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LISA HILL FENNING (SBN 89238) HARRY GARNER (SBN 254942) ARNOLD & PORTER LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Lisa.Fenning@aporter.com Harry.Garner@aporter.com Proposed Counsel to the Debtor and Debtor-in-Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA LOS ANGELES DIVISION In re DOWNEY REGIONAL MEDICAL CENTERHOSPITAL, INC., a California non-profit, public benefit corporation, Debtor. Case No.: 2:09-bk-34714 Chapter 11 EMERGENCY MOTION OF DEBTOR FOR AN INTERIM ORDER (I) ESTABLISHING (A) OMNIBUS HEARING DATES AND (B) CERTAIN NOTICE, CASE MANAGEMENT, AND ADMINISTRATIVE PROCEDURES, AND (II) SCHEDULING A FINAL HEARING; MEMORANDUM IN SUPPORT THEREOF HEARING Date: September __, 2009 Time: Place: Courtroom 1475 United States Bankruptcy Court 255 E. Temple Street Los Angeles, CA 90012

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TABLE OF CONTENTS Page(s)

3 I. 4 II. 5 III. 6 A. 7 B. 8 IV. 9 V. 10 A. 11 B. 12 C. 13 D. 14 VI. 15 VII. 16 17 18 19 20 21 22 23 24 25 26 27 28 -i567728

JURISDICTION AND VENUE ..............................................................................................3 PROCEDURAL STATUS .......................................................................................................3 BACKGROUND .....................................................................................................................3 The Business of the Hospital .......................................................................................3 The Causes of the Bankruptcy Filing...........................................................................4

RELIEF REQUESTED............................................................................................................7 BASIS FOR RELIEF ...............................................................................................................7 Omnibus Hearing Dates ...............................................................................................7 Notice Procedures ........................................................................................................8 Filing Deadlines: Motions, Applications, Objections, and Responses .....................11 Additional Procedures................................................................................................12

APPLICABLE AUTHORITY ...............................................................................................13 CONCLUSION ......................................................................................................................15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 11 U.S.C. 362(d) .......................................................................................................................... 9 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Fed. R. Bankr. P. 9014 .................................................................................................................... 1 -ii567728

TABLE OF AUTHORITIES Page(s) CASES In re Meruelo Maddux Props., Inc., Case No. 01:09-13356 (Bank. C.D. Cal. Apr. 7, 2009) .......................................................... 13 In re Pacifica of the Valley Corp., Case No. 01:09-11678 (Bankr. C.D. Cal. Apr. 17, 2009)....................................................... 13 STATUTES AND RULES 11 U.S.C. 102(1) .................................................................................................................... 1, 12 11 U.S.C. 105 ............................................................................................................................... 1 11 U.S.C. 105(a) ........................................................................................................................ 11 11 U.S.C. 105(d) ........................................................................................................................ 12 11 U.S.C. 341 ............................................................................................................................... 6

11 U.S.C. 1107(a) ........................................................................................................................ 1 11 U.S.C. 1108 ............................................................................................................................. 1 28 U.S.C. 157 ............................................................................................................................... 1 28 U.S.C. 157(b) .......................................................................................................................... 1 28 U.S.C. 1334 ............................................................................................................................. 1 28 U.S.C. 1408 ............................................................................................................................. 1 28 U.S.C. 1409 ............................................................................................................................. 1 Fed. R. Bankr. P. 2002(a).............................................................................................................. 12 Fed. R. Bankr. P. 2002(m) ........................................................................................................ 1, 12 Fed. R. Bankr. P. 3003(c)................................................................................................................ 6 Fed. R. Bankr. P. 9006 .................................................................................................................... 1 Fed. R. Bankr. P. 9007 .............................................................................................................. 1, 12

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LBR 2002-1(a) ................................................................................................................................ 7 LBR 2002-2(a)(3)............................................................................................................................ 7 LBR 4001-1(c)(3)............................................................................................................................ 9 LBR 9013-1(h) .............................................................................................................................. 10 LBR 9075-1(a) ................................................................................................................................ 8 LBR 9075-1(b) ................................................................................................................................ 9

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TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE, CREDITORS HOLDING THE TWENTY LARGEST UNSECURED CLAIMS, ANY ALLEGED SECURED CREDITORS, THE OFFICE OF THE UNITED STATES TRUSTEE, THE UTILITY COMPANIES IDENTIFIED HEREIN, AND OTHER PARTIES IN INTEREST: Downey Regional Medical Center-Hospital, Inc., the debtor and debtor-in-possession in the above captioned case (the Debtor or Hospital), hereby moves this Court for entry of an interim order, substantially in the form attached hereto, pursuant to 11 U.S.C. 102(1) and 105 and Rules 2002(m), 9006, 9007, and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), establishing (a) omnibus hearing dates and (b) certain notice, case management, and administrative procedures in Debtors chapter 11 case, and setting a final hearing on this motion (the Motion). Debtor requests, pursuant to Local Bankruptcy Rules 2081-1(a)(5) and 9075-1(a), that the Court enter an order approving this Motion on less than 48 hours notice, upon timely notice to the Office of the United States Trustee (UST), creditors holding the twenty largest unsecured claims, Debtors alleged secured creditors, and other parties in interest (collectively, the Interested Parties). Debtor requests a hearing on less than regular notice because the proposed notice procedures, if immediately approved, will benefit the Estate by saving Debtor the substantial costs of serving the various notices and motions that will be filed in the beginning of this chapter 11 case on the many parties who will view such service as a waste of Debtors assets. The proposed case management and administrative procedures will similarly benefit the estate. This Motion is based on the Memorandum of Points and Authorities below (the Memorandum); the Declaration of Robert E. Fuller in Support of the Debtors Chapter 11 Petition and First Day Motions (the Fuller Declaration), filed with the Court concurrently herewith; and the arguments, evidence, and representations that may be presented at or prior to the hearing on this Motion. Pursuant to LBR 9075-1(a)(7), if you wish to oppose this Motion you may present a written or oral response to the Motion at the time of the hearing on the Motion.

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WHEREFORE Debtor respectfully requests entry of an interim order (a) directing that all matters be heard at regular monthly hearings to be scheduled in advance, (b) providing procedures for the timely filing of pleadings, (c) establishing notice procedures, and (d) setting a final hearing on the Motion.

Dated: Los Angeles, California September 14, 2009

Respectfully Submitted, /s/ Lisa Hill Fenning Lisa Hill Fenning (SBN 89238) Harry Garner (SBN 254942) Arnold & Porter LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Proposed Counsel to the Debtor and Debtor-inPossession

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MEMORANDUM OF POINTS AND AUTHORITIES Downey Regional Medical Center-Hospital, Inc., the debtor and debtor-in-possession in the above captioned case (the Debtor or Hospital), hereby moves this Court (the Motion) for entry of an interim order (a) directing that all matters be heard at regular monthly hearings to be scheduled in advance, (b) providing procedures for the timely filing of pleadings, (c) establishing notice procedures, and (d) setting a final hearing on the Motion. In support of the Motion, Debtor relies upon and incorporates by reference the Declaration of Robert E. Fuller in Support of the Debtors Chapter 11 Petition and First Day Motions (the Fuller Declaration), filed with the Court concurrently herewith. In further support of the Motion, Debtor, by and through its undersigned counsel, respectfully states as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion under 28 U.S.C. 157 and 1334.

This is a core proceeding under 28 U.S.C. 157(b). Venue of these cases and this Motion in this District is proper under 28 U.S.C. 1408 and 1409. The predicates for the relief requested herein are 11 U.S.C. 102(1) and 105 and Bankruptcy Rules 2002(m), 9006, 9007, and 9014. II. PROCEDURAL STATUS 2. On September 14, 2009 (the Petition Date), Debtor commenced a case (the

Chapter 11 Case) by filing a petition for relief under the Bankruptcy Code. 3. Debtor continues to operate its business and to manage its property as a debtor and

debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in Debtors Chapter 11 Case. 4. States Trustee. III. BACKGROUND A. 5. The Business of the Hospital The Hospital is a nonprofit general acute care and teaching hospital licensed for 199 No creditors committee has been appointed in this Chapter 11 Case by the United

beds located in Downey, California. The Hospital currently operates 181 staffed inpatient beds, including an intensive care unit, a neo-natal intensive care unit for newborns with special health

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issues, a birth center, and definitive observation units, besides general medical-surgical beds. It services approximately 14,000 inpatients per year in all services. The Hospitals average length of stay is less than 4 days on a very acute population, making it one of the most efficient in the state. 6. The Hospital offers a wide variety of clinical services and provides virtually all

clinical services of a major tertiary university hospital except for organ transplants. The Hospital has 11 operating rooms, and a very busy surgical practice. It offers same day surgeries, and specializes in open heart surgery, general surgery, orthopedic surgery, and neurosurgery. It operates on over 7,000 patients annually. The Hospital also has numerous specialty outpatient services, seeing over 80,000 outpatients annually, including non-invasive cardiology, radiology, endoscopy, and physical therapy. 7. The Hospital also has an emergency room of 22 beds. The emergency room is not

designated as a trauma unit, but it is equipped for and services trauma patients who are regularly brought to the Hospital in extremis or who come in via transportation other than ambulance. The emergency room services over 50,000 patients annually. Therefore, at about 2,500 patients per bed annually, it is one of the busiest in the area. The emergency room is burdened because since 2001 there have been four major emergency rooms closed on the I-105 corridor, including Martin Luther King Hospital, leaving only three remaining general emergency rooms in the area including the Hospital.1 B. 8. The Causes of the Bankruptcy Filing Although nominally profitable on an accrual basis, the Hospital has been forced to

commence the Chapter 11 Case as a result of a liquidity crisis. This crisis has two primary causes. First, the Hospital has incurred substantial losses as a result of severe problems on the finance side of its business (now largely corrected) due to defective charge capture practices and software billing practices (the Charge Capture System Problems) that resulted in the Hospital not collecting all the revenues to which it would be entitled. Second, the Hospital was incurring significant losses

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due problems with respect to its capitation arrangements (the Capitation Program) with certain physician groups and health plans (the Capitation Program Problems). These losses were so severe that the Hospital concluded it had to terminate the Capitation Program to staunch the long-term hemorrhaging of cash, despite the short term cash flow interruption and claims that would result. The Hospital has taken steps to exit the Capitation Program and adopt a fee-for-service model, but the exit costs are substantial. The combination of the Charge Capture System and Capitation Program Problems has left the Hospital with no cash reserves since March 2008. 9. In essence, due to software and process failings, the Hospitals financial, billing and

collections systems had failed to capture charges which led to incomplete bills for a significant portion of its services for nearly a decade, causing unrecoverable losses. A cost-accounting problem caused the misallocation of costs to the capitation contracts, resulting in the Hospitals

13 14 15 16 17 18 19 20 debts in full. 21 22 23 24 25 26 27 28 claims for services provided out-of-network by other hospitals and health care providers, (2) the -5567728

books showing a profit in capitation where none really existed. These problems have been investigated, diagnosed, and continue to be remedied under the direction of a new chief executive officer, Kenneth Strople, who took the reins in 2007, Robert Fuller, the chief operating officer, and consultant Richard Yardley, the acting chief financial officer. Given sufficient time to operate under a regime in which charges are properly captured, bills are complete when invoiced, and financial reports provide reliable real-time information, the Hospital should be able to repay its

10.

However, demands by certain creditors for immediate paymentand for payment of

more than the Hospital believes it owes in some casesprevented an orderly restructuring outside of bankruptcy and forced this filing. Much of the pressure has come from the physician groups who have asserted claims in excess of $9 million against the Hospital related to the termination of the capitation contracts. 11. The exit from the Capitation Program created three distinct cash drains: (1) the tail of

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claims by the physician groups participating in the Capitation Program for risk-sharing profit splits, much of which is disputed by the Hospital (the Risk Share Claims), and (3) the transitional loss of cash occasioned by the change in business model out of capitation (where under the Hospital was paid up front, before services were rendered) to fee-for service (where under the Hospital is paid in arrears, typically up to 150 days following the rendering of services), some of which was eased by the $8.8 million in advances by the insurers who participated in the program. However, the Hospital does not have the financial capacity to bridge the costs of exiting capitation within the time frame being demanded by impacted parties. In short, this reorganization filing has resulted from demands made by parties who greatly benefitted from the Capitation Program while it was operational (the physicians), but who are now not patient enough to allow the Hospital to implement its new business model and return to financial stability before demanding payment.

13 14 15 16 17 18 19 20 attach the Hospitals bank accounts in the fall of 2008. The arbitrators award is imminent, and the 21 22 23 24 25 26 27 28 Hospital believes that Alliance will seek immediate enforcement by attaching the Hospitals bank accounts. 14. The threat of attachments relating to the estimated $9 million of Risk Share Claims 12. The immediate problem that forced the Hospital to file this Case arose from an

arbitration brought by one of the physician groups and the potential for the other two groups to follow suit. The physician groups are expected to assert claims for over $9 million. 13. Alliance Physicians Medical Group (Alliance), one of the physician groups,

recently filed an arbitration in an attempt to collect their alleged risk share profits from 2006 to 2008. In its arbitration, Alliance claimed it was owed up to $4.7 million or more. It sought to

has scared off prospective lenders who would not want the loan proceeds intended for critically needed working capital to be diverted to paying historical disputed debts. Such a diversion of funds would shut down the Hospital. The automatic bankruptcy stay will protect the Hospital from the catastrophic interruption of its operations that would result from such an attachment.

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IV.

RELIEF REQUESTED 15. By this Motion, Debtor seeks entry of an interim order (a) directing that all matters

be heard at regular monthly hearings to be scheduled in advance (the Omnibus Hearing Dates), (b) providing procedures for the timely filing of pleadings, (c) establishing notice procedures, and (d) setting a final hearing on the Motion. V. BASIS FOR RELIEF 16. Debtor estimates that it has more than five thousand (5000) creditors and other

parties-in-interest, including 1300 employees, who will be entitled to receive notice in the Chapter 11 Case. Debtor anticipates that many of these parties will file motions and applications in this Chapter 11 Case in pursuit of various forms of relief. To manage this process efficiently, Debtor proposes that every notice, motion, or application, and all briefs, memoranda, affidavits, declarations, or other documents filed in these cases (collectively, the Filings) be subject to the case management procedures described below (the Case Management Procedures). 17. Debtor anticipates that a large number of Filings will made in this case and the Case

Management Procedures are necessary to efficiently schedule hearings and conduct proceedings before the Court. In addition, providing for limited notice procedures that rely in large part on electronic means will save the estate a significant amount of time and expense that would otherwise be expended to provide notice to Debtors numerous creditors and other parties-in-interest. A. 18. Omnibus Hearing Dates In light of the number of interested parties and the size and complexity of this case,

Debtor requests entry of an order scheduling regular Omnibus Hearing Dates at which all matters will be heard, unless for good cause shown the Court orders otherwise. Specifically, Debtor requests that the Court schedule the dates and times for the first six Omnibus Hearing Dates. 19. By scheduling Omnibus Hearing Dates, the Court will facilitate Debtors

reorganization efforts by enabling both Debtor and other parties-in-interest to prepare and present motions or applications in an orderly and timely fashion. If Omnibus Hearing Dates are known in advance, parties will be better able to plan for hearings, thus reducing the need for emergency hearings and/or requests for expedited relief and fostering the consensual resolution of important

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matters. Accordingly, such relief will likely minimize the costs and expenses associated with the otherwise numerous, and potentially irregularly scheduled, hearing dates. 20. The Omnibus Hearing Dates, combined with the parties right to obtain emergency

hearings in appropriate circumstances, will ensure the just, speedy, and inexpensive determination of every proceeding in this case. B. 21. Notice Procedures As noted above, this case is large, complex, and involves a large number of creditors

and other parties-in-interest. Debtor estimates that, absent an order to the contrary, more than five thousand (5000) parties would be entitled to receive notice of some or all Filings in this case. The costs and burdens associated with copying and mailing, dispatching for overnight delivery, or otherwise serving paper copies of such filings will impose substantial economic and administrative burdens on Debtors estate, the Court, and all other parties-in-interest. 22. Such mass mailings would be extraordinarily costly to Debtors estate and would

require Debtor to divert limited resources. The alternative of continually drafting and filing onetime motions to limit notice would increase even more the economic burden on Debtors estate. Accordingly, Debtor submits that limiting notice as proposed herein should be permitted to alleviate these burdens on Debtor and its estate. 23. Debtor proposes that notices of the (i) commencement of this case under chapter 11

of the Bankruptcy Code; (ii) meeting of creditors required pursuant to 341 of the Bankruptcy Code; (iii) time fixed for filing proofs of claim pursuant to Bankruptcy Rule 3003(c); (iv) time fixed for filing objections to and for the hearing to consider approval of a disclosure statement; (v) time fixed for filing objections to and for the hearing to consider confirmation of a plan of reorganization; (vi) hearing on dismissal of the case or its conversion to another chapter; and (vii) time fixed for accepting or rejecting a proposed modification to a plan of reorganization (the Excluded Matters) be provided to all parties-in-interest as provided by the Bankruptcy Rules or the Local Bankruptcy Rules. 24. For all matters other than Excluded Matters (the Limited Notice Matters), Debtor

proposes that, to the extent the Bankruptcy Rules or the Local Bankruptcy Rules require broader

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notice, all Filings in this chapter 11 case be subject to the limited notice procedures described below (the Limited Notice Procedures). 25. With respect to Limited Notice Matters to be heard on regular notice, Debtor

proposes that notice be deemed sufficient if served upon the following entities (the Limited Notice Parties) in the following manner: a. To be served by the Court via Notice of Electronic Filing: (1) the Office of the United States Trustee, subject to the exceptions set forth in Local Bankruptcy Rule 2002-2(a)(3); (2) (3) counsel for Debtor; if an Official Committee of Unsecured Creditors (the Committee) has been appointed, counsel for the Committee; (4) if a Committee has not been appointed, entities (or their counsel) that (i) appear on Debtors list of creditors holding the twenty largest unsecured claims, and (ii) have consented to electronic service pursuant to the Local Bankruptcy Rules; (5) parties that file with the Court and serve upon Debtor a request for special notice pursuant to Local Bankruptcy Rule 2002-1(a);2 and (6) any party against whom relief is sought or whose specific rights or interests are directly affected, or such partys counsel, to the extent such party or counsel has consented to electronic service pursuant to the Local Bankruptcy Rules. b. To be served by the filing party via first class mail, overnight delivery, email, or facsimile: (1) the Office of the United States Trustee, to the extent such service is required by Local Bankruptcy Rule 2002-2(a)(3);

Pursuant to Local Bankruptcy Rule 2002-1(a)(2), subject to certain exceptions, any creditor or equity security holder that files a request for special notice is deemed to consent to receive electronic notice and service from the clerk and parties-in-interest in the case or proceeding. -9567728

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(2)

government agencies required to receive notice of proceedings pursuant to the Bankruptcy Rules or Local Bankruptcy Rules;

(3)

Debtors counsel, addressed to Lisa Hill Fenning, Arnold & Porter LLP, 777 S. Figueroa St., 44th Floor, Los Angeles, CA 90017; email: Lisa.Fenning@aporter.com;

(4)

Debtor, addressed to Robert E. Fuller, Chief Operating Officer, 11500 Brookshire Ave., Downey, CA 90241; email: Rob.Fuller@drmci.org;

(5)

if a Committee has not been appointed, entities (or their counsel) that (i) appear on Debtors list of creditors holding the twenty largest unsecured claims, and (ii) have not consented to electronic service pursuant to the Local Bankruptcy Rules; and

(6)

any party against whom relief is sought or whose specific rights or interests are directly affected, or such partys counsel, to the extent such party or counsel has not consented to electronic service pursuant to the Local Bankruptcy Rules.

Local Bankruptcy Rule 9075-1(a) provides that when a party files a motion

requesting emergency or expedited relief, the party must, unless otherwise ordered by the Court, (a) give telephonic notice of the emergency hearing and the substance of the motion to and (b) serve the moving papers by e-mail, facsimile, or personal service on parties to whom notice of the motion is required to be given pursuant to the Bankruptcy Rules and the Local Bankruptcy Rules, the United States Trustee, and any other party that is likely to be adversely affected by the granting of such motion. Debtor submits that it is not always possible or practical to provide notice and service by the means set forth in Local Bankruptcy Rule 9075-1(a), for instance where notice to a large group is required and Debtor cannot ascertain telephone or facsimile numbers or e-mail addresses for the entire group. Accordingly, Debtor proposes that, with respect to any Limited Notice Matters sought to be heard on an emergency or expedited basis, notice and service be deemed sufficient if the notice and motion are served upon the Limited Notice Parties via overnight delivery, provided that

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the notice and motion are (i) delivered prior to the scheduled hearing time, or e-mail or facsimile, and (ii) transmitted no later than the time they are filed with the Court. C. 27. Filing Deadlines: Motions, Applications, Objections, and Responses Filing Deadline. Except as otherwise provided by the Bankruptcy Code or the

Bankruptcy Rules, Debtor proposes that for a Filing (other than a motion for relief from the automatic stay pursuant to 11 U.S.C. 362(d)) to be heard at the next-scheduled Omnibus Hearing Date, a movant or applicant must file with the Court and serve such Filing at least twenty-one (21) days prior to the next-scheduled Omnibus Hearing Date (the Filing Deadline). Except as otherwise ordered by the Court, if such Filing is filed and served fewer than twenty-one (21) days prior to the next-scheduled Omnibus Hearing Date, Debtor requests that the hearing with respect to such Filing take place on the Omnibus Hearing Date following the next-scheduled Omnibus Hearing Date. 28. In the event that a party cannot comply with the Filing Deadline but wishes to have a

matter heard at the next-scheduled Omnibus Hearing Date, Debtor proposes that such party be required to request, in accordance with the requirements set forth in Local Bankruptcy Rule 90751(b), that the Court shorten the Filing Deadline and hear the matter on the next Omnibus Hearing Date. 29. Scheduling Of Automatic Stay Motions. Debtor proposes that, unless the Court

orders otherwise, for good cause shown, when the Filing is a motion for relief from the automatic stay pursuant to 11 U.S.C. 362(d) and when such motion is filed with the Court and served so as to be actually received at least twenty-one (21) days before the upcoming Omnibus Hearing Date, then the hearing date for such matter shall be set on such upcoming Omnibus Hearing Date. Where the Filing is filed and served fewer than twenty-one (21) days before the upcoming Omnibus Hearing Date, then the hearing for such matter shall be set at the Omnibus Hearing Date following the upcoming Omnibus Hearing Date and the stay shall continue in effect until the conclusion of the hearing on such later date pursuant to Local Bankruptcy Rule 4001-1(c)(3). Except as specifically set forth herein, all other procedures for such motions shall otherwise conform to the Local Rules and the Bankruptcy Rules.

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30.

Objection/Opposition Deadline. In the event that a Filing is a motion or application

for relief, Debtor requests that any objection, opposition, or other response be filed with the Court and served so as to be actually received by the moving party no later than fourteen (14) days before the applicable Omnibus Hearing Date (or such other date upon which the Court will consider the Filing), unless otherwise ordered by the Court. 31. In accordance with Local Bankruptcy Rule 9013-1(h), Debtor proposes that the relief

requested in a Filing be granted without a hearing if no objection is timely filed. Debtor further requests that, should a timely objection to a Filing be submitted, the movant be allowed, but not required, to file a reply to such objection or other responsive pleading no later than seven (7) days before the applicable Omnibus Hearing Date. 32. Violation of Procedures. Debtor proposes that, if any party violates the procedures

detailed in the Case Management Order for instance, by setting a matter for the next regularly scheduled Omnibus Hearing without adequate notice or by setting a matter for a date other than a Omnibus Hearing date without prior approval from the Court Debtor shall forward a copy of the Case Management Order to such party within five business days after such defective filing. Once the notice is corrected and served, the matter shall be scheduled in accordance with the Filing Deadlines set forth herein. D. 33. Additional Procedures Bridge Orders Not Required in Certain Circumstances. Debtor proposes that if a

motion to extend the time to take any action is filed before the expiration of the period prescribed by the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, or the provisions of any order entered by the Court, the time shall automatically be extended until the Court acts on the Motion, without the necessity for the entry of a bridge order. 34. Preliminary Hearing Agenda. Debtor proposes that by 4:00 p.m. (prevailing Pacific

Time) on the third business day prior to any Omnibus Hearing, counsel to Debtor shall file with the Court a preliminary agenda for the hearing (the Preliminary Agenda) and shall serve such Preliminary Agenda in accordance with the Case Management Order. Each Preliminary Agenda shall set forth (a) the docket number and title of each matter scheduled for the Omnibus Hearing; (b)

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all related pleadings, including any Objections filed to date and any Certificates of No Objection, and, as a result, whether each matter is contested or uncontested; (c) whether any matters have settled or at such time are proposed to be adjourned at a subsequent hearing date; and (d) other comments that will assist the Court in preparing the Omnibus Hearing. To the extent possible, contested matters for which an evidentiary hearing is scheduled to be conducted shall be placed at the end of the proposed Preliminary Agenda. The Preliminary Agenda is a proposal for the convenience of the Court and counsel, and it is not intended to be determinative of the matters ultimately to be heard at the Omnibus Hearing. 35. Final Hearing Agenda. Debtor proposes that by 4:00 p.m. (prevailing Pacific Time)

on the business day prior to any Omnibus Hearing, counsel to Debtor shall file with the Court a final agenda (the Final Agenda) and serve such Final Agenda in accordance with the Case Management Order. The Final Agenda shall contain the same information as the Preliminary Agenda, but shall update such information with any new pleadings filed for the Omnibus Hearing since the preparation of the Preliminary Agenda (the New Filings) and any change in status for any agenda items. 36. Telephone Appearance at Hearings. Debtor proposes that to the extent any party

requests permission from the Court to appear telephonically at a hearing, such party shall make the necessary arrangements according to the Courts standard procedures, and shall also be required to notify counsel for Debtor in writing regarding such request at least three (3) business days prior to the applicable hearing date. Information regarding any such telephonic participation shall be noted in the Preliminary Agenda and the Final Agenda. VI. APPLICABLE AUTHORITY 37. Bankruptcy Code 105(a) grants bankruptcy courts broad authority and discretion to

enforce the provisions of the Bankruptcy Code either under specific statutory fiat or under equitable common law principles. Specifically, 105(a) of the Bankruptcy Code provides that the Court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of the Bankruptcy Code, and that no provision of the Bankruptcy Code providing for the raising of an issue by a party-in-interest shall be construed to preclude the court from, sua sponte, taking any

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action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent the abuse of process. Section 105(d) specifically authorizes bankruptcy courts to set status conferences on its own motion in the interests of the orderly conduct and disposition of the case. 38. Adopting the Omnibus Hearing Date process will substantially reduce administrative

burdens and result in substantial cost savings to Debtors estate because of the reduction of time and money Debtor will have to expend on the numerous hearings that otherwise would be held before the Court. In addition, adopting the Omnibus Hearing Date process will significantly reduce the administrative and economic burden placed on creditors and parties-in-interest when filing and serving documents in these cases and appearing at hearings, and thus will promote the efficient and orderly administration of this Chapter 11 Case. Further, early notice to all parties-in-interest of regular hearings will enable all parties-in-interest to plan efficiently for the use of hearing time and will avoid much of the need for emergency hearings or hearings on shortened notice. 39. Bankruptcy Rule 2002(a) provides that, unless otherwise ordered by a bankruptcy

court, notice of certain matters must be given to, among others, all of Debtors creditors, equity security holders, and other parties-in-interest. Bankruptcy Rule 2002(m) provides, however, that the Court may enter orders designating the matters in respect to which, the entity to whom, and the form and manner in which notices shall be sent. See also Fed. R. Bankr. P. 9007 ([W]hen notice is to be given under these rules, the Court shall designate, if not otherwise specified herein. . . . the form and manner in which the notice shall be given.). In addition, Bankruptcy Code 102(1) provides that when the statute permits an action to occur after notice and a hearing, such action may occur after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances . . . . 40. As explained above, Debtor expects that this large and complex case will be fast-

moving. The many creditors and parties-in-interest may have various issues of concern that may be brought to the Court for redress. The costs and burdens associated with the possibility of numerous, fragmented hearings, plus the costs associated with copying and mailing or otherwise serving all

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Filings to parties without the benefit of the provisions proposed herein, will impose an administrative and economic burden on Debtors estate, the Court, and the parties-in-interest. 41. Pursuant to the terms of the Omnibus Hearing Date process, all parties-in-interest

who may be directly affected by the relief sought by a particular Filing will receive notice of such Filing directly from the party submitting such Filing to the Court well in advance of the applicable Omnibus Hearing Date. Under the proposed procedures, all parties will be assured of receiving appropriate notice of matters affecting their interests and an ample opportunity to prepare and respond. Thus, no party will be adversely affected by the proposed procedures. 42. This Court has previously established regular omnibus hearing dates and granted

notice procedures similar to those proposed in this Motion. See, e.g., In re Pacifica of the Valley Corp., Case No. 01:09-11678 (Bankr. C.D. Cal. Apr. 17, 2009) (Docket No. 131) (omnibus hearing dates); In re Meruelo Maddux Props., Inc., Case No. 01:09-13356 (Bank. C.D. Cal. Apr. 7, 2009) (Docket No. 35) (notice procedures). VII. CONCLUSION WHEREFORE, Debtor respectfully requests that the Court enter an order, substantially in the form annexed hereto, granting the relief requested in the Motion and such other and further relief as may be just and proper.

Dated: Los Angeles, California September 14, 2009

Respectfully Submitted, /s/ Lisa Hill Fenning Lisa Hill Fenning (SBN 89238) Harry Garner (SBN 254942) Arnold & Porter LLP 777 South Figueroa Street, 44th Floor Los Angeles, California 90017 Telephone: 213.243.4000 Facsimile: 213.243.4199 Proposed Counsel to the Debtor and Debtor-inPossession

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