KLESTADT & WINTERS, LLP Ian R. Winters Sean C.

Southard Proposed Counsel to the Official Committee of Unsecured Creditors 570 Seventh Avenue, 17th Floor New York, NY 10017 (212) 972-3000

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------x : In re: : : LEHR CONSTRUCTION CORP. : : Debtor. : : --------------------------------------------------------------x

Chapter 11 Case No. 11-10723 (SHL)

OMNIBUS RESPONSE OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO (A) DEBTORS PROPOSED FINAL ORDERS GRANTING FIRST DAY MOTIONS AND RELATED RELIEF, AND (B) TO OTHER PENDING MOTIONS FOR PRESENTMENT OR HEARING ON MARCH 23, 2011

The Official Committee of Unsecured Creditors (the Committee) of Lehr Construction Corp., debtor and debtor-in-possession in the above-captioned chapter 11 case (Debtor), by and through its counsel, Klestadt & Winters, LLP, as and for its omnibus response (Response) to the Debtors proposed final orders granting first day motions in the case (the Motions), hereby sets forth as follows: Factual Background 1. The Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy

Code with the United States Bankruptcy Court for the Southern District of New York on February 21, 2011 (the Petition Date). 2. The Debtor is a builder in New York City specializing in interior construction.

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The Debtor filed the Motions on the Petition Date and this Court entered interim

orders granting the relief requested on an interim basis. The Debtor then filed notices of presentment with respect to final versions of orders approving the Motions (the Proposed Orders). 4. On March 11, 2011, the Office of the United States Trustee appointed the

Committee, which consists of the following five (5) members: (i) Robert Samuels, Inc., (ii) Superior Acoustics, Inc., (iii) Marlin, Inc., (iv) Rockmor Electric Enterprises, Inc., and (v) BP Mechanical Corp. 5. On March 15, 2011, the Committee selected Klestadt & Winters, LLP as its

counsel to represent the Committee in all matters relating to the Debtors Chapter 11 case. RESPONSE 6. The Committee has requested that the Debtor revise certain of the Proposed

Orders to incorporate what are largely non-substantive comments and in other cases has requested that the Debtor provide the Committee with additional information. This additional information is required in order for the Committee to determine whether or not the proposed relief requested with respect to certain of the Motions and corresponding Proposed Orders is appropriate. The Debtor has not yet provided full information in response to the many inquiries of the Committee concerning the various Motions at the time this Response is being filed. The Committee expects that many of the issues set forth can and will be amicably resolved with the Debtor prior to the hearing on the Motions. A. Wages, Compensation and Employee Benefits. 7. On the Petition Date, the Debtor filed its Motion for an Order Pursuant to

Sections 105(a) and 363(b) of the Bankruptcy Code (I) Authorizing Payment of Wages,

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Compensation and Employee Benefits and (II) Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations [DE 3] (the Wage Motion). 8. March 2, 2011, the Debtor filed a notice of presentment of final order to approve

the Wage Motion [DE 30]. Pursuant to Sections Payment of Wages, Compensation and Employee Benefits [DE 3 & 30].

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The Committee has requested a breakdown of each of the components of

compensation, benefits, expenses, etc. for which approval is sought in the Wage Motion. Until this information is received, the Committee is unable to support entry of a final order granting this relief. 10. The Committee has also inquired about whether written policies exist concerning

the benefits offered to employees and whether employment agreements are in place for any employees that set forth the entitlements. 11. Unless there is a contractual right to payment, the Committee is concerned about

certain incentives being paid. For example, items like tuition repayment seem excessive in a liquidating chapter 11 case such as this. In addition, the Debtor indicates that it has a fairly generous matching tradition with respect to its 401(k) plan which should cease in the context of this liquidating case. 12. Finally, the Committee is unclear as to the precise meaning of the second

Ordered paragraph on page 3 of the proposed final order and requires clarification with respect to the same. B. Workers Compensation and Insurance Programs. 13. On the Petition Date, the Debtor filed its Motion for an Order Pursuant to

Sections105(a), 362(d), 363(b) and 503(b) of the Bankruptcy Code (I)Authorizing the Debtor to -3-

(A) Continue its Workers Compensation Program and its Insurance Programs and (B) Pay All Obligations in Respect Thereof and (II) Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations [DE 5] (the Insurance Motion). 14. March 4, 2011, the Debtor filed a notice of presentment of final order to approve

the Insurance Motion [DE 33]. 15. The Committee has requested and believes it is appropriate to have consultation

rights, or what some judges in this District refer to as stop, look and listen rights for the Committee. Specifically, on page, 3, third Ordered paragraph of the proposed final order, the Committee would like specific consultation rights concerning the payment of Insurance Obligations. In addition, in the third Ordered paragraph of page 4 of the final order, the Committee would like to be added as party not to be prejudiced. C. Utilities Motion. 16. On the Petition Date, the Debtor filed its Motion for an Order Pursuant to

Sections105(a) and 366 of the Bankruptcy Code (I) Prohibiting Utilities from Altering, Refusing, or Discontinuing Service, (II) Deeming Utilities Adequately Assured of Future Payment, and (III) Establishing Procedures for Determining Adequate Assurance of Payment [DE 6] (the Utilities Motion). 17. March 2, 2011, the Debtor filed a notice of presentment of final order to approve

the Utilities Motion [DE 27]. 18. With respect to the Utilities Motion, the Committee would like to be included as a

notice party and have certain consultation rights which it has discussed with the Debtor.

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D. Prepetition Taxes. 19. On the Petition Date, the Debtor filed its Motion Pursuant to Sections 105(a),

363(b), and 541 of the Bankruptcy Code (I) For Authorization to Pay Certain Prepetition Taxes, and (II) to Allow Financial Institutions to Cash and Process Related Checks and Transfers [DE 7] (the Tax Motion). 20. March 2, 2011, the Debtor filed a notice of presentment of final order to approve

the Tax Motion [DE 28]. 21. The Committee has requested information related to the amounts that the Debtor

proposes to pay with respect to prepetition tax obligations as the Tax Motion does not identify the same. Until this information is received, the Committee is unable to support entry of a final order granting this relief. E. Omni Management Retention. 22. On March 2, 2011, the Debtor filed its Notice of and Application of the Debtor

for Order Authorizing Retention and Appointment of Omni Management Group as Claims and Noticing Agent for the Clerk of the Bankruptcy Court Under 28 U.S.C. 156(c) Nunc Pro Tunc to February 25, 2011 and Granting Related Relief [DE 23] (the Omni Retention Motion). 23. The Committee supports the entry of an order approving the Omni Retention

Motion and requests that the order entered by this Court reference the Committees right and authority to use Omni for its noticing needs as well. F. Notice Procedures Motion. 24. On March 2, 2011, the Debtor filed its Notice of and Motion for an Order,

Pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy Rules 1015(c) and 9007 Implementing Certain Notice and Case Management Procedures [DE 24] (the Notice

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Procedures Motion). 25. The Committee supports the entry of an order approving the Notice Procedures

Motion provided the Debtor adds the Committee as notice party in certain locations identified for the Debtor in the proposed order. In addition the Committee should be excluded, like the Debtor, from the procedure set forth on page 4, in the second Ordered paragraph, subparagraph (b), and also be involved in conference under subparagraph (c). G. Employment of Accountants. 26. On March 2, 2011, the Debtor filed its Notice of and Debtors Application for

Entry of an Order Under Bankruptcy Code Sections 327,328 and 330 Authorizing Retention and Employment of Rosen Seymour Shapss Martin & Company LLP as Financial Advisor to the Debtor Nunc Pro Tunc to the Petition Date [DE 25] (the Rosen Seymour Retention Motion). 27. With respect to the Rosen Seymour Retention Motion, the Committee objects to

the requested indemnification. Despite what the Rosen Seymour Retention Motion recites, the Committee is not able to locate any request for indemnification in the engagement letter attached to the same. Moreover, where the accountants are proposed to be engaged for traditional accounting services on an hourly basis, it seems inappropriate for such indemnification. 28. In addition, and in order to assess whether the firm is disinterested, the Committee

has requested information concerning whether Rosen Seymour Shapss Marin & Company, LLP has ever performed services for insiders of the Debtor. The Debtor has not yet responded to this inquiry and so the Committee reserves all rights with respect to this subject matter. H. Ordinary Course Professionals. 29. On March 2, 2011, Motion for an Order, Pursuant to Sections 105(a), 327, 328,

and 330 of the Bankruptcy Code, Authorizing the Employment of Professionals Utilized in the

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Ordinary Course of Business Nunc Pro Tunc to the Petition Date [DE 31] (the OC Professionals Motion). 30. The Committee does not object to retention of professionals in the ordinary course

of this liquidating chapter 11 case where necessary and cost-effective. However, the Committee believes that the proposed thresholds in determining when such a professional must file a fee application in this case are too high for this case at $50,000 per month and $300,000 in the aggregate. Rather than this threshold, the Committee suggests alternate thresholds $20,000 per month and $100,000 in the aggregate a under the circumstances of this liquidating case. 31. The Committee has also requested disclosure of whether the professionals that the

Debtor proposes to retain in the ordinary course provide services for insiders of the Debtor and the amounts outstanding to each professional for prepetition services rendered to or for the benefit of the Debtor. The Debtor has not yet responded to this inquiry and so the Committee reserves all rights with respect to the same. 32. The Committee should be included as notice party for the disclosure documents to

be filed by any proposed ordinary course professional and have an opportunity to be heard on objections. 33. As section 327(e) of the Bankruptcy Code speaks to attorney retention only, with

respect to any non-attorneys proposed to be retained by the Debtor, the Committee believes that the disinterestedness requirement applies and therefor the non-attorneys need to waive any claims outstanding in order to be disinterested. I. Critical Vendor Motion. 34. On March 9, 2011, the Debtor filed its Motion of the Debtor for Entry of an Order

Authorizing Payment of Prepetiton Critical Construction Vendor Claims and to Provide

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Adequate Assurance of Future Performance for Subcontractors and Materialmen Who Have Statutory Lien Rights [DE 46] (Critical Vendor Motion). 35. The Committee understands the importance of finishing profitable jobs that are

necessary in order to collect receivables and avoid claims of breach of contract. The Committee further understands that the Debtor is in negotiation with certain proposed critical vendors and the NBA with respect to the future of the NBA project which is the focus of the Critical Vendor Motion. 36. The Committee has requested a breakdown of all proposed payments of a pre-

petition nature in accordance with the Critical Vendor Motion. The Committee has also requested evidence from the Debtor concerning the profitability of the NBA project. Until this information is received, the Committee is unable to support entry of an order granting the Critical Vendor Motion. From the Committees perspective, it may make sense to adjourn the Critical Vendor Motion for a short period while further negotiations can take place and information can be provided.

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WHEREFORE, the Committee requests that this Court approve the relief requested in certain of the Motions as modified in accordance with the comments of the Committee contained herein and otherwise adjourn the consideration of any of the Motions for which the Committee is waiting on additional information. Dated: New York, New York March 21, 2011 Respectfully submitted,
KLESTADT & WINTERS, LLP Proposed Counsel to the Official Committee of Unsecured Creditors /s/Sean C. Southard__________ Ian R. Winters Sean C. Southard 570 Seventh Avenue, 17th Floor New York, New York 10017 By:

(212) 972-3000

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