Proposed Hearing Date: March 23, 2011 at 11:00 a.m. Proposed Objection Deadline: March 18, 2011 at 4:00p.m.

Karen C. Bifferato (DE Bar No. 3279) Marc J. Phillips (DE Bar No. 4445) CONNOLLY BOVE LODGE & HUTZ LLP The Nemours Building 1007 North Orange Street P.O. Box 2207 (19899) Wilmington, DE 19801 Telephone: 302-658-9141 Facsimile: 302-658-0380 Attorneys for Venmar CES, Inc.

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Lehr Construction Corp., Debtor.
) ) ) ) )

Chapter 11 Case No. 11-10723 (SHL) Related to Docket No. 46

OBJECTION OF VENMAR CES, INC. TO MOTION OF THE DEBTOR FOR ENTRY OF AN ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION VENDOR CLAIMS AND TO PROVIDE ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR SUBCONTRACTORS AND MATERIALMEN WHO HAVE STATUTORY LIEN RIGHTS Venmar CBS, Inc. ("Venmar"), by and through its undersigned counsel, hereby objects to the Motion of the Debtor for Entry of an Order Authorizing Payment of?repetition Critical
Construction Vendor Claims and to Provide Adequate Assurance of Future Performance for Subcontractors and Materialmen who have Statutory Lien Rights ("Motion") [Docket No. 46].

In support of its objection, Venmar states as follows: Background 1. On February 21, 2011 ("Petition Date"), the above-captioned debtor ("Debtor")

filed a voluntary petition for relief under chapter 11 oftitle 11 of the United States Code ("Bankruptcy Code").

2.

The Debtor continues to operate its business and manage its affairs as debtor-in-

possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. 3. Prior to the Petition Date, Venmar supplied commercial HVAC equipment to the

Debtor. During the twenty (20) days preceding the Petition Date, Venmar sold goods on credit to the Debtor in the ordinary course of the Debtor's business for which Venmar has not been paid. The goods received by the Debtor during the twenty days prior to the Petition Date have a value of at least $218,500.08. The Debtor has not paid Venmar for the goods delivered to the Debtor within 20 days of the Petition Date. On or about March 7, 2011, Venmar filed a Motion for Allowance and Immediate Payment of Administrative Expense Claim Pursuant to 11 U.S.C. 503(b)(9) (Docket No. 37). 4. On or about March 9, 2011, the Debtor filed the Motion seeking, inter alia,

authority to pay in the ordinary course of business, prepetition claims held by certain critical construction vendors related to certain properties located in Secaucus, New Jersey.
Objection

5.

Venmar objects to the relief sought in the Motion because the Debtor has not met

its burden to establish that such payments are necessary to protect and preserve the Debtor's estate, and payments should not be made to unsecured creditors ahead of administrative creditors such as Venmar, who also is entitled to a mechanics' lien under applicable state law. 6. First, the Debtor has not established that the Critical Construction Vendors (as

defined in the Motion) are critical vendors that may be paid under the standards articulated by the Courts in In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989), Capital
Factors, Inc. v. Kmart Corp., 291 B.R. 818, 823 (N.D. Ill. 2003) and In re Coserv, L.L.C., 237

B.R. 487, 493-94 (Bankr. N.D. Tex. 2002). Bankruptcy courts generally do not authorize the payment of pre-petition unsecured claims except pursuant to a confirmed plan. See e.g., Capital 2

Factors, Inc. v. Kmart Corp., 291 B.R. at 823 (holding that payment of unsecured pre-petition

claims to avoid business disruptions is not authorized by the Bankruptcy Code); In re Coserv,
L.L.C., 237 B.R. at 493-94 ("[A] bankruptcy court may order payment ofunsecured prepetition

claims only under the most extraordinary circumstances."). 7. Before a court will approve payment of a general unsecured prepetition claim on

the basis of"necessity" under 11 U.S. C. 105(a)(l), a debtor must show the following by a preponderance of the evidence: (i) that it is critical that the debtor deal with the claimant; (ii) that unless it deals with the claimant, the debtor risks the probability of harm, or, alternatively, loss of economic advantage to the estate or the debtor's going concern value, which is disproportionate to the amount of the claimant's prepetition claim; and (iii) that there is no practical or legal alternative by which the debtor can deal with the claimant other than by payment ofthe claim. See Coserv, 273 B.R. at 498. The Debtor simply has not met the foregoing burden in this case, given the facts and circumstances set forth in the Motion. 8. Payment should not be made to general unsecured creditors ahead of those

creditors that hold administrative claims and mechanics' liens. At this point in the case, there is no certainty that the Debtor will have the ability to pay administrative claims and to pay off mechanics' lien holders in full. Any payment to general unsecured creditors should not be made until after mechanics' lien holders and administrative claims have been paid in full. 9. Finally, as acknowledged by the Debtor in the Motion, although some of the

Critical Construction Vendors may have section 503(b )(9) claims like that ofVenmar, it is not appropriate for certain holders of section 503(b )(9) claims to be paid ahead of and to the possible detriment of other holders of section 503(b)(9) claims.

WHEREFORE, for all of the foregoing reasons, Venmar respectfully requests that the relief sought in the Motion be denied and for such other and further relief as the Court deems just and appropriate. Dated: March 21, 2011

aren C. Bifferato ( ar No. 279) Marc J. Phillips (DE Bar No. 5180) The Nemours Building 1007 North Orange Street P.O. Box 2207 (19899) Wilmington, DE 19801 Telephone: (302) 658-9141 Facsimile: (302) 658-0380

Attorneys for Venmar CES, Inc.

#4244037vl

CERTIFICATE OF SERVICE
I, Karen C. Bifferato, hereby certify that on the 21st day of March, 2011, I served two true and correct copies of the foregoing upon The Honorable Sean H. Lane via Federal Express at the address listed below and one true and correct copy of the foregoing to the remaining parties listed below in the manner indicated.

VIA FEDERAL EXPRESS The Honorable Sean H. Lane United States Bankruptcy Court One Bowling Green, Courtroom 623 New York, NY 10004 VIA EMAIL AND FIRST CLASS MAIL Frederick Coffey Lehr Construction Corp. 902 Broadway New York, NY 10010 Email: Fred.Coffey@lehrcc.com
James A. Beldner, Esquire CooleyLLP 1114 A venue of the Americas New York, NY 10036 Email: jbeldner@cooley.com Susan Golden, Esquire Office of the United States Trustee for the Southern District ofN ew York 33 Whitehall Street, 21st Floor New York, NY 10004 Email: susan.golden@usdoj .gov

#4247941