Case Document 306 Filed in TXSB on 08/24/18 Page 1 of 6 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

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1 Case Document 306 Filed in TXSB on 08/24/18 Page 1 of 6 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: NEIGHBORS LEGACY HOLDINGS, Case No INC., ET AL., Debtors CHAPTER 11 BRAZORIA COUNTY TAX OFFICE, CROSBY INDEPENDENT SCHOOL DISTRICT, CROSBY MUNICIPAL UTILITY DISTRICT, HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 276, HUMBLE INDEPENDENT SCHOOL DISTRICT, CITY OF HOUSTON, ALIEF INDEPENDENT SCHOOL DISTRICT, VALLEY RANCH MUNICIPAL UTILITY DISTRICT NO. 1, WICHITA COUNTY, LUBBOCK CENTRAL APPRAISAL DISTRICT, MIDLAND COUNTY, TYLER INDEPENDENT SCHOOL DISTRICT, POTTER COUNTY TAX OFFICES AMENDED LIMITED OBJECTION TO DEBTORS EMERGENCY MOTION (I) FOR AN ORDER (A) APPROVING AUCTION AND BID PROCEDURES, INCLUDING BID PROTECTIONS, (B) AUTHORIZING AND SCHEDULING AN AUCTION FOR SALE OF DEBTORS ASSETS, AND (II) FOR ENTRY OF AN ORDER (A) APPROVING THE SALE OF THE DEBTORS ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS, (B) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES (Amends Doc. #154 filed Aug. 3, 2018) To: The Honorable Marvin Isgur United States Bankruptcy Judge: Brazoria County Tax Office, Crosby Independent School District, Crosby Municipal Utility District, Harris County Municipal Utility District No. 276, Humble Independent School District, City of Houston, Alief Independent School District, Valley Ranch Municipal Utility District No. 1, Wichita County, Lubbock Central Appraisal District, Midland County, Tyler Independent School District and Potter County Tax Office (the Taxing Entities ), secured creditors and parties in interest, file the following Amended Limited Objection to Debtors Emergency Motion (i) for an Order (a) Approving Auction and Bid Procedures, including Bid Protections, (b) Authorizing and Scheduling an Auction for Sale of Debtors Assets, and (ii) for 1

2 Case Document 306 Filed in TXSB on 08/24/18 Page 2 of 6 Entry of an Order (a) Approving the Sale of the Debtors Assets Free and Clear of All Liens, Claims, Encumbrances, and Interests, (b) Authorizing the Assumption and Assignment of Executory Contracts and Unexpired Leases (Doc. #20) (the Sale Motion ), and respectfully show as follows: Jurisdiction 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334, et seq. This is a core proceeding under 28 U.S.C. 157(b)(2)(N). This Objection is designated as a contested matter under Bankruptcy Rule Background 2. The Taxing Entities are political subdivisions of the State of Texas, authorized and required by the Constitution and laws of the State of Texas to levy and collect ad valorem taxes on all taxable real and business personal property within their boundaries in order to discharge their statutory functions. 3. The Taxing Entities filed or will file claims for pre-petition ad valorem taxes assessed on the real property and tangible personal property of the estate for the delinquent 2017 taxes and current 2018 tax years 1. The Taxing Entities claims are set forth on the attached Exhibit A. 4. The claims of the Taxing Entities are secured by unavoidable liens that are generally superior to those of other secured claims pursuant to Article VIII, Section 15 of the Texas Constitution, and Sections and Section 32.05(b) of the Texas Property Tax Code. See also Stanford v. Butler, 826 F.2d 353 (5 th Cir. 1987); In Re Winn s Stores, Inc. 177 B.R. 253 (Bktcy W.D. Tex. 1995). 1 The 2018 claims are estimated at this time since the appraisal/assessment process for the 2018 tax year is not complete. 2

3 Case Document 306 Filed in TXSB on 08/24/18 Page 3 of 6 5. The claims of the Taxing Entities are in solido and attach to all tangible personal property of the estate. Universal Seismic Associates, Inc. 288 F.3d 205 (5 th Cir. 2002) 6. The Taxing Entities object to the Sale Motion because it does not provide them with adequate protection for the payment of the 2018 taxes 2. The Asset Purchase Agreement with Altus Health Systems Opco, LLC and Altus Health System Realty, LLC dated July 10, 2018 (the APA) (Doc. # 20-2) appears to provide in pertinent part as to the taxes that: 7. The liabilities assumed by the Buyer are set forth at Section 2.03 of the APA and include no provision for the assumption of the pre-closing property taxes: 2 This Amendment serves to correct the inadvertent omission of certain taxing entities not listed as objecting parties in the original objection although they were included in Exhibit A. 3

4 Case Document 306 Filed in TXSB on 08/24/18 Page 4 of 6 8. While Permitted Liens under the APA includes taxes not yet due and payable, the Taxing Entities are unable to locate any provisions in the APA requiring the Buyer to pay the pre-closing taxes, or requiring the Seller to adequately protect the Taxing Entities with respect to the payment of pre-closing current or delinquent taxes: 9. The Taxing Entities object to the Sale Motion to the extent it fails to adequately protect them with respect to the payment of the 2017 and 2018 taxes assessed on the real property and tangible personal property that is the subject of the Sale Motion. 4

5 Case Document 306 Filed in TXSB on 08/24/18 Page 5 of 6 WHEREFORE, PREMISES CONSIDERED, Brazoria County Tax Office, Crosby Independent School District, Crosby Municipal Utility District, Harris County Municipal Utility District No. 276, Humble Independent School District, City of Houston, Alief Independent School District, Valley Ranch Municipal Utility District No. 1, Wichita County, Lubbock Central Appraisal District, Midland County, Tyler Independent School District and Potter County Tax Office respectfully request that the Court deny the Debtors Sale Motion unless and until they are provided with adequate protection for their tax claims, and that they be granted such other and further relief, at law or in equity, as is just. Respectfully submitted, PERDUE, BRANDON, FIELDER, COLLINS & MOTT, L.L.P. /s/ Owen M. Sonik Owen M. Sonik SBN: Attorney in Charge for Brazoria County Tax Office and Brazos Independent School District 1235 North Loop West, Suite 600 Houston, Texas (713) (713) Facsimile CERTIFICATE OF SERVICE I hereby certify that on this the 24 th day of August, 2018, I sent a true and correct copy of the above and foregoing Brazoria County Tax Office, Crosby Independent School District, Crosby Municipal Utility District, Harris County Municipal Utility District No. 276, Humble Independent School District, City of Houston, Alief Independent School District, Valley Ranch Municipal Utility District No. 1, Wichita County, Lubbock Central Appraisal District, Midland County, Tyler Independent School District and Potter County Tax Office Amended Limited Objection to 5

6 Case Document 306 Filed in TXSB on 08/24/18 Page 6 of 6 Debtors Emergency Motion (i) for an Order (a) Approving Auction and Bid Procedures, Including Bid Protections, (b) Authorizing and Scheduling an Auction for Sale of Debtors Assets, and (c) Granted Related Relief; and (ii) for Entry of an Order (a) Approving the Sale of the Debtors Assets Free and Clear of All Liens, Claims, Encumbrances, and Interests, (b) Authorizing the Assumption and Assignment of Executory Contracts and Unexpired Leases, and (c) Granting Related Relief to the following parties by the following means: COUNSEL FOR DEBTOR PORTER HEDGES LLP John F. Higgins, whose address is: Eric M. English, whose address is: jhiggins@porterhedges.com eenglish@porterhedges.com COUNSEL FOR THE STALKING HORSE BIDDER Anwar-i-Qadeer, whose address is: qadeer@qadeerlaw.com UNITED STATES TRUSTEE Hector Duran, whose address is: Stephen D. Statham, whose address is: Hector.Duran.Jr@usdoj.gov stephen.statham@usdoj.gov And all other parties receiving notice via ECF e-notice. /s/ Owen M. Sonik Owen M. Sonik 6

7 Case Document Filed in TXSB on 08/24/18 Page 1 of 1 Exhibit A Case No. Debtor Taxing Jurisdiction Account No. Legal Description Situs Address est Total NEC PEARLAND ASSET HOLDINGS, LLC Brazoria County Tax Office PEARLAND TOWN CENTER (A0300 HT&BRR) (PEARLAND) BLK 1 LOT BROADWAY, PEARLAND, TX $126, $98, $225, NEC PEARLAND EMERGENCY CENTER, LP Brazoria County Tax Office FURN FIXT EQUIP OTHER PERSONAL PROPERTY BROADWAY, PEARLAND, TX Paid $17, $17, NEIGHBORS EMERGENCY CENTER, LLC Brazoria County Tax Office FURN FIXT EQUIP OTHER PERSONAL PROPERTY 103 WINDING WAY, LAKE JACKSON, TX Paid $16, $16, NEC CROSBY EMERGENCY CENTER, LP Crosby ISD COMPUTERS FURNITURE AND FIXTURES INVENTORY CROSBY LYNCHBURG RD, CROSBY TX Paid $9, $9, Crosby MUD MACHINERY AND OTHER EQUIP Paid $2, $2, NEC YORKTOWN EMERGENCY CENTER, LP Harris County MUD COMPUTERS FURNITURE AND FIXTURES INVENTORY 5835 HIGHWAY 6 HOUSTON TX MACHINERY AND OTHER EQUIP Paid $1, $1, NEC KINGWOOD EMERGENCY CENTER, LP NEIGHBORS LEGACY HOLDINGS, INC. (LEAD CASE) Humble ISD P COMPUTERS FURNITURE AND FIXTURES INVENTORY Paid $7, $7, KINGWOOD DR, HUMBLE TX City of Houston MACHINERY AND OTHER EQUIP Paid $2, $2, Alief ISD COMPUTERS FURNITURE AND FIXTURES INVENTORY N/A $2, $2, RICHMOND AVE, HOUSTON TX City of Houston MACHINERY AND OTHER EQUIP N/A $ $ NEC PORTER EMERGENCY CENTER, LP Valley Ranch MUD INV/FURN/FIXT/EQUIP US HIGHWAY 59, PORTER, TX Paid $5, $5, NEC WICHITA FALLS EMERGENCY CENTER, LP Wichita County BUSINESS PERSONAL 3939 KELL BLVD 3939 KELL BLVD, WICHITA FALLS, TX $17, N/A $17, NEC LUBBOCK EMERGENCY CENTER, LP Lubbock Central Appraisal District P FFM E & SUPP TH STREET, LUBBOCK, TX Paid $5, $5, NEC MIDLAND EMERGENCY CENTER, LP Midland County P FURNITURE & FIXTURES, MACHINERY & EQUIP W WADLEY AVE, MIDLAND TX Paid $ $ NEC TYLER EMERGENCY CENTER, LP Tyler Independent School District BUSINESS PERSONAL PROPERTY 2222 E SOUTHEAST LOOP 323, TYLER, TX $7, N/A $7, NEC Amarillo Emergency Center LP Potter County Tax Office B INV/FURN/SUPP/EQUIP 2103 S WESTERN ST. AMARILLO, TX Paid $11, Grand Total: $11, $333,828.14