IN RE CONSUMERS IGA THRIFTWAY, INC. (Bankr.E.D.Okla. 2004)

TOM CORNISH, Bankruptcy Judge

On the 3^rd day of November, 2004, the Motion for Order Approving Bid Procedures and a Breakup Fee, filed by the Debtors; Resistance of Arvest Bank, Fayetteville, to Motion for Order Approving Bid Procedures and a Breakup Fee; AWG's Conditional Objection and Reservation of Right of First Refusal Regarding Debtors' Motion to Approve Bid Procedures and Break-Up Fee, filed by Associated Wholesale Grocers, Inc. and AWG Acquisition, LLC (collectively "AWG"); and Objection toProposed Bid Procedures, filed by Oklahoma Grocers Association, Inc. ("OGA"); came on for hearing. Appearances were entered at the hearing by Jackie Hill, Attorney for OGA; Amy Wilbourn, Attorny for Arvest Bank ("Arvest"); Mac Finlayson, Attorneyfor Community State Bank; Ron Wright, Attorney for National Bank of Sallisaw; Ron Goins and Mark Benedict, Attorneys for AWG; Steven Bugg, Attorney for Fleming Companies; William Spitler, Attorney for Debtors, and Paul Thomas, Attorney for U.S. Trustee. After review, this Court does hereby enter its findings and conclusions in conformity with Rule 7052, Fed.R.Bankr.P., in this core proceeding.

The Debtors' Motion is connected to a Motion to Approve Sale set for hearing November 17, 2004, involving the sale of twenty-one (21) grocery stores and other assets to CVM, Inc. The present Motion provides for competing bids at the hearing to approve the sale. The proposed sale contains a provisionfor a breakup fee of $50,000, inthe event of a successful competing bid. Debtors state that the procedures set forth in the Motion would benefit the estate, facilitate competing offers and maximize the return to the creditors. Debtors' Counsel has advised this Court that in all probability there will be a bid in excess of twenty-four (24) million dollars.

Arvest objects to the Motion, arguing that the proposed procedures strip Arvest of its statutory right to credit bid the amount of its claim on its collateral in contravention of 11 U.S.C. § 363(k). Arvest also argues that the Debtors fail to show that the breakup fee is reasonable and would benefit the estate.

AWG argues in its Objection that the Motion proposes to make AWG's right of first refusal inapplicable to the sale. At the hearing, counsel for AWG advised this Court of a potential global settlement with the Debtors. Counsel for AWG further indicated that AWG would reserve any issues regarding its right of first refusal until the hearing scheduled for November 17, 2004.

OGA objects to the Motion, stating that OGA's alleged trust fund claim should be remitted either immediately or at the sale closing. OGA alleges that its trust claim, totaling $905,630.17, is not part of the bankruptcyestate and that OGA is entitled to immediate payment thereof. OGA argues that the Purchase and Sale Agreement attached to the Motionto Approve Sale does notrecognize, nor exclude, OGA's trust fund cash that the Debtors have spent or is part of its present operating cash. OGA states that it would have no objectionto the proposed sale if the Debtors segregate OGA's trust funds for future disbursement to OGA.

This Court will grant the Motion and approve the bidding procedures subject to the following modifications:

1. At the hearing on November 17, 2004, the Court will determine whether or not to accept credit bids upon written application of any interested party prior to the hearing.

2. This Court has previously heard testimony regardingOGA'salleged claim for trust funds that were not remitted to it pre-petition in the approximate amount of $905,630.17. Based on the prior testimony, it appears that the OGA claim is more likely thannot fiduciarymoneywhichwillhave to be determined at a further evidentiary hearing. At the sale hearing the Court will determine an appropriate amount to be set aside for a later determination.

IT IS THEREFORE ORDERED that the Motion for Order Approving Bid Procedures and a Breakup Fee is granted, subject to the following conditions:

1. At the hearing on November 17, 2004, the Court will determine whether or not to accept credit bids upon written application of any interested party prior to the hearing.

2. The Court will also determine at the hearing on November 17, 2004, an appropriate amount to be set aside for a later determination as to whether or not OGA's claim is in fact a trust fund claim.