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UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION ______________________________________ In re: Chapter 11 1 DELTA PRODUCE, L.P. , Case No. 12-50073-LMC Debtors Jointly Administered _______________________________________ RESPONSE BY THE INTERNATIONAL BANK OF COMMERCE TO THE UNITED STATES TRUSTEES CERTIFICATE OF NON-COMPLIANCE AND REQUEST FOR A HEARING TO THE HONORABLE LEIF M. CLARK, UNITED STATES BANKRUPTCY JUDGE: Now Comes INTERNATIONAL BANK OF COMMERCE (IBC), Secured Creditor herein, to file this its Response (the Response) to the United States Trustees Certificate of Non-Compliance (the Certificate of Non-Compliance) (Doc. No. 355) and Request for a Hearing, and would show unto the Court as follows. I. 1.1 BACKGROUND FACTS

The Bankruptcy Court has jurisdiction over this proceeding pursuant to 28 U.S.C.

1471, and 11 U.S.C. 362, 157, and 1334 and other applicable sections of the Bankruptcy Code and Amendments. 1.2 IBC is, and has at all times herein mentioned, a federally insured bank duly

authorized to transact business in the state of Texas and may be served through counsel of record herein. 1.3 IBC is informed and believes, and based thereon, alleges that Debtors are and

have been at all times herein mentioned been a Texas corporation, authorized to operate in
1

Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC-11, Superior Tomato-Avocado, Ltd. Case No. 12-50074-LMC-11, Atled, Ltd. Case No. 12-50075-LMC11 and Staci Properties, Ltd. Case No. 12-50110-LMC

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Texas, whose address, shown on its voluntary petition, is 2001 S. Laredo Street, San Antonio, Texas 78207. 1.4 On January 3, 2012 (the Petition Date), the Debtors (with the exception of

Staci Properties, Ltd. which filed its Chapter 11 case on January 9, 2012) filed voluntary petitions for relief under Chapter 11 of title 11 of the United States Code, 11 U.S.C. 101-1532 (as amended, the Bankruptcy Code). 1.5 IBC asserts a pre and post-petition security interest in assets to be sold to Buyer

pursuant to terms of the Earnest Money Contract. IBCs lien is evidenced by prepetition liens duly filed and perfected and acknowledged by prior order of this Court, including Interim Order Granting Use of Cash Collateral dated January 24, 2012 (Doc. No. 49), Final Order Authorizing Use of Cash Collateral dated March 12, 2012 (Doc. No. 146), and Order Approving Post-Petition Financing dated April 10, 2012 (Doc. No. 192), confirming IBCs liens and security interests attaching to all Debtors real and personal property, save and except rolling stock, including real property, furniture, fixtures and equipment, inventory, account receivables, general intangibles and funds on deposit at IBC. IBCs liens and security interests secures pre and post-petition indebtedness evidenced by: i. ii. iii. iv. Delta Note in the amount of $1,500,000.00 dated April 23, 2007; Delta Note in the amount of $2,000,000.00 dated April 1, 2007; Delta Note in the amount of $6,000,000.00 dated June 8, 2010; Staci Produce (Superior) Note in the amount of $2,000,00.00 dated March 3, 2005; v. Staci Properties (Superior) Note in the amount of $2,400,000.00 dated March 3, 2005; and

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vi.

Atled, Ltd. Note in the amount of $1,300,000.00 dated December 12, 2005.

The combined outstanding Debtor obligations payable to IBC, as of the petition date amount to $6,455,615.00. In addition, IBC advanced post-petition loans to Debtors for use within the terms and conditions of the cash collateral budget. 1.6 Delta Produce, L.P., Debtor herein, has filed a Motion for Entry of an Order

Authorizing and Approving the Sale of Certain of the Debtors Assets Free and Clear of all Liens, Claims, Interests, and Encumbrances Outside the Ordinary Course of Business (the Motion to Sell) (Doc. No. 336). The Motion to Sell proposes to sell various assets owned by Debtors free and clear of liens and claims to a buyer pursuant to the terms of the Earnest Money Contract for the sum of $3,800,000.00. Debtors have filed a Motion to Expedite Hearing on the Motion to Sell (Doc. No. 337), and the Court has entered an Order Granting the Motion to Expedite Hearing on the Motion to Sell (Doc No. 345) setting hearing on the Motion to Sell for October 30, 2012 at 9:30 a.m. II. 2.1 basis: i. Currently pending Motion to Sell filed by Debtor proposes a sell by Debtor free and clear of liens and encumbrances of various assets owned by Debtor for the sum of $3.8 Million; ii. iii. The Motion to Sell is set for October 30, 2012; If approved, the sale of the property being conveyed under the terms of the Motion to Sell will close on October 31, 2012; ARGUMENTS AND AUTHORITIES

IBC requests a hearing on the Certificate of Non-Compliance on the following

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iv.

Due to secured claims and encumbrances and in part due to claims asserted under the terms of the Perishable Agricultural and Commodities Act U.S.C. 499a et seq. (PACA) including statutory trust claims and interest under 7 U.S.C. 499e (PACA Trust Claims), a sale outside of bankruptcy is problematic;

v.

Conversion of these proceedings without a hearing, prior to October 30, 2012 will undermine prospects of sale and possibly eliminate sales prospects due to delay or other unforeseen factors.

2.2

A hearing on the Certificate of Non-Compliance on October 30, 2012 will not

have a substantial effect on the U.S. Trustees disposition of these proceedings and/or its eventual conversion into a Chapter 7 case. PRAYER WHEREFORE, PREMISES CONSIDERED, IBC respectfully requests that the Court set a haring on the Trustees Certificate of Non-Compliance, that the hearing be on or after the hearing on the Debtors Motion to Sell, and that IBC be provided such other relief at law or in equity to which it may be justly entitled. Respectfully submitted, MARTIN & DROUGHT, P.C. 2500 Bank of America Plaza 300 Convent Street San Antonio, Texas 78205-3789 (210) 227-7591 / (210) 227-7924 By: /s/ Michael G. Colvard Michael G. Colvard State Bar No. 04629200 ATTORNEYS FOR INTERNATIONAL BANK OF COMMERCE

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CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing instrument was forwarded via United States Mail, First Class, postage prepaid, to the parties listed on the attached service list on October 16, 2012. /s/Michael G. Colvard Michael G. Colvard

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Delta Produce, LP 2001 S Laredo St San Antonio, TX 78207-7023 Super Tomato-Avocado, Ltd. 2001 S Laredo St San Antonio, TX 78207-7023 Staci Properties, Ltd. 2001 S Laredo St San Antonio, TX 78207-7023 William R. Davis Jr Allen M. DeBard Langley & Banack, Inc 745 E Mulberry, Suite 900 San Antonio, TX 78212 Del Campo Supreme, Inc. 672 W. Frontage Rd. Noales, AZ 85621

Atled, Ltd. 200 S Laredo St San Antonio, TX 78207-7023 United States Trustee - SA12 US Trustee's Office 615 E Houston, Suite 533 PO Box 1539 San Antonio, TX 78295-1539 Dimare Newman, Inc. P.O. Box 517 Newman, CA 95360-0517

Craig A. Stokes Stokes Law Offices, LLP 3330 Oakwell Court, Suite 225 San Antonio, TX 78218

A&A Transportation, Inc. 4741 College Park San Antonio, TX 78249

Divine Ripe, LLC 9901 S. Jackson Rd. #A Pharr, TX 78577-6961

Frank's Distributing of Produce P.O. Box 2020 Nogales, AZ 85628-2020

Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220

Harvest Crown Co., Inc. P.O. Box 13578 Bakersfield, CA 93389 J-C Distributing, Inc. 2731 N. Donna Avenue Nogales, AZ 85621

IFCO Systems NA 5250 Tacco Drive San Antonio, TX 78244

Alamo Leasing 2010 NW Military Hwy. San Antonio, TX 78213 International Bank of Commerce 130 E. Travis San Antonio, TX 78205

Kingdom Fresh Produce, Inc. 2243 North Goolie Rd., #A Donna, TX 78537 Mission Produce, Inc. 2500 Vineyad Ave., Suite 300 Oxnard, CA 93036

Juniper Tomato Grower, Inc. P.O. Box 38 Greensboro, FL 32330

Rio Queen Citrus 4012 E. Goodwin Rd. Mission, TX 78574

Royal Flavor, LLC 2655 Melksee St. San Diego, CA 92154

Internal Revenue Service P.O. Box 7346 Philadelphia, PA 19101-7346

Valero Marketing & Supply P.O. Box 300 Amarillo, TX 79105-0300

A & D Carriers 4126 Luckenbach Rd. San Antonio, TX 78251

A&A Concepts, LLC 1219 S. Zarzamora St. San Antonio, TX 78207

Averitt Brokerage Co., Inc. Mr. David Faubion 9999 Perrin Beitel, Suite B San Antonio, TX 78217

B. Catalani, Inc. 1500 S. Zarzamora, #326 San Antonio, TX 78207

Banana Distributing Company 1500 S. Zarzamora San Antonio, TX 78207

Coosemans Houston, Inc. 3124 Produce Row Houston, TX 77023

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Fresh Farm Direct, LLC 106 Adams St., Suite 2A Monte Vista, CLO 81144

Gonzalez Mexican Produce 2501 W. Military Hwy., A-23 McAllen, TX 78503

Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220

Henry Avocado Corp. P.O. Box 300867 Escondidio, CA 92030-0867

Kitchen Pride P.O. Box 585 Gonzales, TX 78629

Le Best Banana Supply Co. P.O. Box 295 Hidalgo, TX 78557

M&P Logistics LP 1500 S. Zarzamora, #308 San Antonio, TX 78207

Maxim Egg Farms P.O. BOx 200805 Dallas, TX 75320-0805

Rio Bravo Produce 1006 S. Cesar Chavez Edinburg, TX 78542

Slankard Produce Co., Inc. 1500 S. Zarzamora San Antonio, TX 78207

Sunriver Sales P.O. Box 2738 Visalia, CA 93279

Touchstone & Associates 1500 S. Zarzamora St., #205 San Antonio, TX 78207

Willson Davis Company 1500 S. Zarzamora San Antonio, TX 78207

Robert E. Goldman 1 East Broward Blvd. Ste. 700 Fort Lauderdale, FL 33301

Tijerina & Sons, LLC c/o Zachary B. Aoki Thurman & Phillips, P.C. 8000 IH-10 West, Suite 1000 San Antonio, TX 78230 David G. Aelvoet Linebarger Gogan Blair 711 Navarro, Suite 300 San Antonio, TX 78205 Flatiron Capital c/o Robert L. Barrows 800 Broadway San Antonio, TX 78215
General Electric Capital Corp, NMHG Financial Services, Inc. c/o William H. Daniel McGinnis, Lochridge & Kilgore 600 Congress Ave., Ste. 2100 Austin, X 78701

Market Dispatch Service, Inc. c/o Celinda Baez Guerra Flume Law Firm, LLP 1020 N.E. Loop 410, Ste. 200 San Antonio, TX 78209 Muller Trading c/o Bruce W. Akerly Cantey Hanger LLP 1999 Bryan St., Suite 3300 Dallas, TX 75201
Divine Ripe, Rio Queen Citrus, Eco-Farms Sales, Garguilo, Inc. c/o Michael J. Black Burns & Black 750 Rittiman Road San Antonio, TX 78209 Steven E. Nurenberg Meuers Law Firm 5395 Park Centra Court Naples, FL 34109

Paul T. Curl/ Diana M. Geis Curl & Stahl, P.C. 700 N. St. Marys Street, Suite 1930 San Antonio, TX 78205 Wilson Davis Co. c/o Paul D. Barkhurst Barkhurst & Hinojosa, PC 110 Broadway, Suite 350 San Antonio, TX 78205
W. Scott Jenson c/o Elliott S. Cappuccio/Randall Pulman/Leslie S. Hyman Pulman Cappuccio Pullen & Benson 2161 NW Military Hwy., Suite 400 San Antonio, TX 78213

PACCAR Financial Corp. c/o Robert J. Reagan Reagan McLain Lee & Hatch, LLP 6060 North Central Expy., Ste. 690 Dallas, TX 75206 Harllee Packing, Inc. c/o Chris S. Tillmanns Bracewell & Giuliani, LLP 711 Louisiana Street, Ste. 2300 Houston, TX 77002-2770

Divine Ripe, LLC c/o John Kurt Stephen Cardenas & Stephen 100 South Bicentennial McAllen, TX 78501

Daimler Trust c/o Stephen G. Wilcox Bassel & Wilcox P.O. Box 11509 Fort Worth, TX 76110-0509

Harllee Packing, Inc. c/o Jake Blanchard Fowler White Boggs P.A. 501 E. Kennedy Blvd., Ste. 1700 Tampa, FL 33602 Jason A. Starks Assistant Attorney General P.O. Box 12548 Austin, TX 78711-2548

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Key Equipment Finance c/o Mark W. Stout Padfield & Stout, LLP 777 Main Street, Suite 1920 Fort Worth, TX 76102

Guadalupe County c/o Lee Gordon McCreary, Veselka, Bragg & Allen P.O. Box 1269 Round Rock, Texas 78680