Broadview EE Motion

7/31/2019 Broadview EE Motion

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Rachel C. StricklandJennifer J. HardyAnna C. BurnsWILLKIE FARR & GALLAGHER LLP787 Seventh Avenue

New York, New York 10019(212) 728-8000

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK------------------------------------------------------xIn re : Chapter 11

:Broadview Networks Holdings, Inc., et al.,

1: Case No. 12-__________ ( ):

Debtors. : (Joint Administration Pending)

------------------------------------------------------ x

DEBTORS MOTION FORINTERIM AND FINAL ORDERS:

(I) AUTHORIZING DEBTORS TO PAY (A) PREPETITION

EMPLOYEE WAGES, SALARIES AND OTHER COMPENSATION,

(B) PREPETITION EMPLOYEE BUSINESS EXPENSES AND

(C) OTHER MISCELLANEOUS EMPLOYEE EXPENSES AND

EMPLOYEE BENEFITS; AND (II) GRANTING RELATED RELIEF

TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE:

The debtors and debtors in possession in the above-captioned cases (collectively,

the Debtors) hereby move for entry of interim and final orders, substantially in the forms

attached hereto as Exhibit A and Exhibit B, pursuant to sections 105(a), 363(b) and 507(a) of

1 The last four digits of the taxpayer identification numbers of the Debtors follow in parentheses:(i) Broadview Networks Holdings, Inc. (0798); (ii) A.R.C. Networks, Inc. (0814); (iii) ARC Networks, Inc.(4934); (iv) ATX Communications, Inc. (2245); (v) ATX Licensing, Inc. (9838); (vi) ATXTelecommunications Services of Virginia, LLC (3888); (vii) BridgeCom Holdings, Inc. (2965);(viii) BridgeCom International, Inc. (3985); (ix) BridgeCom Solutions Group, Inc. (3989); (x) Broadview

Networks, Inc. (1082); (xi) Broadview Networks of Massachusetts, Inc. (8054); (xii) Broadview Networksof Virginia, Inc. (6404); (xiii) Broadview NP Acquisition Corp. (2734); (xiv) BV-BC AcquisitionCorporation (7846); (xv) CoreComm-ATX, Inc. (0529); (xvi) CoreComm Communications, LLC (2077);(xvii) Digicom, Inc. (0777); (xviii) Eureka Broadband Corporation (6004); (xix) Eureka Holdings, LLC(1318); (xx) Eureka Networks, LLC (1244); (xxi) Eureka Telecom, Inc. (3720); (xxii) Eureka Telecom ofVA, Inc. (5508); (xxiii) InfoHighway Communications Corporation (0551); (xxiv) Info-HighwayInternational, Inc. (8543); (xxv) InfoHighway of Virginia, Inc. (1600); (xxvi) nex-i.com, inc. (7035);(xxvii) Open Support Systems LLC (9972); and (xxviii) TruCom Corporation (0714). The Debtorsexecutive headquarters address is 800 Westchester Avenue, Rye Brook, NY 10573.

12-13581 Doc 13 Filed 08/22/12 Entered 08/22/12 18:26:25 Main DocumentPg 1 of 27

8824200120822000000000017

Docket #0013 Date Filed: 8/22/20


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title 11 of the United States Code (the Bankruptcy Code) and Rule 6003 of the Federal Rules

of Bankruptcy Procedure (the Bankruptcy Rules): (i) authorizing the Debtors to pay

(a) prepetition employee wages, salaries and other compensation, (b) prepetition employee

business expenses and (c) other miscellaneous employee expenses and employee benefits; and

(ii) granting related relief (the Motion). In support of the Motion, the Debtors rely upon and

incorporate by reference the Declaration of Michael K. Robinson, President and Chief Executive

Officer of Broadview Networks Holdings, Inc., In Support of Chapter 11 Petitions and First Day

Pleadings (the Robinson Declaration), which was filed with the Court concurrently herewith.

In further support of the Motion, the Debtors, by and through their undersigned proposed

counsel, respectfully represent:

BACKGROUND

1. On the date hereof (the PetitionDate), Broadview Networks Holdings,Inc. (BVNH) and each of the other Debtors filed a voluntary petition for relief under chapter

11 of the Bankruptcy Code. The Debtors intend to continue in the possession of their respective

properties and the management of their respective businesses as debtors in possession pursuant

to sections 1107 and 1108 of the Bankruptcy Code. The Debtors have requested that these

chapter 11 cases be consolidated for procedural purposes. As of the date hereof, no trustee,

examiner or official committee has been appointed in any of the Debtors cases.

2. Prior to the Petition Date, the Debtors solicited votes on theJointPrepackaged Plan of Reorganization for Broadview Networks Holdings, Inc. And Its Affiliated

Debtors (including all exhibits, schedules, appendices, and supplements thereto, and as amended,

modified, or supplemented from time to time, the Prepackaged Plan), through their disclosure

statement related to the Prepackaged Plan (the Disclosure Statement). On or around the date



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that solicitation commenced, holders of over two-thirds of the aggregate principal amount of the

Debtors 11 3/8% senior secured notes due 2012 (the Required Consenting Noteholders) and

holders of approximately 70% of the preferred equity interests in BVNH (the Consenting

Equity Holders) entered into a restructuring support agreement, dated July 13, 2012 (as

amended, the Restructuring Support Agreement) whereby such parties agreed to support the

Prepackaged Plan. The Prepackaged Plan has been accepted by all classes entitled to vote in

excess of the statutory thresholds specified in section 1126(c) of the Bankruptcy Code. The

Debtors have filed concurrently herewith a motion seeking, among other things, to schedule a

combined hearing on the confirmation of the Prepackaged Plan and approval of the Disclosure

Statement.

3. The events leading up to the Petition Date and the facts and circumstancessupporting the relief requested herein are set forth in the Robinson Declaration.

JURISDICTION

4. This Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue before this

Court is proper pursuant to 28 U.S.C. 1408 and 1409. The statutory predicates for the relief

requested herein are sections 105(a), 363(b) and 507(a) of the Bankruptcy Code and

Bankruptcy Rule 6003.

RELIEF REQUESTED

5. Prior to the Petition Date, the Debtors paid their employees wages, salariesand other compensation and benefits in the ordinary course of business. As employee obligations

accrue on an ongoing basis, but are paid periodically in arrears, the intervening chapter 11 filings

signify that there are accrued but unpaid prepetition wages, salaries, commissions and/or other

compensation owed to the Debtors employees.



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6. By this Motion, the Debtors seek entry of an order, pursuant to sections105(a), 363(b) and 507(a) of the Bankruptcy Code: (a) authorizing, but not directing, the

Debtors to: (i) pay and/or perform, as applicable, certain prepetition obligations with respect to

the Debtors current employees (the Employees), consisting of accrued prepetition wages,

salaries, commissions and other cash and non-cash compensation claims (collectively, the

Employee Wage Claims); (ii) reimburse the Employees for travel and other business

expenses incurred prepetition by the Employees on behalf of the Debtors in the ordinary course

of their duties (the Employee Expense Obligations); (iii) administer employee benefit plans,

policies and programs (collectively, the Employee Benefit Programs, and, togetherwith

Employee Wage Claims and the Employee Expense Obligations, the Prepetition Employee

Obligations); (iv) continue the Debtors generally applicable severance policy for Employees

who are not insiders and do not otherwise have employment agreements with the Debtors and

who may be terminated after the Petition Date (the Severance Policy); and (v) pay all related

prepetition withholdings and payroll-related taxes (the Employer Taxes) associated with the

Employee Wage Claims and the Employee Benefit Programs; (b) authorizing and directing the

Payroll Banks (as defined below) to receive, process, honor and pay all of the Debtors

prepetition checks and fund transfers on account of any of the Prepetition Employee

Obligations; and (c) authorizing, but not directing, the Debtors to issue new postpetition checks or

effect new postpetition fund transfers on account of the Prepetition Employee Obligations to

replace any prepetition checks or fund transfer requests that may be dishonored or rejected

inadvertently.2

2 Out of an abundance of caution, the proposed order provides that the relief granted therein shall notconstitute or be deemed an assumption pursuant to section 365(a) of the Bankruptcy Code of anyemployment and service agreements to which the Debtors may be a party or any of the Debtors employee



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7. The Employees are crucial to the Debtors businesses and are among theDebtors most valuable assets. The Debtors success is dependent on their Employees who,

among other things, establish and foster sales relationships with customers, and manage,

maintain and support the Debtors communications and information technology solutions. The

Employees knowledge and understanding of the Debtors products, operations, services,

customer relations and infrastructure are essential to the Debtors effective reorganization.

Absent the relief requested herein, not only would the Employees suffer enormous personal

hardship, but the Debtors businesses would be immediately and irreparably harmed. Put

simply, without their Employees, the Debtors would be unable to continue to operate their

businesses.

8. The filing of a chapter 11 petition is a stressful and uncertain time for adebtors employees. Such stress and uncertainty often damages employee morale at a critical

time when a debtor most needs its employees loyalty. To compound matters, in this case, the

Debtors are seeking the authority to pay prepetition general unsecured claims in the ordinary

course of business.3 Accordingly, it would be unjust and further jeopardize morale to provide

Employees with less favorable treatment than other creditors. Honoring the Prepetition

Employee Obligations will minimize the hardship the Employees may otherwise endure if

payroll and Employee Benefit Programs are interrupted. Honoring such obligations also would

prevent the wholesale loss of Employees if they lose the reasonable expectation that they will

be compensated for their services. Accordingly, the Debtors believe that the continued payment

benefit policies, plans, programs, practices and procedures. To the extent that any of such agreementsconstitute an executory contract within the meaning of section 365 of the Bankruptcy Code, the Debtorsexpect to assume all such contracts pursuant to the Prepackaged Plan.

3 Concurrently herewith, the Debtors have filed the Debtors Motion for Interim and Final OrdersAuthorizing the Payment of Prepetition General Unsecured Claims in the Ordinary Course of Business.



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of the Prepetition Employee Obligations is both critical and justified because of the vital

importance of the Employees to the Debtors. In addition, as the Prepackaged Plan provides that

all general unsecured claims, including amounts in respect of unpaid Prepetition Employee

Obligations, will be paid in full, payment of Prepetition Employee Obligations pursuant to this

Motion is merely a question of timing, as the Debtors contemplate paying these claims in full in

any event.

A. Prepetition Wages, Salaries and Other Compensation(a) Wages

9. As of the Petition Date, the Debtors employ approximately 840 full-timeemployees (who are paid on either an hourly or salary basis) and nine part-time employees

(who are paid on an hourly basis). The Debtors Employees provide a variety of services to

support the Debtors operations, including sales, technical support, customer service, and

installation and maintenance of requisite wiring, telecommunications switches, data routers,

application servers and related equipment. The aggregate average monthly payroll for all

Employees is approximately $4.9 million. In the ordinary course of business, the Debtors owe

wages, salary, and other payments to their employees (the Payroll Obligations). The

Debtors estimate that as of the Petition Date, the prepetition Employee Wage Claims with

respect to all Employees will equal approximately $1.9 million. As of the Petition Date, no

Employee is owed Employee Wage Claims in an amount exceeding $11,725.

10. The Debtors pay their Employees through their payroll disbursementaccount (the Payroll Account), and the payroll process is administered through Automatic

Data Processing, Inc. (ADP). ADP initiates payroll processing bi-weekly, on every other

Monday. The Debtors fund the payroll the following business day. After initiating the payroll



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process and coordinating payment amounts, ADP issues Employees their pay through either

direct deposit or checks. The Employees are paid on a bi-weekly basis, every other Thursday.

(b) Commissions11. In addition to fixed compensation, certain of the Debtors Employees are

entitled to receive performance-based commissions based on a percentage of sales made by

such Employees (the Commission Programs). The Commission Programs encourage sales

Employees and motivate the development and fostering of customer relationships, which are

crucial to the continued success of the Debtors businesses. Payments under the Commission

Programs (the Commission Payments) are made up to 45 days in arrears, with payments

administered once a month on the fifteenth day of the month following the month the

Commission Payments accrued. Accordingly, as of the Petition Date, some of the Debtors

Employees are owed Commission Payments on account of prepetition sales or other prepetition

performance. Prior to the Petition Date, the Debtors paid an average of $405,000 in aggregate

Commission Payments each month. The Debtors estimate that approximately $600,000 in

Commission Payments attributable to the prepetition period are currently outstanding. By this

Motion, the Debtors request the authority to pay, in their discretion, any prepetition claims

related to the Commission Programs (the Commission Claims).

(c) Employer Taxes12. In addition to the Employee Wage Claims, the Debtors are obligated to

pay certain Employer Taxes on behalf of Employees, including FICA (Social Security and

Medicare), federal, state, and, in some instances, local income and other payroll taxes. A

portion of such payments represents amounts withheld from Employees paychecks, and the

remainder of such payments represents required employer contributions. Typically, Employer



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Taxes arising in connection with the Debtors payroll for all Employees are approximately

$501,000 per month.

13. Prior to each payroll, ADP calculates the taxes and other deductions to bemade from such payroll and the Debtors then fund their payroll (including Employer Taxes)

according to the figures calculated by ADP. Thereafter, ADP remits the Employer Taxes to the

appropriate tax agencies. ADP withholds Employer Taxes at the time of the applicable pay

period; however, amounts withheld are remitted by ADP to the applicable taxing authority,

weekly, monthly or quarterly, depending on state and local laws. Consequently, as of the

Petition Date, ADP may be in possession of Employer Taxes relating to the prepetition period.

Many of the Employer Taxes constitute trust fund taxes and the remaining Employer Taxes

likely will create priority claims pursuant to section 507(a)(8) of the Bankruptcy Code if not

paid. Accordingly, the Debtors request authority to pay, or cause ADP to pay, any accrued but

unpaid Employer Taxes that may relate to the prepetition period as and when they become due

in the ordinary course of the Debtors businesses.

14. The Debtors believe that all of their Employees have priority claims withrespect to their accrued but unpaid prepetition wages or salaries pursuant to section 507(a)(4) of

the Bankruptcy Code. Due to the critical importance of the Employees to the Debtors business

and the inability of the Debtors to replace such Employees, the Debtors hereby request

authority to pay the Employee Wage Claims described above as well as any Employer Taxes

associated with those claims.4

4 In addition, certain Employer Taxes are funds withheld from the Employees compensation, and thereforethe Debtors believe that such funds are not property of the Debtors estates.



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(d) Temporary Employee Claims15. To support the Employees in their day-to-day operations, the Debtors also

currently employ four individuals through employee staffing agencies (the Temporary

Employees) to perform certain support services, including administrative functions. The

Debtors estimate that their obligations with respect to the Temporary Employees are

approximately $14,000 per month in the aggregate. Because the Temporary Employees are

also necessary to the Debtors operations, the Debtors hereby request the authority to pay

prepetition claims related to the Debtors employment of the Temporary Employees, in their

discretion (Temporary Employee Claims).5

(e) Consultant Claims16. From time to time, the Debtors also employ consultants for special

projects (the Consultant Employees) to perform business analysis and make

recommendations for business strategy and development. The Debtors currently employ six

Consultant Employees and estimate that their obligations with respect to the Consultant

Employees are approximately $38,000 per month in the aggregate. As the Consultant

Employeesprovide crucial services to the Debtors operations, by this Motion, the Debtors

request the authority to pay, in their discretion, any prepetition claims related to the Debtor s

employment of the Consultant Employees (the Consultant Claims).

5 Concurrently herewith, the Debtors filed the Debtors Motion ForInterim and Final Orders (A) AuthorizingDebtors to Pay Certain Prepetition Obligations Owed to Independent Sales Agents; and (B) GrantingRelated Relief, requesting authority to pay certain prepetition amounts owed to the approximately 550independent sales agents employed by the Debtors, whose services are necessary for the continued sales ofthe Debtors services.



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B. Employee Expense Obligations17. The Debtors believe that, as of the Petition Date, they may have

prepetition Employee Expense Obligations. Although Employees are provided with corporate

credit cards for approved business-related expenses incurred in the ordinary course of

performing their duties for the Debtors, the Employees are responsible for payment of the

corporate credit card bills. In turn, the Employees seek reimbursement of the Employee

Expense Obligations from the Debtors. As their Employees may be co-liable for Employee

Expense Obligations paid through the corporate credit cards, the Debtors request that they be

authorized to satisfy such Employee Expense Obligations in the ordinary course of business.

18. Employees may also incur Employee Expense Obligations on an out-of-pocket basis, without the use of a corporate credit card. The Employees are then responsible for

submitting an expense report to the Debtors through an electronic web-based system. Within

several days of submitting the expense report, the report will be reviewed and, if proper,

payment will be approved. The Employee will then receive a direct deposit payment or check

from the Debtors for the Employee Expense Obligation, outside of the regular payroll cycle.

To the extent that out-of-pocket Employee Expense Obligations have been incurred but not

reported, or reported and are pending approval, the Debtors may owe prepetition Employee

Expense Obligations directly to their Employees. Accordingly, by this Motion, the Debtors

request that they be authorized to satisfy such out-of-pocket Employee Expense Obligations. In

any given month, the Debtors typically incur an aggregate of $100,000 in respect of Employee

Expense Obligations due to their Employees.

19. Additionally, certain sales Employees rely on stipend payments forvarious business travel expenses incurred through direct customer sales in the ordinary course



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of business. Generally, the travel stipend payments are approximately $50,000 per month in the

aggregate. The travel stipend is provided to sales Employees to cover their travel costs as they

meet with current and potential customers to discuss the Debtors products. The travel stipend

is an important obligation of the Debtors as it facilitates necessary customer development which

is crucial to the Debtors revenue and continued success of the Debtors businesses. To the

extent that sales Employees have incurred travel-related expenses but not yet received

corresponding stipend payments, the Debtors may owe prepetition Employee Expense

Obligations directly to their Employees. Accordingly, by this Motion, the Debtors request that

they be authorized to satisfy such stipend-related Employee Expense Obligations.

20. Outstanding Employee Expense Obligations, if any, were incurred inconnection with each Employees employment by the Debtors and in reliance upon the

understanding that such expenses would be reimbursed. The Debtors ability to pay such

expenses reaffirms the Employees reliance on the Debtors and, thereby, has a significant effect

on Employee morale. It would be patently inequitable to require Employees to bear any

expenses that they incurred in furtherance of their responsibilities to the Debtors. Accordingly,

to avoid harming the individual Employees who have incurred such costs, the Debtors request

authority, in their discretion and in the exercise of their business judgment, to continue to honor

their Employee Expense Obligations in the ordinary course of business regardless of when such

obligations arose.

C. Employee Benefit Programs21. In the ordinary course of business, as is customary with most large

businesses, the Debtors have established various employee benefit plans, programs and policies,

including: health insurance; dental insurance; vision insurance; basic and supplemental life



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insurance; accidental death insurance; business travel accident insurance; short- and long-term

disability coverage; workers compensation; and a 401(k) plan. The primary Employee Benefit

Programs are described below.

(a) Medical, Vision, and Dental Insurance22. The Debtors provide all of their regular full-time Employees with medical,

vision, and dentalbenefits (the Medical and Dental Benefits) provided by various medical

benefits providers. Each of the Debtors full-time Employees is eligible to receive health care

coverage.

23. The Debtors have Employees throughout their service areas in theNortheast and Mid-Atlantic region of the United States, and in Ottawa, Canada. All of the

Debtors domestic Employees are covered by a health plan administered by UnitedHealthcare

(the United Plan). In addition, the Debtors Employees in Pennsylvania may elect coverage

under a health plan administered by HMO Independence Blue Cross (the IBX Plan), with

supplemental prescription drug coverage provided through a plan administered by Caremark,

which is self-insured by the Debtors (the Caremark Plan). The Debtors Employees located

in Ottawa may receive health care coverage under health plans administered by either Great

West Healthcare or Regional Care Inc. (the Canadian Plans, and together with the United

Plan and IBX Plan, the Health Plans). The Debtors also provide, to all regular full-time

Employees, dental benefits (Dental Benefits) through a fully-insured dental plan with Aetna,

and vision benefits (Vision Benefits) through a plan administered by UnitedHealthcare

Vision.

24. The Medical and Dental Benefits cost approximately $640,000 per month,including administrative costs associated with the Caremark Plan, of which $435,000 the

Debtors are directly responsible, with the remainder of the cost funded through Employee



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withholdings. The Debtors remit premium payments for the Medical and Dental Benefits

within the first week of each month, paid in advance. The Debtors separately remit ACH

payments with respect to prescription coverage for certain of the Pennsylvania Employees to

Caremark. Other than with respect to the self-insured amounts under the Caremark Plan, the

Debtors do not believe they owe any prepetition obligations on behalf of the Medical and

Dental Benefits. However, out of an abundance of caution, the Debtors hereby seek authority

to maintain their Health Plans, including paying, in their discretion, any amounts owed in the

ordinary course of their business, regardless of when the costs related to such Health Plans

accrued.

6

(b) Life Insurance, Supplemental Life Insurance, Accidental DeathInsurance, Travel Insurance, Disability Insurance and Workers

Compensation

25. The Debtors provide life insurance benefits to all regular full-timeEmployees (Life Insurance Benefits). The Debtors pay all premiums for the Life Insurance

Benefits. Full-time Employees may also enroll in a supplemental life insurance plan and elect

additional coverage in amounts equal to one, two or three times the Employees annual base

pay (Supplemental Life Insurance). The Debtors do not contribute to premiums for the

Supplemental Life Insurance. Amounts due in respect of the Supplemental Life Insurance are

deducted from the electing Employees paycheck, the amount of which depends on the

Employees age and level of elected coverage.

6 Pursuant to the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1986(COBRA), former employees may continue to participate in the Health Plans provided such formeremployees pay the entire cost of coverage, including a 2% COBRA administrative fee. The Debtorsexpend no resources in respect of coverage for former employees under COBRA. Nonetheless, the Debtorsrequest that former employees retain the right to coverage under the Health Plans in accordance with therequirements of the terms of COBRA.



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26. The Debtors also provide automatic coverage for all full-time Employeesunder accidental death and dismemberment insurance (AD&D) and coverage for automobile

liability and damage related to business travel (Travel Insurance). Benefits under AD&D

provide Employees with a maximum benefit of up to one time the Employees annual base

salary and ensure protection for Employees at all times for loss due to an accident occurring

anywhere in the world. Protection for Employees under Travel Insurance goes into effect when

Employees leave for a business-related trip from their regular place of employment or from

their home, and continues until the Employees return, regardless of the distance or duration of

the trip.

27. In addition, the Debtors offer all full-time Employees both short-termdisability (Short-Term Disability) and long-term disability (Long-Term Disability, and

together with Short-Term Disability, Disability Coverage) insurance benefits. Short-Term

Disability ensures that Employees who become disabled for more than seven consecutive days

due to an accident, or fourteen consecutive days due to illness, receive monetary benefits. The

maximum benefit payment period available under Short-Term Disability is 26-weeks in any 52-

week period. Long-Term Disability benefits ensure that Employees who become totally

disabled due to illness or injury will receive insurance payments until the Employee is no

longer totally disabled, returns to work or reaches age 65.

28. The Debtors also provide workers compensation insurance, which coversall Employees for certain medical expenses and some loss of income incurred as a result of a

work-related injury or illness (Workers Compensation). Should medical attention be

required due to a work-related injury or illness, the injured Employee must complete a

Workers Compensation report in order to obtain compensation from the Debtors.



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29. The Debtors expend, on an aggregate basis, approximately $80,000 permonth on account of the Life Insurance Benefits, AD&D benefits, Travel Insurance, Disability

Coverage and Workers Compensation, which costs are paid in advance, on or around the

fifteenth of the month. The Debtors hereby seek authority to maintain their Workers

Compensation benefits, Disability Coverage, Life Insurance Benefits, Supplemental Life

Insurance, Travel Insurance AD&D and Workers Compensation programs, including making

any payments necessary with respect thereto in the ordinary course of the Debtors business,

regardless of when such amounts accrued.

(c)

Ancillary Benefits

30. The Debtors also make available other voluntary ancillary benefits to theirEmployees, including, but not limited to, AFLAC, a prepaid legal program, transit and parking

programs and flex spending accounts (the Ancillary Benefits), for which Employees pay

approximately $14,000 per month in the aggregate. The Debtors collect amounts with respect

to the Ancillary Benefits from the Employees through payroll deductions and, as applicable,

remit such amounts to third parties. For the flex spending accounts, the Debtors estimate that at

any given time, they hold approximately $20,000 of participating Employees wages in such

accounts. The Debtors submit that amounts withheld from Employees wages for the Ancillary

Benefits are not property of the estate and therefore the Debtors seek authority to remit such

amounts to the applicable third party provider, or, in the case of flex spending, to the applicable

Employee, in the ordinary course of business.

(d) 401(k) Plan31. The Debtors maintain a 401(k) plan (the 401(k) Plan) forall

Employees. After six months of employment, the Employees are automatically enrolled in the

401(k) Plan and their contribution level is set at three percent of their compensation per payroll



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period. Employees may make contributions to the 401(k) Plan up to the annual statutory limit,

and may change their percentage contribution at any time. The Debtors do not match or

contribute to the Employee 401(k) accounts.

32. As of the Petition Date, the Debtors estimate that they are holding $85,000in accrued but unremitted contributions to the 401(k) Plan made prepetition. The Debtors

hereby seek authority to maintain their 401(k) Plan, including paying any amounts owed to the

401(k) Plan with respect to their Employees contributions, regardless of when such amounts

accrued. The Debtors respectfully submit that amounts withheld from Employees wages for

contribution to the 401(k) Plan are not property of the Debtors estates, and should be remitted

to the 401(k) Plan.

D. Vacation, Holidays and Other Time Off(a) Vacation

33. All Employees are eligible to receive paid time off(PTO). Generally,Employees are required to use their paid PTO in the calendar year in which it accrues; however,

carry-over of up to five PTO days is permitted. As the Debtors will continue to operate their

businesses as debtors in possession, Employees will be able to take their PTO in the ordinary

course of business. All Employees of the Debtors who have successfully completed 90 days of

employment are entitled to accrue PTO and receive a cash payment on account of such PTO at

the time of such Employees departure. Employees who depart voluntarily are entitled to

receive fifty percent of accrued PTO, whereas Employees who are terminated without cause are

entitled to receive all accrued PTO. By this Motion, the Debtors seek the authority to continue

their PTO policy and to satisfy any departing Employees claims for unused PTO regardless of

when such PTO accrued.



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(b) Holidays34. It is the Debtors policy to provide the majority of regular full-time

Employees with several paid holidays (each, a Holiday) per calendar year, including, but not

limited to, New Years Day, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas.

35. The Debtors hereby seek authority to honor their obligations with respectto PTO and Holidays (collectively, the Non-Working Days Policies), including

(a)permitting Employees to use time accrued but unused under the Debtors Non-Working

Days Policies, and (b) paying, in their discretion, any amounts owed on account of the Non-

Working Days Policies in the ordinary course of their businesses, regardless of when such

amounts accrued.

E. Severance36. The Debtors maintain a generally applicable Severance Policy, which

provides eligible employees with severance benefits upon such Employees termination without

cause. The amount of severance payable under this policy is based generally upon an

Employees level and years of service with the Debtors (the Severance Benefits). In cases

where an Employee is released as a result of a reorganization or staff reduction initiative, the

Debtors have traditionally paid severance at the rate of two weeks of salary for up to one year

of service, with an additional week of severance for each additional full or partial year of

service, up to a maximum of 12 weeks of severance payments. Accordingly, the Debtors

hereby seek authority to honor their prepetition obligations with respect to the Severance

Benefits during the pendency of these cases, regardless of when such amounts accrued.7

7 The Debtors submit that the payment of certain prepetition obligations in respect of Severance Benefits is inaccordance with section 507(a)(4) of the Bankruptcy Code, which provides employees with a priority claim forwages,salaries, or commissions, including vacation, severance, and sick leave pay earned by an individual[.]11 U.S.C. 507(a)(4).



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Additionally, to the extent any employees are terminated during these cases, the Debtors

request authority to continue the Severance Benefits and to pay, in their discretion, Severance

Benefits to eligible non-insider Employees who are terminated without cause after the Petition

Date. The Debtors do not intend to reduce their workforce during the pendency of these cases.

F. Miscellaneous37. In addition to the benefits described herein, the Debtors offer certain other

benefits to various groups of Employees, including, but not limited to, paid jury duty and

bereavement leave, that the Debtors intend to continue in the ordinary course of business (the

Miscellaneous Benefit Programs). The Debtors believe these programs are important to

maintaining employee morale and assisting in the retention of the Debtors workforce, and

expend no additional amounts in respect of the Miscellaneous Benefit Programs. The Debtors

submit that failing to honor such programs would adversely affect the Debtors Employees.

Nonetheless, the Debtors respectfully seek authority, in their sole discretion, to pay all amounts

in respect of the Miscellaneous Benefit Programs incurred prior to the Petition Date and all

such obligations incurred in the ordinary course of business after the Petition Date.

G. Banks and Payroll Accounts38. The Debtors also request that the court: (a) authorize and direct any and

all banks with which the Debtors maintain payroll or other accounts from which the Debtors

make payments related to the Prepetition Employee Obligations (the Payroll Banks) to

receive, process, honor and pay all checks drawn on payroll, benefit and general disbursement

accounts and fund transfers on account of the Prepetition Employee Obligations, whether

presented before or after the Petition Date, provided that sufficient funds are on deposit in the

applicable accounts to cover such payments and the Debtors identify all checks that have been

issued, but not yet processed, attributable to Prepetition Employee Obligations in writing within



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two (2) business days of the date of the Order in respect of this Motion; and (b) authorize the

Debtors to issue new postpetition checks or effect new postpetition fund transfers on account of

the Prepetition Employee Obligations to replace any prepetition checks or fund transfer requests

that may be dishonored or rejected. Such relief is integral in order to implement the relief

sought by this Motion.

BASIS FOR RELIEF

39. The Debtors request authority to pay the Prepetition EmployeeObligations and related expenses in the ordinary course of their businesses. Any delay in

paying any of their Employees could severely disrupt the Debtors relationship with their

Employees and irreparably harm their morale at the very time that Employee dedication,

confidence, support and cooperation proves most critical. If the Debtors do not obtain

immediate authority to pay the Prepetition Employee Obligations, the Debtors operations may

be severely impaired. At this critical stage, the Debtors cannot risk the substantial disruption of

their business operations that would attend any decline in workforce morale attributable to the

Debtors failure, or worse, inability to pay the Prepetition Employee Obligations.

40. Accordingly, by this Motion, pursuant to sections 105(a) and 363(b) of theBankruptcy Code and the necessity of payment doctrine, the Debtors seeks authority to pay

their outstanding Prepetition Employee Obligations. Section 363(b)(1) of the Bankruptcy Code

provides: The trustee, after notice and a hearing, may use, sell, or lease, other than in the

ordinary course of business, property of the estate. . . . 11 U.S.C. 363(b)(1). Section 105(a)

of the Bankruptcy Code further provides in pertinent part: The court may issue any order,

process, or judgment that is necessary or appropriate to carry out the provisions of this title.

11 U.S.C. 105(a). Accordingly, this Court is authorized to grant the relief requested.



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41. The ability of a Bankruptcy Court to authorize the payment of prepetitiondebt when such payment is needed to facilitate the rehabilitation of the Debtors is not a novel

concept. In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989); see also, In

re Lehigh & New England Ry. Co., 657 F.2d 570, 581 (3d Cir. 1981) (noting that necessity of

payment doctrine . . .permit[s] immediate payment of claims of creditors where those creditors

will not supply services or material essential to the conduct of the business until their pre-

reorganization claims shall have beenpaid) (citations and internal quotations omitted); In re

Chateaugay Corp., 80 B.R. 279 (S.D.N.Y. 1987); 2 Collier on Bankruptcy 105.01 at 105-3

(L. King 15

th

ed. 1996) (purpose of section 105(a) of the Bankruptcy Code is to assure the

Bankruptcy Courts power to take whatever action is appropriate or necessary in aid of the

exercise of its jurisdiction.) This equitable common law principle was first articulated by the

United States Supreme Court in Miltenberger v. Logansport C. & S.W. R. Co., 106 U.S. 286

(1882), and is commonly referred to as either the doctrine of necessity or the necessity of

payment rule. In re Ionosphere Clubs, Inc., 98 B.R. at 175-76. This rule recognizes the

existence of the judicial power to authorize a debtor in a reorganization case to pay pre-petition

claims where such payment is essential to the continued operation of the debtor. Id. at 176;

see In re Just For Feet, Inc., 242 B.R. 821, 825-26 (D. Del. 1999) ([n]ecessity of payment

doctrine recognizes that paying certain prepetition claims may be necessary to realize the goal

of chapter 11 - a successful reorganization).

42. Under the doctrine of necessity, a bankruptcy court may exercise itsequitable power to authorize a debtor to pay certain critical prepetition claims, even though

such payment is not explicitly authorized under the Bankruptcy Code. See In re Columbia Gas

Sys. Inc., 136 B.R. 930, 939 (Bankr. D. Del. 1992) (citing In re Lehigh & New England Ry.



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Co., 657 F.2d at 581 (recognizing that [if] payment ofa pre-petition claim is essential to the

continued operation of [the debtor], payment may be authorized.)). Courts have recognized

that the necessity of payment rule squarely applies where a debtors employees must be paid

on time to assure their continued service and loyalty during a chapter 11 case. E.g., Ionosphere

Clubs, 98 B.R. at 174 (permitting Eastern Air Lines to pay its employees prepetition wages,

salaries, medical benefits and business expense claims under the necessity of payment

doctrine). In a number of reported cases, debtors have been permitted to pay prepetition wages,

salaries and employee benefits, even where those claims are substantial. See Chateaugay Corp.,

80 B.R. at 281 (authorizing payment of employee wages and workers compensation

obligations aggregating in excess of $250 million and rejecting appeal of creditor that argued

that the debtor should have been required to pay all similarly situated prepetition claimants); see

also In re Gulf Air, Inc., 112 B.R. 152, 153 (Bankr. W.D. La. 1989) (authorizing the debtor to

pay certain prepetition employee claims for wages, health and life insurance and workers

compensation premiums). The court in Gulf Air found that such payments were in the best

interests of creditors, the debtor and the debtors employees and were essential to a successful

reorganization. See Gulf Air, 112 B.R. at 153-54. The Debtors submit that, as illustrated

below, application of the necessity of payment doctrine is wholly warranted in these cases.

43. In order to achieve a successful reorganization, the Debtors require theirEmployees to work with the same or greater degree of commitment and diligence as they did

prior to the Petition Date. The requested authority to continue to pay the Debtors Employees

and to maintain the current Employee Benefits Programs is necessary to ensure that the Debtors

can retain personnel knowledgeable about the Debtors businesses, and to provide an incentive



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for the Debtors Employees to continue to provide quality services to the Debtors at a time

when they are clearly needed.

44. The wage and benefit obligations for which the Debtors request authorityto pay herein would constitute prepetition employee wage claims or prepetition claims for

contributions to an employee benefits plan entitled to priority under sections 507(a)(4) and (5)

of the Bankruptcy Code. Courts have recognized future priority status as a valid basis for

allowing the payment of wage claims arising claims. See, e.g., In re Braniff, Inc., 218 B.R.

628, 633 (Bankr. M.D. Fla. 1998) (explaining that prepetition wage and wage-related claims are

often allowed to be paid postpetition where such wages are subject to priority because in all

but the direst of circumstances, the debtor will ultimately pay the prepetition wages because of

their very high priority [and, therefore, the] court authorizes their payment early in the case

rather than requiring that the employees wait for payment at the end of the case.).

Accordingly, the Debtors respectfully submit that granting the relief requested will not

adversely affect the Debtors other unsecured creditors.

45. Similarly, the remittance of the Employee contributions towards EmployerTaxes, the 401(k) Plan, or the Employee Deductions also will not prejudice the Debtors

creditors because such withholdings are held in trust for the benefit of the related payees, and

thus, do not constitute property of the Debtors estates under section 541 of the Bankruptcy

Code. See Begier v. IRS, 496 U.S. 53, 65 (1990) (taxes such as excise taxes, FICA taxes and

withholding taxes are property held by debtor in trust for another and as such do not constitute

property of estate); In re Am. Intl Airways, Inc., 70 B.R. 102, 103 (Bankr. E.D. Pa. 1987)

(funds held in trust for federal excise and withholding taxes are not property of debtors estate

and, therefore, not available for distribution to creditors); Shipley Co., Inc. v. Darr (In re Tap,



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Inc.), 52 B.R. 271, 278 (Bankr. D. Mass. 1985) (funds paid by employer to debtor for payment

of employers federal taxes were returnable to employer and not part of debtors estate).

46. The Debtors Employees are essential to the success of the Debtorsbusiness. Consequently, it is critical that the Debtors continue the ordinary course personnel

policies, programs and procedures that were in effect prior to the Petition Date. If the checks

issued and fund transfers requested in payment of the Prepetition Employee Obligations are

dishonored, or if such accrued obligations are not timely paid postpetition, the Debtors

Employees may suffer extreme personal hardship and certain of them may be unable to pay

their daily living expenses. Likewise, it would be inequitable to require the Debtors

Employees to bear personally the business expenses that were incurred on behalf of the Debtors

with the expectation that they would be reimbursed.

47. Authorizing, but not directing, the Debtors to pay the PrepetitionEmployee Obligations in accordance with the Debtors prepetition business practices is in the

best interests of the Debtors, the creditors, and all parties-in-interest, and will enable the

Debtors to continue to operate their businesses efficiently without disruption. A significant

deterioration in morale among Employees at this critical time would have a devastating impact

on the Debtors, their customers, the value of the assets and businesses and the outcome of these

cases. The total amount to be paid if the relief sought herein is granted is modest compared

with the size of the Debtors estates and the importance of the Debtors Employees to the

restructuring effort. Further, many of these obligations are not immediate but, rather, will be

satisfied over an extended period of time and, in some cases, without any monetary

expenditures (e.g., accrued PTO used by certain Employees).



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48. Pursuant to section 363 of the Bankruptcy Code, a bankruptcy court isempowered to authorize a chapter 11 debtor to expend funds in the bankruptcy courts

discretion outside the ordinary course of business. Payment of prepetition wage and salary

claims in order to preserve and protect a debtors business and to ultimately reorganize, retain

their employees and maintain positive employee morale, even if such payment were deemed to

be outside the ordinary course of business, is a sufficient business justification for such an

authorization. See Ionosphere Clubs, 98 B.R. at 175.

49. Furthermore, with respect to obligations described herein, including, butnot limited to, Employee Wage Claims and Employer Taxes, failure by the Debtors to fulfill

such obligations could potentially result in claims being asserted directly against the Debtors

officers and directors. Not only would such claims against the Debtors officers and directors

distract such individuals at a time when it is critical that their full attention be focused on the

reorganization efforts of the Debtors, but such officers and directors would be entitled to

indemnification by the estates.

50. This Court has permitted the postpetition payment of prepetition wage andsalary obligations on the first day or in the early stages of other chapter 11 bankruptcy cases.

See, e.g., In re Houghton Mifflin Harcourt Publishing Co., Case No. 12-12171 (REG) (Bankr.

S.D.N.Y. May 22, 2012); In re TBS Shipping Services Inc., Case No. 12-22224 (RDD) (Bankr.

S.D.N.Y. Feb. 28, 2012); In re Eastman Kodak Company, Case No. 12-10202 (ALG) (Bankr.

S.D.N.Y. Feb. 15, 2012); In re Hostess Brands, Inc., Case No. 12-22052 (RDD) (Bankr.

S.D.N.Y. Jan. 27, 2012); In re General Maritime Corp., Case No. 11-15285 (Bankr. S.D.N.Y.

Dec. 15, 2011) (MG); In re The Great Atl. & Pac. Tea Co., Case No. 10-24549 (RDD) (Bankr.

S.D.N.Y. Jan. 12, 2011).



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51. In addition to the foregoing, importantly, the Prepackaged Plan, which hasbeen overwhelmingly accepted by the classes entitled to vote thereon, contemplates the

unimpairment of priority and general unsecured claims against the Debtors. Accordingly, if the

Prepackaged Plan is confirmed, the relief requested herein shall only affect the timing of

payment to certain holders of priority and general unsecured claims, and should have no effect

on the recoveries of other creditors of the Debtors under the Prepackage Plan.

52. The Debtors further submit that because the relief requested in this Motionis necessary to avoid immediate and irreparable harm to the Debtors for the reasons set forth

herein, Bankruptcy Rule 6003 has been satisfied.

53. To successfully implement the foregoing, the Debtors respectfully seek awaiver of the fourteen-day stay under Bankruptcy Rule 6004(h).

54. Accordingly, for the foregoing reasons, the Debtors respectfully submitthat cause exists for granting the relief requested herein.

NOTICE

55. Notice of this Motion will be given to: (a) the United States Trustee forthe Southern District of New York; (b) counsel to the adm inistrative agent under the Debtors

prepetition and postpetition revolving credit agreements; (c) counsel to the Required

Consenting Noteholders; and (d) the Debtors thirty (30) largest unsecured creditors on a

consolidated basis. The Debtors submit that, under the circumstances, no other or further notice

is required.

56. No previous motion for the relief sought herein has been made to this orany other Court.

57. Because the authorities relied upon herein are set forth above, the Debtorsrespectfully submit that the Motion itself satisfies the requirements of Rule 9013-1(a) of the



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Local Bankruptcy Rules for the Southern District of New York regarding the submission of a

memorandum of law.



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CONCLUSION

WHEREFORE, the Debtors respectfully request that the Court enter interim and

final orders, substantially in the forms annexed hereto as Exhibit A and Exhibit B, granting the

Motion and such other and further relief for the Debtors as may be just and proper.

Dated: August 22, 2012New York, New York

WILLKIE FARR & GALLAGHER LLPProposed Attorneys to Debtors and

Debtors in Possession

By: /s/ Jennifer J. HardyRachel C. StricklandJennifer J. HardyAnna C. Burns

787 Seventh AvenueNew York, New York 10019(212) 728-8000



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EXHIBIT A

Proposed Interim Order

12-13581 Doc 13-1 Filed 08/22/12 Entered 08/22/12 18:26:25 Exhibit A -Proposed Interim Order Pg 1 of 7


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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

------------------------------------------------------xIn re : Chapter 11

:Broadview Networks Holdings, Inc., et al.,1

: Case No. 12-__________ ( ):

Debtors. : (Joint Administration Pending)------------------------------------------------------ x

INTERIM ORDER: (I) AUTHORIZING

DEBTORS TO PAY (A) PREPETITION EMPLOYEE

WAGES, SALARIES AND OTHER COMPENSATION,




Upon the motion (the Motion) of the debtors and debtors in possession in the

above-captioned cases (collectively, the Debtors), requesting entry of an interim order,

pursuant to sections 105(a), 363(b) and 507(a) of title 11 of the United States Code (the

Bankruptcy Code) and Rule 6003 of the Federal Rules of Bankruptcy Procedure (the

Bankruptcy Rules): (i) authorizing, but not directing, the Debtors to pay (a) prepetition

employee wages, salaries and other compensation, (b) prepetition employee business expenses

and (c) other miscellaneous employee expenses and employee benefits; and (ii) granting related

1 The last four digits of the taxpayer identification numbers of the Debtors follow in parentheses:(i) Broadview Networks Holdings, Inc. (0798); (ii) A.R.C. Networks, Inc. (0814); (iii) ARC Networks, Inc.(4934); (iv) ATX Communications, Inc. (2245); (v) ATX Licensing, Inc. (9838); (vi) ATXTelecommunications Services of Virginia, LLC (3888); (vii) BridgeCom Holdings, Inc. (2965);(viii) BridgeCom International, Inc. (3985); (ix) BridgeCom Solutions Group, Inc. (3989); (x) Broadview

Networks, Inc. (1082); (xi) Broadview Networks of Massachusetts, Inc. (8054); (xii) Broadview Networksof Virginia, Inc. (6404); (xiii) Broadview NP Acquisition Corp. (2734); (xiv) BV-BC AcquisitionCorporation (7846); (xv) CoreComm-ATX, Inc. (0529); (xvi) CoreComm Communications, LLC (2077);(xvii) Digicom, Inc. (0777); (xviii) Eureka Broadband Corporation (6004); (xix) Eureka Holdings, LLC(1318); (xx) Eureka Networks, LLC (1244); (xxi) Eureka Telecom, Inc. (3720); (xxii) Eureka Telecom ofVA, Inc. (5508); (xxiii) InfoHighway Communications Corporation (0551); (xxiv) Info-HighwayInternational, Inc. (8543); (xxv) InfoHighway of Virginia, Inc. (1600); (xxvi) nex-i.com, inc. (7035);(xxvii) Open Support Systems LLC (9972); and (xxviii) TruCom Corporation (0714). The Debtorsexecutive headquarters address is 800 Westchester Avenue, Rye Brook, NY 10573.



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relief, as set forth therein; and upon the Declaration of Michael K. Robinson, President and Chief

Executive Officer of Broadview Networks Holdings, Inc., In Support of Chapter 11 Petitions and

First Day Pleadings (the Robinson Declaration); and due and sufficient notice of the Motion

having been given; and it appearing that no other or further notice need be provided; and it

appearing that the relief requested by this Motion is necessary to avoid immediate and

irreparable harm to the Debtors, and is in the best interests of the Debtors, their estates, their

creditors and other parties-in-interest; and it appearing that the relief requested is essential to the

continued operation of the Debtors businesses and the preservation of the value of their assets;

and after due deliberation and sufficient cause appearing therefor, it is hereby

ORDERED, ADJUDGED AND DECREED that:

1. The Motion is granted on an interim basis to the extent set forth herein.2. Capitalized terms not otherwise defined herein have the meanings ascribed

to such terms in the Motion.

3. The Debtors shall be and hereby are authorized to pay, in their solediscretion, the Prepetition Employee Obligations, including, but not limited to, (a) Employee

Wage Claims, solely to the extent such Employee Wage Claims do not exceed $11,725 per

Employee, (b) prepetition obligations that have accrued under the Employee Benefit Programs

and Employee Expense Obligations, and (c) to remit all Employer Taxes to the appropriate

third parties, as and when such obligations are due, upon entry of this Order.

4. The Debtors shall be and hereby are authorized, in their sole discretion, tohonor and continue their Employee Benefit Programs that were in effect as of the Petition Date.

5. The Debtors shall be and hereby are authorized, but not directed, to remitmonthly premiums to the applicable providers under the Employee Benefit Programs and to



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pay, in their sole discretion, any obligations, including prepetition obligations, in respect of the

Caremark Plan in the ordinary course of business.

6. The Debtors shall be and hereby are authorized, but not required, to paycosts and expenses incidental to the payment of the Prepetition Employee Obligations,

including all administration and processing costs and payments to outside professionals, in the

ordinary course of business, in order to facilitate the administration and maintenance of the

Debtors programs and policies related to the Prepetition Employee Obligations.

7. Former employees shall retain the right to coverage under the DebtorsHealth Plans in accordance with the requirements of COBRA, and the Debtors are authorized,

but not directed, to pay any portion of the amounts due under the Health Plans, if any, with

respect to such former employees.

8. The Debtors shall be and hereby are authorized to maintain, at theirdiscretion, the Severance Policy for non-insider Employees terminated after the Petition Date.

9. The Debtors shall be and hereby are authorized, but not directed, to paythe Temporary Employee Claims, Consultant Claims and Commission Claims.

10. All Payroll Banks shall be and hereby are authorized and directed toreceive, process, honor and pay all checks drawn on the Debtors accounts with the Payroll

Banks and fund transfers on account of the Prepetition Employee Obligations, whether

presented before or after the Petition Date, provided that (a) sufficient funds are on deposit in

the applicable accounts to cover such payments, and (b) within two (2) business days from the

date hereof, the Debtors provide the Banks with a list of checks that are outstanding as of the

Petition Date, which relate to Prepetition Employee Obligations.



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11. The Debtors shall be and hereby are authorized to issue, in their solediscretion, new postpetition checks or effect new postpetition fund transfers on account of the

Prepetition Employee Obligations to replace any prepetition checks or fund transfer requests

that may be dishonored or rejected; provided, however, that any check drawn or issued by the

Debtors before the Petition Date may be honored by any Payroll Bank to the extent provided

herein or by another order of this Court.

12. Notwithstanding any other provision of this Order, no Payroll Bank thathonors a prepetition check or other item drawn on any account that is the subject of this Order:

(a) at the direction of the Debtors; (b) in a good faith belief that the Court has authorized

payment of such prepetition check or item; or (c) as the result of a good faith error made despite

implementation of reasonable item handling procedures, shall be deemed to be liable to the

Debtors or their estates or otherwise in violation of this Order.

13. Neither this Order nor any payment or performance by the Debtorsauthorized hereunder shall be deemed an assumption of any executory contract, including any

Employee Benefit Programs, or otherwise affect the Debtors rights under section 365 of the

Bankruptcy Code to assume or reject any executory contract with an Employee.

14. Authorizations given to the Debtors in this Order empower but do notdirect the Debtors to effectuate the payments specified herein, and the Debtors shall retain the

business judgment to make or not make such payments, in all instances subject to the condition

that funds are available to effect any payment. In no event shall any person (director, creditor,

officer, manager, member, Employee or otherwise of the Debtors) be personally liable for any

amounts authorized for payment herein but not paid, and nothing in this Order shall be deemed

to increase, reclassify, elevate to administrative expense status or otherwise effect such claims.



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15. Within three (3) business days after entry hereof, the Debtors shall serve acopy of this Order upon: (a) the United States Trustee for the Southern District of New York;

(b) counsel to the administrative agent under the Debtors prepetition and postpetition revolving

credit agreements; (c) counsel to the Required Consenting Noteholders; and (d) the Debtors

thirty (30) largest unsecured creditors on a consolidated basis.

16. Any objections to entry of a final order on the Motion must be (a) filedwith the Court no later than 4:00 p.m. prevailing Eastern time on [______], 2012 (the

Objection Deadline) and (b) served so as to be actually received by the following parties by

the Objection Deadline: (i) Broadview Networks Holdings, Inc., 800 Westchester Avenue, Rye

Brook, NY 10573, Attn. : Charles Hunter, Esq.; (ii) counsel for the Debtors, Willkie Farr &

Gallagher LLP, 787 Seventh Avenue, New York, NY 10019 (Attn: Rachel C. Strickland, Esq.

and Jennifer J. Hardy, Esq.); (iii) the Office of the United States Trustee, 33 Whitehall Street,

21st Floor, New York, New York 10004 (Attn: Michael Driscoll, Esq. and Richard Morrissey,

Esq.); (iv) counsel to the administrative agent under the Debtors prepetition and postpetition

revolving credit agreements; (v) counsel to the Required Consenting Noteholders; and (vi) the

Debtors thirty (30) largest unsecured creditors on a consolidated basis.

17. Any objections or responses to the Motion shall be filed and served onparties-in-interest as required by the Local Rules.

18. A hearing shall be held to consider the relief granted herein on a finalbasis on _________, 2012, at __.m., before the Honorable __________, United States

Bankruptcy Judge, in Courtroom ___________ Alexander Hamilton Court House, One

Bowling Green, New York, New York (the Final Hearing) and, pending entry of an order



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following the conclusion of the Final Hearing, the relief granted herein shall remain in effect on

an interim basis.

19. This Order, and all acts taken in furtherance of or reliance upon this Order,shall be effective notwithstanding the filing of an objection.

20. Bankruptcy Rule 6003(b) has been satisfied because the relief requested inthe Motion is necessary to avoid immediate and irreparable harm to the Debtors. The

requirements of Bankruptcy Rules 6004(a) and 6004(h) and Local Rule 9013-1(a) are waived.

21. This Court shall retain jurisdiction over any and all matters arising from orrelated to the implementation or interpretation of this Order.

Dated: New York, New York_____________, 2012

UNITED STATES BANKRUPTCY JUDGE



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EXHIBIT B

Proposed Final Order

12-13581 Doc 13-2 Filed 08/22/12 Entered 08/22/12 18:26:25 Exhibit B -Proposed Final Order Pg 1 of 6


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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

------------------------------------------------------x

In re : Chapter 11

:Broadview Networks Holdings, Inc., et al.,1 : Case No. 12-__________ ( )

:

Debtors. : (Joint Administration Pending)

------------------------------------------------------ x

FINAL ORDER: (I) AUTHORIZING

DEBTORS TO PAY (A) PREPETITION EMPLOYEE

WAGES, SALARIES AND OTHER COMPENSATION,




Upon the motion (the Motion) of the debtors and debtors in possession in the

above-captioned cases (collectively, the Debtors), requesting entry of a final order, pursuant to

sections 105(a), 363(b) and 507(a) of title 11 of the United States Code (the Bankruptcy

Code) and Rule 6003 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy

Rules): (i) authorizing, but not directing, the Debtors to pay (a) prepetition employee wages,

salaries and other compensation, (b) prepetition employee business expenses and (c) other

miscellaneous employee expenses and employee benefits; and (ii) granting related relief, as set

1The last four digits of the taxpayer identification numbers of the Debtors follow in parentheses:

(i) Broadview Networks Holdings, Inc. (0798); (ii) A.R.C. Networks, Inc. (0814); (iii) ARC Networks, Inc.

(4934); (iv) ATX Communications, Inc. (2245); (v) ATX Licensing, Inc. (9838); (vi) ATX

Telecommunications Services of Virginia, LLC (3888); (vii) BridgeCom Holdings, Inc. (2965);

(viii) BridgeCom International, Inc. (3985); (ix) BridgeCom Solutions Group, Inc. (3989); (x) Broadview

Networks, Inc. (1082); (xi) Broadview Networks of Massachusetts, Inc. (8054); (xii) Broadview Networksof Virginia, Inc. (6404); (xiii) Broadview NP Acquisition Corp. (2734); (xiv) BV-BC Acquisition

Corporation (7846); (xv) CoreComm-ATX, Inc. (0529); (xvi) CoreComm Communications, LLC (2077);

(xvii) Digicom, Inc. (0777); (xviii) Eureka Broadband Corporation (6004); (xix) Eureka Holdings, LLC

(1318); (xx) Eureka Networks, LLC (1244); (xxi) Eureka Telecom, Inc. (3720); (xxii) Eureka Telecom of

VA, Inc. (5508); (xxiii) InfoHighway Communications Corporation (0551); (xxiv) Info-Highway

International, Inc. (8543); (xxv) InfoHighway of Virginia, Inc. (1600); (xxvi) nex-i.com, inc. (7035);

(xxvii) Open Support Systems LLC (9972); and (xxviii) TruCom Corporation (0714). The Debtors

executive headquarters address is 800 Westchester Avenue, Rye Brook, NY 10573.



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forth therein; and upon the Declaration of Michael K. Robinson, President and Chief Executive

Officer of Broadview Networks Holdings, Inc., In Support of Chapter 11 Petitions and First Day

Pleadings (the Robinson Declaration); and due and sufficient notice of the Motion having

been given; and it appearing that no other or further notice need be provided; and it appearing

that the relief requested by this Motion is necessary to avoid immediate and irreparable harm to

the Debtors, and is in the best interests of the Debtors, their estates, their creditors and other

parties-in-interest; and it appearing that the relief requested is essential to the continued

operation of the Debtors businesses and the preservation of the value of their assets; and after

due deliberation and sufficient cause appearing therefor, it is hereby

ORDERED, ADJUDGED AND DECREED that:

1. The Motion is granted on a final basis to the extent set forth herein.2. Capitalized terms not otherwise defined herein have the meanings ascribed

to such terms in the Motion.

3. The Debtors shall be and hereby are authorized to pay, in their solediscretion, the Prepetition Employee Obligations, including, but not limited to, Employee Wage

Claims, prepetition obligations that have accrued under the Employee Benefit Programs and

Employee Expense Obligations, and to remit all Employer Taxes to the appropriate third

parties, as and when such obligations are due, upon entry of this Order.

4. The Debtors shall be and hereby are authorized, in their sole discretion, tohonor and continue their Employee Benefit Programs that were in effect as of the Petition Date.

5. The Debtors shall be and hereby are authorized, but not directed, to remitmonthly premiums to the applicable providers under the Employee Benefit Programs and to



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pay, in their sole discretion, any obligations, including prepetition obligations, in respect of the

Caremark Plan in the ordinary course of business.

6. The Debtors shall be and hereby are authorized, but not required, to paycosts and expenses incidental to the payment of the Prepetition Employee Obligations,

including all administration and processing costs and payments to outside professionals, in the

ordinary course of business, in order to facilitate the administration and maintenance of the

Debtors programs and policies related to the Prepetition Employee Obligations.

7. Former employees shall retain the right to coverage under the DebtorsHealth Plans in accordance with the requirements of COBRA, and the Debtors are authorized,

but not directed, to pay any portion of the amounts due under the Health Plans, if any, with

respect to such former employees.

8. The Debtors shall be and hereby are authorized to maintain, at theirdiscretion, the Severance Policy for non-insider Employees terminated after the Petition Date.

9. The Debtors shall be and hereby are authorized, but not directed, to paythe Temporary Employee Claims, Consultant Claims and Commission Claims.

10. All Payroll Banks shall be and hereby are authorized and directed toreceive, process, honor and pay all checks drawn on the Debtors accounts with the Payroll

Banks and fund transfers on account of the Prepetition Employee Obligations, whether

presented before or after the Petition Date, provided that (a) sufficient funds are on deposit in

the applicable accounts to cover such payments, and (b) within two (2) business days from the

date hereof, the Debtors provide the Banks with a list of checks that are outstanding as of the

Petition Date, which relate to Prepetition Employee Obligations.



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11. The Debtors shall be and hereby are authorized to issue, in their solediscretion, new postpetition checks or effect new postpetition fund transfers on account of the

Prepetition Employee Obligations to replace any prepetition checks or fund transfer requests

that may be dishonored or rejected; provided, however, that any check drawn or issued by the

Debtors before the Petition Date may be honored by any Payroll Bank to the extent provided

herein or by another order of this Court.

12. Notwithstanding any other provision of this Order, no Payroll Bank thathonors a prepetition check or other item drawn on any account that is the subject of this Order:

(a) at the direction of the Debtors; (b) in a good faith belief that the Court has authorized

payment of such prepetition check or item; or (c) as the result of a good faith error made despite

implementation of reasonable item handling procedures, shall be deemed to be liable to the

Debtors or their estates or otherwise in violation of this Order.

13. Neither this Order nor any payment or performance by the Debtorsauthorized hereunder shall be deemed an assumption of any executory contract, including any

Employee Benefit Programs, or otherwise affect the Debtors rights under section 365 of the

Bankruptcy Code to assume or reject any executory contract with an Employee.

14. Authorizations given to the Debtors in this Order empower but do notdirect the Debtors to effectuate the payments specified herein, and the Debtors shall retain the

business judgment to make or not make such payments, in all instances subject to the condition

that funds are available to effect any payment. In no event shall any person (director, creditor,

officer, manager, member, Employee or otherwise of the Debtors) be personally liable for any

amounts authorized for payment herein but not paid, and nothing in this Order shall be deemed

to increase, reclassify, elevate to administrative expense status or otherwise effect such claims.



40/40

15. Bankruptcy Rule 6003(b) has been satisfied because the relief requested inthe Motion is necessary to avoid immediate and irreparable harm to the Debtors. The

requirements of Bankruptcy Rules 6004(a) and 6004(h) and Local Rule 9013-1(a) are waived.

16. This Court shall retain jurisdiction over any and all matters arising from orrelated to the implementation or interpretation of this Order.

Dated: New York, New York

____________ __ 2012

UNITED STATES BANKRUPTCY JUDGE


Documents

Broadview EE Motion