The Covid outbreak has impacted Legos, a minor airline based in Texas. Legos will be unable to stay in business after two years of significant losses in 2020 and 2021. Fortunately, Coral, the buyer, can connect Legos routes and gate slots to its existing system and is willing to make an offer to buy all of Lego's assets for $25 million. In the meanwhile, Legos must maintain operations, including providing service to the routes it serves throughout Texas. Coral is eager to complete an offer for all of the Debtor's assets, but it will take around four months due to the FAA's approval of the transfer of the routes aircraft and gate slots to Coral. Legos, on the other hand, is on the verge of running out of money. A Bank owns a security interest in all of Lego's assets, including cash and cash equivalents, implying that the American Bank owns a collateral interest in Lego's cash. Legos can't pay pilots, flying crew, or ground personnel since it doesn't have access to its funds. Legos, on the other hand, has access to a line of credit that it has been using to fund operations for many years. The Bank is currently owing $24,500,000, and the Legos assert in its bankruptcy filings that all of its assets have been sold. assets are worth $29,000,000.

1. Legos filed a motion for the use of cash collateral shortly after filing a chapter 11 petition in the District of Texas Bankruptcy Court. For two reasons, the Bank opposes the measure. First, the Bank claims that Legos has no prospect of filing and certifying a plan or restructuring in a reasonable amount of time, and hence should not be allowed to use the Bank's collateral. Second, the Bank contends that Legos has failed to develop adequate accounting systems for tracking the Bank's cash sources and uses. Legos have responded by offering a purchase price that is adequate to pay off the Bank's debt in full. Legos have also provided the evidence of a Price Waterhouse accountant, who will testify that the company has recently embraced accounting best practices that will eliminate any flaws in its accounting system.

1. Legos have decided to accept debtor in possession financing from Coral in order to continue operating a debtor in possession loan. A line of credit in the amount of $500,000 will be used to fund the project. Coral has attached conditions to its offer of post-petition financing: (a) the loan will be secured by all of Legos' assets and will have a lien that is senior to the Bank's, and (b) the amounts advanced will have a so-called super-priority administrative claim that will take precedence over all other administrative expense claims. The Bank has filed an objection to Coral's Debtor-in-Possession loan petition, claiming that Coral should not be allowed to "prime" its lien on all assets. Houston, a key creditor, has also objected to the funding motion, claiming that the airport's post-petition gate fees are administrative claims that should be paid in the usual course of business and before coral's debtor-in-possession loan is reimbursed.

Questions

1. Concerning the cash collateral, the motion must be allowed or the case fails. What bankruptcy sections apply, how should they be applied, and what conditions should be included to allow the motion.

2. Concerning post-petition financing, the motion must be allowed or the case will fail. What bankruptcy sections apply, how should they be applied, and what conditions should be included to allow the Airport's objection. Also giving the Coral booth a lien senior to the Bank and a super-priority administrative claim seems excessive. Draft a memo