UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: JKJ CHEVROLET,
INCORPORATED,
Debtor.

FORD MOTOR CREDIT COMPANY,                                          No. 96-1836
Plaintiff-Appellant,

v.

JKJ CHEVROLET, INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
James C. Cacheris, Chief District Judge.
(CA-96-167-A, BK-91-14535-AB)

Argued: May 9, 1997

Decided: July 21, 1997

Before HALL, WILKINS, and MICHAEL, Circuit Judges.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: George Richard Pitts, DICKSTEIN, SHAPIRO, MORIN
& OSHINSKY, L.L.P., Washington, D.C., for Appellant. John Ber-
nard Connor, JOHN B. CONNOR, P.L.C., Alexandria, Virginia, for
Appellee. ON BRIEF: Guy S. Neal, DICKSTEIN, SHAPIRO,
MORIN & OSHINSKY, L.L.P., Washington, D.C., for Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

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OPINION

PER CURIAM:

Ford Motor Credit Company (Ford) appeals the judgment of the
district court affirming the bankruptcy court's order that it pay
$209,179.51 in commissions, salaries, and other benefits to former
employees of JKJ Chevrolet, Inc., for work they performed during the
pendency of JKJ's Chapter 11 bankruptcy. We affirm.

I.

JKJ was a large automobile dealership in northern Virginia. On
October 21, 1991, it filed for bankruptcy reorganization under Chap-
ter 11. Ford was JKJ's largest creditor; it provided most of JKJ's
product inventory on consignment, in return for a security interest in
virtually all of the dealership's assets. At the time of the bankruptcy
petition, JKJ's assets were worth about $6 million less than the
amount it owed to Ford.

JKJ and Ford agreed to a series of consent orders permitting JKJ
to retain some of the cash that it obtained from the sale of Ford's col-
lateral so that it might continue to operate its business. The last of
these consent orders, filed in the bankruptcy court on February 18,
1992, and set to expire at noon on March 10, 1992, provided that JKJ
would turn over to Ford the loan balance or wholesale cost of each
vehicle that it sold. In turn, JKJ was allowed to retain the profits from
the sales as "available cash collateral," and to use those profits (along
with those realized from other departments within the dealership) to
operate its business, but only so long as the aggregate value of Ford's

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collateral continued to equal or exceed that existing on the date of the
bankruptcy petition. In the event of a "collateral shortfall," JKJ would
have three days to cure the situation by transferring funds from other
accounts, else Ford would be granted relief from the automatic stay
and would be entitled to pursue all appropriate remedies.1

JKJ was sold as a going concern at the expiration of the final con-
sent order on March 10, 1992. On that date, it had approximately
$68,000 in its bank accounts. In addition, there was a payment due
from General Motors Corporation in the amount of $188,142.75. JKJ
owed its employees a total of $209,179.51 in commissions and sala-
ries they earned during the course of the preceding month; indeed, the
paychecks had already been written for distribution on Friday, March
13. Instead, the checks -- along with the payment from GM -- were
seized by Ford, and it refused to pay the employees.

On April 16, 1992, JKJ filed a motion in the bankruptcy court to
direct Ford to pay the past due wages. Following hearings and argu-
ments on the matter, both initially and on remand from the district
court, the bankruptcy court entered orders on January 25, 1993, and
December 12, 1995, which granted JKJ the relief that it had
requested. Ford appealed to the district court, which, on May 8, 1996,
entered a final order affirming the judgment of the bankruptcy court.
Ford appeals.

II.

A.

A debtor-in-possession may not use, sell, or lease cash collateral,
i.e., the proceeds from the liquidation of an asset in which a creditor
has a security interest, for any purpose unless either (1) the creditor
consents or (2) the bankruptcy court, after notice and a hearing,
authorizes the transaction. 11 U.S.C. §§ 363(a),(c)(2). Ford consented
to the use of its cash collateral by JKJ, but that consent expired on
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1 The consent order, among other things, also granted Ford a security
interest in all of JKJ's assets acquired post-petition, and it permitted Ford
to maintain an on-site representative to monitor the dealership's day-to-
day operations.

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March 10, 1992, three days before the employees were scheduled to
be paid. Clause 14(f) of the consent order provides, in pertinent part:

          Debtor . . . shall pay, but only from Available Cash Collat-
          eral, all post-petition wages, employee benefits and
          employer contributions to benefit plans when due[.]2

According to Ford, the employees' wages were not"due" until
March 13, 1992, JKJ's regularly scheduled payday. Ford contends
that, inasmuch as its consent to JKJ's use of its cash collateral had by
then been withdrawn, the payment of these wages would require the
approval of the bankruptcy court. The court, in turn, could not
approve the payment unless it first found that Ford would remain "ad-
equately protected." See 11 U.S.C. § 363(e) ("on request of an entity
that has an interest in property used, sold, or leased, . . . the court . . .
shall prohibit such use, sale, or lease as is necessary to provide ade-
quate protection of such interest.").

The concept of adequate protection is an amorphous one, but, in
essence, it means that the value of a creditor's interest in the property
securing the debt owed to him may not be diminished. A secured
creditor may be adequately protected by (1) the transfer of cash to the
creditor from other estate assets to compensate for the collateral's
diminution in value; (2) the provision of a replacement lien in another
asset of the estate; or (3) the grant of such other relief as will result
in the creditor realizing the "indubitable equivalent" of his interest in
the collateral. See 11 U.S.C. § 361.

The bankruptcy court, on remand from the district court, found that
Ford would be adequately protected if it were compelled to pay the
wages, notwithstanding that it would receive nothing in return. We
need not, however, debate the accuracy of this finding. We conclude
that, inasmuch as the wages were "due" no later than when JKJ ceased
_________________________________________________________________
2 Though the parties do not appear to dispute the point, we note that it
could be argued that the words "when due" modify only the immediately
preceding phrase "employer contributions to benefit plans." Interpreted
in such a way, the clause could be logically construed to require JKJ to
pay all post-petition wages and employee benefits regardless of when
they came "due."

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operations, see Section II.B.1. infra , they were required by the terms
of the consent order to be paid as long as available cash collateral
existed to cover the expense. The bankruptcy court found that the
funds in JKJ's bank accounts and those represented by the GM check
were available cash collateral. Because that finding is not clearly erro-
neous, it must stand.

B.

1.

Nothing in the consent order purports to define the word "due," as
it is used in Clause 14(f). Out of context, the word is inherently
ambiguous. Any meaning that may be ascribed to it must therefore
derive from the common expectations of JKJ and its employees
within the context of their employment relationship.

Ford insists that the dealership and its employees expected that the
latter would be paid on a certain date, and, therefore, that those wages
would not be "due" until then. More basic to the employment relation-
ship, however, than the employees' expectation that they would be
paid on a certain date is their expectation that they would be paid. For
example, had JKJ simply ceased operations instead of declaring bank-
ruptcy, it could not have avoided its obligation to compensate its
employees for accrued wages simply because payday had not yet
arrived. In such a case, absent an agreement to the contrary, the wages
would presumably be "due" on the day the business closed its doors.

Absent a specific provision in the consent order, no different result
should obtain in this case. The law is well settled, in Virginia and
elsewhere, that "[w]hen an ambiguity exists, a court will construe a
contract more strictly against the party who prepared it." Mahoney v.
NationsBank of Va., N.A., 455 S.E.2d 5, 9 (Va. 1995) (citation omit-
ted). Because Ford was wholly responsible for drafting the consent
order, it must abide by the construction of the word"due" in Clause
14(f) that is most favorable to the contract's beneficiaries, so long as
that construction is reasonable.

Interpreting Clause 14(f) to mean that the employees' wages
became "due" upon the cessation of JKJ's business is consistent with

                     5
the reasonable expectations of all of the parties involved. The terms
of the consent order itself, then, permitted the payment of the wages,
to the extent that available cash collateral existed to pay them.

2.

Ford maintains that the $256,000 represented by the closing cash
on hand and the GM payment was not available cash collateral,
because, it says, the value of its collateral had plummeted since the
filing of the petition, creating a collateral shortfall. The evidence of
this supposed shortfall was provided by Frederic R. Miller, an
accountant with Coopers & Lybrand, who testified that, by February
22, 1992, Ford's collateral was worth $432,983 less than it had been
four months earlier.

Miller acknowledged, though, that "one of the biggest source[s] of
the differences" was the recognition of certain pre-petition losses in
the post-petition period. These losses made JKJ's post-petition perfor-
mance look much worse than it actually was, because they were not
subtracted from the initial calculation of the collateral's value. Such
an approach likely makes accounting sense, but we doubt very much
that starting off a few hundred thousand dollars in the hole is what
JKJ contemplated when it agreed to the terms of the consent order.
Indeed, had Ford believed that the dealership was performing so
poorly, it could have shut JKJ down on February 22, as the putative
"collateral shortfall" would have entitled it to do.

The bottom line is that Ford's collateral position on October 21,
1991, vis-a-vis its position on March 10, 1992, was, in light of the
evidence before the bankruptcy court, fairly subject to interpretation.
It was not clear error for that court to find that the value of Ford's col-
lateral had not diminished since the onset of JKJ's bankruptcy. See In
re Stanley, 66 F.3d 664, 667 (4th Cir. 1995) ("[W]e may not, gener-
ally speaking, set aside a finding of fact made by the bankruptcy court
unless it is clearly erroneous."). From that premise, we must accept
the bankruptcy court's conclusion that available cash collateral
existed to pay JKJ's employees, and that Ford must now make good
on the dealership's wage obligations.

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III.

The judgment of the district court is affirmed.

AFFIRMED

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