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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
In re:
PHOENIX BRANDS LLC, et al.,
Debtors.
Chapter 11
Case No. 16-11242 (BLS)
(Jointly Administered)
Re: Docket No. 14 Hearing Date: June 7, 2016 @ 1:00 p.m. Objection Deadline: June 2, 2016 @ noon (extended for Committee and Committee members to June 6,2016 @ noon)
In re: Chapter 11
PHOENIX RIT LLC, Case No. 16-11353 (BLS)
Debtor. (Joint Administration Requested)
OBJECTION BY THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO DEBTORS' MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS
PURSUANT TO 11 U.S.C. §§ 105, 107, 361, 362, 363, 364, AND 507 AND RULES 2002, 4001, 9014, AND 9018 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE
(I) AUTHORIZING THE DEBTORS TO (A) USE CASH COLLATERAL, AND (B) OBTAIN POST PETITION FINANCING; (II) GRANTING LIENS AND
SUPER-PRIORITY CLAIMS; (III) SCHEDULING A FINAL HEARING; AND (IV) GRANTING RELATED RELIEF
The Official Committee of Unsecured Creditors (the "Committee") of the above-
captioned debtors and debtors-in-possession (the "Debtors"), by its proposed counsel, Saul
Ewing LLP, objects (the "Objection") to the Debtors' Motion for Entry of Interim and Final
Orders Pursuant to 11 U.S.C. sCisC 105, 107, 361, 362, 363, 364, and 507 and Rules 2002, 4001,
9014, and 9018 of the Federal Rules of Bankruptcy Procedure (I) Authorizing the Debtors to
The Debtors, together with the last four digits of each Debtor's tax identification number, are: Phoenix Brands LLC (4609), Phoenix Brands Parent LLC (8729), Phoenix North LLC (no BIN), and Phoenix Brands Canada ULC (a Nova Scotia Company). The address of each of the Debtors is 1 Landmark Square, Suite 1810, Stamford, CT 06901, except Phoenix Brands Canada ULC, which is Box 50, 1 First Canadian
Place, Toronto, Ontario, Canada M5X 1B8.
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(A) Use Cash Collateral, and (B) Obtain Post-Petition Financing; (II) Granting Liens and
Super-Priority Claims; (III) Scheduling a Final Hearing; and (IV) Granting Related Relief (the
"DIP Motion"), 2 and in support of the Objection respectfully states as follows:
PRELIMINARY STATEMENT
1. These cases are moving quickly to sell assets solely for the benefit of the secured
creditors, with little value remaining for others.
2. It is unclear whether these cases will be administratively solvent, let alone
whether there will be a recovery for unsecured creditors.
3. At a minimum, the liquidity by the proposed financing and the terms of the use of
cash collateral should budget and cover all administrative expenses, including section 503(b)(9)
claims and all post-petition trade claims, and all the costs of running the chapter 11 cases post-
petition, including any transaction or success fees due the Debtors' investment banker or any
other party.
4. Further, Debtors' pre-petition lenders led by Madison Capital Funding LLC as
agent (together with other lenders, the "Lender Group"), funding this process solely for their own
benefit are not entitled to a rollup creating security interests in, or a superpriority or other
administrative expense claim over, previously unencumbered assets. In addition, particularly
given that most of the liquidity comes from the use of cash collateral and not new money, the
adequate protection, including the allowed, superpriority administrative expense claim,
replacement liens, and monthly payments of interest, fees, and other amounts due under the DIP
Facility are excessive or, simply put, illegal under the Bankruptcy Code. The protection should
2
Capitalized terms not otherwise defined herein shall have the same meaning as that ascribed to them in the DIP Motion.
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be limited to any post-petition diminution in value of the pre-petition collateral—nothing more—
absent a reorganization or sale process benefiting more than the Lender Group.
5. In a non-bankruptcy process, a foreclosure, the lenders would not be entitled to
proceeds from assets other than their collateral. Chapter 11 is not designed to improve the lien
position of the lenders in a sale process where there is no concomitant benefit or protections
provided to administrative and unsecured creditors. If there are unencumbered assets, those
assets should not be usurped for the benefit of the secured creditors.
6. Here the Lender Group seeks to covert $23 million of pre-petition debt to post-
petition debt through the rollup in exchange for a very limited $2 million in new money. It is
less expensive for the unsecured creditors to not take new money and let the Debtors simply
operate solely on cash collateral, since in that circumstance, any shortfall in the ability to repay
the lenders results in only an unsecured deficiency claim and not a new administrative expense
claim ahead of unsecured creditors and diluting the ability to pay section 503(b)(9)
administrative expense claims and post-petition trade claims. Acting on behalf of all unsecured
creditors, and facing these circumstances, the final order should not include provisions to which
the Lender Group is not legally entitled and which will leave unsecured creditors in a worse
position. Specifically, under the circumstances of these cases, the granting of superpriority
claims in Avoidance Actions, the waiver of the Bankruptcy Code Section 506(c) surcharge
rights, and the waiver of the "equities of the case" exception in Bankruptcy Code Section 552(b)
all improperly serve to usurp value from unsecured creditors and provide an unjustifiable
windfall to secured creditors. In addition, provisions relating to the proposed Carve-Out and the
restrictions on the investigation serve only to hamstring the Committee and frustrate its ability to
carry out its fiduciary role, in contravention of settled authority on the vital role played by
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creditors' committees in the chapter 11 process. Moreover, the disparate nature of the budget for
the Committee's professionals compared to the Debtors' professionals, among other issues, is
plainly inequitable for a fiduciary of this estate.
GENERAL BACKGROUND
7. On May 19, 2016 ("the Petition Date"), the Debtors 3 filed petitions for relief
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of Delaware (the "Court").
8. The Debtors continue to operate their businesses and manage their properties as
debtors-in-possession. No trustee or examiner has been appointed in the cases.
9. On June 1, 2016, the Office of the United States Trustee for the District of
Delaware appointed the Committee in the Debtors' chapter 11 cases. On the same day, the
Committee selected Saul Ewing LLP to serve as counsel to the Committee, and on June 2, 2016
selected Deloitte Transactions and Business Analytics LLP as financial advisor.
BACKGROUND RELEVANT TO THIS OBJECTION
10. On or about February 1, 2011, Phoenix Brands entered into that certain Senior
Secured Credit Agreement (as amended the "Pre-Petition Credit Agreement") by and between
Phoenix Brands as borrower, and Madison Capital Funding LLC as agent ("Madison") and the
Lender Group.
11. The financing provided pursuant to the Pre-Petition Credit Agreement consisted
of two tranches: (i) the Term A loan with an initial commitment of $40,000,000 (the "Term A
3 The Committee recognizes that Debtors Phoenix Brands, LLC, Phoenix Brands Parent, LLC, Phoenix North, LLC and Phoenix Canada ULC filed their petitions on May 19, 2016, that Debtor Phoenix Rit LLC filed its petition on June 1, 2016, and that the case of Debtor Phoenix Rit LLC is not yet jointly administered with those of the other Debtors. However, for purposes of simplicity, this Objection will refer to all of the above-captioned debtors as the "Debtors."
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Loan"); and (ii) a revolving loan with an initial commitment of $30,000,000 (the "Revolving
Loan," together with the Term A loan, the "Pre-Petition Facility"). The Pre-Petition Facility was
guaranteed by the Debtors pursuant to a Guarantee and Collateral Agreement dated February 1,
2011,
12. On May 19, 2016, the Debtors filed the DIP Motion. In the DIP Motion, the
Debtors represent that the Term A Loan was, as of the Petition Date, outstanding in the amount
of approximately $7.5 million, plus interest and the Revolving Loan was, as of the Petition Date,
outstanding in the amount of approximately $13.86 million, plus interest for a total outstanding
Pre-Petition Facility amount of $21.3 million, plus accrued interest. See DIP Mot. If 11. The
Debtors assert that this Pre-Petition Facility is secured by substantially all of the Debtors' assets.
13. Pursuant to the DIP Motion, the Debtors seek DIP financing in a total amount of:
(i) up to $2,000,000 in new money revolving loans, plus (ii) a rollup of all of the outstanding
obligations under the Pre-Petition Facility in an amount not less than $23,704,313 (the "DIP
Facility"). Further, pursuant to the credit agreement (the "DIP Credit Agreement") the DIP
lenders (Madison, as agent and lender, and the lenders party to the DIP Facility, collectively, the
"DIP Lenders") will be granted a first-priority, secured lien on all of the Debtors' assets (both
pre-petition and post-petition collateral) and (ii) the DIP Lenders will receive an allowed
superpriority administrative claim for all obligations under the DIP Facility that will have
priority over all administrative expenses allowed in the Debtors' cases.
14. On May 23, 2016, the Court entered an order approving the DIP Motion on an
interim basis [D.I. 56] (the "Interim Order"). The Interim Order authorized post-petition
financing on an interim basis under the DIP Credit Agreement in accordance with the budget
attached to the Interim Order.
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15. The Interim Order scheduled a final hearing with respect to the DIP Motion for
June 7,2016.
OBJECTION
A. The DIP Facility fails to account for all administrative claims.
16. The budget attached to the Interim Order (the "Budget") provides nothing for
503(b)(9) claims. Incredibly, the DIP Credit Agreement and the Interim Order both allow the
DIP Lenders to declare a default if the Court orders payment of a 503(b)(9) claim. See Credit
Agreement II 7.14 (prohibiting Debtors payment of "any administrative expenses, except
expenses incurred in the ordinary course of business of [the Debtors] and set forth in the
Budget"); Interim Order II 19(j) (defining "event of default" as "entry of any order requiring any
Debtor to pay (prior to full, final, and indefeasible repayment of all Aggregate Debt) any
amounts in respect of claims under Code § 503(b)(9)"). The Debtors are running these cases as
if section 503(b)(9) were not part of the Bankruptcy Code.
17. Additionally, the Debtors may not have sufficient liquidity to honor post-petition
administrative claims. Members of the Debtors' vendor community have voiced concerns to
Committee counsel, raising a critical issue of a lack of confidence in the Debtors' ability to pay
for post-petition sales. Further, vendor requests for post-petition adequate assurance have been
refused by the Debtors. The Debtors have reportedly taken the position that supply contracts
require vendors to sell to the Debtors postpetition, notwithstanding the vendors' rights to
adequate assurance. Indeed, Debtors' counsel previewed this issue at the first-day hearing:
Debtors' Counsel: Before I turn to the first days, Your Honor, one issue has arisen. I promised you no major fireworks, but I said there would be some issues. Some of these vendors that we've described, who supply us, are single source, pursuant to long-term contracts, they have, for whatever reason at the moment, decided not to comply, not to ship, not to make. Either we will have conversations with them, which I hope to do if any of them are in the court today or on the phone after we leave this court, about
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their obligation to continue to perform under these contracts or we'll be back -- and we'll reach a voluntary solution -- or we may be back before Your Honor on an emergency basis, seeking to compel performance.
Transcript of Hearing, May 23, 2016, pp. 20-21.
18. This is troubling to the Committee. In a case that is already being run for the
benefit of the Lender Group and that promises little upside for vendors with unsecured claims or
section 503(b)(9) claims, the Debtors are now running roughshod over the vendor's rights to
post-petition payment and adequate assurance. The Debtors' apparent inability to pay (and the
Lender Group's unwillingness to fund) administrative expense claims portends poorly for
generally unsecured creditors.
19. The Committee has performed a preliminary analysis of the Budget, and has
several issues and concerns. First, although the Budget purports to include the quarterly fees due
to the United States Trustee, such fees are not clearly reflected. Second, the Budget provides no
recovery for 503(b)(9) claims. Third, the Committee has no information to confirm the accuracy
of the assumptions in the Budget regarding receipts, which are arguably unrealistically
optimistic, nor the accuracy of the assumptions supporting disbursements, which are arguably
low. Fourth, as discussed more fully below, the Budget does not reflect professional fees for the
Committee sufficient to meet its fiduciary obligations in these cases and significantly
undervalues such fees. Fifth, the Budget reflects a $38,000 per-week shortfall in disbursements
under the TSA, for a total shortfall during the budgeted period of $346,000. Sixth, the Budget
predicts that the Debtors will collect, in a mere two-month period, over $5 million in receivables
from the "Laundry Receivables," which seems incommensurately large in relation to the asset
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values of those business units. 4 Seventh, there are other assumptions and inconsistencies in the
Budget for which the Committee requires some clarification, including, but not limited to, the
calculation of certain amounts of net cash coming out of the estates. And finally, it appears that
the gross proceeds less the applicable holdbacks may—in the end—amount to less than the pre-
petition debt owed to the Lender Group. All of this ambiguity with the Budget, combined with
the Committee's concerns regarding the firmness of the other sources of cash, deeply troubles
the Committee.
20. The Lender Group should not be permitted to liquidate its collateral through a
bankruptcy case on the backs of the Debtors' vendors. If the Lender Group wants to use the
benefits of the bankruptcy process, it should "pay the freight" of such benefits and ensure—at the
very least—that it has budgeted sufficient amounts to pay all administrative creditors and all fees
and costs relating to the sale, including any transaction or success fees due the Debtors'
investment banker 5 or any other party. The Debtors simply must have sufficient liquidity to
satisfy obligations to trade creditors that extend post-petition credit and should be required to
provide adequate assurance of payment of post-petition claims. In order to ensure the Debtors'
compliance with any approved budget, the Final Order should make clear that the Committee is
to be a notice party on all applicable reports and productions regarding the Debtors' performance
4
Under the sale as proposed in the Debtors' pending bid procedures motion, the purchase price of the US laundry assets is $5.9 million, and is $3.8 million (USD) for the Canadian laundry assets. It is further unclear from the Budget whether the RIT receivables are somehow included in that line item, as a line item for "RIT Receivables" is set forth in the Budget, but listed with no corresponding dollar amount. In either instance, the asset value is not commensurate.
5
Under the proposed engagement of Houlihan Lokey Capital, Inc. as investment banker [DI. 88], Houlihan will earn a "Transaction Fee" that could be, at the low end, a fee of 3% based on the current proposed stalking horse transactions. This fee is not reflected is the Budget.
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under the budget, and the Committee should receive this information simultaneously with, and in
the same manner as, the DIP Lenders.
B. The DIP Facility may not be necessary and, in any event, leaves unsecured creditors
in a worse position than if there was no DIP Facility.
21. The DIP Facility offers a mere $2 million in new money revolving loans, in
exchange for which over $23 million in pre-petition obligations under the Pre-Petition Facility
are rolled up. The Committee objects to the roll-up and cross-collateralization of the pre-petition
debt. See In re Saybrook Mfg. Co., Inc., 963 F.2d 1490, 1494-96 (11th Cir. 1992) (noting that
cross-collateralization is inconsistent with bankruptcy law because it (a) is not authorized as a
means of post-petition financing pursuant to Section 364 and (b) is directly contrary to the
fundamental priority scheme of the Bankruptcy Code); Official Comm. of Unsecured Creditors
of New World Pasta Co. v. New World Pasta Co., 322 B.R. 560, 569 n.4 (M.D. Pa. 2005)
(noting that roll-up provisions "have the effect of improving the priority of a prepetition
creditor"); Tenney Viii., 104 B.R. at 570 (holding that "Section 364(d) speaks only of the
granting of liens as security for new credit authorized by the Court"); In re Monach Circuit
Indus., Inc., 41 B.R. 859 (Bankr. E.D. Pa. 1984) (cross-collateralization constitutes an illegal
preference).
22. From the perspective of unsecured creditors, it may be better for the Debtors to
refuse the $2 million in new money, and instead operate solely on cash collateral. Under the
proposed DIP Facility, any deficiency claim is granted superpriority administrative expense
status, see Interim Order ¶ 3(e) ("The Postpetition Debt is hereby granted superpriority
administrative expense status under Code § 364(c)(1), with priority over all costs and expenses
of administration of the Cases...."), which could squeeze out or dilute valid administrative
claims of other creditors (503(b)(9) administrative expense claims and post-petition trade claims)
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and unsecured claims. Without the proposed DIP Facility, the Lender Group's deficiency claim
would merely join the unsecured claims pool.
23. At the first-day hearing in these cases, the Debtors essentially admitted they could
operate on cash collateral:
Debtors' Counsel: The other issue -- two more issues that were raised by the U.S. Trustee -- and then I'll cede the floor to the U.S. Trustee unless the Court has questions about the DIP -- one, the need for a DIP generally. If one were to look at our budget on a pure black and white, it would look
like the case is going to be cash flow positive —
The Court: I saw that.
Debtors Counsel: The issue, though, is that that assumes that every possible break breaks our way. So it assumes that we don't have any issues with our vendors that are going to require extraordinary payments in the post-petition period. It also assumes that every one of our customers
is going to pay on terms.
Transcript of Hearing, May 23, 2016, pp. 43-44.
24. This statement raises many questions, and provides no answers. Does the
Debtors' reference to "vendors that are going to require extraordinary payments in the post-
petition period" simply mean that the post-petition vendors are going to demand adequate
assurance of payment for post-petition sales? Apparently so. The Debtors have filed no critical
vendor motion, so "extraordinary payments" cannot possibly refer to payment of pre-petition
claims. The statement made at the hearing also calls into question the accuracy of DIP Budget,
and again, this correlates directly to the need for the DIP Facility at all.
25. The Committee suspects that the true impetus for the DIP Facility is the Lender
Group's desire to effect a complete roll-up of the Debtors' pre-petition obligations to the benefit
of the Lender Group. The DIP Facility appears designed to (i) enhance the Lender Group's pre-
petition collateral position by converting their unsecured deficiency claim into a superpriority
administrative expense claim; (ii) eliminate any defects in their pre-petition collateral position
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and acquire new collateral; (iii) generate additional fees and revenue expenses for the Lender
Group; and (iv) impact the chance of a sale or chapter 11 plan that would provide a dividend to
unsecured creditors. The Debtors cannot meet the standards for approval of the DIP Facility. A
chapter 11 debtor may obtain post-petition financing on a superpriority basis only if, inter alia, it
cannot obtain "unsecured credit allowable under section 503(b)(1)" of the Bankruptcy Code. $ee
11 U.S.C. § 364(c). While approval of the proposed DIP Facility is within the Court's
discretion, the Court must balance the interests of the Debtors, the DIP Lenders, the Lender
Group (made up of DIP Lenders), and general unsecured creditors.
26. Striking the appropriate balance requires that a debtor seeking post-petition
financing on a superpriority basis and granting liens on previously unencumbered assets
demonstrate that the proposed financing will permit it to formulate a successful plan for the
benefit of the Debtors' estates and the interests of all its creditors. See In re Aqua Associates,
123 B.R. 192, 196 (Bankr. E.D. Pa. 1991); In re Ames Department Stores, Inc., 115 B.R. 34, 37-
40 (Bankr. S.D.N.Y. 1990). The Debtors cannot, solely for the sake of obtaining post-petition
financing quickly and easily, abandon their fiduciary duties to their estates and creditors. Ames
Department Stores, 115 B.R. at 38.
27. A court should approve a proposed debtor-in-possession facility only if such
financing "is in the best interest of creditors generally." In re Roblin Indus., Inc., 52 B.R. 241,
244 (Bankr. W.D.N.Y. 1985) (citing In re Texlon Corp., 596 F.2d 1092, 1098-99 (2d Cir. 1979)).
In addition, a court must review the terms of a debtor-in-possession facility to determine whether
those terms are fair, reasonable, and adequate given the circumstances of the debtor and the
proposed lender. See, e.g., Aqua Assocs., 123 B.R. at 195-96 (holding that proposed financing
should be beneficial and reasonable); Ames Dep't Stores, 115 B.R. at 40 (courts should focus on
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whether the terms of proposed DIP financing are reasonable); In re Tenney Village Co., Inc., 104
B.R. 562, 568 (Bankr. D.N.H. 1989) (debtor-in-possession financing terms must not "pervert the
reorganizational process from one designed to accommodate all classes of creditors and equity
interests to one specially crafted for the benefit" of a single party); see also In re Mid-State
Raceway, Inc., 323 B.R. 40, 60 (Bankr. N.D.N.Y 2005) (post-petition financing must be
necessary to preserve the assets of the estate).
28. Likewise, section 364 of the Bankruptcy Code is not a "secured lenders' act"
allowing a single creditor to upset the level playing field contemplated by the Bankruptcy Code,
See Ames Department Stores, 115 B,R. at 37; see also Tenney Village, 104 B.R. at 568. Courts
generally acknowledge that chapter 11 debtors have little bargaining power against a post-
petition lender, especially when that lender also holds a pre-petition lien on the debtor's assets.
Ames Department Stores, 115 B.R. at 38. Accordingly, courts reviewing proposed post-petition
financing "focus[] their attention on proposed terms that would tilt the conduct of the bankruptcy
case [or] prejudice, at an early stage, the powers and rights that the Bankruptcy Code confers for
the right of all creditors[.]" Id. at 37.
29. The Committee submits that the DIP Facility fails to meet the standard applicable
under the Bankruptcy Code, absent modifications of certain provisions of the Interim Order that
are prejudicial to the rights of unsecured creditors.
C. The DIP Facility improperly grants the DIP Lenders new liens on unencumbered
assets.
i. Avoidance Actions
30. The DIP Lenders seek liens on all claims and causes of action under chapter 5 of
the Bankruptcy Code. See, e.g., Interim Order, Ex.1, ¶ 30. This is wantonly inappropriate. If
chapter 5 causes of action are preserved for any constituency, they should be preserved for the
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benefit of unsecured creditors, and it should be the unsecured creditors who decide how and
whether such claims are pursed. Moreover, chapter 5 causes of action against insiders of the
Debtors should certainly be preserved for the benefit of general unsecured creditors. 6 The
Debtors have not filed their statement of financial affairs, and have filed a motion [D.I. 86]
seeking an extension until July 5, 2016 to do so. The Committee otherwise has no information
on the nature and scope of potential insider chapter 5 causes of action. Unless and until the
Committee has this information, all chapter 5 claims—especially any chapter 5 claims against
insiders—should not become the DIP Lender's Collateral.
31. Avoidance actions, a distinct creature of bankruptcy law designed to facilitate
equality of distribution among a debtor's general unsecured creditors, are not truly property of a
debtor's estate, but instead are rights that the estate holds in trust for the benefit of creditors. See
Official Comm. of Unsecured Creditors v. Chinery (In re Cybergenics Corp.), 330 F.3d 548, 567
(3d Cir. 2000) (noting that the underlying intent of the avoidance powers is the recovery of
valuable assets for the benefit of a debtor's estate); In re Sweetwater, 55 B.R. 724, 731 (D. Utah
1985), rev'd on other grounds, 884 F.2d 1323 (10th Cir. 1989) ("The avoiding powers are not
'property but a statutorily created power to recover property."). Accordingly, bankruptcy courts
customarily restrict the ability of debtors in possession to pledge avoidance power actions as
security. See, e.g., Official Comm. of Unsecured Creditors v. Goold Electronics Corp. (In re
Goold Electronics Corp.), 1993 WL 408366, *3-4 (N.D. Ill., Sept. 22, 1993) (vacating DIP
6 As set forth in the Committee's objection to the Debtors' bid procedures motion, the Committee believes that all stalking horse agreements should include the acquisition and release of all non-insider Avoidance Actions, but should exclude and leave with the estates Avoidance Actions against insiders and the Lender
Group.
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financing order to the extent that the order granted the lender a security interest in the debtor's
preference actions).
32. Because of the unique nature of avoidance power actions, courts recognize that, at
least with respect to proceeds recovered pursuant to section 544(b) of the Bankruptcy Code,
"empowering the trustee or debtor in possession to avoid a transaction by pursuing an individual
creditor's cause of action is a method of forcing that creditor to share its valuable right with other
unsecured creditors." Cybergenics, 226 F.3d at 244; see also Buncher Co. v. Official Comm. of
Unsecured Creditors of GenFarm Ltd. P'ship IV, 229 F.3d 245, 250 (3d Cir. 2000) ("When
recovery is sought under § 544(b) of the Bankruptcy Code, any recovery is for the benefit of all
unsecured creditors, including those who individually had no right to avoid the transfer."); In re
Sweetwater, 884 F.2d 1323, 1328 (10th Cir. 1989) ("[P]ost-petition avoidance actions should be
pursued in a manner that will satisfy the basic bankruptcy purpose of treating all similarly
situated creditors alike. . . ."); Bear Stearns Sec. Corp. v. Gredd, 275 B.R. 190, 194 (S.D.N.Y.
2002) ("[T]he purpose of § 547 is to ensure fair distribution between creditors, while the purpose
of § 548 is to protect the estate itself for the benefit of all creditors."); United Capital Corp. v.
Sapolin Paints, Inc. (In re Sapolin Paints, Inc.), 11 B.R. 930, 937 (Bankr. E.D.N.Y. 1981)
(recognizing ". . . the well-settled principle that neither a trustee . . . nor a debtor-in-possession,
can assign, sell, or otherwise transfer the right to maintain a suit to avoid a preference.").
33. Accordingly, the Committee objects to any liens on avoidance actions.
Other Claims and Assets
34. There could be other claims or causes of action that could benefit the unsecured
creditors, but which may be lost if the DIP Facility is approved. Under the proposed DIP
Facility, any pre-petition claims or causes of action appear to be the subject of the DIP Lenders'
post-petition liens. See Interim Order, Ex. 1, 11 30 (broadly defining "postpetition collateral" as
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"[a]ll of the real property and personal property of the Debtors of any description whatsoever,"
and specifically including "commercial tort claims"). While Commercial Tort Claims
(subsumed in the definition of "Identified Claims") were subject to the Lender Group's alleged
lien under the Pre-Petition Credit Agreement, the schedule setting forth those claims (Schedule
7) lists "none," as is also the case pursuant to the DIP Credit Agreement as Schedule 7 of the DIP
Credit Agreement also lists "none."
35. Any claims or causes of action against the Debtors' directors or officers,
commercial tort claims discovered by the Committee and any insurance proceeds relating to
those claims or causes of action, should be categorically preserved for the benefit of unsecured
creditors. The Committee does not yet know the universe of these claims (nor could it
reasonably be expected to, a few days after its formation and with only receiving limited initial
information from the Debtors). But catching the Committee's eye at this early stage are potential
claims regarding the sale of the Niagara brand.
36. As set forth in the Littlefield declaration [D.I. 3], the Debtors sold their Niagara
brand pre-petition with disappointing results. See Littlefield Decl. 'It 51 ("Despite a robust sale
and marketing effort the sales price achieved was significantly below the amount needed by the
Debtors to reduce the debt load in a meaningful way."). Sawaya Segalas & Co., LLC, was the
investment banker in this sale, not Houlihan Lokey. According to the first-day declaration, the
assets were sold to an unspecified "company owned primarily by Faultless Starch/ Bon Ami
Company."
37. The circumstances of the Niagara brand sale create concern and need to be
examined by the Committee. The Committee has many questions with respect to this transaction,
all of which may become moot, and any claims against the Debtors' directors, officers, insiders,
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or members of the Lender Group relating to this transaction could be lost to the Debtors' estates,
if the proposed DIP Facility is approved.
38. Claims and causes of action against the Debtors' directors, officers, insiders, and
lenders, potential commercial tort claims, and any related insurance proceeds or other rights,
should be preserved for the benefit of the Debtors' unsecured creditors, not spirited away
through approval of the DIP Facility.
39. In addition, assets that were previously deemed Excluded Property under the Pre-
Petition Credit Agreement are no longer excluded from collateral. Moreover, the definition of
"Postpetition Collateral" contained in the Interim Order (see Interim Order, Ex. 1, If 30) is
broader, as it includes real property, and is inconsistent with the definition contained in the post-
petition Guarantee and Collateral Agreement at paragraph 1.2.
40. The Committee objects to liens on any other unencumbered assets, including
causes of action other than avoidance actions, which may also be sources of value for unsecured
creditors.
D. The adequate protection provided in the DIP Facility is unwarranted and, in any
event, should be limited to any diminution in the value of collateral, and be subject
to recharacterization or disgorgement.
41. The Committee objects to the various forms of adequate protection, including the
allowed, superpriority administrative expense claim, replacement liens, and monthly payments of
interest, fees, and other amounts due under the DIP Facility. Absent a showing of actual post-
petition diminution in the value of the pre-petition collateral, the Lender Group is not entitled to
this panoply of adequate protection, particularly because the members of the Lender Group are
both the DIP Lenders and the parties being primed. Moreover, the Final Order should make
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clear that any adequate protection remains subject to recharacterization or disgorgement in the
event any of the underlying pre-petition liens are avoided or found to be undersecured.
42. The purpose of adequate protection is to protect the value of a secured lender's
bargained-for property interest in its pre-petition collateral. In re WorldCom, Inc., 304 B.R. 611,
618-19 (Bankr. S.D.N.Y. 2004) (citations omitted). Adequate protection is intended to preserve
a secured creditor's proprietary interest following the commencement of a bankruptcy case, not
to enhance that creditor's position. In re Mosello, 195 B.R. 277, 289 (Banta - S.D.N.Y. 1996)
(adequate protection must "protect[] . . . the secured creditor from diminution in value of its
collateral during the reorganization process") (citations omitted); see also In re Pine Lake Vill.
Apartment Co., 19 B.R. 819, 824 (Bankr. S.D.N.Y. 1982) ("Neither the legislative history nor
the [Bankruptcy] Code indicate that Congress intended the concept of adequate protection to go
beyond the scope of protecting the secured claim holder from a diminution in the value of the
collateral securing the debt.").
43. Sections 361 through 364 of the Bankruptcy Code provide the framework for the
granting of post-petition adequate protection to pre-petition secured lenders. No provision of the
Bankruptcy Code authorizes a chapter 11 debtor to grant its secured lender an adequate
protection lien against assets in which that lender had no pre-petition security interest.
44. A court's inquiry into the appropriateness of proposed adequate protection is
relatively narrow in focus:
To determine whether an entity is entitled to adequate protection and the type and the amount of adequate protection required, a court must determine the value of the collateral, the creditor's interest in the collateral and the extent to which the value will decrease during the course of the
bankruptcy case.
In re Megan-Racine Assocs., 202 B.R. 660, 663 (Bankr. N.D.N.Y. 1996) (citations omitted).
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45. The scope of the proposed adequate protection in these cases extends beyond
replacement of collateral securing the potential diminution in the value of the Lender Group's
pre-petition collateral below the amount owed to them. The Lender Group should not receive
more than replacement liens for the diminution in value of its collateral. Moreover, as discussed
in more detail below, the Debtors have not demonstrated that the payment of the Lender Group's
professionals' fees, and expenses are proper, much less necessary to protect against diminution
in the value of its pre-petition collateral—or that such collateral will diminish in value at all.
Further—and most importantly—any adequate protection that this Court decides to award should
be subject to recharacterization or disgorgement, including but not limited to a challenge from
the Committee.
E. The requested 506(c) and 552(b) waivers are inappropriate.
46. The Committee objects to waivers of (i) the right to surcharge for the cost and
expenses associated with the preservation and disposition of the Lender Group's pre-petition
collateral, (ii) the power of the Court to prevent pre-petition liens to extend to post-petition
proceeds of collateral, "based on the equities of the case," and (iii) the marshalling doctrine.
47. The section 506(c) waiver serves no purpose, other than to eliminate a potential
avenue of recovery for the Debtors' estates by ensuring that the costs of the Debtors'
restructuring will be borne by the unsecured creditors alone—even if the unsecured creditors
receive no value. Moreover, the waiver contravenes the intent behind Section 506(c) of the
Bankruptcy Code. In re Codesco, Inc., 18 B.R. 225, 230 (Bankr. S.D.N.Y. 1982) ("The
underlying rationale for charging a lienholder with the costs and expenses of preserving or
disposing of the secured collateral is that the general estate and unsecured creditors should not be
required to bear the cost of protecting what is not theirs.").
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48. Courts routinely reject attempted waivers of surcharge rights under Section
506(c). In re The Colad Group, Inc., 324 B.R. 208, 224 (Bankr. W.D.N.Y. 2005) (refusing to
approve DIP financing with a section 506(c) waiver intact); In re Willingham Invs., Inc., 203
B.R. 75, 80 (Bankr. M.D. Tenn. 1996); In re Visual Indus., Inc., 57 F.3d 321, 325 (3d Cir. 1995)
("[Section] 506(c) is designed to prevent a windfall to the secured creditor . . . . The rule
understandably shifts to the secured party . . . the costs of preserving or disposing of the secured
party's collateral, which costs might otherwise be paid from the unencumbered assets of the
bankruptcy estate....") (internal citation omitted); Kivitz v. CIT Group/Sales Fin., Inc., 272 B.R.
332, 334 (D. Md. 2000) (a secured party, and not other creditors, must bear the cost of preserving
or disposing of its own collateral.); In re AFCO Enters., Inc., 35 B.R. 512, 515 (Bankr. D. Utah
1983) ("When the secured creditor is the only entity which is benefited by the trustee's work, it
should be the one to bear the expense. It would be unfair to require the estate to pay such costs
where there is no corresponding benefit to unsecured creditors."); see also In re Motor Coach
Indus. Intl, Inc., Case No. 08-12136 (Bankr. D. Del. Oct. 22, 2008) (Final Order Authorizing
Debtors to Obtain Postpetition Financing) (Docket No. 244) (removing a section 506(c) waiver
from the final post-petition financing order after the creditors' committee objected to its
inclusion); In re Fedders North America, Inc., Case No. 07-11176 (Bankr. D. Del, Oct. 5, 2007)
(Final Order Authorizing Debtors to Obtain Postpetition Financing) (Docket No. 272) (a section
506(c) waiver in the interim post-petition financing order was removed from the final post-
petition financing order after the creditors' committee objected to its inclusion).
49. While a debtor may waive the right to surcharge under 506(c) when a lender
funds an adequate budget designed to cover expenses of the case, here the budget does not
provide for payment of all administrative expense claims. Further, the DIP Lenders have
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provided no basis either for curtailing the Court's power to (i) exclude post-petition proceeds
from the Prepetition Secured Parties' pre-petition collateral, based on the equities of the case
under section 552(b) of the Bankruptcy Code, or (ii) marshal assets. Therefore, the Final Order
should waive neither the provisions of sections 506(c) and 552 of the Bankruptcy Code, nor the
marshalling doctrine.
F. The Lenders' request for professional fees is inappropriate and, at the very least,
should be subject to disclosure.
50. The Credit Agreement provides that the Debtors are to pay the DIP Lenders'
professional fees. See, e.g., Credit Agreement 10.4 ("Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of Agent and Existing Agent (including Legal
Costs). . . ."). The fees are to be paid "on demand," "whether or not included in the Budget," and
without any right (either in the Interim Order or the Credit Agreement) of any party for notice
and an opportunity to object. The Budget has no itemized line item for payment of the DIP
Lenders' professional fees.
51. A chapter 11 debtor's estate typically may only pay professionals' fees pursuant
to sections 330 and 331 of the Bankruptcy Code. In certain limited circumstances, a non-estate
professional may also receive compensation under sections 506(b) or 503(b). The filing of a
bankruptcy petition relieves the debtor of non-bankruptcy obligations to pay professional fees to
third parties unless and only to the extent that the Bankruptcy Code provides for such payments.
In re Loewen Group International, Inc., 274 B.R. 427, 445, n.36 (Bankr. D. Del. 2002)
("Although a contractual provision providing for the recovery of attorneys' fees and costs may
enable an unsecured creditor to pursue recovery of such fees and costs in an action in state court,
in the context of bankruptcy, the creditor's right to assert such claims is limited by the provisions
of the Bankruptcy Code.").
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52. Section 506(b) of the Bankruptcy Code permits paying an oversecured claimant
"any reasonable fees, costs, or charges provided for under the agreement or State statute under
which such claim arose," but only "[t]o the extent that an allowed secured claim is secured by
property the value of which . . . is greater than the amount of such claim." 11 U.S.C. § 506(b).
The Lender Group's professionals thus can only qualify for payment under section 506(b) if and
to the extent that the Lender Group's pre-petition secured claims are oversecured. However, the
Lender Group bears the burden of establishing that the Debtors' debts are oversecured, but have
not done so. See 11 U.S.C. § 363(p)(2).
53. The Lender Group is similarly not entitled to reimbursement of its professionals'
fees under section 503(b) of the Bankruptcy Code. Section 503(b) provides for allowance as an
administrative expenses of costs incurred by entities "making a substantial contribution"
including "reasonable compensation for professional services rendered by an attorney or an
accountant of [such] an entity, based on the time, the nature, the extent, and the value of such
services, and the cost of comparable services other than in a case under this title, and
reimbursement for actual, necessary expenses incurred by such attorney or accountant." 11
U.S.C. § 503(b)(3)(d), (b)(4). Unless and until the Lender Group demonstrates that it has made a
substantial contribution to the Debtors' chapter 11 cases, it is not entitled to be paid under
section 503(b). In addition, to the extent any substantial contribution is shown, the professional
fees would be limited as provided in the language of section 503(b)(4).
54. In certain circumstances, fees may be necessary to induce a disinterested post-
petition lender to extend credit to a Chapter 11 debtor. Here, however, the DIP Lenders have a
compelling incentive to lend under the DIP Facility: protecting their preexisting debt and/or
equity investments in the Debtors, an inducement that exists without the need for any fees at all.
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The DIP Lenders are not new, disinterested lenders, or even pre-petition lenders standing at a
distance from the Debtors. Rather, the proposed DIP Facility is purely protective in nature.
55. While a "protective DIP" is not categorically impermissible, here the proposed
DIP Facility simply goes too far, requiring the Debtors to pay the Lenders' professional fees on
demand, without notice to the Committee or other parties, and irrespective of the Budget. Given
that the essence of the DIP Facility is to improve the position of the Lender Groups, without any
significant new funds for the Debtors' estates, any professional fees or expenses of the Lenders
should be subject to disclosure and an opportunity to object by the Committee. Assuming that
the Lender Group may have some of their professional fees reimbursed, they must be subject to a
reasonableness standard (as are the fees of professionals retained by order of the Bankruptcy
Court) and a monthly cap. The invoices submitted to the Committee and other parties in interest
should not be a mere summary and should be reasonably detailed. The Final Order should also
provide that the Debtors and their estates will not reimburse the professional fees incurred by any
individual lenders (as opposed to the Agent on behalf of the Lender Group).
G. No post-petition interest should be awarded.
56. As additional adequate protection, the Lender Group is seeking post-petition
monthly payments of interest on pre-petition obligations. See Interim Order, II 4(a). The Lender
Group must show that it is oversecured in order to be entitled to post-petition interest. See 11
U.S.C. § 506(b). Neither the Debtors nor the Lender Group have done so.
H. The DIP Facility seeks to hamstring the Committee with a short challenge period,
limited professional fees, and a de minimis investigation budget cap.
57. The Debtors have budgeted $1,757,500 for professional fees and expenses
incurred by the Debtors and have budgeted only $200,000 for the Committee and its
professionals. Thus, the Committee is relegated to just over 11% of that of the Debtors. The
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$200,000 carve out for Committee professionals should be increased to $450,000 (25% of the
Debtors' professional fee budget) as the currently budgeted amount is insufficient for the
Committee to adequately meet its fiduciary obligations.
58. In addition to denying the Committee sufficient funds to adequately participate in
these cases, the Debtors also seek to negatively impact the Committee by providing a short time
period within which to investigate and challenge the extent, priority, and validity of alleged pre-
petition liens and other causes of action. Given the complexity of the Debtors pre-petition
capital and corporate structure, the Debtors' pre-petition transactions (about which the
Committee knows very little, at this point), as well as the Debtors' requested extension of the
deadline to file their schedules and statements of financial affairs until July 5, 2016, it is
unreasonable to expect that the Committee's investigation could be completed within the current
deadline of July 31, 2016. See Interim DIP Order If 8(a). At minimum, the Committee's
challenge deadline should be extended by an additional 30 days, making the new deadline for the
Committee to challenge through August 30, 2016.
59. In addition, through the professional-fee Carveout, the Debtors seek to limit the
Committee to $25,000 in professional fees to investigate a potential Challenge under the DIP
Order. The proposed $25,000 cap on the Committee's fees to investigate the liens and claims of
the Prepetition Secured Parties, and all other potential claims against the Prepetition Secured
Parties, should not be approved. In other complex cases, creditors' committees have not been
subject to budgetary restrictions on their investigation of lender claims, a core component of a
committee's fiduciary duties. See, e.g., In re TOUSA, Inc., Case No. 08-10928 (Bankr. S.D. Fla.
Jan. 9, 2009) (Second Stipulated Final Order Authorizing Use of Cash Collateral) [D.I. No..
2355] (providing for no cap on use of cash collateral to conduct investigation); In re Quebecor
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World (USA) Inc., Case No. 08-10152 (Bankr. S.D.N.Y. Apr. 1, 2008) (providing for no
restriction on the use of post-petition loan funds to conduct investigations into claims against
pre-petition lenders); In re Tropicana Entertainment, LLC, Case No. 08-10856 (Bankr. D. Del.
May 5, 2008); In re Radnor Holdings Corp., Case No. 06-10894 (Bankr. D. Del. Sept. 2, 2006);
In re Delta Airlines, Inc., Case No. 05-17923 (Bankr. S.D. N.Y. Oct. 6, 2005) (no cap).
60. In addition to being unnecessary and atypical, the lien investigation fee cap
deliberately forces the Committee's professionals to finance matters related to the Debtors'
reorganization and harms the adversary system characteristic of the chapter 11 process. See
Tenney Village, 104 B.R. at 568-69 (finding cap on fees unacceptably limited the right of
debtor's counsel to payment for bringing actions against the pre-petition lenders, creating an
economic incentive to avoid bringing such actions in disregard of its fiduciary duties toward the
estate, and therefore, refusing to approve the post-petition financing); In re Channel Master
Holdings, Inc., No. 03-13004, 2004 Bankr. LEXIS 576, at *8-9 (Bankr. D. Del. Apr. 26, 2004)
(refusing to enforce a $75,000 cap on committee's professional fees under a post-petition
financing facility, finding such cap unreasonable in light of the much larger caps on the other
professionals in the case and, after a thorough review of all the actions of the committee's
professionals, determining that the cap on the committee's fees was inadequate to compensate
for such activities).
61. Finally, the DIP Order should explicitly provide for automatic standing of the
Committee to assert a Challenge.
I. The DIP Facility potentially prejudices the creditors by failing to delineate among
Debtor entities.
62. The DIP Facility fails specify how receipts will be accounted by Debtor-entity,
applied against the obligations under the DIP Facility, or how disbursements will be allocated.
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See, e.g., Interim Order ¶ 2(d) (allowing Cash Collateral to be applied to the Debtors' obligations
under the DIP Facility, apparently irrespective of which Debtor entity the Cash Collateral relates
to). This potentially prejudices other creditors.
63. In cases with jointly administered debtors, a creditor's claim is normally only
against a single debtor. If a creditor has a claim against "debtor A," then the distribution to that
creditor on its claim will be determined according to the distributable assets of "debtor A,"
absent substantive consolidation. Here, in the Debtor's DIP Facility, the Debtors could be taking
a post-petition receipt due "debtor A" and arbitrarily applying it against the Lenders' claim
against "debtor B," thereby reducing the distributable assets to other creditors of "debtor A." For
all other creditors, this could prejudice some and result in a windfall for others.
64. Currently, the Debtors' process for cash management and application of receipts
is opaque. The Final Order should clarify this process, and cannot be approved in its current
form without potentially prejudicing all other creditors of the Debtors.
J. The DIP Facility gives the Lenders arbitrary and unilateral bases to declare a default.
65. The Credit Agreement gives the DIP Lenders too much discretion to declare a
default or otherwise avoid their obligations to fund. One of the condition precedents to the
Lenders' obligations under the Credit Agreement is that the "Agents shall have received such
information regarding the financial condition of the Loan Parties as Agents shall have
requested." Credit Agreement § 4.1.5. Clearly, there are potential ways that the Debtors could
be deemed to violate this requirement that do not rise to the level of a default but that would be
deemed one by the DIP lenders. Further, the Debtors represent in the Credit Agreement that
there is no post-petition or continuing "Material Adverse Effect" (Credit Agreement § 5.5),
vaguely defined as, among other things, "a materially adverse change in, or a material adverse
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effect upon, the financial condition, operations, assets, or business, of the Loan Parties taken as a
whole" Credit Agreement § 1.1. It is unclear what could potentially be deemed by the DIP
Lenders to be a "Material Adverse Effect" and as a result, could be something as simple as
having insufficient funds to satisfy adequate assurance requests. Additionally, as mentioned
above, the DIP Lenders can declare a default if the Court orders payment of a 503(b)(9) claim
(Credit Agreement § 7.14).
66. The Credit Agreement—in essence—allows the DIP Lenders to declare a default
arbitrarily or, in the case of payment of 503(b)(9) claims, if the Debtors pay an allowed claim as
ordered by the Court. 7 The DIP Lenders' improperly broad discretion to declare a default under
the DIP Credit Agreement underscores the risk for unsecured creditors. The DIP Facility
amounts to the Lender Group seeking the benefits of liquidating its collateral through the federal
bankruptcy process, but at the same time shifting the risk of this process on to the backs of the
other creditors. If the DIP Lenders also have unfettered discretion to declare a default and "pick
up their toys and go home," that risk is compounded. The DIP Facility should not be approved
without these provisions stricken from the applicable agreements and the Final Order.
K. Reservation of Rights with respect to any Remaining Issues
67. The Committee has identified several other problematic issues with the DIP Order
and is conferring with counsel to the Debtors and the DIP Lenders in an effort to resolve them.
The Committee expressly reserves the right to supplement this Objection at any time prior to the
7
Generally, allowed section 503(b)(9) claims are payable along with all other allowed administrative claims. However, there is case law to support the right to early payment of 503(b)(9) claims in certain circumstances. See, e.g., In re Global Home Products, No. 06-10340 (KG), 2006 WL 3791955, at *4 (Bankr. D. Del. Dec. 21, 2006) (considering the following three factors in determining an entitlement to immediate payment: (1) the prejudice to the debtors, (2) hardship to claimant, and (3) potential detriment to other creditors). It is therefore not inconceivable that a 503(b)(9) claimant in these cases could obtain an allowed 503(b)(9) claim and meet its burden under Global Home for immediate payment, thus tripping the default provision of the DIP Credit Agreement.
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hearing, or raise additional or further objections at the hearing, to the extent the parties are
unable to reach a consensual resolution.
WHEREFORE, for the reasons set forth above, the Committee objects to the relief
sought in the DIP Motion, and respectfully requests that this Court: (i) limit the relief sought by
the Debtors in the DIP Motion to the extent provided for herein; and (ii) grant such other and
further relief as the Court may deem just and proper.
Dated: June 6,2016
SAUL EWING LLP
By:
Mark Minuti (DE Bar No. 2659) Lucian B. Murley (DE Bar No. 4892) 1201 N. Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19899 Telephone: (302) 421-6840 Fax: (302) 421-5873 [email protected] [email protected]
-and-
Sharon L. Levine One Riverfront Plaza 1037 Raymond Blvd, Suite 1520 Newark, NJ 07102-5426 Telephone: (973) 286-6713 Fax: (973) 286-6821 [email protected]
-and-
Robyn F. Pollack Centre Square West 1500 Market Street, 38th Floor Philadelphia, PA 19102-2186 Telephone: (215) 972-7537 Facsimile: (215) 972-1946 rpo 1 lack@sau .com
Proposed Counsel to the Official Committee of Unsecured Creditors of Phoenix Brands LLC, et al.
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
PHOENIX BRANDS LLC, et al.,
Debtors.
Chapter 11
Case No. 16-11242 (BLS)
(Jointly Administered)
In re: Chapter 11
PHOENIX RIT LLC, Case No. 16-11353 (BLS)
Debtor. (Joint Administration Requested)
CERTIFICATE OF SERVICE
I, Lucian B. Murley, hereby certify that on June 6, 2016, I caused a copy of the
Objection by the Official Committee of Unsecured Creditors to Debtors' Motion for Entry
of Interim and Final Orders Pursuant to 11 U.S.C. §§ 105, 107, 361, 362, 363, 364, and 507
and Rules 2002, 4001, 9014, and 9018 of the Federal Rules of Bankruptcy Procedure
(I) Authorizing the Debtors to (A) Use Cash Collateral, and (B) Obtain Post Petition
Financing; (II) Granting Liens and Super-Priority Claims; (III) Scheduling a Final
Hearing; and (IV) Granting Related Relief to be served on the parties on the attached service
list in the manner indicated therein.
SAUL EWING LLP
By:
Lucian . Murley (DE Bar No. 4892)
1201 N. Market Street, Suite 2300
P. 0. Box 1266
Wilmington, DE 19899
(302) 421-6840
Dated: June 6, 2016
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Case 16-11242-BLS Doc 116-1 Filed 06/06/16 Page 1 of 2
PHOENIX BRANDS LLC, et al.,
Service List
Via Electronic Mail: Laura Davis Jones, Esquire
Joseph Mulvihill, Esquire
Pachulski Stang Ziehl & Jones
919 North Market Street, 17th Floor
Wilmington, DE 19801
Hannah Mufson McCollum, Esquire
Office of the United States Trustee
J. Caleb Boggs Federal Building
844 King Street, Suite 2207
Wilmington, DE 19801
Robert Dehney, Esquire
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street
P.O. Box 1347 Wilmington, DE 19899-1347
Joseph Moldovan, Esquire
Morrison Cohen LLP
909 Third Avenue
New York, NY 10022
Dimitri G. Karcazes, Esquire
Goldberg Kohn Ltd.
55 East Monroe Street, Suite 3300
Chicago, IL 60603
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