Yesterday, Recycled Paper Greetings, Inc. filed a motion with its bankruptcy court seeking authority to reject a Corporate Services Agreement dated December 5, 2005 with Monitor Clipper Partners, LLC and the disallowance of any claims asserted by MCP relating to RPG’s rejection of the agreement. According to the motion, RPG’s rejection of the agreement is required by the Prepackaged Plan of Reorganization that RPG has proposed (which would effectuate the acquisition of RPG by American Greetings Corporation) and that American Greetings has a right to terminate its purchase of RPG’s assets if the rejection is not approved. American Greetings has filed a joinder to the rejection motion.
The motion asserts that the agreement was entered into as part of MCP’s leveraged buy out (through affiliated entities) of RPG in December 2005. RPG states that the agreement provides no value to RPG’s estates because the agreement provides that MCP will receive $500,000 per year in exchange for the possible provision of advisory and other services to RPG, none of which have actually been provided. Further, RPG argues that the agreement was not the result of arms’ length negotiations but was imposed upon RPG as a condition of MCP’s agreement to participate in the LBO. As a result, RPG further requests that the court set a bar date for the filing of any claims resulting from the rejection of the agreement and procedures to handle the estimation or allowance of the claim (RPG asserts that it will seek disallowance of any such claims and/or seek to have those claims estimated at $0.00 for allowance and distribution purposes).
A copy of the Corporate Services Agreement is attached to the motion. Download a copy of the motion and the agreement here.
Categories: Bankruptcy and Restructuring News · Major Bankruptcy Case Events · Plan of Reorganization
Tagged: agc, agreement, american, bankrupt, bankruptcy, buy, buyout, chapter 11, clipper, corporate, corporation, greetings, leveraged, mcp, monitor, out, paper, partners, plan, recycled, recycled paper greetings, reject, rejection, reorganization, rpg, services
Categories: Bankruptcy and Restructuring News · Major Bankruptcy Case Events
Tagged: 333 bush, alfred, associates, bankrupt, bankruptcy, california, chapter 11, claim, committee, creditor, creditors, creditors' committee, ehrman, enterprises, guckenheimer, heller, heller ehrman, lea, mept, moore, san francisco, st. matthews, unsecured, williams
Categories: Bankruptcy and Restructuring News · Major Bankruptcy Case Events
Tagged: america, bank, bankrupt, bankruptcy, berry, bp, chapter 11, claim, coca, coca cola, cola, committee, company, creditor, creditors, creditors' committee, delaware, enterprises, first, flying, flying j, j, marketing, national, newfield, north, petroleum, plains, production, products, steelworkers, united, unsecured, zions
The Office of the United States Trustee for the District of Hawaii yesterday objected to the retention (or the terms of the retention) of several proposed professionals for Hawaiian Telcom Communications, Inc. Specifically, the U.S. Trustee filed an objection to the retention of Lazard Freres & Co. (as investment banker and financial advisor), limited objections to the retention of Ernst & Young LLP (as tax advisors) and ordinary course professionals, and a statement reserving its rights with respect to the retention of Zolfo Cooper Management LLC. The U.S. Trustee’s objections are summarized below:
- Lazard Freres & Co.: The U.S. Trustee objects to Lazard’s retention because the U.S. Trustee argues that Lazard cannot represent Hawaiian Telcom in its dispute with Lehman Commercial Paper, Inc. The U.S. Trustee notes that Lazard also represents Lehman in its chapter 11 cases and argues that this creates a direct conflict of interest for Lazard with respect to disputes between Hawaiian Telcom and Lehman. The U.S. Trustee further argues that the imposition of an “ethical wall” by Lazard would be insufficient to resolve the asserted conflict. Hawaiian Telcom is party to a secured Credit Agreement with Lehman (as administrative and collateral agent for the lenders) and the U.S. Trustee asserts that the oustanding debt under that agreement exceeds $500 million. However, the objection states that the debtors and “numerous unsecured creditors, including the Unsecured Creditors’ Committee” contend that certain of the security interests under that agreement were not properly perfected. In the event that Lazard’s retention is approved over the U.S. Trustee’s objection, the U.S. Trustee also objects to Lazard’s proposed limitation of liability and certain provisions of the proposed order relating to review and payment of Lazard’s fees.
- Ernst & Young LLP: The U.S. Trustee objects to Ernst & Young’s retention under section 328(a) of the Bankruptcy Code and requests that E&Y’s fees be subject to review under the “reasonableness” standards of section 330(a) of the Bankruptcy Code. The U.S. Trustee does not want E&Y’s fees to be subject to review only under the “improvident” standard of section 328(a). In addition, the U.S. Trustee objects to the limitation of liability language contained in E&Y’s engagement letter.
- Ordinary Course Professionals (OCP): The U.S. Trustee objects on the grounds that:
- OCPs should be required to qualify as special counsel under section 327(e) of the Bankruptcy Code
- the time period to file an objection to the proposed retention of any OCP should be 14 days rather than 10 days
- the effective date of retention should be limited to the later of the date the OCP started providing services or 30 days prior to submission of the declaration (the debtors proposed that it be retroactive to the date services were commenced regardless of the delay in submitting a declaration)
- the proposed OCP cap of $35,000 per month on average (over a rolling three month period) is excessive and should be limited to $10,000
- if an OCP exceeds the fee cap, it should be required to file a fee application for all of its fees (not just fees in excess of the fee cap)
- the OCP order should include language specifying that Hawaiian Telcom is not authorized to pay a professional who does not comply with the OCP order
- the OCP order should include a requirement that Hawaiian Telcom file a “Notice of Total Compensation” for OCPs before the administrative claims bar date and parties have the opportunity to request that OCPs be required to file a fee application to receive final approval of their fees.
- Zolfo Cooper Management LLC: Hawaiian Telcom supplemented the motion with a copy of the service agreement between Hawaiian Telcom and Zolfo Cooper on January 2nd and the U.S. Trustee has apparently not had sufficient time to review the agreement. However, the U.S. Trustee does request that Zolfo Cooper be required to disclose (1) the names of staff to be provided by Zolfo Cooper; (2) whether the engagement is full-time or part-time for each of Zolfo Cooper’s staff working on the engagement; and (3) any asserted or threatened claims against Zolfo Cooper relating to its pre-petition engagement.
Download copies of the retention applications, the U.S. Trustee’s objections, and every other document filed in Hawaiian Telcom’s bankruptcy cases using netDockets. Sign up now for a free trial account.
Categories: Bankruptcy and Restructuring News · Major Bankruptcy Case Events
Tagged: bankrupt, bankruptcy, chapter 11, communications, cooper, course, ernst, freres, hawaii, hawaiian, hawaiian telcom communications, lazard, objection, ocp, ordinary, professional, retain, retention, telcom, telecom, trustee, young, zolfo
Yesterday, Frontier Airlines, Inc. filed a motion with the bankruptcy court seeking approval of a restructuring agreement with its pilots. Frontier’s pilots are represented by the Frontier Airline Pilots Association and are subject to a collective bargaining agreement. Frontier and its pilots were operating under an interim restructuring relief agreement from June 2008 through December 1, 2008 when the interim agreement expired.
The Restructuring Participation Agreement LOA restructures certain provisions of the collective bargaining agreement on a final basis. Frontier estimates that the agreement will provide labor cost savings of approximately $25 million over its term. FAPA has already held a ratification vote on the restructuring agreement and approximately 85% of Frontier’s pilots voted in favor of the agreement. Subject to court approval, the agreement will take effect on January 1, 2009.
Download a copy of the motion, which attaches a copy of the restructuring agreement, and every other document filed in Frontier’s bankruptcy cases using netDockets. Sign up now for a free trial account.
Categories: Bankruptcy and Restructuring News · Major Bankruptcy Case Events
Tagged: agreement, airlines, association, bankrupt, bankruptcy, bargaining, chapter 11, collective, fapa, frontier, frontier airlines, loa, pilot, ratification, ratify, restructure, restructuring
