Case 16-11242-BLS Doc 116 Filed 06/06/16 Page 1 of 27 IN THE … · 2016-06-06 · The DIP Facility fails to account for all administrative claims. 16. The budget attached to the

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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Case 16-11242-BLS Doc 116 Filed 06/06/16 Page 1 of 27

(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

3 652524.13 06/06/2016


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

7 652524.13 06/06/2016


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)

9 652524.13 06/06/2016


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

- 22 - 652524.13 06/06/2016


$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

- 23 - 652524.13 06/06/2016


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.

- 24 - 652524,13 06/06/2016


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

- 25 - 652524.13 06/06/2016


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.

- 26 - 652524.13 06/06/2016


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.

- 27 - 652524,13 06/06/2016


IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re:


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

652524.13 6/6/16

Case 16-11242-BLS Doc 116-1 Filed 06/06/16 Page 1 of 2


Service List

Via Electronic Mail: Laura Davis Jones, Esquire

Joseph Mulvihill, Esquire

Pachulski Stang Ziehl & Jones

919 North Market Street, 17th Floor


Hannah Mufson McCollum, Esquire

Office of the United States Trustee

J. Caleb Boggs Federal Building

844 King Street, Suite 2207


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

652524.13 6/6/16

Case 16-11242-BLS Doc 116-1 Filed 06/06/16 Page 2 of 2

Documents

Case 16-11242-BLS Doc 116 Filed 06/06/16 Page 1 of 27 IN THE … · 2016-06-06 · The DIP Facility fails to account for all administrative claims. 16. The budget attached to the