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Rotech Healthcare Objection Filed
Rotech Healthcare filed with the U.S. Bankruptcy Court supplemental objection to the official committee of equity security holders' motion to retain Moelis & Company as financial advisor. Rotech Healthcare states, "The Revised Engagement Letter is inconsistent with this Court's ruling at the June13, 2013 hearing by conditioning Moelis' engagement on a Bankruptcy Code section 328(a) retention. Compensation provided under terms and conditions of employment approved under Bankruptcy Code section 328(a) may only be altered 'if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions.' 11 U.S.C. Section 328(a). This is in direct contravention of the Court's reservation of rights with respect to awarding Equity Committee's professionals less fees if they do not add value to the estate or if the fees are objectionable pursuant to Bankruptcy Code section 330. In fact, by insisting on Bankruptcy Code section 328(a) retention, the Equity Committee and Moelis intentionally attempt to undermine the Court's ruling, and that alone is cause to deny Moelis' retention."
Orchard Supply Hardware Stores Sale Approval Sought
Orchard Supply Hardware Stores filed with the U.S. Bankruptcy Court a motion for approval of bid procedures in connection with the sale of substantially all Company assets free and clear of all liens, claims, encumbrances and interests and approval of a $6,150,000 break-up fee. Lowe's Home Improvement will serve as staking horse bidder with an offer of $$205,000,000 for the assets. The motion asserts, "The Debtors believe that the process will culminate in a going-concern sale consisting of most of the Orchard stores and continued employment for the vast majority of the Company's employees enabling the Debtors to maximize the value of their assets and, ultimately, provide the highest possible recovery while protecting jobs and minimizing the impact to the substantial majority of the Company's vendors." The deadline to submit qualified competing bids is August 9, 2013, and - if one or more qualified bids are received - an August 14, 2013 auction and August 20, 2013 sale hearing will follow.
RDA Holding Extension Sought
RDA Holding Debtor Direct Entertainment Media Group filed with the U.S. Bankruptcy Court a motion to extend the exclusive period during which the Company can file a Chapter 11 plan and solicit acceptances thereof through and including July 17, 2013 and September 16, 2013, respectively. The motion explains, "There are three primary issues in developing a plan for DEMG: (1) finalizing the terms of a plan for the "Reorganization Plan Debtors," since many of the creditors hold claims against all of the Debtors and the treatment of such creditors' claims in the Reorganization Plan Debtors' plan impacts their treatment in any DEMG plan, (2) reaching an agreement with DEMG's principal creditor, the Federal Trade Commission, regarding the allowance and treatment of its claim, and (3) reaching an agreement with the Reorganization Plan Debtors regarding the allowance and treatment of their intercompany claims." The Court scheduled a June 28, 2013 hearing to consider the motion.
Orchard Supply Hardware Stores Chapter 11 Petition Filed
Orchard Supply Hardware Stores and two affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 13-11565. The Company, which operates neighborhood hardware and garden stores, is represented by Stuart M. Brown of DLA Piper. The Company concurrently announced that it has reached an agreement through which Lowe's Companies will acquire the majority of its assets for $205 million in cash, plus the assumption of payables owed to nearly all of its supplier partners. The agreement with Lowe's will comprise the initial stalking horse bid in a Court-supervised auction process under Section 363 of the Bankruptcy Code. Under the terms of the agreement, Lowe's would acquire no less than 60 of Orchard's stores, based on further due diligence on the store locations. The Company expects to complete the process in approximately 90 days, pending receipt of the necessary approvals from regulators and the Court. Orchard Supply Hardware Stores has secured commitments for $177 million in debtor-in-possession financing from Wells Fargo Bank, the Company's existing ABL lender, and its term loan lenders, which, in addition to ongoing cash flow, will ensure it is able to continue meeting its financial obligations throughout the Chapter 11 case. In addition, the term loan lenders have formally agreed to support the acquisition agreement with Lowe's as the stalking horse. Orchard Supply Hardware Stores states that it will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates. "Orchard has consistently delivered an exceptional shopping experience for our customers and, as we have executed our repositioning strategy, has also made significant operational improvements to ensure that our stores are optimally positioned for long-term success," said Mark Baker, Orchard's president and C.E.O. "The steps we are taking today allow us to definitively address our balance sheet issues in order to fully execute on our brand transformation and growth strategies. We believe that Lowe's offer is a validation of Orchard's unique market opportunity and of our strategy to capture it."
OnCure Holdings Chapter 11 Petition Filed
OnCure Holdings and 22 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 13-11540. The Company, which provides capital equipment and business management services to oncology physician groups that treat cancer patients, is represented by Paul E. Harner and Keith A. Simon of Latham & Watkins and Daniel J. DeFranceschi of Richards, Layton & Finger. OnCure Holdings announced that prior to filing, the Company, in consultation with an ad hoc group of secured noteholders, engaged in an extensive campaign to market its assets to potential financial and strategic buyers. These efforts resulted in an agreement in principle regarding a proposed acquisition with a third-party purchaser for aggregate consideration of approximately $125 million (and with reimbursement of certain expenses, of approximately $126.5 million). This transaction remains subject to the negotiation and execution of definitive documentation by the parties. OnCure Holdings also announced that Match Point Partners is providing management services, with managing partner Bradford C. Burket serving as its president and chief executive officer. In documents filed with the Court, the Company explains, "Radiation therapy is a highly competitive business. The Debtors' treatment centers face competition from hospitals, other practitioners, and other operators of radiation oncology treatment centers. Notwithstanding their positive market and competitive positions, beginning as early as 2011, the Debtors began to experience significant revenue, cash flow, and liquidity challenges. Most important, overall declines in patient census counts and decreases in Medicare and Medicaid reimbursement rates, which, as noted above, account for almost half of the net revenue of the Debtors' affiliated physician groups, led to increasingly poor financial performance."
Rotech Healthcare Disclosure Statement Approved
The U.S. Bankruptcy Court approved Rotech Healthcare's Disclosure Statement and scheduled an August 20, 2013 hearing to consider the Plan. As previously reported, "Under the Plan, the Company anticipates: (i) each holder of an Allowed First Lien Claim shall receive Cash in an amount equal to the Allowed amount of its First Lien Claim; (ii) each holder of an Allowed Second Lien Notes Claim shall receive (x) its pro rata share of 100% of the common equity of the reorganized Company, subject to dilution by the equity interests issued under the Management Equity Incentive Program (thereby eliminating in excess of $300 million of secured debt), and (y) the right to participate in the New Second Lien Term Loan; (iii) all the Company's outstanding shares will be cancelled and extinguished, and no holder of an Equity Interest in Rotech shall receive a distribution on account thereof; and (iv) trade creditors and vendors who agree to maintain or reinstate payment terms as existing prior to the Commencement Date shall be paid in full upon the effective date of the Plan. Other unsecured claims will be paid their Pro Rata Share of $1,500,000 and except as otherwise set forth in the Plan." In addition, "Barclays estimates the Reorganized Debtors' enterprise value to be between approximately $400 million and $460 million, with a midpoint of $430 million, as of an assumed Plan effective date of June 30, 2013...."
Eastman Kodak Objections Filed
Multiple parties - including Shutterfly, Sony Ericsson Mobile Communications AB, Hewlett-Packard, Canon and STWB - filed with the U.S. Bankruptcy Court separate objections to Eastman Kodak's motion for an order approving the global settlement and procedures for the assumption and assignment of certain contracts and authorizing the Debtors' entry into agreements with respect to the transfer of the document imaging and personalized imaging businesses and use, license and lease of property of the estate in connection therewith. The objectors generally state that they do not oppose the substantial majority of relief sought in the motion but do request that the sale order be clarified to maintain the status quo of the adversary proceeding. Separately, Nikon objected to the Company's motion KPP global settlement and procedures for the assumption and assignment of certain contracts and cross-motion for adequate protection under Section 363(e) and enforcement of Section 365(n)(4). Nikon explains, "Nikon reserves the right to make as the details of the Transactions and Plan become more apparent, the Sales Motion should be denied (and proposed order revised) as to any provisions that would adversely affect Nikon, any of its Agreements, or any of its Reserved Rights and Defenses, whether directly or indirectly. Nikon is available to discuss with Kodak meaningful revision to the Assignment Procedures and other aspects of the proposed Transaction, including, without limitation, (i) expansion of the bargained-for protections set forth in prior sale orders benefiting existing licensees and other parties-in-interest (ii) revision of the Assignment Procedures to address the timing and other concerns addressed and (iii) such other relief as may be required to protect Nikon and its Reserved Rights and Defenses from the adverse effects of the Sales Motion, the Plan, or the proposed orders." Intel, Dai Nippon Printing, LG Display and Nokia also objected to this same motion.
Residential Capital Statement Filed
The U.S. Trustee assigned to Residential Capital case filed with the U.S. Bankruptcy Court a statement of limited support for Berkshire Hathaway's motion for an order unsealing the Court-appointed examiner's report. The Trustee asserts, "the Court will unseal the Examiner's Report once the Court determines whether to approve the Plan Support Agreement...and also recognizes that examiner's reports are on occasion appropriately filed under temporary seal with a contemporaneous motion or established procedure to unseal. Nevertheless, the strong presumption of public access to bankruptcy records should be abridged only in accordance with the specific standards of Section 107 of the Bankruptcy Code. Here, the Examiner's Report was temporarily sealed based on the Debtors' oral application under Section 105 of the Bankruptcy Code. Courts may balance competing statutory interests of public access and confidentiality in Section 107 when temporarily sealing documents pending an opportunity for a full hearing. The general equitable authority of the Court found in Section 105 should not be substituted, however, for a statutory provision that specifically deals with the sealing of documents. Section 107 of the Bankruptcy Code provides both a presumptive right of public access - and an absolute right of United States Trustee access - to documents filed in bankruptcy courts. At the request of a party in interest, a bankruptcy court may seal a document where the party is able to demonstrate that it has met the specific requirements of Section 107(b). To date, the Debtors have not demonstrated that they have met these requirements and similarly, because relief under Section 107 has not been sought, it is unclear whether any of the parties to the Plan Support Agreement can satisfy the specific requirements of Section 107. The Debtors should be required to satisfy those standards and not be permitted to circumvent Section 107 by relying instead on the Court's general equitable powers under Section 105 - even if the sealing is of limited duration."
AMR Hiring Approvals Sought
AMR filed with the U.S. Bankruptcy Court motions to retain Daugherty, Fowler, Peregrin, Haught & Jenson (Contact: Robin D. Jenson) as special counsel at the following hourly rates: partner at $300 to 380 and paraprofessionals at 150 to 190 and Pillsbury Winthrop Shaw Pittman (Contact: Jennifer Trock) as special counsel at the following hourly rates: partner at $625 to 1,155, counsel at 380 to 1,020, associate at 380 to 765 and paraprofessional at 70 to 755.
AmericanWest Bancorporation Plan Filed
HoldCo Advisors filed with the U.S. Bankruptcy Court a Third Amended Plan of Reorganization and related Disclosure Statement for AmericanWest Bancorporation. According to the Disclosure Statement, "As a result of the competing plans and disclosure statements filed by the Debtor and Holdco, the Debtor and Holdco were poised to simultaneously seek approval of competing disclosure statements and confirmation of competing plans. This process would have involved substantial litigation regarding plan confirmation. Holdco and the Debtor, with the support of the Committee, agreed to enter into mediation to resolve the issues raised by the competing plans, and to avoid the substantial cost to the Debtor's estate that litigating competing plans would entail. To that end, Holdco and the Debtor entered into a joint motion to direct mediation [Docket No. 369] (the 'Mediation Motion')." AmericanWest Bancorporation and Holdco agreed to mediate the following issues: (1) Determine if there are any meritorious litigation claims that he/she recommends be pursued in connection with the Court-approved 363 sale of the bank which was completed in December 2011. (2) Determine whether the Debtor's estate has any claims in connection with downstreams or payments of money from the Debtor to its subsidiary bank on account of tax refunds received by the Debtor. (3) Determine whether the Debtor has any avoidance claims against its current or former directors and officers on account of payments made to such current or former directors or officers prior to the commencement of the Chapter 11 case. (4) Evaluate whether the Debtor's proposed settlement of claims asserted by Sandler on its indemnification claim related to the 363 sale of the bank is in the best interests of the Debtor's estate and its creditors. HoldCo Advisors explains that this mediation concluded on April 10, 2013: "As a result of the mediation, the releases of Sandler, SKBHC, the Debtor's professionals, and the Debtor's directors and officers will be included in the Plan, and the Debtor has withdrawn its competing plan. As such, only one plan will be presented to creditors for a vote. For the avoidance of doubt, however, Holdco did not support the Sandler settlement and did not agree that it is in the best interests of the Debtor and its estate. Pursuant to the mediation agreement, however, Holdco cannot object to the Sandler settlement to the extent such settlement is consistent with the description of the settlement provided to Holdco and the mediator."