2021-01-14_GENERAL DOCUMENTS - C1980004

• Permit No: C1980004
• IBM Index Class Name: General Documents
• Doc Date: 1/14/2021
• Doc Name Note: Case No. 20-12043 ‎(GRH)‎ Hopedale Mining LLC
• Doc Name: Bankruptcy Notice
• From: DRMS Website
• To: DRMS
• Permit Index Doc Type: General Correspondence
• Email Name: JDM
• Email Name: JRS
• Email Name: GRM
• Email Name: CMM
• Email Name: CAB
• Media Type: D
• Archive: No

Case 120-bk-12043 Doc 573 Filed 01/13/21 Entered 01/13/21 110353 Desc Main
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Case 120-bk-12043 Doc 573 Filed 01/13/21 Entered 01/13/21 110353 Desc Main
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of voting on a chapter 11 plan. In re Augie/Restivo Baking Co., 860 F.2d 515, 518 (2d Cir. 1988);
see also In re Baker & Getty Fin. Servs., Inc., 974 F.2d 712, 720 (6th Cu. 1992) (noting that
substantive consolidation should be used when warranted by the circumstances of the case and
when it is in the best interest of the unsecured creditors); In re Creditors Serv. Corp., 195 B.R.
680, 688-89 (Barka. S.D. Ohio 1996).
In deciding whether to consolidate, a number of earlier cases relied on the presence or
absence of certain "elements" that are similar to factors relevant to piercing the corporate veil
under applicable state Law. See, e.g., In re GulJeo Inv. Corp., 593 F.2d 921 (10th Cir. 1979). More
recent cases, however, while not ignoring these elements, have applied a Less mechanical approach.
Thus, for example, the Second Circuit, in In re Augie/Restivo, concluded that the extensive list of
elements and factors frequently cited and relied upon by other courts in determining the propriety
of substantive consolidation are "merely variants on two critical factors," namely, "(1) whether
creditors deaftwith the entities as a single economic unit and'did not rely on their separate identity
in extending credit, ...' or (2) whether the affairs of the debtors are so entangled that consolidation
will benefit all creditors .._" 860 F.2d at 518 (citations omitted). The Eleventh Circuit, in
Eastgroup Properties v. Southern Motel Assn, Ltd., 935 F.2d 245 (1Ith Cir. 1991), viewed those
elements and factors "as examples of information that may be useful to courts charged with
deciding whether there is a substantial identity between the entities to be consolidated and whether
consolidation is necessary to avoid some harm or to realize some benefit" Id. at 250. Under the
Eastgroup test, a proponent of substantive consolidation must show that there is substantial
identity between the entities to be consolidated and that consolidation is necessary to avoid some
harm or realize some benefit
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causes of action against the Debtors' insiders and third parties), may span multiple Debtors.
Consolidation avoids the material expense and delay of trying to address those issues.
In short, the benefit of substantive consolidation to the vast majority of creditors far
outweighs any practical harmalthough none, to date, has been suggested. Even if any creditors
in Class 5 claimed to have relied on the credit of an individual Debtor entity (no creditor has argued
this), that number would be miniscule compared to the number of creditors that did not so rely.
Consequently, the Proponents believe that substantive consolidation is warranted in Light of the
criteria established by the courts in ruling on the propriety of substantive consolidation in other
cases.
VH. CONCLUSION
For the foregoing reasons, the Court should (i) confirm the Plan and (a) grant the
Proponents such other and further relief as is just and proper.
B. Factual Basis for Substantive Consolidation of the Debtors' Estates
The facts and circumstances surrounding the historical business operations of the Debtors
support substantive consolidation in these chapter 11 cases. Rhino GP LLC is the general partner
of Rhino Resource Partners LP, which directly or indirectly owns all of the other filing entities.
Rhino and its subsidiary Debtors had common officers and directors, shared key employees and
outside professionals, including, but not limited to, Rhino employees who performed human
resources, Legal, and risk management services for the benefit of all the Debtors and accounting
firms, Law firms and consultants who rendered services to all of the Debtors, and maintained
common insurance policies which cover all the filing entitles. ALL of the entities also shared
physical space and office equipment.
The Debtors' cash management system was effectively centralized and was constructed to
provide a substantially unified system for all of the Debtors; the system allowed for an integrated
method for accounting for revenues and expenses to be collected and paid. While some of the
subsidiary Debtors maintained their own deposit accounts, all of the cash was furneted through
the same master account This allowed Rhino to have overall corporate control of funds and the
ability to manage the Debtors' various business Lines. Furthermore, as set forth above, all
obligations to the Lenders were secured by all assets of each subsidiary Debtor, and the total
valuation of the Debtors was Less than the amount of such obligations. Moreover, the main
remaining assets ofthe Debtors consist of (a) cash "carved out" as part of a resolution with Lenders
in connection with the Debtors' asset sales, and (b) causes of action against third parties. With
respect to (a), there is no natural allocation of that cash between the Debtors, and it could be very
costly to Litigate which Estates should receive particular amounts. The same is true of causes of
action, as the claims most likely to bring material recoveries for creditors under the Plan (i.e.,
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Dated: January 13, 2021 Respectfully submitted,
FROST BROWN TODD LLC
AID-0as L. Lutz
Douglas L. Lutz
A.J. Webb
3300 Great American Tower
301 East Fourth Street
Cincinnati, Ohio 45202
Tel: [phone]
Fax:[phone]
E-mail: [e-mail]
[e-mail]
ATTORNEYS FOR DEBTORS AND DEBTORS
IN -POSSESSION
-and-
FOLEY & LARDNER LLP
/s/Geoffrev S. Goodman (admitted aro hac vice)
Matthew L. Lee (admitted pro hac vice)
321 North Clark Street, Suite 2800
Chicago, Illinois 60654
Telephone: [phone]
Email: [e-mail]
[e-mail]
-and-
BARBER LAW PLLC
/s/T Kent Barber
T. Kent Barber
2200 Burrus Drive
Lexington, KY 40513
Telephone:[phone]
[e-mail]
COUNSEL FOR THE OFFICIAL COMMITTEE
OF UNSECURED CREDITORS OF HOPEDALE
MINING LLC, ET AL.
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