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<br />Exhibit 1 -Joint Motion fcID tpwa1 of Va4leOiNcAUAgreement Page 3 of 14
<br />IN THE UNJTE I) S 1 .c 1 CS SANKRU PTCY COURT
<br />FOR THE SOU I IIERN DISTRICT OF OH IO
<br />In re: ] Chapter I I
<br />}
<br />Hopedale Mining LLC, a+QI ,' } C.,e No- L20-bk-12043 (GRIT)
<br />]
<br />] (Jointly Administered)
<br />]
<br />Debtors. 1
<br />] Ilonomblc Guy R- Humphrey
<br />JOINT MOTION OF THE DEBTORS AND THE OFFICIAL COMMITTEE
<br />OF UNSECURED CREDITORS FOR APPROVAL OF SETTLEMENT
<br />AGREEMENT W I rH PRE PEI I rION LENDERS AND DIP LENDER$
<br />PCRSUA%T TO BANKRUPTCY KU 1,E 9019
<br />The alkh•c-captioned debtor and detours-in-pnsscssitm (collectively, the "Debtors") and
<br />the Official Committee ofllnsecured Creditors (the "Committee"], by and through their respective
<br />counsel, and pursuant to Federal Rule of Bankruptcy Procedure ("Bankruptcy Rolc') 9019 and
<br />LBR 91019-I, hereby move the Court (the "Motion') Fos entry of an Order approving a settlement
<br />agreentenl (the "Settement Agreemm ') by and between (i) the Commitieo, (i i) the Debtors (as to
<br />certain provisions of the Smlcmmt Agrccmcnr); (iii) Colbeck Strategic Lending Master, L.P.
<br />("Col6cck") and CION Iwcstmcnl Corporation ["CION'), togclhcr in their capacities as
<br />Prcpclition Lcndcm:l and (iv) Colbcck and CION, togclhcr in their capacities as DIP Lenders
<br />' The Deklots in these Chapia I I canes Bye (-ilh the loaf four digits of Iheir fcdml raa idsnti liwlirar oatn6ao in
<br />paaeml} Rhino GP LLC (8614). Rhino Rceourtt I'anncn LP(7517). Nhim E-W LLC(6320. Rhin Trucking
<br />LLC J9773X Rhino Exptornian LLC (RR63j, Toad RonfSalipmt Systems LLC (11 83j, Sprinsdide Land LLC (9816).
<br />McClow Canyon Mining LLC 07s)1• Rhino Nonhem IloWi p LLC (1&3a1. CAM.Ohio Rest Fuu LLC (1 9591.
<br />CAM{'olondu LLC (4269). Taylorville Mining LLC (5106), CAM Coal Trading LLC t4143L Castle Valley Mining
<br />LLC (9495), )¢sett Verney Mining LLC (0270). Rhino Services LLC (3356), Rhino 4iifck! su iccs LLC (g93a).
<br />Rhine Tcchookrgim LLC(0994). CAM Mining LLC(7A9B). Rhino Coalfield Saxrkrs LUC (39241, Hapr d.k Mining
<br />LLC (90fA], CAMAR .wky Rol F .e LLC f909), CAM All ILC (9W7)• 11 o ,ill¢ Land LLC (7797J, CAM
<br />AimaA LLC(5467), Peenydle Itoeryy t,t.0 1609j). Rhi., From LLC(1057). kockhoo a Lend LLC (77X)-
<br />' eaphalinad Imo. drat arc not kited herein shall ha the meaniasa —,ibcd m them in the limn cm4,+
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<br />DIP
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<br />Exhibit 1 -Joint Motion fcD9rppmY9 of Pe4leMahtlagreement Page 4 of 14
<br />5. On August 25, 2020, pursuant to the Final DIP Order. the Committee provided
<br />written notice 6o the Prepctilion Lenders of the Committee's intent to file "initial Challenges" to
<br />certain alleged liens and claims of the Prcpctition Secured Parties. The Commitlec's notice of
<br />"Initial Chatlenges" asserted the fob towing pi .1 the Prcl tition Secured Pantie,-
<br />0 Challenges to the Altcged Licns - The Committee asserted that the Prcpelition
<br />Secured Panics failed to pmperly perfect their alleged sccunly interests in certain
<br />of the Deh[ors' assets including motor vehicles: Certain real properties; certain cash
<br />in bank accounts: and certain commercial toot claihm, thereby making such at [eged
<br />security interests unperfected and avoidable pursuanl to I 1 U.S.C. § 544[a]
<br />• Clwl]cn¢es to Claims - The Committer challcngcd the atlowebi l ily of certain
<br />components of the Prcpci ition Secured Panics' claims, including unused lint fees.
<br />make whole claims, origination fees, exit fees, and consent fees totaling at least
<br />S7,122,951.67 plus i arrest.
<br />6. After the Committee notified the Prcpctitian Lenders of its Initial Challenges, the
<br />Commi nee and the Pmp." tion Lenders engaged in substantial negotiations regarding the merits of
<br />the Comm ittec's challenges, the Dcbtors proposed sale of substantially all of their asacts to the
<br />Stalking Horsc Bidder, which was comprised of the Prcpetirion Sccurcd Parties and the DIP
<br />Secured Parties (or their assignees and designees) (as utrimarely consummated, the ''7, the
<br />consideration that the Debtors' "Notes would receive in connection with the Sale, and vanous
<br />relarcd matters.
<br />7. Those negotiations resulted in the first setlenent between the Committee, the
<br />Prepeiition Secured Parties, and the DIP Secured Ponies (the "Firer Sehlemenr"). The lerms of
<br />the First Settlement were incorporated into Paragraph 61 of this Court's under approving the sale
<br />[ECF No. 410] (the Sale Order"). Certain key Icons of the Final Settlement included, among other
<br />things, the following:,
<br />'Thisaummnry is forbackground'illuerati- parpoaca only arW 4 net imnxkd to interpret dw tamaohhc5Blc
<br />Order.
<br />(,.I tcctivcly wish the Preperition Lenders, the Commincc and the f7cbtors, the "Parties"J of all
<br />claims that the Commitiee or the Debtors' estates could have asserted against the Preperition
<br />Secured Parties and DIP Secured Parties. In support ofthis Motion. the Debtors and the Committee
<br />respectfully state as Follows!
<br />BACKGROUND
<br />I. Ceneral Case Backeruund
<br />I. On July 22, 2020. the Debtors filed voluntary petiliens for relief wider Chapter I
<br />of the United Stales Bankruptcy Code, I I LJ,S.C. §§ 101, et seq. (the "Bankruptcy Code') in this
<br />Court.
<br />2. On July 24, ZOM this Court marred m order [ECF No, 94) granting the joint
<br />administration of the Bankruptcy Cases under the lead case In Ne Hopedale Mining. CLC, Case
<br />No. 20-12043.
<br />3. The Committee was appointed on July 30. 2020 [CCF No- IN], The Pmpcii[ion
<br />Securcd Partin and DIP Secured Parties were pre-pmtinn and post -petition secured lenders.
<br />respectively, of the Dcbtors. The Final DIP Chder (a) contemplated that the Committee would
<br />investigate potential claims against the Pn:petrion Seemed Pan ies, and (b) granted standing No the
<br />Comm Elm to pursue certain claims against the Prepctition Secured Panics. [Id. at 1 271-
<br />II. The Com and l ices Inil ill ]nvesliealion And The Parties' First Sell lemenl
<br />4. The Committee investigaled various potential claims against the Preperition
<br />Secured Parties. The initial investigation of the Committee focused on (a) the extent to which the
<br />Pwi erition Secured Parries may have failed to properly perfect their liens on certai n ofthe Debtors'
<br />assets, and (b) the calculalion of the Prcpetilion Secured Panics claims and whelhcr portions of
<br />Owe claims should be disallowed or avoided-
<br />9
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<br />Exhibit 1 - Joint Motion fcm@tpromal of 8atyletRelalAgreement Page 5 of 14
<br />a Acquisition of Contingent Assets. The Stalking Horse Bidder (or its assignees or
<br />desigm,L,t) , 6uld acquire vartious "Contingent ACseta' of the Debtors and agreed
<br />not temtove such assets from its hid, thereby ensuring that there would be"no permit
<br />left behind" in the Debtors' estates.
<br />■ Cash Let! to Fund Administrative Andlar Priority Claims. ThC Prcpelition
<br />Secured Parties and DIP Secured Panics stipuLmcvi that, cffcrtivc as of the closing
<br />ofthe Sale, (i) all of the Debtors cash from the DIP Facility, including any unused
<br />professional feecarve-out amounts OfanyrX would remain avai table in the Debtors'
<br />estates unencumbered by any liens or claims ofthe Prepetition Secured Parties and
<br />DIP Steered Panics; (ii) any cash held in the Debtors' deposit accmums held at Past
<br />West Bank and BB&T may be used to fund administrative and or priority claims;
<br />and (iii) the PreWrion Secured Parries' and DIP Secured Parties' professionals'
<br />fees won Ldonly be paid by the Debtors to the extent set forth in the Debtors' budget.
<br />■ Woiver of Claims Except for Unsecured Deficiency Claims. Upon the closing
<br />of ihs Sale, the Prep wion Secured Panics and DIP Secured Ponies shall possess
<br />only unsecured, non-prionty deficiency claims against the Debtors' estates for any
<br />amounts Lett on the DIP Facility and their pnepetition debt after the closing. The
<br />Committee reserved its rights to object to such deficiency claims.
<br />8. On September 3, 2020, the Committee. the Debtors, the DIP Lenders and the
<br />Preperition Lenders entered into a Stipulation [ECF No. 3921 under which, among other things, (a)
<br />the Committee Part I Initial Challenges were resolved effective as ofthc date of the closing ofthc
<br />Sale and such resolution is binding on any chapter 7 trustee, and [b] the Commincc's Initial
<br />Chat lcngc Dcadli nc of September 3, 2020 at 5:00 p.m. (Essnem) under Paragraph 27 of the Final
<br />DIP Order solely as it relates to the Committee Part 2 Initial Challenges was extended to October
<br />9. 2020.
<br />III. 's A dditi I
<br />9. Pursuant to the I'ma1 DIP Order, the Committee had until October 9, 2020 to bring
<br />any Second Period Challenges {e.g., an equitable subordination claihn]. The Committee sent
<br />several document re luesLs to the Debtors related to their historical business practices and
<br />transactions with the Preperition Secured Parries. The Debtors promptly honored such requests
<br />and produced responsive documents. At the Committee's request, the Debtors also made their
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