|
C�Sfl:PR�Ib143UA1'g3 D�4R32-Filc®i�'IB1l�$/2EntFireffiRIGI'SH!/dC8/PA3Sl�':38)e�@tAain
<br />Exhibit 1 -Joint Motion foC pprtleat of 9kirdjarSeWnreement Page 10 of 14
<br />CASE 29Zihk-32a3 DAflAffii2-&ile�i�!'S&pLB/2gnt�r0ffitt�i&PX8d�:3D36':3�es6@. din
<br />Exhibit 1 - Joint Motion fcm6q)pTuaM1 of 9"kPiNtmV Agreement Page 11 of 14
<br />Pmpoition Lcndcrs other than in accordance with the arms of the
<br />Settlement Agreement shall be in form and substance acceptable to the DIP
<br />Lenders or Prepetition Lenders, as applicable.
<br />• Further Necessary Release. It shall be a condiliOn precedent to the
<br />Setlement Effect in Date that the PTcNinion Agent- Prepetition Collateral
<br />Agent, Origination Agent, and DIP Ag"u, cloture a release of claims
<br />against the Debtors' estates consistent with the release provided by the DIP
<br />Lenders and the Prepetition Lenders under paragraph 4(a) of the Settlement
<br />Agrccment.
<br />JURISDICTION AND VENUE
<br />13, The United Starr' DanikrrpWy Court for the Southern Dicinot of Ohio ha.
<br />jurisdiction over this matter pursuant to 28 U.S.C. §# 157 and 1334. Venue is proper before the
<br />Court pursuant to 28 U-S-C- ¢§ 1403 and 1409. The samrory boles for the relief requested herein
<br />are sections 105(a) of the Bankruptcy Code and Bankruptcy Rule 9019.
<br />RELIEF REQUESTED
<br />14, By this Motion, the Debtors and the Committee respectfully request that Ih is Court
<br />triter an order pursuant to Bankruptcy Rule 9019 and LBR 9019.1. approving the Settlement
<br />Agreement.
<br />15. Bankruptcy Rule 9019(a) states:
<br />On motion by the busree and after notice and a hearing, the court
<br />may approve a compromise or settlement. Notice shall be given to
<br />creditors, the Unfired Sta - Trustee, the debt., and indenture
<br />trustees as provided in Rule 2002 and many other entity as the court
<br />may direct.
<br />Fed. R. Bankr. P.9019(a)-
<br />16, In reviewing the Settlement Agreement. this Court is required to determine that it
<br />is "fair and equitable- and in the hest imemsls of the elate. Proredive Cantu. fire 16rp.
<br />Sroekholdera of TAdT Trailer Ferry, Lac v Anderson, 390 U.S. 414,424 (1968);1& re Bard, 49
<br />Fed, Appx. 528, 530 (6th Cir. 2002); Lyndon Prop. Inv. Co. v. Katz. 196 Fed. Appx. 383.387 (6th
<br />Cir. 2006}; Qopoister v. Man M. Hvllm my Found., 36 F.3d, 582, 586(71h Cir. 1994). Ultimately,
<br />9
<br />C&isfl:22aIb[L-21M3 D604832-Filc®iMISM/2FntEinY@0.(dYiHfMM-3D2U:3lDeOdaein
<br />Exhibit 1 - Joint Motion foD64 pmuaU of BebgledtLmtfagreement Page 12 of 14
<br />20, Third, any litigation with the Prcpetilion Secured Panics would be very complex
<br />and fact -intensive. Litigaling. through discovery, summary judgment, c peers and trial could have
<br />been very cxpcnsivc for the estates, as CommilWe counsel has observed first-hand in other coal -
<br />relayed bankruptcy ad--ry cares. Indeed, certain issues, such as the degree of control exercised
<br />by the Prcpctilion Secured Panics over the Deblms, arc very fact intensive inquiries. Other issues,
<br />such as whether IN! fees Charged by the Prepetuion Secured Parties are enforceable against the
<br />Debtors' eslates, would likely be both fact intensive and require expert testimony. Litigalien also
<br />would have substantially delayed any distributions to creditors.
<br />21, Fourik, lire paramount inlerest ofcredbors supports the senlemeiit. The settleittent,
<br />along with the First Settlem-t described above, paves the way far a ehapler I I plan (the "Elan")
<br />in these cam that is expected to provkdc value for unsecured creditors. Through the settlement.
<br />the estates will receive a guaramced S4W,000 and likely an additional S100.000 upon the
<br />eunFmtariun of the Plan. Indeed, based on current claim estimates, upon consummation of the
<br />settlement, unsecured creditors should be "in the money" in these cases, which seemed like an
<br />uphill bail lc al the outset of the matter.
<br />22. In addition, the Prepetirion Secured Parries and the DIP Secured Parties colleclively
<br />have asserted an un—d deficiency claim of orcr SI8 million. Pursuant to the settlement,
<br />however, the Secured Parties are waiving a6 elai— against the Debtors' estates other than their
<br />right to share as an unsecured creditor until they recoup the S4U0,0W-S500,000 they are paying.
<br />The settlement therefore preserves all of the "upside" value from other recoveries for the Deblors'
<br />unsecured creditors.
<br />23, For the foregoing reasons, the Dcbtors and the Commiucc bcline in their sound
<br />business judgment that the Settlement Agreement is fair and equitable and in the best interest of
<br />it is well accepted that compromises are favored in bankruptcy in order 1st minimize the cost of
<br />1 i6gation to the eslatc and expedite ils administration. Sm. e.g., In re West Pofnr Prop., L.P., 249
<br />S.R. 273.282 (Bankr. E.D. Tenn, 2000).
<br />17. Bankruptcy coons should consider the fallowing four factors when determining
<br />whcthcr to approve a proposed sett km-t: (1) the probability of success in the ;iligation of the
<br />Claim being compromised; (2) the di i<oultkes, ifany, to be eneoumered in the matter ofenBechon;
<br />(1) the complexity o£the litigation involved, and the expense, inconvenience, and delay necessarily
<br />attending it and (4) the paramount interest of credilors and a proper deference to their reasonable
<br />views concerning the proposed compromise. See Bard, 49 Fed. Appx, at 530 (quoting Drevef v.
<br />Loomis, 35 F.2d 800, 806 (6th Cir. 1929)); Jc-(irey v. Lhs,na d, 70 F.3d 183, 184 (19 Cit. 1995);
<br />In rc rs'vndsan. 839 F.2d 610, 621)(9th Cir, I"li). Under Bankruptcy Rule 9019(a), this Court
<br />has broad discretion to approve or reject proposed compromise, and orders approving scuicmems
<br />are Teviewcd for an abuse of discretion. Bard, 49 Fed- Appx, at 530; In Fv Healrhm Intern.. Ire..
<br />136 F.3d 45, $0 n.5 (1st Cir. 19M X
<br />18, Each of the faders listed above supports the Dcbims' cstalcz' entry into the
<br />Settlement Agreement. Ftnt, the probability of success in any litigation is uncertain. The
<br />Commiticc possesses potential equitable subordination claims against [he Prepention Secured
<br />Panies as well as challenges to the validity and amount ofthe Prepetition Secured Parties' claims,
<br />bul any challenge by the Committee would likely be vigorously contested by the Prepetition
<br />Secured Parties. The Committee would have material hurdles to overcome al every Stage of the
<br />litigation in order to prevail on such claims.
<br />19, Second. -hilt the dktliculty of collodion was nor a significant factor as to the
<br />Prcpelition Secured Parties, the Deb(ara' estates have limited resources. and Would prefer to
<br />expend them in other litigation matters that can yield greater brnclits for unsecured creditors.
<br />10
<br />C�&-P(P�IbR-3B4IA3 Ddod832-FilcBikBl'I>TPJ1E/2Fnt�int@14#dfT&P1B�31)'..6':3�esD�Sein
<br />Exhibit 1 -Joint Motion frDftpmNal of "built alf Agreement Page 13 of 14
<br />the Dchtms' estates and their crcdilors. The Dcblms and the C:ommi tiro thcreforc respcctfu l ly
<br />requests that this Court approve the Settlement Agrennem.
<br />24. The IJcbtors and the Committee also request that this Court waive any stay
<br />appl [cable under Bankruptcy Rules 6004, or 7062, or any other provision of the Bankruptcy Code
<br />or Bankruptcy Rules and, thcrcforc, that an order appming this Motion shall be etiectivc
<br />immediately upon entry.
<br />WHEREFORE, the Debrom and the Committee respectfully Toques[ that the Court enter an
<br />order (a) approving the Settlement Ag-1, and (b) for other and further relief as the CM t
<br />deMsjusi and proper.
<br />Respectfully suhmirud,
<br />By:..S/ Geoffrey S. Goodman
<br />GootTrcy S. Goodman IL Bar No. 6272297
<br />(Admitted Pro Hac Vice)
<br />FOLEY & LARDNER LLP
<br />321 N. Clark Street, Suite 28C10
<br />Chicago, Illinois 60654
<br />Telephone- (312)832-4500
<br />facsimile: {312)832.4700
<br />ggoodman(a faley.com
<br />rs' T. Kent Barber
<br />KY Bar No, 092456
<br />T. Kent Barber
<br />BARBER LAW PLLC
<br />200 Bums Drive
<br />Lexington. Kcnmcky 40513
<br />Telephrnc: (859) 2964172
<br />khmberm barberlawky.crtm
<br />AltorneJ' fvr the official Carnnrirtre of
<br />L'eeecured Credhors
<br />12
<br />
|