September 21, 2018 - The Court hearing the COPSync case has confirmed [Docket No. 335] the Debtors’ Third Amended Plan of Liquidation (Immaterially modified from the version of September 13, 2018) [Docket No. 322]. The confirmation order states, “Ken Lefoldt is named as the Liquidation Trustee, and is authorized and approved to enter into the Liquidation Trust Agreement…The Liquidation Trustee is directed and authorized to make all distributions pursuant to Article V of the Plan, the Liquidation Trust Agreement and this Confirmation Order.”
The Plan provides the following detail as to claims and classes:
- Class 1: Allowed Priority Unsecured Wage Claims under 507(a)(4) are considered impaired and are deemed to vote.
- Class 2: Vehicle Secured Claims are considered impaired and are deemed to vote.
- Class 3: Disputed Secured Claims are considered impaired and are deemed to vote.
- Class 4: General Unsecured Claims are considered impaired and are deemed to vote.
- Class 5: IPO Holders who do not Opt-Out of the IPO Settlement Claims are considered impaired and are deemed to vote. In exchange for the IPO Settlement, all Class 5 IPO Holders shall have their stock cancelled.
- Class 6A: Non-IPO Holders and IPO Holders who timely Opt-Out of the IPO Settlement and Class 6B: Equity Holders who are Former Officers and Directors Claims are considered impaired and are deemed to vote.
September 21, 2018 - The Falls Event Center’s Official Committee of Unsecured Creditors filed an objection to the U.S. Trustee’s motion to have the case dismissed [Docket No. 95]. The Committee's objection [Docket No. 143] asserts, “In addition to the arguments raised by the Debtor, the Committee joins to emphasize one point: regardless of whether the filing was initially authorized, the members of the Debtor ratified the filing. The ratification dates back to the Petition Date, and the filing is authorized. Accordingly, the Committee respectfully requests the Court deny the Motion. Bankruptcy courts across the country have recognized that if an entity did not have authority to file a bankruptcy petition, the filing may be subsequently ratified….Here, regardless of whether the filing was properly authorized, the members of the Debtor ratified the filing of the petition. Under Utah law, the members of the Debtor have knowledge of the bankruptcy filing and intended to ratify the filing. First, every equity holder listed on the Debtor’s List of Equity Security Holders received notice of the bankruptcy filing. See Docket Nos. 4 and 23. Second, all parties in interest received notice of the Trustee’s Motion, including members. See Docket No. 105. The only member responses received are those requesting the Trustee’s Motion be denied. See Docket Nos. 119 and 124. Third, since the inception of this case, Brooks Pickering holds weekly investor calls. The first investor call was two days after the filing of the petition. Members of the Debtor receive notification of the calls by email and participate on the calls. Not a single member has raised a concern that this bankruptcy case should be dismissed, and the members, with knowledge of the material facts, have had ample opportunity to object to the filing. What’s more, members have reached out to the Trustee and this Court to indicate their desire to have the Debtor reorganize through a Chapter 11 bankruptcy. Members have also benefitted from the automatic stay in preserving the Debtor’s assets….The members participate on weekly calls. They received notice of the bankruptcy filing and the Motion. Some members have expressly supported the filing through correspondence filed with the Court and calls to the Trustee. Whether or not authorized, the filing of the petition has been properly ratified, and the ratification dates back to the Petition Date.”
September 21, 2018 – The Court hearing the MGTF Radio Company case approved a third extension to the exclusive periods during which the Debtors can file a Chapter 11 Plan, and solicit acceptances thereof, through and including, October 19, 2018 and December 19, 2018, respectively [Docket No. 108]. Absent the requested extensions, the exclusivity periods are scheduled to expire on September 19, 2018 and November 19, 2018, respectively. As previously reported [Docket No. 105], “The Debtors’ goal, of course, is to confirm a plan of reorganization that will receive support from all of their constituencies. Negotiations of such a plan of reorganization are ongoing but require additional work and progress. Accordingly, the Debtors submit that, based upon the foregoing, it would be reasonable to allow the Debtors an extension of the Plan Filing Exclusive Periods.”
September 21, 2018 – Secured creditor United Mississippi Bank (“UMB”) filed an objection to W Resources’ sale motion [Docket No. 136]. The objection [Docket No. 154] asserts, “UMB vigorously objects to the fact there is no minimum bid with respect to the public auction. It further objects to the allocation set forth in the Motion. The allocation will be substantially impacted by no bid minimum with respect to the auction. Section 363(k) of the Bankruptcy Code guarantees the rights of secured creditors to credit-bid the amount of its undisputed lien at a sale of the collateral under section 363(b), ‘unless the court for cause orders otherwise.’ 11 U.S.C. section 363(k). Here, no cause exists to deny UMB’s right to credit bid the amount of its liens on the properties. Indeed, credit-bidding ‘provides a safeguard for secured creditors, by insuring against the undervaluation of their collateral at an asset sale.’….UMB’s first lien against the Ranch House is valid, enforceable, and undisputed; indeed, UMB has filed a Proof of Claim and is entitled to the prima facie validity and priority of its debt and mortgage and lien. But the Motion effectively denies UMB its right to credit-bid its undisputed first lien against the Ranch House provided for in section 363(k). UMB is very concerned that the three tracts, marketed as one unit, could be sold at a fire sale. Therefore, UMB seeks to credit-bid its first lien against the Ranch House to protect against the risk that its collateral will be sold at a depressed price. UMB objects to the public sale aspect of the property. Not knowing whether or not there will be a stalking horse bidder or not results in the likelihood that the three tracts will be sold at a depressed price. The lack of an identified, qualified stalking horse bidder effectively denies UMB’s credit-bidding rights. Without having an actual stalking horse agreement with a qualified stalking horse bidder, the preapproval the Debtor is seeking may create problems with creditors not knowing if this will be the final stalking horse deal and whether that deal may change….UMB further objects to the commission to be paid to under section 328 of the Bankruptcy Code to Hall and Hall Partners, LLC, for merely acting as an auctioneer. Hall and Hall should be required to prove that it was the procuring cause for the sale to a particular purchaser. A commission of 4% to merely be the auctioneer is not reasonable and the Court should not have its hands tied by 11 U.S.C. section 328….UMB also objects to the fact that the property may be sold in strips of 116 acres each. UMB does not know whether all the strips will be sold. UMB objects to the $50,000 carve out. It has not been determined how that will be allocated to the various tracts. The amount is too high.”
September 21, 2018 – The Court hearing the Firestar Diamond case approved the Chapter 11 Trustee’s request for authority to sell certain inventory to J.C. Penney [Docket No. 443]. As previously reported [Docket No. 408], “The Trustee seeks: authority to sell the Penney Memo Inventory under the terms of the proposed Bill of Sale to J. C. Penney, free and clear of all liens and other interests, with all such interests to attach to the sale proceeds, for $1,000,000, subject to adjustment as provided in the Bill of Sale; a finding that the J. C. Penney (or such other successful bidder) is a purchaser in good faith within the meaning of Bankruptcy Code section 363(m); a finding that the Trustee has given appropriate notice under the circumstances and no further or other notice of the proposed sale is Necessary.”