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Allied Systems Holdings, Inc
Allied Systems Holdings, Inc
United States Bankruptcy Court 824 North Market Street Wilmington, Delaware Alleged Debtor. - - - - - - - - - - - - - - - - - - - - - - - - - - - - x ALLIED SYSTEMS LTD. (L.P.), Alleged Debtor. - - - - - - - - - - - - - - - - - - - - - - - - - - - - x In re: Chapter 11 Case No. 12-11565(CSS) ALLIED SYSTEMS HOLDINGS, INC., UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE - - - - - - - - - - - - - - - - - - - - - - - - - - - - x In re: Chapter 11 Case No. 12-11564(CSS)
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Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ECR OPERATOR: LESLIE MURIN B E F O R E : HON CHRISTOPHER S. SONTCHI U.S. BANKRUPTCY JUDGE
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ALLIED SYSTEMS HOLDINGS, INC. Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY: DAVID L. BUCHBINDER, ESQ. (TELEPHONIC) OFFICE OF THE UNITED STATES TRUSTEE Attorney for the United States Trustee 844 King Street, Suite 2207 Lockbox 35 Wilmington, DE 19801 BY: CHRISTOPHER M. SAMIS, ESQ. (TELEPHONIC) RICHARDS, LAYTON & FINGER, P.A. Attorney for Allied Systems Holdings, Inc., Debtors One Rodney Square 920 North King Street Wilmington, DE 19081 BY: EZRA H. COHEN, ESQ. (TELEPHONIC) JEFFREY W. KELLEY, ESQ. (TELEPHONIC) MICHAEL JOHNSON, ESQ. (TELELPHONIC) A P P E A R A N C E S : TROUTMAN SANDERS, LLP Attorney for Allied Systems Holdings, Inc., Debtor 600 Peachtree Street, NE, Suite 5200 Atlanta, GA 30308
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ALLIED SYSTEMS HOLDINGS, INC. Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERITEXT REPORTING COMPANY www.veritext.com BY: ROBERT A. KLYMAN, ESQ. (TELEPHONIC) LATHAM & WATKINS, LLP Attorney for Yucaipa, Interested Party 355 South Grand Avenue Los Angeles, CA 90071 BY: MICHAEL R. NESTOR, ESQ. (TELEPHONIC) YOUNG CONAWAY STARGATT & TAYLOR, LLP Attorney for Yucaipa, Interested Party Rodney Square 1000 North King Street Wilmington, DE 19801 BY: ADAM C. HARRIS, ESQ. (TELEPHONIC) ROBERT J. WARD, ESQ. (TELEPHONIC) SCHULTE, ROTH & ZABEL, LLP Attorney for BDCM Opportunity Fund II, LP, Creditor 919 Third Avenue New York, NY 10022
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VERITEXT REPORTING COMPANY www.veritext.com
KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorney for Yucaipa, Interested Party Two Midtown Plaza, Suite 1500 1349 West Peachtree Street, N.W. Atlanta, GA 30309
BY:
KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorney for Yucaipa, Interested Party 1633 Broadway New York, NY 10019
BY:
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Good afternoon, counsel, this is Judge Sontchi and we're here on a status conference in Allied System Holdings and Allied Systems Limited. There are quite a few people on the telephone and I would urge you to please -- to mute your phones if you're not actively speaking, to do your best not to talk over each other, and to remember to identify yourself prior to every time you speak. And I would like to start by hearing from the petitioning creditors. MR. HARRIS: Good afternoon, Your Honor.
longer than the hearing. MR. HARRIS: Thank you, Your Honor.
Your Honor, we filed the involuntary petitions last week as Your Honor knows, and the summons have been served upon the alleged debtors in the case -- in the cases, I should say.
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would like to let Mr. Collins or his co-counsel from Troutman Sanders address those issues. To the extent those intentions are carried out in the manner that they were described in both the filings and as we discussed them with the alleged debtor's counsel today, we think that the cases can move forward on -hopefully on a more cooperative and consensual track. that there might not need to be any particular order or scheduling order entered by Your Honor relative to our trustee motion at this time. I would like Your Honor to hear from Mr. Collins or his co-counsel from Troutman Sanders on those issues and would then like to have an opportunity to speak thereafter based upon what they say. THE COURT: purported debtor. MR. SAMIS: Good afternoon, Your Honor. All right. Let me hear from the And
This is Chris Samis from Richards, Layton & Finger on behalf of the alleged debtors. Your Honor, with me on the phone are my co-counsel
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express my personal thanks to you, Mr. Samis, for your yeoman's work in getting the Court the documents I needed to be prepared for today, but I'll hear from them. MR. SAMIS: Your Honor, no problem. I was happy
to do so, and I also -- wanted to thank Your Honor for accommodating us this afternoon in reviewing a pretty voluminous docket on very short notice for this status conference. Your Honor, just very briefly, with respect to why we're here today, the alleged debtors believe it's appropriate to use this status conference to address not only the motion to shorten on the trustee motion, but more importantly in our view, the scheduling of our own venue transfer motion, which we think deals with a real gating issue in these cases. So, Your Honor, with that as background, I turn
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This is Jeff Kelley with Troutman Sanders in Ezra Cohen is also, I think, on the line with us
now, but I'll do all the speaking, I believe. By way of background, both Ezra and I were counsel to Allied in the first Chapter 11 case of Allied in front of Judge Mullins, here in Atlanta. Your Honor, the filing of these petitions has caused what Allied believes to be, as we set forth in our papers, some unnecessary disruptions and potentially significant damage to Allied's business and its value. Our perspective on how this possibly could have happened and the motives may be driving the petitioning creditors is set forth in particular in the redacted portions of our response to the motion to shorten time for the hearing on the appointment of a trustee where we, among other things, argue that we don't think that any emergency has been shown and that the issues raised have been the subject of the State Court litigations among the various of the parties going back several years. However, Your Honor, due to the filing that's taken place, their -- the actions in this involuntary
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adequate financing and cash collateral before it files its other subsidiaries, its many other subsidiaries, along with these two. response. But, Your Honor, Allied's preferred forum is That's where, as I mentioned, Allied's first case That case is still open. The Those subsidiaries are identified in our
reasons that we think a transfer is appropriate are set forth in the venue motion. I'm not going to argue that at
this point, but it's primarily the convenience of Allied's very, very stretched-thin executive team, which is located in Atlanta, not to mention Judge Mullins' familiarity with most of the players in this case. The first case was a very large case by Atlanta standards, very intense, a lot of activity in that case, and Judge Mullins had ample opportunity to learn a lot about Allied, and for that matter, Yucaipa. So, Your Honor, we ask that you rule on the venue
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Your Honor -- this is Jeff Kelley, again -- to Bankruptcy Rule 10014 (sic)? THE COURT: MR. KELLEY: (Indiscernible - 4:22:23). Yes, we did raise that, Your Honor,
in our papers, and technically that is correct because the first case is still pending. THE COURT: Anyone else? MR. HARRIS: Adam Harris -- sorry to interrupt. Okay.
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Do I take it that you would -- were that to be the case, you would hold your trustee motion in abeyance pending the decision on the venue motion? MR. HARRIS: THE COURT: MR. NESTOR: We would, Your Honor. Okay. Yes, Your Honor. Michael Nestor ,
Young Conaway on behalf of Yucaipa, and I'm on with Robert Klyman from Latham & Watkins. May we be heard briefly? THE COURT: Mr. Nestor. MR. NESTOR: THE COURT: It's Yucaipa. Oh, very good. I'm sorry. I missed your client,
For the record, Robert Klyman of Latham & Watkins, LLP, on behalf of Yucaipa. Your Honor, by way of background, Yucaipa is the largest lender and shareholder and member of the board of the alleged debtors and we have a direct economic material
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that it's appropriate for Judge Mullins to make the initial decision we would be happy to go down there and get that teed up on an expedited basis. I believe that the debtor chose to file the motion to transfer venue before your Court only because what's left to be resolved in Atlanta is a motion to close the case, but under the plain reading of the statute that may be the more appropriate place for determination as to venue. We
just thought that since there was a trustee motion on an expedited basis filed this was the natural venue to first raise the issue. But as I said, at least from Yucaipa's
perspective, having the issue determined by Judge Mullins would be a perfectly fine result on an expedited basis. I would just add two other points. The first is
while my colleague, Mr. Harris, says that he needs more time to sit down with the debtors, and maybe Yucaipa to understand all there is about the venue in Atlanta, the fact of the matter is that they did have sufficient time to do that before they filed an involuntary. The filing of the
involuntary was their timing, not the debtor's, and the reasons why venue's appropriate in Atlanta, I believe, are
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believe that that is a reason to delay a resolution of the venue motion. The alleged debtors are suffering, you know, potential business issues while they are in limbo. They
want to tee up a process for obtaining financing and getting on with the case in a manner that preserves value, both for the enterprise as a whole and the secured lenders, including Black Diamond in particular. We would also ask Your Honor that while the venue issue is being decided that Black Diamond actually withdraw the trustee motion without prejudice with the ability to refile it on an expedited basis if they'd like, with all parties reserving their rights with respect to whether or not the request for expedited hearing is appropriate before whatever judge ultimately hears the case. The -- it's, you know, tough enough for the business and management to be dealing with an involuntary and scrambling to catch up to make sure that the business doesn't suffer the unnecessary stigma of a trustee motion, which is not going to be heard for some period of time, is something that, at least on Yucaipa's behalf, we would like
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read in the papers Black Diamond might take issue with your comment that you're willing to sit down and talk to them, but that wasn't my impression from what I read. All right. Does anyone else care to make
Buchbinder from the U.S. Trustee's Office. We are concerned about Rule 1014(b) and how it applies here. If we do have the same debtor the rule would
seem to imply that anything pending here is stayed until the Court in Atlanta rules otherwise or orders otherwise. To the extent that an issue has been raised as to whether or not this is the same debtor, Rule 1014(b), Subdivision 4, says that if petitions commencing cases are filed in different districts by regarding or against and Sub 4 is a debtor and an affiliate, if the new debtor is a successor they may or may not be an affiliate. And so what I'm getting at is I agree with the parties that the threshold matter here is a ruling on either Rule 1014(b)'s applicability or a ruling on the venue
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this case, this was the appropriate place to bring up the venue transfer motion. THE COURT: All right. What's the debtor's
position -- presuming I will schedule the venue transfer motion to be heard expeditiously -- what's the debtor's position on when that should occur? MR. KELLEY: As soon as Your Honor's calendar
entry of an order for relief? MR. KELLEY: We believe you can, Your Honor. This
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we are seeking -- we filed a motion seeking the transfer of a case. THE COURT: MR. HARRIS: Mr. Harris, anything? Your Honor, I mean I understand the
strict reading -- the way they're looking at it; on the other hand, what would be the purpose of transferring venue if the only thing the Court who is receiving it would do would be then to be ruling on whether or orders for relief should be entered or not unless there's going to be a ruling that Your Honor can make if there's going to be a contested involuntary. If there's not going to be a contested
involuntary and the debtors were to affirm that, then, you know, there wouldn't be any issue with dealing with the venue transfer in my mind. But there seems to be a timing issue in some respects as to the desire to go to a forum and then deal with the involuntary and conversion at a later date, and not even, frankly, confirmed, but they said subject to board approval -- and I think the word used was "likely" convert, where that would basically put us in a position of litigating the involuntaries in a jurisdiction in which we didn't file them. THE COURT: All right. So, what I'm -- I'm going
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It's my opinion that the two are unrelated in my Allied Systems needs to make a decision, and the
(indiscernible - 4:34:50), Your Honor, is I just don't have the board sitting here with me, that -- which because of the filing of the involuntary petitions we will be consenting, we just do not wish to have a crash landing into a voluntary Chapter 11. We want to make sure that our financing is all
lined up and we want to do it as neatly as possible with the right message to all of our constituencies, many of whom are
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bring the venue motion before your Court in a very early time to let you know that it was an issue. We were faced We
didn't think that if Your Honor was not going to keep the case, not presupposing at all what Your Honor's decision will be, that Your Honor would want to be the one deciding whether to appoint a trustee -THE COURT: MR. KELLEY: attention promptly. THE COURT: Very good. And I understand you would Okay. -- so we brought this motion to your
like Mr. Nestor to withdraw, but, of course, I can't make him withdraw it. I will offer a comment. I think as presented in
its -- or in the papers that the trustee motion is not particularly persuasive, of course, all those motions require a development of facts and it's somewhat difficult to figure it out from the actual papers. What I'd like to do in this case and what I will
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that, I'm available throughout the day with -- I do have to take a break in the late morning, so I won't be available until say 10:30, if we started in the morning, or I'm available 12:30 going forward whether we take a break or we start in the afternoon. I know there are a lot of people who are going to be interested and when the timing on that is going to be, so if people want me to simply state a time I will and we'll basically try to figure it out. But, I think regardless of whether this is going to be withdrawn or filed an 11 or what have you, I have a responsibility to decide very quickly where -- what the venue should be. And it very well may be at the end of that
Mullin hearing my answer is going to be, I can't make that decision because Judge Mullins is going to make that decision. But if it is appropriate for this Court to have a hearing on transfer venue, then one of the possibilities may be that this Court doesn't have the power, or the possibility is this Court decides it has that power and makes a decision. Either way, I need to hear from the
parties and the facts and law to make that call. Is there any comment on that?
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That's all fine with us, just two questions/comments. One is, can we set a time for filing responses of maybe a day before the hearing? And that ties into my
suggestion that we hold the hearing, if Your Honor's available, at 2 o'clock in the afternoon. That way parties
can get in and out the same day, including potentially flying up from Atlanta to the extent they need to do that, rather than doing something early in the morning where people may feel compelled to come in the night before -just the cost issue. I think if we do the 2 o'clock, then If
that's too tight, we can probably do it a little sooner than that. THE COURT: MR. KELLEY: THE COURT: MR. KELLEY: All right. Your Honor -Go ahead. Sorry, go ahead.
The date of the hearing is fine, and we would ask that, if possible, the response date be set a little sooner than that to give us a little bit more time to read it, and we appreciate and agree with Mr. Harris' suggestion that the hearing start at 2 o'clock. THE COURT: All right.
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5:00 p.m., Tuesday, the 29th, I guess that would be. THE COURT: All right. Well, that's what I was about to say. We'll have a hearing May 31st at
2:00 p.m. on the venue motion. Responses are due to -- by no later than 5:00 p.m. on the 29th, which is Tuesday. (Indiscernible - 4:39:46)
transfer motion and no other motions. Anything else? And -- I'm sorry, in the pending, at least the (indiscernible - 4:40:00) I'm going to hold the trustee motion in abeyance. MR. HARRIS: Thank you. THE COURT: MR. SAMIS: Okay. Your Honor, this is Chris Samis. That's fine, Your Honor.
For the record, just to be absolutely clear, we do actually have a pending motion to seal in connection with our venue motion, so I would ask that that be heard at the hearing, as well. THE COURT: Well, I was about to say that. (Indiscernible - 4:40:19)
UNIDENTIFIED SPEAKER:
Your Honor, with respect to certain matters that were contained in our statement in support of trustee motion. MR. HARRIS: Your Honor, I don't think there's any
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appreciate being reminded. To the extent there are (indiscernible 4:40:46) confidentiality or seal of motions, obviously, we'll hear those motions in relation to the venue motions, and if there aren't any objections and you want to send out a stipulated order, that's fine with the Court; however you want to play it. But let's limit it to the venue motion and the related file under seal motions, et cetera. MR. SAMIS: Thank you, Your Honor.
I'll -- we'll discuss that with Mr. Harris and we'll get it worked out. MR. HARRIS: THE COURT: All right. Very good. Great. Thank you.
Anything else? MR. BUCHBINDER: Buchbinder, again. It might be -- I'm sort of concerned about 1014(b) here, as I know everyone else is, and I wouldn't want everyone to end up in another forum and fighting about what Your Honor, this is Dave
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were to find that one of the four types of entities described in Rule 1014(b) is the -- and type of entity we're dealing with, I think the rule doesn't give the Court any discretion except to move the case back to Atlanta. So we might want to deal with 1014(b) first, and as further backup, the parties might all want to agree, and at least for purposes of the venue motion, they're not going to invoke this rule or the Court may want to independently consult with Judge Mullins, who may want to issue an order allowing this Court to rule on the venue motion so that the record is clear and that a lot of unnecessary time is perhaps not wasted downstream litigating these matters. It's just a suggestion. THE COURT: Well, I'm not at all sure that I agree
that if there's a pre-existing case there is no choice but to transfer venue. I'm not sure I agree with your
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in terms of order, the 1014(b) issue might be first. THE COURT: Well, that's something for the parties
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ALLIED SYSTEMS HOLDINGS, INC. Page 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERITEXT REPORTING COMPANY www.veritext.com Tuesday. All right. All right. MR. HARRIS: creditors, Your Honor. Thank you. THE COURT: Thank you. MR. KELLEY: The debtors thank you, Your Honor. On behalf of the U.S. Trustee, Okay. We're adjourned then. Anything else? We're adjourned. That's it from the petitioning 2:00 p.m. Responses due by 5:00 on the 29th, which is certainly would hope that the parties -- and I know they will, because I know you all -- will figure out a professional and logical way to do it. Okay. So the hearing will be May 31st at
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William J. Garling
Digitally signed by William J. Garling DN: cn=William J. Garling, o=Veritext, ou, email=digital@veritext.com, c=US Date: 2012.05.25 15:15:20 -04'00'
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Chapter: 11
NOTICE OF FILING OF TRANSCRIPT AND OF DEADLINES RELATED TO RESTRICTION AND REDACTION A transcript of the proceeding held on 5/22/2012 was filed on 5/25/2012 . The following deadlines apply: The parties have 7 days to file with the court a Notice of Intent to Request Redaction of this transcript. The deadline for filing a request for redaction is 6/15/2012 . If a request for redaction is filed, the redacted transcript is due 6/25/2012 . If no such notice is filed, the transcript may be made available for remote electronic access upon expiration of the restriction period, which is 8/23/2012 unless extended by court order. To review the transcript for redaction purposes, you may purchase a copy from the transcriber (see docket for Transcriber's information) or you may view the document at the clerk's office public terminal.
(ntc)
Notice Recipients
District/Off: 03111 Case: 1211564CSS User: Brandon Form ID: ntcBK Date Created: 5/25/2012 Total: 7
Recipients of Notice of Electronic Filing: ust United States Trustee USTPREGION03.WL.ECF@USDOJ.GOV aty Christopher M. Samis samis@rlf.com aty Christopher M. Samis samis@rlf.com aty Mark D. Collins collins@rlf.com TOTAL: 4 Recipients submitted to the BNC (Bankruptcy Noticing Center): adb Allied Systems Holdings, Inc. 2711 Centerville Road Suite 400 Wilmington, DE 19808 aty Ezra H. Cohen Troutman Sanders LLP Bank of America Plaza 600 Peachtree Street Suite 5200 Atlanta, GA 303082216 aty Jeffrey W. Kelley Troutman Sanders LLP 600 Peachtree St. NE, Suite 5200 Atlanta, GA 30308 TOTAL: 3