IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In rc: ALLIED SYSTEMS HOLDINGS, INC., et at.

, 1 Debtors. Chapter 11 Case No. 12-11564 ( CSS) (Joint Administration Pending)

MOTION TO AUTHORIZE ALLIED SYSTEMS HOLDINGS, INC. TO ACT AS FOREIGN REPRESENTATIVE OF THE DEBTORS Allied Systems Holdings, Inc. ("Allied Holdings") and its U.S. and Canadian subsidiaries (collectively, the "Debtors") respectfully submit this Motion to Authorize Allied Systems Holdings to Act as Foreign Representative of the Debtors (the "Motion"). In support of the Motion, the Debtors rely on the Declaration of Scott D. Macaulay in Support of First Day Motions (the "Macaulay Declaration") and respectfully show the Court as follows: JURISDICTION AND VENUE I. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 1334.

This Motion is a core proceeding pursuant to 28 U .S.C. 157(b). Venue of this proceeding is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. BACKGROUND 2. On May 17, 2012, involuntary petitions were filed against Allied Holdings and its

subsidiary Allied Systems, Ltd. (L.P.) ("Allied Systems") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in this Bankruptcy Court (the "Court"). On
The Debtors in these cases, along with the federal tax identification number (or Canadian business number where applicable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (87568828); Axis Group, Inc. (58-2204628); Commercial Carriers, Inc. (38-0436930); CT Services, Inc. (382918187); Cordin Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-0365100); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (31-0961359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors' corporate headquarters and the Debtors' address for service of process is 2302 Parklake Drive, Bldg. 15, Ste. 600, Atlanta, Georgia 30345.

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June 10, 2012, the remaining Debtors filed voluntary petitions in this Court and, in connection therewith, Allied Holdings and Allied Systems consented to the involuntary petitions filed against them. The "Petition Date" of such Debtor is the date that such involuntary petition or voluntary petition was filed by or against such Debtor. The chapter II cases commenced thereby are, collectively, the "Chapter 11 Cases." 3. The Debtors are authorized to operate their businesses as debtors-in-possession

pursuant to II 07 and II 08 of the Bankruptcy Code. As of the date of this Motion, no official committee of unsecured creditors has been appointed by the Office of the United States Trustee. 4. The Debtors' major line of business, known in the industry as "car haul," is the

transport of light vehicles, such as automobiles, sport-utility vehicles and light trucks, from manufacturing plants, ports, auctions, and railway distribution points to automobile dealerships in the United States and Canada by means of tractor trailers referred to as "Rigs." The Debtors' smaller line of business is logistics, which includes arranging for and managing vehicle distributions services, automobile inspections, auction and yard management services, vehicle tracking, accessorizing, and dealer preparation services for the automobile industry in the United States and Canada, and providing yard management services in Mexico. 5. Additional information about the Debtors' businesses, the events leading up to the

Petition Date, and the facts and circumstances surrounding the Debtors and these Chapter II Cases can be found in the Macaulay Declaration, which is incorporated herein by reference.
RELIEF REQUESTED

6.

By this Motion, Allied Holdings seeks authorization, pursuant to Section 1505 of

the Bankruptcy Code, to take the following actions: (i) act as the foreign representative of the Debtors; (ii) seek recognition by the Ontario Superior Court of Justice (Commercial List) (the
"Ontario Court") of the Chapter II Cases and of certain orders made by this Court in the -2RLF I 6086985v. I

Chapter II Cases from time to time; (iii) request that the Ontario Court lend assistance to this Court; and (iv) seek any other appropriate relief from the Ontario Court that is just and proper. BASIS FOR RELIEF 7. Section 1505 of the Bankruptcy Code allows a debtor in possession to obtain a

court order recognizing the debtor in possession as the foreign representative of the debtor's estate, in order to submit a petition to a foreign court requesting recognition of the debtor's Chapter II case. Specifically, Section 1505 of the Bankruptcy Code provides: A trustee or another entity (including an examiner) may be authorized by the court to act in a foreign country on behalf of an estate created under section 541. An entity authorized to act under this section may act in any way permitted by the applicable foreign law. II U.S.C. 1505. Section 1505 only applies to cases filed under chapters other than Chapter 15 of the Bankruptcy Code because a Chapter 15 case does not create an estate under Section 541. For Chapter II cases, authority to act as a foreign representative may be granted to the debtor in possession because a "trustee," as defined by section 1502(6) of the Bankruptcy Code, "includes ... a debtor in possession in a case under any chapter of this title." ld. 1502(6). 8. The purpose of Section 1505 is to allow a debtor to petition a foreign court for

recognition of its Chapter II case, and to request that the foreign court cooperate with and lend assistance to the debtor and the United States Bankruptcy Court in meeting the objectives of both Chapter 15 of the Bankruptcy Code and the Model Law, on which Chapter 15 is based. These objectives are stated in Section 1501 of the Bankruptcy Code: (a) The purpose of this chapter is to incorporate the Model Law on CrossBorder Insolvency so as to provide effective mechanisms for dealing with cases of cross-border insolvency with the objectives of(1) cooperation between-

(A) courts of the United States, United States trustees, trustees, examiners, debtors, and debtors in possession; and -3RLFI 6086985v. I

(B) the com1s and other competent authorities of foreign countries involved in cross-border insolvency cases; (2) greater legal certainty for trade and investment; (3) fair and efficient administration of cross-border insolvencies that protects the interests of all creditors, and other interested entities, including the debtor; (4) protection and maximization of the value of the debtor's assets; and (5) facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

!d. 1501 _2 Thus, the authority sought by a debtor under Section 1505 is specific to seeking
recognition of the debtor's Chapter 11 case and fostering cooperation between the bankruptcy com1 and foreign courts. 9. An explicit grant of authority to act as the forei gn representative is meant to

facilitate the process of petitioning for recognition in a foreign court. For this reason, Article 5 of the Model Law provides that the person or body administering a reorganization or liquidation in a country that has enacted the Model Law (an "Enacting State") " is authorized to act in a

The preamble of the Model Law is virtually identical: The purpose of this Law is to provide effective mechanisms for dea ling with cases of cross-border insolvency so as to promote the objectives of: (a) Cooperation between the courts and other competent authorities of this State and foreign States involved in cases of cross-border insolvency; (b) Greater lega l ce11ainty for trade and in vestment; (c) Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor; (d) Protection and maximization of the value of the debtor's assets; and (e) Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

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foreign State on behalf of a proceeding under ... the laws of the enacting State relating to insolvency." Model Law Art. 5. The Guide to Enactment explains that [t]he lack of such authorization in some States has proved to be an obstacle to effective international cooperation in cross-border cases. An [E]nacting State in which administrators are already equipped to act as foreign representatives may decide to forgo inclusion of article 5, although even such a[n Enacting] State might want to keep article 5 in order to provide clear statutory evidence of that authority.
See Guide to Enactment
~

84. Clear evidence of a Chapter 11 debtor's authority to act in a

foreign country is particularly necessary because a Chapter 11 case commences immediately upon the filing of a petition, with no order signed by the court that explicitly appoints the debtor as the fiduciary or trustee of the debtor's estate. The fact that a Chapter 11 debtor has this authority by virtue of being a debtor in possession may not be persuasive to a foreign court. 10. Moreover, absent a court order, a Chapter 11 debtor may find it difficult to satisfy

the requirements of a petition for recognition. These requirements are substantially similar in most countries that have adopted the Model Law, including Canada. Specifically, Section 46 of the CCAA (which is similar to Article 15.2 of the Model Law) provides that an application for recognition of a foreign proceeding made by a foreign representative shall be accompanied by (a) a certified copy of the instrument, however designated, that commenced the foreign proceeding or a certificate from the foreign court affirming the existence of the foreign proceeding; (b) a certified copy of the instrument, however designated, authorizing the foreign representative to act in that capacity or a certificate from the foreign court affirming the foreign representative's authority to act in that capacity; and (c) a statement identifying all foreign proceedings in respect of the debtor company that are known to the foreign representative. CCAA, Section 46. Because of the differences between Chapter 11 of the Bankruptcy Code and most other national insolvency laws, a Chapter 11 debtor generally does not have the type of
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evidence specified above. Congress therefore modified the text of Article 5 of the Model Law when incorporating it into Section 1505 of the Bankruptcy Code. The legislative history to Section 1505 explains the reason for this variance in the text as codified by Chapter 15: While the Model Law automatically authorizes an administrator to act abroad, this section requires all trustees and debtors to obtain court approval before acting abroad. That requirement is a change from the language of the Model Law, but one that is purely internal to United States law. Its main purpose is to ensure that the court has knowledge and control of possibly expensive activities, but it will have the collateral benefit of providing further assurance to foreign courts that the United States debtor or representative is under judicial authority and supervision.
See H.R. Rep. No. 109-31, pt. I, I 08 (2005), as reprinted in 2005 U.S.C.C.A.N. 88, 171.

11.

The relief sought by this Motion is, therefore, the first in a two step process. If

granted, Allied Holdings expects to immediately submit an application to the Ontario Court that seeks recognition of the Chapter 11 Cases as foreign main proceedings. 12. Consistent with one of the key objectives of the Model Law - to provide

"[ c]ooperation between the courts and other competent authorities ... involved in cases of cross border insolvency" (Model Law, preamble) - the application for recognition that Allied Holdings will file, if this Motion is granted, will seek to obtain the assistance of the Ontario Court. If the Ontario Court decides to recognize the Chapter II Cases as foreign main proceedings, the Debtors will benefit from the protection of an automatic stay against commencement or continuation of actions or proceedings concerning the Debtors' assets, rights, obligations, and liabilities in Canada. Even if the Ontario Court holds that the Chapter II Cases are not foreign main proceedings, the Ontario Court has discretion to order a stay. In addition,

the foreign representative can seek a wide range of relief fiom the Ontario Court where it is necessary to protect the assets of the Debtors or the interests of its creditors in Canada. Based on

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the foregoing, the Debtors submit that there is sufficient statutory basis and ample justification for this Court to grant the relief requested.
NOTICE

13.

Notice of this Motion has been provided via facsimile, overnight delivery service,

electronic transmission or same-day messenger service to: (i) the Office of the United States Trustee for the District of Delaware; (ii) counsel for the agent for the Debtors' proposed debtorin-possession lenders; (iii) counsel for The CIT Group/Business Credit, Inc., as resigning agent under the Debtors' first lien credit agreement, counsel for BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Adviser L.L.C. and Spectrum Investment Partners LP, and each other lender under the Debtors' first lien credit agreement; (iv) counsel for The Bank of New York Mellon, in its capacity as administrative agent and collateral agent under the Debtors' second lien credit agreement; (v) the Debtors' twenty (20) largest unsecured creditors listed in the Debtors' consolidated list of creditors (excluding insiders); (vi) Bank of America, Fidelity National Bank, J.P. Morgan Chase Bank and Bank of Nova Scotia, which are the banks with which the Debtors maintain their primary banking relationships; and (vii) all other persons requesting notices. As this Motion is seeking "first day" relief, within two (2) business days of the hearing on this Motion, the Debtors will serve copies of this Motion and any order entered in respect to this Motion as required by Local Rule 9013-1 (m). In light of the expedited nature of the relief requested, the Debtors respectfully submit that no further notice is necessary.

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CONCLUSION WHEREFORE the Debtors respectfully request entry of an order granting the relief

requested herein, and granting the Debtors such other and further relief as may be just. A form of Order is attached as Exhibit A hereto . Dated: June I 0, 2012 Wilmington, Delaware

Mar D. C lins (No.2 81) Christop er M. Samis (No. 4909) Marisa A. Terranova (No. 5396)
RICHARDS, LAYTON & F INGER, P.A.

One Rodney Square 920 North King Street Wilmington, Delaware 19801 Telephone No.: (302) 651-7700 Facsimile No.: (302) 65 1-7701 Emai l: collins@rlf.com samis@rlf.com terranova@rlf.com -andJeffrey W. Kelley (GA BarNo. 412296) Ezra H. Cohen (GA Bar No. 173800) Carolyn P. Richter (GA Bar No. 574097) Matthew R. Brooks (GA BarNo. 378018) Benjamin R. Carlsen (GA Bar No. 940614)
TROUTMAN SANDERS LLP

Bank of America Plaza 600 Peachtree Street, Suite 5200 Atlanta, Georgia 30308-2216 Telephone No.: (404) 885-3000 Facsimile No.: (404) 885-3900 Emai 1: jeffrey.kelley@troutmansanders.com ezra.cohen@troutmansanders.com carolyn. richter@troutmansanders. com matthew. brooks@troutmansanders. com benjamin. carlsen@troutmansanders .com

Proposed Counsel for the Debtors

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EXHIBIT A

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, INC., et a/., 1 Debtors. Chapter 11 Case No. 12-11564 (CSS) (Joint Administration Pending)

ORDER AUTHORIZING ALLIED SYSTEMS HOLDINGS, INC. TO ACT AS FOREIGN REPRESENTATIVE OF THE DEBTORS

Upon the motion (the "Motion") of the above-captioned debtors and debtors-inpossession (collectively, the "Debtors"), pursuant to Section 1505 of Title 11 of the United States Code (the "Bankruptcy Code"), for authorization for Allied Systems Holdings, Inc. to act as the foreign representative of the Debtors in Canada in order to seek recognition of the Chapter 11 Cases2 on behalf of the Debtors, and to request that the Ontario Superior Court of Justice (Commercial List) (the "Ontario Court") lend assistance to tllis Court in protecting the Debtors' property, and to seek any other appropriate relief from the Ontario Court that the Ontario Court deems just and proper, all as more fully described in the Motion; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. 157 and 1334; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and it appearing that no other or further notice need be provided; and the
The Debtors in these cases, along with the federal tax identification number (or Canadian business number where app licable) for each of the Debtors, are: Allied Systems Holdings, Inc. (58-0360550); Allied Automotive Group, Inc. (58-2201 081); Allied Freight Broker LLC (59-2876864); Allied Systems (Canada) Company (900169283); Allied Systems, Ltd. (L.P.) (58-1710028); Axis Areta, LLC (45-5215545); Axis Canada Company (87568828); Axis Group, Inc. (58-2204628); Commercial Carriers, Tnc. (38-0436930); CT Services, Inc. (3829 18187); Cord in Transport LLC (38-1985795); F.J. Boutell Driveaway LLC (38-03651 00); GACS Incorporated (58-1944786); Logistic Systems, LLC (45-4241751); Logistic Technology, LLC (45-4242057); QAT, Inc. (592876863); RMX LLC (3 1-096 1359); Transport Support LLC (38-2349563); and Terminal Services LLC (910847582). The location of the Debtors' corporate headquarters and the Debtors' address for service of process is 2302 Park lake Drive, Bldg. IS, Ste. 600, Atlanta, Georgia 30345. 2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

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Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefore, IT IS HEREBY ORDERED THAT: 1. 2. The Motion is GRANTED as set forth herein. Allied Systems Holdings, Inc. is hereby authorized (a) to act as the foreign

representative of the Debtors, (b) to seek recognition by the Ontario Court of the Chapter 11 Cases and of certain orders made by the Court in the Chapter 11 Cases from time to time, (c) to request that the Ontario Court lend assistance to this Court, and (d) to seek any other appropriate relief from the Ontario Court that the Debtors deem just and proper. 3. The requirements set forth in Bankruptcy Rule 6003(b) are satisfied by the

Motion or otherwise deemed waived. 4. Notice of the Motion as provided therein shall be deemed good and sufficient and

the requirements of Local Rule 6004(a) and the Local Rules are satisfied by such notice. 5. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Order

shall be immediately effective and enforceable upon its entry. 6. This Court shall retain jurisdiction to interpret and enforce this Order.

Dated: June_, 2012 Wilmington, Delaware

THE HONORABLE CHRISTOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE

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