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April 25, 2019 – The Debtors objected [Docket No. 337] to a motion filed by the their Official Committee of Unsecured Creditors' (the "Committee," joined in objecting by Delaware Trust Company as Indenture trustee for the Debtors’ unsecured 5.25% Senior Notes) which requested an adjournment of a scheduled Disclosure Statement hearing [Docket No. 268]. The objection vigorously argues that the Committee's motion is part of an "improper attempt to take control of these cases" and "[to] disengage, object, delay, and hope to terminate exclusivity" in order to be afforded the opportunity to present its own Plan. The Debtors' objection sums up: "This improper litigation tactic—veiled in upholding what the Debtors agree are paramount statutory obligations of a committee—not only seeks to destabilize the Debtors’ business, but also seeks to upend a debtor’s exclusive right to file and solicit acceptances on a chapter 11 plan at the inception of a case. This shocking behavior should not be countenanced. The Debtors reserve the right to seek sanctions against the Committee and its professionals’ actions in seeking to ‘cause unnecessary delay, or needlessly increase the cost of litigation'." For those interested, Debtors' counsel is DLA Piper and the Committee's counsel is Milbank.
The Committee has previously filed objections in respect of cash management [Docket No. 44] and the Debtors' proposed KEIP [Docket No. 293].
The present objection continues, “Styled as a Motion under section 1103 of the Bankruptcy Code, the Motion has the makings of a dramatic tale. But after revealing the underlying and uncontroverted facts, it becomes clear that the Motion is merely another improper attempt to take control of these cases. Without a substantive complaint to bring to this Court (or an appropriate procedural ‘hook’), the Motion is based on nothing more than conclusory allegations and conclusions drawn by counsel….As described below, numerous such requests have been made already in the five weeks since these cases commenced, despite the Committee’s advisors’ (and certain of its members’) significant prepetition familiarity with the Debtors and active involvement in these cases from day one. The most telling was the Committee’s demand to continue the hearing on the Debtors’ Disclosure Statement (the ‘Disclosure Statement Hearing’) from May 13 to July 15, with no substantive justification. Conveniently, though, that proposed extension would run one day past the Debtors’ exclusive period. Certainly, this request is not “reasonable” and anything but ‘unremarkable.’…the Committee—only a week after serving the Debtors with wide-ranging discovery requests—contends that it does not have the information necessary to properly evaluate the merits of the Plan. This is not supported by the facts. Notwithstanding the extensive, expedited discovery, both formal and informal (presumably launched to try to distract and delay), the Debtors completed their responsive production well in advance of the Disclosure Statement hearing and have provided the Committee with all the information required to assess the Debtors’ Plan… The Committee argues that it needs ‘to conduct the request investigation of the Debtors’ assets, liabilities, and conduct’ before it can ‘exercise its statutory right either to support the . . . Plan or to seek another path for the Debtors’ reorganization.’ This represents a fundamental misreading—or blatant disregard—of section 1103 of the Bankruptcy Code. And it raises serious concerns about the Committee’s conduct in these cases thus far, which the Debtors believe rises to the level of improper interference with the Debtors’ exclusivity rights under section 1121(b) of the Bankruptcy Code.”
The objection continues, “The Debtors have proposed a Plan during their exclusive window to do so, and have proposed a corresponding hearing schedule which provides more than the notice periods required under the applicable rules. Since that time, the Committee has done everything in its power to derail the Debtors’ efforts, including by filing the Motion, and, most recently (and brazenly), asking the Debtors to withdraw their Plan as a precondition to an all-hands meeting regarding the trajectory of these cases… Under section 1103, the Committee may ‘consult’ with the Debtors, ‘investigate’ their acts, and even ‘participate’ in the formulation of a plan (which the Debtors offered the Committee early on in these cases, but which offer was rebuffed)—but they may not 'seek another path' for the Debtors during section 1121(b) exclusivity. That the Committee openly declares a desire to do so is troubling and reveals the real motives driving the Motion and its related threats, which is to deny the Debtors the benefit of their statutory exclusive right to file and seek to confirm the Plan… At bottom, the Committee has simply failed to meet its burden to demonstrate why a continuance of the Disclosure Statement hearing is necessary… the Debtors have complied with all of the Committee’s information requests in a short period of time, and will continue to do so going forward. The Committee has, and will continue to obtain, sufficient information to make its determination whether to support or oppose the Plan, and the Court will ultimately decide on these issues. Until then, the sole question before the Court on May 13, 2019 is whether the Debtors’ Disclosure Statement provides adequate disclosure to stakeholders. It does. No continuance is warranted.”
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