The U.S. Trustee assigned to the Vertis Holdings’ case filed with the U.S. Bankruptcy Court an objection to the motion of the Debtors for entry of an order pursuant to 11 U.S.C. sections 105(a), 349, 363(b), 554, and 1112(b), Fed. R. Bankr. P. 1017(a) and 9019, Del Bankr. L.R. 3011–1 (i) approving settlement with Quad/Graphics Marketing, LLC in connection with that certain transition services agreement; (ii) authorizing the transfer and deposit of funds into the registry of the court to provide for the payment of accrued professionals fees and approving procedures with respect to the release thereof; (iii) dismissing the Debtors Chapter 11 cases; and (iv) granting related relief. The trustee asserts, “Although the Debtors request an order that purports to dismiss these cases, in fact the Debtors want this Court to continue exercising jurisdiction as to matters that are central to case and estate administration, most notably the consideration of professional fee applications under 11 U.S.C. §330 and 331…. The Motion appears to be designed to allow some parties to continue to seek relief from this Court while precluding others the same opportunity all the while evading and circumventing the payment of U.S. Trustee Quarterly Fees. The cases and orders cited by the Debtors in their motion are inapposite and, among other things, did not contemplate a voluntary dismissal as part of such relief…. The Debtors tout the virtue of the proposed settlement with Quad in support of the Motion. However, the Transition Services Agreement (“TSA”), which the settlement seeks to resolve a potential breach of, is a post–petition contract. The Debtors’ desire to dismiss the cases has created the purported necessity for the settlement. The $300,000 lump sum payment to Quad could just as easily be used to fund other administrative expenses, including those of an orderly Chapter 7 winddown, which would safeguard the due process rights of all creditors and parties–in–interest, not simply the rights and interests of those parties whom the Debtors have chosen to prefer. In addition, the Debtors’ request to destroy books and records is also improper in light of the posture of these cases. The Motion also seeks relief that would ordinarily be sought under a proposed Chapter 11 plan such as the exculpation, release and indemnification of the Debtors’ Officers and Directors, members of the Official Committee of Unsecured Creditors (the “Committee”), the Prepetition Term Loan Lenders and their various professionals. Such relief sought by the Debtors is not contemplated by the Bankruptcy Code and is improper here.”
About Brandy Chetsas
Brandy L. Chetsas is editor in chief at Bankrupt Company News. She joined New Generation Research, Inc. in 1998. As Director of Strategic Content, she leverages 20+ years of communications and project management experience for the distressed investing sector–with particular expertise on corporate restructurings via Chapter 11. Brandy began her career writing for a law enforcement-related publication and teaching English courses at numerous colleges in the U.S. and abroad.