UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION CHAPTER 11

Transcription

1 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION IN RE: A&B VALVE AND PIPING SYSTEMS, L.L.C., et al., DEBTORS CASE NO JOINTLY ADMINISTERED 1 CHAPTER 11 CHIEF JUDGE ROBERT SUMMERHAYS DEBTORS SECOND OMNIBUS MOTION PURSUANT TO 11 U.S.C. 365 TO REJECT CERTAIN EXECUTORY CONTRACTS AND LEASES A HEARING WILL BE CONDUCTED ON THIS MATTER ON DECEMBER 29, 2015 AT 1:30 P.M. C.D.T. BEFORE THE HONORABLE ROBERT SUMMERHAYS, UNITED STATES BANKRUPTCY COURT, WESTERN DISTRICT OF LOUISIANA, LAFAYETTE DIVISION, U.S. COURTHOUSE, 214 JEFFERSON, SUITE 100, LAFAYETTE, LA THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield GP, LLC; and Sheffield Holdings, LP (collectively, the Debtors ), as debtors-in-possession in the above captioned chapter 11 case submit this Debtors Second Omnibus Motion Pursuant to 11 1 Kimzey Casing Service, LLC ( ); Sheffield Holdings, LP ( ); and Sheffield GP, LLC ( ) are being jointly administered with A&B Valve and Piping Systems, LLC ( ) pursuant to this Court s order entered on October 20, 2015 (ECF Doc. 32) #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 1 of 13

2 U.S.C. 365 to Reject Certain Executory Contracts and Leases (the Motion ) 2, and in support thereof respectfully states as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and Venue of the Debtors Chapter 11 cases (the Cases ) in this district is proper pursuant to 28 U.S.C and This is a core proceeding pursuant to 28 U.S.C. 157(b). 2. The statutory predicate for the relief sought hereby is 365 of title 11 of the United States Code (the Bankruptcy Code ). BACKGROUND 3. On October 24, 2015, the Debtors filed a motion (the Sale Motion ) (ECF Doc. 85), requesting, inter alia, an order, pursuant to 11 U.S.C 105 and 363, authorizing and approving (i) the bidding and sale procedures in connection with the proposed sale of each Debtors assets (the Sale Transaction ), (ii) the sale of the assets free and clear of all liens, claims and interests, and (iii) the time, date and place of a hearing to consider the Sale Transaction (the Sale Hearing ). 4. On November 17, 2015, the Court approved the Sale Motion and entered an Order (ECF Doc. 164), setting December 15, 2015 as the date for the Sale Hearing. 5. On December 15, 2015, the Sale Hearing was held and the Court conducted an auction of Kimzey Casing Service, LLC s assets. After the conclusion of the auction, TRK Enterprises, Inc. was declared the Winning Bidder. 6. On December 18, 2015, the Sale Transaction pursuant to that certain Purchase Agreement by and between Kimzey Casing Service, LLC ( Kimzey Casing ) and TRK 2 On December 3, 2015, the Debtors filed an Omnibus Motion Pursuant to 11 U.S.C. 365 to Reject Certain Executory Contracts and Leases (ECF Doc. 203). Accordingly, this Motion is the Debtors second request to reject certain executory contracts and leases #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 2 of 13

3 Enterprises, Inc. was closed. 7. Upon closing of the Sale Transaction, Kimzey Casing will no longer operate as a going concern business. EXECUTORY CONTRACTS AND LEASES 8. Kimzey Casing and TRK Enterprises, Inc. have reviewed the executory contracts and unexpired leases in connection with the Sale Transaction and determined that all contracts/leases will be rejected. Because Kimzey Casing sold substantially all of its assets in the Sale Transaction, Kimzey Casing no longer requires these executory contracts and leases and seeks to reject the contracts and leases because they provide no meaningful value or benefit to the Kimzey Casing estate. A list identifying and describing the executory contracts and leases the Kimzey Casing seeks to reject is attached hereto as Exhibit A (the Executory Contracts ). The Executory Contracts include: (1) various equipment rental contracts, (2) office equipment leases, (3) service agreements, (4) office leases and (5) utility contracts. Kimzey Casing and TRK Enterprises, Inc. have reviewed the Executory Contracts in connection with the closing of the Sale Transaction, and Kimzey Casing has determined, in the exercise of its sound business judgment, that continuing the Executory Contracts would be burdensome and would provide no corresponding benefit or utility to Kimzey Casing estate. 9. The Debtors primary business purpose at this stage in the Cases is to liquidate the assets remaining following the close of the Sale Transaction which includes certain litigation claims and otherwise complete the administration of the Debtors estates. The Executory Contracts are not necessary for the Debtors continuing business operations or the administration of the Debtors estates, and maintaining the Executory Contracts would impose unnecessary costs and burdens on the Debtors estates. Accordingly, the Debtors submit that this Motion to #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 3 of 13

4 reject the Executory Contracts is in the best interest of the Debtors, the creditors, and all parties in interest in the Cases. RELIEF REQUESTED 10. Pursuant to 365 of the Bankruptcy Code, the Debtors seek entry of an order authorizing the rejection of the Executory Contracts, and all amendments thereto, effective as of a date no later than December 31, A proposed form of order is attached hereto. BASIS FOR RELIEF A. Rejection of the Executory Contracts Should be Authorized Under Bankruptcy Code Section 365(a) as an Exercise of the Debtors Sound Business Judgment 11. Bankruptcy Code section 365(a) provides that a debtor, subject to the court s approval, may assume or reject an executory contract or an unexpired lease. 11 U.S.C. 365(a). Under section 365 of the Bankruptcy Code, a debtor may relieve itself of burdensome agreements where performance still remains. See Stewart Title Guar. Co. v. Old Republic Nat l Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (stating that section 365 allows a [debtor] to relieve a bankruptcy estate of burdensome agreements which have not been completely performed ). 12. The decision to assume or reject an executory agreement is a matter within the business judgment of the debtor. See NLRB v. Bildisco & Bildisco (In re Bildisco), 465 U.S. 513 (1984); Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1309 (5th Cir. 1985); In re Ham Consulting Co., 143 B.R. 71, 75 (Bankr. W.D. La. 1992). In order to make its decision to accept or reject, a debtor is required to weigh the benefits and burdens of the executory contract or unexpired lease. In re Food City, Inc., 94 B.R. 91, 93 (Bankr. W.D. Tex. 1988). The business judgment standard mandates that a court approve a debtor s business decision unless the decision is the product of bad faith, whim, or caprice. See In re Trans World Airlines, Inc., 261 B.R. 103, 121 (Bankr. D. Del. 2001); Summit Land Co. V. Allen (In re Summit #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 4 of 13

5 Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) (absent extraordinary circumstance, court approval of a debtor s decision to assume or reject an executory contract should be granted as a matter of course ). 13. Rejection of an executory contract is appropriate where rejection would benefit the estate. See Sharon Steel Corp. v. Nat l Fuel Gas Distrib. Corp. (In re Sharon Steel Corp.), 872 F.2d 36, (3d Cir. 1989). The standard for rejection is satisfied when a debtor has made a business determination that rejection will benefit the estate. See In re Child World, Inc., 142 B.R. 87, 89 (Bankr. S.D.N.Y. 1992); In re TS Indus., Inc., 117 B.R. 682, 685 (Bankr. D. Utah 1990); In re Del Grosso, 115 B.R. 136, 138 (Bankr. N.D. Ill. 1990); In re Ionosphere Clubs, Inc., 100 B.R. 670, 673 (Bankr. S.D.N.Y. 1989). 14. Upon finding that a debtor has exercised its sound business judgment in determining that rejection of certain contracts or leases is in the best interests of its creditors and all parties in interest, a court should approve the rejection under section 365(a). See In re Federal Mogul Global, Inc., 293 B.R. 124, 126 (D. Del. 2003); In re Bradlees Stores, Inc., 194 B.R. 555, 558 n.1 (Bankr. S.D.N.Y. 1996), appeal dismissed, 210 B.R. 506 (S.D.N.Y. 1997); In re Summit Land Co., 13 B.R. 310,315 (Bankr. D. Utah 1981) (holding that absent extraordinary circumstances, court approval of a debtors decision to assume or reject an executory contract should be granted as a matter of course ). More exacting scrutiny would slow the administration of the debtor s estate and increase its cost, interfere with the Bankruptcy Code s provision for private control of administration of the estate, and threaten the court s ability to control a case impartially. Richmond Leasing Co., 762 F.2d at Here, Kimzey Casing has determined that the Executory Contracts are no longer beneficial to Kimzey Casing estate and its creditors, especially given that Kimzey Casing closed #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 5 of 13

6 the Sale Transaction on December 18, 2015 and will no longer be operating as a going concern business. Absent the relief sought, Kimzey Casing may continue to incur costs associated with the Executory Contracts. See 11 U.S.C. 365(d)(3). Accordingly, Kimzey Casing has determined that it is in the best interest of the estate and its creditors to reject the Executory Contracts. B. Bankruptcy Code Section 105 Supports Rejection of the Lease 16. Bankruptcy Code section 105 authorizes this Court to issue any order necessary or appropriate to carry out the provisions of the Bankruptcy Code. 11 U.S.C For reasons set forth herein, rejection of the Executory Contracts is proper and in accordance with section 105. C. Rejection as of December 31, 2015 is Appropriate 17. In consideration of their prudent business judgment, the Debtors submit that rejection of the Executory Contracts is in the best interest of the Debtors, its creditors and all parties in interest in these Cases. Rejection as of December 31, 2015 is beneficial to the Debtors estates by avoiding the possibility of incurring administrative expenses associated with the Executory Contracts in the month of January. For these reasons, the Debtors contend that rejection as of December 31, 2015 is warranted under the circumstances. D. Rejection Damages 18. To the extent that the Executory Contract counterparties intend to claim any damages resulting from the rejection of the Executory Contracts, the Debtors request that the Court order that the deadline for filing a proof of claim coincide with the previously approved general proof of claim deadline January 15, #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 6 of 13

7 COMPLIANCE WITH RULE 6006(f) 19. Bankruptcy Rule 6006(f) authorizes rejection of unexpired leases and executory contracts pursuant to an omnibus motion that sufficiently identifies the agreements subject to the motion. FED. R. BANKR. P. 6006(f). The Debtors Motion and Exhibit A satisfies the requirements of Rule 6006(f). NOTICE 20. Notice of this Motion has been provided by or U.S. first class mail to all counterparties to the Executory Contracts listed on Exhibit A, and all parties on the Debtors Special Notice List. The Debtors submit that no further notice is necessary. RESERVATION OF RIGHTS 21. The Debtors continue to review and evaluate other executory contracts and/or unexpired leases that are not subject to this Motion. The Debtors may identify additional executory contracts and/or unexpired leases to be assumed or rejected. Accordingly, the Debtors reserve the right to seek assumption or rejection of additional executory contracts and unexpired leases. This Motion should not be construed as a determination that any executory contracts or unexpired nonresidential real property leases not addressed herein are to be assumed or assigned. CONCLUSION WHEREFORE, the Debtors respectfully request that the Court enter an order granting the relief requested by this Motion and such further relief as may be just and necessary under the circumstances #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 7 of 13

8 Respectfully submitted, GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN, LLC By: _/s/ Louis M. Phillips Louis M. Phillips (La. Bar No ) Peter A. Kopfinger (La. Bar No ) One American Place 301 Main Street, Suite 1600 Baton Rouge, LA Telephone: (225) Facsimile: (225) AND Armistead M. Long (La. Bar No ) 400 East Kaliste Saloom Road, Suite 4200 Lafayette, Louisiana Phone: (337) Fax: (337) AND Patrick Rick M. Shelby (La. Bar No ) 201 St. Charles Avenue, 40 th Floor New Orleans, Louisiana Telephone: (504) Attorneys for A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield GP, LLC; and Sheffield Holdings, LP #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 8 of 13

9 EXHIBIT A Name of other parties to lease or contract Address 1 Address 2 City State Zip Description of contract or lease Date of Contract All Copy PO Box St. Louis MO Lease 8/4/2015 Aramark PO Box Dallas TX Uniform cleaning service 1/21/2014 Crystal Clean 2175 Point Blvd Suite 375 Elgin IL Washer rental 5/1/2013 El Dorado Water PO Box 445 Eldorado Springs CO Water service 6/1/2015 Enterprise Fleet PO Box Kansas City MO Fleet truck rental 1/22/2013 Holualoa Stapleton Office, LLC PO Box Denver CO Office rental 4/8/2013 Iron Mountain PO Box Dallas TX Storage 2/14/2013 Lancaster Safety 100 Bradford Rd. Suite 100 Wexford PA Safety consultant 10/7/2014 Pelican Lakes 1620 Pelican Lakes Point Windsor CO Golf membership 5/27/2014 Pitney Bowes PO Box Pittsburgh PA Mail postage lease 8/12/2015 Premium Casing 5151 San Felipe Suite 2325 Houston TX Equipment rental 5/12/2009 Rocky Mountain Tech Team 2525 Arapahoe Ave E4-184 Boulder CO IT agreement 12/1/2013 Savin - US Bank 5195 Marshall Street Arvada CO Lease 11/29/2012 Screening One PO Box Los Angeles CA New hire background service 12/19/2014 Sheffield Holdings, LP - PA Shop 3845 Cypress Creek Parkway Suite 451 Houston TX Shop rental 3/1/2012 TeleTrac Collection Center Dr Chicago IL Electronic Logs - DOT 2/26/2014 TJ Sisk & Company Inc Broadway Suite 1000 Denver CO Insurance Broker 10/12/2015 UniFirst 1400 E. Moncrieff Place Aurora CO Uniform cleaning service 11/12/ #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 9 of 13

10 PROPOSED ORDER #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 10 of 13

11 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION IN RE: A&B VALVE AND PIPING SYSTEMS, L.L.C., et al., DEBTORS CASE NO JOINTLY ADMINISTERED 3 CHAPTER 11 CHIEF JUDGE ROBERT SUMMERHAYS ORDER GRANTING DEBTORS SECOND OMNIBUS MOTION PURSUANT TO 11 U.S.C. 365 TO REJECT CERTAIN EXECUTORY CONTRACTS AND LEASES (Relates to Docket No. ) CONSIDERING Debtors Second Omnibus Motion Pursuant to 11 U.S.C. 365 to Reject Certain Executory Contracts and Leases (the Motion ) 4 (ECF Doc. ) filed by debtors-inpossession, A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield 3 Kimzey Casing Service, LLC ( ); Sheffield Holdings, LP ( ); and Sheffield GP, LLC ( ) are being jointly administered with A&B Valve and Piping Systems, LLC ( ) pursuant to this Court s order entered on October 20, 2015 (ECF Doc. 32). 4 All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms as set forth in the Motion #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 11 of 13

12 GP, LLC; and Sheffield Holdings, LP (collectively, the Debtors ), and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157(b) and 1334; and proper and adequate notice of the Motion and the hearing thereon having been given; and it appearing that no other or further notice being necessary; and the relief requested being in the best interests of the Debtors and their estates and creditors; and the Court having reviewed the Motion; and the 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 cause appearing therefor: IT IS ORDERED that the relief requested in the Motion is GRANTED; IT IS FURTHER ORDERED that the Executory Contracts of Kimzey Casing Service, LLC are rejected as of December 31, 2015; IT IS FURTHER ORDERED that the Executory Contract counterparties shall file their proofs of claim for lease rejection damages by January 8, 2016; and IT IS FURTHER ORDERED that this Court shall, and hereby does, retain jurisdiction with respect to all matters arising from or related to the implementation of this Order. # # # GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN, LLC By: /s/ Louis M. Phillips Louis M. Phillips (La. Bar No ) Peter A. Kopfinger (La. Bar No ) One American Place 301 Main Street, Suite 1600 Baton Rouge, LA Telephone: (225) lphillips@gordonarata.com pkopfinger@gordonarata.com 2 AND Gerald H. Schiff (La. Bar No ) #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 12 of 13

13 Armistead M. Long (La. Bar No ) 400 East Kaliste Saloom Road, Suite 4200 Lafayette, Louisiana Phone: (337) AND Patrick Rick M. Shelby (La. Bar No ) 201 St. Charles Avenue, 40 th Floor New Orleans, Louisiana Telephone: (504) Attorneys for A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield GP, LLC; and Sheffield Holdings, LP #242 File 12/18/15 Enter 12/18/15 11:46:26 Main Document Pg 13 of 13

14 PROPOSED ORDER #242-1 File 12/18/15 Enter 12/18/15 11:46:26 Proposed Order Pg 1 of 4

15 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION IN RE: A&B VALVE AND PIPING SYSTEMS, L.L.C., et al., DEBTORS CASE NO JOINTLY ADMINISTERED 1 CHAPTER 11 CHIEF JUDGE ROBERT SUMMERHAYS ORDER GRANTING DEBTORS SECOND OMNIBUS MOTION PURSUANT TO 11 U.S.C. 365 TO REJECT CERTAIN EXECUTORY CONTRACTS AND LEASES (Relates to Docket No. ) CONSIDERING Debtors Second Omnibus Motion Pursuant to 11 U.S.C. 365 to Reject Certain Executory Contracts and Leases (the Motion ) 2 (ECF Doc. ) filed by debtors-inpossession, A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield 1 Kimzey Casing Service, LLC ( ); Sheffield Holdings, LP ( ); and Sheffield GP, LLC ( ) are being jointly administered with A&B Valve and Piping Systems, LLC ( ) pursuant to this Court s order entered on October 20, 2015 (ECF Doc. 32). 2 All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms as set forth in the Motion #242-1 File 12/18/15 Enter 12/18/15 11:46:26 Proposed Order Pg 2 of 4

16 GP, LLC; and Sheffield Holdings, LP (collectively, the Debtors ), and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157(b) and 1334; and proper and adequate notice of the Motion and the hearing thereon having been given; and it appearing that no other or further notice being necessary; and the relief requested being in the best interests of the Debtors and their estates and creditors; and the Court having reviewed the Motion; and the 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 cause appearing therefor: IT IS ORDERED that the relief requested in the Motion is GRANTED; IT IS FURTHER ORDERED that the Executory Contracts of Kimzey Casing Service, LLC are rejected as of December 31, 2015; IT IS FURTHER ORDERED that the Executory Contract counterparties shall file their proofs of claim for lease rejection damages by January 8, 2016; and IT IS FURTHER ORDERED that this Court shall, and hereby does, retain jurisdiction with respect to all matters arising from or related to the implementation of this Order. # # # GORDON, ARATA, MCCOLLAM, DUPLANTIS & EAGAN, LLC By: /s/ Louis M. Phillips Louis M. Phillips (La. Bar No ) Peter A. Kopfinger (La. Bar No ) One American Place 301 Main Street, Suite 1600 Baton Rouge, LA Telephone: (225) lphillips@gordonarata.com pkopfinger@gordonarata.com 2 AND Gerald H. Schiff (La. Bar No ) #242-1 File 12/18/15 Enter 12/18/15 11:46:26 Proposed Order Pg 3 of 4

17 Armistead M. Long (La. Bar No ) 400 East Kaliste Saloom Road, Suite 4200 Lafayette, Louisiana Phone: (337) AND Patrick Rick M. Shelby (La. Bar No ) 201 St. Charles Avenue, 40 th Floor New Orleans, Louisiana Telephone: (504) Attorneys for A&B Valve and Piping Systems, L.L.C.; Kimzey Casing Service, LLC; Sheffield GP, LLC; and Sheffield Holdings, LP #242-1 File 12/18/15 Enter 12/18/15 11:46:26 Proposed Order Pg 4 of 4