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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
REVSTONE INDUSTRIES, LLC, et al.,’
)
Case No. 12-13262 (BLS) (Jointly Administered)
)
Debtors. Related to Docket No. 782
In re:
)
Chapter 11
)
METAVATION, LLC,
) )
Debtor.
Case No. 13-11831 (BLS) (Joint Administration Requested)
) Related to Docket No. 11
Objection Deadline: August 14, 2013 at 4:00 p.m. (prevailing Eastern time) Hearing Date: August 21, 2013 at 11:00 a.m. (prevailing Eastern time) NOTICE OF MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. 4 363(b),NUNC PRO TUNCTO THE PETITION DATE TO:
(1) the Office of the United States Trustee; (ii) the Debtor’s prepetition and postpetition secured lenders; (iii) the Pension Benefit Guaranty Corporation; (iv) the Debtor’s major OEM customers: General Motors and Chrysler; (v) Dayco Products, LLC and Dayco Products S.A. de C.V., the stalking horse purchaser for the Debtor’s assets; and (vi) the Official Committee of Unsecured Creditors in the case of Revstone Industries, LLC.
PLEASE TAKE NOTICE that on July 22, 2013, the above-captioned debtor and debtor in possession (collectively, the "Debtor") filed the Motion ofMetavation, LLC to Employ
and Retain Huron Consulting Services LLC to Provide a Chief Restructuring Officer, Other Officers, and Additional Personnel for the Debtor Pursuant to 11 US.C. § 363(b), Nunc Pro Tunc to the Petition Date (the "Motion") with the United States Bankruptcy Court for the District of
The Debtors in these Chapter 11 Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgings, LLC (9285); and US Tool & Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. DOCS_DE: 188768.173864/002
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Delaware, 824 Market Street, 3 Floor, Wilmington, Delaware 19801 (the "Bankruptcy Court"). A copy of the Motion is attached hereto as Exhibit 1. PLEASE TAKE FURTHER NOTICE that any response or objection to the
Motion must be in writing and filed with the Bankruptcy Court on or before
August 14, 2013,
at 4:00 p.m. (prevailing Eastern time). You must also serve a copy of the response or objection
so that it is received not later than August 14, 2013, at 4:00 p.m. (prevailing Eastern time), by: (i) the Debtor: Metavation, LLC, 2250 Thunderstick Drive, Suite 1203, Lexington, Kentucky 40505, Attn: Office of the General Counsel; (ii) proposed counsel for the Debtor: Laura Davis Jones, Esq., Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 17th Floor, P.O. Box 8705, Wilmington, Delaware 19899-8705 (Courier 19801); (iii) proposed restructuring advisor to
the Debtor, Huron Consulting Services, LLC, 900 Wilshire Dr., Suite 270, Troy, Michigan 48084, Attn: John C. Didonato; (iv) the Office of the United States Trustee: Jane Leamy, Esq., United States Trustee’s Office, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801; (v) counsel to the Stalking Horse Bidder, Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, New York 10036, Attn: Eric Ivester, Esquire and Mark Dressel, Esq.; (vi) counsel to the Official Committee of Unsecured Creditors of Revstone Industries, LLC: Womble Carlyle Sandridge & Rice, LLP, 222 Delaware Avenue, Suite 1501, Wilmington, DE 19801, Matthew P. Ward, Esq.; and (vii) counsel for any official committee of unsecured creditors (if any) appointed in the Metavation, LLC case. PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND
IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING.
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PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE RELIEF SOUGHT IN THE MOTION WILL BE HELD ON AUGUST 21, 2013 AT 11:00 A.M. (PREVAILING EASTERN TIME) BEFORE THE HONORABLE BRENDAN L. SHANNON, UNITED STATES BANKRUPTCY JUDGE, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET STREET, 6TH FLOOR, COURTROOM NO. 1, WILMINGTON DELAWARE 19801. Dated: July’, 2013
PACHUK1 STANG ZIEHL & JONES LLP
Laura David JoNo. 2436) David M. Bertenthal (CA Bar No. 167624) Timothy P. Cairns (Bar No. 4228) Cohn R. Robinson (Bar No. 5524) 919 N. Market Street, 17th Floor Wilmington, DE 19801 Telephone: 302/652-4100 Facsimile: 302/652-4400 Email: ljonespszjlaw.com dbertentha1pszj1aw.com tcairnspszj1aw.com crobinsonpszjlaw.com [Proposed] Counsel for the Debtor and Debtor in Possession
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Exhibit 1
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
)
REVSTONE INDUSTRIES, LLC, et al.,’
)
Case No. 12-13262 (BLS)
)
Debtors. In re:
)
(Jointly Administered)
)
Chapter 11
)
METAVATION, LLC,
)
Case No. 13-11831 (BLS)
)
Debtor.
)
(Joint Administration Requested)
MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. § 363(B), NUNC PRO TUNC TO THE PETITION DATE Metavation, LLC, a debtor and debtor in possession herein ("Metavation" or the "Debtor"), hereby moves the Court for entry of an order, pursuant to sections 105(a) and 363(b) of title 11 of the United States Code (the "Bankruptcy Code") authorizing Metavation to retain Huron Consulting Services LLC (including its agents and independent contractors, "Huron"), pursuant to the terms and conditions of that certain letter agreement between Huron and Revstone Industries, LLC, dated January 17, 2013, as modified by the Retention Order (the "Engagement Letter"), 2 to (i) provide John C. DiDonato ("Mr. DiDonato") as Chief
I
The Debtors in these Chapter 11 Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgings, LLC (9285); and US Tool and Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. 2
A copy of the Engagement Letter is attached as Exhibit A to the Motion Of The Debtors To Employ And Retain Huron Consulting Services LLC To: (I) Provide A Chief Restructuring Officer And Additional Personnel For The Debtors Pursuant To 11 U.S. C. § 363(B), Nunc Pro Tunc To January 17, 2013; And (II) Provide Financial Advisory Services To The Debtors Pursuant To 11 U.S. C. § 327(A), Nunc Pro Tunc To The Period Between December 17, 2013 And January 16, 2013 [Case No. 12-13262; Docket No. 198] dated February 13, 2013 (the "Revstone Huron Retention Application"), as modified and approved by the Order Authorizing the Debtors to Employ and Retain Huron Consulting Services LLC To Provide A Chief Restructuring Officer and Additional Personnel For the D005_DE: 187524.6 73864/002
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Restructuring Officer ("CR0") of Metavation, (ii) provide other officers as detailed in paragraph 10 (the "Officers"), and (iii) provide additional personnel (the "Additional Personnel") 3 to provide restructuring support to Metavation, in each instance nunc pro tunc as of the Metavation Petition Date (defined below). In support of this Motion, Metavation relies upon the declaration of Mr. DiDonato, a Managing Director of Huron (the "DiDonato Declaration") attached hereto as Exhibit A and incorporated herein by reference, and respectfully represents as follows: Jurisdiction
1.
This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue for this matter is proper in this district pursuant to 28 U.S.C. § 1409. 2.
The statutory predicates for the relief requested herein are §§ 105(a) and
363(b) of title 11 of the United States Code (the "Bankruptcy Code"). Background
3.
On December 3, 2012, Debtors Revstone Industries, LLC and Spara, LLC
commenced their cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On January 7, 2013, Debtors Greenwood Forgings, LLC and US Tool and Engineering, LLC commenced their cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors have continued in the possession of their property and have continued to operate and manage their business as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
Debtors Nunc Pro Tunc To January 17, 2013 [Case No. 12-13262; Docket No. 428] dated March 21, 2013 (the "Retention Order"). Huron reserves the right to modify its staffing throughout the course of this chapter 11 case, subject to the terms of the Engagement Letter and any order approving this Motion. DOCSDE: 187524.6 73864/002
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Pursuant to the Order Authorizing Joint Administration of Related Chapter
11 Cases for Procedural Purposes Only (Docket No. 173) (the "Existing Joint Administration Order"), the chapter 11 cases of Revstone Industries, LLC, Spara, LLC, Greenwood Forgings, LLC and US Tool and Engineering, LLC (the "Original Debtors") are jointly administered and are consolidated for procedural purposes. 5.
On December 18, 2012, the United States Trustee appointed an Official
Committee of Unsecured Creditors (the "Committee") in the case of Revstone Industries, LLC. No committee has been appointed in the cases of Spara, LLC Greenwood Forgings, LLC and US Tool and Engineering, LLC. No trustee or examiner has been appointed in any of the Original Debtors’ chapter 11 cases. 6.
On the date hereof (the "Metavation Petition Date"), Metavation filed a
voluntary petition in the Court for relief under chapter 11 of the Bankruptcy Code. Metavation continues to operate its business and manage its properties as a debtor in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in Metavation’s chapter 11 case. As of the date hereof, no creditors’ committee has been appointed in the Metavation chapter 11 case. 7.
The factual background relating to the commencement of the chapter 11
case of Revstone Industries, LLC is set forth in detail in the Declaration of Jay N. Brown in Support of First Day Pleadings (the "Brown Declaration") filed on December 3, 2012, and incorporated herein by reference. The factual background relating to the commencement of the chapter 11 case of Metavation, LLC is set forth in detail in the Declaration of John C. DiDonato in Support of Metavation, LLC Petition and First Day Motions (the "DiDonato Declaration") filed concurrently herewith and incorporated herein by reference.
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Metavation, LLC (the "Company") is a Michigan-based manufacturer of
precision machined components and assemblies, including dampers, engine components, knuckles, and driveline products for the automotive industry. Metavation specializes in designing and manufacturing dampers that are included on original equipment manufacturers’ ("OEMs") engine platforms. The Company also has rapid development capabilities to produce "solution" dampers to correct driveline and powertrain noise vibration and harshness ("NVH") issues. The Company serves many of the largest automotive customers, suppliers, and platforms. The Company’s major OEM customers include General Motors and Chrysler. Metavation’s Tier I supplier customers include American Axle, Dana Automotive, and J.G. Kern. These longstanding relationships have led the Company to a dominant market position in the U.S. crankshaft damper market. Metavation operates from four, modernized facilities located in central Michigan. The Company begins its manufacturing process by developing the rubber component at the Hillsdale, MI facility, and then sends the rubber component to the Mt. Pleasant, MI or Vassar, MI facility for machining and/or assembly. Huron’s Engagement and Qualifications
9.
Huron was originally retained after the filing of the Revstone and Spara
cases to provide restructuring services in support of the Original Debtors’ obligations as chapter 11 debtors-in-possession. Huron’s retention as CR0 to the Original Debtors was approved pursuant to the Order Authorizing the Debtors to Employ and Retain Huron Consulting Services LLC to Provide a Chief Restructuring Officer and Additional Personnel for the Debtors Nunc Pro Tunc to January 17, 2013 [Case No. 12-13262, Docket No. 428]. Under the continuing dynamic circumstances of these cases, Metavation has determined that obtaining the ongoing services of a CR0 and other personnel with turnaround and chapter 11 experience will substantially enhance its ability to (a) operate and meet its administrative obligations in this case DOCSDE:187524.6 73864/002
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and (b) preserve and maximize the value of its assets pending any sale. As such, Metavation has chosen to utilize Huron personnel as appropriate and in addition to Mr. DiDonato, has appointed the following individuals to officer positions (collectively, the "Officers") of Metavation. John C. DiDonato
Chief Restructuring Officer
James M. Lukenda
Deputy CR0
Laura Marcero
Deputy CR0
Brian Linscott
Interim CFO
Geoff Frankel
Vice President
John Owens
Interim Treasurer
John Hemingway
Interim Assistant Treasurer
10.
Huron has extensive experience in providing restructuring services in and
out of chapter 11 proceedings and has an excellent reputation for the services it has rendered on behalf of debtors and creditors throughout the United States. Among many other examples, Huron has provided restructuring and turnaround advisory services to clients including the Original Debtors as noted above, NUMMI; Kazi Foods of Michigan, New York, New Jersey, Maryland and Florida; Forum Health; Lacks; and Lifecare. 11.
Further, as a result of prepetition and post-petition work performed on
behalf of the Original Debtors and Metavation, Huron has acquired significant knowledge of Metavation and its business and is now familiar with the Metavation’ s financial affairs, debt structure, operations and related matters. Accordingly, Huron has developed relevant experience regarding Metavation that will assist it in providing effective and efficient services to Metavation in this case. 12.
As such, Metavation believes that Huron is well qualified and able to
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that it will endeavor to continue to coordinate with the other professionals retained in this bankruptcy case, as well as the bankruptcy cases of the Original Debtors, to eliminate unnecessary duplication or overlap of work. Therefore, Metavation submits that the retention and employment of Huron is in the best interests of the estate, creditors and other stakeholders in this case. Services to Be Provided by Huron 13.
Consistent with the terms of the Engagement Letter, Mr. DiDonato as
CR0, the Officers listed above, and the Additional Personnel are charged with assisting Metavation and performing various operational, administrative and financial responsibilities and activities arising in connection with this chapter 11 case. More specifically, but without limitation, the anticipated services include the following: Compiling data and documents necessary to support the Debtor in its bankruptcy proceeding. Negotiating and documenting the terms of a debtor-in-possession and other financing arrangements. Compiling data and analyses information necessary to meet the reporting requirements that will be mandated by the bankruptcy process; and assisting with other aspects of managing the interactions with major constituents, including covenant compliance, communications, preparation for meetings and follow up on requests. Compiling data and analyses necessary to meet the requirements and requests of various parties related to the Debtor’s restructuring and reorganization. Compiling and formatting data and analyses necessary to meet the financial reporting requirements mandated by the bankruptcy code and the US Trustee’s office. Developing plans to address creditor requirements and interfacing with creditors and their financial advisors. Assisting management with the on-going forecasting of the Debtor’s cash flows and its operations and monitoring and analyzing operational and financial condition. Advising the Restructuring Committee of the Board of Members, or comparable DOCSDE: 187524.6 73864/002
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independent governing body established by an amended Operating Agreement (the "Board"), on restructuring, reorganization, and bankruptcy matters. Advising on communication plans for various stakeholders including customers, suppliers, employees, and the community. Addressing operational challenges that arise due to the bankruptcy filing and the bankruptcy process. Preparing for court hearings, for the argument of motions and other matters, and providing expert testimony as required. Developing a plan of reorganization or liquidation, and supporting documents. Supervising and advising the Debtor on the sale of operating and non-operating assets as directed by the Debtor’s fiduciaries. Performing any other restructuring management duties relating to role as CR0, DCRO and EVP as directed by the Debtor’s fiduciaries. 14.
Metavation is a wholly owned subsidiary of Revstone Transportation,
LLC ("Transportation") which, in turn, is a wholly owned subsidiary of Debtor Revstone Industries, LLC.
On January 17, 2013, Debtor Revstone and non-Debtor Revstone
Transportation, LLC formally effectuated governance changes. Two independent managers (Richard E. Newsted and James B. Shein) were appointed to the three member boards of Revstone and Transportation, among other affiliates, and Mr. DiDonato was appointed as CR0 of the same companies. The independent managers together constitute a majority of the managers on the boards of Revstone and Transportation. The independent managers also were appointed to a restructuring committee of the boards (the "Restructuring Committee"), which was specifically charged with the task of overseeing the CR0 and all bankruptcy-related actions of the Original Debtors and their non-Debtor subsidiaries, including Metavation. 15.
Section 4.1 of the Metavation LLC Agreement provides that, subject to
certain exceptions not at issue here, "all decisions regarding the management and administration of the Company shall be made by, and the business and affairs of the Company shall be managed DOCSDE:187524.6 73864/002
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under the direction of, the Members." The sole member of Metavation is Transportation. Hence, by virtue of the CRO’s management of the sole member under the oversight of its Restructuring Committee, Metavation also is managed by the CR0 of Transportation under the oversight of Transportation’s Restructuring Committee. In addition, by amendment of the Metavation LLC Agreement on July 14, 2013, Mr. DiDonato was appointed as the Chief kcstructuring Officer of Metavation. Upon the Court’s approval of the proposed retention, Mr. DiDonato as CR0 will continue to report to, and to act under the direction, control and guidance of, Transportation’s Restructuring Committee, subject to removal and/or termination thereby. Huron’s Fees 16.
As set forth in the Engagement Letter, fees in connection with this
Engagement will be based upon the time incurred by Mr. DiDonato, and the other Officers, multiplied by Huron’s standard hourly rates for these individuals (which may be adjusted from time to time) illustrated below: Individual
Hourly Rate
John C. DiDonato (CR0) James M. Lukenda (Deputy CR0) Laura Marcero (Deputy CR0) Brian Linscott (Interim CFO) Geoff Frankel (Vice President) John Owens (Interim Treasurer) John Hemingway (Interim Assistant Treasurer)
$750 $725 $700 $700 $725 $565 $550
17.
Huron will bill the Additional Personnel on an hourly basis based on the
actual hours worked, multiplied by Huron’s standard hourly billing rates (which may be subject to adjustment from time to time): Title
Hourly Rate
Managing Director Senior Director and Director Manager
$675 - $750 $535 - $620 $420-$450
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Associate Analyst 18.
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$350 $250
Travel time during which no work is performed shall be itemized
separately and billed at fifty percent (50%) of regular hourly rates. 19.
Huron does not provide any assurance regarding the outcome of its work
and its fees will not be contingent on the results of such work. 20.
Payment of all fees is due and payable monthly by wire transfer.
21.
In addition to the fees outlined above, Huron will bill Metavation monthly
for reimbursement of reasonable direct expenses incurred on Metavation’s behalf during the engagement. Direct expenses include reasonable and customary out-of-pocket expenses arising directly from the engagement, such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the engagement. 22.
Notwithstanding anything to the contrary in the Engagement Letter, Huron
is not seeking any "success," deferred, "back end" or similar fees from Metavation for this engagement. Retainer - Cash on Account
23.
Prior to Huron’s retention, Metavation provided Huron with a retainer of
$250,000.00 (the "Retainer"). The Retainer shall be credited against any amounts due from Metavation at the termination of the Engagement Letter and returned to Metavation upon the satisfaction of all obligations owed to Huron thereunder. Reporting Requirements
24.
Because Huron is not being employed for its interim management services
as a professional under section 327 of the Bankruptcy Code, it will not be submitting regular fee applications pursuant to sections 330 and 331 of the Bankruptcy Code. To maintain DOCSDE:1875246 73864/002
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transparency and to comply with the U.S. Trustee’s protocol applicable to the retention of personnel to assist the Debtors under section 363 of the Bankruptcy Code (sometimes referred to as the "J. Alix Protocol") (the "Protocol"), Huron intends to file with the Court and serve on the Debtor, the U.S. Trustee and any Official Committee of Unsecured Creditors appointed in this case (the "Committee" and, together with the Debtor and the U.S. Trustee, the "Notice Parties") a report on staffing (the "Staffing Report") by the 20th of each month for the previous month, which report would include the names and functions filled by all Huron personnel assigned to this engagement. The Staffing Report (and Huron’s staffing for this matter) would be subject to review by the Court in the event so requested by any of the Notice Parties. 25.
In addition, Huron will file with this Court, and serve upon the Notice
Parties, reports of compensation earned and expenses (the "Compensation Reports") incurred on at least a quarterly basis. The Compensation Reports would summarize the service provided, identify the compensation earned, itemize expenses incurred and provide for an objection period. All such compensation would be subject to review by this Court if an objection is filed. Indemnification and Liability Limitation Provisions 26.
Pursuant to the Retention Order, Huron agreed to the following
modifications to the terms in Huron’s Engagement Letter: (a)
Paragraph 2 of the General Business Terms of the Engagement Letter is modified as follows: the heading "Independent Contractor" is hereby replaced with the heading "No Agency" and the phrase "an independent contractor and" is hereby deleted from the first sentence of that paragraph.
(b)
In the event that Huron seeks reimbursement for attorneys’ fees from the Debtor pursuant to the Engagement Letter, the invoices and supporting time records from such attorneys shall be included in Huron’s own monthly fee statement and shall be subject to the same payment procedures applicable to professionals in these cases.
(c)
Paragraph 9 of the Engagement Letter’s General Business Terms shall apply solely to claims of Huron and the Debtor or any Committee against each other,
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and shall not apply if the Debtor or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, Huron’s own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct. Additionally, the phrase "for the portion of the engagement giving rise to liability" is deleted from this paragraph. (d)
Paragraph 12(d) of the Engagement Letter’s General Business Terms, relating to arbitration in the event a dispute arises between the Debtors or Committee and Huron, is hereby revised to provide that the arbitration provision shall apply only to the extent that the United States Bankruptcy Court, or the United States District Court if the reference is withdrawn, does not retain jurisdiction over a controversy or claim. Huron’s Disinterestedness
27.
To the best of Metavation’s knowledge, information, and belief, and based
upon the DiDonato Declaration, Huron is a "disinterested person" as that term is defined in § 10 1(14) of the Bankruptcy Code. 28.
As described in detail in the DiDonato Declaration, Huron has, among
other things, searched its client databases to determine whether it represents, or has represented, certain of Metavation’s creditors or other parties in interest in these proceedings, and/or matters wholly unrelated to these proceedings. Huron may have represented certain of Metavation’s creditors or other parties in interest in matters wholly unrelated to this Chapter 11 case. Except as may be described in the DiDonato Declaration and/or the Revstone Declaration, Huron does not, to its knowledge, represent any party with an interest materially adverse to Metavation or this estate. Legal Basis for Relief Requested
Metavation Has Exercised Its Sound and Prudent Business Judgment 29.
Section 363 of the Bankruptcy Code provides that, after notice and a
hearing, a debtor may use property of the estate other than in the ordinary course of business. "In determining whether to authorize the use, sale or lease of property of the estate under this
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section, courts require the debtor to show that a sound business purpose justifies such actions." In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999); see also In re Del. & Hudson Ry. Co., 124B.R. 169,176 (D. Del. 1991). 30.
The retention of corporate officers, including in conjunction with the
retention of associated turnaround and advisory firms to provide related services, is proper under section 363 of the Bankruptcy Code, and courts in this district and elsewhere have determined that such retention is an appropriate exercise of a debtor’s business judgment.
See, e.g., In re
Harry & David Holdings, Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. Apr. 27, 2011) (order authorizing retention of Alvarez & Marsal to provide an interim chief executive officer and chief restructuring officer and certain additional officers and personnel);
In re Archbrook Laguna
Holdings LLC, No. 11-13292 (SCC) (Bankr. S.D.N.Y. Aug. 3, 2011) (order authorizing retention of chief restructuring officer pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); In re Calpine Corp., No.05-60200 (BRL) (Bankr. S.D.N.Y. Jan. 17, 2007) (order authorizing employment of interim chief financial officer pursuant to section 363 of the Bankruptcy Code); In re Dana Corp., Case No. 06-10354 (BRL) (Bankr. S.D.N.Y. Mar. 29, 2006) (order designating chief restructuring officer and chief financial officer pursuant to section 363 of the Bankruptcy Code). 31.
Retaining Huron to provide Mr. DiDonato as CR0, the other Officers, and
the Additional Personnel, upon the terms set forth in the Engagement Letter, as modified by the Retention Order, this Motion and any order approving this Motion, would enable Metavation to most efficiently administer this case, address operational issues arising in chapter 11 and preserve and maximize the value of the estate. Metavation requires the assistance of qualified and experienced personnel to assist in these matters. Thus, Metavation believes that it would be
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in its best interests and in the best interests of the estate, creditors and other parties-in-interest for the Court to grant the relief requested herein, with such relief being deemed effective as of the Metavation Petition Date. 32.
Metavation believes that Huron’s fee structure is fair and reasonable in
light of the type of services being provided and is comparable to those generally charged by firms of similar stature to Huron for comparable engagements. In addition, given the numerous issues Huron may be required to address in these cases, the intense effort expected to be required over certain periods of time (particularly at the outset of these cases), Huron’s commitment to the variable level of time and effort necessary to address all such related issues as they arise and the market prices for Huron’s services for engagements of this nature in an out-of-court context, Metavation believes that the Huron fee arrangement is fair and reasonable. The Proposed Retention Comports with the Bankruptcy Code and the Protocol
33.
Huron will provide the Notice Parties with the Staffing Reports and the
Compensation Reports. Because Metavation is seeking to retain Huron, a CR0 and the other Officers pursuant to section 363 of the Bankruptcy Code and not under section 327 of the Bankruptcy Code, Huron is not subject to the compensation requirements of sections 330 and 331 of the Bankruptcy Code. Therefore, Metavation requests that fees and expenses of Huron incurred in the performance of the interim management services be treated as an administrative expense of Metavation’s chapter 11 estate and be paid by Metavation in the ordinary course of business, without the need for Huron to file fee applications or otherwise seek Court approval for the compensation of its services and reimbursement of its expenses, other than those described above. 34.
In addition, because Metavation is not seeking to retain Huron as a
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no requirement that Huron, Mr. DiDonato, the other Officers, or any of the Additional Personnel be disinterested to be retained to provide interim management services. Nevertheless, to the best of Metavation’s knowledge, information and belief based on the DiDonato Declaration, Huron does not have or represent any interest adverse to Metavation’s estate or any class of creditor or equity security holders, by reason of any direct or indirect relationship to, connection with or interest in, parties in interest in these cases, or for any other reason. Additional information about Huron’s connections to parties in interest in these cases is described in the DiDonato Declaration. The Court Also May Grant the Requested Relief Pursuant to Section 105 of the Bankruptcy Code 35.
Additionally, the Court’s general equitable powers codified in
section 105(a) of the Bankruptcy Code provide ample authority for the relief requested herein. Section 105(a) of the Bankruptcy Code empowers the Court to "issue any order, process, or judgment that is necessary to carry out the provisions of this title."
See 11 U.S.C. § 105(a); see
also United States v. Energy Resources Co., 495 U.S. 545, 549 (1990); In re Continental Airlines, 203 F.3d 203, 211 (3d Cir. 2000) ("Section 105(a) of the Bankruptcy Code supplements courts’ specifically enumerated bankruptcy powers by authorizing orders necessary or appropriate to carry out provisions of the Bankruptcy Code."); Adelphia Communications Corp. v. The American Channel (In re Adelphia Communications Corp.), 345
B.R. 69, 85 (Bankr.
S.D.N.Y. 2006) ("Section 105(a) provides broad equitable power for a Bankruptcy Court to maintain its own jurisdiction and to facilitate the reorganization process."). No Prior Request 36.
No prior request for the relief sought in this Motion has been made to this
or any other Court in connection with this chapter 11 case.
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Notice 37.
Notice of this Motion has been given to the following or, in lieu thereof, to
their counsel, if known: (i) the Office of the United States Trustee; (ii) the Debtor’s prepetition and postpetition secured lenders; (iii) the Pension Benefit Guaranty Corporation; (iv) the Debtor’s major OEM customers: General Motors and Chrysler; (v) Dayco Products, LLC and Dayco Products S.A. de C.V., the stalking horse purchaser for the Debtor’s assets; and (vi) the Official Committee of Unsecured Creditors in the case of Revstone Industries, LLC. The Debtor submits that, in light of the nature of the relief requested, no other or further notice need be given.
WHEREFORE, the Debtor respectfully requests that the Court enter an order, substantially in the form attached hereto, (a) granting the relief sought herein and (b) granting to the Debtor such other and further relief as the Court may deem proper.
Dated: July
2013
METAVATION, LLC
1sf Daniel V. Smith, Esq. Daniel V. Smith, Esq. Secretary and General Counsel
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EXHIBIT A DiDonato Declaration
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
)
REVSTONE INDUSTRIES, LLC, et al., 1
)
Case No. 12-13262 (BLS)
)
Debtors. In re:
)
(Jointly Administered)
)
Chapter 11
)
METAVATION, LLC,
)
Case No. 13-11831 (BLS)
)
Debtor.
)
(Joint Administration Requested)
DECLARATION OF JOHN C. DIDONATO, CTP, IN SUPPORT OF THE MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. § 363(B), NUNC PRO TUNC TO THE PETITION DATE I, John C. DiDonato, make this declaration (the "Declaration") 2 pursuant to 28 U.S.C. § 1746 and state as follows: 1.
I am a Managing Director of Huron Consulting Services LLC ("Huron")
and Practice Leader of the Financial Consulting Practice within Huron. Huron maintains its principal place of business at 550 W. Van Buren Street, Chicago, Illinois 60607. Huron specializes in, among other things, bankruptcy and restructuring consulting, interim management and financial and operational consulting to financially troubled companies.
The Debtors in these Chapter II Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgiiigs, LLC (9285); and US Tool & Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. 2 Capitalized terms not otherwise defined herein shall have the meaning given to them in the Motion. 1 DOCS_DE:187524.6 73864/002
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Except as otherwise stated in this Declaration, I have personal knowledge
of the facts set forth herein and, if called as a witness, I would testify thereto. Certain of the disclosures set forth herein related to matters within the knowledge of other employees of Huron and are based on information provided by them. Services to be Provided 3.
Metavation has determined that obtaining the ongoing services of a Chief
Restructuring Officer ("CR0"), the other Officers, and the Additional Personnel with turnaround and chapter 11 experience will substantially enhance its ability to preserve and maximize the value of its estates, maintain its current operations and meet its statutory obligations in this case. 4.
Metavation believes that Huron is well qualified and able to advise it in a
cost-effective, efficient and timely manner. Metavation submits that the retention and employment of Huron is in the best interests of the estate, creditors and other stakeholders in this case. 5.
As such, Metavation has chosen to utilize Huron personnel as appropriate
and has appointed me to the position of CR0, and the individuals listed below as Officers of Metavation, subject to the Court granting the Motion consistent with and on the same terms as the Engagement Letter dated January 17, 2013, a copy of which is attached as Exhibit A to the Revstone Huron Retention Application, as modified by the Retention Order. The Officers are are follows: John C. DiDonato
Chief Restructuring Officer
James M. Lukenda
Deputy CR0
Laura Marcero
Deputy CR0
Brian Linscott
Interim CFO
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Geoff Frankel
Vice President
John Owens
Interim Treasurer
John Hemingway
Interim Assistant Treasurer Professional Oualifications
6.
Huron.
The Financial Consulting Practice of Huron specializes in
services to troubled companies in five main areas: Restructuring & Turnaround, Capital Advisory, Forensics and Litigation, Operational Improvement and Valuation. Clients include public and private companies, lenders, creditors, equity holders, impartial constituents (such as examiners or trustees) and other stakeholders, in bankruptcy proceedings and in out-of-court restructurings. Huron has experience in a variety of industries, including automotive suppliers, metals, transportation, manufacturing, healthcare, higher education, legal, consumer products, and energy. 7.
Huron has assisted in bringing numerous companies successfully through
the complexities of Chapter 11 bankruptcy. The expertise of Huron’s professionals in management, finance, accounting, and operations allows Huron to provide the entire range of services required in complex, troubled situations, including, but not limited to, developing and implementing strategies to maximize value, obtaining debtor-in-possession (DIP) and exit financing, conducting or evaluating an asset sale process, communicating and negotiating with all classes of constituents, developing consensus to implement the optimal strategy, assisting counsel with financial analyses to formulate a Plan of Reorganization or Plan of Liquidation, pursue recovery actions and support other motions and filings, testifying as required, providing financial analyses required by DIP lenders, creditors’ committees and other constituents, and providing bankruptcy case management services such as the preparation of statutory reports and claims reconciliation. 3 DOCSDE: 187524.6 73864/002
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In particular, the professionals of Huron’s Financial Consulting practice
have completed over 100 engagements in the automotive supplier sector. A number of these assignments were as CR0 of Tier I or Tier II automotive suppliers operating as debtors-inpossession in chapter 11. Automotive supplier CR0 clients include, among other examples, New United Motor Manufacturing, Inc. (NUMMI), Blue Water Automotive Systems, Dura Automotive Systems, CEP Products and ]INTERMET Corporation. Other automotive supplier clients include Avon Automotive Holdings, Cadence Innovation, Fisker Automotive, and Global Automotive Systems. 9.
John C. DiDonato, CTP. Since 2007, I have been a Managing Director
of Huron and have served as the Practice Leader of Huron’s Financial Consulting Practice. I was the President of Glass & Associates, a restructuring and turnaround consulting firm, prior to its acquisition by Huron in 2007. 10.
I have over twenty-five years of extensive experience providing assistance
to clients with operational turnarounds, troubled debt restructurings and capital raising, mergers, acquisitions and dispositions, merger integration and other financial consulting and bankruptcy assignments, in both out-of-court and court-supervised situations. My clients have included debtors, senior lenders, official committees of unsecured creditors, equity holders, and other parties-in-interest. 11.
I have served as Chief Restructuring Officer, Chief Restructuring Advisor,
Chief Administrative Officer, and Interim Chief Executive Officer, among other roles. In addition to my appointment to the Revstone Debtors, I have been CR0 of, among other companies, New United Motor Manufacturing, Inc. (NUMMI), Blue Water Automotive
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Systems, Dura Automotive Systems, INTERMET Corporation, Anchor Manufacturing Company, and Ward Products LLC. 12.
In addition to the automotive supplier sector, my expertise encompasses a
wide range of industries, including suppliers, engineering and construction, metals, equipment leasing, logistics, distribution, transportation, and retail. 13.
Since 1994, I have held the designation of Certified Turnaround
Professional (CTP), a certification of the Turnaround Management Association, which requires that the candidate have significant experience in insolvency and restructuring matters, pass a rigorous three part written examination, and demonstrate a high degree of knowledge, skill, and ethics in the subject matter. Huron’s Prior Engagements with Metavation and non-Debtor Subsidiaries
14.
Huron’s prior engagements with Metavation, the Original Debtors and
non-Debtor Subsidiaries are set forth at length in the Declaration Of John C. Didonato, CTP, In Support Of The Motion Of The Debtors To Employ And Retain Huron Consulting Services LLC To: (I) Provide A Chief Restructuring Officer And Additional Personnel For The Debtors Pursuant To 11 U.S.C. § 363(B), Nunc Pro Tunc To January 17, 2013; And (II) Provide Financial Advisory Services To The Debtors Pursuant To 11 U S. C. § 327(A), Nunc Pro Tunc To The Period Between December 17, 2012 And January 16, 2013
(the "Revstone Declaration")
attached as Exhibit B to the Revstone Huron Application and are incorporated herein by reference in their entirety. 15.
As detailed in the Brown Declaration, in 2012, Revstone and its affiliated
companies, including Metavation, embarked on a comprehensive process of sales and financings in order to enable the companies to restructure in a thoughtful and deliberate manner, for the
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benefit of all of its constituents. As part of this process, Metavation retained Huron in October 2012 to market its assets to strategic buyers in the automotive supplier industry. 16.
Huron was paid a fixed fee of $50,000.00 for work performed on this
matter from October 2012 to December 2012. As described herein and in the Revstone Declaration, Huron has no pre-petition claims against Metavation. 17.
Huron has post-petition claims against the Original Debtors for its fees
and expenses. A portion of these fees have been allocated to Metavation. However, this allocation is not a direct obligation of Metavation to Huron. 18.
Huron is not a "creditor" of the Debtor within the meaning of section
101(10) of chapter 11 of Title 11 of the United States Code (as amended, the "Bankruptcy Code"). Other Relationships with Metavation, non-Debtor Subsidiaries and Other Parties
19.
Huron’s other relationships with the Original Debtors, non-Debtor
subsidiaries and affiliates and other parties are set forth at length in the Revstone Declaration and are incorporated by reference herein in their entirety. Huron’s Disinterestedness
20.
In connection with the preparation of this Declaration, Huron updated its
review of its (and its affiliates’ and employees’) contacts with Metavation, the Original Debtors, and their non-debtor affiliates, and certain entities holding large claims against or interest in the Debtor and the Original Debtors that were made reasonably known to Huron. A listing of the parties so reviewed is reflected in Schedule 3 attached to the Revstone Declaration. In addition, Huron added to its original review the parties listed in Schedule 1 attached to this Declaration. Huron’s review, through an internal computer database containing names of individuals and
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entities that are present or former clients of Huron, completed under my supervision, consisted of a query of the Revstone Declaration Schedule 3 parties and the parties in Schedule 1 attached to this Declaration containing names of individuals and entities that are represented by Huron. A summary of such relationships that Huron identified during this process is set forth in Schedule 2 attached hereto. 21.
Based on the results of its review, Huron (including its affiliates and
employees) does not have a relationship with any of the parties listed in Schedule 1 in matters related to these proceedings. Huron (including its affiliates and employees) has provided and could reasonably be expected to continue to provide services unrelated to Metavation’s case for the entities shown in Schedule 2. Huron’s assistance to these parties has been related to providing various consulting services. To the best of my knowledge, no services have been provided to these parties-in-interest which involve their rights in Metavation’s case, nor does Huron’s involvement in this case compromise its ability to continue such consulting services. 22.
Upon information and belief, Grede LLC is an unsecured creditor of
Metavation. From 2008 to 2009, a predecessor under different ownership, Grede Foundries, Inc., was a client of the Restructuring and Turnaround practice of Huron. Huron conducted an assessment of Grede Foundries, Inc.’s business plan, completed a refinancing and provided operational consulting. Grede LLC has never been a client of Huron. 23.
Further, as part of its diverse practice, Huron appears in numerous cases,
proceedings, and transactions that involve many different professionals, including attorneys, accountants, and financial consultants, who may represent claimants and parties-in-interest in Metavation’ s chapter 11 case. Further, Huron (including its affiliates and employees) has performed, in the past, and may perform in the future, consulting services for various attorneys
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and law firms, and has been represented by several attorneys and law firms, some of whom may be involved in these proceedings. Based on Huron’s current knowledge of the professionals involved, and to the best of my knowledge, none of these relationships create interests materially adverse to Metavation, and none are in connection with this case. 24.
Except as disclosed in this Declaration, the Revstone Declaration, and/or
in Schedule 2, Huron has no connection with Metavation, its creditors, the Office of the U.S. Trustee or any of its employees, and/or any other party-in-interest as well as their respective attorneys and accountants. 25.
Huron represents no interest adverse to the interest of Metavation or the
estate and is "disinterested" within the meaning of 11 U.S.C. § 101(14). 26.
Despite the efforts described above to identify and disclose Huron’s
connections with parties in interest in this chapter 11 case, Huron is unable to state with certainty that every client relationship or other connection has been disclosed. In this regard, if Huron discovers additional information that requires disclosure, Huron will file a supplemental disclosure with the Court. 27.
Huron reserves the right to supplement this Declaration in the event that
Huron discovers any facts bearing on matters described in this Declaration regarding Huron’s employment with Metavation. Employment Terms and Compensation 28.
Huron’s retention on behalf of Metavation is subject to the Court’s
approval of the Motion and the Engagement Letter as to Metavation. Huron will seek payment for compensation on an hourly basis, plus reimbursement of actual, necessary expenses incurred by Huron, and certain indemnification as set forth below.
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The compensation Huron seeks for its professionals in these circumstances
is equivalent to what is generally charged by Huron for similar services. Huron adjusts its hourly rates periodically and will charge the rate then in effect. The hourly rates currently charged by Huron are: Title
Hourly Rate
Managing Director Senior Director and Director Manager Associate Analyst 30.
$675 $535 $420
- $750 - $620 - $450 $350 $250
Huron understands that payment of invoices for its work is governed by
the Court and such procedures for filing fee statements and notice as may be applicable to this chapter 11 case. 31.
On July 12, 2013, Huron received a $250,000.00 retainer from Metavation
in accordance with the Engagement Letter. 32.
To the best of my knowledge, (a) no commitments have been made or
received by Huron with respect to compensation or payment in connection with these cases other than in accordance with the provisions of the Bankruptcy Code, and (b) Huron has no agreement with any other entity to share with such entity any compensation received by Huron in connection with this chapter 11 case. 33.
Based on its prior discussions and agreements with the Office of the
United States Trustee in other cases in this District, and its expectations regarding certain modifications the United States Trustee will request to the Engagement Letter, Huron agrees that the order approving Huron’s employment contain the following modifications to the terms in Huron’s Engagement Letter:
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(a)
Paragraph 2 of the General Business Terms of the Engagement Letter is modified as follows: the heading "Independent Contractor" is hereby replaced with the heading "No Agency" and the phrase "an independent contractor and" is hereby deleted from the first sentence of that paragraph.
(b)
In the event that Huron seeks reimbursement for attorneys’ fees from the Debtor pursuant to the Engagement Letter, the invoices and supporting time records from such attorneys shall be included in Huron’s own monthly fee statement and shall be subject to the same payment procedures applicable to professionals in this case.
(c)
Paragraph 9 of the Engagement Letter’s General Business Terms shall apply solely to claims of Huron and the Debtor or Committee against each other, and shall not apply if the Debtor or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, Huron’s own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct. Additionally, the phrase "for the portion of the engagement giving rise to liability" is deleted from this paragraph.
(d)
Paragraph 12(d) of the Engagement Letter’s General Business Terms, relating to arbitration in the event a dispute arises between the Debtor or Committee and Huron, is hereby revised to provide that the arbitration provision shall apply only to the extent that the United States Bankruptcy Court, or the United States District Court if the reference is withdrawn, does not retain jurisdiction over a controversy or claim. 34.
I have read the Motion and, to the best of my knowledge, information and
belief, the contents of the Motion are true and correct. I declare under penalty of perjury that the foregoing is true and correct.
Executed on July
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
REVSTONE INDUSTRIES, LLC, et al.,’
)
Case No. 12-13262 (BLS) (Jointly Administered)
)
Debtors. Related to Docket No. 782
In re:
)
Chapter 11
)
METAVATION, LLC,
) )
Debtor.
Case No. 13-11831 (BLS) (Joint Administration Requested)
) Related to Docket No. 11
Objection Deadline: August 14, 2013 at 4:00 p.m. (prevailing Eastern time) Hearing Date: August 21, 2013 at 11:00 a.m. (prevailing Eastern time) NOTICE OF MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. 4 363(b),NUNC PRO TUNCTO THE PETITION DATE TO:
(1) the Office of the United States Trustee; (ii) the Debtor’s prepetition and postpetition secured lenders; (iii) the Pension Benefit Guaranty Corporation; (iv) the Debtor’s major OEM customers: General Motors and Chrysler; (v) Dayco Products, LLC and Dayco Products S.A. de C.V., the stalking horse purchaser for the Debtor’s assets; and (vi) the Official Committee of Unsecured Creditors in the case of Revstone Industries, LLC.
PLEASE TAKE NOTICE that on July 22, 2013, the above-captioned debtor and debtor in possession (collectively, the "Debtor") filed the Motion ofMetavation, LLC to Employ
and Retain Huron Consulting Services LLC to Provide a Chief Restructuring Officer, Other Officers, and Additional Personnel for the Debtor Pursuant to 11 US.C. § 363(b), Nunc Pro Tunc to the Petition Date (the "Motion") with the United States Bankruptcy Court for the District of
The Debtors in these Chapter 11 Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgings, LLC (9285); and US Tool & Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. DOCS_DE: 188768.173864/002
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Delaware, 824 Market Street, 3 Floor, Wilmington, Delaware 19801 (the "Bankruptcy Court"). A copy of the Motion is attached hereto as Exhibit 1. PLEASE TAKE FURTHER NOTICE that any response or objection to the
Motion must be in writing and filed with the Bankruptcy Court on or before
August 14, 2013,
at 4:00 p.m. (prevailing Eastern time). You must also serve a copy of the response or objection
so that it is received not later than August 14, 2013, at 4:00 p.m. (prevailing Eastern time), by: (i) the Debtor: Metavation, LLC, 2250 Thunderstick Drive, Suite 1203, Lexington, Kentucky 40505, Attn: Office of the General Counsel; (ii) proposed counsel for the Debtor: Laura Davis Jones, Esq., Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 17th Floor, P.O. Box 8705, Wilmington, Delaware 19899-8705 (Courier 19801); (iii) proposed restructuring advisor to
the Debtor, Huron Consulting Services, LLC, 900 Wilshire Dr., Suite 270, Troy, Michigan 48084, Attn: John C. Didonato; (iv) the Office of the United States Trustee: Jane Leamy, Esq., United States Trustee’s Office, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801; (v) counsel to the Stalking Horse Bidder, Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, New York 10036, Attn: Eric Ivester, Esquire and Mark Dressel, Esq.; (vi) counsel to the Official Committee of Unsecured Creditors of Revstone Industries, LLC: Womble Carlyle Sandridge & Rice, LLP, 222 Delaware Avenue, Suite 1501, Wilmington, DE 19801, Matthew P. Ward, Esq.; and (vii) counsel for any official committee of unsecured creditors (if any) appointed in the Metavation, LLC case. PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND
IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING.
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PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE RELIEF SOUGHT IN THE MOTION WILL BE HELD ON AUGUST 21, 2013 AT 11:00 A.M. (PREVAILING EASTERN TIME) BEFORE THE HONORABLE BRENDAN L. SHANNON, UNITED STATES BANKRUPTCY JUDGE, AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET STREET, 6TH FLOOR, COURTROOM NO. 1, WILMINGTON DELAWARE 19801. Dated: July’, 2013
PACHUK1 STANG ZIEHL & JONES LLP
Laura David JoNo. 2436) David M. Bertenthal (CA Bar No. 167624) Timothy P. Cairns (Bar No. 4228) Cohn R. Robinson (Bar No. 5524) 919 N. Market Street, 17th Floor Wilmington, DE 19801 Telephone: 302/652-4100 Facsimile: 302/652-4400 Email: ljonespszjlaw.com dbertentha1pszj1aw.com tcairnspszj1aw.com crobinsonpszjlaw.com [Proposed] Counsel for the Debtor and Debtor in Possession
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
)
REVSTONE INDUSTRIES, LLC, et al.,’
)
Case No. 12-13262 (BLS)
)
Debtors. In re:
)
(Jointly Administered)
)
Chapter 11
)
METAVATION, LLC,
)
Case No. 13-11831 (BLS)
)
Debtor.
)
(Joint Administration Requested)
MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. § 363(B), NUNC PRO TUNC TO THE PETITION DATE Metavation, LLC, a debtor and debtor in possession herein ("Metavation" or the "Debtor"), hereby moves the Court for entry of an order, pursuant to sections 105(a) and 363(b) of title 11 of the United States Code (the "Bankruptcy Code") authorizing Metavation to retain Huron Consulting Services LLC (including its agents and independent contractors, "Huron"), pursuant to the terms and conditions of that certain letter agreement between Huron and Revstone Industries, LLC, dated January 17, 2013, as modified by the Retention Order (the "Engagement Letter"), 2 to (i) provide John C. DiDonato ("Mr. DiDonato") as Chief
I
The Debtors in these Chapter 11 Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgings, LLC (9285); and US Tool and Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. 2
A copy of the Engagement Letter is attached as Exhibit A to the Motion Of The Debtors To Employ And Retain Huron Consulting Services LLC To: (I) Provide A Chief Restructuring Officer And Additional Personnel For The Debtors Pursuant To 11 U.S. C. § 363(B), Nunc Pro Tunc To January 17, 2013; And (II) Provide Financial Advisory Services To The Debtors Pursuant To 11 U.S. C. § 327(A), Nunc Pro Tunc To The Period Between December 17, 2013 And January 16, 2013 [Case No. 12-13262; Docket No. 198] dated February 13, 2013 (the "Revstone Huron Retention Application"), as modified and approved by the Order Authorizing the Debtors to Employ and Retain Huron Consulting Services LLC To Provide A Chief Restructuring Officer and Additional Personnel For the D005_DE: 187524.6 73864/002
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Restructuring Officer ("CR0") of Metavation, (ii) provide other officers as detailed in paragraph 10 (the "Officers"), and (iii) provide additional personnel (the "Additional Personnel") 3 to provide restructuring support to Metavation, in each instance nunc pro tunc as of the Metavation Petition Date (defined below). In support of this Motion, Metavation relies upon the declaration of Mr. DiDonato, a Managing Director of Huron (the "DiDonato Declaration") attached hereto as Exhibit A and incorporated herein by reference, and respectfully represents as follows: Jurisdiction
1.
This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue for this matter is proper in this district pursuant to 28 U.S.C. § 1409. 2.
The statutory predicates for the relief requested herein are §§ 105(a) and
363(b) of title 11 of the United States Code (the "Bankruptcy Code"). Background
3.
On December 3, 2012, Debtors Revstone Industries, LLC and Spara, LLC
commenced their cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On January 7, 2013, Debtors Greenwood Forgings, LLC and US Tool and Engineering, LLC commenced their cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors have continued in the possession of their property and have continued to operate and manage their business as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
Debtors Nunc Pro Tunc To January 17, 2013 [Case No. 12-13262; Docket No. 428] dated March 21, 2013 (the "Retention Order"). Huron reserves the right to modify its staffing throughout the course of this chapter 11 case, subject to the terms of the Engagement Letter and any order approving this Motion. DOCSDE: 187524.6 73864/002
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Pursuant to the Order Authorizing Joint Administration of Related Chapter
11 Cases for Procedural Purposes Only (Docket No. 173) (the "Existing Joint Administration Order"), the chapter 11 cases of Revstone Industries, LLC, Spara, LLC, Greenwood Forgings, LLC and US Tool and Engineering, LLC (the "Original Debtors") are jointly administered and are consolidated for procedural purposes. 5.
On December 18, 2012, the United States Trustee appointed an Official
Committee of Unsecured Creditors (the "Committee") in the case of Revstone Industries, LLC. No committee has been appointed in the cases of Spara, LLC Greenwood Forgings, LLC and US Tool and Engineering, LLC. No trustee or examiner has been appointed in any of the Original Debtors’ chapter 11 cases. 6.
On the date hereof (the "Metavation Petition Date"), Metavation filed a
voluntary petition in the Court for relief under chapter 11 of the Bankruptcy Code. Metavation continues to operate its business and manage its properties as a debtor in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in Metavation’s chapter 11 case. As of the date hereof, no creditors’ committee has been appointed in the Metavation chapter 11 case. 7.
The factual background relating to the commencement of the chapter 11
case of Revstone Industries, LLC is set forth in detail in the Declaration of Jay N. Brown in Support of First Day Pleadings (the "Brown Declaration") filed on December 3, 2012, and incorporated herein by reference. The factual background relating to the commencement of the chapter 11 case of Metavation, LLC is set forth in detail in the Declaration of John C. DiDonato in Support of Metavation, LLC Petition and First Day Motions (the "DiDonato Declaration") filed concurrently herewith and incorporated herein by reference.
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Metavation, LLC (the "Company") is a Michigan-based manufacturer of
precision machined components and assemblies, including dampers, engine components, knuckles, and driveline products for the automotive industry. Metavation specializes in designing and manufacturing dampers that are included on original equipment manufacturers’ ("OEMs") engine platforms. The Company also has rapid development capabilities to produce "solution" dampers to correct driveline and powertrain noise vibration and harshness ("NVH") issues. The Company serves many of the largest automotive customers, suppliers, and platforms. The Company’s major OEM customers include General Motors and Chrysler. Metavation’s Tier I supplier customers include American Axle, Dana Automotive, and J.G. Kern. These longstanding relationships have led the Company to a dominant market position in the U.S. crankshaft damper market. Metavation operates from four, modernized facilities located in central Michigan. The Company begins its manufacturing process by developing the rubber component at the Hillsdale, MI facility, and then sends the rubber component to the Mt. Pleasant, MI or Vassar, MI facility for machining and/or assembly. Huron’s Engagement and Qualifications
9.
Huron was originally retained after the filing of the Revstone and Spara
cases to provide restructuring services in support of the Original Debtors’ obligations as chapter 11 debtors-in-possession. Huron’s retention as CR0 to the Original Debtors was approved pursuant to the Order Authorizing the Debtors to Employ and Retain Huron Consulting Services LLC to Provide a Chief Restructuring Officer and Additional Personnel for the Debtors Nunc Pro Tunc to January 17, 2013 [Case No. 12-13262, Docket No. 428]. Under the continuing dynamic circumstances of these cases, Metavation has determined that obtaining the ongoing services of a CR0 and other personnel with turnaround and chapter 11 experience will substantially enhance its ability to (a) operate and meet its administrative obligations in this case DOCSDE:187524.6 73864/002
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and (b) preserve and maximize the value of its assets pending any sale. As such, Metavation has chosen to utilize Huron personnel as appropriate and in addition to Mr. DiDonato, has appointed the following individuals to officer positions (collectively, the "Officers") of Metavation. John C. DiDonato
Chief Restructuring Officer
James M. Lukenda
Deputy CR0
Laura Marcero
Deputy CR0
Brian Linscott
Interim CFO
Geoff Frankel
Vice President
John Owens
Interim Treasurer
John Hemingway
Interim Assistant Treasurer
10.
Huron has extensive experience in providing restructuring services in and
out of chapter 11 proceedings and has an excellent reputation for the services it has rendered on behalf of debtors and creditors throughout the United States. Among many other examples, Huron has provided restructuring and turnaround advisory services to clients including the Original Debtors as noted above, NUMMI; Kazi Foods of Michigan, New York, New Jersey, Maryland and Florida; Forum Health; Lacks; and Lifecare. 11.
Further, as a result of prepetition and post-petition work performed on
behalf of the Original Debtors and Metavation, Huron has acquired significant knowledge of Metavation and its business and is now familiar with the Metavation’ s financial affairs, debt structure, operations and related matters. Accordingly, Huron has developed relevant experience regarding Metavation that will assist it in providing effective and efficient services to Metavation in this case. 12.
As such, Metavation believes that Huron is well qualified and able to
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that it will endeavor to continue to coordinate with the other professionals retained in this bankruptcy case, as well as the bankruptcy cases of the Original Debtors, to eliminate unnecessary duplication or overlap of work. Therefore, Metavation submits that the retention and employment of Huron is in the best interests of the estate, creditors and other stakeholders in this case. Services to Be Provided by Huron 13.
Consistent with the terms of the Engagement Letter, Mr. DiDonato as
CR0, the Officers listed above, and the Additional Personnel are charged with assisting Metavation and performing various operational, administrative and financial responsibilities and activities arising in connection with this chapter 11 case. More specifically, but without limitation, the anticipated services include the following: Compiling data and documents necessary to support the Debtor in its bankruptcy proceeding. Negotiating and documenting the terms of a debtor-in-possession and other financing arrangements. Compiling data and analyses information necessary to meet the reporting requirements that will be mandated by the bankruptcy process; and assisting with other aspects of managing the interactions with major constituents, including covenant compliance, communications, preparation for meetings and follow up on requests. Compiling data and analyses necessary to meet the requirements and requests of various parties related to the Debtor’s restructuring and reorganization. Compiling and formatting data and analyses necessary to meet the financial reporting requirements mandated by the bankruptcy code and the US Trustee’s office. Developing plans to address creditor requirements and interfacing with creditors and their financial advisors. Assisting management with the on-going forecasting of the Debtor’s cash flows and its operations and monitoring and analyzing operational and financial condition. Advising the Restructuring Committee of the Board of Members, or comparable DOCSDE: 187524.6 73864/002
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independent governing body established by an amended Operating Agreement (the "Board"), on restructuring, reorganization, and bankruptcy matters. Advising on communication plans for various stakeholders including customers, suppliers, employees, and the community. Addressing operational challenges that arise due to the bankruptcy filing and the bankruptcy process. Preparing for court hearings, for the argument of motions and other matters, and providing expert testimony as required. Developing a plan of reorganization or liquidation, and supporting documents. Supervising and advising the Debtor on the sale of operating and non-operating assets as directed by the Debtor’s fiduciaries. Performing any other restructuring management duties relating to role as CR0, DCRO and EVP as directed by the Debtor’s fiduciaries. 14.
Metavation is a wholly owned subsidiary of Revstone Transportation,
LLC ("Transportation") which, in turn, is a wholly owned subsidiary of Debtor Revstone Industries, LLC.
On January 17, 2013, Debtor Revstone and non-Debtor Revstone
Transportation, LLC formally effectuated governance changes. Two independent managers (Richard E. Newsted and James B. Shein) were appointed to the three member boards of Revstone and Transportation, among other affiliates, and Mr. DiDonato was appointed as CR0 of the same companies. The independent managers together constitute a majority of the managers on the boards of Revstone and Transportation. The independent managers also were appointed to a restructuring committee of the boards (the "Restructuring Committee"), which was specifically charged with the task of overseeing the CR0 and all bankruptcy-related actions of the Original Debtors and their non-Debtor subsidiaries, including Metavation. 15.
Section 4.1 of the Metavation LLC Agreement provides that, subject to
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under the direction of, the Members." The sole member of Metavation is Transportation. Hence, by virtue of the CRO’s management of the sole member under the oversight of its Restructuring Committee, Metavation also is managed by the CR0 of Transportation under the oversight of Transportation’s Restructuring Committee. In addition, by amendment of the Metavation LLC Agreement on July 14, 2013, Mr. DiDonato was appointed as the Chief kcstructuring Officer of Metavation. Upon the Court’s approval of the proposed retention, Mr. DiDonato as CR0 will continue to report to, and to act under the direction, control and guidance of, Transportation’s Restructuring Committee, subject to removal and/or termination thereby. Huron’s Fees 16.
As set forth in the Engagement Letter, fees in connection with this
Engagement will be based upon the time incurred by Mr. DiDonato, and the other Officers, multiplied by Huron’s standard hourly rates for these individuals (which may be adjusted from time to time) illustrated below: Individual
Hourly Rate
John C. DiDonato (CR0) James M. Lukenda (Deputy CR0) Laura Marcero (Deputy CR0) Brian Linscott (Interim CFO) Geoff Frankel (Vice President) John Owens (Interim Treasurer) John Hemingway (Interim Assistant Treasurer)
$750 $725 $700 $700 $725 $565 $550
17.
Huron will bill the Additional Personnel on an hourly basis based on the
actual hours worked, multiplied by Huron’s standard hourly billing rates (which may be subject to adjustment from time to time): Title
Hourly Rate
Managing Director Senior Director and Director Manager
$675 - $750 $535 - $620 $420-$450
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Associate Analyst 18.
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$350 $250
Travel time during which no work is performed shall be itemized
separately and billed at fifty percent (50%) of regular hourly rates. 19.
Huron does not provide any assurance regarding the outcome of its work
and its fees will not be contingent on the results of such work. 20.
Payment of all fees is due and payable monthly by wire transfer.
21.
In addition to the fees outlined above, Huron will bill Metavation monthly
for reimbursement of reasonable direct expenses incurred on Metavation’s behalf during the engagement. Direct expenses include reasonable and customary out-of-pocket expenses arising directly from the engagement, such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the engagement. 22.
Notwithstanding anything to the contrary in the Engagement Letter, Huron
is not seeking any "success," deferred, "back end" or similar fees from Metavation for this engagement. Retainer - Cash on Account
23.
Prior to Huron’s retention, Metavation provided Huron with a retainer of
$250,000.00 (the "Retainer"). The Retainer shall be credited against any amounts due from Metavation at the termination of the Engagement Letter and returned to Metavation upon the satisfaction of all obligations owed to Huron thereunder. Reporting Requirements
24.
Because Huron is not being employed for its interim management services
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transparency and to comply with the U.S. Trustee’s protocol applicable to the retention of personnel to assist the Debtors under section 363 of the Bankruptcy Code (sometimes referred to as the "J. Alix Protocol") (the "Protocol"), Huron intends to file with the Court and serve on the Debtor, the U.S. Trustee and any Official Committee of Unsecured Creditors appointed in this case (the "Committee" and, together with the Debtor and the U.S. Trustee, the "Notice Parties") a report on staffing (the "Staffing Report") by the 20th of each month for the previous month, which report would include the names and functions filled by all Huron personnel assigned to this engagement. The Staffing Report (and Huron’s staffing for this matter) would be subject to review by the Court in the event so requested by any of the Notice Parties. 25.
In addition, Huron will file with this Court, and serve upon the Notice
Parties, reports of compensation earned and expenses (the "Compensation Reports") incurred on at least a quarterly basis. The Compensation Reports would summarize the service provided, identify the compensation earned, itemize expenses incurred and provide for an objection period. All such compensation would be subject to review by this Court if an objection is filed. Indemnification and Liability Limitation Provisions 26.
Pursuant to the Retention Order, Huron agreed to the following
modifications to the terms in Huron’s Engagement Letter: (a)
Paragraph 2 of the General Business Terms of the Engagement Letter is modified as follows: the heading "Independent Contractor" is hereby replaced with the heading "No Agency" and the phrase "an independent contractor and" is hereby deleted from the first sentence of that paragraph.
(b)
In the event that Huron seeks reimbursement for attorneys’ fees from the Debtor pursuant to the Engagement Letter, the invoices and supporting time records from such attorneys shall be included in Huron’s own monthly fee statement and shall be subject to the same payment procedures applicable to professionals in these cases.
(c)
Paragraph 9 of the Engagement Letter’s General Business Terms shall apply solely to claims of Huron and the Debtor or any Committee against each other,
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and shall not apply if the Debtor or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, Huron’s own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct. Additionally, the phrase "for the portion of the engagement giving rise to liability" is deleted from this paragraph. (d)
Paragraph 12(d) of the Engagement Letter’s General Business Terms, relating to arbitration in the event a dispute arises between the Debtors or Committee and Huron, is hereby revised to provide that the arbitration provision shall apply only to the extent that the United States Bankruptcy Court, or the United States District Court if the reference is withdrawn, does not retain jurisdiction over a controversy or claim. Huron’s Disinterestedness
27.
To the best of Metavation’s knowledge, information, and belief, and based
upon the DiDonato Declaration, Huron is a "disinterested person" as that term is defined in § 10 1(14) of the Bankruptcy Code. 28.
As described in detail in the DiDonato Declaration, Huron has, among
other things, searched its client databases to determine whether it represents, or has represented, certain of Metavation’s creditors or other parties in interest in these proceedings, and/or matters wholly unrelated to these proceedings. Huron may have represented certain of Metavation’s creditors or other parties in interest in matters wholly unrelated to this Chapter 11 case. Except as may be described in the DiDonato Declaration and/or the Revstone Declaration, Huron does not, to its knowledge, represent any party with an interest materially adverse to Metavation or this estate. Legal Basis for Relief Requested
Metavation Has Exercised Its Sound and Prudent Business Judgment 29.
Section 363 of the Bankruptcy Code provides that, after notice and a
hearing, a debtor may use property of the estate other than in the ordinary course of business. "In determining whether to authorize the use, sale or lease of property of the estate under this
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section, courts require the debtor to show that a sound business purpose justifies such actions." In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999); see also In re Del. & Hudson Ry. Co., 124B.R. 169,176 (D. Del. 1991). 30.
The retention of corporate officers, including in conjunction with the
retention of associated turnaround and advisory firms to provide related services, is proper under section 363 of the Bankruptcy Code, and courts in this district and elsewhere have determined that such retention is an appropriate exercise of a debtor’s business judgment.
See, e.g., In re
Harry & David Holdings, Inc., Case No. 11-10884 (MFW) (Bankr. D. Del. Apr. 27, 2011) (order authorizing retention of Alvarez & Marsal to provide an interim chief executive officer and chief restructuring officer and certain additional officers and personnel);
In re Archbrook Laguna
Holdings LLC, No. 11-13292 (SCC) (Bankr. S.D.N.Y. Aug. 3, 2011) (order authorizing retention of chief restructuring officer pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); In re Calpine Corp., No.05-60200 (BRL) (Bankr. S.D.N.Y. Jan. 17, 2007) (order authorizing employment of interim chief financial officer pursuant to section 363 of the Bankruptcy Code); In re Dana Corp., Case No. 06-10354 (BRL) (Bankr. S.D.N.Y. Mar. 29, 2006) (order designating chief restructuring officer and chief financial officer pursuant to section 363 of the Bankruptcy Code). 31.
Retaining Huron to provide Mr. DiDonato as CR0, the other Officers, and
the Additional Personnel, upon the terms set forth in the Engagement Letter, as modified by the Retention Order, this Motion and any order approving this Motion, would enable Metavation to most efficiently administer this case, address operational issues arising in chapter 11 and preserve and maximize the value of the estate. Metavation requires the assistance of qualified and experienced personnel to assist in these matters. Thus, Metavation believes that it would be
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in its best interests and in the best interests of the estate, creditors and other parties-in-interest for the Court to grant the relief requested herein, with such relief being deemed effective as of the Metavation Petition Date. 32.
Metavation believes that Huron’s fee structure is fair and reasonable in
light of the type of services being provided and is comparable to those generally charged by firms of similar stature to Huron for comparable engagements. In addition, given the numerous issues Huron may be required to address in these cases, the intense effort expected to be required over certain periods of time (particularly at the outset of these cases), Huron’s commitment to the variable level of time and effort necessary to address all such related issues as they arise and the market prices for Huron’s services for engagements of this nature in an out-of-court context, Metavation believes that the Huron fee arrangement is fair and reasonable. The Proposed Retention Comports with the Bankruptcy Code and the Protocol
33.
Huron will provide the Notice Parties with the Staffing Reports and the
Compensation Reports. Because Metavation is seeking to retain Huron, a CR0 and the other Officers pursuant to section 363 of the Bankruptcy Code and not under section 327 of the Bankruptcy Code, Huron is not subject to the compensation requirements of sections 330 and 331 of the Bankruptcy Code. Therefore, Metavation requests that fees and expenses of Huron incurred in the performance of the interim management services be treated as an administrative expense of Metavation’s chapter 11 estate and be paid by Metavation in the ordinary course of business, without the need for Huron to file fee applications or otherwise seek Court approval for the compensation of its services and reimbursement of its expenses, other than those described above. 34.
In addition, because Metavation is not seeking to retain Huron as a
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no requirement that Huron, Mr. DiDonato, the other Officers, or any of the Additional Personnel be disinterested to be retained to provide interim management services. Nevertheless, to the best of Metavation’s knowledge, information and belief based on the DiDonato Declaration, Huron does not have or represent any interest adverse to Metavation’s estate or any class of creditor or equity security holders, by reason of any direct or indirect relationship to, connection with or interest in, parties in interest in these cases, or for any other reason. Additional information about Huron’s connections to parties in interest in these cases is described in the DiDonato Declaration. The Court Also May Grant the Requested Relief Pursuant to Section 105 of the Bankruptcy Code 35.
Additionally, the Court’s general equitable powers codified in
section 105(a) of the Bankruptcy Code provide ample authority for the relief requested herein. Section 105(a) of the Bankruptcy Code empowers the Court to "issue any order, process, or judgment that is necessary to carry out the provisions of this title."
See 11 U.S.C. § 105(a); see
also United States v. Energy Resources Co., 495 U.S. 545, 549 (1990); In re Continental Airlines, 203 F.3d 203, 211 (3d Cir. 2000) ("Section 105(a) of the Bankruptcy Code supplements courts’ specifically enumerated bankruptcy powers by authorizing orders necessary or appropriate to carry out provisions of the Bankruptcy Code."); Adelphia Communications Corp. v. The American Channel (In re Adelphia Communications Corp.), 345
B.R. 69, 85 (Bankr.
S.D.N.Y. 2006) ("Section 105(a) provides broad equitable power for a Bankruptcy Court to maintain its own jurisdiction and to facilitate the reorganization process."). No Prior Request 36.
No prior request for the relief sought in this Motion has been made to this
or any other Court in connection with this chapter 11 case.
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Notice 37.
Notice of this Motion has been given to the following or, in lieu thereof, to
their counsel, if known: (i) the Office of the United States Trustee; (ii) the Debtor’s prepetition and postpetition secured lenders; (iii) the Pension Benefit Guaranty Corporation; (iv) the Debtor’s major OEM customers: General Motors and Chrysler; (v) Dayco Products, LLC and Dayco Products S.A. de C.V., the stalking horse purchaser for the Debtor’s assets; and (vi) the Official Committee of Unsecured Creditors in the case of Revstone Industries, LLC. The Debtor submits that, in light of the nature of the relief requested, no other or further notice need be given.
WHEREFORE, the Debtor respectfully requests that the Court enter an order, substantially in the form attached hereto, (a) granting the relief sought herein and (b) granting to the Debtor such other and further relief as the Court may deem proper.
Dated: July
2013
METAVATION, LLC
1sf Daniel V. Smith, Esq. Daniel V. Smith, Esq. Secretary and General Counsel
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EXHIBIT A DiDonato Declaration
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re:
)
Chapter 11
)
REVSTONE INDUSTRIES, LLC, et al., 1
)
Case No. 12-13262 (BLS)
)
Debtors. In re:
)
(Jointly Administered)
)
Chapter 11
)
METAVATION, LLC,
)
Case No. 13-11831 (BLS)
)
Debtor.
)
(Joint Administration Requested)
DECLARATION OF JOHN C. DIDONATO, CTP, IN SUPPORT OF THE MOTION OF METAVATION, LLC TO EMPLOY AND RETAIN HURON CONSULTING SERVICES LLC TO PROVIDE A CHIEF RESTRUCTURING OFFICER, OTHER OFFICERS, AND ADDITIONAL PERSONNEL FOR THE DEBTOR PURSUANT TO 11 U.S.C. § 363(B), NUNC PRO TUNC TO THE PETITION DATE I, John C. DiDonato, make this declaration (the "Declaration") 2 pursuant to 28 U.S.C. § 1746 and state as follows: 1.
I am a Managing Director of Huron Consulting Services LLC ("Huron")
and Practice Leader of the Financial Consulting Practice within Huron. Huron maintains its principal place of business at 550 W. Van Buren Street, Chicago, Illinois 60607. Huron specializes in, among other things, bankruptcy and restructuring consulting, interim management and financial and operational consulting to financially troubled companies.
The Debtors in these Chapter II Cases and the last four digits of each Debtor’s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgiiigs, LLC (9285); and US Tool & Engineering, LLC (6450). The location of the Debtors’ headquarters and the service address for each of the Debtors is 2250 Thunderstick Dr., Suite 1203, Lexington, KY 40505. 2 Capitalized terms not otherwise defined herein shall have the meaning given to them in the Motion. 1 DOCS_DE:187524.6 73864/002
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Except as otherwise stated in this Declaration, I have personal knowledge
of the facts set forth herein and, if called as a witness, I would testify thereto. Certain of the disclosures set forth herein related to matters within the knowledge of other employees of Huron and are based on information provided by them. Services to be Provided 3.
Metavation has determined that obtaining the ongoing services of a Chief
Restructuring Officer ("CR0"), the other Officers, and the Additional Personnel with turnaround and chapter 11 experience will substantially enhance its ability to preserve and maximize the value of its estates, maintain its current operations and meet its statutory obligations in this case. 4.
Metavation believes that Huron is well qualified and able to advise it in a
cost-effective, efficient and timely manner. Metavation submits that the retention and employment of Huron is in the best interests of the estate, creditors and other stakeholders in this case. 5.
As such, Metavation has chosen to utilize Huron personnel as appropriate
and has appointed me to the position of CR0, and the individuals listed below as Officers of Metavation, subject to the Court granting the Motion consistent with and on the same terms as the Engagement Letter dated January 17, 2013, a copy of which is attached as Exhibit A to the Revstone Huron Retention Application, as modified by the Retention Order. The Officers are are follows: John C. DiDonato
Chief Restructuring Officer
James M. Lukenda
Deputy CR0
Laura Marcero
Deputy CR0
Brian Linscott
Interim CFO
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Geoff Frankel
Vice President
John Owens
Interim Treasurer
John Hemingway
Interim Assistant Treasurer Professional Oualifications
6.
Huron.
The Financial Consulting Practice of Huron specializes in
services to troubled companies in five main areas: Restructuring & Turnaround, Capital Advisory, Forensics and Litigation, Operational Improvement and Valuation. Clients include public and private companies, lenders, creditors, equity holders, impartial constituents (such as examiners or trustees) and other stakeholders, in bankruptcy proceedings and in out-of-court restructurings. Huron has experience in a variety of industries, including automotive suppliers, metals, transportation, manufacturing, healthcare, higher education, legal, consumer products, and energy. 7.
Huron has assisted in bringing numerous companies successfully through
the complexities of Chapter 11 bankruptcy. The expertise of Huron’s professionals in management, finance, accounting, and operations allows Huron to provide the entire range of services required in complex, troubled situations, including, but not limited to, developing and implementing strategies to maximize value, obtaining debtor-in-possession (DIP) and exit financing, conducting or evaluating an asset sale process, communicating and negotiating with all classes of constituents, developing consensus to implement the optimal strategy, assisting counsel with financial analyses to formulate a Plan of Reorganization or Plan of Liquidation, pursue recovery actions and support other motions and filings, testifying as required, providing financial analyses required by DIP lenders, creditors’ committees and other constituents, and providing bankruptcy case management services such as the preparation of statutory reports and claims reconciliation. 3 DOCSDE: 187524.6 73864/002
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In particular, the professionals of Huron’s Financial Consulting practice
have completed over 100 engagements in the automotive supplier sector. A number of these assignments were as CR0 of Tier I or Tier II automotive suppliers operating as debtors-inpossession in chapter 11. Automotive supplier CR0 clients include, among other examples, New United Motor Manufacturing, Inc. (NUMMI), Blue Water Automotive Systems, Dura Automotive Systems, CEP Products and ]INTERMET Corporation. Other automotive supplier clients include Avon Automotive Holdings, Cadence Innovation, Fisker Automotive, and Global Automotive Systems. 9.
John C. DiDonato, CTP. Since 2007, I have been a Managing Director
of Huron and have served as the Practice Leader of Huron’s Financial Consulting Practice. I was the President of Glass & Associates, a restructuring and turnaround consulting firm, prior to its acquisition by Huron in 2007. 10.
I have over twenty-five years of extensive experience providing assistance
to clients with operational turnarounds, troubled debt restructurings and capital raising, mergers, acquisitions and dispositions, merger integration and other financial consulting and bankruptcy assignments, in both out-of-court and court-supervised situations. My clients have included debtors, senior lenders, official committees of unsecured creditors, equity holders, and other parties-in-interest. 11.
I have served as Chief Restructuring Officer, Chief Restructuring Advisor,
Chief Administrative Officer, and Interim Chief Executive Officer, among other roles. In addition to my appointment to the Revstone Debtors, I have been CR0 of, among other companies, New United Motor Manufacturing, Inc. (NUMMI), Blue Water Automotive
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Systems, Dura Automotive Systems, INTERMET Corporation, Anchor Manufacturing Company, and Ward Products LLC. 12.
In addition to the automotive supplier sector, my expertise encompasses a
wide range of industries, including suppliers, engineering and construction, metals, equipment leasing, logistics, distribution, transportation, and retail. 13.
Since 1994, I have held the designation of Certified Turnaround
Professional (CTP), a certification of the Turnaround Management Association, which requires that the candidate have significant experience in insolvency and restructuring matters, pass a rigorous three part written examination, and demonstrate a high degree of knowledge, skill, and ethics in the subject matter. Huron’s Prior Engagements with Metavation and non-Debtor Subsidiaries
14.
Huron’s prior engagements with Metavation, the Original Debtors and
non-Debtor Subsidiaries are set forth at length in the Declaration Of John C. Didonato, CTP, In Support Of The Motion Of The Debtors To Employ And Retain Huron Consulting Services LLC To: (I) Provide A Chief Restructuring Officer And Additional Personnel For The Debtors Pursuant To 11 U.S.C. § 363(B), Nunc Pro Tunc To January 17, 2013; And (II) Provide Financial Advisory Services To The Debtors Pursuant To 11 U S. C. § 327(A), Nunc Pro Tunc To The Period Between December 17, 2012 And January 16, 2013
(the "Revstone Declaration")
attached as Exhibit B to the Revstone Huron Application and are incorporated herein by reference in their entirety. 15.
As detailed in the Brown Declaration, in 2012, Revstone and its affiliated
companies, including Metavation, embarked on a comprehensive process of sales and financings in order to enable the companies to restructure in a thoughtful and deliberate manner, for the
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benefit of all of its constituents. As part of this process, Metavation retained Huron in October 2012 to market its assets to strategic buyers in the automotive supplier industry. 16.
Huron was paid a fixed fee of $50,000.00 for work performed on this
matter from October 2012 to December 2012. As described herein and in the Revstone Declaration, Huron has no pre-petition claims against Metavation. 17.
Huron has post-petition claims against the Original Debtors for its fees
and expenses. A portion of these fees have been allocated to Metavation. However, this allocation is not a direct obligation of Metavation to Huron. 18.
Huron is not a "creditor" of the Debtor within the meaning of section
101(10) of chapter 11 of Title 11 of the United States Code (as amended, the "Bankruptcy Code"). Other Relationships with Metavation, non-Debtor Subsidiaries and Other Parties
19.
Huron’s other relationships with the Original Debtors, non-Debtor
subsidiaries and affiliates and other parties are set forth at length in the Revstone Declaration and are incorporated by reference herein in their entirety. Huron’s Disinterestedness
20.
In connection with the preparation of this Declaration, Huron updated its
review of its (and its affiliates’ and employees’) contacts with Metavation, the Original Debtors, and their non-debtor affiliates, and certain entities holding large claims against or interest in the Debtor and the Original Debtors that were made reasonably known to Huron. A listing of the parties so reviewed is reflected in Schedule 3 attached to the Revstone Declaration. In addition, Huron added to its original review the parties listed in Schedule 1 attached to this Declaration. Huron’s review, through an internal computer database containing names of individuals and
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entities that are present or former clients of Huron, completed under my supervision, consisted of a query of the Revstone Declaration Schedule 3 parties and the parties in Schedule 1 attached to this Declaration containing names of individuals and entities that are represented by Huron. A summary of such relationships that Huron identified during this process is set forth in Schedule 2 attached hereto. 21.
Based on the results of its review, Huron (including its affiliates and
employees) does not have a relationship with any of the parties listed in Schedule 1 in matters related to these proceedings. Huron (including its affiliates and employees) has provided and could reasonably be expected to continue to provide services unrelated to Metavation’s case for the entities shown in Schedule 2. Huron’s assistance to these parties has been related to providing various consulting services. To the best of my knowledge, no services have been provided to these parties-in-interest which involve their rights in Metavation’s case, nor does Huron’s involvement in this case compromise its ability to continue such consulting services. 22.
Upon information and belief, Grede LLC is an unsecured creditor of
Metavation. From 2008 to 2009, a predecessor under different ownership, Grede Foundries, Inc., was a client of the Restructuring and Turnaround practice of Huron. Huron conducted an assessment of Grede Foundries, Inc.’s business plan, completed a refinancing and provided operational consulting. Grede LLC has never been a client of Huron. 23.
Further, as part of its diverse practice, Huron appears in numerous cases,
proceedings, and transactions that involve many different professionals, including attorneys, accountants, and financial consultants, who may represent claimants and parties-in-interest in Metavation’ s chapter 11 case. Further, Huron (including its affiliates and employees) has performed, in the past, and may perform in the future, consulting services for various attorneys
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and law firms, and has been represented by several attorneys and law firms, some of whom may be involved in these proceedings. Based on Huron’s current knowledge of the professionals involved, and to the best of my knowledge, none of these relationships create interests materially adverse to Metavation, and none are in connection with this case. 24.
Except as disclosed in this Declaration, the Revstone Declaration, and/or
in Schedule 2, Huron has no connection with Metavation, its creditors, the Office of the U.S. Trustee or any of its employees, and/or any other party-in-interest as well as their respective attorneys and accountants. 25.
Huron represents no interest adverse to the interest of Metavation or the
estate and is "disinterested" within the meaning of 11 U.S.C. § 101(14). 26.
Despite the efforts described above to identify and disclose Huron’s
connections with parties in interest in this chapter 11 case, Huron is unable to state with certainty that every client relationship or other connection has been disclosed. In this regard, if Huron discovers additional information that requires disclosure, Huron will file a supplemental disclosure with the Court. 27.
Huron reserves the right to supplement this Declaration in the event that
Huron discovers any facts bearing on matters described in this Declaration regarding Huron’s employment with Metavation. Employment Terms and Compensation 28.
Huron’s retention on behalf of Metavation is subject to the Court’s
approval of the Motion and the Engagement Letter as to Metavation. Huron will seek payment for compensation on an hourly basis, plus reimbursement of actual, necessary expenses incurred by Huron, and certain indemnification as set forth below.
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The compensation Huron seeks for its professionals in these circumstances
is equivalent to what is generally charged by Huron for similar services. Huron adjusts its hourly rates periodically and will charge the rate then in effect. The hourly rates currently charged by Huron are: Title
Hourly Rate
Managing Director Senior Director and Director Manager Associate Analyst 30.
$675 $535 $420
- $750 - $620 - $450 $350 $250
Huron understands that payment of invoices for its work is governed by
the Court and such procedures for filing fee statements and notice as may be applicable to this chapter 11 case. 31.
On July 12, 2013, Huron received a $250,000.00 retainer from Metavation
in accordance with the Engagement Letter. 32.
To the best of my knowledge, (a) no commitments have been made or
received by Huron with respect to compensation or payment in connection with these cases other than in accordance with the provisions of the Bankruptcy Code, and (b) Huron has no agreement with any other entity to share with such entity any compensation received by Huron in connection with this chapter 11 case. 33.
Based on its prior discussions and agreements with the Office of the
United States Trustee in other cases in this District, and its expectations regarding certain modifications the United States Trustee will request to the Engagement Letter, Huron agrees that the order approving Huron’s employment contain the following modifications to the terms in Huron’s Engagement Letter:
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(a)
Paragraph 2 of the General Business Terms of the Engagement Letter is modified as follows: the heading "Independent Contractor" is hereby replaced with the heading "No Agency" and the phrase "an independent contractor and" is hereby deleted from the first sentence of that paragraph.
(b)
In the event that Huron seeks reimbursement for attorneys’ fees from the Debtor pursuant to the Engagement Letter, the invoices and supporting time records from such attorneys shall be included in Huron’s own monthly fee statement and shall be subject to the same payment procedures applicable to professionals in this case.
(c)
Paragraph 9 of the Engagement Letter’s General Business Terms shall apply solely to claims of Huron and the Debtor or Committee against each other, and shall not apply if the Debtor or a representative of the estate asserts a claim for, and a court determines by final order that such claim arose out of, Huron’s own bad faith, self-dealing, breach of fiduciary duty (if any), gross negligence, or willful misconduct. Additionally, the phrase "for the portion of the engagement giving rise to liability" is deleted from this paragraph.
(d)
Paragraph 12(d) of the Engagement Letter’s General Business Terms, relating to arbitration in the event a dispute arises between the Debtor or Committee and Huron, is hereby revised to provide that the arbitration provision shall apply only to the extent that the United States Bankruptcy Court, or the United States District Court if the reference is withdrawn, does not retain jurisdiction over a controversy or claim. 34.
I have read the Motion and, to the best of my knowledge, information and
belief, the contents of the Motion are true and correct. I declare under penalty of perjury that the foregoing is true and correct.
Executed on July
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