KLESTADT & WINTERS, LLP Ian R. Winters Sean C.

Southard Counsel to the Official Committee of Unsecured Creditors 570 Seventh Avenue, 17th Floor New York, NY 10018 (212) 972-3000

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------x : In re: : : LEHR CONSTRUCTION CORP. : : Debtor. : : --------------------------------------------------------------x

Chapter 11 Case No. 11-10723 (SHL)

COMMITTEES RESPONSE TO THE UNITED STATES TRUSTEES MOTION FOR AN ORDER DIRECTING THE APPOINTMENT OF A CHAPTER 11 TRUSTEE The Official Committee of Unsecured Creditors (the Committee) of Lehr Construction Corp., debtor and debtor-in-possession in the above-captioned chapter 11 case (Debtor), by and through its counsel, Klestadt & Winters, LLP, as and for its response (Response) to the United States Trustees motion for an order directing the appointment of a chapter 11 trustee [Docket Nos. 178 and 179] (the Motion), hereby sets forth as follows: Background 1. The Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy

Code with the United States Bankruptcy Court for the Southern District of New York on February 21, 2011 (the Petition Date). 2. On March 11, 2011, the Office of the United States Trustee appointed the

Committee, which consists of the following five (5) members: (i) Robert Samuels, Inc., (ii)

Superior Acoustics, Inc., (iii) Marlin, Inc., (iv) Rockmor Electric Enterprises, Inc., and (v) BP Mechanical Corp. 1 3. On April 18, 2011, the Court entered an Order authorizing the retention of

Klestadt & Winters, LLP as counsel to the Committee in all matters relating to the Debtors Chapter 11 case [Docket No. 153]. 4. On May 4, 2011, a grand jury indictment was unsealed by the District Attorney of

New York County (the DA) against the Debtor, as well as two former (Former Management) and two current executives (Current Management) of the Debtor. The charges in the indictments include enterprise corruption, grand larceny and money laundering in connection with an alleged scheme to defraud the Debtors construction clients of a least $30 million over the past decade (the Indictments). See DA Press Release dated May 4, 2011 (annexed to the Local Rule 9077 Affirmation of Ms. Golden as Exhibit A). 5. On May 5, 2011, in response to the Indictments, the United States Trustee filed

the Motion seeking the appointment of a chapter 11 trustee pursuant to sections 1104(a)(2) and (e) of the Bankruptcy Code. Response 6. Though it is not clear to the Committee that adequate cause has been established

by the Motion, the Committee understands and appreciates the concerns expressed by the U.S. Trustee in the Motion and agrees that the Indictments call into question the ability of the Debtors management to fulfill its fiduciary obligations within the context of this pending chapter 11 case. The Committee understands that the Debtor will finish its open construction projects in relatively short order and that Current Management does not have any intention to

As of May 9, 2011, Superior Acoustics, Inc. resigned from the Committee.

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reorganize the business or take on new jobs. 2 As such and when considering the Motion, the Committees focus is on the best interests of creditors of the Debtors estate and maximizing the value of the remaining operations. 7. Within this backdrop, the Committee is concerned with the costs associated with

appointment of a chapter 11 trustee and any corresponding professionals that such a trustee may hire. The budget in this liquidating chapter 11 case appears to be quite thin 3 and excessive additional costs could result in a more immediate liquidation. 8. In point of fact, appointing the wrong party as fiduciary in this case could

unintentionally impede, and possibly defeat, the efficient wind down of the Debtors operations. Though the Committee welcomes a strong independent presence with restructuring experience at the Debtor 4, its important that the fiduciary be selected wisely and that this entire matter is concluded promptly so as to avoid any further confusion on the open projects that has been occasioned by the Indictments and the Motion. 9. A primary concern for the Committee when assessing the best interest of creditors

has to do with credibility and confidence from the counterparties in the Debtors open projects. In order to collect on accounts and pay creditors, including subcontractors on the projects, the Debtor must successfully execute its wind down plan and complete its open jobs. In order for this to be accomplished, it is imperative that the Debtor maintain confidence and credibility with owners and subcontractors and maintain its core personnel with key knowledge and experience.

The Committee understands that Former Management has not been on the Debtors payroll since prior to the Petition Date and has no involvement with the current operations. 3 The Committee has been exceedingly patient in waiting on the completion of a wind down budget and has yet to sign off on the last version circulated by the Debtor. 4 Indeed, the Committee has been suggesting to the Debtor for several weeks that the appointment of a chief restructuring officer will aid the Debtor in completion of the wind down and the bankruptcy specific tasks that are required of a debtor-in-possession. The Committee also felt that a chief restructuring officer would provide independence and credibility to counterparties given the long standing investigation by the DA and the potential for the Indictments during the pendency of the chapter 11 case.

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The Committee believes that Current Management possesses experience and knowledge that may be necessary for any independent party appointed in this case to take advantage of in order to efficiently complete the wind down. Introducing a chapter 11 trustee, who is unfamiliar with the construction industry or does not possess the necessary expertise, or who feels that Current Management must be summarily displaced on account of the Indictments, could prove fatal to the Debtors wind down efforts. 10. If, the Court decides, in its sound judgment, that appointment of a chapter 11

trustee is appropriate in this case under the relevant facts and law, the Committee would urge that the U.S. Trustee and the Debtor work cooperatively to provide for a swift and seamless transition to a fiduciary that will allow for completion of the open projects in an efficient manner. WHEREFORE, the Committee requests the Court to enter relief in response to the Motion that is just and appropriate under the circumstances. Dated: New York, New York May 10, 2011 Respectfully submitted,
KLESTADT & WINTERS, LLP Counsel to the Official Committee of Unsecured Creditors /s/Sean C. Southard__________ Ian R. Winters Sean C. Southard 570 Seventh Avenue, 17th Floor New York, New York 10018 By:

(212) 972-3000

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