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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE ) ) ) ) ) ) ) ) ) ) Case No. 11-11795 (KG) Chapter 11 Courtroom No. 3 824 Market Street Wilmington, Delaware 19801 September 20, 2011 3:00 P.M.
TRANSCRIPT OF HEARING BEFORE HONORABLE KEVIN GROSS UNITED STATES BANKRUPTCY JUDGE
Young Conaway Stargatt & Taylor, LLP By: ROBERT F. POPPITI, JR., ESQ. The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 (302) 571-6600 GINGER MACE Reliable 1007 N. Orange Street Wilmington, Delaware 19801 Telephone: (302) 654-8080 E-Mail: gmatthews@reliable-co.com
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Troutman Sanders LLP By: BRETT D. GOODMAN, ESQ. The Chrysler Building 405 Lexington Avenue New York, NY 10174 (212) 704-6000 Eckert Seamans By: TARA A. LATTOMUS, ESQ. 300 Delaware Avenue, Suite 1210 Wilmington, DE 19801 (302) 425-0432 Ropes and Gray By: BENJAMIN SCHNEIDER, ESQ. 1211 Avenue of the Americas New York, NY 10036-8704 (212) 841 5735
3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OPENING STATEMENT: For the Debtors, by Mr. Poppiti NOTICE OF AGENDA MATTERS: For the Debtors, by Mr. Poppiti For Lisa Singleton, by Ms. Lattomus For the Debtors, by Mr. Poppiti For Lisa Singleton, by Ms. Lattomus For the Committee, by Mr. Schneider For the Debtors, by Mr. Poppiti INDEX Page 4 4 5 9 15 16 18
4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE CLERK: THE COURT: please be seated. Please rise. Good afternoon everyone. Thank you, and Here we
are for the Perkins and Marie Callenders case. MR. POPPITI: THE COURT: MR. POPPITI:
Mr. Poppiti.
Good afternoon, Your Honor. Good afternoon. For the record, Robert Poppiti from I
Young Conaway Stargatt & Taylor on behalf of the Debtors. have with me at the table my co-counsel from Troutman Sanders, Brett Goodman. THE COURT: MR. POPPITI: agenda that we filed. Nice to see you, Mr. Goodman. Your Honor, well work off todays
The first three matters, Your Honor, Your Honor, as you probably
recall, entered orders on the Deloitte retention as well as on our Motion to Modify our lease procedures. THE COURT: MR. POPPITI: THE COURT: MR. POPPITI: Yes. Sort of an odd motion, but Yes. -- we determined after the fact that And
we had some concerns there with our negotiating power. item number 1 is the Pepsi rejection motion.
Were again
going to carry that as we continue to work on a form of stipulation. THE COURT: You bet.
before we walked over today that you signed the orders on Agenda Items 4 and 5 which are our motions to extend our 365(b)(4) deadline and to extend our deadline to remove actions. THE COURT: MR. POPPITI: THE COURT: MR. POPPITI: Thats right. So we do appreciate that. Sure. And that, Your Honor, brings us to
Agenda Item 6, which is Lisa Singletons stay relief motion. And I guess Ill turn the podium over to Movants counsel on this one. THE COURT: how are you? MS. LATTOMUS: THE COURT: Very good, Your Honor, how are you? Thank you. All right. Thank you. Ms. Lattomus,
Very well.
MS. LATTOMUS:
are here on a motion for relief for my client to continue with a cause of action pending in Florida. The cause of There are
action is an employment discrimination action. also some civil rights elements to the case -THE COURT: Yes.
MS. LATTOMUS:
6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. that theres no indication of theft, and so that she doesnt have to disclose that on future applications. I don't know
if Your Honor has had a chance to look through the papers. THE COURT: Yes I did. So I wont belabor the point, Your
MS. LATTOMUS:
standard for a motion for relief, so, but just quickly. THE COURT: Please, yes. Essentially, Your Honor, my burden
MS. LATTOMUS:
today is to show that my client should get relief from the stay, and in order to do that, I have to show that there will be little or no prejudice to the Debtors and their estate, that a weighing of the burdens is I guess in favor of my client. THE COURT: Yes. Although in a bad way.
Exactly. And that we have a probability of With respect to the prejudice to the
Debtors and their estate, Your Honor, I dont know that anyone has actually contended that this claim is not covered by the Liberty Mutual Insurance policy, and in fact this case has been pending since April of this year and they do have, Perkins does have defense counsel who have entered an appearance and have in fact filed an answer. So Im thinking
7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at this point the Debtors should have a good idea of whether this claim is covered or not. On to the hardship issue, Your Honor, the Debtors all but concede in their response to our motion that the appropriate and most efficient and economical forum for this action will be Florida. And if you weigh that against my
client who is a single claimant who resides in Florida, limited economic ability to litigate a case up here, and also the issue with that I mentioned earlier, there is a pressing need to address the theft on her employment records. My co-
counsel has informed me that as shes applying for jobs at this point when shes faced with a question about prior termination and basis for prior termination, he is advising her to indicate that she has been terminated for theft because at this point that is correct. forward and get that addressed. And then finally with respect to success on the merits, the Debtors havent really done anything in their response to address the rather egregious allegations in the underlying complaint in the motion. THE COURT: So - So we need to move
determination for you or for me at such an early stage in the litigation it seems. So thats always a tricky one for me. Right. But I would say, Your Honor,
MS. LATTOMUS:
8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have success on the merits - THE COURT: Yes. -- to the extent that weve received
MS. LATTOMUS:
no opposition or no response to the allegations at all, I would argue it weighs in favor of my client. Id also like
to briefly address the Debtors limited objection, Your Honor, if I might. THE COURT: Please. Basically it boils down to this.
MS. LATTOMUS:
They don't want our motion denied, they would like it continued for 30 days or some other period of time that the Court feels appropriate, so that they may have further communications with Liberty Mutual with respect to the coverage of this claim. As I previously said, Your Honor, They have To
the extent that they have been paying any defense costs at this point, I think they probably would have mentioned that in their objection, but they havent. So, but I guess it
gets down to this, Your Honor, of all of the insurance policies Ive read, and Im sure like Your Honor, Ive read a lot of them, this language is pretty clear. If theres a
retention and if youre insolvent and you cant pay, theres no retention. Its one sentence, it cant get any clearer.
9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the insurance company to respond to that language, I don't think its appropriate, and I think my client has established cause for relief from stay, Your Honor. THE COURT: All right. Thank you, Ms. Lattomus.
That was in a well done, succinct and obviously you like I have a lot of experience with these types of motions. Poppiti, yes sir. MR. POPPITI: Good afternoon again, Your Honor; for Mr.
the record, Robert Poppiti from Young Conaway Stargatt & Taylor on behalf of the Debtors. I too like Ms. Lattomus Hopefully, our And
Your Honor, I think just to be clear, you know, as an upfront matter, were not saying this claim shouldnt eventually be liquidated or adjudicated or that stay relief is not at all appropriate. I think our point is at this point in time its We need some additional time to work with
not appropriate.
the insurance carrier and figure out, you know, where we are. Weve reached out to them obviously and said, you know, youve seen the lift stay motion, heres our reading of the documents, where are you at. Some silence there, of course.
Weve obviously asked in light of that silence to previously adjourn the motion. The Movant has agreed to previously
adjourn it on two different occasions. You know, finally when we realized we were not going
10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to have much progress before this again we reached out to counsel and said, listen, weve not heard anything from the insurance carrier, but heres what we think we can do to alleviate our concerns, more or less, a consensual stipulation that drafts around the concerns. back from the insurance carrier. We did hear
make any assumptions on this one, that the retention does or does not apply. Obviously sort of a cryptic response that I think Ms. Lattomus
is correct, these provisions are generally common, its not the first time probably anyone in this courtroom has seen them. But as we do know that stranger things have happened
when you take actions without knowing what the insurance companys position is. So, Your Honor, at the end of the day our real concern is we go ahead and consent to a stay relief, and the order that the Movants has proposed is entered, what happens if in fact Liberty says okay, you know, there is no retention, but then they look to this estate for administrative claims of sorts. So where were at is if we could get some sort of protection and order, or as weve put forth in a stipulation that says you know you could have your stay relief, but if there is administrative exposures, then you have to alleviate that administrative exposure, whether its directly
11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reimbursing the estate or directly reimbursing Liberty Mutual. So thats our real concern there, Your Honor. We do
think a stipulation made some sense, so we obviously reached out. Unfortunately, we just couldnt get there on an Obviously, youre going to have some
executed stipulation.
other concerns with plan distributions and the like that you could, you know, address in a stipulation. We realize that
is not a reason to obviously deny the stay relief motion, but we do think it would be more efficient to have a stipulation as opposed to an order. Again, our main concern is just getting some language in that order that makes clear, in light of the uncertainty we have, that were not going to get down the road and say you know what, you have your stay relief, and then Liberty sends us a demand letter, whatever it may be, an invoice for you know, $250,000 or whatever the retention may be. So thats, thats our real concern here, Your Honor,
that we could have that prejudice. We do have, you know, related issues. Obviously, as
Your Honor knows, this is a case that has moved very quickly. And I can understand the Movants position that were three months in, but a case of this nature where we came in with a restructure support agreement which obviously dictates that we work hand in hand with Wayzata and their counsel. Honor recalls, a little over ten days ago, As Your
12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we filed our revised form of disclosure statement. THE COURT: MR. POPPITI: Yes. Your Honor entered an order, umpteen
hours were obviously spent on that, Your Honor, working with the Committee. So as far as were concerned, its just not a
simple, I hesitate to call it that, because again, weve said we don't necessarily have an issue with relief. I hesitate
to call it a two party dispute, but its actually much more than that. You know, were working, were a two party
negotiation, were working with Wayzata, were working with the Committee and were obviously working with the insurer. And thats the reason for the time, Your Honor, thats why we need additional time here. You know, we recognize the Movants concerns theyve raised for the first time, albeit an issue with this theft and being on the records, obviously some serious allegations that hopefully can be, you know, taken care of in that action. But again, this was filed 45 days prior to the The stay relief motion was a month in, and So not, you
petition date.
know, not uncommon for the Debtors to be up here saying we need additional time, Your Honor. So again, I trust that youve read the papers. If
you have any specific questions, Im happy to address those. THE COURT: I just want to be clear, Mr. Poppiti.
13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In other words, the stipulation would require Ms. Lattomuss client to pay the administrative expenses if there were any. MR. POPPITI: Yeah, I mean thats the concern, Your
Honor, is if we go ahead and we say you know what, we read the policy too, retention does not apply, or we don't make a representation, we just said you know there is your stay relief. And I think what we would say, Your Honor, if its
dollar one coverage, its dollar one coverage, thats great, get whatever you can get against the insurance proceeds if we can agree to waive any deficiency claims and the like. Certainly that would have to be a negotiation. But what
were concerned with is if Liberty says you know what, theres dollar one coverage, and then they walk in and say for whatever reason, you know, youre responsible for the first 250, Debtors. That's our concern, that we shouldnt be Were just not sure what The silence, if you
would, is giving our client some laziness. THE COURT: Well it seems to me, is the only way to
resolve the question to bring a declaratory judgment action against Liberty Mutual? MR. POPPITI: suggested, Your Honor. that. Well thats one thing that has been Were hopeful that it doesn't come to
14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 breathing - so our concern is okay now that opens up that can of worms, if thats what we really want to do. So were
hopeful we can, you know, continue discussions with them, find out what their position is, you know, and obviously hopefully pin them down more or less on the position. Obviously, Your Honor has raised what could be one sort, you know, one action we could take here which is to say you know what, youve got, you know push has come to shove and you have to let us know what your position is and were filing a dec action. THE COURT: MR. POPPITI: Okay. But obviously that creates another
burden on the estate here to go ahead and do that, again in the throes of a confirmation process. THE COURT: Yes. And when is the confirmation
hearing scheduled if you recall? MR. POPPITI: THE COURT: MR. POPPITI: Yes. Okay. October 31st, Your Honor. All right.
soliciting, or I should say getting the solicitation materials out, and then we anticipate confirmation objections by the 14th of October with the confirmation hearing on October 31st. THE COURT: Okay. All right. Let me hear from Ms.
15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 your client isnt prepared to take that risk of, you know, a potential $250,000 administrative claim. MS. LATTOMUS: THE COURT: Absolutely not, Your Honor.
And shouldnt have to take that risk. Just briefly, Your Honor.
MS. LATTOMUS:
other parties committee, whoever else was listed, no one else has filed an objection to this motion. So to the extent
that they have any problems with it, we should be hearing from them today. Otherwise, Your Honor, this is a classic
situation where my client is stuck between two entities that are battling it out for what could be an indefinite amount of time. THE COURT: Yes. Especially since Liberty Mutual has
MS. LATTOMUS:
the great advantage of kind of getting the benefit of the bankruptcy at this point at the expense of my client. wont say anything else, Your Honor. clear. Thank you. THE COURT: Thank you. Your Honor, Ben Schneider for the So I
Yes.
Good afternoon.
Ropes & Gray, for the Official Committee of Unsecured Creditors. We absolutely support the Debtors in their
request and dont believe that, you know, to the extent something could be worked out, that should be the case. It
would be, we would like to avoid any hasty judgment in this case that may involve an increased burden on the estate. THE COURT: Sure. I understand that Mr. Schneider. Certainly,
obviously the Committees position is significant to me as it should be. MR. POPPITI: And, Your Honor, I would just add, and
I think the restructuring support parties is probably safe to say would be on our side on this one. Obviously as Ms.
Lattomus has said, they have not filed a paper. although often times, as you know, restructuring support parties do try to stay in the background when they can. THE COURT: MR. POPPITI: Sure. More often than that I guess they
dont, but there are certain issues where they do try to stay in the background. Your Honor, and the only other thing I
would add is you know I know oftentimes you probably hear the floodgate, you know, floodgates argument, but you know this is certainly a case where were going to have other claims of this nature, were going to begin to see people file
obviously, wed like to be afforded the opportunity to work with the Committee to work with Wayzata, to figure out whats going to be the blueprint going forward. So we do, again, We
think though at the end of the day, the fact that weve not heard from Liberty, you know, we should be afforded additional time to track them down. And listen, if were not
here in 30 days, Your Honor, as weve asked in our papers, then of course either well do a stipulation with the Movant or well be right back here, and my guess is Your Honor is going to have probably, you know, to the extent of a favorable ruling for the Debtors today, a different ruling at that time if weve not been able to get there, or at least some guidance on where he thinks we should go. So unless
Your Honor has any questions, we rest on our papers. THE COURT: I don't. You know it, this is not a
simple money damages issue, as you sometimes find for example in a personal injury case. And there I generally express the
view that a month or two or three wont make a big difference. My concern here is that theres a reputation at
stake, and the potential if wrong has been done by the Debtor, Im not suggesting it has or hasnt been, but if there has been a wrong, theres significant prejudice to this, this woman, and thats, thats, its preventing, it may
18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be preventing her from getting a job right now, whether its appropriate or unnecessary, that is something that causes me some concern. But it is early in the case. The case has
developed well only because youve been moving ahead so quickly, and its progressed so well. the baby so to speak. I never like to cut
is instead of saying 30 days, Im going to give you 20 days. And I think what we should do in 20 days is have a telephone conference so the parties dont have to come to Court, and Ill see what the status is at that time, if thats acceptable to you. MR. POPPITI: Your Honor, the only thing I was going
to add, and I dont want to mess up Ms. Lattomuss schedule or you know frankly impair her ability to do it by phone, but I think the Debtors are going to need some additional omnibus time. And I don't want to put Your Honor on the spot, but we
were looking for something mid-October. THE COURT: MR. POPPITI: Okay. Certainly before confirmation, we
don't want to be in that week before confirmation, but we may have some matters we may want to tee up, so if Your Honor had time around like the 15th or the 10th. THE COURT: MR. POPPITI: See I shouldnt have asked. So you know and again, I don't mean to
put Your Honor on the spot, and I dont know what works for
19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with. Ms. Lattomus either, but you know were certainly trying to save Your Honor having to deal with this twice in October in addition to confirmation. THE COURT: Ill tell you that I can do. I can, I
don't have anything the week of the 10th because Ive got a very significant trial that week. Poppiti, do you know at this point? MR. POPPITI: Yeah, I think the 6th would probably be But Is the 6th too soon Mr.
again, you know, we certainly understand Your Honors ruling on todays motion, so I don't want to, you know, use that to bootstrap you on - THE COURT: No, no, no, and Im not suggesting, I
know you wouldnt do that, I have no concern that you would do that. You see heres my, my dilemma is, Ive got, were
closed that Monday the 10th, Ive got two days of trial, the 13th and 14th. Im trying to figure why I am out on the 11th. Do you know why Im out on the
The 12th Ive got the Dodgers. 11th? Oh, good. Thank you.
because the reason Im out on the 11th is -- I should be back by say 1:00 that afternoon. MR. POPPITI: Whatever Your Honor is comfortable
Again, we don't want to impose on the Court. THE COURT: MR. POPPITI: No, no. We just thought if we could do the
20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: MR. POPPITI: On the 11th. Anyone else? I assume Court a favor and obviously comply with the ruling today, we would shoot for that. THE COURT: You are not imposing, I promise. Your Honor, I dont mind at all
MS. LATTOMUS:
walking over to appear in person. THE COURT: Are you sure? Not at all. All right. Its always a
Okay.
pleasure to have you here. MS. LATTOMUS: THE COURT: Thank you.
side -- does this work for you Ms. Lattomus, 2:00? MS. LATTOMUS: That should be fine. Thank you, Your
thats okay with the Court and with the Movant. THE COURT: MR. POPPITI: Yes. But I would expect -
issue on the 11th, Your Honor. THE COURT: I hope not because really my very, very
strong inclination would be to grant the motion on the 11th, I don't want there to be any question about that. MR. POPPITI: And we certainly understand and
21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 all. THE COURT: So Ive got you down now for 2:00 on the
11th for other matters you might wish to bring at that time, Mr. Poppiti. MR. POPPITI: Yes, Your Honor, and well send over a
certification to that affect and you know list it as an omnibus hearing of course. THE COURT: You bet. So although youll have to go
back and tell them that the Judge wasn't thrilled about our position on the motion. MR. POPPITI: THE COURT: We will of course will. And youve got a date. We have a date. And, you know,
MR. POPPITI:
hopefully, Your Honor, we can have a copy of this transcript and send it to our friends at Liberty Mutual - THE COURT: MR. POPPITI: including the Court. THE COURT: MR. POPPITI: THE COURT: You bet. Very well. All right. Excellent. -- and indicate where everyone is at,
Thats all I have, Your Honor. Thats it for today? Good to see you
Thank you, and well stand in recess. MR. POPPITI: THE COURT: Thank you, Your Honor. Good day to you all.
22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/Mary Zajaczkowski Mary Zajaczkowski, CET**D-531 September 27, 2011 Date CERTIFICATE I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter.
Chapter: 11
NOTICE OF FILING OF TRANSCRIPT AND OF DEADLINES RELATED TO RESTRICTION AND REDACTION A transcript of the proceeding held on 9/20/2011 was filed on 9/27/2011 . The following deadlines apply: The parties have 7 days to file with the court a Notice of Intent to Request Redaction of this transcript. The deadline for filing a request for redaction is 10/18/2011 . If a request for redaction is filed, the redacted transcript is due 10/28/2011 . If no such notice is filed, the transcript may be made available for remote electronic access upon expiration of the restriction period, which is 12/27/2011 unless extended by court order. To review the transcript for redaction purposes, you may purchase a copy from the transcriber (see docket for Transcriber's information) or you may view the document at the clerk's office public terminal.
(ntc)
Notice Recipients
District/Off: 03111 Case: 1111795KG User: Brandon Form ID: ntcBK Date Created: 9/27/2011 Total: 7
Recipients of Notice of Electronic Filing: ust United States Trustee USTPREGION03.WL.ECF@USDOJ.GOV TOTAL: 1 Recipients submitted to the BNC (Bankruptcy Noticing Center): db Perkins &Marie Callender's Inc., et al. 6075 Poplar Avenue Suite 800 Memphis, TN 38119 aty Brett D. Goodman Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Hollace Topel Cohen Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Mitchel H. Perkiel Troutman Sanders LLP The Chrysler Building, 405 Lexington Ave New York, NY 10174 aty Robert F. Poppiti, Jr. Young, Conaway, Stargatt &Taylor, LLP The Brandywine Building 1000 West Street 17th Floor Wilmington, DE 19801 aty Robert S. Brady Young, Conaway, Stargatt &Taylor The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19801 TOTAL: 6