Energy Future Holdings Precedent Pack Volume 5 of 6

Energy Future
Holdings Corp.
Selected Chapter 11 Case
Documents & Relevant Precedent
Volume 5 of 6

Chapter11Dockets.com has collected key court filings (through May
6, 2014) in the Energy Future Holdings Chapter 11 cases as well as
precedential materials regarding motions to transfer venue of cases
before Bankruptcy Judge Christopher Sontchi, as well as plans of
reorganization proposed by selected energy industry debtors
represented by Kirkland & Ellis LLP in previous Chapter 11 cases.

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Table of Contents
Energy Future Holdings: First Day Motions & Applications (Volume 1 of 6)
Chapter 11 Voluntary Petition Filed by Energy Future Holdings Corp [Docket #1] ....... 16
Motion for Joint Administration [Docket # 17] .................................................................... 45
Motion for Entry of Interim and Final Orders Authorizing the Debtors to Pay Certain
Prepetition Taxes and Fees [Docket #23] ............................................................................ 89
Application to Appoint Claims/Noticing Agent [Docket #24] ....................................... 167
Motion for Entry of Interim and Final Orders (A) Authorizing the Debtors to (I) Pay
Certain Prepetition Compensation and Reimbursable Employee Expenses, (II) Pay
and Honor Employee and Retiree Medical and Similar Benefits, and (III) Continue
Employee and Retiree Benefit Programs, and (B) Modifying the Automatic Stay
[Docket #25] .......................................................................................................................... 207
Supplemental Declaration of Paul Keglevic, Executive Vice President, Chief Financial
Officer, and Co-Chief Restructuring Officer of Energy Future Holdings Corp., et al., in
Support of Wages and Benefits Motion [Docket #46] ..................................................... 265
Motion for Entry of Interim and Final Orders Determining Adequate Assurance of
Payment for Future Utility Services [Docket #26] .............................................................. 287
Motion for Entry of Interim and Final Orders Authorizing the Debtors to (A) Grant
Administrative Expense Priority to all Undisputed Obligations for Goods and Services
Ordered Prepetition and Delivered Postpetition and Satisfy Such Obligations in the
Ordinary Course of Business, and (B) Pay Prepetition Claims of Shippers,
Warehouseman, and Materialmen [Docket #27] ........................................................... 330
Motion for Entry of an Order Authorizing the Debtors to File a Consolidated List of
Creditors in Lieu of Submitting a Separate Mailing Matrix for Each
Debtor [Docket #28] ............................................................................................................ 360
Motion for Entry of Interim and Final Orders Authorizing the Debtors to Pay Prepetition
Critical Vendor Claims [Docket #29] ................................................................................. 373
Motion for Entry of (A) An Order Authorizing the Debtors to (I) Maintain and Administer
Customer Programs and Customer Agreements, (II) Honor Prepetition Obligations
Related Thereto, (III) Pay Certain Expenses on Behalf of Certain Organizations, (IV) Fix
the Deadline to File Proofs of Claim for Certain Customer Claims, and (V) Establish
Procedures for Notifying Customers of Commencement of the Debtors' Chapter 11
Cases, Assumption of Customer Agreement, and the Bar Date for Customer Claims
and (B) An Order Authorizing Certain of the Debtors to Assume the Customer
Agreements [Docket #31] ................................................................................................... 413

Motion Authorizing Texas Competitive Electric Holdings Company LLC and Certain of
its Debtor Affiliates to File Under Seal the Certain Fee Letter Related to Proposed
Debtor-in-Possession Financing [Docket #36]................................................................... 496
Motion for Entry of an Order (A) Authorizing the Debtors to (I) Continue Using Their
Existing Cash Management System, (II) Maintain Existing Bank Accounts and Business
Forms, and (III) Continue Using Certain Investment Accounts; (B) Authorizing
Continued Intercompany Transactions and Netting of Intercompany Claims; and (C)
Granting Postpetition Intercompany Claims Administrative Expense
Priority [Docket #37] ............................................................................................................. 513
Motion for Entry of (A) an Order Authorizing Certain of the Debtors to Pay Certain
Prepetition Transition Charges and Delivery Charges and (B) an Order Authorizing
Certain of the Debtors to Assume Transmission and Distribution Service Agreements
[Docket #38] .......................................................................................................................... 581
Motion Authorizing Energy Future Intermediate Holding Company LLC and EFIH
Finance, Inc. to File Under Seal the Certain Fee Letter Related to Proposed Debtor-in-
Possession Financing [Docket #39] .................................................................................... 620
Motion for Entry of an Order Authorizing Certain of the Debtors to Assume Standard
Form Market Participant Agreements with ERCOT [Docket #40] .................................. 638
Motion for Entry of Interim and Final Orders Authorizing the Debtors to (A) Continue
Performing Under Prepetition Hedging and Trading Arrangements, (B) Pledge
Collateral and Honor Obligations Thereunder, and (C) Enter Into and Perform Under
Trading Continuation Agreements and New Postpetition Hedging and Trading
Arrangements [Docket #41] ............................................................................................... 658
Motion of Texas Competitive Electric Holdings Company LLC and Certain of its Debtor
Affiliates for Entry of Interim and Final Orders (A) Authorizing Use of Cash Collateral, (B)
Granting Adequate Protection, (C) Modifying the Automatic Stay, and (D)
Scheduling a Final Hearing [Docket #71] ......................................................................... 726
Motion of Texas Competitive Electric Holdings Company LLC and Certain of its Debtor
Affiliates, for Entry of Interim and Final Orders (A) Approving Postpetition Financing, (B)
Granting Liens and Providing Superpriority Administrative Expense Claims, (C)
Modifying the Automatic Stay, and (D) Scheduling a Final Hearing [Docket #73] .... 832
Motion of Energy Future Intermediate Holding Company LLC and EFIH Finance, Inc.
for Entry of (I) an Interim Order (A) Approving Certain Fees Related to Postpetition
Financing and Granting Such Fees Administrative Expense Priority and (B) Scheduling
a Final Hearing; and (II) a Final Order (A) Approving Postpetition Financing, (B)
Granting Liens and Providing Superpriority Administrative Expense Claims, (C)
Authorizing the Use of Cash Collateral, (D) Authorizing the EFIH First Lien Refinancing,
(E) Authorizing Issuance of Roll-Up Debt to the Extent Authorized by the Settlement

Motion, (F) Determining the Value of Secured Claims, and (G) Modifying the
Automatic Stay [Docket #74] .......................................................................................... 1,123
Declaration of Paul Keglevic, Executive Vice President, Chief Financial Officer, and
Co-Chief Restructuring Officer of Energy Future Holdings Corp., et al., in Support of
First Day Motions [Docket #98] ........................................................................................ 1,219
Supplemental Declaration of Stephen Goldstein In Support of (I) the Motion of Texas
Competitive Electric Holdings Company LLC and Certain of its Debtors Affiliates for
Entry of Interim and Final Orders (A) Approving Postpetition Financing, (B) Granting
Liens and Providing Superpriority Administrative Expense Claims, (C) Modifying the
Automatic Stay, and (D) Scheduling a Final Hearing and (II) The Motion Authorizing
Texas Competitive Electric Holdings Company LLC and Certain of its Debtor Affiliates
to File Under Seal the Certain Fee Letter Related to Proposed Debtor-in-Possession
Financing [Docket #211] .................................................................................................. 1,683
Supplemental Declaration of Stephen Goldstein in Support of the Motion of Energy
Future Intermediate Holding Company LLC and EFIH Finance, Inc. for Entry of (I) an
Interim Order (A) Approving Certain Fees Related to Postpetition Financing and
Granting Such Fees Administrative Expense Priority and (B) Scheduling a Final Hearing;
and (II) a Final Order (A) Approving Postpetition Financing, (B) Granting Liens and
Providing Superpriority Administrative Expense Claims, (C) Authorizing the Use of Cash
Collateral, (D) Authorizing the EFIH First Lien Refinancing, (E) Authorizing Issuance of
Roll-Up Debt to the Extent Authorized by the Settlement Motion, (F) Determining the
Value of Secured Claims, and (G) Modifying the Automatic Stay [Docket #221] .. 1,687
Declaration of Terry L. Nutt in Support of the Motion of Energy Future Holdings Corp.,
et al., for Entry of Interim and Final Orders Authorizing the Debtors to (A) Continue
Performing Under Prepetition Hedging and Trading Arrangements, (B) Pledge
Collateral and Honor Obligations Thereunder, and (C) Enter into and Perform Under
Trading Continuation Agreements and New Postpetition Hedging and Trading
Arrangements [Docket #229] .......................................................................................... 1,695

Energy Future Holdings: Objections/Responses to First Day Pleadings (Volume 2 of 6)
Response of the Public Utility Commission of Texas in Support of Certain First Day
Pleadings [Docket #123] ....................................................................................................... 16
Preliminary Objection of EFIH 2nd Lien Notes Indenture Trustee and Certain
Noteholders to Motion for Interim Order Scheduling Final Hearing on Post-Petition
Financing [Docket #188] ....................................................................................................... 54
Preliminary Objection of the Ad Hoc Group of TCEH Unsecured Noteholders to the
Motion of the TCEH Debtors for Entry of an Order Directing Joint Administration of Their
Chapter 11 Cases With Those of the Oncor Debtors [Docket #222] .............................. 60
Emergency Motion of the Ad Hoc Group of TCEH Unsecured Noteholders for a Limited
Adjournment of the Hearing on First Day Motions [Docket #223] ................................... 98
Declaration of Jeffrey M. Schlerf, Esq. Related to Preliminary Objection of the Ad Hoc
Group of TCEH Unsecured Noteholders to the Motion of the TCEH Debtors for Entry of
an Order Directing Joint Administration of Their Chapter 11 Cases With Those of the
Oncor Debtors [Docket #227]............................................................................................. 122
Limited Preliminary Objection of the Ad Hoc Group of TCEH Unsecured Noteholders to
the Motion of Energy Future Holdings Corp., et al., for Entry of an Order (A) Authorizing
the Debtors to (I) Continue Using Their Existing Cash Management System, (II)
Maintain Existing Bank Accounts and Business Forms, and (III) Continue Using Certain
Investment Accounts; (B) Authorizing Continued Intercompany Transactions and
Netting of Intercompany Claims; and (C) Granting Postpetition Intercompany Claims
Administrative Expense Priority [Docket #230] .............................................................. 3,027
Omnibus Preliminary Objection Of The Ad Hoc Group Of TCEH Unsecured Noteholders
To (I) The Motion Of Texas Competitive Electric Holdings Company LLC And Certain
Of Its Debtor Affiliates For Entry Of Interim And Final Orders (A) Approving Postpetition
Financing, (B) Granting Liens And Providing Superpriority Administrative Expense
Claims, (C) Modifying The Automatic Stay, And (D) Scheduling A Final Hearing, And
(II) The Motion Of Texas Competitive Electric Holdings Company LLC And Certain Of
Its Debtor Affiliates For Entry Of Interim And Final Orders (A) Authorizing Use Of Cash
Collateral, (B) Granting Adequate Protection, (C) Modifying The Automatic Stay, And
(D) Scheduling A Final Hearing [Docket #231] .............................................................. 3,042
Declaration Of L. John Bird, Esq. in Support of Preliminary Objections of the Ad Hoc
Group of TCEH Unsecured Noteholders [Docket #232] ............................................... 3,075

Energy Future Holdings: First Day Orders (Volume 3 of 6)
Order (Interim) Directing Joint Administration of The Debtors' Chapter 11
Cases [Docket #287] .............................................................................................................. 16
Order (With Revisions Made By The Court) Authorizing Energy Future Intermediate
Holding Company LLC And EFIH Finance, Inc. To File Under Seal The Certain Fee Letter
Related To Proposed Debtor-In-Possession Financing [Docket #288]............................. 34
Order Approving Certain Fees Related To And Scheduling a Final Hearing On The
Proposed Postpetition Financing of Energy Future Intermediate Holding Company LLC
And EFIH Finance [Docket #289] .......................................................................................... 37
Order (With Revisions Made By The Court) Authorizing Texas Competitive Electric
Holdings Company LLC To File Under Seal The Certain Fee Letter Related To Proposed
Debtor-In-Possession Financing [Docket #290] .................................................................. 42
Order (Interim) (A) Authorizing The Debtors To (I) Continue Using Their Existing Cash
Management System, (II) Maintain Existing Bank Accounts And Business Forms, And
(III) Continue Using Certain Investment Accounts; (B) Authorizing Continued
Intercompany Transaction And Netting of Intercompany Claims; And (C) Granting
Postpetition Intercompany Claims Administrative Expense Priority [Docket #304] ....... 45
Order (Interim) Authorizing the Debtors to (A) Maintain and Administer Customer
Programs and Customer Agreements, (B) Honor Prepetition Obligations Related
Thereto, (C) Pay Certain Expenses on Behalf of Certain Organizations, (D) Fix the
Deadline to File Proofs of Claim for Certain Customer Claims, and (E) Establish
Procedures for Notifying Customers of Commencement of the Debtors' Chapter 11
Cases, Assumption of the Customer Agreements, and the Bar Date for Customer
Claims [Docket #307] ............................................................................................................. 54
Order (Interim) Authorizing The Debtors To Pay Prepetition Critical Vendor
Claims [Docket #309] ............................................................................................................. 83
Order (Interim) Authorizing the Debtors to (A) Grant Administrative Expense Priority to
all Undisputed Obligations for Goods and Services Ordered Prepetition and Delivered
Postpetition and Satisfy Such Obligations in the Ordinary Course of Business and (B)
Pay Prepetition Claims of Shippers, Warehousemen, and
Materialmen [Docket #314] .................................................................................................. 93
Order (Interim) Authorizing the Debtors to (A) Continue Performing Under Prepetition
Hedging and Trading Arrangements, (B) Pledge Collateral and Honor Obligations
Thereunder, and (C) Enter Into and Perform Under Trading Continuation Agreements
and New Postpetition Hedging and Trading Arrangements [Docket #315] ................. 98
Order (Interim) Authorizing Certain of the Debtors to Pay Certain Prepetition Transition
Charges and Delivery Charges [Docket #318] ................................................................ 114

Order (Interim) Determining Adequate Assurance of Payment For Future Utility
Services [Docket #319] ........................................................................................................ 118
Order (Interim) Authorizing the Debtors to Pay Certain Prepetition Taxes and
Fees [Docket #320] ............................................................................................................... 128
Order Approving the Retention and Appointment of Epiq Bankruptcy Solutions, LLC as
the Claims and Noticing Agent for the Debtors [Docket #321] .................................... 132
Order (Interim) (A) Authorizing the Debtors to (I) Pay Certain Prepetition
Compensation and Reimbursable Employee Expenses, (II) Pay and Honor Employee
and Retiree Medical and Similar Benefits, and (III) Continue Employee and Retiree
Benefit Programs, and (B) Modifying the Automatic Stay [Docket #322] .................... 138
Order Authorizing the Debtors to File a Consolidated List of Creditors in Lieu of
Submitting a Separate Mailing Matrix for Each Debtor [Docket #323] ........................ 143
Order (Interim) (With Revisions Made By The Court) (A)Authorizing Use of Cash
Collateral For Texas Competitive Electric Holdings Company LLC And Certain of Its
Affiliates, (B)Granting Adequate Protection, (C)Modifying The Automatic Stay, And
(D)Scheduling A Final Hearing [Docket #324] .................................................................. 146
Order (Interim) (With Revisions Made By The Court) (A)Approving Postpetition
Financing For Texas Competitive Electric Holdings Company LLC And Certain of Its
Debtor Affiliates, (B)Granting Liens And Providing Superpriority Administrative Expense
Claims, (C)Modifying The Automatic Stay, And (D)Scheduling A Final
Hearing [Docket #325] ......................................................................................................... 200

Energy Future Holdings: Venue Transfer & Related Pleadings (Volume 4 of 6)
Motion of Wilmington Savings Fund Society, FSB Pursuant to 28 U.S.C. 1408 & 1412
and Rule 1014 of the Federal Rules of Bankruptcy Procedure to Transfer Cases to the
United States District Court for the Northern District of Texas [Docket #5 (Replaced
Docket #2)] .............................................................................................................................. 16
Appendix to Motion of Wilmington Savings Fund Society, FSB Pursuant to 28 U.S.C.
1408 & 1412 and Rule 1014 of the Federal Rules of Bankruptcy Procedure to Transfer
Cases to the United States District Court for the Northern District of
Texas [Docket #3] ................................................................................................................... 56
Motion of Wilmington Savings Fund Society, FSB for Leave to Conduct Discovery
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure of Energy Future
Holdings Corporation, Its Affiliates, and Certain Third Parties [Docket #6] ............... 1,013
Appendix to Motion of Wilmington Savings Fund Society, FSB for Leave to Conduct
Discovery Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure of
Energy Future Holdings Corporation, Its Affiliates, and Certain Third
Parties [Docket #7] ............................................................................................................ 1,093
Debtors' Response and Partial Opposition to the Motion of Wilmington Savings Fund
Society, FSB Pursuant to Rule 2002 and 9006 of the Federal Rules of Bankruptcy
Procedure and 11 U.S.C. Section 105(a) to Shorten Notice of, and Schedule Hearings
on, (I) Request to Transfer Venue; and (II) Request to Conduct Discovery Under Rule
2004 [Docket #203] ........................................................................................................... 3,189
Debtors' Motion to Quash Notice of Deposition of Paul Keglevic Filed by Energy Future
Holdings Corp. [Docket #214] .......................................................................................... 3,196
Limited Joinder of the Ad Hoc Group of TCEH Unsecured Noteholders to the Motion of
Wilmington Savings Fund Society, FSB Pursuant to 28 U.S.C. 1408 & 1412 and Rule
1014 of the Federal Rules of Bankruptcy Procedure to Transfer Cases to the United
States District Court for the Northern District of Texas [Docket #225] ......................... 3,204
Limited Joinder of the Ad Hoc Group of TCEH Unsecured Noteholders to the Motion of
Wilmington Savings Fund Society, FSB for Leave to Conduct Discovery Pursuant to Rule
2004 of the Federal Rules of Bankruptcy Procedure of Energy Future Holdings
Corporation, Its Affiliates, and Certain Third Parties [Docket #226] ........................... 3,214

Bankruptcy Judge Christopher S. Sontchi Venue Transfer Precedent (Volume 5 of 6)
ASHINC Corporation (f/k/a Allied Systems Holdings, Inc.) [Case No. 12-11564]
Motion to Change Venue/Inter-district Transfer - Bankruptcy to the United States
Bankruptcy Court for the Northern District of Georgia, Atlanta Division Filed by
Allied Systems Holdings, Inc. [Docket #29] ................................................................. 16
Objection of the Petitioning Creditors to Motion of the Alleged Debtors to
Transfer Venue of these Involuntary Cases to the United States Bankruptcy Court
for the Northern District of Georgia, Atlanta Division Filed by BDCM Opportunity
Fund II, LP, Black Diamond CLO 2005-1 Adviser L.L.C., Spectrum Investment
Partners LP [Docket #51] ............................................................................................... 29
Order Denying Motion of Alleged Debtors to Transfer Venue of These Cases to
the United States Bankruptcy Court for the Northern District of Georgia, Atlanta
Division [Docket #60] ................................................................................................... 203
Transcript regarding Hearing Held 5/31/12 Regarding the Motion to Transfer
Venue [Docket #62] .................................................................................................... 205
Cordillera Golf Club, LLC [Case No. 12-11893]
Motion of Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary
Jackson and Kevin B. Allen, Individually and as Representatives of a Certified
Class of Members, to Transfer Venue [Docket #69] ................................................ 265
Joinder of Alpine Bank to the Motion of Cheryl M. Foley, Thomas Wilner, Jane
Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen, Individually and as
Members of a Certified Class of Members, to Transfer Venue [Docket #77] ...... 425
Motion of Cordillera Property Owners Association, Inc. and Cordillera
Metropolitan District to Transfer Venue to Colorado and Joinder in the Motion of
Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and
Kevin B. Allen, Individually and as Representatives of a Certified Class of
Members, to Transfer Venue [Docket #78] ............................................................... 435
Joinder of Alpine Bank to the Motion of Cordillera Property Owners Association,
Inc. and Cordillera Metropolitan District to Transfer Venue to
Colorado [Docket #95] ............................................................................................... 478
Joinder of the Official Committee of Unsecured Creditors in: (I) Motion of Cheryl
M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin
B. Allen, Individually and as Representatives of a Certified Class of Members, to
Transfer Venue; and (II) Motion of Cordillera Property Owners Association, Inc.
and Cordillera Metropolitan District to Transfer Venue to
Colorado [Docket #117] ............................................................................................. 480
Omnibus Objection to the Motions to Transfer Venue and/or Related Joinders
Filed By (I) Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary

Jackson and Kevin B. Allen, Individually and as Representatives of a Certified
Class of Members, (II) Alpine Bank, (III) Cordillera Property Owners Association,
Inc. and Cordillera Metropolitan District Filed by Cordillera Golf
Club, LLC [Docket #118] ............................................................................................. 490
Declaration of Daniel L. Fitchett, Jr. in Support of the Debtor's Omnibus Objection
to the Motions to Transfer Venue and/or Related Joinders Filed By (I) Cheryl M.
Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B.
Allen, Individually and as Representatives of a Certified Class of Members, (II)
Alpine Bank, (III) Cordillera Property Owners Association, Inc. and Cordillera
Metropolitan District Filed by Cordillera Golf Club, LLC [Docket #119] ................ 522
Joinder of Creditor Jeffrey Rush, M.D. as Trustee of the Rush Family Trust UTD May
8, 1985, to Objection of Debtor to (I) Motion of Cheryl M. Foley, Thomas Wilner,
Jane Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen, Individually and
as Representatives of a Certified Class of Members, to Transfer Venue, (II) Motion
of Cordillera Property Owners Association, Inc. and Cordillera Metropolitan
District to Transfer Venue to Colorado and Joinder in the Motion of Cheryl M.
Allen, Individually and as Representatives of a Certified Class of Members, to
Transfer Venue, and (III) Joinders of Alpine Bank in Venue Transfer
Motions [Docket #120] ................................................................................................ 526
Southlight Trust I's Joinder to Objection of Debtor to the Motion of Cheryl M.
Allen, Individually and as Representatives of a Certified Class of Members, to
Transfer Venue and Related Motions and Joinders by Alpine Bank, CPOA and the
District [Docket #121] ................................................................................................... 532
Declaration of Harold Bordwin in Support of and Joinder to Objection to Motion
to Change Venue Filed by Cordillera Golf Club, LLC [Docket #122] ................... 535
Joinder of Homeowner Walter Carey to Objection of Debtor to the Motion of
Members, to Transfer Venue and Related Motions and Joinders by Alpine Bank,
CPOA and the District [Docket #123] ....................................................................... 540
Joinder of Homeowner Dan Bennett to Objection of Debtor to the Motion of
Joinder Of David A. Wilhelm To Objection Of Debtor To (I) Motion Of Cheryl M.
Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B.

Allen, Individually And As Representatives Of A Certified Class Of Members, To
Transfer Venue, (II) Motion Of Cordillera Property Owners Association, Inc. And
Cordillera Metropolitan District To Transfer Venue To Colorado And Joinder In The
Motion Of Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary
Jackson And Kevin B. Allen, Individually And As Representatives Of A Certified
Class Of Members, To Transfer Venue, And (III) Joinders Of Alpine Bank In Venue
Transfer Motions [Docket #126] .................................................................................. 544
Joinder of Homeowner Joseph Perry to Objection of Debtor to the Motion of
Notice of Filing of Exhibits to (A) Declaration of Daniel L. Fitchett, Jr. in Support of
the Debtor's Omnibus Objection to the Motions to Transfer Venue and/or Related
Joinders Filed By (I) Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson,
Mary Jackson and Kevin B. Allen, Individually and as Representatives of a
Certified Class of Members, (II) Alpine Bank, (III) Cordillera Property Owners
Association, Inc. and Cordillera Metropolitan District and (B) Declaration of
Harold Bordwin in Support of and Joinder to Objection to Motion to Change
Venue [Docket #129] .................................................................................................. 548
Joinder of Homeowner Edward O'Brien to Objection of Debtor to the Motion of
Order Granting Motion To Change Venue to The United States Bankruptcy Court
for The District of Colorado [Docket #190] ............................................................... 558
Venue [Docket #195] .................................................................................................. 560
Saab Cars North America, Inc. [Case No. 12-10344]
Motion to Change Venue/Inter-district Transfer - Bankruptcy Filed by Saab Cars
North America, Inc. [Docket #16] .............................................................................. 768
Response of Caterpillar Logistics Services, LLC in Support of Motion of Saab Cars
North America to Transfer Venue of Case to Eastern District of
Michigan [Docket #34] ................................................................................................ 831
Opposition of the Dealer Franchisees to the Motion of the Alleged Debtor to
Transfer Venue to Michigan [Docket #35] ................................................................ 836

Reply in Support of Motion of Saab Cars North America, Inc. for Order Transferring
Venue of Case to Bankruptcy Court for the Eastern District of Michigan Filed by
Saab Cars North America, Inc. [Docket #38] .......................................................... 917
Exhibit A to Reply in Support of Motion of Saab Cars North America, Inc. for Order
Transferring Venue of Case to Bankruptcy Court for the Eastern District of
Michigan [Docket #40] ................................................................................................ 926
Order Denying Motion to Change Venue/Inter-district Transfer [Docket #44] ... 929
Venue [Docket #89] .................................................................................................... 930

Selected Kirkland & Ellis LLP Energy Industry Debtor Representation
Precedent (Volume 6 of 6)
Calpine Corp. [Bankr. S.D.N.Y. Case No. 05-60200]
Debtors' Sixth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of
the United States Bankruptcy Code [Docket #7237] ................................................ 16
Findings of Fact, Conclusions of Law, and Order signed on 12/19/2007 Confirming
Sixth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the
Bankruptcy Code [Docket #7256] ............................................................................. 110
Edison Mission Energy [Bankr. N.D. Ill. Case No. 12-49219]
Order Confirming Joint Chapter 11 Plan of Reorganization (Confirmed Third
Amended Joint Chapter 11 Plan of Reorganization (with Technical Modifications)
Attached as Exhibit A) [Docket #2206] ..................................................................... 152
Longview Power, LLC [Bankr. D. Del. Case No. 13-12211]
First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the
Bankruptcy Code [Docket #1139] ............................................................................. 252
North American Petroleum Corporation USA [Bankr. D. Del. Case No. 10-11707]
First Amended Joint Chapter 11 Plan [Docket No. 970] ......................................... 376
Findings of Fact, Conclusions of Law and Order Confirming the First Amended
Joint Chapter 11 Plan [Docket No. 1056] .................................................................. 418

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Case 12-11564-CSS Doc 29-2 Filed 05/21/12 Page 1 of 13
1 UNITED STATES BANKRUPTCY COURT
2 DISTRICT OF DELAWARE
3 Case No. 12-11564(CSS)
4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
5 In the Matter of:
6
7 ALLIED SYSTEMS HOLDINGS, INC.,
8
9 Debtors.
10
11 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
12
13 United States Bankruptcy Court
14 824 North Market Street
15 Wilmington, Delaware
16
17 May 31, 2012
18 2:12 PM
19
20
21
22 B E F O R E :
23 HON CHRISTOPHER S. SONTCHI
24 U.S. BANKRUPTCY JUDGE
25 ECR OPERATOR: LESLIE MURIN
Page 1
VERITEXT REPORTING COMPANY
212-267-6868 www.veritext.com 516-608-2400
Case 12-11564-CSS Doc 62 Filed 06/05/12 Page 1 of 60
1 HEARING RE: Motion of Alleged Debtors to Transfer Venue of
2 these Cases to the United States Bankruptcy Court for the
3 Northern District of Georgia, Atlanta Division.
4
5 HEARING RE: Motion of Alleged Debtors to File Unrelated
6 Version of the Motion of Alleged Debtors to Transfer Venue
7 of these cases to the United States Bankruptcy Court for the
9
10
11
12
13
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25 Transcribed by: Sheri Monroe
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1 A P P E A R A N C E S :
2 RICHARDS, LAYTON & FINGER, P.A.
3 Attorneys for the Debtors
4 One Rodney Square
5 920 North King Street
6 Wilmington, DE 19081
7
8 BY: CHRISTOPHER M. SAMIS, ESQ.
9 MARK D. COLLINS, ESQ.
10
11 TROUTMAN SANDERS
12 Attorney for the Debtors
13 600 Peachtree Street, NE
14 Suite 5200
15 Atlanta, GA 30308-2216
16
17 BY: JEFFREY W. KELLY, ESQ.
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1 LANDIS RATH & COBB, LLP
2 Attorney for Petitioning Creditors
3 919 Market Street
4 Suite 1800
6
7 BY: KERRI K. MUMFORD, ESQ.
8
9 SCHULTE ROTH & ZABEL, LLP
11 919 Third Avenue
12 New York, NY 10022
13
14 BY: ADAM HARRIS, ESQ.
15 VICTORIA LEPORE, ESQ.
16
17 LATHAM & WATKINS, LLP
18 Attorney for Yucaipa
19 355 South Grand Avenue
20 Los Angeles, CA 90071
21
22 BY: ROBERT KLYMAN, ESQ.
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24
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1 YOUNG CONAWAY STARGATT & TAYLOR, LLP
3 Rodney Square
6
7 BY: JOSEPH BARRY, ESQ.
8
9 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON, LLP
10 Attorney for The CIT Group
11 One New York Plaza
13
14 BY: GARY KAPLAN, ESQ.
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1 APPEARANCES: (Telephonically)
2 CATHY COPPAGE, Paul Hastings, LLP
3 SARAH BOEHM, McGuire Wood, LLP
4 PEG BRICKLEY, Dow Jones & Co.
5 THEO CIUPITU, Jack Cooper
6 EZRA H. COHEN, Troutman Sanders, LLP
7 RICHARD EHRLICH, Black Diamond Capital Management
8 ERIN KIM, Pension Benefit Guaranty Corp.
9 STEPHEN S. LAPLANTE, Miller Canfield Padock & Stone
10 DANIELLE SALTZ, Ford Motor Company
11 JEFFREY A. SCHAFFER, Spectrum Group
12 DEREX WALKER, Derex Walker
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1 P R O C E E D I N G S
2 THE COURT: Please be seated. Good afternoon.
3 MR. SAMIS: Your Honor, good afternoon. Your
4 Honor, for the record, Chris Samis of Richards, Layton &
5 Finger here today on behalf of the alleged debtors. Your
6 Honor, with me at counsel table is my colleague, Mr. Collins
7 as well as our co-counsel, Mr. Jeffrey Kelly of the Troutman
8 Sanders firm. Your Honor, also in the courtroom is Mr. John
9 Blount, the general counsel and chief administrative officer
10 of the debtors.
11 Your Honor, todays agenda only has one item of
12 any moment. The matter is a motion to transfer venue,
13 however, Your Honor, it is probably important to note that
14 Agenda Item Number 2 Your Honor entered the order on that,
15 that was the seal motion that was related to the motion to
16 transfer venue. And the order actually covers several other
17 seal motions as well that arent calendared for the hearing
18 today.
19 But, Your Honor, with that I turn the podium over
20 to Mr. Kelly.
21 THE COURT: All right. Thank you.
22 MR. KELLY: Good afternoon, Your Honor. May it
23 please the court, Jeff Kelly, for the record. Mr. Blount
24 has already been introduced by Mr. Samis.
25 The alleged debtors evidence today, Your Honor, in
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1 their support of their motion to transfer venue will consist
2 of facts set forth in the declaration of Scott Macaulay,
3 which was filed on May 21st. Its Docket Number 30, as
4 supplemented by my proffer of certain facts that Mr. Blount
5 would testify to if called as a witness.
6 I will mention that Mr. Harris and I spoke prior
7 to the hearing and Ive agreed that the facts that hes set
8 forth in his response are stipulated to and he need not call
9 any witnesses to establishes those facts and hes agreed
10 that I need not have Mr. Macaulay present today to back up
11 his declaration. Mr. Macaulay is, in fact, back in Atlanta
12 working on other issues related to this matter.
13 Your Honor, what I propose to do is proffer the
14 alleged debtors evidence in summary form and secondly, to
15 show that due to the still pending Allied Chapter 11 cases
16 in Atlanta under Bankruptcy Rule 1014B, it is up to Judge
17 Mullens (phonetic) in Atlanta to decide where these cases
18 should proceed.
19 THE COURT: Well then why havent you asked him?
20 MR. KELLY: Well, Your Honor, we havent asked him
21 because the situation that was presented to us was a motion
22 for appointment of a trustee with a motion to shorten time.
23 And we thought it prudent to go ahead and just raise with
24 Your Honor, immediately, the venue issue rather than having
25 competing motions going on in two different courts.
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1 And then at the status conference last week, Your
2 Honor, I think indicated that you would take up the issue of
3 venue today and decide whether or not 1014B applied, because
4 there were certain factual issues you wanted to have
5 addressed, which Im prepared to do today.
6 THE COURT: Okay.
7 MR. KELLY: Basically, the short answer is for us
8 not to set up competing motions in two different bankruptcy
9 courts.
10 Now, the last thing I intend to do today is to
11 show how the facts in any event demonstrate that both the
12 convenience of the parties and interest of justice lead to
13 the conclusion that venue of these cases should be
14 transferred to the bankruptcy court in Atlanta.
15 Your Honor, a unique circumstance that we have
16 intertwined in this situation is the alleged debtors desire
17 to maintain confidentiality of certain information for the
18 time being. Thats information thats been redacted from
19 our public filings. Were doing that in order to try to
20 limit the damage to the alleged debtors business, we believe
21 caused by these precipitous and unexpected, involuntary
22 filings. I will refer, from time to time, during my
23 presentation, to redacted information for that reason.
24 Your Honor, I would proffer through Mr. Blount,
25 who is here, and his first hand knowledge --
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1 THE COURT: Lets stop here just a second. Is
2 there any objection to, at least from an evidentiary basis,
3 proceeding as Mr. Kelly has outlined? None?
4 MR. HARRIS: I have no objection.
5 THE COURT: All right. So, well admit the
6 declaration of Mr. Macaulay, Docket Item 30, into evidence
7 without objection. And you may proceed with the proffer.
8 MR. KELLY: Thank you, Your Honor.
9 Mr. Blount, who is here in court today, has
10 firsthand knowledge of the redacted facts and he would
11 support those facts if called as a witness.
12 I do need to be clear, however, that Mr. Blount
13 does not have firsthand knowledge as to whether the
14 petitioning creditors were aware of the alleged debtors
15 redacted facts at the time that they filed the involuntary
16 petitions.
17 Your Honor, turning to the facts that are public,
18 with respect to Mr. Macaulays declaration, I would like to
19 just go to that declaration and make a summary proffer or
20 the pertinent parts.
21 The alleged debtor, Allied Systems Holding is the
22 ultimate parent of about 20 other companies including the
23 other alleged debtor, Allied Systems, Ltd.
24 Allied Systems Holdings, which Im going to refer
25 to as -- simply as Holdings, is a privately held Delaware
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1 Corporation headquartered in Atlanta. Holdings has three
2 direct subsidiaries, Allied Automotive Group, Inc., which is
3 a Georgia corporation, Access Group, which is also a Georgia
4 corporation and a captive insurance company incorporated
5 under the laws of the Cayman Islands.
6 Allied System Ltd., which is the other alleged
7 debtor aside from Holdings is a Georgia limited partnership
8 and is a subsidiary of Allied Automotive Group.
9 Holdings, itself, Your Honor, does not directly
10 engage in Allieds line of business. Allieds major line of
11 business is carried out by Georgia Corporation -- Allied
12 Automotive Group, Inc. and its direct and indirect
13 subsidiaries again, including the other alleged debtor
14 Allied Systems.
15 This major line of business is the car haul
16 business, basically its the transport of light vehicles,
17 such as automobiles from port -- the points of manufacturer
18 or other points of drop off, such as train railheads to
19 automobile dealerships throughout the United States and in
20 Canada.
21 Allieds major customers are automobile
22 manufacturers, including primarily Ford at this point.
23 Allied Automotive Group transports these vehicles by means
24 of specialized tractor trailers which are rigs. As of the
25 end of 2011, Allied owned about 2,400 rigs operated out of
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1 about 44 terminals, most of which are leased and located
2 within and throughout the United States and in Canada. None
3 are located in Delaware, two of the terminals are located in
4 Georgia, although one of those is used primarily as place
5 where parts are kept and stored for repairing or
6 refurbishing rigs.
7 Allied Automotive Groups drivers and most of its
8 terminal employees are unionized. These employees are
9 called the Teamster employees, Ill refer to them that way
10 are members of the local unions affiliated with the
11 International Brotherhood of Teamsters, which negotiates on
12 behalf of these local unions. Allied employs about 1,835
13 people of whom about 1,000 or so are Teamster employees.
14 Theres a smaller line of business that Allied is
15 in carried about by another Georgia Corporation, Access.
16 Access is essentially a logistics business for the
17 automotive industry in the United States and Canada, with
18 some yards service management carried out in Mexico.
19 The access group operates from 39 terminals
20 located in the United States, Canada, Mexico, none in
21 Delaware.
22 Turning to the first case, briefly, Your Honor,
23 the pending case thats ready to be closed. The alleged
24 debtors and most of their direct and indirect subsidiaries
25 were reorganized in Chapter 11 cases that were filed in the
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1 Northern District of Georgia in July of 2005, according to a
2 plan that was confirmed by Bankruptcy Judge, Ray Mullens in
3 May of 2007.
4 And when I say the alleged debtors were
5 reorganized, holdings as set forth in Mr. McCaulays
6 declaration is the successor by merger to the original
7 holding company, Allied Holding, Inc., that was the ultimate
8 parent at the time the Chapter 11 case was filed. When the
9 plan and reorganization was confirmed, Holding was created
10 as the subsidiary of the original holding company and then
11 merged into Holding, which is the surviving corporation.
12 In it, I mentioned, although the original Chapter
13 11 case is, in fact, ready to be closed, in fact, it is
14 still pending by Allied at this time.
15 THE COURT: Is Allied Systems Holdings, Inc. a
16 debtor in possession in the Chapter 11 in Georgia with a
17 known case number?
18 MR. KELLY: It is not a debtor in possession, it
19 is a successor to the original holding company. It was
20 created under the plan and its stock was issued under the
21 plan to general unsecured creditors of Allied --
22 THE COURT: Have those been operating free and
23 clear of any jurisdiction of the bankruptcy court?
24 MR. KELLY: Allied Systems Holding?
25 THE COURT: Yes.
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1 MR. KELLY: Except to the extent that its -- Im
2 sorry, Your Honor, I brushed up against the microphone.
3 THE COURT: Its okay.
4 MR. KELLY: Except to the extent that the ongoing
5 administration, which is one of the reasons that its taken
6 so long, has included issuing its stock to general unsecured
7 creditors.
8 But, its -- in fairness, it was not a debtor in
9 possession, it is the entity created under the plan as a
10 successor to a debtor in possession.
11 Your Honor, in the original case Chapter 11 case,
12 the goals were three fold, to increase revenue by increasing
13 customer pricing, to deleverage by conversion debt to
14 equity, which was I referred to a moment ago when I said
15 that Allied -- the current holding stock has been issued to
16 debt -- thus converting debt to equity.
17 And the third goal was to reduce labor costs
18 through reductions in compensation and changes in the work
19 rules with respect to the Teamsters, not to mention shared
20 sacrifice by non-union employees.
21 These goals were largely achieved in the first
22 case, Your Honor, with aid to Yucaipa Private Equity Funds.
23 During the original Chapter 11 case, Yucaipa, among other
24 things, was the catalyst for obtaining an agreement with the
25 teamsters to reduce labor costs for three years and finance
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1 the acquisition of additional rigs for Allied.
2 It supported a plan, this plan that converted
3 general unsecured debt into equity and aided Allied in
4 obtaining exit financing which it had to have to emerge from
5 bankruptcy, thats the same exit financing that we currently
6 -- that Black Diamond Spectrum and Yucaipa are both members
7 of. Yucaipa and the Teamsters, Your Honor, joined the
8 debtors as proponents of Allieds plan and Ive already
9 stated that the stock with issued to creditors and so forth.
10 Your Honor, turning to some of the more -- the
11 dryer venue related facts, Allied does not own any real
12 estate of other tangible outsets in Delaware and it has no
13 creditors doing business with it from Delaware.
14 Upon information and belief none of our employees
15 reside in Delaware, our headquarters are located in Atlanta,
16 with a smaller satellite office in Detroit. We currently
17 have 73 employees working out of our Atlanta headquarters,
18 another 55 employees working out of the Atlanta area
19 terminal that I mentioned, in Georgia.
20 Allied does own and lease real estate in Georgia.
21 None of our members of the board reside in Delaware. One
22 member of our board does split his residence between Georgia
23 and Michigan.
24 Virtually, and Ill come back to this in a moment,
25 virtually all of our key employees reside in Atlanta.
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1 Outside counsel, me are located in Atlanta. Given the
2 international presence of Allied, our creditors are spread
3 out over a wide geographic area. Theres a lot of real
4 estate to Michigan in that regard because of our ties to the
5 automotive industry.
6 We do not think any of our creditors interact
7 with us from locations in Delaware, Your Honor.
8 We fully respect to Mr. McCaulays statement that
9 Allieds key employees reside in Atlanta, Mr. Blount, who
10 again, is here today, would testify that it would fall to
11 him and Mr. Macaulay, both of whom reside in Atlanta, to be
12 witnesses for the alleged debtors in bankruptcy court
13 hearings.
14 Mr. Blount would further testify that due to cost
15 cutting moves necessitated by the recession as it has
16 impacted Allieds business in particular, the executive team
17 is currently stretched very thin as evidenced by the
18 numerous titles that Mr. Blount, himself has. And that it
19 would be and is a significant disruption to Allieds day to
20 day business for either or both him and/or Mr. Macaulay to
21 consume a day or more to travel to Delaware for court
22 hearings, as opposed to the far less oneness trip, if you
23 will, of getting in their car and driving 20 minutes from
24 the headquarters to the bankruptcy court in Atlanta.
25 Your Honor, those facts, along with the redacted
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1 facts that Mr. Blount also supports are the basis of our
2 venue transfer motion. I believe that in order of logical
3 progression, I would first take up the issue of the impact
4 of Bankruptcy Rule 1014B on the situation before the court.
5 THE COURT: Well, lets -- do you -- Mr. Harris,
6 do you want to cross-examine or with to cross-examine the
7 witness?
8 MR. HARRIS: I do not, Your Honor.
9 THE COURT: Okay. Very good. All right. You
10 can keep going.
11 MR. KELLY: Thank you, Your Honor. To paraphrase
12 Rule 1014B with respect to the present situation provides
13 that if cases are filed in different districts against a
14 debtor or an affiliate on motion filed in the district where
15 the petition first filed is pending, that court, that is the
16 court where the petition first filed is pending, may
17 determine in the interest of justice or for the convenience
18 of the parties in which district the case should proceed.
19 THE COURT: Uh-huh.
20 MR. KELLY: Here, Your Honor, the facts are that
21 the Atlanta Chapter 11 case of one of the alleged debtors,
22 which is the Georgia corporation, Allied Systems Ltd.,
23 which was a debtor in possession, Your Honor, in the first
24 case, is still pending. In all candor, the case is ready to
25 be closed. Judge Mullens recently signed an order resolving
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1 a very large administrative claim in that case. The Central
2 States claim, its a multi-employer fund thats related to
3 the Teamsters, that was one of the last large matters that
4 was left undone. I think that was resolved within the last
5 month or so. The case, thus in all candor, is ready to be
6 closed, but it is still pending, it has not been closed.
7 With respect to the other situation, moreover the
8 still pending Atlanta cases are clearly cases of affiliates
9 and that word does appear in the rule, as that word is used
10 in 1014B, of the other alleged debtor, Holdings.
11 So, in other words, the still pending cases are
12 cases of affiliates of Holdings.
13 So, to summarize, one of the alleged debtors is a
14 debtor in possession and is still pending cases in Atlanta,
15 the other is an affiliate of those debtors in possession and
16 its still a pending case.
17 THE COURT: Well, if you look at 1014 -- granted
18 all that. So, lets assume that -- I think fairly assume
19 that for purposes of 1014B, at least initially, that both of
20 the purported debtors in this case have -- are related to
21 cases pending in Georgia that are open.
22 It says that, in that case, it says that the court
23 may determine -- and it doesnt really -- so let me ask you,
24 which court?
25 MR. KELLY: Well, its just a matter of -- the way
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1 I read it is, its the court where the petition first filed
2 is pending.
3 THE COURT: Right.
4 MR. KELLY: Thats the way I -- I think the clear
5 reading of the ruling is.
6 THE COURT: All right. So, the Georgia court may
7 determine -- so, two questions, what if the Georgia court is
8 never asked or the Georgia court is asked and never makes a
9 decision, what happens?
10 And why thats important is, you have two pending
11 cases -- and what it really comes down to the last sentence,
12 which is sticky, that says the proceedings on other
13 petitions shall be stayed by the courts in which they have
14 been filed until the determination is made by the first
15 court.
16 So, in this instance and, again, it is what it is,
17 you havent asked Judge Mullens or its -- since its, they
18 determine, I suppose its possible you could ask a judge and
19 that judge simply never make a determination or say its not
20 going to make a determination. And were stuck in a
21 situation where we dont know what the determination is and
22 this court is stayed from doing anything further, so what
23 happens?
24 MR. KELLY: Ill respond directly. In partial
25 response, my experience with Judge Mullens is he promptly
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1 rules on everything thats brought before him, that
2 particular judge. And again, it was my intention -- and I
3 considered filing something in front of Judge Mullens until
4 we had our status conference last week --
5 THE COURT: Right.
6 MR. KELLY: -- where Your Honor -- I think Your
7 Honor, appropriately, said you wished to consider whether
8 1014B, in fact, had application here because of some factual
9 questions here.
10 I think you present a difficult hypothetical if
11 the other judge is asked and never rules. As I read the
12 statute, I dont think the stay becomes affective unless I
13 ask the other court.
14 THE COURT: Well, yeah -- and thats my question.
15 MR. KELLY: I dont think there is a stay.
16 THE COURT: It says, if positions are commenced --
17 it says upon motion filed in the district where its first
18 pending. So, if you havent filed that motion, in effect,
19 1014B is inapplicable. Which leads us to the situation
20 where basically the answer would be, I dont have to worry
21 about whats going on or has gone on and what the situation
22 is in Georgia, I can simply make a decision on the merit of
23 the transfer venue motion, based on the normal transfer
24 venue rules as opposed to whatever rules might be -- might
25 be more focused on 1014B.
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1 MR. KELLY: Well, Your Honor, if thats your
2 conclusion, Ill --
3 THE COURT: Well no, youre here to argue with me
4 if you want or agree with me if you want. I mean, Im not
5 trying to --
6 MR. KELLY: Well, I think the way I understood the
7 result of the status conference was that, Your Honor was
8 going to consider what -- a factual issue relating to 1014B,
9 which probably resolved -- revolved around what is --
10 THE COURT: Well, we had a discussion at the
11 status conference about whether they were actually -- you
12 know, one of the debtors was not a debtor in Georgia and
13 whether that debtor might be considered a debtor because it
14 was a successor by merger and then, frankly, I dont
15 remember much of a discussion about the other debtor, the
16 limited --
17 MR. KELLY: We didnt talk about that one.
18 THE COURT: -- liability company. Right.
19 MR. KELLY: Right.
20 THE COURT: So, were kind of -- if were talking
21 about the factual issue -- and I did say this, Im trying to
22 whip saw you, that according to the factual issue, at this
23 point I think its fair to say that there are existing
24 cases, ie a debtor and a debtor affiliate in Georgia, that
25 would seem, at least to imply 1014B was applicable.
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1 So, then, assuming that is the case and you
2 havent asked Judge Mullens and again, I understand why,
3 what do I do? Do I just say, well, I dont do anything and
4 send you to Georgia, which seems like a big waste of time
5 and effort, but if the rule says thats what I have to do,
6 thats what I have to do. Or do I have some sort of
7 discretion to make a decision on the merits of the motion?
8 MR. KELLY: Your Honor, as we stand here today,
9 you have the discretion to make the decision on the merits
10 because Ive not asked Judge Mullens, Ive not filed
11 anything in front of Judge Mullens. I believe thats what
12 the situation is. Its a fair reading of the rule.
13 Again, Im reacting to in part -- in terms of the
14 path Ive chosen to the courts and there was just a status
15 conference to the courts statement that you wanted to
16 consider 1014B and if you decided to move it to Atlanta
17 maybe your observations on venue would be of value to Judge
18 Mullens so on and so forth.
19 So, it just didnt seem to me judicially
20 economical, if thats the right way to say it, for me to go
21 off after that status conference and file a motion in front
22 of Judge Mullens --
23 THE COURT: Yeah. And Im not --
24 MR. KELLY: -- knowing that this hearing was
25 coming up.
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1 THE COURT: Im getting the impression you feel
2 like Ive set you up and now Im --
3 MR. KELLY: No, I dont. I dont -- I dont --
4 Im trying to answer your question.
5 THE COURT: Yeah. And I wasnt intending to do
6 that, Im just trying to flush out the --
7 MR. KELLY: And I in all candor expect Your Honor
8 to make a decision or if Your Honors prepared to, on the
9 merits of the venue transfer motion.
10 THE COURT: Okay.
11 MR. KELLY: It is what it is, but the situation
12 that we have is that we have 1014B --
13 THE COURT: Right. So, lets assume -- forget
14 about 1014B for now. So, lets talk about the merits of the
15 venue transfer motion and the argument made by the
16 petitioning creditors that I simply, until theres an order
17 for relief entered, cant go forward with the transfer venue
18 motion anyway.
19 Although, I would point out, by the way, that
20 1014B talks about petitions, it doesnt talk about orders
21 for relief, but anyway --
22 MR. KELLY: Yes, thats one of the things I was
23 going to say, Your Honor. With respect to that argument
24 that they -- as a preliminary matter argue that Your Honor
25 cannot consider the motion because no order for relief has
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1 yet been granted. They first raise Bankruptcy Rule 1011E,
2 which provides that quote, that no pleadings other than an
3 answer may be filed in response to an involuntary petition.
4 Your Honor, the petitioning creditors, I submit, are just
5 flat wrong on that assertion, because a motion which is what
6 is before the court today is not a quote, pleading.
7 Pleadings have a specific meaning under Federal
8 Rules Procedure 7, incorporated by Bankruptcy Rule 7007,
9 theyre listed there. Pleadings are a complaint, an answer,
10 an answer to a counter-claim, so on and so forth. This
11 motion is not a pleading. This conclusion is made even more
12 clear, Your Honor, by the very next sub-section of
13 Bankruptcy Rule 1011B, petitioning creditor cites 1011E for
14 the proposition, which I think is incorrect. But 1011F, the
15 very next sub-section acknowledges that if entities respond
16 to involuntary petitions by a pleading, a motion or other
17 response, they must file a designated statement.
18 In other words, Rule 1011 itself expressly
19 differentiates between pleadings and the motion thats
20 before this court, so I dont think, for that reason, 1011E
21 prohibits Your Honor from considering this motion.
22 They next cite a couple of cases, which Ill move
23 to just very briefly. The David J. Ross case, which they
24 cite on this point, is off the mark because that case
25 considered only the issue of whether a counter-claim, which
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1 is a pleading, a counter-claim for attorneys fees, was
2 permissible -- was a permissible type of response to an
3 involuntary petition. Again, what we have here is a motion,
4 not a pleading, before the court today.
5 The footnote from the Raytech (phonetic) case that
6 they cite, is a 1998 opinion from the Bankruptcy Court in
7 Connecticut. They cite that on Page 6 of their response, is
8 the only case they cite to support this proposition, that
9 the venue motion is premature. Raytech does touch on this
10 issue, Your Honor, but only in passing. The court in
11 Raytech was not ruling on a motion to transfer venue, but on
12 whether a venue challenge had been waived by a creditors
13 committee in a previous case where no order for relief had
14 been entered.
15 On that point, I can speculate with some
16 confidence, Your Honor, that if I had not raised the venue
17 motion when I did in this court, in response to the
18 emergency motion for an appointment of a trustee, I believe
19 the alleged debtors would have been faced with an assertion
20 from the petitioning creditors that we had waived venue, by
21 not raising it while we were engaging on the trustee motion.
22 So, Your Honor, as I said at the status
23 conference, this is a -- the filing of this petition
24 commenced the case, under 303 -- I believe its 303B. 1412
25 talks about transferring cases. I believe a case is before
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1 Your Honor that 1412 applies to and it seems to me at least
2 that common sense dictates an a gating issue in this case is
3 to determine which court should handle the case from this
4 point forward.
5 So, thats my response on their issue that its
6 premature.
7 Id like to turn, finally, to -- if I may to what
8 Ill call the merits of the venue transfer motion.
9 THE COURT: Okay.
10 MR. KELLY: The issues of convenience of the
11 parties and interest of justice. I submit in favor of a
12 venue transfer to Atlanta. The petitioning creditors take
13 issue in their papers with alleged debtors reliance upon the
14 12 part test set forth in the 3rd Circuit Case of Jamara
15 (phonetic), and instead point to the six part test in the
16 5th Circuit Commonwealth Oil opinion.
17 However, as cited in our papers, Your Honor, both
18 Judge Fitzgerald who is sitting as a Delaware judge, once
19 you made the ruling and Judge Walrath have analyzed venue
20 transfer motions under the Jamara standards.
21 Judge Fitzgerald even stated in her innovative
22 communications opinion that the Commonwealth Oil test was a
23 case decided under the Bankruptcy Act, which applied a
24 stricter test of venue transfer then was currently the
25 situation under the code.
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1 Your Honor, I submit that the transfer motion
2 should be granted under either the Jamara test or the
3 Commonwealth Oil standards.
4 As Ill get to in a moment, very briefly, I
5 believe that the factors that are applicable here under both
6 tests are either neutral or favor transfer.
7 As we pointed out in our motion, these issues,
8 these venue transfer motions are -- seem to be decided on a
9 case by case basis. In fact, many of the opinions say its
10 a case by case analysis and the test of convenience to the
11 parties and interest of justice are to be broad and flexible
12 standards as set forth in the Manville opinion that we cite.
13 The interest of justice standard, in particular,
14 contemplates a consideration of whether transferring venue
15 would promote the efficient administration of the estate and
16 judicial economy.
17 The factors that favor transfer in this case are
18 Number 1, that Delaware is more costly, Your Honor, and more
19 disruptive due to travel -- for the presence of Mr. Blount
20 and Mr. Macaulay, to be present as witnesses at sustentative
21 hearings in this case.
22 Theres reference in the petitioning creditors
23 papers to lawyers only appearing at most hearings. The
24 attendance of witnesses for the debtor at hearings is
25 somehow not necessary. Thats not the way Ive ever run a
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1 debtors case, Your Honor. In my experience Im always
2 going to have -- in this particular case, either Mr.
3 Macaulay or Mr. Blount present with me to support evidence
4 at any substantive hearing.
5 Moreover, its my experience that having the
6 gentlemen in those positions present, knowledgeable key
7 employees, promotes efficient administration of the case
8 because the opportunity to act with other -- interact with
9 other constituents and their counsel before and after the
10 hearings.
11 Moreover, Your Honor, contrary to the petitioning
12 creditors statement in their papers, its not necessary that
13 employees attend hearings, I would just point out that in
14 Allied 1, on more than one occasion we had courtroom packed
15 with employees, mostly Teamster employees who took a great
16 interest in that case. And we dont think we have any
17 Teamster employees in Delaware.
18 THE COURT: Well, where did the Teamster guys that
19 attended the hearing from Atlanta come from, do you know?
20 MR. KELLY: Most of them were from Atlanta, some
21 drove from Kentucky. There was a fair number from Kentucky,
22 because that was one of the more, shall I say interested,
23 local unions in what we were trying to do. They may have
24 come from other locations, but as I recall we were talking
25 about Kentucky and Atlanta.
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1 It was Kentucky because of a large facility
2 located there that manufactured a certain kind of vehicle
3 that was being transported by Allied.
4 THE COURT: Corvettes?
5 MR. KELLLY: It was Corvettes.
6 THE COURT: Bowling Green, then?
7 MR. KELLY: Yes.
8 THE COURT: Very good. I have a good friend --
9 two good friends who used to be managers -- senior managers
10 in that plant. Thats the only reason I know.
11 MR. KELLY: And the Teamster official that we
12 interacted with primarily during that first case was
13 actually from Kentucky, I think originally came from that
14 union, if Im -- that local union, if Im not mistaken. So,
15 thats why there was such a Kentucky connection at that
16 time.
17 THE COURT: Okay.
18 MR. KELLY: Now, the Jamara court expressed the
19 convenience of the parties test with a modifier, and Im
20 quoting, as indicated by the relative financial condition.
21 As I read that, I argue the following; here the alleged
22 debtors relative financial condition as compared to the
23 petitioning creditors, which, by the way, I believe, are the
24 only parties that are opposing this motion -- parties of
25 interest that are opposing this venue transfer motion. Im
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1 not aware of anybody else opposing this. We have two
2 minority members of our first lien group who are opposing
3 this venue transfer, nobody else to my knowledge.
4 But the relative financial condition militates in
5 favor of a transfer. In other words, under the Jamara test,
6 as I read it, the inconvenience to Allied is more important
7 than the inconvenience to the petitioning creditors, because
8 of our relative financial condition.
9 The parties choice of forum is also important
10 under Jamara and Your Honor indicated in the Saab ruling,
11 which Ive read, and you know better than any of us here
12 what you meant when you said it, but you said generally its
13 the debtors choice of where to file. I know thats a case
14 where you didnt grant the debtors motion because it was
15 primarily a liquidation case and you said it was a coin flip
16 even in that situation as I read the transcript.
17 Here, were not looking at that kind of a case,
18 Your Honor. Clearly, the alleged debtors choice is Atlanta,
19 where their first Chapter 11 case took place. Theres also
20 redacted information, Your Honor, that is pertinent to the
21 choice of forum issue. Im near the end of my presentation,
22 Your Honor.
23 And finally, the fact that we already have a
24 bankruptcy judge, Judge Mullens, familiar with Allied and
25 most of the parties in interest, Yucaipa, the Teamsters.
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1 Hes familiar with the exit loan facility and so forth,
2 means that efficient administration of these cases would be
3 promoted by the transfer.
4 In our motion, we did say that Judge Mullens would
5 probably, I use the word probably be assigned to this case
6 if transferred. I said that out of not wanting to appear,
7 frankly, to the Bankruptcy Court in Atlanta, in a public
8 filing, as being presumptuous as to case assignments in
9 Atlanta.
10 But the petitioning creditors made an issue out of
11 that in their responsive papers saying I only said probably.
12 I will state unequivocally, its my understanding, I
13 practice in Atlanta, obviously, that the way case assignment
14 is handled in Atlanta, that this, in effect, Chapter 22 case
15 of Allied would be assigned to Judge Mullens. Hes now the
16 chief judge, I dont know how it works, I suppose if he
17 doesnt want it he wouldnt keep it. But under case
18 assignment rules, as I understand them, they would assigned
19 to Judge Mullens.
20 There is also redacted material raised by the
21 petitioning creditors regarding the similarity of issues in
22 the second case as to what transpired in the first case,
23 Your Honor. And I would take issue that that is a
24 distinction with a difference.
25 I think, Your Honor, that the other factors to the
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1 extent that theyre applicable be it under Jamara or
2 Commonwealth Oil, are neutral. Proximity of the creditors
3 is neutral. Our creditors are spread out, none of them are
4 in Delaware, I might add, but our creditors are spread out.
5 The Teamsters, Your Honor, and the other parties
6 in interest and our creditors in the first case, had no
7 problem that Im aware in appearing and being heard and
8 having their claims handled in Allied 1 in Atlanta. I have
9 no reason to think that the Teamsters or other parties in
10 interest or our creditors will have any different result --
11 or any problem appear in Atlanta in the second case.
12 As to the petitioning creditors themselves, Your
13 Honor, they knew when they bought into this first lien
14 facility after the plan was confirmed, that they were buying
15 -- becoming lenders to an operation headquartered in
16 Atlanta, subject to still pending Chapter 11 cases, which
17 were then very much more active when they bought the debt
18 and being administered in Atlanta.
19 Your Honor, I submit the location of the debtors
20 assets is a neutral factor and I really cant think of any
21 other factors that I need comment on, although I will if
22 asked, but nothing else occurs to me.
23 Its primarily, Your Honor, efficient, economic
24 administration of the estate due to my -- the location of my
25 witnesses, coupled with Judge Mullens familiarity with the
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1 basic situation.
2 So, Your Honor, for all those reasons, we
3 respectfully request that the court grant the motion and
4 transfer venue of these cases to Atlanta under 28 USC 1412.
5 THE COURT: Thank you. Mr. Klyman.
6 MR. KLYMAN: Good afternoon, Your Honor. For the
7 record, Robert Klyman of Latham Watkins, LLP on behalf of
8 the Yucaipa companies, which as Mr. Kelly mentioned are
9 significant lenders to the current alleged debtor.
10 Your Honor, Yucaipa, for the record, is the holder
11 of 135,000,000 of the 235,000,000 principle amount of first
12 lien debt. Those numbers are principle amount numbers, not
13 accrued and unpaid interest numbers.
14 Yucaipa also holds 20,000,000 in principle amount
15 of the 30,000,000 second lien debt. Yucaipa holds all the
16 preferred stock and 63 percent of the common stock and I
17 rise in support of the debtors motion to transfer venue.
18 What this motion boils down to is essentially the
19 following; should Black Diamond, which appears in cases
20 throughout the country be compelled to have its lawyers
21 appear in Atlanta?
22 And I should note, Your Honor, that before this
23 hearing I Googled Black Diamond and bankruptcy cases and
24 discovered that in recent years theyve appeared in
25 California, Shreveport, Louisiana, Tennessee, New York,
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1 Delaware and elsewhere.
2 But could Allied stretch management, which now has
3 two day jobs, running the business and dealing with a
4 bankruptcy case, be compelled to participate in a case and
5 attend hearings in Delaware as opposed to a court in Atlanta
6 thats 20 minutes away?
7 This is about keeping a management team focused
8 and in Atlanta to conduct the business of the debtor and
9 maximize value for all stakeholders, of which Yucaipa is by
10 far the largest.
11 In addition, as Mr. Kelly mentioned, the debtor
12 seeks to have its bankruptcy occur in a forum before a judge
13 that knows most of the players and the history and the
14 status of claims that were recently resolved.
15 As you can see from the hearing today with the
16 long list of people who are appearing by phone, Black
17 Diamonds representatives are perfectly able, even though in
18 this matter, theyre located very close to Delaware, to
19 appear by phone. And Black Diamonds counsel, Im sure, has
20 many frequent flyer miles and has no issue getting on a
21 plane.
22 Your Honor, while the facts here are a little
23 different than some of the cases that were cited by Black
24 Diamond, a number of the cases and precedent in this court,
25 uniformly, hold that the debtors choice of forum should not
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1 be lightly disturbed. Thats what Judge Walsh held in the
2 Safety Clean opinion that was attached to the papers by
3 Black Diamond.
4 And in the Enron case, another case cited by Black
5 Diamond, the court held that a debtors choice of forum is
6 entitled to great weight if venue is otherwise proper.
7 Citing Ocean Properties of Delaware, which is a 1998
8 Delaware Bankruptcy case.
9 THE COURT: Well, I mean, as we sit here today,
10 have they chosen a forum? I mean, the choice has basically
11 been, not here.
12 MR. KLYMAN: Well, theyve moved to transfer venue
13 to Atlanta.
14 THE COURT: All right.
15 MR. KLYMAN: So, I think by virtue of that motion,
16 theyre --
17 THE COURT: Okay. Okay.
18 MR. KLYMAN: -- choosing a venue. And in that
19 case, Your Honor --
20 THE COURT: Im sorry, Im -- but they havent, at
21 least as we sit here today, they havent agreed necessarily
22 to go into bankruptcy. That was sort of what I was saying.
23 Its a -- being a purported debtor -- an alleged debtor with
24 the involuntary petition in Delaware versus being an alleged
25 debtor with an involuntary position in Georgia.
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1 MR. KLYMAN: May I have a moment, Your Honor?
2 THE COURT: Uh-huh. And -- I -- my -- my point
3 there is not -- my point there is more along the lines of --
4 and perhaps this is what Mr. Harris is going to say, which
5 is, maybe thats why this motion is premature because we
6 simply dont know at this point whether there will --
7 whether well definitely have a case or if we definitely
8 have a case when well definitely have a case.
9 MR. KLYMAN: Well, Your Honor, I --
10 THE COURT: Before we decide where that case
11 should be.
12 MR. KLYMAN: Your Honor, I dont represent the
13 debtor, Im happy to see the podium to Mr. Kelly on that
14 particular point.
15 THE COURT: Okay. You can move on, Im sorry.
16 MR. KLYMAN: Your Honor, Enron further went on to
17 say that where a transfer would merely shift the
18 inconvenience from one party to the other, the debtors
19 choice of a forum should not be disturbed. And here thats
20 exactly whats at issue, whether its more convenient for
21 the lawyers representing Black Diamond to be in Atlanta or
22 more convenient for the debtors to be in Atlanta or whether
23 it should be flipped and instead of Mr. Harris taking an
24 hour and a half train ride down from New York, the debtors
25 management which is struggling to keep the business afloat,
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1 should be compelled to get on a plane and fly here.
2 Your Honor, the debtor and Yucaipa, by moving to
3 transfer venue, and not immediately contesting the
4 involuntary petition, intend to reserve all rights. And Im
5 speaking for Yucaipa here, Mr. Kelly can speak for Allied,
6 but you have all rights against Black Diamond Spectrum in
7 connection with a timing and nature of the filing. I dont
8 want there to be any sort of admission through silence or
9 acquiescence that the business was not damaged by Black
10 Diamonds actions and when theres an appropriate venue and
11 a case is -- and a case is fixed, then that issue will be
12 joined.
13 And Your Honor, with respect to the procedural
14 issue about whether or not the case can be filed, I just
15 want to speak to that briefly.
16 Black Diamond and Spectrum filed their involuntary
17 petition and then in disregard of the rule that theyre
18 currently citing, they filed an emergency motion to appoint
19 a trustee.
20 If we were to follow their logic, neither the
21 debtors no Yucaipa would have been able to a oppose that
22 motion.
23 They then participated in a scheduling conference
24 about this hearing --
25 THE COURT: No, but Rule 1011 is about responsive
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1 pleadings --
2 MR. KLYMAN: Yes.
3 THE COURT: -- and responsive motions --
4 MR. KLYMAN: Yes.
5 THE COURT: -- by the purported debtor.
6 MR. KLYMAN: Yes. But its not motions, Your
7 Honor, its pleadings.
8 THE COURT: But its titled, responsive pleading
9 or motion in involuntary and across the border cases.
10 MR. KLYMAN: Thats correct, Your Honor, but the
11 section --
12 THE COURT: My point is really as to responsive.
13 MR. KLYMAN: Okay.
14 THE COURT: My point being that because the code
15 specifically contemplates the ability to seek a trustee in
16 the gap period. So, it cant be the rule at least to the
17 extent it purports to be Rule 1011 that says you cant file
18 a motion to seek appointment of a trustee even though code
19 section says you can. That rule cant be applicable.
20 MR. KLYMAN: Youre right. Your Honor, that
21 argument would be illogical just as though under 1014, which
22 is a different rule, a rule says once a petition is filed,
23 either the debtor on its own motion or the court on its own
24 motion, may transfer venue.
25 In one of the cases that were cited by Black
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1 Diamond, a case called BL of Miami, which was a 2003
2 District of Nevada case, in that case the court held that
3 1014 does not, in fact, prohibit a sua sponte transfer of
4 venue by the court, which was dealing with petition and the
5 statute and the rule itself actually speaks to that.
6 So, for those reasons, Your Honor, we believe that
7 the debtors motion should be granted. For me, Im going to
8 get on a plane to come to Delaware or to Atlanta, its not
9 my inconvenience, its not Mr. Harris inconvenience thats
10 at issue, whats at issue is whether or not the debtor
11 should remain in Atlanta in order to maximize value for all
12 the stakeholders. Thank you.
13 THE COURT: Anyone else before I turn to Mr.
14 Harris?
15 (no verbal response)
16 THE COURT: Mr. Harris.
17 MR. HARRIS: Thank you, Your Honor. Im going to
18 stick to the substance of whats before Your Honor today and
19 avoid my natural tendency, which is to respond to people who
20 like to take pot shots at my clients in open court without
21 any foundation and without any evidence and without any
22 support and testimony.
23 Mr. Klyman --
24 THE COURT: So, without poisoning anyone?
25 MR. HARRIS: I thought that was pretty well said,
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1 actually.
2 THE COURT: I wont respond to the threat of a
3 murder, by saying -- all right, go ahead. Non-response of
4 response noted.
5 MR. KLYMAN: Your Honor, I am going to pick up on
6 a theme that, you know, youve already identified here,
7 which is we have involuntary cases filed by petitioning
8 creditors, not just Black Diamond, in this court, in which
9 by all admissions is a proper venue for these cases.
10 1408 makes it absolutely clear, domiciled,
11 (indiscernible), this is a legitimate place for these cases
12 to be. Theyre properly filed here, nobody has challenged
13 that. You havent heard that from either Yucaipa and you
14 havent heard that from the debtors.
15 We dont have a debtors choice of forum, Your
16 Honor, other than to say we dont want it here. And that is
17 an issue because from our perspective, what that basically
18 is saying is that we want the cases transferred in their
19 status as involuntary petitions to another court where we
20 dont know whats going to happen next. Are they going to
21 be contested? Are they going to be consented to? Are we
22 going to be litigating in a place that is not the selected
23 forum of the petitioned creditors at that time and when you
24 read Judge Walshs decision, when you talk about the
25 preferred filing place -- I would submit to Your Honor, that
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1 in this instance, the preferred filing place is that of the
2 petitioning creditors, not of the debtors proposed choice of
3 forum when the debtor actually hasnt made that choice.
4 Were we in a different situation then I think that
5 the analysis might be a little bit different, but thats not
6 where we are and this is not your Saab case where the
7 debtors had informed the petitioning creditors before they
8 ever filed that they, in fact, were going to be filing in
9 Detroit in a day or two and the petitioning creditors turned
10 around and ran off and went someplace else. Here, as a
11 matter of fact.
12 We had no knowledge that there was going to be a
13 filing. We had no knowledge that they were contemplating
14 anything. Theres a lot of redacted information that is not
15 appropriate for this record, but we didnt know. And for
16 people to get up and call it precipitous or unwise or
17 anything else, again, Im not going to respond to that, but
18 were here, its a legitimate forum, 1408 says its a
19 legitimate forum and we should be moving on to the more
20 substantive part of this.
21 THE COURT: Yeah. And as an aside, I mean, you
22 often here sort of -- this sort of, you know, weve got a
23 potential debtor and the case gets filed against them and
24 they sort of like, oh my gosh, I cant believe anyone would
25 do something so un-torrid and so wrongful and, you know,
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1 dont they believe us? And my response to that is, you
2 know, the invective gets you nowhere. Heres the reality,
3 people are owed money, the code allows them to file a
4 voluntary case. They filed a voluntary case, I dont think
5 that makes anyone a bad actor. Simply somebody exercising
6 their legal rights. So, its more an aside, because they
7 didnt really focus a lot on this, but this comment that
8 Black Diamond has somehow wronged the debtor by filing this
9 motion, I dont think that gets you anywhere one way or the
10 other.
11 And it also relates to the fact that I think that
12 the petitioning creditors choice must have some merit
13 because the code gives the petitioning creditor the right to
14 exercise that choice.
15 MR. KLYMAN: I appreciate that, Your Honor and I
16 wholeheartedly agree with it. I want to throw one more
17 piece of reality onto the comment you just made, which is as
18 we mentioned in the motions we had filed with the court
19 originally, the maturity date of the first lien debt was
20 March 29th, it has now come and gone and had we been paid I
21 wouldnt be standing before you today. It has not been paid
22 and theres no expectation that it will be. So, obviously,
23 if there is a contested hearing on a petition, that will be
24 just one more fact to -- or a piece of wood to throw on the
25 otherwise burning embers.
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1 But, Your Honor, Im not going to dwell a lot on
2 the 1011E issue, I think, frankly, the comments weve made,
3 we think that having venue transformations dealt with in the
4 context of involuntary filings opens a whole host of issues
5 of the sort we were just discussing about changing the
6 petitioners chosen forum for litigation for the involuntary
7 itself.
8 We think the way you read the two statutes
9 together, frankly, is that -- that there should be no
10 consideration venue transfer motion by any court until you
11 know you have a case to transfer. You shouldnt be
12 transferring, you know, open litigations, if you will,
13 regarding involuntary petitions until theres a
14 determination of whether an order really should or should
15 not be entered.
16 This is not a situation where somebody is looking
17 to reopen the old case that was extant down in Georgia such
18 that theyre trying to enforce and old plan or claim that it
19 wasnt substantially consummated and therefore, you know,
20 this should be dealt with before an order to (indiscernible)
21 is necessarily entered, its a whole new case. And thats a
22 subject Ill get to in a couple minutes.
23 Let me talk about what the real import would be of
24 Judge Mullens historical knowledge and familiarity and so
25 forth, but Ill come to that in a couple of minutes.
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1 Your Honor, as I said before, I mean, theres no
2 dispute, 1408 says we can be here. This company should be
3 here and frankly, one interesting fact, Your Honor, to note
4 is that when these companies were in bankruptcy before, they
5 are from the parenting company Allied Holdings, which was
6 merged out of existence into Allied Systems Holdings as part
7 of the plan, that was a Georgia corporation.
8 When Yucaipa put the plan together and decided to
9 create Allied Systems Holdings, Inc. as the new parent
10 company, it affirmatively chose to make it a Delaware
11 Corporation. It wanted the rights and benefits and all the
12 things that go along with the fact that its a Georgia
13 company, the corporate governance issues, you know the body
14 and case law that goes along with fiduciary duties, all
15 those items. They affirmatively chose that law and frankly,
16 if you look at Judge Walshs decision of PWS, he says having
17 made that choice, domicile becomes a very valid basis for a
18 case. Whether they choose to do it or whether an
19 involuntary creditor -- petitioning creditor chooses to put
20 them in. That is a valid basis to be here. They chose
21 Delaware as the jurisdiction they wanted to incorporate this
22 company. And they affirmatively took it out of Georgia.
23 The parent company was a Georgia corporation, Allied Systems
24 Holding is a Delaware corporation, theyre the ones who
25 decided to make it so.
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1 Now, Your Honor, if you took the arguments that
2 have been made by both the company and Yucaipa relative to
3 why this case should be transferred -- and again, I would
4 condition that on should be transferred, assuming an order
5 for relief is entered. But if you take their arguments at
6 face value, Your Honor, domicile means nothing in every case
7 in which a venue of transfer motion is filed, should be
8 granted.
9 Because, frankly, a lot of the debtors who come
10 here dont have creditors here, dont have their
11 headquarters here, dont have very many contacts with this
12 jurisdiction independent -- as part of their business, but
13 there are other reasons they file here and they do and
14 theres good reasons for it. Again, look at Judge Walshs
15 decision in PWS, in the final paragraph he has there, which
16 talk about companies that operate nationally,
17 internationally, people should expect, among other things
18 that if there is a filing that the filing would occur in the
19 place where the parent company or one of its affiliates is
20 domiciled.
21 You cant just read it out of the statute, which
22 is what it effectively, I think both the debtors and Yucaipa
23 are trying to do by saying, since we are elsewhere we
24 shouldnt be here.
25 But, even if you move beyond that, Your Honor, and
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1 you get to the substance of the particulars here, you know,
2 the statute in 1412 talks about the interest of justice or
3 the further convenience of the parties. It doesnt talk
4 about just the convenience of the debtors, it talks about
5 the convenience of the parties. And here weve also got
6 case law which suggests that the movant bears the burden of
7 showing by a preponderance of the evidence that the transfer
8 of the venue is necessary in order to achieve the statutory
9 purposes of the venue transfer statute.
10 So, we go through the factors and whether you use
11 the Jamara factors or whether you use the six point test, I
12 think, effectively, Your Honor, the analysis comes out at
13 almost exactly the same place. But when you look at it and,
14 you know, you go through the limited analysis weve been
15 able to do and we dont have schedules or statements or
16 access to books and records or any of those things, but what
17 we come up with Your Honor is that there are substantial
18 parties and creditors who have absolutely no association
19 with Georgia for whom this court is imminently more
20 convenient or at least neutral. The PBGC, which is,
21 obviously, a very substantial creditor here, a continued
22 creditor here, is located in the District of Columbia. The
23 Teamsters headquarters are in DC, although they do have
24 locals, obviously, throughout the country. Yucaipa is,
25 obviously, in California and New York and Mr. Klyman says
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1 hes happy to go anywhere, so I guess that becomes a neutral
2 factor.
3 The petitioning creditors are in New York and
4 Connecticut. CIT who is owed about $35,000,000 is in New
5 Jersey. The chairman of the board of the company, Derex
6 Walker resides in California. There are other directors
7 other than the one they refer to who splits his time and
8 residence between Michigan and Georgia. By implication, all
9 reside some place other than Georgia, we dont know where.
10 And the CO of the company, its our understanding, splits
11 his time and maybe the board member, who splits his time
12 between Michigan and Georgia.
13 I found it interesting that, you know, the debtors
14 didnt suggest their CO would ever be somebody who would be
15 coming to hearings. But, thats, obviously, their choice.
16 With respect to proximity, Your Honor, of the
17 debtor to the courthouse, the extent to which employees of
18 the company need to be in attendance at hearings and my
19 experience and I think in many peoples experiences, depends
20 on a number of factors. The most important of which is, can
21 the parties get on the same page with respect to how the
22 case is going to proceed?
23 If the case is going to proceed in the manner such
24 as Mr. Kelly and I have at least started off in some
25 respects today, of cooperation, where he comes to me and
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1 says, do I need to bring Scott Macaulay to Delaware to
2 testify to the facts in his declaration? No. I mean, Im
3 not going to sit here and force a man to fly, you know, a
4 couple of hours and spend a couple thousand bucks to do
5 that, it doesnt make any sense. And reciprocally, Mr.
6 Kelly was nice enough to say, were not going to contest the
7 facts in your petition, we understand them, theyre true.
8 We dont need to cross-examine anybody, you dont need to
9 find a witness to come down here.
10 Frankly, had he suggested the same with the
11 limited testimony of Mr. Blount, I would have said, Mr.
12 Blount, in my view, doesnt need to be here either. Whether
13 he decides to bring him or not is, obviously, his choice.
14 But if you can get people on the same page and
15 this case is -- if it goes it in, should be one where people
16 are on the same page with respect to a reorganization. Then
17 the need for employees of the company to leave their posts
18 and travel for hearings to be would be limited and, in fact,
19 in many experiences it turns out to be the financial advisor
20 or investment banker for the company who does most of the
21 testifying while the employees, chief financial officer,
22 chief administrative officer, so forth, dont have to.
23 Obviously, theyre involved in a number of things
24 including preparation of budgets and forecasts and
25 presentations and things like that, but that wouldnt
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1 necessarily require them to leave Atlanta.
2 But, again, how the overall need for them to
3 travel for purposes of hearings is dictated in large part by
4 the means by which the case is going to be conducted and I
5 think that at least so far, we got the ball rolling here,
6 theres no question about that and we did file the trustee
7 motion, but I think we have been reaching out and trying to
8 be as cooperative as possible to avoid the need for
9 unnecessary costs and expense and travel and were hopeful
10 that will be -- bear fruit, going forward.
11 With respect to books and records, Your Honor, I
12 mean, theyre all electronic and available, in fact, when
13 the State Court in New York directed Yucaipa to have the
14 company send us historical financial records that they
15 hadnt produced under the terms of the credit agreement for
16 a couple of years, within 72 hours the company had
17 absolutely no problem delivering them to us. So, I think
18 locations of books and records as an issue relative to venue
19 is not particularly relevant.
20 On the location of assets issue, Your Honor, as
21 the case law suggests, location of assets in cases like this
22 is really a neutral factor at best. Yes, they have
23 headquarters in Atlanta and real estate there, they have 44
24 terminals around the country, but this is not a liquidation,
25 we dont need local administration or foreclosure laws and
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1 things like that.
2 At least as we sit here today, everybodys
3 intention would be that if orders for relief were entered
4 these would be either reorganizations or potentially sales.
5 I dont know which way its going to go, but I dont think
6 anybody here has any interest in pressing for any kind of a
7 liquidation. That certainly wouldnt maximize value for my
8 client or anybody else.
9 And that takes us to the issue of deficient and
10 economic administration and heres, Your Honor, I have the
11 most issue with the prior pending case and everybodys, the
12 debtors and Yucaipas statements about the helpfulness, if
13 you will, of Judge Mullens prior experience with this case.
14 Im sure Judge Mullens is an excellent judge.
15 Ive never met the man, but by reputation he is a wonderful
16 man and an excellent jurist.
17 But last time he saw this case and the substance
18 of this case was five years ago, other than claims
19 administration which may have been occurring until now,
20 until recently when the case became ready to ultimately
21 close.
22 A lot has happened as Your Honor well knows in the
23 last five years, given the number of cases that have come
24 through this particular courtroom and this courthouse as a
25 whole. All of which bear on what is going to happen next
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1 with respect to this debtor.
2 The familiarity with parties with Yucaipa, with
3 the debtors, with their counsel is to somebody who was not
4 there the last time, in some respects, a double edged sword.
5 I mean, judges who have seen cases before, potentially, have
6 memories of what happened the last time, what they knew
7 about the business previously, which frankly should not be
8 brought to bear on a new case with a new set of facts, with
9 a new set of players and all new circumstances that have,
10 frankly, nothing to do with what happened in the last case.
11 And Im sure that if we were in Atlanta that Judge
12 Mullens would do his very best to segregate out those pieces
13 of information which he garnered through the last case, from
14 those which are relevant to what would be before him today,
15 but, Your Honor, the fact of the matter is, theyre not
16 particularly relevant. Judges see debtors every day, they
17 dont know a thing about them and they learn very quickly
18 everything they need to know in order to basically preside
19 over the case. Historical knowledge of what happened in a
20 case thats been over for five years is not a reason to
21 transfer venue.
22 Just give me a second, Your Honor, I just want to
23 take a look at my notes with respect to the presentations by
24 debtors counsel and Yucaipa.
25 (Pause)
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1 Id be happy to answer any questions.
2 THE COURT: I have none. Thank you.
3 MR. HARRIS: Great, Your Honor. Thank you very
4 much for your time.
5 THE COURT: Youre welcome. Mr. Kelly?
6 MR. KELLY: Briefly, Your Honor, I thought Id
7 made it clear, but maybe I should make it clear on the
8 record, there will not be -- these petitions will not be
9 contested. Our response today is not until June 8th. The
10 company is operating under a time table, however. The time
11 table has been accelerated by the filing of the
12 involuntaries, but just to be clear, the involuntary
13 petitions will not be contested.
14 If its -- you know, I dont think its premature
15 to rule, but if Your Honor believes its premature to rule
16 on the issue because we dont yet have orders for relief or
17 because these entities are not yet in bankruptcy, then one
18 option I respectfully suggest would be to hold the ruling in
19 advance. Were not that far off from when our response date
20 is.
21 Looking through my notes, I really dont know that
22 theres much else I need to respond to Your Honor. In terms
23 of the cost, I wasnt talking about the cost of coming to
24 Delaware, I was talking about the time thats involved in, I
25 believe, in my experience with this case, Im not trying to
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1 say anything about the CEOs lack of involvement, he may well
2 be involved as well, but based on my experience with this
3 case, it would be Mr. Blount and Mr. Macaulays time, thats
4 what were talking about, not expense. Thank you, Your
5 Honor.
6 THE COURT: Thank you. Anything else?
8 THE COURT: All right. Were going to clear the
9 brush a little bit and talk about Rule 1014B. And as its
10 written, I think its obvious, but Ill say it, that the two
11 alleged debtors in this case, one is a debtor of a case
12 currently pending in Georgia and the other is an affiliate
13 of that debtor with a case currently pending in Georgia.
14 So, Rule 1014 would appear to be applicable as
15 there have been cases opened in Georgia and a later case
16 opened here in Delaware. And the technicalities of 1014B
17 have arguably not been met here, which is that a request
18 should have been made to the judge in Georgia and the judge
19 in Georgia would make a decision on where the venue should
20 be and then until that happens this court would basically
21 hold this case in abeyance, pending a decision.
22 That has happened currently because the statements
23 I made at the status conference, partly and I think chiefly
24 because this is an involuntary petition, which has sort of
25 forced the issue in connection with where the debtor, which
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1 states how it wont oppose the -- or wont respond, I guess,
2 to the involuntary petition and thus allowing a case to be
3 opened at some point in the future. That issue was forced a
4 bit by the fact we have an involuntary in play here.
5 I dont think its constructive to get lost in the
6 technicalities of the rule. And as far as Im concerned to
7 stick to Rule 1014B in this case would really be to promote
8 form over substance.
9 The case in Atlanta for all intensive purposes,
10 closed. The final decree has been requested, a certificate
11 of no objection has been filed, the order just hasnt been
12 signed.
13 And to hold up a decision here on whether to
14 transfer venue you or not, a decision here perhaps on
15 whether an order for relief will be entered et cetera, based
16 on the fact that a CNO hasnt worked its way through
17 chambers yet, I think is just counterproductive.
18 So, as far as Im concerned, for purposes of
19 making this decision today, 1014B is simply inapplicable
20 because the cases -- the case in Georgia is so substantially
21 consummated and for all intensive purposes closed that it
22 would be not constructive or helpful to push the
23 technicalities of who decides what and when.
24 Talking about 1011, I agree with the debtor on
25 this one, that 1011 is not applicable to a motion to
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1 transfer venue. 1011 really deals with the substance of
2 whether or not an order for relief should be entered. There
3 are for example, other motions that can be brought before
4 the court in the interim, including as we discussed a motion
5 for appointment of a trustee, specifically contemplated by
6 the code.
7 I think responsive is important and its the
8 adjective that starts the rule and I think what that case is
9 designed to do is to focus -- excuse me that rule is
10 designed to focus the hearing on the merits of the
11 involuntary petition and to provide a specific framework for
12 deciding that issue. It does not think about venue, it
13 doesnt deal with the venue issue.
14 Again, backing up to 1014, it talks about
15 petitions, it doesnt talk about cases where order for
16 relief has been granted or anything along those lines, so I
17 just think 1011 is simply inapplicable.
18 All right. That gets us to the merits of the
19 motion to transfer venue. Basically, its an equitable
20 consideration, the court takes the facts and circumstances
21 of the case in front of it and decides for the interest of
22 justice where a case should be.
23 There are 12 factor tests, there are six factor
24 tests, I think those types of tests are helpful to focus the
25 court on the types of issues that really should be
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1 considered. We dont play scorecard with them, its not --
2 you know, you dont get a transfer venue if its seven to
3 five or four to two, thats not helpful.
4 I find that every time you add a factor to a test
5 you complicate it by an order of magnitude and to go from a
6 two factor test to a 12 factor test is really, frankly, not
7 helpful, because it just continues to throw in items that
8 cloud the ultimate decision that should be in front of the
9 court.
10 All that said, youve got situations like choice
11 of forum. Well, we have two parties that disagree. The
12 petitioning creditors have chosen Delaware by filing here,
13 as theyre allowed to do under the law. This is proper
14 venue for these cases. The debtor has said no, he would
15 like the case, if any case, to be in Georgia. So, theres a
16 disagreement there. Professionals are going to fly in from
17 all over the country, that happens in every case, thats a
18 neutral factor.
19 Employees and -- let me back up a little bit,
20 issues that can kind of go beyond that, I think are sort of
21 case specific issues, for example, if we had a liquidation
22 here, if we had a hotel in Las Vegas that was being
23 foreclosed on. I mean, the case, arguably, very much should
24 be in Nevada. If we have a piece of undeveloped land in New
25 Mexico, the case should be in New Mexico. Those are strong
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1 factors that would push a case to one place or another.
2 We had an industrial case where there was one
3 factory and it was in Georgia and it was going to be shut
4 down and liquidated under the case, I think theres a much
5 stronger argument that that case should be in Georgia. Why?
6 Well, the employees are really going to care a lot, the
7 employees are there, theyre in Georgia, theyre going to
8 have a real stake in the matter. The Teamsters issue, Im
9 sure that the local and Bowling Green would have been happy
10 if that case had been filed in Kentucky. It wasnt and they
11 wanted to be heard and they got to Atlanta because it was an
12 important issue for them. And it was wholly appropriate.
13 You dont know where a case is going to go at the
14 beginning when you have a transfer of venue motion,
15 especially in a case here where you dont even have an order
16 for relief. So, its a little hard to kind of predict.
17 Some cases are easier to predict than others. This looks
18 like a rehabilitation, even if its done through some sort
19 of sale process, it would be on a going concern process, so
20 its a rehabilitation. Its not a liquidation of specific
21 assets. Its not a shutdown of specific factories.
22 So, all that basically comes to the conclusion
23 that its a bit of a wash. I mean, every factor of what we
24 kind of focus on here is in effect neutral. We have a
25 argument that the loss of time for management to come back
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1 and forth to cases in Delaware is really the distinguishing
2 factor that puts this case where -- that it should be in
3 Atlanta. Thats pretty much it, thats pretty much the
4 distinguishing factor.
5 And I dont think thats sufficient. Remember
6 that the debtor is the movant and has the burden of proof.
7 And one thing Ive learned since Ive been on the bench is
8 that if you cant figure out what to do or if its a tie the
9 movant loses. And I think in this situation the facts
10 simply dont support with any preponderance or any sort of
11 weight that this case should be anywhere other than where it
12 is.
13 Its proper to be in Delaware, it was filed in
14 Delaware by the petitioning creditors appropriately. The
15 debtor sought to move it to Georgia, has the burden of proof
16 and I think simply hasnt met it on the merits. So, Im
17 going to deny the motion to transfer venue. And Im just --
18 Ill enter an order.
19 MR. HARRIS: Thank you, Your Honor.
21 THE COURT: All right. Anything else? All right.
22 Were adjourned. Thank you.
23 (Whereupon these proceedings were concluded at
24 3:35 PM)
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1 I N D E X
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1 C E R T I F I C A T I O N
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4 transcript is a true and accurate record of the proceedings.
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Date: June 4 , 2012
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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: )
)
CORDILLERA GOLF CLUB, LLC,
1
) Case No. 12-11893 (CSS)
dba The Club at Cordillera, )
) Chapter 11
Debtor. )
) Hearing Date: To be determined.
Obj. Deadline: To be determined.

MOTION OF CHERYL M. FOLEY, THOMAS WILNER,
JANE WILNER, CHARLES JACKSON, MARY JACKSON AND KEVIN
B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES OF A
CERTIFIED CLASS OF MEMBERS, TO TRANSFER VENUE

Cheryl M. Foley, Thomas and Jane Wilner, Charles and Mary Jackson and Kevin B.
Allen, as representatives of a certified class in Case Number 11CV552, pending in the District
Court of Eagle County, Colorado (collectively, Member Representatives), by their attorneys
Appel & Lucas, P.C. and Richards, Layton & Finger, P.A., hereby move the court to transfer
venue of this case to the District of Colorado. This motion (this Motion) is supported by the
Declaration of Cheryl M. Foley, which is attached hereto as Exhibit A. In support of this
Motion, the Member Representatives state as follows.
INTRODUCTION
Cordillera is a residential community located in the heart of the Vail Valley in Eagle
County, Colorado. Except for the fact that the Debtor is incorporated in Delaware, everything
about the case is centered in Colorado. The Cordillera community consists of several hundred
single family homes. Integrated with the homes throughout the Cordillera community are a

1
The Debtor in this chapter 11 case, and the last four digits of its employer identification number, is Cordillera Golf
Club, LLC (1317). The address of the Debtors corporate headquarters is 97 Main Street, Suite E202, Edwards, CO
81632.
2

variety of recreational amenities, including golf courses, restaurants, swimming pools and the
like. The Debtor, Cordillera Golf Club, LLC (the Debtor), owns the recreational amenities in
the Cordillera community.
The Debtor and the homeowners, including the Member Representatives, are inextricably
bound to one another. The amenities owned by the Debtor greatly affect the value of the
homeowners homes and lifestyle. Moreover, the homeowners are the primary members of the
Cordillera Club and hence its primary source of revenue. More than 600 Cordillera homeowners
are or were members of the Debtor's club and each paid a substantial deposit to join, which the
Debtor is contractually obligated to repay to the member. The members are the most numerous
creditors of Debtor and, in aggregate, by far the largest.
Unfortunately for everyone involved, the relationship between the Debtor and its major
constituents has become greatly strained over the past few years. That has resulted in ongoing
litigation between the Debtor and different groups of members, concerning a variety of different
issues. The Member Representatives are the court certified representatives of the members in the
litigation. The deteriorating relationship has also lead to disputes between the Debtor and its
principal lender, Alpine Bank.
The issues arising in this case are of a uniquely local character, affecting the entire
Cordillera Community. The Debtor filed its Chapter 11 case in Delaware, although venue was
clearly proper in Colorado, with the transparent purpose of making it more difficult and
expensive for the major constituencies affected by the Debtors operation of the Cordillera
amenities, to have a meaningful role and voice in the Chapter 11 case. For the reasons argued in
this Motion, venue should be transferred to Colorado, where all the voices can more easily and
economically be heard.
3

BACKGROUND FACTS
The Debtor filed this Chapter 11 case on June 26, 2012. No statutory committees have
been formed, and no trustee or examiner has been appointed. There has been one brief hearing
on several first day motions. No other matters have been considered by the Court.
The Debtor is a Delaware limited liability Company. Other than being the State under
whose laws the Debtor was formed, this bankruptcy case has no connection whatsoever to
Delaware. The Debtors only place of business is in Edwards, Colorado. The Debtor owns and
operates The Club at Cordillera (the Club), located in the Vail Valley. This is the Debtors
only asset and only business. The Club comprises four golf courses and the Trailhead and
Summit Facilities. The Mountain, Summit and Valley Course facilities each also have
restaurants, with the Timber Hearth restaurant at the Mountain Course being the Clubs main
restaurant. The Valley Course facilities include a swimming pool and two tennis courts. The
Short Course is a ten-hole golf course with a driving range and putting greens. The Trailhead
Facility comprises a family lodge including a great room, exercise area, locker rooms and
swimming pools. The Summit Club Facility includes a meeting room, an exercise room, two
tennis courts and a swimming pool and jacuzzi. The foregoing are referred to collectively as the
Club Facilities.
The Member Representatives, Cheryl Foley, Thomas and Jane Wilner, Charles and Mary
Jackson and Kevin Allen, are court-appointed representatives of a certified class of club
members in Case Number 11CV552, pending in the District Court of Eagle County, Colorado.
There are approximately 609 members of the class and they hold non-contingent unsecured
claims against the Debtor for deposits paid and which the Debtor is obligated to pay back that
4

total $62,092,000. A couple of the deposits are only $7,500, but the vast majority are $20,000
(for social memberships) and above (for full golf memberships). The deposit claims average
approximately $103,000. The largest individual member deposit claim is $205,000. The
smallest is $20,000. The member deposit claims are by far the largest claims in this case,
dwarfing all other secured and unsecured creditors. The majority of the class members own a
home in Colorado that is adjacent to the Club facilities.
The Member Representatives have been involved in state court litigation (Class Action
Lawsuit) with the Debtor and parties related to the Debtor. A copy of the Third Amended
Complaint in the Class Action Lawsuit is attached hereto as Exhibit B. Among other things, the
Class Action Lawsuit seeks redress for the Debtors violation of the express commitments it
made to induce members to pay 2011 dues and the subsequent misuse of the dues that were then
paid. An affiliate of the Debtor attempted to remove the Class Action Lawsuit to Federal Court.
However, the lawsuit was recently remanded by the Federal District Court in Denver to the Eagle
County District Court.
The Class Action Litigation has given rise to sanctions against the Debtor and other
Defendants for their failure to produce required discovery and contempt proceedings against the
Debtor and other Defendants for their blatant and repeated violation of a temporary restraining
order entered by the State Court. A copy of the Motion regarding that matter is also attached
hereto as Exhibit C. The Court issued an order to show cause why the Defendants, including the
Debtor, should not be held in contempt and that matter is set for hearing on July 20, 2012, in
Colorado, although it will not proceed against the Debtor.
The Debtor has not yet filed its liability Schedules pursuant to Bankruptcy Rule 1007(b).
However, it has filed its list of Twenty Largest Unsecured Creditors and a creditor matrix.
5

Remarkably, the Debtor neglected to list any member on its Schedule of Twenty Largest
Unsecured Creditors, despite the fact that the members non-contingent, undisputed and
liquidated deposit claims are each greater than all but one of the parties the Debtor lists as its
twenty largest unsecured creditors. The Debtor should have shown the members non-contingent
claims for return of their deposits as at least nineteen of the twenty largest unsecured creditors.
Looking at the list of Twenty Largest Creditors, as filed by the Debtor, the claims range from
about $65,000 for personal property taxes to about $5,000 for a motor parts vendor. Half of the
listed twenty largest unsecured creditors are located in Colorado and consist primarily of local
suppliers, vendors and utilities.
ARGUMENT
The United States Bankruptcy Court for the District of Colorado is the proper forum for
this bankruptcy case. Pursuant to 28 U.S.C. 1412, transferring the venue of this bankruptcy
case to Colorado would serve the interests of justice and the convenience of the parties for the
following reasons:
(a) The only assets of the Debtor are the Club Facilities which are located in
Colorado;

(b) the day-to-day business operations of the Debtor occurs only in Colorado;

(c) Nearly all of the representatives of the Debtor and of the major creditor
constituencies are located in Colorado and allowing the case to remain in
Delaware will unnecessarily increase the costs of administration and the
cost to individual creditors;

(d) the majority of creditors are located in Colorado, including the Debtors
secured Creditor, Alpine Bank;

(e) The agreements between the Debtor and most of its creditors are governed
by and will need to apply Colorado law;

(f) there is ongoing litigation pending in Colorado;
6

(g) Colorado law governs many important issues involving the Debtor and the
Club operations; and

(h) The only basis the Debtor had for filing this case in Delaware was the fact
that the Debtor is a Delaware limited liability company;
The convenience of the parties and the interests of justice require that venue of this
bankruptcy case should be transferred to the United States Bankruptcy Court for the District of
Colorado.
Applicable Statutes
Venue for bankruptcy cases is governed by 28 U.S.C. 1408, which provides:
Except as provided in section 1410 of this title, a case under title
11 may be commenced in the district court for the district --

(1) In which the domicile, residence, principal place of business in
the United States, or principal assets in the United States, of the person or
entity that is the subject of such case have been located for the one
hundred and eighty days immediately preceding such commencement, or
for a longer portion of such one-hundred-and eighty-day period than the
domicile, residence, or principal place of business, in the United States, or
principal assets in the United States, of such person were located in any
other district; or

(2) In which there is pending a case under title 11 concerning such
person's affilliate, general partner, or partnership.

In its Petition the Debtor asserts that venue is proper in the District of Delaware because
it is the Debtors domicile. See, e.g., In re Innovative Communication Co., 358 B.R. 120, 125
(Bankr. D. Del. 2006) ("Venue is appropriate in the state of incorporation"). Although this may
be a proper basis for venue of a bankruptcy case, that is not the end of the inquiry.
Even when venue is proper under 28 U.S.C. 1408, a court may transfer venue in the
interest of justice or for convenience of the parties pursuant to 28 U.S.C. 1412. In re B.L. of
Miami, Inc., 294 B.R. 325, 328 (Bankr. D. Nev. 2003). See also, Fed. R. Bankr. P. 1014(a)(1).
7

28 U.S.C. 1412 provides: A district court may transfer a case or proceeding under title 11 to a
district court for another district, in the interest of justice or for the convenience of the parties.
The venue transfer provision is thus disjunctive, permitting the transfer of venue of a case either
because of the interest of justice or for the convenience of the parties. See In re Pinehaven
Associates, 132 B.R. 982, 989-90 (Bankr. E.D.N.Y. 1991).
The burden of proof in connection with a motion to transfer venue is with the moving
party. In re Centennial Coal, Inc., 282 B.R. 140, 143-44 (Bankr. D. Del. 2002)("Although the
moving party bears the burden of demonstrating by a preponderance of the evidence that a
transfer is appropriate, the ultimate decision to transfer venue lies within the sound discretion of
the bankruptcy court.").
Applicable Case Law
On motion to transfer venue, the place of the debtors incorporation is not the controlling
factor. Innovative Communication, supra, 358 B.R. at 127. It is instead just one of many factors
to be considered. The interest of justice ground of 1412 is a broad and flexible standard that is
applied based on the unique facts of each case. In applying that standard, the Court must
consider whether a transfer of venue will promote the efficient administration of the bankruptcy
case, promote judicial economy and fairness to the parties. In re Manville Forest Products Corp.
896 F.2d 1384, 1391 (2d Cir. 1990); See In re Eclair Bakery Ltd, 255 B.R. 121, 141 (Bankr.
S.D.N.Y. 2000) (interests of justice is "a broad and flexible standard that must be applied on a
case by case basis"); In re Condor Exploration, LLC, 294 B.R. 370, 378 (Bankr. D. Colo. 2003)
("When considering the interests of justice standard for purposes of determining whether to
transfer the venue of a bankruptcy case, the court applies a broad and flexible standard,
8

considering whether the transfer of venue will promote the efficient administration of the estate,
judicial economy, timeliness, and fairness.").
The factors courts often consider when evaluating the convenience of parties include the
proximity of creditors of every kind to the court, the proximity of the debtor, the proximity of
witnesses who are necessary to the administration of the estate, the location of the debtor's assets,
the economic administration of the estate, and the necessity for ancillary administration in the
event of liquidation. Innovative Communication, 358 B.R. at 126 (citing In re Commonwealth
Oil Refining Co., 596 F.2d 1239, 1247 (1979). These factors are both related to the private
interests of the parties and the public interests. Id.
When considering the alternative ground for a transfer of venue, the convenience of the
parties, courts typically evaluate the following factors: (1) the proximity of creditors to the
Court; (2) the proximity of the debtor; (3) the proximity of the witnesses necessary to the
administration of the estate; (4) the location of the assets; (5) the economic administration of the
estate; and (6) the necessity for ancillary administration if liquidation is needed. In re
Commonwealth Oil Ref. Co., 596 F.2d 1239, 1247 (5th Cir. 1979); see also, In re Boca Raton
Sanctuary Associates, 105 B.R. 273, 274 (Bankr. E.D. Pa. 1989).
In determining whether to transfer venue of a particular case, the Third Circuit has
identified factors to determine whether "on balance the litigation would more conveniently
proceed and the interests of justice be better served by transfer to a different forum." Jumara v.
State Farm Insurance Co., 55 F.3d 873, 879 (3d Cir. 1995) (determining standard for transfer of
venue under 28 U.S.C. 1404); see also In re Innovative Commun. Co., LLC, 358 B.R. 120, 126
(Bankr. D. Del. 2006) (applying the Jumara test to approve a transfer of venue of Chapter 11
proceedings under 28 U.S.C. 1412 and Fed. R. Bankr. P. 1014). These factors include:
9

1) plaintiff's choice of forum; 2) defendant's forum preference; 3)
whether the claim arose elsewhere; 4) the location of books and
records and/or the possibility of viewing premises if applicable; 5)
the convenience of the parties as indicated by their relative
physical and financial condition; 6) the convenience of the
witnesses, but only to the extent that the witnesses may actually be
unavailable for trial in one of the fora; 7) the enforceability of the
judgment; 8) practical considerations that would make the trial
easy, expeditious, or inexpensive; 9) the relative administrative
difficulty in the two fora resulting from congestion of the courts'
dockets; 10) the public policies of the fora; 11) the familiarity of
the judge with applicable state law; and 12) the local interest in
deciding local controversies at home.

Giuliano v. Harko, Inc. (In re NWL Holdings, Inc.), 2011 Bankr. LEXIS 580 (Bankr. D. Del.
Feb. 24, 2011) (citing Jumara, 55 F.3d at 879-80).
Finally, most bankruptcy courts considering the issue have concluded that venue for a
case involving real estate should be in the state where the real estate is located. See, e.g., In re
B.L. of Miami, Inc., 294 B.R. 325, 332 (Bankr. D. Nev. 2003) ("Where a debtor's assets consist
solely of real property, as with Debtor in this case, courts 'have held that transfer of venue is
proper because "[m]atters concerning real property have always been of local concern and
traditionally are decided at the situs of the property."'); In re Pinehaven Assocs., 132 B.R. 982,
989 (Bankr. E.D.N.Y. 1991) ("There is ample authority for the proposition that a real estate case
... can be most efficiently and economically administered in the bankruptcy court closest to its
major asset, and that the Chapter 11 case can best unfold there."); Condor Exploration, 294 B.R.
at 379 (noting that venue should be in the jurisdiction where debtor's oil and gas leases are
located). See also In re Midland Associates, 121 B.R. 459, 462 (Bankr. E.D. Pa. 1990); In re
Oklahoma City Associates, 98 B.R. 194, 199 (Bankr. E.D. Pa. 1989). In nearly all of the real
estate cases where venue has been transferred, the venue selected by the Debtor was remote from
the location of the real estate.
10

Application of Factors
Several courts have observed that when considering the factors in analyzing the two
separate statutory grounds for transferring venue, the interest of justice and the convenience of
the parties, there is often considerable overlap. See In re Laguardia Assocs., L.P., 316 B.R. 832,
839 (Bankr. E.D. Penn. 2004), citing Matter of Continental Airlines Inc., 133 B.R. 585, 587-88
(Bankr. D. Del. 1991). Therefore, to avoid repetition, the factors are often considered together.
That is the approach taken below.
(a) Matters of Local Concern to Colorado Predominate in this Case.
The Cordillera Club is not merely a country club, it is a community that is home to its
many members. The management and financial problems that have beset the Cordillera
community in the past couple of years have affected the members more than any other
constituency and have affected livability of the community and the value of the members homes
in Cordillera. These are issues of distinctly local concern. The interests of justice favor venue
in the jurisdiction whose substantive law governs the issues in the case. See, e.g., DHP
Holdings II Corp. v. The Home Depot, Inc. (In re DHP Holdings II Corp.), 435 B.R. 264, 275-76
(Bankr. D. Del. 2010).
Delaware bankruptcy courts have consistently held that a debtor's choice of forum must
give way to the interests of justice and convenience of the parties when other relevant factors
favor venue in another jurisdiction. This is particularly so in a case like this where the Debtors
sole assets and business are located in Colorado. For example, in a recent ruling in this District
on a motion to transfer venue, the Court observed in the Allied Systems Holdings, Inc. case, Case
No. 12-11564(CSS) as follows if we had a hotel in Las Vegas that was being foreclosed on. I
mean, the case, arguably, very much should be in Nevada. If we have a piece of undeveloped
11

land in New Mexico, the case should be in New Mexico. Those are strong factors that would
push a case to one place or another. Transcript of Ruling, pp. 56-7, attached hereto as Exhibit
D. Similarly, in the Saab Cars of North American, Inc. case, Case No. 12-10344 (CSS), in
ruling on a motion to transfer venue of the case, the Court observed that So, for example, in a
real estate, single asset real estate case, you know, the management company may be in Dallas,
but the tract of land is in New Mexico. That case should be in New Mexico because land is
something really unique. Obviously, clearly land is unique. And the strongest interest for a piece
of property is where that property is. Transcript of hearing, pp. 26-7, attached hereto as Exhibit
E.
In this case, the most important factor for the Court to consider is that the Debtors assets
consist solely of real property and related personal property that is an integral part of the
Cordillera community located in Colorado. There can be little question that the bankruptcy case
therefore belongs in Colorado.
(b) Proximity of the Debtor.
Courts often look to the location of the debtors primary assets in analyzing the debtors
location. See B.L. of Miami, 294 B.R. at 331. In addition, Court typically determine a debtor's
principal place of business based upon an "operational test," which focuses on the location of the
debtors day-to-day activities. See Condor Exploration, 294 B.R. at 374. The Debtors' assets are
located solely in Colorado and its business operations are conducted solely in Colorado. The
Debtor has no assets or business operations in any location other than Colorado.
In addition, the Debtor has no connections to Delaware other than the fact that Delaware
is the State in which the Debtor was formed. Numerous cases have held that where the Debtors
single contact is its incorporation in the state and all its assets and operations are elsewhere, a
12

transfer of venue should be granted. See e.g., In re Dunmore Homes, Inc., 380 B.R. 663. 673
(S.D.N.Y 2008)(transferring venue and noting that the Debtors only connection to New York
was its state of incorporation and that it had sought financing there).
(c) Proximity of Witnesses.
Because Debtor's business, real estate and operations are located solely in Colorado and
many creditors are located in Colorado, the witnesses who can be expected to testify concerning
issues that will likely arise in connection with the case are located in Colorado. The Member
Representatives are not aware of any likely witness who is located in Delaware. Although the
Debtor has retained professionals in Delaware and California, the location of Debtors'
professionals is not entitled to any significant consideration on a motion to transfer venue. Son v.
Coal Equity, Inc. (In re Centennial Coal, Inc.), 282 B.R. 140, 146 (Bankr. D. Del. 2002)
(convenience of counsel is not relevant to the determination of whether to transfer venue).
(d) Most Creditors are Located in Colorado.
Overwhelmingly, the Debtors principal creditors are based in Colorado, including the
Debtors members and the Debtors principal secured creditor, Alpine Bank.
(e) The Estate can be Administered Most Efficiently in Colorado.
Based on the location of the Debtors' assets, creditors, and witnesses, including the fact
that the substantive law that will govern many of the issues in this case, this bankruptcy case will
be administered most efficiently in Colorado. There is also a substantial likelihood that a trustee
will be appointed in this case because of present managements fraud, dishonesty, incompetence
or gross mismanagement of the affairs of the Debtor. A Colorado trustee would be vastly more
efficient than a Delaware trustee. See In re Abacus Broadcasting Corp., 154 B.R. 682, 684
13

(Bankr. W.D. Tex. 1993) (noting the difficulty of a trustee administering assets in a distant
location).
This bankruptcy case is not a "national case." The case is clearly centered in Colorado.
In addition, this is not a large case. According to the Debtors most optimistic analysis, the value
of the Estates assets are, at best, $33 million. It will be far less expensive to administer the case
in Colorado, where most of the creditors are located and already have counsel, then in Delaware,
which is far from the locus of the Debtors assets and business.
CONCLUSION
The Debtor owns and operates a country club in Colorado. It has no connections to
Delaware, other than being its place of incorporation. This case unquestionably belongs in the
Colorado Bankruptcy Court, a much more convenient location that would facilitate involvement
by the parties most affected by the Debtors bankruptcy filing. The case satisfies each of the
standards that courts have applied in considering motions to transfer venue. No factors, other
than the State of incorporation, favor venue in Delaware. In the interest of justice and for the
convenience of the parties, the Court should exercise its discretion and transfer venue of this case
to Colorado.
14

WHEREFORE, for the above-mentioned reasons, the Member Representatives
respectfully request that this Court enter an order, substantially the form attached hereto as
Exhibit F, granting the relief requested herein and such other and further relief as the Court
deems just and proper.

Dated: July 3, 2012
Wilmington, Delaware

/s/ Zachary I. Shapiro
Mark D. Collins (No. 2981)
Zachary I. Shapiro (No. 5103)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
Email: collins@rlf.com
shapiro@rlf.com

- and -

Garry R. Appel
APPEL & LUCAS, P.C.
1660 17th Street, Suite 200
Denver, Colorado 80202
Telephone: (303) 297-9800
Email: Appelg@appellucas.com

Attorneys for the Member Representatives

RLF1 6214027v. 1

In re: )
)
1
) Case No. 12-11893 (CSS)
) Chapter 11
Debtor. )
) Hearing Date: To be determined.
Obj. Deadline: To be determined.

NOTICE OF MOTIONS AND HEARING

PLEASE TAKE NOTICE that, on July 3, 2012, Cheryl M. Foley, Thomas and Jane
Wilner, Charles and Mary Jackson and Kevin B. Allen, as representatives of a certified class in Case
Number 11CV552, pending in the District Court of Eagle County, Colorado (collectively, Member
Representatives), by their attorneys Appel & Lucas, P.C. and Richards, Layton & Finger, P.A.,
filed (i) the Motion of Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary
Jackson and Kevin B. Allen, Individually and as Representatives of a Certified Class of Members, to
Transfer Venue (the Venue Transfer Motion) and (ii) a motion to shorten the notice and objection
periods in connection with the Venue Transfer Motion (the Motion to Shorten) with the United
States Bankruptcy Court for the District of Delaware, 824 North Market Street, 3
rd
Floor,
Wilmington, Delaware 19801 (the Bankruptcy Court).
PLEASE TAKE FURTHER NOTICE that, if the Bankruptcy Court grants the relief
requested in the Motion to Shorten, (i) a hearing to consider the Venue Transfer Motion will be held
before The Honorable Christopher S. Sontchi, United States Bankruptcy Judge for the District of
Delaware at the Bankruptcy Court, 824 N. Market Street, 5
th
Floor, Courtroom 6, Wilmington,
Delaware 19801 on a date to be set by the Bankruptcy Court (the Hearing Date), and (ii) a

1
81632.

2
RLF1 6214027v. 1
deadline will be set by the Bankruptcy Court by which parties-in-interest may object to the relief
requested in the Venue Transfer Motion (the Objection Deadline). You will receive separate
notice of the Hearing Date and Objection Deadline once set by the Bankruptcy Court.

Dated: July 3, 2012
/s/ Zachary I. Shapiro
Mark D. Collins (No. 2981)
Zachary I. Shapiro (No. 5103)
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
Email: collins@rlf.com
shapiro@rlf.com

- and -

Garry R. Appel
APPEL & LUCAS, P.C.
Telephone: (303) 297-9800
Email: Appelg@appellucas.com

Attorneys for the Member Representatives

Exhibit A

RLF1 6210385v. 3

In re: )
)
1
) Case No. 12-11893 (CSS)
) Chapter 11
Debtor. )

DECLARATION OF CHERYL M. FOLEY

I, Cheryl M. Foley, declare under penalty of perjury, the following:

1. I am, among other things, a resident of Edwards, Colorado, one of the Member
Representatives
2
and Club Members (as defined below). In such capacities, I am familiar
with Cordillera Golf Club, LLC, a Delaware limited liability company and the debtor in
the above-captioned case (the Debtor), including its business, operations, assets and
liabilities. Unless otherwise stated, I have personal knowledge of the facts stated herein.

2. I have read, and am familiar with, the Motion, which I incorporate herein by reference.

3. Cordillera is a residential community located in Edwards, Colorado (the Community),
which consists of several hundred single family homes.

4. The Debtor owns and operates the Club at the Community (the Club), which consists
of certain recreational amenities in the Community, including, among other things, golf
courses, restaurants and swimming pools. The Debtors only assets and principal and
only place of business are located in Edwards, Colorado.

5. The Member Representatives (as defined in the Motion) are court-appointed
representatives of a certified class of the Clubs members in Case Number 11VC552,
pending in the District Court of Eagle County, Colorado (the Class Action Litigation).
3

1
81632.
2
Capitalized terms used herein and not otherwise defined have the meanings given to them in the Motion of Cheryl
M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen, Individually and as
Representatives of a Certified Class of Members, to Transfer Venue (the Motion).
3 A copy of the Third Amended Complaint in the Class Action Litigation is attached to the Motion as Exhibit B
thereto. The Class Action Litigation, among other things, seeks redress for the Debtors violations of the express
commitments it made to induce the Club Members (as defined herein) to pay 2011 dues and the subsequent misuse
of the dues that were then paid. The Class Action Litigation has also given rise to sanctions against the Debtor and
other defendants for their failure to produce required discovery and contempt proceedings against the Debtor and
other defendants for their blatant and repeated violations of a temporary restraining order entered by the State Court.
A copy of the motion regarding that matter is attached to the Motion as Exhibit C thereto. The State Court issued an

2
RLF1 6210385v. 3
The Class Action Litigation has 609 class members, including the Member
Representatives (collectively, the Club Members). The majority of the Club Members
own a home in Edwards, Colorado that is adjacent and/or in very close proximity to the
Club.

6. In order to be accepted into the Club, all Club Members were required to, among other
things, sign an agreement (collectively, the Membership Agreements) and deposit
funds with the Debtor (collectively, the Deposits). The average amount of the Deposits
is $103,000 but the amount of the Deposits ranges from $7,500 to $205,000. Upon
information and belief, all of the Club Members hold non-contingent unsecured claims
against the Debtor on account of the Deposits in the aggregate amount of $62 million and
the Club Members are, by far, the Debtors largest creditors.

7. Upon information and belief, (i) nearly all of the Debtors representatives and creditors
are located in, or have strong connections with, Colorado, including, among others, the
Club Members and the Debtors prepetition secured creditor, Alpine Bank Vail, and (ii)
none of the Debtors representatives and creditors are located in, or have any significant
connections with, Delaware.

8. Upon information and belief, the Debtor is party to numerous agreements, including the
hundreds of Membership Agreements, which are governed by Colorado law.

9. Upon information and belief, the Debtor has no connections with Delaware other than the
fact that Delaware is the state in which it was formed.

Dated: July 3, 2012 /s/ Cheryl M. Foley
Name: Cheryl M. Foley
Title: Member Representative and Club Member

order to show cause why the Debtor and other defendants should not be held in contempt and that matter is set for
hearing on July 20, 2012, in Colorado, although it will not proceed against the Debtor.

Exhibit B
District Court, Eagle County, Colorado
P. O. Box 597, Eagle, Colorado 81631
_____________________________________________
Plaintiffs: CHERYL M. FOLEY, THOMAS WILNER,
JANE WILNER, CHARLES JACKSON and
MARY JACKSON and KEVIN B. ALLEN individually and
on behalf of all others similarly situated,
v.
Defendants:
CORDILLERA GOLF CLUB, LLC, a Delaware
limited liability company; CORDILLERA GOLF
HOLDINGS, LLC, a Delaware limited liability company;
CORDILLERA F & B, LLC, a Delaware limited liability
company; WFP CORDILLERA, LLC, a Delaware limited
liability company; WFP INVESTMENTS, LLC, a Delaware
limited liability company; CGH MANAGER, LLC, a
Delaware limited liability company; DAVID A. WILHELM,
individually; and PATRICK WILHELM, individually
v.
Intervenor-Defendant/Counterclaimant and
Cross-Claimant: ALPINE BANK
_____________________________________________
Attorney for Plaintiffs
Brett Steven Heckman
HECKMAN & OCONNOR, P.C.
P. O. Box 726
Edwards, Colorado 81632
Tel.: (970) 926-5991
Fax: (970) 926-5995
Reg. No. 15330
Allan L. Hale, No. 14885
Peter J . Krumholz, No. 27741
Hale Westfall, LLP
1445 Market St., Suite 300
Denver, CO 80202
Tel.: (720) 904-6010
Fax: (720) 904-6020
COURT USE ONLY
Case Number: 2011CV552
Division: ______
EFILED Document
CO Eagle County District Court 5th JD
Filing Date: Dec 15 2011 3:03PM MST
Filing ID: 41427113
Review Clerk: Karen Frederick
THIRD AMENDED CLASS ACTION COMPLAINT
Plaintiffs, through counsel, bring this class action under C.R.C.P. 23 on behalf of
members of The Club at Cordillera (the Club), and complain against defendants as follows:
FIRST CLAIM FOR RELIEF
(Breach of Contract Class and Subclass)
1. Plaintiff Cheryl M. Foley is a resident of Edwards, Colorado.
2. Plaintiff Thomas Wilner is a resident of Washington, D.C.
3. Plaintiff J ane Wilner is a resident of Washington, D.C.
4. Plaintiff Charles J ackson is a resident of Lincolnshire, Illinois.
5. Plaintiff Mary J ackson is a resident of Lincolnshire, Illinois.
6. Plaintiff Kevin B. Allen is a resident of Cherry Hills Village, Colorado.
7. Defendant Cordillera Golf Club, LLC (CGC) is a Delaware limited liability
company with its principal place of business in Edwards, Colorado.
8. Defendant WFP Cordillera, LLC (WFP) is a Delaware limited liability
company with its principal place of business in Edwards, Colorado.
9. Defendant Cordillera Golf Holdings, LLC ("Holdings"), is a Delaware limited
liability company with its principal place of business in Edwards, Colorado. Upon
information and belief, Holdings has an ownership interest in the Club Facilities as the "Club
Facilities" are described in paragraph 13 hereinbelow.
10. Defendant Cordillera F & B, LLC ("F & B") is a Delaware limited liability
company with its principal place of business in Edwards, Colorado. Upon information and
belief, F & B has an ownership interest in the Club Facilities as the "Club Facilities" are
described in paragraph 13 hereinbelow.
11. WFP Investments, LLC, is a Delaware limited liability company and is
signatory to Alpine Bank loan documents relating to defendants acquisition of The Club at
Cordillera.
12. CGH Manager, LLC, is a Delaware limited liability company and is signatory
to Alpine Bank loan documents relating to defendants acquisition of The Club at Cordillera.
13. Defendant David A. Wilhelm resides in Basalt, Colorado.
14. Defendant Patrick Wilhelm at pertinent times resided in Edwards, Colorado. .
15. David A. Wilhelm and Patrick Wilhelm are referred to collectively as the
Wilhelms. Upon information and belief, and subject to discovery, Patrick Wilhelm is a
beneficiary of a trust arrangement that may be financially responsible for the wrongdoing
asserted herein.
16. CGC owns and operates The Club at Cordillera (the Club). The Club
comprises four golf courses and the Trailhead and Summit Facilities. The Mountain,
Summit and Valley Courses are each 18-hole championship golf courses with clubhouses,
locker rooms, golf shops and grille rooms. The Mountain and Valley Course facilities each
also have restaurants. The Valley Course facilities include two tennis courts. The Short
Course is a ten-hole golf course with a driving range and putting greens. The Trailhead
Facility comprises a family lodge including a great room, exercise area, locker rooms and
swimming pools. The Summit Club Facility includes a meeting room, an exercise room, two
tennis courts and a swimming pool and jacuzzi. The foregoing are referred to collectively as
the Club Facilities.
17. Upon information and belief, WFP is the manager and sole member of CGC,
Holdings and F & B. Upon information and belief, David A. Wilhelm and Patrick Wilhelm
are, or at pertinent times were, members of WFP, and at pertinent times shared management
responsibilities for the Club.
18. Upon information and belief, at pertinent times, WFP, Holdings, F & B,
David Wilhelm and Patrick Wilhelm were in positions of management and control of CGC
and the Club, and in fact exercised management responsibilities and control over CGC and
the Club in connection with matters set forth herein. The roles of WFP Investments, LLC
and CGH Manager, LLC are not yet fully known. Defendants are fiduciaries to plaintiffs and
all members of the Club ("Club Members").
19. Plaintiffs are Club Members. Plaintiffs and all Club Members paid
membership deposits upon joining the Club. Upon acceptance into the Club, each Club
Member was required to sign an agreement (the Membership Agreement) and deposit
funds in amounts as large as $175,000 (Membership Deposits) with the promise and
expectation of being provided the highest quality amenities and use of all Club Facilities.
Pursuant to the Membership Agreement and other membership documents described
hereinbelow, the Membership Deposits are refundable and as such are liabilities of
defendants and, upon information and belief, exceed $100 million.
20. The rights of Club Members are stated in the Membership Plan, which the
Club Members relied upon in joining the Club and paying the substantial deposits that were
required for them to join. The Club and the Club Members are bound by the terms and
conditions of the Membership Plan.
21. The Membership Plan explicitly provides that Club Members, such as
plaintiffs, are entitled to use the Club Facilities, including the Mountain Course, Summit
and Valley Courses and the Short Course an unlimited number of times each year The
Membership Plan explicitly provides that the Owner will pay all operating
deficits...resulting from operation of the Club.
22. In or around J une 2009, the Wilhelms and entities under their direction and
control acquired ownership of the Club, including all of the assets, properties and Club
Facilities from its previous owner, the Posen Group. At or about that time defendants
distributed to Club Members a document entitled Addendum To Application For
Membership Privileges ("Addendum"). In the Addendum, the Club Facilities are defined to
include the aforementioned four golf courses, golf practice facilities, tennis courts, club
houses, athletic club, Trailhead center, and related Club Facilities.
23. Plaintiffs Thomas Wilner, J ane Wilner and Kevin B. Allen are also Premier
Club Members ("Premier Members" or "Premier Memberships"). Defendants first offered
Premier Memberships to Club Members who were "Signature Members" in or around J une
2009. "Signature Members" are Club Members with full golf privileges. Two letters (dated
J une 26 and J uly 1, 2009, respectively, together with a brochure titled Cordillera 20/20 (the
"20/20 brochure" or the "brochure") were sent by defendants promoting Premier
Memberships. The 20/20 brochure promotes Premier Memberships by stating there will be
almost certain increase in value of the Premier Memberships as well as your Cordillera real
estate connected to these benefits. The brochure also states a separate wait list will be
created to accommodate the greater demand for Premier Memberships.
24. There are approximately 160 Premier Members. Premier Members paid an
additional $30,000 to convert to a Premier Membership. In return, Premier Members
received additional rights and benefits that supplement the rights they originally acquired as
Signature Members. These purported rights and benefits are more particularly detailed in
paragraphs 66 to 95 hereinbelow which paragraphs are incorporated herein by reference.
25. Defendants represented to plaintiffs and Club Members in letters and
promotional material used to sell Premier Memberships that, based upon defendants
management and operation of the Club, Premier Members would almost certainly profit
from the acquisition of a Premier Membership. Defendants also represented that Premier
Memberships would be in great demand because of the valuable rights a Premier Member
acquired, and that Premier Memberships would be easily saleable because, among other
things, a separate wait list would be created by defendants to accommodate the greater
demand for Premier Memberships. Defendants also represented that when a Premier
Member sold his/her membership, the Premier Member would lose no money because, at a
minimum, a Premier Member would receive a full refund of the deposits paid for the Premier
Members Signature Membership plus the additional deposit paid for the Premier
Membership.
26. On J uly 30, 2010, David Wilhelm sent Club Members a letter entitled
Restructuring the Club at Cordillera in which he announced that he was losing money
operating the Club and would immediately take steps to lessen the shortfall. He
announced that he was planning a 25 percent reduction of expenditures for 2011.
27. The Cordillera Property Owners Association (CPOA) appointed an informal
group of property owners to study the alternatives that were available and to explore
solutions with the Wilhelms. On October 20, 2010 this group incorporated as the Cordillera
Transition Corporation (CTC).
28. In December 2010, the Wilhelms indicated to the CTC that they did not intend
to open all the golf courses and Club Facilities during 2011 unless they were assured of
sufficient revenues, and that they intended to open only the number of golf courses and other
Club Facilities in 2011 that they believed they could afford.
29. Annual membership dues for 2011 were payable in February 2011. Before
paying those dues, Club Members sought assurances from the Wilhelms and CGC that, in
accordance with the Membership Plan, all of the golf courses and other Club Facilities would
be open for use in 2011.
30. On J anuary 10, 2011, CGC sent an e-mail to Club Members expressly
providing those assurances. The e-mail stated, among other things, as follows:
2011 Dues: Club Facilities Open in 2011.
This has been a hot topic over the past couple of months. Here is
our official position on the subject..
(a) We will open and provide Members access to all four golf
courses, clubhouses and related facilities in 2011. We understand
this has been a concern for many of you and we trust that this will
allay any fears or reservations you may have. This serves as a
response to the Members who have requested assurances of
services.
(b) The annual dues for 2011 will be $18,000 for each golf
membership. As in years past, we are offering an early payment
discount.[and] the golf Annual Dues are $13,800 if the Member
pays before February 4, 2011.
The discounted golf member dues of $13,800 represented a 25 percent increase over the 2010
dues. The e-mail further assured Club Members as follows:
y A special annual dues account is established at a local bank . . .
y All FY 2011 dues will be deposited in this account.
y [N]o portion of the dues or other Club revenues shall be used
for any purpose other than to pay for valid Club expenditures.
y An independent CPA will review and confirm to the Club on a
monthly basis that all funds [are] used for valid Club
purposes.
31. On J anuary 20, 2011 David Wilhelm and Patrick Wilhelm in their individual
capacities sent another e-mail to Fellow (Club) Members stating, among other things, We
are . . . committed to open all the facilities in 2011.
32. Based on those assurances, plaintiffs and, upon information and belief,
approximately 586 other Club Members paid their 2011 annual dues. Upon information and
belief, the revenue received by CGC for the 2011 dues is an estimated $7,760,868.
33. Despite the J anuary 10 and 20 assurances, on May 24, 2011, after he had
collected the annual dues for 2011, David Wilhelm announced in an e-mail to Club Members
that he would not open all the golf courses but would close three of the four golf courses and
their associated clubhouses, the Clubs main restaurant (the Timberhearth), and the
Trailhead facility to preserve cash flow. Wilhelm admitted that his action is particularly
unfair and burdensome to our loyal members who have paid dues in expectation of having
access to all facilities. On J uly 21, 2011, approximately 30 days after the original complaint
in this case was filed, defendants opened one additional golf course, but have opened no
other Club Facilities.
34. Plaintiffs and the other Club Members performed their obligations under the
Membership Plan and otherwise by paying their 2011 dues and did so based on the express
entitlement under the Membership Plan to use all four golf courses and other Club Facilities
and on the express representations of CGC and the Wilhelms that all four golf courses and
other Club Facilities would remain open in 2011.
35. In violation of the Membership Plan and their J anuary 2011 assurances, CGC
and the Wilhelms have failed to provide plaintiffs with the use of three of the four golf
courses, the Timberhearth, the Trailhead facility, and related Club Facilities and amenities.
The Membership Plan and Amended Membership Plan obligate the Clubs owners to fund all
deficits and allow the owners to retain all profits.
36. Defendants have also violated their commitments to Premier Members, having
reneged on their agreement in exchange for the additional payment of $30,000 each to
provide additional benefits to Premier Members as described above.
37. On August 19, 2011, plaintiffs completed a court-ordered audit of defendants
finances from J anuary 1, 2011 through J uly 31, 2011 (the audit period).
38. The audit indicates that defendants, during the audit period, collected
$7,760,868 in dues revenues, and that at least $6,600,533 of those dues was received in
J anuary 2011.
39. The audit indicates that David Wilhelm, from April through J uly 2011, paid
himself $842,536 from Club Members dues as purported interest expense and management
fees.
40. The audit indicates that Patrick Wilhelm, in J une 2011, was paid $50,000
from Club Members dues as purported severance and accrued vacation pay.
41. The audit indicates that in J uly 2011 WFP paid itself from Club Members'
dues $60,000 as a purported reimbursement for severance pay paid to David Wilhelms son,
Nicholas Wilhelm.
42. The audit indicates that as a result of not opening all of the golf courses and
Club Facilities, CGCs cash flow was approximately $1,300,000 greater than CGC had
forecast in J anuary 2011. Defendants utilized this cash to pay themselves instead of opening
all golf courses and Club Facilities as they had agreed and were obligated to do.
43. Defendants also paid $323,483 from March through J uly 2011 to architects
and lawyers for matters not necessary for the operation of golf courses and Club Facilities,
and have since made additional payments of approximately $340,000 for matters not
necessary for the operation of golf courses and Club Facilities.
44. Plaintiffs were damaged as stated below.
SECOND CLAIM FOR RELIEF
(Promissory Estoppel Class and Subclass)
45. Plaintiffs incorporate by reference all previous allegations.
46. All Club Members reasonably relied to their detriment on the J anuary 10,
2011 e-mail from CGC and the J anuary 20, 2011 e-mail from the Wilhelms and paid their
2011 annual dues.
47. Premier Members reasonably relied to their detriment on the promotional
materials provided in connection with the sale of Premier Memberships. Premier Subclass
incorporates additional Premier allegations at paragraphs 66 to 95 hereinbelow.
THIRD CLAIM FOR RELIEF
(False Representation - Class)
50. The Wilhelms and CGC made false representations making the firm
commitment that all four golf courses and Club Facilities would be open in 2011 to induce
Club Members to pay their 2011 dues to the Club.
51. The said representations were material to Club Members.
52. The Wilhelms and CGC made the said representations knowing them to be
false or aware that they did not know whether the representations were true or false inasmuch
as they at all times intended to close all or some of the golf courses and Club Facilities in
their discretion (which they did not possess).
53. Plaintiffs relied on the representations.
54. Plaintiffs reliance was justified.
FOURTH CLAIM FOR RELIEF
(Constructive Trust Class and Subclass)
57. Upon information and belief, CGC is insolvent.
58. The three golf courses which have been closed by the Club are unique and
impossible of duplication.
59. Upon information and belief, the said three golf courses, if not properly
maintained, will be irreparably damaged.
60. Upon information and belief, the $7,760,868 (or what is left of it) will be
dissipated if not immediately protected by the Court, and the said funds, in any event, must
be recovered to maintain the Club Facilities.
FIFTH CLAIM FOR RELIEF
(Breach of Duty of Good Faith and Fair Dealing Class )
61. Plaintiffs incorporate by reference all previous allegations. .
62. Plaintiffs reasonably expected that their 2011 annual dues would be used to
open, operate and maintain the golf courses and Club Facilities.
63. Defendants expressly agreed to open, operate and maintain the golf courses
and Club Facilities, and to pay operating deficits.
64. Defendants had a duty to act in good faith and to deal fairly with plaintiffs and
to act consistent with the reasonable expectations of plaintiffs.
65. Defendants breached their duty of good faith and fair dealing when they chose
to not open all golf courses and Club Facilities and instead paid David Wilhelm, Patrick
Wilhelm, Nicholas Wilhelm and others the payments referenced in paragraphs 39 through 43
hereinabove.
ADDITIONAL ALLEGATIONS AS TO PREMIER MEMBERS
Promotional Representations and Material Omissions in Connection With the Offer and
Sale of Premier Memberships
66. Following its acquisition of the Club, CGC amended the Membership Plan in
a restated agreement entitled The Club at Cordillera Membership Plan as Amended and
Restated in Its Entirety (Amended Membership Plan). The Amended Membership Plan
was drafted solely by defendants with no input or comment by Club Members or Premier
Members. Among other things, the Amended Membership Plan provides for a new category
of memberships called Premier Memberships. The Amended Membership Plan states that
in addition to the rights, privileges, and benefits granted to Signature Members as set forth in
the Amended Membership Plan, Premier Members are entitled to the additional rights and
privileges as described in more detail herein.
67. From J une through December 2009, CGC through WFP, Holdings, David
Wilhelm and Patrick Wilhelm instituted a campaign to market and sell Premier Memberships
to existing Signature Members. The sale of Premier Memberships was designed and
intended by defendants to raise risk capital for CGCs use in enhancing, operating, and
maintaining the Club Facilities by obtaining additional investments from existing Signature
Members.
68. Defendants represented to Club Members and Premier Members in letters and
promotional material used to sell Premier Memberships, that based upon defendants'
management and operation of the Club, Premier Members would almost certainly profit
from the acquisition of a Premier Membership. Defendants also represented that Premier
Memberships would be in great demand because of the valuable rights a Premier Member
acquired, and that Premier Memberships would be easily saleable because a separate wait list
would be created by defendants to accommodate the greater demand for Premier
Memberships. Importantly, defendants also represented that when a Premier Member sold
his/her membership, the Member would lose no money because, at a minimum, a Premier
Member would receive a full refund of the deposits paid for the Premier Members Signature
Membership plus the additional deposit paid for the Premier Membership. Documents
identifying these representations and contractual obligations are identified with specificity
below.
69. Upon information and belief, Signature Members each paid an initial deposit
of up to $150,000 for their Signature Membership.
70. In J une and J uly, 2009, defendants promoted Premier Memberships in letters
and documents that were either written by and/or approved by all defendants before the
letters and documents were provided to all potential Premier Members. Three specific
documents are identified below, and the pertinent representations include the following:
a. In the J une 1, 2009 brochure entitled Cordillera
20/20, the Premier Membership was described as follows:
Premier Members will receive the following direct benefits:
Premier Memberships will include Legacy Privileges
which provides that all children of existing members will be
considered as full members of the club without payment of
additional dues, guest fees or charges not paid by the existing
member.
There will be no transfer fee assessed in connection with
re-issuance of a Premier Membership.
Upon the sale or transfer of their Premier Membership,
Premier Members will have the right to receive the greater of: (a)
the original membership deposit paid by the Premier Member
(including the additional $30,000 membership deposit paid in
connection with the conversion to a Premier Membership); or (b)
the resale price of the Premier Membership. In other words,
Premier Members will have the right to receive 100% of the
increase in the value of their Premier Memberships. Premier
Members will essentially own 100% of their membership equity.
A separate wait list for Premier Memberships will be
created to accommodate the greater demand for these
memberships.
Premier Memberships will be non-assessable.
In the event of a future equity conversion of the Club,
Premier Members will not be required to pay any conversion price
or any similar amount in connection with the equity conversion of
the Club.
Premier Members will have the right to acquire a Cordillera
Mountain Club Membership at a 50% discount off the initial price
at which Cordillera Mountain Club Memberships are offered to the
general public.
ASSOCIATE CLUB PRIVILEGES
Since the Wilhelm Family Partnership owns or controls Mayacama
Golf Club in Sonoma County California and The Roaring Fork
Club in Basalt Colorado; Premier Members will be offered
associate club privileges at these fine clubs as a further
enhancement to the Premier Membership. The associate club
program will also be extended to our clubs in New York and Los
Cabos which are in preliminary stages of development.
The most significant by-product of the associate club program will
be the almost certain increase in the value of the Premier
Memberships as well as your Cordillera real estate connected to
these benefits. . . . (Emphasis added)
b. In a letter dated J une 26, 2009, and signed by David
Wilhelm, the following statement was made:
Cordillera is the largest and most diverse mountain golf franchise
in North America. However, without a deep sense of community
where members and families are connected as part of the
Cordillera Family it is just a beautiful collection of real estate
assets without a real soul. It is this soul that is missing and our job
along with your help, is to renew the spirit and sense of pride that
brought you to this club in the beginning; a reinvigoration of the
community spirit of Cordillera. The attached outline of Cordillera
20/20 represents our initial thoughts to achieve these goals.
When fully developed, property owners at Cordillera will have
over three billion invested and yet the golf and social amenities
represent less than 3% of this amount. The amenities, however,
and their operating philosophy have a huge impact on property
values. Our collective efforts at restoring the golf and social
infrastructure will have the most positive impact on our
membership and your real estate.
Premier Members will also be granted certain access and use
privileges at various affiliate clubs. Current affiliate clubs include
Mayacama Golf Club in Sonoma County California and The
Roaring Fork Club in Basalt Colorado. In the future, the affiliate
club program may also be extended to other clubs, including those
which are in the preliminary stages of development in New York
and Los Cabos. Access to these affiliate clubs at very highly
desirable locations will provide a multiple vacation experience that
is totally unique, financially sensible, and will enhance the lifestyle
of the Premier Members. (Emphasis added)
c. In a letter dated J uly 1, 2009, and signed by Patrick
Wilhelm and David Wilhelm, Defendants made by the following
statement:
Accordingly, we will be seeking your assistance in completing the
membership roster at the Club. As we restore new pride in the
Cordillera community we will ask you to embrace this privilege
and responsibility of membership. By recommending your friends
we can be assured of a compatible and like-minded group of
members who share the Cordillera vision. Moreover, within the
next few days you will be receiving an invitation to enroll in
Premier Membership. You will read more about Premier
Membership in the enclosed Cordillera 20/20. We view this
initiative as one of the single most important developments for
Cordilleras future and ask that you consider this membership
choice very carefully.
71. In making the foregoing representations and promises, defendants, and those
acting under their control, omitted to disclose the following material facts known to them,
and also made the materially false statements set forth in subparagraph (e):
a. that defendants chose to provide positive and
favorable information about David Wilhelms past experience
while intentionally omitting relevant negative information
regarding his past. The omitted information was particularly
material given the importance David Wilhelm had to the success or
failure of the Premier Membership program. Undisclosed were the
facts that David Wilhelms real estate development history
included a civil fraud claim in connection with a real estate
development; that a firm controlled by David Wilhelm, the Forsyth
Group, pled guilty to lying to the government in 1992 in
connection with the sale of a building in St. Louis to the U.S.
Postal Service, and David Wilhelm later agreed to pay
approximately $3 million to settle a civil lawsuit brought by the
government concerning the same sale;
b. that defendants representations that they would
upgrade and run the Club as the premier mountain golf club in
North America were dependent on unduly optimistic and
unreasonable assumptions and projections defendants developed,
including but not limited to unreasonable assumptions regarding
attracting new members, and unreasonable projections that
members would provide significant additional revenue to the Club;
c. that in acquiring the Club, defendants anticipated
receiving over $5 million in deposits from the Posen Group, and
the funds were not received;
d. that notwithstanding the express obligation in the
Amended Membership Plan that required the owners to fund
operating deficits, defendants believed the Club had the right to
pledge its assets to David Wilhelm for operating loans; and
e. At page 7 of the Cordillera 20/20 brochure, on
information and belief defendants misrepresent their relationship
with Lubert-Adler as their long term financial partner and the
circumstances for an alleged new joint venture to develop Battle
Mountain and rename it Cordillera Mountain.
72. Based on the total mix of information available to them through the common
representations made to each of them and to all Members of the Subclass, and also the false
representations set forth above, and in the absence of disclosure of the omitted material facts
described above, plaintiffs accepted CGCs offer to sell Premier Memberships in the Club by
executing the Agreement and making the required Premier Membership Deposit.
73. In addition to the named plaintiffs, approximately 160 other Signature
Members accepted CGCs offer of Premier Membership, based on the common
representations, promises and omissions set forth above.
74. Defendants actions and statements in promoting and selling the Premier
Memberships constituted the offer and sale of a security under the Colorado Securities Act.
The Premier Memberships were an investment contract because the funds paid by plaintiffs
and all Members of the Class for their Premier Memberships were paid with the expectation
that financial benefits would result from the efforts of defendants; and, Premier Memberships
were sold by defendants with the intention and purpose of raising risk capital to finance
defendants proposed operation and enhancement of the Club.
75. In promoting and selling the Premier Membership, Premier Members of the
Subclass reasonably placed their trust and confidence in each defendant, and each defendant
agreed and/or assumed responsibility to act for the benefit of each Premier Member.
Accordingly, a fiduciary relationship existed between defendants and the Premier Members.
76. The contract between Premier Members on the one hand, and CGC on the
other hand, imposed the requirement that CGC acted in good faith.
Premier Membership Rights
77. The Amended Membership Plan sets forth part of the contract between CGC
on the one hand and Club Members and Premier Members on the other hand. In addition to
the contract rights set forth in the Amended Membership Plan, as supplemented and
explained by the representations and promises identified above, CGC made material
representations and promises to Club Members including Premier Members in the
Addendum to Application for Membership.
78. The Amended Membership Plan obligates the Clubs owners to fund all
deficits and it allows the owners to retain all profits. Because the Amended Membership
Plan required the owners to fund deficits, Premier Members had a reasonable expectation
when they acquired their Premier Memberships that notwithstanding the potential for future
operating deficits, the Club would operate as the premier mountain golf community in North
America consistent with the representations in the Cordillera 20/20 brochure and in the J une
26 and J uly 1, 2009 letters identified above.
79. The Amended Membership Plan also obligates CGC to operate all Club
Facilities for the benefit of Premier Members, their adult children (pursuant to the Legacy
Privileges) and for the benefit of Signature Members.
80. Paragraph 1 of the Addendum identifies nine additional contract rights and
benefits that Premier Members acquired when they became Premier Members. It is because
of these additional rights and benefits that reasonably assumed their Premier Memberships
and Cordillera property would almost certainly increase in value, and at a minimum they
would lose no money.
81. The rights included in Paragraph 1 of the Addendum are as follows: Legacy
Privileges, the representation that Premier Memberships are non-assessable, the
representation that a separate wait list would be created for the sale of Premier Memberships,
the right to transfer Premier Memberships with a Cordillera home or home site, the rights of
Premier Members regarding resignation payments, the representation that no transfer fee will
be charged to Premier Members, the representation that no payment is required from Premier
Members in the event of an equity conversion, the right to a fifty percent discount for a
Cordillera Mountain Club Membership, and the right to use Affiliate Clubs.
82. The first claim for relief, breach of contract, involves material breaches,
anticipatory repudiations, disregard of the duty of good faith, and other wrongful conduct by
CGC regarding the contract provisions identified above.
Wrongful Conduct Following Sale of Premier Memberships
83. In a letter signed by David Wilhelm dated J uly 30, 2010, titled Restructuring
The Club At Cordillera, all Premier Members and Signature Members were advised that
defendants intended to implement immediate cost reductions, including a 2011 cost
reduction of 25 percent. The J uly 30 letter reflected a material change in CGCs operating
philosophy. Defendants stated in the letter that prudent financial steps were necessary to
lessen the anticipated shortfall. The letter further indicated the shortfall occurred because
revenues were $4 million less than defendants goal.
84. The J uly 30, 2010 letter constituted a material breach, and an anticipatory
repudiation of CGCs contract obligations to Club Members including Premier Members. As
of J uly 30, 2010, defendants reneged on the obligation set forth in the Amended Membership
Plan that the owners must fund deficits. The J uly 30, 2010 letter also constitutes a
repudiation of the representations under which Premier Memberships were sold, including
the operating philosophy that defendants would run Cordillera as the premier mountain golf
community in North America.
85. The J uly 30, 2010 letter constitutes a breach of fiduciary duties by defendants.
The restructuring described in the J uly 30 letter was adopted to benefit defendants to the
detriment of Club Members including Premier Members, thereby breaching defendants
fiduciary duties. Importantly, defendants acknowledge in the J uly 30 letter that defendants
have always considered themselves as custodians and trustees of Cordillera, thereby
recognizing their fiduciary relationships with plaintiffs and Members of the Subclass.
86. Additionally relevant is the statement in the J uly 30, 2010 letter that
defendants intend to work together in an open, transparent atmosphere of trust to solve the
problems. The quoted statement by defendants was false. In fact, one of the primary
reasons defendants caused the damages identified herein is because of the enormous distrust
the Cordillera community has of defendants. As the result of the omissions,
misrepresentations of fact, and because defendants reneged on representations and
assurances, the Cordillera community views defendants as untrustworthy. The distrust has
caused Premier Memberships to have little to no value and caused Cordillera property owned
by Club Members including Premier Members to decline in value.
87. On information and belief, by a deed of trust dated J une 23, 2010 ("Deed of
Trust"), and signed by Patrick Wilhelm on behalf of CGC, Holdings, F & B, and WFP, the
identified defendants pledged Club assets to David Wilhelm as collateral for a revolving loan
securing past and future advances by David Wilhelm. The Deed of Trust was not authorized
by the parties contract and is inconsistent with the requirement that owners advance
operating deficits. Alternatively, if the Deed of Trust was authorized by the parties contract,
defendants should have disclosed that Club assets could be pledged to David Wilhelm before
the Premier Memberships were sold.
88. Largely because of the Restructuring announced by defendants in the J uly
30, 2010 letter, Premier Members and Signature Members demanded assurance before dues
for 2011 were paid, that all golf courses and Club Facilities would be open for use in 2011.
89. In a letter dated October 27, 2010, approximately 50 Premier Members raised
numerous concerns regarding the Premier Membership Program and the Club. The October
27, 2010 letter noted the fact, after the discovery by Premier Members of the Deed of Trust
executed for the benefit of David Wilhelm, that the Posen Group failed to transfer
approximately $5 million in deposits. Among other points, the letter requested assurance that
the rights of Premier Members would be honored, and defendants would bear the cost of
preserving Premier Memberships in the event of a restructuring or transaction involving the
Club.
90. By letter dated November 5, 2010, David Wilhelm and Patrick Wilhelm, on
behalf of CGC, responded to some of the issues raised in the October 27, 2010 letter.
Notably, the response is silent regarding the discoveries by Premier Members that defendants
failed to disclose the Deed of Trust, or that funds were not received from the Posen Group.
The November 5 response did, however, provide assurance that the rights of Premier
Members would continue for an indefinite period of time in accordance with the
Membership Plan and the Agreement.
91. By email dated J anuary 10, 2011, CGC advised both Premier Members and
Signature members that all four golf courses, clubhouses and related facilities would be open
in 2011. Thereafter, on J anuary 20, 2011, similar assurances were provided by David
Wilhelm and Patrick Wilhelm on behalf of the remaining defendants.
92. Based upon the specific assurances referenced above that all Club Facilities
would be open for the benefit of Premier Members in 2011, and also relying on the contract
provisions that obligate CGC to operate all Club Facilities in 2011, plaintiffs and Members of
the class paid their 2011 dues. The amount each person paid was $13,800, if an early
payment discount was received, or $18,000 if no discount was received.
93. Thereafter, notwithstanding the contract obligations, express assurances, and
fiduciary duties, defendants reneged, and did not open most Club Facilities for 2011.
Instead, the only Club Facilities that were opened were the Valley Golf Course and limited
service at the Valley Club House.
94. The failure to open all Club Facilities in 2011 is a material breach of contract
by CGC, and wrongful conduct by all defendants, thereby providing a basis for liability on
all claims asserted herein.
95. In addition, all of the alleged wrongful conduct by defendants as set forth
above is the direct, legal, and proximate cause of all damages requested by plaintiffs and
each Member of the Subclass.
SIXTH CLAIM FOR RELIEF VIOLATION OF COLORADO SECURITIES ACT
(C.R.S. 11-51-501(1)(b) and 11-51-604(4))
(Against CGC - Subclass)
97. Plaintiffs Premier Memberships are investment contracts, and therefore they
are securities as defined by the Colorado Securities Act, C.R.S. 11-51-201(17).
98. In connection with the offer and sale of a security, and as alleged with
specificity herein, CGC made material misstatements of fact, and also omitted to state
material facts necessary to make the statements made, in light of the circumstances under
which they were made, not misleading.
99. Plaintiffs and Members of the Subclass did not know the truth of the material
misstatement of facts or the material omissions of fact.
100. CGC knew, or in the exercise of reasonable care should have known, of the
material misrepresentations and/or omissions of fact.
101. Plaintiffs and Members of the Subclass sustained damages as a proximate
result of CGCs actions in an amount proved at trial.
102. Plaintiffs and Members of the Subclass are entitled to recover their attorneys
fees under the Colorado Securities Act for the prosecution of this class action.
SEVENTH CLAIM FOR RELIEF VIOLATION OF COLORADO SECURITIES ACT
(C.R.S. 11-51-501(1)(a) and (b) and 11-51-604(3))
(Against CGC - Subclass)
103. Plaintiffs incorporate by this reference all previous allegations.
104. In connection with the sale of Premier Memberships, CGC (a) employed a
device, scheme or artifice to defraud, and/or (b) engaged in an act, practice, or course of
business that operated as a fraud or deceit upon plaintiffs and Members of the Class.
105. CGC engaged in this conduct recklessly, knowingly, or with an intent to
defraud.
106. Plaintiffs and Members of the Subclass relied on CGCs device, scheme,
artifice, practice, and/or course of business in purchasing their Premier Memberships.
107. Plaintiffs and Members of the Subclass sustained damages as a direct and
proximate result of CGCs action in an amount proved at trial.
108. Plaintiffs and Members of the Subclass are entitled to recover their attorneys
fees under the Colorado Securities Act for the prosecution of this Class Action.
EIGHTH CLAIM FOR RELIEF AIDING AND ABETTING VIOLATION OF
COLORADO SECURITIES ACT
(C.R.S. 11-51-501(1) and 11-51-604(5)(c))
(Against WFP, Holdings, David Wilhelm and Patrick Wilhelm - Subclass)
110. WFP, Holdings, F & B, David Wilhelm, and Patrick Wilhelm knew that CGC
was engaged in conduct constituting a violation of C.R.S. 11-51-501, and gave substantial
assistance to such conduct.
111. WFP, Holdings, F & B, David Wilhelm and Patrick Wilhelm are jointly and
severally liable to the same extent as CGC to plaintiffs and Members of the Subclass for
damages proved at trial and for attorneys fees incurred by plaintiffs and Members of the
Subclass.
NINTH CLAIM FOR RELIEF CONTROLLING PERSON LIABILITY FOR
VIOLATION OF COLORADO SECURITIES ACT
(C.R.S. 11-51-501(1) and 11-51-604(5)(b) - Subclass)
(Against WFP, Holdings, David Wilhelm, and Patrick Wilhelm)
113. WFP, Holdings, F & B, David Wilhelm, and Patrick Wilhelm, by virtue of
their relationships with and positions with CGC as alleged herein, had the ability to control,
directly or indirectly, the actions of CGC alleged herein.
114. WFP, Holdings, F & B, David Wilhelm, and Patrick Wilhelm did in fact
exercise control, directly or indirectly, over the actions of CGC alleged herein by, among
other things, authorizing the creation and sale of Premier Membership interests, determining
the terms of those interests, and determining and authorizing the representations, promises,
and omissions made in offering and selling those interests to plaintiffs.
115. WFP, Holdings, F & B, David Wilhelm and Patrick Wilhelm are jointly and
severally liable to the same extent as CGC for the damages proved at trial including
attorneys fees.
TENTH CLAIM FOR RELIEF FRAUDULENT REPRESENTATIONS AND
OMISSIONS OF FACT
(Against All Defendants - Subclass)
117. As more particularly alleged with specificity above, each of the all defendants
made material misrepresentations and also failed to disclose one or more material fact that he
or it had a duty to disclose with respect to Premier Memberships.
118. Defendants made the misrepresentations, and/or failed to disclose the material
facts, with the intent to create a false impression of the actual facts in plaintiffs minds and
the minds of the Members of the Subclass.
119. Defendants made the misrepresentations, and/or failed to disclose the material
facts, with the intent that plaintiffs and Members of the Subclass purchase the Premier
Memberships.
120. Plaintiffs and members of the Subclass purchased the Premier Memberships
relying on the truth of the material misrepresentation, and also the assumption that the
undisclosed facts did not exist, or was different from what was actually stated.
121. The plaintiffs and Members of the Subclass reliance was justified.
122. This reliance caused damages to the plaintiffs and Members of the Subclass in
an amount proved at trial.
ELEVENTH CLAIM FOR RELIEF BREACH OF FIDUCIARY DUTY
(Against All Defendants Class and Subclass)
123. Plaintiffs and Members of the Class and Subclass incorporate by reference all
previous allegations.
124. Defendants were acting as a fiduciary to plaintiffs and Members of the Class
with respect to their assurances provided to all Club members that all Club facilities would
open in 2011 if plaintiffs and the Class paid 2011 dues.
125. Defendants were acting as a fiduciary to plaintiffs, and Members of the
Subclass, with respect to the promotion, sale, and operation of the Club regarding the
Premier Memberships.
126. Defendants breached their fiduciary duties as outlined in more detail above.
127. Defendants wrongful conduct has also caused a diminution of the real estate
values in the Cordillera community, to the financial detriment of Members of the Class and
Subclass.
128. Defendants fiduciary breaches are a cause of the damages sustained by
plaintiffs and Members of the Class and Subclass in an amount proved at trial.
129. Plaintiffs and Members of the Subclass are also entitled to recover their
attorneys fees as authorized by Colorado law for breach of fiduciary duty claims.
TWELFTH CLAIM FOR RELIEF COLORADO CONSUMER PROTECTION ACT
(C.R.S. 6-1-105 Against All Defendants Class and Subclass)
130. Plaintiffs and Members of the Subclass incorporate by reference all previous
allegations.
131. Defendants engaged in an unfair or deceptive trade practice in marketing
Premier Memberships.
132. The deceptive trade practices perpetrated by defendants occurred in the course
of defendants business.
133. Defendants deceptive trade practices significantly impacted the public as
actual or potential customers of the defendants business.
134. The Premier Subclass suffered an injury to their legally protected interests
which were caused by defendants deceptive trade practices.
135. Plaintiffs and Members of the Subclass are entitled to recover three times the
amount of actual damages together with reasonable attorney fees.
CLASS ALLEGATIONS
136. Paragraphs 1 through 135 are incorporated herein.
137. Class Definition. Plaintiffs bring this action pursuant to C.R.C.P.
23(b)(1)(A), on behalf of themselves and the following Classes:
(1) All Club Members who paid Membership Deposits upon joining the Club
and who also paid their 2011 annual dues (the Dues/Deposit Class); and
(2) All Club Members who paid Premier Membership deposits (the Premier
Subclass).
138. Numerosity. The members of the Class and Subclass are so numerous that
joinder of all members is not practicable or necessary. As set forth above, there are at least
586 Club Members who paid their 2011 annual dues and 160 Club Members who paid
Premier Deposits.
139. Commonality. As to the members of the Dues/Deposit Class, this case
presents, inter alia, the following common questions of law and fact:
a. Did defendants breach their contractual obligations,
reasserted in uniform publications by defendants to all Club
Members in J anuary 2011, to make all Club facilities available in
2011 to Club Members who paid 2011 dues?
b. Did defendants breach their contractual obligations
by failing to provide additional promised benefits to Premier
Members?
c. Are defendants estopped from reneging on their
contractual obligation to make all Club facilities available to Club
Members in 2011, and to provide promised additional benefits to
Premier Members?
d. Did defendants falsely represent to the class that all
Club facilities would be open in 2011 if class members paid their
2011 dues?
e. Should the Court impose a constructive trust on the
estimated $7,760,868 in dues paid by Club Members to prevent
defendants from dissipating monies paid by Club Members?
f. What remedies should the Court impose on
defendants for their breaches of the Premier Membership
Agreements?
g. With respect to Premier Members, did defendants
violate the Colorado Securities laws, abet such violations, make
fraudulent misrepresentations, violate the Colorado Consumer
Fraud Act and commit fiduciary breaches?
140. Typicality. Plaintiffs claims are typical of those of the Class they seek to
represent because (a) to the extent plaintiffs seek relief for defendants breaches of contract
and on estoppel grounds, their claims are not only typical of, but the same as any claim that
might be brought by any other Club Member; (b) defendants made uniform, false statements
to the plaintiff Class as a whole upon which the class members reasonably relied in deciding
to pay their 2011 dues; (c) to the extent plaintiffs seek equitable relief, that relief would
affect all class members equally; (d) all of the Class members were injured and continue to
be injured in the same manner by defendants breaches of contract and other violations. As
to defendants breaches of the Premier Membership Agreements, the claims of Thomas
Wilner, J ane Wilner and Kevin Allen are similarly typical of the claims of the Subclass.
141. Adequacy. Plaintiffs will fully and adequately protect the interests of all
members of the Class and Subclass. Plaintiffs have retained counsel who are experienced in
the claims presented and in class actions generally, certain named plaintiffs themselves have
experience in class action litigation, and plaintiffs have no interests antagonistic to or in
conflict with the interests of the Class and Subclass. In addition, plaintiffs have already
obtained a Temporary Restraining Order which the Court entered on J une 24, 2011 against
defendants and obtained a court-ordered audit of defendants books.
142. Rule 23(b)(1) Requirements. Class action status is warranted and appropriate
under Rule 23(b)(1) because prosecution of separate actions by the members of the Class and
Subclass would create a risk of establishing incompatible standards of conduct for defendants
and create a risk of adjudications with respect to individual members of the Class and
Subclass that would, as a practical matter, be dispositive of the interests of the other members
not parties to the actions, or substantially impair or impede their ability to protect their
interests.
143. Rule 23(b)(3) Requirements. If the Class is not certified under Rule
23(b)(1), then certification under (b)(3) is appropriate because questions of law or fact
common to members of the Class and Subclass predominate over any questions affecting
only individual members and a class action is superior to the other available methods for the
fair and efficient adjudication of this controversy.
RELIEF REQUESTED
WHEREFORE, plaintiffs request the following relief:
a. a refund of the 2011 dues paid by the Dues/Deposit
class, or damages equivalent thereto;
b. a refund of the Membership Deposits paid by the
Dues/Deposit class, or damages equivalent thereto;
c. specific performance of the Membership plan, i.e.,
that the Club maintain, and the Club Members be provided use of,
all Club Facilities;
d. imposition of a constructive trust or equitable lien
upon the 2011 dues;
e. a refund to the Premier Subclass of Premier
Membership deposits, or damages as provided by law.
f. prejudgment interest and all interest allowable by
law;
g. costs, expert witness fees and attorney fees;
h. and such other relief as the court deems proper,
including exemplary and statutory damages, .and damages for
injury to home values of Cordillera homeowners.
PLAINTIFFS REQUEST A TRIAL OF ALL ISSUES SO TRIABLE TO A JURY
OF SIX.
HECKMAN & OCONNOR, P.C.
Signature on File
By: /s/Brett Steven Heckman
Brett Steven Heckman
CERTIFICATE OF SERVICE
I hereby certify that on the 15th day of December, 2011, I served the foregoing document
via Lexis Nexis to:
Peter W. Thomas
Thomas | Genshaft, LLP
Aspen Highlands
0039 Boomerang Road, Suite 8130
Aspen, Colorado 81611
Robert P. Ingram
Michelle PrudHomme
Dickinson, PrudHomme, Adams & Ingram, LLP
730 Seventeenth Street, Suite 730
Denver, CO 80202-3504
David L. Lenyo
Garfield & Hecht, P.C.
601 East Hyman Avenue
Aspen, Colorado 81611
Signature on file
/s/ Margaret E. Barry
Margaret E. Barry, Legal Assistant
Exhibit C
Exhibit D

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DISTRICT OF DELAWARE

IN RE: ) Case No. 12-10344 (CSS)
) Chapter 11
SAAB CARS NORTH AMERICA INC., )
) Courtroom No. 6
Debtor. ) 824 Market Street
) Wilmington, Delaware 19801
)
) February 23, 2011
) 2:00 P.M.

TRANSCRIPT OF HEARING
BEFORE HONORABLE CHRISTOPHER S. SONTCHI
UNITED STATES BANKRUPTCY JUDGE

APPEARANCES:

For the Debtors: Stevens & Lee, P.C.
BY: JOSEPH H. HUSTON, JR., ESQ.
1105 N. Market Street, Suite 700
Wilmington, DE 19801
(302) 425-3310

For Ally Financial: Cohen & Seglias
By: JAMES HARKER, ESQ.
Nemours Building
1007 North Orange Street, Suite 1130
(302) 425-5089

ECRO: LESLIE MURIN

Transcription Service: Reliable
1007 N. Orange Street
Telephone: (302) 654-8080
E-Mail: gmatthews@reliable-co.com

Proceedings recorded by electronic sound recording:
transcript produced by transcription service.
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INDEX
Page
NOTICE OF AGENDA MATTERS:
For the Debtors, by Mr. Huston 4
For Ally Financial, Mr. Harker 5
For the Debtors, by Mr. Sendek 5
For Caterpillar, by Mr. Duhig 13
For Creditors, by Mr. Snyder 14
For Ally Financial, Mr. Tatelbaum 18
For U.S. Trustee, by Ms. Leamy 19
For the Debtors, by Mr. Random 24

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THE CLERK: All rise.
THE COURT: Please be seated. Sorry for the delay,
good morning.
MR. HUSTON: Good afternoon, Your Honor, may I please
the Court, Joseph -
THE COURT: Good afternoon. Sorry, I said good
morning. I promise Im awake, were good.
MR. HUSTON: Well good morning, Your Honor, may I
please the Court, Joseph Huston of Stevens & Lee on behalf of
Saab Cars North America. And with me, I have Thomas Radom
and Bruce Sendek of Butzel Long, and also Mr. Tim Colbeck,
who is the President Chief Operating Officer of Saab Cars
North America. Your Honor has scheduled this as a status
conference, and I noticed that that entry is noticeably
absent from our agenda, but we have on the agenda, and I
dont know if Your Honor wants a status conference on this,
but we also have going forward our motion to transfer venue
to the Eastern District of Michigan.
THE COURT: Well I think I do that with Chapter 7
cases for corporations because if people dont put anything
on the docket, I dont know whats going on.
MR. HUSTON: Very good.
THE COURT: Having read all the venue issues I think
I have a real good clear of this idea of this status of the
case.
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MR. HUSTON: Okay, very good.
THE COURT: You can go right into the motions, a
motion --
MR. HUSTON: With your permission, Your Honor, Mr.
Sendek will conduct the merits of the motion to transfer.
THE COURT: Very good.
MR. HUTSON: Thanks.
MR. HARKER: Your Honor, may I just speaking James
Harker. I am local counsel for Ally Bank, and I would like
to introduce to the Court Mr. Charles Tatelbaum. Hes
appeared in this District on a number of occasions, but he
has not had the honor of appearing before you. And he has
been admitted pro hac vice in this case.
THE COURT: Very good; welcome, sir.
MR. SENDEK: Good morning, Your Honor, Bruce Sendek
from the firm of Butzel Long from Detroit. I am pleased to
be here. First time I have ever been in the Bankruptcy Court
in Delaware, and its a privilege.
THE COURT: Okay.
MR. SENDEK: Im here today with my partner, Tom
Radom. Hes the chief bankruptcy counsel for Saab Cars North
America who is also with Butzel Long Firm. And also with me
today is Tim Colbeck. He is the President and Chief
Operating Officer for Saab Cars North America.
Both Mr. Radom and Mr. Colbeck submitted affidavits
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in connection with the motion for the Court which is a motion
to transfer venue, of course, to the Eastern District of
Michigan, the Bankruptcy Court there. Under Rule 1014(a)
which Im sure the Court is well familiar with the standard
which should be allowed if in the sound discretion of the
Court, the convenience of the parties, or the interest of
justice sole provide. And in this situation, we clearly feel
that both prongs, although one or the other may be met.
Theyre both met here, Your Honor.
This is a situation that I think is well suited for
the transfer. In the interest of justice, Ill speak to that
first of all. Saab Cars North America, sometimes referred to
as SCNA, S-c-n-a, is a wholly owned subsidiary of Saab
Automobile AB, a Swedish Company. Saab AB filed for the
Swedish version of a Chapter 7 in December. I believe the
date was December 19
th
. Saab AB was the manufacturer of Saab
brand automobiles. And, of course, when that occurred there
was no more supply coming to Saab Cars North America which is
in the business of distributing cars in North America,
attending to warranty needs, service needs, and marketing
needs and interacting with the dealers among many others.
So at that point, SCNA began looking toward
liquidating the company. And they, on December 20
th
, entered
into a trust mortgage with McTevia Associates to conduct the
liquidation, and that proceeded, and it was actually going
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fairly well. The point that had to be crossed in order to
continue was to deal with Ally. Ally Financial, formerly
GMAC, asserted a lien and sought to foreclose on the lien on
vehicles that were held in ports across the country; three
ports, actually: New Jersey, Georgia and California. They
started three separate actions. And, at first, we began to
defend those actions and as critical dates in the nature of
claimant delivery, replevin in some states.
And as those dates appeared closer, it appeared as
though we would either have to work out an arrangement with
Ally, or we would have to file a bankruptcy proceeding. At
all times, as reflected in the affidavit of Tom Radom, the
counsel for dealers who represents the petitioner which is a
part, which is a portion of the dealer group, was advised of
what was proceeding. And we did try to reach an accord with
Ally. That fell through and, of course, the dealer group was
immediately notified of that. With that in mind, there was,
the road ahead was rather clear. We were going to file for
bankruptcy in the Eastern District of Michigan.
And, in fact, we had already had the board resolution
from SCNAs board to do just that. Its attached to Mr.
Radoms affidavit. It was also, I think, on December 20
th
,
2011, executed by the Board. And it gave McTevia the
authority to do so if it became necessary in his judgment.
So we were going to do that, and Tom Radom advised, counsel
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for the dealer for the petitioners, that the following week,
likely Tuesday, we would file the petition, and asked them to
keep that confidential, and asked them - well that was asked
the point, asked them to keep that confidential, and thats
what the plan was.
And then, of course, as reflected in the affidavit in
our papers, counsel for the dealer acted on that confidential
communication and brought the proceeding here, which is why
we are here today. If it hadnt been for the involuntary
petition filed on January 30
th
, Monday morning early following
the conversation on Friday with Tom Radom, we would have been
in the Eastern District of Michigan, because the plan was as
exactly as stated to file that Tuesday. So here we are, and
it is a classic dash to the Courthouse by a counsel for
petitioners.
And when Tom Radom, as reflected in this
declaration, called the counsel for the petitioners on
Monday, or I think it was the other way around because the
petitioners counsel called Tom Radom to tell him what he had
done, and said sorry but its a closer train ride for me to
be here in Delaware from my office in New York then to fly to
Detroit. And no doubt it is more convenient for petitioners
counsel, but thats not a factor that the Court should weigh,
or ought to weigh in determining convenience.
It happens to be, I think, the only factor that the
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petitioners can point to that really weighs in favor of
keeping the case here as opposed to the many factors that are
outlined in our motion and in the declarations. In Michigan,
there is a significant number of contacts, events that will
relate to the bankruptcy proceeding. SCNAs headquarters is
there. Petitioners make a point of saying that were going
to close that office, which is true, to save the rent on it.
Were moving operations, most likely, to the offices of
McTevia and Associates.
SCNAs employees which numbered about 50 are all
Detroit area residents, except for -- excuse me, SCNAs
employees who worked in the offices in the Detroit area,
there were some field employees, they are all residents of
Michigan except for Mr. Colbeck who is a resident of New
Jersey and commuted to Detroit. Our books and records are in
Detroit. Significant creditors of SCNA are in Detroit.
There is one marketing consultant who has made a claim for a
half a million dollars. Theres other marketing type
consultants who have made claims, substantial claims also
here in Detroit. The secured, one of the principal secured
Debtor who claims that they are owed $61 million dollars from
SCNA is Ally. And Allys headquartered in Detroit.
THE COURT: Ally can go anywhere.
MR. SENDEK: Im sorry.
THE COURT: Ally can go anywhere. I see Ally all the
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time. Theyre a national concern.
MR. SENDEK: Right.
THE COURT: Wheres the workout guy thats working on
the case, where is he?
MR. SENDEK: The individuals that SCNA dealt with in
terms of financing, I believe, are all in the Detroit area.
THE COURT: Okay.
MR. SENDEK: And I dont know who the workout guy, if
they assigned a workout guy to it as well. The other
principal secured creditor is Caterpillar Logistics. Theyre
headquartered outside of Chicago. They actually support this
motion. And the reason, again, has to do with the interest
of justice.
SCNA does not have a lot of cash to work through what
its doing now as part of its liquidation and bankruptcy
proceeding. It has very limited funds, but it is doing work
thats very important, and work that will benefit the entire
creditor group including the dealers, including customers of
Saab vehicles. At this very time, I mean, today, yesterday
and ongoing, Mr. Colbeck is trying to work out arrangements
to provide customers with the ability to get warranty
coverage on the vehicles that they purchased from the dealers
-- excuse me, from dealers that were the Saab AB automobiles.
They are covered by General Motors. General Motors
covers warranties for pre, for 2009 model year cars and
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before, but not for after. So its a big issue, and Mr.
Colbeck is trying to accomplish something there for the
benefit of all the creditors. Assets are being sold for the
benefit of all creditors. Theres an important work being
done by Mr. McTevia right now in terms of securing parts for
the benefit of all creditors and enhancing the value of the
vehicles and into the benefit of the customers as well.
One asset that SCNA has is, are a ship of parts.
Theyre held by Caterpillar Logistics, but there are parts.
And SCNA has made arrangements to sell those parts to dealers
so that they can service their customers, and thats some of
the work thats being done right now. And there needs to be
longer term solutions in place which theyre trying to do in
order to secure an ongoing source of parts, which will in
order to the benefit of many. It will bring additional cash
and assets to the estate and value to the estate, and thats
an important thing and with more value, and more assets, and
more cash which we are realizing right now by virtue of this
arrangement with Caterpillar.
We have an arrangement right now that were receiving
$68,000.00 a week from Caterpillar through our sales, which
ultimately will enter into the benefit of all creditors.
That work is being done in Detroit by McTevia and Associates,
and will be ongoing. Those are just a few examples, but
again, to the extent that this action continues there will be
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a likely confrontation with General Motors. There is a 20
plus million dollar receivable on SCNA books for warranty
reimbursement which GM is denying. It has an obligation to
pay. The dealers have a definite interest in seeing that
pursued and will probably be part of any subsequent
litigation.
General Motors and all the people that SCNA dealt
with at General Motors are in Detroit area, in Renaissance
Center in Detroit. The SCNA people who worked on the
warranty issues are employees, ex-employees of SCNA, maybe a
couple of them have been maintained for now, but they are
Michigan residents all in the Detroit area. And, well I
think thats, I think theres just a host of reasons, Your
Honor, why in the interest of justice it should be
transferred, and for the convenience of the party. And yes
they won the race to the Courthouse, but they shouldnt have.
There was no good reason to bring this action in
Delaware. Had counsel allowed things to progress as told to
him by Mr. Radom, we would be in Detroit, and everyone could
pursue their claims and rights. The dealer groups that are
represented that makes up the petitioner group, theyre
scattered. Sure, there are some in this - theyre some
within driving range to Delaware, but theyre across the
country. There are dealers in Texas, California, Indiana,
Michigan, Illinois, throughout the country. Interestingly,
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theres one Saab dealer in the state of Delaware who is not a
part of the petitioner group. So what we have is no assets
here. We do have assets in Detroit.
There was a statement made in the response that there
are no assets here. The assets are in Pennsylvania held by
Caterpillar or held in the warehouse. Theyre our assets,
but thats not entirely correct. There are accounts
maintained in Detroit area.
THE COURT: Bank accounts?
MR. SENDEK: Theyre bank accounts. There are
vehicles in the Detroit area. Theres something in the
neighborhood of 60 vehicles in Detroit and personal property
in Detroit; again, weighed against nothing in Delaware.
Thank you, Your Honor.
THE COURT: Okay, anyone else in support of the
motion?
MR. DUHIG: Good afternoon, Your Honor, Peter Duhig
of Buchanan Ingersoll & Rooney on behalf of Caterpillar
Logistics Services. Your Honor, Caterpillar Logistics is a
secured creditor. It filed a response in support of SCNAs
motion to transfer venue. Basically to highlight that, if
this case stays here, the administrative costs are likely to
be much higher. It would require long distance travel for
the Debtors, McTevia who is the mortgage Trustee, officers
and witnesses. Its also going to require local counsel.
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And, Your Honor, this is a liquidating case. There arent a
lot of assets that are going to be available to distribute to
creditors. So its our position that the most efficient,
cost effective venue for this case is the Eastern District in
Michigan. So with that we ask that the Court approve SCNAs
motion.
THE COURT: Where are the parts inventory that your
client is in possession of?
MR. DUHIG: They are in a warehouse in Pennsylvania.
THE COURT: Where in Pennsylvania?
MR. DUHIG: It is in Allentown; thank you.
THE COURT: All right, thank you.
MR. DUHIG: Thank you.
THE COURT: Well hear from the movants, or excuse
me, the petitioning creditors.
MR. SNYDER: Thank you, Your Honor. Good afternoon,
Eric Snyder of Wilk Auslander for the 82 petitioning
creditors, and the opposition was filed on behalf of the
dealer network which is 165 dealers. I would like to thank
Your Honor for moving this hearing up. It was originally
schedule for next Friday so that it could be heard today.
After hearing counsel and reviewing the reply, Your Honor, I
believe there are certain facts and evidence that remain
undisputed.
One, that the dealers, 165 of them in 39 states with
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potential claims in excess of $30 million dollars favor venue
here. Two, that only one potential creditor Caterpillar
whose claim is least related, and who the Debtor admits in
the liquidation analysis that was in next to our opposition
is owed no more than $662,000.00. And the reason, Your
Honor, I point out that its least related is if, in fact,
the Debtor is successful in its objective of selling the
parts distribution business, than that claim which is secured
might be nothing more than a lease cure claim, that would be
cured upon assumption and assignment of the lease.
Three, Ally, who the Debtor suggested in his motion
supported the transfer of venue, filed two motions the next
day in this Court seeking substantive relief does not support
transfer, and does not come out in favor in of transfer. And
I would suggest that silence speaks volumes. Substantially,
all the new vehicles undisputed, Your Honor, and the parts
are located in this Circuit. Theyre not located in
Michigan, and there are no assets other than this cash weve
heard about, and some used cars that counsel referred to that
are located in Michigan.
The Debtors CEO, as weve heard, resides in New
Jersey and is here today on behalf of the movant, not Mr.
McTevia. And a little bit about the filing, Your Honor. In
the motion they state that they had the authority since
December 20
th
to seek bankruptcy relief. That was their
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choice, business judgment or, otherwise, to do nothing for
the intervening six week period. SCNA doesnt suggest it
shouldnt be in bankruptcy. In fact, it annexes a petition
to its motion saying that if the Court grants its motion to
transfer venue, then it will file right away in Detroit. So
the issue isnt whether venue is convenient or inconvenient,
its simply that SCNA doesnt want to be here.
Theyve now pointed to any factors relying on
convenience of the parties. Theyve said whoops. They filed
here before we could file in Detroit, and just let us out,
and thats not the appropriate test. With respect to the
fact is, Your Honor, I believe the opposition, as I set forth
above, remains undisputed.
Just one point that I believe was omitted from the
opposition, and thats with respect to what law applies.
While it is true that the dealers sales and service
agreements contemplate that Michigan law applies to
interpretations of the dealers sales and service agreement,
theres little doubt at this stage of SCNAs life that the
issue is going to be about the termination of these franchise
agreements.
As weve heard the Debtor is liquidating. There is
no warranty support. There is no parts support, and there
are new vehicles. And as Im sure the Court is well aware,
the rights of each of the dealers upon termination of their
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franchises are determined under the applicable law of the
state where the franchise is located. So we believe that
although Michigan law is stated to be with respect to
that the ultimate rights -- and what I mean rights, I mean
the claims of each of the dealers -- are going to be relying
on applicable state law regarding the ultimate rejection and
termination of their franchise agreements.
I understand the Debtor is in a bit of a box because,
on one hand, they say they dont really have the assets to
come to Detroit and, the other hand, then the reply in
paragraph six they point to in what I quote is substantial
legal liquid assets in Michigan, and refer to over $3 million
dollars in cash sitting in Michigan accounts. They also
state in there liquidation analysis that Allys claims is
about $300,000.00, but, of course, now they claim that Allys
claims is potentially $61 million dollars.
The test itself is fairly clear, and Im aware that
Your Honor recently applied the test in Visteon to a similar
situation. The opposition goes through the points, and in
light of the number of creditors and the amount of creditors
that comprise of both the dealer network, in general, and the
petitioning creditors, in particular, we believe that SCNA
has not met its heavy burden to demonstrate convenience of
the parties that would warrant transfer. Thank you, Your
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Honor.
THE COURT: Youre welcome; hear from Ally.
MR. TATELBAUM: Thank you, Your Honor. I guess in 45
years in practicing bankruptcy law Ive never had a case
where Ive taken no position where my client has been
referenced so much. We did not file anything on purpose. We
take no position on the motion. To answer Your Honors
question if your Court is interested, there are two workout
people. One divides his time between the United Kingdom and
Sweden, and one is in Detroit, counsel is in Florida. So
its a big triangle.
Because there have been some statements made, and
this is a status conference as well, I would just like to
make a couple of positions clear.
THE COURT: Please.
MR. TATELBAUM: There is no question that Ally has a
first priority perfected security interest in the vehicles in
the ports. There is no question that we have not only a
first priority perfected security interest, we have an
assignment of the $20 million dollar account that GM
purportedly owes. So those two assets are subject. We do
not have a security interest in the parts. We have vehicles
and vehicle related receivables.
We have a cross collateralization agreement, cross
guaranties with the Swedish Company, and the UK Company and
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the France Company, and all. And our debt is currently about
$61 million dollars, all across collateral-wise. I just
wanted to make that clear to the Court, so that the Court
understands the global because theres a lot of - I feel
like the orphan child, and everybody uses us to their
advantage, fine. You know, Your Honors going to make the
decision.
THE COURT: Where are the vehicles now? Theyre
still in the port?
MR. TATELBAUM: Majority of them are in Port Newark.
There is a much smaller group in Savannah Georgia, and then a
little bit larger than Savannah in Oxnard Ventura California,
just north of Los Angeles.
THE COURT: Okay.
MR. TATELBAUM: And we did have replevin proceedings
pending against because its in (indiscernible), each one of
those three states, pending which were stayed by the
bankruptcy filing.
THE COURT: Okay.
MR. TATELBAUM: Thank you, sir.
THE COURT: Youre welcome.
MR. SENDEK: May I reply briefly, Your Honor?
THE COURT: Ms. Leamy do you wish to take a position?
MS. LEAMY: Your Honor, Jane Leamy for the United
States Trustee. Our office does not have a position on the
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motion, and were just here to see the outcome.
THE COURT: Okay, yes Ill hear a reply.
MR. SENDEK: Thank you, Your Honor. First, Your
Honor, the reason we said Ally was in support of this motion
because that was our understanding at the time that weve
filed, and now weve learned that they take no position. And
I heard reference to the Visteon case, and Im familiar with
the factors that the Court applied in that case, which I
think weigh in our favor because those factors where we
pointed to a number of factors that demonstrate that the
Eastern District of Michigan is a more convenient venue.
I dont see those factors existing here, nor have I
heard any, nor have I heard any dispute from counsel, or in
their papers for the affidavit signed by Tom Radom and Mr.
Colbeck. And theyre both here if the Court would like to
take any testimony from them. They are available to do so,
but I have heard no disagreement with those positions.
Now Ive heard, and in the Visteon case who also say
a significant difference. There is that that was the Debtor.
These are a number of unsecured creditors trying to change
the landscape, and I cite to the Court to the case we cited
in our reply brief the Hunt vs. Bankers Trust case. It says
unsecured creditors whoever have no right to dictate venue,
although they do have the right to be heard on issues of
propriety of transfer.
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The business judgment of the Debtor, I think, is
entitled to a significant amount of weight here. Theres
been a number of numbers tossed around by counsel for the
Debtors, but the fact is that -- excuse me, the fact is that
the dealer group is only represented of unsecured creditors
and only a small part of them. Our schedules show that are
$12 million dollars of unsecured claims made by various
parties. Of that group, the dealers represent $4 million
dollars.
And, of course, then theres the secured creditors
which are Ally which makes a significant claim. And then
there is Caterpillar. And the fact Caterpillar has made
known to SCNA that it has a contingent claim of $3.5 million
dollars for its, for the obligations under its agreements
with Caterpillar.
THE COURT: (indiscernible) here is the purported
Debtor has to do here is 1) resolve the issue with the cars;
2) resolve the issue on any accounts receivable; 3) resolve
the issue with the dealers; I guess 4) resolve the issue with
the parts. Thats pretty much what youre going to do in
bankruptcy.
MR. SENDEK: And try to make an accommodation for
ongoing warranty service for the vehicles, thats another
important aspect.
THE COURT: Okay, so very good. Okay, thank you.
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Yes warranty service, all right. Well, let me just run
through it. Caterpillar which is the parts issue supports
you. Ally which is the car issue takes no position. The
warranty claimants, obviously, want to stay here, and the
people who got the assignment for the accounts receivable
from GM, which is Ally, take no position.
You know, Im a little unclear on what, and maybe you
could flush out to me what the status of or how you intend to
proceed with the attempt to get warranty service for the post
2009 cars.
MR. SENDEK: Okay, yes as to warranty if I may just
add this, Your Honor, the customers, the ultimate buyers of
the Saab vehicles have an interest in the warranty claims
and, of course, in a warranty disposition. Of course,
theyre scattered all across the country. And weve heard
from a number of Attorney Generals in various states asking
about how cars are going to be serviced.
THE COURT: Thats not in front of me unless youve
got some evidence.
MR. SENDEK: No, Your Honor, thats not in front of
you. And as far dealing with the warranty -- first of all,
thats going to be handled through McTevia Associates, and
probably relying on Mr. Colbeck, as well and his assistants.
And I do need to correct something. McTevia Associates is
the management of the company now, not Mr. Colbeck under the,
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well under agreements that were made. How will that be done?
Well I dont know. Hopefully, its going to be a negotiated
arrangement with General Motors that theyll cover the - so
that they will cover warranty obligations under new Saab
vehicles or Saab vehicles sold since they sold the company.
We do believe that there is some leverage and, as I
say, we have a 20 plus million dollar receivable from General
Motors. So can that be negotiated? I dont know yet, but --
THE COURT: [indiscernible] negotiation.
MR. SENDEK: -- it could be.
THE COURT: Okay. Sorry I interrupted you. You can
go ahead.
MR. SENDEK: Okay and as I say, Your Honor, theres
no assets in Delaware, but there are assets, albeit accounts.
There are assets in Michigan. We have an operating account
$400,000.00, and that was my point earlier. We have limited
funds in which to run this. We have more funds coming in
through our arrangements that we have with Caterpillar, but
theyre limited, and we have to use them wisely. Its
expensive; extremely expensive for us to hire local counsel,
to make trips back and forth to Delaware to bring people into
this Court as may be needed. Its just an expensive
administration. Thats why the plan was always to move
forward in Detroit. Again, we would be there except for the
race to the Courthouse which I dont think ought to be
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rewarded. Thank you, Your Honor.
THE COURT: Youre welcome; yes sir.
MR. RADOM: Hi, Your Honor, Tom Radom for SCNA. Im
not going to repeat what Mr. Sendek said. Its just that the
Ally motions are --
THE COURT: Are you with the same firm?
MR. RADOM: Yes.
THE COURT: All right.
MR. RADOM: The Ally motions are basically on my
docket, and I just didnt want the record to reflect that
there was no response to statements made by Mr. Tatelbaum,
this counsel to Ally in connection with the validity of their
security interest, the nature of their claims against this GM
receivables and so forth. Those items are in dispute, and I
just want the record to reflect that.
THE COURT: Im sorry, anyone else; anything further?
MR. SNYDER: No, Your Honor, thank you.
THE COURT: Okay, Ill take a short recess.
(Recess 2:49:03 to 3:17:23)
THE COURT: Again, sorry for the delay. Okay, we
have before the Court a motion to transfer venue of a Chapter
11 case. The facts are important, I think, to put on the
record for the support of the Courts reasoning. This was
filed as an involuntary case. The time to contest entry of
order for relief has past, so I dont think technically an
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order is on the docket yet, but the response was due by the
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which is, is that today? So its due today; there you
go. Ill assume youre not going to contest entry of an
order for relief, is that correct?
MR. RADOM: We were certainly hoping that the Eastern
District of Michigan would be the Court to have order of
relief, but --
THE COURT: Well I know that.
MR. RADOM: But, no. I mean, our intentions all
along was to pursue a Chapter 11.
THE COURT: Okay, well I think that fact is
significant. Obviously, there was a race to the Courthouse
here. I dont think there anything pejorative about racing
to the Courthouse. It happens all over the country every
day. And thats one of the things bankruptcys designed to
stop. The filing is certainly part of a race to the
Courthouse. So, obviously, there was a filing on Monday, and
there was going to be a subsequent filing a day or so later
by the Debtor.
But, the Debtor has acknowledged its going to be in
bankruptcy. And I think thats important in the context of
the weight that the Court would give to the desire of the
filing creditors or the plaintiff; however, you want to think
about it. Its not a question of whether there will be a
bankruptcy. Its a question of where. And, I think, that
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does a lot to alleviate the weight of the choice of the
petitioning creditors because, ultimately, generally, the
choice is of the Debtor whether to file and where to file
bankruptcy.
There is nothing on the record here that indicates
they werent going to file, and it was just a question of
timing and location. So for purposes of deciding the motion,
I think the issue of great weight of choice of the first
filer is, basically, neutral. I acknowledge very much that
the involuntary creditors have a strong position, and they
were the first to the Courthouse, but I think thats
alleviated enough by the fact that the Debtor acknowledges it
will be in bankruptcy wherever it will be; that that really
becomes a neutral factor for the Court.
I could go through the various factors that the
Courts have applied, the (indiscernible), of course, in
Visteon which was more in the case of a traditional adversary
proceeding; the six factor case then applied in the
bankruptcy venue -- excuse me, in the actual bankruptcy case,
transfers more generally. But in my mind in this case goes
really to competing factors.
One is where are the Debtors, and whats going to be
going on in connection with the Debtors operations. Well,
first of all, its a liquidation. So traditional issues of
willing to have the bankruptcy in a convenient forum for
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management, for instance, just dont really apply. Its not
like you have a 150 people in the corporate headquarters
running a company. Youve got a liquidation. There are
certainly limited fixed assets. Theyre going to be run
through some of these conference rooms in Detroit or in the
Detroit Metro area. Its not particularly moving in the
context of where should the bankruptcy be filed.
And talk about what the Debtor has to do; whats on
its plate. And I think it is significant that Ally Financial
does not take a position. They are a very large creditor,
secured and some value of collateral. We dont know what it
is, but at least for purposes of today its nine hundred and
something new vehicles. And its a $20 million dollar
account receivable from GM.
Two huge pieces of the assets of the Debtor, and the
party that has the best interest in them doesnt really care
whether its here or Detroit. You all right? Okay. The
parts; well the parts are in Pennsylvania, in Allentown. And
when you look at a liquidation of a case, you really look
more at where the asset is then where the asset may be being
managed.
So, for example, in a real estate, single asset real
estate case, you know, the management company may be in
Dallas, but the tract of land is in New Mexico. That case
should be in New Mexico because land is something really
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unique. Obviously, clearly land is unique. And the
strongest interest for a piece of property is where that
property is.
The property were talking about is up in Allentown,
not in this District, some other Circuit, and about a two
hour drive, if not less. So that gives some weight to
keeping it here. Now at the same time, the party that is in
charge of the parts wants to transfer venue. So I dont
really think of that as a wash too, but the actual assets are
closer here. The person managing the assets is, you know,
wants it to be in Michigan, really kind of makes it a neutral
issue. So weve got the accounts receivable, the cars and
the parts all neutral; future warranties is in negotiation.
That can happen in a conference room anywhere from
(indiscernible) to keep its gain. It doesnt necessarily
matter where it is.
Now I have the dealers, and thats what it really
comes to down to, I think. Youve got the dealers versus
management, and he gets to control, in effect, where the case
will go forward. The dealers are all over the country,
obviously, but the unsecured creditors, they only have power
if they are able, somehow, to form together and act as one.
And theyve dont that, and theyve done that with counsel in
the State of New York. And that counsel supports keeping the
case here in Delaware. Management wants it in Michigan
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primarily to make it convenient for its CRO. They are no
real assets in Michigan.
Theres a lease thats going to be rejected. There
are a few employees. Theres a CRO, and theres cash. None
of that is really substantial for purposes of having to be in
Detroit. The president of the company is in New Jersey, hes
the guy you brought today. The CRO is in Michigan, I dont
see him here. Its an important hearing. Since this is such
an important hearing I think it indicates with some
significance what their motivations might be. So its a long
way of saying its a kind of a coin flip. And if its a coin
flip it should stay where its at, you know, they tell me
this in Judge school if you dont who should win, then if you
move it then both sides loses.
I think the choice of the dealers here is got to
carry the day, as far as I can tell from this case the
primary activity here is really going to be the dealers
versus the Debtor. And theres nothing that hurts the
Debtor, really, coming to Delaware, staying in Delaware. The
costs arent really very significant. Mr. Huston wont cost
you a fortune. Hes a very good attorney. You know, where
the lawyers are we generally dont think about that pretty
much. Although, again, in a liquidating case where the
assets are much less than in a reorganization it probably has
more swing. So long story short I just wanted to go through
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my various factors.
In a very close decision, Im sorry, in a very close
decision the dealers win in eight rounds to seven, and get or
maintain their, maintain where their want to be. So Im
going to deny the motion to transfer venue. Thats all we
have on the agenda for today, but does Ally want to talk
about whats coming up, I think its next week?
MR. TATELBAUM: Yes, sir. Next Friday we have a
motion to modify the automatic stay with respect to the
vehicles only, not on the receivables. And a motion to
prohibit use of cash collateral based upon an anticipation
that an order for relief is going to be entered, I wanted to
tee that up so that it would be an early issue, if there is
going to be an attempt. We believe there is because during
the gap period, the Debtor has sold some vehicles that we
believe are our collateral. Counsel has said its in escrow
which is fine, I take that representation. But we hear about
the dire straits so that, well something that needs to be
teed up for next Friday I hope.
THE COURT: Okay. Are there any traditional first
day, or emergency relief that you really need to get on the
Courts docket?
MR. TATELBAUM: Your Honor, may I raise one more
thing maybe for Friday?
THE COURT: Yes.
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MR. TATELBAUM: Having heard what I heard today we
will probably be filing an objection to the McTevia entity as
CRO. Under the Michigan procedure which is like an
assignment for the benefit of creditors which we have in the
east, they actually do whats called a trust mortgage where
the assets are delivered to the Trustee, and the Trustee is
given a lien on those assets. Weve been after Mr. McTevia
and his company to release their lien. They havent so that
are a lien creditor, and were going to take the position
unless he does something that as a lien creditor hes not a
disinterested party that can - because he - if hes running
the business, how is he going to move to set aside his own
lien, among other things, and investigate the acts and
conduct. So I just wanted to - since that would normally be
a first day thing, I wanted to alert the Court that its not
a rubber stamp.
THE COURT: Okay, well usually, I mean, you can
usually we dont hear the actual retention on the first day.
Wed send that out on full notice.
MR. TATELBAUM: Okay, thank you.
THE COURT: Attention to professionals, etc. Usually
only a claims agent would be something we would look at if
necessary.
THE COURT: So what I was going to say, and Ill let
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counsel speak, but I was going to say if you need a sort of
traditional first day type relief you can tee it up for March
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MR. RADOM: I appreciate that, were going to need in
order for use of cash collateral, but that will be my
stipulation between SCNA and Caterpillar Logistics, thats
the only cash collateral were using is subject to the lien
of Caterpillar Logistics.
THE COURT: Okay.
MR. RADOM: I dont, I mean, we already have an
agreement in place. I dont think that we need emergency
relief at this point in time, but we will tee that up. And
to the extent that we can bring it on for hearing by March
2
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, well do so. But because the operation itself has been
reduced substantially, its not like we need DIP financing,
you know, well have the traditional employment applications,
but as far as I can tell probably just the cash collateral
order. Getting that entered is probably the first priority
here. And then with respect to, we will be asking the Court
to approve Mr. McTevias retention as the Chief Restructuring
Officer.
I will address, I mean, I wasnt expecting to have to
address it today, but Mr. Tatelbaums client has already been
furnished with a termination statement of a security interest
that had been granted under the trust mortgage. The trust
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mortgage itself has been terminated. To that extent Mr.
McTevias not a secured party here and the trust mortgage
itself was just designed to give Mr. McTevia the full
authority to wind down and liquidate the business for the
benefit of all creditors. The lien itself was really for the
benefit of all creditors, and didnt represent anything more
than that, it has been terminated.
THE COURT: Okay, all right. Go ahead and prepare an
order and yeah, the Court will prepare an order, sorry,
anything else?
MR. SNYDER: No, Your Honor.
THE COURT: All right, thank you. Were adjourned.
(Court Adjourned)
CERTIFICATE

I certify that the foregoing is a correct transcript from the
electronic sound recording of the proceedings in the above-
entitled matter.

/s/Mary Zajaczkowski March 19, 2012
Mary Zajaczkowski, CET**D-531 Date

Exhibit E
1 UNITED STATES BANKRUPTCY COURT
2 DISTRICT OF DELAWARE
3 Case No. 12-11564(CSS)
4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
5 In the Matter of:
6
7 ALLIED SYSTEMS HOLDINGS, INC.,
8
9 Debtors.
10
11 - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
12
13 United States Bankruptcy Court
14 824 North Market Street
15 Wilmington, Delaware
16
17 May 31, 2012
18 2:12 PM
19
20
21
22 B E F O R E :
23 HON CHRISTOPHER S. SONTCHI
24 U.S. BANKRUPTCY JUDGE
25 ECR OPERATOR: LESLIE MURIN
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1 HEARING RE: Motion of Alleged Debtors to Transfer Venue of
2 these Cases to the United States Bankruptcy Court for the
4
5 HEARING RE: Motion of Alleged Debtors to File Unrelated
6 Version of the Motion of Alleged Debtors to Transfer Venue
7 of these cases to the United States Bankruptcy Court for the
9
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25 Transcribed by: Sheri Monroe
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1 A P P E A R A N C E S :
2 RICHARDS, LAYTON & FINGER, P.A.
3 Attorneys for the Debtors
4 One Rodney Square
7
8 BY: CHRISTOPHER M. SAMIS, ESQ.
9 MARK D. COLLINS, ESQ.
10
11 TROUTMAN SANDERS
12 Attorney for the Debtors
13 600 Peachtree Street, NE
14 Suite 5200
15 Atlanta, GA 30308-2216
16
17 BY: JEFFREY W. KELLY, ESQ.
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1 LANDIS RATH & COBB, LLP
3 919 Market Street
4 Suite 1800
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7 BY: KERRI K. MUMFORD, ESQ.
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9 SCHULTE ROTH & ZABEL, LLP
11 919 Third Avenue
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14 BY: ADAM HARRIS, ESQ.
15 VICTORIA LEPORE, ESQ.
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17 LATHAM & WATKINS, LLP
19 355 South Grand Avenue
20 Los Angeles, CA 90071
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22 BY: ROBERT KLYMAN, ESQ.
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1 YOUNG CONAWAY STARGATT & TAYLOR, LLP
3 Rodney Square
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7 BY: JOSEPH BARRY, ESQ.
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9 FRIED, FRANK, HARRIS, SHRIVER & JACOBSON, LLP
10 Attorney for The CIT Group
11 One New York Plaza
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14 BY: GARY KAPLAN, ESQ.
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1 APPEARANCES: (Telephonically)
2 CATHY COPPAGE, Paul Hastings, LLP
3 SARAH BOEHM, McGuire Wood, LLP
4 PEG BRICKLEY, Dow Jones & Co.
5 THEO CIUPITU, Jack Cooper
6 EZRA H. COHEN, Troutman Sanders, LLP
7 RICHARD EHRLICH, Black Diamond Capital Management
8 ERIN KIM, Pension Benefit Guaranty Corp.
9 STEPHEN S. LAPLANTE, Miller Canfield Padock & Stone
10 DANIELLE SALTZ, Ford Motor Company
11 JEFFREY A. SCHAFFER, Spectrum Group
12 DEREX WALKER, Derex Walker
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1 P R O C E E D I N G S
2 THE COURT: Please be seated. Good afternoon.
3 MR. SAMIS: Your Honor, good afternoon. Your
4 Honor, for the record, Chris Samis of Richards, Layton &
5 Finger here today on behalf of the alleged debtors. Your
6 Honor, with me at counsel table is my colleague, Mr. Collins
7 as well as our co-counsel, Mr. Jeffrey Kelly of the Troutman
8 Sanders firm. Your Honor, also in the courtroom is Mr. John
9 Blount, the general counsel and chief administrative officer
10 of the debtors.
11 Your Honor, todays agenda only has one item of
12 any moment. The matter is a motion to transfer venue,
13 however, Your Honor, it is probably important to note that
14 Agenda Item Number 2 Your Honor entered the order on that,
15 that was the seal motion that was related to the motion to
16 transfer venue. And the order actually covers several other
17 seal motions as well that arent calendared for the hearing
18 today.
19 But, Your Honor, with that I turn the podium over
20 to Mr. Kelly.
21 THE COURT: All right. Thank you.
22 MR. KELLY: Good afternoon, Your Honor. May it
23 please the court, Jeff Kelly, for the record. Mr. Blount
24 has already been introduced by Mr. Samis.
25 The alleged debtors evidence today, Your Honor, in
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1 their support of their motion to transfer venue will consist
2 of facts set forth in the declaration of Scott Macaulay,
3 which was filed on May 21st. Its Docket Number 30, as
4 supplemented by my proffer of certain facts that Mr. Blount
5 would testify to if called as a witness.
6 I will mention that Mr. Harris and I spoke prior
7 to the hearing and Ive agreed that the facts that hes set
8 forth in his response are stipulated to and he need not call
9 any witnesses to establishes those facts and hes agreed
10 that I need not have Mr. Macaulay present today to back up
11 his declaration. Mr. Macaulay is, in fact, back in Atlanta
12 working on other issues related to this matter.
13 Your Honor, what I propose to do is proffer the
14 alleged debtors evidence in summary form and secondly, to
15 show that due to the still pending Allied Chapter 11 cases
16 in Atlanta under Bankruptcy Rule 1014B, it is up to Judge
17 Mullens (phonetic) in Atlanta to decide where these cases
18 should proceed.
19 THE COURT: Well then why havent you asked him?
20 MR. KELLY: Well, Your Honor, we havent asked him
21 because the situation that was presented to us was a motion
22 for appointment of a trustee with a motion to shorten time.
23 And we thought it prudent to go ahead and just raise with
24 Your Honor, immediately, the venue issue rather than having
25 competing motions going on in two different courts.
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1 And then at the status conference last week, Your
2 Honor, I think indicated that you would take up the issue of
3 venue today and decide whether or not 1014B applied, because
4 there were certain factual issues you wanted to have
5 addressed, which Im prepared to do today.
6 THE COURT: Okay.
7 MR. KELLY: Basically, the short answer is for us
8 not to set up competing motions in two different bankruptcy
9 courts.
10 Now, the last thing I intend to do today is to
11 show how the facts in any event demonstrate that both the
12 convenience of the parties and interest of justice lead to
13 the conclusion that venue of these cases should be
14 transferred to the bankruptcy court in Atlanta.
15 Your Honor, a unique circumstance that we have
16 intertwined in this situation is the alleged debtors desire
17 to maintain confidentiality of certain information for the
18 time being. Thats information thats been redacted from
19 our public filings. Were doing that in order to try to
20 limit the damage to the alleged debtors business, we believe
21 caused by these precipitous and unexpected, involuntary
22 filings. I will refer, from time to time, during my
23 presentation, to redacted information for that reason.
24 Your Honor, I would proffer through Mr. Blount,
25 who is here, and his first hand knowledge --
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1 THE COURT: Lets stop here just a second. Is
2 there any objection to, at least from an evidentiary basis,
3 proceeding as Mr. Kelly has outlined? None?
4 MR. HARRIS: I have no objection.
5 THE COURT: All right. So, well admit the
6 declaration of Mr. Macaulay, Docket Item 30, into evidence
7 without objection. And you may proceed with the proffer.
9 Mr. Blount, who is here in court today, has
10 firsthand knowledge of the redacted facts and he would
11 support those facts if called as a witness.
12 I do need to be clear, however, that Mr. Blount
13 does not have firsthand knowledge as to whether the
14 petitioning creditors were aware of the alleged debtors
15 redacted facts at the time that they filed the involuntary
16 petitions.
17 Your Honor, turning to the facts that are public,
18 with respect to Mr. Macaulays declaration, I would like to
19 just go to that declaration and make a summary proffer or
20 the pertinent parts.
21 The alleged debtor, Allied Systems Holding is the
22 ultimate parent of about 20 other companies including the
23 other alleged debtor, Allied Systems, Ltd.
24 Allied Systems Holdings, which Im going to refer
25 to as -- simply as Holdings, is a privately held Delaware
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1 Corporation headquartered in Atlanta. Holdings has three
2 direct subsidiaries, Allied Automotive Group, Inc., which is
3 a Georgia corporation, Access Group, which is also a Georgia
4 corporation and a captive insurance company incorporated
5 under the laws of the Cayman Islands.
6 Allied System Ltd., which is the other alleged
7 debtor aside from Holdings is a Georgia limited partnership
8 and is a subsidiary of Allied Automotive Group.
9 Holdings, itself, Your Honor, does not directly
10 engage in Allieds line of business. Allieds major line of
11 business is carried out by Georgia Corporation -- Allied
12 Automotive Group, Inc. and its direct and indirect
13 subsidiaries again, including the other alleged debtor
14 Allied Systems.
15 This major line of business is the car haul
16 business, basically its the transport of light vehicles,
17 such as automobiles from port -- the points of manufacturer
18 or other points of drop off, such as train railheads to
19 automobile dealerships throughout the United States and in
20 Canada.
21 Allieds major customers are automobile
22 manufacturers, including primarily Ford at this point.
23 Allied Automotive Group transports these vehicles by means
24 of specialized tractor trailers which are rigs. As of the
25 end of 2011, Allied owned about 2,400 rigs operated out of
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1 about 44 terminals, most of which are leased and located
2 within and throughout the United States and in Canada. None
3 are located in Delaware, two of the terminals are located in
4 Georgia, although one of those is used primarily as place
5 where parts are kept and stored for repairing or
6 refurbishing rigs.
7 Allied Automotive Groups drivers and most of its
8 terminal employees are unionized. These employees are
9 called the Teamster employees, Ill refer to them that way
10 are members of the local unions affiliated with the
11 International Brotherhood of Teamsters, which negotiates on
12 behalf of these local unions. Allied employs about 1,835
13 people of whom about 1,000 or so are Teamster employees.
14 Theres a smaller line of business that Allied is
15 in carried about by another Georgia Corporation, Access.
16 Access is essentially a logistics business for the
17 automotive industry in the United States and Canada, with
18 some yards service management carried out in Mexico.
19 The access group operates from 39 terminals
20 located in the United States, Canada, Mexico, none in
21 Delaware.
22 Turning to the first case, briefly, Your Honor,
23 the pending case thats ready to be closed. The alleged
24 debtors and most of their direct and indirect subsidiaries
25 were reorganized in Chapter 11 cases that were filed in the
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1 Northern District of Georgia in July of 2005, according to a
2 plan that was confirmed by Bankruptcy Judge, Ray Mullens in
3 May of 2007.
4 And when I say the alleged debtors were
5 reorganized, holdings as set forth in Mr. McCaulays
6 declaration is the successor by merger to the original
7 holding company, Allied Holding, Inc., that was the ultimate
8 parent at the time the Chapter 11 case was filed. When the
9 plan and reorganization was confirmed, Holding was created
10 as the subsidiary of the original holding company and then
11 merged into Holding, which is the surviving corporation.
12 In it, I mentioned, although the original Chapter
13 11 case is, in fact, ready to be closed, in fact, it is
14 still pending by Allied at this time.
15 THE COURT: Is Allied Systems Holdings, Inc. a
16 debtor in possession in the Chapter 11 in Georgia with a
17 known case number?
18 MR. KELLY: It is not a debtor in possession, it
19 is a successor to the original holding company. It was
20 created under the plan and its stock was issued under the
21 plan to general unsecured creditors of Allied --
22 THE COURT: Have those been operating free and
23 clear of any jurisdiction of the bankruptcy court?
24 MR. KELLY: Allied Systems Holding?
25 THE COURT: Yes.
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1 MR. KELLY: Except to the extent that its -- Im
2 sorry, Your Honor, I brushed up against the microphone.
3 THE COURT: Its okay.
4 MR. KELLY: Except to the extent that the ongoing
5 administration, which is one of the reasons that its taken
6 so long, has included issuing its stock to general unsecured
7 creditors.
8 But, its -- in fairness, it was not a debtor in
9 possession, it is the entity created under the plan as a
10 successor to a debtor in possession.
11 Your Honor, in the original case Chapter 11 case,
12 the goals were three fold, to increase revenue by increasing
13 customer pricing, to deleverage by conversion debt to
14 equity, which was I referred to a moment ago when I said
15 that Allied -- the current holding stock has been issued to
16 debt -- thus converting debt to equity.
17 And the third goal was to reduce labor costs
18 through reductions in compensation and changes in the work
19 rules with respect to the Teamsters, not to mention shared
20 sacrifice by non-union employees.
21 These goals were largely achieved in the first
22 case, Your Honor, with aid to Yucaipa Private Equity Funds.
23 During the original Chapter 11 case, Yucaipa, among other
24 things, was the catalyst for obtaining an agreement with the
25 teamsters to reduce labor costs for three years and finance
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1 the acquisition of additional rigs for Allied.
2 It supported a plan, this plan that converted
3 general unsecured debt into equity and aided Allied in
4 obtaining exit financing which it had to have to emerge from
5 bankruptcy, thats the same exit financing that we currently
6 -- that Black Diamond Spectrum and Yucaipa are both members
7 of. Yucaipa and the Teamsters, Your Honor, joined the
8 debtors as proponents of Allieds plan and Ive already
9 stated that the stock with issued to creditors and so forth.
10 Your Honor, turning to some of the more -- the
11 dryer venue related facts, Allied does not own any real
12 estate of other tangible outsets in Delaware and it has no
13 creditors doing business with it from Delaware.
14 Upon information and belief none of our employees
15 reside in Delaware, our headquarters are located in Atlanta,
16 with a smaller satellite office in Detroit. We currently
17 have 73 employees working out of our Atlanta headquarters,
18 another 55 employees working out of the Atlanta area
19 terminal that I mentioned, in Georgia.
20 Allied does own and lease real estate in Georgia.
21 None of our members of the board reside in Delaware. One
22 member of our board does split his residence between Georgia
23 and Michigan.
24 Virtually, and Ill come back to this in a moment,
25 virtually all of our key employees reside in Atlanta.
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1 Outside counsel, me are located in Atlanta. Given the
2 international presence of Allied, our creditors are spread
3 out over a wide geographic area. Theres a lot of real
4 estate to Michigan in that regard because of our ties to the
5 automotive industry.
6 We do not think any of our creditors interact
7 with us from locations in Delaware, Your Honor.
8 We fully respect to Mr. McCaulays statement that
9 Allieds key employees reside in Atlanta, Mr. Blount, who
10 again, is here today, would testify that it would fall to
11 him and Mr. Macaulay, both of whom reside in Atlanta, to be
12 witnesses for the alleged debtors in bankruptcy court
13 hearings.
14 Mr. Blount would further testify that due to cost
15 cutting moves necessitated by the recession as it has
16 impacted Allieds business in particular, the executive team
17 is currently stretched very thin as evidenced by the
18 numerous titles that Mr. Blount, himself has. And that it
19 would be and is a significant disruption to Allieds day to
20 day business for either or both him and/or Mr. Macaulay to
21 consume a day or more to travel to Delaware for court
22 hearings, as opposed to the far less oneness trip, if you
23 will, of getting in their car and driving 20 minutes from
24 the headquarters to the bankruptcy court in Atlanta.
25 Your Honor, those facts, along with the redacted
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1 facts that Mr. Blount also supports are the basis of our
2 venue transfer motion. I believe that in order of logical
3 progression, I would first take up the issue of the impact
4 of Bankruptcy Rule 1014B on the situation before the court.
5 THE COURT: Well, lets -- do you -- Mr. Harris,
6 do you want to cross-examine or with to cross-examine the
7 witness?
8 MR. HARRIS: I do not, Your Honor.
9 THE COURT: Okay. Very good. All right. You
10 can keep going.
11 MR. KELLY: Thank you, Your Honor. To paraphrase
12 Rule 1014B with respect to the present situation provides
13 that if cases are filed in different districts against a
14 debtor or an affiliate on motion filed in the district where
15 the petition first filed is pending, that court, that is the
16 court where the petition first filed is pending, may
17 determine in the interest of justice or for the convenience
18 of the parties in which district the case should proceed.
19 THE COURT: Uh-huh.
20 MR. KELLY: Here, Your Honor, the facts are that
21 the Atlanta Chapter 11 case of one of the alleged debtors,
22 which is the Georgia corporation, Allied Systems Ltd.,
23 which was a debtor in possession, Your Honor, in the first
24 case, is still pending. In all candor, the case is ready to
25 be closed. Judge Mullens recently signed an order resolving
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1 a very large administrative claim in that case. The Central
2 States claim, its a multi-employer fund thats related to
3 the Teamsters, that was one of the last large matters that
4 was left undone. I think that was resolved within the last
5 month or so. The case, thus in all candor, is ready to be
6 closed, but it is still pending, it has not been closed.
7 With respect to the other situation, moreover the
8 still pending Atlanta cases are clearly cases of affiliates
9 and that word does appear in the rule, as that word is used
10 in 1014B, of the other alleged debtor, Holdings.
11 So, in other words, the still pending cases are
12 cases of affiliates of Holdings.
13 So, to summarize, one of the alleged debtors is a
14 debtor in possession and is still pending cases in Atlanta,
15 the other is an affiliate of those debtors in possession and
16 its still a pending case.
17 THE COURT: Well, if you look at 1014 -- granted
18 all that. So, lets assume that -- I think fairly assume
19 that for purposes of 1014B, at least initially, that both of
20 the purported debtors in this case have -- are related to
21 cases pending in Georgia that are open.
22 It says that, in that case, it says that the court
23 may determine -- and it doesnt really -- so let me ask you,
24 which court?
25 MR. KELLY: Well, its just a matter of -- the way
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1 I read it is, its the court where the petition first filed
2 is pending.
3 THE COURT: Right.
4 MR. KELLY: Thats the way I -- I think the clear
5 reading of the ruling is.
6 THE COURT: All right. So, the Georgia court may
7 determine -- so, two questions, what if the Georgia court is
8 never asked or the Georgia court is asked and never makes a
9 decision, what happens?
10 And why thats important is, you have two pending
11 cases -- and what it really comes down to the last sentence,
12 which is sticky, that says the proceedings on other
13 petitions shall be stayed by the courts in which they have
14 been filed until the determination is made by the first
15 court.
16 So, in this instance and, again, it is what it is,
17 you havent asked Judge Mullens or its -- since its, they
18 determine, I suppose its possible you could ask a judge and
19 that judge simply never make a determination or say its not
20 going to make a determination. And were stuck in a
21 situation where we dont know what the determination is and
22 this court is stayed from doing anything further, so what
23 happens?
24 MR. KELLY: Ill respond directly. In partial
25 response, my experience with Judge Mullens is he promptly
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1 rules on everything thats brought before him, that
2 particular judge. And again, it was my intention -- and I
3 considered filing something in front of Judge Mullens until
4 we had our status conference last week --
5 THE COURT: Right.
6 MR. KELLY: -- where Your Honor -- I think Your
7 Honor, appropriately, said you wished to consider whether
8 1014B, in fact, had application here because of some factual
9 questions here.
10 I think you present a difficult hypothetical if
11 the other judge is asked and never rules. As I read the
12 statute, I dont think the stay becomes affective unless I
13 ask the other court.
14 THE COURT: Well, yeah -- and thats my question.
15 MR. KELLY: I dont think there is a stay.
16 THE COURT: It says, if positions are commenced --
17 it says upon motion filed in the district where its first
18 pending. So, if you havent filed that motion, in effect,
19 1014B is inapplicable. Which leads us to the situation
20 where basically the answer would be, I dont have to worry
21 about whats going on or has gone on and what the situation
22 is in Georgia, I can simply make a decision on the merit of
23 the transfer venue motion, based on the normal transfer
24 venue rules as opposed to whatever rules might be -- might
25 be more focused on 1014B.
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1 MR. KELLY: Well, Your Honor, if thats your
2 conclusion, Ill --
3 THE COURT: Well no, youre here to argue with me
4 if you want or agree with me if you want. I mean, Im not
5 trying to --
6 MR. KELLY: Well, I think the way I understood the
7 result of the status conference was that, Your Honor was
8 going to consider what -- a factual issue relating to 1014B,
9 which probably resolved -- revolved around what is --
10 THE COURT: Well, we had a discussion at the
11 status conference about whether they were actually -- you
12 know, one of the debtors was not a debtor in Georgia and
13 whether that debtor might be considered a debtor because it
14 was a successor by merger and then, frankly, I dont
15 remember much of a discussion about the other debtor, the
16 limited --
17 MR. KELLY: We didnt talk about that one.
18 THE COURT: -- liability company. Right.
19 MR. KELLY: Right.
20 THE COURT: So, were kind of -- if were talking
21 about the factual issue -- and I did say this, Im trying to
22 whip saw you, that according to the factual issue, at this
23 point I think its fair to say that there are existing
24 cases, ie a debtor and a debtor affiliate in Georgia, that
25 would seem, at least to imply 1014B was applicable.
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1 So, then, assuming that is the case and you
2 havent asked Judge Mullens and again, I understand why,
3 what do I do? Do I just say, well, I dont do anything and
4 send you to Georgia, which seems like a big waste of time
5 and effort, but if the rule says thats what I have to do,
6 thats what I have to do. Or do I have some sort of
7 discretion to make a decision on the merits of the motion?
8 MR. KELLY: Your Honor, as we stand here today,
9 you have the discretion to make the decision on the merits
10 because Ive not asked Judge Mullens, Ive not filed
11 anything in front of Judge Mullens. I believe thats what
12 the situation is. Its a fair reading of the rule.
13 Again, Im reacting to in part -- in terms of the
14 path Ive chosen to the courts and there was just a status
15 conference to the courts statement that you wanted to
16 consider 1014B and if you decided to move it to Atlanta
17 maybe your observations on venue would be of value to Judge
18 Mullens so on and so forth.
19 So, it just didnt seem to me judicially
20 economical, if thats the right way to say it, for me to go
21 off after that status conference and file a motion in front
22 of Judge Mullens --
23 THE COURT: Yeah. And Im not --
24 MR. KELLY: -- knowing that this hearing was
25 coming up.
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1 THE COURT: Im getting the impression you feel
2 like Ive set you up and now Im --
3 MR. KELLY: No, I dont. I dont -- I dont --
4 Im trying to answer your question.
5 THE COURT: Yeah. And I wasnt intending to do
6 that, Im just trying to flush out the --
7 MR. KELLY: And I in all candor expect Your Honor
8 to make a decision or if Your Honors prepared to, on the
9 merits of the venue transfer motion.
10 THE COURT: Okay.
11 MR. KELLY: It is what it is, but the situation
12 that we have is that we have 1014B --
13 THE COURT: Right. So, lets assume -- forget
14 about 1014B for now. So, lets talk about the merits of the
15 venue transfer motion and the argument made by the
16 petitioning creditors that I simply, until theres an order
17 for relief entered, cant go forward with the transfer venue
18 motion anyway.
19 Although, I would point out, by the way, that
20 1014B talks about petitions, it doesnt talk about orders
21 for relief, but anyway --
22 MR. KELLY: Yes, thats one of the things I was
23 going to say, Your Honor. With respect to that argument
24 that they -- as a preliminary matter argue that Your Honor
25 cannot consider the motion because no order for relief has
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1 yet been granted. They first raise Bankruptcy Rule 1011E,
2 which provides that quote, that no pleadings other than an
3 answer may be filed in response to an involuntary petition.
4 Your Honor, the petitioning creditors, I submit, are just
5 flat wrong on that assertion, because a motion which is what
6 is before the court today is not a quote, pleading.
7 Pleadings have a specific meaning under Federal
8 Rules Procedure 7, incorporated by Bankruptcy Rule 7007,
9 theyre listed there. Pleadings are a complaint, an answer,
10 an answer to a counter-claim, so on and so forth. This
11 motion is not a pleading. This conclusion is made even more
12 clear, Your Honor, by the very next sub-section of
13 Bankruptcy Rule 1011B, petitioning creditor cites 1011E for
14 the proposition, which I think is incorrect. But 1011F, the
15 very next sub-section acknowledges that if entities respond
16 to involuntary petitions by a pleading, a motion or other
17 response, they must file a designated statement.
18 In other words, Rule 1011 itself expressly
19 differentiates between pleadings and the motion thats
20 before this court, so I dont think, for that reason, 1011E
21 prohibits Your Honor from considering this motion.
22 They next cite a couple of cases, which Ill move
23 to just very briefly. The David J. Ross case, which they
24 cite on this point, is off the mark because that case
25 considered only the issue of whether a counter-claim, which
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1 is a pleading, a counter-claim for attorneys fees, was
2 permissible -- was a permissible type of response to an
3 involuntary petition. Again, what we have here is a motion,
4 not a pleading, before the court today.
5 The footnote from the Raytech (phonetic) case that
6 they cite, is a 1998 opinion from the Bankruptcy Court in
7 Connecticut. They cite that on Page 6 of their response, is
8 the only case they cite to support this proposition, that
9 the venue motion is premature. Raytech does touch on this
10 issue, Your Honor, but only in passing. The court in
11 Raytech was not ruling on a motion to transfer venue, but on
12 whether a venue challenge had been waived by a creditors
13 committee in a previous case where no order for relief had
14 been entered.
15 On that point, I can speculate with some
16 confidence, Your Honor, that if I had not raised the venue
17 motion when I did in this court, in response to the
18 emergency motion for an appointment of a trustee, I believe
19 the alleged debtors would have been faced with an assertion
20 from the petitioning creditors that we had waived venue, by
21 not raising it while we were engaging on the trustee motion.
22 So, Your Honor, as I said at the status
23 conference, this is a -- the filing of this petition
24 commenced the case, under 303 -- I believe its 303B. 1412
25 talks about transferring cases. I believe a case is before
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1 Your Honor that 1412 applies to and it seems to me at least
2 that common sense dictates an a gating issue in this case is
3 to determine which court should handle the case from this
4 point forward.
5 So, thats my response on their issue that its
6 premature.
7 Id like to turn, finally, to -- if I may to what
8 Ill call the merits of the venue transfer motion.
9 THE COURT: Okay.
10 MR. KELLY: The issues of convenience of the
11 parties and interest of justice. I submit in favor of a
12 venue transfer to Atlanta. The petitioning creditors take
13 issue in their papers with alleged debtors reliance upon the
14 12 part test set forth in the 3rd Circuit Case of Jamara
15 (phonetic), and instead point to the six part test in the
16 5th Circuit Commonwealth Oil opinion.
17 However, as cited in our papers, Your Honor, both
18 Judge Fitzgerald who is sitting as a Delaware judge, once
19 you made the ruling and Judge Walrath have analyzed venue
20 transfer motions under the Jamara standards.
21 Judge Fitzgerald even stated in her innovative
22 communications opinion that the Commonwealth Oil test was a
23 case decided under the Bankruptcy Act, which applied a
24 stricter test of venue transfer then was currently the
25 situation under the code.
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1 Your Honor, I submit that the transfer motion
2 should be granted under either the Jamara test or the
3 Commonwealth Oil standards.
4 As Ill get to in a moment, very briefly, I
5 believe that the factors that are applicable here under both
6 tests are either neutral or favor transfer.
7 As we pointed out in our motion, these issues,
8 these venue transfer motions are -- seem to be decided on a
9 case by case basis. In fact, many of the opinions say its
10 a case by case analysis and the test of convenience to the
11 parties and interest of justice are to be broad and flexible
12 standards as set forth in the Manville opinion that we cite.
13 The interest of justice standard, in particular,
14 contemplates a consideration of whether transferring venue
15 would promote the efficient administration of the estate and
16 judicial economy.
17 The factors that favor transfer in this case are
18 Number 1, that Delaware is more costly, Your Honor, and more
19 disruptive due to travel -- for the presence of Mr. Blount
20 and Mr. Macaulay, to be present as witnesses at sustentative
21 hearings in this case.
22 Theres reference in the petitioning creditors
23 papers to lawyers only appearing at most hearings. The
24 attendance of witnesses for the debtor at hearings is
25 somehow not necessary. Thats not the way Ive ever run a
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1 debtors case, Your Honor. In my experience Im always
2 going to have -- in this particular case, either Mr.
3 Macaulay or Mr. Blount present with me to support evidence
4 at any substantive hearing.
5 Moreover, its my experience that having the
6 gentlemen in those positions present, knowledgeable key
7 employees, promotes efficient administration of the case
8 because the opportunity to act with other -- interact with
9 other constituents and their counsel before and after the
10 hearings.
11 Moreover, Your Honor, contrary to the petitioning
12 creditors statement in their papers, its not necessary that
13 employees attend hearings, I would just point out that in
14 Allied 1, on more than one occasion we had courtroom packed
15 with employees, mostly Teamster employees who took a great
16 interest in that case. And we dont think we have any
17 Teamster employees in Delaware.
18 THE COURT: Well, where did the Teamster guys that
19 attended the hearing from Atlanta come from, do you know?
20 MR. KELLY: Most of them were from Atlanta, some
21 drove from Kentucky. There was a fair number from Kentucky,
22 because that was one of the more, shall I say interested,
23 local unions in what we were trying to do. They may have
24 come from other locations, but as I recall we were talking
25 about Kentucky and Atlanta.
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1 It was Kentucky because of a large facility
2 located there that manufactured a certain kind of vehicle
3 that was being transported by Allied.
4 THE COURT: Corvettes?
5 MR. KELLLY: It was Corvettes.
6 THE COURT: Bowling Green, then?
7 MR. KELLY: Yes.
8 THE COURT: Very good. I have a good friend --
9 two good friends who used to be managers -- senior managers
10 in that plant. Thats the only reason I know.
11 MR. KELLY: And the Teamster official that we
12 interacted with primarily during that first case was
13 actually from Kentucky, I think originally came from that
14 union, if Im -- that local union, if Im not mistaken. So,
15 thats why there was such a Kentucky connection at that
16 time.
17 THE COURT: Okay.
18 MR. KELLY: Now, the Jamara court expressed the
19 convenience of the parties test with a modifier, and Im
20 quoting, as indicated by the relative financial condition.
21 As I read that, I argue the following; here the alleged
22 debtors relative financial condition as compared to the
23 petitioning creditors, which, by the way, I believe, are the
24 only parties that are opposing this motion -- parties of
25 interest that are opposing this venue transfer motion. Im
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1 not aware of anybody else opposing this. We have two
2 minority members of our first lien group who are opposing
3 this venue transfer, nobody else to my knowledge.
4 But the relative financial condition militates in
5 favor of a transfer. In other words, under the Jamara test,
6 as I read it, the inconvenience to Allied is more important
7 than the inconvenience to the petitioning creditors, because
8 of our relative financial condition.
9 The parties choice of forum is also important
10 under Jamara and Your Honor indicated in the Saab ruling,
11 which Ive read, and you know better than any of us here
12 what you meant when you said it, but you said generally its
13 the debtors choice of where to file. I know thats a case
14 where you didnt grant the debtors motion because it was
15 primarily a liquidation case and you said it was a coin flip
16 even in that situation as I read the transcript.
17 Here, were not looking at that kind of a case,
18 Your Honor. Clearly, the alleged debtors choice is Atlanta,
19 where their first Chapter 11 case took place. Theres also
20 redacted information, Your Honor, that is pertinent to the
21 choice of forum issue. Im near the end of my presentation,
22 Your Honor.
23 And finally, the fact that we already have a
24 bankruptcy judge, Judge Mullens, familiar with Allied and
25 most of the parties in interest, Yucaipa, the Teamsters.
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1 Hes familiar with the exit loan facility and so forth,
2 means that efficient administration of these cases would be
3 promoted by the transfer.
4 In our motion, we did say that Judge Mullens would
5 probably, I use the word probably be assigned to this case
6 if transferred. I said that out of not wanting to appear,
7 frankly, to the Bankruptcy Court in Atlanta, in a public
8 filing, as being presumptuous as to case assignments in
9 Atlanta.
10 But the petitioning creditors made an issue out of
11 that in their responsive papers saying I only said probably.
12 I will state unequivocally, its my understanding, I
13 practice in Atlanta, obviously, that the way case assignment
14 is handled in Atlanta, that this, in effect, Chapter 22 case
15 of Allied would be assigned to Judge Mullens. Hes now the
16 chief judge, I dont know how it works, I suppose if he
17 doesnt want it he wouldnt keep it. But under case
18 assignment rules, as I understand them, they would assigned
19 to Judge Mullens.
20 There is also redacted material raised by the
21 petitioning creditors regarding the similarity of issues in
22 the second case as to what transpired in the first case,
23 Your Honor. And I would take issue that that is a
24 distinction with a difference.
25 I think, Your Honor, that the other factors to the
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1 extent that theyre applicable be it under Jamara or
2 Commonwealth Oil, are neutral. Proximity of the creditors
3 is neutral. Our creditors are spread out, none of them are
4 in Delaware, I might add, but our creditors are spread out.
5 The Teamsters, Your Honor, and the other parties
6 in interest and our creditors in the first case, had no
7 problem that Im aware in appearing and being heard and
8 having their claims handled in Allied 1 in Atlanta. I have
9 no reason to think that the Teamsters or other parties in
10 interest or our creditors will have any different result --
11 or any problem appear in Atlanta in the second case.
12 As to the petitioning creditors themselves, Your
13 Honor, they knew when they bought into this first lien
14 facility after the plan was confirmed, that they were buying
15 -- becoming lenders to an operation headquartered in
16 Atlanta, subject to still pending Chapter 11 cases, which
17 were then very much more active when they bought the debt
18 and being administered in Atlanta.
19 Your Honor, I submit the location of the debtors
20 assets is a neutral factor and I really cant think of any
21 other factors that I need comment on, although I will if
22 asked, but nothing else occurs to me.
23 Its primarily, Your Honor, efficient, economic
24 administration of the estate due to my -- the location of my
25 witnesses, coupled with Judge Mullens familiarity with the
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1 basic situation.
2 So, Your Honor, for all those reasons, we
3 respectfully request that the court grant the motion and
4 transfer venue of these cases to Atlanta under 28 USC 1412.
5 THE COURT: Thank you. Mr. Klyman.
6 MR. KLYMAN: Good afternoon, Your Honor. For the
7 record, Robert Klyman of Latham Watkins, LLP on behalf of
8 the Yucaipa companies, which as Mr. Kelly mentioned are
9 significant lenders to the current alleged debtor.
10 Your Honor, Yucaipa, for the record, is the holder
11 of 135,000,000 of the 235,000,000 principle amount of first
12 lien debt. Those numbers are principle amount numbers, not
13 accrued and unpaid interest numbers.
14 Yucaipa also holds 20,000,000 in principle amount
15 of the 30,000,000 second lien debt. Yucaipa holds all the
16 preferred stock and 63 percent of the common stock and I
17 rise in support of the debtors motion to transfer venue.
18 What this motion boils down to is essentially the
19 following; should Black Diamond, which appears in cases
20 throughout the country be compelled to have its lawyers
21 appear in Atlanta?
22 And I should note, Your Honor, that before this
23 hearing I Googled Black Diamond and bankruptcy cases and
24 discovered that in recent years theyve appeared in
25 California, Shreveport, Louisiana, Tennessee, New York,
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1 Delaware and elsewhere.
2 But could Allied stretch management, which now has
3 two day jobs, running the business and dealing with a
4 bankruptcy case, be compelled to participate in a case and
5 attend hearings in Delaware as opposed to a court in Atlanta
6 thats 20 minutes away?
7 This is about keeping a management team focused
8 and in Atlanta to conduct the business of the debtor and
9 maximize value for all stakeholders, of which Yucaipa is by
10 far the largest.
11 In addition, as Mr. Kelly mentioned, the debtor
12 seeks to have its bankruptcy occur in a forum before a judge
13 that knows most of the players and the history and the
14 status of claims that were recently resolved.
15 As you can see from the hearing today with the
16 long list of people who are appearing by phone, Black
17 Diamonds representatives are perfectly able, even though in
18 this matter, theyre located very close to Delaware, to
19 appear by phone. And Black Diamonds counsel, Im sure, has
20 many frequent flyer miles and has no issue getting on a
21 plane.
22 Your Honor, while the facts here are a little
23 different than some of the cases that were cited by Black
24 Diamond, a number of the cases and precedent in this court,
25 uniformly, hold that the debtors choice of forum should not
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1 be lightly disturbed. Thats what Judge Walsh held in the
2 Safety Clean opinion that was attached to the papers by
3 Black Diamond.
4 And in the Enron case, another case cited by Black
5 Diamond, the court held that a debtors choice of forum is
6 entitled to great weight if venue is otherwise proper.
7 Citing Ocean Properties of Delaware, which is a 1998
8 Delaware Bankruptcy case.
9 THE COURT: Well, I mean, as we sit here today,
10 have they chosen a forum? I mean, the choice has basically
11 been, not here.
12 MR. KLYMAN: Well, theyve moved to transfer venue
13 to Atlanta.
14 THE COURT: All right.
15 MR. KLYMAN: So, I think by virtue of that motion,
16 theyre --
17 THE COURT: Okay. Okay.
18 MR. KLYMAN: -- choosing a venue. And in that
19 case, Your Honor --
20 THE COURT: Im sorry, Im -- but they havent, at
21 least as we sit here today, they havent agreed necessarily
22 to go into bankruptcy. That was sort of what I was saying.
23 Its a -- being a purported debtor -- an alleged debtor with
24 the involuntary petition in Delaware versus being an alleged
25 debtor with an involuntary position in Georgia.
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1 MR. KLYMAN: May I have a moment, Your Honor?
2 THE COURT: Uh-huh. And -- I -- my -- my point
3 there is not -- my point there is more along the lines of --
4 and perhaps this is what Mr. Harris is going to say, which
5 is, maybe thats why this motion is premature because we
6 simply dont know at this point whether there will --
7 whether well definitely have a case or if we definitely
8 have a case when well definitely have a case.
9 MR. KLYMAN: Well, Your Honor, I --
10 THE COURT: Before we decide where that case
11 should be.
12 MR. KLYMAN: Your Honor, I dont represent the
13 debtor, Im happy to see the podium to Mr. Kelly on that
14 particular point.
15 THE COURT: Okay. You can move on, Im sorry.
16 MR. KLYMAN: Your Honor, Enron further went on to
17 say that where a transfer would merely shift the
18 inconvenience from one party to the other, the debtors
19 choice of a forum should not be disturbed. And here thats
20 exactly whats at issue, whether its more convenient for
21 the lawyers representing Black Diamond to be in Atlanta or
22 more convenient for the debtors to be in Atlanta or whether
23 it should be flipped and instead of Mr. Harris taking an
24 hour and a half train ride down from New York, the debtors
25 management which is struggling to keep the business afloat,
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1 should be compelled to get on a plane and fly here.
2 Your Honor, the debtor and Yucaipa, by moving to
3 transfer venue, and not immediately contesting the
4 involuntary petition, intend to reserve all rights. And Im
5 speaking for Yucaipa here, Mr. Kelly can speak for Allied,
6 but you have all rights against Black Diamond Spectrum in
7 connection with a timing and nature of the filing. I dont
8 want there to be any sort of admission through silence or
9 acquiescence that the business was not damaged by Black
10 Diamonds actions and when theres an appropriate venue and
11 a case is -- and a case is fixed, then that issue will be
12 joined.
13 And Your Honor, with respect to the procedural
14 issue about whether or not the case can be filed, I just
15 want to speak to that briefly.
16 Black Diamond and Spectrum filed their involuntary
17 petition and then in disregard of the rule that theyre
18 currently citing, they filed an emergency motion to appoint
19 a trustee.
20 If we were to follow their logic, neither the
21 debtors no Yucaipa would have been able to a oppose that
22 motion.
23 They then participated in a scheduling conference
24 about this hearing --
25 THE COURT: No, but Rule 1011 is about responsive
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1 pleadings --
2 MR. KLYMAN: Yes.
3 THE COURT: -- and responsive motions --
4 MR. KLYMAN: Yes.
5 THE COURT: -- by the purported debtor.
6 MR. KLYMAN: Yes. But its not motions, Your
7 Honor, its pleadings.
8 THE COURT: But its titled, responsive pleading
9 or motion in involuntary and across the border cases.
10 MR. KLYMAN: Thats correct, Your Honor, but the
11 section --
12 THE COURT: My point is really as to responsive.
13 MR. KLYMAN: Okay.
14 THE COURT: My point being that because the code
15 specifically contemplates the ability to seek a trustee in
16 the gap period. So, it cant be the rule at least to the
17 extent it purports to be Rule 1011 that says you cant file
18 a motion to seek appointment of a trustee even though code
19 section says you can. That rule cant be applicable.
20 MR. KLYMAN: Youre right. Your Honor, that
21 argument would be illogical just as though under 1014, which
22 is a different rule, a rule says once a petition is filed,
23 either the debtor on its own motion or the court on its own
24 motion, may transfer venue.
25 In one of the cases that were cited by Black
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1 Diamond, a case called BL of Miami, which was a 2003
2 District of Nevada case, in that case the court held that
3 1014 does not, in fact, prohibit a sua sponte transfer of
4 venue by the court, which was dealing with petition and the
5 statute and the rule itself actually speaks to that.
6 So, for those reasons, Your Honor, we believe that
7 the debtors motion should be granted. For me, Im going to
8 get on a plane to come to Delaware or to Atlanta, its not
9 my inconvenience, its not Mr. Harris inconvenience thats
10 at issue, whats at issue is whether or not the debtor
11 should remain in Atlanta in order to maximize value for all
12 the stakeholders. Thank you.
13 THE COURT: Anyone else before I turn to Mr.
14 Harris?
16 THE COURT: Mr. Harris.
17 MR. HARRIS: Thank you, Your Honor. Im going to
18 stick to the substance of whats before Your Honor today and
19 avoid my natural tendency, which is to respond to people who
20 like to take pot shots at my clients in open court without
21 any foundation and without any evidence and without any
22 support and testimony.
23 Mr. Klyman --
24 THE COURT: So, without poisoning anyone?
25 MR. HARRIS: I thought that was pretty well said,
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1 actually.
2 THE COURT: I wont respond to the threat of a
3 murder, by saying -- all right, go ahead. Non-response of
4 response noted.
5 MR. KLYMAN: Your Honor, I am going to pick up on
6 a theme that, you know, youve already identified here,
7 which is we have involuntary cases filed by petitioning
8 creditors, not just Black Diamond, in this court, in which
9 by all admissions is a proper venue for these cases.
10 1408 makes it absolutely clear, domiciled,
11 (indiscernible), this is a legitimate place for these cases
12 to be. Theyre properly filed here, nobody has challenged
13 that. You havent heard that from either Yucaipa and you
14 havent heard that from the debtors.
15 We dont have a debtors choice of forum, Your
16 Honor, other than to say we dont want it here. And that is
17 an issue because from our perspective, what that basically
18 is saying is that we want the cases transferred in their
19 status as involuntary petitions to another court where we
20 dont know whats going to happen next. Are they going to
21 be contested? Are they going to be consented to? Are we
22 going to be litigating in a place that is not the selected
23 forum of the petitioned creditors at that time and when you
24 read Judge Walshs decision, when you talk about the
25 preferred filing place -- I would submit to Your Honor, that
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1 in this instance, the preferred filing place is that of the
2 petitioning creditors, not of the debtors proposed choice of
3 forum when the debtor actually hasnt made that choice.
4 Were we in a different situation then I think that
5 the analysis might be a little bit different, but thats not
6 where we are and this is not your Saab case where the
7 debtors had informed the petitioning creditors before they
8 ever filed that they, in fact, were going to be filing in
9 Detroit in a day or two and the petitioning creditors turned
10 around and ran off and went someplace else. Here, as a
11 matter of fact.
12 We had no knowledge that there was going to be a
13 filing. We had no knowledge that they were contemplating
14 anything. Theres a lot of redacted information that is not
15 appropriate for this record, but we didnt know. And for
16 people to get up and call it precipitous or unwise or
17 anything else, again, Im not going to respond to that, but
18 were here, its a legitimate forum, 1408 says its a
19 legitimate forum and we should be moving on to the more
20 substantive part of this.
21 THE COURT: Yeah. And as an aside, I mean, you
22 often here sort of -- this sort of, you know, weve got a
23 potential debtor and the case gets filed against them and
24 they sort of like, oh my gosh, I cant believe anyone would
25 do something so un-torrid and so wrongful and, you know,
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1 dont they believe us? And my response to that is, you
2 know, the invective gets you nowhere. Heres the reality,
3 people are owed money, the code allows them to file a
4 voluntary case. They filed a voluntary case, I dont think
5 that makes anyone a bad actor. Simply somebody exercising
6 their legal rights. So, its more an aside, because they
7 didnt really focus a lot on this, but this comment that
8 Black Diamond has somehow wronged the debtor by filing this
9 motion, I dont think that gets you anywhere one way or the
10 other.
11 And it also relates to the fact that I think that
12 the petitioning creditors choice must have some merit
13 because the code gives the petitioning creditor the right to
14 exercise that choice.
15 MR. KLYMAN: I appreciate that, Your Honor and I
16 wholeheartedly agree with it. I want to throw one more
17 piece of reality onto the comment you just made, which is as
18 we mentioned in the motions we had filed with the court
19 originally, the maturity date of the first lien debt was
20 March 29th, it has now come and gone and had we been paid I
21 wouldnt be standing before you today. It has not been paid
22 and theres no expectation that it will be. So, obviously,
23 if there is a contested hearing on a petition, that will be
24 just one more fact to -- or a piece of wood to throw on the
25 otherwise burning embers.
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1 But, Your Honor, Im not going to dwell a lot on
2 the 1011E issue, I think, frankly, the comments weve made,
3 we think that having venue transformations dealt with in the
4 context of involuntary filings opens a whole host of issues
5 of the sort we were just discussing about changing the
6 petitioners chosen forum for litigation for the involuntary
7 itself.
8 We think the way you read the two statutes
9 together, frankly, is that -- that there should be no
10 consideration venue transfer motion by any court until you
11 know you have a case to transfer. You shouldnt be
12 transferring, you know, open litigations, if you will,
13 regarding involuntary petitions until theres a
14 determination of whether an order really should or should
15 not be entered.
16 This is not a situation where somebody is looking
17 to reopen the old case that was extant down in Georgia such
18 that theyre trying to enforce and old plan or claim that it
19 wasnt substantially consummated and therefore, you know,
20 this should be dealt with before an order to (indiscernible)
21 is necessarily entered, its a whole new case. And thats a
22 subject Ill get to in a couple minutes.
23 Let me talk about what the real import would be of
24 Judge Mullens historical knowledge and familiarity and so
25 forth, but Ill come to that in a couple of minutes.
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1 Your Honor, as I said before, I mean, theres no
2 dispute, 1408 says we can be here. This company should be
3 here and frankly, one interesting fact, Your Honor, to note
4 is that when these companies were in bankruptcy before, they
5 are from the parenting company Allied Holdings, which was
6 merged out of existence into Allied Systems Holdings as part
7 of the plan, that was a Georgia corporation.
8 When Yucaipa put the plan together and decided to
9 create Allied Systems Holdings, Inc. as the new parent
10 company, it affirmatively chose to make it a Delaware
11 Corporation. It wanted the rights and benefits and all the
12 things that go along with the fact that its a Georgia
13 company, the corporate governance issues, you know the body
14 and case law that goes along with fiduciary duties, all
15 those items. They affirmatively chose that law and frankly,
16 if you look at Judge Walshs decision of PWS, he says having
17 made that choice, domicile becomes a very valid basis for a
18 case. Whether they choose to do it or whether an
19 involuntary creditor -- petitioning creditor chooses to put
20 them in. That is a valid basis to be here. They chose
21 Delaware as the jurisdiction they wanted to incorporate this
22 company. And they affirmatively took it out of Georgia.
23 The parent company was a Georgia corporation, Allied Systems
24 Holding is a Delaware corporation, theyre the ones who
25 decided to make it so.
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1 Now, Your Honor, if you took the arguments that
2 have been made by both the company and Yucaipa relative to
3 why this case should be transferred -- and again, I would
4 condition that on should be transferred, assuming an order
5 for relief is entered. But if you take their arguments at
6 face value, Your Honor, domicile means nothing in every case
7 in which a venue of transfer motion is filed, should be
8 granted.
9 Because, frankly, a lot of the debtors who come
10 here dont have creditors here, dont have their
11 headquarters here, dont have very many contacts with this
12 jurisdiction independent -- as part of their business, but
13 there are other reasons they file here and they do and
14 theres good reasons for it. Again, look at Judge Walshs
15 decision in PWS, in the final paragraph he has there, which
16 talk about companies that operate nationally,
17 internationally, people should expect, among other things
18 that if there is a filing that the filing would occur in the
19 place where the parent company or one of its affiliates is
20 domiciled.
21 You cant just read it out of the statute, which
22 is what it effectively, I think both the debtors and Yucaipa
23 are trying to do by saying, since we are elsewhere we
24 shouldnt be here.
25 But, even if you move beyond that, Your Honor, and
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1 you get to the substance of the particulars here, you know,
2 the statute in 1412 talks about the interest of justice or
3 the further convenience of the parties. It doesnt talk
4 about just the convenience of the debtors, it talks about
5 the convenience of the parties. And here weve also got
6 case law which suggests that the movant bears the burden of
7 showing by a preponderance of the evidence that the transfer
8 of the venue is necessary in order to achieve the statutory
9 purposes of the venue transfer statute.
10 So, we go through the factors and whether you use
11 the Jamara factors or whether you use the six point test, I
12 think, effectively, Your Honor, the analysis comes out at
13 almost exactly the same place. But when you look at it and,
14 you know, you go through the limited analysis weve been
15 able to do and we dont have schedules or statements or
16 access to books and records or any of those things, but what
17 we come up with Your Honor is that there are substantial
18 parties and creditors who have absolutely no association
19 with Georgia for whom this court is imminently more
20 convenient or at least neutral. The PBGC, which is,
21 obviously, a very substantial creditor here, a continued
22 creditor here, is located in the District of Columbia. The
23 Teamsters headquarters are in DC, although they do have
24 locals, obviously, throughout the country. Yucaipa is,
25 obviously, in California and New York and Mr. Klyman says
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1 hes happy to go anywhere, so I guess that becomes a neutral
2 factor.
3 The petitioning creditors are in New York and
4 Connecticut. CIT who is owed about $35,000,000 is in New
5 Jersey. The chairman of the board of the company, Derex
6 Walker resides in California. There are other directors
7 other than the one they refer to who splits his time and
8 residence between Michigan and Georgia. By implication, all
9 reside some place other than Georgia, we dont know where.
10 And the CO of the company, its our understanding, splits
11 his time and maybe the board member, who splits his time
12 between Michigan and Georgia.
13 I found it interesting that, you know, the debtors
14 didnt suggest their CO would ever be somebody who would be
15 coming to hearings. But, thats, obviously, their choice.
16 With respect to proximity, Your Honor, of the
17 debtor to the courthouse, the extent to which employees of
18 the company need to be in attendance at hearings and my
19 experience and I think in many peoples experiences, depends
20 on a number of factors. The most important of which is, can
21 the parties get on the same page with respect to how the
22 case is going to proceed?
23 If the case is going to proceed in the manner such
24 as Mr. Kelly and I have at least started off in some
25 respects today, of cooperation, where he comes to me and
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1 says, do I need to bring Scott Macaulay to Delaware to
2 testify to the facts in his declaration? No. I mean, Im
3 not going to sit here and force a man to fly, you know, a
4 couple of hours and spend a couple thousand bucks to do
5 that, it doesnt make any sense. And reciprocally, Mr.
6 Kelly was nice enough to say, were not going to contest the
7 facts in your petition, we understand them, theyre true.
8 We dont need to cross-examine anybody, you dont need to
9 find a witness to come down here.
10 Frankly, had he suggested the same with the
11 limited testimony of Mr. Blount, I would have said, Mr.
12 Blount, in my view, doesnt need to be here either. Whether
13 he decides to bring him or not is, obviously, his choice.
14 But if you can get people on the same page and
15 this case is -- if it goes it in, should be one where people
16 are on the same page with respect to a reorganization. Then
17 the need for employees of the company to leave their posts
18 and travel for hearings to be would be limited and, in fact,
19 in many experiences it turns out to be the financial advisor
20 or investment banker for the company who does most of the
21 testifying while the employees, chief financial officer,
22 chief administrative officer, so forth, dont have to.
23 Obviously, theyre involved in a number of things
24 including preparation of budgets and forecasts and
25 presentations and things like that, but that wouldnt
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1 necessarily require them to leave Atlanta.
2 But, again, how the overall need for them to
3 travel for purposes of hearings is dictated in large part by
4 the means by which the case is going to be conducted and I
5 think that at least so far, we got the ball rolling here,
6 theres no question about that and we did file the trustee
7 motion, but I think we have been reaching out and trying to
8 be as cooperative as possible to avoid the need for
9 unnecessary costs and expense and travel and were hopeful
10 that will be -- bear fruit, going forward.
11 With respect to books and records, Your Honor, I
12 mean, theyre all electronic and available, in fact, when
13 the State Court in New York directed Yucaipa to have the
14 company send us historical financial records that they
15 hadnt produced under the terms of the credit agreement for
16 a couple of years, within 72 hours the company had
17 absolutely no problem delivering them to us. So, I think
18 locations of books and records as an issue relative to venue
19 is not particularly relevant.
20 On the location of assets issue, Your Honor, as
21 the case law suggests, location of assets in cases like this
22 is really a neutral factor at best. Yes, they have
23 headquarters in Atlanta and real estate there, they have 44
24 terminals around the country, but this is not a liquidation,
25 we dont need local administration or foreclosure laws and
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1 things like that.
2 At least as we sit here today, everybodys
3 intention would be that if orders for relief were entered
4 these would be either reorganizations or potentially sales.
5 I dont know which way its going to go, but I dont think
6 anybody here has any interest in pressing for any kind of a
7 liquidation. That certainly wouldnt maximize value for my
8 client or anybody else.
9 And that takes us to the issue of deficient and
10 economic administration and heres, Your Honor, I have the
11 most issue with the prior pending case and everybodys, the
12 debtors and Yucaipas statements about the helpfulness, if
13 you will, of Judge Mullens prior experience with this case.
14 Im sure Judge Mullens is an excellent judge.
15 Ive never met the man, but by reputation he is a wonderful
16 man and an excellent jurist.
17 But last time he saw this case and the substance
18 of this case was five years ago, other than claims
19 administration which may have been occurring until now,
20 until recently when the case became ready to ultimately
21 close.
22 A lot has happened as Your Honor well knows in the
23 last five years, given the number of cases that have come
24 through this particular courtroom and this courthouse as a
25 whole. All of which bear on what is going to happen next
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1 with respect to this debtor.
2 The familiarity with parties with Yucaipa, with
3 the debtors, with their counsel is to somebody who was not
4 there the last time, in some respects, a double edged sword.
5 I mean, judges who have seen cases before, potentially, have
6 memories of what happened the last time, what they knew
7 about the business previously, which frankly should not be
8 brought to bear on a new case with a new set of facts, with
9 a new set of players and all new circumstances that have,
10 frankly, nothing to do with what happened in the last case.
11 And Im sure that if we were in Atlanta that Judge
12 Mullens would do his very best to segregate out those pieces
13 of information which he garnered through the last case, from
14 those which are relevant to what would be before him today,
15 but, Your Honor, the fact of the matter is, theyre not
16 particularly relevant. Judges see debtors every day, they
17 dont know a thing about them and they learn very quickly
18 everything they need to know in order to basically preside
19 over the case. Historical knowledge of what happened in a
20 case thats been over for five years is not a reason to
21 transfer venue.
22 Just give me a second, Your Honor, I just want to
23 take a look at my notes with respect to the presentations by
24 debtors counsel and Yucaipa.
25 (Pause)
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1 Id be happy to answer any questions.
2 THE COURT: I have none. Thank you.
3 MR. HARRIS: Great, Your Honor. Thank you very
4 much for your time.
5 THE COURT: Youre welcome. Mr. Kelly?
6 MR. KELLY: Briefly, Your Honor, I thought Id
7 made it clear, but maybe I should make it clear on the
8 record, there will not be -- these petitions will not be
9 contested. Our response today is not until June 8th. The
10 company is operating under a time table, however. The time
11 table has been accelerated by the filing of the
12 involuntaries, but just to be clear, the involuntary
13 petitions will not be contested.
14 If its -- you know, I dont think its premature
15 to rule, but if Your Honor believes its premature to rule
16 on the issue because we dont yet have orders for relief or
17 because these entities are not yet in bankruptcy, then one
18 option I respectfully suggest would be to hold the ruling in
19 advance. Were not that far off from when our response date
20 is.
21 Looking through my notes, I really dont know that
22 theres much else I need to respond to Your Honor. In terms
23 of the cost, I wasnt talking about the cost of coming to
24 Delaware, I was talking about the time thats involved in, I
25 believe, in my experience with this case, Im not trying to
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1 say anything about the CEOs lack of involvement, he may well
2 be involved as well, but based on my experience with this
3 case, it would be Mr. Blount and Mr. Macaulays time, thats
4 what were talking about, not expense. Thank you, Your
5 Honor.
6 THE COURT: Thank you. Anything else?
8 THE COURT: All right. Were going to clear the
9 brush a little bit and talk about Rule 1014B. And as its
10 written, I think its obvious, but Ill say it, that the two
11 alleged debtors in this case, one is a debtor of a case
12 currently pending in Georgia and the other is an affiliate
13 of that debtor with a case currently pending in Georgia.
14 So, Rule 1014 would appear to be applicable as
15 there have been cases opened in Georgia and a later case
16 opened here in Delaware. And the technicalities of 1014B
17 have arguably not been met here, which is that a request
18 should have been made to the judge in Georgia and the judge
19 in Georgia would make a decision on where the venue should
20 be and then until that happens this court would basically
21 hold this case in abeyance, pending a decision.
22 That has happened currently because the statements
23 I made at the status conference, partly and I think chiefly
24 because this is an involuntary petition, which has sort of
25 forced the issue in connection with where the debtor, which
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1 states how it wont oppose the -- or wont respond, I guess,
2 to the involuntary petition and thus allowing a case to be
3 opened at some point in the future. That issue was forced a
4 bit by the fact we have an involuntary in play here.
5 I dont think its constructive to get lost in the
6 technicalities of the rule. And as far as Im concerned to
7 stick to Rule 1014B in this case would really be to promote
8 form over substance.
9 The case in Atlanta for all intensive purposes,
10 closed. The final decree has been requested, a certificate
11 of no objection has been filed, the order just hasnt been
12 signed.
13 And to hold up a decision here on whether to
14 transfer venue you or not, a decision here perhaps on
15 whether an order for relief will be entered et cetera, based
16 on the fact that a CNO hasnt worked its way through
17 chambers yet, I think is just counterproductive.
18 So, as far as Im concerned, for purposes of
19 making this decision today, 1014B is simply inapplicable
20 because the cases -- the case in Georgia is so substantially
21 consummated and for all intensive purposes closed that it
22 would be not constructive or helpful to push the
23 technicalities of who decides what and when.
24 Talking about 1011, I agree with the debtor on
25 this one, that 1011 is not applicable to a motion to
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1 transfer venue. 1011 really deals with the substance of
2 whether or not an order for relief should be entered. There
3 are for example, other motions that can be brought before
4 the court in the interim, including as we discussed a motion
5 for appointment of a trustee, specifically contemplated by
6 the code.
7 I think responsive is important and its the
8 adjective that starts the rule and I think what that case is
9 designed to do is to focus -- excuse me that rule is
10 designed to focus the hearing on the merits of the
11 involuntary petition and to provide a specific framework for
12 deciding that issue. It does not think about venue, it
13 doesnt deal with the venue issue.
14 Again, backing up to 1014, it talks about
15 petitions, it doesnt talk about cases where order for
16 relief has been granted or anything along those lines, so I
17 just think 1011 is simply inapplicable.
18 All right. That gets us to the merits of the
19 motion to transfer venue. Basically, its an equitable
20 consideration, the court takes the facts and circumstances
21 of the case in front of it and decides for the interest of
22 justice where a case should be.
23 There are 12 factor tests, there are six factor
24 tests, I think those types of tests are helpful to focus the
25 court on the types of issues that really should be
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1 considered. We dont play scorecard with them, its not --
2 you know, you dont get a transfer venue if its seven to
3 five or four to two, thats not helpful.
4 I find that every time you add a factor to a test
5 you complicate it by an order of magnitude and to go from a
6 two factor test to a 12 factor test is really, frankly, not
7 helpful, because it just continues to throw in items that
8 cloud the ultimate decision that should be in front of the
9 court.
10 All that said, youve got situations like choice
11 of forum. Well, we have two parties that disagree. The
12 petitioning creditors have chosen Delaware by filing here,
13 as theyre allowed to do under the law. This is proper
14 venue for these cases. The debtor has said no, he would
15 like the case, if any case, to be in Georgia. So, theres a
16 disagreement there. Professionals are going to fly in from
17 all over the country, that happens in every case, thats a
18 neutral factor.
19 Employees and -- let me back up a little bit,
20 issues that can kind of go beyond that, I think are sort of
21 case specific issues, for example, if we had a liquidation
22 here, if we had a hotel in Las Vegas that was being
23 foreclosed on. I mean, the case, arguably, very much should
24 be in Nevada. If we have a piece of undeveloped land in New
25 Mexico, the case should be in New Mexico. Those are strong
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1 factors that would push a case to one place or another.
2 We had an industrial case where there was one
3 factory and it was in Georgia and it was going to be shut
4 down and liquidated under the case, I think theres a much
5 stronger argument that that case should be in Georgia. Why?
6 Well, the employees are really going to care a lot, the
7 employees are there, theyre in Georgia, theyre going to
8 have a real stake in the matter. The Teamsters issue, Im
9 sure that the local and Bowling Green would have been happy
10 if that case had been filed in Kentucky. It wasnt and they
11 wanted to be heard and they got to Atlanta because it was an
12 important issue for them. And it was wholly appropriate.
13 You dont know where a case is going to go at the
14 beginning when you have a transfer of venue motion,
15 especially in a case here where you dont even have an order
16 for relief. So, its a little hard to kind of predict.
17 Some cases are easier to predict than others. This looks
18 like a rehabilitation, even if its done through some sort
19 of sale process, it would be on a going concern process, so
20 its a rehabilitation. Its not a liquidation of specific
21 assets. Its not a shutdown of specific factories.
22 So, all that basically comes to the conclusion
23 that its a bit of a wash. I mean, every factor of what we
24 kind of focus on here is in effect neutral. We have a
25 argument that the loss of time for management to come back
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1 and forth to cases in Delaware is really the distinguishing
2 factor that puts this case where -- that it should be in
3 Atlanta. Thats pretty much it, thats pretty much the
4 distinguishing factor.
5 And I dont think thats sufficient. Remember
6 that the debtor is the movant and has the burden of proof.
7 And one thing Ive learned since Ive been on the bench is
8 that if you cant figure out what to do or if its a tie the
9 movant loses. And I think in this situation the facts
10 simply dont support with any preponderance or any sort of
11 weight that this case should be anywhere other than where it
12 is.
13 Its proper to be in Delaware, it was filed in
14 Delaware by the petitioning creditors appropriately. The
15 debtor sought to move it to Georgia, has the burden of proof
16 and I think simply hasnt met it on the merits. So, Im
17 going to deny the motion to transfer venue. And Im just --
18 Ill enter an order.
19 MR. HARRIS: Thank you, Your Honor.
21 THE COURT: All right. Anything else? All right.
22 Were adjourned. Thank you.
23 (Whereupon these proceedings were concluded at
24 3:35 PM)
25
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1 I N D E X
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3 RULINGS
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1 C E R T I F I C A T I O N
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3 I, Sheri Monroe, certify that the foregoing
4 transcript is a true and accurate record of the proceedings.
5
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10 Veritext
11 200 Old Country Road
12 Suite 580
13 Mineola, NY 11501
14
15 th
Date: June 4 , 2012
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Sheri
Monroe
Digitally signed by Sheri Monroe
DN: cn=Sheri Monroe, o=Veritext,
ou, email=digital1@veritext.com,
c=US
Date: 2012.06.04 16:00:22 -04'00'

IN THE UNITED STATES BANKRUPTCY COURT
In re:

dba THE CLUB AT CORDILLERA

Debtor.
)
)
)
)
)
)
Chapter 11

Case No. 12-11893-CSS

Hearing Date: July 16, 2012 at 10:00 a.m.
Objection Date: July 11, 2012 at 12:00 p.m.

JOINDER OF ALPINE BANK TO THE MOTION OF
CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON,
MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND
AS MEMBERS OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER VENUE

Alpine Bank (Alpine), by and through its undersigned counsel, hereby files this joinder
(the J oinder) to the Motion of Cheryl M. Foley, Thomas Wilner, J ane Wilner, Charles J ackson,
Mary J ackson and Kevin B. Allen, Individually and as Members of a Certified Class of
Members, to Transfer Venue [Dkt. No. 69] (the Motion)
1
seeking transfer of this bankruptcy
case pursuant to 28 U.S.C. 1412 to the District of Colorado. Alpine joins in the relief requested
under the Motion and writes separately to highlight the following points:
PRELIMINARY STATEMENT
1. Few cases could be found that more clearly demonstrate the need to transfer
venue for the convenience of the parties or in the interest of justice than this case. The Debtor,
its principals, its officers, its headquarters, its sole business and real property assets, its largest
secured creditor, and largest creditor constituencies are all located in Colorado. Further, the
Debtor is embroiled in various state court litigations with its members in the state of Colorado,
events that it admits have contributed and led to its bankruptcy filing. Having availed itself of
the Colorado courts to sue its own members, its main source of revenue, the Debtor has now

1
Capitalized terms not defined herein shall have the meanings ascribed to them in
the Motion.

2

sought shelter over 2,000 miles across the country in the Delaware bankruptcy courts in an
apparent strategic attempt to litigate its bankruptcy proceeding far from the major parties in
interest in this proceeding. While venue may be proper due to the Debtors incorporation in
Delaware, the Court should grant the Motion and transfer venue to Colorado where all parties
and creditors may be effectively heard and where the Colorado courts can most effectively and
most efficiently administer the bankruptcy involving the disposition of that states real estate and
the potential reorganization of a business inextricably tied to the interests of Colorados
residents, local authorities, and local laws.
RELEVANT BACKGROUND
2. On information and belief, Alpine supplements the Background Facts Section of
the Motion as hereinafter set forth.
The Debtor, its Sole Asset, Principal, Officers, and
Books and Records Are All Located in Colorado

3. Cordillera Golf Club, LLC, (the Debtor or Cordillera) is a Delaware limited
liability company with an admitted residence and principal place of business in Edwards,
Colorado. See Bankruptcy Pet. [Dkt. 1].
4. The Debtors sole business is the ownership and operation of the Cordillera Club
(the Cordillera Club).
5. Mr. Wilhelm, the Debtors manager and equity owner, resides in Colorado. See
Complt. of Debtor for Declaratory and Injunctive Relief [Dkt. No. 57] at 20. Upon information
and belief, Mr. Wilhelm maintains an office at the Debtors corporate headquarters in Edwards,
Colorado as further reflected on the creditor matrix which was certified to and signed by Mr.
Wilhelm. Certification of Consolidated Creditor Matrix [Dkt. No. 10].

3

6. Upon information and belief, the Debtors books and records, officers, and
general employees are all located in Colorado.
The Debtor Negotiated Alpines Secured Loan in Colorado, Under Colorado Law
7. In J une 2009, Alpine, a Colorado banking corporation, the Debtor and Mr.
Wilhelm, negotiated a loan to the Debtor in the original principal amount of $13,700,000 (the
Loan) for the purchase and development of the Cordillera Club. Such negotiation, and the
closing of the Loan, took place in Colorado
8. The Loan is (a) secured by all of the Debtors real and personal property
associated with the Cordillera Club, all or substantially all of which is located in Eagle County,
Colorado, and (b) guarantied by, among others, Mr. Wilhelm. The Loan and its security
documents are governed by Colorado law. See e.g. Appendix to Cash Collateral Motn [Dkt. No.
11] at Exs. A-H (attaching copies of the Loan Agreement and other relevant security documents).
The Debtor Files for Bankruptcy in Delaware,
Venued Solely on its State of Incorporation

9. On J une 26, 2012, the Debtor filed a voluntary petition for relief under chapter 11
of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware. As ascertained
from the Debtors chapter 11 petition and first day filings, the sole basis for proper venue in
Delaware is based upon the Debtors incorporation in Delaware.
10. As evidenced by the Debtors chapter 11 petition, Mr. Wilhelm was in Edwards,
Colorado on the date of the filing. See Decl. Concerning Corp. Ownership Statement attached to
chapter 11 petition [Dkt. No. 1] (noting date as J une 26, 2012 and place of signature Edwards,
Colorado).

4

The Majority of the Debtors Creditors are Located in Colorado
11. The Debtor has not filed its schedules or statement of financial affairs, but based
on a review of the creditor matrix filed along with the first day filings, approximately 54% of the
Debtors creditors are located in the State of Colorado.
2
The Debtors List of Creditors Holding
Twenty Largest Unsecured Claims attached to its bankruptcy petition further reflects that of the
twenty creditors listed, eleven are located in the State of Colorado and 16 of the 20 are located
west of the Mississippi River. Of the approximately 5,238 creditors on the Debtors general
creditor matrix, Alpine has only identified ten creditors located in Delaware. Of these ten, at
least four are government entities, including the United States Trustees Office.
12. Moreover, the Debtors largest secured creditor (Alpine) and second largest listed
unsecured creditor (Eagle County) are located in Colorado.
13. Finally, the Motion indicates that there are hundreds of members of the Cordillera
Club with substantial deposit claims and who are involved in litigation in Colorado, the
majority of [whom] own a home on Colorado that is adjacent to the Club facilities. Motion at 4.
The Debtor is a Plaintiff and Defendant in Two Colorado State Court Proceedings
14. In addition, the Debtor is embroiled in state court litigation in Colorado (the
Colorado Litigation) brought by or against its members and their affiliated local homeowners
associations, including the litigation described in more detail in the Motion (the Class
Litigation). This litigation raises substantial issues under Colorado law. See Motion; see also
Fitchett Decl. at 35-36.

2
All estimates based on the Debtors filed Creditor Matrix are approximate and do
not include allowances for any names or entities that may appear more than once or may be
omitted. See Consolidated Creditor Matrix [Dkt. No. 10].

5

ARGUMENT
15. Alpine supplements the Argument Section of the Motion as hereinafter set forth.
Venue Based Solely on the Debtors State of Incorporation is Insufficient to Survive a
Motion to Transfer.

16. Simply because venue may be proper in a particular jurisdiction does not mean
that it is appropriate. Under 28 U.S.C. 1412, a party may move for the transfer of venue based
on the interests of justice or the convenience of the parties. 28 U.S.C. 1412 (emphasis added);
see also In re Qualteq, Case No. 11-12572-KJ C, 2012 Bankr. LEXIS 503 at *16 (Bankr. D. Del.
Feb. 16, 2012) (transferring venue based on convenience of parties to Northern District of
Illinois where only basis for proper venue in Delaware lay in incorporation of single affiliated
debtor). While venue based on the Debtors state of incorporation is proper, where that is the
only basis for venue it should be transferred upon motion where, as here, no other connections to
the chosen forum exist. See Id.; In re Dunmore Homes, Inc., 380 B.R. 663, 669 (Bankr.
S.D.N.Y. 2008) (transferring venue where debtors only presence in New York was recent
incorporation there while most of its creditors, assets, employees and pending litigation were
located in California).
17. A court weighs six primary factors in determining the convenience to parties in
interest:
(a) proximity of creditors of every kind to the court; (b) proximity of the
debtor; (c) proximity of witnesses who are necessary to the administration
of the estate; (d) the location of the debtors assets; (e) the economic
administration of the estate; and (f) the necessity for ancillary
administration in the event of liquidation.

Id., at **15-16 (transferring venue for convenience of parties where debtors only connection to
Delaware was as state of incorporation of single debtor-affiliate and case activity to date had
been limited to routine matters of case administration including use of cash collateral,

6

retention of estate professionals, maintenance of insurance and the like, id. at *19). The factor
accorded the most weight is promotion of the economic and efficient administration of the estate.
Id. at *17 (citing Puerto Rico v. Commonwealth Oil Refining Co. (Matter of Commonwealth Oil
Refining Co.), 596 F.2d 1239, 1247 (5th Cir. 1979)).
18. Many of the same considerations concerning the administration of the estate and
convenience to the parties arise in considering the interest of justice prong of 1412, see
Qualteq at *18 (describing the interest of justice prong as a broad and flexible standard), and
in granting a transfer of venue motion, bankruptcy courts in this district have considered how the
convenience to the parties and the interest of justice work together to establish venue in a more
appropriate forum. See In re Innovative Commun. Co., LLC, 358 B.R. 120, 128 (Bankr. D. Del.
2006) (transferring venue of bankruptcy proceeding from District of Delaware to US Virgin
Islands, where the debtors assets, public interest, local interest, the convenience to witnesses
worked together established the USVI as the proper venue of the corporate cases.).
19. Here, both the interest of justice and convenience of the parties demand the
transfer of venue to the District of Colorado.
All of the Convenience Factors Favor Colorado

20. The convenience of the parties overwhelmingly favors transfer of this bankruptcy
case to the District of Coloradovirtually all of the convenience factors are met in this case.
Taken as a whole, the specific factors concerning the location in Colorado of: (a) the majority of
creditors, (b) the Debtor, (c) critical witnesses, (d) the Debtors sole asset, and (e) pending
litigation involving the Debtor, lead to the unavoidable conclusion that the most economic and
efficient administration of these casesthe most important factor in the convenience of the
parties testcan only occur in Colorado. See In re Qualteq at *17.

7

21. It is undisputed that the Debtors residence, principal place of business and
location of its sole asset, the Cordillera Club, are all located in the State of Colorado. See
Chapter 11 Pet. [Dkt. No. 1]; Fitchett Decl. Moreover, the Debtors books and records, business
headquarters, principal manager and officers, largest secured creditor (Alpine), and a majority of
its unsecured creditors are located in the State of Colorado
22. Because the Debtors property is located in Colorado, the appraisers and valuation
experts who will be required for depositions and testimony also are located in Colorado as
evidenced by the location of the Debtors own valuation expert in Lakewood, Colorado. See
Fitchett Decl. at 59. Further, Alpine is in the process of obtaining its own, updated appraisal of
the Debtors property, and Alpines appraiser is also located in Lakewood, Colorado The Debtor
has already noticed an emergency hearing on a debtor-in-possession financing motion (the DIP
Motion) scheduled for J uly 19, 2012, seeking a priming lien on Alpines collateral. See DIP
Motn [Dkt. No. 59]. This hearing will raise critical issues of valuation, and potentially other
issues relating to the Loan and to the finances of the Debtor. Most, if not all, of the witness,
expert and fact, relevant to the hearing on the DIP Motion are in Colorado. All of these
witnesses would have to travel more than halfway across the country if this case were to remain
in Delaware. The same is true in connection with virtually any other issue or matter of
significance that will arise in this case.
23. The Debtor and its members are currently embroiled in the Colorado Litigation.
As described in the Motion, a major issue in the Class Litigation will be the claims of the
members against the Debtor concerning the return and/or status of any member deposits. The
Colorado Litigation, and the large number of these member claimants, weighs heavily in favor of
a transfer of venue to Colorado. The Class Litigation raises serious claims under Colorado law.

8

Moreover, the Debtor has already tried to stop the Class Litigation remotely from Delaware
once, raising the suggestion that a bankruptcy proceeding remote from where the Colorado
Litigation is pending is part of the point of a Delaware filing. See Plaintiffs Emergency Motn
to Enforce and Extend the Automatic Stay or for Injunctive Relief, Cordillera Golf Club, LLC v.
Foley (In re Cordillera Golf Club, LLC), Adv. No. 12-50783, (J uly 2, 2012) [Dkt. No. 3]. The
Colorado Litigation should stay in, and should be overseen by, the courts of Colorado. Cf.
Qualteq at **20-21.
24. Finally, any liquidation of the Debtor should the case head in that direction clearly
implicates the local interests of Colorado above those of Delaware. See In re Innovative
Commun. Co., LLC, 358 B.R. at 128 n.7 (noting that while not currently implicated at that stage
in the bankruptcy proceedings, in the event that liquidation should occur, the [US Virgin
Islands] has the paramount interest in the corporate Debtors [USVI cable television companies]
assets.)
25. Based on all of these factors, Alpine cannot conceive of a single factor in the
convenience of the parties analysis which weighs in favor of retaining venue in Delaware. See In
re Qualteq at *17 (transferring venue for convenience of parties where no [convenience] factor
weigh[ed] in favor of the Debtors and all, to one degree or another, weigh[ed] in favor of
[movants].)
The Interests of Justice also Requires Transfer to Colorado
26. The interest of justice standing alone or working together with the convenience of
the parties analysis also requires that this bankruptcy case be transferred to the District of
Colorado. See In re Innovative Commun. Co., LLC, 358 B.R. at 128. As discussed above, the
proximity and location of the Debtor, its sole asset, and critical parties in interest are also

9

relevant to a courts determination as to whether the interest of justice demands transfer of
venue. Clearly the center of gravity of this case is in Colorado, and the numerous
convenience factors further support the presumption that Colorado has a greater interest in
adjudicating the bankruptcy of a business located and conducted solely within its borders. See In
re In re Innovative Commun. Co., LLC, 358 B.R. at 127 (discussing factors in considering public
interests of justice).
27. Further, the events leading up to the Debtors bankruptcy are particularly local:
the Debtor acknowledges that the two main factors in forcing its chapter 11 filing were the
maturity of the Loan (governed by Colorado law) and provided by Alpine (a Colorado banking
corporation), and the downturn in its business exacerbated by the Colorado Litigation filed in the
State of Colorado. See Fitchett Decl. at 40-41. Other state and local issues that will arise in
this case include the valuation of the Debtors real property and business located in Colorado, the
valuation and interpretation of the Debtors water rights, and protection of the interests of local
creditors and parties in interests in these proceedings. The bankruptcy court of the District of
Colorado is best suited to hear and address these matters and are extremely familiar with a case
of this size and nature and the peculiar issues relating thereto. See e.g. Alpine Bank v. Lakota
Canyon Ranch Dev., LLC (In re Lakota Canyon Ranch Dev.), 2012 Bankr. LEXIS 251 (Bankr.
D. Colo. J an. 25, 2012).
Conclusion
28. The only basis for permitting venue in the District of Delaware is the Debtors
choice of incorporation within the State. All other venue factors overwhelmingly favor
Colorado. Keeping venue in the District of Delaware tremendously increases the costs of this

10

bankruptcy case for all parties involved while allowing the Debtor to run from its creditors
and its membership.
29. For the reasons set forth above and in the Motion, the Debtors bankruptcy case
should be transferred to the District of Colorado for the convenience of the parties and in the
interests of justice.

WHEREFORE, Alpine respectfully requests that the Court enter an order granting the
Motion and such other relief as may be necessary and appropriate.
Respectfully submitted,

BALLARD SPAHR LLP

Dated: J uly 5, 2012
By: s/ J oshua E. Zugerman___________
Tobey M. Daluz, Esq. (No. 3939)
J oshua E. Zugerman, Esq. (No. 5261)
919 North Market Street, 11th Floor
Telephone: (302) 252-4465
Facsimile: (302) 252) 4466
E-mail: daluzt@ballardspahr.com
zugermanj@ballardspahr.com

and

Vincent J . Marriott, III, Esq. (PA 41457)
(admitted pro hac vice)
Sarah Schindler-Williams Esq. (NY 4556510)
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Telephone: (215) 665-8500
Facsimile: (215) 864-8999
E-mail: marriott@ballardspahr.com
schindlerwilliamss@ballardspahr.com

Attorneys for Alpine Bank

1
{00648619;v1 }
In re:
Cordillera Golf Club, LLC,
dba The Club at Cordillera.
Debtor.
Chapter 11
Case No.: 12-11893 (CSS)
Related Docket No. 1,69, 71
Hearing Dates: July 16, 2012, 10 a.m. EDT
(Requested)
Objection Deadline: July 11 at 12 p.m. EDT
(Requested)
MOTION OF CORDILLERA PROPERTY OWNERS ASSOCIATION, INC. AND
CORDILLERA METROPOLITAN DISTRICT TO TRANSFER VENUE TO
COLORADO AND
JOINDER IN THE MOTION OF CHERYL M. FOLEY, THOMAS WILNER, JANE
WILNER, CHARLES JACKSON, MARY JACKSON AND KEVIN B. ALLEN,
INDIVIDUALLY AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF
MEMBERS, TO TRANSFER VENUE
Cordillera Property Owners Association, Inc. (CPOA) and Cordillera Metropolitan
District (the District) (collectively, the Moving Parties), by their attorneys Sherman &
Howard L.L.C. and Ashby & Geddes, hereby file this Motion to Transfer Venue to Colorado (the
Motion). In addition, the Moving Parties join in the Motion Of Cheryl M. Foley, Thomas
Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B. Allen, Individually And As
Representatives Of A Certified Class Of Members, To Transfer Venue (the Class Members
Venue Change Motion) (Docket No. 69). In support of their Motion, the Moving Parties
respectfully state as follows:
I. SUMMARY OF ARGUMENT
1. The business of The Cordillera Golf Club, LLC (the Debtor or Club) is
centered upon providing its members the opportunity to play golf at unique and picturesque golf
{00648619;v1 }
2
courses located in Eagle County, Colorado. Members join the Club for that purpose and for the
enjoyment of the Cordillera lifestyle. Necessarily, Debtors product is provided and can be
enjoyed only where the Club and golf courses are physically located -- Eagle County, Colorado.
Further, the success of the Club directly impacts property values throughout the Cordillera
community. Because of the unique and very local nature of the Debtors business, a solution to
its current problems should be determined in the Colorado bankruptcy court, where all Cordillera
community members will have a more convenient forum to have their voices heard.
2. Under familiar principles of law governing the venue of bankruptcy cases, the
United States Bankruptcy Court for the District of Colorado is the proper forum for this
bankruptcy case. Pursuant to Section 1412 of Title 28 of the United States Code, transferring the
venue of this bankruptcy case to Colorado would serve both the interests of justice and the
convenience of the parties for the following reasons:
(a) The primary assets of the Debtor are four golf courses, tennis and fitness
facilities, and related amenities, all of which are located in Eagle County,
Colorado.
(b) Although the Debtor has not yet filed its schedules, 54% of the persons
included on the mailing matrix filed by the Debtor (2,785 out of a total of
5,144) have Colorado mailing addresses. Only ten (.4%) have Delaware
mailing addresses, the 39
th
smallest number by state. See Chart attached
hereto as Exhibit A.
(c) Eleven of the 20 largest unsecured creditors on Debtors Schedule of the
Twenty Largest Unsecured Creditors are from Colorado. None is from
Delaware.
(d) Debtors principal place of business -- indeed, its only place of
business -- is in Colorado.
(e) Upon information and belief, Debtors principal and sole shareholder
resides in Colorado.
{00648619;v1 }
3
(f) Debtors senior lender, Alpine Bank, is located in Colorado, the loan
originated in Colorado and the parties agreed the loan is to be interpreted
under Colorado law. Alpine Bank has expressed to the Court its intent to
file a motion to transfer venue.
(g) The two lawsuits in which Debtor is currently involved are both pending
in State Court in Colorado; one case was brought by the Debtor in the
Colorado District Court in and for Eagle County, Colorado, on May 24,
2011, and the other is a class action brought by Club members in the
Colorado District Court in and for Eagle County, Colorado, on June 20,
2011. The class, as certified by the State Court, has approximately 609
members.
(h) This bankruptcy case is at an early stage and no detriment would occur
from a transfer at this point.
(i) Debtors lead bankruptcy counsel is from San Diego and Debtor is seeking
to hire a Chief Restructuring Officer based in Sherman Oaks, California.
(j) The Colorado creditors have a very important interest in having
controversies deeply affecting a Colorado community decided by
Colorado courts in a location convenient to those affected.
(k) The only relationship of this case to Delaware is the registration of the
Debtor in Delaware.
II. PARTIES, JURISDICTION, AND VENUE
3. On June 26, 2012, the Debtor filed its voluntary chapter 11 bankruptcy petition.
Debtor is a limited liability company formed under the laws of the State of Delaware. Debtor is
authorized to conduct business in the State of Colorado, and is in good standing with the
Colorado Secretary of State.
4. No statutory committees have been formed, and no trustees or examiners have
been appointed.
5. CPOA is a homeowners association and non-profit corporation organized and
operating pursuant to the laws of the State of Colorado. The CPOA has members who,
{00648619;v1 }
4
collectively, are owed millions of dollars by the Debtor. The CPOA is a defendant in litigation
commenced by the Debtor. The CPOA is affected by the Clubs financial problems.
6. The District is a metropolitan district organized pursuant to C.R.S. 32-1-101, et
seq. The District is a quasi-municipal corporation and political subdivision of the State of
Colorado, with the authority to levy and collect property taxes to defray its expenses. The
District currently is owed $205,311.31 in unpaid 2011 property taxes (payable in 2012 per
Colorado law) by the Debtor.
7. The CPOA and the District are parties in interest in this bankruptcy case.
8. This Court has jurisdiction over this bankruptcy case pursuant to 28 U.S.C.
1334.
9. The only basis for venue of this case in Delaware under 28 U.S.C. 1408 is
Debtors registration in Delaware.
10. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A).
11. The statutory bases for the relief requested in this Motion are 11 U.S.C. 105(a),
1
28 U.S.C. 1412, and Fed.R.Bankr.P. 1014.
III. PROCEDURAL HISTORY
12. This bankruptcy case is in its infancy. No substantive orders have been entered
by the Court except for temporary authorization to use cash collateral (Docket No. 44) and this
Courts denial of Debtors attempt to extend the bankruptcy stay to protect Debtors principal
and related entities from a pending State Court contempt proceeding. Debtor has filed motions
to retain counsel and a chief restructuring officer, to appoint a claims agent, for continued use of

1
Title 11 shall be referred to as the Bankruptcy Code.
{00648619;v1 }
5
a cash management system, to honor prepetition wage obligations and pay prepetition taxes and
fees, to require utility companies to continue service, and for interim and final orders for use of
cash collateral. The Court entered interim orders on utilities, payment of pre-petition taxes and
fees, and a final order allowing payment of pre-petition wages. A hearing on all the remaining
motions filed by Debtor is scheduled for July 27, 2012.
13. The Debtor also has filed a motion to obtain a priming, post-petition loan. A
hearing is set for July 19, 2012, to consider authorizing the Debtor to enter into the post-petition
loan on an interim basis.
14. The Debtor has stated that it plans to file a motion to approve a sale under Section
363 of the Bankruptcy Code of the Mountain Course, one of the Debtors golf courses, at a
public auction. See Declaration of Daniel L. Fitchett, Jr. in Support of Chapter 11 Petitions and
First Day Relief (the Fitchett Decl.), 41. No such motion has yet been filed.
15. Six Club members, representatives of a certified class of club members, have filed
a motion to transfer venue, which has been set for a pre-trial conference on July 12, 2012, at 1
p.m., and for hearing on July 16, 2012, at 10 a.m. See Class Members Venue Change Motion.
IV. FACTUAL BACKGROUND
2
Virtually All of Debtors Assets, Operations, and Management are in Colorado
16. The assets of the Debtor include three 18-hole golf courses, a short course, 3
tennis centers, fitness facilities, 5 indoor and outdoor pools, a summer camp with clubhouse for

2
The Moving Parties submit the Declaration of Nanette Kuich, President of the Board of Directors of the District,
and Lois M. Van Deusen, President of the CPOA, in support of the Motion. The Declarations are attached as
Exhibits B and C, respectively. Support for many of the facts that compel a transfer of venue to Colorado is
contained in the Fitchett Declaration and first day motions filed by the Debtor. Those facts are not subject to dispute
by the Debtor.
{00648619;v1 }
6
children, and riding, hiking and cross-country ski trails. All of these assets are located in
Colorado. (Fitchett Declaration, 7)
17. Debtors sole product is a uniquely situated event: the chance to play golf at
courses of special magnificence located in Eagle County, Colorado, close to the homes of
Cordillera members. Everything about this case relates to that particular location in Colorado.
Nothing of any significance in this case relates to Delaware, or any other state.
18. Upon information and belief, the Debtors sole shareholder and managing
member, David Wilhelm, resides in Colorado.
3
The Declaration Regarding List of Creditors
Holding 20 Largest Unsecured Claims filed June 26, 2012, with the Petition in this case, states
that it was signed by Wilhelm in Edwards, Colorado.
19. Debtor advised this Court that Debtor borrowed $13.7 million from Alpine Bank
secured by liens on assets of the Debtor in June, 2009. (Fitchett Declaration, 22). Alpine Bank
is located in Vail, Colorado, and Debtor promised to pay the loan at Alpine Banks office in Vail,
Colorado (Promissory Note attached at Exhibit B to the Notice of Filing of Appendix to Motion
of the Debtor for Entry of Interim and Final Orders (A) Authorizing Use of Cash Collateral; (B)
Granting Adequate Protection; (C) Scheduling a Final Hearing; and (D) Granting Related Relief
(the Cash Collateral Motion Appendix) (Docket No. 11). The loan is governed by Colorado
law. (Cash Collateral Motion Appendix, Exhibit A, Loan Agreement). Alpine and the Debtor
agreed upon the Colorado State Courts in Eagle County, Colorado as the proper venue for
resolution of litigation between them. (Id.)

3
David A. Wilhelm is the manager of CGH Manager, LLC, which is the manager of the Debtor. Wilhelm
describes himself, in litigation he and Debtor initiated in Edwards, Colorado against certain Club members,
Cordillera Golf Club et al. v. Cordillera Transition Corporation, et al. No 2011 CV 456 in the District Court for
Eagle County, Colorado, as an adult individual residing in Basalt, Colorado (Complaint, 4), which is in Eagle
County. Plaintiffs Initial Disclosures in that litigation show an Edwards, Colorado address for Wilhelm.
{00648619;v1 }
7
20. The District is a special district under Colorado law. See C.R.S. 32-1-101, et
seq. Under Colorado law, "special districts are political subdivisions of the state and are created
as convenient agencies for exercising such of the governmental powers of the state as may be
entrusted to them." See Johnson Homes, Inc. v. Southwest Metropolitan Water and Sanitation
District, 725 P.2d 12, 13 (Colo. Ct. App. 1986); C.R.S. 32-1-103(20) ("Special district means
any quasi-municipal corporation and political subdivision organized or acting pursuant to the
provisions of this article."). In addition to the provisions of the Special District Act, the District
also is governed by its Amended and Restated Service Plan, which was approved by the Eagle
County Board of County Commissioners on May 3, 2005 (the Service Plan).
21. Within the Cordillera community, and pursuant to the Special District Act and the
Service Plan, the District provides, among other things, operation and maintenance of all public
facilities and infrastructure, which includes more than 40 miles of roadway and shoulder, 7,000
acres of property, and associated landscaping, water features, ponds, streetlights and signage. In
addition the District performs snow removal, weed and pest control operations; manages the
communitys recreation programs (other than those operated by the Debtor); provides public
safety services for the community, traffic control, wildlife management, and architectural
guideline compliance. In addition to operating and maintaining the public infrastructure within
Cordillera, the District has incurred significant bond debt to construct the public infrastructure
and currently repays the bond debt, as well as covers it operating expenses, with property taxes
paid by property owners within Cordillera, including the Debtor. See Exhibit B, Kuich
Declaration, 5.
{00648619;v1 }
8
22. The District is owed $205,311.31 in unpaid 2011 property taxes (payable in 2012)
by the Debtor. Under Colorado law, this obligation is secured by a first and prior lien against the
Debtors taxable property located within the boundaries of the District, in Eagle County,
Colorado. See id., 7.
23. The Debtor is one of the two largest taxpayers within the District. In Colorado,
property taxes are paid in arrears. Taxes assessed in 2011 are due and payable in 2012. For
2011 taxes, to be paid in 2012, the Debtor owes the District $205,311.31.
24. 2011 taxes owed to the District by the Debtor were based upon an assessed value
of $2,904,860. In Colorado, commercial property, such as that owned by the Debtor, is assessed
for taxation at 29% of actual value. The Debtor has disputed the assessed value.
25. The CPOA is established pursuant to and governed by the Amended and Restated
Declaration of Protective Covenants, Conditions, and Restrictions for Cordillera, recorded on May 12,
1993 in the real property records of the Eagle County Clerk and Recorders Office at Reception No.
504866 (as the same has been amended by the Second Amendment to Declaration of Protective
Covenants, Conditions, and Restrictions for Cordillera, recorded on May 11, 1998 in the real property
records of the Eagle County Clerk and Recorders Office at Reception No. 65572, and the Third
Amendment to Declaration of Protective Covenants, Conditions, and Restrictions for Cordillera, recorded
on April 14, 2010 in the real property records of the Eagle County Clerk and Recorders Office at
Reception No. 201007045), and the Amended and Restated Bylaws of Cordillera Property Owners
Association, Inc., dated as of, and approved by the Board of Directors, on May 21, 2012. See Exhibit C,
Van Deusen Declaration, 6.
4

4
Due to their voluminous nature, copies of the documents referenced here are not attached. Copies will be made
available upon reasonable request.
{00648619;v1 }
9
26. The CPOA performs functions and manages its affairs in a manner similar to property
owners associations in lifestyle communities to enhance the overall quality of life within the community,
to provide programs and facilities for the community, and to preserve property values within the
community. In furtherance of this mission, the CPOA contracts with and provides financial support to the
District in the provision of community operations services, debt retirement, and capital projects;
maintains oversight of the architectural review process within the community; manages a wildfire and
healthy forest initiative; administers a wildlife management program in consultation with the Colorado
Division of Wildlife; operates a ski club at Vail Mountain; manages a community marketing program;
and owns and operates a community center which houses a caf and a branch office of the United States
Post Office. The CPOA also has historically provided funding support for the communitys public safety
department, and acquired and subsequently conveyed to the District a large parcel of land abutting the
Eagle River, which currently is maintained as open space for the benefit of the community.
27. The value of properties within the CPOA are significantly impacted by the
success (or lack thereof) of the Club. A significant portion of the CPOAs revenue comes from a
Real Estate Transfer Assessment (RETA) of 2% charged against the sale price of each home
sold in Cordillera. In 2010, there were 44 transactions within Cordillera, resulting in RETA
revenue of $1,345,708. In 2011, the year in which Debtors litigation against the CPOA was
commenced, there were 28 transactions within Cordillera, resulting in RETA revenue of
$642,755. In addition, the total actual value of the real estate within Cordillera, as determined by
the Eagle County Assessors Office, was $1,433,933,030 in 2010; in 2011, the value dropped to
$1,029,347,630.
28. There is a class-action suit by club members against the Debtor, its principal,
David A. Wilhelm, and certain related entities styled Foley, et al. v. Cordillera Golf Club, LLC,
{00648619;v1 }
10
et al., District Court, Eagle County, State of Colorado, Case No. 2011CV552 (the "Class
Action"). As the Court is aware, a contempt hearing has been scheduled in that Eagle County,
Colorado, District Court case for July 19, 2012, to determine whether the Defendants violated a
preliminary injunction by using funds in a manner prohibited by the preliminary injunction.
29. The CPOA is one of the defendants in the litigation that the Debtor, its principal,
David A. Wilhelm, and certain related entities commenced in District Court, Eagle County, State
of Colorado styled Cordillera Golf Club, LLC, et al. v. Cordillera Transition Corporation, Inc.,
et al., Case No. 2011-CV-456. In that action, Debtor and the related plaintiffs mischaracterize
the CPOA, its individually named board members, and other community entities and individuals
as the driving force behind the decision of approximately 200 Club members to resign from the
Club. In reality, the Debtors own actions, including broken promises and operational failures,
serve as the fount of community outrage and the resignation decisions. The lawsuit is merely a
last ditch effort to manufacture leverage over a community that serves not as the cause of
Debtors failures, but the victims of it.
30. It would be a substantial burden for representatives of the CPOA and the District
to travel to Delaware from Colorado if the bankruptcy case were to remain in Delaware. Travel
to Wilmington, Delaware from Eagle County, Colorado takes not less than ten hours. The
District or CPOA would pay for the expenses associated with this travel.
V. ARGUMENT
31. The convenience of the parties and the interests of justice dictate that venue of
this bankruptcy case should be transferred to the United States Bankruptcy Court for the District
of Colorado. In several recent decisions, Delaware bankruptcy judges have properly transferred
{00648619;v1 }
11
venue of bankruptcy cases filed in Delaware on facts comparable to those presented in this case.
See In re Rehoboth Hospitality, LP, No. 11-12798 (KG), 2011 WL 5024267 (Bankr. D. Del. Oct.
19, 2011); In re Qualteq, Inc., No. 11-12572 (KJC), 2012 WL 527669, (Bankr. D. Del. Feb. 16,
2012); In re Spanish Peaks Holdings, II, LLC, Case No. 11-13300 (BLS) Memorandum Order
(Bank. D. Del. Jan. 10, 2012).
5
A. The Applicable Statutes
32. Even when venue initially is proper in the court where a debtor files its
bankruptcy case, a bankruptcy court may transfer a case or proceeding under title 11 to a district
court for another district, in the interest of justice or for the convenience of the parties. See In
re B.L. of Miami, Inc., 294 B.R. 325, 328 (Bankr. D. Nev. 2003); 28 U.S.C. 1412; see also
Fed.R.Bankr.P. 1014(a) (If a petition is filed in the proper district, the court . . . may transfer the
case to any other district if the court determines that the transfer is in the interest of justice or for
the convenience of the parties.); see also Innovative Communication, 358 B.R. at 127 (on
motion to transfer venue, the place of incorporation is not the controlling factor).
6
33. Venue in Colorado is proper under 28 U.S.C. 1408 (1) because Colorado is the
location of Debtors principal place of business in the United States [and also its] principal
assets in the United States.
B. Applicable Case Law Heavily Favors Venue in Colorado
34. Venue motions are decided based upon the specific facts of each case, weighed in
light of the broad purposes of convenience and fairness. See In re Eclair Bakery Ltd., 255 B.R.

5
A copy of the Memorandum Opinion is attached to this Motion as Exhibit D.
6
28 U.S.C. 1408 authorizes the filing of this bankruptcy case in Delaware because Debtor was formed under the
laws of the State of Delaware. See, e.g., In re Innovative Communication Co., 358 B.R. 120, 125 (Bankr. D. Del.
2006) (Venue is appropriate in the state of incorporation). Debtors registration in Delaware is the only
connection of this case with the State of Delaware.
{00648619;v1 }
12
121, 141 (Bankr. S.D.N.Y. 2000) (interests of justice is a broad and flexible standard that must
be applied on a case by case basis); In re Condor Exploration, LLC, 294 B.R. 370, 378 (Bankr.
D. Colo. 2003) (When considering the interests of justice standard for purposes of determining
whether to transfer the venue of a bankruptcy case, the court applies a broad and flexible
standard, considering whether the transfer of venue will promote the efficient administration of
the estate, judicial economy, timeliness, and fairness. (citation omitted)).
35. A debtors choice of venue is entitled to less consideration where as here, the
choice is not directly related to the operative, underlying facts of the case. See Rehoboth, 2011
WL 5024267 at *3.
36. The factors courts often consider when evaluating the convenience of parties are:
(a) proximity of creditors of every kind to the court;
(b) proximity of the debtor;
(c) proximity of witnesses who are necessary to the administration of the
estate;
(d) the location of the debtors assets;
(e) the economic administration of the estate; and
(f) the necessity for ancillary administration in the event of liquidation.
Innovative Communication, 358 B.R. at 126 (citing In re Commonwealth Oil Refining Co., 596
F.2d 1239, 1247 (5
th
Cir. 1979).
37. Bankruptcy courts in the Third Circuit and elsewhere consistently hold that the
venue of a case involving real estate belongs in the state where the real estate is located.
[T]his Court agrees with other courts in this Circuit which have held that
the estate of a real estate partner is most efficiently administered in the
district where the principal asset is located. In re Midland Assocs., 121
B.R. 459, 461 (Bankr. E.D. Pa. 1990) (citing, In re Oklahoma City
{00648619;v1 }
13
Assocs., 98 B.R. 194, 199-200 (Bankr. E.D. Pa. 1989)); see also In re
Pavilion Place Associates, 88 B.R. 32, 36 (Bankr. S.D.N.Y. 1988); In re
Sundance Corp., 84 B.R. 699, 703 (Bankr. Mont. 1988); In re Nantucket
Apartments Associates, 80 B.R. 154, 156 (Bankr. E.D. Mo. 1987). In the
context of what is essentially a single asset case, the location of the known
improved real estate asset is a particular concern to the Court, especially in
the event of a potential liquidation, and the case is better administered by
a court in the district in which it is located. In re Midland Assocs., 121
B.R. at 461.
In re Rehoboth, 2011 WL 5024267 at *5 accord, In re B.L. of Miami, Inc., 294 B.R. 325, 332
(Bankr. D. Nev. 2003) (Where a debtors assets consist solely of real property, as with Debtor
in this case, courts have held that transfer of venue is proper because [m]atters concerning real
property have always been of local concern and traditionally are decided at the situs of the
property.) (citation omitted); In re Pinehaven Assocs., 132 B.R. 982, 989 (Bankr. E.D.N.Y.
1991) (There is ample authority for the proposition that a real estate case . . . can be most
efficiently and economically administered in the bankruptcy court closest to its major asset, and
that the Chapter 11 case can best unfold there.) (string cite omitted); Condor Exploration, 294
B.R. at 379 (noting that venue should be in the jurisdiction where debtors oil and gas leases are
located).
38. In Spanish Peaks, Bankruptcy Judge Shannon transferred venue from Delaware to
Montana based on the debtors extensive contacts with Montana, a significant number of
Montana creditors and creditors located in states near Montana, the likely sale of real property
located in Montana, and significant litigation in Montana. See Spanish Peaks, Memorandum
Order at pp. 4-5.
39. In Qualteq, Bankruptcy Judge Carey recently granted a motion to transfer venue
in a case with striking similarities to this case. In Qualteq, none of the creditors holding the 30
{00648619;v1 }
14
largest unsecured claims had Delaware addresses and only 10 out of more than 5000 creditors on
the mailing matrix had Delaware addresses. The debtors books and records were kept in Illinois
(except for one subsidiary). Most (82%) of the debtors assets were located in Illinois and none
of the debtors assets were located in Delaware. Significant litigation was also pending in
Illinois. See Qualteq,2012 WL 527669; see also Rehoboth, 2011 WL 504267 at *3-5
(transferring venue from Delaware to Texas).
7
40. As in Spanish Peaks, Qualteq, and Rehoboth, virtually all of this Debtors assets
are located in Colorado, significant litigation is pending in Colorado, none of the creditors listed
on the List of Creditors Holding Twenty Largest Unsecured Claims (the Top 20 List) has a
Delaware address, eleven on the Top 20 List have Colorado addresses, five on the Top 20 List
have California addresses, Debtors principal is a Colorado resident, Debtors only place of
business is in Colorado, and Debtors business is conducted in Colorado.
41. Bankruptcy courts also recognize that matters of special concern to a particular
community should be decided by local courts. See, e.g., Condor Exploration, 294 B.R. at 378
(many courts have included as a significant consideration, a states interest in having local
controversies decided within its borders) (citation omitted); Rehoboth, 2011 WL 5024267 at *4;
Spanish Peaks, Memorandum Order at p.5; cf. Innovative Communication, 358 B.R. at 127
(noting the local public interest in the U.S. Virgin Islands is great where the debtors owned
companies that function as the telephone, newspaper, and other public communication vehicles
in the U.S. Virgin Islands).

7
In Qualteq, the debtors' attempt to have the bankruptcy case conducted at a distance from the pending litigation
and the debtors' primary activities was soundly rejected: "the Debtors' obvious attempt to 'escape' the forum best
suited for administration of the chapter 11 cases should not be condoned." Qualteq, 2012 WL 527669 at *7.
{00648619;v1 }
15
42. This case presents a compelling justification for venue in Colorado. Debtors
product is the opportunity to play golf at premier golf courses in a unique setting and community
in Eagle County, Colorado, and to enjoy related amenities and the concomitant lifestyle. Unlike
many other types of business, Debtors product can be used only where its assets are located, i.e.,
Eagle County, Colorado. Further, the success of the Club has a direct impact on property values
in the Cordillera community. Based on these circumstances, the solution to Debtors problems
should be determined in Colorado.
C. Application of Factors in This Case Mandates Transfer of Venue to Colorado
(a) The Debtor, Its Operations, and Most of Its Creditors are Located in Colorado.
43. The Debtors principal place of business and virtually all of its assets are located
in Colorado, and Debtors owner lives in Colorado. Many courts determine a debtors principal
place of business based upon an operational test, including the location of day-to-day
activities. See Condor Exploration, 294 B.R. at 374. Using an operational test, the Debtors
principal place of business is in Colorado.
44. Moreover, 54% of Debtors creditors, totaling 2785 of Debtors 5145 total
creditors, are listed on Debtors Mailing Matrix with Colorado addresses. Ten of the creditors
listed on the Debtors Mailing Matrix are shown with Delaware addresses just 0.4% of them!
Eleven of the 20 largest unsecured creditors listed by Debtor with the Petition are shown with
addresses in Colorado; none are listed in Delaware. The creditors on this list include some with
claims less than $10,000.00. This list, executed under penalty of perjury by Debtors principal, is
indisputably wrong. Club members are owed refunds of deposits far in excess of this amount.
{00648619;v1 }
16
Many of Debtors members should be listed on Debtors list of 20 largest creditor, and each of
them owns property in Colorado.
(b) Proximity of Witnesses Necessary to Administer the Estate Favors Colorado.
45. Because all of Debtors real estate and all other assets are located in Colorado,
and many creditors are located in Colorado, many of the witnesses who will testify concerning
issues important to the administration of the Debtors estate are located in Colorado. Indeed, all
of Debtors operations and all of its employees and management are in Colorado.
46. The Moving Parties are aware of no witness necessary to the administration of the
estate that is located in Delaware. The Debtor has filed a motion to retain a Chief Restructuring
Officer that is described as being with a national consulting and accounting firm and shows a
Sherman Oaks, California address. (Debtors Motion for an Order, Pursuant to Sections 105 and
363 of the Bankruptcy Code and Bankruptcy Rule 6003, Authorizing and Approving (I) the
Debtors Designation of Alfred H. Siegel as Chief Restructuring Officer, and (II) Retention and
Employment of Crowe Horwath, LLC, Nunc Pro Tunc to the Petition Date (the CRO Motion,
Docket No. 8). The proposed Chief Restructuring Officer, Alfred H. Siegel, states that he is a
Partner at in [sic] the Sherman Oaks office of Crowe Horwath, LLC . . . located at 15233
Ventura Blvd., 9
th
Floor, Sherman Oaks, CA 91403. Crowe has 27 offices throughout the United
States with affiliates worldwide. (Siegel Declaration, Docket No. 8, 1, attached to the CRO
Motion). Debtor is represented by the San Diego, California office of Foley & Lardner LLP, and
has retained Young Conaway Stargatt & Taylor, LLP, as Delaware local counsel. Even so, the
location of Debtors professionals is not entitled to significant consideration on a motion to
transfer venue. See Son v. Coal Equity, Inc. (In re Centennial Coal, Inc.), 282 B.R. 140, 146
{00648619;v1 }
17
(Bankr. D. Del. 2002) (convenience of counsel is not relevant to the determination of whether to
transfer venue).
(c) The Debtors Assets are in Colorado.
47. As stated above, all of the Debtors assets are located in Colorado.
(d) The Estate can be Administered Most Efficiently in Colorado.
48. Based on the location of creditors, witnesses, and Debtors unique assets (as well
as the substantive law that will govern many of the issues in this bankruptcy case), this
bankruptcy case will be administered most efficiently in Colorado.
(e) Ancillary Administration.
49. If the Debtors assets were to be liquidated, Colorado would have the paramount
interest in the assets. See Innovative Communications, 358 B.R. at 128 n.16. In addition, a
Colorado chapter 7 trustee would more efficiently administer the case than a Delaware chapter 7
trustee. See Condor Exploration, 294 B.R. at 380; see also In re Abacus Broadcasting Corp.,
154 B.R. 682, 684 (Bankr. W.D. Tex. 1993) (in deciding to transfer venue, noting: Were it
necessary to convert this case to chapter 7, the U.S. Trustee would routinely appoint a panel
trustee in El Paso, but the trustee would then have to administer assets in a city 1,000 miles
away). Similarly here, if the bankruptcy case were converted to a chapter 7 case for liquidation,
it would be much easier for a Colorado chapter 7 trustee to administer this case and Colorado
would have the paramount interest in the liquidation of a large real estate development located in
Colorado.
{00648619;v1 }
18
D. Based Upon Important Matters of Local Concern to Colorado, This Bankruptcy Case
should be Administered by a Colorado Court
50. As already stated, bankruptcy cases involving real estate developments should be
administered in the state where the real estate is located. Bankruptcy cases in which
governmental units have a significant stake are also best administered in the local jurisdiction.
See Condor Exploration, 294 B.R. at 379 (regulatory agencies, local governmental units and
general-creditor suppliers must play a crucial role in any bankruptcy case). The District is such
a unit of government and political subdivision with the authority to levy and collect taxes. The
disposition of Debtors assets will intimately affect the Cordillera community and the taxing
authorities and other local providers of essential services.
51. The interests of justice favor venue in the jurisdiction whose substantive law
governs the issues in the case. See, e.g., DHP Holdings II Corp. v. The Home Depot, Inc. (In re
DHP Holdings II Corp.), 435 B.R. 264, 275-76 (Bankr. D. Del. 2010) (agreeing that local
judges are more familiar with the applicable state law); Pinehaven Assocs., 132 B.R. at 1412
(this inquiry would include looking into the desirability of having a judge familiar with
applicable law hear and determine issues arising in the case).
52. In addition, a Colorado bankruptcy judge is better suited to handle a bankruptcy
case for a Debtor such as the Club whose only business activities are in Colorado. The
somewhat colorful language of the court in the Abacus Broadcasting case is highly relevant to
this Motion:
In bankruptcy especially, judicial notice is a jurisprudentially
sound thing to do. We do not evaluate cases in splendid isolation from the
outside world, nor should we. The enterprise that seeks reorganization
must satisfy the court that it is a likely candidate for reorganization, that it
has a fighting chance of surviving, even prospering, in the economic
{00648619;v1 }
19
community in which it operates. How much more difficult it is for a judge
to make such an evaluation without any personal experience with at least
the general tenor of that economic community. What, for example, does a
judge in Chicago, or Detroit, or Los Angeles, really know about the
survivability of a restaurant on the Riverwalk in San Antonio? What do I
know of the prospects of a small manufacturing enterprise in South Los
Angeles? Can a judge in Pittsburgh have any real sense of the likelihood
of reorganization of an oil drilling venture whose most valuable prospects
are horizontal wells to be drilled in the Austin Chalk? What do I really
know about the market for commercial boats operating out of Miami
harbor? Granted a court cannot premise its decisions just on the gut feel
for the community (nor should it). It still requires hard evidence, in the
form of testimony and the like. But that is not to say that the courts
familiarity with milieu is not highly relevant, for it is. Better, then, that in
evaluating a request for transfer of venue, the court take into account the
extent to which a judge on the ground as it were might more effectively
and efficiently (and perhaps even more fairly) administer the case than
might a judge far removed from the debtors operations.
Abacus Broadcasting, 154 B.R. 682, 685-86 (Bankr. W.D. Tex. 1993).
53. This bankruptcy case involve Colorado real estate, Colorado creditors, and local
issues of particular concern to Colorado. Both the convenience of the parties and the interests of
justice weigh heavily in favor of venue in Colorado.
54. In short, venue of this case should be in Colorado because Colorado has the
paramount interest in this bankruptcy case.
55. The CPOA and the District join in the Class Members Venue Change Motion.
VI. CONCLUSION
56. The Moving Parties have easily met their burden to demonstrate that the interests
of justice and the convenience of witnesses favor venue in Colorado. For all of the foregoing
reasons, the venue of this bankruptcy case should be transferred to the Bankruptcy Court for the
District of Colorado.
{00648619;v1 }
20
WHEREFORE, The Moving Parties respectfully request that the Court enter an order
transferring the venue of this bankruptcy case to the United States Bankruptcy Court for the
District of Colorado and for such additional relief as is appropriate.
Dated: July 5, 2012
ASHBY & GEDDES
/s/ Ricardo Palacio
William P. Bowden (#2553)
Ricardo Palacio (#3765)
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Phone : 302-654-1888
Fax : 302-654-2067
E-Mail : rpalacio@ashby-geddes.com
and
SHERMAN & HOWARD L.L.C.
Peter A. Cal
Mark L. Fulford
Denver, CO 80202
Phone: 303-297-2900
Fax: 303-298-0940
E-Mail: pcal@shermanhoward.com
mfulford@shermanhoward.com
ATTORNEYS FOR CORDILLERA
PROPERTY OWNERS ASSOCIATION,
INC. AND CORDILLERA
METROPOLITAN DISTRICT
{00647658;v1 }
In re:
Debtor.
Chapter 11
Case No.: 12-11893 (CSS)
Hearing Date: July 16, 2012 at 1:00 p.m. (Requested)
Objection Deadline: July 11 at 12:00 p.m. (Requested)
NOTICE OF MOTION AND HEARING
PLEASE TAKE NOTICE that on July 5, 2012, Cordillera Property Owners
Association, Inc. (CPOA) and Cordillera Metropolitan District (the District) (collectively,
the Moving Parties) filed the Motion of Cordillera Property Owners Association, Inc. and
Cordillera Metropolitan District to Transfer Venue to Colorado and Joinder in the Motion of
Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B.
Allen, Individually and as Representatives of a Certified Class of Members, to Transfer Venue
(the Transfer Motion) with the United States Bankruptcy Court for the District of Delaware,
824 North Market Street, Wilmington, Delaware 19801 (the Bankruptcy Court).
PLEASE TAKE FURTHER NOTICE that concurrently with the filing of the Transfer
Motion, the Moving Parties filed the Motion of Cordillera Property Owners Association, Inc.
and Cordillera Metropolitan District Pursuant to Del. Bankr. L.R. 9006-1(e) to Shorten Notice
and Objection Periods Regarding Their Motion to Transfer Venue to Colorado, and to Schedule
a Hearing on Such Venue Motion (the Motion to Shorten) with the Bankruptcy Court.
PLEASE TAKE FURTHER NOTICE that pursuant to the Motion to Shorten, the
Moving Parties have requested that the Court enter an order scheduling a hearing on the Transfer
Motion for the hearing currently scheduled for July 16, 2012 at 1:00 p.m. (Prevailing Eastern
Time), with responses and objections due July 11, 2012 at 12:00 p.m. (Prevailing Eastern
{00647658;v1 }
2
Time). In accordance with the Local Rules of Practice and Procedure for the United States
Bankruptcy Court of the District of Delaware (the Local Rules), the Bankruptcy Court will
rule on the Motion to Shorten without a hearing.
Dated: July 5, 2012
ASHBY & GEDDES, P.A.
/s/ Ricardo Palacio
William P. Bowden (#2553)
Ricardo Palacio (#3765)
Benjamin W. Keenan (#4724)
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Telephone: (302) 654-1888
Facsimile: (302) 654-2067
Email: wbowden@ashby-geddes.com
rpalacio@ashby-geddes.com
bkeenan@ashby-geddes.com
- and -
SHERMAN & HOWARD L.L.C.
Peter A. Cal
Mark L. Fulford
Denver, CO 80202
Phone: 303-297-2900
Fax: 303-298-0940
E-Mail: pcal@shermanhoward.com
mfulford@shermanhoward.com
Attorneys for Cordillera Property Owners
Association and Cordillera Metropolitan District
EXHIBIT A
{00138624;vl }
Total/creditors
5144
Colorado
2785
Texas
309
California
285
Florida
237
Illinois
180
New York
107
Minnesota
87
Arizona
86
Pennsylvania
83
Georgia
59
Connecticut
58
Iowa
58
North Carolina
56
Ohio
56
Kansas
54
Missouri
54
Michigan
40
Wisconsin
40
Oklahoma
37
Massachusetts 31
New Jersey 28
Nebraska
26
Tennessee 26
Washington
26
Utah
23
Indiana 22
Maryland
21
Canada
20
Nevada
20
Louisana
19
Virginia
19
Oregon
17
Kentucky
16
South Carolina
16
Dlst Of Columbia 15
Idaho 12
Mississippi
11
Delaware 10
Hawaii
10
Vermont 9
Alabama 8
Arkansas 8
New Hampshire
7
New Mexico 7
Maine
6
South Dakota 6
Montana
3
Rhode Island
3
Wyoming 3
Virgin islands
2
West Virginia
2
FPO,AE 1
Alaska
1
Foreign Countries & Unknown Addresses 17
EXHIBITB
{00138624;vl }
In re:
Chapter 11
Cordillera Golf Club, LLC, Case No.: 12-11893 (CSS)
Debtor.
DECLARATION OF NANETTE KUICH IN SUPPORT OF MOTION OF CORDILLERA
PROPERTY OWNERS lNC. AND METROPOLITAN
DISTRICT TO TRANSFER VENUE TO COLORADO
I, Nanette Kuich, declare under penalty of petjury as follows:
1. [ am the President of the Board of Directors of the Cordillera Metropolitan
District (the "District"). I have served as President since May 20 I 0 and have been a member of
the Board since May 2006. I have personal knowledge of the inf01mation contained in this
Declaration based U:pon:ainohg other things, my' service as a n1ember of the Board President
1' ,o, I '' ' ,.
of the Board for the iny status as an owrier of property within the Cordillera community,
and based upon my review '6f business records of the District. If called upon to testify, I would
testify truthfully to the following facts.
2. I submit this Declaration in support of the Motion of Cordillera Property Owners
,,,, ..... : : .. I , ,,
Association, Inc. and the Cordillera Metropolitan District to Transfer Venue to Colorado.
: . .. ; . . . ,.'. . : '. . . . .
.. ' ;3, I haveIivetHrrEagle County, Colorado since:Febrlltary 1996. My;residence-in
Cordillera is my sole residence.
4. The District is a special district under Colorado law. See C.R.S. 32-1-101, et
seq. (the "Special District Act"). Under Colorado law, "special districts are political
subdivisions of the state and are created as convenient agencies for exercising such of the
governmental powers of the state as may be entrusted to them." See Johnson Homes, Inc. v.
Southwest Metropolitan Water and Sanitation District, 725 P.2d 12, 13 (Colo. Ct. App. 1986);
C.R.S. 32-1-1 03(20) ("Special district means any quasi-municipal corporation and political
subdivision organized or acting pursuant to the provisions ofthis article."). In addition to the
provisions ofthe Special District Act, the District also is governed by its Amended and Restated
Service Plan, which was approved by the Eagle County Board of County Commissioners on May
3, 2005 (the "Service Plan").
5. Within the Cordillera community, and pursuant to the Special District Act and the
Service Plan, the District provides, among other things, operation and maintenance of all public
facilities and infrastructure, which includes more than 40 miles of roadway and shoulder, 7,000
acres of property, and associated landscaping, water features, ponds, streetlights and signage. In
addition, the District performs snow removal, weed and pest control operations; manages the
community's recreation programs (other than those operated by the Debtor); provides public
safety services for the community, traffic control, wildlife management, and architectural
guideline compliance. In addition to operating and maintaining the public infrastructure within
Cordillera, the District has incuned significant bond debt to construct the public infrastructure
and currently repays the bond debt, as well as covers its operating expenses, with property taxes
paid by property owners within Cordillera, including the Debtor.
2
6. The District is authorized by the Special District Act to levy taxes on all taxable
property located within the District's botmdaries, for the purpose of defraying the costs of
government and satisfying the District's outstanding debt obligations. See 32-1-1201, C.R.S.
Under Colorado law, the taxes owed to the District are automatically secured by a first and prior
lien against the Debtor's taxable property located within the District's boundaries. See 32-1-
1202, C.R.S.
7. The Debtor is one of the two largest taxpayers within the District. In Colorado,
O' I
property taxes are paid in arrears, meaning that the Debtor's 2011 property taxes are actually
paid in 2012. As of the date of this affidavit, the debtor has not yet paid its 2011 taxes (due in
2012) and is in arrears in the amount of $205,311.31.
8. The Debtor's 2011 taxes, payable in 2012, are based upon an assessed value of
$2,904,860. In Colorado, commercial property, such as that of the Debtor, is assessed for tax
purposes at 29% of actual value. The Debtor has disputed the assessed value.
9. The total actual value of the real estate within Cordillera, as determined by the
Eagle County Assessor's Office, was $1,433,933,030 in 2010; in 2011, the value dropped to
$1,029,347,630. The decline in property value impacted the District's credit rating, in a negative
way, and also necessitated an increase in the District's mill levy to generate the tax revenues
necessary to cover the District's debt service and operational obligations.
1 0. It would be a substantial burden for me and others involved in this matter to travel
to Delaware from Colorado if the bankruptcy case were to remain in Delaware. Travel to
3
Wilmington, Delaware from Eagle Collll'cy'. Colorado takes not less th.an ten bours. Depending
upon what time hearings in Delaware are completed, I may not be able to return to Colorado on
the same day as the hearing.
Under penalty ofpeijury under the laws of the United States of .America and pur.;uqnt to
28 U.S.C. 1746, l certify that the foregoing statements are true and correct to the best of my
lc.tlnwledge. information, and belief.
Executed i s ~ day of July. 2012.
4
EXHIBITC
{00138624;vl }
In re:
Chapter 11
Cordillera Golf Club, LLC, Case No.: 12-11893 (CSS)
Debtor.
DECLARATION OF LOIS M. VANDEUSEN IN SUPPORT OF MOTION OF
CORDILLERA PROPERTY OWNERS ASSOCIATION, INC. AND CORDILLERA
METRO PO LIT AN DISTRICT TO TRANSFER VENUE TO COLORADO
I, Lois M. Van Deusen, dechire under penalty of perjury as follows:
1. I am the President of the Cordillera Property Owners Association, Inc. ("CPOA").
I have held this position since September 19, 2011. I have been a member of the Board of the
CPOA since November 16,2009. I have personal knowledge ofthe information contained in
this Declaration based upon, among other things, my service as President and member of the
Board of the CPOA, my status as an owner of property within the Cordillera community, my
status as a resigned member of the Cordillera Golf Club, LLC (the "Debtor" or "Club"), and
based upon my review of business records of the CPOA If called upon to testify, I would testify
truthfully to the following facts.
2. I submit this Declaration in support of the Motion of Cordillera Property Owners
Association, Inc. and Cordillera Metropolitan District to Transfer Venue to Colorado.
3. Eagle County, Colorado has been my primary residence since 2008. I have been a
member of the Club since 2000. I also own a consulting business, LVD Consulting, LLC, that is
registered as a Colorado entity and whose business address is in Colorado.
4. My family's application for membership in the Club was made in Colorado. My
membership agreement with the Debtor is governed by Colorado law. The existence of the Club
and the amenities it offered was a significant factor in our decision to buy property in Colorado.
5. The COP A is established pursuant to and governed by the Amended and Restated
Declaration of Protective Covenants, Conditions, and Restrictions for Cordillera, recorded on
May 12, 1993 in the real property records ofthe Eagle County Clerk and Recorder's Office at
Reception No. 504866 (as the same has been amended by the Second Amendment to Declaration
of Protective Covenants, Conditions, and Restrictions for Cordillera, recorded on May 11, 1998
in the real property records of the Eagle County Clerk and Recorder's Office at Reception No.
65572, and the Third Amendment to Declaration of Protective Covenants, Conditions, and
Restrictions for Cordillera, recorded on Aprill4, 2010 in the real property records ofthe Eagle
County Clerk and Recorder's Office at Reception No. 201007045), and the Amended and
Restated Bylaws of Cordillera Property Owners Association, Inc., dated as of, and approved by
the Board of Directors, on May 21, 2012.
6. All property owners in the Cordillera community in Eagle County, Colorado are
members ofthe CPOA. Not all property owners within the Cordillera community, however, are
Club members. The CPOA has five Directors, all of whom are resigned members of the Club.
7. The CPOA perfonns functions and manages it affairs in a manner similar to
property owners associations in lifestyle communities to enhance the overall quality of life
within the community, to provide programs and facilities for the community, and to preserve
property values within the community. In furtherance of this mission, the CPOA contracts with
2
and provides financial support to the Cordillera Metropolitan District, a political subdivision of
the State, in the provision of community operations services, debt retirement, and capital
projects; maintains oversight of the architectural review process within the community; manages
a wildfire and healthy forest initiative; administers a wildlife management program in
consultation with the Colorado Division of Wildlife; operates a ski club at Vail Mountain;
manages a community marketing program, and owns and operates a community center which
houses a cafe and a branch office of the Unites States Post Office. The CPOA also has
historically provided funding support for the community's public safety department, and
acquired and subsequently conveyed to the Cordillera Metropolitan District a large parcel of land
abutting the Eagle River, which currently is maintained as open space for the benefit of the
corrununity.
8. The CPOA is funded by assessments paid by its property owners. In addition, the
CPOA receives a percentage of the purchase price of all residential properties sold within the
boundaries subject to the CPOA. The CPOA depends on those revenues to maintain the
programs that characterize the Cordillera lifestyle.
9. The CPOA is one of the defendants in the litigation that the Debtor, its principal,
David A. Wilhelm, and certain related entities commenced in District Court, Eagle County, State
of Colorado styled Cordillera Golf Club, LLC, et al. v. Cordillera Transition Corporation, Inc .
et al., Case No. In that action, Debtor and the related plaintiffs mischaracterize
the CPOA, its individually named board members, and other community entities and individuals
as the driving force behind the decision of approximately 200 Club members to resign from the
3
Club. In reality, the Debtor's own actions, including broken promises and operational failures,
serve as the fount of community outrage and the resignation decisions. The lawsuit is merely a
last ditch effort to manufacture leverage over a community that serves not as the cause of
Debtor's failures, but the victims of it.
10. The value of properties within the CPOA are impacted by the success (or lack
thereof) of the Club. A significant portion of the CPOA's revenue comes from a Real Estate
Transfer Assessment ("RETA") of2% charged against the sales price of each home sold in
Cordillera. In 201 0, there were 44 transactions v.ithin Cordillera, resulting in RET A revenue of
$1,345,708. In 2011, the year in which Debtor's litigation against the CPOA was commenced,
there were 28 transactions within Cordillera, resulting in RETA revenue of$642,755. In
addition, the total actual value of the real estate within Cordillera, as determined by the Eagle
County Assessor's Office, was $1,433,933,030 in 201 0; in 2011, the value dropped to
$1,029,347,630.
11. It would be a substantial burden for me and others involved in this matter to travel
to Delaware from Colorado if the bankruptcy case were to remain in Delaware. Travel to
Wilmington, Delaware from Eagle County, Colorado takes not less than ten hours. Depending
upon what time hearings in Delaware are completed, I and other Colorado residents may not be
able to return to Colorado on the same day as the hearing. The CPOA would pay for the
expenses associated with this travel.
4
Under pena1ty of peljury under the laws of the United States of America and pursllllllt to
28 U.S.C. 1746, I certify that the foregoing statements are true and correct to the best of my
knowledge, information, and belief.
Executed i ~ y of July, 2012.
5
EXHIBITD
{00138624;vl }
Inre:
Chapter 7
Spanish Peaks Holdings II, LLC
Case No.ll-13300 (Bl.S)
Debtor.
Inre:
Chapter7
Spanish Peaks Lodge,. LLC
Case No.ll-13301 (BLS)
Debtor.
Inre:
Chapter7
The Oub at Spanish Peaks, LLC
Case No. 11-13302 {BLS)
Debtor.
MEMORANDUM ORDER
Upon consideration of the Motion of Secured Creditors for Change
of Venue Pursuant to 28 U.S.C. 1412 (the "Venue Motion"),l and the
objections thereto; and after conducting an evidentiary hearing on the
Venue Motion; and after due deliberation, the Court hereby FINDS as
follows:
1. At issue is whether these three related Chapter 7 bankruptcy
cases should remain in this Court, where they have pended since being
filed in October 2011,
2
or be transferred to the Bankruptcy Court in
1
Docket Nos. 72, 64, and 84, respectively, in Case Nos. 11-13300, 11-13301, and 11-
13302.
2
There is no dispute that venue is proper in this Court under 28 U.S.C. 1408. One of
the Debtors (defined below) is a Delaware corporation and the other two Debtors are
affiliates of a Delaware corporation. Section 1408, entitled "Venue of Cases Under Ti-
tle 11," provides that:
"IA] a case under title 11 may be commenced in the district court for the
district (1) in which the domicile, residence, principal place of business in
the United States, or principal assets in the United States, of the person
1
Montana, where the Debtors'
3
primary assets, much of their business
operations, and many of their creditors are located. For the reasons ex-
plained further below, the Court will transfer these cases to Montana.
2. Before financial troubles caused the Debtors to file for bankrupt-
cy, they were in the process of developing a 5,700 acre, high-end, resi-
dential community in Big Sky, Montana (the "Development"). After the
bankruptcy filings, Charles M. Forman was appointed as the Chapter 7
trustee (the "Trustee") to administer the Debtors' estates and to sell the
Development to repay the Debtors' creditors.
3. The Movants4 are various engineers, architects, contractors, and
subcontractors who worked on the Development Each Movant has
filed construction liens against the Development under Montana law.
The Movants have also sued the Debtors (and others) in Montana state
court over issues of lien priority and on claims for breach of contract,
violation of Montana's Prompt Payment Act, unjust enrichment and
quantum meruit. Those actions have been halted for the time being by
operation of the automatic stay, which came into effect when the Debt-
ors filed for bankruptcy.
4. All parties agree that 28 U.S.C. 1412 is the starting point for the
Court's venue transfer analysis. Entitled "Change of Venue/' 1412
provides that "a district court may transfer a case or proceeding under
title 11 to a district court for another district, in the interest of justice or
for the convenience of the parties." See also Fed R. Bankr. P. 1014(a) ("If
or entity that is the subject of such case have been located for the one
hundred and eighty days immediately preceding such commencement
... ; or (2) in which there is pending a case under title 11 concerning such
person's affiliate, general partner, or partnership."
Because the Debtors' principal assets are in Montana, venue would also be appropri-
ate in the District of Montana.
3 The "Debtors" are Spanish Peaks Holdings II, LLC, Spanish Peaks Lodge, LLC, and
The Club at Spanish Peaks, LLC. The former is a Delaware Corporation, the latter two
are Montana corporations.
4
The "Movants'' are CIA Inc., Morrison Maierle Inc., Specialty Systems Inc.,
Stresscon Inc., Williams Plumbing Heating & Utilities Inc., Ace Electric Inc .. MaCon
Supply Inc., Kenyon-Noble Lumber Company Inc., YMC Inc., and Walker Excavation
Inc.
2
a petition is filed in a proper district, ... the case may be transferred to
any other district if the court determines that the transfer is in the inter-
est of justice or for the convenience of the parties."). Section 1412 ap-
plies in cases, like this one, where venue in a given district is proper
under 28 U.S.C. 1408, as well as in cases that are improperly venued.
The party moving for change of venue has the burden of proof by a
preponderance of the evidence, and, although the debtor's choice of fo-
rum is entitled to great weight initially, In re Enron, 284 B.R. 376, 386
(Bankr. S.D.N.Y. 2002), the decision of whether to transfer venue "is
within the court's discretion based on an individualized case-by-case
analysis of convenience and fairnes..c;;." Id.; see also In re Consol. Equity
Prop., lnc., 136 B.R. 261, 266 (D. Nev. 1991) (stressing that "the determi-
nation as to venue is fact-specific"); In re Abacus Broad. Corp., 154 B.R.
682, 685 (Bankr. W.D. Tex. 1993) ("[V]enue does not easily submit to
hard and fast rules.").
5. When asked to transfer an entire bankruptcy case-as opposed
to a discrete proceeding within a case-courts examine "whether trans-
fer of venue will promote the efficient administration of the estate, u i ~
cial economy, timeliness and fairness." In re Enron, 284 B.R. at 387; see
also In re Rehoboth Hospitality, No. 11-12798, 2011 WL 5024267, at *3
(Bankr. D. Del. Oct. 19, 2011); In re Centennial Coal, Inc., 282 B.R. 140, 146
(Bankr. D. DeL 2002). Guiding that inquiry are factors such as:
" The proximity of the debtor to the court;
a The proximity of creditors of every kind to the court;
a The proximity of the witnesses necessary to the administra-
tion of the estate;
o The location of the estate's assets;
a The economical administration of the estate; and
a The necessity for ancillary administration if liquidation shoutd
result.
1 COLLIER ON BANKRUPTCY ~ 4.05[3)[ii] (Alan N. Resnick & Henry J.
Sommer eds., 16th cd. 2011) (citing In re Commom:oealth Oil Ref. OJ., 596
3
F.2d 1239, 1247 (5th Or. 1979), cert. denied, 444 U.S. 1045, 100 S. Ct. 732
(1980)).
6. The Court also agrees with Chief Judge Gross' recent statement
in In Te Rehoboth that
Courts in this Circuit ... have held that the estate of a real estate
partnership is most efficiently adm.inistered in the district where
the principal asset is located. In the context of what is essentially a
single asset case, the location of the lone improved real estate asset
is of particular concern to the Court, especially in the event of a
potential liquidation, and the case is better administered by a
court in the district in which it is located.
2011 WL 5024267 at *5 (citations and quotation marks omitted). While
the Court acknowledges that these cases do not precisely fit the single
asset model, Chief Judge Gross' comments do have application to the
case at bar.
7. After carefully considering the above policies and factors, the
Court finds that the Movants have satisfied their burden to show that
these Chapter 7 cases should be transferred to Montana.
8. First, the Debtors have extensive contacts with Montana. Two of
the three Debtors are Montana corporations. The Development-the
Debtors' primary asset-is located there, and Montana is where the
Debtors do the bulk of their business.
9. Second, a review of the Debtors' schedules shows that a signifi-
cant number of creditors are located either in Montana or in nearby
Western states like California, Oregon, and Utah. Though these claim-
ants may not, even in the aggregate, hold the largest claims against the
estate-that claim appears to belong to a New York City based inves-
tor-the Court must consider the interests of "creditors of every kind"
when evaluating a transfer request. In re Commonmealth Oil, 596 F.2d at
1247.
10. Third, these are Chapter 7 cases primarily involving the sale of
real property located in Montana. Though the record reflects that the
4
Trustee and his professionals have ably managed these cases, it is also
clear that the sale process remains in its early stages. For instance, no
sale motion has been filed, the Court has not been asked to approve
bidding and sale procedures, and the Trustee has not yet moved to re-
tain a broker or investment banker in connection with a sale.
11. The Trustee testified credibly and candidly that he is concerned
about the risk of material harm to the estates and to the interests of
creditors if the sale process is delayed on account of a transfer of venue.
He further testified that he hoped to move forward with a sale by late
spring of this year. However, given where the sale process is at the cur-
rent time, the Court does not conclude that transferring venue will ma-
terially disrupt the orderly administration and prosecution of these cas-
es, or a future sale. Were a sale scheduled to take place imminently, it is
likely that the Court's determination today would be different.
12. Finally, the Court notes that these cases may present the pro-
spect of significant litigation involving the claims of the Movants, and
perhaps others. According to the record adduced at the January 7, 2011
hearing on the Venue Motion, that litigation will primarily involve
questions of Montana lien and real property law. While this Court
could hear those disputes, the Montana Bankruptcy Court is better po-
sitioned to do so. See In re Rehoboth, 2011 WL 5024267 at *4 (holding that
because "resolution of the issues will require interpretation and appli-
cation of Texas real property law ... the Texas Bankruptcy Court is
uniquely positioned to determine [them]").
13. The Court is satisfied that the Movants have carried their bur-
den to demonstrate that transferring venue to Montana is in the inter-
ests of justice, fair to the parties in interest, and consistent with the effi-
cient administration of the estates. However, this Court will retain ju-
risdiction to determine allowance of fees, expenses, and compensation
for the Trustee and the Trustee's professionals retained in this Court
prior to the transfer of venue, unless otherwise ordered by subsequent
ruling of this Court or of the Montana Bankruptcy Court.
5
Accordingly, it is hereby
ORDERED, that the Venue Motion is GRANTED; and it is further
ORDERED, that these cases will be transferred to the United
States Bankruptcy Court for the District of Montana, subject to the lim-
ited retention of jurisdiction provision contained in ,113 above.
Dated: January 10, 2012
BY THE COURT:
6
00648557.1
In re:
Debtor.
Chapter 11
Case No.: 12-11893 (CSS)
Related Docket No. ______
ORDER GRANTING MOTION OF CORDILLERA PROPERTY OWNERS ASSOCIATION,
INC. AND CORDILLERA METROPOLITAN DISTRICT TO TRANSFER VENUE TO
COLORADO ANDJOINDER IN THE MOTION OF CHERYL M. FOLEY, THOMAS WILNER,
JANE WILNER, CHARLES JACKSON, MARY JACKSON AND KEVIN B. ALLEN,
INDIVIDUALLY AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS,
TO TRANSFER VENUE
Upon consideration of the Motion of Cordillera Property Owners Association, Inc. and
Cordillera Metropolitan District to Transfer Venue to Colorado and Joinder in the Motion of Cheryl M.
Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B. Allen, Individually
and as Representatives of a Certified Class of Members, to Transfer Venue (the Motion), and having
considered any objections thereto; and it appearing that due and adequate notice of the Motion has been
given; that it appears that no further or other notice is required; and after due deliberation and sufficient
cause appearing therefor, it is hereby ORDERED that
1. The Motion is GRANTED for the reasons stated on the record and as set forth herein.
2. This Chapter 11 case (including all pending contested matters and adversary proceedings
arising in, arising under or related to this Chapter 11 case) is hereby transferred to the United States
Bankruptcy Court for the District of Colorado, effective immediately.
Dated: July ____, 2012
_______________________________________
The Honorable Christopher S. Sontchi
United States Bankruptcy Court

DMWEST #9140585 v1
In re:

dba THE CLUB AT CORDILLERA

Debtor.
)
)
)
)
)
)
Chapter 11

Case No. 12-11893-CSS

Objection Date: July 11, 2012 at 12:00 p.m.

JOINDER OF ALPINE BANK TO THE MOTION OF CORDILLERA
PROPERTY OWNERS ASSOCIATION, INC. AND CORDILLERA
METROPOLITAN DISTRICT TO TRANSFER VENUE TO COLORADO

Alpine Bank (Alpine), by and through its undersigned counsel, hereby files this
joinder to the Cordillera Property Owners Association, Inc.s (CPOA) and Cordillera
Metropolitan Districts (the District) Motion to Transfer Venue to Colorado [Dkt. No. 78] (the
Second Venue Motion). Alpine joins in the relief requested under the Second Venue Motion
for the reasons stated in the Second Venue Motion, the Motion of Cheryl M. Foley, Thomas
Wilner, J ane Wilner, Charles J ackson, Mary J ackson and Kevin B. Allen, Individually and as
Members of a Certified Class of Members, to Transfer Venue [Dkt. No. 69] (the First Venue
Motion), and Alpines J oinder to the First Venue Motion [Dkt. No. 77]. In addition to the
reasons stated in the Second Venue Motion, the First Venue Motion, and Alpines J oinder to the
First Venue Motion, Alpine notes that the United States Trustee has recently filed a notice of
formation of an official committee of unsecured creditors in this case, which list is comprised
entirely of individuals or principals located in Colorado. Appointment of Official Creditor
Committee filed by United States Trustee (J uly 6, 2012) [Dkt. No. 86].

DMWEST #9140585 v1 2
WHEREFORE, Alpine respectfully requests that the Court enter an order granting the
Second Venue Motion and such other relief as may be necessary and appropriate.


BALLARD SPAHR LLP

Dated: J uly 9, 2012
By: s/ J oshua E. Zugerman___________
Tobey M. Daluz, Esq. (No. 3939)
J oshua E. Zugerman, Esq. (No. 5261)
Telephone: (302) 252-4465
Facsimile: (302) 252) 4466
E-mail: daluzt@ballardspahr.com
zugermanj@ballardspahr.com

and

Vincent J . Marriott, III, Esq. (PA 41457)
Sarah Schindler-Williams Esq. (NY 4556510)
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Telephone: (215) 665-8500
Facsimile: (215) 864-8999
E-mail: marriott@ballardspahr.com
schindlerwilliamss@ballardspahr.com

Attorneys for Alpine Bank

In re:
Chapter 11
CORDILLERA GOLF CLUB, LLC/ Case No. 12-11893 (CSS)
Debtor. Re: Docket Nos. 1, 69, 71, 78, 79,
92,93
Hearing Date: 7/16/12@ 10:00 a.m.
JOINDER OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
IN: (I) MOTION OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER,
CHARLES JACKSON, MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY
AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, TO
TRANSFER VENUE; AND (II) MOTION OF CORDILLERA PROPERTY
OWNERS ASSOCIATION, INC. AND CORDILLERA METROPOLITAN
DISTRICT TO TRANSFER VENUE TO COLORADO
The Official Committee of Unsecured Creditors ("Committee") appointed in the above
captioned, Chapter 11 bankruptcy case of Cordillera Golf Club, LLC ("Debtor"), by and through
its (proposed) undersigned counsel, respectfully files this Joinder (this "Joinder") in: (i) the
Motion filed by Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson
and Kevin B. Allen, Individually and as Representatives of a Certified Class of Members, to
Transfer Venue [Docket No. 69] (the "First Venue Motion'); and (ii) the Motion filed by
Cordillera Property Owners Association, Inc. ("CPOA") and Cordillera Metropolitan District
(the "District") to Transfer Venue to Colorado [Docket No. 79] ("Second Venue Motion"), and
in support, would respectfully show this Court as follows:
I. BACKGROUND
1. On June 26, 2012 ("Petition Date"), the Debtor filed its voluntary for relief under
Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. 101, et seq. (the "Bankruptcy
The Debtor in this chapter II case, and the last four digits of its employer tax identification number, is:
XX-XXX\317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202, Edwards,
co 81632.
615266.17/11112
Code"), thereby initiating the above-captioned case with this Court (the "Bankruptcy Case").
The Debtor remains in control of its business and affairs as a debtor-in-possession pursuant to
sections 1107 and 1108 of the Bankruptcy Code.
2. On July 6, 2012, the United States Trustee filed its Notice of Appointment of
Committee of Unsecured Creditors [Docket No. 86], thereby forming the Comrnittee.
2
3. The Debtor is the owner and operator of "The Club at Cordillera" (the "Club"),
located in Edwards Colorado in Eagle County. The Club includes three 18-hole golf courses, a
short course, three tennis centers, fitness facilities, five indoor and outdoor pools, a sununer
camp and clubhouse for children, and riding, hiking and cross-country ski trails. See Declaration
of Daniel L. Fitchett, Jr. in Support of Chapter 11 Petitions and First Day Relief ("Fitchett
Declaration"), 7. The Club is the Debtor's sole asset and only business.
4. The Club is located within the Cordillera residential community in Edwards,
Colorado, and derives revenues through fees and dues related to Club memberships and
marketed to community residents and others. Fitchett Declaration, 5, 6, 8-12. Upon
information and belief, the sole, ultimate equity interest holder in the Club is Mr. David
Wilhelm, a resident of Colorado. Fitchett Declaration, 20; Consolidated Creditor Matrix
[Docket No. 10], at p. 22. Mr. Wilhelm is also alleged to be a secured creditor of the Debtor,
who, as of the Petition Date, is purportedly owed in excess of $7 million from the Debtor.
Fitchett 53, 54.
5. On or about June 26, 2009, the Debtor entered into a loan agreement with Alpine
Bank, under which the Debtor owes Alpine in excess of $12.7 million, which debt is alleged to
2
The Committee's current membership is comprised of the following various homeowners and trade
creditors of the Debtor: (i) John D. O'Brien; (ii) Cheryl M. Foley; (iii) Ken Ulickey; (iv) Kevin B. Allen;
(v) Dennis S. Meir; (vi) John S. Lemak; and (vii) Ceres Design & Arborscape, LLC. All of the
Committee's members have Colorado addresses.
615266.1 7/11112
2
be secured by substantially all of the Debtor's real and personal property. Fitchett Declaration,
50-52, 54. Alpine Bank is located in Colorado. Upon information and belief, Alpine Bank
supports the transfer of venue of this Bankruptcy Case to the District of Colorado.
B. The First Venue Motion
6. Over the past several years, the Debtor's relationship with its members,
comprising its largest creditor constituency, has become strained, resulting in ongoing litigation
in Colorado state courts that is a central feature in the Debtor's financial difficulties. First Venue
Motion, at p. 2.
7. On July 3, 2012, Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson,
Mary Jackson and Kevin B. Allen filed the First Venue Motion, as individual homeowners in the
Cordillera community, members of the Debtor, and as representatives of a class of homeowner
members (collectively, the "Class Movants") certified in connection with litigation pending in
Colorado state court (the "Class Action"). First Venue Motion, at pp. 3-4.
8. Each of these class member Plaintiffs asserts a noncontingent, unsecured claim
against the Debtor for the return of the member's deposits with the Club, ranging in amount from
$7,500 to $205,000, with an average of approximately $103,000, and for an aggregate total of
approximately $62 million in pre-petition claims. See First Venue Motion, at Exh. A.
Accordingly, this Plaintiff class by far comprises the largest claim constituency in this estate. As
these creditors are comprised of Club members who are, in turn, largely comprised of Cordillera
residents, these Plaintiffs, and their underlying interests, are essentially all located in Colorado.
9. Despite these facts, or perhaps concerned over the implications that would result
from this disclosure, the Debtor failed to include any of these creditors in its List of Creditors
Holding Twenty Largest Unsecured Claims filed with the Court [Docket No. 1] ("List of Twentv
Largest"). According to the Plaintiffs, their members hold individual claims that exceed all but
615266.1 7/11/12
3
one of the unsecured creditors that the Debtor included in its List of Twenty Largest. First
Venue Motion, at p. 5. Notwithstanding, half of the creditors that the Debtor did list are also
located in Colorado.
10. The Class Action involves the Plaintiff members' claims for, inter alia, breach of
contract, inducement, securities violations, and related causes of action against the Debtor and
related parties, and seeks the return of deposits and membership dues and fees paid to the Debtor.
First Venue Motion, at Exh. B. These monies were paid to the Debtor in reliance on certain
express promises, commitments and representations to provide access to Club facilities and other
membership benefits and privileges. First Venue Motion, at Exh. B.
II. On July 5, 2012, this Court entered its Order shortening the requisite notice period
for the First Venue Motion [Docket No. 71], and setting an expedited hearing to consider the
motion for July 16,2012, at 10:00 a.m.
C. The Second Venue Motion
12. On July 5, 2012, the CPOA and the District filed their Second Venue Motion,
through which these movants also joined in the First Venue Motion. The CPOA is one of two
homeowner associations governing the Cordillera community. Its membership is comprised of
private, individual homeowner consumers who also share similar claims and interests as the
Class Movants. Related to this fact, the CPOA is the Defendant in separate litigation
commenced by the Debtor and pending in Colorado state court, apparently contending that the
CPOA is somehow responsible for the determination of numerous of the Debtor's members to
seek to cancel their membership interests. Fitchett Declaration, 6; Second Venue Motion, at
25-29.
13. In addition to generally acting as a property owners association, the CPOA is
involved in the provision of numerous community operations and public safety and welfare
615266.1 7/11112
4
services, including, without limitation, the management, maintenance and operation of public
facilities, programs and initiatives. Second Venue Motion, at 26. The CPOA provides for its
operating expenses through assessments charged on the sale of homes in Cordillera.
14. The District is a quasi-municipal "special" district created under the laws of
Colorado as a political subdivision of the state, and constructs and manages all public facilities
and infrastructure in the district. Second Venue Motion, at 20-21. The District includes
Cordillera, under which the Debtor is one of the District's two largest taxpayers. The District is
thereby a secured creditor of the Debtor pursuant to various ad valorem tax obligations, and is
owed approximately $205,311.31 corresponding to the Debtor's 2011 assessments.
15. On July 9, 2012, this Court entered its Order shortening the requisite notice period
for the Second Venue Motion [Docket No. 92], and setting an expedited hearing to consider that
motion at the same time as the First Venue Motion (July 16,2012, at 10:00 a.m.).
II. JOINDER IN REQUESTED RELIEF
16. The Committee hereby joins in the relief sought in both the First Venue Motion
and the Second Venue Motion, and respectfully prays that this Court enter its order immediately
transferring this Bankruptcy Case, and all related proceedings, to the District of Colorado for
continued administration.
B. Applicable Standards
17. Even where venue is proper, a court may nevertheless transfer a case, "in the
interest of justice or for convenience of the parties." 28 U.S.C. 1412; Fed. R. Bankr.P.
1014(a)(1). Specifically, 28 U.S.C. 1412 provides in relevant part that this Court "may transfer
a case or proceeding under title 11 to a district court for another district, in the interest of justice
or for the convenience of the parties." 28 U.S.C. 1412.
615266.1 7/ll/12
5
18. First, the '"interest of justice' component of 1412 is a broad and flexible
standard which must be applied on a case-by-case basis. It contemplates a consideration of
whether transferring venue would promote the efficient administration of the bankruptcy estate,
judicial economy, timeliness, and fairness ... " In re Manville Forest Products Corp., 896 F.2d
1384, 1391 (2d Cir.l990). Secondly, in consideration of the second clause of this statute- the
convenience ofthe parties- courts typically engage in a factor based analysis that contemplates:
(i) The proximity of creditors of every kind to the Court;
(ii) The proximity ofthe bankrupt (debtor) to the Court;
(iii) The proximity of the witnesses and proof necessary to the administration
of the estate and availability of subpoena power for unwilling witnesses;
(iv) The location of the assets;
(v) The enforceability of judgments and economic administration of the
estate;
(vi) The ability to receive a fair trial;
(vii) The state's interest in having local controversies decided within its
borders, by those familiar with its law; and
(vii) The necessity for ancillary administration if bankruptcy [liquidation]
should result.
See In re LaGuardia Associates, L.P., 316 B.R. 832, 837 (Bankr. E.D. Pa. 2004) (citations
omitted); Matter of Continental Airlines, Inc., 133 B.R. 585, 587-88 (Bankr. D. Del. 1991)
(simultaneously addressing interests of justice and convenience of the parties as related
considerations).
C. All Factors Weigh In Support of Transferring This Bankruptcy Case to the District
of Colorado
19. Here, it is beyond dispute that the Debtor, and the vast majority of its creditors,
including the Debtors' most significant secured and unsecured creditors - the Class Action
615266.1 7/11/12
6
Plaintiffs, the CPOA, the District, Mr. Wilhelm, Alpine Bank, and the members of the
Committee- are all located in Colorado. There can be no dispute that venue for this Bankruptcy
Case is proper in Colorado.
20. Of course, the Debtor's assets are also uniquely situated in Colorado. This is not
a mere case of a debtor who operates in national or international markets irrespective of its
primary location or place of business. The Debtor has no product to offer other than the real
property and related services and facilities in Colorado. Trade vendors providing services to the
Debtor and those seeking to become customers I members of the Debtor must, with negligible
exceptions, necessarily do so in Colorado. Day to day business operations of the Club occur
only in Colorado.
21. Because this case involves a significant real property development and a
residential community located in Colorado, the State of Colorado has a particularized interest in
the resolution of the disputes implicated in this Bankruptcy Case, which no other state can
approximate. In re Buffets Holdings, Inc., 397 B.R. 725, 730 (Bankr. D. Del. 2008); In re
Portjef!Development Corp., 118 B.R. 184, 193-94 (Bankr. E.D.N.Y. 1990) (even where no other
factor supports transfer, the presence of the debtor's principal, if not sole, asset in the destination
district "overwhelmingly militates in favor oftransfer ... ").
22. As cited in the First Venue Motion, this consideration is paramount where, as
here, the sole or central asset of the estate is comprised of real property. Courts recognize the
unique relationship and interest that a state has in matters affecting its local real estate. See First
Venue Motion, at p. 9. See also In re Enron Corp., 284 B.R. 376, 392 (Bankr. S.D.N.Y. 2002)
("[m]atters concerning real property have always been of local concern and traditionally are
615266.1 7/11/12
7
decided at the situs of the property." Citing and quoting In re Baltimore Food Systems, Inc., 71
B.R. 795, 803 (Bankr. D.S.C. 1986)).
23. As to the remaining relevant factors, the major related litigation involving the
Debtor is currently pending in Colorado state courts, and upon information and belief, the
Debtor's managers, principal offices, and books and records are all located in Colorado.
Moreover, this case remains in its infancy, with only two hearings conducted, and primarily to
consider first day requests on an interim basis. Therefore, transferring venue to Colorado can
only maximize judicial economy and the availability of proof, while minimizing the burden on
litigants and parties in interest. This is particularly true in the event that this case becomes an
orderly sale or liquidation as apparently contemplated.
3
See also In re Abacus Broadcasting
Corp., 154 B.R. 682, 684 (Bankr. W.D. Tex. 1993) (where liquidation is contemplated, the court
should consider the added burden that would result in requiring a trustee to administer assets in a
distant location). Furthermore, the agreements between the Debtor and its creditors are primarily
governed under Colorado law.
24. The totality of the circumstances applied here constitute a compelling case to
transfer venue, not only for the convenience of the parties but also in the interests of justice. The
sole factor weighing in favor of the Debtor's choice of forum is simply deference to the Debtor's
choice of forum. However, here, there exists some indication that the Debtor has sought to
actually discourage creditor participation through its choice of forum. In light of the
overwhelming nexus that Colorado has with the Debtor, its assets, creditors, and major disputes,
and the corresponding lack of any meaningful nexus between the Debtor and Delaware, the
The fact that the Debtor has proposed to sell one of its major golf course assets underscores this fact.
Fitchett Declaration, 1111 41-42. Potential purchasers wishing to conduct due diligence in connection with
this potential acquisition of a golf course facility must necessarily do so in Colorado and any sale would be
subject to applicable Colorado law.
615266.1 7/11/12
8
Debtor's choice of forum appears to have no other basis. Critically, the vast majority of the
Debtor's creditors are comprised of individual, consumer homeowners and members located in
Colorado. Many of these parties are in active litigation with the Debtor and its affiliates in
Colorado. The adverse impact that these parties will suffer in having to participate in this case in
Delaware are greater than might be expected of a business that is accustomed to operating in
different markets, and would be particularly acute. The fact that the Debtor failed to disclose the
locations of its true major unsecured creditors -these same individual homeowner members -is
troubling and evidence of its attempt to disenfranchise unsecured creditors in this case. See also
In re Pine haven Associates, 132 B.R. 982, 990 (Bankr. E.D.N.Y. 1991) (debtor's choice of
forum is not entitled to deference where it appears motivated not by the convenience of the
parties, but "to make this Chapter 11 case more burdensome to creditors and other interested
. ")
partres... .
D. Conclusion
25. In sunrmary, the estate's property is comprised of real estate and related
operations uniquely located in residential communities in Colorado. The Debtor's assets,
offices, operations, records, managers, and secured creditors are all located in Colorado. Many
of the Debtor's creditors are private citizens whose participation in this Bankruptcy Case would
be strained and discouraged by the need to litigate in a distant forum. Therefore, as the Debtor
has no connection to Delaware other than its state of incorporation, this Court should exercise its
discretion to transfer this case to the District of Colorado.
615266.1 7/ll/12
9
WHEREFORE, PREMISES CONSIDERED, the Official Committee of Unsecured
Creditors respectfully joins in the requests of the Class Movants, CPO A, and District for this
Court's entry of its Order immediately transferring this case to the District of Colorado, and
granting such other and further relief to the Committee as to which it has shown itself to be justly
entitled.
Dated: July 11, 2012
615266.1 7111112
SAUL EWING LLP
By:

Mark Minuti (No. 2659)
222 Delaware Avenue, Suite 1200
P.O. Box 1266
Telephone: (302) 421-6840
Facsimile: (302) 421-5873
E-mail: mminuti@saul.com
-and-
MUNSCH HARDT KOPF & HARR, P.C.
Russell L. Munsch
Texas Bar No. 14671500
Joseph J. Wielebinski
Jay H. Ong
3 800 Lincoln Plaza
500 N. Akard Street
Dallas, TX 75201-6659
Telephone: (214) 855-7500
Facsimile: (214) 978-4335
E-mail: rmunsch@munsch.com
E-mail: jwielebinski@munsch.com
E-mail: jong@munsch.com
Proposed Counsel for the Official Committee of
Unsecured Creditors
10


In re

CORDILLERA GOLF CLUB, LLC
1

dba The Club at Cordillera,

Debtor.

Chapter 11

Case No. 12-11893 (CSS)

Object. Due: July 11, 2012 at 12:00 p.m.

Re: D.I. 69, 77, 78, 95, 117 & 118)

JOINDER OF CREDITOR JEFFREY RUSH, M.D. AS TRUSTEE OF THE RUSH
FAMILY TRUST UTD MAY 8, 1985, TO OBJECTION OF DEBTOR TO (I) MOTION
OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON,
MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS
REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER
VENUE (D.I. 69), (II) MOTION OF CORDILLERA PROPERTY OWNERS
ASSOCIATION, INC. AND CORDILLERA METROPOLITAN DISTRICT TO
TRANSFER VENUE TO COLORADO AND JOINDER IN THE MOTION OF CHERYL
M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON, MARY
JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES
OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER VENUE (D.I. 78), AND (III)
JOINDERS OF ALPINE BANK IN VENUE TRANSFER MOTIONS (D.I. 77 & 95)

Jeffrey Rush, M.D., as Trustee of the Rush Family Trust UTD May 8, 1985 (Dr.
Rush), by and through his undersigned counsel, hereby submits this joinder in the
contemporaneously filed objection (D.I. 118) (the Objection) of Cordillera Golf Club, LLC,
debtor and debtor-in-possession (the Debtor), to: (i) the Motion Of Cheryl M. Foley, Thomas
Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B. Allen, Individually And As
Representatives Of A Certified Class Of Members (the Plaintiff Class Representatives), To
Transfer Venue (D.I. 69); (ii) the Motion Of Cordillera Property Owners Association, Inc. (the
CPOA) And Cordillera Metropolitan District (the CMD and together with the CPA, the

1
The Debtor in this chapter 11 case, and the last four digits of its employer tax
identification number, is XX-XXX1317. The corporate headquarters address for the
Debtor is 97 Main Street, Suite E202, Edwards, Colorado 81632.

2

Member Organizations) To Transfer Venue To Colorado And Joinder In The Motion Of
Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B.
Allen, Individually And As Representatives Of A Certified Class Of Members, To Transfer
Venue (D.I. 78); and (iii) Joinders Of Alpine Bank In Venue Transfer Motions (D.I. 77 & 95)
(collectively, the Venue Transfer Requests). Dr. Rush joins in and incorporates by reference
the arguments presented in the Debtors Objection, and respectfully states as follows in support
of this Courts retention of this properly venued chapter 11 case:
1. On information and belief, Dr. Rush is the single largest unsecured
creditor of the Debtor, with a claim of not less than $3,750,000.00. Dr. Rushs claim arises
under that certain Guaranty, dated September 24, 2010, as amended (the Guaranty).
2
Indeed,
the combined claims of the Plaintiff Class Representatives and initial movants Cheryl M. Foley,
Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B. Allen, which claims
consistent principally of their respective membership deposits,
3
do not approach what Dr. Rush
alone is owed.
4

2
Other guarantors under the Guaranty include the Debtors non-debtor affiliates WFP
Investments, LLC, WFP Cordillera Holdings, LLC, and Cordillera Golf Holdings, LLC.
The Guaranty was issued in connection with that certain Promissory Note, dated
September 24, 2010, as amended, between Dr. Rush, as Lender, and David A. Wilhelm,
as Borrower. To secure repayment of the indebtedness owed to him, Dr. Rush has
obtained collateral or assignments of collateral from certain non-debtor parties. But, the
Guaranty, as a direct obligation of the Debtor, is unsecured.
3
According to the Class Plaintiff Representatives own motion, they individual paid
membership deposits ranging between $7,500 and $205,000. See Class Plaintiff
Representatives Venue Transfer Request (D.I. 69), at 3-4. Accordingly, it is
mathematically impossible for the aggregate value of the Class Plaintiff Representatives
alleged claims to exceed the amount of Dr. Rushs claim.
4
Just minutes before this Joinder was due, the recently formed Official Committee of
Unsecured Creditors (the Committee) filed a pleading joining the Venue Transfer
Requests and expressing support for changing venue of this bankruptcy case. Although
Dr. Rush has not had the opportunity to fully digest the Committees filing and reserves


3

2. Dr. Rush opposes transfer of this case and respectfully submits that the
interests of the Debtor, its estate, its creditors and other parties in interest are best served by this
Court retaining venue of this case. Furthermore, Dr. Rush believes that this Court is both a
convenient and accessible forum for him and other significant parties in interest.
3. Since September 2010, Dr. Rush has made multiple advances of funds in
the aggregate principal amount not less than $3,750,000, which advances have benefited the
Debtor and its affiliates. These loans from Dr. Rush have provided the Debtor and its affiliates
with much needed liquidity during a period in which they have been embroiled in caustic
litigation and public disputes, largely initiated by a subset of disgruntled Club members. Given
the Debtors current precarious situation, brought on in large part as a result of such events, Dr.
Rush therefore is among the creditors with the most riding on the success or failure of the
Debtors reorganization.
4. Dr. Rush understands and believes that the Debtors best prospects for a
successful reorganization are in this Court. While the judges and staff of the United States
Bankruptcy Court for the District of Colorado are no doubt every bit as capable and diligent as

the right to respond further to it, Dr. Rush respectfully submits that any positions the
Committee asserts in support of transferring venue should be substantially discounted by
this Court. Dr. Rush notes that (i) at least two members of the Committee (Cheryl M.
Foley and Kevin B. Allen) are also named class-plaintiffs and movants on one of the
Venue Transfer Requests; and (ii) at least one member of the Committee (Kenneth
Ulicky) is a Board Member of the CMD, which has made its own Venue Transfer
Request and has joined in that of the named class-plaintiffs. Dr. Rush notes further that
he timely submitted a completed questionnaire and appeared through counsel with his
proxy at the United State Trustees Committee formation meeting held on July 6, 2012,
but was denied a seat on the Committee. As presently constituted, six of the seven
Committee members are current or one time property owners or holders of membership
interests. The remaining Committee member is a trade creditor, who was not present in
person or by proxy at the Committee formation meeting. No member of the Committee
is similarly situated to Dr. Rush.

4

those of this Court, Dr. Rush believes that the poisonous atmosphere created by many of the
dissenting members and property owners and certain others, as well as unfounded claims that
have been reported in the local press in Colorado, has largely choked off the Debtors access to
funding and investment sources in or near Colorado. Dr. Rush understands that the Debtors best
chance to obtain additional funding and investment is likely from East Coast-based lenders that
frequently lend to or invest in debtors in this Court and whose ability to objectively evaluate the
Debtor (and any reorganization plan it proposes) on its merits has not been tainted by long
exposure to these events and misinformation that has been spread in the Colorado press. Indeed,
Northlight Financial, LLC, the Debtors proposed debtor-in-possession lender, manages various
funds from offices located in nearby New York, New York.
5. Additionally, retaining the bankruptcy case in Delaware will not cause Dr.
Rush or other significant parties in interest undue burden or expense. Dr. Rush, who is located in
California, has already retained the undersigned Delaware counsel to assist him in this
bankruptcy and related matters. Indeed, a venue change to Colorado at this point would cause
Dr. Rush to incur additional unnecessary expense because of the need to retain other counsel in
Colorado and bring a new set of lawyers up to speed in this fast moving case.
6. Furthermore, from a convenience standpoint, it makes little different to
Dr. Rush and other West Coast-based creditors whether the case remains pending in this Court or
is transferred to Colorado.
5
This Court (and presumably the Colorado bankruptcy court) permits
creditors to appear and be heard by telephone in appropriate circumstances. And, if there is a

5
Dr. Rush notes that the Kogan Law Firm, APC, which identified a Los Angeles,
California address, recently appeared in the case on behalf of certain unidentified
homeowners. See Notice of Appearance and Demand for Service of Papers, filed July 10,
2012 (D.I. 115).

5

need for Dr. Rush or his California-based attorneys to appear in person, a lengthy plane ride will
be involved whether the case goes forward here or in Colorado.
7. Conversely, the recently-formed Committee has hired not Colorado
based counsel but the sizeable law firms of Munsch Hardt Kopf & Harr, P.C., based in Texas,
and Saul Ewing LLP, with 11 locations along the East Coast. Thus, the Committee now has
more than 340 lawyers at its disposal (and, subject to approval of appropriate applications, being
paid for by the Debtors estate), none of which is located in Colorado, but several of which are
located here in Delaware.
6
Moreover, because (as noted in footnote 3 above) there is substantial
overlap between the membership of the Committee and the movants who have filed the Venue
Transfer Requests, it can be presumed that the constituents on behalf of which the movants
purport to act will be adequately represented here in Delaware by the Committee.

6
Furthermore, based on a review of each firms website (www.munsch.com and
www.saul.com), neither law firm appears to have a single attorney who is an active
member in good standing of the Colorado bar. This fact undermines any argument that
the Committees professionals would somehow be better situated to represent the
unsecured creditors interests were the case transferred to the District of Colorado.

6

WHEREFORE, for all of these reasons and those stated in the Debtors Objection,
in which Dr. Rush joins, Dr. Rush respectfully requests that the Venue Transfer Requests be
denied and that the Court grant such other and further relief to Dr. Rush as is just and equitable.

July 11, 2012

MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Gregory W. Werkheiser
Gregory W. Werkheiser (#3553)
gwerkheiser@mnat.com
Daniel B. Butz (#4227)
kdawson@mnat.com
1201 N. Market Street. 18th Floor
P.O. Box 1347
Wilmington, DE 19899-1347
(302) 658-9200
Counsel for Jeffrey Rush, M.D., as Trustee of the
Rush Family Trust UTD May 8, 1985

In re
CORDILLERA GOLF CLUB, LLC
1
dba The
Club at Cordillera,
Debtor.
Chapter 11
Case No. 12-11893 (CSS)
Hearing Date: July 16, 2012, 10:00 a.m.
Objection Date: July 11, 2012
Related Docket Nos. 69, 77, 78, 95 & 118
SOUTHLIGHT TRUST IS JOINDER TO OBJECTION OF DEBTOR TO THE
MOTION OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES
JACKSON, MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS
REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS,
TO TRANSFER VENUE AND RELATED MOTIONS AND JOINDERS BY
ALPINE BANK, CPOA AND THE DISTRICT
Southlight Trust I (Southlight), an affiliate of Northlight Financial LLC, is the
proposed post-petition lender to the Debtor and Debtor in Possession, Cordillera Golf Club, LLC
dba The Club at Cordillera (the Debtor). Southlight hereby submits this Joinder (the
Joinder) to the Omnibus Objection of Debtor [D.I. 118] (the Objection) to the Motion of
Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson and Kevin B.
Allen, individually and as Representatives of a Certified Class of Members, to Transfer Venue
and Related Motions and Joinders by Alpine Bank, CPOA and the District (collectively, the
Transfer Venue Motion), and states as follows:
1. Southlight opposes a transfer of this bankruptcy case. Southlight is located in
New York. Southlight has already retained Delaware bankruptcy counsel to represent it in this
bankruptcy case. It is more convenient for Southlight, as DIP lender, if the bankruptcy case
remains pending in the Delaware bankruptcy court, in the same time zone where its principal
1
The Debtor in this chapter 11 case, and the last four digits of its employer tax identification number, is XX-
XXX1317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202, Edwards, Colorado
81632.
2
office is located. Further, it is more convenient for Southlight and its non-bankruptcy counsel in
this matter (located in the Midwest) to travel to Delaware for various hearings than to travel to
Colorado. In the end, it will be less expensive for Southlight to participate in the Delaware
proceedings, and therefore, the Debtor, since the Debtor will be obligated to reimburse
Southlight for its reasonable expenses.
2. The DIP loan documents also contemplate that Southlight may provide "exit"
financing to the Debtor. Although not currently bound to provide such financing, Southlight
expects to have significant ongoing negotiations and involvement in the case. Keeping the case
in Delaware will better facilitate Soughlight's participation.
3. Through this Joinder, Southlight joins the Objection and expressly adopts the
arguments raised therein.
3
WHEREFORE, based on the arguments set forth in the Objection and those above,
Southlight respectfully requests that the Court enter an order (i) denying the Transfer Venue
Motion, and (ii) granting Southlight such further relief as it deems just and proper.
Dated: July 11, 2012
WOMBLE CARLYLE SANDRIDGE & RICE, LLP
/s/ Ericka F. Johnson___________________
Matthew P. Ward (Del. Bar No. 4471)
Ericka F. Johnson (Del. Bar No. 5024)
Telephone: (302) 252-4338
Facsimile: (302) 661-7711
-and-
DICKINSON WRIGHT PLLC
Harlan Robins, Esq.
15 N. 4th Street
Columbus, OH 43215
Telephone: (614) 744-2575
Facsimile: (248) 433-7274
-and-
Kristi A. Katsma, Esq.
Dickinson Wright PLLC
500 Woodward Avenue, Suite 4000
Detroit, MI 48226
Telephone: (313) 223-3500
Facsimile: (313) 223-3598
Email: kkatsma@dickinsonwright.com
Counsel for Southlight Trust I

DM3\2236792.1

In re ) Chapter 11
)
CORDILLERA GOLF CLUB, LLC, ) Case No. 12-11893 (CSS)
d/b/a The Club at Cordillera, )
) (Joint Administration Pending)
Debtors. ) Hearing Date: July 16, 2012 at 10:00 a.m.
) Related to 69, 77, 78, 95, 117 and 118

JOINDER OF DAVID A. WILHELM TO OBJECTION OF DEBTOR TO (I) MOTION
OF CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON,
MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS
REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER
VENUE (D.I. 69), (II) MOTION OF CORDILLERA PROPERTY OWNERS
ASSOCIATION, INC. AND CORDILLERA METROPOLITAN DISTRICT TO
TRANSFER VENUE TO COLORADO AND JOINDER IN THE MOTION OF CHERYL
M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON, MARY
JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES
OF A CERTIFIED CLASS OF MEMBERS, TO TRANSFER VENUE (D.I. 78), AND (III)
JOINDERS OF ALPINE BANK IN VENUE TRANSFER MOTIONS (D.I. 77 & 95)

David A. Wilhelm, by and through his undersigned counsel, hereby submits this joinder
in the objection (D.I. 118) (the Objection) of Cordillera Gold Club, LLC, debtor and debtor-in-
possession (the Debtor), to: (i) the Motion of Cheryl M. Foley, Thomas Wilner, Jane Wilner,
Charles Jackson, Mary Jackson And Kevin B. Allen, Individually And As Representatives Of A
Certified Class Of Members, To Transfer Venue (D.I. 69); (ii) the Motion Of Cordillera Property
Owners Association, Inc. And Cordillera Metropolitan District To Transfer Venue To Colorado
And Joinder In The Motion Of Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson,
Mary Jackson And Kevin B. Allen, Individually And As Representatives Of A Certified Class Of
Members, To Transfer Venue (D.I. 78); and (iii) Joinders Of Alpine Bank In Venue Transfer
Motions (D.I. No. 77 and 95) (collectively, the Venue Transfer Requests). Mr. Wilhelm joins
in and incorporates by reference the arguments presented in the Debtors Objection, and in
support, states as follows:

2
DM3\2236792.1
1. Mr. Wilhelm is a substantial equity owner in the Debtor and also holds a secured
claim against the Debtors in the approximate amount of $7,000,000.
2. For the reasons set forth in the Debtors Objection, Mr. Wilhelm opposes transfer
of venue of this case from Delaware and respectfully submits that the interests of the Debtor, its
estate, its creditors and other parties in interest are best served by this Court retaining venue of
this case.
WHEREFORE, Mr. Wilhelm, joins in the Debtors Objection and respectfully requests
that the requests that the Venue Transfer Requests be denied and that the Court grant such other
and further relief to the Debtor and Mr. Wilhelm as is just and equitable.

Dated: July 11, 2012 DUANE MORRIS LLP
/s/ Richard W. Riley
Richard W. Riley (No. 4052)
Telephone: (302) 657-4900
Facsimile: (302) 657-4901
E-Mail: rwriley@duanmorris.com

and

James J. Holman (No. 5617)
Duane Morris LLP
30 South 17th Street
Philadelphia, PA 19103-4196
Telephone: (215) 979-1530
Facsimile: (215) 689-2562
E-mail: jjholman@duanemorris.com

Counsel to David A. Wilhelm

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) Chapter 11
CORDILLERA GOLF CLUB, LLC, )
Dba The Club at Cordillera, )
) Courtroom No. 6
) Wilmington, DE 19801
)
)
) July 16, 2012
) 10:00 A.M.


APPEARANCES:

For the Debtor: Young Conaway Stargatt & Taylor
By: JOSEPH BARRY, ESQUIRE
1000 West Street, 17
th
Floor
(302) 571-6600

Foley & Lardner LLP
By: CHRISTOPHER CELENTINO, ESQUIRE
402 West Broadway, Suite 2100
San Diego, California 92101
(619) 234-6655

ECRO: LESLIE MURIN

Telephone: (302) 654-8080



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For Cordillera Property Ashby & Geddes
Owners/Cordillera By: RICARDO PALACIO, ESQUIRE
Metropolitan District: 500 Delaware Avenue
(302) 654-1888

Sherman & Howard LLC
By: PETER CAL, ESQUIRE
633 Seventeenth Street
(303) 299-8244

For Alpine Bank: Ballard Spahr
By: VINCE MARRIOTT, ESQUIRE
1735 Market Street
Philadelphia, Pennsylvania 19103
(215) 665-8500

For the Committees: Munsch Hardt
By: JOSEPH WIELEBINSKI, ESQUIRE
3800 Lincoln Plaza
Dallas, Texas 75201
(214) 855-7561

For Class Member Richards Layton Finger
Representative: By: MARK COLLINS, ESQUIRE
(302) 651-7531

For David Wilhelm: Duane Morris
By: JAMES HOLMAN, ESQUIRE
30 South Street, 17
th
Floor
Philadelphia, Pennsylvania 19103
(215) 979-1530

For Dr. Rush/Rush Morris Nichols Arsht & Tunnell
Family Trust: By: DANIEL BUTZ, ESQUIRE
1201 North Market Street
(302) 658-9200

For DIP Lender: Womble Carlyle
By: MATTHEW WARD, ESQUIRE
222 Delaware Avenue
(302) 252-4320

3

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INDEX

Page

OPENING STATEMENTS
For the Debtor, by Mr. Barry 5
For Class Member Representatives, by Mr. Collins 10
For CPOA and Cordillera Metro District, by Mr. Cal 20
For Alpine Bank, by Mr. Marriott 23
For the Debtor, by Mr. Celentino 28
For Mr. Wilhelm, by Holman 39
For Dr. Jeffrey Rush, by Mr. Butz 41

Further
WITNESS(s) FOR THE Direct Cross Redirect Recross Redirect
DEBTOR:
Nanette Kuich 43 61 71
Harold Bordwin 75 84 113
109
Daniel Fitchett 120 135 164
156

CLOSING ARGUMENTS:
For Class Members, by Mr. Collins 167
For CPOA/Cordillera Metro District, by Mr. Cal 173
For Alpine Bank, by Mr. Marriott 175
For the Committee, by Mr. Wielebinski 176
For the Debtor, by Mr. Celentino 182

DECISION 194


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THE COURT: Please be seated.
MR. BARRY: Good morning, Your Honor. For the
record, Joseph Barry of Young Conaway Stargatt & Taylor on
behalf of the Debtor. Your Honor, with me in the courtroom
is my colleague, Donald Bowman, as well as Christopher
Celentino from Foley & Lardner.
THE COURT: Welcome.
MR. BARRY: Mr. Celentino will be presenting the
Debtors case. Your Honor, we do have a couple of
housekeeping matters that Id like to get out of the way
before I cede the podium to the movants side to put on their
opening statements.
Following Thursdays status conference, Your Honor,
we had, we continued to work through the joint stipulation of
facts which we submitted to Chambers on Friday. We had a
slight disagreement regarding how evidence was going to be
admitted into Court. It was the Debtors understanding that
to the extent documents were going to be admitted, a witness
will be present to authenticate and admit the documents and
information through that witness. The other side had a
difference of opinion, weve actually worked through that
issue. Weve entered into a stipulation regarding the
admissibility of the movants documents.
I think the best thing for me to do, Your Honor, is

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sort of read from the email that the parties have agreed to.
I have a copy highlighted if Your Honor would like to have it
in writing in front of you as I read through it, but
otherwise I can simply read it into the record.
THE COURT: No, let me have it first.
MR. BARRY: Again, Your Honor, with the
understanding that other than one witness, the movants are
not presenting any witnesses in support of their documents.
The Debtor is not willing, is willing to not object to the
Court admitting the documents included in the movants
binder, with the exceptions Ill note in a minute, Your
Honor, solely and for the purposes of todays hearing, and of
any proceeding and for no other purpose without the need for
a witness to be present to authenticate such document, for
purposes of the hearing only, we will stipulate that the
documents the movants are submitting are what they purport to
be and the post-documents speak for themselves, with the
understanding that counsel will likely be referring to and/or
quoting from portions of the documents.
The Debtor has asked for, and the other side has
agreed to a general stipulation with respect to these
documents, that the Debtor is not stipulating that: 1) any
document is or is not, in force operative document; 2) that
any document has or has not been amended or superseded; 3)
that any document is or is not complete; 4) that any document

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is relevant for any purpose; and 5) all of their objections
are reserved. For example, if there is an argument that
certain membership document is a currently operative
document, we, the Debtor, the parties have agreed that the
Debtor is not stipulating that such membership document is or
is not currently the operative document. The other side may
argue that it is the operative document. The Debtors are not
stipulating that it is. We are, similarly, the Debtor is not
stipulating to the other sides characterization of any
document that may be made in oral argument today, Your Honor.
I noted earlier that there were a couple of exceptions to the
documents that were listed on the document list by the
movants side. Those, Your Honor, are Ms. Foleys
Declaration.
THE COURT: Im sorry. Go ahead.
MR. BARRY: Your Honor, those are the Declaration of
Cheryl M. Foley, which is 35 in the movants binder, and the
Declaration of Lois M. VanDussen (phonetic), which is 37.
Neither Ms. Foley nor Ms. VanDussen are going to be present
today. The Debtor has asked that those be excluded from
todays presentation given their unavailability or
unwillingness to come to the hearing for cross-examination,
and the other side has agreed. There is a third declaration
of Nanette Kuich, and I apologize if Im butchering that
name, but my understanding is she is present in the courtroom

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and available for cross-examination. The other side has
designated her declaration as an exhibit. Similarly, we are,
we have, we have listed declarations from Mr. Bordwin and Mr.
Fitchett, they similarly are present in the courtroom for
cross-examination.
THE COURT: So the declarations of Ms. Kuich and Mr.
-- who is your witness?
MR. BARRY: Fitchett and Mr. Bordwin.
THE COURT: Are going to be admitted?
MR. BARRY: Correct, Your Honor.
THE COURT: Subject to cross. And Ms. Foley and Ms.
VanDussens are not going to be admitted.
MR. BARRY: That is correct, Your Honor. Two other
housekeeping matters, Your Honor. We filed, we being the
Debtor, filed on Friday a demonstrative. We wanted to give
parties an advance preview of a demonstrative that well be
using today in connection with Mr. Fitchetts testimony, its
essentially an extrapolation from the schedules of assets and
liabilities. We did provide the other side with a copy of
the schedules as well as the Court. Theyre rather
extensive. So weve done what is again essentially a
demonstrative for use in todays proceedings that is a
distillation of some of the information thats on the
schedules.
THE COURT: I did not get a copy of that, right?

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MR. BARRY: We did send a copy over to Chambers on
Friday, Your Honor, but we do have extra copies if I could
approach.
THE COURT: Yes please.
MR. PALACIO: Your Honor, just simply for the record
and for Your Honors benefits, one of the witnesses, the
witness for the moving party, her last name is pronounced
kick (phonetic), Nanette Kuich.
THE COURT: I apologize.
MR. BARRY: My apologies. Lastly, Your Honor, last
night the movants communicated to us --
THE COURT: Im sorry, I just got distracted. What
did you just hand me? You filed, you handed me the notice of
filing of excerpt?
MR. BARRY: Yes, Your Honor, thats our
demonstrative.
THE COURT: All right. Okay.
MR. BARRY: And, again, last night we were advised
that the movants had a supplement to their exhibit list. Im
not sure if that was sent over to Chambers or not. Theres
five additional documents that have been designated. The
Debtors are just reserving their rights with respect to those
documents. They werent a part of the original exhibit list.
Weve not stipulated to their admissibility pursuant to the
stipulation that we just read into the record, one of which

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is the transcript, the deposition transcript, the
30(b)deposition of Mr. Fitchett who is actually in the
courtroom today. So, my understanding is to the extent
thats utilized in Court today, it will be for potential
impeachment purposes.
With that, Your Honor, that concludes our
housekeeping matters, and Ill cede the podium to the
movants side to begin their opening statements.
MR. BARRY: Thank you, Your Honor.
MR. COLLINS: Good morning, Your Honor.
THE COURT: Good morning.
MR. COLLINS: For the record, Mark Collins of
Richards Layton and Finger on behalf of the Class Member
Representatives. Your Honor, we are here on two motions to
transfer venue. One, by my clients, the Class Member
Representatives, and the other by the Cordillera Property
Owners Association, and the Cordillera Metropolitan District.
Those two motions were joined in by the Official Committee of
Unsecured Creditors and Alpine Bank. We have agreed, Your
Honor, to limit our time so that each of us can speak to Your
Honor in our opening statements, so well have a number of
the professionals representing the different groups of
creditor constituencies addressing Your Honor in opening.
Your Honor, to set the stage, the basic proposition

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pursuant to 28 U.S.C. 1412 is that its the movants burden
to show by a preponderance of the evidence that the Debtors
bankruptcy case should be transferred in the interest of
justice or for the convenience of the parties. In making
that decision, as opposed to a discrete proceeding within a
chapter 11 case, courts examine whether the transfer of venue
will promote efficient administration of the estate, judicial
economy, timeliness and fairness.
To help guide that equitable inquiry, the courts
look to a number of well known factors. And when you review
the stipulation of facts and apply them to the reported case
factors, whether its a 12 factor test, six factor test, a
four factor test, you come to the same obvious conclusion.
The center of gravity of this case, which Judge Walsh
referenced in a case many years ago called Ernst Home
Centers, in fact, what I quote as the natural venue of this
case, which is rare to find in cases typically filed in the
District of Delaware is the District of Colorado. And the
convenience of the parties and interest of justice is best
served by transferring this case to the Bankruptcy Court for
the District of Colorado.
By way of opening, Your Honor, Ill try to summarize
the uncontested facts and stipulated facts, along with
argument, my argument as to the relevance to the motion
before you today. And Ill set them up in four primary

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categories.
First, is the nature and type of assets at issue and
their location. This case involves a golf club and other
recreational facilities located in Eagle County, Colorado.
The facilities consists of several golf courses, pools,
tennis courts and club houses. And in many ways, this case
is akin to a single asset real estate case. The primary
asset of the Debtor is real estate it owns in Cordillera and
the recreational improvements made to that real estate in
order to attract members to join the club, to pay their
initial deposit and become dues paying members. As a result,
the real estate asset at issue in this case is certainly
unique, and theres certainly an interest by the Cordillera
community, including the surrounding individual homeowners,
the club members and the local municipalities that rely upon
tax revenue from the Cordillera Club and the outcome of this
case. As stipulated, the Debtor has no businesses or
operations outside of the Eagle County.
Second factor, proximity of the Debtor and its
principals to this Court. The Debtor is about 100 miles away
from the Bankruptcy Court in Colorado, which is located in
Denver, and is about 1900 miles away from the Bankruptcy
Court here in Wilmington, Delaware. The Debtors CEO is a
Colorado resident. David Wilhelm, the individual that
indirectly owns all of the equity interest in the Debtor and

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controls the Debtor also resides in Colorado, and has an
office at the Debtors corporate offices in Colorado. The
Debtors books and records, officers, and general employees
are all located in Colorado. While the Debtors lists
location of their higher professionals, that has never been a
material factor in any transfer of venue case, nor should it
be. Professionals travel, thats part of their job.
Proximity, third factor, proximity of creditors of
every kind to the court. In order to use the facilities, you
must become a member of the club, by, among other things,
completing a membership application, and paying a deposit.
The class members assert and the Debtors dispute, that the
Debtors, that they have claims against the Debtors in excess
of $62,000,000 and assert that they are in the aggregate the
largest creditors of the Debtors estates. Over 34 percent
of the clubs members are citizens of Colorado. Over 50
percent of the Clubs members have their primary residences
in Arizona, California, Colorado and Texas. Over 50 percent
of the clubs members own a home that is located near the
Cordillera Club. The movants assert, and this fact is
contained in movants Exhibit 41, that less than one-half of
one percent of the members are located in Delaware. The
Debtors lender, Alpine Bank, is a locally owned and operated
bank in Colorado. It has no offices or operations outside of
Colorado. Every member of the Creditors Committee has a

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residence or a place of business in Colorado. Fifty-four
percent of the more than 5,000 persons listed on the Debtors
creditor matrix had a Colorado mailing address. Only .4
percent have a Delaware mailing address. Eleven of the 20
largest unsecured creditors listed on the Debtors schedule,
the 20 largest unsecured creditors are from Colorado, none
are from Delaware. In fact, all of the major creditor
constituencies in this case have filed their own motion or
have joined in this motion, including Alpine Bank, the
Debtors lender, the Official Committee of Unsecured
Creditors, the Cordillera Property Owners Association, and
the Cordillera Metropolitan District, and my client, the
Class Member Representatives who are leading the class
plaintiffs litigation in Eagle County, Colorado.
Fourth factor, pending litigation involving the
Debtor. Prior to the commencement of this bankruptcy case,
my clients member representatives on the one hand, and the
Debtors and Mr. Wilhelm, and other Wilhelm controlled
entities, on the other hand, commenced two separate lawsuits
in Colorado State Court. Per Your Honors request, Ill
provide a brief summary of the separate lawsuits.
First, the CPOA/CTC ligation. On May 24, 2011, the
Debtor, Mr. Wilhelm and certain affiliates with the Debtor
and controlled by Mr. Wilhelm, commenced the first lawsuit
against the CPOA and the Cordillera Transition Corporation in

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Colorado State Court. The plaintiffs in that case, the
Debtors and Mr. Wilhelm and the affiliates asserted seven
causes of action, including tortious interference of
contract, tortious interference of prospective business and
economic advantage, violations of the Colorado Organized
Crime Control Act, fraud, fraud inducement, civil conspiracy
and defamation. While the allegations are certainly far
reaching, in sum these causes of action all relate to the
alleged actions of CPOA and CTC, an orchestrated scheme to
discredit the plaintiffs insight, club members to resign
from the club, boycott the clubs facilities, remove current
ownership and purchase the club at a discounted price. As
damages, the plaintiffs seek $96,000,000. Not surprisingly,
the answer to the complaint filed by the CPOA and CTC, denied
each and every one of these allegations. This litigation is
still pending in Colorado State Court and is proceeding as
the Debtors are the plaintiffs. The parties are in the midst
of discovery and trial is set for April 1, 2013.
My clients, Your Honor, Member Representatives,
commenced the second suit in Colorado State Court on June
20
th
, 2011, against the Debtor, David Wilhelm, his son
Patrick, and another Wilhelm controlled entity. The class
and subclass were each conditionally certified on November
15th, 2011. The class includes all members of the club who
paid membership deposits upon joining the club and also paid

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their 2011 dues. The subclass includes all members of the
club who paid a $30,000 deposit to convert their memberships
to premier memberships. Of the 621 members in the class,
only 13 members opted out of such class. And the deadline to
opt out was June 8
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, 2012. Since the commencement of the
class action, the complaint has been amended three times.
The third amended complaint alleges 12 cause of action
against the class action defendants. Such causes of action
include breach of contract, promissory estoppel, false
representation, constructive trusts, breach of duty of good
faith and fair dealing, four separate causes of action
relating to violating or aiding and abetting the Colorado
Securities Act, fraudulent representations and omissions of
act, breach of fiduciary duty, and violations of the Colorado
Consumer Protection Act.
In sum, the Member Representatives allege that the
class action defendants breached their member, breached the
membership agreements, fraudulently induced the club members
to pay their 2011 dues, and then misused those funds that
were intended to operate the club. The class action seeks at
least $12,000,000 in damages, certain proponents of which may
be subject to treble damages under Colorado law.
From the outset of the class action, the members
were concerned that club dues and other revenues were being
improperly used by the Debtor and its controlled parties. To

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that end, the Member Representatives sought and obtained a
TRO in the Colorado State Court that precluded the Debtor and
its controlled parties from improperly spending dues
collected by the club. Specifically, the TRO prohibited the
defendants from using club dues for any purpose other than
the necessary maintenance and operation of the clubs four
golf courses and related facilities. The Colorado State
Court subsequently and repeatedly extended the TRO. On
December 2, 2011, after conducting an audit, the class
members assert that Wilhelm and the other class action
defendants had taken more than $1.25 million from the
members dues to pay themselves management fees, severance
payments and interest, including the severance payment to Mr.
Wilhelms son of $60,000, as well as pay the legal fees
incurred by the Debtor and the nondebtor affiliates in the
CPOA/CTC litigation that I referenced earlier.
And as a result, the members filed a motion seeking
to have the three class action defendants held in contempt
for violating the TRO. The contempt hearing was originally
set to occur in April of 2012; however, prior to that time,
the class action defendants filed a notice of removal seeking
to remove the Colorado State action to the Colorado Federal
District Court. The club member representatives opposed that
removal for many of the same reasons that theyre opposing or
that theyre seeking to transfer the venue of this case to

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Colorado. Ultimately the Federal District Court refused to
exercise discretionary jurisdiction and remanded the class
action back to the Colorado State Court. In doing so, the
Colorado Federal District Court held them on other things,
that the recreational activities at issue were all located in
Colorado, the contracts at issue, including the membership
agreements, were most likely executed in Colorado and was
governed by Colorado law, the contracts related to the
premier memberships exclusively provided that Colorado law
applies to any dispute. And there was a clear nexus between
Eagle County, Colorado, the class members, the class action
defendants, and the events at issue in more than 215 of the
class members or greater than 33 percent of the class were
Colorado citizens.
After the remand, the hearing on contempt motion was
rescheduled for July 20th, 2012, just a few days from now.
However, on June 26th, the Debtors obviously filed a chapter
11, that stayed the class action at least against the Debtor
entity, not against the nondebtor insiders. On July 2nd,
the Debtors filed a complaint seeking to restrain the class
action plaintiffs from proceeding in the contempt action
against nondebtor insiders. They did so on an emergency
basis less than 24 hours notice. There was a hearing on
July 3 before Judge Gross where he denied the request for
emergency TRO. As a result, the contempt hearing is

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scheduled to go forward on July 20
th
against the nondebtor
defendants. Trial on that class action is set also for this
time March 11, 2013.
So, Your Honor, in addition to that background and
the facts supporting those four groupings of factors, I would
note, Your Honor, that we dont know the outcome of this
case. We don't know if this will be a reorganization or a
liquidation. There certainly is significant litigation and
acrimony between the community of Cordillera, including the
clubs own members and the surrounding property owners, and
the Debtors, and those individuals that control the Debtors.
We also know that the Debtors need DIP financing, and the
only way they can obtain that DIP financing is through a
priming financing, DIP financing on a contested basis where
the DIP loan would charge 16 percent interest, with default
interest of 6 percent more for a total of 22 percent
interest, in addition to a 2 percent fee, a very significant
rate of return.
Those two factors certainly put into question
whether or not this Debtor is capable of reorganizing, or
whether theyll be forced to liquidate. We do know that the
Debtor is in the process of selling one of the three courses,
the mountain course. So we do know that sales of real estate
assets will be at issue in this chapter 11 case.
In summary, Your Honor, the nexus between the Debtor

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and its creditors with Colorado, in the interest of Colorado
and the outcome of this case are so significantly greater
than they are with Delaware which is limited to the fact that
the Debtor entity is a Delaware formed limited liability
company that equity, justice and the convenience of the
parties will certainly be served by transferring this case to
the District of Colorado. Thank you, Your Honor.
THE COURT: Youre welcome. Next.
MR. PALACIO: Your Honor, for the record, Ricardo
Palacio of Ashby & Geddes on behalf of the CPOA and the
Cordillera Metro District. I have with me Peter Cal from
Sherman and Howard. Hes been admitted pro hac vice, if he
may, Your Honor, hell present argument.
THE COURT: Of course.
MR. PALACIO: Thank you, Your Honor.
MR. CAL: Good morning, Your Honor, Peter Cal from
the law firm of Sherman & Howard in Denver, Colorado. I
represent the Cordillera Metropolitan District and the
Cordillera Property Owners Association Inc. In Court today
with me is Nanette Kuich, she is the president of the board
of directors of the Cordillera Metropolitan District. In
addition because of the importance of this hearing to the
district and the CPOA, outside general counsel for the
district and the CPOA, Allen Pogue (phonetic) is also
attending todays hearing.

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Your Honor, I want to thank you for the honor and
privilege of allowing me to participate in this bankruptcy
case in the United States Bankruptcy Court for the District
of Delaware and in Your Honors courtroom. I concur with the
very persuasive summary of the evidence that has been made by
Mr. Collins. Im going to try to focus in particular on a
few other issues. And I want to start, Your Honor, first
with the unique nature of this Debtor. Its very different
than many of the other national types of cases that are filed
in this courtroom. This is not a case about a retailer who
has products that are sold throughout the country. Its not
a case about a financial company, its not a case about a
service company that provides services throughout the
country. This Debtor provides the opportunity to play golf
in a scenic setting on golf courses in Cordillera, Colorado.
Thats all it does. Associated with that golfing experience
is the opportunity to own residences in the Cordillera
community. For many of the people, the retirees or
otherwise, its their primary residence. I believe Mr.
Collins summarized the number. Even for those for whom it is
a secondary residence, Your Honor, a vacation home, they have
selected Eagle County, Colorado and the Cordillera community
as the place where they go for a break, for a respite. They,
those members have selected Colorado as the place where they
want to vacation.

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I also want to quickly summarize a few of the points
that I think that will come, that were made, and will be
introduced through the deposition testimony, well through the
direct testimony of Mr. Fitchett, the Debtors Chief
Executive Officer, and who was designated as the Debtors
30(b)(6) witness, so his testimony on Friday is binding on
this Debtor, Your Honor.
And ultimately I would, with all due respect, I
would suggest that the Debtors selection of a Delaware venue
is really for an improper purpose, and that part of the
motivation is to create distance and to escape from the
Colorado Bankruptcy Court, to escape the local controversies.
Theres a suggestion, its implicit if not explicit that
somehow the Colorado Bankruptcy Court is incapable of giving
them a fair hearing. In fact, the CEOs testimony Your Honor
was the primary reason was because of the acrimony that
exists within the local region as well as Colorado that is
surrounding the club and their members. The Debtors
business operations are in Colorado and no place else.
Thats the CEOs testimony. The Debtors assets are in
Colorado. Mr. Fitchett testified even as to these
receivables, that may or may not be due for members, Mr.
Fitchetts testimony is the asset is part of the business
that is located in Colorado. Mr. Fitchetts testimony is
that prior to this hearing in the first several weeks of this

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case, he has travelled to or spent four days in Delaware on
the first two hearings that have been scheduled. So then
yesterday and today adds another two days. I don't know
whether he intends to be here on Thursday.
Your Honor, in terms of the factors and of whether
you apply a six factor test or a 12 factor test, I agree with
Mr. Collins that that the 12 factor case, the 12 factors are
typically used for discrete adversary proceedings, there's no
set limit on the number of factors, but certainly the
application of the factors to an entire chapter 11 case
versus the application of the factors to a discrete adversary
proceeding is different. And I think as we introduce the
evidence today, Your Honor, you will see how those factors
have to be applied a little bit differently.
In terms of commenting on the importance of the
litigation, I would suggest, Your Honor, the Debtor told you
how important the Colorado State Court litigation is, when it
filed its emergency motion and sought truly extraordinary
relief on an emergency basis last week. That relief was
denied, but that motion tells you how significant the State
Court litigation is to these bankruptcy cases. And
ultimately, Your Honor, this is a real estate case, and its
a real estate case that is tied to members. And the evidence
will show that regardless of financing, wherever this
financing, wherever this proposed DIP lender is going to come

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from, this case cannot be successfully rehabilitated if the
members are not involved. These golf courses cannot operate
without their members paying dues and these members have all
chosen Colorado as the place for either their primary
residence or their vacation homes. Thank you, Your Honor.
MR. MARRIOTT: Good morning, Your Honor, Vince
Marriott, Ballard Spahr on behalf of Alpine Bank.
THE COURT: Good morning.
MR. MARRIOTT: Good morning. My two predecessors at
the podium have ably I think set the stage, I don't know that
I have much to add. I had intended principally to highlight
what I think is a statement in the Debtors omnibus response
that in my view gets the litigation factors in this case
backwards. And that is to have described the Colorado
litigation as peripheral to the reorganization of the Debtor.
When I believe, as my immediate predecessor just pointed out,
that it is not peripheral, it is both central to the
reorganization if there is to be one, and central to the
reason why this case is in Wilmington rather than in Denver.
I also wanted to point out that the other piece of litigation
that the Debtors seem to treat as more central to where the
case should be and not peripheral, is the complaint that has
been filed against Alpine Bank seeking avoidance of its liens
on personal property. I suggest, Your Honor, that that is in

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fact the peripheral litigation here, both because the
Debtors principal assets are real estate assets, and there
is not a dispute about Alpine Banks lien on the real estate
assets. And second, Your Honor, that complaint will not turn
on some eccentric or unique Delaware law that needs to be
heard in a court sitting in Delaware, it will turn on the
Uniform Commercial Code, which is in effect in Colorado just
as it is in Delaware.
So in terms of what litigation matters in this case,
Your Honor, the central litigation is the Colorado
litigation, the peripheral litigation is the litigation
against Alpine Bank with respect to its security interest.
Thank you.
THE COURT: Thank you.
MR. WIELEBINSKI: Good morning, Your Honor. My name
is Joe Wielebinski, Im with Munsch Hardt, I represent the
Official Unsecured Creditors Committee appointed in this
case. Im here today with my local Delaware counsel, Mark
Minuti, with Saul Ewing. I also want to express my
appreciation for the opportunity to appear before the Court
this morning. Similarly, I want to express my appreciation
for the excellent presentations made by the movants and the
other parties joining in the motion. I think theyve covered
virtually all the issues, so Ill try to cut through this
quickly. The Committee was formed a week ago today, the

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Committee started to look at everything that was presented in
the case, and we certainly saw the venue motions, Your Honor,
and we rapidly came to the decision that the facts in this
case are probably the most clear cut, in our opinion, of
facts supporting the transfer of venue. And so we took pains
to not only join in the emotion, but also to point out to
Your Honor why we thought the venue should be transferred. I
think if you look at it, Your Honor, its very important to
see the sides that are here. I mean this is one of those
cases where you have virtually all the constituents involved.
Importantly, on the side asking for a transfer of venue, you
not only have the senior secured lender and some of the
critical constituent, creditor constituency, but you actually
have a group made up of fiduciaries who have decided that the
best thing in this case in their opinion, and they have an
awful lot to gain or lose in this case, is to move this case
back to Colorado. You have the senior, in the senior secured
lender, somebody that doesn't have, or an entity that doesn't
seem to have the animosity that has been raised as a big
issue in this case. They simply want to get paid, paid as
quickly as possible within the parameters of what the
Bankruptcy Code allows. They dont bring, theyre not
involved in any of the litigation except for an issue
regarding the dispute about their extent and priority of
their lien as to personal property.

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Your Honor, on the Debtors side what youve got is
the Debtor, of course, youve got the principal of the
Debtor, who from our opinion, seems to be smack dab in the
middle of the disputes that are causing so much animosity.
And then you have a few of the local homeowners, and when you
look at the number of homeowners here, its not surprising
that there would be a few that say, I don't really care where
this thing is pending or its not so inconvenient to be in
Delaware or in Colorado. Other than that, the only ones that
are supporting the position, Your Honor, are a professional
who has not yet been retained by the Court, and the other
professionals, I guess, that are already retained and saying
we should stay in Delaware.
Your Honor, youre going to see a lot of evidence
youve heard already about what the factors are, but I think
one thing thats important is if you look at the schedules, I
don't know what the demonstrative is going to show because I
havent seen it yet, but we did a quick summary and we find
that there are seven items of litigation, all of them are in
Eagle County, there are pending. And secured creditors,
theres five in Colorado, six in other states, and zero in
Delaware. Priority creditors, 73 in Colorado, nine in other
states, zero in Delaware. Unsecured creditors, the majority
seem to be in Colorado with approximately six in Delaware.
And then the executory contract parties, three are in

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Colorado, three are in other states, zero in Delaware. I
think youve heard, Your Honor, a number of parties saying
this is essentially a single asset real estate case, and the
contention that the future of this case lies not in Colorado
where the operations are and the employees and the property
itself and the homeowners, but instead where the east coast
financers are located I think is surprising and really not
particularly persuasive. And youll get to hear the
testimony supporting that, Your Honor, but I think that
testimony is going to actually support a transfer of venue.
Your Honor, at the end of the day, besides the factors that
youll weigh and evaluate, one thing we have seen from the
cases, and weve pointed out in our papers is that courts
overwhelmingly recognize that disputes and matters dealing
with real property give rise to specific and unique vested
interest in the home state. And the club, the homeowners
community, the land on which they sit, the public
infrastructure built around it and serving and supporting
these communities, theyre always going to be in Colorado.
The only place you can use your memberships, the only place
where operations occur are in Colorado, and because of that
unique vested interest of Colorado in what is a unique real
estate case, that is a compelling reason why we think this
Court should transfer venue back to the Colorado courts.
Thank you very much, Your Honor.

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THE COURT: Thank you. Anyone else on the movants'
side? All right. Ill hear from the Debtor.
MR. CELENTINO: Thank you, Your Honor, Christopher
Celentino of Foley & Lardner, resident in San Diego,
California, appearing as co-counsel to the Debtor in the
case. I concur with my colleagues in thanking the Court for
my admission to be before you today, and for offering me the
opportunity to present to you today on behalf of the Debtor.
The movants started by pointing out to you that its their
burden to share and prove by a preponderance of the evidence
that this case should be venued someplace else. And the
reason it is their burden, Your Honor, is because this case
is properly venued. And the number one choice and the number
one factor in every single case that theyve cited and every
single case that the Debtor has cited, the number one factor
is the Debtors choice if its properly venued. We have
proper venue here. So the question before Your Honor is can
these movants shoulder the atlas style burden that is on them
to convince you that the preponderance of the evidence
suggests that venue must be someplace else. And the Debtor
submits that they cannot do so.
In their presentations, you didn't hear one word,
and the word you did not hear Your Honor was necessary. The
test is not that it would be convenient, the test is not that
it would be the interest of justice, the test is to take a

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properly venued case and move it, the Court must find by a
preponderance of the evidence, that the upsetting of the
apple cart and that the transfer of venue is necessary for
the convenience of the parties and necessary for the interest
of justice, thats what Jamara (phonetic) means, thats what
Fairfield means, thats what Commonwealth means. And I would
submit, Your Honor, that they didn't indicate the word
necessary to you because they cant prove that. They cant
meet the burden of necessity. And the reason that they cant
meet that burden is because the facts that theyre going to
present to you are capable of multiple meanings. The
inferences that they want you to draw are no more reasonable
than the inferences that the Debtor will want you to draw
from those same facts. And that is what this hearing is
going to be about.
I will start where the Committee counsel left off in
this sense. Its the Debtors view, Your Honor, that
ordinarily the Court would be interested in what a committee
would have to say. But I would submit and the Debtor submits
not in this case. The Committee counsel has indicated to you
theyve been employed for a week, as is clear in the Debtors
papers and as is clear from a review of the notice of
appointment, the Committee is controlled by the movants. The
movants on this motion, Your Honor, are the class members,
excuse me, the class representatives of the litigation class,

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and Ill discus that in greater detail. But those six class
members, class representatives that are the movants, four of
them do not live in Colorado, and the two that do live in
Colorado, have since filing their motion, volunteered to
serve on the U.S. Trustees appointed committee in this case.
I would suggest that the convenience argument that they would
like to pose as it may affect their participation in the case
was waived when those two Colorado residents submitted to the
jurisdiction of this Court by joining the committee, and
acknowledging that they will participate in this case as
members of the committee. Where the committee is controlled
by the class, you can see them as one and the same. And if
thats not clear that theyre one and the same, Your Honor,
it is clear from looking at two documents that the Committee
has already filed with Your Honor, they have already filed an
objection to the appointment of the CRO in which they point
out the acrimony that exists between the class members, Im
sorry, the committee, and the ownership. That is docket 177
at paragraph 7.
In opposition to the Debtors DIP loan which is
coming before Your Honor on Thursday, theyve indicated to
the Court that it is the committees expectation to force a
liquidation in the case. I want the Court to keep that in
mind when we talk about the litigation in Colorado. My
suggestion is that we start with the parties that think venue

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here is proper. We have the Debtor, we have the Debtors
second largest secured creditor, we have the Debtors largest
unsecured creditor, we have four independent homeowners, and
we have the DIP lender. Remember this is the movants
emergency motion on shortened time, and its not right to
characterize the independent homeowners joinder in the
Debtors opposition as they don't care. They say pretty
clearly notwithstanding what Mr. Wielebinski said, they do
care, and they don't think that Colorado is the right venue,
and we will let you know why that is through the course of
todays testimony.
With respect to the necessity that the movants must
prove, remember, Your Honor, as set forth in Visteon, the
convenience of the parties test means that the parties will
be unavailable as witnesses in this proceeding. Ill talk to
you about that in a little bit, but I want you to keep that
in mind. I think the important thing here is that Mr. Cal
made a statement that I want to make sure that Your Honor
understands is not the Debtors statement. Mr. Cal suggests
that the Debtor is before Your Honor because we do not
believe that the bankruptcy Court in Denver could meet out
justice in this case. Youre not going to get that inference
from anything in the Debtors testimony through Mr. Fitchett
or in the Debtors presentation. In fact, Im on the border
of offended by that statement, Your Honor. It would be the

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same thing as me saying the parties telling you that the
interest of justice means you must transfer the case to
Denver is the equivalent of suggesting to you that this Court
cant meet out justice in this case. Of course this case can
meet out justice in this case. And thats why the movants
cannot bear their burden to prove to you that it is necessary
to disrupt the case for the interest of justice, because that
is their burden.
Id like to discuss for a moment the litigation
itself in Colorado. Because Your Honor indicated to us in
your status conference on Thursday, that you were interested
in trying to understand what relationship that litigation has
to the reorganization. I would suggest from a 30,000 foot
level, Your Honor, that in my 25 year career, and I suspect
in your career, this wont be the first case commenced in
this Court that has as one of its elements litigation
someplace else. In fact, in my career, many of the cases
that Ive been involved in in courts all over the country
involved to some degree or another, litigation commenced
against the debtor and typically litigation commenced in a
different form. So theres no surprise about that particular
issue. The existence of litigation someplace else is not
ultimately relevant to this Courts determination on venue,
because it is the movants burden to prove that a properly
venued case must be moved because it is necessary to do so.

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With respect to the case in which the Debtor is
among the plaintiffs, we call that, Your Honor, CPOA/CTC case
remembering that CPOA stands for Cordillera Property Owners
Association and CTC for the Cordillera Transfer Corporation.
The gravamen of that case is that the debtor asserts that the
members not paying dues which is what youre going to hear
about and what Ive already heard a lot about was borne out
of a desire in bad faith to force a liquidation of the
Debtors assets for the benefit of the members at a reduced
price. Thats why the Debtor asserts interference causes of
action. Look at the OCCs position on the DIP financing to
understand whether or not the Debtor might have some belief
in that case. The OCC says theyre here to force a
liquidation. Thats what the Debtor is arguing in that case.
But, Your Honor, the case is about whether or not the boycott
by members that was orchestrated in the Debtors view by the
individuals affiliated with the CPOA and the CTC, whether
its in good faith or bad faith, the Debtors view is that if
its in bad faith, thats an asset of this case. The Debtor
has asserted damages of $96,000,000. Recovery on that case
is peripheral to the reorganization. And Ill explain that
to you in the context of the overall picture.
If the Debtor wins, it will have a big asset. And
if the Debtor loses, it wont. And if theres some middle
ground that comes out of it, that middle ground can be dealt

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with in a plan. I submit that Your Honor has presided over
and confirmed many plans that have alternate treatments based
on alternate outcomes of those litigations that were pending
elsewhere. This wont be the first one. We can provide in a
plan of reorganization for a rehabilitation of this Debtor
that deals with the question of whether we win, the question
of whether we lose, or some alternative scenarios in-between.
There are a few things with respect to the other
litigation case pending in Colorado, as described by Mr.
Collins, that were just not correct. I want to make sure
that the Judge, that Your Honor understands those especially
in light of the fact that I don't believe the movants will be
introducing any evidence to that effect.
First, the argument in that case, that class action
case came about as Your Honor has heard in response to the
Debtors claim against the CPOA and the CTC. In that case,
you heard that there is an assertion of $12,000,000 in
damages, in that case, youve heard that some of the claims
may be subject to treble damages. In our opposition, and in
the declaration of Mr. Fitchett, we point out that the damage
claims are covered by insurance, and the Debtor is being
defended. There are a few things that are not correct about
what Mr. Collins said about the case. Mr. Collins said that
the movants sought and obtained a TRO with the implication
that the Judge ordered the TRO over the Debtors objection.

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Not true. The Debtor and the defendants consented to the
temporary restraining order in that case, and the temporary
restraining order provides that member dues are to be used to
operate the club.
You heard Mr. Collins say that an audit indicated
that $1.25 million worth of those dues were misappropriated
and that a contempt hearing is pending on July 20 regarding
that matter. Not true. The contempt hearing and the
assertion is roughly $390,000 allegedly improperly used, not
a million and a quarter, a big difference because the Debtor
has trade revenue, i.e., nondue revenue that far exceeded the
1.25, far exceeded the 390 and it will be very hard for them
to show either number was not subsumed by the over $2,000,000
in trade revenue in the particular period. So I don't want
the Court to think that the Debtor or the other defendants
have any real concern in that regard.
Third, the suggestion of how important that was
because the Debtor filed an emergency motion denied by Judge
Gross on July 3rd, gives the case much more importance than
it has. Keep in mind, Your Honor, you can see that the stay
that was being sought was for a short period of time, until
the 27th of July, and that short period of time, was to allow
the COO that the Debtor has employed who was acting
independently of Debtors management, to be able to evaluate
what the Debtors role in that litigation should be, pending

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the idea that these folks are pursuing those other defendants
although the matter as stated is against the Debtor.
Id like to suggest, Your Honor, that nobody has
asked the Debtor what it thinks about the litigation. And
despite the fact that they thought to ask the Debtor if the
Debtor would oppose this venue motion, nobody has asked the
Debtor to stipulate or consider a stipulation for relief to
let the class action case go to trial next March as against
the Debtor. In fact, I feel like I may be commencing my own
relief from stay against my client to get to that point where
they can go to Colorado on that class action case and
everybody who says it would be more convenient for them to
testify within the context of what they know, can testify in
Colorado in that case. The outcome of that case is not
relevant or not significantly relevant to the plan in this
case. And the reason for that is obvious, its the same as
every other case that Your Honor has presided over. A plan
can be confirmed to test the feasibility on the best case
scenario for the Debtor, the doomsday scenario for the
Debtor, and some gradations of middle ground, and thats why
the Debtor has a financial advisor who will be here for that
purpose to have that presentation to you.
It was pointed out to you I think as a way of
objecting to the Debtors DIP motion in advance, theres a
complaint about the default interest rate and the like. I

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want to let you know, Your Honor, that this is a
rehabilitation case, and its not a liquidation case. And
the factors that they believe are important to you, will only
apply in a liquidation case, and were going to present to
you why its not a liquidation case. But keep in mind, the
reason that a DIP has been presented on a priming basis is
because: a) Alpine wouldn't work with the Debtor; and b)
because theres a substantial equity cushion in these assets.
This case is about that equity cushion, and in particular the
default rate under the Alpine Loan is 24 percent, its higher
than the DIP loan.
So if I want to summarize my theme so that you
understand, this case is a reorganization case. It is not in
our view a liquidation case. And as a result, as we go
through the factors, youre going to realize something thats
obvious. Whether its 65 percent or 60 percent of the
members live outside of Colorado, the point is a lot of the
members live outside of Colorado. The Debtor has asserted
theyre not creditors, but theyre net Debtors to the Debtor.
And thats pretty straightforward, Your Honor, because in
this particular case, when we get through that member
agreement, one of the things were going to learn about is
for the 60 plus percent that live outside of Colorado, they
represent the Debtors biggest asset. Its not the real
estate in Colorado, its a 30 years contract with those out

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of Colorado residents to pay dues for 30 years at $12,500 or
some other number a year for the course of their obligation.
$2.2 billion in revenue from outside of the state of Colorado
is the asset of this estate, it has nothing to do with the
real estate in Colorado in that sense, which we will argue to
you on Thursday is worth at least $33 million.
So I would submit that the primary asset of this
Debtor is the AR from the 60 percent of the members, $5.7
million of which is past due and the balance is owing under
those contracts. And I would suggest that as you think about
that you understand why the Debtor is proposing that this is
a rehabilitation case and not a liquidation case. I would
suggest, Your Honor, that whether its 55 percent of the
creditors owing money or outside of Colorado like the Debtor
asserts, or whether its 45 percent as the movants assert,
the point is you read a different inference from that. And
the inference I think thats clear from that is this is not a
Colorado centric matter.
And last but not least, it is relevant, Your Honor,
that there is acrimony in Colorado. And the interest of
justice suggests as the joinder of parties who are homeowners
have suggested, that a neutral turf makes the most sense.
And the reason for that, of course is, the parties that are
moving before you will not be able to demonstrate to you that
its truly inconvenient for them to retain counsel and appear

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in these proceedings. And the testimony that they want to
give relates to those Colorado litigations. It doesnt
relate to how the Debtor is going to restructure its over $2
billion worth of future income from the non-Colorado
residents. Thats what the case is about, and thats what
the Debtor will be presenting to you.
THE COURT: Thank you. Anyone else on the Debtors
side? Yes.
MR. HOLMAN: Good morning, Your Honor, James Holman
of Duane Morris for David Wilhelm principal of the Debtor and
the Debtor affiliated entities. Your Honor, notwithstanding
the lengthy statement of facts and the many other facts
alleged on both sides so far in opening statements, I think
we could all agree that there are two essential facts that
are pending right now in this matter. The first being the
off-putted acrimony that exists between the two sides. I
think if you could combine firm databases into a word search
for the word acrimony, youll find it comes up more
frequently than certain definite articles do. This has been
a case of very strident positions, and that strident position
has led I think to the second, to a useful filter to view the
second essential fact of this case, and that is beneath this
acrimony lies an asset of tremendous value. In any brochure
you might pick up on this facility, even reviewing certain
pleadings in the state Court litigation, youll find that

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beneath this lies an asset that has tremendous promise which
is the target of great interest by all side, obviously
including the Debtor, including the many property holders,
and beyond that, those are the two governing rules. Who gets
that value in the end, as Mr. Celentino pointed out, is
obviously an issue that would generate a lot of interest on
the litigation side. But with those two fundamental facts, I
think that it is very, very easy to conclude that the most
appropriate jurisdiction here is one that is central to the
value players. The acrimony is not going to go away no
matter where this case is venued, Your Honor, what will
matter is how that value is unlocked for the purpose of the
opening of this reorganization proceeding and to how that
proceeding proceeds down the line.
Youve heard reference to the DIP motion thats
being cued up and obviously value will be an essential factor
there. The other value issue here that I think is going to
play an enormously important role in the case, is the value
of the claimants claims themselves. The property owner
claimants who are asserting the $62 million refund
liabilities, Your Honor, those are certainly claims in the
generic term. But because those are due under contracts that
have ongoing executory functions, I think the facts as
theyre developed on that which are fairly straightforward
and fairly simple will open up the issue as to whether or not

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those claims ultimately will even be impaired in this
proceeding. Not a fact that can be decided today, but its
certainly a fairly straightforward one from the standpoint of
this reorganization, not one that involves a lot of state
Court related input.
So, Your Honor, I would just conclude by saying that
Mr. Wilhelm obviously supports a venue choice here in
Delaware, and we do hope that Your Honor will take these two
relevant facts in mind as the proceedings go forward. Thank
you.
THE COURT: Thank you. Yes sir. Good morning.
MR. BUTZ: Good morning, Your Honor, for the record,
Daniel Butz from Morris, Nichols, Arsht & Tunnel on behalf of
Dr. Jeffrey Rush as Trustee of the Rush Family Trust. Dr.
Rush is a resident of California and is one of the single
largest creditors in this case. I rise merely to note that
Dr. Rush joins in the Debtors arguments and position and
that Dr. Rush does support the Debtors choice of venue here
in Delaware. Thank you.
THE COURT: And explain the basis of the claim again
please.
MR. BUTZ: A loan, as well as I believe, hes also
an owner.
THE COURT: Loan to the Debtor?
MR. BUTZ: Yes, guaranteed by the Debtors.

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THE COURT: Guaranteed by the Debtor.
MR. BUTZ: And nondebtors.
THE COURT: Is it secured or unsecured?
MR. BUTZ: Unsecured I believe.
THE COURT: Okay. Thank you. Anyone else on the --
there we are -- Mr. Ward.
MR. WARD: Good morning, Your Honor, Matthew Ward of
Womble Carlyle on behalf of Northlight Financial. Your
Honor, with me on the phone is also two attorneys with my
lead counsel, Dickinson Wright firm, thats Harlan Robbins
and Kristi Katsma. Your Honor, I rise simply to bring to
Your Honors attention that we did join in the objection to
the transfer of venue motions. The proposed DIP lender is a
Delaware entity located in New York. Northlight Financial
is, and the proposed DIP lender itself, Southlight Trust is
also a Delaware entity with offices in New York. Because of
that, Your Honor, keeping the case in Delaware will be more
convenient for the DIP lender, and as we noted in the
joinder, we also are contemplating providing exit financing,
and so well be involved in the negotiations likely
throughout the case, and so we would suggest to Your Honor to
keep the case in Delaware to facilitate those.
THE COURT: Thank you, Mr. Ward. Any other? All
right. Thank you for your opening statements. I guess the
next point would be CPOA would put on its witness. Is that
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right? Okay. Well take a short break before that, say
about 5, 10 minutes. And then well proceed with the
witness.
(Recess 11:15 a.m. to 11:28 a.m.)
THE COURT: Please be seated. You may call your
witness.
MR. WIELEBINSKI: Thank you, Your Honor, on behalf of
all of the moving parties that Cordillera Metropolitan
District, and the Cordillera Property Owners Association,
Inc. calls Ms. Nanette Kuich as its first witness.
THE COURT: Okay, thank you, Ms. Kuich, if you would
take the stand, and remain standing, and we will do our
preliminaries.
NANETTE KUICH, CORDILLERA WITNESS, SWORN
DIRECT EXAMINATION
THE COURT: Before we begin, (indiscernible)
objections seated at counsel table (indiscernible).
MR. CAL: Thank you, Your Honor.
THE COURT: You may proceed.
BY MR. CAL:
Q. Good morning, Ms. Kuich.
A. Good morning.
Q. Ms, Kuich, where do you currently live?
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A. I live at 225 Elcazar Drive in Cordillera, Colorado.
MR. CAL: All right, lets look at one of the maps.
Its the map I am going to use as Exhibit 8 in the Exhibit
Book, Your Honor. We are going to use it as a demonstrative
exhibit to just lay out the facilities a little bit.
MR. PALACIO: Your Honor, may I approach, I have a
color copy for Your Honors benefit, a small one.
THE COURT: Oh, thank you.
MR. PALACIO: May I approach?
THE COURT: Yes, please. Thank you very much. Give
a copy to Ms. Werkheiser please. Very good, thank you.
MR. PALACIO: And, Your Honor, for the record again,
Ricardo Palacio, we did provide copies to the Debtors prior
to the hearing so everybody has copies of these.
THE COURT: Very good, thank you.
BY MR. CAL:
Q. Ms. Kuich, would you get up and approach the map, please?
A. Sure.
THE COURT: That is not going to work. Give her the
mike. If she is going to speak while she is there we wont
pick it up so she will need to play Pat Sajak here.
MR. CAL: Thank you very much.
THE COURT: Youre welcome. You may proceed.
BY MR. CAL:
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Q. Ms Kuich, on the map could you show us where your
residence is located.
A. My residence is over on the divide side of what we call
Cordillera, over in this area.
Q. Okay. And where is what is referred to as the Mountain
Golf Course?
A. The Mountain Golf Course is in the center of this area
right here which we call the mountain area, the ranch.
MR. CAL: And, Your Honor, for the record the witness
is pointing, generally, in the middle of the map there.
THE COURT: Yes.
BY MR. CAL:
Q. Now will show us please, Ms. Kuich, where the Summit
Valley Course is?
A. Okay, the Summit Course is over in this area which is the
highest elevation portion of Cordillera.
Q. Okay, and I am sorry I misspoke there it is the Summit
Course?
A. Yes, right.
Q. And thats the course in the lower left hand side?
A. Correct.
Q. And now between the Summit Course and the Mountain
Course, what area is in there?
A. This is open space. About half of the 7000 acres of
Cordillera is open space.
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Q. So on the map that is depicted there could get, just with
your finger show the area that comprises the seven thousand
acres?
A. It would be all of this area in here, plus a very small
part up here on the north side of I70 called Timber Springs,
there are eight home sites there.
Q. And where is the Valley Golf Course?
A. The Valley Golf Course is over here on the north side of
Interstate 70.
Q. So its on that map it is on the upper right hand portion
on a section north of I70.
A. Correct.
Q. And that area is not within the Metropolitan District?
A. It is not.
Q. And where is the Short Course?
A. Well the Short Course is a nine hole course located on
what we call the divide side.
Q. And could you just try and use words, well let me do
that.
A. Okay.
Q. So the Short Course is just on the north side of I70?
A. The south side.
Q. South side, on the south side of I70 and towards the
eastern end of the District?
A. Correct.
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Q. And would you show us where the various homes in the
property are located? For example, homes around the Mountain
Golf Course, where would those be located?
A. Well, you can see that this is the Mountain Course, and
the homes are, basically, surrounding the Mountain Course.
Q. And are those depicted by the little numbers in the boxes
there?
A. Correct, those are all of the designated lot numbers.
Q. And so there are also homes surrounding the Summit
Course?
A. Yes.
Q. And do you know how many individual lots there are,
residential lots there are within the District?
A. Just over nine hundred.
Q. Okay, and of those nine hundred lots, how many have been
built out and have a residence?
A. Five hundred sixty three or about 62 percent.
Q. Okay, thank you very much, Ms. Kuich.
A. Thank you.
MR. CAL: May I approach the witness?
THE COURT: Yes.
BY MR. CAL:
Q. Ms. Kuich, lets quickly just give a little bit of
background, your education background beginning with College.
A. All right, I attended State University of Newark at Stony
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Brook. I have a degree in earth and space sciences which I
completed in 1975.
Q. And what did you do after you graduated from Stony Brook?
A. I taught high school, or science for two years, then I
applied for graduate school and attended at University of
Texas at Dallas. And I moved there in 1977.
Q. All right, and what did you study at the University of
Texas in Dallas?
A. Geochemistry and geology.
Q. Okay, and did you get a degree there?
A. I did not complete my degree. I got hired by Sun Oil
Corporation where I worked as a Geochemist and Exploration
Geologist for four and half years. Then I transferred to
Mobile Oil Corporation who I worked for fourteen and half
years.
Q. Are you currently retired?
A. I am.
Q. And how long have you been retired?
A. For sixteen years.
Q. So thats since what, whats the year?
A. I moved to Colorado in 1996, I retired in 1995.
Q. And have you lived in the Cordillera community since
1996?
A. I have.
Q. Are you a member of the golf club?
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A. I am not. When we first moved there and the developer
owned a golf course I was a social member for five years, but
have and, subsequently resigned.
Q. Is your residence within the Cordillera Property Owners
Association?
A. Yes it is.
Q. And to speed this up, I am going to refer to the
Cordillera Property Owners Association as CPOA. And I will,
generally, refer to the Cordillera Metropolitan District as
the District.
A. Okay.
Q. Are all the residences within the geographic area, the
nine hundred lots, are those all within the CPOA?
A. Yes they are.
Q. Are you a member of the Board of the District Board of
Directors?
A. I am.
Q. How long have you been a member of the Board?
A. I have been a member of the Board for six years.
Q. And are you currently the President?
A. I am.
Q. And for how long have you been the President?
A. For two years.
Q. Over the past several years have you attended all of the
meetings of both the District and the CPOA?
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A. In the last year I have. I think I have missed two
meetings in my six year tenure.
Q. And that is two combined for both District and CPOA?
A. Right, the CPOA and the CMD meet together on a monthly
basis.
Q. And so CMD is just another way of saying District also,
correct?
A. Yes, Im sorry.
Q. In other words --
A. Thats the way we refer to it.
Q. Absolutely, and I just want to make sure we have a clear
record then.
A. Okay.
Q. I want to understand a little bit more the relationship
between the District and the Board. You said that they hold
joint meetings. In terms of material, are materials prepared
in advance for those meetings?
A. Yes we have a joint board packet that comes out about
meetings.
Q. And what is typically included in that packet?
A. We have financials for both organizations and any
outstanding issues to present to either or both Boards.
Q. And based on your review of those packets for the Board
meetings, are you familiar with the finances both of CMD and
the CPOA?
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A. I am.
Q. In terms of the expenses, I know in our stipulated facts
we included some information about the various functions that
both the District and the CPOA perform. How are those
services that are performed, how are those paid for?
A. The District provides basic infrastructure for all of the
home owners, and our revenue comes from taxes which are built
through Eagle County. The CPOA receives their funds from an
annual assessment, and also through a real estate transfer
assessment. When someone sells their house in Cordillera, 2
percent of the sales price in contributed, and the reason for
this is to offset, most of that money is designated as an
offset for the large bond issues that were issued by the
developer to the community.
Q. So, the revenue for the CPOA is also used to offset some
of the expenses of the bonds?
A. The expenses of the bond, and some of the capital costs
of the community.
Q. Give me a few examples of the capital costs please?
A. Well we have road, capital road programs, water
infrastructure programs, we have wildfire and healthy forest
initiatives at which you imagine in Colorado are very
important. We are a fire wise community in Colorado. So
that is a large expense of our budget also.
Q. And public safety, how is, what role do the District and
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CPOA have in public safety?
A. Public safety is a unit that is part of the Cordillera
Metro District, and at this time in the past the Property
Owners Association split the cost equally between the Metro
District and the Property Owners Association. But with the
ongoing litigation with the club, the CPOAs contribution has
not been performed this year which put the Metro District in
a $400,000.00 hold, which we had to cover, that is normally
paid for by the Property Owners Association.
Q. And is it also --
THE COURT: Im sorry, you said you had to cover, you
mean --
MS. KUICH: I mean the Metro District, excuse me.
THE COURT: Okay.
MR. CAL: May I proceed, Your Honor?
THE COURT: Yes.
MR. CAL: Thank you.
BY MR. CAL:
Q. And it is also true that the Debtor has not paid its real
property taxes for 2011, is that right?
A. Thats correct.
Q. And what impact has that had on the District?
A. Well the club is the second largest tax revenue provider
in the Metro District, and which this year is about
$205,000.00 that he owes us at this point and time.
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Q. Okay. Youre aware of the litigation that is pending
surrounding the club, correct?
A. Yes I am.
MR. CELENTINO: Objection to foundation.
THE COURT: I think hes laid a foundation,
overruled.
BY MR. CAL:
Q. And in fact the CPOA is one of the defendants in the
litigation?
A. They are.
Q. And the issues concerning the litigation have come up at
various of the public meetings?
A. Yes.
Q. Do you have an opinion as to the impact of the litigation
and other club problems on property values within the
District?
MR. CELENTINO: Your Honor, the testimony --
THE COURT: Yes.
MR. CELENTINO: -- doesnt qualify (indiscernible).
MS. KUICH: I am --
THE COURT: Im sorry you have to wait.
MR. CAL: May I respond, Your Honor?
THE COURT: You may.
MR. CAL: Thank you. Your Honor, the witness is a
homeowner within the community. Homeowners typically are
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allowed to provide lay opinion testimony as to values. The
witness also is the President of the Board for the District
and has served on the Board for five or six years, and I
think, perhaps, I could lay a little bit more foundation to
establish she does have a basis for her opinion. If I could
I could lay a little -
THE COURT: No, thats not necessary, overruled.
THE COURT: Based on your experience.
MS. KUICH: Based on my experience?
THE COURT: You can answer that question.
MS. KUICH: I can answer that question?
MR. CAL: Yes.
BY MR. CAL:
A. As Metro District President we have seen a tax rate
decrease from about one billion four hundred thousand dollars
in 2010 prior to the lawsuit, and right now our property
values have decreased down to about one billion dollars
overall in the District. And, personally, --
Q. Hold up, and I am sorry for interrupting, but I think
your testimony was you saw the property values decrease from
one billion four hundred thousand?
A. 1.4 billion to --
Q. Oh you mean one billion four hundred million thousand?
A. Yes, excuse me. Thats 1.4 billion.
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Q. Okay. And I was -- in what year was the, the property
values that you are talking about, thats the total assessed
value according to the Eagle County assessor, is that right?
A. Thats correct.
Q. And in Colorado the County assessor values the property
for purposes of determining collection of taxes?
Q. Thats correct.
Q. And in what year did the Eagle County Assessor value the
property at one billion four hundred million?
A. That would be 2010.
Q. And in approximate, in what year did the Eagle County
Assessor value the property at approximately one billion?
A. That would be 2011.
Q. So in that one year it dropped by about $400 million?
A. Correct.
Q. Lets talk a little bit about the revenue that the CPOA
derives from the, I think you called it the real estate
transfer assessment.
A. Yes.
Q. RETA, is that right?
A. Right.
Q. So, 2010 how much revenue did the CPOA derive from the
RETA?
A. I believe that was $1.3 million.
Q. And thats approximate?
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A. Yes.
Q. Okay. And in 2011 the same question?
A. Approximately $600,000.00.
Q. All right, but maybe a little bit more than 600,000?
A. Yes.
Q. Okay.
A. Around that.
Q. Also I want to talk about your own residence. Have you
had an appraisal done recently?
A. Yes, we tried to refinance our house last year in 2011,
and we had previously refinanced, I think, two years prior to
that, and at that time my residence was appraised at about 9
-- pretty close to a million dollars, over $900,000, and this
last appraisal was about $765,000. I can also say that we
were denied financing because of the uncertainty of the
community due to the ongoing litigation.
Q. How has the disputes at the club impacted the Districts
bond rating?
A. The bond rating in our community has been devalued twice
in the past two years. First, from A to A-, and --
MR. BARRY: Your Honor, we are going to object to
this. This is vague. Can we have an understanding of what
disputes at the club is referring to, specifically?
MR. CAL: I did counsel.
THE COURT: The comment was dispute at the club being
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rather vague. I assume you are talking about the ongoing
litigation, counsel?
BY MR. CAL:
Q. Yes, well let me say when I refer to disputes at the
club, Ms. Kuich, I am talking about, I guess lets say the
ongoing litigation as well as the overall financial
instability at the club.
A. Okay.
Q. All right, so I am not going to limit it just to
litigation, but the overall financial instability of the club
okay, do you understand that?
A. Yes. I do.
THE COURT: And I apologize, I dont remember the
question.
MR. CAL: I am going to go back to that, Your Honor,
because Im looking at my notes to try to remember it myself.
BY MR. CAL:
Q. What impact have the disputes surrounding the club had --
and let me ask you lay a little bit, Im getting ahead of
myself. Does the District borrow money?
A. Yes for capital improvements, capital projects.
Q. And is that done through municipal bonds?
A. Yes it is.
Q. And currently about how not about, and currently how much
money is outstanding on the Districts obligations?
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A. I cant say that I remember that fact offhand, Im sorry.
Q. Okay. Is it in excess can you give us just a range where
you think its within a range? If not, thats fine.
THE COURT: Dont guess.
BY MR. CAL:
A. Yes, Im sorry.
Q. No, thats fine, okay.
A. I would rather not guess.
Q. Okay so there -- go ahead.
A. I can say that half of the money, approximately, that we
derive from taxes goes to outstanding bond payment, pretty
close to half.
Q. Okay.
A. And I can tell you our annual budget is somewhere in the
range of $8 to $9 million.
Q. So half of $8 million goes to pay the debt on the bonds?
A. Correct.
Q. Thank you. Do you know the agency that rates the
Districts bonds?
A. Yes, Fitch.
Q. And has in the past two years, how has the bond rating,
has the bond rating from Fitch been downgrading for the
District?
A. Yes it has.
Q. In 2010, before the downgrade, what was the Districts
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bond rating?
A. It was A.
Q. And then when was the first downgrade?
A. Subsequent year, subsequent to that 2011 to A-.
Q. And so 2011 it was downgraded to A-?
A. Correct.
Q. And then how about in 2012?
A. To BBB+.
Q. As the President of the Board, are you familiar with the
reasons Fitch has given for the Districts downgrade?
A. Yes, we have a negative outlook due to the uncertainty
with the litigation ongoing with the club and the community.
Q. Ms. Kuich, I want to talk a little bit about your trip to
Delaware. When did you travel here?
A. Yesterday.
Q. From where?
A. From my home in Cordillera.
Q. And to make the trip what time did you leave your home in
Cordillera?
A. At 5:56 A.M.
Q. Did you drive?
A. I drove to Denver because thats the pretty much the only
convenient way to get to Philadelphia.
Q. Okay, you drove yourself?
A. Yes.
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Q. And you went to the Denver International Airport?
A. Correct.
Q. And when you finally arrived at the hotel, which hotel
are you staying at?
A. The Doubletree.
Q. And when you finally arrived at the Doubletree, what time
was it?
A. It was just before 6:00 P.M.
Q. And that would be East Coast time?
A. Correct.
Q. That would have been about 4:00 P.M. Denver time.
A. Correct.
Q. So that total trip was approximately ten hours?
A. Correct. And, of course, that was Sunday travel too, so
no traffic.
Q. No traffic, okay. Ms. Kuich, could you explain to the
Court please why the District favors a transfer of venue from
Wilmington to the Colorado Bankruptcy Court?
A. Well, we do have the issue of the Debtor being one of our
largest sources of tax revenue, but we also represent all of
the residents of the community. And for the five hundred and
sixty three homeowners, I think, it would be easier for them
to represent themselves in Bankruptcy Court if they could
travel to Denver rather than Delaware.
Q. When you refer to five hundred sixty three homeowners of
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the nine hundred lots, five hundred and sixty three have
built out residences?
A. Correct.
Q. How many of those approximately are full time residents
in Cordillera?
A. We estimate somewhere in the 20-30 percent range,
although our number of registered voters are approximately 42
percent, so we assume that the remainder of that, perhaps,
for ten or so are probably front range individuals.
Q. Okay. So the 42 percent are the number of Cordillera
residents who are Colorado voters?
A. Correct.
MR. CAL: May I have a moment to just consult with my
co-counsel, Your Honor?
THE COURT: Yes.
MR. CAL: Your Honor, that is all we have for the
direct examination. Thank you.
THE COURT: Youre welcome. Cross.
CROSS EXAMINATION
BY MR. CELENTINO:
Q. Thank you, Ms. Kuich, Chris Celentino, Foley & Lardner, I
represent the Debtor in these proceedings. If I am correct
you testified approximately nine hundred lots in the
Cordillera community?
A. Thats correct, in our Metro District.
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Q. In your Metro District. And did you testify, did I
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understand that the Valley Club and the homes surrounding the
Valley Club are not in your district?
A. Thats correct.
Q. Okay. Do you know how many lots there are in the Valley
Club?
A. I am not certain, somewhere around sixty I think.
Q. Do you know how many residences are built in the Valley
Club?
A. I think that they are two thirds built out, somewhere
probably around forty, but I cannot be sure of that.
Q. And you are not a member of the Cordillera Club any
longer, correct?
A. Thats correct.
Q. And you did, when you were a member you indicated you
were a social member?
A. I was a social member, and that was while the developer
owned the club before Mr. Wilhelm.
Q. Before Mr. Wilhelm. Of the, I think you testified that
five hundred and sixty three of the nine hundred lots are
built out with residences?
A. Correct.
Q. Do you know how many of those five hundred and sixty
three residences are members of the Cordillera Club?
A. I am not sure. I would say, I think that Ive heard
numbers somewhere in the five to six hundred number range. I
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think our estimate is it is pretty close to 50/50 lot owners,
you know, total lot house property owners in the Metro
District versus club owners.
Q. Great. Did I understand you -- let me make sure I
understand that. Its approximately equal number of folks
that are members as are not members?
A. Thats including lots, not just the homes.
Q. Including lots?
A. Yes.
Q. Okay, I understand that. Are you aware of any reason why
the Debtor has not paid the two hundred and something dollars
in taxes that youve indicated are owed and unpaid?
A. Im not aware. I think that there is time until, I
think, that the deadline for the County is somewhere around
September, so there is still time.
Q. Are you aware of whether or not those taxes are under
appeal by the Debtor?
A. I am aware that they are under appeal by the Debtor.
Q. You testified that there was a tax based decrease in
value of the residences in Cordillera in a one year period
from 1.4 billion to $1 billion dollars, correct?
A. Yes.
Q. Roughly a 30 percent decrease?
A. I guess that would be good math.
Q. When you testified that you denied financing because of
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the uncertainty with the litigation, did you receive a letter
to that affect?
A. Just a verbal comment from the loan orientor, I guess the
guy that was offering the financing.
Q. Who was that guy?
A. His name is Chris, and I cannot remember his last name, I
apologize.
Q. Thank you, I understand. Do you know --
A. Newswanger [phonetic] is his last name so.
Q. Winer?
A. Newswanger.
Q. Newswanger. When you talk of uncertainty of the
litigation, could he have been, could Mr. Newswanger have
been referring to the possibility that the CPOA might lose in
the litigation?
A. I wouldnt say that. Its just the uncertainty of whats
hanging over the community right now.
Q. When you hear your counsel ask about the instability of
the club, what does that mean to you?
A. Is this a personal question, what does it mean to me
personally?
Q. To you personally, yes.
A. We just are not certain whether these golf courses will
ever be functional again. The Mountain Course has been
closed the past two summers.
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Q. Are you aware that in this case the Creditors Committee
has expressed a desire to force a liquidation of the Debtors
assets?
A. I am not really familiar with a lot of whats going with
the Creditors Committee.
Q. Has the District considered the possibility that the
Debtor might sell the assets?
A. We have considered it. We have been given bond
authorization by the community in the event that these
properties would come up for sale, and there were no other
buyers for the property.
Q. And what is that level of bond authorization?
A. It is $15 million and that was determined before we had
any appraisals done to the property.
Q. How would a sale of the Summit Course to a private buyer
who might use the course for private use only, and not club
member use affect the District?
A. I personally have a hard time imagining that. I assume
you are just talking about not allowing members of the
community to use it, or are you just saying that it would not
belong to the Metro District, not --
Q. Let me, let me help, let me help.
A. Okay, thank you.
Q. I believe you testified earlier that there were, that you
believed that the bond rating was downgrading because of the
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uncertainty regarding the litigation and the membership at
the club, correct?
A. The uncertainty of the litigation that was stated in the
Fitch report.
Q. Did you bring the Fitch report with you?
A. No I do not have that, sorry.
Q. So my question would be this. Lets think of the Summit
Course for a moment. Would it have a negative effect on the
District if the buyer of the Summit Course did not permit
members to use the Summit Course?
A. I have a very difficult time imagining that anyone could
actually operate a golf course without having members of the
community be part of the club.
Q. So imagine that with me for a moment. What would be the
effect on the District if the sale was to a private buyer who
did not permit resident members?
A. I dont see, Im not exactly sure how it would affect the
Metro District.
Q. It is your testimony that the this uncertainty between
the club and surrounding the litigation has an impact on
values in the area, correct?
A. Yes.
Q. Would the uncertainty of a sale that may result in no
members getting the opportunity to play at the Summit Course
have a negative effect on values in the area?
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MR. CAL: Objection, Your Honor, facts are not in
evidence, speculation. Sorry.
THE COURT: Okay, the objections were facts not in
evidence and speculation. Response?
MR. CELENTINO: It is a hypothetical question, Your
Honor, its an adverse witness. You have allowed her to give
her lay opinion I think Im entitled to her lay opinion.
THE COURT: Very good, objection overruled. You may
answer.
BY MR. CELENTINO:
A. Okay, well I am not exactly sure how, I just cant
imagine having a private club in our community without
community members being able to play golf. It just seems
like it is a ten mile drive up the road to get to the Summit
Course, and I just dont see that there are many people that
live in the Valley that are going to drive ten miles just to
play golf on our Summit Course. Im just having a hard time
understanding the question.
MR. CAL: Move to strike as an unresponsive, Your
Honor.
THE COURT: Overruled, she told you what she knew
based on what you asked.
BY MR. CELENTINO:
Q. If the Mountain Course were sold to a developer to
develop the golf course into other residential units, how
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would that impact the community?
A. Well that would not be allowed in a proposed unit
development from the county. There is only a certain number
of residences that are allowed in the community, the total
number is nine hundred and five, and thats how the District
has been platted.
Q. I want to focus for a moment on why you believe that this
forum is inconvenient for you. I think you said that you
expected homeowners would want to appear. What sort of
things do you expect homeowners will want to testify about in
the bankruptcy case?
A. There are a lot of homeowners that are club members and
they would probably like to receive the large amount of money
that they have as deposits, and they have paid for dues in
the club. I think the rest of us that are not club members
would really like this economic uncertainty lifted from the
community so we can continue on with possible development.
Q. So if the economic uncertainty were removed by a
refinance of the club that would be okay?
A. I think that there are many members of the community that
feel that just refinancing the same owner of the club is not
necessarily going to make the club financially viable. He
has not demonstrated that in the past few years.
Q. Are your personal appearances here, would it be just as
easy for you to appear on Court Call from telephone?
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A. I will speak as a member of a Board who takes phone calls
from some of our Board members, and I find it to be not as
convenient, or easy to input your information on the phone as
it is in person.
Q. As a member of the Board, have you been involved in
Bankruptcy proceedings before?
A. I have not.
Q. You have not. The Board has hired counsel to appear in
these proceedings, correct?
A. Yes.
Q. Do you anticipate your counsel appearing at most of the
hearings or yourself personally?
A. I dont imagine that I would be appearing myself too much
more often personally because it is a large expense for our
Metro District for me to be here.
Q. Is there anything in your view that makes it necessary
for a venue of this to be in Colorado?
A. I dont think that it is necessary, but it would
definitely be a less expense for all of the members of the
community.
MR. CELENTINO: May I have one moment to confer with
my co-counsel, Your Honor.
THE COURT: Yes.
MR. CELENTINO: I think the Debtor is finished, Your
Honor, other parties might have questions.
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THE COURT: Okay. Anyone else wish to cross examine
the witness? Give me just a moment. Done whispering? Are
we good? All right, redirect.
REDIRECT EXAMINATION
BY MR. CAL:
Q. Ms. Kuich, are you aware that Debtors counsel refused to
consent to allow Ms. VanDussen to testify by telephone for
todays hearing?
MR. BARRY: Objection, foundation, Your Honor.
THE COURT: Is that true, Mr. Barry?
MR. BARRY: I will say it true.
THE COURT: All right, well --
MR. BARRY: How you get in through this witness, what
this witness --
THE COURT: Well the question is whether she was
aware of the fact. Overruled.
BY MR. CAL:
A. Yes I am aware of that fact.
Q. Now in terms of, I guess I want to elaborate a little bit
about counsel whether it was going through some of the issues
about hiring counsel. If this bankruptcy case were venued in
the Denver, Colorado, do you believe you would attend more
hearings in Denver, Colorado in person that what you would
attend in Wilmington, Delaware in person?
A. Yes.
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Q. How far is your drive from your residence to the
Bankruptcy Court in Denver, Colorado?
A. That would be two hours.
Q. Do you know where the Bankruptcy Court is?
A. I know it is downtown somewhere. I am not familiar with
exactly where.
Q. All right, but you are familiar. So its in downtown,
you are familiar with the drive to downtown Denver?
A. Yes I am.
Q. And you are familiar that the Bankruptcy Court is located
in downtown Denver?
A. Yes.
Q. And that is a two hour drive?
A. Correct.
Q. How much did it cost you, do you know what your airplane
tickets costs?
A. Yes, they cost $1200.
Q. Do you know how much your hotel room cost?
A. No, I am not sure off hand.
Q. If this hearing were held in Denver, Colorado this
morning, would you have enjoyed a day in the mountains
yesterday?
A. Yes.
MR. CAL: Nothing further, Your Honor.
THE COURT: Please step down, thank you.

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MR. CAL: I spoke too fast, Your Honor, I apologize.
THE COURT: Very well, take a moment.
MR. CAL: Thats all we have, Your Honor.
THE COURT: Okay, thank you. Now you may step down.
MS. KUICH: Thank you very much.
THE COURT: All right, and thats it for the
witnesses. And all of your exhibits have been consented to
be admitted, is that correct?
MR. CAL: Your Honor, if I remember from counsel this
morning there were three or four, there was a four or five
additional exhibits that they had not yet consented to.
THE COURT: All right, well, thats okay, all right.
So Exhibits 1 through 43 are admitted except for Exhibits 35
and 37, is that correct, Mr Barry?
MR. BARRY: Thats generally correct with the
reservation of rights and the stipulation we put on the
record at the beginning of the hearing. Again, I have it
writing if the Court would like it.
THE COURT: No thats fine, I understand. What about
Exhibits 44 to 48?
MR. BARRY: Your Honor, I apologize, we simply
havent had an opportunity to review or stipulate to those.
One is Mr. Fitchs deposition, I think we will deal with that
in his examination. One is the amended budget which, of
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filings, and the litigation pending in Colorado. And we just
were not in a position to stipulate to their admissibility
at this point because we havent had an opportunity to review
them.
THE COURT: When we take a break, a lunch break
probably maybe after your first witness. But any event when
its time to take a substantive break, have a look at it. We
will reserve the movants rights in connection with fully
developed in the record if necessary if there is any disputes
as to the admissibility of the exhibits.
MR. BARRY: Understood, Your Honor.
MR. CAL: There was one more exhibit which was 48
which is the supplemental affidavit of Ronald Yordy. In
fact, I had exchanged e-mails with counsel that the only
change we made is we wanted the exhibits to Mr. Yordys
affidavit to be included. This is an exhibit designated by
the Debtors. We just wanted a complete, rather than an
incomplete exhibit.
THE COURT: Well, we will deal with that after the
break.
THE COURT: Youre welcome. Anything else from the
movants? All right, turn to the Debtor.
MR. CELENTINO: Thank you, Your Honor. Your Honor,
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well call as first witness, Harold Bordwin.
HAROLD BORDWIN, DEBTORS WITNESS, SWORN
DIRECT EXAMINATION
BY MR. CELENTINO:
Q. Good afternoon, Mr. Bordwin.
A. Hello.
Q. You have been employed by the Debtor in this case, have
you not?
A. Yes.
Q. You are with what company?
A. GA Keen Realty Advisors.
Q. And what role have you been employed to assist the Debtor
in this case?
A. As their advisor.
Q. Please briefly describe for the Court your experience as
a real estate advisor?
A. Certainly. I joined Keen Realty as a predecessor
organization in 1988. I am currently the President, co-
President of this company, have ran it since the mid 90s.
Our work is 99 percent working with either Debtors or
troubled companies helping them with valuation, real estate
valuation issues, asset sales and dispositions,
restructurings, recapitalizations. So I have been doing this
for twenty-four years.
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Q. You specifically visited the Cordillera Club, have you
not?
A. Yes.
Q. And you visited the golf courses at the Cordillera Club?
A. Yes.
Q. Have you formed an opinion on whether or not this Debtor
can reorganize?
MR. WIELEBINSKI: Objection, Your Honor.
THE COURT: Basis? I cant hear you, you have to
come - either sit over there, or stand over there.
MR. WIELEBINSKI: I apologize, Your Honor, I dont
think he set the necessary --
THE COURT: I still cant, Im sorry.
MR. WIELEBINSKI: I dont think he has established a
predicate for him to be able to testify to this. He does
real estate and restructurings, Your Honor. I dont think
thats enough.
THE COURT: Overruled. Whats your answer?
BY MR. CELENTINO:
A. Im sorry what was the question?
Q. Have you formed an opinion as to whether or not the
Debtor can reorganize in this case?
A. Yes I have.
Q. And what is that opinion?
A. Yes, this is a reorganization.
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Q. Are you involved in assisting the Debtor prepetition in
seeking out sources of financing for its operations?
A. Yes I was.
Q. Can you describe that process?
A. Certainly. I was engaged on June 13th, and immediately
set about reaching out to, oh actually I will back up, prior
to actually being engaged in anticipation of being engaged, I
began reaching out to capital sources that I thought would
provide Debtor In Possession financing, was engaged on the
13th, set up a number of meetings for the company with
several different lenders on the 19th and 20th a week later,
so the 13th was a Wednesday. The following Tuesday and
Wednesday we were successful in soliciting four different
term sheets which the Debtor selected or the company selected
one of those lenders to be the DIP financer, and finalized a
formal commitment letter the day before the bankruptcy filing
on the 26th.
Q. In the process of assisting the Debtor in reaching out to
potential capital sources, did you form an opinion as to
whether or not the Debtors capital would come from the Rocky
Mountain states?
A. I did.
Q. And what was that opinion?
A. Unlikely to come from the Rocky Mountain states.
Q. And the reason?
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A. Based upon contacts I had there, they felt the situation
surrounding Cordillera was too contentious, and didnt want
to be involved.
Q. Approximately how many potential financing sources did
you reach out to in that two week period?
A. We reached out to approximately 53 different capital
sources.
Q. During your twenty-four years of experience in that
contacts, when you reach out to those sources what do you
expect to be very the next contact? Let me rephrase that.
A. Yes, please.
Q. After you reach out to a capital source if someone
expresses an interest, is there a document that they
typically execute for the purposes of expressing that
interest?
A. Yes. So after an initial conversation where there was
receipt of something akin to a teaser, if they have an
interest, they will ask for a non-disclosure agreement, and
we disseminated non-disclosure agreements to fifteen parties.
Q. And how many of those non-disclosure agreements were
signed, all fifteen?
A. Yes.
Q. And how many of those non-disclosure agreements were
executed by companies located in Northeast?
A. Nine of them.
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Q. Of the remaining six, where were the companies executing
those non-disclosure agreements located?
A. Four are from Texas, and two from California.
Q. And not a one from the Rocky Mountain States?
A. Correct.
Q. You indicated that the Debtor received four term sheets
for DIP financing, correct?
A. Yes.
Q. One of those is from the Northlight/Southlight Group,
correct?
A. Yes.
Q. And where are they located?
A. In New York.
Q. Where were the other three term sheets, the companies
that issued the other three term sheets, where were they
located?
A. One was San Francisco, we have New York, we have -- Im
blanking for a moment on the other two. Another one was from
New York. Im sorry, I dont recall the fourth.
Q. I understand. Maybe you will remember. You indicated
that you were assisting the Debtor in finding financial
alternatives, you were seeking DIP lending intake outlending,
correct?
A. The conversations I had with the various capital sources
was to talk about the whole spectrum, so yes. But given that
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we anticipated filing Chapter 11 on the 26th, and I was hired
on the 13th. I was primarily focused on the DIP financing.
Q. Based on your experiences your opinion that this Debtor
will be able to secure takeout financing as part of its case?
A. Yes.
Q. Are you aware of whether or not the Debtor has stipulated
to the retention of a professional property management team
as part of that takeout financing?
A. Yes, that is my understanding.
Q. Are there any other factors that are relevant in your
mind to why this Debtor is not a liquidation case?
A. It just seems so different from the liquidations I am
involved with. I mean, here you have got a property with
significant equity. It is an, theres an operating business
that is going on there, and it strikes me that it would be
somewhat counterproductive for the community to have a
liquidation. The best thing to have here is a reorganization
so that so that the club remains open, operating,
functioning. The people who are currently paying members can
continue to take advantage of it. I understand the discord
in the community with the Debtors principal, but as I have
testified I understand that in connection with a
reorganization recapitalization, the Debtors principal is
prepared to step back and allow professional management to
run the club. So I think this is very clearly a business
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that can benefit from chapter 11 and come out.
THE COURT: What is -- when you say liquidation what
do you mean? What is your understanding, reorganization
versus litigation, so liquidation, can you describe what you
mean by liquidation in that context?
MR. BORDWIN: Well when I say, my concept of
liquidation here is if my instructions were go out and market
this and sell it in ninety days.
THE COURT: Is it going concern, its (indiscernible)
what do you mean?
MR. BORDWIN: Any of the above.
THE COURT: So if the Debtor told you go sell the
Mountain Course in thirty days or ninety days, excuse me,
that would be either that would count for either a sale of
the Mountain Course as a going concern, although it has been
closed for the last two summers, I suppose, or perhaps a
piecemeal sale of the property etc., either of those would
constitute a liquidation in your understanding?
MR. BORDWIN: Right. My picture of what would happen
is you could very well have a piecemeal sale. You have a
Summit Course which is a spectacular setting that could be
bought be a multimillionaire or billionaire. Those kinds of
people have been known to buy courses and turn them into
their own private golf courses.
THE COURT: Im sorry, Im not, Im just trying to
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get an understanding of what you mean. So, basically,
anything other than a plan means liquidation.
MR. BORDWIN: In terms of the timing as well. So you
can have properties sold in an orderly course. You can have
an individual property sold in the ordinary course.
THE COURT: Now see I dont know what you are talking
about.
BY MR. CELENTINO:
Q. Okay, so let me rephrase that. Is it your belief that
this reorganization can take place without a sale of one of
the, any of the three courses?
A. Yes.
Q. And is it your belief that a capital partner will be
interested in investing in the Debtor based on your
experience and the discussions you have had to date without a
liquidation of any of the courses?
A. Based on discussions, the answer is it is yes. Although,
we could see one of the courses sold.
Q. In the event of a reorganization your view of a
liquidation case is that the business of the Debtor would
remain intact as part of that capital refinance?
A. Say that one more time, Im sorry.
Q. Is it your view that the business of the Debtor will
remain intact as part of that capital refinance?
A. Yes.
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Q. And you would not consider a sale of one of the courses a
liquidation?
A. No, because that would not be a liquidation of the
business. That would be a discreet asset sale.
Q. And to date you have not been employed the Debtor for
that purpose, correct? For the purpose of affecting a sale,
correct?
A. My employment --
UNIDENTIFIED SPEAKER: Im not sure what kind of sale
hes talking about now, one course, three courses, four
courses, whats he talking about?
MR. CAL: Objection, Your Honor, I think counsel
needs to when he using the word sale he needs to describe
whether he is referring to a sale of one course, two courses,
three courses, what type of sale is he referring to?
THE COURT: Well I think you can just generalize, and
then go to the specific. Have you have been retained to
pursue a sale in whole or in part at this time.
MR. BORDWIN: The scope of my engagement letter
contemplates selling one or more properties among a list of
services, but the Debtor has not yet asked me to commence
that.
BY MR. CELENTINO:
Q. At this point you have been engaged by the Debtor to find
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a capital partner to keep the business, including all three
courses intact, correct?
A. Yes.
Q. And at this point you believe on the basis of discussions
that if taken place to date, that there is a probability that
that will happen in the course of the case, correct?
A. Yes.
MR. CELENTINO: I have nothing further, Your Honor.
THE COURT: All right, anyone wish to cross the
witness?
CROSS EXAMINATION
BY MR. WIELEBINSKI:
Q. Good afternoon, Mr. Bordwin.
A. Hello.
Q. My name is Joe Weilebinski. I represent the Official
Unsecured Creditors Committee in this case. I just have few
questions. First let me start with a follow up to the last
question, it was something along the lines of, at this point
you have been engaged by the Debtor to keep all the courses
intact. It is true is it not that you havent been retained,
or Im sorry, your retention hasnt been approved by the
Bankruptcy Court?
A. Thats correct.
Q. Okay, and thats still subject to objections and ultimate
ruling by the Court?
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A. Yes.
Q. So all of your testimony where you say you have done this
on behalf of the Debtor, you were actually retained
prepetition before there was a Debtor, correct?
A. Yes, sir.
Q. And you said you are a principal, I think you said the
co-President of GA Keen Realty LLC, correct?
A. Yes.
Q. That is located in New York, correct?
A. My office is, yes.
Q. And you live in New York, do you not?
A. Yes.
Q. And your brother the co-president is, does he live in New
York?
A. Yes.
Q. And thats where his offices are in New York, correct?
A. Correct.
Q. Okay, and you went to undergrad in the Northeast, is that
correct?
A. Yes.
Q. Any many of your clients that you have listed on your
resume are all New York based clients, is that correct? Many
of them, not all of them.
A. Im not sure what is listed there, but many of my clients
are New York based, others are not.
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Q. And indeed on your website the properties that you use as
examples of currently offered properties are all located in
the New York Metropolitan area, they are New York and New
Jersey, I think there was one in Brooklyn, one in New Jersey,
and one was in New York City itself.
A. I know we are currently working on a property in Indiana.
I know we are working on properties in Florida. I know we
are working on a property in New Hampshire.
MR. WIELEBINSKI: I might be able to save some time,
Your Honor, by moving to strike. That wasnt the question I
asked him.
THE COURT: Sustained.
BY MR. WEILEBINSKI:
Q. Now Keen is retained in bankruptcy cases in other states
to provide for the real estate services that you describe, is
that correct?
A. Yes.
Q. You dont limit yourself to only cases filed in New York,
is that right?
A. Correct.
Q. Or in Delaware?
A. Correct.
Q. Do you have an office in Vale, Colorado?
A. No.
Q. Do you have an office in Denver, Colorado?
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A. No.
Q. Have you ever handled a case, been involved in a case in
the Bankruptcy Courts in Denver, Colorado in the last five
years?
A. No.
Q. Has anyone at your office been involved in a case in
Colorado in Bankruptcy Courts in the last five years?
A. No.
Q. Beyond that, the last ten years, have you ever been
involved in a -- ?
A. I dont think we have ever been involved in a case in
Colorado.
Q. So no familiarity with the courts there in Denver, the
Bankruptcy Courts?
A. We have not been involved in a case there.
Q. Okay. You indicated you were retained in early June,
June 13
th
, I think, was the date you said?
A. Yes.
Q. But you first met with the Debtors principals in May of
2012, did you not?
A. Yes.
Q. And you met with them at the club, is that correct?
A. Yes.
Q. Why didnt you meet in New York?
A. I wanted to go to the property, I wanted to see the
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property and meet with the management.
Q. Okay. You have to go out to the property to see it and
understand it, and appreciate its beauty, and the various
different courses and how they are laid out, isnt that a
fair statement?
A. It helps.
Q. Okay. Any buyer would probably want to go out there and
see the facilities, would they not?
A. A buyer certainly would.
Q. Dip lender?
A. Certainly.
Q. Exit financer?
A. Yes.
Q. And, of course, you went out there at that time because
you not only wanted to see the property, you wanted to get
retained on this high profile case, I mean, is that a fair
statement?
A. Yes.
Q. At the time you went out there in May did you think, or I
am sorry, did you know that the Debtor would be filing a
bankruptcy shortly after your meeting?
A. I knew it was being talked about. Im not sure if I knew
it for certainty.
Q. Did you know if it was being filed in Delaware?
A. Did not.
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Q. Okay. Did you know at that time that the Debtor intended
to reorganize and follow the path that it is currently
following?
A. That was the basis for a discussion about what our
services would be.
Q. Okay. So the let me make sure I understand. The Debtor
told you what they wanted to do which was not to sell the
properties piecemeal, but instead attempt to do a
reorganization under chapter 11, fair statement?
A. Yes.
Q. And they told you thats what they would like to hire you
to do at that point.
A. Yes.
Q. And you accepted doing that, correct?
A. Yes.
Q. Okay. Now at that point how long were you out there in
Colorado?
A. A few days.
Q. And it is at that point that you came to the conclusion
that a reorganization was possible, when they told you that
thats what they wanted to do>
A. It became more possible pending receipt of the appraisal
that came in at $33 million.
Q. And when did that appraisal come in?
A. Just before the bankruptcy filing.
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Q. Okay, but you knew that there was going to be a
successful re - Im sorry a reorganization that you were
going to, and you actually signed up to be engaged to
implement before you even knew when the appraisal came in.
That only made it more possible, is that correct?
A. No, I think you are mischaracterizing. If that appraisal
came in and said the value of the property in total was $10
million, I dont think I would be sitting here saying I
believe there is a reorganization. So I had not really
formed a conclusion, values are very important to this case,
and I had not formed a conclusion until that appraisal came
in.
Q. Your conclusion, however, though is this a re-
organization case. Correct?
A. Yes.
Q. What if the DIP is not approved by the Court on Thursday?
A. If the DIP is not approved, well the company is going to
have some very serious cash flow problems.
Q. Well its not going to be able to survive, is that
likely?
A. Correct.
Q. All right. So your statement about this is a
reorganization case doesnt say I know we are going to have a
successful reorganization, or a confirmed plan, all you are
simply saying is at this point based on the clients
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instructions, and objectives, and desires, I am not going to
do any kind of quick 363 sales process. Is that a fair
characterization?
A. No.
Q. Okay. Why not?
A. Well I think that with the combination of the significant
amount of equity in this business, and the ability to get a
DIP financing which, obviously, is subject to court approval,
I think both the combination of those two things make this
into a reorganization.
Q. Okay, so there are some preconditions that are associated
with your testimony that this a re-organization, and not a
liquidation, its you have got to get the DIP approved?
A. Yes.
Q. You are going to have to implement whatever the business
plan is that the Committee at least is not familiar with.
Correct?
A. Yes.
Q. You are going to have to survive for -- how long are they
expecting that it will take to confirm the plan, how long do
you expect?
A. I think we can have a confirmed plan next spring.
Q. Okay. And is there a possibility that a there could be a
competing plan with different objectives?
A. Thats possible.
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Q. And the plan is actually going to have to be viable,
correct? I mean, you cant just go in and say I put together
a plan, this is what I want to do, it has got be a viable
plan that the Court eventually would find is confirmable?
A. Has to be approved by the Court.
Q. Now did you say in your - strike that. You recall
submitting a declaration to this Court in connection with the
hearing on this matter, do you not?
A. Yes.
Q. And did you say in your declaration the words, this is in
paragraph 4, I knew immediately -- and it is referring to the
May 23
rd
, 24
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meeting -- I knew immediately that whatever is
passed the clubs future was not a liquidation.
A. Are you reading from a declaration?
Q. I am.
A. Then thats what it said.
Q. And you knew that at your first meeting?
A. Well I guess that is inconsistent with what Ive just
said which is I did understand. So that comment is based
upon, you know, seeing the property in operation, it being a
beautiful property, and the Debtors anticipation that the
appraisal was going to come out at $30 plus million dollars,
and my sense that I would be successful in getting DIP
financing.
Q. Let me make sure I understand that second to last point.
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The Debtor anticipation at that point, that they knew where
the appraisal value was coming out as, is that what you are
telling the Court?
A. I dont think they knew where it was going to come out,
but thats what they, thats what I heard was expected.
Q. And it matched that expectation, didnt it, a month
later?
A. Appraised at 33 million.
Q. Now in paragraph 7 of your declaration, you make a
statement during a meeting while visiting the Debtors
premises it was expressed to me that the dissension in
acrimony being expressed by a small, but vocal minority of
club members was having a devastating impact on the club and
the real estate values in the surrounding areas, do you
remember that statement?
A. Yes.
Q. Who shared that statement with you?
A. Both David Wilhelm and Dan Fitchett.
Q. And Mr. Wilhelm is the owner in direct equity owner of
this Debtor?
A. Yes.
Q. And Mr. Fitchett is the President?
A. Yes.
Q. Okay. Those are the only parties that attended that
meeting in May other than yourself?
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A. And also Patrick Wilhelm participated by phone.
Q. So your understanding of the acrimony and the dissension
among the members was from the Debtors perspective, is that
correct?
A. Yes.
Q. And did you at that point, did you have any other basis
to see if that was an accurate or correct statement? In
other words, did you talk to any of the members?
A. No, I did not.
Q. You never met with the vocal minority?
A. No.
Q. Okay. Did you look at any of the pleadings that were
filed in the case?
A. No.
Q. In any of the litigation that was then pending in
Colorado?
A. I did not.
Q. Okay so it was just based on what you heard from the
Debtors principles?
A. Yes.
Q. And was it also just based on what the Debtors principle
said that you came to the conclusion that that acrimony was
causing a decrease in the real estate value in the
surrounding area?
A. Say that again, please.
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Q. Well you not only say that it was having a devastating
impact on the club; you say that it impacted real estate
values in the surrounding area. Youre not an appraiser are
you?
A. No.
Q. Okay and did you do any kind of valuation on the
surrounding area to see if real estate values were being
impacted?
A. No, but I was --
Q. Thank you, Mr. Bordwin. I think you answered the
question.
THE COURT: Im sorry, he can explain; go ahead.
BY MR. CELENTINO:
A. I was told numbers similar to the testimony of the prior
witness about the assessed value going from 1.3 or 1.4 down
to $1 billion dollars.
MR. CELENTINO: Move to strike as heresay, Your
Honor.
THE COURT: Overruled.
BY MR. WIELEBINSKI:
Q. Now you also made a statement that in paragraph 8 of your
declaration that the members not directly involved in the
dispute felt pressured to support the more vocal members.
That also came from Messers, Wilhelm and Mr. Fitchett, is
that correct?
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A. Yes.
Q. You didnt verify that in any way did you?
A. Correct.
Q. Now there was a statement that was made also by you that
the small, but vocal minority had engaged Delaware counsel;
Im sorry, the Debtor I think made that statement. That that
vocal minority you have engaged Delaware counsel and shown a
willingness to participate in the case in Delaware, you
didnt make that statement in the declaration, though, did
you?
A. Can I look at my declaration? Are you saying that I made
that statement, or are you --
Q. Let me strike the line of questioning; I will move on.
A. Okay.
Q. Now if there is a large majority out there that has a
view different than this vocal minority, do you think they
would be able to express it in the Courts in Colorado?
A. Say that again?
Q. Would they be able to get involved -- if theyre involved
in the Cordillera community, the case is moved to Colorado,
could that vocal majority be heard in Colorado if they wanted
to be?
A. Youre asking me if there is a majority that wants to be
heard in a Court in Colorado --
Q. No, if they want to be heard, can they be heard if the
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case is in Colorado? Is there any reason they couldnt have
their voice in the Bankruptcy Court in Colorado?
A. The question sounds kind of obvious. I mean anyone can
have their voice heard in any Court they want to be heard in.
Q. Okay and the fact that it is closer to the Cordillera
community, we heard the testimony about that, would that lead
you to believe that they can drive there is a few hours?
A. Sure, there is a difference between driving and flying.
Q. Paragraph 9 of your declaration you say during my visit
to the club I had a confidential dinner meeting with several
local Vail area bankers to discuss, at a high level, a
possible go forward banking relationship with the club, do
you remember that statement?
A. Yes.
Q. Who were the local Vail area bankers that you spoke with?
A. There were three bankers who came to dinner, but I dont
have their names at my fingertips.
Q. All local banks in Vail?
A. It was one bank; three bankers from one bank.
Q. And do you know the population of Vail, the city of Vail?
A. No.
Q. Pretty small community, isnt it?
A. I dont know.
Q. Okay, if I told you it the population that lives there is
under 10,000, would you be surprised by that?
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A. I would not.
Q. In your experience are most of the lenders that do DIP
financing or exit financing sophisticated lenders involved in
larger cases with a large capital base, is that a fair
statement?
A. Are you asking if DIP lenders are typically large and
sophisticated lenders?
Q. Yes.
A. Yes.
Q. So were you surprised that a Vail bank in a city with a
population of under 10,000 would not participate in either
the DIP financing or the exit financing?
A. This is a - its not just a Vail bank. It was a
Colorado based bank so it wasnt a small community bank. And
in some respects, I was surprised. I mean, from my
perspective DIP financing is a very safe kind of financing,
particularly if you are in a priming main position. If you
are in the market place and you know the property, why
wouldnt you do it? Now the flip side of that is most -
getting DIP financing from any smaller bank is just very
tough.
Q. Thanks for giving me the flip side. It saved me a
question here. At that discussion that was high level
communications you were having thats how you described it,
so you were sitting there with a term sheet; you were just
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talking to bankers in Vail having dinner, correct?
A. Correct.
Q. So you said you reached out to about 53 different capital
sources about DIP financing or some kind of exit financing,
or was it both?
A. The real focus was the DIP financing.
Q. Okay and you were able to get to the next step with
fifteen of them, is that your testimony?
A. Yes.
Q. And several of those included lenders from outside the
New York area, is that correct?
A. Yes.
Q. Serious enough that they went to the next step and
actually sent you an NDA, is that right?
A. Yes with fifteen NDAs.
Q. So there are other lending sources outside of New York
and Delaware, correct?
A. Yes.
Q. And where would those particular non-New York based
lenders?
A. As I mentioned, there were four in Texas, two in
California.
Q. And if the Debtor would have selected those, the Debtor
just felt that their proposal was acceptable we could be
dealing with those particular lenders for DIP financing, is
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that correct?
A. If the Debtor selected somebody else then we could be
dealing with that other party.
Q. And if the Court turns down the one the Debtor did
select, the DIP lender that was selected, we might go back to
those particular lenders, is that correct?
A. Yes.
Q. Okay. Is that a likelihood? Not so much that the Court
would turn down the DIP, but that you go back to those
lenders that, obviously, you approached and felt comfortable
enough to think they might be willing to get involved in the
case?
A. Well I cant imagine the Court turning down the DIP, but
yes we would certainly if the Court turned down the DIP then
we would go back to other parties.
THE COURT: Depends on the evidence.
BY MR. CELENTINO:
Q. Now there were certain parties you didnt approach about
a DIP, correct? I mean, you never went, for example, to the
member group and said could you guys think about lending to
this Debtor?
A. Correct.
Q. You never talked with them, never approached them?
A. Correct.
Q. And did you go to Alpine Bank?
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A. I personally did not.
Q. Who did?
A. I believe that -- I am not sure maybe counsel or maybe
David Wilhelm or Dan Fitchett; I am not sure.
A. You are guessing, arent you?
A. I believe that somebody on the companys side did
approach Alpine Bank about that.
Q. Did you talk to somebody about a DIP in Phoenix, Arizona?
Mr. Fitchett seems to think you did so I wanted to know if
that was the case.
A. Well I dealt with 53 different parties in that group of
fifteen that signed NDAs. None of them were from Phoenix.
The other ones were from various places around the country
so I dont recall.
Q. Do you recall how many entities from Denver you did
approach of the 53?
A. One.
Q. And who was that?
A. Summit Capital.
Q. So you didnt approach -- I saw on the Rockys game last
night that the official bank of the Rockys is Wells Fargo.
Did you approach Wells Fargo?
A. No.
Q. Now your testimony is not that a potential lender located
in Metropolitan New York market would not provide financing
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in a case outside of New York or Delaware, is it?
A. No.
Q. And you would agree this happens all the time?
A. That happens all the time.
Q. And many New York based lenders have offices in Colorado
or out west?
A. They may or may not.
Q. And many of those lenders -- thank you. Let me just ask,
again, you would agree that New York based financial
institutions lend to companies in Colorado and elsewhere on a
DIP basis or in connection with exit financing that thats
fairly routine or something that does occur?
A. I am not testifying to any particular loans, but
certainly financial institutions in New York and elsewhere
lend around the country.
Q. Are you aware of any lenders -- strike that. Do you
believe that a New York based lender cant obtain adequate
representation in Colorado?
A. No.
Q. And Northlight financial, thats the proposed DIP lender
here, correct?
A. Yes.
Q. It doesnt limit its lending to Delaware and New York,
does it?
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A. I dont know. You are asking if they limit which Courts
they appear in front of?
Q. No I am asking -- let me ask it this way. If this case
is transferred to Colorado, do you know if Northlight will
not fund a DIP loan if the Colorado Court approves it?
A. I --
MR. WARD: Objection.
THE COURT: Hold on.
MR. WARD: This is Mathew Ward for the DIP lender. I
object based on lack of foundation; therefore, hearsay.
THE COURT: What was the question again? It was a
double negative I think, but I cant do you - why dont you
rephrase it.
MR. WIELEBINSKI: Let me see if I can, Your Honor.
BY MR. WIELEBINSKI:
Q. Mr. Bordwin, are you familiar with the pleading
requesting the DIP the approval of the DIP financing that was
filed in this Court?
A. I have not reviewed that.
Q. If I told you that I couldnt find a provision that said
the lender would not condition -- Im sorry; yes, the lender
would not condition its DIP financing based on the venue of
where the case is pending, would you have reason to doubt
that?
MR. WARD: Objection, Your Honor, the witness has
Bordwin - Cross

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testified that he has not reviewed the documents. He,
obviously, doesnt have a foundation to testify in this area.
MR. WIELEBINSKI: Just asking if knows, Your Honor.
MR. WARD: Right and anything that he does know would
be hearsay.
THE COURT: What he knows would be based on what he
read and what he read isnt hearsay. Its the document.
MR. WARD: To that extent, Your Honor, the document
speaks for itself. This witness is not qualified to testify.
THE COURT: He can testify as to what he knows or
doesnt know is in the document. Do you know whether or not
there is a provision in the DIP financing document that says
in effect if the case is in Colorado the lender wont lend?
THE WITNESS: I am familiar with the commitment
letter and term sheet and there is not a provision like that,
but I believe there is a provision -- it is subject to --
financing is subject to, obviously, to a Bankruptcy Court
order. I believe there is a reference in there to venue, but
I cant recall without looking at it.
MR. WIELEBINSKI: Fair enough, thank you, Mr.
Bordwin. Your Honor, Id ask you to just take judicial
notice of the [indiscernible] that was filed in this case,
the pleading regarding the request by the Debtor for the
approval of the DIP. I think since counsel pointed out that
may be the best evidence, I would just ask you to look at
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that or consider that because we didnt see any provision
that restricted lending based on the venue of the case.
BY MR. WIELEBINSKI:
Q. Northlight Financial actually has done lending in cases
throughout the country, isnt that true?
A. I assume so, but I do not know for sure.
Q. Are you familiar with the case filed in Reno, Nevada
called --
THE COURT: Im sorry, you got like two minutes. Go
ahead.
BY MR. WIELEBINSKI:
Q. Are you familiar with the case filed in Reno, Nevada
called Specialty Trust, Inc.?
A. I am not.
Q. Youre not aware that Northlight was both the DIP lender
and exit financer in that case?
A. I did not know that.
Q. If I told you that was the case, would that surprise you
to learn that they provided both of those financial sources
in the case pending in Reno?
A. That would not surprise me.
Q. And could we agree that Renos farther than Denver,
Colorado, as you know?
THE COURT: From where?
MR. WIELEBINSKI: From Delaware.
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BY MR. WIELEBINSKI:
A. I agree with that.
THE COURT: You can fly direct from Reno, from
Philadelphia by the way and not to Cordillera.
BY MR. WIELEBINSKI:
Q. Mr. Bordwin, paragraph 15 of your declaration states that
you believe the Northlight Financial DIP loan evidences the
likelihood of a rehabilitation. In that regard, again that
has not been approved yet by the Court that DIP loan. Weve
established that. But would that reorganization require the
cooperation and the involvement of the club members in your
mind actively participating in the go forward operations of
the company?
A. Can you ask the question differently?
Q. Paragraph 15 of your declaration states that Northlight
its loan evidences a likelihood of a rehabilitation?
A. Yes.
Q. When you say that, are you contemplating that the members
will be actively involved in participating in the operations,
the club management, being members of the club going forward
under a plan?
A. When I say revitalization I expect that members will
become active members in the club and pay their dues and pay
their bills.
Q. Its a critical component of a successful plan, would you
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say?
A. Critical component of a successful business is that the
members pay their dues and pay their bills.
Q. Thank you. Paragraph 16 of your declaration says that
because capital sources with Chapter 11 experience are
heavily concentrated in the northeast and are more
comfortable with Delaware and New York Courts, the Debtors
chances of reorganization are greatly enhanced if it remains
here. Do you remember that statement?
A. Yes.
Q. Would that apply then to any Debtor case where they are
seeking a DIP or exit financing from a New York lender?
A. I think so.
Q. But this lender, nevertheless, is not requiring it. I
think weve established that, not in this case.
A. I thought the document speak for themselves.
Q. But you remember from the term sheet that there was no
provision that required that?
MR. CELENTINO: Objection; misstate the testimony to
the extent that its been asked before and answered.
THE COURT: Yeah, sustained.
BY MR. WIELEBINSKI:
Q. Let me ask you this, is your testimony that this Debtor
will be unable to reorganize and will be forced to liquidate
if the case is transferred to Colorado?
Bordwin - Cross

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A. I think that the ability to source new capital is greatly
enhanced by being here than by being in Colorado.
Q. Is your testimony that the Debtor will be unable to
reorganize and will be forced to liquidate if the case is
transferred to Colorado, thats my question?
A. I cant testify to whether they will be unable or not.
Q. And its not your testimony that a New York lender would
be unwilling to travel to Colorado and participate in a
bankruptcy case were it based in Colorado?
A. You said is that not my testimony? That is not -- thats
correct that is not my testimony.
Q. Your testimony is not that this proposed DIP lender would
not lend if the case is in Colorado?
A. I think you asked three negatives there.
MR. CELENTINO: Objection; asked and answered.
THE COURT: Youre re-plowing the field. Weve been
here.
BY MR. WIELEBINSKI:
Q. If your retention is approved, but the case goes to
Colorado are you going to continue to participate in it?
A. Yes.
Q. Nevertheless if its transferred to Colorado and you do
participate, it will be more inconvenient for you to have to
travel to Colorado, is that true?
A. Is it more convenient for me to travel to Delaware than
Bordwin - Cross

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Colorado?
Q. Yes.
A. Yes.
Q. Thank you very much.
MR. WIELEBINSKI: Pass the witness.
THE COURT: All right. Mr. Collins.
MR. COLLINS: Just a few questions.
BY MR. COLLINS:
Q. Good afternoon, Mr. Bordwin, Mark Collins on behalf of
the Class Member Representatives; just a few questions. You
stated earlier that you have not been asked to sell or to
market, I should say, any of the golf course facilities, is
that correct?
A. Yes.
Q. Do you know if the Debtor has made a determination to say
currently made a determination to say any of the courses?
A. Weve been asked to prepare to market the Mountain
Course, but not been authorized to start that.
Q. Do you expect the sale of the Mountain Course to happen
during the Chapter 11 case?
A. If I were authorized to sell it, I guess the answer is
yes.
Q. And who do you take direction from at the Debtor?
A. Well in truth, Ive not really interacted very much with
the Debtor since the bankruptcy filed. I was on vacation and
Bordwin - Cross

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just came back on Friday. So, but pre-bankruptcy both Dan
Fitchett and David Wilhelm.
Q. And have you reviewed the Debtors business plan at all?
A. I have not.
Q. Do you know if the Debtor has a business plan?
A. I know theres a business model thats been worked on,
but Im not sure if theres a formal business plan.
Q. Do you know if that model includes or assumes a sale of
the Mountain Course?
A. That model has changed multiple, multiple times during
the period that I was actively looking at it, so pre-
bankruptcy and some versions it did contemplate a sale;
others, it didnt.
Q. So if a member -- if Mr. Fitchett, for example, stated
that the Debtors had concluded in their business judgment to
sell the Mountain Course, would you have any reason to
disagree with that statement?
A. I would not.
Q. Just a few questions on your view here, kind of immediate
view that this was going to be a reorganization case and not
a sale case or a liquidation or the assets. Do you know if
the Debtor has obtained any commitments of equity capital for
a plan of reorganization?
A. Not as far as I know.
Q. Has a plan term sheet been circulated amongst the Debtor,
Bordwin - Cross

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Alpine Bank or the creditors committee?
A. No.
Q. Has there been any lock up agreements with any creditors
prepetition?
A. No; not as far as I know.
Q. Is this a pre-negotiated Chapter 11 case?
A. No.
Q. Its certainly not a pre-package Chapter 11 case?
A. Certainly not.
Q. One or two questions about the DIP financing. I
understand the interest rate is fixed at 16%, is that
correct?
A. Yes.
Q. What is the prime rate today, if you know?
MR. WARD: Objection, Your Honor; relevance.
THE COURT: Mr. Ward objected based on relevance;
overruled.
MR. COLLINS: Thank you.
BY MR. COLLINS:
A. Do I know what the prime rate is, no I dont.
Q. Do you know what the current non-default rate is under
the Alpine loan agreement?
A. I believe its 10%.
Q. If I said 6% would you have any reason to disagree with
that?
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A. No.
Q. A 16% interest rate in todays market do you view that as
high?
THE COURT: What market?
MR. COLLINS: In the real estate market for a
priming DIP Loan.
BY MR. COLLINS:
A. No I think thats a pretty standard for finding DIP
loans.
Q. And you characterized DIP loans as safe, isnt that
right?
A. Yes.
MR. COLLINS: I have no further questions, Your
Honor.
THE COURT: All right thank you. Anything else?
MR. MARRIOTT: Your Honor, I dont have any
questions based on a stipulation that the Debtor and I have
agreed on. This is Vince Marriott on behalf of Alpine Bank.
The witness testified on a number of occasions to the
existence of substantial equity and a value of $33 million as
the basis for his opinion that this was a reorganizable
Debtor.
The Debtor and Alpine Bank have agreed that that
testimony is for purposes of this hearing only and will not
be included as evidence of value for purposes of the DIP
Bordwin - Redirect

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hearing.
THE COURT: I understand; thank you. Redirect.
MR. CELENTINO: Thank you, Your Honor. Debtor is
trying to be very cognizant of the timeframes that the Court
has given us in its scheduling order, so Ill be as brief as
I can, given the extent of cross.
BY MR. CELENTINO:
Q. Mr. Bordwin, much was made of the use of the word you
knew immediately when you visited the property that this was
a rehabilitation. You say you knew immediately, what did
that mean to you?
A. It meant that theres really no reason to go through a
Court sale of these assets and that theres a business here
that can reorganize.
Q. When you indicated on questioning that the Debtor will
have cash flow problems if the DIP is not approved, you
didnt really mean the DIP. You meant the cash infusion,
correct?
A. Yes, I mean there is a cash flow need that can be met in
a variety of ways. I was referring to the DIP financing
proposal of Northlight.
Q. So you testified that if the DIP financing proposal of
Northlight is not approved, the Debtor will seek alternative
sources for financing?
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A. Yes.
Q. And is it your view that alternate sources of financing
commitments will be offered to the Debtor?
A. Yes.
Q. When you were first retained by the Debtor prepetition
you were aware that there was an appraisal of the Debtors
real property assets done in 2009, correct?
MR. CAL: Objection, Your Honor; leading.
BY MR. CELENTINO:
A. Yes, I was aware of that appraisal.
Q. Were you made aware of the amount that was set forth in
that appraisal on 2009?
A. Yes.
Q. What was that amount?
A. Fifty million dollars.
THE COURT: Five zero or one five?
THE WITNESS: Five zero.
BY MR. CELENTINO:
Q. And at the time that you met with the Debtor to discuss
whether or not a rehabilitation was possible, you became
aware, did you not, about the decrease in values that have --
let me strike that, Your Honor; let me strike that. You
testified earlier that you were present when you heard the
previous witness talk about an approximate 30% decrease in
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values over the last time period in Colorado, correct?
A. Yes.
Q. So when you formulated an opinion that there was value to
the Debtor without knowing what the Debtors appraisal might
say, you were assuming about a 30% decrease in the $50
million dollar value, correct?
MR. MARRIOTT: Objection, Your Honor; that is
leading. I mean hes essentially testifying for the witness
and asking the witness to agree with him.
THE COURT: Yeah I agree there. Objection
sustained.
BY MR. CELENTINO:
Q. What was your opinion of the likely value of the Debtors
assets in the May/June timeframe of this year?
MR. MARRIOTT: Objection again, Your Honor. Theres
no foundation for this witness to give an opinion of value.
In fact, when he was testifying previously he was explicitly
relying on the valuation of others.
THE COURT: Well were talking about the basis for
his statement even that [indiscernible] that the case was --
MR. CELENTINO: The value of the case, Your Honor,
correct. So the question, yes.
THE COURT: So the question is at the time you said
that did you have -- Im understanding at least the belief is
the value and, if so, what?
Bordwin - Redirect

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THE WITNESS: What I did know was that there was a
$50 million dollar appraisal that was done in, I forgot, I
think 2009 that given market conditions values have declined.
But by the same token, the mortgage debt here, the first
mortgage is $12.7 million. Whatever the decline would be, it
would certainly be a significant equity cushion in my
opinion.
THE COURT: Okay.
BY MR. CELENTINO:
Q. And given your belief that there was a significant equity
cushion that helped you form the basis that a rehabilitation
is possible in this case?
A. Yes.
Q. And youre aware, are you not that -- strike that. Are
you aware that the Debtor receives revenue from members
dues?
A. Yes.
Q. You were asked earlier whether or not participation by
members paying dues was critical to the reorganization,
correct?
A. Yes.
Q. Does the Debtor need the current members to pay dues, yes
or no?
A. No.
Q. The Debtor just needs members to pay dues, correct?
Bordwin - Redirect

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A. Correct.
Q. And you believe that the Debtor could rehabilitate
without the current homeowner members paying dues if there
were alternate dues paying members, correct?
MR. MARRIOTT: Your Honor, objection again. Counsel
is, again, really testifying for the witness and simply
asking him to agree with him.
THE COURT: Yes; sustained.
BY MR. CELENTINO:
Q. Do you have an opinion on whether or not these current
members are necessary to pay dues for the Debtors successful
reorganization?
A. Well the key area is cash flow, so its people paying
dues; people using the club and paying their bills. And
whether those are current members or some new members is
somewhat irrelevant. The key is simply having members who
use the facilities and pay their dues.
Q. So when you met with the bankers in Colorado, did they
discuss with you -- strike that. After that meeting did you
form an impression of the controversy that existed between
the clubs and its members?
A. That meeting reinforced what I had heard about the extent
of the controversy, so yes it reinforced that.
Q. And you testified earlier that you formed the impression
that the Rocky Mountain states would not be a fertile ground
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for financing for the Debtor?
A. Yes.
Q. Did the meeting with the Colorado bankers help reinforce
that opinion?
A. They helped develop that opinion.
Q. Do you have any reason to believe that any of the
members, that would be members of the club, couldnt
participate in the proceedings here in Delaware?
A. Any reason that theyre prohibited from; I have no reason
to believe that.
Q. Are you aware of what the default rate is under the
Alpine loan agreement?
A. I believe its over 20%. I think its 25%.
MR. CELENTINO: We have nothing further, Your Honor.
THE COURT: Thank you. You may step down.
MR. CAL: [indiscernible] question, Your Honor?
THE COURT: No, no that was redirect. Step down.
No, we did direct, cross, redirect. You have another
witness?
MR. BARRY: We have one more witness, Your Honor.
THE COURT: All right very good, lets take lunch.
And well reconvene promptly at 2:15.
(Recess 1:09:45 - 2:18:52)
MR. BARRY: Good afternoon, Your Honor.
THE COURT: Good afternoon.

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MR. BARRY: Again for the record Joseph Barry on
behalf of the Debtor. Your Honor had asked in closing that
we consider the further documents that were identified by the
movants. We have and we are pleased to report that we will,
subject to the same stipulation we put on the record at the
beginning of the hearing and with the exception, again, of
Mr. Fitchetts deposition transcript, we will not object to
their introduction.
For the record back in 48 was the supplemental
affidavit of Ronald Yordy. Your Honor, that was a document
that we had actually identified on our exhibit list. That
and some others were identified solely for purposes of
potential use impeachment of one of the other sides
witnesses who didnt appear to testify, Your Honor. So with
that, Your Honor, we are not opposing the introduction of
those additional documents.
THE COURT: All right, theyre admitted without
objection. Next witness, and thank you, Mr. Barry.
MR. CELENTINO: If it pleases the Court, the Debtor
will call its next witness Daniel L. Fitchett, Jr.
THE COURT: Okay. Thank you.
DANIEL FITCHELL, JR., DEBTORS WITNESS, SWORN
THE CLERK: Please state and spell your name?
THE WITNESS: Its Daniel, D-a-n-i-e-l, middle
initial L; last name Fitchett, F-i-t-c-h-e-t-t, Jr.
Fitchett - Direct

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MR. CELENTINO: For purposes of the examination,
Your Honor, just my own housekeeping, we have prepared the
testimony on the basis of the time limits that the Court set
out in its scheduling order. We will be as brief and adhere
to those as best as possible.
DIRECT EXAMINATION
BY MR. CELENTINO:
Q. Mr. Fitchett, are you employed by the Debtor?
A. Yes, I am.
Q. What is your title?
A. CEO.
Q. What is your role for the Debtor?
A. My role is the primary management of the clubs and see
them through the situation that we are working on.
Q. Who manages the day-to-day affairs of the Debtor?
A. I do.
Q. Whose decisions govern the day-to-day affairs with the
Debtor?
A. Well currently its the chief credit officer and several
people working for him and myself.
Q. Chief credit officer, what title is that?
A. Restructuring officer. I misspoke.
Q. Who would be making strategic business decisions
regarding the Debtors business?
Fitchett - Direct

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A. Al Siegel and myself.
Q. Has the Debtor made any strategic business decisions
since the filing of the case?
A. Yes, he has.
Q. Has the Debtor made any strategic business decisions
since the filing of the case?
A. Yes, we have.
Q. What was that strategic business decision?
A. We decided to open the Timber Hearth Grill beginning
November 15
th
for the winter season.
Q. And that decision is embodied in what document?
A. Its in -- I dont know exactly.
Q. Did the Debtor submit a budget in connection with its
Debtor-in-possession financing?
A. Yes, we did.
Q. In connection with that budget, does that budget identify
the strategic business decision to open the Timber Hearth
Restaurant in November?
A. Yes, it does.
Q. Who made that decision?
A. It was primarily made by Al Siegel and myself.
Q. Did David Wilhelm agree with that decision?
A. He did not.
Q. The decision was made over his objection, was it not?
A. Yes, it was.
Fitchett - Direct

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Q. Where is the Debtors financial advisor located?
A. In Chicago.
Q. Prior to joining the Debtor as its CEO, would you
describe for me please your business experience?
A. Ive been engaged in the real estate business and clubs
for most of my professional career which extends over a
period of 40 years.
Q. Have you run a golf club before?
A. I have not, but Ive been on golf committees and the
members of three primary clubs.
Q. As a member of those clubs, were you on the committee?
A. Yes, I was.
Q. And that committee helped run the club?
A. It did.
Q. And you have experience in running through those
committees golf club?
A. Yes.
Q. Does the Debtor have creditors who are not located in
Colorado?
A. Yes.
Q. Does the Debtor have contracts with parties that are not
located in Colorado?
A. Yes, we do.
Q. Does the Debtor have vendors that are not located in
Colorado?
Fitchett - Direct

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A. Yes, we do.
Q. Approximately, what percentage of the vendors that are
owed money by the Debtor are not located in Colorado?
A. About 55%.
Q. Are you familiar with the schedules and statements on
file on the case?
A. Yes, I am.
Q. The best of your understanding are those schedules and
statements accurate?
A. Yes.
Q. Are you familiar with what percentage of property owners
in the Cordillera community have only one residence within
that community?
A. Not precisely.
Q. Do you have some familiarity with that statistic?
A. Yes, I do.
Q. When you say not precisely, could you provide us with
your best estimate?
A. I would say somewhere in the neighborhood of 40 or so
that are full time residents.
Q. Are you familiar with the document -- if youll bear with
me, Your Honor -- entitled Notice of Filing and Excerpt of
Schedules of Assets and Liabilities of Cordillera Golf Club
LLC, dba The Club at Cordillera?
A. Yes.
Fitchett - Direct

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MR. CELENTINO: For the record, Your Honor, this is
docket number 177 in the case for Your Honors review.
BY MR. CELENTINO:
Q. Was this document prepared at your instruction?
A. Yes, it was.
Q. And who was it prepared by?
A. Helen Mays who is the accountant for the membership.
Q. And based on your review of this document as filed, do
you believe it is accurate?
A. I do.
Q. This document is the or purports to be the membership
list of the club at the time of the filing, does it not?
A. Yes.
MR. CELENTINO: May I show the document to the
witness, Your Honor?
THE COURT: Yes.
BY MR. CELENTINO:
Q. Mr. Fitchett, turning to page 20 of that document, how
many members does it show are on the current membership
roster of the club?
A. 909.
Q. That particular document has membership broken down by
state, does it not?
A. Yes, it does.
Q. Does the club have members that reside outside of the
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United States?
A. Yes, it does.
Q. Turning to, I believe, its page 6. Correct me please if
Im wrong. Is that where the number of members from the
state of Colorado are listed?
A. Thats page 2?
Q. Im sorry page 2.
A. 320.
Q. So 320 of 909 members are on the Debtors records
Colorado residents?
A. Yes.
Q. And you indicated earlier that you thought it was less
than 40 that have a Colorado address as their only residence,
correct?
A. Yes.
Q. So is it your belief that the vast majority of the
members of the club have their property in the Cordillera
area as a second home or a vacation home?
A. Yes.
Q. Are you generally familiar with the values of the
residences within the Cordillera community?
A. Yes, I am.
Q. And that familiarity would be based upon what?
A. Living in the valley for about 30 years and also being
involved in the brokerage business and running brokerage
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companies.
Q. What would be the approximate range of price of the homes
that are within the Cordillera community?
A. I would say the lower prices currently are around
$750,000.00 north and then ranging up north of $10 million
dollars.
Q. As a general rule, you would describe the area as a very
affluent area?
A. I would.
Q. And its your testimony that the vast majority of these
homeowners have owned these properties as their second home?
A. Yes.
Q. Or their vacation home?
A. Or their vacation home.
Q. When a member joins the club they complete an application
for membership, do they not?
A. Yes, they do.
Q. And based on that application what is the clubs --
strike that. Is there a term that the club anticipates --
strike that again. When a member joins the club after
joining the club there is an expectation that they pay annual
dues, correct?
A. Correct.
Q. Over how many years is it anticipated that a member will
pay dues?
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A. Thirty years.
Q. What is the current annual dues amount charged by the
Debtor?
A. $12,500.00 annually.
Q. How long has that been the dues amount?
A. Last two years.
Q. For a member that were to join the club today the club
would anticipate a dues revenue of $12,500.00 for the next 30
years from that member, correct?
A. Correct.
THE COURT: All right, Im sorry. So your annual
dues are fixed at whatever they are when you start with the
club?
THE WITNESS: No theyre not. Theyre adjusted from
time to time pursuant to the membership plan. Theyre
currently $12,500.00.
THE COURT: But they wouldnt pay $12,500 for 30
years, it would move up?
THE WITNESS: Likely move up, yes.
BY MR. CELENTINO:
Q. That was going to be my next question, Your Honor. One
would expect that rate to move upward as time went on,
correct?
A. Yes.
Q. And some of the membership agreements have been enforced
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for some time, have they not?
A. They have.
Q. Do you have an understanding of the approximate revenue
stream that is reflected by the remaining time on the
membership -- revenue stream from dues for the remaining time
left on the aggregate number of membership contracts in
place?
A. Not precisely, but I think it would be north of a billion
dollars.
Q. And with a little bit of time, you could figure out how
much north of a billion dollars, correct?
A. Yes, I could.
Q. And its your testimony that two thirds of those members
reside outside of the state of Colorado, correct?
A. Correct.
Q. So at north of a billion dollars simply doing the math,
what is the anticipated revenue stream from the Debtor from
the members that live outside of Colorado?
A. Over 600 million.
Q. You indicated in your declaration submitted in support of
the venue motion that you believed that the Debtor may face
difficulty in finding counsel in Colorado if venue of the
case is transferred there, correct?
A. Correct.
Q. What is that testimony based upon?
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A. Its based upon living in the valley and being familiar
with the case or the cases, as well as being employed since
March 1
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.
Q. Are you familiar with the level of acrimony that has been
described today regarding the relationship between the club
and its members?
A. Yes, I am.
Q. Could you describe that level of acrimony for us please?
A. Well I think it takes two levels. There seems to be a
core group that insists upon writing that I would say rude
messages on the invoices and sending them back; telephone
calls; and Ive been approached on the street.
Q. In your handling of the day-to-day affairs of the Debtor,
you come into contact with many members, do you not?
A. I do.
Q. You come into contact with current dues paying members,
do you not?
A. I do.
Q. You come into contact with those who have not paid dues,
correct?
A. I certainly have.
Q. And you come into contact with folks on the membership
resigned list, correct?
A. Yes.
Q. You were in Court when Mr. Bordwin testified earlier that
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it was his belief that it was a small group of members that
were pursuing the acrimony against the Debtor, correct?
A. Correct.
Q. Is that your view?
A. Its my view.
Q. What do you base that view upon?
A. Talking to existing members telling me they wish it would
go away; having dinner with people that say theyre being
ostracized because they have paid their dues and choose to
pay golf --
MR. CAL: Objection, Your Honor; this is all hearsay
now.
MR. CAL: Move to strike.
BY MR. CELENTINO:
Q. Is it your sense that there are many members of the
Cordillera community that would like to rejoin the club?
A. Yes --
MR. CAL: Objection, Your Honor; lack of foundation.
THE COURT: Overruled. You said yes, I believe?
THE WITNESS: Yes.
BY MR. CELENTINO:
Q. Do you have an opinion as to how many members would like
to rejoin the club?
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A. I would --
MR. CAL: Objection, Your Honor; now were getting
into pure speculation and guess work.
MR. CELENTINO: I believe as a lay witness he can
render his opinion, Your Honor.
THE COURT: Well, go ahead, sir. No, go ahead.
MR. CAL: Your Honor, this is not a proper area of
inquiry for lay witness opinion testimony.
THE COURT: I agree; its disguised hearsay;
objection is sustained.
BY MR. CELENTINO:
Q. Are you generally familiar with the litigation commenced
against the Debtor that we generally refer to as the class
member litigation?
A. Generally.
Q. As the CEO Of the Debtor have you been involved in the
Debtors defense of that litigation?
A. Minimally.
Q. The Debtors schedules and statements list past due
membership dues as an asset of the Debtor, correct?
A. Correct.
Q. Do you know the approximate amount of that past due dues?
A. Its past due dues plus trade revenue and its about $5.7
million dollars.
MR. CELENTINO: May I consult with my co-counsel for
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one second, Your Honor?
THE COURT: Yes.
BY MR. CELENTINO:
Q. Would you describe the Vail, Colorado area as a resort
area?
A. Yes, I would.
Q. Would you describe the operations of the golf resort in
that area or the golf club in that area as seasonal?
A. Yes.
MR. CAL: Objection, Your Honor; this is very
leading.
THE COURT: Overruled. I mean these arent
particularly complicated questions. Lets move through them.
Go ahead.
BY MR. CELENTINO:
Q. Would you describe the operations of the club as
seasonal?
A. Yes, I would.
Q. Can the club operate its golf course in the winter
months?
A. It cannot.
Q. What is the primary business in Vail, Colorado in the
winter months?
A. Skiing.
Q. Do you have an opinion of how many of the golf club
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members continue to reside in the Cordillera area during the
winter months?
MR. CAL: Objection, Your Honor; it seems like hes
going after improper lay opinion testimony again. Hes
asking for his opinion.
THE COURT: Well yes he has knowledge generally of
the membership. I think he has a foundation to say his
estimate of how many of the -- are we talking club members?
MR. CELENTINO: Club members.
THE COURT: Are year round residents. So go ahead
and answer it if you wish.
BY MR. CELENTINO:
Q. How many of the club members are year round residents?
A. I think I said 40 before; thereabout.
Q. So if there are 909 club members, how many of them are
not year round residents?
MR. CAL: Objection, Your Honor; that assumes facts
that are not in evidence, the number of members.
THE COURT: There is evidence as to the number of
members. It was previously put into evidence with this
witness; overruled. Can you answer, sir?
THE WITNESS: Yes, I can.
THE COURT: Okay, go ahead.
THE WITNESS: Approximately 860.
THE COURT: Okay. Forty percent -- I thought he
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said --
MR. CELENTINO: I said 40.
THE COURT: Forty total members. Now Im confused.
BY MR. CELENTINO:
Q. Is it your testimony that less than 40 members are year
round residents?
A. Yes.
Q. So theres a possibility that many of them will not be
living in Colorado year round if the case were venued in
Colorado?
A. That is correct.
Q. And as to the members that would not be living in
Colorado year round, a venue in Colorado for the time of the
year that theyre not -- do you have an opinion as to whether
-- dont let me stretch it. Im sorry; not an opinion.
THE COURT: Youre getting into that --
MR. CELENTINO: Yeah. I think thats sufficient.
THE COURT: Ill let you know about that when I
rule.
MR. CELENTINO: Thats sufficient, Your Honor; thank
you.
THE COURT: Im sorry I wasnt even looking up. Is
that it for direct?
MR. CELENTINO: Thats it, Your Honor.
THE COURT: Okay, very good; sorry. Cross.
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CROSS EXAMINATION
BY MR. CAL:
Q. Good afternoon, Mr. Fitchett.
A. Good afternoon.
Q. Lets start with that exhibit you were handed earlier.
Do you have that in front of you?
A. I do.
Q. And that list shows the residency of persons who own the
909 lots, is that correct?
A. No, its not. It shows people who have been members of
the club from time to time. And theyre either on the
sellers wait list; theyre in the suspended category; or in
the active member category. It doesnt relate to the lots.
Q. Okay so some of those people are no longer active
members?
A. Theyre no longer active.
Q. And how any is the total on that list?
A. 909.
Q. Is that list arranged alphabetically?
A. Its arranged by state and I would assume -- no its not.
Q. So can you find Colorado on that list for me?
A. I can, page 2.
Q. How many in Colorado?
A. 320.
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Q. How many in Texas?
A. 132.
Q. And how many in Delaware?
A. Two.
Q. California?
MR. CAL: Your Honor, to try to expedite matters, we
generated a list of what we thought were the western states.
I dont know if that would be helpful to tender that to Your
Honor or wed certainly provide it to the other side, but we
identified 13 states that we considered the western states
and the total is 550. And Id be happy to tender that to the
Court if it would be helpful. Heres a copy of what we did.
MR. CELENTINO: To the extent the Court wants to
receive the document, please allow us to take a look. To the
extent that counsel is testifying when hes supposed to be
asking questions, we object.
MR. CAL: Maybe it would be good for me to proceed
and counsel can consider whether they want to admit the
document or not.
THE COURT: Well Im trying to cut through it. I
mean -- would you [indiscernible] to the Court that its
accurate and --
MR. CAL: I represent to the -- yes, Your Honor. I
represent that list was created by Delaware counsel Ashby &
Geddes this morning. We identified what we consider the
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western states and we took the numbers off of a schedule and
reached a total.
THE COURT: All right, Mr. Palacio?
MR. PALACIO: Indeed, Your Honor. We simply just
had somebody try to correspond the numbers that were listed
on the supplement and just put in a chart on the 13 states
that we recognize or believe to be western states.
THE COURT: Very good; Ill allow the use of the
exhibit; if I could have a copy.
MR. CAL: May I approach, Your Honor?
THE COURT: Yes.
MR. CAL: Thank you, Your Honor.?
MR. CAL: [indiscernible]?
THE COURT: Yes, you may.
BY MR. CAL:
Q. Mr. Fitchett, theres 17 listed in Kansas, correct?
A. According to your list, yes.
Q. Eight in Oklahoma?
A. Yes.
Q. Five in Nevada?
A. Yes.
Q. Two in South Dakota?
A. Yes.
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Q. One in Oregon?
A. Yes.
Q. If you take a look at that list, do you agree that all of
those states are properly considered western states?
A. Yes.
Q. And the total is 550, correct?
A. Thats what the sheet says.
Q. Thats what the number says on the sheet.
A. Right.
Q. Thank you. Did you read the Debtors omnibus objection
to the venue motions before it was filed?
A. Yes.
Q. And is it true that in paragraph one of that objection
the Debtor identifies the valuation of a properties, the
post-petition financing as important issues?
A. I dont believe I understand the question.
Q. Okay well paragraph one the second sentence says, the
Debtors economic rehabilitation turns on the valuation of
its real estate, its going concern business, and its
personal property and other assets, is that correct?
A. Yes.
Q. Now the Debtors appraiser is from the state of Colorado,
correct?
A. Yes.
Q. And the Debtors appraiser visited the club and the golf
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courses several times, is that correct?
A. Yes.
Q. And the going concern business, thats the business
thats conducted in Colorado, is that correct?
A. Yes.
Q. And the Debtors personal property and other assets. Now
for a moment I want to take receivables to the side. Other
than receivables, the Debtors personal property and other
assets are all in Colorado, is that correct?
A. Yes.
Q. The Debtor doesnt own -- again receivables to the side -
- the Debtor -- Im sorry. Strike that question. In terms
of the receivables you remember we talked about those at your
deposition on Friday, correct?
A. Yes.
Q. And, in fact, all of those receivables are paid to the
Debtor into Colorado, correct?
A. Yes.
Q. And, in fact, your account receivables are part of the
business that is located in Colorado, correct?
A. Yes.
Q. You remember at the -- well Im sorry, let me start that
over. The reasons the Debtor filed in Delaware include the
origin of the company that is the best place to try this
case; and the primary reason was because of the acrimony that
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exists within the local region, as well as Colorado that is
surrounding the club and their members. Are those three
reasons correct?
A. Yes.
Q. And then on Friday after we took a break and you had met
with your attorney and at your attorneys direction you had
reviewed your declaration, you included another reason,
correct?
A. I dont recall.
Q. Is there any other reason?
MR. CELENTINO: Objection to the extent its calling
for attorney/client.
BY MR. CAL:
Q. Im asking is there any other reason why the Debtor filed
in Delaware?
THE COURT: Other than confidential attorney/client
privilege?
MR. CAL: Yes, sir.
THE WITNESS: No I dont believe so.
BY MR. CAL:
Q. How many -- is this your third trip to Delaware since the
Debtor filed its Chapter 11 petition?
A. It is.
Q. And on your first trip that was for the first day
hearings?
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A. Yes.
Q. And you spent two days?
A. The greater part of two days, yes.
Q. And not just in Delaware, but traveling.
A. Yes.
Q. Was the traveling combined with your time in Delaware,
correct?
A. Correct.
Q. And did you look into whether you could actually have
gotten to Delaware this morning if you had left Denver in the
morning today?
A. I didnt consider it.
Q. You wanted to come in yesterday?
A. I did.
Q. What was the second occasion you came to Delaware?
A. It was the formation of the creditor committee.
Q. And you wanted to attend that meeting?
A. Yes.
Q. And how many days did you spend on that trip, both in
Delaware and traveling?
A. Approximately, almost two days.
Q. How long did it take you yesterday to get from your home
to the hotel here in Delaware?
A. That was my assignment you gave me.
Q. It was; you remembered. Thank you for remembering that.
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A. It took me from my home. It was 23 miles to the airport.
It took me about 35 minutes. I was at the airport for about
45 minutes. And the flight was 3 hours. And about 40
minute cab ride to the location here.
Q. Okay so how long was that?
A. Id say about seven hours, rough map.
Q. Okay. Are you going to be in Delaware tomorrow?
A. Yes.
Q. Are you staying for the hearing on Thursday?
A. Yes.
Q. So youre going to stay on Wednesday also?
A. Yes.
Q. When are you going to be back in Cordillera doing
business of a CEO in Cordillera?
A. Probably after this hearing.
Q. Youre going to go back to your hotel and work, is that
what youre saying?
A. Yes.
Q. Okay. When are you going to be back on the ground in
Cordillera?
A. I would guess Thursday, I mean Friday or Saturday. Im
not familiar how long this is going to take.
Q. Okay and then, of course, assumes the Court keeps the
venue here in Colorado; right in Delaware, Im sorry. I
misspoke.
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I want to talk about the various professionals that the
Debtor has hired. The chief restructuring officer Mr.
Siegel, how many days has he spent at the out in Cordillera?
A. To my knowledge one full day.
Q. And more than some half days?
A. I dont know. I said to my knowledge one full day as I
spent that whole day with him.
Q. You spent the full day with him. Its possible he was
there other days when you were not there?
A. He had several individuals that have repeated appearances
that report to him that were working with us.
Q. So hes got individuals who work with him who have had
repeated appearances at the club?
A. Yes.
Q. And how many times has Mr. Bordwin visited the club?
A. One time.
Q. Has any people working with Mr. Bordwin visited the club?
A. No.
Q. The CFO I think you told me on Friday the CFO visited the
club multiple times, is that correct?
A. I would say at least two, probably more than two that I
can recall.
Q. And how about representatives working with the CFO?
A. Id say four to eight days.
Q. How many times did the DIP lender visit the club?
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A. I think he was there a day and a half one time.
Q. On Friday you testified that the DIP lender has visited
the club once or twice for a total of two or three days, was
that your testimony on Friday?
A. That was the best I recall.
Q. So is that testimony accurate?
A. It was the best I recall when you asked me the question
and its the same today.
Q. I understand. So the answer today is the DIP lender
visited the club once or twice for a total of two to three
days?
A. I believe so.
Q. And then you also testified that between five to 10 other
people have visited the club, correct? Thats a poor
question; I will clean that question up, so I strike the
question. How many people who are interested in lending to
the Debtor or being an investor or purchasing the assets have
visited the club since you became the chief executive
officer?
A. I would say three to my knowledge.
Q. And you became chief executive officer on March 1, 2012?
A. Yes.
Q. On Friday you told me it was between five and 10, do you
remember that?
A. I remember that.
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Q. Pardon me?
A. I sort of remember that.
Q. Well lets take a look at your deposition.
MR. CAL: May I approach the witness and give him an
exhibit binder please, Your Honor?
THE COURT: Yes.
MR. CAL: Thank you.
THE COURT: Are you giving him a binder or?
MR. CAL: I just have to [indiscernible] copy of the
binder.
THE COURT: Stick to the exhibits.
MR. CAL: Yes, sir.
THE WITNESS: Thank you.
BY MR. CAL:
A. What page?
Q. Mr. Fitchett, would you turn to page; Im sorry, turn to
Exhibit 45 please.
A. Okay.
Q. And could you turn to page 32. Now you recall you were
under oath when I deposed you on Friday, correct?
A. Yes. Hold on.
THE COURT: Its actual page 8 and then if you look
there are --
MR. CAL: Im sorry, Your Honor, I was looking at
[indiscernible]. Thank you for your patience, Your Honor.
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THE COURT: Of course.
BY MR. CAL:
Q. Are you at page 8? Youre looking at the transcript
thats got four pages to a page, correct?
A. Ive got the right place.
Q. Okay. So on Friday you were under oath, correct?
A. Correct.
Q. And on Friday your testimony was that more than five, but
less than 10 had visited the club, correct?
A. My testimony related to the question which said
purchasers visit the club. And there have been numerous
purchasers or potential venture partners visit the club
different than the DIP lender.
Q. Yeah okay Im sorry different than the DIP lender. Im
sorry then were confused. Im not limiting this to the DIP
lender. I want to know since youve been CEO; you became
chief executive officer on March 1, 2012, correct?
A. Correct.
Q. Since you became CEO, how many potential purchasers or
other lenders or investors have visited the club?
A. And I said somewhere between five and 10. And the reason
I had a variable there is Mr. Wilhelm who is trying to rescue
his asset has had people there without me looking at the
club. So Im speculating to some degree. This is to my
knowledge that I talked about here.
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Q. Okay so five to 10 have visited the club to your
knowledge.
A. Yes.
Q. Have the Debtors bankruptcy attorneys from Foley &
Lardner visited the club?
A. Yes.
Q. How many times?
A. I have no idea.
Q. Do you know how many different attorneys visited the
club?
A. I would say -- you know, I really dont know. Im
speculating. I dont keep track of that. I didnt know it
was important.
Q. Okay but certainly more than one day?
A. More than one day.
Q. More than one attorney?
A. More than one attorney.
Q. Has the Debtor sought to retain any Colorado
restructuring attorneys?
A. I dont know the answer to that. No I dont know.
Q. Since you were chief executive officer on March 1, 2012,
have you any knowledge of the Debtor seeking to retain a
Colorado restructuring attorney?
A. I have no knowledge and nor have I done it.
Q. Will a successful reorganization require that members
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agree to pay dues once again?
A. Well as Mr. Bordwin said, we need to have dues paying
members and where they come from is part of the
reorganization plan.
Q. Where could they come from if all of the current members
are not going to pay dues?
A. Well Im not --
MR. CELENTINO: Objection; assumes facts not in
evidence.
THE COURT: Overruled. Go ahead.
BY MR. CAL:
A. Im not sure they wouldnt pay dues.
Q. But the assumption was -- well Im sorry. So if the
current members do not pay dues you seem there does seem to
be some assumption that some other members are going to come
in and pay the dues.
A. The Vail Valley has a very strong golf population. The
major clubs are full. Their memberships are full. And weve
had repeated people asking us about joining a club from front
range and other locations throughout the valley. The
previous membership was limited to those who purchased
property within Cordillera. That since has been opened up
and we would certainly open it up if all the members
boycotted; all the current members boycotted.
Q. So in the past year, how many of these new members have
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joined the club and paid dues?
A. There has been a new member in the past year.
Q. Now you believe Mr. Wilhelms primary residence is in
Colorado, correct?
A. Yes.
Q. The Debtors controller Dan White lives in Eagle,
Colorado, correct?
A. Yes.
Q. You live in Denver, Colorado?
A. I currently live in Denver, Colorado, yes.
Q. You work up in Edwards?
A. Yes.
Q. When youre working in Edwards, you stay up in Edwards?
A. I do.
Q. And your trip between downtown Denver and Edwards is
approximately two hours?
A. An hour and 51 minutes to be exact. Thats in non-snow
traffic, easy going.
Q. Okay. And the trip from Edwards to the Bankruptcy Court
in Delaware -- you know where the Bankruptcy Court in
Delaware is, correct?
A. I do.
Q. You filed a personal bankruptcy there, correct?
A. And a Chapter 11.
Q. The Chapter 11 was one of the other real estate companies
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that you were involved with, correct?
A. Yes.
Q. And so how long is the trip from Edwards, Colorado to the
Bankruptcy Court in Denver, Colorado?
A. I would say approximately as discussed two hours.
Q. Okay. And do you still think its actually quicker to
get to your home in Cherry Creek than it is to the Bankruptcy
Court in downtown Denver?
A. I can get to my home and park and be inside of it faster
than I can be in the Court in downtown Denver.
Q. Okay. The Debtor has between 75 and 109 employees during
the golf season?
A. Well it has more than that when were in full operation.
Thats currently what were doing today.
Q. Well you say full operation; you mean all the courses are
open?
A. Yes, be more than that.
Q. When was the last time all the courses were open?
A. Two years ago, best of my knowledge.
Q. So how many you think there be when all the courses are
open?
A. I would say as a guestimate 125 to 150; no, excuse me,
225 to 250.
Q. And all the employees at the club as currently live in
Colorado during the golf season, correct?
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A. Yes. Well the best of my knowledge. I dont know
whether they always.
Q. And you agree with me that the Debtors business
operations all occur in Colorado, correct?
A. Yes.
Q. Do you think the Debtor would get a fair trial in its
attempt to obtain post-petition financing if the issue were
determined by the Colorado Bankruptcy Court?
A. I think they get a fair trial in any of the Courts.
Q. Including in Colorado?
A. Yes.
Q. And do you believe the Debtor would get a prompt trial on
its attempt to obtain post-petition financing if this case
were transferred to a Colorado Bankruptcy Court?
A. I have no way to judge that.
Q. Do you believe the Debtor would get a fair trial on an
attempt to confirm a plan of reorganization if this case were
transferred to the Bankruptcy Court for the District of
Colorado?
A. I believe so.
Q. And do you believe the Debtor would get a prompt trial on
its attempt to confirm a plan of reorganization if this case
were transferred to the Bankruptcy Court for the District of
Colorado?
A. I have no idea.
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Q. Now we went through the -- Friday at your deposition we
went through the various items of revenues, sources of
revenue that the Debtor has, correct?
A. We did.
Q. And, again, Ill put these receivables to the side, but
all of the revenue other than receivables generated by the
Debtor are generated in Colorado, correct?
A. Yes.
Q. You yourself are familiar with the significant property
declines in the Cordillera community, correct?
A. I am.
Q. And your testimony was that -- and actually its correct
to say that the property values have declined 10 to 15%
because of the issues over the club, thats your opinion,
correct?
A. Thats my opinion.
Q. I want to talk about the dinner with the private bankers
in Colorado. You went to the dinner that Mr. Bordwin
testified about, correct?
A. Yes, I did.
Q. That was up in Vail?
A. Well it was actually in Edwards.
Q. Which restaurant?
A. It was at the Chaparral at the Cordillera Valley Club.
Q. And there was no confidentiality agreement with these
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bankers?
A. There is not.
Q. Who are they?
A. A&B Bank.
Q. A & --
A. A&B Bank.
Q. Okay and after that dinner youve had several more
meetings with those bankers, correct?
A. Ive had telephonic discussions, a lunch with one of
them, and I dont know if Mr. Wilhelm has had another meeting
with them or not.
Q. In your declaration -- you reviewed the declaration that
was submitted by the Debtor in support of the Debtors
omnibus objection to the venue motions, correct?
A. Yes.
Q. And in paragraph four you stated, upon my employment with
the club I expressed to ownership that I did not believe
based upon my 30 year history in real estate, finance and
management that a Colorado based bank would loan money to the
Debtor especially in light of the degree of hostility
expressed toward ownership by a small group of former
members. Is that accurate?
A. Thats what I believe.
Q. So the very first day you become the chief executive
officer youve already concluded that the Debtor is not going
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to be able to obtain any financing in Colorado?
A. That was my opinion based on my experience.
Q. Did you work with Mr. Bordwin and his company at all in
identifying the companies to whom the 53 teasers were sent?
A. I did not.
Q. Did you ever review with him that list?
A. I reviewed with him people who started submitted MVAs to
and then we had some discussions relative to that.
Q. You werent curious to ask whether he had bothered to
send the teaser to any other Colorado entities?
A. No we hired him to perform that function.
Q. In terms of paragraph five, you say, in my role as CEO I
participated in many internal meetings and reviewed documents
concerning the Debtors negotiations with Alpine Bank for an
extension of the existing Alpine Bank loan. Internal
meetings, what do you mean by that?
A. I met with the ownership group and also discussed it with
their attorneys on what the correspondence and the dialogue
contained.
Q. And the ownership group is?
A. Its David Wilhelm and his son Patrick Wilhelm.
THE COURT: Pardon me, Im sorry; excuse me, you
have five minutes.
MR. CAL: Yes, Your Honor. Thank you.
BY MR. CAL:
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Q. And you became CEO on March 1?
A. Yes.
Q. And between March 1 and June 26
th
you had no meetings?
You participated in no direct meetings with Alpine Bank?
A. I did not.
Q. What kind of documents did you review?
A. Well I --
MR. CELENTINO: Objection to the extent it calls for
attorney/client privilege, Your Honor.
BY MR. CAL:
Q. Other than any documents that were prepared by your
attorneys, what documents did you review?
A. I reviewed e-mails and I also had discussions with the
owners.
MR. CAL: Your Honor, Im just going to consult with
my co-counsel and try to wrap this up now.
THE COURT: Okay.
BY MR. CAL:
Q. Of the 909 members on that list, they include the active
and the past -- there were three different categories. Of
that 909, how many are active?
A. Active today?
Q. Yes, sir.
A. We have, I believe its a 163 current dues paying
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members. We have the difference between 163 and about 223.
That difference is waiting out their last due paying
obligation to go on the sellers wait list.
Q. And do you know of those current dues paying members, how
many of those use Colorado as a primary residence?
A. I do not.
MR. CAL: Those are all the questions I have for the
witness, Your Honor.
THE COURT: Mr. Collins.
MR. COLLINS: Now, Your Honor?
THE COURT: Yes, quickly.
BY MR. COLLINS:
Q. Good afternoon, Mr. Fitchett.
A. Good afternoon.
Q. My name is Mark Collins. I represent the Class
Representatives; just a few questions. There was a
stipulation of facts that were entered into by the parties.
You aware of that stipulation of facts?
A. Well --
Q. Generally?
A. Generally.
Q. One of the stipulated facts is that there are
approximately 621 members of the Class involved in the
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Colorado litigation. And you previously testified that
theres a total of 909 members, is that correct?
A. Correct.
Q. So quick math, thats about two thirds of the membership
is involved in the litigation against the Debtor and its
insiders, is that correct?
A. If the math is correct, yes.
Q. And you previously characterized the disputes within the
membership as being a small group of members, do you recall
that testimony?
A. I do.
Q. Do you believe two thirds of the members is a small group
of the membership involved in disputes with the Debtor?
A. I dont believe thats what I was saying. What I said --
youre doing just raw math. Theres people who are part of
it, but they have expressed to me from time to time they wish
it was over with and dont really want to be involved.
Q. But the fact is that 621 members of the club are involved
as a Class Member in that litigation, correct?
A. Its my understanding.
Q. Now I didnt quite understand the math or the
understanding to come up with this billion dollars or multi-
billion dollars worth of accounts receivable. I think your
words were that its anticipated, I think was the word that
you used, that members would pay for 30 years, is that
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correct?
A. Well that is correct. Thats the membership document and
it says if they pay for 30 years they can ask for their
membership dues back less the transfer fee. Not their dues,
their initiation fee.
Q. Right. But members have the ability to resign their
membership, isnt that correct?
A. They do.
Q. Is it your understanding that under the various club
documents including the club membership agreement that
members are to have access to the Summit Course and the
Mountain Course on an unlimited basis?
A. Yes if theyre open.
Q. And if theyre not open then the member is not able to
utilize those courses on an unlimited basis, isnt that
correct?
MR. CELENTINO: Objection; calls for legal opinion.
BY MR. COLLINS:
A. Would you re-ask the question please?
THE COURT: If the course isnt open you cant use
it.
THE WITNESS: Thats correct.
MR. COLLINS: Thank you, Your Honor.
BY MR. COLLINS:
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Q. And you stated that there are only approximately 163
current dues paying members, is that right?
A. That is correct.
Q. Of the 909 total members, is that correct?
A. Well lets go back to the 909. This comprises the people
that are on a sellers wait list. It comprises people who are
suspended and it comprises people who are paying dues. So
there are some people who are on the sellers wait list who
are no longer paying dues, but they are part of the
membership file currently. That comprises the 909.
THE COURT: Could you explain what the sellers wait
list is please?
THE WITNESS: Yes, by the club documents depending
on whether it was pre 2005, they had to pay one years worth
of dues upon their resignation list and then they could go on
the seller wait list, which Ill come back. After 2005, two
years worth of dues to be on the sellers wait list and all
their accounts have to be current.
They then are on the sellers wait list for getting
their membership dues, initiation fee back on a one and four
basis. We sell three memberships that we get. The fourth
one is the next person on the list. That person comes off,
three more, the next person on the list.
THE COURT: All right so after two years youre not
paying the dues, but you dont get your initiation fee back
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until enough members have been added that youre allowed to
drop?
THE WITNESS: Or youve been on the rolls for 30
years.
BY MR. COLLINS:
Q. You said to that, I just want to make sure I heard this.
MR. COLLINS: Go ahead, Your Honor.
THE COURT: No, no. Thank you.
BY MR. COLLINS:
Q. I think you stated because I just want to make sure I
heard it correctly that the Debtor has had no new members in
the last year, is that correct?
A. Yeah we havent even looked for members. Nobody would
join under the circumstances that we are right now.
Q. Now, I want to ask a couple of questions about your
statement that there are only 40 members who reside
permanently in Colorado or in Cordillera. Our stipulation of
facts state that approximately 208 to 215 members of a Class
are citizens of Colorado. Yet, you say that there are only
40 members who reside in Cordillera, is that correct?
A. What I said was approximately. I have no way of knowing.
I dont know that. I know by driving around and seeing the
houses empty, I know by taking to people that, you know,
where they reside and that was a general observation on my
part, not a statistical observation.
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Q. So youre not disputing the fact that you have stipulated
that 208 to 215 members of Cordillera, the Club of Cordillera
are citizens of Colorado?
A. That doesnt mean they reside in Cordillera. They reside
in Denver. They reside in Fort Collins, Pueblo, in other
places.
Q. I see. I understand there is one golf course open and
thats the Valley Golf Course, is that correct?
A. Yes, thats correct.
Q. And if I remember correctly on the math that was handed
to the Court, the Valley Club is that which is north of I7?
A. Yes thats correct.
Q. And the Summit Course and the Mountain Course which are
closer to all of the home sites in Cordillera, they are both
closed?
A. They are both closed.
Q. And is it true that the Debtors plan to sell the Mountain
Course?
A. I would say that thats one of the multiple options that
we discussed. Weve discussed selling off non-strategic
assets. Weve discussed selling the Summit. We discussed
the Mountain Course. And I believe in our early documents we
did talk about the Mountain Course, but that is a flexible
plan. And, in fact, the members themselves have tried to buy
the two south side courses leading the other course
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bifurcated.
MR. COLLINS: May I approach, Your Honor, the
witness with a hearing binder or exhibit binder?
THE COURT: Yes. Try to wrap it up quickly, though.
What number we on?
MR. COLLINS: Your Honor, I believe this is Exhibit
2 in the movants binder.
THE COURT: Yes.
MR. COLLINS: Your Honor, for the record I was going
to ask the witness about his first day declaration in support
of voluntary petition.
BY MR. COLLINS:
Q. Turning to page 10 of that affidavit, Mr. Fitchett, can
you please read paragraph 41 of your affidavit?
A. That which is marked in yellow?
Q. Yes.
A. After considering other alternatives, the Debtors
management and ownership in their reasonable business
judgment concluded that the most effective way to maximize
value of their estate for the benefit of the creditors is a
363, oh excuse me, the complete prompt sale of one of its
club facilities, the Mountain Course. Pursuant to Section
363 of the Bankruptcy Code subject to a higher or better bids
at the public auction, a sale transaction.
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Q. Thank you. And you signed this affidavit less than a
month ago, is that correct on June 26
th
, 2012?
A. Whatever the correct date was yes.
Q. And is it still the Debtor -- do you still agree with
your statement in paragraph 41?
A. I think thats one of the alternatives that were
considering.
Q. What will happen to the Debtor if the DIP financing
proposal by Northlight is not approved by this Court or the
Colorado Bankruptcy Court?
MR. CELENTINO: Objection; calls for legal
conclusion.
THE COURT: To the best of your knowledge on a
business basis?
THE WITNESS: We will probably secure other people
who we have been talking to and are currently talking to.
BY MR. COLLINS:
Q. Try it again?
A. Try what again?
Q. To come back to the Court with a new financing proposal?
A. A new proposal or a joint venture partner that will
eliminate all the debt including the commercial debt.
MR. COLLINS: All right thank you, Your Honor.
THE COURT: Youre welcome. All right, redirect?
MR. CELENTINO: Ill be brief, Your Honor.
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BY MR. CELENTINO:
Q. Mr. Fitchett, since the filing of the petition has the
Debtor modeled proposed plans?
A. I would say yeah, the answer is yes.
Q. Does the Debtors current model include the sale of any
of the three golf courses?
A. It does not.
Q. And that is the model that has been worked on by whom?
A. By the financial advisor and the chief restructuring
officer, myself, and then informing the ownership of the
Debtor what we were doing.
Q. Is it your belief today that the Debtor will sell any of
the three primary courses as part of its reorganization?
A. Thats not the current desire.
Q. Youve been asked a question about the small group of
members who are pursuing the acrimony. Will you please
explain your opinion of why its a small group?
A. Well its subjective, but my contact by being around the
clubs and also being involved in the community for quite some
time, it is being incited by this group. And its my
judgment that a great number of them want to get this over
with, play golf, and have their kids come out and enjoy the
activities and all the other stuff that the clubs used to
have.
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Q. Notwithstanding, the large number of members in the
Class, its your view that the acrimony is driven by a small
subset of that Class, correct?
A. Yes.
Q. How many?
A. Well I cant really guess; Id say somewhere around 50
maybe.
THE COURT: Dont guess.
BY MR. CELENTINO:
Q. And youre generally familiar with the class litigation?
A. Generally.
Q. Is it your view that the litigation and its outcome is
peripheral to the Debtors restructure?
A. Yes.
MR. CELENTINO: No further questions.
THE COURT: Thank you. You may step down. Thank
you very much.
THE WITNESS: Just leave this here?
THE COURT: Yes, please.
MR. BARRY: Your Honor, I believe that that closes
the evidence. As a housekeeping matter, I wanted to ask --
THE COURT: Lets just check on that. Is there any
other evidence any party wishes to discuss? Okay, very good
that will close the evidentiary record.
MR. BARRY: So, Your Honor, with respect to the

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exhibit binders, Your Honor is accepting all of the exhibits
with the exception of Mr. Fitchetts deposition declaration?
THE COURT: Subject to the stipulations on the
record, theyre all admitted without objection.
(Debtors Exhibit received into evidence)
MR. BARRY: And we have, I think the western states
demonstrative. I couldnt recall if that got accepted as an
exhibit --
THE COURT: Its just a demonstrative.
THE COURT: Similarly, the course map was --
MR. CAL: It was just a demonstrative.
THE COURT: Youre welcome. Lets take a short
break and then Id like to hear closing argument. You dont
need to repeat what you told me in opening argument, but
obviously tying it into the record before the Court is sort
of the point. And I think, again, a half hour per side
should be sufficient. Then, Ill take another break and then
Ill rule. So lets reconvene at 3:35 and then well press
on. All right.
(Recess 3:26:05 - 3:37:51)
(Proceedings resume at 3:37 p.m.)

(Call to order of the Court.)


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Mr. Collins.
MR. COLLINS: Thank you, Your Honor.
I hope to be brief in our closing. We obviously
spent, and I spent some material amount of time walking the
Court through the stipulated facts and what we believe the
evidentiary record is on an uncontested bases --
THE COURT: Uh-huh.
MR. COLLINS: -- which, if I had my druthers, I
might just rest on that, because I think the stipulated facts
really do carry the day with respect to our burden, which is
preponderance of the evidence.
But Your Honor, I was somewhat surprised by the
strength of the debtor's comment about the word "necessary,"
when he started his opening; and the fact that you did not
hear use the word "necessary" in describing the test that the
Court -- or the equitable test, the discretion that the Court
has in ruling on the motion to transfer venue. And the
reason why I did not use the word "necessary" is because it's
not in the statute.
Section 1412 talks about what is in the interest of
justice and for the convenience of the parties. And when you
look at the various tests that this Court has used in looking
to transfer venue of the Chapter 11 case itself, rather than
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with a test that is flexible; it's broad, has many factors.
And the Court can weigh those facts really however the Court
wishes to, to come to an equitable result.
And I think the best way to kind of summarize what
I think the test is, is to look to what Judge Gonzalez said
in the Enron case, and what Judge Carey commented on in his
Qualteq decision, which was as follows:
"The interest of justice prong is a broad and
flexible standard that is applied based on the
facts and circumstances of each case. In
evaluating the interest of justice, the Court must
consider what will promote efficient administration
of the estate, judicial economy, timeliness, and
fairness."
And Your Honor, when you look at the facts that
have been set forth before you, both in the stipulated facts,
as well as in the testimony and the cross-examination, we
believe that it's really -- in many respects, cannot be
contested that this case belongs in Colorado for the fairness
of the parties, for judicial economy, and for the fair and
efficient administration of this estate.
Your Honor, the testimony of Mr. Fitchett, I think
was fairly clear on why they filed in Delaware, and that was
to get out -- get out of Colorado, get out of the place where
the stakeholders are located because of the acrimony that had

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-- exists between the members of the club -- the very
vitality of the club, the business of the club is its members
-- but to get away from them and to come to Delaware.
If venue is not transferred back to Colorado, it is
very likely that a large body of these non-major players; the
individual members, those with claims of $20,000 or $50,000
or upwards of $200,000, will be disadvantaged by their -- the
substantial time and expense to come to Delaware to defend
the claims.
We note in the -- or the debtor has stated several
times that they dispute the claims of the members, which we
estimated to be, in the aggregate, $62 million.
They certainly have already brought a lawsuit
against the class representatives in Delaware, seeking to
enjoin the class action from proceeding. So they'll
certainly need to -- at least the class representatives will
need to defend themselves here in Delaware on that adversary
proceeding, which is still pending.
There might very well be proceedings relating to
the interpretation of the membership agreements; whether
those agreements are going to be assumed or rejected; whether
the debtors will sell assets, which would certainly impact
the rights of the members under those membership agreements.
So there is a lot at stake, Your Honor, in this
case for the members. And they deserve the right to have

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access to a court that is a few hours from where they reside,
vacation, spend a lot of -- a lot of their time, Your Honor.
As we noted, over fifty percent of the class members
own property in Cordillera. Over thirty percent, thirty-four
percent, are citizens of Colorado. So those -- certainly
those members, along with the other members that -- that
vacation there often will have greater access to the
Bankruptcy Court to defend their rights and claims.
In fact, Your Honor, to transfer this case back to
Colorado should really only benefit the debtor and its
principals. They will be much closer to the corporate
offices of the debtor.
Mr. Fitchett, who has been here for the first-day
hearing, the formation meeting, today's hearing, depositions,
I guess tomorrow, and potentially a trial on the DIP
financing, that could all be taking place in Colorado, where
he would be able to better serve the debtor and its estate by
actively managing the business operations of the debtor,
rather than spending ten hours each way or seven hours each
way to and from Delaware.
In essence, the only basis upon which the debtors
object to the motion to transfer venue are that they will not
get a fair shake, I guess, in Colorado, in the Colorado
Bankruptcy Court, because of the longstanding animosity
between it and the creditors and the members; and two, that

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it's easier for them to locate financing with a bankruptcy
case pending in Delaware in New York, as compared to
Colorado.
As to animosity between the debtors and its
creditors, Your Honor, that is more of a basis to appoint a
Chapter 11 Trustee than it is to keep a local debtor far away
from its important stakeholders.
In addition, the outcome of this bankruptcy case
will be decided by a bankruptcy judge, not a jury. So I
think that concern about what is in the local press is really
unfounded.
As to the other basis; that this case needs to be
in Delaware in order to better access the financial markets
on the east coast challenges, really, all economic sense. If
a lender believes it can make money on loan that is safe and
can obtain the level of return it desires, it will make that
loan regardless of whether this case is pending in Colorado
or in Delaware.
It's not even clear, Your Honor, that the DIP
commitment terminates if this case is transferred to
Colorado. I went through the termsheet looking for such a
provision; not surprising it's not there, because I've never
really seen such a provision in a DIP loan agreement.
Additionally, Your Honor, the debtor is in
significant litigation in the Colorado State Court with its

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members, a property homeowners association, the Metro
District, Cordillera -- the Cordillera Transition Company;
and these litigations are significant. They concern
longstanding disputes between the parties and involve
primarily state law claims. Those litigations are going to
have to be resolved one way or the other if this entity, this
debtor, has a chance to move forward. It's that significant.
Finally, Your Honor, bankruptcy courts recognize
that matters of special concern to a particular community; in
this case, the Cordillera community located in Yuma County,
Colorado, should be decided by local courts.
It is uncontested -- I think the debtors stipulate
through testimony of Mr. Fitchett -- that the success or
failure of the club has a direct impact on property values in
the Cordillera community. According the debtor's bankruptcy
case, including any trial over the value of the debtors real
property, whether it arises in a debtor-in-possession
financing contested matter or a plan confirmation hearing,
should take place close to the community with the most
significant interest in the outcome of this case, which is
Colorado. And it certainly is not Wilmington, Delaware.
For all of those reasons, Your Honor, the class
representatives would respectfully request that the motion be
approved and the case be transferred back to Colorado.
THE COURT: Okay.

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MR. COLLINS: Thank you.
MR. CAL: Good afternoon, Your Honor.
Your Honor, first in closing, I do want to
emphasize the importance that courts have given to local
regulatory and governmental concerns. Two cases: In Re
Condor Exploration, LLC, 294 Bankr. 370, 379, District of
Colorado Court, quote:
"Regulatory agencies, local governmental units, and
general creditor suppliers must play a crucial role
in any bankruptcy case."
And the District of Delaware, In Re Innovative
Communications Co., 358 B.R. 120, 127; also noting the
importance of local public interests.
And then I think to really capture the debtor's
side of the case, the way -- what they've got to favor venue
in Delaware. And it was hit on against what these courts
have said. At Paragraph 13 of their objection, Your Honor, I
quote:
"All of the debtor's professionals, as well as the
proposed DIP Lender, believe that the Delaware is
the best venue for this case. These are the
constituents who are critical to the success of
this case and the financial rehabilitation and
reorganization of the debtor, not the movants."

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Well, with all due respect, that is pure arrogance.
The courts have said repeatedly that the concerns of the
professionals are not the concern on a venue motion, Your
Honor. To dismiss the concerns of all the movants, no matter
what the hostilities have been -- these are the creditors who
you're going to have to sit down and work with to come up
with a plan of reorganization. You do need the members. You
can't run a private golf course without the members. It's
fanciful to think that some members from somewhere are just
going to come in and join the club if all the other members
go away. There's no evidence to support that.
So Your Honor, the people who they have to sit down
and work with -- and this is what they have to say, Your
Honor, from their first-day hearing, Your Honor. They talked
-- one of the reasons they wanted the CRO is he's going to
come in and help make some kind of peace here. Well, you
can't create peace by telling the movants that their concerns
are absolutely irrelevant, and it's the professionals and a
proposed DIP lender are the only important people in the
case.
Your Honor, I do also think Judge Carey's decision
in the Qualteq case -- we'd really like to focus you on that.
In the Qualteq case, the CRO had testified that
Delaware was chosen for three reasons: The predictability of
the process, familiarity of the Court with business issues,

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and desire to create distance between the debtor's operations
and the ongoing lawsuits in Chicago. And Judge Carey said,
2012 Westlaw 527669, at *7:
"I reject categorically the notation that any
practice or experience of this Court serves as a
basis under these circumstances to resist a motion
for the transfer of Denver" (sic).
And then the Court concluded:
"Furthermore, the debtor's obvious attempt to
escape the forum best suited for administration of
these Chapter 11 cases should not be condoned."
So I suggest, Your Honor, that a reorganization is
going to require the participation of the members and the
other creditors.
And I also suggest, Your Honor, that, with all due
respect -- I understand why they decided to file in Delaware,
but it was an attempt to escape the controversies that are
ongoing in Colorado. And we submit, Your Honor, that those
controversies, which give all parties a fair opportunity to
voice their issues and for their voices to be heard, this
bankruptcy case should be transferred to the District of
Colorado. Thank you, Your Honor.
MR. MARRIOTT: Good afternoon, Your Honor. Vince
Marriott on behalf of Alpine Bank.

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I have little to add to what my colleagues have
said so far, and I don't feel the need to speak to hear
myself talk.
The only thing I would -- Mr. Collins used the word
"disadvantage" to smaller creditors, including the smaller
members in his constituency. I think that what will happen,
Your Honor, is that "disadvantage" may be too mild a word if
it stays here in Delaware; I think the better word is
"disenfranchised." I think those creditors will be
disenfranchised from meaningful participation in this case
because it's too far to come, it's too expensive, and it is
not conducive at all to their participation. Thank you.
THE COURT: You're welcome.
MR. WIELEBINSKI: Your Honor, on behalf of the
committee, I want to thank the Court, first of all, for being
patient and listening to us today. I know I tested your
limits with the cross-examination of Mr. Bordwin.
I always find it interesting how parties can
disagree on the facts, and how you can get such divergent
views. That's what obviously makes your job so interesting.
But I think what we can't ignore is that an
effective reorganization, if there's one to be had, will
require the involvement of the members and some effort to try
to resolve this acrimony.
I think Mr. Cal hit the nail on the head when he

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said the debtors have all but told you that
litigation is of no moment, it really has nothing to do with
the -- with the reorganization, we'll get through that, and
it's not really critical. And I just disagree with that, and
I hope the Court does, as well.
Number two, Your Honor, is that I think -- again,
Mr. Cal made a good point that the constituents who have all
joined together and are supporting venue are very critical
components of any successful, either reorganization or
liquidation, whatever happens in this case. It's not the
professionals, it's not the proposed DIP lender, it's not the
equity investor. It's the constituents that have come to
this Court and said, please transfer this case.
Your Honor, I won't stress more than what Mr.
Collins already said, that "necessary" is nowhere in the
language of the statute. And so while it was stressed by Mr.
Celentino, I don't think that's the burden we have to meet.
What I do want to point out, Your Honor, is despite
the acrimony and the bad feelings, remember it was the debtor
that commenced the first litigation against the members. And
they tried to argue that there's just cause for that. They
believe in that. But importantly, Your Honor, they commenced
it before the class action occurred; and Your Honor, they
commenced it in Colorado.
Now we heard a lot today about the rehabilitation

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that this debtor wants to undergo. Plenty of
discussion. But we saw nothing, and there's nothing in the
record that really gives this Court or any of the parties any
better understanding of what that rehabilitation involves.
We don't know what the timing is, we don't what the terms
are. We don't know any source of financing or equity
investment. And we certainly don't know if it's viable.
We've heard about a possible equity investor and
maybe a possible billionaire that would come up to buy the
Summit course. But that's just -- it's just speculation at
this point, Your Honor. There's nothing that really supports
any of that.
What we do have is this. We have evidence that Mr.
Wilhelm had a predisposition as early as May towards a
rehabilitation involving whatever his grand scheme is; so
much so that he conveyed it to Mr. Bordwin at their first
meeting, and Mr. Bordwin agreed with that and decided to go
forward with the case.
We have a DIP proposal that's before the Court that
has met great resistance. In connection with that, if you
look at Exhibit 44, Your Honor, we have a supplemental DIP
budget that shows that, after borrowing the DIP of 4.7
million and getting an additional infusion that's not
described, of an additional, it looks like it's $1.6 million,
the debtor, after one year, still ends up with about as much

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cash as it started with. That's what that DIP proposal
shows. So when we're talking about a rehabilitation and that
Mr. Bordwin is convinced that's where this is going, that's
the only evidence the Court has before it.
And this same entity, Your Honor, before the
bankruptcy, had serious cash shortfalls. Mr. Wilhelm had to
step and take money out of his pocket to fund those
shortfalls. And yet, we're going to go and go forward with a
DIP that, you know, has some real, real concerns.
Nevertheless, the debtor came here today and testified, oh,
we believe there's a rehabilitation.
Your Honor, the reason I raise that is because it's
in that context that the committee raised concerns in its
pleading about the DIP proposal. We're not here to try to
force a liquidation. We are here to say that that DIP that
was proposed, the committee does not support; doesn't
necessarily understand, because there's not enough
disclosure; and doesn't seem to make economic sense.
The other thing, Your Honor, is, to the extent that
there was an assertion by Mr. Celentino that this committee
is controlled by the class representatives, I think nothing
could be further from the truth. I hesitated about standing
up and objecting, but I didn't. I -- but it was a little out
of bounds.
There are seven members of the committee. One is a

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-- not a member at all; it's a -- just an unsecured
creditor. The other ones are members, but they're -- and
they are involved in the class litigation, but they are not
class representatives. And they are fiduciaries, Your Honor,
and I think they are sophisticated individuals who take their
responsibilities seriously.
Your Honor, with respect to animosity, I think it
was mentioned, but I want it reiterated, that you're not
going to escape that animosity by running to Delaware. If
there is animosity, it's still there. You're going to escape
it or you're going to get rid of it by working with the
constituents, coming up -- talking to one another, and coming
up with creative solutions to get rid of the problems, or
litigating it. But you're not going to get rid of it by
coming here.
Your Honor, what we heard from the testimony with
Mr. Bordwin I think could be summarized as follows:
Many lenders that he knows or chose to contact are
located in New York, where he happened to be from, and he
grew up, and he has many contacts there. But those weren't
all the lenders. And there were some that were located in
the west who expressed and interest and actually went so far
as signing an NDA.
We heard no testimony that said, if the DIP
proposal is not approved; whether it's not approved here in

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Delaware or not approved in Colorado -- I'm sorry -- if it's
not approved -- strike that, Your Honor.
We heard no testimony that said, if the case is
transferred to Colorado, that the DIP lender wouldn't go
forward with the proposal.
The investor who has been lined up, but not
approved, this Northlight, has actually done DIP financing
and exit financing in cases outside of Delaware, and outside
of New York, and as far away as Reno. And we believe, Your
Honor, it would do it here.
We also heard that, if it goes to Colorado, it
doesn't mean -- if the case goes to Colorado -- that the
debtor is going to be liquidated.
And Your Honor, we heard, finally, that if the case
is moved to Colorado, Mr. Bordwin will stay as a to-be-
retained expert on behalf of the debtor.
Your Honor, the last point I want to raise is, I
think from everything we heard, our view is that the
litigation is a critical issue that has to be resolved. The
members are an important element; I think a critical element,
of any successful reorganization. And this is essentially a
single-asset real estate case. It has unique issues. You
heard about the impact it has on the community, on the taxing
-- on the tax base, on the bonds, on the ability to employ
more individuals.

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I think those unique factors, Your Honor, are the
reason why this should all be determined and heard in
Colorado. And I think, Your Honor, we've met our burden, and
I'd ask that the Court consider all of that and transfer
venue as request.
MR. WIELEBINSKI: Thank you very much.
THE COURT: All right. I'll hear from the debtor's
side.
MR. CELENTINO: Thank you, Your Honor. Christopher
Celentino again for the debtor.
Thank you for taking a day to schedule a trial and
to hear evidence on this matter. And I think it's important
for you to remember that the proceeding is you've sought to
hear evidence in the case. Argument versus evidence is very
important in how this case should be decided.
We don't have any evidence in the record, as
committee counsel just suggested, that this particular DIP
lender has conducted any transaction outside. What you have
is counsel arguing from the podium about an alleged
transaction in Reno, and you have the actual witnesses saying
they know nothing about it. There is no evidence that that
happened.
And I think that's pretty important, Your Honor, to
start there and step back and remember that this was an

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evidentiary hearing. The movants chose to submit
declarations to get the order shortening time, and chose not
to make the witnesses available for cross, so that the
declarations are not in. So the only evidence, outside
of the stipulation of facts, comes in from the movants' side
through Ms. Kuich. Hopefully I got that right.
One of the most interesting things she said, Your
Honor, when you take a look at it, is that forty percent -- I
think she said approximately forty percent -- of the
residents are registered voters, and approximately ten
percent of them live there. And I think that's an important
fact for Your Honor when you go back and look at the
stipulation of facts.
The stipulation of facts uses the word "citizens."
And the stipulation of facts talks about those that have
registered to vote in Colorado, even though the evidence from
the movants is that ten percent of the homeowners actually
live there.
MR. CAL: Objection. That was not (indiscernible).
THE COURT: Okay. Go ahead.
MR. CELENTINO: And Your Honor will read it back if
you're so interested, and you'll see that's what she said.
The point to that is this is a case about second
homes and vacation homes among very wealthy folks, or at
least who have the means to buy second homes in a value of

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750,000 to $10 million. And that is the testimony from Mr.
Fitchett, and that is not controverted.
And so the question that the Court has to ask
itself is: What evidence is there before me to disturb the
debtor's choice of venue, which all of the cases say is of
paramount importance? This case is properly venued here.
The statute permits the debtor to have selected this venue.
And that's why there is a preponderance of the evidence
standard that convenience of the parties must happen.
So Mr. Marriott stands up and suggests that the
residents, the members, will be disenfranchised. Your Honor,
there is a statutory committee appointed in the case. The
statutory committee, as the Court knows from the application
on file on Friday, did not get Colorado counsel. The
statutory committee retained counsel in Texas to represent
them, wherever the case is venued.
The statutory committee is in charge with
monitoring. To the extent that those members have a voice,
the statutory committee is in charge, under the law, to
discharge that fiduciary duty that we've been informed
they've taken seriously, for the benefit of those unsecured
creditors, which, if you believe the movants, are creditors
in the case. The debtor doesn't think so. The debtor thinks
that the members are net debtors to, not creditors of the
estate.

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What is the testimony before you? There's $5.7
million in unpaid AR, and there's something like a billion
dollars, an expected revenue stream outside of the real
estate. It's the member dues.
What is the evidence before you? Two-thirds of the
members that will be paying that billion dollars live outside
of Colorado.
What is the evidence before you? More than half of
the vendors that are owed money are outside of Colorado.
What this case is about, as the movants have put it
forward, is the litigation. That's their case. Their case
is the parties want to testify -- excuse me, Your Honor --
the parties want to testify in their home state about their
claims, and the parties will be disenfranchised if they don't
get to testify in their home state about their claims that
they've asserted in the litigation.
And the evidence before you, not the argument
before you, the evidence before you, is that the litigation
is peripheral to the debtor's rehabilitation; peripheral
because the evidence, uncontroverted, before you, is that the
debtor's got insurance coverage for those claims.
What makes it -- or what makes it unpersuasive,
that the convenience of the parties that want to testify in
the litigation somehow means it's the same as convenience
regarding the rehabilitation, is the fact that they didn't

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give you a witness that said that they wanted to -- to
testify about the reorganization; that they wanted to testify
about the debtor's economics, they wanted to testify and
would give evidence on those issues.
On cross-examination, Ms. Kuich said it would be
easier for the homeowners if they wanted to go to Denver to
have their opinions heard. Your Honor, that doesn't happen
in cases, whether they're venued here or they're venued in
Denver or they're venued in Chicago. We didn't pick Thailand
as a venue. The creditors don't come. They retain counsel.
These creditors, very wealthy, all have retained counsel.
They're all here before you. And it's not the case, if they
put on one bit of evidence, that anything that they want to
testify about has anything to do with anything other than the
litigation.
And I started in my opening by suggesting, the
debtor is prepared to put its money where its mouth -- or its
mouth where its money is; money where its mouth is -- however
that phrase goes. I suggested that nobody bothered to ask
the debtor if the debtor would let the litigation go forward
in Colorado.
Subject to the insurer confirming that our
insurance is still in place, Your Honor, I think that would
be the natural result here. The litigation should go forward
in Colorado. And if the case can be resolved on the economic

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terms that the debtor has proposed, we'll work on an economic
rehabilitation, we'll work with the members that are seeking
to have the whole case transferred back, and we'll see if
common ground can be reached in the litigation.
But if it can't be, there's no risk that anybody
that wants to testify about that litigation is
disenfranchised, because that case will go forward there.
That litigation matter will go forward there. The
rehabilitation in the debtor's bankruptcy case is not
centrally wrapped around testimony of the parties in that
litigation.
So the Court has factors for it to consider. The
statute refers to convenience of the parties or the interest
of justice.
Both sides are arguing the interest of justice the
same way. The movants are not arguing that this Court can't
mete out justice, or that they can't get a fair shake in this
court. Likewise, the debtor is not arguing, as to its
rehabilitation, that it can't get a fair shake in Colorado.
So the interest of justice test is not at issue before the
Court.
What's at issue before Court is: How do you
evaluate the convenience of the parties to the
reorganization? It's not a question of convenience of the
parties in the litigation; it's convenience of the parties in

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the reorganization.
What do we know? We know that the movants who
filed the motion, the class members, we know that four of the
six of them do not live in Colorado. We know that the two
that do live in Colorado have asked for and been appointed to
this creditors' committee in this case. The movants have
retained competent counsel. Their counsel is here, they've
participated in the hearings.
There is no inconvenience to the movants if the
case remains here. They are class representatives of a
litigation that I suggested can and will take place in
Colorado. So the convenience of the parties test with
respect to the movants is, at best, neutral. Although they -
- the movants prefer the case in Colorado, the debtor prefers
it here.
And the convenience of the parties, the very
important test that this Court understands from the Visteon
case, is: Is there any evidence that any party who wants to
be heard can't be heard, is unavailable? Well, that's not
going to be the issue, I submit. Counsel has already been
employed in the case. They've done an admirable job today.
So let's talk about the next constituency,
unsecured creditors' committee. They retained counsel from
Texas. They're going to be inconvenienced wherever the case
is.

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The unsecured creditors have an obligation to all
of the creditors. Four of the homeowners, to which they have
an obligation, have filed a joinder and said they don't want
venue transferred. The single largest unsecured creditor in
the case has filed a joinder, does not want venue
transferred, believes in the economic rehabilitation of the
debtor.
I think that the unsecured creditors' committee, if
they want to suggest that they're not controlled by the
movants, I think that they need to take into account that
there are others here, including the single largest member of
their constituency, who doesn't want venue transferred.
Alpine Bank, the single largest secured creditor,
it wants the matter transferred.
David Wilhelm, the second-largest secured creditor,
wants the case not transferred.
The proposed DIP lender wants the case not
transferred.
So the question for convenience of the parties now
comes down to this. You have no evidence and no testimony on
the side of the movants, any of them, that anybody can't
appear here. And in fact, the one witness they did produce
appeared here. Yes, it took her a little bit longer than it
would if she were appearing in Denver. But when asked if she
believes it's necessary for her to appear at other hearings,

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she didn't say so. And what she did say was that she
perceived that it would be easier on the homeowners; those
folks, most of whom, Your Honor, don't live in Colorado.
Now the stipulation of facts is brought to light
quite a bit by the other side, and I started by telling you
that I believed there were multiple inferences that can be
drawn.
First, I think we've clarified that the litigation
itself, and regardless of its outcome in Colorado, is not
central to this case. This case is a valuation case. This
case is a valuation about a membership stream of income.
This case is about a valuation of real estate. And as much
as Mr. Marriott and I disagree, we believe the case is about
the perfection, or lack thereof, of the first lender's
interest in the personal property, which includes, in our
view, the $5.7 million of AR and the billion dollars worth
of future revenue that Mr. Fitchett testified to, of which
there's no contradicting evidence.
I would suggest that the situs of this case, Your
Honor, resides with the two-thirds of the gamut of members
who do not live in Colorado.
Now you do have testimony from Mr. Fitchett that
suggests that he's aware that the time probably has come for
the instigators and the others to come together, because
there are many that want to come back to the club, but for

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the constant instigation here. So I want to talk to you
about that, because that's where you have the testimony of
Mr. Bordwin that I thought was very helpful.
Yes, I concede Mr. Bordwin said he wouldn't give up
on the case. That's a positive for us because he's done a
fabulous job for us in a little bit of time.
The notion that we would be before you on an
emergency hearing on venue, and have put together for you the
details of a plan in the third week of the case, I would
suggest is a bit unusual. The fact is the testimony before
you is a rehabilitation is more probable than not, and that
the -- and that Mr. Bordwin testified that venue of the
bankruptcy case in this court is the best bet for enhancing
the debtor's opportunity at rehabilitation and not a
liquidation. Mr. Fitchett testified that the debtor's
current model contemplates a refinance and an investment
without a liquidation of one of the three golf courses.
I agree that the time has come for the parties to
discuss those models. It's in the context of having the
committee oppose the DIP by saying that they expect a
liquidation of the assets that we'll have to have that
conversation. There is no doubt, Your Honor, that the debtor
is seeking to secure financing. Its prepetition lender
simply didn't work with it.
So on balance, I started by saying "necessary" for

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the convenience of the parties. That's the
judicial rub. That's not in the statute, but I didn't say it
was. I referred the Court to the Enron case. I referred the
Court to Delaware & Hudson, which we cited on Page 17. I
referred the Court to Fairfield Puerto Rico, cited with
approval in Commonwealth Oil. Those are all of the cases
that point out that, when a case is properly venued, there
needs to be something more than an equivalent reading of the
statistics. There needs to be more than a balance that could
go either way.
In this particular case, that's what you got. You
got the knowledge that two-thirds of the members don't reside
in Colorado; and if they are creditors, two-thirds of the
populous will be implicated by a move of the case to
Colorado. You have fifty-five percent of the vendors owed
money are outside of Colorado. They'll be impacted
negatively if you move to Colorado. So, in order to move the
case to Colorado for the convenience of the parties, you have
to say that the minority of the connections justify a move,
where the majority would suggest outside of Colorado is a
proper forum.
The litigation, it's not central to the
reorganization. Will it have to be resolved? It will either
be resolved at trial, or it will be resolved by a settlement.
The debtor does not believe those creditors who are seeking a

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twelve-million-dollar claim, you heard, subject to potential
treble damages, which the debtor's evidence says is covered
by insurance, is the driving force of the case. And that is
what the testimony and evidence before you is.
So you asked us on Thursday in the conference to
explain with evidence, not with attorneys' argument, with
evidence, the connection between the litigation on the one
hand, and the bankruptcy case on the other. And the movants
gave you argument. There isn't evidence on that issue.
The evidence on that issue is the plaintiff has a -
- the debtor has a plaintiff's case that may result in a
victory; may not. It's a big number. The evidence is that
the class action case has been commenced at a twelve-million-
dollar amount with maybe some of those damages being trebled,
and the evidence before you is it's covered by insurance.
The debtor has suggested, subject to confirming
with the insurer that a stipulation is okay, that relief from
stay can be had against the debtor, let the case go forward
in Colorado.
As a result, the players in this case, the ones who
are going to work on the rehabilitation, the ones who have
the most to lose, the largest unsecured creditor and the
second-largest secured creditor, have suggested venue here is
proper. And I would submit, Your Honor, that, at best, you
read neutral inferences from the facts. And since a tie goes

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to the runner, favors the debtor's choice; and since the
economic rehabilitation of the debtor and the evidence of
that favors venue here, I would suggest that venue here in
Delaware is proper.
Anyone else from the debtor's side?
(No verbal response.)
THE COURT: All right. I'm going to -- well, I'll
probably need -- let's see. We're reconvene at quarter to 5,
and I'll give my ruling.
COUNSEL: Thank you, Your Honor. Thank you, Your
Honor. Thank you.
(Recess taken at 4:22 p.m.)
(Proceedings resume at 4:50 p.m.)
(Call to order of the Court.)
First of all, I'd like to thank the parties and the
professionals for their professionalism and cooperation in
presenting a very efficient and interesting, and also helpful
presentation for the hearing today.
All right. Before I jump into the -- some of the
factors that are generally listed that the Court should
consider, I just want to make a couple, sort of global
preliminary findings/rulings/comments.
First of all, as we discussed, the case is properly

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venued in Delaware. It was appropriate -- it was
an available venue as the state of incorporation -- or
actually the LLC.
But in any event (indiscernible) no stigma or bad
acting by a company to file bankruptcy in an available venue.
Delaware, under the law, is an available venue; Colorado,
under the law, is an available venue, and the debtor had the
choice of either. And to say that they're running away from
their creditors or they're doing something untoward in filing
the case in Delaware, really I don't think is a fair
characterization. It's not what the law should say.
And to the extent that my colleagues or others have
made the types of comments that Judge Carey did about, you
know, running away from creditors by filing in Delaware
should not be condoned, each case is -- is -- has to be
judged on its unique facts and circumstances. But as a
general comment, I disagree with that. Delaware is
available, Delaware is appropriate, and there is nothing
untoward in the fact that they filed in Delaware.
You normally don't hold it against the debtor for
filing Chapter 11 at all. I mean, that's something that
comes out of nowhere. It's designed, in part, to import
creditors. And of course, there's nothing untoward in filing
99.9 percent of your Chapter 11's. Obviously, there can be
bad-faith filings.

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So having said that, obviously, the movants bear
the burden of establishing by a preponderance of the evidence
that moving the case to Colorado would be for the convenience
of the parties and/or the interest of justices.
The cases say a "preponderance," and then they say
the burden is heavy, courts should proceed cautiously. It's
a little difficult to sort of wrap your head around it. I
think you can maybe argue that it's sort of a preponderance-
plus standard that has to be met. But I think that the fair
way, you know, to deal with it, and the appropriate way is
simply to apply a preponderance of the evidence requirement
that the movants have to meet. And you know, the tie goes to
the debtor. And really, that's -- that is the rule in any
case where the movant has the burden of proof. If you don't
meet the burden of proof, you lose.
And I found over the few years that I've been doing
this job that, if I don't know what to do, the best thing to
do is to deny the motion, because if I don't know what to do,
the person trying to get me to do something has failed to
meet their burden.
So just having said that, just some other comments.
This is a really close decision, I have to say.
Whether it goes one way or the other, this is a very close
call. It comes down to the parties and how they're split.
Even when they are split fifty/fifty -- you have the class

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representatives, the homeowners association, the district,
the official committee, Alpine seeking to move the case. You
have the debtor, Dr. Rush, Mr. Wilhelm, the DIP lender,
certain property owners all opposing moving the case to
Colorado.
I think the point that was made by the debtor at
one point about the committee being really the class
representatives/homeowners association in another guise,
really, I didn't view that as a negative comment or
implication that the committee fulfill its fiduciary duties.
I think the point simply was, to a certain extent, it's
duplicative to say that a committee that has homeowners and
class representatives on it also has -- also has, in effect -
- is in effect carrying the water for its constituency.
And really, that's what committees are for. I
mean, they're designed to address this very issue, which is
you have a disparate group of unsecured creditors who, on an
individual basis, may not be able to afford to participate
significantly -- sufficiently in a Chapter 11, or to have
enough skin in the game to even take a shot at participating.
We appoint official committees to address that problem by
giving a disparate group of creditors a seat at the table,
with counsel paid for by the debtors.
So I note all this to sort of say that there is
some, if you will, duplication of effort on the pro-venue

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side, but not enough really to affect it one way or the
other. I just -- I wanted to offer those comments because
that's how I viewed them, and I know that it was a sensitive
issue.
There are a number of factors that obviously favor
keeping the case in -- or moving the case to Colorado:
The business is in Colorado. The business owns
golf courses and owns golf courses in Colorado.
Land is involved. Often courts, including me, have
made very sort of broad comments, probably too broad, about
the fact that, you know, cases that involve a single asset or
cases involving a piece of land should really be where -- in
a court where that piece of land is.
I think the more appropriate way to think about is:
What's the case going to be about? Are we reorganizing
something that's -- are we dealing very specifically with the
piece of property or the improvements on the property, or are
we talking about perhaps a bankruptcy for another reason?
Maybe it's litigation; tort litigation, whatever, that may be
pushing the reason why the case is filed.
All that said, there's no question that a case like
this, which involves real estate, which involves the
improvements to real estate, which involves the tax base on
which the real estate is located, which affects the property
values of the surrounding homeowners, those are all factors

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that would favor moving the case to Colorado. And they're
strong factors, and important.
There are quite a number, also, however, which are
either neutral or favor keeping it here. And if it's
neutral, it favors keeping it here because you haven't met
the burden on that point.
I think a liquidation, as I think of it, is
unlikely in this case. We're either going to have a
reorganization of some or all of the business, or we're going
to have combination of sale of some or all of the assets on a
going-concern basis.
An order 363 sale really is not a liquidation in my
mind. Whether it ultimately leads to a confirmed plan of
reorganization or not is another thing. But when people
think liquidation, when I think liquidation, I think fire
sale liquidation. I think putting the assets, not as the sum
of their parts, but part by part out for sale, and see what
happens. It's like stripping down a factory or selling off -
- auctioning off leases, something like that, as more of a
liquidation.
I don't see this cases headed to liquidation. The
underlying improvements on the -- on the property are simply
too valuable to really be run as anything else. There are
property restrictions on whether they can be carved up and
turned into further homes. There's -- obviously, it's in a

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wealthy area. You know, the best use of these properties, at
least in my -- in my understanding -- and of course the
evidence ultimately might be wrong, but as I sit here, the
best use of these properties is what they are; they're golf
courses. They're golf courses in a beautiful location, in a
high-income area, with surrounding homes. So that's never
going to be, in my -- in my understanding -- and I think
that's a (indiscernible) understanding.
(Indiscernible) members, but the members are
scattered throughout the United States. Most people
obviously can't play golf in six feet of snow. If you can,
good luck. I don't know how you would do it. But somebody
will probably send me a YouTube video in ten minutes showing
me somebody playing golf in six feet of snow.
But in any event, the seasonal nature, I think, is
really what's behind the fact that you have people who are --
who summer there, who don't use the property twelve months
out of the year, who have primary residences elsewhere. So
at least as we sit as homeowners and members, you know,
that's really a neutral factor, but I'll discuss that a
little bit later, as well.
This case (indiscernible) this at the end, but a
big, large piece of it, or the primary piece right now at
least might be that it's a balance sheet -- a balance sheet
restructuring.

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More important, I think it's going to be not just
refinancing debt; I think you're going to need an infusion of
new capital into this company in order for it to survive; or
it's going to need to be sold off to parties who can put up
some capital, and get the thing moving again. So it's not --
it's not, you know, a retooling a business, getting rid of
bad contracts, going back to our core values, and a lot of
things you see in more retail or manufacturing or that type
of case.
And quickly, I'll go through the factors that are
generally used. And again, these factors are not necessarily
determinative. They are -- like any factor test, they are
meant to inform the Court's ultimate decision, I think. But
they're helpful to go through.
It's unclear to me -- it's a little unclear to me
which to use, the six- or the twelve-factor test. In any
event, I'll go through both, because I they're appropriate.
So starting with the six-factor test.
The proximity of creditors of every kind to the
Court. That is a -- I think a close factor, but I think it
does slightly favor transferring the case.
The proximity of the bankrupt debtor to the Court.
Obviously, that would favor moving it to Colorado.
The proximity of the witnesses necessary to the
administration of the estate. I think that's a neutral

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factor, given that the witnesses that are going to be
necessary to the administration of the estate are, in effect,
the professionals, who will be the CRO, the restructuring
team, the CEO as well. But for the most part, I think the
witnesses necessary to the administration of the estate is a
neutral factor.
The location of the assets, obviously is in
Colorado.
The economic administration of the estate. And you
know, I have to tell you, some of these factors are written
in such a way, I'm not sure what they mean. But I think
that's a neutral factor.
The necessity for -- for -- here we go.
The necessity for ancillary administration if the
liquidation should result. Well, that would favor Colorado.
So that score card is, you know, three, two, one,
if you go -- with the (indiscernible) in Colorado, which is
really three-three, which means it's a tie, which means the
debtor would -- would prevail under that factor test, at
least if it was used as a score card.
The twelve-factor test, which comes from the Jumara
case in the Third Circuit.
Plaintiff's choice of forum; i.e., movants'. Well,
that's clearly Colorado.
Defendant's forum preference; the debtor. Well,

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that's Delaware.
Whether the claims arose elsewhere. That one is a
little tricky because it really gets down to what kind of
claims are we talking about. Somebody borrows money from a
bank, does it -- does the claim arise where the bank is, does
it arise where the actual property is that is the collateral,
et cetera. But the reality is the business is in Colorado.
The claims are sort of split, but they slightly favor
Colorado. So I think and I find that that factor favors
Colorado.
The location of the books and records and/or the
possibility of viewing the premises. And this is definitely
a Colorado issue. I mention this, and you know, I think it's
true, that the location of the books and records has really
become a non-factor. Ninety-nine percent of books and
records that are important are stored -- excuse me -- stored
electronically, and there are virtual data rooms, et cetera.
You know, nobody opens a book anymore for that type of work.
However, the possibility of viewing the premises.
Again, we're talking about land, we're talking about a golf
course. In order to be able to make a decision whether you
want to buy this land or you want to invest in this land,
you're going to at least need a kick-the-tires view, in my
mind, of what you might be buying.
Number five, the convenience of the parties as

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indicated by the relative physical and financial
condition. I really find that to be a neutral party -- or
excuse me, a neutral factor for the most part, again, subject
to something I'm going to say in a little while.
The convenience of the witnesses, but only to the
extent that the witnesses may actually be unavailable for
trial. I think that's a neutral factor.
The enforceability of the judgment. That's a
neutral factor.
Practical considerations that would make trial
easy, expeditious, or inexpensive. Again, given all of the
(indiscernible) located, given -- and I don't just mean the
lawyers, but I mean, importantly, the CRO, the financial
advisors, I think that's a neutral factor.
Relative administrative difficulty (indiscernible)
resulting from congestion of the Courts' dockets. I don't
know what the Court's docket is like in Colorado. My docket
is, frankly, not overly stretched at this point. I think
that's a neutral factor.
Public policies of (indiscernible). That's
neutral.
(Indiscernible) applicable state law obviously
would favor Colorado.
And local interests in deciding local controversies
at home is a Colorado issue.

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So again, in that one, we get -- if you discount
the pro or the -- against the negative or neutral, it goes
five Colorado, seven for Delaware. And I'm missing one,
obviously, because that doesn't add up to twelve. Give me a
moment. One, two, three, four five ... I'm sorry. Five-
seven. It works out five-seven. Is that twelve?
UNIDENTIFIED: Yes.
(Laughter.)
THE COURT: This is bankruptcy court. One plus one
doesn't equal two here, it never has.
So again, you know, the factor is, in effect, a
tie, or slightly in favor of the debtor. So if you look at
those two lists, you know, you really would be in a position
to say this case should stay in Delaware. All right. But
it's not. I'm going to move it to Colorado, and this is why.
The key issue in this case, the key problem in this
case in my mind, based on the evidence and the arguments, is
where do you find members. That's where the money comes to
run the case. What do we do about getting members in the
door that are going to pay the dues to have the golf courses
be able to operate and to be profitable?
Well, this is where the litigation sort of touches
on it. Although the litigation, in and of itself, is not
necessarily a factor that favors moving it to Colorado, as

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the debtor has argued, I think it's inexorably linked to the
membership problem.
The way I read it today is you have the issue that
there's obviously dissatisfaction and acrimony between
members and management, whether that's a minority or
majority. And the reality is, we sit here today, I think we
had a hundred -- we have a 163 paying members, according to
testimony. That's not enough to support this business,
obviously.
Where is the debtor going to get members? Well,
it's either going to members by reconciling with the
dissenting members or going out and opening up the business
and getting members from other locations in the vicinity.
And that's a change. And I understand, as originally
planned, you had to be a property owner to be a member. As
the debtor testified, there have been no new members in a
year. But of course, there's ongoing litigation. The golf
course is really operating on a shoestring budget at this
point.
But the up or down of this case is going to be the
members. And those are people who either reside in Colorado
or who have a vested interest in vacation in Colorado, who
are interested in the business in Colorado because of the way
it is run, where it is located, et cetera. That, to me, is
the central issue, and that tips this case in favor of

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transferring venue.
Again, it's a -- it's a close issue. But I think
that primary problem and the fact that it's the primary
problem that has to be resolved for the company to reorganize
successfully is linked in such a way to the fact that these
courses are in Colorado; the members at least spend some of
their time of Colorado. You're going to be opening it up to
other members who may or may not reside -- or other
applicants who may or may not reside full time in the
immediate area, but at least spend some time in the immediate
area.
So that's a long way of saying that, based on the
evidence and the law and the arguments of counsel, the
movants have met their burden of transferring venue, and the
Court will enter an order immediately, transferring venue to
Colorado.
I've consulted with our Clerk's Office. As soon as
enter an order, which I'll do very shortly, our Clerk's
Office will contact the Clerk's Office in Colorado to
effectuate the transfer as quickly as possible. And they are
going to be made aware of the fact that there is a
(indiscernible) financing that will need to be dealt with
very, very quickly in Colorado, since obviously this Court
will not handle it here in Delaware.
Any questions?

208
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UNIDENTIFIED: Thank you, Your Honor.
THE COURT: No. All right.
UNIDENTIFIED: No, Your Honor.
THE COURT: All right. Thank you very much again.
I appreciate the presentation. And the Court will enter an
order shortly.
COUNSEL: Thank you, Your Honor. Thank you, Your
Honor.
(Proceedings concluded at 5:14 p.m.)

CERTIFICATE
entitled matter.

/s/Mary Zajaczkowski July 18, 2012

CERTIFICATION
I certify that the foregoing is a correct
transcript from the electronic sound recording of the
proceedings in the above-entitled matter to the best of my
knowledge and ability.
________________________________ July 18, 2012
Coleen Rand
AAERT Cert. No. 341; N.J. Cert. No. 242
Certified Court Transcriptionist for Reliable

In re: )
) Chapter 11
SAAB CARS NORTH AMERICA, INC., )
) Case No. 12-10344-CSS
Alleged/Proposed Debtor. )
___________________________________ )

DECLARATION OF TIM COLBECK

I, Tim Colbeck, declare as follows:

1. I am the President and Chief Operating Officer of Saab Cars North America, Inc.
(SCNA).

2. SCNA is a North American operating subsidiary of Saab Automobile AB and is
responsible for automotive sales, parts distribution, marketing, warranty claim
processing, and various other activities in North America.

3. SCNAs corporate offices are located at 4237 Delemere Court, Royal Oak, Michigan
48073.

4. I have read and am familiar with the Motion of Saab Cars North America, Inc. for Order
Transferring Venue of Case to Bankruptcy Court for the Eastern District of Michigan (the
Motion), and I support the relief sought in the Motion.

5. Nearly all of SCNAs key officers and former employees are located in Michigan, as are
nearly all of SCNAs key witnesses, its books and records, and its proposed chief
restructuring officer, J ames McTevia of McTevia & Associates, LLC (McTevia). I am
also available to testify and work in Michigan to the extent needed in connection with
SCNAs wind down and bankruptcy; however, I now spend some of my time in New
J ersey.

6. Until recent cutbacks, most of SCNA's employees worked in Michigan; none worked in
Delaware. As of the date of this Declaration, all remaining SCNA employees work in
Michigan.

7. Many of SCNAs assets remain in Michigan, while there are none in Delaware.

8. McTevia, which has been orchestrating SCNAs wind-down since December 20, 2011
due to Saab ABs bankruptcy filing in Sweden, is in Michigan.

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Dealers want Saab North America
placed into Chapter 11 bankruptcy
Rick Kranz
Automotive News -- January 30, 2012 - 12:49 pm ET
UPDATED: 1/30/12 5:04 p.m. ET
DETROIT -- A group of 41 Saab U.S.
dealers today asked a U.S. Bankruptcy
Court to place Saab Cars North America
into Chapter 11 bankruptcy protection.
The lawyer representing Saab's U.S.
dealers submitted the involuntary Chapter
11 petition in U.S. Bankruptcy Court in
Wilmington, Del.
"We filed a [Chapter] 11 just in case a
white knight comes out of nowhere and
buys Saab's parent" and would want to
reorganize the North American operations,
said Leonard Bellavia, the lawyer
representing 162 of Saab's 188 U.S.
dealers.
The dealers last Friday had threatened to
file a Chaper 7 for involuntary liquidation.
Today's petition listed individual dealer
claims for unpaid warranty, incentive
reimbursement and other obligations
ranging from $79.11 to $167,977.98.
Parent company Saab Automobile AB filed
for liquidation on Dec. 19 in a Swedish
bankruptcy court.
Saab Cars North America suspended operations on that day and selected McTevia &
Associates to manage the company's U.S. operations, giving it day-to-day control of the
assets.
Kurt Schirm, president of the Saab Dealer Council, said dealers studied the liquidation
plan set up for Saab Car North America by McTevia & Associates.
But the dealers decided an involuntary Chapter 11 bankruptcy was in their best
interests.
Schirm said the bankruptcy attorney who filed the petition today, "seldom sees these
third-party administration situations work out because they just don't have
enforceability ... the enforceability that a court would. There is no one dictating or
mandating the decision, it is all one open-ended negotiation.

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Page 1 of 5 Dealers want Saab North America placed into Chapter 11 bankruptcy
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"You could also wind up in a situation where you have multiple lawsuits filed in different
courts for different reasons in different jurisdictions as opposed to having a single
venue," he said.
Bellavia said the bankruptcy petition was filed in Delaware for two reasons.
"We just feel that a court further away from Detroit will be more dealer friendly," Bellavia
said in a telephone interview.
He added that dealers were concerned Saab would file for bankruptcy today.
"The dealers were left with no alternative but to file and we felt they might be racing us to
the courthouse so that they could get the case filed in Michigan," Bellavia said.
Second, several members of the Saab dealer council, as is the law firm representing the
dealers, are located on the East Coast, "so it was a matter of convenience," he said.
Tim Colbeck, COO of Saab Cars North America, said he was not surprised by the
dealers petition.
"Maybe the timing (of the petition) did," Colbeck said. "Overall, within the scope of what
we have been doing, we anticipated that it was something that could happen."
STATEMENT FROM DEALER COUNSEL LEONARD BELLAVIA
The Chapter 11 allows Saab an opportunity to liquidate its assets, with direct supervision
of the court and the dealers
In a Chapter 7, a trustee is appointed and the costs of liquidation become greater
because the trustee is paid commissions, and has to hire new counsel that does not
have the knowledge of Saab's current counsel, an additional substantial cost to
creditors.
Because of this, we believe that since the assets are liquidating under either Chapter 11
or Chapter 7, allowing Saab to liquidate, with dealer supervision, is the most effective
way of minimizing the costs of liquidating the assets.
You can reach Rick Kranz at rkranz@crain.com.

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Page 2 of 5 Dealers want Saab North America placed into Chapter 11 bankruptcy
2/6/2012 http://www.autonews.com/apps/pbcs.dll/article?AID=/20120130/RETAIL07/120139993

SL1 1130153v1/000000.00000

In re: )
) Chapter 11
) Case No. 12-10344-CSS
Involuntary Debtor. )
___________________________________ ) Related to Docket No. _____

ORDER TRANSFERRING VENUE OF CASE TO UNITED STATES
BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN

Upon the motion of Saab Cars North America, Inc. (SCNA), for an order pursuant to
28 U.S.C. 1412 and Rule 1014 of the Federal Rules of Bankruptcy Procedure, transferring the
venue of the above-captioned case to the United States Bankruptcy Court for the Eastern District
of Michigan, (the Motion);
1
and it appearing that the Court has jurisdiction to consider the
Motion pursuant to 28 U.S.C. 157(b)(2); and this Court having determined that granting the
relief requested in the Motion is in the best interests of SCNA and its estate; and it appearing that
sufficient notice of the Motion has been given under the circumstances and that no other or
further notice is necessary; and upon the record herein and the arguments made by parties in
interest at hearing; and after due deliberation thereon; and good and sufficient cause appearing
therefor;
IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED, as modified herein.
2. Case 12-10344-CSS is hereby transferred to the United States Bankruptcy Court
for the Eastern District of Michigan (the Michigan Bankruptcy Court).

1
Unless otherwise defined, capitalized terms used herein shall have the meanings ascribed to them in the Motion.

SL1 1130153v1/000000.00000
3. The Clerk of this Court is hereby instructed, within two (2) days of entry of such
order, to send to the Michigan Bankruptcy Court by overnight courier (or electronically at the
Michigan Bankruptcy Courts option) (a) certified copies of this Order and the docket entries in
this Case, together with (b) all pleadings that have been filed in this Case.
4. SCNA is authorized and empowered to take such actions as may be necessary and
appropriate to implement the terms of this Order.

Dated: ______________

_______________________________________
THE HONORABLE CHRISTOPHER S. SONTCHI
UNITED STATES BANKRUPTCY J UDGE
7/2803653.1
IN RE:

SAAB CARS NORTH AMERICA, INC.,

Debtor.
)
)
)
)
)
)
Chapter 11
Case No. 12-10344 (CSS)

Hearing Date: February 23, 2012 @ 2:00 p.m.
Objection Deadline: February 20, 2012 @ 4:00 p.m.

RESPONSE OF CATERPILLAR LOGISTICS SERVICES, LLC IN SUPPORT OF
MOTION OF SAAB CARS NORTH AMERICA TO TRANSFER VENUE OF CASE TO
EASTERN DISTRICT OF MICHIGAN [D.I. 16]
Caterpillar Logistics Services LLC, (Cat Logistics) by and through counsel, does
hereby file this Response in support of the motion of Saab Cars North America, Inc. (Saab
NA) to transfer venue of this Chapter 11 case to the Eastern District of Michigan (the Motion)
and in support of the Motion states as follows:
BACKGROUND
1. Cat Logistics provides integrated logistics services to Saab NA in connection with
the sale of automotive supplies and replacement parts and accessories pursuant to the terms of an
Amended and Restated Logistics Services Agreement dated August 1, 2000 (the LSA).
2. To secure the obligations owed by Saab NA to CAT Logistics under the LSA,
Saab NA granted CAT Logistics a security interest in all of Saab NAs parts inventory (the
Parts Inventory) located in the warehouse located at 7055 Ambassador Dr., Allentown, PA
(the Warehouse) and all proceeds thereof.
3. Saab NA executed a Trust Mortgage dated December 20, 2011 (the Trust
Mortgage) in which McTevia & Associates, LLC was appointed the Trustee (the Mortgage
Trustee). Under the Trust Mortgage, the Mortgage Trustee was granted the authority to operate
7/2803653.1
2
the business of Saab NA for the stated purpose of liquidating its assets for the benefit of
creditors.
4. Saab NA, the Mortgage Trustee and Cat Logistics entered into an Interim
Inventory Services Agreement effective J anuary 17, 2012 (the Interim Agreement) to provide
for the continued sale of the Parts Inventory under the LSA, as amended. By Agreement
effective J anuary 30, 2012, the Interim Agreement was amended, inter alia, to extend the term of
the Interim Agreement until March 16, 2012. The parties are currently discussing an additional
agreement to provide for the replenishment of Parts Inventory at the Warehouse.
RESPONSE
5. Cat Logistics supports the Motion and states that it is in the best interest of the
creditors that the venue of this Chapter 11 case be transferred to the Eastern District of Michigan.
6. Cat Logistics further agrees with the statements made by Saab NA in its Motion
and asserts that the factors applied by the Third Circuit in considering a change of venue clearly
favor a transfer of this Chapter 11 case to the Eastern District of Michigan. See In re Centennial
Coal, Inc., 282 B.R. 140, 144 (Bankr. D. Del. 2002)(citing Jumara v. State Farm Ins. Co., 55
F.3d 873, 879-80 (3
rd
Cir. 1995). Cat Logistics asserts that the compelling factors in this case are
as follows:
a. The choice of the Debtor is the Eastern District of Michigan.
b. No claim has originated in Delaware.
c. The principal place of business of the Debtor is in Michigan.
d. The location of the Debtors books and records are in Michigan.
7/2803653.1
3
e. The Debtors principal officers and the Mortgage Trustee are located in
Michigan.
f. The Debtors legal counsel engaged to represent the Debtor during this
liquidation has offices in Bloomfield Hills, Michigan.
g. The nature of the Debtors automotive business is linked to Michigan for
purposes of state law issues, local interest and public policy.
h. Petitioners and other creditors in this case are geographically spread out in
areas other than Delaware.
7. Most importantly, Cat Logistics asserts that the administrative costs in this case
will have a significant bearing on the amount of distribution that unsecured creditors will
receive. As stated in the Background above, the Debtor was in process of liquidating its
inventory at the time that this case was commenced, and thus there is a limited value of assets for
distribution to the creditors. The administration of this Chapter 11 case will undoubtedly be
higher if the case is administered in a jurisdiction requiring travel for Debtors counsel, the
Mortgage Trustee, officers and witnesses. Further the duplication of professional services
needed to administer a case in a jurisdiction that is separate from the Debtors principal place of
business can be significant. The most efficient and cost effective venue for this case is in the
Eastern District of Michigan.
Dated: February 20, 2012
Respectfully Submitted,
BUCHANAN INGERSOLL & ROONEY PC

/s/ Peter J . Duhig________________
Peter J . Duhig (Bar No. 4024)
Telephone: (302) 552-4249
Facsimile: (302) 552-4295
Email: peter.duhig@bipc.com
7/2803653.1
4

and

William L. Norton, III (TN BPR #10075)
BRADLEY ARANT BOULT CUMMINGS LLP
1600 Division Street, Suite 700
Nashville, Tennessee 37203
(615) 252-2397
bnorton@babc.com

Attorneys for Cat Logistics

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on the 20th day of February 2012, the
foregoing Response was caused to be served on all parties in interest electronically through the
Courts CM/ECF system and upon the parties below in the manner indicated.

Via Hand Delivery and Email

Maria Aprile Sawczuk, Esq.
J oseph H. Huston, J r., Esq.
Stevens & Lee, P.C.
masa@stevenslee.com
jhh@stevenslee.com
Via First Class Mail and Email

Thomas B. Radom, Esq.
Bruce L. Sendek, Esq.
Butzel Long, a professional corporation
41000 Woodward Avenue
Stoneridge West
Bloomfield Hills, MI 48304
radon@butzel.com
sendek@butzel.com

Via Hand Delivery and Email

Christopher A. Ward, Esq.
Polsinelli Shughart, PC
cward@polsinelli.com

Via First Class Mail and Email

Eric J . Snyder, Esq.
J ohn Stauder, Esq.
Wilk Auslander LLP
1515 Broadway
New York, NY 10036
esnyder@wilkauslander.com
jstauder@wilkauslander.com
Via Hand Delivery

United States Trustee
844 King Street, Room 2207
Lockbox #35

7/2803653.1
5

/s/ Peter J . Duhig________________
Peter J. Duhig

#1023167-v3

2175641.1
In re:

Saab Cars North America, Inc.

Alleged Debtors.
)
)
)
)
)
)
Chapter 11

Case No. 12-10344 (CSS)

Re: Docket No. 16

OPPOSITION OF THE DEALER FRANCHISEES
TO THE MOTION OF THE ALLEGED
DEBTOR TO TRANSFER VENUE TO MICHIGAN

One hundred and sixty five
1
of the vehicle and service franchisees (the Dealer
Network) of Saab Cars North America, Inc. (SCNA), the alleged debtor herein, including the
eighty-six petitioning creditors (the Petitioners), interpose this objection (the Objection) to
the motion (the Motion) of SCNA to transfer venue under 28 U.S.C. 1412, solely for the
convenience of the parties, to the Eastern District of Michigan. In support of the Objection, the
Dealer Network states as follows:
BASIS FOR THE OBJECTION
1. The Motion should be denied because SCNA has not met its heavy burden of
introducing evidence weighing strongly in favor of transfer. SCNA is undisputedly liquidating,
and a substantial percentage of its assets are located in New Jersey and Pennsylvania. None of its
assets are located in Michigan. Both of SCNAs alleged secured creditors are Delaware entities
and the Dealer Network, which comprises substantially all of its non-secured obligations, are
located in thirty-nine states, including Hawaii. Finally, SCNAs President and Chief Operating
Officer, one of only a handful of remaining employees, is now located primarily in New Jersey.
2. The Petitioners favor venue in this court, and SCNA has neither identified any
witnesses or records that cannot be produced in Delaware nor demonstrated that Delaware is an

1
A list of these dealers, reflecting 81% of all Saab franchisees, is annexed hereto as Exhibit A.
2175641.1
2
inconvenient forum because SCNA is a Delaware corporation with an admitted national
presence.
3. In light of these facts, SCNA cannot show that it would be easier, faster or more
economical to hold this case in Michigan. SCNA has not met its burden in showing that the
under the relevant factors set forth below, the balance of interests weighs strongly in favor of
transfer. Therefore, the Motion should be denied.
BACKGROUND
4. During 1989, the Saab car division of Saab-Scania was reorganized into Saab
Automobile AB (Saab). At that time, 50% of Saab was owned by the General Motors
Company (GM). During 2001, GM became the 100% shareholder of Saab. On June 1, 2009,
the assets of GM, including its interest in Saab, were sold to General Motors LLC.
5. During June, 2009, GM sold all of its assets, including its interest in Saab, to
General Motors LLC (GMLLC). Prior to February 23, 2010, the members of the Dealer
Network were parties to Dealer Sales and Service Agreements (DSSAs) with either GM or
GM LLC. On February 23, 2010 (the Sale Date), General Motors LLC, sold Saab to Saab
Spyker Automobiles, N.V., n/k/a Swedish Automobile N.V. (SWAN), a Netherlands company
and assigned its rights under the DSSA to SCNA.
6. During October 2010, all dealers executed a new DSSA directly with SCNA. In
the new DSSA (Article 5.5), SCNA established a National Dealer Council (NDC). According
to this Article, the role of the NDC is to foster and maintain a positive business relationship
between [SCNA] and its dealers and to obtain input in SCNAs decision making process.
[and] is intended to provide [SCNA] with the benefit of dealer advice regarding various
decisions which affect dealership operations.
2175641.1
3
7. The DSSA also specifically sets forth SCNAs obligations to its dealers. In
particular, the DSSA requires SCNA to: a) make available a mix of models and series of
Motor Vehicles in quantities to enable Dealer to fulfill its obligation[s]. (Art. 6.4.1); b)
process orders of dealers for Parts and Accessories, as that term is defined in the DSSA (Art.
6.2); and c) warrant new Motor Vehicle Parts and Accessories. (Art. 6.5). With respect to
SCNAs payment obligations related to warranty work, [SCNA] will provide or pay Dealer for
the parts and other materials and will pay dealer a reasonable amount for labor. (Art. 7.1.4).
The relevant portions of the DSSA are annexed hereto as Exhibit B.
8. As set forth in the annexed declaration (the Schirm Dec.) of Kurt Schirm (Ex.
C), the President of the NDC, each dealer executed a DSSA identical to the one annexed hereto.
Schirm Dec. 4. Mr. Schirms dealership is located in Northern Virginia. The other active
member of the NDC, Thomas L. Backes, maintains a Saab dealership and resides in Southern
Connecticut. Id. at 2.
9. On December 19, 2011, unable to find a buyer acceptable to GM LCC,
2
Saab
filed for bankruptcy in Sweden. On that date, SCNA announced that it was suspending warranty
coverage for all new Saab vehicles, suspending warranty reimbursement to its dealers as required
under the DSSA for any model year 2010 and 2011 vehicles
3
and was freezing the dealers
accounts so that any sums owed to dealers as of that time would not be paid. A copy of a
memorandum from John Anderson, the executive director of North American Sales of SCNA,
reflecting these events, is annexed hereto as Exhibit D.

2
Under certain agreement executed at the time of the sale of Saab to SWAN, GM maintains certain rights necessary
for the manufacturing of Saab vehicles.
3
GM LCC has agreed to provide warranty reimbursement for all vehicles purchased prior to the Sale Date.
2175641.1
4
10. On December 20, 2011, SCNA appointed McTevia & Company, LLC
(McTevia), a Florida limited liability company, with offices in Florida and Michigan, to
administer SCNAs assets.
11. At the end of December, 2011, Ally Financial, Inc. (Ally), a Delaware limited
liability company, commenced actions in New Jersey, California and Georgia against SCNA to
take possession of the 896 vehicles that SCNA owns (the SCNA Vehicle Inventory). [ECF
Doc. No. 18, 13-14]. A liquidation analysis prepared by SCNA, as of December 20, 2011 (the
Liq. Analysis), reflects the location of the SCNA Vehicle Inventory. According to the Liq.
Analysis: a) 656 (73%) of the SCNA Vehicles Inventory is located in New Jersey, b) 185 (21%)
is located in California, c)17 (2%) is located in Georgia and 38 (4%) are located in dealers lots.
A copy of the Liq. Analysis is annexed hereto as Ex. E
4
.
12. According to the Liq. Analysis, the vehicle and parts inventory make up
substantially all of SCNAs assets. The Liq. Analysis also reflects that, as of December 20,
2011, Ally was owed $174,296 and CLS owed $681,921.
13. On January 13, 2012, SCNA terminated 80% of its employees located in
Michigan and announced it was closing its Michigan office at the end of February, 2012. A copy
of an article reflecting these layoffs in an interview with James McTevia is annexed hereto as
Exhibit F. In the article, Mr. McTevia admits that: a) there is no way to salvage the company
and that SCNA will be liquidating; b) there is no money to keep SCNA going; and c) there are
no new parts coming in. Id.
14. As set forth in the Schirm Dec. ( 9), SCNA currently maintains nine full and
part-time employees, including its Chief Operating Officer (COO) Tim Colbeck, who is now
located primarily in New Jersey (Motion, p.14, fn 7).

4
Certain portions of the Liq. Analysis, not relevant to the Motion, have been redacted.
2175641.1
5
15. In the Liq. Analysis (Note E), SCNA ascribes a discount to the value of the
SCNA Vehicles Inventory from the manufacturers suggested retail price (MSRP) of
$32.745mm to $18.874mm, a discount of 42%. According to Note E to the Liq. Analysis, this
valuation is predicated on [McTevias] belie[f]] that the vehicles would most likely be sold at
auctionwith no warranty.
16. According to SCNA, as of December 20, 2011, the Dealer Network owned 2,149
vehicles (the Dealer Network Inventory). Schirm Dec., 10. According to the Schirm Dec., the
vehicles in the Dealer Network Inventory have been sold, and will sell in the future, at an
average of at least 42% less than the MSRP. Id.
17. On January 17, 2012, SCNA (a Delaware corporation) and McTevia (a Florida
LLC) entered into an agreement with Caterpillar Logistics Services (CLS), a Delaware limited
liability company, to allow CLS to continue to distribute parts owned by SCNA to the dealers.
The parts are all located at a facility (the Facility) located in Pennsylvania and CLS has filed a
security interest with respect to SCNAs obligations under this agreement, as well as SCNA
rental obligations with respect to the Facility. A copy of the Security Agreement reflecting this
arrangement, including the location of the Facility, is annexed hereto as Exhibit G.
18. On January 30, 2012, 48 of the Petitioners, entities possessing claims that are not
contingent, unliquidated or disputed (CUD)
5
, filed an involuntary Chapter 11 petition against
SCNA in Delaware, the state of SCNAs incorporation. On January 31, 2012, the bankruptcy
petition was amended to include an additional 38 additional Petitioners whose claims were not
CUD. A copy of the Involuntary Petition, as amended, is annexed hereto as Exhibit H. A
plurality of Petitioning Creditors are located in Pennsylvania (8), New York (7) and
Massachusetts (6).

5
The numbers set forth in the Involuntary petition, as amended, were provided by SCNA. (Schirm Dec., 11).
2175641.1
6
19. On February 7, 2012, a day after the Motion was filed, Ally filed motions in the
Bankruptcy Court to modify the bankruptcy stay to obtain possession of the SCNA Vehicle
Inventory and to prohibit SCNA from using cash collateral [ECF Doc. Nos. 18 & 19].
STATUORY AUTHORITY FOR TRANSFERRING
VENUE UNDER 28 U.S.C. 1412.

20. The Delaware Bankruptcy Courts and the Third Circuit Court of Appeals have
utilized two related tests when determining whether venue of a bankruptcy proceeding, or an
adversary proceeding within a bankruptcy proceeding, should be transferred under 28 U.S.C.
1412. When considering a motion to transfer an adversary proceeding, this court has recognized
that Third Circuit case law requires the Court to apply a twelve-factor test in determining
whether to grant a motion to transfer venue. In re Visteon Corp., 2011 WL 5025004, at *1
(Bankr. D. Del. Oct. 21, 2011)(Sontchi, J.)(Visteon). The factors are: (1) the plaintiffs forum
preference as evidenced by his or her original choice; (2) defendants preference; (3) whether the
claim arose elsewhere; (4) the convenience of the parties due to their relative physical and
financial condition; (5) the convenience of the expected witnesses, but only so far as the
witnesses might be unavailable for trial if the trial is conducted in a certain forum; (6) the
location of books and records, to the extent that the books and records could not be produced in a
certain forum; (7) the enforceability of the judgment; (8) practical considerations regarding the
ease, speed, or expense of trial; (9) the administrative difficulty due to court congestion; (10) the
local interest in deciding local controversies in the home forum; (11) the public policies of the
two fora; and (12) the familiarity of judge with applicable state law. In re Hechinger Inv. Co.,
296 B.R. 323, 325-26 (Bankr. D. Del. 2003) (citing Jumara v. State Farm Ins. Co., 55 F.3d 873,
879 (3d Cir. 1995).
2175641.1
7
21. In considering whether to transfer a bankruptcy proceeding as opposed to an
adversary proceeding, Delaware Bankruptcy Courts have also considered (1) the proximity of
creditors of every kind to the court; (2) the proximity of the debtor; (3) the proximity of
witnesses who are necessary to the administration of the estate; (4) the location of the debtors
assets; (5) the economic administration of the estate; and (6) the necessity for ancillary
administration in the event of liquidation. In re Innovative Commcn Co., LLC, 358 B.R. 120,
126 (Bankr. D. Del. 2006); see also In re Delaware and Hudson Railway Co., 96 B.R. 469, 471
(D. Del. 1989).
ARGUMENT
1. As the Proponent, SCNA is Required to Prove that Balance of Interests
Strongly Favors Transfer.

22. Regardless as to which test is utilized by this court, the burden is on the moving
party to establish that the balance of interests weighs strongly in favor of the requested transfer.
Nice Sys., Inc. v. Witness Sys., Inc., 2006 WL 2946179, at *1 (D. Del. Oct. 12, 2006, citing
Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970)) (emphasis added). Indeed, [a]
transfer will be denied if the factors are evenly balanced or weigh only slightly in favor of the
transfer. Nice Sys., 2006 WL 2946179, at *1.
23. When the choice of Delaware is legitimate and rational, the proponents of the
transfer must prove that the public and private interest factors strongly favor transfer. Id. at
*2; Kollmorgen Corp. v. Gettys Corp., 760 F. Supp. 65, 66-67 (D. Del. l991) (quoting Shutte,
431 F.2d at 25) (The proponent has the burden of showing the relevant factors are balanced in
favor of the transfer and unless the balance of convenience of the parties is strongly in favor of
defendant, the plaintiff's choice of forum should prevail.).
2175641.1
8
24. SCNA has failed to meet its heavy burden. Indeed, of the combined eighteen
factors contained in the two tests, all of the factors favor keeping this case in Delaware or are
neutral. SCNA is a Delaware corporation with a national presence. Its two alleged secured
creditors are also incorporated here.
25. It would not be inconvenient for SCNA to hold the bankruptcy here, since many
of SCNAs assets are located close to Delaware and its creditors and the witnesses in this
bankruptcy are located nearby as well. SCNA does not allege that there are any witnesses or
books and records that could not be produced in Delaware, that there is any bar to enforcement in
Delaware or that there are any other administrative difficulties with administering the case in
Delaware.
26. Instead, SCNA argues that transfer to the Eastern District of Michigan is proper
for essentially two reasons: a) because SCNA is headquartered there; and b) because
Detroit is the automotive capital of the world. (Motion at p. 14) SCNA makes these
arguments, even though none of its assets are in Michigan; it is no longer operating, its
headquarters will close at the end of February, 2012; and its CEO resides in New Jersey.
27. And, regardless of how SCNA describes Detroit, other bankruptcy courts,
including the Bankruptcy Courts in districts far from Michigan, have demonstrated that they are
quite capable of overseeing the bankruptcy proceedings of vehicle franchisors with employees in
Michigan (i.e., GM and Chrysler). SCNA simply has not met its heavy burden of demonstrating
sufficient basis to justify transferring this case halfway across the country. Each factor is
discussed below.
1. The Twelve-Factor Test

a. Plaintiffs Choice of Forum

2175641.1
9
28. A plaintiffs choice of forum is entitled to paramount consideration, Nice Sys.,
2006 WL 2946179, at *2 (citing Shutte, 431 F.2d at 25), and is accorded substantial weight
where it relates to legitimate [and] rational concerns Waste Distillation Tech., Inc. v. Pan Am.
Res., Inc., 775 F. Supp. 759, 764 (D. Del. 1991) and should not be lightly disturbed. In Re:
ML-Lee Acquisition Fund II, L.P., 816 F. Supp. 973, 975 (D. Del. 1993) (quoting Shutte, 431
F.2d at 25); In re Hechinger Inv. Co., 296 B.R. at 326 ([T]he plaintiff has chosen this forum, a
decision to which courts normally defer.).
29. As set forth in the Schirm Declaration (11), the bankruptcy petition was filed in
Delaware because Delaware is a proper venue for the bankruptcy filing, counsel for the Dealer
Network are located in New York and Mr. Schirm is located about 120 miles from Wilmington,
approximately 2 hours by car should his need to appear in Bankruptcy Court on behalf of the
Dealer Network become necessary.
30. SCNA argues that it is the debtors choice of forum that should be given
deference and cites to In re Ocean Properties of Delaware, Inc., 95 B.R. 304, 205 (Bankr. D.
Del. 1988) (When venue is proper, the debtors choice of forum is entitled to great weight.)
(Motion, pp. 9, 11). The Ocean Properties case actually undermines SCNAs position and
supports keeping venue in Delaware.
31. In Ocean Properties, the debtor chose the forum by filing for bankruptcy in
Delaware. Just as a district court gives weight to a plaintiffs choice of forum in a civil case, the
bankruptcy court gave weight to the debtors choice of forum in filing for bankruptcy. But here,
the Petitioners filed this involuntary bankruptcy petition in Delaware. SCNA is not the original
chooser of venue; it is the proponent of transfer. As explained above, the proponent of transfer
has the burden of showing the relevant factors are balanced in its favor. To give deference to
2175641.1
10
SCNAs desire to transfer venue out of this court would favor transfer out of a properly venued
jurisdiction and overturn the rule that the proponent of transfer has the burden of proving that the
balance of interests strongly favors transfer. Thus, the court should give deference to the Dealer
Networks choice of venue and this factor weighs in favor of keeping this case in Delaware.
b. Defendants Choice of Forum

32. As explained above, the court must give deference to the Petitioners choice of
forum. In re Hayes Lemmerz Intl, Inc., 312 B.R. 44, 46 (Bankr. D. Del. 2004) (the Plaintiff has
chosen this forum. As to the second factor, the Defendant prefers another forum. However,
deference is given to the plaintiffs choice of forum.). That SCNA prefers a different forum
does not favor transfer.
c. Whether the Claim Arose Elsewhere

33. The potential claims in this proceeding arise in the dealerships, which are located
in 39 states, including Hawaii and thus this factor does not favor transfer. But even if the claims
arose in Michigan, this Court has held that this factor does not favor transfer and is at most
neutral. In Visteon, 2011 WL 5025004, at *2, the defendant argued that its claim arose in
Michigan and the plaintiff conceded that its claims were based on transactions that occurred
outside of Delaware. This court stated Nonetheless this Court has held that where the issue
will be resolved through basic contractual interpretation and the location of the underlying events
is not germane, this factor is neutral. (Citing DHP Holdings II Corp. v. Home Depot, Inc., 435
B.R. 264, 273 (Bankr. D. Del. 2010)).
34. The issues in this case will turn on the basic contract interpretation of the
DSSAs. Where these agreements were executed or performed is unimportant and this factor
therefore at most neutral. SCNA acknowledges this holding from DHP Holdings II Corp. in its
2175641.1
11
brief and essentially concedes that this factor does not favor transfer (Motion, p. 12, fn 5). We
agree.
d. Convenience of the Parties

35. Convenience is relevant only as it relates to a partys physical and financial
condition. Magsil Corp. v. Seagate Tech., 2006 WL 1259043, at *1 (D. Del. Apr. 30, 2006)
(citing Jumara, 55 F.3d at 879). To show that the convenience of the parties favors transfer, the
proponent must prove that litigating in Delaware would pose a unique or unusual burden on
[its] operations. Amgen Inc. v. Ariand Pharm., 513 F. Supp. 2d 34, 45 (D. Del. 2007) (quoting
Ace Capital v. Varadam Foundation, 392 F. Supp. 2d 671, 673 (D. Del. 2005)); In re Visteon
Corp., 2011 WL 5025004, at *2 ([Proponent] has failed to show any concrete evidence that it
would be less expensive overall to litigate outside Delaware. As a result, the convenience factor
is neutral.).
36. SCNA has not alleged that holding the bankruptcy proceedings in Delaware
would pose a unique or unusual burden on its operations. Moreover, [a]bsent some showing of
a unique or unexpected burden, [defendant] should not be successful in arguing that litigation in
[its] state of incorporation is inconvenient. [Defendant] should expect litigation in Delaware
courts, and it has not shown that litigating this case here will be unusually burdensome or
oppressive. Wesley-Jessen Corp. v. Pilkington, 157 F.R.D. 215, 218 (D. Del. 1993).
37. Further, SCNAs admitted national presence belies any claim that it would be
unduly burdened by proceeding in Delaware. R2 Tech. v. Intelligent Sys. Software, 2002 WL
31260049 at *2 (D. Del. 2002); BAE Sys. Aircraft Controls, Inc. v. Eclipse Aviation Corp., 224
F.R.D. 581 (D. Del. Oct. 9, 2004). Courts will only transfer a case for the convenience of the
parties if the defendant is regional and the center of gravity of the case is located in a distinct
2175641.1
12
area outside the original forum. Tsoukanelis v. Country Pure Foods, Inc., 337 F. Supp. 2d 600,
603 (D. Del. 2004) (denying transfer motion because courts accord a plaintiff's choice of forum
substantial weight and only transfer venue if the defendant is regional (as opposed to national) in
character); See also Datex-Ohmeda, Inc. v. Hill-Rom Serv., Inc., 185 F. Supp. 2d 407, 412 (D.
Del. 2002) ([B]ecause the parties to this litigation are national corporations, the Court finds that
neither party will be unduly inconvenienced by this action proceeding in Delaware.).
38. The three cases by SCNA (Motion, pp. 10-11) where the Bankruptcy Courts
granted motions to transfer based on the convenience of the parties concluded transfer was
appropriate only because the debtor was regional and not national.
39. In First New England Dental Centers, Inc. Case No. 980347, letter op at 9
(Bankr. D. Del. Mar. 20 1998), the court stated that this Chapter 11 case is not a national case,
i.e. one where assets and parties in interest with substantial claims are scattered throughout the
country; it is a small regional case with the center of gravity in Massachusetts. In In re Ernst
Home Center, Inc., Case No. 96-1088 and 1089, bench ruling Tr. at 7 (Bankr. D. Del. Mar. 8,
1996), the court stated that If the Debtors properties and its creditors were truly scattered
throughout the country, I would be inclined to deny the motions. And in In re Midland
Associates, 121 B.R. 459, 461 (Bankr. E.D. Pa. 1990), the court stated, in the context of a one
asset case, the central issue is likely to focus on the value of the asset, which in this case is
located in Texas. Hence, testimony from Texas witnesses and interpretation of Texas law will
most likely be paramount. 121 B.R. at 461. The court stated, [i]mproved real estate is a
particularly local concern often better administrated by a court in the district in which it is
located. In virtually every single asset improved real estate partnership case we have seen, the
court has transferred the bankruptcy to the jurisdiction where the asset is located. Id.
2175641.1
13
40. In contrast to these three cases, SCNA clearly has a national presence, doing
business with dealers located in 39 states of the United States. SCNA admits that its operations
are national in scope, and not regional. Colbeck Declaration, 11 (In particular, SCNAs
dealer network spans across the United States). In fact, SCNA established the NDC to foster
and maintain these sprawling business relationships. SCNAs assets are also not located in one
geographic area but in four different states: Pennsylvania, New Jersey, California and Georgia.
There is no one center of gravity in this case and certainly not in Michigan.
41. SCNA has not alleged that holding the bankruptcy proceedings in Delaware
would pose a unique or unusual burden on its operations, nor could it under these facts. SCNA is
a Delaware corporation that does business with dealers located across the United States, with
assets located in four different states. This factor thus weighs in favor of keeping the bankruptcy
in Delaware.
e. Convenience of the Witnesses

42. The convenience of the witnesses is a factor only to the extent that the witnesses
may actually be unavailable for trial in one of the fora. Jumara, 55 F.3d at 879. Without such
a showing, witnesses are presumed to be willing to testify in either forum, despite the
inconvenience that one of the forums would entail. In re Visteon Corp., 2011 WL 5025004, at
*3 ([Movant] has not suggested any relevant witnesses that would be unavailable for trial in
Delaware. Therefore, this factor favors keeping the action in Delaware.). And [p]arty
witnesses or witnesses who are employed by a party carry no weight in the balance of
convenience analysis since each party is able, indeed, obligated to procure the attendance of its
own employees for trial. Affymetrix, Inc. v. Synteni, Inc., 28 F. Supp. 2d 192, 203 (D. Del.
1998).
2175641.1
14
43. SCNA does not identify any relevant witnesses that would be unwilling or unable
to testify in Delaware, stating only vaguely that former employees would not be subject to the
subpoena power of this court. (Motion, p. 14) Simply stating that certain witnesses live outside
the venue is insufficient to fulfill SCNAs burden of showing that witnesses will actually be
unavailable for trial. Acuity Brands, Inc. v. Cooper Indus., Inc., 2008 WL 2977464, at *2 (D.
Del. July 31, 2008) ([W]hile it is true that none of the potential third-party witnesses identified
by [the defendant] appear to reside in Delaware, [the defendant] fails to demonstrate that these
witnesses will be either unable or unwilling to travel to Delaware.).
44. Moreover, the vast majority of witnesses including: a) the Petitioners by the NDC,
b) SCNAs CEO, c) and the two alleged secured creditors, (i) CLS, a Delaware LLC and ii) Ally,
who filed motions presently pending in this court, will certainly be available in Delaware. Alcoa
Inc. v. Alan Inc., 2007 WL 1948821, *4 (D. Del. July 2, 2007) (denying motion to transfer where
defendants identified over a dozen non party witnesses whom they asserted would be
inconvenienced by venue in Delaware; of these non-party witnesses, only four provided
affidavits stating that they are unwilling to travel to Delaware for trial). SCNA has failed to
carry its burden in showing that witnesses will be unavailable in Delaware and this factor thus
weighs against transfer.
f. Location of Documents

45. Courts only consider the location of documents in the transfer analysis to the
extent that the files could not be produced in the alternative forum. In re Innovative Commcn
Co, LLC, 358 B.R. at 127. As courts in this District have repeatedly noted, today's modern
technology allows for the easy exchange of electronic discovery, and the location of documents
outside the forum does not warrant transfer. Acuity Brands, 2008 WL 2977464 at *3; ADE
2175641.1
15
Corp. v. KLA-Tencor Corp., 138 F. Supp. 2d 565, 571 (D. Del. 2001) (With new technologies
for storing and transmitting information, the burden of gathering and transmitting documents
3,000 miles is probably not significantly more than it is to transport them 30 miles.); Jones
Pharma, Inc. v. KV Pharmaceutical Co., 2004 WL 323109, at *3 (D. Del. Feb. 17, 2004)
(although [the defendant] contends that the books and records necessary to litigate this action
are in [the transferee forum], [the defendant] does not contend that they could not be produced or
would be unavailable in Delaware. Therefore, the Court does not consider the location of the
books and records as weighing in favor of a transfer....).
46. SCNA argues that the case should be transferred because SCNA keeps many of
its documents in hard copy in Michigan and to the extent it has documents in electronic form,
those documents may have to be converted to be compatible with other computer systems.
(Motion, p. 12). This argument on its face is unconvincing and more importantly, is completely
foreclosed by the above Delaware case law. Copying documents, scanning them onto compact
discs and producing them is a necessary and routine part of litigation. This will be true whether
this case is located in Delaware or Michigan and any alleged burden on SCNA based on its
routine discovery obligations does not factor into the transfer analysis. SCNA has failed to show
that the interests based on the location of documents weighs in its favor and this factor thus
weighs against transfer.
g. The Enforceability of the Judgment

47. SCNA has not objected to personal jurisdiction and has not provided any reason
why a judgment from this Court would not be given full faith and credit in the State of Michigan.
Therefore, this factor favors keeping the action in Delaware. In re Visteon Corp., 2011 WL
5025004, at *3.
2175641.1
16
h. Practical Considerations Regarding the Ease, Speed or Expense of Trial

48. SCNA argues that this factor weighs in favor of transfer because SCNA is in the
automobile industry and Detroit, Michigan is the automotive capital of the world. (Motion, p.
14). This argument carries no weight. The General Motors and Chrysler bankruptciesthe two
largest and most famous bankruptcies concerning vehicle franchisors in historytook place in
New York and not Michigan. We fail to see how the connection between cars and Detroit makes
the case proceed faster or less expensively in Michigan, considering none of the assets are
located there and SCNA has not identified any witnesses that would only be available in that
forum. This factor favors keeping the bankruptcy in Delaware.
i. The Administrative Difficulty Due to Court Congestion

49. SCNA admits in its Motion (26) that there is no evidence that this district is
more congested than the Bankruptcy Court of the Eastern District of Michigan. Therefore, this
factor favors keeping the bankruptcy in Delaware.
j. Delawares Interest in Deciding the Litigation

50. By incorporating in Delaware and availing themselves of the benefits of
Delaware's corporate laws, Defendants chose to expose themselves to the risk of suit in
Delaware. Praxair Inc. v. ATMI, Inc., No. Civ. 03-1158-SLR, 2004 WL 883395, at *2 (D. Del.
Apr. 20, 2004); ADE Corp. v. KLA-Tencor Corp., 138 F. Supp. 2d 565, 572 (D. Del. 2001)
([O]ne aspect of a company's decision to incorporate in Delaware is agreeing to submit itself
to the jurisdiction of the courts in this state for the purposes of resolving this type of commercial
dispute.). Absent some showing of a unique or unexpected burden, defendants cannot be
successful in arguing that litigation in [their] state of incorporation is inconvenient. Id. at 573.
2175641.1
17
51. SCNA claims Michigan has a major interest in this Case. [because] SCNA [is]
a party of the automobile industry so strongly dominates Michigans economy. Motion, p. 16.
However, the evidence strongly reflects that SCNA is no longer part of any industry. As a result
of Saabs demise and bankruptcy, it maintains a handful of employees no longer responsible to
provide marketing, warranty support or parts distribution to the dealers. (See Ex. F). Delawares
interest in presiding over this bankruptcy thus weighs against transfer.
k. The Public Policies of the Two Fora

52. SCNA uses this factor to rehash its arguments that it will be more convenient for
SCNA and some of its creditors to administer this case in Michigan and that it would be
appropriate to administer this case in a state that is home to the automobile industry. (Motion, p.
15). For the reasons already discussed, this argument fails and this factor does not favor transfer.
l. Familiarity of Judge with Applicable State Law
53. SCNAs argument assumes that the DSSAs with SCNA must all be interpreted
under Michigan law. This factor, even if true, does not warrant transfer because the issues in this
case will depend on basic contract interpretation. Visteon, 2011 WL 5025004, at *2
([Defendant] contends that the claim arose in Michigan. [Plaintiff] does not dispute this and
concedes that its claims are based on transactions that occurred outside of Delaware.
Nonetheless this Court has held that where the issue will be resolved through basic contractual
interpretation and the location of the underlying events is not germane, this factor is neutral.
(citing DHP Holdings, 435 B.R. at 273)
54. This court is more than capable of applying basic Michigan contract law.
Moreover, to the extent this factor does weigh in favor of transfer, one factor in twelve is not
enough to justify transferring a properly venued case halfway across the United States. Nice
2175641.1
18
Sys., 2006 WL 2946179, at *1 (A transfer will be denied if the factors are evenly balanced or
weigh only slightly in favor of the transfer.).
2. The Six-Factor Test

55. As explained above, when considering whether to transfer a bankruptcy
proceeding, Delaware Bankruptcy Courts also apply a six-factor test based on the proximity of
the creditors, debtor, assets and witnesses, as well as the economic administration of the estate,
and the necessity for ancillary administration in the event of liquidation. In re Innovative
Commcn Co., LLC, 358 B.R. at 126. An analysis of these factors also counsels in favor of
retaining the bankruptcy in Delaware. Although as the movant, SCNA has the burden of proof,
SCNA did not address these factors in the Motion and thus cannot meet its burden in showing
that the balance of interests weighs strongly in favor of transfer.
A. The Proximity of Creditors of Every Kind to the Court

56. SCNA suggests that the dealers claims consist of only 14% of total liabilities
(Motion, 2, 20; Colbeck Declaration, 120 ). SCNA provides no evidence to support this
contention other than the unsupported statement by Mr. Colbeck. The Dealer Network wishes
this statement was true, but SCNA ignores the significant discounts the Dealer Network is
required to offer to purchasers of the remaining Dealer Vehicle Inventory as a result of SCNA
breach of the DSSAs, including its obligation to supply new vehicles to the dealers, provide
warranties with respect to these vehicles, and to reimburse dealers for parts and services rendered
to holds of these warranties.
57. As set forth in the Liq. Analysis, as of December 20, 2011, SCNA estimates, and
admits, that the value of SCNA Vehicle Inventory, should be reduced by $14 million. As of that
date, the dealers owned 2,149 vehicles (See Schirm Affidavit, 11). Applying the same discount
2175641.1
19
factor that SCNA used of 42%, and the same average MSRP of $36,556.73 per vehicle (See Liq.
Analysis, Note E), the claims of the Dealer Network, arising from SCNAs breach of the DSSAs,
equals at least
6
$33mm.
58. All of the other debts set forth on the Liq. Analysis total approximately $8mm.
Based on solely on this one component of the Dealer Networks compensatory damages, at least
eighty (80%) percent of SCNAs total liabilities consist of the claims of the Dealer Network,
who prefer venue in this Court.
B. The Proximity of the Debtor
59. The Motion states that SCNAs principal place of business is located in Royal
Oak, Michigan, and that Petitioners acknowledge that SCNAs principal place of business is
Royal Oak as the petition lists SCNA [Royal Oak] address [and] zip code. Motion, p. 4. This
statement is false. The location of the principal place of business is left blank on the Involuntary
Petition, as amended and the location of the Principal Place of Assets is listed as Unknown.
60. Although SCNAs office, such as it is, is currently located in Michigan, SCNA
recently terminated 80% of its employees and is closing down its Michigan operations at the end
of February, 2012 and its CEO is now located primarily in New Jersey.
61. The United States Supreme Court recently held in Hertz Corp. v. Friend, 130
S.Ct. 1181, 175 L.Ed.2d 1029 (2010), that a corporations principal place of business, for
purposes of determining diversity jurisdiction under 28 U.S.C. 1332(c)(1), refers to the place
where the corporations high level officers direct, control, and coordinate the corporations
activities. Id. at 1192.

6
The Dealer Network has suffered additional compensatory damages resulting from SCNAs breach of the DSSAs,
in addition to the loss of the value of the vehicles.
2175641.1
20
62. As stated above, SCNAs president and COO currently resides and is located
primarily in New Jersey. As a result, in light of the Hertz decision, SCNAs principal place of
business is arguably either New Jersey, where Mr. Colbeck and 73% of the SCNA Vehicle
Inventory is located or Pennsylvania where the Parts Inventory is located; both locations are
within this Circuit. In such a situation, the location of the debtors office, by itself, does not
warrant transfer. In re Fairfield Puerto Rico, Inc., 333 F. Supp. at 1191 (Weighing all of the
foregoing factors and being especially impressed with the fact that the plant is non-operating,
and the formulation of a plan of arrangement depends primarily on efforts and activities which
are centered in the eastern part of the United States, the Court concludes that the movants have
failed to carry their burden of proof in support of transfer.). Thus, this factor weighs in favor of
keeping the bankruptcy in Delaware.
C. The Proximity of Witnesses Who Are Necessary to the Administration of the
Estate

63. There are several witnesses necessary to the administration of the estate. Kurt
Schirm, President of the NDC, maintains a dealership and residence in Northern Virginia.
(Schirm Dec. 1). The other active member of the NDC, Thomas L. Backes, maintains a
dealership and resides in Southern Connecticut. (Id. 2). Tim Colbeck, the President and COO
of SCNA, is now located primarily in New Jersey. (Motion, p. 14, fn 7). Furthermore, Ally, an
alleged secured creditor, filed motions in this court, thereby availing itself of this courts
jurisdiction. Thus, none of the necessary witnesses are located in Michigan, many are located
adjacent to or near Delaware and Ally has chosen to litigate its issues in this court. This factor
weighs in favor of retaining the case in Delaware.

2175641.1
21
D. The Location of the Debtors Assets

64. As set forth in the Liq. Analysis, substantially all of the alleged debtors assets
consist of the SCNA Vehicles and Parts Inventory. The SCNA Vehicles Inventory is located in
New Jersey, California and Georgia. The Parts Inventory is located in Pennsylvania. Thus, a
substantial portion of the alleged debtors assets are located very close to Delaware whereas
none of these assets are located in Michigan. This factor therefore favors keeping the
bankruptcy in Delaware.
E. The Economic Administration of the Estate

65. This case will proceed more economically in Delaware than in Michigan. As
described above, the concentration of the witnesses and assets on the East Coast will make the
case proceed more economically in Delaware. Though the burden is on SCNA to show that the
balance of interests weighs strongly in favor of transfer, it did not even address the location of
the assets or creditors in its brief and conveniently considered only the location of witnesses who
were former employees of SCNA. But the most important witnessesSchirm, Backes and
Colbeckall reside on the East Coast in close proximity to Delaware. That a SCNA skeletal
staff is located in Michigan is inconsequential to the efficient administration of the estate in light
of these other facts, especially considering its current activities taking place on the East Coast.
See In re Fairfield Puerto Rico, Inc., 333 F. Supp. at 1191. This factor weighs in favor of
retaining the case in Delaware.
F. The Necessity for Ancillary Administration in the Event of Liquidation

66. In the Colbeck Declaration (2), he states that SCNA is responsible for
automotive sales, parts distribution, marketing, warranty claim processing, and various other
activities in North America. See also Motion, 1. That may have been true as of December 19,
2175641.1
22
2011, but, SCNA no longer undertakes any of those obligations (See Ex. F). In fact, SCNAs
operations are so moribund at this point, that Mr. Colbeck is located primarily now in New
Jersey. Motion, p. 14, n.7.
67. SCNA, whose parent manufacturer is liquidating, will be itself liquidating.
However, SCNA has provided no evidence of the need for necessary ancillary administration.
CONCLUSION
68. For the reasons set forth herein, the Dealer Network respectfully requests that this
court enter an order denying the Motion and for such other and further relief as this court deems
just and proper.

POLSINELLI SHUGHART
Counsel for the Dealer Network

By: /s/ Christopher A. Ward
Christopher A. Ward (No. 3877)
Shanti M. Katona (No. 5352)
222 Delaware Avenue
Phone: (302) 252-0920
Fax: (302) 252-0921
email: cward@polsinelli.com
skatona@polsinelli.com

WILK AUSLANDER LLP
Of Counsel to Bellavia Gentile
& Associates, LLP,
Counsel for the Dealer Network

By: /s/ Eric J. Snyder
Eric J. Snyder (admitted pro hac vice)
1515 Broadway
New York, New York 10036
Tel:(212) 981-2300
Fax: (212) 752-6380
email: esnyder@wilkauslander.com


1

02/22/2012 SL1 1134718v1 107160.00001

In re: )
) Chapter 11
) Case No. 12-10344-CSS
Alleged/Proposed Debtor. )
___________________________________ ) Related to Docket Nos. 16 and 35

REPLY IN SUPPORT OF MOTION OF SAAB CARS NORTH AMERICA, INC. FOR
ORDER TRANSFERRING VENUE OF CASE TO
BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN

Saab Cars North America, Inc. (SCNA), in support of its Motion for Order
Transferring Venue of Case to Bankruptcy Court for the Eastern District of Michigan (the
Motion), and in response to the Opposition of the Dealer Franchisees to the Motion of the
Alleged Debtor to Transfer Venue to Michigan (the Opposition), submits the following Reply.
1

INTRODUCTION
1. As SCNA made clear in its Motion, this Case is pending in this Court solely
because Petitioners counsel raced to the courthouse to lay venue in Delaware rather than
Michigan. Petitioners now assert that as the first to file, their actions should be rewarded by
allowing the Case to remain in this Court. In reality, and as the cases cited in this Reply make
clear, no deference to Petitioners choice of venue is warranted. This Court should focus on
whether either the convenience of the parties or the interests of justice on the whole favor the
transfer of this Case to Michigan, and both considerations undoubtedly do.
2. SCNAs current headquarters and its proposed restructuring officer (McTevia) are
located in Michigan, and so too are substantially all of SCNAs liquid assets and most of the

1
Capitalized but undefined terms used in this Reply have the meanings ascribed to them in the
Motion.

2

02/22/2012 SL1 1134718v1 107160.00001
likely witnesses in this Case. Moreover, one of SCNAs secured creditors, Caterpillar Logistics
Services, LLC (Cat Logistics), has filed a Response in Support of the Motion (the Caterpillar
Response), pointing out that transfer will minimize the cost of administering this Case and will
maximize the recovery by SCNAs creditors. In light of these facts, Petitioners can offer no
meaningful explanation as to how the overall administration of this Case would be more efficient
in this Court than in Michigan. Transfer of this Case to the Michigan Bankruptcy Court remains
warranted both in the interest of justice and for the convenience of the parties.
2

REPLY ARGUMENT
A. Petitioners Do Not Dispute that this Case Was Filed in this Court Merely Because
Petitioners Raced to the Courthouse; Thus, Petitioners Venue Preference Warrants
No Deference.

3. In the Motion, SCNA offered the Radom Declaration and an article from the
Automotive News to confirm that Petitioners counsel both (a) knew SCNA was preparing to file
a voluntary chapter 11 case in the Michigan Bankruptcy Court, and (b) preemptively filed this
Case in Delaware given his own proximity to this Court. In their Opposition, Petitioners do not
deny either of these facts. Rather, Petitioners offer the Declaration of Kurt Schirm (the Schirm
Declaration), president of the National Dealer Council (the NDC) and president and operator
of one of the 165 Petitioner dealers, as a purported additional justification for Petitioners
counsels actions.
4. In reality, the Schirm Declaration does nothing to dispel the fact that Petitioners
raced to the courthouse to obtain a convenient venue for Petitioners counsel. The Schirm
Declaration states that after SCNA retained McTevia in December of 2011, the NDC believed it

2
Significantly, [t]he considerations of 1412 are disjunctive and transfer is appropriate even if
only one is met. Dwight v. Titlemax of Tennessee, Inc., 2010 U.S. Dist. LEXIS 4767, at *5
(E.D. Tenn. J an. 21, 2010).

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was in the best interest of the dealers to retain counsel to protect the interests of the dealers, and
it further determined that retaining Bellavia, Gentile & Associates, a law firm located in Long
Island, New York, would be in the best interest of the dealers. Schirm Declaration 7. It was
not until after the NDC retained Bellavia, Gentile & Associates (Bellavia) that the current
group of Petitionerswhich includes dealers located in 39 states including Hawaiiwas
organized for this Case. See id. 8. Bellavia then filed the Case in Delaware because, in
Schirms own words, my attorneys were located in New York and I am located about 120 miles
from Wilmington, approximately 2 hours by car should I need to appear in Bankruptcy Court on
behalf of the Dealer Network. Id. 11 (emphasis added).
5. Schirms and his counsels considerations have no bearing on whether this Court
is an efficient venue for SCNA, SCNAs creditors on the whole, or even the principals of the 164
Petitioners other than Schirm. As such, the mere fact that Petitioners counsel filed this Case in
this Court warrants no deference to Petitioners venue preference. This is particularly true
where, as here, SCNA specifically told Petitioners counsel in the context of cooperative
discussions that SCNA planned to file a voluntary petition in Michigan imminently, and
Petitioners counsel acted on that fact. See Berisford Capital Corp. v. Central States, Southeast
and Southwest Areas Pension Fund, 67 F. Supp. 220, 222 (S.D.N.Y. 1988) ([T]he first-filed
rule is not to be applied in a mechanical way regardless of other considerations. In deciding
between competing jurisdictions, it has often been stated that the balancing of convenience
should be left to the sound discretion of the district courts. And where the parties engage in a
race to the courthouse to achieve first-filed status after a breakdown in settlement negotiations
. . . the courts should be concerned with what the interests of justice require and not with who
won the race. (Internal citations and quotation marks omitted)); see also In re iHealthcare, Inc.,

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2011 Bankr. LEXIS 2107, *9-*10 (Bankr. N.D. Ind., J une 9, 2011) (noting that the first-to-file
rule . . . yields to the interest of justice and the presumption that [a] second-filed case should
be dismissed in favor of the case filed first can be overcome by a showing that the plaintiff in
the first-filed action raced to the courthouse to avoid litigating in another forum . . . . (Internal
citations and quotation marks omitted)). This Court should grant Petitioners Motion and
transfer this Case to Michigan rather than reward Petitioners for their blatant venue shopping.
B. The Michigan Bankruptcy Court is the Most Convenient and Appropriate Venue.
6. As another basis for their Opposition, Petitioners assert that a substantial
percentage of [SCNAs] assets are located in New J ersey and Pennsylvania. None of its assets
are located in Michigan. Opposition 1 (Emphasis in original). Notably, Petitioners do not
point to a single asset (or witness or interested party) in this Case that is located in Delaware.
Moreover, Petitioners contention that none of SCNAs assets are located in Michigan is
simply not so. SCNA maintains substantial liquid assets in Michigan, including, as of February
21, 2012, (i) a special vehicle deposit account with a balance of $403,304, (ii) a Saab Dealership
Parts Escrow account with a balance of $2,305,945, of which SCNA has a right to $1,328,168,
with the remaining $977,777 representing dealer deposits for unordered/unshipped parts, and (iii)
a corporate operating account with a balance of $398,283. Further, thirty-nine company vehicles
3

7. Additionally, while Petitioners point to several facts that supposedly favor the
administration of this Case on the East Coast, these facts are substantially outweighed by the
facts favoring transfer. For example:

3
To the extent that any facts set forth in this Reply are not already corroborated by the materials
attached to the Motion, SCNAs President and Chief Operating Officer, Tim Colbeck, will be at
the hearing on the Motion and can testify to the accuracy of such facts if required.

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a. Petitioners assert that Tim Colbeck, SCNAs President and Chief
Operating Officer, is located primarily in New J ersey. Opposition 1. In fact, Mr. Colbeck still
travels to Michigan and other states on SCNA business, and in any event, as Petitioners concede,
SCNA has eight other full and part-time employees. Id. 14. Petitioners do not dispute that any
of these other individuals is located in Michigan.
b. Petitioners also assert that a substantial percentage of [SCNAs] assets
are located in New J ersey and Pennsylvania. Id. 1. At the same time, however, Petitioners
cite SCNAs liquidation analysis for the proposition that SCNAs vehicle and parts inventory
make up substantially all of SCNAs assets, and more than a quarter of SCNAs vehicle
inventory is located in California, Georgia, or dealer lots (facts that do not favor Delaware). Id.
11. Most importantly, Petitioners acknowledge that secured creditors Ally Financial, Inc.
(Ally) and Cat Logistics, respectively, claim to have security interests in SCNAs vehicles and
parts. Id. 11 and 17. Allys corporate offices are located in Detroit, Michigan. Cat Logistics
offices are located outside of Chicago, Illinois, and Cat Logistics has expressly supported the
transfer of this Case to Michigan in the Cat Response.
c. Next, Petitioners seek to minimize the fact that SCNAs headquarters are
located in Michigan in light of SCNAs J anuary 13, 2012, announcement that it was closing its
Michigan office at the end of February, 2012. Id. 13. In reality, this fact is immaterial. Upon
the closure of SCNAs corporate headquarters, to forestall the further accrual of rent and other
obligations under a lease with a third party, SCNAs books and records will be transferred to,
and SCNAs remaining operations will be conducted out of, the offices of McTevia, SCNAs
proposed restructuring officer. McTevia is located in the Eastern District of Michigan.

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d. Petitioners also question whether Michigan law applies to Petitioners
agreements with SCNA. It does. Under the Standard Provisions of SCNAs Dealer Sales and
Service Agreement (the DSSA), which Petitioners contend govern their claims against SCNA
(see Opposition 6, 7, and 53), Article 17.12 (entitled Applicable Law) expressly provides
that [t]his agreement is governed by the laws of the State of Michigan. Significantly, while
Petitioners attached a portion of the DSSA to their Opposition, they did not attach the page
containing the choice-of-law provision. A copy is therefore attached hereto as Exhibit A.
e. Finally, while Petitioners contend that they are significant parties in this
Case, with claims allegedly equal to at least $33mm (Opposition 57) and at least (80%) of
SCNAs total liabilities (Opposition 58), Petitioners overstate their role. They are but one of
many classes or types of creditors. One of SCNAs creditors alone, Ally, has asserted claims
against SCNA totaling $61 million, which is nearly double the alleged combined value of all of
Petitioners claims. Like SCNA, moreover, Allys principal operations are located in Michigan.
Further, Ally claims to be a secured creditor, while Petitioners only purport to be unsecured
creditors. For these reasons, Petitioners venue preferences cannot be dispositive. See Hunt v.
Bankers Trust Co., 799 F.2d 1060, 1068 (5
th
Cir. 1984) (Unsecured creditors, however, have no
right to dictate venue, although they do have a right to be heard on the issue of the propriety of a
transfer from one court of proper venue to another. The Chapter 11 petitioners might have
elected to file in the Northern District of Texas, and the order creates no greater disadvantage to
the unsecured creditors than would such a filing. They will have a right to be heard in the Texas
bankruptcy court equal to their right to be heard in the Louisiana bankruptcy court. As
unsecured creditors they have a right to have their position considered but they have no right to
control the venue in which a Chapter 11 petition is filed.).

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8. In summary, none of the above facts supports Petitioners opposition to SCNAs
Motion, and the Michigan Bankrutpcy Court undoubtedly remains the most efficient venue for
this Case.
C. Petitioners Six-Factor Test Is Substantially Similar to the Twelve-Factor Test Cited
By SCNA and Produces the Same Result.

9. Petitioners assert that in addition to the twelve-factor transfer test SCNA cited in
its Motion (the Twelve-Factor Test), Delaware Bankruptcy Courts have also considered (1)
the proximity of creditors of every kind to the court; (2) the proximity of the debtor; (3) the
proximity of witnesses who are necessary to the administration of the estate; (4) the location of
the debtors assets; (5) the economic administration of the estate; and (6) the necessity for
ancillary administration in the event of liquidation. Id. at 21 (citing In re Innovative Commun.
Co., LLC, 358 B.R. 120, 126 (Bankr. D. Del. 2006) and In re Delaware and Hudson Railway
Co., 96 B.R. 469, 471 (D. Del. 1989)). To the extent the above-referenced six-factor test (the
Six-Factor Test) drives the analysis in this Case, the result is the same as under the Twelve-
Factor Test. The Twelve-Factor Test implicates virtually the same considerations as the Six-
Factor Test (plus others), and thus, SCNA has already effectively explained in the Motion why
the Six-Factor Test also weighs in favor of transfer.
10. Finally, as for the last factor of the Six-Factor Test, Petitioners argue that SCNA
has provided no evidence of the need for necessary ancillary administration. Opposition 67.
In reality, whether ancillary administration will be necessary is still unknown; however, to the
extent litigation is necessary to collect property of the estate, it will almost certainly involve
parties located in Michigan, with potential reference to Michigan law. SCNA anticipates
litigation with creditors, including Michigan-based Ally, which is SCNAs largest alleged
creditor. For example, Ally recently commenced actions against SCNA in New J ersey,

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California, and Georgia, and Ally has already filed two motions with this Court relating to its
alleged $61 million claim. SCNA also has an ongoing parts business that will continue in
chapter 11 until such time as it can be sold. That business is currently generating roughly
$100,000 a day and is being administered by Michigan personnel. SCNA also will likely be
involved in litigation with General Motors (which is also based in Michigan) over $24 million in
reimbursements that SCNA asserts are owed by General Motors on account of unsatisfied
warranty obligations.
11. In light of these facts, it is likely that Court involvement will be necessary during
SCNAs liquidation, and for the reasons set forth in the Motion and in this Reply, the overall
administration of this Case will be much more efficient in the Michigan Bankruptcy Court.
CONCLUSION
12. SCNAs Motion and this Reply set forth significant reasons why venue in this
Case should be transferred to the Michigan Bankruptcy Court. The overwhelming reason why
this Case is even pending in this Court at all is because Petitioners counsel used information
entrusted to him by SCNA to race to the courthouse. Beyond the proximity of this Court to
Petitioners counsel, Schirm, and one of Schirms associates on the NDC, this Court offers little,
if any, geographical advantage to many of the interested parties in this Case, including SCNA,
Ally, and Cat Logistics. Michigan, on the other hand, is where most of SCNAs witnesses, and
books and records are located, as well as SCNAs liquid assets and company cars and SCNAs
counsel and proposed restructuring officer. In the words of Cat Logistics, one of SCNAs
secured creditors, [t]he administration of this Chapter 11 case will undoubtedly be higher if the
case is administered in a jurisdiction requiring travel for Debtors counsel, the Mortgage Trustee
[and restructuring officer], officers and witnesses. Further the duplication of professional

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services needed to administer a case in a jurisdiction that is separate from the Debtors principal
place of business can be significant. The most efficient and cost effective venue for this case is
the Eastern District of Michigan. Cat Response 7.
WHEREFORE, for the reasons set forth above, SCNA respectfully requests that this
Court enter an order (a) transferring the venue of the Case to the Michigan Bankruptcy Court and
(b) granting such further and other relief as may be appropriate and just.

STEVENS & LEE

By: /s/Joseph H. Huston, Jr.
J oseph H. Huston, J r.,
1105 North Market Street, Suite 700
(302) 425-3310
Email jhh@stevenslee.com
-and-
BUTZEL LONG, a professional corporation
Thomas B. Radom, Esquire
Bruce L. Sendek, Esquire
41000 Woodward Avenue
Stoneridge West
Bloomfield Hills, Michigan 48304
(248) 258-1616

Attorneys for Saab North America, Inc.

EXHIBIT A

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) Chapter 11
SAAB CARS NORTH AMERICA INC., )
) Courtroom No. 6
) Wilmington, Delaware 19801
)
) February 23, 2011
) 2:00 P.M.


APPEARANCES:

For the Debtors: Stevens & Lee, P.C.
BY: JOSEPH H. HUSTON, JR., ESQ.
(302) 425-3310

For Ally Financial: Cohen & Seglias
By: JAMES HARKER, ESQ.
Nemours Building
1007 North Orange Street, Suite 1130
(302) 425-5089

ECRO: LESLIE MURIN

Telephone: (302) 654-8080

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INDEX
Page
NOTICE OF AGENDA MATTERS:
For the Debtors, by Mr. Huston 4
For Ally Financial, Mr. Harker 5
For the Debtors, by Mr. Sendek 5
For Caterpillar, by Mr. Duhig 13
For Creditors, by Mr. Snyder 14
For Ally Financial, Mr. Tatelbaum 18
For U.S. Trustee, by Ms. Leamy 19
For the Debtors, by Mr. Random 24

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THE COURT: Please be seated. Sorry for the delay,
good morning.
MR. HUSTON: Good afternoon, Your Honor, may I please
the Court, Joseph -
THE COURT: Good afternoon. Sorry, I said good
morning. I promise Im awake, were good.
MR. HUSTON: Well good morning, Your Honor, may I
please the Court, Joseph Huston of Stevens & Lee on behalf of
Saab Cars North America. And with me, I have Thomas Radom
and Bruce Sendek of Butzel Long, and also Mr. Tim Colbeck,
who is the President Chief Operating Officer of Saab Cars
North America. Your Honor has scheduled this as a status
conference, and I noticed that that entry is noticeably
absent from our agenda, but we have on the agenda, and I
dont know if Your Honor wants a status conference on this,
but we also have going forward our motion to transfer venue
to the Eastern District of Michigan.
THE COURT: Well I think I do that with Chapter 7
cases for corporations because if people dont put anything
on the docket, I dont know whats going on.
MR. HUSTON: Very good.
THE COURT: Having read all the venue issues I think
I have a real good clear of this idea of this status of the
case.
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MR. HUSTON: Okay, very good.
THE COURT: You can go right into the motions, a
motion --
MR. HUSTON: With your permission, Your Honor, Mr.
Sendek will conduct the merits of the motion to transfer.
MR. HUTSON: Thanks.
MR. HARKER: Your Honor, may I just speaking James
Harker. I am local counsel for Ally Bank, and I would like
to introduce to the Court Mr. Charles Tatelbaum. Hes
appeared in this District on a number of occasions, but he
has not had the honor of appearing before you. And he has
been admitted pro hac vice in this case.
THE COURT: Very good; welcome, sir.
MR. SENDEK: Good morning, Your Honor, Bruce Sendek
from the firm of Butzel Long from Detroit. I am pleased to
be here. First time I have ever been in the Bankruptcy Court
in Delaware, and its a privilege.
THE COURT: Okay.
MR. SENDEK: Im here today with my partner, Tom
Radom. Hes the chief bankruptcy counsel for Saab Cars North
America who is also with Butzel Long Firm. And also with me
today is Tim Colbeck. He is the President and Chief
Operating Officer for Saab Cars North America.
Both Mr. Radom and Mr. Colbeck submitted affidavits
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in connection with the motion for the Court which is a motion
to transfer venue, of course, to the Eastern District of
Michigan, the Bankruptcy Court there. Under Rule 1014(a)
which Im sure the Court is well familiar with the standard
which should be allowed if in the sound discretion of the
Court, the convenience of the parties, or the interest of
justice sole provide. And in this situation, we clearly feel
that both prongs, although one or the other may be met.
Theyre both met here, Your Honor.
This is a situation that I think is well suited for
the transfer. In the interest of justice, Ill speak to that
first of all. Saab Cars North America, sometimes referred to
as SCNA, S-c-n-a, is a wholly owned subsidiary of Saab
Automobile AB, a Swedish Company. Saab AB filed for the
Swedish version of a Chapter 7 in December. I believe the
date was December 19
th
. Saab AB was the manufacturer of Saab
brand automobiles. And, of course, when that occurred there
was no more supply coming to Saab Cars North America which is
in the business of distributing cars in North America,
attending to warranty needs, service needs, and marketing
needs and interacting with the dealers among many others.
So at that point, SCNA began looking toward
liquidating the company. And they, on December 20
th
, entered
into a trust mortgage with McTevia Associates to conduct the
liquidation, and that proceeded, and it was actually going
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fairly well. The point that had to be crossed in order to
continue was to deal with Ally. Ally Financial, formerly
GMAC, asserted a lien and sought to foreclose on the lien on
vehicles that were held in ports across the country; three
ports, actually: New Jersey, Georgia and California. They
started three separate actions. And, at first, we began to
defend those actions and as critical dates in the nature of
claimant delivery, replevin in some states.
And as those dates appeared closer, it appeared as
though we would either have to work out an arrangement with
Ally, or we would have to file a bankruptcy proceeding. At
all times, as reflected in the affidavit of Tom Radom, the
counsel for dealers who represents the petitioner which is a
part, which is a portion of the dealer group, was advised of
what was proceeding. And we did try to reach an accord with
Ally. That fell through and, of course, the dealer group was
immediately notified of that. With that in mind, there was,
the road ahead was rather clear. We were going to file for
bankruptcy in the Eastern District of Michigan.
And, in fact, we had already had the board resolution
from SCNAs board to do just that. Its attached to Mr.
Radoms affidavit. It was also, I think, on December 20
th
,
2011, executed by the Board. And it gave McTevia the
authority to do so if it became necessary in his judgment.
So we were going to do that, and Tom Radom advised, counsel
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for the dealer for the petitioners, that the following week,
likely Tuesday, we would file the petition, and asked them to
keep that confidential, and asked them - well that was asked
the point, asked them to keep that confidential, and thats
what the plan was.
And then, of course, as reflected in the affidavit in
our papers, counsel for the dealer acted on that confidential
communication and brought the proceeding here, which is why
we are here today. If it hadnt been for the involuntary
petition filed on January 30
th
, Monday morning early following
the conversation on Friday with Tom Radom, we would have been
in the Eastern District of Michigan, because the plan was as
exactly as stated to file that Tuesday. So here we are, and
it is a classic dash to the Courthouse by a counsel for
petitioners.
And when Tom Radom, as reflected in this
declaration, called the counsel for the petitioners on
Monday, or I think it was the other way around because the
petitioners counsel called Tom Radom to tell him what he had
done, and said sorry but its a closer train ride for me to
be here in Delaware from my office in New York then to fly to
Detroit. And no doubt it is more convenient for petitioners
counsel, but thats not a factor that the Court should weigh,
or ought to weigh in determining convenience.
It happens to be, I think, the only factor that the
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petitioners can point to that really weighs in favor of
keeping the case here as opposed to the many factors that are
outlined in our motion and in the declarations. In Michigan,
there is a significant number of contacts, events that will
relate to the bankruptcy proceeding. SCNAs headquarters is
there. Petitioners make a point of saying that were going
to close that office, which is true, to save the rent on it.
Were moving operations, most likely, to the offices of
McTevia and Associates.
SCNAs employees which numbered about 50 are all
Detroit area residents, except for -- excuse me, SCNAs
employees who worked in the offices in the Detroit area,
there were some field employees, they are all residents of
Michigan except for Mr. Colbeck who is a resident of New
Jersey and commuted to Detroit. Our books and records are in
Detroit. Significant creditors of SCNA are in Detroit.
There is one marketing consultant who has made a claim for a
half a million dollars. Theres other marketing type
consultants who have made claims, substantial claims also
here in Detroit. The secured, one of the principal secured
Debtor who claims that they are owed $61 million dollars from
SCNA is Ally. And Allys headquartered in Detroit.
THE COURT: Ally can go anywhere.
MR. SENDEK: Im sorry.
THE COURT: Ally can go anywhere. I see Ally all the
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time. Theyre a national concern.
MR. SENDEK: Right.
THE COURT: Wheres the workout guy thats working on
the case, where is he?
MR. SENDEK: The individuals that SCNA dealt with in
terms of financing, I believe, are all in the Detroit area.
THE COURT: Okay.
MR. SENDEK: And I dont know who the workout guy, if
they assigned a workout guy to it as well. The other
principal secured creditor is Caterpillar Logistics. Theyre
headquartered outside of Chicago. They actually support this
motion. And the reason, again, has to do with the interest
of justice.
SCNA does not have a lot of cash to work through what
its doing now as part of its liquidation and bankruptcy
proceeding. It has very limited funds, but it is doing work
thats very important, and work that will benefit the entire
creditor group including the dealers, including customers of
Saab vehicles. At this very time, I mean, today, yesterday
and ongoing, Mr. Colbeck is trying to work out arrangements
to provide customers with the ability to get warranty
coverage on the vehicles that they purchased from the dealers
-- excuse me, from dealers that were the Saab AB automobiles.
They are covered by General Motors. General Motors
covers warranties for pre, for 2009 model year cars and
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before, but not for after. So its a big issue, and Mr.
Colbeck is trying to accomplish something there for the
benefit of all the creditors. Assets are being sold for the
benefit of all creditors. Theres an important work being
done by Mr. McTevia right now in terms of securing parts for
the benefit of all creditors and enhancing the value of the
vehicles and into the benefit of the customers as well.
One asset that SCNA has is, are a ship of parts.
Theyre held by Caterpillar Logistics, but there are parts.
And SCNA has made arrangements to sell those parts to dealers
so that they can service their customers, and thats some of
the work thats being done right now. And there needs to be
longer term solutions in place which theyre trying to do in
order to secure an ongoing source of parts, which will in
order to the benefit of many. It will bring additional cash
and assets to the estate and value to the estate, and thats
an important thing and with more value, and more assets, and
more cash which we are realizing right now by virtue of this
arrangement with Caterpillar.
We have an arrangement right now that were receiving
$68,000.00 a week from Caterpillar through our sales, which
ultimately will enter into the benefit of all creditors.
That work is being done in Detroit by McTevia and Associates,
and will be ongoing. Those are just a few examples, but
again, to the extent that this action continues there will be
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a likely confrontation with General Motors. There is a 20
plus million dollar receivable on SCNA books for warranty
reimbursement which GM is denying. It has an obligation to
pay. The dealers have a definite interest in seeing that
pursued and will probably be part of any subsequent
litigation.
General Motors and all the people that SCNA dealt
with at General Motors are in Detroit area, in Renaissance
Center in Detroit. The SCNA people who worked on the
warranty issues are employees, ex-employees of SCNA, maybe a
couple of them have been maintained for now, but they are
Michigan residents all in the Detroit area. And, well I
think thats, I think theres just a host of reasons, Your
Honor, why in the interest of justice it should be
transferred, and for the convenience of the party. And yes
they won the race to the Courthouse, but they shouldnt have.
There was no good reason to bring this action in
Delaware. Had counsel allowed things to progress as told to
him by Mr. Radom, we would be in Detroit, and everyone could
pursue their claims and rights. The dealer groups that are
represented that makes up the petitioner group, theyre
scattered. Sure, there are some in this - theyre some
within driving range to Delaware, but theyre across the
country. There are dealers in Texas, California, Indiana,
Michigan, Illinois, throughout the country. Interestingly,
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theres one Saab dealer in the state of Delaware who is not a
part of the petitioner group. So what we have is no assets
here. We do have assets in Detroit.
There was a statement made in the response that there
are no assets here. The assets are in Pennsylvania held by
Caterpillar or held in the warehouse. Theyre our assets,
but thats not entirely correct. There are accounts
maintained in Detroit area.
THE COURT: Bank accounts?
MR. SENDEK: Theyre bank accounts. There are
vehicles in the Detroit area. Theres something in the
neighborhood of 60 vehicles in Detroit and personal property
in Detroit; again, weighed against nothing in Delaware.
Thank you, Your Honor.
THE COURT: Okay, anyone else in support of the
motion?
MR. DUHIG: Good afternoon, Your Honor, Peter Duhig
of Buchanan Ingersoll & Rooney on behalf of Caterpillar
Logistics Services. Your Honor, Caterpillar Logistics is a
secured creditor. It filed a response in support of SCNAs
motion to transfer venue. Basically to highlight that, if
this case stays here, the administrative costs are likely to
be much higher. It would require long distance travel for
the Debtors, McTevia who is the mortgage Trustee, officers
and witnesses. Its also going to require local counsel.
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And, Your Honor, this is a liquidating case. There arent a
lot of assets that are going to be available to distribute to
creditors. So its our position that the most efficient,
cost effective venue for this case is the Eastern District in
Michigan. So with that we ask that the Court approve SCNAs
motion.
THE COURT: Where are the parts inventory that your
client is in possession of?
MR. DUHIG: They are in a warehouse in Pennsylvania.
THE COURT: Where in Pennsylvania?
MR. DUHIG: It is in Allentown; thank you.
THE COURT: All right, thank you.
MR. DUHIG: Thank you.
THE COURT: Well hear from the movants, or excuse
me, the petitioning creditors.
MR. SNYDER: Thank you, Your Honor. Good afternoon,
Eric Snyder of Wilk Auslander for the 82 petitioning
creditors, and the opposition was filed on behalf of the
dealer network which is 165 dealers. I would like to thank
Your Honor for moving this hearing up. It was originally
schedule for next Friday so that it could be heard today.
After hearing counsel and reviewing the reply, Your Honor, I
believe there are certain facts and evidence that remain
undisputed.
One, that the dealers, 165 of them in 39 states with
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potential claims in excess of $30 million dollars favor venue
here. Two, that only one potential creditor Caterpillar
whose claim is least related, and who the Debtor admits in
the liquidation analysis that was in next to our opposition
is owed no more than $662,000.00. And the reason, Your
Honor, I point out that its least related is if, in fact,
the Debtor is successful in its objective of selling the
parts distribution business, than that claim which is secured
might be nothing more than a lease cure claim, that would be
cured upon assumption and assignment of the lease.
Three, Ally, who the Debtor suggested in his motion
supported the transfer of venue, filed two motions the next
day in this Court seeking substantive relief does not support
transfer, and does not come out in favor in of transfer. And
I would suggest that silence speaks volumes. Substantially,
all the new vehicles undisputed, Your Honor, and the parts
are located in this Circuit. Theyre not located in
Michigan, and there are no assets other than this cash weve
heard about, and some used cars that counsel referred to that
The Debtors CEO, as weve heard, resides in New
Jersey and is here today on behalf of the movant, not Mr.
McTevia. And a little bit about the filing, Your Honor. In
the motion they state that they had the authority since
December 20
th
to seek bankruptcy relief. That was their
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choice, business judgment or, otherwise, to do nothing for
the intervening six week period. SCNA doesnt suggest it
shouldnt be in bankruptcy. In fact, it annexes a petition
to its motion saying that if the Court grants its motion to
transfer venue, then it will file right away in Detroit. So
the issue isnt whether venue is convenient or inconvenient,
its simply that SCNA doesnt want to be here.
Theyve now pointed to any factors relying on
convenience of the parties. Theyve said whoops. They filed
here before we could file in Detroit, and just let us out,
and thats not the appropriate test. With respect to the
fact is, Your Honor, I believe the opposition, as I set forth
above, remains undisputed.
Just one point that I believe was omitted from the
opposition, and thats with respect to what law applies.
While it is true that the dealers sales and service
agreements contemplate that Michigan law applies to
theres little doubt at this stage of SCNAs life that the
issue is going to be about the termination of these franchise
agreements.
As weve heard the Debtor is liquidating. There is
no warranty support. There is no parts support, and there
are new vehicles. And as Im sure the Court is well aware,
the rights of each of the dealers upon termination of their
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franchises are determined under the applicable law of the
state where the franchise is located. So we believe that
although Michigan law is stated to be with respect to
that the ultimate rights -- and what I mean rights, I mean
the claims of each of the dealers -- are going to be relying
on applicable state law regarding the ultimate rejection and
termination of their franchise agreements.
I understand the Debtor is in a bit of a box because,
on one hand, they say they dont really have the assets to
come to Detroit and, the other hand, then the reply in
paragraph six they point to in what I quote is substantial
legal liquid assets in Michigan, and refer to over $3 million
dollars in cash sitting in Michigan accounts. They also
state in there liquidation analysis that Allys claims is
about $300,000.00, but, of course, now they claim that Allys
claims is potentially $61 million dollars.
The test itself is fairly clear, and Im aware that
Your Honor recently applied the test in Visteon to a similar
situation. The opposition goes through the points, and in
light of the number of creditors and the amount of creditors
that comprise of both the dealer network, in general, and the
petitioning creditors, in particular, we believe that SCNA
has not met its heavy burden to demonstrate convenience of
the parties that would warrant transfer. Thank you, Your
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Honor.
THE COURT: Youre welcome; hear from Ally.
MR. TATELBAUM: Thank you, Your Honor. I guess in 45
years in practicing bankruptcy law Ive never had a case
where Ive taken no position where my client has been
referenced so much. We did not file anything on purpose. We
take no position on the motion. To answer Your Honors
question if your Court is interested, there are two workout
people. One divides his time between the United Kingdom and
Sweden, and one is in Detroit, counsel is in Florida. So
its a big triangle.
Because there have been some statements made, and
this is a status conference as well, I would just like to
make a couple of positions clear.
THE COURT: Please.
MR. TATELBAUM: There is no question that Ally has a
first priority perfected security interest in the vehicles in
the ports. There is no question that we have not only a
first priority perfected security interest, we have an
assignment of the $20 million dollar account that GM
purportedly owes. So those two assets are subject. We do
not have a security interest in the parts. We have vehicles
and vehicle related receivables.
We have a cross collateralization agreement, cross
guaranties with the Swedish Company, and the UK Company and
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the France Company, and all. And our debt is currently about
$61 million dollars, all across collateral-wise. I just
wanted to make that clear to the Court, so that the Court
understands the global because theres a lot of - I feel
like the orphan child, and everybody uses us to their
advantage, fine. You know, Your Honors going to make the
decision.
THE COURT: Where are the vehicles now? Theyre
still in the port?
MR. TATELBAUM: Majority of them are in Port Newark.
There is a much smaller group in Savannah Georgia, and then a
little bit larger than Savannah in Oxnard Ventura California,
just north of Los Angeles.
THE COURT: Okay.
MR. TATELBAUM: And we did have replevin proceedings
pending against because its in (indiscernible), each one of
those three states, pending which were stayed by the
bankruptcy filing.
THE COURT: Okay.
MR. SENDEK: May I reply briefly, Your Honor?
THE COURT: Ms. Leamy do you wish to take a position?
MS. LEAMY: Your Honor, Jane Leamy for the United
States Trustee. Our office does not have a position on the
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motion, and were just here to see the outcome.
THE COURT: Okay, yes Ill hear a reply.
MR. SENDEK: Thank you, Your Honor. First, Your
Honor, the reason we said Ally was in support of this motion
because that was our understanding at the time that weve
filed, and now weve learned that they take no position. And
I heard reference to the Visteon case, and Im familiar with
the factors that the Court applied in that case, which I
think weigh in our favor because those factors where we
pointed to a number of factors that demonstrate that the
Eastern District of Michigan is a more convenient venue.
I dont see those factors existing here, nor have I
heard any, nor have I heard any dispute from counsel, or in
their papers for the affidavit signed by Tom Radom and Mr.
Colbeck. And theyre both here if the Court would like to
take any testimony from them. They are available to do so,
but I have heard no disagreement with those positions.
Now Ive heard, and in the Visteon case who also say
a significant difference. There is that that was the Debtor.
These are a number of unsecured creditors trying to change
the landscape, and I cite to the Court to the case we cited
in our reply brief the Hunt vs. Bankers Trust case. It says
unsecured creditors whoever have no right to dictate venue,
although they do have the right to be heard on issues of
propriety of transfer.
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The business judgment of the Debtor, I think, is
entitled to a significant amount of weight here. Theres
been a number of numbers tossed around by counsel for the
Debtors, but the fact is that -- excuse me, the fact is that
the dealer group is only represented of unsecured creditors
and only a small part of them. Our schedules show that are
$12 million dollars of unsecured claims made by various
parties. Of that group, the dealers represent $4 million
dollars.
And, of course, then theres the secured creditors
which are Ally which makes a significant claim. And then
there is Caterpillar. And the fact Caterpillar has made
known to SCNA that it has a contingent claim of $3.5 million
dollars for its, for the obligations under its agreements
with Caterpillar.
THE COURT: (indiscernible) here is the purported
Debtor has to do here is 1) resolve the issue with the cars;
2) resolve the issue on any accounts receivable; 3) resolve
the issue with the dealers; I guess 4) resolve the issue with
the parts. Thats pretty much what youre going to do in
bankruptcy.
MR. SENDEK: And try to make an accommodation for
ongoing warranty service for the vehicles, thats another
important aspect.
THE COURT: Okay, so very good. Okay, thank you.
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Yes warranty service, all right. Well, let me just run
through it. Caterpillar which is the parts issue supports
you. Ally which is the car issue takes no position. The
warranty claimants, obviously, want to stay here, and the
people who got the assignment for the accounts receivable
from GM, which is Ally, take no position.
You know, Im a little unclear on what, and maybe you
could flush out to me what the status of or how you intend to
proceed with the attempt to get warranty service for the post
2009 cars.
MR. SENDEK: Okay, yes as to warranty if I may just
add this, Your Honor, the customers, the ultimate buyers of
the Saab vehicles have an interest in the warranty claims
and, of course, in a warranty disposition. Of course,
theyre scattered all across the country. And weve heard
from a number of Attorney Generals in various states asking
about how cars are going to be serviced.
THE COURT: Thats not in front of me unless youve
got some evidence.
MR. SENDEK: No, Your Honor, thats not in front of
you. And as far dealing with the warranty -- first of all,
thats going to be handled through McTevia Associates, and
probably relying on Mr. Colbeck, as well and his assistants.
And I do need to correct something. McTevia Associates is
the management of the company now, not Mr. Colbeck under the,
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well under agreements that were made. How will that be done?
Well I dont know. Hopefully, its going to be a negotiated
arrangement with General Motors that theyll cover the - so
that they will cover warranty obligations under new Saab
vehicles or Saab vehicles sold since they sold the company.
We do believe that there is some leverage and, as I
say, we have a 20 plus million dollar receivable from General
Motors. So can that be negotiated? I dont know yet, but --
THE COURT: [indiscernible] negotiation.
MR. SENDEK: -- it could be.
THE COURT: Okay. Sorry I interrupted you. You can
go ahead.
MR. SENDEK: Okay and as I say, Your Honor, theres
no assets in Delaware, but there are assets, albeit accounts.
There are assets in Michigan. We have an operating account
$400,000.00, and that was my point earlier. We have limited
funds in which to run this. We have more funds coming in
through our arrangements that we have with Caterpillar, but
theyre limited, and we have to use them wisely. Its
expensive; extremely expensive for us to hire local counsel,
to make trips back and forth to Delaware to bring people into
this Court as may be needed. Its just an expensive
administration. Thats why the plan was always to move
forward in Detroit. Again, we would be there except for the
race to the Courthouse which I dont think ought to be
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rewarded. Thank you, Your Honor.
THE COURT: Youre welcome; yes sir.
MR. RADOM: Hi, Your Honor, Tom Radom for SCNA. Im
not going to repeat what Mr. Sendek said. Its just that the
Ally motions are --
THE COURT: Are you with the same firm?
MR. RADOM: Yes.
MR. RADOM: The Ally motions are basically on my
docket, and I just didnt want the record to reflect that
there was no response to statements made by Mr. Tatelbaum,
this counsel to Ally in connection with the validity of their
security interest, the nature of their claims against this GM
receivables and so forth. Those items are in dispute, and I
just want the record to reflect that.
THE COURT: Im sorry, anyone else; anything further?
MR. SNYDER: No, Your Honor, thank you.
THE COURT: Okay, Ill take a short recess.
(Recess 2:49:03 to 3:17:23)
THE COURT: Again, sorry for the delay. Okay, we
have before the Court a motion to transfer venue of a Chapter
11 case. The facts are important, I think, to put on the
record for the support of the Courts reasoning. This was
filed as an involuntary case. The time to contest entry of
order for relief has past, so I dont think technically an
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order is on the docket yet, but the response was due by the
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which is, is that today? So its due today; there you
go. Ill assume youre not going to contest entry of an
order for relief, is that correct?
MR. RADOM: We were certainly hoping that the Eastern
District of Michigan would be the Court to have order of
relief, but --
THE COURT: Well I know that.
MR. RADOM: But, no. I mean, our intentions all
along was to pursue a Chapter 11.
THE COURT: Okay, well I think that fact is
significant. Obviously, there was a race to the Courthouse
here. I dont think there anything pejorative about racing
to the Courthouse. It happens all over the country every
day. And thats one of the things bankruptcys designed to
stop. The filing is certainly part of a race to the
Courthouse. So, obviously, there was a filing on Monday, and
there was going to be a subsequent filing a day or so later
by the Debtor.
But, the Debtor has acknowledged its going to be in
bankruptcy. And I think thats important in the context of
the weight that the Court would give to the desire of the
filing creditors or the plaintiff; however, you want to think
about it. Its not a question of whether there will be a
bankruptcy. Its a question of where. And, I think, that
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does a lot to alleviate the weight of the choice of the
petitioning creditors because, ultimately, generally, the
choice is of the Debtor whether to file and where to file
bankruptcy.
There is nothing on the record here that indicates
they werent going to file, and it was just a question of
timing and location. So for purposes of deciding the motion,
I think the issue of great weight of choice of the first
filer is, basically, neutral. I acknowledge very much that
the involuntary creditors have a strong position, and they
were the first to the Courthouse, but I think thats
alleviated enough by the fact that the Debtor acknowledges it
will be in bankruptcy wherever it will be; that that really
becomes a neutral factor for the Court.
I could go through the various factors that the
Courts have applied, the (indiscernible), of course, in
Visteon which was more in the case of a traditional adversary
proceeding; the six factor case then applied in the
bankruptcy venue -- excuse me, in the actual bankruptcy case,
transfers more generally. But in my mind in this case goes
really to competing factors.
One is where are the Debtors, and whats going to be
going on in connection with the Debtors operations. Well,
first of all, its a liquidation. So traditional issues of
willing to have the bankruptcy in a convenient forum for
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management, for instance, just dont really apply. Its not
like you have a 150 people in the corporate headquarters
running a company. Youve got a liquidation. There are
certainly limited fixed assets. Theyre going to be run
through some of these conference rooms in Detroit or in the
Detroit Metro area. Its not particularly moving in the
context of where should the bankruptcy be filed.
And talk about what the Debtor has to do; whats on
its plate. And I think it is significant that Ally Financial
does not take a position. They are a very large creditor,
secured and some value of collateral. We dont know what it
is, but at least for purposes of today its nine hundred and
something new vehicles. And its a $20 million dollar
account receivable from GM.
Two huge pieces of the assets of the Debtor, and the
party that has the best interest in them doesnt really care
whether its here or Detroit. You all right? Okay. The
parts; well the parts are in Pennsylvania, in Allentown. And
when you look at a liquidation of a case, you really look
more at where the asset is then where the asset may be being
managed.
So, for example, in a real estate, single asset real
estate case, you know, the management company may be in
Dallas, but the tract of land is in New Mexico. That case
should be in New Mexico because land is something really
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unique. Obviously, clearly land is unique. And the
strongest interest for a piece of property is where that
property is.
The property were talking about is up in Allentown,
not in this District, some other Circuit, and about a two
hour drive, if not less. So that gives some weight to
keeping it here. Now at the same time, the party that is in
charge of the parts wants to transfer venue. So I dont
really think of that as a wash too, but the actual assets are
closer here. The person managing the assets is, you know,
wants it to be in Michigan, really kind of makes it a neutral
issue. So weve got the accounts receivable, the cars and
the parts all neutral; future warranties is in negotiation.
That can happen in a conference room anywhere from
(indiscernible) to keep its gain. It doesnt necessarily
matter where it is.
Now I have the dealers, and thats what it really
comes to down to, I think. Youve got the dealers versus
management, and he gets to control, in effect, where the case
will go forward. The dealers are all over the country,
obviously, but the unsecured creditors, they only have power
if they are able, somehow, to form together and act as one.
And theyve dont that, and theyve done that with counsel in
the State of New York. And that counsel supports keeping the
case here in Delaware. Management wants it in Michigan
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primarily to make it convenient for its CRO. They are no
real assets in Michigan.
Theres a lease thats going to be rejected. There
are a few employees. Theres a CRO, and theres cash. None
of that is really substantial for purposes of having to be in
Detroit. The president of the company is in New Jersey, hes
the guy you brought today. The CRO is in Michigan, I dont
see him here. Its an important hearing. Since this is such
an important hearing I think it indicates with some
significance what their motivations might be. So its a long
way of saying its a kind of a coin flip. And if its a coin
flip it should stay where its at, you know, they tell me
this in Judge school if you dont who should win, then if you
move it then both sides loses.
I think the choice of the dealers here is got to
carry the day, as far as I can tell from this case the
primary activity here is really going to be the dealers
versus the Debtor. And theres nothing that hurts the
Debtor, really, coming to Delaware, staying in Delaware. The
costs arent really very significant. Mr. Huston wont cost
you a fortune. Hes a very good attorney. You know, where
the lawyers are we generally dont think about that pretty
much. Although, again, in a liquidating case where the
assets are much less than in a reorganization it probably has
more swing. So long story short I just wanted to go through
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my various factors.
In a very close decision, Im sorry, in a very close
decision the dealers win in eight rounds to seven, and get or
maintain their, maintain where their want to be. So Im
going to deny the motion to transfer venue. Thats all we
have on the agenda for today, but does Ally want to talk
about whats coming up, I think its next week?
MR. TATELBAUM: Yes, sir. Next Friday we have a
motion to modify the automatic stay with respect to the
vehicles only, not on the receivables. And a motion to
prohibit use of cash collateral based upon an anticipation
that an order for relief is going to be entered, I wanted to
tee that up so that it would be an early issue, if there is
going to be an attempt. We believe there is because during
the gap period, the Debtor has sold some vehicles that we
believe are our collateral. Counsel has said its in escrow
which is fine, I take that representation. But we hear about
the dire straits so that, well something that needs to be
teed up for next Friday I hope.
THE COURT: Okay. Are there any traditional first
day, or emergency relief that you really need to get on the
Courts docket?
MR. TATELBAUM: Your Honor, may I raise one more
thing maybe for Friday?
THE COURT: Yes.
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MR. TATELBAUM: Having heard what I heard today we
will probably be filing an objection to the McTevia entity as
CRO. Under the Michigan procedure which is like an
assignment for the benefit of creditors which we have in the
east, they actually do whats called a trust mortgage where
the assets are delivered to the Trustee, and the Trustee is
given a lien on those assets. Weve been after Mr. McTevia
and his company to release their lien. They havent so that
are a lien creditor, and were going to take the position
unless he does something that as a lien creditor hes not a
disinterested party that can - because he - if hes running
the business, how is he going to move to set aside his own
lien, among other things, and investigate the acts and
conduct. So I just wanted to - since that would normally be
a first day thing, I wanted to alert the Court that its not
a rubber stamp.
THE COURT: Okay, well usually, I mean, you can
usually we dont hear the actual retention on the first day.
Wed send that out on full notice.
MR. TATELBAUM: Okay, thank you.
THE COURT: Attention to professionals, etc. Usually
only a claims agent would be something we would look at if
necessary.
THE COURT: So what I was going to say, and Ill let
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counsel speak, but I was going to say if you need a sort of
traditional first day type relief you can tee it up for March
2
nd
.
MR. RADOM: I appreciate that, were going to need in
order for use of cash collateral, but that will be my
stipulation between SCNA and Caterpillar Logistics, thats
the only cash collateral were using is subject to the lien
of Caterpillar Logistics.
THE COURT: Okay.
MR. RADOM: I dont, I mean, we already have an
agreement in place. I dont think that we need emergency
relief at this point in time, but we will tee that up. And
to the extent that we can bring it on for hearing by March
2
nd
, well do so. But because the operation itself has been
reduced substantially, its not like we need DIP financing,
you know, well have the traditional employment applications,
but as far as I can tell probably just the cash collateral
order. Getting that entered is probably the first priority
here. And then with respect to, we will be asking the Court
to approve Mr. McTevias retention as the Chief Restructuring
Officer.
I will address, I mean, I wasnt expecting to have to
address it today, but Mr. Tatelbaums client has already been
furnished with a termination statement of a security interest
that had been granted under the trust mortgage. The trust
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mortgage itself has been terminated. To that extent Mr.
McTevias not a secured party here and the trust mortgage
itself was just designed to give Mr. McTevia the full
authority to wind down and liquidate the business for the
benefit of all creditors. The lien itself was really for the
benefit of all creditors, and didnt represent anything more
than that, it has been terminated.
THE COURT: Okay, all right. Go ahead and prepare an
order and yeah, the Court will prepare an order, sorry,
anything else?
MR. SNYDER: No, Your Honor.
THE COURT: All right, thank you. Were adjourned.
(Court Adjourned)
CERTIFICATE

entitled matter.

/s/Mary Zajaczkowski March 19, 2012


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