07/20/2007 122 Objection Filed by Pro Plas LLC (RE: related document(s)102 Application to Employ). (Attachments: # 1 Continuation of Main Document) (Case, E.) (Entered: 07/20/2007)
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Doc 122 pages 1 to 5
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
LEXINGTON DIVISION
In Re: ) Case No. 07-50934
) Judge William S. Howard
PLASTICON INTERNATIONAL, INC ) Chapter 11
)
)
Debtor. )
)
PRO PLAS LLC’S RESPONSE TO THE APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR ORDER AUTHORIZING THE EMPLOYMENT OF WISE DELCOTTO PLLC AS ATTORNEYS FOR THE COMMITTEE
AND
PRO PLAS LLC’S OBJECTION TO THE APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR ORDER AUTHORIZING THE APPROVAL OF RETAINER
Pro Plas LLC, a Missouri limited liability company (“Pro Plas”), files this its’ Response to the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Employment of Wise Delcotto PLLC as Attorneys for the Committee and its’ Objection to the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Approval of Retainer (“Response to WD’s Employment Application” and “Objection to WD’s Request for Approval of Retainer”) and in support thereof states the following:
1. Pro Plas has no objection to the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Employment of Wise Delcotto PLLC as Attorneys for the Committee (“WD’s Employment Application”).
2. Pro Plas does object to the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Approval of Retainer (“WD’s Request for Approval of Retainer”).
3. Paragraph 9 of the WD Employment Application and Request for Approval of Retainer stated the following:
“Upon information and belief, Debtor’s counsel has requested a prepetition retainer of approximately $55,000.00 to be held as collateral security throughout the duration of their representation of the Debtor. WD requests that the Court approve a similar arrangement for Committee counsel, including a $25,000.00 retainer to be deposited upon approval of Committee counsel employment, which funds will be held in escrow by WD pending further orders of the Court. WD has advised the Committee that unless acceptable arrangements are made for approval of a retainer carve-out from Debtor’s cash flow, WD cannot undertake this representation.”
4. Debtor Plasticon does not have funds for a “retainer carve-out from Debtor’s cash flow.”
5. According to the Pro Mold, Inc. Disbursement Journals that are attached hereto and incorporated herein as Exhibit “1”, “2” and “3”, Debtor Pro Mold has transferred the following amounts to Debtor Plasticon since June 22, 2007 for management fees:
Date Amount
a. June 22, 2007 $ 7,500.00
b. June 29, 2007 $ 7,500.00
b. July 6, 2007 $ 7,500.00
c. July 10, 2007 $ 7,500.00
Total $30,000.00
6. According to counsel for Debtor Pro Mold and Debtor Plasticon, Debtor Plasticon directed Debtor Pro Mold to pay these management fees to Debtor Plasticon “out of necessity because Debtor Plasticon had no money to pay its’ payroll.”
7. If Debtor Plasticon has no money to pay its’ payroll, Debtor Plasticon has no money to pay a $25,000 retainer to the attorney for the Official Committee of Unsecured Creditors.
8. James Turek, Sr. reported to the Court on or about May 22, 2007 that Debtor Pro Mold had a written management agreement with Debtor Plasticon that provided for Debtor Pro
Mold to pay Debtor Plasticon $25,000 per month.
9. The Court instructed Debtor Pro Mold to produce a copy of the written management agreement.
10. As of this date, no written management agreement has been produced.
11. Pro Plas LLC, a Missouri limited liability company; John P Murphy III Revocable Trust No. 1; 10315 LLC, a Missouri limited liability company; and John P. Murphy III (‘the Murphy Entities”) and Debtor Pro Mold entered into the Agreed Order on Debtor’s Amended Emergency Motion to Use Cash Collateral (“Agreed Emergency Cash Collateral Order”), a copy of which is attached hereto and incorporated herein as Exhibit “4”.
12. On June the Court signed and the Clerk entered the Agreed Emergency Cash Collateral Order.
13. Attached to the Agreed Emergency Cash Collateral Order was the budget.
14. The budget does not include a line item for the payment of a management fee by Debtor Pro Mold to Debtor Plasticon.
15. The Agreed Emergency Cash Collateral Order states the following:
“E. Debtor shall not make any expenditures or incur any obligations relating to non budgeted items including capital improvements, without the prior written approval of the Murphy Entities, unless the Court orders otherwise with notice to the Murphy Entities and an opportunity to object.”
“F. Debtor Pro Mold’s emergency or interim use of the cash collateral shall be and is hereby conditioned upon Debtor Pro Mold’s compliance with the Interim Budget incorporated herein by reference and the following pursuant to 11 U.S.C. §363(e)…”
16. The Murphy Entities have not given written consent to Debtor Pro Mold to pay the management fees listed above to Debtor Plasticon and have notified counsel for the Debtors on several occasions that the Murphy Entities do not consent to these payments by Debtor Pro Mold.
17. Debtor Pro Mold has not filed a motion and requested authorization from the Court to pay management fees to Debtor Plasticon.
18. The parties signed an Agreed Order Setting Aside Order Scheduling Hearing (“Second Agreed Order”), a copy of which is attached hereto and incorporated herein as
Exhibit “5”.
19. The Court signed and the Clerk entered the Second Agreed Order on June 26, 2007.
20. Debtor Pro Mold continues to violate the Agreed Emergency Cash Collateral Order and the Second Agreed Order.
21. Debtor Plasticon has asserted it has no money to pay its payroll and thus should have no money to pay a $25,000 retainer to WD.
WHEREFORE, Pro Plas LLC requests that the Court:
a. approve the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Employment of Wise Delcotto PLLC as Attorneys for the Committee;
b. deny the Application of the Official Committee of Unsecured Creditors for Order Authorizing the Approval of Retainer; and
c. grant Pro Plas LLC such other and further relief as the Court deems just and proper.
STONE, LEYTON & GERSHMAN
A Professional Corporation
By: /s/ E. Rebecca Case
E. Rebecca Case, EDMO #2800
Howard S. Smotkin, EDMO #4407
7733 Forsyth Boulevard, Suite 500
St. Louis, Missouri 63105
(314) 721-7011; (314) 721-8660 Facsimile
erc@stoneleyton.com; hss@stoneleyton.com
Attorneys for John P. Murphy III Revocable Trust
No. 1; Pro Plas LLC; 10315 LLC, and John P.
Murphy, III, individually
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing document has been served electronically in the method established under CM/ECF Administrative Procedures Manual and
the Local Court Standing Order dated July 25, 2002, on the Debtor, the Debtor’s Attorney, the Office of the United States Trustee and to all parties who filed a Notice of Appearance electronically and/or first class, postage prepaid U.S. mail on this 20th day of July 2007.
/s/ E. Rebecca Case
E. Rebecca Case |
