08/28/2007 176 Response Filed by Pro Plas LLC (RE: related document(s)171 Motion to Continue/Reschedule Hearing filed by Debtor Plasticon International, Inc.). (Smotkin, Howard) (Entered: 08/28/2007)
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Doc 176
In re: ) Case No. 07-50934
) Chapter 11
PLASTICON INTERNATIONAL, INC., )
)
Debtor. )
RESPONSE TO MOTION TO RESCHEDULE HEARING ON MOTION FOR RELIEF
OF STAY (DE #83), MOTION TO APPOINT TRUSTEE (DE #156), AND MOTION BY
PRO PLAS, LLC FOR APPOINTMENT OF A CHAPTER 11 TRUSTEE (DE #167)
Creditor Pro Plas LLC, a Missouri limited liability company ("Pro Plas"), files this Response to the Motion to Reschedule Hearing on Motion for Relief of Stay (DE #83), Motion to Appoint Trustee (DE #156), and Motion by Pro Plas, LLC for Appointment of a Chapter 11 Trustee (DE #167) ("Motion") filed by Debtor Plasticon International, Inc. ("Debtor Plasticon") and in support thereof respectfully states the following:
Introduction
1. On August 17, 2007, Debtor Plasticon filed its Motion (DE #171) seeking to continue various matters originally scheduled for hearing on August 30, 2007.
2. Pro Plas acknowledges that the Motion for Relief of Stay, originally set for August 30, 2007 has already been continued by this Court and will be reset.
3. Consequently, the only matters currently set for hearing on August 30, 2007 are the motion by Pro Plas, LLC for appointment of a Chapter 11 Trustee and motion by the Office of the United States Trustee for appointment of a Chapter 11 Trustee.
4. The primary reason asserted by Debtor Plasticon for the continuance is that Debtor Plasticon recently retained new bankruptcy counsel.
5. Under normal circumstances, counsel for Pro-Plas, as a matter of courtesy, would consent to a reasonable continuance of the motions currently set on August 30, 2007.
6. However, Debtor Plasticon's conduct to date during the course of this Chapter 11 proceeding makes it impossible for Pro Plas' counsel to consent.
7. Since the filing of this case and the Pro Mold, Inc. companion case, both Debtors have largely ignored their Chapter 11 responsibilities and engaged in patterns of conduct prohibited under the Bankruptcy Code and this Court's Orders. 8. This conduct has not only been detrimental to Pro Plas, but detrimental to the creditor community at large.
9. Allowing such activities to continue unchecked by granting an unconditional continuance is contrary to the rule of law and ill advised.
Management Fees
10. Attached hereto and incorporated herein as EXHIBIT 1, is a schedule detailing a series of unauthorized post-petition transfers, totaling more than $98,000, made by Debtor Pro Mold to Debtor Plasticon in direct violation of this Court's Interim Cash Collateral.
11. The cash collateral budget, which was agreed to by the parties, and continued by the parties, contains a rolling 30-day budget that does not provide for a management fee.
12. Consequently, payment of a management fee is a violation of the Cash Collateral Order that is currently in place.
13. In addition, Pro Plas and the Murphy Entities have repeatedly and continuously objected to the payment of such management fees.
14. Their informal objections have been ignored by Debtor Plasticon and Debtor Pro Mold.
15. When a management fee was first discussed with this Court at a hearing on May 22, 2007, the Court commented/directed that the terms of any management agreement be provided to the Murphy Entities.
16. To date, the Murphy Entities have not been provided with the terms of any management agreement.
17. Moreover, despite ample time to do so, neither Debtor Plasticon, nor Debtor Pro Mold have sought approval from this Court for the payment of any management fee.
18. Instead, Debtor Plasticon and Debtor Pro Mold unilateral decided to pay the fee, without any regard to the Cash Collateral Order or the rights of the creditors.
19. Pro Plas is concerned that a continuance will only embolden Debtor Plasticon and Debtor Pro Mold to continue this unauthorized activity, and perhaps accelerate or increase it, at the expense of Pro Plas, the other Murphy Entities and the other, non-insider, creditors of Debtor Plasticon and Debtor Pro Mold.
20. If this Court is inclined to grant the continuance(s) requested, such continuance(s) should be conditioned on Debtor Pro Mold's strict adherence to the Cash Collateral Order and rolling 30 day budget that is currently in place.
21. No management fee should be paid and any fees recently paid and not yet disbursed to pay Debtor Plasticon's expenses should be immediately returned to Debtor Pro Mold.
22. Preservation of the status quo and adherence to both the Orders of this Court and the provisions of the Bankruptcy Code should be essential conditions to the terms of any continuance.
23. Finally, if Debtor Plasticon and/or Debtor Pro Mold fail to follow the conditions, set forth above for a continuance, the penalties should be swift and severe.
24. Namely, any deviation from the Cash Collateral Order and rolling 30 day budget that is currently in place and any variation from the Orders of this Court and the provisions of the Bankruptcy Code should result in the immediate appointment of a Chapter 11 Trustee in both
cases.
WHEREFORE, Pro Plas respectfully requests that the continuance requested by Debtor Plastcion be conditioned on (a) the preservation of the status quo, (b) Debtor Plasticon and Debtor Pro Mold strictly adhering to this Court's Cash Collateral Order and 30 day budget in the Pro Mold case, (c) the immediate appointment of a Chapter 11 Trustee in both cases if Debtor Plasticon or Debtor Pro Mold fail to follow the Orders of this Court or the provisions of the Bankruptcy Code; and (d) such other and further relief as this Court deems just and proper.
STONE, LEYTON & GERSHMAN
A Professional Corporation
By: /s/ Howard S. Smotkin
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 Pro Plas LLC
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing document has been served electronically and/or by first class mail 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 U.S. Trustee and on the Master Service List No. 1 on this 28th day of August 2007.
/s/ Howard S. Smotkin
Howard S. Smotkin
EXHIBIT 1
PRO MOLD, INC.
USBC-EDKY 07-50935
CHAPTER 11
UNAUTHORIZED POST-PETITION TRANSFERS
DATE DESCRIPTION - PAYEE SUB-TOTAL AMOUNT COMMENT
31-May-07 Lex Real $ 14,000.00 UMB Wire Transfer - Transfer to Insider Entity - Not Budgeted - No Known Purpose
31-May-07 Chantal Appraisal $ 3,500.00 UMB Check No. 1946 - Equipment Appraisal - Professional Not Employed - Not Budgeted
01-Jun-07 Chantal Appraisal $ 500.00 UMB Check No. 1952 - Equipment Appraisal - Professional Not Employed - Not Budgeted
05-Jun-07 Chantal Appraisal $ 800.00 UMB Check No. 1954 - Equipment Appraisal - Professional Not Employed - Not Budgeted
27-Jun-07 Plasticon International, Inc. $ 7,500.00 Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 4,849.84
Wire Transfer from UMB Account - Payment of Receivable Collected from Plastcion Product Sale - Transfer to Insider Entity - Not Budgeted
$ 19,849.84
03-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
10-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
17-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
24-Jul-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
01-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
06-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
08-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
14-Aug-07 Plasticon International, Inc. $ 7,500.00
Wire Transfer from UMB Account - Management Fee - Professional Not Employeed - Transfer to Insider Entity - Not Budgeted
$ 98,649.84 TOTAL
The amounts above do not include any transfers made during the weeks commencing on August 19, 2007 and August 26, 2007.
Presumably at least 2 additional payments of $7,500 each were or are scheduled to be made, making the total unauthorized transfers to date more than $113,000.00. |
