09/28/2007 236 Response Filed by Pro Plas LLC (RE: related document(s)230 Motion for Miscellaneous Relief filed by Debtor Plasticon International, Inc.). (Smotkin, Howard) (Entered: 09/28/2007)
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Doc 236
In re: Case No. 07-50934
Chapter 11
PLASTICON INTERNATIONAL, INC.,
Debtor.
RESPONSE TO EMERGENCY MOTION TO SUSPEND SCHEDULING ORDER
CONCERNING THE 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 Emergency Motion to Suspend Scheduling Order (" Emergency Motion") filed by Debtor Plasticon International, Inc. ("Debtor Plasticon") concerning the motion filed by Pro Plas, LLC for appointment of a Chapter 11 Trustee (DE #167) and respectfully states the following:
Overview
1. On September 26, 2007, Debtor Plasticon filed its Emergency Motion (DE #230) seeking to suspend the Court's Scheduling Order dated August 31, 2007 (D.E. 185).
2. The "Emergency" necessitating the Emergency Motion is that James N. Turek, Sr., the President, Chairman, CEO, and controlling shareholder of Debtor Plasticon seeks to avoid a hearing that will likely result in his permanent removal from operating or controlling Debtor Plasticon and/or Debtor Pro Mold, Inc. ("Debtor Pro Mold")
3. Both the United States Trustee and Pro Plas ("collectively "Movants") expended considerable resources gathering the evidence necessary to sustain their respective motions for the appointment of a Chapter 11 Trustee.
4. Now at the eleventh hour, as the Debtors' financial condition continues to deteriorate, and after previewing Movants' exhibits, affidavits, and proposed stipulations of fact, the Debtors want to delay these proceedings for a second time.
5. The Emergency Motion should be denied.
Avoiding Appointment of a Trustee
6. While essentially acknowledging that The United States Trustee and Pro Plas will likely prevail in their efforts to have Chapter 11 Trustees appointed in both cases, Mr. Turek seeks to dictate the terms of his surrender.
7. Mr. Turek proposes the appointment of a chief restructuring officer to whom he will allegedly temporarily cede control of Debtor Plasticon and Debtor Pro Mold.
8. Mr. Turek, while creating the appearance of relinquishing control of Debtor Plasticon through the appointment of a chief restructuring officer, will still be poised to take back Pro Mold and Plasticon when his actions are no longer subject to scrutiny by the Office of the U.S. Trustee or Pro Plas.
9. 11 U.S.C. §1104 specifically provides for the appointment of a Chapter 11 Trustee when management engages in fraud, dishonesty, gross mismanagement, or is incompetent.
10. Nothing in the Bankruptcy Code permits current management to continue its reign by calling for the appointment of a Chief Restructuring Officer in response to a motion for appointment of a Chapter 11 Trustee.
No Cash and No Lease
11. The current financial condition of Debtor Plasticon, as well as its primary subsidiary Debtor Pro Mold is critical.
12. Any further delay will likely prove fatal to both Debtor Plasticon and Debtor Pro Mold.
13. Debtor Plasticon reportedly has less than $1,000 in the bank.
14. Debtor Pro Mold, as of September 21, 2007, had cash on hand of only $10,580; the lowest level since filing bankruptcy. See EXHIBIT A attached hereto and incorporated herein by this reference.
15. Similarly, Debtor Pro Mold's current accounts receivable (those that are less than 90 days old) have declined precipitously since its bankruptcy filing. See EXHIBIT B attached hereto and incorporated herein by this reference.
16. To make matters worse, Debtor Pro Mold allowed the lease on its factory in St. Louis to be rejected by operation of law and now faces the prospect of finding a new factory and incurring hundreds of thousands of dollars in moving expenses, as well as a substantial lease rejection claim.
17. In short, the prospects for recovery by Debtor Pro Mold or Debtor Plasticon are dimming quickly.
18. The proposed appointment of a chief restructuring officer does nothing to alleviate the current cash crisis facing the Debtors.
19. Moreover, Debtor Pro Mold's proposed Disclosure Statement and Plan do nothing to address the current situation.
20. Without immediate cash and a place to manufacture its goods, Debtor Pro Mold will not survive in time for a Plan to be confirmed.
Restoring Creditor Confidence
21. The appointment of a Chapter 11 Trustee will help restore creditor confidence and give the Debtors a chance to survive.
22. In particular, Pro Plas and the other Murphy Entities may be inclined under a Chapter 11 Trustee to provide interim financing and an opportunity for Debtor Pro Mold to remain in its current premises.
23. Under Mr. Turek or even a chief restructuring officer its is questionable whether anyone is willing to provide funding to aid the Debtors' recoveries.
WHEREFORE, Pro Plas respectfully requests that this Honorable Court (a) overrule the Emergency Motion (b) hold the hearing on the motions for appointment of Chapter 11 Trustees for Debtor Plasticon and Debtor Pro Mold as originally scheduled on October 3, 2007, and (c) award such other and further relief as it 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 27th day of September, 2007.
/s/ Howard S. Smotkin
Howard S. Smotkin
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