LONGS READ: REPLY TO MURPHY RESPONSE TO EMERGENCY MOTION TO SUSPEND SCHEDULING ORDER
Document 240 Below:
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
LEXINGTON DIVISION
IN RE:
PLASTICON INTERNATIONAL, INC.
Debtor.
Case No. 07-50934
Judge William S. Howard
Chapter 11
REPLY TO MURPHY RESPONSE TO EMERGENCY MOTION TO SUSPEND SCHEDULING ORDER
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Comes Plasticon International, Inc. (“Debtor” or “Plasticon”), by counsel, and for its Reply to the Response to the Emergency Motion to Suspend Scheduling Order concerning the Motion by Pro Plas, LLC[1], for Appointment of a Chapter 11 Trustee [D.E. 236, 185, 167], states as follows:
1. As stated in the Debtor’s Emergency Motion to Suspend Scheduling Order [D.E. 230] (the “Emergency Motion”), the United States Trustee, working in tandem with the Murphy Entities, have presented an attack on the Debtor’s operations and conduct, specifically addressing the conduct of the president and designated corporate representative, James N. Turek, Sr. (“Turek”), both pre- and post-petition. Having reviewed both the Trustee’s documents and arguments, it is apparent to Debtor and Turek that Turek’s prior management and lack of credibility creates an atmosphere in which it is difficult for this Chapter 11 case to proceed. In the interest of avoiding additional cost through the preparation and trial of an issue even Turek himself recognizes is detrimental to the reorganization of the Debtor, the Debtor presents the Court with a solution – remove Turek and appoint a chief restructuring officer.
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[1] Pro Plas, LLC, John P. Murphy III Revocable Trust, 103155, LLC and John P. Murphy (“Murphy”) are collectively referred to as the “Murphy Entities.”
2. The Debtor, in filing the Emergency Motion and in filing on September 26, 2007, the Affidavit of Turek in accordance with this Court’s Scheduling Order [D.E. 195] as well as the Application for Authorization to Employ Arcadia Consulting Services (“Arcadia”) to provide William D. Bishop as a Chief Restructuring Officer [D.E. 237], strenuously takes issue with the Murphy Entities’ patently incorrect theory that Turek “proposes the appointment of a chief restructuring officer to whom he will allegedly temporarily cede control” of the Debtor, and their further insinuation that Turek is only “creating the appearance of relinquishing control of the 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 United States Trustee or the Murphy Entities.” Counsel for the Debtors can only conclude that the Murphy Entities’ attorneys have not read the pleadings carefully as there has never been any reference to Turek’s taking any action other than agreeing to a complete rescission of his duties.
3. Given the furious pace that pleadings have been filed in these cases, Debtor restates its position to clarify any misunderstanding the Court or other parties may have. Upon the employment of a chief restructuring officer, Turek is off the payroll of Debtor Plasticon[2]. Turek will have no input in the management of the company. Debtor, Turek and, most importantly, William D. Bishop (“Bishop”), proposed chief restructuring officer, all state that Bishop has no prior relationship to the Debtor or to Turek. Turek has complete understanding that on the appointment of a chief restructuring officer, he will have no control over the Debtor or Bishop. Turek does not anticipate taking the business
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[2] Turek has never been on the payroll of Pro Mold.
“back” from Bishop when the United States Trustee or the Murphy Entities “aren’t looking” nor has Bishop made any such promise to Turek.
4. In response to the assertions of the Murphy Entities that the current financial condition of Debtor, Pro Mold, as well as its parent Debtor, Plasticon, is critical,[3] Debtor states as follows: Any chapter 11 debtor operates on a shoestring[4]. It is puzzling to the Debtor that throughout the course of conversation with the Murphy Entities, the Murphy Entities’ unwillingness to talk about payment or the filing of a plan of reorganization was always conditioned on the fact that no plan would be supported and no payments would be negotiated due to their complete lack confidence in Turek to follow through with promises. Now, Debtor has removed Turek from the equation and offers to the Murphy Entities an opportunity to negotiate their claims and otherwise get paid through its Chapter 11 plan, yet it appears that this is not the Murphy Entities’ goal at all. In support of this Reply and to best set out the true intentions of the Murphy Entities, Debtor attaches a letter from Greg Schaaf of Greenebaum, Doll & McDonald, local counsel for the Murphy Entities, outlining what the Debtor believes to be the Murphy Entities’ true intentions in this case.
5. In the letter, the Murphy Entities make it clear that their willingness to work with the Debtor, entertain the idea of a plan or even entertain the idea of being paid is anathema to them and that Murphy simply wants “his” company back. A company, the Debtor may remind the Court, for which the Debtor Plasticon paid $2,500,000.00 cash
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[3] The cash flow situation of Pro Mold is not solely the effect of this filing. Last summer, Murphy advanced $35,000 to Pro Mold as an emergency operating loan (see proof of claim # 72) while Murphy was president and general manager. Summer is typically Pro Mold’s “slow season.”
[4] Contributing to the shoestring conditions the Murphy Entities now lament is their insistence that Pro Mold pay almost $5,000.00 per month interest to Pro Plas, LLC on the $1,000,000.00 note executed only by Plasticon for the balance of the $3.5 million purchase of Pro Mold stock by Plasticon.
and executed a note for $1,000,000.00 for the balance of the purchase price. Further, Murphy wants “his” company back while keeping the $2,500,000.00 cash and not paying the over $790,000.00 which Plasticon has advanced for the benefit of Pro Mold[5].
6. Regardless of the financial issues raised by the Murphy Entities in their response, the viability of the Debtor is not before the Court today. The issue before the Court today is Debtor’s request for a finding that the United States Trustee and Murphy Entities’ motions to appoint a chapter 11 trustee is rendered moot by the Debtor’s application to employ a chief restructuring officer, and the hearing of same is now unnecessary.
7. It is the Debtor’s understanding that the Unsecured Creditors Committee appointed by the Office of the United States Trustee supports the Debtor’s Emergency Motion. In fact, Debtor has tendered a draft Plan of Reorganization to the Committee to begin the process of negotiating the Debtor’s reorganization.
WHEREFORE, Debtor respectfully requests that its Emergency Motion be sustained, and that the Debtor be authorized to employ Arcadia Consulting Services to provide William D. Bishop as Chief Restructuring Officer.
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[5] Plasticon has advanced or paid over $790,000.00 cash to the benefit of Pro Mold over the past year including paying off an operating line of credit of $385,000.00 due to Regions Bank, purchase of a $200,000.00 piece of equipment, and payment of $30,000.00 for two dryers.
FOWLER MEASLE & BELL PLLC
/s/ Ellen Arvin Kennedy
Ellen Arvin Kennedy, Esq.
Timothy A. West, Esq.
300 West Vine Street, Suite 600
Lexington, KY 40507-1660
(859) 252-6700
(859) 255-3735 fax
EAKennedy@FowlerLaw.com
TWest@FowlerLaw.com
ATTORNEYS FOR DEBTOR,
PRO MOLD, INC.
CERTIFICATE OF SERVICE
I hereby certify that the foregoing was served this the 28th day of September, 2007, electronically in accordance with the method established under this Court’s CM/ECF Administrative Procedures and Standing Order dated July 25, 2002 upon all parties in the electronic filing system in this case and to those listed on the Master Service List by first class postage paid mail.
/s/ Ellen Arvin Kennedy
ATTORNEY FOR DEBTOR
ATTACHED LETTER from Greenebaum, Doll & McDonald: tinyurl.com |
