11/14/2007 290 Objection Filed by 10315 LLC, John P. Murphy III Revocable Trust No 1, John P Murphy III, Pro Plas LLC (RE: related document(s)287 Motion to Continue/Reschedule Hearing, filed by Unknown Elizabeth Lee Thompson). (Smotkin, Howard) (Entered: 11/14/2007)
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Doc 290
In Re:
PRO MOLD, INC.,
Debtor.
Case No. 07-50935
Judge William S. Howard
Chapter 11
OBJECTION OF CREDITORS THE MURPHY ENTITIES TO MOTION OF CHAPTER 11 TRUSTEE TO CONTINUE HEARING ON: I. MOTION FOR RELIEF FROM STAY AND RELATED DEADLINES; II. MOTION FOR IMMEDIATE SURRENDER OF NONRESIDENTIAL REAL PROPERTY; AND III. MOTION TO CONVERT
Creditors the John P. Murphy, III Revocable Trust No. 1; Pro Plas, LLC, a Missouri limited liability company; 10315, LLC, a Missouri limited liability company; and John P. Murphy, III (collectively the "Murphy Entities"), by and through their attorneys, object to the Chapter 11 Trustee's Motion to Continue Hearing on: I. Motion for Relief from Stay and Related Deadlines; II. Motion for Immediate Surrender of Nonresidential Real Property; and III. Motion to Convert. (“Motion”). In support of this objection, the Murphy Entities state as follows:
Background
1. Six months ago, on May 16, 2007, Debtor Pro Mold, Inc. filed this case. At the time of filing, Pro Mold had cash and Collectible Accounts Receivable [1] of $352,818.40.
[1] The term Collectible Accounts Receivable refers to receivables that are less than 60 days old and not owed by Pro-Mold's parent company, Plasticon International, Inc.
2. Five months ago, on June 15, 2007, the Murphy Entities filed their Motion for Relief from Automatic Stay (DE #77) (the "Motion for Relief"). On that date, Pro Mold had cash and Collectible Accounts Receivable of $470,339.02.
3. Four months ago, on July 7, 2007, the Murphy Entities filed their Exhibits in Support of their Motion for Relief. (DE #119). On that date, Pro Mold had cash and Collectible Accounts Receivable of $391,475.54.
4. On July 12, 2007, this Court conducted a preliminary hearing on the Motion for Relief and set the matter for an evidentiary hearing on August 30, 2007. On July 12, 2007, Pro Mold had cash and Collectible Accounts Receivable of $377,929.10
5. Three months ago, on August 16, 2007, the Murphy Entities filed their Motion for Appointment of a Chapter 11 Trustee (DE #182). On that date, Pro Mold had cash and Collectible Accounts Receivable of $288,413.61.
6. Two and one-half months ago, on August 30, 2007, this Court held a status conference and with the consent of all parties reset the evidentiary hearing on the Motion for Relief to October 16, 2007, due in part to the pending Motion to Appoint a Chapter 11 Trustee and Pro Mold's retention of replacement counsel in the bankruptcy proceeding. On August 30, 2007, Pro Mold had cash and Collectible Accounts Receivable of $261,689.25.
7. Two months ago, on September 13, 2007, the deadline for Pro Mold to assume or reject its real property lease with 10315, LLC expired and the lease was rejected by operation of law. On that date, Pro Mold had cash and Collectible Accounts Receivable of $176,532.15.
8. On September 27, 2007, the Murphy Entities filed their Motion for Immediate Surrender of Property, relating to Pro Mold's manufacturing facility in St. Louis, Missouri.
9. On October 1, 2007, this Court, on the motion of the Murphy Entities and with the consent of all parties, continued the evidentiary hearing on the Motion for Relief to October 30, 2007. This Court subsequently reset it for October 31, 2007.
10. On October 3, 2007, this Court sustained the motion of the Murphy Entities and the motion of the United States Trustee to appoint a Chapter 11 Trustee.
11. Five weeks ago, on October 5, 2007, the United States Trustee Appointed Kenneth C. Henry as the Chapter 11 Trustee for Pro Mold. On that date, Pro Mold had cash and Collectible Accounts Receivable of $197,357.66.
12. Four weeks ago on October 11, 2007, the Murphy Entities, at the request of the Chapter 11 Trustee, and with the consent of all parties, filed its Third Motion to Reschedule Final Hearing on Motion for Relief. This Court reset the final hearing on the Motion for Relief to November 19, 2007. On October 11, 2007, Pro Mold had Cash and Collectible Accounts Receivable of $210,550.87.
13. Two weeks ago, on October 30, 2007, counsel for the Murphy Entities served their Proposed Stipulation of Facts, in compliance with this Court's Order, on the Chapter 11 Trustee; his counsel, Elizabeth Thompson; and various other parties connected with this case. On that date, Pro Mold had cash and Collectible Accounts Receivable of $182,566.16.
14. None of the parties served, including the Chapter 11 Trustee, commented or provided any meaningful response to the Proposed Stipulation of Facts.
15. On November 1, 2007, the Murphy Entities filed their motion to convert this case to a proceeding under Chapter 7 (DE #272).
16. On November 13, 2007, the Chapter 11 Trustee filed the instant Motion.
The Motion Should Be Overruled
17. The Murphy Entities Motion for Relief has been pending before this Court for five months.
18. During that time, Pro Mold's cash and accounts receivable have steadily declined, as indicated on Exhibit A, attached hereto and incorporated herein.
19. The decline in the value of Pro Mold and its underlying assets is at the expense of the primary secured creditors, the Murphy Entities.
20. The Chapter 11 Trustee was aware of, or should have been aware of, Pro Mold's precarious financial condition and the pending Motion for Relief, as well as the Motion for Immediate Surrender of Nonresidential Real Property.
21. The Murphy Entities afforded Pro Mold's new bankruptcy counsel, Fowler Measle & Bell PLLC, the courtesy of continuing the Motion for Relief shortly after it was retained.
22. Similarly, the Murphy Entities afforded the Chapter 11 Trustee the courtesy of continuing the Motion for Relief and the Motion for Immediate Surrender of the Property.
23. However, these matters cannot be continued indefinitely as Pro Mold continues to lose money and flounder in bankruptcy.
24. While the Chapter 11 Trustee claims that he has not employed counsel, the Murphy Entities have negotiated with and discussed the Pro Mold case with Elizabeth Thompson, of Stites & Harbison PLLC on several occasions.
25. The choice by the Chapter 11 Trustee, and presumably Ms. Thompson, not to have her formally employed in the case is not a valid reason to postpone the Motion for Relief.
26. The Chapter 11 Trustee has had ample opportunity to employ counsel.
27. The situation at Pro Mold is not improving as its cash and accounts receivable continue to dwindle.
28. At the end of December, the Chapter 11 Trustee is required to pay the St. Louis County Real Estate Taxes for Pro Mold of $26,639.82 and the St Louis County Personal Property Taxes of $67,753.08, a total of $94,392.90.
29. Even under the best of conditions, it is clear at this point that Pro Mold has no ability to pay these expenses in a timely manner and has no ability to reorganize.
30. Neither the Murphy Entities nor the Chapter 11 Trustee can afford the luxury to wait, much less continue the Motion for Immediate Surrender, the Motion to Convert, and the Motion for Relief another 90 days.
31. Without a lease the Chapter 11 Trustee's belief that Pro Mold can either reorganize or be sold as a going concern for in excess of the amount owed to the Murphy Entities is not reasonable or supportable.
32. Further delay will not change that fact.
33. Consequently, the matters scheduled for hearing on November 19, 2007 should go forward as scheduled.
Alternative to Sustaining the Entire Motion
34. Finally, if this Court is inclined to sustain the Motion, it should limit the relief to continuing only the Motion for Relief for no more than ten days.
35. However, it should hear the Motion for Immediate Surrender of the Real Estate and should also hear the Motion to Convert on November 19, 2007.
36. Both the Motion for Immediate Surrender of the Real Estate and the Motion to Convert involve discrete issues, which are relatively simple both legally and factually.
37. Overruling the Motion in part and sustaining the Motion in part strikes a fair compromise between hearing all three matters or hearing none of them on November 19, 2007.
WHEREFORE, the Murphy Entities respectfully request that:
(i) the Chapter 11 Trustee's Motion be overruled;
(ii) the Motion for Relief, the Motion for Immediate Surrender of the Premises, and the Motion to Covert be heard on November 19, 2007; and
(iii) this Court award the Murphy Entities 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
GREENEBAUM DOLL & MCDONALD PLCC
John W. Ames
Gregory R. Schaaf
300 West Vine Street, Suite 1100
Lexington, Kentucky 40507
(859) 288-4629
(859) 367-3877 Facsimile
grs@gdm.com
Local Counsel for Pro Plas, LLC
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing Objection of the Murphy Entities to Chapter 11 Trustee's Motion to Continue Hearing on: I. Motion for Relief from Stay and Related Deadlines; II. Motion for Immediate Surrender of Nonresidential Real Property; and III. Motion to Convert has been served electronically in the method established under CM/ECF Administrative Procedures Manual and the Local Court Standing Order dated July 25, 2002 via electronic and/or first class, postage prepaid U.S. mail on this 14th day of November 2007.
/s/ Howard S. Smotkin Howard S. Smotkin
MASTER SERVICE LIST
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EXHIBIT A
Pro Mold Cash and Collectible Accounts Receivable
Chart - graphic |
