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GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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BRIAN L. DAVIDOFF (SBN 102654)

BDavidoff@GreenbergGlusker.com

C. JOHN M. MELISSINOS (SBN 149224)

JMelissinos@GreenbergGlusker.com

COURTNEY E. POZMANTIER (SBN 242013)

CPozmantier@GreenbergGlusker.com

GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Telephone:310.553.3610

Fax: 310.553.0687

Proposed General Bankruptcy Attorneys for Debtor

and Debtor in Possession

In re:

RHYTHM AND HUES, INC.

74262-00017/1911273.1

UNITED STATES BANKRUPTCY COURT

CENTRAL DISTRICT OF CALIFORNIA

Debtor and Debtor in

Possession.

LOS ANGELES DIVISION

Case No. 2:13-bk-13775-NB

Chapter 11

REPLY MEMORANDUM OF POINTS

AND AUTHORITIES OF DEBTOR AND

DEBTOR IN POSSESSION RE MOTION

FOR APPROVAL OF DEBTOR IN

POSSESSION FINANCING

Date: March 12, 2013

Time: 2:00 p.m.

Place: Courtroom 1545

255 E. Temple Street

Los Angeles, CA 90012

Rhythm And Hues, Inc., the debtor and debtor in possession herein (the “Debtor”, R&H

or the “Company”), submits its reply to the Response filed by the Official Committee of

Unsecured Creditors (the “Committee”) to the Debtor’s Emergency Motion for Interim and Final

REPLY MEMORANDUM OF DEBTOR AND DEBTOR

IN POSSESSION RE DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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Orders Approving Post-Petition Financing Agreement with Universal City Studios LLC and

Twentieth Century Fox [Docket No. 7] (the “Motion”) as follows:

I. Entry into the DIP Loan Agreement Represents a Sound Exercise of the Debtor’s

Business Judgment

The Committee asserts that the Debtor’s decision to enter into the debtor in possession

financing (the “DIP Loan” or the “DIP Loan Agreement”) with Twentieth Century Fox (“Fox”)

as agent for Fox and Universal City Studios LLC (“Universal”) (Universal and Fox are

sometimes referred to collectively as the “Lenders”), was not a reasonable exercise of the

Debtor’s business judgment. Rather, the Committee asks the Court to substitute the Committee’s

judgment, arguing that the Debtor should have rejected the favorable DIP Loan, fired all of the

employees, and closed its doors. The Committee and its counsel, which have been involved in

this case for a little over a week, fundamentally misunderstand the Debtor’s financial predicament

during the weeks leading up to the Petition Date when the Debtor negotiated and entered into a

binding term sheet with the Lenders which resulted in the DIP Loan Agreement. 1 As described in

more detail below, the Debtor entered into the DIP Loan Agreement so it could preserve the

going concern value of its business for at least a brief time, and avoid the abrupt cessation of

operations and incurrence of massive employee and customer claims. This is a sound exercise of

the Debtor’s judgment that should not be disturbed.

Among other things, if the Debtor had not entered into the DIP Loan Agreement, it would

not have received the $6,000,000 unsecured loan from the Lenders, $750,000 of which was

advanced on January 18, 2013, allowing the Debtor to make critical payments to vendors and

employees, and avoid a cessation of operations. If the Debtor had not received the next

$5,250,000 on January 24, 2013, again on an unsecured basis, the Debtor would not have been

able to make further crucial payments to vendors or to meet outstanding payroll, and would have

1 The Committee represents an unsecured creditor pool totaling approximately $18 million. However, of that

amount, $6 million is owed to the Lenders, approximately $5 million owed to employees, Warner Bros. claims that

approximately $4.9 million is owed to it, and Focal Point asserts a claim based upon its pre-petition investment

banker agreement with the Debtor. Any trade debt is relatively small. It is surprising that the Committee’s position

is adverse to the interests of two of its constituents, which hold claims representing nearly 2/3 of the total unsecured

claims.

74262-00017/1911273.1 2

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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been forced to close its doors. Moreover, without the DIP Loan, the Debtor would not have been

able to explore a sale of the Company, including the attempted sale to Prime Focus immediately

prior to the filing of this case. Put simply, the Committee apparently fails to recognize that

shutting down operations would have been premature and irresponsible not only because it would

have foreclosed a possible sale, but also because it would have created the following additional

claims against the estate, none of which exist today, and which collectively far exceed the secured

claim of the Lenders:

1) Claims asserted by Fox and Universal collectively, which the Debtor is advised by Fox

and Universal would be significant, based upon claims for breach of contract with respect to their

respective films. Prior to the Petition Date, Fox and Universal had already made certain

contractual payments to the Debtor. The Debtor had not completed the work on those films, and

was not in a position to deliver without substantial additional work being completed. In addition

to the foregoing, additional damages sought would likely include any costs which would have

been incurred by Fox and Universal to have the work re-done elsewhere, damages based upon

any difference in quality, and damages based upon any delay in delivery.

2) Potential additional claims for violation of the “WARN” Act and related statutes

beyond those already being asserted by one of the Committee members and others. The 254

employees who were terminated on February 10, 2013 were given notification that the Company

was unable to provide advance notice of their termination. While the Company believes some or

all of the employees were not entitled to 60 days’ advance WARN notice under either federal or

state law, and that WARN notice was not required for the remainder of the employees due to

applicable exceptions under state and federal law, two class action adversary actions have been

initiated seeking damages for failure to give 60 days’ advance notice of termination. If the

Company had been shut down, as advocated by the Committee, then all 750 employees of the

Company may have asserted WARN claims. Without conceding that the Company violated any

WARN law, or would have violated any WARN law, the termination of an additional 500

employees could have subjected the Company to potential additional exposure for 60 days of

wages for those employees, or potential claims for three times the amount presently being

74262-00017/1911273.1 3

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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asserted.

3) Potential claims totaling $45 million under the Public Health Service Act (“PHS Act”),

as amended by the Patient Protection and Affordable Care Act enacted on March 23, 2010. The

foregoing statutes provide, inter alia, that plans and issuers must provide 60 days’ advance notice

of any modification of a medical plan and that failure to provide such notice results in penalties of

$1,000 per day per covered employee. As discussed in the Debtor’s Emergency Motion for Order

Authorizing Debtor in Possession to Honor Certain Pre-Petition Employee Wages and Benefits,

if the Debtor had shut down operations, as suggested in the Committee’s Response, the Debtor

could have faced the possible penalty of $45 million calculated as follows: 750 covered

employees multiplied by 60 days multiplied by the $1,000/day penalty.

In addition to the foregoing claims that would have been asserted against the estate,

because the Company’s work on the films would not have been completed, further remaining

payments to the Debtor from Fox and Universal under their respective contracts with the Debtor

would never have been required to be made. Indeed, a shutdown of the Company would have

resulted in less revenue and larger claims, as described above.

Facing this choice, rather than adopt the decision the Committee endorses, the Debtor

made the reasonable and prudent decision to negotiate the loan terms obtained from the Lenders.

This decision avoided unnecessary large claims being asserted against the estate, as described

above, allowed the Debtor to remain in business long enough to seek alternative solutions and/or

exit strategies, and was thus a sound exercise of the Debtor’s business judgment. The

Committee’s assertion that liquidation would somehow achieve a better result simply misses the

mark.

The DIP Loan, including the pre-petition unsecured loan of $6,000,000, acted as a bridge

to this chapter 11 case, and the possible sale of the Debtor as a going concern. Without the DIP

Loan, all of the Debtor’s more than 700 pre-petition employees would have immediately lost their

jobs. By remaining a going concern, the Debtor was able to minimize layoffs and still employs

approximately employ 450 people. The Debtor is currently moving toward completion on

movies for both Fox and Universal, and continues to work towards completion of another film co-

74262-00017/1911273.1 4

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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produced by Legendary Pictures, pursuant to the Change Order approved by the Court on

February 21, 2013.

In addition, the asset value of the estate is being maximized by the continuity of

operations. The Debtor believes that the sale of the Debtor’s assets in a liquidation would result

in far less value. For purposes of calculating a distribution to unsecured creditors, proceeds of a

liquidation would have been divided into a much larger denominator than exists today, resulting

in a smaller distribution. Moreover, and of much greater consequence for the affected

individuals, liquidation would have been disastrous for all of the current employees whose jobs

have been retained and who may continue to be employed upon the close of a sale transaction.

Finally, the DIP Loan covers more than the direct costs of completing the Lenders’

movies. It also covers necessary overhead for the Debtor, generally, allowing the Debtor to

continue to operate as a viable business. The purpose of the DIP Loan was not solely to allow

the Lenders’ movies to be completed, but to allow the Debtor to remain in business in the short

term in order to potentially remain viable by reorganizing and attracting new contracts, or, as has

developed, to maximize value through a sale process. Without the pre-petition unsecured loan

and the DIP Loan, none of that would have been possible. The value obtained through liquidation

would have been negligible, when compared to the substantial increase in asserted claims against

the estate.

II. The Committee Ignores that the DIP Loan Contains a Number of Unusual Features

The DIP Loan, unlike most other debtor in possession facilities, does not mature within a

matter of months after the loan is made. Rather, the maturity date is nearly three (3) years after

the date of the loan, December 31, 2015. If a plan of reorganization is confirmed by an earlier

date, the DIP Loan is technically due, but subject to the replacement loan provisions described

immediately below.

If a plan of reorganization is confirmed which provides for a sale of substantially all of the

Debtor’s assets, or if a sale is consummated through section 363 outside of a plan, the Lenders

have agreed that an approved buyer can enter into a replacement loan on substantially the same

terms. Consequently, a buyer may be able to pay more for the assets of the estate because there

74262-00017/1911273.1 5

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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will be no requirement either to pay off the Lenders at closing or to find its own financing.

Other terms of the DIP Loan would also assist a potential buyer. No principal pay-down

is required until the maturity date of December 31, 2015. Payments of interest only are required

on a monthly basis until maturity, when the entire principal and any accrued interest are due and

payable. In addition, a 6% interest rate is likely much lower than a buyer could obtain in the

marketplace for a loan of this type. And to the extent that a buyer does not find these financing

terms to be favorable, then the buyer can obtain its own financing and pay off the Lenders with no

penalty. As a result, the DIP Loan allows the sale to maximize the amount of consideration paid

by any buyer.

A final feature of the DIP Loan relates to the shareholder notes. Specifically, even though

the shareholder notes are part of the Lenders’ collateral, the Lenders have indicated their

willingness to allow the proceeds of any sale of the property to be contributed to the Debtor and

used for the Debtor’s operations, rather than to pay down the DIP Loan. This is another provision

which could be beneficial to the operations of the Debtor.

III. The Carve Out Is Appropriate Under the Circumstances of this Case

The Committee makes much of the Carve Out, which provides $50,000 for Committee

counsel, despite the Debtor’s substantial efforts to obtain a larger concession from the Lenders for

prospective Committee counsel. The reality is that this is a case in which substantial efforts of

Debtor’s counsel, Chief Restructuring Officer and Investment Banker are, and have been,

required in order to put the Debtor in a position to be sold as a going concern. This is not a case

in which the Debtor has been carrying on its business on the back of trade vendors, or where each

constituent is too small to adequately represent itself and needs the Committee to level the

playing field. The Committee’s largest constituents are the Lenders and employees, both of

whose interests the Committee has thus far opposed; another large Hollywood studio, Warner

Bros., which was offered an opportunity to be part of the DIP Loan but chose not to participate,

and which is adequately represented by its own counsel; the WARN Act claimants, whose alleged

claim would have been three (3) times as large had all employees been fired as the Committee

suggests, and Focal Point, the Company’s pre-petition investment banker. Moreover, the amount

74262-00017/1911273.1 6

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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of the Carve Out negotiated by the Debtor for its professionals is based upon an estimate of the

actual expected fees necessary to provide the services required to complete the chapter 11 case.

Therefore, any reduction in the amount would be detrimental to the Debtor.

In this case, Debtor’s counsel has been performing substantial services for the Debtor on a

daily basis since the Petition Date. These services involve not only bankruptcy-specific issues,

but also related employment and general business issues. The Committee on the other hand, was

just recently formed, and Committee counsel just retained. Thus, even more than in a typical

chapter 11 case, the role of Committee counsel in this case is likely to be much less substantial

than the role of Debtor’s counsel.

Finally, it is important to note that the Carve Out is not an allocation from an existing pre-

petition security interest. Rather, it represents the amount agreed upon by the Debtor and the

Lenders as part of an arm’s-length negotiation and it impacts collateral proceeds which are not

property of the estate. See e.g., In re Debbie Reynolds Hotel & Casino, Inc., 255 F.3d 1061, 1067

(9 th Cir. 2001) (surcharge on secured creditor’s collateral is not an administrative claim, comes

directly from recovery, and should be paid directly to the carve out beneficiary); In re Lavelle

Aricraft,Co., No. MISC. 95-108, 1995 WL 334325, at *2 (E.D. PA 1995) (upholding carve out

for debtor’s counsel alone); In re Hotel Syracuse, Inc., 275 B.R. 679, 682-83 (Bankr. N.D. N.Y.

2002) (court permits carve out for the benefit solely of debtor’s counsel); In re Nuclear Imaging

Systems, Inc. 270 B.R. 365, 379 (Bankr. E.D. PA 2001) (secured creditor may designate which

administrative claimants may benefit from carve out). Accordingly, the Court cannot designate

which professionals may benefit from a carve out contrary to the agreement of the parties.

IV. Ample Authority Exists to Permit this Court to Approve the 506(c) Waiver

Courts in various jurisdictions have ruled that section 506(c) waivers are an appropriate

exercise of the debtor's business judgment. See In re Enron Corp. 2001 Bankr. Lexis 1563, at *10

(Bankr. S.D.N.Y. Dec. 3, 2001)(approving post-petition financing where loan took priority over

all administrative claims and claims arising under 506(c)); In re Film Equip. Rental Co., 1991

U.S. Dist. LEXIS 17956 (S.D.N.Y. December 12, 1991) (upholding 506(c) waiver against

debtor's counsel who sought surcharge for fees); Inteliquest Media Corp. v. Miller (In re

74262-00017/1911273.1 7

REPLY MEMORANDUM RE

DIP FINANCING MOTION


GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, California 90067-4590

Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

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Inteliquest Media Corp.), 326 B.R. 825 (B.A.P. 10th Cir. 2005) (rejecting appellants' argument

that the 506(c) waiver in the financing order violated public policy); see also In re Antico Mfg.

Co., 31 B.R. 103, 106 n.1 (Bankr. E.D.N.Y. 1983) (regarding an objection to a 506(c) waiver,

court noted that "[c]ertainly, the paragraph in question is not so detrimental or improper as to

jeopardize the loss of the entire financing package”).

Accordingly, more than ample authority exists for this Court to permit the Section 506(c)

waiver in the Final Order.

V. Conclusion

For all of the foregoing reasons, and for all of the reasons discussed in the Motion

and at the preliminary hearing on the Motion, the Debtor’s exercise of its business judgment was

sound and the Motion should be approved.

DATED: March 11, 2013

74262-00017/1911273.1 8

GREENBERG GLUSKER FIELDS CLAMAN

& MACHTINGER LLP

By: /s/ Courtney E. Pozmantier

BRIAN L. DAVIDOFF

C. JOHN M. MELISSINOS

COURTNEY E. POZMANTIER

Proposed General Bankruptcy Attorneys for

Debtor and Debtor in Possession

REPLY MEMORANDUM RE

DIP FINANCING MOTION


Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

Main Document Page 9 of 11

PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:

1900 Avenue of the Stars, 21 st Floor, Los Angeles, CA 90067-4590

A true and correct copy of the foregoing document entitled (specify): Reply Memorandum of Points and

Authorities of Debtor and Debtor in Possession re Motion for approval of Debtor in Possession Financing

will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and

(b) in the manner stated below:

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling

General Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the

document. On March 11, 2013, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and

determined that the following persons are on the Electronic Mail Notice List to receive NEF transmission at the

email addresses stated below:

Service information continued on attached page

2. SERVED BY UNITED STATES MAIL:

On March 11, 2013, I served the following persons and/or entities at the last known addresses in this bankruptcy

case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States

mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration that

mailing to the judge will be completed no later than 24 hours after the document is filed.

Service information continued on attached page

3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state

method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on March 11, 2013, I

served the following persons and/or entities by personal delivery, overnight mail service, or (for those who

consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge

here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later

than 24 hours after the document is filed.

VIA PERSONAL DELIVERY

The Honorable Neil W. Bason

United States Bankruptcy Court

255 E. Temple Street, Suite 1552

Los Angeles, CA 90012

Service information continued on attached page

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

March 11, 2013 Courtney Pozmantier /s/ Courtney Pozmantier

Date Printed Name Signature

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

74262-00017/1911280.1


Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

Main Document Page 10 of 11

1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF):

Wayne M. Smith with Warner Bros. wayne.smith@warnerbros.com

Committee member

Yolanda S Aguilar

Courtesy NEF

Lorie A Ball

lball@peitzmanweg.com

Courtesy NEF

Gail L Chung GL@outtengolden.com, JXH@outtengolden.com

Russell Clementson

russell.clementson@usdoj.gov

for U.S. Trustee

Ronald Clifford

rclifford@blakeleyllp.com, ecf@blakeleyllp.com;

for Anthony Barcelo

seb@blakeleyllp.com

Brian L Davidoff

for Rhythm And Hues Inc

H Alexander Fisch

for Credtor Committee Official

Committee of Unsecured Creditors

Scott F Gautier

Courtesy NEF

Jeffrey A Krieger

for Rhythm And Hues Inc

Mary D Lane

Courtesy NEF

C John M Melissinos

for Rhythm And Hues Inc

Katie Nownes

Courtesy NEF

Danielle A Pham

for Creditor Committee Official

Committee Of

Unsecured Creditors

Courtney E Pozmantier

for Rhythm And Hues Inc

Hamid R Rafatjoo

for Legendary Pictures, LLC

David M Reeder

Thomas C. Capizzi

Victor Sahn

Courtesy NEF

Claire E Shin

for Rhythm And Hues Inc

Lori Sinanyan

for Twentieth Century Fox

United States Trustee (LA)

for U.S. Trustee

Howard J Weg

Courtesy NEF

bdavidoff@greenbergglusker.com,

jreinglass@greenbergglusker.com;

kwoodson@greenbergglusker.com;

calendar@greenbergglusker.com; sgaeta@greenbergglusker.com

afisch@stutman.com

sgautier@peitzmanweg.com

jkrieger@ggfirm.com, kwoodson@greenbergglusker.com;

calendar@greenbergglusker.com;

pporooshani@greenbergglusker.com

mal@msk.com, mec@msk.com

jmelissinos@greenbergglusker.com,

jreinglass@greenbergglusker.com;

kwoodson@greenbergglusker.com;

calendar@greenbergglusker.com; sgaeta@greenbergglusker.com

katie@omnimgt.com

dpham@stutman.com, daniellepham@gmail.com

cpozmantier@greenbergglusker.com,

sgaeta@greenbergglusker.com

hrafatjoo@venable.com, ataylor@venable.com;

jnassiri@venable.com; bclark@venable.com

david@reederlaw.com, jessica@reederlaw.com

vsahn@sulmeyerlaw.com,

agonzalez@sulmeyerlaw.com,asokolowski@sulmeyerlaw.com

cshin@greenbergglusker.com, jreinglass@greenbergglusker.com;

kwoodson@greenbergglusker.com;calendar@greenbergglusker.co

m; sgaeta@greenbergglusker.com

lsinanyan@jonesday.com, lsinanyan@ecf.inforuptcy.com

ustpregion16.la.ecf@usdoj.gov

hweg@peitzmanweg.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

74262-00017/1911280.1


Case 2:13-bk-13775-NB Doc 116 Filed 03/11/13 Entered 03/11/13 21:33:05 Desc

Main Document Page 11 of 11

2. SERVED BY UNITED STATES MAIL:

DEBTOR

John Patrick Hughes, President CFO

2100 East Grand

El Segundo, CA 90245

3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state

method for each person or entity served):

Gary E. Klausner, Counsel for Official Committee of

Unsecured Creditors.

gklausner@stutman.com

Richard L. Wynne, Counsel for DIP Lenders rlwynne@jonesday.com

Joshua Mester, Counsel for DIP Lenders jmester@jonesday.com

Dare Law, for U.S. Trustee Dare.Law@usdoj.gov

Evan Jones, Counsel for Stalking Horse Bidder ejones@omm.com

John F. Hedge, Chief Restructuring Officer of Debtor jhedge@scouler.com

Lloyd B. Sarakin, Vice President and Associate

General Counsel for Sony Electronics Inc.

Lloyd.sarakin@am.sony.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012 F 9013-3.1.PROOF.SERVICE

74262-00017/1911280.1

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