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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 the lien of the Class 4 secured claim holder, Mr. Venkidu, are preserved for TPL and the Committee. [November Disclosure Statement, p. 24, lines 15-20]. Yet, in contradiction, the Plan provides that the Committee shall be dissolved on the Effective Date. [November Plan, § 10.15]. At any rate, the November Disclosure Statement should include all information regarding any affirmative claims and causes of action which may be a source of recovery for creditors. 5. Information Regarding the Creditor Trust Trustee Is Inadequate. 63. The November Plan provides for the appointment of the Creditor Trust Trustee by the Court at the confirmation hearing, to be selected from a list of three (3) candidates proposed by the Debtor. Such individual will, among other things, be empowered to investigate, prosecute and defend claims and causes of action, and to act as the November Plan trustee and disbursing agent. [November Plan, § 1.17] 11 . Notwithstanding the integral role of the Creditor Trust Trustee, the November Disclosure Statement is silent as to how the candidates were selected, the amounts and procedures to compensate the selected trustee, the criteria for selecting the trustee, to whom the trustee will report, and how the trustee’s role will be governed. The November Disclosure Statement should, at a minimum, provide details to clarify these questions. In addition, given that the affirmative claims against third parties, including the Debtor’s affiliates and insiders, may constitute the most valuable sources of recovery for creditors, the Creditor Trust Trustee should be required to pursue such affirmative claims, and, in the instance she/he decides not to pursue any particular affirmative claim, should be required to notify parties in interest of her/his decision prior to abandoning any such affirmative claim. Neither the November Plan nor the November Disclosure Statement describes any procedure for such a process. 6. Disclosure Regarding Officers and Insiders Is Deficient. 64. Section 1129(a)(5) of the Bankruptcy Code requires a chapter 11 plan to identify any insider that will be employed by the reorganized company, to identify all individuals who will serve as officers of the reorganized company and to demonstrate that the appointment of such officers is consistent with the interests of creditors and public policy. Here, the November Plan designates 27 28 11 The November Plan and November Disclosure Statement both reference a “Claims Trust Trustee” but do not define such term. [See, e.g., November Disclosure Statement p. 39, lines 2-15]. Presumably, the reference is intended to be to the Creditor Trust Trustee, but in any event, both documents should either clarify or correct the references. TTH:sb H:\Client Matters\- F&R\Tech Properties\Pl\Plan & DS\Nov 22, 2013\DS\Obj v14.docx 23 OBJECTION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO DEBTOR’S DISCLOSURE STATEMENT RE: TPL PLAN OF REORGANIZATION (NOVEMBER 22, 2013) Case: 13-51589 Doc# 298 Filed: 12/02/13 Entered: 12/02/13 15:51:10 Page 28 of 30
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Daniel Leckrone as its corporate responsible person. However, the November Disclosure Statement does not outline his authority and responsibilities, and does not provide a mechanism for parties in interest to replace him. The November Disclosure Statement also fails to provide any support that Daniel Leckrone’s continued service as a corporate officer is in the best interests of creditors, a finding that the Court must affirmatively make. See In re Texaco, Inc. 84 B.R. 893, 908 (Bankr. S.D.N.Y. 1984). The Committee believes, on the contrary, that Daniel Leckrone’s continued service is counter to the best interests of creditors. 65. The November Plan is deficient in identifying plan insiders who will be employed by the reorganized company. For example, with respect to Alliacense, the November Disclosure Statement provides that TPL and Alliacense both are owned by Daniel Leckrone, and that Alliacense’s president is Daniel Leckrone’s son, but only in a footnote in the narrative of the history of the company. [November Disclosure Statement, p. 11, n. 3]. Similarly, Exhibit “C” to the November Disclosure Statement provides biographies for TPL’s officers but omits disclosure of the relationships between Daniel Leckrone on the one hand, and both Janet Neal and Susan Anhalt, on the other hand. 66. Many creditors, including the members of the Committee, have had long and unhappy experiences in dealing with Daniel Leckrone in which agreements are made and broken, followed by long negotiations attempting to resolve issues, followed by further breaches of amended agreements, diversion of assets to related entities, followed by commencement of litigation to enforce agreements. The November Disclosure Statement does not provide explanation of these histories. Creditors should know of Daniel Leckrone’s history of dealings with non-insider creditors so they can decide whether they want Mr. Leckrone to continue to manage the company or whether extensive monitoring of the Debtor, including provisions proposed by the Committee in negotiations, should be put in place. This information is integral for parties in interest to make informed decisions about the November Plan which proposes to perpetuate the company’s self-dealings among insiders. The November Disclosure Statement’s failure to inconspicuously, transparently disclose such information is glaring and should not be permitted. 28 67. The recent litigation results casts doubts about the effectiveness of the Debtor’s TTH:sb H:\Client Matters\- F&R\Tech Properties\Pl\Plan & DS\Nov 22, 2013\DS\Obj v14.docx 24 OBJECTION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO DEBTOR’S DISCLOSURE STATEMENT RE: TPL PLAN OF REORGANIZATION (NOVEMBER 22, 2013) Case: 13-51589 Doc# 298 Filed: 12/02/13 Entered: 12/02/13 15:51:10 Page 29 of 30
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