Case Doc 392 Filed 02/08/12 Entered 02/08/12 17:22:49 Desc Main Document Page 1 of 5

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1 Document Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) In re: TRANS NATIONAL COMMUNICATIONS INTERNATIONAL, INC., Chapter 11 Case No WCH Debtor. OBJECTION BY RBS ASSET FINANCE, INC. TO DEBTOR S MOTION SEEKING APPROVAL OF LEASE REJECTION RBS Asset Finance, Inc. ( RBS-AF ), hereby submits this Objection to the motion, dated January 27, 2012 [D.R. No. 370] ( Motion ), by Trans National Communications International, Inc., debtor-inpossession herein (the Debtor ), seeking entry of an order, inter alia, (a) authorizing and approving the Debtor s rejection of a certain equipment lease with RBS-AF, and (b) granting the Debtor such other and additional relief as is just and proper. In opposition to the relief requested in the Motion, RBS-AF respectfully represents and sets forth as follows: A. Introduction FACTS 1. On October 9, 2011 (the Petition Date ), the Debtor commenced this case by filing a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with the Clerk of this Court. Since the Petition Date, the Debtor has continued in the possession, management and operation of its assets, properties and businesses in accordance with 1107 and 1108 of the Bankruptcy Code. 2. On October 20, 2011, the Office of the United States Trustee (the U.S. Trustee ) convened an organizational meeting of unsecured creditors, at the conclusion of which the U.S. Trustee appointed a three member official unsecured creditors committee (the Committee ). 3. As of the date hereof, no trustee or examiner has been appointed herein. 1

2 Document Page 2 of 5 B. The RBS-AF Equipment Lease 4. Prior to the Petition Date the Debtor and RBS-AF entered into the following agreements: a. Master Lease Agreement dated as of December 14, 2009 (the Master Lease Agreement ); b. Additional Security Agreement, dated as of December 14, 2009 (the RBS-AF Security Agreement ); and c. Lease Schedule No. 001, dated as of December 23, 2009, pursuant to which the Debtor leased certain telecommunications switching equipment (collectively, the Equipment ) from RBS-AF upon the terms and conditions set forth in the aforementioned documents. 5. Pursuant to the terms of the Master Lease Agreement and the RBS-AF Security Agreement, and to secure the Debtor s performance, the Debtor granted to RBS-AF a security interest in (a) the Equipment and (b) all of the Debtor s personal property. On January 13, 2010, RBS-AF duly and properly filed a financing statement under the Uniform Commercial Code with the Secretary of State of Delaware, as a result of which RBS-AF is a duly and properly perfected secured creditor of the Debtor in the chapter 11 case. 6. The Debtor has failed to pay when due the amounts arising under the Master Lease Agreement and Lease Schedule No. 001 for the months September 2011 through and including February The Debtor s failure to make the aforementioned lease payments constitutes a default under the Master Lease Agreement. Additionally, the Debtor s continuing payment failure gives rise to the following claims in favor of RBS-AF: (a) a secured claim in the full amount of the balance of the lease payments arising under the Master Lease Agreement and Lease Schedule No. 001, and (b) an administrative expense claim for the unpaid lease amounts for the period October 2011 through February C. The Debtor s Proposed Plan of Reorganization 7. On February 6, 2012, TNCI filed its proposed plan of reorganization (the Plan ) [D.R. No. 388], and related proposed disclosure statement (the Disclosure Statement ) [D.R. No. 389]. 2

3 Document Page 3 of 5 TNCI also filed a companion motion (the Disclosure Statement Motion ) [D.R. No. 390], seeking, among other things, (i) approval of the disclosure statement and (ii) approval of certain vote solicitation and related notice procedures in connection with plan confirmation. 8. Among other things, the Plan -- if confirmed 1 -- provides for the payment in full of administrative claims and certain secured creditors claims, including the RBS-AF secured claim. In that connection, the Plan proposes to separately classify the RBS-AF secured claim in Class 2, and treat said claim as follows 2 : a. In the Debtor s sole discretion, the RBS-AF secured claim will either (i) be re-financed and paid in full (no timetable provided) or (ii) be paid in full in monthly installments of principal and interest; b. Interest on the RBS-AF secured claim will be paid at a rate equal to the prime rate on the Effective Date (as defined in the Plan) plus 150 basis points; c. Principal will be repaid based on a twenty (20) year amortization, with all unpaid principal and interest due at the end of the 24 th month following the Effective Date. 3 D. Debtor s Rejection Motion 9. Pursuant to the Motion, the Debtor seeks an order approving its rejection of the Master Lease Agreement and Lease Schedule No. 001, respectively. In support of the Motion, the Debtor argues that it no longer needs the Equipment, and that as a matter of business judgment rejection should be approved. DEBTOR S REJECTION MOTION SHOULD BE DENIED 10. As noted above, the Debtor argues that it no longer needs the Equipment, and at the same time acknowledges RBS-AF s resulting secured claim (as set forth in the Plan), but nevertheless 1 RBS-AF hereby reserves any and all rights with respect to, inter alia, any and all claims it may have against the Debtor s Chapter11 estate, and any objections that it may have with regard to confirmation of the Plan, approval of the Disclosure statement, and/or approval of the Disclosure Statement Motion. 2 The description of the Plan treatment provided herein is presented in summary form only. The Court is respectfully referred to the Plan itself for a complete recitation of the proposed treatment of RBS-AF s Class 2 secured claim. 3 As an alternative to the foregoing treatment, the Plan provides that the interest rate, amortization and term will be determined by the Court. 3

4 Document Page 4 of 5 concludes that it will reap unspecified cash flow savings justifying rejection at this time. RBS-AF submits that the Debtor s business judgment in seeking rejection of the Master Lease Agreement and Lease Schedule No. 001, respectively, is suspect and fundamentally flawed. Moreover, based on certain representations made to RBS-AF in advance of the Debtor having filed the Motion, the Motion is at best incomplete, and at worst disingenuous. 11. In that regard, the Debtor has previously represented to RBS-AF that if the Debtor rejects the Master Lease Agreement and Lease Schedule No. 001, in order to maintain its operations the Debtor will need to replace the Equipment with comparable substitute switching equipment under a new lease agreement at a substantial cost. The Debtor omitted this critical fact from its presentation in the Motion. Assuming this to be the case, it is questionable whether the Debtor in fact reaps any benefit whether short or long term from the proposed rejection, particularly when one considers the aggregate cost of (a) the replacement equipment plus (b) payment in full of RBS-AF s resulting secured claim, plus (c) the required payment of RBS-AF s administrative claim. 12. RBS-AF submits that the Debtor s determination to reject the Master Lease Agreement and Lease Schedule No. 001 is not the product of sound business judgment, and moreover, is not in the best interests of the estate and its creditors. For these reasons, the Court should deny the Motion. [Continued Next Page] 4

5 Document Page 5 of 5 WHEREFORE, for the reasons set forth herein, RBS-AF respectfully submits that the Court should deny the Motion, and grant RBS-AF such other and additional relief as is just and proper. Dated: February 8, 2012 Respectfully Submitted, RIEMER & BRAUNSTEIN LLP By: /s/ Steven E. Fox Steven E. Fox Brett J. Nizzo Times Square Tower, Suite 2506 Seven Times Square New York, NY10036 (212) and - Steven T. Greene (BBO #210000) Three Center Plaza Boston, Massachusetts (617) Attorneys for RBS Citizens, N.A., successor by merger to Citizens Bank of Massachusetts

Case Doc 416 Filed 02/14/12 Entered 02/14/12 16:29:18 Desc Main Document Page 1 of 5

Case Doc 416 Filed 02/14/12 Entered 02/14/12 16:29:18 Desc Main Document Page 1 of 5 Document Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) In re: TRANS NATIONAL COMMUNICATIONS INTERNATIONAL, INC., Chapter 11 Case No. 1 1-19595-WCH Debtor. LIMITED