IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF WISCONSIN. Debtor in Possession.

Transcription

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF WISCONSIN In re: ARCHDIOCESE OF MILWAUKEE, Chapter 11 Bankruptcy Case No SVK Debtor in Possession. MOTION TO INCREASE FEE CAP FOR EMPLOYMENT OF BERKELEY RESEARCH GROUP, LLC, FINANCIAL ADVISOR FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS The Official Committee of Unsecured Creditors (the Committee ), by its attorneys, Pachulski Stang Ziehl & Jones LLP and Howard Solochek & Weber, S.C., hereby moves (the Motion ) for approval to raise the fee cap of the Committee s financial advisor, Berkeley Research Group, LLC ( BRG ), pursuant to section 328(a) of the United States Bankruptcy Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code ). In support of its motion, the Committee states the following: Jurisdiction 1. On January 4, 2011, the Archdiocese of Milwaukee (the Debtor ) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. James I. Stang (CA Bar No ) Kenneth H. Brown (CA Bar No ) Gillian N. Brown (CA Bar No ) Pachulski Stang Ziehl & Jones LLP Santa Monica Blvd., 13 th Floor Los Angeles, CA Telephone: (310) Facsimile: (310) jstang@pszjlaw.com kbrown@pszjlaw.com gbrown@pszjlaw.com Case svk Doc 3090 Filed 05/05/15 Page 1 of 8

2 2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157(a) and 1334, and such other sections as may be applicable. 3. This is a core proceeding under 28 U.S.C. 157(b)(1). This motion concerns the administration of the Debtor s estate pursuant to 28 U.S.C. 157(b)(2)(A). Introduction 4. The Committee files this Motion to raise BRG s fee cap by $300,000 to enable BRG to provide critical services in connection with the Committee s objections to the confirmation of the Debtor s anticipated, amended cram-down plan of reorganization (the Amended Plan ). BRG s work will relate primarily to the Debtor s proposed settlement of the Cemetery Trust Litigation. BRG has been integral to the Committee s analysis of the facts underlying the Cemetery Trust Litigation since that adversary proceeding was filed nearly four years ago. As part of the Committee s objection to the Debtor s cram-down Amended Plan, BRG will be required to: (i) analyze and evaluate issues involving the Amended Plan and the Cemetery Trust Litigation; (ii) prepare expert reports pursuant to Federal Rule of Civil Procedure 26; (iii) assist counsel in the preparation for and taking of percipient and expert witness depositions; (iv) prepare for and attend their own depositions; (v) assist in the preparation for evidentiary hearings, including cross examination of the Debtor s witnesses; and (vi) prepare for and testify at evidentiary hearing regarding financial issues. 5. In addition, BRG will continue its analysis of the Debtor s monthly financial reports, including requesting additional information from the Debtor to clarify 2 Case svk Doc 3090 Filed 05/05/15 Page 2 of 8

3 the Committee s concerns as they arise. BRG has made such requests as recently as mid- April None of the Committee s other professionals has either BRG s expertise in forensic accounting or BRG s knowledge of the financial issues in the Cemetery Trust Litigation. BRG is essential to the Committee s response to the Amended Plan. Factual Basis For Relief BRG has Served as the Committee s Financial Advisor for more than Four Years 7. BRG s knowledge of this bankruptcy case spans more than four years. On April 11, 2011, the Committee filed its Application Pursuant to Fed. R. Bankr. P for Entry of an Order Authorizing and Approving the Employment of Berkeley Research Group, LLC as Financial Advisor to the Committee Nunc Pro Tunc to March 3, On May 17, 2011, the Committee filed its First Amended Application Pursuant to Fed. R. Bankr. P for Entry of an Order Authorizing and Approving the Employment of Berkeley Research Group, LLC as Financial Advisor to the Committee Nunc Pro Tunc to March 3, On July 19, 2011, the Court entered an Order Granting the First Amended Application of the Official Committee of Unsecured Creditors Pursuant to Fed. R. Bankr. P for Entry of an Order Authorizing and Approving the Employment of Berkeley Research Group, LLC as Financial Advisor to the Official Committee of Unsecured Creditors Nunc Pro Tunc [Docket No. 337] (the Employment Order ). 3 Case svk Doc 3090 Filed 05/05/15 Page 3 of 8

4 9. The Employment Order contained a fee cap of $100, on BRG s fees. Pursuant to the Employment Order, if the fee cap was not sufficient an additional motion was to be filed. 10. On November 30, 2011, the Committee filed its Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Creditors [Docket No. 500]. On December 21, 2011, the Court entered its Order Granting Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Unsecured Creditors [Docket No. 517 ] (the First Fee Cap Order ). Pursuant to the First Fee Cap Order, BRG s fee cap was increased by $75,000 to a total fee cap of $175,000. Paragraph 2 of the First Fee Cap Order also provided that it was entered without prejudice to the Committee filing further motions seeking Court approval to raise BRG s fee cap. 11. On March 6, 2012, the Committee filed its Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Creditors [Docket No. 655]. On April 6, 2012, the Court entered its Order Granting Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Unsecured Creditors [Docket No. 714] (the Second Fee Cap Order ). Pursuant to the Second Fee Cap Order, BRG s fee cap was increased by $75,000 to a total fee cap of $250,000. Paragraph 2 of the Second Fee Cap Order also provided that it was entered without prejudice to the Committee filing further motions seeking Court approval to raise BRG s fee cap. 4 Case svk Doc 3090 Filed 05/05/15 Page 4 of 8

5 12. In spring 2014, the Committee required BRG to resume its work on the Cemetery Trust Litigation as part of the Committee s analysis of the then-pending plan of reorganization. On April 1, 2014, the Committee filed its Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Creditors [Docket No. 2611]. On April 24, 2014, the Court entered its Order Granting Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Unsecured Creditors [Docket No. 2651] (the Third Fee Cap Order ). Pursuant to the Third Fee Cap Order, BRG s fee cap was increased by $100,000 to a total fee cap of $350,000. As of March 31, 2015, BRG has exceeded that fee cap by $5, Paragraph 2 of the Third Fee Cap Order also provided that it was entered without prejudice to the Committee filing further motions seeking Court approval to raise BRG s fee cap. BRG s Work is Critical to the Committee s Response to Plan Confirmation 13. BRG s work has been critical to the Committee s analysis of the Cemetery Trust Litigation for nearly four years. Now, BRG s expertise is essential in formulating the Committee s objections to the Amended Plan, particularly demonstrating to the Court that the proposed compromise of the Cemetery Trust Litigation is not within the range of reasonableness. 14. Among other things, BRG s analysis and testimony are critical to the Committee s ability to demonstrate to the Court that the transferred funds were not held in trust at the time of the transfer in 2008; that no portion of the funds received from the 5 Case svk Doc 3090 Filed 05/05/15 Page 5 of 8

6 purchasers of burial and mausoleum sites were placed in a segregated account but rather were commingled with the Debtor s operating funds in a general operating account; and that the absence of records does not permit the Debtor to trace the commingled funds. 15. In addition, the Debtor contends that the present value cost of maintaining its cemeteries in perpetuity exceeds $246 million and that the dilution caused by this claim justifies the extinguishment of the estate s claims against the Cemetery Trust. BRG s analysis and testimony are critical to the Committee s ability to demonstrate to the Court that the Debtor is vastly overstating the value of the perpetual care claim. This will require further analysis of the Keegan Linscott & Kenon, P.C. reports from 2006 and 2013 upon which the Debtor relies, and analysis of additional financial data that the Debtor and the Cemetery Trust produce in discovery regarding cemetery revenues and expenses and historical returns on assets. WHEREFORE, the Official Committee of Unsecured Creditors requests that the Court enter an order increasing the fee cap for Berkeley Research Group, LLC by [remainder of page left intentionally blank] 6 Case svk Doc 3090 Filed 05/05/15 Page 6 of 8

7 $300,000 without prejudice to the Committee filing further motions seeking Court approval to raise BRG s fee cap. Dated: May 5, 2015 Respectfully submitted, PACHULSKI STANG ZIEHL & JONES LLP By /s/ Gillian N. Brown James I. Stang (CA Bar No ) Kenneth H. Brown (CA Bar No ) Gillian N. Brown (CA Bar No ) Pachulski Stang Ziehl & Jones LLP Santa Monica Blvd., 13 th Floor Los Angeles, CA Telephone: (310) Facsimile: (310) jstang@pszjlaw.com kbrown@pszjlaw.com gbrown@pszjlaw.com -and- Albert Solochek (State Bar No ) Jason R. Pilmaier (State Bar No ) Howard Solochek & Weber, S.C N. Farwell Ave., Suite 301 Milwaukee, WI Telephone: (414) Facsimile: (414) asolochek@hswmke.com jpilmaier@hswmke.com Attorneys for the Official Committee of Unsecured Creditors 7 Case svk Doc 3090 Filed 05/05/15 Page 7 of 8

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9 UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF WISCONSIN In re: Archdiocese of Milwaukee Case No SVK Chapter 11 Debtor in Possession, NOTICE OF MOTION TO INCREASE FEE CAP FOR EMPLOYMENT OF BERKELEY RESEARCH GROUP, LLC, FINANCIAL ADVISOR FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO: Interested Parties PLEASE TAKE NOTICE that the the Official Committee of Unsecured Creditors by its attorneys, Pachulski Stang Ziehl & Jones LLP and Howard, Solochek & Weber, S.C. ( HSW ) has filed a Motion to Increase Fee Cap for Employment of Berkeley Research Group, LLC, Financial Advisor for the Official Committee of Unsecured Creditors. Your rights may be affected. You should read these papers carefully and discuss them with your attorney, if you have one in this bankruptcy case. (If you do not have an attorney, you may wish to consult one.) If you do not want the Court to approve the application, or if you would like the Court to consider your views on it, then within 14 days of the date of this notice, you or your attorney must: Prepared By: Albert Solochek Jason R. Pilmaier 1845 N. Farwell Ave, Suite 301 Milwaukee, WI (414) Telephone (414) Facsimile alsolochek@hswmke.com jpilmaier@hswmke.com Case svk Doc Filed 05/05/15 Page 1 of 3

10 1. File with the court a written objection to the motion and a request for a hearing at: Clerk, U. S. Bankruptcy Court Room 126, Federal Courthouse 517 E. Wisconsin Avenue Milwaukee, WI If you mail your objection to the court for filing, you must mail it early enough so the court will receive it on or before the date stated above. You must also mail a copy to: Albert Solochek, Esq. Howard, Solochek & Weber, S.C N. Farwell Ave., Suite 301 Milwaukee, WI James I. Stang (CA Bar No ) Kenneth H. Brown (CA Bar No ) Gillian N. Brown (CA Bar No ) Pachulski Stang Ziehl & Jones LLP Santa Monica Blvd., 13 th Floor Los Angeles, CA If you mail your Response to the Court for filing, you must mail it early enough so the Court will receive it on or before the date stated above. If you or your attorney do not take these steps, the Court may decide that you do not oppose the motion and may enter an order approving it without further notice or hearing. Case svk Doc Filed 05/05/15 Page 2 of 3

11 Dated: May 5, 2015 Respectfully submitted, PACHULSKI STANG ZIEHL & JONES LLP By /s/gillian N. Brown James I. Stang (CA Bar No ) Kenneth H. Brown (CA Bar No ) Gillian N. Brown (CA Bar No ) Pachulski Stang Ziehl & Jones LLP Santa Monica Blvd., 13 th Floor Los Angeles, CA Telephone: (310) Facsimile: (310) and- Albert Solochek (State Bar No ) Jason R. Pilmaier (State Bar No ) Howard, Solochek & Weber, S.C. 324 E. Wisconsin Ave., Suite 1100 Milwaukee, WI Telephone: (414) Facsimile: (414) Attorneys for the Committee of Unsecured Creditors Case svk Doc Filed 05/05/15 Page 3 of 3