IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

Transcription

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 SP NEWSPRINT HOLDINGS LLC, et al., 1 Case No (CSS Debtors. Jointly Administered Hearing Date: March 5, 2012 at 10:00 a.m. (EST Objection Deadline: February 27, 2012 at 4:00 p.m. (EST NOTICE OF MOTION AND HEARING PLEASE TAKE NOTICE that, on February 13, 2012, the above-captioned debtors and debtors-in-possession (collectively, the Debtors filed the Debtors Motion to Establish Procedures for Sale or Abandonment of Certain De Minimis Assets (the Motion with the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court. PLEASE TAKE FURTHER NOTICE that any objections to the Motion must be filed in writing with the Bankruptcy Court, 824 N. Market Street, 3 rd Floor, Wilmington, Delaware 19801, and served upon and received by the undersigned counsel for the Debtors prior to February 27, 2012 at 4:00 p.m. (EST. PLEASE TAKE FURTHER NOTICE that if any objections to the Motion are received, the Motion and such objections shall be considered at a hearing before The Honorable Christopher S. Sontchi at the Bankruptcy Court, 824 N. Market Street, 5 th Floor, Courtroom 6, Wilmington, Delaware 19801, on March 5, 2012 at 10:00 a.m. (EST. 1 The Debtors in these Chapter 11 cases, along with the last four digits of each of the Debtors tax identification numbers, are: SP Newsprint Holdings, LLC (6180; SP Newsprint Co. LLC (7779; SP Recycling Corporation (2936; and SEP Technologies, L.L.C. (2955. RLF v. 1 Filed: 2/13/12 Dkt. No: 479

2 PLEASE TAKE FURTHER NOTICE THAT IF NO OBJECTIONS TO THE MOTION ARE TIMELY FILED, SERVED AND RECEIVED IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. Dated: February 13, 2012 Wilmington, Delaware Respectfully submitted, /s/ Lee E. Kaufman Mark D. Collins (No Lee E. Kaufman (No RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware Telephone: ( Facsimile: ( and- Joel H. Levitin Richard A. Stieglitz, Jr. Maya Peleg CAHILL GORDON & REINDEL LLP Eighty Pine Street New York, New York Telephone: ( Facsimile: ( Attorneys for the Debtors and Debtors-in-Possession RLF v. 1-2-

3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 SP NEWSPRINT HOLDINGS LLC, et al., 1 Case No (CSS Debtors. Jointly Administered Hearing Date: March 5, 2012 at 10:00 a.m. (EST Objection Deadline: February 27, 2012 at 4:00 p.m. (EST DEBTORS MOTION TO ESTABLISH PROCEDURES FOR SALE OR ABANDONMENT OF CERTAIN DE MINIMIS ASSETS The above-captioned debtors and debtors-in-possession (collectively, the Debtors, by and through their undersigned attorneys, hereby file this motion (the Motion for an order, pursuant to Bankruptcy Code 105, 363, and 554, authorizing the sale or abandonment, as the case may be, of certain de minimis assets. In support of the relief requested in this Motion, the Debtors respectfully represent as follows: JURISDICTION 1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b. Venue is proper before this Court pursuant to 28 U.S.C and The statutory predicates for the relief requested herein are Bankruptcy Code 105(a, 363(b, (f, and (m, and 554(a. 1 The Debtors in these Chapter 11 cases, along with the last four digits of each of the Debtors tax identification numbers, are: SP Newsprint Holdings, LLC (6180; SP Newsprint Co. LLC (7779; SP Recycling Corporation (2936; and SEP Technologies, L.L.C. (2955.

4 INTRODUCTION 2. On November 15, 2011, the Debtors filed with this Court separate, voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. On November 17, 2011, this Court entered an order [ECF No. 57] directing the joint administration of these cases. 3. The Debtors continue to manage their properties and operate their business as debtors-in-possession pursuant to Bankruptcy Code 1107 and No trustee or examiner has been appointed in these cases. 4. On November 29, 2011, the United States Trustee appointed an official committee (the Committee of unsecured creditors for these cases. 5. SP Newsprint Co., LLC, is one of the largest producers of newsprint in North America, operating two newsprint mills located in Dublin, Georgia, and Newberg, Oregon. SP Recycling Corporation was established in 1980 to secure a ready supply of recycled fiber for the Debtors, a key raw material for newsprint, and it currently has 23 recycling centers in nine states. 6. Like other companies in the newsprint and paper-related industries, a variety of external factors have led to a decline in the Debtors revenue over the last several years, while at the same time the cost of necessary raw materials has increased. In response, the Debtors undertook cost-cutting and other measures, but nonetheless, they fell out of compliance with certain covenants under their pre-petition credit agreement and have otherwise been in default thereunder since June The Debtors are currently conducting a going-concern sale process in an attempt to maximize enterprise value for the benefit of their creditors and other parties-ininterest. -2-

5 RELIEF REQUESTED 8. By this Motion, the Debtors seek authority, pursuant to Bankruptcy Code 105(a, 363(b, (f, and (m, and 554(a, to sell or abandon, as the case may be, certain property that they believe is of de minimis value in the context of these cases, free and clear of liens, claims, and encumbrances, without further Court approval, subject to the proposed procedures set forth below. FACTUAL BACKGROUND AND PROPOSED PROCEDURES 9. In the ordinary course of business, the Debtors accumulate certain miscellaneous assets, including, but not limited to, scrap metal, obsolete storeroom inventory, out-of-service equipment, junked mobile equipment, and automobile, computer and other machine parts. 2 Such inventory or property has become obsolete, worn out, and/or is no longer necessary for the Debtors business operations and, as such, is not material to the Debtors going-concern value, and the Debtors do not believe that any potential purchaser of their assets would have any significant interest in buying these de minimis assets. 10. To avoid the unnecessary costs and delays associated with obtaining specific Court authorization, on multiple occasions, for each proposed sale or abandonment of property, as the case may be, of relatively de minimis value, the Debtors propose the following procedures (the Sale and Abandonment Procedures for the sale or abandonment of property having an estimated book value of $50,000 or less: a. The Debtors would file and serve a notice ( Notice via , facsimile, or overnight delivery, as applicable and appropriate under the circumstances, to (i the United States Trustee, (ii counsel to the Committee, (iii counsel to General Electric Capital Corporation, agent for 2 During these cases, the Debtors have sold scrap metal and other material in the ordinary course of business in accordance with their past practices. -3-

6 the Debtors pre-petition and post-petition lenders ( GECC, and (iv any known party that the Debtors reasonably believe could claim an interest in the property proposed to be sold or abandoned (each a Notice Party and collectively, the Notice Parties for (i any asset proposed to be sold to an insider, as such term is defined in the Bankruptcy Code, 3 (ii any sale or abandonment of an asset with a book value of $30,000 or more, and (iii any sale to a buyer that when considered with previous purchases would result in a sale to such buyer of assets with an aggregate book value in an amount that would exceed $50,000. Each Notice would specify, among other things, the assets to be sold and the proposed sale price and any other material terms. b. No notice would be provided for asset sales to non-insiders with a purchase price that is less than $30,000 or abandonment of assets with a book value of less than $30,000; provided, however, that the Debtors would furnish a monthly schedule of all such assets sold or abandoned during the preceding month to the Notice Parties; provided further, however, that any such sale or abandonment; as applicable, effectuated under the Sale and Abandonment Procedures without notice would be approved by the Debtors Chief Restructuring Officer. c. The Notice Parties would have five business days from the date on which the Notice is filed and served to serve an objection to the proposed transaction upon counsel for the Debtors, Cahill Gordon & Reindel LLP, 80 Pine Street, New York, New York (Attn: Joel H. Levitin, Esq., Richard A. Stieglitz Jr., Esq., Maya Peleg, Esq., and Meghan McDermott, Esq. and Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware (Attn: Mark D. Collins, Esq. and Lee E. Kaufman, Esq.. If no written objection is received by counsel to the Debtors prior to the expiration of such five-day period, the Debtors would be authorized to consummate the proposed sale transaction or abandon the property, as applicable, and take such actions as are reasonable or necessary to close the transaction or effectuate the abandonment, as applicable. d. If a Notice Party properly and timely serves an objection to the Notice, the Debtors and the objecting Notice Party would use good-faith efforts to resolve the objection. If the Debtors and the objecting Notice Party are unable to achieve a consensual resolution, the Debtors would not proceed with the proposed transaction pursuant to these procedures, but would be 3 The Debtors do not anticipate that any abandonment would result in the abandoned asset becoming property of an insider. However, to the extent known at the time of abandonment, the Debtors would provide notice of any abandonment anticipated to result in the abandoned property becoming property of an insider. -4-

7 permitted to seek Court approval of the proposed transaction upon expedited notice, subject to this Court s availability. Nothing in the Sale and Abandonment Procedures would prevent the Debtors, in their discretion, from seeking the separate approval of this Court at any time of any proposed transaction upon notice and a hearing, independent of the Sale and Abandonment Procedures. BASIS FOR RELIEF The Debtors Should be Authorized to Sell and/or Abandon De Minimis Assets in Accordance with the Sale and Abandonment Procedures 11. Initially, Bankruptcy Code 363(b(1 provides that [t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate. 12. In determining whether to authorize the sale of property outside the ordinary course of business, courts require a debtor to show that a sound business purpose justifies such actions. Dai-Ichi Kangyo Bank, Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward Holding Corp., 242 B.R. 147,153 (D. Del. 1999; see also In re Del. & Hudson Ry. Co., 124 B.R. 169, 178 (D. Del (affirming decision permitting debtor to sell assets where sound business reasons supported the sale. When a sound business purpose exists, and the sale is made in good faith, a sale pursuant to Bankruptcy Code 363(b(1 should be approved. See In re Abbotts Dairies of Pa., Inc., 788 F.2d 143, (3d Cir (noting that when a court authorizes a sale of assets pursuant to Section 363(b(1, it is required to consider the good faith of the purchaser. 13. Moreover, pursuant to Bankruptcy Code 554(a, a debtor, after notice and a hearing... may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. The right to abandon property is generally -5-

8 broad, subject to narrow exceptions inapplicable here. Cf. Midatlantic Nat l Bank v. N.J. Dep t of Evnt., Prot., 474 U.S. 494, (1986 (holding that the bankruptcy trustee may not abandon environmentally contaminated property in contravention of state law that is reasonably designed to protect public health or safety. 14. Finally, Bankruptcy Code 105(a, which empowers a court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of the Bankruptcy Code would provide a further basis for approval of the Sale and Abandonment Procedures The Debtors submit that the sale and/or abandonment, as the case may be, of any property and/or assets under the Sale and Abandonment Procedures provides an efficient and cost-effective means of maximizing the value thereof, including a logical and fair way to dispose of assets that do not provide a benefit to the Debtors and, as such, is an exercise of the Debtors sound and prudent business judgment. Thus, the Debtors submit that these procedures are in the best interests of their respective estates, their creditors, and other parties-in-interest. 16. Obtaining this Court s approval, on the other hand, for each proposed sale or abandonment would result in unnecessary administrative costs attendant to drafting, serving, filing, and prosecuting related, necessary pleadings, which would significantly diminishing any potential recoveries on such assets for creditors. Moreover, the amount of proceeds generated by 4 The purpose of Bankruptcy Code 105(a is to ensure a bankruptcy court s power to take whatever action is appropriate or necessary in aid of the exercise of [its] jurisdiction. 2 Collier on Bankruptcy , at (16th rev. ed (footnote omitted, see also In re DeLorean Motor Co., 991 F.2d 1236, 1242 (6th Cir ( The basic purpose of [Section 105(a] is to enable the court to do whatever is necessary to aid its jurisdiction, i.e., anything arising in or relating to a bankruptcy case. (citation omitted; In re Joint E. & S. Dist. Asbestos Litig., 129 B.R. 710, 843 (E.D.N.Y. & S.D.N.Y ( [Section 105] has been construed to afford bankruptcy courts necessary flexibility to facilitate reorganizations. ; In re Cooper Props. Liquidating Trust, Inc., 61 B.R. 531, 537 (Bankr. W.D. Tenn. 1986; Mgmt. Tech. Corp. v. Pardo, 56 B.R. 337, 339 (Bankr. D.N.J

9 many of the Debtors de minimis assets would likely not warrant the incurrence of any such expenses, and in such cases, the Debtors submit that it is prudent for them to sell or abandon such assets under the Sale and Abandonment Procedures. Thus, the Debtors submit that the expedited procedures proposed herein would permit the Debtors to be responsive to the needs of interested purchasers and prevent lost sales due to delay and allow the Debtors to negotiate and sell assets in a relatively short timeframe. 17. The Debtors believe that the rights of other interested parties would be protected under the Sale and Abandonment Procedures, and therefore, no such parties would be prejudiced by the requested relief. Indeed, the Debtors would provide the Notice Parties with the opportunity to review and to object to any proposed sale to any insiders, as defined in the Bankruptcy Code, or any proposed sale for more than $30, This Court and others have granted similar relief. See, e.g., In re CB Holding Corp. et al., Case No (MFW (Bankr. D. Del. August 23, 2011 (approving abandonment procedures for de minimis assets with a book value of less than $10,000 and de minimis assets with a book value of $10,000 or more, and approving sale procedures for all de minimis assets; In re Orleans Homebuilders, Inc., et al., Case No (PJW (Bankr. D. Del. May 4, 2010 (approving procedures relating to sales of de minimis assets with a net cash purchase price of $25,000 or less; In re Nortel Networks, Inc. et al., Case No (KG (Bankr. D. Del. Feb. 18, 2009 (approving debtor s motion for sales of de minimis assets less than $10,000,000, and approving the sale of de minimis assets of less than $1,500,000 without being required to give notice; In re Sharper Image Corporation, Case No (KG (Bankr. D. Del. April 2, 2008 (approving debtor s motion for sales of de minimis assets less than $50,000 or $100,000 depending on the location of the assets; In re Semcrude L.P., et al., Case -7-

10 No (BLS (Bankr. D. Del. Dec. 8, 2008 (approving procedures for the sale of assets up to $100,000; In re Federal Mogul Global Inc., T&N Limited, et al., Case No (RJN (Bankr. D. Del Feb. 11, 2002 (approving the debtor s motion for sales of de minimis assets less than $5,000,000 or $10,000,000 depending on the entity they are sold to; see also In re Lehman Brothers Inc., Case No (JMP SIPA (Bankr. S.D.N.Y. Nov. 24, 2008; In re Westpoint Stevens Inc., et al., Case No (RDD (Bankr. S.D.N.Y. August. 14, 2003 (approving abandonment procedures. The De Minimis Assets Should be Sold Free of Liens, Claims, and Encumbrances 19. In accordance with Bankruptcy Code 363(f, a debtor may sell property free and clear of any interest in such property of an entity other than the estate if any one of the following conditions is satisfied: a. applicable nonbankruptcy law permits the sale of such property free and clear of such interest; b. the [lienholder or claimholder] consents; c. such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; d. such interest is in bona fide dispute; or e. [the lienholder or claimholder] could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. Because Section 363(f is stated in the disjunctive, satisfaction of any one of its five requirements would suffice to warrant approval of any sales effectuated under the Sale and Abandonment Procedures, free and clear of liens, claims, encumbrances, attachments, and other interests, with any such interests to attach to the applicable sale proceeds. See Folger Adam Sec. Inc. v. De Matties/McGregor JV, 209 F.3d 252, 257 (3d Cir (discussing how Section -8-

11 363(f authorizes sale of debtor s assets free and clear of all liens, claims, and interests if any one of [the] five prescribed claims is met ; In re Kellstrom Indus., Inc., 282 B.R. 787, 793 (Bankr. D. Del (property may be sold free and clear if at least one of the subsections of Section 363(f is met; In re DVI, Inc., 306 B.R. 496, 503 (Bankr. D. Del (same; see also Michigan Employment Sec. Comm n v. Wolverine Radio Co. (In re Wolverine Radio Co., 930 F.2d 1132, 1147 n.24 (6th Cir. 1991, cert. dismissed, 503 U.S. 987 (1992 (same. 20. The Debtors believe that one or more of these requirements would be satisfied in connection with each proposed sale under the Sale and Abandonment Procedures: (a (b (c The Debtors believe that their pre- and post-petition lenders would consent to the Debtors proposed sales under the Sale and Abandonment Procedures and, if not, would have the opportunity to object to any such sales. Moreover, if a holder of a lien, claim, encumbrance, or other interest or purported right receives notice of a proposed sale under the Sale and Abandonment Procedures and does not object in accordance therewith, such holder would be deemed to have consented to the sale free and clear on that basis alone. See, e.g., Veltman v. Whetzel, 93 F.3d 517 (8th Cir (failure to object to notice of sale or attend hearing deemed consent to sale for purposes of Bankruptcy Code 363; In re Elliot, 94 B.R. 343, 345 (E.D. Pa ( implied consent was sufficient to satisfy the consent requirement of Bankruptcy Code 363(f(2; In re Enron Corp., 2004 WL , at *2 (Bankr. S.D.N.Y. Feb. 5, 2004 (same; Hargrave v. Pemberton (In re Tabore, Inc., 175 B.R. 855 (Bankr. D. N.J (same. Additionally, Bankruptcy Code 363(f(l allows a sale to proceed free and clear of liens if the power to sell free and clear exists outside the bankruptcy context in another body of law. The existence of such ability would be unquestionable for each proposed sale, such as under state law foreclosure statutes. See Precision Indus. Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537, 545 (7th Cir. 2003, rev g Precision Indus., Inc. v. Qualitech Steel SBQ, LLC, No , 2001 WL (S.D. Ind. Apr. 24, -9-

12 2001 (finding that property sold pursuant to Section 363(f(1 on account of state foreclosure law was sold free and clear of lessee s possessory interest in property. (d Finally, because the Debtors secured creditors may be required to accept money damages in exchange for any interests in the property that would be sold under the Sale and Abandonment Procedures, Bankruptcy Code 363(f(5 would be satisfied in each instance. See In re Trans World Airlines, 322 F.3d 283, (3d Cir (property sold free and clear of interests when claims were subject to monetary valuation and satisfaction. Indeed, because the de minimis assets would be sold for what the Debtors believe to be the best price possible, the holders of any liens thereon could be compelled to accept money in satisfaction of such liens or object to the proposed sales under the Sale and Abandonment Procedures. See In re WPRV-TV, Inc., 143 B.R. 315, 321 (D.P.R. 1991, vacated on other grounds, 165 B.R. 1 (D.P.R. 1992, aff'd in part, rev d in part, 983 F.2d 336 (1st Cir (where properties... sold for the best price obtainable under the circumstances, and the liens will attach to the sale proceeds, the proposed sale [satisfies Bankruptcy Code 363(f(5] and may be approved. 21. Thus, the Debtors submit that at least one (if not more of the subsections of Bankruptcy Code 363(f will be satisfied for any sales under the Sale and Abandonment Procedures, such that this Court should approve those sales free and clear of interests. To the extent any appropriate party objects to any such sale being free and clear, and the Debtors and such party cannot reach a resolution in accordance with the Sale and Abandonment Procedures, this Court would be able to consider that issue at a subsequently-scheduled hearing. Buyers of De Minimis Assets Should be Deemed Good-Faith Purchasers 22. The Debtors request that this Court find and hold that all purchasers are entitled to the protections afforded by Bankruptcy Code 363(m, which provides: The reversal or modification on appeal of an authorization under subsection (b or (c of [Section 363] of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such -10-

13 property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal. The Debtors submit that this relief is appropriate in light of the opportunity of the Notice Parties to review and object to sales to insiders and sales that exceed $30,000, see Esposito v. Title Ins. Co. (In re Fernwood Market, 73 B.R. 616, 620 (Bankr. E.D. Pa (good-faith purchasers are protected under Section 363(m where notice is provided to lienholders, and to the extent the Debtors learn of any information that makes them believe that a proposed purchaser is not a good-faith buyer, they would inform this Court and seek to have any related sale approved by a separate motion. 23. Thus, the Debtors submit that the Sale and Abandonment Procedures, and the ultimate sales and/or abandonment of property pursuant thereto, as the case may be, are consistent with an exercise of the Debtors sound and prudent business judgment, are fair and appropriate under the circumstances, as the Debtors balance the need for an expeditious realization of value and/or reduction of burdensome costs to their estates, and provide for the efficient administration of these cases. Accordingly, the Debtors submit that the requested relief is in their best interest and the best interests of their estates and creditors and, therefore, should be granted. REQUEST FOR WAIVER OF STAY 24. As set forth above, any delay in the ability to sell de minimis assets under the Sale and Abandonment Procedures would be detrimental to the Debtors, their creditors, and their estates. Accordingly, to the extent applicable, the Debtors seek a waiver of the 14-day stay of any order approving this Motion and request that each sale and/or abandonment, as the case -11-

14 may be, consummated in connection with the Sale and Abandonment Procedures be deemed immediately approved when consummated thereunder. NOTICE 25. Notice of this Motion has been given, in accordance with the Bankruptcy Rules and the Local Rules, via first-class mail service, , facsimile, and/or hand delivery, as appropriate, to the United States Trustee; counsel to GECC; counsel to the Committee; counsel to the Debtors management company; and any parties that have filed notices of appearance and requested service of pleadings in these cases. The Debtors submit that no other or further notice need be given under the circumstances of these cases. NO PREVIOUS REQUEST 26. No previous request for the relief sought herein has been made to this Court or to any other court. [remainder of page intentionally left blank] -12-

15 CONCLUSION WHEREFORE, the Debtors request entry of an order, substantially in the form attached hereto as Exhibit A, granting the relief requested herein and such other and further relief as is just and proper under the circumstances. Dated: February 13, 2012 Wilmington, Delaware Respectfully submitted, /s/ Lee E. Kaufman Mark D. Collins (No Lee E. Kaufman (No RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware Telephone: ( Facsimile: ( and- Joel H. Levitin Richard A. Stieglitz Jr. Maya Peleg Meghan McDermott CAHILL GORDON & REINDEL LLP Eighty Pine Street New York, New York Telephone: ( Facsimile: ( Attorneys for the Debtors and Debtors-in-Possession -13-

16 EXHIBIT A Proposed Form of Order

17 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 SP NEWSPRINT HOLDINGS LLC, et al., 1 Case No (CSS Debtors. Jointly Administered Re: ECF No. ORDER ESTABLISHING PROCEDURES FOR SALE OR ABANDONMENT OF CERTAIN DE MINIMIS ASSETS Upon the motion (the Motion 2 of the Debtors for an order, pursuant to Bankruptcy Code 105, 363, and 554, authorizing the sale and/or abandonment, as the case may be, of certain de minimis assets, free and clear of liens, claims, and encumbrances, without further Court approval, and establishing and approving the Sale and Abandonment Procedures, all as more fully described in the Motion and detailed below; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. 157 and 1334; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b; and the Court having found that good and sufficient cause exists for granting the Motion; and it appearing that establishing the Sale and Abandonment Procedures and effectuating sales of certain de minimis assets thereunder is within the Debtors sound business judgment; and any abandonment of de minimis assets effectuated under the Sale and Abandonment Procedures being appropriate under Bankruptcy Code 363 and 554; and upon the record of these Chapter 11 cases and any hearings held to consider the Motion; and it 1 2 The Debtors in these Chapter 11 cases, along with the last four digits of each of the Debtors tax identification numbers, are: SP Newsprint Holdings LLC (6180; SP Newsprint Co., LLC (7779; SP Recycling Corporation (2936; and SEP Technologies, L.L.C. (2955. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Motion.

18 appearing that the relief requested in the Motion is appropriate in the context of these cases and in the best interests of the Debtors and their respective estates, creditors, and all other parties-ininterest; and it appearing that notice of the Motion and the relief requested therein was adequate and proper under the circumstances of these Chapter 11 cases, and it appearing that no other or further notice need be given IT IS HEREBY ORDERED THAT: 1. The Motion is granted as set forth herein. 2. Pursuant to Bankruptcy Code 105(a, 363(b, (f, and (m, and 554(a, the Debtors are authorized to sell or abandon de minimis assets, as the case may be, having an estimated book value of $50,000 or less, in accordance with the following procedures: a. The Debtors shall file and serve a Notice via , facsimile, or overnight delivery, as applicable and appropriate under the circumstances, to the Notice Parties for (i any asset proposed to be sold to an insider, as such term is defined in the Bankruptcy Code, (ii any sale or abandonment of an asset with a book value of $30,000 or more, and (iii any sale to a buyer that when considered with previous purchases would result in a sale to such buyer of assets with an aggregate book value in an amount that exceeds $50,000. Each Notice would specify, among other things, the assets to be sold and the proposed sale price and any other material terms. b. No notice must be provided for asset sales to non-insiders with a purchase price that is less than $30,000 or abandonment of assets with a book value of less than $30,000; provided, however, that the Debtors must furnish a monthly schedule of all such assets sold or abandoned during the preceding month to the Notice Parties; provided further, however, that any such sale or abandonment, as applicable, effectuated under the Sale and Abandonment Procedures without notice shall be approved by the Debtors Chief Restructuring Officer. c. The Notice Parties shall have five business days from the date on which the Notice, as applicable, is filed and served to serve an objection to the proposed transaction upon counsel for the Debtors, Cahill Gordon & Reindel LLP, 80 Pine Street, New York, New York (Attn: Joel H. Levitin, Esq., Richard A. Stieglitz Jr., Esq., Maya Peleg, Esq., and Meghan McDermott, Esq. and Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware

19 (Attn: Mark D. Collins, Esq. and Lee E. Kaufman, Esq.. If no written objection is received by counsel to the Debtors prior to the expiration of such five-day period, the Debtors shall be authorized to consummate the proposed sale transaction or abandon the property, as applicable, and take such actions as are reasonable or necessary to close the transaction or effectuate the abandonment, as applicable. d. If a Notice Party properly and timely serves an objection to the Notice, the Debtors and the objecting Notice Party shall use good-faith efforts to resolve the objection. If the Debtors and the objecting Notice Party are unable to achieve a consensual resolution, the Debtors may not proceed with the proposed transaction pursuant to these procedures, but shall be permitted to seek Court approval of the proposed transaction upon expedited notice, subject to this Court s availability. 3. Nothing in the Sale and Abandonment Procedures shall prevent the Debtors, in their sole discretion, from seeking the separate approval of this Court at any time of any proposed sale or abandonment transaction, as the case may be, upon notice and a hearing, independent of the Sale and Abandonment Procedures. 4. Pursuant to Bankruptcy Code 363(f, all sales of property pursuant to this Order and the Sale and Abandonment Procedures shall be free and clear of all liens, claims, and encumbrances, with any liens, claims, and encumbrances to attach to the proceeds of any applicable sale. 5. Purchasers of property sold by the Debtors pursuant to this Order shall be entitled to the protections afforded by Bankruptcy Code 363(m in the event of a reversal or modification on appeal of this Order or any sale consummated hereunder; provided, however, that, to the extent the Debtors believe that any such purchasers are not good-faith purchasers under Section 363(m, the Debtors will seek separate approval for the applicable sale and shall not proceed with such sale under the Sale and Abandonment Procedures. 7. The Debtors are authorized and empowered to take any and all actions necessary to implement the terms of this Order. -3-

20 8. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry, notwithstanding any applicability of Bankruptcy Rule 6004(h, and any sales consummated under the Sale and Abandonment Procedures shall be deemed immediately approved. 9. This Court shall retain jurisdiction over all matters arising from or related to the interpretation and implementation of this Order. Dated:, 2012 Wilmington, Delaware THE HONORABLE CHRISTOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE -4-