Case BLS Doc 744 Filed 02/10/17 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE.

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1 Case BLS Doc 744 Filed 02/10/17 Page 1 of 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: PHOENIX BRANDS LLC, et al., 1 Debtors. Chapter 11 Case No (BLS) (Jointly Administered) Hearing Date: February 27, 2017 Docket Ref. Nos.: 715, 716, 717, 718, 721, 722, 723, 724, 726 and 727 OMNIBUS RESERVATION OF RIGHTS OF INTERNATIONAL PAPER COMPANY WITH RESPECT TO THE FEE APPLICATIONS OF PROFESSIONALS International Paper Company ( International Paper )submits this omnibus reservation of rights (the Omnibus Reservation of Rights ) with respect to the following fee applications filed by various professionals: Seventh Monthly Application for Compensation for Services Rendered and Reimbursement of Expenses of Pachulski Stang Ziehl & Jones LLP, as Co- Counsel for the Debtors for the period from November 1, 2016 through November 30, 2016 [Docket No. 715] (the Seventh Monthly Pachulski Stang Fee Application ), the Eighth Monthly Application for Compensation for Services Rendered and Reimbursement of Expenses of Pachulski Stang Ziehl & Jones LLP, as Co-Counsel for the Debtors for the period from December 1, 2016 through December 27, 2016 [Docket No. 716] (the Eighth Monthly Pachulski Stang Fee Application ), the Final Application for Compensation for Services Rendered and Reimbursement of Expenses of Pachulski Stang Ziehl & Jones LLP, as Co- Counsel for the Debtors for the period from May 19, 2016 through December 27, 2016 [Docket No. 717] (the Final Pachulski Stang Fee Application ), the Sixth Monthly Application for 1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Phoenix Brands LLC, (4609); Phoenix Brands Parent LLC, (8729); Phoenix North LLC, (no FEIN); and Phoenix Brands Canada ULC (a Novia Scotia Company). The address of each of the Debtors is 1 Landmark Square, Suite 1810, Stamford, CT 06901, except Phoenix Brands Canada ULC, which is Box 50, 1 First Canadian Place, Toronto, Ontario, Canada MSX 1B8.

2 Case BLS Doc 744 Filed 02/10/17 Page 2 of 7 Compensation for Services Rendered and Reimbursement of Expenses of Morrison Cohen LLP, as Counsel to the Debtors for the period from November 1, 2016 through December 27, 2016 [Docket No. 718] (the Sixth Monthly Morrison Cohen Fee Application ), the Consolidated Sixth Monthly and Final Fee Application for Compensation and Reimbursement of Expenses of Saul Ewing, LLP, as Counsel to the Official Committee of Unsecured Creditors for the periods from November 1, 2016 through December 27, 2016 and June 1, 2016 through December 27, 2016 [Docket No. 721] the ( Sixth Monthly and Final Saul Ewing Fee Application ), the Final Fee Application of Houlihan Lokey Capital, Inc., as Investment Banker to the Debtors for the Period from May 19, 2016 through August 31, 2016 [Docket No. 722] (the Final Houlihan Lokey Fee Application ), the Final Application for Compensation for Services Rendered and Reimbursement of Expenses of Morrison Cohen LLP, as Counsel to the Debtors for the period from May 19, 2016 through December 27, 2016 [Docket No. 723] (the Final Morrison Cohen Fee Application ), the Final Application for Compensation for Services Rendered and Reimbursement of Expenses of Deloitte Financial Advisory Services LLP as Financial Advisor to the Official Committee of Unsecured Creditors for the period from June 2, 2016 through October 31, 2016 [Docket No. 724] (the Final Deloitte Fee Application ), the Consolidated Fourth Monthly and Final Application of Osler, Hoskin & Harcourt LLP, as Canadian Counsel to the Debtors for the periods from September 1, 2016 through December 27, 2016 and May 19, 2016 through December 27, 2016 [Docket No. 726] the Fourth Monthly and Final Osler Fee Application ), and the Final Application for Compensation for Services Rendered and Reimbursement of Expenses of Getzler Henrich & Associates LLC, as Financial Advisor to the Debtors for the period from May 19, 2016 through December 27, 2016 [Docket No. 727] (the Final Getzler Fee Application, and together with the Seventh Monthly Pachulski Stang Fee Application, Eighth Monthly Pachulski Stang Fee Application, the Final Pachulski Stang Fee Application, the Sixth Monthly Morrison Fee Application, the Sixth Monthly and Final Saul Ewing Fee Application, the Final Houlihan Lokey Fee Application, the Final Morrison Cohen Fee Application, the Final Deloitte Fee Application, the Fourth Monthly and Final Osler Fee -2-

3 Case BLS Doc 744 Filed 02/10/17 Page 3 of 7 Application, the Professionals Fee Applications ). In support of this Omnibus Reservation of Rights, International Paper respectfully represents as follows: BACKGROUND 1. On May 19, 2016 (the Petition Date ), the Debtors filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of Delaware (the Court ). 2. The Debtors continue to operate their businesses and manage their properties as debtors-in-possession. No trustee or examiner has been appointed in these cases. 3. On June 1, 2016, the Official Committee of Unsecured Creditors (the Committee ) was appointed by the Office of the United States Trustee for the District of Delaware. 4. On June 30, 2016, International Paper filed a reservation of rights [Docket No. 232] with respect to the Motion of the Debtors for an Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals [Docket No. 7], in which International Paper asserted that it had claims arising under 503(b)(9) of the Bankruptcy Code amounting to approximately $107, On January 23, 2017, the Seventh Monthly Pachulski Stang Fee Application was filed. 6. On January 24, 2017, the Eighth Monthly Pachulski Stang Fee Application, the Final Pachulski Stang Fee Application, and the Sixth Monthly Morrison Cohen Fee Application were all filed. 7. On January 25, 2017, the Sixth Monthly and Final Saul Ewing Fee Application and the Final Houlihan Lokey Fee Application were both filed. 8. On January 26, 2017, the Final Morrison Cohen Fee Application, the Final -3-

4 Case BLS Doc 744 Filed 02/10/17 Page 4 of 7 Deloitte Fee Application, the Fourth Monthly and Final Osler Fee Application, and the Final Getzler Fee Application were all filed. RESERVATION OF RIGHTS 9. While International Paper does not per se oppose payment of the fees and expenses set forth in the Professionals Fee Applications, it does want to ensure that payment of such fees and expenses in no way compromises its own ability to be fully paid on account of its section 503(b)(9) claim. At a minimum, International Paper s section 503(b)(9) claim must be treated pari passu with other administrative claims in these cases, including claims for professional fees. 10. An examination of the applicable law reveals the settled principle that all administrative expenses are on an equal footing. Accordingly, section 503(b)(9) claims should be treated just as any other administrative expense. See generally In re Plastech Eng g, 394 B.R. 147 (Bankr. E.D. Mich. 2008) (rejecting application of section 502(d) of the Bankruptcy Code to section 503(b)(9) administrative expenses because such claims should be treated like any other administrative claim); see also In re HQ Global Holdings, Inc., 282 B.R. 169, 173 (Bankr. D. Del. 2002) ( distributions prior to confirmation of a plan are usually disallowed when the estate may not be able to pay all administrative claims in full ) (citing In re Standard Furniture, 3 B.R. 527, 532 (Bankr. S.D. Cal. 1980)). 11. By way of illustration, in In re Townsends, Inc., et al., Case No (CSS) (Bankr. D. Del.), the committee objected to the entry of a final DIP financing order, arguing, in part, that the debtors chapter 11 cases were administratively insolvent because the budget did not include sufficient funding to pay all the administrative claims. Of particular concern to the Townsends court was the fact that the debtors had proposed to pay most administrative claims in full with the exception of section 503(b)(9) claims. After learning that the budget only -4-

5 Case BLS Doc 744 Filed 02/10/17 Page 5 of 7 provided $1.8 million for payment of an estimated $16 million in 503(b)(9) claims, the court stated as follows: Well, we ve got a problem. Not going to run an administratively insolvent estate. There are benefits to the current administrative claims that are accruing. There are benefits to the unsecured creditors. But it can t be done on the back of the 503(b)(9) admin claims, which are admin claims. Congress has made that determination. So certainly I would have a problem running any case that was administratively insolvent. But one that is both administratively insolvent and prefers one set of administrative creditors over another is doubly troubling. So that s -- well, I m not going to do it.... [T]o go in with a path forward that indicates... that a certain type of administrative expense claim won t get paid in full but yet others will, I just I can t run that kind of case. Hearing Transcript, In re Townsends, Inc., et al., Case No (CSS) (Bankr. D. Del.), Jan. 21, 2011 at 23:25 24:9; 24: This is not a new or novel principle. In In re Chips N Twigs, Inc., 58 B.R. 109 (Bankr. E.D. Pa. 1986), for example, the court denied applications for payment of administrative expense claims both by a creditor that supplied goods in the ordinary course of business to the debtor after the filing of the petition 58 B.R. at 112. See also In re Western Farmers Assoc., 13 B.R. 132, 136 (Bankr. W.D. Wa. 1981) (holding that [a]ll expenses of administration, including those granted under Section 546(c) 2 are on a parity ); In re Gherman, 114 B.R. 305 (Bankr. S.D. Fla. 1990) (interim compensation would be allowed, subject to duty to later disgorge such 2 Prior to 2005, section 546(c) provided that: (c) Except as provided in subsection (d) of this section, the rights and powers of a trustee under sections 544(a), 545, 547, and 549 of this title are subject to any statutory or common-law right of a seller of goods that has sold goods to the debtor, in the ordinary course of such seller's business, to reclaim such goods if the debtor has received such goods while insolvent, but- (1) such a seller may not reclaim any such goods unless such seller demands in writing reclamation of such goods- (A) before 10 days after receipt of such goods by the debtor; or (B) if such 10-day period expires after the commencement of the case, before 20 days after receipt of such goods by the debtor; and (2) the court may deny reclamation to a seller with such a right of reclamation that has made such a demand only if the court - (A) grants the claim of such a seller priority as a claim of a kind specified in section 503(b) of this title; or (B) secures such claim by a lien. -5-

6 Case BLS Doc 744 Filed 02/10/17 Page 6 of 7 amounts if it is determined that insufficient funds existed to similarly pay other administrative claims); Stump v. Creel & Atwood, P.C. (In re Lockwood Corp.), 216 B.R. 628, 635 (Bankr. D. Neb. 1997) ( [t]he clear majority of courts that have addressed this issue have uniformly held a cause of action for disgorgement does exist if the chapter 7 estate is administratively insolvent ); In re Vernon Sand & Gravel, 109 B.R. 255 (Bankr. N.D. Ohio 1989) (bankruptcy court can require professional fees to be disgorged to achieve prorated deduction when, upon conversion of Chapter 11 case to Chapter 7, there are insufficient funds to pay Chapter 11 administrative expenses). 13. For the above reasons, International Paper submits that its administrative claim must be paid in full, or at a minimum, treated pari passu with other administrative claims in these cases, such as the current claims for professional fees. 14. International Paper reserves the right to revise, amend or supplement this Omnibus Reservation of Rights at any time. CONCLUSION 15. International Paper respectfully submits that the payment of any fees and expenses pursuant to the Professionals Fee Applications should in no way compromise International Paper s ability to be fully paid on account of its 503(b)(9) claim. At a minimum, International Paper s 503(b)(9) claim should be treated pari passu with other administrative claims in these cases, including claims for professional fees. In the event its 503(b)(9) claim is not paid in full, International Paper reserves all of its rights to seek reallocation or disgorgement -6-

7 Case BLS Doc 744 Filed 02/10/17 Page 7 of 7 of any professional fees paid pursuant to the Professionals Fee Applications. Dated: February 9, 2017 Respectfully submitted, LOWENSTEIN SANDLER LLP Kenneth A. Rosen Nicole M. Fulfree 65 Livingston Avenue Roseland, New Jersey Telephone: (973) Facsimile: (973) and -- STEVENS & LEE /s/joseph H. Huston, Jr. Joseph H. Huston, Jr. (No. 4035) 919 North Market Street, Suite 1300 Tel: (302) Fax: (610) jhh@stevenslee.com Counsel for International Paper -7-

8 Case BLS Doc Filed 02/10/17 Page 1 of 4 CERTIFICATE OF SERVICE Joseph H. Huston, Jr., certifies that on February 10, 2017, he caused a true copy of the foregoing Omnibus Reservation of Rights of International Paper Company With Respect to the Fee Applications of Professionals to be served on all parties in interest electronically through the Court's CM/ECF System; and additionally upon the parties on the attached service list in the manners recited. /s/ Joseph H. Huston, Jr. Joseph H. Huston, Jr.

9 Case BLS Doc Filed 02/10/17 Page 2 of 4 SERVICE LIST Richard EF Valitutto XPO LOGISTICS WORLDWIDE, INC Piedmont Pkwy. High Point, NC richard.valitutto@xposc.com Mark J. Baiocchi, Esquire THE LAW OFFICES OF MARK J. BAIOCCHI 1755 S. Naperville Road, Suite 100 Wheaton, IL mbaiocchi@baiocounsel.com COUNSEL FOR DS CONTAINERS, INC. Ronda L. Hale Tammy Alstadt BERRY PLASTICS CORPORATION 101 Oakley Street Evansville, IN rondahale@berryplastics.com tammyaltstadt@berryplastics.com Robert K. Dakis, Esquire David J. Kozlowski, Esquire Jack Levy, Esquire Joseph T. Moldovan, Esquire MORRISON COHEN LLP 909 Third Avenue New York, NY rdakis@morrisoncohen.com dkozlowski@morrisoncohen.com jlevy@morrisoncohen.com jmoldovan@morrisoncohen.com COUNSEL FOR THE DEBTORS Via Electronic Mail: Deborah Fletcher, Esq. FISHERBROYLES, LLP 6000 Fairview Road, Suite 1200 Charlotte, NC deborah.fletcher@fisherbroyles.com COUNSEL FOR XPO LOGISTICS WORLDWIDE, INC. Keith Porapaiboon AKZO NOBEL SURFACE CHEMISTRY LLC 525 West Van Buren, Suite 1600 Chicago, IL keith.porapaiboon@akzonobel.com Via Electronic Mail: Sharon Levine, Esquire Mark Minuti, Esquire Luke Murley, Esquire SAUL EWING LLP 1201 North Market Street Suite slevine@saul.com mminuti@saul.com: lmurley@saul.com COUNSEL FOR THE COMMITTEE Laura Davis Jones, Esquire Joseph M Mulvihill, Esquire PACHULSKI STANG ZIEHL & JONES LLP 919 N. Market Street, 17th Floor ljones@pszjlaw.com jmulvihill@pszjlaw.com COUNSEL FOR THE DEBTORS

10 Case BLS Doc Filed 02/10/17 Page 3 of 4 Zachary J. Garrett, Esquire Dimitri G. Karcazes, Esquire GOLDBERG KOHN LTD. 55 East Monroe Street Suite 3300 Chicago, IL zachary.garrett@goldbergkohn.com dimitri.karcazes@goldbergkohn.com COUNSEL FOR MADISON CAPITAL FUNDING LLC Hannah Mufson McCollum, Esquire OFFICE OF THE UNITED STATES TRUSTEE U. S. Department of Justice 844 King Street, Suite 2207 Lockbox #35 hannah.mccollum@usdoj.gov Via Electronic Mail: RUST CONSULTING/OMNI BANKRUPTCY 5955 DeSoto Avenue Suite 100 Woodland Hills, CA bosborne@omnimgt.com CLAIMS AGENT Marcy J. McLaughlin, Esquire MORRIS, NICHOLS, ARSHT & TUNELL 1201 N. Market Street P.O. Box 1347 Wilmington, DE mmclaughlin@mnat.com COUNSEL FOR MADISON CAPITAL FUNDING LLC MADISON CAPITAL FUNDING Attn: Accounts Manager, Phoenix Brands 30 South Wacker Drive, Suite 3700 Chicago, IL Mark Wiklund INTERNATIONAL PAPER 1740 International Dr. Memphis, TN mark.wiklund@ipaper.com Jeremy W. Ryan, Esquire R. Stephen McNeill, Esquire POTTER ANDERSON & CORROON LLP 1313 North Market Street, Sixth Floor P.O. Box 951 Wilmington, DE jryan@potteranderson.com rmcneill@potteranderson.com COUNSEL TO SS ROBIN OPERATING, LLC Vadim J. Rubinstein, Esquire LOEB & LOEB LLP 345 Park Avenue New York, NY vrubinstein@loeb.com COUNSEL TO SS ROBIN OPERATING, LLC -2-

11 Case BLS Doc Filed 02/10/17 Page 4 of 4 LINCOLNSHIRE MANAGEMENT, INC. Attn: President or Legal Department 780 Third Avenue, 40th Floor New York, NY Domenic E. Pacitti, Esquire KLEHR HARRISON HARVERY BRANZBURG LLP 919 Market Street, Suite INTERNAL REVENUE SERVICE Centralized Insolvency Operation P.O. Box 7346 Philadelphia, PA MONZACK MERSKY MCLAUGHLIN & BROWDER, P.A. Attn: Rachel B. Mersky 1201 N. Orange Street, Suite 400 David M. Klauder, Esquire BIELLI & KLAUDER, LLC 1204 N. King Street Morton R. Branzburg, Esquire KLEHR HARRISON HARVERY BRANZBURG LLP 1835 Market Street Philadelphia, PA KIRKLAND & ELLIS LLP Attn: John T. Weber 601 Lexington Avenue New York, NY U.S. ATTORNEY'S OFFICE P.O. Box Market St., Suite 1100 Wilmington, DE