Case BLS Doc 1468 Filed 04/23/14 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case BLS Doc 1468 Filed 04/23/14 Page 1 of 5 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: REVSTONE INDUSTRIES, LLC, et al 1 Debtors. Chapter 11 (Jointly Administered) Case No (BLS) Hearing Date: April 30, 2014 at 10:00 a.m. (ET) OBJECTION OF THE PENSION BENEFIT GUARANTY CORPORATION TO MOTION OF THE COMMITTEE OF UNSECURED CREDITORS FOR ENTRY OF AN ORDER AUTHORIZING AND DIRECTING THE U.S. TRUSTEE TO RECONSTITUTE THE UNSECURED CREDITORS COMMITTEE The Pension Benefit Guaranty Corporation ( PBGC ) hereby objects to the Motion of the Official Committee of Unsecured Creditors for Entry of an Order Authorizing and Directing the United States Trustee to Reconstitute the Unsecured Creditors Committee ( Motion ) [Docket No. 1427]. For the following reasons, the Court should deny the Motion. FACTUAL BACKGROUND 1. On December 3, 2012, Revstone Industries, LLC ( Revstone ) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the Court ). 2. On December 17, 2012, the Office of the U.S. Trustee appointed the Committee of Unsecured Creditors of Revstone Industries, LLC ( Committee ) pursuant to Bankruptcy Code section 1102(a)(1). 1 The Debtors in these Chapter 11 Cases and the last four digits of each Debtor s federal tax identification numbers are: Revstone Industries, LLC (7222); Spara, LLC (6613); Greenwood Forgings, LLC (9285); and US Tool and Engineering, LLC (6450). The location of the Debtors headquarters and the service address for each of the Debtors is 230 N. Limestone St., Ste. 100, Lexington, KY

2 Case BLS Doc 1468 Filed 04/23/14 Page 2 of 5 3. The Committee formed by the U.S. Trustee for the Revstone bankruptcy case initially had the following 5 members: 2 a. Boston Finance Group LLC ( BFG ); b. Schoeller Arca Systems, Inc.; c. Patrick J. O Mara; d. Thule Holdings, Inc.; and e. PBGC 4. On February 4, 2014, Kerry Capital Advisors, Inc. was appointed to the Committee. 5. PBGC has filed twenty-one claims in each of the Debtors bankruptcy cases in the aggregate. The claims asserted by PBGC are based on ERISA liabilities stemming from four pension plans sponsored by TPOP, Fourslides, Inc., and Fairfield Castings, LLC (the Plan Sponsors ). Each of the Debtors and other members of the controlled group of the Plan Sponsors are jointly and severally liable for each of the claims filed by PBGC. 6. On February 14, 2014, the Debtors filed the Motion of Revstone Industries, LLC, et al. for Order Pursuant to 11 U.S.C. 105 and 363 and Bankruptcy Rule 9019 Authorizing and Approving Settlement Agreement with Pension Benefit Guaranty Corporation [Docket No. 1322] (the 9019 Motion ). The 9019 Motion seeks approval of a settlement agreement that is attached as Exhibit 1 to the 9019 Motion (the PBGC Settlement ). 7. The PBGC Settlement provides for an allowed PBGC claim against each of the Debtors in the amount of $95 million. PBGC Settlement, 2. 2 On May 23, 2013, Schoeller Arca Systems, Inc. resigned from the Committee. 2

3 Case BLS Doc 1468 Filed 04/23/14 Page 3 of 5 8. On March 10, 2014, the Committee voted to remove the PBGC from the Committee, and subsequently formally requested that the U.S. Trustee remove PBGC from the Committee. 9. On March 17, 2014, the Office of the U.S. Trustee rejected the Committee s request to remove PBGC from the Committee. OBJECTION 10. The Motion is yet another instance of wasteful and unproductive litigation in this case, irresponsibly adding to administrative expenses in a case that is currently administratively insolvent. Simply put, there is no defensible reason for the Motion to be heard at this time. 11. On or about February 20, 2014, PBGC consulted with the Office of the U.S. Trustee about PBGC s status as a Committee member in light of the PBGC Settlement. PBGC was advised to remain on the Committee pending the outcome of the 9019 Motion, and to recuse itself as appropriate from Committee discussions and votes regarding the settlement. 12. Accordingly, PBGC advised counsel for the Committee that PBGC intended to follow the guidance offered by the U.S. Trustee. PBGC also advised Committee counsel that PBGC would resign from the Committee if the 9019 Motion is approved. 13. PBGC has voluntarily recused itself from all Committee activity related to the PBGC Settlement and the 9019 Motion. 14. The issues raised by the Motion will be effectively resolved by the hearing on the 9019 Motion, which is scheduled for May 6, There is, thus, no reason why the Motion needs to be heard before the 9019 Motion hearing. 15. If the 9019 Motion is not approved by the Court, PBGC should continue to be a member of the Committee. PBGC is the largest unsecured creditor of Revstone and its affiliates, 3

4 Case BLS Doc 1468 Filed 04/23/14 Page 4 of 5 with a claim in excess of $95 million. If that claim is not resolved pursuant to the PBGC Settlement, the U.S. Trustee s appointment of PBGC to the Committee must stand. The Bankruptcy Code delegates responsibility for choosing the members of the creditors committee to the United States trustee; the decision is not made by the creditors. In re Haskell-Dawes, Inc., 188 B.R. 515, 522 (Bankr. E.D. Pa. 1995). Although appointments of creditor committees made by the United States Trustee are subject to de novo review by bankruptcy courts, the courts should give weight to the United States Trustee s decisions regarding appointment of these committees and the members of such committees. 11 U.S.C In the event the 9019 Motion is not approved, any conflicts associated with the PBGC Settlement would cease to exist. PBGC would be a creditor with a large unresolved claim. Any conflicts remaining between PBGC and the other members of the Committee would be no more or less disabling than those present when the Committee was formed. Members of a creditor s committee are not expected to completely align their interests with each other, in fact, conflicts among creditors are inherent in all bankruptcy cases. In re Sharon Steel Corp., 100 B.R. 767, 779 (Bankr. W.D. Pa. 1989) (citing In re Baldwin-United Corp., 45 B.R. 375, 376 (Bankr. S.D. Ohio 1983). 17. There is no basis for the Committee s argument that PBGC s continued membership will impair the functioning of the Committee. As the Committee notes, PBGC has willingly recused itself during any and all discussions or votes involving the PBGC Settlement and any other discussions or votes where PBGC s interests as an individual creditor are in conflict with its interests as a committee member. Motion, 25. PBGC s recusal from the Committee s discussions and communications about the PBGC Settlement sufficiently addresses the issues raised in the Motion. Furthermore, the Committee s filing of this Motion and its 4

5 Case BLS Doc 1468 Filed 04/23/14 Page 5 of 5 objections to the PBGC Settlement while PBGC has been a member of the Committee clearly demonstrate that PBGC s ongoing membership has in no way hindered or impaired the Committee s ability to act independently of PBGC. CONCLUSION PBGC s membership on the Committee will be effectively resolved upon the conclusion of the hearing on the 9019 Motion. The Committee has failed to demonstrate why it is necessary for the Court to adjudicate the Motion before it rules on the 9019 Motion on May 6, WHEREFORE, PBGC respectfully requests that this Court either deny the Committee s Motion, or defer ruling until after the 9019 hearing on May 6, 2014, if the Motion is not then moot. Dated: April 23, 2014 Washington, D.C. Respectfully Submitted, /s/m. Katherine Burgess ISRAEL GOLDOWITZ Chief Counsel KAREN L. MORRIS Deputy Chief Counsel KARTAR S. KHALSA Assistant Chief Counsel DESIREE M. AMADOR M. KATHERINE BURGESS CASSANDRA B. CAVERLY MELISSA HARCLERODE Attorneys PENSION BENEFIT GUARANTY CORPORATION Office of the Chief Counsel 1200 K Street, N.W., Suite 340 Washington, D.C Tel.: (202) , ext Fax: (202) s: burgess.katie@pbgc.gov and efile@pbgc.gov 5

6 Case BLS Doc Filed 04/23/14 Page 1 of 2 CERTIFICATE OF SERVICE I hereby certify that on this 23 rd day of April, 2014, the Objection of the Pension Benefit Guaranty Corporation to Motion of the Committee of Unsecured Creditors for Entry of an Order Authorizing and Directing the U.S. Trustee to Reconstitute the Unsecured Creditors Committee was served on the following: Timothy P. Cairns Laura Davis Jones Colin R. Robinson Pachulski Stang Ziehl & Jones, LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE Debtors Counsel Jane M. Leamy Office of the U.S. Trustee 844 King Street, Suite 2207 Wilmington, DE U.S. Trustee Evan Olin Williford The Williford Firm, LLC 901 North Market Street Suite 800 Wilmington, DE Counsel for Homer W. McClarty and Ascalon Enterprises, LLC Mark L. Desgrosseilliers Ericka Fredricks Johnson Steven K. Kortanek Matthew P. Ward Womble Carlyle Sandridge & Rice, LLP 222 Delaware Avenue, Suite 1501 Wilmington, DE Counsel for the Official Committee of Unsecured Creditors Rust Consulting/Omni Bankruptcy 5955 DeSoto Avenue Suite 100 Woodland Hills, CA Claims Agent Gregg M. Galardi Sarah E. Castle DLA Piper LLP 1251 Avenue of the Americas New York, NY Counsel for Boston Finance Group, LLC

7 Case BLS Doc Filed 04/23/14 Page 2 of 2 Sheldon S. Toll P.O. Box 4297 Southfield, MI Counsel for Ascalon Enterprises, LLC /s/ M. Katherine Burgess M. Katherine Burgess