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

Transcription

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. LIMITED OBJECTION BY RBS CITIZENS, N.A. TO DEBTOR'S MOTION SEEKING APPROVAL OF ITS RETENTION AND EMPLOYMENT OF CAPSTONE VALUATION SERVICES GROUP. LLC [D.R. No RBS CITIZENS, N.A., successor by merger to Citizens Bank of Massachusetts ("Citizens"), hereby submits this Limited Objection to the motion, dated February 13, 2012 [D.R. No. 404] (the "Motion"), by Trans National Communications International, Inc., debtor-in-possession herein (the "Debtor"), seeking entry of an order, pursuant to Sections 327 and 328 of the Bankruptcy Code, inter alia, (a) authorizing and approving the Debtor's retention and employment of Capstone Valuation Services Group, LLC ("Capstone") as Debtor's valuation consultant and appraiser, and (b) granting the Debtor such other and additional relief as is just and proper. In limited opposition to the relief requested in the Motion, Citizens 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 Document Page 2 of 5 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. B. The Debtor's Proposed Plan of Reorganization 4. On February 6, 2012, the Debtor filed its proposed plan of reorganization (the "Plan") [D.R. No. 388], and related proposed disclosure statement (the "Disclosure Statement") [D.R. No. 389]. The Debtor 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. Pursuant to a notice dated February 9, 2012, the Court has set the Disclosure Statement Motion for a hearing on March 12, 2012 at 12:00 noon (ET). THE COURT SHOULD CONDITION APPROVAL OF THE MOTION 5. As the Court has witnessed over the last approximately 45 days of this case, there has been a growing acrimony between the Debtor, Citizens and the Committee over the issues relating to the Debtor's initial failed attempt to hire an investment banker, and thereafter its refusal to pursue an alternate investment banker candidate. As has been stated in various pleadings filed by both Citizens and the Committee, both of these parties believe that engaging an agent for the purpose of going to market to attract either fresh capital investment or potential sale candidates is critical to establishing true market value benchmarks for evaluating any plan proposal, and ultimately making any real progress in this case. 6. When the Debtor announced at the last cash collateral hearing held on January 24th that it had abandoned any effort to engage an investment banker and instead intended to retain an "appraiser", Citizens was hopeful that the Debtor would vet candidates with it and the 2

3 Document Page 3 of 5 Committee. Regrettably, the Debtor declined to involve Citizens (and presumably the Committee) in the selection process. Moreover, although the Motion recites that the Debtor interviewed 3 candidates, none of those candidates are identified in the Motion, and neither are their proposed engagement terms. One is therefore left only to accept the Debtor's word that Capstone was the best choice among the 3 unknown candidates, and further that the terms under which Capstone is to be engaged are fair and reasonable under the circumstances. The Debtor's prior investment banker retention motion suffered from the same basic deficiencies. While the Debtor is entitled to some deference in this regard, such deference is not unfettered and does not operate to override the Debtor's fundamental obligation to meet its evidentiary burden of establishing the basic fairness and reasonableness of the proposed retention. 7. The Debtor also asserts in the Motion that "[t]he Disclosure Statement contemplates the employment of an appraiser for the purpose of informing creditors regarding the value of the business." See Motion at 6 (emphasis added). Toward that lofty goal, and given the more recent discordant tone of the case, Citizens submits that approval of the Debtor's proposed Capstone retention should be conditioned on the Debtor providing full and complete access -- in favor of Citizens and the Committee to Capstone, including, without limitation, its professionals working on the engagement, any and all reports (both draft and final), and any work papers, analyses and other work product related to this engagement.' Only by providing this level of voluntary access can the parties hope to avoid the needless duplication of effort and costs associated with valuing the Debtor's business and assets.2 In this connection, Citizens submits that all of this information would be available to it and the Committee through more formal discovery methods, but at a much greater cost, both in terms of absolute dollars, time expended and delays in advancing the case to a conclusion. Requiring this level of access as a condition to the proposed engagement avoids these added costs and problems. 2 Citizens continues to reserve any and all rights that it has under its existing loan documents and applicable law to engage its own investment banking and/or other consultants to assist it in defending its rights in this case. 3

4 Document Page 4 of 5 8. In addition to providing this level of access, the Court should also condition any approval of the proposed retention on Capstone first filing a more particularized disclosure affidavit. In this regard, the Abrams affidavit submitted in support of the proposed retention recites that "neither I nor any professional or employee participating in or connected with Capstone's engagement with the Debtor, insofar as I have been able to ascertain, has any connections or relationships with the Debtor, its creditors or any other parties-in-interest..." See Abrams Affidavit, 5. However, the Abrams Affidavit goes on to state, in mere generalities, that "[b]ecause of the size and diversity of Capstone's business, it is possible that Capstone may have provided services to other creditors, equity security holders, or parties-in interest or their respective attorneys and accountants..." See Abrams Affidavit, In order to insure that the Capstone engagement is not compromised in any way, and otherwise has the level of disinterestedness and impartiality that is appropriate in the circumstances, Citizens submits that the Court should further condition any approval of the proposed retention on Capstone first filing a more particularized disclosure affidavit that details, with specifics and particulars, any past or present relationship or engagement that it may have (or had) with (a) Steven Belkin, (b) any entity in which Steven Belkin has or holds an interest (whether direct or indirect), and (c) any other engagements where Capstone has provided valuation and/or appraisal services in matters where Debtor's counsel (including bankruptcy and special), and Debtor's financial advisor (Staten Group and/or Bruce Rogoff) have been involved. [Continued Next Page] 4

5 Document Page 5 of 5 WHEREFORE, for the reasons set forth herein, Citizens respectfully submits that the Court should condition any grant of the Motion as described herein, and grant Citizens such other and additional relief as is just and proper. Dated: February 14, 2012 Respectfully Submitted, RIEMER & BRAUNSTEIN LLP By: Is! 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