Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 1 of 20 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE

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1 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 1 of 20 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re: GT Advanced Technologies, Inc., et al, Debtors 1 Chapter 11 Case No HJB Jointly Administered Hearing: 1/7/15 at 10:00 a.m. UNITED STATES TRUSTEE S OBJECTION TO DEBTORS MOTION FOR ENTRY OF ORDER WAIVING COMPLIANCE WITH REQUIREMENTS OF SECTION 345(B) OF THE BANKRUPTCY CODE AND RELATED RELIEF [COURT DOCKET NO. 0865] TO THE HONORABLE HENRY J. BOROFF UNITED STATES BANKRUPTCY JUDGE: Pursuant to 28 U.S.C. 586, 11 U.S.C. 105(a) and 345(b), William K. Harrington, the United States Trustee for Region 1 ( United States Trustee ), respectfully submits this Objection to the Debtors Motion for Entry of Order Waiving Compliance with Requirements of Section 345(b) of the Bankruptcy Code and Related Relief ( Motion to Waive 345(b) Compliance ). In support of this Objection the United States Trustee states as follows: I. PRELIMINARY STATEMENT 1. Through the present Motion, the Debtors seek an Order from this Court waiving compliance with the requirements of 11 U.S.C. 345(b), which would have the effect of allowing the Debtors to keep all of their funds on hand - at least $93 million dollars according to the November, 2014 operating report - with no protection from investment risk or risk of institutional insolvency. Of the $93 million on hand as of the most recent operating report, 88% 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s tax

2 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 2 of 20 of the funds, or $82 million, are held in an investment account without FDIC protection and subject to risk from market loss. At a minimum, further information is needed to assess whether the underlying securities held in the investment accounts are appropriate. In order to facilitate the exchange of this information and so the United States Trustee can examine the Debtors about all of these issues, the Court should defer ruling on the Motion until after the continued Section 341 Meeting of Creditors, scheduled for January 8, II. PROCEDURAL STATUS 2. On October 6, 2014 ( Petition Date ), GT Advanced Technologies Inc., GTAT Corporation, GT Advanced Equipment Holding LLC, GT Equipment Holdings, Inc., Lindbergh Acquisition Corp., GT Sapphire Systems Holding LLC, GT Advanced Cz LLC, GT Sapphire Systems Group LLC, and GT Advanced Technologies Limited (collectively, Debtors ) filed skeletal voluntary chapter 11 petitions with the Court. The Debtors cases have not been substantively consolidated, but are being jointly administered by the Court. See Court Order dated October 7, 2014; Docket No The Debtors filed numerous first day pleadings ( First Day Motions ) on the Petition Date. Among the First Day Motions was the Debtors Emergency Ex Parte Motion for Entry of Order (A) Authorizing Debtors to Use Existing Cash Management System, (B) Authorizing and Directing Banks and Financial Institutions to Honor and Process Checks and Transfers, (C) Authorizing Continued Use of Intercompany Transactions, (D) Waiving Requirements of Section 345(b) of Bankruptcy Code and (E) Authorizing Debtors to Use Existing Bank Accounts and Existing Business Forms [Docket No. 4] (the Cash Management Motion. ) 4. The Debtors Cash Management Motion recited that the Debtors had sixteen (16) 2

3 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 3 of 20 bank accounts in the United States. The Domestic Bank Accounts are maintained principally with Bank of America ; however, GTAT also maintains (i) one deposit account with Wells Fargo Bank and (ii) one money market account with Santander. Cash Management Motion at 12. The Cash Management Motion included two Schedules detailing the accounts. Among the accounts listed were investment accounts with Bank of America. It was later determined that the investment accounts were with Bank of America Merrill Lynch. 5. The United States Trustee raised immediate concerns with the proposed waiver of 345(b) in the Debtors Cash Management Motion and at the insistence of the United States Trustee, the 345 waiver was deleted from the revised proposed Order. As noted by the Debtors, [a]t the request of the United States Trustee, the Debtors at the first day hearing did not insist upon [the waiver of 345(b)] and the Cash Management Order, as entered, does not provide for an express waiver. See Debtors Motion to Waive 345 Compliance, 5, note Following the Debtors skeletal filings and the First Day Motions, the United States Trustee took immediate steps to ensure that the Debtors financial accounts were properly identified as Debtor in possession accounts and sufficiently collateralized with acceptable securities in accordance with the provisions of 11 U.S.C. 345(b). 7. After numerous communications with the Bank of America, the United States Trustee was advised that on October 20, 2014 the Bank of America finally pledged $100 million in acceptable collateral to the Federal Reserve for the benefit of the United States for the Debtors accounts. The United States Trustee also received a bond in the amount of $1.5 million as protection for the Debtors overseas accounts. 8. In the weeks after October 20, 2014 the Debtors requested that the United States Trustee release substantially all of the collateral provided by Bank of America. The Bank of 3

4 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 4 of 20 America also independently requested that the United States Trustee release most of the collateral pledged to secure the Debtors accounts. The Bank of America reported to the United States Trustee that the cost of maintaining the collateral would be 2 points, or $200,000 per year, for $100 million of coverage. On information and belief this is the first case in Region 1 where a financial institution has assessed a fee for posting collateral to the Federal Reserve for the benefit of the United States. 9. On November 19, 2014, the Debtors provided further detail concerning the Merrill Lynch investment accounts to the United States Trustee. The information provided indicated that the Debtors had $93 million in the Merrill Lynch account, held in three separate funds: BlackRock T Fund ($50 million); Bank of America Treasury Reserves 4232 ($20 million) and JP Morgan US Treasury Plus 3913 ($23 million). The brochures provided made clear that none of the three funds are protected by FDIC insurance. The funds are not guaranteed by the U.S. Government and are not supported by the full faith and credit of the United States. The funds have also earned little to no income in the last year or two: Merrill Lynch Fund No. 1 BlackRock T Fund 4

5 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 5 of 20 information: Merrill Lynch Fund No. 2 Bank of America Treasury Reserves The brochure for the Bank of America Treasury Reserves account provided this The income earned on the Bank of America Treasury Reserves account is set forth below: 5

6 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 6 of 20 Merrill Lynch Fund No. 3 JP Morgan US Treasury The prospectus for JP Morgan Chase also confirmed that this Fund is not insured by the FDIC and it is possible to lose money by investing in the Fund: 6

7 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 7 of The Debtors Cash Management Motion referred to the investment accounts as Bank of America Accounts. The Merrill Lynch monthly statements provided to the United States Trustee at his request include the name of Bank of America on the statements. The Debtors monthly operating report for the month ending November 29, 2014 refers to the account in question holding $82 million as a Bank of America investment account: 7

8 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 8 of Accordingly, the United States Trustee considers the Debtors investment account with Merrill Lynch as a Bank of America account and pursuant to 11 U.S.C. 345(b) submits that collateralization should be maintained. The United States Trustee has declined to release the $100 million of collateral pledged for his benefit by the Bank of America pursuant to the provisions of 11 U.S.C. 345(b) because the Debtors have not demonstrated how the estates would be protected from the financial insolvency of the institutions. The United States Trustee is also concerned because 88% of the Debtors funds on hand as of the end of November,

9 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 9 of 20 are in an investment account where the principal may be at risk. 12. According to the Debtors motion filed on December 23, 2014, the Debtors had $12.5 million in the Bank of America accounts and $82 million in their Merrill Lynch investment account, of which $25 million was transferred to a Bank of America account after November 28, See Debtors Motion, 7, note 3. The November, 2014 operating report, filed December 31, 2014, refers to the receipt of a federal tax refund totaling $29.1 million, but the report failed to include the bank statements as required and a request has been made for those statements. 13. The Debtors continued 341 meeting is scheduled for January 8, 2015, the day after the Court is scheduled to hear the 345(b) Waiver Motion. Among other areas of inquiry, the United States Trustee intends to examine the Debtors at the 341 meeting about their bank accounts, their investment accounts (including the underlying money market fund holdings therein), and the inter-company transfers made. III. APPLICABLE LEGAL STANDARDS A. 11 U.S.C. 345(b). 14. Bankruptcy Code Section 345(b) provides that money of a bankruptcy estate shall be insured or guaranteed by the United States or by a department, agency or instrumentality of the United States, or backed by the full faith and credit of the United States. 11 U.S.C. 345(b). Money of the estate may also be deposited in an entity that has posted a bond in favor of the United States or has deposited securities with the Federal Reserve Bank in an account maintained by the United States Trustee. Id. A court may waive the requirements of Section 345 upon the showing of cause. Id. 9

10 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 10 of 20 IV. ARGUMENT A. The Debtors Have Failed to Satisfy Their Burden of Demonstrating Cause for the Waiver of the Requirements of 11 U.S.C. 345(b). 15. At the present time the Debtors funds in domestic accounts are collateralized by acceptable treasury bonds or treasury bills in favor of the United States. The Debtors foreign accounts are protected by a $1.5 million bond in favor of the United States. By their Motion, the Debtors ask the Court for an Order that waives the requirements of Section 345(b) for all accounts going forward with Bank of America or with Merrill Lynch. The effect of this Order would be to permit the Debtors to hold as much as $93 million or more in accounts that are not protected in the event of the institution s insolvency, and for 88% of the funds on hand, the account s principal is at risk, the account has no FDIC coverage, and the account earns little to no interest. 16. As required by Section 345(b)(2), securities used as collateral must be of the kind specified in 31 U.S.C Section 9303 specifies that government obligations may be used as security. A government obligation in turn is defined in 31 U.S.C. 9301(2) as a public debt obligation of the United States Government and an obligation whose principal and interest is unconditionally guaranteed by the government. In light of this definition, only United States Treasury bills, bonds, or notes are deemed to constitute acceptable securities for purposes of the authorized depository system. See United States Trustee v. Columbia Gas Systems, Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294 (3d Cir. 1994). 17. In 1994, Congress amended Section 345(b) to provide that the bankruptcy court for cause may modify or waive the requirements of 11 U.S.C The Debtors account at Bank of America/Merrill Lynch, holding $82 million out 10

11 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 11 of 20 of $93 million of the estate s funds, is not FDIC protected. The brochures for the account make clear that investments in the Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank and are not insured or guaranteed by the FDIC, the Federal Reserve Board or any other government agency. Although the Fund seeks to preserve the value of [the] investment it is possible to lose money by investing in the Fund. (emphasis supplied). 19. The United States Trustee agrees with the Debtors position that in determining whether cause exists for a waiver of the requirements under 11 U.S.C. 345(b) the analysis found in the Service Merchandise case is useful. See In re Service Merchandise Co., Inc., 240 B.R. 894, 896 (Bankr. M.D. Tenn. 1999). There the Court established a totality of circumstances test for determining whether cause has been established under 11 U.S.C. 345(b). Three of the ten factors highlighted by the Service Merchandise case may be problematic in this case: 1) the amount of investments involved, 2) the safeguards in place within the Debtors own business of insuring the safety of the funds; and 3) the Debtors ability to reorganize in the face of a failure of one or more of the institutions. In this case, the amount of investments is significant: $82 million or more of the Debtors funds, or 88% of the funds on hand, are in an investment account where the principal could be at risk. While the possibility of insolvency of the Bank of America or Merrill Lynch may be remote or even extremely remote, it is nonetheless a risk. If this Court were to grant the Debtors Motion, the estate may have limited or no protection in place 2 and the insolvency for either of these institutions would likely make it nearly impossible for the Debtors to reorganize. To move forward at this time without any collateralization at all appears to be an unnecessary risk for the estate to withstand or the 2 The Debtors state that in the highly unlikely event of an insolvency of Merrill Lynch, the Debtors investments in the account would be customer property that is afforded priority over claims of Merrill Lynch under the Securities Investor Protection Act of (b) Waiver Motion, 25. The United States Trustee has asked for a more detailed explanation of the priority that would be given the Debtors accounts in this situation. 11

12 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 12 of 20 Court to allow. The ease with which the Debtors apparently deposited $25 million into the Merrill Lynch account and then withdrew it seems to belie the Debtors statement that it is too complicated and time consuming to transfer the funds to a more traditional account. 20. Building on the Service Merchandise factors, courts in other jurisdictions have imposed additional requirements designed to ensure the safety of funds invested in money market accounts. See, e.g., District of Delaware (Local Bankruptcy Rule ( LBR ) ), Northern District of California (LBR ), and Central District of California (LBR ). These local rules from other jurisdictions, although not binding here, reflect sound practices consistent with section 345 s imperative to protect bankruptcy estates while providing debtors some flexibility in their cash management. In these jurisdictions, courts will not find cause to allow the use of money market funds, unless the trustee or debtor-in-possession identifies the fund and files, along with the fund s current prospectus, a certification by the fund that: a. it is offered by an investment management company registered under the Investment Company Act of 1940; b. it qualifies as a money market fund under the Investment Company Act of 1940; c. it invests exclusively in United States Treasury bills and Notes owned directly or through repurchase agreements; d. it has received the highest money market fund rating from a nationally recognized statistical rating agency, such as Standard & Poor s or Moody s; e. it has agreed to redeem fund shares in cash the next business day; and f. it has adopted a policy to provide shareholders 60 days notice of any change in its investment or redemption policies. 12

13 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 13 of 20 See id. 21. In this case, the Debtors have provided evidence that the current holdings in their investment accounts may satisfy certain prudential concerns (c) and (d) (see Declaration of Michele Rayos, 18-19), but have not addressed the remaining concerns listed above. In order to ensure that the Debtors investment policies adequately promote safety and preservation, the United States Trustee seeks a reasonable period of time to obtain further information responsive to these concerns, including the full details of (1) the Debtors current investment practices and (2) the existing money market redemption policies. 22. Given the need for additional information and because factual questions have been raised as to the ease with which the funds have been transferred from the Merrill Lynch investment account to the Bank of America account(s), the United States Trustee asks that the Court defer ruling on the Motion until the 341 meeting has been concluded and discovery from the Debtors as well as Bank of America/Merrill Lynch may be undertaken. *** WHEREFORE, the United States Trustee respectfully requests that the Court defer ruling on the Debtors Motion For Entry Of Order Waiving Compliance With Requirements of Section 345(b) of The Bankruptcy Code And Related Relief pending the conclusion of the 341 meeting and discovery from the Debtors and Bank of America/Merrill Lynch may be conducted, and grant such further relief as may be just. 13

14 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 14 of 20 Respectfully submitted, WILLIAM K. HARRINGTON, UNITED STATES TRUSTEE By: /s/ Geraldine Karonis Geraldine Karonis Assistant United States Trustee Office of the United States Trustee 1000 Elm Street Suite 605 Manchester, NH (603) Bnh Dated: January 5, 2015 CERTIFICATE OF SERVICE I hereby certify that on this date a copy of the foregoing was forwarded to all parties on the attached list via CM/ECF unless as otherwise indicated: HJB Notice will be electronically mailed to: Jason R. Adams on behalf of Creditor Committee Official Committee of Unsecured Creditors KDWbankruptcydepartment@kelleydrye.com Christopher J. Allwarden on behalf of Creditor Public Service Company of New Hampshire nhlegal@nu.com David P. Azarian on behalf of Interested Party Certain Equity Security Holders dazarian@azarianlaw.net Bryan R. Bagdady on behalf of Creditor Dynamic Motion Control, Inc. Bryan@celsinfo.com Holly Barcroft on behalf of Debtor GT Advanced Cz LLC hbarcroft@nixonpeabody.com, dsklar@nixonpeabody.com;man.managing.clerk@nixonpeabody.com;cbuonopane@nixonpeabo dy.com;bcollier@nixonpeabody.com;cgrijalva@nixonpeabody.com;ccarlin@nixonpeabody.com Andrew D. Behlmann on behalf of Creditor City of Pontiac General Employee's Retirement System abehlmann@lowenstein.com 14

15 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 15 of 20 Mark I. Bernstein on behalf of Creditor Apple Inc. J. William Boone on behalf of Creditor HeBei Hengbo Ceramic Materials Ryan M. Borden on behalf of Creditor Midland Precision Machining, Inc. Peter Breslauer on behalf of Creditor Sumitomo (SHI) Cryogenics of America Inc Christopher M. Candon on behalf of Creditor Airgas USA, LLC James S. Carr on behalf of Creditor Committee Official Committee of Unsecured Creditors Keith J. Cunningham on behalf of Creditor Tannor Partners Credit Fund, LP Eleanor Wm Dahar on behalf of Creditor City of Pontiac General Employee's Retirement System Matthew J. Delude on behalf of Creditor Sumitomo Electric U.S.A., Inc. Daniel M. Deschenes on behalf of Creditor Granite State Plumbing & Heating, LLC Ann Marie Dirsa on behalf of U.S. Trustee Office of the U.S. Trustee Christopher M. Dube on behalf of Creditor Samchang Advanced Solution Co., Ltd Lawrence M. Edelman on behalf of Creditor DCM Tech Corporation Marita S. Erbeck on behalf of Creditor Sanmina Corporation Michael S. Etkin on behalf of Creditor City of Pontiac General Employee's Retirement System Jeremy R. Fischer on behalf of Creditor Certain Note Holders 15

16 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 16 of 20 Andrew J. Flame on behalf of Creditor Plansee SE Christopher M. Floyd on behalf of Interested Party Certain Equity Security Holders Christopher Fong on behalf of Debtor GT Advanced Cz LLC Edmond J. Ford on behalf of Creditor Dynamic Motion Control, Inc. Kelly J. Gagliuso on behalf of Creditor Decco, Inc. William S. Gannon on behalf of Creditor Intego GmbH Dustin N. Gauthier on behalf of Creditor Steel-Pro, Inc. Matthew T. Gensburg on behalf of Creditor Naumann/Hobbs Material Handling Corp. II, Inc. Steven A. Ginther on behalf of Creditor Missouri Department of Revenue Matthew A. Gold on behalf of Creditor Argo Partners Steven E. Grill on behalf of Creditor Committee Official Committee of Unsecured Creditors James T. Grogan, III on behalf of Debtor GT Advanced Cz LLC Honor S. Heath on behalf of Creditor Public Service Company of New Hampshire Andrew Helman on behalf of Creditor Steel-Pro, Inc. Camden B. Hillas on behalf of Creditor Apple Inc. 16

17 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 17 of 20 Gary T. Holtzer on behalf of Creditor Apple Inc. Nancy Isaacson on behalf of Creditor Advanced Process Systems, LLC Michael D. Jankowski on behalf of Creditor Steel-Craft Corp. of Hartford Matthew R. Johnson on behalf of Creditor Committee Official Committee of Unsecured Creditors Brad M. Kahn on behalf of Creditor Certain Note Holders Michael S. Kalis on behalf of Creditor Interstate Electrical Services Corp. Robert J. Keach on behalf of Creditor Tera Xtal Technology Corporation Martin S. Kedziora on behalf of Creditor Naumann/Hobbs Material Handling Corp. II, Inc. Susheel Kirpalani on behalf of Debtor GT Advanced Equipment Holding LLC Lisa M. Kresge on behalf of Creditor Expeditors International of Washington, Inc. James S. LaMontagne on behalf of Creditor Expeditors International of Washington, Inc. Robert J. Lemons on behalf of Creditor Apple Inc. Colin P. Maher on behalf of Creditor Committee Official Committee of Unsecured Creditors Robert K. Malone on behalf of Creditor Sanmina Corporation David M. Mannion on behalf of Creditor Sumitomo Electric U.S.A., Inc. 17

18 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 18 of 20 Benjamin E. Marcus on behalf of Creditor Certain Note Holders m Frank B. Mesmer, Jr. on behalf of Creditor Hangzhou Dahe Thermo-Magnetics Co. frank@biz-patlaw.com Joshua N. Mesmer on behalf of Creditor Hangzhou Dahe Thermo-Magnetics Co. josh@biz-patlaw.com Gregory A. Moffett on behalf of Creditor Apple Inc. gmoffett@preti.com, sbarrington@preti.com Steven M. Notinger on behalf of Creditor U.S. Bank National Association, As Trustee notingers@cwbpa.com, guerettec@cwbpa.com;notingerd@cwbpa.com Paul F. O'Donnell, III on behalf of Creditor Granite State Plumbing & Heating, LLC podonnell@hinckleyallen.com, kabarrett@hinckleyallen.com Thomas J. Pappas on behalf of Creditor G4S Secure Solutions (USA), Inc. tpappas@primmer.com, smerrigan@primmer.com Richard C. Pedone on behalf of Debtor GT Advanced Cz LLC rpedone@nixonpeabody.com Lori L. Pines on behalf of Creditor Apple Inc. lori.pines@weil.com Steven D. Pohl on behalf of Interested Party Certain Equity Security Holders spohl@brownrudnick.com, cfloyd@brownrudnick.com;cennis@brownrudnick.com Charles R. Powell, III on behalf of Creditor Committee Official Committee of Unsecured Creditors cpowell@devinemillimet.com, sleonard@devinemillimet.com;cmaher@devinemillimet.com;junger@devinemillimet.com Jennifer D. Raviele on behalf of Creditor Committee Official Committee of Unsecured Creditors jraviele@kelleydrye.com Jennifer Rood on behalf of Creditor Diamond Materials Tech, Inc. jrood@bernsteinshur.com, mamurphy@bernsteinshur.com Peter C.L. Roth on behalf of Interested Party State of New Hampshire peter.roth@doj.nh.gov, laura.maynard@doj.nh.gov 18

19 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 19 of 20 Jennifer M. Roussil on behalf of Creditor Sanmina Corporation Katherine A. Scherling on behalf of Debtor GT Advanced Equipment Holding LLC Sage M. Sigler on behalf of Creditor G4S Secure Solutions (USA), Inc. James S. Singer on behalf of Creditor Interstate Electrical Services Corporation Daniel W. Sklar on behalf of Debtor GT Advanced Cz LLC Robert A. Soriano on behalf of Creditor Diamond Materials Tech, Inc. Robert A. Soriano on behalf of Creditor MBT Systems Ltd. Robert A. Soriano on behalf of Creditor Meyer Burger Jeffrey C. Spear on behalf of Interested Party Dow Jones & Company, Inc. John M. Sullivan on behalf of Creditor Apple Inc. Ryan D. Sullivan on behalf of Creditor United Rentals (North America), Inc. Peter N. Tamposi on behalf of Creditor Advanced Process Systems, LLC Lisa Snow Wade on behalf of Creditor Steel-Craft Corp. of Hartford Michael F. Walsh on behalf of Creditor Apple Inc. Jason H. Watson on behalf of Creditor G4S Secure Solutions (USA), Inc. 19

20 Case: HJB Doc #: 922 Filed: 01/05/15 Desc: Main Document Page 20 of 20 John Robert Weiss on behalf of Creditor Powertec Energy Corp. Jack S. White on behalf of Creditor Interstate Electrical Services Corp. Eric R. Wilson on behalf of Creditor Committee Official Committee of Unsecured Creditors Dated: January 5, 2015 /s/ Geraldine Karonis Geraldine Karonis 20