Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 1 of 9 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: NSC Wholesale Holdings LLC et al. Debtors Reporting Period: 12/01/18-12/31/18 MONTHLY OPERATING REPORT File with Court and submit copy to United States Trustee within 20 days after end of month. Submit copy of report to any official committee appointed in the case. Document Explanation REQUIRED DOCUMENTS Form No. Attached Attached Schedule of Cash Receipts and Disbursements MOR-1 X Bank Reconciliation (or copies of debtor's bank reconciliations MOR-1a X Affidavit/Supplement Attached Schedule of Professional Fees Paid MOR-1b X Copies of bank statements Available to the U.S. Trustee upon request. Cash disbursements journals Available to the U.S. Trustee upon request. Statement of Operations MOR-2 X Balance Sheet MOR-3 X X Status of Postpetition Taxes MOR-4 X X See attached Copies of IRS Form 6123 or payment receipt General Notes Copies of tax returns filed during reporting period Summary of Unpaid Postpetition Debts MOR-4 X X Listing of aged accounts payable MOR-4 X X Accounts Receivable Reconciliation and Aging MOR-5 X X Debtor Questionnaire MOR-5 X X I declare under penalty of perjury (28 U.S.C. Section 1746 that this report and the attached documents are true and correct to the best of my knowledge and belief. Signature of Debtor Date Signature of Joint Debtor Date /s/ Mark Samson 1/18/2019 Signature of Authorized Individual* Date Mark Samson Printed Name of Authorized Individual Chief Restructuring Officer Title of Authorized Individual *Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company. MOR
Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 2 of 9 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: NSC Wholesale Holdings LLC et al. Debtors Reporting Period: 12/01/18-12/31/18 General Notes This Monthly Operating Report ("MOR" has been prepared solely for the purpose of complying with the monthly reporting requirements applicable in these bankruptcy cases. The financial information contained herein is unaudited, preliminary in nature, and, as discussed below, not prepared in strict accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP". Such financial statements represent the Debtors good faith attempt to comply with the requirements of the United States Trustee using resources available. This information is specifically limited to the reporting period and limited in scope to the requirements of this report. These unaudited financial statements have not been subject to procedures that would typically be applied to financial information presented in accordance with U.S. GAAP, and upon application of such procedures, the Debtors believe that the financial information could be subject to changes which could be material. Moreover, certain totals may not sum due to rounding, and any accruals included for bankruptcy related professional fees are based on information provided by such professionals. The results of operations contained herein are not necessarily indicative of the results that may be expected from any other period or for the full year, and may not necessarily reflect the results of operations, financial position or schedule of receipts and disbursements in the future. The amounts in MOR 3 that are currently classified as liabilities subject to compromise may be subject to future change as the Debtors complete their analysis of pre and post-petition liabilities, including the reconciliation of intercompany balances. The Debtors caution readers not to place undue reliance on the MOR. There can be no assurance that such information is complete and the MOR may be subject to revision. Copies of IRS Form 6123 or Payment Receipts Payroll taxes and social contributions are withheld and remitted by Paycor on behalf of the Debtors. Evidence of remittance is available to the U.S. Trustee upon request. MOR
In re: NSC Wholesale Holdings LLC et al. Case 18-12394-KJC Case No. (KJC Doc 335 Filed 01/18/19 Page 3 of 9 SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS (For the period December 1, 2018 through December 31, 2018 Actual 12/1- NSC Realty NSC of West Actual (Consolidated 12/31/18 NSC Wholesale Top Key BP Liquor Holdings Hempstead Teara Cumulative since (Consolidated Holdings** Lodi LLC LLC LLC LLC LLC filing Cash beginning balance (as of November 30, end of day $8,851,533 $8,414,476 $437,057 $864,766 Receipts Sales $0 - - - $11,746,049 Sales tax $0 - - - $668,415 Auction proceeds $441,289 441,289 $441,289 Rental Income $0 - - - $44,612 Total Receipts 441,289 441,289 - - - - - - 12,900,365 Disbursements Payroll Disbursements Net Payroll ($198,917 (198,917 - - ($1,258,527 Payroll taxes $0 - - - ($347,370 Total Payroll Disbursements (198,917 (198,917 - - - - - - (1,605,897 Rent Rent ($4,133 ($4,133 $0 $0 ($1,211,817 $0 Sales & Use Tax $0 Sales & use tax ($221,442 (116,032 (105,410 ($1,029,878 $0 Operations Expenses $0 Maintenance $0 - - ($8,654 Utilities ($123,141 (123,141 - ($278,451 Phone & Internet ($1,401 (1,401 - ($6,463 Garbage $0 - - ($71,439 Travel expenses $0 - ($11,269 Advertising $0 - ($6,692 Paydown of CONA credit facility ($5,898,000 (5,898,000 ($5,898,000 Payroll Processing ($4,887 (4,887 - ($15,446 Bank and credit card fees ($3,486 (3,374 - $ (112 ($168,525 Interest ($3,094 (3,094 - ($55,008 Armored transportation ($528 (528 - ($7,002 Bankruptcy professionals ($55,652 (55,652 ($80,652 Claims and Noticing Agent Services ($30,681 ($30,681 ($53,443 Insurance ($7,188 (7,188 - ($41,590 Union dues/medical insurance ($1,427 (1,427 - ($173,982 Store liquidation- Hilco ($266,283 (266,283 - ($534,938 Logistics/trucking $0 - ($33,423 Total Disbursements (6,820,260 (6,714,738 (105,410 (112 - - - - (11,292,569 Net Cash Flow (6,378,971 (6,273,449 (105,410 (112 - - - - 1,607,796 Bank ending balance $2,472,562 $2,141,027 ($105,410 $436,945 $2,472,562 TOTAL DISBURSEMENTS ($6,820,260 ($6,714,738 ($105,410 ($112 $0 $0 $0 $0 ($11,292,569 LESS: TRANSFERS TO DEBTOR IN POSSESSION ACCOUNTS - - PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. from e $0 $0 TOTAL DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY ($6,820,260 ($6,714,738 ($105,410 ($112 $0 $0 $0 $0 ($11,292,569 *National Wholesale Liquidators of Lodi, Inc. (" Lodi" does not maintain any accounts and makes no disbursements. All income flows directly into the accounts of NSC Wholesale Holdings LLC (" NSC", and all disbursements for the operations of Lodi flow from the accounts of NSC. **The beginning cash balance for NSC Wholesale Holdings was increased from $8,121,533, which is the amount reflected as the ending cash balance in the November 2018 report, because the Debtors are treating amounts held in the professional escrow account as a debtor account for purposes of this report. Thus, the amounts held in the account have been added to the beginning cash balance. FORM MOR-1
Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 4 of 9 In re: NSC Wholesale Holdings LLC et al. Debtor Bank and account no. [A] BANK RECONCILIATIONS Continuation Sheet for MOR-1 As of December 31, 2018 Accounting (book balance Bank balance Difference to be reconciled Cut-off Receipts Cut-off Payments [B] Unreconciled difference NSC Wholesale Holdings LLC Capital One Bank N.A. *0419 $473,340 $483,749 $10,409 $0 ($10,409 $0 NSC Wholesale Holdings LLC Capital One Bank N.A. *0427 1,689 1,689 $0 - - - NSC Wholesale Holdings LLC Bank of America *3484 835,831 835,831 $0 - - - NSC Wholesale Holdings LLC Saul Ewing Arnstein Lehr IOLTA Escrow *1395 714,348 714,348 $0 - - - Top Key LLC Bank of America *3201 436,945 436,945 $0 - - - - - - - TOTAL $2,462,153 $2,472,562 $10,409 $0 ($10,409 $0 Notes [A] As noted on the statement of cash receipts and disbursements, Lodi maintains no bank accounts. In addition, the Debtors are treating the professional escrow account maintained by their counsel, Saul Ewing Arnstein & Lehr LLP, as a Debtor account for purposes of this report in order to reflect the disbursements made from such account, which are, indirectly, Debtor disbursements. [B] Checks issued within the reporting period but pending to be cashed. FORM MOR-1a
In re: NSC Wholesale Holdings LLC et al. STATEMENT OF OPERATIONS (Income Statement The Statement of Operations is to be prepared on an accrual basis. The accrual basis of accounting recognizes revenue when it is realized and expenses when they are incurred, regardless of when cash is actually received or paid. Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 5 of 9 12/1/18-12/31/18 NSC Realty NSC of West Cumulative NSC** Lodi Top Key BP Liquor LLC Teara LLC REVENUES (Consolidated* Holdings LLC Hempstead LLC Filing to Date Gross Revenues 441,289 441,289 - - 11,572,479 Less: Returns and Allowances - - - Net Revenue 441,289 441,289 - - - - - - 11,572,479 COST OF GOODS SOLD Cost of Goods Sold - - - - 9,789,037 Gross Profit 441,289 441,289 - - - - - - 1,783,442 OPERATING EXPENSES Advertising - - - 6,692 Insurance 7,188 7,188 - - 41,590 Phone & Internet 1,401 1,401 - - 6,463 Garbage - - - - 46,792 Bank & credit card commissions 3,486 2,868 506 112 154,938 Repairs and Maintenance - - - - 8,654 Rent and Lease Expense 4,133 4,133 - - 1,211,817 Salaries/Commissions/Fees 157,552 137,083 20,469-1,360,362 Taxes - Payroll 54,837 46,611 8,226-385,167 Recruitments - - - - Payroll Processing 4,887 4,154 733-13,528 Union dues/medical insurance 2,796 2,796 - - 175,351 Travel Expenses - - - 10,831 Logistics & Transportation - - - 33,423 Utilities 58,399 58,399 - - 285,480 Inventory Liquidation Expense - - - - 534,938 Surveillance - - - - Armored transportation 528 449 79-5,826 Other expenses - - - - Total Operating Expenses Before Depreciation 295,207 265,082 30,013 112 - - - - 4,281,852 Depreciation/Depletion/Amortization - - - - Net Profit (Loss Before Other Income & Expenses 146,082 176,207 (30,013 (112 - - - - (2,498,410 REORGANIZATION ITEMS Professional Fees 55,652 55,652-80,652 U. S. Trustee Quarterly Fees 69,826 67,147 1,054 325 325 325 325 325 118,025 Other Reorganization Expenses 30,681 $30,681-53,443 Note A Total Reorganization Expenses 156,159 153,480 1,054 325 325 325 325 325 252,120 Income Taxes - - - - Net Profit (Loss (10,077 22,727 (31,067 (437 (325 (325 (325 (325 ($2,750,530 ($2,750,530 Note A: Breakdown of "Other Reorganization Expenses" 12/1/18-12/31/18 $0 Claims and Noticing Agent Services (Omni 30,681 - - Total Other Reorganization Expenses $30,681 *Lodi does not earn any income, and makes no expenditures. All income is earned by NSC, and all expenses are paid by NSC. **The revenues reflected herein include proceeds received in connection with the auction of the Debtors' assets in accordance with Court orders entered on November 29 and 30, 2018 [D.I. 230, 232, 233, 233 and 239] and the sale of the Debtors' inventory through store closing sales carried out pursuant to the Court order entered November 14, 2018 [D.I. 167]. FORM MOR-2
In re: NSC Wholesale Holdings LLC et al BALANCE SHEET The Balance Sheet is to be completed on an accrual basis only. Pre-petition liabilities must be classified separately from postpetition obligations. Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 6 of 9 BOOK VALUE AT END OF BOOK VALUE AT END OF BOOK VALUE AT END OF BOOK VALUE AT END OF ASSETS CURRENT REPORTING MONTH (Consolidated CURRENT REPORTING MONTH (NSC CURRENT REPORTING MONTH (Lodi CURRENT REPORTING MONTH (Top Key CURRENT ASSETS Unrestricted Cash and Equivalents $2,462,153 $2,025,208 $0 $436,945 Security Deposits $870,314 484,929 385,385 0 Note A Accounts Receivable (Net $1,127,548 1,127,548 0 0 Note B Other receivables $0 0 0 0 Inventories $0 0 0 0 Prepaid Expenses $0 0 0 0 Professional Retainers $301,762 301,762 0 0 Other Current Assets $0 0 0 0 TOTAL CURRENT ASSETS $4,761,777 $3,939,447 $385,385 $436,945 PROPERTY AND EQUIPMENT Furniture, Fixtures and Office Equipment (including Software, Net $1,775,622 $1,747,761 $27,861 $0 Leasehold Improvements, Net $6,031,816 $5,922,850 108,966 0 TOTAL PROPERTY & EQUIPMENT $7,807,438 $7,670,611 $136,827 $0 OTHER ASSETS Goodwill $9,508,291 $6,088,291 $3,420,000 $0 TOTAL OTHER ASSETS $9,508,291 $6,088,291 $3,420,000 $0 TOTAL ASSETS $22,077,506 $17,698,349 $3,942,212 $436,945 BOOK VALUE AT END OF BOOK VALUE AT END OF BOOK VALUE AT END OF BOOK VALUE AT END OF LIABILITIES AND OWNER EQUITY CURRENT REPORTING MONTH CURRENT REPORTING MONTH CURRENT REPORTING MONTH CURRENT REPORTING MONTH LIABILITIES (Post-petition Accounts Payable $27,318 $27,318 $0 $0 Payroll Liabilities $0 - - - Payroll Taxes Liabilities $0 - - - Sales & Use Tax Liabilities $0 - - - Professional Fees $0 - - - Accrued Expenses $0 - - - $0 - - - TOTAL LIABILITIES (Post-petition $27,318 $27,318 $0 $0 OWNER EQUITY Common Stock $10,000 $0 $10,000 $0 Additional Paid-In Capital $5,695,604 5,695,604 - - Retained Earnings - Pre-Petition $19,095,114 14,277,199 4,380,962 436,953 Retained Earnings - Postpetition ($2,750,530 (2,301,772 (448,750 (8 NET OWNER EQUITY $22,050,188 $17,671,031 $3,942,212 $436,945 TOTAL LIABILITIES AND OWNERS' EQUITY $22,077,506 $17,698,349 $3,942,212 $436,945 Note A: Security Deposits This amount includes post-petition utility deposits. Note B: Accounts Receivable *The accounts receivable reflected above includes a $525,000 receivable from a related party, ABB Middletown LLC, for which we are informed that there is no underlying documentation and is likely not collectible. In addition, the accounts receiveable reflected above reflects amounts owed by certain former sub-tenants or licensees for which the Debtors do not anticipate any recovery. FORM MOR-3
Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 7 of 9 In re: NSC Wholesale Holdings LLC et al. STATUS OF POSTPETITION TAXES The beginning tax liability should be the ending liability from the prior month or, if this is the first report, the amount should be zero. Attach photocopies of IRS Form 6123 or payment receipt to verify payment or deposit of federal payroll taxes. Attach photocopies of any tax returns filed during the reporting period. Beginning Amount Ending Tax Withheld or Amount Date Check No. Tax Liability Accrued Paid Paid or EFT Liability Federal Withholding - 15,209 15,209 12/4/2018 Wire Transfer to Paycor - FICA-Employee - 10,458 10,458 12/4/2018 Wire Transfer to Paycor - FICA-Employer - 10,458 10,458 12/4/2018 Wire Transfer to Paycor - Unemployment - 55 55 12/4/2018 Wire Transfer to Paycor - Income - - - Other: - Total Federal Taxes - 36,180 36,180 - State and Local Withholding - 8,386 8,386 12/4/2018 Wire Transfer to Paycor - Sales & Use 228,814-228,814 12/20/2018 ACH via Dept. Revenue - Note A Unemployment - 779 779 12/4/2018 Wire Transfer to Paycor - Real Property - - - Personal Property - - - Other: - Total State and Local 228,814 9,165 237,979 - Total Taxes $228,814 $45,345 $274,159 $0 Note A : Paid via ACH 12/20/18 SUMMARY OF UNPAID POSTPETITION DEBTS* Attach aged listing of accounts payable. Number of Days Past Due Current 0-30 31-60 61-90 Over 90 Total Accounts Payable $27,318 $27,318 Payroll Liabilities - - Payroll Taxes Liabilities - - Sales & Use Tax Payable - - Rent/Leases-Building Payable - - Rent/Leases-Equipment Payable - - Secured Debt/Adequate Protection Payments - - Professional Fees - - Amounts Due to Insiders* - - Other: - Other: - Total Postpetition Debts $27,318 $0 $0 $0 $0 $27,318 Explain how and when the Debtor intends to pay any past-due postpetition debts. *The Debtors intend to use proceeds from the "going-out-of-business" sales conducted in accordance with the Court order entered on November 14, 2018 [D.I. 167] to satisfy accounts payable. The Debtors' payments to date are further consistent with their Court-approved budget [D.I. 166]. FORM MOR-4
Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 8 of 9 In re NSC Wholesale Holdings LLC, et al. SCHEDULE OF PROFESSIONAL FEES AND EXPENSES PAID This schedule is to include all retained professional payments from case inception to current month. Amount Wire transfer Amount Paid Year-To-Date Payee Period Covered Approved Payor Number Date Fees Expenses Fees Expenses SSG Advisors LLC November 2018 $25,000 NSC Wholesale Holdings LLC 20181121MMQFMPGH002787 11/21/2018 $25,000 $100,000 Saul Ewing Arnstein Lehr LLP 10/24/18-10/31/18 $55,652 NSC Wholesale Holdings LLC 12/27/2018 $55,323 $329 $55,323 $329 FORM MOR-1b
Case 18-12394-KJC Doc 335 Filed 01/18/19 Page 9 of 9 In re: NSC Wholesale Holdings LLC et al. ACCOUNTS RECEIVABLE RECONCILIATION AND AGING Accounts Receivable Reconciliation Amount Total Accounts Receivable at the beginning of the reporting period $ 1,127,548 Note A + Amounts billed during the period $0 - Amounts collected during the period $0 Total Accounts Receivable at the end of the reporting period $1,127,548 Accounts Receivable Aging Amount 0-90 days old $147,058 91+ days old $980,490 Total Accounts Receivable $1,127,548 Amount considered uncollectible (Bad Debt $525,000 Accounts Receivable (Net $602,548 Note A *The accounts receivable reflected above includes a $525,000 receivable from a related party, ABB Middletown LLC, for which we are informed that there is no underlying documentation and is likely not collectible. In addition, the accounts receiveable reflected above reflects amounts owed by certain former sub-tenants or licensees for which the Debtors do not anticipate any recovery. The accounts receivable above also includes the proceeds received in connection with the auction of the Debtors' assets in accordance with Court orders entered on November 29 and 30, 2018 [D.I. 230, 232, 233, 233 and 239] and the sale of the Debtors' inventory through store closing sales carried out pursuant to the Court order entered November 14, 2018 [D.I. 167]. DEBTOR QUESTIONNAIRE Must be completed each month Yes No 1. Have any assets been sold or transferred outside the normal course of business Note B X this reporting period? If yes, provide an explanation below. 2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below. X 3. Have all postpetition tax returns been timely filed? If no, provide an explanation below. 4. Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation below. X X 5. Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s. If an investment account has been opened X provide the required documentation pursuant to the Delaware Local Rule 4001-3. Note B The Debtors commenced going-out-of-business sales on the weekend following the Petition Date, in accordance with the Court's order authorizing such sales on an interim [D.I. 37], and later final [D.I. 167], basis. These sales concluded by November 30, 2018. In addition, on November 29 and 30, 2018, the Court entered orders authorizing the sales and/or transfers of certain of the Debtors' assets, including certain store and warehouse locations, to various purchasers/assignees [D.I. 230, 232, 233, 233 and 239]. FORM MOR-5
Case 18-12394-KJC Doc 335-1 Filed 01/18/19 Page 1 of 1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: NSC WHOLESALE HOLDINGS LLC, et al., 1 Debtors. Chapter 11 Jointly Administered CERTIFICATE OF SERVICE I, Monique B. DiSabatino, hereby certify that on January 18, 2019, I caused a copy of the Monthly Operating Report for the Reporting Period December 1, 2018 December 31, 2018 be served via Hand Delivery on the following party. David Buchbinder, Esquire Office of the United States Trustee J. Caleb Boggs Federal Building 844 King Street, Suite 2207 Wilmington, DE 19801 Dated: January 18, 2019 /s/ Monique B. DiSabatino Monique B. DiSabatino (DE Bar No. 6027 SAUL EWING ARNSTEIN & LEHR LLP 1201 N. Market Street, Suite 2300 P.O. Box 1266 Wilmington, DE 19899 (302 421-6806 monique.disabatino@saul.com 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are: NSC Wholesale Holdings LLC (6210; National Wholesale Liquidators of Lodi, Inc. (4301; NSC Realty Holdings LLC (4779; NSC of West Hempstead, LLC (5582; Top Key LLC (7503; BP Liquor LLC (2059; and Teara LLC (8660. The Debtors mailing address is 111 Hempstead Turnpike, West Hempstead, NY 11552. 30550763.1 01/18/2019