Pg 1 of 9 WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Gary T. Holtzer Robert J. Lemons Kelly DiBlasi Matthew P. Goren Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------x : In re : Chapter 11 : WAYPOINT LEASING : Case No. 18-13648 (SMB) HOLDINGS LTD., et al., : : (Jointly Administered) Debtors. 1 : --------------------------------------------------------x DEBTORS REPLY IN SUPPORT OF WAC2 SALE TRANSACTION TO THE HONORABLE STUART M. BERNSTEIN, UNITED STATES BANKRUPTCY JUDGE: Waypoint Leasing Holdings Ltd. and certain of its subsidiaries and affiliates, as debtors and debtors in possession (collectively, the Debtors ) in the above-captioned chapter 11 cases (collectively, the Chapter 11 Cases ), submit this reply ( Reply ) to the limited objections and reservations of rights with respect to the Debtors proposed sale of the WAC2 assets, and respectfully represent as follows: 1 A list of the Debtors in these Chapter 11 Cases, along with the last four digits of each Debtor s federal tax identification number, is attached hereto as Exhibit A.
Pg 2 of 9 Preliminary Statement 1. Following the February 12th Sale Hearing, 2 the Debtors have successfully closed the WAC9 and WAC12 Streamlined Credit Bids and are days away from closing the sale of substantially all of their assets to Macquarie. The Debtors are now before the Court seeking approval of a 363(k) Credit Bid to Wells Fargo Bank N.A., in its capacity as the WAC Facility Agent for the WAC2 Lenders (as defined in the DIP Order) 3 (together with its permitted successors and assigns, Buyer ) in accordance with the terms and conditions of that certain Asset Purchase Agreement (as amended, supplemented or otherwise modified, including all exhibits, schedules and other attachments thereto, the Purchase Agreement ) [Exhibit B to Notice of Filing of WAC2 Asset Purchase Agreement and Proposed WAC2 Sale Order, ECF No. 486]. Pursuant to the Purchase Agreement, the Buyer will acquire certain assets of Waypoint Asset Company 2 (Ireland) Limited (the Seller ), including the beneficial interests of each of MSN 31431 Trust, MSN 760734 Trust, MSN 920024 Trust and MSN 920030 Trust, which trusts own the WAC2 aircraft (such transaction, the WAC2 Sale Transaction ). 2. Only one (1) limited objection was filed with respect to the WAC2 Sale Transaction, 4 which is addressed by the agreement reached between the Debtors and the WAC2 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Order Approving (A) Bidding Procedures, (B) Bid Protections, (C) Form and Manner of Notice of Cure Costs, Auction, Sale Transaction, and Sale Hearing, and (D) Date for Auction, if Necessary, and Sale Hearing [ECF No. 159] (the Bidding Procedures Order ) or the Purchase Agreement. 3 See the Final Order Pursuant to 11 U.S.C. 105, 361, 362, 363, 364, 507, and 552, Fed. R. Bank. P. 2002, 4001, 6003, 6004, and 9014, and L. Bankr. R. 2002-1, 4001-2, 9013-1, 9014-1, and 9014-2 (I) Authorizing the Debtors to (A) Obtain Senior Secured Priming Superiority Postpetition Financing, (B) Grant Liens and Superpriority Administrative Expense Status, and (C) Utilize Cash Collateral; (II) Granting Adequate Protection; (III) Scheduling Final Hearing; and (IV) Granting Related Relief [ECF No. 231] (the DIP Order ). 4 See Suntrust Bank s Limited Objection and Reservation of Rights With Respect to WAC2 Asset Purchase Agreement and Proposed WAC 2 Sale Order [ECF No. 495] (the SunTrust Limited Objection ). Milestone Aviation Group ( Milestone ) also filed a Reservation of Rights With Respect to WAC 2 Asset Purchase Agreement and Proposed WAC 2 Sale Order [ECF No. 496] related to title of certain engines. The parties are attempting to resolve the issue with Milestone consensually, but if they are unable to do so, they will address the issue at the Sale Hearing on March 12, 2019. 2
Pg 3 of 9 Lenders regarding the amount of the Wind-down Payment, as set forth herein and in the Declaration of Robert A. Del Genio in Support of Proposed Order (I) (A) Approving Purchase Agreement Among Debtors and Successful Credit Bidder, (B) Authorizing Sale of Certain of Debtors Assets Free and Clear of Liens, Claims, Encumbrances, and Other Interests, (C) Authorizing Assumption and Assignment of Executory Contracts and Unexpired Leases in Connection Therewith, and (D) Granting Related Relief, and (II) Authorizing Debtors to Take Certain Actions with Respect to Related Intercompany Claims in Connection Therewith, filed contemporaneously herewith (the Del Genio Declaration ). As set forth in the Del Genio Declaration, the Debtors and the WAC2 Lenders have agreed to a Wind-down Payment in the amount of $2,706,500. This amount is in satisfaction of the Wind-down Payment required by the Bidding Procedures Order and the Purchase Agreement, as well as the Debtors section 506(c) and related claims against the WAC2 Lenders. Contemporaneously herewith, the Debtors have filed a revised Proposed Sale Order incorporating these agreements. 3. For the reasons set forth below and in the Del Genio Declaration, the Debtors respectfully submit that the proposed Wind-down Payment, which is now disclosed, is reasonable, is sufficient to cover the costs of winding down the operations of the obligors to the WAC2 Facility, and funds the reasonable and necessary costs and expenses of preserving and disposing of the WAC2 Lenders collateral. Accordingly, the Court should overrule the SunTrust Limited Objection and approve the WAC2 Sale Transaction. The Wind-down Payment Amount is Disclosed and Covers Wind-down Costs and Expenses of Preserving and Disposing the WAC2 Collateral 4. SunTrust, in its capacity as the WAC7 Administrative Agent, objects to a finding in the WAC2 Proposed Sale Order. Specifically, SunTrust objects to the proposed finding regarding disclosure of the consideration to be provided by the Buyer and disclosure of 3
Pg 4 of 9 other material agreements or arrangements in connection with the WAC2 Sale Transaction. SunTrust argues that the Debtors must disclose the amount of the Wind-down Payment and complains that the Debtors did not file a schedule of debt to be assumed by the Buyer. See SunTrust Limited Objection at 1-2. The SunTrust Limited Objection should be overruled. While nothing in the Bidding Procedures Order requires the Debtors to disclose a wind-down payment in connection with a 363(k) Credit Bid, 5 because the Debtors have reached an agreement with the WAC2 Lenders on the amount of such payment, including with respect to satisfaction of the Debtors potential section 506(c) claims against such lenders and their collateral, such information is now disclosed. among other things: 5. With respect to 363(k) Credit Bids, the Bidding Procedures required, a commitment to pay the costs associated with winding down the applicable WAC Facility s operations at the closing of such bid, which costs shall be reasonably acceptable to the Debtors and the WAC Facility Agent and shall include, if applicable, its allocated share of the Expense Reimbursement. Bidding Procedures, p. 17 c. 6. As discussed in the Del Genio Declaration, the Debtors and the WAC2 Lenders have agreed to a Wind-down Payment in the amount of $2,706,500, as reflected in the Wind-down Payment Statement attached to the Del Genio Declaration as Exhibit B. This payment covers direct and allocable expenses associated with the following cost categories: Carve-Out Amounts; Seller Transaction Expenses; WAC2 Specific Wind-down Costs; Document Retrieval Costs; Macquarie Expense Reimbursement; Forbearance Intercompany Claim; and WAC2 Cure Costs. 5 In addition, from a tax and accounting perspective, the Wind-down Payment is considered reimbursement and payment of expenses, rather than consideration for the Acquired Assets. 4
Pg 5 of 9 7. The amount and a detailed explanation of each of these components is described in more detail in the Del Genio Declaration. As discussed therein, the costs covered by the Wind-down Payment (i) relate to the wind down of the operations of the obligors to the WAC2 Facility, (ii) relate to services that protected and maximized the value of the WAC2 assets, to the benefit of the WAC2 Lenders, (iii) have been incurred or will be incurred in connection with the preservation and disposal of the WAC2 Lenders collateral, (iv) constitute administrative expense claims against WAC2 that must be satisfied in connection with the wind down of WAC2 and its exit from chapter 11, and/or (v) constitute contractual or Court-ordered obligations of the WAC2 Lenders. 8. The Debtors have determined that the amounts comprising the Wind-down Payment are reasonable, are sufficient to cover the costs of winding down the obligors to the WAC2 Facility, and are appropriate to fund the reasonable and necessary costs and expenses of preserving and disposing of the WAC2 Lenders collateral. Accordingly, the Debtors have determined that payment of the Wind-down Payment is consistent with the terms of the Bidding Procedures and the Purchase Agreement, and satisfies the Debtors section 506(c) and related claims against the WAC2 Lenders and their collateral. 6 The revised Proposed Sale Order includes the Wind-down Payment amount and provides for the satisfaction and release of section 506(c) claims. 9. In addition, the Buyer is not assuming any debt pursuant to the Purchase Agreement. Therefore, there is no schedule in this regard to disclose. Accordingly, and for the 6 Section 506(c) of the Bankruptcy Code provides, in relevant part, that [t]he trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim. 11 U.S.C. 506(c). Pursuant to the DIP Order, the Debtors waived any such claims with respect to the Participating WAC Secured Parties. Such claims were preserved, however, with respect to the Non-Participating WAC Secured Parties and their collateral, including the WAC2 Lenders. 5
Pg 6 of 9 reasons set forth above, the Court should overrule the SunTrust Limited Objection and approve the WAC2 Sale Transaction. WHEREFORE the Debtors respectfully request entry of the Proposed Sale Order and such other and further relief as the Court may deem just and appropriate. Dated: March 11, 2019 New York, New York /s/ Kelly DiBlasi WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Gary T. Holtzer Robert J. Lemons Kelly DiBlasi Matthew P. Goren Attorneys for Debtors and Debtors in Possession 6
Pg 7 of 9 Exhibit A Debtors Waypoint Leasing Holdings Ltd. 2899 MSN 760682 Trust N/A Waypoint Leasing (Luxembourg) 7041 MSN 920022 Trust N/A S.à r.l. Waypoint Leasing (Ireland) 6600 MSN 920062 Trust N/A Limited Waypoint Asset Co 10 Limited 2503 MSN 920125 Trust N/A MSN 2826 Trust N/A MSN 9229 AS 7652 MSN 2879 Trust N/A Waypoint Asset Co 3A Limited 6687 Waypoint Asset Co 11 Limited 3073 MSN 41371 Trust N/A MSN 2905 Trust N/A Waypoint Asset Euro 1A Limited 9804 Waypoint Asset Co 14 Limited 1585 MSN 4466 Trust N/A Waypoint Asset Co 15 Limited 1776 MSN 4469 Trust N/A Waypoint Asset Co 3 Limited 3471 MSN 6655 Trust N/A AE Helicopter (5) Limited N/A Waypoint Leasing (Luxembourg) 8928 Euro S.à r.l. AE Helicopter (6) Limited N/A Waypoint Asset Co 1A Limited 1208 MSN 31141 Trust N/A Waypoint Leasing Labuan 1A 2299 Limited MSN 31492 Trust N/A Waypoint Asset Co 1C Limited 0827 MSN 36458 Trust N/A Waypoint Asset Co 1D Limited 7018 MSN 760543 Trust N/A Waypoint Asset Co 1F Limited 6345 MSN 760551 Trust N/A Waypoint Asset Co 1G Limited 6494 MSN 760581 Trust N/A Waypoint Asset Co 1H Limited 7349
Pg 8 of 9 MSN 760628 Trust N/A Waypoint Asset Co 1J Limited 7729 MSN 760631 Trust N/A MSN 20159 Trust N/A MSN 6658 Trust N/A Waypoint Asset Funding 6 LLC 4964 Waypoint 760626 Business Trust N/A Waypoint Asset Co 7 Limited 9689 MSN 7152 Trust N/A Waypoint Asset Euro 7A Limited 2406 MSN 7172 Trust N/A Waypoint Asset Co 8 Limited 2532 Waypoint Asset Funding 3 LLC 4960 MSN 31041 Trust N/A Waypoint Asset Malta Ltd 5348 MSN 31203 Trust N/A Waypoint Leasing Labuan 3A 8120 MSN 31578 Trust N/A Limited Waypoint Leasing UK 3A Limited 0702 MSN 760617 Trust N/A Waypoint Asset Co 4 Limited 0301 MSN 760624 Trust N/A Waypoint Asset Co 5 Limited 7128 MSN 760626 Trust N/A MSN 1251 Trust N/A MSN 760765 Trust N/A MSN 14786 Trust N/A MSN 920063 Trust N/A MSN 2047 Trust N/A MSN 920112 Trust N/A MSN 2057 Trust N/A Waypoint 206 Trust N/A Waypoint Asset Co 5B Limited 2242 Waypoint 407 Trust N/A Waypoint Leasing UK 5A Limited 1970 Waypoint Asset Euro 1B Limited 3512 Waypoint Asset Co 6 Limited 8790 Waypoint Asset Euro 1C Limited 1060 MSN 31042 Trust N/A MSN 20012 Trust N/A MSN 31295 Trust N/A MSN 20022 Trust N/A 2
Pg 9 of 9 MSN 31308 Trust N/A MSN 20025 Trust N/A MSN 920119 Trust N/A MSN 920113 Trust N/A Waypoint Asset Funding 8 LLC 4776 Waypoint Asset Co Germany 5557 Limited Waypoint Leasing UK 8A Limited 2906 MSN 31046 Trust N/A Waypoint Leasing US 8A LLC 8080 MSN 41511 Trust N/A Waypoint Asset Company 6861 MSN 760608 Trust N/A 1 (Ireland) Limited Waypoint Asset Euro 1D Limited 1360 MSN 89007 Trust N/A Waypoint Asset Co 1L Limited 2360 MSN 920141 Trust N/A Waypoint Asset Co 1M Limited 5855 MSN 920152 Trust N/A Waypoint Asset Co 1N Limited 3701 MSN 920153 Trust N/A Waypoint Asset Euro 1G Limited 4786 MSN 920273 Trust N/A Waypoint Asset Funding 1 LLC 7392 MSN 920281 Trust N/A Waypoint Leasing UK 1B Limited 0592 MSN 9205 Trust N/A Waypoint Leasing UK 1C Limited 0840 MSN 9229 Trust N/A Waypoint Asset Company 7847 MSN 920030 Trust N/A 2 (Ireland) Limited Waypoint 2916 Business Trust N/A Waypoint Asset Funding 2 LLC 7783 MSN 31431 Trust N/A Waypoint Asset Co 1K Limited 2087 MSN 760734 Trust N/A Waypoint Leasing Services LLC 8965 MSN 920024 Trust N/A 3