Pg 1 of 63 CURTIS, MALLET-PREVOST, COLT & MOSLE LLP Steven J. Reisman Cindi M. Giglio 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Proposed Conflicts Counsel for the Debtors and Debtors in Possession Hearing Date and Time: June 14, 2016 at 2:00 p.m. (Eastern Time) Objection Deadline: June 7, 2016 at 4:00 p.m. (Eastern Time) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------x : In re : Chapter 11 : BREITBURN ENERGY : Case No. 16-11390 (SMB) PARTNERS LP, et al., : : (Jointly Administered) Debtors. 1 : : ---------------------------------------------------------x NOTICE OF APPLICATION OF DEBTORS PURSUANT TO 11 U.S.C. 327(a), FED. R. BANKR. P. 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AUTHORITY TO RETAIN AND EMPLOY CURTIS, MALLET-PREVOST, COLT & MOSLE LLP AS CONFLICTS COUNSEL FOR THE DEBTORS EFFECTIVE AS OF THE PETITION DATE PLEASE TAKE NOTICE that a hearing on the annexed Application (the Application ) of Breitburn Energy Partners LP and its affiliated debtors in the above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors ), for an order 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, as applicable, are: Breitburn Energy Partners LP (9953); Breitburn GP LLC (9948); Breitburn Operating LP (5529); Breitburn Operating GP LLC (5525); Breitburn Management Company LLC (2858); Breitburn Finance Corporation (2548); Alamitos Company (9156); Beaver Creek Pipeline, L.L.C. (7887); Breitburn Florida LLC (7424); Breitburn Oklahoma LLC (4714); Breitburn Sawtelle LLC (7661); Breitburn Transpetco GP LLC (7222); Breitburn Transpetco LP LLC (7188); GTG Pipeline LLC (3760); Mercury Michigan Company, LLC (3380); Phoenix Production Company (1427); QR Energy, LP (3069); QRE GP, LLC (2855); QRE Operating, LLC (9097); Terra Energy Company LLC (9616); Terra Pipeline Company LLC (3146); and Transpetco Pipeline Company, L.P. (2620). The Debtors mailing address is 707 Wilshire Boulevard, Suite 4600, Los Angeles, California 90017.
Pg 2 of 63 pursuant to 11 U.S.C. 327(a), Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules for the Southern District of New York (the Local Rules ) for authority to employ and retain Curtis, Mallet-Prevost, Colt & Mosle LLP as their conflicts counsel for the chapter 11 cases, all as more fully set forth in the Application, will be held before the Honorable Stuart M. Bernstein, United States Bankruptcy Judge, and the United States Bankruptcy Court, One Bowling Green, New York, New York 10004 (the Bankruptcy Court ), on June 14, 2016 at 2:00 p.m. (Eastern Time) (the Hearing ). PLEASE TAKE FURTHER NOTICE that objections, if any, to the Application shall be in writing, shall conform to the Bankruptcy Rules and the Local Rules, shall set forth the name of the objecting party, the basis for the objection and the specific grounds thereof, shall be filed with the Bankruptcy Court (a) by attorneys practicing in the Bankruptcy Court, including attorneys admitted pro hac vice, electronically in accordance with General Order M-399 (which can be found at www.nysb.uscourts.gov), and (b) by all other parties in interests, on a CD-ROM, in text-searchable portable document format (PDF) (with a hard copy delivered directly to Chambers), in accordance with the customary practices of the Bankruptcy Court and General Order M-399, to the extent applicable, and shall be served in accordance with General Order M- 399 on: (a) Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153 (Attn: Ray C. Schrock, P.C. and Stephen Karotkin, Esq.), the proposed attorneys for the Debtors; (b) (c) Curtis, Mallet-Prevost, Colt & Mosle LLP, 101 Park Avenue, New York, NY 10178 (Attn: Steven J. Reisman, Esq. and Cindi M. Giglio, Esq.), the proposed conflicts counsel for the Debtors; the Office of the United States Trustee for Region 2, 201 Varick Street, Suite 1006, New York, NY 10014 (Attn: Susan D. Golden, Esq. and Richard C. Morrissey, Esq.); 2
Pg 3 of 63 (d) (e) (f) (g) (h) (i) (j) (k) the Official Committee of Unsecured Creditors; the parties listed on the consolidated list of top five (5) largest secured claims filed by the Debtors in these chapter 11 cases; the parties listed on the consolidated list of top twenty (20) largest unsecured claims filed by the Debtors in these chapter 11 cases; the attorneys for Wells Fargo Bank, National Association, administrative agent under (i) the proposed Debtor-in-Possession Credit Agreement and (ii) that certain Third Amended and Restated Credit Agreement, dated November 19, 2014 (as amended), Winston & Strawn LLP, 333 S. Grand Avenue, 38th Floor, Los Angeles, California 90071 (Attn: Eric E. Sagerman, Esq. and Justin Rawlins, Esq.); the attorneys for Delaware Trust Company, successor trustee under the indenture for the 9.25% Senior Secured Second Lien Notes due 2020, Foley & Lardner LLP, 321 North Clark Street, Suite 2800, Chicago IL 60654 (Attn: Mark F. Hebbeln, Esq.); the attorneys for Wilmington Trust Company, successor trustee under the indentures for the 8.625% Senior Notes due 2020 and the 7.875% Senior Notes due 2022, Kilpatrick, Townsend & Stockton LLP, 1100 Peachtree Street, Suite 2800, Atlanta GA 30309 (Attn: Todd C. Meyers, Esq.); the attorneys for certain holders of the 9.25% Senior Secured Second Lien Notes due 2020, Kirkland & Ellis LLP, 601 Lexington Avenue, New York NY 10022 (Attn: Christopher J. Marcus, P.C.); the attorneys for certain holders of the 8.625% Senior Notes due 2020 and the 7.875% Senior Notes due 2022, Milbank, Tweed, Hadley & McCloy LLP, 601 S. Figueroa Street, 30th Floor, Los Angeles, CA 90017 (Attn: Paul Aronzon, Esq.); (l) the Securities and Exchange Commission, 200 Vesey Street, Suite 400, New York, NY 10281 (Attn: Bankruptcy Department); (m) (n) (o) the Internal Revenue Service, 290 Broadway, New York, NY 10007 (Attn: District Director); the counterparties to the Debtors derivative contracts; and all other entities that requested notice in these chapter 11 cases under Bankruptcy Rule 2002 so as to be so filed and received no later than June 7, 2016 at 4:00 p.m. (Eastern Time) (the Objection Deadline ). 3
Pg 4 of 63 PLEASE TAKE FURTHER NOTICE that if an objection to the Application is not received by the Objection Deadline, the relief requested shall be deemed unopposed and the Bankruptcy Court may enter an order granting the relief sought without a hearing. PLEASE TAKE FURTHER NOTICE that any objecting parties are required to attend the Hearing, and failure to appear may result in relief being granted or denied upon default. Dated: May 26, 2016 New York, New York /s/ Steven J. Reisman Steven J. Reisman Cindi M. Giglio CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Proposed Conflicts Counsel for the Debtors and Debtors in Possession 4
Pg 5 of 63 CURTIS, MALLET-PREVOST, COLT & MOSLE LLP Steven J. Reisman Cindi M. Giglio 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Proposed Conflicts Counsel for the Debtors and Debtors in Possession Hearing Date and Time: June 14, 2016 at 2:00 p.m. (Eastern Time) Objection Deadline: June 7, 2016 at 4:00 p.m. (Eastern Time) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------------x In re : : Chapter 11 BREITBURN ENERGY : PARTNERS LP, et al., : Case No. 16-11390 (SMB) : Debtors. 1 : (Jointly Administered) ----------------------------------------------------------------x APPLICATION OF DEBTORS PURSUANT TO 11 U.S.C. 327(a), FED. R. BANKR. P. 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AUTHORITY TO RETAIN AND EMPLOY CURTIS, MALLET-PREVOST, COLT & MOSLE LLP AS CONFLICTS COUNSEL FOR THE DEBTORS EFFECTIVE AS OF THE PETITION DATE TO THE HONORABLE STUART M. BERNSTEIN, UNITED STATES BANKRUPTCY JUDGE: Breitburn Energy Partners LP and its affiliated debtors in the above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors ), respectfully represent as follows in support of this application (this Application ): 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, as applicable, are: Breitburn Energy Partners LP (9953); Breitburn GP LLC (9948); Breitburn Operating LP (5529); Breitburn Operating GP LLC (5525); Breitburn Management Company LLC (2858); Breitburn Finance Corporation (2548); Alamitos Company (9156); Beaver Creek Pipeline, L.L.C. (7887); Breitburn Florida LLC (7424); Breitburn Oklahoma LLC (4714); Breitburn Sawtelle LLC (7661); Breitburn Transpetco GP LLC (7222); Breitburn Transpetco LP LLC (7188); GTG Pipeline LLC (3760); Mercury Michigan Company, LLC (3380); Phoenix Production Company (1427); QR Energy, LP (3069); QRE GP, LLC (2855); QRE Operating, LLC (9097); Terra Energy Company LLC (9616); Terra Pipeline Company LLC (3146); and Transpetco Pipeline Company, L.P. (2620). The Debtors mailing address is 707 Wilshire Boulevard, Suite 4600, Los Angeles, California 90017.
Pg 6 of 63 BACKGROUND 1. On May 15, 2016 (the Petition Date ), the Debtors each commenced with this Court a voluntary case (collectively, the Chapter 11 Cases ) under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On May 26, 2016, the Office of the United States Trustee for Region 2 (the U.S. Trustee ) appointed the Official Committee of Unsecured Creditors (the Creditors Committee ). 2. These Chapter 11 Cases are being jointly administered for procedural purposes only pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). 3. Additional information regarding the Debtors business, capital structure, and the circumstances leading to the commencement of these Chapter 11 Cases is set forth in the Declaration of James G. Jackson Pursuant to Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of New York and in Support of the Debtors Chapter 11 Petitions and First Day Relief (ECF No. 13) (the Jackson Declaration ). JURISDICTION 4. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. RELIEF REQUESTED 5. Pursuant to sections 327(a) and 1107 of the Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016, and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules for the United States Bankruptcy Court for the Southern District of New York (the Local Rules ), the -2-
Pg 7 of 63 Debtors request authority to employ and retain Curtis, Mallet-Prevost, Colt & Mosle LLP ( Curtis ) as its conflicts counsel in these Chapter 11 Cases, effective as of the Petition Date (the Engagement ) in accordance with the terms and conditions set forth in that certain engagement letter between the Debtors and Curtis, dated as of May 10, 2016 (the Engagement Letter ) and in the Reisman Declaration (as defined below). 6. Contemporaneously herewith, the Debtors have filed an application to retain Weil, Gotshal & Manges LLP ( Weil ) as lead counsel in these Chapter 11 Cases. It is anticipated that there might be matters with respect to which Weil cannot represent the Debtors because of an actual or perceived conflict of interest. Accordingly, the Debtors seek Court approval to employ and retain Curtis as their conflicts counsel in connection with these Chapter 11 Cases to handle matters that the Debtors may encounter which are not appropriately handled by Weil and other professionals because of a potential or actual conflict of interest or such matters as otherwise may be designated to Curtis. This arrangement will avoid unnecessary litigation and reduce the overall expense of administering these Chapter 11 Cases. Pursuant to section 327(a) of the Bankruptcy Code, the Debtors request that the Court approve the retention of Curtis as their conflicts counsel, to perform services that will be necessary during these Chapter 11 Cases in accordance with Curtis normal hourly rates and policies in effect when Curtis renders the services or incurs the expenses. 7. A proposed form of order granting the relief requested in the Motion is attached hereto as Exhibit A (the Proposed Order ). 8. In support of this Application, the Debtors submit the Declaration of Steven J. Reisman, attached hereto as Exhibit B (the Reisman Declaration ) and the declaration of Gregory C. Brown, the Debtors General Counsel, attached hereto as Exhibit C, (the Brown Declaration ). -3-
Pg 8 of 63 professional person include: BASIS FOR RELIEF 9. Bankruptcy Rule 2014(a) requires that an application for retention of a [S]pecific facts showing the necessity for the employment, the name of the person to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and, to the best of the applicant s knowledge, all of the person s connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. Fed. R. Bankr. P. 2014(a). As required, this Application and the exhibits attached hereto set forth specific facts showing the necessity for the employment, the reasons for selecting Curtis, the professional services to be rendered, the proposed arrangements for compensation and Curtis connections to parties in interest. 10. Curtis is a law firm that employs over 300 attorneys worldwide and maintains offices for the practice of law at 101 Park Avenue, New York, New York, as well as offices in Houston, Texas; Washington D.C.; Almaty, Kazakhstan; Ashgabat, Turkmenistan; Astana, Kazakhstan; Beijing, China; Buenos Aires, Argentina; Dubai, United Arab Emirates; Frankfurt, Germany; Istanbul, Turkey; London, England; Mexico City, Mexico; Milan, Italy; Muscat, Sultanate of Oman; Paris, France; and Rome, Italy. 11. The Debtors have been informed that Steven J. Reisman, a member of Curtis, as well as other members of, counsel to, and associates of Curtis who will be employed in these Chapter 11 Cases, are members in good standing of the Bar of the State of New York and the United States District Court for the Southern District of New York, among other courts. 12. Curtis has been involved in a number of other significant chapter 11 cases where it served as conflicts counsel in this District. See e.g., In re Fairway Group Holdings -4-
Pg 9 of 63 Corp., No. 16-11241 (MEW) (Bankr. S.D.N.Y.) (retention pending); In re Genco Shipping & Trading Limited, No. 14-11108 (SHL) (Bankr. S.D.N.Y. May 16, 2014) [ECF No. 181]; In re American Roads LLC, No. 13-12412 (BRL) (Bankr. S.D.N.Y. Aug. 21, 2013) [ECF No. 93]; In re Residential Capital, LLC, No. 12-12020 (MG) (Bankr. S.D.N.Y. Jul. 16, 2012) [ECF No. 781]; In re Hawker Beechcraft, Inc., No. 12-11873 (SMB) (Bankr. S.D.N.Y. May 30, 2012) [ECF No. 181]; In re Gen. Mar. Corp., No. 11-15285 (MG) (Bankr. S.D.N.Y. Dec. 12, 2011) [ECF No. 98]; In re Sbarro, Inc., No. 11-11527 (SCC) (Bankr. S.D.N.Y. May 3, 2011), [ECF No. 151]; In re FGIC Corp., No. 10-14215 (SMB) (Bankr. S.D.N.Y. Oct. 19, 2010) [ECF No. 86]; In re CIT Group, Inc., No. 09-16565 (ALG) (Bankr. S.D.N.Y. Nov. 24, 2009) [ECF No. 134]; In re Readers Digest Ass n, Inc., No. 09-23529 (RDD) (Bankr. S.D.N.Y. Sept. 17, 2009) [ECF No. 99]; In re Lear Corp., No. 09-14326 (ALG) (Bankr. S.D.N.Y. Jul. 31, 2009) [ECF No. 260]; In re Charter Commc ns, Inc., No. 09-11435 (JMP) (Bankr. S.D.N.Y. Apr. 15, 2009) [ECF No. 180]; In re Star Tribune Holdings Corp., No. 09-10244 (RDD) (Bankr. S.D.N.Y. Feb. 9, 2009) [ECF No. 78]; In re Lehman Brothers Holdings Inc., No. 08-13555 (JMP) (Bankr. S.D.N.Y. Nov. 21, 2008) [ECF No. 1659]. 13. The Debtors have selected Curtis as conflicts counsel because of Curtis extensive expertise, experience and knowledge in the field of debtors and creditors rights and business reorganization under chapter 11 of the Bankruptcy Code and other areas of the law where the Debtors may need legal advice. Curtis also possesses extensive experience in practicing before this Court and other Bankruptcy Courts throughout the United States. Furthermore, the Debtors believe that the retention of Curtis will enhance the ability of Weil to represent the Debtors generally and assist the Debtors in carrying out their duties in the Chapter 11 Cases. -5-
Pg 10 of 63 14. The Debtors believe that, rather than resulting in extra expense to the Debtors estates, retention of a single firm, such as Curtis, to handle all matters with respect to which Weil may not be able to handle due to a potential or actual conflict will promote the effective and economical representation of the Debtors in the Chapter 11 Cases. 15. Curtis has become familiar with the Debtors and many of the potential issues that may arise in the context of the Chapter 11 Cases and is thus poised to immediately step in and handle other matters that may arise during the pendency of the Chapter 11 Cases with respect to which Weil is conflicted. Furthermore, Curtis has assured the Debtors that it will work closely with Weil to take care not to duplicate the efforts of Weil, or any other professionals the Debtors may retain in the Chapter 11 Cases. 16. Based on the foregoing, the Debtors believe that Curtis is well-qualified and uniquely positioned to represent them as conflicts counsel in the Chapter 11 Cases in the most efficient and timely manner. SERVICES TO BE PROVIDED 17. Curtis role in the Chapter 11 Cases is limited to discrete matters where Weil cannot assist the Debtors due to the existence of an actual or potential conflict. As a result, Weil and Curtis will coordinate to avoid duplication of efforts and inefficiency. 18. In the Declaration and Disclosure Statement on Behalf of Weil, Gotshal & Manges LLP Pursuant to 11 U.S.C. 327, 329, and 504 and Fed. R. Bankr. P. 2014(a) and 2016(b) of Ray C. Schrock (the Schrock Declaration ), Weil makes certain disclosures with regard to present and former representations. As set forth in the Schrock Declaration, to the extent an issue arises in connection with certain current or prior clients that in the view of Weil could give rise to an actual or potential conflict, such issue will be addressed by Curtis. Subject to the terms of the Application and the Reisman Declaration, Curtis will represent the Debtors in -6-
Pg 11 of 63 all matters in which Weil has a conflict, as well as the conflict parties of any other counsel to the Debtors or any other parties that Weil may subsequently disclose that it has a conflict. 19. Subject to this Court s approval, Curtis will render professional services to the Debtors in connection with such discrete matters where Weil may not be able to act as a result of an actual or potential conflict of interest: (a) (b) (c) (d) (e) take necessary action to protect and preserve the Debtors estates including prosecuting actions on behalf of the Debtors, defending any action commenced against the Debtors and representing the Debtors interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the Debtors estates; prepare, on behalf of the Debtors, applications, motions, memoranda, orders, reports and other legal pleadings on matters as necessary for the Debtors; make appearances in Court and at various meetings on matters handled by Curtis; to the extent not already handled by Weil, take any necessary action on behalf of the Debtors to resolve issues in connection with obtaining approval of a disclosure statement and confirmation of one or more chapter 11 plans; and communicate with creditors and other parties in interest on matters that the Debtors or Weil considers necessary for Curtis to handle. PROFESSIONAL COMPENSATION 20. Curtis has stated its desire and willingness to act in these Chapter 11 Cases, to render the necessary professional services as attorneys for the Debtors and to receive compensation and reimbursement in accordance with its standard billing practices for services rendered and expenses incurred on behalf of the Debtors, in accordance with the provisions of sections 330 and 331 of the Bankruptcy Code or as otherwise ordered by the Court. Curtis billing practices and rates are summarized below, subject to periodic adjustments to reflect economic and other conditions, and are consistent with those generally governing the firm s -7-
Pg 12 of 63 representation of its other clients in and out of bankruptcy, regardless of whether a fee application is required. Category Hourly Rate 2 Partners $765-$900 Of Counsel $660 Associates $325-$620 Legal Assistants $200-$300 Managing Clerk $570 Other Support Personnel $70-$325 21. Curtis hourly billing rates, as agreed to by the Debtors, are designed to compensate Curtis fairly for the work of its professionals. The hourly fees are comparable to those charged by attorneys of similar experience and expertise for engagements of similar scope and complexity to the Chapter 11 Cases. 22. Curtis hourly billing rates are subject to periodic review and adjustments to reflect, among other things, changes in responsibilities and increased experience. Curtis has agreed that it will provide reasonable notice to the Debtors, the U.S. Trustee, and the Creditors Committee in connection with any increase of Curtis hourly billing rates, and file a notice of any such increase of Curtis hourly billing rates with the Court. 3 23. As set forth in the Reisman Declaration, on May 13, 2016, Curtis received an evergreen retainer in the amount of $25,000 (the Retainer ) from the Debtors for services to be performed and incurred, including in preparation for the commencement of these Chapter 11 2 These billing rates are in effect until September 1, 2016. Billing rates are adjusted annually. 3 Each September, there is a step-up of associate class to reflect an increase in each associate s class seniority. This annual step-up is not considered a rate increase as the billing rate among the applicable associate class may not change. -8-
Pg 13 of 63 Cases. Curtis intends to apply the Retainer to any outstanding amounts relating to the period prior to the Petition Date that were not processed through Curtis billing system as of the Petition Date. Curtis intends to retain the balance on account of services rendered and expenses incurred subsequent to the Petition Date. Any unused portion of the Retainer will be applied to Curtis postpetition fees and expenses incurred by Curtis in the Chapter 11 Cases. Notwithstanding anything to the contrary in the Engagement Letter, the Debtors will not replenish the Retainer referenced therein postpetition. 24. Except as set forth above, the Debtors did not make any other payments to Curtis during the 90-day period prior to the Petition Date, and Curtis is not a prepetition creditor of the Debtors. 25. Curtis hourly billing rates for professionals are not intended to cover outof-pocket expenses and certain elements of overhead that are typically billed separately. Accordingly, Curtis regularly charges its clients for the expenses and disbursements incurred in connection with the client s case, including, inter alia, telecommunications, document processing, photocopying, postage and package delivery charges, court fees, transcript costs, travel expenses, expenses for working meals and computer-aided research. 26. The Debtors understand and have agreed that Curtis hereafter will apply to the Court for allowances of compensation and reimbursement of expenses in accordance with General Order M-412 (Order Establishing Procedures for Monthly Compensation and Reimbursement of Expenses of Professionals, dated December 21, 2010 (Gonzalez, C.J.)), Administrative Order M-447 (Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases, dated January 29, 2013 (Morris, C.J.)), and the U.S. Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. 330 by Attorneys in Larger Chapter 11 Cases, effective -9-
Pg 14 of 63 November 1, 2013 (collectively, the Fee Guidelines ), sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any further orders of the Court (the Orders ) for all professional services performed and expenses incurred after the Petition Date. 27. Subject to the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Fee Guidelines, and the Orders, the Debtors propose to compensate Curtis for services rendered at its customary hourly rates that are in effect from time to time, as set forth herein and in the Reisman Declaration, and to reimburse Curtis according to its customary reimbursement policies. The Debtors respectfully submit that Curtis rates and policies stated in the Reisman Declaration are reasonable. 28. No promises have been received by either Curtis or any member, counsel, associate or other employee thereof as to compensation or payment in connection with the Chapter 11 Cases other than in accordance with the provisions of the Bankruptcy Code. Curtis has no agreement with any other entity to share with such entity any compensation received by the Firm in connection with these Chapter 11 Cases. 29. Curtis intends to maintain detailed, contemporaneous time records and apply to the Court for payment of compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Fee Guidelines (to the extent required by the foregoing), and any additional procedures that may be established by the Court in the Chapter 11 Cases. In addition, Curtis has agreed to accept as compensation such sums as may be allowed by the Court. Curtis understands that interim and final fee awards are subject to approval by this Court. NO ADVERSE INTEREST, DISINTERESTEDNESS AND DISCLOSURE OF CONNECTIONS 30. Curtis has informed the Debtors that in its view it: -10-
Pg 15 of 63 (a) (b) (c) does not hold or represent an interest adverse to the Debtors estates; is a disinterested person as defined by section 101(14), and used in section 327(a) (as qualified by section 1107(b)) of the Bankruptcy Code; and has no connection with the Debtors, its creditors or other parties in interest in the Chapter 11 Cases, except as set forth in the Reisman Declaration. 31. To the best of the Debtors knowledge, the attorneys of Curtis do not have any connection with or any interest adverse to the Debtors, its creditors or any other party-ininterest, or their respective attorneys and accountants, except as may be set forth in the Reisman Declaration. 32. Curtis has fully informed the Debtors of its ongoing representations as described in the Reisman Declaration and the Debtors have consented to Curtis continued representation of such entities in matters unrelated to these proceedings. 33. Curtis has informed the Debtors that Curtis will conduct an ongoing review of its files and promptly supplement its disclosure to the Court as required by Bankruptcy Rule 2014(a) in the event that circumstances change or new information is discovered from that presented in the Reisman Declaration. NOTICE 34. Notice of this Motion has been provided to (i) the U.S. Trustee (Attn: Susan D. Golden, Esq. and Richard C. Morrissey, Esq.); (ii) the Creditors Committee; (iii) the holders of the five (5) largest secured claims against the Debtors (on a consolidated basis); (iv) the holders of the twenty (20) largest unsecured claims against the Debtors (on a consolidated basis); (v) Winston & Strawn LLP, as counsel to Wells Fargo Bank, National Association, administrative agent under (a) the proposed Debtor-in-Possession Credit Agreement and (b) that certain Third Amended and Restated Credit Agreement, dated as of November 19, 2014 (as -11-
Pg 16 of 63 amended); (vi) Foley & Lardner LLP, as counsel to Delaware Trust Company, successor trustee under the indenture for the 9.25% Senior Secured Second Lien Notes due 2020; (vii) Kilpatrick, Townsend & Stockton LLP, as counsel to Wilmington Trust Company, successor trustee under the indentures for the 8.625% Senior Notes due 2020 and the 7.875% Senior Notes due 2022; (viii) Kirkland & Ellis LLP, as counsel to certain holders of the 9.25% Senior Secured Second Lien Notes due 2020; (ix) Milbank, Tweed, Hadley & McCloy LLP, as counsel to certain holders of the 8.625% Senior Notes due 2020 and the 7.875% Senior Notes due 2022; (x) the Securities and Exchange Commission; (xi) the Internal Revenue Service; (xii) counterparties to the Debtors derivative contracts; (xiii) any entity that has filed a request for notice under Bankruptcy Rule 2002 (collectively, the Notice Parties ). The Debtors submit that, in view of the facts and circumstances, such notice to the Notice Parties is sufficient and no other or further notice need be provided. 35. No previous request for the relief sought herein has been made by the Debtors to this or any other Court. WHEREFORE, the Debtors respectfully request entry of the Proposed Order granting the relief requested herein and such other and further relief as is just. Dated: New York, New York May 26, 2016 /s/ Gregory C. Brown Gregory C. Brown Executive Vice President, General Counsel, and Chief Administrative Officer Breitburn GP LLC -12-
Pg 17 of 63 EXHIBIT A PROPOSED ORDER
Pg 18 of 63 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------------x In re : : Chapter 11 BREITBURN ENERGY : PARTNERS LP, et al., : Case No. 16-11390 (SMB) : Debtors. 1 : (Jointly Administered) ----------------------------------------------------------------x ORDER PURSUANT TO 11 U.S.C. 327(A), FED. R. BANKR. P. 2014 AND 2016, AND LOCAL RULES 2014-1 AND 2016-1 AUTHORIZING THE RETENTION AND EMPLOYMENT OF CURTIS, MALLET-PREVOST, COLT & MOSLE LLP AS CONFLICTS COUNSEL FOR THE DEBTORS EFFECTIVE AS OF THE PETITION DATE Upon the application (the Application ) 2 of Breitburn Energy Partners LP and its affiliated debtors in the above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors ), pursuant to section 327(a) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, for an order authorizing the Debtors to employ and retain Curtis, Mallet-Prevost, Colt & Mosle LLP ( Curtis ) as conflicts counsel for the Debtors and Debtors in Possession, effective as of the Petition Date, under a general retainer, all as more fully set forth in the Application; and upon the declaration of Steven J. Reisman, a partner of Curtis, annexed to the Application as Exhibit B (the Reisman Declaration ) and the declaration of Gregory C. Brown, Executive Vice-President, General 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, as applicable, are: Breitburn Energy Partners LP (9953); Breitburn GP LLC (9948); Breitburn Operating LP (5529); Breitburn Operating GP LLC (5525); Breitburn Management Company LLC (2858); Breitburn Finance Corporation (2548); Alamitos Company (9156); Beaver Creek Pipeline, L.L.C. (7887); Breitburn Florida LLC (7424); Breitburn Oklahoma LLC (4714); Breitburn Sawtelle LLC (7661); Breitburn Transpetco GP LLC (7222); Breitburn Transpetco LP LLC (7188); GTG Pipeline LLC (3760); Mercury Michigan Company, LLC (3380); Phoenix Production Company (1427); QR Energy, LP (3069); QRE GP, LLC (2855); QRE Operating, LLC (9097); Terra Energy Company LLC (9616); Terra Pipeline Company LLC (3146); and Transpetco Pipeline Company, L.P. (2620). The Debtors mailing address is 707 Wilshire Boulevard, Suite 4600, Los Angeles, California 90017. 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Application.
Pg 19 of 63 Counsel and Chief Administrative Officer of the Debtors, annexed to the Application as Exhibit C (the Brown Declaration ); and the Court being satisfied, based on the representations made in the Application and the Reisman Declaration, that Curtis is disinterested as such term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and as required under section 327(a) of the Bankruptcy Code, that Curtis represents no interest adverse to the Debtors estates with respect to the matters upon which it is to be engaged; and the Court having jurisdiction to consider the Application and the relief requested therein in accordance with 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference to Bankruptcy Court Judges of the District Court for the Southern District of New York, dated January 31, 2012 (Preska, C.J.); and consideration of the Application and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and 1409; and due and proper notice of the Application having been provided, and such notice having been adequate and appropriate under the circumstances; and it appearing that no other or further notice need be provided; and a hearing having been held to consider the relief requested in the Application (the Hearing ); and upon the record of the Hearing and all of the proceedings had before the Court; and the Court having found and determined that the relief sought in the Application is in the best interests of the Debtors, their estates, creditors, and all parties in interest, and that the legal and factual bases set forth in the Application establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, it is ORDERED that the Application is hereby granted as set forth herein; and it is further -2-
Pg 20 of 63 ORDERED that pursuant to section 327(a) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, the Debtors are authorized to employ and retain Curtis as its attorneys under a general retainer, in accordance with Curtis normal hourly rates and disbursement policies, all as contemplated by the Application and on the terms set forth in the Reisman Declaration, effective as of the Petition Date; and it is further ORDERED that Curtis is authorized to perform all actions and services set forth in the Application, including, without limitation, assisting, advising and representing the Debtors with respect to the following matters: and it is further a. take necessary action to protect and preserve the Debtors estates including prosecuting actions on behalf of the Debtors, defending any action commenced against the Debtors and representing the Debtors interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the estates; b. prepare, on behalf of the Debtors, applications, motions, memoranda, orders, reports and other legal pleadings on matters as necessary for the Debtors; c. make appearances in Court and at various meetings on matters handled by Curtis; d. to the extent not already handled by Weil, take any necessary action on behalf of the Debtors to resolve issues in connection with obtaining approval of a disclosure statement and confirmation of one or more chapter 11 plans; and e. communicate with creditors and other parties in interest on matters that the Debtors or Weil considers necessary for Curtis to handle. ORDERED that Curtis shall be compensated in accordance with, and will file, interim and final fee applications for allowance of its compensation and expenses and shall be subject to sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Fee Guidelines, and any further order of the Court; and it is further -3-
Pg 21 of 63 ORDERED that Curtis shall be reimbursed for reasonable and necessary expenses as provided by the Fee Guidelines; and it is further ORDERED that Curtis shall use its best efforts to avoid any duplication of services provided by any of the Debtors other retained professionals in these Chapter 11 Cases; and it is further ORDERED that Curtis shall provide reasonable notice to the Debtors, the U.S. Trustee, and the Creditors Committee in connection with any increase of Curtis hourly rates as set forth in the Reisman Declaration, and file a notice of any such increase of Curtis hourly billing rates with the Court; and it is further ORDERED that to the extent the Application is inconsistent with this Order, the terms of this Order shall govern; and it is further ORDERED that, notwithstanding anything to the contrary in the Engagement Letter, Curtis shall not withdraw as counsel to the Debtors prior to the effective date of any chapter 11 plan confirmed in these Chapter 11 Cases without prior approval of the Court in accordance with Local Rule 2090-1(e); and it is further ORDERED that the terms and conditions of this Order shall be immediately effective and enforceable upon its entry; and it is further ORDERED that the Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order; and it is further ORDERED that, notwithstanding any applicability of Bankruptcy Rules 6004(h), 7062, or 9014, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry; and it is further -4-
Pg 22 of 63 ORDERED that this Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of this Order. Dated: New York, New York, 2016 UNITED STATES BANKRUPTCY JUDGE -5-
Pg 23 of 63 EXHIBIT B REISMAN DECLARATION
Pg 24 of 63 CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Steven J. Reisman Cindi M. Giglio Proposed Conflicts Counsel for the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------------x In re : : Chapter 11 BREITBURN ENERGY : PARTNERS LP, et al., : Case No. 16-11390 (SMB) : Debtors. 1 : (Jointly Administered) ----------------------------------------------------------------x DECLARATION OF STEVEN J. REISMAN IN SUPPORT OF THE APPLICATION OF DEBTORS PURSUANT TO 11 U.S.C. 327(a), FED. R. BANKR. P. 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AUTHORITY TO RETAIN AND EMPLOY CURTIS, MALLET-PREVOST, COLT & MOSLE LLP AS CONFLICTS COUNSEL FOR THE DEBTORS EFFECTIVE AS OF THE PETITION DATE I, Steven J. Reisman, do hereby declare as follows: 1. I am a member of the firm of Curtis, Mallet-Prevost, Colt & Mosle LLP ( Curtis or the Firm ), which maintains an office for the practice of law at, among other 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, as applicable, are: Breitburn Energy Partners LP (9953); Breitburn GP LLC (9948); Breitburn Operating LP (5529); Breitburn Operating GP LLC (5525); Breitburn Management Company LLC (2858); Breitburn Finance Corporation (2548); Alamitos Company (9156); Beaver Creek Pipeline, L.L.C. (7887); Breitburn Florida LLC (7424); Breitburn Oklahoma LLC (4714); Breitburn Sawtelle LLC (7661); Breitburn Transpetco GP LLC (7222); Breitburn Transpetco LP LLC (7188); GTG Pipeline LLC (3760); Mercury Michigan Company, LLC (3380); Phoenix Production Company (1427); QR Energy, LP (3069); QRE GP, LLC (2855); QRE Operating, LLC (9097); Terra Energy Company LLC (9616); Terra Pipeline Company LLC (3146); and Transpetco Pipeline Company, L.P. (2620). The Debtors mailing address is 707 Wilshire Boulevard, Suite 4600, Los Angeles, California 90017.
Pg 25 of 63 places, 101 Park Avenue, New York, New York 10178. Curtis is a law firm that employs over 300 attorneys worldwide and maintains offices for the practice of law in New York, New York; Houston, Texas; Washington D.C.; Almaty, Kazakhstan; Ashgabat, Turkmenistan; Astana, Kazakhstan; Beijing, China; Buenos Aires, Argentina; Dubai, United Arab Emirates; Frankfurt, Germany; Istanbul, Turkey; London, England; Mexico City, Mexico; Milan, Italy; Muscat, Sultanate of Oman; Paris, France; and Rome, Italy. 2. I am an attorney at law admitted to practice before the courts of the State of New York and the United States District Court for the Southern District of New York. 3. I submit this declaration in support of the application (the Application ) 2 of Breitburn Energy Partners LP and its debtor affiliates, as debtors and debtors in possession (collectively, the Debtors ), in the above-captioned cases (the Chapter 11 Cases ), for entry of an order authorizing the retention and employment of Curtis as conflicts counsel to the Debtors, effective as of the Petition Date, at its normal hourly rate in effect from time to time and in accordance with its normal reimbursement policies, in compliance with sections 329 and 504 of title 11 of the United States Code (the Bankruptcy Code ) and to provide the disclosure requirements under Rules 2014(a) and 2016(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules for the United States Bankruptcy Court for the Southern District of New York (the Local Rules ). Unless otherwise stated in this Declaration, I have personal knowledge of the facts set forth herein. To the extent that any information disclosed herein requires amendment or modification upon Curtis completion of further analysis or as additional information becomes available to it, it is Curtis practice that a supplemental declaration will be submitted to this Court. 2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Application. -2-
Pg 26 of 63 4. Prior to the Petition Date, the Debtors retained Curtis to represent and advise them in connection with certain matters that arise, or may arise, in their restructuring that are not appropriately handled by the Debtors lead bankruptcy counsel, Weil, Gotshal & Manges LLP ( Weil ) because of actual or potential conflict of interest issues or such matters as otherwise may be designated to Curtis. A copy of that certain engagement letter between the Debtors and Curtis, dated as of May 10, 2016 (the Engagement Letter ) is annexed hereto as Exhibit 1. 5. In the Declaration and Disclosure Statement on Behalf of Weil, Gotshal & Manges LLP Pursuant to 11 U.S.C. 327, 329, and 504 and Fed. R. Bankr. P. 2014(a) and 2016(b) of Ray C. Schrock (the Schrock Declaration ), Weil makes certain disclosures with regard to present and former representations. As set forth in the Schrock Declaration, I understand that to the extent an issue arises in connection with certain current or former clients that in the view of Weil could give rise to an actual or potential conflict, such issue will be addressed by Curtis. Subject to the terms of the Application and the Reisman Declaration, Curtis will represent the Debtors in all matters in which Weil has a conflict, as well as the conflict parties of any other counsel to the Debtors or any other parties that Weil may subsequently disclose that it has a conflict. 6. Subject to this Court s approval, Curtis will render professional services to the Debtors for certain discrete matters, which may include the following matters where Weil may not be able to act as a result of an actual or potential conflict of interest: (a) take necessary action to protect and preserve the bankruptcy estates including prosecuting actions on behalf of the Debtors, defending any action commenced against the Debtors and representing the Debtors interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the estates; -3-
Pg 27 of 63 (b) (c) (d) (e) prepare, on behalf of the Debtors, applications, motions, memoranda, orders, reports and other legal pleadings on matters as necessary for the Debtors; make appearances in Court and at various meetings on matters handled by Curtis; to the extent not already handled by Weil, take any necessary action on behalf of the Debtors to resolve issues in connection with obtaining approval of a disclosure statement and confirmation of one or more chapter 11 plans; and communicate with creditors and other parties in interest on matters that the Debtors or Weil considers necessary for Curtis to handle. 7. Curtis is not a creditor of the Debtors and: (i) (ii) (iii) does not hold or represent an interest adverse to the Debtors estates; is a disinterested person as defined by section 101(14), and used in section 327(a) (as qualified by section 1107(b)) of the Bankruptcy Code; and has no connection with the Debtors, their creditors or other parties in interest in the Chapter 11 Cases, except as set forth herein. 8. Curtis has extensive expertise, experience and knowledge in the field of debtors and creditors rights and business reorganization under chapter 11 of the Bankruptcy Code and other areas of the law where the Debtors may need legal advice. Curtis also possesses extensive experience in practicing before this Court and other Bankruptcy Courts throughout the United States. Furthermore, the retention of Curtis as conflicts counsel will enhance the ability of Weil to represent the Debtors generally and assist the Debtors in carrying out its duties in the Chapter 11 Cases. 9. In the event that matters should arise over the course of these Chapter 11 Cases on which Weil may be precluded from acting by reason of an actual or potential conflict of interest, the Debtors will rely on Curtis. -4-
Pg 28 of 63 CURTIS DISCLOSURE PROCEDURES AND DISINTERESTEDNESS 10. In preparing this Declaration, in order to ensure compliance with the requirements of the Bankruptcy Code and the Bankruptcy Rules regarding the retention of professionals by a debtor, I was provided with a list (the Potential Parties-in-Interest List ) of (a) entities affiliated with or related to the Debtors, (b) professionals expected to be retained by the Debtors, (c) key creditors of the Debtors, and (d) certain other parties in interest in the Chapter 11 Cases (collectively, the Potential Parties-in-Interest ). The Potential Parties-in- Interest List was based off a comprehensive list of the types of entities who may have contacts with the Debtors developed through discussions with Weil (the Retention Checklist ). The Retention Checklist is attached hereto as Exhibit 2. 11. Pursuant to a set of procedures developed by Curtis to comply with the requirements of the Bankruptcy Code and the Bankruptcy Rules and the Local Rules regarding the retention of professionals by a debtor under the Bankruptcy Code (the Curtis Disclosure Procedures ), I caused a search to be performed of Curtis computerized database consisting of all client, matter, cross-referenced and related information from 1980 to present. 12. To the best of my knowledge, after my review of the Firm s records, except as disclosed more fully below, Curtis has no connections with any of the Potential Partiesin-Interest in matters related to these Chapter 11 Cases. Curtis does have certain connections with certain of the Potential Parties-in-Interest in matters unrelated to these Chapter 11 Cases, as described below. 13. After diligent efforts, Curtis has identified the client connections disclosed below. The connections are categorized as follows: (a) clients for which Curtis has rendered services in the prior two (2) years and is presently rendering services ( Current Clients ); -5-
Pg 29 of 63 (b) clients for which Curtis has rendered services in the prior two (2) years and which engagement was closed within the prior two (2) years ( Former Clients ); (c) (d) entities that are related to, or may be related to, a current client for which Curtis has rendered services in the prior two (2) years and is presently rendering services; and entities that are related to, or may be related to, a former client for which Curtis has rendered services in the prior two (2) years and which engagement was closed within the prior two (2) years. 14. All client connections were diligently reviewed by an attorney working under my supervision. From such review, I determined that, with respect to each connection between Curtis and such parties, Curtis does not hold or represent an interest that is adverse to the Debtors estates, and Curtis is a disinterested person as such term is defined in section 101(14) of the Bankruptcy Code, for the reasons discussed below. Current Clients Exhibit 3 15. Curtis has currently rendered services and may, in the future, render services to the Current Clients set forth on Exhibit 3 hereto and their respective affiliates in matters unrelated to the Debtors. 16. To the best of my knowledge and information, the annual fees paid to Curtis by any of the Current Clients and their respective affiliates for either of the last two calendar years did not exceed 1% (one percent) of the annual gross revenue of Curtis for such year. Most of the Current Clients have either executed a waiver letter or indicated that they will execute a waiver letter allowing Curtis to act adversely to their interests on all matters unrelated to the matter(s) on which we are acting for them. Curtis has not, does not and will not represent any of the Current Clients or their respective affiliates in the Chapter 11 Cases or in other matters adverse to the Debtors during the pendency of the Chapter 11 Cases. -6-
Pg 30 of 63 Former Clients Exhibit 4 17. Curtis has rendered services to the following Former Clients set forth on Exhibit 4 hereto, within the prior two (2) years and Curtis engagement was formally concluded within such period. Curtis may, however, in the future, render services to the Former Clients or their affiliates or subsidiaries in matters unrelated to the Chapter 11 Cases. If any Former Client becomes a Current Client during the pendency of these Chapter 11 Cases Curtis will make the appropriate supplemental disclosures to the Court. Entities That Are Related or May Be Related to Current Clients Exhibit 5 18. In addition, the entities set forth on Exhibit 5 hereto either (a) have a name similar to a client in the client database or (b) are or may be related to a Current Client (collectively, the Potential Clients ). In certain instances, after a diligent effort, Curtis was unable to determine whether the similarity of names was, in fact, a coincidence or whether, and to what extent, the Potential Clients are related to a Current Client. However, out of an abundance of caution, Curtis has confirmed that, similar to the Current Clients and Former Clients identified above, Curtis does not represent any of the Potential Clients set forth on Exhibit 5 in matters related to the Chapter 11 Cases. Entities That Are Related or May Be Related to Former Clients Exhibit 6 19. Similarly, the entities set forth on Exhibit 6 hereto either (a) have a name similar to a Former Client in the client database or (b) are or may be related to a Former Client. After a diligent effort, Curtis was unable to determine whether the similarity of names was, in fact, a coincidence or whether, and to what extent, such entity is related to a Former Client in the client database. However, out of an abundance of caution, Curtis has confirmed that, similar to the Current Clients, Former Clients, and Potential Clients identified above, Curtis does not represent any of the entities set forth on Exhibit 6 in matters related to the Chapter 11 Cases. -7-
Pg 31 of 63 20. To the best of my knowledge, neither I, Curtis, nor any member or associate of Curtis, insofar as I have been able to ascertain, has in the past represented the Potential Parties-in-Interest List or any other party in interest in the Chapter 11 Cases in any matter that would conflict with Curtis duties in the Chapter 11 Cases or create any interest adverse to the interests of the Debtors in respect of the matters on which Curtis is to be employed in the Chapter 11 Cases. Curtis has not and will not represent any such entities in relation to the Debtors and Curtis does not have any relationship with such entities that would be adverse to the Debtors estates in the matters upon which Curtis is to be employed in the Chapter 11 Cases. CONNECTIONS WITH THE DEBTORS PROFESSIONALS 21. As part of its practice, Curtis regularly appears in cases, proceedings, and transactions involving many different attorneys, accountants, financial consultants, real estate consultants, and investment bankers including other professionals representing parties in interest in the Chapter 11 Cases. Curtis may have worked with or presently works with the professionals involved or to be retained in the Chapter 11 Cases, on cases, proceedings or transactions in matters unrelated to the Chapter 11 Cases. From time to time, Curtis has referred work to other professionals involved or to be retained in the Chapter 11 Cases. Likewise, certain such professionals have referred work to Curtis. In certain instances, such professionals may be clients of Curtis. In addition, Curtis has in the past represented and currently appears in matters in which Curtis represents the same entity, a related entity, or an adverse entity to those represented by other professionals in the Chapter 11 Cases. CONNECTIONS WITH THE UNITED STATES TRUSTEE AND THIS COURT 22. Insofar as I have been able to ascertain, Curtis has no connection with the United States Trustee (the U.S. Trustee ) in this Judicial Circuit or any person known to be -8-
Pg 32 of 63 employed by the Office of the U.S. Trustee in this Judicial Circuit (other than Curtis formerly employing Greg Zipes in 1998 through 1999 immediately prior to his joining the Office of the U.S. Trustee), except as set forth in this Declaration. 23. I am not related, and to the best of my knowledge, no attorney at the Firm is related to any United States Bankruptcy Judge in this District or to the U.S. Trustee for this District, or any employee thereof. CURTIS PERSONNEL INQUIRY 24. Curtis has conducted a general inquiry of certain of its legal personnel to determine whether they own any debt or equity securities of the Debtors or their affiliates, other than in connection with investments in mutual funds, blind trusts or other investments as to which such individual has no discretion as to the selection of the individual underlying assets. Based on responses to this inquiry, I understand that as of the date hereof, no Curtis legal personnel own any debt or equity securities of the Debtors or their affiliates. Curtis has a longstanding policy prohibiting all personnel from using confidential information that may come to their attention in the course of their work. In this regard, all Curtis personnel are barred from trading in securities with respect to which they possess confidential information. 25. Certain interrelationships exist among the Debtors. Nevertheless, the Debtors have advised Curtis that these relationships do not pose any conflicts of interest because of the general unity of interest among the Debtors. Insofar as I have been able to ascertain, I know of no conflicts of interest that would preclude Curtis joint representation of the Debtors in the Chapter 11 Cases. 26. The proposed engagement of Curtis is not prohibited by Bankruptcy Rule 5002. -9-
Pg 33 of 63 27. Curtis believes that it can adequately represent the interests of the Debtors. Curtis has not represented any creditor, interest holder or other party-in-interest in connection with their respective dealings with the Debtors, except as disclosed above. Curtis has fully informed the Debtors of its ongoing representation of the entities identified in the exhibits to this Declaration and the Debtors have agreed both to the Firm s continued representation of these entities in matters unrelated to these proceedings and to the Firm s representation of the Debtors in the Chapter 11 Case. CURTIS RATES AND BILLING PRACTICES 28. I have advised the Debtors of Curtis desire and willingness to act in the Chapter 11 Cases, to render the necessary professional services as attorneys for the Debtors and to receive compensation and reimbursement in accordance with its standard billing practices for services rendered and expenses incurred on behalf of the Debtors, in accordance with the provisions of sections 330 and 331 of the Bankruptcy Code or as otherwise ordered by the Court. Curtis billing practices and rates are summarized below, subject to periodic adjustments to reflect economic and other conditions, and are consistent with those generally governing the Firm s representation of its other clients in and out of bankruptcy, regardless of whether a fee application is required. -10-
Pg 34 of 63 Category Hourly Rate 3 Partners $765-$900 Of Counsel $660 Associates $325-$620 Legal Assistants $200-$300 Managing Clerk $570 Other Support Personnel $70-$325 29. Curtis hourly billing rates, as agreed to by the Debtors, are designed to compensate Curtis fairly for the work of its professionals. The hourly fees are comparable to those charged by attorneys of similar experience and expertise for engagements of similar scope and complexity to the Chapter 11 Cases. 30. Curtis hourly billing rates are subject to periodic review and adjustments to reflect, among other things, changes in responsibilities and increased experience. Curtis has agreed that it will provide reasonable notice to the Debtors, the U.S. Trustee, and the Official Committee of Unsecured Creditors in connection with any increase of Curtis hourly rates. 4 31. On May 13, 2016, in connection with the services Curtis agreed to provide to the Debtors, Curtis received an evergreen retainer in the amount of $25,000 (the Retainer ) from the Debtors for services to be performed in connection with the commencement and prosecution of the Chapter 11 Cases and for the reimbursement of reasonable and necessary expenses incurred in connection therewith. Curtis intends to apply the Retainer to any outstanding amounts relating to the period prior to the Petition Date that were not processed 3 These billing rates are in effect until September 1, 2016. Billing rates are adjusted annually. 4 Each September, there is a step-up of associate class to reflect an increase in each associate s class seniority. This annual step-up is not considered a rate increase as the billing rate among the applicable associate class may not change. -11-
Pg 35 of 63 through Curtis billing system as of the Petition Date. Curtis intends to retain the balance on account of services rendered and expenses incurred subsequent to the Petition Date. Any unused portion of the Retainer will be applied to Curtis postpetition fees and expenses incurred by Curtis in the Chapter 11 Cases. Notwithstanding anything to the contrary in the Engagement Letter, the Debtors will not replenish the Retainer referenced therein postpetition. 32. Except as set forth above, the Debtors did not make any other payments to Curtis during the 90-day period prior to the Petition Date, and Curtis is not a prepetition creditor of the Debtors. 33. Curtis hourly billing rates for professionals are not intended to cover outof-pocket expenses and certain elements of overhead that are typically billed separately. Accordingly, Curtis regularly charges its clients for the expenses and disbursements incurred in connection with the client s case, including, inter alia, telecommunications, document processing, photocopying, postage and package delivery charges, court fees, transcript costs, travel expenses, expenses for working meals and computer-aided research. Curtis intends to seek reimbursement for expenses incurred in connection with its representation of the Debtors in accordance with Curtis normal reimbursement policies, subject to any modifications to such policies that Curtis may be required to make to comply with orders of this Court, the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and to the extent required by the foregoing the Fee Guidelines (as defined below). 34. No promises have been received by either Curtis or any member, counsel, associate or other employee thereof as to compensation or payment in connection with the Chapter 11 Cases other than in accordance with the provisions of the Bankruptcy Code. Curtis -12-
Pg 36 of 63 has no agreement with any other entity to share with such entity any compensation received by the Firm in connection with these Chapter 11 Cases. 35. Curtis intends to maintain detailed, contemporaneous time records and apply to the Court for payment of compensation in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the General Order M-412 (Order Establishing Procedures for Monthly Compensation and Reimbursement of Expenses of Professionals, dated December 21, 2010 (Gonzalez, C.J.)), Administrative Order M-447 (Amended Guidelines for Fees and Disbursements for Professionals in Southern District of New York Bankruptcy Cases, dated January 29, 2013 (Morris, C.J.)), and the U.S. Trustee Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. 330 by Attorneys in Larger Chapter 11 Cases, effective November 1, 2013 (collectively, the Fee Guidelines ), and any additional procedures that may be established by the Court in the Chapter 11 Cases. In addition, Curtis has agreed to accept as compensation such sums as may be allowed by the Court. Curtis understands that interim and final fee awards are subject to approval by this Court. 36. Curtis also intends to seek reimbursement for expenses incurred in connection with its representation of the Debtors in accordance with Curtis normal reimbursement policies, subject to any modifications to such policies that Curtis may be required to make to comply with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Fee Guidelines, and any further order of the Court. -13-
Pg 37 of 63 ATTORNEY STATEMENT PURSUANT TO FEE GUIDELINES 37. The following is provided in response to the request for additional information set forth in D.1. of the Fee Guidelines. Question 1: Response: Question 2: Response: Question 3: Response: Question 4: Response: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? It is customary for Curtis to increase rates without notification to the client. However, for the Debtors, Curtis has agreed that it will provide reasonable notice to the Debtors, the U.S. Trustee, and the Official Committee of Unsecured Creditors in connection with any increase of Curtis hourly rates, and file a notice of any such increase of Curtis hourly billing rates with the Court. Moreover, certain normal and customary expenses incurred by Curtis that are reimbursed by other clients are not payable by a debtor in a bankruptcy case. Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? No. If you represented the client in the twelve (12) months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed postpetition, explain the difference and the reasons for the difference. The billing rates and material financial terms for Curtis engagement by the Debtors are as set forth herein. No adjustments were made to either the billing rates or the material financial terms of Curtis employment by the Debtors as a result of the filing of the Chapter 11 Cases. Has your client approved your prospective budget and staffing plan, and, if so, for what budget period? Yes, our client has approved a prospective budget for Curtis through the period ending August 12, 2016. Our client is always involved in staffing decisions, and staffing remains the client s prerogative. 38. The foregoing constitutes the statement of Curtis pursuant to sections 327(a), 328(a) and 504 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016 and Local Rules 2014-1 and 2016-1. -14-
Pg 38 of 63 is true and correct. Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing Executed on May 26, 2016 New York, New York /s/ Steven J. Reisman Steven J. Reisman -15-
Pg 39 of 63 INDEX OF EXHIBITS TO DECLARATION OF STEVEN J. REISMAN Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Engagement Letter Retention Checklist Current Clients of Curtis Former Clients of Curtis Entities That Are Related or May Be Related to Current Clients of Curtis Entities That Are Related or May Be Related to Former Clients of Curtis
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