UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK ) In re ) Chapter 11 ) Case No. 09-75473-REG SUFFOLK READY MIX, LLC, ) ) Re: Docket No. 56 Debtor. ) ) OBJECTION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO DEBTOR S MOTION TO EXTEND EXCLUSIVITY PERIODS The Official Committee of Unsecured Creditors (the Committee ) of Suffolk Ready Mix, LLC (the Debtor ) hereby objects (the Objection ) to the Debtor s Motion [Docket No. 56] (the Motion ) seeking an order, pursuant to Section 1121(d) of Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code ), extending for six months the exclusive time periods for the Debtor to file a plan of reorganization and to solicit acceptances thereof. As is set forth in detail below, the Committee objects to the Debtor s request for such a lengthy extension of the applicable time periods, and submits that the Debtor has failed to demonstrate cause for its request. In further support of this Objection, the Committee respectfully represents as follows: Pertinent Factual Background and Procedural History 1. On July 24, 2009 (the Petition Date ), the Debtor filed a Voluntary Petition for relief under Chapter 11 of the Bankruptcy Code. Since the Petition Date, the Debtor has continued in possession of its property and in the management of its business as a debtor-inpossession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 262192_1
2. On August 12, 2009, the Office of the United States Trustee for the Eastern District of New York appointed the Committee. 3. On November 13, 2009, the Debtor filed an Application [Docket No. 53] (the Application ) seeking an order pursuant to Section 365(d)(4) of the Bankruptcy Code extending the deadline for the Debtor to assume or reject the unexpired lease for the non-residential real property located in Kings Park, New York (the Property ) until the earlier of (i) February 19, 2010, or (ii) the date on which the Court enters an order confirming a plan of reorganization. 4. On November 17, 2009, the Debtor filed the Motion. 5. On November 19, 2009, the Court entered an Order [Docket No. 57] granting the Application in part and extending the deadline for the Debtor to assume or reject the unexpired lease for the Property until the earlier of (i) January 20, 2010, or (ii) the date on which the Court enters an order confirming a plan of reorganization. 6. The Court has scheduled a status conference and a hearing on the Motion for December 2, 2009 at 1:30 p.m. The Committee s Objection to the Motion 7. By way of the Motion, the Debtor seeks to extend the exclusive periods set forth in Sections 1121(b) and 1121(c) of the Bankruptcy Code for six months. The Committee respectfully objects to the Motion because the Debtor has not even remotely come close to satisfying its burden of demonstrating cause in support of its request, and because the Debtor has altogether failed to explain why it needs such a lengthy extension of the applicable time periods. 1 8. Section 1121 of the Bankruptcy Code provides, in pertinent part, that on request of a party in interest made within the respective periods specified in subsections (b) and (c) of 1 The Committee also takes issue with the Debtor s request that the extensions be granted without prejudice to further extensions in the future[.] See Motion at 6. 262192_1 2
this section and after notice and a hearing, the court may for cause reduce or increase the 120- day period or the 180-day period referred to in this section. 11 U.S.C. 1121(d)(1). 9. Courts that have addressed the issue have uniformly held that the debtor bears the burden of establishing cause for an extension of its exclusivity periods. See, e.g., In re Express One International, Inc., 194 B.R. 98, 100 (Bankr. E.D. Tex. 1996); In re Texaco, Inc., 76 B.R. 322, 326 (Bankr. S.D.N.Y. 1987) (citations omitted). It is not sufficient for a debtor merely to recite allegations that it deems to constitute cause under Section 1121(d)(1) of the Bankruptcy Code; rather, it must make an affirmative showing of cause supported by admissible evidence. In re Ravenna Industries, Inc., 20 B.R. 886, 889 (Bankr. N.D. Ohio 1982) (court declined to grant further extension of exclusivity period where no cause shown, debtor had been afforded prior extensions, and cash position was deteriorating). 10. Moreover, it is well settled that [i]n cases involving uncomplicated issues and not unusually large debtors, requests for extensions of the exclusivity periods should not be granted routinely or as a matter of course without proof as to probable success in formulating a plan of reorganization and evidence that the debtor did not seek the additional extension in order to pressure the creditors to accede to the debtor s reorganization demands. Texaco, 76 B.R. at 326 (citations omitted); accord Matter of American Federation of Television and Radio Artists, 30 B.R. 772 (Bankr. S.D.N.Y. 1983) (no cause to extend exclusivity period where case not unusually large and debtor made no showing it could successfully reorganize if extension granted). 11. The factors deemed to be relevant in determining whether cause exists under Section 1121(d) of the Bankruptcy Code are as follows: (a) the size and complexity of the case; 262192_1 3
(b) (c) (d) (e) (f) (g) (h) (i) the necessity of sufficient time to permit the debtor to negotiate a plan of reorganization and prepare adequate information; the existence of good faith progress toward reorganization; the fact that the debtor is paying its bills as they become due; whether the debtor has demonstrated reasonable prospects for filing a viable plan; whether the debtor has made progress in negotiations with its creditors; the amount of time which has elapsed in the case; whether the debtor is seeking an extension of exclusivity in order to pressure creditors to submit to the debtor s reorganization demands; and whether an unresolved contingency exists. In re Adelphia Communications Corp., 352 B.R. 578, 587 (Bankr. S.D.N.Y. 2006) (footnote omitted); see also In re R.G. Pharmacy, Inc., 374 B.R. 484 (Bankr. D. Conn. 2007); In re Grand Traverse Development Co., Ltd., 147 B.R. 418 (Bankr. W.D. Mich. 1992); In re McLean Industries, Inc., 87 B.R. 830 (Bankr. S.D.N.Y. 1988); In re Wisconsin Barge Line, Inc., 78 B.R. 946 (Bankr. E.D. Mo. 1987). 12. Applying the facts of this matter to the case law discussed above, it is clear that the Debtor has not demonstrated the existence of cause entitling it to the requested extensions of the exclusivity periods. The Debtor simply alleges in the Motion that it has spent the four months subsequent to the Petition Date focused mainly on issues pertaining to its operations, and that it has begun to review the claims asserted against it, so that once those claims are finally determined (by an unspecified date in the future), it can then begin to develop a plan of reorganization. See Motion at 6. Such allegations are wholly insufficient to establish cause within the meaning of Section 1121(d)(1) of the Bankruptcy Code and the cases that interpret it. 262192_1 4
13. The Motion addresses, albeit tangentially so, only the third of the nine factors listed above. See id. (discussing progress being made toward reorganization). It is devoid of any consideration of the other eight factors. Especially troubling to the Committee is the absence of any recognition of the fourth factor, which considers whether the Debtor is paying its bills in a timely manner. See Adelphia Communications, 352 at 587. By its own admission, which it made in connection with the Application, the Debtor is not current in its obligations to the lessor of the Property. For this reason, and given the lack of any showing of cause, the Committee objects to the granting of the relief sought in the Motion. 14. This case is not an unusually large or complex case that would require such lengthy extensions as the Debtor seeks in order to permit the Debtor to develop a plan of reorganization to address a large number of contested claims. Indeed, the Debtor does not even discuss the substance of any proposed plan of reorganization in the Motion. The issues to be dealt with in any such plan should be relatively straightforward; it is the Committee s belief that the exclusivity period provided by Section 1121(b) of the Bankruptcy Code afforded the Debtor adequate opportunity to negotiate and prepare its plan of reorganization. 15. Of course, if the Court denies the Motion, the Debtor will be free to propose a plan of reorganization notwithstanding the expiration of the period set forth in Section 1121(b) of the Bankruptcy Code. The Debtor s unsecured creditors, whose interests the Committee represents, should not be deprived of the opportunity to put forth an alternative plan of reorganization simply because the Debtor could not complete its plan of reorganization within the time afforded to it. 262192_1 5
Waiver of Memorandum of Law 16. Because this Objection does not present any novel issues of law, and because the statutory provisions and authorities relied upon are set forth herein, the Committee respectfully requests that the Court waive the requirement of Rule 9013-1(b) of the Local Bankruptcy Rules for the Eastern District of New York that a separate memorandum of law be filed. Conclusion 17. Absent a finding of cause, a debtor should not be permitted to continue to put off creditors having plans of their own. In re Parker Street Florist & Garden Center, Inc., 31 B.R. 206, 207 (Bankr. D. Mass. 1983). The Committee respectfully submits that in the circumstances of this case, the termination of the exclusive time periods set forth in Sections 1121(b) and 1121(c) of the Bankruptcy Code, and the filing of a plan of reorganization by the Committee, would better serve the Debtor s unsecured creditors than would granting the extensions that the Debtor seeks in the Motion. 18. The Committee therefore respectfully requests that the Court enter an order as follows: (a) sustaining this Objection; (b) denying the Motion in its entirety; and (c) granting to the Committee such other and further relief as the Court deems just and proper. Dated: November 25, 2009 JAGER SMITH P.C. /s/ Steven C. Reingold Bruce F. Smith (BS 9582) Steven C. Reingold (SR 6731) Michael J. Fencer (admitted pro hac vice) One Financial Center Boston, Massachusetts 02111 telephone: (617) 951-0500 facsimile: (617) 951-2414 email: sreingold@jagersmith.com 262192_1 6
- and - Francis G. Conrad (FC 4603) 485 Madison Avenue, 20th Floor New York, New York 10022 telephone: (212) 683-3520 Attorneys for Official Committee of Unsecured Creditors of Suffolk Ready Mix, LLC 262192_1 7
CERTIFICATE OF SERVICE I, Steven C. Reingold, hereby certify that on this 25th day of November, 2009, I caused true copies of the within Objection of Official Committee of Unsecured Creditors to Debtor s Motion to Extend Exclusivity Periods to be served upon the parties set forth on the attached service list as so indicated. /s/ Steven C. Reingold Steven C. Reingold (SR 6731) One Financial Center Boston, Massachusetts 02111 telephone: (617) 951-0500 facsimile: (617) 951-2414 email: sreingold@jagersmith.com 262192_1
In re Suffolk Ready Mix, LLC. Case No. 8-09-75473-REG 2002 Service List Michael G. McAuliffe, Esq. Law Offices of Michael G. McAuliffe 48 South Service Road, Suite 102 Melville, New York 11747 Counsel for the Debtor Leslie A. Berkoff, Esq. Morritt Hock Hamrott & Horowitz LLP 400 Garden City Plaza Garden City, New York 11530 Counsel to Antonio Lopes Stan Yang, Esq. Office of the United States Trustee Long Island Federal Courthouse 560 Federal Plaza, Room 560 Central Islip, New York 11722 Counsel for the United States Trustee Lawrence E. Tofel, Esq. Tofel & Partners, LLP 800 Third Avenue New York, New York 10022 Counsel for Lafarge North America, Inc. Clifford A. Katz, Esq. Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, LLP 1065 Avenue of the Americas New York, New York 10018 Counsel for Financial Federal Credit Inc. Robert T. Bonsignore, Esq. Financial Federal Credit Inc. 733 Third Avenue, 24th Floor New York, New York 10017 Counsel for Financial Federal Credit Inc. 262192_1
Josh Russell, Esq., District Tax Attorney New York State Department of Taxation & Finance 400 Oak Street, Suite 102 Garden City, New York 11530 Counsel for New York State Department of Taxation & Finance Magdeline D. Coleman, Esq. Buchanan Ingersoll & Rooney P.C. 620 Eighth Avenue, 23d Floor New York, New York 10018 Counsel for Caterpillar Financial Services Corporation Eli Mattioli, Esq. Eunice Rim, Esq. K&L Gates LLP 599 Lexington Avenue New York, New York 10022 Counsel for Essex Cement Company 262192_1