Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 1 of 9 In re: GULF CHEMICAL & METALLURGICAL CORPORATION, a Texas corporation, et al., UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF PENNSYLVANIA Debtors. GULF CHEMICAL & METALLURGICAL CORPORATION, a Texas corporation, et al., v. Movants, No Respondent, Respondent. 1 Chapter 11 Case No. 16-22192-JAD & 16-22195-JAD (Jointly Administered under Case No. 16-22192-JAD Docket No. MOTION OF DEBTORS FOR AN ORDER AUTHORIZING DEBTORS TO RETAIN, EMPLOY, AND COMPENSATE CERTAIN PROFESSIONALS UTILIZED IN THE ORDINARY COURSE OF THE DEBTORS' BUSINESSES The above-captioned debtors and debtors in possession, Gulf Chemical & Metallurgical Corporation ("Gulf' and Bear Metallurgical Company ("Bear," and together with Gulf, the "Debtors", hereby move the Court (this "Motion" for the entry of an order, pursuant to sections 105(a and 327 of title 11 of the United States Code, 11 U.S.C. 101-1532 (the "Bankruptcy Code", authorizing the Debtors to retain, employ, and compensate certain professionals utilized in the ordinary course of the Debtors' businesses, nunc pro tunc to the Petition Date (defined below. In support of this Motion, the Debtors respectfully represent as follows: The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, include: Gulf Chemical & Metallurgical Corporation, a Texas corporation (3600 and Bear Metallurgical Company, a Delaware corporation (1238. 2290091.v1
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 2 of 9 Background On the date hereof (the "Petition Date", the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors are continuing in possession of their property and are operating and managing their businesses, as debtors in possession, pursuant to sections 1107 and 1108 of the Bankruptcy Code. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334 and 157. Consideration of this Motion is a core proceeding pursuant to 28 U.S.C. 157(b(2. The venue of the Debtors' chapter 11 cases and this Motion is proper pursuant to 28 U.S.C. 1408 and 1409. 3. The factual background regarding the Debtors, including their business operations, their capital and debt structure, and the events leading to the filing of the chapter 11 cases, is set forth in detail in the Declaration of Eric Caridroit in Support of Chapter 11 Petitions and First Day Motions (the "Caridroit Declaration", filed contemporaneously with this Motion and fully incorporated herein by reference. Relief Requested 4. The Debtors customarily retain the services of attorneys, accountants and other professionals to represent them in matters arising in the ordinary course of their businesses (the "Ordinary Course Professionals". A list of current Ordinary Course Professionals is annexed as Exhibit A to this Motion. The Debtors reserve the right to supplement Exhibit A to designate additional Ordinary Course Professionals by providing notice (the "Supplemental Notice", subject to the procedures detailed below. 2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Caridroit Declaration. 2
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 3 of 9 By this Motion, the Debtors seek authorization: (a to retain the Ordinary Course Professionals under sections 105(a and 327 of the Bankruptcy Code without the necessity of a separate, formal retention application approved by this Court for each Ordinary Course Professional; and (b to compensate the Ordinary Course Professionals for postpetition services rendered, subject to certain limits set forth below, without the necessity of additional Court approval. In contrast, the Debtors will file individual retention applications for any professionals that the Debtors seeks to employ in connection with the administration of the Debtors' chapter 11 cases. Basis for Relief 6. The Debtors desire to employ and retain the Ordinary Course Professionals nunc pro tunc to the Petition Date to render services to the Debtors' estates. The nature of the services rendered by any of the Ordinary Course Professionals is not related to the administration of the Debtors' bankruptcy cases. Moreover, the cost of preparing retention applications and fee applications would be significant, and in light of the procedures requested by this Motion, unnecessary. Accordingly, consistent with the circumstances of the Debtors' chapter 11 cases, the Debtors request that they be permitted to employ and retain the Ordinary Course Professionals subject to the terms described below. Payment of Fees and Expenses 8. The Debtors request that they be permitted to pay, without formal application to the Court by any Ordinary Course Professional, 100% of the fees and disbursements to each of the Ordinary Course Professionals upon the submission to the Debtors of an appropriate invoice setting forth in reasonable detail the nature of the services rendered after the Petition Date, so 3
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 4 of 9 long as such interim fees and disbursements do not exceed $30,000 per month per Ordinary Course Professional over the duration of the chapter 11 cases. 9. The Debtors propose that payments to a particular Ordinary Course Professional would become subject to Court approval pursuant to an application for an allowance of compensation and reimbursement of expenses under sections 330 and 331 of the Bankruptcy Code if such payments to an Ordinary Course Professional exceed the cap of $30,000 per month per Ordinary Course Professional over the duration of the Debtors' chapter 11 cases. 10. The Debtors further propose that, commencing on July 20, 2016, and on or before the 20 th day of every month thereafter during which the chapter 11 cases are pending, they will file a statement that includes the following information for each Ordinary Course Professional: (a the name of such Ordinary Course Professional; (b the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by such Ordinary Course Professional during the previous month; and (c a general description of the services rendered by such Ordinary Course Professional. This statement will be filed with the Court and served on (i the United States Trustee for the Western District of Pennsylvania; (ii those creditors listed on the Debtors' List of Creditors Holding 20 Largest Unsecured Claims or official officer of unsecured creditors, if appointed; (iii the Debtors' prepetition secured lender; (iv the proposed debtor in possession financing lender; and (v the undersigned counsel to the Debtors (collectively, the "Notice Parties" with respect to the immediately preceding month. 11. The Notice Parties may file objections to the payments to Ordinary Course Professionals within 10 days of the filing of the statement. If an objection to the fees and expenses of an Ordinary Course Professional is filed by a Notice Party, such fees and expenses 4
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 5 of 9 will be subject to review and approval by the Court pursuant to section 330 of the Bankruptcy Code. Submission of Bankruptcy Rule 2014 Affidavits 12. The Debtors also request that all Ordinary Course Professionals be excused from submitting separate applications for proposed retention. The Debtors recognize, however, the importance of providing the Court and the United States Trustee information about each Ordinary Course Professional that is an attorney or law firm. 13. In order to ensure that each Ordinary Course Professional that is an attorney or law firm does not represent or hold any interest adverse to the Debtors or their estates with respect to the matter on which such professional is employed, the Debtors request that each Ordinary Course Professional that is an attorney or law firm be required to file an affidavit of disinterestedness with the Court, substantially in the form attached hereto as Exhibit B, and to serve copies thereof on the Notice Parties, and those parties requesting notice pursuant to Rule 2002(g of the Bankruptcy Rules prior to, or contemporaneous with, the submission of invoices to the Debtor that accompany a request for compensation. The Debtors will not make payment to any Ordinary Course Professional who is an attorney or law firm and has failed to file an affidavit of disinterestedness. 14. The Debtors further request that the Notice Parties be given 10 days from the date of service of an Ordinary Course Professional's affidavit to object to the retention of such professional (the "Objection Deadline". Objections, if any, shall be served upon the Ordinary Course Professional and the Notice Parties on or before the Objection Deadline. If any such objection cannot be resolved within 10 days of service, the matter will be scheduled for hearing before the Court. If no objection is submitted on or before the Objection Deadline, or if any objection submitted is timely resolved as set forth above, the Debtors request that, without 5
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 6 of 9 further order of the Court, the employment, retention and compensation of the Ordinary Course Professional be deemed approved. 15. The Debtors reserve their right to file Supplemental Notices, in their sole discretion, to add or remove any Ordinary Course Professionals as necessary. After filing a Supplemental Notice, the Debtors shall serve the notice upon the Notice Parties, who shall have ten days after the filing of the Supplemental Notice to object to the retention of any newly designated Ordinary Course Professional. Objections, if any, shall be served upon the Ordinary Course Professional and the Notice Parties on or before the Objection Deadline. If any such objection cannot be resolved within 10 days of service, the matter will be scheduled for hearing before the Court. If no objection is submitted on or before the Objection Deadline, or if any objection submitted is timely resolved as set forth above, the Debtors request that, without further order of the Court, the employment, retention and compensation of the new Ordinary Course Professional be deemed approved. Any new Ordinary Course Professional whom the Debtors retain shall file an affidavit of disinterestedness contemporaneously with the Debtors' filing of the Supplemental Notice. Any new Ordinary Course Professionals retained pursuant to a Supplemental Notice will be paid in accordance with the terms and conditions set forth above. Basis for Relief 16. Because the Ordinary Course Professionals will not be involved in administering the chapter 11 cases, the Debtors do not believe that the Ordinary Course Professionals are bankruptcy "professionals" within the meaning of section 327 of the Bankruptcy Code, whose retention must be approved by the Court. In re Madison Management Group, Inc., 137 B.R. 275, 283 (Bankr. N.D. Ill. 1992 (only retention of professionals whose duties are central to administration of the bankruptcy case requires prior court approval under section 327 of the Bankruptcy Code; In re D'Lites of America, Inc., 108 B.R. 352, 355 (Bankr. N.D. Ga. 1989 6
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 7 of 9 (section 327 approval not necessary for one who provides services to debtors that are necessary regardless of whether a petition was filed; In re United Color Press, Inc. 129 B.R. 143, 145 (Bankr. S.D. Ohio 1991 (a professional under section 327 of the Bankruptcy Code is a person who plays an intimate role in the reorganization of the debtor. 17. In the interest of full disclosure, the Debtors note that the initial Ordinary Course Professionals listed on Exhibit A may be performing services that could relate in some way to the chapter 11 cases. For example, the Debtors' bankruptcy cases will inevitably involve detailed review of the Debtors' financial statements, tax returns, and related documents - work that Deloitte & Touche LLP completes for Gulf. Similarly, environmental or employee benefit issues may arise during the bankruptcy cases; if so, Baker Botts LLP or Thompson Coburn LLP will likely address environmental issues for Gulf, and Eckert Seamans Cherin Mellott LLC will address any employee benefit issues for Gulf or Bear. While this work will be done in the context of the chapter 11 cases, it is not necessarily because of the chapter 11 cases or related to the administration thereof. 18. Nevertheless, out of an abundance of caution, the Debtors seek the relief requested in this Motion to avoid any later controversy about the Debtors' employing and paying the Ordinary Course Professionals during the pendency of the chapter 11 cases. The Debtors have sought specific Court authority to employ all "professionals" involved in the actual administration of the chapter 11 cases, pursuant to section 327 of the Bankruptcy Code. 19. The Debtors submit that the proposed employment of the Ordinary Course Professionals and the payment of compensation in the ordinary course is in the best interests of the Debtors' estates and creditors. Finally, the Debtors do not believe that any of the Ordinary 7
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 8 of 9 Course Professionals have an interest materially adverse to the Debtors, their estates, or creditors. 20. Relief similar to that sought in this Motion has been granted in many other chapter 11 cases. See, e.g., In re QSL of Medina, Inc., et al., No. 15-52722 (Bankr. N.D. Ohio December 15, 2015; In re Bucyrus Community Hospital, Inc., Case No. 10-61078 (Bankr. N.D. Ohio, March 23, 2010; (authorizing the retention, employment and payment of certain professionals in the ordinary course of the Debtors' business. 3 The Debtors and their estates will be well served by authorizing the retention of the Ordinary Course Professionals, and it is in the best interests of all of the parties and the creditors to avoid any disruption in the professional services rendered by the Ordinary Course Professionals in the day-to-day operations of the Debtors' businesses. Notice 21. No trustee, examiner or official committee has been appointed in this chapter 11 case. Notice of this Motion has been served on the following parties or, in lieu thereof, to their counsel, if known: (i the United States Trustee for the Western District of Pennsylvania; (ii those creditors listed on the Debtors' List of Creditors Holding 20 Largest Unsecured Claims; (iii the Debtors' prepetition secured lender; (iv the proposed debtor in possession financing lenders; (v the District Director of Internal Revenue; (vi the Texas Commission on Environmental Quality; (vii the Texas Office of the Attorney General Environmental Protection Division; (viii each of the Ordinary Course Professionals subject to the relief requested in this Motion. In light of the nature of the relief requested herein, the Debtors submit that no other or further notice need be given. 3 Copies of unreported orders are available upon request to Debtors' counsel. 8
Case 16-22192-JAD Doc 34 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Main Document Page 9 of 9 No Prior Request 22. No prior request for the relief sought in this Motion has been made to this Court or any other court. WHEREFORE, the Debtors respectfully request that the Court enter an order: (i authorizing the Debtors to employ and compensate certain Ordinary Course Professionals on the terms and conditions set forth herein; and (ii granting such other relief as is proper and just. Dated: June 14, 2016 Respectfully submitted, Sean D. Malloy (Ohio 0073157 (pro hac vice pending Michael J. Kaczka (Ohio 0076548 (pro hac vice pending Joshua A. Gadharf (Michigan P76860 (pro hac vice pending McDONALD HOPKINS LLC 600 Superior Avenue, East, Suite 2100 Cleveland, OH 44114 Telephone: (216 348-5400 Facsimile: (216 348-5474 E-mail: smalloy@ mcdonaldh opki ns.com mkaczka @ mcdonaldh opki ns.com igadharf@mcdonaldhopkins.com -and- Is/ William E. Kelleher, Jr. William E. Kelleher, Jr. (Pa. I.D. No. 30747 Thomas D. Maxson (Pa. I.D. No. 63207 Helen S. Ward (Pa. I.D. No. 204088 COHEN & GRIGSBY, P.C. 625 Liberty Avenue, 5th Floor Pittsburgh, PA 15222 Telephone: (412 297-4900 Facsimile: (412 209-0672 Email: wkelleher @ cohenlaw.com tmaxson@cohenlaw.com hward @ cohenlaw.com PROPOSED COUNSEL FOR DEBTORS AND DEBTORS IN POSSESSION 9
Case 16-22192-JAD Doc 34-1 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Exhibit A - List of Professionals Page 1 of 2 EXHIBIT A {6163551:}
Case 16-22192-JAD Doc 34-1 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Exhibit A - List of Professionals Page 2 of 2 LIST OF ORDINARY COURSE PROFESSIONALS Firm Name Type of Work Relevant Debtor Eckert Seamans Cherin Mellott LLC Legal (benefits Gulf & Bear Fisher Phillips LLP Legal (labor Gulf & Bear Schneider Downs & Co., Inc. Audit Bear Ernst & Young Audit (tax Gulf Martinez & Associates, LLC Audit (tax Gulf Adams and Reese, LLP Legal (labor Gulf Baker Botts LLP Legal (environmental Gulf Blake, Cassels, & Graydon Squire Patton Boggs LLP Legal (Canadian counsel for environmental and trans-boundary shipments of hazardous recyclable materials Legal (environmental and business Gulf Gulf Thompson Coburn LLP Legal (environmental Gulf Deloitte & Touche LLP Tax Gulf Gary Pearson Environmental consultant Gulf {6163551:}
Case 16-22192-JAD Doc 34-2 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Exhibit B - Affidavit of Disinterestness Page 1 of 3 EXHIBIT B {6163584:}
Case 16-22192-JAD Doc 34-2 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Exhibit B - Affidavit of Disinterestness Page 2 of 3 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF PENNSYLVANIA In re: GULF CHEMICAL & METALLURGICAL CORPORATION, a Texas corporation, et al., 1 Debtors. GULF CHEMICAL & METALLURGICAL CORPORATION, a Texas corporation, et al., v. No Respondent, Movants, Respondent. Chapter 11 Case No. 16- (Request for Joint Administration Pending Judge Related to Docket No. AFFIDAVIT OF IN SUPPORT OF EMPLOYMENT AS PROFESSIONAL TO RENDER SERVICES IN THE ORDINARY COURSE OF BUSINESS STATE OF [ ] SS. COUNTY OF [ ] I,, being first duly sworn and deposed, state: 1. I am a member of [ ] which maintains offices at [ ]. 2. Prior to the commencement of the above-captioned chapter 11 cases, [Professional] was retained by one or more of the Debtors to provide [general description of services provided]. 3. The Debtors owe [Professional] approximately $[ ] for prepetition services rendered from [ ] through [ ]. 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, include: Gulf Chemical & Metallurgical Corporation, a Texas corporation (3600 and Bear Metallurgical Company, a Delaware corporation (1238. {6163584:}
Case 16-22192-JAD Doc 34-2 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Exhibit B - Affidavit of Disinterestness Page 3 of 3 4. To the best of my knowledge, [Professional] has no other connection with the Debtors, their creditors, other parties-in-interest, or the United States Trustee [except that ]. 5. [Professional] may have performed services in the past and may perform services in the future, in matters unrelated to the chapter 11 cases, for persons that are parties in interest in the Debtor s chapter 11 cases. As part of its customary practice, [Professional] is retained in cases, proceedings and transactions involving many different parties, some of whom may represent or be employed by the Debtors, claimants and parties in interest in the chapter 11 cases. 6. [Professional] represents that neither it, nor any member or professional employed by [Professional], insofar as can be reasonably ascertained, holds or represents any interest adverse to the Debtors or the Debtors estates with respect to the matters on which [Professional] is to be employed. Subscribed and sworn to before me this day of, 2016 Notary Public [Name] {6163584:} 2
Case 16-22192-JAD Doc 34-3 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Proposed Order Page 1 of 4 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF PENNSYLVANIA In re: Chapter 11 GULF CHEMICAL & METALLURGICAL 1 CORPORATION, a Texas corporation, et al., Case No. 16-22192-JAD & 16-22195-JAD (Jointly Administered under Debtors. Case No. 16-22192-JAD GULF CHEMICAL & METALLURGICAL CORPORATION, a Texas corporation, et al., v. Movants, No Respondent, Respondent. Related to Docket No. ORDER AUTHORIZING THE DEBTORS TO RETAIN, EMPLOY, AND COMPENSATE CERTAIN PROFESSIONALS UTILIZED IN THE ORDINARY COURSE OF THE DEBTORS' BUSINESSES This matter having come before the Court on the Motion of Debtors for an Order Authorizing the Debtor to Retain, Employ, and Compensate Certain Professionals Utilized in the Ordinary Course of the Debtor's Business, Docket No. (the "Motion", filed by the abovecaptioned debtors and debtors in possession (collectively, the "Debtors". The Court having reviewed the Motion; the Court finding that: (a the Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334 and reference from the District Court for the Western District of Pennsylvania pursuant to 28 U.S.C. 157; (b this proceeding is a core proceeding pursuant to 28 U.S.C. 157(b(2; (c venue of the chapter 11 cases and this Motion is proper under 28 U.S.C. 1408 and 1409; (d service and notice of the Motion was sufficient under the 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, include: Gulf Chemical & Metallurgical Corporation, a Texas corporation (3600 and Bear Metallurgical Company, a Delaware corporation (1238.
Case 16-22192-JAD Doc 34-3 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Proposed Order Page 2 of 4 circumstances; and (e the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; IT IS HEREBY ORDERED THAT: The Motion shall be, and hereby is, GRANTED. Capitalized terms used but not defined herein shall have the meanings given to them in the Motion. 3. The Debtors are authorized, but not required, to retain, employ, and to pay the reasonable fees and expenses of the Ordinary Course Professionals so that they may assist and advise the Debtors in the operation of their businesses. 4 The Debtors are authorized, but not required, to pay each Ordinary Course Professional identified no more than $30,000 per month each month over the duration of the Debtors' chapter 11 cases. The Debtors shall not pay more than such amounts for services rendered without an order of this Court authorizing such higher amount. In the event the fees of any Ordinary Course Professional exceed $30,000 per month during a month in course of the Debtors' chapter 11 cases, such Ordinary Course Professional shall file a fee application with this Court for the amount of the fees in excess of the aforementioned limitations. Commencing on July 20, 2016 and the 20 th business day of every month thereafter during which the chapter 11 cases are pending, a statement will be filed with the Court and served on: (i the United States Trustee for the Western District of Pennsylvania; (ii those creditors listed on the Debtors' List of Creditors Holding 20 Largest Unsecured Claims; (iii the Debtors' prepetition secured lender; (iv the proposed debtor in possession financing lender; and (v the undersigned counsel to the Debtors (collectively, the "Notice Parties" with respect to the immediately preceding month. Such statement will include the following information for each Ordinary Course Professional: (a the name of such Ordinary Course Professional; (b the 2 2290809.v1
Case 16-22192-JAD Doc 34-3 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Proposed Order Page 3 of 4 aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by such Ordinary Course Professional during the previous month; and (c a general description of the services rendered by such Ordinary Course Professional. 6. Notice Parties shall have 10 days following the filing of the monthly accounting to file objections to payments to a particular Ordinary Course Professional reflected in that statement. In the event an objection to the amounts paid to an Ordinary Course Professional is filed, this Court shall determine the reasonableness and necessity of such fees and expenses in accordance with section 330 of the Bankruptcy Code. 8. Each Ordinary Course Professional who is an attorney shall file an affidavit of lack of adverse interest with this Court substantially in the form attached to the Motion as Exhibit B, and serve copies thereof on the Notice Parties and those parties requesting notice pursuant to Rule 2002(g of the Bankruptcy Rules prior to or contemporaneous with the submission to the Debtors of invoices accompanying a request for compensation. 9 The Debtors shall not make any payment to any Ordinary Course Professional who has failed to file such affidavit of disinterestedness. 10. The Notice Parties shall have 10 days from the date of service of the Ordinary Course Professional affidavit to object to the retention of such professional. If any objection cannot be resolved within 10 days of service, the matter will be scheduled for a hearing. 11. If the Debtors desire to retain an additional Ordinary Course Professional, the Debtors shall follow the procedures outlined in the Motion for issuing a Supplemental Notice. Any new Ordinary Course Professional retained pursuant to a Supplemental Notice shall be paid in accordance with the terms and conditions set forth above. 2290809.v1 3
Case 16-22192-JAD Doc 34-3 Filed 06/14/16 Entered 06/14/16 19:08:21 Desc Proposed Order Page 4 of 4 12. Notwithstanding anything to the contrary contained herein, the terms and conditions of this Order, and authority granted to the Debtors herein, shall be subject in all respects to any requirements imposed upon the Debtors under any approved debtor in possession financing facility or order with respect thereto regarding the use of cash collateral, including, without limitation, any approved budget. 13. This Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. By the Court: Jeffery A. Deller Chief United States Bankruptcy Judge 2290809.v1 4