K&L GATES LLP William B. Finkelstein State Bar No. 07016300 Artoush Varshosaz State Bar No. 24066234 1717 Main Street, Suite 2800 Dallas, Texas 75201 (214) 939-5500 Telephone (214) 939-5849 Telecopy and Eric T. Moser 599 Lexington Avenue New York, NY 10022-6030 (212) 536-4858 Telephone (212) 536-3901 Telecopy ATTORNEYS FOR PPG INDUSTRIES, INC. UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION IN RE: Chapter 11 VITRO ASSET CORP., et al., Case No. 11-32600-hdh-11 Debtors. 1 Jointly Administered LIMITED OBJECTION OF PPG INDUSTRIES, INC. TO PROPOSED ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND PROPOSED CURE AMOUNTS PPG Industries, Inc. ( PPG ) submits this limited objection to the Debtors Motion, Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code and Rules 2002, 6004, 6006, 9007, and 9014 of the Federal Rules of Bankruptcy Procedure, for Entry of an Order Approving the Sale of Substantially All of the Debtors' Assets [Docket No. 242] (the Motion ), and in support thereof, states as follows: 1 The Debtors are: Vitro America, LLC (Case No. 11-32602), Super Sky Products, Inc. (Case No. 11-32604), Super Sky International, Inc. (Case No. 11-32605), VVP Finance Corporation (Case No. 11-32611), and VVP Funding Corporation (Case No. 11-33161). NY-883555 v2
1. The Debtors have identified American Glass Enterprises, LLC (the Successful Bidder ) as the successful bidder for substantially all of their assets. 2 2. Based on the Debtors Notice to Parties in Interest of Each Bidder s (I) List of Assigned Contracts; and (II) List of Assumed Liabilities [Docket No. 664], PPG understands that the Successful Bidder may wish to have the Debtors assume and assign certain contracts with PPG in connection with its purchase of the Debtors assets. 3. Under the Bankruptcy Code, however, before such an assumption and assignment can occur, the Debtors must, at a minimum: (i) cure all outstanding defaults under the assumed contracts; and (ii) provide adequate assurance that the Successful Bidder will perform all of the Debtors future obligations under any assigned contracts. 11 U.S.C. 365(b). 4. Based on the limited information that is currently available about the terms of the Successful Bidder s offer, 3 the Successful Bidder has not yet definitively committed to assume the Debtors contracts with PPG since the Successful Bidder has not yet filed its asset purchase agreement with the Debtors. 4 5. The Successful Bidder has likewise not yet committed to perform the Debtors future obligations under the Debtors contracts with PPG by agreeing to assume and pay: (i) the 2 See Debtors Notice to Parties in Interest of Successful Bid [Docket No. 721]. 3 Pursuant to the terms of this Court s Order (A) Approving Bidding Procedures and Bidding Protections in Connection with the Sale of Substantially All of the Debtors' Assets; (B) Establishing Procedures for Filing Objections to the Proposed Assumption and Assignment of Certain Contracts and Cure Amounts; (C) Scheduling a Hearing on the Sale Motion; and (D) Granting Related Relief, [Docket No. 532] (the Bid Procedures Order ), the Debtors were required to file and serve a Supplement identifying the Successful Bidder, and providing a copy of the purchase agreement signed by the Successful Bidder, on or before June 2, 2011. See Bid Procedures Order, 22. 4 On June 6, 2011, the Debtor posted the Successful Bidder s Contract Designations to the website of its noticing agent. These designations are not self-interpreting, however, and presumably form part of a larger integrated asset purchase agreement that will explain precisely how the Debtor and the Successful Bidder intend to deal with assumed executory contracts. OBJECTION TO PROPOSED CURE AMOUNT - PAGE 2
substantial amounts owing under PPG s contracts with the Debtors, but which have not yet come due, and (ii) the substantial additional sums that PPG expects the Debtor to incur for purchases made between the time of the sale hearing and the date of any closing between the Debtors and the Successful Bidder. 6. Finally, the Debtors Notice to Contract Counterparties to any Contract that May Be Assumed And Assigned by the Debtors in Connection with the Proposed Sale of Substantially All of the Debtors Assets and Associated Proposed Cure Amounts [Docket No. 635] (the Cure Notice ) understates the cure amount presently owed to PPG as $2,314,000.00 and misidentifies several of the Debtors contracts with PPG by referring to the wrong date or suggesting that the contracts have already terminated. 5 7. PPG s records reflect that, as of June 2, 2011, the Debtors are already in default in the amount of $2,403,223.77 a number that exceeds the Debtor s proposed cure amount and which can be expected to grow substantially between the date of this pleading and the closing of any sale with the Successful Purchaser since PPG s records also reflect that the total outstanding receivables owing by the Debtors to PPG, including with respect to post-petition purchases that are not yet due, is $5,531,185.05 as of June 2, 2011. 8. PPG reserves the right to supplement or amend this objection at or prior to the Sale Hearing based on the filing of the Supplement required by the Bid Procedures Order, or otherwise. 5 See, e.g., Cure Notice, p. 19 (asserting that three PPG contracts purportedly terminated on 1/1/11, OBJECTION TO PROPOSED CURE AMOUNT - PAGE 3
WHEREFORE, PPG respectfully requests this Court condition any assumption or assignment of its contracts with the Debtors on: (i) the prompt payment of all sums that may then be due and owing at the time of such assumption or assignment; (ii) the unequivocal assumption by the Successful Purchaser (or any other party to whom the Debtor may seek to assign PPG s contracts) of the obligation to satisfy all of the Debtors outstanding obligations under such contracts, including, without limitation, the obligation to pay for any postpetition purchases of goods that are not yet due; and (iii) granting such other and further relief as this Court may deem just and proper. Dated: June 6, 2011 Respectfully Submitted, K&L GATES LLP By: /s/ Artoush Varshosaz William B. Finkelstein Texas State Bar No. 07016300 Artoush Varshosaz Texas State Bar No. 24066234 1717 Main Street, Suite 2800 Dallas, TX 75201 Telephone: (214) 939-5500 Telecopy: (214) 939-5849 Bill.Finkelstein@klgates.com Artoush.Varshosaz@klgates.com and Eric T. Moser 599 Lexington Avenue New York, NY 10022-6030 (212) 536-4858 Telephone (212) 536-3901 Telecopy Eric.Moser@klgates.com ATTORNEYS FOR PPG INDUSTRIES, INC. OBJECTION TO PROPOSED CURE AMOUNT - PAGE 4
CERTIFICATE OF SERVICE I certify that on June 6, 2011, a true and correct copy of the Objection to Proposed Cure Amounts was served via (i) email through the Bankruptcy Court s Electronic Case Filing System on those parties that have consented to such service and (ii) first class U.S. Mail upon the parties listed below. US Trustee for the Northern District of Texas Attn. George McElreath, Esq. and Erin Schmidt, Esq. 1100 Commerce Street Dallas, Texas 75242 Fulbright & Jaworski LLP Attn: William R. Greendyke, Esq. and Ryan E. Manns, Esq. 2200 Ross Avenue, Suite 2800 Dallas, Texas 75201 Akin Gump Strauss Hauer & Feld LLP Michael S. Stamer, Esq. & Abid Qureshi, Esq. One Bryant Park New York, New York 10036 and Sarah Link Schultz, Esq. 1700 Pacific Avenue, Suite 4100 Dallas, Texas 75082 /s/ Artoush Varshosaz OBJECTION TO PROPOSED CURE AMOUNT - PAGE 5