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Full title: Adversary case 21-50994. Complaint to (I) Avoid and Recover Certain Preferential Transfers Pursuant to 11 U.S.C. Section 547 and 550; and (II) Disallow Certain Claims Pursuant to 11 U.S.C. Section 502(d) by Gorham Paper and Tissue, LLC against Kruger Inc.. Fee Amount $350 (12 (Recovery of money/property - 547 preference)),(14 (Recovery of money/property - other)),(02 (Other (e.g. other actions that would have been brought in state court if unrelated to bankruptcy))). (Attachments: # 1 Exhibit A # 2 Notice of Dispute Resolution Alternatives) (Katona, Shanti) (Entered: 06/30/2021)

Document posted on Jun 29, 2021 in the bankruptcy, 9 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Kruger Inc. (the “Defendant”) to: (i) avoid and recover certain transfers made by GPT to the Defendant in the ninety (90) days before GPT commenced its bankruptcy case on November 4, 2020, pursuant to §§ 547 and 550 of title 11 of the United States Code (the “Bankruptcy Code”); and (ii) disallow any and all claims held by the Defendant against GPT pursuant to § 502(d) of the Bankruptcy Code.Because all of the Transfers were made by GPT pursuant to the Settlement Agreement and Confessed Judgment, the Transfers were not made in the ordinary course of business between GPT and the Defendant or the industry, and the debt established in the Settlement Agreement and Confessed Judgment that gave rise to the Transfers was not incurred in the ordinary course of business operations.The Defendant has not paid the value of the Transfers to GPT pursuant to §§ 547(b) and 550 of the Bankruptcy Code.Pursuant to § 502(d) of the Bankruptcy Code, the Defendant is not entitled to receive payment on the Kruger Claim, and the Kruger Claim must be disallowed, unless and until such time as the Defendant has repaid the full value of the Transfers to GPT. PRAYER FOR RELIEF WHEREFORE, based on the foregoing allegations, GPT requests that this Court grant the following relief: A. Judgment in favor of GPT and against Defendant determining that the Transfers are avoidable in their entirety; B. Judgment in favor of GPT and against the Defendant directing the Defendant immediately to pay to GPT the full amount of the Transfers, plus interest and costs to the maximum extent permitted by law; C. Judgment in favor of GPT and against the Defendant disallowing the Kruger Claim in its entirety unless and until such time as the Defendant pays to GPT the full amount of the avoided Transfers; and D. Such other and further relief as this Court may deem just and proper.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 Gorham Paper and Tissue, LLC, et al., Case No. 20-12814 (KBO) Debtors.1 (Jointly Administered) Gorham Paper and Tissue, LLC, Plaintiff, Adv. Proc. No. 21-__________ (KBO) v. Kruger Inc., Defendant. COMPLAINT TO (I) AVOID AND RECOVER CERTAIN PREFERENTIAL TRANSFERS PURSUANT TO 11 U.S.C. §§ 547 AND 550; AND (II) DISALLOW CERTAIN CLAIMS PURSUANT TO 11 U.S.C. § 502(d) Gorham Paper and Tissue, LLC, a debtor and debtor-in-possession in the above-captioned chapter 11 cases (“GPT”), files this complaint (the “Complaint”) against Kruger Inc. (the “Defendant”) to: (i) avoid and recover certain transfers made by GPT to the Defendant in the ninety (90) days before GPT commenced its bankruptcy case on November 4, 2020, pursuant to §§ 547 and 550 of title 11 of the United States Code (the “Bankruptcy Code”); and (ii) disallow any and all claims held by the Defendant against GPT pursuant to § 502(d) of the Bankruptcy Code. In support of this Complaint, GPT alleges the following: 1 The last four digits of Gorham Paper and Tissue, LLC’s federal taxpayer identification number are 6533. See 11 U.S.C. § 342(c)(1). The last four digits of White Mountain Tissue, LLC’s federal taxpayer identification number are 0078. See id. Prior to the sale of substantially all of their assets, the principal place of business for Gorham Paper and Tissue, LLC and White Mountain Tissue, LLC was 72 Cascade Flats, Gorham, New Hampshire 03581.

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JURISDICTION AND VENUE 1. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157(a) and 1334(a) and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated as of February 29, 2012. 2. This is a core proceeding pursuant to 28 U.S.C. § 157(b). 3. Venue of the Chapter 11 Cases (defined below) and the Complaint are proper in this District under 28 U.S.C. §§ 1408 and 1409. 4. Pursuant to Local Rule 7008-1, GPT consents to the entry of final judgments or orders with respect to this adversary proceeding if it is determined that this Court would lack Article III jurisdiction to enter final order or judgment absent consent of the parties. FACTUAL ALLEGATIONS A. Background Of The Debtors 5. On November 4, 2020 (the “Petition Date”), GPT and its affiliate, White Mountain Tissue, LLC (“WMT” and, together with GPT, the “Debtors”) commenced their bankruptcy cases by filing voluntary petitions for relief with this Court under chapter 11 of the Bankruptcy Code (the “Chapter 11 Cases”). 6. On November 6, 2020, this Court entered an order authorizing the joint administration of the Chapter 11 Cases, for procedural purposes only, pursuant to Bankruptcy Rule 1015(b) and Local Rule 1015-1 [Docket No. 42 in Case No. 20-12814]. 7. The Debtors are limited liability companies formed under the laws of the State of Delaware, with their principal places of business (prior to the sale of substantially all of their assets) located at 72 Cascade Flats, Gorham, New Hampshire. 8. Prior to the sale, the Debtors manufactured towel and tissue parent rolls for “at-home” and “away-from-home” (i.e., commercial or industrial) markets. For the at-home market,

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the Debtors manufactured parent rolls for the production of bath, facial tissue, towels, napkins, and other paper products. For the away-from-home market, the Debtors manufactured parent rolls for the production of industrial towels and wipes, hard wound towels, and multi-fold towels. 9. For at-home products, production was run through the “TM06” dry crepe tissue machine, which was purchased in 2012 by WMT. Production for away-from-home products was run through the “PM09” towel machine owned by GPT. 10. On November 7, 2020, the Debtors filed a motion pursuant to § 363 of the Bankruptcy Code seeking approval of bid procedures and authorization to sell substantially all of their assets [Docket No. 53] (the “Sale Motion”). 11. The Court approved the Sale Motion on November 19, 2020 [Docket No. 112], and the Debtors closed the sale of substantially all of their assets to Gorham Acquisitions, LLC on December 31, 2021. 12. Since closing their asset sales, the Debtors have continued to wind-down their affairs and plan their exits from the Chapter 11 Cases, including investigating avoidance actions. 13. As of and prior to the Petition Date, GPT was and remains insolvent, including, but not limited to, because GPT was unable to pay its debts when they became due and GPT’s liabilities exceeded the value of its assets by tens of millions of dollars, as evidenced by GPT’s Schedules and Statement of Financial of Affairs filed in the Chapter 11 Cases, and the consideration paid for GPT’s assets in the asset sale. B. Background Of The Defendant 14. Upon information and belief, the Defendant is a Canadian corporation incorporated in the Province of Quebec, with its principal place of business located at 3284 Chemin Bedford, Montreal, Quebec, H3S 1G5.

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15. The Defendant is one of Canada’s largest manufacturers of tissue products for household, industrial, and commercial use. 16. The Defendant distributes the paper products it produces to a wide array of commercial and public establishments, including throughout the United States. 17. GPT scheduled the Defendant as holding a general unsecured claim in the amount of $225,025.47 [Docket No. 140, at p. 85] (the scheduled general unsecured claim and any other claims held by Kruger against GPT as of the Petition Date are referred to herein as the “Kruger Claim”). 18. The Defendant did not file a proof of claim in the Chapter 11 Cases. C. The Relationship Between GPT And The Defendant 19. Prior to the Petition Date, GPT and the Defendant engaged in numerous transactions in which the Defendant sold various pulp products to GPT. 20. The Defendant intentionally and knowingly conducted business with the Debtors, including at and through the Debtors’ mill in Gorham, New Hampshire. 21. The Defendant’s business relationship with the Debtors directly gave rise to the causes of action in this Complaint. 22. On or about February 12, 2020, after GPT had failed to make certain payments when due to the Defendant, the Defendant filed a complaint against GPT in Coos County New Hampshire Superior Court, Case No. 218-2018-CV-000635 (the “New Hampshire Complaint”). 23. In the New Hampshire Complaint, the Defendant alleged claims for breach of contract and related claims. The Defendant sought damages in an amount not less than $623,075.47.

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24. On or about May 13, 2020, GPT and the Defendant entered into a settlement agreement to resolve the New Hampshire Complaint (the “Settlement Agreement”).225. At the same time as the Settlement Agreement, GPT agreed to enter into that certain Confessed Judgment Note dated May 13, 2020 (the “Confessed Judgment”), in which GPT acknowledged the indebtedness to the Defendant in the amount of $623,075.47. 26. A true and correct copy of the Confessed Judgment is attached hereto as Exhibit A. D. The Transfers From GPT To The Defendant In The 90 Days Before The Petition Date27. During the ninety (90) days prior to the Petition Date (the “Preference Period”), GPT transferred monies to the Defendant in the aggregate amount of $195,000.00 (each a “Transfer” and, collectively, the “Transfers”). 28. GPT made the Transfers to the Defendant in the following amounts on the following dates: 2 The Settlement Agreement contains a confidentiality provision. Accordingly, GPT has not attached the Settlement Agreement to this Complaint out of an abundance of caution.

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29. GPT made each of the Transfers to the Defendant pursuant to the Settlement Agreement and Confessed Judgment. 30. None of the Transfers were made by GPT in exchange for new products or services from the Defendant, nor pursuant to the ordinary course business relationship between GPT and Kruger that existed prior to or after the settlement. E. GPT’s Reasonable Due Diligence Into Reasonably Knowable Defenses 31. Prior to filing this Complaint, GPT and its counsel conducted reasonable due diligence into potential defenses to the Transfers that might render some or all of the Transfers non-avoidable. 32. GPT’s due diligence included discussing the business relationship with GPT’s former Chief Executive Officer, Richard Arnold, and former Chief Financial Officer, Wayne Johnson. GPT also gathered and reviewed historic payment data between GPT and the Defendant. GPT also reviewed the Settlement Agreement and the Confessed Judgment. 33. Because all of the Transfers were made by GPT pursuant to the Settlement Agreement and Confessed Judgment, the Transfers were not made in the ordinary course of business between GPT and the Defendant or the industry, and the debt established in the Settlement Agreement and Confessed Judgment that gave rise to the Transfers was not incurred in the ordinary course of business operations. 34. Based on its reasonable due diligence, GPT determined that each Transfer is avoidable pursuant to § 547(b) of the Bankruptcy Code, and the Defendant does not have any reasonably known defenses to the Transfers.

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FIRST CLAIM FOR RELIEF (Avoidance of Preferential Transfers – 11 U.S.C. § 547) 35. GPT repeats and realleges the allegations contained in each preceding paragraph of the Complaint as if fully set forth herein. 36. During the Preference Period, GPT made the Transfers to the Defendant in the total amount of $195,000.00. 37. Each Transfer constituted a transfer of property of GPT to or for the benefit of the Defendant. 38. The Defendant was a creditor of GPT at the time of each Transfer, by virtue of the amounts that that GPT was obligated to pay in accordance with the Settlement Agreement and Confessed Judgment. 39. Each Transfer was to or for the benefit of the Defendant, as a creditor of GPT. 40. Each Transfer was made for, or on account of, an antecedent debt or debts owed by GPT to the Defendant. 41. Each Transfer was made while GPT was insolvent. GPT also is entitled to, and may rely on, the presumption of insolvency pursuant to § 547(f) of the Bankruptcy Code. 42. Each Transfer enabled the Defendant to receive more than the Defendant would have received if: (i) the Chapter 11 Cases were brought as cases under chapter 7 of the Bankruptcy Code; (ii) the Transfers had not been made; and (iii) the Defendant received payment on account of the debt paid by each of the Transfers to the extent provided by the Bankruptcy Code. 43. Each Transfer is avoidable in its entirety pursuant to § 547(b) of the Bankruptcy Code.

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SECOND CLAIM FOR RELIEF (Recovery of Avoided Transfers – 11 U.S.C. § 550) 44. GPT repeats and realleges the allegations contained in each preceding paragraph of the Complaint as if fully set forth herein. 45. GPT is entitled to avoid the Transfers pursuant to § 547(b) of the Bankruptcy Code. 46. The Defendant was the initial and immediate transferee of the Transfers. 47. GPT is entitled to recover for the benefit if its estate the proceeds or value of the Transfers pursuant to § 550 of the Bankruptcy Code. THIRD CLAIM FOR RELIEF (Disallowance of Claims – 11 U.S.C. § 502(d)) 48. GPT repeats and realleges the allegations contained in each preceding paragraph of the Complaint as if fully set forth herein. 49. GPT is entitled to avoid the Transfers pursuant to § 547(b) of the Bankruptcy Code. 50. The Defendant has not paid the value of the Transfers to GPT pursuant to §§ 547(b) and 550 of the Bankruptcy Code. 51. Pursuant to § 502(d) of the Bankruptcy Code, the Defendant is not entitled to receive payment on the Kruger Claim, and the Kruger Claim must be disallowed, unless and until such time as the Defendant has repaid the full value of the Transfers to GPT. PRAYER FOR RELIEF WHEREFORE, based on the foregoing allegations, GPT requests that this Court grant the following relief: A. Judgment in favor of GPT and against Defendant determining that the Transfers are avoidable in their entirety; B. Judgment in favor of GPT and against the Defendant directing the Defendant

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immediately to pay to GPT the full amount of the Transfers, plus interest and costs to the maximum extent permitted by law; C. Judgment in favor of GPT and against the Defendant disallowing the Kruger Claim in its entirety unless and until such time as the Defendant pays to GPT the full amount of the avoided Transfers; and D. Such other and further relief as this Court may deem just and proper. Dated: June 30, 2021 Respectfully submitted, Wilmington, Delaware POLSINELLI PC /s/ Shanti M. Katona Christopher A. Ward (Del. Bar No. 3877) Shanti M. Katona (Del. Bar No. 5352) 222 Delaware Avenue, Suite 1101 Wilmington, Delaware 19801 Telephone: (302) 252-0920 Facsimile: (302) 252-0921 cward@polsinelli.com skatona@polsinelli.com -and- BERNSTEIN, SHUR, SAWYER & NELSON, P.A. D. Sam Anderson (Admitted Pro Hac Vice) Adam R. Prescott (Admitted Pro Hac Vice) 100 Middle Street PO Box 9729 Portland, Maine 04104 Telephone: (207) 774-1200 Facsimile: (207) 774-1127 sanderson@bernsteinshur.com aprescott@bernsteinshur.com Counsel to the Debtors and Debtors in Possession

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