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Full title: Third Motion to Extend Exclusivity Period for Filing a Chapter 11 Plan and Disclosure Statement Filed by Klausner Lumber Two LLC. Hearing scheduled for 7/15/2021 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 6/28/2021. (Attachments: # 1 Exhibit A-Proposed Order # 2 Notice) (Amer, Nader) (Entered: 06/07/2021)

Document posted on Jun 6, 2021 in the bankruptcy, 11 pages and 0 tables.

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(the “Debtor”) hereby moves (the “Motion”), pursuant to section 1121(d) of title 11 of the United States Code (the “Bankruptcy Code”) and rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), for entry of an order, substantially in the form attached hereto as Exhibit A (the “Proposed Order”), extending the periods during which (1) the Debtor has the exclusive right to file a chapter 11 plan (the “Exclusive Filing Period”) by approximately four months from June 8, 2021 to October 10, 2021, and (2) the Debtor has the exclusive right to solicit acceptances thereof (the “Exclusive Solicitation Period” and together with the Exclusive Filing Period, the “Exclusive Periods”) by approximately four months from August 9, 2021 to December 10, 2021. On April 13, 2020, the County also brought suit against the Debtor and Carolina Sawmill, L.P. (“Carolina Sawmills”)—the Debtor’s prepetition lender—by filing a complaint in North Carolina State Court requesting the entry of a declaratory judgment providing, inter alia, that neither the Debtor nor Carolina Sawmills had any interest in the Real Property.On November 9, 2020 the Court entered the Order Approving Stipulation Regarding Motion to Approve County Settlement (D.I. 377), and the Order Approving Motion of the Debtor Pursuant to Bankruptcy Rule 9019, Local Rule 9013-1 and 11 U.S.C. §§ 105(a) and 363 for Entry of an Order Authorizing Revised Settlement with the County (D.I. 380).By this Motion, the Debtor seeks entry of an order, pursuant to section 1121(d) of the Bankruptcy Code, extending the Exclusive Filing Period by approximately four months through and including October 10, 2021, and the Exclusive Solicitation Period by approximately four months through and including December 10, 2021, without prejudice to the Debtor’s right to seek further extensions of the Exclusive Periods.Notably, since the Petition Date, the Debtor has, among other things: (a) procured post-petition financing; (b) prepared and filed its Schedules of Assets and Liabilities and Statement of Financial Affairs (see D.I. 76, 77); (c) obtained Court orders to retain critical professionals and establish procedures for the interim compensation of professionals; (d) solicited third-party purchasers for the sale of the Debtor’s assets; (e) negotiated extensively with the County and Carolina Sawmills to resolve various issues, including with respect to the Real Property and reached a settlement, enabling the Debtor to pursue a going-concern sale of its assets; (f) conducted a full marketing and sale process, to include a virtual auction; (g) obtained approval of the APA and sale of substantially all of the Debtor’s assets, and closed on the sale; (h) begun conducting the claims administration and investigation process, including negotiating a settlement with the WARN Act Plaintiffs and filing several cl

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 In re Case No. 20-11518 (KBO) Klausner Lumber Two LLC, Hearing Date: Debtor.1 July 15, 2021 at 2:00 p.m. (ET) Objection Deadline: June 28, 2021 at 4:00 p.m. (ET) DEBTOR’S MOTION FOR ENTRY OF AN ORDER FURTHER EXTENDING THE EXCLUSIVE PERIODS DURING WHICH ONLY THE DEBTOR MAY FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THEREOF The above-captioned debtor and debtor-in-possession (the “Debtor”) hereby moves (the “Motion”), pursuant to section 1121(d) of title 11 of the United States Code (the “Bankruptcy Code”) and rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), for entry of an order, substantially in the form attached hereto as Exhibit A (the “Proposed Order”), extending the periods during which (1) the Debtor has the exclusive right to file a chapter 11 plan (the “Exclusive Filing Period”) by approximately four months from June 8, 2021 to October 10, 2021, and (2) the Debtor has the exclusive right to solicit acceptances thereof (the “Exclusive Solicitation Period” and together with the Exclusive Filing Period, the “Exclusive Periods”) by approximately four months from August 9, 2021 to December 10, 2021. In support of the Motion, the Debtor respectfully represents as follows: 1 The last four digits of the Debtor’s EIN are 4897. The Debtor’s mailing address is P.O. Box C, Redding Ridge, CT 06876.

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JURISDICTION 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, 2012. This is a core proceeding under 28 U.S.C. § 157(b). Venue of these cases and the Motion is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. 2. The Debtor consents pursuant to Local Rule 9013-1(f) to the entry of a final order by the Court in connection with this Motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. 3. The statutory bases for the relief requested herein is section 1121(d) of the Bankruptcy Code and Local Rule 9006-2. GENERAL BACKGROUND 4. On June 10, 2020 (the “Petition Date”), the Debtor filed a voluntary petition under chapter 11 of the Bankruptcy Code (the “Case”). The Debtor continues to operate its business and manage its properties as debtor in possession pursuant to §§ 1107(a) and 1108 of the Bankruptcy Code. 5. On June 25, 2020 the United States Trustee (the “U.S. Trustee”) for the District of Delaware appointed an official committee of unsecured creditors (the “Creditors’ Committee”). No party has requested the appointment of a trustee or examiner in the Case. 6. The Debtor was the owner of a substantially complete timber sawmill in Enfield, Halifax County, North Carolina. Additional detail regarding the Debtor, its business, the events leading to the commencement of this case and the facts and circumstances supporting

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the relief requested herein is set forth in the Declaration of Robert Prusak in Support of Debtor’s Bankruptcy Filing (D.I. 6). 7. Pursuant to an Economic Development Agreement executed by Halifax County, North Carolina (the “County”) and the Debtor on or about November 1, 2012 (the “EDA”), the County conveyed approximately 430 acres of land that the County acquired for the sawmill site to the Debtor by a deed filed on January 6, 2014 (the “Real Property”). The Debtor did not pay monetary consideration for the Real Property, so the County retained a future interest in the Real Property known as a “right of entry or power of termination” (the “Right of Entry”), which could be exercised by the County if the Debtor failed to complete construction and commence operation of its sawmill facility within a stated period of time after the recording of the deed. 8. On April 9, 2020, after the sawmill was shut down as a result of various financial and social hurdles (including the COVID-19 pandemic), the County exercised its Right of Entry and filed a Notice of Exercise of Entry and Power of Termination. On April 13, 2020, the County also brought suit against the Debtor and Carolina Sawmill, L.P. (“Carolina Sawmills”)—the Debtor’s prepetition lender—by filing a complaint in North Carolina State Court requesting the entry of a declaratory judgment providing, inter alia, that neither the Debtor nor Carolina Sawmills had any interest in the Real Property. 9. Both before and after the Petition Date, the Debtor and the County engaged in discussions regarding a settlement of the disputes between the Debtor and the County to enable the Debtor to sell the Real Property along with the rest of its assets, as part of a value maximizing going-concern sale, which would also fulfill the original objections of the EDA to bring jobs to the County. The ultimate terms of this settlement were memorialized in that certain Release and

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Settlement Agreement between the Debtor and the County dated July 28, 2020 (the “County Settlement”). 10. On July 28, 2020, the Debtor filed a Motion with the Court seeking approval of the Settlement Agreement. Thereafter, on August 14, 2020, Carolina Sawmills objected to the County Settlement on numerous grounds, including, inter alia, that the County Settlement was an improper settlement of a three-party dispute among the Debtor, Carolina Sawmills, and the County over the parties’ respective rights in the Real Property and that Carolina Sawmills has a lien on the Real Property pursuant to a deed of trust. 11. Following an all-day mediation session with former Bankruptcy Judge Kevin Gross on September 9, 2020, the Debtor, Carolina Sawmills, the County and the Creditors’ Committee reached an agreement, in principal, which would allow the County Settlement to be approved and the Debtor to proceed with selling its assets as a going-concern. However, certain issues regarding the structure of the settlement in light of the EB5 Immigrant Investor Program arose, and documentation of the settlement negotiations came to an impasse. 12. After extensive additional negotiations, the Debtor, the County, and Carolina Sawmills entered into a final settlement. On November 9, 2020 the Court entered the Order Approving Stipulation Regarding Motion to Approve County Settlement (D.I. 377), and the Order Approving Motion of the Debtor Pursuant to Bankruptcy Rule 9019, Local Rule 9013-1 and 11 U.S.C. §§ 105(a) and 363 for Entry of an Order Authorizing Revised Settlement with the County (D.I. 380). 13. Thereafter, the Debtor filed the Debtors Motion for Entry of (A) an Order (I) Scheduling a Hearing on the Approval of the Sale of All or Substantially All of the Debtors Assets Free and Clear of All Encumbrances, and the Assumption and Assignment of Certain Executory

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Contracts and Unexpired Leases, (II) Approving Certain Bidding Procedures and Assumption and Assignment Procedures, and the Form and Manner of Notice Thereof, (III) Designating Stalking Horse Purchaser and Approving Certain Bid Protections, and (IV) Granting Related Relief; and (B) an Order (I) Approving Asset Purchase Agreement, (II) Authorizing the Sale of All or Substantially All of The Debtors Assets Free and Clear of All Encumbrances, (III) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and (IV) Granting Related Relief [D.I. 381] (the “Bidding Procedures Motion”), which was granted by order of the Court on November 19, 2020 [D.I. 421] (the “Bidding Procedures Order”). 14. Pursuant to the Bidding Procedures Order, the Debtor obtained a stalking horse bidder and conducted a fulsome marketing and sale process, culminating in a virtual auction on December 10, 2020. Through the auction, the Debtor obtained an offer from Binder Beteiligungs AG, acting through Binderholz Enfield LLC (“Binderholz”) of $83.4 million in cash, plus assumed liabilities, as more fully set forth in Binderholz’s modified Asset Purchase Agreement (“the APA”), for the purchase of substantially all of the Debtor’s assets. 15. On December 17, 2020, the Court held a hearing on the sale portion of the Debtor’s Bidding Procedures Motion and approved the sale of substantially all of the Debtor’s assets to Binderholz under the APA. See D.I. 507. The sale of substnatially all of the Debtor’s assets to Binderholz closed on January 8, 2021. 16. On October 28, 2020, the Debtor was granted its first extension of the Exclusive Periods [D.I. 361], and on March 25, 2021, the Debtor was granted a second extension of the Exclusive Periods through June 8, 2021 and August 9, 2021, respectively [D.I. 691]. 17. Since then, the Debtor has engaged in the claims administration and investigation process, filed updated schedules of assets and liabilities [D.I. 586] and related

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supplemental bar date notices, and navigated additional issues in connection with the orderly administration of the Bankruptcy process. 18. Specifically, the Debtor has worked diligently to negotiate a settlement with the WARN Act Plaintiffs, which, if successful, would be implemented through the Debtor’s Plan. The Debtor engaged in a mediation with the WARN Act Plaintiffs, the Creditors’ Committee, and former Judge Kevin Gross. The Debtor anticipates being able to reach an amicable resolution with the WARN Act Plaintiffs and filing a motion to approve the settlement within the next month or so. However, as with the similar settlement reached with the WARN Act Plaintiffs in the Klausner Lumber One LLC bankruptcy case, given that any such settlement involves the resolution of a class action, there are certain timing issues that need to be factored in for purposes of consummating the settlement. 19. Additionally, as part of the claims review and reconciliation process, the Debtor has (i) filed two omnibus (substantive and non-substantive) claims objections and (ii) objected to several significant claims filed in the case, including those asserted by Deloitte Financial Advisory GmbH and Scharpenack GmbH. The Debtor and its professionals, along with the Committee, also continues to investigate other significant large claims filed in the case and anticipates that additional claims objections and/or adversary proceedings will be filed with respect to certain of these claims in the near term. The resolution of these claims may impact the terms of the Debtor’s chapter 11 plan and/or the anticipated distribution to creditors in the case. RELIEF REQUESTED 20. By this Motion, the Debtor seeks entry of an order, pursuant to section 1121(d) of the Bankruptcy Code, extending the Exclusive Filing Period by approximately four months through and including October 10, 2021, and the Exclusive Solicitation Period by

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approximately four months through and including December 10, 2021, without prejudice to the Debtor’s right to seek further extensions of the Exclusive Periods. BASIS FOR RELIEF 21. Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a chapter 11 case during which a debtor has the exclusive right to propose and file a plan. Section 1121(c)(3) of the Bankruptcy Code provides that if the debtor proposes and files a plan within the initial 120-day exclusive period, the debtor then has until 180 days after the commencement of the chapter 11 case to solicit and obtain acceptances of such plan. Pursuant to section 1121(d)(1) of the Bankruptcy Code, “on request of a party in interest made within the respective periods specified in subsections (b) and (c) of this section and after notice and hearing, the court may for cause reduce or increase the 120-day period or the 180-day period referred to in this section.”2 22. Although the term “cause” is not defined by the Bankruptcy Code, the legislative history indicates that it is to be viewed flexibly “in order to allow the debtor to reach an agreement” with its creditors. H.R. Rep. No. 595, 95th Cong., 1st Sess. 232 (1977); see also In re McLean Indus., Inc., 87 B.R. 830, 833 (Bankr. S.D.N.Y. 1987); In re Public Serv. Co. of N.H., 88 B.R. 521, 534 (Bankr. D.N.H. 1988) (“[T]he legislative intent . . . [is] to promote maximum flexibility.”). To facilitate this legislative intent, a debtor should be given a reasonable opportunity to negotiate an acceptable plan with creditors and to prepare adequate financial and non-financial information concerning the ramifications of any proposed plan for 2 Such extensions are capped by section 1121(d)(2) of the Bankruptcy Code, which limits any extension of the exclusive filing period to eighteen (18) months after the petition date and any extension of the solicitation period to twenty (20) months after the petition date.

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disclosure to creditors. See, e.g., McLean, 87 B.R. at 833–34; In re Texaco, Inc., 76 B.R. 322, 327 (Bankr. S.D.N.Y. 1987). 23. The decision to extend a debtor’s exclusive periods is committed to the bankruptcy court’s sound discretion, guided by the facts and circumstances of each case. See, e.g., First Am. Bank of N.Y. v. S.W. Gloves & Safety Equip., Inc., 64 B.R. 963, 965 (D. Del. 1986). Courts consider a variety of factors in determining whether “cause” exists to warrant an extension of the exclusive periods, including: (a) the size and complexity of the case; (b) the debtor’s progress in resolving issues facing the estate; and (c) whether an extension of time will harm the debtor’s creditors. See, e.g., In re Gibson & Cushman Dredging Corp., 101 B.R. 405, 409–10 (E.D.N.Y. 1989) (listing factors); In re Dow Corning Corp., 208 B.R. 661, 664–65 (Bankr. E.D. Mich. 1997) (citing In re Express One Int’l, Inc., 194 B.R. 98, 100 (Bankr. E.D. Tex. 1996)). The existence of good faith progress and the need for additional time to continue such progress are particularly significant factors that establish cause for extending the exclusive periods under section 1121(d) of the Bankruptcy Code. See Express One Int’l, Inc., 194 B.R. at 101; In re Pine Run Trust, Inc., 67 B.R. 432, 435 (Bankr. E.D. Pa. 1986). 24. Cause exists to extend the Exclusive Periods in this chapter 11 case. First, the Debtor and its professionals have made significant progress in moving the case toward a successful completion, including spending considerable time addressing numerous issues involving creditors and other parties in interest. Notably, since the Petition Date, the Debtor has, among other things: (a) procured post-petition financing; (b) prepared and filed its Schedules of Assets and Liabilities and Statement of Financial Affairs (see D.I. 76, 77); (c) obtained Court orders to retain critical professionals and establish procedures for the interim compensation of professionals; (d) solicited third-party purchasers for the sale of the Debtor’s assets; (e)

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negotiated extensively with the County and Carolina Sawmills to resolve various issues, including with respect to the Real Property and reached a settlement, enabling the Debtor to pursue a going-concern sale of its assets; (f) conducted a full marketing and sale process, to include a virtual auction; (g) obtained approval of the APA and sale of substantially all of the Debtor’s assets, and closed on the sale; (h) begun conducting the claims administration and investigation process, including negotiating a settlement with the WARN Act Plaintiffs and filing several claims objections; (i) filed amended schedules of assets and liability; and (j) reached a settlement to allow the wind down of the 401(k) Profit Sharing Plan and Trust; and (k) addressed other matters to facilitate the orderly administration of the Debtor’s bankruptcy case. 25. As a result, the Debtor submits that no party in interest is ready to submit a plan for this chapter 11 case. The extension request is reasonable and is consistent with the efficient prosecution of the chapter 11 cases in that it will provide the Debtor with additional time to administer its claims and thereafter draft and file a plan and solicit acceptances thereof. Consequently, the relief requested herein is necessary. Allowing the Exclusive Periods to lapse now would defeat the very purpose of section 1121 and deprive the Debtor and its creditors of the benefit of a meaningful and reasonable opportunity to negotiate and confirm a consensual plan. 26. Third, creditors will not be harmed by extending exclusivity at this time. This Motion is the Debtor’s second motion to extend the Exclusive Periods. The Debtor intends to use the extended Exclusive Periods to, among other things, resolve asserted claims and draft and negotiate a consensual plan. As such, the Debtor submits that creditors will not be prejudiced by an extension of the Exclusive Periods.

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27. For all the foregoing reasons, the Debtor submits that sufficient cause exists to extend the Exclusive Filing Period through and including October 10, 2021, and the Exclusive Solicitation Period through and including December 10, 2021. AUTOMATIC EXTENSION UNDER LOCAL RULE 9006-2 28. Pursuant to Local Rule 9006-2, the Exclusive Periods shall automatically be extended until the Court acts on this Motion, without the necessity for entry of a bridge order. NOTICE 29. Notice of this Motion will be provided to: (a) the Office of the United States Trustee for the District of Delaware; (b) counsel to the Committee; (c) counsel to the DIP Lender; (d) counsel to the County; (e) counsel to Carolina Sawmills; and (f) any other party that has requested notice pursuant to Local Rule 2002-1(b). The Debtor respectfully submits that no further notice of this Motion is required under the circumstances. (Remainder of Page Intentionally Left Blank)

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CONCLUSION WHEREFORE, the Debtor respectfully requests that the Court enter an order substantially in the form of the Proposed Order attached as Exhibit A and grant such other relief as is just and proper under the circumstances. Dated: June 7, 2021 MORRIS, NICHOLS, ARSHT & TUNNELL LLP Wilmington, Delaware /s/Nader A. Amer Robert J. Dehney (No. 3578) Eric Schwartz (No. 3134) Daniel B. Butz (No. 4227) Nader A. Amer (No. 6635) 1201 N. Market Street, 16th Floor P.O. Box 1347 Wilmington, Delaware 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 Email: dbutz@mnat.com namer@mnat.com and Thomas A. Draghi (admitted pro hac vice) Alison M. Ladd (admitted pro hac vice) WESTERMAN BALL EDERER MILLER ZUCKER & SHARFSTEIN, LLP 1201 RXR Plaza Uniondale, New York 11556 Telephone: (516) 622-9200 Facsimile: (516) 622-9212 Email: tdraghi@westermanllp.com aladd@westermanllp.com Counsel to Klausner Lumber Two LLC

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