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Full title: Objection to confirmation of plan Schultz Parties' Comment and Limited Objection to Plan (RE: related document(s)834 Chapter 11 plan) filed by Consultant Blackbox Management Group, LLC, Creditor Brian Schultz. (Kaufman, Aaron)

Document posted on Mar 24, 2021 in the bankruptcy, 6 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number (collectively, the “Debtors”): Studio Movie Grill Holdings, LLC (6546); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC Management I, LLC (3224). Brian Schultz and Blackbox Management, LLC (the “Schultz Parties”) file this Comment and Limited Objection to the Debtors’ Third Amended Joint Plan of Reorganization for Studio Movie Grill Holdings, LLC and Jointly Administered Debtors “Schultz Release Conditions” means the terms and conditions that each of the Schultz Parties must satisfy prior to the Effective Date for the Schultz Parties and their Related Persons to become “Releasi

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Aaron M. Kaufman TX Bar No. 24060067 GRAY REED 1601 Elm Street, Suite 4600 Dallas, Texas 75201 Telephone: (214) 954-4135 Facsimile: (214) 953-1332 Email: akaufman@grayreed.com COUNSEL FOR BRIAN SCHULTZ AND BLACKBOX MANAGEMENT, LLC IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION § IN RE: CASE NO. 20-32633-hdh11 § § STUDIO MOVIE GRILL HOLDINGS, et al., CHAPTER 11 § § DEBTORS.1 (Jointly Administered) § SCHULTZ PARTIES’ COMMENT AND LIMITED OBJECTION TO PLAN 1 The debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal tax identification number (collectively, the “Debtors”): Studio Movie Grill Holdings, LLC (6546); OHAM Holdings, LLC (0966); Movie Grill Concepts Trademark Holdings, LLC (3096); Movie Grill Concepts I, Ltd. (6645); Movie Grill Concepts III, Ltd. (2793); Movie Grill Concepts IV, Ltd. (1454); Movie Grill Concepts IX, LLC (3736); Movie Grill Concepts VI, Ltd. (6895); Movie Grill Concepts VII, LLC (2291); Movie Grill Concepts X, LLC (6906); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XII, LLC (6040); Movie Grill Concepts XIII, LLC (5299); Movie Grill Concepts XIV, LLC (4709); Movie Grill Concepts XIX, LLC (9646); Movie Grill Concepts XL, LLC (4454); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLII, LLC (2309); Movie Grill Concepts XLIII, LLC (9721); Movie Grill Concepts XLIV, LLC (8783); Movie Grill Concepts XLV, LLC (2570); Movie Grill Concepts XV, LLC (4939); Movie Grill Concepts XVI, LLC (1033); Movie Grill Concepts XVII, LLC (1733); Movie Grill Concepts XVIII, LLC (8322); Movie Grill Concepts XX, LLC (7300); Movie Grill Concepts XXI, LLC (1508); Movie Grill Concepts XXII, LLC (6748); Movie Grill Concepts XXIV, LLC (5114); Movie Grill Concepts XXIX, LLC (5857); Movie Grill Concepts XXV, LLC (4985); Movie Grill Concepts XXVI, LLC (5233); Movie Grill Concepts XXVII, LLC (4427); Movie Grill Concepts XXVIII, LLC (1554); Movie Grill Concepts XXX, LLC (1431); Movie Grill Concepts XXXI, LLC (3223); Movie Grill Concepts XXXII, LLC (0196); Movie Grill Concepts XXXIII, LLC (1505); Movie Grill Concepts XXXIV, LLC (9770); Movie Grill Concepts XXXIX, LLC (3605); Movie Grill Concepts XXXV, LLC (0571); Movie Grill Concepts XXXVI, LLC (6927); Movie Grill Concepts XXXVII, LLC (6401); Movie Grill Concepts XXXVIII, LLC (9657); Movie Grill Concepts XXIII, LLC (7893); Studio Club, LLC (3023); Studio Club IV, LLC (9440); Movie Grill Concepts XI, LLC (2837); Movie Grill Concepts XLI, LLC (4624); Movie Grill Concepts XLVI, LLC (2344); Movie Grill Concepts XLVII, LLC (5866); Movie Grill Concepts XLVIII, LLC (8601); Movie Grill Concepts XLIX, LLC (0537); Movie Grill Concepts L, LLC (5940); Movie Grill Concepts LI, LLC (7754); Movie Grill Concepts LII, LLC (8624); Movie Grill Concepts LIII, LLC (3066); Movie Grill Concepts LIV, LLC (2018); Movie Grill Concepts LV, LLC (4699); Movie Grill Partners 3, LLC (4200); Movie Grill Partners 4, LLC (1363); Movie Grill Partners 6, LLC (3334); and MGC Management I, LLC (3224).

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Brian Schultz and Blackbox Management, LLC (the “Schultz Parties”) file this Comment and Limited Objection to the Debtors’ Third Amended Joint Plan of Reorganization for Studio Movie Grill Holdings, LLC and Jointly Administered Debtors [Docket No. 834] (as amended and supplemented, the “Plan”).2 I. BACKGROUND 1. The Schultz Parties are parties to that certain Consulting Agreement approved by this Court on December 10, 2020 [See Docket No. 325], and Mr. Schultz is the current or former President, CEO, Chairman and (indirectly) owner of the Debtors. 2. Until this afternoon, the Plan defined “Released Parties” to include the Schultz Parties once they agreed to become “Releasing Parties.”3 This afternoon, without agreement from the Schultz Parties, the Plan was amended to revise this definition. Now, the Schultz Parties cannot be Releasing Parties “unless each of the Schultz Release Conditions [a new term] is satisfied in the Agent’s discretion.”4 3. Until this afternoon, to become “Releasing Parties,” the Plan merely provided that “each Schultz Party [must], prior to the Effective Date, execute[] a release in form and substance acceptable to the Agent, including agreeing to become a “Releasing Party” under the Plan and to be subject to the release set forth in Article VIII.E of the Plan (unless waived by the Agent).”5 Now, the Schultz Parties cannot become Releasing Parties “unless each of the Schultz Release Conditions is satisfied in the Agent’s discretion.”6 4. The Plan, as amended this afternoon, added three new definitions, as relevant to the Schultz Parties: 2 Unless otherwise defined herein, all capitalized terms shall have the meaning ascribed in the Plan. 3 See Second Amended Plan, Definitions 167 (Docket No. 700, page 24 of 86). 4 See Third Amended Plan, Definition 171 (Docket No. 384, page 24 of 88) 5 See Second Amended Plan, Definition 168 (Docket No. 700, page 24 of 86). 6 See Third Amended Plan, Definition 172 (Docket No. 384, page 24-25 of 88).

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“Blackbox Consulting Agreement” means that certain Consulting Agreement between OHAM, SMG Holdings, and their subsidiaries, Brian Schultz, and Blackbox Management Group, LLC as approved by the Bankruptcy Court pursuant to the Order Granting Debtors’ Application to Authorize Retention of Blackbox Management Group, LLC as Management Consultant (ECF No. 325).7 “Blackbox Survival Obligations” means solely those certain post-termination date obligations of the Debtors, Brian Schultz, and Blackbox Management Group, LLC, as applicable, that shall, subject and to the extent set forth in the terms of the Blackbox Consulting Agreement, survive termination of the Blackbox Consulting Agreement.8 . . . “Schultz Release Conditions” means the terms and conditions that each of the Schultz Parties must satisfy prior to the Effective Date for the Schultz Parties and their Related Persons to become “Releasing Parties” under the Plan, including (a) each Schultz Party executes a release in form and substance acceptable to the Agent, (b) each Schultz Party releases and waives in writing any and all claims to all proceeds or refunds of any insurance policy of the Debtors or the Estates and admits that the whole life insurance policies issued by Northwestern Mutual ended 1656 and 8018 and all proceeds thereto and refunds thereof constitute property of the Debtors and the Estates, (c) that each Schultz Party agrees to become a “Releasing Party” under the Plan and to be subject to the releases set forth in Article VIII of the Plan, and (d) such other terms and conditions as the Agent may determine. The Agent may waive any Schultz Release Condition in its discretion via a writing acceptable to the Agent that is signed by the Agent or its authorized representative or attorney.9 5. Notably, the proposed amendments to the Plan were not circulated to the Schultz Parties until 10:30 am on Thursday, March 25, 2021, with the caveat that such amendments remained subject to further review from the Agent. The Schultz Parties provided comments at 3:15 pm. The Plan was filed, without accepting any of the Schultz Parties’ comments, nearly an hour later. 7 See Third Amended Plan, Definition 32 (Docket No. 384, page 10 of 88). 8 See Third Amended Plan, Definition 33 (Docket No. 384, page 10 of 88). 9 See Third Amended Plan, Definition 189 (Docket No. 384, page 27 of 88).

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II. COMMENT 6. The Plan, as amended, moves the goal posts for the Schultz Parties to join in what are supposed to be mutual releases under the Plan. From the outset, the Schultz Parties have made clear to the Debtors and the Agent that they are ready and willing to become “Releasing Parties” as contemplated under the Plan. They have been requesting a form of the release from the Agent for several weeks. However, for reasons that remain unclear to the Schultz Parties, the Agent refused to circulate a draft to the Schultz Parties until 10:30 am on March 25, 2021—less than 24 hours before the Confirmation Hearing. To be clear, the Schultz Parties remain ready and willing to be “Releasing Parties” under the Plan, provided that such releases are mutual, consensual and supported by consideration, as the Fifth Circuit requires them to be. 7. The Schultz Parties engaged the undersigned counsel on March 12, 2021, to assist in finalizing a release as contemplated under the Plan. However, despite the Schultz Parties’ best efforts over the last two weeks, the Schultz Parties have been deprived of their opportunity to become a “Releasing Party” under the Plan. Given the timing of first receiving a draft release, as well as the proposed plan amendments that were sent with the initial draft release—mere hours before the filing of the Third Amended Plan—the Schultz Parties would ask that the Court intervene by finding that the Schultz Parties have complied with the “Schultz Release Conditions” and that the insurance policies referenced in Article VIII.E of the Plan are not property of the estates.10 8. Further, the Schultz Parties would ask this Court intervene by modifying the Plan, through the Confirmation Order, to clarify that terminated employees may apply for work with the Schultz Parties. While the Schultz Parties have no intention of violating the Consulting 10 The Debtors’ financial advisors have demonstrated to the Agent that the insurance policies were purchased with non-Debtor funds. This Plan provision was never negotiated with the Schultz Parties and should not be a condition for the Schultz Parties to be “Releasing Parties.”

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Agreement or otherwise soliciting employees from the Debtors, the current Consulting Agreement places restrictions on the Schultz Parties’ ability to hire terminated employees in such a manner that would unfairly penalize terminated employees. This should be corrected to ensure that employees can maintain their employment, especially in locations that are no longer being operated by the Debtors. 9. Finally, because Mr. Schultz has personal exposure on the liquor licenses until the Debtors or Reorganized Debtors obtain replacement licenses, Mr. Schultz would ask that the Court impose deadlines on such replacements, or hold regular status conferences until all such licenses have been replaced. III. CONCLUSION AND LIMITED OBJECTION WHEREFORE, based upon the foregoing, the Schultz Parties respectfully request that this Court confirm the Plan, provided that the Confirmation Order: (1) find that the Schultz Parties have satisfied the Schultz Release Conditions and are, therefore, are “Released Parties” and “Releasing Parties” under the Plan; (2) waive the requirement in Article VIII.E of the Plan that the Schultz Parties release claims to the insurance policies that were paid by non-debtor funds; (3) allow terminated employees to apply for employment with the Schultz Parties after the Effective Date; (4) establish deadlines or hold weekly status conferences to ensure that the Reorganized Debtors are making progress on the replacement of liquor licenses on which Mr. Schultz has personal exposure; and (5) grant such other relief in favor of the Schultz Parties as may be appropriate and warranted under the circumstances. Respectfully submitted this 25th day of March, 2021.

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GRAY REED By: /s/ Aaron Kaufman Aaron M. Kaufman Texas Bar No. 24060067 1601 Elm Street, Suite 4600 Dallas, Texas 75201 Telephone: (214) 954-4135 Facsimile: (214) 953-1332 Email: akaufman@grayreed.com COUNSEL FOR BRIAN SCHULTZ AND BLACKBOX MANAGEMENT, LLC CERTIFICATE OF SERVICE The undersigned hereby certifies that on the 25th day of March, 2021, a true and correct copy of the foregoing document was filed with the Court and served electronically upon those parties registered to receive electronic notice via the Court’s CM/ECF system, and separately emailed to counsel for the Debtors and the Agent. /s/ Aaron M. Kaufman Aaron M. Kaufman