Create an Account or Login to Existing Account
7-Day Free Trial
HTML Document View
Full title: Motion for Clarification Filed by Advantage Holdco, Inc.. Hearing scheduled for 9/3/2021 at 01:00 PM at US Bankruptcy Court, 824 Market St., 3rd Fl., Courtroom #7, Wilmington, Delaware. (Attachments: # (1) Notice # (2) Exhibit A # (3) Exhibit B # (4) Exhibit C) (Roth-Moore, Andrew)
Document posted on Aug 8, 2021 in the bankruptcy, 10 pages and 0 tables.
Bankrupt11 Summary (Automatically Generated)
Intheordinarycourseofbusiness,theDebtorsincurredseveralcategoriesofclaimsrelatedtotheirRental Fleet (collectivelyreferredtoas “Vehicle Charges”): Tolls, moving and parking violations and citations, towing and impound charges,and otherfees incurred from operating orparking vehicles (“Operating Charges”).Based onthe Debtors’ investigation, the continuing charges stem from unreturned, lost, or stollenTransponders or license plates, the failure of certain Vehicle Vendors to re-plate and re-titlesurrenderedvehicles,and outdatedVehicle Agencyrecords.11 20.This problem exposes the Debtors to potential claims, not only for continuingregistration fees, but also for claims for tolls, citations, violations, and other fees that VehicleAgencies allocate based on vehicle title and registration information.Nonetheless, theDebtors’ management has contacted several Vehicle Agencies and Vehicle Vendors seekinginformation related to the post-Surrender Date charges and to explain that the Debtors no longerown or operate the Rental Fleet.Without clarification that the Rental Fleet was not estate property following theSurrender Dates and that neither the Debtors nor their estates are liable for post-Surrender DateVehicles Charges, the Debtors will continueto receive Vehicle Charges associated with cars theydo not own or possess and that provided no benefit to the estates.
List of Tables
Document ContentsINTHE UNITEDSTATESBANKRUPTCYCOURT FORTHE DISTRICTOFDELAWARE ----------------------------------------------------------x : Chapter11 In re: : : CaseNo. 20-11259(CTG) ADVANTAGEHOLDCO, INC., et al., : : (Jointly Administered) Debtors.1 : : HearingDate:September3,2021at1:00p.m. ----------------------------------------------------------x ObjectionDeadline:August23,2021at4:00p.m. MOTIONFORENTRYOFANORDER CLARIFYINGTHECOURT’SVEHICLE SURRENDERORDERS WITH RESPECT TOCONTINUINGLIABILITIES Advantage Holdco, Inc. and certain of its affiliates, the debtors and debtors-in-possessionintheabove-captionedchapter11cases(collectively,the“Debtors”),herebymove(the“Motion”)pursuant to section 105(a) of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the“Bankruptcy Code”), for entry of an order, substantially in the form of Exhibit A hereto (the“Proposed Order”) clarifying certain of the Court’s Surrender Orders (as defined below) withrespect to continuing liabilities related to surrendered vehicles, such as tolls, parking violations,andregistrationfees. InsupportoftheMotion,theDebtorsstate asfollows: RELIEF REQUESTED2 1. Shortly after the Petition Date, the Debtors ceased their car rental services. TheCourtenteredorderspermittingtheDebtorstosurrenderownershipandpossessionoftheirRentalFleet to the lessors and financers that claimed to own the cars or hold first priority liens on the 1 TheDebtorsin thesecases, alongwiththelastfourdigitsofeachDebtor’sfederaltaxidentificationnumber,are: Advantage Holdco,Inc.(4832); Advantage Opco, LLC (9101); Advantage Vehicles LLC (6217); E-ZRent A Car,LLC(2538);CentralFloridaPaint&Body,LLC(1183);AdvantageVehicleFinancingLLC(7263);andRACVehicleFinancing,LLC(8375). TheDebtors’addressisPOBox2818,Windermere,FL,34786. 2Capitalizedtermsusedinthissectionhavethemeaningprovidedbelow.
1cars. Despite the Surrender Orders, the Debtors continue to receive claims and charges for tolls,citations,fees,and expenses relatedtoits former RentalFleet. 2. The Debtors respectfully request that the Court enter an order clarifying that,pursuant to its Surrender Orders, following the Surrender Dates, the Debtors neither owned noroperateditsRentalFleetandneithertheDebtorsnortheirestatesareliableforpost-SurrenderDateVehicle Charges. JURISDICTION 3. TheCourthasjurisdictionoverthismatterunder28U.S.C.§1334andthe AmendedStanding Order of Reference from the United States District Court for the District of DelawaredatedFebruary29,2012. Venueproperunder28 U.S.C.§§1408and1409. 4. Thisisacoreproceedingunder28U.S.C.§157(b)and,pursuanttoRule9013-1(f)of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Courtfor the District of Delaware, the Debtors consent to the entry of a final order by the Court inconnection with the Motion to the extent that it is later determined that the Court, absent consentoftheparties,cannotenterfinalordersorjudgmentsconsistentwithArticleIIIoftheUnitedStatesConstitution. 5. The statutory basis for the relief requested herein is section 105(a) of theBankruptcyCode. BACKGROUND 6. OnMay26,2020(the“PetitionDate”),theDebtorsfiledvoluntarypetitionsinthisCourt commencing cases for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11Cases”). 7. The Debtors continue to manage and operate their businesses as debtors inpossessionpursuant tosections 1107and 1108oftheBankruptcyCode.
28. On June 9, 2020, the United States Trustee for Region 3 appointed the OfficialCommittee of Unsecured Creditors in the Chapter 11 Cases [Docket No. 140]. No trustee orexaminerhas been appointedinthe Chapter11Cases. 9. A more complete factual background regarding the Debtors, including theirbusiness operations, their capital, and debt structures, and the events leading to the filing of theChapter 11 Cases, is set forth in detail in the Declaration of Alfred C. Farrell, Chief FinancialOfficer of Advantage Holdco, Inc., in Support of Chapter 11 Petitions and First Day Pleadings[DocketNo.15]. 10. In further support of this Motion, the Debtors rely on the Declaration of Alfred C. Farrell in Support of the Motion for Entry of an Order Clarifying the Court’s Vehicle SurrenderOrders withRespecttoContinuing Liabilities attachedhereto as ExhibitB. A. The Rental Fleet 11. The Debtors previously provided rental car services throughout the United States,largelyfocusedonlocations nearmajor airports. 12. The Debtors acquired substantially all their rental car fleet (the “Rental Fleet”)under a number of agreements (collectively, the “Vehicle Facilities”) with certain, non-affiliatedthird-party lessors and financers (collectively, the “Vehicle Vendors”). The Vehicle Facilitieswerevariouslystyledasrevolvingcreditlinesorleasesand,typically,weresecuredbyfirstpriorityliens onthevehiclesfinancedusingthose facilities.3 13. DependingonthetermsoftheVehicleFacility,certaincarsintheRentalFleetweretitledand registered to a Debtor, while the remainder of the cars were titled and registered to one3NoneofthedescriptionscontainedhereinoftheVehicleFacilitiesisanadmissionastothestatusofanysuchfacilityasatrueleaseorasecuredcreditfacilityortothevalidityorperfectionofanypurportedliensontheDebtors’assets,andtheDebtorsreservealloftheirrightswithrespectthereto.
3of the Vehicle Vendors. Each license plate used for the Rental Fleet was registered to one of theDebtorsoraVehicleVendor. Additionally,incertainlocations,theDebtorsprovidedrenterswithelectronic toll collection devices(“Transponders”) that werelinkedto an account associatedwithaDebtor. 14. Intheordinarycourseofbusiness,theDebtorsincurredseveralcategoriesofclaimsrelatedtotheirRental Fleet (collectivelyreferredtoas “Vehicle Charges”): Tolls, moving and parking violations and citations, towing and impound charges,and otherfees incurred from operating orparking vehicles (“Operating Charges”). These fees were typically incurred by renters. However, in the ordinary course ofbusiness, certain of the Debtors’ Rental Fleet, license plates, and Transponderswere stollenandusedillegally,resultingin additionalOperatingCharges. Governmental agencies charged taxes, fees, and expenses related to vehicleregistration,plating,titling,andownership. The Debtors incurred transfer and service fees, taxes,4 and third-party liability topurchasersinconnectionwithvehiclesales. 15. Local and state agencies and contract companies, including tolling authorities,parking and citations authorities, departments of motor vehicles, taxing agencies (collectively“Vehicle Agencies”), assign Vehicle Charges to the entity or person to which a vehicle, licenseplate, or toll transponder is registered. The exact method of assignment varied by location. Forinstance, depending on location, tolls were registered based on license plates or Transponders. Andmovingandparking violationsareoftenchargedtotheholderof acars’title orregistration. 4Inmoststates,theDebtors,ascarrentaloperators,wereexemptfromsalestaxontheirRentalFleet.
416. In their ordinary course of business, the Debtors contracted with various thirdparties (the “Administrators”) to administer certain titling, registration, tolling, and citationsassociated with the Rental Fleet and provide Transponders.5 Following the Petition Date, theDebtorsrejectedtheir contracts withtheAdministrators effectiveJuly30,2020.6B. SurrenderoftheRental Fleet 17. PriortothePetitionDate,theDebtorshadalreadybegunsignificantfleetreductionsthroughbulk sales and by surrendering vehicles to the Vehicle Vendors. As of thePetition Date,theDebtors’RentalFleetconsistedofapproximately8,458cars. BythenendofJune2020,alittlemorethanamonthafterthePetitionDate,theDebtorsceasedcarrentals. Postpetition,theVehicleVendorsassertedownershiporsecurityinterests intheRentalFleetandbeganworkingtorecoverthe Rental Fleet. Consequently, the Debtors negotiated the surrender of their Rental Fleet withrespective Vehicle Vendors. 18. In June of 2020, the Court entered a series of agreed orders lifting the automaticstay for Vehicle Vendors or approving stipulations with the Vehicle Vendors (the “SurrenderOrders”).7 PursuanttotheSurrenderOrders,theDebtorssurrenderedtheirremainingRentalFleet8on or before June 30, 2020 (the “Surrender Dates”)9, giving up the Debtors’ rights to possessionand ownership, where applicable. However, the Surrender Orders preserved the Debtors’ rights5Intheordinarycourse,theDebtorsadministeredcertaintitling,registration,tolling,andcitationsassociatedwiththeRentalFleetinhouse. 6SeeOrderAuthorizingtheDebtorsto(i)RejectCertainExecutoryContractsandUnexpiredLeasesEffectiveasoftheRejectionDate;and(ii)AbandonAnyRemainingPersonalPropertyinConnectionTherewith [DocketNo.437]. 7SeeDocketNos.169,213,250,321,and449. 8Inlimitedcircumstances,theDebtorsretainedpossessionorownershipofacertaincarsthat,intheDebtors’ordinarycourseofbusiness,wereheavilydamaged,subjecttolegalholdsrelatedtoongoinglitigation.,orstollen(the“RetainedVehicles”). TheDebtorshavenotoperatedtheRetainedVehiclesaftertheSurrenderDates. 9ThespecificSurrenderDateforeachVehicleVendorisidentifiedspecificallyonExhibitC.
5and claims to the proceeds of the Retained Vehicles and surrendered vehicles, including fromapplicable insurancepolicies.10 C. The Debtors Continue toReceivePost-SurrenderDate Charges 19. Consistent with the Surrender Orders, following the Surrender Dates, the Debtorsand theirremaining,limited workforcecoordinated with the Administrators and, whenrequested,Vehicle Vendors to finalize the surrender of the Rental Fleet and to return Transponders andlicense plates. Despite these efforts, the Debtors have continuedto receive charges related to theRental Fleet, Transponders, and license plates that accrued after the Surrender Dates. Based onthe Debtors’ investigation, the continuing charges stem from unreturned, lost, or stollenTransponders or license plates, the failure of certain Vehicle Vendors to re-plate and re-titlesurrenderedvehicles,and outdatedVehicle Agencyrecords.11 20. The inventory and return of Transponders, for instance, was hampered by theCovid-19 pandemic. The Administrators that supplied Transponders also provided staff to bepresent at the Debtors’ locations to assist with inventory, removal, and return of Transponders. However, due to the Covid-19 pandemic, the Administrators stopped providing such servicesmonthspriortoPetitionDate.TheDebtorsinstructedtheirremaining,limitedworkforcetoremoveTranspondersformthesurrenderedRentalFleetandreturnthemtotheAdministrators. However,basedon charges received from Vehicle Agencies, it appears that certain Transponders were stillactive and in use for some time following the Surrender Dates, generating additional toll chargesagainst theDebtors. 10 In certain instances, third-party, collection agencies the Debtors retained prior to the Petition Date (“CollectionAgencies”), including Purco Fleet Services, Inc., have and continue to recover and hold proceeds from RetainedVehiclesandsurrenderedvehicles. 11Todate,theDebtorsbelievethatnopartyhasfiledanyproofofclaimorotherwiseassertedaclaimoradministrativeexpenseintheChapter11Casesforpost-SurrenderDateVehicleCharges.
621. Further, several of the Debtors’ license plates were never returned to appropriateVehicle Agencies and continue to be used without permission of the Debtors or while beingtransportedorsoldbyVehicleVendorsaftercarsweresurrendered. WhentheDebtorssurrenderedacar,theirstaffortheVehicleVendorsweretaskedwithreturningDebtorlicenseplates. Further,when the Rental Fleet was returned or surrendered to Vehicle Vendors, they were required byagreementandapplicablestatelawtoobtainnewlicenseplatesthatwerenolongerassociatedwiththe Debtors. However, in certain instances, both before and after the Petition Date, the Debtors’license plates were still used by some Vehicle Vendors or never returned to respective VehicleAgencies and, in some instances, were stollen. Unknown third parties continue to illegally usecertain plates, generating tolls, citations, violations, and other fees that are being charged to theDebtors. There are, for example, a limited number of license plates that are ticketed for tolls inNew York and New Jerseymultiple times a day—often these plates appear on morethanone caron the same day. The weekly volume of charges varies. In certain weeks, the Debtors havereceivedhundredsoftolls,citations,violations,andotherfeesthat relatetooldlicense plates. 22. The Debtors also understand that, in certain circumstances, Vehicle Vendors didnot properly re-register or re-title cars recovered from the Rental Fleet. For instance, certainVehicle Vendors used powers of attorney or instructed the Debtors to improperly transfer titledirectly from a Debtor to a third party. In certain instances, Vehicle Vendors even used theDebtors’dealer license toeffectuate sales aftervehiclesweresurrendered. DoingsolikelysavedVehicle Vendors hundreds of dollars per vehicle in titling and registration fees. It also created arecordincorrectlyshowingthattheDebtors,ratherthantheVehicleVendors,soldvehicles. TheseactionscreatedpotentialliabilitytotheDebtorsfor,amongotherthings,transfer andservicefees,sales tax,andthird-party liabilitytopurchasers.
723. Likewise,outdatedVehicleAgencyrecordscontinuetoresultinadditionalVehicleCharges. As discussed, in certain instances, Vehicle Vendors failed to re-title or re-registersurrenderedcars. Further,evenwherecars areproperlyre-titledorre-registered,Vehicle Agencyrecordsstillhavesubstantialerrors. VehicleAgencyrecordsareoutdatedlargelybecauseVehicleAgencies do not share information with Vehicle Agencies located outside of their state. So, forinstance,ifacarthatwastitledandregisteredinFloridaisthensold,registered,andtitledinTexas,Florida records may still show that the vehicle is titled and registered to a Debtor. The DebtorsunderstandthatinFloridaalone,theremaybeasmanyas100,000vehiclesthatarestillassociatedwith the Debtors. This problem exposes the Debtors to potential claims, not only for continuingregistration fees, but also for claims for tolls, citations, violations, and other fees that VehicleAgencies allocate based on vehicle title and registration information. The Debtors continue toreceive adaily supplyof newnoticesforsuchclaims. BASIS FORRELIEF 24. It is without question that a bankruptcy court is permitted to enter an orderinterpretingandclarifyingits prior orders. SeeTravelers Indem.Co.v.Bailey,557U.S.137,151(2009). Further, under section 105(a) of the Bankruptcy Code, “[t]he court may issue any order,process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11U.S.C. §105(a). 25. The Surrender Orders provide that the Debtors surrendered control and, whereapplicable, ownership of their Rental Fleet as of the Surrender Dates. Following the SurrenderDates, the estates no longer owned, operated, or possessed cars in the Rental Fleet. As a result,any Vehicle Charges incurred by operation of the Rental Fleet or any license plates orTransponders formerly associatedwiththe Rental Fleetwouldnotbe liabilitiesoftheestates.
826. Contrary to the Surrender Orders, the Debtors continue to receive post-SurrenderDate Vehicle Charges. The problem of lost or stollen Transponders and license plates andinaccurate Vehicle Agency records is not new. The Debtors have managed these problemsthroughout their existence. However, prior to ceasing operations, the Debtors retained theAdministrators, who have expertise and unique access to Vehicle Agency records, to correct andrespondtoinaccurateclaims. Now,withouttheassistanceoftheAdministratorsandaverylimitedstaff, the Debtors lack the resources to continue to respond to each notice. Nonetheless, theDebtors’ management has contacted several Vehicle Agencies and Vehicle Vendors seekinginformation related to the post-Surrender Date charges and to explain that the Debtors no longerown or operate the Rental Fleet. The Vehicle Agencies are unable (or unwilling) to update theirrecordstostopcontinuingpost-Surrender Date charges. 27. Without clarification that the Rental Fleet was not estate property following theSurrender Dates and that neither the Debtors nor their estates are liable for post-Surrender DateVehicles Charges, the Debtors will continueto receive Vehicle Charges associated with cars theydo not own or possess and that provided no benefit to the estates. Such clarification is especiallynecessarysincethemajorityofthecarsgeneratingsuchVehicleChargesweresoldorsurrenderedpriortoPetitionDate. 28. The Debtors seek a clarification order out of an abundance of caution. Under thecircumstances described herein, the Debtors do not believe any Vehicle Agencies or other thirdparties hold valid claims against the Debtors, including administrative expense claims, for post-Surrender Date Vehicles Charges. Nonetheless, dealing with post-Surrender Date VehiclesChargesis extremelyburdensomeand creates a risk oflitigation. The requestedclarificationwilldelineatetheDebtors’andtheirestates’liability.
9NOTICE 29. Notice of this Motion will be given to: (a) the U.S. Trustee; (b) counsel to theDebtors’ postpetition lender; (c) counsel to the Committee; (d) counsel to the Vehicle Vendors;(e)all knownVehicle Agencies andthirdpartiesthat maycontinue to assert VehicleCharges and(f)allpartiesentitledtonoticepursuanttoLocalRule2002-1(b). TheDebtorssubmitthatnootherorfurthernoticeis required. CONCLUSION WHEREFORE,theDebtorsrequestthattheCourtenteranorder,substantiallyintheformattachedhereto,grantingthereliefrequestedintheMotionandsuchotherandfurtherreliefasmaybejust andproper. Dated: August 9,2021 COLESCHOTZP.C. /s/ AndrewJ.Roth-Moore NormanL.Pernick (No. 2290) Justin R.Alberto(No.5126) PatrickJ.Reilley (No.4451) AndrewJ.Roth-Moore(No. 5988) 500DelawareAvenue,Suite 1410 Wilmington,Delaware19801 Telephone:(302)652-3131 firstname.lastname@example.org email@example.com firstname.lastname@example.org email@example.com Counsel to theDebtors andDebtors in Possession