arent fox llp robert m. hirsh, esq. · robert m. hirsh, esq. 1301 avenue of the americas new york,...

AFDOCS/21187266.1

ARENT FOX LLP Robert M. Hirsh, Esq. 1301 Avenue of the Americas New York, NY 10019-60022 Telephone: (212) 484-3900 Facsimile: (212) 484-3990 Email: [email protected]

Proposed Counsel to the Debtor and Debtor-in-Possession

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY

In re:

CTE 1 LLC,

Debtor.

Chapter 11

Case No. 19-30256-VFP

(Honorable Vincent F. Papalia)

DEBTOR’S APPLICATION TO (I) RETAIN CARL MARKS ADVISORY GROUP LLC AND (II) DESIGNATE STEVEN F. AGRAN AS CHIEF RESTRUCTURING OFFICER,

NUNC PRO TUNC TO THE PETITION DATE

CTE 1 LLC, the debtor and debtor-in-possession (the “Debtor” or the “Company”), by

and through its undersigned proposed counsel, hereby applies (the “Application”), pursuant to

sections 105(a), and 363 of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the

“Bankruptcy Code”) and Rule 2016 of the Federal Rules of Bankruptcy Procedures (the

“Bankruptcy Rules”), for entry of an order, substantially in the form attached hereto as Exhibit

A, (i) authorizing the engagement and retention of Carl Marks Advisory Group LLC (“CMAG”);

and (ii) designating Steven F. Agran as the Chief Restructuring Officer (the “CRO”), nunc pro

tunc to the Petition Date (defined below), pursuant to the terms set forth in that certain advisory

agreement (the “Advisory Agreement”) entered into between the Debtor and CMAG on October

29, 2019. A true and correct copy of the Advisory Agreement is attached as Exhibit 1 to the

Case 19-30256-VFP Doc 13 Filed 10/30/19 Entered 10/30/19 19:31:04 Desc Main Document of 12

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Declaration of Steven F. Agran (the “Agran Declaration”), which is attached hereto as Exhibit

B. In support of this Application, the Debtor respectfully represents as follows:

JURISDICTION, VENUE, AND STATUTORY PREDICATES

1. This Court has jurisdiction over this Application pursuant to 28 U.S.C. §§ 157 and

1334, and the Standing Order of Reference to the Bankruptcy Court Under Title 11 of the United

States District Court for the District of New Jersey, entered on July 23, 1984, and amended on

September 18, 2012 (Simandle, C.J.). Venue is proper in this district pursuant to 28 U.S.C. §§

1408 and 1409. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

2. The statutory predicates for the relief requested herein are sections 105(a) and 363

of the Bankruptcy Code and Rule 2016 of the Bankruptcy Rules.

BACKGROUND

3. On October 27, 2019 (the “Petition Date”), the Debtor filed a voluntary petition

for relief under chapter 11 of the Bankruptcy Code, commencing the Chapter 11 Case in the

United States Bankruptcy Court for the District of New Jersey.

4. The Debtor is operating its business and managing its property as debtor-in-

possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As of the filing of this

Application, no request has been made for the appointment of a trustee or examiner and no

statutory committee has been appointed in the Chapter 11 Case.

5. The Debtor owns and operates an automotive dealership known as Lexus of

Englewood and located at: (1) 53-59 Engle St., Englewood, NJ 07631, (2) 75 Columbus Avenue,

Englewood, New Jersey 07631, (3) 335 Grand Avenue, Leonia, New Jersey 07605, (4) 40

Rockwood Place, Englewood, New Jersey 07631, and (5) 136 Engle Street, Englewood, New

Jersey 07631 (the “Dealership”).


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RELIEF REQUESTED

6. The Debtor hereby seeks entry of an order, substantially in the form attached

hereto as Exhibit A, (i) authorizing the engagement and retention of CMAG and (ii) designating

Steven F. Agran to serve as CRO of the Debtor, pursuant to the terms under the Advisory

Agreement and nunc pro tunc to the Petition Date.

QUALIFICATIONS

7. CMAG is nationally recognized for its expertise in providing distressed financial

advisory services to debtors, creditors, and other constituents in various bankruptcy proceedings

and out-of-court restructurings. CMAG has been named as one of the nation’s top “turnaround”

consulting firms for more than ten years by Turnarounds & Workouts magazine. Its experience

spans a multitude of cases including: In re Abengoa Bioenergy US Holding, LLC, Case No. 16-

41161 (Bankr. E.D. Mo. 2016); In re Green Field Energy Services, Case No. 13-12783(KG)

(Bankr. D. Del. 2013); In re Scovill Fasteners Inc., Case No. 11-21650-REB (Bankr. N.D. Ga.

2011); In re Otter Tail Ag Enters., LLC, Case No. 09-61250-DDO (Bankr. D. Minn. 2010); In re

Holley Performance Prods., Inc., Case No. 09-13333-PJW (Bankr. D. Del. 2009); In re Am.

Cmty. Newspapers, LLC, Case No. 09-11446-KJC (Bankr. D. Del. 2009); In re Sun-Times Media

Grp., Inc., Case No. 09-11092-CSS (Bankr. D. Del. 2009); In re White Energy, Inc., Case No.

09-11601-CSS (Bankr. D. Del. 2009); In re Manis Lumber Co., Case No. 08-40398-PWB

(Bankr. N.D. Ga. 2008); In re Lenox Sales, Inc., Case No. 08-14679 (Bankr. S.D.N.Y. 2008); In

re Linens 'n Things, Inc., Case No. 08-10832 (Bankr. D. Del. 2008); In re Joan Fabrics Corp.,

Case No. 07-10479-CSS (Bankr. D. Del. 2007); In re Rowe Furniture, Inc., Case No. 06-11143-

SSM (Bankr. E.D. Va. 2006); In re Foss Mfg. Co., Inc., Case No. 05-13725-JMD (Bankr.

D.N.H. 2008); In re Macro Wood Prods., Inc., Case No. 05-68820-TJT (Bankr. E.D. Mich.


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2005); In re Sw. Recreational Indus., Inc., Case No. 04-40656-PWB (Bankr. N.D. Ga. 2004); In

re Elite Model Mgmt. Corp., Case No. 04-10845 (Bankr. S.D.N.Y. 2004); In re Jillians Entm't

Holdings, Inc., et al., Case No. 04-033192 (Bankr. W.D. Ky. 2004); In re Master Graphics,

Inc./TN Corp., Case No. 00-02929-PJW (Bankr. D. Del 2000); and In re Axiohm IPB, Inc., Case

No. 99-04153-PJW (Bankr. D. Del. 1999).

8. Mr. Agran is the Managing Director of CMAG and has over twenty years of

turnaround and interim management experience in advising distressed companies. In his past

engagements, Mr. Agran has provided restructuring and liquidation services to companies across

a broad range of industries, including trucking and transportation, distribution, food production

and services, retail, and healthcare.

9. Based on the qualifications and reputation of CMAG and Mr. Agran, the Debtor

posits that CMAG is well-suited to provide the necessary services and counseling for an effective

and efficient administration of this Chapter 11 Case and maximize recovery for the estate and its

creditors.

SERVICES TO BE PROVIDED

10. The Advisory Agreement, which governs the Debtor’s engagement and

compensation of CMAG, describes the scope of services to be provided by CMAG as follows:

General Services:

Oversee all operational activities of the Company, including, automobile sales, automobile service, cash management and operations;

Control all aspects of automotive sales including MSO (Manufacturer’s Certificate of Origin), keys, registrations and payment of sales tax;

Advise the Company on negotiations with key constituents;

Participate in conference calls and attend meetings of, the Company’s board of directors, creditors, or other parties in interest;


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Assist the Company in the negotiation of DIP terms and the creation of a DIP budget; and

Assist in the preparation of financial information for distribution to the Company’s stakeholders if required, including, cash flow projection updates, cash receipts and disbursement analysis, and analysis of any proposed transactions for which Court approval is sought.

Services Related to Bankruptcy Administration

Assist the Company and its counsel in bankruptcy including the preparation of motions such as motions to approve bid and sale procedures;

Track the Company’s performance against any DIP budget, analyze variances, and oversee reporting as required by the DIP financing agreement;

Manage and coordinate the Company’s compliance with sale and other process milestones as may be set forth in its DIP credit agreement;

Assist Counsel with overseeing administration of the Company’s bankruptcy estate including:

Attend US Trustee’s Section 341 meeting of creditors;

Oversee preparation of the Company’s Statement of Financial Affairs and Schedules to be submitted to the Court;

Oversee preparation of Monthly Operating Reports (MORs);

Support U.S. Trustee information requests;

Attend hearings and testify to matters related to the case as reasonably required;

Lead efforts to classify and resolve claims asserted against the Company as required by the Bankruptcy Code;

If a creditor’s committee is appointed, assist in responding to reasonable requests from the committee and its professionals; and

Follow closing of a sale, assist with any requested estate wind-down activities.


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Services in Support of 363 Sale Process

Assist the Company and counsel negotiate any “stalking horse” bid(s) and help formulate and implement strategy for identifying additional prospective acquirers;

Assist the Company in soliciting and negotiating with prospective acquirers;

Assist the Company and Counsel in negotiating appropriate bid and sale procedures, and assist in preparation and prosecution of the bid and sale procedure motion;

Assist and support the Company in the coordination of the sales effort, due diligence process, help manage data flow between management and potential acquirers, and assist in the negotiation and structuring of the aspects of each alternative proposed transaction;

In coordination with Company counsel: analyze the relative merits of competing transaction proposals for the Company’s evaluation, hold any auction required by any entered bid procedures order, prepare for, attend and testify as necessary at the any sale hearing or related hearing required to obtain a sale order from the Court.

Assist with any sale closing requirements.

Other Services

Perform other tasks and duties related to this engagement as are directed by the Company and reasonably acceptable to CMAG.

NO DUPLICATION OF SERVICES

11. The services provided by CMAG will not duplicate the services to be rendered by

other professionals retained in this Chapter 11 Case.

TERMS OF RETENTION AND COMPENSATION

12. The Debtor seeks to employ and retain CMAG and designate Mr. Agran as CRO

pursuant to Section 363 of the Bankruptcy Code, rather than as an estate professional under

Section 327. Therefore, if approved, CMAG and Mr. Agran will not be required to file fee

applications under Sections 330 and 331 of the Bankruptcy Code, but will file and serve


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compensation reports (the “Compensation Reports”), on a monthly basis, to the United States

Trustee and counsel to any committee appointed this Chapter 11 Case (the “Notice Parties”).

13. The Debtor has agreed to pay CMAG a fixed weekly fee of thirty-five thousand

dollars ($35,000) to perform services described under Section 2 of the Advisory Agreement (the

“Fixed Weekly Fee”). In addition to the Fixed Weekly Fee, if, during the period CMAG is

retained by CTE, or within the twelve (12) months from the date of termination of this

Agreement (the “Residual Period”), CTE enters into a definitive agreement for a Section 363

sale of the Debtor’s assets (a “Transaction”) with any party introduced by CMAG or with whom

CMAG has had discussions on behalf of CTE (defined as “Covered Parties” in Section 10 of the

Advisory Agreement), that is subsequently consummated, CMAG will be due a fee, in an

amount of $500,000, a (“Transaction Fee”), which will be paid in cash and earned in full and due

upon the completion of each Transaction.

14. In addition to compensation for professional services rendered by CMAG

professionals, CMAG will seek reimbursement for reasonable and necessary expenses incurred

in connection with the Chapter 11 Case, including but not limited to travel, lodging, duplications,

computer research, messenger, and telephone charges. The Debtor shall also reimburse CMAG

for the reasonable fees and expenses of its outside counsel incurred in connection with the

preparation, negotiation, enforcement, and approval of the Advisory Agreement. All fees and

expenses due to CMAG will be billed on a monthly basis, or more frequently at CMAG’s

discretion.

15. To the best of the Debtor’s knowledge, this compensation arrangement is

consistent with the typical arrangements entered into by CMAG and other “turnaround”

consulting firms with respect to the services to be rendered for the Debtor. Further, the Debtor


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posits that there is no agreement between CMAG or any other person or entity for sharing

compensation received by CMAG in connection with this Chapter 11 Case.

16. Neither CMAG nor any professional employee or independent contractor of

CMAG received any payment nor a retainer in connection with the engagement proposed herein.

DISINTERESTEDNESS

17. To the best of the Debtor’s knowledge, information, and belief and as set forth in

the annexed Agran Declaration, the Debtor submits that CMAG is a “disinterested person,” as

defined in section 101(14) of the Bankruptcy Code. CMAG (i) is not a creditor, equity security

holder, or insider of the Debtor, (ii) was not, within two years before the date of filing of Petition

Date, a director, officer, or employee of the Debtor, and (iii) does not have an interest materially

adverse to the interest of the Debtor’s estate or of any class of creditors or equity security

holders. In addition, based upon the results of the relationship search disclosed in the Agran

Declaration, CMAG neither holds nor represents an interest adverse to the Debtor.

18. The Debtor understands CMAG appears in many cases involving a substantial

number of creditors, parties-in-interest and professionals and has made every effort to disclose

all connection in the Agran Declaration. Although it is not possible to guarantee that each and

every connection is disclosed, the Debtor will file supplemental disclosures in the event that it

becomes aware of any additional connections. In addition, it is possible that some creditors,

professionals or parties in interests are those with de minimus interest in other cases where

CMAG plays a role.


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INDEMNIFICATION

19. Subject to approval of the Court and as more fully described in the Advisory

Agreement, the Debtor will indemnify (a) Mr. Agran and CMAG professionals for all acts or

omissions and decisions made in performance of its services for the Debtor, to the same extent as

the most favorable indemnification extends to the Debtor’s officers and directors; and (b) CMAG

pursuant to terms of the Advisory Agreement.

20. The Debtor and CMAG believe that the indemnification provisions contained in

the Advisory Agreement are customary and comparable to those negotiated by firms providing

restructuring services. The terms and conditions of the indemnification were negotiated at arm’s

length and in good faith.

APPLICABLE AUTHORITY

21. Section 363(b)(1) of the Bankruptcy Code provides in relevant part that the

“trustee, after notice and a hearing, may use sell or lease, other than in the ordinary course of

business, property of the estate.” 11 U.S.C. 363(b)(1). Further, under Section 105(a) of the

Bankruptcy Code, the “court may issue any order, process, or judgment that is necessary to carry

out the provisions of this title.” 11 U.S.C. 105(a). The Court should approve the Debtor’s

proposed use of its assets under Section 363(b) of the Bankruptcy Code if the proposed use

reflects reasonable business judgment. See e.g. Myers v. Martin (In re Martin), 91 F.3d 389, 395

(3d. Cir. 1996) (noting that courts defer to trustee’s judgment so long as there is a “legitimate

business justification”). Moreover, numerous courts, including those in the Third Circuit have

authorized a Debtor under section 363 of the Bankruptcy Code to employ a professional to serve

as its restructuring officer or CRO. See e.g. In re Tokheim Corp., Case No. 02-13437 (Bankr. D.


10

Del. 2003); In re Radnor Holdings Corp, Case No. 06-10894 (Bankr. D. Del. 2007); see In re

Montgomery Ward Holding Corp., 242 B.R. 147, 153 (Bankr. D. Del. 1999).

22. Here, the Debtor’s proposed retention of CMAG is reasonable and consistent with

what has been approved in other similar cases where the employment of a CRO has been

addressed. More specifically, this Application and the procedures proposed herein show that Mr.

Agran is qualified and otherwise authorized to serve as CRO, and provide a mechanism for the

Court and interested parties to retain oversight over the fees paid to CMAG. As set forth above,

Mr. Agran has substantial experience and knowledge regarding the bankruptcy process and is

well-suited to advise this Chapter 11 Debtor through the bankruptcy process and assist with

prosecution of this Chapter 11 Case. Indeed, Mr. Agran’s services are essential and necessary to

the Debtor’s ongoing bankruptcy efforts.

23. The Debtor believes that the employment of CMAG and Mr. Agran as CRO is a

sound exercise of its business judgment and the services of Mr. Agran are necessary and

essential to maximizing the value of the estate for the benefit of its creditors. For these reasons,

the Debtor submits that the relief requested herein in necessary and appropriate, and is the best

interest of the estate and creditors and should be granted in all respects.

WAIVER OF MEMORANDUM OF LAW

24. Because the legal basis upon which the Debtor relies is incorporated herein and

the Application does not raise any novel issues of law, the Debtor respectfully requests that the

Court waive the requirement to file a separate memorandum of law pursuant to D.N.J. LBR

9013-1(a)(3).


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NO PRIOR REQUEST

25. The Debtor has not made any prior request to this or to any other court for the

relief sought herein.

NOTICE

26. Notice of this Application has been given to (i) the Office of the United States

Trustee for the District of New Jersey, One Newark Center, Suite 2100, Newark, NJ 07102; (ii)

the Internal Revenue Service, 2970 Market Street, Mail Stop 5-Q30.133, Philadelphia, PA 19104-

5016; (iii) the New Jersey Division of Taxation Compliance and Enforcement - Bankruptcy Unit,

50 Barrack Street, 9th Floor, Trenton, NJ 08695; (iv) the Office of the Attorney General of the

State of New Jersey, Division of Law, Richard J. Hughes Justice Complex, 25 Market Street,

Trenton, NJ 08625; (v) the Office of the United States Attorney, Peter Rodino Federal Building,

970 Broad Street, Suite 700, Newark, NJ 07102; vi) Toyota Motor Credit, 4 Gatehall Drive,

Parsippany, NJ 07054; (vii) American Guardian Funding Corporation, 4450 Weaver Parkway,

Suite 200, Warrenville, IL 60555; (viii) Bank of the West, 1625 West Fountainhead Parkway,

AZ-TTN-10C-A, Tempe, AZ 85282; and (ix) the Debtor’s twenty largest unsecured creditors. In

light of the nature of the relief requested herein, the Debtor respectfully submits that no other or

further notice is required.

[Remainder of page intentionally left blank]


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WHEREFORE, the Debtor respectfully requests entry of an order, substantially in the

form attached hereto as Exhibit A, (i) authorizing the engagement and retention of CMAG and

(ii) designating Steven F. Agran to serve as CRO of the Debtor, pursuant to the terms under the

Advisory Agreement and nunc pro tunc to the Petition Date.

Dated: October 30, 2019 Respectfully submitted,

ARENT FOX LLP

/s/ Robert M. Hirsh Robert M. Hirsh, Esq. 1301 Avenue of the Americas New York, NY 10019-6022 Telephone: (212) 484-3900 Facsimile: (212) 484-3990 Email: [email protected] Proposed Counsel to the Debtor and Debtor-in-Possession


AFDOCS/21187266.1

Exhibit A

Proposed Order

Case 19-30256-VFP Doc 13-1 Filed 10/30/19 Entered 10/30/19 19:31:04 Desc Exhibit A - Proposed Order Page 1 of 6

AFDOCS/21187266.1


ARENT FOX LLP Robert M. Hirsh, Esq. 1301 Avenue of the Americas New York, NY 10019 Telephone: (212) 484-3900 Facsimile: (212) 484-3990 Email: [email protected]


In re:

CTE 1 LLC,

Debtor.

Chapter 11

Case No. 19-30256-VFP

(Honorable Vincent F. Papalia)

ORDER AUTHORIZING THE DEBTOR’S APPLICATION TO (I) RETAIN CARL MARKS ADVISORY GROUP LLC AND (II) DESIGNATE STEVEN F. AGRAN AS CHIEF RESTRUCTURING OFFICER,

NUNC PRO TUNC TO THE PETITION DATE

The relief set forth on the following pages, numbered two (2) through and including five

(5), is hereby ORDERED.


Page: 2 Debtor: CTE 1 LLC Case No.: 19-30256 (VFP) Caption: Order Authorizing the Debtor’s Application to (I) Retain Carl Marks Advisory Group LLC

and (II) Designate Steven F. Agran as Chief Restructuring Officer, Nunc Pro Tunc to the Petition Date

2

Upon the application (the “Application”)1 of the Debtor for entry of an order, under

sections 105(a) and 363 of the Bankruptcy Code and Rule 2016 of the Bankruptcy Rules, (i)

authorizing the engagement and retention of Carl Marks Advisory Group LLC (“CMAG”) and

(ii) designating Steven F. Agran to serve as Chief Restructuring Officer (“CRO”) of the Debtor,

pursuant to the terms set forth in that certain advisory agreement (the “Advisory Agreement”)

and nunc pro tunc to the Petition Date, by and between CMAG and the Debtor, all as more fully

set forth in the Application, and the Court having reviewed the Application and the Argan

Declaration; and the Court having determined that the relief requested in the Application is in the

best interests of the Debtor, its estate, its creditors and other parties-in-interest; and it appearing

that notice of the Application was good and sufficient under the particular circumstances and that

no other or further notice need be given; and upon the record herein; and after due deliberation

thereon; and good and sufficient cause appearing therefore,

IT IS HEREBY ORDERED that:

1. The Application is GRANTED as set forth herein.

2. The Debtor is authorized to (i) engage and retain CMAG and (ii) designate Mr.

Argan to serve as CRO of the Debtor nunc pro tunc to the Petition Date, pursuant to the terms set

forth in the Advisory Agreement, subject to the terms outlined herein, which apply

notwithstanding anything in the Advisory Agreement or the Application to the contrary:

a. CMAG and its affiliates shall not act in any other capacity (for example, and without limitation, as a financial advisor, claims agent/claims administrator, or investor/acquirer) in connection with the above-captioned case.

1 Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Application.




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b. In the event the Debtor seeks to have CMAG personnel assume executive officer positions that are different than the position disclosed in the Application, or to materially change the terms of the engagement by either (i) modifying the functions of personnel, (ii) adding new personnel, or (iii) altering or expanding the scope of the engagement, a motion to modify the retention shall be filed.

c. CMAG shall file shall file with the Court with copies to the United States Trustee (“U.S. Trustee”) and all official committees a report of staffing on the engagement for the previous month. Such report shall include the names and functions filled of the individuals assigned. All staffing shall be subject to review by the Court in the event an objection is filed.

d. No principal, employee or independent contractor of CMAG and its affiliates shall serve as a director of the Debtor during the pendency of and the above-captioned case.

e. CMAG shall file with the Court, and provide notice to the U.S. Trustee and all official committees, reports of compensation earned and expenses incurred on a monthly basis. Such reports shall contain summary charts which describe the services provided, identify the compensation earned by each executive officer and staff employee provided, and itemize the expenses incurred. Time records shall (i) be appended to the reports, (ii) contain detailed time entries describing the task(s) performed, and (iii) be organized by project category. Where personnel are providing services at an hourly rate, the time entries shall identify the time spent completing each task in 1/10/hour increments and the corresponding charge (time multiplied by hourly rate) for each task; where personnel are providing services at a “flat” rate, the time entries shall be kept in hourly increments. All compensation shall be subject to review by the Court in the event an objection is filed.

f. Success fees, transaction fees, or other back-end fees, shall be approved by the Court at the conclusion of the case on a reasonableness standard and are not being pre-approved by entry of this Order. No success fee, transaction fee or back-end fee shall be sought upon conversion of the case, dismissal of the case for cause, or appointment of a trustee.

g. The Debtor is permitted to indemnify CMAG in accordance with and on the same terms as provided to the Debtor’s other officers and directors under the corporate bylaws and applicable state law.




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h. For a period of three years after the conclusion of the engagement, neither CMAG nor any of its affiliates shall make any investments in the Debtor or the Reorganized Debtor(s).

i. CMAG shall disclose any and all facts that may have a bearing on whether the firm, its affiliates, and/or any individuals working on the engagement hold or represent any interest adverse to the Debtor, its creditors, or other parties in interest. The obligation to disclose identified in this subparagraph is a continuing obligation.

3. The Debtor is authorized to pay CMAG a fixed weekly fee of $35,000 for each

week which CMAG performs services under Section 2 of the Advisory Agreement. The Fixed

Weekly Fee will be due in advance, via wire transfer, at the beginning of each week and

commencing on the date of the Advisory Agreement.

4. In addition to the Fixed Weekly Fee, if, during the period CMAG is retained by

the Debtor, or within the Residual Period, the Debtor enters into a definitive agreement for a

Transaction(s) with any party introduced by CMAG or with whom CMAG has had discussions

on behalf of the Debtor that is subsequently consummated, CMAG will be due a Transaction Fee

in the amount of $500,000, which will be paid in cash and earned in full and due upon the

completion of each Transaction.

5. The terms of the Advisory Agreement, as modified by the Application and this

Order, are reasonable terms and conditions of employment and are thereby approved.

6. CMAG shall use its reasonable efforts to avoid any unnecessary duplication of

services provided by any other retained professionals in this Chapter 11 Case.

7. CMAG shall disclose any and all facts that may have a bearing on whether the

firm, its affiliates, and/or any individuals working on the engagement hold or represent any




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interest adverse to the Debtor, its creditors, or any other parties-in-interest. The obligation to

disclose pursuant to this paragraph is a continuing obligation.

8. To the extent that there may be any inconsistency between the terms of this

Application, the Argan Declaration or the Advisory Agreement and this Order, the terms of this

Order shall govern.

9. Notwithstanding the possible applicability of Bankruptcy Rule 6004(h), the terms

and conditions of this Order shall be immediately effective and enforceable upon its entry.

10. The Debtors are authorized to take all actions necessary to effectuate the relief

granted pursuant to this Order.

11. This Court shall retain jurisdiction to hear and determine all matters arising from

or related to the implementation, interpretation or enforcement of this Order.


AFDOCS/21187266.1

Exhibit B

Declaration of Steven F. Agran

Case 19-30256-VFP Doc 13-2 Filed 10/30/19 Entered 10/30/19 19:31:04 Desc Exhibit B - Declaration of Steven F. Agran Page 1 of 24

AFDOCS/21187266.1

ARENT FOX LLP Robert M. Hirsh, Esq. 1301 Avenue of the Americas, 42nd Floor New York, NY 10019 (212) 484-3900 (Telephone) (212) 484-3990 (Facsimile) [email protected]



In re:

CTE 1 LLC,

Debtor.

Chapter 11

Case No. 19-30256 (VFP)

DECLARATION OF STEVEN F. AGRAN IN SUPPORT OF DEBTOR’S APPLICATION TO (I) RETAIN CARL MARKS ADVISORY GROUP LLC AND (II) DESIGNATE

STEVEN F. AGRAN AS CHIEF RESTRUCTURING OFFICER, NUNC PRO TUNC TO THE PETITION DATE

I, Steven F. Agran, declare that:

1. I am over 18 years of age. If called as a witness, I could and would competently

testify with respect to the matters set forth in this declaration from my own personal knowledge

or from knowledge gathered from others within CTE 1 LLC (the “Debtor”), my review of

relevant documents, or my opinion based upon my experience concerning the Debtor’s

operations.

2. I am the Managing Director of Carl Marks Advisory Group LLC (“CMAG”), a

business and restructuring advisory services firm. I submit this declaration (the “Declaration”)

on behalf of CMAG in support of the Debtor’s Application to (I) Retain Carl Marks Advisory


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Group LLC and (II) Designate Steven F. Agran as Chief Restructuring Officer, Nunc Pro Tunc

to the Petition Date (the “Application”). Except as otherwise noted, I have personal knowledge

of the matters set forth herein. All capitalized terms used herein that are not otherwise defined

shall have the meanings ascribed to them in the Application.

3. A true and correct copy of that certain advisory agreement (the “Advisory

Agreement”) entered into between the Debtor and CMAG on October 29, 2019 is attached hereto

Exhibit 1.

DISINTERESTEDNESS AND ELIGIBILITY

4. In connection with the preparation of this Declaration, CMAG performed a

conflict search to determine whether it holds or represents any interests adverse to the Debtor.

Such analysis consisted of a review of CMAG’s contacts with the Debtor, its non-Debtor

affiliates, and certain entities holding large claims against or interests in the Debtor that were

made reasonably known to CMAG by the Debtor. A listing of the parties reviewed is reflected

on Exhibit 2 to this Declaration. Based on the results of its review, CMAG does not have an

active relationship with any of the listed parties in matters unrelated to this proceeding.

5. Further, as part of its diverse practice, CMAG appears in numerous cases and

proceedings, and participates in transactions that involve many different professionals, including

attorneys, accountants, and financial consultants, who may represent claimants and parties in

interest in this Chapter 11 Case. Further, CMAG has performed in the past, and may perform in

the future, advisory consulting services for various attorneys and law firms, and has been

represented by several attorneys and law firms, some of whom may be involved in these

proceedings. Based on our current knowledge of the professionals involved, and to the best of

my knowledge, none of these relationships create interests materially adverse to the Debtor in


3

matters upon which CMAG is to be employed, and none are in connection with this case.

6. CMAG does not believe it is a “creditor” of the Debtor within the meaning of

section 101(10) of the Bankruptcy Code. Further, neither I nor any member of the CMAG

engagement team serving the Debtor, to the best of my knowledge, is a holder of any of the

Debtor’s debt or equity securities.

7. To the best of my knowledge, no employee of CMAG is a relative of, or has been

connected with, any judge of the bankruptcy court for this district or the United States Trustee in

this district.

8. To the best of my knowledge, CMAG is a “disinterested person” as that term is

defined in section 101(14) of the Bankruptcy Code, in that CMAG (i) is not a creditor, equity

security holder, or insider of the Debtor, (ii) was not, within two years before the date of filing of

Petition Date, a director, officer, or employee of the Debtor, and (iii) does not have an interest

materially adverse to the interest of the Debtor’s estate or of any class of creditors or equity

security holders. In addition, to the best of my knowledge and based upon the results of the

relationship search described above and disclosed herein, other than as described herein, CMAG

neither holds nor represents an interest adverse to the Debtor.

9. If any new material relevant facts or relationships are discovered or arise, CMAG

will promptly prepare and file a supplemental declaration.

COMPENSATION

10. Subject to Court approval and in accordance with the applicable provisions of the

Bankruptcy Code, the Bankruptcy Rules, applicable United States Trustee guidelines, and the

local rules of this Court, CMAG will seek from the Debtor payment for compensation and

reimbursement of expenses as follows:


4

A Fixed Weekly Fee of $35,000 for each week which CMAG performs services under Section 2 of the Advisory Agreement. The Fixed Weekly Fee will be due in advance, via wire transfer, at the beginning of each week and commencing on the date of the Advisory Agreement.

In addition to the Fixed Weekly Fee, if, during the period CMAG is retained by CTE, or within the Residual Period, CTE enters into a definitive agreement for a Transaction(s) with any party introduced by CMAG or with whom CMAG has had discussions on behalf of CTE (defined as “Covered Parties” in Section 10), that is subsequently consummated, CMAG will be due a Transaction Fee in the amount of $500,000, which will be paid in cash and earned in full and due upon the completion of each Transaction.

CMAG will seek reimbursement for reasonable and necessary expenses incurred in connection with the Chapter 11 Case, including but not limited to travel, lodging, duplications, computer research, messenger, and telephone charges. CMAG will also be reimbursed for the reasonable fees and expenses of its outside counsel incurred in connection with the preparation, negotiation, enforcement, and approval of the Advisory Agreement. All fees and expenses due to CMAG will be billed on a monthly basis, or more frequently at CMAG’s discretion.

11. To the best of my knowledge, (a) no commitments have been made or received by

CMAG with respect to compensation or payment in connection with this Chapter 11 Case, other

than in accordance with applicable provisions of the Bankruptcy Code and the Bankruptcy Rules,

and (b) CMAG has no agreement with any other entity to share with such entity any

compensation received by CMAG in connection with this Chapter 11 Case.

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AFDOCS/21187266.1

Exhibit 1

Advisory Agreement


AFDOCS/21187266.1

Exhibit 2

CTE 1 LLC Potential Parties in Interest

Debtor

CTE 1, LLC

Secured Creditors

American Guardian Funding Corporation Bank of the West Toyota Motor Credit Corp.

Equity Security Holders

Carmine DeMaio Carmine Zeccardi Dmitri Zeldin Frank Holtham Other 335 Grand Ave LLC 800 Response A&S Management LLC AGWS Alco Fasteners International Alldata Altice Media American Wear Uniforms Antonio Guiterrez Atlantic Car Interiors Automotive Mastermind Autotrader.com, Inc. Autoweb, Inc. B C L Automotive B-C Tire Bartolomeo Italain Gourmet Benzel-Busch Motor Car Corp. Brandon Cleaning & Landscaping Bubbz & Sudz Detailing, LLC Car Gurus Carfax, Inc. CDK Global


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Century Link Chaflin Realty Chip Master, LLC City of Englewood Collision Pros Bodyworks Command Security Systems Complete Document Solutions De Lage Landen Dealer Rater.Com, LLC. Dealer Socket Dealer Tire Demaio Holdings I Inc./Infiniti of Englewood DeMaio Holdings Inc./Norman Gale Buick GMC Diligent Delivery Systems Dubin Glass Duval Auto Repair Elite Interior Restorations Elrac Inc. Englewood Dealership Properties/PSD Automotive Enterprise Rent a Car Enterprise Rental CBS Equifax Information Svns LLC Ernie's Auto Detailing Experian Extra Space Storage Exxon Mobil Fleet GCCC Federal Express Corp. First Bank Fishline Collision Frankie's Tire & Recycling LLC Gaeta Recycling Company LLC Gasoline Approval System Geiger Glass Weld of NJ Grainger Great America Financial Services Gubagoo Inc. Hertz Hightech Solutions NYC, LLC Horizon Blue Cross NJ Hughes Environmental Engineering , Inc. IDS Autoshred Interstate Waste Services IP Network Services James Whang Zakar Mtrs JLA Restoration


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Keystone Auto Lending KI-KI's Showroom KIKI Lexus of Roseville Lorco Petroleum Services Madison Ave Coach Works Magic Wheel Repair Marsh McLennan MDL Automation Metropolitan Wholesale Mitchell International Inc. Mizzoni's Autobody MJ Electronics New England Car Care LLC New York Times NJ Car Northern Valley Auto Body Northside Imports OE Connection LLC Optionsoft Technologies Inc. Pitney Bowes PJM Electric Precise Dents PSE & G Purchase Power Redline Reyna Capital Corporation RGM Coffee Rothman Realty Route One Santander Bank Siegal Distributing Company Silverstar Alloy Wheel Repair Spectrum State of NJ Div Tax Sterling Talent Solutions Suez Water New Jersey Sun Auto Glass Inc. Telesystem Thyssenkrupp Elevator Corp. Timepayment Corp. Toyota of Hackensack Trans Union LLC TSD United Motor Parts Inc. UPS


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US Bumper Repair US Cyber Services V Auto Venice Auto Body & Painting Specialist Inc. Verizon Verizon Wireless Viking Pest Control WCBS & Affiliates Wholesale Auto Supply Wholesale Inc.


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