Download - Northstar Sale Motion ()
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
1/40
{BAY:02057312v1}13029825\V-7
IN THE UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF DELAWARE
In re
Northstar Aerospace (USA) Inc., et al.,1
Debtors.
Chapter 11
Case No.: 12-11817 (MFW)(Jointly Administered)
Hearing Date: June 27, 2012 at 4:00 p.m.
Objection Deadline: June 26, 2012 at 4:00 p.m.Committee Objection Deadline: Before Hearing.
DEBTORS MOTION FOR ORDERS (I)(A) AUTHORIZING
AND APPROVING THE JOINT CROSS-BORDER BIDDING
PROCEDURES, (B) AUTHORIZING AND APPROVING A BREAK UP
FEE AND EXPENSE REIMBURSEMENT, (C) APPROVING THE
NOTICE PROCEDURES, (D) APPROVING THE ASSIGNMENT PROCEDURES, AND
(E) SETTING A DATE FOR THE SALE HEARING,AND (II) AUTHORIZING AND APPROVING (A) THE SALE OF
CERTAIN ASSETS, (B) THE ASSUMPTION AND ASSIGNMENT
OF CERTAIN CONTRACTS AND (C) THE ASSUMPTION
AND SUBLEASE OF CERTAIN LEASES
The above-captioned debtors and debtors-in-possession (each a Debtor and
collectively, the Debtors), hereby move (the Motion) this court (the Court) for the entry of
orders pursuant to sections 105, 363 and 365 of chapter 11 of title 11 of the United States Code
(the US Bankruptcy Code), Rules 2002, 6004, 6006 and 9014 of the Federal Rules of
Bankruptcy Procedure (the Bankruptcy Rules), and Rule 6004-1 of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of
Delaware (the Local Rules) (i)(a) authorizing and approving the joint cross-border bidding
procedures (as attached hereto as Exhibit E, the Bidding Procedures) for the sale of
substantially all of the Debtors assets, as described more fully herein (collectively, the US
Purchased Assets) and the assets of the Canadian Vendors (as that term is defined below, the
1 The Debtors and the last four digits of their respective tax identification numbers are: Northstar Aerospace(USA) Inc. (XX-XXX4389), Northstar Aerospace (Chicago) Inc. (XX-XXX1441), D-Velco Manufacturing ofArizona, Inc. (XX-XXX5660) and Derlan USA Inc. (XX-XXX6924). The address of Northstar Aerospace(USA) Inc. and Northstar Aerospace (Chicago) Inc. is 6006 West 73rd Street, Bedford Park, Illinois 60638.The address of D-Velco Manufacturing of Arizona, Inc. and Derlan USA Inc. is 401 South 36th Street, Phoenix,Arizona 85034.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
2/40
{BAY:02057312v1} 213029825\V-7
Canadian Purchased Assets), (b) authorizing and approving the terms and conditions of the
proposed bid protections, the Break-Up Fee and Expense Reimbursement and (as that term is
defined below), (c) approving the form and manner of sale notices (the Notice Procedures), (d)
approving the procedures as set forth below for the assumption and assignment of certain
contracts and leases and the assumption and sublease of certain leases (the Assignment
Procedures), and (e) setting the time, date and place of a later hearing (the Sale Hearing) to
consider the sale of substantially all of the Debtors assets and the assumption and assignment,
or assumption and sublease, as the case may be, of certain pre-petition executory contracts and
unexpired leases of the Debtors; (ii) authorizing and approving (a) the sale (the Sale) of the US
Purchased Assets free and clear of all liens, Claims, Liability, Encumbrances and Interests (as
those terms are defined in the Asset Purchase Agreement (defined below), collectively, the
Encumbrances and Interests), (b) the assumption and assignment of certain contracts and
leases pursuant to section 365 of the Bankruptcy Code, and the assumption of certain real estate
leases pursuant to section 365 of the Bankruptcy Code (collectively, the US Assumed
Contracts); and (iii) granting them such other relief as the Court deems just and proper. In
support of the Motion, the Debtors rely on the declaration of Jon Nemo (the Nemo
Declaration), Managing Director at Harris Williams & Co. (Harris Williams), the Debtors
investment banking firm. The Nemo Declaration is attached hereto as Exhibit B. In further
support of the Motion, the Debtors respectfully represent as follows:
Jurisdiction, Venue and Predicates for Relief
1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334(b) andtheAmended Standing Order of Reference from the United States District Court for the District
of Delaware, dated February 29, 2012. Venue is proper pursuant to 28 U.S.C. 1408 and 1409.
This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2).
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
3/40
{BAY:02057312v1} 313029825\V-7
2. The statutory bases for the relief requested herein are sections 105, 363 and 365of the US Bankruptcy Code, Rules 2002, 6004, 6006 and 9014 of the Bankruptcy Rules, and
Rule 6004-1 of the Local Rules.
Background
A. Introduction3. On June 14, 2012 (the Petition Date), the Debtors filed voluntary petitions for
relief under chapter 11 of the Bankruptcy Code (the US Bankruptcy Cases).
4. The Debtors continue to operate their businesses and manage their properties asdebtors in possession pursuant to sections 1107(a) and 1108 of the US Bankruptcy Code.
5. Each of the Debtors is a direct or indirect subsidiary of Northstar Aerospace, Inc.(Northstar), an Ontario corporation, which had been listed on the Toronto Stock Exchange.
Also on the Petition Date, Northstar, Northstar Aerospace (Canada) Inc. (Northstar Canada),
2007775 Ontario, Inc. and 3024308 Nova Scotia Company (collectively, the Canadian
Debtors), commenced a proceeding under Canadas Companies Creditors Arrangement Act (the
CCAA) in the Ontario Superior Court of Justice (the Canadian Court, and together with this
Court, the Courts, and each individually a Court), seeking relief from their creditors
(collectively, the Canadian Proceedings, and together with the U.S. Bankruptcy Cases, the
Insolvency Proceedings). The Canadian Debtors will continue to manage their properties and
operate their businesses under the supervision of the Canadian Court.
6. No official committee of unsecured creditors has yet been appointed in the cases.B. Debtors Corporate Structure and Business7. A description of the Debtors corporate structure and business and the events
leading to the chapter 11 cases is set forth in Declaration of Craig A. Yuen in support of chapter
11 Petitions and Related Motions (the Yuen Declaration).
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
4/40
{BAY:02057312v1} 413029825\V-7
C. Marketing Effort8. As described more fully in the Nemo Declaration, the assets of the Debtors have
been marketed twice in the last twenty months. In late 2010 and 2011, there was a marketing
effort focused on stock transactions for Northstar -- the publicly traded Canadian parent entity --
as a whole, primarily with strategic buyers. This marketing effort was led by Harris Williams as
investment banker.
9. The 2012 marketing process was broader than the prior marketing process. Inaddition to contacting potential interested bidders from the first process, an additional group of
financial and strategic buyers were contacted about a potential transaction and portion bids for
specific facilities of Northstar (as opposed to Northstar as a whole) were specifically encouraged.
10. 39 potential buyers were contacted by Harris Williams during the 2012 marketingeffort. 35 potential buyers executed a Non-Disclosure Agreement (NDA) and received an
updated confidential information memorandum. 18 of the potential buyers who signed NDAs
were strategic buyers and 17 were financial buyers.
11. Harris Williams assisted the Company in providing an extensive virtual dataroomto bidders who had signed the NDA, as well as arranging other opportunities for due diligence
meetings and calls.
12. 17 indications of interest (IOIs) were received in February and March, 2012,including 5 IOIs for individual facilities.
13. Further dialogue, due diligence and meetings with potential bidders occurredthereafter. In late March, non binding letters of intent (LOIs) from potential bidders were
received and evaluated. 6 of the LOIs were for substantially all of Northstars operating assets in
both the US and Canada, 1 of the LOIs was for a possible recapitalization of Northstar and 2 of
the LOIs were for the Chicago Facility only.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
5/40
{BAY:02057312v1} 513029825\V-7
14. The letters of intent were evaluated by Northstar on a number of criteria,including, without limitation, overall value of the proposed transaction (or combination of
transactions in the case of portion LOIs) and likelihood of closing a transaction in a reasonable
time frame, and the Debtors then proceeded to more intensive diligence and discussions with a
subset of the parties who submitted LOIs.
15. There were some requests from the remaining potential buyers for an exclusivenegotiating and diligence period, to which Debtors did not agree. The leading interested buyers
which remained generally continued their discussion and diligence irrespective of the lack of
exclusivity.
16. In early May, 2012, the Debtors agreed in lieu of exclusivity to an expensereimbursement letter for due diligence and related expenses up to $750,000 each with the then
two remaining leading bidders because the two leading bidders indicated they were unwilling to
incur further material out-of-pocket expenses for accounting, legal, environmental and other
diligence costs without the benefit of the expense reimbursement letter. The expense
reimbursement letters are subject to certain terms and conditions as set forth therein.
17. Each of the two leading bidders indicated they completed their due diligence andnegotiated forms of definitive Asset Purchase Agreements and related documents and exhibits
with Northstar.
D. The Stalking-Horse Bid18. The Debtors marketing process culminated on June 13, 2012, with Debtor
Northstar Aerospace USA Inc. (Northstar USA), Debtor Northstar Aerospace (Chicago) Inc.
(Northstar Chicago) and Debtor D-Velco Manufacturing of Arizona, Inc. d/b/a Northstar
Aerospace (Phoenix) (Northstar Phoenix; together with Northstar USA and Northstar Chicago,
the US Vendors), Northstar and Northstar Canada (together with Northstar, the Canadian
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
6/40
{BAY:02057312v1} 613029825\V-7
Vendors; together with the US Vendors, the Vendors) and Heligear Acquisition Co. or its
designee (the US Purchaser) and Heligear Canada Acquisition Corporation or its designee (the
Canadian Purchaser; together with the US Purchaser, the Purchaser) entering into that
certain Agreement of Purchase and Sale for the sale of substantially all of the Debtors assets as a
stalking-horse purchase agreement (as attached hereto as Exhibit A, the Asset Purchase
Agreement).2
19. The Purchasers are affiliates of Wynnchurch Capital (Wynnchurch), a leadingChicago based private equity investment firm focused on middle-market investments, with over
$1.1 billion under management. Since 1999, Wynnchurch has made more than 30 investments in
middle-market companies, including AxleTech International, Henniges Automotive, Inc. and
SafeWorks, LLC. Wynnchurch and its principals have significant experience in the niche
manufacturing and business services industries. Additional information regarding Wynnchurch
and its investment portfolio companies may be found at www.wynnchurch.com.
Relief Requested
20. By this Motion, the Debtors seek orders: (i)(a) authorizing and approving theBidding Procedures, (b) authorizing and approving the terms and conditions of the Break-Up Fee
and Expense Reimbursement (as that term is defined below), (c) approving the Notice
Procedures, (d) approving the Assignment Procedures, and (e) setting the time, date, and place of
the Sale Hearing (such order, substantially in the form attached hereto as Exhibit C, the US
Bidding Procedures Order); and (ii) authorizing and approving (a) the Sale of the Debtors
rights, title and interests in the US Purchased Assets free and clear of all Encumbrances and
2 Certain confidential and sensitive commercial business information and terms have been redacted from theAsset Purchase Agreement filed with this Motion at the request of the Purchaser. However, an unredacted versionof the Asset Purchase Agreement will be provided to the Court, counsel to any Official Committee of UnsecuredCreditors, the Office of the United States Trustee and the Canadian Monitor and upon request to the Debtorsinvestment banker or counsel, Qualified Bidders who have signed a Non-Disclosure Agreement.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
7/40
{BAY:02057312v1} 713029825\V-7
Interests, (b) the assumption and assignment of the US Assumed Contracts (such order,
substantially in the form attached hereto as Exhibit D, the Sale Order); and (iii) granting them
such other relief as the Court deems just and proper.
A. Highlighted Terms Pursuant to Local Rule 6004-1(b)(iv)21. Pursuant to Local Rule 6004-1(b)(iv), the Asset Purchase Agreement and/or the
proposed Sale Order contain the following terms:3
Deadlines The Asset Purchase Agreement requires that theClosing must occur prior to August 31, 2012. (APA 7.1).
Good FaithDeposit
The Purchaser has deposited into escrow 10% of thetotal cash purchase price of $70,000,000.00 as agood faith deposit for the purchase of the USPurchased Assets and the Canadian PurchasedAssets. $4,550,000.00 of the good faith deposit isallocated to the US Vendors and $2,450,000.00 ofthe good faith deposit is allocated to the CanadianVendors. (APA 3.5). Such good faith deposit willbe forfeited by the Vendors in the event the Salecontemplated by the Asset Purchase Agreement doesnot close. However, the Vendors will not forfeit the
good faith deposit if the Purchasers are theSuccessful Bid, the Transaction does not close byAugust 31, 2012, but the Vendors are in compliancewith all terms and conditions of the Asset PurchaseAgreement. (Id.)
3 The highlighted terms and summary of the Asset Purchase Agreement is provided for the benefit of the Courtand other parties in interest. The Asset Purchase Agreement is incorporated herein by reference. To the extentof any conflict between this summary and the Asset Purchase Agreements, the term of the Asset PurchaseAgreement shall govern. Capitalized terms used but not otherwise defined in this summary shall have themeanings set forth in the Asset Purchase Agreement.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
8/40
{BAY:02057312v1} 813029825\V-7
Use and Allocation
of Proceeds
The Purchaser shall pay a total cash Purchase Priceof $70,000,000.00, subject to an adjustment forchanges in working capital between the date of theAsset Purchase Agreement and the Closing Date.$45,500,000.00 of the total purchase price is
allocated to the US Purchased Assets and$24,500,000.00 of the total purchase price allocatedto the Canadian Purchased Assets. (APA 3.1 and3.2). In addition, the Sale Order requires that theUS Purchaser pay to Fifth Third Bank as Agent allproceeds of the Sale (after deducting certainamounts) to be held or applied to the AggregateSecured Liabilities (as defined in the DIP FinancingOrder). (Sale Order, O and 29).
Taxes The Asset Purchase Agreement does not claim any
specific exemption from Transfer Taxes. Rather, theAsset Purchase Agreement requires the Vendors topay all such Transfer Taxes, except to the extent ofany exemptions pursuant to section 1146 of the USBankruptcy Code. The Purchaser and Vendors willcooperate to exempt the acquisition of the PurchasedAssets from Transfer Taxes, when possible. (APA 3.7). The Debtors do not believe any Transfer Taxesare owed in the U.S. under applicable non-bankruptcy law.
Record Retention The Asset Purchase Agreement requires that thePurchaser provide the Debtors access to their booksand records for at least seven (7) years after theClosing. (APA 9.1).
Successor Liability Pursuant to paragraph T of the Sale Order, theDebtors are requesting a finding of fact that the USPurchaser is not a successor of the Debtors. Inaddition, the Sale Order requests a conclusion thatthe US Purchaser will have no successor liability forany claim as of the Closing Date. (Sale Order, 25
and 27).
Relief from
Bankruptcy Rule
6004(h)
Pursuant to paragraph 32 of the Sale Order, theDebtors request that the Sale Order be effective andenforceable immediately upon entry, and that thestay under Bankruptcy Rule 6004(h) not apply.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
9/40
{BAY:02057312v1} 913029825\V-7
Credit Bidding Pursuant to Section 5 of the Bidding Procedures, theSecured Lenders consent to the Stalking HorseAgreement and the Secured Lenders will not submita credit bid against the Stalking Horse Bidder.However, if the Stalking Horse Agreement or any
higher and better Successful Bid or Back-Up Bid isnot approved by the U.S. Court or the CanadianCourt or does not close for any reason on or beforethe Termination Date, the Agent may submit a creditbid on behalf of the Secured Lenders if it so chooseswithout any prior submission of a Bid, qualificationas a Bidder or further auction and, subject toapproval by the U.S. Court and the Canadian Court,close its credit bid pursuant to appropriatedocumentation consistent with a credit bid.
B. The Asset Purchase Agreement22. After extensive arms-length, good faith negotiations among the Vendors and the
Purchaser and their respective advisors, the parties have agreed, among other things, to convey
the US Purchased Assets and assign the US Assumed Contracts to the Purchaser in accordance
with the terms and conditions of the Asset Purchase Agreement, subject to the approval of the
transaction in the jurisdictions in which the Vendors are subject to creditor protection
proceedings. A copy of the Asset Purchase Agreement is attached hereto as Exhibit A. The
Debtors have determined that the Asset Purchase Agreement represents the best opportunity for
the Debtors to maximize the value of their assets and to serve as a basis for conducting an
auction to seek higher and/or better offers. The Asset Purchase Agreement contemplates the sale
of the US Purchased Assets, subject to higher and/or better bids, on the following material terms:
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
10/40
{BAY:02057312v1} 1013029825\V-7
Purchase Price The Purchaser shall pay a total cash purchase priceof $70,000,000.00, subject to an adjustment forchanges in working capital between the date of theAsset Purchase Agreement and the closing date, plusassumption of certain Liabilities (further described
below). $45,500,000.00 of the total cash purchaseprice is allocated to the US Purchased Assets and$24,500,000.00 of the total cash purchase priceallocated to the Canadian Purchased Assets. (APA 3.1, 3.2).
Break-Up Fee and
Expense
Reimbursement
In certain circumstances the Vendors may berequired to pay to the Purchaser a break-up fee andexpense reimbursement in the amount of 3.5% ofthe total purchase price of $70,000,000.00, payablefrom the closing of a higher and better bid. (APA
1.1, 8.3).
Assets and Shares
Transferred Free
and Clear
At the closing, the Debtors will transfer, subject tocertain exceptions, their rights, title and interests inthe US Purchased Assets, free and clear of allEncumbrances and Interests. (APA 2.2)
Employees The Purchaser will offer all active US UnionizedEmployees terms and conditions of employmentwhich will exclude the Vendors pension plan.Thereafter, and when legally appropriate, the US
Purchaser will recognize and offer to negotiate withthe US Unionized Employees lawfulrepresentatives concerning terms and conditions ofemployment. (APA 5.1).
Assumed
Liabilities
The liabilities to be assumed by the Purchaserinclude, among others, (i) Liabilities relating to theUS Purchases Assets arising on or after the ClosingDate; (ii) all Liabilities (other than Cure Costs)arising after the Closing Date under the USAssumed Contracts; and (iii) specifically identifiedemployee Liabilities. (APA 2.7). The Purchaser isnot assuming the defined benefit pension plan forthe Northstar Chicago facility and has begunnegotiations with the union about the terms of theirpost-closing relationship.
Closing Conditions The obligation of the Purchaser to close the Sale issubject to, among other things, the satisfaction of thefollowing conditions:
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
11/40
{BAY:02057312v1} 1113029825\V-7
the accuracy of the Vendors representations andwarranties in all material respects;
Vendors payment of all Cure Costs (as definedbelow); and
The Vendors have obtained DIP financingsufficient to continue operations, and such DIPfinancing has been approve by the respectiveCourts.
(APA 6.1).
Termination
Rights
The Asset Purchase Agreement may be terminated atany time prior to the Closing Date if the Purchasers,through the Asset Purchase Agreement are not the
winning bid at the Auction. (APA 7.8).
C. The Bidding Procedures23. In order to ensure that the Debtors receive the maximum value for the US
Purchased Assets, the Asset Purchase Agreement is subject to higher or better offers, and, as
such, the Purchaser (the Stalking Horse Bidder) and Asset Purchase Agreement will serve as
the stalking-horse bid for the US Purchased Assets (the Stalking Horse Agreement). The US
Purchased Assets and Canadian Purchased Assets may be sold in a single sale to a single
purchaser or in strategic business units to several purchasers.
24. While the Debtors believe that the terms of the Asset Purchase Agreement are fairand reasonable and reflect the highest and best value for the US Purchased Assets, the Debtor
nevertheless desire to allow for any parties that may have an interest in purchasing the Assets a
further opportunity to make a bid for the US Purchased Assets. Accordingly, the Debtors
developed Bidding Procedures consistent with the Debtors need to expedite the sale process but
with the objective of promoting active bidding that will result in the highest and best offer the
marketplace can sustain for the US Purchased Assets while affording appropriate protect for the
Stalking Horse Bidder. Moreover, the Bidding Procedures reflect the Debtors objective of
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
12/40
{BAY:02057312v1} 1213029825\V-7
conducting the Auction in a controlled, but fair and open, fashion that promotes interest in the
US Purchased Assets by financially capable, motivated bidders who are likely to close a
transaction, while simultaneously discouraging non-serious offers and offers from persons the
Debtors do not believe are sufficiently capable or likely to actually consummate a transaction.
25. Pursuant to Local Rule 6004-1(c)(i), the Bidding Procedures (attached hereto asExhibit E) and/or the US Bidding Procedures Order (attached hereto as Exhibit C) contain the
following key proposed terms:4
a) Assets for SaleThe Vendors are soliciting superior offers for all or a portion of the Stalking Horse Assets.Bids may also include assets of the Vendors which are not Stalking Horse Assets.
b) Bidding DeadlinesAll Bids must be submitted in accordance with the terms of the Bidding Procedures sothat they are actually received no later than 10:00 a.m. (Eastern time) on July 13, 2012(the Bid Deadline). A Bid received after the Bid deadline shall not constitute aQualified Bid.
c) Requirements for Participation in Auction: Qualified Bidders.To participate in the Auction, a party submitting a Bid (a Bidder) must submit a Bidthat is determined by the Vendors to satisfy each of the following conditions (a QualifiedBid):
i. Written Submission of Modified APA and Commitment to Close. Bidders (other thanthe Stalking Horse Bidder) must submit a Bid by the Bid Deadline in the form of anexecuted mark-up of the Stalking Horse Agreement (each a Modified APA)reflecting such Qualified Bidders proposed changes to the Stalking HorseAgreement, and a written and binding commitment to close on the terms andconditions set forth therein.
ii. Irrevocable. A Bid must be irrevocable until the sooner of (i) August 31, 2012, in theevent that the Qualified Bid is determined to be the Successful Bid; and (ii) the earlier
4 The summary of the principal terms of the US Bidding Procedures Order is provided for the benefit of the Courtand other parties in interest. The US Bidding Procedures Order is incorporated herein by reference. To theextent of any conflict between this summary and the US Bidding Procedures Order, the term of the US BiddingProcedures Order shall govern. Interested parties should review the US Bidding Procedures Order for a fullrecital of the relevant terms and conditions of the proposed Sale and Auction. Capitalized terms used but nototherwise defined in this summary shall have the meanings set forth in the US Bidding Procedures Order.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
13/40
{BAY:02057312v1} 1313029825\V-7
of August 31, 2012, 2012, or when the Successful Bid closes, in the event that theQualified Bid is determined to be the Back-up Bid (the Termination Date);
iii. Contingencies. A Bid may not be conditional on obtaining financing or any internalapproval or on the outcome or review of due diligence. Any other contingenciesassociated with a Bid may not, in aggregate, be materially more burdensome thanthose set forth in the Stalking Horse Agreement;
iv. Financing Sources and Evidence of Financial Ability to Close. A Bid must identifythe actual Bidder and owners and ultimate parent company of the Bidder and containwritten evidence of a commitment for financing or other evidence of the ability tofund and consummate the sale satisfactory to the Vendors with appropriate contactinformation for such financing sources;
v. No Fees Payable to Qualified Bidder. A Bid may not request or entitle the QualifiedBidder (other than the Stalking Horse Bidder) to any break-up fee, expensereimbursement, or similar type of payment;
vi. Good-Faith Deposit. Each Bid must be accompanied by a cash deposit (the GoodFaith Deposit) in an amount equal to: (i) ten (10) percent in cash of the cash andvalue of the non-cash purchase price allocated to the Canadian Assets under theModified APA, which shall be paid to the Monitor to be held in trust, and (ii) ten (10)percent in cash of the cash and value of the non-cash purchase price allocated to theU.S. Assets under the Modified APA, which shall be paid to the Debtors to be held ina separate escrow account;
vii.Minimum Overbid. The aggregate consideration in a Bid must have a cash purchaseprice for the Canadian Assets (the Canadian Cash Purchase Price) of at least the
amount payable for the Canadian Assets under the Stalking Horse Agreement, being$24,500,000, and a cash purchase price for the U.S. Assets (the U.S. Cash PurchasePrice) of at least the amount payable for the U.S. Assets under the Stalking HorseAgreement, being $45,500,000.00, plus the Break-Up Fee and ExpenseReimbursement of $2,450,000.00, plus $300,000 for a total minimum considerationof $72,750,000.00 (the Minimum Overbid); provided that any Portion Bidder shallnot be subject to the Minimum Overbid and shall instead be subject to such overbidamount as the Vendors may determine prior to commencement of the Auction; and
viii. Non-cash Consideration. Bids may include non-cash consideration, such aspromissory notes, earn-outs, publicly traded equities or other equity consideration.
The Vendors, after consultation with the Agent will determine how to value suchconsideration in their reasonable business judgment.
d) Secured Lenders may Credit BidThe Secured Lenders consent to the Stalking Horse Agreement and the Secured Lenderswill not submit a credit bid against the Stalking Horse Bidder. However, if the StalkingHorse Agreement or any higher and better Successful Bid or Back-Up Bid is notapproved by the U.S. Court or the Canadian Court or does not close for any reason on orbefore the Termination Date, the Agent may submit a credit bid on behalf of the Secured
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
14/40
{BAY:02057312v1} 1413029825\V-7
Lenders if it so chooses without any prior submission of a Bid, qualification as a Bidderor further auction and, subject to approval by the U.S. Court and the Canadian Court,close its credit bid pursuant to appropriate documentation consistent with a credit bid.
e) Portion BiddersA party who does not wish to purchase all or substantially all of the Stalking Horse Assets(a Portion Bidder) may submit a Bid in respect of a subset of such assets (a PortionBid) and shall constitute a Qualified Bidder if such Portion Bid satisfies therequirements to become a Qualified Bidder, other than the Minimum Overbid.
f) Due Diligence From BiddersEach Qualified Bidder shall comply with all reasonable requests for additionalinformation by the Vendors regarding such Bidder and its contemplated transaction.Failure by a Bidder to comply with requests for additional information will be a basis forthe Vendors to determine that the Bidder is not a Qualified Bidder. The other leading
bidder candidate had completed its due diligence and other possible remaining biddershave already conducted substantial diligence on the Debtors and their business.
g) Auctioni. Only if a Qualified Bid (other than the Stalking Horse Bid) is received by the Bid
Deadline will the Vendors conduct an auction (the Auction) to determine thehighest and/or best Bid with respect to the Stalking Horse Assets. The Auction shallcommence on July 17, 2012, at 10:00 a.m. (Central Time) at the offices of SNRDenton LLP, 233 South Wacker Drive, Suite 7800, Chicago, Illinois 60606.
ii.
If no such Qualified Bid is received by the Bid Deadline, then the Auction will nottake place, the Stalking Horse Bidder will be declared the Successful Bidder, theVendors will seek approval of, and authority to consummate, the Stalking HorseAgreement and the transactions provided for therein at the Sale Hearings.
iii. If a Qualified Bid is received in accordance with the Bidding Procedures, the Auctionwill be conducted according to the following procedures:
(A) Participation At The Auction. Only a Qualified Bidder that has submitted aQualified Bid is eligible to participate at the Auction; provided that theNorthstar Debtors may allow any or all Portion Bidders that are QualifiedBidders to participate in the Auction. Only the authorized representatives
(including counsel and other advisors) of each of the Qualified Bidders, theVendors, the Secured Lenders, advisors to any Official Committee in theChapter 11 Proceedings, and the Monitor and any other party or representativewho the Vendors in their reasonable business judgment authorize to attendshall be permitted to attend at the Auction. During the Auction, the biddingwill begin with the highest Qualified Bid (the Opening Bid) and eachsubsequent round of bidding shall continue in minimum increments of at leastthe Minimum Overbid Increment. A combination of Portion Bids (anAggregated Bid) which, when totaled, exceed the Minimum Overbid may
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
15/40
{BAY:02057312v1} 1513029825\V-7
be determined to be the Opening Bid. At least one business day prior to thestart of the Auction, the Vendors will provide the terms of the Opening Bid toall participating Qualified Bidders and a blackline of the Opening Bid to theStalking Horse Agreement. The determination of which Qualified Bidconstitutes the Opening Bid shall take into account any factors the Vendors
reasonably deem relevant to the value of the Qualified Bid to the Vendors,including, among other things, the following: (i) the amount and nature of theconsideration; (ii) the proposed assumption of any liabilities, if any; (iii) theability of the Qualified Bidder to close the proposed transaction; (iv) theproposed closing date and the likelihood, extent and impact of any potentialdelays in closing; (v) any purchase-price adjustments; (vi) the impact of thecontemplated transaction on any actual or potential litigation; (vii) the neteconomic effect of any changes from the Stalking Horse Agreement, if any,contemplated by the contemplated transaction documents (the ContemplatedTransaction Documents), (viii) the net after-tax consideration to be receivedby the Vendors; and (ix) such other considerations as the Vendors deem
relevant in their reasonable business judgment (collectively, the BidAssessment Criteria);
(B) Authority to Bid. All representatives of Qualified Bidders who submit anybids at the Auction must represent on the record that they have authority to bidand that the Bid they submit is binding on the Qualified Bidder.
(C) Conduct of the Auction. The Vendors and their advisors will direct andpreside over the Auction. All Bids made after the Opening Bid must beOverbids, and will be made and received on an open basis, and all materialterms of each Overbid may be fully disclosed to all other Qualified Biddersthat are participating in the Auction.
(D) Terms of Overbids. An Overbid is any Bid made at the Auction subsequentto the Vendors announcement of (i) the Opening Bid, and (ii) the then highestand/or best Overbid at the beginning of each subsequent round of bidding (theRound Leading Bid). To submit an Overbid, in any round of the Auction, aQualified Bidder must comply with the following conditions:
(1)Minimum Overbid Increment. Any Overbid must be made inincrements of at least $300,000 (the Minimum Overbid Increment).
(2)Remaining terms are the same as for Qualified Bids. An Overbid mustcomply with the conditions for a Qualified Bid set forth above, provided,however, that the Bid Deadline shall not apply. Any Overbid made by aQualified Bidder must remain open and binding on the Qualified Bidderuntil the Termination Date.
The Vendors will credit the amount of the Break-Up Fee and ExpenseReimbursement to each and every Overbid submitted by the StalkingHorse Bidder at the Auction, meaning that if the Stalking Horse Bidderssubsequent Overbid is the Round Leading Bid, any subsequent Overbidmust exceed the Stalking Horse Bidders Overbid by the amount of the
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
16/40
{BAY:02057312v1} 1613029825\V-7
Break-Up Fee and Expense Reimbursement and Minimum OverbidIncrement.
To the extent not previously provided, a Qualified Bidder submitting anOverbid must submit, as part of its Overbid, written evidence (in the formof financial disclosure or credit-quality support information orenhancement reasonably acceptable to the Vendors) demonstrating suchQualified Bidders ability to close the transaction proposed by suchOverbid.
(3)Announcing Overbids. At the start of each round of bidding, theVendors will announce the material terms of the Round Leading Bid, thebasis for calculating the total consideration offered in such Overbid, andthe resulting benefit to the Vendors based on, among other things, the BidAssessment Criteria.
(4)Consideration of Overbids. The Vendors reserve the right, in theirreasonable business judgment, to make one or more adjournments in theAuction to, among other things: (A) facilitate discussions between theVendors and individual Qualified Bidders; (B) allow individual QualifiedBidders to consider how they wish to proceed; (C) consider and determinethe current highest and/or best Overbid at any given time during theAuction; and (D) give Qualified Bidders the opportunity to provide theVendors with such additional evidence as they may require, in theirreasonable business judgment, that the Qualified Bidder has obtained allrequired internal corporate approvals, has sufficient internal resources, orhas received sufficient non-contingent debt and/or equity fundingcommitments, to consummate the proposed transaction at the prevailing
Overbid amount.
(5)Portion Bids. Each Portion Bidder entitled to participate in theAuction will be entitled to submit an Overbid (in a minimum increment tobe determined by the Vendors) with respect to any portion of the Assetswithout being required to submit an Overbid with respect to all theStalking Horse Assets or all assets subject to the Round Leading Bid.
(E) Closing the Auction. Upon conclusion of the bidding, the Auction will beclosed, and the Vendors will (i) immediately review the final Overbid of eachremaining Qualified Bidder on the Bid Assessment Criteria, and (ii) identify
the highest and/or best Overbid or Opening Bid (the Successful Bid and theentity or entities submitting such Successful Bid, the Successful Bidder),and the next highest and/or best Overbid, Opening Bid, or Stalking HorseAgreement, after the Successful Bid (the Back-up Bid and the entity orentities submitting such Back-up Bid, the Back-up Bidder), and advise theremaining Qualified Bidders of such determination. One or more PortionBid(s) can form part of a Successful Bid and Back-up Bid so long as suchPortion Bid(s) do not overlap in respect of the Assets sought to be purchased.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
17/40
{BAY:02057312v1} 1713029825\V-7
h) Investment BidIf a Qualified Bidder submits an investment bid involving a restructuring, recapitalizationor other form of reorganization of the business and affairs of the Vendors as a goingconcern or a plan of compromise and arrangement or reorganization concerning theVendors, which the Vendors consider would result in a greater value being received forthe benefit of the Vendors creditors than the Qualified Bids, then the Vendors mayconsider such investment bid a Qualified Bid and allow such Qualified Bidder toparticipate in the Auction, notwithstanding that such investment bid does not otherwisecomply with the terms the Bidding Procedures. In such case, the Northstar Debtors mayadopt appropriate rules to facilitate such Qualified Bidders participation in the Auction.
i) Sale Hearingi. A joint hearing to approve the sale of Assets to the Successful Bidder shall be
conducted by the Canadian Court and the U.S. Court within 7 days of the conclusionof the Auction and by no later than July 24, 2012 at the time set by the Court (the
Sale Hearing). The Vendors will be deemed to have accepted the Successful Bidonly when the Successful Bid has been approved by the Canadian Court and the U.S.Court.
ii. Following the approval of the sale to the Successful Bidder at the Sale Hearing, ifsuch Successful Bidder fails to consummate the sale in accordance with the terms andconditions of the Contemplated Transaction Documents of the Successful Bidder, theVendors will be authorized, but not required, to deem the Back-up Bid, as disclosed atthe Sale Hearing, as the Successful Bid and the Vendors will be authorized, but notrequired, to consummate the sale with the Back-up Bidder, subject to approval of theCanadian Court and the U.S. Court, which approvals may be sought by the Vendors
on a conditional basis at the Sale Hearing, at the Vendors discretion.
j) Break-Up Fee and Expense ReimbursementIn the event that the Stalking Horse Bidder is entitled to payment of the Break-Up Feeand Expense Reimbursement pursuant to Section 8.3 of the Asset Purchase Agreement,the combined break-up fee and expense reimbursement in the amount of three and one-half percent (3.5%) of the base cash purchase price amount of the Stalking Horse Bid (theBreak-Up Fee and Expense Reimbursement) will be paid to the Stalking Horse Bidderfrom the proceeds received upon closing of the Successful Bid or the Back-up Bid. Noother expense reimbursement will be payable to the Stalking Horse Bidder.
k) As Is, Where IsThe sale of Assets will be on an as is, where is basis and without representations orwarranties of any kind, nature, or description by the Vendors, their agents or estatesexcept to the extent as expressly stated in the Stalking Horse Agreement or theContemplated Transaction Documents of another Successful Bidder. The Stalking HorseBidder and each Qualified Bidder will be deemed to acknowledge and represent that ithas had an opportunity to conduct any and all due diligence regarding the Assets prior tomaking its offer, that it has relied solely on its own independent review, investigation,
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
18/40
{BAY:02057312v1} 1813029825\V-7
and/or inspection of any documents and/or the Assets in making its Bid, and that it didnot rely on any written or oral statements, representations, promises, warranties,conditions or guaranties whatsoever, whether express, implied, by operation of law orotherwise, regarding the Assets, or the completeness of any information provided inconnection therewith or the Auction, except as expressly stated in the Bidding Procedures
or (a) in the case of the Stalking Horse Bidder, the Stalking Horse Agreement, as may bemodified in any Overbid by the Stalking Horse Bidder or (b) in the case of any otherSuccessful Bidder, the Contemplated Transaction Documents of such Qualified Bidder.
l) Free of Any and All Encumbrances and Interests.Except as otherwise provided in the Successful Bidders Contemplated TransactionDocuments, all of the Vendors right, title, and interest in and to the Assets subject theretoshall be sold free and clear of all Claims Liens, Encumbrances and Interests inaccordance with the Stalking Horse Agreement, if applicable, and the vesting orders ofthe Canadian Court and the U.S. Court, with such Encumbrances and Interests to attachto the net proceeds of the sale of the Assets. The Canadian Purchase Price and the U.S.
Purchase Price will be paid, held, and distributed in accordance with orders of theCanadian Court and the U.S. Court, respectively, approving the sale or sales.
m)Return or Application of Good Faith DepositGood Faith Deposits of all Qualified Bidders will be held in a separate non-interest-bearing account or escrow. Good Faith Deposits of all Qualified Bidders, other than theSuccessful Bidder and the Back-up Bidder will be returned to such Qualified Bidders two(2) business days after the selection of the Successful Bidder and Back-up Bidder. GoodFaith Deposits of the Successful Bidder will be applied to the purchase price of suchtransaction at closing. The Good Faith Deposit of the Back-up Bidder will be held in an
interest-bearing account until two (2) business days after the closing of the transactionscontemplated by the Successful Bid, and thereafter returned to the Back-up Bidder. If aSuccessful Bidder fails to consummate an approved sale because of a breach or failure toperform on the part of such Successful Bidder, the Vendors will be entitled to retain theGood Faith Deposit of the Successful Bidder as part of their damages resulting from thebreach or failure to perform by the Successful Bidder. If the Successful Bidder fails toconsummate an approved sale for any reason, and a transaction is completed with theBack-up Bidder, the Good Faith Deposit of the Back-up Bidder will be applied to thepurchase price of the transactions contemplated by the purchase agreement of the Back-up Bidder at closing.
n) Modifications and Reservationsi. Subject to the Canadian Bidding Procedures Order and the U.S. Bidding Procedures
Order, the Vendors will have the right after consultation with the Agent to adopt suchother rules (including rules that may depart the Bidding Procedures), that in theirreasonable business judgment will better promote the goals of the Bidding Proceduresincluding the extension of the Bid Deadline; provided that the adoption of any rulethat materially deviates from the Bidding Procedures will require the prior consent ofthe Stalking Horse Bidder or orders of the Canadian Court and the U.S. Court.Qualified Bidders (other than the Stalking Horse Bidder) shall not be deemed third
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
19/40
{BAY:02057312v1} 1913029825\V-7
party beneficiaries of these Joint Bidding Procedures and shall not have standing toobject to the Vendors administration thereof.
ii. The Vendors in consultation with the Agent may prior to or during the Auction, adoptsuch additional rules for the Auction that will better promote the goals of the Auctionand that are not inconsistent with the provisions of the Bidding Procedures, theCanadian Bidding Procedures Order and the U.S. Bidding Procedures Order;provided that the adoption of any rule for the Auction that materially deviates fromthe Auction procedures set forth in these Bidding Procedures will require the priorconsent of the Stalking Horse Bidder or orders of the Canadian Court and the U.S.Court.
iii. The Vendors may, after consultation with the Agent for the Secured Lenders and theMonitor reject at any time before entry of an order of the Canadian Court or the U.S.Court approving a Successful Bid, any Bid (except the Stalking Horse Agreement,other than in accordance with its terms) that is (a) inadequate or insufficient, (b) notin conformity with the requirements of the CCAA, the Code, the Bidding Procedures,
or (c) contrary to the best interests of the Vendors, their estates and creditors thereof.
26. The Debtors submit that implementation of the Bidding Procedures will not chillthe bidding for the US Purchased Assets. Rather, approval of the Bidding Procedures is in the
best interests of the Debtors, their estates, and their creditors in that it provides a structure and
format for other potentially interested parties to formulate a bid for the Assets. Failure to
approve the Bidding Procedures may jeopardize the Sale to the Purchaser to the detriment of the
Debtors creditors, employees, customers and vendors.
27. As described above, under the Asset Purchase Agreement, the Debtors and theCanadian Debtors have agreed to pay the Purchaser a combined Break-Up Fee and Expense
Reimbursement in the amount of three and one-half percent (3.5%) of the purchase price of the
Stalking Horse Bid. The Debtors are obligated to pay the Purchaser their pro rata share of the
Break-Up Fee and Expense Reimbursement based on the total purchase price allocated to the US
Purchased Assets in the Asset Purchase Agreement, subject to this Courts approval, which
amount the Debtors consider to be fair and reasonable for the time, effort and expense of the
Stalking Horse Bidder in conducting due diligence and negotiating the Asset Purchase
Agreement. The Debtors have further agreed that their obligation to pay the Break-Up Fee and
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
20/40
{BAY:02057312v1} 2013029825\V-7
Expense Reimbursement will survive termination of the Asset Purchase Agreement, and that the
portion of the Break-Up Fee and Expense Reimbursement to be paid by the Debtors will
constitute an administrative expense of the Debtors under sections 503(b) or 507(b) of the US
Bankruptcy Code. Absent such provision, the Purchaser was unwilling to act as a stalking
horse and thereby establish a baseline by which the value of the US Purchased Assets would be
measured. The Debtors believe that in this instance it is necessary and appropriate for the
Debtors to make payment of the Break-Up Fee and Expense Reimbursement, subject to the terms
of the Asset Purchase Agreement. The Break-Up Fee and Expense Reimbursement will be paid
only if the Debtors fail to consummate the transaction proposed in the Asset Purchase
Agreement, but only if such failure to consummate the transaction is because the Debtors accept
a competing offer from a competing bidder and actually closes the sale and receives the purchase
price from such competing bidder.
D. The Notice Procedures28. The Debtors propose to give notice (the Notice Procedures), immediately after
the entry of the US Bidding Procedures Order of the Bidding Procedures, the time and place of
the Auction, the time and place of the Sale Hearing, and the objection deadline for the Sale
Hearing by sending a notice (the Sale Notice), substantially in the form attached to this Motion
as Exhibit F, to (i) the Office of the United States Trustee; (ii) counsel for the US Purchaser; (iii)
counsel to the Agent for the Debtors pre-petition secured lenders and DIP financiers, (iv)
counsel to Boeing Capital Loan Corporation. (v) counsel for any Creditors Committee; (vi) all
entities known to have expressed an interest in a transaction with respect to the US Purchased
Assets during the past four months; (vi) all creditors of the Debtors and entities known to have
asserted any Encumbrances and Interests in or upon an of the US Purchased Assets; (vii) all
federal, state, county and local and foreign regulatory or taxing authorities or recording offices
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
21/40
{BAY:02057312v1} 2113029825\V-7
which have a reasonably known interest in the relief requested by the Motion; (viii) all parties to
US Assumed Contracts; (ix) the United States Attorneys office; (x) the Securities and Exchange
Commission; (xi) the Internal Revenue Service; (xii) the Pension Benefit Guaranty Corporation;
and (xiii) all entities filing notices of appearance or requests for notice under Bankruptcy Rule
2002 in these US Bankruptcy Cases.
29. In addition, as soon as practicable after entry of the US Bidding Procedures Order,but in any event no more than three (3) business days after entry of such order, the Debtors shall
publish notice of the Bidding Procedures, the time and place of the Auction, the time and place
of the Sale Hearing, and the objection deadline for the Sale Hearing in the Chicago Tribune,
Arizona Republic and the Wall Street Journal (National Edition), substantially in the form
attached hereto as Exhibit G (the Publication Notice).
E. The Assignment Procedures30. The Debtors propose a set of procedures to facilitate the Sale which would
involve the assumption and assignment of the US Assumed Contracts (the Assignment
Procedures). The Debtors propose to serve the Notice of Possible Assumption, Sale and
Assignment of Certain Unexpired Leases and Executory Contracts and Sale Hearing (the Cure
Notice), substantially in the form attached hereto at Exhibit H. The Debtors will serve the Cure
Notices as soon as practicable after the entry of the US Bidding Procedures Order, but in any
event, no later than ten (10) business days prior to the Sale Hearing.
31. The Debtors will attach to the Cure Notice their calculations of the undisputedcure amounts that the Debtors believe must be paid to cure all prepetition defaults under all US
Assumed Contracts (the Cure Costs). The Debtors request that unless the non-debtor party to a
US Assumed Contract files and serves an objection (the Cure Cost Objection) to the Cure
Costs on or before 4:00 p.m. (prevailing Eastern Time) on July 13, 2012 (the Cure Objection
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
22/40
{BAY:02057312v1} 2213029825\V-7
Deadline), such non-debtor party should (a) be forever barred from objecting to the Cure Cost
and from asserting any additional cure or other amounts with respect to such US Assumed
Contract, and the Debtors shall be entitled to rely solely upon the Cure Cost, and (b) be forever
barred and estopped from asserting or claiming against the Debtors, the Successful Bidder or any
other assignee of the US Assumed Contract that any additional amounts are due or defaults exist,
or conditions to assumption and assignment must be satisfied with respect to such US Assumed
Contract.
32. In the event that a Cure Cost Objection is timely filed, the Cure Cost objectionmust set forth (i) the basis for the objection and (ii) the amount the party asserts as the Cure Cost.
After receipt of the Cure Cost Objection, the Debtors will attempt to reconcile any differences in
the Cure Cost believed by the non-debtor party to exist. In the event, however, the Debtors and
the non-debtor party cannot consensually resolve the Cure Cost Objection and such dispute must
be resolved, the Debtors will segregate any disputed portion of the Cure Costs pending the
resolution of any such disputes by this Court or mutual agreement of the parties.
33. In the event that the Successful Bidder is not the Stalking Horse Bidder, withintwo (2) business days after the conclusion of the Auction, the Debtors will serve notice
identifying the Successful Bidder upon each counterparty to an executory contract or unexpired
lease to be assumed and assigned to the Successful Bidder. Each counter-party shall have until
July 22 or the date that is two (2) business days prior to the Sale Hearing (the Adequate
Assurance Objection Deadline) to object to the assumption and assignment of such executory
contract or unexpired lease solely on the issue of whether the Successful Bidder can provide
adequate assurance of future performance as required by section 365 of the US Bankruptcy
Code.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
23/40
{BAY:02057312v1} 2313029825\V-7
F. Request to Set a Date for the Sale Hearing34. The Debtors intend to present the Successful Bid and the Back-up Bid, if any, for
approval by the Court pursuant to the provisions of sections 105, 363 and 365 of the Bankruptcy
Code at the Sale Hearing to be scheduled by the Court and currently proposed as __:_____
a.m/p.m. on July 24, 2012. The Debtors shall be deemed to have accepted a bid only when the
Court has approved the bid at the Sale Hearing. Upon the failure to consummate a sale of the US
Purchased Assets after the Sale Hearing because of the occurrence of a breach or default under
the terms of the Successful Bid, the next highest or otherwise best Back-up Bid, if any, as
disclosed at the Sale Hearing, shall be deemed the Successful Bid without further order of the
Court, and the parties shall be authorized to consummate the transaction contemplated by the
Back-up Bid.
35. The Debtors further request, pursuant to Bankruptcy Rule 9014, that anyobjection to the relief to be considered at the Sale Hearing must be filed on or before 4:00 p.m.
(prevailing Eastern Time) on July 13, 2012 (the Objection Deadline).
G. Sale Free and Clear of Liens and Claims36. The Debtors have agreed that the conveyance of the Debtors interest in the US
Purchased Assets in accordance with the Asset Purchase Agreement will be a legal, valid, and
effective transfer of such US Purchased Assets, and, to the fullest extent permitted by sections
105, 363(f) and 365 of the Bankruptcy Code, or other applicable law, vests or will vest the
Purchaser with all right, title, and interest of the Debtors in and to the US Purchased Assets free
and clear of Encumbrances and Interests (except the US Assumed Obligations and US Permitted
Encumbrances, as those terms are defined in the Asset Purchase Agreement) of any kind or
nature whatsoever including, but not limited to, Encumbrances and Interests in respect of the
following: (1) any labor agreements; (2) all mortgages, deeds of trust and security interests;
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
24/40
{BAY:02057312v1} 2413029825\V-7
(3) any pension, welfare, compensation or other employee benefit plans, agreements, practices
and programs, including, without limitation, any pension plan of any Debtor; (4) any other
employee, workers compensation, occupational disease or unemployment or temporary
disability related claim, including, without limitation, claims that might otherwise arise under or
pursuant to (a) the Employee Retirement Income Security Act of 1974, as amended, (b) the Fair
Labor Standards Act, (c) Title VII of the Civil Rights Act of 1964, (d) the Federal Rehabilitation
Act of 1973, (e) the National Labor Relations Act, (f) the Worker Adjustment and Retraining Act
of 1988, (g) the Age Discrimination and Employee Act of 1967 and Age Discrimination in
Employment Act, as amended, (h) the Americans with Disabilities Act of 1990, (i) the
Consolidated Omnibus Budget Reconciliation Act of 1985, (j) state discrimination laws, (k) state
unemployment compensation laws or any other similar state laws, or (l) any other state or federal
benefits or claims relating to any employment with any of the Debtors or any of their respective
predecessors; (5) any bulk sales or similar law; (6) any tax statutes or ordinances, including,
without limitation, the Internal Revenue Code of 1986, as amended; (7) any theories of successor
or products liability; and (8) any Environmental Laws (as defined in the Asset Purchase
Agreement). However, the Debtors do not seek, and nothing in Sale Order should be construed
to: (1) release, nullify, or enjoin a governmental authority from enforcing any Environmental
Laws under which a purchaser of property would otherwise be liable as a current owner or
operator after the date of purchase, or (2) permit a governmental authority to obtain from the US
Purchaser penalties arising under Environmental Laws prior to the Closing Date. Any employee
medical claims which are incurred prior to the Closing (regardless of when such claims are
presented for payment) will be claims against the bankruptcy estates of the Debtors, and not the
US Purchaser, and the US Purchaser will be responsible only for such claims which are incurred
after the Closing.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
25/40
{BAY:02057312v1} 2513029825\V-7
37. All Encumbrances and Interests of any kind or nature whatsoever (other than USPermitted Encumbrances) will attach to the proceeds of the Sale (the Proceeds) with the same
force, validity, priority and effect, if any, as the claims, liens, encumbrances, and interests
formerly had against the US Purchased Assets, if any, subject to the Debtors ability to challenge
the extent, validity, priority and effect of the Encumbrances and Interests unless foreclosed by
the DIP Financing Order and subject to and as otherwise provided in any other order of this
Court in these US Bankruptcy Cases.
H. Canadian Proceedings38. Contemporaneously herewith, the Canadian Debtors are seeking authorization
from the Canadian Court to enter into the Asset Purchase Agreement, and approval of the
Bidding Procedures (the Canadian Bidding Procedures Order). The final sale and assignment
of the Canadian Purchased Assets also will be submitted for approval by the Canadian Court. To
facilitate this process, the Debtors have simultaneously moved this Court for an order approving
a court-to-court cross-border protocol. A full description of the court-to-court cross-border
protocol is set forth in that motion.
Basis for Relief
A. Sale of the Assets Is a Product of the Debtors Reasonable Business Judgment39. Section 363(b)(1) of the Bankruptcy Code provides: [t]he Trustee, after notice
and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of
the estate. Section 105(a) of the Bankruptcy Code provides in relevant part: The Court may
issue any order, process, or judgment that is necessary or appropriate to carry out the provisions
of this title.
40. Virtually all courts have held that approval of a proposed sale of assets of a debtorunder section 363 of the Bankruptcy Code outside the ordinary course of business and prior to
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
26/40
{BAY:02057312v1} 2613029825\V-7
the confirmation of a plan of reorganization is appropriate if a court finds that the transaction
represents a reasonable business judgment on the part of the trustee or debtor-in-possession. See
In re Abbotts Dairies of Pa., 788 F.2d 143 (3d Cir. 1986);In re Delaware & Hudson Ry. Co., 124
B.R. 169, 176 (D. Del. 1991) (holding that the following non-exclusive list of factors may be
considered by a court in determining whether there is a sound business purpose for an asset sale:
the proportionate value of the asset to the estate as a whole; the amount of elapsed time since
the filing; the effect of the proposed disposition of [sic] the future plan of reorganization; the
amount of proceeds to be obtained from the sale versus appraised values of the property; and
whether the asset is decreasing or increasing in value); In re Stroud Ford, Inc., 205 B.R. 722
(Bankr. M.D. Pa. 1996); Titusville Country Club v. Pennbank (In re Titusville Country Club), 128
B.R. 396, 399 (Bankr. W.D. Pa. 1991);In re Industrial Valley Refrigeration & Air Conditioning
Supplies Inc., 77 B.R. 15, 21 (Bankr. E.D. Pa. 1987); In re Lionel Corp., 722 F.2d 1063 (2d Cir.
1983); Stephens Indus., Inc. v. McClung, 789 F.2d 386, 391 (6th Cir. 1986); In re Ionosphere
Clubs, Inc., 100 B.R. 670, 675 (Bankr. S.D.N.Y. 1989); In re Phoenix Steel Corp., 82 B.R. 334,
335-36 (Bankr. D. Del. 1987) (stating that the elements necessary for approval of a section 363
sale in a chapter 11 case are that the proposed sale is fair and equitable, that there is a good
business reason for completing the sale and the transaction is in good faith).
41. The sound business reason test requires a trustee or debtor-in-possession toestablish four elements: (1) that a sound business purpose justifies the sale of assets outside the
ordinary course of business; (2) that accurate and reasonable notice has been provided to
interested persons; (3) that the trustee or the debtor-in-possession has obtained a fair and
reasonable price; and (4) good faith. In re Titusville Country Club, 128 B.R. at 399; In re
Sovereign Estates, Ltd., 104 B.R. 702, 704 (Bankr. E.D. Pa. 1989); Phoenix Steel Corp., 82 B.R.
at 335-36;see also Stephens Indus., 789 F.2d at 390;In re Lionel Corp., 722 F.2d at 1071.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
27/40
{BAY:02057312v1} 2713029825\V-7
42. Additionally, prior to and after enactment of the Bankruptcy Code, courts havepermitted a proposed sale of all or substantially all assets of a trustee outside the ordinary course.
43. The proposed procedures for, and the sale of the Debtors interests in the USPurchased Assets meet the sound business reason test. First, sound business purposes justify
the sale. The Debtors believe that a prompt sale of the US Purchased Assets conducted pursuant
to the Bidding Procedures presents the best opportunity to realize the maximum value of the US
Purchased Assets for distribution to the Debtors estates and their creditors. The Debtors further
believe that the benefit to their creditors will be adversely affected absent an immediate sale. See
In re Lionel Corp., 722 F.2d at 1071 (of factors for court to evaluate on motion under section
363(b), most important perhaps, [is] whether the asset is increasing or decreasing in value).
44. The proposed procedures for, and the sale of the US Purchased Assets also meetthe other factors of the sound business reason test. As part of this Motion, the Debtors have
sought to establish procedures for notice to creditors and other prospective bidders. Under the
circumstances of this case, the Debtors submit that the notice period proposed satisfies the
requirements of the Bankruptcy Rules, see Bankruptcy Rule 2002, and provides sufficient time
for parties-in-interest to submit objections to the proposed sale and for bidders to formulate and
submit competing proposals.
45. Finally, the proposed procedures for the sale of the US Purchased Assets, whichrequire the Debtors to consult with the Committee, the Agent for the Secured Lenders and the
Monitor throughout the process, satisfy the good faith requirement ofAbbotts Dairies. The
Debtors submit that the Stalking Horse Bid and the results of the Auction will be the product of
good faith, arms length negotiations with respect to the price and other terms of the sale of the
US Purchased Assets between the Vendors (including the Debtors) and Successful Bidder at the
conclusion of the Auction.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
28/40
{BAY:02057312v1} 2813029825\V-7
46. As set forth above, the Debtors have demonstrated compelling and sound businessjustifications for authorizing the sale of the US Purchased Assets and the payment of the Break-
Up Fee and Expense Reimbursement under the circumstances, timing, and procedures set forth
in the Asset Purchase Agreement. The sale of the US Purchased Assets pursuant to the Bidding
Procedures will afford the Debtors estates an opportunity to maximize the recoveries to
creditors. Accordingly, the Debtors request that the Court approve the proposed procedures for
sale of the US Purchased Assets to the highest or otherwise best bidder at the Auction and
approve the Sale presented to the Court at the Sale Hearing and authorize the Debtors to take
such other steps as are necessary to consummate the Sale.
B. The Bidding Procedures Are Appropriate Under the Circumstances47. A debtor may sell, after notice and a hearing, its assets outside the ordinary course
of business. 11 U.S.C. 363. Generally, to obtain approval of a proposed sale of assets, a debtor
must demonstrate that the proffered purchase price is the highest and best offer under the
circumstances of the case. See, e.g., Four B. Corp. v. Food Barn Stores, Inc. (In re Food Barn
Stores, Inc.), 107 F.3d 558, 564-65 (8th Cir. 1997) (holding that in bankruptcy sales, a primary
objective of the Code [is] to enhance the value of the estate at hand); In re Integrated Res., 147
B.R. 650, 659 (S.D.N.Y. 1992) (It is a well-established principle of bankruptcy law that the . . .
Debtors duty with respect to such sales is to obtain the highest price or greatest overall benefit
possible for the estate.) (quoting Cello Bay Co. v. Champion Intl Corn. (In re Atlanta
Packaging Prods., Inc.), 99 B.R. 124, 131 (Bankr. N.D. Ga. 1988)).
48. The implementation of competitive bidding procedures to facilitate the sale of adebtors assets outside of the ordinary course of a debtors business is routinely approved by
bankruptcy courts as a means of ensuring that such sale will generate the highest and best return
for a debtors estate. The Debtors submit that the opportunity for competitive bidding embodied
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
29/40
{BAY:02057312v1} 2913029825\V-7
in the Bidding Procedures will generate the highest or otherwise best offer for the US Purchased
Assets and therefore is designed to maximize the value of the US Purchased Assets.
49. The Debtors believe that a prompt sale process is the best way to maximize thevalue of the Debtors assets for the benefit of their estates, creditors and other stakeholders.
Accordingly, the Debtors have concluded that: (a) a prompt sale of the US Purchased Assets is
the best way to maximize value for these estates, and (b) the proposed Bidding Procedures
described herein are fair, reasonable, and appropriate and are designed to maximize recovery
with respect to the sale of the US Purchased Assets.
C.
Provision for Bid Protections in the Form of a Break-Up Fee Has Become aRecognized and Necessary Practice
50. The Debtors have formulated a bidding process that the Debtors believe willinduce prospective competing bidders to expend the time, energy and resources necessary to
submit a bid, and which the Debtors believe is fair and reasonable and provides a benefit to the
Debtors estates and creditors. The Bidding Procedures and, in particular, the proposed Break-
Up Fee and Expense Reimbursement are reasonable and supported by applicable case law.
51. The use of bid protections such as these has become an established practice inchapter 11 asset sales involving the sale of significant assets because such bid protections enable
a debtor to ensure a sale to a contractually committed bidder at a price the debtor believes is fair,
while providing the debtor with the potential of obtaining an enhanced recovery through an
auction process. Historically, bankruptcy courts have approved bidding incentives (including bid
protections) solely by reference to the business judgment rule, which proscribes judicial
second-guessing of the actions of a corporations board of directors taken in good faith and in the
exercise of honest judgment. See, e.g., In re 995 Fifth Ave. Assocs., 96 B.R. 24, 28 (Bankr.
S.D.N.Y. 1992) (holding that bidding incentives may be legitimately necessary to convince a
`white knight to enter the bidding by providing some form of compensation for the risks it is
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
30/40
{BAY:02057312v1} 3013029825\V-7
undertaking) (citation omitted); In re Marrose Corp., 1992 WL 33848, at *5 (Bankr. S.D.N.Y.
1992) ([bidding incentives] are meant to compensate the potential acquirer who serves as a
catalyst or stalking horse which attracts more favorable offers). See also In re Integrated Res.,
147 B.R. 650, 657-58 (S.D.N.Y. 1992).
52. The Third Circuit has clarified the standard for determining the appropriateness ofbidding incentives in the bankruptcy context. In Calpine Corp. v. OBrien Envtl. Energy, Inc. (In
re OBrien Envtl. Energy, Inc.), 181 F. 3d 527 (3d Cir. 1999), the Third Circuit held that even
though bidding incentives are measured against a business judgment standard in non-bankruptcy
transactions, the administrative expense provisions in section 503(b) of the Bankruptcy Code
govern in the bankruptcy context. Accordingly, to be approved, bidding incentives such as the
Break-Up Fee and Expense Reimbursement must provide benefit to a debtors estate. Id. at 533.
53. OBrien identified at least two instances in which bidding incentives may providebenefit to the estate. First, benefit may be found if assurance of a Break-up Fee promoted more
competitive bidding, such as by inducing a bid that otherwise would not have been made and
without which bidding would have been limited. Id. at 537. Second, where the availability of
bidding incentives induced a bidder to research the value of the debtor and submit a bid that
serves as a minimum or floor bid on which other bidders can rely, the bidder may have provided
a benefit to the estate by increasing the likelihood that the price at which the debtor is sold will
reflect its true worth. Id.
54. The bid protections proposed by the Debtors are consistent with the businessjudgment rule and satisfy the Third Circuits administrative expense standard. At the
inception of the Auction process, potential purchasers will be provided with the Asset Purchase
Agreement and will be afforded an opportunity to submit their own adaptation of that agreement,
marked to show changes necessary to consummate a sale which must be acceptable to the
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
31/40
{BAY:02057312v1} 3113029825\V-7
Debtors. Under the administrative expense standard enunciated in OBrien, as well as the
sound business judgment standard followed in other jurisdictions, the bid protections proposed
by the Debtors, including the Break-Up Fee and Expense Reimbursement should be approved as
fair and reasonable. The proposed bid protections are reasonable and generally consistent with
the range of bidding protections typically approved by bankruptcy courts in this district. See,
e.g., In re Rouge Indus., Inc., Case No. 03-13272 (Bankr. D. Del. Dec. 3, 2003);In re Ameriserve
Food Distrib., Inc., Case No. 00-00358 (Bankr. D. Del. Jan 31, 2000) (court approved break-up
fee of 3.6% or $4 million in connection with a $110 million sale of assets); In re Fruit of the
Loom, Inc., Case No. 99-04497 (Bankr. D. Del. Dec. 29, 1999) (court approved break-up fee of
3.0%, or $25 million in connection with a $835 million sale of business); In re Worldwide
Direct., Inc., Case No. 99-108 (Bankr. D. Del. Feb. 26, 1999) (approving break-up fee of 3.1% of
the proposed purchase price); In re Montgomery Ward Holding Corp., et al., Case No. 97-1409
(Bankr. D. Del. June 15, 1998) (court approved break-up fee of 2.7% or $3 million in connection
with $100 million sale of real estate);In re Medlab, Inc., Case No. 97-1893 (Bankr. D. Del. Apr.
28, 1999) (court approved break-up fee of 3.12% or $250,000 in connection with $8 million sale
transaction).
55. Accordingly, the Debtors payment of the pro rata portion of the Break-Up Feeand Expense Reimbursement which may be paid by the Vendors in the event that a higher or
better offer for the US Purchased Assets is received, and consummated (a) constitutes an actual
and necessary cost of preserving the Debtors estates, within the meaning of section 503(b) of the
Bankruptcy Code, (b) provides a substantial benefit to the Debtors estates and creditors and all
parties-in-interest, (c) is reasonable and appropriate, and (d) is necessary to ensure that the
Purchaser will continue to pursue the proposed Asset Purchase Agreement consummate the
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
32/40
{BAY:02057312v1} 3213029825\V-7
purchase of the US Purchased Assets, and therefore constitute administrative expenses with
priority pursuant to Bankruptcy Code sections 503(b) or 507(b).
D. The Purchaser Should be Granted the Protection of Bankruptcy CodeSection 363(m)As will be set forth in further detail at the Sale Hearing, the
Debtors also maintain that the Purchaser will be entitled to the protections afforded by
Bankruptcy Code section 363(m).
57. Specifically, Bankruptcy Code section 363(m) provides that:[t]he reversal or modification on appeal of an authorizationunder subsection (b) or (c) of this section of a sale or leaseof property does not affect the validity of a sale or lease
under such authorization to an entity that purchased orleased such property in good faith, whether or not suchentity knew of the pendency of the appeal, unless suchauthorization and such sale or lease were stayed pendingappeal.
11 U.S.C. 363(m).
58. While the Bankruptcy Code does not define good faith, the Third Circuit inAbbotts Dairies held that:
[t]he requirement that a purchaser act in good faith . . .speaks to the integrity of his conduct in the course of thesale proceedings. Typically, the misconduct that woulddestroy a purchasers good faith status at a judicial saleinvolves fraud, collusion between the purchaser and otherbidders or the trustee, or an attempt to take grossly unfairadvantage of other bidders.
788 F.2d at 147 (citations omitted); see generally Marin v. Coated Sales, Inc., (In re Coated
Sales, Inc.), 1990 WL 212899 (S.D.N.Y. Dec. 13, 1990) (holding that party, to show lack of good
faith, must demonstrate fraud, collusion, or an attempt to take grossly unfair advantage of other
bidders);see also In re Sasson Jeans, Inc., 90 B.R. 608, 610 (S.D.N.Y. 1988) (quoting In re Bel
Air Assocs., Ltd., 706 F.2d 301, 305 (10th Cir. 1983));In re Pisces Leasing Corp., 66 B.R. 671,
673 (E.D.N.Y. 1986) (examining facts of each case, concentrating on integrity of [an actors]
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
33/40
{BAY:02057312v1} 3313029825\V-7
conduct during the sale proceedings (quoting In re Rock Indus. Mach. Corp., 572 F.2d 1195,
1198 (7th Cir. 1978)).
59. As the Debtors will demonstrate at the Sale Hearing, over the last few months, theDebtors have spent a considerable amount of time and resources negotiating the Asset Purchase
Agreement at arms length, with give and take on both sides. Under the circumstances, the
Purchaser is entitled to all of the protections of Bankruptcy Code section 363(m).
E. Sale of the Debtors Assets Should Be Free and Clear of Liens and Claims60. Pursuant to, and to the fullest extent permitted by, section 363(f) of the
Bankruptcy Code, the Debtors seek authority to sell and transfer the Debtors right, interest and
title in the US Purchased Assets to the Purchaser or Successful Bidder free and clear of all liens,
claims, encumbrances and other interests, except as set forth in the Asset Purchase Agreement,
with such liens, claims, encumbrances and other interests to attach to the Proceeds of the Sale,
subject to any rights and defenses of the Debtors and other parties-in-interest with respect
thereto. Section 363(f) of the Bankruptcy Code provides, in pertinent part:
The trustee may sell property under subsection (b) or (c) ofthis section free and clear of any interest in such propertyof an entity other than the estate, only if
(1) applicable nonbankruptcy law permits sale of suchproperty free and clear of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which suchproperty is to be sold is greater than the aggregate value of
all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal orequitable proceeding, to accept a money satisfaction ofsuch interest.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
34/40
{BAY:02057312v1} 3413029825\V-7
11 U.S.C. 363(f). See alsoIn re Elliot, 94 B.R. 343, 345 (E.D. Pa. 1988) (holding that section
363(f) is written in the disjunctive; court may approve sale free and clear provided at least one
of the requirements is met).
61. With respect to each creditor asserting an Encumbrance and Interest, the Debtorsbelieve that one or more of the standards set forth in Bankruptcy Code 363(f)(1)-(5) has been
satisfied. Those holders of Encumbrances and Interests who do not object or who withdraw their
objections to the Sale or the Motion will be deemed to have consented to the Motion and Sale
pursuant to Bankruptcy Code 363(f)(2). The Debtors believe that those holders of
Encumbrances and Interests who do object fall within one or more of the other subsections of
Bankruptcy Code section 363(f).
62. A sale free and clear of Encumbrances and Interests is necessary to maximize thevalue of the US Purchased Assets. The Purchaser would not have entered into the Asset
Purchase Agreement and would not consummate the Sale absent the ability to purchase the US
Purchased Assets free and clear of all Encumbrances and Interests. A sale of the US Purchased
Assets other than one free and clear of all Encumbrances and Interests would yield substantially
less value for the Debtors estates, with less certainty than transaction proposed by the Asset
Purchase Agreement. Accordingly, the Sale contemplated by the Asset Purchase Agreement is in
the best interests of the Debtors, their estates and creditors, and all other parties-in-interest.
63. A sale free and clear of Encumbrances and Interests is particularly appropriateunder the circumstances because any Encumbrance and Interest in, to or against the Debtors
right, interest and title in the US Purchased Assets that exists immediately prior to the Closing
will attach to the sale Proceeds allocated to the Debtors with the same validity, priority, force and
effect as it had at such time, subject to the rights and defenses of the Debtors or any party-in-
interest. The Debtors submit that holders of Encumbrances and Interests, if any, will be
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
35/40
{BAY:02057312v1} 3513029825\V-7
adequately protected by the availability of the Proceeds of the Sale to satisfy such Encumbrances
and Interests.
F. Notice of the Proposed Sale is Reasonable Under the Circumstances64. The Debtors submit that the Sale Notice as set forth above, along with the
Publication Notice in the Chicago Tribune, Arizona Republic and the Wall Street Journal
(National Edition), is reasonable and appropriate and will be adequate to ensure that all
interested parties have the opportunity to bid for the US Purchased Assets, and/or to object to the
proposed Sale.
G. The Assumption and Assignment of the US Assumed Contracts Should BeAuthorized
65. Under Bankruptcy Code section 365(a), a debtor, subject to the courts approval,may assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C.
365(a). Bankruptcy Code section 365(b)(1), in turn, codifies the requirements for assuming an
executory contract of a debtor. This subsection provides:
(b)(1) If there has been a default in an executory contract
or unexpired lease of the debtor, the trustee may not assumesuch contract or lease unless, at the time of assumption ofsuch contract or lease, the trustee --
(A) cures, or provides adequate assurance that thetrustee will promptly cure, such default. . .;
(B) compensates, or provides adequate assurance thatthe trustee will promptly compensate, a party other than thedebtor to such contract or lease, for any actual pecuniaryloss to such party resulting from such default; and
(C) provides adequate assurance of future performanceunder such contract or lease.
11 U.S.C. 365(b)(1). Section 365(f)(2) of the Bankruptcy Code provides, in pertinent part,
that:
The trustee may assign an executory contract or unexpiredlease of the debtor only if --
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
36/40
{BAY:02057312v1} 3613029825\V-7
(A) the trustee assumes such contract or lease inaccordance with the provisions of this section; and
(B) adequate assurance of future performance by theassignee of such contract or lease is provided, whether ornot there has been a default in such contract or lease.
11 U.S.C. 365(f)(2).
66. The meaning of adequate assurance of future performance depends on the factsand circumstances of each case, but should be given practical, pragmatic construction. EBG
Midtown S. Corp. v. McLaren/Hart Envtl. Engg Corp. (In re Sanshoe Worldwide Corp.), 139
B.R. 585, 593 (S.D.N.Y. 1992);see alsoIn re Prime Motor Inns Inc., 166 B.R. 993, 997 (Bankr.
S.D. Fla. 1994); Carlisle Homes, Inc. v. Azzari (In re Carlisle Homes, Inc.), 103 B.R. 524, 538
(Bankr. D.N.J. 1988).
67. Among other things, adequate assurance may be provided by demonstrating theassignees financial health and experience in managing the type of enterprise or property
assigned. See, e.g., In re Bygaph, Inc., 56 B.R. 596, 605-06 (Bankr. S.D.N.Y. 1986) (finding
adequate assurance of future performance present when prospective assignee of lease from
debtor has financial resources and has expressed willingness to devote sufficient funding to
business in order to give it strong likelihood of succeeding).
68. To the extent any defaults exist under any US Assumed Contract, any such defaultwill be promptly cured or adequate assurance that such default will be cured will be provided
prior to the assumption and assignment. If necessary, the Debtors will submit facts prior to or at
the Sale Hearing to show the financial credibility of the Purchaser or Successful Bidder and
willingness and ability to perform under the US Assumed Contracts. The Sale Hearing will
therefore provide the Court and other interested parties the opportunity to evaluate and, if
necessary, challenge the ability of the Purchaser or Successful Bidder to provide adequate
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
37/40
{BAY:02057312v1} 3713029825\V-7
assurance of future performance under the US Assumed Contracts, as required under section
365(b)(1)(C) of the Bankruptcy Code.
69. In addition, the Debtors submit that it is an exercise of their sound businessjudgment to assume and assign, as the case may be, the US Assumed Contracts to the Purchaser
or Successful Bidder in connection with the consummation of the Sale, and that the assumption
and assignment of the US Assumed Contracts are in the best interests of the Debtors, their
estates, their creditors, and all parties-in-interest. The US Assumed Contracts being assigned to
the Purchaser (or Successful Bidder) are an integral part of the US Purchased Assets being
acquired by the Purchaser (or Successful Bidder), and accordingly, such assumption, and
assignment of the US Assumed Contracts are reasonable and enhance the value of the Debtors
estates. The Court should therefore authorize the Debtors to assume and assign the US Assumed
Contracts.
H. Waiver of Bankruptcy Rule 6006(f)(6) with Respect To The US AssumedContracts
70. Bankruptcy Rule 6006(f)(6) requires that an omnibus motion to reject, assume orassign multiple executory contracts or unexpired leases be limited to no more than 100
executory contracts or unexpired leases. With regards to the US Assumed Contracts, the
Debtors request that the Court waive the provision in Bankruptcy Rule 6006(f)(6) limiting the
number of executory contracts and unexpired leases that may be incorporated into one omnibus
motion. Rule 6006(f)(6) seeks to help the other parties to the contracts locate their information
in the midst of the omnibus motion. 10 Collier on Bankruptcy 6006.05 (15th ed. 1999).
Because the Debtors propose to send an individual notice to each counterparty to the US
Assumed Contracts, the purpose of the rule will be satisfied without needlessly filing multiple
motions with the Court.
-
7/31/2019 Northstar Sale Motion (www.chapter11cases.com)
38/40
{BAY:02057312v1} 3813029825\V-7
I. Waiver of Automatic Fourteen-Day Stay Under Bankruptcy Rules 6004(h)and 6006(d)
71. Pursuant to Bankruptcy Rule 6004(h), unless the Court orders otherwise, allorders authorizing the sale of property pursuant to section 363 of the Bankruptcy Code are
automatically stayed for fourteen days after entry of the order. Si