Hearing Date: August 27, 2009 at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: August 24, 2009 by 12:00 p.m. (prevailing Eastern Time) KRAMER LEVIN NAFTALIS & FRANKEL LLP Thomas Moers Mayer Kenneth H. Eckstein Philip Bentley 1177 Avenue of the Americas New York, New York 10036 (212) 715-9100 Counsel for the Official Committee of Unsecured Creditors of Old Carco LLC (f/k/a Chrysler LLC), et al . UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ––––––––––––––––––––––––––––––––––––––––– In re: OLD CARCO LLC (f/k/a CHRYSLER LLC), et al . Debtors. ) ) ) ) ) ) ) ) ––––––––––––––––––––––––––––––––––––––––– Chapter 11 Case No. 09-50002 (AJG) Jointly Administered PLEASE TAKE NOTICE that a hearing will be held before the Honorable Arthur J. Gonzalez, United States Bankruptcy Judge, in Room 523 of the United States Bankruptcy Court for the Southern District of New York, Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004-1408, on August 27, 2009, at 10:00 a.m. (prevailing Eastern Time) to consider the following Application of the Official Committee of Unsecured Creditors Pursuant to Sections 328 and 1103 of the Bankruptcy Code Authorizing the Retention of Stutzman, Bromberg, Esserman & Plifka, PC and Susman Godfrey L.L.P., as Special Counsel to the Committee, Nunc Pro Tunc to August 13, 2009 (the “Application ”).
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Hearing Date: August 27, 2009 at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: August 24, 2009 by 12:00 p.m. (prevailing Eastern Time)
KRAMER LEVIN NAFTALIS & FRANKEL LLP Thomas Moers Mayer Kenneth H. Eckstein Philip Bentley 1177 Avenue of the Americas New York, New York 10036 (212) 715-9100 Counsel for the Official Committee of Unsecured Creditors of Old Carco LLC (f/k/a Chrysler LLC), et al.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ––––––––––––––––––––––––––––––––––––––––– In re:
OLD CARCO LLC (f/k/a CHRYSLER LLC), et al.
Debtors.
) ) ) ) ) ) ) )
–––––––––––––––––––––––––––––––––––––––––
Chapter 11 Case No. 09-50002 (AJG) Jointly Administered
PLEASE TAKE NOTICE that a hearing will be held before the Honorable Arthur J.
Gonzalez, United States Bankruptcy Judge, in Room 523 of the United States Bankruptcy Court
for the Southern District of New York, Alexander Hamilton Custom House, One Bowling Green,
New York, New York 10004-1408, on August 27, 2009, at 10:00 a.m. (prevailing Eastern
Time) to consider the following Application of the Official Committee of Unsecured Creditors
Pursuant to Sections 328 and 1103 of the Bankruptcy Code Authorizing the Retention of
Stutzman, Bromberg, Esserman & Plifka, PC and Susman Godfrey L.L.P., as Special Counsel to
the Committee, Nunc Pro Tunc to August 13, 2009 (the “Application”).
PLEASE TAKE FURTHER NOTICE that that objections, if any, to the Application must
be made in writing, with a hard copy to chambers; conform to the Federal Rules of Bankruptcy
Procedure and the Local Rules for the United States Bankruptcy Court Southern District of New
York; and be filed with the Bankruptcy Court and served in accordance with the Administrative
Order, Pursuant to Bankruptcy Rule 1015(c) Establishing Case Management and Scheduling
Procedures in these cases [Docket No. 661] (the “Case Management Order”) so as to be actually
received by the respective applicant and the Special Service List listed in the Case Management
Order not later than 12:00 p.m. (prevailing Eastern Time) on August 24, 2009.
Dated: New York, New York August 13, 2009
KRAMER LEVIN NAFTALIS & FRANKEL LLP
/s/ Philip Bentley Philip Bentley
Thomas M. Mayer Kenneth H. Eckstein Philip Bentley 1177 Avenue of the Americas New York, New York 10036 Telephone: (212) 715-9100
Counsel for the Official Committee of Unsecured Creditors of Old Carco LLC (f/k/a Chrysler LLC), et al.
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Hearing Date: August 27, 2009 at 10:00 a.m. (eastern) Objection Date: August 24, 2009 at 12:00 p.m. (eastern)
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
Chapter 11 Case No. 09-50002 (AJG) Jointly Administered
APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS PURSUANT TO SECTIONS 328 AND 1103 OF THE BANKRUPTCY CODE AUTHORIZING THE RETENTION OF STUTZMAN, BROMBERG,
ESSERMAN & PLIFKA, PC AND SUSMAN GODFREY L.L.P., AS SPECIAL COUNSEL TO THE COMMITTEE, NUNC PRO TUNC TO AUGUST 13, 2009
The duly-appointed Official Committee of Unsecured Creditors (the “Creditors’
Committee”) of the above-captioned debtors and debtors-in-possession (collectively, the
“Debtors”) hereby applies for an order (the “Application”), pursuant to sections 328 and 1103 of
chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) and Rule 2014 of the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), authorizing the Committee to
retain Stutzman, Bromberg, Esserman & Plifka, PC (“Stutzman Bromberg”) and Susman
Godfrey L.L.P. (“Susman Godfrey”) as special counsel to the Creditors’ Committee in
connection with certain litigation proceedings, nunc pro tunc to August 13, 2009, pursuant to the
terms of that certain contingent fee agreement, dated as of August 13, 2009, among the
Creditors’ Committee, Susman Godfrey and Stutzman Bromberg (the “Contingent Fee
Agreement”), a copy of which is attached hereto as Exhibit A and incorporated herein by
reference. In support of this Application, the Creditors’ Committee respectfully represents as
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follows:
Background
1. On April 30, 2009 (the “Petition Date”), the Debtors filed voluntary
petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors continue to operate
their businesses and manage their properties as debtors-in-possession pursuant to sections 1107
and 1108 of the Bankruptcy Code.
2. On May 5, 2009, the Office of the United States Trustee for the Southern
District of New York appointed the Creditors’ Committee to represent the interests of all
unsecured creditors in these chapter 11 cases. The current members of the Creditors’ Committee
are: (i) International Union, United Automobile, Aerospace & Agricultural Implement Workers
of America, UAW; (ii) DARCARS Imports, Inc.; (iii) Desiree Sanchez; and (iv) Patricia
Pascale.1
3. On June 5, 2009, the Court issued an order that authorized certain Debtors
to enter into that certain Settlement Agreement III, dated as of June 5, 2009 (“Settlement
Agreement III”), by and among Daimler, Daimler North America Finance Corporation
(“DNAF”), Daimler Investments US Corporation (“DIUS”, and together with Daimler and
DNAF, the “Daimler Parties”), CG Investment Group, LLC, CG Investor, LLC, Chrysler
Holding LLC, Carco Intermediate Holdco I LLC, Chrysler LLC, and the Pension Benefit
Guaranty Corporation. Section 6(b) of the Settlement Agreement III provides for the release of
certain claims against certain parties, including the Daimler Parties, unless the Creditors’
1 As a result of the consummation of a sale transaction involving the Debtors and Fiat S.p.A., seven Creditors’
Committee members – AutoNation, Inc., Continental Automotive Systems, Inc., Cummins, Inc., Magna International, Inc., Ohio Module Manufacturing Co., Pension Benefit Guaranty Corporation, and Zanetti Chrysler Jeep Dodge – have resigned from the Creditors’ Committee.
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Committee, delivers to Debtors’ counsel a demand (the “Committee Demand”) for the Debtors to
bring claims against the Daimler Parties as set forth in a proposed complaint that accompanied
the Committee Demand (the “Daimler Complaint”).
4. In early June 2009, the Creditors’ Committee began an investigation into
the existence and viability of potential claims and causes of action arising out Daimler’s
restructuring of the Debtor and subsequent sale of the Debtor to Cerberus in 2007, including
whether certain transfers that occurred in connection with this restructuring were fraudulent and
violated Daimler’s fiduciary duties. The Creditors’ Committee’s investigation has confirmed
that the estate of Debtor Old CarCo LLC (“CarCo”) possesses claims against Daimler and related
parties that, in the Committee’s view, are meritorious and have enormous potential value to
CarCo’s estate.
5. At a meeting of the Creditors’ Committee held on July 31, 2009, the
Creditors’ Committee selected Susman Godfrey and Stutzman Bromberg (collectively, “Special
Counsel”) as its special counsel to prosecute claims and causes of action described in the
Daimler Complaint against the parties named therein (the “Daimler Litigation”) on behalf of
CarCo’s estate.
6. On August 3, 2009, the Creditors’ Committee properly delivered the
Committee Demand and the Daimler Complaint upon Daimler and its counsel.
7. On August 13, 2009, this Court issued an order that authorized the
Creditors’ Committee to file the Daimler Complaint and prosecute the Daimler Litigation on
behalf of the estate of CarCo.
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Jurisdiction and Venue
8. This Court has jurisdiction over this Application pursuant to 28 U.S.C.
§§ 157 and 1334. This Application raises a core matter under 28 U.S.C. § 157(b)(2)(A). Venue
of these cases and this Application is proper in this district pursuant to 28 U.S.C. §§ 1408 and
1409. The relief sought herein may be granted under sections 328 and 1103 of the Bankruptcy
Code and Bankruptcy Rule 2014.
Relief Requested
9. The Creditors’ Committee hereby seeks authorization, pursuant to sections
328 and 1103 of the Bankruptcy Code and Bankruptcy Rule 2014, to retain Special Counsel as
special counsel, nunc pro tunc to August 13, 2009, for the limited purpose of representing the
Creditors’ Committee in connection with the Daimler Litigation. In support of this Application,
the Creditors’ Committee submits the Declaration of Jacob W. Buchdahl of Susman Godfrey (the
“Buchdahl Declaration”), attached hereto as Exhibit B, and the Declaration of Sander L.
Esserman of Stutzman Bromberg (the “Esserman Declaration”), attached hereto as Exhibit C.
The Creditors’ Committee respectfully requests that a proposed order (the “Proposed Order”) in
the form attached hereto as Exhibit D be entered by the Court.
10. The terms and conditions of Special Counsel’s proposed retention by the
Creditors’ Committee are set forth in the Contingent Fee Agreement.
11. The Creditors’ Committee believes that Special Counsel’s retention should
be approved by this Court because Special Counsel’s services would be beneficial for the estates
in these chapter 11 cases. The Special Counsel are highly qualified and disinterested, and the
terms of their retention set forth in the Contingent Fee Agreement are fair and reasonable.
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Basis for Relief
12. Pursuant to section 328(a) of the Bankruptcy Code, “a committee... with
the court’s approval, may employ a professional person under section 1103 [of the Bankruptcy
Court]... on any reasonable terms and conditions of employment, including on a retainer, on an
hourly basis, on a fixed percentage fee basis, or on a contingent fee basis.” 11 U.S.C. §328(a).
Furthermore, pursuant to section 1103 of the Bankruptcy Code, a committee, with the court’s
approval, may employ on or more attorneys to perform services for such committee.
13. As required by Bankruptcy Rule 2014(a), this Application sets forth the
following: (a) the facts showing the necessity for Special Counsel’s employment, (b) the reasons
for the Creditors’ Committee’s selection of Special Counsel as special counsel in connection
with the Daimler Litigation, (c) the professional services to be provided by Special Counsel, (d)
the arrangement between the Creditors’ Committee and Special Counsel with respect to
compensation of Special Counsel, and (e) to the best of the Creditors’ Committee’s knowledge,
the extent of Special Counsel’s connections, if any, to certain parties in interest in these chapter
11 cases.
Necessity for Special Counsel
14. On August 13, 2009, the Creditors’ Committee was granted leave to file
the Daimler Complaint and prosecute the Daimler Litigation on behalf of CarCo’s estate. A
successful outcome in the Daimler Litigation would provide enormous value for CarCo’s estate
in these chapter 11 cases. The Creditors’ Committee has determined that the claims set forth in
the Daimler Complaint have merit and should be pursued. Susman Godfrey and Stutzman
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Bromberg have agreed to prosecute the Daimler Litigation on a contingent fee basis as described
herein, thereby sparing the estate most of the expense of this litigation. The Creditors’
Committee submits that the terms of the Contingent Fee Agreement will limit the cost of the suit
to a small fraction of what it might otherwise cost to pursue.
15. Accordingly, the Creditors’ Committee seeks to retain Special Counsel to
prosecute the Daimler Litigation for the benefit of CarCo’s estate and its creditors.
Qualifications of Susman Godfrey and Stutzman Bromberg
16. The Creditors’ Committee submits that both Susman Godfrey and
Stutzman Bromberg possess superior experience and qualifications necessary to act as special
counsel to the Creditors’ Committee in connection with the Daimler Litigation.
17. The Creditors’ Committee has selected Susman Godfrey as special
counsel because of the firm’s extensive experience in representing plaintiffs in a broad range of
complex, high-stakes commercial litigation matters. This experience includes the representation
of plaintiffs in suits asserting claims for fraudulent conveyance, breach of fiduciary duty, and
unjust enrichment, including In re First Capital Holdings, Case No. 91- 75518 (SB) (Bankr. C.D.
Ca. 1991), In re Enron, Case No. 01-16034 (AJG) (Bankr. S.D.N.Y. 2001) and In re
19. Based on the foregoing, the Creditors’ Committee believes that Susman
Godfrey and Stutsman Bromberg are both well qualified and able to represent the Creditors’
Committee as special counsel in a most efficient and timely manner.
Services to be Rendered by Special Counsel
20. Subject to the terms and conditions set forth in the Contingent Fee
Agreement, the Creditors’ Committee desires to retain Special Counsel to prosecute the Daimler
Litigation as fully set forth in the Contingent Fee Agreement.
Compensation for Services to be Rendered by Special Counsel
21. The Creditors’ Committee requests the approval of the Contingent Fee
Agreement, including the compensation provisions therein pursuant to section 328(a) of the
Bankruptcy Code. The Creditors’ Committee and Special Counsel have agreed that Special
Counsel shall be paid on a contingency basis, as set forth in the Contingent Fee Agreement, the
Buchdahl Declaration and the Esserman Declaration.
22. Pursuant to the Contingent Fee Agreement, Special Counsel will be
compensated as follows:
a. Contingent Fee: The contingent fee will vary depending on when the matter is resolved.
(1) As to any of Creditors’ Committee claims that are settled within ninety (90) days of the filing the Daimler Complaint,
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KL2 2615451.3
Special Counsel will receive 18.75% of the gross recovery under $125 million, 15% of the gross between $125 million and $200 million and 11.75% of any gross recovery above that.
(2) As to any of Creditors’ Committee claims that are settled after ninety (90) days but before one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 21.875% of the gross recovery under $125 million, 17.5% of the gross recovery between $125 million and $200 million and 13.125% of any gross recovery above that.
(3) As to any of Creditors’ Committee’s claims that are settled after one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 25% of the gross recovery under $125 million, 20% of the gross recovery between $125 million and $200 million and 15% of any gross recovery above that. The term “gross recovery” means all money or other things of value recovered by the Old Car LLC bankruptcy estate or a liquidation trust created by a confirmed chapter 11 plan of liquidation (the “Litigation Trust”), including the value of any business accommodation recovered, including any attorney’s fees awarded by the court or arbitrator(s), and without reduction for any expenses of litigation.
b. Division of Responsibilities and Fees between Susman Godfrey and Stutzman Bromberg. Susman Godfrey and Stutzman Bromberg will split the fee and the work on a 70/30 basis. Susman Godfrey and Stutzman Bromberg have agreed that Stephen D. Susman shall be lead counsel and shall have the final decision on whom work is assigned to and how it is allocated between the two firms.
c. Noncash Settlements. If the Daimler Litigation is settled and the Creditors’ Committee receives value other than in cash, Special Counsel shall be entitled to demand and receive, at their option: (i) payment in cash, under the above Contingent Fee payment scheme, of Special Counsel’s applicable contingent percentage of (a) the present value of any noncash consideration plus (b) any cash received upon settlement; or (ii) an undivided interest in any property received by the Creditors’ Committee, equal to Special Counsel’s applicable contingent percentage of the above Contingent Fee payment scheme, plus payment of Special Counsel’s applicable contingent percentage of any cash received as a result of settlement.
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d. Pre-Effective Date Expenses. Prior to the effective date (“Effective Date”) of a Plan, Special Counsel will submit their monthly out-of-pocket costs, disbursements, and litigation expenses (collectively, “Expenses”) to the Debtors for payment in accordance with the Order, Pursuant to Sections 105(a) and 331 of the Bankruptcy Code, Bankruptcy Rule 2016(a) and Local Bankruptcy Rule 2016-1, Establishing Procedures for Interim Monthly Compensation for Professionals, dated May 20, 2009 [Docket No. 1334] (the “Interim Compensation Order”), as well as any other applicable orders that may be entered by the bankruptcy court. Special Counsel’s Expenses may include, but are not limited to, court fees, service-of-process charges, photocopies, computer-assisted legal research, long distance telephone and telecopy charges, messenger and delivery fees, court reporter fees, travel, meals, hotel and messenger/overnight delivery charges. Special Counsel’s Expenses may also include charges billed by outside service providers that are not “professionals” within the meaning of section 1103 of the Bankruptcy Code (“Non-Professional Service Providers”), such as a court-reporting firm, EIS or document production company. Special Counsel’s charges for certain types of in-house expenses are contained in Exhibit B to the Contingent Fee Agreement.
e. Pre-Effective Date Professionals. If Special Counsel determines that the services of one or more experts or other non-legal professionals are necessary for the prosecution of the Claims prior to the Effective Date, Creditors’ Committee agree to retain such professionals pursuant to sections 328 and 1103 of the Bankruptcy Code. For their services and expenses incurred prior to the Effective Date, such professionals shall be compensated pursuant to the terms of the Interim Compensation Order and any other applicable bankruptcy court orders; their retention agreement will clearly state that Special Counsel are not responsible for any of their charges.
f. Post-Effective Date Expenses and Professionals. For all Expenses incurred after the Effective Date, Special Counsel will invoice the Litigation Trust on a monthly basis, and all invoices will be due and payable within 30 days after receipt. To the extent that Special Counsel’s pre-Effective Date Expenses have not been paid in full by the Effective Date or promptly thereafter in accordance with the Interim Compensation Order and any other applicable bankruptcy court orders, the Litigation Trust will promptly pay any remaining pre-Effective Date Expenses, plus interest at the rate of 1.5% per month on all unpaid amounts. In addition, the Litigation Trust will be responsible for payment of all fees and expenses incurred after
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KL2 2615451.3
the Effective Date by any expert witnesses or other non-legal professionals, and for all charges incurred after the Effective Date by any other outside service providers. For any such outside service provider that Special Counsel retain after the Effective Date on the Litigation Trust’s behalf, the Litigation Trust will enter into a contract with such service provider that will clearly state that Special Counsel are not responsible for any of their charges and that the Litigation Trust will pay such charges directly to the provider as billed. Special Counsel’s policies on outside vendors are contained in Exhibit C to the Contingent Fee Agreement.
No Adverse Interest, Disinterestedness and Disclosure of Connections
23. The Creditors’ Committee believes that neither Susman Godfrey nor
Stutzman Bromberg holds or represents an interest that is adverse either to the Creditors’
Committee or the Debtors’ estates nor does either such firm have any connection with the
Debtors’ estates or creditors or any party-in-interest herein in the matters for which Special
Counsel are to be retained, except as set forth in either the Buchdahl Declaration and Esserman
Declaration. Therefore, to the best of the Creditors’ Committee's knowledge, each of Susman
Godfrey and Stutzman Bromberg is a “disinterested person” within the meaning of section
101(14) of the Bankruptcy Code.
24. To check and clear potential conflicts of interest in these chapter 11 cases,
each of Susman Godfrey and Stutzman Bromberg searched their respective client databases to
determine whether they had any relationships with the entities identified in (a) Schedule 1 to
Corinne Ball’s declaration in support of the Debtors’ application to retain Jones Day LLP and (b)
Exhibit A to the supplemental disclosure statement in support of the Debtors’ application to
retain Jones Day LLP.
25. To the best of the Creditors’ Committee’s knowledge, other than as set
forth in the Buchdahl Declaration and the Esserman Declaration, Special Counsel do not have
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KL2 2615451.3
any connection with the Debtors, its estates, its creditors, any party in interest, their respective
attorneys and accountants, the United States Trustee or any person employed in the office of the
United States Trustee or any other party with an actual or potential interests in these chapter 11
cases.
Notice
26. Notice of this Motion has been provided to (i) the U.S. Trustee, (ii)
counsel to the Debtors, and (iii) all the parties identified on the General Service List and the
Special Service List (as such terms are defined in the Case Management Order). The Creditors’
Committee submits that no other or further notice is required.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
KL2 2615451.3
WHEREFORE the Creditors’ Committee respectfully requests entry of the
Proposed Order granting the relief requested herein, nunc pro tunc to August 13, 2009, and such
other and further relief as is just and proper.
THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF OLC CARCO LLC, et al.
Dated: New York, New York August 13, 2009
By: /s/__Alan Brayton____________________ Alan Brayton
Co-Chairman, Official Committee of Unsecured Creditors for Old Carco LLC, et al.
EXHIBIT A
To Retention Application
Aug 13 2009 3:16PM
HP LFISERJET FAX
7079339902
p.2
Mr. Alan BraytonAugust 13, 2009Page 9
Sincerely yours,
SUSMAN GODFREY L.L.P.
STUTZMAN, BROMBERG, ESSERMAN & PLIFKA
Sander L. Esserman
Exhibits:Exhibit A — ComplaintExhibit B -- In-House ChargesExhibit C Policy on Outside Vendors
AGREED TO AND ACCEPTED:
UNSECURED CREDITORS' COMMITTEE
4?.setkQ7Man BraytonCo-Chairman
Date: ! t. I
EIN Number:(Please provide this number for bank use in establishing trust account)
By:
9
EXHIBIT A (To Contingent Fee Agreement)
Complaint
(the Complaint is being filed under seal)
EXHIBIT B (To Contingent Fee Agreement)
EXHIBIT B Page 1
963795v1/107572
CURRENT SUSMAN GODFREY L.L.P. 2009 IN-HOUSE CHARGES
AMOUNT 1. Photocopy ............................................................................................................10¢ per page 2. Printing (for jobs of more than 10 pages) Black and white................................................................................................10¢ per page Color..................................................................................................................$1 per page 3. Secretarial overtime at a rate from $20 to $70 per hour. 4. Computerized research passed through at actual cost to firm. 5. Long distance call charges, credit card, and collect conference calls passed through at actual cost
to firm. 6. Susman privately owned aircraft: When he, or other firm professionals, fly on it for your case,
unless you have agreed otherwise, we will only charge you what it would cost him, or the other firm professionals, for a comparable commercial flight.
EXHIBIT C (To Contingent Fee Agreement)
EXHIBIT C 708425v1/107572
Susman Godfrey's Policy on Outside Vendors
We use outside vendors to provide services such as reproduction of documents,
production of exhibits, jury consultation, court reporting, videography and an array of
substantive consultants and testifying experts. In each case, we ask the outside vendor to
contract directly with our clients, to make its own credit arrangements with our clients and to
send its invoices directly to our clients. While we make recommendations, the client has
absolute freedom to retain whomever he wishes, as long as the service provider can do the job.
There are, however, several types of vendors which we use when the client does not insist on
someone else.
Most of our outside copy work (small jobs are done in-house and charged pursuant to
Exhibit B) will be sent to our two “preferred” copy companies which specialize in litigation
photocopying and document production. In return for assuring us that the prices are competitive,
we will send all work other than small jobs which can be done onsite to these “preferred” copy
companies because we are familiar with their consistent quality and prompt service. But again,
the client is free to ask us to use a different copy company of its choice.
EXHIBIT B
To Retention Application
Declaration Of Jacob W. Buchdahl
KL2 2616563.1
SUSMAN GODFREY Jacob W. Buchdahl (JB 1902) 654 Madison Avenue, 5th Floor New York, NY 10065 Telephone: (212) 336-8330 Facsimile: (212) 336-8340
Proposed Special Counsel to the Official Committee of Unsecured Creditors of Old Carco LLC, et al.
UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
In re: Chapter 11 OLD CARCO LLC Case No. 09-50002 (AJG) (f/k/a CHRYSLER LLC), et al., Jointly Administered Debtors
DECLARATION OF JACOB BUCHDAHL IN SUPPORT OF THE APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS PURSUANT TO SECTIONS 328 AND 1103 OF THE BANKRUPTCY CODE AUTHORIZING THE RETENTION OF STUTZMAN, BROMBERG,
ESSERMAN & PLIFKA, PC AND SUSMAN GODFREY L.L.P., AS SPECIAL COUNSEL TO THE COMMITTEE, NUNC PRO TUNC TO AUGUST 13, 2009
Pursuant to Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, Jacob Buchdahl,
Esq., declares:
1. I am a partner at Susman Godfrey L.L.P. (“Susman Godfrey” or the “Firm”), a
law firm with offices in New York, Texas, California, and Washington. I am resident in the
Firm’s New York office at 654 Madison Avenue, 5th Floor, New York, New York 10065-8404.
I am admitted to practice law in the State of New York, the United States District Court for the
Southern District of New York, and the United States Court of Appeals for the Second Circuit. I
am authorized to submit this Declaration in support of the Application of the Official Committee
KL2 2616563.1
of Unsecured Creditors (the “Creditors’ Committee”) Pursuant to Sections 328 and 1103 of the
Bankruptcy Code Authorizing the Retention of Stutzman, Bromberg, Esserman & Plifka, PC and
Susman Godfrey L.L.P. (“Susman Godfrey”), as Special Counsel to the Committee, Nunc Pro
Tunc to July 31, 2009 (the “Application”)1.
2. Neither I, the Firm, nor any partner or associate thereof, insofar as I have been
able to ascertain, has any connection with the Debtors, their creditors or any other parties in
interest herein, or their respective attorneys and accountants, the U.S. Trustee, or any person
employed in the office of the U.S. Trustee, except as set forth herein.
3. Section 1103(b) of the Bankruptcy Code does not incorporate the general
“disinterestedness” standard of Code § 327(a). However, Rule 2014(a) of the Federal Rules of
Bankruptcy Procedure requires that an application for employment under Section 1103 of the
Bankruptcy Code disclose all connections with the Debtors, the estates, the professionals and the
Office of the Trustee. The Firm, therefore, discloses its known connections as follows.
4. I performed, or caused to be performed, the following investigation of
disinterestedness before submitting this Declaration:
a. A list of names was assembled using information identified in both (1) Schedule 1 to Corinne Ball’s declaration in support of the Debtors’ application to retain Jones Day LLP and (2) Exhibit A to the supplemental disclosure statement in support of the Debtors’ application to retain Jones Day LLP (collectively, the “Ball Declaration”).
b. Susman Godfrey maintains a database which contains the names of clients and other parties interested in particular matters (the “Client Database”). The Client Database includes the name of each current or former client and the names of the Susman Godfrey personnel who are or were responsible for current or former matters for such client. Susman Godfrey compared each of the Contact Parties to the names in the Client Database.
1 Capitalized terms not otherwise defined herein shall have the meanings and definitions ascribed to such terms in
the Application.
KL2 2616563.1
c. Susman Godfrey then identified matches between the Client Database and the Contact Parties as of August 4, 2009 (the “Client Match List”), together with the names of the respective Susman Godfrey personnel responsible for current or former matters for the entities on the Client Match List.
d. Susman Godfrey then reviewed the Client Match List and deleted obvious name coincidences and entities that were adverse parties. The remaining client connections with regard to which Susman Godfrey had represented the client within the last two years were compiled for purposes of this Affidavit and are contained on Schedule 1 hereto.
5. After reviewing the Client Match List, it appears that Susman Godfrey does not
hold or represent an interest that is adverse to the Debtors’ estates, is a disinterested person who
does not hold or represent any interest adverse to and has no connection (subject to the
disclosures in Schedule 1 hereto) with the Debtors herein, their creditors, the U.S. Trustee or any
party-in-interest herein in the matters upon which Susman Godfrey is to be retained, and is a
“disinterested person” within the meaning of section 101(14) of the Bankruptcy Code, subject to
the disclosures in Schedule 1 hereto showing connections with parties listed on the Contact List
who have been clients of the Firm within the last two years.
6. Susman Godfrey is a “disinterested person,” as that term is defined in section
l0l(14)of the Bankruptcy Code in that Susman Godfrey in that the Firm, its shareholders and
associates (a) are not creditors, equity security holders or insiders of the Debtors; (b) are not and
were not, within two (2) years before the Petition Date, a director, officer, or employee of the
Debtors; (c) are not and were not, within three (3) years before the Petition Date, an investment
banker for a security of the Debtors, or an attorney for such investment banker in connection
with the offer, sale or issuance of any security of the Debtors; (d) do not have an interest
materially adverse to the interests of the Debtors’ estates or of any class of creditors or equity
security holders, by reason of any direct or indirect relationship to, connection with, or interest
in, the Debtors, or for any other reason, except as disclosed herein. Susman Godfrey has certain
KL2 2616563.1
relationships with certain creditors, other parties in interest, and other professionals in connection
with unrelated matters, but has not represented any such party in connection with matters relating
to the Debtors. Susman Godfrey believes that its representation of such creditors or other parties
in such other matters has not and will not affect its representation of the Creditors’ Committee in
prosecuting Daimler Claims.
7. Susman Godfrey represents and has represented over the past several years certain
of the non-debtor entities in non-related matters. Susman Godfrey anticipates continuing such
representation. Susman Godfrey has in the past represented, currently represents, and may in the
future represent entities that may be claimants or interest holders of the Debtors in matters
unrelated to the Debtors’ pending Chapter 11 cases. Similarly, Susman Godfrey has in the past
been adverse to, is currently adverse to, and may in the future be adverse to claimants or interest
holders of the Debtors in matters unrelated to the Debtors’ pending Chapter 11 cases. Susman
Godfrey has a large and diversified practice limited to litigation that encompasses the
representation of financial institutions and commercial corporations, some of which are or may
consider themselves to be creditors or parties in interest in the Debtor’s pending chapter 11 cases
or to otherwise have interests in these cases. Susman Godfrey believes that its representation of
such creditors or other parties in such other matters has not and will not affect its representation
of the Creditors’ Committee in prosecuting Daimler Claims.
8. Susman Godfrey will continue to examine any possible conflicts as additional
information concerning entities having a connection with the Debtors is developed and will file
appropriate supplemental disclosure with the Court as necessary.
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9. Pursuant to the Contingent Fee Agreement, and subject to the Court’s approval,
the Creditors’ Committee proposes to pay Stutzman Bromberg and Susman Godfrey
(collectively, “Special Counsel”) as follows:
a. Contingent Fee: The contingent fee will vary depending on when the matter is resolved. Generally, the contingent fee increases with the passage of time and work required.
(1) As to any of Creditors’ Committee claims that are settled within ninety (90) days of the filing the Daimler Complaint, Special Counsel will receive 18.75% of the gross recovery under $125 million, 15% of the gross between $125 million and $200 million and 11.75% of any gross recovery above that.
(2) As to any of Creditors’ Committee claims that are settled after ninety (90) days but before one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 21.875% of the gross recovery under $125 million, 17.5% of the gross recovery between $125 million and $200 million and 13.125% of any gross recovery above that.
(3) As to any of Creditors’ Committee’s claims that are settled after one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 25% of the gross recovery under $125 million, 20% of the gross recovery between $125 million and $200 million and 15% of any gross recovery above that.
The term “gross recovery” means all money or other things of value recovered by the Old Car LLC bankruptcy estate or a liquidation trust created by a confirmed chapter 11 plan of liquidation (the “Litigation Trust”), including the value of any business accommodation recovered, including any attorney’s fees awarded by the court or arbitrator(s), and without reduction for any expenses of litigation.
b. Division of Responsibilities and Fees between Susman Godfrey and Stutzman Bromberg. Susman Godfrey and Stutzman Bromberg will split the fee and the work on a 70/30 basis. Susman Godfrey and Stutzman Bromberg have agreed that Stephen D. Susman shall be lead counsel and shall have the final decision on whom work is assigned to and how it is allocated between the two firms.
c. Noncash Settlements. If the Daimler Litigation is settled and the Creditors’ Committee receives value other than in cash, Special Counsel shall be entitled to demand and receive, at their option: (i) payment in cash, under the above Contingent Fee payment scheme, of Special Counsel’s applicable contingent percentage of (a) the present value of any
KL2 2616563.1
noncash consideration plus (b) any cash received upon settlement; or (ii) an undivided interest in any property received by the Creditors’ Committee, equal to Special Counsel’s applicable contingent percentage of the above Contingent Fee payment scheme, plus payment of Special Counsel’s applicable contingent percentage of any cash received as a result of settlement.
d. Pre-Effective Date Expenses. Prior to the effective date (“Effective Date”) of a Plan, Special Counsel will submit their monthly out-of-pocket costs, disbursements, and litigation expenses (collectively, “Expenses”) to the Debtors for payment in accordance with the Order, Pursuant to Sections 105(a) and 331 of the Bankruptcy Code, Bankruptcy Rule 2016(a) and Local Bankruptcy Rule 2016-1, Establishing Procedures for Interim Monthly Compensation for Professionals, dated May 20, 2009 [Docket No. 1334] (the “Interim Compensation Order”), as well as any other applicable orders that may be entered by the bankruptcy court. Special Counsel’s Expenses may include, but are not limited to, court fees, service-of-process charges, photocopies, computer-assisted legal research, long distance telephone and telecopy charges, messenger and delivery fees, court reporter fees, travel, meals, hotel and messenger/overnight delivery charges. Special Counsel’s Expenses may also include charges billed by outside service providers that are not “professionals” within the meaning of section 1103 of the Bankruptcy Code (“Non-Professional Service Providers”), such as a court-reporting firm, EIS or document production company. Special Counsel’s charges for certain types of in-house expenses are contained in Exhibit B to the Contingent Fee Agreement.
e. Pre-Effective Date Professionals. If Special Counsel determines that the services of one or more experts or other non-legal professionals are necessary for the prosecution of the Claims prior to the Effective Date, Creditors’ Committee agree to retain such professionals pursuant to sections 328 and 1103 of the Bankruptcy Code. For their services and expenses incurred prior to the Effective Date, such professionals shall be compensated pursuant to the terms of the Interim Compensation Order and any other applicable bankruptcy court orders; their retention agreement will clearly state that Special Counsel are not responsible for any of their charges.
f. Post-Effective Date Expenses and Professionals. For all Expenses incurred after the Effective Date, Special Counsel will invoice the Litigation Trust on a monthly basis, and all invoices will be due and payable within 30 days after receipt. To the extent that Special Counsel’s pre-Effective Date Expenses have not been paid in full by the Effective Date or promptly thereafter in accordance with the Interim Compensation Order and any other applicable bankruptcy court orders, the Litigation Trust will promptly pay any remaining pre-Effective Date Expenses, plus
KL2 2616563.1
interest at the rate of 1.5% per month on all unpaid amounts. In addition, the Litigation Trust will be responsible for payment of all fees and expenses incurred after the Effective Date by any expert witnesses or other non-legal professionals, and for all charges incurred after the Effective Date by any other outside service providers. For any such outside service provider that Special Counsel retain after the Effective Date on the Litigation Trust’s behalf, the Litigation Trust will enter into a contract with such service provider that will clearly state that Special Counsel are not responsible for any of their charges and that the Litigation Trust will pay such charges directly to the provider as billed. Special Counsel’s policies on outside vendors are contained in Exhibit C to the Contingent Fee Agreement.
11. I respectfully submit that the above fee arrangement is reasonable in light of the
industry practice, market rates for both in and out of chapter 11 proceedings, Susman Godfrey’s
experience, and the type of work to be performed pursuant to Susman Godfrey’s retention.
12. Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing
is true and correct.
Dated: New York, New York August 13, 2009
/s/ Jacob W. Buchdahl_____________ Jacob W. Buchdahl
KL2 2616563.1
Schedule 1
Schedule of Interested Parties that Currently Employ or Have Within the Last Two Years Employed Susman Godfrey L.L.P. in Matters Unrelated to the Debtors or their Chapter 11 Cases
INTERESTED PARTY RELATIONSHIP TO THE DEBTORS
CLIENTS
ACE Aviation Holdings, Inc. Major Business Affiliation of Chrysler LLC’s Directors and Managers
Affiliate companies ACE Insurance, ACE USA, ACE Insurance Management Limited, ACE Limited, ACE American Insurance Company, ACE Bermuda LTD, and ACE Global Markets are current clients.
ACE Limited Major Insurer and/or Insurance Broker
ACE Limited is a current client. See also description under ACE Aviation Holdings, Inc.
Ceva Common Carriers, Customs Brokers, and Warehousemen
Ceva Freight LLC is paying certain legal expenses for a current client, who was formerly an officer of EGL, Inc. The client is the subject of a derivative litigation arising from the purchase of EGL by CEVA Group Plc.
Delphi Automotive Systems Major Supplier Delphi Corporation (to which Delphi Automotive Systems was renamed) is a current client.
General Electric Company Major Fleet Customer General Electric is a current client.
The Hertz Corporation Major Fleet Customer Hertz is a former client.
Pepsico, Inc. Major Fleet Customer Pepsico is a former client.
Michael J. Ross Current Directors, Managers and Officers of Debtors other than Chrysler LLC
Michael Ross is a former client of the firm, but we have reason to believe it is not the same Michael Ross listed on
KL2 2616563.1
the Contact Parties.
Joseph P. and Patricia Murphy Parties to Significant Litigation with the Debtors
Patricia Murphy is a former client of the firm, but we have reason to believe it is not the same Patricia Murphy listed on the Contact Parties.
EXHIBIT C
To Retention Application
Declaration of Sander L. Esserman
KL2 2615612.2
STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, PC Sander L. Esserman 2323 Bryan Street, Suite 2200 Dallas, Texas 75201-2689 (214) 969-4900 Proposed Special Counsel to the Official Committee of Unsecured Creditors of Old Carco LLC, et al.
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
Chapter 11 Case No. 09-50002 (AJG) Jointly Administered
DECLARATION OF SANDER L. ESSERMAN IN SUPPORT OF THE APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS PURSUANT TO SECTIONS 328 AND 1103 OF THE BANKRUPTCY CODE AUTHORIZING THE RETENTION OF STUTZMAN, BROMBERG,
ESSERMAN & PLIFKA, PC AND SUSMAN GODFREY L.L.P., AS SPECIAL COUNSEL TO THE COMMITTEE, NUNC PRO TUNC TO AUGUST 13, 2009
Pursuant to Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, Sander L.
Esserman, Esq., declares:
1. I am a shareholder in the firm of Stutzman, Bromberg, Esserman & Plifka,
PC (“Stutzman Bromberg” or the “Firm”), and maintain an office at 2323 Bryan Street, Dallas,
Texas 75201-2689. I am duly admitted to practice law in the State of Texas, the United States
District Court for the Northern District of Texas and the United States Courts of Appeals for the
Second Circuit and Fifth Circuits. I am authorized to submit this Declaration in support of the
Application of the Official Committee of Unsecured Creditors (the “Creditors’ Committee”)
3 KL2 2615612.2
Pursuant to Sections 328 and 1103 of the Bankruptcy Code Authorizing the Retention of
Stutzman, Bromberg, Esserman & Plifka, PC and Susman Godfrey L.L.P. (“Susman Godfrey”),
as Special Counsel to the Committee, Nunc Pro Tunc to July 31, 2009 (the “Application”)1.
2. Neither I, the Firm, nor any shareholder, or associate thereof, insofar as I
have been able to ascertain, has any connection with the Debtors, their creditors or any other
parties in interest herein, or their respective attorneys and accountants, the U.S. Trustee, or any
person employed in the office of the U.S. Trustee, except as set forth herein.
3. Section 1103(b) of the Bankruptcy Code does not incorporate the general
“disinterestedness” standard of Code § 327(a). However, Rule 2014(a) of the Federal Rules of
Bankruptcy Procedure requires that an application for employment under Section 1103 of the
Bankruptcy Code disclose all connections with the Debtors, the estates, the professionals and the
Office of the Trustee. The Firm, therefore, discloses its known connections as follows.
4. The Firm has made the following investigation of disinterestedness prior
to submitting this Declaration. The Firm has undertaken a full and thorough review of its
computer database, which contains the names of clients and other parties interested in particular
matters. The Firm requires all of its professionals, before accepting the representation of a new
client, or the representation of an existing client in a new matter, to perform a conflicts check
through the Firm’s database and to enter conflict information regarding new clients or new
matters into that database. Thus, a review of said computerized database should reveal any and
all actual or potential conflicts of interest with respect to any given representation. In particular,
1 Capitalized terms not otherwise defined herein shall have the meanings and definitions ascribed to such terms in
the Application.
4 KL2 2615612.2
an employee of the Firm, under my supervision, ran the names of the parties (the “Contact
Parties”) identified in both (a) Schedule 1 to Corinne Ball’s declaration in support of the
Debtors’ application to retain Jones Day LLP and (b) Exhibit A to the supplemental disclosure
statement in support of the Debtors’ application to retain Jones Day LLP (collectively, the “Ball
Declaration”). According to the Ball Declaration, the Contact Parties include, but are not limited
to, the Debtors; the ultimate owners of the Debtors; the Debtors’ current and former officers,
directors and managers; the Debtors’ prepetition first-lien and second-lien secured lenders; the
agent for the Debtors’ prepetition first-lien loan facility; the Debtors’ major fleet customers; the
Debtors’ major retail dealers; the Debtors’ major suppliers; the Debtors’ 50 largest unsecured
creditors; members of the Creditors’ Committee; the parties to derivatives agreements with the
Debtors; the Debtors’ major lessors; parties to collective bargaining agreements with the
Debtors; the Debtors’ common carriers, customs brokers and warehousemen; parties to
significant litigation with the Debtors; parties to material license agreements and permits with
the Debtors; and major insurers and insurance brokers of the Debtors. The Firm’s database was
examined to determine which, if any, of the Contact Parties had been a client of the Firm within
the two years preceding the date of this Declaration.
5. Based on the results of the database, it appears that Stutzman Bromberg
does not hold or represent an interest that is adverse to the Debtors’ estates, is a disinterested
person who does not hold or represent any interest adverse to and has no connection (subject to
the disclosures set forth below) with the Debtors herein, their creditors, the U.S. Trustee or any
party-in-interest herein in the matters upon which Stutzman Bromberg is to be retained, and is a
“disinterested person” within the meaning of section 101(14) of the Bankruptcy Code, subject to
5 KL2 2615612.2
the following material disclosures showing connections with parties listed on the Contact List
who have been clients of the Firm within the last two years:
a. Patricia Pascale, a member of the Creditors’ Committee, through her counsel Brayton Purcell LLP, engaged Stutzman Bromberg to serve as her co-counsel in the Chrysler bankruptcy proceedings. Stutzman Bromberg believes that its representation of Patricia Pascale (i) has not affected and will not affect its representation of the Creditors’ Committee in connection with the Daimler Litigation and (ii) does not constitute the representation of an adverse interest with respect to either the Creditors’ Committee or Patricia Pascale.
b. Stutzman Bromberg has represented and continues to represent Pepsico Inc. in matters that are not related to Chrysler.
c. In 2007 and 2008, Stutzman Bromberg represented Bombardier Capital Inc. in matters that are not related to Chrysler.
6. The Debtors have numerous creditors and other parties-in-interest.
Stutzman Bromberg may have in the past represented, and may presently or in the future
represent or be deemed adverse to, creditors or parties-in-interest in addition to those specifically
disclosed herein in matters unrelated to these cases. Stutzman Bromberg believes that its
representation of such creditors or other parties in such other matters has not and will not affect
its representation of the Creditors Committee in prosecuting the Daimler claims.
7. Furthermore, Stutzman Bromberg is a “disinterested person” as that term
is defined in section 101(14) of the Bankruptcy Code in that the Firm, its shareholders and
associates:
a. are not creditors, equity security holders or insiders of the Debtors;
b. are not and were not, within two (2) years before the Petition Date, a director, officer, or employee of the Debtors;
6 KL2 2615612.2
c. are not and were not, within three (3) years before the Petition Date, an investment banker for a security of the Debtors, or an attorney for such investment banker in connection with the offer, sale or issuance of any security of the Debtors;
d. do not have an interest materially adverse to the interests of the Debtors’ estates or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the Debtors, or for any other reason, except as disclosed herein.
8. Pursuant to the Contingent Fee Agreement, and subject to the Court’s
approval, the Creditors’ Committee proposes to pay Stutzman Bromberg and Susman Godfrey
(collectively, “Special Counsel”) as follows:
a. Contingent Fee: The contingent fee will vary depending on when the matter is resolved. Generally, the contingent fee increases with the passage of time and work required.
(1) As to any of Creditors’ Committee claims that are settled within ninety (90) days of the filing the Daimler Complaint, Special Counsel will receive 18.75% of the gross recovery under $125 million, 15% of the gross between $125 million and $200 million and 11.75% of any gross recovery above that.
(2) As to any of Creditors’ Committee claims that are settled after ninety (90) days but before one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 21.875% of the gross recovery under $125 million, 17.5% of the gross recovery between $125 million and $200 million and 13.125% of any gross recovery above that.
(3) As to any of Creditors’ Committee’s claims that are settled after one hundred and eighty (180) days after filing the Daimler Complaint, Special Counsel will receive 25% of the gross recovery under $125 million, 20% of the gross recovery between $125 million and $200 million and 15% of any gross recovery above that.
The term “gross recovery” means all money or other things of value recovered by the Old Car LLC bankruptcy estate or a liquidation trust created by a confirmed chapter 11 plan of liquidation (the “Litigation Trust”), including the value of any business accommodation recovered, including any attorney’s fees
7 KL2 2615612.2
awarded by the court or arbitrator(s), and without reduction for any expenses of litigation.
b. Division of Responsibilities and Fees between Susman Godfrey and Stutzman Bromberg. Susman Godfrey and Stutzman Bromberg will split the fee and the work on a 70/30 basis. Susman Godfrey and Stutzman Bromberg have agreed that Stephen D. Susman shall be lead counsel and shall have the final decision on whom work is assigned to and how it is allocated between the two firms.
c. Noncash Settlements. If the Daimler Litigation is settled and the Creditors’ Committee receives value other than in cash, Special Counsel shall be entitled to demand and receive, at their option: (i) payment in cash, under the above Contingent Fee payment scheme, of Special Counsel’s applicable contingent percentage of (a) the present value of any noncash consideration plus (b) any cash received upon settlement; or (ii) an undivided interest in any property received by the Creditors’ Committee, equal to Special Counsel’s applicable contingent percentage of the above Contingent Fee payment scheme, plus payment of Special Counsel’s applicable contingent percentage of any cash received as a result of settlement.
d. Pre-Effective Date Expenses. Prior to the effective date (“Effective Date”) of a Plan, Special Counsel will submit their monthly out-of-pocket costs, disbursements, and litigation expenses (collectively, “Expenses”) to the Debtors for payment in accordance with the Order, Pursuant to Sections 105(a) and 331 of the Bankruptcy Code, Bankruptcy Rule 2016(a) and Local Bankruptcy Rule 2016-1, Establishing Procedures for Interim Monthly Compensation for Professionals, dated May 20, 2009 [Docket No. 1334] (the “Interim Compensation Order”), as well as any other applicable orders that may be entered by the bankruptcy court. Special Counsel’s Expenses may include, but are not limited to, court fees, service-of-process charges, photocopies, computer-assisted legal research, long distance telephone and telecopy charges, messenger and delivery fees, court reporter fees, travel, meals, hotel and messenger/overnight delivery charges. Special Counsel’s Expenses may also include charges billed by outside service providers that are not “professionals” within the meaning of section 1103 of the Bankruptcy Code (“Non-Professional Service Providers”), such as a court-reporting firm, EIS or document production company. Special Counsel’s charges for certain types of in-house expenses are contained in Exhibit B to the Contingent Fee Agreement.
8 KL2 2615612.2
e. Pre-Effective Date Professionals. If Special Counsel determines that the services of one or more experts or other non-legal professionals are necessary for the prosecution of the Claims prior to the Effective Date, Creditors’ Committee agree to retain such professionals pursuant to sections 328 and 1103 of the Bankruptcy Code. For their services and expenses incurred prior to the Effective Date, such professionals shall be compensated pursuant to the terms of the Interim Compensation Order and any other applicable bankruptcy court orders; their retention agreement will clearly state that Special Counsel are not responsible for any of their charges.
f. Post-Effective Date Expenses and Professionals. For all Expenses incurred after the Effective Date, Special Counsel will invoice the Litigation Trust on a monthly basis, and all invoices will be due and payable within 30 days after receipt. To the extent that Special Counsel’s pre-Effective Date Expenses have not been paid in full by the Effective Date or promptly thereafter in accordance with the Interim Compensation Order and any other applicable bankruptcy court orders, the Litigation Trust will promptly pay any remaining pre-Effective Date Expenses, plus interest at the rate of 1.5% per month on all unpaid amounts. In addition, the Litigation Trust will be responsible for payment of all fees and expenses incurred after the Effective Date by any expert witnesses or other non-legal professionals, and for all charges incurred after the Effective Date by any other outside service providers. For any such outside service provider that Special Counsel retain after the Effective Date on the Litigation Trust’s behalf, the Litigation Trust will enter into a contract with such service provider that will clearly state that Special Counsel are not responsible for any of their charges and that the Litigation Trust will pay such charges directly to the provider as billed. Special Counsel’s policies on outside vendors are contained in Exhibit C to the Contingent Fee Agreement.
9. I respectfully submit that the above fee arrangement is reasonable in light
of the industry practice, market rates for both in and out of chapter 11 proceedings, Stutzman
Bromberg’s experience, and the type of work to be performed pursuant to Stutzman Bromberg’s
retention.
10. Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the
foregoing is true and correct.
9 KL2 2615612.2
Dated: Corpus Christi, Texas August 13, 2009 /s/ Sander L. Esserman______________
Sander L. Esserman
KL2 2615451.3
Exhibit D
To Retention Application
(Proposed Order)
KL2 2615451.3
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK