1 UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT HARTFORD DIVISION : In re: : Chapter 11 : CARLA’S PASTA, INC., et al., : Case No. 21-20111 : Debtors. 1 : (Jointly Administered) : DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER (I) AUTHORIZING THE DEBTOR TO EMPLOY AND RETAIN PHOENIX EXECUTIVE SERVICES, LLC AS THEIR FINANCIAL ADVISORS AND JOSEPH C. NAPPI AS THEIR CHIEF RESTRUCTURING OFFICER PURSUANT TO 11 U.S.C. § 327(a), AND (II) GRANTING RELATED RELIEF Carla’s Pasta, Inc. (“Carla’s Pasta”) and Suri Realty, LLC (“Suri”), debtors and debtors- in-possession in the above-captioned chapter 11 cases (together, the “Debtors”), hereby submit this application (this “Application”), pursuant to section 327(a) of title 11 of the United States Code (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), Local Bankruptcy Rule 2014-1, for entry of an order substantially in the form attached hereto as Exhibit A (the “Order”): (i) authorizing the Debtors to employ and retain Phoenix Executive Services, LLC (“Phoenix”) as their financial advisors and naming Joseph C. Nappi (“Nappi”) of Phoenix as the Debtors’ chief restructuring officer (as defined in the Engagement Letter, the “CRO”), effective as of the Petition Date (defined herein), and (ii) granting related relief. In support of this Application, the Debtors submit the declaration of Joseph C. Nappi of Phoenix (the “Nappi Declaration”) annexed hereto as Exhibit B. In further support of this Application, the Debtors state as follows: 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Carla’s Pasta, Inc. (5847) and Suri Realty, LLC (5847). The Debtors’ corporate headquarters and service address is 50 Talbot Lane, South Windsor, Connecticut 06074. Case 21-20111 Doc 194 Filed 03/01/21 Entered 03/01/21 16:00:38 Page 1 of 12
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UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT
HARTFORD DIVISION : In re: : Chapter 11 : CARLA’S PASTA, INC., et al., : Case No. 21-20111 :
Debtors.1 : (Jointly Administered) :
DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER
(I) AUTHORIZING THE DEBTOR TO EMPLOY AND RETAIN PHOENIX EXECUTIVE SERVICES, LLC AS THEIR FINANCIAL
ADVISORS AND JOSEPH C. NAPPI AS THEIR CHIEF RESTRUCTURING OFFICER PURSUANT TO 11 U.S.C. § 327(a), AND (II) GRANTING RELATED RELIEF
Carla’s Pasta, Inc. (“Carla’s Pasta”) and Suri Realty, LLC (“Suri”), debtors and debtors-
in-possession in the above-captioned chapter 11 cases (together, the “Debtors”), hereby submit
this application (this “Application”), pursuant to section 327(a) of title 11 of the United States
Code (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”), Local Bankruptcy Rule 2014-1, for entry of an order
substantially in the form attached hereto as Exhibit A (the “Order”): (i) authorizing the Debtors to
employ and retain Phoenix Executive Services, LLC (“Phoenix”) as their financial advisors and
naming Joseph C. Nappi (“Nappi”) of Phoenix as the Debtors’ chief restructuring officer (as
defined in the Engagement Letter, the “CRO”), effective as of the Petition Date (defined herein),
and (ii) granting related relief. In support of this Application, the Debtors submit the declaration
of Joseph C. Nappi of Phoenix (the “Nappi Declaration”) annexed hereto as Exhibit B. In further
support of this Application, the Debtors state as follows:
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Carla’s Pasta, Inc. (5847) and Suri Realty, LLC (5847). The Debtors’ corporate headquarters and service address is 50 Talbot Lane, South Windsor, Connecticut 06074.
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JURISDICTION
1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157(b)
and 1334. This proceeding is core pursuant to 28 U.S.C. § 157(b).
2. Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
3. The statutory predicates for the relief requested herein are Bankruptcy Code
sections 327(a), Bankruptcy Rules 2014 and 2016, and Local Bankruptcy Rule 2014-1.
PRELIMINARY STATEMENT
4. The Debtors require the services of an experienced CRO and financial advisors to
help the Debtors navigate through chapter 11 and restructure the Debtors’ business and operations.
In addition, the Debtors’ access to DIP financing is dependent upon retaining a CRO reasonably
acceptable to the Lenders. Through March 1, 2021, the Debtors engaged Novo Advisors, LLC
(“Novo”) as their financial advisors and Mr. Sandeep Gupta as their CRO. Recently, the Debtors
determined that there may exist a potential conflict of interest that may preclude Novo from being
“disinterested” pursuant to Bankruptcy Code section 328(a). While the Debtors outlined certain
actions that could be taken to maintain their existing advisors, to avoid and/or minimize any
disruptions and additional administrative expenses in the Chapter 11 Cases (defined herein), Novo
tendered their resignation, effective March 1, 2021. Immediately thereafter, the Company retained
Phoenix and Nappi as CRO, as of February 28, 2021, subject to this Court’s approval.2 Prior to
retaining Phoenix, the Company provided a list of all creditors and other parties in interest to
Phoenix to review for conflicts and connections. Phoenix has unequivocally stated, and confirmed
in the attached Nappi Declaration, that neither Phoenix nor Nappi has any institutional
2 As set forth in the Engagement Letter (defined below) Nappi’s role as CRO is further subject to the Debtors including Nappi on their existing director and officer liability insurance policy, and until such time Nappi will serve as an advisor to the Debtors.
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relationships with any material creditors in these Chapter 11 Cases and has not done work in any
matter involving either of the senior secured lenders for over eight (8) years. The Company is
confident that Phoenix and Nappi hold no interest adverse to the Company and their estates, and
are otherwise disinterested persons.
BACKGROUND
A. The Chapter 11 Case
5. On October 29, 2020, an involuntary petition for relief under chapter 7 of the
Bankruptcy Code was filed against Suri Realty, LLC. See Case No. 20-21270 at Dkt. No. 1. An
order converting the involuntary chapter 7 bankruptcy case to a voluntary case under chapter 11
of the Bankruptcy Code was entered on December 17, 2020. See Case No. 20-21270 at Dkt. No.
30 (the “Suri Chapter 11 Case”).
6. On February 8, 2021 (the “Petition Date”), Carla’s Pasta commenced this case by
filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code (“Carla’s Pasta’s
Chapter 11 Case”, and together with the Suri Chapter 11 Case, the “Chapter 11 Cases”).
7. The Debtors continue to operate and manage their businesses as debtors-in-
possession pursuant to Bankruptcy Code sections 1107(a) and 1108.
8. No trustee or examiner has been appointed in these Chapter 11 Cases.
9. On February 18, 2021, the Office of the United States Trustee appointed an Official
Committee of Unsecured Creditors in the Carla’s Pasta Chapter 11 Case (the “Committee”).
10. Additional factual background relating to the Debtors’ business and the
commencement these Chapter 11 Cases is set forth in detail in the Amended Declaration of Sandeep
Gupta, Chief Restructuring Officer, in Support of Debtors’ First Day Pleadings [see Dkt. 48] (the
“First Day Declaration”).
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RELIEF REQUESTED
11. The Debtors seek an order of this Court authorizing the employment and retention
of Phoenix as their financial advisors, and designating Joseph C. Nappi as its CRO for the Chapter
11 Cases and all related matters, effective as of February 8, 2021. Accordingly, the Debtors
respectfully request that the Court enter an order pursuant to section 327(a) of the Bankruptcy
Code and Bankruptcy Rule 2014(a) authorizing the Debtors to employ and retain Phoenix as their
financial advisors and Nappi as CRO to perform any financial advisory services that will be
necessary during the Chapter 11 Cases.
PHOENIX’S QUALIFICATIONS
12. Phoenix is a highly qualified and respected full service financial advisory firm
comprised of seasoned professionals providing financial advisory and corporate restructuring
services primarily related to companies in financial distress or undergoing a purchase/sale
transaction.
13. The Debtors have selected Phoenix to serve as their financial advisor because
Phoenix’s professionals have extensive experience and knowledge in analyzing, structuring,
negotiating and effecting restructuring and recapitalization transactions, evaluating business
operations, properties, financial conditions and prospects, developing strategies for accomplishing
proposed transactions, assessing valuations, providing expert testimony, and other support related
to reorganization and sales of assets.
14. Joseph C. Nappi, a Senior Managing Director of Phoenix, will lead all of the day-
to-day aspects of this assignment and will serve as CRO. Mr. Nappi is well suited to provide the
services required by the Debtors, and his advisory experience extends across many industries,
including food services, as referenced in the Nappi Declaration.
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15. The Debtors believe Phoenix is well suited to provide the financial advisory
services required by the Debtors. The Debtors believe that Phoenix’s general accounting and
financial advisory experience and expertise, along with its ability to provide asset evaluation and
analysis and expert testimony, if necessary, will inure to the benefit of the Debtors.
16. In addition, Phoenix and Mr. Nappi are capable and willing to undertake the
challenge of coming in to these pending Chapter 11 Cases in order to provide financial advisory
services and leadership, while reducing any disruptions inherent in a change of management and
advisory services to a debtor in bankruptcy. Mr. Nappi and his team at Phoenix are seasoned
professionals, and anticipate that the transition into their respective CRO and financial advisor
roles will be smooth under the circumstances of these Chapter 11 Cases. The Debtors believe that
Mr. Nappi and Phoenix are well qualified to represent them in these Chapter 11 Cases in an
efficient and effective manner.
SERVICES TO BE RENDERED
17. During the pendency of the Chapter 11 Cases, the Debtors contemplate that Phoenix
will provide the following services:
a. Provide the necessary oversight and assistance to the Board of Directors and the Debtors in the preparation of the various financial reporting requirements in these Chapter 11 Cases;
b. Meet regularly with the Debtors’ Board of Directors (the “Board”) and senior management (i) to receive updates on any and all action items implemented by agreement between senior management and the CRO and Phoenix personnel, (ii) to be updated on any and all recommendations of senior management and/or the CRO and Phoenix personnel as to future action items, and (iii) to address any other matters that senior management and/or the CRO believe should be brought to the attention of the Board;
c. Assist the Debtors in their communications and negotiations with Bank of Montreal and People’s United Bank (collectively the “Lenders”), as well as any other secured and unsecured creditors, including the Committee, and their related legal and financial advisor professionals;
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d. Oversee and as need be prepare and/or monitor, and modify the Debtors’ cash flow forecasts and bankruptcy related budgets on a periodic basis in order to determine and/or validate the sources and uses of cash, borrowing availability (if applicable), and the timing and magnitude of financing necessary to support the Debtors during these Chapter 11 Cases;
e. Develop and maintain a “Scorecard” to monitor and report to the various constituents the key value drivers of the cash flow;
f. Oversee the preparation, monitoring and periodically modify the Debtors’ business plan, the actual monthly and YTD GAAP results vs. the budget, monthly financial projections and normalized TTM EBITDA and projected pro forma EBITDA;
g. Provide oversight with regard to daily cash management activities, including maximizing and forecasting collections and availability, and assisting the Debtor with prioritizing disbursements within the Debtors’ availability constraints;
h. Review and approve disbursements made by the Debtors, with the exception of Phoenix’s invoices, which authority for payment will remain with either the President or the Board of Directors, however neither the CRO and Phoenix shall become signatories to any checking or disbursement account. The CRO and Phoenix personnel will also have authority to review and approve all requested borrowings under any DIP facility during the Chapter 11 Cases;
i. Work with restructuring counsel to assist management in the preparation of the post filing Monthly Operating Reports (MORs) and assist with statements and schedules that are typical in any bankruptcy proceeding;
j. Provide the necessary oversight to assure all parties that the efforts of Cowen and Company, LLC to identify and solicit interest from interested parties are sufficient to conduct a far reaching and effective auction process;
k. Provide testimony in any Chapter 11 proceeding as needed; and
l. Provide such other support as may be reasonably requested by the Debtors or Debtors’ counsel that fall within Phoenix’s expertise, experience, and capabilities that are mutually agreeable.
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DISINTERESTEDNESS OF PHOENIX
18. To the best of the Debtors’ knowledge, Phoenix and its respective employees have
no connections with creditors, parties-in-interest, their respective attorneys and accountants, or the
United States Trustee, or any persons employed by the United States Trustee, except as disclosed
in the Nappi Declaration.
19. In late February 2021, the Debtors determined it would be in their best interests to
engage Phoenix, and Nappi as CRO, to represent the Debtors as replacement financial advisors
and CRO. Given Phoenix’s financial advisory and restructuring qualifications and Phoenix’s
familiarity with industries in line with the Debtors’ business, the Debtors subsequently retained
Phoenix to assist with their restructuring efforts.
20. Accordingly, the Debtors submit that (i) Phoenix and its employees are
“disinterested persons” as that phrase is defined in Section 101(14) of the Bankruptcy Code, and
(ii) Phoenix neither represents nor holds an interest adverse to the interest of the Debtors’ estate
with respect to the matter on which Phoenix is to be employed.
21. As set forth in the Nappi Declaration, there is no agreement or understanding
between Phoenix and any other entity, other than an employee of Phoenix, for the sharing of
compensation received or to be received for services rendered in connection with these cases.
22. The Debtors believe that the retention of Phoenix is in the best interests of the
Debtors and the Debtors’ estates.
COMPENSATION OF PHOENIX
23. As compensation for services to be rendered to the Debtors, and consistent with the
compensation terms set forth in the Engagement Letter attached as Exhibit 2 to the Nappi
Declaration (the “Engagement Letter”), Phoenix intends to charge the Debtors a flat-rate monthly
fee of $100,000 for the provision of both financial advisory and CRO services (the “Monthly
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Fee”).3 The agreement to provide a flat rate was a material concession by Phoenix as the Debtors
require an advisor that will operate within the strict budget approved by the Lenders, yet anticipate
that if engaged at their hourly rates, they would likely exceed the Monthly Fee. Although Phoenix
will be paid at the Monthly Fee, they will continue to track their time and services as outlined
herein.
24. By this Application, the Debtors request that Phoenix be permitted to record its
time in quarter-hour increments, as is customary in Phoenix’s industry, and that Phoenix be
excused from the typical requirement to bill in increments of one-tenth of an hour. In addition,
Phoenix will bill for all out of pocket expenses reasonably incurred by Phoenix in connection with
the matters contemplated by this Application. Travel time, normally billed at 50%, has been
waived as an additional courtesy to the Debtors. As compensation for the administrative and
support time and expenses typically required (e.g. computer, e-mail, administrative staff time, etc.)
Phoenix will bill $300 each month, which is in addition to the Monthly Fee .
25. Phoenix intends to apply for compensation for professional services rendered and
reimbursement of its actual expenses incurred in connection with these Chapter 11 Cases, subject
to the Court’s approval and in compliance with applicable provisions of the Bankruptcy Code, the
Bankruptcy Rules, the Local Bankruptcy Rules, any interim professional compensation order that
may be entered by this Court, and any other applicable procedures and orders established by this
Court, and consistent with the proposed compensation set forth in the Engagement Letter. Pursuant
to the Engagement Letter, upon Court approval of this Application, the Debtors will forward
$50,000 to Phoenix to be held as a retainer. Unless otherwise agreed by the parties, this retainer
will not to be applied or credited to amounts due from the Debtors but will be returned to the
3 Phoenix’s customary hourly rates range from $150 to $795 per hour.
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Debtors once all amounts due to Phoenix are paid in full subject to a holdback to fund any
indemnification claims.
26. The Debtors believe the overall compensation structure set forth in the Engagement
Letter is comparable to those generally charged by corporate financial consulting firms of similar
stature to Phoenix for comparable engagements, both in and out of bankruptcy proceedings.
27. Additionally, as set forth in the Engagement Letter, Phoenix seeks a limited
indemnity from the Debtors for any claims against Phoenix relating to the services it provides to
the Debtors in these Chapter 11 Cases; provided the Debtors shall not be obligated to indemnify
or hold Phoenix for any gross negligence or willful misconduct by Phoenix. The Debtors believe
such limited indemnities are quite common and customary for financial advisory firms and
requests that the Court approve such terms as part of Phoenix’s engagement.
28. Lastly, as set forth in the Engagement Letter, either party may immediately
terminate the engagement with or without cause upon delivery of written notice.
BASIS FOR RELIEF
29. The Debtors submit that the retention of Phoenix under the terms described herein
is appropriate under sections 327(a), 328, and 1107 of the Bankruptcy Code.
30. Section 327(a) empowers a debtor, with the Court’s approval, to employ
professionals “that do not hold or represent an interest adverse to the estate, and that are
disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under this
title.” 11 U.S.C. § 327(a).
31. Section 101(14) of the Bankruptcy Code defines “disinterested person” as a person
that:
(A) Is not a creditor, an equity security holder, or an insider;
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(B) Is not and was not, within two years before the date of the filing of the petition, a director, officer, or employee of the debtor; and
(C) Does not have an interest materially adverse to the interests of the estate 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 debtor, or for any other reason.
11 U.S.C. § 101(14)(A)-(C).
32. Section 1107(b) of the Bankruptcy Code provides that “a person is not disqualified
for employment under section 327 of this title by a debtor in possession solely because of such
person’s employment by or representation of the debtor before the commencement of the case.”
11 U.S.C. § 1107(b).
33. To the best of the Debtors’ knowledge, the partners and associates of Phoenix do
not have any connection with the Debtors, their creditors, or any other party in interest, or their
attorneys, except to the extent set forth in the Nappi Declaration. Accordingly, the Debtors believe
Phoenix is “disinterested” and does not hold or represent an interest adverse to the Debtors’ estates.
34. Section 328(a) of the Bankruptcy Code authorizes the employment of a professional
person “on any reasonable terms and conditions of employment, including on a retainer . . .” 11
U.S.C. § 328(a).
35. The Debtors believe the terms and conditions of the Engagement Letter are fair,
reasonable and market-based terms that should be approved pursuant to section 328(a) of the
Bankruptcy Code, including the monthly flat fee rate structure that Phoenix has agreed upon.
36. Subject to this Court’s approval and in accordance with section 328 of the
Bankruptcy Code, the applicable Bankruptcy Rules, the Local Rules, any interim professional
compensation order and any other procedures that may be entered by this Court, the Debtors
request that Phoenix receive reimbursement of actual and necessary expenses incurred in
connection with their representation of the Debtors in this case.
UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT
HARTFORD DIVISION : In re: : Chapter 11 : CARLA’S PASTA, INC., et al., : Case No. 21-20111 :
Debtors.1 : (Jointly Administered) :
ORDER AUTHORIZING THE DEBTORS (I) TO EMPLOY
AND RETAIN PHOENIX EXECUTIVE SERVICES, LLC AS THEIR FINANCIAL ADVISORS AND JOSEPH C. NAPPI AS CHIEF RESTRUCTURING OFFICER PURSUANT TO 11 U.S.C. §§ 327(a), AND (II) GRANTING RELATED RELIEF
Upon consideration of the Debtors’ Application for Entry of an Order Authorizing the
Debtors (I) To Employ and Retain Phoenix Executive Services, LLC as their Financial Advisors
and Joseph C. Nappi as Chief Restructuring Advisor Pursuant to 11 U.S.C. §§ 327(a), and
(II) Granting Related Relief (the “Application”)2 and the Nappi Declaration and any response(s)
to the Application; and due and proper notice of the Application having been given; and it
appearing that no other or further notice of the Application is required; and the Court having
jurisdiction to consider the Application in accordance with 28 U.S.C. §§ 157 and 1334; and
consideration of the Application and the requested relief being a core proceeding pursuant to 28
U.S.C. § 157(b)(2); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and
1409; and the relief requested in the Application and provided for herein being in the best interest
of the Debtors, their estates, and creditors; and after due deliberation and sufficient cause appearing
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Carla’s Pasta, Inc. (5847) and Suri Realty, LLC (5847). The Debtors’ corporate headquarters and service address is 50 Talbot Lane, South Windsor, Connecticut 06074.
2 Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Application.
UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT
HARTFORD DIVISION : In re: : Chapter 11 : CARLA’S PASTA, INC., et al., : Case No. 21-20111 :
Debtors.1 : (Jointly Administered) :
DECLARATION OF JOSEPH C. NAPPI
IN SUPPORT OF DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE
DEBTORS (I) TO EMPLOY AND RETAIN PHOENIX EXECUTIVE SERVICES, LLC AS THEIR FINANCIAL ADVISORS AND JOSEPH C.
NAPPI AS CHIEF RESTRUCTURING OFFICER PURSUANT TO 11 U.S.C. § 327(a), AND (II) GRANTING RELATED RELIEF
Pursuant to 28 U.S.C. § 1746, I, Joseph C. Nappi, hereby declare as follows under the
penalty of perjury to the best of my knowledge, information, and belief:
1. I am a Senior Managing Director of Phoenix Executive Services, LLC (“Phoenix”).
I am authorized to make this declaration on Phoenix’s behalf (the “Declaration”). This Declaration
is submitted pursuant to Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the
“Bankruptcy Rules”) and Local Bankruptcy Rule 2014-1 in support of the application of the
Debtors in the above-captioned chapter 11 cases (the “Chapter 11 Cases”) for an order pursuant to
section 327(a) of title 11 of the United States Code (the “Bankruptcy Code”) authorizing the
employment and retention of Phoenix as their financial advisors and naming Joseph C. Nappi
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Carla’s Pasta, Inc. (5847) and Suri Realty, LLC (5847). The Debtors’ corporate headquarters and service address is 50 Talbot Lane, South Windsor, Connecticut 06074.
(“Nappi”) of Phoenix as the chief restructuring advisor (as defined in the Engagement Letter, the
“CRO”) for the Debtors (the “Application”).2
SERVICES TO BE RENDERED
2. At the request of the Debtors, Phoenix will render general financial advisory and
restructuring services to the Debtors as needed throughout the course of the Chapter 11 Cases. In
addition, and subject to approval of the Application, I will serve as the Debtors’ CRO. In that role,
I will advise and assist the Debtors in a variety of restructuring efforts.
3. During these Chapter 11 Cases, it is anticipated that the financial advisory services
Phoenix will render may include, but shall not be limited to, the following:
a. Provide the necessary oversight and assistance to the Board of Directors and the Debtors in the preparation of the various financial reporting requirements in these Chapter 11 Cases;
b. Meet regularly with the Debtors’ Board of Directors (the “Board”) and senior management (i) to receive updates on any and all action items implemented by agreement between senior management and the CRO and Phoenix personnel, (ii) to be updated on any and all recommendations of senior management and/or the CRO and Phoenix personnel as to future action items, and (iii) to address any other matters that senior management and/or the CRO believe should be brought to the attention of the Board;
c. Assist the Debtors in their communications and negotiations with Bank of Montreal and People’s United Bank (collectively the “Lenders”), as well as any other secured and unsecured creditors, including the Committee, and their related legal and financial advisor professionals;
d. Oversee and as need be prepare and/or monitor, and modify the Debtors’ cash flow forecasts and bankruptcy related budgets on a periodic basis in order to determine and/or validate the sources and uses of cash, borrowing availability (if applicable), and the timing and magnitude of financing necessary to support the Debtors during these Chapter 11 Cases;
2 Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Application.
e. Develop and maintain a “Scorecard” to monitor and report to the various constituents the key value drivers of the cash flow;
f. Oversee the preparation, monitoring and periodically modify the Debtors’ business plan, the actual monthly and YTD GAAP results vs. the budget, monthly financial projections and normalized TTM EBITDA and projected pro forma EBITDA;
g. Provide oversight with regard to daily cash management activities, including maximizing and forecasting collections and availability, and assisting the Debtor with prioritizing disbursements within the Debtors’ availability constraints;
h. Review and approve disbursements made by the Debtors, with the exception of Phoenix’s invoices, which authority for payment will remain with either the President or the Board of Directors, however neither the CRO and Phoenix shall become signatories to any checking or disbursement account. The CRO and Phoenix personnel will also have authority to review and approve all requested borrowings under any DIP facility during the Chapter 11 Cases;
i. Work with restructuring counsel to assist management in the preparation of the post filing Monthly Operating Reports (MORs) and assist with statements and schedules that are typical in any bankruptcy proceeding;
j. Provide the necessary oversight to assure all parties that the efforts of Cowen and Company, LLC to identify and solicit interest from interested parties are sufficient to conduct a far reaching and effective auction process;
k. Provide testimony in any Chapter 11 proceeding as needed; and
l. Provide such other support as may be reasonably requested by the Debtors or Debtors’ counsel that fall within Phoenix’s expertise, experience, and capabilities that are mutually agreeable.
3. Phoenix is prepared, if necessary, to work closely with any other professional
retained by the Debtors to ensure there is no duplication of effort or cost.
DISINTERESTEDNESS OF PROFESSIONALS
4. Based on Phoenix’s conflicts search conducted to date and described herein, to the
best of my knowledge, neither I, Phoenix, nor any member or associate thereof, insofar as I have
been able to ascertain, has any connection with, or holds an interest adverse to, the Debtors, its
creditors or any other parties in interest, or their respective attorneys and accountants, the United
States Trustee or any person employed in the office of the United States Trustee, except as
disclosed or as otherwise described immediately below. Moreover, neither Phoenix nor myself
have any institutional relationships with any material creditors in these Chapter 11 Cases and have
not done work in any matter involving either of the senior secured Lenders for over eight (8) years.
5. There is no agreement or understanding between Phoenix and any other entity,
other than an employee of Phoenix, for the sharing of compensation received or to be received for
services rendered in connection with these cases. Accordingly, Phoenix submits that (i) Phoenix
and its employees are “disinterested persons” as that phrase is defined in Section 101(14) of the
Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and (ii) Phoenix
neither represents nor holds an interest adverse to the interest of the Debtors’ estate with respect
to the matter on which Phoenix is to be employed, in that Phoenix, its members and associates:
A. Is not a creditor, an equity security holder, or an insider;
B. Is not and was not, within two years before the date of the filing of the petition, a director, officer, or employee of the debtors, except to the extent that I have served as the Debtors’ chief restructuring officer as an independent contractor, subject to the terms and conditions of the Engagement Letter; and
C. Does not have an interest materially adverse to the interests of the 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.
6. I am not related, and to the best of my knowledge, no member or associate at
Phoenix is related, to any United States Bankruptcy Judge in this District or to the United States
Trustee for this District or any employee thereof.
7. As of the Petition Date and the date of the Application, the Debtors do not currently
owe Phoenix any amounts for any services rendered prior to such dates.3 In the one-year period
prior to the Petition Date, Phoenix did not perform any services for the Debtors.
8. Phoenix and certain of its members and associates may have in the past represented,
may currently represent, and may in the future represent, parties in interest, including creditors of
the Debtors in connection with matters unrelated to the Debtors and the Chapter 11 Cases. Phoenix
has conducted a search of its electronic database utilizing the company’s e-mail conflict reporting
system (the “Conflict Check System”) for its connection to the entities listed on the Exhibit 1
attached to this Declaration. The information listed on Schedule 1 may be updated or may change
during the pendency of these cases. I will update this Declaration when necessary and when I
become aware of additional material information.
9. Except as disclosed herein, Phoenix has not and will not advise any party identified
on Schedule 1 in any matters related to these Chapter 11 Cases. Moreover, Phoenix presently or
in the past has served as a professional person in other matters, wholly unrelated to the Debtors or
these Chapter 11 Cases, in which other attorneys, accountants and other professionals of the
Debtors, their creditors, or other parties in interest also may have served or serve as professional
persons.
10. None of the representations described above are materially adverse to the interests
of the Debtors’ estates or any class of creditors or equity security holders. Moreover, pursuant to
section 327(c) of the Bankruptcy Code, Phoenix is not disqualified from acting as financial
3 Upon application and subject to approval of this Bankruptcy Court, it is anticipated that any amounts due Phoenix from either Debtor during the Chapter 11 Cases will be paid by the cash of Carla’s Pasta or the proceeds of the Debtors’ assets.
Secured Creditors and Asserted Secured Creditors, and Known Counsel to Creditors
People’s United Bank, NA Cohn, Birnbaum & Shea, P.C. (Counsel to People’s United Bank, NA) BMO Harris Bank, N.A. Chapman and Cutler LLP (Counsel to BMO Harris Bank, N.A.) The Dennis Engineering Group Lewis Brisbois (Counsel to Dennis Engineering Group) Town of South Windsor, Connecticut Elm Electrical, Inc. (asserted secured creditor)
Shatz, Schwartz and Fentin (Counsel to Elm Electrical, Inc.)
Professional Advisors
Phoenix Advisors Cowen and Company Bankruptcy Management Solutions, Inc. (trade name “Stretto”) Court Clerk and US Trustee’s Office Staff
Kim L. McCabe Holley Claiborn Joseph H. Flamini William Harrington Erin Hogan Steven Mackey Frank Marino Kari Mitchell Jennifer J. Morey Nicole Neely Sharon Warner
Pietro Cicolini, Clerk of the United States Bankruptcy Court for the District of Connecticut
provide such report together with the total amount of fees and expenses to be paid. Our monthly invoice should be paid via ACH or wire transfer.
Notwithstanding anything herein to the contrary, failure of the Company to promptly pay
the Monthly Fee or to pay for reimbursement of expenses shall constitute justification for Phoenix to terminate this Agreement upon five days’ written notice. ACH & Wire transfer instructions are as follows:
Truist Bank 150 S. Warner Road, King of Prussia, PA 19406 Telephone: 800-222-3321 Phoenix Executive Services, LLC Account 7432 ABA 9123
Expenses
The Company shall pay all expenses incurred in connection with services related to the engagement (e.g. actual out-of-pocket expenses such as travel and meals incurred in connection with the engagement). In addition, as compensation for the administrative and support time and expenses typically required (e.g. computer, e-mail, administrative staff time, etc.) we will bill a monthly fee of $300. The weekly invoices referred to above will include such reimbursable expenses. Project Deposit
Upon Bankruptcy Court approval, the Company shall pay to PES Fifty Thousand Dollars ($50,000) via ACH or wire transfer as a retainer (the “Deposit”). This Deposit is not to be applied or credited to amounts due from the Company but will be returned to the Company once all amounts due hereunder are paid in full subject to a holdback to fund any indemnification claims. PES reserves the right to require that the Deposit be increased on a periodic basis to match actual levels of work activity. The Company hereby grants a security interest in the Deposit to PES to secure payment of all amounts due or which become due hereunder and expressly authorizes PES to pay itself any amounts past due from the Deposit. The Company acknowledges and agrees that this security interest is perfected by virtue of PES’s possession of the Deposit.
PES is prepared to begin this Project immediately upon receipt of a signed copy of this letter and a signed copy of our standard indemnification agreement (which is attached hereto). By signing below, the Company also acknowledges that PES’s Standard Terms, Conditions and Disclosure Agreement (which is attached hereto) is hereby incorporated by reference and made part of this Agreement.
This letter contains the entire Agreement among the parties relating to the subject herein.
Any modification or other changes to the terms contained herein or therein must be in writing and signed by the parties hereto to be enforceable.