In the United States Bankruptcy Court for the District of Delaware
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Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 1 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) In re: ) Chapter 11 ) CHARMING CHARLIE HOLDINGS INC., et al.,1 ) Case No. 17-12906 (CSS) ) ) Debtors. ) (Jointly Administered) ) DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF THORNTON GROUT FINNIGAN LLP AS CANADIAN INSOLVENCY COUNSEL FOR THE DEBTORS AND DEBTORS IN POSSESSION EFFECTIVE NUNC PRO TUNC TO JANUARY 29, 2018 The above-captioned debtors and debtors in possession (collectively, the “Debtors”) file this application (this “Application”) for the entry of an order (the “Order”), substantially in the form attached hereto as Exhibit A authorizing the Debtors to retain and employ Thornton Grout Finnigan LLP (“TGF”) as Canadian insolvency counsel to the Debtors, effective nunc pro tunc to January 29, 2018. In support of this Application, the Debtors submit the declaration of D.J. Miller, a partner at TGF, attached hereto as Exhibit B (the “Miller Declaration”) and the declaration of Robert Adamek, the Senior Vice President and Chief Financial Officer of the Debtors, which is attached hereto as Exhibit C (the “Adamek Declaration”). In further support of this Application, the Debtors respectfully 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, include: Charming Charlie Canada LLC (0693); Charming Charlie Holdings Inc. (6139); Charming Charlie International LLC (5887); Charming Charlie LLC (0263); Charming Charlie Manhattan LLC (7408); Charming Charlie USA, Inc. (3973); and Poseidon Partners CMS, Inc. (3302). The location of the Debtors’ service address is: 6001 Savoy Drive, Houston, Texas 77036. PHIL1 6781873v.2 Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 2 of 12 JURISDICTION AND VENUE 1. This United States Bankruptcy Court for the District of Delaware (the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, 2012. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). The Debtors confirm their consent, pursuant to Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), to the entry of a final order by the Court in connection with this motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. 2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 3. The statutory bases for the relief requested herein are sections 327(a), 328(a), and 330 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Local Rules 2014-1 and 2016-1. BACKGROUND 4. On December 11, 2017 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors are continuing in the possession of their respective properties and the management of their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. On December 13, 2017, the Court entered an order [Docket No. 90] authorizing the joint administration and procedural consolidation of the chapter 11 cases pursuant to Bankruptcy Rule - 2 - PHIL1 6781873v.2 Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 3 of 12 1015(b). No entity has requested the appointment of a trustee or examiner in these chapter 11 cases. On December 19, 2017, the United States Trustee for the District of Delaware (the “U.S. Trustee”) appointed an official committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code [Docket No. 149] (the “Creditors’ Committee”). 5. A description of the Debtors’ businesses, the reasons for commencing the chapter 11 cases, and the relief sought from the Court to allow for a smooth transition into chapter 11 are set forth in the Declaration of Robert Adamek, Chief Financial Officer of Charming Charlie Holdings Inc. in Support of Debtors’ Chapter 11 Petitions and First Day Motions (the “First Day Declaration”), filed on December 11, 2017 [Docket No. 4], incorporated herein by reference. RELIEF REQUESTED 6. By this Application, the Debtors seek the entry of an Order authorizing the retention and employment of TGF as their Canadian insolvency counsel in accordance with the terms and conditions set forth in that certain engagement letter between the Debtors and TGF effective as of January 29, 2018 (the “Engagement Letter”), a copy of which is attached hereto as Exhibit 1 to Exhibit A and incorporated herein by reference. Pursuant to section 328(a) of the Bankruptcy Code, the Debtors further request that the Court approve the retention of TGF as their Canadian insolvency counsel under a general retainer in accordance with TGF’s normal hourly rates in effect at the time services are rendered, and normal reimbursement policies. APPROPRIATENESS OF CANADIAN INSOLVENCY COUNSEL FOR THE DEBTORS 7. The Debtors require Canadian insolvency counsel to advise and assist them with respect to Canadian insolvency issues and seeking recognition in Canada of these chapter 11 cases (the “Canadian Recognition Proceedings”) under Part IV of the Companies’ Creditors Arrangement Act (Canada). - 3 - PHIL1 6781873v.2 Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 4 of 12 SERVICES TO BE PROVIDED 8. Subject to further order of the Court and consistent with the Engagement Letter, the Debtors seek to retain TGF to advise them nunc pro tunc to January 29, 2018. 9. TGF will advise and assist with respect to Canadian insolvency issues, including providing the following services: (a) prepare, on behalf of the Debtors, as debtors in possession, all necessary applications, court materials, motions, orders, reports and papers in connection with the Canadian Recognition Proceedings; (b) provide the Debtors with advice and represent the Debtors in the Canadian Recognition Proceedings; (c) represent and advise the Debtors in negotiations with their creditors in Canada; (d) appear before the Canadian courts on behalf of the Debtors; and (e) perform all other necessary or requested legal services in connection with the Canadian Recognition Proceedings. TGF’S QUALIFICATIONS 10. The Debtors have selected TGF to serve as their Canadian insolvency counsel during the pendency of these chapter 11 cases because of the firm’s extensive experience and knowledge in the field of corporate restructuring under Canadian insolvency law, for which TGF is well-known. In selecting counsel to advise the Debtors with respect to the Canadian Recognition Proceedings, the Debtors sought Canadian insolvency counsel well versed in bankruptcy and insolvency cases with both U.S. and Canadian components. 11. TGF has been actively involved in major chapter 11 cases and has represented debtors and other stakeholders in other cases, including, among others: In re SquareTwo Financial Services Corporation et al., No. 17-10659 (JLG) (Bankr. S.D.N.Y., Mar. 19, 2017); In re Old BPSUSH Inc., et al., No. 16-12373 (KJC) (Bankr. D. Del., October 31, 2016), In re - 4 - PHIL1 6781873v.2 Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 5 of 12 Pacific Exploration & Production Corporation et al., No. 16-11189 (JLG) (Bankr. S.D.N.Y., Apr. 29, 2016); In re Horsehead Holding Corp., No. 16-10287 (CSS) (Bankr. D. Del., Feb. 2, 2016); In re Fraser Papers Inc., No. 09-12123 (KJC) (Bankr. D. Del. Feb. 11, 2011); In re Sun- Times Media Group Inc., No. 09-11092 (CSS) (Bankr. D. Del., Jun. 10, 2009); In re Abitibi- Consolidated Inc., No. 09-11348 (KJC) (Bankr. D. Del. Apr. 17, 2009); In re Nortel Networks, Inc., No. 09-10138 (KG) (Bankr. D. Del. Jan. 14, 2009); In re Muscletech Research and Development Inc., No. 06-100992 (JMP) (Bankr. S.D.N.Y. Jan. 18, 2006). 12. In preparing for its representation of the Debtors in these chapter 11 cases, TGF has become familiar with the Debtors’ business and the potential legal issues that may arise in the context of the Canadian Recognition Proceedings. The Debtors submit that TGF is well- qualified to represent them as Canadian insolvency counsel in the Canadian Recognition Proceedings in an efficient and timely manner. NO DUPLICATION OF SERVICES 13. The Debtors have also retained Kirkland & Ellis LLP (“K&E”) as their general bankruptcy counsel and Klehr Harrison Harvey Branzburg LLP (“KHHB”) as their Delaware co- counsel. As noted above, TGF’s activities as Canadian insolvency counsel to the Debtors will be unique in these cases and accordingly will not duplicate the services to be performed by other professionals retained by the Debtors in these chapter 11 cases. At all stages of these chapter 11 cases, the Debtors will supervise their legal professionals to further ensure that no firm duplicates services provided by another firm. PROFESSIONAL COMPENSATION 14. TGF intends to apply for interim, to the extent applicable, and final compensation for professional services rendered on an hourly basis and reimbursement of expenses incurred in - 5 - PHIL1 6781873v.2 Case 17-12906-CSS Doc 397 Filed 02/02/18 Page 6 of 12 connection with these chapter 11 cases, subject to the Court’s approval, after notice and a hearing, and in compliance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C.