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Irell & Manella LLP 840 Newport Center Drive, Suite 400 Newport Beach, CA 92660 Jeffrey M. Reisner, Esq. (State Bar No. 143715) Kerri Lyman, Esq. (State Bar No. 241615) Tel: (949) 760-0991 Fax: (949) 760-5200 Email: [email protected] Email: [email protected] Proposed Counsel for the Official Committee of Unsecured Creditors
UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: Case No. 8:12-bk-22808 (SC) American Suzuki Motor Corporation, a California Chapter 11 corporation,' APPLICATION PURSUANT TO Debtor and Debtor-in-Possession. SECTIONS 328, 330 AND 1103 OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016, AND LOCAL BANKRUPTCY RULES 2014-1 AND 2016-1 FOR AN ORDER AUTHORIZING THE RETENTION OF ALIXPARTNERS, LLC AS FINANCIAL ADVISOR FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS, NUNC PRO TUNC TO NOVEMBER 16, 2012 [Request for Order Shortening Time Filed Concurrently Herewith]
TO THE HONORABLE SCOTT C. CLARKSON, THE OFFICE OF THE UNITED STATES TRUSTEE, THE DEBTOR AND ITS COUNSEL OF RECORD AND PARTIES- IN-INTEREST The Official Committee of Unsecured Creditors (the "Committee") of the above-captioned debtor and debtor-in-possession, (collectively, the "Debtor"), hereby applies for entry of an order
("Application"), pursuant to sections 328, 330 and 1103 of chapter 11 of title 11 of the United
1 The last four digits of the Debtor's federal tax identification number are 8739. The Debtor's address is: 3251 East Imperial Highway, Brea, CA 92821.
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1 States Code (the "Bankruptcy Code"), Rules 2014 and 2016 of the Federal Rules of Bankruptcy 2 Procedures (the "Bankruptcy Rules"), and Rules 2014-1 and 2016-1 of the Local Bankruptcy 3 Rules of the United States Bankruptcy Court for the Central District of California (the "Local 4 Bankruptcy Rules"), in substantially the form attached hereto as Exhibit A, authorizing the 5 Committee to retain AlixPartners, LLC ("AlixPartners") to serve as financial advisor to the 6 Committee in connection with the above-captioned chapter 11 case, effective as of Friday, 7 November 16, 2012. This Application is supported by the Declaration of Ted Stenger (the
8 "Stenger Declaration") filed concurrently herewith and attached hereto as Exhibit B. In further 9 support of this Application, the Committee respectfully represents as follows:
10 Background 11 1. On November 5, 2012 (the "Petition Date"), Debtor filed a voluntary petition in 12 this Court for relief under chapter 11 of the Bankruptcy Code. The Debtor continues to operate 13 and manage its business as debtor-in-possession pursuant to Bankruptcy Code sections 1107 and
14 1108.
15 2. On November 14, 2012, the Office of the United States Trustee for the Central 16 District of California (the "U.S. Trustee") held an organizational meeting of the Debtor's 17 unsecured creditors for the purpose of forming an official committee of unsecured creditors.
18 3. On November 14, 2012, the U.S. Trustee, pursuant to section 1102 of the 19 Bankruptcy Code, appointed the Committee to represent the interests of all unsecured creditors in 20 this chapter 11 case. The United States Trustee selected the following seven parties to serve as 21 members of the Committee: (i) Advantage Suzuki LLC; (ii) Ball Automotive Group — Ball 22 Suzuki; (iii) Siltanen, Inc. dba Siltanen & Partners Advertising; (iv) Royal Suzuki; (v) Suzuki of 23 Wichita East, LLC; (vi) Planet Suzuki; and (vii) D2K, Inc. dba Suzuki of Huntsville, Shoals
24 Suzuki and Varsity Suzuki.
25 4. At a meeting of the Committee held on November 16, 2012, the Committee voted 26 to retain AlixPartners to serve as financial advisor. Accordingly, this Application is made by the 27 Committee for an order, pursuant to sections 328, 330 and 1103 of the Bankruptcy Code,
28
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Bankruptcy Rules 2014 and 2016, and Local Bankruptcy Rules 2014-1 and 2016-1, authorizing the Committee to retain AlixPartners as its financial advisor, effective as of November 16, 2012. 5. The Debtor was established in 1986 as the sole distributor in the United States of Suzuki automobiles, motorcycles, all-terrain vehicles, and marine outboard engines (the "Suzuki
Products") Suzuki Motor Corporation ("SMC"), the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki Products 2 and is not a debtor in this or any other insolvency proceeding. As of November 5, 2012, the Debtor had approximately 295 employees across three divisions: automotive (the "Automotive Division"), motorcycles and all-terrain vehicles (the "Motorcycles/ATV Division"), and outboard marine motors and related products (the "Marine Division"). A more detailed description of the Debtor, including its business operations, their capital and debt structure, and the events leading to the filing of these bankruptcy cases, is set forth in the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer of American Suzuki Corporation, in Support of First Day Pleadings, filed with the Court on the Petition Date
(the "Reiss Declaration").
Jurisdiction and Venue
6. The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Venue is proper in this
district pursuant to 28 U.S.C. §§ 1408 and 1409.
Relief Requested
7. This application is made by the Committee for an order, pursuant to sections 328, 330 and 1103 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Bankruptcy Rules 2014-1 and 2016-1, authorizing the employment and retention of AlixPartners as its financial advisor effective as of November 16, 2012, in accordance with the terms and conditions set forth in that certain engagement letter dated as of November 29, 2012, by and between the
2 The ATVs are manufactured by an 80% owned affiliate of the Debtor. An overview of Suzuki Products manufactured by SMC, its affiliates, and certain unaffiliated entities is included in the Reiss Declaration, as hereinafter defined.
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Committee and AlixPartners (the "Engagement Letter"), a copy of which is attached hereto as
Exhibit C and incorporated by reference herein. 8. The Committee brings this Application because of the critical importance of a financial advisor to assist in the performance of its duties. The Committee believes that AlixPartners is well qualified to provide those advisory services and that the terms of the Engagement Letter are reasonable.
AlixPartners' Qualifications
9. The Committee understands that AlixPartners has a wealth of experience in providing financial advisory services, and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the
United States. 10. AlixPartners' professionals have assisted and advised, and provided strategic advice to, debtors, creditors, bondholders, investors, and other entities in numerous chapter 11 cases of similar size and complexity to the Debtor's chapter 11 case. Since its inception in 1981, AlixPartners, LLP, its predecessor entities, and its affiliates, including AlixPartners, LLC, have provided restructuring or crisis management services in numerous large cases, including most
recently: In re Residential Capital, LLC, Case No. 12-12020 (MG) (Bankr. S.D.N.Y. 2012); In re Eastman Kodak Company, Case No. 12-10202 (ALG) (Bankr. S.D.N.Y. 2012); In re TBS Shipping Services, Inc., Case No. 12-22224 (RDD) (Bankr. S.D.N.Y. 2012); In re United Retail
Group, Inc., Case No. 12-10405 (SMB) (Bankr. S.D.N.Y. 2012); In re Borders, Inc., Case No. 11- 10615 (Bankr. S.D.N.Y. 2011); In re Neff Corp., Case No. 10-12610 (Bankr. S.D.N.Y. 2011); In re Lyondell Chemical Co., Case No. 09-10023 (REG) (Banks. S.D.N.Y. 2009); In re Motors Liquidation Co., Case No. 09-50026 (REG) (Banks. S.D.N.Y); In re Hayes Lemmerz, Case No. 09-11655 (MFW) (Bankr. D. Del. 2009); In re Bearing Point, Case No. 09-10693 (REG) (Bankr.
S.D.N.Y. 2009); In re Charter Communications, Case No. 09-11435 (JMP) (Bankr. S.D.N.Y. 2009); In re General Growth Properties, Case No. 09-11977 (ALG) (Bankr. S.D.N.Y. 2009); In re ACG Holdings, Inc., Case No. 08-11467 (CSS) (Bankr. D. Del. 2008); In re Bally Total Fitness of Greater New York, Case No. 08-14818 (BRF) (Bankr. S.D.N.Y. 2008) and Case No. 07-12395
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(BRL) (Bankr. S.D.N.Y. 2007); In re Reader's Digest, Case No. 09-23529 (Bankr. S.D.N.Y.
2009); In re SemGroup, L.P., Case No. 08-11525 (BLS) (Bankr. D. Del 2008); In re Tropicana Casinos & Resorts, Case No. 08-10856 (DJC) (Bankr. D. Del. 2008); In re VeraSun Energy Corporation, Case No. 08-12606 (BLS) (Bankr. D. Del. 2008); In re Tribune Company, Case No.
08-13141 (KJC) (Bankr. D. Del. 2008). 3 11. In light of the size and complexity of the Debtor's chapter 11 case, the Committee requires the services of a seasoned and experienced financial advisor, and one that is familiar with the Debtor's businesses and operations and the chapter 11 process. The Committee believes that AlixPartners is well-qualified to provide its services in a cost-effective, efficient, and timely manner. AlixPartners will coordinate with the other retained professionals in the chapter 11 case to eliminate unnecessary duplication or overlap of work. The Committee submits that the employment and retention of AlixPartners would be in the best interest of the Debtor, its estate
and its creditors. Services to be Rendered
12. Subject to further order of the Court and consistent with the Engagement Letter, the Committee anticipates that AlixPartners will render such financial advisory services as the Committee may consider desirable to discharge the Committee's responsibilities and further the interests of the Committee's constituents in this case. It is expected that AlixPartners services
will include, without limitation, the following:
• advising and assisting the Committee in its analysis and monitoring of the Debtor's historical, current and projected financial affairs, including without limitation, schedules of assets and liabilities, statement of financial affairs, periodic operating reports, analyses of cash receipts and disbursements and analyses of cash flow forecasts;
• analyzing the Debtor's business plans, including prospective financial statements and the related underlying assumptions and support thereto;
• developing periodic monitoring reports to enable the Committee to effectively evaluate the Debtor's performance on an ongoing basis;
• assisting and advising the Committee and its counsel in reviewing and evaluating any court motions filed or to be filed by the Debtor or any other parties-in-interest, including, but not limited to:
3 Because of the voluminous nature of the orders cited herein, such orders are not attached to the application. Copies of these orders are available upon request of the Committees' counsel.
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- settlement with dealers,
- sale of assets,
- post-petition financing arrangements,
- critical vendor arrangements,
- cash management, and
- assumption or rejection of executory contracts;
• analyzing the Debtor's assets and claims and assess potential recoveries to the various creditor constituencies under various scenarios;
• advising and assisting the Committee in its review of: (i) intercompany transactions, including those between the Debtor and non-Debtor subsidiaries and affiliates and (ii) related-party transactions;
• advising and assisting the Committee in identifying and/or reviewing preference payments, potential fraudulent conveyances and other causes of action that the Debtor's estate may hold against third parties;
• attending Committee meetings and court hearings as may be required in the role of advisors to the Committee;
• assisting the Committee in discharging its communication and disclosure obligations to its constituency including, but not limited to establishing a committee information website; and
• providing other services that are consistent with the Committee's role and duties as may be requested from time to time and that fall within AlixPartners' expertise.
13. Under the Engagement Letter, if AlixPartners finds it desirable to augment its
professional staff with independent contractors (each, an "Independent Contractor") in this
chapter 11 case (a) AlixPartners will file, and require the Independent Contractor to file,
declarations indicating that such Independent Contractor has reviewed the list of interested parties
in this case, disclosing the Independent Contractor's relationships, if any, with the interested
parties and indicating that the Independent Contractor is disinterested, (b) the Independent
Contractor will remain disinterested during the time that the Independent Contractor is involved in
providing services on behalf of the Committee, and (c) the Independent Contractor will represent
that he or she will not work for the Debtor or other parties in interest in this chapter 11 case
during the time AlixPartners is involved in providing services to the Committee, except as an
Independent Contractor of AlixPartners. AlixPartners will charge the Committee for an
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Independent Contractor's services at the rate charged to AlixPartners by such Independent
Contractor. 14. In connection with each of its engagements, AlixPartners may use employees from each of the U.S. and non-U.S. subsidiary affiliates of AlixPartners, LLP, depending on the needs of the engagement. To the extent AlixPartners uses employees from non-U.S. subsidiary affiliates of AlixPartners, LLP during this engagement, AlixPartners will charge standard non-U.S. hourly rates for each such employee, converted without mark-up to U.S. dollars on the invoice date. To the extent AlixPartners uses employees of U.S. subsidiary affiliates during this engagement, AlixPartners will charge standard U.S. hourly rates for each such employee.
Professional Compensation
15. AlixPartners' decision to accept this engagement to advise and assist the Committee is conditioned upon its ability to be retained in accordance with its customary terms and conditions of employment and compensated for its services and reimbursed for the out-of-
pocket expenses it incurs in accordance with its customary billing practices.
16. AlixPartners intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with this chapter 11 case, subject to this Court's approval and in compliance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, the guidelines established by the United States
Trustee for the Central District of California (the "U.S. Trustee Guidelines"), and any other applicable procedures and orders of this Court and consistent with the proposed terms of compensation set forth in the Engagement Letter (all such proposed terms, the "Fee Structure") to which the Committee respectfully refers this Court for a full recitation, including without
limitation this Court's order establishing interim compensation procedures 4.
17. Pursuant to the Engagement Letter, the Committee and AlixPartners have agreed to a Fee Structure based on AlixPartners' standard hourly rates. AlixPartners, however, will not seek
4 On November 5, 2012, the Debtor filed its motion to implement interim compensation procedures for all professionals retained by the Debtor and approved by the Court. A hearing on the motion is currently scheduled for December 6, 2012.
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