IN the UNITED STATES BANKRUPTCY COURT DISTRICT of DELAWARE ) in Re: ) Chapter 11 ) ) CHARMING CHARLIE HOLDINGS INC., Et Al
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Case 17-12906-CSS Doc 174 Filed 12/21/17 Page 1 of 15 IN THE UNITED STATES BANKRUPTCY COURT 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, PURSUANT TO SECTIONS 327(a) AND 328(a) OF THE BANKRUPTCY CODE, AUTHORIZING THE RETENTION AND EMPLOYMENT OF GUGGENHEIM SECURITIES, LLC AS INVESTMENT BANKER FOR THE DEBTORS AND DEBTORS IN POSSESSION, NUNC PRO TUNC TO THE PETITION DATE, AND MODIFYING CERTAIN TIME-KEEPING REQUIREMENTS OF LOCAL RULE 2016-2 The above-captioned debtors and debtors in possession (collectively, the “Debtors”) in these jointly-administered chapter 11 cases (these “Cases”) hereby submit this application (this “Application”) for entry of an order, substantially in the form attached hereto as Exhibit A (the “Proposed Order”), (i) authorizing the Debtors to retain and employ Guggenheim Securities, LLC (“Guggenheim Securities”) as the Debtors’ investment banker pursuant to sections 327(a) and 328(a) of chapter 11 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 rules 2014-1 and 2016-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), nunc pro tunc to the Petition Date (as defined below), (ii) waiving certain time-keeping requirements of Local Rule 2016-2, and (iii) granting related relief. In support of this 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 6695750v.3 Case 17-12906-CSS Doc 174 Filed 12/21/17 Page 2 of 15 Application, the Debtors submit the declaration of Stuart Erickson (the “Erickson Declaration”), which is attached hereto as Exhibit B. In further support of this Application, the Debtors respectfully represent as follows: JURISDICTION 1. The United States Bankruptcy Court for the District of Delaware (the “Court”) has jurisdiction over these Cases, the Debtors, property of the Debtors’ estates and this matter under 28 U.S.C. § 1334, and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated as of February 29, 2012. This is a core proceeding under 28 U.S.C. § 157(b). 2. Venue in this Court is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 3. Pursuant to Local Rule 9013-1(f), the Debtors consent to the entry of a final judgment or order with respect to this Application if it is determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. 4. The statutory and legal predicates for the relief requested herein are sections 327(a) and 328(a) of the Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016, and Local Rules 2014-1 and 2016-2. BACKGROUND 5. On December 11, 2017 (the “Petition Date”), each of the Debtors filed with this Court a voluntary petition for relief under the Bankruptcy Code. The Debtors continue to be in possession of their assets and to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As of the date 2 PHIL1 6695750v.3 Case 17-12906-CSS Doc 174 Filed 12/21/17 Page 3 of 15 hereof, no trustee, examiner, or official committee of unsecured creditors has been appointed in these Cases. No date has been set for a meeting pursuant to section 341 of the Bankruptcy Code. 6. Additional factual background regarding the Debtors, including their business operations, capital and debt structures, and the events leading to the filing of these Cases, is set forth in detail in the Declaration of Robert Adamek in Support of First Day Pleadings [D.I. 4] (the “Adamek Declaration”), which is fully incorporated in this Application by reference. RELIEF REQUESTED 7. By this Application, the Debtors respectfully request entry of the Proposed Order (i) authorizing the Debtors to retain and employ Guggenheim Securities as their investment banker pursuant to sections 327(a) and 328(a) of the Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016, and Local Rules 2014-1 and 2016-2, nunc pro tunc to the Petition Date, pursuant to the terms of that certain engagement letter between Guggenheim Securities and the Debtors, dated as of October 9, 2017, a copy of which is attached hereto as Exhibit C (the “Engagement Letter”),2 (ii) waiving certain time-keeping requirements of Local Rule 2016-2, and (iii) granting related relief. The Engagement Letter describes (a) the various services that the Debtors seek Guggenheim Securities to perform on their behalf in connection with these Cases and (b) the terms and conditions of the proposed engagement of Guggenheim Securities by the Debtors. GUGGENHEIM SECURITIES’ QUALIFICATIONS AND THE NEED FOR GUGGENHEIM’S SERVICES 8. The Debtors submit this Application because of their need to retain a qualified investment banker to assist them in the critical tasks associated with guiding the Debtors through 2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Engagement Letter. 3 PHIL1 6695750v.3 Case 17-12906-CSS Doc 174 Filed 12/21/17 Page 4 of 15 these Cases. The Debtors believe that their retention of an investment banker is necessary and appropriate to enable them to evaluate the financial and economic issues raised by these Cases, to successfully consummate a Transaction and to fulfill their statutory duties. 9. The Debtors selected Guggenheim Securities as their investment banker in these Cases based upon Guggenheim Securities’ extensive experience in matters involving complex financial restructurings and Guggenheim Securities’ excellent reputation for the services that it has rendered in chapter 11 cases on behalf of debtors and creditor constituencies throughout the United States. 10. As set forth in the Erickson Declaration, Guggenheim Securities and its senior professionals have extensive expertise providing investment banking services to financially distressed companies, creditors, committees, equity holders, asset purchasers, and other constituencies in reorganization proceedings and complex financial restructurings, both in and out of court. Guggenheim Securities and its professionals are providing or have provided investment banking, financial advisory and other services in connection with the following recent cases, among others: In re Appvion, Inc., Case No. 17-12082 (KJC) (Bankr. D. Del. Oct. 31, 2017); In re Payless Holdings LLC, Case No. 17-42267 (Bankr. E.D. Mo. May 9, 2017); In re Limited Stores Co., LLC, Case No. 17-10124 (KJC) (Bankr. D. Del. Feb. 16, 2017); In re Essar Steel Minn. and ESML Holdings Inc., Case No. 16-11626 (BLS) (Bankr. D. Del. Aug. 6, 2016); In re Juniper GTL LLC, Case No. 16-31959 (Bankr. S.D. Tex. May 18, 2016); In re Pac. Sunwear of Cal., Inc., Case No. 16-10882 (LSS) (Bankr. D. Del. May 3, 2016); In re Hutcheson Med. Ctr., Inc., Case No. 14-42863 (Bankr. N.D. Ga. May 22, 2015); In re Cal Dive Int’l, Inc., Case No. 15-10458 (CSS) (Bankr. D. Del. May 26, 2015); In re SIGA Techs., Inc., Case No. 14- 12623 (Bankr. S.D.N.Y. Mar. 19, 2015); Energy Future Holdings Corp., Case No. 14-10979 4 PHIL1 6695750v.3 Case 17-12906-CSS Doc 174 Filed 12/21/17 Page 5 of 15 (CSS) (Bankr. D. Del. Jan. 13, 2015); In re KiOR, Inc., Case No. 14-12514 (CSS) (Bankr. D. Del. Dec. 5, 2014). 11. Guggenheim Securities, moreover, has been engaged by the Debtors since October 2017, during which time Guggenheim Securities professionals have worked closely with the Debtors’ management and other professionals in preparing for these Cases and become familiar with the Debtors’ business operations, capital structure, creditors and other matters.3 12. For the foregoing reasons, the Debtors believe that Guggenheim Securities is well qualified to advise the Debtors in an expert and efficient manner. SCOPE OF SERVICES 13. Subject to the Court’s approval, the Debtors anticipate that Guggenheim Securities will perform investment banking services, among others, by assisting the Debtors with respect to the following pursuant to the terms of the Engagement Letter:4 (a) Review and analysis of the business, financial condition and prospects of the Company; (b) Evaluation of the liabilities of the Company, its debt capacity and its strategic and financial alternatives; (c) Evaluation from a financial and capital markets point of view of alternative structures and strategies for implementing a Transaction; (d) Preparation of offering, marketing or other transaction materials concerning the Company and the applicable Transaction for distribution and presentation to the Creditors, Acquirors and/or Investors (collectively, “Transaction Counterparties”); (e) Development and implementation of a marketing plan with respect to such Transaction; 3 The Debtors also previously engaged Guggenheim Securities pursuant to an engagement letter dated January 3, 2017, in connection, among other things, with the negotiation of an amendment to their prepetition term loan facility. The Debtors successfully entered into such amendment on July 7, 2017. 4 To the extent there is any inconsistency between the summary of the services to be provided under the Engagement Letter and the terms of the Engagement Letter, the terms of the Engagement Letter shall control.