Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 1 of 50
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Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 1 of 50 COOLEY LLP COOLEY LLP Cullen D. Speckhart (VSB 79096) Jay R. Indyke ( admitted pro hac vice ) Admitted to practice in Virginia, New York, Missouri Ian Shapiro ( admitted pro hac vice ) and Texas; Not admitted to practice in DC, supervised Evan Lazerowitz ( admitted pro hac vice ) by members of DC bar Paul Springer ( admitted pro hac vice ) 1299 Pennsylvania Avenue, NW, Suite 700 55 Hudson Yards Washington, DC 20004-2400 New York, NY 10001 Telephone: (202) 842-7800 Telephone: (212) 479-6000 Facsimile: (202) 842-7899 Facsimile: (212) 479-6275 Proposed Counsel to the Official Committee of Unsecured Creditors IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINA RICHMOND DIVISION -------------------------------------- X : Chapter 11 In re: : Case No. 20-33332 (KLP) LE TOTE, INC., et al .1 : (Jointly Administered) Debtors. : -------------------------------------- X APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF LE TOTE, INC., ET AL. , FOR ENTRY OF AN ORDER AUTHORIZING THE EMPLOYMENT AND RETENTION OF BDO CONSULTING GROUP, LLC AS FINANCIAL ADVISOR EFFECTIVE AS OF AUGUST 17, 2020 The Official Committee of Unsecured Creditors (the “Committee”) appointed in these chapter 11 cases of the above-captioned debtors and debtors-in-possession (collectively, the “Debtors”) hereby files this application (this “Application”) for an order, substantially in the form attached hereto as Exhibit A , authorizing the retention and employment of BDO Consulting 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are set forth in the Debtors’ Motion for Entry of an Order (I) Directing Joint Administration of Chapter 11 Cases and (II) Granting Related Relief filed August 2, 2020 [Docket No. 3]. The location of the Debtors’ service address is 250 Vesey Street, 22nd Floor, New York, New York 10281. Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 2 of 50 Group, LLC (“BDO”) as its financial advisor pursuant to section 1103 of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Bankruptcy Rules for the United States Bankruptcy Court for the Eastern District of Virginia (the “Local Rules”). In support of this Application, the Committee also files the (i) Declaration of David E. Berliner of BDO USA, LLP in Support of the Application to Retain and Employ BDO Consulting Group, LLC as Financial Advisor to the Official Committee of Unsecured Creditors of Le Tote, Inc., et al., Effective as of August 17, 2020 (the “Berliner Declaration”), attached hereto as Exhibit B. JURISDICTION AND VENUE 1. The United States Bankruptcy Court for the Eastern District of Virginia (the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the Standing Order of Reference from the United States District Court for the Eastern District of Virginia, dated August 15, 1984. The Committee confirms its consent, pursuant to Bankruptcy Rule 7008 to the entry of a final order by the Court in connection with this Application 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 before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory predicate for the relief sought herein is section 1103(a) of the Bankruptcy Code. Relief is also proper pursuant to Bankruptcy Rule 2014 and the Local Rules. Applicant will apply for compensation in accordance with sections 330 and 331 of the Bankruptcy Code. BACKGROUND 3. On August 2, 2020 (the “Petition Date”), each of the Debtors filed a voluntary petition with this Court for relief under chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their properties as debtors-in-possession pursuant to 2 Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 3 of 50 sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these cases by the Office of the United States Trustee for the Eastern District of Virginia (the “U.S. Trustee”). 4. On August 12, 2020, the U.S. Trustee appointed the Committee, consisting of the following three members: (i) The CIT Group/Commercial Services, Inc., (ii) G-III Leather Fashions, Inc., and (iii) Liquidity Capital II, L.P. 5. On August 13, 2020, the Committee selected Cooley as its proposed counsel and on August 17, 2020, selected BDO Consulting Group, LLC (“BDO”) as its proposed financial advisor. RELIEF REQUESTED AND REASONS THEREFOR 6. By this Application, pursuant to section 1103(a) of the Bankruptcy Code and Bankruptcy Rule 2014, the Committee requests entry of the proposed order attached hereto as Exhibit A , approving the employment and retention of BDO, effective as of August 17, 2020, as its financial advisor in connection with these chapter 11 cases. 7. By separate application, the Committee is seeking to employ and retain Cooley LLP as its lead counsel. 8. BDO 2 is a consulting and financial advisory firm which maintains offices at 100 Park Avenue, New York, New York 10017, among other places. BDO and its affiliates provide a full range of accounting, advisory and consulting services to a wide range of publicly traded and privately held companies. BDO and its affiliates service offerings include business assessment, financial reorganization, crisis management, turnaround management, transaction advisory, business valuation, insolvency consulting, forensic investigations and litigation support. BDO’s 2 Certain of the services provided to the Committee will be performed by personnel of BDO USA, LLP (“BDO USA”), the parent entity of BDO. 3 Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 4 of 50 professionals have extensive familiarity with the accounting practices in insolvency matters in bankruptcy courts throughout the United States. The Committee selected BDO because its professionals are experienced with respect to business and financial issues pertinent to Chapter 11 cases. The Committee believes that BDO is well qualified to provide assistance in connection with its duties and responsibilities in the Bankruptcy Cases. BDO will render a broad range of services that may include, but are not limited to: (a) Advise and assist the Committee in its analysis and monitoring of the Debtors’ historical, current and projected financial affairs, including, schedules of assets and liabilities and statement of financial affairs; (b) Advise and assist the Committee with respect to the use of cash collateral and evaluation of the Debtors’ covenant review protocol and monitoring thereof; (c) Review the Debtors’ cash flow forecasts and underlying support and scrutinize cash receipts and disbursements on an on-going basis; (d) Advise and assist the Committee and counsel in their review of the prepetition lending facilities; (e) Review the proposed payments of pre-petition expenses by the Debtors and perform procedures to ensure that the payments are appropriate; (f) Advise and assist the Committee and counsel in reviewing and evaluating any court motions, applications, or other forms of relief filed or to be filed by the Debtors, or any other parties-in-interest; 4 Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 5 of 50 (g) Review and evaluate cash flows and/or other projections of the Debtors and, as needed, prepare alternative business projections relating to the valuation of the Debtors’ business enterprise; (h) Prepare valuation analyses of the Debtors’ businesses and assets using various professionally accepted methodologies; (i) Evaluate financing proposals and alternatives proposed by the Debtors for use of cash collateral, exit financing and capital raising supporting any plan of reorganization; (j) Work to develop strategies to maximize recoveries from the Debtors’ assets and advise and assist the Committee with respect to such strategies; (k) Monitor the GOB sale process; (l) Monitor the Debtors’ sales process and their investment banker, assist the Committee in evaluating sales proposals and alternatives and attend any auctions of the Debtors’ assets; (m) Analyze the financial ramifications of any proposed transactions for which the Debtors seek Bankruptcy Court approval, including, but not limited to, sale of all or a portion of the Debtors’ assets, and/or employee incentive and severance plans; (n) Monitor the Debtors’ claims management process, analyze claims including guarantee claims, administrative claims (including 503(b)(9) and stub rent claims), secured claims, priority claims and potential deficiency claims and summarize claims by entity, as needed; (o) Advise and assist the Committee in identifying and/or reviewing any asset sales or other pre-petition transactions, preference payments, fraudulent conveyances, and other potential causes of action that the Debtors’ estates may hold against insiders and/or third parties; 5 Case 20-33332-KLP Doc 333 Filed 09/14/20 Entered 09/14/20 16:08:31 Desc Main Document Page 6 of 50 (p) Analyze the Debtors’ assets and analyze potential recoveries to creditor constituencies under various scenarios and prepare