IN the UNITED STATES BANKRUPTCY COURT for the DISTRICT of DELAWARE in Re: MTE HOLDINGS LLC, Et Al., Debtors. Chapter 11 Case
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Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 MTE HOLDINGS LLC, et al., Case No. 19-12269 (KBO) Debtors.1 Jointly Administered Hearing Date: January 8, 2019, at 1:30 p.m. Objections Due: December 10, 2019, at 4:00 p.m. DEBTORS’ APPLICATION FOR ENTRY OF AN ORDER UNDER SECTIONS 327(a) AND 1107(b) OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016, AND LOCAL RULES 2014-1 AND 2016-1 AUTHORIZING RETENTION AND EMPLOYMENT OF MORRIS, NICHOLS, ARSHT & TUNNELL LLP AS BANKRUPTCY CO-COUNSEL AND DELAWARE COUNSEL FOR THE DEBTORS NUNC PRO TUNC TO THE PETITION DATE The above-captioned debtors and debtors in possession (the “Debtors”) submit this application (the “Application”) for entry of an order, substantially in the form attached hereto as Exhibit D, pursuant to sections 327(a) and 1107(b) of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended, the “Bankruptcy Code”), rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and rules 2014-1 and 2016-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), authorizing the retention and employment of Morris, Nichols, Arsht & Tunnell LLP (“Morris Nichols”) as bankruptcy co-counsel and Delaware counsel to the Debtors nunc pro tunc to the Petition Date (as defined below). In 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: MTE Holdings LLC (7894); MTE Partners LLC (1158); Olam Energy Resources I LLC (0770); MDC Energy LLC (9140); MDC Texas Operator LLC (1087); Ward I, LLC (6817); and MDC Reeves Energy LLC (3644). The Debtors’ address is 280 East 96th Street, Suite 210, Indianapolis, Indiana 46240. Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 2 of 11 support of the Application, the Debtors rely upon and incorporate by reference: (a) the Declaration of Mark Siffin, Chief Executive Officer of MDC Energy LLC in Support of Chapter 11 Petitions and First Day Motions (D.I. 50) (the “First Day Declaration”)2; (b) the Declaration of Robert J. Dehney in Support of the Debtors’ Application for Entry of an Order Under Sections 327(a) and 1107(b) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1 Authorizing Retention and Employment of Morris, Nichols, Arsht & Tunnell LLP as Bankruptcy Co-Counsel and Delaware Counsel for the Debtors Nunc Pro Tunc to the Petition Date (the “Dehney Declaration”) attached as Exhibit A; (c) the Statement of Morris, Nichols, Arsht & Tunnell LLP Pursuant to Section 329 of the Bankruptcy Code, Bankruptcy Rule 2016, and Local Rule 2016-1 (the “Rule 2016 Statement”) attached as Exhibit B; and (d) the Declaration of Mark Siffin, Chief Executive Officer of MTE Holdings LLC, in Support of the Debtors’ Application for Entry of an Order Under Sections 327(a) and 1107(b) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1 Authorizing Retention and Employment of Morris, Nichols, Arsht & Tunnell LLP as Bankruptcy Co-Counsel and Delaware Counsel for the Debtors Nunc Pro Tunc to the Petition Date (the “Siffin Declaration”) attached as Exhibit C. In further support of the Application, the Debtors respectfully state as follows: JURISDICTION 1. 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 2 Capitalized terms used but not defined herein are defined in the First Day Declaration. 2 Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 3 of 11 the meaning of 28 U.S.C. § 157(b)(2). Venue of these proceedings and the Application in this Court is proper under 28 U.S.C. §§ 1408 and 1409. 2. The Debtors consent to entry of final orders or judgments by the Court on this Application. 3. The statutory bases for the relief requested herein are sections 327(a) and 1107(b) of the Bankruptcy Code, as supplemented by Bankruptcy Rules 2014(a) and 2016 and Local Rules 2014-1 and 2016-1. BACKGROUND 4. On October 22, 2019 (the “Petition Date”), MTE Holdings LLC (“MTE Holdings”) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Subsequently, on October 23, 2019 (the “Affiliate Petition Date”), MTE Holdings’ parent affiliates Olam Energy Resources I LLC and MTE Partners LLC filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The remaining Debtors, all affiliates, filed voluntary bankruptcy petitions on November 8, 2019. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or creditors committee has been appointed in these cases. 5. The Debtors operate in Midland, Texas in the oil and gas industry. 6. Additional detail regarding the Debtors, their business, the events leading to commencement of these cases, and the facts and circumstances supporting the relief requested herein is set forth in the First Day Declaration. 7. The Debtors have also retained Kasowitz Benson Torres LLP (“Kasowitz”) as bankruptcy co-counsel. Morris Nichols will coordinate with Kasowitz and the 3 Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 4 of 11 Debtors’ other professionals to provide the Debtors with the highest level of service while avoiding unnecessary duplication of efforts. RELIEF REQUESTED 8. By this Application, the Debtors respectfully request entry of an order, substantially in the form attached hereto as Exhibit D, pursuant to sections 327(a) and 1107(b) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, authorizing the Debtors to retain and employ Morris Nichols as their bankruptcy co-counsel and Delaware counsel nunc pro tunc to the Petition Date. BASIS FOR RELIEF 9. Under section 327(a) of the Bankruptcy Code, a debtor in possession may employ one or more attorneys to represent it in carrying out its duties under the Bankruptcy Code, provided that such attorneys are disinterested persons and do not hold or represent an interest adverse to the estate. Section 101(14) of the Bankruptcy Code defines “disinterested person” as one who: is not a creditor, an equity security holder, or an insider; . is not and was not, within 2 years before the date of the filing of the petition, a director, officer, or employee of the debtor; and . does not have an interest materially adverse to the interest 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) (2018). 10. Before commencing these chapter 11 cases, the Debtors retained Morris Nichols to assist in advising, preparing for, and commencing cases under chapter 11 of the Bankruptcy Code. Subject to entry of an order approving this Application, the Debtors have also retained Kasowitz to assist in prosecuting these chapter 11 cases. 4 Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 5 of 11 11. The Debtors seek to retain and employ Morris Nichols because the firm’s attorneys have extensive experience representing debtors in chapter 11 cases before this Court. Further, Morris Nichols attorneys have become familiar with the Debtors and their business and financial affairs through assisting the Debtors with preparing these chapter 11 cases for filing. For these reasons, Morris Nichols is uniquely qualified to represent the Debtors as bankruptcy co-counsel and Delaware co-counsel. 12. The Debtors request approval of the employment of Morris Nichols nunc pro tunc to the Petition Date. Nunc pro tunc relief is warranted in these cases. The Third Circuit has identified “time pressure to begin service” and absence of prejudice as factors favoring nunc pro tunc retention. See In re Ark. Co., 798 F.2d 645, 650 (3d Cir. 1986); see also Indian River Homes, Inc. v. Sussex Tr. Co., 108 B.R. 46, 52 (D. Del. 1989). Given the size and complexity of these cases, the Debtors were not able to seek approval of Morris Nichols’s retention before Morris Nichols began work. Nonetheless, the Debtors and Morris Nichols have filed this Application within five weeks of the Petition Date. Under these circumstances, no party will be prejudiced and nunc pro tunc retention should be approved. 13. Finally, maintaining the Current Advance (as defined below) is appropriate in these cases. See In re Insilco Techs., Inc., 291 B.R. 628, 634 (Bankr. D. Del. 2003) (“Factors to be considered, include . whether terms of an engagement agreement reflect normal business terms in the marketplace; . the relationship between the Debtor and the professionals, i.e., whether the parties involved are sophisticated business entities with equal bargaining power who engaged in an arms-length negotiation; . [and] whether the retention, as proposed, is in the best interests of the estate . .”). First, agreements regarding retainers are commonplace and “reflect normal business terms in the marketplace.” See id. at 634 (stating that 5 Case 19-12269-KBO Doc 139 Filed 11/26/19 Page 6 of 11 it is not disputed that “the taking of .