Case 21-30209-KRH Doc 213 Filed 03/08/21 Entered 03/08/21 10:38:54 Desc Main Document Page 1 of 268 Douglas M. Foley (VSB No. 34364) Benjamin Finestone, Esq. (admitted pro hac vice) Sarah B. Boehm (VSB No. 45201) Jordan Harap (pro hac vice pending) MCGUIREWOODS LLP Quinn Emanuel Urquhart & Sullivan, LLP Gateway Plaza 51 Madison Avenue 800 East Canal Street New York, NY 10010 Richmond, Virginia 23219 Telephone: (212) 849-7000 Telephone: (804) 775-1000 Co-Counsel to Movants UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION ) In re: ) Chapter 11 ) ALPHA MEDIA HOLDINGS LLC, et al.,1 ) Case No. 21-30209 (KRH) ) Debtors. ) (Jointly Administered) ) MOTION OF JUNIOR DIP AGENT AND COLLATERAL MANAGER TO ENFORCE FINAL ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN POSTPETITION FINANCING, (II) GRANTING LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) AUTHORIZING THE USE OF CASH COLLATERAL, (IV) GRANTING ADEQUATE PROTECTION, (V) MODIFYING THE AUTOMATIC STAY, AND (VI) GRANTING RELATED RELIEF ICG Debt Administration LLC (the “Junior DIP Agent” as defined in the Final Order (I) Authorizing the Debtors to Obtain Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, (III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV) Granting Adequate Protection to the Prepetition Secured Parties, (V) Modifying the Automatic Stay, (VI) Granting Related Relief (the “Final DIP Order”2)) and ICG Debt Advisors 1 A complete list of the Debtors in these chapter 11 cases may be found at: https://cases.stretto.com/AlphaMedia/. 2 Capitalized terms not defined herein shall have the meanings ascribed to them in the Final DIP Order (ECF No. 168). 1 Case 21-30209-KRH Doc 213 Filed 03/08/21 Entered 03/08/21 10:38:54 Desc Main Document Page 2 of 268 LLC – Manager Series (the “Collateral Manager” and together with the Junior DIP Agent, the “Movants”), respectfully state as follows in support of this motion (this “Motion”): PRELIMINARY STATEMENT 1. “Courts do not sit for the idle ceremony of making orders and pronouncing judgments, the enforcement of which may be flouted, obstructed, and violated with impunity[.]” Thompson v. U.S. Dep’t Housing & Urban Dev., 404 F.3d 821 (4th Cir. 2005) (citing Waffenschmidt v. Mackay, 763 F.2d 711 (5th Cir. 1985)). This Court entered the Final DIP Order on February 24, which provided that the “unpaid principal … and accrued interest thereon” under the Debtors’ Prepetition First Lien Credit Agreement “shall be paid with the proceeds of the Senior DIP Facility.” Final DIP Order ¶ F at 9-10. No citation is needed to support the notion that the terms and provisions of this Court’s orders are to be complied with. 2. All parties but one have performed under and complied with the Final DIP Order. The DIP Lenders performed, funding proceeds no later than February 25, 2021. The Debtors too have performed, paying such amounts to Fortress, as acting First Lien agent, so that the Prepetition First Lien Lenders could be repaid. Only Fortress has flouted the terms of the Final DIP Order, by refusing to pay six Prepetition First Lien Lenders that Fortress has alleged are affiliated with the Junior DIP Agent (the “Singled-Out Unpaid Lenders”), electing instead to retain such funds in order to collateralize its exposure with respect to the matters to be considered at the March 11 hearing. 3. As discussed herein, Fortress’s reasons for refusing to comply with the Final DIP Order are without merit for a series of independent reasons. The Final DIP Order is binding on Fortress. Fortress should be immediately ordered to perform. 2 Case 21-30209-KRH Doc 213 Filed 03/08/21 Entered 03/08/21 10:38:54 Desc Main Document Page 3 of 268 RELIEF REQUESTED 4. The Movants request that the Court order Fortress to immediately comply with the Final DIP Order and to pay the Singled-Out Unpaid Lenders “the unpaid principal … and accrued interest” owed to them, which amounts Fortress has already been paid by the Debtors. 5. The Court should further order such other relief as it believes to be just and warranted based on Fortress’s willful disregard of the terms of the Final DIP Order, including awarding legal fees to the Movants and finding Fortress in contempt. See In re Cherry, 247 B.R. 176, 186-87 (Bankr. E.D. Va. 2000) (“11 U.S.C. § 105(a) authorizes a bankruptcy court to hold a party in civil contempt for failing to comply with a previous order.”); see also In re Hookup, L.L.C., No. 12-33202-KRH, 2013 Bankr. LEXIS 170, at *9 (Bankr. E.D. Va. Jan. 15, 2013) (court “may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of” the Bankruptcy Code) citing Burd v. Walters (In re Walters), 868 F.2d 665, 669 (4th Cir. 1989). JURISDICTION AND VENUE 6. 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 16, 1984.3 7. Under the Final DIP Order, the Court retained “exclusive jurisdiction to hear, determine and, if applicable, enforce the terms of, any and all matters arising from or related to … this Final Order.” Final DIP Order ¶ 51; see also In re Circuit City Stores, Inc., 557 B.R. 443, 448 (Bankr. E.D. Va. 2016) (bankruptcy court has subject matter jurisdiction to interpret prior orders). 3 The Movants confirm their consent, pursuant to Rule 7008 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy 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. 3 Case 21-30209-KRH Doc 213 Filed 03/08/21 Entered 03/08/21 10:38:54 Desc Main Document Page 4 of 268 8. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. PERTINENT FACTUAL BACKGROUND 9. Intermediate Capital Group PLC and/or its affiliates (“ICG”) hold $30,333,333.33 of the Debtors’ Prepetition Second Lien Notes and $25,666,666.67 of original principal amount of the Debtors’ Prepetition HoldCo Notes. See Declaration of Brian Spenner, dated March 8, 2021 (the “Spenner Decl.”) ¶ 2. 10. The Singled-Out Unpaid Lenders are six corporate entities: (1) ICG US CLO 2014- 1, Ltd.; (2) ICG US CLO 2014-2, Ltd.; (3) ICG US CLO 2014-3, Ltd.; (4) ICG US CLO 2015-1, Ltd.; (5) ICG US CLO 2016-1, Ltd.; and (6) ICG US CLO 2015-2R, Ltd. Together, these entities hold an aggregate of $3,244,029 of loans issued under the Prepetition First Lien Credit Agreement. Spenner Decl. ¶ 3. 11. Each of the Singled-Out Unpaid Lenders are separate and distinct entities from each other, as well as from ICG and/or the Junior DIP Agent. Spenner Decl. ¶ 4. ICG Debt Advisors LLC – Manager Series (the “Collateral Manager”) merely acts as collateral manager for the Singled-Out Unpaid Lenders. Id. The duties and obligations of the Collateral Manager are solely those of the Collateral Manager and are not guaranteed by ICG, the Junior DIP Agent, or any of their other affiliated entities. Id. Similarly, the assets of the Singled-Out Unpaid Lenders are not commingled, or shared in any way, with and do not represent assets of ICG, the Junior DIP Agent, or any of their other affiliated entities. Id. 12. After the Debtors had reached an agreement with respect to a prepackaged restructuring, Fortress purchased at par substantially all of the Prepetition First Lien Loans, assumed the role of First Lien Agent, and refused to proceed with the prepackaged restructuring. See Declaration of John Grossi in Support of Chapter 11 Petitions and First Day Motions at ¶¶ 28- 4 Case 21-30209-KRH Doc 213 Filed 03/08/21 Entered 03/08/21 10:38:54 Desc Main Document Page 5 of 268 29 (ECF No. 22). Notably, Fortress did not offer to purchase the loans held by the Singled-Out Unpaid Lenders. 13. On February 18, 2021, the Debtors filed an amended motion seeking authority to, among other things, obtain postpetition financing. See Amended Motion to Approve Debtor in Possession Financing (the “DIP Motion”) (ECF No. 144). Among other things, the Debtors stated they were seeking approval to access “a $95 million senior facility provided by Brigade which will be used to retire and satisfy the Debtors’ existing first lien indebtedness….” DIP Mot. ¶ 12 (emphasis added); see also id. ¶ 14 (seeking authority to “use such proceeds to refund, refinance, replace and repay the Prepetition First Lien Obligations….”). 14. DBD AMAC LLC, acting as the Administrative and Collateral Agent for the Prepetition First Lien Lenders (“Fortress”), filed an objection to the DIP Motion.4 In addition, Fortress appeared and actively participated at the hearing held by the Court on February 23, 2021. 15. The Court entered the Final DIP Order on February 24, 2021.5 The Final DIP Order was “immediately effective and enforceable upon its entry and there shall be no stay of execution or effectiveness of this Final Order.” Id. ¶ 50. No party, including Fortress, has purported to appeal the Final DIP Order. 16. The Final DIP Order is “valid and binding upon the Debtors, the DIP Secured Parties, and the Prepetition Debt Parties, and any and all other creditors of the Debtors, the Committee, any and all other parties in interest and their respective successors and assigns….” Final DIP Order ¶ 41.