Case 18-10122-KG Doc 554 Filed 09/17/18 Page 1 of 16 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 PES HOLDINGS, LLC, et al.,1 Case No. 18-10122 (KG) Debtors. (Jointly Administered) SECOND INTERIM AND FINAL FEE APPLICATION OF PJT PARTNERS LP AS INVESTMENT BANKER TO THE DEBTORS FOR ALLOWANCE (AND FINAL APPROVAL) OF COMPENSATION FOR SERVICES RENDERED AND FOR THE REIMBURSEMENT OF ALL ACTUAL AND NECESSARY OUT-OF-POCKET EXPENSES INCURRED FOR THE PERIOD OF JANUARY 21, 2018 THROUGH APRIL 2, 2018 Name of Applicant: PJT Partners LP Authorized to Provide Professional Services to: Debtors Date of Retention: Order entered on February 23, 2018 approving the retention of PJT Partners LP nunc pro tunc to January 21, 2018 [Docket No. 195] Period for which Compensation and Expense Reimbursement is sought: January 21, 2018 through April 2, 2018 Amount of Compensation sought as actual, reasonable and necessary: $2,798,763.44 Amount of Expense Reimbursement requested as actual, reasonable and necessary: $11,640.00 Payment Sought: $0.00 This is an: __ monthly x interim x final application 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: PES Holdings, LLC (8157); North Yard Financing, LLC (6284); North Yard GP, LLC (5458); North Yard Logistics, L.P. (952): PES Administrative Services_ LL,C (3022); PES Logistics GP, LLC (9202); PES Logistics Partners, L.P. (1288); PESRM Holdings, LLC (2107), aid Philadelphia Energy Solutions Refining and Marketing LLC (974). The debtors` service address is: 1735 Market Street. Philadelphia, Pennsylvania 19103. Case 18-10122-KG Doc 554 Filed 09/17/18 Page 2 of 16 Prior Monthly Applications Filed: Requested Approved Date Filed [Docket No.] Period Covered Fees Expenses Fees Expenses 03/28/18 [Docket No. 339]2 01/21/18 – 02/28/18 $237,096.77 $10,313.49 $237,096.77 $10,313.49 04/13/18 [Docket No. 390]3 03/01/18 – 03/31/18 $175,000.00 $- $175,000.00 $- 05/11/18 [Docket No. 433]4 04/01/18 – 04/30/18 $175,000.00 $1,326.51 $140,000.00 $1,326.51 2 Certificate of No Objection filed on 04/23/18. See Docket No. 402. 3 Certificate of No Objection filed on 05/08/18. See Docket No. 423. 4 Certificate of No Objection filed on 06/19/18. See Docket No. 470. 2 Case 18-10122-KG Doc 554 Filed 09/17/18 Page 3 of 16 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 PES HOLDINGS, LLC, et al.,1 Case No. 18-10122 (KG) Debtors. (Jointly Administered) SECOND INTERIM AND FINAL FEE APPLICATION OF PJT PARTNERS LP AS INVESTMENT BANKER TO THE DEBTORS FOR ALLOWANCE (AND FINAL APPROVAL) OF COMPENSATION FOR SERVICES RENDERED AND FOR THE REIMBURSEMENT OF ALL ACTUAL AND NECESSARY OUT-OF-POCKET EXPENSES INCURRED FOR THE PERIOD OF JANUARY 21, 2018 THROUGH APRIL 2, 2018 PJT Partners LP (“PJT”) respectfully represents as follows: I. Background 1. PJT acted as investment banker to the above-captioned debtors, its affiliated debtor entities as debtors and debtors-in-possession (collectively, the “Debtors”). 2. On January 21, 2018 (the “Petition Date”), the Debtors each filed voluntary petitions with the Court for reorganization relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Subsequent to the Petition Date, the Debtors continued to operate their businesses as debtors-in-possession pursuant to §§ 1107(a) and 1108 of the Bankruptcy Code. 3. On February 2, 2018, the Debtors filed the Debtors’ Application for Entry of an Order Authorizing the Employment and Retention of PJT Partners LP as an Investment Banker for the Debtors and Debtors in Possession, Effective Nunc Pro Tunc To The Petition Date [Docket No. 146] (the “Retention Application”), pursuant to which the Debtors sought authority to retain and 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: PES Holdings, LLC (8157); North Yard Financing, LLC (6284); North Yard GP, LLC (5458); North Yard Logistics, L.P. (952): PES Administrative Services_ LL,C (3022); PES Logistics GP, LLC (9202); PES Logistics Partners, L.P. (1288); PESRM Holdings, LLC (2107), aid Philadelphia Energy Solutions Refining and Marketing LLC (974). The debtors` service address is: 1735 Market Street. Philadelphia, Pennsylvania 19103. Case 18-10122-KG Doc 554 Filed 09/17/18 Page 4 of 16 employ PJT as their investment banker pursuant to the terms of an engagement agreement (the “Engagement Agreement”) dated August 9, 2017. A copy of the Engagement Agreement is attached to the Retention Application. 4. On February 23, 2018, the Court entered the Order Authorizing the Employment and Retention of PJT Partners LP as Investment Banker for the Debtors and Debtors In Possession, Effective Nunc Pro Tunc to the Petition Date [Docket No. 195] (the “Retention Order”) approving the Retention Application and authorized the retention and employment of PJT nunc pro tunc to the Petition Date, pursuant to the terms of the Engagement Agreement. 5. On February 26, 2018, the Court entered the Order (I) Establishing Procedures for Interim Compensation and Reimbursement of Expenses for Retained Professionals and (II) Granting Related Relief [Docket No. 216] (the “Procedures Order”), establishing procedures for interim compensation and reimbursement of expenses for professionals. 6. On April 2, 2018, the Court entered the (Corrected) Order Approving the Debtors’ Disclosure Statement for and Confirming the Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization of PES Holdings, LLC and Its Debtor Affiliates [Docket No. 357] (the “Plan”). The Debtors’ Plan became effective on August 7, 2018, at which time the Debtors emerged from chapter 11 protection. 7. PJT submits this second interim and final fee application (the “Second Interim and Final Fee Application”) requesting: (i) the allowance (and final approval) of the Monthly Fees (as defined herein) earned for investment banking services rendered by it as investment banker to the Debtors, and the reimbursement of out-of-pocket expenses incurred during the period of April 1, 2018 through April 2, 2018 (the “Second Interim and Final Period”); (ii) allowance (and final approval) of the Restructuring Fee (as defined herein); and (iii) final approval of PJT’s Monthly 2 Case 18-10122-KG Doc 554 Filed 09/17/18 Page 5 of 16 Fees and out-of-pocket expenses incurred and applied for and previously approved2 by the Court in connection with PJT’s first interim fee application (the “First Interim Application”) for investment banking services rendered to the Debtors for the period of January 21, 2018 through March 31, 2018 (the “First Interim Period” and, together with the Second Interim and Final Period, the “Retention Period”). 8. Investment banking services and out-of-pocket expenses for which compensation and reimbursement are sought were rendered and expended by PJT on behalf of the Debtors pursuant to chapter 11 of the Bankruptcy Code. II. The PJT Engagement 9. Pursuant to the Engagement Agreement, PJT was retained to provide some or all of the following services to the Debtors:3 (a) assist in the evaluation of the Debtors' businesses and prospects; (b) assist in the development of the Debtors' long-term business plan and related financial projections; (c) assist in the development of financial data and presentations to the Debtors' Board of Directors, various creditors and other third parties; (d) analyze the Debtors' financial liquidity and evaluate alternatives to improve such liquidity; (e) analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by the Restructuring; (f) provide strategic advice with regard to restructuring or refinancing the Debtors' Obligations; (g) evaluate the Debtors' debt capacity and alternative capital structures; (h) participate in negotiations among the Debtors and their creditors, suppliers, lessors and other interested parties; 2 On July 17, 2018, the Court entered the Order Granting First Interim Fee Application of PJT Partners LP as Investment Banker to the Debtors for Allowance of Compensation for Services Rendered and for the Reimbursement of All Actual and Necessary Out-of-Pocket Expenses Incurred for the Period of January 21, 2018 through March 31, 2018 [Docket No. 489] approving PJT’s First Interim Application on an interim basis. 3 Capitalized terms used but not defined herein shall have the meanings provided to them in the Engagement Agreement. 3 Case 18-10122-KG Doc 554 Filed 09/17/18 Page 6 of 16 (i) value securities offered by the Debtors in connection with a Restructuring; (j) advise the Debtors and negotiate with lenders with respect to potential waivers of amendments of various credit facilities; (k) assist in arranging financing for the Debtors, as requested; (l) provide expert witness testimony concerning any of the subjects encompassed by the other services; and (m) provide such other advisory services as are customarily provided in connection with the analysis and negotiation of a Restructuring, as requested and mutually agreed. 10. Pursuant to the Engagement Agreement, as approved by the Retention Order, the Debtors agreed to pay PJT as follows in consideration for the investment banking services rendered:4 (a) Monthly Fee. The Debtors shall pay PJT a monthly advisory fee (the “Monthly Fee”) of $175,000 per month. Fifty percent (50%) of all Monthly Fees paid to PJT after the 6th Monthly Fee payment (i.e., after $1,050,000 has been paid) shall be credited against the Restructuring Fee described below; (b) Capital Raising Fee. The Debtors shall pay PJT a capital raising fee (the “Capital Raising Fee”) for any financing arranged by PJT, earned and payable upon receipt of a binding commitment.