Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 1 of 13 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE

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1 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 1 of 13 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re: GT ADVANCED TECHNOLOGIES INC., et al., Reorganized Debtors. 1 Chapter 11 Case No HJB Jointly Administered GTAT CORPORATION and GT ADVANCED TECHNOLOGIES INC., Adv. Proc. No. Plaintiffs, v. DECCO, INC. Defendant. COMPLAINT GTAT Corporation ( GTAT ) and GT Advanced Technologies Inc. ( GT Inc. and, together with GTAT, Plaintiffs ), two of the reorganized debtors (the Reorganized Debtors ) in the above-captioned jointly administered chapter 11 cases, by and through their undersigned counsel, file this complaint (the Complaint ) against Decco, Inc. ( Decco or Defendant ) and state: NATURE OF ACTION 1. This is an adversary proceeding brought under Part VII of the Bankruptcy Rules to (a) seek a declaratory judgment that certain mechanic s liens are unperfected under applicable 1 The Reorganized Debtors, along with the last four digits of each reorganized debtor s tax identification number, as applicable, are: GT Advanced Technologies Inc. (6749), GTAT Corporation (1760), Lindbergh Acquisition Corp. (5073), GT Advanced Cz LLC (9815), and GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH

2 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 2 of 13 law; (b) avoid such liens under 11 U.S.C. 545(2); (c) avoid such liens under 11 U.S.C. 544(a)(3); (d) reclassify Decco s proof of claim as a general unsecured claim; and (e) enter judgment avoiding and permitting the Reorganized Debtors to recover preferential transfers in accordance with 11 U.S.C. 547 and 550 and Bankruptcy Rule JURISDICTION AND VENUE 2. This Court has jurisdiction over this adversary proceeding under 28 U.S.C. 1334(b). 3. This adversary proceeding has been referred to this Court under 28 U.S.C. 157(a). 4. This adversary proceeding is a core proceeding under 28 U.S.C. 157(b)(2)(B), (F), (K), and (O). 5. Venue of this adversary proceeding is proper in this district pursuant to 28 U.S.C. 1409(a). GENERAL BACKGROUND 6. On October 6, 2014 (the Petition Date ), GT Inc. and eight of its direct and indirect subsidiaries (collectively, the Debtors ) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of New Hampshire (the Court ). No trustee was appointed in the Debtors chapter 11 cases. 7. On March 8, 2016, the Bankruptcy Court entered an order (the Confirmation Order ) confirming the Debtors Amended Joint Plan of Reorganization (the Plan ), dated March 7, 2016 [Docket No. 3310]. The Plan became effective in accordance with its terms on March 17, 2016 [Docket No. 3353]. 2

3 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 3 of Plaintiffs are two of the Reorganized Debtors in the above-captioned chapter 11 cases. 9. In accordance with Sections 1.184, 8.13, and 14.5 of the Plan and Paragraphs 42 and 43 of the Confirmation Order, avoidance actions were retained by the Reorganized Debtors. This Court retained jurisdiction over avoidance actions under Article XV of the Plan and Paragraph 48 of the Confirmation Order. 10. Defendant Decco is a corporation that provided goods or services to the Debtors prior to the Petition Date. DEFENDANT S CLAIM AND ALLEGED MECHANIC S LIEN 11. On January 26, 2015, Decco filed a proof of claim against GTAT, identified by the official claims agent in the Debtors chapter 11 cases as Claim No. 873, in the aggregate amount of $77,500 ( Claim 873 ). 12. Decco asserts that Claim 873 is secured by a mechanic s lien (the Mechanic s Lien ) on Plaintiffs property on the basis that Decco performed design and installation work for GTAT. 13. Decco did not attempt to perfect its mechanic s lien prior to the Petition Date. 14. After the Petition Date, on October 23, 2014, Decco filed a Notice of Mechanic s Lien by Decco, Inc. Pursuant to USBC 546(b)(2)(B) [Docket No. 270], stating that, under section 546(b)(2) of the Bankruptcy Code, it intended to perfect the Mechanic s Lien pursuant to N.H. RSA 447 et seq. 15. Also, after the Petition Date, on November 6, 2014, Decco filed a Petition for Ex Parte Mechanic s Lien Attachment in Hillsborough County Superior Court. See Attachments to 3

4 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 4 of 13 Claim 873. This petition was granted, and a Writ of Attachment and Trustee Process was issued on November 7, Id. 16. On information and belief, Decco will assert that its post-petition Date attempts to perfect the Mechanic s Lien should be effective pursuant to section 546(b)(2)(B) of the Bankruptcy Code. 17. GTAT disputes that the post-petition attempt to perfect the Mechanic s Lien by Decco is effective under section 546(b)(2)(B) of the Bankruptcy Code. 18. An actual controversy exists between GTAT and Decco concerning the Mechanic s Lien, Claim 873, and the effectiveness of Decco s post-petition attempt to perfect a lien under New Hampshire law. THE PREFERENTIAL TRANSFERS 19. On or within ninety days prior to the Petition Date (the Preference Period ), one or more transfers were made to or for the benefit of Decco by GTAT. Exhibit A hereto reflects the known transfers made to Decco by GTAT during the Preference Period (the Transfers ), the bank account used, and the method of transfer. 20. Such goods or services were provided by Decco to GTAT on or before the invoice date indicated on Exhibit A and before the corresponding Transfer was made. 21. Had the Transfers not been made, Decco would have an unsecured claim against GTAT in the amount(s) set forth on the applicable invoices. 22. During the course of this proceeding, Plaintiffs may learn (through discovery or otherwise) of additional transfers made to Decco during the Preference Period. It is Plaintiffs intention to avoid and recover all transfers made by the Debtors of an interest in property to or for the benefit of Decco, whether or not such transfers are reflected on Exhibit A. Plaintiffs 4

5 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 5 of 13 reserve the right to amend this Complaint to include: (a) further information regarding the Transfers, (b) additional transfers, (c) modifications of or revisions to Defendants names, (d) additional defendants, or (e) additional causes of action (including, but not limited to, causes of action under sections 542, 544, or 545 of the Bankruptcy Code) (collectively, items (a)-(e) the Amendments ), which may become known to Plaintiffs at any time during this Adversary Proceeding, through formal discovery or otherwise, and for the Amendments to relate back to this Complaint. FIRST CAUSE OF ACTION (Declaratory Judgment to Determine the Validity, Extent, and Priority of Any Liens, Encumbrances, and Interests in Plaintiffs Property) 23. Plaintiffs repeat and re-allege each of the allegations set forth above. 24. The Mechanic s Lien is a statutory lien governed by N.H. RSA 447:1 et seq. and 11 U.S.C N.H. RSA 447:2 permits the creation of mechanic s liens for labor and materials. Although mechanic s liens continue for 120 days after the labor or services are provided, see N.H. RSA 447:9, the mechanic s lien is secured only by attachment of the property upon which it exists at any time while the lien continues, the writ and return thereon distinctly expressing that purpose, N.H. RSA 447: Until the writ is issued, a bona fide purchaser takes real property free and clear of any liens. N.H. RSA 477:3-a provides that every deed, conveyance, court order, or instrument which affects title to any interest in real property shall not be effective as against bona fide purchasers for value until so recorded. 27. Likewise, N.H. RSA 511-A:5 provides that attachment orders, shall not be effective against bona fide purchasers of value until attachments of real estate have been 5

6 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 6 of 13 recorded. See also Chagnon Lumber Co., Inc. v. Stone Mill Const. Corp., 124 N.H. 820, A.2d 588, 589 (1984) (holding that RSA 511-A:5 applies to mechanic s liens filed under RSA chapter 447 and that subsequently perfected lien was inferior to the rights of bona fide purchasers). 28. Decco did not perfect its Mechanic s Lien by attachment prior to the Petition Date. 29. Decco s attempts to perfect the Mechanic s Lien after the Petition Date pursuant to section 546(b)(2) of the Bankruptcy Code were ineffective because New Hampshire law neither permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection nor provides for the maintenance or continuation of perfection of an interest in property to be effective against an entity that acquires rights in such property before the date on which action is taken to effect such maintenance or continuation, as provided in 11 U.S.C. 546(b)(1). 30. Accordingly, the Decco Mechanic s Lien is unperfected. SECOND CAUSE OF ACTION (Avoidance of Unperfected Statutory Lien Under Section 545 of the Bankruptcy Code) 31. Plaintiffs repeat and re-allege each of the allegations set forth above. 32. Section 545(2) of the Bankruptcy Code provides that [t]he trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that such lien... is not perfected or enforceable at the time of the commencement of the case against a bona fide purchaser that purchases such property at the time of the commencement of the case, whether or not such a purchaser exists. 11 U.S.C. 545(2). 6

7 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 7 of Under section 545(2) of the Bankruptcy Code, a trustee is entitled to avoid a statutory lien if, under applicable state law, a bona fide purchaser takes property free and clear of unperfected mechanic s liens. See also Schoonover Elec. Co., Inc. v. Enron Corp. (In re Enron Corp.), 294 B.R. 232, 237 & 244 (Bankr. S.D.N.Y. 2003) (construction lien under New Jersey statute that was perfected postpetition was avoidable under section 545(2) of the Bankruptcy Code). 34. New Hampshire law is applicable to Claim As stated above, under New Hampshire law, mechanic s liens are not enforceable against bona fide purchasers unless and until a writ of attachment has been entered and recorded. 36. Decco did not perfect its Mechanic s Lien prior to the Petition Date. 37. Decco s attempt to perfect the Mechanic s Lien after the Petition Date pursuant to section 546(b)(2) of the Bankruptcy Code was ineffective because N.H. RSA chapter 447 does not permit perfection of the Mechanic s Lien to be effective against a bona fide purchaser that acquires rights in the property before the date of perfection. 38. As of the Petition Date, a bona fide purchaser for value was entitled to take Plaintiffs property free and clear of the Mechanic s Lien. 39. Accordingly, the Mechanic s Lien should be avoided under section 545(2) of the Bankruptcy Code. 40. Because the Decco Mechanic s Lien is subject to avoidance, Claim 873 should be reclassified as a general unsecured claim. THIRD CAUSE OF ACTION (Avoidance of Unperfected Statutory Lien Under Section 544 of the Bankruptcy Code) 41. Plaintiffs repeat and re-allege each of the allegations set forth above. 7

8 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 8 of Section 544(a)(3) of the Bankruptcy Code provides, in pertinent part, that [t]he trustee shall have, as of the commencement of the case.. the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by... a bona fide purchaser of real property, other than fixtures, from the debtor U.S.C. 544(a)(3). 43. Under New Hampshire law, mechanic s liens are not enforceable against bona fide purchasers unless and until a writ of attachment has entered and been recorded. 44. Decco did not perfect its Mechanic s Lien prior to the Petition Date. 45. Decco s attempt to perfect the Mechanic s Lien after the Petition Date pursuant to section 546(b)(2) of the Bankruptcy Code was ineffective because N.H. RSA chapter 447 does not permit perfection of the Mechanic s Lien to be effective against a bona fide purchaser that acquires rights in the property before the date of perfection. 46. As of the Petition Date, a bona fide purchaser for value was entitled to take Plaintiffs property free and clear of the Mechanic s Lien. 47. Accordingly, the Mechanic s Lien should be avoided under section 544(a)(3) of the Bankruptcy Code. 48. Because Decco s Mechanic s Lien is subject to avoidance, Claim 873 should be reclassified as a general unsecured claim. FOURTH CAUSE OF ACTION (Preference Action Against Decco) 49. Plaintiffs repeat and re-allege each of the allegations set forth above. 50. The Transfers identified on Exhibit A hereto were made during the Preference Period. 8

9 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 9 of The Transfers identified on Exhibit A hereto were transfers of an interest of GTAT in property. 52. The Transfers identified on Exhibit A hereto were made for or on account of antecedent debts owed to Decco by GTAT before such Transfers were made. 53. Decco was a creditor at the time of each Transfer identified on Exhibit A hereto by virtue of supplying goods or services to GTAT for which GTAT was obligated to pay. 54. Each Transfer identified on Exhibit A hereto was to or for the benefit of Decco within the meaning of section 547(b)(1) of the Bankruptcy Code because each Transfer either reduced or fully satisfied a debt or debts owed by GTAT to Decco. 55. Each Transfer identified on Exhibit A hereto was made for, or on account of, an antecedent debt or debts owed by GTAT to Decco before such Transfers were made. 56. Section 547(f) of the Bankruptcy Code states, in part, that the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition. 57. The Transfers identified on Exhibit A hereto were made while GTAT was insolvent. 58. As a result of each Transfer, Decco received more than it would have received if: (a) GTAT s case was a case under chapter 7 of the Bankruptcy Code; (b) the Transfers had not been made; and (c) Decco received payment on account of the debt paid by the Transfers to the extent provided by the provisions of the Bankruptcy Code. 59. GTAT s liabilities exceeded its assets at all relevant times, as evidenced by, among other things, (a) GTAT s schedules filed in the underlying chapter 11 cases, (b) the 9

10 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 10 of 13 proofs of claim that have been filed by creditors to date, and (c) GTAT s intercompany obligations. 60. Accordingly, the Transfers on Exhibit A hereto constitute preferential transfers which should be avoided as preferences pursuant to Bankruptcy Code section 547. FIFTH CAUSE OF ACTION (Recovery of Avoided Transfers Under Bankruptcy Code Section 550 Against Decco) 61. Plaintiffs repeat and re-allege each and every allegation set forth above. 62. GTAT is entitled to avoid the Transfers pursuant to section 547(b) of the Bankruptcy Code (the Avoided Transfers ). 63. Decco was the initial transferee of the Avoided Transfers or the immediate or mediate transferees of such initial transferee(s) or the persons for whose benefit the Avoided Transfers were made. 64. Pursuant to section 550(a) of the Bankruptcy Code, GTAT is entitled to recover the Avoided Transfers from Decco, plus interest thereon to the date of payment, and the costs of this action. SIXTH CAUSE OF ACTION (Disallowance of Claims Pursuant to Bankruptcy Code Section 502(d) Against Decco) 65. Plaintiffs repeat and re-allege each and every allegation set forth above. 66. Decco is an entity from which property is recoverable under section 550 of the Bankruptcy Code, or is a transferee of transfers avoidable under section 547 or 548 of the Bankruptcy Code, as set forth in the preceding causes of action. 67. Decco has not paid the amount, or turned over such property, for which it is liable under section 550 of the Bankruptcy Code. 10

11 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 11 of Pursuant to section 502(d) of the Bankruptcy Code, Claim 873 should be disallowed until the Transfers are repaid in full to GTAT, plus interest thereon and costs. SEVENTH CAUSE OF ACTION (Setoff Against Defendant) 69. Plaintiffs repeat and re-allege each and every allegation set forth above. 70. Under section 558 of the Bankruptcy Code, Plaintiffs estates (a) have the right to assert any right of setoff against Defendant, and (b) may set off against any claim (and the payments due under a chapter 11 plan in respect of such claim) any claims that the Plaintiffs estates have against the holder of such claim. 71. Under applicable bankruptcy and non-bankruptcy law, Plaintiffs are entitled to set off any recovery from the preceding causes of action against any payment or distribution to be made to Defendant or its assignees from the Debtors chapter 11 estates. PRAYER FOR RELIEF WHEREFORE, for the foregoing reasons, Plaintiffs respectfully requests the following relief: A. That the Court enter a declaratory judgment that the Decco Mechanic s Lien is unperfected under applicable New Hampshire law; B. That the Decco Mechanic s Lien be avoided pursuant to 11 U.S.C. 545(2); C. That the Decco Mechanic s Lien be avoided pursuant to 11 U.S.C. 544(a)(3); D. That Claim 873 be reclassified as a general unsecured claim; 11

12 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 12 of 13 E. That the Transfers on Exhibit A hereto be avoided as preferences under section 547 of the Bankruptcy Code; F. That the Avoided Transfers be recovered by GTAT pursuant to section 550 of the Bankruptcy Code; G. That judgment be entered in GTAT s favor and against Decco in an amount not less than $150,000.00, plus interest at the legal rate from the date of the Transfers, together with all costs of this actions; H. That Claim 873 be disallowed in accordance with section 502(d) of the Bankruptcy Code until it satisfies the judgment; I. That post-judgment interest be awarded at the maximum legal rate running from the date of judgment herein until the date the judgment is paid in full, plus costs; J. That the Reorganized Debtors estates be permitted to set off the amount of the judgment obtained in this adversary proceeding against any payment or distribution to be made to Decco or its assignees from the Reorganized Debtors chapter 11 estates; and K. That Plaintiffs be granted such other and further relief as the Court deems just and proper. Dated: June 21, 2016 _/s/ G. Alexander Bongartz Luc A. Despins, Esq. James T. Grogan, Esq. (BNH07394) G. Alexander Bongartz, Esq. (BNH07449) PAUL HASTINGS LLP 200 Park Avenue New York, New York Telephone: (212) Facsimile: (212) and - 12

13 Case: CJP Doc #: 1 Filed: 06/21/16 Desc: Main Document Page 13 of 13 Daniel W. Sklar, Esq. Holly J. Barcroft, Esq. NIXON PEABODY LLP 900 Elm Street Manchester, NH Telephone: (603) Facsimile: (603) Co-Counsel for the Reorganized Debtors 13

14 Case: CJP Doc #: 1-1 Filed: 06/21/16 Desc: Exhibit A - Transfers Page 1 of 2 Exhibit A

15 Case: CJP Doc #: 1-1 Filed: 06/21/16 Desc: Exhibit A - Transfers Page 2 of 2 EXHIBIT A Transferee Purchase Order Number Purchase Order Date Invoice Number Date of Invoice Invoiced Amount Amount Paid ACH Trace # Clearing Date DECCO INC /29/2014 $ 75, total $ 75, $ 75, /15/2014 DECCO INC /17/2014 $ 75, total $ 75, $ 75, /29/2014

16 Case: CJP Doc #: 1-2 Filed: 06/21/16 Desc: Adversary Proceeding Cover Sheet Page 1 of 2

17 Case: CJP Doc #: 1-2 Filed: 06/21/16 Desc: Adversary Proceeding Cover Sheet Page 2 of 2