shl Doc 1046 Filed 03/31/14 Entered 04/01/14 00:01:01 Main Document Pg 1 of 74

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1 Pg 1 of 74 Hearing Date: April 29, 2014 at 11:00 a.m. (Eastern Time) Objection Deadline: April 22, 2014 at 4:00 p.m. (Eastern Time) AKIN GUMP STRAUSS HAUER & FELD LLP Lisa G. Beckerman Rachel Ehrlich Albanese One Bryant Park New York, New York Tel: (212) Fax: (212) Counsel to the Debtors and Debtors in Possession FARRELL FRITZ, P.C. Ted A. Berkowitz Patrick T. Collins Veronique A. Urban 1320 RXR Plaza Uniondale, New York Tel: (516) Fax: (516) Counsel to the Official Committee of Unsecured Creditors UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re: Chapter 11 METRO AFFILIATES, INC., et al. 1, Debtors x Case No (SHL) Jointly Administered MOTION OF THE DEBTORS AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR ENTRY OF AN ORDER: (A) APPROVING THE DISCLOSURE STATEMENT; (B) APPROVING CERTAIN DATES RELATED TO CONFIRMATION OF THE PLAN; (C) APPROVING CERTAIN VOTING PROCEDURES AND THE FORM OF CERTAIN DOCUMENTS TO BE DISTRIBUTED IN CONNECTION WITH SOLICITATION OF THE PLAN; AND (D) APPROVING PROPOSED VOTING AND GENERAL TABULATION PROCEDURES 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayer identification number, are: 180 Jamaica Corp. (7630); Amboy Bus Co., Inc. (2369); Atlantic Escorts, Inc. (8870); Atlantic Express Coachways, Inc. (2867); Atlantic Express New England, Inc. (4060); Atlantic Express of California, Inc. (5595); Atlantic Express of Illinois, Inc. (5759); Atlantic Express of LA, Inc. (1639); Atlantic Express of Missouri, Inc. (3116); Atlantic Express of New Jersey, Inc. (8504); Atlantic Express of Pennsylvania, Inc. (0330); Atlantic Express Transportation Corp. (4567); Atlantic Queens Bus Corp. (0276); Atlantic Paratrans of NYC, Inc. (1114); Atlantic Paratrans, Inc. (3789); Atlantic Transit, Corp. (7142); Atlantic-Hudson, Inc. (5121); Block 7932, Inc. (3439); Brookfield Transit, Inc. (8247); Courtesy Bus Co., Inc. (5239); Fiore Bus Service, Inc. (1233); Groom Transportation, Inc. (7208); G.V.D. Leasing, Inc. (0595); James McCarty Limo Services, Inc. (8592); Jersey Business Land Co. Inc. (3850); K. Corr, Inc. (4233); Merit Transportation Corp. (8248); Metro Affiliates, Inc. (0142); Metropolitan Escort Service, Inc. (9197); Midway Leasing, Inc. (7793); R. Fiore Bus Service, Inc. (3609); Raybern Bus Service, Inc. (9412); Raybern Capital Corp. (6990); Raybern Equity Corp. (3830); Robert L. McCarthy & Son, Inc. (4617); Staten Island Bus, Inc. (6818); Temporary Transit Service, Inc. (0973); Atlantic Express of Upstate New York Inc. (1570); Transcomm, Inc. (4493); and Winsale, Inc. (2710). The Debtors service address at Metro Affiliates, Inc. s corporate headquarters is 7 North Street, Staten Island, NY

2 Pg 2 of 74 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii BACKGROUND... 2 JURISDICTION AND VENUE... 3 RELIEF REQUESTED... 3 A. APPROVAL OF DISCLOSURE STATEMENT... 4 B. CONFIRMATION HEARING DATE... 7 C. NOTICE OF CONFIRMATION HEARING AND RELATED ISSUES; CONTENT AND TRANSMITTAL OF SOLICITATION PACKAGES, AND ESTABLISHMENT OF VOTING RECORD DATE... 8 D. NOTICES TO CLASSES DEEMED TO ACCEPT OR REJECT THE PLAN E. NOTICE TO COUNTERPARTIES TO EXECUTORY CONTRACTS AND UNEXPIRED LEASES F. DEADLINE AND PROCEDURES FOR FILING OBJECTIONS TO CONFIRMATION G. TEMPORARY ALLOWANCE MOTIONS AND NON-CREDITORS H. VOTING ON THE PLAN AND RELATED MATTERS NOTICE NO PRIOR REQUEST CONCLUSION i

3 Pg 3 of 74 TABLE OF AUTHORITIES CASES Page(s) Abel v. Shugrue (In re Ionosphere Clubs, Inc.), 179 B.R. 24 (Bankr. S.D.N.Y. 1995)...5 Cadle Co. II, Inc. v. Official Comm.of Unsecured Creditors (In re PC Liquidation Corp.), 383 B.R. 856 (E.D.N.Y. 2008)...6 Kirk v. Texaco, Inc., 82 B.R. 678 (S.D.N.Y. 1988)...6 Momentum Mfg. Corp. v. Emp. Creditors Comm. (In re Momentum Mfg. Corp.), 25 F.3d (2d Cir. 1994)...5 STATUTES 11 U.S.C. 105(a)...3, 8 11 U.S.C. 105(d) U.S.C U.S.C. 1107(a) U.S.C U.S.C. 1123(a) U.S.C. 1123(a)(1) U.S.C. 1123(b) U.S.C U.S.C , 5, 6, 7 11 U.S.C. 1125(a)...5, 6 11 U.S.C. 1125(b)...4, 5, 7 11 U.S.C U.S.C. 1126(f) U.S.C. 1126(g)...11 ii

4 Pg 4 of U.S.C U.S.C U.S.C U.S.C. 157(b)(2) U.S.C U.S.C U.S.C OTHER AUTHORITIES Fed. R. Bankr. P. 1015(c)...8 Fed. R. Bankr. P , 7, 19 Fed. R. Bankr. P. 2002(b)...7 Fed. R. Bankr. P. 2002(l)...9 Fed. R. Bankr. P. 2002(m)...8 Fed. R. Bankr. P. 3003(c)(2)...13 Fed. R. Bankr. P. 3003(c)(3)...13 Fed. R. Bankr. P Fed. R. Bankr. P Fed. R. Bankr. P. 3017(c)...16 Fed. R. Bankr. P. 3017(d)...8, 14 Fed. R. Bankr. P Fed. R. Bankr. P. 3018(a)...17 Fed. R. Bankr. P. 3018(c)...14 Fed. R. Bankr. P Fed. R. Bankr. P. 3020(b)(l)...12 Fed. R. Bankr. P H.R. Rep. No (1977), reprinted in 1978 U.S.C.A.N iii

5 Pg 5 of 74 Local Rule Local Rule , 19 Local Rule , 12 EXHIBIT A Proposed Order EXHIBIT B Confirmation Hearing Notice EXHIBIT C Non-Voting Status Notice Deemed to Accept EXHIBIT D Non-Voting Status Notice Deemed to Reject EXHIBIT E Notice to Contract and Lease Counterparties EXHIBIT F Ballots iv

6 Pg 6 of 74 The above-captioned debtors and debtors in possession (collectively, the Debtors ) and the Official Committee of Unsecured Creditors appointed in these chapter 11 cases (the Committee and, together with the Debtors, the Plan Proponents ) hereby move this Court (the Motion ), for the entry of an order, substantially in the form attached hereto as Exhibit A (the Proposed Order ), (a) approving the Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code for the Joint Chapter 11 Plan of Liquidation for Metro Affiliates, Inc. and Its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors (as may be amended from time to time, the Disclosure Statement ); (b) approving certain dates related to confirmation of the Joint Chapter 11 Plan of Liquidation for Metro Affiliates, Inc. and Its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors (as may be amended from time to time, the Plan ) 2 ; (c) approving certain voting procedures and the form of certain documents to be distributed in connection with the solicitation of the Plan; and (d) approving proposed voting and general tabulation procedures. In support of this Motion, the Plan Proponents respectfully represent as follows: BACKGROUND 1. On November 4, 2013, each of the Debtors filed a voluntary petition with this Court under chapter 11 of title 11 of the Bankruptcy Code. 2. The Debtors are authorized to operate their business and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, and their cases have been consolidated for joint administration and procedural purposes only. 3. The Committee was appointed by the Office of the United States Trustee for Region 2 (the U.S. Trustee ) on November 13, No trustee or examiner has been appointed in these cases. 2 Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan. 2

7 Pg 7 of Contemporaneously with the filing of this Motion, the Plan Proponents filed the Plan and Disclosure Statement. JURISDICTION AND VENUE 5. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). 6. Venue is proper pursuant to 28 U.S.C and The statutory bases for the relief requested herein are sections 105(a), 502, 1123(a) and (b), 1124, 1125, 1126 and 1128 of title 11 of the United States Code (the Bankruptcy Code ), Rules 2002, 3016, 3017, 3018 and 3020 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and Rules , and of the Local Bankruptcy Rules for the Southern District of New York (the Local Rules ). RELIEF REQUESTED 8. By this Motion, the Plan Proponents respectfully request that the Court enter the Proposed Order (i) approving the Disclosure Statement as containing adequate information under section 1125 of the Bankruptcy Code; (ii) fixing the date of the Confirmation Hearing; (iii) establishing a deadline and procedures for filing objections to confirmation of the Plan; (iv) establishing a deadline and procedures for the temporary allowance of claims for voting purposes with respect to the Plan; (v) establishing the treatment to be accorded certain contingent, unliquidated, disputed, released and/or satisfied claims for notice and voting purposes; (vi) approving the manner and form of notice of the Confirmation Hearing and procedures for the distribution of solicitation packages; (vii) approving the form of ballots to be sent to creditors entitled to vote on the Plan; (viii) approves the form of notices to be sent to nonvoting creditors and contract and lease counterparties; and (ix) establishes a voting deadline for the receipt of ballots. 3

8 Pg 8 of The Plan Proponents seek the Court s approval for the following schedule of dates and deadlines relating to confirmation of the Plan: Date April 29, 2014, 11:00 a.m. (prevailing Eastern Time) April 29, 2014, 4:00 p.m. (prevailing Eastern Time) May 7, 2014 or the date that is seven (7) calendar days after entry of the Disclosure Statement Order May 16, 2014, 4:00 p.m. (prevailing Eastern Time) May 23, 2014, 4:00 p.m. (prevailing Eastern Time) May 27, 2014 or the date that is approximately ten (10) calendar days prior to the Confirmation Hearing Event(s) (each as defined or described below) Disclosure Statement Hearing Voting Record Date Solicitation Date Deadline for filing Temporary Allowance Motions Temporary Allowance Motion Objection Deadline Voting Deadline Plan Objection Deadline May 30, 2014 June 3, 2014 or the date that is three (3) calendar days prior to the Confirmation Hearing A date to be set by the Bankruptcy Court that is on or after June 6, KCC Certification Deadline Reply Deadline to Plan Objections Confirmation Hearing A. APPROVAL OF DISCLOSURE STATEMENT 10. Section 1125(b) of the Bankruptcy Code provides, in pertinent part, that: 3 The Plan Proponents have been informed by KCC (defined herein) that approximately five (5) business days is needed to print and mail the Disclosure Statement and Plan after the date upon which the Court enters an order approving the Disclosure Statement. The DIP Credit Facility (as defined in the Plan) contains a milestone that confirmation of the Plan occur by May 31, 2014 and a stated maturity date of May 31, Given the notice of the confirmation hearing required under the Bankruptcy Rules and the time required for printing and mailing of the Solicitation Packages (defined herein), the Debtors will be unable to meet such a milestone and will seek an extension of the milestone and the stated maturity date for the DIP Credit Facility consistent with the requested confirmation hearing date of June 6,

9 Pg 9 of U.S.C. 1125(b). [a]n acceptance or rejection of a plan may not be solicited after the commencement of the case under this title from a holder of a claim or interest with respect to such claim or interest, unless, at the time of or before such solicitation, there is transmitted to such holder the plan or a summary of the plan, and a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information. 11. Section 1125(a) of the Bankruptcy Code defines adequate information to mean: 11 U.S.C. 1125(a). information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor s books and records that would enable such a hypothetical investor of the relevant class to make an informed judgment about the plan. 12. Thus, a disclosure statement must, as a whole, provide information that is reasonably practicable to permit an informed judgment by creditors and interest holders, if applicable, to vote on a plan of reorganization. See Momentum Mfg. Corp. v. Emp. Creditors Comm. (In re Momentum Mfg. Corp.), 25 F.3d (2d Cir. 1994). The adequacy of such information is to be determined on a case-specific basis under a flexible standard that can promote the policy of Chapter 11 towards fair settlement through a negotiation process between informed interested parties. Abel v. Shugrue (In re Ionosphere Clubs, Inc.), 179 B.R. 24, 29 (Bankr. S.D.N.Y. 1995) (internal citation omitted). The need to make this determination practically and flexibly is underscored in the legislative history of section 1125 of the Bankruptcy Code: Precisely what constitutes adequate information in any particular instance will develop on a case-by-case basis. Courts will take a practical approach as to what is necessary under the circumstances of each case, such as the cost of preparation of the statements, the need for relative speed in solicitation and confirmation.... In [chapter 11] cases, there is frequently great uncertainty. Therefore the need for flexibility is greatest. 5

10 Pg 10 of 74 See H.R. Rep. No , at (1977), reprinted in 1978 U.S.C.A.N. 5968, Courts are vested with wide discretion in determining whether a disclosure statement contains adequate information within the meaning of section 1125(a) of the Bankruptcy Code. See Kirk v. Texaco, Inc., 82 B.R. 678, 682 (S.D.N.Y. 1988) ( The legislative history could hardly be more clear in granting broad discretion to bankruptcy judges under 1125(a)... ); see also Cadle Co. II, Inc. v. Official Comm. of Unsecured Creditors (In re PC Liquidation Corp.), 383 B.R. 856, 865 (E.D.N.Y. 2008) ( [W]hat constitutes adequate information in any particular situation is determined on a case-by-case basis... with the determination being largely within the discretion of the bankruptcy court. ) (citations omitted). This grant of discretion is intended to permit courts to tailor the disclosures made in connection with the solicitation of votes on a chapter 11 plan to a particular debtor s facts and circumstances. See H.R. Rep at 409; Texaco, 82 B.R. at 682 (stating bankruptcy judges have a clear congressional mandate to exercise broad discretion in chapter 11 cases). 14. The Plan Proponents respectfully submit that the Disclosure Statement contains ample and adequate information to allow parties in interest to make informed judgments about and, to the extent appropriate, vote on the Plan. The Disclosure Statement includes information regarding, among other things: (a) the Debtors, their corporate history, assets, liabilities and business; (b) the conditions preceding the Debtors decision to commence these chapter 11 cases; (c) the significant events that have occurred during these chapter 11 cases, especially with respect to the ongoing sales of substantially all of the Debtors assets; (d) the classification and treatment of Claims and Interests under the Plan; (e) other material terms of the Plan and the means for its implementation; and (f) certain risk factors relating to the Plan. Accordingly, the Plan Proponents respectfully submit that the Disclosure Statement complies with all of the requirements of section 1125 of the Bankruptcy Code and addresses the information set forth 6

11 Pg 11 of 74 above in a manner that provides holders of claims entitled to vote to accept or reject the Plan with adequate information within the meaning of section 1125 of the Bankruptcy Code, and therefore, the Disclosure Statement should be approved. 15. The Plan Proponents also request that the Court authorize them, pursuant to section 1125(b) of the Bankruptcy Code, to transmit copies of the Disclosure Statement (together with all exhibits, including the Plan, and related documents), as approved by the Court, in the manner and upon such persons set forth below. B. CONFIRMATION HEARING DATE 16. The Plan Proponents request that the Bankruptcy Court set a date and time for the Confirmation Hearing that is on or after June 6, The Plan Proponents also request that the Court fix a date and time that is approximately ten (10) calendar days prior to the Confirmation Hearing as the date and time for which objections to confirmation of the Plan must be filed and served. Pursuant to Bankruptcy Rule 2002(b), at least twenty-eight (28) days notice by mail must be given to all creditors of the time fixed for filing objections to, and the hearing to consider, confirmation of a plan. As set forth below, and assuming entry of an order approving this Motion on April 30, 2014, the Plan Proponents propose to serve notice of the Confirmation Hearing and related matters on or before May 7, 2014 or the date that is seven (7) calendar days after entry of the Disclosure Statement Order (the Solicitation Date ). This will provide creditors with at least thirty-one (31) days notice of the Confirmation Hearing and thus satisfies the notice requirements of Bankruptcy Rule 2002(b). 17. The Plan Proponents also request that the Court direct that the Confirmation Hearing may be continued from time to time by announcing such continuance in open court, or by a notice of adjournment filed with the Court and served on (a) all entities that have filed a request for service of filings in the chapter 11 cases pursuant to Bankruptcy Rule 2002 and 7

12 Pg 12 of 74 (b) other parties entitled to notice under the Order Pursuant to 11 U.S.C. 105(a) and (d) and Bankruptcy Rules 1015(c), 2002(m), and 9007 Implementing Certain Notice and Case Management Procedures [ECF No. 65] (the Case Management Order ). Further, the Plan Proponents request that the Court direct that the Plan may be modified pursuant to section 1127 of the Bankruptcy Code prior to, during, or as a result of the Confirmation Hearing, in each case, without further notice to parties in interest, provided that any such modification does not materially and adversely affect any class of claims under the Plan. C. NOTICE OF CONFIRMATION HEARING AND RELATED ISSUES; CONTENT AND TRANSMITTAL OF SOLICITATION PACKAGES, AND ESTABLISHMENT OF VOTING RECORD DATE 18. Bankruptcy Rule 3017(d) specifies the materials to be distributed to creditors upon approval of a disclosure statement. Pursuant to Bankruptcy Rule 3017(d), the Plan Proponents propose to transmit, no later than the Solicitation Date, to certain creditors identified herein, either (1) a solicitation package (each, a Solicitation Package ) containing a copy or conformed version of: (a) a notice (the Confirmation Hearing Notice ), substantially in the form attached hereto as Exhibit B, of (i) the approval of the Disclosure Statement, (ii) the date of the Confirmation Hearing, (iii) the deadline and procedures for filing objections to Confirmation of the Plan, (iv) the deadline and procedures for the temporary allowance of claims for voting purposes, (v) the treatment to be accorded certain contingent, unliquidated, disputed, released and/or satisfied claims for notice and voting purposes, (vi) notice of the hearing to consider confirmation of the Plan and procedures for the distribution of Solicitation Packages, (vii) the approval of the form of ballots to be used in connection with the Solicitation Package, and (viii) the voting deadline for receipt of ballots; (b) the Disclosure Statement, in either paper form or CD-ROM format; (c) the Plan (which shall be furnished in the Solicitation Package as Exhibit A to the Disclosure Statement); (d) the order granting this Motion, in either paper form or CD- 8

13 Pg 13 of 74 ROM format and (e) if applicable, a personalized ballot, with instructions attached thereto [(and a pre-addressed, postage prepaid return envelope)]; or (2) a Non-Voting Status Notice (as defined herein) and a copy of the Confirmation Hearing Notice (together, a Non-Voting Package ). 19. The Plan Proponents propose that (a) creditors holding claims in classes designated as Impaired and entitled to vote receive the Solicitation Package by first-class mail and (b) Interest holders and holders of Unimpaired claims who are not entitled to vote receive the Non-Voting Package by first class mail or, if available, or facsimile. 20. The Plan Proponents propose to send to each voting party (a) only the Solicitation Package appropriate for the voting class(es) applicable to such voting party, and (b) only one Solicitation Package, even if such voting party has claims or interests in more than one of the Debtors. 21. The Plan Proponents further propose that they not be required to transmit Solicitation Packages, Non-Voting Packages or other notices, or to re-send such materials, to any person whose mail was returned to KCC marked undeliverable or moved-no forwarding address or similar marking, unless KCC or the Plan Proponents learn of that person s new or correct address. 22. In addition, the Plan Proponents propose to publish the Confirmation Hearing Notice (in a format modified for publication) in USA Today on a date at least fifteen (15) calendar days prior to the Voting Deadline. Bankruptcy Rule 2002(l) permits the Bankruptcy Court to order notice by publication if it finds that notice by mail is impracticable or that it is desirable to supplement notice. Fed. R. Bankr. P. 2002(l). 23. The Plan Proponents believe that the transmittal and mailing of the Solicitation Packages and Non-Voting Packages as described herein and the publication of the Confirmation 9

14 Pg 14 of 74 Hearing Notice will provide adequate notice to creditors of the Confirmation Hearing and related dates and deadlines and comply with applicable law. D. NOTICES TO CLASSES DEEMED TO ACCEPT OR REJECT THE PLAN 24. In compliance with section 1123(a)(1) of the Bankruptcy Code and as reflected in the Plan, Administrative Claims (including Professional Fee Claims) and Priority Tax Claims are not classified and will be Unimpaired under the Plan. See 11 U.S.C. 1123(a)(1) (providing for classification of claims other than administrative and priority tax claims). As such, holders of these unclassified claims are not entitled to vote on the Plan. In addition, the Plan provides that holders of Real Property Tax Claims and Other Secured Claims are Unimpaired under the Plan and such holders are therefore deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of such claims are therefore not entitled to vote on the Plan. 25. Thus, the Plan Proponents do not intend to solicit votes from Holders of DIP Claims, Administrative Claims, Priority Tax Claims, Real Property Tax Claims and Other Secured Claims. The Plan Proponents will, however, send each such claimant a Non-Voting Package, including a Non-Voting Status Notice with Respect to Unimpaired Classes Deemed to Accept the Joint Chapter 11 Plan of Liquidation for Metro Affiliates, Inc. and Its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors, substantially in the form attached hereto as Exhibit C (the Non-Voting Status Notice Deemed to Accept ), in lieu of a Solicitation Package. The notice will explain to such Holders their nonvoting status and that such holders may obtain certain materials in the Solicitation Package from the Debtors claims, noticing and solicitation agent, Kurtzman Carson Consultants, LLC ( KCC ). 26. The Plan Proponents also do not intend to solicit votes from holders of Interests as the Plan provides that, on the Effective Date, all Interests shall be deemed canceled, released and 10

15 Pg 15 of 74 extinguished, and will be of no further force or effect. Holders of Interests are therefore conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. The Plan Proponents will, however, send to each Interest holder a Non-Voting Package, including a Non-Voting Status Notice with Respect to Impaired Classes Deemed to Reject the Debtors Joint Chapter 11 Plan of Liquidation for Metro Affiliates, Inc. and Its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors, substantially in the form attached hereto as Exhibit D (the Non-Voting Status Notice Deemed to Reject and together with the Non-Voting Status Notice Deemed to Accept, the Non- Voting Status Notices ), in lieu of a Solicitation Package. The notice will explain to such Holders their non-voting status and that such holders may obtain certain materials in the Solicitation Package from KCC. 27. The Plan Proponents respectfully submit that the Non-Voting Status Notices and the proposed procedures related thereto comply with applicable law and therefore should be approved. E. NOTICE TO COUNTERPARTIES TO EXECUTORY CONTRACTS AND UNEXPIRED LEASES 28. To ensure that counterparties to executory contracts and unexpired leases whose executory contracts or unexpired leases have not already been rejected by a prior order of the Bankruptcy Court receive appropriate notice of the rejection of their contract or lease pursuant to the Plan, such counterparties shall receive the Notice to Contract and Lease Counterparties, substantially in the form attached hereto as Exhibit E (the Notice to Contract and Lease Counterparties ) on or before May 21, 2014 (or the date that is ten (10) business days after the Solicitation Date). If any such counterparty is also a holder of a Claim or Interest, such counterparty shall also receive a Solicitation Package or Non-Voting Package, as applicable, in 11

16 Pg 16 of 74 accordance with the Solicitation Procedures. The Plan Proponents respectfully submit that the Notice to Contract and Lease Counterparties complies with the Bankruptcy Code and the Bankruptcy Rules and should therefore be approved. F. DEADLINE AND PROCEDURES FOR FILING OBJECTIONS TO CONFIRMATION 29. Bankruptcy Rule 3020(b)(l) provides that objections to confirmation of a plan must be filed and served within a time fixed by the court. Local Rule further provides that, unless the Court orders otherwise, objections to confirmation of a chapter 11 plan shall be filed not later than seven (7) days prior to the first date set for the hearing to consider confirmation of the plan. The Plan Proponents request that this Court fix a date and time which is approximately ten (10) calendar days before the Confirmation Hearing for filing and serving objections to confirmation of the Plan (the Plan Objection Deadline ). This date will allow the Plan Proponents to provide creditors and other interested parties with ample notice by mail of the time by which objections to the Plan must be filed and provide the Plan Proponents with the time necessary to consider and, if necessary, respond to any objections that may be filed. Objections to the Plan, if any, must be in writing, shall conform to the Bankruptcy Rules, the Local Rules and the Case Management Order, and shall be filed with the Court and served upon the Notice Parties (as defined below) and counsel to the Plan Proponents on or before the Plan Objection Deadline. The Plan Proponents request that all objections not timely filed and served in accordance with the provisions of this Motion shall be deemed waived. 30. The Plan Proponents propose to file any response to any objections filed to confirmation of the Plan, and any briefs and/or affidavits in support of confirmation of the Plan, by no later than 4:00 p.m. (prevailing Eastern Time) on June 3, 2014 or the date that is three (3) calendar days prior to the Confirmation Hearing. 12

17 Pg 17 of 74 G. TEMPORARY ALLOWANCE MOTIONS AND NON-CREDITORS 31. The Plan Proponents respectfully request that the Court fix May 16, 2014 as the last day for creditors that hold disputed, contingent, unliquidated, disputed, released and/or satisfied claims to file motions for the temporary allowance of such claims for purposes of accepting or rejecting the Plan (the Temporary Allowance Motions ), if any. The Plan Proponents propose that any objections to Temporary Allowance Motions shall be filed and served on or before May 23, 2014 at 4:00 p.m. (prevailing Eastern Time) and, in light of the abbreviated period prior to the Voting Deadline, that reply papers be waived. 32. The Plan Proponents propose that a party who files a Temporary Allowance Motion be permitted to submit a provisional ballot in respect of the claim(s) that is the subject of the motion, and that such ballot be counted by KCC only after entry of an order granting the Temporary Allowance Motion. To that end, the Plan Proponents respectfully request that any order temporarily allowing claims be entered on or before the Certification Deadline of May 30, Before or after the filing of a Temporary Allowance Motion, the Plan Proponents and a claimant may stipulate to the amount or classification of its claim(s) for voting purposes only pursuant to a stipulation and order filed on presentment (in lieu of filing other pleadings). 34. Bankruptcy Rule 3003(c)(2) provides that [a]ny creditor or equity security holder whose claim or interest is not scheduled or scheduled as disputed, contingent, or unliquidated shall file a proof of claim or interest within the time prescribed by subdivision (c)(3) of this rule; any creditor who fails to do so shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution. Notwithstanding the orders entered by the Court establishing deadlines for filing proofs of claim and the service of notice and publication notice thereof, certain creditors whose claims were scheduled as unliquidated, disputed and/or 13

18 Pg 18 of 74 contingent may have failed to timely file proofs of claim. Hence, the Plan Proponents request that the Court specifically direct that any holder of a claim (a) that is listed in the Schedules as disputed, contingent or unliquidated and (b) that is not the subject of a timely filed proof of claim or an order specifically allowing such claim (any such holder, a Non-Creditor ), shall not be treated as a Creditor with respect to such claim for purposes of receiving distributions under the Plan or for voting on the Plan. 35. Moreover, so as to avoid the time and significant expense associated with producing large numbers of copies and service upon thousands of entities who can neither vote on, nor receive a distribution under, the Plan, 4 the Plan Proponents have included in the Proposed Order a finding that, following entry of the Disclosure Statement Order, (a) Non-Creditors and (b) any party listed in the Debtors creditor matrix who is not listed in the Schedules and did not file a proof of claim, shall no longer be treated as Creditors for the purpose of receiving notices in the chapter 11 cases and shall be removed from the creditor matrix. H. VOTING ON THE PLAN AND RELATED MATTERS i. Approval of Ballots 36. In accordance with Bankruptcy Rule 3018(c), the Plan Proponents have prepared customized ballots for holders of claims, substantially in the form of the ballots attached as Exhibit F hereto, to tabulate acceptances and rejections of the Plan. 37. The forms of the ballots are based on Official Form No. 14 and have been modified to: (a) address the particular circumstances of the chapter 11 cases; and (b) include certain additional information that the Plan Proponents believe to be relevant and appropriate for each class of claims entitled to vote on the Plan. See Fed. R. Bankr. P. 3017(d) and 3018(c). 4 The Debtors had included thousands of former employees and former trade creditors in their creditor matrix in order to achieve the broadest possible notice of these chapter 11 cases. If such parties do not have or assert a claim against or interest in the Debtors, however, such broad notice is no longer necessary or cost-effective. 14

19 Pg 19 of In addition, the ballots include information on the voluntary third-party releases provided in Section of the Plan and contain clear instructions for creditors to opt out of granting such releases if they so desire. The ballots also clearly state that the creditors decision whether or not to grant the third-party releases will not have any effect on such creditor s right to receive a distribution under the Plan. 39. The Plan Proponents submit that the forms of ballots comply with the Bankruptcy Rules and therefore should be approved. 40. The Plan Proponents request authority to make non-substantive changes to the Disclosure Statement, the Plan, the ballots and any related documents without further order of the Court, which include, without limitation, clerical changes to correct typographical and grammatical errors, and to make conforming changes to the Disclosure Statement, the Plan and any other materials in the Solicitation Packages or the Non-Voting Packages prior to mailing as may be appropriate. The Plan Proponents further seek authority, but not direction, for KCC to contact creditors that have submitted invalid or defective ballots, as described below, to correct the defect in such party s ballot. ii. Establishment of Voting Record Date 41. The Plan Proponents further request that the Court establish a record date (the Voting Record Date ) with respect to the solicitation of votes from creditors. The Plan Proponents propose that April 29, 2014 at 4:00 p.m. (prevailing Eastern Time) be set as the Voting Record Date. The Claims Register shall be deemed closed as of the Voting Record Date, and only those holders of claims listed in the Claims Register as of the Voting Record Date shall be entitled to vote to accept or reject the Plan. The Plan Proponents will have no obligation to recognize for purposes of voting on the Plan the holder of any claim transferred after the Voting Record Date. 15

20 Pg 20 of 74 iii. Voting Deadline for Receipt of Ballots 42. Bankruptcy Rule 3017(c) requires the court to fix a time within which holders of claims may accept or reject a plan. The Plan Proponents request that the Court fix 5:00 p.m. (prevailing Eastern Time) on May 27, 2014 or the date that is ten (10) calendar days prior to the Confirmation Hearing (the Voting Deadline ) as the last date by which ballots for accepting or rejecting the Plan must be received by the KCC in order to be included in the tabulation of ballots. The proposed Voting Deadline is twenty (20) days after the proposed date for transmitting the Solicitation Packages and ten (10) days before the anticipated Confirmation Hearing. This deadline will afford creditors sufficient time to vote and will provide the Plan Proponents with adequate time to tabulate the Ballots expected to be returned. iv. Procedures for Vote Tabulation I. Ballots Counted as Acceptances 43. The Plan Proponents propose that the following ballots be counted and be deemed to be cast as acceptances of the Plan: (a) (b) (c) any ballot timely received that is properly executed and contains sufficient information to permit the identification of the claimant and that is cast as an acceptance of the Plan; any ballot timely received that is properly executed and cast as an acceptance of the Plan by a claimant which has previously submitted a ballot that voted to reject the Plan, such that the latter submitted ballot shall be deemed to supersede and amend the earlier submitted ballot; and any ballot timely received that is properly executed and (i) indicates neither an acceptance nor rejection of the Plan or (ii) indicates both an acceptance and rejection of the Plan. 16

21 Pg 21 of 74 II. Ballots Not Counted 44. The Plan Proponents propose that unless otherwise ordered by the Court after notice to the Plan Proponents and a hearing, the following ballots should not be counted in determining whether the Plan has been accepted or rejected: (a) (b) (c) (d) (e) (f) (g) any ballot received after the Voting Deadline as set forth herein; any ballot that is illegible or contains insufficient information to permit the identification of the claimant; any ballot cast by (i) a creditor who has not timely filed a proof of claim with respect to the claim being voted, and whose claim either is not listed, or is listed as a disputed, contingent or unliquidated claim, on the Schedules or (ii) a creditor who has timely filed a proof of claim which is filed as contingent, unliquidated or disputed or is the subject of an objection, unless (1) such creditor has its claim temporarily allowed for voting purposes pursuant to the procedures outlined herein or (2) such claim is an Insured Claim, as described below; any ballot cast by a person that does not hold a claim in a class that is entitled to vote to accept or reject the Plan; any ballot which does not contain an original signature; any ballot which is unsigned; and any ballot received by KCC by facsimile, or other electronic communication. III. Amount and Number; Multiple Ballots 45. Claim Amounts. In determining whether a particular class of claims has accepted the Plan by the requisite dollar amount, the Plan Proponents propose that, for voting purposes only, the amount of each claim counted be: (a) the amount allowed by a final order of the Court; or (b) the amount temporarily allowed by the Court pursuant to Bankruptcy Rule 3018(a); or (c) if not allowed under (a) or (b) above, then (i) the liquidated amount specified in a 17

22 Pg 22 of 74 proof of claim timely filed by such voting creditor and not subject to an objection; or (ii) if no proof of claim has been timely filed, on the basis of the undisputed, noncontingent and liquidated amount of such claim as it appears in the Schedules. The amount and classification of a claim listed on a ballot shall be without prejudice to the Plan Proponents right to file an objection to such claim for any purpose. 46. Specifically with respect to Insured Claims in Class 6 under the Plan, however, the Plan Proponents propose to permit holders of Insured Claims that are listed in an amount in the Schedules or in the amount set forth on a proof of claim to vote in such amount, regardless of whether such claim is listed as disputed, contingent or unliquidated. If no amount is set forth in the Schedules or on a proof of claim for an Insured Claim that is disputed, contingent or unliquidated, the Plan Proponents propose to permit the holder of such claim to vote in the amount of $1.00. The Plan Proponents submit that this procedure will facilitate voting for Class 6, as almost all of the Claims in Class 6 are disputed, contingent or unliquidated. For the avoidance of doubt, any such Insured Claim remains subject to objection and is not Allowed for any purpose other than voting. 47. Changing Votes. Whenever two or more ballots are cast voting the same claim prior to the Voting Deadline, the Plan Proponents propose that the last valid ballot received prior to the Voting Deadline shall be deemed to reflect the voter s intent and thus to supersede any prior ballots submitted in respect of such claim (even if submitted by a different record holder). 48. No Vote Splitting; Effect. Creditors must vote all of their claims within a particular class under the Plan to either accept or reject the Plan and may not split their votes. Accordingly, the Plan Proponents propose that a ballot that partially rejects and partially accepts the Plan will be deemed to be and will be counted as an acceptance of the Plan. 18

23 Pg 23 of Duplicative Claims. To the extent that any creditor entitled to vote in a given class has filed duplicate proofs of claim (meaning the claims are in the same amount, with the same classification and asserting the same basis of claim) to be voted in such class, such creditor shall be provided, to the extent possible, with only one Solicitation Package and one ballot which shall reflect the vote of only one such claim. 50. Counting Votes. If a party that is entitled to vote has more than one claim within the same class against one or more of the Debtors based upon different transactions, such party shall be entitled to one vote for numerosity purposes in the aggregate dollar amount of all of said claims. 51. Certification of Acceptance or Rejection of Plan. In furtherance of Local Rule , the Plan Proponents shall, at least seven (7) days prior to the Confirmation Hearing (the Certification Deadline ), certify to the Court and file on the docket of the chapter 11 cases the amount and number of Allowed Claims of each Class accepting or rejecting the Plan. A copy of such certification shall be served by KCC upon the Notice Parties and counsel to the Plan Proponents. NOTICE 52. Notice of this Motion shall be provided to: (a) the U.S. Trustee, (b) counsel to Wells Fargo, (c) counsel to certain holders of the Notes, (d) counsel to BNYM, as indenture trustee for the Notes, (e) the IRS, (f) the United States Attorney for the Southern District of New York, (g) the National Labor Relations Board, (h) Corporation Counsel of the City of New York, (i) counsel to Local , Amalgamated Transit Union, AFL-CIO and (j) parties in interest who have filed a notice of appearance in these cases pursuant to Bankruptcy Rule 2002 (collectively, the Notice Parties ). 19

24 Pg 24 of 74 NO PRIOR REQUEST 53. No prior request for the specific relief sought in this Motion has been made to this or any other court in connection with these chapter 11 cases. 20

25 Pg 25 of 74 CONCLUSION WHEREFORE, the Plan Proponents request that the Court (i) approve this Motion in all respects, (ii) enter the Proposed Order and (iii) grant the Plan Proponents such further relief as is just and proper. Dated: New York, New York March 31, 2014 /s/ Lisa G. Beckerman AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York Tel: (212) Fax: (212) Lisa G. Beckerman Rachel Ehrlich Albanese Counsel to the Debtors and Debtors in Possession /s/ Patrick T. Collins FARRELL FRITZ, P.C. Ted A. Berkowitz Patrick T. Collins Veronique A. Urban 1320 RXR Plaza Uniondale, New York Tel: (516) Fax: (516) Counsel for the Official Committee of Unsecured Creditors Interwoven\

26 Pg 26 of 74 Exhibit A Proposed Order

27 Pg 27 of 74 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re: Chapter 11 METRO AFFILIATES, INC., et al. 1, Debtors x Case No (SHL) Jointly Administered ORDER (A) APPROVING THE DISCLOSURE STATEMENT; (B) APPROVING CERTAIN DATES RELATED TO CONFIRMATION OF THE PLAN; (C) APPROVING CERTAIN VOTING PROCEDURES AND THE FORM OF CERTAIN DOCUMENTS TO BE DISTRIBUTED IN CONNECTION WITH THE SOLICITATION OF THE PLAN; AND (D) APPROVING PROPOSED VOTING AND GENERAL TABULATION PROCEDURES Upon the motion (the Motion ) 2 of the above-captioned debtors and debtors in possession (the Debtors ) and the Official Committee of Unsecured Creditors appointed in these cases (the Committee and, together with the Debtors, the Plan Proponents ) for entry of an order: (i) approving the Disclosure Statement; (ii) scheduling a hearing to consider confirmation of the Plan; (iii) establishing a deadline and procedures for filing objections to confirmation of the Plan; (iv) establishing a deadline and procedures for the temporary allowance of claims for voting purposes with respect to the Plan; (v) establishing the treatment to be 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayer identification number, are: 180 Jamaica Corp. (7630); Amboy Bus Co., Inc. (2369); Atlantic Escorts, Inc. (8870); Atlantic Express Coachways, Inc. (2867); Atlantic Express New England, Inc. (4060); Atlantic Express of California, Inc. (5595); Atlantic Express of Illinois, Inc. (5759); Atlantic Express of LA, Inc. (1639); Atlantic Express of Missouri, Inc. (3116); Atlantic Express of New Jersey, Inc. (8504); Atlantic Express of Pennsylvania, Inc. (0330); Atlantic Express Transportation Corp. (4567); Atlantic Queens Bus Corp. (0276); Atlantic Paratrans of NYC, Inc. (1114); Atlantic Paratrans, Inc. (3789); Atlantic Transit, Corp. (7142); Atlantic-Hudson, Inc. (5121); Block 7932, Inc. (3439); Brookfield Transit, Inc. (8247); Courtesy Bus Co., Inc. (5239); Fiore Bus Service, Inc. (1233); Groom Transportation, Inc. (7208); G.V.D. Leasing, Inc. (0595); James McCarty Limo Services, Inc. (8592); Jersey Business Land Co. Inc. (3850); K. Corr, Inc. (4233); Merit Transportation Corp. (8248); Metro Affiliates, Inc. (0142); Metropolitan Escort Service, Inc. (9197); Midway Leasing, Inc. (7793); R. Fiore Bus Service, Inc. (3609); Raybern Bus Service, Inc. (9412); Raybern Capital Corp. (6990); Raybern Equity Corp. (3830); Robert L. McCarthy & Son, Inc. (4617); Staten Island Bus, Inc. (6818); Temporary Transit Service, Inc. (0973); Atlantic Express of Upstate New York Inc. (1570); Transcomm, Inc. (4493); and Winsale, Inc. (2710). The Debtors service address at Metro Affiliates, Inc. s corporate headquarters is 7 North Street, Staten Island, NY Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Motion or the Plan, as applicable.

28 Pg 28 of 74 accorded certain contingent, unliquidated, disputed, released and/or satisfied claims for notice and voting purposes; (vi) approving the form of notice of the hearing to consider confirmation of the Plan and procedures for distribution of solicitation packages; (vii) approving the form of ballots; (viii) approving the form of notices to be sent to non-voting creditors and contract and lease counterparties, and (ix) establishing a voting deadline for receipt of ballots; and it appearing that this Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. 157 and 1334; and it appearing that venue of these chapter 11 cases and the Motion in this district is proper pursuant to 28 U.S.C and 1409; and a hearing having been held on [April 29, 2014] (the Disclosure Statement Hearing ) at which all parties in interest were offered an opportunity to be heard with respect to the Disclosure Statement and the Motion; and it appearing that this matter is a core proceeding pursuant to 28 U.S.C. 157(b); and this Court having reviewed (a) the Disclosure Statement, all modifications thereof and objections thereto (if any), (b) the Motion and objections, responses and replies thereto (if any) and (c) arguments of counsel made and the evidence proffered or adduced at the Disclosure Statement Hearing; and the Court having found that the legal and factual bases set forth in the Motion and at the Disclosure Statement Hearing establish just cause for the relief granted herein and that the relief requested in the Motion is in the best interests of the Debtors, their estates, their creditors and other parties in interest; and this Court having found that proper and adequate notice of the Motion and the relief requested therein has been provided; and objections (if any) to the Motion having been withdrawn or overruled on the merits; and after due deliberation thereon; and good and sufficient cause appearing therefor, 2

29 Pg 29 of 74 IT IS HEREBY FOUND AND DETERMINED THAT: 1. In accordance with the procedures and dates approved and prescribed by the Court, proper and adequate notice of the Motion, the Disclosure Statement Hearing and the deadline for filing objections to the Disclosure Statement was provided by the Plan Proponents. 2. Notice of the Motion and the Disclosure Statement Hearing, as approved and prescribed by the Court, constituted adequate and sufficient notice pursuant to the Bankruptcy Code and Bankruptcy Rules. 3. The Disclosure Statement, as amended, modified or supplemented by the record of the Disclosure Statement Hearing and revisions made or to be made as a result thereof, if any, contains adequate information, as that term is defined in section 1125 of the Bankruptcy Code. 4. The procedures proposed by the Plan Proponents in the Motion are reasonable and appropriate. IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT: Approval of Disclosure Statement 5. Pursuant to Bankruptcy Rule 3017(b), the Disclosure Statement (including all exhibits thereto), as amended, modified or supplemented by the record of the Disclosure Statement Hearing and the revisions, if any, made or to be made as a result thereof is hereby approved in all respects. 6. The relief requested in the Motion is granted in all respects, as more fully described below. Confirmation Hearing Date 7. Pursuant to Bankruptcy Rule 3017(c), the hearing (the Confirmation Hearing ) to consider confirmation of the Plan shall be held before the Honorable Sean H. Lane, United 3

30 Pg 30 of 74 States Bankruptcy Judge, at the United States Bankruptcy Court located at One Bowling Green, New York, NY , on [June 6, 2014] at :_0 _.m. (prevailing Eastern Time), or as soon thereafter as counsel can be heard, and may be adjourned from time to time without further notice (other than by announcement of the adjourned date or dates in open court, or by a notice of adjournment filed with the Court and served on (a) all entities that have filed a request for service of filings in the chapter 11 cases pursuant to Bankruptcy Rule 2002 and (b) other parties entitled to notice under the Order Pursuant to 11 U.S.C. 105(a) and (d) and Bankruptcy Rules 1015(c), 2002(m), and 9007 Implementing Certain Notice and Case Management Procedures [ECF No. 65] (the Case Management Order ). The Plan may be modified, amended or supplemented pursuant to section 1127 of the Bankruptcy Code prior to, during, or as a result of the Confirmation Hearing, without further notice to parties in interest; provided that such modifications, amendments or supplements do not materially and adversely affect any class of claims in the Plan. Deadline and Procedures for Filing Objections to Confirmation 8. Pursuant to Bankruptcy Rule 3020(b)(1), [May 27, 2014] at 4:00 p.m. (prevailing Eastern Time) is fixed as the last date for filing and serving objections to confirmation of the Plan (the Objection Deadline ). 9. Objections to the Plan, if any, must be in writing, shall conform to the Bankruptcy Rules and the Local Rules and the Order Pursuant to 11 U.S.C. 105(a) and (d) and Bankruptcy Rules 1015(c), 2002(m), and 9007 Implementing Certain Notice and Case Management Procedures [ECF No. 65] (the Case Management Order ), and shall be filed with the Bankruptcy Court either (i) electronically in accordance with General Order M-399 (which can be found at by registered users of the Bankruptcy Court s 4