Case MBK Doc 1058 Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Main Document Page 1 of 2

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1 Case MBK Doc 1058 Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Main Document Page 1 of 2 UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE ANDREW R. VARA ACTING UNITED STATES TRUSTEE, REGION 3 Peter J. D Auria, Esq. (PD 3709) One Newark Center, Suite 2100 Newark, NJ Telephone: (973) Fax: (973) Peter.J.D Auria@usdoj.gov UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY : Chapter 11 In re: : : Case No (MBK) Kid Brands, Inc., et al. 1, : (Jointly Administered) : Hearing Date: Nov. 6, 2017 at 11:00 a.m. Debtors. : : ORAL ARGUMENT REQUESTED NOTICE OF MOTION OF THE ACTING UNITED STATES TRUSTEE FOR AN ORDER CONVERTING THE CASES TO CHAPTER 7 OR, IN THE ALTERNATIVE, DISMISSING THE CASES PURSUANT 11 U.S.C. 1112(b) TO: ALL PERSONS ON ATTACHED CERTIFICATE OF SERVICE PLEASE TAKE NOTICE that the Acting United States Trustee will move before the Honorable Michael B. Kaplan on November 6, 2017 at 11:00 a.m., or as soon thereafter as counsel may be heard, at the United States Bankruptcy Court, District of New Jersey, Clarkson S. Fisher U.S. Courthouse, 402 East State Street, Trenton, New Jersey, for an Order Converting the Cases to Chapter 7 or, in the alternative, Dismissing the Cases Pursuant to 11 U.S.C (b) and for such other and further relief as this Court deems just and appropriate. 1 This caption is intended to identify all seven (7) separate entities that are the subject of this jointly administered proceeding, such entities being Kid Brands, Inc. (Case No (MBK)), Kids Line, LLC (Case No (MBK)), Sassy, Inc. (Case No (MBK)), I&J Holdco, Inc. (Case No (MBK)), LaJobi, Inc. (Case No (MBK)), CoCaLo, Inc. (Case No (MBK)), RB Trademark Holdco, LLC (Case No (MBK)).

2 Case MBK Doc 1058 Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Main Document Page 2 of 2 PLEASE TAKE FURTHER NOTICE that any papers in opposition to the Motion must be filed with the Court and served upon the United States Trustee no later than seven days in advance of the hearing date pursuant to District of New Jersey Local Bankruptcy Rule (a)(2). If opposing papers are not filed and served within the required time, the Motion will be decided on the papers pursuant to District of New Jersey Local Bankruptcy Rule (d), and an Order either (i) Converting these Chapter 11 Cases to Chapter 7 Cases, or (ii) Dismissing these Chapter 11 Cases, may be signed and entered in the Court's discretion. ANDREW R. VARA ACTING UNITED STATES TRUSTEE REGION 3 DATED: September 21, 2017 /s/ Peter J. D Auria Peter J. D Auria Trial Attorney

3 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 1 of 6 UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE ANDREW R. VARA ACTING UNITED STATES TRUSTEE, REGION 3 Peter J. D Auria, Esq. (PD 3709) One Newark Center, Suite 2100 Newark, NJ Telephone: (973) Fax: (973) Peter.J.D Auria@usdoj.gov UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY : Chapter 11 In re: : : Case No (MBK) Kid Brands, Inc., et al. 1, : (Jointly Administered) : Hearing Date: Nov. 6, 2017 at 11:00 a.m. Debtors. : : ORAL ARGUMENT REQUESTED MEMORANDUM OF LAW IN SUPPORT OF MOTION OF THE ACTING UNITED STATES TRUSTEE FOR AN ORDER CONVERTING THE CASES TO CHAPTER 7 OR, IN THE ALTERNATIVE, DISMISSING THE CASES PURSUANT 11 U.S.C. 1112(b) THE ACTING UNITED STATES TRUSTEE ( UST ), by and through counsel, in furtherance of his duties and responsibilities, hereby respectfully moves for an Order Converting the Cases to Chapter 7 or, in the Alternative, Dismissing the Cases Pursuant to 11 U.S.C (b), and for such other and further relief as this Court deems just and appropriate. 1. Under 28 U.S.C. 586(a)(8), the UST has a duty to apply promptly to this Court after finding material grounds for seeking relief under 11 U.S.C This duty is part of the UST s overarching responsibility to enforce the laws as written by Congress and 1 This caption is intended to identify all seven (7) separate entities that are the subject of this jointly administered proceeding, such entities being Kid Brands, Inc. (Case No (MBK)), Kids Line, LLC (Case No (MBK)), Sassy, Inc. (Case No (MBK)), I&J Holdco, Inc. (Case No (MBK)), LaJobi, Inc. (Case No (MBK)), CoCaLo, Inc. (Case No (MBK)), RB Trademark Holdco, LLC (Case No (MBK)).

4 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 2 of 6 interpreted by the courts. See United States Trustee v. Columbia Gas Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, (3d Cir. 1994) (noting that UST has public interest standing under 11 U.S.C. 307 which goes beyond mere pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498, 500 (6 th Cir. 1990) (describing the UST as a watchdog ). BACKGROUND 2. On June 18, 2014, the seven (7) related above-captioned debtors (the Debtor(s) ) each filed a voluntary petition for relief under chapter 11 of Title 11, United States Code (the Bankruptcy Code ), and each Debtor remained in possession of its property and management of its affairs. 3. On or about July 2, 2014, the UST formed the Official Committee of Unsecured Creditors (the Committee ) (Docket Entry 112). 4. A review of the docket in this case indicates that, as of the filing of this Motion, the Debtors have only filed monthly operating reports through and including the month of April Additionally, a review of the docket in this case indicates that, as of the filing of this Motion, the Debtors have not filed any disclosure statement or plan of reorganization U.S.C. 1112(b)(1) provides: ARGUMENT Except as provided in paragraph (2) and subsection (c), on request of a party in interest, and after notice and a hearing, the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause unless the court determines that the appointment under section 1104(a) of a trustee or an examiner is in the best interests of creditors and the estate.

5 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 3 of 6 7. Cause is defined in 11 U.S.C. 1112(b)(4) as including (A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; (B) gross mismanagement of the estate; (C) failure to maintain appropriate insurance that poses a risk to the estate or to the public; (D) unauthorized use of cash collateral substantially harmful to 1 or more creditors; (E) failure to comply with an order of the court; (F) unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter; (G) failure to attend the meeting of creditors convened under section 341(a) or an examination ordered under rule 2004 of the Federal Rules of Bankruptcy Procedure without good cause shown by the debtor; (H) failure timely to provide information or attend meetings reasonably requested by the United States Trustee (or the bankruptcy administrator, if any); (I) failure timely to pay taxes owed after the date of the order for relief or to file tax returns due after the date of the order for relief; (J) failure to file a disclosure statement, or to file or confirm a plan within the time fixed by this title or by order of the court; (K) failure to pay any fees or charges required under chapter 123 of title 28; (L) revocation of an order of confirmation under section 1144; (M) inability to effectuate substantial consummation of a confirmed plan; (N) material default by the debtor with respect to a confirmed plan; (O) termination of a confirmed plan by reason of the occurrence of a specific condition in the plan; and

6 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 4 of 6 (P) failure of the debtor to pay domestic support obligation that first becomes payable after the date of the filing of the petition. 8. It is well settled that the list of factors constituting cause are not exhaustive. The legislative history for the statute provides in part, [t]he court will be able to consider other factors, and to use its equitable powers to reach an appropriate result in individual cases. H. Rep. 595, 95 th Cong., 1 st Sess. 406 (1977). See, In re Pittsfield Weaving Company, 393 B.R. 271, 274 (Bankr. D.N.H. 2008) (Section 1112(b)(4) provides a non-exhaustive list of causes for conversion or dismissal). Deficiency in Timely Filing Monthly Operating Reports: 9. Pursuant to 11 U.S.C. 704(a)(7) and (8), made applicable in Chapter 11 cases by 11 U.S.C. 1106(a)(1) and 1107 (a) and Fed. R. Bankr. P. 2015, a debtor is required to supply certain reports concerning the estate s administration and the operation of the debtor s post-petition business as prescribed by the United States Trustee Operating Guidelines and Reporting Requirements for Chapter 11 cases, which were distributed to the Debtors at the inception of these Cases. 10. The Debtors have failed to comply with the United States Trustee Operating Guidelines and Reporting Requirements for Chapter 11 cases. A review of the docket in these cases indicates that, as of the filing of this Motion, the Debtors have only filed monthly operating reports through and including the month of April The Debtors failure to timely file monthly operating reports hinders the Court s, the UST s, and creditors ability to monitor the operations of the Debtors. For example, in the absence of reports, it is impossible to determine whether the Debtors are current with post-petition obligations, have paid the correct quarterly fees to the United States Trustee Program, or have the ability to confirm a plan of reorganization.

7 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 5 of The reporting requirements mandate that (a) prior to confirmation a debtor file monthly operating reports within days following the end of each month, and (b) after confirmation that a debtor file quarterly reports within thirty days following the end of each calendar quarter. 12. The Debtors have failed to timely file monthly operating reports. The unexcused failure to satisfy timely any filing or reporting requirement is cause to convert pursuant to 11 U.S.C. 1112(b)(4)(F). Accordingly, relief is warranted under 11 U.S.C. 1112(b)(1). Status of the Debtors Operations and of the Bankruptcy Case: 13. As outlined above, a review of the docket in this case indicates that, as of the filing of this Motion, no disclosure statement or plan of reorganization has been filed. 14. As these cases continue in chapter 11, attendant administrative costs naturally follow. Upon the events of these cases, the Debtors assets have been sold, and operations have ceased. These cases have continued over a protracted period of time, and have failed to present an exit strategy from bankruptcy. Such circumstances present a substantial or continuing loss to or diminution of the estates and the absence of a reasonable likelihood of rehabilitation. Accordingly, cause to convert these cases to chapter 7, or alternatively dismiss the cases, is present pursuant to 11 U.S.C. 1112(b)(4)(A). CONCLUSION 15. The UST submits that, based on a review of the record in these cases, there is clear cause for either conversion to chapter 7 or dismissal of the cases. The UST further submits that conversion would be in the best interest of creditors. Conversion would result in the appointment of an independent trustee who would liquidate any remaining assets, investigate whether there are any outstanding recoveries to pursue, and disburse any remaining cash.

8 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Memorandum of Law Page 6 of 6 Moreover, prior events in these cases contemplated and prepared for the possibility that these cases could convert to chapter 7. Specifically, the Final Order Pursuant To 11 U.S.C. 105, 361, 362, 363, 364 And 507 (1) Approving Post-Petition Financing (2) Authorizing Use Of Cash Collateral, (3) Granting Liens And Providing Superpriority Administrative Expense Status and (4) Modifying Automatic Stay ( Final DIP Order ) (Docket Entry 537) provides a $50, Wind-Down Amount. The stated purpose for the Wind-Down Amount is to fund a winddown budget in the event these Cases are converted to cases under Chapter 7 of the Bankruptcy Code. See, Final DIP Order 32(a) at page 32. It is respectfully asserted that this previously allocated Wind-Down Amount should be utilized, and that the best course for these cases is conversion to chapter 7. WHEREFORE, for the foregoing reasons, the UST respectfully requests that this Court enter an Order Converting the Cases, or alternatively an Order Dismissing the Cases, and grant such other and further relief that is deemed just and equitable. Respectfully submitted, ANDREW R. VARA UNITED STATES TRUSTEE REGION 3 DATED: September 21, 2017 /s/ Peter J. D Auria Peter J. D Auria Trial Attorney

9 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Proposed Order Converting Cases Page 1 of 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY Caption in Compliance with D.N.J. LBR (c) UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE ANDREW R. VARA ACTING UNITED STATES TRUSTEE, REGION 3 Peter J. D Auria, Esq. (PD 3709) One Newark Center, Suite 2100 Newark, NJ Telephone: (973) Fax: (973) Peter.J.D Auria@usdoj.gov In Re: Kid Brands, Inc., et al. 1, Debtors. Chapter 11 Case No.: (MBK (Jointly Administered) Hearing Date: Nov. 6, 2017 at 11:00 a.m. Judge: Michael B. Kaplan ORDER CONVERTING CHAPTER 11 CASES The relief set forth on the following page(s), numbered two (2) is hereby ORDERED. 1 This caption is intended to identify all seven (7) separate entities that are the subject of this jointly administered proceeding, such entities being Kid Brands, Inc. (Case No (MBK)), Kids Line, LLC (Case No (MBK)), Sassy, Inc. (Case No (MBK)), I&J Holdco, Inc. (Case No (MBK)), LaJobi, Inc. (Case No (MBK)), CoCaLo, Inc. (Case No (MBK)), RB Trademark Holdco, LLC (Case No (MBK)).

10 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Proposed Order Converting Cases Page 2 of 2 (Page 2) Kid Brands, Inc., et al. Chapter 11 Case No.: (MBK (Jointly Administered) Order Converting Chapter 11 Cases Upon consideration of the Motion of the Acting United States Trustee by and through counsel, for an Order Converting these Chapter 11 Cases to Chapter 7, pursuant to 11 U.S.C. 1112(b), and notice of the motion having been given to the Debtors, Debtors counsel and parties in interest, and the Court having found cause for the entry of the within order is in the best interest of creditors, and good cause shown, it is hereby ORDERED AS FOLLOWS: 1. The chapter 11 case of Kid Brands, Inc., case No (MBK), is hereby CONVERTED to a Chapter 7 case. 2. The chapter 11 case of Kids Line, LLC, case No (MBK), is hereby CONVERTED to a Chapter 7 case. 3. The chapter 11 case of Sassy, Inc., case No (MBK), is hereby CONVERTED to a Chapter 7 case. 4. The chapter 11 case of I&J Holdco, Inc., case No (MBK), is hereby CONVERTED to a Chapter 7 case. 5. The chapter 11 case of LaJobi, Inc., case No (MBK), is hereby CONVERTED to a Chapter 7 case. 6. The chapter 11 case of CoCaLo, Inc., case No (MBK), is hereby CONVERTED to a Chapter 7 case. 7. The chapter 11 case of RB Trademark Holdco, LLC, case No (MBK), is hereby CONVERTED to a Chapter 7 case.

11 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Proposed Order Dismissing Cases Page 1 of 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY Caption in Compliance with D.N.J. LBR (c) UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE ANDREW R. VARA ACTING UNITED STATES TRUSTEE, REGION 3 Peter J. D Auria, Esq. (PD 3709) One Newark Center, Suite 2100 Newark, NJ Telephone: (973) Fax: (973) Peter.J.D Auria@usdoj.gov In Re: Kid Brands, Inc., et al. 1, Debtors. Chapter 11 Case No.: (MBK (Jointly Administered) Hearing Date: Nov. 6, 2017 at 11:00 a.m. Judge: Michael B. Kaplan ORDER DISMISSING CHAPTER 11 CASES The relief set forth on the following page(s), numbered two (2) is hereby ORDERED. 1 This caption is intended to identify all seven (7) separate entities that are the subject of this jointly administered proceeding, such entities being Kid Brands, Inc. (Case No (MBK)), Kids Line, LLC (Case No (MBK)), Sassy, Inc. (Case No (MBK)), I&J Holdco, Inc. (Case No (MBK)), LaJobi, Inc. (Case No (MBK)), CoCaLo, Inc. (Case No (MBK)), RB Trademark Holdco, LLC (Case No (MBK)).

12 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Proposed Order Dismissing Cases Page 2 of 2 (Page 2) Kid Brands, Inc., et al. Chapter 11 Case No.: (MBK (Jointly Administered) Order Dismissing Chapter 11 Cases Upon consideration of the Motion of the Acting United States Trustee by and through counsel, for an Order Dismissing the Chapter 11 cases, pursuant to 11 U.S.C. 1112(b), and notice of the motion having been given to the Debtors, Debtors counsel, and parties in interest, and the Court having found cause for the entry of the within order is in the best interest of creditors, and good cause shown, it is hereby ORDERED AS FOLLOWS: 1. The chapter 11 case of Kid Brands, Inc., case No (MBK), is hereby DISMISSED. 2. The chapter 11 case of Kids Line, LLC, case No (MBK), is hereby DISMISSED. 3. The chapter 11 case of Sassy, Inc., case No (MBK), is hereby DISMISSED. 4. The chapter 11 case of I&J Holdco, Inc., case No (MBK), is hereby DISMISSED. 5. The chapter 11 case of LaJobi, Inc., case No (MBK), is hereby DISMISSED. 6. The chapter 11 case of CoCaLo, Inc., case No (MBK), is hereby DISMISSED. 7. The chapter 11 case of RB Trademark Holdco, LLC, case No (MBK), is hereby DISMISSED.

13 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Certification by Francyne D. Arendas Page 1 of 2 UNITED STATES DEPARTMENT OF JUSTICE OFFICE OF THE UNITED STATES TRUSTEE ANDREW R. VARA ACTING UNITED STATES TRUSTEE, REGION 3 Peter J. D Auria, Esq. One Newark Center, Suite 2100 Newark, NJ Telephone: (973) Fax: (973) Peter.J.D Auria@usdoj.gov UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY : Chapter 11 In re: : : Case No (MBK) Kid Brands, Inc., et al. 1, : (Jointly Administered) : Hearing Date: Nov. 6, 2017 at 11:00 a.m. Debtors. : : ORAL ARGUMENT REQUESTED DECLARATION OF FRANCYNE D. ARENDAS I, Francyne D. Arendas, of full age, hereby declare under penalty of perjury, pursuant to 28 U.S.C. 1746, as follows: 1. I am a Bankruptcy Analyst for the Office of the United States Trustee and have full knowledge of the facts set forth herein. 1 This caption is intended to identify all seven (7) separate entities that are the subject of this jointly administered proceeding, such entities being Kid Brands, Inc. (Case No (MBK)), Kids Line, LLC (Case No (MBK)), Sassy, Inc. (Case No (MBK)), I&J Holdco, Inc. (Case No (MBK)), LaJobi, Inc. (Case No (MBK)), CoCaLo, Inc. (Case No (MBK)), RB Trademark Holdco, LLC (Case No (MBK)).

14 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Certification by Francyne D. Arendas Page 2 of 2 2. On June 18, 2014, the seven (7) related above-captioned debtors (the Debtor(s) ) each filed a voluntary petition for relief under chapter 11 of Title 11, United States Code (the Bankruptcy Code ). A review of the record in these cases indicates that each Debtor has remained in possession of its property and management of its affairs. 3. A review of the jointly administered docket in these cases indicates that, as of this date, the Debtors have only filed monthly operating reports through and including the month of April A review of the jointly administered docket in these cases indicates that, as of this date, the Debtors have not filed any disclosure statement or plan of reorganization. I certify under penalty of perjury that the forgoing is true and correct to the best of my knowledge. By: /s/ Francyne D. Arendas Francyne D. Arendas Bankruptcy Analyst Dated: September 21, 2017

15 Case MBK Doc Filed 09/21/17 Entered 09/21/17 10:46:52 Desc Ntc of Hrg on Motion to Conver Page 1 of 1 Form 169 ntccovert UNITED STATES BANKRUPTCY COURT District of New Jersey MLK Jr Federal Building 50 Walnut Street Newark, NJ Case No.: MBK Chapter: 11 Judge: Michael B. Kaplan In Re: Debtor(s) (name(s) used by the debtor(s) in the last 8 years, including married, maiden, trade, and address): Kid Brands, Inc. POB 148 Bloomfield, NJ Social Security No.: Employer's Tax I.D. No.: NOTICE OF HEARING ON APPLICATION/MOTION TO CONVERT CASE An application/motion to convert the above captioned case from Chapter 11 to Chapter 7, has been filed by United States Trustee. Notice is hereby given that the Court will conduct a hearing on this matter to determine the application/motion for conversion or in the alternative Dismiss Case before the Honorable Michael B. Kaplan on: Date: November 6, 2017 Time: 11:00 AM Location: Courtroom 8, Clarkson S. Fisher, U.S. Courthouse, 402 E. State St., Trenton, NJ Dated: September 25, 2017 JAN: Jeanne Naughton Clerk