Case Doc 530 Filed 01/05/18 Entered 01/05/18 09:29:14 Desc Main Document Page 1 of 19

Transcription

1 Document Page 1 of 19 UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA In re: WYNIT Distribution, LLC BKY WD Navarre Distribution, LLC BKY WD Encore Software, LLC BKY WD Navarre Holdings, LLC BKY WD Navarre Digital Services, LLC BKY WYNIT Holdings, Inc. BKY WD Navarre Canada, ULC BKY Debtors. JOINTLY ADMINISTRED UNDER BKY# NOTICE OF HEARING ON MOTION TO DISMISS OR CONVERT CASE TO CHAPTER 7 TO: The debtors, all creditors and other parties in interest: The United States Trustee has brought a motion before the court seeking either a dismissal of this case or a conversion of the case to one under chapter 7. The court will hold a hearing on this motion before the Honorable Kathleen H. Sanberg, Chief U.S. Bankruptcy Judge, at 2:30 p.m. on Wednesday, February 14, 2018, in Courtroom No. 8 West, United States Courthouse, 300 South Fourth Street, Minneapolis, Minnesota, Any response to this motion must be filed and delivered not later than February 9, 2018, which is five days before the time set for the hearing (including Saturdays, Sundays, and holidays). UNLESS A RESPONSE OPPOSING THE MOTION IS TIMELY FILED, THE COURT MAY GRANT THE MOTION WITHOUT A HEARING. Dated: CLERK OF BANKRUPTCY COURT By: Deputy Clerk

2 Document Page 2 of 19 UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA JOINTLY ADMINISTRED UNDER BKY# In re: WYNIT Distribution, LLC BKY WD Navarre Distribution, LLC BKY WD Encore Software, LLC BKY WD Navarre Holdings, LLC BKY WD Navarre Digital Services, LLC BKY WYNIT Holdings, Inc. BKY WD Navarre Canada, ULC BKY Debtors. NOTICE OF HEARING AND MOTION TO DISMISS OR CONVERT CASE TO: The debtors and other entities specified in Local Rule Daniel M. McDermott, the United States Trustee, by his undersigned attorney, moves the Court for the relief requested below and gives notice of hearing. 2. The court will hold a hearing on this motion before the Honorable Kathleen H. Sanberg, Chief U.S. Bankruptcy Judge, at 2:30 p.m. on Wednesday, February 14, 2018, in Courtroom No. 8 West, United States Courthouse, 300 South Fourth Street, Minneapolis, Minnesota, Any response to this motion must be filed and delivered not later than February 9, 2018, which is five days before the time set for the hearing (including Saturdays, Sundays, and holidays). UNLESS A RESPONSE OPPOSING THE MOTION IS TIMELY FILED, THE COURT MAY GRANT THE MOTION WITHOUT A HEARING. 4. This Court has jurisdiction over this motion pursuant to 28 U.S.C. 157 and 1334, FED. R. BANKR. P and Local Rule Venue issues are also controlled by 28 U.S.C.

3 Document Page 3 of , 1409 and The United States Trustee has standing to file this motion pursuant to 28 U.S.C. 586(a) and 11 U.S.C This matter constitutes a core proceeding. 5. This motion arises under 11 U. S. C. 1112(b) and FED. R. BANKR. P and This motion is filed under FED. R. BANKR. P and Local Rules through Movant requests that these cases be converted to chapter 7 or dismissed. Dismissal is not appropriate because the debtors are engaged in a liquidation and there remains substantial avoidance actions for a chapter 7 trustee to pursue for the benefit of all remaining creditors. Accordingly, the U.S. Trustee requests that the cases be converted to cases under chapter 7. FACTS 6. The voluntary petitions commencing these chapter 11 cases were filed on September 8, The cases are now pending before the court. The debtors were engaged in the business of wholesale distribution of electronics and other goods, along with other related business operations. 7. Subsequent to the filing of these seven related cases, the debtors sought an order allowing for joint administration. That order was granted on September 13, Doc. #55. This motion seeks conversion to chapter 7 of all seven of the jointly administered cases. 8. On October 30, 2017, the undersigned counsel to the U.S. Trustee conducted the meeting of creditors required by 11 U.S.C. 341(a). At that meeting, testimony was taken from Peter Richichi, the debtors Chief Financial Officer, Geoffrey Lewis, the debtors Chief Executive Officer, and Greg Charleston, a senior managing director from Conway McKenzie, a consultant hired by the debtor to assist in the chapter 11 process. 9. At the 341 meeting of creditors, the debtors testified, inter alia, that a large part of the debtors business was shut down prior to the filing of the bankruptcy cases and that most of the day to day work force of the debtors was laid off. The testimony further included the fact that the

4 Document Page 4 of 19 debtors did not have sufficient cash flow from operations to continue with the business and that the debtors intended to conduct an orderly liquidation of the business in chapter On September 8, 2017, the debtors sought interim authority to use the cash collateral of Wells Fargo Bank and its related entities and its loan participants (Lenders). Doc. #6. That motion further sought approval of a post-petition credit agreement under which the debtors would be able to borrow additional funds post-petition from the Lenders for the purpose of funding the wind down of the debtors businesses and the liquidation of its assets. On September 13, 2017, the court granted that motion and entered an order approving the use of cash collateral and approval of the post-petition loans. Doc. #56. The loans made under this agreement were subject to a tight budget under which the debtors were required to conduct the liquidation, with little extra funds being advanced beyond what the Lenders would allow or approve. Subsequently, the court extended approval of these agreements between the debtors and the Lenders. See Doc. # On September 28, 2017, the debtors brought an expedited motion seeking authority to conduct a sale of assets free and clear of liens and encumbrances. Doc. #138. That sale was to be conducted via established bid procedures and with other bid parameters and safeguards. Id. The assets sold included inventory, accounts receivable and other assets. That motion was granted by the court on October 12, 2017 (Doc. #202), and the debtors commenced the bid/sale process according to the terms approved by the court. Included in the motion was the proviso that time was of the essence and that the assets needed to be liquidated prior to the December 2017 holiday season because the inventory and related assets were declining in value. On information and belief, the assets that were the subject of that motion were sold according to the terms of the court s order. 12. The debtors brought a second sale motion seeking authority to sell additional assets on October 24, Doc. #279. That sale was also via an auction using established bid

5 Document Page 5 of 19 procedures and allegedly included assets that were the subject of certain consignment agreements by suppliers. On November 9, 2017, the court approved the bid and sale procedures for those assets. Doc. #354. That sale approval included in part, a settlement of issues with vendors claiming a consignor s interest in the assets sold. On information and belief, the assets which were the subject of that motion have been sold in accordance with the order entered by the court. 13. The debtors also brought an expedited motion to sell the assets consisting of the WD Encore Software (Doc. #289). That motion was granted on October 31, 2017, (Doc. #306) and, on information and belief, the debtors successfully conducted the sale of the assets that were the subject of that motion. 14. The debtors also sough authority to approve a series of settlements and compromises with various parties in interest (Doc.#382 and #409), and the court approved those settlements. Doc. #420 and # On information and belief, all of the assets of the debtors have now been subject to sale motions which have been approved by the court and the sales and settlements have all been consummated. 16. There have been numerous fee applications filed by various parties in interest in the cases. Up through December 20, 2017, debtors lead counsel, Stinson Leonard Street, has been allowed and paid $975,876.50, with $166, in additional compensation now pending in a filed fee application. Similarly, Lowenstein Sandler, counsel to the unsecured creditors committee, has been allowed and paid $253,868.85, with $47, in addition now pending. Debtors consultants at Conway McKenzie have been allowed and paid $1,243, in fees and $73, in expenses, with an additional $283, in fees and $35, in expenses now pending. Local counsel to the unsecured creditors committee, Barnes & Thornberg has been

6 Document Page 6 of 19 allowed and paid $211, with an additional $28, now pending. Other professionals being paid by the debtors estates include JND Corporate Restructuring (noticing agent); Goldman Sloan Nash and Haberman (Canadian counsel); and Firley Moran Freer & Essa, CPAs. The professional fees and expenses which are subject to court review and approval now total over $3.6 million for these cases. In addition, millions more in fees have been incurred by professionals hired by the post-petition Lenders, including the Greenberg Traurig law firm, Lindquist & Vennum and Goodmans, LLP No plans or disclosure statements have been filed by the debtors or any other party in interest. On information and belief, the Lenders will not authorize the use of funds consisting of their cash collateral or the proceeds of their post-petition loans in order to draft or advance a disclosure statement and plan. 18. On January 3, 2018, the court heard a verified motion by the debtors to change part of the compensation structure of debtors lead counsel, Stinson Leonard Street, and conflicts counsel, Lamey Law Firm. The change proposed would have allowed those firms to be compensated via a contingent fee agreement for the pursuit of avoidance actions. See Doc. #488. (Compensation Motion). According to the memorandum in support of the Compensation Motion, the basis for changing the compensation terms is the debtors lack the ability to finance the liquidation of these causes of action. Doc. #488, p.10 of 31. On information and belief, these causes of action constitute the main remaining assets of the debtors. 1 The lenders professional fees were incurred and paid pursuant to the final order authorizing the debtors to obtain post-petition financing. Doc. #298. They are not subject to approval by the court, but the fee information has been provided to parties, including the U.S. Trustee, pursuant to the lending agreement.

7 Document Page 7 of At the January 3, 2018, at hearing on the Compensation Motion, the court inquired of counsel to the debtors regarding the consummation of asset sales, as previously approved by the court. Counsel to the debtors reported to the court that the sales had indeed been consummated, so that the majority of warehouses were empty, with remaining residual inventory having been consolidated in a warehouse in Missaugua, Ontario. On information and belief, there are no remaining assets of the debtors which need to be the subject of sale motions before the court. MOTION TO CONVERT 20. Pursuant to 11 U.S.C. 1112(b), the Court may dismiss or convert a chapter 11 case for cause after notice and a hearing. Section 1112(b)(4) states that cause for dismissal or conversion to chapter 7 includes, among other things: (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 under 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.... (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 condition specified in the plan; and

8 Document Page 8 of 19 (P) failure of the debtor to pay any domestic support obligations that first becomes payable after the date of the filing of the petition. 21. Cause exists to immediately convert these cases to chapter 7. The debtors are no longer engaged in business. Virtually all of their assets have been sold pursuant to court order and there is nothing left to reorganize. The liquidation of inventory and related assets has now been completed and the debtors warehouses are empty. Under 11 U.S.C. 1112(b)(4)(A), conversion to chapter 7 is appropriate when there is an ongoing loss to or diminution of the estate and an absence of a likelihood of rehabilitation. With no remaining business or assets, there is no ability to reorganize and nothing to rehabilitate. Moreover, the debtors have not and cannot proffer a plan and disclosure statement without inappropriately using the cash of the Lenders. The debtors verified Compensation Motion seeking to modify counsel s compensation to a contingent fee alleged there is no money to pursue avoidance actions. With no assets and no money to complete the liquidation process, the debtors cannot go forward in chapter Further, there continues to be an ongoing incurrence of substantial administrative costs, particularly professional fees and expenses for multiple professionals, all of which continue to diminish the bankruptcy estates at the expense of creditors. That diminution establishes the ongoing losses to the bankruptcy estates. The combination of ongoing losses to the estates, coupled with the absence of the ability to reorganize, establishes cause for immediate conversion to chapter 7 under 11 U.S.C. 1112(b)(4)(A). 23. The debtors came into these chapter 11 cases with the knowledge and expectation that there would be a quick liquidation and subsequent conversion of the cases to chapter 7. Time was of the essence in getting the assets sold, and the sales have now been completed. The

9 Document Page 9 of 19 liquidation process is over and there is no benefit to the debtors by remaining under chapter 11. Conversely, a conversion to chapter 7 will cause the cessation of numerous ongoing expenses, including professional fees to debtors counsel and consultants, creditors committee counsel and other engaged professionals, as well as U.S. Trustee fees and the costs of preparing monthly operating reports. A conversion to chapter 7 would therefore limit the ongoing losses to the estate resulting from the incurrence of fees and expenses for which the bankruptcy estates would otherwise be responsible. 24. The remaining assets of the estates, based on the Compensation Motion, primarily include avoidance actions which can most efficiently and economically be brought by a chapter 7 trustee. The Compensation Motion disclosed there to be about $110 million in avoidance actions which can best be pursued by an independent chapter 7 trustee, without the involvement of consultants, the unsecured creditors committee counsel, and other professionals. A conversion to chapter 7 is in the best interests of creditors because it would increase the likelihood that there will be a distribution to creditors as the result of these recoveries. CONCLUSION 25. Based on the record before the court, cause exists to convert these cases to chaper 7. Given that these estates are mostly liquidated, there are no unusual circumstances that the debtors could claim as the basis for remaining under chapter 11. The burden of remaining under chapter 11 shifts to the debtors upon a showing that cause to convert exists, and the debtor cannot meet that burden. See attached Memorandum and 11 U.S.C. 1112(b)(2). The debtors in possession cannot show that going through the plan and disclosure statement process is more economic or more protective of creditors interests. In fact, the situation is the exact opposite.

10 Document Page 10 of 19 The few remaining assets can best be pursued by a chapter 7 trustee without the related expenses of chapter On information and belief, debtor WD Navarre Canada, ULC is an unlimited liability company, registered in Nova Scotia, and established under the laws of Canada. In addition to being a debtor in these cases, it has also sought relief under the Companies Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36. On September 8, 2017, the debtors brought a motion (Doc. #15) under 11 U.S.C seeking to give the debtors (specifically, debtor WYNIT Distribution, LLC) authority to act as foreign representative in the Canadian proceeding. The motion was granted by the court on September 14, Doc. #61. Under that order, WYNIT Distribution was given authority to seek, inter alia, any other appropriate relief from the Canadian Court that WYNIT Distribution deems just and proper in furtherance of the protections of the WD Navarre Canada s estate. Doc. #61, p.2, 3(c). Since WYNIT Distribution, as a debtor in possession under 1107(a) has all the rights, powers and duties of a trustee, the conversion of these cases to chapter 7 should have no effect on the Canadian debtor. A chapter 7 trustee would simply and appropriately step into the fiduciary role of foreign representative under the court s prior order of September 14, The debtors filed these cases in order to implement a managed wind down and liquidation of assets. That has now been completed. There is no further need to remain under chapter 11 and what little is left, should be resolved through the chapter 7 liquidation process. 28. The United States Trustee submits that the foregoing constitutes cause for immediate conversion to chapter 7. Given that the debtor has no current or future business operations, the cases should be immediately converted to chapter 7.

11 Document Page 11 of 19 WHEREFORE, the United States Trustee moves the Court for an order converting these jointly administered cases to cases under chapter 7. The U.S. Trustee submits that conversion to chapter 7 is necessary in order to preserve assets for the benefit of creditors and that dismissal would be detrimental to those creditors interests. Dated: January 5, 2018 DANIEL M. McDERMOTT United States Trustee Region 12 By: s/_michael R. Fadlovich MICHAEL R. FADLOVICH Trial Attorney MN Attorney I.D. No United States Trustee's Office 1015 U.S. Courthouse 300 South Fourth Street Minneapolis, MN (612)

12 Document Page 12 of 19 VERIFICATION I, Michael R. Fadlovich, attorney for the United States Trustee, the movant named in the foregoing motion, declare under penalty of perjury that the foregoing is true and correct according to the best of my knowledge, information and belief. Likewise, attached Exhibits A, Exhibit B, and Exhibit C are true and correct copies. January 5, 2018 s/michael R. Fadlovich MICHAEL R. FADLOVICH Trial Attorney

13 Document Page 13 of 19 UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA JOINTLY ADMINISTRED UNDER BKY# In re: WYNIT Distribution, LLC BKY WD Navarre Distribution, LLC BKY WD Encore Software, LLC BKY WD Navarre Holdings, LLC BKY WD Navarre Digital Services, LLC BKY WYNIT Holdings, Inc. BKY WD Navarre Canada, ULC BKY Debtors. MEMORANDUM OF LAW IN SUPPORT OF MOTION TO CONVERT OR DISMISS The United States Trustee, by the undersigned attorney, submits this memorandum in support of the motion to dismiss this case or convert it to a Chapter 7 case. DISMISSAL A proceeding to dismiss a case or convert a case to another chapter is governed by 11 U.S.C and FED R. BANKR. P A request for dismissal or conversion of a case shall be made by motion. A motion to dismiss or a motion to convert a case shall be deemed a motion either to dismiss or to convert, whichever is in the best interest of creditors and the estate. Local. R. Bankr. P a debtor under Chapter 7. A case may be converted to a Chapter 7 case if the debtor may be 11 U.S.C. 1112(f). Under 11 U.S.C. 1112(b), the specific requirements for the conversion or dismissal of a chapter 11 case are set forth. That section provides:

14 Document Page 14 of 19 (b)(1) 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. (2) The court may not convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter if the court finds and specifically identifies unusual circumstances establishing that converting or dismissing the case is not in the best interests of creditors and the estate, and the debtor or any other party in interest establishes that (A) there is a reasonable likelihood that a plan will be confirmed within the time frames established in sections 1121(e) and 1129(e) of this title, or if such sections do not apply, within a reasonable period of time; and (B) the grounds for granting such relief include an act or omission of the debtor other than under paragraph (4)(A)C (i) for which there exists a reasonable justification for the act or omission; and (ii) that will be cured within a reasonable period of time fixed by the court.... (4) for purposes of this subsection, the term cause includes (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 under 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.... (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;

15 Document Page 15 of 19 (O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and (P) failure of the debtor to pay any domestic support obligations that first becomes payable after the date of the filing of the petition. 11 U.S.C. 1112(b). Cause for conversion or dismissal is not limited to the reasons expressed in 1112(b), (e). 11 U.S.C. 102(3); Moody v. Security Pac. Business Credit, Inc., 85 B.R. 319, (W.D. Pa. 1988). In this case, cause exists to convert the cases to chapter 7 immediately. The debtors are out of business, having sold their assets via court approved bid procedures. There is nothing left of the debtor s business to reorganize. If allowed to remain under chapter 11, the losses to the bankruptcy estates will continue to accrue in the form of administrative expenses, including U.S. Trustee fees, professional fees related to chapter 11 administration and monthly operating report preparation. These expenses will be incurred at a time when the debtors have no remaining sources of income. Since there is cause for conversion of the case to chapter 7, the burden has now shifted to the debtor to show that it should remain in chapter 11. See 11 U.S.C. 1112(b)(2). That section requires that the bankruptcy court make a finding that specifically identifies unusual circumstances establishing that conversion is not in the best interests of the estate and creditors, and that there is a reasonable likelihood that a plan will be confirmed within a reasonable time. Id. Here, based on what s transpired thus far in the cases, the debtors cannot allege that such special circumstances exist. Further, the debtors cannot propose a plan, let alone one that can be confirmed in a reasonable time. Instead, the situation demands immediate conversion to chapter 7 and the appointment of an independent trustee to wind up the cases.

16 Document Page 16 of 19 The purpose of 1112(b)(1) is to preserve estate assets by preventing the debtor in possession from gambling on the enterprise at the creditors expense when there is no hope of rehabilitation. Loop v. U.S. Trustee, 379 F.3d 511, 515 (8 th Cir 2004), citing In re Lizeric Realty Corp, 188 B.R. 499, 503 (Bankr. S.D. N.Y 1995). Any delay in conversion is simply gambling with the creditors funds, a result which cannot be countenanced by the court. In addition, the parties to a case are entitled to rely on facts established in the record in making a case for conversion or dismissal under 1112(b). Loop, at 518. Here, the U.S. Trustee relies on the verified motions for approval of the bid procedures and asset sales conducted by the debtors, the consummation of those sales, the settlements with the various parties, the representations by the debtors officers at the 341 meeting and by debtors counsel in hearings before the court. There are no factual disputes which would mitigate the cause established for immediate conversion and accordingly, conversion is imperative. Based on the foregoing, cause exists to immediately convert the case to chapter 7. Wherefore, the U.S. Trustee submits this memorandum in support of his motion seeking conversion of the case to chapter 7. Respectfully submitted, DANIEL M. McDERMOTT United States Trustee Dated January 5, 2018 By s/michael R. Fadlovich MICHAEL R. FADLOVICH Trial Attorney MN Attorney I.D. No U.S. Trustee's Office 1015 U.S. Courthouse Minneapolis, MN (612)

17 Document Page 17 of 19 CERTIFICATE OF SERVICE In re: WYNIT Distribution, LLC BKY WD Navarre Distribution, LLC BKY WD Encore Software, LLC BKY WD Navarre Holdings, LLC BKY WD Navarre Digital Services, LLC BKY WYNIT Holdings, Inc. BKY WD Navarre Canada, ULC BKY Debtors. JOINTLY ADMINISTRED UNDER BKY# The undersigned hereby certifies under penalty of perjury that he is an employee in the Office of the United States Trustee for the District of Minnesota and is a person of such age and discretion as to be competent to serve papers. That on January 5, 2018, he caused to be served a copy of the attached: United States Trustee's Motion to Convert Case to Chapter 7 or to Dismiss case, with supporting Memorandum, Proposed Order, and Certificate of Service, by placing said copy in a postpaid envelope addressed to the person(s) hereinafter named, at the place and address stated below, which is the last known address, and by depositing said envelope and contents in the United States Mail at Minneapolis, Minnesota. WYNIT Distribution LLC PO Box Greenville, SC Jeffrey L. Cohen Lowenstein Sandler LLP 1251 Avenue of the Americas New York, NY Canon USA Inc. One Canon Park Melville, NY LifePrint Products, Inc Golden Foothill Parkway, Suite 102 El Dorado Hills, CA Edwin H. Caldie Stinson Leonard Street 50 South Sixth Street, Suite 2600 Minneapolis, MN Quicken, Inc Haven Avenue Menlo Park, CA DayMen Asia Limited, DayMen US Inc. DayMen Canada Acquisition 1435 North MCDowell Blvd Suite 200 Petaluma, CA Symantec Corporation 501 E. Middlefield Road Office #L1124 Mountain View, CA 94043

18 Document Page 18 of 19 Other creditors were served either via the court s CM/ECF case management system or separately by the clerk of court as provided for in it separate certificate of service. By: e/michael R. Fadlovich Michael R. Fadlovich Trial Attorney MN Atty I.D. No U.S. Trustee's Office 300 South Fourth St., #1015 Minneapolis, MN (612)

19 Document Page 19 of 19 UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA JOINTLY ADMINISTRED UNDER BKY# In re: WYNIT Distribution, LLC BKY WD Navarre Distribution, LLC BKY WD Encore Software, LLC BKY WD Navarre Holdings, LLC BKY WD Navarre Digital Services, LLC BKY WYNIT Holdings, Inc. BKY WD Navarre Canada, ULC BKY Debtors. O R D E R The above-entitled chapter 11 cases came before the court on the motion of the United States Trustee seeking an order dismissing or alternatively converting the cases to chapter 7. Michael R. Fadlovich appeared on behalf of the U.S. Trustee. Other appearances were noted in the record. Based upon the motion filed by the U.S. Trustee, the findings of the court on the record, and all of the files, records and proceedings herein, it is hereby ORDERED: These jointly administered chapter 11 cases are converted to chapter 7. Kathleen H. Sanberg Chief U.S. Bankruptcy Judge