Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 1 of 15

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1 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 1 of 15 Gregory G. Hesse (Texas Bar No ) HUNTON & WILLIAMS LLP 1445 Ross Avenue Suite 3700 Dallas, Texas Telephone: (214) Tyler P. Brown (admitted pro hac vice) Jason W. Harbour (admitted pro hac vice) HUNTON & WILLIAMS LLP Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia Telephone: (804) Proposed Counsel to the Debtors and Debtors in Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: THINK FINANCE, LLC, et al., Debtors. 1 Chapter 11 Case No (HDH) (Jointly Administered) FIRST OMNIBUS MOTION OF THE DEBTORS AND DEBTORS IN POSSESSION FOR ENTRY OF AN ORDER AUTHORIZING THE DEBTORS TO REJECT CERTAIN EXECUTORY CONTRACTS Bankruptcy Rule 6006 Notice to Executory Contract Counter-Parties PURSUANT TO BANKRUPTCY RULE 6006, PARTIES RECEIVING THIS OMNIBUS MOTION SHOULD LOCATE THEIR RESPECTIVE NAMES AND CONTRACTS LISTED ON EXHIBIT 1 TO THE ATTACHED PROPOSED ORDER. THE DEBTORS HAVE REQUESTED THAT AN EXPEDITED HEARING BE HELD ON THIS MATTER FOR NOVEMBER 20, 2017 AT 9:00 A.M. (PREVAILING CENTRAL TIME) AT THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS, 1100 COMMERCE STREET, 14TH FLOOR, COURTROOM #3, DALLAS, TX The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are: Think Finance, LLC (6762), Think Finance SPV, LLC (4522), Financial U, LLC (1850), TC Loan Service, LLC (3103), Tailwind Marketing, LLC (1602), TC Administrative Services, LLC (4558), and TC Decision Sciences, LLC (8949). 2 See Motion of the Debtors and Debtors in Possession for Setting and Request for Expedited Hearing on the Motion of the Debtors and Debtors in Possession for Entry of an Order Authorizing the Debtors to Reject Certain Executory Contracts filed contemporaneously herewith.

2 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 2 of 15 IF YOU OBJECT TO THE RELIEF REQUESTED, YOU MUST RESPOND IN WRITING BY FILING YOUR RESPONSE WITH THE CLERK OF THE BANKRUPTCY COURT NO LATER THAN NOVEMBER 16, 2017, AT 4:00 P.M. (PREVAILING CENTRAL TIME). YOU MUST SERVE A COPY OF YOUR RESPONSE ON THE PARTIES INCLUDED ON THE MASTER SERVICE LIST FILED WITH THE COURT. IF YOU FAIL TO DO SO, THE COURT MAY TREAT THIS MOTION AS UNOPPOSED AND GRANT THE RELIEF REQUESTED HEREIN. The above-captioned debtors and debtors-in-possession (collectively, the Debtors ), by their undersigned counsel, hereby move (the Motion ) the Court, pursuant to sections 105(a), 365(a) and 554(a) of Title 11 of the United States Code, 11 U.S.C (as amended, the Bankruptcy Code ) and Rule 6006 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), for entry of an order in substantially the form annexed hereto as Exhibit A (the Proposed Order ), authorizing the Debtors to reject the executory contracts (together, the Rejected Contracts ), listed on Exhibit 1 3 annexed to the Proposed Order, effective as of the dates identified in Exhibit 1. In support of this Motion, the Debtors submit the following: I. Jurisdiction, Venue and Predicates for Relief 1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 28 U.S.C. 1334(b). Venue is proper pursuant to 28 U.S.C and This matter is a core proceeding within the meaning of 28 U.S.C. 157 (b)(2). 2. The predicates for the relief sought herein are sections 105(a), 365(a) and 554(a) of the Bankruptcy Code and Bankruptcy Rule Inclusion of a contract on Exhibit 1 to the Proposed Order does not constitute an admission or determination by the Debtors that such contract is an executory contract, and the Debtors reserve all rights concerning such a determination. 2

3 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 3 of 15 II. Background A. The Chapter 11 Cases 3. On October 23, 2017 (the Petition Date ), each of the Debtors filed with the Court its respective voluntary petition for relief under chapter 11 of the Bankruptcy Code, commencing the above-captioned chapter 11 cases. On October 27, 2017, the Court entered an order authorizing the joint administration of these chapter 11 cases [Doc. No. 34]. 4. On November 2, 2017, the United States Trustee appointed the Official Unsecured Creditors Committee in these chapter 11 cases. No trustee or examiner has been appointed. 5. A full description of the Debtors business operations, corporate structures, capital structures, and reasons for commencing these cases is set forth in full in the Declaration of Barney Briggs in support of the Debtors Chapter 11 Petitions and First Day Pleadings [Doc. No. 12] (the Briggs Declaration ), which is incorporated herein by reference. Additional facts in support of the specific relief sought herein are set forth below. B. The Rejected Contracts 6. The Debtors currently are undergoing a comprehensive review of their executory contracts and unexpired leases to determine which contracts and/or leases to assume and which to reject. 7. The contracts the Debtors seek to reject in this Motion include (i) an ELA order for software license and support services agreement and related amendments (as amended, the ELA Order ) and related purchase order (the Purchase Order ) 4 with VMware, Inc. 4 The term of the ELA Order expired on June 25, 2017, but the Debtors subsequently submitted the Purchase Order on June 28, Thus, out of an abundance of caution, the Debtors seek to reject the ELA Order and the Purchase Order. 3

4 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 4 of 15 ( VMware ), and (ii) a master security services agreement for network security monitoring and associated services and related addendum (together, the MSA ) with Global DataGuard, Inc. d/b/a Masergy ( Masergy ) The Debtors no longer have need of the services provided under the Rejected Contracts, and continuing with them would provide little to no benefit for the Debtors. The Debtors have reviewed the terms and conditions of the Rejected Contracts and believe, in the exercise of their sound business judgment, that rejection is appropriate and in the best interests of their creditors, other stakeholders, and estates. III. Relief Requested 9. By this Motion, the Debtors respectfully request the entry of the Proposed Order authorizing the Debtors to reject the Rejected Contracts listed on Exhibit 1 annexed to the Proposed Order effective as of the dates identified in Exhibit 1, and granting such other and further relief as the Court deems just and proper. IV. Basis for the Relief Requested A. Rejection of the Rejected Contracts is Appropriate. 10. Section 365(a) of the Bankruptcy Code provides that a debtor-in-possession subject to the court s approval, may assume or reject any executory contract or unexpired lease of the debtor. 11 U.S.C. 365(a). This provision allows a trustee to relieve the bankruptcy estate of burdensome agreements which have not been completely performed. Stewart Title Guaranty Co. v. Old Republic Nat l Title Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (citing In re Murexco Petroleum, Inc., 15 F.3d 60, 62 (5th Cir. 1994)). 5 Pursuant to an communication dated October 31, 2017, Masergy accepted the Debtors termination request effective as of October 30,

5 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 5 of When analyzing a debtor s decision to reject an executory contract or an unexpired lease, courts typically apply a business judgment standard to determine whether to approve the proposed rejection. See Nat l Labor Relations Bd. v. Bildisco & Bildisco (In re Bildisco), 465 U.S. 513, 523 (1984) (recognizing the business judgment standard as the traditional test applied to authorize the rejection of executory contracts); Richmond Leasing Co. v. Capital Bank, N.A. (In re Richmond Leasing Co.), 762 F.2d 1303, 1309 (5th Cir. 1985) ( It is well established that the question [of] whether a lease should be rejected... is one of business judgment. ) (internal citations omitted); In re Pilgrim s Pride Corp., 403 B.R. 413, 422 (Bankr. N.D. Tex. 2009) ( The general rule is that the decision to reject a given contract should be left to the trustee s (or debtor in possession s) sound business judgment. ) (internal citations omitted). Rejection of an executory contract or an unexpired lease is appropriate where such rejection would benefit the estate. See Orion Pictures Corp., 4 F.3d at ; Sharon Steel Corp. v. National Fuel Gas Distrib. Corp. (In re Sharon Steel Corp.), 872 F.2d 36, 40 (3d Cir. 1989); In re HQ Global Holdings, 290 B.R. 507, 511 (Bankr. D. Del. 2003); In re Stable News Assoc., Inc., 41 B.R. 594, 596 (Bankr. S.D.N.Y. 1984). 12. Upon a finding that the debtor has exercised its sound business judgment in determining that the assumption or rejection of an agreement is in the best interests of the debtor, its creditors and all parties-in-interest, the court should approve the assumption or rejection under section 365(a) of the Bankruptcy Code. See, e.g., In re Circuit City Stores, Inc., No , 2010 Bankr. LEXIS 1713, at *12 (Bankr. E.D. Va. June 9, 2010); Bildisco, 462 U.S. at 523; Sharon Steel Corp., 872 F.2d at 39-40; Westbury Real Estate Ventures, Inc. v. Bradlees, Inc. (In re Bradlees Stores, Inc.), 194 B.R. 555, 558 n.1 (Bankr. S.D.N.Y. 1996); Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) (holding that absent 5

6 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 6 of 15 extraordinary circumstances, court approval of a debtor s decision to assume or reject an executory contract should be granted as a matter of course ). 13. An integral component of the Debtors efforts to maximize value for their estates and their stakeholders consists of eliminating unnecessary costs and burdensome contracts. The Debtors have reviewed the terms of each of the Rejected Contracts and determined, in their good faith business judgment, that the rejection of the Rejected Contracts is in the best interests of their creditors, other stakeholders, and estates as there is little benefit and/or substantial burdens to the Debtors related to the Rejected Contracts. B. Rejection of the Executory Contracts Should Be Effective as of the Dates Identified in Exhibit 1 Annexed to the Proposed Order. 14. The Debtors also respectfully submit that it is appropriate for the Court to order that the effective date of rejection of each of the Rejected Contracts should be the date identified in Exhibit 1 to the Proposed Order for such contract. 15. While section 365 of the Bankruptcy Code does not specifically address the Court s authority to order rejection to be effective immediately, many courts in this district and others have held that bankruptcy courts may, in their discretion, authorize rejection retroactive to a date prior to entry of the order authorizing the rejection where the balance of equities weighs in favor of retroactive rejection. See, e.g., In re ALCO Stores, Inc., Case No (SGJ) (Bankr. N.D. Tex. Oct. 27, 2014) [Doc. No. 176] (rejecting lease as of the petition date); In re Reddy Ice Holdings, Inc., Case No (SGJ) (Bankr. N.D. Tex. May 4, 2012) [Doc. No. 252] (rejecting executory contract as of the petition date); In re Erickson Retirement Cmtys., et al., Case No (SGJ) (Bankr. N.D. Tex. Feb. 11, 2010) [Doc. No. 808] (rejecting leases as of the latter of the filing date of the rejection motion or the date on which the debtors vacated the premises); see also In re At Home Corp., 392 F.3d 1064, (9th Cir. 2004) (affirming 6

7 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 7 of 15 bankruptcy court s approval of retroactive rejection), cert. denied sub nom. Pacific Shores Dev., LLC v. At Home Corp., 546 U.S. 814 (2005); In re Thinking Machines Corp., 67 F.3d 1021, 1028 (1st. Cir. 1995) (holding that bankruptcy courts may enter retroactive orders of approval, and should do so when the balance of equities preponderates in favor of such remediation ); In re Jamesway Corp., 179 B.R. 33, (S.D.N.Y. 1995) (holding that section 365 does not include restrictions as to the manner in which the court can approve rejection ); In re Visteon Corp., No (CSS) (Bankr. D. Del. June 23, 2009) (authorizing the rejection of leases retroactive to the petition date); In re Leiner Health Prods., Inc., No (KJC) (Bankr. D. Del. Apr. 7, 2008) (authorizing the rejection of leases retroactive to the date the motion was filed); In re Chi-Chi s, Inc., 305 B.R. 396, 399 (Bankr. D. Del. 2004) (holding that when principals of equity dictate, a bankruptcy court may approve rejection of nonresidential lease pursuant to section 365(a) retroactive to the motion filing date); In re Loewen Grp. Int l, Inc., No (PJW) (Bankr. D. Del. Oct. 26, 2000) (authorizing the rejection of leases retroactive to the date the motion was filed). 16. Here, the balance of the equities favors rejection as requested herein. Without the requested relief, the Debtors may be forced to incur unnecessary administrative expenses for the Rejected Contracts that provide little or no tangible benefit to the Debtors estates. Moreover, as the Debtors ceased using the services provided under each Rejected Contract on or before the date identified in Exhibit 1 for such contract, and provided notice of the Debtors intent not to continue using the services after that date, the counterparties to the Rejected Contracts will not be unduly prejudiced if the rejection is deemed effective as of the dates identified in Exhibit 1. 7

8 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 8 of Accordingly, the Debtors submit that it is both fair and equitable for the Court to order that the rejection of the Rejected Contracts be effective as of the dates identified in Exhibit 1. V. Request for Waiver of Stay 18. Bankruptcy Rule 6004(h) provides that [a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise. Although the Debtors believe that Bankruptcy Rule 6004(h) does not apply to the relief requested herein, to the extent that Bankruptcy Rule 6004(h) does apply, the Debtors submit that ample cause exists to justify a waiver of the fourteen-day stay because the relief requested herein is essential to avoid the potential accrual of unnecessary administrative expenses. VI. Notice 19. Notice of this Motion has been provided in accordance with the Order Granting Complex Chapter 11 Bankruptcy Case Treatment [Doc. No. 39] entered by this Court on October 27, In addition, the Debtors have served the counterparties to the Rejected Contracts. The Debtors submit that no other or further notice need be provided. 8

9 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 9 of 15 WHEREFORE, the Debtors respectfully request that the Court grant the Debtors the relief requested herein and such other and further relief as the Court deems just and proper. DATED: November 3, 2017 Respectfully submitted, /s/ Gregory G. Hesse Gregory G. Hesse (Texas Bar No ) HUNTON & WILLIAMS LLP 1445 Ross Avenue Suite 3700 Dallas, Texas Telephone: (214) ghesse@hunton.com -and- Tyler P. Brown (admitted pro hac vice) Jason W. Harbour (admitted pro hac vice) HUNTON & WILLIAMS LLP Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia Telephone: (804) tpbrown@hunton.com jharbour@hunton.com Proposed Counsel to the Debtors and Debtors in Possession 9

10 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 10 of 15 EXHIBIT A PROPOSED ORDER

11 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 11 of 15 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: THINK FINANCE, LLC, et al., Debtors. 1 Chapter 11 Case No (HDH) (Jointly Administered) ORDER WITH RESPECT TO DEBTORS FIRST OMNIBUS MOTION AUTHORIZING THE DEBTORS AND DEBTORS IN POSSESSION TO REJECT CERTAIN EXECUTORY CONTRACTS Upon the first omnibus motion (the Motion ) 2 of the above-captioned debtors and debtors-in-possession (collectively, the Debtors ) for entry of an order, pursuant to sections 105(a), 365(a) and 554(a) of the Bankruptcy Code and Rule 6006 of the Bankruptcy Rules for entry of an order authorizing the Debtors to reject the executory contracts (collectively, the 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are: Think Finance, LLC (6762), Think Finance SPV, LLC (4522), Financial U, LLC (1850), TC Loan Service, LLC (3103), Tailwind Marketing, LLC (1602), TC Administrative Services, LLC (4558), and TC Decision Sciences, LLC (8949). Motion. 2 Unless otherwise defined herein, each capitalized term shall have the meaning ascribed to it in the

12 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 12 of 15 Rejected Contracts ) listed on Exhibit 1 3 annexed hereto, effective as of the dates identified in Exhibit 1; the Court finds that: (a) it has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157 and 1334; (b) this is a core proceeding pursuant to 28 U.S.C. 157(b); (c) venue is proper before this court pursuant to 28 U.S.C and 1409; (d) the relief requested in the Motion is in the best interests of the Debtors, their estates and creditors; (e) the Debtors have exercised sound business judgment in determining to reject the Rejected Contracts; (f) proper and adequate notice of the Motion and the hearing thereon has been given and no other or further notice is necessary; and (g) upon the record herein, and after due deliberation thereon, good and sufficient cause exists for the granting of the relief as set forth herein. Therefore, IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED. 2. The Debtors hereby are authorized to reject the Rejected Contracts, which rejection shall be deemed effective as of the effective date of rejection identified in Exhibit 1 annexed hereto for such Rejected Contract. 3. Any counterparty to a Rejected Contract, to the extent it elects to file a rejection damages claim, if any, relating to the rejection of a Rejected Contract, shall file such claim by the claims bar date established in the Debtors chapter 11 cases. 4. Nothing herein shall prejudice the right of the Debtors to object to the allowance or classification of any claim for damages arising from the rejection of the Rejected Contracts. 3 Inclusion of a contract on Exhibit 1 attached hereto does not constitute an admission or determination by the Debtors that such contract is an executory contract, and the Debtors reserve all rights concerning such a determination 2

13 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 13 of Notwithstanding any Bankruptcy Rule or Local Bankruptcy Rule that might otherwise delay the effectiveness of this Order, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 6. This Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order. 7. The Debtors are authorized and empowered to take all actions necessary to implement the relief requested in this Order. ###END OF ORDER### 3

14 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 14 of 15 Submitted by: /s/ Gregory G. Hesse Gregory G. Hesse (Texas Bar No ) HUNTON & WILLIAMS LLP 1445 Ross Avenue Suite 3700 Dallas, Texas Telephone: (214) and- Tyler P. Brown (admitted pro hac vice) Jason W. Harbour (admitted pro hac vice) HUNTON & WILLIAMS LLP Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia Telephone: (804) Proposed Counsel to the Debtors and Debtors in Possession 4

15 Case hdh11 Doc 67 Filed 11/03/17 Entered 11/03/17 17:36:40 Page 15 of 15 EXHIBIT 1 Name on Contract VMware, Inc. Global DataGuard, Inc. d/b/a Masergy Mailing Address 3401 Hillview Ave. Palo Alto, CA Attn: Matt Phillips 3939 Beltline Road Suite 400 Addison, TX Attn: Dean Trumbull Debtor Counterparty TC Loan Service, LLC TC Loan Service, LLC Description of Contract/Services ELA order for software licenses, technical support and subscription services Master Security Services Agreement for network security monitoring services Related Agreements Subject to Rejection ELA Order dated June 28, 2011; Amendment No. 1 to ELA Order dated June 28, 2013; Amendment No. 2 to ELA Order dated June 24, 2014; Amendment No. 3 to ELA Order dated June 26, 2015; Support/Subscription Quote dated June 28, 2017 Master Security Services Agreement dated January 15, 2013; Addendum dated March 30, 2015 Rejection Effective Date Effective as of the Petition Date Effective as of October 30, 2017