IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION Case No

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1 In re: SANJEL (USA) INC., et al., 1 Debtors in a foreign proceeding. IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION Case No (Chapter 15) JOINTLY ADMINISTERED RESPONSE OF PRICEWATERHOUSECOOPERS INC., AS MONITOR AND FOREIGN REPRESENTATIVE, TO MOTION OF HENRY AND MICHELLE GUSMAN, INDIVIDUALLY AND MICHELLE GUSMAN, AS NEXT FRIEND OF B.T.G., PURSUANT TO 11 U.S.C. 362(d), FOR RELIEF FROM AUTOMATIC STAY [RESPONDS TO DOCKET NO. 607] PricewaterhouseCoopers Inc. ( PwC or the Monitor ), in its capacity as the court appointed Monitor and authorized foreign representative (the Foreign Representative ) of the Chapter 15 Debtors, including Sanjel (USA) Inc. ( SUSA ), in proceedings (the CCAA Proceedings ) commenced under Canada s Companies Creditors Arrangement Act, R.S.C. 1985, c. C36, as amended (the CCAA ) pending before the Court of Queen s Bench of Alberta (the Canadian Court ), hereby submits this Response of PricewaterhouseCoopers Inc., as Monitor and Foreign Representative, to Motion of Henry and Michelle Gusman, Individually and Michelle Gusman, As Next Friend of B.T.G., Pursuant to 11 U.S.C. 362(d), for Relief from Automatic Stay, pursuant to 11 U.S.C. 362, the Court s Order Granting Expedited Petitions for Recognition as Foreign Main Proceedings Pursuant to Sections 1515 and 1517 of the United States Bankruptcy Code and Related Relief [Docket No. 185] (the Recognition 1 The debtors in these jointly administered Chapter 15 cases are as follows: Sanjel Corporation ( Sanjel Corp. ), Suretech Group Ltd. ( Suretech ), Sanjel Energy Services (USA) Inc. ( Sanjel Energy ), Sanjel (USA) Inc. ( SUSA ), Suretech Completions (USA) Inc. ( Suretech USA ), Sanjel Capital (USA) Inc. ( Sanjel Capital ), Terracor Group Ltd. ( Terracor Group ), Terracor (USA) Inc. ( Terracor USA ), Terracor Resources (USA) Inc. ( Terracor Resources ), Terracor Logistics (USA) Inc. ( Terracor Logistics ), and Sanjel Canada Ltd. (collectively, the Chapter 15 Debtors ) \ /12/2017 2:36 PM 1

2 Order ), Rule 4001 of the Federal Rules of Bankruptcy Procedure, and Bankruptcy Local Rules 4001 and 9014(b), and respectfully would show: 1. On April 4, 2016, 2 the Monitor, in its capacity as Foreign Representative of the Chapter 15 Debtors, including SUSA, filed petitions for relief under Chapter 15 of title 11 of the United States Code (as amended, the Bankruptcy Code ). The Court has entered orders jointly administering the cases. A further description of the background of the Chapter 15 Debtors and the events leading up to the filing of the petitions may be found in the Affidavit of Paul Crilly, Exhibit F in the Notice of Filings of Documents in Support of First Day Filings [Docket No. 24], which is incorporated by reference herein. 2. Pursuant to orders of the Canadian Court and this Court, SUSA has sold all of its assets and the Monitor is winding up the remaining affairs of SUSA, which has no remaining assets or employees and which is no longer operating. See Declaration of Ricardo F. Osuna in Support of Response of PricewaterhouseCoopers Inc., as Monitor and Foreign Representative, to Motion of Henry and Michelle Gusman, Individually and Michelle Gusman, As Next Friend of B.T.G., Pursuant to 11 U.S.C. 362(d), for Relief from Automatic Stay (the Osuna Declaration ), attached hereto as Exhibit A and incorporated herein, at 6 and On December 1, 2016, Henry and Michelle Gusman, Individually and Michelle Gusman, as Next Friend of B.T.G. ( Plaintiffs ) initiated a lawsuit for alleged personal injury damages against, inter alia, SUSA in the 118 th Judicial District Court, Howard County, Texas (the State Court ), styled Henry and Michelle Gusman, Individually and Michelle Gusman, As Next Friend of B.T.G. v. Sanjel (USA), Inc., et al., Cause No (the State Court Action ). The State Court Action was filed after the Chapter 15 Debtors bankruptcy cases were filed and 2 The petition date for Sanjel Canada Ltd. is April 11, \ /12/2017 2:36 PM 2

3 Plaintiffs did not seek an order of this Court lifting the stay to allow such filing. The undersigned counsel filed a Suggestion of Bankruptcy and Notice of Automatic Stay in the State Court Action on January 3, The State Court Action has been stayed as a result of SUSA s Chapter 15 case and the entry of the Court s Recognition Order. Plaintiffs have now filed the Motion of Henry and Michelle Gusman, Individually and Michelle Gusman, As Next Friend of B.T.G., Pursuant to 11 U.S.C. 362(d), for Relief from Automatic Stay [Docket No. 607] (the Lift Stay Motion ), seeking to have the stay lifted so that Plaintiffs may pursue their alleged claims against SUSA in the State Court Action. 3 In the Lift Stay Motion, Plaintiffs allege that they only seek to modify the automatic stay to allow the State Court Action to go forward to judgment and to fix and liquidate their claims so as to be able to recover against any available insurance policies which might provide coverage for SUSA s liability, if any. Plaintiffs further allege that SUSA s estate will not be prejudiced by modifying the automatic stay to allow the State Court Action to proceed. 4. The Monitor recognizes that this Court does not usually adjudicate personal injury claims and that, as a general matter, the Court often lifts the automatic stay to allow litigation to proceed in state court where debtors have insurance coverage. 4 The Monitor also recognizes that jury trial issues would make trial of this matter in the Bankruptcy Court complicated and it appears that Plaintiffs have requested a jury in the State Court Action. 5. Consequently, the Monitor does not contest Plaintiffs request to lift the automatic stay imposed by the Court Recognition Order and 11 U.S.C. 362 but would request that the 3 It should be noted that Plaintiffs apparently do not seek retro-active lifting of the stay to allow the initial filing of the State Court Action. 4 Indeed, 28 U.S.C. 157 specifically provides that personal injury tort and wrongful death claims are tried in the District Court rather than the Bankruptcy Court \ /12/2017 2:36 PM 3

4 Court condition the lifting of the automatic stay as described herein by entering the Order attached hereto as Exhibit B. 6. In that regard, the Monitor would request that the Court, in any Order lifting the automatic stay, specifically find that SUSA has sold all of its assets (including its books and records), has ceased all ongoing operations, has no current employees, and that the Monitor, as a result, has no access to information and documents regarding the facts and circumstances surrounding Plaintiffs alleged injuries. See Osuna Declaration at 9. These findings are necessary so the State Court is fully apprised of the current status of SUSA and its wind-down in connection with any discovery, other pre-trial, or trial issues that might arise in the State Court. The Monitor has no direct knowledge of the facts underlying the State Court Action. Id. Thus, the Court s order on the Lift Stay Motion should specifically provide that the stay is not lifted to allow written or deposition discovery on the Monitor or on the SUSA Estate, or for Plaintiffs to seek any sanctions in the State Court in connection with the State Court Action against the SUSA s Estate and/or the Monitor. The Court s Order should further specifically provide that the State Court is not authorized to impose discovery costs, fees, or expenses against the Monitor or SUSA s Bankruptcy Estate in connection with the State Court Action, except to the extent that applicable insurance coverage exists for any such allegedly allowable costs, fees and expenses and this Court, in a subsequent proceeding, allows the State Court to go forward with respect to such allegedly allowable fees, costs or expenses. 7. To the extent that SUSA s insurance company and counsel hired to defend SUSA in the State Court Action has relevant, non-privileged documents that would be discoverable in the State Court Action, Plaintiffs should be authorized to pursue discovery with respect to such documents from SUSA s State Court counsel hired by the insurance company, as allowed by the \ /12/2017 2:36 PM 4

5 State Court. Plaintiffs should also be authorized to conduct discovery with respect to third parties who might have discoverable information but the Monitor should not be required to seek to compel any such third parties to respond to such discovery, produce any witnesses for deposition or trial, or otherwise have an obligation with respect to discovery against such third parties. 8. Plaintiffs claims, if any, would be general unsecured claims in SUSA s Chapter 15 Bankruptcy case and, as the Court is aware, it is not anticipated that there will be any distribution to unsecured creditors. See Osuna Declaration at 8. Consequently, the Court s order lifting the stay should specifically provide that Plaintiffs are limited to recovering only out of any liability insurance policies of SUSA which provide coverage for any adjudicated liability of SUSA with respect to Plaintiffs and their alleged injuries. 9. Without the protections and conditions to lifting of the automatic stay set out above, the Monitor would be prejudiced by lifting the automatic stay, contrary to the allegations in the Lift Stay Motion. WHEREFORE, the Monitor requests that in connection with any order lifting the automatic stay pursuant to the Lift Stay Motion that the Court condition the lifting of the stay as set out above and enter the Order attached as Exhibit B which provides for same. The Monitor also requests such other and further relief to which it may be justly entitled \ /12/2017 2:36 PM 5

6 Dated: July 12, 2017 Respectfully submitted, DYKEMA COX SMITH By: /s/ Patrick L. Huffstickler Deborah D. Williamson State Bar No Patrick L. Huffstickler State Bar No Patrick B. McMillin State Bar No East Pecan Street, Suite 1800 San Antonio, Texas (210) (210) (Fax) COUNSEL FOR THE CANADIAN MONITOR AND FOREIGN REPRESENTATIVE \ /12/2017 2:36 PM 6

7 CERTIFICATE OF SERVICE I certify a copy of the foregoing document will be served by electronic notification by the Electronic Case Filing system for the United States Bankruptcy Court for the Western District of Texas to those parties registered to receive ECF Notice and by U.S. Mail, postage prepaid, on the parties listed below on July 12, Ronald B. Johnson Law Offices of Ronald B. Johnson Riverview Towers, Suite Soledad Street San Antonio, TX R. Shane Seaton 1301 S. Gregg St. Big Spring, TX Jill C. Pennington Davis, Gerald & Cremer A Professional Corporation 400 W. Illinois, Suite 1400 Midland, TX Adrienne Bilbrey, SCLA Claims Officer, North American Casualty Claims P.O. Box Phoenix, AZ Calvin M. Carroll MCU Specialist P.O. Box Schaumburg, IL Cal Hendrick Shafer, Davis, O Leary & Stoker 700 N. Grant, Suite 201 (79761) P.O. Drawer 1552 Odessa, TX David J. Plavnicky Suzanne Sharpless PLAVNICKY KINZEL MAKOWSKI LLP 5300 Memorial Drive, Suite 675 Houston, Texas \ /12/2017 2:36 PM /s/ Patrick L. Huffstickler Patrick L. Huffstickler 7

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