IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Transcription

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA IN RE: W. S. LEE & SONS, INC. Bktcy BM Chapter 11 Debtor IN RE: LEE SYSTEMS SOLUTIONS, Bktcy BM LLC Chapter 11 Debtor W. S. LEE & SONS, INC.; LEE SYSTEMS SOLUTIONS, LLC; OMEGA BANK; and ROBERT E. LEE Movants Doc. # v. Hearing Date:, 2007 NO RESPONDENTS Hearing Time:.m. Respondents JOINT MOTION OF DEBTORS-IN-POSSESSION, OMEGA BANK, AND ROBERT E. LEE FOR APPROVAL OF SETTLEMENT, AND CONFIRMATION OF JOINT PLAN OF REORGANIZATION OF CURRENT MANAGEMENT, NEW INVESTORS, AND DEBTORS- IN-POSSESSION, EXCLUDING EXISTING EQUITY HOLDERS, DATED NOVEMBER 6, 2006 BASED UPON WITHDRAWAL OF OBJECTIONS OF ROBERT E. LEE TO CONFIRMATION AND HIS JOINDER HEREIN AND HIS CONSENT TO ENTRY OF AN ORDER CONFIRMING SAID PLAN COMES NOW the Debtors above named, W.S. Lee & Sons, Inc.( WSL and Lee Systems Solutions, LLC ( LSS, by and through their attorneys, Spence, Custer, Saylor, Wolfe & Rose, LLC, Omega Bank, by and through its attorneys, Babst, Calland, Clements & Zomnir, P.C., and Robert E. Lee, by and through his attorneys, Blumling & Gusky, LLP, and do hereby file the within Joint Motion Of Debtors-In-Possession, Omega Bank, And Robert E. Lee For Approval Of Settlement And Confirmation Of Joint Plan Of Reorganization Of Current Management, New Investors, And Debtors- In-Possession, Excluding Existing Equity Holders, Dated November

2 6, 2006, Based Upon Withdrawal Of Objections Of Robert E. Lee To Confirmation And His Joinder Herein And His Consent To Entry Of An Order Confirming Said Plan, upon a cause whereof the following is a statement, to wit: 1. The Debtors commenced the within cases by filing voluntary petitions with this Court seeking relief under Chapter 11 of Title 11 of the U.S. Code, 11 U.S.C. Section 101, et seq, on March 14, This proceeding is a core proceeding over which this Court has jurisdiction pursuant to 28 U.S.C. Sections 157 and Movant, Omega Bank ( Omega is an entity with a business address, for purposes of this proceeding, of attn: Timothy Lockard, 366 Walker Drive, State College, Pa., , with notice to Elizabeth (Betsy A. Dupuis, Esquire, Babst, Calland, Clements Zomnir, P.C., 328 Innovation Blvd., Suite 200, State College, Pa., 16803, and David W. Ross, Esquire, Babst, Calland, Clements Zomnir, P.C., 8 th Floor, Two Gateway Center, Pittsburgh, Pa., Movant, Robert E. Lee ( REL is an individual with an address, for purposes of this proceeding, of c/o Thomas Ferguson, Esquire, Blumling & Gusky, LLP, 1200 Koppers Building, th Ave., Pittsburgh, Pa., The Debtors/Movant are, and remain, Debtors-in- Possession with all of the duties, obligations and authority of such an entity pursuant to Section 1107 of the Code. 6. The Debtors heretofore filed, with the support and endorsement of Omega Bank, the largest pre-petition creditor of the Debtors, and the lender which, together with the funds to be infused by the New Investors, will provide the emergence financing under the hereinafter referred to Plan, the Joint Plan Of Reorganization Of Current Management, New Investors, And Debtors-In-Possession, Excluding Existing Equity Holders, Dated November 6, 2006 (the Joint Plan, and the Disclosure Statement In Support Of Joint Plan Of Reorganization Of Current Management, New Investors, And Debtors-In-Possession, Excluding Existing Equity Holders, Dated November 6, 2006 (the Joint Plan Disclosure, the terms of the Joint Plan and Joint Plan Disclosure being incorporated herein by 7. REL filed objections to the approval of the Joint Plan Disclosure, the provisions of which are incorporated herein by 8. The Debtors and other parties in interest, including the Official Committee of Unsecured Creditors (the Committee, and

3 Omega Bank, filed responses to the REL objections, said responses being incorporated herein by 9. A hearing was scheduled for and held on January 5, 2007, on the adequacy of the Joint Plan Disclosure. 10. The Court, by Order dated January 12, 2007, approved the adequacy of the Joint Plan Disclosure, set a time period for balloting on the said Joint Plan, and scheduled a hearing on the Confirmation of the Joint Plan for April 6, 2007, the provisions of said Order of January 12, 2007 being incorporated herein by 11. Balloting on the Joint Plan occurred between January 24, 2007 and March 30, The Debtors filed a Summary of Balloting on or about April 3, 2007, disclosing that each Class of secured creditors, the holders of executory contract being assumed, administrative claimants, holders of 503(b(9 claims, holders of priority claims, as well as Class 11, which was holders of allowed General Unsecured claims excluding the claims of insiders, overwhelmingly approved and voted in favor of the Joint Plan, the provisions of the Summary Of The Balloting being incorporated herein by 13. REL filed objections to the confirmation of the Joint Plan, the provisions of which are incorporated herein by 14. The Debtors and other parties in interest, including the Committee and Omega Bank, filed responses to the REL objections, said responses being incorporated herein by 15. The Court, at the time of the scheduled Confirmation Hearing, determined that given the nature of the REL objections, the matters could not be determined on the basis of legal argument alone, and therefore, that an evidentiary hearing would be required to be held to be held to resolve various factual disputes concerning the Objections, and to determine whether the Joint Plan could or could not be confirmed, and therefore scheduled an evidentiary hearing on the matters in dispute for April 30, 2007, the provisions of said Order being incorporated herein by 16. The Debtors-In-Possession, Omega Bank, and REL, while preparing for the April 30, 2007 hearing, through their respective counsel, have been in intense negotiations to determine whether the matters in dispute could among them, be amicably resolved, and the objections to confirmation filed by REL withdrawn.

4 17. As the result of said negotiations, and each party (with the advice and assistance of counsel evaluating the merits or lack thereof of the respective positions, the costs of the pending litigation, its effect upon the emergence of these Debtors from Chapter 11, the prospect for appeals of the trial Court s decision, the possible affect that a delay in emergence could have on the Joint Plan s business plan, and the inherent uncertainties of litigation, the parties, on the eve of April 18, 2007, reached an agreement of settlement, under which all pending litigation by and between the Debtors and REL will be withdrawn and resolved with prejudice upon the entry of an Order Confirming the Joint Plan being entered and said Order becoming a Final Order of Court, REL agreeing to withdraw all objections to confirmation, REL in fact agreeing to support the confirmation of the Joint Plan via this Joint Motion seeking Confirmation Of The Joint Plan, and other matters, all as set forth at length in the Term Sheet Of Settlement Between Robert E. Lee And W. S. Lee & Sons, Inc. And Lee Systems Solutions, LLC- Bullet Point Form (April 18, 2007 (the Term Sheet, the terms of said Term Sheet being incorporated herein by 18. The Term Sheet has been executed by and on behalf of The Bankruptcy Estate of W.S. Lee & Sons, Inc., The Bankruptcy Estate of Lee Systems, Solutions, LLC, W.S. Lee & Sons, Inc., Omega Bank, and Robert E. Lee, copies of the Term Sheet and counterpart signature pages being attached hereto and designated Ex The parties hereto believe and therefore aver that given the entry into the Term Sheet, the withdrawal of the Objections To Confirmation of REL, and the endorsement of and support of REL for the Confirmation Of The Joint Plan, that based upon the Summary of Balloting, there no longer exists an impediment to the entry of an Order Confirming the Joint Plan. 20. REL, Omega, and the Debtors jointly believe that the best interests of the Debtors and the creditors of these estates will be served by the entry of an Order approving the settlement pursuant to the Term Sheet and the entry of an Order of Confirmation confirming the Joint Plan. 21. The Debtors have not offered nor been offered any consideration for agreement to the terms hereof, including the terms set forth in the Term Sheet, except as set forth in this Motion and in the Term Sheet. 22. The Movants herein have been authorized to further represent that the Committee supports the relief being requested herein, as it assures the Committee that the Class 11 claimants will receive the amounts provided for Class 11 under the Joint

5 Plan, and that the same can begin being distributed to the holders of allowed Class 11 claims. 23. The Debtors and Omega have agreed to amend the language of the Plan that provided: The Effective Date of the Joint Plan shall be 45 days from the date the order of confirmation becomes final., to read as follows: The Amended Effective Date of the Joint Plan shall be a date agreed upon by Omega Bank and the Debtors, which date shall be not less than (10 days or greater than (15 days from the date of this Order. WHEREFORE, the Debtors, Omega Bank, and Robert E. Lee do pray this Court to enter an Order approving the settlement set forth in the Term Sheet, and to, based upon the withdrawal by REL of the Objections To Confirmation and REL s joinder herein, and the and the support of and endorsement of the confirmation of the Joint Plan by all Classes under the Joint Plan, enter an Order approving and confirming the Joint Plan, and each party hereto does authorize its respective counsel to join in this Motion on their behalf. Spence, Custer, Saylor, Wolfe & Rose, L.L.C. By: /s/ James R. Walsh James R. Walsh, Esquire 400 AmeriServ Bldg. P.O. Box 280 Johnstown, PA., Pa. I.D. # ( JWalsh@Spencecuster.com Attorneys For Movants/ Debtors-In- Possession Blumling & Gusky, LLP By: /s/ Thomas M. Ferguson 1200 Koppers Building th Ave. Pittsburgh, Pa., Pa. I.D. # ( TFerguson@BlumlingGusky.com Attorneys For Movant/ Robert E. Lee Babst, Calland, Clements & Zomnir, P.C. By: /s/david W. Ross Two Gateway Center, 8 th Floor

6 Pittsburgh, Pa., Pa. I.D. # ( Dross@bccz.com Attorneys For Movant/ Omega Bank JRW/Laptop III/W.S. Lee/Joint Motion To Approve Term Sheet Settlement Between Debtors, Omega Bank, and Robert E. Lee, And To Enter Order Confirming Joint Plan/