IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

Transcription

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 In re: Al23 SYSTEMS, INC., et al.,1 Debtors Case No (KJC) (Jointly Administered) Obj. Deadline: January 8, 4:00 p.m. Hearing Date: January 15, 2:00 p.m. APPLICATION FOR EMPLOYMENT OF CAPITOL COUNSEL LLC AS LOBBYIST FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS NUNC PRO TUNC TO DECEMBER 21, 2012 The Official Committee of Unsecured Creditors (the "Committee") of Al23 Systems, Inc., et al. (collectively, the "Debtors"), by and through its undersigned counsel, hereby files this application (the "Application") for authority to have its counsel employ Capitol Counsel LLC ("Capitol Counsel") as lobbyist for the Committee nunc pro tunc to December 21, 2012, This Application is supported by the Declaration of John O'Neill in Support of the Application for Authority to Employ Capitol Counsel LLC as Lobbyist for the Committee (the "O'Neill Declaration"), attached hereto as Exhibit A. In further support of this Application, the Committee respectfully states as follows: BACKGROUND 1. On October 16, 2012 (the "Petition Date"), each of the Debtors commenced its case under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). The Debtors continue to operate their businesses and manage their properties as debtors-in- The Debtors in these Chapter 11 Cases, along with the last four digits of each Debtor's federal tax identification number, are: Al23 Systems, Inc. (3876); Al23 Securities Corporation (5388); and Grid Storage Holdings LLC (N/A). The above-captioned Debtors' mailing address is do Al23 Systems, Inc., 200 West Street, Waltham, Massachusetts

2 possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been requested or appointed in any of the Debtors' chapter 11 cases. 2. On November 2, 2012, the United States Trustee for the District of Delaware (the "U.S. Trustee"), pursuant to section 1102(a)(1) of the Bankruptcy Code, appointed seven members to the Committee. The members of the Committee are as follows: (i) Axisteia Master, L.P., (ii) BAE Systems Controls Inc., (iii) DynaPower Company, LLC, (iv) Fisker Automotive Inc., (v) Hudson Bay Capital Management, LLC, (vi) Smith Electric Vehicles Corp., and (vii) U.S. Bank National Association as Indenture Trustee. 3. On December 11, 2012, this Court entered the Order Authorizing (I) the Sale of Certain Assets of the Debtors Free and Clear of All Claims, Liens, Liabilities, Rights, Interests and Encumbrances, (II) the Debtors' Entry into and Performance of Their Obligations Under the Asset Purchase Agreement and Ancillary Agreements, (III) the Debtors' Assumption and Assignment of Certain Executory Contracts and Unexpired Leases and (IV) Related Relief [Docket No. 640] (the "Wanxiang Sale Order"), pursuant to which the Court, inter alia, authorized the Debtors to sell substantially all of their assets to Wanxiang America Corporation (including its designees under the applicable sale documents, "Wanxiang"). 4. The sale of assets to Wanxiang is subject to approval of the United States Treasury Department's Committee for Foreign Investment in the United States ("CFIUS"). 5. Considerable political pressure has been raised against CFIUS approval of the proposed sale to Wanxiang. By way of example, the Debtors' jilted stalking horse bidder, Johnson Controls Inc. ("JCI"), has hired a seasoned political lobbyist and, upon information and belief, is doing everything within its power to encourage CFIUS to deny approval of the proposed sale to Wanxiang. 2

3 6. The Committee has determined that it requires a lobbyist in connection with the CIFUS process and the political opposition to the proposed sale to Wanxiang, and, on December 21, 2012, the Committee selected Capitol Counsel to serve as the Committee's lobbyist. 7. Capitol Counsel is a full-service, government relations firm providing political analysis, strategic advice, and advocacy services. The professionals of Capitol Counsel are among the most seasoned lobbyists in Washington with extensive experience developing and executing effective legislative strategies for clients. Capitol Counsel has a long standing working relationship with Blackstone Advisory Partners, L.P., the Committee's financial advisor, and based, in part, on that relationship, was willing to quickly get up to speed and become engaged at a proposed rate that is below market for similar lobbying services. 8. Subject to approval of this Court, Committee counsel Brown Rudnick LLP has executed an engagement letter with Capitol Counsel, attached hereto as Exhibit B (the "Engagement Letter"). Such selection was based on the Committee's determination that, in light of, among other things, Capitol Counsel's familiarity with the Debtors' businesses and the political process involved in the Debtors' sale of assets to Wanxiang, Capitol Counsel is the best candidate to serve as lobbyist for the Committee. The Committee also believes that Capitol Counsel's proposed compensation structure is competitive and appropriate given the Committee's understanding of the facts and circumstances of these chapter 11 cases and its understanding of fees charged by similar lobbying firms for such services. JURISDICTION AND VENUE 9. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C and 1409.

4 10. The statutory predicates for the relief sought herein are sections 328(a) and 1103 of title 11 of the Bankruptcy Code and Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). RELIEF REQUESTED 11. Pursuant to Bankruptcy Code sections 328(a) and 1103(a) and Bankruptcy Rules 2014 and 2016, the Committee requests authority to have Brown Rudnick LLP employ and retain Capitol Counsel as the Committee's lobbyist, effective nunc pro tunc to December 21, 2012, in connection with the Debtors' chapter 11 cases. RETENTION OF CAPITOL COUNSEL A. Services to be Provided 12. Subject to further order of the Court and consistent with the Engagement Letter, it is expected that Capitol Counsel will provide such advisory and lobbyist services to the Committee and its advisors as they deem appropriate and feasible in the course of these chapter 11 cases, including, but not limited to, the following services: a) Political and policy intelligence gathering and analysis; b) Strategic guidance and tactical implementation regarding legislative and political matters; and c) If appropriate and necessary, direct advocacy before Congress, including relevant congressional committees, and the Executive Branch, as appropriate. B. Compensation 13. Section 328(a) of the Bankruptcy Code provides, in relevant part, that an official committee "with the court's approval, may employ or authorize the employment of a professional person under section 327 or 1103 of this title... on any reasonable terms and 4

5 conditions of employment, including on a retainer, on an hourly basis, on a fixed percentage or fee basis, or on a contingent fee basis." 11 U.S.C. 328(a). 14. Subject to the Court's approval, and in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, this Court's local rules, orders of this Court, and guidelines established by the U.S. Trustee, and as set forth more fully in the Engagement Letter, the Committee contemplates that Capitol Counsel will be compensated for a flat fee of $75,000 as well as be reimbursed all reasonable out-of-pocket expenses for out-of-town travel approved in advance, as well as local transportation, messenger services, and research materials, which expenses will be billed separately. The payment of the fee and reimbursement of expenses set forth in this paragraph and the Engagement Letter shall be referred to herein as the "Fee Structure." The Committee expects Capitol Counsel to complete its work no later than February 28, 2013, Payment of the $75,000 flat fee shall be made promptly upon entry of an order approving this Application, 15. The Committee believes that this Fee Structure is consistent with and typical of compensation arrangements entered into by firms of stature similar to that of Capitol Counsel for comparable engagements, both in and out of bankruptcy proceedings. Based upon discussions among the Committee's legal advisors and Capitol Counsel, the Committee understands that Capitol Counsel expects to spend approximately 70 to 100 man hours on the engagement and that the proposed flat fee of $75,000 is less than the fee that Capitol Counsel would typically charge for such an engagement. The Committee believes that the Fee Structure is reasonable, market-based, and designed to fairly compensate Capitol Counsel for its work in these chapter 11 cases and to cover fixed and routine overhead expenses. 5

6 16. In light of the foregoing, the Committee believes that the Fee Structure is both fair and reasonable under the circumstances of this engagement. C. Fee Application and Waiver 17, The Committee understands that firms such as Capitol Counsel do not normally charge for their services on an hourly basis. Instead, their fees typically consist of monthly "flat" fees. As is the case with other firms in the industry, Capitol Counsel does not customarily maintain time records like those maintained by attorneys and other professionals compensated on an hourly basis. Moreover, the Committee has also been advised that requiring Capitol Counsel to create the time entries for its professionals as prescribed by the Bankruptcy Rules would be unduly burdensome and time consuming and may actually hinder Capitol Counsel from providing the services for which it is being engaged. Accordingly, the Committee requests that Capitol Counsel be excused from the requirement to maintain or provide detailed time records in accordance with Bankruptcy Rule 2016(a) and/or Local Bankruptcy Rule or otherwise conform to a schedule of hourly rates for its professionals. 18. At the conclusion of the Engagement, Capitol Counsel shall file a final fee application seeking final approval of the payment of the fees and expenses incurred by it in connection with the Engagement. In lieu of detailed time records in connection with the services rendered pursuant to the Engagement Letter, Capitol Counsel's final fee application shall include daily records in summary format, which shall indicate the total hours incurred by each professional for each day and a brief description of the nature of the work performed. BASIS FOR RELIEF 19. By this Application, the Committee requests that the Court approve the compensation arrangements set forth in the Engagement Letter pursuant to section 328(a) of the 6

7 Bankruptcy Code. The compensation arrangements contained in the Engagement Letter are highly beneficial to the Debtors' estates as they provide the proper inducement for Capitol Counsel to act expeditiously and prudently with respect to the matters for which it will be employed. The compensation of Capitol Counsel shall be subject to the standard of review set forth in section 328 of the Bankruptcy Code and not subject to any other standard of review, provided however that Capitol Counsel's retention may be subject to review by the United States Trustee under section 330 of the Bankruptcy Code. 20. The Committee has specifically selected Capitol Counsel to serve as the Committee's lobbyist because of its extensive experience in representing and advising parties in legislative and political matters. 21. Pursuant to Bankruptcy Code section 328(a), the Committee may retain Capitol Counsel on reasonable terms and conditions. The Committee submits that Capitol Counsel's terms of reimbursement and compensation as set out in the Engagement Letter are reasonable. DISINTERESTEDNESS; LACK OF ADVERSE INTEREST 22. To the best of the Committee's knowledge and based on the O'Neill Declaration, the Committee submits that Capitol Counsel is a "disinterested person" as that term is defined in section 101(14). The Committee further submits that Capitol Counsel neither represents nor holds any interest adverse to the Debtors' estates or the Committee in the matters upon which Capitol Counsel is to be engaged, except as set forth in the O'Neill Declaration and described below. Further, except as set forth in the O'Neill Declaration, Capitol Counsel has no connection with any Debtor, creditor, other party in interest, their respective attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee, 7

8 23. The Committee has been informed that Capitol Counsel is conducting an ongoing review of its files to ensure that no disqualifying circumstances arise, and if new relevant facts or relationships are discovered, Capitol Counsel will supplement its disclosure to the Court. 24. The Committee submits that the appointment of Capitol Counsel on the terms and conditions set forth in the Engagement Letter and herein is in the best interest of the Debtors, their creditors, and all parties in interest. NO PRIOR REQUEST 25. No previous application for the relief requested herein has been made to this or any other court. 8

9 WHEREFORE, the Committee requests that the Court enter an order substantially in the form attached hereto, authorizing the Committee's counsel to employ Capitol Counsel as lobbyist in these cases nunc pro tunc to December 21, 2012 and granting such other and further relief as the Court may deem just, proper and equitable. Dated: December 28, 2012 SAUL EWING LLP Mark Minuti (No. 2659) 222 Delaware Avenue, Suite 1200 P. 0. Box 1266 Wilmington, DE (302) (302) (fax) BROWN RUDNICK LLP William R. Baldiga, Esq. John F. Storz, Esq. Seven Times Square New York, NY (212) (212) (fax) -and- -and- Sunni P. Beville, Esq. R. Benjamin Chapman, Esq. One Financial Center Boston, MA (617) (617) (fax) Counsel to the Official Committee of Unsecured Creditors 9