Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 1 of 14

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1 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 1 of 14 GIBSON, DUNN & CRUTCHER LLP Samuel A. Newman (admitted pro hac vice) snewman@gibsondunn.com Olivia Adendorff (TX SBN: ) oadendorff@gibsondunn.com Michael S. Neumeister (admitted pro hac vice) mneumeister@gibsondunn.com 2100 McKinney Avenue, Suite 1100 Dallas, Texas Telephone: Facsimile: Counsel for Liquidation Trustee for Liquidation Trust for TPP Acquisition, Inc. IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re TPP ACQUISITION, INC. d/b/a The Picture People, Debtor. Case No hdh-11 Chapter 11 LIQUIDATION TRUSTEE S MOTION TO ENFORCE CONFIRMATION ORDER AS TO THE MONROE CLAIMANTS A HEARING WILL BE CONDUCTED ON THIS MATTER ON DECEMBER 19, 2017 AT 9:00 A.M. (CT) AT THE EARLE CABELL FEDERAL BUILDING, 1100 COMMERCE STREET, 14TH FLOOR, COURTROOM NO. 3, DALLAS, TEXAS IF YOU OBJECT TO THE RELIEF REQUESTED, YOU MUST RESPOND IN WRITING, SPECIFICALLY ANSWERING EACH PARAGRAPH OF THIS PLEADING. UNLESS OTHERWISE DIRECTED BY THE COURT, YOU MUST FILE YOUR RESPONSE WITH THE CLERK OF THE BANKRUPTCY COURT WITHIN TWENTY-ONE DAYS FROM THE DATE YOU WERE SERVED WITH THIS PLEADING. YOU MUST SERVE A COPY OF YOUR RESPONSE ON THE PERSON WHO SENT YOU THE NOTICE; OTHERWISE, THE COURT MAY TREAT THE PLEADING AS UNOPPOSED AND GRANT THE RELIEF REQUESTED.

2 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 2 of 14 The Liquidation Trustee for the Liquidation Trust for TPP Acquisition, Inc. (the Liquidation Trustee ) hereby files this motion (the Motion ) seeking entry of an order enforcing the Order (I) Finally Approving Second Amended Disclosure Statement and (II) Confirming Second Amended Joint Chapter 11 Plan of Liquidation of the Debtor and the Committee Under Chapter 11 of the Bankruptcy Code [D.I. 548] (the Confirmation Order ) as to Monroe Capital Corporation, Monroe Capital Partners Fund LP, Monroe Capital Management Advisors LLC, and TPP Operating, Inc. (collectively, the Monroe Claimants ) with respect to the matters the Court should resolve at the hearing on December 19, In support of the Motion, the Liquidation Trustee respectfully represents as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion 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 The Court retained jurisdiction over this Motion and the relief requested herein pursuant to paragraph 60 of the Court s Confirmation Order. PRELIMINARY STATEMENT 3. The Liquidation Trustee files this motion solely to make clear the issues that it believes are currently set for hearing in connection with the Liquidation Trustee s Notice of Filing of Wind-Down Reserve Accounting [D.I. 627] (the Wind-Down Reserve Accounting ) on December 19, The Wind-Down Reserve Accounting was previously ordered by this Court as a result of the relief sought in the Monroe Admin Claim Application (as defined below). The Court did not rule on certain of the Liquidation Trustee s objections to the Monroe Admin Claim Application at the hearing on that application, but rather ordered the Liquidation Trustee to 2

3 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 3 of 14 prepare and file the Wind-Down Reserve Accounting to demonstrate the proposed use and reserve of remaining Wind-Down Cash (as defined in the Plan). 4. The Liquidation Trustee has timely filed the Wind-Down Reserve Accounting demonstrating the proposed use and reserve of the Wind-Down Cash consistent with the Confirmation Order and Plan (as defined below), and the Monroe Claimants have objected thereto. This Motion relies exclusively on the Liquidation Trustee s previous briefing with respect to the Wind-Down Reserve Accounting. However, the Liquidation Trustee files this Motion out of an abundance of caution to make clear, and to provide parties with notice and an opportunity to object, that the Liquidation Trustee requests entry of an order authorizing but not directing the Liquidation Trustee, without further notice to parties or further order of the Court, to use the remaining Wind-Down Cash to make distributions under the Plan as described in the Wind-Down Reserve Accounting. 5. Further, given that the resolution of the Wind-Down Reserve Accounting resolves all remaining issues with respect to the Monroe Admin Claim Application, the Court, upon approval of the Wind-Down Reserve Accounting, should deny the Monroe Admin Claim Application, except to the extent of any remaining Wind-Down Cash after the use and distribution thereof pursuant to the Wind-Down Reserve Accounting. 6. The relief requested by the Liquidation Trustee in this Motion is all provided for in the Confirmation Order, and the Liquidation Trustee therefore requests the Court to enforce the Confirmation Order as to the Monroe Claimants, and (i) authorize, but not direct, the Liquidation Trustee to use the remaining Wind-Down Cash pursuant to the Wind-Down Reserve Accounting, and (ii) deny relief requested in the Monroe Admin Claim Application except with 3

4 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 4 of 14 the respect to the allowance of an Administrative Claim only for the amount of Wind-Down Cash after the use of such cash pursuant to the Wind-Down Reserve Accounting. BACKGROUND 7. On September 2, 2016, TPP Acquisition, Inc., the debtor and debtor-in-possession in the above captioned bankruptcy proceeding (the Debtor ), filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. On September 13, 2016, the Office of the United States Trustee appointed the Official Committee of Unsecured Creditors [D.I. 103] (the Committee ). 8. On April 22, 2017, the Court entered the Confirmation Order, pursuant to which the Court confirmed The Debtor s and Official Committee of Unsecured Creditors Second Amended Joint Plan of Liquidation for TPP Acquisition, Inc. d/b/a The Picture People Under Chapter 11 of the United States Bankruptcy Code (Final Version) [D.I. 548] (the Plan ). The Plan is a liquidating plan, and provided for the transfer of all or substantially all of the Debtor s assets to a liquidation trust (the Liquidation Trust ) for the benefit of the Debtor s creditors. The core assets transferred to the Liquidation Trust were as follows: (i) the estate s causes of action against (a) Blackstreet Capital Management LLC and its affiliates; (b) the Monroe Claimants; and (c) the Debtors directors and officers (collectively, the D s & O s ) for breach of fiduciary duty; (ii) approximately $69,028 in unencumbered cash; and (iii) remaining Wind- Down Cash, an accounting of which has been filed with the Court pursuant to the Accounting Order (as defined below). 9. Pursuant to the Plan, the deadline to file Administrative Claims was June 26, Plan, Art. II.A.3; Exh. A, 2 (definition of Administrative Claims Bar Date ). If a creditor or party in interest failed to file a timely Administrative Claim, such creditor or party in 4

5 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 5 of 14 interest is forever barred from asserting such Administrative Claims against the Debtor, the Liquidation trust, or their property. Plan, Art. II.A Further, the Plan and the Confirmation Order incorporated the Court s prior TPP Sale Order and DIP Order (each as defined in the Plan) with respect to the use and distribution of proceeds from the Debtors remaining Wind-Down Cash, which constitutes the remaining loan proceeds borrowed by the Debtor under the DIP Credit Agreement (as defined in the Plan). Confirmation Order, 36; Plan, Art. V.E.3.a. Specifically, according to the Confirmation Order, [a]mounts in the Wind-Down Reserve may be used only to pay unpaid Allowed Administrative Claims, Allowed Secured Claims, Ordinary Course Liabilities, Allowed Secured and Priority Tax Claims, and U.S. Trustee fees identified in the DIP Budget and only up to the amounts identified in the DIP Budget. Confirmation Order, On June 26, 2017, the Monroe Claimants filed their Application for Allowance and Payment of Administrative Expense Claims and Reservation of Rights [D.I. 578] (the Monroe Admin Claim Application ). Through the Monroe Admin Claim Application, the Monroe Claimants asserted administrative expense claims on account of certain purported setoff rights and other rights under the Court s prior orders, and reserved rights with respect to certain claims that the Monroe Claimants asserted may exist against the Committee and its former members and professionals. On July 26, 2017, the Liquidation Trustee filed its objection to the Monroe Admin Claim Application [D.I. 605] (the Trustee Admin Claim Objection ). Through the Trustee Admin Claim Objection, the Liquidation Trustee demonstrated that the Monroe Claimants failed to adequately assert an administrative expense claim under the Plan. Further, as demonstrated in the Trustee Admin Claim Objection, the Monroe Claimants are entitled to a return of any Wind-Down Cash after the permitted uses under the DIP Order and the Plan; 5

6 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 6 of 14 however, the Monroe Claimants are not entitled to immediate payment of such funds so long as the Liquidation Trustee determined that it should pay or reserve for administrative expense claims covered by the DIP Budget (as defined in the Plan). 12. On September 21, 2017, the Court entered an order, [D.I. 625] (the Admin Claim Order ), granting the Monroe Admin Claim Application in part, with all other relief requested therein... subject to further Order by the Court at the appropriate time. The Court further ordered the Liquidation Trustee to file and serve a reconciliation and accounting of the Wind- Down Reserve (the Wind-Down Reserve Accounting ). Id. 13. On September 29, 2017, the Liquidation Trustee filed its Wind-Down Reserve Accounting, setting forth the Liquidation Trustee s proposed distributions and reserves with respect to the Wind-Down Cash. The Monroe Claimants filed their objection to the Wind-Down Reserve Accounting on October 20, 2017, and a hearing on the Wind-Down Reserve Accounting is scheduled for December 19, On November 21, 2017, the Liquidation Trustee filed its reply in support of the Wind-Down Reserve Accounting (the Wind-Down Reserve Reply ). 14. Counsel for the Liquidation Trustee conferred with counsel for the Monroe Claimants on November 3, 2017 regarding the findings that the Liquidation Trustee thought the Court would be in position to make at the hearing on the Wind-Down Reserve Accounting. First, the Liquidation Trustee proposed that the Court make express findings that the Liquidation Trustee is permitted and authorized to reserve and distribute the Wind-Down Cash as set forth in the Wind-Down Accounting. Second, the Liquidation Trustee suggested that, once the Wind- Down Accounting is ruled on, the Court should finally resolve the remaining claims asserted by the Monroe Claimants in the Monroe Admin Claim Applications. Counsel for the Liquidation Trustee and the Monroe Claimants were unable to reach agreement on the proper matters before 6

7 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 7 of 14 this Court to be resolved. As a result, the Liquidation Trustee now files this Motion requesting the Court to make specific findings with respect to matters that are already briefed and before the Court for resolution. Such findings should be made in furtherance of the provisions of the Confirmation Order. RELIEF REQUESTED 15. By this Motion, the Liquidation Trustee seeks an order enforcing the Confirmation Order as to the Monroe Claimants by (i) finding that the Liquidation Trustee is permitted and authorized, but not directed, to use the remaining Wind-Down Cash pursuant to the Wind-Down Reserve Accounting, and (ii) denying any relief requested in the Monroe Admin Claim Application that had not otherwise been granted pursuant Admin Claim Order. This is purely a procedural motion, and the Liquidation Trustee relies entirely on the briefs on these issues that have been previously submitted with the Court. BASIS FOR RELIEF 16. Pursuant to the Confirmation Order, this Court retained jurisdiction to enforce the Confirmation Order and the Plan. Confirmation Order, 60; Plan, Art. VII.A.8, 11. The Liquidation Trustee s right to use and establish reserves with respect to the Wind-Down Cash is provided for in the Plan. Similarly, the Plan governs the ability of parties in interest to assert Administrative Claims against the Debtors. A. The Court Should Authorize the Liquidation Trustee to Use the Remaining Wind- Down Cash Pursuant to the Wind-Down Reserve Accounting 17. The Plan and Confirmation Order permit the Liquidation Trustee to use remaining Wind-Down Cash to make distributions on account of unpaid obligations of the estate to the extent contemplated under the DIP Budget, subject to any permitted variance. The provisions governing the Liquidation Trustee s rights with respect to the use and reserve of the Wind-Down 7

8 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 8 of 14 Cash is extensively briefed in the Wind-Down Reserve Accounting and the Wind-Down Reserve Reply. Similarly, the Monroe Claimants have briefed the basis for which they believe they are entitled to an immediate return of all remaining Wind-Down Cash. The parties expect that the Court will resolve at the hearing on December 19, 2017 all disputes over the permitted uses of the Wind-Down Cash. 18. To the extent the Court authorizes the Liquidation Trustee to use Wind-Down Cash as described in the Wind-Down Reserve Accounting (subject to any modifications required by the Court), the Court should also enter an express order authorizing but not directing the Liquidation Trustee to use the remaining Wind-Down Cash to make distributions under the Plan pursuant to the Wind-Down Reserve Accounting. Such a result is consistent with the Plan and the Confirmation Order, and will permit the Liquidation Trustee to use assets provided under the Plan to satisfy unpaid creditor claims. There is no need to further delay these distributions to legitimate claimholders. B. The Monroe Claimants Administrative Claim Should be Limited Only to the Amount of Any Remaining Wind-Down Cash After the Liquidation Trustee Has Used or Reserved Such Cash Pursuant to the Wind-Down Reserve Accounting. 19. Pursuant to the Plan, holders of Administrative Claims were required to file motions establishing their right to an administrative expense priority claim on or before June 26, The Monroe Claimants timely filed their Monroe Admin Claim Application, but as set forth in the Trustee Admin Claim Objection, the Monroe Claimants assertion of a right to an administrative expense claim contradicted this Court s prior orders, and their reservation of rights with respect to certain claims against the Monroe Claimants did not satisfy their burden to prove their right to an administrative expense claim. 8

9 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 9 of On September 21, 2017, the Court entered the Admin Claim Order, granting the Monroe Admin Claim Application in part and requiring the filing of the Wind-Down Reserve Accounting, with all other relief requested therein... subject to further Order by the Court at the appropriate time. The Liquidation Trustee has filed the Wind-Down Reserve Accounting, and the Court will resolve any dispute over the use of remaining Wind-Down Cash. The Liquidating Trustee expects that the Court will order that any remaining cash after the Liquidation Trustee uses the Wind-Down Cash pursuant to the Wind-Down Reserve Accounting, the Monroe Claimants shall have an Administrative Claim with respect to the return of such proceeds As set forth in the Trustee Admin Claim Objection, the Monroe Claimants have failed to establish any Administrative Claim, are not entitled to any further Administrative Claim against the Debtor s estate and the Court should disallow the Monroe Claimants asserted Administrative Claim other than to preserve their claim for return of any remaining Wind-Down Cash after the distributions permitted by the Court s Order on the Wind-Down Reserve Accounting. Notice 22. Notice of this Motion has been provided to: (i) the Office of the United States Trustee; (ii) the Post Effective Date Service List; and (iii) counsel for the Monroe Claimants. No other or further notice need be provided. 1 We note that the Liquidation Trustee believes that this cash became estate property when it was advanced, and any obligation to return such cash was extinguished when the DIP Loan (as defined in the Plan) was credit bid in connection with the Monroe Claimants acquisition of substantially all of the assets of the estate, and therefore, the estate has no obligation to return any of the Wind-Down Cash. However, the Liquidation Trustee understands the Court has decided not to rule in the Liquidation Trustee s favor on this basis. The Liquidation Trustee reserves all rights with respect to the effect of the credit bid on the estate s obligations. 9

10 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 10 of 14 Conclusion WHEREFORE, for the reasons set forth herein, the Liquidation Trustee respectfully requests that the Court enter an order, substantially in the form attached hereto as Exhibit A, (i) authorizing, but not directing, the Liquidation Trustee to use the remaining Wind-Down Cash pursuant to the Wind-Down Reserve Accounting without further notice to parties or further order of the Court, (ii) denying any relief requested in the Monroe Admin Claim Application that had not otherwise been granted pursuant Admin Claim Order, and (iii) granting such other and further relief as the Court deems appropriate. Respectfully submitted, Dated: November 21, 2017 GIBSON, DUNN & CRUTCHER LLP /s/ Olivia Adendorff Samuel A. Newman Michael S. Neumeister Olivia Adendorff Counsel for Liquidation Trustee for Liquidation Trust for TPP Acquisition, Inc. 10

11 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 11 of 14 EXHIBIT A Proposed Form of Order

12 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 12 of 14 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In Re TPP Acquisition, Inc. d/b/a The Picture People, Debtor. Case No hdh-11 Chapter 11 ORDER ENFORCING CONFIRMATION ORDER AS TO THE MONROE CLAIMANTS Upon the Liquidation Trustee s Motion to Enforce Confirmation Order as to the Monroe Claimants (the Motion ) 2 of the Liquidation Trustee; and the Court having found that the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); and the Court having found that venue of this proceeding and the Motion in this District is proper pursuant to 28 U.S.C and 1409; and the Liquidation Trustee having provided appropriate notice of the Motion and 2 All capitalized terms not defined herein shall have the meanings ascribed to them in the Motion.

13 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 13 of 14 the opportunity for a hearing on the Motion under the circumstances and that no other or further notice is required; and the Court having reviewed the Motion; and no objections to the Motion having been filed with this Court; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and upon all of the proceedings had before the Court; and after due deliberation and sufficient cause appearing therefor, it is hereby: ORDERED, ADJUDGED, AND DECREED THAT: 1. The Motion is granted as set forth herein. 2. The Liquidation Trustee is authorized, but not directed, to use, distribute, and reserve remaining Wind-Down Cash as set forth in the Wind-Down Reserve Accounting, without further notice to parties or further order of the Court. 3. The Monroe Admin Claim Objection is denied in its entirety except (i) to the extent expressly granted pursuant to the Court s Order on Application for Allowance and Payment of Administrative Expense Claims and Reservation of Rights [Dkt. No. 578], and (ii) the Monroe Claimants shall retain an Administrative Claim (as defined in the Plan) solely to the extent of any remaining Wind-Down Cash after the Liquidation Trustee s use, distribution and reserve of remaining Wind-Down Cash as set forth in the Wind-Down Reserve Accounting. 4. The Court retains jurisdiction with respect to all matters arising from or related to the implementation, interpretation and enforcement of this Order.

14 Case hdh11 Doc 639 Filed 11/21/17 Entered 11/21/17 13:18:18 Page 14 of 14 CERTIFICATE OF SERVICE I certify that at my direction copies of the following documents: LIQUIDATION TRUSTEE S MOTION TO ENFORCE CONFIRMATION ORDER AS TO THE MONROE CLAIMANTS were sent on November 21, 2017, to those parties entitled to receive notice via ECF, and via US Mail, first class, postage prepaid, to the parties listed below: Haynes and Boone, LLP Robert D. Albergotti Ian T. Peck Jarom Yates 2323 Victory Ave, Suite 700 Dallas, TX Riemer & Braunstein LLP Donald E. Rothman Three Center Plaza Boston, MA Riemer & Braunstein LLP Steven E. Fox Lon M. Singer Times Square Tower, Suite 2506 Seven Times Square New York, NY Office of the US Trustee Nancy S. Resnick Earle Cabell Federal Building 1100 Commerce Street, Room 976 Dallas, TX Riemer & Braunstein LLP Phillip J. Block 71 South Wacker Drive, Suite 3515 Chicago, IL Vinson & Elkins LLP Josiah M. Daniel, III Rebecca L Petereit 2001 Ross Avenue, Suite 3700 Dallas, TX Dated: November 21, 2017 GIBSON, DUNN & CRUTCHER LLP /s/olivia Adendorff Samuel A. Newman Michael S. Neumeister Olivia Adendorff Counsel for Liquidation Trustee for Liquidation Trust for TPP Acquisition, Inc.