Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 1 of 8 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re: GT ADVANCED TECHNOLOGIES INC., et al. Debtors. 1 Chapter 11 Case No. 14-11916-HJB Jointly Administered MOTION FOR THE ENTRY OF AN ORDER APPROVING INFORMATION BLOCKING PROCEDURES AND PERMITTING TRADING OF COVERED CLAIMS UPON ESTABLISHMENT OF A SCREENING WALL Fidelity Convertible Securities Investment Trust ( Fidelity CSI Trust ), by and through its undersigned counsel, hereby submits this motion (the Motion ) for the entry of an order, pursuant to 11 U.S.C. 105(a), approving information blocking procedures and permitting Fidelity CSI Trust, a member of the Official Committee of Unsecured Creditors (the Committee ), to trade Covered Claims (as defined below) upon establishment and implementation of a Screening Wall 2 and in accordance with any such order. In support of this Motion, Fidelity CSI Trust respectfully represents as follows: BACKGROUND 1. On October 6, 2014, GT Advanced Technologies Inc. and its affiliated entities (collectively, the Debtors ) filed petitions for relief under chapter 11 of the United States 1 The Debtors, along with the last four digits of each debtor s tax identification number, as applicable, are: GT Advanced Technologies Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), and GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH 03054. 2 As used herein, the term Screening Wall refers to procedures established by an organization, such as a financial institution, to isolate its trading activities from its activities as a member of a statutory committee appointed in a debtor s chapter 11 case. A Screening Wall typically involves procedures inside the institution that both (i) insulate relevant people from material nonpublic information and (ii) function without necessary disruption to the management and operation of the organization. Typical Screening Wall arrangements consist of the following, to the extent necessary to achieve compliance: staffing arrangements whereby the institution s personnel responsible for performing committee functions are different than the personnel responsible for performing trading functions; physical separation of the office and file spaces used by those personnel; establishment of procedures for securing committee-related files; establishment of separate telephone and facsimile lines for trading activities and committee activities; and special procedures for the delivery and posting of telephone messages. ActiveUS 137723457v.3
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 2 of 8 Bankruptcy Code, 11 U.S.C. 101-1532 (the Bankruptcy Code ). The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On October 8, 2014, the Court ordered the joint administration of the Debtors cases. 2. On October 14, 2014, pursuant to section 1102 (a) of the Bankruptcy Code, the Office of the United States Trustee (the U.S. Trustee ) appointed seven (7) individual creditors to the Official Committee of Unsecured Creditors (the Committee ), including Fidelity CSI Trust. [Docket No. 127]. 3. Fidelity CSI Trust is an open-ended investment trust organized under the laws of Ontario, Canada. Fidelity CSI Trust owns certain Covered Claims (defined below) of the Debtors, including the 3% Convertible Senior Notes due 2017 and the 3% Convertible Senior Notes due 2020 issued by GT Advanced Technologies Inc. FMR Co., Inc. ( Fidelity ), serves as investment sub-advisor on behalf of Fidelity CSI Trust, and Fidelity, or one of its affiliates serves as advisor or sub-advisor to certain other client accounts that also beneficially own certain Covered Claims. JURISDICTION AND VENUE 4. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334 and Rule 77.4(a) of the Local Rules for the United States District Court for the District of New Hampshire. This is a core proceeding under 28 U.S.C. 157(b) and may be determined by this Court. Venue is proper under 28 U.S.C. 1408 and 1409. 5. The statutory predicate for the relief requested herein is section 105 of the Bankruptcy Code. ActiveUS 137723457v.3-2 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 3 of 8 RELIEF REQUESTED 6. Fidelity CSI Trust requests the entry of an order in the form filed contemporaneously herewith (the Order ), providing that Fidelity CSI Trust will not violate its fiduciary duties as a member of the Committee by continuing to engage in the trading of Covered Claims 3 or as a consequence of Fidelity, or any of its affiliates, continuing to trade Covered Claims for others or for its own account, in each case as a regular part of their respective businesses, provided that Fidelity and Fidelity CSI Trust establish and effectively implement a Screening Wall to prevent the misuse of any material nonpublic information obtained through Fidelity CSI Trust s activities as a member of the Committee. Nothing herein or in the Order shall have any impact on, or prohibit or curtail or restrict, the trading practices of Fidelity or any of its affiliates or clients or Fidelity CSI Trust or amend or alter the requirements of this Court s Final Order, Pursuant to Bankruptcy code Sections 105(a) and 362, Establishing Notification Procedures and Approving Restrictions on Certain Transfers of Claims Against and Equity Interests in the Debtors Nunc Pro Tunc to October 7, 2014 [Docket No. 387]. 7. In conjunction with their respective existing information blocking procedures, Fidelity and Fidelity CSI Trust propose to established and maintain during the Debtors chapter 11 cases the Screening Wall detailed in the Declaration of Nathan H. Van Duzer filed herewith as Exhibit A (the Declaration ), which states that he will comply with the terms and procedures consistent with those set forth in this Motion and the Declaration. BASIS FOR RELIEF 8. Although members of the Committee owe fiduciary duties to the creditors of these estates, Fidelity CSI Trust also has fiduciary duties to maximize returns to its respective clients 3 Covered Claims is used to mean any claims against any of the Debtors, including, without limitation, (i) securities as defined in Section 2(a)(1) of the Securities Act of 1933 (including the following: stocks, notes, bonds, debentures, participation in, or derivatives based upon or relating to, any of the Debtors debt obligations or equity interests) and (ii) bank debt. ActiveUS 137723457v.3-3 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 4 of 8 through the trading of Covered Claims. If it is barred from trading Covered Claims during the pendency of these bankruptcy cases because of its duties to other creditors, it may risk the loss of a beneficial investment opportunity and, moreover, may breach its fiduciary duties to its clients. Alternatively, if Fidelity CSI Trust is compelled to resign from the Committee because of its inability to trade for the benefit of itself or its clients, its interests may be compromised by virtue of taking a less active role in the reorganization process. Fidelity CSI Trust should not be forced to choose between serving on the Committee and risking the loss of beneficial investment opportunities or foregoing service on the Committee and possibly compromising its responsibilities by taking a less active role in the reorganization process. 9. In the last several years, many institutions have faced a similar dilemma with respect to committee membership in other chapter 11 cases. To resolve this issue, bankruptcy courts have permitted members of statutory committees to trade securities of debtors provided that the committee members establish and comply with Screening Walls similar to the ones proposed here. See, e.g., In re NII Holdings, Inc., Case No. 14-12611 (SCC) (Bankr. S.D.N.Y., October 6, 2014), ECF No. 69; In re A123 Systems, Inc. et. al., No. 12-12859 (KJC) (Bankr. D. Del., Nov. 8, 2012), ECF No. 320; In re MF Global Holdings Ltd., et. al., Case No. 11-15909 (MG) (Bankr. S.D.N.Y., November 17, 2011), ECF No. 117; In re Advanta Corp., No. 09-13931 (KJC) (Bankr. D. Del., Mar. 3, 2010), ECF 305; In re Premier International Holdings Inc., No. 09-12019 (CSS) (Bankr. D. Del., July 29, 2009), ECF 273; In re Smurfit-Stone Container Corp., No. 09-10235 (BLS) (Bankr. D. Del., March 23, 2009), ECF 576; In re Radnor Holdings Corp., No. 06-10894 (PJW) (Bankr. D. Del., Oct. 20, 2006), ECF 435 In re Solutia Inc., et al., Case No. 03-17949 (PCB) (Bankr. S.D.N.Y., January 22, 2004), ECF No. 302; In re FiberMark, Inc., et.al., No. 04-10463 (CAB) (Bankr. D. Vt., October 19, 2004), ECF 684; In re WorldCom, Inc., ActiveUS 137723457v.3-4 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 5 of 8 Case No. 02-13533 (AJG) (Bankr. S.D.N.Y., Aug. 6, 2002), ECF No. 275; In re Enron Corp., No. 01-16034 (AJG) (Bankr. S.D.N.Y., Feb. 27, 2002), ECF No. 1753; In re Dairy Mart Convenience Stores, Inc., Case No. 01-42400 (AJG) (Bankr. S.D.N.Y., Dec. 20, 2001), ECF No. 252; In re Iridium Operating LLC, Case No. 99-45005 (CB) (Bankr. S.D.N.Y., Nov. 3, 1999), ECF No. 144. 10. Each of the trading orders entered in the foregoing cases provided that a committee member does not violate its fiduciary duties as a committee member by trading in a debtor s securities, so long as it acts in accordance with certain information blocking procedures approved by the bankruptcy court. The orders further provide that the bankruptcy court may take appropriate action if there is any actual breach by a committee member of its fiduciary duty as a committee member. 11. In the seminal decision on this issue, In re Federated Dep t Stores, Inc., Case No. 1-90-0130, 1991 Bankr. Lexis 288 (Bankr. S.D. Ohio Mar. 7, 1991), the bankruptcy court agreeing with the position of the Securities and Exchange Commission on this issue stated that Fidelity Management & Research Company: 4 Will not be violating its fiduciary duties as a committee member and accordingly, will not be subjecting its claims to possible disallowance, subordination, or other adverse treatment, by trading in securities of the Debtors... during the pendency of these cases, provided that Fidelity employs an appropriate information blocking device or [Screening] Wall which is reasonably designed to prevent Fidelity trading personnel from receiving any nonpublic committee information through Fidelity committee personnel and to prevent Fidelity committee personnel from receiving information regarding Fidelity s trading in securities of the Debtors... in advance of such trades. In re Federated Dep t Stores, Inc., 1991 Bankr. Lexis 288 at *2. 4 FMR Co., Inc., is a subsidiary of Fidelity Management & Research Company. ActiveUS 137723457v.3-5 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 6 of 8 12. The Federated court approved the Screening Wall procedures of Fidelity Management & Research Company, which, as here, included: (i) a written acknowledgement by personnel performing committee work that they could receive nonpublic information and were aware of the Screening Wall procedures in effect; (ii) a prohibition on the sharing of non-public committee information with certain other employees; (iii) separate file space for committee work which is inaccessible to certain other employees; (iv) restrictions on committee personnel s access to trading information; and (v) a compliance review process. The Screening Wall procedures outlined here parallel those protections established in the Federated case and followed in subsequent cases. 13. Orders permitting committee members to trade securities of a debtor subject to the establishment of a Screening Wall enable and encourage large institutional creditors with expertise and experience in reorganizations to join statutory committees, thereby enabling statutory committees to consist of the largest and most experienced stakeholders and to function in a manner contemplated by the Bankruptcy Code. The entry of such orders is an appropriate exercise of bankruptcy courts equitable powers pursuant to section 105(a) of the Bankruptcy Code, which empowers courts to issue any order... that is necessary or appropriate to carry out the provisions of the [Bankruptcy Code]. 11 U.S.C. 105(a). 14. Creditors that perform investment advisory services or that buy and sell securities or other financial assets for their own account should not be forced into the choice between (i) serving on a creditors committee and risking the loss of beneficial investment opportunities for themselves or their clients and (ii) compromising those same responsibilities and hampering their ability to protect their previous investment in a debtor by taking a less active role in the ActiveUS 137723457v.3-6 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 7 of 8 reorganization. Accordingly, Fidelity CSI Trust requests that this Court enter the Order that will permit Fidelity CSI Trust to trade Covered Claims. 15. Counsel to Fidelity CSI Trust has had discussions with the U.S. Trustee regarding the relief requested herein and has addressed all questions and comments of the U.S. Trustee. NOTICE 16. Notice of this Motion has been given to the U.S. Trustee, counsel to the Debtors, and parties that have requested service pursuant to Federal Rules of Bankruptcy Procedure 2002 in these chapter 11 cases. Based on the foregoing, Fidelity CSI Trust respectfully submits that no further notice is needed. WAIVER OF MEMORANDUM OF LAW 17. The Fidelity CSI Trust requests that the Court waive and dispense with the requirement set forth in LBR 7102(b)(2) that any motion filed shall have an accompanying memorandum of law. The legal authorities upon which the Fidelity CSI Trust relies are set forth above. Accordingly, the Fidelity CSI Trust submits that a waiver of the LBR 7102(b)(2) requirement is appropriate under these circumstances. NO PREVIOUS REQUEST 18. No previous request for the relief sought herein has been made to this Court or any other Court. WHEREFORE, Fidelity CSI Trust respectfully requests that the Court enter the Order (i) approving the Screening Wall procedures set forth herein and the Declaration; (ii) determining that Fidelity CSI Trust will not violate its fiduciary duties as a Committee member and, accordingly, will not subject its interests or claims (or those of its affiliates or its client accounts or funds) or the claims or interest of Fidelity (or those of its affiliates or its client accounts or funds) to possible disallowance, subordination, or other adverse treatment by trading, or as a ActiveUS 137723457v.3-7 -
Case: 14-11916-HJB Doc #: 1070 Filed: 01/21/15 Desc: Main Document Page 8 of 8 consequence of Fidelity or its affiliates continuing to trade for others or for its own account, in Covered Claims during the pendency of the Debtors chapter 11 cases, provided that Fidelity and Fidelity CSI Trust follow the procedures set forth herein and the Declaration; and (iii) granting such other and further relief as is just and proper. Dated: January 21, 2015 Manchester, NH Respectfully submitted, s/ Benjamin E. Marcus Benjamin E. Marcus (BNH # 06561) Jeremy R. Fischer (BNH #07143) DRUMMOND WOODSUM 1001 Elm Street, Suite 303 Manchester, New Hampshire 03101 Telephone: (603) 433-3317 E-mail: bmarcus@dwmlaw.com jfischer@dwmlaw.com and Dennis L. Jenkins, Esq. (pro hac vice admission pending) WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts 02109 Telephone: 617-526-6491 Email: dennis.jenkins@wilmerhale.com Counsel to Fidelity Convertible Securities Investment Trust ActiveUS 137723457v.3-8 -
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Case: 14-11916-HJB Doc #: 1070-2 Filed: 01/21/15 Desc: Proposed Order Page 1 of 3 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re: GT Advanced Technologies, Inc., et al. Debtors. 1 Chapter 11 Case No. 14-11916-HJB Jointly Administered ORDER APPROVING SPECIFIED INFORMATION BLOCKING PROCEDURES AND PERMITTING TRADING OF COVERED CLAIMS UPON ESTABLISHMENT OF A SCREENING WALL Upon the Motion for the Entry of an Order Approving Information Blocking Procedures and Permitting Trading of Covered Claims upon Establishment of a Screening Wall (the Motion ) 2 for entry of an order approving specified information blocking procedures and permitting Fidelity Convertible Securities Investment Trust ( Fidelity CSI Trust ) to trade Covered Claims upon the establishment and implementation of Screening Walls; and due and proper notice of the Motion having been given; and a hearing having been held on the Motion on, 201_; and after due deliberation, and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED and DECREED as follows: 1. The Motion is granted, subject to the terms and conditions of this Order. 2. The information blocking procedures described substantially in the Declaration and the Motion, which are designed to prevent the misuse of Committee information and which 1 The Debtors, along with the last four digits of each debtor s tax identification number, as applicable, are: GT Advanced Technologies Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), and GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH 03054. 2 Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Motion. ActiveUS 137756356v.3
Case: 14-11916-HJB Doc #: 1070-2 Filed: 01/21/15 Desc: Proposed Order Page 2 of 3 are acceptable to the U.S. Trustee or otherwise consistent with its policies and procedures, are hereby approved. 3. Fidelity CSI Trust will not be violating its duties as a member of the Committee and, accordingly, will not subject its holdings or the holdings of its customers or affiliates or the holdings of Fidelity or Fidelity s customers or affiliates to possible disallowance, subordination, or other adverse treatment, to the extent that, during the pendency of Debtors chapter 11 cases, Fidelity CSI Trust or Fidelity (or its affiliates) causes Covered Claims to be traded for others or for their own account, provided that Fidelity and Fidelity CSI Trust establish, implement, and strictly adhere to the information blocking procedures detailed in the Declaration and the Motion or otherwise approved in writing by the U.S. Trustee and ordered by the Court. 4. The trading in the Covered Claims by Fidelity CSI Trust will not constitute a breach of this Order provided that Fidelity and Fidelity CSI Trust establish and effectively implement and strictly adhere to the information blocking procedures detailed in the Declaration and the Motion or otherwise approved in writing by the U.S. Trustee and ordered by the Court. 5. In the event any other individual Fidelity CSI Trust representative is chosen to replace Fidelity CSI Trust s representative on the Committee, such individual will deliver to the U.S. Trustee a declaration affirming his or her compliance with the screening procedures described herein prior to accepting any responsibilities in connection with these Chapter 11 Cases. 6. This Order does not preclude the Court from taking any action that it may deem appropriate in the event that the Court determines that an actual breach of fiduciary duty has occurred as a result of a defect in, or the ineffectiveness of, the implementation of the information blocking procedures herein approved. ActiveUS 137756356v.3-2 -
Case: 14-11916-HJB Doc #: 1070-2 Filed: 01/21/15 Desc: Proposed Order Page 3 of 3 7. Nothing in this Order shall prejudice the right of the U.S. Trustee to take such action as he or she deems appropriate in the case, including the removal of any Committee member pursuant to section 1102 of the Bankruptcy Code. Dated:, 201 HONORABLE HENRY J. BOROFF UNITED STATES BANKRUPTCY JUDGE ActiveUS 137756356v.3-3 -
Case: 14-11916-HJB Doc #: 1070-3 Filed: 01/21/15 Desc: Notice of Hearing Page 1 of 2 Hearing Date and Time: February 12, 2015 at 10:00 a.m. (Eastern Time) Objection Deadline: February 5, 2015 UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIRE In re: GT ADVANCED TECHNOLOGIES INC., et al. Debtors. 1 Chapter 11 Case No. 14-11916-HJB Jointly Administered NOTICE OF HEARING PLEASE TAKE NOTICE that Fidelity Convertible Securities Investment Trust ( Fidelity CSI Trust ) has filed the Motion for the Entry of an Order Approving Information Blocking Procedures and Permitting Trading of Covered Claims Upon Establishment of Screening Wall (the Motion ). A hearing on the Motion is scheduled for February 12, 2015 at 10:00 a.m. at the United States Bankruptcy Court for the District of New Hampshire (the Bankruptcy Court ), 1000 Elm St #1001, Manchester, New Hampshire 03101. PLEASE TAKE FURTHER NOTICE that objections or responses, if any, to the Motion must be in writing, shall conform to the Bankruptcy Rules and the Local Bankruptcy Rules, and shall be (a) filed with the Court on the docket of In re GT Advanced Technologies, Inc., Case No. 14-11916-HJB, and (b) served upon (i) the Clerk of the Bankruptcy Court, 1000 Elm Street, Suite 1001, Manchester, NH 03101-1708; (ii) Paul Hastings LLP, 75 East 55th Street, NewYork, NY 10022, Attn: Luc A. Despins, Esq., and 600 Travis Street, 58th Floor, Houston, TX 77002, Attn: James Grogan, Esq., and Nixon Peabody LLP, 900 Elm Street, Manchester, NH 03101, Attn: Daniel W. Sklar, Esq. and Holly J. Barcroft, Esq.; (iii) Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178, Attn: James S. Carr, Esq.; and (iv) the Office of the United States Trustee, 1000 Elm Street, Suite 605, Manchester, NH 03101, Attn: Geraldine Karonis, Esq.; and (v) Wilmer Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, MA 02109, Attn. Dennis Jenkins, Esq., and Drummond Woodsum, 1001 Elm Street, Suite 303, Manchester, NH 03101, Attn. Benjamin E. Marcus, Esq., so as to be received no later than February 5, 2015 (the Objection Deadline ). PLEASE TAKE FURTHER NOTICE that if no objections are timely filed and served with respect to the Motion, Fidelity CSI Trust may, on or after the Objection Deadline, request that the Bankruptcy Court enter an order substantially in the form of 1 The Debtors, along with the last four digits of each debtor s tax identification number, as applicable, are: GT Advanced Technologies Inc. (6749), GTAT Corporation (1760), GT Advanced Equipment Holding LLC (8329), GT Equipment Holdings, Inc. (0040), Lindbergh Acquisition Corp. (5073), GT Sapphire Systems Holding LLC (4417), GT Advanced Cz LLC (9815), GT Sapphire Systems Group LLC (5126), and GT Advanced Technologies Limited (1721). The Debtors corporate headquarters are located at 243 Daniel Webster Highway, Merrimack, NH 03054.
Case: 14-11916-HJB Doc #: 1070-3 Filed: 01/21/15 Desc: Notice of Hearing Page 2 of 2 the proposed order annexed to the Motion, which order may be entered with no further notice or opportunity to be heard offered to any party. Dated: January 21, 2015 s/ Benjamin E. Marcus Benjamin E. Marcus (BNH # 06561) Jeremy R. Fischer (BNH #07143) DRUMMOND WOODSUM 1001 Elm Street, Suite 303 Manchester, New Hampshire 03101 Telephone: (603) 433-3317 E-mail: bmarcus@dwmlaw.com jfischer@dwmlaw.com - 2 -