in re : chapter 11 southern air : case no. 12-12690 (css ...€¦ · with this court a voluntary...
TRANSCRIPT
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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
------------------------------------------------------x : In re : Chapter 11 : SOUTHERN AIR : Case No. 12-12690 (CSS) HOLDINGS, INC., et al., : : Jointly Administered Debtors.1 : : Objection Deadline: October 12, 2012 at 4:00 p.m. (ET) : Hearing Date: October 25, 2012 at 1:00 p.m. (ET) ------------------------------------------------------x
APPLICATION OF DEBTORS FOR AUTHORITY TO EMPLOY AND RETAIN WEIL, GOTSHAL &
MANGES LLP AS ATTORNEYS FOR THE DEBTORS AS OF THE PETITION DATE PURSUANT TO SECTIONS 327(a) AND 328(a) OF THE AND
FEDERAL RULE BANKRUPTCY CODE OF BANKRUPTCY PROCEDURE 2014(a)
Southern Air Holdings, Inc. (“Holdings”) and its affiliated debtors in the above-
referenced chapter 11 cases, as debtors and debtors in possession (collectively, the “Debtors”),
submit this application (the “Application”) for authority to employ and retain Weil, Gotshal &
Manges LLP (“Weil” or the “Firm”) as attorney to the Debtors, effective as of the Petition Date
(as defined below) and, in support thereof, respectfully represent as follows:
Jurisdiction
1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
§§ 157 and 1334, and the Amended Standing Order of Reference from the United States District
Court for the District of Delaware, dated as of February 29, 2012. This is a core proceeding
1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: (i) Southern Air Holdings, Inc., 6605; (ii) Cargo 360, Inc., 4233; (iii) Southern Air Inc., 2187; (iv) Air Mobility Inc., 3824; (v) 21110 LLC, 3761; (vi) 21111 LLC, 8100; (vii) 21221 LLC, 1567; (viii) 21550 LLC, 8103; (ix) 21576 LLC, 6341; (x) 21590 LLC, 8105; (xi) 21787 LLC, 0617; (xii) 21832 LLC, 7893; (xiii) 23138 LLC, 7192; (xiv) 24067 LLC, 6360; (xv) 46914 LLC, 0322; (xvi) Aircraft 21255, LLC, 5500; (xvii) Aircraft 21380, LLC, 1753; and (xviii) CF6-50, LLC, 9733. The address for all Debtors is 117 Glover Avenue, Norwalk, Connecticut 06850.
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pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408
and 1409.
Background
2. On the date hereof (the “Petition Date”), each of the Debtors commenced
with this Court a voluntary 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 possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code. No trustee, examiner, or statutory committee of creditors (“Creditors’ Committee”) has
been appointed in these chapter 11 cases.
3. Contemporaneously herewith, the Debtors have filed a motion requesting
joint administration of the chapter 11 cases pursuant to Rule 1015(b) of the Federal Rules of
Bankruptcy Procedure (the “Bankruptcy Rules”).
The Debtors’ Businesses
4. Southern Air Inc. (“Southern Air”), the Federal Aviation Administration
(“FAA”) certificated, indirect subsidiary of Holdings, is an experienced provider of long-haul,
wide-body air cargo transportation services. Southern Air operates a fleet of eleven aircraft,
including four Boeing 777s, four Boing 747-400s, and three Boeing 747-200s. Southern Air’s
staff and flight operations are positioned around the world to facilitate global operations for both
governmental and commercial customers. Holdings is the direct or indirect parent company of
the other Debtors.
5. As of the Petition Date, the Debtors employed approximately 611 full-
time employees. For the twelve months ended July 31, 2012, the Debtors’ unaudited and
consolidated financial statements reflected revenues of approximately $428.2 million. As of July
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31, 2012, the Debtors’ unaudited and consolidated financial statements reflected assets totaling
approximately $206.9 million and liabilities totaling approximately $486.5 million.
6. Additional information regarding the Debtors’ business, capital structure,
and the circumstances leading to this chapter 11 filing is contained in the Declaration of Daniel
J. McHugh in Support of the Debtors’ Chapter 11 Petitions and First Day Relief, filed
contemporaneously herewith.
Relief Requested
7. The Debtors seek court approval pursuant to sections 327(a) and 328(a) of
the Bankruptcy Code and Bankruptcy Rule 2014(a) to employ and retain Weil as their attorneys
in connection with the commencement and prosecution of their chapter 11 cases effective as of
the Petition Date. Specifically, the Debtors seek to retain Weil, as attorneys to the Debtors, to
perform the extensive legal services that will be necessary during their chapter 11 cases in
accordance with Weil’s normal hourly rates in effect when services are rendered and Weil’s
normal reimbursement policies. A Proposed order is attached hereto as Exhibit A (the “Proposed
Order”).
The Retention of Weil Is Warranted
8. The Debtors have been informed that Brian S. Rosen, a member of Weil,
as well as other members of, counsel to, and associates of Weil who will be employed in these
chapter 11 cases, are members in good standing of, among others, the Bar of the State of New
York and the United States District Court for the Southern District of New York. To the extent
applicable, applications for admission pro hac vice to practice before this Court have been
submitted contemporaneously herewith.
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9. Weil possesses an in-depth knowledge of the Debtors’ capital structure as
a result of Weil’s substantial historical representation of the Debtors. Weil represented the
Debtors in connection with the documentation of their existing credit facility and all subsequent
amendments thereto. In connection with the 2009 and 2011 amendments to the Debtors’ credit
facility, Weil advised the Debtors with respect to an additional equity contribution by the
Debtors’ ultimate parent, a group of funds managed by Oak Hill Capital Partners II, L.P. (the
“Oak Hill Funds”). Additionally, Weil has performed much of the Debtors’ external corporate
and finance work since 2007, when the Debtors were acquired by the Oak Hill Funds. In
connection with its prepetition representation of the Debtors with respect to alternatives for
refinancing their financial obligations and the preparation for, and commencement of, these
chapter 11 cases, Weil has gained additional insight into the current condition of the Debtors’
businesses and operations. Accordingly, Weil possesses the necessary background to deal
effectively with many of the potential legal issues and problems that may arise in the context of
the Debtors’ chapter 11 cases. The Debtors believe that Weil is both well qualified and uniquely
able to represent them in their chapter 11 cases in an efficient and timely manner.
10. Additionally, the Debtors have selected Weil as their attorneys because of
the Firm’s knowledge of the Debtors’ business and financial affairs and its extensive general
experience and knowledge, in particular, its recognized expertise in the field of debtor
protections, creditors’ rights and business reorganizations under chapter 11 of the Bankruptcy
Code. Weil has been actively involved in most of the major chapter 11 cases over the last
several decades. Weil currently represents or has represented, among others, the following
debtors: Washington Mutual, Inc., Magna Entertainment Corp., Enron Corp., Lehman Brothers
Holdings Inc., AMR Corp., General Motors Corp., BearingPoint, Inc., Dallas Stars, L.P., The
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Sharper Image Corporation, Inc., Recycled Paper Greetings, Inc., Lenox Group, Inc.,
LandSource Communities Development, LLC, PRC, LLC, Charys Holding Company, Inc.,
Hollinger Inc., The New York Racing Association, Lexington Precision Corp., Silicon Graphics,
Inc., Footstar, Inc., New World Pasta Company, Parmalat USA Corp., Loral Space &
Communications Ltd., TL Administration Corporation, Republic Engineered Product Holdings,
WestPoint Stevens Inc., Worldcom, Inc., Adelphia Business Solutions, Inc., APW Ltd., Formica
Corp., Global Crossing Ltd., Regal Cinemas, Inc., Sunbeam Corporation, Bethlehem Steel
Corporation, Armstrong Worldwide Industries, Genesis Health Services Corp., Grand Union
Corporation, Weiner’s Stores, Carmike Cinemas, Inc., DIMAC Marketing Corporation, Sun
Healthcare Group, Inc., United Companies Financial Corporation, and Bruno’s, Inc.
11. Should the Debtors be required to retain attorneys other than Weil in
connection with the prosecution of these chapter 11 cases, the Debtors, their estates, and all
parties in interest would be unduly prejudiced by the time and expense necessarily attendant to
such attorneys’ familiarization with the intricacies of the Debtors and their business operations.
Scope of Services
12. The services to be performed by Weil are appropriate and necessary to
enable the Debtors to execute faithfully their duties as debtors and debtors in possession and to
prosecute their chapter 11 cases. Subject to further order of this Court, it is proposed that Weil
be employed to render the following professional services:
a. take all necessary action to protect and preserve the Debtors’ estates, including the prosecution of actions on the Debtors’ behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors’ estates;
b. prepare on behalf of the Debtors, as debtors in possession, all necessary motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtors’ estates;
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c. take all necessary actions in connection with a chapter 11 plan and related disclosure statement(s) and all related documents, and such further actions as may be required in connection with the administration of the Debtors’ estates;
d. take all necessary action to protect and preserve the value of the estates of the Debtors including advising with respect to the Debtors’ affiliates in the U.S. and abroad, and all related matters; and
e. perform all other necessary legal services in connection with the prosecution of these chapter 11 cases.
13. It is necessary for the Debtors to employ attorneys to render the foregoing
professional services. Weil has stated its desire and willingness to act in these chapter 11 cases
and render the necessary professional services as attorneys for the Debtors.
14. In addition to this Application, the Debtors filed or expect to file shortly
an application to employ (a) Young Conaway Stargatt & Taylor, LLP, as co-counsel to the
Debtors, (b) Kurtzman Carlson Consultants LLP, as claims, solicitation, and noticing agent to the
Debtors, and (c) Zolfo Cooper, LLC, as investment banker and financial advisor to the Debtors.
The Debtors may also file applications to employ additional professionals. Rather than resulting
in any extra expense to the Debtors’ estates, it is anticipated that the efficient coordination of
efforts of the Debtors’ attorneys and other professionals will greatly add to the progress and
effective administration of these chapter 11 cases.
Weil’s Disinterestedness
15. To the best of the Debtors’ knowledge, the members of, counsel, and
associates of, Weil do not have any connection with or any interest adverse to the Debtors, their
creditors, or any other party in interest, or their respective attorneys and accountants, except as
may be set forth in the Affidavit of Brian S. Rosen submitted in support of the Application (the
“Rosen Affidavit”), attached hereto as Exhibit B.
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16. Based upon the Rosen Affidavit, the Debtors submit that Weil is a
“disinterested person,” as that term is defined in section 101(14) of the Bankruptcy Code, as
modified by section 1107(b) of the Bankruptcy Code. The Debtors have been informed that
Weil will conduct an ongoing review of its files to ensure that no disqualifying circumstances
arise, and if any new relevant facts or relationships are discovered, Weil will supplement its
disclosure to the Court.
Professional Compensation
17. As set forth in the Rosen Affidavit, Weil received a an advance against
expenses for services to be performed in preparation for and prosecution of these chapter 11
cases, in the amount disclosed in the Rosen Affidavit. Prior to the Petition Date, Weil applied
amounts received from the Debtors as compensation for professional services performed relating
to the potential commencement of these chapter 11 cases, as well as for reasonable and necessary
expenses incurred in connection therewith.
18. The Debtors understand that Weil hereafter intends to apply to the Court
for allowances of compensation and reimbursement of expenses in accordance with the
applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of
Delaware (the “Local Rules”), the guidelines established by the Office of the United States
Trustee for the District of Delaware (the “UST Guidelines”), and further orders of this Court
(“Orders”) for all services performed and expenses incurred after the Petition Date.
19. For services rendered by Weil in these cases, the Debtors, subject to the
applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the UST
Guidelines, and the Orders, propose to pay Weil its customary hourly rates for services rendered
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that are in effect from time to time, as set forth in the Rosen Affidavit, and to reimburse Weil
according to its customary reimbursement policies. The Debtors respectfully submit that Weil’s
rates and policies are reasonable.
Notice
20. No trustee, examiner, or Creditors’ Committee has been appointed in these
chapter 11 cases. Notice of this Motion has been provided to (a) the Office of the United States
Trustee for the District of Delaware; (b) each of the Debtors’ thirty (30) largest unsecured
creditors on a consolidated basis; (c) the Securities and Exchange Commission; (d) the Internal
Revenue Service; (e) the United States Attorney’s Office for the District of Delaware; (f) the
United States Transportation Command; (g) the Defense Logistics Agency – Energy;
(h) Canadian Imperial Bank of Commerce, New York Agency (“CIBC”); (i) counsel to CIBC;
(j) Oak Hill Capital Management (“Oak Hill”); (k) counsel to Oak Hill; (l) all lessors under
aircraft operating leases with Southern Air; and (m) any other party directly affected by this
Motion. The Debtors respectfully submit that such notice is sufficient under the circumstances.
No Previous Request
21. No previous request for the relief sought herein has been made to this or
any other Court.
01:12568713.1
UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
------------------------------------------------------x : In re : Chapter 11 : SOUTHERN AIR : Case No. 12-12690 (CSS) HOLDINGS, INC., et al., : : Jointly Administered Debtors.1 : : Hearing Date: October 25, 2012 at 1:00 p.m. (ET) : Objection Deadline: October 12, 2012 at 4:00 p.m. (ET) ------------------------------------------------------x
NOTICE OF APPLICATION TO: (A) THE OFFICE OF THE UNITED STATES TRUSTEE FOR THE DISTRICT OF
DELAWARE; (B) EACH OF THE DEBTORS’ THIRTY (30) LARGEST UNSECURED CREDITORS ON A CONSOLIDATED BASIS; (C) THE SECURITIES AND EXCHANGE COMMISSION; (D) THE INTERNAL REVENUE SERVICE; (E) THE UNITED STATES ATTORNEY’S OFFICE FOR THE DISTRICT OF DELAWARE; (F) THE UNITED STATES TRANSPORTATION COMMAND; (G) THE DEFENSE LOGISTICS AGENCY – ENERGY; (H) CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY (“CIBC”); (I) COUNSEL TO CIBC; (J) OAK HILL CAPITAL MANAGEMENT (“OAK HILL”); (K) COUNSEL TO OAK HILL; (L) ALL LESSORS UNDER AIRCRAFT OPERATING LEASES WITH SOUTHERN AIR; AND (M) ALL PARTIES REQUESTING NOTICE PURSUANT TO BANKRUPTCY RULE 2002.
PLEASE TAKE NOTICE that the above-captioned debtors and debtors in
possession (the “Debtors”) have filed the attached Application of Debtors for Authority to Employ and Retain Weil, Gotshal & Manges LLP as Attorneys for the Debtors Pursuant to Section 327(a) and 328(a) of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 2014(a) (the “Application”).
PLEASE TAKE FURTHER NOTICE that responses, if any, to the relief
requested in the Application must be filed with the United States Bankruptcy Court for the
1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: (i) Southern Air Holdings, Inc., 6605; (ii) Cargo 360, Inc., 4233; (iii) Southern Air Inc., 2187; (iv) Air Mobility Inc., 3824; (v) 21110 LLC, 3761; (vi) 21111 LLC, 8100; (vii) 21221 LLC, 1567; (viii) 21550 LLC, 8103; (ix) 21576 LLC, 6341; (x) 21590 LLC, 8105; (xi) 21787 LLC, 0617; (xii) 21832 LLC, 7893; (xiii) 23138 LLC, 7192; (xiv) 24067 LLC, 6360; (xv) 46914 LLC, 0322; (xvi) Aircraft 21255, LLC, 5500; (xvii) Aircraft 21380, LLC, 1753; and (xviii) CF6-50, LLC, 9733. The address for all of the Debtors is 117 Glover Avenue, Norwalk, Connecticut 06850.
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District of Delaware, 824 N. Market Street, 3rd Floor, Wilmington, Delaware 19801 on or before October 12, 2012 at 4:00 p.m. (ET). At the same time, you must serve a copy of your response upon the undersigned counsel.
PLEASE TAKE FURTHER NOTICE THAT A HEARING ON THE
RELIEF REQUESTED IN THE APPLICATION WILL BE HELD ON OCTOBER 25, 2012 AT 1:00 P.M. (ET) BEFORE THE HONORABLE CHRISTOPHER S. SONTCHI, UNITED STATES BANKRUPTCY JUDGE, IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 N. MARKET STREET, 5TH FLOOR, COURTROOM NO. 6, WILMINGTON, DELAWARE 19801.
PLEASE TAKE FURTHER NOTICE IF YOU FAIL TO RESPOND TO THE APPLICATION IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF REQUESTED THEREIN WITHOUT FURTHER NOTICE OR A HEARING. Dated: September 28, 2012 Wilmington, Delaware
/s/ M. Blake Cleary M. Blake Cleary (No. 3614) Jaime L. Chapman (No. 4936) Maris F. Kandestin (No. 5294) YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square 1000 North King Street Wilmington, Delaware 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 -and- Brian S. Rosen, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007
Proposed Attorneys for the Debtors and Debtors in Possession
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Exhibit A
Proposed Order
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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
------------------------------------------------------x : In re : Chapter 11 : SOUTHERN AIR : Case No. 12-12690 (CSS) HOLDINGS, INC., et al., : : Jointly Administered Debtors.1 : : Re: Docket No. ------------------------------------------------------x
ORDER AUTHORIZING DEBTORS TO EMPLOY AND RETAIN WEIL, GOTSHAL & MANGES
LLP AS ATTORNEYS FOR THE DEBTORS AS OF THE PETITION DATE PURSUANT TO SECTIONS 327(a) AND 328(a) OF THE BANKRUPTCY
CODE AND FEDERAL RULE OF BANKRUPTCY PROCEDURE 2014(a)
Upon the application, dated September 28, 2012 (the “Application”),2 of Southern
Air Holdings, Inc. and its affiliated debtors in the above-referenced chapter 11 cases, as debtors
and debtors in possession (collectively, the “Debtors”), for authority to employ and retain Weil,
Gotshal & Manges LLP (“Weil”) as attorneys to the Debtors, effective as of the Petition Date,
pursuant to sections 327(a) and 328(a) of the Bankruptcy Code and Bankruptcy Rules 2014(a),
all as more fully set forth in the Application; and upon consideration of the Affidavit of Brian S.
Rosen in support of the Application, and attached thereto as Exhibit B (the “Rosen Affidavit”);
and the Court being satisfied, based on the representations made in the Rosen Affidavit, that
Weil is “disinterested” as such term is defined in section 101(14) of the Bankruptcy Code, as
1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: (i) Southern Air Holdings, Inc., 6605; (ii) Cargo 360, Inc., 4233; (iii) Southern Air Inc., 2187; (iv) Air Mobility Inc., 3824; (v) 21110 LLC, 3761; (vi) 21111 LLC, 8100; (vii) 21221 LLC, 1567; (viii) 21550 LLC, 8103; (ix) 21576 LLC, 6341; (x) 21590 LLC, 8105; (xi) 21787 LLC, 0617; (xii) 21832 LLC, 7893; (xiii) 23138 LLC, 7192; (xiv) 24067 LLC, 6360; (xv) 46914 LLC, 0322; (xvi) Aircraft 21255, LLC, 5500; (xvii) Aircraft 21380, LLC, 1753; and (xviii) CF6-50, LLC, 9733. The address for all Debtors is 117 Glover Avenue, Norwalk, Connecticut 06850.
2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Application.
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modified by section 1107(b) of the Bankruptcy Code, and as required under section 327(a) of the
Bankruptcy Code, that Weil represents no interest adverse to the Debtors or to their estates, and
that the employment of Weil is necessary and in the best interests of the Debtors and their
estates; and the Court having jurisdiction to consider the Motion and the relief requested therein
pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the
United States District Court for the District of Delaware, dated as of February 29, 2012; and
consideration of the Application and the requested relief being a core proceeding pursuant to
28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and
1409; and due and proper notice of the Application having been provided to the parties listed
therein, and it appearing that no other or further notice need be provided; and the Court having
determined that the legal and factual bases set forth in the Application establish just cause for the
relief granted herein; and it appearing that the relief requested in the Application is in the best
interests of the Debtors, their estates and creditors; and upon all of the proceedings had before
the Court and after due deliberation and sufficient cause appearing therefor,
IT IS HEREBY ORDERED THAT:
1. The Application is GRANTED.
2. The Debtors are authorized, pursuant to sections 327(a) and 328(a) of the
Bankruptcy Code and Bankruptcy Rule 2014(a), to employ and retain Weil, as attorneys to the
Debtors and on the terms and conditions set forth in the Application and the Rosen Affidavit,
effective as of the Petition Date.
3. Weil shall apply for compensation and reimbursement in accordance with
the procedures set forth in sections 330 and 331 of the Bankruptcy Code, the applicable
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Bankruptcy Rules, the Local Rules, the UST Guidelines, and such other procedures as may be
fixed by order of this Court.
4. This Court retains jurisdiction to interpret and enforce this Order.
Dated: ________________________, 2012 Wilmington, Delaware
CHRISTOPHER S. SONTCHI UNITED STATES BANKRUPTCY JUDGE
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Exhibit B
Rosen Affidavit
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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
------------------------------------------------------x : In re : Chapter 11 : SOUTHERN AIR : Case No. 12-12690 (CSS) HOLDINGS, INC., et al., : : Joint Administration Requested Debtors.1 : : ------------------------------------------------------x
AFFIDAVIT OF BRIAN S. ROSEN IN SUPPORT OF DEBTORS’ APPLICATION
FOR AUTHORITY TO EMPLOY AND RETAIN WEIL, GOTSHAL & MANGES LLP AS ATTORNEYS FOR THE
DEBTORS PURSUANT TO SECTIONS 327(a) AND 328(a) OF THE BANKRUPTCY CODE AND FEDERAL RULE OF BANKRUPTCY PROCEDURE 2014(a)
STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) Brian S. Rosen, being duly sworn, deposes and says:
1. I am a member of the firm of Weil, Gotshal & Manges LLP (“Weil” or the
“Firm”), an international law firm with principal offices at 767 Fifth Avenue, New York, New
York 10153 and regional offices in Washington, D.C.; Dallas and Houston, Texas; Miami,
Florida; Boston, Massachusetts; Providence, Rhode Island; Wilmington, Delaware; and
Redwood Shores, California; and foreign offices in London, United Kingdom; Paris, France;
Budapest, Hungary; Warsaw, Poland; Frankfurt and Munich, Germany; Prague, Czech Republic;
as well as Beijing, Hong Kong, and Shanghai, China. 1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are: (i) Southern Air Holdings, Inc., 6605; (ii) Cargo 360, Inc., 4233; (iii) Southern Air Inc., 2187; (iv) Air Mobility Inc., 3824; (v) 21110 LLC, 3761; (vi) 21111 LLC, 8100; (vii) 21221 LLC, 1567; (viii) 21550 LLC, 8103; (ix) 21576 LLC, 6341; (x) 21590 LLC, 8105; (xi) 21787 LLC, 0617; (xii) 21832 LLC, 7893; (xiii) 23138 LLC, 7192; (xiv) 24067 LLC, 6360; (xv) 46914 LLC, 0322; (xvi) Aircraft 21255, LLC, 5500; (xvii) Aircraft 21380, LLC, 1753; and (xviii) CF6-50, LLC, 9733. The address for all Debtors is 117 Glover Avenue, Norwalk, Connecticut 06850.
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2. I submit this Affidavit to provide the disclosures required under section 329(a) of
title 11 of the United States Code (the “Bankruptcy Code”) and Rules 2014(a) and 2016(b) of the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) in connection with the
application, dated September [ ], 2012 (the “Application”), of the above-captioned debtors and
debtors in possession (collectively, the “Debtors”), for authority to employ and retain Weil as
their attorneys in these chapter 11 cases pursuant to sections 327(a) and 328(a) of the Bankruptcy
Code. Unless otherwise stated in this Affidavit, I have personal knowledge of the facts set forth
herein. To the extent any information disclosed herein requires amendment or modification upon
Weil’s completion of further review or as additional party in interest information becomes
available to it, a supplemental affidavit will be submitted to the Court reflecting such amended or
modified information.
3. Neither I, Weil, nor any member, counsel to, or associate of the Firm represents
any entity other than the Debtors in connection with these chapter 11 cases. In addition, to the
best of my knowledge, after due inquiry, neither I, Weil, nor any member, counsel to, or
associate of the Firm represents any party in interest in these chapter 11 cases in matters related
to these chapter 11 cases. Weil previously provided services to the Debtors in connection with
matters unrelated to these chapter 11 cases, including, without limitation, (a) general external
corporate and finance work, (b) amendments to the Debtors’ existing credit facility, and (c) an
additional equity contribution by the Debtors’ ultimate parent, a group of funds managed by Oak
Hill Capital Partners II, L.P. (the “Oak Hill Funds”).
Weil Disclosure Procedures
4. Weil has in the past represented, currently represents, and may in the future
represent entities that are claimants or interest holders of the Debtors in matters unrelated to the
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Debtors’ pending chapter 11 cases. Weil, which employs approximately 1,200 attorneys, has a
large and diversified legal practice that encompasses the representation of many financial
institutions and commercial corporations. Some of those entities are, or may consider
themselves to be, creditors or parties in interest in the pending chapter 11 cases or to otherwise
have interests in these cases.
5. In preparing this Affidavit, I used a set of procedures developed by Weil to ensure
compliance with the requirements of the Bankruptcy Code, the Bankruptcy Rules, and the Local
Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the
District of Delaware (the “Local Rules”), regarding the retention of professionals by a debtor
under the Bankruptcy Code (the “Firm Disclosure Procedures”). Pursuant to the Firm Disclosure
Procedures, I performed, or caused to be performed, the following actions to identify the parties
relevant to this Affidavit and to ascertain Weil’s connection to such parties:
a. A comprehensive list of the types of entities that may have contacts with the Debtors was developed through discussions with the Weil attorneys who have provided services to the Debtors and in consultation with the Debtors (the “Retention Checklist”). A copy of the Retention Checklist is attached hereto as Exhibit 1.
b. Weil obtained information responsive to the Retention Checklist through several inquiries of the Debtors’ employees and review of documents provided by the Debtors to Weil. Weil then used that information, together with other information identified by Weil, to compile a list of the names of entities that may be parties in interest in these chapter 11 cases (the “Potential Parties in Interest”).
c. Weil maintains a master client database as part of its conflict clearance and billing records. The master client database includes the names of the entities for which any attorney time charges have been billed since the database was first created (the “Client Database”). The Client Database includes the name of each current and former client, the names of the parties who are or were related or adverse to such current or former client, and the names of the Weil personnel who are or were responsible for current or former matters for such client. It is the policy of Weil that no new matter may be accepted or opened within the Firm without completing and submitting to those charged with maintaining the conflict
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clearance system the information necessary to check each such matter for conflicts, including the identity of the prospective client, the name of the matter, adverse parties and, in some cases, parties related to the client or to an adverse party. Accordingly, the database is updated for every new matter undertaken by Weil. The accuracy of the system is a function of the completeness and accuracy of the information submitted by the attorney opening a new matter.
d. Weil compared the names of each of the Potential Parties in Interest to client matters in the Client Database for which professional time was recorded during the two years prior to the comparison.2 Any matches to names in the Client Database generated by the comparison were compiled, together with the names of the respective Weil personnel responsible for the identified client matters (the “Client Match List”).
e. A Weil attorney then reviewed the Client Match List and deleted obvious name coincidences and individuals or entities that were adverse to Weil’s clients in both this matter and the matter referenced on the Client Match List.
f. Using information in the Client Database concerning entities on the Client Match List, and making general and, if applicable, specific inquiries of Weil personnel, Weil verified that it does not represent and has not represented any entity on the Client Match List in connection with the Debtors or these chapter 11 cases.
g. In addition, a general inquiry to all Weil personnel (attorneys and staff) was sent by electronic mail to determine whether any such individual or any member of his or her household (a) owns any debt or equity securities of any of the Debtors; (b) holds a claim against any of the Debtors or any of the Debtors’ significant stockholders; or (c) is or was an officer, director, or employee of any of the Debtors or any of the Debtors’ significant stockholders.
Weil’s Connections with the Debtors
6. Weil compiled responses to the foregoing inquiries for the purposes of preparing
this Affidavit. Responses to the inquiry described in paragraph 5(g) hereof indicate that, as of
2 For purposes of the Firm Disclosure Procedures, Weil considers an entity a “former client” if all matters for such client have been closed, but professional time was recorded within the past two years. Because the Firm Disclosure Procedures only reflect client activity during the past two years, matches to client matters outside that timeframe are not reflected in this Affidavit.
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the Petition Date, no Weil lawyers and/or support staff and/or their family members hold claims
against, or equity interests in the Debtors.
7. Weil has rendered restructuring-related legal services to the Debtors since mid-
July of this year. Since that time, Weil has advised the Debtors concerning their affairs, debt
obligations, and restructuring alternatives. Weil also has performed services necessary to enable
the Debtors to file for protection under chapter 11. Weil, working together with Young
Conaway Stargatt & Taylor, LLP (“Young Conaway”), was primarily responsible for the
preparation of the chapter 11 petitions, initial motions, and applications relating to these chapter
11 cases and their commencement.
Weil’s Connections with Parties in Interest in Matters Unrelated to These Chapter 11 Cases
8. Either I, or an attorney working under my supervision, reviewed the connections
between Weil and the clients identified on the Client Match List and the connections between
those entities and the Debtors and determined, in each case, that Weil does not hold or represent
an interest that is adverse to the Debtors’ estates and that Weil is a “disinterested person” as such
term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the
Bankruptcy Code, for the reasons discussed below.
9. Weil has represented the Debtors since their acquisition by the Oak Hill Funds in
2007. During that time, Weil has performed most of the Debtors’ external corporate and finance
work. In 2009 and 2011, Weil represented the Debtors in connection with amendments to their
first lien credit agreement. In connection with each amendment and to facilitate the successful
completion of the amendments, Weil also represented the Debtors in connection with the
contribution of additional equity by the Oak Hill Funds to the Debtors to repay and/or repurchase
first lien loans and to provide additional liquidity to the Debtors. Weil has also represented the
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Debtors in connection with their current restructuring efforts. I understand that the Oak Hill
Funds have retained the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP in July or
August of this year to represent them with respect to the Debtors’ restructuring process.
10. Weil previously has represented, currently represents, and may represent in the
future the entities described below (or their affiliates), in matters unrelated to the Debtors. The
disclosure list, attached as Exhibit 2 hereto, is the product of implementing the Firm Disclosure
Procedures. An entity is listed as a “Current Client” in Exhibit 2 if Weil has any open matters
for such entity or a known affiliate of such entity and attorney time charges have been recorded
on any such matters within the past two years. An entity is listed as a “Former Client” on
Exhibit 2 if Weil represented such entity or a known affiliate of such entity within the past two
years based on recorded attorney time charges on a matter, but all matters for such entity or any
known affiliate of such entity have been formally closed. Weil has not represented, does not
represent, and will not represent any of such entities in matters directly related to the Debtors or
these chapter 11 cases.
11. To the best of my knowledge and information, the annual fees for each of the last
two years paid to Weil by any entity listed on Exhibit 2, except for General Electric Co. (and its
affiliates), did not exceed 1% of the Firm’s annual gross revenue.
12. In addition to the entities identified in Exhibit 2, the entities identified in
Exhibit 3 attached hereto, either (a) have a name similar to a client identified on the Client Match
List or (b) are or may be related to such a client (collectively, the “Potential Clients”). After a
diligent effort, Weil was unable to determine whether the similarity of names was in fact a name
coincidence or whether, and to what extent, the Potential Client is related to a client identified on
the Client Match List. Out of an abundance of caution, however, Weil has confirmed that,
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similar to the clients identified above, Weil has not represented, does not represent, and will not
represent any of the Potential Clients in matters directly related to the Debtors or these chapter
11 cases.
13. In addition to the foregoing, through diligent inquiry, I have ascertained no
connection, as such term is used in section 101(14)(C) of the Bankruptcy Code, as modified by
section 1107(b), and Bankruptcy Rule 2014(a), between Weil and (a) the Office of the United
States Trustee for the District of Delaware (the “U.S. Trustee”) or any person employed thereby,
(b) any attorneys, accountants, or financial consultants in these chapter 11 cases, or (c) any
investment bankers that represent or may represent the Debtors or claimants or other parties in
interest in these chapter 11 cases, except as set forth herein. As part of its practice, Weil appears
in cases, proceedings, and transactions involving many different attorneys, accountants, financial
consultants, and investment bankers, some of which now or may in the future represent claimants
and other parties in interest in these cases. Weil has not represented, and will not represent, any
of such parties in relation to the Debtors or their chapter 11 cases. Weil does not have any
relationship with any such attorneys, accountants, financial consultants, and investment bankers
that would be adverse to the Debtors or their estates.
14. Because distressed debt is actively traded in the commercial markets, Weil may
be unaware of the actual holder of such debt at any given moment. Weil represents numerous
entities in unrelated matters that may buy and/or sell distressed debt of chapter 11 debtors.
15. Despite the efforts described herein to identify and disclose Weil’s connections
with the parties in interest in these chapter 11 cases, because the Debtors are an international
enterprise with numerous relationships with creditors, Weil is unable to state with certainty that
every client relationship or other connection has been disclosed. In this regard, Weil will
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continue to apply the Firm Disclosure Procedures and if any new material relevant facts or
relationships are discovered or arise, Weil will promptly file a supplemental disclosure with the
Court.
Weil Is Disinterested
16. Based on the foregoing, insofar as I have been able to ascertain after diligent
inquiry, I believe Weil does not hold or represent an interest adverse to the Debtors’ estates in
the matters upon which Weil is to be employed, and Weil is “disinterested” as such term is
defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the
Bankruptcy Code.
Weil’s Rates and Billing Practices
17. Weil is not a creditor of the Debtors. During the approximate one-year period
prior to the commencement of these cases, Weil received from the Debtors payments and
advances in the aggregate amount of approximately $2,091,000 for professional services
performed and to be performed, including the commencement and prosecution of these chapter
11 cases. As of the Petition Date, the fees and expenses incurred by Weil approximated
$1,888,000. Weil has applied the payments and advances received to credit the Debtors’ account
for Weil’s estimated charges for professional services performed and expenses incurred up to the
time of the commencement of these chapter 11 cases and has reduced the balance of the credit
available to the Debtors by the amount of such charges. As of the Petition Date, Weil had a
remaining credit balance in favor of the Debtors for future professional services to be performed,
and expenses to be incurred in connection with these chapter 11 cases, in the approximate
amount of $203,000.
18. Weil intends to charge the Debtors for services rendered in these chapter 11 cases
at Weil’s normal hourly rates in effect at the time the services are rendered. Weil’s current
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customary hourly rates, subject to change from time to time, are $770.00 to $1,075.00 for
members and counsel, $450.00 to $760.00 for associates, and $80.00 to $320.00 for
paraprofessionals.
19. Weil also intends to seek reimbursement for expenses incurred in connection with
its representation of the Debtors in accordance with Weil’s normal reimbursement policies,
subject to any modifications to such policies that Weil may be required to make to comply with
orders of this Court, the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and the
guidelines promulgated by the U.S. Trustee (the “UST Guidelines”). Weil’s disbursement
policies pass through all out of pocket expenses at actual cost or an estimated actual cost when
the actual cost is difficult to determine. For example, with respect to duplication charges, Weil
will charge $0.10 per page because the actual cost is difficult to determine. Similarly, as it
relates to computerized research, Weil believes that it does not make a profit on that service as a
whole although the cost of any particular search is difficult to ascertain. Other reimbursable
expenses (whether the service is performed by Weil in-house or through a third-party vendor)
include, but are not limited to, facsimiles, toll calls, overtime, overtime meals, deliveries, court
costs, cost of food at meetings, transcript fees, travel, and clerk fees.
20. No promises have been received by Weil, or any member, counsel, or associate
thereof, as to payment or compensation in connection with these chapter 11 cases other than in
accordance with the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules,
and the UST Guidelines. Weil has no agreement with any other entity to share with such entity
any compensation received by Weil or by such entity.
21. The Application requests, pursuant to section 328(a) of the Bankruptcy Code,
approval of their retention of Weil on rates, terms, and conditions consistent with what Weil
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charges non-chapter 11 debtors, namely, prompt payment of Weil’s hourly rates as adjusted from
time to time and reimbursement of out-of-pocket disbursements at cost or based on formulas that
approximate the actual cost where the actual cost is not easily ascertainable. Subject to these
terms and conditions, Weil intends to apply pursuant to section 330 of the Bankruptcy Code for
allowances of compensation for professional services rendered in these chapter 11 cases and for
reimbursement of actual and necessary expenses incurred in connection therewith in accordance
with the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and the UST
Guidelines.
Coordination with Other Professionals for the Debtors
22. Weil is aware that the Debtors have submitted, or intend to submit an application
to retain (a) Young Conaway, as co-counsel to the Debtors; (b) Zolfo Cooper, LLC, as
investment banker and financial advisor to the Debtors; and (c) Kurtzman Carlson Consultants
LLC, as claims, solicitation, and noticing agent to the Debtors. The Debtors may seek to retain
additional professionals in the near term. Weil intends to carefully monitor and coordinate
efforts of all professionals retained by the Debtors in the chapter 11 cases and will clearly
delineate their respective duties so as to prevent duplication of effort, whenever possible.
01:12571764.3
Exhibit 1
Retention Checklist
Debtors Non-Debtor Subsidiary Current and Former Directors/Managers (up to three years) Current and Former Officers (up to three years) Director Affiliations Employees in the Office of the U.S. Trustee Banks (Bank Accounts) Litigation Parties Trade Names (d/b/a, f/k/a, etc.) Significant Stockholders Top 30 Unsecured Creditors Secured Creditors Professionals Governmental Authorities Taxing Authorities Vendors, Contract Counterparties, and Other Parties in Interest Insurance Companies Unions
01:12571764.3
Exhibit 2
Current and Former Clients
Matched Entity Relationship to Debtors Relationship to WEIL
DVB Bank, S.E. Party in Interest Affiliate of Current Client
Canadian Imperial Bank of Commerce (CIBC) CIBC DCM CR New Issue CIBC SLTS Runoff
Secured Creditors Affiliates of Current Client
CIBC World Markets Corp. Secured Creditor Current Client
Avenue CLO Fund Ltd. Avenue CLO II, Ltd. Avenue CLO III, Ltd.
Secured Creditor Affiliates of Current Client
Credit Suisse Loan Funding LLC Secured Creditor Affiliate of Current Client
Goldman Sachs Lending Partners LLC Secured Creditor Affiliate of Current Client
Oak Hill Cargo 360, LLC Equity Holder Affiliate of Current Client
Oak Hill Capital Partners II, L.P. Board Member Affiliation Current Client
Oak Hill Capital Management Partners II, L.P. Board Member Affiliation Affiliate of Current Client
OH Aircraft Acquisition LLC Top 30 Unsecured Creditor Affiliate of Current Client
Carlyle Arnage CLO, LTD Carlyle Azure CLO LTD. Carlyle Bristol CLO,LTD Carlyle Daytona CLO LTD Carlyle McLaren CLO LTD. Carlyle Modena CLO, LTD Carlyle Vantage CLO, LTD Carlyle Veyron CLO, LTD.
Secured Creditors Affiliates of Current Client
Boeing US Training and Flight Services LLC Unsecured/Trade Creditors Affiliate of Current Client
Boeing Commercial Airlines Top 30 Unsecured
Creditor and Unsecured Trade Creditors
Affiliate of Current Client
2 01:12571764.3
Matched Entity Relationship to Debtors Relationship to WEIL
Bridgestone Aircraft (Asia) Bridgestone Aircraft Tires (USA)
Unsecured/Trade Creditors Affiliate of Current Client
Ceridian Benefit Services Ceridian COBRA Services
Unsecured/Trade Creditors/Contractual
Party Affiliate of Current Client
Dell Financial Services Unsecured/Trade Creditors Affiliate of Current Client
Gate Gourmet, Inc. Unsecured/Trade Creditors Current Client
General Electric Aircraft Engines General Electric Inspection Technologies LP
Unsecured/Trade Creditors Affiliates of Current Client
KLM Engineering & Maintenance Unsecured/Trade
Creditors and Litigation Party
Affiliate of Current Client
KLM Royal Dutch Airlines Unsecured/Trade
Creditors and Litigation Party
Current Client
Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines)
Top 30 Unsecured Creditor Current Client
Port Authority of New York and New Jersey Unsecured/Trade Creditors Current Client
Transperfect Legal Solutions Unsecured/Trade Creditors Affiliate of Current Client
Cablevision Systems Corporation Utilities Current Client
Comcast Utilities Current Client
Dell Financial Services Unsecured/Trade Creditors Affiliate of Current Client
Verizon Utilities Current Client
Verizon Wireless Verizon Wireless Albany Utilities Affiliate of Current Client
JP Morgan Chase, N.A Centralized Bank Account Current Client
3 01:12571764.3
Matched Entity Relationship to Debtors Relationship to WEIL
Merrill Lynch Centralized Bank Account Current Client
Wells Fargo Bank Northwest, N.A. Centralized Bank Account Affiliate of Current Client
Magellan EAP Contractual Party Affiliate of Current Client
United Healthcare Contractual Party Affiliate of Current Client
Jacobson Companies, Inc. Board Member Affiliation Related to Current Client
FTI Consulting, Inc. Oakhill Professional Current Client
4 01:12571764.3
Exhibit 3
Potentially Related Clients
Matched Entity Relationship to Debtors Relationship to WEIL
LSG/SKY Chefs Inc. EUR LSG/Sky Chefs, Inc. USD Unsecured/Trade Creditors Potentially Related to a Current
Client