SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: APRIL 19, 1999
ATLAS ENVIRONMENTAL, INC.
(Exact name of registrant as specified in charter)
COLORADO 0-26166 841140790
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
150 SOUTH PINE ISLAND ROAD, SUITE 100,
PLANTATION, FLORIDA 33324
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 370-9011
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 14, 1997, Atlas Environmental, Inc. ("Atlas") and its
subsidiaries, South Florida Thermal Services, Inc., Florida Specialized
Carriers, Inc., Kleensoil International, Inc., Transoil, Inc., Waste Magic
Recyclers, Inc., Waste Magic Recyclers Palm Beach, Inc., Waste Magic Recyclers
Central, Inc., Homestead Landfill & Recycling Mgmt. Co., Naples Recycling
Resources, Inc., South Florida Recovery, Inc. and Royal Crown Carting, Inc.
(collectively, the "Subsidiaries"), filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of Florida, Fort Lauderdale Division (the
"Bankruptcy Court"), Case No. 97-20203-BKC-RBR through and inclusive of Case No.
97-20214-BKC-RBR.
On October 16, 1998 the Bankruptcy Court directed the appointment of a
Chapter 11 Trustee for Atlas and the Subsidiaries. On October 20, 1998 the
Bankruptcy Court approved the appointment of Soneet R. Kapila (the "Trustee") as
Chapter 11 Trustee for Atlas and clarified the appointment, on November 17,
1998, to include the Subsidiaries. Soneet Kapila has retained Holland & Knight,
LLP to represent him in the jointly administered cases.
On April 19, 1999, the Trustee, on behalf of Atlas and the
Subsidiaries, received an Offer to Purchase (the "Offer") made by J.R. Capital,
Inc. ("J.R. Capital") to acquire substantially all of the assets of Atlas and
the Subsidiaries. Pursuant to the terms of the Offer, the assets to be acquired
by J.R. Capital include: (i) accounts receivable outstanding on the closing date
(other than accounts receivable due from WasteMasters, Inc. or any affiliate);
(ii) automotive vehicles; (iii) real property; (iv) machinery and equipment; (v)
executory contracts and permits, to the extent assignable; (vi) certain claims
and causes of action and proceeds therefrom; and (vii) other personal property
of any kind or nature. Consideration to be paid under the Offer is
$22,402,000.00 (the "Purchase Price"). The amount of consideration was
determined by negotiation of the parties and is subject to adjustment upward or
downward, depending on the amount of BNY Financial Corporation's ("BNYFC")
allowed claim against Atlas and the Subsidiaries in the Chapter 11 bankruptcy
proceeding.
The consummation of the transactions contemplated in the Offer is
subject to the satisfaction of numerous conditions precedent, including (i)
completion of competitive bidding on May 21, 1999 pursuant to bid procedures
approved by Order of the Bankruptcy Court dated April 29, 1999; (ii) Bankruptcy
Court approval of the sale of assets pursuant to the terms of the Offer; (iii)
approval by J.R. Capital and BNYFC of the form of order approving the sale; (iv)
Bankruptcy Court approval of the assignment of certain contracts and permits to
J.R. Capital; (iv) no material adverse change having occurred with respect to
the business and assets of Atlas and the Subsidiaries; (v) a closing occurring
on or prior to May 28, 1999; (vi) the release of certain claims against BNYFC;
(vii) Bankruptcy Court approval of a certain letter agreement between Atlas, the
Subsidiaries and BNYFC; (viii) payment by J.R. Capital of certain tax
obligations; (ix) agreement of BNYFC to provide a loan to J.R. Capital
sufficient to pay the Purchase Price and provide working capital; and (x) the
negotiation, Bankruptcy Court approval and execution of a definitive Asset
Purchase Agreement and related closing documents. There can be no assurance that
any or all of the above conditions will be satisfied.
2
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On April 19, 1999, the Trustee filed the Trustee's Motion Seeking Entry
of an Order (I) Scheduling Hearing to Approve (A) the Sale of Substantially All
of the Debtors' Assets, Free and Clear of All Liens, Claims and Encumbrances
Other than Tax Liens, Pursuant to 11 U.S.C. ss.ss. 105 and 363, and the
Assumption and Assignment of Certain Executory Contracts, Unexpired Leases and
Permits Pursuant to 11 U.S.C. ss. 365, and Approving Agreement with BNY
Financial Corporation and (B) On an Emergency Basis, Bidding Procedures and a
Break Up Fee, (II) Approving Bidding Procedures and Break Up Fee and (III)
Approving the Sale of Substantially All of the Debtors' Assets and Approving
Agreement With BNY Financial Corporation (the "Motion") before the Bankruptcy
Court seeking Bankruptcy Court approval of, among other things, the sale of the
assets pursuant to the Offer. The Motion is scheduled for hearing before the
Bankruptcy Court on May 21, 1999 at 9:30 a.m.
If the Bankruptcy Court approves the sale and the transactions are
consummated, the proceeds of the sale will be used to satisfy BNYFC's secured
claim against Atlas and the Subsidiaries with the remaining proceeds to form a
contribution fund for the payment of various classes of creditors.
The above description of the Offer does not purport to be complete and
is qualified in its entirety by the full text of such document which is attached
as an Exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2 Offer to Purchase dated April 19, 1999 by and among
J.R. Capital, Inc. and Soneet Kapila, Chapter 11
Trustee for Atlas Environmental, Inc., South Florida
Thermal Services, Inc., Florida Specialized Carriers,
Inc., Kleensoil International, Inc., Transoil, Inc.,
Waste Magic Recyclers, Inc., Waste Magic Recyclers
Palm Beach, Inc., Waste Magic Recyclers Central,
Inc., Homestead Landfill & Recycling Mgmt. Co.,
Naples Recycling Resources, Inc., South Florida
Recovery, Inc. and Royal Crown Carting, Inc.
99 Trustee's Motion Seeking Entry of an Order (1)
Scheduling Hearing to Approve (A) the Sale of
Substantially All of the Debtors' Assets, Free and
Clear of All Liens, Claims and Encumbrances Other
than Tax Liens, Pursuant to 11 U.S.C. /sections/105
and 363, and the Assumption and Assignment of Certain
Executory Contracts, Unexpired Leases and Permits
Pursuant to 11 U.S.C. /section/365, and Approving
Agreement with BNY Financial Corporation and (B) On
an Emergency Basis, Bidding Procedures and a Break Up
Fee, (II) Approving Bidding Procedures and Break Up
Fee and (III) Approving the Sale of Substantially
All of the Debtors' Assets and Approving Agreement
With BNY Financial Corporation (not including
exhibits)
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLAS ENVIRONMENTAL, INC.
By: /s/ SONEET R. KAPILA
-------------------------------
Soneet R. Kapila
Trustee in Bankruptcy
Dated: May 4, 1999
4
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2 Offer to Purchase dated April 19, 1999 by
and among J.R. Capital, Inc. and Atlas
Environmental, Inc., South Florida Thermal
Services, Inc., Florida Specialized
Carriers, Inc., Kleensoil International,
Inc., Transoil, Inc., Waste Magic Recyclers,
Inc., Waste Magic Recyclers Palm Beach,
Inc., Waste Magic Recyclers Central, Inc.,
Homestead Landfill & Recycling Mgmt. Co.,
Naples Recycling Resources, Inc., South
Florida Recovery, Inc. and Royal Crown
Carting, Inc.
99 Trustee's Motion Seeking Entry of an Order (1)
Scheduling Hearing to Approve (A) the Sale of
Substantially All of the Debtors' Assets, Free and
Clear of All Liens, Claims and Encumbrances Other
than Tax Liens, Pursuant to 11 U.S.C. /sections/105
and 363, and the Assumption and Assignment of Certain
Executory Contracts, Unexpired Leases and Permits
Pursuant to 11 U.S.C. /section/365, and Approving
Agreement with BNY Financial Corporation and (B) On
an Emergency Basis, Bidding Procedures and a Break Up
Fee, (II) Approving Bidding Procedures and Break Up
Fee and (III) Approving the Sale of Substantially
All of the Debtors' Assets and Approving Agreement
With BNY Financial Corporation (not including
exhibits)
5
EXHIBIT 2
J.R. CAPITAL, INC.
16224 N.W. 82nd Place
Miami Lakes, FL 33016
April 19, 1999
Mr. Soneet R. Kapila
Kapila & Company
1000 South Federal Highway
Suite 200
Ft. Lauderdale, FL 33316
Re: OFFER TO PURCHASE
Gentlemen:
We submit to you an offer ("Offer to Purchase") to purchase the
"Purchased Assets" (as defined herein) in bulk, pursuant to which J.R. CAPITAL,
INC. or any designee or designees of J.R. Capital, Inc. (the "Purchaser"), will
purchase from ATLAS ENVIRONMENTAL, INC., SOUTH FLORIDA THERMAL SERVICES, INC.,
FLORIDA SPECIALIZED CARRIERS, INC., KLEENSOIL INT'L., INC., TRANSOIL, INC.,
WASTE MAGIC RECYCLERS, INC., WASTE MAGIC RECYCLERS PALM BEACH, INC., WASTE MAGIC
RECYCLERS CENTRAL, INC., HOMESTEAD LANDFILL & RECYCLING MGMT., CO., NAPLES
RECYCLING RESOURCES, INC., SOUTH FLORIDA RECOVERY, INC. and ROYAL CROWN CARTING,
INC. and any affiliate or related entity of the foregoing companies holding
title or any other interest of any kind, nature or description in any of the
assets to be purchased hereunder, as their interests may appear and soneet R.
Kapila, as Trustee for the foregoing entities (collectively, the "Seller"), all
of which are subject to Chapter 11 proceedings in jointly administered cases
pending in the United States Bankruptcy Court for the Southern District of
Florida (the "Bankruptcy Court"), certain assets of Seller as more particularly
described below (the "Acquisition").
Upon your acceptance of this letter, Purchaser agrees to direct its
attorney to prepare and present agreements to memorialize this Offer to
Purchase.
The principal terms and conditions of the Acquisition are as follows:
1. TERMS OF THE OFFER.
(a) Purchaser offers to purchase from Seller, and Seller will
sell and convey to Purchaser, or its designees, on an "as is, where is" basis
with no representations or warranties of any kind, nature or description,
certain asserts of Seller, as more particularly described in paragraph 1(b)
below (the "Purchased Assets"), for a purchase price of $22,402,000.00 subject
to adjustment pursuant to paragraph 1(d) below (the "Purchaser Price").
<PAGE>
(b) For purposes hereof, Purchased Assets shall mean and
include:
(i) Outstanding Accounts Receivable (other than any
receivable owed by Wastemasters, Inc. or any affiliate) owned by the
Seller on the Closing Date (as defined herein), including any prepaid
Accounts Receivable;
(ii) All of Seller's Automotive Vehicles, as more
particularly set forth in Schedule "A";
(iii) All Equipment owned by the Seller, as more
particularly set forth in Schedule "B";
(iv) All of Seller's service parts, tools and shop
equipment and related goods used or maintained in connection with the
Purchased Assets ("Miscellaneous Items");
(v) All of the Assumed Executory Contracts (as defined
below) and Permits, to the extent assignable;
(vi) Seller's real property (the "Real Property") wherever
located;
(vii) Any claims and/or causes of action Seller may have
against USA Waste, Inc. whether contingent or non-contingent;
(viii) The proceeds of any causes of action Seller
commences against any third party either pre- or post-closing equal to
fifty percent (50%) of the gross recovery, including any credits or
setoffs, up to a maximum of $500,000 in total to be paid to Purchaser;
and
(ix) All other personal property of Seller, of any kind or
nature, not specially identified above;
together with all furniture and fixtures, supplies, leases, licenses, trademarks
and tradenames, franchises, executory contracts, goodwill, and other rights of
Seller as a going concern and other assets directly used in connection with the
operation of the business of every kind, nature and description, wheresoever
located and whether or not carried or reflected on the books and records of
Seller. The Purchased Assets shall specifically exclude only the assets of the
Seller as set forth on Schedule "C" ("Excluded Assets").
(c) All of the Purchased Assets shall be conveyed and/or
assigned to the Purchaser, or its designees, free and clear of all liens,
claims, encumbrances or interests in or upon the Purchased Assets, including,
but not limited to those liens, claims and encumbrances previously granted by
Seller to BNY Financial Corporation ("BNYFC"), except (i) liens held by BNYFC to
secure indebtedness owed to BNYFC if and only if BNYFC shall agree, in its sole
and absolute discretion, to allow Purchaser to assume some or all of the
indebtedness due it from Seller and BNYFC and Purchaser agree that the Purchased
Assets shall be subject to such liens, claims and encumbrances of BNYFC to
secure such indebtedness, and (ii) liens held by any governmental unit to secure
any tax obligation outstanding as of the Closing Date, all in
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accordance with Sections 363(f) and 365 of the United States Bankruptcy Code
(the "Bankruptcy Code"), respectively. Notwithstanding the foregoing, (i) the
Purchased Assets comprised of Equipment (as such term is defined in the New York
Uniform Commercial Code) shall be conveyed to Purchaser or its designees subject
to any validly perfected purchase money security interests; and (ii) Real
Property shall be conveyed to Purchaser subject to the consent decrees issued by
state and local environmental agencies. Purchaser shall pay any documentary
stamp taxes due on the transfer of the real estate at closing.
(d) The Purchase Price shall be (i) increased by an amount
equal to the amount by which the indebtedness due BNYFC increases as the result
of the accrual of interest, charges and expenses as set forth in BNYFC's
pre-petition loan documentation with Seller from and after January 8, 1999 and
(ii) decreased by an amount, if any, by which the Allowed BNYFC Claim (defined
below) is less than $22,402,000.00
2. ASSUMED EXECUTORY CONTRACTS/PERMITS. As of the date hereof, the
Seller is a party to certain executory leases, contracts and licenses which are
necessary to the conduct of the Seller's business relating to the Purchased
Assets, (the "Executory Contracts"). Promptly after execution of this Offer to
Purchase, Seller agrees to deliver to Purchaser true and complete copies of such
Executory Contracts unless otherwise agreed to by Purchaser, and Purchaser will
designate in writing those Executory Contracts to be assumed by Purchaser. A
preliminary list of the Executory Contracts which Purchaser intends to assume is
annexed hereto as Schedule "D" and such list will be updated in the Closing
Documents. Seller shall take all action reasonably necessary in order to assume
and assign such specified Executory Contracts to Purchaser, or its designees, in
accordance with the Bankruptcy Code. Upon entry by the Bankruptcy Court of the
Purchase Approval Order (defined below), which order shall include provisions
authorizing the assumption and assignment of the Executory Contracts, such
Executory Contracts shall be assumed by Seller and assigned to Purchaser, or its
designees, and such assumption and assignment shall be effective as of the
closing of this transaction ("Assumed Executory Contracts"). Seller shall pay
all "cure" amounts required to assume the Assumed Executory Contracts. The
assignment of the Assumed Executory Contracts to Purchaser, or its designees,
shall be contemporaneous with the closing of the Acquisition. Additionally,
Seller shall assign all Permits, to the extent permitted by law, which are
necessary to the conduct of the Seller's business, to the Purchaser.
3. ASSUMED LIABILITIES. Except as otherwise required in connection with
the assumption of the Assumed Executory Contracts, the Seller acknowledges that
the Purchaser is not offering to assume, and agrees that Purchaser shall not
assume, any contracts, obligations or liabilities of Seller, other than those
contracts, obligations, or liabilities that may be designated in writing to
Seller by Purchaser prior to the closing of the Acquisition. Purchaser agrees
that it shall assume (i) any current outstanding non-tax payables as of the
Closing Date (other than payables due to Wastemasters, Inc. or any of its
affiliates) in an amount not to exceed $800,000 in the aggregate, and (ii) any
liabilities owed to governmental units for taxes that were (a) due and owing as
of the Closing Date and (b) are secured by liens against the Purchased Assets as
of the Closing Date, and (iii) any taxes attributable to the gain arising from
the consummation of the sale and transfer by Seller to Purchaser pursuant to
this Letter Agreement up to a maximum of $400,000, after Seller applies any
offsets, expenses, refunds, credits, prepaid taxes and deductions which may
reduce the Seller's tax liability (collectively, the "Tax Reductions"). Seller
shall apply any and all Tax Reductions in compliance with the Internal Revenue
Code.
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Except as otherwise agreed to in writing between Purchaser and Seller, Seller
acknowledges and agrees that Purchaser is not assuming any other contract,
obligation or liability of Seller, including without limitation, under any
employee benefit, pension or other plans or under any employee collective
bargaining agreements, or any state, local or federal taxes, except as provided
in this paragraph 3.
4. TAX PRORATIONS. Notwithstanding the foregoing, Purchaser does not
assume any liability for any debt owed to a governmental unit for taxes or other
debts that became due and payable after December 31, 1998 except as hereinafter
set forth in this paragraph. All personal property taxes, ad valorem taxes, real
property taxes and intangible taxes for calendar year 1999 shall be prorated on
the Closing Date based on the taxes paid for calendar year 1998. At Closing,
Seller shall place with an escrow agent acceptable to Purchaser funds sufficient
to pay Seller's pro rata share of such 1999 taxes which shall be released to
Purchaser upon presentation to such escrow agent of a tax bill without further
order. In the event the actual taxes due are less/more than the estimated taxes
escrowed, Purchaser and Seller shall adjust the amount due to reflect actual
taxes owed. In the event Purchaser appeals the 1999 real and personal property
tax assessments, Seller shall receive his pro rata portion of any net reduction
(after Purchaser's costs and expenses incurred in connection with such appeal,
including attorney's fees.)
5. ESTABLISHMENT OF BID PROCEDURE, MINIMUM OVERBID PROTECTION, AND
APPROVAL OF BREAK-UP FEE AND EXPENSES. Consummation of the transactions
contemplated by this Offer to Purchase is subject to a competitive bid procedure
pursuant to Section 363 of the Bankruptcy Code to be agreed upon by the parties
and approved by the Bankruptcy Court and subject to competing bids, if any.
Promptly after execution of this Offer to Purchase by the parties hereto, Seller
shall file with the Bankruptcy Court a motion, which shall have been approved by
the Purchaser as satisfactory in form and substance, seeking an expedited
hearing and entry of an Order of the Bankruptcy Court establishing a bid
procedure, providing Purchaser with minimum overbid protection and approving
break-up fee arrangements in accordance with Sections 363(f) and 365 of the
Bankruptcy Code, ("Bid Procedure Order") and a second hearing to consider
competing bids and approve consummation of the sale (the "Final Hearing").
Without limiting the foregoing, the Bid Procedure Order shall include, but not
be limited, to the following:
(a) The competitive bid procedure must require that all bids
must be for immediate payment in cash (unless BNYFC shall agree in writing, in
its sole and absolute discretion prior to submission of the bid, to allow such
bidder to assume some or all of the indebtedness due BNYFC from Seller, in which
case such assumed indebtedness shall be construed to be cash equivalent); plus
assumption of the tax obligations and other liabilities identified in paragraph
3 of this Letter Agreement.
(b) Seller may solicit bids simultaneously for both the
Purchased Assets in bulk and separate bids for separate parts of the Purchased
Assets. However, Purchaser will not be required to allocate separate prices for
parts of the Purchased Assets, and the Trustee shall sell all of the Purchased
Assets at the Final Hearing.
(c) At the Final Hearing, the Court shall select the highest
and best bid for the Purchased Assets after considering the recommendations of
the Seller and BNYFC and shall approve separate bids for the separate parts of
the Purchased Assets only in the event the
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aggregate price of all of the separate bids exceeds the Purchase Price and
provided that all of the closings on the separate sales are conditioned on one
another.
(d) Prior to the entertainment of bids, prospective bidders
for the Purchased Assets must (i) place with an authorized representative of the
Bankruptcy Court a deposit in the amount of $200,000 in immediately available
funds towards the purchase of the Purchased Assets, which deposit shall be
refunded together with all interest accrued thereon to such prospective bidder
and (ii) provide to the Bankruptcy Court evidence, to the satisfaction of the
Seller, BNYFC and the Court, that such prospective bidder has the financial and
other ability to close on the sale of the Purchased Assets and is capable of
providing adequate assurance of future performance with respect to the Assumed
Executory Contracts, all in accordance with the Bid Procedure Order.
(e) The competitive bid procedure shall be subject to an
overbid requirement for the Purchased Assets of at least $200,000 in excess of
the Purchase Price set forth herein. If no qualifying overbid is received, then
the Seller shall recommend that the Bankruptcy Court approve the transaction set
forth herein.
(f) The competitive bid procedure shall provide that if
another person or entity submits a written bid for the Purchased Assets in
excess of the Purchase Price plus $200,000 and delivers the required written bid
and deposit to Seller at least five (5) days prior to the Final Hearing, then
such bidder and Purchaser may increase their bids at the hearing in successive
increments of $25,000.
(g) If the Court approves the sale of the Purchased Assets to
another entity or person for a purchase price equal to or in excess of the
Purchase Price plus $200,000, Purchaser shall receive a fee in the amount of
$200,000. Such break-up fee shall be paid to Purchaser at the closing of the
sale of any or all of the Purchased Assets to such third-party purchaser or
purchasers from the proceeds of sale of the Purchased Assets.
(h) In the event Purchaser or another bidder chooses to be a
backup bidder and keep its deposit "at risk" pending closing on the sale, the
Court shall approve such backup bidder, as appropriate, at the last bid price
such bidder submits provided such bidder is a qualified bidder at the hearing on
the sale.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. The obligation of the
Purchaser to consummate the Acquisition of the Purchased Assets as described
herein is subject to the fulfillment of the following conditions:
(a) The form of the order of the Bankruptcy Court (i)
authorizing the sale of the Purchased Assets free and clear of all interests,
claims and liens and (ii) assigning the Assumed Executory Contracts in
accordance with Sections 363(f) and 365 of the Bankruptcy Code (the "Purchase
Approval Order") shall (x) be acceptable to Purchaser and to Purchaser's lender,
BNYFC, (y) provide for the net proceeds to be paid at closing to BNYFC, minus
amounts necessary to pay senior liens, if any, and such other amounts, if any,
as BNYFC may agree in its sole and absolute discretion to contribute to the
Seller's estate and (z) be final, non-appealable and shall not be subject to any
stay pending appeal;
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(b) The Seller shall have assumed and assigned to Purchaser,
or any designee of Purchaser, in accordance with the applicable provisions of
the Bankruptcy Code, the Assumed Executory Contracts and, if permitted by law,
any permits, executory leases, contracts and licenses which shall have been
identified by Purchaser in connection with its due diligence which Purchaser
wishes to acquire and assume;
(c) The Purchaser shall be satisfied, in its reasonable
discretion, that there shall have been no material adverse change in the
Purchased Assets or in the Seller's business or business prospects (and no
adverse ruling of the Bankruptcy Court regarding the Contractor Agreement and
Lease Agreements between Seller and National Resource Recovery Ltd. referred to
on Schedule D attached hereto that would affect the assignment thereof) since
the date of this Offer to Purchase;
(d) A closing no later than May 28, 1999, unless such date is
extended by Purchaser, in its sole discretion;
(e) The estate provides releases of any and all claims that it
may have of any kind or nature against BNYFC;
(f) The letter agreement between Seller and BNYFC dated April
15, 1999 has been approved by a final, non-appealable Order of the Bankruptcy
Court;
(g) Seller shall have continued to pay all of the accounts
payable and taxes as they become due up to the Closing Date; and
(h) BNYFC shall have agreed to provide Purchaser with a loan
sufficient to pay the Purchase Price, including all adjustments and assumed
liabilities, and provide working capital for the continued operations, all under
terms and conditions satisfactory to Purchaser and to be advanced on or before
the Closing Date.
7. CLOSING DATE. The closing of the sale of the Purchased Assets shall
occur on the first business day after the satisfaction of all conditions
precedent set forth in Section 5 hereof and the Order approving the sale becomes
a final, non-appealable Order, and in no event later than May 28, 1999, unless
Purchaser, in its sole discretion, elects to close either prior to the Order
becoming a final Order or subsequent to May 28, 1999. If a qualified overbid for
the Purchased Assets is accepted, from a party other than the Purchaser, the
closing of such sale shall occur on or prior to May 28, 1999 unless otherwise
agreed in writing by the successful bidder and the Seller.
8. CONDUCT OF BUSINESS PRIOR TO CLOSING. Prior to the closing, Seller
shall continue to operate its business in the ordinary course and consistent
with past practices and shall use commercially reasonable efforts and diligence
to preserve the business operations of Seller intact, to keep available the
services of its present personnel, to preserve in full force and effect the
contracts, agreements, instruments, leases, licenses, arrangements and
understandings of Seller and to preserve the goodwill of its suppliers,
customers, community and others having relations with Seller.
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9. EXPIRATION. This Offer to Purchase shall expire at the close of
business on April 16, 1999, unless this Offer to Purchase is executed and
returned to Purchaser by all parties hereto prior to such date.
10. OTHER PROVISIONS.
(a) This Offer to Purchase is subject to the preparation of
mutually satisfactory Closing Documents including, without limitation, an Asset
Purchase Agreement and related conveyance documents.
(b) The Closing Documents with respect to the transactions
contemplated herein will contain no representations or warranties. All Closing
Documents and this Offer to Purchase, will be governed by the internal laws of
the State of Florida and the parties consent to the jurisdiction of the United
States Bankruptcy Court for the Southern District of Florida regarding the
interpretation and construction of such agreements.
11. COUNTERPARTS. This Offer to Purchase may be executed in one or more
counterparts which, when taken together, shall represent the fully executed
agreement of the parties.
If you are in agreement with the terms and conditions of this Offer to
Purchase, please sign and date the enclosed duplicate of this Offer to Purchase
in the space provided below and return it to the undersigned.
J.R. CAPITAL, INC.
By:/S/ JACK CASAGRANDE
-------------------
Name: Jack Casagrande
Title: President
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ACCEPTED AND AGREED to this
19th day of April, 1999
SONEET KAPILA, as Chapter 11 Trustee for
ATLAS ENVIRONMENTAL, INC.
SOUTH FLORIDA THERMAL SERVICES, INC.
FLORIDA SPECIALIZED CARRIERS, INC.
KLEENSOIL INT'L., INC.
TRANSOIL, INC.
WASTE MAGIC RECYCLERS, INC.
WASTE MAGIC RECYCLERS PALM BEACH, INC.
WASTE MAGIC RECYCLERS CENTRAL, INC.
HOMESTEAD LANDFILL & RECYCLING MGMT. CO.
NAPLES RECYCLING RESOURCES, INC.
SOUTH FLORIDA RECOVERY, INC. and
ROYAL CROWN CARTING, INC.
By: /S/ SONEET KAPILA
----------------------
Title: CHAPTER 11 TRUSTEE
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EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
FT. LAUDERDALE DIVISION
In re CASE NO. 97-20203-BKC-RBR
CHAPTER 11
ATLAS ENVIRONMENTAL, INC. (Jointly Administered)
SOUTH FLORIDA THERMAL SERVICES, INC. CASE NO. 97-20204-BKC-RBR
FLORIDA SPECIALIZED CARRIERS, INC. CASE NO. 97-20205-BKC-RBR
KLEENSOIL INT'L., INC. CASE NO. 97-20206-BKC-RBR
TRANSOIL, INC. CASE NO. 97-20207-BKC-RBR
WASTE MAGIC RECYCLERS, INC. CASE NO. 97-20208-BKC-RBR
WASTE MAGIC RECYCLERS PALM BEACH, INC. CASE NO. 97-20209-BKC-RBR
WASTE MAGIC RECYCLERS CENTRAL, INC. CASE NO. 97-20210-BKC-RBR
HOMESTEAD LANDFILL & RECYCLING MANAGEMENT CO. CASE NO. 97-20211-BKC-RBR
NAPLES RECYCLING RESOURCES, INC. CASE NO. 97-20212-BKC-RBR
SOUTH FLORIDA RECOVERY, INC. CASE NO. 97-20213-BKC-RBR
ROYAL CROWN CARTING, INC. CASE NO. 97-20214-BKC-RBR
Debtors.
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TRUSTEE'S MOTION SEEKING ENTRY OF AN ORDER: (I) SCHEDULING
HEARINGS TO APPROVE (A) THE SALE OF SUBSTANTIALLY ALL OF
THE DEBTORS' ASSETS, FREE AND CLEAR OF ALL LIENS, CLAIMS
AND ENCUMBRANCES OTHER THAN TAX LIENS, PURSUANT TO 11
U.S.C. /SECTIONS/ 105 AND 363 AND THE ASSUMPTION AND ASSIGNMENT
OF CERTAIN EXECUTORY CONTRACTS, UNEXPIRED LEASES
AND PERMITS PURSUANT TO 11 U.S.C. /SECTION/ 365, AND
APPROVING AGREEMENT WITH BNY FINANCIAL CORPORATION
AND (B) ON AN EMERGENCY BASIS, BIDDING PROCEDURES
AND A BREAK UP FEE, (II) APPROVING BIDDING
PROCEDURES AND BREAK UP FEE AND (III) APPROVING
THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS
AND APPROVING AGREEMENT WITH BNY FINANCIAL CORPORATION
Soneet R. Kapila, Chapter 11 Trustee (the "Trustee") of Atlas
Environmental, Inc., South Florida Thermal Services, Inc., Florida Specialized
Carriers, Inc., Kleensoil International, Inc., Transoil, Inc., Waste Magic
Recyclers, Inc., Waste Magic Recyclers Palm Beach, Inc., Waste Magic Recyclers
Central, Inc., Homestead Landfill & Recycling Mgmt. Co., Naples Recycling
Resources, Inc., South Florida Recovery, Inc. and Royal
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Crown Carting, Inc. (collectively, the "Debtors") through undersigned counsel,
hereby files this Trustee's Motion Seeking Entry of an Order (I) Scheduling
Hearing to Approve (A) the Sale of Substantially All of the Debtors' Assets,
Free and Clear of All Liens, Claims and Encumbrances Other than Tax Liens,
Pursuant to 11 U.S.C. /sections/ 105 and 363, and the Assumption and Assignment
of Certain Executory Contracts, Unexpired Leases and Permits Pursuant to 11
U.S.C. /section/ 365, and Approving Agreement with BNY Financial Corporation and
(B) On an Emergency Basis, Bidding Procedures and a Break Up Fee, (II) Approving
Bidding Procedures and Break Up Fee and (III) Approving the Sale of
Substantially All of the Debtors' Assets and Approving Agreement With BNY
Financial Corporation (the "Motion") and moves the Court to enter Orders:
(i) scheduling a hearing on an expedited basis to consider
approval of the bidding procedures and break-up fee agreed upon by the
Trustee and Purchaser, and scheduling a subsequent hearing to consider
approval of the sale of substantially all of the Debtors' assets to
J.R. Capital, Inc. or its designee(s) (the "Purchaser"), free and clear
of liens, claims and encumbrances other than Tax Liens (defined below);
the assumption and assignment of certain executory contracts, unexpired
leases and permits of the estates, and approving the agreement with BNY
Financial Corporation ("BNYFC");
(ii) approving the bidding procedures and break up fee agreed
upon by the Trustee and the Purchaser; and
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(iii) approving the sale of substantially all of the Debtors'
assets, the assumption and assignment of certain executory contracts,
unexpired leases and permits, and the agreement with BNYFC, pursuant to
INTER ALIA, 11 U.S.C. /sections/ 105, 363, 365 and Bankruptcy Rules
2002, 4001, 6004, 6006 and 9019, and Local Rules 2002-1, 6004-1,
6006-1, 9013-1 and 9019-1, and requests an evidentiary hearing thereon,
and in support thereof, alleges as follows:
I. JURISDICTION
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
/section/ 1334. This matter is a "core" proceeding pursuant to 28 U.S.C.
/sections/ 157(b)(2)(D), (M) and (N). This matter is brought pursuant to 11
U.S.C. /sections/ 105, 363 and 365, Bankruptcy Rules 2002, 4001, 6004, 6006 and
9019, and Local Rules 2002-1, 6004-1, 6006-1, 9013-1 and 9019-1.
II. VENUE
2. Venue is proper before this Court pursuant 28 U.S.C. /sections/ 1408
and 1409.
III. PRELIMINARY STATEMENT
3. Through this Motion, the Trustee seeks approval of a sale
transaction, and related relief, which will authorize him to sell the Debtors'
assets as a going concern. Consummation of the proposed transaction will: (i)
allow the Trustee to transfer the
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assets free and clear of all liens, claims and encumbrances other than Tax
Liens, to the Purchaser who will, after closing, be responsible for managing the
assets and addressing issues relating to compliance with all environmental
regulations and decrees which the estate may otherwise be burdened with; and
(ii) result in the establishment of a fund, as well as carve-outs, which will
thereafter be utilized by the Trustee for the benefit of the estates to make
partial distributions on account of administrative, priority and unsecured
claims and/or create a fund to pursue various causes of action that will remain
with the estates in order to supplement the funds that will initially be
available to distribute to creditors upon the consummation of the sale.
4. Given the tortured history of these cases during the more than two
year period in which they have been pending and the limited realistic
alternative options available to the Trustee, the Trustee strongly believes, in
his sound business judgment, that approval of the transactions sought in this
Motion are in the best interests of the estates. If the transactions set forth
in the Motion are not approved and consummated, the Trustee believes these cases
will be converted to Chapter 7 and only certain of the assets will be disposed
of either through a /section/ 363 sale in the Chapter 7, or via abandonment or
stay relief being granted to BNYFC, which would likely result in the burdensome
"assets" remaining in the estate for administration by a Chapter 7 trustee.
Under each of these scenarios, the benefits derived from the estates under the
transactions delineated in the Motion will be lost. For all of the foregoing
reasons, the
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Trustee seeks approval of the Purchase Agreement and the agreement with BNYFC as
being in the best interest of the estates.
III. BACKGROUND OF THE CHAPTER 11 CASES AND
EVENTS LEADING TO THE NEGOTIATION AND
EXECUTION OF THE PURCHASE AGREEMENT
5. The Debtors' cases have been pending since January 14, 1997 (the
"Petition Date"). The events which have occurred since the Petition Date which
ultimately led to the appointment of the Trustee on October 19, 1998 are,
generally, well-known to this Court.(1) However, a brief recitation of certain
of the events which have led the Trustee to submit this Motion is relevant so
that the Court may consider the requested relief in the current context in which
it is sought.
6. The Debtors are in the waste management business and operate
recycling, remediation, landfill and related operations. As such, the Debtors'
businesses involve a high level of regulatory compliance and permitting as to
environmental issues.
7. Upon the filing of the voluntary petitions by the Debtors, the
Debtors and BNYFC initially engaged in contested cash collateral proceedings.
Ultimately, stipulations regarding the use of cash collateral were entered into
between the parties and approved by this Court. Thereafter, like many Chapter 11
cases, the Debtors,
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(1) In order to not burden this Motion with a complete recitation of
all of the proceedings which have occurred since the Petition Date, the Trustee
respectfully requests that the Court take judicial notice of all of the
pleadings and documents heretofore filed in the cases which constitute the case
record in these matters.
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BNYFC and the Creditors' Committee addressed matters relating to information
gathering, restructuring the Debtors' operations, negotiating the repayment of
BNYFC's indebtedness, as well as distributions to unsecured creditors through a
plan of reorganization.(2) Although these efforts were often adversarial and did
not result in an agreement between the parties regarding the terms of a proposed
plan of reorganization, the Debtors filed a proposed Plan and supporting
Disclosure Statement on February 11, 1998. This Plan contained alternative
treatment for the BNYFC Indebtedness depending upon whether BNYFC accepted or
rejected the Plan.
8. Sometime in March, 1998, and before the initial Disclosure Statement
was considered, ownership of $10,000,000 in subordinated secured debt, the
preferred stock interest of T. Alec Rigby, and more than 51% of the Debtors'
common stock was transferred by their owners to entities affiliated with
WasteMasters, Inc. ("WasteMasters").
9. WasteMasters is an entity in financial distress that purports to be
engaged in the waste management industry and is, in certain respects, a
competitor of the Debtors. WasteMasters, and its affiliated entities, paid no
real consideration for the acquisition of the subordinated secured indebtedness,
preferred stock and common stock
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(2) BNYFC filed a proof of claim for $17,522,168.65 allegedly due as of
the Petition Date, plus interest, expenses and other charges permitted by the
applicable loan documentation accruing on and after the Petition Date (the
"BNYFC Indebtedness").
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as these interests were acquired in exchange for restricted common shares of
WasteMasters. As of April 7, 1999, these shares "trade" at $0.250 per share.(3)
10. Apparently, the proceedings went from difficult to disastrous once
WasteMasters seized control of the Debtors' operations. Appearing more intent
upon depleting the Debtors' assets than reorganizing them, WasteMasters embarked
upon a "scorched earth" policy regarding the Debtors' affairs and in self
dealing. WasteMasters caused the Debtors to modify their Plan of Reorganization
to provide for only a long term "cram down" of the BNYFC Indebtedness pursuant
to which it sought to use BNYFC's cash collateral to fund administrative
expenses, provide no significant paydown of the secured debt during the proposed
seven year restructure and ultimately "repay" the indebtedness through a
purported refinancing on the maturity date seven years hence. WasteMasters' only
purported contribution toward the repayment of the Debtors' obligations was a $1
million fund which would have been utilized to pay administrative claims. BNYFC
vigorously opposed the Plan.
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(3) Mr. R. Dale Sterritt and Mr. Edward Roush who were the officers of
WasteMasters who controlled the Debtors after their acquisition of the interests
in the Debtors, are currently named defendants in several litigations pending in
the United States District Courts for the Northern District of Texas and the
Eastern District of New York. In each of these proceedings, various plaintiffs
have alleged that Messrs. Sterritt and Roush have engaged in a massive scheme to
defraud investors and violate securities laws. Pursuant to a decision by the
United States District Court for the Northern District of Texas dated January
28, 1999, a preliminary injunction was issued overturning an election of
directors of Continental Investment Corporation (a significant shareholder in
WasteMasters) which was improperly orchestrated by Mr. Sterritt and finding that
the Plaintiffs had shown a substantial likelihood of success on their claims
that the defendants had violated federal securities laws.
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11. The estates were mired in extensive litigation over many matters
during the period in which WasteMasters controlled the Debtors. During this
period, WasteMasters caused the Debtors to engage in numerous transactions for
the benefit of WasteMasters or its affiliates and to the detriment of the
estates, effectively eroding the asset base. These transactions included
transactions with C.A.T. Recycling, a subsidiary of WasteMasters. As a result of
such transactions, C.A.T. owes various Debtors approximately $360,000 in unpaid
accounts receivable. WasteMasters also caused the Debtors to engage in other
transactions where the interests of the Debtors' estates conflicted with the
interests of WasteMasters and its affiliates.(4) As a result of WasteMasters'
conflict of interest, improper conduct, and inability to fund the confirmation
deposit that was required under the Debtors' Plan, the Court ordered the
appointment of the Trustee.
12. Upon his appointment, the Trustee took control of the Debtors'
business operations. Being mindful of the long duration of the DIP proceedings,
shortly after retaining a Director of Operations and stabilizing operations, the
Trustee attempted to mediate a consensus between WasteMasters, Atlas and BNYFC
to ascertain whether a consensual plan of reorganization could be confirmed.
When it became evincingly clear that a consensus could not be reached between
these adverse parties, the Trustee
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(4) Reference is made to the Motion filed by BNYFC for the appointment
of the Trustee which resulted in the Trustee being appointed by this Court and
which sets forth in greater detail the actual and potential conflicts of
interests and improper actions of WasteMasters.
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immediately sought and obtained a January 11, 1999 plan deadline pursuant to
which competing plans of reorganization had to be filed. The deadline, however,
does not pertain to the Trustee, who specifically reserved the right to file a
plan of reorganization.
13. Because no one filed a plan, the Trustee consequently focused his
efforts on a sale of substantially all of the assets of the bankruptcy estates
pursuant to 11 U.S.C. /section/ 363. To that end, the Trustee prepared extensive
bid packages and commenced marketing efforts with his new chief of operations,
Phillip Foreman. Thereafter, the Trustee and his professionals met with or spoke
to approximately twelve parties who expressed varying degrees of interest in
Atlas and its subsidiaries.
14. In particular, the Trustee met with Jack Casagrande of J.R.
Capital, who was interested in acquiring Atlas' assets prior to the appointment
of the Trustee. J.R. Capital submitted a letter of intent to the Trustee on
January 8, 1999 to purchase substantially all of the assets of the Debtors'
estates. The Trustee negotiated this letter of intent over a several month
period while he simultaneously analyzed the tax ramifications of the proposed
sale. Thereafter, the Trustee received a revised Letter of Intent from the
Purchaser which forms the basis upon which the Trustee is now prepared to
proceed.
15. The Trustee also received a letter of intent from Peerless
Recycling, LLC to BNYFC containing three separate proposals, none of which,
however, were acceptable to the Trustee or to BNYFC. The Trustee also received a
letter of interest
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articulating an all cash offer for the remediation entities owned by Atlas. The
Trustee has not, however, received enough offers for certain lots which, if
considered in the aggregate, would comprise a sale of substantially all of the
assets of Atlas. Purchaser's offer includes substantially all of the Debtors'
assets.
Indeed, in his incessant attempt to market and sell these assets for
the benefit of all creditors, the Trustee continued negotiations with the new
principals of WasteMasters and Peerless Recycling LLC.
16. Unfortunately, despite the Trustee's continual efforts to solicit
aggressive and spirited bidding for the assets of these corporations, it does
not appear that other prospective bidders are willing to match the proposal of
Purchaser. BNYFC has agreed to provide financing for the Purchaser to allow the
Purchaser to consummate this transaction. Achieving BNYFC's consent to a sale is
crucial insofar as BNYFC is entitled to receive the sale proceeds and also
enjoys additional rights under 11 U.S.C. /section/ 363(k).
17. Purchaser's offer is conditioned upon a sale transaction pursuant
to 11 U.S.C. /section/ 363. The offer is supported by BNYFC who, as further
explained INFRA, has agreed to carve-outs of its cash collateral and/or sale
proceeds for the payment of certain claims and has agreed to provide financing
to the Purchaser subject to the Tax Liens and to provide the gains tax
undertaking referred to below.
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18. The Trustee believes that the proposed sale transaction with
Purchaser is appropriate and in the best interest of the bankruptcy estates for
several reasons as summarized below:
i) After an exhaustive marketing effort, it appears that this
proposal is the only viable option for the disposition of all of the
assets and their attendant environmental problems;
ii) The transaction satisfies BNYFC's claim in full and leaves
a Contribution Fund for the payment of various classes of creditors;
iii) In the event of conversion and the subsequent abandonment
of these assets to BNYFC, who would undoubtedly seek stay relief to
foreclose its liens, the Trustee believes there would be no
distribution to other secured, administrative, priority or unsecured
creditors; and
iv) Finally, yet regrettably, at this juncture of the case,
there is not a substantial likelihood that a plan of reorganization can
be confirmed within a reasonable period of time, if at all.
19. With the substantial accumulated pre-Trustee administrative fees
and costs, the Chapter 11 professional administrative fee claims currently
exceed $1.6 million and none of the sale proposals received by the Trustee are
of a magnitude sufficient to assure payment of 100% of the allowed
administrative and priority claims
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as required by Section 1129 of the Bankruptcy Code in order to confirm a plan.5
The Trustee is concerned with the ever escalating costs incurred on a monthly
basis from the continued operations of the bankruptcy estates with no definable
benefit to creditors. Therefore, the Trustee, in his discretion and sound
business judgment, has decided to proceed with the sale to Purchaser.
IV. OVERVIEW OF THE PURCHASE AGREEMENT
20. A true and correct copy of Purchaser's Offer To Purchase dated
April 15, 1999 (the "Offer") upon which the Asset Purchase Agreement is to be
premised is attached hereto as Exhibit "A" and is incorporated herein by
reference. (A definitive Asset Purchase Agreement (the "Purchase Agreement")
will be filed with the Court and provided to all parties requesting same by the
date of the hearing to consider approval of the bidding procedures and break up
fee. Once filed, all references in this Motion to the Offer shall be deemed to
be references to the Asset Purchase Agreement.)
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(5) In addition to the secured claim of BNYFC which approximates
$22,402,000 as of March 31, 1999, and approximately $900,000 of secured tax
claims, there exists approximately $10 million of subordinated secured debt.
Thus, a purchase price in excess of $33.3 million would be required in order for
ANY monies to be available to pay administrative creditors on account of their
allowed claims. As no realistic prospects exist for a purchase price of this
magnitude, it is clear to the Trustee that these estates are administratively
insolvent.
In addition to the fact that the Trustee cannot propose a plan that
would provide for payment of administrative claims which have accrued to date
(although not yet allowed), the Trustee anticipates that given the fact that
there is not sufficient value to provide substantial recoveries to various
classes of creditors (some of which are controlled by WasteMasters), substantial
litigation would occur in connection with any plan that might be filed thereby
serving only to increase the amount due administrative creditors. As a result,
the Trustee submits that a sale of the assets pursuant to Section 363 is the
only practical vehicle under which a transaction can be consummated in the
Chapter 11 cases.
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Pursuant to the Offer, the Purchaser will acquire the Purchased Assets (as
defined in the Offer) on an "as is, where is" basis with no representations or
warranties of any kind, nature or description. As is more specifically set forth
in the Offer, the assets to be acquired by the Purchaser include all of the
Debtors': (i) accounts receivable outstanding on the closing date (other than
accounts receivable due from Wastemasters or its affiliates), (ii) automotive
vehicles: (iii) real property; (iv) machinery and equipment; (v) other personal
property of any kind or nature; and (vi) the executory contracts and unexpired
leases that it desires to assume as reflected in the applicable schedule to the
Offer, and as is more specifically set forth below in this Motion, and the
assignment of the Debtors' permits, to the extent assignable.
21. The Trustee has been advised by the Purchaser and BNYFC that BNYFC
has agreed to provide financing which will permit the Purchaser to consummate
the transaction. The Purchase Price for the Purchased Assets is $22,402,000 as
of March 31, 1999, and is subject to an adjustment either upward or downward,
depending upon the amount of BNYFC's allowed claim in this proceeding as of the
closing date ("Closing Date").(6)
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6 Although the Purchase Price is specifically structured to match the
BNYFC Indebtedness, the Trustee and BNYFC have entered into an agreement which
is an integral part of the sale transaction, and the approval of which is a
condition to the sale transaction. Pursuant to the agreement, BNYFC agrees to
contribute funds for the benefit of the estates which it would otherwise be
entitled to retain, provide acquisition financing to the Purchaser subject to
the Tax Liens aggregating approximately $900,000, and provide the gains tax
assurance, as is more specifically set forth herein.
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22. Initially, the Purchaser proposed that it acquire the Purchased
Assets, free and clear of all liens, claims and encumbrances.(7) In order to
make additional proceeds available to the estates, the Purchaser has agreed to
acquire the Purchased Assets subject to the claims and liens of various Florida
county taxing authorities for unpaid real and personal property taxes which
constitute perfected liens on the Purchased Assets. More specifically, the
Purchaser has agreed to assume the existing tax obligations of the Debtors which
give rise to secured claims of the following counties: Broward, Collier,
Miami-Dade, Glades, Manatee, Pasco and Palm Beach (collectively, the "Tax
Liens"). Based upon information obtained by the Trustee upon inquiry with each
county taxing authority, the Tax Liens aggregate approximately $880,000 as of
March 31, 1999. The Tax Liens increase at the rate of 1.5% per month. In
addition to the Purchaser agreeing to acquire the Purchased Assets subject to
the Tax Liens, BNYFC has agreed, in connection with its financing of the
Purchaser, to allow its liens to be subordinate to the Tax Liens subsequent to
the closing of the sale transaction.
23. In conjunction with the Purchaser's agreement to acquire the
Purchased Assets subject to the Tax Liens, and BNYFC's willingness to proceed
with the financing of the Purchaser subject to such liens, each of the above
referenced county taxing authorities was contacted by counsel for BNYFC
regarding the restructure of their
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(7) The Offer provides that Purchaser may acquire the assets subject to
the liens of BNYFC if BNYFC so consents, in which event the assumption of the
BNYFC indebtedness and the continuation of the liens shall be construed as a
cash equivalent for the purchase price.
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respective indebtedness in connection with the proposed sale transaction
pursuant to which the allowed secured tax claims of each county would be
restructured over a six year period from the date of the closing of the sale
transaction. Commencing on and after the Closing Date, the restructured tax
indebtedness would accrue interest at a rate of 8% per annum, payable on a
quarterly basis with the first payment being made three months after the
consummation of the sale. The restructured indebtedness would remain secured by
a first lien on the property which currently secures the Tax Liens of each
respective county. As of the date of the filing of this Motion, five of the
seven counties have agreed in writing to accept the restructure of the
indebtedness and the inclusion of the terms of the restructure in the Order of
the Bankruptcy Court approving the sale. Based upon information provided to the
Trustee, the Trustee anticipates receiving the acceptance of the two remaining
taxing authorities prior to the hearing on the sale. It is further contemplated
that, absent a default by the Purchaser on its payments of the restructured tax
debt, the respective tax collectors for each county will be prohibited from
taking any administrative or legal action to issue tax certificates or tax
deeds, with respect to the Purchased Assets, or conduct a public sale of any
Purchased Assets that are subject to tax certificates.
24. Also as a condition precedent to the Trustee's obligation to close,
the Trustee requires: (i) the Purchaser to pay to, or for the benefit of, the
Trustee, when and if due, any income, capital gains or alternative minimum taxes
incurred by the bankruptcy estates as a result of the sale to Purchaser in an
amount not to exceed
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$400,000, after taking into account any and all refunds, offsets, expenses and
deductions which may reduce the estates' tax liability; and (ii) BNYFC provide
financial assurance to the Trustee, or any successor, with a guarantee (or such
other form of financial assurance acceptable to BNYFC and the Trustee)
supporting the Purchaser's gains tax undertakings (the "Gains Tax Undertaking").
The Purchaser and BNYFC have agreed to this request.
25. In consideration of the recent modifications to the proposal
provided by the Purchaser with respect to its willingness to acquire the
Purchased Assets subject to the Tax Liens and to provide the Gains Tax
Undertaking, and BNYFC's increased exposure with respect thereto, the Purchaser
shall be entitled to receive payment of 50% of the gross proceeds realized in
connection with the various causes of action remaining with the Debtors' estate
until the Purchaser has received $500,000.(8)
26. In addition to the acquisition of the assets, the payment of the
Purchase Price, and the other consideration referred to above, the Purchaser has
agreed to assume the ordinary course of business accounts payable of the
Debtors, other than any payables which may be due to Wastemasters or its
affiliates, incurred after the Petition Date up to the maximum amount of
$800,000, which the Trustee believes is a sufficient
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(8) The Purchaser has instructed the Trustee to remit any such funds to
BNYFC to be applied by BNYFC against the indebtedness due from the Purchaser in
connection with providing the financing for the transaction.
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amount to allow for the payment of the normal operating expenses which have been
incurred by the Debtors. In addition, Purchaser shall maintain the Debtors'
books and records but shall make such books and records available to the Trustee
and his professionals upon reasonable notice.
27. The structure of the Purchase Price and the agreement with BNYFC
affords BNYFC, the Debtors' primary secured creditor, the opportunity to
restructure and obtain the prospect of ultimately receiving repayment of the
indebtedness through the loan facilities that it will provide to the Purchaser.
The estates will receive a greater benefit than would otherwise be obtained in
the absence of the proposed transactions or even in the context of a higher
offer since any proceeds in excess of BNYFC's Claim would inure to the benefit
of the holders of the subordinated secured debt and not administrative, priority
or unsecured creditors.
28. Moreover, the Trustee notes that the Purchaser has agreed to
acquire ALL of the Debtors' assets, notwithstanding the fact that certain assets
are the subject of consent decrees with various environmental regulatory
agencies which the Purchaser has agreed to comply with, as well as certain
properties which may have significant closure costs associated with them. The
Trustee believes that the Purchaser's willingness to acquire all of the assets,
rather than "cherry pick" only the most valuable ones, provides a substantial
benefit to the estates as the estates might otherwise be left with the burden,
expense and responsibility of administering these "assets" as there is no
certainty that BNYFC would foreclose on these assets in the absence of this
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transaction. Pursuant to the United States Supreme Court's decision in MIDLANTIC
NATIONAL BANK V. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, 474 U.S. 494
(1986) and its progeny, under such circumstances, the Trustee may be precluded
from abandoning these assets due to public welfare concerns.
29. Pursuant to the Offer, it is contemplated that the Purchase
Agreement contain various conditions to the Purchaser's obligation to close.
These conditions will include:
i) The form of the Order authorizing the sale shall be
acceptable to the Purchaser and its lender, BNYFC, and shall provide
for the proceeds of the sale to be paid to BNYFC at the closing and for
such Order approving the sale and the settlement with BNYFC becoming
final, non-appealable and not subject to any stay pending appeal;
ii) The assumption by the Trustee and assignment to the
Purchaser of all of the assumed executory contracts and unexpired
leases scheduled in the Purchase Agreement and listed on Exhibit "B" to
this Motion and any permits and licenses identified by the Purchaser,
to the extent permitted by applicable law;
iii) The execution of releases by the Trustee on behalf of the
bankruptcy estates of any and all claims they may have against BNYFC
and the assignment to the Purchaser of any and all claims that the
estate may have against USA Waste, Inc.; and
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iv) A closing by no later than May 28, 1999, unless such date
is extended by Purchaser in its sole discretion.
30. The Trustee believes that the Purchaser is acting in good faith
and, at the requirement of the Purchaser, the Trustee seeks a finding by this
Court that the Purchaser is a "good faith" purchaser entitled to the protection
of Section 363(m) of the Bankruptcy Code.
31. The above represents only a summary of the Offer and each party is
referred to the Offer and the Purchase Agreement itself for a more detailed
description of the provisions of the transaction. In the event of any
inconsistencies between the Offer and the Purchase Agreement and the summary
contained in this Motion, the provisions of the Purchase Agreement shall govern.
V. ASSUMPTION AND ASSIGNMENT OF EXECUTORY
CONTRACTS, UNEXPIRED LEASES AND PERMITS
32. As stated above, the Offer requires that certain specified
executory contracts and unexpired leases be assumed and assigned to the
Purchaser. Accordingly, the relief sought by the Trustee in this Motion includes
authorization for the Trustee to assume and assign to the Purchaser the
executory contracts and unexpired leases which are more specifically set forth
on Exhibit "B" hereto. Exhibit "B" also quantifies the cure amounts, if any,
which may be due from the estates to the non-debtor party to such executory
contract or unexpired lease which the Trustee shall be required to cure in
connection with the assumption and assignment of each agreement. The
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amounts reflected on Exhibit "B" represent the amounts reflected on the Debtors
and the Trustee's books and records. In the absence of an objection by the
non-debtor party to such executory contract or unexpired lease, the Trustee
requests that the amounts reflected on Exhibit "B" shall be deemed to be the
amount of the Trustee's cure and obligation to such party. Exhibit "B" also
contains a list of permits which the Trustee seeks authorization to assign to
the Purchaser.
VI. THE BNYFC AGREEMENT
33. An integral component of the proposed sale transaction, and a
condition precedent to the sale transaction from the perspective of the Trustee,
the Purchaser and BNYFC, is the approval of an agreement between the Trustee and
BNYFC with respect to BNYFC's contribution of a fund from its collateral
proceeds to be made available to the Trustee and/or creditor constituencies for
the benefit of the estates. Accordingly, the Trustee and BNYFC have entered into
a letter agreement, a copy of which is annexed hereto as Exhibit "C" (the "BNYFC
Agreement") which provides for the following:
i) BNYFC agrees to contribute up to $2 million (the
"Contribution Fund") to the estate for the purpose of permitting the
Trustee to: (a) cure defaults under executory contracts and unexpired
leases to be assumed and assigned to the Purchaser as a condition of
the Offer; (b) pay the Trustee and his professionals as a carve-out of
its cash collateral; (c) and utilize the balance
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in such manner as the Trustee may determine, subject to Bankruptcy
Court approval, including, without limitation, the prosecution of
causes of action which will remain with the bankruptcy estates and/or
to effectuate distributions to administrative, priority unsecured
and/or general unsecured creditors in such manner as the Trustee may
negotiate with these constituencies.(9)
ii) The Contribution Fund is to consist of: (a) a contribution
by BNYFC of the cash collateral held by the Trustee on the Closing Date
which the Trustee estimates will be approximately $1,300,000 and (b) a
contribution by BNYFC from the proceeds otherwise realizable by it from
the Purchaser in an amount equal to the difference between the
Contribution Fund and the cash collateral released by BNYFC at closing,
but in no event shall such contribution exceed $700,000;(10)
iii) BNYFC agrees to provide financing to the Purchaser on a
subordinate lien basis with the liens to be granted by the Purchaser to
BNYFC for the acquisition financing to be subordinate and subject to
the Tax Liens which the Trustee anticipates will aggregate
approximately $900,000;
- --------
(9) The Trustee notes that, as funds otherwise available to be retained
by BNYFC, BNYFC (or perhaps the Trustee as a disbursing Agent), has the right to
distribute its own funds to such parties as it may select without the need to
comply with the priority scheme of the Bankruptcy Code. SEE IN RE: SPM
MANUFACTURING CORPORATION, 984 F.2d 1305 (1st Cir. 1993).
(10) To the extent the cash collateral held by the Trustee is depleted
by virtue of payments to the Chapter 11 Trustee or his professionals, or is
otherwise less than $1,300,000 on the Closing Date, the amount of the
Contribution Fund shall be reduced on a dollar for dollar basis.
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iv) BNYFC agrees to provide the Gains Tax Undertaking more
specifically referred to in paragraph 24 above.
v) Notwithstanding the fact that the payment of the
Contribution Fund will create a shortfall for BNYFC and that repayment
of the BNYFC Indebtedness will ultimately depend upon the success of
the Purchaser in connection with the post closing operations, BNYFC
agrees to release any claim that it would have in connection with its
shortfall to receive a distribution arising from assets which may be
available in the future as the result of the prosecution of various
claims of the Debtors' estates against third parties (a description of
these claims is set forth in paragraphs 43(a) through 43(d) below),
other than any interest that BNYFC may have in the Purchaser's
entitlement to receive a portion of any recoveries on account of claims
against third parties granted to Purchaser pursuant to the terms of the
Purchase Agreement. The claims released by BNYFC would include a
release of any and all claims for adequate protection, for replacement
liens or for administrative claim status which BNYFC might otherwise be
entitled to under the cash collateral Orders entered during the
pendency of these cases; and
vi) The allowance of BNYFC's secured claim, for purposes of
this sale transaction, in the amount of $22,402,000, as of March 31,
1999, plus interest, fees and expenses incurred prior to the Closing
Date and the payment of such
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sum, minus that portion of the Contribution Fund comprised of sale
proceeds, to BNYFC on the Closing Date from the sale proceeds.(11)
34. The BNYFC Agreement is conditioned upon: (i) a closing of the
approved purchase transaction occurring no later than May 28, 1999, unless
otherwise extended by Purchaser and BNYFC; (ii) entry of an Order approving the
transactions set forth in this Motion, including the BNYFC Agreement, which
shall be final and non-appealable by the Closing Date; and (iii) a release from
the estates in favor of BNYFC of any and all claims of the estates against
BNYFC. As BNYFC is providing the Contribution Fund to provide a source of
payment on account of professional administrative fees that may ultimately be
allowed in the cases which might not otherwise exist given the fact that the
case is administratively insolvent, BNYFC has also conditioned the BNYFC
Agreement upon obtaining releases from all professionals who may assert
administrative claims for services rendered during the bankruptcy case of any
right to receive payment from BNYFC, or its collateral, pursuant to Section
506(c) of the Bankruptcy Code or otherwise. If the Trustee cannot obtain
agreement
- --------
(11) The Trustee and BNYFC have agreed to allow BNYFC's secured claim
in the amount set forth above since the inclusion or exclusion of certain
components of the claim (i.e., various charges and expense reimbursements
permitted under the applicable loan documentation) have no effect on the estates
since the purchase price formula contained in the Purchase Agreement would
result in a reduction in the purchase price to the extent BNYFC's claim would be
allowed in a lower amount and creates a higher purchase price to the extent the
BNYFC claim is allowed in a higher amount. The BNYFC Agreement provides for a
reservation of the Trustee's rights to review and challenge the inclusion of
various charges and expenses in BNYFC's claim in the event a purchaser other
than the Purchaser offers a cash purchase price in excess of the amount of
BNYFC's claim, exclusive of termination charges, default interest accruals and
expense reimbursements.
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of the professionals to waive any Section 506(c) rights that they may seek to
assert against BNYFC, the BNYFC Agreement provides that BNYFC shall have the
right, but not the obligation, at its discretion, to proceed with the
transaction based upon a reduction of the Contribution Fund in such amount as
BNYFC shall agree to, in its sole discretion, provided that such reduced
Contribution Fund is sufficient to pay the cure obligations of the estate in
connection with the executory contracts and unexpired leases as well as the
fees, commissions and expenses of the Chapter 11 Trustee and his professionals
of not more than $900,000.
35. As is reflected in the BNYFC Agreement, the Trustee and the
professionals retained by him have agreed to receive payment of their allowed
compensation and reimbursement of expenses in the form of a specific carve-out
from the Contribution Fund in exchange for the waiver of any /section/ 506(c)
rights that they may have.
36. The above represents only a summary of the terms and conditions of
the BNYFC Agreement and each party is encouraged to review the BNYFC Agreement
in its entirety. In the event of an inconsistency between the BNYFC Agreement
and this summary, the terms and provisions of the BNYFC Agreement shall control.
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VII. BIDDING PROCEDURES AND BREAKUP FEE
37. The Trustee and the Purchaser have negotiated certain bid
procedures and breakup fee provisions which are more specifically set forth in
the Purchase Agreement. Accordingly, the Trustee seeks an expedited hearing to
consider approval and the entry of a Bid Procedure Order, substantially in the
form annexed hereto as Exhibit "D" (the "Bid Procedure Order"), which approves
the bidding procedures and break up fee set forth in paragraph 4 of the Offer.
The procedures include the following:(12)
(a) any competitive bid must be for immediate payment
in cash on the Closing Date (unless BNYFC shall agree in writing, in
its sole and absolute discretion prior to submission of the bid, to
allow such bidder to assume some or all of the BNYFC Indebtedness, in
which case such assumed indebtedness shall be construed to be a cash
equivalent) plus the assumption of the Tax Liens and the Gains Tax
Undertaking from such bidder guaranteed by a financial institution,
acceptable to the Trustee;,
(b) the Trustee may solicit bids simultaneously for
both the Purchased Assets in bulk and separate bids for separate lots
of the Purchased Assets provided, however, that the Purchaser will not
be required to allocate separate prices for lots of the Purchased
Assets and that the Trustee shall sell all of the Purchase Assets at
the sale hearing;
(c) at the sale hearing, the Court shall select the
highest and best bid for the Purchased Assets after considering the
recommendations of the Trustee and BNYFC and shall approve separate
bids for the separate lots of the Purchased Assets only in the event
that the aggregate price of all of the separate bids for the lots
exceeds the purchase price paid by the Purchaser and provided that all
of the closings on the separate sales are conditioned on one another;
- --------
(12) Initial capitalized terms not otherwise defined in this Motion
shall have the meaning ascribed to them in the Offer.
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(d) prior to the entertainment of bids, prospective
purchasers must: (i) place with the Trustee a deposit in the amount of
$200,000 in immediately available funds toward the purchase of the
Purchased Assets, which deposits shall be refunded together with all
interest accrued thereon to such prospective bidder if such Bidder is
not the successful purchaser; and (ii) provide to the Bankruptcy Court
evidence, to the satisfaction of the Trustee, BNYFC and the Court, that
such prospective bidder has the financial and other ability to close on
the sale of the Purchased Assets and is capable of providing adequate
assurance of future performance with respect to the assumed executory
contracts and unexpired leases;
(e) the competitive bid procedure shall be subject to
an initial overbid requirement for the Purchased Assets of at least
$200,000 in excess of the Purchase Price set forth in the Offer;
(f) if another person or entity submits a written bid
for the Purchased Assets in excess of the Purchase Price plus $200,000
prior to the hearing on the sale, then such bidder and the Purchaser
may increase their bids at the hearing in successive increments of
$25,000;
(g) if the Bankruptcy Court approves the sale of the
Purchased Assets to another entity or person for a price equal to or in
excess of the Purchase Price plus $200,000, Purchaser shall receive a
fee in the amount of $200,000 (the "Break-up Fee") such Break-up Fee
shall be paid to Purchaser at the closing of the sale of any or all of
the Purchased Assets to such third party purchaser or purchasers from
the proceeds of sale of the Purchased Assets; and
(h) in the event the Purchaser or another bidder
chooses to be a back-up bidder and keep its deposit "at risk" pending
closing on the sale, the Court shall approve such back-up bidder as
appropriate, at the last bid price such bidder submits, provided such
bidder is a qualified bidder at the hearing on the sale.
38. The Trustee believes that the approval of the bidding procedures,
including the breakup fee, is appropriate and in the best interest of the
estates in order to clearly establish the terms and conditions upon which
competing bids will be considered. Because the Purchaser has served as the
"stalking horse" with respect to
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the sale of the Debtors' assets, the Trustee believes that it is appropriate
that the breakup fee, which represents less than one percent of the Purchase
Price, be approved and is fair and reasonable in light of all the circumstances
attendant to this case. SEE, IN RE INTEGRATED RESOURCES, INC., 135 B.R. 746
(Bankr. S.D.N.Y.) AFFD., 147, B.R. 650 (S.D.N.Y. 1992) APP. DISMISSED, 3 F.3d 49
(2nd Cir. 1993).
VIII. APPROVAL OF THE PURCHASE AGREEMENT AND BNYFC
AGREEMENT IS IN THE BEST INTEREST OF THE ESTATES
AND IS PREDICATED UPON A SOUND BUSINESS PURPOSE
39. The Trustee's proposed transfer of substantially all of the assets
pursuant to the Purchase Agreement and this Motion prior to the filing of a Plan
of Reorganization is permitted by the Bankruptcy Code. SEE 11 U.S.C. /section/
363(b); In re CHATEAUGAY CORP., 975 F.2d 141, 144 (2d Cir. 1992; IN RE:
CONTINENTAL AIRLINES, INC., 780 F.2d 1223 (5th Cir. 1986); STEPHENS INDUSTRIES,
INC. V. MCCLUNG, 789 F.2d 386 (6th Cir. 1986); IN RE LIONEL CORPORATION, 722
F.2d 1063 (2nd Cir. 1983). For all of the reasons set forth above, the Trustee
asserts that approval and consummation of the referenced transactions is
supported by a sound business purpose. IN RE TITUSVILLE COUNTRY CLUB, 128 B.R.
396, 399 (Bankr. D. Pa. 1991). With respect to satisfying the elements of the
"sound business purpose" test, the Trustee asserts that the sale of
substantially all of the Debtors' operating assets pursuant to the Purchase
Agreement will preserve their going concern value. IN RE NARON & WAGONER,
CHARTERED, 88 B.R. 85 (Bankr. D. Md. 1988). Moreover, the Trustee and the
Purchaser are acting in good faith. Creditors
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and other parties in interest will receive accurate and reasonable notice of the
terms of the proposed sale and the BNYFC Agreement for which the Trustee seeks
approval in this Motion. The consideration for the transactions is adequate and
reasonable under the circumstances.
40. The Trustee asserts that exigent circumstances exist which mandate
that the Court authorize the proposed sale in the absence of a confirmed plan of
reorganization. SEE IN RE: CHATEAUGUY, 973 F.2d 141)(delay in sale would risk a
lower price in the future); IN RE WEATHERLY FROZEN FOOD GROUPS, INC., 149 B.R.
480 (Bankr. N.D. Ohio 1992) (sale approval because debtor did not have funds to
repair or maintain new factoring equipment to meet inspection); IN RE WHITE
MOTOR CREDIT CORP., 14 B.R. 584 (Bankr. N.D. Ohio 1981); IN RE ST. PETERSBURG
HOTEL ASSOCIATION, LTD., 37 B.R. 341 (Bankr. N.D. Fla. 1983); IN RE BOOGAART OF
FLORIDA, INC., 17 B.R. 480 (Bankr. S.D. Fla. 1981). The exigent circumstances
herein include the precarious situation of several environmental permits and
consent decrees, some of which will lapse within the next few months.
41. Approval of the Purchase Agreement and the BNYFC Agreement as well
as consummation of the transactions contained therein will also eliminate the
prospect of a large deficiency claim for BNYFC which may occur if the assets are
not sold on a going concern basis. This could substantially dilute any
distribution that might ultimately be available for general unsecured creditors.
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42. Consummation of the transaction will also preserve the recoveries
the estates may realize in the future for the benefit of creditors from the
prosecution of various causes of action without the estates being required to
expend such funds to address compliance with environmental consent decrees and
other regulatory obligations.
43. Upon the consummation of the contemplated transactions, the estates
will retain a substantial interest in various causes of action which may be
pursued to enhance the distributions available to administrative, priority
and/or unsecured creditors. Potential causes of action that will remain with the
estates include:
(a) causes of action against the former owners of the equity
securities of Waste Magic Recyclers, Inc., Waste Magic Recyclers Central, Inc.,
Waste Magic Recyclers Palm Beach, Inc., Homestead Landfill & Recycling Mgmt.
Company and Royal Crown Carting, Inc. to Atlas Environmental, Inc. in January,
1996. The former sellers include, without limitation, Thomas Hanford, John
Maxwell, Barbara Maxwell, Craig Pascale and/or Richard Pascale, Steve Weston,
Roxanne Weston and Manny Ziser. Based upon the Debtors' Second Amended
Disclosure Statement previously approved by this Court, these causes of action
are based on several theories, including, without limitation, avoidance actions
under /sections/ 544, 547, 548 and 550 of the Bankruptcy Code, as well as
applicable state fraudulent conveyance laws. Basically, the Debtors have
asserted that they did not receive reasonably equivalent value when they
purchased the equity securities in certain of the Debtors in January, 1996 and
that the equity
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securities were worth substantially less than the price paid by the Debtors. As
is more specifically set forth in the Second Amended Disclosure Statement, the
Debtors claim to have been damaged by more than $12 million pursuant to 11
U.S.C. /section/ 548(a)(2) with respect to Waste Magic's claims against Thomas
Hanford, John Maxwell and Barbara Maxwell and by more than $9 million with
respect to Homestead's claims against Craig Pascale and/or Richard Pascale,
Steve Weston, Roxanne Weston, Manny Ziser, Steven and Heidi Fine;
(b) Based upon the Debtors' Second Amended Disclosure
Statement and/ or Statements of Financial Affairs, the Debtors may also have
claims against the following persons/insiders who received the following amounts
within the one year period immediately prior to the filing of the bankruptcy
petitions:
T. Alec Rigby $1,000,000.00
Gary Kabot 60,000.00
Thomas Hanford 72,597.00
John Maxwell 3,000.00
Thomas Roberts 23,310.00
David Thomas 250,000.00
Christopher Hill 100,000.00
The estates would have the right to pursue avoidance of such transfers, if
appropriate, as well as investigate and pursue recovery of any other preference,
fraudulent conveyance or other claims against any parties, except to the extent
specifically precluded by the Purchase Agreement or the BNYFC Agreement;
(c) The estates may also have significant claims against T.
Alec Rigby in connection with transactions involving and relating to Mr. Rigby's
acquisition of the
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equity interests in Sebring Landfill, Inc. and his subsequent transfer of those
equity interests to WasteMasters in return for WasteMasters' stock. In addition,
there may exist a cause of action against Mr. Rigby for transfers he received
post-petition from the Debtors but through Sebring Landfill Inc. Information was
provided to the Court that reflects that payments were made to Mr. Rigby in his
capacity as a director/shareholder of Sebring Landfill, Inc. of not less than
$480,000; and
(d) The estates may also have substantial claims and causes of
action against WasteMasters, R. Dale Sterritt, Edward Roush and entities
affiliated with any of these persons in connection with their breach of
fiduciary duties, wrongful conduct and transfer of assets of the estates prior
to the Trustee's appointment. In this regard, Debtors' counsel presently holds
the sum of $500,000 previously remitted on behalf of WasteMasters in connection
with the Debtors' failed Plan of Reorganization which Debtors' counsel is
required to hold pending further Order of the Bankruptcy Court. The Trustee
believes that claims may exist against such entities that would allow some or
all of such funds to be recovered for the benefit of the estates.
44. While there can be no assurance that any or all of the causes of
action that remain with the estates will result in recoveries, the Trustee
believes that approval of the transactions set forth in this Motion will enhance
the likelihood that substantial recoveries can be realized for the benefit of
creditors since the transactions will: (i) provide a fund to investigate and
pursue such claims; and (ii) eliminate the possibility
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that the estates' interest in any recoveries on account of such claims will be
diluted by any deficiency claim of BNYFC.
IX. REQUEST FOR EQUITABLE RELIEF
45. The Trustee requests this Court to utilize, to the extent
necessary, its equitable powers pursuant to 11 U.S.C. /section/ 105(a) to effect
the relief requested in this Motion.
X. NOTICE TO PARTIES IN INTEREST
46. Due to the requirement of the Purchaser that the transaction close
by no later than May 28, 1999, the Trustee requests that the Court enter a
scheduling order, substantially in the form annexed hereto as Exhibit "E" (the
"Scheduling Order") pursuant to which a hearing will be scheduled for April 29,
1999, at 1:30 p.m. to consider the entry of an order, substantially in the form
annexed hereto as Exhibity "D" (the "Bid Procedure Order"), approving the
bidding procedures and break-up fee and the scheduling of a subsequent hearing
to consider the entry of an order substantially in the form annexed hereto as
Exhibit "F" (the "Sale Approval Order") approving the sale of substantially all
the debtor's assets and the related relief set forth above. The Scheduling Order
also provides for approval by this Court of the form of the Notice to be served
by the Trustee, substantially in the form annexed hereto as Exhibit "G" (the
"Notice"). The Trustee proposes to serve the Notice by first class mail on all
creditors, and all parties who have filed Notices of Appearance in these cases
at least 14 days
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prior to the April 29, 1999 hearing to consider entry of the Bid Procedure Order
and at least twenty (20) days prior to the hearing to consider approval of the
Motion and Sale Approval Order. In addition, the Trustee will serve a copy of
this Motion, together with exhibits, on: i) counsel for (a) BNYFC, (b) the
Debtors, (c) Purchaser and (d) each Creditor's Committee appointed in these
cases; ii) all professionals retained in these cases who may have administrative
claims; iii) all parties to executory contracts and unexpired leases that the
Trustee seeks to assume and assign to the Purchaser; iv) any governmental
agencies having issued permits which may be assigned; v) all parties who may
have liens on the Purchased Assets; and vi) all pertinent tax authorities; and
(vii) the Office of the United States Trustee.
47. If any creditor or party in interest objects to this Motion, such
objection must be filed with the Clerk of the Bankruptcy Court, with copies
served upon counsel for the Trustee, the Purchaser and BNYFC at the addresses
set forth in the Notice at least two days prior to the hearing to approve the
bidding procedures and breakup fee and five days prior to the hearing to approve
the balance of the relief requested in this Motion.
XII. RELIEF REQUESTED
WHEREFORE, the Trustee respectfully requests this Court to:
i) enter the Scheduling Order;
ii) enter the Bid Procedure Order upon the conclusion of the
expedited hearing to consider approval of the bidding procedures and break-up
fee;
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iii) enter the Sale Approval Order, upon the conclusion of the
hearing on the Motion to consider the sale of substantially all of the Debtor's
assets and related relief, including, the assumption and assignment of executory
contracts, unexpired leases and permits as well as the BNYFC Agreement pursuant
to, INTER ALIA, 11 U.S.C. /sections/ 363, 365, and Bankruptcy Rules 2002, 4001,
6004, 6006 and 9019 and Local Rules 2002-1, 6004-1, 6006-1, 9013-1 and 9019(1);
iv) invoke its equitable powers under 11 U.S.C. /section/ 105,
to the extent necessary, to provide the relief requested in this Motion; and
v) grant any additional relief to which the Trustee may be
entitled.
Dated: April 19, 1999
Respectfully submitted,
HOLLAND & KNIGHT LLP
ATTORNEYS FOR THE TRUSTEE
Holland & Knight LLP
701 Brickell Avenue
Suite 3000
Miami, Florida 33131
Tel: 305-374-8500
Fax: 305-789-7799
By: ___________________________
Craig V. Rasile, Esq.
Florida Bar Number 613691
MIA5-725466.2
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of Trustee's Motion
Seeking Entry Of An Order was served via U.S. Mail this 19th day of April, 1999,
to all parties on the attached Service List.
____________________________
Craig V. Rasile
35
