Case: MCF11 Doc#:87 Filed:10/15/13 Entered:10/15/13 11:24:21 Document Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF PUERTO RICO

Transcription

1 Document Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF PUERTO RICO IN RE: CARIBBEAN INTERNATIONAL NEWS CORPORATION d/b/a EL VOCERO DE PUERTO RICO, CASE NO (MCF) CHAPTER 11 Debtor URGENT MOTION FOR CONVERSION TO CHAPTER 7; APPOINTMENT OF AN OPERATING CHAPTER 7 TRUSTEE; AND TO CHANGE NATURE OF TODAY S HEARING TO THE HONORABLE COURT: and prays: Comes now Debtor through its undersigned counsel and very respectfully states 1. On September 20, 2013, Debtor filed its petition for reorganization under the provisions of Chapter 11 of the Bankruptcy Code, and as of that date has been operating its business and managing its affairs as a debtor in possession, as provided for in the Bankruptcy Code. See Docket No As a first day motion, Debtor filed its Urgent Joint Motion Authorizing the Sale of Certain of Debtor s Assets Pursuant to Sections 105 and 363 of the Bankruptcy Code (the Sale Motion ). See Docket No The Court has scheduled the hearing to discuss the Sale Motion for today at 1:30 p.m. 4. After carefully analyzing its options under Chapter 11 due to the inability to obtain an interim DIP financing, as well as the additional costs and expenses that

2 Document Page 2 of 5 Urgent Motion For Conversion To Chapter 7 Page 2 continue to accumulate in this already heavily litigated case, Debtor understands that its best course of action is to file the instant motion requesting that Debtor s Chapter 11 proceedings be converted to liquidation proceedings under 11 U.S.C. Chapter 7, but with an express order, entered pursuant to 11 U.S.C. 721, for the Chapter 7 Trustee to operate Debtor s business for a period of at least forty five (45) days in order to maximize Debtor s assets through a public sale. 5. It is uncontested that Debtor may request the conversion of the captioned case to Chapter 7 insofar as 11 U.S.C. 1112(a) grants Debtor the absolute right to dos so. Abbott v. Blackweller Furniture Co., 33 B.R.399, 401 (W.D.N.C. 1983); In re Schuler, 119 B.R.191, 192 (Bankr. W.D.Mo. 1990) U.S.C. 721 states that the court may authorize the trustee to operate the business of the debtor for a limited period, if such operation is in the best interest of the estate and consistent with the orderly liquidation of the estate. A Chapter 7 Trustee may operate a debtor s business only upon obtaining prior court authorization. The grant of operational authority is discretionary, not mandatory. In re Advanced Modular Power Sys., Inc., 413 B.R. 643, 668 (Bankr. S.D. Tex. 2009). 7. In a Chapter 7 case, the Court can authorize only the Trustee to operate the debtor s business pursuant to 11 U.S.C. 721, where the interim operation of Debtor s business is in the best interest of the estate and is consistent with the order. Therefore, the Court may authorize the Chapter 7 Trustee to operate debtor s business on an interim basis where doing so will maximize the value of the estate and thus increase creditor recoveries.

3 Document Page 3 of 5 Urgent Motion For Conversion To Chapter 7 Page 3 8. For example, the interim operation of the Debtor s business by a Chapter 7 Trustee may be authorized where the sale of the Debtor s business, as a going concern, as in this case, would realize a greater value than would be realized in a liquidation. See In re Heissinger Res. Ltd., 67 B.R. 378, 384 (C.D. Ill.1986); In re Quarter Moon Livestock Co. Inc., 116 B.R. 775, 782 (Bankr. D. Idaho 1990) (bankruptcy court allowed trustee to operate cattle ranch until the autumn, in the interest of maximizing estate s value.) 9. Financial gain to the estate is not the sole basis on which a court may authorize a trustee to operate the debtor s business. For example, if the sudden termination of the business would cause great hardship to the general public or innocent third parties, authorization of the Chapter 7 Trustee to operate the Debtor s business at a loss might be appropriate. In re 30 Hill Top Street Corp., 42 B.R. 517, 519 (Bankr. D. Mass. 1984) (Allowing the Chapter 7 Trustee to operate nursing home to avoid harm to the patients despite continuing losses of the business). 10. In the instant case it is uncontested that Debtor s assets would have more value if these are sold as a going concern. Even the parties that have objected to the Sale Motion agree that a sale of Debtor s assets would be more beneficial to the Estate. However, due to the inability to reach a consensual agreement with said creditors for a sale under 11 U.S.C. 363, the immediate need for funds to comply with Debtor s postpetition payables, and more importantly to purchase the materials needed for the continuous publishing of El Vocero newspaper, Debtor submits that an immediate conversion to Chapter 7, with an express order for the Trustee to operate Debtor s business, is in the best interest of the Estate and all its creditors.

4 Document Page 4 of 5 Urgent Motion For Conversion To Chapter 7 Page The proposed stalking horse and DIP Lender, i.e. Publi-Inversiones Puerto Rico, Inc. ( P-I ), may be willing to grant the Chapter 7 financing, if needed, under the terms of a superpriority loan on an as needed basis, upon terms and conditions to be agreed to by P-I and the Chapter 7 Trustee. Therefore, and based on Debtor s projections, which have been already submitted to this Court, any cash shortfall under Chapter 7 could be covered by the aforementioned superpriority loan. 12. Debtor prays that the hearing currently scheduled for today at 1:30 pm be held as scheduled, but that its nature be converted to discuss the instant motion. As such, and due to the urgency of this matter, Debtor requests that it be exempted from the Notice requirements of Rules 1017(f) and 2002(a)(4) of the Federal Rules of Bankruptcy Procedure, and that after said hearing an order be entered converting the captioned case to Chapter 7, with an express order pursuant to 11 U.S.C. 721 for the Chapter 7 Trustee to operate Debtor s business for a period of forty five (45) days. DECLARATION UNDER PENALTY OF PERJURY I, Peter W. Miller, of legal age, married and resident of Trujillo Alto, Puerto Rico, as President of d/b/a El Vocero de Puerto Rico, declare: 1. My name and personal circumstances are as aforementioned. 2. The statements set forth in the instant motion are true and correct. 3. I am authorized by, to execute this document on behalf of the corporation. I declare under penalty of perjury (28 U.S.C. 1746) that the foregoing is true and correct, this 15 th day of October, s/ Peter W. Miller PETER W. MILLER

5 Document Page 5 of 5 Urgent Motion For Conversion To Chapter 7 Page 5 LOCAL BANKRUPTCY RULE (F) CERTIFICATION I, Alexis Hernández Fuentes, Esq., counsel to the Debtor, hereby certify that pursuant to Local Bankruptcy Rule (f), I have carefully examined the matter and concluded that there is a true need for an emergency hearing, that neither I or the Debtor have created the emergency through any lack of due diligence, and that both, I and the Debtor, have made bona fide efforts to resolve the matter without a hearing. WHEREFORE, it is respectfully prayed at today s hearing, Debtor s Chapter 11 proceedings be converted to Chapter 7, with an express order pursuant to 11 U.S.C. 721 for the Chapter 7 Trustee to operate Debtor s business for a period of at least forty five (45) days. CERTIFICATE OF SERVICE: I hereby certify that on this same date, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF systems, which will send notification of such filing to the Office of the United States Trustee, and all participants of CM/EMF. San Juan, Puerto Rico, this 15 th day of October, s/ Alexis Fuentes-Hernández Alexis Fuentes-Hernández USDC-PR FUENTES LAW OFFICES, LLC P.O. Box San Juan, PR Tels. (787) Fax. (787) alex@fuentes-law.com