Case tnw Doc 610 Filed 11/04/14 Entered 11/04/14 18:02:15 Desc Main Document Page 1 of 9

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1 Document Page 1 of 9 UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF KENTUCKY IN RE: CHAPTER 11 LICKING RIVER MINING, LLC, et al. CASE NO (ASHLAND, LONDON, & DEBTORS IN POSSESSION LEXINGTON DIVISIONS) JOINTLY ADMINISTERED ****** IN RE: CHAPTER 11 HARLAN COUNTY MINING, LLC CASE NO OAK HILL COAL, INC. CASE NO SANDLICK COAL COMPANY, LLC CASE NO U.S. COAL MARKETING, LLC CASE NO (LEXINGTON DIVISION) DEBTORS IN POSSESSION JOINT ADMINISTRATION APPLICATION PENDING APPLICATION FOR AN ORDER AUTHORIZING AND APPROVING THE EMPLOYMENT AND RETENTION OF JOHN J. BROGAN, JD, CPA D/B/A BROGANTAX AS TAX CONSULTANT FOR HARLAN COUNTY MINING, LLC, OAK HILL COAL, INC., SANDLICK COAL COMPANY, LLC, AND U.S. COAL MARKETING, LLC Come Harlan County Mining, LLC, Oak Hill Coal, Inc., Sandlick Coal Company, LLC, and U.S. Coal Marketing, LLC, as debtors and debtors in possession (collectively, the Additional Debtors ), and Licking River Resources, Inc., Licking River Mining, LLC, S. M. & J., Inc., J.A.D. Coal Company, Inc., Fox Knob Coal Co., Inc., and U.S. Coal Corporation, as jointly-administered debtors and debtors in possession (collectively, the Jointly Administered Debtors, and together with the Additional Debtors, the Debtors ), by counsel, and pursuant to 11 U.S.C. 327(a) and 328(a) and Fed. R. Bankr. P and 6003, respectfully request the entry of an order authorizing the Additional Debtors to employ John J.

2 Document Page 2 of 9 Brogan, JD, CPA d/b/a Brogantax ( Mr. Brogan ) as their consultant to advise the Additional Debtors regarding tax planning in connection with net operating loss carryovers and emergence from bankruptcy, effective as of the commencement of the Additional Debtors bankruptcy cases (the Application ). In support of this Application, the Debtors submit the Affidavit of John J. Brogan, JD, CPA (the Affidavit ) attached hereto as Exhibit A. In further support of this Application, the Debtors respectfully state as follows: JURISDICTION AND VENUE 1. On May 22, 2014, an involuntary petition seeking relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. 101, et seq. (the Bankruptcy Code ) was filed against Licking River Mining, LLC ( LR Mining ). On May 23, 2014, involuntary petitions seeking relief under Chapter 11 of the Bankruptcy Code were filed against Licking River Resources, Inc. ( LRR ) and Fox Knob Coal Co., Inc. ( Fox Knob ). On June 3, 2014, an involuntary petition seeking relief under Chapter 11 of the Bankruptcy Code was filed against S. M. & J., Inc. ( SM&J ). On June 4, 2014, an involuntary petition seeking relief under Chapter 11 of the Bankruptcy Code was filed against J.A.D. Coal Company, Inc. ( JAD ). 1 On June 10, 2014, an involuntary petition seeking relief under Chapter 11 of the Bankruptcy Code was filed against U.S. Coal Corporation ( U.S. Coal ). The foregoing involuntary petitions are collectively referred to as the Involuntary Petitions, and the dates upon which the Involuntary Petitions were filed are collectively referred to as the Commencement Dates. 2. On June 12, 2014, the Court entered an order for relief in each of the Subsidiary Debtors bankruptcy cases (the Subsidiary Relief Date ). On June 27, 2014, the Court entered an order for relief in U.S. Coal s bankruptcy case (the U.S. Coal Relief Date, and together with the Subsidiary Relief Date, the Relief Dates ). 1 LR Mining, LRR, Fox Knob, SM&J, and JAD are collectively referred to as the Subsidiary Debtors. 2

3 Document Page 3 of 9 3. On June 13, 2014, the Court entered an Order [Doc 91] 2 directing the joint administration of the Subsidiary Debtors bankruptcy cases. On June 27, 2014, the Court entered an Order [U.S. Coal Doc 48] directing that the bankruptcy case of U.S. Coal be jointly administered with the Subsidiary Debtors bankruptcy cases. Contemporaneously herewith, the Debtors are filing a motion requesting that the Additional Debtors bankruptcy cases be jointly administered with the Jointly-Administered Debtors bankruptcy cases. 4. No trustee or examiner has been appointed in the Chapter 11 cases of any of the Debtors. The Official Committee of Unsecured Creditors (the Committee ) was appointed in the Jointly-Administered Debtors bankruptcy cases on June 18, 2014 [See Doc 145]. 5. On September 15, 2014, the Committee filed a Motion [Doc 468] requesting, among other things, that the Court compel the Jointly-Administered Debtors to file Chapter 11 petitions for the Additional Debtors, which are subsidiaries of U.S. Coal. 6. On October 27, 2014, the Court entered an Order [Doc 574] which authorized, compelled, and directed the Jointly-Administered Debtors to file Chapter 11 petitions for the Additional Debtors. Contemporaneously with the filing of this Motion, voluntary Chapter 11 petitions were filed for each of the four Additional Debtors as directed by the Court. 7. The Debtors all continue to operate their businesses and manage their properties as debtors in possession pursuant to 11 U.S.C. 1107(a) and This Court has jurisdiction over all of the Debtors Chapter 11 cases under 28 U.S.C. 157 and This matter constitutes a core proceeding under 28 U.S.C. 157(b)(2)(A). 2 All ECF numbers contained herein refer to pleadings filed in the lead case of In re Licking River Mining, LLC, Case No unless otherwise specifically noted. 3

4 Document Page 4 of 9 9. The Debtors all maintain their principal places of business in Fayette County, Kentucky. Accordingly, venue for all of the Debtors Chapter 11 cases is proper in this District under 28 U.S.C and BACKGROUND 10. Information regarding the Debtors businesses and operations can be found in the Declaration of John Collins in Support of the Debtors First Day Pleadings [Doc 13] and the Declaration of John Collins Regarding the Motion of the Official Committee of Unsecured Creditors for an Order Compelling the Debtors to File Chapter 11 Petitions for Non-Debtor Subsidiaries [Doc 542], which are fully incorporated herein by reference. PRIOR RELATED RELIEF 11. On August 6, 2014, the Jointly-Administered Debtors filed their Application for an Order Authorizing the Employment and Retention of John J. Brogan, JD, CPA, d/b/a Brogantax as Tax Consultant [Doc 346] (the Original Brogan Employment Application ), which requested authorization for those Debtors to employ Mr. Brogan as their tax consultant in their bankruptcy cases. On August 20, 2014, this Court entered an Order [Doc 395] (the Original Brogan Employment Order ) authorizing the Jointly-Administered Debtors to employ and retain Mr. Brogan as their tax consultant. RELIEF REQUESTED 12. For purposes of consistency among the Jointly-Administered Debtors bankruptcy cases and the Additional Debtors bankruptcy cases, the Relief Requested section in this Application is substantially the same as the Relief Requested section in the Original Brogan Employment Application, with the exception of added references to the Additional Debtors which have filed voluntary Chapter 11 petitions since the filing of the Original Application. 4

5 Document Page 5 of 9 However, interested parties are encouraged to read both pleadings as they evaluate the relief requested in this Application. 13. The Debtors are in the process of developing their Chapter 11 plan in these bankruptcy cases. The Debtors have certain net operating losses ( NOLs ), which potentially have value to the Debtors Estates. As part of the plan development process, the Debtors require the services of a professional who can advise the Debtors whether their NOLs have value in the context of negotiating a Chapter 11 plan. Accordingly, pursuant to 11 U.S.C. 327(a) and 328(a), the Additional Debtors desire to retain and employ Mr. Brogan as their tax consultant during their bankruptcy cases for the purpose of advising the Additional Debtors regarding tax planning in connection with net operating loss carryovers and emergence from bankruptcy (the Services ). This Court has already approved Mr. Brogan s employment by the Jointly-Administered Debtors to provide those Services in the Original Brogan Employment Order, and by this Application, the Debtors request that the Court authorize the Additional Debtors to employ Mr. Brogan on the same terms previously approved in said Original Order. 14. The Debtors selected Mr. Brogan as their consultant to provide the Services because of Mr. Brogan s extensive experience with providing tax planning services to businesses of various sizes and in various industries. In his thirty-seven-year career, Mr. Brogan has practiced tax law, worked as an accountant in a large accounting firm, served as the Director of Tax of a publicly-held company, and taught a variety of graduate level tax courses. Based upon this experience, the Debtors believe that Mr. Brogan is well qualified and able to provide the necessary Services all of the Debtors in their Chapter 11 cases. 15. Mr. Brogan has stated his willingness and desire to render the necessary Services to all of the Debtors in accordance with the terms set forth herein, subject to the Court s approval of his employment. 5

6 Document Page 6 of Mr. Brogan has advised the Debtors that his professional fees for providing the Services to all of the Debtors will be billed at his customary hourly rate of $ per hour, which may be adjusted periodically in the ordinary course of his business. This is the same rate contemplated in the Original Brogan Employment Application, and the Additional Debtors believe that this rate is fair and reasonable. 17. The Additional Debtors have been advised by Mr. Brogan that he will not be able to provide the Services to the Additional Debtors until such time as his employment is approved. Since the Jointly-Administered Debtors are presently involved in developing their Chapter 11 plan, all Debtors believe that it is very important that Mr. Brogan be able to provide the Services to the Additional Debtors as soon as possible so that the Debtors can begin to incorporate the Additional Debtors into the plan formulation. Against this background, the Debtors respectfully request that the Court authorize the Additional Debtors to employ Mr. Brogan on an interim basis following a hearing on this Application, and that any interim order approving this Application provide that it will become a final order unless any objections to the interim order are filed within fourteen days of the entry of said interim order. 18. Pursuant to 11 U.S.C. 328(a), Mr. Brogan intends to apply to this Court for allowance of compensation for professional services rendered and reimbursement of expenses incurred in accordance with the terms of this Application and the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Local Bankruptcy Rules of this Court. Mr. Brogan understands that interim and final fee awards by the Debtors are subject to approval by this Court. 19. To the best of the Debtors information, knowledge, and belief, Mr. Brogan s provision of Services to the Additional Debtors as set forth herein will not be adverse to the interests of the Debtors creditors in these Chapter 11 proceedings. 6

7 Document Page 7 of To the best of the Debtors information, knowledge, and belief, Mr. Brogan does not have any connection with the Debtors, their creditors, or any other party in interest, except as specifically set forth in the Affidavit, nor does Mr. Brogan hold or represent any interest adverse to the Debtors Estates. Based on the Affidavit, the Debtors believe that Mr. Brogan is a disinterested person as defined in 11 U.S.C. 101(14). 21. The Debtors believe that the employment of Mr. Brogan as set forth herein is reasonable and in the best interests of the Debtors Estates for the purposes of 11 U.S.C. 327(a) and 328(a), and that this Court should approve Mr. Brogan s employment. WHEREFORE, the Debtors request entry of an order substantially in the form tendered herewith: (1) approving the Additional Debtors retention of Mr. Brogan as their tax consultant in their bankruptcy cases pursuant to the terms set forth herein; and (2) granting the Debtors such other and further relief as the Court deems just and proper. Dated: November 3, 2014 LICKING RIVER MINING, LLC LICKING RIVER RESOURCES, INC. S. M. & J., INC. FOX KNOB COAL CO., INC. 7

8 Document Page 8 of 9 J.A.D. COAL COMPANY, INC. U.S. COAL CORPORATION HARLAN COUNTY MINING, LLC OAK HILL COAL, INC. SANDLICK COAL COMPANY, LLC U.S. COAL MARKETING, LLC Respectfully submitted, DELCOTTO LAW GROUP PLLC /s/ Amelia Martin Adams, Esq. KY Bar No Laura Day DelCotto, Esq. KY Bar No North Upper Street Lexington, KY Telephone: (859) Facsimile: (859) aadams@dlgfirm.com ldelcotto@dlgfirm.com and 8

9 Document Page 9 of 9 NIXON PEABODY LLP /s/ Dennis J. Drebsky, Esq. NY Bar No Christopher M. Desiderio, Esq. NY Bar No Madison Avenue New York, NY Telephone: (212) Facsimile: (212) ddrebsky@nixonpeabody.com cdesiderio@nixonpeabody.com COUNSEL FOR JOINTLY- ADMINISTERED DEBTORS AND DEBTORS IN POSSESSION COUNSEL FOR ADDITIONAL DEBTORS (UNDER PENDING APPLICATION) 9