EFiled: Aug 29 2014 02:16PM EDT Transaction ID 55960322 Case No. 9826-VCN IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE ) ) Next Generation Vending, LLC, ) a Delaware limited liability company ) ) C.A. No. 9826-VCN MOTION OF THE RECEIVER FOR AN ORDER (I) ESTABLISHING A RECORD DATE FOR ASSERTING CLAIMS AGAINST THE RECEIVERSHIP ESTATE, (II) WAIVING THE REQUIREMENT OF NEWSPAPER PUBLICATION OF THE RECORD DATE, AND (III) APPROVING THE FORM AND MANNER OF NOTICE THEREOF Fraas Services II, LLC ( Fraas or Receiver ) of Next Generation Vending, LLC, a Delaware limited liability company (the Company ), respectfully petitions the Court for the entry of an order (I) establishing a record date for asserting claims against the receivership estate, (II) waiving the requirement of newspaper publication of the record date, and (III) approving the form and manner of notice thereof (the Motion ), and in support thereof, states as follows: BACKGROUND A. The Company. 1. NGV was organized as a Delaware limited liability company by the filing of a Certificate of Formation (the Certificate ) under and pursuant to the Delaware Limited Liability Company Act (as amended, the Act ) with the office of the Secretary of State of the State of Delaware on July 20, 2011 and the
execution of the Limited Liability Company Agreement, dated as of July 20, 2011 by the Company s sole member, Next Generation Vending Holding Corp. ( Holding ). On September 28, 2011, Holding executed the Amended And Restated Limited Liability Company Agreement Of Next Generation Vending, LLC (the Limited Liability Company Agreement ). 2. NGV was a premier provider of innovative and enticing vending and refreshments for corporate and institutional environments. Headquartered in Stoughton, Massachusetts, the company provided full-service vending and office coffee services for thousands of clients in the United States. 3. Since at least July 2013, the Company was in payment default under that certain Credit Agreement dated August 4, 2011 (as amended and otherwise modified from time to time, the Credit Agreement ) entered into by Holding, the Company and certain of their affiliates (collectively, the NGV Parties ), certain financial institutions and institutional investors identified as Lenders on the signature pages thereto (collectively, the Lenders ) and D. E. Shaw Direct Capital Portfolios, L.L.C., in its capacity as administrative agent and as collateral agent in the manner and to the extent described in Article IX of the Credit Agreement (in either such capacity, the Agent ), and certain Events of Default (as defined in the Credit Agreement) had and have since occurred and are continuing. Since the winter of 2013 / 2014, the Company engaged in discussions with the Agent and the 2
Lenders, and with its franchisor Compass Group USA, Inc. by and through its Canteen Vending Services division ( Compass ), to determine a course of action to address and resolve the Company s default positions. As a result of those negotiations, the Company entered into certain Forbearance Agreement dated as of May 12, 2014 (as amended and otherwise modified from time to time, the Forbearance Agreement ), by and among the NGV Parties, the Lenders and the Agent, and that certain Master Transaction Agreement dated as of May 12, 2014 by and among the Company, the other NGV Parties, and Compass (as amended and otherwise modified from time to time, the Master Transaction Agreement ). 4. Pursuant to the Forbearance Agreement, among other things, the Lenders instructed the Agent to declare all of the Obligations (as defined in the Credit Agreement) to be immediately due and payable. Pursuant to the Master Transaction Agreement, the Company and Compass identified purchasers (collectively, the Purchasers ) to acquire designated assets of the Company which, when taken together, constituted substantially all of the assets used by the Company and the other NGV Parties in Next Generation s vending, micro market, office coffee services and dining business in the Company s various geographic territories (collectively, the Asset Transactions ). In order to consummate the Asset Transactions free and clear of the liens and security interests of the Agent and Lenders and with their consent, pursuant to the Forbearance Agreement, the 3
Purchasers entering into respective secured party sale agreements with the Agent pursuant to which any of the Company s property that constituted Collateral (as defined in the Credit Agreement) capable of being conveyed pursuant to a secured party sale pursuant to Section 9-610 of the Uniform Commercial Code as in effect in the state of New York as of the date hereof (the UCC ) was transferred to the Purchasers upon the Agent s foreclosure thereon and the private secured party sale thereof pursuant to Section 9-610 et seq. of the UCC. The Purchasers also entered into respective asset purchase agreements with the Company (and, in one case, an affiliate of the Company which owned real estate) pursuant to which the remainder of the assets of the Company were transferred, respectively, to the Purchasers. 5. The simultaneous closing of the Asset Transactions occurred on May 16, 2014, whereupon the Agent received from the Purchasers sale proceeds totaling $21,050,000 on account of claims under the Credit Agreement totaling, as of May 9, 2014, not less than $41,658,495.13, which claims were secured by liens on and security interests in the Collateral i.e., substantially all of the Company s assets. 6. Since the closing of the Asset Transactions, NGV had maintained certain administrative functions including but not limited to facilitating a smooth transition of the company to the Purchasers. NGV had maintained fourteen employees for some or all of the time between May 16, 2014 and June 27, 2014 in this regard. 4
7. On June 23, 2014, Mr. Ronald J. Bienias, Chief Operating Officer and Member of Next Generation Vending, LLC filed a certificate of cancellation with the Secretary of State and dissolved the Company. In addition, on June 25, 2014, (the Petition Date ) Holding filed a Petition for the Winding Up of a Limited Liability Company and the Appointment of a Liquidating Trustee Pursuant to 6 Del. C. 18-803 (the Wind Up Petition ). 8. The Wind Up Petition proposed the appointment of Fraas Services II, LLC as Liquidating Trustee. On June 30, 2014, this Court entered an order appointing Fraas Services II, LLC as interim receiver. On July 29, 2014, this Court entered an order appointing Fraas Services II, LLC as permanent receiver. B. Notice of Receivership Proceedings and Need for Record Date. 9. On or about July 2, 2014, the Receiver provided notice of (i) the Petition, (ii) the appointment of the Receiver on an interim basis, and (iii) the hearing to consider appointment of the Receiver on a permanent basis to all known creditors of the Company. 10. To facilitate the pro rata distribution of the assets of the receivership estate among the creditors of the Company, the Receiver has determined that it is necessary to establish a date certain, not less than sixty (60) days from the mailing of notice of such date, by which creditors must assert claims against the Company in order to receive a distribution from the receivership estate (the Record Date ). 5
11. Known creditors of the Company have already received notice of the Petition and the appointment of the Receiver. The Receiver intends to mail notice of the Record Date (the Record Date Notice ), in the form attached hereto as Exhibit A, to all known potential creditors of the Company as set forth on the list of creditors filed with the Court on July 29, 2014 (Docket No. 15)(the Creditor List ). The Receiver further intends to publish the Record Date Notice on the website established for creditors and parties-in-interest in this proceeding: www.nextgenerationone.com. The Receiver will also provide the Record Date Notice to any creditor or potential creditor that contacts the Receiver or its counsel. The Receiver respectfully submits that a written notice of the Record Date mailed to all creditors of the Company, included on the Creditor List, along with publication notice as set forth herein, constitutes due and adequate notice under the circumstances and that any other or future notice would unnecessarily deplete the limited assets of the receivership estate to the detriment of all creditors. 12. Only those creditors who disagree with the amounts indicated on the Creditor List will be required to file a claim in order to receive its pro-rata distribution from the receivership estate. If a creditor does not dispute the amount identified on the list of creditors, such amount will be deemed the allowed claim of such creditor without the need for filing a claim. 6
RELIEF REQUESTED 13. By this Motion, the Receiver respectfully requests that the Court enter an order, substantially in the form attached hereto as Exhibit B, (i) establishing a record date by which creditors of the Company must assert their claims against the receivership estate; and (ii) waiving the requirement of newspaper publication of the Record Date. BASIS FOR RELIEF I. Approval of the Record Date. 14. This application is warranted and the relief sought herein is permissive pursuant to 6 Del. C. 18-805. Section 18-805 of title 6 of the Delaware Code provides: When the certificate of formation of any limited liability company formed under this chapter shall be canceled by the filing of a certificate of cancellation pursuant to 18-203 of this title, the Court of Chancery, on application of any creditor, member or manager of the limited liability company, or any other person who shows good cause therefor, at any time, may either appoint 1 or more of the managers of the limited liability company to be trustees, or appoint 1 or more persons to be receivers, of and for the limited liability company, to take charge of the limited liability company's property, and to collect the debts and property due and belonging to the limited liability company, with the power to prosecute and defend, in the name of the limited liability company, or otherwise, all such suits as may be necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by the limited liability company, if in being, that may be necessary for the final settlement of the unfinished business of the limited liability company. The powers of the trustees or 7
acting. receivers may be continued as long as the Court of Chancery shall think necessary for the purposes aforesaid. 15. As noted above, the Receiver has been appointed and is so duly 16. Rule 153 of the Court of Chancery Rules provides: Unless otherwise ordered by the Court, within 15 days after the filing of a list of the creditors of the company, the Register in Chancery shall give to every known creditor of the company notice by mail to file their claims against the company within a certain time to be fixed in said notice, which shall not be less than 60 days after the mailing of said notices; and cause a like notice to be published in such newspaper or newspapers and for such time as shall be designated by the Court ; and forthwith file a report of the Register in Chancery s performance of the duty. 17. The Receiver seeks the relief requested in this Motion so that creditors of the receivership estate receive adequate notice of the time for filing claims in this proceeding. 1 Without the notice proposed by the Receiver, creditors will be unaware of when and where to file claims. The Receiver believes that the proposed notice, along with the website established by the Receiver, will provide creditors with ample notice and information for such creditors to file their claims in this proceeding. II. Approval of Waiver of Requirement of Newspaper Publication 1 Undersigned counsel for the Receiver has been advised by the Register in Chancery that the Register in Chancery will not provide the notice required by Rule 153. 8
18. For the reasons set forth in the Motion Of Fraas Services II, LLC As Interim Receiver Of Next Generation Vending, LLC For Entry Of Order Permitting The Receiver To Electronically Publish Notice Of This Proceeding And The Appointment Of The Receiver On Next Generation Vending, LLC s Website In Lieu Of Publication (Docket No. 10), the Receiver respectfully requests that the requirement that notice of the Record Date be published in a newspaper be waived. 19. The Receiver submits that publication of notice in a newspaper or periodical would be inordinately expensive. Based upon estimates received by the Receiver, the Receiver expects that it will cost between $14,000 and $24,000 to publish notice in a national newspaper of general circulation for one day. Conversely, the Receiver submits that publishing notice in a newspaper or periodical of general circulation is not an effective manner of providing notice to the Company s creditors. 20. The Receiver submits that publication of notice on the Company s website is a more effective manner of communicating with the Company s creditors with respect to the Record Date. 21. The Receiver submits that under the circumstances, it is appropriate to permit the Receiver to publish notice of the Record Date on the Company s website in lieu of publication of notice in a newspaper of general circulation. 9
22. Accordingly, for the foregoing reasons, the Receiver respectfully submits that cause exists for granting the relief requested herein. NOTICE 23. Notice of this Motion will be given to the parties set forth on Exhibit B, including: (1) the Lenders, and (2) any other party having filed a notice of appearance and/or having requested service of notices in this matter. The Receiver submits that, under the circumstances, no other and further notice is required. WHEREFORE, the Receiver respectfully requests that this Court enter an order substantially in the form attached hereto as Exhibit B (i) establishing the Record Date and approving the form and manner of notice thereof, (ii) waiving the requirement of newspaper publication of the Record Date and (iii) granting the Receiver such other and further relief as is just and proper. Dated: August 29, 2014 GELLERT SCALI BUSENKELL & BROWN, LLC /s/ Michael G. Busenkell Michael G. Busenkell, Esq. (Del. Bar No. 3933) Ronald S. Gellert (No. 4259) 913 N. Market Street, 10 th Floor Wilmington, DE 19801 Tel: (302) 425-5800/Fax: (302) 425-5814 Counsel for Fraas Services II, LLC, Receiver of Next Generation Vending, LLC 10
EFiled: Aug 29 2014 02:16PM EDT Transaction ID 55960322 Case No. 9826-VCN
EFiled: Aug 29 2014 02:16PM EDT Transaction ID 55960322 Case No. 9826-VCN IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN RE ) ) Next Generation Vending, LLC, ) a Delaware limited liability company ) ) C.A. No. 9826-VCN [PROPOSED] ORDER (I) ESTABLISHING A RECORD DATE FOR ASSERTING CLAIMS AGAINST THE RECEIVERSHIP ESTATE, (II) WAIVING THE REQUIREMENT OF NEWSPAPER PUBLICATION OF THE RECORD DATE, AND (III) APPROVING THE FORM AND MANNER OF NOTICE THEREOF Upon consideration of the Motion (the Motion ) of Fraas Services II, LLC ( Fraas or Receiver ) of Next Generation Vending, LLC, a Delaware limited liability company (the Company ) for an order (i) establishing the Record Date and approving the form and manner of notice thereof, (ii) waiving the requirement of newspaper publication of the Record Date, and (iii) granting the Receiver such other and further relief as is just and proper; and the Court having reviewed the Motion; and it appearing that the Court has jurisdiction over the above-captioned matter pursuant to 6 Del. C. 18-805 and of the Motion pursuant to Rule 153 of the Court of Chancery Rules; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein, it is hereby ORDERED that the Motion is GRANTED; and it is further
ORDERERD THAT: 1. The Record Date shall be no less than sixty (60) days from the mailing of the Record Date to creditors. 2. The notice of the Record Date, attached to the Motion as Exhibit A, is hereby approved. 3. The Receiver is permitted to electronically publish notice of the Record Date on the Company s website in lieu of publication in a newspaper; and 4. The Receiver s requirement, pursuant to Court of Chancery Rule 153, to publish notice in a newspaper is hereby waived. Dated:, 2014 Vice Chancellor John W. Noble
EFiled: Aug 29 2014 02:16PM EDT Transaction ID 55960322 Case No. 9826-VCN