Main Document Page 1 of 8 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF NEW YORK In re: Case No. 15-31160 COYNE INTERNATIONAL ENTERPRISES CORP.,I Chapter 7 Case Debtor. MOTION OF THE CHAPTER 7 TRUSTEE FOR ENTRY OF AN ORDER AUTHORIZING THE ABANDONMENT, DISPOSAL AND/OR DESTRUCTION OF CERTAIN BOOKS AND RECORDS OF THE DEBTOR William J. Leberman, Esq., the chapter 7 trustee (the "Trustee") appointed in the abovecaptioned chapter 7 case of Coyne International Enterprises Corp. (the "Debtor"), by and through his counsel Bond, Schoeneck &King, PLLC hereby moves (the "Motion") the United States Bankruptcy Court for the Northern District of New York (the "Court") for entry of an order, pursuant to section 105, 363 and 554 of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the "Bankruptcy Code"), Rule 6007 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") and Local Rule 6007-1 of the Local Bankruptcy Rules for the Northern District of New York (the "Local Rules"), authorizing the abandonment, disposal and/or destruction of certain books and records that, in the judgment of the Trustee, are surplus, obsolete or unduly burdensome to the chapter 7 estate or unnecessary to the administration of the chapter 7 estate (the "Obsolete Records"). In support of this Motion, the Trustee respectfully represents as follows: JURISDICTION AND VENUE the Bankruptcy Code. The Court has jurisdiction to consider this Motion pursuant to 157 and 1334 of ' The last four digits of the Debtor's federal taxpayer identification number are 0758. 2687201.4 5/12/2016
Main Document Page 2 of 8 2. This is a core proceeding under 157(b). 3. Venue of this case and this Motion is proper in this Court pursuant to 1408 and 1409 of the Bankruptcy Code. 4. The statutory predicates for relief requested herein are 105, 363 and 554 of the Bankruptcy Code, Rule 6007 of the Bankruptcy Rules and Rule 6007-1 of the Local Rules. BACKGROUND 5. On July 31, 2015 (the "Petition Date"), the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in this Court. 6. During the chapter 11 case, the Debtor sold many of its assets, and on February 26, 2016 the chapter 11 case was converted to a chapter 7 case by Order dated December 23, 2015. On February 26, 2016, William J. Leberman was appointed as the chapter 7 trustee. 7. Upon the sale of the Debtor's assets and the conversion to chapter 7, all of the Debtor's satellite offices sent their paper records to the Debtor's headquarters in Syracuse, New York (the "Syracuse Headquarters"). Currently, there are over 2,500 boxes of paper records being stored at the Syracuse Headquarters. 8. The Trustee has carefully reviewed his duty to maintain the Debtor's business records balanced with his duty to maximize the value of the Debtor's estate for the benefit of creditors. Upon receipt of all of the Debtor's records in Syracuse, New York, the Trustee and Bond, Schoeneck &King, PLLC as special counsel to the Trustee have carefully reviewed and analyzed the voluminous records located at the Syracuse Headquarters. 9. Separately, the Trustee has taken steps to secure and take possession of electronic business records of the Debtor. These electronic records are now stored on data storage devices under the Trustee's control 2
Main Document Page 3 of 8 10. Currently, the Syracuse Headquarters is under contract to be sold. Notice of the sale was provided in accordance with the Order Authorizing and Approving Expedited Procedures for the Sale, Transfer or Abandonment of De Minimis Assets [Docket No. 563], whereby the Court authorized the Debtor to sell certain assets with a selling price equal to or less than $200,000. The parties intend to close by the end of May 2016. As such, the Trustee has until approximately the end of May, 2016 to remove all records and other assets from the building. 1 1. The Trustee has begun to segregate and dispose of certain documents that would have been destroyed in the ordinary course of business, and now wishes to further abandon, destroy and/or discard the Obsolete Records, which, if kept, will be a significant financial drain on the estate. 12. The Trustee will not abandon, destroy and/or discard any business records that the Trustee has a duty to maintain pursuant to federal and state law. Further, all Obsolete Records will be abandoned, destroyed and/or discarded in compliance with Rule 6007-1(b) of the Local Rules. RELIEF REQUESTED 13. By this Motion, the Trustee seeks entry of an order modifying the requirements of Local Rule 6007-1, authorizing the Trustee to abandon, destroy and/or discard the Obsolete Records, which are burdensome, of inconsequential value to the estate, and not relevant to the wind-down of the estate, resolution of claims, and any pending or potential litigation.
Main Document Page 4 of 8 BASIS FOR RELIEF REQUESTED 14. Section 554(a) of the Bankruptcy Code provides that "[a]fter notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate." 11 U.S.C. 554(a). 15. Section 363 of the Bankruptcy Code further provides that "[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate." 11 U.S.C. 363(b)(1). 16. In addition, section 105 of the Bankruptcy Code provides, in pertinent part, that "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. 105(a). 17. "The abandonment power embodied in section 554 enables the trustee to rid the estate of burdensome or worthless assets, and so speeds the administration of the estate...and also protects the estate from diminution." In re Quanta Resources Corp., 739 F.2d 912, 915 (3d Cir. 1984). 18. In reviewing a trustee's decision to abandon property that is either of inconsequential value or burdensome to the Debtor's estate, the Court should apply the business judgment standard. See In re Slack, 290 B.R. 282, 284 (Bankr. D. N.J. 2003} ("The trustee's power to abandon property is discretionary... The court only needs to find the trustee made: 1) a business judgment; 2) in good faith; 3) upon some reasonable basis; and 4) within the trustee's scope of authority."); see also Frostbaurn v. Ochs, 277 B.R. 470, 475 (E.D.N.Y. 2002) (stating that a trustee is to use "his best business judgment in deciding when... to renounce title to and abandon burdensome property" pursuant to section 554 of the Bankruptcy Code) (internal citations omitted). 0
Main Document Page 5 of 8 19. As a result of the sale of substantially all of the Debtor's assets during the administration of the Debtor's chapter 11 case, the chapter 7 estate no longer needs to retain the Obsolete Records in its possession, custody or control. Accordingly, abandonment, disposal and/or destruction of the Obsolete Records are warranted under sections 105(a), 363(b)(1) and 554(a) of the Bankruptcy Code. 20. The Trustee took possession of 2,500 boxes upon the conversion of the Debtor's chapter 11 case to chapter 7, a substantial portion of which contain the Obsolete Records, at the Syracuse Headquarters. As the building is under contract to be sold, the Trustee will soon lose the ability to store the Obsolete Records free of charge. It would be overly burdensome and financially irresponsible to move all of the Obsolete Records to a storage facility. 21. The Trustee has undertaken a general review of the Debtor's books and records to determine (i) which of the books and records the Trustee may appropriately abandon, discard and otherwise dispose, and (ii) which of the records must be shredded due to the existence of confidential information, pursuant to Rule 6007-1(b) of the Local Rules. 22. The Obsolete Records include, for example, accounts payable, accounts receivable, work orders, route settlements, personnel, training, compensation, merchandise, engineering and similarly unneeded documents for certain time periods. The Trustee does not intend to dispose of any records that must be retained by statute for a certain period. 23. In addition, the Trustee intends to keep any document that is necessary to (i) the performance of the Trustee's duties and responsibilities, (ii) any pending litigation, (iii) the filing of any tax returns, (iv) the resolution of any claims of or against the estate, and (v) any potential causes of actions that the estate may have under Chapter 5 of the Bankruptcy Code or otherwise, 5
Main Document Page 6 of 8 including, without limitation, preference and avoidance actions pursuant to section 547 and 548 of the Bankruptcy Code. 24. The Trustee does not reasonably anticipate any prejudice befalling any party in interest in the event the Obsolete Records are discarded and destroyed. 25. Because the Debtor's estate has no proposed future operations and the Obsolete Records have no independent value to the estate, there is no need to keep the Obsolete Records. Further, the cost to store the Obsolete Records far exceeds any benefit of maintaining them. 26. The Trustee has determined that disposing of the Obsolete Records will further efforts to eliminate unnecessary costs and will provide for a more efficient administration of the estate, while at the same time discharging his duty to maintain business records as appropriate. 27. The Trustee is exploring various means of disposing of the Obsolete Records, including, without limitation, hiring a company to shred any Obsolete Records that contain confidential information in accordance with Rule 6007-1(b) of the Local Rules. 28. Accordingly, the Trustee respectfully requests authority to abandon, dispose and/or destroy the Obsolete Records as the Trustee deems reasonable and appropriate. 29. Finally, Rule 6007 of the Bankruptcy Rules provides, in pertinent part, that "[ujnless otherwise directed by the court, the trustee. shall give notice of a proposed abandonment or disposition of property to the United States trustee, all creditors, indenture trustees, and committees elected pursuant to 705 or appointed pursuant to 1102 of the Code." Fed. R. Bankr. P. 6007(a) (emphasis added). The Trustee does not believe that the destruction of the Obsolete Records implicates Rule 6007 of the Bankruptcy Rules, but is filing this Motion out of an abundance of caution, seeking this Court's approval for the Trustee's record retention and destruction decisions.
Main Document Page 7 of 8 30. Due to the nature of the Obsolete Records, the Trustee requests that this Court modify the service requirement of Bankruptcy Rule 6007 to eliminate service on all of the Debtor's creditors. Rather, the Trustee proposes that service of this Motion on the Office of the United States Trustee, any party filing a request for notice pursuant to Bankruptcy Rule 2002 and any parties known by the Trustee who may have an interest in any of the Obsolete Records that is the subject of this Motion is sufficient notice. NOTICE 31. Notice of this Motion has been provided to: (a) the Office of the United States Trustee; (b) any party filing a request for notice pursuant to Bankruptcy Rule 2002; and (c) any parties known by the Trustee who may have an interest in any of the Obsolete Property that is the subject of this Motion. In light of the nature of the relief requested herein, the Trustee submits that no other or further notice is necessary or required. ~7
Main Document Page 8 of 8 CONCLUSION WHEREFORE, the Trustee respectfully requests authority to abandon, discard and/or destroy the Obsolete Records pursuant to 105, 363 and 554 of the Bankruptcy Code, Rule 6007 of the Bankruptcy Rules and Rule 6007-1 of the Local Rules, and such other and further relief as this Court deems just and proper. Dated: May 12, 2016 Syracuse, New York BOND, SCHOENECK &KING, PLLC,~--~ By:,,~tephe~ A. D Yo F,, q. `~B~x--doll No. Bar Roll No. 101522) Charles J. Sullivan, Esq. (Bar Roll No. 507717) Sara C. Temes, Esq. (Bar Roll No. 514148) One Lincoln Center Syracuse, New York 13202 Facsimile: 315.218.8100 Email: sdonatonbsk.com csullivannbsk.com stemes cr,bsk.com Special Counsel to William J. Leberman, Chapter 7 Trustee