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FENNEMORE CRAIG , P.C.
LAS V E G A S
Fennemore Craig, P.C. Laurel E. Davis (NV Bar No. 3005) Jon T. Pearson (NV Bar No. 10182) 300 South Fourth Street, Suite 1400 Las Vegas, Nevada 89101 Telephone: (702) 692-8000 E-mail: ldavis@fclaw.com E-mail: jpearson@fclaw.com Counsel for Debtor and Debtor-in-Possession
E-filed August 25, 2008
UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA In re XYIENCE INCORPORATED, a Nevada corporation, Debtor. Chapter 11 No. BK-S-08-10474-MKN DECLARATION OF OMER SATTAR IN SUPPORT OF THE DEBTOR’S PLAN OF REORGANIZATION Date of Hearing: August 26, 2008 Time of Hearing: 1:30 p.m. Location: 300 Las Vegas Blvd. South Courtroom #2 Las Vegas, Nevada 89101 I, OMER SATTAR, under penalty of perjury, hereby declare as follows: 1. I am the President of Xyience Incorporated (the “Debtor”). I am an adult and
competent to testify in court. This declaration is made based upon my personal knowledge, or upon my consultation with others on the Debtor’s staff with direct responsibility for the specific topics addressed in this declaration. If called upon to testify regarding these matters, I could and would do so. 2. 9001(5). ///
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I am the designated representative of the Debtor pursuant to Bankruptcy Rule
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ENNEMORE CRAIG , P.C. L AS V EGAS
3.
This Declaration is filed in support of the Debtor’s Plan of Reorganization (the
“Plan”), Docket No. 191.1 Debtor’s Assets 4. On March 6, 2008, the Debtor filed a Motion for Order Approving the Sale of
Property Free and Clear of Liens, Claims, et al. (“Sale Motion”). [Dkt. No. 149]. The Sale Motion came on for hearing on April 1, 2008, at which time the Bankruptcy Court approved the Sale Motion and Manchester Consolidated Corp. (“Manchester”) acquired the Debtor’s Assets free and clear of all liens and claims. [Dkt. No. 178]. Manchester acquired the Assets for a total consideration of $15,017,000, which consisted of a cash payment of the Manchester Sale Proceeds to the Debtor in the amount of $200,000, and assumption of more than $14.8 Million in secured debt – the secured claim held by Zyen – which included Zyen’s post-petition claim for the Zyen DIP Financing Loan. 5. The Debtor’s sale of Assets to Manchester closed on April 16, 2008. Nevada Title
Company continues to hold the Manchester Sale Proceeds of $200,000 in escrow, pending further Order of the Bankruptcy Court. 6. Post-petition, Fennemore Craig has held the $225,000 Administrative Carve Out in Based upon the Bankruptcy Court’s July 28, 2008, Order regarding
its Trust Account.
Professional fee applications (Dkt. No. 248), Fennemore Craig to applied $75,000 of the Administrative Carve Out in partial satisfaction of its fees and costs. 7. As of this date, the Debtor’s Assets consist of the Manchester Sale Proceeds of
$200,000, the remaining Administrative Carve Out of $145,125, a pending claim made on the Debtor’s Directors and Officers Insurance Policy, and all Litigation Claims, which is broadly defined in the Plan to include any Bankruptcy avoidance claims, the Shareholder Derivative Action pending as Adv. Proc. 08-1107, an action against Richard Bergeron pending as Adv. Proc. All Defined terms in this Declaration shall have the meaning set forth in the Plan and/or Disclosure Statement, unless otherwise stated herein.
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ENNEMORE CRAIG , P.C. L AS V EGAS
08-1082, and the Committee’s Action against Zyen pending as Adv. Proc. 08-1094. I believe that it is more appropriate to have the Liquidating Trustee, rather than the Debtor, should move forward with these Litigation Claims, and I have therefore not undertaken the necessary review and analysis to make preference and other demands or to move forward with the pending litigation on a substantive basis. 8. It is my business judgment as the Debtor’s authorized representative that a chapter
11 liquidation of the estate’s remaining assets under the supervision and control of a Liquidating Trustee would be more efficient and less expensive than a liquidation of this case after conversion of this case to a chapter 7 case. Administrative Expenses 9. On July 28, 2008, I authorized Fennemore Craig to apply its $75,000 post-petition
retainer in partial payment of its allowed first interim fee application. 10. On August 19, 2008, I authorized Fennemore Craig to pay from the Administrative
Carve Out $4,875 to the Office of the U.S. Trustee in payment of U.S. Trustee fees accrued through August 31, 2008. It is my understanding and belief that after application of this payment, the U.S. Trustee fees due from the Debtor are current, and there are no unpaid fees. Resignation as Liquidating Trustee and Selection of Alternative Trustee 11. The Debtor’s Disclosure Statement filed July 15, 2008 as Docket 231, and the
accompanying Liquidating Trust Agreement attached as Exhibit 2 both identified me as the Liquidating Trustee. 12. Subsequent to July 15, 2008, I decided to step down as the proposed Liquidating
Trustee because based upon further review and discussion with creditors and other parties in interest, I agreed that the most appropriate course of action in this case was for me to step down as the proposed liquidating trustee and to instead select an independent third party to act as Liquidating Trustee, and to allow the Official Committee of Unsecured Creditors (“Committee”) to act as a non-binding Advisory Board to the Liquidating Trustee.
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I believe that this
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ENNEMORE CRAIG , P.C. L AS V EGAS
arrangement is in the best interests of the Debtor, creditors and parties in interest. 13. Debtor’s counsel then served and filed a Supplement to the Disclosure Statement
on July 17, 2008 (Dkt. 238) which modified the definition for “Liquidating Trustee” making it clear that I would not serve as Liquidating Trustee and that I would instead locate a panel trustee to act in this role. 14. Thereafter, I researched appropriate candidates to act as Liquidating Trustee, and I
ultimately selected William A. (“Biff”) Leonard, Jr. who is a Nevada Chapter 7 panel Trustee. On July 31, 2008 (Dkt. 255), my counsel served and filed a Second Supplement to the Disclosure Statement was submitted identifying as the Liquidating Trustee, which included Mr. Leonard’s resume as Exhibit 3. Negotiations with the Committee 15. Since July 17, 2008, extensive discussions have been held among the Debtor and
the Committee, through counsel, in a good faith effort to resolve the Committee’s objections to the Debtor’s Plan and Disclosure Statement. Much of those discussions have centered around the scope of the Committee’s role as Advisory Board to the Liquidating Trustee, and whether or not the Advisory Board would have the final decision making power with respect to the pending litigation herein. Those discussions are ongoing, and I am hopeful that a mutually agreeable resolution can be reached prior to the Plan Confirmation hearing. 16. In the event that the Debtor and the Committee are not able to reach an amicable
resolution of the Committee concerns prior to August 26, 2008 at 1:30 p.m., I believe that it is in the best interests of the Debtor, estate, creditors and parties in interest to move forward with the Plan Confirmation hearing. Any further delay in commencing the Plan Confirmation hearing will unnecessarily increase chapter 11 administrative expenses to the detriment of the estate and its creditors. /// ///
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ENNEMORE CRAIG , P.C. L AS V EGAS
DATED: this 25th day of August, 2008. /s/ Omer Sattar OMER SATTAR
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ENNEMORE CRAIG , P.C. L AS V EGAS
CERTIFICATE OF SERVICE 1. On August 25, 2008, I served the following document(s):
DECLARATION OF OMER SATTAR IN SUPPORT OF THE DEBTOR’S PLAN OF REORGANIZATION
2. [x]
I served the above-named document(s) by the following means to the persons as listed below: a. ECF System (attach the "Notice of Electronic Filing" or list all persons and addresses): saebig@williamskastner.com
SHEENA R. AEBIG:
OGONNA M. ATAMOH: oatamoh@nevadafirm.com, bkecf@nevadafirm.com; paltstatt@nevadafirm.com; sliberio@nevadafirm.com; rmoss@nevadafirm.com KEITH MILES AURZADA: ANTHONY W. AUSTIN: JASON C. FARRINGTON: GREGORY E GARMAN: DOUGLAS D. GERRARD: JAMES D. GREENE: MATTHEW L. JOHNSON: kaurzada@pogolaw.com, grojas@pogolaw.com aaustin@lrlaw.com jason@corylaw.us bankruptcynotices@gordonsilver.com, bknotices@gordonsilver.com DGERRARD@GERRARD-COX.COM, ekaymedellin@gerrard-cox.com bknotice@bhfs.com bankruptcy@mjohnsonlaw.com, mjohnson@mjohnsonlaw.com; candice@mjohnsonlaw.com; mvermillion@mjohnsonlaw.com plawson@huntertonlaw.com
PAMELA R. LAWSON:
MATTHEW E. MCCLINTOCK: mmcclintock@bellboyd.com, sthoma@bellboyd.com AMBRISH S. SIDHU: ROBERT SPEAR: ecfnotices@sidhulawfirm.com rspear@hutchlegal.com, krigg@hutchlegal.com
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ENNEMORE CRAIG , P.C. L AS V EGAS
U.S. TRUSTEE - LV – 11: MATTHEW C. ZIRZOW: [] addresses): [] b.
USTPRegion17.lv.ecf@usdoj.gov bankruptcynotices@gordonsilver.com, bknotices@gordonsilver.com
United States mail, postage fully prepaid: (list persons and
c.
Personal Service (List persons and addresses): [] For a party represented by an attorney, delivery was made by handling the document(s) to the attorney or by leaving the document(s) at the attorney's office with a clerk or other person in charge, or if no one is in charge by leaving the document(s) in a conspicuous place in the office. For a party, delivery was made by handing the document(s) to the party or by leaving the document(s) at the person's dwelling house or usual place of abode with someone of suitable age and discretion residing there.
[]
[x]
d.
By direct email (as opposed to through the ECF system) (list persons and email addresses): Augie.landis@usdoj.gov Based upon the written agreement of the parties to accept service by email or a court order, I caused the document(s) to be sent to the persons at the email addresses listed below. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful.
AUGUST LANDIS:
[]
e.
By fax transmission (list persons and fax numbers): Based upon the written agreement of the parties to accept service by fax transmission or a court order, I faxed the document(s) to the persons at the fax numbers listed below. No error was reported by the fax machine that I used. A copy of the record of the fax transmission is attached.
[]
f.
By messenger: I served the document(s) by placing them in an envelope or package addressed to the persons at the addresses listed below and providing them to a messenger for service. (A declaration by the messenger must be attached to this Certificate of
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ENNEMORE CRAIG , P.C. L AS V EGAS
Service). I declare under penalty of perjury that the foregoing is true and correct. DATED this 25th day of August, 2008. /s/ Mia Hurtado An Employee of Fennemore Craig, P.C.
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