Case 08-37031-rld11 Doc 141 Filed 02/10/09
1 Susan S. Ford, OSB No. 84220
Thomas W. Stilley, OSB No. 88316
2 SUSSMAN SHANK LLP
1000 SW Broadway, Suite 1400
3 Portland, OR 97205-3089
Telephone: (503) 227-1111
4 Facsimile: (503) 248-0130
E-Mail: susanf@sussmanshank.com
5 tom@sussmanshank.com
6 Attorneys for Debtor in Possession
7
8 IN THE UNITED STATES BANKRUPTCY COURT
9 DISTRICT OF OREGON
10 In re )
) Case No. 08-37031-rld11
11 Summit Accommodators, Inc., an Oregon )
corporation, dba Summit 1031 Exchange, ) JOINT MOTION OF DEBTOR AND
12 ) OFFICIAL COMMITTEE OF
Debtor. ) UNSECURED CREDITORS TO
13 ) SUBSTITUTE OBSIDIAN FINANCE
) GROUP, LLC FOR TYRELL B. VANCE,
14 ) LLC AS CHIEF RESTRUCTURING
) OFFICER FOR THE DEBTOR
15
16
17 Pursuant to 11 USC § 327(a), Summit Accommodators, Inc., dba Summit 1031
18 Exchange (“Debtor”) and the Official Committee of Unsecured Creditors (“UCC”) move
19 the Court for entry of an order substituting Obsidian Finance Group, LLC (“Obsidian”)
20 for Tyrell B. Vance, LLC (“Vance”) as Chief Restructuring Officer of the Debtor, and
21 represent as follows:
22 1. On December 22, 2008, Debtor filed its Application to Employ Obsidian as
23 its financial consultant to provide professional services in connection with the
24 administration of this case (the “Application”). The hearing originally scheduled on the
25 Application has been continued. Obsidian has been providing such services in the case
26 since the petition date.
Page 1 of 3 – JOINT MOTION OF DEBTOR AND OFFICIAL COMMITTEE OF UNSECURED
CREDITORS TO SUBSTITUTE OBSIDIAN FINANCE GROUP, LLC FOR TYRELL B.
VANCE, LLC AS CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR
SUSSMAN SHANK LLP, ATTORNEYS AT LAW
1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089
TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130
Case 08-37031-rld11 Doc 141 Filed 02/10/09
1 2. The Debtor and the UCC have been negotiating the terms of a trust or
2 assignment agreement with the Debtor’s shareholders, pursuant to which the Debtor’s
3 shareholders will agree to assign individual interests in their respective assets to a
4 trustee of a trust or assignee to pay creditors in the above-referenced case. Such
5 negotiations have been ongoing but are anticipated to be completed in the very near
6 future.
7 3. In the interests of economy, the role of CRO of the Debtor and the role of
8 the trustee or assignee described in paragraph 1, above, can be more efficiently
9 handled by a single entity. Vance is willing to substitute Obsidian in Vance’s role as
10 CRO and Obsidian is willing to accept the substitution.
11 4. Obsidian’s substitution and proposed employment as CRO of the Debtor
12 shall be pursuant to the CRO Retention agreement attached hereto as Exhibit “A”,
13 except as otherwise ordered by the Court. Obsidian’s employment as financial
14 consultant shall be pursuant to the Application and the order entered thereon following
15 the continued hearing. Upon entry of an order granting this Motion, Obsidian’s
16 employment as financial consultant pursuant to the Application shall terminate.
17 Thereafter, Obsidian will provide financial expertise as part of its role as CRO of the
18 Debtor.
19 5. As CRO of the Debtor, Obsidian shall be responsible to and only to the
20 Court and shall act as a fiduciary of the estate in the same manner that the Court
21 approved the retenion of Vance. Obsidian shall not be responsible to nor shall Obsidian
22 take actions pursuant to any instructions by the Debtor’s existing Board of Directors,
23 officers or shareholders. Obsidian shall be the exclusive holder of the attorney-client
24 privilege of the Debtor. To the extent that Obsidian shares any privileged information
25
26
Page 2 of 3 – JOINT MOTION OF DEBTOR AND OFFICIAL COMMITTEE OF UNSECURED
CREDITORS TO SUBSTITUTE OBSIDIAN FINANCE GROUP, LLC FOR TYRELL B.
VANCE, LLC AS CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR
SUSSMAN SHANK LLP, ATTORNEYS AT LAW
1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089
TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130
Case 08-37031-rld11 Doc 141 Filed 02/10/09
1 or attorney work product with the UCC or its professionals, the movants request that the
2 Court order that such disclosure shall not constitute a waiver of any applicable privilege.
3 6. To the fullest extent permitted by law, Debtor shall indemnify, defend and
4 hold harmless Obsidian as CRO from and against all claims, liabilities, losses and
5 damages incurred by it to any third party as a result of the performance of Obsidian’s
6 duties hereunder, except that Obsidian shall not be entitled to indemnification from the
7 Debtor for any breach of fiduciary duty or negligence by Obsidian as CRO.
8 7. Compensation of Obsidian as CRO shall be in accordance with 11 USC §
9 330. The retainer paid to Obsidian by Debtor prior to the Petition Date shall be subject
10 to any reservation of creditors to assert that the retainer payment to Obsidian is property
11 of a particular creditor, rather than of Debtor or the estate. The retainer shall not be
12 applied without Court approval pursuant to § 330.
13 Dated this 10 day of February, 2009.
14 SUSSMAN SHANK LLP
15 /s/ Susan S. Ford
___________________________________________
16 Susan S. Ford, OSB No. 84220
Thomas W. Stilley, OSB No. 88316
17 Attorneys for Debtor and Debtor-In-Possession
18
19
20 PERKINS COIE LLP
21 /s/ Steven M. Hedberg
__________________________________________
22 Steven M. Hedberg, OSB No. 842440
Jeanette L. Thomas, OSB No. 980420
23 Attorneys for Unsecured Creditors’ Committee
24
25
26
Page 3 of 3 – JOINT MOTION OF DEBTOR AND OFFICIAL COMMITTEE OF UNSECURED
CREDITORS TO SUBSTITUTE OBSIDIAN FINANCE GROUP, LLC FOR TYRELL B.
VANCE, LLC AS CHIEF RESTRUCTURING OFFICER FOR THE DEBTOR
SUSSMAN SHANK LLP, ATTORNEYS AT LAW
1000 SW BROADWAY, SUITE 1400, PORTLAND, OREGON 97205-3089
TELEPHONE (503) 227-1111 | FACSIMILE (503) 248-0130
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Summit Accommodators, Inc.
C/O Ms. Susan Ford
Sussman Shank LLP
1000 SW Broadway
Suite 1400
Portland, Oregon 97205
Re: Retention of Obsidian Finance Group, LLC
Dear Sirs:
1. Introduction
This letter confirms that Obsidian Finance Group, LLC (“Obsidian”), has been retained
by Summit Accommodators, Inc. (the “Company”) to serve as Chief Restructuring
Officer (the “Services”) for the Company. The scope of our services is set out below. As
used herein, “you,” “your” and related terms will refer to the Company; “we,” “ours” and
“us” and related terms will refer to Obsidian.
Obsidian has previously filed its application to provide financial advisory services (the
“Financial Advisory Services”) and services relating to the liquidation of various assets
including LLC membership interests and real property interests that we understand will
be made available to the Creditors of the Company (the “Liquidation Services”). Upon
retention as Chief Restructuring Officer, the Financial Advisory Services will be
subsumed into the Chief Restructuring Officer role.
2. Scope of Services
The scope of services to be performed will be related to managing the Company in its
restructuring efforts and other services that become necessary from time to time. The
Services, which are more fully outlined on Schedule A, are subject to change by mutual
agreement.
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Page 2
3. Fees and Expenses
As compensation for providing Services hereunder, the Company shall pay Obsidian
professional fees based on an hourly rate schedule and the level of staff required to
complete our Services plus reasonable out-of-pocket expenses.
Our current hourly rate schedule is set forth on Schedule B.
Company has paid Obsidian a retainer of $100,000 to be credited to the professional fees
and expenses to be incurred by the Company under this Engagement. The retainer was
paid on December 19, 2008. It is refundable to the extent not required to pay
professional fees and expenses.
Our hourly rates are adjusted from time to time. You will be informed in advance of the
effective date of such new rates. Obsidian services will be charged at the rates that are in
effect at the time the services are rendered.
The Company agrees to reimburse Obsidian for reasonable out-of-pocket expenses that
are likely to be incurred on the Company’s behalf during this Engagement, including, but
not limited to, airfare, meals and hotel accommodations and other similar costs and
expenses all in accordance with the limitations on such expenses under the U.S. Trustee
Guidelines. Obsidian will not charge any markup, overhead, profit or other fees on the
reimbursable expenses. Expenses will be billed in conjunction with our monthly
professional fee statements.
4. Limitations on Services
While Obsidian's employees are professionals – including attorneys and certified public
accountants – Obsidian is not a law firm or accounting firm and it does not give legal, tax
or accounting advice. Clients of Obsidian and companies transacting with Obsidian are
responsible for providing all necessary legal, tax and accounting advice. Obsidian's
principals and employees will expect to work closely with those professionals.
5. Conflicts of Interest
Obsidian has undertaken a review of our records to determine Obsidian’s professional
relationships with the Company and its stakeholders. Obsidian reviews current and
former client lists and, to the best of our knowledge, checks those lists against the
debtors, creditors, and any other party in interest, their respective attorneys and
accountants, the U.S. Trustee, and any other person employed in the office of the U.S.
Trustee. Based on our review, Obsidian has not been engaged to represent any other
client over the past twelve months in relation to the Company, except to the extent that
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Page 3
our representation of another client incidentally related to the Company on an indirect
basis and was not material to the scope of the particular engagement.
Obsidian is not aware of any conflicts of interest or additional relationships that we
believe would preclude us from performing the Services.
6. Indemnification
Company will, to the extent allowable by law, indemnify Obsidian, its owners,
employees, and contractors against any and all claims arising out of, connected with or
related to the services performed under this letter, whether or not such claims are
attributable to negligence by Obsidian, except to the extent the liability was caused by the
grossly negligent or willful acts or omissions of Obsidian employees, or contractors in
performing the services, each as finally adjudicated by a court of law.
If Obsidian is called on to render services directly or indirectly relating to the subject
matter of this Agreement beyond the services contemplated above, (including, but not
limited to, producing of documents, answering interrogatories, giving depositions, giving
expert or other testimony, whether by agreement, subpoena or otherwise), Company shall
pay our then-current hourly rates for the staff members and professionals involved for the
time expended in rendering such services, including, but not limited to, time for
meetings, conferences, preparation and travel, and all related costs and expenses, and the
reasonable legal fees and expenses of our counsel.
In no event will Obsidian or any of its members or employees (together the “Obsidian
Group”) be liable for any claim asserted against the Company. Obsidian shall not have or
incur any liability to the Company for any act or omission in connection with, relating to,
or arising out of, Obsidian’s services, including the exercise of our business judgment,
except for liability for gross negligence, willful misconduct or knowing violation of the
law.
7. Assignment
This Agreement shall inure to the benefit of the parties and their successors and permitted
assigns. Neither party may assign this Agreement, in whole or in part, without the prior
written consent of the other. Any attempt to make such an assignment shall be void.
This Agreement is made solely for the benefit of the parties hereto, and no third party
shall acquire any claim against Obsidian as a result of this Agreement.
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Page 4
If you have any questions regarding this letter or Schedules A and B, please do not
hesitate to contact me at (503) 542-8870.
Sincerely,
OBSIDIAN FINANCE GROUP, LLC
By: _______________________________
Kevin Padrick
Senior Principal
Schedule A – Services
Schedule B – Hourly Rates
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Schedule A
SCHEDULE A
Services
Obsidian is appointed Chief Restructuring Officer with the power to take possession of,
and to control, manage, operate and/or liquidate Company and all of Company’s assets,
wherever located, for the benefit of Company and its creditors, including without
limitation in its proceeding under Chapter 11 of the United States Bankruptcy Code,
subject to the direction and supervision of the Court.
Without limiting the generality of the foregoing, Obsidian shall have the following
specific powers and duties:
• To take charge, control and possession of all of Company’s assets, operations,
books, and records;
• To investigate any and all transactions by Company, its finances and status of
all its accounts;
• To collect, manage, secure, and preserve all of Company’s assets, books, and
records, including without limitation its exchange accounts;
• Excepting the exchange accounts, to liquidate all of Company’s assets in
Obsidian’s reasonable business judgment for the benefit of Company and its
creditors;
• With approval of the Court, effect exchange transactions in a manner designed
to mitigate potential claims;
• To make such payments and disbursements from Company’s operating
accounts as Obsidian deems reasonably necessary and appropriate to facilitate
the Services and ensure the continued operation of Company’s business
during the restructuring period;
• To investigate and pursue any and all claims of Company against any person
or entity as Obsidian deems appropriate in the exercise of its reasonable
business judgment, including without limitation, claims under existing bonds
and insurance policies;
• To give such notices as the law requires or Obsidian may deem necessary;
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Schedule A
• To contract with, hire, pay, direct, discipline, suspend, or discharge any and
all persons without cause (including Company’s existing officers and
employees) that is in Obsidian’s sole judgment necessary for the restructuring
of Company and/or the ongoing liquidation or disposition of any of
Company’s assets for the benefit of Company or its creditors;
• To select, employ, supervise, instruct, and pay legal counsel, accountants,
other professionals and other persons or entities for Company as necessary in
Obsidian’s judgment to assist Obsidian in performing its powers and duties
hereunder;
• To obtain and maintain adequate insurance;
• To enter into, modify, or terminate any contracts and leases related to
Company or its assets and operations as Obsidian deems necessary;
• To institute, prosecute, defend, compromise, intervene in, or become a party
to, by substitution or otherwise, such actions or proceedings in state or federal
court as may in Obsidian’s reasonable business judgment be necessary and
proper for carrying out its powers and duties hereunder, or to carry out the
terms of this Agreement;
• To review the books and records of Company to determine if any improper
transfers or conveyances were made, or transfers that may be avoidable by
Company as Debtor-in-Possession under Chapter 5 of the Bankruptcy Code
and to pursue any action, which shall in Obsidian’s reasonable business
judgment, be appropriate or required to recover any assets and transfers as
may be recoverable for the benefit of Company and its creditors; and
• To make all decisions and exercise all powers and rights as CRO for
Company, acting as Debtor-in-Possession, in its Chapter 11 case.
Case 08-37031-rld11 Doc 141 Filed 02/10/09
February 9, 2009
Schedule B
SCHEDULE B
Hourly Rates
Position Rate
Senior Principals $ 600
Managing Directors $ 450
Vice Presidents $ 450
Assistant Vice Presidents $ 400
Associates $ 300
Project Analysts $ 200 to 300
Analysts $ 250
Administrative $ 100 to 125
Case 08-37031-rld11 Doc 141 Filed 02/10/09
January 7, 2009
Schedule C
Case 08-37031-rld11 Doc 141 Filed 02/10/09
1 CERTIFICATE OF SERVICE
2 I, Linda R. Scott, declare as follows:
3 I am employed in the County of Multnomah, State of Oregon; I am over the age
4 of eighteen years and am not a party to this action; my business address is 1000 SW
5 Broadway, Suite 1400, Portland, Oregon 97205-3089, in said County and State.
6 I certify that on February 10, 2009, I served, via overnight mail, a full and
7 correct copy of the foregoing JOINT MOTION OF DEBTOR AND OFFICIAL
8 COMMITTEE OF UNSECURED CREDITORS TO SUBSTITUTE OBSIDIAN FINANCE
9 GROUP, LLC FOR TYRELL B. VANCE, LLC AS CHIEF RESTRUCTURING OFFICER
10 FOR THE DEBTOR. to the parties of record, addressed as follows:
11 See attached list.
12 I also certify that on February 10, 2009, I served the above-referenced
13 document(s) on all ECF participants as indicated on the Court’s Cm/ECF system.
14 See attached list.
15 I swear under penalty of perjury that the foregoing is true and correct to the best
16 of my knowledge, information, and belief.
17 Dated: February 10, 2009.
18
19 /s/ Linda R. Scott
___________________________________________
20 Linda R. Scott, Legal Assistant
21
22
F:\CLIENTS\20304\002\CERTIFICATE OF SERVICE\CERT MOT SUB.DOC
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Page 1 of 1 – CERTIFICATE OF SERVICE
SUSSMAN SHANK
Sussman Shank LLP
ATTORNEYS AT LAW
1000 SW BROADWAY, SUITE 1400
PORTLAND, OREGON 97205-3089
TELEPHONE (503) 227-1111
Case 08-37031-rld11 Doc 141 Filed 02/10/09
MASTER SERVICE LIST
In re Summit Accommodators, Inc. dba Summit 1031 Exchange
Case No. 08-37031-rld11
Summit Accommodators, Inc. Ronald R. Miller
dba Summit 1031 Exchange 18775 Pinehurst Rd.
1567 SW Chandler Ave., Ste. 101 Bend, OR 97701
Bend, OR 97702
Debtor Nodding Onion, LLC
c/o Rolland B. Andrews
Securities and Exchange Commission 629 Lower Valley Rd
SEC Headquarters Kalispell, MT 59901
100 F Street, NE
Washington, DC 20549 Points West Holdings, Inc.
c/o Ron W. Jones
IRS 291 East 1400 South #6
PO Box 21126 St. George, UT 84790
Philadelphia, PA 19114
Tenneson Engineering Corp.
IRS c/o Ben Beseda
1220 SW Third Ave. M/S 0240 3313 W Second Str, St.100
Portland, OR 97204 The Dalles, OR 97058
TENNANT INVESTORS
c/o Annie Tennant Buell
6200 Buena Vista Drive
Vancouver, WA 98661
Ph: (360) 694-8119
Fax: (360) 936-1142
Email: anniebuell@gmail.com
Creditors’ Committee Chair
CHARLES MOSTER
620 Congress Ave #320
Austin, TX 78701
Alessandro Family Trust
c/o Michael Alessandro
880 Snow King Ave
Jackson, WY 83001
Bull Creek Apartments Ltd.
c/o Diana G. Zuniga
602 W.7th Str
Austin, TX 78701
Lewis Interests, Ltd
c/o William C. Pollard
800 Rio Grande
Austin, TX 78701
Bert Manuel
1821 Samuel James Ct
Yuba City, CA 95993
Page 1 – Service List