Champion Enterprises Inc. (fka CJHBQ)

[Madclown]

Appointment or Election of a Case Trustee

Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U.S. trustee can request the appointment of a case trustee or examiner at any time prior to confirmation in a chapter 11 case. The court, on motion by a party in interest or the U.S. trustee and after notice and hearing, shall order the appointment of a case trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement, or if such an appointment is in the interest of creditors, any equity security holders, and other interests of the estate. 11 U.S.C. § 1104(a). Moreover, the U.S. trustee is required to move for appointment of a trustee if there are reasonable grounds to believe that any of the parties in control of the debtor "participated in actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor's financial reporting." 11 U.S.C. § 1104(e). The trustee is appointed by the U.S. trustee, after consultation with parties in interest and subject to the court's approval. Fed. R. Bankr. P. 2007.1. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U.S. trustee convenes a meeting of creditors for the purpose of electing a person to serve as trustee in the case. 11 U.S.C. § 1104(b).

The case trustee is responsible for management of the property of the estate, operation of the debtor's business, and, if appropriate, the filing of a plan of reorganization. Section 1106 of the Bankruptcy Code requires the trustee to file a plan "as soon as practicable" or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. 11 U.S.C. § 1106(a)(5).

Upon the request of a party in interest or the U.S. trustee, the court may terminate the trustee's appointment and restore the debtor in possession to management of bankruptcy estate at any time before confirmation.11 U.S.C. § 1105.

http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html#casetrustee


Please don't ask if I own the stock, I'm only here because this has been painful to watch. Please just do a little research before you motion the court for something. You file an official motion as in "Motion for the Appointment of a Trustee" #1 know what that actually means and #2 know that an official motion requires your attendance in the courtroom, otherwise your motion is thrown in the garbage and the objectors prevail. The appointment of an Official Trustee means that the Trustee takes over the debtor's business. There is always a Trustee assigned to the case but rarely is one "Appointed". I hope you haven't sent those "motions" in yet.

I don't want to discourage anyone from acting to protect their rights and interests, just want to encourage a little more thought before action. Another thing you need to consider is how you are going to defend or explain away the following (because your request for an EC will be met with these and many other roadblocks):

1. Prove that the stock trading at $0.05 which is a market cap of less than $4 million and Bonds trading at 6.8% of par does not accurately reflect the true value of the company.

2. Successfully argue that goodwill and intangibles (which make up 64% of assets) should not be written to zero.

3. Show how the Unsecured Creditors are failing to represent your interests. How could an EC serve you better?

4. Successfully argue that there is a better offer out there for the company that exceeds the $50 Million offer for 61% of the new company remembering that this current offer was the best out of the 150 or so parties that were approached concerning a potential buyout. If there is not a better offer out there then show how the company can successfully restructure without a buyout.

5. Show how the $50 million dollar deal will pay off all secured parties in addition to the $180 million and all other unsecureds that sit in front of equity. As of July 4, 2009 there was about $440 million, (if not more by now) in front of an equity recovery between the debt and negative working capital. These guys in front would love to have an equity recovery because it would pay them in full. So far they have been unsuccessful in preventing the DIP lenders from hijacking the bankruptcy case. The original DIP terms called for a complete divestiture of the business within 90 days of the DIP. That amounts to a fire sale and that is what is going on right now. Look to some of the other manufactured home companies that went bankrupt in the last 18 months and see what kind of deals they got for their assets. Use that to assess your own expectations of what the company should sell for and whether the "stalking horse bid" is fair or not. Right now that Stalking horse bid in CJHBQ's does not even include one penny of recovery for the bonds or equity so you need to find a recent deal that did, so that you can argue there might be one out there for CJHBQ.

6. Show whether industry EBITDA multiples and current CJHBQ EBITDA levels suggest a "meaningful recovery" for equity in the event a sale cannot be consummated that preserves equity value.

If you look into and address some or even all of these issues in your request letters for an EC you will go much farther than just stating that you would like an EC while offering no proof as to whether it is warranted under statute, prior case law or current industry/market conditions. Having dealt with this for about 7 months before finding success in Chemtura's case and having written as many letters to the trustee as I did in re Chemtura, I can assure you the task before you is much bigger than saying "pretty please".

Best wishes.