2-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 1 of 8
background image
2
BACKGROUND
4.
On or about June 15, 2012 (the “Filing Date”), the Debtor filed a voluntary
petition for reorganization pursuant to Chapter 11 of the Bankruptcy Code.
5.
Thereafter the instant proceedings were referred to your Honor for administration
under the Bankruptcy Code.
6.
The Debtor has continued in possession of its property and the management of its
business affairs as debtors-in-possession pursuant to §§1107 and 1108 of the Bankruptcy Code.
7.
On July 6, 2012, an Official Committee of Unsecured Creditors (the
“Committee”) was appointed by the United States Trustee, and the law firm of ASK Financial has
been retained as its substituted counsel for Neiger LLP. Neither a trustee nor an examiner have
been heretofore appointed.
8.
The Debtor is the parent of thirty-one (31) wholly-owned subsidiaries, which are
not debtors herein (the “Non-Debtor Affiliates”). Substantially all of the Non-Debtor Affiliates
are inactive and, except as otherwise described, have minimal or no assets or liabilities as of the
Petition Date.
9.
The Debtor entity that is now known as Atrinsic, Inc. was originally incorporated
under the name Millbrook Acquisition Corp. on or about February 3, 1994. On or about May 2,
2007, Millbrook Acquisition Corp. changed its name to New Motion, Inc. On or about February
4, 2008, New Motion, Inc. merged (the “Merger”) with Traffix, Inc., pursuant to which Traffix,
Inc. became a wholly-owned subsidiary of New Motion, Inc. On or about June 25, 2009, New
Motion, Inc. changed its name to Atrinsic, Inc.
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 2 of 8
background image
3
10.
Prior to the Petition Date, , the Debtor was a marketer of direct-to-consumer
subscription products and an internet search-marketing agency. The Debtor sold entertainment
and lifestyle subscription products directly to consumers, which the Debtor marketed through the
Internet. The Debtor also sold Internet marketing services to its corporate and advertising clients.
The Debtor developed its marketing media network, consisting of web sites, proprietary content
and licensed media, to attract consumers, corporate partners and advertisers. Unfortunately, due
to an exhaustion of working capital and continued operational the Debtor previously ceased its
operations and filed Chapter 11 to preserve and protect its assets pending filing of a contemplated
consensual plan of reorganization.
11.
Just prior to the Chapter 11 case, the Debtor entered into a Plan Support
Agreement with its prepetition secured lenders which contemplated the Debtor filing a plan of
reorganization within the first few weeks of the Chapter 11 case.
12.
To that end, the Debtor filed a Plan of Reorganization (“Plan”) and accompanying
Disclosure Statement (“Disclosure Statement”) with the Court on July 13, 2012. The Plan was
based upon a redistribution of the Debtor’s equity interests to all classes of creditors through
Section 1145 of the Bankruptcy Code.
13.
On August 17, 2012 the Securities and Exchange Commission (“SEC”) filed an
objection to, inter alia, approval of the Disclosure Statement (the “SEC Objection”).
14.
Since the time of the filing of the Plan and Disclosure Statement the Debtor, its
secured lenders and the Committee have been in concerted negotiations concerning, inter alia, a
consensual plan of reorganization.
15.
The Debtor has recently been represented with two separate alternatives to re-
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 3 of 8
background image
4
commence its business operations. One of the alternatives contemplates a reverse merger with an
active telecom company backed by an infusion of millions of dollars of new working capital into
the Debtor. The other alternative contemplates a re-commencement of the advertising business
with additional capital and a contemplated joint venture with another existing media company.
16.
Both of these options, if consummated, would provide the Debtor with the bona
fides and ability to file an amended Plan based upon an actual business plan, projections,
reorganization and distribution to all classes of creditors and equity interests.
17.
Negotiations are in a developed state yet require some additional, reasonable
amount of time to result in the formulation of an amended Plan, which Plan the Debtor is hopeful
will resolve the SEC Objection and be acceptable to the secured lenders and Committee,
respectively.
RELIEF REQUESTED
18.
The exclusive time within which the Debtor may file a plan of reorganization
(“Plan Exclusivity”) is scheduled to expire on October 12, 2012 and the exclusive time within
which the Debtor may solicit acceptances to a plan of reorganization is scheduled to expire 60
days thereafter, or December 12, 2012 (“Solicitation Exclusivity”) (collectively, the "Exclusive
Periods"). The Debtor is proceeding by Notice of Motion brought prior to October 12, 2012, the
expiration of Plan Exclusivity, and thus the Court can grant the relief requested at the time of the
hearing.
19.
The Debtor hereby requests a further extension of the Exclusive Periods for filing a
plan of reorganization and seeking acceptances to said plan, respectively, for a period of one
hundred twenty (120) days and one hundred eighty (180) days, for the reasons stated both above
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 4 of 8
background image
5
and below. This request for an extension of said periods is made within the Debtor’s Exclusive
Periods as provided in 11 U.S.C. Section 1121(d).
BASIS FOR RELIEF
20.
11 U.S.C. § 1121 (d) provides as follows:
"On request of a party in interest made within the respective periods specified
in subsections (b) and (c) of this section and after notice and a hearing, the court may
for cause reduce or increase the 120-day period or the 180-day period referred to in
this section."
21.
Pursuant to 11 U.S.C. 1121, the Debtor must show cause for the extension of the
exclusive period. See, e.g. In re Texaco, Inc., 76 B.R. 322, 326 (Bankr. S.D.N.Y. 1987).
22.
The Debtor submits that cause indeed exists for the further extension of the
Exclusive Periods for several reasons. First, the Debtor was occupied in the early stages of these
proceeding with, inter alia: (a) issues concerning use of cash collateral; (b) compliance with US
Trustee operating guidelines; (c) numerous creditor and shareholder inquiries; (d) negotiations with
the secured lenders and Committee; (e) formulation of a “re-start” business plan; and (f) the
formulation and filing of the initial Plan.
23.
The Debtor was further preoccupied with the preparation of Schedules of Assets and
Liabilities and monthly operating reports, which have been somewhat complex in light of the
Debtor’s need for reconciliation of its prepetition books and records.. The Debtor is current in the
filing of all of the foregoing.
24.
Finally, the Debtor has been further involved in providing information to the Board
of Directors, the secured lenders, Creditors Committee and responding to Creditors Committee
inquiry concerning its assets, liabilities, future business plans and ongoing expenses. The Debtor
submits it has been fully cooperating with the secured lenders and Committee in providing such
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 5 of 8
background image
6
information while trying to stay focused on formulating the revised Plan.
25.
These accomplishments and ongoing matters have resulted in the evaporation of the
Debtor’s exclusivity periods provided by 11 U.S.C. § 1121(b).
26.
As a result of all of the foregoing, the Debtor respectfully submits that it would be
prejudicial and detrimental to the Debtor, its creditors, its shareholders and the estate at large if the
Debtor was not given additional time to complete their negotiations with proposed plan funders,
joint venturers and/or merger candidates and formulate the revised Plan, all of which is absolutely
essential to the successful outcome of the Chapter 11 case.
27.
Termination of the Debtor’s Exclusive Periods will materially affect the Debtor’s
ability to continue the efforts referred to hereinabove, and any potential competing plan would
delay and complicate the Debtor’s effective reorganization.
28.
Such an event may cause the termination of the Debtor’s authority to use cash
collateral or result in a dismissal or conversion of the case to Chapter 7 or otherwise severely
prejudice the Debtor’s possibility of reorganizing. It is respectfully submitted that the value of
the Debtor’s assets would materially diminish if its hopeful imminent reorganization would
derailed or sidetracked.
29.
Therefore, the termination of the Debtor’s Exclusive Periods at this time would
have serious and prejudicial effects upon the Debtor’s estate and the Debtor’s administration of
the Chapter 11 proceeding.
30.
The Debtor respectfully submits that sufficient cause thus exists for the granting of
an extension for a period of 120 days for Plan Exclusivity and 180 days for Solicitation Exclusivity,
respectively, in order to allow the Debtor to complete the negotiations and tasks referred to
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 6 of 8
background image
7
hereinabove and to formulate a revised, confirmable plan of reorganization.
31.
It is respectfully submitted that the Debtor has been complying with its post-
petition obligations, performing its operations and administering its case in good faith, and
therefore extensions of time should be reasonably granted.
32.
Accordingly, the Debtor seeks an additional one hundred twenty (120) day period
within which it may exclusively file a plan of reorganization and an additional one hundred
eighty (180) days within which it may exclusively solicit acceptances to such plan pursuant to
Section 1121 of the Code.
WAIVER OF MEMORANDUM OF LAW
33.
The Debtor respectfully requests waiver of submission of a separate memorandum
of law in connection with this Motion, in that there are no novel or difficult legal issues presented
herein.
NOTICE
34.
Notice of this Motion has been provided to (i) Office of the United States Trustee;
(ii) counsel to the Debtor’s secured lenders; (iii) counsel to the Official Committee of Unsecured
Creditors; (iv) counsel to the SEC; and (v) parties who have filed notices of appearance. The
Debtor submits that said notice is adequate and proper.
CONCLUSION
35.
For all of the foregoing reasons, the Debtor respectfully requests entry of an order
extending the Exclusive Periods for respective periods of 120 days.
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 7 of 8
background image
8
WHEREFORE, the Debtor respectfully requests that the Court enter an order extending
the Debtor’s Plan Exclusive Period for a period of 120 days and extending the Debtor’s Solicitation
Exclusivity Period for a period of 180 days, together with such other and further relief as is just and
proper under the circumstances, for all of which no prior request has been made to this or any other
Court.
Dated: Harrison, New York
October 10, 2012
RATTET PASTERNAK, LLP
Attorneys for the Debtor
550 Mamaroneck Avenue
Harrison, New York 10528
(914) 381-7400
By:
/s/ Jonathan S. Pasternak
Jonathan S. Pasternak
12-12553-jmp Doc 58 Filed 10/10/12 Entered 10/10/12 15:49:44 Main Document
Pg 8 of 8
background image
1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------X
In re:
ATRINSIC, INC.,
Chapter 11
Case No. 12-12553 (JMP)
Debtor.
-------------------------------------------------------------X
ORDER FURTHER EXTENDING DEBTOR’S EXCLUSIVE
PERIODS PURSUANT TO 11 U.S.C. SECTION 1121(d)
UPON the Application (the "Application") of the above captioned debtor (the "Debtor"),
by its attorneys, Rattet Pasternak, LLP, for an Order pursuant to Section 1121 of the Bankruptcy
Code (the "Code") to further extend the Debtor’s exclusive periods (the “Exclusive Periods”) in
which to file a plan of reorganization (the "Plan") and to seek acceptances or rejections to the
Plan, respectively; and a hearing having been held on November 8, 2012, and it appearing that
adequate notice having been given; and upon due deliberation, that all objections, if any, having
either been resolved, withdrawn or overruled, and good and sufficient cause exists to grant the
relief requested to the extent set forth below, it is hereby
12-12553-jmp Doc 58-1 Filed 10/10/12 Entered 10/10/12 15:49:44 Exhibit
Proposed Order Pg 1 of 2
background image
