This week the co. filed a motion to extend the exclusivity of filing their POR(Docket # 1953)...in that motion which is copied below are some details of progress thus far--see paragraphs 12-15 regarding "inter-estate" and "LES mediation" progress...
Paul V. Shalhoub, Esq. (Admitted Pro Hac Vice) Rachel C. Strickland, Esq. (Admitted Pro Hac Vice) WILLKIE FARR & GALLAGHER LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 - and - Dion W. Hayes (VSB No. 34304) John H. Maddock III (VSB No. 41044) McGUIREWOODS LLP One James Center 901 East Cary Street Richmond, Virginia 23219-4030 (804) 775-1000 Attorneys for the Debtors and Debtors in Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION ------------------------------------------------------x In re : Chapter 11 : LandAmerica Financial Group, Inc., et al., : Case No. 08-35994 (KRH) : Debtors. : (Jointly Administered) ------------------------------------------------------x DEBTORS’ MOTION FOR ORDER EXTENDING CERTAIN DEBTORS’ EXCLUSIVE PERIODS TO FILE CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THERETO PURSUANT TO SECTION 1121(d) OF THE BANKRUPTCY CODE TO: THE HONORABLE UNITED STATES BANKRUPTCY JUDGE The debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”) hereby move this Court (the “Motion”) for entry of an order, pursuant to section 1121(d) of title 11 of the United States Code (the “Bankruptcy Code”), (a) extending the Exclusive Filing Period (as defined herein) during which LandAmerica Financial Group, Inc. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 1 of 24
-2- (“LFG”), LandAmerica 1031 Exchange Services, Inc. (“LES”), LandAmerica Title Company (“LandAm Title”), Southland Title Corporation, Southland Title of Orange County, and Southland Title of San Diego (the “Southland Entities,” and collectively with LFG, LES and LandAm Title, the “Initial Debtors”) have the exclusive right to file a chapter 11 plan, through and including October 15, 2009; (b) extending the Exclusive Solicitation Period (as defined herein) during which the Initial Debtors have the exclusive right to solicit acceptances of a chapter 11 plan, through and including December 15, 2009; and (c) allowing a further thirty (30) day extension of each of the Exclusive Filing Period and the Exclusive Solicitation Period upon written consent of the Creditors’ Committees (as defined herein) without further application to this Court, which further extended Exclusive Periods (as defined herein) shall apply to all Debtors. In support of this Motion, the Debtors, by and through their undersigned counsel, respectfully represent as follows: BACKGROUND 1. On November 26, 2008 (the “Petition Date”), LFG and LES each filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. On March 6, 2009, March 27, 2009, March 31, 2009 and July 17, 2009, various other LFG affiliates (LandAmerica Assessment Corporation (“LAC”), LandAm Title, the Southland Entities and LandAmerica Credit Services, Inc. (“LandAm Credit”)) each filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code, respectively. Pursuant to orders of this Court dated November 28, 2008, March 11, 2009, April 8, 2009, April 9, 2009 and July 22, 2009, the chapter 11 cases of the Debtors are being jointly administered under case number 08-35994. The Debtors continue to manage their properties as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in the Debtors’ chapter 11 cases. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 2 of 24
-3- 2. On December 3, 2008, the United States Trustee for the Eastern District of Virginia (the “U.S. Trustee”) appointed an Official Committee of Unsecured Creditors in the case of (a) LandAmerica Financial Group, Inc. (the “LFG Committee”), and (b) LandAmerica 1031 Exchange Services, Inc. (the “LES Committee,” and, together with the LFG Committee, the “Creditors’ Committees”). 3. On June 4, 2009, the U.S. Trustee filed his Amended Appointment of Unsecured Creditors’ Committee, adding two (2) additional members to the LES Committee. A. Ongoing Asset Sales 4. LFG is a holding company that operates through its various subsidiaries (collectively, with LFG, the “Company”). Prior to the Petition Date, approximately 85 to 90% of the Company’s revenue was derived from LFG’s primary title insurance underwriting subsidiaries – Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation, United Capital Title Insurance Company, and their respective subsidiaries (collectively, the “Underwriters”). On December 22, 2008, LFG sold its direct and/or indirect ownership of its stock in the Underwriters to Fidelity National Financial, Inc. (“FNF”), Fidelity National Title Insurance Company (“FNTIC”) and Chicago Title Insurance Company (“CTIC” and collectively with FNF and FNTIC, “Fidelity”) pursuant to this Court’s orders dated December 17, 2008 and December 21, 2008. 5. Since the sale of the Underwriters, LFG, with the assistance of its professionals, has successfully marketed, negotiated and consummated sales of several subsidiaries, which resulted in substantial value to the LFG estate. On March 20, 2009, this Court approved the sale of LandAmerica Valuation Corporation, a wholly-owned subsidiary of LFG that performed valuations on commercial real estate, to BB Valuation, Inc. (the “LVC Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 3 of 24
-4- Sale”). The LVC Sale closed on April 1, 2009, resulting in approximately $0.8 million in value for LFG’s estate. In addition, on March 25, 2009, this Court approved the sale of all or substantially all of the principal assets of LAC to Partner Assessment Corporation d/b/a Partner Engineering and Science (the “LAC Sale”). The LAC Sale closed on March 26, 2009, resulting in approximately $2 million in value for LAC’s estate. Furthermore, LFG sold its stock in its wholly-owned subsidiaries LoanCare Servicing Center, Inc. and LC Insurance Agency, Inc. (“LoanCare”). The sale of LoanCare was approved by this Court on May 21, 2009 and closed on June 3, 2009, resulting in approximately $15.9 million in value for LFG’s estate. Additionally, LFG sold its 22% ownership interest in RealEC Technologies, Inc. (“RealEC”) to LPS Asset Management Solutions, Inc., which resulted in approximately $2.6 million in value for LFG’s estate. Finally, LFG sold LandAmerica Home Warranty Company, LandAmerica Property Inspection Services, Inc., Buyers Real Estate Services, Inc. and Residential Property Maintenance, Inc. (the “Home Warranty”) to Buyers Protection Group, Inc. By order dated May 21, 2009, this Court approved the sale of Home Warranty, which is expected to result in over $11 million in value for LFG’s estate. 6. LFG continues to evaluate the Company’s remaining businesses to determine the manner in which to best maximize value, including through one or more sales of the Company’s remaining businesses and/or the prompt and orderly wind-down and liquidation of such businesses. B. Resolution of Material Claims 7. Since the Petition Date, the Debtors have worked diligently to resolve significant claims filed against their estates. The Debtors have settled certain prepetition and postpetition claims in accordance with the settlement procedures that were approved by this Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 4 of 24
-5- Court on May 21, 2009. Specifically, the Debtors have entered into consensual agreements terminating or amending several of their unexpired non-residential real property leases. In addition, the Debtors continue to negotiate the settlement of certain lawsuits that are pending against their estates. Finally, the Debtors have filed six (6) omnibus claim objections to expunge numerous claims against their estates. The Debtors continue to review the proofs of claim filed in theses cases and will continue to work to resolve such claims. 8. The Debtors and their professionals have also focused on resolving certain significant governmental claims. The Internal Revenue Service (“IRS”) has asserted various priority tax claims against the Debtors’ estates in excess of $54 million. The Debtors dispute the extent, validity and priority of such claims, and are engaged in negotiations with the IRS with respect to such tax claims. 9. In addition, the Pension Benefit Guarantee Corporation (the “PBGC”) has asserted claims against LFG’s and LES’s estates, each in the amount of $37.5 million, for the unfunded benefit liabilities of the LandAmerica Cash Balance Plan (the “Pension Plan”), which are contingent on the termination of the Pension Plan. The Debtors are working with the PBGC to value the potential costs of terminating the Pension Plan, to determine an appropriate manner in which to accomplish the termination, and ultimately to resolve or settle the PBGC’s claims. 10. The Debtors continue to address numerous complex issues relating to the sale of the Underwriters to Fidelity, including handling transition issues relating to the Fidelity sale. Specifically, LFG and its professionals have worked to separate LFG and its subsidiaries’ operations from the Underwriters pursuant to the Transition Services Agreement (the “TSA”), whereby LFG operated material elements of the Underwriters’ businesses (e.g., accounting, information technologies, human resources, etc.) pending their transition to Fidelity. The Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 5 of 24
-6- Debtors and their professionals have spent a significant amount of time in an effort to resolve issues with respect to reimbursement of services provided pursuant to the TSA and to reconcile amounts owed by and among the parties. C. Sale of Auction Rate Securities 11. In an effort to maximize the value of its estate, LES has also focused its efforts on marketing and selling its investments in subordinate student loan auction rate securities (“Auction Rate Securities”). LES currently holds twenty (20) tranches of Auction Rate Securities with a total face value of $201.7 million. As has been widely publicized, the market for auction rate securities froze in early 2008, and as a result, LES has been unable to liquidate the Auction Rate Securities at a price near their par value. Due to the nature of these assets, the sale of ARS has required prolonged discussions between the Debtors, the LES Committee and prospective brokers and purchasers. The Debtors anticipate filing a motion with the Court seeking approval of procedures to market and, if appropriate, sell the Auction Rate Securities. D. Plan Process 12. On May 21, 2009, the Court approved a protocol (the “Mediation Protocol”) providing for a two-step mediation of (a) certain inter-estate transactions between LFG and LES (the “Inter-Estate Mediation”), and (b) issues relating to a compromise plan of liquidation involving a global resolution of, among other things, certain litigation test cases (the “Lead Cases”),1 which share common legal and factual issues with other adversary proceedings pending against LES (the “LES Mediation”). 1 A fifth Lead Case was later designated. However, as LES consummated a Court-approved settlement with one of the Lead Case claimants, Health Care REIT, Inc., four Lead Cases now remain. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 6 of 24
-7- 13. The Inter-Estate Mediation, the first step of the Mediation Protocol, was designed to address the validity, priority, characterization or allowance of certain inter-estate transfers and, to the extent that such transfers are claims, the extent to which such claims should be avoided or disallowed under chapter 5 of the Bankruptcy Code as well as LES’ and LFG’s estates allocable share of liabilities associated with the claims asserted by the Internal Revenue Services and Pension Benefit Guarantee Corporation. Since the resolution of these inter-estate disputes would have a material impact on the recoveries of LFG’s and LES’ creditors, such issues needed to be addressed prior to the formulation of a plan. Due to the efforts of all involved, this mediation was a success. At the conclusion of the Inter-Estate Mediation on July 3, 2009, the Creditors’ Committees agreed to a proposed resolution for the treatment of all interestate issues. This resolution took the form of a term sheet that will be embodied in a plan of liquidation. 14. The second step of the Mediation Protocol, the LES Mediation, was designed to address a structure for a plan of liquidation encompassing a global resolution of, among other things, outstanding issues relating to the Lead Cases, including the resolution of whether certain customers were entitled to consequential damages and whether proceeds of sales of relinquished properties (the “Exchange Funds”) were held by LES in constructive trusts on behalf of their customers. Furthermore, the Mediation Protocol imposed a stay of the Lead Cases to alleviate the related litigation expenses and to enable the parties to focus on the mediation. As part of the LES Mediation, which concluded on July 14, 2009, the Creditors’ Committees and the Lead Case plaintiffs agreed to a proposed resolution of many of the outstanding issues related to the Lead Cases. Like the Inter-Estate Mediation, the LES Mediation resulted in a term sheet. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 7 of 24
-8- 15. Since the conclusion of the LES Mediation, the Debtors, with the input of the Creditors’ Committees, have worked diligently to document the resolution of the Inter-Estate Mediation and the LES Mediation in a consensual plan of liquidation. Since July 30, 2009, the Debtors and the Creditors’ Committees have exchanged over a dozen drafts of a proposed joint chapter 11 plan of liquidation and ancillary documents related thereto. There have been multiple conference calls between the professionals retained by the Debtors and the Creditors’ Committees to negotiate and finalize the terms of the plan. Given the diligent efforts of all involved, the Debtors are optimistic that they will be in a position to file a largely consensual plan in the near term. JURISDICTION 16. The Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). The statutory predicate for the relief sought herein is section 1121(d) of the Bankruptcy Code, as supplemented by Rule 9006(b)(1) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). RELIEF REQUESTED 17. Section 1121(b) of the Bankruptcy Code provides for an initial period of 120 days after the commencement of a chapter 11 case during which a debtor has the exclusive right to file a chapter 11 plan (the “Exclusive Filing Period”). Section 1121(c)(3) of the Bankruptcy Code provides that, if a debtor files a plan of reorganization within the Exclusive Filing Period, then it has an initial period of 180 days after the commencement of its chapter 11 case to solicit acceptances of such plan (the “Exclusive Solicitation Period” and, together with the Exclusive Filing Period, the “Exclusive Periods”). Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 8 of 24
-9- 18. By order of this Court dated July 22, 2009, the Exclusive Filing Period for the Initial Debtors was extended through and including September 15, 2009 and the Exclusive Solicitation Period for the Initial Debtors was extended through and including November 15, 2009 for each of the Initial Debtors. 19. In addition, LAC’s current Exclusive Filing Period ends November 3, 2009, and LAC’s Exclusive Solicitation Period ends December 31, 2009. LandAm Credit’s current Exclusive Filing Period ends November 14, 2009, and LandAm Credit’s Exclusive Solicitation Period ends January 13, 2010. 20. The Debtors are currently in the process of formulating a plan of liquidation and have made significant progress in that respect. In order to facilitate discussions with the Creditors’ Committees and other parties in interest, and to maintain much needed order, process and momentum, the Debtors believe that the extension of the Exclusive Filing Period through and including October 15, 2009 and the extension of the Excusive Solicitation Period through and including December 15, 2009 for the Initial Debtors are not only warranted but critical in these cases. If extensions of the Exclusive Periods are granted as set forth herein, the Debtors believe they will have the requisite time to propose and solicit a confirmable plan without the confusion and chaos that wound ensue if multiple competing agendas were permitted to be pursued by divergent constituencies. In addition, the Debtors request authority to further extend the Exclusive Periods one or more times by thirty (30) days each, upon the written consent of each of the Creditors’ Committees without further application to this Court, which further extended dates shall also apply to LAC and LandAm Credit. The Debtors will file notices of additional extensions of the Exclusive Periods with the Court and serve such notices on the U.S. Trustee and all parties who have requested notice in the Debtors’ chapter 11 cases Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 9 of 24
-10- pursuant to Bankruptcy Rule 2002. The relief requested herein will ensure that the Debtors and the Creditors’ Committees lead the efforts to achieve a consensual plan, and that such plan incorporates the results of the Inter-Estate and LES Mediations. 21. The Debtors request that the extension of the Exclusive Periods be through and including the later of October 15, 2009 and December 15, 2009, respectively, or the exclusivity dates otherwise applicable to the Debtors. 22. The relief requested herein shall be without prejudice to the Debtors’ rights to request further extensions of the Exclusive Periods in compliance with section 1121(d)(2) of the Bankruptcy Code or to seek other appropriate relief. For the reasons set forth herein, the Debtors believe that “cause” exists to extend the Exclusive Periods. BASIS FOR RELIEF 23. The Exclusive Periods under section 1121(b) of the Bankruptcy Code are intended to afford debtors an opportunity to propose a chapter 11 plan and to solicit acceptances of such plan without the disruption to the debtors’ cases that might be caused by the filing of competing plans by non-debtor parties. In circumstances where, as here, the Exclusive Periods prove to be insufficient to formulate, negotiate, file and solicit acceptances of a meaningful chapter 11 plan which garners support of various parties in interest, section 1121(d) of the Bankruptcy Code allows the Court to extend the Initial Debtors’ Exclusive Periods for “cause.” Specifically, section 1121(d) of the Bankruptcy Code provides: (1) Subject to paragraph (2), 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. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 10 of 24
-11- (2) (A) The 120-day period specified in paragraph (1) may not be extended beyond a date that is 18 months after the date of the order for relief under this chapter. (B) The 180-day period specified in paragraph (1) may not be extended beyond a date that is 20 months after the date of the order for relief under this chapter. 11 U.S.C. § 1121(d). 24. It is well established that a decision to extend the Exclusive Periods is left to the sound discretion of the Bankruptcy Court and should be based upon the facts and circumstances of a particular case. See First American Bank of New York v. Southwest Gloves and Safety Equip., Inc., 64 B.R. 963, 965 (D. Del. 1986); In re Reetz, 61 B.R. 412, 414 (Bankr. W.D. Wis. 1986). Although the Bankruptcy Code does not define “cause” for the purpose of an extension of the Exclusive Periods, courts have looked to the legislative history of section 1121(d) of the Bankruptcy Code for guidance. See In re Gibson & Cushman Dredging Corp., 101 B.R. 405, 409 (E.D.N.Y. 1989); In re Amko Plastics, Inc., 197 B.R. 74, 77 (Bankr. S.D. Ohio 1996). In doing so, courts have found that Congress did not intend that the 120- and 180- day periods be a hard and fast rule. See Amko Plastics, 197 B.R. at 77 (noting that Congress intended courts to have flexibility in dealing with extensions of exclusivity); Gaines v. Perkins (In re Perkins), 71 B.R. 294, 297 (W.D. Tenn. 1987) (“The hallmark of … [section 1121(d)] is flexibility”). Rather, Congress intended that the Exclusive Periods be of an adequate length, given the circumstances, for a debtor to formulate, negotiate and draft a viable plan, which by definition means one supported by some or all of a debtor’s key constituents, without the disruption that would occur with the filing of competing plans. See Geriatrics Nursing Home, Inc. v. First Fidelity Bank, N.A. (In re Geriatrics Nursing Home, Inc.), 187 B.R. 128, 133 (D.N.J. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 11 of 24
-12- 1995). Indeed, Congress recognized that often a 120-day exclusivity period will not afford a debtor in large cases sufficient time to formulate and negotiate a plan: The court is given the power, though, to increase . . . the 120-day period depending on the circumstances of the case. [T]he bill allows the flexibility for individual cases that is not available today. For example, if an unusually large company were to seek reorganization under chapter 11, the Court would probably need to extend the time in order to allow the debtor to reach an agreement. H.R. Rep. No. 95-595, 95th Cong. 1st Sess. 232 (1977) (footnotes omitted).2 25. When determining whether cause exists for an extension of the Exclusive Periods, courts have relied on a variety of factors, each of which may provide sufficient grounds for extending exclusivity. Factors considered by courts in making such a determination have included: (a) the size and complexity of the case; (b) the necessity of sufficient time to negotiate a plan and prepare adequate information; (c) whether the debtor is paying its debts as they come due; (d) whether the debtor has demonstrated reasonable prospects for filing a viable plan; (e) whether the debtor has made progress in negotiating with creditors; (f) the length of time the case has been pending; (g) whether the debtor is seeking the extension to pressure creditors; and (h) whether unresolved contingencies exist. See, e.g., Continental Casualty Co. v. Burns & Roe Enters., Inc. (In re Burns & Roe Enters., Inc.), 2005 U.S. Dist. LEXIS 26247, at *11-12 (D.N.J. 2005); In re Gibson & Cushman Dredging Corp., 101 B.R. at 409-10; In re Central Jersey Airport Servs., LLC, 282 B.R. 176, 184 (Bankr. D.N.J. 2002); In re Express One Int’l Inc., 194 B.R. 98, 100 (Bankr. E.D. Tex. 1996); In re Grand Traverse Dev. Co. Ltd. P’ship, 147 B.R. 418, 420 (Bankr. W.D. Mich. 1992); In re Southwest Oil Co. of Jourdanton, Inc., 84 B.R. 448, 451-54 2 Notwithstanding the 2005 amendment to section 1121(d), courts have continued to adopt a flexible approach in granting requests for extensions of the exclusivity and solicitation periods. See, e.g., In re Stone Barn Manhattan LLC, Case No. 08-12579 (ALG) (Bankr. SDNY July 16, 2009) (granting third exclusivity extension); In re Tweeter Home Entm’t Group, Inc., Case No. 07-10787 (PJW) (Bankr. D. Del. Sept. 29, 2008) (extending exclusivity to nearly 18 months after the petition date). Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 12 of 24
-13- (Bankr. W.D. Tex. 1987). The application of the relevant factors to the facts and circumstances of these cases demonstrates that the requested extensions are both appropriate and necessary to afford the Initial Debtors with adequate time to propose, negotiate, and solicit acceptances to a chapter 11 plan. A. Size and Complexity of the Cases 26. As of the Petition Date, LFG wholly-owned approximately 28 direct subsidiaries, approximately 219 active and inactive indirect subsidiaries (certain of which are joint ventures), and an interest in approximately 14 non-title joint ventures. In addition, the Company had approximately 27 different lines of business and over 7,300 employees. The size of LFG’s case alone supports a finding of cause to further extend LFG’s Exclusive Periods. During these chapter 11 cases, LFG has continued to work to resolve numerous complex issues relating to the disposition of its subsidiaries. In addition, LFG and its professionals continue to address and respond to creditors’ inquiries related to these cases on a daily basis. 27. The size and complexity of LES’s chapter 11 case also warrant a further extension of its Exclusive Periods. LES is a party to numerous adversary proceedings commenced by its customers. Since the early stages of these cases, LES devoted significant resources to litigating the Lead Cases and has been successful in negotiating settlements and obtaining Court approval of the settlement agreements with several customers. However, many more adversary proceedings remain unresolved. LES is hopeful that the outcome of the LES Mediation, will enable LES to confirm a plan without the need for further protracted, expensive litigation that will erode the value of its estate. 28. To date, there have been more than 2,700 claims filed against the Debtors’ estates in the aggregate face amount of $2.2 billion. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 13 of 24
-14- B. The Debtors Require Additional Time to Prepare Adequate Information and Formulate a Chapter 11 Plan 29. The Debtors have worked arduously to formulate a plan and are engaged in dynamic negotiations with the Creditors’ Committees over the details of such plan. Even though significant progress has been made so far, many pieces are still in flux. At this juncture, it is critical that creditors’ focus be on only one plan of liquidation, which embodies the settlements reached pursuant to the Mediation Protocol, and that the Debtors have a meaningful opportunity to resolve any open issues, finalize the plan and lead the solicitation and confirmation process. If multiple competing plans are permitted, much of the success reached by the parties in their negotiations and their long-standing efforts to reach consensual resolutions could very well be squandered. C. The Debtors Have Made Good Faith Progress In These Cases and Do Not Seek Extension of the Exclusive Periods For Improper Reasons 30. The Debtors have made material progress in these chapter 11 cases and do not seek the extension of the Exclusive Periods as a means to exert pressure on the relevant parties in interest. Since the extension of LFG’s initial Exclusive Periods, the Debtors and their professionals have devoted a substantial amount of time towards, inter alia: (a) assisting the Debtors in winding-down their businesses; (b) working with LFG to evaluate, market, and sell, as applicable, the remaining businesses of its subsidiaries; (c) litigating disputes relating to the ownership of Exchange Funds; (d) implementing the Mediation Protocol to resolve both interestate and LES related disputes; (e) rejecting leases and contracts that are burdensome to the Debtors in order to mitigate losses and maximize values; (f) settling and otherwise resolving material claims, including the claims filed by the IRS and the PBGC; (g) reviewing and filing omnibus objections to claims filed against the Debtors; (h) resolving issues related to the Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 14 of 24
-15- transition of the Underwriters to Fidelity and the reimbursement of costs by and among the parties; and (i) drafting and finalizing a consensual chapter 11 plan of liquidation. 31. The requested extensions are not proposed for improper reasons. To the contrary, such extensions will allow the Debtors to address the concerns of key parties in interest while they finalize the plan, which will encompasses the resolution of significant issues determined during the Inter-Estate Mediation and the LES Mediation. D. The Debtors are Paying Their Debts as They Come Due 32. The Debtors continue to make timely payment of their undisputed postpetition obligations. As such, the requested extension will afford parties in interest a meaningful opportunity to negotiate with the Debtors as they formulate their chapter 11 plan and solicit votes to accept or reject such plan without prejudice to parties in interest. E. The Debtors Have Reasonable Prospects for Filing a Viable Plan 33. The Debtors believe they have reasonable prospects for filing a viable plan. The Debtors are in the process of finalizing a plan of liquidation memorializing the resolutions reached during the Inter-Estate Mediation and the LES Mediation, and intend to file the plan within the coming weeks. F. Negotiations with Creditors 34. The development of a chapter 11 plan has been and will continue to be a consensual process in which the Creditors’ Committees and other parties in interest play a significant role. A suitable extension of the Exclusive Periods will allow the Debtors the flexibility and time necessary to pursue further meaningful plan discussions with the Creditors’ Committees. In addition, permission to extend the Exclusive Filing Period and the Exclusive Solicitation Period beyond October 15, 2009 and December 15, 2009 with the written approval of the Creditors’ Committees, will likewise promote further collaboration between all of the Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 15 of 24
-16- parties and increase the likelihood of achieving a consensual plan. Accordingly, the Debtors submit that this factor favors granting the Motion and extending the Exclusive Periods. G. The Debtors Are Not Seeking an Extension to Pressure Creditors 35. The requested extensions of the Debtors’ Exclusive Periods are not being made to pressure creditors. To the contrary, the Debtors continue to work and fully cooperate with both of the Creditors’ Committees and their professionals. Counsel and financial advisors for the Debtors maintain regular contact with the professionals for the Creditors’ Committees, responding to inquiries and keeping such professionals apprised of all material issues and case status. Notably, the Debtors seek these extensions to enable more time to collaborate with, not oppose, their creditor constituencies. H. The Debtors’ Cases Have Been Pending for Less Than Ten Months 36. The Debtors commenced the initial cases on November 26, 2008, and filed the subsequent cases on March 6, 2009, March 7, 2009, March 31, 2009 and July 17, 2009. Although this is the third time the Initial Debtors have sought an extension of the Exclusive Periods, in cases as complex as these, it is not unreasonable, or unusual, to extend the Exclusive Periods multiple times. In addition, the Initial Debtors previously requested and were granted short extensions of their Exclusivity Periods in order to maintain the momentum in these cases. Now, as before, the Initial Debtors seek a short extension of their Exclusive Periods. Compare, e.g., In re Stone Barn Manhattan LLC, Case No. 08-12579 (ALG) (Bankr. SDNY June 30, 2009) (seeking a six-month exclusivity extension); In re Frontier Airlines Holdings, Inc., Case No. 08- 11298 (RDD) (Bankr. S.D.N.Y. May 8, 2009) (seeking a four-month exclusivity extension). I. Termination of the Debtors’ Exclusive Periods Could Adversely Impact These Cases 37. Termination of the Initial Debtors’ Exclusive Periods could adversely impact the progress of these cases. Indeed, if this Court were to deny the Initial Debtors’ request Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 16 of 24
-17- for an extension of the Exclusive Periods, any party in interest would be free to propose a plan. As this Court is well aware, such a ruling would foster a chaotic environment with no central focus, and the forward progress made could potentially be lost as multiple parties assert their own proposed plans asserting competing rights to the same assets. Neither the Debtors nor their creditors can afford to enter into a litigious environment of competing chapter 11 plans. In fact, such an environment would not only be counterproductive, it would significantly delay these cases at great cost to all. 38. Relief similar to the relief requested herein has routinely been granted in other chapter 11 cases, including in liquidating chapter 11 cases. See, e.g., In re S & K Famous Brands, Inc., Case No. 09-30805 (KRH) (Bankr. E.D. Va. June 5, 2009) (exclusivity extended by 60 days); In re LandAmerica Financial Group, Inc., Case No. 08-35994 (KRH) (Bankr. E.D. Va. Mar. 23, 2009) (exclusivity extended by 120 days); In re Circuit City Stores, Inc., Case No. 08- 35653 (KRH) (Bankr. E.D. Va. Mar. 3. 2009) (exclusivity extended by 120 days); In re US Airways, Inc., et al., Case No.04-13819 (SSM) (Bankr. E.D. Va. Jan. 28, 2005) (exclusivity initially extended by 80 days); In re Stone Barn Manhattan LLC, Case No. 08-12579 (ALG) (Bankr. SDNY July 16, 2009) (extending exclusivity by 14 months); In re Frontier Airlines Holdings, Inc., Case No. 08-11298 (RDD) (Bankr. S.D.N.Y. May 20, 2009) (same); In re Tweeter Home Entm’t Group, Inc., Case No. 07-10787 (PJW) (Bankr. D. Del. Sept. 29, 2008) (extending exclusivity to nearly 18 months after the petition date); In re SCO Group, Inc., Case No. 07-11337 (KG) (Bankr. D. Del. Sept. 24, 2008) (extending exclusivity to more than 15 months after the petition date). Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 17 of 24
-18- NOTICE 39. Notice of this Motion will be given to: (a) the U.S. Trustee, (b) counsel for the Creditors’ Committees, (c) all parties who have requested notice in the Debtors’ chapter 11 cases, and (d) such other parties entitled to receive notice pursuant to this Court’s December 23, 2008 Amended Administrative Order entered in these cases. The Debtors submit that no other or further notice is required. NO PRIOR REQUEST 40. No previous request for the relief sought herein has been made to this or to any other Court. WAIVER OF MEMORANDUM OF LAW 41. Pursuant to Local Rule 9013-1(G), and because there are no novel issues of law presented in the Motion and all applicable authority is set forth in the Motion, the Debtors respectfully request that the requirement that all motions be accompanied by a separate written memorandum of law be waived. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 18 of 24
-19- CONCLUSION WHEREFORE, the Debtors respectfully request that the Court grant the Motion, enter the proposed order annexed hereto as Exhibit A, and grant such other and further relief as the Court deems just and proper. Dated: Richmond, Virginia Respectfully submitted, August 31, 2009 /s/ Dion W. Hayes__________________ Dion W. Hayes (VSB No. 34304) John H. Maddock III (VSB No. 41044) McGUIREWOODS LLP One James Center 901 East Cary Street Richmond, Virginia 23219-4030 (804) 775-1000 - and - WILLKIE FARR & GALLAGHER LLP Paul V. Shalhoub, Esq. Rachel C. Strickland, Esq. 787 Seventh Avenue New York, New York 10019 (212) 728-8000 Attorneys for the Debtors and Debtors in Possession \9860671.1 Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 19 of 24
EXHIBIT A Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 20 of 24
Paul V. Shalhoub, Esq. (Admitted Pro Hac Vice) Rachel C. Strickland, Esq. (Admitted Pro Hac Vice) WILLKIE FARR & GALLAGHER LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 - and - Dion W. Hayes (VSB No. 34304) John H. Maddock III (VSB No. 41044) McGUIREWOODS LLP One James Center 901 East Cary Street Richmond, Virginia 23219-4030 (804) 775-1000 Attorneys for the Debtors and Debtors in Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION ------------------------------------------------------x In re : Chapter 11 : LandAmerica Financial Group, Inc., et al., : Case No. 08-35994 (KRH) : Debtors. : (Jointly Administered) ------------------------------------------------------x ORDER EXTENDING CERTAIN DEBTORS’ EXCLUSIVE PERIODS TO FILE A CHAPTER 11 PLAN AND SOLICIT ACCEPTANCES THERETO PURSUANT TO SECTION 1121(d) OF THE BANKRUPTCY CODE Upon the motion (the “Motion”) of the debtors and debtors in possession in the above-captioned cases (collectively, the “Debtors”), for an Order Extending the Exclusive Periods for LFG, LES, LandAm Title and the Southland Entities to File a Chapter 11 Plan and Solicit Acceptances thereto Pursuant to Section 1121(d) of the Bankruptcy Code; and notice of the Motion having been provided to the parties identified in the Motion; and no other or further notice being Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 21 of 24
-2- necessary or required; and a hearing having been held on the Motion; and it appearing to the Court, based upon the Motion, and the full record of these cases, that the Motion should be granted; and after due deliberation, and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED, AND DECREED that: 1. The Motion is granted to the extent set forth herein. 2. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion. 3. Any responses or objections to the Motion that have not been previously withdrawn or otherwise resolved are hereby overruled and denied. 4. The Exclusive Filing Period for LFG, LES, LandAm Title and the Southland Entities shall be extended through and including October 15, 2009. 5. The Exclusive Solicitation Period for LFG, LES, LandAm Title and the Southland Entities shall be extended through and including December 15, 2009. 6. The Debtors’ Exclusive Periods shall be extended through and including the later of October 15, 2009 and December 15, 2009, respectively, or the exclusivity dates otherwise applicable to the Debtors. 7. The Exclusive Filing Period and the Exclusive Solicitation Period for LFG, LES, LandAm Title and the Southland Entities may each be extended for additional thirty (30) day periods upon written consent of the Creditors’ Committees, without further application to this Court, which further extended dates shall also apply to LAC and LandAm Credit. 8. The Debtors shall file a notice of any additional extensions of the Exclusive Periods with this Court and serve such notice on the U.S. Trustee and all parties who have requested notice in the Debtors’ chapter 11 cases pursuant to Bankruptcy Rule 2002. Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 22 of 24
-3- 9. The entry of this Order shall be without prejudice to the rights of the Debtors to request further extensions of the Exclusive Periods or to seek other appropriate relief. 10. This Court shall retain jurisdiction with respect to all matters arising from or related to the implementation or interpretation of this Order. Dated: September __, 2009 ____________________________________ UNITED STATES BANKRUPTCY JUDGE Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 23 of 24
-4- WE ASK FOR THIS: Paul V. Shalhoub (Admitted Pro Hac Vice) Rachel C. Strickland (Admitted Pro Hac Vice) WILLKIE FARR & GALLAGHER LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8000 - and - Dion W. Hayes (VSB No. 34304) John H. Maddock III (VSB No. 41044) McGUIREWOODS LLP One James Center 901 East Cary Street Richmond, Virginia 23219-4030 (804) 775-1000 Attorneys for the Debtors and Debtors in Possession LOCAL BANKRUPTCY RULE 9022-1(C) CERTIFICATION Pursuant to Local Rule 9022-1(C), I hereby certify that the foregoing proposed order has been endorsed by or served upon all necessary parties. Dion W. Hayes (VSB No. 34304) John H. Maddock III (VSB No. 41044) McGUIREWOODS LLP One James Center 901 East Cary Street Richmond, Virginia 23219-4030 (804) 775-1000 Case 08-35994-KRH Doc 1953 Filed 08/31/09 Entered 08/31/09 18:45:45 Desc Main Document Page 24 of 24