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Richard M. Pachulski (CA Bar No. 90073) James I. Stang (CA Bar No. 94435) Dean A. Ziehl (CA Bar No. 84529) Linda F. Cantor (CA Bar No. 153762) Debra I. Grassgreen (CA Bar No. 169978) PACHULSKI STANG ZIEHL & JONES LLP 10100 Santa Monica Blvd., Suite 1300 Los Angeles, CA 90067-4114 Telephone: 310/277-6910 Facsimile: 310/201-0760 E-mail: rpachulski@pszjlaw.com jstang@pszjlaw.com dziehl@pszjlaw.com lcantor@pszjlaw.com dgrassgreen@pszjlaw.com Proposed Attorneys for Debtor and Debtor in Possession
Stephen G. Morrison (pro hac vice pending) George B. Cauthen (pro hac vice pending) Steven A. McKelvey, Jr. (pro hac vice pending) Jody A. Bedenbaugh (pro hac vice pending) Nelson Mullins Riley & Scarborough, LLP Meridian, 17th Floor 1320 Main Street Columbia, SC 29201 Telephone: 803/799-2000 Facsimile: 803/256-750 Email: steve.morrison@nelsonmullins.com george.cauthen@nelsonmullins.com steve.mckelvey@nelsonmullins.com jody.bedenbaugh@nelsonmullins.com
Proposed Special Dealer Network Counsel for Debtor and Debtor in Possession
UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ ( ) Chapter 11 NOTICE OF APPLICATION AND APPLICATION PURSUANT TO SECTIONS 327(E), 330, AND 331 OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AN ORDER AUTHORIZING THE RETENTION OF NELSON MULLINS RILEY & SCARBOROUGH, LLP AS SPECIAL DEALER NETWORK COUNSEL [Declaration of George B. Cauthen filed concurrently herewith] [NO HEARING REQUIRED UNLESS REQUESTED PER L.B.R. 2014-1(B)]
The last four digits of the Debtors federal tax identification number are (8739). The Debtors address is: 3251 East Imperial Highway, Brea, CA 92821.
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TO: (A) THE UNITED STATES TRUSTEE; (B) COUNSEL FOR THE DEBTORS PREPETITION AND POSTPETION LENDER; (C) THOSE CREDITORS HOLDING THE 20 LARGEST UNSECURED CLAIMS AGAINST THE DEBTORS ESTATE; AND (D) THOSE PARTIES WHO HAVE REQUESTED NOTICE PURSUANT TO BANKRUPTCY RULE 2002.
PLEASE TAKE NOTICE that on the date hereof (the Petition Date), the above-captioned debtor and debtor in possession (the Debtor) filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code) with the Clerk of the United States Bankruptcy Court for the Central District of California (the Bankruptcy Court). PLEASE TAKE FURTHER NOTICE that on the date hereof the Debtor filed the Application Pursuant to Sections 327(e), 330, and 331 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016 and Local Rules 2014-1 and 2016-1 for an Order Authorizing the Retention of Nelson Mullins Riley & Scarborough, LLP as Special Dealer Network Counsel, Nunc Pro Tunc to the Petition Date (the Application) with the Bankruptcy Court. PLEASE TAKE FURTHER NOTICE that, pursuant to Local Rule 2014-1(b)(3)(E), any response or objection to the Application must be filed with the Bankruptcy Court on or before November 20, 2012 at 4:00 p.m. (Pacific time). PLEASE TAKE FURTHER NOTICE that at the same time, you must also serve a copy of the response or objection upon: (i) proposed dealer network counsel for the Debtor: Nelson Mullins Riley & Scarborough, LLP, Meridian, 17th Floor, 1320 Main Street, Columbia, South Carolina, Attention: Steve Morrison (steve.morrison@nelsonmullins.com) and George B. Cauthen (george.cauthen@nelsonmullins.com) (ii) proposed attorneys for the Debtor: Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Blvd., Suite 1300, Los Angeles, CA 90067-4114, Attention: Debra I. Grassgreen (dgrassgreen@pszjlaw.com) and John W. Lucas (jlucas@pszjlaw.com), and (iii) the U.S. Trustee, 411 West Fourth Street, Suite 9041, Santa Ana, CA 92701, as well as the Clerk of the United States Bankruptcy Court, Central District of California. PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF DEMANDED BY THE APPLICATION WITHOUT FURTHER NOTICE OR HEARING.
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PLEASE TAKE FURTHER NOTICE that if a timely objection is filed, that a hearing will be scheduled and the Debtor will provide separate notice therefor. Dated: November 5, 2012 PACHULSKI STANG ZIEHL & JONES LLP By /s/ Debra I. Grassgreen Richard M. Pachulski James I. Stang Dean A. Ziehl Linda F. Cantor Debra I. Grassgreen Proposed Attorneys for Debtor and Debtor in Possession and
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NELSON MULLINS RILEY & SCARBOROUGH, LLP Stephen G. Morrison George B. Cauthen Steven A. McKelvey, Jr. Jody A. Bedenbaugh Proposed Special Dealer Network Counsel for Debtor and Debtor in Possession
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UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ Chapter 11 APPLICATION PURSUANT TO SECTIONS 327(E), 330, AND 331 OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AN ORDER AUTHORIZING THE RETENTION OF NELSON MULLINS RILEY & SCARBOROUGH, LLP AS SPECIAL DEALER NETWORK COUNSEL [Declaration of George B. Cauthen filed concurrently herewith] [NO HEARING REQUIRED UNLESS REQUESTED PER L.B.R. 2014-1(B)]
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American Suzuki Motor Corporation, as debtor and debtor in possession (the Debtor), hereby files this application (the Application) to employ Nelson Mullins Riley & Scarborough, LLP (Nelson Mullins) as Debtors special dealer network counsel, nunc pro tunc to the Petition Date. In support of the Application, the Debtor relies on (i) the Statement Under Rule 2016 of the Federal Rules of Bankruptcy Procedure and Section 329 of the Bankruptcy Code, and (ii) the Declaration of George B. Cauthen in Support of Application Pursuant to Sections 327(e), 330, and 331 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016 and Local Rules 2014-1 and 2016-1 for an Order Authorizing the Retention of Nelson Mullins Riley & Scarborough, LLP as Special Dealer Network Counsel, Nunc Pro Tunc to the Petition Date (the Cauthen Declaration), which are annexed hereto as Exhibit A and Exhibit B, respectively. In support of this Application, the Debtor respectfully represents as follows: I. STATEMENT OF FACTS A. Jurisdiction and Venue The Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue of this chapter 11 case is proper pursuant to 28 U.S.C. 1408 and 1409. On the date hereof (the Petition Date), the Debtor filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Debtor continues to operate and manage its affairs as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or committee has been appointed in this chapter 11 case. The Debtor was established in 1986 as the sole distributor in the continental United States of Suzuki automobiles, motorcycles, all-terrain vehicles, and marine outboard engines (the Suzuki Products). Suzuki Motor Corporation (SMC), the 100% interest holder in the Debtor, manufacturers substantially all of the Suzuki Products2 and is not a debtor in this or any other insolvency proceeding. As of the Petition Date, the Debtor has approximately 295 employees across
The ATVs are manufactured by an 80% owned affiliate of the Debtor. An overview of the Suzuki Products manufactured by SMC, its affiliates, and certain unaffiliated entities is included in the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions.
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three divisions: automotive (the Automotive Division), motorcycles and all-terrain vehicles (the Motorcycles/ATV Division), and outboard marine motors and related products (the Marine Division). In the operation of its business, the Debtor purchases Suzuki Products from SMC and certain other non-debtor affiliates. In turn, the Debtor wholesales virtually its entire inventory through a network of independently owned and unaffiliated dealerships located throughout the continental United States. The dealers then market and sell the Suzuki Products to retail customers. As of the Petition Date, there are approximately 220 automotive dealerships, over 900 motorcycle/ATV dealerships, and over 780 outboard marine dealerships. Through dealers, the Debtor also sells a portion of its automotive inventory (less than 10%) to car rental companies and others (less than 2%) that lease the vehicles to retail customers. The Debtor also purchases the majority of its automotive parts from SMC and certain unaffiliated companies and resells them to the automotive dealers and authorized warranty service providers. The Debtor determined that its Automotive Division is facing and will continue to face a number of serious challenges in the highly regulated and competitive automotive industry in the continental U.S. market. The challenges include unfavorable foreign exchange rates, disproportionally high and increasing costs associated with meeting more stringent state and federal automotive regulatory requirements unique to the continental U.S. market, low sales volumes, a limited number of models in its line-up, and existing and potential litigation costs. The Debtor has exhausted all available means to reduce the cost of operating the Automotive Division for it to operate profitably. Accordingly, the Debtor determined that the best way to preserve and enhance the value of its overall business is to wind down new sales of the Automotive Division in the continental U.S. and realign its business focus on the long-term growth of its Motorcycles/ATV and Marine Divisions. Contemporaneous with the filing of this case, the Debtor filed a plan of reorganization (the Plan). Under the proposed Plan, the Motorcycles/ATV and Marine Divisions will remain largely unaffected including the warranties associated with such products. As part of its restructuring, NounCo, Inc., a wholly owned subsidiary of SMC, will purchase the Motorcycles/ATV and Marine
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Divisions and the parts and service components of the Automotive Division. The restructured Automotive Division intends to honor automotive warranties and authorize the sale of genuine Suzuki automotive parts and services to retail customers through a network of parts and service only dealerships that will provide warranty services. The Debtors Motorcycles/ATV Division is strong and competitively positioned in its market, allowing for long-term growth as economic conditions improve. Similarly, the Marine Division has remained competitive during the recent challenging economic times and the Debtor is working to further build its market share in the marine industry through continued investment in new product development and resuming large-scale marketing events focused on attracting new marine customers. The strategy embodied in the proposed Plan returns the business to its roots in the U.S. market, which began with motorcycles, and is intended to position the overall business for success in the continental U.S. for the benefit of all parties in interest. The Suzuki name is recognized around the world as a brand of quality products that offer reliability and originality. SMC has informed the Debtor that it continues to invest in its operations, improve its overall performance worldwide, and remains committed to manufacturing Suzuki Products for customers around the world. SMCs manufacturing and world-wide distribution of Suzuki automobiles will continue despite the Debtors wind down of the continental U.S. Automotive Division. Additional factual background regarding the Debtor, including its current and historical business operations and the events precipitating its chapter 11 filing, is set forth in detail in the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions (the Reiss Declaration) filed contemporaneously with this Motion and incorporated herein by reference. II. RELIEF REQUESTED By this Application, the Debtor seeks entry of an order, pursuant to sections 327(e), 330, and 331 of title 11 of the United States Code (the Bankruptcy Code), Bankruptcy Rule 2014 and Local
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Rule 2014-1 authorizing it to employ and retain Nelson Mullins as its special dealer network counsel in these chapter 11 cases. A proposed form of order is annexed hereto as Exhibit C. III. THE COURT SHOULD AUTHORIZE THE DEBTOR TO EMPLOY NELSON MULLINS AS ITS DEALER NETWORK COUNSEL A. The Qualifications of Nelson Mullins Nelson Mullins provides advice and counsel in complex litigation, corporate, economic development, securities, finance, intellectual property, government relations, regulatory, and other areas for clients ranging from private individuals to large businesses, including many publicly held companies. The Debtor seeks Court approval to retain Nelson Mullins, effective as of the Petition Date, at the expense of the Debtors estate, to serve as the Debtors special counsel to provide legal services as may be necessary and appropriate in connection with the restructuring of the Debtors various dealership contracts. Nelson Mullins has been the Debtors attorney for more than six years and is intimately familiar with the Debtors various dealerships. Presently, Nelson Mullins is representing the Debtor in the following cases filed by dealers: 1. JF Enterprises, LLC, d/b/a Jeremy Franklin's Suzuki of Kansas City and Olathe's Showcase Cars, Inc., d/b/a Jeremy Franklin Suzuki of Olathe v. American Suzuki Motor Corporation bearing case number 0916-CV-34354 filed in the Circuit Court of Jackson County, Missouri at Kansas City. The Debtor was sued in this case based on its alleged participation in the alleged false advertising campaigns of two of its dealers: Joe Gibson Suzuki and Chad Franklin Suzuki. The case was tried in 2011 and the Plaintiffs obtained a $19 million judgment against the Debtor. The judgment was vacated by the trial court and the case is on appeal. Nelson Mullins has been retained to retry the case, if necessary, following a decision on appeal. John Cornelius Dangerfield, individually, and d/b/a Johnny's Enterprises, Inc., d/b/a Johnny's Suzuki of Monck's Corner and Johnny's Suzuki of Summerville, Johnny's Suzuki of Easley, LLC, Johnny's Suzuki of Myrtle Beach, LLC, d/b/a Johnny's Suzuki of Myrtle Beach v. American Suzuki Motor Corporation bearing case number 2012-CP-18-619 pending in the United States District Court for the District of South Carolina, Charleston Division. Plaintiffs filed suit against the Debtor based on its alleged participation in the alleged false advertising scheme of one of its dealers: Joe Gibson Suzuki. The Debtor has filed a motion for summary judgment in the case on all claims. 5
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James Brockman, Jr., Wade Hampton of Greer, L.L.C. and Suzuki of Greer, L.L.C. v. American Suzuki Motor Corporation bearing case number 6:11-cv03381 pending in the United States District Court for the District of South Carolina, Greenville Division. The Plaintiffs filed a 10 count complaint against the Debtor based on its alleged participation in the alleged false advertising campaign of one of its dealers: Joe Gibson Suzuki. The Debtor moved to dismiss all claims asserted in the original complaint. The court dismissed seven claims and allowed the Plaintiffs to amend three claims. The Debtor has moved to dismiss the three amended claims. D2K, Inc., d/b/a Suzuki of Huntsville, Shoals Suzuki, Inc., Varsity Suzuki, Inc., and Gary Linam, an individual v. American Suzuki Motor Corporation bearing case number CV-09-S-2436-NE pending in the United States District Court for the Northern District of Alabama, Northeastern Division. Plaintiffs in this case filed suit against the Debtor related to various alleged aspects of the Debtors business plan from 2003-2007, including allegations related to the Debtors allocation system, incentive programs, and alleged RICO violations related to false sales reporting. The Debtor moved for summary judgment on all of the claims. The motion is pending and the case is subject to being scheduled for trial on or after November 2012.
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Nelson Mullins depth of experience in complex litigation matters makes it particularly qualified to represent the Debtor. Therefore, the Debtor believes that Nelson Mullins retention is in the best interest of the estate. More information about Nelson Mullins generally, its expertise and its attorneys, is available on its website at www.NelsonMullins.com. B. Compensation of Nelson Mullins by the Debtor and Other Disclosures Nelson Mullins has requested a postpetition retainer in the amount of $550,000 to be held in Nelson Mullins client trust account to be applied against fees and costs incurred (the Retainer). There are no arrangements between Nelson Mullins and any other entity for the sharing of compensation received or to be received in connection with this case, except insofar as such compensation may be shared among the partners, of counsel, and associates of Nelson Mullins. The Retainer is not a fixed price for counsels services, and Nelson Mullins reserves the right to seek additional compensation beyond the amounts covered by the Retainer in accordance with applicable provisions of the Bankruptcy Code and Bankruptcy Rules. Nelson Mullins understands that the Debtor has retained and may retain additional professionals during the term of the engagement. Nelson Mullins may have worked with the additional professionals in the past and agrees to work cooperatively with such professionals on this
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chapter 11 case to integrate any respective work conducted by the professionals on behalf of the Debtor. Nelson Mullins has assured the Debtor that it will work closely with each of these firms to take care not to duplicate efforts in this case. Specifically, Nelson Mullins work on dealer matters will supplement and not duplicate the work of the Debtors general bankruptcy counsel. C. Disinterestedness of Nelson Mullins Under Section 327(e) of the Bankruptcy Code, the Court may authorize the Debtor to employ Nelson Mullins, provided Nelson Mullins does not hold or represent any interest adverse to the Debtor or to the estate on the matters for which its employment is proposed. As disclosed in the Cauthen Declaration, no such adverse interest exists here. To the best of the Debtors knowledge and based upon the Cauthen Declaration, neither Nelson Mullins nor any of its partners, of counsel, or associates has any connection with the Debtor, any creditors of the estate, any party in interest, their respective attorneys or accountants, the United States Trustee, or any person employed in the Office of the United States Trustee, except to the extent set forth in the Cauthen Declaration. Therefore, the Debtor does not believe any adverse interest exists with these creditors. To the best of the Debtors knowledge and based upon the Cauthen Declaration, only Nelson Mullins and not any of its partners, of counsel, or associates is a creditor, equity security holder, or an insider of the Debtor as that term is defined in section 101(31) of the Bankruptcy Code. To the best of the Debtors knowledge and based upon the Cauthen Declaration, neither Nelson Mullins nor any of its partners, of counsel, or associates is or was, within two years before the date of the filing of the petition, a director, officer, or employee of the Debtor. The Debtor is informed and believes that Nelson Mullins has conducted a conflict check within Nelson Mullins database and, except as set forth in the Cauthen Declaration, thus far has not encountered any creditors of the Debtor with which an actual conflict exists between Nelson Mullins and such creditors. Note that Nelson Mullins previously represented the Debtor and its parent (who is also a creditor), Suzuki Motor Corp., in connection with the joint prosecution of a patent infringement proceeding, Suzuki Motor Company and American Suzuki Motor Corp. v. Jiujiang Hison Motor Boat Manufacturing, Ltd, Civil Action No. 1:12-cv-20626-PAS, in the United States District Court for the Southern District of Florida. If, at any subsequent time during the course of
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this proceeding, Nelson Mullins learns of any other representation which may give rise to a conflict, Nelson Mullins will promptly file with the Court and the Office of the United States Trustee an amended declaration identifying and specifying such involvement. D. Proposed Hourly Rates and Expenses Subject to the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, the United States Trustee Guidelines, and this Courts rules, the Debtor proposes to pay Nelson Mullins its customary hourly rates in effect from time to time and to reimburse Nelson Mullins according to its customary reimbursement policies. The attorneys currently expected to be principally responsible for the chapter 11 case, and their respective hourly rates effective as of January 1, 2012, are as follows: Stephen G. Morrison $495, George B. Cauthen $425, Steve McKelvey $475, and Jody A. Bedenbaugh $315. The hourly rate for the paralegals assigned to this matter range from $150 to $190. The hourly rates of all Nelson Mullins attorneys and paraprofessionals are available upon request. It is contemplated that Nelson Mullins will seek interim compensation during the case as permitted by sections 330 and 331 of the Bankruptcy Code and Bankruptcy Rule 2016 and pursuant to any interim compensation procedures that are approved by the Court. Nelson Mullins understands that its compensation in the case is subject to the prior approval of this Court. No compensation will be paid except upon application to and approval by this Court after notice and a hearing in accordance with sections 330 and 331 of the Bankruptcy Code, Bankruptcy Rule 2016, Local Bankruptcy Rule 2016-1. E. Interim Compensation The Debtor, subject to the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and further orders of this Court, propose to pay Nelson Mullins its customary hourly rates for services rendered that are in effect from time to time, as set forth in the Cauthen Declaration, and to reimburse Nelson Mullins according to its customary reimbursement policies, and submit that such rates are reasonable. The Debtor understands that Nelson Mullins hereafter intends to apply to the Court for allowances of compensation and reimbursement of expenses in accordance with the applicable
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provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and orders of this Court for all services performed and expenses incurred after the Petition Date.3 F. Notice Pursuant to Local Bankruptcy Rule 2014-1(b)(4), a hearing is not required in connection with the Application unless requested by the United States Trustee, a party in interest, or otherwise ordered by the Court. Pursuant to Local Bankruptcy Rule 2014-1(b)(3), any response to the Application and request for hearing must be in the form prescribed by Local Bankruptcy Rule 90131(f)(1) and must be filed with the Court and served upon the Debtor, its proposed bankruptcy counsel, and the United States Trustee no later than fourteen days from the date of service of notice of the filing of the Application. Notice of filing of this Application (the Notice) was provided to (i) the Office of the United States Trustee; (ii) the Debtors prepetition and postpetition lender; (iii) the creditors listed in the Consolidated List of Creditors Holding 20 Largest Unsecured Claims; and (iv) those persons who have requested notice pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure. WHEREFORE, the Debtor requests that this Court approve the employment of Nelson Mullins Riley & Scarborough, LLP as special dealer network counsel, as of the commencement of the case, to render services as described above, with compensation to be paid by the Debtors estate as an administrative expense in such amounts as this Court may hereafter determine and allow. Dated: November 5, 2012 AMERICAN SUZUKI MOTOR CORPORATION By:
Name: Takashi Iwatsuki Title: Chairman of the Board
The Debtor filed contemporaneously with this Application a motion for authorization to implement interim compensation procedures for all professionals retained by the Debtor and approved by the Court.
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EXHIBIT A (Section 329 Statement)
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UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. STATEMENT UNDER RULE 2016 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE AND SECTION 329 OF THE BANKRUPTCY CODE Case No.: 12-_____ ( ) Chapter 11
[No Hearing Required Unless Requested Per L.B.R. 2014-1(B)] Nelson Mullins Riley & Scarborough, LLP (Nelson Mullins), pursuant to Rule 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and section 329 of chapter 11 of title 11 of the United States Code (the Bankruptcy Code), states that the undersigned is proposed special dealer network counsel to the above-captioned debtor and debtor in possession (the Debtor) in this case.
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The Debtor has agreed to pay Nelson Mullins for the legal services rendered or to be rendered by its various attorneys, paralegals, and case management assistants in connection with this case on the Debtors behalf. The Debtor also has agreed to reimburse Nelson Mullins for its actual and necessary expenses incurred in connection with this case. Nelson Mullins has received payments from the Debtor during the year prior to the Petition Date in the amount of $3,461,557.31 as of November 2, 2012 (not including a retainer in the amount of $550,000) in connection with its prepetition representation of the Debtor. Nelson Mullins is current as of the Petition Date, but has not yet completed a final reconciliation as of the Petition Date. Upon final reconciliation of the amount actually expended prepetition, any balance remaining from the payments to Nelson Mullins will be credited to the Debtor and utilized as Nelson Mullins retainer to apply to postpetition fees and expenses pursuant to the compensation procedures approved by this Court. Nelson Mullins will seek approval of payment of compensation upon the filing of appropriate applications for allowance of interim or final compensation pursuant to sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of the United States Bankruptcy Court for the Central District of California, and orders of this Court.2 The filing fee for the Debtor in this case has been paid in full. The services to be rendered include all those services set forth in the Application Pursuant to Sections 327(e), 330, and 331 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016 and Local Rules 2014-1 and 2016-1 for an Order Authorizing the Retention of Nelson Mullins Riley & Scarborough, LLP as Special Dealer Network Counsel, Nunc Pro Tunc to the Petition Date submitted concurrently herewith.
The Debtor filed contemporaneously with this Application a motion for authorization to implement interim compensation procedures for all professionals retained by the Debtor and approved by the Court.
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Nelson Mullins further states that it has neither shared nor agreed to share (a) any compensation it has received or may receive with another patty or person, other than with the pattners, of counsel, and associates of Nelson Mullins, or (b) any compensation another person or patty has received or may have received. Dated: November 5, 2012 NELSON MULLINS RILEY & SCARBOROUGH, LLP
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By Stephen G. Morrison George B. Cauthen Steven A. McKelvey, Jr. Jody A. Bedenbaugh Proposed Special Dealer Network Counsel for Debtor and Debtor in Possession
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EXHIBIT B (Cauthen Declaration)
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UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ Chapter 11 DECLARATION OF GEORGE B. CAUTHEN IN SUPPORT OF APPLICATION PURSUANT TO SECTIONS 327(E), 330, AND 331 OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AN ORDER AUTHORIZING THE RETENTION OF NELSON MULLINS RILEY & SCARBOROUGH, LLP AS SPECIAL DEALER NETWORK COUNSEL [No Hearing Required Unless Requested Per L.B.R. 2014-1(B)]
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I, George B. Cauthen, hereby declare: 1. I make this declaration in support of the application (the Application) filed by
American Suzuki Motor Corporation, the above-captioned debtor and debtor in possession (the Debtor), to employ Nelson Mullins Riley & Scarborough, LLP (Nelson Mullins) as special dealer network counsel, effective as of the Petition Date. 2. I am an attorney and partner of Nelson Mullins and am duly admitted and licensed to
practice in the State of South Carolina. 3. follows: Nelson Mullins Riley & Scarborough, LLP Meridian, 17th Floor 1320 Main Street Columbia, SC 29201 Tel: 803-799-2000 Fax: 803-256-7500 4. The Debtor seeks Court approval to retain Nelson Mullins, effective as of the Petition The name, address, telephone number, and facsimile number of Nelson Mullins are as
Date, at the expense of the Debtors estate, to serve as the Debtors special counsel to provide legal services as may be necessary and appropriate in connection with the Debtors numerous dealerships. Prior to the filing of the chapter 11 case, Nelson Mullins was retained by the Debtor to act as its counsel in connection with its various dealerships. As such, Nelson Mullins is intimately familiar with and has particular expertise in the areas of the Debtors dealerships. Nelson Mullins depth of experience in litigation matters makes it particularly qualified to represent the Debtor. More information about Nelson Mullins generally, its expertise and its attorneys, is available on its website at www.NelsonMullins.com. 5. Due to Nelson Mullins comprehensive understanding of the Debtors affairs, the
Debtor has requested that this Court authorize the employment of Nelson Mullins to render legal services on behalf of the Debtor. Subject to the provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Bankruptcy Rules, Nelson Mullins will be paid its customary hourly rates in effect from time to time and to reimburse Nelson Mullins according to its customary reimbursement policies.
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6.
The attorneys currently expected to be principally responsible for the case, and their
respective hourly rates effective as of January 1, 2012, are as follows: Stephen G. Morrison $495, George B. Cauthen $425, Steve McKelvey $475, and Jody A. Bedenbaugh $315. The hourly rate for the paralegals assigned to this matter range from $150-$190. The hourly rates of all of Nelson Mullins attorneys and paraprofessionals are available upon request. The hourly rates set forth above are subject to periodic adjustments to reflect economic and other conditions. Nelson Mullins will use other attorneys and paraprofessionals during the course of the case that it and the Debtor deem appropriate. 7. Nelson Mullins has requested a postpetition retainer in the amount of $550,000 to be
held in Nelson Mullins client trust account to be applied against fees and costs incurred costs (the Retainer). 8. Nelson Mullins understands that the Debtor may retain additional professionals
during the term of the engagement. Nelson Mullins agrees to work cooperatively with such professionals on this case to integrate any respective work conducted by such professionals on behalf of the Debtor. Nelson Mullins has assured the Debtor that it will work closely with any such firms, especially bankruptcy counsel, to take care not to duplicate efforts in this case. 9. It is contemplated that Nelson Mullins will seek interim compensation during the case
as permitted by sections 330 and 331 of the Bankruptcy Code and Bankruptcy Rule 2016. Nelson Mullins understands that its compensation in the case is subject to the prior approval of this Court. No compensation will be paid except upon application to and approval by this Court after notice and a hearing in accordance with sections 330 and 331 of the Bankruptcy Code, Bankruptcy Rule 2016, and Local Bankruptcy Rule 2016-1. Moreover, Nelson Mullins reserves the right to seek monthly interim compensation for the duration of the case. 10. To the best of my knowledge, Nelson Mullins does not represent or hold any interest
adverse to the Debtor or its estate, except as set forth herein. 11. To the best of my knowledge, neither Nelson Mullins nor any of its partners, of
counsel, or associates has any connection with the Debtor, any creditors of the estate, any party in
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interest, their respective attorneys or accountants, the United States Trustee, or any person employed in the Office of the United States Trustee, except to the extent set forth herein. 12. Nelson Mullins and certain of its partners, counsel and associates may have in the
past represented, may currently represent and in the future likely will represent parties-in-interest to the Debtor in connection with matters unrelated to the Debtor and this chapter 11 Case. Nelson Mullins has searched its electronic database for any connection it may have to the entities in the categories described below. The list of entities may have changed without our knowledge and may change during the pendency of this chapter 11 Case. Nelson Mullins will update this Declaration when necessary and when it becomes aware of material information. Nelson Mullins has searched the following categories of entities (collectively, the "Interested Parties"): a. b. c. d. e. f. g. h. i. j. The Debtors automotive dealers 50 largest unsecured creditors of the Debtor; Directors and officers of the Debtor; Affiliates of the Debtor and Debtors equity interest holder; Significant utilities; List of 300 major vendors; Beneficiaries and issuers of letters of credit; Major insurers and insurance brokers; Professional service providers; and Parties to litigation and attorneys.
22 23 24 25 26 27 28 13. Our review of the results of the search of our client database with regard to the Interested
Parties indicates that Nelson Mullins currently represents certain other creditors of the Debtors in matters totally unrelated to the Debtors or their Chapter 11 Cases. None of these parties represents more than 1% of NMRS' total value of time billed for the one-year preceding the Petition Date. NMRS expects that the Debtor will be adverse to some or all of these creditors. To the extent a direct conflict arises between the Debtor and any of these particular creditors and interested parties,
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Nelson Mullins will not represent the Debtor or the creditor in that particular dispute. Debtors counsel, Pachulski Stang Ziehl & Jones LLP, or other special counsel as may be necessary, shall represent the Debtor in such an event. Importantly, Nelson Mullins is proposed to be retained as special counsel for dealer network matters, and none of the parties identified below are current or former dealers of the Debtor. Our review of the Nelson Mullins database indicates the following Interested Parties are listed as current Nelson Mullins clients: a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t. u. v. w. x. y. z. aa. bb. cc. dd. ee. ff. gg. 14. SPX Service Solutions; UPS Freight and UPS; AT&T; Consumers Energy; Sheffield Financial, LLC; Ally Bank KPMG (affiliate) Bank of the West Bank of America GE Commercial Distribution Finance GE Money Bank Fed Ex Freight West Garmin Spectrum Lubricants Corp. Teksystems BBVA Compass General Motors, LLC Nissan North America Sun Life Assurance Company of Canada U.S. Bank JPMorgan Chase Wachovia Management Corp. Wells Fargo Sun Trust Bank Union Bank Federal Insurance Co./Chubb Specialty Sompo Japan Tokio Marine Aetna State Farm Mutual Automobile Insurance Co. Nationwide Life Insurance Co. Kaiser Permanente Automatic Data Processing, Inc. In addition, Nelson Mullins regularly works with a number of law firms and other
professional service firms identified on the Debtors list of professional service providers. 5
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15.
We continue to review and update the list of Interested Parties as that information is
2
3
received and the information listed below may change as a result of additional review and analysis. Nelson Mullins will continue to supplement this Declaration as needed. 16. In addition, Nelson Mullins previously represented the Debtor and its parent (who is
5
6
7
also a creditor), Suzuki Motor Corp., in connection with the joint prosecution of a patent infringement proceeding, Suzuki Motor Company and American Suzuki Motor Corp. v. Jiujiang Hison Motor Boat Manufacturing, Ltd, Civil Action No. 1: 12-cv-20626-PAS, in the United States District Comt for the Southern District of Florida. 17. To the best my knowledge and based, only Nelson Mullins and not any of its pmtners,
8
9 10
11
of counsel, or associates is a creditor, equity security holder, or an "insider" of the Debtor as that term is defined in section 101 (31) of the Bankruptcy Code. 18. To the best my knowledge, neither Nelson Mullins nor any of its pmtners, of counsel,
12 13
or associates is or was, within two years before the date of the filing of the petition, a director, officer, or employee of the Debtor. Except as disclosed herein, to the best of my knowledge, neither Nelson Mullins nor any of its partners, of counsel, or associates has any interest materially adverse to the interest of the estate or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the Debtor or for any other reason. 19. The attorneys from Nelson Mullins that will be involved in the case are familiar with
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the Bankruptcy Code, Bankruptcy Rules, Local Bankruptcy Rules, and United States Trustee Guides and will comply with them. I declare under penalty ofpe1jury under the laws of the United States of America that the foregoing is true and conect. Executed on this l ~rday ofNovember _, 201 , t Columbia, South Carolina.
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v-
3-C;Jlb
George B. Cauthen
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EXHIBIT C (Proposed Order)
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UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re: American Suzuki Motor Corporation,1 Debtor. Case No.: 12-_____ ( ) Chapter 11 ORDER GRANTING DEBTORS APPLICATION PURSUANT TO SECTIONS 327(E), 330, AND 331 OF THE BANKRUPTCY CODE, BANKRUPTCY RULES 2014 AND 2016 AND LOCAL RULES 2014-1 AND 2016-1 FOR AN ORDER AUTHORIZING THE RETENTION OF NELSON MULLINS RILEY & SCARBOROUGH, LLP AS SPECIAL DEALER NETWORK COUNSEL [NO HEARING REQUIRED UNLESS REQUESTED PER L.B.R. 2014-1(B)] Upon the application, dated November 5, 2012 (the Application),2 of American Suzuki Motor Corporation, the above captioned debtor and debtor in possession (the Debtor) for
The last four digits of the Debtors federal tax identification number are (8739). The Debtors address is: 3251 East Imperial Highway, Brea, CA 92821. 2 Capitalized terms not defined herein shall have the meaning ascribed to them in the Application.
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authorization, pursuant to sections 327(a), 330, and 331 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1, authorizing the retention of Nelson Mullins Riley & Scarborough, LLP (Nelson Mullins) as special dealer network counsel to the Debtor, nunc pro tunc to the Petition Date , all as more fully set forth in the Application; and the Court having jurisdiction to consider the Application and the relief requested therein pursuant to 28 U.S.C. 157 and 1334; and consideration of the Application and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b)(2); and venue being proper pursuant to 28 U.S.C. 1408 and 1409; and it appearing that the relief requested in the Application is in the best interests of the Debtors estate, its creditors, and all other parties in interest; and the Debtor having provided appropriate notice of the Application and the opportunity for a hearing on the Application under the circumstances and no other or further notice need be provided; and the Court having reviewed the Application and having heard the statements in support of the relief requested therein at a hearing before the Court (the Hearing); and the Court having considered the Application, all pleadings and papers filed in connection with the Application, including the Declaration of M. Freddie Reiss, Proposed Chief Restructuring Officer, in Support of Emergency First Day Motions s and the Memorandum of Points and Authorities filed in support thereof, and the arguments of counsel and evidence proffered at the hearing on the Application; after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. 2. The Application is GRANTED. Pursuant to section 327(a) of the Bankruptcy Code, the Debtor is authorized to
employ and retain Nelson Mullins as special dealer network counsel, effective nunc pro tunc to the Petition Date, on the terms set forth in the Application, the Statement and the Cauthen Declaration. 3. Nelson Mullins shall file applications and be compensated in accordance with
sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and such other interim compensation procedures as may be fixed by order of this Court. 4. The Court retains jurisdiction to interpret and enforce the terms of this Order and the
retention of Nelson Mullins. #####

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Case 8:12-bk-22808-CB

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Name: Takashi Iwatsuki Title: Chairman of the Board

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EXHIBIT A (Section 329 Statement)

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EXHIBIT B (Cauthen Declaration)

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EXHIBIT C (Proposed Order)

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retention of Nelson Mullins. #####

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