In re

UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
BACK YARD BURGERS, INC., et a/.
1
Case No. 12-12882 (PJW)
Debtors.
(Joint Administration Pending)
APPLICATION OF THE DEBTORS FOR ORDER AUTHORIZING AND APPROVING
THE RETENTION AND EMPLOYMENT OF RUST CONSULTING/OMNI
BANKRUPTCY AS ADMINISTRATIVE ADVISOR FOR THE DEBTORS, NUNC PRO
TUNC TO THE PETITION DATE
The above-captioned debtors and debtors-in-possession (collectively, the "Debtors")
hereby submit this application (the "Application") for entry of an order authorizing and
approving the services agreement (the "Services Agreement") between the Debtors and Rust
Consulting/Omni Bankruptcy ("Rust Omni") and authorizing and approving the retention and
employment of Rust Omni as administrative advisor ("Administrative Advisor") for the
Debtors in connection with these chapter 11 cases, nunc pro tunc to the Petition Date (as defined
below). In support of this Application, the Debtors rely on the declaration of Paul Deutch (the
"Deutch Declaration") attached hereto as Exhibit "A" and incorporated herein by reference. In
further support of the Application, the Debtors respectfully represent as follows:
Status of the Case
1. On the date hereof (the "Petition Date"), each of the Debtors filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code.
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax
identification number, are: Back Yard Burgers, Inc. (7I63), BYB Properties, Inc. (9046), Nashville BYB,
LLC ( 6507) and Little Rock Back Yard Burgers, Inc. (9 I 33 ). The mailing address of the Debtors is: St.
Clouds Building, 500 Church Street, Suite 200, Nashville, TN 372 I 9.
2. The Debtors have continued in possession of their properties and are operating
and managing their business as debtors-in-possession pursuant to sections 1107(a) and 1108 of
the Bankruptcy Code.
3. No request has been made for the appointment of a trustee or examiner and a
creditors' committee has not yet been appointed in these cases.
Jurisdiction, Venue, and Statutory Predicates
4. This Court has jurisdiction over this Application 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 is a core
proceeding pursuant to 28 U.S.C. 157.
5. The relief sought by this Application is based upon section 327(a) of chapter 11 of
title 11 ofthe United States Code (the "Bankruptcy Code"), Rule 2014 ofthe Federal Rules of
Bankruptcy Procedure (the "Bankruptcy Rules") and Rule 2014-1 of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of
Delaware (the "Local Bankruptcy Rules").
Background
6. The Debtors are an established quick-service restaurant chain with approximately
90 locations concentrated in the Southeast United States. The Debtors operate company owned
locations and maintain a franchise network of individually owned restaurants which collectively
employ approximately five hundred and twelve (512) employees. Back Yard Burgers began as a
single restaurant in Cleveland, Mississippi in 1987, and today, the Debtors pride themselves on
having a strong reputation for offering big and bold backyard tastes served straight from the grill
at value prices. The Debtors compete for business by offering black-angus hamburgers and
chicken grilled on-site on charcoal grills, providing savory flavors most usually found only in
2
neighborhood back yards. Meal offerings include chicken sandwiches, turkey burgers, hot dogs,
salads, sides, and desserts; however, the main focus of the menu is centered on the Debtors'
premium Black Angus burgers.
7. The Debtors own and operate approximately 25 restaurants (excluding franchised
locations), positioned as quick-service dining destinations where families and children can enjoy
a wide variety of freshly prepared meals and desserts for lunch and dinner. Restaurant
operations generated $18.4 million in revenue in the first eight (8) months of 2012 with a $2.4
million EBITDA loss.
8. The Debtors also have contracted with approximately forty-two ( 42) franchisees
to operate more than sixty-four (64) restaurants under franchise agreements. Franchisees are
offered the right to operate a Back Yard Burgers restaurant for an up front fee, and franchised
locations are operated under strict guidelines to present and preserve a unified brand image.
Franchising offers stable cash flows from the collection of royalties and product purchases,
accounting for approximately $1.3 million in revenue in the first eight (8) months of2012.
9. In the first nine months of 2012, the Debtors reported a 0.8 percent decline and
1.8 percent incline in same store sales of franchise and company -operated stores, respectively.
In the same segments, the Debtors reported declines of 4.0 percent and 5.7 percent, respectively,
in 2011. These decreases were driven by a decline in guest traffic.
10. A detailed factual background of the Debtors' businesses and operations, as well
as the events precipitating the commencement of these cases, is more fully set forth in the
Declaration of James E. Boyd, Jr. in Support of the Debtors' Chapter 11 Petitions and Requests
for First Day Relief (the "First Day Declaration"), filed contemporaneously herewith and
incorporated herein by reference.
3
Relief Requested
11. By this Application, the Debtors respectfully request entry of an order authorizing
and approving the retention of Rust Omni as Administrative Advisor for the Debtors in these
chapter 11 cases nunc pro tunc to the Petition Date pursuant to the Services Agreement attached
hereto as Exhibit "B" and incorporated by reference herein.
12. In addition to this Application, the Debtors have also filed an application under 28
U.S.C. 156(c) for authorization to retain Rust Omni to serve as the claims and noticing agent in
these cases (the "Section 156(c) Application"). Given that the administration of these cases will
require Rust Omni to perform duties outside the scope of 28 U.S.C. 156(c), the Debtors
supplement the Section 156( c) Application with this Application.
Rust Omni's Qualifications
13. The size, complexity of business, and corporate structure of the Debtors will make
preparation of Schedules particularly challenging. In view of these challenges, which are
exacerbated by the Debtors' small workforce, the Debtors submit that their retention of Rust
Omni to provide administrative services ("Administrative Services") is both necessary and in
the best interest of the Debtors, their estates and other parties-in-interest.
14. Rust Omni is one of the country's leading chapter 11 administrators, with
significant experience in noticing, claims administration, solicitation, balloting, and facilitating
other administrative aspects of Chapter 11 cases. Rust Omni has substantial experience
providing Administrative Services in matters of this size and complexity. See In re Allied
Systems Holdings, Inc., Case No. 12-11564 (CSS) (Bankr. D. Del. July 6, 2012); In re Fastship,
Inc., Case No. 12-10968 (BLS) (Bank. D. Del. March 20, 2012); In re Perkins Marie
4
Callender's, Case No. 11-11795 (KG) (Bankr. D. Del. June 14, 2011); In re Mervyn's Holding,
Inc., Case No. 08-11586 (KG) (Bankr. D. Del. July 30, 2008)_2
15. The Debtors submit that using Rust Omni to provide the Administrative Services
will provide the most cost-effective and efficient administration of these Chapter 11 Cases. The
Debtors chose Rust Omni based on its experience, reputation, and the competitiveness of its fees.
By retaining Rust Omni to provide Administrative Services in these Chapter 11 Cases, the
Debtors and their professionals will be substantially relieved of handling such services and will
be more able to focus on the Debtors' reorganization efforts. Accordingly, the Debtors believe
that Rust Omni is well qualified to provide the Administrative Services, and that Rust Omni's
retention in such capacity is in the best interests of the Debtors' estates and their creditors.
Services to be Provided
16. In particular, the Debtors seek to retain Rust Omni to provide, among other
things, the following bankruptcy Administrative Services, if and to the extent requested:
a. assisting with, among other things, solicitation, balloting and tabulation
and calculation of votes, as well as preparing any appropriate reports, as
required in furtherance of confirmation of plan( s) of reorganization;
b. generating an official ballot certification and testifying, if necessary, in
support of the ballot tabulation results;
c. gathering data in conjunction with the preparation, and assist with the
preparation, of the Debtors' schedules of assets and liabilities and
statements of financial affairs;
d. generating, providing and assisting with claims objections, exhibits,
claims reconciliation, and related matters;
e. providing a confidential data room;
f. managing any distributions pursuant to a confirmed plan of
reorganization; and
Because of the voluminous nature of the orders cited herein, they are not attached to the Application.
5
g. providing such other claims processing, noticing, solicitation, balloting
and Administrative Services described in the Services Agreement, but not
included in the Section 156( c) Application, as may be requested from time
to time by the Debtors.
Compensation and Representation of Disinterestedness
17. The fees Rust Omni will charge in connection with its services to the Debtors are
set forth in the Services Agreement. Rust Omni's rates are competitive and comparable to the
rates Rust Omni' s competitors charge for similar services, and are reasonable given the quality
of Rust Omni's services and Rust Omni's bankruptcy expertise. Additionally, Rust Omni will
seek reimbursement from the Debtors for reasonable expenses in accordance with the terms of
the Services Agreement.
18. Rust Omni intends to apply to the Court for allowance of compensation and
reimbursement of out-of-pocket expenses incurred after the Petition Date in connection with the
services it provides pursuant to this Application, as Administrative Advisor in these chapter 11
cases, subject to Court approval and in accordance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the guidelines established by the
United States Trustee for the District of Delaware and further orders of this Court.
19. The Deutch Declaration represents that, to the best of Paul Deutch's knowledge
Rust Omni is not connected with the Debtors, their creditors, the United States Trustee or any
person employed by the Office ofthe United States Trustee, and that to the best of Rust Omni's
knowledge, after due inquiry, Rust Omni does not by reason of any direct or indirect relationship
to, connection with or interest in the Debtors, hold or represent any interest adverse to the
Debtors, their estates or any class of creditors or equity interest holders with respect to the
6
matters upon which it is to be engaged. Based upon the Deutch Declaration, Rust Omni is a
"disinterested person," as that term is defined in section 1 01 ( 14) of the Bankruptcy Code.
Basis For Relief
20. 11 U.S.C. 327(a) provides that a debtor, subject to Court approval:
[M]ay employ one or more attorneys, accountants, appraisers,
auctioneers, or other professional persons, that do not hold or
represent an interest adverse to the estate, and that are
disinterested persons, to represent or assist the [debtor] in carrying
out the [debtor]' s duties under this title.
11 U.S.C. 327(a).
21. Bankruptcy Rule 20 14( a) requires that an application for retention include:
[S]pecific facts showing the necessity for the employment, the
name of the [firm] to be employed, the reasons for the selection,
the professional services to be rendered, and proposed arrangement
for compensation, and, to the best of the applicant's knowledge, all
of the [firm's] connections with the debtor, creditors, any other
party in interest, their respective attorneys and accountants, the
United States trustee, or any person employed in the office of the
United States trustee.
Fed. R. Bankr. P. 2014
22. To help manage administrative tasks with respect to the hundreds of creditors,
equity security holders, and other parties in interest that are expected to be involved in the
Debtors' chapter 11 cases, the Debtors seek an order appointing Rust Omni as the Administrative
Advisor in these chapter 11 cases pursuant to sections 327(a) of the Bankruptcy Code and
Bankruptcy Rule 2014, and Local Bankruptcy Rule 2014-1.
23. For the above reasons, the Debtors submit that Rust Omni's employment 1s
necessary and in the best interests of the Debtors and their estates.
7
Notice
24. Notice of this Motion has been given to the following parties or, in lieu thereof, to
their counsel, if known: (a) the Office of the United States Trustee for the District of Delaware;
(b) counsel to Harbert Mezzanine Partners, L.P., as the Debtors' prepetition lenders; (c) counsel
to Pharos Capital Partners II, L.P. and Pharos Capital Partners II-A, L.P., as the Debtors'
postpetition lenders; (d) creditors holding the thirty (30) largest unsecured claims as set forth in
the consolidated list filed with the Debtors' petitions; (e) those parties requesting notice pursuant
to Rule 2002; (f) the Office of the United States Attorney General for the District of Delaware;
and (g) the Internal Revenue Service. The Debtors submit that, in light of the nature of the relief
requested, no other or further notice need be given.
No Prior Request
25. No prior request for the relief sought in this Application has been made to this or
any other court.
WHEREFORE, the Debtors respectfully request that the Court enter an order
(i) authorizing the retention and employment of Rust Omni as Administrative Advisor to perform
the services described herein; and (ii) granting the Debtors such other relief as the Court deems
just and proper.
Dated: ,__ ___ ], 2012
es E. Boyd, Jr.
Chief Executive Officer
8
EXHIBIT A
The Deutch Declaration
In re
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
BACK YARD BURGERS, INC., et a/.
1
Case No. 12-12882 (PJW)
Debtors.
(Joint Administration Pending)
DECLARATION OF PAUL DEUTCH IN SUPPORT OF
APPLICATION OF THE DEBTORS FOR ORDER AUTHORIZING AND APPROVING
THE RETENTION AND EMPLOYMENT OF RUST CONSUL TING/OMNI
BANKRUPTCY AS ADMINISTRATIVE ADVISOR FOR THE DEBTORS, NUNC PRO
TUNC TO THE PETITION DATE
Paul Deutch, hereby declares, under penalty of perjury, as follows:
1. I am the Executive Managing Director of Rust Consulting/Omni Bankruptcy
("Rust Omni") with offices located at 1120 A venue of the Americas, 4th Floor, New York, NY
10036, and I am authorized to make and submit this declaration on behalf of Rust Omni. This
declaration is submitted in support ofthe application (the "Application")
2
of Back Yard Burgers,
Inc. ("BYB"), one of the above-captioned debtors and debtors-in-possession (the "Debtors"), for
authorization to retain and employ Rust Omni as administrative advisor ("Administrative
Advisor") for the Debtors in the above-captioned chapter 11 cases. The statements contained
herein are based upon personal knowledge.
2. As Administrative Advisor, Rust Omni will perform the Administrative Services
("Administrative Services") specified in the Application and the Services Agreement (the
"Services Agreement").
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax
identification number, are: Back Yard Burgers, Inc. (7163), BYB Properties, Inc. (9046), Nashville BYB,
LLC (6507) and Little Rock Back Yard Burgers, Inc. (9133). The mailing address of the Debtors is: St.
Clouds Building, 500 Church Street, Suite 200, Nashville, TN 37219.
Capitalized terms not defined herein shall have the meaning ascribed to them in the Application.
3. Rust Omni is a leading chapter 11 administrator with expertise in noticing, claims
processmg, balloting, solicitation and distribution. Rust Omni is well qualified to provide
experienced noticing, claims and balloting services in connection with these cases. Among the
other chapter 11 cases in which Rust Omni is, or was, retained as Administrative Advisor to
Debtors are: See In re Allied Systems Holdings, Inc., Case No. 12-11564 (CSS) (Bankr. D. Del.
July 6, 2012); In re Fastship, Inc., Case No. 12-10968 (BLS) (Bank. D. Del. March 20, 2012); In
re Perkins Marie Callender's, Case No. 11-11795 (KG) (Bankr. D. Del. June 14, 2011); In re
Mervyn's Holding, Inc., Case No. 08-11586 (KG) (Bankr. D. Del. July 30, 2008).
3
4. Rust Omni specializes in providing Administrative Services and has provided
identical or substantially similar services to chapter 11 debtors in other cases. Accordingly, I
believe Rust Onmi is well qualified to act as Administrative Advisor in these cases.
5. Rust Omni is a "disinterested person," as that term is defined in section 101(14)
of title 28 of the United States Code (the "Bankruptcy Code"), in that Rust Omni and its
professional personnel:
a. are not creditors, equity security holders or insiders of the Debtors;
b. are not and were not, within two (2) years before the date of the filing of these
cases, directors, officers or employees of the Debtors; and
c. do not have an interest materially adverse to the interests of the Debtors' estates
or any class of creditors or equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in, the Debtors.
6. If Rust Omni' s proposed retention is approved by this Court, Rust Omni will not
accept any engagement or perform any service for any entity or person other than the Debtors in
these cases without the prior approval of this Court. Rust Omni may, however, provide
professional services to entities or persons that may be creditors or parties in interest in these
Because of the voluminous nature of the orders cited herein, they are not attached to the Application.
2
cases, which services do not relate to, or have any direct connection with, these cases or the
Debtors.
7. Rust Omni represents, among other things, that:
a. It will not consider itself employed by the United States government and shall not
seek any compensation from the United States government in its capacity as
Administrative Advisor;
b. By accepting employment in these cases, Rust Omni waives any right to receive
compensation from the United States government;
c. In its capacity as Administrative Advisor, Rust Omni will not be an agent of the
United States and will not act on behalf of the United States; and
d. Rust Omni will not employ any past or present employees of the Debtors in
connection with its work as Administrative Advisor.
8. In addition to the Application, the Debtors have also filed an application under
28 U.S.C. 156(c) for authorization to retain Rust Omni to serve as the claims and noticing
agent in these cases.
9. Rust Omni has reviewed its electronic database to determine whether it has any
relationships with the entities provided by the Debtors. At this time, we are not aware of any
relationship which would present a disqualifying conflict of interest. Should Rust Omni
discover any new relevant facts or relationships bearing on the matters described herein during
the period of its retention, Rust Omni will use reasonable efforts to file promptly a
supplemental declaration.
10. In performing the services of Administrative Advisor, Rust Omni will charge
the Debtors the rates set forth in the Services Agreement.
I declare, pursuant to 26 U.S.C. 1746, under penalty of perjury, that the foregoing is
true and correct to the best of my information, knowledge and belief.
3
FTL 108875052v11
4
I
EXHIBITB
Services Agreement
5
"
RUST!Omni
,_ ':,, t-i ' r": ~ - i : (; ,:, ; [i 1: It.', rt !; (.1' I ;:. '>'
October 3, 2012
Laura S. Derise, Esq.
Associate Legal Counsel
Back Yard Burgers, Inc.
St. Cloud Corner
500 Church Street, Suite 200
Nashville, TN 37219
Dear Laura:
Re: Rust Consulting/Omni Bankruptcy
-Retention letter
This letter (the "'Agreement") will acknowledge that you have requested Rust
Consulting/Omni Bankruptcy ("Rust Omni'') to provide services to Back Yard Burgers,
Inc., BYB Properties, Inc., Little Rock Back Yard Burgers, Inc., and Nashville BYB, LLC
(collectively, the "Companies") in preparation of, and in cormection with, the Companies'
anticipated chapter 11 filings. Rust Omni will make itself available to the Companies, as
requested, for the purposes of assisting the Companies with pre- and post-petition case
administration matters including preparation and management of the creditor matrix,
preparation of schedules of assets and liabilities and statement of financial affairs, claims
management, noticing, plan solicitation and tabulation, distribution, the development and
maintenance of an informational website and any other services as may be requested by
the Companies.
The services to be rendered by Rust Omni will be billed at our normal hourly rates
which range from $25.00 to $175.00 per hour as per the attached rate sheet. Rates are
adjusted annually on January 2nd of each year, and are subject to increases not to exceed
ten (1 0%) percent per annum. Increases greater than ten (1 0%) percent per annum will be
discussed with you, and be subject to your prior approval, before becoming effective.
For all such services rendered, we require a$ J 0,000 deposit, which such deposit
must be replenished immediately prior to the commencement of the Companies' chapter
I I proceedings. All charges will be on a po11al to portal basis plus out-of-pocket
expenses. Rust Omni shall be compensated on a monthly basis for those services
performed by Rust Omni during the preceding calendar month. Invoices are payable
Laura S. Derise, Esq.
October 3, 2012
Page 2
upon submission.
I
RUSTjOmni
:;. (.") - ~ '' :,. "i ' :., .::. j ~ ,;_ 1! >: Jf i ~ 1 p l ' y
Each of Rust Omni and the Companies, on behalf of themselves and their
respective employees, agents, professionals and representatives, agrees to keep
confidential all non-public records, systems, procedures, software and other information
received from the other party in connection with the services provided under this
Agreement; provided, however, that if either pa1iy reasonably believes that it is required
to produce any such information by order of any govemmental agency or other regulatory
body it may, upon not less than ftve (5) business days' written notice to the other party,
release the required information.
The parties understand that the software programs and other materials furnished
by Rust Omni pursuant to this Agreement and/or developed during the course of this
Agreement by Rust Omni are the sole property of Rust Omni. The term "program" shall
include, without limitation, data processing programs, specifications, applications,
routines, and documentation. The Companies agree not to copy or pennit others to copy
the source code from the support software or any other programs or materials fumished
pursuant to this Agreement. The Companies fU!iher agree that any ideas, concepts, know
how or techniques relating to data processing or Rust Omni's perfo1mance of its services
developed during the course of its Agreement by Rust Omni shall be the exclusive
property of Rust Omni. Upon the Companies' request at any time or times while this
Agreement is in effect, Rust Omni shall immediately deliver to the Companies and/or the
Companies' retained professionals, at the Companies' expense, any or all of the non-
proprietary data and records held by Rust Omni pursuant to this Agreement, in the form
requested by the Companies.
This Agreement is terminable at will by the parties hereto upon thirty (30) days
written notice. In the event that this Agreement is terminated, regardless of the reason for
such tennination, Rust Omni shall cooperate with the Con1panies to maintain an orderly
transfer of all records, data and information and record keeping functions, and shall
provide aU necessary staff, services and assistance required for an orderly transfer. The
Companies agree to pay for such services in accordance with Rust Omni's then existing
prices for such services.
Laura S. Derise, Esq.
October 3, 2012
Page 3
8
RUSTIOnlni
c ::. . : i ' .:. ;. ,, :, ' , .. ,, ;., 1 ::
Please acknowledge the above by signing and returning a copy of this letter.
Should you have any questions regarding the above, please do not hesitate to call me.
En c.
cc: Maria Diconza, Esq.
Brian Osborne
Eric Schwarz

Back Yard Burgers, Inc.
BYB Properties, Inc.
Little Rock Back Yard Burgers, Inc.
Nashville BYB, LLC
nv
Laura S. Derise, Esq.
Associate Legal Counsel
In re
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
BACKYARD BURGERS, INC., et al.
1
Case No. 12-12882 (PJW)
Debtors.
(Joint Administration Pending)
Ref. Docket No.
ORDER AUTHORIZING AND APPROVING THE RETENTION AND
EMPLOYMENT OF RUST CONSULTING/OMNI BANKRUPTCY AS
ADMINISTRATIVE ADVISOR FOR THE DEBTORS, NUNC PRO TUNC TO
THE PETITION DATE
Upon the application (the "Application")
2
of Back Yard Burgers, Inc. ("BYB"), one of
the above-captioned debtors and debtors-in-possession (the "Debtors"), for entry of an order
pursuant to section 327(a) of title 28 of the United States Code (the "Bankruptcy Code"), Rule
2014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and the Rule
2014-1 ofthe Local Rules of Bankruptcy Practice and Procedure ofthe United States Bankruptcy
Court for the District of Delaware (the "Local Rules"), authorizing the retention of Rust
Consulting/Omni Bankruptcy ("Rust Omni") as administrative advisor ("Administrative
Advisor") in these chapter 11 cases nunc pro tunc to the Petition Date, on the terms and
conditions set forth on the agreement by and between the Debtors and Rust Omni, dated October
3, 2012 (the "Services Agreement"); and upon Rust Omni's Declaration; and it appearing that
this Court has jurisdiction to consider the Application pursuant to 28 U.S.C. 157 and 1334;
and it appearing that venue of these cases and the Application in this district is proper pursuant to
The Debtors in these chapter 11 Cases, along with the last four digits of each Debtor's federal tax
identification number, are: Back Yard Burgers, Inc. (7163), BYB Properties, Inc. (9046), Nashville BYB,
LLC (6507) and Little Rock Back Yard Burgers, Inc. (9133). The mailing address of the Debtors is: St.
Clouds Building, 500 Church Street, Suite 200, Nashville, TN 37219.
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Application.
28 U.S.C. 1408 and 1409; and it appearing that this matter is a core proceeding pursuant to 28
U.S.C. 157(b ); and this Court having determined that the relief requested in the Application is
in the best interests of the Debtors, their estates, their creditors and other parties in interest; and it
appearing that proper and adequate notice of the Application has been given and that no other or
further notice is necessary; and after due deliberation thereon; and good and sufficient cause
appearing therefor,
IT IS HEREBY ORDERED THAT:
1. For reasons set forth on the record, the Application is GRANTED.
2. The Debtors are authorized to retain Rust Omni as their Administrative Advisor in
accordance with the terms and conditions set forth in the Application and the Services
Agreement, effective nunc pro tunc to the Petition Date.
3. Rust Omni shall apply to the Court for allowance of compensation and
reimbursement of out-of-pocket expenses incurred in these cases under the Application after the
Petition Date in accordance with the applicable provisions of the Bankruptcy Code, the
Bankruptcy Rules, the Local Rules, the guidelines established by the United States Trustee for
the District of Delaware and further orders of this Court.
4. The indemnification provisions of the Services Agreement are approved, subject
to the following clarifications:
a. Subject to the provisions of subparagraphs (c) and (d) below, the
Debtors are authorized to indemnify, and shall indemnify, Rust Omni in
accordance with the Services Agreement and to the extent permitted by
applicable law, for any claim arising from, related to, or in connection
with Rust Omni' s performance of the services described in the Services
Agreement;
b. Rust Omni shall not be entitled to indemnification, contribution, or
reimbursement for services other than the claims agent services provided
under the Services Agreement, unless such services and the
indemnification, contribution, or reimbursement therefore are approved by
the Court;
c. Notwithstanding anything to the contrary in the Services
Agreement, the Debtors shall have no obligation to indemnify any person,
or provide contribution or reimbursement to any person, for any claim or
expense to the extent that it is either (i) judicially determined (the
determination having become final and no longer subject to appeal) to
have arisen from that person's gross negligence or willful misconduct; (ii)
for a contractual dispute in which the Debtors allege the breach of Rust
Omni's contractual obligations unless the Court determines that
indemnification, contribution, or reimbursement would be permissible
pursuant to In reUnited Artists Theatre Co., 315 F.3d 217 (3d Cir. 2003);
or (iii) settled prior to a judicial determination as to the exclusions set
forth in clauses (i) and (ii), but determined by this Court, after notice and a
hearing, to be a claim or expense for which that person should not receive
indemnity, contribution, or reimbursement under the terms of the Services
Agreement as modified by the Court's Order; and
d. If, before the earlier of (i) the entry of an order confirming a
chapter 11 plan in these cases (that order having become a final order no
longer subject to appeal) and (ii) the entry of an order closing these
chapter 11 cases, Rust Omni believes that it is entitled to the payment of
any amounts by the Debtors on account of the Debtors' indemnification,
contribution, or reimbursement obligations under the Services Agreement,
including without limitation the advancement of defense costs, Rust Omni
must file an application before this Court, and the Debtors may not pay
any such amounts to Rust Omni before the entry of an order by this Court
approving the payment. This subparagraph (d) is intended only to specify
the period of time under which the Court shall have jurisdiction over any
request for payment by Rust Omni for indemnification, contribution, or
reimbursement, and not a provision limiting the duration of the Debtors'
obligation to indemnify Rust Omni.
5. The Debtors and Rust Omni are authorized to take all actions necessary to
effectuate the relief granted pursuant to this Order in accordance with the Application.
6. The Court retains jurisdiction with respect to all matters arising from or related to
the implementation of this Order.
Dated:
--------
PETERJ. WALSH
UNITED STATES BANKRUPTCY JUDGE