Case Converted to Chapter 7; Creditors Must File New Proof of Claim

On or about January 13, 2016, the Court entered an Order converting the Case to Chapter 7.  As of the date of that Order, the Committee has been disbanded, and Guy C. Fustine, Esq. has been appointed as the interim Chapter 7 Trustee.

All creditors must file a new proof of claim by May 23, 2016.

Debtor Files Sixth Amended Plan, Motion for Consideration, and Motion to Approve Financing

On or about February 27, 2015, the Debtor-out-of-possession filed its Sixth Amended Plan, as well as a Motion for Consideration of the same and a Motion to Approve Financing with Private Capital Group. The Debtor’s new filings seek to borrow $4m from Private Capital Group for the purposes of paying RBS $3m as payment in full of their previous settlement agreement, paying 1st Source Bank approximately $500,000 on their secured claim(s), and using the remaining $500,000 to fund additional payments needed on the Effective Date of the Plan. As a result, the Court entered an Order on March 2, 2015 setting a Status Conference for March 12, 2015 at 10:30am in the Erie Courtroom for the purpose of discussing the position of the Chapter 11 Trustee vis-à-vis the Debtor-out-of-possession’s Plan.

The Debtor continues to propose to pay unsecured creditors in full at Plan confirmation or in the months thereafter by way of monthly payments. However, the contingencies contained in the commitment letter from Private Capital Group render the proposed source of funding unclear. Separately, the Chapter 11 Trustee and the Committee filed a Motion to Reopen and Determine Status of Adversary Proceeding and Derivative Standing of [the Committee] for the purposes of determining the status of the prior claims against First Merit Bank, et al., regarding the fraudulent transfer of funds pursuant to an airplane loan. A hearing has been scheduled on that Motion for April 9, 2015 at 9:30am in the Erie Courtroom.

Court Appoints Chapter 11 Trustee; Denies Debtor's Plan Confirmation

Following up on the previous post, the Debtor and RBS had reportedly contacted the Court on the eve of the November 13 continued hearing to relay that they had come to an agreement. The agreement was initially presented to the Court at the continued hearing on the morning of Thursday, November 13. However, before the conclusion of that hearing, the agreement fell through apparently as a result of certain default provisions not acceptable to the Debtor and/or its principals.

As a result, on Friday, November 14, the United States Trustee’s Office appointed Guy C. Fustine, Esq., as Chapter 11 Trustee in all three (3) related Bankruptcy Cases, which the Court later approved. Attorney Fustine has since accepted that appointment. Additionally, confirmation of the Debtor's prior plan of reorganization was denied. It is reported that Mr. Fustine has been meeting with the Debtor and its representatives, among other parties, to determine the next course of action.

Court Grants Debtor’s Expedited Fourth Motion to Extend Time for RBS Settlement; Conditionally Appoints Chapter 11 Trustee

On or about October 27, 2014, the Debtor filed an Expedited Fourth Motion to Extend Time in connection with its prior settlement with RBS, which was approved by Court Order following an expedited hearing on October 31, 2014.  The Order directs the United States Trustee (“UST”) to appoint a Chapter 11 Trustee (the “Trustee”) effective as of 8:30a.m. on November 13 (the “Deadline”), the same day on which the Court scheduled the Debtor’s continued Plan Confirmation Hearing.  If the Debtor reports unequivocally to the Court prior to the Deadline that settlement payments satisfactory to RBS have been made, then the Trustee’s appointment shall not go into effect and the Plan Confirmation Hearing may proceed as scheduled.  If not, the Trustee presumably displaces the Debtor from control of the Bankruptcy Estate.

The UST is excused from filing a motion seeking approval of its selection for Trustee until the Deadline has passed.

Court Grants Debtor’s Third Motion to Extend Time for RBS Settlement; 1st Source Bank Files Motions for Contempt and Sanctions

On or about September 29, 2014, the Debtor filed a Third Motion to Extend Time in connection with its prior settlement with RBS, which was approved by Court Order following the Plan Confirmation Hearing on October 2, 2014.  The Order dated October 3, 2014, stated that payment of the RBS settlement amount per the Settlement Agreement and Settlement Orders shall be timely if paid by October 30, 2014, and the creation of the escrow deposits required in the GPE and JDOG cases for unsecured creditors shall be timely if made by November 15, 2014.  As a result, the Court entered an Order continuing the Plan Confirmation Hearing to November 13, 2014, at 9:30a.m. in the Erie Courtroom.

In the meantime, the Debtor participated in mediation in an effort to resolve its ongoing dispute with 1^st Source Bank surrounding their Motion for Relief from the Automatic Stay (“Motion for Relief”), which was unsuccessful. 1^st Source Bank has since filed a Motion for Contempt and Motion for Sanctions against Richard M. Osborne (“Osborne”), GPE, and the Debtor, upon which the Court entered an Order scheduling a hearing on the same for October 28, 2014, at 10:00a.m. in the Erie Courtroom, and directing Osborne to personally appear.  The Court also entered an Order scheduling Trial on 1^st Source Bank’s Motion for Relief for the same day and time.

Debtor Files Fifth Amended Plan and Disclosure Statement

On or about August 12, 2014, the Debtor filed its Fifth Amended Plan and Disclosure Statement in connection with its prior settlement with RBS.  These filings were made following the hearings held on July 21, at which further amendments were directed by the Court to address any remaining objections.  As a result, the Court entered an Order on August 13, 2014 approving the Disclosure Statement and scheduling a Plan Confirmation Hearing for October 2, 2014 at 10am in the Erie Courtroom, with objections due by September 19, 2014.

The Debtor continues to propose to pay unsecured creditors in full after Plan confirmation or in the months thereafter by depositing monthly payments into escrow for the payment of administrative expense claims and unsecured claims sequentially.  The Debtor also moved for extensions of time to meet its previously filed Amended Statement of Settlement Milestones with RBS, to which RBS consented.  Based upon the information available to the Committee, the Debtor has been able and will continue to meet those milestones as extended.  The Committee will continue to monitor these milestones to ensure that the unsecured creditor escrow is being funded for future distributions.

Debtor Files Fourth Amended Plan and Disclosure Statement

On or about June 8, 2014, the Debtor filed its Fourth Amended Plan and Disclosure Statement in connection with its prior settlement with RBS.  A hearing has been scheduled on the Disclosure Statement for Thursday, July 24 at 9:30am in the Erie Bankruptcy Courtroom, with objections due by July 17. 

Essentially the Debtor proposes to pay unsecured creditors in full after Plan confirmation or in the months thereafter by depositing monthly payments into escrow for the payment of administrative expense claims and unsecured claim sequentially.  The Debtor also previously filed an Amended Statement of Settlement Milestones setting forth the various obligations that the Debtor has under the settlement with RBS.  Based upon the information available to the Committee, the Debtor has been able to meet those milestones thus far.  The Committee will continue to monitor these milestones to ensure that the unsecured creditor escrow is being funded for future distributions.