Brigade Capital Management filed with the U.S. Bankruptcy Court a motion to appoint an examiner to the Cenveo case.
The motion explains, “It is apparent – based merely on an initial review of publicly available information – that the Debtors’ controlling shareholders, officers and/or directors (i) have been involved in insider/related party transactions, (ii) have received exorbitant, non-market compensation and benefits, and (iii) have engaged in questionable negotiations culminating in the proposed restructuring support agreement (the ‘RSA’) entered into between the Debtors and certain holders of First Lien Notes (the ‘Ad Hoc Group’). Despite providing holders of Second Lien Notes (and unsecured creditors) with only a de minimis recovery, the RSA contemplates a substantial management incentive plan and employment agreements for existing management and is based on a low value of the Debtors’ business that is inconsistent with prior public disclosures.”
In addition, “Just one day before the Petition Date…and only after the RSA including full releases for all of the Debtors’ insiders was in place, Cenveo’s board of directors allegedly appointed an individual to oversee an investigation into any potential claims or causes of action against officers, directors, insiders and other parties arising out of prepetition conduct. The Debtors have provided no other details about the scope of the investigation, the financial resources allocated to it, or the identification of those professionals advising such individual….Brigade therefore respectfully requests that this Court appoint an examiner to investigate the insider and related party transactions as well as the potential improprieties involved in the RSA negotiations to ensure a neutral, independent, and proper investigation is conducted that all parties can trust.”
The Court scheduled a March 6, 2018 hearing to consider the motion.
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