in the united states bankruptcy court for the …omnimgt.com/cmsvol2/pub_47241/674406_451.pdf ·...

4783475.1

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

In re: LOCKWOOD HOLDINGS, INC., et al.,1

Debtors.

§ § § § § § §

Chapter 11 Case No. 18-30197 (DRJ) (Jointly Administered)

ORDER AUTHORIZING THE RETENTION OF HILCO VALUATION SERVICES, LLC AS INVENTORY APPRAISER TO THE DEBTORS, EFFECTIVE AS OF JUNE 5, 2018

Upon the expedited application (the “Application”)2 of Lockwood Holdings, Inc. and

certain of its affiliates, the above-captioned debtors and debtors in possession (collectively, the

“Debtors”) for the entry of an order authorizing the Debtors to retain and employ Hilco Valuation

Services LLC (“Hilco”) as inventory appraiser effective as of June 5, 2018, pursuant to sections

327(a) of the Bankruptcy Code; and the Court having reviewed the Application and the Lawlor

Declaration; the Court having found that (i) the Court has jurisdiction over this matter pursuant to

28 U.S.C. §§ 157 and 1334, (ii) venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and

1409, (iii) this is a core proceeding pursuant to 28 U.S.C. § 157(b), (iv) the terms and conditions

of Hilco’s employment, including the compensation structure set forth in the Engagement Letter

are reasonable as required by section 328(a) of the Bankruptcy Code, and (v) notice of the

Application was sufficient under the circumstances; after due deliberation the Court having

determined that the relief requested in the Application is in the best interests of the Debtors, their

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number are: Lockwood Holdings, Inc. (9726); LH Aviation, LLC (6984); Piping Components, Inc. (0197); Lockwood International, Inc. (8597); Lockwood Enterprises, Inc. (6504); LMG Manufacturing, Inc. (9468); and 7807 Eagle Lane, LLC (7382). 2 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Application.

(Docket No. 431)

ENTERED 06/12/2018

Case 18-30197 Document 451 Filed in TXSB on 06/12/18 of 9

4783475.1

estates and their creditors; and good and sufficient cause appearing therefor, it is hereby

ORDERED that:

1. The Application is GRANTED as set forth herein and under the terms of the

Engagement Letter attached hereto as Exhibit 1, effective as of June 5, 2018.

2. The Debtors are authorized, pursuant to sections 327(a) and 328(a) of the

Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Bankruptcy Local Rules 2014-1 and

2016-1, to retain and employ Hilco as their appraiser in accordance with the terms and conditions

set forth in the Engagement Letter, except as provided by this Order.

3. Hilco’s compensation as set forth in the Engagement Letter is approved pursuant

to section 328(a) of the Bankruptcy Code, and Hilco shall be compensated and entitled to

reimbursement of expenses in accordance with the terms of, and at the times set forth in, the

Engagement Letter and this Order.

4. Notwithstanding the Debtors having paid Hilco’s fees and reimbursed Hilco’s

expenses at the times specified in the Engagement Letter, all such payments shall be subject to

review and approval of this Court, whether by final fee application or otherwise.

5. Notwithstanding the preceding paragraph of this Order and any provision to the

contrary in the Application or the Engagement Letter, the compensation and expense

reimbursement payable to Hilco pursuant to the Engagement Letter and this Order shall be subject

to review only pursuant to the standard set forth in section 328(a) of the Bankruptcy Code, and

shall not be subject to any other standard of review, including, without limitation, the standard of

review set forth in sections 330 or 331 of the Bankruptcy Code. Additionally, Hilco is not required

to file monthly fee statements or interim fee applications.


4783475.1

6. Notwithstanding anything to the contrary contained herein, the relief granted in this

Order and any payment to be made hereunder shall be subject to the terms of any orders authorizing

debtor in possession financing and/or granting the use of cash collateral approved by this Court in

these chapter 11 cases (including with respect to any budgets governing or relating to such use),

and to the extent there is any inconsistency between the terms of such financing and/or cash

collateral orders as to such payments, the terms of such financing and/or cash collateral orders

shall control. Hilco shall be deemed a professional entitled to the Carve Out provided under the

Final DIP Order. For clarity, any report or work product prepared by Hilco in connection with the

Appraisal Services shall only be used for decision-making purposes regarding financing of the

Debtors’ assets, whether such financing is in connection with a sale or disposition of the assets

pursuant to section 363 of the Bankruptcy Code, a chapter 11 plan, or other restructuring or

financing transaction, and shall not be used in a manner inconsistent with the restrictions on use

of proceeds or any other applicable terms set forth in the Final DIP Order.

7. The Debtors will share the final report produced in connection with the Appraisal

Services with the Committee and Wells Fargo Bank, N.A., as well as any drafts, subject to the

Committee and/or Wells Fargo Bank, N.A. executing a hold harmless agreement with Hilco.

8. Hilco shall use reasonable efforts (consistent with its professional obligations) not

to duplicate any of the services provided to the Debtors by any of its other retained professionals.

9. Notwithstanding anything to the contrary in the Application and the Engagement

Letter, Hilco shall have whatever duties, fiduciary or otherwise, that are imposed upon it by

applicable law.

10. The Debtors are authorized to take all actions necessary to effectuate the relief

granted pursuant to this Order in accordance with the Application.


4783475.1

11. To the extent this Order is inconsistent with the terms of the Engagement Letter,

the terms of this Order shall govern.

12. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), the terms

and conditions of this Order shall be immediately effective and enforceable upon its entry.

13. Notwithstanding anything to the contrary in the Engagement Letter, during the

pendency of these chapter 11 cases, this Court shall retain exclusive jurisdiction over (i) any

dispute arising out of or relating to the Engagement Letter, (ii) any dispute arising out of the

engagement of Hilco, and (iii) all matters arising from or related to the implementation of this

Order.

Signed on ___________, 2018 _______________________________________ DAVID R. JONES

UNITED STATES BANKRUPTCY JUDGE

Signed: ____________________________________ DAVID R. JONES UNITED STATES BANKRUPTCY JUDGE

June 12, 2018.


Exhibit 1

Engagement Letter


Hilco Valuation Services, LLC • 5 Revere Drive Suite 300 • Northbrook • IL • 60062 • phone: 847.313.4720 • fax:

847.897.0820

ATLANTA • BOSTON • CHICAGO • CHARLOTTE • DETROIT • LOS ANGELES • NEW YORK OAKLAND • TORONTO • LONDON (UK)

June 5, 2018 Lockwood Enterprises, Inc. 10203 Wallisville Road Houston, Texas, USA, 77013 RE: Inventory Evaluation and Appraisal – Lockwood Enterprises, Inc. Hilco Valuation Services, LLC (“Hilco”) is pleased to submit its proposal to Lockwood Enterprises, Inc. (“Lockwood” or the “Company”) concerning the Inventory Appraisal Lockwood has requested Hilco to undertake with respect to your Company. The proposal is organized in the following four sections:

♦ Form of Opinion and Objective ♦ Approach and Scope ♦ Timing ♦ Fees and Costs

INVENTORY APPRAISAL: Form of Opinion and Objective Hilco will appraise the inventory of Lockwood Enterprises, Inc. located within the United States and Canada. Hilco will provide to Lockwood a projection of gross and net liquidation value based upon an Orderly Liquidation Value (“NOLV”) scenario and a Fair Market Value of the inventory.

Net Orderly Liquidation Value (“NOLV”) is herein defined as: A professional opinion of the estimated most probable price, expressed in terms of currency, which the subject inventory typically could realize at a privately negotiated sale, properly advertised and professionally managed, by a seller obligated to sell over a reasonable period of time, net of occupancy and liquidation costs, as of the effective date of the appraisal report. Further, the ability of certain asset groupings to draw sufficient prospective buyers to insure competitive offers is considered. All inventory is to be sold on an “as is, where is” basis, with purchasers responsible for removal of assets at their own risk and expense. Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the value indicated. Fair Market Value (“FMV”) is herein defined as: The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.


of 4

Hilco Valuation Services, LLC

Approach and Scope Hilco plans to address the objectives through analysis of inventory reports; walkthrough of existing inventory, management reports and systems; and an on-site visit and inspection of representative facilities including Wallisville (including Oates) and Windfern (including Tomoe). As appropriate and during visits and analysis of the financial and operating data, Hilco will conduct management discussions with key Company executives. The inventory valuations will be based upon certain criteria including but not limited to:

♦ Inventory turnover by product type; ♦ Maintained gross margin by product type; ♦ Relationship of inventory ownership to sales volume; ♦ Balance of assortment of inventory; ♦ Review of condition of inventory; ♦ Review of current market conditions; and ♦ Analysis of the Company’s existing customer base.

Timing The following table illustrates Hilco’s proposed schedule: Acceptance of Proposal 06/05/18 Thursday Due Diligence to begin 06/06/18 Thursday

Data Due from Company 06/06/18 Thursday Final Report Delivered 06/27/18* Thursday *The above dates are contingent upon the timely execution of this engagement letter and the timely receipt of all the information detailed in Hilco’s Information Request List by the date(s) set forth above. Furthermore, this engagement letter is subject to and conditioned upon entry of an order, in form and substance acceptable to Hilco, on or before Tuesday, June 12, 2018, by the United States Bankruptcy Court for the Southern District of Texas (the “Approval Order”), which Approval Order shall provide for payment to Hilco in such amounts and at such times as set forth below. Fees and Costs Hilco’s fee for the Inventory Evaluation and Appraisal described above will be $40,000 plus reasonable travel expenses payable as follows: $20,000 upon entry of the Approval Order and the balance due upon completion but prior to the mailing or the release of any verbal or written


of 4

Hilco Valuation Services, LLC

indication of value and the release of the final report. Wiring instructions are attached for your convenience.1 The appraisal will conform to the guidelines established by the Uniform Standards of Professional Appraisal Practice. The appraisal will be subject to Hilco’s standard limitations and statement of conditions. The contents of the appraisal will not be transmitted to any third party without the express written consent of Lockwood. To the extent permitted by law, the maximum aggregate liability of Hilco, its members, affiliates, officers, directors, employees and agents to Lockwood arising out of or relating to this Agreement or the engagement or services to be provided hereunder, whether based upon or arising in tort, contract, statute strict liability or otherwise, shall be limited to the amount of fees paid by Lockwood to Hilco under this engagement letter for the services contracted. Neither Hilco nor its members, affiliates, officers, directors, employees, or agents shall be liable to Lockwood for any incidental, consequential, indirect, special, or punitive damages relating to this engagement. Each of Hilco and Lockwood hereby waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this agreement and any amendment, instrument, document or agreement delivered or which may in the future be delivered in connection herewith or therewith or arising from any relationship existing in connection with any of the foregoing, and agrees that any such action or proceeding shall be tried before a court and not before a jury. A final signed copy of the report will be sent to Lockwood. The appraisal report shall be used for decision-making purposes regarding financing of the assets, whether such financing is in connection with a sale or disposition of the assets pursuant to section 363 of the Bankruptcy Code, a chapter 11 plan, or other restructuring or financing transaction. The appraisal may be invalid if used for any other purpose. After receipt of payment in full of the appraisal fee, the appraisal reports shall be deemed to be owned by Lockwood who may, at its option, provide such appraisals to other persons interested in providing financing for any or all of the assets (“Other Parties”). The Other Parties shall be entitled to rely on the appraisal reports to the same extent as Lockwood. If the terms and conditions of this proposal are acceptable, kindly indicate your acceptance at the bottom of this page and return it via facsimile to (847) 897.0820. We look forward to working with you towards the successful completion of this project.

1 Hilco is not agreeing to and shall not be obligated to provide any testimony in connection with the foregoing. In the event Hilco is subpoenaed or otherwise compelled to testify, whether at deposition or trial, whether before the United States Bankruptcy Court for the Southern District of Texas or other court of competent jurisdiction, the Company shall compensate Hilco at the hourly rate of $495 per hour, including any time for preparation and review, plus any costs or expenses incurred. Travel time shall be billed at 50%.


in the united states bankruptcy court for the …omnimgt.com/cmsvol2/pub_47241/674406_451.pdf ·...

Documents