katten muchin rosenman llpstrettodocs.s3.amazonaws.com/files/4fa9e0d8-2da7-4c0f...19-10971-smb doc...

Hearing Date: May 7, 2020 at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: April 30, 2020 at 4:00 p.m. (prevailing Eastern Time)

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Steven J. Reisman, Esq. Jerry L. Hall, Esq. (admitted pro hac vice) Cindi M. Giglio, Esq.

Peter A. Siddiqui, Esq. (admitted pro hac vice)

KATTEN MUCHIN ROSENMAN LLP 575 Madison Avenue New York, NY 10022

KATTEN MUCHIN ROSENMAN LLP 525 W. Monroe Street Chicago, IL 60661

Telephone: (212) 940-8800 Telephone: (312) 902-5455 Facsimile: (212) 940-8876 Facsimile: (312) 902-1061 [email protected] [email protected] [email protected]

[email protected]

Counsel to Debtors and Debtors-in-Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

) In re: ) Chapter 11 ) SIZMEK INC., et al.,1 ) Case No. 19-10971 (SMB) ) Debtors. ) (Jointly Administered) )

NOTICE OF HEARING ON DEBTORS’ MOTION FOR

ENTRY OF ORDER AUTHORIZING THE COMPROMISE OF CERTAIN CLAIMS WITH AMAZON.COM, INC. AND GRANTING RELATED RELIEF

PLEASE TAKE NOTICE that on April 14, 2020, Debtors filed the Debtors’ Motion for

Entry of Order Authorizing the Compromise of Certain Claims with Amazon.com, Inc. and

Granting Related Relief (the “Motion”).

PLEASE TAKE FURTHER NOTICE, that a hearing (the “Hearing”) on the Motion

will be held before the Honorable Stuart M. Bernstein, United States Bankruptcy Judge, in

1 Debtors in these Chapter 11 Cases, along with the last four digits of each Debtor’s federal tax identification number, include: Sizmek Inc. (4624); Sizmek DSP, Inc. (2319); Point Roll, Inc. (3173); Sizmek Technologies, Inc. (6402); Wireless Artist LLC (0302); WirelessDeveloper, Inc. (9686); X Plus One Solutions, Inc. (8106); X Plus Two Solutions, LLC (4914); and Solomon Acquisition Corp (4229). The location of Debtors’ service address for purposes of these Chapter 11 Cases is: Realization Services, Inc. Attn: Melanie Browne, P.O. Box 189, Bedford Hills, NY 10507.

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Courtroom 723, United States Bankruptcy Court for the Southern District of New York, One

Bowling Green, New York, NY 10004-1408 (the “Bankruptcy Court”) on May 7, 2020 at 10:00

a.m. (prevailing Eastern Time).

PLEASE TAKE FURTHER NOTICE that any responses or objections (each,

an “Objection”) to the Motion and the relief requested therein shall be in writing, shall conform

to the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules for the Southern

District of New York, the Order Establishing Certain Notice, Case Management, and

Administrative Procedures (the “Case Management Order”) [Docket No. 103], shall set forth the

basis for the Objection and the specific grounds therefore, and shall be filed with the Court

electronically in accordance with General Order M-399 by registered users of the Court’s case

filing system (the User’s Manual for the Electronic Case Filing System can be found at

http://www.nysb.uscourts.gov, the official website for the Court), with a hard copy delivered

directly to chambers pursuant to Local Bankruptcy Rule 9070-1 and served so as to be actually

received no later than April 30, 2020, at 4:00 p.m. (prevailing Eastern Time) (the “Objection

Deadline”) upon:

a. Counsel to Debtors, Katten Muchin Rosenman LLP, 575 Madison Avenue, New

York, NY 10022-2585, Attn.: Steven J. Reisman, Esq. and Jerry L. Hall, Esq., and

Katten Muchin Rosenman LLP, 525 West Monroe St., Chicago, IL 60661-3693,

Attn.: Peter A. Siddiqui, Esq.;

b. The Office of The United States Trustee, U.S. Federal Office Building, 201 Varick

Street, Suite 1006, New York, New York 10014, Attn.: Richard Morrissey, Esq.;

c. Counsel to the Official Committee of Unsecured Creditors, Cooley LLP, 55 Hudson

Yards, New York, NY 10001, Attn: Michael Klein, Esq.; and Lauren Reichardt, Esq.


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d. Any other parties required to be served pursuant to the Case Management Order.

PLEASE TAKE FURTHER NOTICE that if no Objection to the Motion is received by

the Objection Deadline, the Motion shall be deemed unopposed, and the Bankruptcy Court may

enter an order granting the Motion without a hearing.

PLEASE TAKE FURTHER NOTICE that the Hearing may be continued or adjourned

thereafter from time to time without further notice other than an announcement of the adjourned

date or dates at the Hearing. Debtors will file an agenda before the Hearing, which may modify

or supplement the Motion to be heard at the Hearing.

PLEASE TAKE FURTHER NOTICE that a copy of the Motion may be obtained free

of charge by visiting the website of Stretto at https://cases.stretto.com/sizmek. You may also

obtain copies of any pleadings by visiting the Court’s website at http://www.nysb.uscourts.gov in

accordance with the procedures and fees set forth therein.


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Dated: April 14, 2020 /s/ Steven J. Reisman New York, New York KATTEN MUCHIN ROSENMAN LLP

Steven J. Reisman, Esq. Cindi M. Giglio, Esq. Jerry L. Hall, Esq. (admitted pro hac vice) 575 Madison Avenue New York, NY 10022

Telephone: (212) 940-8800

Facsimile: (212) 940-8876 Email: [email protected]

[email protected] [email protected]

-and- Peter A. Siddiqui, Esq. (admitted pro hac vice) KATTEN MUCHIN ROSENMAN LLP 525 W. Monroe Street Chicago, IL 60661 Telephone: (312) 902-5455 Email: [email protected]



Hearing Date: May 7, 2020 at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: April 30, 2020 at 4:00 p.m. (prevailing Eastern Time)

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Steven J. Reisman, Esq. Jerry L. Hall, Esq. (admitted pro hac vice)

Peter A. Siddiqui, Esq. (admitted pro hac vice) KATTEN MUCHIN ROSENMAN LLP

Cindi M. Giglio, Esq. KATTEN MUCHIN ROSENMAN LLP

525 W. Monroe Street Chicago, IL 60661

575 Madison Avenue Telephone: (312) 902-5455 New York, NY 10022 Facsimile: (312) 902-1061 Telephone: (212) 940-8800 [email protected] Facsimile: (212) 940-8876 [email protected] [email protected] [email protected]




DEBTORS’ MOTION FOR ENTRY OF ORDER AUTHORIZING THE COMPROMISE OF CERTAIN CLAIMS

WITH AMAZON.COM, INC. AND GRANTING RELATED RELIEF

Sizmek Inc. and certain of its affiliates, as debtors and debtors-in-possession in the

above-captioned cases (collectively, the “Debtors”), hereby move (the “Motion”) this Court for

entry of an order, substantially in the form attached hereto as Exhibit A (the “Proposed Order”),

(i) approving the compromise of certain disputes among Debtor Sizmek Technologies, Inc.

(“Parent”), certain of Debtors’ non-debtor affiliates, and Amazon.com, Inc. (“Amazon”), as set

forth in the Settlement and Release of Claims attached as Exhibit 1 to the Proposed Order (the

2Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Sizmek Inc. (4624); Sizmek DSP, Inc. (2319); Point Roll, Inc. (3173); Sizmek Technologies, Inc. (6402); Wireless Artist LLC (0302); Wireless Developer, Inc. (9686); X Plus One Solutions, Inc. (8106); X Plus Two Solutions, LLC (4914); and Solomon Acquisition Corp. (4229). The location of Debtors’ service address for purposes of these chapter 11 cases is: Realization Services, Inc. Attn: Melanie Browne, P.O. Box 189, Bedford Hills, NY 10507


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“Settlement Agreement”), and (ii) granting related relief. In support of this Motion, Debtors

represent as follows:

JURISDICTION & VENUE

1. The United States Bankruptcy Court for the Southern District of New York (the

“Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the

Amended Standing Order of Reference from the United States District Court for the Southern

District of New York, dated February 1, 2012. Debtors confirm their consent, pursuant

Bankruptcy Rule 7008 to the entry of a final order by the Court in connection with this Motion to

the extent that it is later determined that the Court, absent consent of the parties, cannot enter

final orders or judgments in connection herewith consistent with Article III of the United States

Constitution.

2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory basis for the relief requested herein is Rule 9019(a) of the Federal

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

RELEVANT BACKGROUND

4. On June 20, 2019, the Court entered the Order Authorizing and Approving

Private Sale of Debtor Seller’s Portion of the AdServer Business Free and Clear of All Liens,

Claims, Encumbrances, and Other Interests, and Granting Related Relief [Dkt. No. 269] (the

“Sale Order”).

5. Pursuant to the Sale Order, the Court approved that certain Asset Purchase

Agreement dated May 31, 2019 (the “APA”) among Amazon, as purchaser, and Parent, and

Parent, Sizmek Technologies Ltd., an Israeli company (“Sizmek Israel”), and Sizmek

Technologies Ltd., a company incorporated in England and Wales (“Sizmek UK” and

collectively with Parent and Sizmek Israel, the “Sellers”), as sellers, pursuant to which the


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Sellers sold to Amazon, and Amazon purchased from the Sellers, the Sellers’ AdServer business

(the “Sale”). In connection with the APA, Amazon and the Sellers also entered into that certain

Transition Services Agreement dated as of June 21, 2019 (the “TSA”). The Sale closed on June

21, 2019 (the “Closing”).

6. The APA requires the Sellers to pay to Amazon, within ten business days of

receipt thereof, any payments from any third party relating to or arising from Amazon’s

ownership of the assets purchased under the APA or its operation of the AdServer business after

the Closing, including any payments with respect to Purchaser Accounts Receivable (as defined

in the APA).

7. Following the Closing, Amazon alleged that the Sellers received and failed to turn

over proceeds of Purchaser Accounts Receivable in excess of $3 million in violation of the APA.

On January 5, 2020, Amazon filed a limited objection to the Debtors’ Motion for the Entry of

Interim and Final Orders (I) Authorizing the Debtors to Use Cash Collateral Pursuant to 11

U.S.C. § 363; and (II) Granting Adequate Protection Pursuant to 11 U.S.C. § 361, 362, 363 and

507 [Dkt. No. 580] (the “Cash Collateral Motion”) based on those grounds.

8. At the hearing regarding the Cash Collateral Motion on January 7, 2020, the

Sellers and Amazon reached agreement whereby, among other things, the Sellers would transfer

certain funds to Amazon in satisfaction of their obligations to turn over the proceeds of

Purchaser Accounts Receivable and reconcile amounts owing under the TSA (the “Cash

Collateral Agreement”).

9. On January 9, 2020, the Court entered the Final Order (I) Authorizing the

Debtors to Use Cash Collateral Pursuant to 11.U.S.C. § 363, (II) Granting Adequate Protection

Pursuant to 11 U.S.C. §§ 361, 362, 363, and 507, and (III) Granting Related Relief [Dkt. No.


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588] (the “Final Cash Collateral Order”), granting the Cash Collateral Motion on a final basis

and incorporating the terms of the Cash Collateral Agreement. (See Final Cash Collateral Order

at ¶ 12.)

10. Following the entry of, and in compliance with, the Final Cash Collateral Order,

Amazon and the Sellers have exchanged reports relating to the collection of accounts receivable,

and have worked in good faith to reconcile the amounts of outstanding Purchaser Accounts

Receivable, the amounts of Sellers Accounts Receivable (as defined in the APA) received by

Amazon, the amounts due from Amazon and its affiliates to Debtors and their affiliates,

including under the TSA, and amounts due from Debtors and their affiliates to Amazon and its

affiliates, including under the TSA.

11. The Parties have participated in settlement discussions regarding their disputes

and have agreed in good faith to settle, release, and compromise all their potential claims and

disputes related to the APA and the TSA (the “Settlement”), as set forth in the Settlement

Agreement, subject to the Court’s approval.

12. As set forth in further detail in the Settlement Agreement, Amazon and the Sellers

have agreed, among other things: (i) that the Sellers will continue to remit funds to Amazon as

required by the Final Cash Collateral Order, up to the amount of the Outstanding Purchase

Accounts Receivable (as defined in the Final Cash Collateral Order); (ii) that Amazon’s

obligation under the APA to remit to the Sellers collections in respect of Sellers Accounts

Receivable shall remain in full force and effect; (iii) to terminate all Forward TSA Obligations

(as defined in the Settlement Agreement); (iv) that Amazon will continue to perform its reverse

WD1, WD2, and WD-3 TSA services to the Sellers pursuant to the TSA in accordance with the

terms thereof, with the Sellers remitting payment to Amazon for such services in accordance


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with the TSA; and (v) that no other payments between Amazon, the Sellers, and each of their

affiliates will be made in connection with the APA, the TSA, or the other Transaction

Documents (as defined in the APA), other than as provided in the Settlement Agreement.

13. Additionally, as set forth in further detail in the Settlement Agreement, Amazon

and the Sellers have agreed to release each other and their respective affiliates from all claims for

relief, damages, demands, suits, actions, injuries, losses, costs, expenses and/or causes of action

arising out of or relating to the APA, the TSA, the above-captioned bankruptcy cases, and the

maters addressed in the Amazon Reconciliation (as defined in the Settlement Agreement) prior

to the date of the Settlement Agreement.

14. Debtors have determined that the Settlement is in the best interest of Debtors and

their estates and accordingly request that the Court approve the Settlement Agreement and the

terms thereof.

15. Debtors have consulted with the Official Committee of Unsecured Creditors (the

“Committee”) and Cerberus Business Finance, LLC (“Cerberus”), Debtors’ pre-petition secured

lender, and have been advised that they have no objection to the relief requested herein.

RELIEF REQUESTED

16. By this Motion and pursuant to Bankruptcy Rule 9019, Debtors request the entry

of an Order, substantially in the form of the Proposed Order, approving the Settlement as set

forth in the Settlement Agreement.

BASIS FOR RELIEF REQUESTED

17. Bankruptcy Rule 9019(a) provides that “[o]n motion by the trustee and after

notice and a hearing, the court may approve a compromise or settlement.” A bankruptcy court

must determine whether a proposed settlement “is in the best interest of an estate[.]” See Nellis

v. Shugrue, 165 B.R. 115, 122 (S.D.N.Y. 1994). When evaluating a proposed settlement, a


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bankruptcy court need not decide the issues of law and facts raised therein, but rather should

“canvass the issues and see whether the settlement falls below the lowest point in the range of

reasonableness.” Finkelstein v. W.T. Grant Co. (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d

Cir. 1983) (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972)) (internal quotations and

brackets omitted). Importantly, a bankruptcy court’s discretion should be exercised “in light of

the general public policy favoring settlements.” In re Dewey & LeBoeuf LLP, 478 B.R. 627, 641

(S.D.N.Y. 2012).

18. In deciding whether a particular settlement is fair and equitable, courts consider:

(a) the balance between the litigation’s possibility of success and the settlement’s benefits; (b)

the likelihood of complex and protracted litigation, with its attendant expense, inconvenience,

and delay; (c) the paramount interests of creditors; (d) whether parties in interest support the

settlement; (e) the competency and experience of counsel supporting, and the experience and

knowledge of the bankruptcy court judge reviewing, the settlement; (f) the nature and breadth of

releases to be obtained by officers and directors; and (g) the extent to which the settlement is the

product of arm’s length bargaining. See Motorola, Inc. v. Official Comm. of Unsecured

Creditors (In re Iridium Operating LLC), 478 F.3d 452, 462 (2d Cir. 2007) (internal quotations

omitted).

19. Debtors submit that the Settlement Agreement represents a fair and equitable

compromise, falls well within the range of reasonableness and satisfies each of the foregoing

factors. Specifically, though the disputes resolved under the Settlement Agreement could have

been resolved through litigation, such litigation would likely require a significant investment of

resources, while the Settlement Agreement resolves the disputes without any adversarial process,

saving the estates from bearing the costs of litigation, as well as the additional reconciliations


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contemplated by the APA and TSA, and thus provides value. Thus, the Settlement Agreement is

beneficial to Debtors’ creditors and their stakeholders. Additionally, the Settlement Agreement

is supported by the Committee and Cerberus and was negotiated in good faith by the parties

without collusion and at arm’s length.

20. Debtors have determined, in their sound business judgment, that the Settlement is

fair, reasonable, and beneficial to their estates and their stakeholders. Accordingly, Debtors

respectfully request that the Court approve the Settlement Agreement pursuant to Bankruptcy

Rule 9019.

REQUEST FOR BANKRUPTCY RULE 6004 WAIVER

21. Debtors submit that waiver of the stay imposed by Bankruptcy Rule 6004(h) is

necessary to preserve the value of their estates. Accordingly, Debtors respectfully request that

the Court waive the 14-day stay imposed by Rule 6004(h) as the nature of the relief sought

herein warrants immediate relief.

NOTICE

22. In accordance with paragraph 19(d) of the Order Establishing Certain Notice,

Case Management, and Administrative Procedures [Dkt. No. 103] (the “Case Management

Order”), entered by this Court on April 23, 2019, Debtors will serve notice of this Motion on the

Master Service List (as defined in the Case Management Order), which includes all parties that

may be directly affected by the Settlement Agreement, as well as the parties to the Settlement

Agreement. In light of the nature of the relief requested, no other or further notice need to be

given.

NO PRIOR REQUEST

23. No previous application for the relief requested herein has been made by Debtors

to this or any other court.


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WHEREFORE, Debtors respectfully request that the Court enter an Order, substantially

in the form of the Proposed Order, granting the relief requested herein and such other and further

relief as is just and proper.

Dated: April 14, 2020 /s/ Steven J. Reisman New York, New York KATTEN MUCHIN ROSENMAN LLP

Steven J. Reisman, Esq. Jerry L. Hall, Esq. (admitted pro hac vice) Cindi M. Giglio, Esq. 575 Madison Avenue

New York, NY 10022

Telephone: (212) 940-8800 Facsimile: (212) 940-8876 Email: [email protected] [email protected]

[email protected] -and- KATTEN MUCHIN ROSENMAN LLP Peter A. Siddiqui, Esq. (admitted pro hac vice) 525 W. Monroe Street Chicago, IL 60661 Telephone: (312) 902-5455 Email: [email protected]



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Exhibit A

Proposed Order


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ORDER GRANTING DEBTORS’ MOTION FOR ENTRY OF ORDER

AUTHORIZING THE COMPROMISE OF CERTAIN CLAIMS WITH AMAZON.COM, INC. AND GRANTING RELATED RELIEF

Upon consideration of the motion (the “Motion”)2 of the Debtors and debtors in

possession herein (collectively, the “Debtors”) for entry of an order authorizing the compromise

of certain claims with Amazon.com, Inc. (“Amazon”) and granting related relief; and this Court

having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C.

§§ 157 and 1334; and consideration of the Motion and the relief requested therein being a core

proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to

28 U.S.C.§§ 1408 and 1409; and due and sufficient notice of the Motion and opportunity for

objections having been provided; and it appearing that no other or further notice need be

provided; and the relief requested being a reasonable exercise of Debtors’ sound business

judgment consistent with their fiduciary duties and in the best interests of Debtors, their estates,

and their creditors; and this Court having determined that the legal and factual bases set forth in

1Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Sizmek Inc. (4624); Sizmek DSP, Inc. (2319); Point Roll, Inc. (3173); Sizmek Technologies, Inc. (6402); Wireless Artist LLC (0302); Wireless Developer, Inc. (9686); X Plus One Solutions, Inc. (8106); X Plus Two Solutions, LLC (4914); and Solomon Acquisition Corp. (4229). The location of Debtors’ service address for purposes of these chapter 11 cases is: Realization Services, Inc. Attn: Melanie Browne, P.O. Box 189, Bedford Hills, NY 10507

2 Capitalized terms not defined herein shall have the meanings ascribed to them in the Motion.


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the Motion establish just cause for the relief granted herein; and after due deliberation and

sufficient cause appearing therefor it is hereby:

ORDERED, ADJUDGED, AND DECREED THAT:

1. The Motion is GRANTED as set forth herein.

2. Debtors are authorized to enter into the Settlement Agreement attached hereto as

Exhibit 1.

3. Debtors are authorized and empowered to take all actions necessary or

appropriate to implement the relief granted in this Order.

4. The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.

5. This Court shall retain jurisdiction with respect to all matters arising from or

related to the implementation or interpretation of this Order.

Dated: __________, 2020

New York, New York THE HONORABLE STUART M. BERNSTEIN UNITED STATES BANKRUPTCY JUDGE


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Exhibit 1 to Order

Settlement Agreement


-9- SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS 502866461 v3

US_143777846

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IN WITNESS WHEREOF, the undersigned executed this Agreement as of the dates noted below, to be effective upon the entry of an order approving this Agreement by the Bankruptcy Court.

Sellers: Barry Kasoff as representative of Sizmek Technologies Ltd., an Israeli company. By:__________________________________ Dated:April 10, 2020 Barry L. Kasoff, CFO Barry Kasoff as representative of Sizmek Technologies, Inc., a Delaware corporation. By:__________________________________ Dated:April 10, 2020 Barry L. Kasoff, CFO George Pappachen as representative of Sizmek Technologies Ltd., a company incorporated in England and Wales. By:__________________________________ Dated:April 10, 2020 George Pappachen, Director Amazon: Paul Kotas as representative of Amazon.com, Inc., a Delaware corporation. By:__________________________________ Dated:April 10, 2020 Paul Kotas, SVP

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