In re Art & Architecture Books of the 21ST Century, Corp.

Decision Date18 March 2016
Docket NumberCase No. 2:13-bk-14135-RK
CourtUnited States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Central District of California
PartiesIn re ART AND ARCHITECTURE BOOKS OF THE 21st CENTURY, a California corporation, Debtor.

In re ART AND ARCHITECTURE BOOKS OF
THE 21st CENTURY, a California corporation, Debtor.

Case No. 2:13-bk-14135-RK

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA, LOS ANGELES DIVISION

March 18, 2016


Victor A. Sahn (CA Bar No. 97299)
vsahn@sulmeyerlaw.com
David S. Kupetz (CA Bar No. 125062)
dkupetz@sulmeyerlaw.com
Daniel A. Lev (CA Bar No. 129622)
dlev@sulmeyerlaw.com
Asa S. Hami (CA Bar No. 210728)
ahami@sulmeyerlaw.com
SulmeyerKupetz
A Professional Corporation
333 South Hope Street, Thirty-Fifth Floor
Los Angeles, California 90071-1406
Telephone: 213.626.2311
Facsimile: 213.629.4520

Attorneys for Official Committee of Unsecured
Creditors

Chapter 11

FINDINGS OF FACT AND CONCLUSIONS OF LAW RE CONFIRMATION OF SECOND AMENDED PLAN OF REORGANIZATION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS AS MODIFIED

Date: February 3, 4, and 24, 2016
Place: Courtroom 1675
U.S. Bankruptcy Court
255 East Temple Street
Los Angeles, CA 90012

The above-captioned Chapter 11 bankruptcy case came on for an evidentiary hearing before the undersigned United States Bankruptcy Judge on February 3, 4, and 24, 2016 to address confirmation of the Second Amended Plan of Reorganization of Official Committee of Unsecured Creditors, as modified by the modified plan filed as Docket No. 1859 (the "Plan"),1 filed by the

Page 2

Official Committee of Unsecured Creditors (the "Committee") in the above-captioned chapter 11 bankruptcy case of Art and Architecture Books of the 21st Century (the "Debtor"). Appearances at the confirmation hearing are reflected in the record. The following are the court's Findings of Fact and Conclusions of Law ("Findings") which support confirmation of the Plan, pursuant to Rules 7052 and 9014 of the Federal Rules of Bankruptcy Procedure and Rule 52 of the Federal Rules of Civil Procedure.

The Court considered the materials of the Committee included in the Committee's chapter 11 plan solicitation package with respect to its "Second Amended Plan of Reorganization of Official Committee of Unsecured Creditors" [Dkt. No. 1528], which materials include, in addition to the Plan: (a) the "Amended Supplemental Disclosure Statement Based on Second Amended Plan of Reorganization of Official Committee of Unsecured Creditors" (the "Supplemental Disclosure Statement"), which serves as a supplement to the "First Amended Disclosure Statement in Respect of First Amended Plan of Reorganization of Official Committee of Unsecured Creditors" [Dkt. No. 1018] (the "First Disclosure Statement"); (b) the Committee's form of ballot for the Committee Plan (the "Committee Ballot"); (c) the Notice of Voting Procedures on Committee's Plan (the "Notice of Voting Procedures"); (d) the Committee's proposed plan solicitation letter (the "Committee Solicitation Letter"); and (e) the Committee's proposed notice of hearing on confirmation of the Committee Plan, voting procedures, and related dates and deadlines (the "Committee Plan Confirmation Notice," and, collectively with the Committee Plan, the Supplemental Disclosure Statement, the First Disclosure Statement, the Committee Ballot, the Notice of Voting Procedures, and the Committee Solicitation Letter, as such documents may have been modified at and following the hearing, the "Committee Solicitation Materials").

In connection with the hearing on confirmation of the Plan, the Court also considered (1) all declarations submitted by the Committee in support of the Plan, including (without limitation) the declarations of Victor A. Sahn, Howard B. Grobstein, Jack Alexander, Robert Suiter, Elizabeth von Habsburg, Sam Leslie, A. Lavar Taylor, and Daniel A. Lev; (2) the testimony and other evidence presented on behalf of the Committee at the hearing on confirmation of the Plan; (3) the

Page 3

Memorandum of Official Committee of Unsecured Creditors Regarding Confirmation of Second Amended Plan of Reorganization [Dkt. No. 1722], including the Amended and Restated Plan Term Sheet and Plan Support Agreement, attached as Exhibit 2 thereto, between AERC Desmond's Tower, LLC ("AERC"), the Committee, Eric Wilson ("Wilson"), and Wilson Administrative Services ("WASL"), dated January 15, 2016 (as modified in the manner set forth in paragraphs IV and XII herein, the "AERC Plan Term Sheet"); (4) the settlement and plan support agreement (the "WFI Modification Agreement") reached between the Committee, Westminster Finance, Inc. ("WFI"), Wilson, and WASL; (5) the Term Sheet Agreement reached between the Committee, the Debtor, Ace New York, a California corporation, Ace Museum, a California Non-Profit, Wilson and Telford Building, Ltd. ("Telford") (the "Debtor Plan Term Sheet"); (6) all papers filed and all testimony and other evidence presented at the confirmation hearing in opposition to confirmation of the Plan; (7) the arguments and representations of counsel made at the confirmation hearing; and (8) the parties' further briefing on these Findings. The Court also considered the objections of the Los Angeles County Metropolitan Transportation Authority (the "MTA") and the Franchise Tax Board ("FTB"), which were resolved by agreement on amended terms to the Plan. Objections that Mr. Gary Lang, an individual, had raised to an earlier version of the Plan were resolved by stipulation prior to the deadline for objections to the Plan

Objections to confirmation of the Plan were filed by: (1) the Debtor; (2) Jennifer Kellen ("Kellen") and Douglas Chrismas ("Christmas"); (3) the FTB who appeared through Hutchinson Meltzer of the Attorney General's Office of the State of California; (4) the MTA; and (5) Mr. DeWain Valentine, an individual. As stated above, the FTB's and MTA's objections were resolved by agreed upon modifications to the Plan and for the reasons set forth on the record and herein, the remaining objections are overruled other than as provided in these Findings.

In accordance with the confirmation hearing, this Court being fully advised on the premises and good cause appearing therefor, this Court makes the following findings of fact and conclusions of law.

Page 4

FINDINGS OF FACT

1. This Chapter 11 bankruptcy case was filed on February 19, 2013. The Debtor has been and remains as the Debtor in Possession in this bankruptcy case since the commencement of this case.

2. The Debtor is in the business of selling modern artwork and art objects to the public, and to other galleries and purveyors of artwork and art objects. The Debtor maintains two business locations which are at 9430 Wilshire Boulevard, Beverly Hills, California ("Beverly Hills Property" or "Beverly Hills Location") and at 5514 Wilshire Boulevard, Los Angeles, California ("Mid-Wilshire Location"). Douglas Chrismas is the Debtor's principal.

3. Also, in June, 2015, the Debtor sold the Beverly Hills Property to the MTA for $40,000,000 pursuant to a purchase agreement (the "MTA Purchase Agreement") and obtained, subject to the terms and conditions of agreements reached between the Debtor and the MTA, an agreement to buy back the Option Property, as that term is defined in the MTA Purchase Agreement.

4. The Committee was appointed shortly after the filing of this Chapter 11 case as the duly appointed and constituted official committee of unsecured creditors, and has been continually involved in this bankruptcy case from the time of its appointment. The Committee filed a Plan of Reorganization in this case in early 2015, however, the hearing on confirmation of that Plan was continued following the Debtor's successfully arranging for the sale of the Beverly Hills Property to the MTA. Accordingly, as more particularly described below, the Committee reached an agreement with AERC which was first put before the Court on or about December 11, 2016. That agreement was the Term Sheet and Plan Support Agreement (the "First Term Sheet") and was entered into by and between the Committee, Wilson, a creditor and chairperson of the Committee, WASL, and AERC. The parties to the First Term Sheet include the creditors holding the most substantial claims in this case. Subsequently, these same parties entered into the Amended and Restated Term Sheet and Plan Support Agreement, dated January 15, 2016 (the "Second Term Sheet"), which revised the First Term Sheet in order to provide for a global

Page 5

settlement (the "Global Settlement") of all disputes between AERC, on the one hand and the bankruptcy estate. However, the Global Settlement was subject to approval of the applicable board or investment committee of AERC by February 3, 2016, and the parties agreed that if the board or investment committee did not approve the Global Settlement by February 3, 2016, that the provisions of paragraph VI.E of the Second Term Sheet would be replaced by the provisions of paragraph VI.E of the First Term Sheet (thereby creating the AERC Plan Term Sheet, as defined above), and the AERC Plan Term Sheet would continue as the effective agreement between the parties. Because such applicable board or investment committee approval was not obtained, paragraph VI.E of the First Term Sheet has replaced paragraph VI.E in the operative version of the AERC Plan Term Sheet that is referenced and incorporated herein. The Committee and AERC have further modified the AERC Plan Term Sheet to provide that Section XI, entitled Termination, is modified to provide that the AERC Plan Term Sheet shall be subject to termination by any party thereto upon one (1) day's written notice if any of the following are not achieved: (a) an order confirming the Plan shall be entered by no later than March 18, 2016; and (b) the Plan shall be substantially consummated no later than April 15, 2016. All references herein to the AERC Plan Term Sheet contemplate the agreement as modified by the terms described in this paragraph and Paragraph 12.

5. Following the filing of the First Term Sheet with the Court, pursuant to its order entered on January 13, 2016 [Dkt. No. 1619], the Court approved the Supplemental Disclosure Statement,...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT