Enterprising Investor
2 weeks ago
Notice of Deposition of George L. Miller (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul, LLC, William Rouhana. Detweiler, Donald (10/18/24)
Since Chapter 7 trustees are appointed by the US Trustee, expect thorough representation.
Deposition scheduled for 10/28/24 at 1:00.
Source: PACER [Docket 402]
Notice of Deposition of Robert Warshauer (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul, LLC, William Rouhana. Detweiler, Donald (10/18/2024)
Deposition scheduled for 10/30/24 at 3:00.
Source: PACER [Docket 403]
Notice of Deposition of John Young (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul, LLC, William Rouhana. Detweiler, Donald (10/18/24)
Young was a former board member.
Deposition scheduled for 10/30/24 at 10:00.
Source: PACER [Docket 404]
Notice of Deposition of Richard Pachulski (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul, LLC, William Rouhana. Donald (10/18/24)
Deposition scheduled for 10/31/24 at 11:00.
Source: PACER [Docket 405]
Enterprising Investor
2 weeks ago
Motion for Protective Order // Chicken Soup for the Soul, LLC's and William Rouhana's Motion for Protective Order (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul, LLC, William Rouhana. Detweiler, Donald (10/17/24)
[Edited for content]
Pursuant Application, Robert Warshauer, a former director of CSSE and member of CSSE’s SRC, seeks entry of an order, seeking two distinct retentions: (i) an order “authorizing the SRC to retain and employ PSZJ from June 28, 2024 through and including July 3, 2024”; and (ii) an order “authorizing the Chapter 11 Debtors to retain and employ PSZJ as their chapter 11 counsel from July 4, 2024 through and including July 10, 2024, the conversion date for these cases.”
Pursuant to the 327(e) Application, the Chapter 11 Trustee seeks to retain PSZJ as special litigation and transactional counsel to the Chapter 7 Trustee effective as July 11, 2024.
The Omnibus Objection identifies a number of critical events and facts impacting the Applications, including (i) Pachulski Stang Ziehl & Jones LLP’s (“PSZJ”) undisputed representation of the SRC both before and during the chapter 11 cases; (ii) PSZJ’s purported change of representation from the SRC to the Debtors following the Court’s July 4, 2024 Interim DIP Financing Order; (iii) Creditor HPS Investment Partners, LLC’s (“HPS”) failure to fully fund the amounts payable under the Interim DIP Financing Order prior to the conversion of the chapter 11 cases; (iv) HPS using the Interim DIP Financing Order to reinstate the SRC; HPS using the conversion of the chapter 11 cases to chapter 7 as an excuse not to fund almost half of the Interim DIP Financing approved by the Court (thereby depriving employees of certain health coverage benefits bargained for as part of the Interim DIP Financing Order); (v) PSZJ assisting in these efforts by criticizing the Debtors’ financial condition (and Mr. Rouhana individually) before the Court, despite just days earlier claiming PSZJ lacked the records and documents necessary to assess the Debtors’ finances and operations; and (vi) the SRC’s inexplicable replacement of Reed Smith, LLP, the Debtors’ chapter 11 counsel, with the SRC’s individual counsel, PSZJ.
While the Omnibus Objection sets forth a troubling sequence of events and facts, it is not intended to prove liability of HPS, the SRC, or its individual members. Rather, it informs the Court of the events and questionable relationships and interests among the SRC, HPS, and PSZJ, all of which bear upon the Applicants’ burden of proof before the Court. To meet their burden for the Applications, Applicants must, inter alia, demonstrate that: (i) under the 327(a) Application, PSZJ did not hold or represent an interest adverse to the Debtors’ estates and was disinterested at the time of its alleged engagement by the Debtors in the chapter 11 cases; and (ii) under the 327(e) Application, the proposed retention of PSZJ is in the best interest of the estates, and PSZJ does not represent or hold any interest adverse to the Debtors or the estates with respect to the matters on which PSZJ would be employed.
Because Mr. Warshauer is a former director of CSSE who resigned his board position on or around July 10, 2024, Movants are filing simultaneously with this Motion for Protective Order an Emergency Motion to Exclude the Court’s Consideration of the 327(a) Application (D.I. TBD, the “Emergency Motion to Exclude”). The Emergency Motion to Exclude seeks to exclude the Court’s consideration of the 327(a) Application due to Mr. Warshauer’s lack of corporate authority to seek retention of PSZJ ex post facto, after his resignation from the CSSE board of directors and the clear and unambiguous retention requirements of section 327(a) of the Bankruptcy Code. Granting the Emergency Motion to Exclude would winnow the issues raised by the Applications and should be considered in connection with this Motion for Protective Order. Based on discussions between counsel to the Movants and Applicants, the Movants understand that the Applicants oppose such relief.
By this Motion for Protective Order, Movants seek entry of an order quashing the proposed Depositions pursuant to Fed. R. Civ. P. 26(c) because: (i) good cause exists to protect Movants from annoyance, embarrassment, oppression, undue burden, and expense; (ii) the Depositions are also not relevant to the Applications before the Court and seek privileged information; (iii) the discovery sought is disproportionate to the issues before the Court; and (iv) the Applications fail as a matter of law. Indeed, the Depositions appear to be nothing more than an improper attempt to launch an investigation of Mr. Rouhana and CSS on issues unrelated to the Applications. The Court should not countenance such gamesmanship by the Applicants and its proposed counsel.
A protective order is also necessary because the Applicants seek discovery as to certain legal contentions identified in the Omnibus Objection relating to potential claims the Debtors’ estates may have or hold against HPS and the SRC, PSZJ’s former clients. (Exhibit A at Ex. A.) These potential legal claims were raised by the chapter 11 Debtors’ former counsel, Reed Smith LLP, as potential legal claims against HPS (Exhibit C hereto, the “Reed Smith Correspondence”), not CSS or Mr. Rouhana. The Applicants presumably plan to explore these legal contentions and Reed Smith Correspondence with Movants. However, neither CSS nor Mr. Rouhana can swear under oath about the legal theories and contentions developed by Reed Smith on behalf of the chapter 11 Debtors, and the Applicants’ desire to examine Movants on such legal contentions would be an exercise in futility given the pervasive attorney-client privilege and work product objections and instructions that questions about Reed Smith’s characterizations regarding HPS’s alleged misconduct would inevitably draw.
To this end, the hearing on the Applications should not be turned into collateral litigation about whether the chapter 7 Debtors can prevail on legal contentions developed by the Debtors’ former chapter 11 counsel. Rather, the focus should, instead, be on whether the Applicants have met their burden of proof to retain PSZJ under the Applications, especially given PSZJ’s prior representations of the SRC and HPS.
Accordingly, Movants respectfully request the Court enter a protective order quashing the proposed Depositions in their entirety.
Source: PACER [Docket 396]
Enterprising Investor
2 weeks ago
Amended Notice of Deposition 30(b)(6) of Chicken Soup For The Soul, LLC (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul Entertainment, Inc., George L. Miller. (10/17/24)
Source: PACER [Docket 394]
Amended Notice of Deposition of William Rouhana (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul Entertainment, Inc., George L. Miller. (10/17/24)
Deposition has been rescheduled for 11/05/24 at 11:00 or at such other day and time as counsel may agree.
Source: PACER [Docket 395]
The reason for the postponement to follow.
Enterprising Investor
4 weeks ago
Notice of Deposition Notice of 30(b)(6) Deposition of Chicken Soup for the Soul, LLC (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul Entertainment, Inc., George L. Miller (10/08/24)
Source: PACER [Docket 384]
Notice of Deposition of William Rouhana (related document(s)225, 226, 283) Filed by Chicken Soup for the Soul Entertainment, Inc., George L. Miller. (10/08/24)
Source: PACER [Docket 385]
The Strategic Review Committee (the “SRC”) of Chicken Soup for the Soul Entertainment, Inc. (“CSSE”) and the other above-captioned debtors (the “Debtors”), the Debtors, and George L. Miller, the duly appointed chapter 7 trustee of the Debtors’ estates (the “Trustee” and, together, the “Applicants”), shall take the deposition of the person designated by Chicken Soup for the Soul, LLC (“CSS”) and William Rouhana, respectively, to testify on CSS’s behalf with respect to the topics described in Exhibit A attached hereto in connection with the contested matters relating to the Application of the Strategic Review Committee and the Debtors for Authorization to Employ and Retain Pachulski Stang Ziehl & Jones LLP as Chapter 11 Counsel Effective as of June 28, 2024 through and including July 10, 2024 [Docket No. 226] and the Application of the Chapter 7 Trustee for an Order Authorizing the Retention of Pachulski Stang Ziehl & Jones LLP as Special Litigation and Transactional Counsel to the Chapter 7 Trustee Effective as of July 11, 2024 [Docket No. 225] (the “Applications”), and in response to the Omnibus Objection to the Applications [Docket No. 283] (the “Objection”) filed by CSS and William Rouhana, CEO of CSS and former CEO and director of CSSE (the “Objectors”).
Exhibit A
Topics
1. The Objectors’ contention at Paragraph 55 of the Objection that “Debtors owned very contentious claims against PSZJ’s client the SRC (and, by extension, Warshauer and Young) relating to their roles in executing and facilitating HPS’s plan to prevent CSSE from obtaining
the $40 million working capital it needed.”
2. The Objectors’ contention at Paragraph 55 of the Objection that “Debtors’ claims against HPS were one of the Estates’ most valuable assets that any counsel for Debtors ought to have vigorously preserved and, at the appropriate time, pursued.”
3. The Objectors’ contention at Paragraph 55 of the Objection that “Warshauer and Young, were key witnesses to, and targets of, such claims [against HPS].”
4. The Objectors’ contention at Paragraph 56 of the Objection that “the circumstances and timing of PSZJ’s retention by the SRC strongly suggest PSZJ and HPS were working together to execute HPS’s prepetition plan to force Debtors’ liquidation for HPS’s gain to the detriment of Debtors’ shareholder, creditors, business partners, and employees.”
5. The Objectors’ contention at Paragraph 68 of the Objection that “PSZJ became the conduit for the SRC’s destruction of the value-preserving strategy Reed Smith had set into motion for the cases, including derailment of Debtors’ potential claims and causes of action against HPS.”
6. The Objectors’ contention at Paragraph 69, footnote 10 of the Objection that there are “claims and causes of action Debtors’ Estates may have or hold against the SRC and HPS relating to value-destructive actions taken by the SRC[.]”
7. The Objectors’ contention at Paragraph 77 of the Objection that “these PSZJ [current and former] clients caused the financial distress and the circumstances that ultimately led to Debtors seeking bankruptcy protection.”
Deposition scheduled for 10/22/24 at 11:00.
Enterprising Investor
3 months ago
It is highly unlikely that the trustee will need to retrieve the kiosks.
Motion for Relief from Stay (FEE) Motion Of CVS Pharmacy, Inc. for an Order Modifying the Automatic Stay Pursuant to 11 U.S.C. §§ 105(A) and 362(D) to Permit CVS Pharmacy, Inc. to Remove and Dispose of Kiosks. Fee Amount $199. Filed by CVS Pharmacy, Inc.. Hearing scheduled for 8/13/2024 at 10:00 AM at US Bankruptcy Court, 824 Market St., 3rd Fl., Courtroom #7, Wilmington, Delaware. Objections due by 7/30/2024. (7/16/24)
Source: PACER [Docket 144]
Certificate of No Objection regarding CVS Pharmacy, Inc.'s Motion for Relief from Stay (related document(s)144) Filed by CVS Pharmacy, Inc.. (8/02/24)
Source: PACER [Docket 200]
Motion to Shorten and Limit the Notice with Respect to Walmart Inc.'s Motion for an Order Modifying the Automatic Stay to Permit Walmart Inc. to Remove and Dispose of Kiosks (related document(s)202) Filed by Walmart Inc. f/k/a Wal-Mart Stores, Inc. (8/02/24)
Source: PACER [Docket 203]
1manband
3 months ago
This is the usual process for Chapter 7 companies. The stock price does decline slowly, and volume dries up, but the stock price remains above zero when it is finally cancelled.
The market is not that efficient. Many investors, particularly penny stock, Meme and MOMO investors, really don't understand how the market works and don't understand that Chapter 7 does require the stock to be cancelled. By law, the company cannot continue beyond the liquidation, although the stock may limp along until FINRA gets around to terminating trading.
There is also the issue of short positions. The current short position is over 600,000 shares. Obviously anyone short this stock will (eventually) see a 100% return on their short when the stock is cancelled. However, that timing is uncertain, and shorting is not free. They have to pay money to borrow the shares to short, and if the stock hangs around long enough that cost may exceed the value of their short position. So, they will cover from time to time and close out their positions and lock in their profit. Also, the stock they borrowed may be pulled back by the underlying owner, so the shorter may have to repurchase shares in the open market if they can't find new shares to borrow. That also contributes to trading volume.
Fundamentally, the stock is worthless now as there is zero chance the shareholders will receive anything in the liquidation. But, stocks don't trade purely on fundamental value, and you are seeing that here.
Enterprising Investor
3 months ago
Letter Regarding Trustee's Notice of Termination of Employment Upon Conversion to Chapter 7 Filed by George L. Miller (7/30/2024)
Please take notice that I am the duly appointed and acting interim Chapter 7 Trustee (the “Chapter 7 Trustee”) for the bankruptcy estates of Chicken Soup for the Soul Entertainment, Inc. et al, Case No. 24-11442 (TMH), and its affiliated debtors (collectively, the Debtors”) 1 which are pending in the United States Bankruptcy Court for the District of Delaware. The Debtors’ bankruptcy cases were filed on June 28, 2024 (the “Petition Date”), seeking relief under Chapter 11 of the Bankruptcy Code (11 U.S.C. § 101 et seq.) and were subsequently converted on July 10, 2024 (the “Conversion Date”) to liquidation cases under Chapter 7 of the Bankruptcy Code. Upon conversion to Chapter 7, the Bankruptcy Code does not permit the Chapter 7 Trustee to operate the Debtors’ businesses. Accordingly, the Debtors ceased operating upon conversion to Chapter 7 and all employees were terminated by operation of law effective as of the Conversion Date.
Source: PACER [Docket 192]
1manband
4 months ago
Yes, they can. But that is meaningless for the shareholders in regards to the value of the stock. The stock is going to zero, guaranteed. It will be cancelled under Chapter 7 with no payments to shareholders.
Even if any lawsuit against the Board is successful, it won't generate any funds for shareholders. The money would go towards making the creditors whole, and that is a massive nut to crack. The liquidation of the assets will bring pennies, and they need dollars to satisfy all of their liabilities and debt. Only after creditors receive 100% of what they are owed will shareholders get what is left, and that will not happen here. But even if it did and any lawsuit was successful and magically found enough money to pay off all the creditors in full AND provide additional money for shareholders, that money would be paid to shareholders as of the date of the malfeasance, not shareholders as of the final liquidation of the assets. In other words, it doesn't matter if a person owns the stock from this point forward or not. Buying the stock now would not get a person into the lawsuit - that has passed.
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