On September 22, 2010, Andy S. Kong of the law firm Arent Fox submitted a “Supplemental Statement in support of: (1) Motion for authority to obtain post-petition financing; (2) Motion for order authorizing debtors and debtors-in-possession to employ certain professionals in the ordinary course of business and to set procedures; and (3) Joint motion of One South Lake Street, LLC and Wild Game Ng, LLC for order authorizing the interim modification of the debtors’ hotel casino lease and land lease.”
We have already discussed the lease and the suggested modification (3), so let’s focus on items (1) and (2).
Item (1) is a motion for authority to obtain post-petition financing.
The debtors (Hi-Five, One South and Wild Game Ng) seek financing in the amount of $179,980.50. This financing would “enable Wild Game Ng to pay the premiums required for its general liability insurance.” Is it incorrect to assume that Wild Game Ng has not been paying its required premiums? Did the general liability insurance for the Siena lapse?
This “Premium Financing” arranged by IPFS Corporation of California “is an agreement for insurance premium financing. Notwithstanding the inadvertent references to ‘working line of credit’ and ‘credit line’ in the Financing Motion, the Premium Financing Agreement does not provide a working capital line of credit for the Debtors.” That may be the case, but it appears there’s more to this $180k loan than meets the eye. (We are told this has been approved within the past day or two.)
Let’s pull another paragraph for review to underscore this sentiment:
“The Premium Financing Lender’s liens and security interests shall be senior to the rights of the estates in this or any subsequent proceeding under the Bankruptcy Code and to the rights of any other person or entity claiming a security interest in the Collateral, except, with respect to any loss payments which reduce the unearned premiums, the rights of mortgagees or other loss payees, including RE Reno to the extent it has a valid, perfected, and enforceable lien against the assets of One South and/or Wild Game.”
WOW. By the way, the bolded, underlined text above was not added for emphasis. It was emphasized as such in the filing. What we think this paragraph says is that IPFS will get paid its $180k before RE Reno investors get their cash. Furthermore, it’s the third time the document calls into question RE Reno’s “purported” status as a secured creditor “to the extent it has a valid, perfected, and enforceable lien against the assets of One South and/or Wild Game.”
Item (2) is a “motion for order authorizing debtors and debtors-in-possession to employ certain professionals in the ordinary course of business and to set procedures.” Essentially, the Debtors need to pay a group of businesses a certain amount of money per month to perform services vital to the operation of the Siena. So who are these “certain professionals”?
Let’s start with #4 and work our way up to #1.
Number 4 on the list is Onsite Consulting, who’s fees would be capped at $60,000 per month. That’s $720,000 per year. Onsite Consulting provides hospitality management and consulting for restaurants, casinos and hotels. On its face, Onsite sounds like a perfect fit. However, another glance would lead one to believe this is nothing more than putting lipstick on a pig (yes, the Siena is the pig). Onsite may be able to smear some lipstick on the Siena, but it’s still the Siena.
Number 3 on the list is Elever Professional, clocking in at $10,000 per month. Elever does executive recruiting, interim placement and performance consulting. This makes no sense and unless we are missing something here, Judge Newsome should consider denying this request.
Number 2 on the list is KMC, Inc. at $8,000 per month. There are two KMC’s on the internet – one does information management. The other manufactures fluid film bearings. Regardless, $8k is a boatload of cash to pay KMC.
This brings us to Numero Uno on the list and our favorite inclusion. Number one, at $4,000 per month “is a California virtual law firm that offers a variety of legal services at cost-effective flat rates. Our virtual law offices and user-friendly website ensure efficiency in the services we render at reduced expense to our clients.
Our last two points have to do with this document is in regard to Part IV, The Lease Motion.
First, it appears Konami Gaming has objected to the Lease Motion. According to Kong, the Arent Fox attorney proposed to represent Barney’s companies in this BK and restructuring process, “The Debtors are still evaluating the objection but submit that Konami Gaming, Inc.’s objections may be addressed, at least in part, by the Stipulation.” Looks like Konami isn’t putting up with Barney’s BS. We’ll continue monitoring Konami’s involvement.
Secondly, Kong writes, “The Debtors do not believe the above clarifications are controversial.”
When people who trusted Barney have lost everything, everything is controversial.