Re: TPL BK Pacers

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Re: TPL BK Pacers

in response to

TPL BK Pacers

BaNosser

posted on Jan 11, 2014 10:41AM

TABLE OF AUTHORITIES

Cases

In re Bergeron

, __ WL __, 2013 WL 5874571 (Bkrtcy.E.D.N.C., 2013).................................... 24

In re G-I Holdings, Inc.

, 385 F. 3d 313 (3

Cir, 2004) .................................................................. 4

In re Marvel Entertainment Group, Inc.,

140 F.3d 463 (3

Cir. 1998).................................... 4, 23

In re Sundale Ltd.

, 400 B.R. 890 (Bankr. S.D. Fla. 2009).............................................................. 5

Statutes

11 U.S.C. section 1104(a)(1). ..................................................................................................

..... 10

11 U.S.C. section 1104(a)(2) ...................................................................................................

. 2, 22

11 U.S.C. section 1129(a)(11) ..................................................................................................

.... 23

11 U.S.C. section 365 ..........................................................................................................

......... 21

California Civil Code section 1622.............................................................................................

.. 15

Other Authorities

7 Collier on Bankruptc

¶ 1104.02[3][d][ii] ................................................................................. 23

7 Collier on Bankruptcy

Par. 1104.02[3][a] .................................................................................. 4

7 Collier on Bankruptcy

Par. 1104.02[3][b][i] ............................................................................... 3

CACI 304 Oral or Written Contract Terms .................................................................................. 15

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 3 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 1

INTRODUCTION

1. Only weeks before a vote by creditors can take place on two remarkably similar

competing plans that both call for unsecured clai

mants to take over the right to manage and

collect proceeds from the MMP Portfolio which di

ffer primarily as to who will manage the rest

of TPL post-confirmation and whether Portfolios

other than MMP are

commercialized by TPL,

the OCC

seeks a different end to the case. In its Motion

, the OCC seeks (1) appointment of a

trustee, (2) issuance of an order

to show cause re: contempt, (3) di

sclosure of (a) the details of

settlements proposed to the OCC that were d

eemed approved under the terms of this Court’s

Settlement Procedures Order

, (b) the status of proceeds from those approved settlements, and

(4) an injunction direc

ting sequestration of 100% of the proc

eeds of the approved settlements.

2. While the OCC cites both Bankruptcy Code section 1104(a)(1) and 1104(a)(2) in

its Motion, the main thrust of the

filing appears to be that the a

lleged violation of this Court’s

Settlement Procedures Order constitutes cause fo

r relief. The facts surrounding TPL’s strict

adherence to and the OCC’s disr

egard of the Settlement Proce

dures Order are straightforward

and undisputed. TPL proposed nine settlements

to the OCC under the terms of the Settlement

Procedures Order. The OCC approv

ed the first six settlements but fa

iled to exercise its rights as

to the remaining three, choosing instead to ma

ke demands for new concessions not within the

four corners of the Settlement Procedures Order,

for reasons beyond the purpose and intent of the

Official Unsecured Creditors’ Committee.

Motion Of Creditors’ Committee For Orders (1)

Directing The Appointment Of A Chapter 11

Trustee; And (2) Directing The Debtor And Dani

el E. Leckrone To Appear And Show Cause

Why They Should Not Be Held In Contempt

For Violation Of This Court’s Order.

Order on Motion Regarding Settlement Pr

ocedures dated May 7, 2013, docket no. 124.

The OCC also requested that approval of the O

CC’s disclosure statement be tracked with that

of the TPL Plan and that confirmation of both r

un parallel; the Court granted that request at a

December 18, 2013 hearing.

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 4 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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procedures established in the Se

ttlement Procedures Order, th

at could not in any event be

performed without violating other c

ourt orders and causing the cessation of

TPL’s operations.

3. The OCC disregarded its obligations

under the Settlement Procedures Order

because it elected (a) within 48 hours of receiving

notification of three

settlements from TPL

conduct a call or meeting with TPL, (b) immediately following such meeting to communicate to

TPL whether it opposed the settlem

ent in a statement of positi

on, and (c) to explain in its

statement of position why the settl

ements proposed were “not in

the best interest of the

bankruptcy estate, or why Settlement Committ

ee believes a better settlement[s] could be

obtained.” As a result, all three settlements

were deemed approved under the terms of the

Settlement Procedures Order and promptly documen

ted and paid. Since the facts are undisputed,

this Court will be in a position at the Ja

nuary 23, 2014 hearing to determine which party

followed the requirements of the Settlement

Procedures Order and which did not.

4. The OCC has not otherwise met its high ev

identiary burden to establish cause for

the appointment of a trustee or established by cl

ear and convincing evidence that appointment of

a trustee is in the best interests of the esta

te under Bankruptcy Code section 1104(a)(2). TPL

believes the appointment of a trus

tee will significantly

negatively impact its Portfolios and the

revenue to be earned therefrom and s

hould not occur at this time.

II.

ARGUMENT

Appointment of a Trustee Is An Extraordinary Remedy, and The

OCC’s Unsupported and Erroneous Alle

gations Do Not Fulfill Its Burden

of Proof as to Cause.

5. “The appointment of a trustee in a ch

apter 11 case is an ex

traordinary remedy.

The drafters of the Code recognized that, as a

general rule, in the absence of fraud, dishonesty,

incompetence, gross mismanagement, or similar grounds, the debtor’s management should be

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 5 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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given an opportunity to propose a pl

an of reorganization for the debt

or. For this reason there is a

strong presumption that the debtor should be pe

rmitted to remain in possession absent a showing

of the need for appointment of a tr

ustee . . . .” 7 Collier on Bankruptcy

Par. 1104.02[3][b][i]

(Alan N. Resnick and Henry J. Sommer eds., 16

ed.) at 1104-9. As the OCC seemingly

acknowledges (Motion, 11:8-10), “’[t

]he party moving for appointment

of a trustee ... must prove

the need for a trustee ...

by clear and convincing evidence.’

See Sharon Steel,

871 F.2d at 1226.

‘

It is settled that appointment

of a trustee should be the ex

ception, rather than the rule.’

Id.

1225.

In the usual chapter 11 proceeding, the

debtor remains in possession throughout

reorganization because ‘current management is gene

rally best suited to orch

estrate the process of

rehabilitation for the benefit of credito

rs and other interests of the estate.’

In re V. Savino Oil &

Heating Co.,

99 B.R. 518, 524 (Bankr.E.D.N.Y.1989). Thus the basis for

the strong

presumption against appointi

ng an outside trustee

is that there is often no need for one: ‘The

debtor-in-possession is a fiduciary

of the creditors and, as a result, has an obligation to refrain

from acting in a manner which could damage the

estate, or hinder a succ

essful reorganization.’

Petit v. New England Mort. Serves.,

182 B.R. 64, 69 (D.Me.1995).

The strong presumption

also finds its basis in the debtor-in-possession's

usual familiarity with the business it had already

been managing at the time of the

bankruptcy

filing, often making it the

best party to conduct

operations during the reorganization.

See Sharon Steel,

871 F.2d at 1226. “

In re G-I Holdings,

Inc.

, 385 F. 3d 313, 319 (3

Cir, 2004)(emphasis in the original),

quoting In re Marvel

Entertainment Group, Inc.,

140 F.3d 463, 471 (3

Cir. 1998).

6 . “A trustee unfamiliar with the business and its creditors will usually suffer delay

and expense learning facts

and circumstances that the trustee need

s to know in orde

r to facilitate

the debtor’s reorganization. Neve

rtheless, the House Report recogni

zed that in some cases fraud,

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 6 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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gross mismanagement, or other circumstances

might be present under which the benefit of a

trustee would outweigh the detriment. In view

of this expressed purpose, it would seem that a

court considering a motion to appoint a trustee sh

ould generally balance the benefit to be gained

by such an appointment against the detriment to

the reorganization effort and the rights of the

debtor that may result from such an

appointment. 7 Collier on Bankruptcy

Par. 1104.02[3][a] at

1104-8.

7 . As set forth below, the OCC has failed

to meet its high evidentiary burden to

show either cause for relief or that appointment

of a trustee is, on the eve of voting on plans of

reorganization, in the best interests of credito

rs. Significantly, the O

CC has failed to explain

what precisely a trustee would

do, other than replacing management

, and what he or she could

hope to accomplish in the few remaining weeks be

fore creditors are solicited simultaneously

with two plans voting occurs and what it would

cost in terms of fees and lost settlement

opportunities. The OCC’s plan, if

it is confirmed, will result in

the replacement of management,

the very remedy sought in the Motion – and lik

ely other employees who the OCC asserts are

overpaid, unnecessary, or both. Pr

ospective licensees have alr

eady shown their propensity to

“wait and see” what happens in this case which has made it difficult to generate revenue; the

appointment of a trustee will likely cause the

prospective licensee comm

unity to chill even

further which may limit or preclude the ability of

TPL or the OCC to proceed with any plan.

Given the procedural status of this case, no

trustee should be appoint

ed to replace current

management when two competing plans, one

from the OCC replacing management, and the

other from TPL retaining management, are about

to be set by this Court for coordinated

solicitation, voting, and confirmation.

See e.g. In re Sundale Ltd.

, 400 B.R. 890, 909 ( (Bankr.

S.D. Fla. 2009)(where the case is moving forward,

plan is on file, and

debtors’ ability to

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 7 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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reorganize will be tested through the confirmation

process within next three months, lack of

confidence in management was found not

to merit appointment of trustee.)

TPL Has Complied Strictly With The Terms Of The Settlement

Procedures Order, And No Cause Fo

r Appointment of A Trustee Exists.

8. TPL initially responded on December 17, 2013

to the allegations in the Motion

that it had violated the Settlement Proce

dures Order with its Statement of Position.

TPL

incorporates that Statement of

Position, the accompanying declaration of Heinz Binder, and the

exhibits to that declaration file

d under seal by this reference as

if set forth herein in full.

9. The OCC has noted correctly that th

e Settlement Procedures Order was the

product of a contested motion and was only entere

d after a hearing. What the OCC fails to

recount is that the approval procedure agreed

to by the OCC and TPL is streamlined because

negotiating settlements with litig

ation defendants under these facts

is incredibly time sensitive

and must be capitalized upon in real-time. TP

L explained this point in

its April 22, 2013 Reply

to Objection to Motion Regarding Se

ttlement Procedures (“Reply”):

“ Negotiating the settlement of a Patent

Action is complex, is usually done in

person, and requires the immediate auth

ority to enter into an agreement.

‘The only significant unknown element in

the Allowed Resolutions is the

amount that would be paid by the defendants. That amount cannot be

known until it is actually negotiated; this

, in turn, cannot practically occur

without the authority to do so.

Negotiations to settle TPL’s patent cases

are done in person. TPL and its licensing-services vendor, Alliacense,

require that prospective licensees come

to the table with the authority to

settle, and that expectation is mutual

.’”

Reply, 6:18-25 (emphasis added).

10. Paragraph 3 of the Settlement Proce

dures Order therefore sets forth the

accelerated 48-hour presentation and consider

ation procedure which TPL and the OCC

TPL’s Statement Of Position Regarding App

lication And Interpreta

tion Of Court Order

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 8 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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negotiated so that settlements with defendants

could be presented and considered within a

specific and limited timeframe:

“When TPL wishes to set

tle litigation by way of the

issuance of a license or ot

herwise, it will send a notice

to the settlement Committee and the committee counsel

identifying the adverse party and the terms of the

proposed settlement. Counsel for the committee

and for TPL will then schedule a conference call

to consider the proposed settlement at a mutually-

convenient time (but in no event later than 48 hours

from the date and time of the notice) among the

Settlement Committee, committee counsel, TPL’s

bankruptcy counsel, TPL’s special litigation counsel

and the licensing director for Alliacense Limited LLC.”

11. Pursuant to paragraph 3 of the Se

ttlement Procedures Order, on November 18,

2013, TPL provided electronic notice to the OCC with

the terms of its proposed settlement with

one defendant from the Patent Cases in

accordance with the procedures above,

consistent with

the practice employed for the six settlements pres

ented to the Committee prior to that date. The

OCC even acknowledges that TPL “requested

a call with the Settlement Subcommittee to

discuss approval of a new settlement.” Moti

on, 3:24-26. On November 19, 2013, TPL reiterated

its request for a call on the first proposed settleme

nt and announced its desi

re to discuss a second

settlement.

On November 20, 2013, TPL provided electr

onic notice to the OCC with the terms

of the second proposed settlement

and requested a call to discuss it.

On November 26, 2013,

TPL provided the OCC with electronic notice of a

third proposed settlement and requested a call

to discuss it.

See Exhibit “C” to Declaration of Heinz

Binder in support of Statement of Position.

See Exhibit “D” to Declaration of Heinz

Binder in support of Statement of Position

See Exhibit “F” to Declaration of Heinz

Binder in support of Statement of Position

See Exhibit “I” to Declarat

ion of Heinz Binder in support of Statement of Position

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 9 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 7

12. The OCC failed to schedule, within 48

hours of each notification to it of any of

the three settlements, or at any later time, “

. . . a conference call to consider the proposed

settlement . . . among the Settlement Committee,

committee counsel, TPL’s bankruptcy counsel,

TPL’s special litigation counsel and the licensi

ng director for Alliacense Limited LLC.”

Following each of the three electronic notificatio

ns of settlement descri

bed in the preceding

paragraph, the OCC’s only response was to respond in an email that “[t]he committee will only

consider further proposed settlements if 20% of th

e gross settlement proceeds is deposited into a

trust account for the benefit of credito

rs.” Motion, 3:25-4:5.

13. Paragraph 5 of the Settlement Procedur

es Order specifies the actions the OCC

shall (not may) take after receiving a settle

ment proposal from TPL and how long it has to

respond.

“Immediately following a presentation described in

Paragraph 3 or 4 above [the one the OCC is required to

schedule within 48 hours of receipt

of a notice of settlement],

the Settlement Committee shall convene to discuss the

proposed settlement and decide if

it does or does not support it.

Immediately thereafter, committee counsel shall notify TPL’s

bankruptcy counsel in writing

of the Settlement Committee’s

position regarding the proposal.”

Settlement Procedures Order, Par. 5.

14. Paragraph 7 of the Settlement Procedures

Order then specifies what an objection

of the OCC to a proposed settlement, if any, must contain:

“If the Settlement Committee objects to TPL’s proposed

settlement, committee counsel will communicate such

decision in writing to TPL’s

bankruptcy counsel setting

out the basis for that opp

osition, including the reason

the Settlement Committee claims the proposed settlement

is not in the best interest of

the bankruptcy estate, or why

Settlement Committee believes a better settlement could be

obtained.”

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 10 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 8

Settlement Procedures Order, Par. 7.

15. Paragraph 9 of the Settlement Procedur

es Order provides for deemed approval of

settlements should the OCC fail to perform its

duties under paragra

phs 3, 5, and 7:

“If TPL provides the notice described in paragraph 3,

and the Settlement Committee fails to (a) agree to a

time for a conference within 48 hours, (b) attend an

agreed-on conference, or (c) provide a written statement

of its position as described in paragraph 5 [in other words,

following the “presentation” or

conference call required in

paragraph 3], then it is deemed that the creditors committee

has not objected to the proposed

settlement, and TPL may

enter into it as described in paragraph 6.”

16. It is undisputed that the OCC did not

agree to a time for a conference within 48

hours (as required by paragraph 3) or attend an

agreed-on conference (a

s required by paragraph

5). The OCC flatly refused to meet with TPL at

all to consider any of

the proposed settlements,

all of which were several years in the making, ex

traordinarily time sensitive, and substantially

beneficial to the Portfolio being licensed owing to the size and position of the licensees in the

market.

17. The OCC asserts that its blanket refusa

ls to consider settlements (Motion, 3:25-

4:5) constituted written responses sufficient

to comply with paragraph 9 of the Settlement

Procedures Order. The OCC

is wrong for two reasons.

a. First, the prerequisite fo

r a qualifying statemen

t of position under

paragraph 5 is a

meeting or conference call

between the OCC and the specific list of parties

necessary to present a settlemen

t that the OCC could then eval

uate. (“Immediately following a

presentation described in Paragraph 3 or 4 a

bove, the Settlement Committee shall convene to

discuss the proposed settlement and decide if

it does or does not support it. Immediately

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 11 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 9

thereafter, committee counsel shall notify TPL’s ba

nkruptcy counsel in writing of the Settlement

Committee’s position.” Settlement Pr

ocedures Order, Par. 5.).

b. Second, the text of the OCC’s blanke

t refusals to consider settlements is

deficient and cannot constitute qualifying responses.

Paragraph 7 of the Settlement Procedures

Order requires that the OCC, if it objects, set

out in the objection “ . . . the basis for that

opposition, including the reason the Settlement Committ

ee claims the proposed settlement is not

in the best interest of the bankruptcy estate

, or why Settlement Committee believes a better

settlement could be obtained.” The purpose of this

in the Order is to ensure TPL has sufficient

information to then address the OCC’s conc

erns by either supplyi

ng the OCC with more

information or restructuring the settlement.

The OCC’s demand for an economic concession and

for the set aside of funds in der

ogation of the rights of secured

parties, contingency counsel, and

in a manner not permitted by the agreed cash collateral orders in place, in no way addressed why

any of the three proposed settlements themselves

(as opposed to directi

on or re-direction of

proceeds paid after consummation) were not in th

e best interest of the estate, much less why

better settlements could be obtained. In fact,

TPL believes the settlements were in the best

interests of the estate and that no

better settlements

could be obtained.

18. The OCC consciously elect

ed to disregard the Settl

ement Procedure Order for

improper purposes. The OCC freely admits in the

Motion why it did so, and the timing of that

admission is as damning as its substance. Th

e OCC advised TPL on November 13, 2013, that “ .

. . without significant progress in the negotiations

regarding the plan, you should not expect

approval of further proposed li

censing transactions/settlements.”

Motion, 3:17-23. This was

transmitted at a time that the B.D.R.P. process

ordered by this Court to generate a consensual

plan had not yet concluded. It was not until

November 18, 2013, that

the OCC advised Judge

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 12 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 10

Montali that a further session would “not be

productive” and unilaterally terminated the

B.D.R.P.process.

19. The fact that the OCC began sending

emails, after it had disregarded its

obligations under the Settlement Procedures Order,

is not relevant to

the question of whether

cause for relief exists under Bankruptcy Code

section 1104(a)(1). The issue is whether TPL

complied with the Settlement Procedures Order.

The OCC’s communications

subsequent to the

deemed approval of three settlements suggest only

that the OCC belatedly reviewed the terms of

the Settlement Procedures Order and realized the

consequences of its failed effort to block all

further settlements and defund the estate.

20. As set forth in paragraph 7 above,

TPL consistently followed the specific

requirements of the Settlement Procedures Order

from the date of its entry. The first six

settlements TPL proposed to the OCC were proposed in the same format, with the same

information provided, and the OCC scheduled calls promptly. TPL notified the OCC of each of

the last three settlements it negotiated in the same manner, and asked that the OCC schedule

meetings with TPL to evaluate them; there have

been no other settlements. TPL will continue to

follow the requirements of the Settlement Procedur

es Order and present all settlements to the

OCC whenever they are negotiated.

21. TPL is including with this Opposition Br

ief a declaration from its Chief Financial

Officer, Dwayne Hannah. Mr. Hannah

details the uses of funds rece

ived from the last three

settlements and $4,000,000 received. All amounts

paid were within the allowed amounts for

categories of expenses approved by this Court pu

rsuant to TPL’s Second Motion to Approve Use

of Cash Collateral (FRBP 4001(b)). It is notewo

rthy that the OCC’s allega

tions as to “wasteful

dissipation of assets” (Motion, 5:16-7:10) de

scribe expenditures in budget categories and

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 13 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 11

amounts to which the secured creditors of this case

have stipulated and, w

ith two exceptions (the

first and last cash collateral hearings)

to which the OCC has agreed as well.

22. It is also noteworthy that the demand made by the Committee to set aside 20% of

the gross amounts of the licenses

for unsecured creditors was mathem

atically impossible in light

of TPL’s other obligations under to contingency

payment agreements with

(i) litigation counsel,

(ii) the Fast Logic Portfolio pa

rtner, and (iii) Alliacense (which

negotiated all three settlements

and whose work made them possible), as well as

the required adequate protection payments to

TPL’s secured creditors, and the carve out paym

ents to professionals demanded by the OCC if

TPL was to pay expenses and any kind of pa

yroll. TPL repeatedly informed the OCC

subcommittee that the 20% gross formula was infeasible; the explanation was apparently

ignored.

23. TPL respectfully submits that the Court

should deny the Motion to the extent that

its seeks relief based upon allegatio

ns made regarding the Settleme

nt Procedures Order, decline

to issue an order to show cause re: contempt, fi

nd that the settlements

proposed to the OCC have

been disclosed as required in the Settlement Pro

cedures Order, and decline to issue an injunction

directing sequestration of the proceeds

of current or future settlements.

. The Other Facts Alleged by The OCC

Are Not Sufficient as Cause for Relief

under Bankruptcy Code Section 1104(a)(1)

24. In the conclusion of the Motion, the

OCC alleges that TPL and Daniel E.

Leckrone have “ . . . breached their fiduciary obli

gations to the estate . . . .” Motion, 11:20. The

Motion contains four categories of allegations th

at the OCC is apparently

pressing as cause for

appointment of a trustee to

support the point. Each are ad

dressed in turn below.

///

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 14 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

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Case Expenditures to Date

25. The OCC categorizes TPL’s court-approved expenditures for employee salary and

vendor payments to Alliacense

, all authorized for payment without objection from the OCC to

cash collateral authority requested (at leas

t until the December 4, 2013 final hearing), as

“outlandish” (Motion, 5:10) and a “wasteful di

ssipation of assets” (Motion, 5:16). The OCC

however offers no explanation of why the sala

ries paid to TPL insiders are “outlandish

,” and

supplies no evidence to support its position. The

OCC must be aware that its chairman, Chet

Brown, litigated this very issue in the

Brown v. TPL

trial in the Santa Clara Superior Court (case

number 1-09-CV-159452). Judge Huber’s finding, wh

ich the OCC now appare

ntly seeks to re-

litigate, is instructive:

“It is also clear that th

ere is no evidence to suggest that [Dan Leckrone’s

children] did not perform adequately

in their respective positions with the

company.....While Brown implies that the family members were well

paid, there is no evidence to suggest their remuneration was

disproportionate to job performance

or that their compensation exceeded

that of others similarly

situated in the industry.”

Statement of Decision, 3:21-26.

26. In the event that this Court does wish

to revisit Judge H

uber’s ruling and take

further evidence on the reasonableness of salaries

paid to TPL management or insiders, TPL has

retained the services of

Mr. Greg Goodere for testimony. Mr.

Goodere, an expert in the field of

human resources and salary levels

in this field and geographic lo

cation and has assisted TPL in

the past in setting compensation, has conducted

an analysis of the

qualifications of and

compensation to TPL’s employees and manageme

nt and is able to testify thereto.

TPL will address all issues re

lated to Alliacense at once wh

en responding to claims of a

conflict of interest.

The OCC also overstates the combined salari

es of three top members of management as

$630,000 rather than their actual total of $580,000.

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 15 of

OPPOSITION TO MOTION TO APPOINT TRUSTEE

Page 13

27. The allegations made in the Motion (5:12-7:10) as to the duties of and

compensation to employee Janet Neal is rife with

inaccuracies and mischaracterization of prior

testimony. For example, the allega

tion that “TPL paid Ms. Neal

far more than the compensation

listed in her written consulting agreement....”

(Motion, 6:8-10) is entirely unsupported. The

only thing that the OCC did cite

is Exhibit “C” to the Kim decl

aration - a copy of Ms. Neal’s

consulting agreement - which provides no support fo

r the statement that she was paid “far more”

than in her agreement.. The OCC’s reference

to Exhibit “A” of Ms Kim’s declaration is

unavailing as well as an attempt to support their

statements, inappropriately suggested as fact,

that TPL loaned money for Ms. Neal to purchas

e her home. The Exhib

it contains nothing but

unequivocal testimony by Dwayne Hannah that TPL

did not provide any funds for Ms. Neal’s

home. [1198:16-28.] No money was ever loan

ed by TPL to Ms. Neal for her home. The

statement made by the OCC that they do not know

what Ms. Neal does is supported only by a

declaration from the OCC’s attorney, Mr. Murray,

who has never met nor worked with Ms. Neal.

TPL is prepared to refute the OCC’s remaining

attacks on its employment of Ms. Neal, point-by-

point, at an evidentiar

y hearing on the Motion.

Alleged Conflicts Of Interest

28. The OCC includes section IV of its br

ief allegations regarding Mr. Leckrone’s

relationship with Alliacense, conj

ecture regarding pre-petition adva

nces and offset thereof, Mr.

Leckrone’s role on the board of PDS, and insider sa

laries. None create a c

onflict of interest that

merits the removal of TPL’s management.

a. Allegations Regarding Alliacense

29. The OCC alleges that Alliacense was,

prior to 2007, part of a “TPL Group.”

Motion, 12:13-14, but does not arti

culate any significance to this

characterization, and further

Case: 13-51589 Doc# 357 Filed: 01/09/14 Entered: 01/09/14 19:00:11 Page 16 of

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misstates Alliacense’s corporate history. Alli

acense was formed as a Nevada corporation on

January 4, 2005, and it operated under that name

until it was merged into an existing Delaware

LLC (named Alliacenes LLC) on December 31, 2008, which was then renamed Alliacense

Limited LLC. The “TPL Group” referenced

by the OCC was a marketing denomination for

services rendered by separate entities and does

not describe a legal re

lationship. Alliacense has

always been maintained and operated as a free

standing entity to provi

de essential Licensing

Program services to TPL.

30. The OCC’s central argument as to c

onflict of interest is that both TPL and

Alliacense are “ . . . owned and managed by Mr.

Leckrone as its sole shareholder and sole

member,” (Motion, 7:15-17), in a manner that re

sulted in “self dealing” (Motion, 8:16). The

authority cited for the claim of not only owners

hip but control is to a motion filed by TPL dated

April 15, 2013. TPL believes that

no conflict exists between Mr.

Leckrone’s in his role as

responsible individual for TPL and

his ownership of Alliacense for

the reasons set forth in TPL’s

Response to Objection

. . . Until June 2013, Dan Leckrone was the

sole owner and manager of Alliacense

and Mac Leckrone, his son, was the Pres

ident. In June 2013, Mr. Leckrone

resigned as manager of the company and ha

s not participated in the management

of Alliacense since that time. Corporat

e formalities are strictly observed. TPL

does not believe there is a

conflict for Mr. Leckrone be

cause (1) he no longer is

the manager of the company; (2) even

prior to his formal resignation, Mac

Leckrone handled the day-to-day operati

ons of the company as President and (3)

TPL is confident that it is being charged

at or below market rates for the services

provided. TPL does not believe any conflic

t arises due to the common ownership

between the companies, and the Committee ha

s not identified an actual conflict to

which TPL can respond.

Response to Objection, 11:3-11.

Response By Debtor To Objection Of Offi

cial Committee Of Unsecured Creditors To

Debtor’s Disclosure Statement Re: TPL Plan

Of Reorganization (D

ecember 9, 2013)(the “TPL

Response to Objection”).

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31. The OCC alleges that pre-petition payments to Alliacense occurred under an

earlier version of the Services Agreement that ha

d not been reduced to writing and later, when it

was, had not been signed. Motion, 7:17-19. Ca

lifornia Civil Code sec

tion 1622 provides that a

contract need not be in writing to be enforceable

: “[a]ll contracts may be

oral, except such as are

specially required by stat

ute to be in writing.”