Document Page 1 of 53 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF GEORGIA ROME DIVISION IN RE: BEAULIEU GROUP, LLC, et al., Debtors. ) ) ) ) ) ) CHAPTER 11 Jointly Administered Under CASE NO. 17-41677-bem LIQUIDATING TRUSTEE S OBJECTION TO REQUEST FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM UNDER 11 U.S.C. 503(b)(9) FILED BY MR. CARPET LLC (CLAIM NO. 900150) COMES NOW PMCM 2, LLC (the Liquidating Trustee ), in its capacity as the liquidating trustee of the Beaulieu Liquidating Trust created pursuant to the confirmed First Amended Joint Plan of Liquidation (the Plan ) in the above-captioned jointly administered Chapter 11 case (the Bankruptcy Case ), by and through the undersigned counsel, and files this Objection (the Objection ) to the Request For Payment Of Administrative Expense Claim Under 11 U.S.C. 503(b)(9) filed by Mr. Carpet LLC (the Claimant ). The Liquidating Trustee respectfully show this Court as follows: BACKGROUND 1. On July 16, 2017 (the Petition Date ), Beaulieu Group, LLC, Beaulieu Trucking, LLC and Beaulieu of America, Inc. (collectively, the Debtors ) each filed voluntary petitions with the United States Bankruptcy Court for the Northern District of Georgia, Rome Division under Chapter 11 of Title 11, United States Code (the Bankruptcy Code ). Prior to June 4, 2018 (the effective date of the Plan), the Debtors were authorized to operate their business as debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.
Document Page 2 of 53 2. No trustee or examiner has been appointed in this Bankruptcy Case. No request has been made for the appointment of a trustee or examiner. An Official Committee of Unsecured Creditors was appointed on July 21, 2017. 3. On or about August 18, 2017, the Debtors each filed their Statement of Financial Affairs and accompanying Schedules. 4. On or about November 1, 2017, the Court entered an Order (A) Approving Asset Purchase Agreement and Authorizing the Sale of Assets of the Debtors Outside the Ordinary Course of Business, (B) Authorizing the Sale of Assets Free and Clear of All Liens, Claims, Encumbrances and Interests, (C) Authorizing the Assumption and Sale and Assignment of Certain Executory Contracts and Unexpired Leases and Establishing Cure Costs in Connection Therewith, and (D) Granting Related Relief [Dkt. No. 345] (the Sale Order ). Pursuant to the terms of the Sale Order, the Debtors sold substantially all of their personal property assets to Engineered Floors, LLC and certain real property to Pentz Street Holdings, LLC. 5. On September 20, 2017, the Court entered its Order Granting Motion (A) To Establish a Bar Date for Filing Proofs of Claim and Requests for Payment of Administrative Expense Claims Under 11 U.S.C. 503(B)(9); (B) For Approval of Bar Date Notice, Proof of Claim Form, and 11 U.S.C. 503(B)(9) Request for Payment Form; and (C) For Approval of Other Procedures [Dkt. No. 274] (the Bar Date Order ). The Bar Date Order (i) established 5:00 p.m. (Eastern) on November 21, 2017, as the last date for creditors that are not governmental units to file proofs of - 2 -
Document Page 3 of 53 claim, proofs of interest and requests for payment of administrative expense claims under Section 503(b)(9) of the Bankruptcy Code; (ii) established 5:00 p.m. (Eastern) on January 12, 2018 as the last date for creditors that are governmental units to file proofs of claim, proofs of interest and requests for payment of administrative expense claims under Section 503(b)(9); and (iii) approved a form of bar date notice, proof of claim form, 503(b)(9) request for payment form and other procedures. RELIEF REQUESTED 6. On or about November 21, 2017, the Claimant filed a request for payment of administrative expense claim under Section 503(b)(9) of the Bankruptcy Code asserting an administrative expense claim in the amount of $2,497.75, designated as Claim No. 900150 (the 503(b)(9) Request ). A copy of the 503(b)(9) Request is attached hereto as Exhibit A. On or about November 21, 2017, the Claimant also filed a proof of claim asserting an unsecured claim in the amount of $3,519.75, designated as Claim No. 1624 (the Unsecured Claim ). The Unsecured Claim is inclusive of the amount asserted in the 503(b)(9) Request. A copy of the Unsecured Claim is attached hereto as Exhibit B. The asserted basis of the Unsecured Claim is defective carpet, and appears to assert a warranty claim for the value of carpet delivered by the Debtors to Claimant years prior to the Petition Date which the Claimant asserts was either defective or nonconforming. 7. Section 503(b)(9) of the Bankruptcy Code grants administrative expense status for the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such - 3 -
Document Page 4 of 53 debtor s business. See 11 U.S.C. 503(b)(9). Given that the Petition Date was July 16, 2017, the twentieth day prior to the Petition Date was June 26, 2017 (the Cutoff Date ). 8. The Liquidating Trustee objects to the 503(b)(9) Request on the basis that no goods were sold or delivered to the Debtors at all, much less within the twenty (20) day period prior to the Petition Date. Because the Unsecured Claim is inclusive of the amounts asserted in the 503(b)(9) Request, the Liquidating Trustee respectfully requests that the Court disallow the 503(b)(9) Request in its entirety. 9. The Liquidating Trustee reserves the right to object further to the 503(b)(9) Request on any and all additional factual or legal grounds. Without limiting the generality of the foregoing, the Liquidating Trustee specifically reserves the right to amend this Objection, file additional papers in support of this Objection, file a subsequent objection on any ground to the 503(b)(9) Request if it is not disallowed as requested herein or take other appropriate actions to (a) respond to any allegation or defense that may be raised in a response filed by or on behalf of the Claimant or other interested parties, (b) further object to the 503(b)(9) Request for which the Claimant provides (or attempts to provide) additional documentation or substantiation, (c) further object to the 503(b)(9) Request based on additional information that may be discovered upon further review by the Liquidating Trustee or through discovery pursuant to the applicable provisions of Part VII of the Bankruptcy Rules, or (d) object to any other claim filed by the Claimant, including, but not limited to, the Unsecured Claim. WHEREFORE the Liquidating Trustee prays that the Court enter an order disallowing the 503(b)(9) Request, and granting such other and further relief as the Court deems just and proper. - 4 -
Document Page 5 of 53 This 15th day of October, 2018. SCROGGINS & WILLIAMSON, P.C. 4401 Northside Parkway Suite 450 Atlanta, GA 30327 T: (404) 893-3880 F: (404) 893-3886 E: rwilliamson@swlawfirm.com aray@swlawfirm.com mlevin@swlawfirm.com By: /s/ Matthew W. Levin J. ROBERT WILLIAMSON Georgia Bar No. 765214 ASHLEY REYNOLDS RAY Georgia Bar No. 601559 MATTHEW W. LEVIN Georgia Bar No. 448270 Counsel for the Liquidating Trustee - 5 -
Document Page 6 of 53 EXHIBIT A Claim No. 900150
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Document Page 28 of 53 EXHIBIT B Claim No. 1624
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