Add To Favorites

CREDITOR INFORMATION PROTOCOL OF THE OFFICIAL UNSECURED
CREDITORS COMMITTEE AND THE PLAN COMMITTEE
OF THE QUAY CORPORATION, INC.
BANKRUPTCY CASE NO. 05 B 63146
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

Presiding Judge:

Honorable Jack B. Schmetterer
Everett McKinley Dirksen
United States Courthouse
219 South Dearborn Street
Courtroom 682
Chicago, Illinois 60604

Overview of Chapter 11 Case:

On October 18, 2005, The Quay Corporation, Inc. ("Quay") filed a voluntary petition under Title 11, Chapter 11 of the United States Bankruptcy Code (the "Code"). The case is pending before the Honorable Jack B. Schmettere­r. Since the bankruptcy filing, Quay has maintained possession of its assets and has been operating as a debtor-in-possession. No Trustee has been appointed. Since the bankruptcy filing, Quay has been operating with a positive cash flow and it appears that there will be a dividend to unsecured creditors. It is too early in the case to determine what the amount of the dividend may be.

Quay obtained cash collateral orders with its lender and paid its operating expenses and administrative and priority claims on time during the pendency of the Chapter 11 case. No motions to convert or dismiss the case were filed and Quay filed all of its monthly debtor-in-possession reports. All appropriate "first day motions" were filed and orders were entered approving the retention of counsel, providing for adequate assurance to utilities, authorizing the payment of pre-petition payroll, authorizing the use of its pre-petition bank accounts and setting of a bar date for the filing of claims.

Debtor's Plan of Reorganization

On May 21, 2007, Quay filed its Second Amended Plan of Reorganization (the "Plan"). Pursuant to the Plan, Class 3 unsecured creditors shall be paid 100% of their allowed claims over three years, together with interest at the prime rate, in monthly installments of principal and interest based upon a five year amortization schedule.

On June 25, 2007, the Court held a combined hearing for approval of Quay's Second Amended Disclosure Statement and its Plan. On July 17, 2007, Judge Schmetterer entered an order and notice confirming the Plan and also issued a written opinion overruling creditor Wisconsin Cheese Group's objections to the Plan and to Debtor's settlement agreement with Mexican Cheese Producers, Inc. To view the confirmation order, click here ; to view Judge Schmetterer's written opinion overruling Wisconsin Cheese Group's objections, click here.

The next post-confirmation status hearing is scheduled for March 25, 2008.

Plan Committee

Upon the effective date of the Plan, the Official Unsecured Creditors' Committee was dissolved and the Plan Committee was formed. The Plan Committee consists of the members of the Official Unsecured Creditors' Committee and has the power and standing to participate in any court hearings related to any matters regarding: proposed modifications or amendments to the Plan; the allowance of any and all professional, administrative and priority claims filed or heard after confirmation of the Plan; Debtor's compliance with its reporting requirements as set forth in the Plan; and enforcement of the Class 3 claimants' right to payment of their claims.

The Plan Committee will remain in existence until such time as the final distributions are made to Quay's Class 3 unsecured creditors. Bruce Scalambrino and the law firm of Scalambrino & Arnoff, LLP represent the Plan Committee.

Overview of Chapter 11 and the Official Unsecured Creditors' Committee Duties:

The filing of a petition pursuant to chapter 11 of the Bankruptcy Code allows the debtor to continue its business operations pursuant to a plan of reorganization that must be approved by debtor's creditors and meet specific statutory criteria.

Upon the filing of debtor's chapter 11 petition, all of debtor's property becomes property of the bankruptcy estate and the automatic stay provision of the Code prevents creditors from commencing or continuing actions for pre-petition claims against debtor and property of the estate. The filing of the chapter 11 petition also transforms debtor into a "debtor-in-possession," meaning that debtor retains control and possession of its assets during the pendency of the bankruptcy case, unless cause exists to necessitate the appointment of a case trustee. A debtor-in-possession continues to operate the business and performs many of the functions that trustees perform under other chapters of the Code, including using, selling or leasing property of the estate, securing post-petition financing and assuming or rejecting executory contracts or leases.

Members of debtor's official unsecured creditors' committee are appointed to serve by the United States Trustee. The committee normally consists of those persons or entities who indicate an interest in serving on the committee and generally are chosen from the list of the twenty largest creditors in the case. In this case, the creditors that served on the committee represented diverse interests inthe case and consisted of creditors holding both large and small claims.

The Code sets forth the powers and duties of the committee, including: consultation with the debtor-in-possession regarding administration of the case; investigation of debtor's financial condition and its business operation; participation in the formulation of a plan of reorganization; solicitation of comments from creditors that are not committee members; and any other services in the interest of those represented by the committee. The committee and its members owe a fiduciary duty to the unsecured creditor body, including a duty of confidentiality and to avoid conflicts of interest. The committee adopted by-laws that governed its conduct in this case.

Creditors' Rights Pursuant to Section 1102 of the Bankruptcy Code:

Section 1102 of the Code grants non-members of the committee who hold unsecured claims the right to access information which the committee obtains in the performance of its duties. Likewise, the committee has the right to solicit and receive comments from non-committee members regarding the case. Debtor provided the committee with documents relating to its past financial operations, which were made available to all of Quay's unsecured creditors.

Privileged and Confidential Information:

In the course of the committee's duties, it may come into possession of highly confidential information concerning the operations of the debtor, its future plans, possible sale of its assets, the desirability of the continuance of its business or the rejection of certain of its leases. This information may be provided to the committee on a confidential basis. Moreover, the committee and its counsel have attorney-client and work-product privileges which may preclude the disclosure of certain information to the general unsecured creditor body. As a result, the committee adopted a policy with regard to the request of such information.

Pursuant to the policy, had an unsecured creditor requesedt confidential or privileged information, committee's counsel would have, as soon as practicable, but no more than twenty days after receipt of the request, informed the requesting party of the confidential nature of the information requested and/or of the assertion of a privilege with regard to the request. Counsel to the committee would have also provided the requesting party with an index of the information which it deems confidential and/or privileged. The requesting party may then have, but only after a good faith effort to meet and confer with committee's counsel to resolve the issue, filde a motion to compel the disclosure of the requested information. The committee also reserved the right to request that the court to conduct an in camera review of any information requested in order to determine the confidential and/or privileged nature of the same.

Claims Bar Date:

On November 10, 2005, Judge Schmetterer entered an order setting January 17, 2006 as the last day for creditors to file a proof of claim. The claims deadline has passed. To access the claims register, click here :

Links:

The United States Bankruptcy Court for the Northern District of Illinois: http://www.ilnb.uscourts.gov/

Honorable Jack B. Schmetterer (court calendar and procedures):

http://www.ilnb.uscourts.gov/JudgeSchmetterer/Schmetterer.htm

Office of the United States Trustee - Region 11

http://www.usdoj.gov/ust/r11/index_page.htm

Filing Documents:

The United States Bankruptcy Court for the Northern District of Illinois requires that all petitions, motions, applications, notices, pleadings, memoranda of law and other documents filed with court in connection with a bankruptcy case be filed electro­nically. Individuals that are not represented by an attorney may file documents in paper form with the Clerk's Office. Click here to review the administrative procedures for the case management/elec­tronic case filing system.

Questions:

Any questions regarding the post-confirmation status of the bankruptcy case or regarding the Plan Committee can be addressed to Bruce C. Scalambrino, attorney for the Plan Committee, at bcs@sacounsel.com .