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  1. 1. IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re Chapter 11 CORDILLERA GOLF CLUB, LLC 1 dba The Case No. 12-11893 (CSS) Club at Cordillera, Hearing Date: July 16, 2012 at 10:00 a.m. Debtor. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ___]Ref. Docket Nos. 69, 77, 78 & 95 THE DEBTORS OMNIBUS OBJECTION TO THE MOTIONS TO TRANSFER VENUE AND/OR RELATED JOINDERS FILED BY (I) CHERYL M. FOLEY, THOMAS WILNER, JANE WILNER, CHARLES JACKSON, MARY JACKSON AND KEVIN B. ALLEN, INDIVIDUALLY AND AS REPRESENTATIVES OF A CERTIFIED CLASS OF MEMBERS, (II) ALPINE BANK, (III) CORDILLERA PROPERTY OWNERS ASSOCIATION, INC. AND CORDILLERA METROPOLITAN DISTRICT Cordillera Golf Club, LLC dba The Club at Cordillera, the debtor and debtor in possession in the above-captioned case (the "Debtor"), by and through its undersigned attorneys, hereby submits this omnibus objection (the "Objection") to (i) the motion (the "Class Member Motion") of Cheryl M. Foley, Thomas Wilner, Jane Wilner, Charles Jackson, Mary Jackson And Kevin B. Allen, Individually And As Representatives Of A Certified Class Of Members (collectively, the "Class Members") to transfer venue of this case, (ii) the motion (the "CPOA/CMD Motion," and together with the Class Member Motion, the "Motions") of Cordillera Property Owners Association, Inc. ("the "CPOA") and Cordillera Metropolitan District ("CMD" or the "District"), to transfer venue of this case, and (iii) the joinders to the Motions (the "Joinders," and collectively with the Motions, the "Venue Motions") filed by Alpine Bank ("Alpine," and together with the Class Members, CPOA and CMD, the "Movants"). In support of its Objection, the Debtor respectfully states as follows: 1 The Debtor in this chapter 11 case, and the last four digits of its employer tax identification number, is XX- XXX1317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202, Edwards, Colorado 81632.01:12275800.2
  2. 2. PRELIMINARY STATEMENT 1. This case is not a liquidation case, but is instead a chapter 11 reorganization. The Debtors economic rehabilitation turns on the valuation of its real estate, its going concern business, and its personal property and other assets. The Debtor alleges that the alleged first- priority secured lender has a defective security interest in the Debtors non-real estate personal property assets. The fundamental issues to be resolved in this case are valuation, post-petition financing, and going-forward capitalization. The issues currently pending in Colorado and the focus of the Class Members Motion and the Joinders, are at best peripheral to the central issues in the bankruptcy case, and are matters which can be resolved in Colorado without threatening the economic rehabilitation of the Debtor. Whether the Debtor wins its Colorado lawsuit as plaintiff, and how much money that may bring into the estate, is peripheral to the Debtors capital restructure and financing plans, which are grounded in the financial markets of New York and the Northeast U.S. Whether the class action case results in a defense verdict in favor of Debtor (which Debtor anticipates), or a judgment for the class members (which, in any event, is an insured claim and therefore not a serious threat to the Debtors restructuring) is likewise peripheral to the Debtors capital restructure and financing plans, which are grounded in the financial markets ofNew York and the Northeast U.S. A transfer of venue away from the financial markets ofNew York and the Northeast U.S. makes the chapter 11 rehabilitation ofthis Debtor significantly more expensive, significantly less efficient, and prejudices all creditors of this estate that would expect a higher recovery on their claims with a recapitalization of the Debtor that can and will be accomplished in this case. 2. On July 3, 2012, the Class Members filed the Class Member Motion on shortened notice seeking to change the venue of this chapter 11 case to the United States Bankruptcy Court for the District of Colorado.01:12275800.2 2
  3. 3. 3. On July 5, 2012, Alpine filed its joinder to the Class Member Motion. Alpine is Debtors secured lender, whose security interest is at issue in an adversary proceeding pending before this Court. Alpine now complains about Delaware as a forum; yet, the Debtors chapter 11 filing was precipitated by Alpines unwillingness to extend the due date on its loan. Declaration of Daniel Fitchett ("Fitchett Decl."). The Debtor was unable to find alternative financing in Colorado and thus has been forced to look outside the local Colorado market. 4. To that end, the Debtor has engaged a national-based real estate advisor (GA Keen Realty Advisors, based in NY) and a nationally-prominent Chief Restructuring Officer, Alfred H. Siegel (the "CRO"), who is not domiciled in Colorado. At least in part because of the stigma associated with the class action dispute, the Debtors professionals have determined that the Debtors financial future is not grounded in the Midwest, but rather the financial markets of New York and the east coast. See Declaration ofHarold Bordwin filed in support hereof ("Bordwin Decl."). 5. On July 5, 2012, CPOA and the District filed the CPOA/CMD Motion. The Debtor believes these parties are not motivated to promote the best interests of the estate. Rather, they seek to move this case to Colorado where the Debtor will be hampered by negative public opinion fueled by unsubstantiated claims espoused by these parties. In contrast, the Delaware forum provides a level playing field and affords the Debtor and all parties in interest a proper forum to prosecute this chapter 11 case to a successful reorganization. Movants cries of inconvenience are simply not supported by compelling evidence. In fact, Movants have had no difficulty voicing their views in this Court and not a single Movant has stated that they are unable to attend hearings in Delaware.01:12275800.2 3
  4. 4. 6. Aside from the Movants, who represent only a fraction of the creditor body as a whole, none of the other creditors in this case have lodged a complaint over the Debtors choice of venue. Indeed, it is anticipated that independent homeowners and Club members will join in the within opposition to the Venue Motions. 7. No one disputes that venue of the Debtors case is both proper and permissible in Delaware under 28 U.S.C. § 1408; instead, Movants proceed under 28 U.S.C. § 1412. The Venue Motions are focused on the fact that (a) the Debtors headquarters and assets are in Colorado and (b) the Debtor has many Colorado creditors, some with a pending action litigation in Colorado. 2 8. As discussed in detail below, these facts and what follows from them fall far short of satisfying the Movants heavy burden of showing that the interests of justice or the convenience of parties in interest will be served by transferring this Chapter 11 reorganization case to Colorado. 9. Contrary to the suggestions in the Venue Motions, the Debtors selection of Delaware for the venue of this case was and remains in the best interests of the estate because the economic administration of the case and the rehabilitation of the Debtor hinges on contacts with the financial markets in New York and on the East Coast, not locally in Colorado. While the Debtor may be characterized as a regional operation insofar as the location of its real estate and related amenities are concerned, its broad appeal on the national level is borne out by the fact that nearly two-thirds of its members reside outside of Colorado. See Debtors Schedules and 2 The Colorado litigation between the Movants and the Debtor is not the focus of the bankruptcy case. While the Debtor expects to prevail in its case as plaintiff (and the recovery will be an asset of the estate), and expects to be exonerated in the class action case (and even if not, the recovery is covered by insurance, so the outcome will have little impact on the estate), the overall outcome of that litigation is not central to the economic reorganization of this Debtor.01:12275800.2 4
  5. 5. Statement of Financial Affairs, which will be on file herein. Moreover, the reality is that the success of this chapter 11 proceeding will hinge on the participation of those located on the East Coast, including the proposed DIP Lender. See Bordwin Decl. at 1 16. 10. As would be expected of a company that owns and operates high-end recreational amenities in a residential community where many of the homes are second homes or vacation homes, the vast majority of the Debtors creditors are actually located outside of Colorado. 3 The statements by Movants that most creditors are in Colorado are simply not accurate; in fact, of the six individuals that filed the Member Motion, only Ms. Foley lists her address in Edwards, Colorado, and Mr. Allen lists his address in Cherry Hills Village, Colorado -the other four Movants reside in Washington, DC or Illinois. See Exhibit B to the Foley Decl. And, as to Ms. Foley and Mr. Allen, they have affirmatively sought and obtained a position on the Official Committee of Unsecured Creditors ("Committee") in this case, thus consenting to their availability to participate in this case no matter where it is pending. 4 See Notice of Appointment of Committee of Unsecured Creditors, Docket No.86. In fact, the Debtor expects that the major issues in this case will tum on the involvement of parties located on the East Coast. 11. The ultimate question for the Court is whether the Movants have shouldered their heavy burden and proved that administration of this chapter 11 case - and not the peripheral 3 In fact, Movants Thomas and Jane Wilner are located in Washington, DC (about 110 miles to the Delaware Court as opposed to 1657 miles to the Colorado Court) and Charles and Mary Jackson are located in Illinois (781 miles to Delaware Court and 1012 miles to Colorado). Additionally, the general creditor breakdown is as follows: Members: 34% are in Colorado, 66% are outside of Colorado; Vendors Owed Money (excluding employees): 46% are in Colorado, 54% are outside of Colorado; All vendors (excluding employees): 55% are in Colorado, 45% are outside of Colorado. See Schedules and Statement of Financial Affairs. 4 On or about July 6, 2012, the U.S. Trustee appointed the seven-member Committee [Docket No. 86]. Of the seven Committee members, four of them are Class Members, two of whom are named class representatives and Movants herein. The Debtor understands that the Committee is likely to support the Venue Motion. However, while the Debtor recognizes that the bankruptcy courts often give some deference to official committees on matters such as the one at bar, the weight of any support of the Venue Motion by the Committee in this case should be appropriately discounted given that the majority composition of the Committee are actual Movants herein.01:12275800.2 5
  6. 6. litigation already pending in Colorado- will be improved if the case is transferred to Colorado. The Debtor submits that Movants have not done so and will not be able to do so. 12. By the time this Court considers the Venue Motions, it will have held three separate hearings, including one status conference, in this case involving 8 motions and applications, 7 of which were approved, and one of which was denied after an appearance by some of the Movants. Additionally, the Debtor has filed its application to employ professionals. Moreover, the vocal creditors, including the Movants, have already engaged local Delaware counsel to represent their interests. Movants simply have not met their burden of showing they cannot appear in Delaware. They, in fact, already have. And Ms. Foley and Mr. Allen have volunteered to participate in the case no matter where it is venued by volunteering for the Committee. 13. After a diligent interview process and search, the Debtor has retained Delaware counsel, as well as non-Colorado based financial advisor, each of which is skilled and experienced in chapter 11 reorganizations. Other parties have already retained Delaware counsel, including the DIP lender. The Debtors real estate advisor, who is involved in the East Coast financial markets, is located in New York. All of the Debtors professionals as well as the proposed DIP lender believe that Delaware is the best venue for this case. These are the constituents who are critical to the success of this Case and the financial rehabilitation and reorganization of the Debtor, not the Movants.01:12275800.2 6
  7. 7. 14. Transferring this case to Colorado will create far more harm than it could ever alleviate; it would necessitate a new judge; it would require new co-counsel for the Debtor (and the Debtor anticipates difficulty and attendant delay with the retention of Colorado counsel based upon possible conflicts of interest, see Fitchett Decl. at~ 10); transfer may affect (and will certainly increase the costs associated with) the potential debtor in possession financing, which is poised to provide sufficient funds for the Debtor to operate for the next year while it finalizes its capital restructuring and confirms a plan ofreorganization. Moreover, it would inconvenience the Debtors real estate advisor, DIP lender, CRO, and financial advisors- the parties whose testimony is most likely if the Debtors plan is contested. 15. The Movants have not and will not be able to satisfy their heavy burden of showing that a change in venue is necessary for the convenience of the parties or for the interests of justice, and this Court should therefore deny the Motion. BACKGROUND A. The Debtor 16. The Debtor is a limited liability company incorporated under the laws of the state of Delaware. B. Company Background 17. The Debtor owns and operates the "Club Facilities" as defined in the Venue Motion which are located in Vail Valley in Eagle County, Colorado. 18. The details of the Debtors operations, current management and equity interests in the Debtor, are set forth in the First Day Motion affidavit of the Debtors CEO, DanielL. Fitchett, Jr. filed herein on June 26, 2012 (Docket No.2) and are incorporated herein by reference.01:12275800.2 7
  8. 8. 19. Prior to filing its bankruptcy in Delaware, the Debtor worked with local lenders in Colorado, including Alpine Bank, but was not successful in generating any interest from the local Colorado community to assist with financing for the business. Fitchett Decl. Indeed, the Debtor attempted to negotiate a work-out with Alpine Bank for many months prior to the filing of the bankruptcy petition herein without success. Fitchett DecI. Therefore, Debtor was forced to look outside Colorado- with the assistance of its New York-based real estate advisor, among several alternatives, the Debtor identified Northlight Financial, LLC a New York based lender and negotiated the terms of a DIP loan with its affiliate, Southlight Trust I, a Delaware statutory trust (collectively "DIP Lender"), which is the subject ofthe July 19,2012 hearing scheduled to proceed before this Court. [Docket Entry No. 59]. 20. The main issues in this case, namely Alpine Banks alleged perfection of a security interest in personal property of the Debtor and the reorganization of the Debtors capital structure, are governed by Delaware law. 21. On June 26, 2012 (the "Petition Date"), the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. C. Activity in the Bankruptcy Case 22. The Debtor continues to operate its business and manage its property as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On June 27, 2012, the Court presided over, and granted, the Debtors seven (7) First Day Motions, and each of the Movants participated through counsel in those proceedings.01:12275800.2 8
  9. 9. 23. On July 3, 2012, this Court denied Debtors emergency motion for co-debtor stay, after vociferous and competent participation and opposition by these very Movants, through the representation of Delaware counsel, who had little inconvenience appearing before this Court on 24-hours notice. 24. The Debtors motion for approval of debtor in possession financing, filed on July 1, 2012, is set to be heard on July 19, 2012, and Alpine and the Debtor have worked together, through local counsel, relative to streamline discovery and trial of that matter. 25. On June 29, 2012, Debtor filed an adversary complaint against Alpine Bank, challenging the alleged security interest in certain of Debtors assets, commencing adversary case number 12-50785 (the "Adversary") [Docket Entry No. 60]. 26. On July 3, 2012, the Members Motion was filed to transfer venue, after they had already appeared through same Delaware counsel in the First Day Motions and the co-debtor stay hearings on June 27 and July 3, respectively. On July 5, 2012, Alpine Bank filed its joinder in the Class Member Motion. 27. On July 5, 2012, the CPOA and the District- through counsel who represented them at the First Day Motions - filed their motion to transfer venue. 28. On July 6, 2012, the United States Trustee presided over a formation meeting and appointed the Committee, which includes as volunteers who have submitted to the jurisdiction and venue of the Delaware court, the only Colorado residents that participated in the filing of the Members Motion. 29. On July 10, 2012, Debtor filed various professional retention applications and related motions. 30. The Debtor anticipates filing its Schedules and Statements in short order.01:12275800.2 9
  10. 10. 31. To suggest that Movants are unable to avail themselves of competent Delaware representation, or that somehow the Colorado-based members will be inconvenienced by their own voluntary participation as members ofthe Debtors Creditors Committee if this matter proceeds in Delaware, is belied by facts; rarely do clients need to attend every hearing (indeed, maybe not even most hearings) and Movants have made no effort to explain how often or why they would need to personally appear, particularly given the ease of telephonic appearance. D. The Movants 32. Some of the Movants allege to be court-approved representatives of a certified class of club members in Case Number 11CV552 pending in the District Court of Eagle County, Colorado. Only two of these named members live in Colorado (and both of the Colorado residents have decided to forego any claims of inconvenience by traveling to Delaware on July 6, 2012 to be appointed as members ofthe Committee), the other four live in Illinois and Washington, DC- both forums more convenient to Delaware than Colorado. 33. All Movants have engaged Delaware counsel to assist with their Members Motion (and to appear at the First Day Motions and the Stay Motion). See Court Docket Entry No. 58, 61, 82, and 83. 34. Movants that are participants in the class action litigation have not provided any evidence to this Court that they are authorized to speak for the alleged 609 other members of the class they purport to represent, or whether this is simply rogue conduct on the part of the six members.01:12275800.2 10
  11. 11. 35. Alpine clearly has shown no inconvenience as is evidenced by their active participation in this case to date- it is uncertain whether the bank will challenge Debtors claim that Delaware law applies to the issue of perfection of its security interest in Debtors personal property assets. 36. Finally, CPOA and the District have also engaged Delaware counsel (who appeared at the First Day hearings) and have shown no hardship in having the case proceed in Delaware, including that they have shown no need to appear in person given the ease of telephonic appearances. Moreover, Ms. VanDeusen, although she claims that Delaware is inconvenient, actually has strong ties to the East Coast, is on the board of organizations in New Jersey and works for a New Jersey based firm. See http://www.njisj.org/test site/about/boardll.php. E. The Debtors Assets 37. When the Debtor commenced this case, it operated four golf courses, a state-of- the-art athletic club, the Trailhead Facilities, and owned restaurant facilities at the Mountain, Summit and Valley Course facilities, swimming pools, tennis courts, and a family lodge, among other amenities. The Debtor also owns significant accounts receivable owing from members spread across the Country. F. The Debtors Secured Creditors 38. On the Petition Date, the Debtors alleged secured lender, Alpine, had opposed the Debtors motion to use cash collateral and is the defendant in Debtors Adversary challenging the banks perfected secured status in certain collateral. Alpine has also expressed opposition to the Debtors motion for approval of DIP financing from the DIP Lender, currently scheduled for hearing on July 19, 2012.01:12275800.2 11
  12. 12. 39. David Wilhelm is also an alleged secured creditor of the Debtor, although Debtor understands that Wilhelm consents to Delawares choice of venue in Delaware and consents to the terms of the Debtors DIP financing. G. The Debtors Other Creditors 40. The Debtors Schedules and Statements which will be on file herein by the hearing date ofthe Venue Motions, as well as Exhibit A to the CPOA/District Motion, demonstrate that there are potential creditors located in every state in the United States and abroad. Of the vendors who have outstanding claims against the Debtor, over 50% are not located in Colorado. Ofthe Debtors club members, some of whom claim to be creditors ofthe Debtor (these claims are disputed by the Debtor), approximately 66% reside outside Colorado. In short, Colorado is not the most convenient forum for the vast majority of the pre-petition participants in the Debtors business. ARGUMENT I. TRANSFER OF THE DEBTORS CHAPTER 11 CASE IS NOT IN THE INTEREST OF JUSTICE OR FOR THE CONVENIENCE OF THE PARTIES 41. "Change of Venue" pursuant to 28 USC 1412 provides: "A district court may transfer a case or proceeding under title 11 to a district court for another district, in the interest of justice or for the convenience of the parties." Section 1412 of title 28 applies to changes of venue both of (a) cases under title 11 and (b) civil proceedings arising under title 11, or arising in or related to cases under title 11. Section 1412 speaks ofthe interest of justice "or" the convenience of the parties.01:12275800.2 12
  13. 13. INTERESTS OF JUSTICE WEIGH IN FAVOR OF DELAWARE 42. A Debtors choice of venue should only be disturbed when the balance weighs heavily in favor of a defendants motion for transfer. Oglebay Norton Co. v. Port (In re ONCO Inv. Co.), 320 B.R. 577, 579 (Bank:r. D. Del. 2005). Movants bear the burden of demonstrating, by a preponderance of the evidence, that a transfer of venue is warranted. HLI Creditor Trust v. Keller Rigging Constr., Inc. (In re Hayes Lemmerz Intl Inc.), 312 B.R. 44, 45 (Bank:r. D. Del. 2004) (citing Hechinger Liquidation Trust v. Fox (In re Hechinger Inv. Co. ofDel., Inc.), 296 B.R. 323, 325 (Bank:r. D. Del. 2003). The decision of whether venue should be transferred lies within the sound discretion of the Court, though the moving party must demonstrate by a preponderance of the evidence that such change is warranted. Lamari Ltd. v. Yes! Entmt Corp., 244 B.R. 56, 61 (D.N.J. 2000). 43. In cases such as this one where the existing venue is entirely appropriate, the Court must exercise its power to transfer cases cautiously. In re Enron Corp., 274 B.R. 327, 342 (Bankr. S.D.N.Y. 2002); In re Campbell, 242 B.R. at 746; A.R.E. Mfg. Co., Inc. v. D & M Nameplate, Inc. (In re A.R.E. Mfg. Co., Inc.), 124 B.R. 912, 914 (Bankr. M.D. Fla. 1991); In re Walter, 47 B.R. 240, 241 (Bank:r. M.D. Fla. 1985). A. The Case will Turn on Involvement of the East Coast Based Lenders/ Investors/Buyers 44. The most important consideration in deciding whether to transfer venue of this case is where economic administration of a chapter 11 case can best be accomplished. See In re Enron Corp., 274 B.R. at 348; In re Commonwealth Oil Ref. Co., 596 F.2d at 1247; In re Intl Filter Corp., 33 B.R. 952, 956 (Bank:r. S.D.N.Y. 1983). The economic administration of a bankruptcy estate involves the need to obtain post-petition financing, the need to obtain financing to fund reorganization, and the location of the sources of such financing and the01:12275800.2 13
  14. 14. management personnel in charge of obtaining it. Huntington Natl Bank v. Indus. Pollution Control, Inc. (In re Indus. Pollution Control, Inc.), 137 B.R. 176, 182 (Bankr. W.D. Pa. 1992); see also In re Intl Filter Corp., 33 B.R. at 956; In re Enron Corp., 274 B.R. at 348; In re Garden Manor Assocs., L.P., 99 B.R. 551, 554-55 (Bankr. S.D.N.Y. 1988) (court denied motion to transfer even when sole asset was located in another jurisdiction because ability to raise capital, renegotiate loan terms and likely sources of capital were located in current venue.) 45. The Movants arguments focus largely on peripheral litigation in Colorado and the situs of the Debtors primary assets rather than on the true driver of this restructuring, which will be financing from sources outside Colorado, such as the proposed DIP Lender. The post- petition economic administration of this case is East Coast centric as there is little or no economic market in Colorado or the Midwest for the sources of post-petition capital for the Debtor as are available to it on the East Coast. See Bordwin Decl. at~ 13. See also Fitchett Decl. at~ 4-6 and 8. B. Disruption To Debtor, Their Estates and Their Creditors 46. The Debtors goal of maximizing the recovery for creditors can best be achieved through a speedy and efficient chapter 11 process. Transfer of venue of this case would thwart, or at least hamper, that goal. There is no question that a transfer of venue of this case at this time would delay, disrupt, and add unnecessary expenses (especially to the DIP financing) to the administration of the cases, and take the Debtor back to a financial market that has already turned its back on the Debtor. 4 7. If this Court were to grant the Venue Motion and transfer venue, the Colorado court would need to expend time and effort to become familiar with the cases, the relief granted to date, and the pending matters. The professionals would need to retain a new set of local01:12275800.2 14
  15. 15. counsel (with attendant problems being anticipated by the Debtor) and may need to file duplicative motions. All with additional expense to the Debtor. 48. Moreover, as to the adversary proceeding contesting Alpines security interest, the inevitable delays in resolving that issue would unquestionably result in additional expense for the estate and would not be in the best interests of creditors. Thus, it is in the best interests of the Debtor, their estates and their creditors for the venue of this case to remain in Delaware. II. THE CONVENIENCE OF THE PARTIES IS AT BEST NEUTRAL, AND LIKELY IN DEBTORS FAVOR, IN LIGHT OF THE REALITY THAT THE MAJOR CREDITORS, THE DEBTOR, AND DEBTORS PROFESSIONALS (INCLUDING ITS REAL ESTATE ADVISOR), AND PROPOSED DIP LENDER ALL HAVE AVAILED THEMSELVES OF THIS COURT AND HAVE ENGAGED COMPETENT DELAWARE COUNSEL 49. The criteria that many courts employ in determining whether to transfer a title 11 case for convenience of the parties is: (1) the proximity of creditors of every kind to the court; (2) the proximity of the bankrupt (debtor) to the court; (3) the proximity of the witnesses necessary to the administration of the estate; (4) the location of the assets; (5) the economic administration of the estate; and (6) the necessity for ancillary administration ifliquidation should result. See, Commonwealth of Puerto Rico v. Commonwealth Oil Refining Co., Inc. (In re Commonwealth Oil Refining Co., Inc.), 596 F.2d 1239, 1241 (5th Cir. 1979), cert. denied, 444 U.S. 1045, 100 S. Ct. 732, 62 L. Ed. 2d 731 (1980). Accord In re Enron Corp., 274 B.R. at 343 (using CORCO factors but also relying upon Gulf States Exploration Co. v. Manville Forest Prods. Corp. (In re Manville Forest Prods. Corp.), 896 F.2d 1384 (2d Cir. 1990), even though that case involved a motion to transfer an adversary proceeding); In re Land Stewards, L.C., 293 B.R. 364 (Bankr. E.D. Va. 2002); In re Campbell, 242 B.R. 740 (Bankr. M.D. Fla. 1999); In re Pope Vineyards, 90 B.R. 252 (Bankr. S.D. Tex. 1988); In re Walter, 47 B.R. 240 (Bankr. N.D. Fla. 1985).01:12275800.2 15
  16. 16. 50. Third Circuit case law requires the Court to apply a twelve-factor test in determining whether to grant a motion to transfer venue. 5 See Hayes, 312 B.R. at 46 (citing Jumara v. State Farm Ins. Co., 55 F.3d 873, 879-80 (3d Cir. 1995)). The twelve factors are: (1) Plaintiffs choice of forum, (2) defendants forum preference, (3) whether the claim arose elsewhere, (4) the location ofthe books and records and/or the possibility of viewing premises if applicable, (5) the convenience of the parties as indicated by their relative physical and financial condition, (6) the convenience of the witnesses, but only to the extent that the witnesses may actually be unavailable for trial in one of the fora, (7) the enforceability of the judgment, (8) practical considerations that would make the trial easy, expeditious, or inexpensive, (9) the relative administrative difficulty in the two fora resulting from congestion of the courts dockets (1 0) the public policies of the fora, (11) the familiarity of the judge with the applicable state law, and (12) the local interest in deciding local controversies at home. Movants argue that the Chapter 11 case should be transferred to the District of Colorado for several asserted reasons- none ofwhich ultimately weigh in favor of transferring venue -- as follows: (1) there is pending litigation in Colorado, involving some of the members (Debtors response: these members do not explain why this should prevent the bankruptcy case from proceeding in Delaware); (2) the majority of creditors are in Colorado (Debtors response: as noted above, this is not accurate. The majority of both creditors and members are located outside of Colorado, and the majority of members filing the Member Motion do not reside in Colorado. Moreover, the two who do reside in Colorado having volunteered to accept the convenience of the Delaware forum by joining the UCC); (3) little has happened in the case (Debtors response: this is incorrect, the Debtor has filed and this Court ruled on 7 first day motions, the financial 5 These 12 factors include the six (6) factors related to the convenience ofthe parties discussed above.01:12275800.2 16
  17. 17. support for the Debtor is located in the East Coast, Debtors CRO, financial advisor and real estate advisor are not in Colorado, the Debtors counsel is in Delaware and San Diego, not Colorado; a committee has been formed, and the major creditors have all engaged Delaware counsel. All is in place in Delaware to move the case expeditiously forward); (4) the assets are in Colorado (Debtors response: the location of the assets is not a critical issue in a motion to transfer venue in a Chapter 11 proceeding, but may be relevant in a liquidation. See Garden Manor Assoc., supra. But, in any event, a significant asset of the Debtor,- accounts receivable owing from members- are owed by members located throughout the Country); (5) Colorado law applies to some agreements (Debtors response: this Court is well positioned to address the potential issues in this case, even if it must interpret contracts governed by laws of other jurisdictions- although, it is unclear, at best, whether even the membership agreements are all governed by Colorado law (see below), and even then, while Colorado law may be relevant to the litigation matters pending there, it has little relevance to the financial restructuring that is the central issue in this case. See In re Visteon Corporation v. Governor Business Solutions, Inc., 2011 Bankr. LEXIS 4008 (this court held that "where issues will be resolved through basic contractual interpretation, and the location of the underlying events is not germane, this factor is neutral.")). 51. As discussed more fully below, Movants simply have not met their heavy burden to justifY such a drastic remedy of transferring this case to Colorado. In re Delaware and Hudson Railway Co., 96 B.R. 467, 468 (D. Del. 1988), affd, 884 F.2d 1383 (3d Cir. 1989); see also In re01:12275800.2 17
  18. 18. Commonwealth Oil Refining Co., Inc., 596 F.2d at 1241; In re Fairfield Puerto Rico, Inc., 333 F. Supp. 1187, 1189 (D. Del. 1971). 6 52. The burden of proof in connection with the Venue Motions is on the Movants, not the Debtor. Nevertheless, the Debtor will demonstrate that, utilizing the twelve-factor test relating to venue transfer, Movants have not and cannot meet their burden. III. TWELVE FACTOR TEST WEIGHS IN DEBTORS FAVOR IN RETAINING VENUE IN DELAWARE 53. The first factor, Debtors forum preference, weighs in Debtors favor. "Transfer is a cumbersome disruption of the Chapter 11 process." In re Pavilion Place Associates, 88 B.R. 32, 35 (Bankr. S.D.N.Y. 1988). Consequently, when venue is proper, a debtors choice of forum is to be accorded substantial weight and deference. See In re Delaware and Hudson Railway Co., 96 B.R. at 469; In re Visteon Corp., 2011 Bankr. LEXIS 4008. A movant must demonstrate that a transfer of venue is necessary to achieve the statutory purposes by a preponderance of the evidence. In re Commonwealth Oil Refining Co., 596 F.2d at 1241 (citing, In re Fairfield Puerto Rico, Inc., 333 F. Supp. 1187, 1189 (D. Del. 1971)). 6 In considering these factors, courts also rely on decisions construing 28 U.S.C. § 1404, which is the federal statute governing transfer of venue of civil actions. Jumara v. State Farms Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995); In re Spillane, 884 F.2d 642, 645 (1st Cir. 1989); Pursuit Athletic Footwear, Inc. v. Save Power Ltd., C.A. No. 96-40- MMS, 1996 WL 328596, at *5 (D. Del. June 7, 1996) ("The decision to transfer venue under either section 1404 and 1412 has been determined to tum on the same issues."). Courts considering venue transfer motions in nonbankruptcy cases recognize that "a plaintiffs choice of forum is a paramount consideration in any determination of a transfer request, and the court should not disturb the plaintiffs choice lightly." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970).01:12275800.2 18
  19. 19. 54. Some courts suggest that something more than a preponderance of the evidence must weigh in favor of transfer: [W]here after balancing all factors, the equities lean but slightly in favor of the movant, the plaintiffs choice of forum should not be disturbed. 49 B.R. 935, 938 (Bankr. E.D.N.Y. 1985); see also In re Garden Manor Assoc., L.P., 99 B.R. at 553 ("where a transfer would merely shift the inconvenience from one party to the other, or where after balancing all the factors, the equities leaned but slightly in favor of the movant, the [debtors] choice of forum should not be disturbed."). 55. In Matsushita Battery Indus. Co. v. Energy Conversion Devices, Inc., the Delaware District Court described the movants burden of proof on a venue transfer motion as follows: As a general rule, "[b ]ecause plaintiffs choice of forum is accorded substantial weight, the burden is on the defendants to establish that the balance of convenience of the parties and witnesses strongly favors the defendants." C.A. No. 96-101-SLR, 1996 WL 328594, at *4 (D. Del. April23, 1996) (quoting, Bergman v. Brainin, 512 F. Supp. 972, 973 (D. Del. 1981)). 56. A Delaware entitys election to commence a chapter 11 case in the District of Delaware is not to be disregarded or downplayed in the context of a venue transfer motion. Indeed, it is the well-settled law of this District that, even if Delaware is not a plaintiffs "home turf," deference should be accorded to the Delaware entitys choice of venue. See Waste Distillation Technology, Inc. v. Pan American Resources, 775 F. Supp. 759, 766 (D. Del. 1991) ("[T]his Court rejects the assertion that lack of doing business here makes it unfair to try the case here.").01:12275800.2 19
  20. 20. 57. Wilmington, Delaware is a ninety-minute train ride from both New York City and Washington D.C. It is a thirty minute drive from the Philadelphia International Airport. Conversely, Cordillera is over a hundred miles from Denver, through at least three mountain passes. For the vast majority of the parties in interest that will be attending hearings in this case on a regular basis, Wilmington is at least if not a far more convenient venue than Colorado, including for some of the Movants, contrary to their self-serving and unsupported claims of . . mconvemence. 58. Consider the parties in interest that are certain to attend every hearing in this case, the Debtor, their proposed DIP lender, the Committee and the U.S. Trustee. Their respective counsel are each located in San Diego, Detroit and Delaware. Should contested hearings be necessary, the likely witnesses will be the Debtors financial advisors who are based in the East Coast. And the only Colorado-based Class Members among the Movants have voluntarily elected to join the Committee and should be viewed as consents to the convenience of these cases no matter where they are venued. 59. All of the major parties in this case have already retained Delaware bankruptcy counsel. Of the numerous professionals who have appeared in this case, only Alpines counsel has offices in both Colorado and Delaware. 60. In addition, the Debtors Delaware counsel has extensive understanding of numerous aspects of the Debtors business, as they took the lead in assisting the Debtor in the preparation of its first day motions. Transferring this case to Colorado would require the Debtor to engage and educate local counsel in Colorado (with an anticipated delay and potential conflict issue) and would saddle the estate with additional expenses arising from the time and expense for travel to and from Colorado. These expenses could be substantial in light of the fact that the01:12275800.2 20
  21. 21. Debtors counsel are located in San Diego, California, and Delaware, and the financial advisors are located on the East Coast (Detroit and New York). Moreover, at least in part because of the action of Movants, there is no market for financing to the Debtor in Colorado, and the financial markets in New York and the East Coast are the most likely source of the Debtors post-petition financing. See Bordwin Decl. at~ 16. 61. Notably, the DIP Lender, located in New York, also supports venue in Delaware (the DIP Lender has advised the Debtor that it intends to file a joinder in the Debtors opposition to the transfer of venue). And several of the dues paying members support venue in Delaware. 62. Accordingly, the Debtors decision to commence this case in the District of Delaware is entitled to substantial weight and deference and should not be disturbed unless the equities strongly favor the Movants, which it does not. This factor weighs in favor of a Delaware forum. 63. As to the second factor, Defendants Forum Preference, Movants obviously prefer the District of Colorado. Thus, the second factor superficially appears to weigh in favor of transferring venue. Upon more careful scrutiny, Movants have not presented evidence to show that they are unable to participate in Delaware, nor can they because they have already been very active in the case and the only Colorado-based initial Movants have essentially waived their preference for the Colorado forum, having subsequently consented to the Delaware forum by agreeing to serve on the Creditors Committee, a decision undertaken after the filing of the Members Motion. Moreover, the Movants dont speak for all creditors, and as noted, dues paying members and homeowners support Debtors decision to file in Delaware.01:12275800.2 21
  22. 22. 64. Additionally, the majority of the Debtors other creditors and members are located outside of Colorado and thus, under Movants logic, could face substantial travel burdens if the Debtor had filed their cases in Colorado. Even Colorado creditors would face long trips by car or plane, as the Colorado Bankruptcy Court, which is a greater than a two-hour car ride from Cordillera, is far from being centrally-located. For example, a creditor in Washington, DC (which include Movants Thomas and Jane Wilner) would be forced to traverse a greater distance to Colorado than they would to attend a hearing in Wilmington. 65. Finally, Debtor believes that other Club members favor a speedy resolution of the Debtors economic rehabilitation in the Delaware venue, and Debtor expects those members to file Joinders in the Debtors Opposition to the Venue Motion. 66. The Debtors alleged secured creditor- whose businesses are national in scope and thus render them generally agnostic on matters of geography- not surprisingly has already engaged Delaware counsel and from the Court docket has had no difficulty in making its position known to the Court. Moreover, it is now a defendant in the adversary proceeding before this Court (Adversary Number 12-50785) and has filed a joinder in the Members Motion. 67. This factor is at best neutral or weighs in favor of the Debtor given that Debtors preference for a forum takes precedence. See Garden Manor, supra. 68. As to the third factor, whether The Claim Arose Elsewhere, Movant contends that the claims relate to issues in Colorado. The Debtor does not dispute that the majority of the assets are located in Colorado. The Debtor contends that the relevant law for the fmancial restructuring, the post-petition finance, and the corporate restructuring is Delaware. The Debtor filed in Delaware for the convenience of the parties that the Debtor expects will be instrumental in the Debtors reorganization, namely the DIP financing lender, the financial advisor, the01:12275800.2 22
  23. 23. bankruptcy counsel, the real estate advisor, and expected "exit financing" lenders. Here, Debtors goal is to submit a plan that will allow the Debtor to proceed with a recapitalization and new investment that will allow the Debtor to profitably manage its operation and satisfy claims of creditors. It is well-settled that "where the issue will be resolved through basic contractual interpretation and the location of the underlying events is not germane, this factor is neutral." 7 Visteon, supra, citing DHP Holdings II, 435 B.R. at 273. 69. This factor is in favor of the Debtor. 70. As to the fourth factor, Location Of Books And Records, this is also a neutral factor. Debtor concedes that the computers on which its electronic "books and records" are maintained are located in Colorado - but these electronic books and records can be easily accessed without regard to the location of the computer on which they are maintained. However, given the goal, and likelihood, of rehabilitation, this is not an important factor here and should 7 It is uncertain to what extent Colorado law does apply to the interpretation of the member documents. In essence, there are four (4) documents or instruments that govern memberships and membership rights and obligations in the Club at Cordillera, namely: (1) The Club at Cordillera Membership Plan; (2) The Club at Cordillera Rules and Regulations; (3) The Club at Cordillera Application for Membership Privileges; and (4) the Addendum to Application for Membership Privileges (Premier Memberships) or Addendum to Application for Membership Privileges (Charter Memberships). All members of the Club at Cordillera (Signature Golf, National, Gold Medallion, Corporate, Social, Resident Owner and Honorary), were required to execute and deliver to Debtor an Application for Membership Privileges. Similarly, pursuant thereto, all members of the Club at Cordillera are bound by the Membership Plan and the Rules and Regulations, as those are from time to time amended. The Membership Plan, the Rules and Regulations and the Application for Membership Privileges are all silent as to governing law. In other words, neither the Membership Plan, the Rules and Regulations nor the Application for Membership Privileges specify any governing law. Debtor asserts that all members of the Club at Cordillera are bound by these documents, as they are amended from time to time. Certain Signature Golf Members of the Club at Cordillera elected to convert their Signature Golf Membership to either a Premier Membership or a Charter Membership. In order to make this election, these members executed and delivered to the Debtor an Addendum to Application for Membership Privileges (Premier Memberships) or an Addendum to Application for Membership Privileges (Charter Memberships). In these Addendums, the governing law is specified as Colorado. These documents only apply to a limited number of Signature Golf Members. These are the only documents that specify the governing law. Given that nearly two-thirds of the members are not Colorado residents, there is at least a question of whether Colorado law governs the claims grounded in these documents.01:12275800.2 23
  24. 24. not be the basis for the transfer of venue of this chapter 11 case. See In re Commonwealth Oil Ref. Co., 596 F.2d 1239, 1248 (5th Cir. 1979) (holding that "the location of the assets is not as important where the ultimate goal is rehabilitation rather than liquidation). See also In re Land Stewards, L.C., 293 B.R. 364, 371 (Bankr. E.D. Va. 2002) .");In re Marina Enterprises, 14 B.R. 327 (Bankr. S.D. Fla. 1981) (venue proper in Florida although debtors sole asset, undeveloped land for hotel/casino, was located in New Jersey). Venue should be retained in the location where the debtor can most successfully reorganize, even if the sole asset is located in another jurisdiction. See In re Emon, 274 B.R. at 328 (citing In re Garden Manor Assocs., L.P., 99 B.R. 551, 554-55 (Bankr. S.D.N.Y. 1988)). 71. Movants and Alpine place great emphasis on the fact that the Debtors headquarters (and thus, their pre-petition executives) are located in Colorado. But, physical location of a debtors headquarters (or the computers on which the electronic books and records are maintained) does not dictate the venue of a chapter 11 reorganization case, especially in light of the geographic diversity of the majority of Debtors current creditors and members, the universe of Debtors prospective investors, financial partners, and Chief Reorganization Officer. As recognized by the Court in In reUnited Button Co., 137 F. 668, 672, 673-74 (D. Del. 1904): Proximity of place ofbusiness of the bankrupt to the court entertaining proceedings in bankruptcy, though a circumstance sometimes entitled to weight, is by no means conclusive. Much stress was laid by counsel for the petitioning creditors upon the fact that the principal place ofbusiness ofthe bankrupt was located in New York City. Assuming this to be the case ... I am unable to perceive that the fact has much materiality or relevancy, as orders and directions may be sent to the manufacturing plants in Massachusetts from the receiver in Wilmington, as well as from one in New York or Chicago.01:12275800.2 24
  25. 25. See also Fairfield Puerto Rico, 333 F. Supp. at 1190 ("[T]he location of principal assets and ... principal place of business or residence does not necessarily control whether transfer should be ordered."); In re Intl Filter Corp., 33 B.R. 952, 956 (Bankr. S.D.N.Y. 1983) ("the location of the [debtors] assets ... [has] greater weight ifthe proceeding is brought in Chapter 7."). 72. As a matter of geography, Delaware is the convenient forum for east coast investors, and the available financing for the success of the Debtors Chapter 11 case. See Bordwin Decl. at ,-r 16. 73. Moreover, it is well recognized that "Because of the "ease of transporting [paper and electronic] documents" when discovery is "largely limited to paper exchanges" the physical location of books and records is frequently considered a "neutral" factor. See In re Viteon, supra, citing DHP Holdings II, 435 B.R. at 273-274. Movants have not asserted that this matter "involves excessive or significant paperwork or that that there will be a copious amount of document production, which, in tum, would make it difficult to produce evidence to this court." ONCO, 320 B.R. at 580. Movant also has not distinguished the amount of non-electronic books and records in this case from the amounts considered non-problematic in comparable cases in this Circuit. 74. This factor is in favor of the Debtor. 75. As to the fifth factor, Convenience Of The Parties, Movants argue that the majority of creditors, including Debtors secured creditor Alpine, are located in Colorado. As stated above, the facts are otherwise: a majority of Debtors creditors, and a super-majority of Debtors "members" are located outside of Colorado. 76. Movants claim Delaware would be inconvenient, ignoring the reality that Movants and joinder parties have already engaged competent Delaware counsel and have01:12275800.2 25
  26. 26. appeared before this Court with little inconvenience. Moreover, Movants ignore the reality that the existing secured creditor, Alpine, to date has been unwilling to work with the Debtor and thus the Debtor was forced to seek out alternative financing. The only Colorado-based Movants have availed themselves of a seat on the Creditors Committee, consenting to the convenience of forum no matter where this case is pending. The Debtor was unable to find any lenders in Colorado willing to work with the Debtor. See Bordwin Decl. at 1 10-11. Thus the Debtor has had to seek out and has found, the DIP Lender, who is located on the east coast, convenient to the Delaware court. 8 77. A motion is before this Court for approval of the DIP financing which motion is to be heard on July 19, 2012. The importance of expedited treatment for approval of financing bodes against transferring venue. Moreover, the Debtor has already retained Delaware counsel familiar with the case and without an office in Colorado. The Debtor has engaged a real estate advisor who advises the debtor that the best chance for locating additional investors/buyers - not just the DIP lender- are on the east coast, not Colorado. See Bordwin Decl. at 1 13. Thus, Delaware is optimally located to assist in the reorganization. As noted in ONCO, 320 B.R. at 580 and cited by this Court in its In re Visteon decision: "transferring the dispute to another forum may actually increase the administrative expenses of the estate, lower the amounts available for distribution ... and sap the temporal and financial resources of the Plaintiff." Movants have failed to show any concrete evidence that it would be less expensive overall to handle the reorganization matters of this case anywhere but Delaware. As a result, the convenience factor is neutral at best for Movants and likely weighs in favor of denial of the motion. 8 Indeed, all of Debtors received DIP proposals and interest in take-out finance are with non-Colorado based entities.01:12275800.2 26
  27. 27. 78. Debtor concedes that many- but not the majority- of the creditors are located in Colorado, a fact not determinative that the cases should be transferred to Colorado. See In re Indus. Pollution Control Inc., 137 B.R. at 181. The majority of creditors who are owed money, and the super-majority of members, are located outside Colorado. Based on their moving papers, four of the six Movants are not residents of Colorado: two are from Illinois, two from Washington, DC. And both Colorado-based Movants can hardly be heard to complain given that they volunteered to sit on the creditors committee no matter where this case is venued. 79. No creditor other than Movants have expressed a concern over the Delaware venue. Other creditors and members support venue in Delaware. In fact the Debtors key constituents to its reorganization, including the DIP lender, oppose transfer of venue to Colorado. 80. Attendance at meetings of the Committee and with the Debtors professionals will occur irrespective of the venue of the Chapter 11 cases. In many instances, these meetings will be conducted by conference call. In fact, not one of the Movants stated that they, individually, intended to appear at hearings. Given that the Colorado bankruptcy court is at least a two-hour drive for most of the Committee Members, for example, it is unlikely they will attend any routine hearings. Thus, their claims of inconvenience should not sway this Court as there is simply no substance behind those claims. This is likely to be particularly true in cases, such as these, where the Committee members are located in states across the country. 81. Movants profess concern for Colorado creditors, arguing that the Delaware hinders their participation in this case. While this may be true in a few limited instances, the venue of this case likely has very little to do with why these creditors are not likely to take an active participation in this case. Their lack of participation likely stems from the fact that the size of their claim, if any, is too small to justify the expenditure of time necessary to effectively01:12275800.2 27
  28. 28. participate in a chapter 11 case. Congresss solution to this problem of collective action was to provide for the formation of an official committee of unsecured creditors. This Committee has been formed in this case and the members have not presented any reason why they will need to personally appear at any of the hearings- indeed, the only two Colorado-based Movants have joined that committee. 82. It is also unlikely that there will be a need for ancillary administration if liquidation should result. This factor has little bearing on the case proceeding in Delaware. This Court is more than capable of conducting sale motions of assets located outside its borders - but, as set forth herein, and evidenced by the speed and efficiency with which this Debtor acquired a post-petition DIP commitment, this case demonstrates a strong likelihood of reorganization. 83. As described above, the Debtor maintains that Delaware is more convenient than Colorado for parties that are most likely to routinely participate in court hearings and that Colorado would present a substantial travel burden even for Colorado creditors. Thus, this factor weighs in favor of the Debtor. 84. As to the sixth factor, Convenience Of The Witnesses, this factor is only relevant to the extent that Movants show that witnesses are "actually unavailable for trial in Delaware." In re Visteon, 2011 Bankr. LEXIS 4008 (citing Hayes, 312 B.R. at 4 7. ). "Without such a showing, witnesses are presumed to be willing to testify in either forum, despite the inconvenience that one of the forums would entail." Id. 85. Movants have not suggested that any relevant witnesses would be unavailable for trial in Delaware- this can hardly be the case for the two Colorado-based Movants, who have arguably waived the inconvenience argument by volunteering to participate as members of the statutory committee, and one of whom is a declarant who is expected to be in Court for the01:12275800.2 28
  29. 29. hearing on the Motion. Moreover, Movants have not established that they will hereafter be witnesses in these bankruptcy proceedings. They may or may not. However, "a mere shift of inconvenience from one party to another will not suffice for a change of venue pursuant to 28 U.S.C. § 1412. Russell, Bankruptcy Evidence Manual, 2002 Ed.,§ 301.33. See In re Campbell, 242 B.R. 740, 747 (Bankr. M.D. Fla. 1999) ("While the Court is concerned for the convenience of witnesses in every case, this factor concerns the proximity of those witnesses necessary for administration of this estate.") The "Court needs more than mere allegations ... that witnesses will be needed and why their inconvenience in traveling to this district outweighs the Debtors choice to file its petition here." In re Stony Brook Dev., LLC, No. 06-13781-WIL, 2006 Bankr. LEXIS 4246, 2006 WL 4547184, at 2 (Bankr. D. Md. Sept. 8, 2006). Other than the alleged facts asserted in the Class Action case, of which they may testify in the already pending cases in Colorado (and as to which the Debtor maintains insurance coverage), there is not likely an issue that arises in the reorganization for which their testimony is even relevant, much less likely. Therefore, this factor favors keeping the action in Delaware. 86. As to the seventh factor, Enforceability Of The Judgment, Movants have not even mentioned this factor, have not objected to personal jurisdiction, and have not provided any reason why a judgment from this Court would not be given full faith and credit in the State of Colorado, if ever relevant. Therefore, this factor favors keeping the action in Delaware. See Hechinger, 296 B.R. at 326. 87. As to the eighth factor- Practical Considerations that Would Make the Trial Easy, Expeditious, or Inexpensive- the Movants have introduced no evidence. Practically, this Chapter 11 case is about value, enterprise value, and an East Coast based market valuation and refinance. This factor weighs greatly in favor of venue in Delaware.01:12275800.2 29
  30. 30. 88. As to the ninth factor- the Relative Administrative Difficulty in the Two Fora Resulting from Congestion of the Courts Dockets- is likely a neutral or weighs in Debtors favor as this Court has already demonstrated the alacrity in which it moves matters along. 89. As to the tenth factor- the Public Policies of the Fora- weigh in Favor of this Court where the emotional, charged dynamic that obviously exists in Colorado can be defused in a fresh location free oflocal acrimony. See Bordwin Decl. at~ 7-8; Fitchett Decl. at~ 3. 90. As to the eleventh factor- the Familiarity of the Judge with the Applicable State Law- is likely a neutral issue. Little need be said in response to Movants assertion that Colorado is a more "convenient and logical forum" because issues in the Debtors case will require application of Colorado law. First, if that is true about the pending litigation brought by the Members and the Debtors likely counter-claims, there is no truth to the fact that the reorganization issues central to the Chapter 11 have anything to do with Colorado law. Moreover, as to such peripheral issues even if they are relevant, bankruptcy courts regularly deal with state law issues without any difficulty, and the geographic scope of the Debtors operations makes it highly unlikely that Colorado law will be the only state law at issue. Moreover, the perfection, or lack thereof, of the alleged Alpine security interest in certain personal property will tum on Delaware law, not Colorado law. Thus, Delaware, is likely better situated to deal with laws of different states given the more diverse types of creditor bodies in cases filed in Delaware. 9 9 Movants claim that Colorado law governs the rights of members under the membership documents. This is a red herring. First, it may not be true- see footnote 7, supra. Second, this is not the issue in the reorganization, where the relevant law is Delaware or possibly New York law (because the DIP and prospective fmancing partners are New York based, and it is common to expect New York law to govern post-petition fmancing arrangements in a reorganization).01:12275800.2 30
  31. 31. 91. As to the twelfth and final factor -the Local Interest in Deciding Local Controversies at Home -- Movants have not shown any prejudice to a Delaware forum. In fact, for reasons discussed, the financial market in Colorado is foreclosed to the Debtor, forcing the Debtor to look outside the local environment and to East Coast participants. The local community has turned its back on this Debtor and thus this factor weighs in favor of a Delaware forum. CONCLUSION 92. Under the facts of this case, neither the "convenience of the parties" nor the "interest of justice" either necessitate or justify the transfer of this chapter 11 reorganization case to Colorado. In fact, the opposite is true. The Movants have not, and will not, sustain their burden of showing, by a preponderance of the evidence, that the interests of justice or convenience of parties are better served ifthis case were transferred to Colorado. Indeed, it is clear that such a transfer, at this juncture, will negatively affect the Debtors rehabilitation, will increase the Debtors expenses relative to its DIP loan and future refinance, and will be of utmost inconvenience to the Debtors professionals and likely post-petition financing sources.01:12275800.2 31
  32. 32. 93. Delaware is well-suited to the convenience of the parties in interest that are most likely to play an active role in this case: the Debtor and its professionals, the Committee (with both of its 2 Colorado-based Movants having consented to participating in the Committee) and its professionals, the DIP lender, and other creditors that have retained local Delaware counsel. And, far from serving the interests of justice, transferring this case would work an injustice on this estate because it would be costly and disruptive to the Debtors efforts to reorganize. Accordingly, the Debtor respectfully requests that this Court deny the Venue Motion, allow the Debtor to proceed with its efficient rehabilitation in this Court, and grant the Debtor such other and further relief as is necessary and appropriate under the circumstances Dated: July Jj_, 2012 FOLEY & LARDNER LLP Christopher Celentino (CA No. 131688) Mikel Bistrow (CA No. 102978) 402 West Broadway, Suite 2100 San Diego, California 921 01 Telephone: (619) 234--6655 Facsimile: (619) 234-3510 -and- YOUNG CONAWAY STARGATT & TAYLOR, LLP (72 R. Nof(N0:3526) ~ Michael ~ Joseph M. Barry (No. 4221) Donald J. Bowman, Jr. (No. 4383) Kenneth J. Enos (No. 4544) Rodney Square 1000 N. King Street Wilmington, Delaware 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 Proposed Counsel for Debtor and Debtor in Possession01:12275800.2 32