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TRACY HOPE DAVIS
United States Trustee for Region 2
U.S. Department of Justice
Office of the United States Trustee
U.S. Federal Office Building
201 Varick Street, Room 1006
New York, NY 10014
(212) 510-0500
By: Andrea B. Schwartz, Trial Attorney

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re
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:



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NMP-GROUP, LLC,


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Debtor.

















Hearing Date and Time:
September 10, 2013, at 9:45 a.m.

Chapter 11
Case No. 13-12269 (REG)

UNITED STATES TRUSTEE’S OBJECTION TO

DEBTOR’S MOTION FOR AN ORDER SCHEDULING A COMBINED

HEARING ON THE ADEQUACY OF THE DISCLOSURE STATEMENT AND
CONFIRMATION OF THE DEBTOR’S PLAN OF ORDERLY LIQUIDATION

TO: THE HONORABLE ROBERT E. GERBER,

UNITED STATES BANKRUPTCY JUDGE:



Tracy Hope Davis, the United States Trustee, respectfully submits this



objection to the motion of NMP-Group, LLC (the “Debtor”) for an order scheduling a

combined hearing on the adequacy of the disclosure statement and confirmation of

the Debtor’s plan of orderly liquidation. (ECF No. 41).

I. INTRODUCTION

The United States Trustee objects to the Motion because the relief sought is

inconsistent with another provision of the Bankruptcy Code and is premature. A

combined hearing on the adequacy of a disclosure statement and confirmation of a





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plan is permissible in a small business or prepackaged bankruptcy case, but it is not

appropriate here. The Debtor neither is a small business nor is this case

“prepackaged” under General Order M-454. Thus, the combined hearing permitted

under Section 105(d)(2) is unavailable because it is inconsistent with Section 1125

which requires approval of a disclosure statement before solicitation of a plan.

Further, the Debtor has not demonstrated any emergent circumstances that

warrant expedited action.

The Motion also is premature. At the Section 341(a) meeting, the Debtor, a

single-member limited liability company, produced as its representative an

individual, not the sole member, who had little or no knowledge about the Debtor’s

financial affairs.1 The individual had no specific knowledge of the information in the

petition, schedules or SOFA, each of which she signed under penalty of perjury.

Although claiming to be the “Manager,” the individual is not the Debtor’s employee

and does not receive compensation from the Debtor. Instead, she appeared simply to

be a friend of the sole member, who was in Moscow at the time of the Section 341(a)

meeting. Because the Debtor, or a person with knowledge of the Debtor’s financial

affairs, has been unable to be examined under oath and verify the accuracy of the

information contained in seminal bankruptcy documents, the Debtor should not be

permitted to schedule, on an expedited basis, a combined hearing on a disclosure

statement and plan that may contain inaccurate or incomplete information,

including the identity and universe of the Debtor’s potential creditors.


1 A transcript of the 341(a) Meeting has been ordered and relevant excerpts will be submitted to the
Court once it has been received.



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A.

Background.

II. FACTS

1.

On July 10, 2013, the Debtor filed a voluntary petition under chapter

11 of the Bankruptcy Code. (ECF No. 1).

2.

Annexed to the petition is the Written Consent of Sole Member, which

provides that the Debtor is a single-member limited liability company whose sole

member is Natalia Pirogova. (ECF No. 1). By the Written Consent, Ms. Pirogova

authorized Luiza Dubrovsky, “a manager of the company,” among other things, to

execute documents in this case on the Debtor’s behalf. Id.

3.

By Order dated August 1, 2013, the Court determined that the Debtor

is a single-asset real estate debtor under Section 101(51). (ECF No. 27).

4.

By Order dated August 2, 2013, the Court authorized the Debtor to

retain Cole, Schotz, Meisel, Forman & Leonard P.A. as its counsel. (ECF No. 30).

5.

6.

No trustee or examiner has been appointed in this case.

The United States Trustee has not formed a creditors’ committee due

to lack of interest.

7.

Since the Petition Date, the Debtor has continued to operate its

business and manage its property as a debtor in possession under Sections 1107(a)

and 1108 of the Bankruptcy Code.

B.

The Section 341(a) Meeting.

8.

On August 14, 2013, the United States Trustee convened the Section

341(a) meeting. Ms. Dubrovsky, with counsel, appeared for the Debtor. Ms.



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Pirogova did not attend, however, a Florida attorney appeared on her behalf. In

addition, counsel for 172 Madison (NY), LLC, the largest secured creditor, attended.

9. Ms. Dubrovksy testified in words or substance that: (1) she is not the

Debtor’s “Managing Member,” (2) she is not a member of the Debtor, (3) she is not

the Debtor’s employee and (4) she receives no compensation from the Debtor. Ms.

Dubrovsky also testified in words or substance that she had no specific knowledge

about the financial information contained in the petition, schedules and SOFA.

10. Upon hearing this testimony, the United States Trustee’s counsel (the

“UST Counsel”) expressed concerns as to whether Ms. Dubrovsky was an

appropriate debtor representative for the Section 341(a) meeting.

11. Because a creditor had appeared and Ms. Dubrovsky represented that

she had shortened her vacation in Latvia to attend the meeting, the UST Counsel

agreed to continue, with the understanding that she would not close the meeting

until she was satisfied that all of her questions had been answered sufficiently.

12. On August 28, 2013, the UST Counsel sent a letter to the Debtor

stating that the United States Trustee intended to examine Ms. Pirogova at a

continued meeting to be held during the week of September 9 or 16, 2013. A copy of

the letter is annexed as Exhibit A to the Declaration of Andrea B. Schwartz dated

August 29, 2013. The UST Counsel also requested that the Debtor adjourn the

Motion until after the continued meeting took place.

13. On August 29, 2013, Ms. Volkov sent an email response declining to

consent to the adjournment. Ms. Volkov stated that there was no reason why the



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meeting could not take place after the hearing, and noted that, “[t]he local rules do

not even require the 341 meeting to take place before confirmation in a prepackaged

plan case.” Id. A copy of the email is annexed as Exhibit B to the Schwartz

Declaration.

OBJECTION

A.



The Relief Requested is Inconsistent with Section 1125 Because
this is Not a Small Business or Prepackaged Case.

Section 105(d)(2) permits the Court, unless inconsistent with another

provision of the Bankruptcy Code, to issue an order providing that the hearing on

approval of the disclosure statement be combined with the hearing on confirmation

of the plan. 11 U.S.C. ' 105(d)(2)(vi). An order combining the disclosure statement

and confirmation hearing, however, is likely to be inconsistent with Section 1125

except in small business or prepackaged bankruptcy cases. See 2 Alan N. Resnick &

Henry J. Sommer (eds.), Collier on Bankruptcy ¶ 105.08 (16th ed. 2013); see also In

re Amster Yard Assocs., 214 B.R. 122 (Bankr. S.D.N.Y. 1997) (if the case is not a

small business case, then the court is not authorized to permit solicitation of votes

prior to approval of a disclosure statement); General Order M-454 (permitting

combined hearings in prepackaged cases).

Section 1125(f) permits the Court to conditionally approve a disclosure

statement and conduct a combined hearing on the disclosure statement and

confirmation in a small business case. 11 U.S.C. ' 1125(f). The Debtor,

however, is not a “small business debtor” under Section 101(51D). Thus, the

Debtor cannot obtain a combined hearing under Section 1125(f).



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General Order M-454 permits the Court to conduct a combined hearing in a

prepackaged bankruptcy case. Gen. Order M-454 at X. Despite Debtor’s counsel’s

apparent assertion that this case is prepackaged, the facts belie the claim. For

many reasons, including that the Debtor did not solicit and obtain prepetition the

requisite votes for confirmation, this case is not “prepackaged. Accordingly, a

combined hearing is not available under General Order M-454. Thus, because

Section 1125 requires approval of a disclosure statement before solicitation of a

plan, the relief sought under Section 105(d)(2) is inconsistent with another

provision of the Bankruptcy Code and should be denied.

C.



The Relief Sought is Premature Because the Debtor Has Failed,
in Substance, to Appear at the Section 341(a) Meeting.

Section 341(a) requires that the United States Trustee convene and preside

at a meeting of creditors. 11 U.S.C. 341(a). Section 343 requires that the debtor

appear and be examined under oath at the meeting. 11 U.S.C. ' 343. Where the

debtor is not an individual, the individuals in control of and most knowledgeable

about the entity should appear for the examination. See 3 Collier at ¶ 343.02. If the

debtor does not appear, the Court may dismiss the case. See 11 U.S.C. §

1112(b)(4)(G).

The relief sought is premature. Here, the Debtor, a single-member limited

liability company, produced Ms. Dubrovsky as its representative at the Section

341(a) meeting. Ms. Dubrovsky is not the sole member and her testimony reflected

that she had little or no knowledge of the Debtor’s financial affairs. In fact, Ms.



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Dubrovsky testified that she had no specific knowledge of the information in the

petition, schedules or SOFA, each of which she signed under penalty of perjury.

Although claiming to be the Debtor’s “Manager,” Ms. Dubrovsky testified that

she is not the Debtor’s employee and does not receive compensation from the

Debtor. Based upon the sum and substance of her testimony, it appeared that she

merely is Ms. Pirogova’s friend who was in Moscow when the Section 341(a)

meeting occurred. Because the United States Trustee has been unable to examine

the Debtor or a person with knowledge of the Debtor’s financial affairs under oath

the Debtor should not be permitted to schedule, on an expedited basis, a hearing on

a disclosure statement or confirmation of a plan that may contain inaccurate or

incomplete information, including the identity and universe of the Debtor’s

potential creditors.

V. CONCLUSION



WHEREFORE, the United States Trustee respectfully requests that the

Court: (i) sustain the Objection, (ii) deny the Motion and (iii) grant other just relief.

Dated:



























New York, New York
August 29, 2013



Respectfully submitted,

TRACY HOPE DAVIS
United States Trustee















































/s/ Andrea B. Schwartz
Andrea B. Schwartz, Trial Attorney
U.S. Department of Justice
Office of the United States Trustee
U.S. Federal Office Building
201 Varick Street, Room 1006
New York, NY 10014
(212) 510-0500


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