Case 24-10628-KBO Doc 9 Filed 04/01/24 Page 1 of 41
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`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE DISTRICT OF DELAWARE
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`In re:
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`WOM S.A., et al.1
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`) Chapter 11
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`) Case No. 24-______ (___)
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`(Joint Administration Requested)
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`Debtors.
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`DEBTORS’ MOTION FOR ENTRY OF INTERIM
`AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS
`TO (A) PAY FOREIGN VENDOR CLAIMS, INTERCONNECTION
`CLAIMS, SHIPPER CLAIMS, AND REFUND CLAIMS AND (B) CONTINUE
`OTHER CUSTOMER PROGRAMS AND (II) GRANTING RELATED RELIEF
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`The above-captioned debtors and debtors-in-possession (collectively, the “Debtors” or
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`the “Company”) state as follows in support of this motion (this “Motion”):
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`Relief Requested
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`1.
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`The Debtors seek entry of an interim order substantially in the form attached hereto
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`as Exhibit A (the “ Proposed Interim Order”), and a final order substantially in the form attached
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`hereto as Exhibit B (the “Proposed Final Order,” and together with the Proposed Interim Order,
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`the “Orders”), (i) authorizing the Debtors to (a) pay Foreign Vendor Claims, Interconnection
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`Claims, Shipper Claims, and Refund Claims (each as defined herein)2 and (b) continue Other
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`Customer Programs (as defined herein) and (ii) granting related relief.
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`1 The Debtors in these chapter 11 cases (the “Chapter 11 Cases”), and each Debtor’s federal tax identification
`number in their applicable jurisdiction of incorporation, are as follows: Kenbourne Invest S.A. (2018 2206 815);
`NC Telecom II AS (59.208.720-0); WOM Mobile S.A. (99.517.000-0); WOM S.A. (78.921.690-8); Conect S.A.
`(96.965.220-k); and Multikom S.A. (78.456.640-4). The location of the Debtors’ service address in these Chapter
`11 Cases is: General Mackenna No. 1369, Santiago, Chile.
`2 Contemporaneously with the filing of this Motion, the Debtors have filed certain other “first day” motions seeking
`authority to satisfy certain prepetition claims. This Motion is not duplicative of any such motion. Nothing
`contained herein is intended or should be construed as an admission as to the validity of any claim against the
`Debtors or a waiver of the Debtors’ rights to dispute any asserted claim.
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`Case 24-10628-KBO Doc 9 Filed 04/01/24 Page 2 of 41
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`2.
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`Pursuant to the Proposed Interim Order, the Debtors seek authority to pay, in the
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`ordinary course of their business, the Foreign Vendor Claims, the Interconnection Claims, the
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`Shipper Claims, and the Refund Claims (each as defined herein) as such obligations become due
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`and payable in an aggregate amount not to exceed $41.36 million3 (collectively, the “Interim
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`Amount”).
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`3.
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`In addition, and pursuant to the Proposed Final Order, the Debtors seek authority
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`to pay the Foreign Vendor Claims, the Interconnection Claims, the Shipper Claims, and the Refund
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`Claims (each as defined herein), in an aggregate amount (inclusive of the Interim Amount) not to
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`exceed $103.41 million, as such obligations become due and payable in the ordinary course of
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`business.
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`4.
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`Pursuant to the Orders, the Debtors also seek authority to continue to amend and
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`implement the Refund Program and the Other Customer Programs (each as defined herein) in the
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`ordinary course of business and honor obligations in connection therewith arising after the Petition
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`Date, as such obligations become due and payable, without further application to the Court.
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`5.
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`As set forth herein, the Debtors also request that all applicable banks and other
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`financial institutions (collectively, the “Banks”) be authorized to honor, process, and effect
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`payments related to the relief requested herein.
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`6.
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`In addition, the Debtors request that the Court (as defined herein) schedule a final
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`hearing (the “Final Hearing”)4 to consider approval of this Motion on a final basis and entry of
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`the Proposed Final Order.
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`3 All amounts contained herein are listed in U.S. dollars (“USD”) unless otherwise noted. All amounts have been
`converted from Chilean pesos to U.S. dollars using the currency exchange rate of 980 Chilean pesos per U.S.
`dollar, which is the approximate average of the currency exchange rates set forth by the Chilean Central Bank
`over the past 15 days.
`4 Such period between the date this Motion was filed and the Final Hearing shall be the “Interim Period.”
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`7.
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`In support of this Motion, the Debtors rely upon and incorporate by reference the
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`Declaration of Robert Wagstaff in Support of Debtors’ Chapter 11 Petitions and Requests for First
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`Day Relief (the “First Day Declaration”),5 filed contemporaneously herewith.
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`8.
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`For the reasons set forth herein, the Debtors submit that the relief requested is in
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`the best interest of the Debtors, their estates, creditors, and other parties in interest, and therefore
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`should be granted.
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`Jurisdiction, Venue, and Predicates for Relief
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`9.
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`The United States Bankruptcy Court for the District of Delaware (the “Court”) has
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`jurisdiction to consider this Motion under 28 U.S.C. §§ 157 and 1334 and the Amended Standing
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`Order of Reference from the United States District Court for the District of Delaware, dated
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`February 29, 2012 (Sleet. C.J.). This is a core proceeding under 28 U.S.C. § 157(b). Venue of
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`these Chapter 11 Cases and this Motion in this District is proper under 28 U.S.C. §§ 1408 and
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`1409.
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`10.
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`The predicates for the relief requested by this Motion are sections 105(a), 363(b),
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`1107(a), and 1108 of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 6003
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`and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).
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`11.
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`Pursuant to Local Bankruptcy Rule 9013-1(f), the Debtors consent to the entry of a
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`final judgment or order with respect to this Motion if it is determined that this Court lacks
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`Article III jurisdiction to enter such final order or judgment absent consent of the parties.
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`5 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the
`First Day Declaration.
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`Case 24-10628-KBO Doc 9 Filed 04/01/24 Page 4 of 41
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`I.
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`Overview of Chapter 11 Cases
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`Background
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`12.
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`On April 1, 2024 (the “Petition Date”), each of the Debtors filed a voluntary
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`petition for relief under chapter 11 of the Bankruptcy Code with the Court. The Debtors continue
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`to operate their business and manage their properties as debtors-in-possession pursuant to sections
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`1107(a) and 1108 of the Bankruptcy Code. Concurrently with the filing of this Motion, the Debtors
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`have requested procedural consolidation and joint administration of these Chapter 11 Cases
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`pursuant to Bankruptcy Rule 1015(b). No creditors’ committee has been appointed by the Office
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`of the United States Trustee for the District of Delaware (the “U.S. Trustee”), nor has a trustee or
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`examiner been appointed in these Chapter 11 Cases.
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`13.
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`The Company is one of the fastest growing and market-leading telecommunications
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`providers in Latin America and has been the second-largest mobile network operator in Chile since
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`2019. The Company reaches over 8.5 million customers and provides prepaid and post-paid
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`mobile voice, data, and broadband services, along with a rapidly expanding “Fiber to the Home”
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`broadband offering to consumers and businesses in Chile. The Company’s 5G wireless broadband
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`services deliver internet access to approximately one million customers, with a coverage area that
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`spans over 18 million people. The Company employs, directly or indirectly, approximately 7,000
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`people in Chile.
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`14.
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`Additional factual background and information regarding the Debtors, including
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`their business operations, their corporate and capital structure, and the events leading to the
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`commencement of these Chapter 11 Cases, is set forth in detail in the First Day Declaration.
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`II.
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`Overview of the Foreign Vendor Claims
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`15.
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`As noted above, the Company is the second-largest mobile network operator in
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`Chile, servicing approximately 8.5 million customers and employing approximately 7,000 people
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`in the country. While these Chapter 11 Cases are pending in the United States, the Debtors’
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`business is in Chile. As a result, the Debtors regularly transact and procure essential goods and
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`services such as utilities, telecommunication services and equipment, network infrastructure,
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`cellphone handsets, advertising, software, and real estate with local Chilean and other
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`counterparties (the “Foreign Vendor Claimants”) that are located solely outside the United States
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`and that do not have known material ties to the United States (and thus for whom enforcement of
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`the automatic stay will be difficult, if not impossible), including vendors based in Chile and other
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`parts of Latin America, Canada, the United Kingdom, Ireland, Sweden, Poland, Belgium, Spain,
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`China, and Singapore. In doing so, the Company incurs obligations to such counterparties in the
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`ordinary course of its business (the “Foreign Vendor Claims”).
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`16.
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`Among the many justifications for granting the Debtors the authority to pay the
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`Foreign Vendor Claims, none is more important than the fact that there is a credible risk that any
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`counterparty of the Debtors that is located outside the United States and does not have otherwise
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`known ties to the United States can seek to enforce on an unpaid obligation and place the Debtors
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`in a Chilean liquidation proceeding.6 This would have disastrous consequences because, if not
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`withdrawn, the Debtors would be required to either (i) pay the obligation in full or (ii) commence
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`a voluntary liquidation proceeding in Chile, thereby preventing the Debtors from successfully
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`restructuring their business through these Chapter 11 Cases. Moreover, it is an event of default
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`6 This is not an idle threat as the Debtors’ unpaid Chilean creditors have already initiated at least six executive
`proceedings against the Debtors and made at least two attempts to force the Debtors into liquidation proceedings
`in Chile.
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`under the Debtors’ proposed DIP Credit Agreement if an involuntary insolvency proceeding
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`remains pending against the Debtors for a continuous 60-day period. The Debtors cannot risk
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`losing access to the financing provided under the DIP Credit Agreement, which is critical to
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`continuing operations. Avoiding a Chilean liquidation process is therefore essential to preserving
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`7,000 jobs, maintaining services for over 8 million telecommunications customers, and
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`maximizing the value of the Debtors and their estates.
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`17.
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`Despite the global reach of the automatic stay, it is possible (if not likely) that the
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`Debtors’ Foreign Vendor Claimants, acting upon an erroneous belief that they are not subject to
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`such stay, could seek to enforce their claims against one or more of the Debtors in Chile or another
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`foreign jurisdiction, or exercise other self-help remedies to recover such prepetition amounts.
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`Thus, for these Chapter 11 Cases to have any chance of success, the Debtors need to be able to
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`clear the deep stack of outstanding payables owed to those creditors with no known ties to the
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`United States, so they can focus on their restructuring efforts in these Chapter 11 Cases without
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`concern that their business operations will be disrupted.
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`18.
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`Of concern are not just the actions that such foreign-based vendors can take in Chile
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`to enforce unpaid obligations, but also that such parties support the Debtors’ operations in Chile
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`and play a vital role in the Debtors’ business. The practical ability for the Debtors to replace such
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`vendors is limited (if even possible) and the Debtors’ business could be irreparably harmed by
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`even a temporary disruption in the Foreign Vendor Claimants’ supply of goods and services. As
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`such, there is a significant risk that such Foreign Vendor Claimants, including Foreign Utility
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`Providers (as defined herein), who are not familiar with the U.S. bankruptcy law or principles, may
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`disregard the automatic stay. Because of the limited availability of comparable vendors, as well
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`as the length of time it would take to replace the Foreign Vendor Claimants or obtain an order
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`enforcing the automatic stay (if meaningful locally), it is vitally important that the Debtors have
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`the discretion to satisfy, where necessary, certain prepetition claims held by Foreign Vendor
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`Claimants, notwithstanding that they may be party to valid prepetition agreements.
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`19.
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`Depending on the type of services provided, the Foreign Vendor Claimants
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`generally fall into the following categories: (a) utility providers; (b) factoring services providers;
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`and (c) other business vendors.
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`a) Utility Providers
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`20.
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`The Debtors obtain services from utility providers based outside the United States
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`(the “Foreign Utility Providers”) whose services are exclusively provided in Chile and, thus,
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`incur utility expenses for these critical services, including electricity, water, and internet (the
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`“Utility Services”). The Foreign Utility Providers provide Utility Services to: (a) the Debtors’
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`corporate headquarters in Santiago, Chile, where corporate staff work; (b) network centers that
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`house technology infrastructure; (c) stores across Chile where mobile and data internet plans are
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`sold and customer service is provided; (d) warehouses where inventory and network infrastructure
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`assets are stored; and (e) towers where the network communication infrastructure is located.
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`21.
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`The Utility Services are crucial to ensure that there are no interruptions in the
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`Debtors’ business operations. The Foreign Utility Providers generally have a monopoly in the
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`services they provide, therefore, it is not cost-effective or practical for the Debtors to obtain
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`comparable services from alternative sources within a reasonable timeframe and without
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`discontinuing such services.
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`22.
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`For a limited number of the Debtors’ infrastructure towers and store locations, such
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`as stores located inside shopping malls or shopping centers, certain Utility Services are billed
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`directly to the Debtors’ landlords and passed through to the Debtors as part of the Debtors’ lease
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`payments in accordance with the applicable lease agreements or billed to the Debtors by the
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`landlord. The relief requested herein covers all Foreign Utility Providers supplying Utility
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`Services to the Debtors, including those landlords supplying the Debtors with Utility Services
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`under certain applicable lease agreements. The termination or interruption of the Utility Services
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`could result in the Debtors’ inability to operate, and thus maintaining the Utility Services on an
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`uninterrupted basis during these Chapter 11 Cases is essential to preserving and maximizing the
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`value of the estates for the benefit of all stakeholders. In addition to seeking authority to continue
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`payments to the Foreign Utility Providers, the Debtors respectfully request language in the Orders
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`providing that all such landlords be required to continue to pay for Utility Services provided in the
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`ordinary course of business at premises that the Debtors occupy until the effective date of the
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`rejection of the applicable lease agreement, if any, pursuant to section 365 of the Bankruptcy Code.
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`23.
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`As of the Petition Date, the Company had approximately $5.4 million in unpaid
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`payables to the Foreign Utility Providers, of which $2.16 million will become due and payable in
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`the Interim Period.
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`b) Factoring Providers
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`24.
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`In the ordinary course of business, the Debtors regularly enter into factoring
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`arrangements (the “Factoring Arrangements”) with certain factoring providers (the “Factoring
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`Providers”) under which certain of the Debtors’ vendors sell their receivables (the “Receivables”)
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`from the Debtors to the Factoring Providers. Stated simply, under the Factoring Arrangements,
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`the Debtors pay amounts the Debtors otherwise owe to certain vendors directly to the Factoring
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`Providers.
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`25.
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`The Factoring Arrangements allow the Debtors’ vendors to improve their liquidity,
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`which fosters a stronger relationship between the vendor and the Debtors, leading to discounts
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`and/or improved services. The Factoring Arrangements thus provide an important source of
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`operational flexibility for the Debtors and a valuable service to the Debtors’ vendors and suppliers
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`by allowing them to address their near-term liquidity needs through prompt monetization of the
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`Receivables.
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`26.
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`As of the Petition Date, the Company had approximately $15.73 million in unpaid
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`payables to the Factoring Providers, of which $6.29 million will become due and payable in the
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`Interim Period.
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`c) Other Business Vendors
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`27.
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`To maintain their operations, the Debtors also make payments in the ordinary
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`course of business to various other foreign creditors including third-party vendors that, among
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`other things, provide: (a) advertising services; (b) telecommunications services and equipment; (c)
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`software; (d) network infrastructure; (e) logistics and handling services; (f) construction services;
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`(g) equipment maintenance services; (h) inventory; and (i) other miscellaneous and professional
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`services, which the Debtors submit are essential to the smooth operation of their business. In some
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`instances, the Debtors also transact with certain competitors and third parties to use their sites and
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`network towers to install antennas or rent space from certain foreign vendors to install their own
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`network towers and equipment. As of the Petition Date, the Company had approximately $82.13
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`million in unpaid payables to the Other Business Vendors, of which $32.86 million will become
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`due and payable in the Interim Period.
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`28.
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`The Debtors estimate that the aggregate amount owed to Foreign Vendor Claimants
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`for goods delivered or services provided before
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`the Petition Date
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`is approximately
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`$103.26 million. Of the amounts due to Foreign Vendor Claimants on the Petition Date,
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`approximately $41.31 million will become due during the Interim Period.
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`29.
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`The Foreign Vendor Claimants, who are located in foreign countries with little to
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`no contacts in the United States, may not be willing to do business with a “Chapter 11 Debtor”
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`absent payment of their prepetition claims. The Debtors are balancing the need to ensure that the
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`Chapter 11 Cases do not disrupt their operations or adversely affect their collection efforts with
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`the need to preserve the value of the Debtors’ estates.
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`30.
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`Therefore, paying such Foreign Vendors Claims will contribute significantly to the
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`Debtors’ immediate and orderly transition into bankruptcy and enhance the Debtors’ business
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`value for the benefit of all parties in interest.7
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`II.
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`Overview of the Interconnection Service Providers
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`31.
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`The Debtors have historically entered into interconnection and connectivity
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`agreements (the “Interconnection Agreements”) with certain telecommunications providers
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`operating in Chile (the “Interconnection Service Providers”). The Interconnection Service
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`Providers are the Debtors’ main competitors in the Chilean market for telecommunications
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`services. Essentially, the Interconnection Service Providers and the Debtors allow access to each
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`other’s network to allow for each of their customers to use roaming services when the other parties’
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`customers enter into an area in Chile where one of the parties has no coverage or the network of
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`the other party is stronger. Not only do these interconnection services allow customers of each of
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`the Interconnection Service Providers and the Debtors to achieve almost seamless coverage, but
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`they also serve an essential purpose by making sure that, to the extent possible, customers are able
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`to receive emergency alerts from Chilean authorities, including possible Tsunami warnings (which
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`In addition to the Foreign Vendor Claimants discussed herein, the Debtors are aware of one additional vendor
`with an outstanding prepetition obligation asserted against the Debtors for approximately $300, dating back to
`2015. While the Debtors have not been able to locate an invoice with respect to this obligation, to ensure,
`however, that there is no future disruption to the Debtors’ business operations on account of such obligation, and
`out of an abundance of caution, the Debtors request authorization to pay the balance of the obligation at such time
`when the vendor provides an invoice and requests payment.
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`is a real issue given Chile’s proximity to the Pacific Ocean). The ability to provide essentially
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`nationwide coverage is, not surprisingly, a major selling point for the Debtors’ telecommunications
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`services. If those services were suspended or terminated (even for a brief period), it could have a
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`disastrous and irreparable impact on the Debtors’ ability to maintain their customers or sign up
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`new customers. Service suspension may even lead to regulatory fines or, in certain cases, could
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`risk the Debtor’s ability to keep their concessions.
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`32.
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`The Debtors have outstanding prepetition amounts owing to certain of the
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`Interconnection Service Providers with respect to amounts due under the Interconnection
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`Agreements (the “Interconnection Claims”). To be clear, the Debtors do not believe that the
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`Interconnection Service Providers (nearly all of whom have material connections with the United
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`States) will knowingly and intentionally violate the Bankruptcy Code (including, without
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`limitation, sections 362 and 365). Given the serious consequences that even a minor disruption
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`would cause, the Debtors request authority to pay any outstanding amounts owed to the
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`Interconnection Service Providers, if necessary, to lift any suspension or termination of services
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`by the Interconnection Service Providers. If, however, the Debtors do need to make these
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`payments because of an action by the Interconnection Service Providers that violates the
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`Bankruptcy Code (or if such action is taken but the Debtors do not have to make payments to
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`resolve it), the Debtors reserve all rights against such parties to seek redress from this Court to
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`remedy such violation, including, without limitation, under sections 362, 365, and 549 of the
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`Bankruptcy Code.
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`III. Overview of the Shippers
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`33.
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`In the ordinary course of business, the Debtors rely on a variety of shippers,
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`delivery companies, and similar service providers (collectively, the “Shippers”) for the
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`transportation of the Debtors’ inventory to and from the Debtors’ headquarters, stores, and kiosks,
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`as well as for the supply of goods from vendors to the Debtors.
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`34.
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`The Debtors’ distribution system is an integrated network that is dependent upon
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`the continued use of their existing Shippers. Because the Debtors’ business depends on the
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`constant supply of inbound product to fulfill customer demand and the ability to move product
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`within the Debtors’ network of stores and kiosks, even minor disruptions to the supply and
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`movement of inventory could be detrimental to the going concern value of the Debtors’ business.
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`35.
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`In the ordinary course of business, the Debtors’ goods are regularly placed in the
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`physical possession of the Shippers while they are transported to their destination. If any
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`prepetition amounts owed to the Shippers are not satisfied, these parties may refuse to deliver or
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`release the Debtors’ goods until the Debtors pay charges and expenses incurred in connection with
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`the transportation of such goods. In some cases, a Shipper may even claim ownership of the goods
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`in its possession to secure payment of the charges and expenses owed to them by the Debtors. Any
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`such action by a Shipper would significantly harm, and potentially cripple, the Debtors’ operations
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`by interrupting the Debtors’ supply chain and undermining the Debtors’ ability to fulfill their
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`customers’ needs.
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`36.
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`Such Shippers’ possession and retention of the Debtors’ goods would not only
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`disrupt the Debtors’ operations, but also undermine the Debtors’ ability to efficiently administer
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`these Chapter 11 Cases. The Debtors believe that the cost of replacing or reconstructing their
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`existing supply chain network far exceeds the amount of claims outstanding to the Shippers as of
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`the Petition Date. Further, the value of the goods in the Shippers’ possession and the cost of even
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`a minor interruption to the Debtors’ business would likely exceed the amounts owed to the
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`Shippers. Accordingly, to prevent the breakdown of their transportation network, the Debtors
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`respectfully request authority to pay certain prepetition obligations (the “Shipper Claims”) as they
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`become due and payable in the ordinary course of business. The Debtors are not aware of any
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`outstanding amounts owing to the Shippers as of the Petition Date. Out of an abundance of caution,
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`however, the Debtors also seek authority to continue paying the Shipper Claims in the ordinary
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`course of business.
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`IV. Overview of the Refund Claims
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`37.
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`The Debtors have historically provided refunds to their customers under certain
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`circumstances to attract and maintain positive customer relationships (the “Refund Program”).
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`The Debtors’ ability to pay the Refund Claims (as defined herein) and continue the Refund
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`Program is a cornerstone of the Debtors’ restructuring efforts because they promote customer
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`satisfaction and generate goodwill for the Debtors’ business and brand.
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`38.
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`In the ordinary course of business, the Debtors incur certain monthly obligations
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`(the “Refund Claims”) associated with honoring refund requests submitted by customers (the
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`“Customers”) for amounts the Customers have already paid in exchange for the Debtors’ products
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`and services, including mobile phones and accessories such as headsets and phone chargers. The
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`Refund Claims typically relate to payment refunds for defective or damaged goods, missing or
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`broken parts, shipping delays, billing discrepancies, and overcharges for any given product, or for
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`the difference between the regular and introductory promotional rates of service resulting from
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`extensions of the introductory rate upon customer request.
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`39.
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`Programs like the Refund Program are common in the telecommunications
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`industry, and similar programs are used by the Debtors’ competitors. Given the competitive
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`telecommunications landscape in Chile, without the Refund Program, potential customers may be
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`unwilling to continue to do business with the Debtors, which would ultimately harm the Debtors,
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`their creditors, and other parties in interest.
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`40.
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`The Debtors estimate that approximately $150,000 is owed to the Customers under
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`the Refund Program as of the Petition Date, of which $50,000 will become due and payable in the
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`Interim Period. The Debtors’ estimated total average monthly cost of paying the Refund Claims
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`under the Refund Program is approximately $41,750 for the twelve (12) months prior to the
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`Petition Date (and approximately $49,650 at its highest), with each Refund Claim ranging between
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`$6 and $100. The Debtors seek authority to pay the Refund Claims as of the Petition Date in an
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`amount within this twelve (12) month range and continue to utilize the Refund Program in the
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`ordinary course of business and honor such obligations in connection therewith arising after the
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`Petition Date, as such obligations become due and payable.
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`V.
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`Overview of the Other Customer Programs
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`41.
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`In addition to the Refund Program, the Debtors offer a number of other promotional
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`and goodwill programs to their customers in the ordinary course of business, including: (i)
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`customer acquisition and retention discounts (the “Discount Programs”); (ii) product purchase
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`financing (the “Financing Programs”); (iii) billing credits (the “Customer Credit Program”);
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`and (iv) a phone upgrade program (the “Upgrade Program,” and with the Discount Programs,
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`Financing Programs, and Customer Credit Programs, the “Other Customer Programs”). The
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`Debtors extend Discount Programs to customers as an incentive to sign up for and continue using
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`their services by offering free months of wireless service. The Debtors also permit customers to
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`finance the purchase of their handset products and pay the full cost of the product over time through
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`their Financing Programs. The Debtors also offer credits to customers who are (i) subject to
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`network outages or (ii) having difficulties in meeting their contractual obligations as a way of
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`building goodwill with such customers. Lastly, the Company provides customers with the
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`opportunity to participate in their Upgrade Program. Under the Upgrade Program, customers pay
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`for phone products at a discounted upfront rate (typically 50%), and then are not required to make
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`any additional payments for the next 12 months. After this period, customers can choose whether
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`they would prefer to (i) pay their remaining outstanding balance or (ii) trade in their current phone
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`for a new phone, and again only pay 50% of the cost of the new phone thereby restarting the
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`Upgrade Program. The Debtors estimate that there are no unpaid obligations of the Debtors under
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`the Other Customer Programs as of the Petition Date, but respectfully request authority to (i)
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`continue to utilize the Other Customer Programs in the ordinary course of business and honor
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`obligations in connection therewith arising after the Petition Date, as such obligations become due
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`and payable and (ii) fashion such promotional programs for the benefit of the Customers as the
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`Debtors deem appropriate in their business judgment.
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`Basis for Relief
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`I.
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`The Court Should Authorize Payment of the Foreign Vendor Claims, the
`Interconnection Claims, the Shipper Claims, and the Refund Claims Under Sections
`105(a) and 363 of the Bankruptcy Code
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`42.
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`Payment of prepetition obligations is appropriate where necessary to preserve the
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`estate, including the going-concern value of an operating business. See e.g., In re Just for Feet,
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`Inc., 242 B.R. 821, 825-26 (D. Del. 1999). In authorizing such payments, courts acknowledge that
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`several legal theories rooted in sections 105(a) and 363(b) of the Bankruptcy Code support the
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`payment of these prepetition claims.
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`43.
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`The Court may authorize the Debtors to pay the Foreign Vendor Claims, the
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`Interconnection Claims, the Shipper Claims, and the Refund Claims pursuant to section 363(b) of
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`the Bankruptcy Code. Section 363(b)(1) authorizes courts, after notice and hearing, to permit a
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`debtor to “use, sell, or lease, other than in the ordinary course of business, property of the estate.”
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`11 U.S.C. § 363(b)(1). In determining whether to authorize the use, sale, or lease of estate
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`property, “courts require the debtor to show that a sound business purpose justifies such actions.”
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`Dai-Ichi Kangyo Bank, Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward
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`Holding Corp.), 242 B.R. 147, 153 (D. Del. 1999). In evaluating whether a sound business purpose
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`justifies the use, sale, or lease of property under section 363(b), courts consider a variety of factors,
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`“which essentially represent a ‘business judgment test.’” Id. The debtor must “articulate some
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`business justification, other than mere appeasement of major creditors.” In re Ionosphere Clubs,
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`Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989). The princ