`Document Page 1 of 14
`
`
`
`
`
`George Hofmann (10005)
`Matthew M. Boley (8536)
`
`Jeffrey Trousdale (14814)
`Cohne Kinghorn, P.C.
`111 East Broadway, 11th Floor
`Salt Lake City, Utah 84111
`Telephone: (801) 363-4300
`
`Attorneys for George Hofmann, Chapter 11 Trustee
`
`
`
`
`
`IN THE UNITED STATES BANKRUPTCY COURT
`DISTRICT OF UTAH, CENTRAL DIVISION
`
`
`
`In re:
`
`VIDANGEL, INC.,
`
`
`Debtor.
`
`
`
`
`
`
`
`
`
`Bankruptcy No. 17-29073 (KRA)
`
`Chapter 11
`
`
`
`
`TRUSTEE’S OBJECTION TO COPYRIGHT CREDITORS’ MISLABELED “ERRATA”
`AND INEFFECTIVE PROPOSAL FOR CORRECTIVE ACTION
`
`
`George Hofmann, in his capacity as Chapter 11 Trustee (the “Trustee”) of the
`
`bankruptcy estate of VidAngel, Inc. (the “Debtor”), through counsel, submits this
`
`objection to Studios’ Notice of Errata Regarding Service of Motion to Approve Studios’
`
`Disclosure Statement, Proposal for Corrective Action, and Request for a Status
`
`Conference [Docket No. 646] (the “Motion”) filed by Copyright Creditors.1
`
`
`1
`“Copyright Creditors” or, as they refer to themselves, the “Studios”, mean and
`refer to, collectively, Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century
`Fox Film Corporation, Warner Bros. Entertainment Inc., MVL Film Finance LLC, New
`Line Productions, Inc. and Turner Entertainment Co.
`{00487751.DOCX / 3}
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 2 of 14
`
`
`
` Firstly, this is no erratum.2 Copyright Creditors disseminated their plan and
`
`disclosure statement before court approval – to the entire creditor body. Whether this
`
`serious violation of bankruptcy law and procedure was intentional or merely negligent,
`
`Copyright Creditors’ “ballot rigging” will have a material adverse effect on the solicitation
`
`process in connection with the Trustee’s Plan. One logical result of Copyright Creditors’
`
`actions is that voting creditors could be persuaded either to ignore the Trustee’s Plan, or
`
`to vote against it. Copyright Creditors cannot “unring the bell.” And the “corrective
`
`action” proposed falls woefully short of effective mitigation.
`
`INTRODUCTION
`“Nice guys finish last.”3
`“It’s easier to ask forgiveness than it is to get permission.”4
`
`The Trustee has followed the rules. For which he continues to be punished.
`
`Meanwhile, Copyright Creditors repeatedly have ignored and flouted the rules in an
`
`effort to delay and interfere with confirmation of the Trustee’s Plan.
`
`
`
`2
`An erratum is a correction of a published text or, sometimes, in the context of
`legal proceedings, a filing with the Court. An “errata sheet” is a device to be used to
`correct “printed” errors that may cause misunderstanding which are detected too late to
`correct before distribution of a published work, or filing of a pleading. The errata sheet
`lists the printed errors with their location in the printed text.
`The famous sports quote “Nice guys finish last” has long been attributed to
`3
`legendary baseball player and manager Leo Durocher. Most sources agree that the
`basis for the attribution comes from remarks “Leo the Lip” made on July 6, 1946, when
`he was managing the Brooklyn Dodgers. According to Frank Graham, sportswriter
`for The New York Journal-American., Durocher was asked: “Why don’t you be a nice
`guy for a change?” Durocher answered:
`Nice guys! Look over there. Do you know a nicer guy than Mel Ott? Or any of
`the other Giants? Why, they’re the nicest guys in the world! And where are
`they? In seventh place! Nice guys! I’m not a nice guy – and I’m in first place.”
`After pacing up and down the visitors’ dugout, the Dodger manager waved a
`hand toward the Giants’ dugout and repeated, “The nice guys are all over
`there, in seventh place.
`4
`Admiral Grace Hopper, quoted in U.S. Navy's Chips Ahoy magazine (July 1986).
`{00487751.DOCX / 3}
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 3 of 14
`
`
`
`The Trustee’s plan and disclosure statement were filed March 5, 2020. As the
`
`Bankruptcy Code and Rules require, he did not send out his plan and unapproved
`
`disclosure statement to voting creditors. Instead, he scheduled a hearing as required
`
`by section 1125(b) of the Bankruptcy Code – to be held April 10, 2020. See Notice
`
`[Docket No. 582]. As discussed below, approval (and, consequently, dissemination) of
`
`the Trustee’s disclosure statement was delayed by a string of stall tactics.
`
`Meanwhile, Copyright Creditors filed their plan over five weeks later. By
`
`transgressing the requirements of section 1125(b) of the Bankruptcy Code, and the
`
`strict prohibitions of Bankruptcy Rule 3017, however, Copyright Creditors illegally
`
`“pulled the rug out from under” the Trustee. The Trustee’s Plan and court-approved
`
`disclosure statement was not first plan and disclosure statement that voting creditors
`
`received. Copyright Creditors stole the first word, by flouting the rules. Their flawed
`
`(and subsequently amended, but still flawed) plan, together with an incomplete and
`
`misleading disclosure, was the first plan to arrive in voting creditors’ mailboxes.
`
`Approval (and, as a consequence, dissemination) of the Trustee’s disclosure
`
`statement and plan was stalled and delayed by Copyright Creditors. First, the Trustee
`
`voluntarily continued and postponed the hearing from the week of April 6th to the
`
`following week, as an accommodation to counsel for Copyright Creditors. Copyright
`
`Creditors filed their objection to the disclosure statement on the last possible day – April
`
`6, 2020. Prior to the scheduled hearing, however, the Trustee amended and
`
`supplemented his disclosure statement to address each and every criticism.
`
`Copyright Creditors filed their own plan and disclosure statement on Friday, April
`
`10, 2020, a mere two business days prior to the April 14, 2020 hearing on approval of
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 4 of 14
`
`
`
`the Trustee’s disclosure statement. Then, the day of the hearing on the Trustee’s
`
`disclosure statement the Copyright Creditors raised a new argument – without any
`
`advance notice and for the first time. During oral colloquy, counsel for Copyright
`
`Creditors suggested that approval, and dissemination, of the Trustee’s disclosure
`
`statement and plan should be delayed so that Copyright Creditors could include a letter
`
`in the solicitation package. No letter had been prepared or submitted for consideration
`
`prior to the hearing. So this resulted in further delay. The hearing was continued to
`
`April 22, 2020.
`
`Unlike the Trustee, however, Copyright Creditors did not follow the rules. They
`
`did not seek or obtain court approval, before sending their plan and disclosure
`
`statement to voting creditors. Instead, on April 15, 2020, Copyright Creditors illegally
`
`disseminated unauthorized copies of their plan and unapproved disclosure statement to
`
`the entire matrix of creditors in the Case, which includes the voting creditors in Class 2
`
`and Class 6 of theirs and the Trustee’s plans—the two classes that the Court previously
`
`acknowledged were the most likely to be “swing” votes. This unapproved and prohibited
`
`solicitation was done for the same purpose as the then proposed, and uncertain,
`
`Solicitation Letter. Copyright Creditors wanted their plan to be “front and center,” and to
`
`capture the attention of voting creditors – all with the aim of persuading them to reject
`
`the Trustee’s Plan, which they had not yet even seen.
`
`While the Court wasted precious resources reviewing the Trustee’s Disclosure
`
`Statement and Copyright Creditors’ objections thereto, and while the Trustee wasted
`
`the Estate’s resources negotiating the language that would be included in Copyright
`
`Creditors’ “solicitation letter” Copyright Creditors engaged in prohibited ballot rigging.
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 5 of 14
`
`
`
`Like Leo Durocher’s Brooklyn Dodgers, they wanted to be first.5 Who cares about rules.
`
`After all, “it’s easier to ask forgiveness than it is to get permission.”
`
`
`
`A game with no rules is no game at all. But this bankruptcy case no simple game.
`
`It represents the livelihood of hundreds of people. The investments of thousands. A
`
`service to hundreds of thousands.
`
`
`
`The Trustee asks the Court to decline Copyright Creditors’ request for relief at
`
`the “emergency” hearing scheduled on less than 24 hour notice. Authorizing Copyright
`
`Creditors to send their proposed letter will not “remediate” their actions. Copyright
`
`Creditors cannot “unring the bell.”6 Further, a letter telling voting creditors that they
`
`should “disregard” the (since amended) plan and unapproved, misleading disclosure
`
`statement that was sent to them on April 14, 2020 – a full two weeks ago – is not likely
`
`to have a prophylactic effect. It is more likely encourage attention than dissuade it. In
`
`short, the letter will have the effect of arousing the curiosity of voting creditors such that,
`
`
`See footnote 3, supra, quoting Leo Durocher, in relevant part: “Why, they’re the
`5
`nicest guys in the world! And where are they? In seventh place! Nice guys! I’m not a
`nice guy – and I’m in first place.”
`6
`It is telling, that the first “example sentence” provided to illustrate the meaning of
`this phrase on the website www.theidioms.com is directly on point:
`
`unring the bell
`
`Meaning
`▪ once something has been done you cannot run away from it, you can only
`face the aftermath
`ramifications have to be withstood whenever something is done
`▪
`▪ we cannot take back something once said or done.
`
`Example Sentences
`1. Remember Tom, you cannot unring the bell once you have sent out that
`mail.
`See https://www.theidioms.com/unring-the-bell/ (highlighting added; all other emphasis
`in original)
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 6 of 14
`
`
`
`if they have not already read Copyright Creditor’s plan and illegal disclosure statement
`
`in the two weeks since it arrived by mail, now they will.
`
`
`
`The Trustee believes that this very serious matter should not be “rushed.” The
`
`Trustee, and the Court, should be allowed to approach Copyright Creditors’ serious
`
`violations of bankruptcy law, and their interference with the solicitation and confirmation
`
`of the Trustee’s Plan, “carefully” and “deliberately.”
`
`Unless he is presented with a solution – in the nature of a global settlement
`
`and/or consensual plan that he believes to be in the best interests of the estate – the
`
`Trustee intends to file a motion for appropriate relief. But the Trustee would like a
`
`reasonable opportunity to “catch his breath” and to consider what relief is appropriate
`
`under the circumstances. The Court should await the Trustee’s motion before it begins
`
`exploring how this very important and serious matter should be addressed. The Court
`
`should deny the relief requested in Copyright Creditors’ mislabeled erratum.
`
`I.
`
`The Law.
`
`ARGUMENT
`
`As the Court is undoubtedly aware, Bankruptcy Code § 1125(b) provides in
`
`relevant part:
`
`An acceptance or rejection of a plan may not be solicited after the
`commencement of the case under this title from a holder of a claim or
`interest with respect to such claim or interest, unless, at the time of or
`before such solicitation, there is transmitted to such holder the plan or a
`summary of the plan, and a written disclosure statement approved, after
`notice and a hearing, by the court as containing adequate information.
`
`Bankruptcy Rule 3017 implements Bankruptcy Code § 1125 and provides further
`
`requirements and strict limits preventing the dissemination of a plan and/or disclosure
`
`statement prior to the bankruptcy court’s approval. Rule 3017 provides, in relevant part:
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 7 of 14
`
`
`
`The plan and the disclosure statement shall be mailed with the notice of
`the hearing only to the debtor, any trustee or committee appointed under
`the Code, the Securities and Exchange Commission and any party in
`interest who requests in writing a copy of the statement or plan.
`
`
`Bankruptcy Rule 3017(a) (emphasis added). Rule 3017(a) “forbids sending copies of a
`
`plan and disclosure statements to any party other than those explicitly mentioned” prior
`
`to the Court’s approval of a disclosure statement. In re Clamp-All Corp., 233 B.R. 198,
`
`208 (Bankr. D. Mass. 1999). “The requirement of advance court approval ensures that
`
`adequate information is provided to creditors and parties in interest and was thought to
`
`discourage the undesirable practice (under the former Bankruptcy Act of 1898, as
`
`amended) of soliciting acceptance or rejection at a time when creditors and
`
`stockholders were ‘too ill-informed to act capably in their own interests.’” Id. (internal
`
`citation omitted); see also In re Rook Broad. of Idaho, Inc., 154 B.R. 970, 976 (Bankr. D.
`
`Idaho 1993) (“Permitting a plan proponent to distribute proposed disclosure statements
`
`taints the voting process.”).
`
`II.
`
`The Grossly Improper Solicitation
`
`
`
`By disseminating their proposed disclosure statement and plan prior to Court
`
`approval, and prior even to the Trustee’s dissemination of his own Court-approved
`
`disclosure statement, Copyright Creditors seriously have tainted the voting process, and
`
`have interfered and tampered with the Trustee’s efforts to solicit acceptance of the
`
`Trustee’s Plan.
`
`The disclosure statement does not “merely” solicit votes in favor of their own
`
`(since amended) plan. The unapproved and misleading disclosure statement is blatantly
`
`designed to solicit rejection of the Trustee’s Plan. Specifically, Copyright Creditors’
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 8 of 14
`
`
`
`unauthorized disclosure statement includes the following criticisms of, and solicitations
`
`to reject, the Trustee’s Plan:
`
`•
`
`• “The Studios’ Plan is more favorable to Creditors and the
`Reorganized Debtor than is the plan proposed by the Chapter 11
`Trustee.” Copyright Creditors’ Disclosure Statement, p. 2 (emphasis
`added). This is one of the first statements that creditors have read with
`respect to Copyright Creditors’ plan and the Trustee’s plan.
`
`“The Trustee’s Chapter 11 Plan is conspicuously silent on whether the
`Reorganized Debtor will resume exploiting the Studios’ copyrights. In
`fact, the Trustee’s Plan appears to contemplate that the Debtor will
`continue to fight the damages award and injunction through an appeal
`to the Ninth Circuit (which has twice rejected the Debtor’s appeals of
`district court orders), and likely will pursue a fresh litigation campaign
`(including litigation against the Studios) concerning the so-called “DVR
`Model.” Copyright Creditors’ Disclosure Statement at p. 12.
`
`“The Studios’ Plan is a Plan of Reorganization. Although the Trustee
`and Reorganized Debtor’s current projections appear to be flawed and
`overly optimistic (even before the economic uncertainties caused by
`the global pandemic), rendering the Trustee’s Chapter 11 Plan not
`feasible . . . .” Copyright Creditors’ Disclosure Statement at p. 12.
`
`“Indeed, the Studios’ Plan requires less in payments over time, making
`it more feasible than the Trustee’s Plan.” Copyright Creditors’
`Disclosure Statement at p. 27.
`
`“[I]n all events the Studios’ Plan is the only plan that is feasible, and
`the Chapter 11 Trustee’s Plan is not.” Copyright Creditors’ Disclosure
`Statement at p. 28.
`
`
`
` •
`
`
`
` •
`
`
`
` •
`
` “The present alternative to the Studios’ Plan is the Chapter 11
`Trustee’s Plan, Dkt. 579. That Plan is inferior for numerous
`reasons.” Copyright Creditors’ Disclosure Statement at p. 28
`(emphasis added). This is the beginning statement of Section 5.2 of
`Copyright Creditors’ Disclosure Statement. Although the section is too
`large to include in this pleading, the entire section is a solicitation to
`reject the Trustee’s Plan. Highlights include:
`
`➢ “the Chapter 11 Trustee’s Plan is not supported by the Debtor’s
`past performance and is therefore not feasible on its face”
`➢ “[t]hose facts, alone, defeat the Trustee’s Plan and require
`acceptance and confirmation of the Studios’ Plan”
`
` •
`
`
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 9 of 14
`
`
`
`➢ “If the Reorganized Debtor cannot comply with the simple
`requirement to not exploit the Studios’ copyrighted works
`without a license, the Bankruptcy Court should not permit it to
`reorganize.”
`➢ “The Studios will vote against the Trustee’s Plan and oppose
`confirmation of it.”
`➢ “the Studios’ Plan treats all classes of creditors and Equity
`Interests equal to, or better, than the Chapter 11 Trustee’s
`Plan.”
`➢ “The only possible reason the Chapter 11 Trustee may have for
`not supporting the Studios’ Plan is because the Debtor’s
`management, Neal Harmon and Jeffrey Harmon, will not agree
`to be bound by the Restrictive Covenants and will threaten to
`leave the company. That is not a reason to oppose a Plan that
`is otherwise in the best interests of all. Indeed, that is a reason
`to be suspicious of the intentions of Neal Harmon and Jeffrey
`Harmon for the Reorganized Debtor following confirmation.”
`
` •
`
`
`
`“Unlike the Trustee’s Proposed Plan, the Studios’ Plan can satisfy the
`absolute priority rule because it has the support of the estate’s largest
`creditors.” Copyright Creditors’ Disclosure Statement at p. 32.
`
`The unapproved and misleading disclosure statement that Copyright Creditors have
`
`disseminated to voting creditors in blatant disregard of bankruptcy law and procedure is
`
`focused equally, if not more, on solicitating voting creditors to reject the Trustee’s plan
`
`than it is on solicitating acceptance of Copyright Creditors’ plan. Section 1125(b) is
`
`clear: “rejection of a plan may not be solicited after the commencement of the case
`
`under this title from a holder of a claim or interest with respect to such claim or interest,
`
`unless, at the time of or before such solicitation, there is transmitted to such
`
`holder the plan or a summary of the plan, and a written disclosure statement
`
`approved, after notice and a hearing, by the court as containing adequate information.”
`
`(emphasis added).
`
`
`
`Of course, Copyright Creditors’ unauthorized disclosure statement also solicits
`
`votes to accept their plan. Their “disclaimer” language does nothing to remedy this,
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 10 of 14
`
`
`
`when it is followed by 70 pages of solicitation to vote on their plan. It is akin to starting a
`
`sentence with: “no offense intended, but…” An offensive statement always follows.
`
`III.
`
`The Sanctions.
`
`
`
`Even if the Court assumes that Copyright Creditors’ actions were just a
`
`“mistake,” or were committed in ignorance of the rules (despite being represented by
`
`highly sophisticated counsel), such a mistake is not be excusable. The adverse effect is
`
`the same. Either way, Copyright Creditors’ actions illegally have interfered with the
`
`voting process. Sanctions are not dependent on a finding of willfulness or malice. No
`
`matter the reason, serious sanctions are warranted. As one Court explained:
`
`Violation of § 1125(b) of the Code and Rule 3017(a) is a very serious
`matter. It may justify [A] monetary fines, In re California Fidelity, Inc., 198
`B.R. 567, 573 (9th Cir.BAP 1996); In re Charles St. African Methodist
`Church, 499 B.R. 126, 133 (Bkrtcy.D.Mass.2013) [creditor also denied the
`ability to ever file a competing plan in the case]; … [B] disallowance of
`votes, In re Media Central, Inc., 89 B.R. 685, 689 (Bkrtcy.E.D.Tenn.1988);
`or [C] subordination of claims, In re Clamp–All Corp., 233 B.R. 198, 210
`(BkrtcyD.Mass.1999).
`
`
`In re Wilson, 2013 WL 6404776, *1 (Bankr. N.D.Cal. Dec. 6, 2013) (terminating debtor’s
`
`counsel from representation of the debtor) (bold and italics added); see also In re Aspen
`
`Limousine Serv., Inc., 198 B.R. 341, 351 (D. Colo. 1996) (affirming bankruptcy court’s
`
`imposition of civil and criminal contempt).
`
`
`
`The consequences of Copyright Creditors’ actions cannot be overstated. While
`
`Copyright Creditors sought to include a “solicitation letter” with the Trustee’s Court
`
`approved disclosure statement, purportedly so they could “refute” or make
`
`counterarguments to the Trustee’s statements therein, Copyright Creditors illegally
`
`disseminated with own misleading disclosure statement without court approval, and with
`
`no checks or balances.
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 11 of 14
`
`
`
`The consequence on the solicitation and voting process relating to the Trustee’s
`
`Plan cannot be understated. Copyright Creditors’ have stolen the first word. Their
`
`unapproved, misleading and one-sided disclosure statement will be the first message
`
`seen by voting creditors. Copyright Creditors illegally have solicited rejection of the
`
`Trustee’s Plan before creditors even had a chance to look at it.
`
`
`
`To be clear, Copyright Creditors’ unauthorized dissemination of their disclosure
`
`statement prior to the Trustee’s dissemination of his Court-approved disclosure
`
`statement is a much different scenario than their request to include a “solicitation letter”
`
`to be disseminated with the Trustee’s Court-approved disclosure statement. One case
`
`aptly notes the differences:
`
`In further fleshing out the holding of Century Glove, Inc. v. First Am. Bank
`of New York, 860 F.2d 94 (3rd Cir.1988), the court in Apex Oil held that “a
`soliciting party may react to and present contrary views regarding the
`court-approved disclosure statement, but may not present or suggest an
`alternative plan that has not been subject to court scrutiny regarding
`adequacy of disclosure.” Apex Oil, 111 B.R. at 250. The court also held
`that it would not allow a party to use such communications to circumvent
`the Bankruptcy Code by suggesting an alternative plan that had not been
`approved by the court. See Id. at 249. In offering examples of the types of
`solicitations that were permissible to send out without prior court approval,
`the court listed such things as narratives or conclusions that were contrary
`to those expressed in the plan, expressing positions or conclusions that
`were not contained in the plan, or alternative liquidation analysis.
`
`
`In re CGE Shattuck, LLC, 254 B.R. 5, 13 (Bankr. D.N.H. 2000). Copyright Creditors
`
`asked for and received an opportunity to disseminate “narratives or conclusions” that
`
`are contrary to those expressed in the Trustee’s plan and disclosure statement. They
`
`did not ask for, nor did they receive, permission to distribute Copyright Creditors’ own
`
`unapproved disclosure statement and plan without prior Court review and approval.
`
`Copyright Creditors were not authorized to send their unapproved disclosure statement
`
`to all parties on the mailing matrix, including all voting creditors.
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 12 of 14
`
`
`
`
`
`Copyright Creditors’ actions are also dramatically different from the scenario in In
`
`re Snyder, 51 B.R. 432 (Bankr. D. Utah 1985), upon which Copyright Creditors rely. The
`
`facts of that case are laid out in the opinion:
`
`This communication consisted of a cover letter from the debtor's attorney
`addressed to each creditor proposing to “more effectively handle [the]
`bankruptcy by following one of five plans” and dismissing the case.
`Creditors were invited to send their comments on the various plans to the
`debtor's attorney.
`
`The communication also included a letter, sent to all creditors on the
`mailing matrix, that was addressed to the creditors' committee, entitled
`“Proposal to Settle and Compromise Claims” which stated: “We are
`making this proposal in an attempt to take a practical and economic
`approach to this case to pay all creditors the highest possible amount.” It
`further stated that a meeting “with the creditor's [sic] committee and all
`creditors who would like to attend” would be held on “the 21st day of
`March, 1984, at 12:00 p.m. at our offices. In that meeting we will discuss
`in detail our proposal and hopefully come to some understanding of our
`differences.” To these letters were attached exhibits containing appraisals
`and values of the debtor's real property, the debtor's estimates as to costs
`of development and potential profits, numerous newspaper articles
`concerning the “Heritage Mountain” project in Utah County (a proposed
`resort adjacent to the debtor's property), and various payout provisions for
`secured and unsecured creditors as these provisions related to each of
`five “plans” proposed by the debtor.
`
`Upon receipt of the communication, counsel for the creditors' committee
`immediately notified all creditors that the committee considered the
`communication to be factually misleading in numerous particulars, and a
`violation of 11 U.S.C. § 1125, and further advised them to ignore the
`communication. The trustee's attorney and the attorney for the creditors'
`committee advised the debtor's attorney that in their view both the
`communication and the scheduled meeting violated the law. Thereafter,
`the debtor's attorney again wrote to all creditors, suggesting that they
`ignore the creditors' committee's advice. This letter stated the prior
`communication was not a solicitation of votes but was merely a request for
`information and input from creditors to assist in the formulation of a plan.
`
`Id. at 434–35. Copyright Creditors’ unapproved disclosure statement is not an invitation
`
`to creditors to negotiate plan terms. It is a direct attack on the Trustee’s Plan. It is not
`
`an invitation for further dialogue. It is also notable that Snyder was decided when
`
`{00487751.DOCX / 3}
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 13 of 14
`
`
`
`section 1125 was new. Cases subsequent to Snyder have further developed the law,
`
`and understandably impose severe sanctions when creditors or debtors blatantly flout
`
`the strict rules governing plan solicitation. Here, Copyright Creditors blatantly violated
`
`the rules. The rules need to be enforced. Serious sanctions should be levied.
`
`CONCLUSION
`
`Copyright Creditors’ “Notice of Errata” and the proposed “slap on the wrist”
`
`included therein shows just how lightly they are taking their violation. Copyright
`
`Creditors neither should dictate the appropriate sanctions for their conduct, nor the form
`
`and substance of appropriate mitigation.
`
`As stated above, the Trustee does not want to “rush” into this matter. His hope in
`
`providing advance notice to Copyright Creditors before filing a motion was that he and
`
`Copyright Creditors could have fruitful discussions on a global settlement that could
`
`moot the problem. Instead, Copyright Creditors have again attempted to steal the first
`
`word, and have attempted to preempt the Trustee by demanding an emergency hearing
`
`on less than 24 hours notice. Although the Trustee still holds out hope for fruitful
`
`settlement discussions, he requires additional time, and believes that the Court needs
`
`additional briefing, before determining what sanctions should be levied on Copyright
`
`Creditors for their actions. The Court should deny Copyright Creditors’ requested relief.
`
` Dated:
`
`
`
`
`
`
`
`
`
`
`
`{00487751.DOCX / 3}
`
`April 30, 2020
`
`
`
`COHNE KINGHORN, P.C.
`
`
`
`
`
`/s/ Jeffrey Trousdale
`George Hofmann
`Matthew M. Boley
`Jeffrey Trousdale
`Attorneys for the Trustee
`
`
`
`
`
`
`
`
`
`Case 17-29073 Doc 649 Filed 04/30/20 Entered 04/30/20 11:24:49 Desc Main
`Document Page 14 of 14
`
`
`
`CERTIFICATE OF SERVICE
`
` I
`
` hereby certify that on the 30th day of April, 2020, the foregoing OBJECTION
`was electronically filed with the United States Bankruptcy Court for the District of
`Utah by using the CM/ECF system.
`
` I
`
` further certify that the parties of record in this case, as identified below, are
`registered CM/ECF users and will be served through the CM/ECF system.
`
`• J. Thomas Beckett tbeckett@parsonsbehle.com,
`ecf@parsonsbehle.com;brothschild@parsonsbehle.com;kstankevitz@parsonsbe
`hle.com
`• Michael Ronald Brown mbrown@parsonsbehle.com
`• Laurie A. Cayton tr laurie.cayton@usdoj.gov,
`James.Gee@usdoj.gov;Lindsey.Huston@usdoj.gov
`• Rose Leda Ehler rose.ehler@mto.com, cynthia.soden@mto.com
`• George B. Hofmann ghofmann@ck.law, dhaney@ck.law;mparks@ck.law
`• George B. Hofmann tr trustee@ck.law,
`dhaney@ck.law;mparks@ck.law;UT16@ecfcbis.com;gbh@trustesolutions.net
`• Michael R. Johnson mjohnson@rqn.com, docket@rqn.com;dburton@rqn.com
`• Kelly M. Klaus kelly.klaus@mto.com
`• David H. Leigh dleigh@rqn.com, dburton@rqn.com;docket@rqn.com
`• Grace S. Pusavat gpusavat@parsonsbehle.com
`• Brian M. Rothschild brothschild@parsonsbehle.com, ecf@parsonsbehle.com
`• Joseph M. Shapiro jshapiro@strongandhanni.com,
`cbecerra@strongandhanni.com
`• Jeffrey L. Trousdale jtrousdale@cohnekinghorn.com,
`mparks@cohnekinghorn.com
`• United States Trustee USTPRegion19.SK.ECF@usdoj.gov
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`/s/ Mashell Parks
`
`
`
`
`
`
`{00487751.DOCX / 3}
`
`
`
`