1. UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
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Inre:
Chapter 11
ALLIED SYSTEMS HOLDINGS, INC.,
Case No. 12-c_[_ _jl (LJ)
Alleged Debtor.
·--------------------------------------------------------------------------------------x
In re:
Chapter 11
ALLIED SYSTEMS, LTD. (L.P.),
Case No. 12-L[_ _jl (LJ)
Alleged Debtor.
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PETITIONING CREDITORS' MOTION PURSUANT TO
DEL. BANKR. L.R. 9006-l(e) FOR AN ORDER SHORTENING TIME
FOR NOTICE OF THE HEARING TO CONSIDER THE EXPEDITED MOTION
OF PETITIONING CREDITORS FOR THE APPOINTMENT OF A TRUSTEE
PURSUANT TO 11 U.S.C. §§ lOS( a), 1104(a)(l) AND 1104(a)(2)
Petitioning creditors BDCM Opportunity Fund II, LP, Black Diamond CLO 2005-1 Ltd,
and Spectrum Investment Partners, LP (collectively, the "Petitioning Creditors") by and through
their undersigned counsel, hereby submit this motion (the "Motion to Shorten") for an order
shortening the notice and objection periods with respect to the Expedited Motion of Petitioning
Creditors for the Appointment of a Trustee Pursuant to 11 U.S.C. §§ 105(a), 1104(a)(l) and
1104(a)(2) (the "Trustee Motion"). The Trustee Motion is being filed and served concurrently
herewith. In support of this Motion to Shorten, the Petitioning Creditors respectfully state as
follows.
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2. BACKGROUND
I. On May 14, 2012, the Petitioning Creditors filed involuntary petitions (the
"Involuntary Petitions") under section 303 and chapter II of title II of the United States Code
against Allied Systems Holdings, Inc., and Allied Systems, Ltd. (L.P .) (together, the "Alleged
Debtors"). Pursuant to Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") lOll (b),
defenses and objections, if any, to the Involuntary Petitions are due by June 4, 2012. As of the
date hereof, no order for relief has been entered in these cases.
2. The factual background relating to the filing of the Involuntary Petitions is set
forth in detail in the Statement ofPetitioning Creditors in Support of the Involuntary Chapter 11
Petitions Filed Against Allied Systems Holdings, Inc. and Allied Systems, Ltd. (L.P.), which was
filed contemporaneously with the Involuntary Petitions and is incorporated herein by reference.
JURISDICTION
3. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ !57
and 1334. This is a core proceeding under 28 U.S.C. § 157(b) and venue is proper in this district
pursuant to 28 U.S.C. §§ 1408 and 1409.
4. The statutory predicates for the relief requested herein are section 105(a) of the
Bankruptcy Code and Rule 9006-1 (e) of the Local Rules of Bankruptcy Practice and Procedure
of the United States Bankruptcy Court for the District of Delaware (the "Local Rules").
RELIEF REOUESTED
5. By this Motion, the Petitioning Creditors seek authority pursuant to Bankruptcy
Code section 105(a) and Local Rule 9006-l(e) to shorten the notice required for a hearing on the
Trustee Motion so that the Trustee Motion may be heard within two (2) days of its filing and
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3. service, or otherwise earliest available date, with objections to the relief sought in the Trustee
Motion due at or before such hearing or on such other date as the Court shall order.
BASIS FOR RELIEF
6. Pursuant to Del. Bankr. L.R. ("Local Rule") 9006-l(c), notice of a motion such as
the Trustee Motion must ordinarily be provided at least at least fourteen (14) days (and an
additional three (3) days if service is by mail) prior to the hearing date, with the deadline for
objection(s) to be no later than seven (7) days before the hearing date. However, the Court may
order that a motion be heard on less notice than required by the Local Rules upon "written
motion (served on all interested parties) specifying the exigencies justifying shortened notice."
Local Rule 9006-1(e). No hearing on such a motion to shorten is required. See id.
7. As explained more fully in the Trustee Motion, exigent circumstances exist that
warrant hearing the Trustee Motion on shortened notice, as there is a risk of significant harm to
the Alleged Debtors' creditors and stakeholders if the reliefrequested in the Trustee Motion is
not heard and granted on the earliest possible timeframe. Specifically, Yucaipa American
Alliance Fund I, LP and Yucaipa American Alliance (Parallel) Fund I, LP (collectively,
"Yucaipa"), which has controlled the Alleged Debtors since their emergence from chapter 11
protection in 2007, has engaged in an ongoing, pervasive manipulation and control of the
Alleged Debtors, and significant conflicts of interest leave the Alleged Debtors incapable of
fulfilling their fiduciary obligations. The exigencies in support of hearing the Trustee Motion on
shortened notice include, but are not limited to:
• Yucaipa's position as majority shareholder and purported controlling First
Lien Lender, and its control of the Allied board of directors (the "Allied
Board") and senior management, create conflicts of interest that prevent the
Alleged Debtors from discharging their fiduciary duties;
• The Alleged Debtors have grossly mismanaged their business;
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4. • As a result of the Alleged Debtors' conflicts of interest and loyalty to
Yucaipa, as well as their gross mismanagement of the business, the
Petitioning Creditors have no confidence in the Alleged Debtors' ability to
reorganize their business or discharge their fiduciary duties; and
• The Alleged Debtors, under control of Yucaipa, have been unwilling to
engage the Petitioning Creditors in restructuring negotiations, which has
resulted in litigation between the Petitioning Creditors and Yucaipa and
created an acrimonious relationship between Petitioning Creditors (on the one
hand), and Yucapia and the Alleged Debtors (on the other hand), warranting
appointment of a Chapter 11 trustee.
These serious conflicts and issues, among others that are more fully described in the Trustee
Motion, pose a serious threat to the interests of the Alleged Debtors' creditors and stakeholders.
To allow Yucaipa to maintain control over the Alleged Debtors during these Chapter 11
proceedings would severely impact the integrity of the bankruptcy process and materially and
adversely affect the prospects of a successful reorganization. Unless a disinterested fiduciary is
appointed as soon as possible, Yucaipa will strategically direct any restructuring process for its
benefit and to the detriment of other creditors. The risk of mismanagement and adverse impact
to the Alleged Debtors' creditors and stakeholders grows with each passing day and necessitates
the hearing of the Trustee Motion on an expedited timeframe.
8. Local Rule 9006-1 (e) grants this Court the authority to order that a motion be
heard on less notice than is required by the Bankruptcy Rules, and provides that the Court may
rule on a motion for the same "promptly without need for a hearing." Additionally, Bankruptcy
Code section lOS(a) provides that the Court "may issue any order, process, or judgment that is
necessary or appropriate to carry out the provisions of this title." Together, Local Rule 9006-
l(e) and Bankruptcy Code section lOS(a) provide ample authority for the Court to grant this
Motion to Shorten. The exigencies in support such relief are clear. Accordingly, the Petitioning
Creditors respectfully request that the Motion to Shorten be granted at the Court's earliest
converuence.
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5. NOTICE AND NO PRIOR REQUEST
9. The Petitioning Creditors have provided notice of this Motion to Shorten and the
Trustee Motion to the Alleged Debtors and the Office of the United States Trustee by hand
and/or overnight delivery. In light of the nature of the relief requested herein, the Petitioning
Creditors submit that no other or further notice is required.
10. No previous request for the relief requested herein has been made to this or any
other court.
[Remainder of page intentionally blank.]
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6. WHEREFORE, the Petitioning Creditors respectfully request that this Court enter an
order granting the relief requested herein and grant the Petitioning Creditors such other and
further relief as is just and proper.
Dated: May 17, 2012
Wilmington, Delaware
dam G. Landis (No. 3407
Kerri K. Mumford (No. 4186)
Jeffrey Drobish (No. 5437)
919 Market Street, Suite 1800
Wilmington, Delaware 19801
Telephone: (302) 467-4400
Facsimile: (302) 467-4450
Email: landis@lrclaw.com
mumford@lrclaw.com
drobish@lrclaw.com
-and-
Adam C. Harris
Robert J. Ward
Victoria A. Lepore
SCHULTE ROTH & ZABEL LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Counsel to the Petitioning Creditors
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7. UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
·------------------------------------------------------------------------------------------X
In re:
Chapter 11
ALLIED SYSTEMS HOLDINGS, INC.,
Case No. 12-.__[_ __.] (LJ)
Alleged Debtor.
·------------------------------------------------------------------------------------------X
In re:
Chapter 11
ALLIED SYSTEMS, LTD. (L.P.),
Case No. 12-._[_ _,] (LJ)
Alleged Debtor.
Ref No.
·------------------------------------------------------------------------------------------X
ORDER GRANTING PETITIONING CREDITORS' MOTION PURSUANT TO
DEL. BANKR. L.R. 9006-l(e) FOR AN ORDER SHORTENING TIME FOR
NOTICE OF THE HEARING TO CONSIDER THE EXPEDITED MOTION
OF PETITIONING CREDITORS FOR THE APPOINTMENT OF A TRUSTEE
PURSUANT TO 11 U.S.C. §§ 105(a), 1104(a)(l) AND 1104(a)(2)
Upon consideration of the Petitioning Creditors' Motion Pursuant to Del. Bankr.
L.R. 9006-1 (E) For an Order Shortening Time For Notice of the Hearing to Consider the
Expedited Motion of Petitioning Creditors For the Appointment of a Trustee Pursuant to 11
US.C. §§ 105(a), 1104(a)(1) and 1104(a)(2) (the "Motion to Shorten"); 1 and the Court having
determined that granting the relief requested in the Motion to Shorten is in the best interests of
the Alleged Debtors, their creditors and other parties in interest; and it appearing that due and
adequate notice of the Motion to Shorten has been given under the circumstances, and that no
other or further notice need be given; and after due deliberation and sufficient cause appearing
therefor, it is hereby:
1
Capitalized terms used but not otherwise defmed herein have the meanings ascribed to them in the Motion to
Shorten.
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8. ORDERED, that the Motion to Shorten is granted; and it is further
ORDERED, that the Trustee Motion shall be heard on May _ , 2012 at
_ : _ _ _ .M.; and it is further
ORDERED, that any objections to the relief requested in the Trustee Motion, if
any, shall be filed and served no later than May_, 2012 at_: _ _ _.M.; and it is further
ORDERED, that this Court shall retain jurisdiction over any and all matters
arising from or related to the implementation or interpretation of this Order.
Dated: May_, 2012
Wilmington, Delaware
United States Bankruptcy Judge
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