Pg 1 of 173 Hearing Date and Time: June 5, 2018, 2018, at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: May 29, 2018, at 4:00 p.m. (prevailing Eastern Time) Thomas B. Walper (admitted pro hac vice) Kevin Allred (admitted pro hac vice) Seth Goldman (admitted pro hac vice) MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, 50 th Floor Los Angeles, CA 90071 Telephone: (213) 683-9100 Facsimile: (213) 683-3702 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) NINE WEST HOLDINGS, INC., et al., 1 ) Case No. 18-10947 (SCC) ) Debtors. ) (Jointly Administered) ) NOTICE OF DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF MUNGER, TOLLES & OLSON LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION EFFECTIVE NUNC PRO TUNC TO THE PETITION DATE PLEASE TAKE NOTICE that a hearing on the Application for Entry of An Order Authorizing the Retention and Employment of Munger, Tolles & Olson LLP as Attorneys for the Debtors and Debtors in Possession Effective Nunc Pro Tunc to the Petition Date (the Application ) will be held before the Honorable Shelley C. Chapman, United States Bankruptcy Judge, United States Bankruptcy Court for the Southern District of New York (the Court ), One 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Nine West Holdings, Inc. (7645); Jasper Parent LLC (4157); Nine West Management Service LLC (4508); Kasper Group LLC (7906); Kasper U.S. Blocker LLC (2390); Nine West Apparel Holdings LLC (3348); Nine West Development LLC (2089); Nine West Distribution LLC (3029); Nine West Jeanswear Holding LLC (7263); One Jeanswear Group Inc. (0179); and US KIC Top Hat LLC (3076). The location of the Debtors service address is: 1411 Broadway, New York, New York 10018.
Pg 2 of 173 Bowling Green, Courtroom No. 623, New York, New York 10004-1408, on June 5, 2018, at 10:00 a.m. (prevailing Eastern Time). PLEASE TAKE FURTHER NOTICE that any responses or objections to the relief requested in the Application shall: (a) be in writing; (b) confirm to the Federal Rules of Bankruptcy Procedures, the Local Bankruptcy Rules for the Southern District of New York, all General Orders applicable to chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York, and the Order (A) Establishing Certain Notice, Case Management, and Administrative Procedures and (B) Granting Related Relief [Docket No. 107] (the Case Management Order ) approved by the Court; (c) be filed electronically with the Court on the docket of In re Nine West Holdings, Inc., Case No. 18-10947 (SCC) by registered users of the Court s electronic filing system and in accordance with the General Order M-399 (which is available on the Court s website at http://www.nysb.uscourts.gov) and (d) be served so as to be actually received by May 29, 2018, at 4:00 p.m., prevailing Eastern Time, by (i) the entitles on the Master Service List (as defined in the Case Management Order and available on the Debtors case website at https://cases.primeclerk.com/ninewest) and (ii) any person or entity with a particularized interest in the subject matter of the Application. 2
Pg 3 of 173 PLEASE TAKE FURTHER NOTICE that only those responses that are timely filed, served, and received will be considered at the hearing. Failure to file a timely objection may result in entry of a final order granting the Application as requested by the Debtors. Los Angeles, California Dated: May 6, 2018 /s/ Seth Goldman Thomas B. Walper (admitted pro hac vice) Kevin Allred (admitted pro hac vice) Seth Goldman (admitted pro hac vice) MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, 50 th Floor Los Angeles, California 90071 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 Proposed Counsel to the Debtors and Debtors in Possession 3
Pg 4 of 173 Hearing Date and Time: June 5, 2018, 2018, at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: May 29, 2018, at 4:00 p.m. (prevailing Eastern Time) Thomas B. Walper (admitted pro hac vice) Kevin Allred (admitted pro hac vice) Seth Goldman (admitted pro hac vice) MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, 50 th Floor Los Angeles, CA 90071 Telephone: (213) 683-9100 Facsimile: (213) 683-3702 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) NINE WEST HOLDINGS, INC., et al., 1 ) Case No. 18-10947 (SCC) ) Debtors. ) (Jointly Administered) ) DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF MUNGER, TOLLES & OLSON LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION EFFECTIVE NUNC PRO TUNC TO THE PETITION DATE The above-captioned debtors and debtors in possession (collectively, the Debtors ) respectfully state as follows in support of this application (the Application ): 2 1 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Nine West Holdings, Inc. (7645); Jasper Parent LLC (4157); Nine West Management Service LLC (4508); Kasper Group LLC (7906); Kasper U.S. Blocker LLC (2390); Nine West Apparel Holdings LLC (3348); Nine West Development LLC (2089); Nine West Distribution LLC (3029); Nine West Jeanswear Holding LLC (7263); One Jeanswear Group Inc. (0179); and US KIC Top Hat LLC (3076). The location of the Debtors service address is: 1411 Broadway, New York, New York 10018. Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Application.
Pg 5 of 173 Relief Requested 1. The Debtors seek entry of an order, substantially in the form attached hereto as Exhibit A (the Order ), authorizing the employment and retention of Munger, Tolles & Olson LLP ( MTO ) as counsel to the Debtors, effective nunc pro tunc to the Petition Date (as defined below), in accordance with the terms and conditions of that certain engagement letter, dated as of September 5, 2017 (the Engagement Letter ), 3 attached hereto as Exhibit B, to render professional services at the direction of Alan B. Miller and Harvey L. Tepner, the independent directors or managers of Jasper Parent LLC, Nine West Holdings, Inc., and ONE Jeanswear Group, Inc. (the Independent Directors ), in connection with Restructuring Matters (as defined below) as directed by the Independent Directors. In support of this Application, the Debtors submit the declaration of Seth Goldman, a partner at MTO (the Goldman Declaration ), attached hereto as Exhibit C, and the declaration of Alan B. Miller (the Miller Declaration ), attached hereto as Exhibit D. Jurisdiction and Venue 2. The United States Bankruptcy Court for the Southern District of New York (the Court ) has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the Southern District of New York, dated January 31, 2012. The Debtors confirm their consent, pursuant to rule 7008 of the Federal Rules of Bankruptcy Procedures (the Bankruptcy Rules ), to the entry of a final order by the Court in connection with this motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgements in connection herewith consistent with Article III of the United States Constitution. 3 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Engagement Letter. 2
Pg 6 of 173 3. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. 4. The statutory bases for the relief requested herein are sections 327(a) and 330 of title 11 of the United States Code, 11 U.S.C. 101 1532 (the Bankruptcy Code ), Bankruptcy Rules 2014(a) and 2016, and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules for the Southern District of New York (the Bankruptcy Local Rules ). Background 5. On April 6, 2018 (the Petition Date ), each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their property as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On April 9, 2018, the Court entered an order [Docket No. 68] authorizing the joint administration and procedural consolidation of the chapter 11 cases pursuant to Bankruptcy Rule 1015(b). No entity has requested the appointment of a trustee or examiner in these chapter 11 cases. 6. A description of the Debtors business and the reasons for commencing the chapter 11 cases are set forth in the Declaration of Ralph Schipani, Interim Chief Executive Officer of Nine West Holdings, Inc., in Support of the Chapter 11 Petitions and First Day Applications (the First Day Declaration ), filed on April 6, 2018 [Docket No. 6], and incorporated herein by reference. MTO s Qualifications and Services to be Rendered 7. The Debtors seek to retain MTO because of its experience in, among other areas, financial restructuring, litigation, corporate governance, corporate finance and transactions, and tax law. MTO lawyers have significant experience representing and advising the spectrum of constituents in chapter 11 proceedings debtors, committees, secured and unsecured creditors, independent or disinterested directors, special committees, shareholders, and 3
Pg 7 of 173 others, including providing advice with respect to fiduciary duties in connection with chapter 11 proceedings. 8. Since its engagement, MTO has become familiar with the Debtors and various aspects of their financial affairs and reorganization. The Debtors believe that MTO is well-qualified to represent them, as directed by the Independent Directors, in an efficient and timely manner. 9. The Independent Directors were appointed to the boards of directors and managers of Jasper Parent LLC, Nine West Holdings, Inc., and ONE Jeanswear Group, Inc. in August of 2017. Under the Engagement Letter, the Independent Directors authorized the hiring of MTO to provide advice on Restructuring Matters at the direction of the Independent Directors. Restructuring Matters are defined as matters: (a) arising in, arising under, or relating to, title 11 of the United States Code (or analogous state or foreign statutes); (b) concerning a financing, refinancing, recapitalization, restructuring, or out-of-court workout of equity or debt; or (c) involving companies potentially in the zone of insolvency. 10. The Debtors request authority to retain MTO to continue to provide advice on Restructuring Matters at the direction of the Independent Directors. Such matters consist of Restructuring Matters that involve a potential or actual conflict of interest for the Debtors, which the Independent Directors will evaluate and determine on an ongoing basis with the advice of MTO. By way of example, at this time, it is anticipated that MTO will continue to provide advice about potential claims by, and against, the Debtors related to their equity interest holders, potential claims against other parties arising from the 2014 acquisition of the Debtors by the equity interest holders and related financing and other transactions, as well as on other aspects of the Debtors reorganization process or plan that involve potential or actual conflicts of interest 4
Pg 8 of 173 with their equity interest holders. MTO shall also represent the Debtors at the direction of the Independent Directors with respect to Restructuring Matters on which Kirkland & Ellis LLP and Kirkland & Ellis International LLP (collectively, Kirkland ), lead bankruptcy counsel, has an ethical conflict of interest (and for which MTO does not). With respect to Restructuring Matters directed by the Independent Directors, services being rendered and to be rendered by MTO include, but are not limited to, fact investigation, legal research, briefing, argument, discovery, plan and disclosure statement matters, appearance and participation in hearings, and communications and meetings with parties in interest, in each case as related to Restructuring Matters directed by the Independent Directors. Professional Compensation 11. Pursuant to the terms of the Engagement Letter, and subject to Court approval of this Application, MTO intends to apply for compensation for professional services rendered on an hourly basis and the reimbursement of reasonable expenses. The hourly rates and corresponding rate structure MTO will apply are the same as the hourly rates and corresponding rate structure that MTO uses in other restructuring matters, and are comparable to the hourly rates and corresponding rate structure that MTO uses for corporate, securities, and litigation matters, whether in court or otherwise, regardless of whether a fee application is required. The hourly rates used by MTO in representing the Debtors are consistent with the rates that MTO charges other clients (including other clients in chapter 11 cases), regardless of the location of the client or the court in which the matter is pending. 12. MTO and the Debtors have not agreed to any variations from, or alternatives to, MTO s standard billing arrangements. As discussed in more detail below, MTO rates are subject to periodic change in the ordinary course of business. The MTO 2018 hourly rates for the engagement range as follows: 5
Pg 9 of 173 Billing Category Range Partners $795 to $1,400 Of Counsel $825 to $995 Associates $425 to $790 Paraprofessionals $250 to $400 13. The MTO hourly rates are set at a level designed to compensate MTO fairly for the work of its attorneys and paraprofessionals and to cover fixed and routine expenses. Hourly rates vary with the experience and seniority of the individuals assigned. These hourly rates are subject to periodic adjustments to reflect economic and other conditions. 4 MTO represented the Debtors with respect to Restructuring Matters as directed by the Independent Directors before the Petition Date using the hourly rates listed above. 14. MTO will maintain detailed, contemporaneous time records in six-minute intervals and apply to the Court for payment of compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Bankruptcy Local Rules and any additional procedures that may be established by the Court in these chapter 11 cases. 5 MTO timekeepers will record time using billing categories that substantially conform to those categories set forth at section 8(b) of the United States Trustee Guidelines, and will record the amount of time per task within each billing category. 6 4 5 6 Like many other law firms, MTO typically increases the hourly billing rate of attorneys and paraprofessionals once a year, which increase includes (i) ordinary course step increases related to the advancing seniority or promotion of an attorney or paraprofessional (a Step Increase ), and (ii) periodic (generally yearly) rate increases with respect to each level of seniority (a Rate Increase ). The Step Increases do not constitute rate increases (as the term is used in the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330 by Attorneys in Larger Chapter 11 Cases, effective November 1, 2013). The proposed order provides that MTO will provide ten business-days notice to the Independent Directors, the Debtors, the U.S. Trustee, and any official committee before implementing any Rate Increase, and shall file any notice with the Court. In applying to the Court for payment of compensation and reimbursement of expenses, MTO will comply with Rule 2016-1 of the Bankruptcy Local Rules and also make reasonable efforts to comply with the United States Trustee Guidelines. MTO may, in its discretion and in consultation with the Debtors, determine to create separate or additional billing categories for certain discrete projects undertaken during these chapter 11 cases. 6
Pg 10 of 173 15. Furthermore, MTO will maintain records of expenses incurred and itemize those expenses as well as summarize them by expense categories established as part of MTO s customary billing procedures. MTO does not charge clients for office supplies, standard duplication, facsimile transmissions, secretarial support, or Westlaw or Lexis computer-assisted legal research. MTO does charge its clients in all areas of practice for all other expenses incurred in connection with a representation. The expenses charged to clients include, among other things, telephone conference call and international call charges, mail, express mail, and overnight delivery service charges, special or hand delivery charges, document retrieval charges, mass mailings (including envelopes and labels) performed by outside copying services, airfare, meals, lodging, transcription costs, and non-ordinary overhead expenses. MTO will charge the Debtors for these expenses in compliance with all applicable rules, procedures and orders of the Court. 16. MTO will consult with the U. S. Trustee regarding any suggested alterations to the fee and expense categories used by MTO. MTO understands that interim and final fee awards are subject to approval by this Court. 17. If the Debtors, through the Independent Directors, direct MTO to engage contract attorneys, the Debtors will be charged at cost for fees billed by contract attorneys, and MTO will ensure that all contract attorneys are subject to conflict checks and disclosures in accordance with the requirements of the Bankruptcy Code and Bankruptcy Rules. MTO has not and will not share, or agree to share, compensation with any contract attorneys engaged by MTO for these chapter 11 cases. 18. On September 27, 2017, the Debtors provided MTO with an advance payment retainer of $250,000 (the Retainer ) for professional services to be rendered. In 7
Pg 11 of 173 accordance with the terms of the Engagement Letter, the MTO fees and expenses were deemed automatically deducted from the Retainer as such fees and expenses were incurred. The Goldman Declaration contains information regarding the payments by the Debtors to MTO in the 90 days before the Petition Date. As of the Petition Date, the Debtors did not owe MTO any amounts for legal services rendered before the Petition Date. Subject to Court approval, the balance of the Retainer will be held by MTO until the conclusion of its engagement and applied to any fees or expenses awarded in a final fee application, with the remaining balance, if any, to be returned to the Debtors. 19. Pursuant to Bankruptcy Rule 2016(b), no agreement or understanding exists between MTO and any other person, other than as permitted by Section 504 of the Bankruptcy Code, to share compensation received for services rendered in connection with these chapter 11 cases, nor shall MTO share or agree to share compensation received for services rendered in connection with these chapter 11 cases with any other person other than as permitted by section 504 of the Bankruptcy Code. No Duplication of Services 20. By separate application, the Debtors have requested that the Court approve the retention and employment of Kirkland as lead bankruptcy counsel on matters other than Restructuring Matters as directed by the Independent Directors. MTO will work closely with Kirkland, the Debtors and the other retained professionals to clearly delineate the respective scope of work and to prevent unnecessary duplication of services whenever reasonably possible. MTO s Disinterestedness 21. The Goldman Declaration, incorporated herein by reference, discloses MTO connections to the Debtors and parties in interest in these cases that MTO has been able to determine as of the time of filing this Application. In reliance on the Goldman Declaration, and 8
Pg 12 of 173 except as set forth therein, the Debtors believe that: (a) MTO has no connection with the Debtors, their affiliates, their creditors, the Office of the U.S. Trustee for the Southern District of New York (the U.S. Trustee ), any person employed in the office of the U.S. Trustee, or any other party with an actual or potential interest in these chapter 11 cases or their respective attorneys or accountants; (b) MTO is not a creditor, equity security holder, or insider of the Debtors; (c) none of the MTO lawyers are, or were within two years of the Petition Date, a director, officer, or employee of the Debtors; and (d) MTO neither holds nor represents an interest materially adverse to the Debtors or their estates. Accordingly, the Debtors believe that MTO is a disinterested person, as defined in section 101(14) of the Bankruptcy Code and as required by section 327(a) of the Bankruptcy Code. 22. In the event that this representation would result in MTO becoming adverse to a party in interest that gives rise to a professional conflict, the Debtors shall retain separate counsel to represent their interests with respect to such matter against such party. Basis for Relief I. The Debtors Should be Permitted to Retain and Employ MTO. 23. The Debtors seek retention of MTO as their counsel with respect to Restructuring Matters as directed by the Independent Directors pursuant to section 327(a) of the Bankruptcy Code, which provides that a debtor, subject to Court approval: 11 U.S.C. 327(a). [M]ay employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the [debtor] in carrying out the [debtor] s duties under this title. 24. Bankruptcy Rule 2014(a) requires that an application for retention include: 9
Pg 13 of 173 Fed. R. Bankr. P. 2014(a). [S]pecific facts showing the necessity for the employment, the name of the [firm] to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and, to the best of the applicant s knowledge, all of the [firm s] connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. 25. Based on the foregoing, the Debtors submit that for all the reasons stated above and in the Goldman Declaration and Miller Declaration, the retention of MTO as counsel with respect to Restructuring Matters as directed by the Independent Directors is warranted and satisfies Bankruptcy Rule 2014(a). Further, as stated in the Goldman Declaration, MTO is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code, and does not hold or represent an interest adverse to the estates of the Debtors, and MTO has no connection to the Debtors, their creditors, or other parties in interest, except as disclosed in the Goldman Declaration. 26. The Debtors submit that the terms and conditions of MTO s employment, as disclosed in this Application, are reasonable. Motion Practice 27. This Application includes citations to the applicable rules and statutory authorities upon which the relief requested herein is predicted and a discussion of their application to this motion. Accordingly, the Debtors submit that this Application satisfies Local Rule 9013-1(a). Notice 28. The Debtors have provided notice of this motion to the entities on the Service List (as defined in the Case Management Order in these chapter 11 cases [Docket No. 10
Pg 14 of 173 107] and available on the Debtors case website at https://cases.primeclerk.com/ninewest). The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be given. 29. No prior request for the relief sought in this application has been made to this or any other court. [Remainder of page intentionally left blank] 11
Pg 15 of 173 WHEREFORE, the Debtors respectfully request that the Court authorize entry of an order substantially in the form attached hereto as Exhibit A, granting the relief requested in this Application and granting such other and further relief as is appropriate under the circumstances. New York, New York Dated: May 6, 2018 /s/ Ralph Schipani Ralph Schipani
Pg 16 of 173 EXHIBIT A Proposed Order
Pg 17 of 173 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) ) NINE WEST HOLDINGS, INC., et al., 1 ) Case No. 18-10947 (SCC) ) Debtors. ) (Jointly Administered) ) ORDER GRANTING DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF MUNGER, TOLLES & OLSON LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION EFFECTIVE NUNC PRO TUNC TO THE PETITION DATE Upon the application (the Application ) 2 of the above-captioned debtors and debtors in possession (collectively, the Debtors ) for entry of an Order authorizing the Debtors to employ and retain Munger, Tolles & Olson LLP ( MTO ) as attorneys to the Debtors, effective nunc pro tunc to the Petition Date in accordance with the terms and conditions of the Engagement Letter; and upon the Goldman Declaration and the Miller Declaration in support of the Application; and upon the First Day Declaration; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Application in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and this Court having found that the Debtors notice of the Application and opportunity for a hearing on the 1 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Nine West Holdings, Inc. (7645); Jasper Parent LLC (4157); Nine West Management Service LLC (4508); Kasper Group LLC (7906); Kasper U.S. Blocker LLC (2390); Nine West Apparel Holdings LLC (3348); Nine West Development LLC (2089); Nine West Distribution LLC (3029); Nine West Jeanswear Holding LLC (7263); One Jeanswear Group Inc. (0179); and US KIC Top Hat LLC (3076). The location of the Debtors service address is: 1411 Broadway, New York, New York 10018. Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Application.
Pg 18 of 173 Application were appropriate under the circumstances and no other notice need be provided; and this Court having reviewed the Application [and having heard the statements in support of the relief requested therein at a hearing before this Court (the Hearing )]; and this Court having determined that the legal and factual bases set forth in the Application [and at the Hearing] establish just cause for the relief granted herein; and any objections (if any) to the requested relief having been withdrawn or overruled on the merits; and the Court being satisfied, based on the representations made in the Application and the Goldman Declaration and Miller Declaration, that (a) MTO does not hold or represent an interest adverse to the Debtors estates and (b) MTO is a disinterested person as defined in section 101(14) of the Bankruptcy Code as required by section 327(a) of the Bankruptcy Code, and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 1. The Application is approved as set forth herein. 2. In accordance with and pursuant to section 327(a) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Bankruptcy Local Rules 2014-1 and 2016-1, the Debtors are hereby authorized to employ and retain MTO as counsel with respect to Restructuring Matters as directed by the Independent Directors under the terms and conditions set forth in the Application and in the Goldman Declaration effective nunc pro tunc to the Petition Date. The Goldman Declaration sets forth the services being provided by, and to be provided by, MTO to the Debtors with respect to Restructuring Matters at the direction of the Independent Directors, which include, without limitation: (i) investigating and advising the Independent Directors on Restructuring Matters that involve a potential or actual conflict of interest for the Debtors; 2
Pg 19 of 173 (ii) (iii) (iv) (v) investigating and advising the Independent Directors on whether a Restructuring Matter involves a potential or actual conflict of interest for the Debtors; implementing the decisions of the Independent Directors; representing the Debtors on matters for which Kirkland has an ethical conflict (and MTO does not); and all other necessary legal services for the Debtors, as related to Restructuring Matters as directed by the Independent Directors, in connection with the prosecution of the above captioned cases, including, fact investigation, legal research, briefing, argument, discovery, plan and disclosure statement matters, appearance and participation in hearings, and communications and meetings with parties in interest. 3. Nothing in the Engagement Letter shall supersede any provisions of the Bankruptcy Code during the pendency of the Debtors chapter 11 cases; provided, however, that to the extent the Application, the Goldman Declaration, the Miller Declaration, any later declaration, or the Engagement Letter is inconsistent with this Order, the terms of this Order shall govern. 4. MTO shall use its reasonable efforts to avoid any duplication of services provided by any of the Debtors other retained professionals in these chapter 11 cases. 5. MTO shall apply for compensation for professional services rendered on an hourly basis and reimbursement of expenses incurred in connection with the chapter 11 cases of the Debtors, subject to the Court s approval and in compliance with the applicable provisions of the Bankruptcy Code, Bankruptcy Rules, Bankruptcy Local Rules, and any other applicable procedures and orders of the Court. 6. MTO is authorized without further order of the Court to apply amounts from the Retainer to compensate and reimburse MTO for fees or expenses incurred prior to the Petition Date consistent with its ordinary course billing practice. Notwithstanding anything to the contrary in the Engagement Letter, the Debtors are not obligated to replenish the Retainer. MTO 3
Pg 20 of 173 shall hold the balance of the Retainer until the conclusion of the MTO engagement and the payment of the fees, costs, and expenses of MTO as approved in the MTO final fee application, after which MTO shall return any remaining balance of the Retainer to the Debtors. 7. MTO shall not charge a markup to the Debtors with respect to fees billed by contract attorneys who are hired by MTO to provide services to the Debtors and shall ensure any such contract attorneys are subject to conflict checks and disclosures in accordance with the requirements of the Bankruptcy Code and Bankruptcy Rules. MTO will not share, or agree to share, compensation with any contract attorneys engaged by MTO for these chapter 11 cases. 8. MTO shall provide ten business days notice to the Debtors, the Independent Directors, the U.S. Trustee, and any official committee before any Rate Increase of the rates set forth in the Application or the Engagement Letter are implemented and shall file such notice with the Court. The U.S. Trustee retains all rights to object to any Rate Increase on all grounds, including the reasonableness standard set forth in section 330 of the Bankruptcy Code, and the Court retains the right to review any Rate Increase pursuant to section 330 of the Bankruptcy Code. 9. The Debtors and MTO are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Application. 10. Notice of the Application as provided therein is deemed to be good and sufficient notice of such Application, and the requirements of the Bankruptcy Local Rules are satisfied by the contents of the Application. 11. The terms and conditions of this Order shall be immediately effective and enforceable upon its entry. [Remainder of page intentionally left blank] 4
Pg 21 of 173 12. Notwithstanding any contrary provision in the Application or Engagement Letter, the Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order. New York, New York Dated:, 2018 HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE 5
Pg 22 of 173 EXHIBIT B Engagement Letter
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Pg 33 of 173 Exhibit C Goldman Declaration
Pg 34 of 173 Hearing Date and Time: June 5, 2018, 2018, at 10:00 a.m. (prevailing Eastern Time) Objection Deadline: May 29, 2018, at 4:00 p.m. (prevailing Eastern Time) Thomas B. Walper (admitted pro hac vice) Kevin Allred (admitted pro hac vice) Seth Goldman (admitted pro hac vice) MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, 50 th Floor Los Angeles, CA 90071 Telephone: (213) 683-9100 Facsimile: (213) 683-3702 Proposed Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) ) NINE WEST HOLDINGS, INC., et al., 1 ) Case No. 18-10947 (SCC) ) Debtors. ) (Jointly Administered) ) DECLARATION OF SETH GOLDMAN IN SUPPORT OF DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF MUNGER, TOLLES & OLSON LLP AS ATTORNEYS EFFECTIVE NUNC PRO TUNC TO THE PETITION DATE Pursuant to Bankruptcy Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) and Rules 2014-1 and 2016-1 of the Local Bankruptcy Rules of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Local Rules ), 2 I, Seth Goldman, state the following under penalty of perjury: 1 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Nine West Holdings, Inc. (7645); Jasper Parent LLC (4157); Nine West Management Service LLC (4508); Kasper Group LLC (7906); Kasper U.S. Blocker LLC (2390); Nine West Apparel Holdings LLC (3348); Nine West Development LLC (2089); Nine West Distribution LLC (3029); Nine West Jeanswear Holding LLC (7263); One Jeanswear Group Inc. (0179); and US KIC Top Hat LLC (3076). The location of the Debtors service address is: 1411 Broadway, New York, New York 10018. This Declaration is also generally consistent with the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. 330 by Attorneys in Larger Chapter 11 Cases Effective as of November 1, 2013, issued by the Executive Office for United States Trustees (the United States Trustee Guidelines ).
Pg 35 of 173 1. I am a partner at Munger, Tolles & Olson LLP ( MTO ), located at 350 S. Grand Ave., 50th Floor, Los Angeles, California, 90071, and have been duly admitted to practice law in the State of California and the four United States District Courts in California. 2. I make this Declaration in support of the Debtors Application for Entry of an Order Authorizing the Employment and Retention of Munger, Tolles & Olson LLP as Attorneys Effective Nunc Pro Tunc to the Petition Date (the Application ). 3 3. The facts set forth in this Declaration are personally known to me and, if called as a witness, I could and would testify thereto. MTO s Qualifications 4. MTO is well qualified to advise the Debtors in connection with Restructuring Matters as directed by the Independent Directors because of its experience in, among other areas, financial restructuring, litigation, corporate governance, corporate finance and transactions, and tax law. MTO lawyers have significant experience representing and advising the spectrum of constituents in chapter 11 proceedings debtors, committees, secured and unsecured creditors, special committees, independent or disinterested directors, shareholders, and others, including providing advice with respect to fiduciary duties in connection with chapter 11 proceedings. 5. Since its engagement, MTO has become familiar with the Debtors and various aspects of their financial affairs and reorganization. I believe MTO is well-qualified to represent the Debtors, as directed by the Independent Directors, in an efficient and timely manner. 3 Capitalized terms not otherwise defined herein have the meanings given to them in the Application. 2
Pg 36 of 173 Services to be Provided by MTO 6. The Independent Directors were appointed to the boards of directors and managers of Jasper Parent LLC, Nine West Holdings, Inc., and ONE Jeanswear Group, Inc. in August of 2017. Under the Engagement Letter, the Independent Directors authorized the hiring of MTO to provide advice on Restructuring Matters at the direction of the Independent Directors. Restructuring Matters are defined as matters: (a) arising in, arising under, or relating to, title 11 of the United States Code (or analogous state or foreign statutes); (b) concerning a financing, refinancing, recapitalization, restructuring, or out-of-court workout of equity or debt; or (c) involving companies potentially in the zone of insolvency. 7. The Debtors request authority to retain MTO to continue to provide advice on Restructuring Matters at the direction of the Independent Directors. Such matters consist of Restructuring Matters that involve a potential or actual conflict of interest for the Debtors, which the Independent Directors will evaluate and determine on an ongoing basis with the advice of MTO. By way of example, at this time, it is anticipated that MTO will continue to provide advice about potential claims by, and against, the Debtors related to their equity interest holders, potential claims against other parties arising from the 2014 acquisition of the Debtors by the equity interest holders and related financing and other transactions, as well as on other aspects of the Debtors reorganization process or plan that involve potential or actual conflicts of interest with their equity interest holders. MTO shall also represent the Debtors at the direction of the Independent Directors with respect to Restructuring Matters on which Kirkland & Ellis LLP and Kirkland & Ellis International LLP (collectively, Kirkland ), lead bankruptcy counsel, has an ethical conflict of interest (and for which MTO does not). With respect to Restructuring Matters directed by the Independent Directors, services being rendered and to be rendered by MTO include, but are not limited to, fact investigation, legal research, briefing, argument, discovery, 3
Pg 37 of 173 plan and disclosure statement matters, appearance and participation in hearings, and communications and meetings with parties in interest, in each case as related to Restructuring Matters directed by the Independent Directors. 8. MTO shall be directed by the Independent Directors, on behalf of the Debtors. By separate application, the Debtors have requested that the Court approve the retention and employment of Kirkland as lead bankruptcy counsel on matters other than Restructuring Matters as directed by the Independent Directors. MTO will work closely with Kirkland, the Debtors and the other retained professionals to clearly delineate the respective scope of work and to prevent unnecessary duplication of services whenever reasonably possible. Compensation and Fee Applications 9. Pursuant to the terms of the Engagement Letter, and subject to Court approval of this Application, MTO intends to apply for compensation for professional services rendered on an hourly basis and the reimbursement of reasonable expenses. The hourly rates and corresponding rate structure MTO will apply are the same as the hourly rates and corresponding rate structure that MTO uses in other restructuring matters, and are comparable to the hourly rates and corresponding rate structure that MTO uses for corporate, securities, and litigation matters, whether in court or otherwise, regardless of whether a fee application is required. The hourly rates used by MTO in representing the Debtors are consistent with the rates that MTO charges other clients (including other clients in chapter 11 cases), regardless of the location of the client or the court in which the matter is pending. 10. MTO and the Debtors have not agreed to any variations from, or alternatives to, MTO s standard billing arrangements. As discussed in more detail below, MTO rates are subject to periodic change in the ordinary course of business. The MTO 2018 hourly rates for the engagement range as follows: 4
Pg 38 of 173 Billing Category Range Partners $795 to $1,400 Of Counsel $825 to $995 Associates $425 to $790 Paraprofessionals $250 to $400 11. The MTO hourly rates are set at a level designed to compensate MTO fairly for the work of its attorneys and paraprofessionals and to cover fixed and routine expenses. Hourly rates vary with the experience and seniority of the individuals assigned. These hourly rates are subject to periodic adjustments to reflect economic and other conditions. 4 MTO represented the Debtors with respect to Restructuring Matters as directed by the Independent Directors before the Petition Date using the hourly rates listed above. 12. MTO will maintain detailed, contemporaneous time records in six-minute intervals and apply to the Court for payment of compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Bankruptcy Local Rules and any additional procedures that may be established by the Court in these chapter 11 cases. 5 MTO timekeepers will record time using billing categories that substantially conform to those categories set forth at section 8(b) of the United States Trustee Guidelines, and will record the amount of time per task within each billing category. 6 4 5 6 Like many other law firms, MTO typically increases the hourly billing rate of attorneys and paraprofessionals once a year, which increase includes (i) ordinary course step increases related to the advancing seniority or promotion of an attorney or paraprofessional (a Step Increase ), and (ii) periodic (generally yearly) rate increases with respect to each level of seniority (a Rate Increase ). The Step Increases do not constitute rate increases (as the term is used in the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 330 by Attorneys in Larger Chapter 11 Cases, effective November 1, 2013). The proposed order provides that MTO will provide ten business-days notice to the Independent Directors, the Debtors, the U.S. Trustee, and any official committee before implementing any Rate Increase, and shall file any notice with the Court. In applying to the Court for payment of compensation and reimbursement of expenses, MTO will also comply with Rule 2016-1 of the Bankruptcy Local Rules and make reasonable efforts to comply with the United States Trustee Guidelines. MTO may, in its discretion and in consultation with the Debtors, determine to create separate or additional billing categories for certain discrete projects undertaken during these chapter 11 cases. 5
Pg 39 of 173 13. Furthermore, MTO will maintain records of expenses incurred and itemize those expenses as well as summarize them by expense categories established as part of MTO s customary billing procedures. MTO does not charge clients for office supplies, standard duplication, facsimile transmissions, secretarial support, or Westlaw or Lexis computer-assisted legal research. MTO does charge its clients in all areas of practice for all other expenses incurred in connection with a representation. The expenses charged to clients include, among other things, telephone conference call and international call charges, mail, express mail, and overnight delivery service charges, special or hand delivery charges, document retrieval charges, mass mailings (including envelopes and labels) performed by outside copying services, airfare, meals, lodging, transcription costs, and non-ordinary overhead expenses. MTO will charge the Debtors for these expenses in compliance with all applicable rules, procedures and orders of the Court. 14. MTO understands that interim and final fee awards are subject to approval by this Court. Professional Compensation 15. On September 27, 2017, the Debtors provided MTO with an advance payment retainer of $250,000 (the Retainer ) for professional services to be rendered. In accordance with the terms of the Engagement Letter, the MTO fees and expenses were deemed automatically deducted from the Retainer as such fees and expenses were incurred. Subject to Court approval, the balance of the Retainer will be held by MTO until the conclusion of its engagement and applied to any fees or expenses awarded in a final fee application, with the remaining balance, if any, to be returned to the Debtors. 16. During the 90-day period before the Petition Date, the Debtors paid the following amounts to MTO: 6
Pg 40 of 173 Type of Transaction Date Amount Receipt of Advance Payment Retainer 9/27/17 $250,000.00 Payment Received 2/7/18 $191,718.31 Payment Received 3/27/18 $157,173.75 Payment Received 3/30/18 $173,965.60 Payment Received 4/5/18 $164,506.96 Balance of Retainer as of Petition Date (subject to reduction for fees or expenses incurred but not posted before the Petition Date) 4/6/18 $250,000 17. As of the Petition Date, the Debtors did not owe MTO any amounts for legal services rendered before the Petition Date. 18. Pursuant to Bankruptcy Rule 2016(b), no agreement or understanding exists between MTO and any other person, other than as permitted by Section 504 of the Bankruptcy Code, to share compensation received for services rendered in connection with these chapter 11 cases, nor shall MTO share or agree to share compensation received for services rendered in connection with these chapter 11 cases with any other person other than as permitted by section 504 of the Bankruptcy Code. Disclosure Concerning Disinterestedness 19. In connection with the MTO proposed retention by the Debtors, MTO undertook to determine whether it had any conflicts or other relationships that might cause it not to be disinterested, or to hold or represent an interest adverse to the Debtor. The Debtors have provided MTO with a list of the names (collectively, the Interested Parties ) of individuals or institutions set forth on Schedule 1 hereto. 7 7 MTO s inclusion of parties in Schedule 1 is solely to disclose MTO s conflict search process and is not an admission that any party has a valid claim against the Debtors or that any party properly belongs in Schedule or has a claim or legal relationship to the Debtors of the nature described in Schedule 1. 7
Pg 41 of 173 20. The status of entities listed as Interested Parties on Schedule 1 may change during the pendency of these chapter 11 cases without our knowledge. MTO will update this Declaration as necessary when new names of parties in interest are made available. 21. MTO and certain of its partners and associates may have in the past represented, may currently represent, and are likely in the future to represent, parties in interest in these chapter 11 cases in matters unrelated to these chapter 11 cases. For the purpose of preparing this Declaration, MTO searched its electronic database containing the names of current and former clients for its connections to the Interested Parties. MTO compared each of the Interested Parties to the names that MTO has compiled into a master client database from its conflicts clearance and billing records, comprised of the names of the entities for which any attorney time charges have been billed (the Client Database ). The Client Database includes the name of each current or former client, and the names of the MTO personnel who are or were responsible for current or former matters for such client. 22. To the extent I have been able to ascertain based on the search of the Client Database and reasonable inquiry, listed on Schedule 2 to this Declaration are those Interested Parties, or affiliates thereof, that are or have been MTO clients within the three years immediately prior to February 28, 2018. 8 None of the representations listed on Schedule 2 or described herein is materially adverse to the interests of the Debtor, and all prior and current MTO representations of the clients, former clients, or their affiliates and/or subsidiaries are or have been in matters unrelated to these chapter 11 cases. 23. The MTO conflict search reveals, to the best of MTO s knowledge, that those MTO attorneys and paraprofessionals, if any, who have previously represented Interested 8 MTO has disclosed connections with current or former clients for whom time was posted in its books and records in the 36 months immediately prior to February 28, 2018. 8
Pg 42 of 173 Parties with respect to the Debtors restructuring efforts while working at other law firms, have not worked on matters relating to the Debtors restructuring efforts at MTO. 24. Based on the conflicts search conducted to date, to the best of my knowledge, neither I, MTO, nor any partner or associate thereof, have any connection with the Debtors, their creditors, or any other parties in interest, their respective attorneys and accountants, the U.S. Trustee, any person employed in the Office of the U.S. Trustee, or any bankruptcy judge currently serving on the United States Bankruptcy Court for the Southern District of New York, except as disclosed or otherwise described herein. 25. MTO has not, does not, and will not, represent any entity other than the Debtors in these chapter 11 cases. From time to time, MTO has referred matters to other professionals to be retained in these chapter 11 cases. Likewise, certain of such professionals have referred legal work to MTO. Certain insurance companies pay the legal bills of MTO clients and some of these insurance companies may be involved in these chapter 11 cases. None of these insurance companies, however, are MTO clients simply because they pay legal fees on behalf of MTO clients. 26. Prior to the Petition Date, MTO performed certain legal services for or paid by the Debtors, as described herein and in the Application. As a result of the Retainer referenced above, the Debtors do not owe MTO any amount for services performed or expenses incurred prior to the Petition Date. Specific Disclosures 27. As specifically set forth below and in the attached schedules, MTO represents certain of the creditors or other parties in interest in ongoing matters unrelated to the Debtors and these chapter 11 cases. None of the representations described herein are materially adverse to the interests of the estates. Moreover, pursuant to section 327(c) of the Bankruptcy 9