-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PNKzzOj+0mitNZ1OCiyZisPLZJhg336kxLQ+Stfm0vUlVNS/0SelV92OxpLyww7q mHQoxFncZYkW+3C5KxMjbA== 0000922409-96-000035.txt : 19960629 0000922409-96-000035.hdr.sgml : 19960629 ACCESSION NUMBER: 0000922409-96-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960507 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960627 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMBOLICS INC CENTRAL INDEX KEY: 0000745664 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 953548781 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13412 FILM NUMBER: 96586478 BUSINESS ADDRESS: STREET 1: 9000 FULBRIGHT AVE CITY: CHATSWORTH STATE: CA ZIP: 91311 BUSINESS PHONE: 8189983600 MAIL ADDRESS: STREET 1: 9000 FULBRIGHT AVE CITY: CHATSWORTH STATE: CA ZIP: 91311 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): May 7, 1996 Symbolics, Inc. (Exact name of registrant as specified in its charter) Delaware (State of incorporation or organization) 0-13412 95-3548781 (Commission File Number) (I.R.S. Employer Identification No.) 9000 Fulbright Avenue, Chatsworth, California 91311 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 998-3600 PAGE 1 of 21 PAGES Item 2. Acquisition or Disposition of Assets. (a) On May 7, 1996, the Chapter 11 bankruptcy case of Symbolics, Inc., a Delaware corporation and the debtor- in-possession, Case No. 93-10789-WCH in the United States Bankruptcy Court for the District of Massachusetts (Eastern Division) (the "Company"), was dismissed pursuant to an order of that Court, upon the motion of the Company. In accordance with that order, all of the assets of the Company are to be distributed to its priority and administrative creditors, with no assets remaining for distribution to the Company's shareholders. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits Exhibit 99.1 -- Order Granting Debtor's Motion to Dismiss, dated as of May 7, 1996. Exhibit 99.2 -- Debtor's Motion to Dismiss, dated as of January 18, 1996. PAGE 2 of 21 PAGES SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, the counsel to its bankruptcy estate. SYMBOLICS, INC. DATE: June 19, 1996 By: Thomas M. Tomlinson Counsel to Bankruptcy Estate of Symbolics, Inc. PAGE 3 of 21 PAGES EXHIBIT INDEX Exhibit Description of Exhibit Page 99.1 Order Granting Debtor's Motion to Dismiss, dated as of May 7, 1996. 5 99.2 Debtor's Motion to Dismiss, dated as of 8 January 18, 1996. PAGE 4 of 21 PAGES EX-99 2 Exhibit 99.1 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) ) In re: ) ) SYMBOLICS, INC., ) Chapter 11 ) Case No. 93-10789-WCH ) Debtor. ) ) ORDER GRANTING DEBTOR'S MOTION TO DISMISS This matter came on for hearing before this Court on May 7, 1996 on the Debtor's Motion to Dismiss (the "Dismissal Motion"), after due notice to all parties in interest. Objections to the Dismissal Motion were filed by Catherine D. Groom, Theresa Dellabella and John Palmer Moving & Storage, Inc. (collectively, the "Objections"). Upon consideration of the written submissions and arguments of the various parties and the pleadings and proceedings heard to date in this case, and due cause appearing therefor, this Court hereby finds as follows: 1. Dismissal of this case, on the terms and conditions set forth below, is in the best interests of the Debtor, its creditors and its estate. Dismissal will result in an efficient, expeditious and complete resolution of this Chapter 11 case since, following the sale of substantially all of the Debtor's assets to Princeton Capital Finance Company, all of the Debtor's assets have been reduced to cash for final PAGE 5 of 21 PAGES distribution pursuant to the terms of this Order. Dismissal of this case likewise will avoid the costs and delays associated with the conversion of the Debtor's case to a case under Chapter 7 of the Bankruptcy Code, which this Court finds is unnecessary under the facts and circumstances of this case. 2. No purpose would be served by forcing the Debtor and other parties in interest to achieve a less favorable result through a conversion to Chapter 7. To the contrary, it would result in unnecessary expense, delay and imposition on this Court and other parties in interest. Moreover, denial of the Dismissal Motion would unnecessarily further delay payment of all allowed or allowable administrative and priority unsecured claims in accordance with applicable law and the terms of this Order. Accordingly, and for the foregoing reasons, it is hereby: ORDERED, that the Objections be, and they hereby are, overruled; and it is further ORDERED, that the Dismissal Motion be, and it hereby is, allowed. This Court shall enter an order dismissing this case promptly upon the filing of a statement by counsel to the Debtor listing payments made by the Debtor of all remaining assets of its estate, consisting of funds currently held in escrow, to all allowed or allowable administrative expense and priority unsecured claims; and it is further ORDERED, that funds held in escrow at Choate, Hall & Stewart, which funds constitute all of the Debtor's known assets, PAGE 6 of 21 PAGES shall be distributed first to pay in full holders of allowed or allowable Section 507(a)(3) and 507(a)(7) priority unsecured claims and secondly, to holders of allowed administrative expense claims in accordance with the terms of the Agreed Order Regarding Fee Applications Of Professionals; and it is further ORDERED, that the counsel to the Debtor shall cause copies of all checks evidencing payment in accordance with this Order to be provided to the Office of the United States Trustee; and it is further ORDERED, that the Debtor be, and it hereby is, authorized without further Order of this Court to execute and deliver any and all documents and take any and all actions which it deems necessary or appropriate to effectuate dismissal of this case in accordance with this Order and the Dismissal Motion. Entered at Boston, Massachusetts, in said District, this 7th day of May, 1996, at 10:11 a.m. /s/ William C. Hillman William C. Hillman United States Bankruptcy Judge PAGE 7 of 21 PAGES EX-99 3 Exhibit 99.2 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS (Eastern Division) __________________________________ ) In re: ) ) SYMBOLICS, INC., ) Chapter 11 ) Case No. 93-10789-WCH ) Debtor. ) __________________________________) DEBTOR'S MOTION TO DISMISS Symbolics, Inc., the debtor and debtor-in-possession in this case (the "Debtor"), hereby moves this Court pursuant to Sections 305(a)(1) and 1112(b) of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq., for entry of an order dismissing its Chapter 11 case. The Debtor contends that no useful purpose can be served by maintenance of the case under Chapter 11 or conversion of the case to Chapter 7 and therefore asserts that such dismissal is in the best interests of its creditors. In support of this motion, the Debtor respectfully represents as follows: BACKGROUND 1. The Debtor commenced this case by filing a voluntary petition under Chapter 11 of the Bankruptcy Code on January 27, 1993 (the "Petition Date"). No trustee has been appointed and therefore the Debtor has all of the rights and duties of a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. PAGE 8 OF 21 PAGES 2. The Debtor's primary business consisted of the manufacture, sale, and servicing of proprietary computer systems. The Debtor was also engaged in the marketing and servicing of various software products. 3. On July 27, 1995, this Court authorized and approved the sale of substantially all of the Debtor's assets to Princeton Capital Finance Company, LLC ("Princeton"), following the receipt of competitive bids by the Court. Prior to the Princeton sale, the Debtor vigorously pursued reorganization, and sought an infusion of capital from various sources as a means to achieving that goal.[FN1] The Debtor also engaged in negotiations with no fewer than fifteen (15) interested parties for the possible sale of all or part of its business. The total purchase price paid by Princeton after allowance for closing adjustments was approximately $535,215.75, including a deposit in the amount of $30,000. The Princeton sale was closed on August 9, 1995 (the "Princeton Closing"). In accordance with an agreement between the Debtor and CIT Group/Credit Finance, Inc. ("CIT"), the Debtor's pre- and post-petition lender, the proceeds of the sale (net of the deposit paid by Princeton) were deposited with CIT. The deposit on the purchase price remained in an interest-earning escrow account held for the benefit of the Debtor's estate by its counsel. ____________________ 1. The Debtor, the Official Committee of Unsecured Creditors, and their respective attorneys negotiated and prepared several proposed plans throughout the course of this case. PAGE 9 of 21 PAGES THE DEBTOR'S REMAINING ASSETS a. Cash 4. As of the Princeton Closing, the Debtor had approximately $320,000 in outstanding accounts receivable. Of that amount, the Debtor has collected approximately $120,000 since the Princeton Closing. The Debtor had maintained three bank accounts at Bank of Boston which had been used to hold the Debtor's cash assets, including collected accounts receivable. In October of 1995, following application of the Princeton sale proceeds to its debt, CIT deposited substantially all of the funds owed to the Debtor from the sale to Princeton in the Bank of Boston accounts.[FN2] On or about November 11, 1995, these accounts were merged into a single account which currently contains approximately $44,616. The remainder of the sum that had been held in this account has been deposited in escrow accounts with Debtor's counsel. The deposits in these escrow accounts with Debtor's counsel have a current composite balance of approximately $669,970.11. The Debtor's counsel also holds a retainer from the Debtor of approximately $62,000, which has not been applied. Thus, the Debtor currently has cash available for the payment of its creditors in the total amount of approximately $776,586.11. ____________________ 2. CIT continues to withhold approximately $6,000 from the proceeds of the Princeton sale in anticipation of attorneys' fees it apparently expects to incur in connection with the Debtor's case. The Debtor anticipates that all or substantially all of this sum will be returned to the estate, voluntarily or involuntarily. PAGE 10 of 21 PAGES b. Accounts Receivable 5. The Debtor has collected all of its outstanding accounts receivable, with the exception of an outstanding account receivable that was due from the Debtor's former British subsidiary, Symbolics, Ltd. The assets of Symbolics, Ltd. were liquidated subsequent to the Petition Date in a proceeding which is pending in England. The Debtor is informed and believes that negligible assets will be distributed from the Symbolics, Ltd. estate to creditors. Accordingly, the Debtor believes that its claim against Symbolics, Ltd. is of little, if any, value. c. Avoidance Actions 6. The Debtor has analyzed all potential avoidance causes of action and has brought over ten (10) preference actions. Each of those actions has been concluded and the proceeds realized from settlements approved by this Court have been remitted to the Debtor. 7. As a result of the sale of assets to Princeton, the Debtor has no remaining assets other than the available cash and accounts receivables set forth in the foregoing paragraphs. Since the Princeton Closing, the Debtor has not engaged in any ongoing software or hardware business, but has concentrated its efforts on the orderly wind-down of its affairs. The only remaining task for the Debtor is the distribution of its remaining assets, consisting almost exclusively of cash, to its creditors. PAGE 11 of 21 PAGES CLAIMS AGAINST THE DEBTOR a. Priority Claims 8. This Court set April 29, 1993 as the bar date for the filing of proofs of claim by all creditors asserting a claim against the Debtor which arose prior to the Petition Date. The Debtor has analyzed the proofs of claim filed against it. As a result of its review, the Debtor believes that claims (exclusive of administrative claims which are discussed below) are in excess of $12,000,000. Included within that estimate are employee claims entitled to priority under Section 507(a) of the Bankruptcy Code, which aggregate approximately $63,171.58[FN3] and tax claims entitled to priority under Section 507(a)(7)[FN4] of the Bankruptcy Code which approximate $231,271.70.[FN5] ____________________ 3. The Debtor has prepared Symbolics, Incorporated's Objection To Overstated Employee Priority Claims Under 11 U.S.C. Section 502 And Federal Rule of Bankruptcy Procedure 3007. Depending on the disposition of that objection, these claims could be reduced to $23,635.99. 4. Since this case was filed prior to October 22, 1994, the amendments to the Bankruptcy Code enacted by Pub. L. No. 103-394 do not apply to this case. 5. This Court ruled on February 9,1995 that the claim of the California State Board of Equalization for $315,367.97 was filed late and will therefore be subordinated and treated as an unsecured claim. Accordingly, the State of California's claim is not included in this estimate. Furthermore, the Debtor has prepared Symbolics, Incorporated's First Omnibus Objection To Priority Tax Claims Under 11 U.S.C. Section 502 And Federal Rule Of Bankruptcy Procedure 3007. As a result of that objection, the priority tax claims against the Debtor's estate could be reduced to $165,280.89. PAGE 12 of 21 PAGES b. Priority Claims Without Merit 9. In addition to those priority claims against the estate, other creditors have made priority claims totalling approximately $576,746.69. The Debtor has prepared Symbolics, Incorporated's Objection To Certain Secured And Priority Claims Under 11 U.S.C. Section 502 And Federal Rule Of Bankruptcy Procedure 3007, objecting to the priority status of these claims. The Debtor believes that this objection will successfully strike all of these claims. c. Administrative Claims 10. On information and belief, the Debtor has timely paid all of its post-petition obligations (trade or otherwise). There are, however, a variety of administrative expenses against the Debtor's estate. The Debtor's counsel, Choate, Hall & Stewart, has incurred fees of approximately $427,835.48 (through January 10, 1996), and is likely to incur additional fees and expenses as the Debtor's affairs are wound- down. At the inception of its Chapter 11 case, the Debtor also engaged Hutchins, Wheeler & Dittmar to serve as special counsel with regard to various corporate matters. That firm asserts an administrative claim in the sum of approximately $60,000. The Debtor also engaged Yoshida, Croyle & Sokolski, P.C. to prepare federal and state tax returns and related accounting services, which has a claim for unpaid professional fees in the sum of $38,600.87. Finally, counsel to the Creditors Committee, Testa, PAGE 13 of 21 PAGES Hurwitz & Thibeault, has incurred fees of $147,941 and is likely to incur additional fees and expenses as the Debtor's affairs are wound-down. In addition to the professionals outlined above, two other creditors assert administrative claims. First, under a settlement authorized and approved by this Court on December 16, 1994, Matsco Financial Corporation enjoys a $5,000 administrative claim. Secondly, the County of Los Angeles has an administrative claim of $25,811.49 for post-petition property taxes which were incurred prior to the Princeton Closing. All told, the Debtor has incurred total administrative costs of $705,188.84. 11. The administrative claimants listed above have not filed fee applications with this Court. Indeed, during the three (3) years this case has been pending neither counsel to the Debtor nor counsel to the Committee have received any payment from the Debtor's estate. Because no fee applications have yet been reviewed by the Court, the Debtor requests that this Court retain jurisdiction for the limited purpose of reviewing all fee applications for Debtor's counsel, counsel for the Creditors' Committee, and any other entity filing an administrative claim wishing to be compensated out of the estate. PAGE 14 of 21 PAGES d. Secured and Unsecured Creditors 12. Following the sale of the Debtor's business to Princeton, the Debtor has no secured creditors.[FN6] The Debtor's unsecured creditors have filed claims totalling approximately $11,694,470.13.[FN7] 13. The Debtor has cash on hand of approximately $776,586.11 in its bank account and in the escrow accounts maintained by Choate, Hall & Stewart. The Debtor holds sufficient cash to pay its administrative claimants in full and anticipates making a pro rata distribution of any remaining cash to the Debtor's prepetition priority creditors in order of their priority under the Bankruptcy Code.[FN8] No assets are available for distribution on account of general unsecured claims.[FN9] ____________________ 6. The Georgia Institute of Technology has filed a secured proof of claim in the amount of $1,778.04. The Debtor believes that this claim is unsecured, and has objected to its classification as a secured claim in Symbolics, Incorporated's Objection To Certain Secured And Priority Claims Under 11 U.S.C. Section 502 And Federal Rule Of Bankruptcy Procedure 3007. 7. This amount includes claims by employees above the $2,000 cap for employee priority claims imposed by Section 507(a)(3). It also includes a claim for Deutschmarks which was converted to dollars for calculation purposes using the exchange rate for September 19, 1995. 8. Accordingly, all employee claims entitled to priority under Section 507(a)(3) of the Bankruptcy Code would be paid in full before any pro rata distribution would be made to tax claims entitled to priority under Section 507(a)(7) of the Bankruptcy Code. 9. Alternatively, the Debtor could make a pro rata distribution to all allowed administrative and priority claims. PAGE 15 of 21 PAGES GROUNDS FOR DISMISSAL 14. The dismissal of this case will bring an efficient and complete resolution to this Chapter 11 case. Dismissal will avoid the costs associated with the preparation of a plan and disclosure statement and the confirmation process, which costs the Debtor respectfully submits are unnecessary in this case as the Debtor proposes a distribution of its cash consistent with the priorities of the Bankruptcy Code. Moreover, a liquidating plan would serve no purpose as the funds held by the Debtor are insufficient to pay any claimants other than administrative claims and a pro rata distribution to holders of priority claims and, thus, there would be no impaired class of creditors entitled to vote with respect to any such plan. 15. Conversion of this case to Chapter 7 would not be in the best interests of the Debtor's creditors. Conversion to Chapter 7 would serve no purpose other than to delay any distribution and create increased costs of administration, thereby further depleting the funds available for payment of existing administrative expense claims and a pro rata distribution on account of priority unsecured claims. 16. Section 1112(b) of the Bankruptcy Code authorizes this Court to dismiss or convert a Chapter 11 case "for cause." While Section 1112(b) enumerates several grounds which constitute cause, the list is not exhaustive. See In re Markhon Ind., 100 B.R. 432, 434 (Bankr. N.D. Ind. 1989). Section 1112(b) requires that this Court exercise its sound discretion in PAGE 16 of 21 PAGES determining whether dismissal is in the best interests of creditors and the estate. 17. Similarly, Section 305(a)(1) of the Bankruptcy Code allows the court at any time to dismiss a case if the interests of the creditors and the debtor would be better served by such dismissal. The foremost considerations in determining whether dismissal under Section 305(a)(1) is in the best interests of the debtor and creditors are the efficiency and economy of administration. See In re Michael S. Starbuck, Inc., 14 B.R. 134, 135 (Bankr. S.D.N.Y. 1981). Failure to dismiss this case will only result in a depletion of the assets of the estate as well as the unnecessary delay of distribution to the creditors and further imposition on limited judicial resources. 18. The duties of a trustee, as set forth in Section 704, would be either redundant or irrelevant in this case. Those duties remaining in the case that could be performed by a trustee can be more effectively and swiftly performed by the Debtor, with less cost to its creditors. As the debtor-in- possession, the Debtor has already reduced the property of the estate to cash and has investigated its financial affairs in order to collect on any possible claims. Without limiting the foregoing, the Debtor has commenced, prosecuted, and settled preference claims. While the Debtor has not yet filed its objections to all disputed priority claims, it is in a better position than a trustee to make such objections, since it has already investigated the validity of the claims and determined PAGE 17 of 21 PAGES which of them may be open to challenge. The Debtor also has already prepared such objections and intends to file them shortly. 19. The remaining duties of a trustee would not apply to this case. The Debtor no longer has any business that could be operated or wound up by the trustee. Since the Debtor is a corporation, there could be no discharge proceeding for the trustee to participate in. 11 U.S.C. Section 727(a)(1). 20. While a trustee would not be able to perform any functions that would be helpful to the Debtor's creditors, the attendant expenses involved in conversion of this case to Chapter 7 would draw funds away from the resources from which those creditors will be paid. The pool of cash that currently exists to pay creditors cannot grow, as the Debtor no longer has a business to operate or any other means of generating revenue. Appointment of a trustee would only increase the total administrative expenses that would have to be paid from this existing pool, 11 U.S.C. Sections 330(a), 503(a)(2), further limiting the pro rata distribution among prepetition priority creditors. The Debtor's unsecured creditors would still be unable to recover on their claims. The procedure involved in the conversion of the case, election of a trustee, and continuation of the case would also drain the existing assets of the estate due to the administrative costs from Debtor's counsel and the Creditors' Committee's counsel necessarily incurred in relation to that procedure. PAGE 18 of 21 PAGES 21. Dismissal of this case is therefore in the best interests of the Debtor's creditors. This Motion has been reviewed by both the United States Trustee overseeing this case and counsel for the Creditors Committee prior to its submission to the Court and neither party now opposes dismissal of the case. Furthermore, case law supports the idea that a debtor should generally be free to voluntarily dismiss its own case, provided that its creditors are not harmed thereby. See In re Geller, 74 B.R. 685, 690 (Bankr. E.D. Penn. 1987) (noting that the court would "grant such a motion [to voluntarily dismiss] in all but extraordinary situations"); In re Kimball, 19 B.R. 301, 302 (Bankr. D. Maine 1982)(refusing to allow a voluntary dismissal only because of the "substantial legal prejudice" that creditors would suffer if the debtor was allowed to file a new petition which would lead to a more encompassing discharge). The creditors in this case would not be harmed, and would in fact be benefitted by dismissal of the case, which would lead to the maximum possible distribution to the creditors entitled to distribution under the priority provisions of the Bankruptcy Code. 22. On facts virtually identical to the case at bar, this Court in In re Edgewood Associates Limited Partnership, Chapter 11 Case No. 92-19992-WCH, ordered dismissal of the Chapter 11 case in order to permit the remaining assets of the estate to be distributed to pay administrative claims in full and PAGE 19 of 21 PAGES to make a pro rata distribution to prepetition priority creditors. While that case involved an original motion to dismiss that was brought by the United States Trustee and was assented to by the Debtor, this case comparably involves a motion by the Debtor which is not opposed by the United States Trustee or the Official Committee of Unsecured Creditors. In both cases, the best interests of the creditors in receiving the maximum possible distribution with a minimum of needless delay can be met by dismissal of the case. 23. If this case is dismissed, the Debtor shall distribute its remaining cash assets first in payment of allowed administrative expenses and then any remaining cash assets pro rata to priority creditors in the same order of priority as specified in Bankruptcy Code Section 507. The Debtor does not anticipate that any assets will remain after payment to priority creditors. Dismissal will, therefore, result in distribution of the Debtor's assets consistent with the provisions of the Bankruptcy Code without the need for the estate to incur the costs associated with a formal liquidation proceeding and without the need for any further delay of such distributions. 24. In order to ensure a swift distribution of the Debtor's remaining assets, the Debtor will commit to a distribution date of 60 days after the date that an order is entered granting dismissal of this case. The Debtor hereby commits to send checks in accordance with the distribution set forth herein on or before such distribution date. After the PAGE 20 of 21 PAGES distribution date, the Debtor shall furthermore supply this Court with an affidavit from its counsel, Choate, Hall & Stewart that such distribution has been made. WHEREFORE, the Debtor respectfully requests that this Court grant this Motion to Dismiss and grant the Debtor such other and further relief as this Court deems just and proper. SYMBOLICS, INC., By its counsel, /s/ Douglas R. Gooding Paul D. Moore, P.C. (bma 02282) Douglas R. Gooding (bma 04607) CHOATE, HALL & STEWART Exchange Place 53 State Street Boston, Massachusetts 02109 (617) 248-5000 Dated: January 18, 1996 PAGE 21 of 21 PAGES -----END PRIVACY-ENHANCED MESSAGE-----