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UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MASSACHUSETTSEASTERN DIVISION

____________________________________

)

In re: ))

NEW ENGLAND COMPOUNDING ) CHAPTER 11PHARMACY, INC., ) CASE NO. 12-19882-HJB

)

Debtor. )____________________________________)

DEBTOR’S APPLICATION TO RETAIN DONLIN, RECANO & CO., INC.

AS CLAIMS, NOTICING AND BALLOTING AGENT

( REQUEST FOR EMERGENCY DETERMINATION )

New England Compounding Pharmacy, Inc., the above-captioned debtor and debtor-in-

possession (the “Company”), hereby respectfully submits this application (the “Application”) for

an order authorizing the appointment of Donlin, Recano & Co., Inc. (“DRC”) as claims, noticing

and balloting agent. Pursuant to MLBR 9013-1(g), the Company respectfully requests that this

Court make an emergency determination with respect to this Application so that DRC can be

compensated for the services it has already begun to render concerning service of pleadings and

notices, and in the event of denial of the Application, the Company can comply with the deadline

to file a creditor matrix under MLBR 1007-1(a). In support of this Application, the Company

submits the Affidavit of Colleen McCormick (the “McCormick Affidavit”), attached to this

Application as Exhibit A.

In further support of this Application, the Company states as follows:

Background

1. On December 21, 2012, the Company filed a voluntary petition for relief under

chapter 11 of the Bankruptcy Code (the “Petition Date”).

Case 12-19882 Doc 5 Filed 12/21/12 Entered 12/21/12 18:22:15 Desc MainDocument of 13

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2. The Company continues to own and manage its assets as a debtor-in-possession

pursuant to §§ 1107(a) and 1108 of the Bankruptcy Code.

3. To date, no trustee, examiner, creditors’ committee, or other official committee

has been appointed in the Company’s Chapter 11 Case.

4. The Company is a compounding pharmacy which combines ingredients to create

specific formulations of pharmaceutical products. Prior to the Petition Date, numerous

individuals across the country were stricken with fungal meningitis attributed to contaminated

products distributed by the Company. In early October, NECC initiated a nationwide recall of

potentially contaminated product and, in cooperation with regulatory authorities, ceased

operation. More than 100 lawsuits have been filed and hundreds more are expected in

connection with this tragic occurrence.

5. Through this Chapter 11 case, NECC seeks to forge a consensual, comprehensive

resolution of these claims in the form of a Chapter 11 plan establishing a compensation fund for

meningitis claimants based on agreements to be reached among them, the Company, its insurers

and other parties with potential liability for the meningitis cases. To spearhead this effort, the

directors and shareholders appointed Keith D. Lowey of Verdolino & Lowey, P.C. as

independent director and chief restructuring officer with plenary and exclusive authority over

matters related to personal injury claims and the Company’s conduct of this Chapter 11 case.

The Company’s goal is to provide a greater, quicker, fairer and less expensive payout to its

creditors than they could achieve through piecemeal litigation.

Jurisdiction and Venue

6. This Court has jurisdiction over this matter pursuant to §§ 157 and 1334 of title

28 of the United States Code (the “Judicial Code”). Venue is proper pursuant to §§ 1408 and


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1409 of the Judicial Code. This matter is a core proceeding pursuant to § 157(b) of the Judicial

Code.

7. The statutory predicates for the relief requested in this Application are 28 U.S.C.

§ 156(c), Rule 2002 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”),

and Rule 2014-1 of the Local Rules of Bankruptcy Practice and Procedure for the United States

Bankruptcy Court for the District of Massachusetts (the “Local Rules”).

Relief Requested

8. The large number of creditors and other parties-in-interest involved in the

Company’s Chapter 11 case would, absent the appointment of a claims agent, impose heavy

administrative and other burdens upon this Court and the office of the Clerk of the Court (the

“Clerk’s Office”). To relieve the Court and the Clerk’s Office of these burdens, the Company

proposes to engage DRC to provide the customary services of a claims, noticing, and balloting

agent in this district pursuant to the Services Agreement between the Company and DRC

executed on November 28, 2012, and attached hereto as Exhibit B (the “Agreement”). The

Company proposes to retain DRC on the terms and conditions set forth in the Agreement, with

the cost of such services to be paid from the Company’s estates as contemplated by 28 U.S.C. §

156(c).

Basis for Requested Relief

9. DRC is a firm that specializes in providing claims management, case

administration, vote solicitation and tabulation, noticing and other administrative and consulting

services in Chapter 11 cases. DRC is one of the premier Chapter 11 administrative agents with

substantial experience in voting, claims administration and ballot tabulation. DRC has acted as

the claims, noticing, and balloting agent in numerous cases of comparable size, including, among

others, In re Credit-Based Asset Servicing and Securitization LLC, et al., Case No. 10-16040


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(ALG) (Bankr. S.D.N.Y. 2010); In re Metro Goldwyn-Mayer Studios Inc., et al., Case No. 10-

15774 (SMB) (Bankr. S.D.N.Y.2010); In re Graphics Properties Holdings, Inc (f/k/a Silicon

Graphics, Inc.), et al., Case No. 09-11701 (MG) (Bankr. S.D.N.Y. 2009); In re Quebecor World

(USA) Inc., et al., Case No. 08-10152 (JMP) (Bankr. S.D.N.Y. 2008); In re Ciena Capital LLC,

et al., Case No. 08-13783 (AJG) (Bankr. S.D.N.Y. 2008); In re M. Fabrikant & Sons, Inc., et al.,

Case No. 06-12737 (SMB) (Bankr. S.D.N.Y. 2006); and In re Syratech Corporation, et al, Case

No. 05-11062 (RS) (Bankr. E.D. Mass. 2005). In light of such experience and the efficient and

cost-effective methods it has developed, the Company, its estate and creditors will clearly benefit

from the appointment of DRC. The Company seeks to engage DRC to, among other things,

transmit certain designated notices, maintain claims files and the claims register, and mail and

tabulate ballots in connection with any proposed Chapter 11 plan. The Company proposes to

retain DRC pursuant to terms that its principals indicate are customary in the industry.

10. At the request of the Court, the Company, or the Clerk’s Office, DRC will

provide the following services:

(A) Prepare and serve required notices and pleadings in this Chapter 11

case, which may include, but are not limited to:

(i) notice of commencement;

(ii) notice of objections to claims;

(iii) notice of any hearings on a disclosure statement andconfirmation of a plan of reorganization; and

(iv) other miscellaneous notices or pleadings to any entities as

the Company or the Court may deem necessary or

appropriate for the orderly administration of this Chapter

11 case;

(B) Within five days after the mailing of a particular notice or

pleading, file with the Clerk’s Office a certificate or affidavit of

service that includes either a copy of the notice served or thedocket number(s) and title(s) of the pleading(s) served, an

alphabetical list of persons to whom the notice was mailed, and the

date of mailing;


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(C) Maintain copies of all proofs of claim and proofs of interest filed in

this Chapter 11 case;

(D) Maintain official claims registers by docketing all proofs of claim

and proofs of interest on claims registers, including the following

information:

(i) the name and address of the claimant and any agent thereof,if the proof of claim or proof of interest was filed by an

agent;

(ii) the date received;

(iii) the claim number assigned; and

(iv) the asserted amount and classification of the claim;

(E) Implement necessary security measures to ensure the completenessand integrity of the claims register, including, but not limited to,

keeping adequate backups of electronic data;

(F) As requested by the Clerk’s Office, transmit to the Clerk’s Office a

copy of the claims register;

(G) Maintain an up-to-date mailing list for all entities that have filed aproof of claim, proof of interest, or request for notice, which list

shall be available upon request of a party-in-interest or the Clerk’s

Office;

(H) Provide access to the public for examination of copies of theproofs of claim or interest without charge during regular business

hours;

(I) Respond to creditors’ inquiries regarding their claims or the claimsprocess;

(J) Record all transfers of claims and provide notice of such transfersas required by Bankruptcy Rule 3001(e);

(K) Prepare any exhibits for objections to claims, as requested;

(L) Keep updated records regarding the administration of claims in the

Company’s Chapter 11 case;

(M) To the extent necessary, gather data in conjunction with thepreparation of the Company’s schedules of assets and liabilities

and statement of financial affairs;

(N) Assist the Company with other tasks as necessary to reconcile and

resolve claims;

(O) Mail voting documents to claimants, and serve notice thereof asappropriate;

(P) Respond to claimants’ inquiries regarding the disclosure statement

and the voting procedures (restricting answers only to information

contained in the plan documents);


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(Q) Receive, examine, and tabulate returned ballots in accordance with

established procedures, and prepare a certified report of votingresults for delivery to the Court;

(R) Provide such other noticing, disbursing and related administrative

services as may be required from time to time by the Company;

and

(S) Comply with applicable federal, state, municipal, and local

statutes, ordinances, rules, regulations, orders, and other

requirements; and promptly comply with such further conditions

and requirements as the Clerk’s Office or the Court may at anytime prescribe.

11. Section 156(c) of the Judicial Code expressly authorizes the Court to use non-

court services for the administration of bankruptcy cases, stating:

Any court may utilize facilities or services, either on or off the court’spremises, which pertain to the provision of notices, dockets, calendars, and

other administrative information to parties in cases filed under theprovisions of title 11, United States Code, where the costs of such

facilities or services are paid for out of the assets of the estates and are not

charged to the United States.

28 U.S.C. § 156(c).

12. Further, Bankruptcy Rule 2002, which generally regulates what notices must be

provided to creditors and parties-in-interest in bankruptcy cases, permits the Court to direct that

some person other than the Clerk’s Office give notice of the various matters described above.

For example, Bankruptcy Rule 2002(a) provides:

[T]he clerk, or some other person as the court may direct, shall give thedebtor, the trustee, all creditors and indenture trustees at least 21 days’

notice by mail . . . .

Fed. R. Bankr. P. 2002(a).

13. The Company has more than 200 creditors (albeit many of which hold contingent

and/or unliquidated claims). Accordingly, § 156(c) of the Judicial Code, and Bankruptcy Rule

2002 expressly authorize DRC’s retention.


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Compensation

14. The Company proposes to retain DRC at the rates set forth in the Agreement and

to pay DRC for its services and to reimburse DRC for its reasonable expenses, from the

Company’s estate in accordance with § 156(c) of the Judicial Code and § 503(b)(1)(A) of the

Bankruptcy Code. The rates billed by DRC in connection with this appointment will not exceed

the rates set forth in the Agreement, except to the extent such amounts are subject to ordinary

increase in accordance with the Agreement. The Company believes that the compensation to be

paid to DRC pursuant to the Agreement is fair and reasonable.

15.

The Company submits that the fees and expenses incurred by DRC will be

administrative in nature and thus are not subject to the standard fee application procedures of

professionals retained by chapter 11 debtors. As such, the Company requests authorization to

compensate DRC, without further order of this Court, for services rendered upon DRC’s

submission of monthly invoices to the Company that summarize, in reasonable detail, the

services for which compensation is sought.

16. If the Company objects to any of DRC’s invoices, the Company will attempt to

resolve its concerns with DRC and if a consensual resolution is not possible, the Company will

schedule a hearing before the Court to consider the disputed invoice. In such case, the Company

will remit to DRC only the undisputed portion of the invoice and, if applicable, will pay the

remainder to DRC upon resolution of the disputed portion, as mandated by this Court. To the

extent DRC requires redress for non-payment of its fees and expenses, it will seek relief from the

Court.

17. If DRC’s services are terminated, it shall continue to perform its duties until the

completion of a transition with the Clerk’s Office or any successor notice, claims, or balloting

agent.


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Indemnification

18. As part of the overall compensation payable to DRC under the terms of the

Agreement, the Company has agreed to certain indemnification obligations. The Agreement

provides that the Company will indemnify and hold harmless DRC, its affiliates, and each of

their respective officers, members, directors, agents, consultants, and employees under certain

circumstances specified in the Agreement. This indemnification, however, will not extend to

acts of gross negligence or willful misconduct by DRC. Both the Company and DRC believe

such provisions are customary and reasonable for claims, noticing, and balloting agents retained

in Chapter 11 cases.

Disinterestedness 19. To the best of the Company’s knowledge, other than as set forth in the

McCormick Affidavit, DRC has not represented and has no relationship with: (a) the Company;

(b) its creditors or equity security holders; (c) any other parties in interest in this Chapter 11 case;

(d) the respective attorneys and accountants of any of the foregoing; or (e) the United States

Trustee or any person employed in the Office of the United States Trustee for the District of

Massachusetts, in any matter relating to this Chapter 11 case.

20. As set forth in the McCormick Affidavit, DRC believes, to the best of its

knowledge, that it: (a) neither holds nor represents any interest adverse to the Company or the

Company’s estate on matters for which it is to be retained; (b) has no connection with the

Company, its creditors, or any other party in interest on matters for which it is to be retained; and

(c) is a “disinterested person” as such term is defined in § 101(14) of the Bankruptcy Code.

21. DRC will conduct an ongoing review of its files to ensure that no conflicts or

other disqualifying circumstances exist or arise. If any new facts or relationships are discovered,

DRC will supplement its disclosure to the Court.


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22. Pursuant to the McCormick Affidavit, DRC further represents that:

(A) It will not consider itself employed by the United States

Government and shall not seek any compensation from the United

States Government in its capacity as the claims, noticing, and

balloting agent in this Chapter 11 case;(B) By accepting employment in this Chapter 11 case, DRC waives

any rights to receive compensation from the United States

Government; and

(C) In its capacity as the claims, noticing, and balloting agent in thisChapter 11 case, DRC will not be an agent of the United States and

will not act on behalf of the United States.

23. DRC will not employ any past or present employees of the Company in

connection with its work in this Chapter 11 case.

24. Based upon the foregoing, the Company believes that the retention of DRC is

essential, appropriate, and in the best interests of the Court, the Company, the Company’s

creditors, and all other parties-in-interest.

Emergency Consideration is Warranted

25. Pursuant to MLBR 9013-1(g), the Court may consider this Application on an

emergency basis where exigent circumstances are present justifying such relief. In the event the

Application is not allowed, the Company must be able to comply with the deadline set forth in

MLBR 1007-1(a), which sets forth the deadline for filing the creditor’s matrix, and which occurs

prior to the passage of the standard notice period applicable to the Application. Therefore, the

circumstances justify an emergency determination of the Application.

Notice

26. The Company has served this Application by the Court’s ECF System and/or

first-class mail, postage prepaid, on (a) the taxing authorities, (b) the 20 largest unsecured

creditors, (c) the Office of the United States Trustee, and (d) all parties who have filed a notice of

appearance in this case. In light of the relief requested herein, the Company submits that no


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other or further notice is required. No request for the relief requested herein has been made to

any other Court.

WHEREFORE, the Company respectfully requests that the Court enter an order, (i)

authorizing the retention and employment of DRC as the claims, noticing and balloting agent in

this Chapter 11 case in accordance with the terms of the Agreement; and (ii) granting such other

and further relief as this Court deems just and proper.

Respectfully submitted,

NEW ENGLAND COMPOUNDING PHARMACY,INC.,

By its attorneys,

/s/ Daniel C. Cohn

Daniel C. Cohn, Esq. BBO #090780Keri L. Wintle, Esq. BBO #676508

Murtha Cullina LLP

99 High Street, 20th

Floor

Boston, MA 02110(617) 457-4000 Telephone

(617) 482-3868 Facsimile

[email protected]: December 21, 2012 [email protected]


mailto:[email protected]




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UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF MASSACHUSETTSEASTERN DIVISION

____________________________________

)

In re: ))

NEW ENGLAND COMPOUNDING ) CHAPTER 11PHARMACY, INC., ) CASE NO. 12-

)

Debtor. )____________________________________)

ORDER AUTHORIZING THE DEBTOR TO RETAIN DONLIN, RECANO & CO., INC.

AS CLAIMS, NOTICING AND BALLOTING AGENT

Upon the application (the “Application”)

1

of the above-captioned debtor and debtor-in-

possession (the “Company”) for an order (this “Order”) authorizing the Company to retain

Donlin, Recano & Co., Inc. (“DRC”) as claims, noticing, and balloting agent; and upon the

McCormick Affidavit; and it appearing that this Court has jurisdiction to consider the

Application pursuant to 28 U.S.C. §§ 157 and 1334; and it appearing that venue of this Chapter

11 case and the Application in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and

it appearing that this matter is a core proceeding pursuant to 28 U.S.C. § 157(b); and this Court

having determined that the relief requested in the Application is in the best interests of the

Company, its estate, creditors, and other parties-in-interest; and it appearing that proper and

adequate notice of the Application has been given under the circumstances and that no other or

further notice is necessary; and after due deliberation thereon; and good and sufficient cause

appearing therefor;

IT IS HEREBY ORDERED THAT:

1. The Application is GRANTED as set forth herein.

1Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Application.


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2. Pursuant to 28 U.S.C. § 156(c), the Company is authorized to retain and employ

DRC as the claims, noticing, and balloting agent in the Company’s Chapter 11 case upon the

terms and conditions set forth in the Application and the Agreement as of the Petition Date.

3. DRC is authorized to take such other actions as are reasonably necessary to

comply with all duties set forth in the Application and the Agreement in accordance with this

Order.

4. The Agreement, attached to the Application as Exhibit B, is approved in its

entirety.

5.

The Company is authorized to pay DRC in the ordinary course of business

without approval of the Court and without the necessity for DRC to file an application for

reimbursement with the Court.

6. DRC will serve monthly invoices on the Company, counsel for the Company, the

Office of the United States Trustee, and any official committees that may be appointed in this

case. Without further order of this Court, the fees and expenses of DRC incurred in performance

of the services set forth in the Agreement are to be treated as an administrative expense of the

Company’s estate and shall be paid by the Company in the ordinary course of business after the

submission of an invoice in reasonable detail describing the basis for such fees and expenses,

unless the Company or any other party-in-interest objects to the invoice and cannot resolve their

objection directly with DRC, in which case the Company will schedule a hearing before the

Court to consider the disputed invoice. In such case, the Company shall remit to DRC only the

undisputed portion of the invoice and, if applicable, shall pay the remainder to DRC upon the

resolution of the disputed invoice, as mandated by this Court.


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7. If this case is converted to a case under Chapter 7 of the Bankruptcy Code, DRC

will continue to be paid for its services until all claims in this case have been processed; and if

DRC’s services are necessary in the converted Chapter 7 case, DRC will continue to be paid in

accordance with 28 U.S.C. § 156(c) upon the terms of the Agreement and this Order.

8. If DRC is unable to provide the services set forth in the Application and the

Agreement for any reason, DRC will immediately notify the Clerk’s Office, the Company, and

the Company’s counsel and cause all original proofs of claim and computer information to be

turned over to the Clerk’s Office or another claims agent with the advice and consent of the

Clerk, the Company, and the Company’s counsel.

9. Upon the closing of the Company’s case, DRC shall be relived of any obligation

to retain claims and solicitation materials in connection with the Company’s case and may

deliver any such materials to the Clerk’s Office without further order of this Court.

10. The Company is authorized and empowered to take all actions necessary to

implement the relief granted in this Order.

11. Notwithstanding any applicability of any Bankruptcy Rules, the terms and

conditions of this Order shall be immediately effective and enforceable upon its entry.

12. Notwithstanding anything to the contrary in the Agreement, during the pendency

of this bankruptcy case, this Court shall retain jurisdiction with respect to all matters arising from

or relating to the interpretation or implementation of this Order or of the Agreement.

Dated: _____________, 2012 __________________________________________

Boston, MA UNITED STATES BANKRUPTCY JUDGE


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