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WILLIAM S. HATFIELD
Director
GIBBONS
Gibbons P.C.
One Gateway Center
Newark, New Jersey 07102-5310
Direct: (973) 596-4511 Fax: (973) 639-8320
whatfieldeggibbonslaw.com
May 9, 2017
VIA ECF
The Honorable Christopher S. Sontchi
United States Bankruptcy Court
824 North Market Street, 5th Floor
Wilmington, DE 19801
Re: In re: Maxus Energy Corporation, et al., No. 16-11501 (Bankr. D. Del.)
Dear Judge Sontchi:
This firm is counsel to the group of parties referred to as the Gibbons Parties in the
above-referenced matter. The Gibbons Parties write concerning a dispute with Debtors relating
to the (Amended) Stipulation and Consent Order For Tierra Solutions, Inc. To Share Certain Site
Data With Parties In Interest [Docket No. 714] (the "Amended Consent Order") entered by this
Court on January 9, 2017. This dispute was initially raised in the Gibbons' Parties Written
Objections to the Amended Disclosure Statement [Docket No. 1168] and discussed at the April
18, 2017 Omnibus Hearing during arguments on the adequacy of the Amended Disclosure
Statement.'
Specifically, Article VI (C) of the Amended Plan seeks to terminate the rights of the
Gibbons Parties under the Amended Consent Order while transferring all of the Debtors' assets
to the Liquidating Trust, including its books and records. The Amended Plan expressly provides
that the Liquidating Trust is not a successor to the Debtors and thus, would have no obligations
to perform under the Amended Consent Order, which was negotiated and agreed to by the
Debtors, the Gibbons Parties and certain other creditors. See Amended Plan, Art. VI(C). [Docket
No. 1258]. Under the Amended Consent Order, the Debtors are required to provide copies of
certain non-privileged environmental site data and documents relating to the Diamond Alkali
Superfund Site to the parties. This information was initially requested by the Gibbons Parties on
January 9, 2017. The Gibbons Parties sent a letter to Debtors' counsel on March 31, 2017
(attached hereto as Ex. 1) seeking the production of documents under the Amended Consent
Order or, in the alternative, a Certification that all non-privileged responsive documents have
already been produced. That letter also sought a Privilege Log for all site data and documents
withheld by Debtors as privileged in this matter. Although Debtors have referred the Gibbons
1 The Gibbons Parties did not press their argument on the Amended Consent Order in the afternoon session of the
Disclosure Statement hearing. Rather, after consultation with Debtors during the lunch break, we agreed to address
the dispute concerning the Amended Consent Order separate and apart from the Disclosure Statement and raise it in
a separate submission to the Court. This letter is intended to do so and the Gibbons Parties hereby rely upon and
incorporate their arguments in their prior Objection [Docket No. 1168] as if set forth herein.
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GIBBONS P.C.
The Honorable Christopher S. Sontchi
May 9, 2017
Page 2
Parties to the millions of pages ot documents produced by Debtors in these Chapter 11 Cases, to
date, the Gibbons Parties have not received the requested Certification or Privilege Log.
From at least February 7, 2017 to May 2, 2017, we met and conferred with Debtors on
about a half dozen occasions and exchanged numerous emails on this matter, but we have not
been able to resolve the dispute. The email exchanges with Debtors on May 1-2, 2017 (attached
hereto as Ex. 2) crystalize the issue at hand. The Gibbons Parties understand that Debtors do not
want the Amended Consent Order to "live on forever" and they would prefer not to pass on those
obligations to any others via the Amended Plan. Rather, Debtors wish to terminate their
obligations upon the effective date of the Amended Plan. At this time, the Gibbons Parties do
not object to that proposed term in the Plan conditioned on Debtors fully completing their
obligations under the Amended Consent Order — which obligations are not yet satisfied. Without
a Certification from Debtors of their good faith efforts to search for the requested site data and
documents and written confirmation that all non-privileged documents have been provided — the
Gibbons Parties (and other interested parties) are left guessing as to whether Debtors have in fact
completed their obligations under the Order. To the extent they "complied" with the requests
propounded under the Amended Consent Order, Debtors have largely referred the Gibbons
Parties to the millions of pages of documents produced by the Debtors in these Chapter 11 Cases
to date. However, Debtors have not specifically identified which bates ranges in the bankruptcy
production are responsive to each individual request under the Amended Consent Order, leaving
the Gibbons Parties with no way to evaluate whether the Debtors have produced all of the
relevant documents.
Prior to termination of Debtors' obligations, the Gibbons Parties seek confirmation from
Debtors in a written Certification (in a form substantially similar to that attached hereto as Ex. 3)
that they have completed a diligent search and review to fulfill their obligations under the
Amended Consent Order, and that Debtors also produce a Privilege Log of the specific
documents withheld from production based upon that diligent search and review in this
proceeding.2 Further, without a log of the specific documents Debtors chose to withhold from
production in this matter under a claim of privilege, the parties are left in the dark as to whether
any documents were withheld, the amount of data and number of documents that are both
relevant and responsive to the requests but were not produced, the type of site data or documents
and subject matter(s) covered by those withheld materials, and what the specific claim of
privilege is that Debtors assert as the basis to withhold such data or information.
2 Of note, Debtors have agreed to provide certain additional sampling data obtained from Newark Bay in late 2016
under the Amended Consent Order, which request is still pending. If Debtors are unable to provide that sampling
data prior to confirmation of the Amended Plan, we ask that the Court require the Liquidating Trust to provide that
data when it becomes available.
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GIBBONS P.C.
The Honorable Christopher S. Sontchi
May 9, 2017
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This simple request to Debtors is quite mundane - as with any production, it is customary
that the producing party provide a certification and a log of specific materials withheld
explaining the subject matter(s) and bases for any claim of privilege. To date, Debtors have not
provided any reason as to why they cannot provide a written confirmation here. Further, instead
of providing a log of allegedly privileged materials withheld under the Amended Consent Order,
Debtors have punted and referenced a stale and flawed privilege log from an entirely different
proceeding, the New Jersey State Court litigation, which was provided to NJDEP, OCC, and
others, many years ago. That privilege log was challenged by both Plaintiff NJDEP and
Defendant OCC and found to be suspect by Special Master Corodemus. Moreover, as noted
above, the discovery requested under the Amended Consent Order relates only to site data and
information, not to the business and litigation issues addressed in the NJ litigation. As such, the
prior State Court log is neither reliable nor responsive to the requests under the Amended
Consent Order. Debtors should provide a specific Privilege Log to reflect its diligent efforts to
review and evaluate the 49 topics of site data and information specifically requested in this
bankruptcy proceeding.
Accordingly, to the extent the Debtors are unable to certify full compliance before the
Effective Date of the Amended Plan, the Gibbons Parties' rights to receive the requested nonprivileged documents should not be terminated. If there is no Certification or Privilege Log, the
Liquidating Trust, as the party obtaining access to the Debtors' documents, should be required to
comply and fulfill Debtors' obligations under the Amended Consent Order. The Amended
Consent Order provides for the Gibbons Parties and others to pay the costs of producing such
documents and therefore there is no adverse impact on requiring the Liquidating Trust to retain
those obligations.
In sum, the Gibbons Parties respectfully seek the assistance of the Court to resolve the
dispute among the parties to ensure Debtors' compliance with the Amended Consent Order.
Your Honor's time and attention to this matter are greatly appreciated.
Respectfully submitted
_Wil iam S. Hatfi
Director
Enclosures
All Participants via ECF Filing
cc:
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
Chapter 11
MAXUS ENERGY CORPORATION, et al.,1
Case No. 16-11501 (CSS)
Debtors.
(Jointly Administered)
DECLARATION OF COMPLIANCE WITH DISCOVERY OBLIGATIONS
UNDER AMENDED CONSENT ORDER
I, _____________________, hereby declare as follows:
1. I am an attorney with the law firm of Morrison & Foerster LLP, counsel for debtors and
debtors-in-possession in the above-captioned matter.
2. I provide this declaration in connection with the (Amended) Stipulation and Consent
Order for Tierra Solutions, Inc. To Share Certain Site Data With Parties in Interest [Docket No.
714] (the “Amended Consent Order”).
3. As required by the Amended Consent Order, debtors have conducted a diligent search of
the files under their custody or control, and have produced copies of all non-privileged
documents that are responsive to the Gibbons Parties’ requests under the Amended Consent
Order.
4. As required by the Amended Consent Order, debtors have conducted a diligent search
and have produced all raw and validated data that was collected by one or more of the debtors or
their agents related to any Operable Unit of the Diamond Alkali Site.
1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, include: Maxus Energy Corporation (1531), Tierra Solutions, Inc. (0498), Maxus International Energy
Company (7260), Maxus (U.S.) Exploration Company (2439), and Gateway Coal Company (7425).
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I certify that the foregoing statements made by me are true. I am aware that if any of the
foregoing statements made by me are willfully false, I am subject to punishment.
Morrison & Foerster LLP
Counsel for Debtors and
Debtors-in-Possession
_______________________________
Dated: May __, 2017
2
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
Chapter 11
MAXUS ENERGY CORPORATION, et al.,1
Case No. 16-11501 (CSS)
(Jointly Administered)
Debtors.
CERTIFICATE OF SERVICE
1.
I, Natasha M. Songonuga, hereby certify that I am not less than 18 years of age
and am not a party in this matter.
2.
On May 9, 2017, I caused to be electronically filed and served through the Court’s
CM/ECF system a letter to Judge Sontchi regarding the (Amended) Stipulation and Consent
Order for Tierra Solutions, Inc. to Share Certain Site Data with Parties in Interest [Docket No.
714] on all parties who have electronically entered a notice of appearance.
I certify that the foregoing statements made by me are true. I am aware that if any of the
above statements are false, I am subject to punishment.
Dated: May 9, 2017
Wilmington, Delaware
GIBBONS P.C.
By: /s/ Natasha M. Songonuga
Natasha M. Songonuga, Esq. (Bar No. 5391)
300 Delaware Ave, Suite 1015
Wilmington, DE 19801-1761
Telephone: (302) 518-6300
Facsimile: (302) 429-6294
E-mail: [email protected]
Counsel for Ashland LLC, ISP Chemicals LLC,
Mallinckrodt LLC, National-Standard LLC, Harris
Corporation and Givaudan Fragrances
Corporation
1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, include: Maxus Energy Corporation (1531), Tierra Solutions, Inc. (0498), Maxus International Energy
Company (7260), Maxus (U.S.) Exploration Company (2439), and Gateway Coal Company (7425).