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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MASSACHUSETTS EASTERN DIVISION ____________________________________ ) In re: ) ) NEW ENGLAND COMPOUNDING ) CHAPTER 11 PHARMACY, INC., ) CASE NO. 12-19882-HJB ) Debtor. ) ____________________________________) DEBTORS 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-inpossession (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).

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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 Companys 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 Companys conduct of this Chapter 11 case. The Companys 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

Companys 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 Clerks Office). To relieve the Court and the Clerks 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 Companys 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. 1015774 (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 Clerks 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) (ii) (iii) (iv) notice of commencement; notice of objections to claims; notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and 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 Clerks Office a certificate or affidavit of service that includes either a copy of the notice served or the docket 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) (D)

Maintain copies of all proofs of claim and proofs of interest filed in this Chapter 11 case; 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; the date received; the claim number assigned; and the asserted amount and classification of the claim;

(ii) (iii) (iv) (E)

Implement necessary security measures to ensure the completeness and integrity of the claims register, including, but not limited to, keeping adequate backups of electronic data; As requested by the Clerks Office, transmit to the Clerks Office a copy of the claims register; Maintain an up-to-date mailing list for all entities that have filed a proof of claim, proof of interest, or request for notice, which list shall be available upon request of a party-in-interest or the Clerks Office; Provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; Respond to creditors inquiries regarding their claims or the claims process; Record all transfers of claims and provide notice of such transfers as required by Bankruptcy Rule 3001(e); Prepare any exhibits for objections to claims, as requested; Keep updated records regarding the administration of claims in the Companys Chapter 11 case; To the extent necessary, gather data in conjunction with the preparation of the Companys schedules of assets and liabilities and statement of financial affairs; Assist the Company with other tasks as necessary to reconcile and resolve claims; Mail voting documents to claimants, and serve notice thereof as appropriate; Respond to claimants inquiries regarding the disclosure statement and the voting procedures (restricting answers only to information contained in the plan documents); 5

(F) (G)

(H)

(I) (J) (K) (L) (M)

(N) (O) (P)

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(Q)

Receive, examine, and tabulate returned ballots in accordance with established procedures, and prepare a certified report of voting results for delivery to the Court; Provide such other noticing, disbursing and related administrative services as may be required from time to time by the Company; and 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 Clerks Office or the Court may at any time prescribe.

(R)

(S)

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 courts premises, which pertain to the provision of notices, dockets, calendars, and other administrative information to parties in cases filed under the provisions 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 Clerks 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 the debtor, 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 DRCs 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 Companys 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 DRCs 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 DRCs 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 DRCs services are terminated, it shall continue to perform its duties until the

completion of a transition with the Clerks 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 Companys 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 Companys 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; By accepting employment in this Chapter 11 case, DRC waives any rights to receive compensation from the United States Government; and In its capacity as the claims, noticing, and balloting agent in this Chapter 11 case, DRC will not be an agent of the United States and will not act on behalf of the United States.

(B)

(C)

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 Companys 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 creditors 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 Courts 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 #090780 Keri L. Wintle, Esq. BBO #676508 Murtha Cullina LLP 99 High Street, 20th Floor Boston, MA 02110 (617) 457-4000 Telephone (617) 482-3868 Facsimile dcohn@murthalaw.com kwintle@murthalaw.com

Dated: December 21, 2012

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MASSACHUSETTS EASTERN DIVISION ____________________________________ ) In re: ) ) NEW ENGLAND COMPOUNDING ) CHAPTER 11 PHARMACY, 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-inpossession (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.
1

The Application is GRANTED as set forth herein.

Capitalized 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 Companys 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. entirety. 5. The Company is authorized to pay DRC in the ordinary course of business The Agreement, attached to the Application as Exhibit B, is approved in its

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 Companys 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 DRCs 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 Clerks Office, the Company, and the Companys counsel and cause all original proofs of claim and computer information to be turned over to the Clerks Office or another claims agent with the advice and consent of the Clerk, the Company, and the Companys counsel. 9. Upon the closing of the Companys case, DRC shall be relived of any obligation

to retain claims and solicitation materials in connection with the Companys case and may deliver any such materials to the Clerks 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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