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IN THE UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF TENNESSEE ) ) Chapter 11 CHURCH STREET HEALTH ) Case

No. 12-01573 MANAGEMENT, LLC, et al., ) Judge Lundin ) Jointly Administered1 Debtors. ) ) OFFICIAL UNSECURED CREDITORS ) COMMITTEE, ) ) Plaintiff, ) ) v. ) Adv. Pro. No. ___________ ) SSO FUNDING CORP.; SSH FUNDING CORP.; ) CIT HEALTHCARE LLC, AS COLLATERAL ) AGENT AND ADMINISTRATIVE AGENT; and ) AMERICAN CAPITAL, LTD. AS COLLATERAL ) AGENT, ) ) Defendants. ) ______________________________________________________________________________ COMPLAINT OF THE OFFICIAL UNSECURED CREDITORS COMMITTEE TO DETERMINE THE VALIDITY, PRIORITY, OR EXTENT OF LIENS OR OTHER INTEREST IN PROPERTY AND FOR DECLARATORY JUDGMENT ______________________________________________________________________________ Plaintiff, the Official Unsecured Creditors Committee for Church Street Health Management, LLC, et al. ("Plaintiff" or "Committee"), Debtors in the above-captioned jointly administered cases, states as its Complaint against Defendants SSO Funding Corp., SSH Funding Corp., CIT Healthcare LLC, as Collateral Agent and Administrative Agent, and American Capital Ltd., as Collateral Agent (collectively, the "Defendants") to determine the validity, priority, or extent of liens or other interest in property and for declaratory judgment as follows:
The Debtors (with the last four digits of each Debtors federal tax identification number and chapter 11 case number), are: Church Street Health Management, LLC (2335; Case No. 12-01573), Small Smiles Holding Company, LLC (4993; Case No. 12-01574), FORBA NY, LLC (8013; Case No. 12-01575), FORBA Services, Inc. (6506; Case No. 12-01577), EEHC, Inc. (4973; Case No. 12-01576).
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IN RE:

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Jurisdiction, Venue, and Parties 1. 2. Plaintiff brings this action pursuant to Fed. R. Bankr. P. 7001(2) and (9). The Court has jurisdiction over the subject matter of this Complaint pursuant to

28 U.S.C. 157(b) and 1334(b). This action is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A), (K), and (O). 3. 4. Venue of this action is proper in this district pursuant to 28 U.S.C. 1409. On February 20, 2012 (the Petition Date) the Debtors filed voluntary petitions

for relief under chapter 11 of title 11 of the United State Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code). [Docket Entry No. 1]. The Debtors are operating their businesses and managing their properties as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these cases. 5. On February 22, 2012, the Court ordered that the Debtors' cases be procedurally

consolidated and jointly administered. [Docket Entry No. 54]. 6. The United States Trustee filed the Appointment and Notice of Appointment of

Unsecured Creditors Committee on March 1, 2012. [Docket Entry No. 94]. The Committee has commenced its work and participated in the case since formation. 7. The Defendants are as follows: a. SSO Funding Corp. is a special purpose entity acting as a conduit for the

provision of financing between Debtors and the entities providing financing to the Debtors and may be served in care of Global Securitization Services, LLC, 68 South Service Road, Suite 120, Melville, New York, 11747. b. SSH Funding Corp. is a special purpose entity acting as a conduit for the

provision of financing between Debtors and the entities providing financing to the Debtors and

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may be served in care of Global Securitization Services, LLC, 68 South Service Road, Suite 120, Melville, New York, 11747. c. CIT Healthcare LLC, is the Collateral Agent and Administrative Agent for

the Prepetition First Lien Facility Lenders and the Prepetition Second Lien Facility Lenders.2 CIT Healthcare, LLC, may be served at 11 West 42nd Street, Floor 7, New York, New York, 10036. d. American Capital Ltd. is the Collateral Agent under the Subordinated

Murabaha Facility Agreement and maybe served at 505 Fifth Avenue, 26th Floor, New York, New York, 10017. 8. The Defendants identified above are the prepetition secured lenders of the

Debtors as identified by the Debtors on their Statements and Schedules. [See Schedule D, Docket Entry No. 213]. Background 9. The Debtor, Small Smiles Holding Company, LLC ("SSHC"), formed in

Delaware in September 2006, is the parent of a group of companies headquartered in Nashville, Tennessee, that provide dental practice management services to 67 dental centers serving low income and underprivileged families in 22 states across the country (collectively, SSHC and its affiliates, the "Company, the "Debtor," or the "Debtors"). According to the Debtors, the dental centers are owned by licensed dentists. 10. On March 2, 2012, the Debtors filed an Expedited Motion to Sell Substantially all

Assets of the Debtors (the "Sale Motion"). [Docket Entry No. 106].

Except as otherwise set forth herein, capitalized terms used herein, but not defined herein, shall have the meanings ascribed to them in the Affidavit of Martin McGahan [Docket No. 11].

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11.

On February 21, 2012, the Debtors filed the Expedited Motion of the Debtors for

Entry of Interim and Final Orders Order (I) Authorizing the Debtors to (A) Obtain Postpetition Secured Financing and (B) Utilize Cash Collateral, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Granting Adequate Protection, (IV) Modifying the Automatic Stay, and (V) Scheduling a Final Hearing (the "DIP Motion") seeking entry of the Final Order. [Docket Entry No. 20]. 12. Upon the filing of the DIP Motion and initial hearing, the Court entered the

Interim Order (I) Authorizing the Debtors to (A) Obtain Postpetition Secured Financing and (B) Utilize Cash Collateral, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Granting Adequate Protection, (IV) Modifying the Automatic Stay, and (V) Scheduling a Final Hearing (the "Interim Order") on February 22, 2012. [Docket Entry No. 60]. 13. Entry No. 70]. 14. On February 21, 2012, the Debtors sought approval of the Proposed Final Order On February 24, 2012, the Court entered a "corrected" Interim Order. [Docket

(I) Authorizing the Debtors to (A) Obtain Postpetition Secured Financing and (B) Utilize Cash Collateral, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Granting Adequate Protection, (IV) Modifying the Automatic Stay, and (V) Scheduling a Final Hearing dated February 21, 2012 (the Final DIP Order).[Docket Entry No. 84]. 15. On March 16, 2012, the Final DIP Order, as modified, was entered by the Court.

[Docket Entry No. 187]. 16. Under the terms of the Final DIP Order, the Committee was granted a time period

in which to review and object to or challenge the validity, extent, perfection or priority of the security interests and liens of the Debtors' prepetition secured lenders in and to the prepetition

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collateral of the Debtors, or the validity, allowability, priority, status or amount of the prepetition secured obligations (such objection or challenge, a "Challenge" and the time period for any such Challenge being the "Challenge Period"). [Final DIP Order, 7]. 17. Pursuant to the terms of the Stipulation, Agreement, and Order Regarding

Expedited Motion of the Official Committee of Unsecured Creditors to Enter Order Modifying Final DIP Order, the Committee was provided additional time extending the expiration of the Challenge Period until and through April 27, 2012. This Complaint has therefore been timely filed.

A.
18.

Description of Purported Security Interests and Liens by Prepetition Lenders The relevant loan transactions and associated purported security interests are

described in the Final DIP Order. Pursuant to an Amended and Restated Credit Agreement dated February 1, 2010 (the "Prepetition First Lien Agreement") and together will all other loan and security documents executed in connection therewith (the "Prepetition First Lien Documents") among SSO Funding Corp. ("SSO") and certain of the prepetition secured lenders (the "Prepetition First Lien Lenders") and CIT Healthcare LLC, as collateral agent and administrative agent (the "Prepetition Agent"), the Prepetition First Lien Lenders provided Debtors with a first lien secured credit facility comprised of up to $131,475,000 in aggregate principal amount of term loans (the "Prepetition First Lien Facility"). [See Final DIP Order, F(i), p. 6]. 19. Pursuant to a Second Lien Credit Agreement dated February 1, 2012 (the

"Prepetition Second Lien Agreement" and together with all other loan and security documents executed in connection therewith, the "Prepetition Second Lien Documents" and, together with the Prepetition First Lien Documents, collectively the "Prepetition Credit Documents") among SSO as borrower, certain of the prepetition secured lenders (the "Prepetition Second Lien 5
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Lenders" and together with the Prepetition First Lien Lenders collectively the "Prepetition Lenders") and the Prepetition Agent, the Prepetition Second Lien Lenders provided a second lien secured credit facility comprised of up to $25,000,000 in aggregate principal amount of term loans (the "Prepetition Second Lien Facility"). [See Final DIP Order, F(iii), p. 7]. 20. The Prepetition Lenders assert that under the terms of the Prepetition Credit

Documents, the Debtors granted security interests in (the "Prepetition Secured Obligations") and liens on (the "Prepetition Liens") substantially all assets of the Debtors (the "Prepetition Collateral") to the Prepetition Agent as collateral agent under the Prepetition Credit Documents. [Final DIP Order, F(vii), p. 8]. 21. The Prepetition Lenders assert that the Prepetition Secured Obligations are

(i) legal, valid, binding and enforceable against each applicable Debtor and (ii) not subject to any contest, attack, objection, recoupment, defense, counterclaim, offset, subordination,

recharacterization, avoidance or other claim, cause of action or other challenge of any nature. [Final DIP Order, F(ix), p. 9]. 22. The Prepetition Lenders further assert that the Prepetition Liens on the Prepetition

Collateral are legal, valid and enforceable. [Final DIP Order, F(x), p. 9]. 23. The Final DIP Order provides that the Committee, as the Court-appointed

representatives of the unsecured creditors of the Debtors, may object or challenge the various assertions/findings contained in the Final DIP Order and the Debtors' stipulations regarding, (i) the validity, extent, perfection or priority of the mortgage, security interests and liens of the Prepetition Lenders in and to the Prepetition Collateral of the Debtors, or (ii) the validity, allowability, priority, status or amount of the prepetition obligations asserted by the Prepetition Lenders . [Final DIP Order, 7].

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B. The D&O Policies and Commercial Tort Claims 24. Prior to the Petition Date, the Debtors purchased and obtained coverage under

certain Directors and Officer's Liability Insurance Policies, including but not limited to policy number G25007220 002 (the "D&O Policies"). 25. The Debtors and/or others on behalf of the Debtors have or may have claims

against parties for whom coverage is provided under the D&O Policies (the "D&O Claims"). All or some of the D&O Claims constitute commercial tort claims. 26. Further, and independent of the D&O Claims, the Debtors and/or others on behalf

of the Debtors have or may have independent claims against other third parties that arose prior to the Petition Date, and that constitute commercial tort claims (the "Commercial Tort Claims"). 27. With the exception of certain claims and causes of action described specifically in

the schedules to the Prepetition Credit Documents, the security interests and liens asserted by the Prepetition Lenders do not extend to and are not perfected in the D&O Policies, the D&O Claims, the Commercial Tort Claims, and any proceeds thereof. COUNT ONE (Determination of Validity, Priority and Extent of Lien) 28. The Committee incorporates by reference the allegations of paragraphs 1 through

27 set forth above as if fully set forth herein. 29. Pursuant to Fed. R. Bankr. P. 7001(2), this Court has the power to determine the

validity, priority, and extent of liens in the Debtors' property. 30. The Prepetition Lenders do not hold a valid, perfected lien against the D&O

Policies, the D&O Claims, and the Commercial Tort Claims, including the proceeds thereof. 31. The Committee is entitled to a determination pursuant to Fed. R. Bankr. P.

7001(2) as to the validity, priority, and extent of any lien in the D&O Policies, the D&O Claims, 7
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and the Commercial Tort Claims, and a specific finding that the Prepetition Lenders do not have a valid lien in such property including the proceeds thereof. COUNT TWO (Declaratory Judgment) 32. The Committee incorporates by reference the allegations of paragraphs 1 through

31 set forth above as if fully set forth herein. 33. Pursuant to Fed. R. Bankr. P. 7001(9), this Court has the power to declare the

rights, status, and other legal relations and priority in the Debtors' property. 34. There is an existing dispute between and among the Prepetition Lenders and the

Committee regarding: (A) the extent, if any, of the Prepetition Lenders' liens against the D&O Policies, the D&O Claims, the Commercial Tort Claims and the proceeds thereof, and (B) the priority of any such the liens. 35. The Committee is entitled to declaratory relief pursuant to Fed. R. Bankr. P.

7001(9) declaring and resolving the extent, validity, and priority of the parties' rights in the D&O Policies, the D&O Claims, and the Commercial Tort Claims, including the proceeds thereof, and a declaration that the Prepetition Lenders do not have a lien on the D&O Policies, the D&O Claims, and/or the Commercial Tort Claims, including the proceeds thereof.

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WHEREFORE, the Committee respectfully requests that this Court order and enter a judgment: (A) determining the validity, priority, and extent of any lien in the D&O Policies, the D&O Claims, and the Commercial Tort Claims, and make a specific finding that the Prepetition Lenders do not have a valid lien in such policies, including the proceeds thereof and (B) declaring and resolving the extent, validity, and priority of the parties' rights in the D&O Policies, the D&O Claims, and the Commercial Tort Claims, including the proceeds thereof, and issuing a declaratory judgment that the Prepetition Lenders do not have a lien on the D&O Policies, the D&O Claims, and/or the Commercial Tort Claims, including the proceeds thereof.

Respectfully submitted,

/s/ John H. Rowland John H. Rowland (BPR No. 013944) Courtney H. Gilmer (BPR No. 022131) BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C. 211 Commerce Street, Suite 800 Nashville, Tennessee 37201 Telephone: (615) 726-5544 Facsimile : (615) 744-5544 Email for ECF purposes: businessbknash@bakerdonelson.com E. Franklin Childress, Jr. (BPR No. 007040) BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C. 165 Madison Avenue, Suite 2000 Memphis, Tennessee 38103 Telephone: (901) 577-2147 Facsimile: (901) 577-2303 Email: fchildress@bakerdonelson.com Counsel for the Official Unsecured Creditors Committee

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