Debtor's Objection to West Virginia Economic Development Authority's Motion to Convert — Panthera Enterprises, LLC

Summary

The debtor's objection to the West Virginia Economic Development Authority's motion to convert the case to Chapter 7 or dismiss it, filed December 11, 2019 as Doc 75 in In re Panthera Enterprises, LLC, Case No. 2:19-787, in the U.S. Bankruptcy Court for the Northern District of West Virginia. Panthera says it owns property in Old Fields, West Virginia used as a special operations training facility, and that its government training business ran into financial difficulty in 2015 because of defense budget issues and sequestration. It states that it reached an agreement with its tenant, Panthera Training, LLC, under which Training will conduct the December DEA Course and be paid $44,464.80 by an affiliate. It argues that the Authority cannot show bad faith or that reorganization has no reasonable chance. Signed by John J. Richardson of Bernstein-Burkley, P.C.

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
In re:

PANTHERA ENTERPRISES, LLC,

Case No. 2:19-787

Chapter 11

Debtor-in-possession.

WEST VIRGINIA ECONOMIC
DEVELOPMENT AUTHORITY,

Movant,

v.

PANTHERA ENTERPRISES, LLC,

Respondent.

DEBTOR’S OBJECTION AND RESPONSE IN OPPOSITION TO WEST VIRGINIA
ECONOMIC DEVELOPMENT AUTHORITY’S MOTION TO CONVERT THIS CASE
TO A CHAPTER 7 PROCEEDING, OR, IN THE ALTERNATIVE, DISMISS THIS
BANKRUPTCY CASE FOR CAUSE

AND NOW, comes Panthera Enterprises, LLC (“Debtor”), by and through its
undersigned counsel, and files this objection and response in opposition (the “Objection”) to
West Virginia Economic Development Authority’s Motion to Convert this Case to a Chapter 7
Proceeding, or, in the Alternative, Dismiss this Bankruptcy Case for Cause (the “Motion”). In
support of its Objection, Debtor states as follows:
JURISDICTION AND VENUE
1. This Court (hereinafter defined) has jurisdiction over the Motion pursuant to 28 U.S.C. §
1334(b). This matter is a core proceeding under 28 U.S.C. § 157(b).
2. Venue of this Motion is proper in this district under 28 U.S.C. §§ 1408 and 1409(a).

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INTRODUCTION
3. The EDA feigns concern for the estate and all creditors, when in reality, it self-servingly
seeks to short circuit the Debtor’s opportunity for and efforts at reorganization in order to benefit
only itself.  The EDA’s Motion is filled with speculation, innuendo and sophistry, but has little to
no substance related to the legal principles on which it purports to rely.  The Motion is further
filled with irrelevant and unfounded allegations regarding not only the Debtor, but the Debtor’s
owners and principals and certain entities having some common ownership with the Debtor.
Although cliché, the EDA employs the “red herring” method of pleading throughout its Motion.
Regardless, much of the manufactured concerns asserted by the EDA have been recently
remedied through the Debtor’s efforts to resolve certain disputes and differences it has with its
tenant, Panthera Training, LLC (“Training”).  Said concerns, even if real, have been further
allayed by the Court’s recent Order denying the Debtor’s request for preliminary injunction for
possession of the Property (defined below).  The Debtor recently advised the Court (and all
parties) that the Debtor and Training reached an agreement whereby Training will conduct the
December DEA Course, Training will be paid for conducting the December DEA Course and
Training will also be paid $44,464.80 from Debtor’s affiliate, Panthera Training Center, LLC
(“PTC”).
4. The burden is on the EDA to show that this bankruptcy case was actually filed in bad
faith and that the Debtor has no objective, reasonable chance at reorganization.  The EDA cannot
make such showings.  All of the “bad faith” allegations made by the EDA are common scenarios
in the context of a distressed company and its pre-petition operations and financial difficulties.
Even if the EDA’s factual allegations are true (which the Debtor denies in some cases), those
alleged facts do not support a finding of bad faith by this Court.  The Debtor fully acknowledges
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that its Property was subject to a foreclosure sale and that the Debtor filed this Chapter 11
bankruptcy in case in order to obtain breathing room to address and deal with the debt to the
EDA underlying that foreclosure sale.  That is another extremely common scenario that does not
constitute bad faith.  The EDA’s assertion that the Debtor cannot (or even intends to) reorganize
its debts and operations is patently false.  It is now clear from the record in this case that the
Debtor has valuable assets that it can utilize to restructure its operations, improve its profitability
and pay its creditors through the mechanics of a Chapter 11 plan.  Up to this point in these
proceedings, the Debtor has been involved in an intense dispute with Training, which the Court
has now preliminarily ruled upon.  With that preliminary relief request resolved, the Debtor can
pivot to its operations and business relationships.  At the very least, the Debtor is entitled to an
opportunity to develop and propose a Chapter 11 plan that will benefit all creditors and parties in
interest.  The EDA’s Motion, if granted, would benefit only the EDA and would have the
unfortunate effect of drastically diminishing the value of the estate to the detriment of all other
parties in interest.   As discussed more fully below, the EDA’s Motion should accordingly be
denied.
BACKGROUND
5. On September 13, 2019, the Plaintiff filed a voluntary petition for relief under Chapter 11
of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as amended, the “Bankruptcy
Code”) of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of West Virginia (the “Court”) at case number 19-00787 (the “Case”).
6. The Plaintiff owns the real property located at 2506 Fishpond Road, Old Fields, West
Virginia 26845 (the “Real Property”), including the improvements, structures and various
personal property situated on such real property (collectively, the “Property”), all of which is
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utilized as a special operations training facility for various of the Plaintiff’s clients and customers
(the “Facility”).
7. Beginning in or October, 2015, the Debtor’s business of fulfilling government training
contracts began experiencing financial difficulty due to uncontrollable issues with the
government’s defense budget and sequestration.  Prior to that time, the Debtor had operated
successfully and continued to grow its business.
8. Due to the financial difficulties it was experiencing, on or about June 1, 2018, the Debtor
entered into a commercial lease with Panthera Training, LLC (“Training”) (the “Lease”) by
which the Defendant was to occupy the Property and the Facility and conduct certain trainings
(the “Trainings”) to fulfill certain contracts held by the Plaintiff (the “Training Contracts”). A
true and correct copy of the Lease is attached hereto as Exhibit A.
9. The Debtor subcontracted the Training Contracts to Training to allow Training to
facilitate the Trainings while it was leasing the Property (the “Subcontract”). A true and correct
copy of the Subcontract is attached hereto as Exhibit B.
10. Prior to entering into the Lease and the Subcontract, the Debtor performed all obligations
under the Training Contracts through an affiliated subcontractor.
11. In a related proceeding well known to the Court, the Debtor and Training traded requests
for preliminary injunctive relief, all of which has been denied by the Court.  In the process of that
dispute, Debtor and Training have entered into an agreement to ensure that certain crucial
December Trainings are conducted as scheduled, including the very important DEA Contract
Trainings.
12. Even after the Debtor entered into the Lease and Subcontract, the Debtor has remained
involved in various aspects of the business operations conducted at the Facility.
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13. In particular, the Debtor’s involvement in the Facility was and is crucial to the
preparation of proposals to obtain new government training contracts since Training did not and
does not have the experience, track record or resources necessary to prepare such proposals and
be awarded such contracts. By way of example, as recently as June, 2019 the Debtor’s principals,
particularly Ray Jones, prepared an RFI to be submitted to the DEA for a proposed Disaster
Readiness Course.  Attached hereto are correspondence and draft RFIs prepared primarily by Mr.
Jones as Exhibit C.
14. EDA is a secured creditor of the Debtor as a result of two prepetition loans made to the
Debtor (the “Loans”). The Loans are secured by Deeds of Trust on the Debtor’s Property and
EDA has alleged first priority liens on the Property.
15. As of the Petition Date, the total amount due under the loans to EDA was $6,433,609.38.
16. As a result of the Debtor’s Lease with Training, Training pays $52,000.00 a month to
EDA as payment on the Loans. The $52,000.00 would otherwise be due to the Debtor as
monthly rent, but Debtor has agreed that such monthly rent payments be made directly to the
EDA by Training.
17. Since July of 2018, EDA has been timely paid all monthly payments due to it from
Debtor.
18. EDA, the Debtor and various other parties entered into a forbearance agreement on July
6, 2018 (the “Forbearance Agreement”). Under the Forbearance Agreement, EDA agreed to
forbear from exercising its rights under the Loans for a period of six months (the “Forbearance
Period”) and in exchange, the monthly rental payments in the amount of $52,000.00 that
Training owed to the Debtor under the Lease were to be made directly to EDA.
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19. The Debtor did not default on the Forbearance Agreement during the Forbearance Period
and EDA timely received its monthly payments as required.
20. The Forbearance Period expired on January 6, 2019.
21. EDA waited until August 14, 2019 – more than eight months from the expiration of the
Forbearance Period – to send letter a notice of default under the Loans and Deeds of Trust.
22. On November 2, 2019, West Virginia Economic Development Authority (“EDA”) filed
the Motion to convert this Case to a chapter 7 proceeding, or in the alternative, dismiss this Case
(the “Motion to Convert”). Simultaneously, EDA also filed a motion for relief from stay to
foreclose on the Property.
LEGAL AUTHORITY AND ANALYSIS
23. 11 U.S.C § 1112(b)(1) provides that “on request of a party in interest, and after notice
and a hearing, the court shall convert a case under this chapter to a case under chapter 7 of
dismiss a case under this chapter, whichever is in the best interest of creditors and the estate, for
cause…” 11 U.S.C. § 1112(b)(1).
24. “Cause” for converting or dismissing a case pursuant to 11 U.S.C. § 1112(b) has been
interpreted by the Fourth Circuit to include a lack of the debtor’s good faith, which requires a
showing that (1) the debtor’s reorganization is objectively futile and (2) the debtor’s filing was
motivated by subjective bad faith. See Carolin Corp. v. Miller, 886 F.2d 693, 698 (4th Cir.
1989).  As a clear indication of high threshold for ordering dismissal or conversion, the Carolin
court noted in adopting this stringent dual test that “it is better to risk proceeding with a wrongly
motivated invocation of Chapter 11 protections whose futility is not immediately manifest than
to risk cutting off even a remote chance that a reorganization effort so motivated might
nevertheless yield a successful rehabilitation.  Id. at 701.
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25. The Carolin court succinctly pointed out that “[d]ecisions denying access at the very
portals of a bankruptcy, before an ongoing proceeding has even begun to develop the total shape
of the debtor’s situation, are inherently drastic and not lightly to be made.”  Id. at 700.  Clearly,
the Carolin court recognized the relatively extreme remedy of ordering dismissal or conversion
in the early stages of a Chapter 11 case.  The Carolin court continued, “dismissal on grounds of
bad faith filing should not be judicially [employed] as an easy alternative to other post-petition
creditors remedies.”  Id.    The Carolin court stated that “something more than even the most
obvious likelihood of ultimate futility should be required to justify threshold dismissals for want
of good faith in filing” and that requires “subjective bad faith on the part of the petitioner.”  Id.
26. The Carolin court described the “objective futility” prong as “designed to insure that
there is embodied in the petition some relation to the statutory objective of resuscitating a
financial troubled debtor” and that such analysis “should concentrate on assessing whether there
is no going concern to preserve and no hope of rehabilitation.”  Id. at 701.
27. Regarding the “subjective bad faith” prong, the Carolin court stated that such “inquiry in
designed to insure that the petitioner actually intends to use the provisions of Chapter 11 to
reorganize or rehabilitate an existing enterprise, or to preserve going concern values of a viable
or existing business” and further stated that the aim of such consideration is “to determine
whether the petitioner’s real motivation is to abuse the reorganization process and cause hardship
or to delay creditors by resort to the Chapter 11 device merely for the purpose of invoking the
automatic stay without an intent or ability to reorganize.”  Id. at 702.
28. As discussed more fully below, analysis of the matter at hand based upon the Fourth
Circuit’s established authority and stringent requirements for motions to dismiss or convert under
§1112(b)(1) dictates that the EDA’s Motion be denied in its entirety.
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A. Under a Totality of the Circumstances Analysis, EDA has Failed to Show that the
Debtor Filed its Chapter 11 Petition for Relief with Subjective Bad Faith.

29. EDA’s Motion to Convert fails to establish that the Debtor’s filing was motivated by
subjective bad faith.
30. The Fourth Circuit recognizes that a totality of the circumstances inquiry is required in
determining whether subjective bad faith exists and that “any conceivable list of factors is not
exhaustive,” further providing that “there is no ‘single factor that will necessarily lead to a
finding of bad faith.’” Id. at 701 (internal citations omitted).
31. EDA suggests consideration of the following  “non-exhaustive list of factors”  in order to
determine subjective bad faith:
1. The Debtor has one asset;
2. Secured creditors’ liens encumber the asset;
3. There are generally no employees except for the principals and there is no
ongoing business activity;
4. The debtor has little or no cash flow and no available source of income to
sustain a plan of reorganization or make adequate protection payments;
5. There are few, if any, unsecured creditors whose claims are relatively small;
6. There are allegations of wrongdoing by the debtor or its principals1;
7. The timing of the debtor’s filing evidences an intent to delay or frustrate the
legitimate efforts of secured creditors to enforce their rights;
8. The debtor is afflicted with the ‘new debtor syndrome’ in which a one asset
entity is created or revitalized on the eve of foreclosure to isolate the insolvent
property and its creditors;
9. There is no realistic possibility of reorganization of the debtor’s business;
10. The reorganization involves a two-party dispute; and
11. Bankruptcy offers the only possibility of forestalling loss of property.

Motion to Convert, ¶ 51.

32. Relying primarily on speculation and unfounded accusations, EDA incredibly suggests
that “nearly all of these factors” weigh in favor of granting EDA’s Motion to Convert.  In reality,

EDA
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however, EDA a thorough analysis of the relevant facts in light of these factors shows that there
is little to no support for the EDA’s bald assertions.
33. Addressing these enumerated factors in order below, it is clear that the facts and
circumstances weigh heavily in Debtor’s favor.
i. The Debtor has more than one valuable asset.  Although the Real Property is a significant
asset, the Debtor also has other valuable assets detailed in its Schedules and, importantly,
has one very valuable contract with the United States Drug Enforcement Agency (the
“DEA Contract”).  The Debtor is in the process of determining how to maximize the
value of these assets collectively and within the parameters of its legal relationship with
its tenant, Training.  To be sure, this is not a “single asset” case – as the Court is well
aware as a result of its substantial judicial considerations to date.  This is also clearly
evidenced by the substantial focus placed on the DEA Contract so far in these
proceedings.
ii. The most recent appraisal of the Property provided an appraised value of over $15
million.  Despite the EDA’s unfounded allegations, there is no evidence suggesting that
such appraisal is inaccurate, and especially no evidence that it is grossly overstated.  The
EDA falsely states that the $15 million valuation includes trade fixtures and personal
property that are no longer owned by the Debtor.  To the contrary, the appraisal is based
on the value of the land itself, the various structures located on the land and various site
improvements (such as the driving track which alone has a value of $2.4 million).  A true
and correct copy of the Appraisal is attached hereto as Exhibit D.  The Property is
encumbered by approximately $8,857,337.00 in secured debt.  Accordingly, there is a
substantial equity cushion protecting the EDA’s interest and, additionally, the EDA is
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receiving monthly payments of $52,000 which further adequately protects its interest in
the Real Property.
iii. The EDA attempts to place significance on the Debtor’s lack of employees.  As noted,
the Debtor has no employees but rather utilizes a subcontractor to perform its DEA
Contract.  The Debtor always operated in this manner, previously using PTC as a
subcontractor to perform its trainings.  The EDA further falsely states that the Debtor
“has no operations.”  The EDA is either wholly disingenuous in making such assertions
or simply fails to understand the relationship of contractor/subcontractor and
landlord/tenant.  The Debtor is operating as a landlord to a fully functioning special
operations training facility and as the prime contractor to the most valuable training
relationship serviced at the facility.  In addition, the Debtor has the right to have a
representative present at the facility at all times to oversee such trainings (See
Subcontract, Sections 1.2(C), 1.8 and 1.9) – the Debtor intends to avail itself of this right
to the fullest going forward, which will further establish its involvement in day-to-day
activities at the facility.
iv. The Debtor has significant fixed cash flow and the potential for significant additional
cash flow.  The Debtor earns $52,000 per month through its Lease with Training, which
income is paid directly to EDA, and the Debtor may begin to directly collect its
administrative fee of $20,000 per month.  The Debtor is also entitled to payment of
“Additional Rent” under its Lease, which Debtor asserts will provide a lucrative revenue
source in the very near future.  In fact, operations at the facility from October, 2018
through October, 2019 generated revenue of $3,961,595.00.  True and correct copies of
the applicable Profit and Loss Statements showing monthly revenues are attached hereto
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as Exhibit E.  Revenue has generally increased over the past year, due in part to the
lucrative DEA Contract which began operations in October, 2018. This trend of
increasing revenue should continue and Debtor expects to be due Additional Rents on a
go forward basis (even utilizing Training’s method of calculating Additional Rents due,
which Debtor does not concede).
v. The Debtor would suggest that the existence of other significant creditors is a very
important factor to be considered in the analysis of whether or not to convert or dismiss
the case.  Yet the EDA failed to address this factor at all.  The Debtor would further
suggest that the EDA failed to address it because it clearly is not in the EDA’s favor.  The
Debtor has multiple general unsecured creditors and they have significant claims.
Protection of their interests by preserving the Real Property and allowing the Debtor to
seek to reorganize is wholly against the EDA’s self-interest of attempting to foreclose on
the Real Property for only its benefit.  Substantial emphasis and weight should be
allocated to this factor in order to preserve value in the estate and seek to accomplish
what is in the best interests of all creditors.
vi. The EDA focuses the bulk of its argument on various allegations levied against the
Debtor’s principals.  Despite the EDA’s characterization of any alleged acts by the
principals, nothing alleged was done in bad faith.  The EDA states that the principals
overestimated projected revenue to be derived from the Property, while at the same time
acknowledging that the principals may have just been “unrealistically optimistic.”  The
Debtor is not aware of any legal authority pursuant to which “unrealistic optimism”
would amount to bad faith and the EDA does not cite to any such authority.  Regardless, ,
the DEA Contract did not begin operations until September, 2018, after which time
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revenue has been relatively consistent.  With regard to the list of customers referenced by
EDA, the list provided to Training was a list of existing customers and such list was
accurate at all times.  EDA also implies that since the Debtor’s estimates of projected
revenue as provided to Training did not come to fruition, there must have been malicious
intent when in fact the estimates were just that: estimates. Even if the estimates were
“optimistic," such does not constitute bad faith.  In fact, as the beneficiary of Additional
Rents, the Debtor (as much as Training) had a vested interest in the actual revenues being
consistent with the estimates   In any event, the projections of revenue provided by
Training to Debtor reasonably relied on the contracts that the Debtor had at that time as
well as contracts, such as the DEA contract, which the Debtor expected to, and indeed
did, win.
The EDA claims particular significance related to the Debtor’s relationship with
SMI and the Debtor’s conveyance of personal property to SMI.  What the EDA fails to
mention is that SMI had and has a valid security interest in the Debtor’s personal
property.  A true and correct copy the SMI Security Agreement is attached hereto as
Exhibit F.  SMI’s demand for its collateral due to a loan default by the Debtor resulted in
the conveyance of the Debtor’s personal property (SMI’s collateral) to SMI.  There
simply is nothing nefarious or even questionable about this transaction.  SMI had a valid
interest in all such property and the right to foreclose upon it at any time.  If SMI had not
taken title to such property pre-petition, it would be a first lien secured creditor against
such property in the bankruptcy.  In a related transaction, the Timber Agreement was
executed in favor of SMI at SMI’s demand as additional security for SMI's debt.  The
Timber Agreement simply creates a lien and the Debtor intends to pay off SMI’s lien
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through its plan of reorganization. Although the granting of such security interest may be
an alleged default under the EDA loan documents, it is in no way evidence of bad faith.
Rather, it was an instance of the Debtor attempting to appease the demands of another
aggressive creditor.
The EDA also asks the Court to attach particular significance to the fact that the
$20,000 administrative fee owed to the Debtor and PTC was paid directly to the Debtor’s
principals.  As has been set forth on the record in this case, all such transactions were
properly accounted for and evidenced in the Debtor’s general ledger as receipts and
payments.  To the extent that the EDA or any other party does not believe that the
principals were entitled to compensation, or that they were only entitled to some other
amount of compensation, that is an issue that has not been raised by EDA.  Nevertheless,
the principals performed valuable services both prior to and subsequent to execution of
the Lease and they accordingly were entitled to compensation from the Debtor and/or
PTC.  As mentioned above, as recently as June, 2019, Mr. Jones prepared an RFI to be
submitted to the DEA for a proposed Disaster Readiness Course.  See attached Exhibit B.
Substantial time, resources and, perhaps more importantly, personal knowledge, ability
and experience are required to prepare any such proposal.  Moreover, during the period
from June 1, 2018 and August 31, 2019, the principals contributed over $300,000.00 to
cover various Debtor expenses, including certain expenses related to research and
creation of proposals such as the RFI referenced above.  If Training or the Debtor were to
hire an outside company to complete these proposals, the cost that would be incurred in
that process would be no less than the payments made to the principals from the Debtor.
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There is no evidence of bad faith in these transactions and EDA has not shown any and,
in fact, the evidence is to the contrary.
Lastly, the EDA purports to associate some bad faith to a lawsuit involving Blue
Force Technologies, Inc. which was settled after only one preliminary hearing with the
judge. See Motion to Convert, ¶ 84-88. Such allegations were made against Debtor’s
principals in unrelated and irrelevant litigation.  That litigation was settled with no
admission of liability.  As such, EDA’s allegations of wrongdoing amount to nothing
more than allegations about allegations, with no factual support whatsoever.
vii. The Debtor readily acknowledges that it filed this petition prior to the EDA’s attempt to
foreclose on the Property.  In fact, the Debtor filed its petition in order to gain breathing
room and seek to rehabilitate.  It is undisputed and well established that such is a
legitimate and even wise use of the bankruptcy process.  See e.g., In re Carolin, 886 F2d
703 (“it is quite common and not inappropriate for a debtor to use chapter 11 to obtain a
respite from a creditor or creditors aggressively seeking to collect on a debt, even when
execution is imminent."  The EDA’s allegations that this is evidence of bad faith  are
unfounded and unsupported by applicable legal authority.
viii. There was no change in the Debtor’s ownership structure pre-petition, therefore no
instance of “new debtor syndrome
ix. The Debtor absolutely has a realistic possibility of reorganization given its valuable
assets and options for addressing the remaining disputed issues with Training.  This
factor is discussed more fully below in Section B.
x. Although the EDA states that this bankruptcy is a “two party” dispute, that allegation
belies the clear fact that the Debtor is currently addressing numerous creditors and parties
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in interest, including both the EDA and Training.  In addition, there are numerous other
creditors with significant claims and interests that have a stake in the outcome of these
proceedings.  Protecting the interests of ALL creditors is paramount, despite the EDA’s
attempt to liquidate the Debtor’s most valuable asset for the sole benefit of the EDA.
xi. The Debtor may have been able to prevent any loss of the property outside of bankruptcy.
In any event, this factor is not determinative.  See again, In re Carolin, 886 F2d 703 (“it
is quite common and not inappropriate for a debtor to use chapter 11 to obtain a respite
from a creditor or creditors aggressively seeking to collect on a debt, even when
execution is imminent.”)
34. Accordingly, the EDA fails to support the vast majority of these factors in a meaningful
way and ignores the realities of the circumstances out of self-serving convenience.  When each
factor is analyzed and the true nature of the attendant facts are considered, it is clear that this
bankruptcy case was not filed in bad faith and that the Debtor has both the intent and ability to
reorganize under Chapter 11.  Because the totality of the circumstances analysis does not
indicate that the Debtor has filed its case with subjective bad faith, the first prong of the “bad
faith” analysis from Carolin Corp. is not met and the Court cannot find that the Debtor lacked
the requisite good faith. See 886 F.2d at 698.  The EDA’s Motion must accordingly dismissed on
this basis alone.
B. The Debtor has a Realistic and Objective Possibility of Reorganizing
35. The EDA’s position that a reorganization if “objectively futile” in this case is wholly
unsupported by any credible evidence and, in fact, ignores the realities of the circumstances.
Because the Debtor’s reorganization is not objectively futile,  the EDA cannot  meet the second
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prong of bad faith. Based upon this alone, the Court cannot find that the Debtor has filed the case
in bad faith.
36. The Debtor fully intends to file a Chapter 11 plan of reorganization that will maximize
the value of its substantial assets, preserve its business as a going concern and pay creditor
claims pursuant to requirements of the Bankruptcy Code.  The Debtor acknowledges that most
bankruptcy reorganizations involve obstacles and challenges, but it is clear that the Debtor has
several options for proceeding as a going concern.  The Debtor first acknowledges that its
dispute with Training has its own challenges and that such litigation is always uncertain.  Under
those circumstances, the Debtor recognizes that one potential version of its Plan may involve
maintaining the status quo as to Training.  In that regard, the Debtor and Training recently
reached a temporary agreement to accommodate certain required December, 2019 trainings,
including under the valuable DEA Contract.  In such scenario, as discussed above, the Debtor
will have consistent fixed revenue and the inevitable receipt of Additional Rents as revenues
have increased and stabilized.  The Debtor is also in discussions with potential investors and/or
lenders that may infuse capital into the Debtor if necessary.
37. If, on the other hand, the Debtor continues to seek and regains possession of the Property,
it will proceed with preparations for performing its obligations under the DEA Contract.  The
EDA has implied that the Debtor is not capable of performing necessary trainings, but any such
assertion is patently false.  Although the Debtor experienced financial difficulties as a result of
federal government budget cuts and sequestration, the Debtor never experienced any issues with
its ability to provide the required Trainings.  The Debtor would remind the EDA that the Debtor
(or its predecessor or affiliate controlled by the principals) was awarded government Training
Contracts as early as July 26, 2013. Prior to that, the Debtor performed obligations under
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government contracts as a subcontractor for the Naval Special Warfare Community and Linxx
Training Diplomatic Security Mobile Security Teams.   Furthermore, the Debtor performed
Trainings for the Department of State, Diplomatic Security, Mobile Security Deployment Teams
and High Threat teams from 2013 through 2016. These groups form the high-end response teams
for the State Department and only reluctantly ceased receiving Trainings through the Debtor and
the Facility because the government constructed a facility in Virginia for such Trainings.
Additionally, from 2013 to 2017, the Debtor also performed Trainings under an ad hoc purchase
order with USTAD/CST.
38. Again, it was only federal budget cuts and sequestration that brought an abrupt halt to the
Debtor’s profitable operations.  Because the defense and intelligence budgets have since been
reestablished and are healthy, the Debtor’s belief in its ability to successfully reorganize is
rational and supported.
39. Additionally, notwithstanding EDA’s liens on the Property, the Debtor retains significant
equity in the Property as set forth above.
40.  “[W]hether there is net equity in a principal or single asset could be of importance of
successful reorganization…” Carolin Corp., 886 F.2d at 705.
41. Further, EDA’s allegation that the Debtor “has no going concern” and “does not operate a
business” is simply wrong. See Motion to Convert, ¶ 90.  As stated above, the EDA is either
wholly disingenuous in making such assertions or simply fails to understand the relationship of
contractor/subcontractor and landlord/tenant.  The Debtor is operating as a landlord to a fully
functioning special operations training facility and as the prime contractor to one of the most
valuable training relationships serviced at the facility.  In addition, the Debtor has the right to
have a representative present at the facility at all times to oversee such trainings (See
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Subcontract, Sections 1.2(C), 1.8 and 1.9) – the Debtor intends to avail itself of  this right to the
fullest going forward, which will further establish its involvement in day-to-day activities at the
facility.
42. The Debtor has significant assets and a viable business enterprise. The Debtor’s purpose
in filing this Case was to obtain a respite from execution activities that would only benefit one
party, and allowing it to formulate a Plan to repay its creditors and continue as a going concern..
This potential is clearly real and in no way objectively futile.
43. The Debtor’s goals are consistent with the purposes of the Bankruptcy Code and,
contrary to EDA’s bald assertions stating otherwise, the Debtor has both the intent and the ability
to reorganization.
WHEREFORE, the Debtor, Panthera Enterprises, LLC, respectfully requests that this Court
enter an Order denying West Virginia Economic Development Authority’s Motion to Convert
this Case to a Chapter 7 Proceeding or to Dismiss the Bankruptcy Case for Cause, and order any
further relief the Court deems proper.
Date: December 11, 2019

BERNSTEIN-BURKLEY, P.C.

By: /s/ John J. Richardson

John J. Richardson, Esq. (WV ID 13140)

jrichardson@bernsteinlaw.com
Robert S. Bernstein, Esq. (WV ID 4708)

rbernstein@bernsteinlaw.com

Mark A. Lindsay, Esq. (PA ID 89487)

Admitted Pro Hac Vice

mlindsay@bernsteinlaw.com

707 Grant Street, Ste. 2200

Pittsburgh, PA 15219

Phone: (412) 456-8101

Fax: (412) 456-8135

Counsel for Debtor

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CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that the within Objection and Response to Motion to Convert
and/or Dismiss was served via the CM/ECF system upon all parties and counsel of record on this 11th day
of December, 2019.
Respectfully submitted:
Date: December 11, 2019

BERNSTEIN-BURKLEY, P.C.

By: /s/ John J. Richardson

John J. Richardson, Esq.

WV ID: 13140

jrichardson@bernsteinlaw.com
707 Grant Street, Ste. 2200

Pittsburgh, PA 15219

Phone: (412) 456-8101

Fax: (412) 456-8135

Counsel for Debtor/Plaintiff

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