VYR - Interim Compensation Motion Proposed Filing Version

Summary

The Debtors' motion (Doc 118 in Case 24-11217-BLS) seeks an order approving Compensation Procedures for the allowance and payment of compensation and reimbursement of expenses for attorneys and other professionals whose retentions are approved by the Court. Under the proposal, on or after the 21st day of each month following the month for which compensation is sought, each Professional may file a Monthly Fee Statement for the preceding month. The motion lists Debtors' Professionals including Kirkland & Ellis LLP as primary restructuring counsel, Cole Schotz P.C. as co-counsel, PJT Partners LP as investment banker and AlixPartners, LLP as financial advisor. It is dated June 25, 2024 and signed /s/ Patrick J. Reilley.

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
)
In re:
)
Chapter 11
)
VYAIRE MEDICAL, INC., et al.,1
)
Case No. 24-11217 (BLS)
)
Debtors.
)
(Jointly Administered)
)
)
Hearing Date: July 9, 2024, at 10:00 a.m. (ET)
)
Obj. Deadline: July 2, 2024, at 4:00 p.m. (ET)
MOTION OF DEBTORS FOR ENTRY OF AN ORDER (I) ESTABLISHING
PROCEDURES FOR INTERIM COMPENSATION AND REIMBURSEMENT
OF EXPENSES FOR PROFESSIONALS AND (II) GRANTING RELATED RELIEF
The above-captioned debtors and debtors in possession (collectively, the “Debtors” and,
each, a “Debtor”) state as follows in support of this motion:2
Relief Requested
1.
The Debtors seek entry of an order, substantially in the form attached hereto as
Exhibit A (the “Order”): (a) approving the Compensation Procedures (as defined herein) for an
orderly, regular process for the allowance and payment of compensation and reimbursement of
expenses incurred by attorneys and other professionals whose retentions are approved by this Court
pursuant to sections 327, 328, or 1103 of title 11 of the Bankruptcy Code (each as defined herein)
and who will be required to file applications for the allowance of compensation and reimbursement
1
The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495.  A complete list
of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be
obtained on the website of the Debtors’ claims and noticing agent at https://omniagentsolutions.com/Vyaire.  The
location of Debtor Vyaire Medical, Inc.’s principal place of business and the Debtors’ service address in these
chapter 11 cases is 26125 North Riverwoods Boulevard, Mettawa, Illinois, USA 60045.
2
A detailed description of the Debtors and their business, including the facts and circumstances giving rise to the
Debtors’ chapter 11 cases, is set forth in the Declaration of John Bibb, Group Chief Executive Officer of Vyaire
Medical, Inc., in Support of Chapter 11 Petitions and First Day Motions [Docket No. 15] (the “First Day
Declaration”).  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them
in the First Day Declaration.
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of expenses pursuant to sections 330 and 331 of the Bankruptcy Code; and (b) granting related
relief.
Jurisdiction and Venue
2.
The United States District Court for the District of Delaware has jurisdiction over
this matter pursuant to 28 U.S.C. §1334, which was referred to the United States Bankruptcy Court
for the District of Delaware (the “Court”) under 28 U.S.C. § 157 and the Amended Standing Order
of Reference from the United States District Court for the District of Delaware, dated February 29,
2012.  The Debtors confirm their consent, pursuant to rule 9013-1(f) of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of
Delaware (the “Local Rules”), to the entry of a final order by the Court in connection with this
motion to the extent that it is later determined that the Court, absent consent of the parties, cannot
enter final orders or judgments in connection herewith consistent with Article III of the United
States Constitution.
3.
Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
4.
The statutory bases for the relief requested herein are sections 105(a), 330, and 331
of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”), rule 2016
of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Local Rule 2016-2.
Background
5.
Vyaire Medical, Inc., together with its direct and indirect subsidiaries (collectively,
“Vyaire” or the “Company”), is a global company focused on developing products and providing
related services for the diagnosis, treatment, and monitoring of various cardiology, pulmonology,
and respiratory health conditions.  With a 70-year history of pioneering breathing technology, the
integrated solutions offered by the Company help enable, enhance, and extend
lives.  Headquartered in Mettawa, Illinois, Vyaire operates approximately 27 offices and
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manufacturing facilities, and employs approximately 950 individuals around the world.  The
Company has a global reach, and Vyaire products are available in more than 100 countries.  Its
customers are the hospitals, health centers, and private practice facilities delivering life-enhancing
products and services to patients every day.
6.
On June 9, 2024 (the “Petition Date”), Vyaire Medical, Inc. and certain of its
subsidiaries filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.  The
Debtors are operating their business and managing their property as debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.  On June 11, 2024, the Court entered an
order authorizing the procedural consolidation and joint administration of these chapter 11 cases
pursuant to Bankruptcy Rule 1015(b) and Local Rule 1015-1.  See Docket No. 84.  No request for
the appointment of a trustee or examiner has been made in these chapter 11 cases, and no official
committees have been appointed or designated.
Retention of Professionals
7.
The Debtors have filed or will file applications to retain certain professionals
(collectively, the “Debtors’ Professionals”), including:  (a) Kirkland & Ellis LLP and Kirkland &
Ellis International LLP, as primary restructuring counsel; (b) Cole Schotz P.C., as co-counsel;
(c) PJT Partners LP, as investment banker, (d) AlixPartners, LLP, as financial advisor; and
(e) Omni Agent Solutions, Inc., as claims and noticing agent and administrative advisor.  The
Debtors anticipate they also may retain other professionals pursuant to sections 327 or 328 of the
Bankruptcy Code during the course of these chapter 11 cases as the need arises.  Moreover, to the
extent a statutory committee is appointed in these chapter 11 cases, such committee may seek to
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retain counsel, a financial advisor, or other professionals to represent them in connection with
these chapter 11 cases (together with the Debtors’ Professionals, the “Professionals”).3
The Proposed Compensation Procedures
8.
Pursuant to section 331 of the Bankruptcy Code, all professionals are entitled to
submit applications for interim compensation and reimbursement of expenses every 120 days, or
more often if the Court permits.  See 11 U.S.C. § 331.  In addition, section 105(a) of the Bankruptcy
Code authorizes the Court to issue any order “necessary or appropriate to carry out the provisions
of [the Bankruptcy Code],” thereby codifying the Court’s inherent equitable powers.
See 11 U.S.C. § 105(a).
9.
The Debtors propose that the monthly payment of compensation and
reimbursement of expenses of the Professionals (the “Compensation Procedures”) be structured as
follows:
(a)
On or after the 21st day of each month following the month for which
compensation is sought, each Professional seeking compensation may file
an application (each, a “Monthly Fee Statement”) for interim allowance of
compensation for services rendered and reimbursement of expenses
incurred during the preceding month, and serve such Monthly Fee
Statement, on:  (a) the Debtors, Vyaire Medical, Inc.; 26125 North
Riverwoods Boulevard, Mettawa, Illinois, USA 60045, Attn.:  Charles
Braley (cbraley@alixpartners.com); (b) proposed counsel to the Debtors
(i) Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York,
10022, Attn.:  Joshua A. Sussberg, P.C. (joshua.sussberg@kirkland.com)
and Chris Ceresa (chris.ceresa@kirkland.com); (ii) Kirkland & Ellis LLP,
333 West Wolf Point Plaza, Chicago, Illinois 60654, Attn.:  Spencer A.
Winters
(spencer.winters@kirkland.com),
Yusuf
U.
Salloum
(yusuf.salloum@kirkland.com),
and
Rebecca
Marston
(rebecca.marston@kirkland.com); (iii) Cole Schotz P.C., 500 Delaware
3
Contemporaneously herewith, the Debtors filed the Motion of Debtors for Entry of an Order (I) Authorizing the
Debtors to Retain and Compensate Professionals Utilized in the Ordinary Course of Business and (II) Granting
Related Relief (the “OCP Motion”).  The OCP Motion seeks authority for the Debtors to continue to retain certain
professionals in the ordinary course of business (the “OCPs”) on terms substantially similar to those in effect
before the Petition Date.  If the OCP Motion is granted, the OCPs would not be required to file individual retention
applications and would be paid in full, subject to their respective prepetition arrangements, without the need for
submission of fee applications, but subject to a monthly fee cap.
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Avenue, Suite 1410, Wilmington, Delaware 19801, Attn: Patrick J. Reilley,
Esq. (preilley@coleschotz.com); and (iv) Cole Schotz P.C., Court Plaza
North, 25 Main Street, Hackensack, New Jersey 07601, Attn.: Michael D.
Sirota, Esq. (msirota@coleschotz.com), Warren A. Usatine, Esq.
(wusatine@coleschotz.com); (c) the Office of the United States Trustee for
the District of Delaware, 844 King Street, Suite 2207, Lockbox 35,
Wilmington,
Delaware
19801,
Attn:
Benjamin
Hackman
(Benjamin.A.Hackman@usdoj.gov); (d) counsel to the 1L Ad Hoc Group,
(i) Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166,
Attn:  Scott J. Greenberg (SGreenberg@gibsondunn.com), Jason Zachary
Goldstein
(JGoldstein@gibsondunn.com),
Joshua
Brody
(JBrody@gibsondunn.com), and Kevin Liang (KLiang@gibsondunn.com)
and (ii) Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 17th
floor,
Wilmington,
DE
19801,
Attn:

Laura
Davis
Jones
(ljones@pszjlaw.com) and Timothy P. Cairns (tcairns@pszjlaw.com); and
(e) counsel to any statutory committee appointed in these chapter 11 cases
(each, an “Application Recipient” and, collectively, the “Application
Recipients”).  Any Professional that fails to file a Monthly Fee Statement
for a particular month or months may subsequently submit a Monthly Fee
Statement that includes a request for compensation earned or expenses
incurred during the previous months.
(b)
Each Application Recipient will have until 4:00 p.m. (Prevailing Eastern
Time) 21 days after service of a Monthly Fee Statement to review the
request (“Objection Deadline”).  The Objection Deadline shall be
conspicuously noted on the Monthly Fee Statement.  Upon the expiration of
such 21-day period, if no Application Recipient has filed with the Court a
Notice of Objection to Monthly Fee Statement (defined below), the
applicable Professional may file a certificate of no objection (a “CNO”)
with the Court with respect to the unopposed portion of the fees and
expenses requested in its Monthly Fee Statement.  After a CNO is filed with
the Court, the Debtors are authorized to pay the Professional an amount
(the “Actual Monthly Payment”) equal to 80% of the fees and 100% of the
expenses
requested
in
the
applicable
Monthly
Fee
Statement
(the “Maximum Monthly Payment”) that are not subject to an Objection
pursuant to subparagraph (c) below.
(c)
If any Application Recipient objects to a Monthly Fee Statement, the
objecting party shall, within 21 days of service of the Monthly Fee
Statement, serve a written notice upon the respective Professional and each
of the Application Recipients (the “Notice of Objection to Monthly Fee
Statement”) setting forth the precise nature and basis of the objection and
the amount at issue.  Thereafter, the objecting party and the Professional
shall attempt to resolve the objection on a consensual basis.  If the parties
reach an agreement, the Debtors shall be authorized to promptly pay 80%
of the agreed-upon fees and 100% of the agreed-upon expenses.  If,
however, the parties are unable to reach a resolution of the objection within
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14 days after service of the Notice of Objection to Monthly Fee Statement,
the objecting party shall file its objection (the “Objection”) with the Court
within 3 business days and serve such Objection on the respective
Professional and each of the Application Recipients.  Thereafter, the
Professional may either (i) file with the Court a response to the Objection,
together with a request for payment of the difference, if any, between the
Maximum Monthly Payment and the Actual Monthly Payment made to the
affected Professional (the “Disputed Amount”) or (ii) forego payment of the
Disputed Amount until the next hearing on an Interim Fee Application or
Final Fee Application (each, as defined herein), at which time the Court will
consider the Objection, if requested by the parties.4
(d)
Each Professional may submit its first Monthly Fee Statement on or after
July 21, 2024.  This initial Monthly Fee Statement will cover the period
from the Petition Date through June 30, 2024.  Thereafter, the Professionals
may file Monthly Fee Statements in the manner described above.
(e)
Beginning with the period ending on August 31, 2024, and at three-month
intervals thereafter (the “Interim Fee Period”), each of the Professionals
may file and serve on the Application Recipients an interim fee application
(each, an “Interim Fee Application”) for compensation and reimbursement
of expenses sought in the Monthly Fee Statements served during such
period.  Each Professional shall serve notice of its Interim Fee Application
(which identifies the Professional seeking compensation, discloses the
period for which the payment of compensation and reimbursement of
expenses is being sought, and describes the amount of compensation and
expenses sought) on all parties that have entered their appearance pursuant
to Bankruptcy Rule 2002. The Interim Fee Application should conform to
the requirements of the Local Rules, the Bankruptcy Rules, and the
Bankruptcy Code Sections 330 and 331.  Application Recipients will have
21 days after service of an Interim Fee Application to object thereto
(the “Interim Fee Application Objection Deadline”).  The Interim Fee
Application Objection Deadline shall be conspicuously stated on the
respective Interim Fee Application.  The first Interim Fee Application
should cover the Interim Fee Period from the Petition Date through and
including August 31, 2024.
(f)
The Debtors will request that the Court schedule a hearing on Interim Fee
Applications at least once every three months or at such other intervals as
the Court deems appropriate.  The Court, in its discretion, may approve an
uncontested Interim Fee Application without the need for a hearing upon
4
For the avoidance of doubt, no Professional shall file a CNO or otherwise request entry of an order approving
payment of any fees or expenses if any objection has been raised, either formally or informally, and such objection
has not been resolved.
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the Professional’s filing of a CNO.  Upon allowance by the Court of a
Professional’s Interim Fee Application, the Debtors shall be authorized to
promptly pay such Professional all allowed fees (including the 20%
holdback) and expenses not previously paid.
(g)
A pending Objection to payment of compensation or reimbursement of
expenses will not disqualify a Professional from the future payment of
compensation or reimbursement of expenses under the Compensation
Procedures.
(h)
Neither (i) the payment of or the failure to pay, in whole or in part,
compensation for services and reimbursement of expenses under the
Compensation Procedures nor (ii) the filing of or the failure to file an
Objection to any Monthly Fee Application or Interim Fee Application will
bind any party in interest or the Court with respect to the allowance of
interim or final applications for compensation for services and
reimbursement of expenses of Professionals.  All fees and expenses paid to
Professionals in accordance with the Compensation Procedures are subject
to disgorgement until final allowance by the Court.
(i)
Professionals shall file final applications for compensation and
reimbursement (collectively, the “Final Fee Applications”) by such
deadline as may be established in a confirmed chapter 11 plan or in an order
of the Court.  All Final Fee Applications shall comply with the applicable
provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules,
and applicable orders of the Court.  For the avoidance of doubt, neither
(i) the failure to file any Monthly Fee Statement and/or Interim Fee
Application nor (ii) a pending Objection to any amounts sought under any
Monthly Fee Statement and/or an Interim Fee Application will hinder,
prevent, or delay a Professional from filing a Final Fee Application or
seeking amounts for any compensation or reimbursement that is subject to
a pending Objection.
10.
The Debtors request that the Court limit service of the Interim Fee Applications and
the Final Fee Applications (collectively, the “Applications”) to the Application Recipients, and
that all other parties that have filed a notice of appearance with the Clerk of this Court and
requested notice of pleadings in these chapter 11 cases be entitled to receive only notice of hearings
on the Applications (the “Hearing Notice”).  Serving the Applications and the Hearing Notices in
this manner will permit the parties most active in these chapter 11 cases to review and object to
the Professionals’ fees and expenses, and save unnecessary administrative and mailing expenses.
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Basis for Relief
11.
Pursuant to section 331 of the Bankruptcy Code, all Professionals are entitled to
submit applications for interim compensation and reimbursement of expenses every 120 days, or
more often if the bankruptcy court permits.  See 11 U.S.C. § 331.  Additionally, section 105(a) of
the Bankruptcy Code authorizes the Court to issue any order “necessary or appropriate to carry out
the provisions of [the Bankruptcy Code],” thereby codifying the Court’s inherent equitable powers.
11 U.S.C. § 105(a).
12.
Factors to consider in deciding whether to establish interim compensation
procedures include “the size of [the] reorganization cases, the complexity of the issues involved,
and the time required on the part of the attorneys for the debtors in providing services necessary
to achieve a successful reorganization of the debtors . . . .”  See, e.g., In re Int’l Horizons, Inc.,
10 B.R. 895, 897 (Bankr. N.D. Ga. 1981) (establishing procedures for monthly interim
compensation).
13.
The size of these chapter 11 cases and time and effort that will be required from the
Professionals to successfully complete a sale process involving some or all of the Debtors’ assets
justifies the Compensation Procedures requested herein.  Indeed, such Compensation Procedures
are necessary to ensure that the Professionals are fairly and timely compensated for their services
in these cases and are not forced to bear undue financial burden or risk caused by delays in
payment.
14.
Courts in this jurisdiction have approved relief similar to the relief requested in this
motion.  See, e.g., In re Supply Source Enterprises, Inc., No. 24-11054 (BLS) (Bankr. D. Del. June
13, 2024) (granting order establishing procedures for interim compensation and reimbursement of
expenses for retained professionals); In re Express, Inc., No. 24-10831 (KBO) (Bankr. D. Del.
May 14, 2024) (same); In re Sientra, Inc., No. 24-10245 (JTD) (Bankr. D. Del. Mar. 26, 2024)
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(same); In re MVK Farmco LLC, No. 23-11721 (LSS) (Bankr. D. Del. Nov. 15, 2023) (same); In
re Yellow Corporation, No. 23-11069 (CTG) (Bankr. D. Del. Sept. 13, 2023) (same); In re PGX
Holdings, Inc., Case No. 23-10718 (CTG) (Bankr. D. Del. Jun. 4, 2023) (same).
15.
The proposed Compensation Procedures will enable the Debtors to closely monitor
costs of administering these chapter 11 cases, maintain level cash flow availability, and implement
efficient cash management procedures.  Moreover, the Compensation Procedures will allow the
Court and key parties in interest to ensure the reasonableness and necessity of the compensation
and reimbursement sought pursuant to such procedures.
16.
Establishing the Compensation Procedures will significantly aid the efficient
administration of these chapter 11 cases.  Accordingly, the relief requested is in the best interests
of the Debtors’ estates, creditors, and parties in interest.
Notice
17.
The Debtors will provide notice of this motion to:  (a) the United States Trustee for
the District of Delaware; (b) advisors to any statutory committee appointed; (c) counsel to the 1L
Ad Hoc Group; (d) the agent of the DIP Facility and counsel thereto; (e) the agent of the First Lien
Credit Agreement and counsel thereto; (f) the Second Lien Credit Agreement Agent and counsel
thereto; (g) the agent of the First Lien Notes and counsel thereto; (h) the Debtors’ Professionals;
and (i) any party that has requested notice pursuant to Bankruptcy Rule 2002.  The Debtors submit
that, in light of the nature of the relief requested, no other or further notice need be given.
Case 24-11217-BLS    Doc 118    Filed 06/25/24    Page 9 of 10

WHEREFORE, the Debtors request entry of the Order, substantially in the form attached
hereto as Exhibit A, (a) granting the relief requested herein and (b) granting such other relief as
the Court deems appropriate under the circumstances.
Dated: June 25, 2024
Wilmington, Delaware
/s/  Patrick J. Reilley
COLE SCHOTZ P.C.
KIRKLAND & ELLIS LLP
Patrick J. Reilley, Esq. (DE Bar No. 4451)
KIRKLAND & ELLIS INTERNATIONAL LLP
500 Delaware Avenue, Suite 1410
Joshua A. Sussberg, P.C. (admitted pro hac vice)
Wilmington, Delaware 19801
601 Lexington Ave
Telephone:
(302) 652-3131
New York, New York 10022
Facsimile:
(302) 652-3117
Telephone:
(212) 446-4800
Email:
preilley@coleschotz.com
Facsimile:
(212) 446-4900
Email:
joshua.sussberg@kirkland.com
- and -
- and -
Michael D. Sirota, Esq. (admitted pro hac vice)
Spencer A. Winters, P.C. (admitted pro hac vice)
Warren A. Usatine, Esq (admitted pro hac vice)
Yusuf U. Salloum (admitted pro hac vice)
Court Plaza North, 25 Main Street
333 West Wolf Point Plaza
Hackensack, New Jersey 07601
Chicago, Illinois 60654
Telephone:
(201) 489-3000
Telephone:
(312) 862-2000
Facsimile:
(201) 489-1536
Facsimile:
(312) 862-2200
Email:
msirota@coleschotz.com
Email:
spencer.winters@kirkland.com
wusatine@coleschotz.com
yusuf.salloum@kirkland.com
Proposed Co-Counsel to the Debtors
Proposed Co-Counsel to the Debtors
and Debtors in Possession
and Debtors in Possession
Case 24-11217-BLS    Doc 118    Filed 06/25/24    Page 10 of 10

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