Vyaire re. PJT's First Interim Fee Application - fv
- Date
- 2024-07-30
Summary
The First Interim Application of PJT Partners LP as investment banker to the debtors in In re Vyaire Medical, Inc., et al., Chapter 11 Case No. 24-11217 (BLS), filed November 12, 2024 as Doc 734 in the U.S. Bankruptcy Court for the District of Delaware. It covers the period of June 9, 2024 through August 31, 2024 and seeks compensation of $1,228,333.33 and expense reimbursement of $2,104.96. The application lists prior monthly fee statements, describes the retention order entered July 30, 2024 and the engagement letter's Monthly Fee, Capital Raising Fee and Restructuring Fee terms, and summarizes services including the sale process and the auction for the Ventilation Assets. It asks the court to allow Monthly Fees of $478,333.33 and a Capital Raising Fee of $750,000.00, and states an amount due of $348,478.33.
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Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 1 of 13
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
----------------------------------------------------------
)
In re ) Chapter 11
)
VYAIRE MEDICAL, INC., et al., 1 ) 24-11217 (BLS)
)
Debtors. ) (Jointly Administered)
)
----------------------------------------------------------
FIRST INTERIM APPLICATION OF PJT PARTNERS LP AS
INVESTMENT BANKER TO THE DEBTORS AND DEBTORS-IN-POSSESSION FOR
ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND FOR THE
REIMBURSEMENT OF ALL ACTUAL AND NECESSARY EXPENSES INCURRED
FOR THE PERIOD OF JUNE 9, 2024 THROUGH AUGUST 31, 2024
SUMMARY SHEET
Name of Applicant: PJT Partners LP
Authorized to Provide
Professional Services to: Debtors
Date of Retention Order: Order entered on July 30, 2024 approving the
retention of PJT Partners LP effective as of June
9, 2024 [Docket No. 335]
Period for which Compensation
And Reimbursement is sought: June 9, 2024 through August 31, 2024
Amount of Compensation sought
as actual, reasonable, and necessary: $1,228,333.33
Amount of Expense Reimbursement sought
as actual, reasonable, and necessary: $2,104.96
Amount of Cash Payment Sought: $348,478.33
This is a monthly x interim final application
1
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.
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 2 of 13
Prior Monthly Fee Statements Filed:
Requested Approved
Date Filed [Docket Number Period Covered Fees Expenses Fees Expenses Amount Paid
08/02/24 [Docket No. 349]1 - $750,000.00 $0.00 $600,000.00 $0.00 $600,000.00
08/15/24 [Docket No. 389]2 06/09/24 – 06/30/24 $128,333.33 $145.00 $102,666.67 $145.00 $0.00
08/30/24 [Docket No. 486]3 07/01/24 – 07/31/24 $175,000.00 $1,026.85 $140,000.00 $1,026.85 $141,026.85
09/26/24 [Docket No. 572]4 08/01/24 – 08/31/24 $175,000.00 $933.11 $140,000.00 $933.11 $140,933.11
1
Certificate of No Objection filed on 08/30/24 [Docket No. 486].
2
Certificate of No Objection filed on 09/06/24 [Docket No. 511].
3
Certificate of No Objection filed on 09/23/24 [Docket No. 538].
4
Certificate of No Objection filed on 10/18/24 [Docket No. 643].
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 3 of 13
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
----------------------------------------------------------
)
In re ) Chapter 11
)
VYAIRE MEDICAL, INC., et al., 1 ) 24-11217 (BLS)
)
Debtors. ) (Jointly Administered)
)
----------------------------------------------------------
FIRST INTERIM APPLICATION OF PJT PARTNERS LP AS
INVESTMENT BANKER TO THE DEBTORS AND DEBTORS-IN-POSSESSION FOR
ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND FOR THE
REIMBURSEMENT OF ALL ACTUAL AND NECESSARY EXPENSES INCURRED
FOR THE PERIOD OF JUNE 9, 2024 THROUGH AUGUST 31, 2024
PJT Partners LP (“PJT”), investment banker to the above-captioned debtors and
debtors-in-possession (collectively, the “Debtors”), hereby submits its first interim fee application
(the “First Interim Fee Application”) for the period of June 9, 2024 through August 31, 2024 (the
“First Interim Period”). By this First Interim Fee Application, PJT seeks payment of professional
fees in the amount of $1,228,333.33 and the reimbursement of out-of-pocket expenses incurred in
the amount of $2,104.96. PJT respectfully represents as follows:
Background
1. On June 9, 2024 (the “Petition Date”), the Debtors 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”). The Debtors are operating their businesses and managing their
properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
1
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.
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 4 of 13
2. On July 9, 2024, this Court entered the Order (I) Establishing Procedures for
Interim Compensation and Reimbursement of Expenses for Retained Professionals and (II)
Granting Related Relief [Docket No. 218] (the “Procedures Order”) establishing procedures for
interim compensation and reimbursement of expenses for professionals.
3. On July 9, 2024, the Debtors filed the Application of Debtors for Entry of An Order
(I) Authorizing the Retention and Employment of PJT Partners LP as Investment Banker to the
Debtors and Debtors In Possession Effective as of the Petition Date, (II) Waiving Certain
Information Requirements Pursuant to Local Rule 2016-2, and (II) Granting Related Relief
[Docket No. 240] (the “Retention Application”), pursuant to which the Debtors sought authority
to employ and retain PJT as their investment banker pursuant to the terms of an engagement letter
(the “Engagement Letter”) dated April 25, 2024. A copy of the Engagement Letter was attached
to the Retention Application.
4. On July 30, 2024, this Court entered the Order (I) Authorizing the Retention and
Employment of PJT Partners LP as Investment Banker to the Debtors and Debtors in Possession
Effective as of the Petition Date, (II) Waiving Certain Information Requirements Pursuant to Local
Rule 2016-2, and (III) Granting Related Relief [Docket No. 335] (the “Retention Order”)
approving the Retention Application and authorizing the employment and retention of PJT
effective as of June 9, 2024, pursuant to the terms of the Engagement Letter, as modified by the
Retention Order.
5. PJT submits this First Interim Fee Application requesting: (i) the allowance of
Monthly Fees (as defined below) earned for investment banking services rendered to the Debtors
during the First Interim Period, (ii) the Capital Raising Fee (as defined below), and (iii) the
reimbursement of out-of-pocket expenses incurred during the First Interim Period.
2
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 5 of 13
The PJT Engagement
6. Pursuant to the Engagement Letter, PJT was retained to provide the following
services to the Debtors:2
(a) assist in the evaluation of the Debtors’ businesses and prospects;
(b) assist in the development of the Debtors’ long-term business plan and related
financial projections;
(c) assist in the development of financial data and presentations to the Debtors’ board
of directors, various creditors and/or third parties;
(d) analyze the Debtors’ financial liquidity and evaluate alternatives to improve such
liquidity;
(e) analyze various Restructuring scenarios and the potential impact of these scenarios
on the recoveries of those stakeholders impacted by the Restructuring;
(f) provide strategic advice with regard to restructuring or refinancing the Debtors’
Obligations;
(g) evaluate the Debtors’ debt capacity and alternative capital structures;
(h) participate in negotiations among the Debtors and their creditors, suppliers, lessors,
and other interested parties and/or potential financing parties;
(i) value securities offered by the Debtors in connection with a Restructuring;
(j) provide financial and valuation advice and assistance to the Debtors in developing
and seeking approval of an in-court Restructuring (including a Chapter 11 plan);
(k) advise the Debtors and negotiate with lenders with respect to potential waivers or
amendments of various credit facilities;
(l) assist in arranging financing for the Debtors, as requested;
(m) provide expert witness testimony concerning any of the subjects encompassed by
the other investment banking services; and
(n) provide such other advisory services as are customarily provided in connection with
the analysis and negotiation of a transaction similar to a potential Restructuring
and/or Capital Raise, as requested and mutually agreed.
2
Capitalized terms used but not defined herein shall have the meanings provided thereto in the Engagement Letter.
3
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 6 of 13
7. Pursuant to the Engagement Letter, as approved by the Retention Order, the
Debtors agreed to pay PJT as follows in consideration for the services rendered:3
(a) Monthly Fee: The Debtors shall pay a monthly advisory fee (the “Monthly Fee”)
in the amount of $175,000. Fifty percent (50%) of the first $1,050,000 in Monthly
Fees paid to PJT under the Engagement Letter and/or the Prior Letter shall be
credited, once and without duplication, against any Restructuring and/or Capital
Raising Fee, up to a maximum total aggregate credit against all such fees equal to
$525,000.
(b) Capital Raising Fee: The Debtors shall pay a capital raising fee (the “Capital
Raising Fee”) for any Capital Raise, earned and payable upon the earlier of the
receipt of a binding commitment letter and the closing of such Capital Raise. If
access to the financing is limited by orders of the bankruptcy court, a proportionate
fee shall be payable with respect to each available commitment (irrespective of
availability blocks, borrowing base, or other similar restrictions). The Capital
Raising Fee will be calculated as:
Senior Debt (other than Structured Financing): One-and-a-half percent
(1.5%) of the total issuance and/or committed amount of senior debt financing,
excluding senior debt financing that is or may (or is anticipated in the future to)
constitute a Structured Financing,
Junior Debt (and Structured Financing): Three-percent (3.0%) of the total
issuance and/or committed amount of (A) Structured Financing, (B) junior debt
financing, or (C) unsecured debt financing (including, without limitation,
financing that is junior in right of payment, second lien, subordinated
(structurally or otherwise) and unsecured debt), and
Equity Financing: Five-percent (5.0%) of the issuance and/or committed
amount of equity financing,
in each case, including by means of a back-stop commitment; provided that, (x) the
minimum Capital Raise Fee in respect of any Capital Raise shall be $750,000, and
(y) if any portion of the debt or equity financing is raised from Apax Partners, LLP
or its affiliates (collectively, the “Sponsor”), then PJT Partners shall be entitled to
receive 50% of the Capital Raising Fee (the “Sponsor Capital Raising Fee”) to
which it otherwise would have been entitled in respect of any debt or equity
financing raised from the Sponsor.
(c) Restructuring Fee: The Debtors shall pay a fee in respect of a Restructuring (the
“Restructuring Fee”) equal to $7,000,000, earned and payable upon the
consummation of a Restructuring.
3
This description of PJT’s compensation structure is for summary and illustrative purposes only. The terms of the
Engagement Letter, as modified and approved by the Retention Order, shall apply to any such compensation awarded
to PJT.
4
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 7 of 13
(d) Expense Reimbursements: In addition to the fees described above, the Debtors
agree to reimburse PJT for all reasonable and documented out-of-pocket expenses
incurred during PJT’s engagement, including, but not limited to, travel and lodging,
direct identifiable data processing, document production, publishing services and
communication charges, courier services, working meals, reasonable and
documented fees and expenses of PJT’s outside counsel (without the requirement
that the retention of such counsel be approved by the court in any bankruptcy case),
and other necessary expenditures, payable upon rendition of invoices setting forth
in reasonable detail the nature and amount of such expenses Further, in connection
with the reimbursement, contribution and indemnification provisions set forth in
the Engagement Letter and Attachment A to the Engagement Letter (the
“Indemnification Agreement”), which is incorporated therein by reference and
addressed further below, the Debtors agree to reimburse each PJT Party, for its legal
and other expenses (including the cost of any investigation and preparation) as they
are incurred in connection with any matter in any way relating to or referred to in
the Engagement Letter or arising out of the matters contemplated by the
Engagement Letter (including, without limitation, in enforcing the Engagement
Letter), subject to certain exceptions, limitations, and requirements set forth in the
Indemnification Agreement.
Services Provided by PJT During the First Interim Period
8. PJT has rendered professional services to the Debtors as requested and in
furtherance of the interests of the Debtors and the Debtors’ estate. The variety and complexity of
the issues in this chapter 11 case and the need to act or respond to such issues on an expedited
basis have required the expenditure of substantial time by PJT personnel. PJT respectfully submits
that the professional services that it rendered on behalf of the Debtors were necessary and
appropriate, and have directly contributed to the effective administration of this chapter 11 case.
The following summary of services rendered during the First Interim Period is not intended to be
an exhaustive description of the work performed; rather, it is merely an attempt to highlight certain
of those areas in which PJT rendered services to the Debtors:
(a) evaluating the Debtors’ businesses and prospects;
(b) assisting in the development of materials for the Debtors’ Special Committee of the
Board (the “Special Committee”);
(c) participating in meeting(s) with the Special Committee;
5
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 8 of 13
(d) conducting the post-petition sale process, including, among other activities,
management meetings and extensive due diligence;
(e) analyzing non-binding bids received in connection with the sale process;
(f) negotiating bids received in connection with the sale process;
(g) conducting the auction for the Ventilation Assets;
(h) participating in the Sale Hearings;
(i) preparing and filing various declarations, including (i) in support of the DIP
financing, (ii) in support of the Bid Procedures, and (iii) in connection with the
Proposed Sale Orders;
(j) participating in discussions among the Debtors, their other advisors and the
Debtors’ various creditors, including the 1L Ad Hoc Group and the Official
Committee of Unsecured Creditors; and
(k) providing support to counsel with regards to various matters.
The PJT Team
9. The investment banking services set forth above were performed primarily by:
Jamie Baird, Partner; Rakesh Patel, Partner; Michael Schlappig, Managing Director; Amit Sharma,
Managing Director; Avi Raval, Managing Director; Sammy Lamali, Director; Dylan Friesner,
Vice President; May Li, Associate; Ahmad Choudhry, Analyst; Raymond Mason, Analyst; and
other PJT professionals as needed. Details of the background and experience of the professionals
currently employed at PJT are provided in Appendix A.
PJT’s Request for Allowance of Compensation and Reimbursement of
Out-of-Pocket Expenses
10. For the First Interim Period, PJT seeks (a) allowance of Monthly Fees in the amount
of $478,333.33, and (b) reimbursement of out-of-pocket expenses incurred in the amount of
$2,104.96. Out-of-pocket expenses incurred by PJT during the First Interim Period but not yet
processed due to timing, will be submitted at a later date. Although every effort has been made to
include all expenses incurred during the First Interim Period, some expenses might not be included
in this First Interim Fee Application due to delays caused in connection with the accounting and
6
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 9 of 13
processing of such expenses. Accordingly, PJT reserves the right to make further application to
this Court for allowance of such expenses incurred during the First Interim Period but not included
herein.
PJT’s Request for Allowance of the Capital Raising Fee
11. In addition to the Monthly Fees earned and out-of-pocket expenses incurred during
the First Interim Period, PJT earned a Capital Raising Fee during the First Interim Period pursuant
to the terms of the Engagement Letter.
12. On July 11, 2024, this Court entered the Final Order (I) Authorizing the Debtors to
Obtain Postpetition Financing, (II) Authorizing the Debtors to Use Cash Collateral, (III) Granting
Liens and Providing Superpriority Administrative Expense Claims, (IV) Granting Adequate
Protection, (V) Modifying Automatic Stay, and (VI) Granting Related Relief [Docket No. 248]
authorizing, among other relief, the Debtors to obtain debtor-in-possession post-petition financing
(the “DIP Financing”) in the aggregate amount of up to $180 million.
13. The Engagement Letter provides, in pertinent part, that PJT shall earn a Capital
Raising Fee equal to “1.5% of the total issuance and/or committed amount of senior debt financing.
. . provided that, the minimum Capital Raise Fee in respect of any Capital Raise shall be $750,000
. . .” PJT is only seeking allowance and payment of a Capital Raising Fee in respect to the “new
money” portion of the DIP Financing of $45 million which would equate to a $675,000 fee (i.e.,
$45 million x 1.5%). However, given the minimum Capital Raising Fee payable to PJT pursuant
to the terms of the Engagement Letter, PJT earned a Capital Raising Fee in respect of the “new
money” portion of the DIP Financing in an amount equal to $750,000.
14. Invoices detailing the fees earned and out-of-pocket expenses incurred during the
First Interim Period is attached hereto as Appendix B. A summary of the fees earned and out-of-
pocket expenses incurred during the First Interim Period is provided below:
7
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 10 of 13
Out-Of-Pocket Payment
First Interim Period Fees Expenses Received Amount(s) Due
June 9 – 30, 20244 $128,333.33 145.00 $- $128,478.33
July 1 – 31, 2024 175,000.00 1,026.85 (141,026.85) 35,000.00
August 1 – 31, 2024 175,000.00 933.11 (140,933.11) 35,000.00
Capital Raising Fee 750,000.00 - (600,000.00) 150,000.00
Total $1,228,333.33 $2,104.96 ($881,959.96) $348,478.33
15. PJT respectfully submits that the compensation requested for the services rendered
by PJT to the Debtors during the First Interim Period is fully justified and reasonable based upon
(a) the complexity of the issues presented, (b) the skill necessary to perform the financial advisory
services properly, (c) the preclusion of other employment, (d) the customary fees charged to clients
in non-bankruptcy situations for similar services rendered, (e) time constraints required by the
exigencies of the case, and (f) the experience, reputation and ability of the professionals rendering
services.
16. PJT respectfully submits that the services it has rendered to the Debtors have been
necessary and in the best interests of the Debtors and the Debtors’ estate. PJT respectfully submits
that under the criteria normally examined in chapter 11 reorganization cases, the compensation
requested by PJT is reasonable in light of the work performed by PJT during these chapter 11
cases.
17. The amount of the compensation sought in this First Interim Fee Application and
PJT’s billing practices are consistent with market practices in a bankruptcy context. PJT has never
billed its clients based on the number of hours expended by its professionals. Accordingly, PJT
does not have hourly rates for its professionals, and PJT’s professionals generally do not maintain
detailed time records of the work performed for its clients. However, PJT has maintained
contemporaneous time records in this case in one-half hour increments. Time records of the
4
Monthly Fee calculated as follows: 22 days out of 30 days multiplied by $175,000.
8
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 11 of 13
1,512.0 hours expended by PJT professionals in providing investment banking services to the
Debtors during the First Interim Period are provided in Appendix C.
18. A summary of hours expended by PJT professionals during the First Interim Period
is provided below:
Hours Expended By Professional
Professional June 9 – 30, 2024 July 2024 August 2024 Total
Jamie Baird 17.0 33.5 68.0 118.5
Rakesh Patel 2.0 - - 2.0
Michael Schlappig 41.5 68.0 142.5 252.0
Avi Raval - 0.5 - 0.5
Amit Sharma 2.0 - - 2.0
Sammy Lamali 2.0 - - 2.0
Dylan Friesner 110.5 197.0 181.5 489.0
May Li 2.0 - 2.0
Ahmad Choudhry 121.0 217.5 235.0 573.5
Raymond Mason 70.5 - 70.5
Total 368.5 516.5 627.0 1,512.0
19. Out-of-pocket expenses incurred by PJT are charged to a client if out-of-pocket
expenses are incurred for the client or are otherwise necessary in connection with services rendered
for such particular client. PJT does not factor general overhead expenses into any disbursements
charged to its clients in connection with chapter 11 cases. PJT has followed its general internal
policies with respect to out-of-pocket expenses billed as set forth below, with any exceptions
specifically explained.
(a) All cross-country airfare charges are based upon coach class rates.
(b) With respect to local travel, PJT's general policy enables employees to travel by
taxi or, in certain circumstances private car service, to and from meetings while
rendering services to a client on a client related matter, for which the client is
charged. Further, and primarily for safety reasons, employees are permitted to
charge to a client the cost of transportation home if an employee is required to work
past 9:00 p.m. on weekdays on client specific matters.
(c) PJT's general policy permits its professionals to charge in-office dinner meals to a
client after working 3 hours beyond their regularly scheduled workday if an
employee is required to provide services to the client during such dinnertime, and
to charge in-office meals on the weekend if an employee is required to provide
services to a client on the weekend and spends at least 4 hours in the office.
9
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 12 of 13
(d) The External Research category of expenses includes charges from outside
computer/electronic service companies that supply, for a fee, research and/or
financial documents to PJT. The services provided by these companies primarily
consist of the retrieval of financial documents from regulatory agencies and/or the
retrieval of research that would not otherwise be available to PJT. The Internal
Research category of expenses are the charges for time spent by PJT research staff
in operating the computer/electronic terminals related to these computer/electronic
service companies.
(e) The Publishing Services category of expenses includes charges for the production
of text-based publications such as research reports and presentations, and printing
and binding services.
20. All services for which PJT requests compensation were performed for and on behalf
of the Debtors and not on behalf of any other person or stakeholder.
21. No agreement or understanding exists between PJT and any other entity for the
sharing of compensation received or to be received for services rendered in or in connection with
this proceeding.
Certificate of Compliance and Waiver
22. Finally, the undersigned representative of PJT certifies that PJT has reviewed the
requirements of Local Bankruptcy Rule 2016-2 and that this First Interim Fee Application
substantially complies with that Local Bankruptcy Rule. To the extent that this First Interim Fee
Application does not comply in all respects with the requirements of Local Bankruptcy Rule 2016-
2, PJT believes that such deviations are not material and respectfully requests that any such
requirement be waived.
10
Case 24-11217-BLS Doc 734 Filed 11/12/24 Page 13 of 13
Requested Relief
WHEREFORE, PJT requests that the Court:
(a) allow on an interim basis (i) PJT’s Monthly Fees in the amount of $478,333.33; (ii)
PJT’s Capital Raising Fee in the amount of $750,000.00, and (iii) the
reimbursement of PJT’s out-of-pocket expenses in the amount of $2,104.96;
(b) authorize and direct the Debtors to pay PJT’s allowed and unpaid Monthly Fees,
DIP Financing Fee and out-of-pocket expenses incurred during the First Interim
Period as follows:
Monthly Fees $478,333.33
Capital Raising Fee 750,000.00
Out-of-Pocket Expenses 2,104.96
Less: Payment Received (881,959.96)
Amount Due PJT $348,478.33
and
(c) grant such other and further relief as the Court deems just and proper.
Dated: November 12, 2024 PJT Partners LP
Investment Banker to the Debtors
By: /s/ James H. Baird
James H. Baird
Partner
280 Park Avenue
New York, NY 10017
(212) 364-7800
11
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