Application to retain Special Litigation Counsel...only copied relevant parts.

Case 22-13166-PDR Doc 113 Filed 01/20/23

APPLICATION OF CHAPTER 7 TRUSTEE TO RETAIN DAVID C. CIMO
AND THE LAW FIRM OF CIMO MAZER MARK PLLC AS SPECIAL
LITIGATION COUNSEL EFFECTIVE AS OF JANUARY 12, 2023
Marc P. Barmat (the “Trustee”), Chapter 7 Trustee for the estate (the “Estate”) of the
above-captioned Debtor, Generex Biotechnology Corp. (the “Debtor”), pursuant to 11 U.S.C §§
105, 327(e), 328(a), 330, and 331, and Fed. R. Bankr. P. 2014 and 2016, as applicable as set forth
herein, and Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”), moves to retain David C. Cimo and the law firm of Cimo Mazer Mark PLLC (“CMM”)
(collectively, the “Applicant”) as special litigation counsel effective as of January 12, 2023, the
date services were first rendered (the “Application”), and says:
JURISDICTION
1. This Court has jurisdiction to consider this Application pursuant to 28 U.S.C. §
1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue in this district is proper
pursuant to 28 U.S.C. §§ 1408 and 1409.
BACKGROUND
2. On April 23, 2022, three petitioning creditors filed an involuntary petition as to the
Debtor seeking relief under title 11 of the United States Code (the “Bankruptcy Code”)
commencing this case. [ECF No. 1].
3. On May 12, 2022, four additional creditors filed an election to join the involuntary
Chapter 7 Petition. [ECF No. 8].
4. By Order dated June 6, 2022, the Court entered its Order for Relief. [ECF No. 17].
5. On June 7, 2022, the Trustee became the duly appointed and acting Chapter 7
Trustee of the Estate of the Debtor. [ECF No. 18].
6. In administering the Estate, the Trustee has reason to believe that potential claims
may exist against the Debtor’s former management and other third parties warranting, in the
Trustee’s business judgment, the retention of special litigation on a contingency fee basis to
investigate, and if appropriate, prosecute any and all such claims.
RELIEF REQUESTED
7. Subject to the terms and conditions set forth below, the Trustee seeks to retain
CMM as special litigation counsel to represent him in this case to investigate, and if appropriate,
prosecute: (a) claims against former insiders, officers, directors, managers, owners, shareholders,
members, partners, employees, or control persons of the Debtor, (and each of its respective
affiliates, agents, owners, and/or control persons), except Terry Thompson, Richard Purcell, Dr.
Jason Terrell, Anthony Crisci, and Andrew Ro (“Excluded Parties”); (b) claims against former
professionals of the Debtor and its affiliates, including auditors, accountants, bookkeepers,
attorneys, financial brokers, and investment advisors; (c) Chapter 5 avoidance claims, and claim
objections involving the claims described in (a) and (b) above; (d) insurance recovery claims,
including coverage litigation and bad faith claims involving the claims described in (a) and (b)
above; and (e) any and all other litigation claims as may be directed by the Trustee and agreed to
by Applicant, except any claims the estate has against Olaregen Therapeutix, Inc. or Antigen
Express, Inc. d/b/a NuGenerex Immuno-Oncology, Inc. (“Excluded Entities”) (collectively, the
“Litigation Claims”).1
8. Applicant’s compensation will consist solely of a 35% contingency fee to be
calculated based upon gross monetary recoveries or the amount of value provided to the Estate
(the “Contingency Fee”).
9. Pursuant to Section 327(a) of the Bankruptcy Code, the Trustee, “with the court’s
approval, may employ one or more attorneys . . . that do not hold or represent an interest adverse
to the Estate, and that are disinterested persons, to represent or assist the trustee in carrying out the
trustee’s duties.” 11 U.S.C. § 327(a).
10. Pursuant to Section 328(a) of the Bankruptcy Code, the Trustee, “with the court’s
approval, may employ or authorize the employment of a professional person under section 327 . .
. of this title, as the case may be, on any reasonable terms and conditions of employment, including
on a retainer, on an hourly basis, on a fixed or percentage fee basis, or on a contingent fee basis.”
11 U.S.C. § 328(a).
11. The Trustee needs experienced counsel to investigate and possibly pursue the
Litigation Claims. Applicant’s attorneys are experienced and well regarded in the fields of
complex bankruptcy and commercial litigation, and regularly represent fiduciaries and litigants in
such matters throughout the United States. Applicant’s attorneys have an excellent reputation for
the services that the firm proposes to render, and are well qualified to assist the Trustee in this
case. Accordingly, the Trustee submits that his retaining CMM as special litigation counsel to
investigate and, if appropriate, pursue and/or prosecute the Litigation Claims on a contingency fee
basis would be in the best interests of the Estate.
12. The Trustee has reviewed the Declaration of David C. Cimo, Esquire, a shareholder
1 Any and all claims against the Excluded Parties and Excluded Entities are not within the scope of retention due to
the proposed sale and/or settlement of such claims by the Trustee.
at CMM (the “Declaration”), a copy of which are attached hereto as Exhibit A and incorporated
herein by reference.
13. To the best of the Trustee’s knowledge, information, and belief, and based entirely
and in reliance upon the Declaration: (i) CMM does not represent or hold any interest adverse to
the Debtor or to the Estate with respect to the matters for which it is to be employed; and (ii) CMM
has no connection to the Estate, creditors, interest holders, and/or any related parties, except as
may be disclosed in the Declaration.
14. As explained in the Declaration, CMM is disinterested persons within the meaning
of 11 U.S.C. §101(14).
15. If CMM discovers any additional facts bearing on the matters described herein
during the period of their retention, it will supplement the information contained in their respective
Declaration.
16. CMM will assist and advise the Trustee solely related to the investigation and, if
appropriate, prosecution of the Litigation Claims. The Trustee believes that these services will not
duplicate the services that other professionals will be providing to the Estate in this case. CMM
will perform only these services and will not overlap with any of the Trustee’s other professionals.
17. In its discretion, Applicant may advance payment of litigation related costs
pertaining to the investigation and/or pursuit of the Litigation Claims, but the Estate shall be
responsible for the reimbursement and/or payment of all expert witness and consulting fees and
costs, and any and all other normal and customary out-of-pocket expenses incurred in connection
with the professional services provided hereunder, including but not limited to travel, court
reporter fees, printing, photocopy costs, administrative, and other costs.
18. All requests for payment of Applicant’s Contingency Fee pursuant to the Order
approving this Application shall be filed and approved without the need to file formal fee
applications with the Court: (i) by respective motion to approve any and all settlements pursuant
to Fed. R. Bank. P. 9019, with the amount of the Contingency Fee sought to be included in both
the title and body of the motion; and/or (ii) in a motion seeking payment of the Contingency Fee
in the event of payment other than from settlement, i.e., satisfaction of a judgment.
19. Irrespective of the foregoing, Applicant shall file applications for reimbursement
of costs and expenses in compliance with the Bankruptcy Rules, the Local Rules of this Court, and
Bankruptcy Court and United States Trustee Guidelines, or as may otherwise be ordered by the
Court.
20. The Local Rules of this Court and guidelines in this District provide various
timekeeping requirements for professionals. Because Applicant’s compensation in this matter
consists of the Contingency Fee, the Trustee respectfully requests that the Court exempt them from
such requirements.
21. Notice of this Application will be given to the following parties by first class
postage-prepaid U.S. mail, electronic mail, and/or hand delivery: (i) the Office of the United States
Trustee; (ii) the Debtor; (iii) CMM; and (iv) all parties that have requested notice pursuant to
Bankruptcy Rule 2002. The Trustee submits that, in light of the nature of the relief requested, no
other or further notice need be given.
WHEREFORE, the Trustee respectfully requests that the Court enter an order, in
substantially the form attached as Exhibit B: (i) approving this Application; (ii) authorizing him
to retain CMM as special litigation counsel to perform the services set forth herein under the terms
and conditions set forth herein effective as of January 12, 2023, the date services were first
rendered; (iii) authorizing him to pay the Contingency Fee to CMM without further order of the
Court; (iv) authorizing CMM to seek payment of costs and expenses, subject to Applicant filing,
and obtaining Court approval, of a fee application under 11 U.S.C. § 330; and (v) granting any
such other and further relief that the Court may deem just and proper.