IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: ALLIED SYSTEMS HOLDINGS, et al, Debtor(s).

) ) ) ) ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 12-11564 Jointly Administered

Hearing Date: September 28, 2012 at 11:00 a.m. (ET) Objection Deadline (By Agreement): September 24, 2012 at 12:00 noon (ET)

OBJECTION OF THE TEAMSTERS NATIONAL AUTOMOBILE TRANSPORTERS INDUSTRY NEGOTIATING COMMITTEE (TNATINC) TO DEBTORS MOTION PURSUANT TO 11 U.S.C. 363 (b)(1) AND 503 (c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN The Teamsters National Automobile Transporters Industry Negotiating Committee (TNATINC), a creditor, party in interest, and the national negotiating committee of local unions affiliated with the International Brotherhood of Teamsters (IBT) which are the exclusive collective bargaining representatives of over 1000 bargaining unit employees of the Debtors, hereby objects to the Motion (KERP Motion) of the Debtors (the Debtors or the Company) for Entry of an Order Pursuant to 11 U.S.C. 363 (b) (1) and 503 (c)(3) Authorizing the Debtors to Implement Key Employee Retention Plan (the KERP) (Docket No. 420): 1. The TNATINC objects to the Motion for the same reasons raised in the

Objection filed or to be filed by the Official Committee of Unsecured Creditors, which is incorporated as if fully set out and stated herein.1

The TNATINC submits that the Debtors have failed to submit sufficient proof that the employees covered by the KERP Program are not insiders, and therefore reserves its rights in arguing that the Motion does not meet the relevant requirements of 11 U.S.C. 503 (c)(1), (2).

00239084.1

2.

The TNATINC objects to the Motion because there is no demonstrated

need to approve the KERP in order to retain the relevant employees and no demonstration of why these employees should be covered. The Motion overall and supporting papers are based on conclusory and vague allegations about the need for the KERP and do not meet the required showing of, for example, the reasonable relationship to the results to be obtained, reasonableness in light of the particular debtor involved, fairness, consistency with industry standards, due diligence, and independent counsel. In re Global Home Products, LLC, 369 B.R. 778, 784 (Bankr. D. Del. 2007). Hyperbole about the need to stem the tide of allegedly departing employees does not satisfy evidentiary requirements. Thus: a. The Motion admits that the Company did not have an equivalent retention plan prior to the bankruptcy. KERP Motion, 11. The Motion does not detail or demonstrate a loss of relevant employees, or even offers by other employers to such employees, post-bankruptcy as an alleged basis for the Motion. The Motion states that the Company was short staffed before the bankruptcy and variously that it has lost a number of employees in United States and Canada since the filing date or some unspecified number of key employees, and dramatically speaks of the need to stem the tide of such departures. Motion, 7, 15, 21. However, the Company fails to detail and demonstrate how short-staffed it allegedly was in key positions before the bankruptcy, the actual number of losses in key positions that have taken place since the bankruptcy and in what positions, and how any such losses compare to normal attrition in such positions. The Motion reviews the potential loss of key employees but states in one place that its concern is based on the fact of the bankruptcy itself, and in another that it has some unspecified first hand knowledge of an unspecified number of employees (in this instance not described as key) looking for other employment. Motion, 7, 21. The Motion fails to detail and demonstrate the job functions and responsibilities of each of the 79 employees it seeks to cover by the KERP at the cost of $799,523.95, and why the retention of each

b.

c.

d.

e.

such allegedly key individual is essential to reorganization and critical to the functioning of the Debtors ongoing operations. Motion, 7, 21. It says it polled department heads about who should be included in the program, without specifying the variables and considerations to be utilized or that were utilized in such polling exercise and whether any limitations were placed on the number of employees to be so recommended. Motion, 21. f. The Motion expresses concern about replacing any departing employees with temporary employees at higher rates but does not detail and demonstrate the basis for that conclusion. Motion, 16. The Motion states in a conclusory fashion that, notwithstanding the Companys failure to retain an independent benefits consultant, the KERP comports with industry standards and that the Debtors believe that the KERP payments are consistent with bonuses available to comparable employees in its industry. KERP Motion, 20. It also states, in a conclusory fashion, that the wages paid to its non-bargaining employees (as opposed to the covered key employees) are on some undefined low side of the industry. Id.

g.

3.

Section 503 (c)(3) of the Bankruptcy Code requires that the Debtor

demonstrate that these types of retention payments that are outside the ordinary course of business (which the Debtor concedes is the case here, Motion, 11) are justified by the facts and circumstances of the case . . . 11 U.S.C. 503 (c)(3). The burden of proof is on the Debtor. In re Pilgrims Pride Corp., 401 B.R. 229, 236-237 (Bankr. N.D. Tex. 2009). The paucity of proof and detail in the instant KERP Motion appears to reflect an attitude that the approval of any such program is the absolute right of any debtor in a relatively large case, a right concomitant with the bankruptcy filing itself. That attitude is inconsistent with the statute and the reasons for the statutes enactment. Global Home Products, 369 B.R. at 784 (reviewing Congressional concern over KERP abuses and the need for appropriate standards). 4. The Motion should also be denied because this is the wrong time to seek

approval of any such Motion. The Debtors have failed to pledge to respect the wages, benefits, and

working conditions of its other employees, including the more than a thousand employees represented by the TNATINC, and the future direction of these cases remains uncertain. 5. In addition to all of the above, the Court should be particularly sensitive to

the impact of the approval of such a plan on the Debtors bargaining unit employees represented by the TNATINC. As the court noted in In re U.S. Airways, Inc., 329 B.R. 793, 797 (Bankr. E.D. Va. 2005), management bonus plans have something of a shady reputation: All too often they have been used to lavishly reward at the expense of the creditor body the very executives whose bad decisions or lack of foresight were responsible for the debtors financial plight. But even where external circumstances rather than the executives are to blame, there is something inherently unseemly in the effort to insulate the executives from the financial risks all other stakeholders face in the bankruptcy process. In In re Geneva Steel Co., 236 B.R. 770, 773 (Bankr. D. Utah 1999), the court sustained a unions objection to an executive severance program, rejecting the routine application of the business judgment rationale under the circumstances even prior to the enactment of Section 503 (c)(3). The Court noted that it view[ed] the support and participation of the [union] as being equally critical to Genevas successful reorganization as the support and participation of the key employees, and concluded that proposing the plan without consulting with the union whose support and participation in the bankruptcy is critical is not an example of sound business judgment. Id. at 773. These factors are particularly important in circumstances where the evidentiary basis for the Motion is woefully inadequate. 6. The morale and continuing commitment and work of the Debtors

bargaining unit employees is essential to keeping the Debtors in business, maintaining the Debtors viability, and preserving the estate for reorganization.

7.

There simply is no legal or factual basis for approval of the KERP Motion

and it should be denied.

CONCLUSION For the foregoing reasons, the Court should deny the KERP Motion. Dated: September 24, 2012 Respectfully submitted, /s/ Susan E. Kaufman Susan E. Kaufman (DSB#3381) COOCH AND TAYLOR, P.A. th 1000 West Street, 10 Floor The Brandywine Building Wilmington, DE 19899 (302) 984-3820 / (302) 984-3939 Fax Skaufman@coochtaylor.com Richard M. Seltzer, Esq. COHEN, WEISS AND SIMON LLP nd 330 West 42 Street New York, NY 10036 (212) 563-4100 / (646) 473-8230 Fax rseltzer@cwsny.com Counsel for TNATINC

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In Re: Allied Systems Holdings, Inc., et al., Debtors. ) ) ) ) ) Chapter 11 Case No. 12-11564 (CSS) Jointly Administered

CERTIFICATE OF SERVICE I, Susan E. Kaufman, Esquire certify that I caused one true and correct copy of the within OBJECTION OF THE TEAMSTERS NATIONAL AUTOMOBILE TRANSPORTERS INDUSTRY NEGOTIATING COMMITTEE (TNATINC) TO DEBTORS MOTION PURSUANT TO 11 U.S.C. 363 (b)(1) AND 503 (c)(3) SEEKING AN ORDER AUTHORIZING THE DEBTORS TO IMPLEMENT KEY EMPLOYEE RETENTION PLAN to be sent on September 24, 2012 in the manner indicated to the following: Via Hand Delivery Mark D. Collins, Esquire Christopher M. Samis, Esquire Marisa A. Terranova, Esquire Richards Layton & Finger One Rodney Square Wilmington, DE 19899 William D. Sullivan, Esquire William A. Hazeltine, Esquire Sullivan Hazeltine Allinson LLC 901 N. Market St., Suite 1300 Wilmington, DE 19801 David L. Buchbinder, Esquire Office of the U.S. Trustee J. Caleb Boggs Federal Building Suite 2207 Wilmington, DE 19801

Via U.S. Mail, Postage Prepaid Ezra H. Cohen, Esquire Jeffrey W Kelley, Esquire Carolyn Peterson Richter, Esquire Troutman Sanders LLP Bank of America Plaza, Suite 5200 600 Peachtree St NE Atlanta, GA 30308-2216 Michael G. Burke, Esquire Brian J. Lohan, Esquire Dennis Kao, Esquire Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 Matthew A. Clemente Sidley Austin LLP One South Dearborn Street Chicago, IL 60603

DATED: September 24, 2012

Cooch and Taylor, P.A.

/s/ Susan E. Kaufman Susan E. Kaufman, (DSB#3381) 1000 West Street, 10th Floor The Brandywine Building Wilmington, DE 19899 (302) 984-3820 / (302) 984-3939 Fax Skaufman@coochtaylor.com