DECLARATION OF JAMES E. O’HALLORAN IN SUPPORT OF MOTION …

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IN THE UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF DELAWARE

In re: ) Chapter 11)

PIPELINE FOODS, LLC, et al.,1 ) Case No. 21-11002 (KBO))

Debtors. ) Hearing Date: September 22, 2021 at 1:00 p.m. ET) Objections Filed: September 15, 2021

DECLARATION OF JAMES E. O’HALLORAN IN SUPPORT OF MOTION OFATLANTIC SPECIALTY INSURANCE COMPANY TO OBTAIN AN ORDER THAT

THE AUTOMATIC STAY DOES NOT PROHIBIT THE SURETY FROMCANCELLING AND/OR TERMINATING SURETY BONDS, OR, IN THE

ALTERNATIVE AN ORDER PROVIDING RELIEF FROM THE STAY TO CANCELAND/OR TERMINATE SURETY BONDS

I, JAMES E. O’HALLORAN, of full age, hereby declares as follows:

1. I am a Surety Claims Attorney for Intact Insurance Surety Group (“Intact”) and

Atlantic Specialty Insurance Company (“ASIC”). As such, I am fully familiar with the facts and

information contained in this Declaration.

2. I make this Declaration on behalf of Intact and ASIC and their other affiliated

sureties (collectively, the “Surety”).

3. I make this Declaration based upon matters known personally to me and of which

I am competent to testify if called as a witness in proceedings in this matter, and as further

described in this Declaration.

4. Prior to the Petition Date, the Surety issued and/or executed certain surety bonds

and/or related instruments on behalf of certain of the Debtors and/or their affiliates in connection

1The Debtors in these cases, along with the last four digits of each Debtors’ federal tax identification number, are:

Pipeline Foods, LLC (5070); Pipeline Holdings, LLC (5754); Pipeline Foods Real Estate Holding Company, LLC(7057); Pipeline Foods Real Estate Holding Company, LLC (7057); Pipeline Foods, ULC (3762); Pipeline FoodsSouthern Cone S.R.L. (5978); and Pipeline Foods II, LLC (9653).

Case 21-11002-KBO Doc 457 Filed 09/21/21 of 4

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with the Debtors’ business operations (collectively, the “Bonds”).

5. As of the Petition Date, the aggregate penal limit of the active Bonds was in the

amount of $6,306,000.00. Attached as Exhibit “A” is a list dated 7/26/2021 of Bonds that were

active as of the Petition Date. Among the Bonds are those which are generally known as “grain

dealer bonds,” “commodity handler bonds,” etc., which are executed in favor of various public

bodies and utilities (such as the Michigan Department of Agriculture and Rural Development, or

“MDARD”) to secure Debtors’ various contractual and/or statutory obligations in connection

with handling agricultural products, as a supply chain operator.

6. In connection with the Surety’s execution of the Bonds, Debtor Pipeline

Holdings, LLC, executed and delivered a certain General Indemnity Agreement (“Indemnity

Agreement”) executed on or about November 27, 2018. Attached hereto as Exhibit “B” is a true

and accurate redacted copy of the November 27, 2018 Indemnity Agreement.

7. The Indemnity Agreement provides, in relevant part, that Debtor, Pipeline

Holdings, LLC, as “Indemnitor,” “on its or their behalf and/or on behalf of any of its or their

present or future, directly or indirectly majority-owned or controlled subsidiaries or affiliates,

whether alone or in joint venture with others whether or not named herein, and/or on behalf of

any other corporation, entity, partnership or person upon the written request of any of the

undersigned, hereinafter referred to individually and/or collectively as the “Principal,” has the

following obligations, among other things, to Surety:

. . .

2) Indemnity – The indemnitors shall defend, exonerate, hold harmless,indemnify, and keep indemnified the Surety, its successors and assigns from andagainst any and all liability for losses, fees, liabilities, claims, costs and expensesof any kind or nature (collectively, “Indemnity Losses and Expenses”), includingbut not limited to, solicitor and own client costs, party and party costs, judicialand extra-judicial costs, attorney’s fees and expenses, accounting, and any otheroutside consulting fees and from and against any such Indemnity Losses and


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Expenses which the Surety may sustain or incur, plus interest thereon, arising outof, directly or indirectly: (1) the Surety being requested by any of the Indemnitorsto execute or procure the execution of any Bonds, including any incurred costsand expenses under or in connection therewith; or (2) the Surety having executedor procured the execution of any Bonds on behalf of the Principal; or (3) thefailure of the Indemnitors to perform or comply with any of the terms andconditions of this Agreement; and/or (4) the Surety enforcing any of the terms andconditions of this Agreement.

3) Collateral – The Indemnitors upon demand of the Surety, at any time andfrom time to time as for any reason, including but not limited to Surety’s receiptof a claim, shall immediately deliver to the Surety collateral in the form ofcollateral and in amounts, acceptable to Surety in its sole and absolute discretion,to secure the payment and performance of all obligations and liability to theSurety under the terms of this Agreement, including but not limited to thepayment of any actual or contingent Indemnity Losses and Expenses. Anyacceptable collateral provided to the Surety by the Indemnitors or any third partyor the proceeds thereof, in whole or in part, may be held in the name of Suretyand applied to any obligations of Indemnitors under this Agreement. The Suretyshall not have any obligation to release such collateral until it has received awritten release and conclusive evidence of its discharge without loss in the formand substance satisfactory to the Surety with respect to the Bonds and fulfillmentby Indemnitors of all obligations owed, present or future, absolute or contingent,under this Agreement. Indemnitors agree that their failure to immediately depositwith Surety any sums demanded under this section shall cause irreparable harm toSurety for which it has no adequate remedy at law, and Surety shall be entitled toinjunctive relief for specific performance of such obligation.

(See Exhibit “B,” Indemnity Agreement, at second and third un-numbered

paragraphs, at numbered Paragraphs 2) and 3) thereof, and signature lines).

8. Based on the foregoing, by written contract, the Debtors as indemnitors

are obligated to reimburse the Surety for any and all losses, costs and/or expenses

incurred or to be incurred in connection with the Bonds, as well as to provide the Surety

collateral upon demand.

9. In addition, I understand that under applicable common law, certain of the

Debtors are and/or may be obligated to reimburse the Surety for any and all losses, costs


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and/or expenses incurred or to be incurred in connection with the Bonds.

I declare under penalty of perjury, in accordance with 28 U.S.C. §1746, that this

Declaration is true and correct to the best of my knowledge.

Executed on: September 21, 2021 /s/ James E. O’Halloran, Esq.JAMES E. O’HALLORAN, ESQ.Surety Claims Attorney,Intact Insurance Company andAtlantic Specialty Insurance Company


EXHIBIT ABond List

Case 21-11002-KBO Doc 457-1 Filed 09/21/21 Page 1 of 2

Account Name: PIPELINE FOODS, LLCSelected Status: ActiveSelected Effective Date: 07/26/2021Data is current as of: 07/26/2021

Category Bond # Effective Expiration Principal Obligee Description Total Liability Total PremiumContract Bonds (Performance B800020228‐0002 07/05/2021 07/05/2022 PIPELINE REAL ESTATMINNESOTA TO PERFO 106,250.00 2,391.00License and Permit Bonds 800020222‐0005 06/30/2021 06/30/2022 PIPELINE FOODS LLC STATE OF SOUTHGRAIN WAREHOUS 50,000.00 1,125.00License and Permit Bonds 800020218‐0003 03/17/2021 03/17/2022 PIPELINE FOODS LLC NORTH DAKOTAGRAIN ELEVATOR W 260,000.00 5,850.00License and Permit Bonds 800020219‐0003 03/17/2021 03/17/2022 PIPELINE FOODS LLC NORTH DAKOTA ROVING GRAIN BU 62,500.00 1,406.00License and Permit Bonds 800020223‐0002 02/22/2021 02/22/2022 PIPELINE FOODS LLC STATE OF GEORGGRAIN WAREHOUS 20,000.00 450.00License and Permit Bonds 800020224‐0002 02/22/2021 02/22/2022 PIPELINE FOODS LLC LOUISIANA DEPAGRAIN DEALER BO 50,000.00 1,125.00License and Permit Bonds 800020225‐0002 02/22/2021 02/22/2022 PIPELINE FOODS LLC STATE OF MICHI GRAIN MERCHAND 100,000.00 2,250.00License and Permit Bonds 800020226‐0002 02/22/2021 02/22/2022 PIPELINE FOODS LLC COLORADO DEPADEALER AND OR C 55,000.00 1,238.00License and Permit Bonds 800020227‐0002 02/22/2021 02/22/2022 PIPELINE FOODS LLC FLORIDA DEPARTAGRICULTURAL PR 100,000.00 2,250.00License and Permit Bonds 800045241‐0000 01/29/2021 01/29/2022 PIPELINE FOODS LLC MONTANA DEPA962019641 ‐ COM 60,000.00 1,350.00License and Permit Bonds 800020215‐0002 01/18/2021 01/18/2022 PIPELINE FOODS LLC STATE OF NEBRAGRAIN DEALER BO 270,000.00 6,075.00License and Permit Bonds 800020221‐0002 01/14/2021 01/14/2022 PIPELINE FOODS LLC IOWA DEPARTMGRAIN DEALER BO 100,000.00 2,250.00License and Permit Bonds 800020214‐0002 01/10/2021 01/10/2022 PIPELINE FOODS LLC STATE OF ARKANGRAIN DEALER'S B 100,000.00 1,738.00Contract Bonds (Performance B800020216‐0002 12/20/2020 12/20/2021 PIPELINE REAL ESTATMINNESOTA TOWPERFORMANCE AN 106,250.00 2,965.00License and Permit Bonds 800020217‐0002 12/20/2020 12/20/2021 PIPELINE FOODS LLC MISSOURI DEPA GRAIN DEALER'S B 116,000.00 2,610.00License and Permit Bonds 800020220‐0002 12/20/2020 12/20/2021 PIPELINE FOODS LLC MINNESOTA DEPGRAIN BOND (INTA 500,000.00 11,250.00License and Permit Bonds 800048861‐0000 11/20/2020 11/20/2021 PIPELINE FOODS, ULCCANADIAN GRAI 962019615 ‐ CANA 4,250,000.00 89,708.00Totals 6,306,000.00 136,031.00


EXHIBIT BGeneral Indemnity Agreement


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IN THE UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF DELAWARE

In re: ) Chapter 11)

PIPELINE FOODS, LLC, et al.,1 ) Case No. 21-11002 (KBO))

Debtors. )

CERTIFICATE OF SERVICE

I, Gary D. Bressler, do hereby certify that on Tuesday, September 21, 2021, I did cause

the Declaration of James E. O’Halloran In Support Of the Motion Of Atlantic Specialty

Insurance Company to Obtain an Order That the Automatic Stay Does Not Prohibit the Surety

From Cancelling and/or Terminating Surety Bonds, or, In The Alternative an Order Providing

Relief From the Stay to Cancel and/or Terminate Surety Bonds to be electronically filed via

CM/ECF and served upon all parties receiving notice pursuant to the CM/ECF system, as well as

the following parties by electronic mail:

Counsel For Debtors & Debtors InPossessionBarry A. ChatzMonique B. DiSabatinoMatthew P. MilanaMark MinutiMichael L. GesasSaul Ewing Arnstein & Lehr [email protected]@[email protected]

Counsel for Debtors & Debtors InPossessionMichael L. Gesas (admitted pro hac vice)Barry A. Chatz (admitted pro hac vice)David A. Golin (admitted pro hac vice)Christopher S. Naveja (admitted pro hac vice)Andrew J. Rudolph (admitted pro hac vice)Saul Ewing Arnstein & Lehr [email protected]@[email protected]@[email protected]

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are:Pipeline Foods, LLC (5070); Pipeline Holdings, LLC (5754); Pipeline Foods Real Estate Holding Company, LLC(7057); Pipeline Foods Real Estate Holding Company, LLC (7057); Pipeline Foods, ULC (3762); Pipeline FoodsSouthern Cone S.R.L. (5978); and Pipeline Foods II, LLC (9653).


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Counsel for Committee of UnsecuredCreditorsKevin G. CollinsKevin C. Driscoll, Jr.Connie A. LahnMolly N. SiglerBarnes & [email protected]@[email protected]@btlaw.com

U.S. TrusteeJane M. LeamyOffice of the United States [email protected]

Counsel for Coöperatieve RabobankU.A., New York BranchMatthew P. WardMorgan L. PattersonWomble Bond Dickinson (US) [email protected]@wbd-us.com

Counsel for Coöperatieve Rabobank U.A.,New York BranchH. Stephen Castro (admitted pro hac vice)Eric C. Daucher (admitted pro hac vice)Norton Rose Fulbright U.S. [email protected]@nortonrosefulbright.com

Counsel for The Michigan Department ofAgriculture & Rural DevelopmentMegen E. MillerAssistant Attorney General,Environment, Natural Resources, andAgriculture [email protected]

MCELROY DEUTSCH MULVANEY& CARPENTER, LLP

/s/ Gary D. BresslerGary D. Bressler (No. 5544)300 Delaware Ave.; Ste. 770Wilmington, DE 19801Telephone: (302) 300-4515Facsimile: (302) 654-4031E-mail: [email protected]

Counsel to Atlantic Specialty InsuranceCompany


DECLARATION OF JAMES E. O’HALLORAN IN SUPPORT OF MOTION …

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