ITT EDUCATIONAL SERVICES, INC., 1 - Omni Agent Solutions

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION IN RE: ) ) ITT EDUCATIONAL SERVICES, INC., et al.1 ) Case No. 16-07207-JMC-7A ) Debtors. ) Jointly Administered

TRUSTEE’S MOTION TO COMPROMISE AND SETTLE OPEN BANK ACCOUNTS WITH JPMORGAN CHASE BANK, N.A.

Deborah J. Caruso, the chapter 7 trustee in this case (the “Trustee”), by counsel, pursuant

to Rule 9019 of the Federal Rules of Bankruptcy Procedure, requests entry of an order

authorizing the Trustee to compromise and settle issues with the Affiliated Debtors’ (as defined

below) open bank accounts with JPMorgan Chase Bank, N.A. (“Chase”) on the following

grounds:

I. JURISDICTION

1. The Court has jurisdiction over this motion pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).

2. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory predicate for relief is Rule 9019 of the Federal Rules of Bankruptcy

Procedure (the “Bankruptcy Rules”).

II. BACKGROUND

4. On September 16, 2016 (the “Petition Date”), ITT Educational Services, Inc.

(“ITT”), ESI Service Corp. (“ESI”) and Daniel Webster College, Inc. (“Webster College,” and

together with ITT and ESI, the “Affiliated Debtors”) filed voluntary petitions for relief under

chapter 7 of the Bankruptcy Code. The Trustee was appointed interim trustee in each of the

1 The debtors in these cases, along with the last four digits of their respective federal tax identification numbers are ITT Educational Services, Inc. [1311]; ESI Service Corp. [2117]; and Daniel Webster College, Inc. [5980].

Case 16-07207-JMC-7A Doc 2241 Filed 12/06/17 EOD 12/06/17 14:27:21 Pg 1 of 11

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Affiliated Debtors’ bankruptcy cases on the Petition Date pursuant to section 701(a)(1) of the

Bankruptcy Code. The Trustee became the case trustee in each of the Affiliated Debtors’

bankruptcy cases following the conclusion of the first meeting of creditors on November 1, 2016,

pursuant to section 702(d) of the Bankruptcy Code.

5. On October 4, 2016, the Court entered its Order Granting Motion for Joint

Administration of Chapter 7 Cases [Docs 221 & 222], directing the Affiliated Debtors’

bankruptcy cases to be jointly administered for procedural purposes only.

6. On the Petition Date, the Affiliated Debtors maintained more than 100 deposit

accounts at Chase (the “Accounts”), which served as the Affiliated Debtors’ primary depository.

In addition to the Accounts, the Affiliated Debtors have an interest in Account No. xxxxx8776,

maintained with Chase (the “CUSO Account”), which is not subject to the terms of the

Settlement (as defined below) and is not included as an Account for purposes of this Motion.

7. Both prior to and following the Petition Date, Chase provided comprehensive

treasury management services to the Affiliated Debtors in connection with the Accounts.

Chase’s records indicate that the Affiliated Debtors’ bankruptcy estates are indebted to Chase in

an amount exceeding $75,000.00 on account of fees that accrued in connection with the

Accounts since the Petition Date (the “Account Fees”).

8. At the Trustee’s direction, the majority of the Accounts have been closed, with the

exception of seven (7) Accounts (the “Open Accounts”) and the CUSO Account. The Trustee

and Chase have agreed to a settlement (the “Settlement”) to resolve all outstanding matters

related to the Accounts, as described in the Settlement Agreement attached and incorporated as

Exhibit 1. The Settlement includes, but is not limited to, the following terms:

(a) All Open Accounts shall be closed, with the exception of Account No. xxxx4003 (the “Remaining Account”);


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(b) Chase shall wire all funds in the Open Accounts, other than $55,000.00 in the

Remaining Account, to the Trustee’s escrow accounts;

(c) Following Court-approval of the Settlement, Chase may debit the $55,000.00 from the Remaining Account and retain those funds in satisfaction of the Account Fees, which shall also be in satisfaction of any administrative or secured claim on account of the Account Fees.

III. RELIEF REQUESTED

9. The Trustee requests entry of an order, pursuant to Bankruptcy Rule 9019,

authorizing the Trustee to enter into the Settlement with Chase, as described in more detail in the

Settlement Agreement attached as Exhibit 1.

IV. GROUNDS FOR GRANTING RELIEF

10. Pursuant to Bankruptcy Rule 9019(a), the Court may approve a compromise or

settlement on a motion made by the Trustee, after notice and an opportunity for a hearing.

11. Approval of a proposed settlement rests solely in the discretion of the bankruptcy

court. In re Holly Marine Towing, Inc., 699 F.3d 796, 799 (7th Cir. 2012) (citing In re Doctors

Hosp. of Hyde Park, Inc., 474 F.3d 421, 426 (7th Cir. 2007). While the Court must “determine

whether the proposed settlement is fair and equitable and in the best interests of the estate[,]” the

Court is not required to conduct a full evidentiary hearing regarding the propriety of settlement.

Depoister v. Mary M. Holloway Foundation, 36 F.3d 582, 586-87 (7th Cir. 1994). Stated

differently, in reaching a decision on whether to approve a settlement, the Court must make an

informed and independent judgment but need not make an independent investigation of the facts and

it may give weight to the trustee's informed judgment and consider the competency and

experience of counsel supporting the compromise. Id.

12. The factors relevant to the Court’s inquiry include (a) the probability of success in the

litigation; (b) the complexity of the litigation involved, and the expense, inconvenience and delay


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necessarily attending it; and (c) the paramount interest of creditors. Doctors Hosp. of Hyde

Park, Inc., 474 F.3d at 426; In re American Reserve Corp., 841 F.2d 159, 161 (7th Cir. 1987).

13. The Trustee believes that settling the Account Fees for $55,000.00 in exchange for the

voluntary turnover of the funds in the Open Accounts is a reasonable exercise of her sound business

judgment as trustee and is in the best interest of the Affiliated Debtors’ creditors.

V. NOTICE

14. Pursuant to the Notice, Case Management and Administrative Procedures (the

“Case Management Procedures”) approved by the Court on October 4, 2016 [Doc 220], the

Trustee will serve a copy of this motion on the following (as defined in the Case Management

Procedures): (a) the Core Group; (b) the Request for Notice List; and (c) the Appearance List.

NOTICE IS GIVEN, that pursuant to the Case Management Procedures, any objection to this motion must be in writing and filed with the Bankruptcy Clerk by no later than 4:00 p.m. (prevailing Eastern Time) on January 3, 2018. Those not required or not permitted to file electronically must deliver any objection by U.S. mail, courier, overnight/express mail or in person at:

116 U.S. Courthouse 46 East Ohio Street Indianapolis, IN 46204

The objecting party must also serve a copy of the written objection upon the Trustee’s counsel, at Counsel for Trustee Deborah J. Caruso, Rubin & Levin, P.C., 135 N. Pennsylvania Street, Suite 1400, Indianapolis, IN 46204. If an objection is NOT timely filed, the requested relief may be granted without a hearing. NOTICE IS FURTHER GIVEN that in the event an objection to this motion is timely filed, a hearing on this motion and such objection will be conducted on January 10, 2018 at 1:30 p.m. (prevailing Eastern time), in Room 325 of the United States Courthouse, 46 East Ohio Street, Indianapolis, IN 46204.

WHEREFORE, the Trustee respectfully request entry of an order, pursuant to

Bankruptcy Rule 9019, authorizing the Trustee to enter into the Settlement with Chase, and

granting the Trustee all other just and proper relief.


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Respectfully submitted,

RUBIN & LEVIN, P.C.

By: /s/ Meredith R. Theisen Meredith R. Theisen

Deborah J. Caruso (Atty. No. 4273-49) John C. Hoard (Atty. No. 8024-49)

James E. Rossow Jr. (Atty. No. 21063-29) Meredith R. Theisen (Atty. No. 28804-49)

RUBIN & LEVIN, P.C. 135 N. Pennsylvania Street, Suite 1400

Indianapolis, Indiana 46204 Tel: (317) 634-0300 Fax: (317) 263-9411 Email: [email protected]

[email protected] [email protected]

[email protected] Attorneys for Deborah J. Caruso, Trustee


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CERTIFICATE OF SERVICE

I hereby certify that on December 6, 2017, a copy of the foregoing Trustee’s Motion to Compromise and Settle Open Bank Accounts with JPMorgan Chase Bank, N.A. was filed electronically. Pursuant to Section IV.C.3(a) of the Case Management Procedures, notice of this filing will be sent to the following parties through the Court’s Electronic Case Filing System. Parties may access this filing through the Court’s system. John Joseph Allman [email protected], [email protected] Robert N Amkraut [email protected] Scott S. Anders [email protected], [email protected] Manuel German Arreaza [email protected] Todd Allan Atkinson [email protected] Darren Azman [email protected] Joseph E Bain [email protected] Kay Dee Baird [email protected], [email protected];[email protected];[email protected] Michael I. Baird [email protected], [email protected] Christopher E. Baker [email protected], [email protected] James David Ballinger [email protected], [email protected] Joseph E. Bant [email protected] William J. Barrett [email protected], [email protected] Ashley Flynn Bartram [email protected], [email protected] Alex M Beeman [email protected], [email protected] Thomas M Beeman [email protected] Richard James Bernard [email protected] John J Berry [email protected], [email protected] Brandon Craig Bickle [email protected] Robert A. Breidenbach [email protected] Wendy D. Brewer [email protected], [email protected] Kayla D. Britton [email protected], [email protected];[email protected] Jason R Burke [email protected], [email protected] Erin Busch [email protected] Yan Cao [email protected] Kevin M. Capuzzi [email protected], [email protected];[email protected] James E. Carlberg [email protected], [email protected];[email protected] Steven Dean Carpenter [email protected] Deborah Caruso [email protected], [email protected];[email protected];[email protected] Deborah J. Caruso [email protected], [email protected] Joshua W. Casselman [email protected], [email protected];[email protected] Ben T. Caughey [email protected] Sonia A. Chae [email protected]


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John Andrew Chanin [email protected], [email protected] Eboney Delane Cobb [email protected] Michael Edward Collins [email protected] Michael Anthony Collyard [email protected], [email protected] Eileen Connor [email protected] Lawrence D. Coppel [email protected] Heather M. Crockett [email protected], [email protected];[email protected];[email protected] J Russell Cunningham [email protected], [email protected] David H DeCelles [email protected] Dustin R. DeNeal [email protected], [email protected];[email protected] Laura A DuVall [email protected], [email protected] Henry A. Efroymson [email protected] Abby Engen [email protected], [email protected] Annette England [email protected] Charles Anthony Ercole [email protected], [email protected] Carolyn Meredith Fast [email protected] Elaine Victoria Fenna [email protected] Andrew W Ferich [email protected] Patrick F.X. Fitzpatrick [email protected], [email protected];[email protected];[email protected];[email protected] John David Folds [email protected], [email protected] Jennifer N Fountain [email protected], [email protected] Sarah Lynn Fowler [email protected], [email protected] Lydia Eve French [email protected] Jonathan William Garlough [email protected], [email protected];[email protected] Robert P Goe [email protected] Douglas Gooding [email protected] John Andrew Goodridge [email protected], [email protected];[email protected] Michael Wayne Grant [email protected] Alan Mark Grochal [email protected] Gregory Forrest Hahn [email protected], [email protected] Julian Ari Hammond [email protected], [email protected] Wallace M Handler [email protected], [email protected] Adam Craig Harris [email protected] Brian Hauck [email protected] Jeffrey M. Hawkinson [email protected], [email protected] Claude Michael Higgins [email protected] Michael W. Hile [email protected], [email protected] Sean M Hirschten [email protected] Robert M. Hirsh [email protected] John C. Hoard [email protected], [email protected];[email protected] Andrew E. Houha [email protected]


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James C Jacobsen [email protected], [email protected] Christine K. Jacobson [email protected], [email protected] Jay Jaffe [email protected], [email protected];[email protected] Benjamin F Johns [email protected], [email protected] Russell Ray Johnson [email protected] Kenneth C. Jones [email protected] Anthony R. Jost [email protected], [email protected] Timothy Q. Karcher [email protected] John M. Ketcham [email protected], [email protected] Taejin Kim [email protected] Edward M King [email protected], [email protected];[email protected] Michael Orrin King [email protected], [email protected] Roy F. Kiplinger [email protected], [email protected] James A. Knauer [email protected], [email protected] Kevin Dale Koons [email protected], [email protected] Harris J. Koroglu [email protected], [email protected] Lawrence Joel Kotler [email protected] Robert R Kracht [email protected] Andrew L. Kraemer [email protected], [email protected] David R. Krebs [email protected], [email protected] Jerrold Scott Kulback [email protected] Jay R LaBarge [email protected] Vilda Samuel Laurin [email protected] Jordan A Lavinsky [email protected] David S Lefere [email protected], [email protected] Martha R. Lehman [email protected], [email protected];[email protected];[email protected] Gary H Leibowitz [email protected], [email protected];[email protected] Donald D Levenhagen [email protected] Elizabeth Marie Little [email protected] Melinda Hoover MacAnally [email protected], [email protected];[email protected] Christopher John Madaio [email protected] John A. Majors [email protected], [email protected] Steven A. Malcoun [email protected] Jonathan Marshall [email protected] Thomas Marvin Martin [email protected] Jeff J. Marwil [email protected], [email protected];[email protected];[email protected] Richard J Mason [email protected] Patrick Francis Mastrian [email protected], [email protected] Ann Wilkinson Matthews [email protected] Rachel Jaffe Mauceri [email protected]


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Michael K. McCrory [email protected], [email protected] Maureen Elin McOwen [email protected] Harley K Means [email protected], [email protected];[email protected];[email protected] Toby Merrill [email protected],[email protected],[email protected] Robert W. Miller [email protected] Thomas E Mixdorf [email protected], [email protected] Evgeny Grigori Mogilevsky [email protected], [email protected] James P Moloy [email protected], [email protected];[email protected] Ronald J. Moore [email protected] Hal F Morris [email protected] Michael David Morris [email protected] Kevin Alonzo Morrissey [email protected], [email protected];[email protected];[email protected] Whitney L Mosby [email protected], [email protected] C Daniel Motsinger [email protected], [email protected];[email protected];[email protected];[email protected] Lee Duck Moylan [email protected], [email protected] Abraham Murphy [email protected] Justin Scott Murray [email protected] Alissa M. Nann [email protected], [email protected] Henry Seiji Newman [email protected] Kevin M. Newman [email protected], [email protected] Cassandra A. Nielsen [email protected], [email protected],[email protected] Ryan Charles Nixon [email protected] Kathryn Elizabeth Olivier [email protected], [email protected];[email protected] Gregory Ostendorf [email protected], [email protected] Pamela A. Paige [email protected], [email protected] Danielle Ann Pham [email protected] Zachary David Price [email protected] Jack A Raisner [email protected] Jonathan Hjalmer Reischl [email protected] James Leigh Richmond [email protected] Melissa M. Root [email protected] David A. Rosenthal [email protected] James E Rossow [email protected], [email protected];[email protected];[email protected] Rene Sara Roupinian [email protected], [email protected];[email protected];[email protected];[email protected];[email protected] Victoria Fay Roytenberg [email protected], [email protected] Steven Eric Runyan [email protected]


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Craig Damon Rust [email protected], [email protected] Karl T Ryan [email protected], [email protected] Joseph Michael Sanders [email protected] Thomas C Scherer [email protected], [email protected] James R. Schrier [email protected], [email protected];[email protected] Ronald James Schutz [email protected] H. Jeffrey Schwartz [email protected] Courtney Michelle Scott [email protected] Joseph E Shickich [email protected], [email protected] William E Smith [email protected], [email protected] Lauren C. Sorrell [email protected], [email protected];[email protected] Catherine L. Steege [email protected], [email protected];[email protected] Jesse Ellsworth Summers [email protected], [email protected] Jonathan David Sundheimer [email protected] Nancy K. Swift [email protected], [email protected] Eric Jay Taube [email protected], [email protected];[email protected] Meredith R. Theisen [email protected], [email protected];[email protected] Meredith R. Theisen [email protected], [email protected];[email protected];[email protected];[email protected] Jessica L Titler [email protected] Todd Christian Toral [email protected], [email protected] Ronald M. Tucker [email protected], [email protected],[email protected] U.S. Trustee [email protected] Michael Ungar [email protected] Sally E Veghte [email protected], [email protected] Rachel Claire Verbeke [email protected] Amy L VonDielingen [email protected] Carolyn Graff Wade [email protected] Louis Hanner Watson [email protected] Jeffrey R. Waxman [email protected], [email protected];[email protected] Christine M.H. Wellons [email protected] Philip A. Whistler [email protected], [email protected] Bradley Winston [email protected], [email protected] Brandon Michael Wise [email protected] Cathleen Dianne Wyatt [email protected], [email protected] Joseph Yar [email protected], [email protected] James T Young [email protected], [email protected];[email protected] James E. Zoccola [email protected]


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I further certify that on December 6, 2017, pursuant to Section IV.C.3(c) of the Case Management Procedures, a copy of the foregoing Trustee’s Motion to Compromise and Settle Open Bank Accounts with JPMorgan Chase Bank, N.A. was emailed to the following:

Arlington ISD/Richardson ISD: Eboney Cobb at [email protected] CEC Red Run, LLC: Alan M. Grochal at [email protected] SWRE Deal V Building, LLC: Paul Weiser at [email protected] Tarrant County/Dallas County: Elizabeth Weller at [email protected] Northwest Natural Gas Company: Ashlee Minty at [email protected] Solar Drive Business, LLC: Chris W. Halling at [email protected] Market-Turk Company: Jordan A. Lavinsky at [email protected] Taxing Authority for Harris County, Texas: John P. Dillman at [email protected] Texas Comptroller of Public Accounts: Rachel Obaldo at [email protected] Clear Creek Independent School District: Carl O. Sandin at [email protected] Synchrony Bank: Recovery Management Systems Corporation at [email protected] Bexar County: Don Stecker at [email protected] SWRE Deal V Building, LLC: Nancy K. Swift at [email protected] TN Dept. of Revenue: Michael Willey at [email protected] Florida Department of Education: Benman D. Szeto at [email protected] Last Second Media, Inc.: T. Todd Egland at [email protected] Hung Duong: Kevin Schwin at [email protected] Travis County: Kay D. Brock at [email protected] Able Building Maintenance: Scott D. Fink at [email protected] Marathon Ventures, LLC: Daniel M. Karger at [email protected] Oklahoma County Treasurer: Tammy Jones at [email protected] JM Partners LLC: John Marshall at [email protected]

/s/ Meredith R. Theisen

Meredith R. Theisen g:\wp80\trustee\caruso\itt educational - 86723901\drafts\motion compromise settle chase accounts.docx


Exhibit 1 Page 1 of 7

Case 16-07207-JMC-7A Doc 2241-1 Filed 12/06/17 EOD 12/06/17 14:27:21 Pg 1 of 7

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