Exhibit 5.1
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
February 8, 2008
KAR Holdings, Inc.
13085 Hamilton Crossing Boulevard
Carmel, Indiana 46032
| | Re: | KAR Holdings, Inc. and the Guarantors Listed on Schedules I and II hereto |
Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as special counsel to KAR Holdings, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1 (the “Registration Statement”) filed by the Company and the Guarantors (defined below) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”). The prospectus, which forms a part of and is included in the Registration Statement, has been prepared for Goldman, Sachs & Co. in connection with offers and sales in market-making transactions of the Company’s (i) $150,000,000 aggregate principal amount of Floating Rate Senior Notes due 2014 (the “Floating Notes”) and $450,000,000 aggregate principal amount of 8 3/4% Senior Notes due 2014 (the “Fixed Notes” and, together with the Floating Notes, the “Senior Notes”) and, in each case, the applicable Senior Guarantees (defined below), and (ii) $425,000,000 aggregate principal amount of 10% Senior Subordinated Notes due 2015 (the “Subordinated Notes” and, together with the Senior Notes, the “Notes”) and the Subordinated Guarantees (defined below).
The Floating Notes are to be issued under an indenture dated as of April 20, 2007, among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated December 26, 2007, among the Company, ADESA Dealer Services, LLC, ADESA Pennsylvania, LLC, Automotive Finance Consumer Division, LLC, Dent Demon, LLC, Sioux Falls Auto Auction, Inc., Tri-State Auction Co., Inc. and Zabel & Associates, Inc. (collectively, the “Additional Guarantors”), the other guarantors party thereto and the Trustee, and the Second Supplemental Indenture, dated January 22, 2008, among the Company, Axle Holdings, Inc. (“Axle Holdings”), the other guarantors party thereto and the Trustee (as so supplemented, the “Floating Indenture”). The Floating Indenture provides for the guarantee of the Floating Notes (the “Floating Guarantees”) by certain subsidiaries of the Company incorporated or formed pursuant to the laws of the State of Delaware or New York and listed on Schedule I hereto (the “DE/NY Guarantors”) and other subsidiaries listed on Schedule II hereto (the “Non-DE/NY Guarantors” and, together with the DE/NY Guarantors, the “Guarantors”).
KAR Holdings, Inc.
February 8, 2008
Page 2
The Fixed Notes are to be issued under an indenture, dated as of April 20, 2007, among the Company, the guarantors named therein and the Trustee, as supplemented by the First Supplemental Indenture, dated December 26, 2007, among the Company, the Additional Guarantors, the other guarantors party thereto and the Trustee, and the Second Supplemental Indenture, dated January 22, 2008, among the Company, Axle Holdings, the other guarantors party thereto and the Trustee (as so supplemented, the “Fixed Indenture”). The Fixed Indenture provides for the guarantee of the Fixed Notes (the “Fixed Guarantees” and, together with the Floating Guarantees, the “Senior Guarantees”) by the Guarantors.
The Subordinated Notes are to be issued under an indenture, dated as of April 20, 2007, among the Company, the guarantors named therein and the Trustee, as supplemented by the First Supplemental Indenture, dated December 26, 2007, among the Company, the Additional Guarantors, the other guarantors party thereto and the Trustee, and the Second Supplemental Indenture, dated January 22, 2008, among the Company, Axle Holdings, the other guarantors party thereto and the Trustee (as so supplemented, the “Subordinated Indenture” and, together with the Floating Indenture and the Fixed Indenture, the “Indentures”). The Subordinated Indenture provides for the guarantee of the Subordinated Notes (the “Subordinated Guarantees” and, together with the Senior Guarantees, the “Guarantees”) by the Guarantors.
The Floating Notes are to be offered by the Company in exchange for up to $150,000,000 aggregate principal amount of its outstanding Floating Rate Senior Notes due 2014; the Fixed Notes are to be offered by the Company in exchange for up to $450,000,000 aggregate principal amount of its outstanding 8 3/4% Fixed Rate Senior Notes due 2014; and the Subordinated Notes are to be offered by the Company in exchange for up to $425,000,000 aggregate principal amount of its outstanding 10% Senior Subordinated Notes due 2015 (collectively, the “Original Notes”) pursuant to a Registration Statement on Form S-4 (the “Exchange Offer Registration Statement”). The foregoing exchange offers are referred to herein collectively as the “Exchange Offer.”
This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of:
| | (i) | the Registration Statement; |
| | (ii) | an executed copy of the Exchange and Registration Rights Agreement, dated as of April 20, 2007, by and among the Company, the guarantors named in the respective Indentures, and Goldman, Sachs & Co., Bear, |
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February 8, 2008
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Stearns & Co. Inc., UBS Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Initial Purchasers as defined therein (the “Registration Rights Agreement”);
| | (iii) | executed copies of the Indentures; |
| | (iv) | the Certificate of Incorporation of the Company, as certified by the Secretary of the State of Delaware; |
| | (v) | the By-Laws of the Company, as certified by Rebecca C. Polak, the Secretary of the Company; |
| | (vi) | the Certificate or Articles of Incorporation and the By-Laws of each of the DE/NY Guarantors that are corporations, as certified by Rebecca C. Polak, the Secretary of the Company; |
| | (vii) | the Certificate of Formation or Articles of Organization, as applicable, and the Operating Agreements of each of the DE/NY Guarantors that are limited liability companies, as certified by Rebecca C. Polak, the Secretary of the Company; |
| | (viii) | certain actions by written consent of the Board of Directors of the Company, dated as of April 12, 2007, and of the Pricing Committee of the Board of Directors of the Company, dated April 13, 2007, relating to the Exchange Offer, the issuance of the Original Notes and the Notes, the Indentures, the Registration Rights Agreement and related matters, as certified by Rebecca C. Polak, the Secretary of the Company; |
| | (ix) | certain actions by written consent by the Board of Directors of Axle Holdings, Inc., dated January 22, 2008, and of the Board of Directors or Managers, as applicable, dated April 20, 2007, of each of the DE/NY Guarantors relating to the Exchange Offer, the Indentures, the Guarantees, the Registration Rights Agreement and related matters, as certified by Rebecca C. Polak, the Secretary of the Company; |
| | (x) | the Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), on Form T-1, of the Trustee with respect to the Floating Indenture, filed as an exhibit to the Registration Statement; |
| | (xi) | the Statement of Eligibility and Qualification under the Trust Indenture Act, on Form T-1, of the Trustee with respect to the Fixed Indenture, filed as an exhibit to the Registration Statement; |
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February 8, 2008
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| | (xii) | the Statement of Eligibility and Qualification under the Trust Indenture Act, on Form T-1, of the Trustee with respect to the Subordinated Indenture, filed as an exhibit to the Registration Statement; and |
| | (xiii) | the form of the Notes, included as an exhibit to the applicable Indentures. |
We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and the Guarantors and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company, the Guarantors and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. In making our examination of executed documents, we have assumed that the parties thereto, other than the Company and the DE/NY Guarantors, had the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. We have also assumed that each of the Guarantors has been duly organized and is validly existing in good standing, and has requisite legal status and legal capacity, under the laws of the respective jurisdictions of organization or incorporation, as applicable, and that each of the Guarantors, other than the DE/NY Guarantors, has complied and will comply with all aspects of the laws of all relevant jurisdictions in connection with the transactions contemplated by, and the performance of its obligations under, the Indentures, the Registration Rights Agreement, the Notes and the Guarantees (collectively, the “Transaction Documents”), other than the laws of the State of New York in so far as we express our opinions herein. As to any facts material to the opinions expressed herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of the Company, the Guarantors and others and of public officials.
The opinions set forth below are subject to the following further qualifications, assumptions and limitations:
(a) we have assumed that the execution and delivery by the Company and the Guarantors of the Transaction Documents and the performance by the Company and the Guarantors of their respective obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which the Company, the Guarantors or any of their properties are subject;
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February 8, 2008
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(b) the validity or enforcement of any agreements or instruments may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law); and
(c) we do not express any opinion as to the applicability or effect of any fraudulent transfer, preference or similar law on the Transaction Documents or any transactions contemplated thereby.
Our opinion set forth herein is limited to the laws, rules and regulations of the State of New York and the federal laws, rules and regulations of the United States of America, in each case that, in our experience, are normally applicable to transactions of the type contemplated by the Registration Statement and, to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as “Opined on Law”). We do not express any opinion with respect to the laws of any jurisdiction other than the Opined on Law or as to the effect of any such non-opined on law on the opinion herein stated.
Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that:
1. When the Exchange Offer Registration Statement becomes effective and the Notes have been duly executed, authenticated, issued and delivered in accordance with the terms of the applicable Indenture, the Registration Rights Agreement and the Exchange Offer, the Notes will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.
2. When the Notes have been duly executed, authenticated, issued and delivered in exchange for the Original Notes in accordance with the provisions of the applicable Indenture, the Registration Rights Agreement and the Exchange Offer and the Guarantees have been duly executed and delivered in accordance with the provisions of the applicable Indenture, the Registration Rights Agreement and the Exchange Offer, the Guarantees of each Guarantor will constitute valid and binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their terms.
KAR Holdings, Inc.
February 8, 2008
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We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption “Legal Matters” in the prospectus included in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.
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| Very truly yours, |
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| /s/ Skadden, Arps, Slate, Meagher & Flom LLP |
Schedule I
DE/NY Guarantors
| 1. | ADESA, Inc., a Delaware corporation |
| 2. | ADESA Arkansas, LLC, a Delaware limited liability company |
| 3. | ADESA New York, LLC, a New York limited liability company |
| 4. | Axle Holdings, Inc., a Delaware corporation |
| 5. | IAA Acquisition Corp., a Delaware corporation |
| 6. | Insurance Auto Auctions Corp., a Delaware corporation |
Schedule II
Non-DE/NY Guarantors
| 1. | A.D.E. of Ark-La-Tex, Inc., a Louisiana corporation |
| 2. | A.D.E. of Knoxville, LLC, a Tennessee limited liability company |
| 3. | ADESA Ark-La-Tex, LLC, a Louisiana limited liability company |
| 4. | ADESA Atlanta, LLC, a New Jersey limited liability company |
| 5. | ADESA Birmingham, LLC, an Alabama limited liability company |
| 6. | ADESA California, LLC, a California limited liability company |
| 7. | ADESA Charlotte, LLC, a North Carolina limited liability company |
| 8. | ADESA Colorado, LLC, a Colorado limited liability company |
| 9. | ADESA Corporation, LLC, an Indiana limited liability company |
| 10. | ADESA Dealer Services, LLC, a Indiana limited liability company |
| 11. | ADESA Des Moines, LLC, an Iowa limited liability company |
| 12. | ADESA Florida, LLC, a Florida limited liability company |
| 13. | ADESA Impact Texas, LLC, a Texas limited liability company |
| 14. | ADESA Indianapolis, LLC, an Indiana limited liability company |
| 15. | ADESA Lansing, LLC, a Michigan limited liability company |
| 16. | ADESA Lexington, LLC, a Kentucky limited liability company |
| 17. | ADESA Mexico, LLC, an Indiana limited liability company |
| 18. | ADESA Missouri, LLC, a Missouri limited liability company |
| 19. | ADESA New Jersey, LLC, a New Jersey limited liability company |
| 20. | ADESA Ohio, LLC, an Ohio limited liability company |
| 21. | ADESA Oklahoma, LLC, an Oklahoma limited liability company |
| 22. | ADESA Pennsylvania, LLC, a Pennsylvania limited liability company |
| 23. | ADESA Phoenix, LLC, a New Jersey limited liability company |
| 24. | ADESA San Diego, LLC, a California limited liability company |
| 25. | ADESA-South Florida, LLC, an Indiana limited liability company |
| 26. | ADESA Southern Indiana, LLC, an Indiana limited liability company |
| 27. | ADESA Texas, Inc., a Texas corporation |
| 28. | ADESA Virginia, LLC, a Virginia limited liability company |
| 29. | ADESA Washington, LLC, a Washington limited liability company |
| 30. | ADESA Wisconsin, LLC, a Wisconsin limited liability company |
| 31. | ADS Ashland, LLC, an Ohio limited liability company |
| 32. | ADS Priority Transport Ltd., an Ohio limited liability company |
| 33. | AFC Cal, LLC, a California limited liability company |
| 34. | Asset Holdings III, L.P., an Ohio limited partnership |
| 35. | Auto Dealers Exchange of Concord, LLC, a Massachusetts limited liability company |
| 36. | Auto Dealers Exchange of Memphis, LLC, a Tennessee limited liability company |
| 37. | Auto Disposal Systems, Inc., an Ohio corporation |
| 38. | Automotive Finance Consumer Division, LLC, an Indiana limited liability company |
| 39. | Automotive Finance Corporation, an Indiana corporation |
| 40. | Automotive Recovery Services, Inc., an Indiana corporation |
| 41. | AutoVIN, Inc., an Indiana corporation |
| 42. | Dent Demon, LLC, an Indiana limited liability company |
| 43. | IAA Services, Inc., an Illinois corporation |
| 44. | Insurance Auto Auctions, Inc., an Illinois corporation |
| 45. | PAR, Inc., an Indiana corporation |
| 46. | Sioux Falls Auto Auction, Inc., a South Dakota corporation |
| 47. | Tri-State Auction Co., Inc., a North Dakota corporation |
| 48. | Zabel & Associates, Inc., a North Dakota corporation |
