UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW
YORK
Chapter 11
Case Nos. ( )
In re: (Jointly Administered)
Lodgian, Inc., et al.,
Debtors.
AFFIDAVIT AND DISCLOSURE STATEMENT OF RICHARD CARTOON LLC IN
SUPPORT OF APPLICATION TO EMPLOY RICHARD CARTOON LLC AS CHIEF
FINANCIAL OFFICER FOR THE DEBTORS
STATE OF GEORGIA )
)ss.:
COUNTY OF FULTON )
Richard Cartoon, being duly sworn, deposes and says:
1. I am currently the President of Richard Cartoon LLC ("RCLLC")
and I maintain an office at 2000 RiverEdge Parkway, Atlanta GA 30328. I submit
this affidavit and disclosure statement in support of the application of
Lodgian, Inc. et al ("the Debtors") for an order authorizing the employment and
retention of RCLLC to provide services to the Debtors customarily provided by
the office of the Chief Financial Officer pursuant to the terms and conditions
set forth in the agreement dated November 13, 2001 ("the Engagement Agreement"),
a copy of which is attached hereto as Exhibit A..
2. The facts set forth in my affidavit are based upon my personal
knowledge, information and belief.
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3. RCLLC is well qualified to provide services to the Debtors
customarily provided by the office of the Chief Financial Officer. I am the
President of RCLLC and will serve as Chief Financial Officer of the Debtors.
During the period from October 1989 through September 1999, I was a partner in
the restructuring group of a "Big 5" accounting firm. While partner of the Big 5
accounting firm, I acted as the chief financial advisor to Servico, Inc.
("Servico") a hotel owner and management group, throughout its Chapter 11
proceedings. Servico successfully emerged from Chapter 11 in 1992 and
subsequently merged with the Impac group to form Lodgian, Inc. As a result of my
involvement with the Servico Chapter 11 cases, I am familiar with the
hospitality industry and with a number of the existing properties of the
Debtors. I continued as a partner of the Big 5 accounting firm until September
1999. I formed my own company, RCLLC effective October 1, 1999 and continued to
provide restructuring services to companies, creditors' committees and other
parties-in-interest.
4. On December x, 2001 ("the Petition Date") Lodgian, Inc. and
most of its subsidiaries filed for protection under Chapter 11 of the Bankruptcy
Code. Prior to the Petition Date RCLLC was retained on October 11, 2001 to
perform financial advisory services to Lodgian, Inc. and its subsidiaries. On
November 13, 2001 the scope of the engagement was changed and RCLLC was retained
to provide services to the Company customarily provided by the office of the
Chief Financial Officer. I was designated by RCLLC to act as its representative
to serve as the Chief Financial Officer of the Company reporting to the Chief
Executive Officer subject to the terms and conditions set forth in the
Engagement Agreement.
5. Prior to the Petition Date RCLLC received compensation in the
aggregate amount of [$161,427] for services rendered and costs and expenses
incurred in providing services by its management and associates.
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6. On October 11, 2001 RCLLC received a $50,000 retainer from
Lodgian, Inc. for services to be rendered and expenses to be incurred and this
retainer was continued through and remained fully funded as of the Petition
Date.
7. RCLLC has not provided services to any entities or individuals
in connection with these Chapter 11 cases, other than the provision of services
to the Debtors mentioned above. RCLLC does not represent any interest adverse to
the Debtors and will not represent any entity, other than the Debtors, in
connection with these Chapter 11 cases. To my knowledge, none of the clients of
RCLLC is a creditor or party in interest in these Chapter 11 cases.
8. Accordingly, based upon the preceding, I submit that RCLLC is
a "disinterested person" as defined in section 101(14) of the Bankruptcy Code
and as required by section 327(a) of the Bankruptcy Code.
9. As compensation for its services, RCLLC has agreed that it
will receive its customary hourly rates, which are as follows:
President/Managing Director $310
Staff/Consultants $200 - $250
Support Staff $ 50 - $100
These rates are equivalent to those currently being charged by RCLLC to its
other clients. In the ordinary course of business, RCLLC will revise its hourly
rates on June 30 of each year.
11. In addition to compensation for professional services rendered
by RCLLC, RCLLC shall seek reimbursement for reasonable and necessary expenses
incurred in connection with the above- captioned cases, including, but not
limited to, transportation, lodging, food, telephone, copying, messenger service
and research.
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12. RCLLC shall make proper application to the Bankruptcy Court
for compensation for the services rendered to the Debtors and/or the Committee
in these proceedings pursuant to sections 330 and 331 of the Bankruptcy Code,
and the Administrative Order entered in these cases.
13. No agreement or understanding exists between RCLLC and any
other person for the sharing of compensation to be received in connection with
these cases.
14. The proposed engagement of RCLLC is not prohibited by Rule
5002 of the Bankruptcy Rules.
15. RCLLC requests that its retention as Chief Financial Officer
be approved nunc pro tunc to the Petition Date.
FURTHER AFFIANT SAYETH NOT.
By: /s/ Richard Cartoon
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Richard Cartoon
SWORN TO before me, this x day
of December 2001.
/s/
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Notary Public
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