Contract analysis

1. On June 20, 2022 (the "Petition Date"), each of the Debtors filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), in this Court. The Chapter 11 Cases are being jointly administered for procedural purposes only pursuant to an order of this Court entered on June 21, 2022 [Dkt. 15].

2. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee of unsecured creditors has been appointed in these Chapter 11 Cases as of the date hereof.

3. By this Application (the "Application"), the Debtors seek entry of an order, pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and the Local Rules of the United States Bankruptcy Court for the Northern District of Ohio (the "Local Rules"), authorizing the Debtors to retain and employ Kellner & Hartwick LLP ("

4. K&H will serve as local co-counsel alongside Calderwood & Harkness LLP ("C&H"), the Debtors' lead bankruptcy counsel, whose retention is the subject of a separate application filed contemporaneously herewith [Dkt. 36]. C&H, a nationally recognized restructuring practice headquartered in New York, New York, will serve as lead counsel and bear primary responsibility for all substantive aspects of the Debtors' restru

5. K&H is a Cleveland-based law firm with extensive experience in complex Chapter 11 proceedings before this Court. The Firm is well-qualified to provide the local co-counsel services required by the Debtors, and its retention will serve the best interests of the Debtors' estates and their creditors. K&H has been engaged on this matter since immediately prior to the Petition Date and has been providing valuable servi

6. This Court has jurisdiction over this Application pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), as it involves the administration of the Debtors' estates.

7. Venue of these Chapter 11 Cases and this Application is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. Crestline Packaging Solutions LLC is organized under the laws of the State of Ohio and has maintained its principal place of business and principal assets in this District for the 180-day period preceding the Petition Date.

8. The statutory bases for the relief requested herein are Sections 327(a) and 328(a) of the Bankruptcy Code, Rules 2014(a) and 2016 of the Bankruptcy Rules, and the applicable Local Rules of the United States Bankruptcy Court for the Northern District of Ohio.

III. BACKGROUND A. The Debtors and Their Business

9. Crestline Packaging Solutions LLC is an Ohio limited liability company headquartered at 4710 Industrial Corridor Drive, Akron, Ohio 44308 (Employer Identification Number: 31-1782094). CPS is the principal operating entity among the Debtors and conducts substantially all of the Debtors' business operations.

10. CPS Holdings Inc. is a Delaware corporation and the direct parent of CPS (Employer Identification Number: 82-3491657). CPS Holdings Inc. maintains a registered agent at 1209 Orange Street, Wilmington, Delaware 19801 (c/o National Corporate Services, Inc.). CPS Holdings Inc. is a holding company with no independent operations; its sole material asset is its equity interest in CPS.

11. CPS is a leading manufacturer of specialty chemical packaging and industrial containment products. The Debtors' product line includes high-density polyethylene ("HDPE") drums, intermediate bulk containers ("IBCs"), steel pails, and specialty containment vessels. These products serve a diverse customer base across the chemical, petrochemical, and agricultural sectors, among others. CPS's products are critical to t

12. CPS operates four manufacturing plants located in Ohio, Indiana, and Louisiana, and employs approximately 1,420 individuals across its operations, including both hourly production workers and salaried administrative, management, and sales personnel. The Debtors' principal executive offices are located in Akron, Ohio.

13. For the fiscal year ended December 31, 2021 ("FY2021"), CPS reported revenue of approximately $312.6 million and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of approximately $38.4 million. For the trailing twelve-month period ended March 31, 2022 ("TTM Q1 2022"), EBITDA had declined to approximately $29.1 million, reflecting the operational and market headwinds described further bel

14. CPS was acquired by Thornfield Capital Partners LP ("Thornfield"), a private equity firm, in a leveraged buyout transaction that closed in October 2017. The enterprise value at the time of the acquisition was approximately $410 million. Thornfield continues to hold its equity interest in CPS through CPS Holdings Inc. B. Events Leading to the Chapter 11 Filing

15. The Debtors' capital structure at the Petition Date consisted of total funded debt of approximately $247.3 million. This debt was comprised of three principal facilities: (a) a first lien revolving credit facility (the "Revolving Credit Facility") with aggregate commitments of $50.0 million, of which approximately $32.6 million was drawn at the Petition Date; (b) a first lien term loan (the "First Lien Term Loan"

16. The Revolving Credit Facility and the First Lien Term Loan are governed by that certain First Lien Credit Agreement, dated as of October 13, 2017 (as amended, restated, supplemented, or otherwise modified from time to time, the "First Lien Credit Agreement"), among CPS, as borrower, CPS Holdings Inc., as guarantor, the lenders from time to time party thereto, and Ridgeline National Bank, N.A. ("Ridgeline"), as ad

17. Beginning in late 2020 and continuing through 2021 and into 2022, the Debtors experienced significant operational and financial headwinds that materially impacted their financial performance. Revenue declined approximately 18% from fiscal year 2020 to fiscal year 2021, driven by a combination of reduced customer demand in key end-markets, lost volume from certain large chemical manufacturing customers that had cu

18. As a result of these adverse developments, in the first quarter of 2022, CPS breached the maximum total leverage ratio financial covenant set forth in Section 7.11 of the First Lien Credit Agreement. The Debtors' actual total leverage ratio as of March 31, 2022 was approximately 8.50x, which exceeded the maximum covenant level of 5.75x by a substantial margin. This breach constituted an event of default under the

19. On April 22, 2022, Ridgeline, in its capacity as administrative agent under the First Lien Credit Agreement, delivered a formal Notice of Default to the Debtors. The occurrence of a default under the First Lien Credit Agreement, in turn, triggered cross-default provisions under Section 6.01(e) of the Second Lien Notes Indenture, resulting in a default under the Second Lien Notes as well.

20. The Debtors immediately engaged their financial and legal advisors and commenced negotiations with their principal creditor constituencies. On May 18, 2022, the Debtors, Ridgeline, and the requisite lenders under the First Lien Credit Agreement entered into a Forbearance Agreement (the "Forbearance Agreement"), pursuant to which the first lien lenders agreed to forbear from exercising their default remedies for a

21. During the forbearance period, the Debtors, their advisors, and representatives of their principal stakeholders engaged in intensive negotiations regarding the terms of a consensual restructuring. On June 20, 2022, having determined that a court-supervised restructuring was necessary and in the best interests of all stakeholders, the Debtors filed their voluntary petitions for relief under Chapter 11 of the Bankr

22. On July 8, 2022, the Debtors, Thornfield Capital Partners LP, the Ad Hoc Group of First Lien Lenders (represented by Hargrove, Mitchell & Saunders LLP), and the Ad Hoc Group of Second Lien Noteholders (represented by Pemberton & Locke LLP) entered into a Restructuring Support Agreement (the "RSA") [Dkt. 52], which sets forth the principal terms of a prepackaged plan of reorganization and the commitments of the su

23. The Debtors' lead bankruptcy counsel, Calderwood & Harkness LLP, is a nationally recognized law firm headquartered at 30 Rockefeller Plaza, New York, New York 10112. C&H maintains an office at 127 Public Square, Suite 4100, Cleveland, Ohio 44114, but the lead engagement team for these Chapter 11 Cases is based in C&H's New York office.

24. Given the complexity of these Chapter 11 Cases, the requirements of this Court's Local Rules, and the Debtors' need for counsel with significant familiarity with the practices, procedures, and preferences of this Court and the judges of this District, the Debtors require local co-counsel with an established and active presence in the Northern District of Ohio. The retention of experienced local co-counsel is espe

25. K&H is located in Cleveland, Ohio, and has extensive experience practicing before this Court, including in complex Chapter 11 reorganization proceedings involving significant multi-creditor constituencies and contested matters. K&H's professionals are well-acquainted with the Local Rules, the preferences and procedures of the judges of this Court, and the practices of the Office of the United States Trustee for R

26. The retention of K&H as local co-counsel will allow the Debtors to benefit from K&H's local expertise and presence while avoiding unnecessary duplication of effort with lead counsel C&H. The Debtors believe that the retention of K&H will promote the efficient and cost-effective administration of these Chapter 11 Cases and is in the best interests of the Debtors' estates and their creditors.

IV. K&H'S QUALIFICATIONS AND PROPOSED SCOPE OF SERVICES A. Firm Overview

27. Kellner & Hartwick LLP is a law firm with its principal office at 600 Superior Avenue East, Suite 1800, Cleveland, Ohio 44114. Founded in 1987, K&H has developed a well-established bankruptcy and restructuring practice with significant experience representing debtors, creditors' committees, secured lenders, and other parties in interest in Chapter 11 proceedings before the United States Bankruptcy Court for the N

28. The lead partner responsible for this engagement is Bruce Tatelman, a partner in K&H's Bankruptcy and Restructuring group. Mr. Tatelman has practiced before this Court for over twenty years and has served as lead or local co-counsel in numerous significant Chapter 11 cases in this District. Mr. Tatelman's extensive familiarity with the practices and procedures of this Court will be of particular value to the Debt

29. K&H will provide the following services as local co-counsel to the Debtors, in coordination with and under the direction of lead counsel Calderwood & Harkness LLP: (a) Advising the Debtors with respect to the Local Rules, local practices, and procedures of this Court, including any applicable standing orders, general orders, and chambers procedures of the presiding judge; (b) Preparing, filing, and serving pleadi

30. K&H will work under the direction of C&H's engagement team for these Chapter 11 Cases, which includes Colette Whitman (Responsible Partner), Nathaniel Bower (Billing Partner), Gabrielle Moss (Lead Associate), and Amy Chesterton (Working Associate). K&H and C&H have established protocols for regular communication and coordination to ensure that their respective efforts are efficiently allocated and that unnecessar

31. K&H will primarily focus on matters requiring local presence, familiarity with the Local Rules and procedures of this Court, and appearances before this Court. C&H will retain primary responsibility for all substantive aspects of the Debtors' Chapter 11 Cases, including negotiation and drafting of the plan of reorganization and disclosure statement, negotiations with the Debtors' principal creditor constituencies

V. K&H'S DISINTERESTEDNESS AND ABSENCE OF ADVERSE INTERESTS

32. K&H does not hold or represent any interest adverse to the Debtors' estates. K&H is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code.

33. In connection with this Application, K&H has conducted a comprehensive conflicts review of its records and has determined that it does not have any connection with the Debtors, their creditors, any other party in interest, or their respective attorneys and accountants that would disqualify K&H from serving as local co-counsel to the Debtors under Sections 327(a) and 328(c) of the Bankruptcy Code.

34. Specifically, K&H has reviewed its records for connections with each of the following parties in interest in these Chapter 11 Cases: (a) Crestline Packaging Solutions LLC and CPS Holdings Inc. (the Debtors); (b) Marcus J. Reinholdt, Chief Executive Officer of CPS; Dana Kowalski, Chief Financial Officer of CPS; and Preston Yee, General Counsel of CPS; (c) Thornfield Capital Partners LP (equity sponsor of the Debto

35. Based upon this comprehensive review, K&H has determined that it has no disqualifying connections with any of the foregoing parties. K&H has not previously represented any of the Debtors, their insiders, their equity sponsor, their secured or unsecured creditors, or any other party in interest in these Chapter 11 Cases in any matter related to the Debtors or these Chapter 11 Cases.

36. Reference is made to the Declaration of Bruce Tatelman (the "Tatelman Declaration"), filed contemporaneously herewith as Exhibit B, which provides further detail regarding K&H's disinterestedness and connections with parties in interest, as required by Rule 2014(a) of the Bankruptcy Rules. To the extent K&H discovers any new connections or potential conflicts during the pendency of these Chapter 11 Cases, K&H wil

VI. TERMS OF RETENTION AND COMPENSATION A. Compensation Structure

37. K&H will be compensated for professional services rendered and reimbursed for actual and necessary expenses incurred in connection with these Chapter 11 Cases at its standard hourly rates in effect at the time such services are rendered, subject to the approval of this Court pursuant to Sections 330 and 331 of the Bankruptcy Code.

38. K&H's current standard hourly rates for the professionals expected to work on this engagement are set forth in the accompanying Declaration of Bruce Tatelman, filed herewith as Exhibit B. K&H's hourly rates are consistent with the rates charged by firms of comparable standing and experience for similar services in this market and in similar Chapter 11 cases.

39. K&H will seek compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and the guidelines established by the Office of the United States Trustee for professionals retained in Chapter 11 cases in the Northern District of Ohio (the "U.S. Trustee Guidelines"). B. Estimated Fees

40. K&H estimates that its total fees and expenses for services rendered throughout the Chapter 11 Cases will be approximately $380,000. This estimate is based on K&H's preliminary assessment of the scope of services likely to be required in these Chapter 11 Cases, given the prepackaged nature of the Debtors' proposed plan of reorganization and the anticipated duration and complexity of the cases. The actual fees and

41. K&H has not received any prepetition retainer from the Debtors in connection with its engagement as local co-counsel in these Chapter 11 Cases. K&H has not received any payments from the Debtors' estates or from any other source on account of services rendered or to be rendered in these Chapter 11 Cases. D. Fee Applications

42. K&H will submit interim and final fee applications to this Court for approval in accordance with Sections 330 and 331 of the Bankruptcy Code, Rule 2016 of the Bankruptcy Rules, the applicable Local Rules, and the U.S. Trustee Guidelines. All interim and final fee applications filed by K&H will be subject to review by the Office of the United States Trustee for Region 9 and to approval by this Court after notice a

VII. APPLICABLE LEGAL STANDARD

43. Section 327(a) of the Bankruptcy Code provides, in relevant part, that: "[T]he trustee, with the court's approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title." 11 U.S

44. Section 328(a) of the Bankruptcy Code authorizes the court to approve the terms and conditions of the employment of a professional retained under Section 327(a), including approval of compensation "on a reasonable basis" for "any term customary in the professional's trade." 11 U.S.C. § 328(a). Compensation on an hourly basis, as proposed here, is the customary and well-accepted form of compensation for legal prof

45. Rule 2014(a) of the Bankruptcy Rules requires that an application for the employment of a professional be accompanied by a verified statement of the person to be employed, setting forth "the person's connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee." Fed. R.

46. K&H satisfies the requirements of Section 327(a) of the Bankruptcy Code. As demonstrated by the Tatelman Declaration and as set forth herein, K&H does not hold or represent any interest adverse to the Debtors' estates, and K&H is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). K&H has no connection with the Debtors, their creditors, or any oth

47. Courts routinely authorize the retention of local co-counsel in complex Chapter 11 cases where the debtor's lead counsel is based in another jurisdiction, particularly where local expertise in court procedures, practices, and rules is beneficial to the efficient administration of the case. See, e.g., In re Akron Thermal, Ltd. P'ship, Case No. 10-51942 (Bankr. N.D. Ohio) (authorizing retention of local co-counsel)

VIII. NO DUPLICATION OF SERVICES

48. K&H and C&H will employ procedures to avoid unnecessary duplication of services. The respective roles of K&H and C&H have been clearly delineated: K&H's role as local co-counsel will be limited to those services requiring local presence, local expertise, and familiarity with the Local Rules and procedures of this Court, while C&H will retain primary responsibility for all substantive aspects of the Debtors' Chapt

49. Specifically, C&H will retain primary responsibility for, among other things, the preparation and negotiation of the Debtors' prepackaged plan of reorganization [Dkt. 47], the disclosure statement [Dkt. 48], all matters relating to debtor-in-possession financing, negotiations with the Debtors' principal creditor constituencies, cash collateral matters, and the overall restructuring strategy. K&H's services will b

50. Staffing and work allocation between K&H and C&H will be coordinated between Bruce Tatelman of K&H and Colette Whitman and Nathaniel Bower of C&H on an ongoing basis to ensure efficiency, to minimize costs to the Debtors' estates, and to avoid any duplication of professional effort. Where both firms attend a hearing or participate in a matter, only one firm will be designated as lead counsel for that proceeding,

51. Notice of this Application has been provided to the following parties: (a) The Office of the United States Trustee for Region 9, Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, Ohio 44114; (b) Ridgeline National Bank, N.A. (as administrative agent, collateral agent, and DIP agent), 200 Public Square, Cleveland, Ohio 44114; (c) Hargrove, Mitchell & Saunders LLP (counsel to the Ad Hoc Group of