Case 09-11899

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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA IN RE: VIRGIN OIL COMPANY, INC. DEBTOR CASE NO. 09-11899 CHAPTER 11 SECTION A

OBJECTION BY THE VIRGIN OIL COMPANY, INC. PLAN TRUST TO CLAIM NOS. 101 AND 102 FILED ON BEHALF OF ROBERT FULTON SMITH, JR. NOW INTO COURT, through undersigned counsel, comes the Virgin Oil Company Plan Trust (Plan Trust), which, pursuant to Rule 3007 of the Federal Rules of Bankruptcy Procedure, hereby objects to Claim Nos. 101 and 102 which were filed in the above-captioned matter on behalf of Robert Fulton Smith, Jr. , and in support thereof shows as follows: Jurisdiction 1. This Court has jurisdiction over this Chapter 11 case, and the parties and property affected hereby, pursuant to 28 U.S.C. 1334. This Court also has jurisdiction over the subject matter of this Objection pursuant to the Order Confirming the Second Amended Plan or Reorganization Filed by the Official Committee of Unsecured Creditors and CIT Capital USA, Inc. as of August 26, 2011 as Amended (Docket No. 948) (Confirmation Order) and Articles X and XIII of the Second Amended Plan of Reorganization Filed by the Official Committee of Unsecured Creditors and CIT Capital USA, Inc. as of August 26, 2011 (Docket No. 761), as amended and modified by the First and Second Immaterial Modifications (Docket Nos. 813 and 940) and supplemented by the Supplement (Docket No. 812) (collectively, the Plan).

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Procedural Background 2. On June 25, 2009 (the Petition Date), certain creditors of the Debtor initiated this bankruptcy case by filing an involuntary petition for relief under Chapter 7 of the Bankruptcy Code. The bankruptcy case was subsequently converted from Chapter 7 to Chapter 11. See Docket No. 50. 3. On December 13, 2011, this Court entered the Confirmation Order confirming the Plan. Docket No. 948. 4. Pursuant to Section M of the Confirmation Order and Section 5.3(F) and Article X of the Plan, Whistler Energy, L.L.C. has the requisite authority as Trustee for the Plan Trust (Trustee) to file this objection. Claims Objected To and Relief Requested 5. On March 9, 2012, Robert Fulton Smith, Jr. filed Claim No. 101 asserting an unsecured claim for an unspecified amount. Attachment A to Claim No. 101 details that the asserted claim is for indemnification regarding certain pending litigation. See Claim No. 101 attached hereto as Exhibit 1. 6. On May 14, 2012, Robert Fulton Smith, Jr. filed Claim No. 102 asserting an unsecured claim in the amount of $674,930.46. Attachment A to Claim No. 102 details that the value of the claim is asserted to be the value of a .4667% interest in that certain offshore oil and gas lease

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identified as OCS-G-18011, which was purportedly to be assigned to Robert Fulton Smith, Jr. by Virgin Offshore U.S.A., Inc. (Offshore) in accordance with a letter from Offshore dated November 15, 2002. See Claim No. 102 attached hereto as Exhibit 2 and Attachment A thereto. 7. Claim No. 101 should be expunged and disallowed in its entirety because (a) Claim No. 101 was not timely filed in compliance with the Order of this Court entered on March 12, 2010 (Docket No. 310); (b) Claim No. 101 fails to comply with Official Form B10 and include an actual alleged amount of the claim; and (c) Claim No. 101 has been satisfied and/or paid by a third party pursuant to authorization granted by the Order of this Court entered on April 23, 2012 (Docket No. 1022). 8. Claim No. 102 should be expunged and disallowed in its entirety because (a) Claim No. 102 was not timely filed in compliance with the Order of this Court entered on March 12, 2010 (Docket No. 310); (b) Claim No. 102 does not constitute a claim against the Debtor insofar as it is premised upon an assignment which, upon information and belief, was never actually completed; (c) Claim No. 102 is based upon an agreement to which the Debtor is not a party and which creates no obligation of the Debtor; and (d) Claim No. 102 is otherwise invalid since it is based upon the asserted value of an oil and gas lease which is also erroneous. 9. Alternatively, both Claim Nos. 101 and 102 are subject to subordination pursuant to Section 510(c)(1) of the Bankruptcy Code for the reasons set forth in the Joint Motion for Appointment of a Chapter 11 Trustee Pursuant to 1104 of the Bankruptcy Code (Docket No. 755).

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10. The Fifth Circuit has stated that there are three requirements for equitable subordination: 1. The claimant engaged in inequitable conduct; 2. The misconduct resulted in injury to creditors of the bankrupt or conferring an unfair advantage on the claimant; and 3. Equitable subordination must not be inconsistent with applicable bankruptcy law.1 11. Claim Nos. 101 and 102 are subject to equitable subordination pursuant to 11 U.S.C. 510(c) insofar as Robert Fulton Smith, Jr. engaged in and were parties to inequitable conduct in relation to their employment and position with the Debtor, the misconduct resulted in substantial injury to the estate of the Debtor and its creditors and conferred an unjust benefit upon the claimant, and equitable subordination of the Claim Nos. 101 and 102 would be consistent with applicable bankruptcy law. 12. Consequently, even if Claim Nos. 101 and 102 are determined to be otherwise allowed, the Plan Trust requests that such claims be subordinated in their entirety to all other allowed claims or interests pursuant to 11 U.S.C. 510(c). Reservation of Rights 13. This objection does not affect the rights of the Plan Trust to object to any claim by any claimant on any alternate basis. The Plan Trust specifically reserves the right to amend or supplement this objection after further investigation and discovery. Further, the Plan Trust

Wilson v. Huffman (In re Missionary Baptist Foundation of Amer., Inc.), 712 F.2d 206, 212 (5th Cir. 1983); Benjamin v. Diamond (In re Mobile Steel Corp.), 563 F.2d 692 (5th Cir. 1977).
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reserves the right to bring or assert any other causes of action or claims against claimants included herein or any other claimants. WHEREFORE, the Plan Trust prays that, after due proceedings had, the Court enter an Order finding that Claim Nos. 101 and 102 be disallowed in their entirety and expunged from the claims register in the above-captioned matter, and for all other general and equitable relief that this Court deems proper. Respectfully submitted, LUGENBUHL, WHEATON, PECK, RANKIN & HUBBARD /s/ Christopher T. Caplinger__________________ STEWART F. PECK (#10403) CHRISTOPHER T. CAPLINGER (#25357) BENJAMIN W. KADDEN (#29927) JOSEPH P. BRIGGETT (#33029) 601 Poydras Street, Suite 2775 New Orleans, LA 70130 Telephone: (504) 568-1990 Facsimile: (504) 310-9195 Email: speck@lawla.com; ccaplinger@lawla.com; bkadden@lawla.com; jbriggett@lawla.com Counsel for The Virgin Oil Company, Inc. Plan Trust Certificate of Service I hereby certify that a true and correct copy of the above and foregoing has been served upon the parties that receive electronic notice via the Courts CM/ECF System, as well as the following party via first class mail on this 29TH day of June 2012: Robert Fulton Smith, Jr., c/o Guy E.Wall 540 Elmwood Park Blvd. Harahan, LA 70123

/s/ Christopher T. Caplinger__________________