RULING RE: DEBTORS' APPLICATION TO EMPLOY ARNOLD & PORTER LLP AS AN ORDINARY COURSE PROFESSIONAL

BRENDA MOODY WHINERY, Bankruptcy Judge.

This matter having come before the Court pursuant to the First Application to Employ Professionals and Consultants Used by the Debtors in the Ordinary Course of Business (the "Application") (Docket No. 143), filed by ArmorWorks Enterprises, LLC and TechFiber, LLC (the "Debtors"), as modified and supplemented by the Reply in Support of Application to Employ Professionals and Consultants Used by the Debtors in the Ordinary Course of Business (the "Reply") (Docket No. 166), and upon consideration of the Objection to First Application to Employ Professionals and Consultants Used by the Debtors in the Ordinary Course of Business (the "Objection") (Docket No. 151) filed by C Squared Capital Partners, LLC ("C Squared") and Anchor Management LLC ("Anchor") (collectively the "C Squared Parties"), the Declaration of Christopher R. Yukins in Support of Debtors' Application to Employ Arnold & Porter LLP as an Ordinary Course Professional (the "Yukins Declaration") (Docket No. 166-2), a hearing having been conducted on August 29, 2013, the Court having considered the pleadings referenced above, the arguments of counsel, and having ruled approving the employment of all except one of the proposed Ordinary Course Professionals, and having taken the issue of employment of Arnold & Porter LLP ("Arnold & Porter") as an ordinary course professional under advisement,

THE COURT HEREBY FINDS THAT:

The C Squared Parties object to the retention of Arnold & Porter as an Ordinary Course Professional on the basis that:

(a) the scope of work to be performed by Arnold & Porter is not sufficiently defined to determine whether the retention is appropriate pursuant to 11 U.S.C. §327(e);

(b) the retention of Arnold & Porter is inappropriate because Arnold & Porter has represented Mr. Perciballi and his interests in other matters and at a minimum, more disclosure is required; and

(c) Anchor does not agree to the retention of Arnold & Porter and the Debtors therefore lack authority to retain the firm.

The Debtors have represented that the scope of work to be performed by Arnold & Porter will be limited to providing legal counsel to the Debtors with respect to government contracts, including bidding and procurement, export controls and other related matters.

The Yukins Declaration provides:

(a) that Christopher Yukins has represented ArmorWorks Enterprises, LLC with respect to "government contracts, government contract bidding and procurement law, export controls, and certain other related matters" since its inception in 2001. Mr. Yukins joined Arnold & Porter in 2007 and Arnold & Porter has represented ArmorWorks Enterprises, LLC since that date;

(b) that neither Christopher Yukins nor Arnold & Porter have represented William Perciballi individually; and

(c) that neither Mr. Yukins nor Arnold & Porter represented Mr. Perciballi or ArmorWorks, Inc. in state court matters involving the C Squared Parties, although Mr. Yukins did provide testimony regarding certain work performed on behalf of ArmorWorks Enterprises, LLC.

There is no dispute that the Debtors require specialized legal counsel in matters relating to government contract law, export control and related matters. The C Squared Parties argue that Debtors should retain a firm other than Arnold & Porter.

The Committee has negotiated with the Debtors and agreed to the terms of employment, the budget, and an agreed upon form of order for the employment of the Ordinary Course Professionals. The C Squared Parties have agreed to the form of order, with the exception of Arnold & Porter.

The proposed budget provides for monthly fees of $5,000 for Arnold & Porter.

The proposed order provides that the invoices for each of the Ordinary Course Professionals will be provided to the Committee and the C Squared Parties at least ten (10) days prior to payment. The Committee and the C Squared Parties will have the right to object to such invoices.

Based upon the foregoing, the Court hereby concludes that the Debtors have sufficiently disclosed and defined the scope of representation to be provided by Arnold & Porter.

Further, the connections disclosed between Mr. Yukins, Arnold & Porter, the Debtors and Mr. Perciballi do not disqualify Arnold & Porter from continuing to represent the Debtors post-petition as an Ordinary Course Professional.

In addition, there is no dispute that the services to be provided by Arnold & Porter are necessary for the Debtors' ongoing operations. Given the limited budget and provisions for review of all fee invoices by the Committee and C Squared Parties prior to payment, and the Court's continuing jurisdiction over all matters relating to these Ordinary Course Professionals, it is not in the best interests of the Debtors, Creditors or the Estate to require Debtors to retain new government contract counsel at this stage of the case.

Therefore, for good cause appearing,

IT IS HEREBY ORDERED overruling the Objection of the C Squared Parties and approving the Application to employ Arnold & Porter as an Ordinary Course Professional subject to the Application, as amended by the Reply, and as set forth on the record at the August 29, 2013 hearing. Counsel for the Debtors is to include Arnold & Porter in the agreed upon form of order approving Ordinary Course Professionals and to upload the same.

DATED AND SIGNED ABOVE.

To be NOTICED by the BNC ("Bankruptcy Noticing Center") to.