Vernon E. Inge, Jr. (Va. State Bar No. 32699) 

Corey S. Booker (Va. State Bar No. 73419) 

WHITEFORD, TAYLOR & PRESTON, L.L.P. 

Two James Center 

1021 East Cary Street, Suite 1700 

Richmond, Virginia 23219 

Telephone: 804.977.3301 / 804.977.3302 

Facsimile: 804.977.3291 / 804.977.3292 

E-Mail: vinge@wtplaw.com 

E-Mail: cbooker@wtplaw.com 

Special Litigation Counsel for Harry Shaia, Jr., Chapter 7 Trustee 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: ) 

) 

DELTA CAREER EDUCATION ) Case No. 18-33822-KLP 

CORP., et al., ) Chapter 7 

) 

Debtors. ) (Jointly Administered) 

____________________________________) 

TRUSTEE’S MOTION FOR AUTHORITY TO CONDUCT 

EXAMINATIONS AND ISSUE SUBPOENAS PURSUANT TO 

RULE 2004 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE 

Harry Shaia, Jr., Trustee (the “Trustee”), by counsel, chapter 7 trustee for Delta Career 

Education Corporation (the “Debtor” and collectively with its thirteen (13) direct and indirect 

subsidiaries who are debtors in this jointly administered case, the “Debtors”), respectfully moves 

the Court, pursuant to section 105 of title 11 of the United States Code (the “Bankruptcy 

Code”) and Rule 2004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) 

for entry of an order directing a designated representative from Gryphon Investors, Inc. 

(“Gryphon”) to produce certain documents and to submit to an examination. In support of this 

Motion, the Trustee respectfully states as follows: 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 1 of 11
2

JURISDICTION 

1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157 

and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this 

Court pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory predicates for the relief requested 

are Section 105(a) of the Bankruptcy Code and Rules 2004 and 9016 of the Bankruptcy Rules. 

BACKGROUND 

2. The Debtors were engaged in the business of for-profit education and operated a 

substantial number of colleges and other schools throughout the country. Certain of the Debtors 

sold certain of their assets to Ancora on or about January 18, 2018, pursuant to the Sale 

Agreement, and thereafter engaged in wind down efforts that included the operation of their 

remaining businesses through the end of the school year in May 2018 (the “2018 Ancora 

Transaction”). Thereafter, the Debtors ceased all business operations with the exception of 

liquidation activities culminating with the filing of the Debtors’ various bankruptcy cases. 

3. This bankruptcy case was commenced by the Debtor’s filing of a voluntary 

petition for relief under Chapter 7 of the Bankruptcy Code on July 27, 2018. The other Debtors 

filed their own voluntary petitions for relief under Chapter 7 of the Bankruptcy Code on July 26 

or 27, 2018. The Court entered an Order [D.N. 18] on August 1, 2018, providing for the joint 

administration of the Debtors’ bankruptcy cases (collectively and as jointly administered, the 

“Bankruptcy Case”). 

4. The Trustee was appointed interim trustee in the Bankruptcy Case and continues 

to serve as Trustee in this Bankruptcy Case. Among other things, the Trustee engaged special 

litigation counsel (“Special Litigation Counsel”) to investigate potential claims and causes of 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 2 of 11
3

action belonging to the Debtors’ bankruptcy estates (the “Investigation”) and to prosecute those 

claims and causes of action that the Trustee determines based on the Investigation to have merit. 

The Investigation has commenced but is not complete. 

5. Gryphon is a private equity firm. In 2006, Gryphon acquired some or all of the 

Debtors and provided capital to the Debtors’ business operations. 

6. Following its acquisition, Gryphon was active in the management of the Debtors, 

including having a presence on the Debtors’ Board of Directors. The Debtors also paid Gryphon 

management fees. 

7. Gryphon also actively participated in the 2018 Ancora Transaction. 

RELIEF REQUESTED 

8. By this Motion, the Trustee respectfully requests, pursuant to section 105 of the 

Bankruptcy Code, Rules 2004 and 9016 of the Bankruptcy Rules, that the Court enter an order 

authorizing the Trustee: (i) to examine a designated representative of Gryphon regarding 

operations of the Debtors from 2013 – 2018, the 2018 Ancora Transaction, and the wind down of 

the Debtors; and (ii) to issue subpoenas to conduct an examination of a designated representative 

of Gryphon and to require Gryphon to produce documents similar to the scope of documents 

identified on Exhibit A (the “Requested Documents”). 

9. In order to investigate possible assets of the Debtor, the Trustee believes that 

Gryphon can provide information that will be useful to him. 

BASIS FOR RELIEF 

10. Bankruptcy Rule 2004 provides in relevant part: 

(a) Examination on Motion. On motion of any party in interest, the 

court may order the examination of any entity. 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 3 of 11
4

(b) Scope of Examination. The examination of an entity under this rule 

or of the debtor under §343 of the Code may relate only to the acts, conduct, or 

property or to the liabilities and financial condition of the debtor, or to any matter, 

which may affect the administration of the debtor’s estate, or the debtor’s right to 

a discharge . . . . 

11. It is well-established that the scope of a Rule 2004 examination is broad. See In re 

Nucletron Mfg. Corp., No. 93-34486, 1994 WL 16191611, *2 (Bankr. E.D. Va., Mar. 17, 1994) 

(“Bankruptcy courts, among others, have long held that the scope of an examination under 

Bankruptcy Rule 2004 is extremely wide. ...”). The purpose of the Rule 2004 examination is to 

permit “the trustee or parties in interest to ascertain the condition and whereabouts of the assets of 

the debtor’s estate.” In re Martin, 403 B.R. 359, 362 (Bankr. D.S.C. 2009). If a third person can 

be shown to have a relationship with the debtor’s affairs, the party is subject to a Rule 2004 

examination. In re Mantolesky, 14 B.R. 973, 977 (D. Mass. 1981). 

12. The entry of an order approving this Motion is warranted in this case. 

13. As described above, Gryphon has first-hand knowledge of the Debtors’ business 

affairs and potential evidence, including information regarding the 2018 Ancora Transaction and 

general operation of the Debtors” colleges and schools. Gryphon’s knowledge is related to the 

Debtors’ business affairs, and a Rule 2004 examination is appropriate. 

14. The Trustee seeks to examine Gryphon’s designated representative and 

documents in furtherance of his investigation of the 2018 Ancora Transaction and to determine if 

there are other claims the Trustee may bring, among other things. Bankruptcy Rule 2004 affords 

the Trustee the ability to perform the requested examination in this regard. 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 4 of 11
5

WAIVER OF LOCAL RULE 9013-1(G)

15. The Trustee requests the Court waive Local Rule 9013-1(G)’s requirement for a 

written memorandum with his Motion because the facts, supporting reasons and legal authority 

for the Trustee’s Motion are contained within the Motion. 

CONCLUSION 

WHEREFORE, Harry Shaia, Jr., Trustee, by counsel respectfully requests the entry of an 

order substantially similar to Exhibit B directing Gryphon Investors, Inc.’s designated 

representative to submit to an oral examination and for Gryphon Investors, Inc.’s to produce 

documents similar to the documents identified in Exhibit A, and granting such other relief as may 

be appropriate. 

HARRY SHAIA, JR., CHAPTER 7 TRUSTEE 

/s/ Corey S. Booker

Counsel 

Vernon E. Inge, Jr. (Va. State Bar No. 32699) 

Corey S. Booker (Va. State Bar No. 73419) 

WHITEFORD, TAYLOR & PRESTON, L.L.P. 

Two James Center 

1021 East Cary Street, Suite 1700 

Richmond, Virginia 23219 

Telephone: 804.977.3301 / 804.977.3302 

Facsimile: 804.977.3291 / 804.977.3292 

E-Mail: vinge@wtplaw.com 

E-Mail: cbooker@wtplaw.com 

Special Litigation Counsel for Harry Shaia, Jr., Chapter 7 Trustee

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 5 of 11
6

CERTIFICATE OF SERVICE 

I hereby certify that on the 27th day of February, 2020, a true and correct copy of the 

foregoing Trustee’s Motion for Authority to Conduct Examinations and Issue Subpoenas 

Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure was served on all 

persons receiving electronic notice in these cases, and by U.S. Mail to those not receiving EFC 

notifications, including the following: 

Harry Shaia, Jr., Esq. 

SPINELLA, OWINGS & SHAIA, P.C. 

8559 Mayland Drive 

Richmond, Virginia 23294 

Chapter 7 Trustee

William A. Broscious, Esq. 

KEPLEY BROSCIOUS & BIGGS, PLC

2211 Pump Road 

Richmond, Virginia 23233 

Counsel for the Chapter 7 Trustee 

Peter J. Barrett, Esq. 

KUTAK ROCK L.L.P. 

901 East Byrd Street, Suite 1000 

Richmond, Virginia 23219 

Counsel for Debtor

Gryphon Investors, Inc. 

ATTN: Richard David Andrews, Reg. Agent 

One Maritime Plaza, Suite 2300 

San Francisco, California 94111 

/s/ Corey S. Booker

Corey S. Booker

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 6 of 11
Exhibit A 

DOCUMENTS TO BE PRODUCED BY GRYPHON INVESTORS, INC.

I. Definitions and Instructions.

The term, “documents,” shall have that meaning ascribed to it by the Federal Rules of 

Civil Procedure, as made applicable in bankruptcy cases pursuant to the Federal Rules of 

Bankruptcy Procedure. 

The term, “documents,” shall also include and mean, without litigation, the original and 

copies of any written, recorded, or graphic matter, however produced or reproduced, including, 

but not limited to, all letters, telegrams, e-mails, electronic data, correspondence, reports, 

memoranda, contracts, contract modifications, recordings, memorials of telephone conversations 

or meetings or conferences, interoffice or intraoffice communications and communications with 

third parties (including contractors, subcontractors, suppliers and legislative or executive 

personnel), work papers, handwritten notes, minutes, handwritten drafts, press releases, 

statements, transcripts, desk calendars, personal appointment pads, appointment books, diaries, 

“rolodex” cards, telephone bills, expense account statements, expense vouchers, credit card 

charges and receipts, travel records, receipts, canceled checks, or other instruments of payment 

or indicia of payment, bank statements, notes payable or receivable, endorsements, account 

statements, comparisons, acknowledgements, analyses, portfolios, ledgers, ledger sheets, books 

of account (including accounts receivable), journals, audits, accountants’ reports, filings with any 

governmental agency, financial statements, corporate records, purchase orders, timecards, 

drawings, sketches, specifications, change orders and all construction documents, diagrams or 

other writings of any nature whatsoever (whether written, handwritten, typed, Xeroxed, 

photocopied, printed, duplicated, reproduced, recorded, or drafted) however produced or 

reproduced, or any thing or matter which by itself or in connection with other matters or things 

will produce an intelligible image or sound containing, reflecting, or recording, in whole or in 

part, any information (including, without limitation, all interim as well as final drafts, nonidentical copies, reports, pictures, drawings, sketches, work sheets, diagrams, handwritten notes, 

or other recorded material of any kind or nature). 

“Documents” shall also mean all tapes, discs, information on computer hard drives, 

paper, and electronic media including hard disks, floppy disks, optical disks, DVD- and CDROM disks, magnetic tapes, disaster recovery back-up, computer chips, conferencing or work 

sessions, electronic mail (e-mail), personal computers (home and office), laptop computers, 

computing units, personal information on calendars, digital personal assistants, and identifying 

markers placed on storage devices containing the electronic data. This discovery seeks electronic 

information whether active (those files listed on a personal computer, file server, or floppy disk), 

archived (files backed up and sent to storage) and/or transparent (information deleted from the 

personal computer or the file server but which remains in the system despite not appearing on the 

computer’s directory). 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 7 of 11
Exhibit A 

8

“Documents” shall also specifically include originals (and, if originals are not in the 

Party in Interest’s possession, custody or control, then copies of recordings of telephone 

conversations. 

“Gryphon” shall mean all Grpyhon Investors, Inc., and all of its officers, employees, 

agents, parents, subsidiaries, successors, or assigns. 

All other capitalized terms have the meaning ascribed to them in the Motion. 

II. Documents Requested. 

1. All documents related to the Debtors’ monthly and annual financial statements, 

balance sheets, profit and loss statements, and cash flow statements for 2013 – 

2018. 

2. All documents related to any consulting fees paid by the Debtors to Gryphon from 

2013 – 2018. 

3. All documents related to consulting or other services Gryphon provided to the 

Debtors, including but not limited to: the types of services provided; who 

provided the services; the duration of the services; and any work product or other 

written documents related to the services from 2013 – 2018. 

4. All documents related to any debts or liabilities to Gryphon for which the Debtors 

were obligated from 2013 – 2018. 

5. All documents related to any debts or liabilities to Gryphon for which the Debtors 

were obligated to Gryphon after 2018. 

6. Any and all copies of minutes, reports, or other documents from or of the 

Debtors’ Board of Directors from 2013 – 2018. 

7. All documents related to the 2018 Ancora Transaction, including but not limited 

to any internal documents or memorandum related to the sale. 

8. All documents related to the Debtors’ business following the closing of the 2018 

Ancora Transaction through the filing of the Bankruptcy Case. 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 8 of 11
Exhibit B 

Vernon E. Inge, Jr. (Va. State Bar No. 32699) 

Corey S. Booker (Va. State Bar No. 73419) 

WHITEFORD, TAYLOR & PRESTON, L.L.P. 

Two James Center 

1021 East Cary Street, Suite 1700 

Richmond, Virginia 23219 

Telephone: 804.977.3301 / 804.977.3302 

Facsimile: 804.977.3291 / 804.977.3292 

E-Mail: vinge@wtplaw.com 

E-Mail: cbooker@wtplaw.com 

Special Litigation Counsel for Harry Shaia, Jr., Chapter 7 Trustee 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

In re: ) 

) 

DELTA CAREER EDUCATION ) Case No. 18-33822-KLP 

CORP., et al., ) Chapter 7 

) 

Debtors. ) (Jointly Administered) 

____________________________________) 

ORDER GRANTING MOTION FOR AUTHORITY TO 

CONDUCT EXAMINATION AND ISSUE SUBPOENAS PURSUANT 

TO RULE 2004 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE 

The matter before the Court in the Motion for Authority to Conduct Examinations and 

Issue Subpoenas Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure (the 

“Motion”), filed by Harry Shaia, Jr., Chapter 7 Trustee (the “Trustee”), by special litigation 

counsel. The Court finding that adequate notice has been given and that cause exists for the grant 

of the relief requested in the Motion, it is hereby ORDERED and DECREED that: 

1. The Motion is GRANTED in its entirety. 

2. The Trustee is authorized to conduct an examination of a designated 

representative of Gryphon Investors, Inc. (“Gryphon”) pursuant to Rule 2004 of the Federal 

Rules of Bankruptcy Procedure, including without limitation, to compel the production of 

documents from Gryphon within the scope of Exhibit A attached to the Motion, to compel the 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 9 of 11
Exhibit B 

10 

appearance of a designated representative of Gryphon at an examination, and to issue subpoenas 

to Gryphon as may be required for the production of documents and the appearance of a 

designated representative at an examination. 

ENTERED: 

UNITED STATES BANRKUPTCY JUDGE 

WE ASK FOR THIS: 

/s/ 

Vernon E. Inge, Jr. (Va. State Bar No. 32699) 

Corey S. Booker (Va. State Bar No. 73419) 

WHITEFORD, TAYLOR & PRESTON, L.L.P. 

Two James Center 

1021 East Cary Street, Suite 1700 

Richmond, Virginia 23219 

Telephone: 804.977.3301 / 804.977.3302 

Facsimile: 804.977.3291 / 804.977.3292 

Special Litigation Counsel for Harry Shaia, Jr., Chapter 7 Trustee 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 10 of 11
Exhibit B 

11 

CERTIFICATE OF ENDORSEMENT 

UNDER LOCAL BANKRUPTCY RULE 9022-1(C)

I hereby certify that the foregoing Order Granting the Motion for Authority to Conduct 

Examination and Issue Subpoenas Pursuant to Rule 2004 of the Federal Rules of Bankruptcy 

Procedure has been served upon or endorsed by all necessary parties. 

/s/ 

Corey S. Booker 

SERVICE LIST 

Harry Shaia, Jr., Esq. 

SPINELLA, OWINGS & SHAIA, P.C. 

8559 Mayland Drive 

Richmond, Virginia 23294 

Chapter 7 Trustee

William A. Broscious, Esq. 

KEPLEY BROSCIOUS & BIGGS, PLC

2211 Pump Road 

Richmond, Virginia 23233 

Counsel for the Chapter 7 Trustee 

Peter J. Barrett, Esq. 

KUTAK ROCK L.L.P. 

901 East Byrd Street, Suite 1000 

Richmond, Virginia 23219 

Counsel for Debtor

Gryphon Investors, Inc. 

ATTN: Richard David Andrews, Reg. Agent 

One Maritime Plaza, Suite 2300 

San Francisco, California 94111 

Case 18-33822-KLP Doc 112 Filed 02/27/20 Entered 02/27/20 23:27:28 Desc Main

Document Page 11 of 11