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MED DIVERSIFIED INC
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8-K/A
May 24, 4:21 PM ET
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MED DIVERSIFIED INC 8-K/A
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Contents
289
I. BRIEF HISTORY OF THE DEBTORS AND THEIR CHAPTER 11 CASES
A. General
B. Events Preceding the Debtors’ Chapter 11 Filings
C. Commencement of this Chapter 11 Case
D. Significant Events During the Chapter 11 Case
(c) Operations
(i) CCG
• Negotiated new managed care agreements in Illinois with Aetna, Gentiva and Health Marketing, in Ohio with Gentiva and Ohio Health Choice, in New Jersey with Gentiva and Amerahealth with no corresponding losses of payor contracts
• Achieved positive EBITDA in 10 of 13 months following the commencement of the chapter 11 cases
• While Revenue since the Petition Date of $32.6 million is 8% below post-petition budget, EBITDA of $1.6 million remains consistent with comparable pre-petition periods due to focus on core therapies
• Added referral sources in each market
• Successfully implemented electronic billing at all branches with corresponding improvement in cash collections and reduction in DSO.
(ii) CCS
• Revenues in the post petition period of $68.8 million are consistent with budget and modestly greater than comparable pre-petition period despite reimbursement rate reductions in Texas due to budget constraints.
• EBITDA of $6.3 million since the Petition Date is also consistent with budget and has increased 22% over comparable prepetition periods.
• Staff reductions resulting from Texas Medicaid rule changes will provide annualized savings of $350,000.
• Maintained company-wide DSO of 30-31 days, while implementing electronic billing of various HMO payors
• Lost only 15 of 7,000 patients - No loss of full- time staff
• Consistently high Texas Department of Health Services survey ratings achieved, together with “exceptional” ratings during post-petition internal billing integrity audits.
d) Compliance and Regulatory Affairs
• Fully implemented HIPAA privacy policies
• Completed company-wide privacy and security training for all Med and CDSI employees - Made all necessary SEC filings
e) Information Technology
• Made significant progress towards conversion to electronic billing
• Completed in- house upgrade of Oracle conversion, saving more than $200,000 in contracting fees
• Reduced data networking costs by consolidating and reengineering data circuits in corporate headquarters, with no network capacity loss
• Reduced staff by 2 full-time employees, while maintaining level of customer field support
f) Human Resources/Payroll
• Reduced outside payroll costs through negotiated savings of $240,000 on the annual contract.
• Reduced headcount in payroll department by 2, for an annual savings of $100,000
• Reduced human resources department headcount by 2 directors and a vice president
(a) National Century Financial Enterprises, Inc., National Premier Financial Services, Inc., NPF VI, Inc., NPF X, Inc., NPF XII, Inc., NPF Capital, Inc.
(b) CCG Committee Objection to the Bank’s Claims
(c) The Settlement By and Among the Bank, NCFE and the CCG Committee
II. ASSETS AND LIABILITIES OF THE DEBTORS’ ESTATES
III. SUMMARY OF THE PLAN OF REORGANIZATION
A. Classification and Treatment of Claims and Interests
B. Treatment of Unclassified Administrative Expense Claims and Priority Tax Claims
C. Classes of Claims and Equity Interests
D. Implementation of the Plan and Execution of its Terms
(a) The Purpose of the CCG Creditors’ Trust. The CCG Creditors’ Trust shall be deemed established on the Effective Date pursuant to the terms of the CCG Creditors’ Trust Agreement. The purpose of the CCG Creditors’ Trust is to receive and disburse the proceeds of the CCG Payment to holders of Allowed Claims in Class B-4 pursuant to the Plan, and to prosecute the CCG Recovery Rights and distribute any Net Recoveries obtained thereby(a) with respect to the 25% share of the Net Recoveries held by the Bank, to or for the benefit of the Bank and (b) with respect to the 75% share of the Net Recoveries held by the CCG Creditor’s Trust, to the holders of Allowed Claims in Class B-4, in each case in accordance with Article IV of the Plan. The CCG Creditors’ Trust shall also be responsible for objecting to Claims in Class B-4, if appropriate. It is estimated that professional fees, incurred for performing those tasks will be in the range of $60,000.00 to $80,000.00.
(b) Transfers of CCG Recovery Rights and Right to Net Recoveries Payments to the CCG Creditors’ Trust by Reorganized Debtors. On the Effective Date, or as soon thereafter as practicable, the CCG Payment, the CCG Recovery Rights and the right to receive 75% of the Net Recoveries shall be irrevocably assigned, transferred and conveyed to the CCG Creditors’ Trust. Notwithstanding any other provision of the Plan, the CCG Creditors’ Trust Trustee shall have the right in his/her/its sole and absolute discretion to prosecute, compromise, settle and release the CCG Recovery Rights. The CCG Creditors’ Trust Trustee shall have no obligation or liability to any Creditor or party-in- interest, including without limitation the Bank, for his/her/its decision not to prosecute or to compromise or release any of the CCG Recovery Rights.
(c) Purpose of the CDSI Creditors’ Trust and the CCS Creditors’ Trust. The CDSI Creditors’ Trust and the CCS Creditors’ Trust shall be deemed established on the Effective Date pursuant to the terms of the applicable Creditors’ Trust Agreements. The purpose of the CDSI Creditors’ Trust and the CCS Creditors’ Trust is to receive and disburse the proceeds of the CDSI Payment and CCS Payment to holders of Allowed Claims in Classes A-4 and C-4, respectively, pursuant to the Plan. The CDSI Creditors’ Trust and CCS Creditors’ Trust also shall be responsible for objecting to Claims in Classes A-4 and C-4, if appropriate. It is estimated that professional fees incurred for performing those tasks for the CDSI Creditors Trust will be in the range of $25,000 to $35,000, and for the CCS Creditors Trust, in the range of $40,000 to $50,000.
(d) Management and Powers of the Creditors’ Trusts; Substitution of Parties. After the Effective Date, the affairs of the Creditors’ Trusts and all assets held or controlled by the Creditors’ Trusts shall be managed under the direction of the applicable Creditors’ Trust Trustees in accordance with the terms of the Creditors’ Trust Agreements. The CDSI and CCS Creditors’ Trust Trustees shall be selected by the respective Debtors of these estates; the CCG Committee shall select the CCG Creditors’ Trust Trustee. The authority and powers of the Creditors’ Trust Trustees shall include, without limitation, the authority and power: (a) to object to Claims in Classes A-4, B-4, and C-4 (a trustee of a Creditors’ Trust shall object only to Claims that would otherwise be paid from the applicable Creditors’ Trust), and the ability to prosecute or settle such objections and defend claims and counterclaims asserted in connection therewith (including by way of asserting the Debtors’ rights of recoupment, setoff or otherwise); (b) in the case of the CCG Creditors’ Trust Trustee, to initiate and prosecute in every capacity, including as representative of the Estates under section 1123(b)(3) of the Code, of the CCG Recovery Rights assigned to the CCG Creditors’ Trust; (c) in the case of the CCG Creditors’ Trust Trustee, to compromise and settle of any such CCG Recovery Rights assigned to the CCG Creditors’ Trust; (d) to effect distributions under the Plan to the holders of Allowed Claims in Classes A-4, B-4, and C-4, as applicable; (e) to participate in any post-Confirmation Date motions to amend or modify the Plan or the Creditors’ Trust Agreements, or appeals from the Confirmation Order as it relates to the classes of Claims to be paid from the Creditors’ Trusts; and (f) to participate in actions to enforce or interpret the Plan as it relates to classes of Claims to be paid from the Creditors’ Trusts.
(e) Establishment of Reserve. Pursuant to the terms of the Creditors’ Trust Agreements, the Creditors’ Trust Trustees shall maintain a reserve in trust for the payment of any administrative expenses of the Creditors’ Trusts, taxes, and any Disputed Claims, which may later become Allowed Claims. No distributions shall be made on account of any Disputed Claims unless and until such Claims become Allowed Claims as provided in the Creditors’ Trust Agreements.
(f) Employment of Professionals. The Creditors’ Trust Trustees are authorized, without further order of the Court, to employ such Entities, including professionals, as he/she/it may deem necessary to enable him/her/it to perform his/her/its functions under the Plan, and the costs of such employment and other expenditures shall be paid solely from assets transferred to, or payments received by, the Creditors’ Trusts as provided in the Plan. Such Entities shall be compensated and reimbursed for their reasonable and necessary fees and out-of-pocket expenses on a monthly basis from the Creditors’ Trusts without further notice, hearing or approval of the Court except as set forth in the Creditors’ Trust Agreements.
(g) Objections to Claims by the Creditors’ Trusts. All objections to Disputed Claims in Classes A-4, B-4, and C-4 to be filed by the Creditors’ Trust Trustees shall be filed with the Court and served upon the holders of such Claims by the later of (a) 90 days after the Effective Date, or (b) 90 days after the particular proof of claim has been filed, except as extended by an agreement between the claimant and the applicable Creditors’ Trust, or by order of the Court upon a motion filed by the applicable Creditors’ Trust Trustee, with notice of such motion to be served upon the Office of the United States Trustee and those holders of Claims to which the objection is made. If no objection has been filed to a proof of claim by the objection bar dates established in this paragraph, the Claim to which such proof of claim relates shall be treated as an Allowed Claim for all purposes under the Plan.
(h) Payments to the Bank. The Trustee shall make payments to the Bank on account of its right to receive a 25% share of the Net Recoveries within 30 days after the Net Recoveries are obtained or determined.
(i) Distributions to Creditors. Distributions shall be made in accordance with the Plan, the Confirmation Order, and the Creditors’ Trust Agreements.
(i) Reserve for Unpaid Claims. For purposes of calculating Pro Rata distributions or any other distributions to be made under the Plan to holders of Allowed Claims, the calculation of the total Allowed Claims shall be computed as if all Disputed Claims then pending were allowed in the full amount thereof.
(ii) Initial Distribution Date. Except for payments required to be made on the Effective Date in accordance with other sections of the Plan, the Creditors’ Trust Trustees shall make the initial distributions from the Creditors’ Trusts at such time as they deem appropriate, provided that in the reasonable discretion of the Creditors’ Trust Trustees Cash in an amount sufficient to render feasible a distribution after making reasonable reserves to pay the expenses (including, but not limited to, federal income taxes and withholding taxes, if any, or in objecting to claims), debts, charges, liabilities, and obligations of the Creditors’ Trusts.
(iii) Allowance of Claims. Distributions shall be made with respect to any Disputed Claim, which becomes an Allowed Claim after the Effective Date, on or as soon as practicable after the date on which a Disputed Claim becomes an Allowed Claim. The amount of any distribution shall be calculated on a Pro Rata basis, so that each Disputed Claim that becomes an Allowed Claim receives an initial distribution equal to the total percentage distributions made prior to the date of such allowance on account of other Allowed Claims of the same Class under the Plan and the applicable Creditors’ Trust Agreement.
(iv) Subsequent Distribution Dates. After the Initial Distribution Date, unless otherwise directed in a post-Confirmation Date Final Order, the Creditors’ Trust Trustees shall make additional distributions at such time as the Creditors’ Trust Trustees, in the exercise of their discretion, deem appropriate to the holders of Allowed Claims in Classes A-4, B-4, and C-4, of the Cash then held in the respective Creditors’ Trusts (after reasonable reserves to pay the expenses (including, but not limited to, federal and state income taxes and withholding taxes, if any, and all expenses and fees incurred in the prosecution of the CCG Recovery Rights or in objecting to Claims), debts, charges, liabilities, and obligations of each Creditors’ Trust have been made in the reasonable discretion of the Trustee of such Creditors’ Trust), provided that each distribution to a single Creditor must exceed $25.00 and any distribution which is less than $25.00 shall be withheld and carried-over to the next distribution date. Notwithstanding the foregoing, the final distribution to any Creditor shall be made even if it is less than $25.00.
(v) Unclaimed Property. Until the expiration of 180 days following the date on which the distribution of the Unclaimed Property has been attempted, Unclaimed Property shall be delivered upon presentation of proper proof by a holder of its entitlement thereto, after which time the holder of an Allowed Claim entitled to such Unclaimed Property shall cease to be entitled thereto. Thereafter, all right, title and interest therein shall vest in the Creditors’ Trusts for redistribution in accordance with the Plan and the applicable Creditors’ Trust Agreement. After the expiration of 180 days following the date of an attempted distribution of Unclaimed Property, each
(vi) Surrender. Notwithstanding any other provision of the Plan, no holder of an Allowed Claim shall receive any distribution under the Plan in respect of such Allowed Claim until such holder has surrendered to the Creditors’ Trusts any promissory note or other document(s) evidencing such Allowed Claim, or until evidence of loss and indemnity satisfactory to the Creditors’ Trust Trustees, in his/her/its sole and absolute discretion, shall have been delivered to the Creditors’ Trust in the case of any note or other document(s) alleged to be lost, stolen or destroyed.
(vii) Final Distribution. Upon resolution of all outstanding objections to Disputed Claims in Classes A-4, B-4, and C-4, and after the payment of all expenses and other obligations of the Creditors’ Trusts, and after the CCG Recovery Rights have all been resolved or abandoned and the Bank’s share of the Net Recoveries has been distributed, the Creditors’ Trust Trustees shall make Pro Rata distributions of all remaining assets of the Creditors’ Trusts to holders of Allowed Claims in Classes A-4, B-4, and C-4 in accordance with the Plan and the Creditors’ Trust Agreements.
(viii) Exemption From Certain Transfer Taxes. Pursuant to section 1146(c) of the Code, the issuance, transfer or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of the Code, may not be taxed under any law imposing a stamp tax, transfer tax or similar tax. Pursuant to section 1146(c) of the Code, no transfer to or from the Creditors’ Trusts, the Litigation Trust, or the Administrative Claims Fund under the Plan, shall be subject to any stamp tax, transfer tax or similar tax.
(ix) Estimation of Unliquidated Disputed Claims. As to any unliquidated Disputed Claim, including Claims based upon rejection of executory contracts or leases, or other Disputed Claims, the Court, upon motion by a Creditors’ Trust Trustee, may estimate the amount of the Disputed Claim and may determine an amount sufficient to reserve for any such Claim. Any Entity whose Disputed Claim is so estimated shall have recourse only against the applicable Creditors’ Trust and against no other assets or person (including the Creditors’ Trust Trustees), and in any case only in an amount not to exceed the estimated amount of such Entity’s Claim, even if such Entity’s Claim, as finally allowed, exceeds the maximum estimated amount thereof.
(k) Certain Tax Matters. For all federal and state income tax purposes, the Debtors and/or the Reorganized Debtors shall report and treat the transfers of property (other than their own debt instruments) to each Creditors’ Trust as sales of such assets at a selling price equal to the fair market value of such assets on the date of the transfer. For all such purposes, in each case the transferred assets shall be deemed to have the fair market values determined by the Debtors or the Reorganized Debtors, as appropriate, in their absolute and sole discretion, and such valuations shall be used by Debtors and/or the Reorganized Debtors and the
(a) Purpose of the Litigation Trust. The Litigation Trust shall be deemed established on the Effective Date pursuant to the terms of the Litigation Trust Agreement. The purpose of the Litigation Trust is to prosecute the Litigation Trust Claims and distribute to the Bank any proceeds therefrom net of all claims and expenses of the Litigation Trust Trustee. No other Creditors or Entities shall receive any proceeds from the Litigation Trust Claims.
(b) Transfers of the Litigation Trust Claims to the Litigation Trust. On the Effective Date, or as soon thereafter as practicable, the Litigation Trust Claims shall be irrevocably assigned, transferred and conveyed to the Litigation Trust.
(c) Transfer of Sun Accounts Receivable. On the Effective Date, immediately following the payment in full of the Allowed Claim of Sun Capital or, if there is a disagreement about the amount of the Allowed Claim, upon the establishment of a separate reserve escrow account into which will be deposited an amount equal to the amount of Sun Capital’s Claim as asserted by Sun Capital (or such other amount as may be determined by Order of the Bankruptcy Court) to which Sun Capital’s lien will attach, all purchased accounts receivable shall be transferred by Sun Capital to the Litigation Trust.
(d) Management and Powers of the Litigation Trust; Substitution of Parties. After the Effective Date, the affairs of the Litigation Trust and all assets held or controlled by the Litigation Trust shall be managed under the direction of the Litigation Trust Trustee in accordance with the terms of the Litigation Trust Agreement. The powers of the Litigation Trust shall include: (a) the initiation and prosecution in every capacity, including as representative of the Estates under section 1123(b)(3)(B) of the Code, of the Litigation Trust Claims assigned to the Litigation Trust; (b) the compromise and settlement of any such Litigation Trust Claims assigned to the Litigation Trust; (c) the distribution of net proceeds from the Litigation Trust Claims to the Bank; (d) participation in any post-Confirmation Date motions to amend or modify the Plan or the Litigation Trust Agreement, or appeals from the Confirmation Order as it relates to the Litigation Trust; and (e) participation in actions to enforce or interpret the Plan as it relates to the Litigation Trust.
(e) Employment of Professionals. The Litigation Trust Trustee is authorized, without further order of the Court, to employ such Entities, including professionals, as he/she/it may deem necessary to enable him/her/it to perform his/her/its functions under the Plan, and the costs of such employment and other expenditures shall be paid solely from assets transferred to, or payments received by, the Litigation Trust as provided in the Plan. Such Entities shall be compensated and reimbursed for their reasonable and necessary fees and out-of-pocket expenses on a monthly basis from the Litigation Trust without further notice, hearing or approval of the Court except as set forth in the Litigation Trust Agreement.
(f) Prosecution of the Litigation Trust Claims. Pursuant to the Confirmation Order, on the Effective Date, the Debtors will irrevocably assign, transfer and convey to the Litigation Trust the Litigation Trust Claims. The Litigation Trust shall have the full power and authority to initiate, prosecute, compromise or otherwise resolve any and all Litigation Trust Claims, and all fees, costs, and expenses incurred in respect of the investigation, initiation, and prosecution of such claims shall be payable and paid solely by the Litigation Trust, with all net proceeds derived therefrom to be distributed directly to the Bank.
(g) Certain Tax Matters. The Trustee shall report the Litigation Trust for federal income tax purposes as a “liquidating trust” as defined in Treasury Regulations Section 301.7701-4(d) and Rev. Proc. 94-45 and as a “grantor trust,” with the Bank treated as the grantor and the deemed owner of the Litigation Trust. The transfer of the Litigation Trust Claims to the Litigation Trust will be treated, for all federal and state tax purposes, as a deemed transfer to the Bank, followed by a deemed transfer by the Bank to the Litigation Trust. The Litigation Trust Trustee shall, in his/her/its reasonable discretion, determine the value of all property transferred to the Litigation Trust and the Litigation Trust Trustee, the Debtors, and the Bank shall use such valuations for all federal and state tax purposes.
E. Provisions Regarding Voting Upon and Confirmation of the Plan
(a) Voting Requirements under the Bankruptcy Code
(b) Procedure for Voting
(c) Mailing of Ballots
(d) Separate Votes by Each Impaired Class
(e) Unimpaired Classes and Classes Which Receive Nothing Need Not Vote On the Plan
(a) Absolute Priority Rule
(b) Best Interest of Creditors Test; Liquidation Analysis
(a) Federal Income Tax Consequences to Holders of Claims
(b) The Creditors’ Trusts.
(c) Federal Income Tax Consequences To The Reorganized Debtors
(i) Tax Reorganizations.
(ii) Reduction of the Debtors’ Indebtedness.
(iii) Carryover and Availability of Med and the Debtors’ Net Operating Losses
a) Generally
b) Section 382
(d) Backup Withholding and Reporting.
F. Executory Contracts and Unexpired Leases, Retiree Benefits; Post- Confirmation Fees and Final Decree
G. Provisions Regarding Releases and Discharge
H. Retention of Jurisdiction
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1. “Administrative Claim” means a Claim for payment of an administrative expense of a kind specified in section 503(b) of the Code and referred to in section 507(a)(l) of the
2. “Administrative Claims Fund” means a fund established by the Reorganized Debtors, Med, Trestle, and Resource Pharmacy on the Effective Date for the purpose of making distributions to: (a) holders of Allowed Administrative Claims against the Debtors and Med; and (b) Sun Capital on account of its Allowed Claims. To the extent that funds remain in the Administrative Claims Fund after payment of the Allowed Administrative Claims of Med, and the Debtors and the Allowed Claims of Sun Capital, such funds may be used to fund the Class 10A Distribution(as defined in the Med Plan). The sources of funds in the Administrative Claims Fund shall be transfers pursuant to the Resource Plan and the Trestle Plan on the Effective Date. The Administrative Claims Fund shall utilize a bank account to be opened by the Debtors or Reorganized Debtors for the purpose of receiving and disbursing funds in accordance with this paragraph and the Plan.
3. “AIG” means American Home Assurance Company, National Union Fire Insurance Company of Pittsburg, P.A., Insurance Company of the State of Pennsylvania, American International Specialty Lines Insurance Company, and other entities related to American International Group, Inc.
4. “Allowed Administrative Claim” means all or that portion of an Administrative Claim which is an Allowed Claim.
5. “Allowed Claim” means that portion of a Claim: (a) which was scheduled by the Debtors pursuant to section 521 of the Code, other than a Claim scheduled as disputed, contingent or unliquidated; (b) proof of which was timely filed with the Court, and as to which no objection has been filed on or prior to the deadlines established by sections II.B, V.E.8, and V.I of the Plan; or (c) which has otherwise been allowed by a Final Order.
6. “Allowed Convenience Class Claim” means all or that portion of a Convenience Class Claim which is an Allowed Claim.
7. “Allowed Priority Claim” means all or that portion of a Priority Claim which is an Allowed Claim.
8. “Allowed Secured Claim” means all or that portion of a Secured Claim which is an Allowed Claim.
9. “Allowed Subordinated Claim” means all or that portion of a Subordinated Claim which is an Allowed Claim.
10. “Allowed Tax Claim” means all or that portion of a Tax Claim which is an Allowed Claim.
11. “Allowed Unsecured Claim” means all or that portion of an Unsecured Claim which is an Allowed Claim.
12. “Bank” means Private Investment Bank Limited.
13. “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure.
14. “Business Day” means any day other than a Saturday, a Sunday or a “legal holiday” (as defined in Bankruptcy Rule 9006(a)).
15. “Cases” means, collectively, the chapter 11 cases under the Code commenced by the Debtors on the Petition Date.
16. “Cash” means lawful currency of the United States and equivalents thereof, including, but not limited to: bank deposits, wire transfers, checks, and other similar items.
17. “CCG” means Chartwell Care Givers, Inc., a Delaware corporation.
18. “CCG Creditors’ Trust” means that trust established in accordance with section V.E hereof, and which, after the Effective Date, will hold and distribute certain assets and funds for the benefit of holders of Allowed Claims in Class B-4 in accordance with the terms of the Plan, and will have such powers, duties and obligations as are set forth therein, in the CCG Creditors’ Trust Agreement, in the Confirmation Order, in other Final Orders, and by applicable law.
19. “CCG Creditors’ Trust Agreement” means that certain “CCG Creditors’ Trust Agreement,” a true and correct copy of which is attached hereto as Exhibit “1.”
20. “CCG Creditors’ Trust Trustee” shall mean the Trustee of the CCG Creditors’ Trust consisting of one (1) Entity to be designated by the Committee on or before the Effective Date.
21. “CCG Insider Avoidance Actions” means any and all causes of action brought under sections 544 through 551, inclusive, of the Code, which may be asserted against any Insiders (as defined in section 101(31) of the Code) or Affiliates (as defined in section 101(2) of the Code) of CCG.
22. “CCG Payment” means the $2,350,000 in Cash to be paid on the Effective Date to the CCG Creditors’ Trust for the benefit of the holders of Allowed Claims in Class B-4.
23. “CCG Recovery Rights” means any and all causes of action held by CCG and its Estate to subordinate Claims under section 510 of the Code, and causes of action held by CCG and its Estate brought under sections 544 through 551, inclusive, of the Code, except for the CCG Insider Avoidance Actions.
24. “CCS” means Chartwell Community Services, Inc., a Texas corporation.
25. “CCS Creditors’ Trust” means that trust established in accordance with section V.E hereof, and which, after the Effective Date, will hold and distribute certain assets and funds for the benefit of holders of Allowed Claims in Class C-4 in accordance with the terms of the Plan, and will have such powers, duties and obligations as are set forth therein, in the CCS Creditors’ Trust Agreement, in the Confirmation Order, in other Final Orders, and by applicable law.
26. “CCS Creditors’ Trust Agreement” means that certain “CCS Creditors’ Trust Agreement,” a true and correct copy of which is attached hereto as Exhibit “3.”
27. “CCS Creditors’ Trust Trustee” shall mean the Trustee of the CCS Creditors’ Trust consisting of one (1) Entity to be designated by the Debtors on or before the Effective Date.
28. “CCS Payment” means the $350,000 in Cash to be paid on the Effective Date to the CCS Creditors’ Trust for the benefit of the holders of Allowed Claims in Class C-4.
29. “CDSA” means CDS Acquisition, Inc., a Delaware corporation.
30. “CDSI” means Chartwell Diversified Services, Inc., a Delaware corporation.
31. “CDSI Creditors’ Trust” means that trust established in accordance with section V.E hereof, and which, after the Effective Date, will hold and distribute certain assets and funds for the benefit of holders of Allowed Claims in Class A-4 in accordance with the terms of the Plan, and will have such powers, duties and obligations as are set forth therein, in the CDSI Creditors’ Trust Agreement, in the Confirmation Order, in other Final Orders, and by applicable law.
32. “CDSI Creditors’ Trust Agreement” means that certain “CDSI Creditors’ Trust Agreement,” a true and correct copy of which is attached hereto as Exhibit “2.”
33. “CDSI Creditors’ Trust Trustee” shall mean the Trustee of the CDSI Creditors’ Trust consisting of one (1) Entity to be designated by the Debtors on or before the Effective Date.
34. “CDSI Payment” means the $250,000 in Cash to be paid on the Effective Date to the CDSI Creditors’ Trust for the benefit of the holders of Allowed Claims in Class A-4.
35. “CHT” means Chartwell Home Therapies, L.P., a Massachusetts limited partnership.
36. “CHT Administrative Claims” means the Administrative Claims of CHT asserted against the Debtors pursuant to that certain Proceeds Distribution Agreement dated June 6, 2003.
37. “Claim” or “Claims” as defined in the Code, section 101(5)(A) and (B) means (a) any right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (b) any right to an equitable remedy for breach of performance if such
breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
38. “Class” means a group of Claims or Interests classified together in a class designated in Article III of the Plan.
39. “CMS” means the Division of Financial Management, Centers for Medicare and Medicaid Services, United States Department of Health and Human Services.
40. “Code” means the Bankruptcy Code, as codified in title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., including all amendments thereto.
41. “Committee” means the Official Committee of Unsecured Creditors appointed by the Office of the United States Trustee in CCG’s Case, as it may be constituted from time to time.
42. “Confirmation Date” means the date of entry of the Confirmation Order.
43. “Confirmation Order” means the order of the Court confirming the Plan pursuant to section 1129 of the Code.
44. “Convenience Class Claim” means any Unsecured Claim that is asserted against the Debtors in an amount that is less than $100, or any Unsecured Claim the holder of which has agreed to accept $100 or less in full satisfaction of such Claim.
45. “Court” means the United States Bankruptcy Court for the Eastern District of New York.
46. “Creditor” means any holder of a Claim, as defined in the Code, section 101(10).
47. “Creditors’ Trusts” means, collectively, the CDSI Creditors’ Trust, the CCG Creditors’ Trust, and the CCS Creditors’ Trust.
48. “Creditors’ Trust Agreements” means, collectively, the CDSI Creditors’ Trust Agreement, the CCG Creditors’ Trust Agreement, and the CCS Creditors’ Trust Agreement.
49. “Creditors’ Trust Trustees” means, collectively, the CDSI Creditors’ Trust Trustee, the CCG Creditors’ Trust Trustee, and the CCS Creditors’ Trust Trustee.
50. “Debtors” means, collectively, CDSI, CCG, and CCS, whether as debtor or as debtor-in-possession.
51. “Disclosure Statement” means the “Disclosure Statement Regarding the Second Amended Joint Plan of Reorganization of Debtors Chartwell Diversified Services, Inc., Chartwell Care Givers, Inc., and Chartwell Community Services, Inc. Dated May 18, 2004” (and all exhibits and attachments thereto or referenced therein) that relates to the Plan and is approved pursuant to section 1125 of the Code in an order entered by the Court, as such Disclosure Statement may be amended, modified or supplemented.
52. “Disputed Claim” means any Claim which is not an Allowed Claim, or a Claim which has been disallowed by the Court under section 502 of the Code.
53. “Effective Date” means, unless an earlier date is otherwise agreed to by the Debtors, the Bank and the Committee, the later of: (a) the eleventh (11th) day after the Confirmation Date if it is a Business Day, or if it is not a Business Day, the first Business Day thereafter; and (b) the first Business Day on which the Confirmation Order becomes a Final Order. This Plan will not become effective with respect to CCG and CDSI, and no distributions to holders of Allowed Claims against CCG or CDSI will be made, unless and until the conditions described in Article IX of this Plan occurs.
54. “Entity” means an individual, a corporation, a general partnership, a limited partnership, a limited liability company, a limited liability partnership, an association, a joint stock company, a joint venture, an estate, a trust, an unincorporated organization, a government or any subdivision thereof, or any other entity.
55. “Estate” or “Estates” means the estate(s) created by section 541(a) of the Code upon the Petition Date.
56. “Final Order” means an order or judgment of the Court, the operation or effect of which has not been stayed, and as to which the time to appeal or to seek reargument or
rehearing has expired, and as to which no appeal, reargument, or petition for rehearing or certiorari has been taken or is pending.
57. “HMA Claims” means any and all Claims asserted against the Debtors by Home Medical of America, Inc. and/or any of its direct or indirect subsidiaries, affiliates, Insiders, assigns, trustees and agents, including, without limitation, proofs of claim numbers 586, 587, 588, 589 and 607.
58. “Initial Distribution Date” means the first Business Day on which a distribution is made under the Plan to holders of Allowed Claims.
59. “Insurance Policy” means any insurance policy held by the Debtors.
60. “Interest” means: (a) the common or preferred stock or any ownership rights in the common or preferred stock of any Debtor; and (b) any right, warrant or option, however arising, to acquire the common stock or any other equity interest, or any rights therein, of any Debtor.
61. “Interest Holder” means the holder of an Interest.
62. “Litigation Trust” means that trust established in accordance with section V.F hereof, and which, after the Effective Date, will hold and prosecute certain claims for the benefit of the Bank in accordance with the terms of the Plan, and will have such powers, duties and obligations as are set forth therein, in the Litigation Trust Agreement, in the Confirmation Order, in other Final Orders, and by applicable law.
63. “Litigation Trust Agreement” means that certain “Litigation Trust Agreement,” a true and correct copy of which is attached hereto as Exhibit “4.”
64. “Litigation Trust Claims” means: (a) any claims and causes of action of the Debtors against the Insiders (as defined in section 101(31) of the Code) of Med; (b) the CCG Insider Avoidance Actions; (c) the Other Recovery Rights; and (d) the Transferred Claims.
65. “Litigation Trust Trustee” shall mean the Trustee of the Litigation Trust consisting of one (1) Entity to be designated by the Bank on or before the Effective Date.
66. “Med” means Med Diversified, Inc., a Nevada corporation.
67. “Med Adversary Proceeding” means the adversary proceeding entitled Med Diversified, Inc., et al. v. National Century Financial Enterprises, Inc., et al., Case No. 03-8262 (Bankr. E.D.N.Y.).
68. “Med Plan” means the “Second Amended Plan of Liquidation of Debtor Med Diversified, Inc. Dated May 10, 2004” filed in Med’s bankruptcy case which is pending in this Court.
69. “NCFE/Bank Settlement” means that certain settlement agreement between the NCFE Released Parties and the Bank which was approved by the United States Bankruptcy Court for the District of Ohio on March 2, 2004.
70. “NCFE Entities” means National Century Financial Enterprises, Inc., National Premier Financial Services, Inc., NPF VI, Inc., NPF XII, Inc., NPF X, Inc., NPF-LL, NPF Capital, TegCo Investments LLC, TEGRx, Inc., Home Medical of America, Nations Healthcare, Inc., Infusion Management Systems, Lance Poulsen, Rebecca Parrett, Hal Pote, Don Ayers, JP Morgan Chase, and Bank One, and any of their affiliates, subsidiaries, shareholders, officers, and directors.
71. “NCFE Released Parties” means National Century Financial Enterprises, Inc., National Premier Financial Services, Inc., NPF VI, Inc., NPF XII, Inc., NPF X, Inc., NPF-LL, and NPF Capital.
72. “Net Recoveries” means the Cash actually received by the CCG Creditors’ Trust on account of the CCG Recovery Rights, less the costs of recovering such Cash, including, without limitation, all attorneys’ fees and costs of litigation associated with such CCG Recovery Rights.
73. “New CDSI Common Stock” means all shares of common stock, par value $0.001 per share, of CDSI on or after the Effective Date, which may be issued in accordance with section V.B of the Plan.
74. “Other Recovery Rights” means any and all causes of action to subordinate Claims under section 510 of the Code, and causes of action brought under sections 544 through 551, inclusive, of the Code, except for the CCG Recovery Rights.
75. ““Petition Date” means November 27, 2002.
76. “Plan” means this “Second Amended Joint Plan of Reorganization of Debtors Chartwell Diversified Services, Inc., Chartwell Care Givers, Inc., and Chartwell Community Services, Inc. Dated May 10, 2004” (including all exhibits and attachments, each of which is hereby incorporated and made part of the Plan), as modified or amended from time to time.
77. “Priority Claim” means a Claim other than an Administrative Claim or a Tax Claim, which, if allowed, would be entitled to priority under section 507(a) of the Code.
78. “Pro Rata” means proportionately, so that with respect to a particular Allowed Claim, the ratio of (a)(i) the amount of property distributed on account of such Claim to (ii) the amount of such Claim, is the same as the ratio of (b)(i) the amount of property distributed on account of all Allowed Claims of the Class in which such Claim is included to (ii) the amount of all Allowed Claims in that Class.
79. “Professionals” means those Entities (a) employed in the Cases under sections 327 or 1103 of the Code, and (b) entitled, under sections 328, 330, 331, 503(b), 506(b), and/or 507(a)(1) of the Code, to seek compensation for legal, accounting or other professional services and the costs and expenses related to such services from the Debtors or the Estates.
80. “Related Debtors” means, collectively, the Debtors, Med, Trestle, and Resource Pharmacy.
81. “Reorganized Debtors” means, collectively, CDSI, CCG, and CCS, on and after the Effective Date.
82. “Resource Pharmacy” means Resource Pharmacy, Inc., a Nevada corporation.
83. “Resource Plan” means the “Second Amended Plan of Liquidation of Resource Pharmacy, Inc. Dated May 10, 2004” filed in Resource Pharmacy’s bankruptcy case which is pending in this Court.
84. “Secured Claim” means a Claim secured by a lien on any property of any of the Estates, but only to the extent of the value of the secured interest that the holder of such Claim has in such property as of the Petition Date (or, with respect to Court approved post-petition financing, the Confirmation Date), with such value calculated after deducting the amount of all liens, security interests, encumbrances, interests, or other claims, that are senior in priority to such Claim with respect to such property.
85. “Subordinated Claim” means: (a) any Claim, or a portion of a Claim, that is subject to subordination under section 510 of the Code, and (b) any Claim, or portion of a Claim, for any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive damages to the extent that such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the holder of such Claim. In the event that the Court determines that the subordination of a Claim is inappropriate, such Claim shall be treated as an Unsecured Claim in Class A-4, B-4, or C-4, as applicable.
86. “Sun Capital” means Sun Capital Health Care, Inc.
87. “Sun Capital Escrow Account” means an account established by Sun Capital to hold the proceeds of pre-October 18, 2002 receivables of the Debtors, in the approximate amount of $3.6 million.
88. “Tax Claim” means a Claim entitled to priority under section 507(a)(8) of the Code.
89. “TLC Debtors” means Tender Loving Care Health Care Services, Inc., a Delaware corporation; T.L.C. Home Health Care, Inc., a Florida corporation; Albert Gallatin Home Care, Inc., a Delaware corporation; Staff Builders, Inc., a New York corporation; Staff Builders International, Inc., a New York corporation; Careco, Inc., a Massachusetts corporation; Tender Loving Care Home Care Services, Inc., a New York corporation; T.L.C. Midwest, Inc., a
Delaware corporation; U.S. Ethicare Corp., a Delaware corporation; T.L.C. Medicare Services of Dade, Inc., a Florida corporation; T.L.C. Medicare Services of Broward, Inc., a Florida corporation; U.S. Ethicare Chautauqua Corp., a New York corporation; Ethicare Certified Services, Inc., a New York corporation; U.S. Ethicare Erie Corp., a New York corporation; U.S. Ethicare Niagara Corp., a New York corporation; S.B.H.F., Inc., a New York corporation; Staff Builders Services, Inc., a New York corporation; Staff Builders Home Health Care, Inc., a Delaware corporation; St. Lucie Home Health Agency, Inc., a Florida corporation; and A Reliable Homemaker of Martin St. Lucie County, Inc., a Florida corporation, each of which is a debtor in a chapter 11 bankruptcy case pending in this Court.
90. “Transferred Claims” means those claims and causes of action that are transferred to the Litigation Trust pursuant to the terms of the Trestle Plan, the Resource Plan, and the Med Plan.
91. “Trestle” means Trestle Corporation, a Delaware corporation.
92. “Trestle Plan” means the “Second Amended Plan of Liquidation of Trestle Corporation Dated May 6, 2004” filed in Trestle’s bankruptcy case which is pending in this Court.
93. “Unclaimed Property” means any funds or other property to be distributed to Creditors pursuant to the Plan and the Creditors’ Trust Agreements which, after an attempted distribution, has not been received by the rightful Creditor. Unclaimed property shall include checks and any other property that have been returned as undeliverable without a proper forwarding address, or which were not mailed or delivered because of the absence of a proper address to which to mail or deliver such property.
94. “Unsecured Claim” means a Claim that is not a Priority Claim, Secured Claim, Subordinated Claim, or Administrative Claim.
1. Any term used in the Plan that is not defined herein, whether in this Article I or elsewhere, or other Exhibits hereto, but that is defined in the Code or the Bankruptcy
Rules has the meaning ascribed to that term in (and shall be construed in accordance with the rules of construction under) the Code or the Bankruptcy Rules.
2. Any capitalized term used in the Plan that is not defined herein, or other Exhibits hereto, but that is defined and used in the Disclosure Statement has the meaning ascribed to that term in the Disclosure Statement.
3. The words “herein,” “hereof,” “hereto,” “hereunder” and others of similar import refer to the Plan as a whole and not to any particular article, section, subsection or clause contained in the Plan.
4. Unless specified otherwise in a particular reference, a reference in the Plan to an article or a section is a reference to that article or section of the Plan.
5. Any reference in the Plan to a document being in a particular form or on particular terms and conditions means that the document shall be substantially in such form or substantially on such terms and conditions.
6. Any reference in the Plan to an existing document means such document, as it may have been amended, modified or supplemented from time to time as of the Effective Date.
7. Whenever from the context it is appropriate, each term stated in either the singular or the plural shall include both the singular and the plural.
8. The rules of construction set forth in section 102 of the Code shall apply to the Plan.
9. In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
10. All Exhibits to the Plan are incorporated into the Plan, and shall be deemed to be part of the Plan.
11. The provisions of the Plan shall control over the contents of the Disclosure Statement. The provisions of the Confirmation Order shall control over the contents of the Plan.
12. Unless otherwise specified in the Plan, whenever a distribution of property must be made, or an act required on a particular date, the distribution or act shall occur on such date, or as soon as practicable thereafter.
ARTICLE II
PAYMENT OF ADMINISTRATIVE EXPENSES AND TREATMENT OF CERTAIN UNCLASSIFIED CLAIMS
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
1. Class A-1.1 Claims (Secured Claims of the Bank). Class A-1.1 consists of the Allowed Secured Claims of the Bank against CDSI.
2. Class A-1.2 Claims (Secured Claims of the NCFE Released Parties). Class A-1.2 consists of the Allowed Secured Claims of the NCFE Released Parties against CDSI.
3. Class A-1.3 Claims (Secured Claims of AIG). Class A-1.3 consists of the Allowed Secured Claims of AIG against CDSI.
4. Class A-1.4 Claims (Secured Claims of Sun Capital). Class A-1.4 consists of the Allowed Secured Claims of Sun Capital against CDSI.
5. Class A-1.5 Claims (Other Secured Claims). Class A-1.5 consists of all Secured Claims against CDSI other than Claims in Classes A-1.1 through A-1.4. Each holder of an Allowed Secured Claim against CDSI shall be deemed to be a separate sub-class of Class A-1.5.
6. Class A-2 Claims (Priority Claims). Class A-2 consists of all Allowed Priority Claims against CDSI. Class A-2 does not include any Tax Claims, all of which shall be treated in accordance with section II.C of the Plan.
7. Class A-3 Claims. (Intentionally Omitted)
8. Class A-4 Claims (Other Unsecured Claims). Class A-4 consists of all Allowed Claims against CDSI (including Claims arising from the rejection of executory contracts) other than (a) Administrative Claims, (b) Tax Claims, (c) Convenience Class Claims, and (d) Claims included within any other Class designated in the Plan. Class A-4 shall be deemed to include those Creditor(s) holding an alleged Secured Claim against CDSI for which: (i) no collateral exists to secure the alleged Secured Claim; and/or (ii) liens, security interests, or other encumbrances that are senior in priority to the alleged Secured Claim exceed the fair market value of the collateral securing such alleged Secured Claim as of the Petition Date.
9. Class A-5 Claims (Unsecured Convenience Class Claims). Class A-5 consists of all Allowed Convenience Class Claims against CDSI.
10. Class A-6 Claims (Subordinated Claims). Class A-6 consists of all Allowed Subordinated Claims against CDSI.
11. Class A-7 Claims (Inter-Debtor Claims). Class A-7 consists of all Allowed Claims of any Related Debtor (other than CDSI) against CDSI.
12. Class A-8 Interests. Class 8 consists of all Interests in CDSI.
13. Class B-1.1 Claims (Secured Claims of the Bank). Class B-1.1 consists of the Allowed Secured Claims of the Bank against CCG.
14. Class B-1.2 Claims (Secured Claims of the NCFE Released Parties). Class B-1.2 consists of the Allowed Secured Claims of the NCFE Released Parties against CCG.
15. Class B-1.3 Claims (Secured Claims of CMS). Class B-1.3 consists of the Allowed Secured Claims of CMS against CCG.
16. Class B-1.4 Claims (Secured Claims of Sun Capital). Class B-1.4 consists of the Allowed Secured Claims of Sun Capital against CDSI.
17. Class B-1.5 Claims (Other Secured Claims). Class B-1.5 consists of all Secured Claims against CCG other than Claims in Classes B-1.1 through B-1.4. Each holder of an Allowed Secured Claim against CCG shall be deemed to be a separate sub-class of Class B-1.5.
18. Class B-2 Claims (Priority Claims). Class B-2 consists of all Allowed Priority Claims against CCG. Class B-2 does not include any Tax Claims, all of which shall be treated in accordance with section II.C of the Plan.
19. Class B-3 Claims. (Intentionally Omitted)
20. Class B-4 Claims (Other Unsecured Claims). Class B-4 consists of all Allowed Claims against CCG (including Claims arising from the rejection of executory contracts) other than (a) Administrative Claims, (b) Tax Claims, (c) Convenience Class Claims, and (d) Claims included within any other Class designated in the Plan. Class B-4 shall be deemed to include those Creditor(s) holding an alleged Secured Claim against CCG for which: (i) no collateral exists to secure the alleged Secured Claim; and/or (ii) liens, security interests, or other encumbrances that are senior in priority to the alleged Secured Claim exceed the fair market value of the collateral securing such alleged Secured Claim as of the Petition Date.
21. Class B-5 Claims (Unsecured Convenience Class Claims). Class B-5 consists of all Allowed Convenience Class Claims against CCG.
22. Class B-6 Claims (Subordinated Claims). Class B-6 consists of all Allowed Subordinated Claims against CCG.
23. Class B-7 Claims (Inter-Debtor Claims). Class B-7 consists of all Allowed Claims of any Related Debtor (other than CCG) against CCG.
24. Class B-8 Interests. Class 8 consists of all Interests in CCG.
25. Class C-1.1 Claims (Secured Claims of the Bank). Class C-1.1 consists of the Allowed Secured Claims of the Bank against CCS.
26. Class C-1.2 Claims (Secured Claims of the NCFE Released Parties). Class C-1.2 consists of the Allowed Secured Claims of the NCFE Released Parties against CCS.
27. Class C-1.3 Claims (Secured Claims of Carrollton-Farmers Branch Independent School District). Class C-1.3 consists of the Allowed Secured Claims of Carrollton-Farmers Branch Independent School District against CCS.
28. Class C-1.4 Claims (Secured Claims of Weingarten Realty Investors). Class C-1.4 consists of the Allowed Secured Claims of Weingarten Realty Investors against CCS.
29. Class C-1.5 Claims (Secured Claims of Low/Fifty Construction). Class C-1.5 consists of the Allowed Secured Claims of Low/Fifty Construction against CCS.
30. Class C-1.6 Claims (Secured Claims of Sun Capital). Class C-1.6 consists of the Allowed Secured Claims of Sun Capital against CDSI.
31. Class C-1.7 Claims (Other Secured Claims). Class C-1.7 consists of all Secured Claims against CCS other than Claims in Classes C-1.1 through C-1.6. Each holder of an Allowed Secured Claim against CCS shall be deemed to be a separate sub-class of Class C-1.7.
32. Class C-2 Claims (Priority Claims). Class C-2 consists of all Allowed Priority Claims against CCS. Class B-2 does not include any Tax Claims, all of which shall be treated in accordance with section II.C of the Plan.
33. Class C-3 Claims. (Intentionally Omitted)
34. Class C-4 Claims (Other Unsecured Claims). Class C-4 consists of all Allowed Claims against CCS (including Claims arising from the rejection of executory contracts) other than (a) Administrative Claims, (b) Tax Claims, (c) Convenience Class Claims, and (d) Claims included within any other Class designated in the Plan. Class C-4 shall be deemed to include those Creditor(s) holding an alleged Secured Claim against CCS for which: (i) no collateral exists to secure the alleged Secured Claim; and/or (ii) liens, security interests, or other encumbrances that are senior in priority to the alleged Secured Claim exceed the fair market value of the collateral securing such alleged Secured Claim as of the Petition Date.
35. Class C-5 Claims (Unsecured Convenience Class Claims). Class C-5 consists of all Allowed Convenience Class Claims against CCS.
36. Class C-6 Claims (Subordinated Claims). Class C-6 consists of all Allowed Subordinated Claims against CCS.
37. Class C-7 Claims (Inter-Debtor Claims). Class C-7 consists of all Allowed Claims of any Related Debtor (other than CCS) against CCS.
38. Class C-8 Interests. Class 8 consists of all Interests in CCS.
ARTICLE IV
TREATMENT OF CLAIMS AND INTERESTS
Treatment of CDSI Claims and Interests
ARTICLE V
IMPLEMENTATION OF THE PLAN AND EXECUTION OF ITS TERMS
1. Purpose of the CCG Creditors’ Trust. The CCG Creditors’ Trust shall be deemed established on the Effective Date pursuant to the terms of the CCG Creditors’ Trust Agreement. The purpose of the CCG Creditors’ Trust is to receive and disburse the CCG Payment to holders of Allowed Claims in Class B-4 pursuant to the Plan, and to prosecute the CCG Recovery Rights and distribute any Net Recoveries obtained thereby (a) with respect to the 25% share of the Net Recoveries held by the Bank, to or for the benefit of the Bank and (b) with respect to the 75% share of the Net Recoveries held by the CCG Creditor’s Trust, to the holders of Allowed Claims in Class B-4, in each case in accordance with Article IV of the Plan. The CCG Creditors’ Trust shall also be responsible for objecting to Claims in Class B-4, if appropriate.
2. Transfers of CCG Recovery Rights and Right to Net Recoveries; Payments to the CCG Creditors’ Trust by Reorganized Debtors. On the Effective Date, or as soon thereafter as practicable, the CCG Recovery Rights and the right to receive 75% of the Net Recoveries shall be irrevocably assigned, transferred and conveyed to the CCG Creditors’ Trust. Notwithstanding any other provision of the Plan, the CCG Creditors’ Trust Trustee shall have the right in his/her/its sole and absolute discretion to prosecute, compromise, settle and release the CCG Recovery Rights. The CCG Creditors’ Trust Trustee shall have no obligation or liability to any Creditor or party-in- interest, including without limitation the Bank, for his/her/its decision not to prosecute or to compromise or release any of the CCG Recovery Rights.
3. Purpose of the CDSI Creditors’ Trust and the CCS Creditors’ Trust. The CDSI Creditors’ Trust and the CCS Creditors’ Trust shall be deemed established on the Effective Date pursuant to the terms of the applicable Creditors’ Trust Agreements. The purpose of the CDSI Creditors’ Trust and the CCS Creditors’ Trust is to receive and disburse the CDSI Payment and the CCS Payment to holders of Allowed Claims in Classes A-4 and C-4, respectively,
pursuant to the Plan. The CDSI Creditors’ Trust and CCS Creditors’ Trust also shall be responsible for objecting to Claims in Classes A-4 and C-4, if appropriate.
4. Management and Powers of the Creditors’ Trusts; Substitution of Parties. After the Effective Date, the affairs of the Creditors’ Trusts and all assets held or controlled by the Creditors’ Trusts shall be managed under the direction of the applicable Creditors’ Trust Trustees in accordance with the terms of the Creditors’ Trust Agreements. The authority and powers of the Creditors’ Trust Trustees shall include, without limitation, the authority and power: (a) to object to Claims in Classes A-4, B-4, and C-4 (a trustee of a Creditors’ Trust shall object only to Claims that would otherwise be paid from the applicable Creditors’ Trust), and the ability to prosecute or settle such objections and defend claims and counterclaims asserted in connection therewith (including by way of asserting the Debtors’ rights of recoupment, setoff or otherwise); (b) in the case of the CCG Creditors’ Trust Trustee, to initiate and prosecute in every capacity, including as representative of the Estates under section 1123(b)(3) of the Code, of the CCG Recovery Rights assigned to the CCG Creditors’ Trust; (c) in the case of the CCG Creditors’ Trust Trustee, to compromise and settle of any such CCG Recovery Rights assigned to the CCG Creditors’ Trust; (d) to effect distributions under the Plan to the holders of Allowed Claims in Classes A-4, B-4, and C-4, as applicable; (e) to participate in any post-Confirmation Date motions to amend or modify the Plan or the Creditors’ Trust Agreements, or appeals from the Confirmation Order as it relates to the classes of Claims to be paid from the Creditors’ Trusts; and (f) to participate in actions to enforce or interpret the Plan as it relates to classes of Claims to be paid from the Creditors’ Trusts.
5. Establishment of Reserve. Pursuant to the terms of the Creditors’ Trust Agreements, the Creditors’ Trust Trustees shall maintain a reserve in trust for the payment of any administrative expenses of the Creditors’ Trusts, taxes, and any Disputed Claims, which may later become Allowed Claims. No distributions shall be made on account of any Disputed Claims unless and until such Claims become Allowed Claims as provided in the Creditors’ Trust Agreements.
6. Employment of Professionals. The Creditors’ Trust Trustees are authorized, without further order of the Court, to employ such Entities, including professionals, as he/she/it may deem necessary to enable him/her/it to perform his/her/its functions under the Plan, and the costs of such employment and other expenditures shall be paid solely from assets transferred to, or payments received by, the Creditors’ Trusts as provided in the Plan. Such
Entities shall be compensated and reimbursed for their reasonable and necessary fees and out-of-pocket expenses on a monthly basis from the Creditors’ Trusts without further notice, hearing or approval of the Court except as set forth in the Creditors’ Trust Agreements.
7. Objections to Claims by the Creditors’ Trusts. All objections to Disputed Claims in Classes A-4, B-4, and C-4 to be filed by the Creditors’ Trust Trustees shall be filed with the Court and served upon the holders of such Claims by the later of (a) 90 days after the Effective Date, or (b) 90 days after the particular proof of claim has been filed, except as extended by an agreement between the claimant and the applicable Creditors’ Trust, or by order of the Court upon a motion filed by the applicable Creditors’ Trust Trustee, with notice of such motion to be served upon the Office of the United States Trustee and those holders of Claims to which the objection is made. If no objection has been filed to a proof of claim by the objection bar dates established in this paragraph, the Claim to which such proof of claim relates shall be treated as an Allowed Claim for all purposes under the Plan.
8. Payments to the Bank. The Trustee shall make payments to the Bank on account of its right to receive a 25% share of the Net Recoveries within 30 days after the Net Recoveries are obtained or determined.
9. Distributions to Creditors. Distributions shall be made in accordance with the Plan, the Confirmation Order, and the Creditors’ Trust Agreements.
(a) Reserve for Unpaid Claims. For purposes of calculating Pro Rata distributions or any other distributions to be made under the Plan to holders of Allowed Claims, the calculation of the total Allowed Claims shall be computed as if all Disputed Claims then pending were allowed in the full amount thereof.
(b) Initial Distribution Date. Except for payments required to be made on the Effective Date in accordance with other sections of the Plan, the Creditors’ Trust Trustees shall make distributions from the Creditors’ Trusts at such time as they deem appropriate, to the holders of Allowed Claims in Classes A-4, B-4, and C-4, provided that in the reasonable discretion of the Creditors’ Trust Trustees, there shall be in the Creditors’ Trusts Cash
in an amount sufficient to render feasible a distribution after making reasonable reserves to pay the expenses (including, but not limited to, federal income taxes and withholding taxes, if any, or in objecting to Claims), debts, charges, liabilities, and obligations of the Creditors’ Trusts.
(c) Allowance of Claims. Distributions shall be made with respect to any Disputed Claim, which becomes an Allowed Claim after the Effective Date, on or as soon as practicable after the date on which a Disputed Claim becomes an Allowed Claim. The amount of any distribution shall be calculated on a Pro Rata basis, so that each Disputed Claim that becomes an Allowed Claim receives an initial distribution equal to the total percentage distributions made prior to the date of such allowance on account of other Allowed Claims of the same Class under the Plan and the applicable Creditors’ Trust Agreement.
(d) Subsequent Distribution Dates. After the Initial Distribution Date, unless otherwise directed in a post-Confirmation Date Final Order, the Creditors’ Trust Trustees shall make additional distributions at such time as the Creditors’ Trust Trustees, in the exercise of their discretion deem appropriate to the holders of Allowed Claims in Classes A-4, B-4, and C-4, of the Cash then held in the respective Creditors’ Trusts (after reasonable reserves to pay the expenses [including, but not limited to, federal and state income taxes and withholding taxes, if any, and all expenses and fees incurred in the prosecution of the CCG Recovery Rights or in objecting to Claims], debts, charges, liabilities, and obligations of each Creditors’ Trust have been made in the reasonable discretion of the Trustee of such Creditors’ Trust), provided that each distribution to a single Creditor must exceed $25.00 and any distribution which is less than $25.00 shall be withheld and carried-over to the next distribution date. Notwithstanding the foregoing, the final distribution to any Creditor shall be made even if it is less than $25.00.
(e) Unclaimed Property. Until the expiration of 180 days following the date on which the distribution of the Unclaimed Property has been attempted, Unclaimed Property shall be delivered upon presentation of proper proof by a holder of its entitlement thereto, after which time the holder of an Allowed Claim entitled to such Unclaimed Property shall cease to be entitled thereto. Thereafter, all right, title and interest therein shall vest in the
Creditors’ Trusts for redistribution in accordance with the Plan and the applicable Creditors’ Trust Agreement. After the expiration of 180 days following the date of an attempted distribution of Unclaimed Property, each Claim with respect to such Unclaimed Property shall be treated as if it had been disallowed in its entirety.
(f) Surrender. Notwithstanding any other provision of the Plan, no holder of an Allowed Claim shall receive any distribution under the Plan in respect of such Allowed Claim until such holder has surrendered to the Creditors’ Trusts any promissory note or other document(s) evidencing such Allowed Claim, or until evidence of loss and indemnity satisfactory to the Creditors’ Trust Trustees, in his/her/its sole and absolute discretion, shall have been delivered to the Creditors’ Trust in the case of any note or other document(s) alleged to be lost, stolen or destroyed.
(g) Final Distribution. Upon resolution of all outstanding objections to Disputed Claims in Classes A-4, B-4, and C-4 and after the payment of all expenses and other obligations of the Creditors’ Trusts, and after the CCG Recovery Rights have all been resolved or abandoned and the Bank ‘s share of the Net Recoveries has been distributed, the Creditors’ Trust Trustees shall make Pro Rata distributions of all remaining assets of the Creditors’ Trusts to holders of Allowed Claims in Classes A-4, B-4, and C-4 in accordance with the Plan and the Creditors’ Trust Agreements.
(h) Exemption From Certain Transfer Taxes. Pursuant to section 1146(c) of the Code, the issuance, transfer or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of the Code, may not be taxed under any law imposing a stamp tax, transfer tax or similar tax. Pursuant to section 1146(c) of the Code, no transfer to or from the Creditors’ Trusts, the Litigation Trust, or the Administrative Claims Fund under the Plan, shall be subject to any stamp tax, transfer tax or similar tax.
(i) Estimation of Unliquidated Disputed Claims. As to any unliquidated Disputed Claim, including Claims based upon rejection of executory contracts or
leases, or other Disputed Claims, the Court, upon motion by a Creditors’ Trust Trustee, may estimate the amount of the Disputed Claim and may determine an amount sufficient to reserve for any such Claim. Any Entity whose Disputed Claim is so estimated shall have recourse only against the applicable Creditors’ Trust and against no other assets or person (including the Creditors’ Trust Trustees), and in any case only in an amount not to exceed the estimated amount of such Entity’s Claim, even if such Entity’s Claim, as finally allowed, exceeds the maximum estimated amount thereof.
10. Certain Tax Matters. For all federal and state income tax purposes, the Debtors and/or the Reorganized Debtors shall report and treat the transfers of property (other than their own debt instruments) to each Creditors’ Trust as sales of such assets at a selling price equal to the fair market value of such assets on the date of the transfer. For all such purposes, in each case the transferred assets shall be deemed to have the fair market values determined by the Debtors or the Reorganized Debtors, as appropriate, in their absolute and sole discretion, and such valuations shall be used by Debtors and/or the Reorganized Debtors and the Creditors’ Trust. The Creditors’ Trusts shall be deemed to be “disputed ownership funds” within the meaning of Proposed Treasury Regulation section 1.468B-9. The Debtors or Reorganized Debtors, as appropriate, shall prepare, make, and file with the IRS, with copies to the appropriate Creditors’ Trust Trustee, any statement required by Proposed Treasury Regulations section 1.468B-9. Any such statements shall be consistent with the provisions of the Plan and the Debtors’ or Reorganized Debtors’ determinations of the fair market values of the property conveyed to the Trustee of the Creditors’ Trusts.
1. Purpose of the Litigation Trust. The Litigation Trust shall be deemed established on the Effective Date pursuant to the terms of the Litigation Trust Agreement. The purpose of the Litigation Trust is to prosecute the Litigation Trust Claims and distribute to the Bank any proceeds therefrom net of all claims and expenses of the Litigation Trust Trustee. No other Creditors or Entities shall receive any proceeds from the Litigation Trust Claims.
2. Transfers of the Litigation Trust Claims to the Litigation Trust. On the Effective Date, or as soon thereafter as practicable, the Litigation Trust Claims shall be irrevocably assigned, transferred and conveyed to the Litigation Trust.
3. Transfer of Sun Accounts Receivable. On the Effective Date, immediately following the payment in full of the Allowed Claim of Sun Capital or, if there is a disagreement about the amount of the Allowed Claim, upon the establishment of a separate reserve escrow account into which will be deposited an amount equal to the amount of Sun Capital’s Claim as asserted by Sun Capital (or such other amount as may be determined by Order of the Bankruptcy Court) to which Sun Capital’s lien will attach, all purchased accounts receivable shall be transferred by Sun Capital to the Litigation Trust.
4. Management and Powers of the Litigation Trust; Substitution of Parties. After the Effective Date, the affairs of the Litigation Trust and all assets held or controlled by the Litigation Trust shall be managed under the direction of the Litigation Trust Trustee in accordance with the terms of the Litigation Trust Agreement. The powers of the Litigation Trust shall include: (a) the initiation and prosecution in every capacity, including as representative of the Estates under section 1123(b)(3)(B) of the Code, of the Litigation Trust Claims assigned to the Litigation Trust; (b) the compromise and settlement of any such Litigation Trust Claims assigned to the Litigation Trust; (c) the distribution of net proceeds from the Litigation Trust Claims to the Bank; (d) participation in any post-Confirmation Date motions to amend or modify the Plan or the Litigation Trust Agreement, or appeals from the Confirmation Order as it relates to the Litigation Trust; and (e) participation in actions to enforce or interpret the Plan as it relates to the Litigation Trust.
5. Employment of Professionals. The Litigation Trust Trustee is authorized, without further order of the Court, to employ such Entities, including professionals, as he/she/it may deem necessary to enable him/her/it to perform his/her/its functions under the Plan, and the costs of such employment and other expenditures shall be paid solely from assets transferred to, or payments received by, the Litigation Trust as provided in the Plan. Such Entities shall be compensated and reimbursed for their reasonable and necessary fees and out-of-pocket expenses on a monthly basis from the Litigation Trust without further notice, hearing or approval of the Court except as set forth in the Litigation Trust Agreement.
6. Prosecution of the Litigation Trust Claims. Pursuant to the Confirmation Order, on the Effective Date, the Debtors will irrevocably assign, transfer and convey to the Litigation Trust the Litigation Trust Claims. The Litigation Trust shall have the full power and authority to initiate, prosecute, compromise or otherwise resolve any and all Litigation Trust Claims, and all fees, costs, and expenses incurred in respect of the investigation, initiation, and prosecution of such claims shall be payable and paid solely by the Litigation Trust, with all net proceeds derived therefrom to be distributed directly to the Bank.
7. Certain Tax Matters. The Trustee shall report the Litigation Trust for federal income tax purposes as a “liquidating trust” as defined in Treasury Regulations Section 301.7701-4(d) and Rev. Proc. 94-45 and as a “grantor trust,” with the Bank treated as the grantor and the deemed owner of the Litigation Trust. The transfer of the Litigation Trust Claims to the Litigation Trust will be treated, for all federal and state tax purposes, as a deemed transfer to the Bank, followed by a deemed transfer by the Bank to the Litigation Trust. The
Litigation Trust Trustee shall, in his/her/its reasonable discretion, determine the value of all property transferred to the Litigation Trust and the Litigation Trust Trustee, the Debtors, and the Bank shall use such valuations for all federal and state tax purposes.
ARTICLE VI
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
ARTICLE VII
RETENTION OF JURISDICTION
ARTICLE VIII
DISCHARGE; RELEASE OF CLAIMS; MODIFICATION; MISCELLANEOUS
ARTICLE IX
CONDITIONS PRECEDENT TO EFFECTIVENESS OF CCG PLAN AND CDSI PLAN
ARTICLE X
WAIVER OF CONDITIONS PRECEDENT TO EFFECTIVENESS OF THE PLAN
ARTICLE XI
CONFIRMATION REQUEST
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