Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 1 of 159
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`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
`
`In re:
`
`SOUTHERN FOODS GROUP, LLC, et al.,
`
`
`Debtors.1
`
`_________________________________________
`
`
`)
`)
`)
`)
`)
`)
`)
`_________________________________________ )
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`
`
`Chapter 11
`
`Case No. 19-36313 (DRJ)
`
`(Jointly Administered)
`
`
`
`
`
`FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER CONFIRMING
`THE FIRST AMENDED JOINT CHAPTER 11 PLAN OF LIQUIDATION
`OF SOUTHERN FOODS GROUP, LLC, DEAN FOODS COMPANY, AND
`THEIR DEBTOR AFFILIATES
`
`The Debtors2 having:
`
`a. filed the Joint Chapter 11 Plan of Liquidation of Southern Foods Group, LLC, Dean
`Foods Company, and Their Debtor Affiliates, dated November 30, 2020 [D.I. 3230],
`which the Debtors revised on January 15, 2021 [D.I. 3368], on January 27, 2021 [D.I.
`3398], and on January 29, 2021 [D.I. 3412] (as so revised, the “Original Plan” and, as
`may be further amended, supplemented, or modified in accordance with the terms
`thereof, including the First Amended Plan (as defined herein), the “Plan”); and
`
`1 The debtors and debtors in possession in these chapter 11 cases, along with the last four digits of their
`respective Employer Identification Numbers, are as follows: Southern Foods Group, LLC (1364); Dean Foods
`Company (9681); Alta-Dena Certified Dairy, LLC (1347); Berkeley Farms, LLC (8965); Cascade Equity Realty,
`LLC (3940); Country Fresh, LLC (6303); Dairy Information Systems Holdings, LLC (9144); Dairy Information
`Systems, LLC (0009); Dean Dairy Holdings, LLC (9188); Dean East II, LLC (9192); Dean East, LLC (8751); Dean
`Foods North Central, LLC (7858); Dean Foods of Wisconsin, LLC (2504); Dean Holding Company (8390); Dean
`Intellectual Property Services II, Inc. (3512); Dean International Holding Company (9785); Dean Management, LLC
`(7782); Dean Puerto Rico Holdings, LLC (6832); Dean Services, LLC (2168); Dean Transportation, Inc. (8896);
`Dean West II, LLC (9190); Dean West, LLC (8753); DFC Aviation Services, LLC (1600); DFC Energy Partners,
`LLC (3889); DFC Ventures, LLC (4213); DGI Ventures, Inc. (6766); DIPS Limited Partner II (7167); Franklin
`Holdings, Inc. (8114); Fresh Dairy Delivery, LLC (2314); Friendly’s Ice Cream Holdings Corp. (7609); Friendly’s
`Manufacturing and Retail, LLC (9828); Garelick Farms, LLC (3221); Mayfield Dairy Farms, LLC (3008); Midwest
`Ice Cream Company, LLC (0130); Model Dairy, LLC (7981); Reiter Dairy, LLC (3675); Sampson Ventures, LLC
`(7714); Shenandoah’s Pride, LLC (2858); Steve’s Ice Cream, LLC (6807); Suiza Dairy Group, LLC (2039);
`Tuscan/Lehigh Dairies, Inc. (6774); Uncle Matt’s Organic, Inc. (0079); and Verifine Dairy Products of Sheboygan,
`LLC (7200). The debtors’ mailing address is 2711 North Haskell Avenue, Suite 3400, Dallas, TX 75204.
`
`2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in
`the Plan, Disclosure Statement, or Solicitation Order (each as defined herein), as applicable. The rules of
`interpretation set forth in Article I.B of the Plan shall apply to this order.
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 2 of 159
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`b. filed the Disclosure Statement for Joint Chapter 11 Plan of Liquidation of Southern
`Foods Group, LLC, Dean Foods Company, and Their Debtor Affiliates, dated November
`30, 2020 [D.I. 3231], which the Debtors revised on January 15, 2021 [D.I. 3369], on
`January 27, 2021 [D.I. 3399], and on January 29, 2021 [D.I. 3412] (as so revised, the
`“Disclosure Statement”);
`
`the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the
`“Court”) having:
`
`a. entered the Order (I) Approving the Disclosure Statement, (II) Establishing Procedures
`for the Solicitation and Tabulation of Votes to Accept or Reject the Plan, (III) Approving
`the Forms of Ballots and Solicitation Materials, (IV) Establishing the Voting Record
`Date, (V) Fixing the Date, Time, and Place for the Confirmation Hearing and the
`Deadline for Filing Objections Thereto, (VI) Approving Related Notice Procedures, and
`(VII) Granting Related Relief, dated January 29, 2021 [D.I. 3421] (the “Solicitation
`Order”);
`
`b. approved, pursuant to the Solicitation Order, among other things, (i) the Disclosure
`Statement and (ii) the transmission to Holders of Claims against the Debtors’ Estates of
`the Original Plan, the Disclosure Statement, and the associated Ballots and notices in
`compliance with title 11 of the United States Code (the “Bankruptcy Code”), the
`Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Rules
`of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the
`Southern District of Texas (the “Local Rules”); and
`
`c. set, pursuant to the Solicitation Order, March 17, 2021 at 9:00 a.m. (prevailing Central
`Time), as the date and time for the commencement of the hearing to consider
`Confirmation of the Plan (the “Confirmation Hearing”);
`
`the Debtors having:
`
`a. timely and properly solicited the Plan and Disclosure Statement and provided due notice
`of the Confirmation Hearing, all in compliance with the Bankruptcy Code, the
`Bankruptcy Rules, the Local Rules, and the Solicitation Order, as evidenced by, among
`other things, the Affidavit of Service of Solicitation Materials, dated February 17, 2021
`[D.I. 3473] (the “Solicitation Affidavit”);
`
`b. timely and properly filed and served, on March 12, 2021, the Notice of Filing of Plan
`Supplement [D.I. 3539] (the “Plan Supplement”);
`
`c. filed, on March 12, 2021, the First Amended Joint Chapter 11 Plan of Liquidation of
`Southern Foods Group, LLC, Dean Foods Company, and Their Debtor Affiliates
`[D.I. 3538] (the “First Amended Plan”);
`
`d. filed, on March 15, 2021, the Declaration of Nicholas E. Haughey in Support of
`Confirmation of the First Amended Joint Chapter 11 Plan of Liquidation of Southern
`Foods Group, LLC, Dean Foods Company, and Their Debtor Affiliates [D.I. 3554] (the
`“Haughey Declaration”);
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 3 of 159
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`e. submitted, on March 12, 2021, the Declaration of Stephenie Kjontvedt of Epiq Corporate
`Restructuring, LLC Regarding Voting and Tabulation of Ballots Cast in Connection with
`the Joint Chapter 11 Plan of Liquidation of Southern Foods Group, LLC, Dean Foods
`Company, and Their Debtor Affiliates [D.I. 3540] (the “Tabulation Declaration”),
`describing the methodology used for the tabulation of votes and the results of voting with
`respect to the Plan; and
`
`f. filed, on March 15, 2021, the Debtors’ Memorandum of Law in Support of Confirmation
`of the First Amended Joint Chapter 11 Plan of Liquidation of Southern Foods Group,
`LLC, Dean Foods Company, and Their Debtor Affiliates [D.I. 3555] (the “Confirmation
`Brief”);
`
`the Court having:
`
`a. found that the notice provided regarding the Confirmation Hearing, and the opportunity
`for any party in interest to object to Confirmation of the Plan, have been adequate and
`appropriate under the circumstances and no further notice is required;
`
`b. considered, and having taken judicial notice of, the entire record of the Chapter 11 Cases;
`
`c. held the Confirmation Hearing;
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`d. considered the entire record of the Confirmation Hearing, including, but not limited to,
`
`i. the Plan (including, without
`the Plan Documents),
`limitation,
`Disclosure Statement, and the Solicitation Order,
`
`the
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`ii. the Solicitation Affidavit and Tabulation Declaration,
`
`iii. the objections, reservations of rights, and other responses submitted with
`respect to the Plan (collectively, the “Objections”), including the
`following: D.I. 3499, 3512, 3513, 3514, 3519, 3522, 3523, 3524, and 3525,
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`iv. the Haughey Declaration,
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`v. the Confirmation Brief, and
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`vi. arguments of counsel and the evidence proffered, adduced, and/or
`presented at the Confirmation Hearing, and
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`e. overruled any and all Objections to the Plan and to Confirmation, as well as all
`statements and reservations of rights not consensually resolved or withdrawn, except as
`otherwise expressly provided herein; and
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`after due deliberation thereon and good cause appearing therefor, and based on the decision set
`
`forth on the record, it is hereby FOUND, ORDERED, and ADJUDGED that:
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`FINDINGS OF FACT AND CONCLUSIONS OF LAW
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`A.
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`The findings and conclusions set forth herein and on the record at the
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`Confirmation Hearing constitute the Court’s findings of fact and conclusions of law pursuant to
`
`Rule 52 of the Federal Rules of Civil Procedure, as made applicable herein by Bankruptcy Rules
`
`7052 and 9014. To the extent that any of the following findings of fact constitute conclusions of
`
`law, they are adopted as such. To the extent any of the following conclusions of law constitute
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`findings of fact, they are adopted as such.
`
`B.
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`Jurisdiction and Venue. The Court has jurisdiction over the Chapter 11 Cases
`
`pursuant to 28 U.S.C. § 1334 and the Order of Reference to Bankruptcy Judges, General Order
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`2012-6 (S.D. Tex. May 24, 2012) (Hinojosa, C.J.). Confirmation of the Plan is a core proceeding
`
`pursuant to 28 U.S.C. §§ 157(b)(2)(A), (L), and (O), and the Court may enter a Final Order with
`
`respect thereto in accordance with Article III of the United States Constitution. Each of the
`
`Debtors was an eligible debtor under section 109 of the Bankruptcy Code. Venue was proper in
`
`the Southern District of Texas as of the Petition Date and continues to be proper pursuant to 28
`
`U.S.C. §§ 1408 and 1409.
`
`C.
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`Commencement and Joint Administration of Chapter 11 Cases. On November
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`12, 2019 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief under
`
`chapter 11 of the Bankruptcy Code. By order of the Court [D.I. 9], the Chapter 11 Cases are
`
`being jointly administered for procedural purposes only pursuant to Bankruptcy Rule 1015. The
`
`Debtors have continued in possession of their property and have continued to operate and
`
`manage their businesses as debtors in possession pursuant to sections 1107(a) and 1108 of the
`
`Bankruptcy Code. On November 22, 2019, the Office of the United States Trustee appointed an
`
`Official Committee of Unsecured Creditors (the “Creditors’ Committee”). See Notice of
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 5 of 159
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`Appointment of Committee of Unsecured Creditors [D.I. 288]. No trustee or examiner has been
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`appointed in the Chapter 11 Cases.
`
`D.
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`Judicial Notice. The Court takes judicial notice of the docket of the Chapter 11
`
`Cases maintained by the Clerk of the Court, including, but not limited to, all pleadings and other
`
`documents filed, all orders entered, and all evidence and arguments made, proffered, adduced,
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`and/or presented at the various hearings held before the Court during the pendency of the
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`Chapter 11 Cases.
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`E.
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`Solicitation Order, Solicitation, and Notice.
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`1.
`
`On January 29, 2021, the Court entered the Solicitation Order, which,
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`among other things, (a) approved the Disclosure Statement for purposes of solicitation, having
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`found that it contained “adequate information” within the meaning of section 1125 of the
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`Bankruptcy Code, (b) approved the form of Ballots, Solicitation Materials (as defined herein),
`
`and related notices, (c) approved the procedures for the solicitation and tabulation of votes to
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`accept or reject the Plan, (d) authorized the Debtors, through the Claims and Solicitation Agent,
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`to solicit acceptances or rejections of the Plan in accordance with such procedures,
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`(e) established the Voting Record Date, and (f) fixed the date, time, and place for the
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`Confirmation Hearing (as then scheduled) and the deadlines for voting on, and filing objections
`
`to, Confirmation of the Plan;
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`2.
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`Promptly following entry of the Solicitation Order, in compliance with the
`
`Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and the Solicitation Order, and as
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`evidenced by the Solicitation Affidavit, the Claims and Solicitation Agent effectuated:
`
`(a)
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`filing and service on all parties in interest of a notice concerning
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`the Disclosure Statement and the Plan, and deadlines and hearing dates with respect thereto,
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`including, but not limited to, setting forth the proposed release, exculpation, and injunction
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`provisions in the Plan, the dates applicable to, and procedures regarding, the solicitation of votes
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`on the Plan, the date of the Confirmation Hearing, and the procedures for objecting to
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`Confirmation of the Plan or opting out of the Plan’s release, exculpation, and injunction
`
`provisions; and
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`(b)
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`service of the appropriate solicitation materials (collectively, the
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`“Solicitation Materials”) on (i) each Holder of Claims entitled to vote on the Plan (i.e., Class 3
`
`(Senior Notes Claims), Class 4 (Control Group Liability Pension Claims), Class 5 (Convenience
`
`Claims), and Class 6 (General Unsecured Claims)), including, but not limited to, (A) the
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`Disclosure Statement, (B) the Plan, (C) the Solicitation Order, (D) the Confirmation Hearing
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`Notice, (E) an appropriate number of Ballots (with voting instructions with respect thereto), and
`
`(F) the Committee Letter, and (ii) each Holder of Claims or Interests in a Class not entitled to
`
`vote on the Plan, but entitled to opt out of the release, exculpation, and injunction provisions of
`
`the Plan (i.e., Class 1 (Other Secured Claims), Class 2 (Other Priority Claims), Class 8 (Section
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`510(b) Claims), and Class 9 (Existing Interests)),3 including (A) the Confirmation Hearing
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`Notice and (B) a Notice of Non-Voting Status (with a Non-Voting Opt Out Form and submission
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`instructions with respect thereto).
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`3.
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`The Debtors were not required to solicit votes from the Holders of Claims
`
`and Interests in Class 7 (Prepetition Intercompany Claims) and Class 10 (Intercompany Interests)
`
`as each such Class either (a) will receive no distribution under the Plan and is deemed to reject
`
`
`3 Holders of Interests in Class 9 are not Releasing Parties under the Plan and, therefore, such Holders are
`not be deemed to have granted the releases or consented to the exculpation and injunction provisions set forth in
`Article IX of the Plan. In addition, each Holder of Interests in Class 9 that had requested to receive notices with
`respect to such Interests from its bank, broker, or other nominee, or such firm’s agent, was only to receive electronic
`transmission of the Non-Voting Status Notice and Confirmation Hearing Notice, unless any such Holder contacted
`the Claim and Solicitation Agent for a paper copy.
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 7 of 159
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`the Plan or (b) will be Unimpaired and is presumed to Accept the Plan. Further, the Debtors did
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`not send Holders of Claims and Interests in each such Class a Confirmation Hearing Notice,
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`Notice of Non-Voting Status, or a Non-Voting Opt Out Form as such Holders are either Debtors
`
`or wholly owned Debtor Affiliates.
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`4.
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`As described in the Solicitation Order and as evidenced by the Solicitation
`
`Affidavit, service of the Solicitation Materials was adequate and sufficient under the
`
`circumstances of the Chapter 11 Cases, and adequate and sufficient notice of the Confirmation
`
`Hearing and other requirements, deadlines, hearings, and matters described in the Solicitation
`
`Order (a) was timely and properly provided in compliance with the Bankruptcy Code, the
`
`Bankruptcy Rules, the Local Rules, and the Solicitation Order and (b) provided due process, and
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`an opportunity to appear and to be heard, to all parties in interest.
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`5.
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`Because the foregoing transmittals, notices, and service set forth above
`
`were adequate and sufficient, no other or further notice is necessary or shall be required.
`
`F.
`
`Voting. Votes on the Plan were solicited after disclosure of “adequate
`
`information” as defined in section 1125 of the Bankruptcy Code. As evidenced by the
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`Solicitation Affidavit and Tabulation Declaration, votes to accept the Plan have been solicited
`
`and tabulated fairly, in good faith, and in a manner consistent with the Solicitation Order, the
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`Bankruptcy Code, the Bankruptcy Rules, and the Local Rules.
`
`G.
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`Plan Supplement. The filing and notice of the Plan Supplement (and any
`
`subsequent amendments, modifications, and supplements thereto filed with the Court) were
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`proper and in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and
`
`the Solicitation Orders, and no other or further notice is or shall be required.
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`H.
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`Plan Modifications. Any modifications to the Plan since the commencement of
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`solicitation described or set forth herein following entry of the Solicitation Order comply with
`
`the applicable provisions of the Bankruptcy Code, Bankruptcy Rules, and Local Rules. Such
`
`modifications constitute immaterial modifications and/or do not adversely affect or change the
`
`treatment of any Claims or Interests. Pursuant to Bankruptcy Rule 3019, the modifications do
`
`not require either (1) any additional disclosure under section 1125 of the Bankruptcy Code
`
`and/or the re-solicitation of votes under section 1126 of the Bankruptcy Code or (2) that the
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`Holders of Claims be afforded an opportunity to (a) change previously cast acceptances or
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`rejections of the Plan or (b) withdraw or submit previously submitted or withheld Non-Voting
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`Opt Out Forms.
`
`I.
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`Burden of Proof. The Debtors, as proponents of the Plan, have met their burden
`
`of proving the satisfaction of the requirements for Confirmation of the Plan set forth in section
`
`1129 of the Bankruptcy Code by a preponderance of the evidence, which is the applicable
`
`standard. Further, each witness who testified (by declaration or otherwise) on behalf of the
`
`Debtors at or in connection with the Confirmation Hearing was credible, reliable, and qualified
`
`to testify as to the topics addressed in his or her testimony.
`
`J.
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`Voting Results. As more fully set forth in the Tabulation Declaration, Class 3
`
`voted to accept the Plan at each of the 28 Debtor entities where Holders of Senior Notes Claims
`
`maintained Claims, Class 4 voted to accept the Plan at 43 of the 43 Debtor entities, Class 5 voted
`
`to accept the Plan at 21 of the 43 Debtor entities, and Class 6 voted to accept the Plan at 12 of the
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`43 Debtor entities. On the other hand, at certain of the Debtor entities, two-thirds in amount and
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`over one-half in number of the Class 5 (Convenience Claims) and/or Class 6 (General Unsecured
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`Claims) that voted on the Plan did not vote to accept the Plan, thereby resulting in rejecting
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`Impaired Classes at such Debtor entities.
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`K.
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`Bankruptcy Rule 3016. The Plan is dated and identifies the Debtors as the entities
`
`submitting the Plan, thereby satisfying Bankruptcy Rule 3016(a). The filing of the Disclosure
`
`Statement satisfied Bankruptcy Rule 3016(b).
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`COMPLIANCE WITH SECTION 1129 OF BANKRUPTCY CODE
`
`L.
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`Plan Compliance with Bankruptcy Code (11 U.S.C. § 1129(a)(1)). As further
`
`detailed below, the Plan complies with the applicable provisions of the Bankruptcy Code,
`
`thereby satisfying section 1129(a)(1) of the Bankruptcy Code.
`
`1.
`
`Proper Classification (11 U.S.C. §§ 1122 and 1123(a)(1)). Article III of
`
`the Plan designates all Claims and Interests, other than the Claims of the type described in
`
`sections 507(a)(2), 507(a)(3), or 507(a)(8) of the Bankruptcy Code, into ten Classes. The Claims
`
`or Interests in each designated Class have the same or substantially similar rights as the other
`
`Claims or Interests in such Class. Valid business, legal, and factual reasons exist for separately
`
`classifying the various Classes of Claims and Interests under the Plan. The Plan, therefore,
`
`satisfies sections 1122 and 1123(a)(1) of the Bankruptcy Code. The separate classification of the
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`Convenience Claims (Class 5) and the General Unsecured Claims (Class 6) under the Plan is
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`warranted, pursuant to section 1122(b) of the Bankruptcy Code, to facilitate “administrative
`
`convenience” for distributions thereunder.
`
`2.
`
`Specified Unimpaired Classes (11 U.S.C. § 1123(a)(2)). The Plan
`
`specifies that Class 1 (Other Secured Claims), Class 2 (Other Priority Claims), Class 7
`
`(Prepetition Intercompany Claims), and Class 10 (Intercompany Interests) are Unimpaired or
`
`potentially Unimpaired Classes under the Plan, within the meaning of section 1124 of the
`
`Bankruptcy Code, thereby satisfying section 1123(a)(2) of the Bankruptcy Code.
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`3.
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`Specified Treatment of Impaired Classes (11 U.S.C. § 1123(a)(3)). The
`
`Plan specifies that Class 3 (Senior Notes Claims), Class 4 (Control Group Liability Pension
`
`Claims), Class 5 (Convenience Claims), Class 6 (General Unsecured Claims), Class 7
`
`(Prepetition Intercompany Claims), Class 8 (Section 510(b) Claims), Class 9 (Existing Interests),
`
`and Class 10 (Intercompany Interests) are Impaired or potentially Impaired under the Plan,
`
`within the meaning of section 1124 of the Bankruptcy Code, and specifies the treatment of such
`
`Classes, thereby satisfying section 1123(a)(3) of the Bankruptcy Code.
`
`4.
`
`No Disparate Treatment (11 U.S.C. § 1123(a)(4)). The Plan provides for
`
`the same treatment for each Claim or Interest in each respective Class unless the Holder of a
`
`particular Claim or Interest has agreed to less favorable treatment on account of such Claim or
`
`Interest, thereby satisfying section 1123(a)(4) of the Bankruptcy Code.
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`5.
`
`Implementation of Plan (11 U.S.C. § 1123(a)(5)). Article IV and other
`
`provisions of the Plan, the various documents included in the Plan Supplement, and the terms of
`
`this order (this “Order”) provide adequate and proper means for the implementation of the Plan,
`
`including, but not limited to, the following:
`
`(a)
`
`Liquidation Trust. On the Effective Date, (i) a Liquidating Trust shall be
`established for the benefit of the Liquidating Trust Beneficiaries, (ii) the
`Debtors and their Estates shall transfer, and shall be deemed to have
`irrevocably transferred, to the Liquidating Trust for the benefit of the
`Liquidating Trust Beneficiaries all title and interest in all of the
`Liquidating Trust Assets, which transfer shall be free and clear of Claims,
`Liens, encumbrances, charges, other interests, and contractually imposed
`restrictions except as otherwise provided in the Plan, and (iii) all Causes of
`Action of each of the Debtors shall immediately vest in the Liquidating
`Trust free and clear of all Claims, Liens, encumbrances, charges, and other
`interests. (See Plan, Art. IV.A.1–3). The Liquidating Trust shall be
`established for the sole purpose of liquidating and administering the
`Liquidating Trust Assets and making distributions on account thereof as
`provided for under the Plan and the Liquidating Trust Agreement. (See
`Plan, Art. IV.A.4). The Liquidating Trust shall be administered by the
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`(b)
`
`(c)
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`Liquidating Trustee pursuant to the Liquidating Trust Agreement and the
`Plan. (See Plan, Art. IV.A.5).
`
`Corporate Action. Article IV.B of the Plan provides, among other things,
`for the merger and liquidation of the Debtors and their Estates. (See Plan,
`Art. IV.B.1). In addition, each of the matters provided for under the Plan
`involving the corporate structure of the Debtors or the Liquidating Trust,
`or corporate action to be taken by or required of the Debtors or the
`Liquidating Trust, shall, as of the Effective Date, be deemed to have
`occurred (unless contemplated under the Plan or the Liquidating Trust
`Agreement to occur after the Effective Date) and be effective as provided
`under the Plan or the Liquidating Trust Agreement, and shall be
`authorized and approved in all respects without any requirement of further
`action by any Person, including, but not limited to, the Liquidating
`Trustee, Holders of Claims or Interests against or in the Debtors, or
`directors or officers of the Debtors. (See Plan, Art. IV.B.3).
`
`Cancellation of Existing Securities and Related Agreements and the
`Senior Notes Indenture. On the Effective Date, except as otherwise
`specifically provided for in the Plan, all rights of any Holder of Claims or
`Interests, including options or warrants to purchase Interests or obligating
`the Debtors to issue, transfer, or sell Interests of the Debtors, shall be
`cancelled. (See Plan, Art. IV.C.1). Except for purposes of evidencing the
`right to a distribution pursuant to the Plan, each record Holder of Senior
`Notes shall be deemed to have surrendered its Senior Notes or other
`documentation underlying each Senior Notes Claim, and all such
`surrendered Senior Notes and other documentation shall be deemed to be
`cancelled as to the Debtors pursuant to the Plan, except to the extent
`otherwise provided in the Plan. (See Plan, Art. IV.C.3).
`
`(d)
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`Issuance of New Equity Interest. The New Equity Interest shall be issued
`on the Effective Date to the Liquidating Trustee. (See Plan, Art. IV.C.2).
`
`6.
`
`Designation of Directors and Officers (11 U.S.C. § 1123(a)(7)). The
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`identities and affiliations of the Liquidating Trustee and the members of the Liquidating Trust
`
`Advisory Board were disclosed at, or before, the Confirmation Hearing in compliance with
`
`applicable law. The Liquidating Trustee is hereby appointed, immediately upon the occurrence
`
`of the Confirmation Date, to serve as the sole officer, director, or manager of each of the
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`Liquidating Debtors and, upon the occurrence of the Effective Date, the Liquidating Trustee
`
`shall be deemed appointed to serve as the trustee and administrator of the Liquidating Trust. On
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`the Effective Date, the Liquidating Trust Advisory Board shall be appointed, pursuant to the
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`Liquidating Trust Agreement, to (a) instruct and supervise the Liquidating Trustee with respect
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`to its responsibilities under the Plan and the Liquidating Trust Agreement and (b) review and
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`approve the decisions of the Liquidating Trustee as set forth in the Liquidating Trust Agreement.
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`The foregoing is consistent with the interests of Holders of Claims and with public policy,
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`thereby satisfying section 1123(a)(7) of the Bankruptcy Code.
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`7.
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`Inapplicable Provisions (11 U.S.C. §§ 1123(a)(6) and (8)). The Plan
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`provides for the dissolution of the Debtors and, therefore, section 1123(a)(6) of the Bankruptcy
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`Code is inapplicable. Additionally, none of the Debtors are individuals, as such term is used in
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`the Bankruptcy Code. Accordingly, section 1123(a)(8) of the Bankruptcy Code is inapplicable.
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`8.
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`Additional Plan Provisions (11 U.S.C. § 1123(b)). As set forth below, the
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`discretionary provisions of the Plan comply with section 1123(b) of the Bankruptcy Code and are
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`not inconsistent with the applicable provisions of the Bankruptcy Code. Thus, section 1123(b) of
`
`the Bankruptcy Code is satisfied.
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`(a)
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`Impairment/Unimpairment of Classes (11 U.S.C. § 1123(b)(1)). In
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`accordance with section 1123(b)(1) of the Bankruptcy Code, (i) Classes 1, 2, 7, and 10 are
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`Unimpaired or potentially Unimpaired and (ii) Classes 3, 4, 5, 6, 7, 8, 9, and 10 are Impaired or
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`potentially Impaired under the Plan.
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`(b)
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`Assumption and Rejection of Executory Contracts and Unexpired
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`Leases (11 U.S.C. § 1123(b)(2)). In accordance with section 1123(b)(2) of the Bankruptcy Code,
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`Article VIII of the Plan provides that each Executory Contract and Unexpired Lease shall be
`
`deemed automatically rejected pursuant to sections 365 and 1123 of the Bankruptcy Code as of
`
`the Effective Date, except as follows:
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 13 of 159
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`i.
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`Any Executory Contract or Unexpired Lease shall not be
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`deemed so rejected if it (A) has been previously assumed, assumed and assigned, or rejected by
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`the Debtors by Final Order of the Court, (B) is the subject of a motion to assume, assume and
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`assign, or reject pending as of the Effective Date, (C) is an Intercompany Contract, (D) is an
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`Insurance Contract, or (E) is otherwise assumed, or assumed and assigned, pursuant to the terms
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`of the Plan.
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`ii.
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`As of the Effective Date, the Liquidating Debtors shall be
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`deemed to have assumed all of the Debtors’ D&O Liability Insurance Policies pursuant to
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`sections 105 and 365(a) of the Bankruptcy Code. The Liquidating Debtors’ foregoing
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`assumption of each of
`
`the D&O Liability Insurance Policies
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`is hereby approved.
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`Notwithstanding anything to the contrary contained in the Plan, Confirmation of the Plan shall
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`not discharge, release, impair, alter, amend, or otherwise modify any advancement, indemnity, or
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`other obligations of any party under the D&O Liability Insurance Policies. After the Effective
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`Date, none of the Liquidating Debtors shall terminate or otherwise reduce the coverage under
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`any of the D&O Liability Insurance Policies with respect to conduct occurring prior thereto, and
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`all directors and officers of the Debtors who served in such capacity at any time prior to the
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`Effective Date shall be entitled, subject to the terms and conditions of the D&O Liability
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`Insurance Policies, to the full benefits of any such policy from the applicable insurers for the full
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`term of such policy regardless of whether such directors and officers remain in such positions
`
`after the Effective Date.
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`iii.
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`Each Indemnification Obligation to a current or former
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`director, officer, manager, or employee who was employed by any of the Debtors in such
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`capacity on or prior to the Effective Date (including, for the avoidance of doubt, the members of
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`Case 19-36313 Document 3565 Filed in TXSB on 03/17/21 Page 14 of 159
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`the board of directors, board of managers, or equivalent body of each Debtor at any time) shall
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`be deemed assumed effective as of the Effective Date. Each Indemnification Obligation that is
`
`deemed assumed pursuant to the Plan shall (A) remain in full force and effect, (B) not be
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`modified, reduced, discharged, impaired, or otherwise affected in any way, (C) be deemed and
`
`treated as an executory contract pursuant to sections 365 and 1123 of the Bankruptcy Code
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`regardless of whether or not Proofs of Claim have been Filed with respect to such obligations,
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`and (D) survive unaffected irrespective of whether such indemnification is owed for an act or
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`event occurring before, on, or after the Petition Date.
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`iv.
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`Any obligations of the Debtors (whether pursuant to their
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`corporate charters, bylaws, certificates of incorporation, other organizational documents, board
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`resolutions, indemnification agreements, employment contracts, policy of providing employee
`
`indemnification, applicable state law, specific agreement in respect of any claims, demands,
`
`suits, causes of action, or proceedings against such Persons or agreements, including
`
`amendments, or otherwise) entered into at any time prior to the Effective Date to indemnify,
`
`reimburse, or limit the liability of the current and former directors, officers, managers,
`
`employees, attorneys, accountants, investment bankers, and other professionals of the Debtors, as
`
`applicable, in each case, based upon any act or omission related to such Persons’ service with,
`
`for, or on behalf of the Debtors prior to the Effective Date with respect to all present and future
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`actions, suits, and proceedings relating to the Debtors, shall survive Confirmation and, except as
`
`set forth in the Plan, remain unaffected thereby, and shall not be discharged, irrespective of
`
`whether such defense, indemnification, reimbursement, or limitation of liability accrued or is
`
`owed in connection with an occurrence before or after the Petition Date; provided, that all
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`obligations under Article VIII.B of the Plan shall be limited solely to