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UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW MEXICO


In re:
FLYING STAR CAFES, INC.,
a New Mexico Corporation,

Case No. 15-10182-ta11

Debtor.
MARK AND JEAN BERNSTEINS CHAPTER 11 PLAN OF REORGANIZATION FOR
FLYING STAR CAFS, INC.
DATED: July 29, 2016
Mark and Jean Bernstein (together, the Bernsteins) propose the following Chapter 11
Plan for Flying Star Cafes, Inc. (the Debtor or Flying Star), pursuant to Bankruptcy Code
1121(c) and other applicable law. The Disclosure Statement that accompanies this Plan discusses
the Debtors history and the Property of the Estate, and contains a summary and discussion of the
Plan. Holders of Claims are encouraged to read the Disclosure Statement before voting to accept
or reject the Plan.
ARTICLE I
DEFINITIONS
If not otherwise defined, any terms used in the Plan that are defined in Bankruptcy Code
101 or 102 shall have the meanings ascribed to those terms in such sections. In addition, in the
Plan and Disclosure Statement the following terms shall have the meanings ascribed to them
below:
Administrative Claim means any Claim for a cost or expense of administration of the
Bankruptcy Case allowed under 364(b), 503(b), and/or 507(a)(2) of the Bankruptcy Code,
including, without limitation, any actual and necessary post-petition expenses of preserving the
Estate, any actual and necessary post-petition expenses of operating the business of the Debtor in
Possession, all compensation or reimbursement of expenses to the extent allowed by the
Bankruptcy Court under 330, 331, or 503 of the Bankruptcy Code, and any fees or charges
assessed against the Estate under 28 U.S.C. 1930.
Administrative Offices means the Debtors, Rio Chan Foods and Rio Chan Brands
offices at 2701 Broadway NE, Albuquerque, NM.
Allowed when used with respect to a Claim, other than an Administrative Claim, means,
except as otherwise provided herein, a Claim, proof of which was timely and properly filed or, if
no proof of Claim was filed, which has been or hereafter is listed by the Debtor in question on its

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Schedules as liquidated and not disputed or contingent or for which, pursuant to Order of the
Bankruptcy Court, applicable law, or otherwise, a proof of Claim is not required to be filed, and,
in either case, as to which no objection to the allowance thereof has been filed on or before the
deadline set forth in section 6.2 or 3.16(c) of this Plan, as applicable. When used with respect to an
Administrative Claim, Allowed means an Administrative Claim which the Bankruptcy Court
has entered a Final Order approving.
Auction shall mean an auction conducted in accordance with section 3.11 of this Plan.
Avoidance Actions shall mean Causes of Action arising or held under Sections 502,
510, 541, 544, 545, 547, 548, 549, 550, 551 or 553 of the Bankruptcy Code, or under related state
or federal statutes and common law, including fraudulent transfer laws.
Bankruptcy Case means this case, which is the bankruptcy case titled In re Flying Star
Cafes, Inc., United States Bankruptcy Court, District of New Mexico, Case No. 15-10182-ta11.
Bankruptcy Code means Title I of the Bankruptcy Reform Act of 1978, as amended,
set forth in sections 101 et seq. of Title 11 of the United States Code, as applicable to the
Bankruptcy Case.
Bankruptcy Court means the United States District Court for the District of New
Mexico, having jurisdiction over the Bankruptcy Case and, to the extent of any reference made
pursuant to 28 U.S.C. 157, the unit of such District Court pursuant to 28 U.S.C. 151; or, in the
event such court ceases to exercise jurisdiction over the Bankruptcy Case, such court or unit
thereof that exercises jurisdiction over the Bankruptcy Case in lieu thereof.
Bankruptcy Rules means, collectively, (i) the Federal Rules of Bankruptcy Procedure,
as amended from time to time, as applicable to the Bankruptcy Case, and (ii) the Local Bankruptcy
Rules applicable to cases pending before the Bankruptcy Court, as now in effect or hereafter
amended.
Bar Date for filing proofs of Claim means August 21, 2015, the date set by the
Bankruptcy Court by which proofs of Claim must be filed, except as set forth below in this
paragraph. For Claims arising before the Effective Date, the Bar Date for filing Administrative
Claims and applications for allowance of Fee Applications is set forth in section 3.16(c) of this
Plan. The Bar Date for filing Claims arising from the rejection of an executory contract or
unexpired lease is set forth in section 4.2(d) of this Plan.
Bid Approval Order means the order of the Bankruptcy Court approving a winning bid
as a result of the Auction, or, in the event the Auction is not held, approving the bid of the
Bernsteins contained in section 3.11 of the Plan.
Business Day means any day which is not a Saturday, a Sunday, or a legal holiday as
defined in Bankruptcy Rule 9006(a).
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Claim means (a) any right to payment from the Debtor, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, arising prior to the Effective Date, or (b) any
right to an equitable remedy for breach of performance if such breach gives rise to a right of
payment from the Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured,
arising prior to the Effective Date.
Class means a class into which Claims have been placed in this Plan.
Confirmation means entry of the Confirmation Order.
Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters
the Confirmation Order on its docket.
Confirmation Order means the Order of the Bankruptcy Court confirming the Plan in
accordance with the provisions of Chapter 11 of the Bankruptcy Code.
Cure Amount means the amount the Debtor is required by Bankruptcy Code
365(b)(1) to pay, or to prove adequate assurance that they will promptly pay, as a condition to
assumption of a Contract or Lease.
Debtor means Flying Star Cafes, Inc., a New Mexico corporation.
Debtor in Possession means the Debtor, prior to the Effective Date, so long as the
Bankruptcy Case remains pending under chapter 11 of the Bankruptcy Code and so long as no
trustee has been appointed under Bankruptcy Code 1104.
Disallowed Claim means any Claim (i) listed as disputed, contingent, or unliquidated in
the Debtors schedules for which a proof of Claim has not been timely filed, or (ii) for which a
Final Order disallowing the Claim has been entered.
Disclosure Statement means the Disclosure Statement for Mark and Jean Bernsteins
Chapter 11 Plan of Reorganization for Flying Star Cafes, Inc., filed contemporaneously herewith,
if and as amended, as approved by the Bankruptcy Court in this Bankruptcy Case.
Disputed Claim means a Claim (or portion of a Claim) against the Debtor as to which
an objection has been filed and served within the time period set forth herein for doing so, and
which objection has not been determined by a Final Order.
Effective Date means the date that is twenty (20) days after Bid Approval Order is
entered, so long as the Bid Approval Order has become a Final Order; and if the Bid Approval
Order has not become a Final Order on such date, then the Effective Date is the date that is the
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first date on which the Bid Approval Order becomes a Final Order which is at least thirty (30)
days following the Confirmation Date.
Entity has the meaning set forth in Bankruptcy Code 101(15).
Estate means the estate of the Debtor created under the Bankruptcy Code by the
commencement of the Bankruptcy Case. Any references to actions taken by the Estate refer to
actions taken by the representatives of the Estate acting in their representative capacity.
Executory Contract means an executory contract which the Debtor or Rio Chan Foods
is a party to and which may be assumed or rejected under Bankruptcy Code 365.
Fee Application means a request or application filed by a Professional for fees and costs
incurred on behalf of the Debtor or the UCC.
Final Decree means the final decree closing the Bankruptcy Case, to be entered by the
Bankruptcy Court pursuant to Bankruptcy Rule 3022.
Final Order means (i) an Order as to which the time to appeal has expired and as to
which no appeal or stay shall then be pending or as to which any right to appeal or stay shall have
been waived in writing in form and substance satisfactory to the Debtor; or (ii) in the event that an
appeal is timely filed, an order or judgment of the Bankruptcy Court or other applicable court for
which no stay is in effect. The Confirmation Order shall be deemed a Final Order on the first date
on which no stay of the Confirmation Order is and remains in effect that is at least fifteen (15)
days (calculated in accordance with Bankruptcy Rule 9006(a)) following the entry of the
Confirmation Order.
Flying Star Bernalillo means the restaurant formerly operated by the Debtor located
at 200 S. Camino del Pueblo, Bernalillo, New Mexico 87004, which has been closed.
Flying Star Corrales means the restaurant operated by the Debtor located at 10700
Corrales Road, Albuquerque, New Mexico 87114.
Flying Star Nob Hill means the restaurant operated by the Debtor located at 3416
Central Ave. SE, Albuquerque, New Mexico 87106.
Flying Star Downtown means the restaurant formerly operated by the Debtor located
at 723 Silver Ave. SW, Albuquerque, New Mexico 87102, which has been closed.
Flying Star Juan Tabo means the restaurant operated by the Debtor located at 8001
Menaul Blvd. NE, Albuquerque, New Mexico 87110.
Flying Star Menaul means the restaurant operated by the Debtor located at 4501 Juan
Tabo Blvd. NE, Albuquerque, New Mexico 87111.
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Flying Star Paseo means the restaurant operated by the Debtor located at 8000 Paseo
Del Norte NE, Albuquerque, New Mexico 87122.
Flying Star Rio Grande means the restaurant operated by the Debtor located at 4026
Rio Grande Blvd. NW, Albuquerque, New Mexico 87107.
Flying Star Santa Fe means the restaurant formerly operated by the Debtor located at
500 Market St. Ste. 110, Santa Fe, NM 87501, which has been closed.
Hewlett Packard means Hewlett Packard Financial Services Company, a Delaware
corporation.
Hitachi Capital means Hitachi Capital America Corp., a Delaware corporation.
Holder means a person or Entity that asserts a Claim against the Debtor, the Debtor in
Possession, or the Estate arising before the Confirmation Date.
Impaired means, as described in 1124 of the Bankruptcy Code, a Class of Claims or
interests for which legal, equitable, and contractual rights are altered pursuant to the Plan or for
which the Plan does not cure the default, reinstate the maturity of the Claim, compensate the
Holder of the Claim for damages, does not compensate the Holder of the Claim for pecuniary
losses resulting from non-monetary obligations, or otherwise alter the legal, equitable, or
contractual rights of the Holder of the Claim.
Insider has the meaning set forth in Bankruptcy Code 101(31).
Interest shall mean shareholder interests in the Debtor, of record with the State of New
Mexico Secretary of State.
Lease means an unexpired lease which the Debtor or Rio Chan Foods is a party to and
which may be assumed or rejected under Bankruptcy Code 365.
Net Collection Proceeds means the proceeds remaining from collection of a debt, after
payment of the expenses normally associated with such collection, including attorneys fees, and
costs and other actual expenses of collection.
Order means a judgment, order, or other decree of the Bankruptcy Court, the effect of
which has not been stayed.
Person has the meaning set forth in Bankruptcy Code 101(41).
Petition Date means March 25, 2015, the date on which the Debtor filed its voluntary
petition commencing the Bankruptcy Case.
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Plan means this Chapter 11 plan of reorganization, including any exhibits hereto and all
documents incorporated by reference, either in their present form or as they may be altered,
amended, or modified from time to time in accordance with the Bankruptcy Code and Bankruptcy
Rules.
Pre-Petition Agreement means a contract or agreement, other than an Executory
Contract or a Lease, which the Debtor or Rio Chan Foods is a party to and which was executed
before the Petition Date or which went into effect before the Petition Date.
Priority Non-Tax Claim means any pre-petition Claim entitled to a priority in payment
under 507(a)(1), (4), (5), (6) and (7) of the Bankruptcy Code.
Priority Tax Claim means a Claim of a governmental unit of the kind specified in
507(a)(8) of the Bankruptcy Code. To the extent a Claim of governmental unit is Allowed as a
Secured Claim or Administrative Claim, it is not a Priority Tax Claim.
Professional means any Person, including attorneys and accountants for the Debtor or
the UCC, retained or to be compensated pursuant to 327, 328, 330, 331, 503(b)(2), or 1103 of
the Bankruptcy Code.
Property of the Estate means all property comprising or contained in the Estate, as set
forth in 541 and 1115 of the Bankruptcy Code.
Pro Rata means a distribution to a Class divided according to the ratio, with respect to
each Allowed Claim, as of the date of any given distribution under this Plan, of the amount of such
Allowed Claim to the aggregate amount of (i) all Allowed Claims in the same Class, plus (ii) all
Disputed Claims relating to such Class.
Railyard Co. means Railyard Company LLC, a New Mexico Limited Liability
Company, successor by merger to Market Station, LLC.
Reorganized Debtor means the Debtor, on and after the Effective Date.
Rio Chan Brands means Rio Chan Brands, LLC, a Delaware Limited Liability
Company.
Rio Chan Foods means Rio Chan Foods, LLC, a Delaware Limited Liability Company.
Rio Chan IP means Rio Chan Intellectual Property Holdings, LLC, a Delaware Limited
Liability Company.
Satellite Coffee means Satellite Coffee, Inc., a New Mexico corporation.
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Schedules means the schedules of assets and liabilities, as amended from time to time,
filed by the Debtor as required by 521(a)(1) of the Bankruptcy Code, Bankruptcy Rule
1007(b)(1), and the Official Bankruptcy Forms, as amended from time to time.
Secured Claim means that portion of an Allowed Claim equal to the value, as of the
Confirmation Date (or such other date found to apply by the Bankruptcy Court, pursuant to
Bankruptcy Code 506(a)) of the valid, perfected interest of the Holder of a Claim in Property of
the Estate, which interest secures a Claim, to the extent of the creditors interest in the Estates
interest in such property, all as determined by the Bankruptcy Court pursuant to 506(a) of the
Bankruptcy Code and Bankruptcy Rule 3012, or as determined by a settlement between the Debtor
and the Holder of the Secured Claim approved by the Bankruptcy Court after notice to creditors.
Spirit Master means Spirit Master Holdings SPE, LLC.
UCC shall mean the Unsecured Creditors Committee appointed in this case by the U.S.
Trustee on February 24, 2015 (Doc. No. 63), as the same may be constituted during the
Bankruptcy Case.
Urban Assets means Urban Assets, L.L.C., a New Mexico limited liability company.
U.S. Bank means U.S. Bank, N.A..
U.S. Trustee means the Office of the United States Trustee, whose address is P.O. Box
608, Albuquerque, NM 87103.
Unclaimed Property means any funds or property dedicated for distribution under the
Plan, which funds or property are unclaimed on and after such attempted distribution, including
without limitation (a) checks (and the funds represented thereby) that have been returned as
undeliverable without a proper forwarding address; (b) funds for checks that have not been paid or
presented for payment; or (c) checks (and the funds represented thereby) that were not mailed or
delivered or that were returned because of the absence of a proper address, and that the Debtor
after reasonable efforts is unable to deliver to a proper address.
Unimpaired when used in reference to a Claim or Interest means a Claim or Interest
that is not Impaired within the meaning of 1124 of the Bankruptcy Code.
Unsecured Non-Priority Claim means any Claim that is not (i) a Secured Claim, (ii) an
Administrative Claim, or (iii) a Priority Non-Tax Claim or Priority Tax Claim.
Valley Property means Valley Property, L.L.C., a New Mexico limited liability
company.

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ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
For purposes of voting and all other Plan Confirmation matters, except as otherwise
provided herein, all Claims shall be classified as set forth in this Article. Administrative Claims are
not separately classified, and there are no claims of the kind specified in 11 U.S.C. 507(a)(3),
since this is a voluntary bankruptcy case.
Under this Plan, Claims and Interests are classified as follows:
2.1
Class 1 (Priority Tax Claims). Class 1 consists of Allowed unsecured Priority Tax
Claims under 11 U.S.C. 507(a)(8). Class 1 claims include the claims of the New Mexico
Department of Workforce Solutions, New Mexico Taxation and Revenue Department, Bernalillo
County Treasurer and Sandoval County Treasurer. Class 1 Claims are Unimpaired under the Plan,
and are not entitled to vote to accept or reject the Plan.
2.2
Class 2 (Priority Non-Tax Claims). Class 2 consists of Allowed unsecured Priority
Non-Tax Claims under 507(a)(1), (4), (5), (6), and (7) of the Bankruptcy Code, and shall not
include any Priority Tax Claim. Class 2 Claims are Unimpaired under the Plan.
2.3
Class 3 (Claim of U.S. Bank). Class 3 consists of the Claim of U.S. Bank secured by
substantially all of the assets of the Debtor. Class 3 is Impaired under the Plan.
2.4
Class 4 (Claim of Hitachi Capital). Class 4 consists of the Claim of Hitachi Capital,
secured by a purchase money security interest in a 2013 Hino 268 delivery truck, a 2013 Morgan
Gold Star refrigerator body, a 2013 Carrier Supra 660 refrigerator unit, and a 2013 Maxon RC-3
liftgate. Class 4 is Impaired under the Plan.
2.5
Class 5 (Claim of Hewlett Packard). Class 5 consists of the Claim of Hewlett
Packard, secured by various miscellaneous electronic equipment and software. Class 5 is Impaired
under the Plan.
2.6
Class 6 (Claim of GE Capital). Class 6 consists of the Claim of GE Capital, secured
by furniture, fixtures, equipment and inventory. Class 6 Impaired under the Plan.
2.7
Class 7 (Secured Claim of Railyard Co.). Class 7 consists of the Secured Claim of
Railyard Co., if any, to the extent secured by various furniture, fixtures, equipment and software
used at Flying Star Santa Fe. Class 7 is Impaired under the Plan.
2.8
Class 8 (Claim of Mech-Con Investments, LLC). Class 8 consists of the Claim of
Mech Con Investments, LLC for tenant improvements to the Administrative Offices. Class 8 is
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2.9
Class 9 (General Unsecured Non-Priority Claims). Class 9 consists of Unsecured
Non-Priority Claims which are not otherwise classified. A list of Class 9 Claims is set forth in
Exhibit B to the Disclosure Statement. Class 9 is Impaired under the Plan.
2.10 Class 10 (Insider Unsecured Claims). Class 10 consists of Unsecured Non-Priority
Claims Holders are Insiders. A list of Class 10 Claims is set forth in Exhibit B to the Disclosure
Statement. Class 10 is Impaired under the Plan.
2.11 Class 11 (Equity Shareholders). Class 11 consists of all equity ownership Interests
in the Debtor. Class 11 is Impaired under the Plan.
ARTICLE III
TREATMENT OF CLAIMS
Claims in Classes 3, 4, 5, 6, 8 and 9 are Impaired by this Plan and Holders of such Claims
are entitled to vote for or against Confirmation of this Plan. Claims which are Allowed pursuant to
the Bankruptcy Code and Rules shall be treated as follows:
3.1
Class 1. Class 1 Claims (Allowed Priority Tax Claims) shall be paid in full on or
before fourteen (14) days after the Effective Date. Class 1 Claims are not entitled to vote on the
Plan because they are Unimpaired.
3.2
Class 2. Class 2 Claims (Allowed Priority Non-Tax Claims) shall be paid in full
on or before fourteen (14) days after the Effective Date. Class 2 Claims are not entitled to vote on
the Plan because they are Unimpaired.
3.3
Class 3. The Class 3 Claim of U.S. Bank shall be paid in monthly installments of
$10,000.00, beginning on the first day of the first month following the month in which the
Effective Date occurs, until the balance of the Claim, with interest at the rate of 5.25% per
annum has been paid in full. U.S. Bank shall retain all liens it had as of the Effective Date. Class
3 is Impaired and entitled to vote to accept or reject this Plan.
3.4
Class 4. The Class 4 Claim of Hitachi Capital shall be paid in monthly
installments of $3,000.00, beginning on the first day of the first month following the month in
which the Effective Date occurs, until the balance of the Claim, with interest at the rate of 5.5%
per annum has been paid in full. Hitachi Capital shall retain all liens it had as of the Effective
Date until its Claim is paid in full. Class 4 is Impaired and entitled to vote to accept or reject this
Plan.
3.5

Class 5. The Class 5 Claim of Hewlett Packard shall be treated as follows:

(a)
The Bernsteins hereby incorporate the payment terms contained in the
Debtors Pre-Petition Agreements with Hewlett Packard into the Plan. Hewlett Packards claim
will be paid according to the payment terms in such agreements. This treatment shall cure any
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possible default under the Pre-Petition Agreements, and on the Effective Date of the Plan, all
Pre-Petition Agreements, including loan documents, between the Debtor and Hewlett Packard
shall be reinstated to their non-default and non-accelerated status.
(b)
The preceding paragraph notwithstanding, section 5.17 of this Plan shall
apply to the Debtors loan from Hewlett Packard and to all Pre-Petition Agreements between the
Debtor and Hewlett Packard.
(c)
Hewlett Packard shall retain all liens it had as of the Effective Date until its
Claim is paid in full.
3.6

Class 6. The Class 6 Claim of GE Capital shall be treated as follows:

(a)
The Bernsteins hereby incorporate the payment terms contained in the
Debtors Pre-Petition Agreements with GE Capital into the Plan. GE Capitals claim will be paid
according to the payment terms in such agreements. This treatment shall cure any possible
default under the Pre-Petition Agreements, and on the Effective Date of the Plan, all Pre-Petition
Agreements, including loan documents, between the Debtor and GE Capital shall be reinstated to
their non-default and non-accelerated status.
(b)
The preceding paragraph notwithstanding, section 5.17 of this Plan shall
apply to the Debtors loan from GE Capital and to all Pre-Petition Agreements between the
Debtor and GE Capital.
(c)
GE Capital shall retain all liens it had as of the Effective Date until its
Claim is paid in full.
3.7

Class 7. The Class 7 secured Claim of Railyard Co. shall be treated as follows:

Upon occurrence of the Effective Date, any property to which a valid lien of Railyard Co.
had attached as of the Petition Date shall be deemed surrendered to Railyard Co. in full
satisfaction of its secured claim.
3.8
Class 8. The Class 8 secured Claim of Mech-Con Investments, LLC shall be paid
in full in accordance with the terms of the Order Approving Debtors Assumption of Unexpired
Lease with Mech-Con Investments, LLC (Doc. No. 199) and the Amended Tenant Improvement
Note dated August 1, 2015, which are incorporated herein by reference.
3.9.

Class 9. Class 9 Claims (General Unsecured Claims) shall be paid as follows:

(a)
On or before sixty (60) days after the Effective Date, Holders of Allowed
Class 9 Claims shall be entitled to a Pro Rata distribution of the proceeds of the Auction after
payment in full of all Allowed Administrative Claims, Allowed Priority Tax Claims and Allowed
Priority Non-Tax Claims, as set forth in more detail in section 3.11 of this Plan.
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(b)
Holders of Allowed Class 9 Claims shall be entitled to a Pro Rata
distribution of 100% of the Net Collection Proceeds of any debt which a court determines is
owed to the Debtor by Satellite Coffee, to be paid at the discretion of the Debtor, provided that
the Reorganized Debtor must distribute any Net Collection Proceeds no later than the end of the
calendar quarter after the calendar quarter in which the Net Collection Proceeds are actually
received by the Reorganized Debtor.
3.10 Class 10. Class 10 Claims (Insider Unsecured Claims) shall receive the same
treatment as Class 9 claims, except that in the event that the Bernsteins bid to purchase the equity
in the Reorganized Debtor, is approved by the Bankruptcy Court, Class 10 Claims shall be
subordinated to Class 9 Claims and shall not receive any payment until all Class 9 Claims are
paid in full, as further discussed in section 3.11(h) of this Plan. However, in the event that the
Bernsteins bid to purchase the equity in the Reorganized Debtor is approved by the Bankruptcy
Court, and that approval is later rescinded, overturned on appeal, or otherwise invalidated, Class
10 Claims shall not be subordinated as set forth herein.
3.11

Class 11. Class 11 Interests (Equity Shareholders) shall be treated as follows:

(a)
shall be cancelled.

On the Effective Date, all existing shares and equity interests in the Debtor

(b)
On the date that is fourteen (14) days after Confirmation Order is entered, if
the Confirmation Order has become a Final Order; or, if the Confirmation Order has not become a
Final Order on such date, on the date that is the first date on which the Confirmation Order has
become a Final Order that is at least seven (7) days following the Confirmation Date, the Debtor
shall hold an Auction of the equity interests in the Reorganized Debtor, in accordance with the
following procedures:
i.
ii.

iii.
iv.

v.

The asset to be auctioned is 9,000 shares in the Reorganized Debtor, which


shall be 100% of the shares in the Reorganized Debtor on the Effective Date.
100% of the shares in the Reorganized Debtor will be sold as a single package;
offers for only a portion of the shares in the Reorganized Debtor shall not be
allowed.
The minimum bid at the Auction shall be $1,500,000.00.
The Auction shall take place in Albuquerque, New Mexico at a location
designated by the Court at a date and time designated by the Court, to be
noticed to creditors and other parties of interest.
Parties other than the Bernsteins wishing to participate in the auction must
submit an Expression of Interest to the Debtor declaring their desire
to bid. The Expression of Interest must be received by the Debtors counsel at
least five (5) Business Days prior to the date of the Auction. The Expression of
Interest must demonstrate that the bidder has the financial means by which to
complete the purchase of the membership interest. This may be accomplished
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vi.

vii.

viii.
ix.

x.
xi.

xii.

xiii.
xiv.

xv.

by furnishing to the Debtors counsel documentation showing available funds


of at least the purchase price that the bidder will bid at the sale, or by
providing a cashiers check of $100,000.00, which shall be fully refunded if
the party providing this is not the successful bidder at the auction.
No party shall be allowed to bid contingent on the bidder receiving financing,
nor may bids be contingent on a bidder receiving approval from its board of
directors or a regulatory body, or contingent on any event other than approval
of the bid by the Bankruptcy Court.
Any party bidding at the Auction must identify itself. An individual bidding on
behalf of someone else, an organization, corporation, or trust must identify his
or her principal.
Any bid submitted at the Auction must be irrevocable until the closing and
final approval by the Bankruptcy Court.
Bids may not include a request for, or be subject to payment of, any
transaction or break-up fee, expense reimbursement, or other transaction
expenses paid from the purchase price.
A back-up bid shall be solicited at the time of the auction in the event that the
winning bidder is unable to finalize the sale.
If the winning bidder is unable to finalize the sale because of lack of funding,
and if such bidder paid $100,000.00 to be able to participate in the auction,
then such bidder shall forfeit $50,000.00 of such monies to the Reorganized
Debtor.
The highest and best bid, and the bid which shall be accepted as the winning
bid, is the bid which would result in the highest payment, by Pro Rata
percentage, to the unsecured creditors which would have Allowed Claims after
the entry of the Bid Approval Order.
The proceeds of the Auction shall be property of the Estate and used in
accordance with this Plan.
If no valid Expressions of Interest are received by the Debtors counsel at least
five (5) Business Days prior to the date of the Auction, the Bernsteins bid of
$1,500,000.00 and subordination of all Class 10 Claims shall be considered the
winning bid, and the Auction shall not be held.
The minimum increment by which a bid must be higher than the previous bid
is $25,000.00.

(c)
The Debtor will provide a due diligence package to all known
potential bidders or any Person or entity that requests it prior to the date of the Auction.
(d)
Upon conclusion of the Auction, the Debtor will review each bid. The
highest and best bid, and the bid which the Debtor shall conditionally accept as the winning bid,
is the bid which would result in the highest payment, by Pro Rata percentage, to the unsecured
creditors which would have Allowed Claims after the entry of the Bid Approval Order. The
Debtor will announce its determination as to the winning bid and back-up bid by filing a notice
in the Bankruptcy Case on or before the Business Day after the Auction. The Debtor shall
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conditionally accept what it deems to be the winning bid, subject to approval by the
Bankruptcy Court. The Debtor may also conditionally accept the bid determined by the
Debtor to be the second best bid, conditioned on (i) Bankruptcy Court approval of a sale to that
bidder, (ii) the winning bidder failing to close, and (iii) the agreement of the back-up bidder to
act as such. After the Auction is conducted, the Debtor shall promptly seek Bankruptcy Court
approval of the winning bid, including a determination by the Bankruptcy Court that the
purchaser acted in good faith.
(e)
The Debtor will return all earnest money deposits by the end of the next
Business Day after conclusion of the Auction, except for the earnest deposits of the winning
bidder and the back-up bidder.
(f)
If the winning bid contained subordination or disallowance of any Claims
as a part of the offer, the Bid Approval Order shall disallow or subordinate such Claims.
(g)
Within seven (7) Business Days after the date that both (1) the Bid
Approval Order has become a Final Order, and (2) the Debtor has received the full bid amount
from the party whose bid was approved by the Bankruptcy Court in the Bid Approval Order, the
Debtor, pursuant to 11 U.S.C. 1123(a)(5)(J), shall issue new shares in the Reorganized Debtor
comprising 100% of all equity interests in the Reorganized Debtor, to the party whose bid was
approved in the Bid Approval Order. To the extent applicable, 11 U.S.C. 1145 is invoked.
(h)
After the Effective Date, as further provided herein, the Debtor shall apply
the proceeds of the Auction, or the payment of the Bernsteins, as applicable, as follows:
i.

ii.
iii.
iv.

First, to pay all Allowed Administrative Claims in full, including setting aside
an amount sufficient to pay in full any pending Administrative Claims by
Professionals not yet Allowed;
Second, to pay all Allowed Priority Tax Claims in full;
Third, to pay all Allowed Priority Non-Tax Claims in full; and
Fourth, distributing the amount remaining after making payments as set forth
in subsections (i) through (iii) above shall be distributed Pro Rata to holders of
Allowed Class 9 Claims.

3.15 Surrender of Instruments and Release of Liens. Each Holder of an Allowed Secured
Claim, shall not be entitled to receive final payment due under this Plan until such Holder
surrenders any negotiable instruments it holds executed by the Debtor and executes a release of its
lien(s) (in recordable form if appropriate), and delivers the same to the Debtor. Any Holder that
fails to surrender such instrument or satisfactorily explain its non-availability or to execute such
release of lien(s) within ninety (90) days of the date the final payment would otherwise have been
made under this Plan shall be deemed to have no further Claim and shall not receive the final
payment under the Plan.

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3.16

Administrative Claims.

(a)
Except as otherwise agreed to by the Debtor and the Holder of an Allowed
Administrative Claim, and except as specifically provided for below, each such Holder shall be
paid in full in Cash on the later of:
i.
ii.

On or before fourteen (14) days after the Effective Date, or


Within fourteen (14) days of the date such Administrative Claim becomes an
Allowed Administrative Claim.

(b)
The United States Trustees quarterly fees shall be paid in full without
prior approval pursuant to 28 U.S.C. 1930 on or before the Effective Date. Any dispute related
to the amount of the fees shall be resolved by the Court at the Confirmation Hearing.
(c)
Estimated administrative expenses as of the Effective Date are identified
on Exhibit B to the Disclosure Statement. Requests for payment of such Claims must be filed and
served on the Debtor and the United States Trustee no later than twenty-one (21) days after the
Effective Date, which shall be the Administrative Claim Bar Date. Likewise, all Professionals
requesting compensation or reimbursement of expenses under 327, 328, 330, 331 and 503(b)
of the Bankruptcy Code for services rendered before the Effective Date shall file and serve a Fee
Application on the Debtor and the United States Trustee no later than the Administrative Claim
Bar Date. This bar date shall not apply to charges incurred after the Effective Date.
Any Holder of an unpaid Administrative Claim to which the Administrative Claim Bar
Date applies which fails to file a request seeking to have its expense allowed on or before said
Bar Date, and any Professional to which the Administrative Claim Bar Date applies who fails to
comply with the provisions of this section shall be forever barred from seeking the allowance of
its Administrative Claim, and the Debtor and the Estate shall not be liable for any obligation on
such expense or any related expense.
After the Effective Date, Court approval shall not be required for payment of any fee, cost
or expense which, prior to the Effective Date, would have qualified as an Administrative Claim
under 503 of the Bankruptcy Code, including payment of Professionals.
(d)
The provisions set forth in this section do not apply to debts incurred by
the Debtor after the Effective Date, even if such debts would have been Administrative Claims,
had they been incurred prior to the Effective Date. Such debts will be paid by the Debtor in the
ordinary course of its business.

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ARTICLE IV
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
4.1

Assumption.

(a)
hereby assumed:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
xvi.
xvii.
xviii.
xix.
xx.

The following Executory Contracts and Leases, if not already assumed, are

Contract with Alliance Payroll Services for payroll processing;


Lease from Argyle Welding Supply, Inc. for CO2 tanks;
Contract with Bottling Group, LLC for beverage distribution;
Lease from Lab, LLC for Flying Star Nob Hill location;
Lease from Mech-Con Investments, LLC for the Administrative Offices;
Lease from Solid Gold Classic LLC for Flying Star Paseo location;
Lease from Spirit Master for Flying Star Menaul location;
Lease from Spirit Master for Flying Star Juan Tabo location;
Lease from TLC Company Inc. for water conditioning equipment;
Contract with TW Telecom, L.P. for telecommunications services;
Lease from Joslevin Realty Corp of S.F. for Flying Star Rio Grande location;
Lease from Joslevin Realty Corp of S.F for Flying Star Corrales location;
Contract with Verizon Wireless for telecommunications services;
Contract with Willis of Tennessee, Inc. for insurance premium financing;
Contract with Heartland Credit Card Processing for credit card processing and
lease of credit card terminals;
Contract with Rio Chan Brands for general and administrative services;
Lease from Auto-Chlor System of Albuquerque, Inc. for lease of dishwasher;
Contract with Shamrock Foods for food service products;
All prime vendor contracts; and
Any and all insurance contracts.

(b)
Unless otherwise agreed by the Debtor and all other parties to an Executory
Contract or Lease assumed under this Plan, any amount in default under said Executory Contract
or Lease shall be paid within five (5) days after the Effective Date.
(c)
Unless otherwise agreed by the Debtor and all other parties to an Executory
Contract or Lease assumed under this Plan, Confirmation shall be deemed to adequately assure
the Debtors future performance under such Executory Contract or Lease.
4.2

Rejection.

(a)
The Confirmation Order shall have the effect of Bankruptcy Court
approval of the rejection of any Executory Contract or Lease existing as of the Petition Date
which (1) has not been expressly assumed by the Debtor either herein, or for which a motion to
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assume has not been filed or (2) has been expressly rejected, whether herein, by an Order in the
Bankruptcy Case, or by operation of law.
(b)
Without limiting the effect of paragraph 4.2(a), above, the following
Executory Contracts and Leases are specifically rejected as of the Petition Date, if not already
rejected:

i. Contract with Auto-Chlor System of Albuquerque, Inc. for service and supply
contract for Flying Star Bernalillo location;
ii. Lease from Camino del Pueblo 200/400, LLC for Flying Star Bernalillo
location;
iii. Lease from 3rd and Gold, LLC for Flying Star Downtown location; and
iv. Lease from Railyard Co. for Flying Star Santa Fe location.
(c)
The Confirmation Order shall constitute an Order avoiding any lien, of the
type described in 11 U.S.C. 545, of any lessor under a Lease rejected under this Plan.
(d)
A person damaged by rejection of a Lease or Executory Contract may have
a Claim against the Debtor. To the extent such Claim is Allowed, it will be treated as a Class 9
Claim as set forth in section 3.9 of this Plan. Any party to a rejected Executory Contract or Lease
which asserts that it has been damaged by rejection of a Lease or Executory Contract in this
Bankruptcy Case must file a Proof of Claim for rejection damages in the Bankruptcy Case,
within thirty (30) days after notice of rejection is provided to them. Service of a copy of this
Plan, after filing, on the lessor under any Executory Contract or Lease rejected under this Plan
shall constitute notice of rejection of such Executory Contract or Lease not expressly assumed
herein. Failure by a party to a rejected Executory Contract or Lease to timely file a proof of
Claim shall irrevocably bar any Claim for damages.
ARTICLE V
MEANS OF EXECUTION AND OPERATION
5.1
Management. Mark and Jean Bernstein shall continue to manage the Debtors
operations, with the assistance of Amy Ahyo, the Debtors Controller, unless the Bankruptcy
Court approves the sale of the equity interests in the Debtor to a party other than the Bernsteins, in
accordance with section 3.11 of the Plan, in which event, the Bernsteins reserve the right to resign
as managers of the Debtor.
5.2
Cramdown. If any Impaired Class of Claims fails to accept this Plan, the Debtor
requests that the Bankruptcy Court confirm the Plan in accordance with 11 U.S.C. 1129(b).
5.3
Actions to Consummate the Plan. Except as otherwise provided in the Plan, upon
Confirmation, the Reorganized Debtor shall have the power and authority, on or after the Effective
Date, to execute all documents, and take or cause to be taken all actions, necessary or appropriate
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to enable the Reorganized Debtor to accomplish the transactions contemplated under the Plan,
without further Order. The Reorganized Debtor shall be entitled to seek such orders, judgments,
injunctions, and rulings as it deems necessary or appropriate to carry out the intentions and
purposes of, and to give full effect to, the provisions of the Plan.
5.4
Post-Confirmation Operations and Sale of Assets. Except as otherwise provided in
the Plan or Confirmation Order, after the Effective Date, the Reorganized Debtor shall have full
authority to use, sell, and lease any assets without approval of the Bankruptcy Court. Unless the
Plan or Confirmation Order expressly provides otherwise, after the Effective Date, entry of the
Confirmation Order shall constitute the required authority under Bankruptcy Code 363 and 364
for the use, sale or lease of property of the Reorganized Debtor outside the ordinary course of
business, the use of cash collateral, or the obtaining of credit, for the same, except sales free and
clear of liens, and sale of substantially all of the assets of the Reorganized Debtor, which shall
continue to require Bankruptcy Court approval.
5.5
Reducing Plan Provisions to Further Writings. The Plan provisions that apply to
each Class upon the Effective Date need not be further reduced to writing or executed by the
parties to be binding.
5.6
Withholding Taxes. The Debtor shall be entitled to deduct any federal or state
withholding taxes from any payments made with respect to Allowed Claims, as appropriate, and
shall otherwise comply with 345 of the Bankruptcy Code.
5.7
Good Faith Dispute Respecting a Distribution. In the event of any good faith
dispute respecting a distribution to which a creditor claims it is entitled, the Debtor may delay
making the distribution pending resolution of the dispute.
5.8
Operating Reports. The Reorganized Debtor shall not be required to file any
monthly or other operating reports for any periods ending after the Effective Date, but shall file
quarterly reports in accordance with section 8.19 of this Plan.
5.9
Post-Petition Trade Obligations and Taxes. Notwithstanding any other provision of
this Plan to the contrary, unpaid Administrative Claims representing obligations incurred in the
ordinary course of post-petition business by the Debtor, including without limitation post-petition
trade obligations, routine post-petition payroll obligations, and post-petition tax obligations, are
not discharged or modified by this Plan, and will be paid by the Debtor in the ordinary course of
its business.
5.10 Liquidation of Disputed Claims. After the Effective Date, the Reorganized Debtor
shall make reasonable efforts to liquidate the amount of all Disputed Claims and accounts
receivable.
5.11 Rounding. Whenever any payment of a fraction of a cent would otherwise be called
for, the actual payment shall reflect a rounding of such fraction down to the n.earest whole cent.
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5.12 De Minimis Amounts. The Reorganized Debtor shall have no obligation to make a
distribution to a Holder of an Allowed Claim of less than $5.00.
5.13 Less Favorable Treatment. The Debtor and the Holder of an Allowed Claim may
agree to payment of such Allowed Claim on a basis less favorable to the Holder than provided in
this Plan. The Reorganized Debtor may prepay a Holder of an Allowed Claim as long as the
Reorganized Debtor prepays all Claims in the same Class Pro Rata.
5.14

Estates Claims Preserved.

(a) Except as provided otherwise herein, the Reorganized Debtor shall retain the
following rights, claims and causes of action post-confirmation:
i.
ii.
iii.
iv.
v.
vi.
vii.

All causes of action in all currently pending lawsuits to which the Debtor or its
estate is a party;
Collection and enforcement of any and all judgments in favor of the Debtor,
whether obtained before or after confirmation;
The right to pursue subsequent transferees of fraudulent and preferential
transfers under 11 U.S.C. 550 and other applicable law;
The right to enforce any settlement agreement to which the Debtor is a party,
including the right to enforce any settlement contained within this Plan;
Any and all defenses or counterclaims which could have been asserted by the
Debtor pre-petition, or the Debtor post-petition;
Avoiding powers held by the Debtor pre-Confirmation; and
Any and all rights, claims, or causes of action which accrue or are discovered
by the Debtor post-Confirmation.

(b)
The rights, claims, and causes of action retained by the Debtor postconfirmation may be asserted by the Reorganized Debtor after the Effective Date. The Debtor
does not waive, relinquish or abandon (nor shall it be estopped or otherwise precluded from
asserting) any right, Claim, Cause of Action, defense, or counterclaim that constitutes property of
the Debtor or is assertable by the Debtor: (i) whether or not such right, Claim, Cause of Action,
defense, or counterclaim has been listed or referred to in the Schedules, the Plan, the Disclosure
Statement, or any other document filed with the Bankruptcy Court, (ii) whether or not such right,
Claim, Cause of Action, defense, or counterclaim is currently known to the Debtor, and (iii)
whether or not a defendant in any litigation relating to such right, Claim, Cause of Action,
defense or counterclaim filed a proof of Claim in the Bankruptcy Case, filed a notice of
appearance or any other pleading or notice in the Bankruptcy Case, voted for or against the Plan,
or received or retained any consideration under the Plan.
(c)
To the extent that any conflict is perceived between this section of the Plan
and section 5.22 of the Plan, section 5.22 shall control.
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5.15 Transferred Bankruptcy and Other Powers and Authority of the Reorganized
Debtor. Unless a trustee is appointed under Bankruptcy Code 1104, as of the Effective Date, the
Reorganized Debtor shall own and have the authority to exercise, all the powers of a trustee and/or
debtor in possession for the purposes of objecting to Claims and prosecuting Claims and causes of
action under 542, 543, 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code, available
to the Estate, with full authority to preserve, compromise, and resolve all such Claims and causes
of action. The Reorganized Debtor shall also have full right, power, and authority to investigate
(including examinations under Rule 2004 of the Bankruptcy Rules) and, if necessary, object to
Claims and commence actions to collect any assets or assert causes of action. Unless a trustee is
appointed under Bankruptcy Code 1104, the Reorganized Debtor also shall have the full right,
power, and authority of a trustee to sell property free and clear of interests pursuant to Bankruptcy
Code 363(f) and/or 1129(b)(2)(A)(ii), subject to further Bankruptcy Court approval to the
extent such approval is not given in this Plan.
5.16 Pre-Petition Liens. Except as otherwise expressly provided in the Plan, the
Confirmation Order, or an Order entered after the Effective Date, all property of the Debtor, or of
the Estate, of any kind and any type, whether real property, personal property, stock in
subsidiaries, or any other property interest of any nature whatsoever, shall be free and clear of all
liens, claims and interests of creditors, Interest holders, and other parties in interest.
5.17 Survival of Contractual Documents. The terms or conditions of Pre-Petition
Agreements and Executory Contracts and Leases assumed by the Debtor shall remain in effect
after Confirmation except as follows:
(a)
Pre-Petition Agreements, Executory Contracts and Leases assumed by the
Debtor shall be deemed modified to conform to the provisions of this Plan;
(b)
The provisions set out in the Plan, including but not limited to default
provisions, supersede any provisions in the Pre-Petition Agreements covering the same matters or
that conflict with the terms of the Plan;
(c)
Any default existing as of the Effective Date, based on breach of any
financial covenants, covenants relating to income or expense, or any warranties or representations
in any of the Pre-Petition Agreements, Executory Contracts or Leases being untrue, or based on
any breach of any such warranties or representations shall be deemed permanently waived;
(d)
Any default existing as of the Effective Date, based on the Debtors or any
other persons insolvency, commencement of a bankruptcy case, revocation or repudiation of any
guarantees, death of a co-debtor or guarantor on any underlying debt, a material adverse change,
deemed insecure, defective collateralization, or default to third parties provision or failure to
comply with financial covenants, or similar provisions shall be deemed permanently waived;

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(e)
All self-help, power of attorney, waiver of jury trial, consent to venue,
absolute right to appointment of a receiver, and limitations on other debt or junior lien provisions
in Pre-Petition Agreements shall be unenforceable;
(f)
Except as may be provided in the Plan, after the Effective Date, the Debtor
shall not be required to provide financial or other information or to provide notices to any Holder
of a Claim or to comply with budget requirements;
(g)
Effective Date;

Any restrictions on junior liens or borrowings shall not apply after the

(h)
The difference between any rate of interest applicable after default or
maturity of a debt, and the non-default rate of interest will not exceed three percentage points;
(i)
Any provision imposing a make-whole premium, prepayment penalty,
premium, fee or charge, or default interest shall be unenforceable except to the extent Allowed by
the Bankruptcy Court as part of a Holders Secured Claim, if at all;
(j)
Nothing herein shall affect or impair the rights of holders of Claims other a
guaranty agreement, but actions alone of any guarantor shall not give rise to a default or breach of
covenant by the Debtor;
(k)
Any provision based on a material adverse change shall be limited to a
material adverse change in the Debtors financial condition compared to the Debtors financial
condition on the Effective Date;
(l)
Any provision based on insecurity shall be limited to a good faith belief
by a party to a Pre-Petition Agreement who in good faith believes itself to be insecure compared to
the position it was in with respect to the Debtor on the Effective Date; and
(m)
To the extent any conflict is perceived between this section and section 5.16
or 5.18 of the Plan, sections 5.16 or 5.18 shall be controlling.
5.18 Application of Payments. Except as otherwise provided in the Plan or otherwise
agreed upon between the Debtor and the Holder of a Claim, payments shall be applied first to
attorneys fees and costs, second to accrued but unpaid interest, and third to principal.
5.19 Defaults and Remedies on Default. The following default provisions apply to all
Claims and all creditors, whether classified or unclassified, whether an Administrative Claim,
Secured Claim, Priority Non-Tax Claim, Priority Tax Claim, or Unsecured Non-Priority Claim:
(a)
Default by the Reorganized Debtor in Payments to Creditors. If any
payment to a creditor required to be made by the Reorganized Debtor under this Plan is not made
in the specified amount on or before the specified due date, the Reorganized Debtor shall be in
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default in its payment obligations under this Plan to that creditor if the Reorganized Debtor fails to
make the required payment within twenty (20) days after receipt of a written notice from the
creditor that the payment was not made, sent by certified mail, return receipt requested with a copy
to counsel for the Reorganized Debtor.
(b)
Default by the Reorganized Debtor in Nonpayment Obligations to
Creditors. If the Reorganized Debtor fails to perform any of its obligations under this Plan to a
creditor and the failure to perform is material, other than an obligation to pay money to a creditor,
except as provided below, the Reorganized Debtor shall be in default in its nonpayment
obligations under this Plan to that creditor if the Reorganized Debtor fails to perform the
nonpayment obligation within twenty (20) days after receipt of written notice from that creditor of
the Reorganized Debtors failure to perform sent by certified mail, return receipt requested with a
copy to counsel for the Reorganized Debtor, or, if the default is not reasonably curable within
twenty (20) days, the Reorganized Debtor will be in default unless it commences a cure of the
default within the 20-day period and proceeds diligently to complete the cure.
(c)
Late Charges. Any payment made in accordance with the Reorganized
Debtors obligations under the Plan shall not be a payment that is late, and therefore will not be
subject to any late charges. Further, so long as the Reorganized Debtor is not in default to a
creditor in its obligations to that creditor under the Plan, no default interest shall accrue to that
creditor because the Reorganized Debtor shall not be in default.
(d)
Tolling the Cure Period. Notwithstanding anything to the contrary in this
paragraph, if a motion is filed prior to the expiration of the applicable cure period set forth herein,
then the cure period shall be tolled pending any sale of assets approved by the Bankruptcy Court
or entry of an Order resulting from the motion to modify the Plan, as applicable, and if the
obligation in default is modified with Bankruptcy Court approval, such modification shall
constitute a cure of the default.
5.20 Interest Rates. The Debtor may negotiate an interest rate to pay any Class of
creditors that is different from the rate of interest provided for that Class in Article III of the Plan.
Any such rate agreed in writing between the Debtor and all of the Holders of the Claims in that
Class shall supersede the rate of interest provided for that Class in Article III. If a Holder of a
Secured Claim in a Class that has voted to reject the Plan objects that the rate of interest specified
for its Claim does not satisfy the requirements of Bankruptcy Code 1129(b)(2)(A), then such
creditor will be paid at the minimum rate that satisfies the requirements of Bankruptcy Code
1129(b)(2)(A), as determined by the Bankruptcy Court (whether higher or lower than such rate). If
the Bankruptcy Court determines that the rate of interest to be paid to a Holder of a Secured Claim
as a condition to Confirmation is higher than the interest rate expressly proposed in the Plan for
payment of the Claim, then the amortization period for purposes of computing monthly payments
to that creditor will increase as necessary so the monthly payment amount is the same as if the
loan amortized at the non-default rate of interest over the period specified in the Plan for payment
of that Claim.
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5.21 Adequate Protection Orders. Any adequate protection Orders entered prior to the
Effective Date shall be superseded by the Plan, and no longer shall be in effect, provided,
however, that creditors shall retain any liens granted under any such adequate protection Orders
and cash collateral Orders to the extent of such liens.
5.22

Releases.

(a)
If there are any claims held by the Debtor or Rio Chan Foods against
Satellite Coffee, such claims shall be preserved in accordance with section 5.14 of this Plan.
(b)
All claims which the Debtor and Rio Chan Foods may have against one
another shall be deemed extinguished as of the Effective Date, as a result of their substantive
consolidation under section 5.24 of this Plan.
(c)
Entry of the Confirmation Order shall constitute Bankruptcy Court
approval of the settlement of the Debtors and Rio Chan Foods claims against Rio Chan IP
pursuant to Bankruptcy Rule 9019, 11 U.S.C. 1123(b)(3)(a), and other applicable law, if any,
on the following terms:
i.

Entry of the Confirmation Order shall constitute a voluntary and knowing


release and discharge by Rio Chan IP of the Debtor and Rio Chan Foods, their
agents, officers, directors, employees, attorneys, employers, beneficiaries,
recipients, transferees, or distributees, and all of their respective successors,
heirs and assigns from any and all claims, demands, causes of action, costs,
expenses, and requests for attorneys fees, whether asserted or unasserted, with
respect to any and all claims of any kind which Rio Chan IP may have against
the Debtor and/or Rio Chan Foods as of the Effective Date, whether known or
unknown, asserted or unasserted, including, but not limited to, any claims that
Rio Chan IP could have made in the Bankruptcy Case, a related adversary
proceeding, or a state court proceeding.

ii.

In consideration therefor, entry of the Confirmation Order shall further


constitute a voluntary and knowing release and discharge by the Debtor and
Rio Chan Foods of Rio Chan IP, its agents, officers, directors, employees,
attorneys, employers, beneficiaries, recipients, transferees, or distributees, and
all of its respective successors, heirs and assigns from any and all claims,
demands, causes of action, costs, expenses, and requests for attorneys fees,
whether asserted or unasserted, with respect to any and all claims of any kind
which the Debtor and/or Rio Chan Foods may have against Rio Chan IP as of
the Effective Date, whether known or unknown, asserted or unasserted,
including, but not limited to, any claims that the Debtor or Rio Chan Foods
could have made in the Bankruptcy Case, a related adversary proceeding, or a
state court proceeding.
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iii.

In further consideration therefor, the Debtor and Rio Chan Foods shall
reconvey to Rio Chan IP all intellectual property pertaining to the Debtor or
Rio Chan Foods within sixty (60) days of the Effective Date by a separate
document.

(d)
If and only if a bid for the equity in the Reorganized Debtor by the
Bernsteins is approved by the Bankruptcy Court, then entry of the Bid Approval Order shall
constitute Bankruptcy Court approval of the settlement of the Debtors and Rio Chan Foods
claims against Rio Chan Brands, the Bernsteins, Valley Property, and Urban Assets pursuant to
Bankruptcy Rule 9019, 11 U.S.C. 1123(b)(3)(a), and other applicable law, if any, on the
following terms:

i.

In consideration therefor, entry of the Bid Approval Order shall further


constitute a voluntary and knowing release and discharge by the Debtor and
Rio Chan Foods of Rio Chan Brands, the Bernsteins, Valley Property and Urban
Assets, their family, agents, officers, directors, employees, attorneys,
employers, beneficiaries, recipients, transferees, or distributees, and all of their
respective successors, heirs and assigns from any and all claims, demands,
causes of action, costs, expenses, and requests for attorneys fees, whether
asserted or unasserted, with respect to any and all claims of any kind which the
Debtor or Rio Chan Foods may have against the Bernsteins, Valley Property
and/or Urban Assets as of the Effective Date, whether known or unknown,
asserted or unasserted, including, but not limited to, any Avoidance Actions,
claims for breach of contract, breach of fiduciary duty, and any other claims that
the Debtor or Rio Chan Foods, or any representative of the Estate, including but
not limited to a trustee under any chapter of the bankruptcy code, the UCC, and
any additional creditors committee which may be formed, could have made in
the Bankruptcy Case, a related adversary proceeding, or a state court
proceeding.

(e)
If the Bid Approval Order approves a bid by the Bernsteins, releases under
this section shall become effective upon entry of the Bid Approval Order, without the need for
execution of a separate document.
(f)
The releases granted under this section shall be binding upon the Debtor,
the Estate, and any successor estate representative (including without limitation, any chapter 7 or
chapter 11 trustee appointed or elected for the Debtor, or any examiner) under all circumstances
and for all purposes, and shall be binding upon all other parties in interest, including the UCC
and any other creditors committee which may be formed, whether such committee has been
formed at the time, and including another party in interest which has filed an adversary
proceeding or contested matter.

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5.23 Amendment of Corporate Documents. The Reorganized Debtor shall, within thirty
(30) days of the Effective Date, amend its articles of incorporation and bylaws to the extent
necessary to prohibit the issuance of nonvoting equity securities, and provide that, if more than
one class of securities is to have voting power, an appropriate distribution of such voting power
as required under 11 U.S.C. 1123(a)(6).
5.23 Consolidation with Rio Chan Foods. The Confirmation Order shall constitute an
order pursuant to 11 U.S.C. 105(a), 1123(a)(5)(C), and other applicable law, if any, (1)
substantively consolidating the assets of and debts of the Debtor and Rio Chan Foods,
notwithstanding any applicable state law regarding the merger of the two, (2) determining that all
assets of Rio Chan Foods as of the Petition Date are assets of the Reorganized Debtor, and (3)
determining that all debts of Rio Chan Foods as of the Petition Date are debts of the Reorganized
Debtor. Nothing herein shall prohibit the Debtor, the Debtors shareholders, officers or directors,
Rio Chan Foods, or the members of Rio Chan Foods, from causing the merger of the Debtor and
Rio Chan Foods under applicable non-bankruptcy law, so long as the Debtor is the surviving
entity under any such merger. Likewise, nothing contained herein shall prevent Rio Chan Foods,
or the members of Rio Chan Foods from causing the dissolution of Rio Chan Foods under
applicable nonbankruptcy law.

ARTICLE VI
PROCEDURE FOR RESOLVING DISPUTED CLAIMS
6.1
Power to Object to, Litigate, and Settle Disputed Claims. After the Effective Date,
the Reorganized Debtor will have exclusive authority to (i) file objections to Claims, (ii) file
proofs of Claim on behalf of creditors who do not file Claims within the period set for doing so,
pursuant to Bankruptcy Rule 3004, and (iii) litigate to final judgment, settle, or withdraw
objections to Disputed Claims.
6.2
Time to Object to Claims. Any person entitled to file an objection to a Claim shall
file any objections to Claims on or before the latest of (i) sixty (60) days after the Effective Date;
(ii) thirty (30) days after proof of such Claim is filed; (iii) thirty (30) days after the Bar Date for
filing the Claim, or (iv) such other applicable period of time limitation as may be fixed or
extended by the Bankruptcy Court; except that (a) objections to Administrative Claims shall be
governed as set forth in section 3.16 of this Plan; (b) this time limit shall not apply to any disputes
concerning the validity, enforceability or priority of any liens or to any actions to avoid liens; and
(c) the time to object to Claims arising from the rejection of Executory Contracts or Leases is the
later of (a) sixty (60) days after the Effective Date or (b) sixty (60) days after a Claim for rejection
damages is filed.
6.3
Payment After Allowance. Payments to Holders of Disputed Claims, to the extent
such Claims ultimately are Allowed, shall be made in accordance with the provisions of the Plan
governing the Class of Claims to which the respective Holder belongs. As soon as practicable after
the date that the Order or judgment of the Bankruptcy Court allowing such Claim becomes a Final
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Order, any property that would have been distributed prior to the date on which a Disputed Claim
became Allowed shall be distributed, together with interest at the rate provided for in the Plan.
Even if only a portion of a Claim is Disputed, the Reorganized Debtor shall not be required to
make payments to the Holder of such Claim based on any portion of the Claim pending Allowance
or Disallowance of the entire Claim.
6.4
Treatment of Disallowed Claims. Disallowed Claims shall receive no payment, and
shall be discharged in full. Holders of Disallowed Claims shall be forever barred from asserting
such Disallowed Claims against the Debtor, the Estate, or any of the Debtors property.
6.5
Resolution of Disputed Claims. After the Effective Date, the Reorganized Debtor
shall pursue with reasonable diligence the resolution of all Disputed Claims.
6.6
Late Fees, Default Interest, Attorneys Fees, and Costs. Late fees, noncompliance
or default interest, and attorneys fees and costs arising prior to the Effective Date that are claimed
by any Holder as part of its Claim (other than Fee Applications by Professionals employed with
the approval of the Bankruptcy Court) shall be Allowed only to the extent allowable under the
Bankruptcy Code and applicable nonbankruptcy law. No attorneys fees or costs accruing before
the Effective Date shall be Allowed unless (i) claimed in a Supplemental Secured Claim filed
within thirty (30) days after the Effective Date specifying the amount claimed, with copies of
attorney narrative billing statements attached, and (ii) served on counsel for the Debtor and on the
U.S. Trustee when it is filed. The Debtor, and any other party in interest, shall have the right to
object to the Supplemental Secured Claim within thirty (30) days after the deadline for filing the
same. If the Supplemental Secured Claim is timely filed and served, and no objection is timely
filed, such Supplemental Secured Claim shall be deemed automatically allowed. If the
Supplemental Secured Claim is timely filed and served, and an objection is timely filed, the
Supplemental Secured Claim shall be determined by the Bankruptcy Court.
ARTICLE VII
EFFECTIVE DATE AND CONDITIONS PRECEDENT THERETO
7.1
Conditions Precedent to Effectiveness. The Plan shall not become effective, and
the Effective Date shall not occur, unless and until the following conditions shall have been
satisfied or waived:
(a)
The Confirmation Order, in form and substance reasonably acceptable to
the Bernsteins, shall have been entered by the Bankruptcy Court and shall have become a Final
Order;
(b)
The Bid Approval Order shall have been entered by the Bankruptcy Court
and shall have become a Final Order;
(c)
The proceeds of the bid approved by the Bid Approval Order shall have
been actually received by the Debtor; and
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(d)
The Debtor shall have sufficient cash to meet payment obligations under
the Plan required to be made within fourteen (14) days of the Effective Date.
(e)
All actions, other documents and agreements necessary to implement the
Plan, if any, shall have been executed, delivered, and, if necessary, properly recorded, and shall
have become effective.
7.2
Waiver of Conditions. The Bernsteins in their sole discretion may waive one or
more of the conditions precedent to the effectiveness of the Plan set forth in section 7.1 above,
except that the Bernsteins may not waive the condition that the proceeds of the bid approved by
the Bid Approval Order shall have actually been received by the Debtor.
7.3
Notice of Effective Date. On or before (5) days after the Effective Date, the
Reorganized Debtor shall file and serve a Notice of Effective Date on the full mailing matrix for
the Bankruptcy Case, providing notice of the Effective Date occurred, and containing a list of the
dates of all deadlines set by this Plan or the Confirmation Order which expire after the Effective
Date.
7.4
Notice of Non-Effectiveness of Plan. If on or before ninety (90) days after the
Confirmation Date, the Plan has not become effective pursuant to sections 7.1 or 7.2 above, then
the Debtor shall file with the Court a Notice of Non-Effectiveness of Plan, giving notice that the
Plan has not become effective, and stating the reasons therefor, and, after filing such notice, the
Debtor shall request that the Court hold a status conference.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1
Discharge of the Reorganized Debtor. On the Confirmation Date, subject to
occurrence of the Effective Date, the Reorganized Debtor will be discharged from all debts which
arose before the Petition Date, to the maximum extent allowed by 1141(d)(1)(A) of the
Bankruptcy Code, except that the Reorganized Debtor will not be discharged of any debt (i)
imposed by this Plan; (ii) of a kind specified in 1141(d)(6)(A) of the Bankruptcy Code if a
timely complaint was filed in accordance with the Bankruptcy Rules; or (iii) of a kind specified in
1141(d)(6)(B) of the Bankruptcy Code. After the Effective Date, all Claims against the
Reorganized Debtor will be limited to the debts described in clauses (i) through (iii) of the
preceding sentence. Except as otherwise provided by the Bankruptcy Code, confirmation of this
Plan will be deemed to preclude all persons from asserting against the Reorganized Debtor, its
successors, assets, or properties, or other, a further Claim based upon any act or omission,
transaction, or other activity of any kind or nature that occurred prior the Effective Date, except as
expressly allowed by or pertaining to an obligation undertaken as a result of this Plan.
8.2
Injunction Upon Discharge. Except as otherwise provided in the Plan or the
Confirmation Order, all entities that have held or currently hold, or may hold Claims or other debts
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or liabilities against the Reorganized Debtor that are discharged pursuant to the terms of the Plan
are, or upon Confirmation will be, permanently enjoined, on and after entry of an Order for
discharge, from taking any of the following actions on account of any such Claims, debts,
liabilities, or equity security interests:
(a)
Commencing or continuing in any manner any action or other proceeding of
any kind with respect to any such Claim, debt, liability, or equity security interests, or right, other
than to enforce any right pursuant to this Plan;
(b)
Enforcing, attaching, collecting, or recovering in any manner any judgment,
award, decree, or order against the Debtor, or its property or interests in property, on account of
any such Claim, debt, liability, or equity security interest;
(c)
Creating, perfecting, or enforcing any lien or encumbrance against the
Debtor, or its property or interests in property on account of any such Claim, debt, liability, or
equity security interest;
(d)
Asserting any right of setoff, subrogation, or recoupment of any kind
against any Claim, debt, liability, or obligation due to the Debtor or against its property or interests
in property on account of any such Claim, debt, liability, or equity security interest; and
(e)
Commencing or continuing any action, in any manner, in any place that
does not comply with or is inconsistent with the provisions of the Plan or the Confirmation Order.
Such injunction shall extend to and be for the benefit of any successor of the Debtor. Any
person injured by any willful violation of such injunction shall recover actual damages, including
costs and attorneys fees, and, in appropriate circumstances, may recover punitive damages, from
the willful violator.
8.3
Full and Final Satisfaction. The final payments and distributions provided in
respect of each Allowed Claim in the Plan shall be in full settlement and final satisfaction of such
Allowed Claim.
8.4
Payment of Statutory Fees. All quarterly fees due and payable on or before the
Effective Date to the Office of the U. S. Trustee pursuant to section 1930(a)(6) of title 28 of the
United States Code shall be paid Pro Rata with Allowed Administrative Claims. The Estate shall
remain responsible for timely payment of such quarterly fees due and payable after the Effective
Date and until the Bankruptcy Case is closed, pursuant to section 1930(a)(6) of title 28 of the
United States Code, and shall file quarterly reports necessary for the determination of the amount
of such fees as provided for in section 7.19 of this Plan.
8.5
No Liability for Solicitation or Participation. As specified in 1125(e) of the
Bankruptcy Code, persons that solicit acceptances or rejections of the Plan and/or that participate
in the offer, issuance, sale, or purchase of securities offered or sold under or in connection with the
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Plan, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, are
not liable, on account of such solicitation or participation, for violation of any applicable law, rule,
or regulation governing the solicitation of acceptances or rejections of the Plan or the offer,
issuance, sale, or purchase of securities.
8.6
Limitation of Liability. Neither the Debtor nor any Professionals employed by the
Debtor shall have or incur any liability to any person or Entity for any act taken or omission made
in good faith in connection with or related to negotiating, formulating, implementing, confirming,
carrying out or consummating the Plan, the Disclosure Statement, or any contract, instrument,
security, release, or other agreement, or document created in connection with the Plan or the
solicitation of votes in connection therewith.
8.7
Remedies to Cure Defects. After the Confirmation Date, the Debtor may, with the
approval of the Bankruptcy Court, and so long as it does not materially adversely affect the
interest of Holders of Allowed Claims, remedy any defect or omission, or reconcile any
inconsistency in the Plan, or in the Confirmation Order, if necessary to carry out the purposes and
the intent of the Plan.
8.8
Headings. Paragraph headings in this Plan have been inserted for the convenience
of the reader. Such headings shall not serve in any way to limit or modify the provisions of the
paragraph.
8.9
Setoff. Except as otherwise expressly provided for in this Plan to the contrary,
nothing contained in this Plan shall constitute a waiver or release by the Debtor of any right of
setoff the Debtor may have against the Holder of any Claim.
8.10 Binding Effect/ Successors and Assigns. As of the Effective Date, the provisions of
this Plan shall be binding upon the Debtor, and all creditors, Holders, and parties in interest, and
their respective agents and representatives, pursuant to 1141(a) of the Bankruptcy Code. The
rights, duties, and obligations of persons named or referred to in this Plan shall be binding upon,
and shall inure to the benefit of, the successors and assigns of such persons.
8.11 Governing Law. Except to the extent the Bankruptcy Code is applicable, the rights
and obligations arising under or relating to the Plan shall be governed and construed in accordance
with the laws of the State of New Mexico.
8.12 Enlargement of Time. Any deadline to act or take action hereunder may be enlarged
or shortened by written agreement of all affected parties. Upon appropriate notice and after a
hearing, the Bankruptcy Court may shorten or enlarge the time to take or conduct any act required
or allowed to be performed under the Plan, for cause.
8.13 Sale of Additional Property. The Debtor may file at any time a motion seeking to
employ brokers or to approve sales of property.
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8.14 Direct Payments and Payments by the Debtor. The Debtor will pay directly, outside
the Plan, expenses of continuing to operate its business in the ordinary course of business.
8.15 Calculation of Pro Rata Share of Payments. In determining the Pro Rata share of
payments to which creditors are entitled, the Debtor may rely on scheduled amounts, if no proof of
Claim is filed, on proof of Claim amounts, if a proof of Claim is filed, or on an order of the
Bankruptcy Court if the amount of the Claim has been determined by the Bankruptcy Court. In
addition, in determining Pro Rata amounts, the unpaid amount owed to each creditor will be used.
8.16 Notices. All notices and requests shall be given in writing by first class United
States mail postage prepaid, by overnight delivery using a recognized courier service (such as
Federal Express, UPS, Airborne, or U.S. Express Mail), or by hand delivery. Notices given by
overnight delivery or hand delivery shall be deemed given when received. Notices given by mail
shall be deemed given three days after the date of mailing. Notices to the Debtor shall be to Moore,
Bassan & Behles, P.C., ATTN: George M. Moore, 3800 Osuna Blvd. NE, Ste. 2, Albuquerque,
NM 87109, or at such other addresses or to such other counsel as the Debtor may designate in
writing to the person giving notice.
8.17 Modification. If the Bankruptcy Court determines that this Plan does not
sufficiently provide for the sale of assets to pay creditors in full over a reasonable time, given all
the circumstances, so as to warrant approval of the this Plan, the Debtor may amend the Plan to
so provide, as determined by the Bankruptcy Court.
8.18

Prepayment. Any obligation under this Plan may be prepaid without penalty.

8.19 Reporting. The Reorganized Debtor shall file of record a report for each calendar
quarter, due within forty-five (45) days after the end of the calendar quarter, setting forth the
amount of income and expenses for the quarter, broken down in line items.
8.20 Calculation of Time. For all deadlines which are set a given number of days after
the Effective Date, if the deadline expires on a day which is not a Business Day, the deadline
shall be the next Business Day.
8.21 Dissolution of UCC. The UCC shall automatically dissolve upon the Effective
Dateand shall cease to exist without further Order of this Court.
ARTICLE IX
VESTING OF ASSETS AND CLOSING
AND REOPENING THE CASE
9.1
Revesting of Assets. On the Effective Date, except as otherwise specifically set
forth herein, all Property of the Estate, including each and every claim or cause of action that was
asserted or could have been asserted by the Debtor against any party, in the Bankruptcy Case or
otherwise, including causes of action for recovery of preferences, fraudulent conveyances, and any
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other action under 542 through 553 of the Bankruptcy Code, shall vest in the Reorganized
Debtor, free and clear of all Claims and Interests except as specifically provided for in the Plan or
Confirmation Order.
9.2
Closing and Reopening the Case. The Reorganized Debtor may at any time request
the Bankruptcy Court close the Bankruptcy Case. If the Bankruptcy Court closes the Bankruptcy
Case before the Reorganized Debtor is granted a discharge, then the Bankruptcy Court will reopen
the Bankruptcy Case upon request for the purpose of making a determination to be made by the
Bankruptcy Court pursuant to the Plan or according relief under the Bankruptcy Code.
ARTICLE X
MODIFICATION OF THE PLAN
10.1 Prior to Confirmation. The Debtor may modify this Plan at any time prior to
Confirmation so long as the modification complies with the requirements of 1122 and 1123 of
the Bankruptcy Code.
10.2 After Confirmation. After Confirmation, the Plan may be modified, with approval
of the Bankruptcy Court, to the fullest extent provided in the Bankruptcy Code.
10.3 Acceptances. Any acceptance of the Plan shall be deemed an acceptance of any
subsequent modification of the Plan determined by the Bankruptcy Court not to materially and
adversely affect or impair the Class of creditors for which the acceptance was presented.

ARTICLE XI
RETENTION OF JURISDICTION
11.1 Jurisdiction. Unless the Bankruptcy Court determines otherwise, the Bankruptcy
Court shall retain jurisdiction of this Bankruptcy Case and over all adversary proceedings,
contested matters, and other matters or proceedings arising in or in connection with this
Bankruptcy Case, including without limitation jurisdiction to:
(a)
Consider any modification of the Plan under 1127 of the Bankruptcy
Code, to the fullest extent permitted under the Bankruptcy Code;
(b)
Hear and determine any controversies, suits, and disputes which may arise
in connection with the interpretation or enforcement of the Plan;
(c)
Hear and determine all requests for allowance of compensation and/or
reimbursement of expenses by Professionals made after the Confirmation Date;

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(d)
Classify, fix, liquidate, allow, or disallow Claims and direct distribution of
the funds under the Plan, and hear and determine all objections to Claims, controversies, suits, and
disputes pending on or after the Confirmation Date;
(e)
Hear and determine all adversary proceedings still pending and not
dismissed, or which are hereinafter filed to determine disputed matters not disposed of by the Plan,
but which relate to the Plan;
(f)
Adjudicate all Claims or controversies arising out of any purchases, sales, or
contracts made or undertaken by the Debtor during the pendency of this Bankruptcy Case;
(g)
Hear and determine any and all applications, adversary proceedings, and
other matters arising out of or related to the Plan, including but not limited to actions under
506, 542, 543, 544, 545, 547, 548, 549, 550, or 553 of the Bankruptcy Code;
(h)
Order the sale of property free and clear of interests, liens and
encumbrances, as the case may be, pursuant to 363 and/or 1129(b)(2)(A)(ii) and/or (iii) of the
Bankruptcy Code;
(i)
Correct any defect, cure any omission, or reconcile any inconsistency in or
interpret any provisions of the Plan or the Confirmation Order as may be necessary to carry out the
Plan or the Confirmation Order, or as may be necessary to carry out the purposes and intent of the
Plan;
(j)
Determine disputed applications for the assumption or rejection of
executory contracts and unexpired leases under 365 of the Bankruptcy Code, and determine the
allowance of Claims resulting therefrom;
(k)
Determine any and all disputes arising under or relating to the Plan and
enforce and administer the provisions of the Plan;
(l)
Enforce all Orders, judgments, injunctions, and rulings entered in
connection with the Bankruptcy Case, including using Bankruptcy Rule 7070;
(m)

Enter a Final Decree under Bankruptcy Rule 3022 closing this Bankruptcy

Case;
(n)
Make such Orders as are necessary or appropriate to interpret or carry out
the provisions of the Plan;
(o)
Make such Orders or give such direction as may be appropriate under
1142 of the Bankruptcy Code; and

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(p)
Undertake such other matters, consistent with the Plan, as may be provided
for in the Confirmation Order.
Dated July 29, 2016

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