Findings of Fact, Conclusions of Law, and Order Confirming the Debtor's Third Amended Chapter ...

211 Pages·2015·1.31 MB·English

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3 Signed and Filed: December 11, 2015
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6 ________________________________________
HANNAH L. BLUMENSTIEL
7 U.S. Bankruptcy Judge
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UNITED STATES BANKRUPTCY COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN FRANCISCO DIVISION
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In re: Case No.: 15-31141
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LES 12 NEWZOOM, INC., Chapter 11
&JEHL ONAL T AWC ALIFORNIA 13 Debtor. FLIANWD,I NAGNSD OOFR FDAECRT C, OCNOFNICRLMUISNIGO NTSH OE F
ZNG IRNEYS ,CISCO 14 DEBTOR’S THIRD AMENDED CHAPTER
STAATTOFRAN 15 11 PLAN OF REORGANIZATION, DATED
KI AN NOVEMBER 30, 2015
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1 TABLE OF EXHIBITS
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Exhibit Exhibit Name
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A Plan
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B Form of Notice of Effective Date of Plan
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STAATTOFRAN 15
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1 WHEREAS, NewZoom, Inc. (the “Debtor”) filed the Debtor’s Second Amended
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Chapter 11 Plan of Reorganization dated October 30, 2015 [Docket No. 189] and subsequently
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filed, and seeks confirmation of, the Debtor’s Third Amended Chapter 11 Plan of Reorganization
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dated November 30, 2015 [Docket No. 258] (as it may be further modified per its terms and
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inclusive of the Plan Supplement, Plan Documents, and all other documents and exhibits relating to
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the Plan, the “Plan”);1
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8 WHEREAS, the Debtor filed the Plan in response to certain objections to the prior
9 version of the Plan and to implement other non-material changes to the Debtor’s reorganization. The
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non-material modifications to the Plan were reflected in the blackline of the Plan filed on November
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P 30, 2015, as Exhibit A to the Notice of Filing of Blackline of Third Amended Chapter 11 Plan of
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N Reorganization [Docket No. 259] (collectively, the “Plan Modifications”).
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ZNG IEHL ALRNEYS T A,CELES ALIFO 14 WHEREAS, the Bankruptcy Court entered the Order (I) Approving Disclosure
SKI TAATTOLAOS NG 15 Statement, (II) Approving the Form and Manner of Notice of the Disclosure Statement Notice,
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HU 16 (III) Establishing Procedures for Solicitation and Tabulation of Votes on Plan, (IV) Scheduling
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Hearing on Confirmation of Plan of Reorganization and (V) Approving Related Matters [Docket
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No. 192] (the “Disclosure Statement Order”) and therefore has, among other items, (i) approved the
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Disclosure Statement in Support of Debtor’s Second Amended Chapter 11 Plan of Reorganization
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[Docket No. 190] (the “Disclosure Statement”); and (ii) scheduled a preliminary hearing to consider
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confirmation of the Plan on December 2, 2015, at 2:30 p.m. (prevailing Pacific Time), and an
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23 evidentiary hearing on December 9, 2015, at 1:00 p.m. (prevailing Pacific Time) (collectively,
24 the “Confirmation Hearing”);
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A copy of the Plan (without the Plan Supplement, Plan Documents, and all other documents and exhibits relating to
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the Plan (collectively, the “Plan Exhibits”)) is attached hereto as Exhibit A and incorporated herein by reference.
Capitalized terms and phrases used herein have the meanings given to them in the Plan. The rules of interpretation
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set forth in Article I of the Plan apply to this Order (the “Confirmation Order”).

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1 WHEREAS, the Amended Affidavit of Service [Docket No. 242] with respect to the
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mailing of notice of the Confirmation Hearing in accordance with the Disclosure Statement Order
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(the “Affidavit of Service”) was filed with the Court on November 24, 2015;
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WHEREAS, entities could obtain the Plan and Disclosure Statement, Plan Exhibits,
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and related documents distributed to creditors and other parties in interest from the Debtor’s website
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at http://cases.primeclerk.com/newzoom;
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8 WHEREAS, on November 9, 2015, the Debtor filed the Plan Supplement [Docket
9 No. 204] in accordance with the Plan and the Disclosure Statement Order; and the Debtor filed
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amendments to the Plan Supplement on November 30, 2015 [Docket No. 266] and on
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P December 1, 2015 [Docket No. 269];
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&J ON W ORNIA 13 WHEREAS, the Affidavit of Publication of [Docket No. 202] with respect to the
EHL ALT ACALIF publication of the Notice of (I) Deadline for Casting Votes to Accept or Reject Debtor’s Second
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STAATTOFRAN 15 Amended Plan of Reorganization, (II) Confirmation Hearing, and (III) Related Matters and
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Court on November 6, 2015;
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WHEREAS, the Declaration Of Christina Pullo Of Prime Clerk LLC Regarding The
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Solicitation Of Votes And Tabulation Of Ballots Cast On The Debtor’s Second Amended Chapter 11
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Plan Of Reorganization (the “Voting Affidavit”) was filed on November 25, 2015 [Docket No. 249].
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WHEREAS, on November 30, 2015, the Debtor filed its Memorandum of Law in
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23 Support of Confirmation of the Third Amended Plan of Reorganization, Dated November 30, 2015
24 [Docket No. 260] (the “Confirmation Brief”);
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WHEREAS, the Debtor filed the declaration of Andrew Hinkelman [Docket No. 261]
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in support of the Plan (the “Hinkelman Declaration”);
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1 WHEREAS the Bankruptcy Court held the Confirmation Hearing on
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December 2, 2015 and December 9, 2015 and, in connection therewith, considered, among other
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items, (a) the objections to the Plan filed by:
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1. The Texas Comptroller of Public Accounts [Docket No. 223];
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2. Landlords affiliated with General Growth Properties [Docket No. 224];
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3. Boulevard Invest LLC, Broadway Mall Owner, LLC, CenterCal Properties,
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Inc., Dimond Center Holdings, LLC, QKC Maui Owner, LLC, Starwood
Retail Partners LLC, The Macerich Company, and Westfield, LLC [Docket
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No. 226];
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4. Macy’s Retail Holdings, Inc., Macy’s West Stores, Inc., Macy’s Florida
10 Stores, LLC and Macy’s Puerto Rico, Inc. [Docket No. 227];
11 5. The Taubman Company [Docket No. 228];
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&JEHL ONAL T AWC ALIFORNIA 13 7. Intuit Inc. [Docket No. 230];
ZNG IRNEYS ,CISCO 14 8. Panasonic Appliance Refrigeration Systems Corporation of America [Docket
STAATTOFRAN 15 No. 231];
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18 11. Best Buy Stores, L.P. [Docket No. 235];
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12. North American Kiosk, LLC [Docket No. 254];
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13. Objection of Landlords Affiliated with Rouse Properties, Inc. and Jones Lang
LaSalle Americas, Inc. to Debtor’s Proposed Cure Amounts [Docket
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No. 275];
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(collectively, the “Objections”); (b) the Confirmation Brief, (c) the Hinkelman Declaration and the
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testimony set forth therein; and (d) all other evidence proffered or adduced during, memoranda, and
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objections filed in connection with, and arguments of counsel made at, the Confirmation Hearing;
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26 WHEREAS, the Bankruptcy Court has considered all of the proceedings held before
27 the Bankruptcy Court and taken judicial notice of the documents and pleadings filed in the
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Bankruptcy Case;
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1 WHEREAS, the Court made certain findings of fact and conclusions of law on the
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record at the Confirmation Hearing, and such findings and conclusions will be deemed to be
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incorporated herein in their entirety; and, therefore,
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IT IS HEREBY FOUND, DETERMINED, AND CONCLUDED THAT:
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A. Findings of Fact and Conclusions of Law. The findings and conclusions set
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forth herein constitute the Bankruptcy Court’s findings of fact and conclusions of law pursuant to
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8 Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To
9 the extent any of the following findings of fact constitute conclusions of law, they are adopted as
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such. To the extent any of the following conclusions of law constitute findings of fact, they are
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&J ON W ORNIA 13 B. Venue and Jurisdiction. The Court has jurisdiction over this matter pursuant
EHL ALT ACALIF to Sections 157 and 1334 of Title 28 of the United States Code. Confirmation of the Plan is a core
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STAATTOFRAN 15 proceeding pursuant to Section 157(b)(2) of Title 28 of the United States Code. The Debtor was,
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of Title 28 of the United States Code, venue of this chapter 11 case in the United States District
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Court for the Northern District of California was proper as of the Petition Date and remains proper.
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C. Objections to the Plan. The Bankruptcy Court concludes that all objections to
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the Plan not otherwise withdrawn at, or prior to, the Confirmation Hearing should be overruled for
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the reasons the Bankruptcy Court articulated on the record at the Confirmation Hearing and/or set
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23 forth in the Debtor’s Confirmation Brief.
24 D. Transmittal and Mailing of Materials; Notice. The Disclosure Statement, the
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Plan, the Disclosure Statement Order, and the notices of the Confirmation Hearing were transmitted
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and served in compliance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of
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Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the Northern District
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1 of California (the “Local Rules”) and the Disclosure Statement Order. Based upon the foregoing,
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due, adequate, and sufficient notice of the Confirmation Hearing and all other related dates and
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deadlines has been given in compliance with the Bankruptcy Rules, the Local Rules, and the terms
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of the Disclosure Statement Order, and no other or further notice is, or shall be, required.
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E. Approval of Plan Modifications. The Plan Modifications are either technical
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changes or clarifications that cause no material or adverse effect or change to the treatment of any
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8 Claim against, or Interest in, the Debtor. Pursuant to Section 1127(b) of the Bankruptcy Code and
9 Bankruptcy Rule 3019, there is no basis to require additional disclosure of the Plan Modifications.
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In the context of this case, the Debtor’s disclosure of the Plan Modifications constitutes due and
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P sufficient notice thereof. Accordingly, the Plan (as modified and restated) is properly before the
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EHL ALT ACALIF F. Good Faith Negotiation, Implementation and Consummation. The Debtor and
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STAATTOFRAN 15 the Creditors’ Committee2 (and, as applicable, each of their respective Representatives) participated
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faith in negotiating at arms’ length all contracts, instruments, releases, agreements, and documents
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related to, or necessary to, implement, effectuate, and consummate the Plan, including (a) all
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contracts, instruments, agreements, and documents to be executed and delivered in connection with
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the Plan; and (b) the certificate of incorporation, by-laws, or comparable constituent documents of
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the Reorganized Debtor. In making this determination, the Court has examined, among other items,
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23 the totality of circumstances surrounding the filing of this chapter 11 case, the record of this
24 proceeding and the Plan and all related pleadings, exhibits, statements, and comments regarding
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Confirmation.
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2 The Creditors’ Committee’s participation was limited to negotiating the provisions under the Plan regarding the
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treatment of general unsecured claims and the related trust agreement.
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1 G. Good Faith and Section 1125(e) of the Bankruptcy Code. The Debtor and, as
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applicable, their Representatives have acted in good faith and in compliance with the applicable
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provisions of the Bankruptcy Code and the Disclosure Statement Order with respect to the
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transmittal of all materials relating to the Plan. As such, the Debtor and, as applicable, its
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Representatives are both entitled to the benefits and protections of Section 1125(e) of the
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Bankruptcy Code. In addition, the Debtor and, as applicable, its Representatives each have acted in
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8 good faith and in compliance with the applicable provisions of the Bankruptcy Code with respect to
9 the issuance of the Interests in the Reorganized Debtor. As such, the Debtor and, as applicable, its
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Representatives are entitled to the benefits and protections of Section 1125(e) of the Bankruptcy
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&J ON W ORNIA 13 H. Compliance with the Requirements of Section 1129 of the Bankruptcy Code.
EHL ALT ACALIF The Debtor has the burden of proving the elements of Section 1129(a) and (b) of the Bankruptcy
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STAATTOFRAN 15 Code by a preponderance of the evidence. The Debtor has met such burden. As set forth below, the
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Bankruptcy Code.
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I. Section 1129(a)(1) of the Bankruptcy Code—the Plan Complies with
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Applicable Provisions of the Bankruptcy Code. As required under section 1129(a)(1) of the
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Bankruptcy Code, the Plan complies with all applicable provisions of the Bankruptcy Code,
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including, without limitation, Sections 1122 and 1123 of the Bankruptcy Code:
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(i) Section 1122 of the Bankruptcy Code. In accordance with Section
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1122(a) of the Bankruptcy Code, Article II of the Plan classifies each
Claim against, and Interest in, the Debtor into a Class containing only
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substantially similar Claims or Interests (Plan Art. II). Based upon
their secured status, Prepetition Facility Claims and Other Secured
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Claims have been separately classified in Classes 2 and 3 (Plan Article
II). Due to their entitlement to priority status under Section 507 of the
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Bankruptcy Code, Priority Claims have been separately classified in
Class 1 (Plan Art. II). Unsecured Claims, Preferred Interests, and
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Common Interests have been separately classified in, respectively,
Classes 4, 5, and 6 due to the distinctive bases for such Claims (Plan
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Art. II).
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1 (ii) Section 1123(a)(1) of the Bankruptcy Code. In accordance with
Section 1123(a)(1) of the Bankruptcy Code, Article II of the Plan
2 properly classifies all Claims and Interests that require classification
(Plan Art. II). In particular, Article II of the Plan segregates Priority
3 Claims (Class 1), Prepetition Facility Claims (Class 2), Other Secured
Claims (Class 3), Unsecured Claims (Class 4), Preferred Interests
4 (Class 5), and Common Interests (Class 6) into separate classes. (Plan
Art. II). The number of Classes reflects the diverse characteristics of
5 those Claims and Interests, and the legal rights under the Bankruptcy
Code of each of the holders of Claims or Interests within a particular
6 Class are substantially similar to other holders of Claims or Interests
within that Class.
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(iii) Section 1123(a)(2) of the Bankruptcy Code. In accordance with
8 Section 1123(a)(2) of the Bankruptcy Code, Section 3.1 of the Plan
identifies and describes each Class of Claims or Interests that is not
9 impaired under the Plan. In particular, Section 3.1 of the Plan
indicates that Classes 1 and 3 are unimpaired or may be unimpaired
10 under the Plan (Plan § 3.1).
11 (iv) Section 1123(a)(3) of the Bankruptcy Code. In accordance with
P Section 1123(a)(3) of the Bankruptcy Code, Section 3.2 of the Plan
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ZNG IRNEYS ,CISCO 14 (v) SSeeccttiioonn 11112233((aa))((44)) ooff tthhee BBaannkkrruuppttccyy CCooddee, . th eI nP laacnc oprdroavnicdee sw tihthe
STAATTOFRAN 15 same treatment for each Claim or Interest of a particular Class unless
SKI SAN the holder of a Claim or Interest in a particular Class agrees to less
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17 (vi) Section 1123(a)(5) of the Bankruptcy Code. In accordance with
Section 1123(a)(5) of the Bankruptcy Code, the Plan provides
18 adequate means for the Plan’s implementation. Among other items,
Article VII of the Plan specifically provides for (a) the formation of
19 the Unsecured Creditor Trust (Plan § 7.2); (b) the cancellation of
existing Interests in the Debtor, and the issuance of new Interests in
20 the Reorganized Debtor (Plan § 7.2); (c) the effectiveness of the Exit
Facility and the use of proceeds thereof to satisfy the DIP Facility
21 Claims (Plan § 7.2); and (d) the Debtor’s continued corporate
existence, with the Debtor maintaining, as applicable, the powers of
22 corporation under the laws of the Debtor’s respective jurisdiction of
organization and without prejudice to any right to alter or terminate
23 such existence (whether by merger or otherwise) under applicable state
law (Plan § 7.5).
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(vii) Section 1123(a)(6) of the Bankruptcy Code. In accordance with
25 Section 1123(a)(6) of the Bankruptcy Code, the Reorganized Debtor’s’
organizational documents will prohibit the issuance of nonvoting
26 equity securities and provide for the appropriate distribution of voting
power among all classes of equity securities authorized for issuance to
27 the extent required by Section 1123(a)(6) of the Bankruptcy Code.
28 (viii) Section 1123(a)(7) of the Bankruptcy Code. In accordance with
Section 1123(a)(7) of the Bankruptcy Code, the provisions of the Plan
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1 and the Reorganized Debtor’s organizational documents or similar
constituent documents governing the manner of selection of officers
2 and directors of the Reorganized Debtor are consistent with the
interests of creditors and equity security holders and with public policy
3 (Plan Supplement, Ex. D).
4 (ix) Section 1123(a)(8) of the Bankruptcy Code. Section 1123(a)(8) of the
Bankruptcy Code is inapplicable to the Debtor because the Debtor is
5 not an individual.
6 (x) Section 1123(b)(1) of the Bankruptcy Code. As permitted by Section
1123(b)(1) of the Bankruptcy Code, Article IV of the Plan provides for
7 the impairment of Claims and Interests in the Debtor. The Debtor will
distribute no property on account of the Interests, and the Plan further
8 provides for the Interests’ cancellation (Plan § 4.1(e) and (f)).
9 (xi) Section 1123(b)(2) of the Bankruptcy Code. As permitted by Section
1123(b)(2) of the Bankruptcy Code, Section 12.1 of the Plan provides
10 that, as of the Effective Date, except for any Executory Contract or
Unexpired Lease listed on Exhibit A of the Plan Supplement (which
11 may be amended any time prior to the Effective Date), if any, and
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EHL ALT ACALIF Lease prior to the Effective Date; the Debtor will reject, pursuant to
ZNG IRNEYS ,CISCO 14 SUencetxiopnir e3d6 5L eoafs et heen tBeraendk irnutpot cbyy Cthoed eD, eebatocrh pErixoerc tuot otrhye CPeotnittiroanc t Daantde
STAATTOFRAN 15 that has not previously expired or terminated pursuant to its own terms
SKI SAN (Plan § 12.1).
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17 of the Executory Contracts and Unexpired Leases listed on Exhibit A
to the Plan Supplement as of the Effective Date (Id.).
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(xii) Section 1123(b)(5) of the Bankruptcy Code. As permitted by Section
19 1123(b)(5) of the Bankruptcy Code, Article IV of the Plan either
modifies or leaves unaffected the rights of holders of each class of
20 Claims.
21 (xiii) Section 1123(b)(6) of the Bankruptcy Code. As permitted by Section
1123(b)(6) of the Bankruptcy Code, the Plan includes additional
22 appropriate provisions that are not inconsistent with the applicable
provisions of the Bankruptcy Code, including the provisions of
23 (a) Article IX of the Plan governing distributions on account of
Allowed Claims; (b) Article X of the Plan establishing procedures for
24 resolving Disputed Claims and making distributions on account of
such Disputed Claims once resolved; (c) Article XIII of the Plan
25 governing the retention of jurisdiction by the Court over certain
matters after the Effective Date; and Article XIV of the Plan setting
26 forth certain releases, the discharge injunction and related matters.
27 (xiv) Section 1123(d) of the Bankruptcy Code. In accordance with Section
1123(d) of the Bankruptcy Code, Section 12.2 of the Plan provides for
28 the satisfaction of Cure Claims associated with each Executory
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