Notice of Filing Fully Executed Term Sheet

14 Pages·2016·0.34 MB·English

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
www.flsb.uscourts.gov

In re: Chapter 11 Cases

ADINATH CORP., et al.,1 Case No. 15-16885-LMI
Jointly Administered
Debtors.
__________________________________/

DEBTORS’ NOTICE OF FILING FULLY EXECUTED
TERM SHEET (EXHIBIT 4 TO DISCLOSURE STATEMENT
FOR PLAN PROPONENTS’ PLAN OF LIQUIDATION PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY CODE [ECF NO. 795])

Adinath Corp. and SFS, Ltd. (collectively, the “Debtors”), by and through their
undersigned counsel, hereby file the attached fully executed Term Sheet dated April 8, 2016,
between and among: (i) the Debtors; (ii) the Official Committee of Unsecured Creditors
appointed in the Debtors’ chapter 11 cases; and (iii) Swapnil Shah, Shail Shah, Bhavana Shah,
JNS INVT, LLC, Swapnil Shah Revocable Trust, Shail Shah Revocable Trust, Mahudi
International Corp., JNS Fashions, LLC, Arihant International, LLC, VIR International, LLC,
SNJ Apparel, LLC and New Dots, LLC, which is attached as Exhibit “4” to the Disclosure
Statement for Plan Proponents’ Plan of Liquidation Pursuant to Chapter 11 of the Bankruptcy

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification
number, are Adinath Corp. (4843) and SFS, Ltd. (n/k/a Simply Fashion Stores, Ltd.) (6230). The
address for the Debtors is 2110 N.W. 95th Avenue, Miami, FL 33172.

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Code [ECF No. 795] dated April 8, 2016.
Dated: April 15, 2016 Respectfully submitted,

BERGER SINGERMAN LLP
Counsel for the Debtors and Debtors in
Possession
1450 Brickell Avenue, Ste. 1900
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]

By: /s/ Christopher A. Jarvinen
Christopher A. Jarvinen
Florida Bar No. 21745
[email protected]
Paul Steven Singerman
Florida Bar No. 378860
[email protected]

2

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EXECUTION COPY

TERM SHEET

This term sheet (the “Term Sheet”) sets forth the principal terms of an agreement
between The Official Committee (the “Committee”) of Unsecured Creditors of Adinath Corp.
and Simply Fashion Stores, Ltd. (together, the “Debtors”) and the Debtors on the one hand, and
each of Swapnil Shah, Shail Shah, Bhavana Shah, JNS INVT, LLC, Swapnil Shah Revocable
Trust, Shail Shah Revocable Trust, Mahudi International Corp., JNS Fashions, LLC, Arihant
International, LLC, VIR International, LLC, SNJ Apparel LLC and New DOTS, LLC
(collectively, the “Shah Parties”) resolving and settling the various disputes between the parties
as of the date of this Term Sheet. Under this settlement, the Debtors and the Committee shall
prepare, file and prosecute to confirmation a joint plan of liquidation (the “Plan”) for the Debtors
and, in connection therewith, the Shah Parties shall (i) subordinate any and all claims of the Shah
Parties (whether secured, administrative, priority or general unsecured) to the claims of any and
all non-insider creditors (whether administrative, priority, priority tax and general unsecured),
(ii) shall support confirmation of the Plan, including voting to accept the Plan in respect of any of
the claims of the Shah Parties; (iii) make the Settlement Payment (as defined below) on the
effective date of the Plan, and (iv) consent to the use of any and all funds in the bankruptcy
estates, including cash collateral of JNS INVT, LLC, which Settlement Payment and funds in the
bankruptcy estate shall be available under the Plan on the Effective Date of the Plan to be used at
the direction and control of the Debtors and the Committee (a) to pay all allowed administrative
claims in the bankruptcy estates, (b) to pay all allowed priority claims, and (c) to provide a return
to general unsecured creditors of the Debtors.. In consideration of the above, on the effective
date of the Plan, the adversary proceeding initiated by the Committee against the Shah Parties
(Case No. 15-1540-BKC-LMI-A) shall be dismissed with prejudice and the Shah Parties, Cary
Garrido and the Shah Parties’ Representatives (as defined below) shall be released from any and
all claims that were or could have been asserted by the Committee, the Committee members, the
Debtors and/or the Debtors’ estates in such adversary proceeding or any other lawsuit as set forth
below.
THIS TERM SHEET REFLECTS THE MATERIAL TERMS OF THE SETTLEMENT
BETWEEN THE PARTIES HERETO. THIS TERM SHEET IS BEING APPENDED TO THE
DEBTORS’ PLAN BEING FILED AS OF THE DATE HEREOF, PURSUANT TO WHICH
THE DEBTORS AND THE COMMITTEE SEEK, AMONG OTHER THINGS, APPROVAL
OF THE SETTLEMNT CONTAINED HERIEN UNDER BANKRUPTCY RULE 9019
CONTEMPORANEOUS WITH CONFIRMATION OF THE PLAN. OTHER THAN THIS
TERM SHEET, THE PLAN AND THE CONFIRMATION ORDER REFLECTING AND
APPROVING THE SETTLEMENT CONTAINED HEREIN, THE PARTIES CONTEMPLATE
THAT THE ONLY OTHER DOCUMENTS REQUIRED TO BE EXECUTED AND
DELIVER4ED IN CONNECTION HEREWITH WILL BE A SEPARATE GENERAL
RELEASE DOCUMENTING THE RELEASE PROVIDED FOR BELOW.

1. Plan of Liquidation: The Debtors and the Committee shall prepare, file and prosecute to
confirmation the Plan that provides for the orderly wind-down of the Debtors’ estates
through the Plan. The Shah Parties agree to support confirmation of the Plan as set forth

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herein. The Plan shall constitute a settlement pursuant to Bankruptcy Rule 9019 of all
disputes between the Debtors, the Debtors’ estates, the Committee and the Shah Parties
(including Cary Garrido and the Shah Parties’ Representatives) pursuant to Bankruptcy
Rule 9019 pursuant to the terms hereof. The Debtor, the Committee and the Shah Parties
(and their respective professionals) shall use their best efforts to achieve confirmation of
the Plan as soon as reasonably possible, which best efforts shall include (i) a voluntary
waiver of at least $200,000 in fees by the Committee’s professionals and $60,000 by the
Debtors’ professionals, (ii) an agreement to modify and/or delete any term of the Plan if
required by the Bankruptcy Court in order to achieve confirmation of the Plan, provided
that such term does not prevent the Shah Parties from obtaining the benefits of the
settlement described herein, and (iii) not withdrawing or seeking to withdraw the Plan in
the event the Bankruptcy Court disallows any portion of the fees requested by the
Committee’s professionals and/or the Debtors’ professionals.
2. Estates’ Causes of Action: In addition to including customary provisions for liquidating
plans, the Plan shall provide for the vesting of all of the estates’ causes of action,
including chapter 5 avoidance actions, that have not been released pursuant hereto in a
person or entity appointed by the Committee. The Plan shall further provide that all such
estates’ causes of action shall be pursued, prosecuted and compromised without further
order of the Court and only at the direction of or with the consent of the Committee or its
successor in interest.
3. Shah Parties’ Claims: In order to consummate the Plan and effectuate the settlement
contemplated herein, each of the Shah Parties agrees to subordinate any and all secured,
administrative, priority and unsecured claims they have or may assert against the Debtors,
the Committee or the Debtors’ estates to the claims of any and all non-insider creditors
(whether administrative, priority, priority tax and general unsecured).
4. Settlement Payment: On the effective date of the Plan, and in consideration of the
settlement and compromise contained herein, the Shah Parties (i) shall make a payment to
the Debtors in the fixed amount of $650,000 (the “Settlement Payment”), and (ii) shall
consent to the use of funds in the bankruptcy estates, including the cash collateral of JNS
INVT, LLC. The Settlement Payment and estate funds shall be used to fund the
obligations under and in connection with confirmation of the Plan on the Effective Date
of the Plan, including at the direction and control of the Debtors and the Committee to
pay all allowed administrative, priority, and priority tax claims, and to distribute the
remainder to the holders of allowed general unsecured claims.
5. Adequate Protection Payments. JNS INVT, LLC agrees that the Debtors shall.not be
required to make any adequate protection interest payments to JNS INVT, LLC from and
after the payment made in March 2016 through the date the Bankruptcy Court either
approves or denies the settlement described herein.
6. Payment of Committee Professional Fees. The Shah Parties and the Debtor shall not
object to the payment of up to $100,000 in allowed professional fees to the professionals
employed by the Committee from unencumbered funds in the bankruptcy estate, provided
however that JNS INVT, LLC reserves all of its rights in respect of the payment of such

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fees, including in respect of its super-priority administrative expense claim, in the event
the settlement described herein is not approved by the Bankruptcy Court.
7. General Releases: The Debtors, their bankruptcy estates and the Committee shall provide
a general release to the Shah Parties, Cary Garrido and the Shah Parties’ Representatives
of the Adversary Proceeding Claims (as defined in the Plan, including all claims and
causes of action that were or could have been asserted by the Debtors, their estates and
the Committee, whether in the Adversary Proceeding (defined below) or otherwise,
which release shall be incorporated into the Plan. On the effective date of the Plan, the
adversary proceeding (the “Adversary Proceeding”) currently pending as Case No. 15-
1540-BKC-LMI-A in the United States Bankruptcy Court for the Southern District of
Florida shall be dismissed with prejudice. On the Effective Date of the Plan, each
member of the Committee and the Shah Parties (including Cary Garrido) shall exchange
mutual general releases of any and all claims and causes of action that either may have
against the other related in any way to the Debtors, the Debtors’ business operations, the
bankruptcy estates and the claims of such Committee members in the bankruptcy estates;
provided however that such releases shall not affect any rights of either party under any
written personal or cross-corporate guarantees of the Debtors’ obligations executed by
any of the Shah Parties directly to and in favor of a Committee member in connection
with the Debtors’ prepetition operations. For purposes of this Term Sheet and the
settlement contained herein, the Shah Parties’ Representatives shall mean (i) with respect
to any Shah Party which is a limited liability company or a corporation, any and all
shareholders, officers, directors, members, managers, employees, representatives,
attorneys and/or agents of each such limited liability company or corporation, (ii) with
respect to any Shah Party which is a trust, any and all grantors, trustees, beneficiaries,
employees, representatives, attorneys and/or agents of each such trust, and (iii) any and
all mediate, intermediate and/or subsequent transferees of any property of the Estate(s)
initially transferred to or for the benefit of any Shah Party, Cary Garrido and/or any
person or entity referred to in subclauses (i) and (ii) above.
8. Tolling of all Applicable Deadlines: Effective upon the execution of this Tern Sheet, all
applicable deadlines (including deadlines to answer or respond to the amended complaint
therein) with respect to the Adversary Proceeding and all statutes of limitations with
applicable to any and all claims that may be asserted by the Committee therein shall be
tolled, and the parties shall cooperate with each other to file any pleadings with the Court
necessary to effect any such extensions or tolling.
9. Non-Admission of Liability: The parties shall agree that they have entered into this Term
Sheet and shall support the Plan in compromise of disputed claims and that entry into this
Term Sheet or support for the Plan is not an admission of any liability or wrongdoing on
the part of the Shah Parties.
10. Further Assurances: The parties agree to execute all documents and take all necessary
steps to effectuate the settlements and consummate the Plan as contemplated herein.

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J L Consummxltiol1 of'f'ratls49tiol1s Described Herein: The parties hel'ctc agree to llse theil'
best effortS to consummate the Plan described in this Term She~t no later than June 30,
20,16,
12. Binding Effect. This Tern; Sheelshall be binding upon and shall imll'e to the ben~fit of
tho'pattles, theit successors, tlSsigJ'iS, heirs, executors, legal representatiVes and
administrators.
1.3. .status Quo Al1te: Each patty shall retain and preserve all orits rights, remedies;, clajm~,
counterclaims, defenscsnnd,nothing cOiJtalned heNiin shall he deeinecl.to be ti Wtily¢i:6f
any,s;tafmsQr cause's o{~ction 11l)filsllCh t.iIl1C'US the Plan has becpmeeff~ctive. At;,110
Jime MiU!' anything contained hel'einbe, deemed. an adluissl6i1 tif'IiabHityliyatiyo party
heretb"
Dated: ArjiH8,20,16
BY:OLEM SHOE CORPORATION
By:
Rbbcf:tOlcnibel'g
,BY: ROSBNTHAL & ROSENTHAL, INC.
By: _
Anthony Verrilli
I 299.124BO vi
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