Checks issued by a Disbursing Agent or the Litigation Trust on account of Allowed Claims shall be null and void if not negotiated within 120 days after the issuance of such check. In an effort to ensure that all Holders of Allowed Claims receive their allocated distributions, no later than 120 days after the issuance of such checks, Reorganized Greektown and the Litigation Trustee shall File with the Bankruptcy Court a list of the Holders of any un-negotiated checks. This list shall be maintained and updated periodically in the sole discretion of Reorganized Greektown and the Litigation Trustee for as long as the Debtors’ Chapter 11 Cases stay open. Requests for reissuance of any check shall be made directly to the Disbursing Agent or Litigation Trustee by the Holder of the relevant Allowed Claim with respect to which such check originally was issued. Any Holder of an Allowed Claim holding an un-negotiated check that does not request reissuance of such un-negotiated check within 180 days after the date of mailing or other delivery of such check shall have its Claim for such un-negotiated check discharged and expunged and be discharged and forever barred, estopped, and enjoined from asserting any such Claim against Reorganized Greektown, the Litigation Trust, or their property. In such cases, any Cash held for payment on account of such Claims shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code and become property of Reorganized Greektown or the Litigation Trust, as applicable, free of any Claims of such Holder with respect thereto. Nothing contained herein shall require Reorganized Greektown or Litigation Trustee to attempt to locate any Holder of an Allowed Claim.
Any payment in Cash to be made pursuant to the Plan shall be made at the election of Reorganized Greektown, the Disbursing Agent, or the Litigation Trustee, as applicable, by check or by wire transfer.
Pursuant to section 1141(d) of the Bankruptcy Code, except as otherwise specifically provided in the Plan or in the Confirmation Order or under the terms of the documents evidencing and order approving the Exit Facility, Confirmation of the Plan and the distributions and rights that are provided in the Plan shall be in complete satisfaction, discharge, and release, effective as of the Confirmation Date, of all Claims and causes of action, whether known or unknown, against, liabilities of, obligations of, rights against, and Interests in the Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims, rights, and Interests, including, but not limited to, Claims and Interests that arose before the Effective Date, any liability (including withdrawal liability) to the extent such Claims relate to services performed by employees of the Debtors prior to the Petition Date and that arise from a termination of employment or a termination of any employee or retiree benefit program, regardless of whether such termination occurred prior to or after the Effective Date, all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not (a) a Proof of Claim based upon such Claim, debt, right, or Interest is Filed or deemed Filed under section 501 of the Bankruptcy Code, (b) a Claim or Interest based upon such Claim, debt, right, or Interest is
Allowed under section 502 of the Bankruptcy Code, or (c) the Holder of such a Claim, right, or Interest accepted the Plan, The Confirmation Order shall be a judicial determination of the discharge of all Claims against and Interests in the Debtors, subject to the occurrence of the Effective Date.
Pursuant to section 510 of the Bankruptcy Code, the Reorganized Debtor reserves the right to re-classify any Allowed Claim or Allowed Interest in accordance with any contractual, legal, or equitable subordination relating thereto.
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| 3. | Releases |
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| | | a. | Release By Debtor Released Parties of Released Parties |
Pursuant to section 1123(b)(3) of the Bankruptcy Code, effective as of the Effective Date, each Debtor, in its individual capacity and as a debtor in possession for and on behalf of its Estate, and each other Debtor Released Party automatically and without further notice, consent or order shall be deemed to have, and shall have, conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged all Released Parties (subject only to the limitations of this section) for and from any and all claims or Causes of Action existing from the beginning of time through the Effective Date in any manner arising from, based on, or relating to, in whole or in part, the Exculpated Claims, the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtors and any Released Party, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, or any act, omission, occurrence, or event in any manner relating to any such Claims, Interests, restructuring, a Restructuring Transaction or the Chapter 11 Cases; provided, however, that the Debtors or Reorganized Greektown may assert any Retained Actions against the Released Parties solely for defensive purposes to defend against Claims asserted by the Released Parties against the Debtors or Reorganized Greekown (but such Retained Actions shall not be assignable except as assigned pursuant to the Plan), provided further, however, that nothing contained herein is intended to operate as a release of any potential claims based upon gross negligence or willful misconduct or Claims that are included within Litigation Trust Assets.
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| b. | Releases by Holders of Claims and Interests |
Except as otherwise provided in the Plan on or after the Effective Date, Holders of Claims and Interests shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged the Released Parties from any and all claims, interests, obligations, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including Exculpated Claims, any derivative claims asserted on behalf of any Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Person would have been entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ restructuring, a Restructuring Transaction, the Debtors’ Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the
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Plan, the business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims or Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan and Disclosure Statement, or related agreements or other documents, instruments, the Debtor/Lender Plan and Debtor/Lender Disclosure Statement, or related agreements or other documents, upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date; provided, however, that nothing contained herein is intended to operate as a release of any potential claims based upon gross negligence or willful misconduct, of Retained Actions, or of Litigation Trust Assets; provided further, however, that Section 7.3 of the Plan shall not release any Released Party from any Cause of Action held by a Governmental Unit existing as of the Effective Date based on (i) the IRC or other domestic state, city, or municipal tax code; (ii) the environmental laws of the United States or any domestic state, city or municipality; (iii) any criminal laws of the United States or any domestic state, city or municipality; (iv) the Exchange Act, the Securities Act, or other securities laws of the United States or any domestic state, city or municipality; (v) the ERISA; or (vi) the Michigan Gaming Control and Revenue Act, MCL 432.201, et seq., as amended, or the regulations promulgated thereunder.
Except as otherwise provided in the Plan, effective as of the Effective Date, no Released Party shall have or incur, and each Released Party is released and exculpated from, any Claim, obligation, cause of action, or liability for any Exculpated Claim, except for gross negligence or willful misconduct, but in all respects such Released Parties shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The Released Parties have, and on the Effective Date shall be deemed to have, participated in compliance with the applicable provisions of the Bankruptcy Code with regard to the distributions made pursuant to the Plan, and therefore are not, and on account of such distributions, shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan.
Except as provided in the Plan or the Confirmation Order, as of the Confirmation Date, all Persons that have held, currently hold, or may hold Claims or Interests that have been discharged or terminated pursuant to the terms of the Plan, including, without limitation, Article VII thereof, are permanently enjoined from taking any of the following actions against any of the Debtor Released Parties, or their property on account of any such discharged Claims, debts, liabilities, or terminated Interests or rights: (i) commencing or continuing, in any manner or in any place, any action or other proceeding; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree, or order; (iii) creating, perfecting, or enforcing any Lien or encumbrance; (iv) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability, or obligation due to the Debtors; and (v) commencing or continuing any action in any manner, in any place that does not comply, or is consistent, with the provisions of the Plan.
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| | |
| 6. | Protections Against Discriminatory Treatment |
Consistent with section 525 of the Bankruptcy Code and the Supremacy Clause of the United States Constitution, all Persons, including Governmental Units, shall not discriminate against Reorganized Greektown or deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, Reorganized Greektown, or other Persons with whom the Reorganized Greektown has been associated, solely because one or more of the Debtors has been a debtor under chapter 11 of the Bankruptcy Code, has been insolvent before the commencement of the Chapter 11 Cases (or during the Chapter 11 Cases but before the Debtors are granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11 Cases.
Except as otherwise expressly provided for in the Plan, each Reorganized Debtor, Newco or Newco Sub pursuant to the Bankruptcy Code (including section 553 of the Bankruptcy Code), applicable non-bankruptcy law, or as may be agreed by the Holder of a Claim, may setoff against any Allowed Claim and the distributions to be made pursuant to the Plan on account of such Allowed Claim (before any distribution is made on account such Allowed Claim), any Claims, rights, and Causes of Action of any nature that such Debtor or Reorganized Debtor, Newco or Newco Sub, as applicable, may hold against the Holder of such Allowed Claim, to the extent such Claims, rights, or Causes of Action against such Holder have not been otherwise compromised or settled on or prior to the Effective Date (whether pursuant to the Plan or otherwise); provided, however, that neither the failure to effect such a setoff nor the allowance of any Claim pursuant to the Plan shall constitute a waiver or release by such Reorganized Debtor, Newco or Newco Sub of any such Claims, rights, and Causes of Action that such Reorganized Debtor, Newco or Newco Sub may possess against such Holder. In no event shall any Holder of Claims be entitled to setoff any Claim against any Claim, right, or Cause of Action of the Debtors or Reorganized Debtor, Newco or Newco Sub, as applicable, unless such Holder has Filed a motion with the Bankruptcy Court requesting the authority to perform such setoff on or before the Confirmation Date, and notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to section 553 of the Bankruptcy Code or otherwise.
In no event shall any Holder of a Claim or Interest be entitled to recoup any Claim or Interest against any Claim, right, or Cause of Action of the Debtors or the Reorganized Debtor or Newco or Newco Sub, as applicable, unless such Holder actually has performed such recoupment and provided notice thereof in writing to the Debtors on or before the Confirmation Date, notwithstanding any indication in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any right of recoupment.
Except as otherwise provided in the Plan or in any contract, instrument, release, or other agreement or document created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to Articles III and VIII of the Plan, or with respect to the Pre-petition Lenders, the payment in full of the Claims of the Pre-petition Lenders, all
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mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and discharged, and all of the right, title, and interest of any Holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the Reorganized Greektown and its successors and assigns.
On and after the Effective Date, Reorganized Greektown may maintain documents in accordance with their current document retention policy, as may be altered, amended, modified, or supplemented by Reorganized Greektown.
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| 11. | Reimbursement or Contribution |
If the Bankruptcy Court disallows a Claim for reimbursement or contribution of a Person pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the extent that such Claim is contingent as of the time of allowance or disallowance, such Claim shall be forever disallowed and expunged notwithstanding section 502(j) of the Bankruptcy Code, unless before the Confirmation Date: (1) such Claim has been adjudicated as non-contingent; or (2) the relevant Holder of a Claim has Filed a non-contingent Proof of Claim on account of such Claim and a Final Order has been entered before the Confirmation Date determining such Claim as no longer contingent
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| 12. | Exclusions and Limitations on Exculpation and Releases |
Notwithstanding anything in the Plan to the contrary, no provision of the Plan or the Confirmation Order, including, without limitation, any exculpation or release provision, shall modify, release, or otherwise limit the liability of any Person not specifically released under the Plan, including, without limitation, any Person who is a co-obligor or joint tortfeasor of a Released Party or who is otherwise liable under theories of vicarious or other derivative liability.
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I. | Allowance and Payment of Certain Administrative Claims |
All final requests for payment of Professional Claims and requests for reimbursement of expenses of members of any official committee must be Filed no later than the Administrative Claims Bar Date. After notice and a hearing in accordance with the procedures established by the Bankruptcy Code and prior orders of the Bankruptcy Court, the Allowed Amount of such Professional Claims and expenses shall be determined by the Bankruptcy Court.
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| | | b. | Payment of Professional Claims |
Reorganized Greektown shall pay all unpaid portions of Allowed Professional Claims within thirty (30) days of entry of a Final Order Allowing such Claims. Any Professional may request that Reorganized Greektown provide adequate assurance of payment of Allowed Professional Claims. To the extent Reorganized Greektown and any such Professional cannot agree on the form of such adequate assurance, the Court shall determine upon motion by such Professional the form of such adequate assurance, if any is necessary.
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| | | | |
| | | c. | Post-Effective Date Retention |
On the Effective Date, any requirement that Professionals comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date or to make any disclosures pursuant to Bankruptcy Rules 2014 and 2016 shall terminate, and Reorganized Greektown shall employ and pay Professionals in the ordinary course of business.
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| 2. | Substantial Contribution Compensation and Expenses Bar Date |
Any Person who requests compensation or expense reimbursement for making a substantial contribution in the Chapter 11 Cases pursuant to sections 503(b)(3), (4), and/or (5) of the Bankruptcy Code shall File an application with the clerk of the Bankruptcy Court on or before the Administrative Claims Bar Date or be forever barred from seeking such compensation or expense reimbursement. The Bankruptcy Court shall determine any timely Filed request for compensation or expense reimbursement made under Section 2.5 of the Plan, and Reorganized Greektown shall pay any amount determined to be owed within thirty (30) days of entry of a Final Order approving such payment.
On the Effective Date (or as soon as practicable thereafter), all Allowed DIP Facility Claims shall be paid in full in Cash or otherwise satisfied in a manner acceptable to such Holders of DIP Facility Claims in accordance with the terms of the DIP Facility and the DIP Credit Agreement. Upon compliance with the preceding sentence, all Liens and security interests granted to secure the obligations under the DIP Credit Agreement shall be deemed cancelled and shall be of no further force and effect.
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| 4. | Other Administrative Claims |
All other requests for payment of an Administrative Claim (other than as set forth in Section 2.4 or 2.5 of the Plan) must be Filed with the Bankruptcy Court on or before the Administrative Claims Bar Date. Any Administrative Claim that (i) was required to be Filed before the Bar Date pursuant to the Bar Date Order, and (ii) was not so filed, shall be a Disallowed Claim. Any request for payment of an Administrative Claim pursuant to Section 2.7 of the Plan that is not Filed before the Administrative Claims Bar Date shall be disallowed and forever barred without the need for any objection. The Debtors or Reorganized Greektown may settle an Administrative Claim without further Bankruptcy Court approval. Unless an objection to an Administrative Claim is Filed within ninety (90) days of the Administrative Claims Bar Date (unless such objection period is extended by the Bankruptcy Court), such Administrative Claim shall be deemed Allowed in the amount requested. In the event that an objection to an Administrative Claim is filed, the Bankruptcy Court shall determine the Allowed Amount of such Administrative Claim. Notwithstanding the foregoing, no request for payment of an Administrative Claim need be Filed with respect to an Administrative Claim that has been previously paid in the ordinary course of business.
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| | |
J. | Confirmation and Consummation of the Plan |
| | |
| 1. | Conditions Precedent to Confirmation |
The following are conditions precedent to confirmation of the Plan that may be satisfied or waived in writing in accordance with Section 6.3 of the Plan:
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• | The Confirmation Order, the Plan, and all exhibits and annexes to each of the Plan and the Confirmation Order shall be in form and substance acceptable to each of the Noteholder Plan Proponents, and, solely with respect to the Confirmation Order, reasonably acceptable to the Ad Hoc Lender Group. |
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• | The Confirmation Order shall have been entered by the Bankruptcy Court on or prior to January 31, 2010 (or, in the event that a third party files a competing plan of reorganization, March 31, 2010), unless such date is extended or waived pursuant to Section 6.3 of the Plan; provided, however that the failure of the Bankruptcy Court to enter the Confirmation Order on or prior to January 31, 2010 or March 31, 2010, as applicable, is not directly caused by any action or inaction on the part of any member of the Ad Hoc Lender Group. |
| | |
| 2. | Conditions Precedent to Consummation |
The following are conditions precedent to Consummation, each of which may be satisfied or waived in writing in accordance with Section 6.3 of the Plan:
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• | The conditions precedent to the effectiveness of the Exit Facility and the Purchase and Put Agreement are satisfied or waived in accordance with the terms thereof by the parties thereto and Reorganized Greektown has access to funding under the Exit Facility and access to the proceeds of the Rights Offering, the Put Agreement, and the Direct Equity Purchase; |
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• | The Confirmation Order, with the Plan and all exhibits and annexes to each, in form and substance reasonably satisfactory to the Noteholder Plan Proponents, and, solely with respect to the Confirmation Order, reasonably acceptable to the Ad Hoc Lender Group, shall have been entered by the Bankruptcy Court and shall be a Final Order. |
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• | All actions, documents and agreements necessary to implement the Plan shall be in form and substance satisfactory to the Noteholder Plan Proponents, and, to the extent required under the Letter Agreement, the Ad Hoc Lender Group, and shall have been effected or executed as applicable. |
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• | All authorizations, consents and regulatory approvals required for the Plan’s effectiveness shall have been obtained and not revoked including, without limitation, any required City of Detroit or required MGCB regulatory approvals and consents, and, as required, Reorganized Greektown’s ownership structure, capitalization and management shall have been approved by the MGCB and the City of Detroit. |
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• | The Tax Rollback shall have become effective. |
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• | The Effective Date shall have occurred on or prior to June 30, 2010, unless such date is extended or waived pursuant to Section 6.3 of the Plan; provided, however that the failure of the Effective Date to occur on or prior to June 30, 2010 is not directly caused by any action or inaction on the part of any member of the Ad Hoc Lender Group. |
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• | Either the Debtors’ assumption of the current development agreement with the City of Detroit, or the Debtors’ entry into a revised development agreement with the City of Detroit acceptable to the Put Parties that complies with MCL § 432.206(1)(b) shall have been approved by a Final Order. |
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| 3. | Waiver of Conditions Precedent. |
The conditions to Confirmation or Consummation of the Plan set forth in Section 6.1.1, 6.2.2 and 6.2.3 thereof may be waived in whole or in part by written consent of the Noteholder Plan Proponents without further notice to, action, order, or approval of the Bankruptcy Court or any other Person. The conditions to Consummation of the Plan set forth in Sections 6.2.1, 6.2.5, and 6.2.7 thereof may be waived in whole or in part by written consent of all of the Put Parties (and, solely with respect to Section 6.2.1 of the Plan and to the extent required under the terms of the Letter Agreement, the Ad Hoc Lender Group) without further notice to, action, order, or approval of the Bankruptcy Court or any other Person. The conditions to Confirmation or Consummation of the Plan set forth in Section 6.1.2 and Section 6.2.6 thereof may only be extended or waived by written consent of both (a) the holders of a majority of the principal amount of the Secured Claims under the Pre-Petition Credit Agreement, and (b) the Debtors; provided, however, that if, in the case of either Section 6.1.2 or 6.2.6 of the Plan, the failure to satisfy such condition is directly caused by any action or inaction (after a written request from the Put Parties requesting that action be taken which is required to effect the provisions of the Stipulation) on the part of the Debtors or the DIP Agent or the Pre-petition Agent, such condition can be extended or waived without the consent of the Debtors; provided further, however, that the Debtors shall agree to grant such waiver or extension unless in the proper exercise of their fiduciary duties they determine that such consent should not be provided under the circumstances. The failure of the Put Parties, the Noteholder Plan Proponents, or the Pre-petition Lenders to exercise any of the foregoing rights shall not be deemed a waiver of any other rights, and each such right shall be deemed an ongoing right, which may be asserted at any time.
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| 4. | Effect of Non-Occurrence of Conditions to the Effective Date |
Each of the conditions to Consummation must be satisfied or waived pursuant to Section 6.2 or Section 6.3 of the Plan. If the conditions to Consummation have not been satisfied or waived pursuant to Section 6.2 or Section 6.3 of the Plan by June 30, 2010, unless such date is extended or waived pursuant to Section 6.3 of the Plan, the Confirmation Order shall be vacated according to its terms. Additionally, if the conditions to Consummation have not been satisfied or waived pursuant to Section 6.2 or Section 6.3 of the Plan, then upon motion by one or more of the Noteholder Plan Proponents made before the Effective Date and following a hearing on such motion, the Confirmation Order may be vacated by the Bankruptcy Court; provided, however, that notwithstanding the Filing of such motion to vacate, the Confirmation Order may not be vacated if the Effective Date occurs before the Bankruptcy Court enters a Final Order granting such motion. If the Confirmation Order is vacated pursuant to Section 6.4 of the Plan or otherwise, then except as provided in any Final Order vacating the Confirmation Order, the Plan
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will be null and void in all respects, including the discharge of Claims and termination of Interests pursuant to the Plan and section 1141 of the Bankruptcy Code and the assumptions, assignments, and rejections of executory contracts or unexpired leases pursuant to Article XIII of the Plan, and nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or release of any Claims, Interests, Causes of Action or Retained Actions; (2) prejudice in any manner the rights of any Debtor or any other Person; or (3) constitute an admission, acknowledgment, offer, or undertaking of any sort by any Debtor or any other Person.
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| 5. | Satisfaction of Conditions Precedent to Confirmation |
On entry of a Confirmation Order acceptable to the Debtors each of the conditions precedent to Confirmation, as set forth in Article VI of the Plan, shall be deemed to have been satisfied or waived in accordance with the Plan.
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K. | Plan Modification, Revocation, or Withdrawal |
| | |
| 1. | Plan Modification and Amendment |
Except as otherwise provided in the Plan, the Letter Agreement, or the Stipulation, the Noteholder Plan Proponents may, from time to time, propose amendments or modifications to the Plan prior to the Confirmation Date, without leave of the Bankruptcy Court; provided, however that the Noteholder Plan Proponents shall not propose any amendment or modification to the Plan that would alter the treatment of the Holders of Pre-petition Credit Agreement Claims pursuant to Section 3.2 of the Plan or the Holders of DIP Facility Claims pursuant to Section 2.6 of the Plan. Subject to certain restrictions and requirements set forth in section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 and those restrictions on modification set forth in the Plan and the Letter Agreement, the Noteholder Plan Proponents expressly reserve their rights to revoke or withdraw, or to alter, amend or modify materially the Plan with respect one or more Debtors, one or more times, after the Confirmation Date. After the Confirmation Date, the Noteholder Plan Proponents may, with leave of the Bankruptcy Court, and upon notice and opportunity for hearing to the affected Creditor(s) and the Notice Parties only, remedy any defect or omission, reconcile any inconsistencies in the Plan or in the Confirmation Order, or otherwise modify the Plan.
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| 2. | Effect of Confirmation on Plan Modifications |
Entry of a Confirmation Order shall mean that all modifications or amendments to the Plan since the solicitation thereof are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional disclosure or re-solicitation under Bankruptcy Rule 3019.
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| 3. | Plan Revocation or Withdrawal |
Except as expressly provided in the Letter Agreement or the Stipulation, the Noteholder Plan Proponents reserve the right to revoke or withdraw the Plan before the Confirmation Date and to File subsequent chapter 11 plans. If the Noteholder Plan Proponents revoke or withdraw the Plan, or if Confirmation or Consummation does not occur, then: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain of any Claim or Interest or Class of Claims or Interests), assumption, assignment, or rejection of executory contracts or unexpired leases effected by the
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Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void; and (3) nothing contained in the Plan shall: (i) constitute a waiver or release of any Claims, Interests, or Causes of Action; (ii) prejudice in any manner the right of such Debtors or any other Person; or (iii) constitute an admission, acknowledgement, offer, or undertaking of any sort by such Debtors or any other Person. Except as expressly provided in the Letter Agreement or the Stipulation, in the event that one or more, but less than all, of the Noteholder Plan Proponents seeks to revoke or withdraw the Plan, and subject, to the extent applicable, to the terms of the Stipulation, nothing in the Plan prevents any Noteholder Plan Proponent from continuing to seek Confirmation of the Plan or from Filing and seeking Confirmation of any alternative or competing Plan.
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L. | Retention of Jurisdiction |
Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, and subject to the MGCB retaining exclusive jurisdiction to determine all regulatory matters arising under the Michigan Gaming Act, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including without limitation, jurisdiction to:
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| • | Allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Interests; |
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| • | Decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Professionals authorized pursuant to the Bankruptcy Code or the Plan; |
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| • | Resolve any matters related to: (a) the assumption, assumption and assignment, or rejection of any executory contract or unexpired lease to which a Debtor is party or with respect to which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Cure or Claims arising therefrom, including Cure or Claims pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any executory contract or unexpired lease that is assumed; (c) Reorganized Greektown amending, modifying, or supplementing, after the Effective Date, pursuant to Article XIII of the Plan, any executory contracts or unexpired leases to the list of executory contracts and unexpired leases to be assumed or rejected or otherwise; and (d) any dispute regarding whether a contract or lease is or was executory or expired; |
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| • | Ensure that distributions to Holders of Allowed Claims and Interests are accomplished pursuant to the provisions of the Plan; |
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| • | Adjudicate, decide, or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications involving any Debtor that may be pending on the Effective Date; |
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| • | Adjudicate, decide, or resolve any and all matters related to any Causes of Action; |
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| • | Adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code; |
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| • | Enter and implement such orders as may be necessary or appropriate to execute, implement, or consummate the provisions of the Plan and Confirmation Order and all contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan or the Disclosure Statement; |
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| • | Enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code; |
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| • | Resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the Consummation, interpretation, or enforcement of the Plan or any Person’s obligations incurred in connection with the Plan; |
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| • | Issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any Person with Consummation or enforcement of the Plan; |
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| • | Resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the releases, injunctions, and other provisions contained in Article VII, and enter such orders as may be necessary or appropriate to implement such releases, injunctions, and other provisions; |
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| • | Resolve any and all cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by a Holder of a Claim for amounts not timely repaid; |
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| • | Enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated; |
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| • | Adjudicate any and all disputes arising from or relating to payments or distributions under the Plan; |
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| • | Consider any and all modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any Final Order, including the Confirmation Order; |
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| • | Hear and determine requests for the payment or distribution on account of Claims entitled to priority pursuant to section 507 of the Bankruptcy Code; |
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| • | Hear and determine any and all disputes arising in connection with the interpretation, implementation, or enforcement of the Plan or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with the Plan; |
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| • | Hear and determine any and all disputes arising under sections 525 or 543 of the Bankruptcy Code; |
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| • | Hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code with any tax incurred or alleged to be incurred by any Debtor or Reorganized Debtor or Newco or Newco Sub as a result of Consummation of the Plan being considered to be incurred or alleged to be incurred during the administration of these Chapter 11 Cases for purposes of section 505(b) of the Bankruptcy Code, of any entity’s request for the tax rollback pursuant to M.C.L. § 432.212; |
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| • | Hear and determine any and all disputes involving the existence, nature, or scope of the Debtors’ discharge, including any dispute relating to any liability arising out of the termination of employment or the termination of any employee or retiree benefit program, regardless of whether such termination occurred before or after the Effective Date; |
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| • | Determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, indenture, or other agreement or document created in connection with the Plan or the Disclosure Statement; |
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| • | Enforce any orders previously entered by the Bankruptcy Court; |
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| • | Hear any and all other matters not inconsistent with the Bankruptcy Code; and |
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| • | Enter an order or Final Decree concluding or closing the Chapter 11 Cases. |
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M. | Miscellaneous Provisions |
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| 1. | Immediate Binding Effect |
Subject to Article VI of the Plan and notwithstanding Bankruptcy Rules 3020(e), 6004(g), or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of the Plan shall be immediately effective and enforceable and deemed binding upon the Debtors, Reorganized Greektown, and any and all Holders of Claims or Interests (irrespective of whether any such Holders of Claims or Interests did not vote to accept or reject the Plan, voted to accept or reject the Plan, or is deemed to accept or reject the Plan), all Persons that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in the Plan and this Disclosure Statement, each Person acquiring property under the Plan, and any and all non-Debtor parties to executory contracts and unexpired leases with the Debtors.
On or before the Effective Date, the Noteholder Plan Proponents may File with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Debtors or Reorganized Greektown, as applicable, and all Holders of Claims or Interests receiving distributions pursuant
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to the Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan.
Except as expressly set forth in the Plan, the Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order. None of the Filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any Noteholder Plan Proponent with respect to the Plan or the Disclosure Statement shall be or shall be deemed to be an admission or waiver of any rights of any Noteholder Plan Proponent with respect to the Holders of Claims or Interests prior to the Effective Date.
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| 4. | Term of Injunctions or Stays |
Unless otherwise provided in the Plan or Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases under Bankruptcy Code sections 105 or 362 or any Bankruptcy Court order, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or Confirmation Order), will remain in full force and effect until the Effective Date.
All injunctions or stays in the Plan or Confirmation Order will remain in fall force and effect in accordance with their terms.
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| 5. | Termination of Liens and Encumbrances |
Any of the Debtors, Reorganized Greektown, and all parties in interest, including without limitation any Creditor, shall be required to execute any document reasonably requested by the other to memorialize and effectuate the terms and conditions of the Plan. This shall include without limitation any execution by any of the Debtors or Reorganized Greektown of Uniform Commercial Code financing statements and the execution by Creditors of any Uniform Commercial Code termination and mortgage releases and termination. Reorganized Greektown is expressly authorized to file any termination statement to release a Lien which is either discharged or satisfied as a result of the Plan or any payments made in accordance with the Plan.
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| 6. | Causes of Action; Standing |
Except as otherwise provided in the Plan, Reorganized Greektown or the Litigation Trust, as applicable, shall have the right to commence, continue, amend or compromise all Causes of Action available to any Debtor, the Estate or the debtor in possession, including without limitation all Avoidance Claims whether or not those Causes of Action or Avoidance Claims were the subject of a suit as of the Confirmation Date.
Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and the Bankruptcy Rules) or unless otherwise specifically stated, the laws of the State of Michigan, without giving effect to the principles of conflict of laws, shall govern the rights, obligations, construction, and implementation of the Plan, any agreements, documents, instruments, or contracts executed or entered into in connection with the Plan (except as
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otherwise set forth in those agreements, in which case the governing law of such agreement shall control).
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| 8. | Plan Provisions Nonseverable |
If, before Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (1) valid and enforceable pursuant to its terms; (2) integral to the Plan and may not be deleted or modified without the Debtors’ consent; and (3) nonseverable and mutually dependent.
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| 9. | Closing of Chapter 11 Cases |
Reorganized Greektown shall, promptly after the full administration of any of the Chapter 11 Cases, File with the Bankruptcy Court, all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close their Chapter 11 Cases.
Each Holder of a Claim or an Interest shall be deemed to have waived any right to assert any argument, including the right to argue that its Claim or Interest should be Allowed in a certain amount, in a certain priority, secured, or not subordinated by virtue of an agreement made with the Debtors or any other Person, if such agreement was not disclosed in the Plan, the Disclosure Statement, or papers Filed with the Bankruptcy Court before the Confirmation Date.
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| 11. | Conflicts and Plan Interpretation |
Except as set forth in the Plan, to the extent that any provision of the Disclosure Statement, or any other Bankruptcy Court order (other than the Confirmation Order) referenced in the Plan (or any Exhibits, schedules, appendices, supplements, or amendments to any of the foregoing), conflict with or are in any way inconsistent with any provision of the Plan, the Plan shall govern and control.
VI. STATUTORY REQUIREMENTS FOR PLAN CONFIRMATION
The following is a brief summary of the Plan Confirmation process. Claim and Interest Holders are encouraged to review the Bankruptcy Code’s relevant provisions and to consult their own attorneys.
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A. | The Confirmation Hearing |
Bankruptcy Code section 1128(a) requires the Bankruptcy Court, after notice, to hold a hearing on Plan Confirmation. Under Bankruptcy Code section 1128(b), any party in interest may object to Plan Confirmation.
The Confirmation Hearing will commence on January 12, 2010 at 10:00 a.m. (prevailing eastern time), before the Honorable Walter Shapero, United States Bankruptcy Judge, at the United States Bankruptcy Court for the Eastern District of Michigan, Southern Division, located at The Theodore Levin Courthouse, 211 West Lafayette Blvd., 10th Floor, Detroit, Michigan 48226. The Bankruptcy Court may adjourn the Confirmation Hearing from time to time without further notice except by announcing the adjournment date at the Confirmation Hearing or at any subsequent adjourned Confirmation Hearing.
To confirm the Plan, the Bankruptcy Court must find that, among other things, the requirements of Bankruptcy Code section 1129 are satisfied. In summary, these requirements include the following:
1. The Plan complies with all applicable Bankruptcy Code provisions.
2. The Noteholder Plan Proponents have complied with the applicable Bankruptcy Code provisions.
3. The Plan has been proposed in good faith and not by any means forbidden by law.
4. Any payment made or promised under the Plan for services or for costs and expenses in, or in connection with, the Chapter 11 Cases, or in connection with the Plan and incident to the cases, has been disclosed to the Bankruptcy Court, and any such payment made before Plan Confirmation is reasonable, or if such payment is to be fixed after Confirmation, such payment is subject to Bankruptcy Court approval as reasonable.
5. With respect to each Class of Impaired Claims or Interests, either each Claim or Interest Holder in such Class has accepted the Plan or will receive or retain under the Plan on account of such Claim or Interest, property of a value, as of the Effective Date, not less than the amount such Holder would receive or retain if the Debtors were liquidated on such date under chapter 7 of the Bankruptcy Code.
6. Each Class of Claims or Equity Interests entitled to vote on the Plan either has accepted the Plan or is not Impaired under the Plan, or the Plan can be confirmed without the approval of each voting Class under Bankruptcy Code section 1129(b).
7. Except to the extent a particular Claim Holder agrees to different treatment, Allowed Administrative Claims and other Allowed Priority Claims will be fully paid on, or as soon as reasonably practical after, the Effective Date.
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8. At least one Class of Impaired Claims or Equity Interests has accepted the Plan, determined without including any acceptance of the Plan by any Insider holding a Claim or Interest in such Class.
9. Confirmation is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtors or any successor to the Debtors under the Plan, unless the liquidation or reorganization is proposed in the Plan.
10. All fees of the type described in 28 U.S.C. § 1930, including the fees of the United States Trustee, will be paid as of the Effective Date.
11. The Plan addresses payment of retiree benefits in accordance with Bankruptcy Code section 1114.
The Noteholder Plan Proponents believe that the Plan satisfies the requirements of Bankruptcy Code section 1129, including, without limitation, that (i) the Plan satisfies or will satisfy all of the Bankruptcy Code’s statutory requirements; (ii) the Noteholder Plan Proponents have complied or will have complied with all of the Bankruptcy Code’s requirements; and (iii) the Noteholder Plan Proponents proposed the Plan in good faith.
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C. | Best Interests of Creditors Test |
Before it can confirm the Plan, the Bankruptcy Court must find (with certain exceptions) that the Plan provides, with respect to each Class, that each Claim or Interest Holder in such Class either: (a) has accepted the Plan; or (b) will receive or retain under the Plan property of a value, as of the Effective Date, not less than the amount that such Person would receive or retain if the Debtors liquidated under chapter 7 of the Bankruptcy Code.
In chapter 7 liquidation cases, unsecured creditors and interest holders are generally paid from available assets in the following order, with no junior class receiving any payments until all amounts due to senior classes have been fully paid or any such payment is provided for:
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| • | Secured creditors (to the extent of their collateral’s value); |
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| • | Administrative and other priority creditors; |
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| • | Unsecured creditors; |
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| • | Debt expressly subordinated by its terms or by Bankruptcy Court order; and |
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| • | Equity interest holders. |
As described in more detail in the Liquidation Analysis set forth in Exhibit B to this Disclosure Statement, the Noteholder Plan Proponents believe that the value of any distributions in a chapter 7 case would be less than the value of Plan distributions because, among other reasons, distributions in a chapter 7 case may not occur for a longer period of time, reducing the distributions’ present value. In this regard, it is possible that chapter 7 distributions could be delayed for a period for a trustee and its professionals to become knowledgeable about the
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Chapter 11 Cases and the Claims against the Debtors. In addition, chapter 7 distributions are likely to be significantly discounted because of the sale’s distressed nature, and because the chapter 7 trustee’s and professionals’ fees and expenses would likely exceed those of the Debtors’ Professionals (further reducing Cash available for distribution).
Before it can confirm the Plan, the Bankruptcy Court must also find that Confirmation is not likely to be followed by Reorganized Greektown’s liquidation or the need for further financial reorganization, unless that liquidation or reorganization is contemplated by the Plan. For purposes of showing that the Plan meets this feasibility standard, the Noteholder Plan Proponents have analyzed the Reorganized Greektown’s ability to meet their obligations under the Plan and to retain sufficient liquidity and capital resources to conduct their businesses.
The Noteholder Plan Proponents believe that, with a significantly deleveraged capital structure, the Debtors’ businesses will be viable. The decreased debt on the Debtors’ balance sheet will substantially reduce their interest expense, thereby improving cash flow.
Projections indicate that Reorganized Greektown should have sufficient cash flow to pay and service their debt obligations and to fund their operations. Accordingly, the Noteholder Plan Proponents believe that the Plan complies with Bankruptcy Code section 1129(a)(l l)’s financial feasibility standard.
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E. | Acceptance by Impaired Classes |
The Bankruptcy Code requires, as a condition to plan confirmation, that, except as described in the following Section, each class of impaired claims or equity interests accept the plan. A class not “impaired” under a plan is deemed to have accepted the plan and, therefore, solicitation of acceptances with respect to such class is not required. A class is “impaired” unless the plan: (a) leaves unaltered the legal, equitable and contractual rights to which the claim or interest entitles the Holder of that claim or interest; (b) cures any default and reinstates the original terms of the obligation; or (c) provides that, on the consummation date, the claim or interest Holder receives Cash equal to the allowed amount of its claim or, with respect to any interest, any fixed liquidation preference to which the interest Holder is entitled or any fixed price at which the debtors may redeem the security.
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F. | Confirmation Without Acceptance by All Impaired Classes |
Bankruptcy Code section 1129(b) allows a Bankruptcy Court to confirm a plan, even if all impaired classes entitled to vote on the plan have not accepted it, provided that the plan has been accepted by at least one impaired class. Bankruptcy Code section 1129(b) states that, notwithstanding an impaired class’s failure to accept a plan, the plan shall be confirmed, at the plan proponent’s request, in a procedure commonly known as “cram down,” so long as the plan does not “discriminate unfairly” and is “fair and equitable” with respect to each class of claims or interests impaired that is impaired under, and has not accepted, the plan.
Courts will take into account a number of factors in determining whether a plan discriminates unfairly, including the effect of applicable subordination agreements between
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parties. Accordingly, a plan could treat two unsecured-creditor classes differently without unfairly discriminating against either class.
The condition that a plan be “fair and equitable” to a non-accepting class of secured claims includes the requirements that: (a) the secured claim holders retain the liens securing their claims for the claims’ allowed amount, whether the debtors’ retain the applicable encumbered property or transfer it to another entity under the plan; and (b) each secured claim Holder in the class receives deferred Cash payments totaling at least the claims’ allowed amount with a present value, as of the plan’s effective date, at least equivalent to the value of the secured claimant’s interest in the applicable encumbered property.
The condition that a plan be “fair and equitable” with respect to a non-accepting class of unsecured claims requires that either: (a) the plan provides that each claim Holder in the class receive or retain property valued, as of the plan’s effective date of the plan, equal to the claim’s allowed amount; or (b) any claim or interest Holder junior to the claims of the class will not receive or retain under the plan any property for the junior claim or equity interest
The condition that a plan be “fair and equitable” to a non-accepting class of equity interests requires that either: (a) the plan provides that each interest Holder in the class receives or retains under the plan property of a value, as of the plan’s effective date, equal to the greater of (i) the allowed amount of any fixed liquidation preference to which the interest Holder is entitled, (if) any fixed redemption price to which the interest Holder is entitled, or (iii) the interest’s value;
or (b) if the class does not receive such an amount as required under (a), no class of equity-interests junior to the non-accepting class receives a distribution under the plan.
The Plan provides that if any Impaired Class rejects the Plan, the Noteholder Plan Proponents reserve the right to seek to Plan Confirmation under Bankruptcy Code section 1129(b)’s “cram down” provisions. If any Impaired Class rejects the Plan or is deemed to have rejected the Plan, the Noteholder Plan Proponents will request Plan Confirmation under Bankruptcy Code section 1129(b). The Noteholder Plan Proponents reserve the right to alter, amend, modify, revoke or withdraw the Plan or any Plan Exhibit or Schedule, including for the purpose of satisfying Bankruptcy Code section 1129(b)’s requirements, if necessary.
VII. CERTAIN FACTORS TO BE CONSIDERED BEFORE VOTING
Before voting on the Plan, all Impaired Claim Holders should read and carefully consider the factors set forth below, as well as all other information set forth or otherwise referenced in this Disclosure Statement. These factors should not, however, be regarded as constituting the only risks involved in connection with the Plan and its implementation.
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A. | Certain Bankruptcy Law Considerations |
The occurrence of nonoccurrence of any or all of the following contingencies, and any others, could affect distributions available to Allowed Claim and Interest Holders under the Plan but will not necessarily affect the validity of the vote of the Impaired Classes to accept or reject the Plan or necessarily require a re-solicitation of the votes of Claim and/or Interest Holders in
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such Impaired Classes.
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| 1. | Parties in Interest May Object to the Noteholder Plan Proponents’ Classification of Claims and Interests |
Bankruptcy Code section 1122 provides that a plan may place a claim or an equity interest in a particular class only if such claim or interest is substantially similar to other claims or equity interests in such class. The Noteholder Plan Proponents believe that the classification of Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Noteholder Plan Proponents created Classes of Claims and Interests, each encompassing Claims or Interests, as applicable, that are substantially similar to other Claims and Interests in each such Class. There can be no assurance, however, that the Bankruptcy Court will reach the same conclusion.
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| 2. | Failure to Satisfy Vote Requirements |
If votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm the Plan, the Noteholder Plan Proponents intend to seek, as promptly as practicable thereafter, Confirmation of the Plan. If sufficient votes are not received, the Noteholder Plan Proponents may seek to accomplish an alternative chapter 11 plan. There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to the Holders of Allowed Claims as those proposed in the Plan.
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| 3. | The Noteholder Plan Proponents May Not be Able to Secure Confirmation of the Plan |
There can be no assurance that the requisite acceptances to confirm the Plan will be received. Even if the requisite acceptances are received, there can be no assurance that the Bankruptcy Court will confirm the Plan. A nonaccepting Holder of an Allowed Claim might challenge either the adequacy of this Disclosure Statement or whether the balloting procedures and voting results satisfy the requirements of the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determines that this Disclosure Statement, the balloting procedures, and the voting results are appropriate, the Bankruptcy Court can still decline to confirm the Plan if it finds that any of the statutory requirements for Confirmation have not been met, including the requirement that the terms of the Plan do not “unfairly discriminate” and are “fair and equitable” to nonaccepting Classes.
Consummation of the Plan is also subject to certain conditions described in Article VI of the Plan. If the Plan is not consummated, it is unclear what distributions, if any, Holders of Allowed Claims or Interests will receive with respect to their Allowed Claims or Interests.
The Noteholder Plan Proponents, subject to the terms and conditions of the Plan, reserve the right to modify the terms and conditions of the Plan as necessary for Confirmation. Any such modifications could result in a less favorable treatment of any nonaccepting Class, as well as of any Classes junior to such nonaccepting Class, than the treatment currently provided in the Plan. Such a less favorable treatment could include a distribution of property to the Class affected by the modification of a lesser value than currently provided in the Plan or no distribution of property whatsoever under the Plan.
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| 4. | Nonconsensual Confirmation |
If any impaired class of claims or equity interests does not accept a chapter 11 plan, a bankruptcy court may nevertheless confirm such a plan at the plan proponents’ request if at least one impaired class has accepted the plan (with such acceptance being determined without including the vote of any Insider in such class) and, as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes.
The Noteholder Plan Proponents believe that the Plan satisfies these requirements and the Noteholder Plan Proponents may request such nonconsensual Confirmation in accordance with section 1129(b) of the Bankruptcy Code. Nevertheless, there can be no assurance that the Bankruptcy Court will reach this conclusion. In addition, the pursuit of nonconsensual Confirmation or Consummation of the Plan may result in, among other things, increased expenses relating to Professional Claims and the expiration of financing commitments.
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| 5. | The Debtors May Object to the Amount or Classification of a Claim |
Except as otherwise provided in the Plan, the Noteholder Plan Proponents reserve the right to object to the amount or classification of any Claim under the Plan. The estimates set forth in this Disclosure Statement cannot be relied on by any Holder of a Claim where such Claim is subject to an objection. Any Holder of a Claim that is subject to an objection thus may not receive its expected share of the estimated distributions described in this Disclosure Statement.
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| 6. | Risk of Non-Occurrence of the Effective Date |
Although the Noteholder Plan Proponents believe that the Effective Date will occur quickly after the Confirmation Date and after MGCB approval is obtained, there can be no assurance as to such timing or as to whether the Effective Date will, in fact, occur. If the Effective Date does not occur by June 30, 2010, and the Noteholder Plan Proponents cannot obtain a waiver of such condition as contained in the Stipulation, the Noteholder Plan Proponents are required to withdraw the Plan.
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| 7. | Contingencies Not to Affect Votes of Impaired Classes to Accept or Reject the Plan |
The distributions available to Holders of Allowed Claims under the Plan can be affected by a variety of contingencies, including, without limitation, whether the Debtors are consolidated and whether the Bankruptcy Court orders certain Allowed Claims to be subordinated to other Allowed Claims. The occurrence of any and all such contingencies, which could affect distributions available to Holders of Allowed Claims under the Plan, will not affect the validity of the vote taken by the Impaired Classes to accept or reject the Plan or require any sort of revote by the Impaired Classes.
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B. | Risk Factors That May Affect Allowed Claim Holders’ Recovery |
Claim Holders should read and consider carefully the risk factors set forth below, as well as the other information set forth in this Disclosure Statement and related documents, referred to
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or incorporated by reference in this Disclosure Statement, before voting to accept or reject the Plan. This Article provides information regarding potential risks in connection with the Plan, the financial projections attached to this Disclosure Statement, and other risks that could impact Reorganized Greektown’s future business operations and performance. These factors should not, however, be regarded as the only risks involved in connection with the Plan and its implementation.
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| | 1. | Reorganized Greektown May Not Be Able to Achieve Projected Financial Results or Meet Post-Reorganization Debt Obligations and Finance All Operating Expenses, Working Capital Needs, and Capital Expenditures |
Reorganized Greektown may not be able to meet its projected financial results or achieve projected revenues and cash flows that they have assumed in projecting future business prospects. To the extent that Reorganized Greektown may lack sufficient liquidity to continue operating as planned after the Effective Date, may be unable to service their debt obligations as they come due, or may not be able to meet their operational needs. Anyone of these failures may preclude Reorganized Greektown from, among other things, (a) enhancing its current customer offerings; (b) taking advantage of future opportunities; (c) growing its businesses; or (d) responding to competitive pressures. Further, a failure of Reorganized Greektown to meet its projected financial results or achieve projected revenues and cash flows could lead to cash flow and working capital constraints, which constraints may require the Reorganized Greektown to seek additional working capital. Reorganized Greektown may not be able to obtain such working capital when it is required. Further, even if Reorganized Greektown were able to obtain additional working capital, it may only be available on unreasonable terms. For example, Reorganized Greektown may be required to take on additional debt, the interest costs of which could adversely affect the results of the operations and financial condition of Reorganized Greektown. If any such required capital is obtained in the form of equity, the equity interests of the holders of New Common Stock and New Preferred Stock of Newco could be diluted. There is no guarantee that the XRoads Financial Projections will be realized.
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| | 2. | Estimated Valuation of Reorganized Greektown, the New Common Stock and New Preferred Stock, and the Estimated Recoveries to Holders of Allowed Claims Are Not Intended to Represent the Potential Market Values (if any) of the New Common Stock and New Preferred Stock |
The Noteholder Plan Proponents’ estimated recoveries to Allowed Claim Holders are not intended to represent the market value, if any, of the Newco’s New Common Stock and New Preferred Stock. The estimated recoveries are based on (1) the midpoint of the Debtors’ valuation analysis, as provided in connection with the Debtor/Lender Plan and attached hereto as Exhibit E; (2) the implied value of Newco’s Total Equity Shares derived from the Put Parties’ commitment to purchase at the Preferred Rights Offering Price the aggregate principal amount of Rights Offering Securities, not otherwise subscribed for in the Rights Offering; and (3) the midpoint of the valuation of Charles S. Edelman LLC, attached hereto as Exhibit D, using the XRoads Financial Projections, as defined below and attached hereto as Exhibit F. The valuations are based on numerous assumptions (the realization of many of which are beyond Reorganized Greektown’s control), including, without limitation: (a) the successful reorganization of the Debtors; (b) an assumed date for the occurrence of the Effective Date; (c) Reorganized
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Greektown’s ability to achieve the operating and financial results included in the Debtor’s Financial Projections and the XRoads Financial Projections; (d) Reorganized Greektown’s ability to maintain adequate liquidity to fund operations; and (e) the assumption that capital and equity markets remain consistent with current conditions.
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| | 3. | Many Tax Implications of the Debtors’ Bankruptcy and Reorganization Are Uncertain |
The tax laws with respect to the bankruptcy of limited liability companies are extremely complex and uncertain, and the tax characterization and tax consequences of the implementation of the Plan are also largely uncertain. Allowed Claim Holders should carefully review Article IX of this Disclosure Statement, “Certain United States Federal Income Tax Considerations,” to determine how the tax implications of the Plan and these Chapter 11 Cases may adversely affect the Holders, the Debtors and Reorganized Greektown.
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| | 4. | Potential Dilution Caused By Rights Offering, Warrants, or Management Agreement |
As stated above, the holders of Allowed Bond Claims shall have the right to purchase on the effective date of the Plan their pro rata share of One Million Eight Hundred Fifty Thousand (1,850,000) shares of the Rights Offering Securities, including New Preferred Stock to be issued by Newco. Additionally, as discussed above, New Common Stock may be issued to Management under the Management Agreement. If New Common Stock is issued to Management, or the New Preferred Stock is converted into New Common Stock, the ownership percentage represented by the New Common Stock distributed under the Plan will be diluted. Additionally, owners of New Preferred Stock may receive dividends in the form of New Common Stock which would dilute the ownership percentage represented by the New Common Stock distributed under the Plan.
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C. | Risk Factors that Could Negatively Impact the Debtors’ Businesses |
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| 1. | Bankruptcy-Related Risk Factors |
During the pendency of the Chapter 11 Cases, the Debtors are subject to various risks, including the following:
• The Chapter 11 Cases may adversely affect the Debtors’ business prospects and/or their ability to operate during the reorganization.
• The Chapter 11 Cases and the attendant difficulties of operating the Debtors’ business while attempting to reorganize the business in bankruptcy may make it more difficult to maintain and promote the Debtors’ facilities and attract customers to their facilities.
• The Chapter 11 Cases will cause the Debtors to incur substantial costs for Professional fees and other expenses associated with the Chapter 11 Cases.
• The Chapter 11 Cases may adversely affect the Debtors’ ability to maintain or renew their gaming licenses in the jurisdiction in which they operate.
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• The Chapter 11 Cases may prevent the Debtors from continuing to grow their businesses and may restrict their ability to pursue other business strategies. Among other things, the Bankruptcy Code limits the Debtors’ ability to incur additional indebtedness, make investments, sell assets, consolidate, merge or sell, or otherwise dispose of all or substantially all of their assets or grant Liens. These restrictions may place the Debtors at a competitive disadvantage.
• The Chapter 11 Cases may adversely affect the Debtors’ ability to maintain, expand, develop, and remodel their properties.
• Transactions by the Debtors outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit their ability to respond timely to certain events or take advantage of certain opportunities. The Debtors may not be able to obtain Bankruptcy Court approval or such approval may be delayed with respect to actions they seek to undertake in the Chapter 11 Cases.
• The Debtors may be unable to retain and motivate key executives and employees through the process of reorganization, and the Debtors may have difficulty attracting new employees. In addition, so long as the Chapter 11 Cases continue, the Debtors’ senior management will be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on business operations.
• The Debtors may be unable to maintain satisfactory labor relations through the process of reorganization.
• There can be no assurance as to the Debtors’ ability to maintain sufficient financing sources to fund their businesses and meet future obligations.
• There can be no assurance that the Noteholder Plan Proponents will be able to successfully develop, prosecute, Confirm, and Consummate the Plan with respect to the Chapter 11 Cases that is acceptable to the Bankruptcy Court and the Debtors’ Creditors, equity holders, and other parties in interest. Additionally, other third parties may seek to propose and confirm one or more plans of reorganization, to appoint a chapter 11 trustee, or to convert the cases to chapter 7 cases.
In addition, the uncertainty regarding the eventual outcome of the Debtors’ restructuring, and the effect of other unknown adverse factors could threaten the Debtors’ existence as a going concern. Continuing on a going-concern basis is dependent on, among other things, obtaining Bankruptcy Court approval of a reorganization plan, maintaining the Debtors’ gaming licenses, maintaining the support of key vendors and customers, and retaining key personnel, along with financial, business, and other factors, many of which are beyond the Noteholder Plan Proponents’ and the Debtors’ control. Under the priority scheme established by the Bankruptcy Code, unless creditors agree otherwise, pre-petition liabilities and postpetition liabilities must be satisfied in full before Interest Holders are entitled to receive any distribution or retain any property under the Plan or an alternative plan o reorganization. The ultimate recovery to Claim and/or Interest Holders, if any, will not be determined until Confirmation of the Plan or an alternative plan of reorganization. No assurance can be given as to what values, if any, will be
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ascribed in the Chapter 11 Cases to each of these constituencies or what types or amounts of distributions, if any, they would receive.
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| 2. | General Business and Financial Risk Factors |
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| | | a. | The Turmoil Presently Existing in the Financial Markets May Impact the Debtors’ Ability to Obtain Sufficient Financing and Credit on a Going Forward Basis |
The current crisis in the global credit and financial markets and the inability of corporate borrowers to access debt markets may materially and adversely affect the Debtors’ ability to obtain sufficient financing to operate their businesses on a going-forward basis.
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| | | b. | Economic and Political Conditions, Including a Worsening of the Current Recession and Other Factors Affecting Discretionary Consumer Spending, May Harm the Debtors’ Businesses, Financial Condition, and Results of Operations |
The Debtors’ businesses may be adversely affected by the recession currently being experienced in the United States since the Debtors are dependent on discretionary spending by their customers. The continuation or worsening of the current economic conditions could cause fewer people to spend money or cause people to spend less money at the Debtors’ facility and could adversely affect the Debtors’ revenues.
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| | | c. | Intense Competition Could Result in Loss of Market Share or Profitability |
The Debtors face intense competition in the market in which its gaming facility is located. The Debtors’ casino primarily competes with two other casinos located in Detroit, Michigan and one casino a short distance away in Windsor, Ontario, Canada. The Debtors’ casino also competes to a lesser degree with casinos in other locations, including on Native American lands and cruise ships, and with other forms of legalized gambling in Michigan and throughout the United States, including state-sponsored lotteries and racetracks. On November 3, 2009, Ohio voters passed a casino gaming initiative authorizing casino-style gaming at four locations in the state: Cincinnati, Cleveland, Columbus, and Toledo. Should casinos be built in these jurisdictions, Greektown will face increased competition.
Some of the Debtors’ competitors have significantly greater financial resources and, as a result, the Debtors may be unable to compete successfully with them in the future. Additionally, the Debtors’ highly leveraged position and the filing of the Chapter 11 Cases has had, and will likely continue to have, an adverse impact on the Debtors’ ability to compete.
In addition, online gaming, despite its current illegality in the United States, is a growing sector in the gaming industry. Online casinos offer a variety of games, including slot machines, roulette, poker, and blackjack. Web-enabled technologies allow individuals to game using credit or debit cards or other forms of electronic payment. The Noteholder Plan Proponents are unable to assess the impact that online gaming will have on their operations in the future and there is no assurance that the impact will not be materially adverse.
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Competition from other casino and hotel operators involves not only the quality of casino, hotel room, restaurant, entertainment, and convention facilities, but also hotel room, food, entertainment, and beverage prices. The Debtors’ operating results can be adversely affected by significant cash outlays for advertising and promotions and complimentary services to patrons, the amount and timing of which are partially dictated by the policies of their competitors and the Debtors’ efforts to keep pace. If the Debtors lack the financial resources or liquidity to match the promotions of competitors, the number of casino patrons may decline, which may have an adverse effect on their financial performance.
The Debtors’ ability to compete successfully will also depend on their ability to develop and implement strong and effective marketing campaigns both at their individual properties and across their businesses. To the extent they are unable to develop successfully and implement these types of marketing initiatives, the Debtors may not be successful in competing in their markets and their financial position could be adversely affected. The filing of the Chapter 11 Cases and the Debtors’ access to capital likely will also adversely impact their ability to develop and implement these types of initiatives.
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| | | d. | The Debtors Are Subject to Litigation which, if Adversely Determined, Could Result in Substantial Losses |
The Debtors are, from time to time, during the ordinary course of operating their businesses, subject to various litigation claims and legal disputes, including contract, lease, employment, and regulatory claims as well as claims made by visitors to the Debtors’ property.
Certain litigation claims may not be covered entirely or at all by the Debtors’ insurance policies or their insurance carriers may deny such coverage. In addition, litigation claims can be expensive to defend and may divert the Debtors’ attention from the operations of their businesses. Further, litigation involving visitors to the Debtors’ properties, even if without merit, can attract adverse media attention. As a result, litigation can have a material adverse effect on the Debtors’ businesses and, because the Debtors cannot predict the outcome of any action, it is possible that adverse judgments or settlements could significantly reduce their earnings or result in losses.
With certain exceptions, however, the filing of the Chapter 11 Cases operates as a stay with respect to the commencement or continuation of litigation against the Debtors that was or could have been commenced before the Petition Date. In addition, with respect to the litigation stayed by commencement of the Chapter 11 Cases, the Debtors’ liability is subject to discharge in connection with Confirmation of the Plan, with certain exceptions. Therefore, certain litigation claims against the Debtors may be subject to compromise in connection with the Chapter 11 Cases. This may reduce the Debtors’ exposure to losses in connection with the adverse determination of such litigation.
In connection with the matters covered in Section II.C.2 of this Disclosure Statement, the City of Detroit has taken the position that Greektown has failed to construct the theater component of the casino complex as required under the Development Agreement, and that such alleged failure is a zoning violation which, if not cured, could subject the casino to closure. The Debtors maintain that they have in fact fulfilled the requirement of a theater component to the
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casino complex, and therefore no such zoning violation exists and no such cure is necessary; and further, that under the City of Detroit’s zoning and permitting ordinances, even if a cure was necessary Greektown could effect such cure without any significant risk of a closure.
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| | | e. | Work Stoppages, Labor Problems, and Unexpected Shutdown May Limit the Debtors’ Operational Flexibility and Negatively Impact the Debtors’ Future Profits |
The Debtors are party to one or more collective-bargaining agreements with labor unions. There can be no assurance that the Debtors will be able to renegotiate the labor agreements that are currently in effect without incurring significant increases in their labor costs. Changes to their collective-bargaining agreements could cause significant increases in labor cost, which could have a material adverse impact on the Debtors’ businesses, financial condition, and results of operations.
In addition, the unions with which the Debtors have collective-bargaining agreements or other unions could seek to organize groups of employees that are not currently represented by unions. Union organization efforts may occur in the future, could cause disruptions to the Debtors’ businesses and result in significant costs, both of which could have a material adverse effect on the Debtors’ businesses, financial condition, and results of operations.
Finally, if the Debtors are unable to negotiate these agreements on mutually acceptable terms, the affected employees may engage in a strike instead of continuing to work without contracts or under expired contracts, which could have a materially adverse effect on the Debtors’ results of operations and financial condition. Any unexpected shutdown of the Debtors’ casino property for a work stoppage or strike action could have an adverse effect on their businesses and results of operations. Moreover, strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting the Debtors’ casino. There cannot be assurance that the Debtors can be adequately prepared for unexpected labor developments that may lead to a temporary or permanent shutdown of their casino property.
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| | | f. | Governmental Regulations and Taxation Policies Could Adversely Affect the Debtors’ Businesses, Financial Condition and Results of Operations |
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| | | (i) | Regulation by Gaming Authorities |
As stated more fully in Section II.C, above, the Debtors are subject to extensive regulation with respect to the ownership and operation of their gaming facility. The MGCB requires that the Debtors hold various licenses, qualifications, filings of suitability, registrations, permits, and approvals. The MGCB has broad powers with respect to the licensing of casino operations and may deny, revoke, suspend, condition, or limit the Debtors’ gaming license, impose substantial fines, temporarily suspend casino operations, and take other actions, any one of which could adversely affect the Debtors’ businesses, financial condition, and results of operations. In addition, the MGCB may decide to deny requests to transfer ownership interests in Reorganized Greektown as described in the Plan.
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| | | (ii) | Potential Changes in Legislation and Regulation |
From time to time, legislators and special interest groups propose legislation that would expand, restrict, or prevent gaming operations in the jurisdiction in which the Debtors operate. Further, from time to time, the jurisdiction could consider or enact legislation and referenda, such as bans on smoking in casinos and other entertainment and dining facilities, that could adversely affect the Debtors’ operations. Any restriction on or prohibition relating to the Debtors’ gaming operations, or enactment of other adverse legislation or regulatory changes, could have a material adverse effect on the Debtors’ businesses, financial condition, and results of operations.
The casino entertainment industry represents a significant source of tax revenues to the various jurisdictions in which casinos operate. Gaming companies are currently subject to significant state and local taxes and fees in addition to the federal and state income taxes that typically apply to corporations, and such taxes and fees could increase at any time. From time to time, various state and federal legislators and officials have proposed changes in tax laws or in the administration of such laws, including increases in tax rates, which would affect the gaming industry. Worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes and fees. In addition, state or local budget shortfalls could prompt tax or fee increases. Any material increase in assessed taxes, or the adoption of additional taxes or fees in the Debtors’ market could have a material adverse effect on the Debtors’ businesses, financial condition, and results of operations.
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| | | (iv) | Compliance with Other Laws |
The Debtors are also subject to a variety of other rules and regulations, including zoning, environmental, constructions and land-use, and regulations governing the sale of alcoholic beverages. Failure to comply with these laws could have a material adverse impact on the Debtors’ businesses, financial condition, and results of operations.
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| | | g. | Noncompliance with Environmental, Health, and Safety Regulations Could Adversely Affect the Debtors’ Results of Operations |
As the owner, operator, and developer of real property, the Debtors must address, and may be liable for, hazardous materials or contamination of these sites. The Debtors’ ongoing operations are subject to stringent regulations relating to the protection of the environment an handling of waste, particularly with respect to the management of wastewater from their facility. Any failure to comply with existing laws or regulations, the adoption of new laws or regulations with additional or more rigorous compliance standards, or the more rigorous enforcement of environmental laws or regulations could adversely affect the Debtors’ businesses, financial condition, and results of operations by increasing their expenses and limiting their future opportunities.
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| | | h. | Allegations of Food-Related Illnesses Could Negatively Affect the Debtors’ Results from Operations |
As an operator of a hotel and restaurants, the Debtors are or may be subject to complaints or litigation from consumers alleging illness, injury or other food quality, health, or operational concerns. Food-related illnesses may be caused by a variety of food-borne pathogens, such as e-coli or salmonella, and from a variety of illnesses transmitted by restaurant workers, such as hepatitis. The Debtors cannot control all of the potential sources of illness that can be transmitted from food or the Debtors’ water supply. If any person becomes ill, or alleges becoming ill, as a result of eating the Debtors’ food, the Debtors may be liable for damages, be subject to governmental regulatory action, be forced to shut down one or more of their restaurants, and/or receive adverse publicity, regardless of whether the allegations are valid or whether the Debtors are liable; all of which could adversely affect the Debtors’ businesses, financial condition, and results of operations.
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| | | i. | The Debtors Could Lose Key Employees |
The Debtors compete with other potential employers for employees, and the Debtors may not succeed in hiring and retaining the executive and other employees that they need. The inability to hire and retain qualified employees could adversely affect the Debtors’ businesses, financial condition, and results of operations.
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| | | j. | The Concentration and Evolution of the Slot Machine Manufacturing Industry Could Impose Additional Costs on the Debtors |
The majority of the Debtors’ gaming revenue is attributable to slot machines operated by the Debtors at their gaming facility. It is important, for competitive reasons, that the Debtors offer the most popular and technologically advanced slot machine games to their customers. A substantial majority of the slot machines in the United States in recent years were manufactured by a limited number of companies. A deterioration in the Debtors’ commercial arrangements with any of these slot machine manufacturers could result in the Debtors being unable to acquire the slot machines desired by the Debtors’ customers or could result in manufacturers significantly increasing the cost of these machines. Alternatively, significant industry demand for new slot machines may result in the Debtors being unable to acquire the desired number of new slot machines or result in manufacturers increasing the cost of these machines.
The inability to obtain new and up-to-date slot machine games could impair the Debtors’ competitive position and result in decreased gaming revenues at their casino. In addition, increases in the costs associated with acquiring slot-machine games could adversely affect the Debtors’ profitability.
In recent years, the prices of new slot machines have risen more rapidly than the domestic rate of inflation. Furthermore, in recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring gaming operators to execute participation-lease arrangements for them to be able to offer such machines to patrons. Participation slot-machine-leasing arrangements typically require the payment of a
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fixed daily rental fee. Such agreements may also include a percentage payment to the manufacturer of “coin-in” or “net win.” Generally, a slot machine participation lease is more expensive over the long term than the cost of purchasing a new slot machine.
For competitive reasons, the Debtors may be forced to purchase new slot machines, replace older slot machines with more costly machines, or enter into participation-lease arrangements that are more expensive than the costs currently associated with the continued operation of existing slot machines. If the newer slot machines do not result in sufficient incremental revenues to offset the increased investment and participation-lease costs, the Debtors’ businesses, financial condition, and results of operations could be adversely affected.
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| | | k. | The Debtors May Not Have or Be Able to Obtain Sufficient Insurance Coverage to Replace or Cover the Full Value of Losses the Debtors May Suffer |
The Debtors evaluate their risks and insurance coverage on a regular basis. While the Noteholder Plan Proponents believe they have obtained sufficient insurance coverage with respect to the occurrence of casualty damage to cover losses that could result from the acts or events described above, the Debtors may not be able to obtain sufficient or similar insurance for later periods and may not be able to predict whether the Debtors will encounter difficulty in collecting on any insurance claims they may submit, including claims for business interruption.
In addition, while the Debtors maintain insurance against many risks to the extent and in amounts that the Noteholder Plan Proponents believe are reasonable, these policies do not cover all risks. Furthermore, portions of the Debtors’ businesses are difficult or impracticable to insure. Therefore, after carefully weighing the costs, risks, and retaining versus insuring various risks, as well as the availability of certain typos of insurance coverage, the Debtors occasionally opt to retain certain risks not covered by their insurance policies. Retained risks are associated with deductible limits or self-insured retentions, partial self-insurance programs, and insurance policy coverage ceilings.
The Debtors carry certain insurance policies that, in the event of certain substantial losses, may not be sufficient to pay the full current market value or current replacement cost of damaged property. As a result, if a significant event were to occur that is not fully covered by the Debtors’ insurance policies, the Debtors may lose all, or a portion of, the capital they have invested in a property, as well as the anticipated future revenue from such property, and the Debtors’ businesses, financial condition, and results of operations could be adversely affected. Consequently, uninsured losses may negatively affect the Debtors’ financial condition, liquidity and results of operations. There can be no assurance that the Debtors will not face uninsured losses pertaining to the risks they have retained.
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| | | l. | The Debtors’ Business, Financial Condition, and Results of Operations Could Be Materially Adversely Affected by the Occurrence of Natural Disasters or Other Catastrophic Events, Including War and Terrorism |
Natural disasters, such as tornados, floods, fires, and earthquakes could adversely affect
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the Debtors’ businesses and operating results. The Noteholder Plan Proponents cannot predict the impact that future natural disasters will have on the Debtors’ ability to maintain their customer base or sustain their business activities.
Catastrophic events such as terrorist and war activities in the United States and elsewhere have had a negative effect on travel and leisure expenditures, including lodging, gaming, and tourism. In addition, given that the Debtors’ sole gaming facility is located in Detroit, Michigan, any man-made or natural disasters in or around Detroit could have a significant adverse effect on their businesses, financial condition, and results of operations. The Debtors cannot predict the extent to which such events may affect them, directly or indirectly, in the future. The Noteholder Plan Proponents also cannot ensure that the Debtors will be able to obtain any insurance coverage with respect to occurrences of terrorist acts and any losses that could result from these acts.
The prolonged disruption at the Debtors’ property due to natural disasters, terrorist attacks, or other catastrophic events could adversely affect the Debtors’ businesses, financial condition, and results of operations.
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| | | m. | Energy Price Increases May Adversely Affect the Debtors’ Businesses, Financial Condition, and Results of Operations |
The Debtors casino property uses significant amounts of electricity, natural gas, and other forms of energy. While the Debtors have not experienced shortages of energy or fuel to date, substantial increases in energy and fuel prices or shortage of energy or fuel in the United States may negatively affect their businesses, financial condition, results of operations in the future. The extent of the impact is subject to the magnitude and duration of the energy and fuel-price increase, but this impact could be material. In addition, energy and gasoline prices increases in the Detroit metropolitan area and surrounding areas could result in a decline in disposable income of potential customers and a corresponding decrease in visitation and spending at the Debtors’ property, which could negatively impact their revenues. Further, increases in fuel prices and resulting increases in transportation costs, could adversely affect the Debtors’ businesses, financial condition, and results of operations.
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| | | n. | The Debtors’ Businesses May Be Materially Adversely Affected by Conditions in the Automotive Industry |
The Debtors casino property is located in Detroit, Michigan, a metropolitan area whose economy is heavily dependent on the health of the global automotive industry. Currently, the automotive industry is experiencing a dramatic downturn, the future length and scope of which cannot be predicted. A prolonged continuation or worsening of this downturn could materially impact the disposable income of Reorganized Greektown’s customers, causing a decrease in visitation and spending at the Debtors’ properties. Such events could adversely impact the Debtors’ businesses, financial condition, and results of operations.
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D. | Risks Associated With Forward-Looking Statements |
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| 1. | Financial Information Is Based on the Debtors’ Books and Records and, Unless Otherwise Stated, No Audit Was Performed |
The financial information in this Disclosure Statement has not been audited. In preparing this Disclosure Statement, the Noteholder Plan Proponents relied on financial data derived from the Debtors’ books and records that was available at the time of such preparation. Although the Noteholder Plan Proponents have used their reasonable business judgment to ensure the accuracy of the financial information provided in this Disclosure Statement, and while the Noteholder Plan Proponents believe that such financial information fairly reflects the financial condition of the Debtors, the Noteholder Plan Proponents are unable to warrant or represent that the financial information is without inaccuracies.
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| 2. | Financial Projections and Other Forward-looking Statements Are Not Assured, Are Subject to Inherent Uncertainty Due to the Numerous Assumptions on which They Are Based and, as a Result, Actual Results May Vary |
This Disclosure Statement contains various projections concerning the financial results of the Reorganize Debtors’ operations, including the Financial Projections that are, by their nature, forward looking, and which projections are necessarily based on certain assumptions and estimates. Should any or all of these assumptions or estimates ultimately prove to be incorrect, the actual future experiences, of Reorganized Greektown may turn out to be different from the XRoads Financial Projections. Due to the inherent uncertainties associated with projecting financial results generally, the projections contained in this Disclosure Statement will not be considered assurances or guarantees of the amount of funds or the amount of Claims that may be Allowed in the various Classes.
Specifically, the projected financial results contained in this Disclosure Statement reflect numerous assumptions concerning the anticipated future performance of Reorganized Greektown, some of which may not materialize, including, without limitation assumptions concerning: (a) the timing of Confirmation and Consummation of the Plan in accordance with its terms; (b) the anticipated future performance of Reorganized Greektown, including without limitation, the Debtors’ ability to maintain or increase revenue and gross margins, control future operating expenses, or make necessary capital expenditures; (c) general business and economic conditions; (d) overall industry performance and trends; (e) the Debtors’ ability to maintain market strength and receive vendor support by way of favorable purchasing terms; and (f) consumer preferences continuing to support the Debtors’ business plan.
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E. | Disclosure Statement Disclaimer |
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| 1. | Information Contained in this Disclosure Statement Is for Soliciting Votes and the Rights Offering |
The information contained in this Disclosure Statement is for the purpose of soliciting votes on the Plan and for providing information in connection with the Rights Offering and may not be relied on for any other purposes.
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| 2. | This Disclosure Statement Was Not Approved by the U.S. Securities and Exchange Commission |
This Disclosure Statement was not filed with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act or applicable state securities laws. Neither the SEC nor any state regulatory agency has passed on the accuracy or adequacy of this Disclosure Statement, or the Exhibits or the statements contained in this Disclosure Statement, and any representation to the contrary is unlawful.
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| 3. | Reliance on Exemptions from Registration under the Securities Act |
This Disclosure Statement has been prepared under section 1125 of the Bankruptcy Code and Bankruptcy Rule 3016(b) and is not necessarily in accordance with federal or state securities laws or other similar laws. The offer of the New Preferred Stock and New Common Stock to certain Claim Holders has not been registered under the Securities Act or similar state securities laws or “blue sky” laws.
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| 4. | No Legal or Tax Advice Is Provided to You by this Disclosure Statement |
This Disclosure Statement is not legal advice to you. The contents of this Disclosure Statement should not be construed as legal, business, or tax advice. Each Claim and Interest Holder should consult his or her own legal counsel and accountant for legal, tax, and other matters related to his or her Claim or Interest. This Disclosure Statement may not be relied on for any purpose other than to determine how to vote on the Plan or object to Confirmation of the Plan.
The information and statements contained in this Disclosure Statement will neither (a) constitute an admission of any fact or liability by any Person (including, without limitation, the Noteholder Plan Proponents) nor (b) be deemed evidence of the tax or other legal effects of the Plan on the Debtors, Reorganized Greektown, Allowed Claim or Interest Holders, or any other parties in interest.
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| 6. | Failure to Identify Litigation Claims or Projected Objections |
No reliance should be placed on the fact that a particular litigation claim or projected objection to a particular Claim or Interest is, or is not, identified in this Disclosure Statement. The Debtors or Reorganized Greektown may seek to investigate, file, and prosecute Claims and Interests and may object to Claims after the Confirmation or Effective Date of the Plan irrespective of whether this Disclosure Statement identifies such Claims or objections to Claims.
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| 7. | No Waiver of Right to Object or Right to Recover Transfers and Assets |
The vote by a Holder of an Allowed Claim for or against the Plan does not constitute a waiver or release of any Claims, Causes of Action, or rights of the Noteholder Plan Proponents, the Debtors or Reorganized Greektown (or any party in interest, as the case may be) to object to that Holder’s Allowed Claim, or recover any preferential, fraudulent, or other voidable transfer
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of assets, regardless of whether any Claims or Causes of Action of the Noteholder Plan Proponents, the Debtors or the Debtors’ respective Estates are specifically or generally identified herein.
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| 8. | Information Was Provided by the Debtors and Was Relied on by the Noteholder Plan Proponents’ Professionals |
The Professionals have relied on information provided by the Debtors in connection with the preparation of this Disclosure Statement. Although the Professionals have performed certain limited due diligence in connection with the preparation of this Disclosure Statement, they have not verified independently the information contained in this Disclosure Statement.
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| 9. | Potential Exists for Inaccuracies, and the Noteholder Plan Proponents Have No Duty to Update |
The statements contained in this Disclosure Statement are made by the Noteholder Plan Proponents as of the date of this Disclosure Statement, unless otherwise specified, and the delivery of this Disclosure Statement after that date does not imply that there has not been a change in the information since that date. While the Noteholder Plan Proponents have used their reasonable business judgment to ensure the accuracy of all of the information provided in this Disclosure Statement and in the Plan, the Noteholder Plan Proponents nonetheless cannot, and do not, confirm the current accuracy of all statements appearing in this Disclosure Statement. Further, although the Noteholder Plan Proponents may subsequently update the information in this Disclosure Statement, the Noteholder Plan Proponents have no affirmative duty to do so unless ordered to do so by the Bankruptcy Court.
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| 10. | No Representations Outside this Disclosure Statement Are Authorized |
No representations concerning or relating to the Debtors, these Chapter 11 Cases, or the Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. Any representations or inducements made to secure your acceptance or rejection of the Plan other than as contained in, or included with, this Disclosure Statement, should not be relied upon by you in arriving at your decision. You should promptly report unauthorized representations or inducements to the Noteholder Plan Proponents’ counsels, the Creditors’ Committee counsel, and the United States Trustee.
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F. | Alternatives to Confirmation and Consummation of the Plan |
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| 1. | Liquidation under Chapter 7 |
If no plan can be confirmed, the Debtors’ Chapter 11 Cases may be converted to a case (or cases) under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be elected to liquidate the assets of the Debtors for distribution in accordance with the priorities established by the Bankruptcy Code. A discussion of the effects that a chapter 7 liquidation would have on the recoveries of Holders of Claims and Interests and the Debtors’ Liquidation Analysis is set forth above, the Noteholder Plan Proponents believe that liquidation under chapter 7 would result in (1) smaller distributions being made to Creditors than those provided for in the Plan because of: (a) the likelihood that the assets of the Debtors would have to be sold or otherwise disposed
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of in a less orderly fashion over a shorter period of time; (b) additional administrative expenses involved in the appointment of a trustee; and (c) additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of the Debtors’ operations; and (2) no distributions being made to any class junior to the Holders of Allowed Secured Claims.
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| 2. | Alternative Plan of Reorganization |
If the Plan is not confirmed, the Debtors may seek expedited confirmation of the Debtor/Lender Plan. Additionally, the Noteholder Plan Proponents, the Debtors, or any other party in interest could attempt to formulate a different plan. Such a plan might involve either a reorganization and continuation of the Debtors’ business or an orderly liquidation of their assets. With respect to an alternative plan, the Noteholder Plan Proponents have explored various alternatives in connection with the formulation and development of the Plan, The Noteholder Plan Proponents believe that the Plan, as described herein, enables Creditors to realize the most value under the circumstances. In a liquidation under chapter 11, the Debtors’ assets would be sold in an orderly fashion over a more extended period of time than in a liquidation under chapter 7, possibly resulting in somewhat greater (but indeterminate) recoveries than would be obtained in chapter 7. Further, if a trustee were not appointed, because such appointment is not required in a chapter 11 case, the expenses for Professional fees would most likely be lower than those incurred in a chapter 7 case. Although preferable to a chapter 7 liquidation, the Noteholder Plan Proponents believe that any alternative liquidation under chapter 11 is a much less attractive alternative to Creditors and Interest Holders than the Plan because of the greater return provided by the Plan.
VIII. SECURITIES LAWS MATTERS
In reliance upon section 1145 of the Bankruptcy Code, other than Backstop Securities (as defined below), the offer and issuance of New Common Stock, New Preferred Stock and Rights Offering Securities (the “Plan Securities” and to the extent they constitute “securities,” the “1145 Securities”) will be exempt from the registration requirements of the Securities Act of 1933, as amended, (the “Securities Act”) and equivalent provisions in state securities laws. Section 1145(a) of the Bankruptcy Code generally exempts from such registration requirements the issuance of securities if the following conditions are satisfied: (i) the securities are issued or sold under a chapter 11 plan by (a) a debtor, (b) one of its affiliates participating in a joint plan with the debtor, or (c) a successor to a debtor under the plan and (ii) the securities are issued entirely in exchange for a claim against or interest in the debtor or such affiliate, or are issued principally in such exchange and partly for cash or property. The Noteholder Plan Proponents believe that the exchange of 1145 Securities for Claims against the Debtors under the circumstances provided in the Plan will satisfy the requirements of section 1145(a) of the Bankruptcy Code.
The 1145 Securities to be issued pursuant to the Plan will be deemed to have been issued in a public offering under the Securities Act and, therefore, may be resold by any Holder thereof without registration under the Securities Act pursuant to the exemption provided by section 4(1) thereof, unless the Holder is an “underwriter” with respect to such securities, as that term is defined in section 1145(b)(1) of the Bankruptcy Code (a “statutory underwriter”). In
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addition, such securities generally may be resold by the holders thereof without registration under state securities or “blue sky” laws pursuant to various exemptions provided by the respective laws of the individual states. However, holders of securities issued under the Plan are advised to consult with their own counsel as to the availability of any such exemption from registration under federal securities laws and any relevant state securities laws in any given instance and as to any applicable requirements or conditions to the availability thereof.
Section 1145(b)(i) of the Bankruptcy Code defines “underwriter” for purposes of the Securities Act as one who (i) purchases a claim or interest with a view to distribution of any security to be received in exchange for the claim or interest, or (ii) offers to sell securities issued under a plan for the holders of such securities, or (iii) offers to buy securities issued under a plan from persons receiving such securities, if the offer to buy is made with a view to distribution of such securities and under an agreement made in connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan, or (iv) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. An entity is not deemed to be an “underwriter” under section 2(a)(11) of the Securities Act with respect to securities received under section 1145(a)(1) which are transferred in “ordinary trading transactions” made on a national securities exchange or a NASDAQ market. However, there can be no assurances, and it is not currently anticipated, that such securities will be listed on an exchange or NASDAQ market. What constitutes “ordinary trading transactions” within the meaning of section 1145 of the Bankruptcy Code is the subject of interpretive letters by the staff of the Securities and Exchange Commission (the “SEC”). Generally, ordinary trading transactions are those that do not involve (i) concerted activity by recipients of securities under a plan of reorganization, or by distributors acting on their behalf, in connection with the sale of such securities, (ii) use of informational documents in connection with the sale other than the disclosure statement relating to the plan, any amendments thereto, and reports filed by the issuer with the SEC under the Securities Exchange Act of 1934, as amended, or (iii) payment of special compensation to brokers or dealers in connection with the sale.
The term “issuer” is defined in section 2(4) of the Securities Act; however, the reference contained in section 1145(b)(1)(D) of the Bankruptcy Code to section 2(11) of the Securities Act purports to include as statutory underwriters all persons who, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, an issuer of securities. “Control” (as defined in Rule 405 under the Securities Act) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Accordingly, an officer or director of a reorganized debtor or its successor under a plan of reorganization may be deemed to be a “control person” of such debtor or successor, particularly if the management position or directorship is coupled with ownership of a significant percentage of the voting securities of such issuer. Additionally, the legislative history of section 1145 of the Bankruptcy Code provides that a creditor who receives at least 10% of the voting securities of an issuer under a plan of reorganization will be presumed to be a statutory underwriter within the meaning of section 1145(b)(i) of the Bankruptcy Code.
Certain issuances of the New Common Stock, New Preferred Stock, Rights Offering Shares, and Reduced Vote Rights Offering Shares to Put Parties will not be exempt from the registration requirements of the Securities Act pursuant to section 1145 of the Bankruptcy Code,
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but the Noteholder Plan Proponents believe that any such issuance of the Plan Securities to the Put Parties will be exempt pursuant to section (4)(2) of the Securities Act, as a transaction by an issuer not involving any public offering, and equivalent exemptions in state securities laws.
To the extent that persons receive Plan Securities not exempt from the registration requirements of the Securities Act pursuant to section 1145 of the Bankruptcy Code (collectively, “Restricted Holders”), resales by Restricted Holders would not be exempted by section 1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law. Restricted Holders may, however, be able, at a future time and under certain conditions described below, to sell securities without registration pursuant to the resale provisions of Rule 144 under the Securities Act.
Under certain circumstances, holders of 1145 Securities deemed to be “underwriters” may be entitled to resell their securities pursuant to the limited safe harbor resale provisions of Rule 144 of the Securities Act, to the extent available, and in compliance with applicable state and foreign securities laws. Generally, Rule 144 of the Securities Act provides that persons who are affiliates of an issuer who resell securities will not be deemed to be underwriters if certain conditions are met. These conditions include the requirement that current public information with respect to the issuer be available, a limitation as to the amount of securities that may be sold in any three-month period, the requirement that the securities be sold in a “brokers transaction” or in a transaction directly with a “market maker” and that notice of the resale be filed with the Securities and Exchange Commission. The Debtors cannot assure, however, that adequate current public information will exist with respect to any issuer of 1145 Securities and therefore, that the safe harbor provisions of Rule 144 of the Securities Act will be available, provided, however, that Newco intends to register the New Common Stock on a registration statement on Form 10 and become a reporting issuer under the Securities Exchange Act of 1934, as amended.
Pursuant to the Plan, certificates evidencing 1145 Securities received by Restricted Holders or by a holder that the Debtors determine is an underwriter within the meaning of section 1145 of the Bankruptcy Code will bear a legend substantially in the form below:
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. |
Any person or entity entitled to receive 1145 Securities who the issuer of such securities determines to be a statutory underwriter that would otherwise receive legended securities as provided above, may instead receive certificates evidencing 1145 Securities without such legend
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if, prior to the distribution of such securities, such person or entity delivers to such issuer, (i) an opinion of counsel reasonably satisfactory to such issuer to the effect that the 1145 Securities to be received by such person or entity are not subject to the restrictions applicable to “underwriters” under section 1145 of the Bankruptcy Code and may be sold without registration under the Securities Act and (ii) a certification that such person or entity is not an “underwriter” within the meaning of section 1145 of the Bankruptcy Code. Any Holder of a certificate evidencing 1145 Securities bearing such legend may present such certificate to the transfer agent for 1145 Securities for exchange for one or more new certificates not bearing such legend or for transfer to a new holder without such legend at such time as (i) such securities are sold pursuant to an effective registration statement under the Securities Act or (ii) such holder delivers to the issuer of such securities an opinion of counsel reasonably satisfactory to such issuer to the effect that such securities are no longer subject to the restrictions applicable to “underwriters” under section 1145 of the Bankruptcy Code or (iii) such effect that (x) such securities are no longer subject to the restrictions pursuant to an exemption under the Securities Act and such securities may be sold without registration under the Securities Act or (y) such transfer is exempt from registration under the Securities Act, in which event the certificate issued to the transferee shall not bear such legend.
IN VIEW OF THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A RECIPIENT OF SECURITIES MAY BE AN UNDERWRITER OR AN AFFILIATE OF REORGANIZED GREEKTOWN, THE DEBTORS MAKE NO REPRESENTATIONS CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN SECURITIES TO BE DISTRIBUTED PURSUANT TO THE PLAN. ACCORDINGLY, THE NOTEHOLDER PLAN PROPONENTS RECOMMEND THAT POTENTIAL RECIPIENTS OF SECURITIES CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES.
IX. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a very general summary of certain U.S. federal income tax considerations with respect to the Consummation of the Plan and the receipt of New Common Stock of Newco with respect to (i) the Debtors and Reorganized Greektown and (ii) a typical Holder of an Allowed Claim who is entitled to vote on or to accept or reject the Plan. Except as otherwise noted, the following summary does not discuss the U.S. federal income tax considerations to Holders whose Claims are entitled to payment in full in cash or are otherwise unimpaired under the Plan, or to Holders of Interests or Intercompany Claims, or with respect to Claims of nontaxable entities (such as an Indian tribal authority or a government).
This discussion is based on current provisions of the IRC, final, temporary or proposed Treasury Regulations promulgated thereunder, judicial opinions, published positions of the Internal Revenue Service (the “Service”) and all other applicable authorities, all as in effect on the date of this Disclosure Statement, and all of which are subject to change (possibly with retroactive effect) and are subject to differing judicial or administrative interpretations, resulting in U.S. federal income tax considerations different from those discussed below. There can be no assurance that the Service will not take a contrary view. No ruling from the Service has been or will be sought nor will any counsel provide a legal opinion as to any of the tax issues or matters set forth below.
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Legislative, judicial or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such changes may or may not be retroactive and could affect the tax consequences for the Holders, the Debtors and Reorganized Greektown. It cannot be predicted whether any tax legislation will be enacted or, if enacted, whether any tax law changes contained therein would affect the tax consequences to the Holders, the Debtors or Reorganized Greektown.
The following discussion assumes that a Holder of an Allowed Claim will hold any New Common Stock as a “capital asset.” It also assumes that all of the Debtors’ debt obligations constitute indebtedness for U.S. federal income tax purposes.
This discussion is for general information only and addresses only certain material U.S. federal income tax considerations and does not address all of the considerations or taxes that may be relevant to a Holder, such as the potential application of any state, local or foreign tax laws or federal estate or gift tax laws or the alternative minimum tax. It does not attempt to consider any facts or limitations applicable to any particular Holder in light of that Holder’s particular circumstances or to any Holder subject to special rules under the U.S. federal income tax laws, such as financial institutions, banks, thrifts, mutual funds, insurance companies, brokers, dealers or traders in securities, commodities or currencies, tax-exempt organizations, sovereigns, and entities or organizations treated as sovereigns or states for U.S. federal income tax purposes, tax-qualified retirement plans, partnerships and other pass-through entities, investors in such pass-through entities, small business investment companies, regulated investment companies, real estate investment trusts, foreign corporations, foreign trusts, foreign estates, Holders who are not citizens or residents of the United States, or who are not “U.S. persons” under the Internal Revenue Code, Holders subject to the alternative minimum tax, Holders holding Claims as part of a hedge, straddle, constructive sale or other risk reduction strategy or as part of a conversion transaction or other integrated investment, Holders who have a “functional currency” other than the U.S. dollar or Holders that acquired interests in connection with the performance of services.
The Plan contemplates the possible implementation of alternate reorganizational structures that could potentially have varying tax consequences for the Debtors and the Holders of Claims. This discussion does not specifically address the tax consequences of any particular alternate structure or its implementation, although it generally describes certain considerations that would apply in certain circumstances. The Debtors and Holders should consult their respective tax advisers if and when such alternate structures are implemented.
THE TAX LAWS WITH RESPECT TO BANKRUPTCY AND INSOLVENCY MATTERS THAT ARE APPLICABLE TO LIMITED LIABILITY COMPANIES ARE EXTREMELY COMPLEX AND UNCERTAIN, AND THE FOLLOWING SUMMARY IS OF A GENERAL NATURE ONLY. HOLDERS OF CLAIMS AND EQUITY INTERESTS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR THEM OF THE CONSUMMATION OF THE PLAN, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS, OR ANY OTHER FEDERAL TAX LAWS.
TO COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230,
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TAXPAYERS ARE HEREBY NOTIFIED THAT (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS DISCLOSURE STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON A TAXPAYER UNDER THE INTERNAL REVENUE CODE, (B) ANY SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN, AND (C) TAXPAYERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
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A. | U.S. Federal Income Tax Considerations for the Debtors |
The following discussion assumes that Holdings is, and will be, treated as a partnership (although its future status will be determined in the sole discretion of the Put Parties) and the current Holders of Interests in Holdings are, and will be, treated as partners of Holdings for U.S. federal income tax purposes through the Effective Date. It also assumes that Casino is an entity disregarded as separate from Holdings for U.S. federal income tax purposes. The U.S. federal income tax consequences of the Plan to Holdings and its members are uncertain, and will depend in part on the classification of Reorganized Holdings and Newco (and, to the extent Newco Sub is formed, Newco Sub) for U.S. federal income tax purposes, the characterization of the restructuring transactions and the precise transactions undertaken in connection with the Plan. The tax returns of Reorganized Greektown and the Debtors for the year in which cancellation of indebtedness income is recognized by the Debtors in connection with the Plan, including the allocation of items to and among the owners of equity Interests in Holdings, and all elections relating thereto as well as the tax characterization of the restructuring transactions shall be determined in the sole discretion of the Put Parties.
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| 1. | Gain or Loss on Consummation of the Plan |
Each of Holdings and the other Debtors will recognize taxable gain or loss on any taxable disposition of its assets pursuant to the Plan, including the transfer of the Litigation Trust Assets to the Litigation Trust and any other taxable transfers of assets by Holdings (such as a taxable sale of its assets or a deemed or actual taxable transfer to Newco or any other person or persons) or such Debtor, as applicable. If Holdings recognizes gain or loss, such gain or loss (all or a portion of which may constitute ordinary income or loss) would be recognized while Holdings is treated as a partnership for U.S. federal income tax purposes and allocated among the existing members of Holdings (and not holders of New Common Stock or New Preferred Stock or Newco or Newco Sub) in accordance with Holdings’ limited liability company agreement and their interests in Holdings. Significant limitations apply to the deductibility of certain losses and deductions of an entity treated as a partnership for U.S. federal income tax purposes. Existing members of Holdings may also recognize gain or loss with respect to their interests in Holdings.
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| 2. | Cancellation of Indebtedness |
In very general terms, the discharge of a debt obligation for an amount less than the obligation’s adjusted issue price gives rise to cancellation of indebtedness income (“CODI”) to a debtor, which must be included in the debtor’s income for U.S. federal income tax purposes, unless payment of the obligation would have given rise to a deduction for the debtor. Holdings
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and the other Debtors generally will realize substantial amounts of CODI in connection with the Plan, which will be reported to the Service. The CODI realized by Holdings and Casino will be allocated among the existing members of Holdings (and not the holders of New Common Stock and New Preferred Stock or Newco or Newco Sub) in accordance with Holdings’ limited liability company agreement and such members’ interests in Holdings. The amount of such CODI will depend upon a number of factors. Under IRC section 108, under certain circumstances CODI will not be recognized if the CODI occurs in a case brought under the Bankruptcy Code, provided the taxpayer is under the jurisdiction of a court in such case and the cancellation of indebtedness is granted by the court or is pursuant to the plan approved by the court (the “Bankruptcy Exception”). Generally, under IRC section 108(b), any CODI excluded from gross income under the Bankruptcy Exception must be applied against and reduce certain tax attributes of the taxpayer (including, but not limited to, NOL carryforwards, current year NOLs, tax credits and tax basis in assets). However, under IRC section 108(d)(6), when a partnership realizes CODI, the partners of such partnership are treated as receiving their allocable share of such CODI and the Bankruptcy Exception (and related attribute reduction) is applied at the partner level rather than the partnership level. Similarly, the exemption from recognition of CODI for insolvent taxpayers is applied at the partner level as well. Accordingly, the partners of Holdings will be treated as receiving their allocable share of CODI realized by Holdings and they may not be able to utilize the bankruptcy exception. Holdings’ partners include another partnership, so the potential applicability of the Bankruptcy Exception would be tested under Section 108(d)(6) at the level of the partners of such partnership. Any CODI recognized by a member of Holdings will increase such member’s adjusted tax basis in its Interest. However, as discussed further below, the reduction in a member’s share of partnership liabilities (e.g., as a result of the discharge of Holdings’ liabilities under the Plan or otherwise) will reduce such member’s adjusted tax basis in its partnership interest in Holdings. These increases and decreases in a member’s adjusted tax basis in its partnership interest in Holdings will generally be governed by the organizational documents and membership agreement of Holdings that are in place as of the cancellation of Holdings’ liabilities for tax purposes and the members’ Interests in Holdings, and are uncertain. To the extent any of the Debtors that are corporations are treated as realizing CODI, the Bankruptcy Exception would apply to exclude the CODI from gross income. These corporations would also respectively be subject to potential tax attribute reduction under IRC section 108(b).
In February 2009, Congress enacted as part of the American Recovery and Reinvestment Act an elective CODI deferral and ratable inclusion provision with respect to the reacquisition of “applicable debt instruments” within the meaning of IRC section 108(i). The Plan provides that such election will not be made by or with respect to any entity recognizing CODI.
A partner’s share of partnership liabilities is generally included in the partner’s tax basis in its partnership interest, and a reduction in such share is generally treated as a distribution to such partner. The reductions in Holding’s liabilities that will occur pursuant to the Plan will be treated as distributions from Holdings to its members to the extent of their shares of such reductions. These distributions will first reduce a member’s adjusted tax basis to zero, and any excess distribution will be taxable to such member, resulting in income recognition.
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| 4. | Section 382 Limitations on Net Operating Losses |
If a corporation undergoes an ownership change, as defined in IRC section 382(g), the application of pre-change Net Operating Losses (“NOLs”) to reduce income for any post-change year is limited by IRC section 382. Any NOLs of a Debtor that is a corporation would be subject to limitation under IRC section 382 by reason of the Plan.
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| 5. | Transfer of Assets to Litigation Trust |
Pursuant to the Plan, the Debtors will be treated for U.S. federal income tax purposes as transferring the Litigation Trust Assets to the beneficiaries of the Litigation Trust followed by the transfer by such beneficiaries to the Litigation Trust of such Litigation Trust Assets in exchange for beneficial interests in the Litigation Trust. Accordingly, the transfer of such assets by the Debtors is a taxable transaction, and may result in the recognition of income or gain by the Debtors, depending in part on the value of such assets at the time of transfer.
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B. | U.S. Federal Income Tax Considerations for Holders |
The following discussion applies to a Holder who (or that) is treated for U.S. federal income tax purposes as (i) an individual that is a citizen or resident of the United States, (ii) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust, if it is subject to the primary supervision of a federal, state or local court within the United States and one or more U.S. persons have authority to control all substantial trust decisions or, if the trust has a valid election in effect under the applicable Treasury Regulations to be treated as a U.S. person.
The potential U.S. federal income tax considerations with respect to the Plan to a Holder of a Claim will depend, among other things, upon the origin of the Holder’s Claim, whether or not the Holder holds the Claim as a capital asset, whether the Holder reports income using the accrual or cash method (or other method) of accounting, the manner in which the Holder acquired the Claim and its timing in acquiring the Claim, whether the Claim constitutes a “security” for U.S. federal income tax purposes, whether the Holder has taken a bad debt deduction or worthless security deduction with respect to such Claim (or portion of its Claim) in the current year or any prior year, the length of time the Claim has been held, whether the Claim was acquired at a discount, whether the Holder has previously included in its taxable income accrued but unpaid interest with respect to the Claim, and whether the Claim is an installment obligation for U.S. federal income tax purposes.
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| 1. | Class 1, 7, 11, 16, 20 and 24 Claims (Secured Claims of Pre-petition Lenders Against Each Reorganizing Debtor, Trappers and Holdings II) |
Under the Plan, each Holder of an Allowed Claim in Classes 1, 7, 11, 16, 20 and 24 shall receive, in full satisfaction of such Allowed Pre-petition Credit Agreement Claim, Cash in the full amount of such Holder’s Allowed Pre-petition Credit Agreement Claim. In general, each Holder of such a Claim should recognize gain or loss in an amount equal to the difference between (x) the amount of Cash received by the Holder in satisfaction of its claim, and (y) the Holder’s adjusted tax basis in its claim. However, the U.S. federal income tax consequences of
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the Plan to Holders of Allowed Claims in Classes 1, 7, 11, 16, 20 and 24 are uncertain and will depend in part on such Holder’s particular circumstances, as well as the factors mentioned above. Holders of such Claims should therefore consult their tax advisors as to the tax consequences resulting to them as a consequence of the Consummation of the Plan.
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| 2. | Class 2, 8, 12, 17, 21 and 25 Claims (Allowed Other Secured Claims Against Holdings, Casino, Holdings II, Builders, Builders Property, Realty, Realty Property, Trappers and Trappers Property) |
Except to the extent that a Holder of an Allowed Other Secured Claim in Classes 2, 8, 12, 17, 21 or 25 agrees to a different treatment, at the sole option of Reorganized Greektown with the prior written consent of the Put Parties, (i) on the Effective Date or as soon thereafter as is practicable, each Allowed Other Secured Claim shall be Reinstated and rendered unimpaired in accordance with section 1124(2) of the Bankruptcy Code, notwithstanding any contractual provision or applicable non-bankruptcy law that entitles the Holder of an Allowed Other Secured Claim to demand or receive payment of such Allowed Other Secured Claim prior to the stated maturity of such Allowed Other Secured Claim from and after the occurrence of a default, (ii) each Holder of an Allowed Other Secured Claim in Classes 2, 8, 12, 17, 21 or 25 shall receive Cash in an amount equal to such Allowed Other Secured Claim, including any interest on such Allowed Other Secured Claim required to be paid pursuant to section 506(b) of the Bankruptcy Code, on the later of the Effective Date and the date such Allowed Other Secured Claim becomes an Allowed Other Secured Claim, or as soon thereafter as is practicable or (iii) each Holder of an Allowed Other Secured Claim in Classes 2, 8, 12, 17, 21 or 25 shall receive the Collateral securing its Allowed Other Secured Claim and any interest on such Allowed Other Secured Claim required to be paid pursuant to section 506(b) of the Bankruptcy Code, in full and complete satisfaction of such Allowed Other Secured Claim on the later of the Effective Date and the date such Allowed Other Secured Claim becomes an Allowed.
The U.S. federal income tax consequences of the Plan to Holders of Allowed Claims in Classes 2, 8, 12, 17, 21 or 25 are uncertain and will depend on a Holder’s particular circumstances, what the Holder receives, the classification of Reorganized Holdings for U.S. federal income tax purposes, as well as the factors mentioned above. Holders of such Claims should therefore consult their tax advisors as to the tax consequences resulting to them as a consequence of Consummation of the Plan.
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| 3. | Class 3 & 13 Claims (Bond Claims Against Holdings and Holdings II) |
Each Holder of an Allowed Claim in Classes 3 and 13 shall receive, in full satisfaction of such Allowed Claim, (i) subject to Section 4.10.5 of the Plan, from Newco, such Holder’s Pro Rata share of 140,000 shares of New Common Stock, (ii) from the Debtors, a share of the Holdings Litigation Trust Interest equal to the proportion that such Holder’s Allowed Bond Claim bears to the aggregate amount of all Allowed Bond Claims and all Allowed General Unsecured Claims in Class 4 and (iii) the right to participate in the Rights Offering and purchase such Holder’s Pro Rata share of Rights Offering Securities as provided in Section 4.7 of the Plan.
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| a. | Litigation Trust Interests |
Pursuant to the Plan, the Debtors will be treated for U.S. federal income tax purposes as
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transferring the Litigation Trust Assets to the beneficiaries of the Litigation Trust followed by the transfer by such persons to the Litigation Trust of such Litigation Trust Assets in exchange for beneficial interests in the Litigation Trust. All parties shall treat the Litigation Trust as a “liquidating trust” in accordance with Treasury Regulations Section 301.7701-4(d) of which the beneficiaries are the grantors and beneficiaries. The Litigation Trustee shall file returns for the Litigation Trust as a “grantor trust” pursuant to Treasury Regulations Section 1.671-4(a). Accordingly, each Holder of an Allowed General Unsecured Claim Against Holdings will be treated for U.S. federal income tax purposes as directly receiving, and as a direct owner of, its respective share of the Litigation Trust Assets. The Trustee will make a good-faith valuation of the Litigation Trust Assets, and all parties must consistently use such valuation for all U.S. federal income tax purposes. In general, each beneficial owner of the Litigation Trust should recognize gain or loss in an amount equal to the difference between (x) the fair market value of its share of the Litigation Trust Assets that were treated as transferred to such Holder in satisfaction of its Claim and (y) the portion of the Holder’s adjusted tax basis in the portion of its Claim exchanged for such assets. The allocation of the tax basis in a Holder’s Allowed Claim in Classes 3 and 13 among the separate consideration received by such Holder will be based on their fair market values and will be determined by the Put Parties in good faith.
Subject to the discussion of the LT Disputed Claims Reserve below, the Litigation Trust’s taxable income, gain, loss, deduction or credit shall be allocated to the holders of beneficial interests in accordance with Section 4.12.15(ii) of the Plan. After the Effective Date, any amount a Holder receives as a distribution from the Litigation Trust in respect of its beneficial interest in the Litigation Trust should not be included, for U.S. federal income tax purposes, in the Holder’s amount realized in respect of its Claim but should be separately treated as a distribution received in respect of such Holder’s beneficial (ownership) interest in the Litigation Trust. Holders of beneficial interests that are subject to special rules under the IRC should carefully consider the effects on them of the Litigation Trust’s income and activities.
Under IRC Section 468B(g), amounts earned by an escrow account, settlement fund or similar fund must be subject to current tax. Treasury Regulations provide that a court-monitored fund established to hold money or other property subject to conflicting claims of ownership generally is treated as a “disputed ownership fund,” unless satisfying the more specific requirements of “qualified settlement fund” treatment. Accordingly, pursuant to the Plan the Litigation Trustee will (i) make an election pursuant to Treasury Regulations Section 1.468B-9 to treat the LT Disputed Claims Reserve as a “disputed ownership fund” and (ii) to the extent permitted by applicable law, report consistently for state and local income tax purposes. In addition, all parties must report consistently with such treatment.
A disputed ownership fund is subject to a separate entity-level tax, in a manner similar to either a corporation or a qualified settlement fund, depending upon the nature of the assets transferred to the fund.
In determining the taxable income of the LT Disputed Claims Reserve, (a) any amounts transferred by the Debtors or Reorganized Debtors to the account will be excluded from the account’s income; (b) any interest income or other earnings with respect to the fund’s assets will be included in the fund’s income; (c) any sale or exchanges of property by the fund will result in the recognition of gain or loss in an amount equal to the difference between the fair market value
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of the property on the date of disposition and the adjusted basis of the fund in such property; and (d) any administrative costs (including state and local taxes) incurred by the fund will be deductible by the fund.
In general, a disputed ownership fund’s initial tax basis for property received from or on behalf of a transferor is the property’s fair market value when transferred to the fund, and its holding period begins on the date of the transfer. However, a fund’s initial basis for property received from a transferor-claimant is the same as the transferor-claimant’s basis immediately before the transfer, and the fund succeeds to the transferor-claimant’s holding period for the property. In general, (i) distributions from the LT Disputed Claims Reserve to holders of beneficial interests in such fund should be taxed to holders in the same manner as if such amounts were received directly from the Debtors and (ii) the LT Disputed Claims Reserve must treat a distribution of property as a sale of the property for a price equal to the property’s fair market value on the date of distribution.
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| b. | Restructuring Transactions. |
Different structures could potentially have varying tax consequences for the Holders of Claims in Classes 3 and 13 and the Plan could be implemented in more than one manner. In addition, the tax treatment of the restructuring transactions are uncertain, and Holders may recognize taxable gain or loss on the transactions. The tax characterization and the tax reporting of the restructuring transactions will be determined in the sole discretion of the Put Parties. Holders of Claims in Classes 3 and 13 who will receive New Common Stock and who acquire Rights Offering Securities should consult their tax advisors regarding the Plan, including but not limited to the receipt and holding of equity interests in Reorganized Holdings and Newco. Holders should also consult their respective tax advisors regarding the ultimate structure. Holders that are subject to special tax rules under the IRC should carefully consider the effects to them of any momentary ownership they may have of equity interests in, or assets of, Holdings or Reorganized Holdings, which in each case are entities that are taxable as partnerships for U.S. federal income tax purposes.
The U.S. federal income tax consequences to a Holder of a Class 3 or 13 Claim that receives New Common Stock, a share of the Holdings Litigation Trust Interest, and the right to participate in the Rights Offering pursuant to the Plan are uncertain and will depend in part on the value of the rights to participate in the Rights Offering, the characterization of the restructuring transactions, including the contribution to Newco, whether the restructuring transactions include a taxable disposition of the Holder’s Claims or of the assets of Holdings, the allocation of such Holder’s tax basis among the assets it receives, the Holder’s particular circumstances, and whether Newco Sub is formed, as well as the factors mentioned above. Holders of such Claims should therefore consult their tax advisors as to the tax consequences resulting to them from Consummation of the Plan.
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| 4. | Class 4, 9, 14, 18, 22, and 26 Claims (General Unsecured Claims Against Holdings, Casino, Holdings II, Builders, Realty, and Trappers). |
Under the Plan, each Holder of an Allowed Claim in the General Unsecured Classes shall
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receive, in full satisfaction of such Allowed Claim, (i) a distribution of Cash from the Unsecured Distribution Fund equal to the proportion that the amount of such Holder’s Allowed Claim in the General Unsecured Classes bears to the aggregate amount of all Allowed General Unsecured Claims, and, (ii) if such Holder’s Allowed General Unsecured Claim is in Class 4, a share of the Holdings Litigation Trust Interest equal to the proportion that such Holder’s Allowed General Unsecured Claim bears to the aggregate amount of all Allowed Bond Claims and all Allowed General Unsecured Claims in Class 4, (iii) if such Holder’s Allowed General Unsecured Claim is in Class 9, a Pro Rata share of the Casino Litigation Trust Interest, and (iv) if such Holder’s Allowed General Unsecured Claim is in Classes 14, 18, 22, or 26, a share of the Other Litigation Trust Interest equal to the proportion that such Holder’s Allowed General Unsecured Claim bears to the aggregate amount of all Allowed General Unsecured Claims in Class 14, 18, 22 and 26. All Litigation Trust Interests shall be satisfied solely out of Litigation Trust Assets, and Holders of Allowed Claims in the General Unsecured Classes shall not have recourse to Reorganized Greektown for unpaid portions of any Litigation Trust Interest.
See “3(a) Litigation Trust Interests” above for a discussion regarding the receipt and holding of Litigation Trust Interests. The U.S. federal income tax consequences of the Plan to a Holder of an Allowed Claim in Classes 4, 9, 14, 18, 22 and 26 will depend upon a Holder’s particular circumstances and the factors mentioned above. Holders of such Claims should therefore consult their tax advisors as to the tax consequences resulting to them as a consequence of Consummation of the Plan.
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| 5. | Class 5, 10, 15, 19, 23 & 27 Claims (Intercompany Claims) |
Under the Plan, each obligee Debtor that holds a Class 5, 10, 15, 19, 23 or 27 Intercompany Claim shall receive, in full satisfaction of such Intercompany Claim against an Obligor Debtor, an interest-free note in a principal amount equal to a percentage of the total amount of such Intercompany Claim, which percentage shall be equal to the percentage recovery of the Holders of General Unsecured Creditors against such Obligor Debtor. The U.S. federal income tax consequences of the Plan to a Holder of an Intercompany Claim are uncertain and depend upon a Holder’s particular circumstances and the factors mentioned above. Holders of such Claims should therefore consult their tax advisors as to the tax consequences resulting to them as a consequence of Consummation of the Plan.
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| 6. | Class 6 Claims (Equity Interests – Holdings) |
Under the Plan, each Holder of equity Interests in Class 6 shall not receive or retain any interest or property under the Plan and all such equity Interests will be cancelled and extinguished. The U.S. federal income tax consequences of the Plan to a Holder of an equity Interest in Class 6 are uncertain and depend upon a Holder’s particular circumstances and the factors mentioned above. Holders of such equity Interests should therefore consult their tax advisors as to the tax consequences resulting to them as a consequence of Consummation of the Plan.
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| 7. | Accrued but Unpaid Interest |
A portion of the consideration received by a Holder of a Claim may be attributable to accrued but unpaid interest on such Claim. Such amount should be taxable to that Holder as interest income if such accrued but unpaid interest has not been previously included in the
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Holder’s gross income for U.S. federal income tax purposes.
If the fair market value of the consideration is not sufficient to fully satisfy all principal and interest on Allowed Claims, the extent to which such consideration will be attributable to accrued but unpaid interest is unclear. Under the Plan, the aggregate consideration to be distributed to Holders of Allowed Claims in each Class will be allocated first to the principal amount of Allowed Claims, with any excess allocated to unpaid interest that accrued on such Claims, if any. The Service could take the position, however, that the consideration received by the Holder should be allocated in some way other than as provided in the Plan. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE DETERMINATION OF THE AMOUNT OF CONSIDERATION RECEIVED UNDER THE PLAN THAT IS ATTRIBUTABLE TO INTEREST.
Holders of Allowed Claims may be affected by the “market discount” provisions of IRC sections 1276 through 1278. Under these provisions, some or all of any gain realized by a Holder may be treated as ordinary income (instead of capital gain), to the extent of the amount of accrued “market discount” on such Allowed Claims.
In general, a debt obligation with a fixed maturity of more than one year that is acquired by a holder on the secondary market (or, in certain circumstances, upon original issuance) is considered to be acquired with “market discount” as to that holder if the debt obligation’s stated redemption price at maturity (or revised issue price as defined in IRC section 1278, in the case of a debt obligation issued with original issue discount) exceeds the tax basis of the debt obligation in the holder’s hands immediately after its acquisition. However, a debt obligation is not a “market discount bond” if the excess is less than a statutory de minimis amount (equal to 0.25% of the debt obligation’s stated redemption price at maturity or revised issue price, in the case of a debt obligation issued with original issue discount, multiplied by the number of complete years remaining until maturity at the time of the acquisition).
Absent an election to include market discount into income currently as it accrued, any gain recognized by a Holder on the taxable disposition of Allowed Claims that were acquired with market discount should be treated as ordinary income to the extent of the market discount that accrued thereon while the Allowed Claims were considered to be held by the Holder. To the extent that the Allowed Claims that were acquired with market discount are exchanged in a tax-free transaction for other property, any market discount that accrued on the Allowed Claims (i.e., up to the time of the exchange) but was not recognized by the Holder is carried over to the property received therefor and any gain recognized on the subsequent sale, exchange, redemption or other disposition of such property is treated as ordinary income to the extent of such accrued market discount.
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| 9. | Information Reporting and Backup Withholding |
In general, information reporting requirements may apply to distributions or payments under the Plan. Additionally, under the backup withholding rules, a Holder of a Claim may be subject to backup withholding (currently at a rate of 28%) with respect to distributions or payments made pursuant to the Plan unless that Holder: (a) comes within certain exempt
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categories (which generally include corporations) and, when required, demonstrates that fact; or (b) provides a correct taxpayer identification number and certifies under penalty of perjury that the taxpayer identification number is correct and that the Holder is not subject to backup withholding because of a failure to report all dividend and interest income. Backup withholding is not an additional tax but is, instead, an advance payment that may be refunded to the extent it results in an overpayment of tax; provided, however, that the required information is timely provided to the Service.
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| 10. | Holders of New Equity of Newco |
The federal income taxation of Holders of New Common Stock and New Preferred Stock of Newco will depend upon, among other things, the precise structure and implementation of the Plan, and a Holder’s particular circumstances. Holders of New Common Stock and New Preferred Stock should consult their own tax advisors regarding the issuance, holding and disposition of New Common Stock and New Preferred Stock. Newco itself will be classified as a corporation for U.S. federal income tax purposes, and it and its subsidiaries may have significant tax liabilities, including by reason of the restructuring transactions, and also by reason of its holding structure.
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| 11. | State and Local Taxes. |
In addition to the U.S. federal income tax considerations described above, Holders and the Debtors should consider the potential state and local tax consequences of the Plan, including with respect to alternative reorganizational structures. It is possible that significant amounts of state and local taxes may be owed by Holders and by the Debtors or Reorganized Greektown with respect to the Plan. Any such tax liabilities could have material financial consequences to the Debtors, the Holders or Reorganized Greektown.
NO REPRESENTATIONS ARE MADE REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE PLAN TO ANY HOLDER OF A CLAIM OR INTEREST. EACH HOLDER OF A CLAIM OR INTEREST IS STRONGLY URGED TO CONSULT A TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS DESCRIBED HEREIN AND IN THE PLAN.
X. VOTING INSTRUCTIONS
On December 7, 2009, the Bankruptcy Court entered the Solicitation Procedures Order approving the adequacy of this Disclosure Statement and approving the Solicitation Procedures (as defined in the Solicitation Procedures Motion, incorporated by reference into the Solicitation Procedures Order), which set forth procedures for the solicitation of votes to accept or reject the Plan. The procedures for solicitation of votes to accept or reject the Plan are provided in the Solicitation Procedures Motion. In addition to approving the Solicitation Procedures, the Solicitation Procedures Order established certain dates and deadlines, including the date for the Confirmation Hearing, the Voting Record Date, and the Voting Deadline. The Solicitation Procedures Order also approved the forms of Ballots and certain Confirmation-related notices.
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The Solicitation Procedures Order and Solicitation Procedures should be read in conjunction with this Article X. Capitalized terms used in this Article X that are not otherwise defined in this Disclosure Statement or the Plan have the meanings given them in the Solicitation Procedures.
The Bankruptcy Court may confirm a plan only if it determines that the plan complies with the requirements of chapter 11 of the Bankruptcy Code. One of these requirements is that the Bankruptcy Court find, among other things, that the plan has been accepted by the requisite votes of all classes of impaired claims and impaired interests unless approval will be sought under Bankruptcy Code section 1129(b) despite the non-acceptance by one or more such classes. The process by which the Debtors solicit votes to accept or reject the Plan will be governed by the Solicitation Procedures Order and the Solicitation Procedures.
The following is a brief and general summary of the Solicitation Procedures. Claim and Interest Holders are encouraged to review the Solicitation Procedures Order, the Solicitation Procedures, the relevant provisions of the Bankruptcy Code, and to consult their own advisors. To the extent of any inconsistency between the summary below and the Solicitation Procedures Order or the Solicitation Procedures, the Solicitation Procedures Order and the Solicitation Procedures control.
In general, a claim or interest holder may vote to accept or reject a plan if (i) no party in interest has objected to such claim or interest, and (ii) the claim or interest is impaired by the plan. If the holder of an impaired claim or interest will not receive any distribution under the plan for the claim or interest, the Bankruptcy Code deems such holder to have rejected the plan for that claim or interest. If a claim or interest is not impaired, the Bankruptcy Code deems that the holder of such claim or interest has accepted the plan and the plan proponent need not solicit such holder’s vote.
Under Bankruptcy Code section 1124, a class of claims or interests is deemed to be “impaired” under a plan unless the plan leaves unaltered the claim or interest holder’s legal, equitable, and contractual rights, or, notwithstanding any legal right to accelerate payment of such claim or interest, the plan cures all existing defaults (other than defaults resulting from the occurrence of bankruptcy events), reinstates the maturity of such claim or interest as it existed before the default, compensates the holder of such claim or interest for any damages incurred as result of reasonable reliance on the holder’s legal right to an accelerated payment, and does not otherwise alter the legal, equitable, or contractual rights to which such claim or interest holder is entitled.
None of the Impaired Interest Holders are entitled to vote on the Plan. Only the following Impaired Claims in Voting Classes shall be entitled to vote on the Plan with regard to such Claims:
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| 1. | Holders of Claims for which Proofs of Claim have been timely filed, as reflected on the Claims register, as of the Voting Record Date; |
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| 2. | Holders of Claims that are listed in the Debtors’ Schedules, with the exception of those Claims that are listed in the Schedules as contingent, unliquidated, and/or disputed (excluding such Claims listed in the Debtors’ Schedules that have been superseded by a timely filed Proof of Claim); and |
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| 3. | Holders whose Claims arise pursuant to an agreement or settlement with the Debtors executed before the Voting Record Date, as reflected in a document filed with the Bankruptcy Court, in an order of the Bankruptcy Court, or in a document executed by the Debtors pursuant to authority granted by the Bankruptcy Court, regardless of whether a Proof of Claim has been filed. |
The assignee of a transferred and assigned Claim (whether a timely-Filed Claim or a Claim on the Schedules) shall be permitted to vote such Claim only if (i) the transfer or assignment has been fully effected under the procedures dictated by Bankruptcy Rule 3001(e) and (ii) such transferor and assignor of such Claim would be permitted to vote such Claim if such transfer and assignment had not occurred.
For purposes of determining the Claim amount associated with each Holder’s vote, such amount shall not include applicable interest accrued after the Petition Date only if the Claim Holder is entitled to payment of interest under the Plan.
A vote may be disregarded under Bankruptcy Code section 1126(e) if the Bankruptcy Court determines that it was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code. The Solicitation Procedures also set forth assumptions and procedures for tabulating Ballots.
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D. | Classes Impaired Under the Plan |
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| 1. | Impaired Voting Classes of Claims and Interests |
Classes 3, 4, 9, 13, 14, 18, 22 and 26 are Impaired under the Plan and are therefore entitled to vote to accept or reject the Plan.
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2. | Impaired Non-Voting Classes of Claims and Interests |
Class 6 is wholly Impaired under the Plan and is deemed to have rejected the Plan under Bankruptcy Code section 1126(g). Holders of Intercompany Claims in Classes 5, 10, 15, 19, 23, and 27 are required under the terms of the Stipulation to vote in favor of the Plan and therefore are deemed to accept the Plan. Thus, Holders in such Classes will not be solicited to vote on the Plan.
Under the Solicitation Procedures, these parties will receive a notice, substantially in the form attached as an exhibit to the Solicitation Procedures Order, notifying them of their non-voting rights.
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E. | Contents of the Solicitation Package |
The following materials will constitute the Solicitation Package:
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| 1. | The Plan; |
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| 2. | The Disclosure Statement; |
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| 3. | The Solicitation Procedures Order (without exhibits); |
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| 4. | The Confirmation Hearing Notice; |
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| 5. | The appropriate Ballot and voting instructions; |
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| 6. | A pre-addressed, postage pre-paid, return envelope; |
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| 7. | An appropriate cover letter describing the contents of the Solicitation Package; and |
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| 8. | The Committee Solicitation Letter. |
Any party who receives portions of the Solicitation Package in electronic format but who desires a paper copy of these documents may request a copy from the Claims Agent. The Solicitation Package (except the Ballots) may also be obtained by accessing the Debtors’ restructuring website at http://www.kccllc.net/greektowncasino.
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F. | Distribution of Solicitation Package |
The Solicitation Package will be served on the Debtors, the Holders of Claims in the Voting Classes; the Internal Revenue Service; the United States Trustee for the Eastern District of Michigan; and all other parties in interest on the Voting Record Date.
The Claims Agent will carry out the solicitation process, including answering questions regarding the procedures and requirements for voting to accept or reject the Plan and for objecting to the Plan, providing additional copies of all materials, and overseeing the voting tabulation process.
To be counted, Ballots cast by Holders of Claims in Voting Classes indicating acceptance or rejection of the Plan must be RECEIVED by the Claims Agent by the Voting Deadline at the address listed on the Ballot, whether by first-class mail, overnight courier, or personal delivery. The Ballots and the accompanying pre-addressed postage-paid envelopes will clearly indicate the appropriate return address. Completed Ballots must be returned to (1) for Holders of Claims in the General Unsecured Classes, Greektown Holdings, LLC, C/O Kurtzman Carson Consultants LLC, 2335 Alaska Avenue, El Segundo, CA 90245, Attn: Ballot Processing Department; or (2) for Holders of Bond Claims, to your nominee for processing and delivery to Greektown Balloting Center, c/o Kurtzman Carson Consultants LLC, Attn: David M. Sharp, 1230 Avenue of the Americas, 7th Floor, New York, New York 10020. Such Ballots should be cast in accordance with the Solicitation Procedures. Any Ballot received after the Voting Deadline will be counted in the Noteholder Plan Proponents’ sole discretion.
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For answers to any questions regarding the Solicitation Procedures, parties may call the Claims Agent toll free at 866-381-9100.
To obtain an additional copy of the Plan, this Disclosure Statement, or other Solicitation Package materials (including Ballots), please refer to the Claims Agent’s website at http://www.kccllc.net/greektowncasmo or request a copy from the Claims Agent by mail at 2335 Alaska Avenue, El Segundo, California 90245, Attn: Greektown Balloting; by telephone toll free at 866-381-9100; or by e-mail at greektowmnfor@kccllc.com.
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H. | Establishing Claim Amounts |
In tabulating votes, the following hierarchy will be used to determine the Claim amount associated with each Creditor’s vote:
(1) The Claim’s Allowed Amount, if the Claim has been Allowed pursuant to Court order;
(2) The Claim amount settled and/or agreed upon by the Debtors and the Noteholder Plan Proponents prior to the Voting Record Date, as reflected in a court pleading, stipulation, term sheet, agreement, or other document filed with the Bankruptcy Court, in an order entered by the Bankruptcy Court, or in a document executed by the Debtors and the Noteholder Plan Proponents pursuant to authority granted by the Bankruptcy Court, regardless of whether a Proof of Claim has been filed;
(3) The Claim amount contained on a Proof of Claim that has been timely filed by the relevant Bar Date (or deemed timely filed by the Bankruptcy Court under applicable law); provided, however, that Ballots cast by Holders whose Claims are not listed on the Debtors’ Schedules, but who timely filed Proofs of Claim in unliquidated or unknown amounts that are not the subject of an objection filed before the Voting Deadline, will count for satisfying the numerosity requirement of section 1126(c) of the Bankruptcy Code, and the unliquidated or unknown portion of the Claims will count in the amount of $1.00 solely for the purposes of satisfying the dollar amount provisions of section 1126(c) of the Bankruptcy Code; and
(4) The Claim amount listed in the Debtors’ Schedules, provided that such Claim is not scheduled as contingent, disputed, and/or unliquidated and has not been paid.
(5) In the absence of any of the foregoing at zero.
The Claim amount established pursuant to the foregoing will control for voting purposes only, and will not be determinative of the Allowed Amount of any Claim.
The following voting procedures and standard assumptions shall be used in tabulating Ballots:
(1) Except as otherwise provided in the Solicitation Procedures, unless a Ballot being furnished is timely submitted on or prior to the Voting Deadline, the Noteholder Plan Proponents
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may reject such Ballot as invalid and, therefore, decline to count it in connection with Confirmation;
(2) The method of delivery of Ballots to be sent to the Balloting Agent is at the election and risk of each Holder, and except as otherwise provided, a Ballot will be deemed delivered only when the Balloting Agent actually receives the original executed Ballot;
(3) An original executed Ballot is required to be submitted by the Person submitting such Ballot. Delivery of a Ballot to the Balloting Agent by facsimile, e-mail, or any other electronic means will not be valid;
(4) No Ballot should be sent to any of the Debtors, the Noteholder Plan Proponents. the Debtors’ agents. The Noteholder Plan Proponents’ agents (other than the Balloting Agent), any indenture trustee (unless specifically instructed to do so), the Debtors’ financial or legal advisors, or the Noteholder Plan Proponents’ financial or legal advisors and, if so sent, will not be counted;
(5) The Noteholder Plan Proponents expressly reserve the right to amend from time to time the terms of the Plan in accordance with the terms thereof (subject to compliance with the requirements of section 1127 of the Bankruptcy Code and the terms of the Plan regarding modification);
(6) If multiple Ballots are received from the same Claim Holder with respect to the same Claim prior to the Voting Deadline, the latest valid Ballot will be deemed to reflect that voter’s intent and will supersede and revoke any prior received Ballot for the same Claim;
(7) Claim Holders must vote all of their Claims within a particular Class either to accept or to reject the Plan and may not split such votes. Accordingly, a Ballot that partially rejects and partially accepts the Plan will not be counted. Further, to the extent there are multiple Claims within the same Class, the Noteholder Plan Proponents may, in their sole discretion, aggregate the Claims of any particular Holder within a Class for the purpose of counting votes;
(8) A person signing a Ballot in its capacity as a trustee, executor, administrator, guardian, attorney in fact, officer of a corporation, or otherwise acting in a fiduciary or representative capacity should indicate such capacity when signing and must submit proper evidence to the requesting party to so act on behalf of such Holder or beneficial Holder;
(9) The Noteholder Plan Proponents, subject to contrary order of the Bankruptcy Court, may waive any defects or irregularities as to any particular Ballot at any time, either before or after the Voting Deadline, and any such waivers will be documented in the Voting Report;
(10) Neither the Noteholder Plan Proponents, the Debtors, nor any other Person, will be under any duty to provide notification of defects or irregularities with respect to delivered Ballots other than as provided in the Voting Report, nor will any of them incur any liability for failure to provide such notification;
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(11) Unless waived or as ordered by the Bankruptcy Court, any defects or irregularities in connection with deliveries of Ballots must be cured prior to the Voting Deadline or such Ballots will not be counted;
(12) If a Claim is listed in the Schedules as being a non-Priority Claim (or is not listed in the Schedules) and a Proof of Claim is filed as a Priority Claim (in whole or in part), such Claim will be temporarily Allowed for voting purposes as a non-Priority Claim in an amount that such Claim would have been so Allowed in accordance with the tabulation procedures set forth in the Solicitation Procedures had such Proof of Claim been filed as a non-Priority Claim;
(13) If a Claim is listed in the Schedules as being an unsecured Claim (or is not listed in the Schedules) and a Proof of Claim is filed as a Secured Claim (in whole or in part), such Claim will be temporarily Allowed for voting purposes as an unsecured Claim in an amount that such Claim would have been so Allowed in accordance with the tabulation procedures set forth in the Solicitation Procedures had such Proof of Claim been filed as an unsecured Claim.
(14) Subject to any contrary order of the Bankruptcy Court, the Noteholder Plan Proponents reserve the right to reject any and all Ballots not in proper form, the acceptance of which, in the opinion of the Noteholder Plan Proponents, would not be in accordance with the provisions of the Bankruptcy Code or the Bankruptcy Rules; provided, however, that any such rejections will be documented in the Voting Report;
(15) If a Claim has been estimated or otherwise allowed for voting purposes only by an order of the Bankruptcy Court, such Claim shall be temporarily allowed in the amount so estimated or allowed by the Bankruptcy Court for voting purposes only and not for purposes of allowance or distribution;
(16) The following Ballots shall not be counted in determining the acceptance or rejection of the Plan: (i) any Ballot that is illegible or contains insufficient information to permit the identification of the Claim Holder; (ii) any Ballot cast by a Person that does not hold a Claim in a Class that is entitled to vote on the Plan; (iii) any Ballot cast for a Claim listed on the Debtors’ Schedules as contingent, unliquidated, and/or disputed for which no Proof of Claim was timely filed; (iv) any unsigned Ballot or one lacking an original signature; (v) any Ballot not marked to accept or reject the Plan, or marked both to accept and reject the Plan; and (vi) any Ballot submitted by any Person not entitled to vote pursuant to the procedures described in the Solicitation Procedures.
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J. | Subscription Procedures |
The following procedures will be used to effectuate the subscription to the Rights Offering.
(1) The Noteholder Plan Proponents will send Master Subscription Forms, to nominees and registered holders of Bond Claims determined as of the Rights Offering Record Date, including, without limitation, brokers, banks, dealers, or other agents or nominees (collectively, the “Nominees”). Each Nominee will receive copies of Beneficial Holder Subscription Forms together with appropriate instructions for the proper completion, due execution, and timely delivery of the Beneficial Holder Subscription Form, for distribution to the beneficial owners of the Claims for whom such Nominee holds such Claims.
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(2) In order to exercise Subscription Rights, each Holder of an Allowed Bond Claim must: (a) be a Holder as of the Rights Offering Record Date, and (b) return a duly completed Subscription Form to such Holder’s nominee so that the Master Subscription Form of such nominee, together with copies of the Beneficial Holder Subscription Forms, is actually received by the Rights Offering Agent on or before the Subscription Expiration Date. If the Rights Offering Agent for any reason does not receive a Holder’s Beneficial Holder Subscription Form on or prior to the Subscription Expiration Date, such Holder shall be deemed to have relinquished and waived its right to participate in the Rights Offering
(3) Each party that has exercised Subscription Rights shall receive the Effective Date Notice at least thirty (30) days prior to the Anticipated Effective Date, which will provide notice of the Rights Offering Funding Date. Each Holder of an Allowed Bond Claim that has exercised Subscription Rights is obligated pay to the Rights Offering Agent on or before the Rights Offering Funding Date such Holder’s Holder Purchase Payment in accordance with the wire instructions set forth on the Effective Date Notice or by bank or cashier’s check delivered to the Rights Offering Agent. If, on or prior to the Rights Offering Funding Date, the Rights Offering Agent for any reason does not receive from a given Holder of Subscription Rights the Holder Purchase Payment in immediately available funds as set forth above, such Holder shall be deemed to have relinquished and waived (i) its right under the Plan to receive any of the distribution of New Common Stock provided to Holders of Allowed Bond Claims pursuant to section 3.4.2 of the Plan and (ii) its right to participate in the Rights Offering; provided, however that the Put Parties have the right to bring an action in the Bankruptcy Court for specific performance and reimbursement of any costs and fees associated with such action, and all consequential damages arising from such breach, which consequential damages may exceed the amount of such Holder’s Holder Purchase Payment, against any Holder that has exercised Subscription Rights but does not provide the Holder Purchase Payment in immediately available funds as set forth above on or prior to the Rights Offering Funding Date.
(4) Following Confirmation, each party that has exercised Subscription Rights will receive the Effective Date Notice requiring payment on Rights Offering Funding Date. The Noteholder Plan Proponents will undertake commercially reasonable efforts to provide at least fifteen (15) days notice of the Rights Offering Funding Date and to provide for such date to be as close as possible to the Effective Date. However, the Noteholder Plan Proponents cannot predict the occurrence of the Effective Date with any certainty.
(5) Purchasers of Rights Offering Securities that do not provide certain documentation will receive no more than 4.9% of the Total Equity Shares of Newco and the remainder of their purchased Rights Offering Securities in Rights Offering Warrants. Rights Offering participants may receive all of their Rights Offering Securities in Rights Offering Shares if they provide documentation in the manner described and within the time required in the Effective Date Notice that they are MGCB Qualified. Rights Offering participants may receive Rights Offering Shares representing up to 14.9% of the Total Equity Shares of Newco if they provide documentation in the manner described and within the time required in the Effective Date Notice that they are qualified as an Institutional Investor with waivers of the Gaming Act’s eligibility and suitability requirements.
(6) Should the Plan be confirmed but not become effective, the Rights Offering
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Agent will return all Holder Purchase Payments received from Holders who elected to participate in the Rights Offering to such Holders. No further liability shall attach to any of the Rights Offering Agent, the Noteholder Plan Proponents, or the Debtors.
XI. RECOMMENDATION
In the Noteholder Plan Proponents’ opinion, the Plan is in the best interests of all creditors and urge the Holders of Claims entitled to vote to accept the Plan and to evidence such acceptance by returning their Ballots so they will be received by the Voting Agent no later than January 4, 2010 at 7:00 p.m. eastern standard time.
[Signature Pages Follow]
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| | |
December 7, 2009 | Respectfully Submitted, |
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| JOHN HANCOCK STRATEGIC INCOME FUND |
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| By: | /s/ Barry Evans |
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|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK TRUST STRATEGIC INCOME TRUST |
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| By: | /s/ Barry Evans |
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|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK FUNDS II STRATEGIC INCOME FUND |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
| | |
| JOHN HANCOCK HIGH YIELD FUND |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK TRUST HIGH INCOME TRUST |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
| | |
| JOHN HANCOCK FUNDS II HIGH |
| INCOME FUND |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK BOND FUND |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK INCOME SECURITIES TRUST |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK INVESTORS TRUST |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
| | |
| JOHN HANCOCK FUNDS III |
| LEVERAGED COMPANIES FUND |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK FUNDS II ACTIVE |
| BOND FUND |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| JOHN HANCOCK FUNDS TRUST |
| ACTIVE BOND TRUST |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| MANULIFE GLOBAL FUND U.S. BOND FUND |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| MANULIFE GLOBAL FUND U.S. HIGH YIELD FUND |
| | |
| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| MANULIFE GLOBAL FUND STRATEGIC INCOME |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| MIL STRATEGIC INCOME FUND |
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| By: | /s/ Barry Evans |
| |
|
| | Barry Evans |
| | President, Chief Investment Officer |
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| OPPENHEIMER CHAMPION INCOME FUND |
| By: Oppenheimer Funds, Inc. as investment advisor thereto |
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| By: | /s/ Margaret Hui |
| |
|
| | Margaret Hui |
| | Vice President |
| | |
| OPPENHEIMER STRATEGIC INCOME FUND |
| By: | Oppenheimer Funds, Inc. as investment |
| | advisor thereto |
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| By: | /s/ Margaret Hui |
| |
|
| | Margaret Hui |
| | Vice President |
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| OPPENHEIMER STRATEGIC BOND FUND / VA |
| By: Oppenheimer Funds, Inc. as investment advisor thereto |
| | |
| By: | /s/ Margaret Hui |
| |
|
| | Margaret Hui |
| | Vice President |
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| OPPENHEIMER HIGH INCOME FUND / VA |
| By: Oppenheimer Funds, Inc. as investment advisor thereto |
| | |
| By: | /s/ Margaret Hui |
| |
|
| | Margaret Hui |
| | Vice President |
| | |
| ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO |
| By: Oppenheimer Funds, Inc. as investment advisor thereto |
| | |
| By: | /s/ Margaret Hui |
| |
|
| | Margaret Hui |
| | Vice President |
| | |
| BRIGADE CAPITAL MANAGEMENT |
| | |
| By: | /s/ Don Morgan |
| |
|
| | Don Morgan |
| | Managing Partner |
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| SOLA LTD |
| | |
| By: | /s/ Christopher Pucillo |
| |
|
| | Christopher Pucillo |
| | Director |
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| SOLUS CORE OPPORTUNITIES |
| MASTER FUND LTD |
| | |
| By: | /s/ Christopher Pucillo |
| |
|
| | Christopher Pucillo |
| | Director |
| | |
| OFFICIAL COMMITTEE OF |
| UNSECURED CREDITORS |
| |
| By Its Counsel, Clark Hill PLLC |
| | |
| | |
| By: | /s/Joel D. Applebaum |
| |
|
| | Joel D. Applebaum |
| | Member, Clark Hill PLLC |
| | |
| DEUTSCHE BANK TRUST COMPANY |
| AMERICAS, AS INDENTURE TRUSTEE |
| | |
| By Its Counsel Moses & Singer LLP |
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| By: | /s/ Mark N. Parry |
| |
|
| | Mark N. Parry |
| | Partner, Moses & Singer LLP |
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| | |
December 7, 2009 | Prepared By: |
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| GOODWIN PROCTER LLP |
| | |
| By: | /s/ Allan S. Brilliant |
| |
|
| | Allan S. Brilliant |
| | Craig P. Druehl |
| | Stephen M. Wolpert |
| | K. Brent Tomer |
| The New York Times Building |
| 620 Eighth Avenue |
| New York, NY 10018 |
| abrilliant@goodwinprocter.com |
| cdruehl@goodwinprocter.com |
| swolpert@goodwinprocter.com |
| ktomer@goodwinprocter.com |
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| Counsel to Certain Noteholder Plan Proponents |
| | |
| CLARK HILL PLC |
| | |
| By: | /s/ Joel D. Applebaum |
| |
|
| | Joel D. Applebaum (P36774) |
| | Robert D. Gordon (P48627) |
| | Shannon L. Deeby (P60242) |
| 500 Woodward Avenue, Suite 3500 |
| Detroit, Michigan 48226-3435 |
| (313) 965-8300 |
| japplebaum@clarkhill.com |
| rgordon@clarkhill.com |
| sdeeby@clarkhill.com |
| | |
| Counsel to the Official Committee of |
| Unsecured Creditors |
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| MOSES AND SINGER LLP |
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| By: | /s/ Mark N. Parry |
| |
|
| | Mark N. Parry |
| | Alan Kolod |
| | Declan M. Butvick |
| The Chrysler Building |
| 405 Lexington Avenue |
| New York, New York 10174 |
| mparry@mosessinger.com |
| akolod@mosessinger.com |
| dbutvick@mosessinger.com |
| | |
| Counsel to Indenture Trustee |
