F-Star Socorro - Chapter 11 Plan Terms

Plan Terms

Overview

• The Ritz Project Debtors filed an amended joint liquidating plan on Oct. 14, 2026. They are F-Star Socorro, L.P. and affiliates that hold the Ritz-Carlton, Paradise Valley resort project and related Arizona and Texas real estate, and they have been in Chapter 11 since Nov. 4, 2025. All remaining assets vest on the effective date in a plan trust run by Lance Miller, the debtors' CRO. Existing management is deemed to resign, and Miller becomes the sole manager, director and officer of each debtor.
• The estates' assets include:
  • The Ritz-Carlton, Paradise Valley, a 215-room ultra-luxury resort at 7000 East Lincoln Drive, Paradise Valley, Arizona, with 78 hotel guestrooms, 137 casitas, and restaurant, retail, meeting and ballroom space
  • The remaining unsold units among 80 Ritz-Carlton-branded, resort-integrated villas in the 7000 East Lincoln Villas Condominium
  • Undeveloped land in Scottsdale and Paradise Valley, including the Palmeraie parcels and Ritz-Carlton estate lots
  • Commercial property and land in El Paso and Socorro, Texas, slated for sale to Madison
• The plan's economics turn on RC PV Lender I LLC (with its affiliates, Madison), the lender to several of the debtors under a May 11, 2023 construction loan agreement. Madison takes the El Paso properties, subject to court approval, and the villas sale proceeds, both subject to a clawback, and holds the senior trust interests. At the same time, the trust prosecutes the estates' claims against Madison and holds all assets until that litigation concludes.
• The plan does not apply to the affiliated Commercial Property Debtors: 5 Star Tech I, L.P.; 5 Star Tech II-1, LP; 5 Star Tech II-4, LP; 5 Star Tech I GP, LLC; 5 Star Tech II-1 GP, LLC; 5 Star Tech II-4 GP, LLC; and F-Star Socorro Holding Co., LLC. Even so, the plan relies on a Commercial Property Transaction, meaning one or more sales, refinancings, recapitalizations or other transactions involving their assets or equity. That transaction resolves the replacement DIP and Corebridge adequate protection claims, and its net proceeds are lent to the trust on the effective date.
• The Ritz Project Debtors are substantively consolidated solely for voting, confirmation and distributions. Intercompany guarantees and joint and several liability are eliminated, duplicate claims are treated as a single claim, and each debtor keeps its separate legal existence. If the court does not approve consolidation, the plan operates as a separate plan for each debtor.

Madison Claims, Clawback and Litigation

• Madison's construction loan claim is treated as allowed for plan purposes at $570.31 million. Interest at S+5.75% per annum is added solely to the extent it becomes payable under Madison's June 17, 2026 term sheet with the debtors, which the court approved in the order authorizing Madison's interim postpetition financing (Dkt. No. 793) and which is included in the plan supplement. The claim is nonetheless designated disputed, and it can still be reduced by any defenses, setoffs, counterclaims or claims the debtors or the trust assert under the term sheet and applicable law.
• The trust takes over all claims of the debtors against Madison (the Madison Actions), including the claims asserted in Five Star Resort Owner LLC v. R C P V Lender I, LLC (Ariz. Sup. Ct.) and JNY Building Owner LLC v. RC PV Lender I, LLC (Tex. Dist. 205th, El Paso). The confirmation order must include a finding that the trust has standing to pursue them on behalf of the debtors and their estates.
  • The plan does not give the bankruptcy court exclusive jurisdiction over the Madison Actions, which may proceed in the applicable non-bankruptcy courts.
  • The trustee may prosecute, settle, sell or abandon the Madison Actions without court approval, retain counsel on an hourly, hybrid or contingency basis, and obtain litigation financing. The costs of pursuing them are a trust administrative expense paid from trust funding.
  • Madison is not a released party, and the releases do not reach any insider's claims against Madison.
• The Clawback applies to each of Madison's recoveries on the El Paso properties and the villas, to any credit-bid purchase of the resort, and to any villa transfer or deed in lieu. The plan defines the Clawback as the clawback agreed between the debtors and Madison and approved by the court, or as the court otherwise orders. Once the Madison Actions are resolved in any court, the bankruptcy court keeps jurisdiction to determine the Clawback's amount and application and to grant relief to enforce it.
• Under the term sheet, Madison's bonding claims are not subject to the Clawback or to any estate defenses, setoffs or counterclaims. These claims cover losses on surety bonds that Madison arranged as principal to release mechanics', construction or similar liens on debtor property.
• On the effective date, the construction loan agreement and all related loan documents, guarantees, pledge agreements, security agreements and collateral documents, any pledges of equity in the debtors, and the initial advance documents are canceled, except to evidence the right to plan distributions.

Sale of El Paso Properties

• Madison's credit bid has been designated the successful bid for the El Paso properties under the term sheet and the court-approved El Paso bidding procedures (Dkt. No. 852). Subject to court approval, the debtors will sell the properties free and clear to Madison or its designee. In exchange, the outstanding principal of Madison's construction loan claim is reduced by $90 million, subject to the Clawback.
  • The properties consist of 1340 Bob Hope Drive in El Paso, with over 190,000 square feet of net rentable area on over 9 acres; vacant land at 11091 Alameda Avenue in Socorro; vacant warehouse and distribution facilities at 11891 Alameda Avenue in Socorro, with over 860,000 square feet of net rentable area on over 34 acres; and additional land parcels in Socorro.
• If Clawback terms have not been agreed or ordered before the effective date, the trust holds the El Paso properties in a segregated, purely custodial capacity for Madison's sole benefit. Once the Clawback is agreed or ordered, the trust conveys the properties to Madison, subject to the Clawback, under a court order approving the sale. In the interim:
  • The properties and their proceeds and rents are not trust assets and cannot be used to pay any claim or trust expense.
  • No lien other than Madison's may attach to them.
  • The trustee may not sell or encumber them except under the sale order or with Madison's written consent.

Sale of the Hotel Property

• Between confirmation and the effective date, the debtors will market and sell the resort and its furniture, fixtures and equipment (FF&E) under court-approved section 363 bidding procedures, with the sale itself also subject to court approval. The sale must close no later than six months after the court approves those procedures, and the deadline may be extended twice, by six months each time, on notice filed with the court.
  • The sale is free and clear except for statutory lien claims, which the buyer must assume as a closing condition. Unless Madison is the winning bidder, existing liens attach to the proceeds with the same validity, priority and extent.
  • The debtors may include any of the undeveloped real estate in the process, either with the resort or as separate lots or bid packages.
  • If Madison is not the winning bidder, the trust holds the cash proceeds for distribution under the plan, with liens attaching.
• Any qualified bidder must:
  • Identify an experienced hotel developer, reasonably acceptable to the debtors, that commits to complete development of the resort
  • Identify the sources and uses for completing the resort
  • Commit to give the trustee reasonable consultation rights on the development
• The debtors may designate a stalking horse bidder with bid protections. Parent equity holders or their designees are eligible if they meet the qualified bidder requirements and sign a release. The release covers all claims against the debtors, the trust, the trustee and their related parties arising from the cases, the plan, the trust agreement or the related transactions.
• With a court order, the debtors or the trustee may abandon any FF&E that is burdensome or of inconsequential value, and no holder has a claim on account of the abandonment.

Parent Equity Purchase Option

• Parent equity holders or their designees may buy the resort, its FF&E and the undeveloped real estate free and clear (other than assumed statutory lien claims) without an auction. The price is cash of no less than $570 million, adjusted as follows:
  • Plus the allowed Madison DIP claim
  • Plus any allowed Madison bonding claims
  • Plus the amount needed to pay all allowed general unsecured claims in full
  • Minus the $90 million reduction in Madison's construction loan claim from the El Paso sale
  • Minus any villas sale proceeds paid to Madison before the option deadline
• The option is exercisable by written notice by a deadline to be set in the hotel bidding procedures. All liens attach to the proceeds with their existing validity and priority.
• Timely exercise ends the marketing process, and the debtors sell to the exercising holders at the option price without an auction. The buyers must meet the qualified bidder requirements and sign the same release required of a stalking horse. If the option is not exercised, the marketing, auction and sale proceed.

Madison Credit Bid

• The hotel bidding procedures will preserve the debtors' right to seek a determination that cause exists under section 363(k) to deny or limit Madison's right to credit bid on the resort. That challenge may rest on any pending or later challenge to Madison's claims.
• If Madison is the winning bidder regardless of any such challenge, it acquires the resort subject to the Clawback. The credit bid amount applied to its construction loan claim also remains subject to the Clawback and to the estates' defenses, setoffs, counterclaims and claims. Neither the sale nor any sale order waives the Clawback or impairs the Madison Actions or any other trust action.
• Bidders must disclose any funding, financing, sponsorship or other arrangement with Madison. A sale is also subject to the Clawback if the buyer is funded, financed or sponsored by Madison, directly or indirectly, or if Madison holds equity in the buyer.

Villas and Undeveloped Real Estate

• Villas sale proceeds go solely to Madison, net of brokerage commissions, closing costs and royalty fees, in satisfaction of its DIP and construction loan claims under the cash collateral order (Dkt. No. 453) and the term sheet. No trust beneficiary shares in them.
• The debtors or the trustee will use commercially reasonable efforts to sell the remaining villas, subject to the Clawback, under the real estate sales order (Dkt. No. 121), the cash collateral order and the term sheet. Alternatively, they may transfer or abandon villas to Madison in exchange for a reduction of its construction loan claim in an amount the court sets. Any such transfer is subject to the Clawback and to the return to Madison of any remaining villas sale proceeds.
• Undeveloped real estate not sold with the resort may be sold by the trustee after the effective date, at the trustee's sole discretion. The trustee may use a separate process, including a private sale, and needs no court approval. Net proceeds run through the trust waterfall, with liens attaching.
  • Maintenance and preservation costs, including property taxes and insurance, are paid from trust funding, and the trustee may enter into junior financing to cover them.
• The trustee may also negotiate deed-in-lieu or similar arrangements with Madison on any trust asset, subject to the Clawback.

DIP Financing and Commercial Property Transaction

• Replacement DIP: B.H. Capital Ventures, LLC is the replacement DIP lender under a secured superpriority loan agreement dated Feb. 20, 2026 (interim order Dkt. No. 366; final order Dkt. No. 467).
  • Its claims are resolved through the Commercial Property Transaction, after which they are released against the Ritz Project Debtors and its liens terminate.
  • Payment of those claims in full in cash, including accrued interest and fees, is a condition to the effective date.
  • Neither the debtors nor the trustee may set off against distributions on those claims.
• Madison DIP: Madison funded an $8.5 million initial advance bearing interest at 16% per annum under the term sheet (interim order Dkt. No. 793; final order Dkt. No. 881). The plan provides that the Madison DIP claims are allowed on the effective date and are released. By then, they will have been paid in full in cash from villas sale proceeds.
• Corebridge: Corebridge Institutional Investments (U.S.), LLC holds adequate protection claims under the replacement DIP order, including its junior adequate protection liens. To the extent those claims encumber or relate to property of the Ritz Project Debtors, they are likewise resolved through the Commercial Property Transaction and released, and the liens are terminated.
• Commercial property loan: on the effective date, the Commercial Property Debtors lend the net proceeds of the Commercial Property Transaction, after closing costs, to the trust on an intercompany basis. Together with cash on hand, those proceeds pay administrative and professional fee claims and fund the trust's fees and expenses.

Plan Trust and Distribution Waterfall

• The trust holds all assets until the Madison Actions conclude. The trustee may sell assets earlier and hold the net proceeds where needed to preserve or maximize value or to keep the trust's liquidating trust tax status. After the Madison Actions conclude, the trustee distributes:
  • First, villas sale proceeds received on or after the effective date and not already paid to Madison, solely to Madison on its allowed construction loan claims
  • Second, net proceeds of the resort, its FF&E and the undeveloped real estate, together with all other trust cash, to holders of A, B, C, D and E Interests, in that order
• The trust issues passive, uncertificated interests, transferable only as applicable law permits:
  • A Interests: Madison bonding and construction loan claims
  • B Interests: allowed professional fee claims not paid in cash, with the holder's consent
  • C Interests: allowed general unsecured claims
  • D Interests: allowed insider and affiliate claims, subordinated to all other claims and paid only from residual value after A, B and C Interests are paid in full
  • E Interests: allowed parent equity interests, paid from residual value after A through D Interests are paid in full
• Trust fees and expenses are paid from trust funding. They may not be paid from Madison's collateral or its proceeds except as reasonably necessary to preserve trust assets. Any shortfall is paid from trust assets only after Madison's allowed bonding and construction loan claims are paid in full.
• Miller is compensated under the trust agreement from trust funding. The trust agreement must be reasonably acceptable to the creditors' committee.
• The trust indemnifies the trustee and its professionals from trust assets for losses incurred without fraud, gross negligence or willful misconduct, as determined by a final order, and advances their reasonable defense costs as incurred without any prior determination of entitlement.
• The creditors' committee designates a GUC class representative, who is paid from trust funding. This representative receives the same reports as A Interest holders and may consult on matters affecting C Interests.
• Parent equity holders designate an unpaid equity class representative, who receives the reports provided to A and C Interest holders and may consult on matters affecting E Interests. The trustee must give both class representatives at least seven days' written notice before settling or commencing a trust action or entering into litigation financing.
• The trustee may ask the court to suspend distributions to any beneficiary whose actions materially interfere with plan implementation, trust administration, the Madison Actions or asset liquidation. The suspension lasts until the interference stops and any resulting damages and costs are paid.
• The trust must dissolve within five years of its establishment. On a motion made before the fifth anniversary, the court may grant a fixed-period extension. Absent a favorable IRS private letter ruling or a satisfactory opinion of counsel, extensions are capped at three years in total.

Unclassified Claims

• Administrative claims are paid in full from cash on hand and the commercial property loan proceeds. Requests for payment are due on the first business day that is 30 days after the effective date; ordinary-course liabilities, allowed section 503(b)(9) claims and DIP claims, among others, are exempt. A request becomes allowed if no objection is filed by the 120th day after the effective date.
• Professional fee claims are paid from cash on hand or the commercial property loan proceeds after final fee applications, which are due on the 45th day after the effective date. If the professional consents, any unpaid portion is satisfied with B Interests.
• Priority tax claims are paid in full in cash. At the debtors' or trustee's option, they may instead be paid through deferred cash payments as permitted by section 1129(a)(9)(C).
• Replacement DIP, Madison DIP and Corebridge adequate protection claims are also unclassified and are treated as described above.

Classified Claims and Interests

• Class 1, statutory lien claims (unimpaired, not entitled to vote): mechanics', materialmen's and similar statutory lien claims against the resort are assumed by the resort buyer as a condition of the sale, unless the holder agrees otherwise. They receive no plan distributions.
• Class 2A, Madison bonding claims (impaired, entitled to vote): A Interests. The claims are not subject to the Clawback or to any estate defenses, setoffs or counterclaims.
• Class 2B, Madison construction loan claims (impaired, entitled to vote): treated as allowed at $570.31 million, plus interest at S+5.75% to the extent payable under the term sheet, subject to reduction. To the extent not already applied, and subject to the Clawback, Madison receives the El Paso properties for a $90 million claim reduction and the villas sale proceeds. It also receives A Interests.
• Class 3, other secured claims (unimpaired, not entitled to vote): at the debtors' or trustee's election, cash equal to the allowed claim, the collateral, reinstatement or other unimpairing treatment.
• Class 4, priority non-tax claims (unimpaired, not entitled to vote): cash equal to the allowed claim or other unimpairing treatment.
• Class 5, general unsecured claims (impaired, entitled to vote): pro rata C Interests.
• Class 6, Ritz-Carlton claims (impaired, entitled to vote): the debtors assume three agreements with The Ritz-Carlton Hotel Company, L.L.C., each dated May 18, 2007, as amended: the residential license and development agreement, the pre-commencement agreement and the operating agreement. Ritz-Carlton is deemed to waive any cure amounts and receives no plan distributions.
• Class 7, insider and affiliate claims (impaired, entitled to vote): pro rata D Interests, subordinated to all other claims.
• Class 8, non-parent equity interests (impaired, deemed to reject): canceled with no recovery. The trustee may retain them to preserve the corporate structure, but they carry no distribution rights.
• Class 9, parent equity interests (impaired, entitled to vote): E Interests. Parent equity means interests in Five Star Development Properties, LLC; FSPV Mezz C Sub LLC; F-Star Socorro, L.P.; 5-Star Tech II-2, L.P.; JNY, L.P.; JNY II, L.P.; 11751 Alameda Avenue Parent, LLC; Southwest Rojas Parent, LLC; and Unit 82 El Paso Owner, LLC.

Executory Contracts

• Contracts on the assumption schedule in the plan supplement are assumed on the effective date and assigned to the trust as needed; all other contracts not previously assumed, assigned or rejected are rejected. Cure amounts are paid in cash 30 days after the later of the effective date and the resolution of any cure dispute, and a debtor that loses a cure dispute may reject the contract within 10 business days. Rejection damages claims are general unsecured claims and receive C Interests.
• All insurance policies, including director and officer policies, are assumed. The trustee also assumes the debtors' indemnification obligations to directors and officers, except for claims arising from knowing and intentional fraud, gross negligence or willful misconduct.

Conditions to Effectiveness

• The effective date requires:
  • A final confirmation order
  • The trustee's appointment and execution of the trust agreement
  • The trust's receipt of the trust funding, plus cash sufficient to pay all allowed administrative claims (including professional fee claims) and priority non-tax claims, as estimated by the debtors in consultation with the trustee
  • Payment in full in cash of the replacement DIP claims, including accrued interest and fees
  • Execution of the implementing documents
  • The absence of any order or law blocking the plan transactions
• The debtors may waive any condition in writing. If the conditions are neither satisfied nor waived, the confirmation order has no further effect, the plan is void, and all parties return to their positions as of the day before confirmation.

Key Dates

• The hotel sale must close within six months after the court approves the hotel bidding procedures, with two six-month extensions available on notice. The deadline for the parent equity purchase option will be set in those procedures.
• The cure schedule is due no later than 10 calendar days before the confirmation hearing begins, and objections are due within 10 calendar days after it is filed. The distribution record date is the date the confirmation hearing begins.
• Administrative claim requests are due on the first business day that is 30 days after the effective date. Final fee applications are due on the 45th day after the effective date.
• Claim objections are due by the 180th day after the later of the effective date and the filing or amendment of the claim, subject to extension.
• Rejection damages claims must be filed within 30 days after the rejection takes effect.

Releases, Exculpation and Injunction

• The released parties are the debtors and their estates; replacement DIP lender B.H. Capital Ventures; the creditors' committee and its members; CRO Lance Miller or any successor; the plan trustee; and the related parties of each.
• The debtors and their estates release the released parties. So do all holders of claims and interests that do not affirmatively opt out, as well as the released parties themselves and their related parties. The releases cover claims based on acts or events through the effective date relating to:
  • The debtors and the cases
  • Investments in, or indebtedness of, the debtors
  • Claims treated under the plan
  • Business dealings with the debtors
  • The plan transactions
• Neither release covers claims against any insider. The exceptions are an insider released under a separate court-approved written agreement and Lance Miller in his role as CRO or trustee.
• Exculpation covers the debtors, the creditors' committee and its members, the CRO and the trustee for acts from the petition date until the effective date. This includes the sales of the El Paso properties, villas, resort, FF&E and undeveloped real estate. Acts that a final order finds to be actual fraud, willful misconduct, criminal acts or gross negligence are excluded.
• The trust indemnifies exculpated parties for the costs of any dispute over their conduct in the cases, including hourly attorneys' fees and any increase in director and officer insurance costs.
  • This indemnification is a trust administrative expense paid before any distribution to equity or general unsecured creditors.
  • A plaintiff whose suit leaves the trust or an exculpated party uninsurable must post a cash bond sufficient to replace the coverage.
  • An exculpated party that substantially prevails recovers its reasonable fees and costs.
• Holders are permanently enjoined from pursuing released or settled claims against the released parties, the exculpated parties or the debtors, and from entry of the confirmation order all holders are enjoined from interfering with plan implementation.
  • No one may sue the debtors or an exculpated party over released, settled or exculpated matters unless the court first finds, after notice and a hearing, that the claim has a likelihood of success and specifically authorizes the suit; the bankruptcy court keeps exclusive jurisdiction over those claims.
  • The plaintiff must also post a deposit, in an amount the trustee estimates, to cover potential indemnification costs.
• After the effective date, no retained professional may help anyone pursue claims against the debtors, released parties or exculpated parties relating to the cases, the plan or the trust. A breach requires the professional to give back all fees the debtors paid it from the petition date through the effective date.
• The trustee may ask the court to extend the automatic stay or other case injunctions to non-debtor third parties to protect trust assets or claims. Because the debtors will be dissolved, they receive no discharge under section 1141(d)(3).

Voting, Confirmation and Amendments

• Votes are tabulated by class on a consolidated basis across the Ritz Project Debtors. The section 1129(a)(10) and section 1129(b) tests are applied to each consolidated class rather than debtor by debtor, and the debtors will seek cramdown under section 1129(b) of any rejecting class.
• A voting class in which no holder votes is deemed to accept. A class with no allowed or temporarily allowed claim or interest as of the confirmation hearing is eliminated.
• The debtors may amend the plan before the effective date with the consent of the replacement DIP lender, not to be unreasonably withheld. The creditors' committee's consent is also required, solely where the rights of allowed general unsecured creditors would be materially and adversely affected. The same consents apply if the court rewrites a provision held invalid before confirmation.
• The creditors' committee dissolves on the effective date, except for fee applications and any appeals of the confirmation order.