F-Star Socorro - Chapter 11 Plan Terms

Plan Terms

Overview

• The Ritz Project debtors — 27 entities affiliated with F-Star Socorro, L.P., which filed Chapter 11 on Nov. 4, 2025 in the Southern District of Texas — filed a joint liquidating plan on Sept. 18, 2026 under which all remaining assets vest in a plan trust on the effective date, with the trust holding, administering, liquidating, and distributing those assets to trust beneficiaries under the plan and a trust agreement.
• The plan's centerpiece is a June 17, 2026 term sheet with prepetition construction lender RC PV Lender I LLC, referred to in the plan as Madison, which fixes a consented secured claim, hands Madison the El Paso properties by credit bid, and channels villa sale proceeds to Madison, while expressly preserving the debtors' affirmative claims against Madison and a "clawback" against the consideration Madison receives.
  • The principal remaining asset, a 215-room ultra-luxury resort known as The Ritz-Carlton, Paradise Valley, is to be marketed and sold post-confirmation under court-approved bidding procedures, subject to a parent equity purchase option priced at no less than $570 million in cash plus adjustments.
  • The clawback itself is undefined in economic terms: the plan defines it only as the clawback agreed between the debtors and Madison and approved by the court, or as otherwise ordered by the court, and contemplates that it may remain unset as of the effective date.
• Seven affiliated 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, defined as the commercial property debtors — are not plan proponents, and the plan does not apply to them. Their assets or equity are to be sold, refinanced, or recapitalized in a separate commercial property transaction, the net proceeds of which are loaned on an intercompany basis to the plan trust on the effective date.
• The debtors are deemed substantively consolidated solely for voting, tabulating class acceptances, confirmation, and the resulting treatment and distributions; the plan itself serves as the consolidation motion, and the confirmation order would approve it effective as of the effective date. For those purposes the debtors' assets and liabilities are treated as merged into a single consolidated estate, intercompany guarantees and joint and several liabilities are eliminated with no distribution on account of them, and a claim asserted against more than one debtor on the same underlying liability is treated as a single claim satisfied from a single recovery. Consolidation does not merge the entities, change any debtor's separate legal existence, corporate structure, control, or tax classification, or transfer assets, and it does not affect assumed contracts, insurance proceeds, or any defense or counterclaim the debtors or trust hold on the Madison actions or other preserved actions. If the court declines to approve consolidation, the plan is treated as a separate plan for each debtor.

Madison Term Sheet and Consented Claim

• Size: Madison's consented claim is $570,310,000, plus interest at S+5.75% per annum, payable only to the extent the term sheet's conditions are met.
  • The claim arises under a May 11, 2023 construction loan agreement among Madison and nine borrower entities: Five Star Land Owner, Five Star Resort Owner, Unit 82 El Paso Owner, F-Star Socorro, the two JNY building owners, 11751 Alameda Avenue Owner, FSPV Res C, and 1340 Bob Hope Drive Owner.
  • The Madison construction loan claims remain disputed claims; for plan purposes they are treated as allowed in the consented amount, subject to reduction on account of any defenses, setoffs, counterclaims, or claims the debtors, the trust, or the trustee may assert under the term sheet and applicable law.
• Madison's bonding claims — losses on surety bonds Madison procured as principal to release mechanics', construction, or similar liens against debtor property — are carved out: they are not subject to the clawback or to any defense, setoff, counterclaim, or claim the debtors, trust, or trustee could otherwise assert against Madison.
• The plan preserves the Madison actions in full — every claim the debtors or the trust hold against Madison, known or unknown, arising before or after the petition date, including the pending suits Five Star Resort Owner LLC v. RC PV Lender I, LLC, No. CV2025-015943 (Ariz. Sup. Ct.) and JNY Building Owner LLC v. RC PV Lender I, LLC, No. 2025DCV1925 (Tex. Dist. 208th—El Paso). Both transfer to the plan trust, and the confirmation order is to include a finding that the trust has standing to pursue them.
  • The bankruptcy court retains jurisdiction over clawback interpretation, implementation, and enforcement, and is to fix the clawback amount and application following resolution of the Madison actions — but the plan expressly declines to confer exclusive jurisdiction over the Madison actions themselves or over suits against the debtors, their affiliates, or insiders pending in non-bankruptcy courts as of the effective date, which may proceed where they sit.

DIP Financing and Other Unclassified Claims

• Administrative expense claims, professional fee claims, priority tax claims, the Madison DIP claims, the replacement DIP claims, and the Corebridge adequate protection claims are unclassified and do not vote.
• Madison DIP claim: an $8.5 million initial advance plus interest at 16% per annum, funded under the Madison term sheet and authorized on an interim basis at Dkt. No. 793 and on a final basis at Dkt. No. 881. The claim is allowed on the effective date, by which point holders will already have been paid in full in cash from villas sale proceeds under the term sheet; the claim is then satisfied and released.
• Replacement DIP claim: the claims of B.H. Capital Ventures, LLC, the replacement DIP lender, under a Feb. 20, 2026 secured superpriority debtor-in-possession loan agreement with the debtors, authorized on an interim basis at Dkt. No. 366 and finally at Dkt. No. 467. These claims are resolved through implementation and consummation of the commercial property transaction, upon which they are fully released against the Ritz Project debtors, all securing liens terminate, and no separate treatment or distribution is made under the plan.
  • The replacement DIP loan agreement survives only to the extent necessary to let holders receive plan distributions, along with any provisions of the agreement or order of a type that survives repayment; the lender and its agents are otherwise automatically released from all duties and obligations on the effective date.
  • Neither the trustee nor the debtors may set off or recoup against distributions on account of replacement DIP claims.
  • Payment and satisfaction in full in cash of the replacement DIP claims, including accrued and unpaid interest, fees, and other amounts, is a condition to the effective date, though the plan elsewhere provides that those claims are resolved through the commercial property transaction and receive no separate treatment or distribution.
• Corebridge adequate protection claims: the junior adequate protection liens and other adequate protection claims of Corebridge Institutional Investments (U.S.), LLC granted under the replacement DIP order, to the extent they encumber or relate to Ritz Project debtor property. These follow the replacement DIP claims — resolved through the commercial property transaction, then fully released with liens terminated and no separate treatment or distribution.
• Administrative expense claims are paid in full from cash on hand and the commercial property loan proceeds on the latest of the effective date, 30 days after allowance, the ordinary-course due date, or a date agreed with the holder; the administrative bar date is the first business day 30 days after the effective date.
• Professional fee claims are paid from cash on hand or the commercial property loan proceeds at the debtors' or trustee's election, with final fee applications due 45 days after the effective date; to the extent a holder consents, any unpaid balance is satisfied in B interests in the plan trust.
• Priority tax claims are paid in cash on the latest of the effective date, 30 days after allowance, the date due and payable, or a date agreed with the holder, with the debtors or trustee retaining the option to make deferred cash payments under section 1129(a)(9)(C).

Sale of the El Paso Properties

• Madison's credit bid has already been designated the successful bid for the El Paso properties under the term sheet and the bidding procedures approved at Dkt. No. 852. Subject to court approval, the debtors will convey the properties to Madison or its designee free and clear in exchange for a $90 million reduction in the outstanding principal of the Madison construction loan claim, subject to the clawback.
• The El Paso properties comprise 1340 Bob Hope Drive, El Paso, with over 190,000 square feet of net rentable area on over nine acres; vacant land at 11091 Alameda Avenue, Socorro; vacant warehouse and distribution facilities at 11891 Alameda Avenue, Socorro, with over 860,000 square feet of net rentable area on over 34 acres; and five Socorro land parcels of 13.3579 acres (PID #15511), 25.52 acres (PID #173179), 41.5751 acres (PID #48686), 4.25 acres (PID #392798), and 1.8027 acres (PID #43982).
• If the clawback terms are not agreed or ordered before the effective date, the properties transfer to the plan trust on the effective date in a segregated, purely custodial capacity for Madison's sole benefit until the clawback is fixed, at which point they are conveyed to Madison subject to the clawback under a court order approving the sale. During that holding period the properties and their proceeds, rents, and products are not plan trust assets and are unavailable to satisfy any claim, trust fees and expenses, or any other obligation of the debtors, the estates, the trust, or the trustee; no lien, claim, interest, or encumbrance other than Madison's may attach; and the trustee may not sell, encumber, or transfer them except under the sale order or with Madison's written consent.

Sale of the Hotel Property

• The hotel property is the 215-room Ritz-Carlton, Paradise Valley at 7000 East Lincoln Drive, Paradise Valley, Arizona — 78 hotel guestrooms and 137 casitas, plus restaurant, retail, meeting, and ballroom space — together with all furniture, fixtures, equipment, and other tangible personal property at or used in connection with it.
• Timing: the sale must close no later than six months after court approval of the hotel bidding procedures, with intervening bid deadlines set in those procedures; the debtors may extend the deadline twice, by six months per extension, on notice filed with the court.
• The debtors will market and sell the hotel and its FF&E free and clear of liens, claims, interests, and encumbrances other than the statutory lien claims the buyer assumes, under section 363 bidding procedures, and may elect to include all or part of the undeveloped real estate in the process, whether within the hotel offering or as separate lots or bid packages.
• Qualified bidders must identify an experienced hotel developer committing to complete development of the property and reasonably acceptable to the debtors; identify sources and uses for completion; and commit to reasonable consultation rights for the plan trustee on development.
• Stalking horse: the procedures permit the debtors, in their business judgment, to designate a stalking horse with customary bid protections. Holders of parent equity interests or their designees are eligible, provided they meet the qualified bidder requirements and each participating holder and designee executes a release of all claims against the debtors, the trust, the trustee, and their related parties arising from or related to the cases, the plan, the trust agreement, or the contemplated transactions.
• Credit bid: the procedures must reserve 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 hotel, including on the basis of any pending or later-asserted challenge to Madison's claims.
  • Even so, if Madison wins the auction it takes the hotel subject to the clawback, and the credit bid amount applied to its construction loan claim remains subject to the clawback and to any defenses, setoffs, counterclaims, or claims the debtors, trust, or trustee may assert; neither the sale nor any order approving it 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, and any sale to a Madison-related purchaser — any person or entity Madison funds, finances, or sponsors directly or indirectly, or in which it holds equity — is likewise subject to the clawback.
  • If Madison is not the winning bidder, cash proceeds are held by the plan trust under the plan's distribution provisions, with liens on the hotel attaching to proceeds with the same validity and priority.
• Closing condition: the purchaser must assume all statutory lien claims — mechanics', materialmen's, and similar statutory liens against the debtors' real property.
• The debtors or trustee may, in their business judgment and on entry of a court order, abandon or dispose of any hotel FF&E that is burdensome or of inconsequential value; abandoned FF&E is not a plan trust asset, and no holder of a claim or interest has any claim or cause of action against the debtors or trustee on that account.

Equity Purchase Option

• Price: no less than $570 million in cash, plus the allowed Madison DIP claim, plus any allowed Madison bonding claims, plus the amount needed to satisfy all allowed general unsecured claims in full, minus the $90 million construction loan claim reduction on account of the El Paso sale, and minus any villas sale proceeds paid to Madison before the exercise deadline.
• Holders of parent equity interests or their designees may exercise the option by written notice to the debtors on or before a deadline set in the hotel bidding procedures, purchasing the hotel, the hotel FF&E, and the undeveloped real estate free and clear of liens, claims, interests, and encumbrances other than assumed statutory lien claims, with all liens, claims, interests, and encumbrances attaching to proceeds at the same validity and priority.
• Timely and valid exercise terminates the marketing process: the debtors sell at the purchase price and do not conduct an auction or otherwise continue the sale process, provided the exercising holders or designees satisfy the qualified bidder requirements. Each participating holder and designee must execute the same release of claims against the debtors, the trust, the trustee, and their related parties.
• If the option is not timely and validly exercised, the debtors proceed with marketing, auction, and sale under the hotel bidding procedures.

Villas and Undeveloped Real Estate

• The villas are the 80 Ritz-Carlton-branded, resort-integrated villas within the 7000 East Lincoln Villas Condominium in Paradise Valley, Maricopa County, Arizona. The debtors or trustee will use commercially reasonable efforts to complete sales of the remaining unsold villas under the real estate sales order (Dkt. No. 121), the stipulated final cash collateral order (Dkt. No. 453), and the Madison term sheet, subject to the clawback.
  • Alternatively, the debtors or trustee may in their sole discretion transfer ownership of or abandon one or more villas to Madison in exchange for a reduction in the construction loan claim in an amount to be determined by the court, subject to the clawback and to the return to Madison of any remaining villas sale proceeds.
  • Villas sale proceeds — gross proceeds less brokerage commissions, customary closing costs, and royalty fees — go solely to Madison in satisfaction of its DIP and construction loan claims under the cash collateral order and term sheet; no other trust beneficiary shares in them.
• Undeveloped real estate, identified on Schedule 1 to the plan as three Arizona parcels — Palmeraie Scottsdale, Palmeraie Paradise Valley, and the Ritz-Carlton estate lots — is marketed and sold by the trustee after the effective date if not sold earlier with the hotel, at the trustee's sole and absolute discretion and without court approval or other authorization, in a fashion designed to maximize value; the trustee need not run an auction if a private sale process would maximize value in his reasonable business judgment.
  • Net proceeds are held by the trust and distributed under the plan's waterfall, with liens attaching to proceeds at the same validity and priority.
  • Maintenance and preservation costs, including property taxes and insurance, are paid from the plan trust funding; to the extent necessary, the trustee may enter into junior financing on terms subject to his reasonable business judgment.
• The trustee may negotiate and consummate deed-in-lieu-of-foreclosure transactions or similar arrangements with Madison on any trust assets, subject to the clawback.

Plan Trust

• Plan trustee: Lance Miller, the debtors' chief restructuring officer, serves as the initial trustee, with successors appointed under the trust agreement. The trustee is a fiduciary of the trust beneficiaries and is compensated from the plan trust funding as part of trust fees and expenses, on terms disclosed in the trust agreement and required to be reasonable in light of the assets administered and the anticipated duration and complexity of the administration.
• The trust is established on the effective date to receive, hold, administer, liquidate, and distribute the trust assets, and is charged with liquidating those assets, reconciling and objecting to claims, investigating and prosecuting the trust actions including the Madison actions, distributing to beneficiaries, and winding down and dissolving the debtors. The trustee holds sole and exclusive authority to implement the liquidation without court approval or any other party's consent.
• Plan trust assets: the undeveloped real estate and any unsold villas or their sale proceeds; hotel and hotel FF&E sale proceeds; all preserved actions, including the Madison actions and all Chapter 5 claims; any contributed claims when assigned; the plan trust funding; the debtors' books and records; and all other estate property not otherwise distributed or administered. Villas sale proceeds are expressly excluded from distribution to beneficiaries and go solely to Madison.
• Assets vest in the trust on the effective date free and clear of claims, liens, interests, and encumbrances except as the plan provides, exempt from stamp, real estate transfer, mortgage recording, sales, use, and similar taxes under section 1146(a); the trust succeeds the debtors as to all trust assets and, acting through the trustee, is the sole estate representative under section 1123(b)(3).
• The trustee may settle, compromise, abandon, or dismiss trust actions without court approval, but must give the GUC class representative and the equity class representative at least seven days' prior written notice before settling or commencing any such action; the same seven-day notice applies before entering litigation financing. The trustee may elect to submit any settlement or financing to the court for approval.
• The trust indemnifies the trustee and its retained professionals from trust assets against loss, liability, and expense incurred absent fraud, gross negligence, or willful misconduct as determined by final order, with advancement of fees and expenses on written request and without any prior entitlement determination.
• Attorney-client, work product, and other privileges attaching to documents and communications transferred to the trust vest in and are controlled by the trust and trustee, and the transfer is not a waiver; the debtors must give the trustee at least 10 business days' written notice before taking any action on privileged records relating to trust assets that could effect a waiver, must preserve those records and deliver them on reasonable request, and must cooperate in giving the trustee access to books, records, and the current and former officers, directors, employees, and professionals with knowledge of the trust actions and trust assets.
• Governance: the trust agreement must be in form and substance reasonably acceptable to the creditors' committee and is filed with the plan supplement. It will provide for payment of trust fees and expenses; retention of counsel, accountants, financial advisors, and other professionals, including contingency-fee counsel; orderly liquidation and the manner and timing of distributions; and disposition of the trust actions, including prosecution, settlement, abandonment, sale, or dismissal of the Madison actions.
• Class representatives: the creditors' committee designates a GUC class representative for holders of general unsecured claims, compensated from the plan trust funding with the same timing and priority as other trust professionals; holders of parent equity interests designate an equity class representative, who serves without compensation from the trust. The GUC representative receives the same written reports the trustee provides to holders of A interests, and the equity representative those provided to holders of A and C interests, in each case subject to privilege and fiduciary limits, and both may reasonably consult with the trustee on matters affecting the holders they represent.
• Tax treatment: the debtors will treat the trust as a liquidating trust under Treasury Regulation section 301.7701-4(d) and a grantor trust under section 671 of the tax code, unless applicable law requires otherwise.
• Dissolution: once all disputed claims are allowed or disallowed by final order and all, or substantially all, trust assets have been distributed, the trustee seeks court authority to dissolve — no approval needed if the cases have closed. In no event may the trust remain in existence beyond five years from the trust establishment date unless the court, on motion made before that anniversary, finds a fixed-period extension necessary, which may not exceed three years together with prior extensions absent a favorable IRS private letter ruling or satisfactory opinion of counsel that further extension would not jeopardize liquidating trust status.

Plan Trust Funding and Sources of Consideration

• Plan trust funding consists of cash on hand remaining after satisfaction of all allowed claims entitled to cash payment on the effective date, together with the commercial property loan proceeds — the net proceeds available at closing of the commercial property transaction after closing costs, loaned intercompany from the commercial property debtors to the trust on the effective date.
• Distributions are funded from trust asset proceeds: cash on hand; villas sale proceeds received on or after the effective date; hotel and hotel FF&E sale proceeds; undeveloped real estate sale proceeds, if any; any recoveries on the Madison actions; and any other cash or trust asset proceeds — with villas sale proceeds again reserved solely to Madison.
• Trust fees and expenses, maintenance and carrying costs for trust assets, post-effective-date quarterly U.S. Trustee fees, undeveloped real estate property taxes and insurance, and the costs of investigating and pursuing the trust actions including the Madison actions are all paid from the plan trust funding as administrative expenses of the trust.
  • Trust fees and expenses may not be paid from Madison collateral or its proceeds, except as reasonably necessary to preserve trust assets.
  • Any shortfall is paid in full from available trust assets only after the allowed Madison bonding claims and construction loan claims have been paid and satisfied in full.

Trust Interests and Distribution Waterfall

• Five series of trust interests evidence entitlement to trust distributions. They are passive — no voting, consent, or other shareholder-like control rights except as the trust agreement provides — uncertificated, and non-transferable except in accordance with applicable law.
  • A interests: holders of Madison bonding claims and Madison construction loan claims.
  • B interests: any remaining allowed professional fee claims not otherwise satisfied in cash.
  • C interests: holders of allowed general unsecured claims.
  • D interests: holders of allowed insider and affiliate claims, subordinate in right of payment to all other claims including the C interests, and payable only from residual value after the A, B, and C interests are paid in full.
  • E interests: holders of allowed parent equity interests, payable only from residual value after the A, B, C, and D interests are paid in full.
• The trust holds and maintains all trust assets pending conclusion of the Madison actions, though the trustee may sell or dispose of assets and hold net proceeds before then where he determines in good faith that doing so is necessary or appropriate to preserve or maximize value or to maintain liquidating trust status.
• On conclusion of the Madison actions, the trustee liquidates and distributes solely under the following waterfall:
  • First, villas sale proceeds received on or after the effective date and not previously transferred or distributed to Madison go solely to Madison under the term sheet in satisfaction of the allowed construction loan claims.
  • Second, net proceeds from the sale of the hotel, the hotel FF&E, and the undeveloped real estate, if sold, together with all other cash remaining in the trust, are distributed to holders of A interests, then B, then C, then D, then E.
• Net proceeds of any undeveloped real estate sale, whether through the hotel process or a separate post-effective-date sale, follow the same order of priority.

Treatment of Claims and Equity Interests

• Claims and interests are classified by legal nature, the collateral securing them, and source of recovery, and are treated on a consolidated basis without regard to which debtor is obligated on or holds them. All claims and interests will be satisfied from trust distributions funded by liquidation of trust assets.
• Class 1, statutory lien claims (unimpaired, not entitled to vote): except as otherwise agreed by a holder, each statutory lien claim against the hotel is assumed by the hotel purchaser as a condition to closing, and holders receive no plan distribution.
• Class 2A, Madison bonding claims (impaired, entitled to vote): holders receive A interests in the plan trust, and the claims are not subject to the clawback or to any defense, setoff, counterclaim, or claim assertable against Madison.
• Class 2B, Madison construction loan claims (impaired, entitled to vote): holders receive, to the extent not previously applied during the cases and subject to the clawback, the El Paso properties in exchange for the $90 million claim reduction and the villas sale proceeds, plus A interests in the plan trust.
• Class 3, other secured claims (unimpaired, not entitled to vote): on the later of the effective date or 30 days after allowance, holders receive, at the debtors' or trustee's election, cash equal to the allowed claim, the collateral securing it, reinstatement, or other treatment rendering the claim unimpaired.
• Class 4, priority non-tax claims (unimpaired, not entitled to vote): on the later of the effective date or 30 days after allowance, holders receive, at the debtors' or trustee's election, cash equal to the allowed claim or other treatment rendering it unimpaired under section 1124.
• Class 5, general unsecured claims (impaired, entitled to vote): except to the extent previously satisfied during the cases, holders receive C interests entitling them to pro rata trust distributions. Rejection damages claims are treated as general unsecured claims and receive C interests on allowance.
• Class 6, Ritz-Carlton claims (impaired, entitled to vote): the debtors assume the Ritz-Carlton contracts — the May 18, 2007 residential license and development agreement, pre-commencement agreement, and operating agreement, each as amended — and The Ritz-Carlton Hotel Company, L.L.C. is deemed to have waived any right to cure amounts otherwise payable on assumption, receiving no plan distribution.
• Class 7, insider and affiliate claims (impaired, entitled to vote): holders receive D interests entitling them to pro rata trust distributions, subordinate in right of payment to all other claims.
• Class 8, non-parent equity interests (impaired, deemed to reject): interests are cancelled and extinguished with no recovery, though the trustee may in his sole discretion elect to retain them to maintain the corporate or organizational structure, in which case they continue in place but confer no distribution or other rights.
• Class 9, parent equity interests (impaired, entitled to vote): holders of equity in Five Star Development Properties, FSPV Mezz C Sub, F-Star Socorro, 5-Star Tech II-2, JNY, JNY II, 11751 Alameda Avenue Parent, Southwest Rojas Parent, and Unit 82 El Paso Owner receive E interests in the plan trust.

Voting and Confirmation

• Votes are tabulated on a consolidated basis for each class across all Ritz Project debtors, so holders vote together as a single class regardless of which debtor they hold against. Impaired claim classes accept at two-thirds in amount and more than one-half in number of those voting; impaired interest classes accept at two-thirds in amount of those voting.
• A voting-eligible class in which no holder votes is deemed to accept, and a class with no allowed or temporarily allowed holder as of the confirmation hearing date is deemed eliminated for voting and section 1129(a)(8) purposes.
• The plan provides that section 1129(a)(10) is satisfied by acceptance from one or more of the voting classes, and the debtors will seek confirmation under section 1129(b) as to any rejecting class; because of consolidation, section 1129(a)(10), the fair and equitable test, and the unfair discrimination test are to be evaluated for each consolidated class as a single class across the debtors rather than debtor by debtor.
• Stretto, Inc. serves as voting agent. The distribution record date is the date the confirmation hearing commences.

Compromise and Settlement

• The plan settles all claims, interests, and controversies relating to any allowed claim or interest or any distribution on account of one, with entry of the confirmation order approving that settlement; all plan distributions are final.
• The classification and manner of satisfying claims and interests takes all subordination rights into account, whether contractual, equitable, or under section 510. Those rights are terminated, enforcement actions are permanently enjoined, and distributions are not subject to payment to any beneficiary of a terminated subordination right or to levy, garnishment, attachment, or other legal process by such a beneficiary.

Conditions Precedent

• To confirmation: court approval of the disclosure statement as containing adequate information, and entry of the confirmation order on the docket and in full force and effect.
• To the effective date:
  • The confirmation order has become a final order in full force and effect.
  • The plan trustee has been appointed and has executed the trust agreement.
  • The trust has received cash sufficient to pay in full all allowed administrative expense claims, including professional fee claims, and allowed priority non-tax claims, as estimated by the debtors in consultation with the trustee, plus the plan trust funding.
  • The replacement DIP claims have been paid and satisfied in full in cash, including accrued and unpaid interest, fees, and other amounts.
  • All actions, documents, certificates, and agreements necessary to implement the plan have been effected, executed, delivered, and where required filed with applicable governmental units.
  • No order, ruling, or law is in effect staying, restraining, enjoining, prohibiting, or making illegal the plan transactions.
• The debtors may waive any confirmation or effective date condition in writing, in whole or in part, or the court may do so by order or other formal action. If conditions are neither satisfied nor waived, the confirmation order loses force, the plan is null and void, no distributions are made, no contracts or leases are deemed assumed or rejected, and the debtors and all holders are restored to the status quo ante as of the day before the confirmation date, with nothing in the plan or disclosure statement operating as a waiver, release, prejudice, or admission.

Releases

• Released parties: the Ritz Project debtors and their estates; B.H. Capital Ventures as replacement DIP lender; the creditors' committee and its members; Lance Miller as chief restructuring officer and any successor; the plan trustee; and each of their related parties, defined to reach current and former subsidiaries, affiliates, stockholders, members, partners, equity holders, directors, managers, officers, employees, agents, designees, attorneys, financial advisors, investment bankers, accountants, consultants, and other professionals and representatives. Madison is not a released party.
• Releasing parties: each released party; all holders of claims or interests who do not affirmatively opt out; and each of their related parties.
• Debtor releases run from the debtors, their estates, and any entity purporting to assert a claim derivatively through them, covering all claims and causes of action based on acts or circumstances on or before the effective date relating to the debtors or the cases; any released party's investment in or transfer of debtor securities or assets; any released party's acts or omissions concerning debtor indebtedness or equity investments; any released party acting as officer, director, direct or indirect sponsor, affiliate, shareholder, employee, agent, or advisor of a debtor; the subject matter of any claim or interest treated in the plan; business or contractual arrangements between a debtor and a released party, excluding future or continuing performance obligations; and the liquidation of claims and interests, the plan transactions, and vote solicitation.
• Third-party releases from releasing parties track the debtor release clause for clause, except that the capacity clause reaches a released party only as an officer, director, employee, agent, or advisor of a debtor, dropping the debtor release's reach to direct or indirect sponsors, affiliates, and shareholders. They are given in consideration of the debtors' obligations under the plan, plan distributions, and the cash and other consideration delivered in connection with the plan, and a holder avoids them only by affirmatively opting out.
• Carve-outs: nothing releases claims of the debtors or the trust against any insider — except an insider expressly released under a separate court-approved written agreement, and except Lance Miller in his capacity as CRO or plan trustee — or any insider's claims against Madison.

Exculpation and Injunction

• Exculpated parties are the debtors; the creditors' committee and each of its members; Lance Miller as CRO and any successor; and the plan trustee. Exculpation runs to acts and omissions on or after the petition date and before the effective date in connection with the cases, the debtors, the restructuring efforts, intercompany transactions, the plan and its negotiation and consummation, the sales of the El Paso properties, the villas, the hotel, the hotel FF&E, and the undeveloped real estate, plan administration and distributions, and related settlements, excepting acts or omissions determined in a final order to constitute actual fraud, willful misconduct, criminal acts, or gross negligence, and excepting obligations arising on or after the effective date under the plan, confirmation order, or implementing documents.
• Exculpated parties are indemnified by the plan trust for costs, expenses, and liabilities in any dispute relating to their actions in the cases, the plan, or any matter covered by the releases and exculpation, including attorneys' fees at hourly rates and any annual increase in the cost of binding directors' and officers' liability insurance for the trust resulting from the dispute; these obligations are trust administrative expenses payable ahead of any distribution to holders of equity interests or general unsecured claims. If a dispute renders the trust or an exculpated party uninsurable under D&O coverage, the plaintiff must post a cash bond with the trust sufficient to replace the coverage. An exculpated party that substantially prevails is entitled to an award of reasonable attorneys' fees and costs.
• Holders of claims and interests other than claims reinstated under the plan, and all other parties in interest, together with their current and former employees, agents, officers, directors, principals, and direct and indirect affiliates, are permanently enjoined from the effective date, as to any released or settled claim, interest, or cause of action, from:
  • commencing, conducting, or continuing any suit, action, or proceeding in any forum against the released parties, exculpated parties, or the debtors;
  • enforcing, levying, attaching, collecting, or otherwise recovering on any judgment, award, decree, or order against them;
  • creating, perfecting, or enforcing any encumbrance against them;
  • asserting any right of setoff, subrogation, or recoupment against any obligation due from them or against debtor property on account of such claims or interests; and
  • commencing or continuing any action on account of or with respect to any claim or interest released or settled under the plan.
• The injunction does not preclude parties from exercising rights under the plan and related documents or from bringing an action to enforce the plan, the confirmation order, or any implementing document. On entry of the confirmation order, holders are separately enjoined from taking any action to interfere with implementation or consummation.
• A gatekeeping provision bars any person or entity from commencing or pursuing a claim against the debtors or exculpated parties that relates to, or is reasonably likely to relate to, any released, settled, or exculpated matter without the court first determining after notice and a hearing that the claim has a likelihood of success and specifically authorizing it; as a condition to commencing litigation, the plaintiff must post a deposit with the trust in an amount the trustee estimates as reasonably necessary to cover potential indemnification costs, held pending the court's determination on prevailing-party fees.
• From the effective date, no retained professional may directly or indirectly represent, advise, or assist any person in asserting or pursuing a claim against the debtors, released parties, or exculpated parties arising out of the cases, the plan, the trust agreement, or the contemplated transactions; breach results in disgorgement of all fees the debtors paid that professional from the petition date through the effective date.
• Existing injunctions and stays under sections 105 and 362 remain in effect until the effective date, and the trustee may move, for cause, to extend stay or injunction protections to non-debtor third parties as necessary to protect trust assets, effectuate the plan, or preserve the value of trust claims.

Executory Contracts and Leases

• Contracts and leases on the schedule of assumed contracts and leases are deemed assumed on the effective date under sections 365 and 1123 and, where necessary, assigned to the plan trust, without further notice or court action. Everything else not previously assumed, assumed and assigned, or rejected — including anything assumed and assigned or rejected in connection with the El Paso sale — is deemed rejected on the effective date.
• Cure amounts are paid in full in cash on the later of 30 days after the effective date or 30 days after resolution of any cure dispute. The debtors must file a cure schedule no later than 10 calendar days before the confirmation hearing and serve it on counterparties, who are barred from disputing a listed cure amount, including a $0 cure, if they fail to object within 10 calendar days of filing.
• Rejection damages claims must be filed within 30 days after the effective date of rejection and are treated as general unsecured claims receiving C interests.
• All insurance policies, including D&O policies, under which the debtors have obligations in effect on the effective date are treated as executory contracts and assumed, and assigned to the trust if necessary to keep them in force.
• Indemnification obligations to current and former directors and officers are not discharged or impaired, are assumed by the plan trustee as an executory contract on the effective date, and continue as the trustee's obligations — except that the trustee will not indemnify directors or officers for claims arising out of any act or omission constituting knowing and intentional fraud, gross negligence, or willful misconduct.

Wind-Down, Distributions and Miscellaneous

• On the effective date, all estate property vests in the trust free and clear under sections 1141(b) and (c); the debtors' managers, directors, and officers are deemed to have resigned; and the plan trustee is appointed sole manager, director, and officer and becomes the sole representative of the debtors and their estates, substituted in their place in all pending matters without any motion or substitution of counsel.
• The debtors receive no discharge under section 1141(d)(3) because they will not engage in business after consummation and will be dissolved; holders' rights are governed by and limited to the treatment, settlements, releases, exculpation, injunctions, and distributions the plan and confirmation order provide.
• The cases are to be closed as soon as reasonably practicable, with the trustee retaining the right to move to reopen, including for claim reconciliation and later distributions. The creditors' committee dissolves on the effective date, surviving only for fee applications under sections 330 and 331 and any pending appeal of the confirmation order.
• On the effective date, all agreements and instruments evidencing any claim or interest are cancelled, including the Madison prepetition construction loan and its related guarantees, pledge agreements, security agreements, and collateral documents; any pledges of equity in any debtor; and documents connected with the initial advance. All liens securing secured claims are released, with holders directed to release collateral and execute confirming documents.
• Claim objections are due on or before the 180th day after the later of the effective date or the date a claim is filed, amended, or otherwise asserted in writing, subject to extension; after the effective date only the debtors or trustee may object. No postpetition interest accrues or is allowed except as provided in the replacement DIP order, in the Madison term sheet as to the bonding and construction loan claims, or as section 506(b) permits.
• The trustee has no obligation to make any distribution under $50 in cash, and no holder may receive more than its allowed claim plus any permitted postpetition interest. Unclaimed distributions revert to the trust one year after the later of the effective date or first allowance, with the holder's rights forever barred.
• The trustee may seek court authority to suspend, delay, or withhold distributions to any beneficiary whose conduct he reasonably determines materially interferes with plan implementation, trust administration, prosecution or resolution of the Madison actions or other trust actions, or the liquidation or distribution of trust assets, until the interference ceases and any resulting damages or costs are satisfied in full.
• Setoff and recoupment rights are preserved for the trustee under section 553, limited to amounts agreed with the holder or adjudicated by a court, with the replacement DIP claims carved out.
• Amendments before the effective date require the consent, not to be unreasonably withheld, of the replacement DIP lender and — only where the rights of holders of allowed general unsecured claims would be materially and adversely affected — the creditors' committee; the same consents govern any judicial reformation of an invalid provision. The debtors reserve the right to revoke or withdraw the plan before the effective date.
• Securities issued under the plan are exempt from registration to the maximum extent permitted by section 1145(a), and plan transfers are exempt from stamp, transfer, recording, and similar taxes under section 1146(a). New York law governs, except that entity governance matters follow each debtor's state of organization. The plan is deemed substantially consummated on the effective date. The trustee must preserve the debtors' documents and records for 12 months following the effective date. The confirmation order controls over the plan and plan supplement in any conflict; the plan controls over the disclosure statement and other implementing documents.