Lugano Diamonds & Jewelry - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• On July 9, 2026, the Debtors — Lugano Diamonds & Jewelry Inc., Lugano Holding, Inc., Lugano Buyer, Inc., K.L.D. Jewelry, LLC, and Lugano Prive, LLC — filed the Amended Chapter 11 Plan of Liquidation in their jointly administered chapter 11 cases pending in the U.S. Bankruptcy Court for the District of Delaware, Case No. 25-12055 (BLS), which provides for the resolution of the outstanding Claims and Equity Interests asserted against the Debtors.
  • The Debtors filed voluntary chapter 11 petitions on Nov. 16, 2025, and the U.S. Trustee appointed the Creditors' Committee on Nov. 25, 2025.
  • The Debtors filed the original Chapter 11 Plan of Liquidation on June 24, 2026 [Dkt. No. 612].
• The Plan is implemented through various acts and transactions, including the CODI Settlement, the establishment of the Liquidation Trust, the appointment of the Liquidation Trustee, and the making of Distributions by the Liquidation Trust.
• The Plan Support Agreement, by and among the CODI Parties, the Debtors, and the Creditors' Committee, establishes the Debtors' obligations to, among other things, propose a Plan containing provisions consistent with all material terms of the CODI Settlement, and all such parties' obligations to, among other things, vote to accept the Plan and support its Confirmation.
• The Debtors believe that Confirmation and implementation of the Plan are the best option to maximize value under the circumstances and urge all Holders of Claims in Impaired Classes entitled to vote to support confirmation. The Disclosure Statement and related materials transmitted therewith include a letter from the Creditors' Committee supporting acceptance of the Plan.

Background to the CODI Settlement

• The Debtors were established by Mordechai Haim Ferder and his wife, Idit Ferder, in 2004 as a designer, manufacturer, and retailer of high-end jewelry. In 2021, CODI acquired an indirect majority interest in Lugano Diamonds & Jewelry Inc. from Mr. Ferder and his affiliated entities.
  • Following the transaction, Lugano Holding, Inc. was the sole shareholder of Lugano Buyer, Inc., which in turn was the sole shareholder of Lugano Diamonds & Jewelry Inc.; Mr. Ferder and his affiliated entities acquired a significant portion of the equity of Lugano Holding, Inc., with CODI becoming the majority equity holder. Mr. Ferder continued as chief executive officer and a member of the board of directors of certain Debtors.
  • Lugano Diamonds & Jewelry Inc. and Lugano Buyer, Inc., as co-borrowers, and CODI, as lender, entered into a Credit Agreement dated as of Sept. 3, 2021, with the other Debtors as guarantors. Pursuant to a Guarantee and Collateral Agreement of the same date, the obligations are secured by liens on substantially all of the Debtors' personal property. Outstanding obligations under the Credit Agreement, including principal, prepetition interest, and fees, exceed $718 million.
• On May 7, 2025, CODI and its parent entity filed a Form 8-K disclosing that CODI had commenced an internal investigation into the financing, accounting, and inventory practices of Lugano Holding, Inc. based on concerns reported to CODI management, and that Mr. Ferder had resigned as Chief Executive Officer of Lugano Holding, Inc. and from all offices and directorships previously held with the applicable Debtors and their subsidiaries and affiliates.
• On June 24, 2025, Lugano Diamonds & Jewelry, Inc. commenced an action against Mr. Ferder and a related trust for which he is a trustee, asserting Claims for fraud, concealment, constructive fraud, and breach of fiduciary duty.
• On July 9, 2025, Thomas FitzGerald and L. Spencer Wells joined the board of directors of Lugano Diamonds & Jewelry Inc. (the "Lugano Board"), and on July 16, 2025, the Lugano Board delegated certain matters to a newly formed Special Committee of that board comprising Messrs. FitzGerald and Wells, with authority to investigate, bring, and resolve potential claims.
  • The Special Committee retained independent advisors and commenced an internal investigation surrounding the fraud allegations, including to determine what Claims may exist as a result. The Special Committee, the full board of Lugano Diamonds & Jewelry Inc., and the board of directors, board of managers, or manager/member of each other Debtor authorized the commencement of the Chapter 11 Cases.
  • The UCC, working with the Special Committee on behalf of the Debtors, also commenced an investigation into the fraud allegations and the extent and validity of the liens and Claims asserted by CODI.
• On Jan. 27, 2026, CODI filed a secured Claim against the Debtors, identified as proof of claim number 153 in the amount of $718,222,591.91 (the "CODI Prepetition Claim"), and withdrew two proofs of claim filed on Jan. 19, 2026. CODI has also asserted Claims arising under the DIP Order and the Cash Collateral Order for, among other things, interim financing and adequate protection (the "CODI Postpetition Claims").
• As part of the ongoing investigations, the Debtors (through the Special Committee), CODI, and the UCC agreed to non-binding mediation, held between May 6 and May 7, 2026, which resulted in an agreement in principle to material terms resolving the disputes between the parties.

CODI Settlement Agreement

• The Settlement Agreement and Mutual Release is entered into by and among the Debtors, Compass Diversified Holdings ("CODI Parent"), Compass Group Diversified Holdings LLC ("CODI"), Compass Group Management LLC ("CGM"), Sostratus, LLC, and the UCC. It was executed in June 2026 — by the CODI entities on June 22, 2026 (Stephen Keller for CODI Parent and CODI; Zachary T. Sawtelle for CGM and Sostratus) and by the UCC, through its chair, Adam Rothstein, on June 24, 2026.
• The settlement becomes effective upon satisfaction of the following conditions:
  • Approval and execution by the requisite majority of the members of the relevant boards of directors or managers of CODI Parent, CODI, CGM, and Sostratus in accordance with their respective governing documents;
  • Execution and delivery by each of the parties of counterpart signature pages to the Agreement and the PSA to counsel for the other parties; and
  • Occurrence of the Plan Effective Date.
• Pursuant to Bankruptcy Code §§ 1123(a)(5), 1123(b)(3), and 1123(b)(6), the settlements contained in the Plan and the Liquidation Trust Agreement constitute a good faith compromise and settlement of the claims and controversies resolved thereunder, including the CODI Settlement and the Intercompany Claims. Entry of the Confirmation Order constitutes the Bankruptcy Court's approval of such compromises as of the Effective Date and its finding that they are in the best interest of the Debtors, the Estates, and their respective property and stakeholders, and are fair, equitable, and reasonable.
• Disputes arising under or relating to the Agreement after the Effective Date are to be decided by the Bankruptcy Court, to whose sole and exclusive jurisdiction the parties consent. The Agreement is governed by Delaware law and, together with the PSA and Plan, constitutes the final and fully-integrated agreement of the parties concerning the subject matter.
• In the event of any inconsistency between the Agreement and the Plan, the Plan governs. The parties designate the Bankruptcy Release Parties and CODI Release Parties as third-party beneficiaries with the right to enforce the releases provided under the Agreement.

CODI Recoveries

• The CODI Claim is Allowed as of the Effective Date, and its Holder receives the Special Beneficial Interest in the Liquidation Trust in full satisfaction, settlement, and release of the CODI Claim. Pursuant to the terms of the CODI Settlement, the DIP Claims do not receive a separate distribution but are deemed satisfied by the treatment provided to the CODI Claim. The Special Beneficial Interest provides the following consideration:
  • CODI Specified Asset Recoveries — on the Plan Effective Date, payment of 34.79% of the Effective Date Cash (the Liquidation Trust Agreement instead measures this initial Distribution as 34.79% of the Cash in the Specified Asset Account, a segregated account holding Agency Agreement Cash and all Net Proceeds of Specified Assets); a subsequent Distribution equal to 34.79% of Cash released from the Effective Date Reserves and Professional Fee Reserve to the extent not necessary to satisfy all Allowed Administrative, Professional Fee, Priority, Priority Tax, Other Secured, and Convenience Claims; and periodic Distributions equal to 34.79% of all Net Proceeds of Specified Assets received by the Liquidation Trust after the Effective Date.
  • CODI Auditor Recovery — periodic Distributions equal to 45% of Net Proceeds of all GT Claims. The Liquidation Trustee must ensure its professionals maintain a record of fees and expenses under a separate billing designation for all work associated with the CODI Auditor Recovery.
  • CODI Remainder Recovery — periodic Distributions equal to 25% of Net Proceeds of Causes of Action (including recoveries under any representations and warranty policy and Avoidance Actions) other than the GT Claims and Specified Assets.
  • CODI Residual Recovery — one or more Distributions of any Net Proceeds remaining in the Liquidation Trust after Holders of General Beneficial Interests receive Distributions equal to the full amount of their Allowed General Unsecured Claims plus GUC Interest.
• All CODI Recoveries are made by wire transfer or similar transfer of immediately available funds pursuant to written directions provided by CODI to the Debtors or the Liquidation Trustee, as applicable.
• Cash, net of the Effective Date Reserves and Professional Fee Reserve, held by the Liquidation Trust as of the Effective Date or received thereafter and not used for Distributions on account of the Special Beneficial Interest constitutes Liquidation Trust Available Cash.
• The balance of each recovery becomes Liquidation Trust Available Cash for Distribution to Holders of General Beneficial Interests — 65.21% of Effective Date Cash, of released reserve Cash, and of Specified Asset Net Proceeds; 55% of GT Claim Net Proceeds; and 75% of Net Proceeds of other Causes of Action.
• Under the Liquidation Trust Agreement, Distributions are made in the following order: (i) funding of the Trust Expense Reserve, Professional Fee Reserve, and Effective Date Reserves and payment of all Allowed Administrative, Professional Fee, Priority, Priority Tax, Other Secured, and Convenience Claims (supplemented with Liquidation Trust Available Cash if the reserves prove inadequate); (ii) the Initial CODI Distribution; (iii) the Subsequent CODI Distribution; (iv) periodic Distributions on the Special Beneficial Interest; (v) Pro Rata Distributions to Holders of General Beneficial Interests up to their Allowed General Unsecured Claims and then GUC Interest; and (vi) the CODI Residual Recovery.

Assignment of Claims Against the Auditor

• CODI irrevocably assigns and transfers the CODI Auditor Claims — all Causes of Action CODI holds or could hold against Grant Thornton LLP and its affiliates ("GT"), which served as auditor for the Debtors and CODI, arising from or related to GT's services to any of the Debtors and services GT rendered to CODI in connection with the Debtors — to the Liquidation Trust. CODI's GT Claim is deemed contributed to the Liquidation Trust as of the later of Sept. 15, 2026, and the Effective Date.
• The Plan offers holders of general unsecured Claims the opportunity to assign any individual Claims or Causes of Action against GT to the Liquidation Trust in exchange for an enhanced recovery on such creditor's unsecured Claim; provided that such enhanced recovery shall not affect the treatment of the CODI Claims, reduce the CODI Recoveries, or have any material adverse effect of any kind on any of the CODI Parties or CODI Related Parties.

Classification and Treatment of Claims

• The Plan classifies Claims (other than Administrative Claims, Priority Tax Claims, and DIP Claims, which are unclassified) and Equity Interests as follows:
  • Class 1 — Other Secured Claims: Unimpaired; not entitled to vote (conclusively presumed to accept). For voting purposes and to comply with Bankruptcy Code § 1122(a), each Allowed Other Secured Claim is deemed to be in its own subclass unless its Holder shares the same Lien on Collateral with another such Holder. At the Liquidation Trustee's option, each Holder receives Cash from the Liquidation Trust in the Allowed amount of its Claim, return of the Collateral securing such Claim without representation or warranty (and without recourse against any Person), or such other recovery necessary to satisfy Bankruptcy Code § 1129 to render the Claim Unimpaired.
  • Class 2 — Priority Claims: Unimpaired; not entitled to vote (conclusively presumed to accept). Each Holder receives Cash from the Liquidation Trust equal to the unpaid portion of its Allowed Claim.
  • Class 3 — CODI Claim: Impaired; entitled to vote. Treated as described above through the Special Beneficial Interest.
  • Class 4 — General Unsecured Claims: Impaired; entitled to vote. Each Holder receives on the Effective Date its Pro Rata share of the General Beneficial Interests in the Liquidation Trust, and is entitled to GUC Interest to the extent of Liquidation Trust Available Cash if Distributions equal the full amount of the Allowed General Unsecured Claim. GUC Interest accrues at the federal judgment rate in effect at the time of calculation, applied to each Distribution for the period between the Petition Date and the date of that Distribution, and is payable only if and when Distributions satisfy the Holder's Allowed General Unsecured Claim in full.
  • Class 5 — Convenience Class Claims: Impaired; entitled to vote. A Convenience Class Claim is any Claim that would otherwise be a General Unsecured Claim but is either in an amount of $10,000 or less or is reduced to $10,000 pursuant to a Convenience Class Election. Each Holder receives Cash from the Liquidation Trust equal to 50% of its Allowed Convenience Class Claim.
  • Class 6 — Intercompany Claims: Impaired; deemed to reject and not entitled to vote. Holders receive no property or interest in property under the Plan.
  • Class 7 — Subordinated Claims: Impaired; deemed to reject and not entitled to vote. Holders receive no property or interest in property under the Plan.
  • Class 8 — Equity Interests: Impaired; deemed to reject and not entitled to vote. All Equity Interests are cancelled as of the Effective Date and Holders receive or retain nothing.
• Contributing Creditor enhancement: Each Contributing Creditor that executes the documents the Liquidation Trustee reasonably requests to complete the transfer of its Contributed Claim to the Liquidation Trust is entitled to an additional Distribution — not counting against any other Distribution — on account of its General Beneficial Interest equal to its Pro Rata portion of 10% of the Net Proceeds of all Causes of Action against GT, net of the CODI share of those Net Proceeds, subject to the Liquidation Trustee (in consultation with the Liquidation Trust Oversight Board) independently and reasonably confirming that the Contributed Claim is colorable and supportable by evidence.
  • By way of illustration, assuming $1 million of Net Proceeds of all Causes of Action against GT: $450,000 to CODI; $55,000 shared Pro Rata among all Contributing Creditors based on each Contributing Creditor's Allowed General Unsecured Claim amount relative to all Contributing Creditors' Allowed General Unsecured Claim amounts; and $495,000 to the Liquidation Trust as Liquidation Trust Available Cash.
• Unclassified Claims:
  • Administrative Claims — each Holder receives Cash from the Liquidation Trust equal to the unpaid portion of the Allowed Claim, or such other less favorable treatment as agreed in writing. Requests for payment (other than Professional Fee Claims) must be Filed no later than the Administrative Claims Bar Date, failing which the Claim is forever barred and deemed released and extinguished as of the Effective Date without any objection, notice, or Bankruptcy Court action; no request for payment is required with respect to an Administrative Claim previously Allowed.
  • Professional Fee Claims and Ordinary Course Professional Fee Claims — paid in Cash by the Liquidation Trustee from the Professional Fee Reserve or Liquidation Trust Assets, as applicable. Final fee applications must be Filed and served on counsel to the Liquidation Trust, CODI, and the U.S. Trustee no later than 45 calendar days after the Effective Date, with objections due 21 calendar days after filing (or such longer period allowed by order or agreement with the requesting Professional). Payment is made within five Business Days after entry of the approving Final Order.
  • Priority Tax Claims — at the Liquidation Trustee's option and in accordance with Bankruptcy Code § 1129(a)(9)(C), paid in Cash on the later of the Effective Date and 30 calendar days after allowance; in regular installments over a period not exceeding five years after the Petition Date, plus interest at the rate determined under applicable nonbankruptcy law as of the calendar month in which the Effective Date occurs and without prejudice to prepayment without penalty; or on such other treatment as agreed in writing. Allowed Priority Tax Claims not due and payable on the Effective Date are paid in the ordinary course, and an Allowed Priority Tax Claim that is also an Other Secured Claim is treated as an Other Secured Claim if not otherwise paid in full.
• Any Allowed General Unsecured Claim that is an Insured Claim is Allowed only to the extent of the Uninsured Portion of such Claim. Nothing waives any Causes of Action against the Debtors' insurance carriers, and the Debtors and the Liquidation Trust expressly reserve the right to assert that insurance coverage is property of the Estates.

Liquidation Trust

• A Liquidation Trust is established on the Effective Date as a Delaware statutory trust named the "Lugano Liquidation Trust" for the benefit of the Liquidation Trust Beneficiaries, for the purpose of pursuing, monetizing, or liquidating the Liquidation Trust Assets and making Distributions in accordance with Treasury Regulation § 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business.
  • Michael Goldberg serves as the initial Liquidation Trustee, receiving compensation and expense reimbursement as set forth in the Liquidation Trust Agreement. CSC Delaware Trust Company serves as Delaware trustee.
  • The Liquidation Trustee is the exclusive trustee of the Liquidation Trust Assets for purposes of 31 U.S.C. § 3713(b) and 26 U.S.C. § 6012(b)(3), and the representative of the Estates appointed pursuant to Bankruptcy Code § 1123(b)(3).
  • Subject to the supervision of the Liquidation Trust Oversight Board, the Liquidation Trustee has the authority to carry out and implement all applicable provisions of the Plan on behalf of the Debtors and the Estates without the need for Bankruptcy Court approval, except as otherwise provided.
  • The Liquidation Trust Agreement limits the liability of the Liquidation Trustee and the Liquidation Trust Oversight Board and provides for indemnification of the Liquidation Trustee, the Oversight Board, and their respective Related Parties.
• Liquidation Trust Oversight Board: A board comprising five members established under the Plan and Article III of the Liquidation Trust Agreement oversees the Liquidation Trustee's performance of his duties.
  • The initial members are Stephen Keller, Adam Rothstein, Avi Wazana, Spencer Wells, and Craig Barbarosh; Messrs. Wells and Barbarosh are the independent members.
• Trustee authority thresholds: Under the Liquidation Trust Agreement, the Liquidation Trustee must obtain the Oversight Board's majority consent to, among other things, terminate or extend the Trust's term; commence or pursue Causes of Action and Claim objections above a specified threshold; monetize any Trust Asset valued at $250,000 or more; engage any Advisor whose expected fees and expenses are estimated to total $150,000 or more and agree to its fee arrangement; enter into litigation financing arrangements; invest Trust Assets or Trust income; make Distributions from the Disputed Claims Reserve; reserve Cash for contingent liabilities; change the Trustee's compensation; make structural changes to the Trust; take action with respect to Reorganized Lugano, including its dissolution; dispute, settle, or otherwise resolve the Tax Refund; appoint a Registrar; and dispose of books and records.
• Oversight Board governance: Board Members owe the Beneficiaries fiduciary duties consistent with those a creditors' committee member owes to unsecured creditors and must act in the interests of the Beneficiaries as a whole. A Board Member with a conflict must disclose it, may be limited to non-voting participation as determined by the Independent Board Members and the Trustee, and may be denied access to related analyses and work product; a Board Member holding a Claim that is not Allowed may not participate as to that Claim, a former Creditors' Committee member is conflicted as to Claims involving former Committee members, and only the Independent Board Members and the Trustee may vote on matters pertaining to Causes of Action relating to a potential Ponzi scheme or other fraud in respect of Investment Contracts. Vacancies are filled by CODI for the CODI-designated seat, by the remaining Creditors' Committee-designated members for a Committee seat, and by the remaining Board Members for an independent seat subject to the CODI-designated member's approval, not to be unreasonably withheld. Only the Independent Board Members are compensated, on terms the Creditors' Committee and CODI must agree no later than the Effective Date.
• Reporting and information rights: The Liquidation Trustee must provide quarterly reports to the Oversight Board on the status of Trust Assets, Cash balances and reserves, the Disputed Claims Reserve, Disputed Claims, Causes of Action, and Trust Expenses, and may redact portions relating to a Board Member's own Claim. On account of its Special Beneficial Interest, CODI and its agents, auditors, and advisors may receive unredacted quarterly reports from the CODI-designated Board Member, subject to the Trust's confidentiality provisions.
• Liquidation Trust Interests: The Trust has two series — the Special Beneficial Interest, issued to the holder of the CODI Secured Claim, and the General Beneficial Interests, issued Pro Rata to holders of General Unsecured Claims. Interests are uncertificated and recorded on the books and records of the Liquidation Trust, which recording is all that is required for Distribution.
  • Except as required or effected by operation of law, a Beneficiary may not sell, transfer, assign, pledge, hypothecate, or otherwise dispose of its Beneficial Interest without the Trustee's written consent.
  • To the extent the interests are deemed "securities," their issuance is exempt from registration under the Securities Act and applicable state and local laws pursuant to Bankruptcy Code § 1145.
• Beneficiary rights are limited: Beneficiaries hold no title to the Trust Assets, no governance or voting rights, and no standing to direct the Liquidation Trustee or to institute proceedings with respect to the Trust Assets, and (other than CODI) no right to demand an accounting. Any action against the Trust, the Liquidation Trustee, or a Board Member must be brought in the U.S. Bankruptcy Court for the District of Delaware, jury trial is waived, the prevailing party is entitled to fees, the Beneficiary may be required to post a bond, and such rights do not survive the Trust's termination.
• Vesting: On the Effective Date, the Liquidation Trust is automatically vested with all Liquidation Trust Assets free and clear of all Claims, Liens, or interests, subject only to the Liquidation Trust Interests and Liquidation Trust Expenses, and such vesting is exempt from stamp, transfer, mortgage reporting, sales, use, or similar taxes. To the extent the Debtors cannot or are prohibited from transferring any asset, the Post-Confirmation Debtor holds such asset and its proceeds in trust for the Liquidation Trust.
  • The Debtors must transfer to the Trustee, or provide reasonable access to, all records in their possession or control, including file servers, email servers, email archiving systems, master journals, software platforms, and backups. The Trust may invoke Bankruptcy Code § 542 to pursue turnover of Trust Assets.
  • All privileges are preserved and vest in the Liquidation Trust; following the transfer, the Trustee may invoke or waive any privilege in his sole discretion.
• Contributed Claims: Except with respect to CODI's GT Claim, all Contributed Claims are irrevocably contributed to the Liquidation Trust on the Effective Date. Nothing in the Plan, Confirmation Order, Liquidation Trust Agreement, or Disclosure Statement waives, releases, or relinquishes any Contributed Claim, and the Liquidation Trust may assert all Contributed Claims fully as if they had not been contributed.
• Tax treatment: The transfer of Trust Assets is intended to be treated as a transfer to the Beneficiaries followed by their transfer to the Liquidation Trust, so that the Trust is a grantor trust and the Beneficiaries are its grantors and deemed owners for all tax purposes. The Liquidation Trustee must file grantor trust returns under Treasury Regulation § 1.671-4(a); determine the fair market value of the Trust Assets as of the Effective Date and notify the Beneficiaries of that valuation, which must be used consistently by all parties for all income tax purposes; elect under Treasury Regulation § 1.468B-9(c) to treat the Disputed Claims Reserve as a disputed ownership fund taxed as a separate entity; and send Beneficiaries annual statements of their interests and shares of Trust income, gain, loss, deduction, and credit.
• Duration: The Trustee, the Trust, and the Oversight Board are discharged or dissolved when the Trustee determines that pursuit of remaining unresolved Causes of Action and monetization of other Trust Assets are unlikely to yield sufficient additional proceeds to justify further pursuit, all objections to Disputed Claims are fully resolved, and all required distributions to Beneficiaries have been made.
  • Absent earlier termination, the Trust terminates and dissolves on the fifth anniversary of the Effective Date unless the Bankruptcy Court, on a motion made within the six-month period before such anniversary, determines that a fixed-period extension is necessary to facilitate or complete the recovery on, and liquidation and distribution of, the Trust Assets. Any extension may not exceed five years, together with any prior extensions, without a favorable IRS letter ruling or an opinion of counsel satisfactory to the Trustee that further extension would not adversely affect the Trust's status as a liquidating trust for U.S. federal income tax purposes.
• Plan § 5.03(m) provides that, to the extent of any inconsistency between the Plan and the Liquidation Trust Agreement, the Plan controls, and the Liquidation Trust Agreement itself provides that where a conflict exists among the Plan, the Confirmation Order, and that agreement, the Confirmation Order controls. Under Plan § 11.21, however, the Plan controls over the Liquidation Trust Agreement unless the Confirmation Order specifically refers to Section 11.21, in which case the Confirmation Order controls.

Reserves and the Agreed Pre-Effective Date Fee Budget

• On the Effective Date, the Liquidation Trustee must create and thereafter maintain the Effective Date Reserves, the Professional Fee Reserve, and the Liquidation Trust Expense Reserve. A Cash reserve may only be used for the Distributions for which it was established, and any Cash ultimately not needed becomes Liquidation Trust Available Cash.
  • Effective Date Reserves — Cash reserves, subject to CODI's approval in all respects, for payments on account of estimated Allowed Administrative Claims (other than Professional Fee Claims), Priority Claims, Priority Tax Claims, Other Secured Claims, and Convenience Claims. The initial amount must be agreed among the Creditors' Committee, the Debtors, and CODI and set forth in the Plan Supplement. The Effective Date Reserves are not Liquidation Trust Assets; the Liquidation Trustee establishes, maintains, and administers them as disbursing agent for the Debtors and holds them in trust for the holders of those Claims, who are not Liquidation Trust Beneficiaries on account of them, and the Oversight Board oversees the Liquidation Trustee as if the Liquidation Trust Agreement's terms applied. Once those Claims are Allowed or disallowed and paid, remaining funds transfer to the Liquidation Trust as Liquidation Trust Available Cash.
  • Professional Fee Reserve — must be fully funded on the Effective Date in an amount equal to the Professionals' and Ordinary Course Professionals' estimates of unpaid Fee Claims as of the Effective Date, incorporating any Cash already set aside under the Cash Collateral Order. Each Professional must deliver its estimate to the Debtors, the Creditors' Committee, and CODI no later than three Business Days prior to the Effective Date; disputes may be submitted to the Bankruptcy Court, which, following notice and a hearing, fixes the required funding. Cash in the Professional Fee Reserve in excess of the aggregate Allowed Professional Fee Claims is first distributed in accordance with the 34.79% Distribution on the Special Beneficial Interest, with any additional amounts becoming Liquidation Trust Available Cash. The Professional Fee Reserve is not an Effective Date Reserve.
  • Liquidation Trust Expense Reserve — segregated Cash in an amount reasonably necessary to maintain the value of the Liquidation Trust Assets pending monetization, fund Liquidation Trust Expenses, and satisfy or reserve for other liabilities incurred or anticipated by the Trustee (including indemnification obligations, in amounts and for the period the Trustee determines in good faith without the Oversight Board's consent). The initial reserve established on the Effective Date is subject to approval by CODI and a majority of the Oversight Board, not to be unreasonably withheld, and the Trustee may increase it from time to time with the Oversight Board's majority consent. The Liquidation Trust Agreement must include provisions for additional future funding, and on termination all remaining Cash in the reserve becomes Liquidation Trust Available Cash for Distribution.
• Effective Date Cash consists of all Cash in the Estates on the Effective Date, less the amount required to fund the Effective Date Reserves and the lesser of (i) Professional Fees incurred between the Petition Date and the Effective Date and (ii) the Agreed Pre-Effective Date Fee Budget.
• The Agreed Pre-Effective Date Fee Budget, agreed among CODI, the Debtors, the Special Committee, and the Creditors' Committee and attached as Exhibit A to the Plan, establishes the maximum amount of Professional Fees that may be deducted from Effective Date Cash for purposes of determining the Effective Date Distribution on account of the CODI Claim. It is not a cap on the total amount of Professional Fees allowable for the period between the Petition Date and the Effective Date.
  • Debtors' and Special Committee's Professionals: $1,571,765
  • Creditors' Committee Professionals: $955,000
  • Total: $2,526,765
  • The Debtors, CODI, the Special Committee, and the Creditors Committee have agreed to further allocations with respect to individual Professionals.

Substantive Consolidation

• Pursuant to Bankruptcy Code § 1123(a)(5)(C) and the Bankruptcy Court's equitable powers under § 105(a), the Plan substantively consolidates all Debtors' Estates into a single consolidated Estate for all purposes under the Plan and the Liquidation Trust Agreement, including the Allowance of Claims, Distributions, and voting. On the Effective Date:
  • The Assets and liabilities of the Debtors are merged into the single consolidated Estate;
  • All guaranties by one Debtor of another Debtor's obligations are eliminated and extinguished, so that any Claim, guaranty, and joint or several liability constitutes only one obligation of the consolidated Estate;
  • Each Claim Filed against any Debtor is treated as Filed against, and as one Claim against and obligation of, the consolidated Estate;
  • All Intercompany Claims are eliminated and extinguished, with Holders receiving no Distributions or property on account thereof; and
  • For purposes of setoff under Bankruptcy Code § 553, the Debtors are treated as one entity.
• Such consolidation does not affect any subordination provisions or the Liquidation Trust's ability to seek subordination of any Claim or Equity Interest. All post-Effective Date fees payable to the U.S. Trustee under 28 U.S.C. § 1930 are calculated on a separate legal entity basis for each Post-Effective Date Debtor.
• The Disclosure Statement and the Plan constitute a motion requesting approval of the substantive consolidation. Unless a Creditor purportedly affected by the consolidation objects in writing on or before the deadline to object to confirmation of the Plan (or such other date the Bankruptcy Court fixes), consolidation may be approved at the Confirmation Hearing; if objections are timely filed, a hearing will be scheduled, which may but need not be the Confirmation Hearing.
  • If the Bankruptcy Court determines that consolidation of any given Debtors is not appropriate, the Debtors may request confirmation and approval of treatment and Distributions on an adjusted, Debtor-by-Debtor basis, or that the Plan be treated as a separate Plan for each Debtor. The Debtors separately reserve the right to seek confirmation without implementing consolidation of any given Debtor and, in their reasonable discretion, to request approval of treatment of and Distributions to any given Class on an adjusted, Debtor-by-Debtor basis.

Wind-Down and Post-Confirmation Debtor

• On the Effective Date, each of the Debtors' existing directors, officers, and managers is terminated automatically and the Special Committee is disbanded. Such persons have no ongoing rights against or obligations (except confidentiality obligations) to the Debtors or the Estates, except that each may file a proof of claim by the Rejection Claims Bar Date if not barred by the Bar Date Order, or a request for payment of an Administrative Claim.
• Each Debtor other than the Post-Confirmation Debtor is dissolved automatically on the Effective Date without further Corporate Action, corporate or limited liability company filings, or payments, and all existing Interests in the Debtors are cancelled.
• Lugano Holding, Inc. continues in existence as the Post-Confirmation Debtor solely to implement the Post-Confirmation Debtor Functions — the winding up of the affairs of the Post-Confirmation Debtor, the other Debtors, and their subsidiaries, including terminating their corporate or organizational existence and monetizing the Tax Refund.
  • On the Effective Date, the 100% ownership interest in the Post-Confirmation Debtor is issued to the Liquidation Trust, and the Liquidation Trustee serves as its sole board member and officer. Its certificate of incorporation and bylaws are deemed amended to the extent necessary to carry out the Plan.
  • The Tax Refund vests in the Post-Confirmation Debtor on the Effective Date, which holds its rights therein in trust for the Liquidation Trust. Cash proceeds, after payment of expenses incurred in collection, must be irrevocably transferred to the Liquidation Trust and paid in accordance with the Plan and the CODI Settlement.
  • Under the Liquidation Trust Agreement, Tax Refund Claims are not transferred to the Trust but are retained and prosecuted by "Reorganized Lugano" — the same entity the Plan calls the Post-Confirmation Debtor, Lugano Holding, Inc., wholly owned by the Trust and controlled by the Trustee as its sole officer and director — with the Trustee appointed as Plan Administrator and chief executive officer and the Oversight Board serving as its board. Proceeds must be transferred to the Trust free and clear of all claims and interests and deposited in the Specified Asset Account. Once all Tax Refund Claims are prosecuted to completion, including any appeals, and all proceeds transferred to the Trust as Liquidation Trust Available Cash, the Trustee may dissolve Reorganized Lugano.
• All property of the Debtors' Estates — including the Specified Assets (but excluding the Tax Refund), all Causes of Action, and any Cash (including the Liquidation Trust Expense Reserve, but excluding the Effective Date Reserves and Professional Fee Reserve) — vests in the Liquidation Trust, subject only to any Liens and the terms of the CODI Settlement. To the extent avoided, Liens are preserved for the benefit of the Liquidation Trust.
• The Liquidation Trustee may use, acquire, and dispose of property, and conduct any sales, liquidations, or monetization of Estate Assets on any terms it deems appropriate, without supervision or approval by the Bankruptcy Court, other than restrictions imposed by the Plan, the Liquidation Trust Agreement, the Plan Supplement documents, or the Confirmation Order.
• The Creditors' Committee is automatically dissolved on the Effective Date, and each member (solely in that capacity) and each retained Professional is released and discharged from all rights, duties, responsibilities, and obligations arising from or related to the Debtors, Committee membership, the Plan, or the Chapter 11 Cases, except with respect to Professional Fee Claims.
• Statutory Fees under 28 U.S.C. § 1930 and any interest thereon due and owing as of the Effective Date must be paid by the Debtors in full in Cash on the Effective Date, with the Liquidation Trustee paying all such fees thereafter when due and remaining obligated, notwithstanding the substantive consolidation, to pay applicable Statutory Fees for each Debtor until the earliest of that Debtor's case being closed, dismissed, or converted to chapter 7. The Debtors must file all monthly operating reports due prior to the Effective Date on UST Form 11-MOR, and the Liquidation Trustee must thereafter file final monthly operating reports and separate UST Form 11-PCR reports. The U.S. Trustee provides no release under the Plan, Statutory Fees are Allowed, and no proof of claim or administrative expense request is required. Nothing in the Plan or Plan Supplement determines that future distributions are not disbursements under 28 U.S.C. § 1930, exempts them from that section, or prejudices the U.S. Trustee's rights thereunder, all of which are fully reserved; these provisions control over any contrary provision of the Plan or Plan Supplement.
• Final Decree and case closing: Upon determining that all Claims have been Allowed, disallowed, expunged, or withdrawn and all Liquidation Trust Assets liquidated, abandoned, or otherwise administered, the Liquidation Trustee must move for entry of the Final Decree with respect to the Post-Confirmation Debtor, upon which the Trustee, the Oversight Board, and their Related Parties are discharged.
  • At any time following the Effective Date, the Liquidation Trust may, upon notice and a hearing, close all Chapter 11 Cases except that of the Post-Confirmation Debtor — in which all contested matters, including Claim objections, are administered and heard — and change the name of the Post-Confirmation Debtor and the case caption as desired.

Preservation of Causes of Action

• The Liquidation Trust and, with respect to the Tax Refund, the Post-Confirmation Debtor, as successor in interest to the Debtors and the Estates, has the exclusive right, power, and interest to institute, commence, file, pursue, prosecute, enforce, abandon, settle, compromise, release, waive, dismiss, or withdraw any and all Causes of Action, including any GT Claim and Contributed Claim, without further order of the Bankruptcy Court, except as otherwise provided in the Liquidation Trust Agreement or as required by Bankruptcy Rule 7023.1.
• The failure to specifically identify any potential or existing Avoidance Actions or Causes of Action in the Disclosure Statement or the Plan does not limit the rights of the Liquidation Trust or the Post-Confirmation Debtor to pursue them. Unless expressly waived, relinquished, released, compromised, or settled in the Plan or a Final Order, all Causes of Action are expressly reserved, and no preclusion doctrine — including res judicata, collateral estoppel, issue preclusion, claim preclusion, waiver, estoppel, or laches — applies. The right to pursue or adopt any claims alleged in any lawsuit in which a Debtor or the Liquidation Trust is a plaintiff, defendant, or interested party is fully reserved as against any Person that is not a Released Party, including plaintiffs and co-defendants in those lawsuits. A non-exclusive list of Causes of Action is included in the Plan Supplement.
• Specified Assets consist of the Agency Agreement Proceeds, the Tax Refund, the Theft Policy, and Causes of Action to establish and realize upon amounts due to the Estates with respect thereto.
  • Agency Agreement Proceeds comprise all Cash, including proceeds from the irrevocable standby letter of credit naming Lugano Diamond & Jewelry, Inc. and CODI Parent as beneficiaries, received by the Debtors under the Agency Agreement with Enhanced Retail Funding LLC, net of any reasonable expenses necessary to recover such proceeds.
  • The Theft Policy comprises the Primary and Excess All Risks (LDI) policies, policy numbers B080123941W24 and B080123942W24, issued by Lloyd's (syndicated), and the Jewelers Block policy number B1161K25DY247 issued by Lloyd's (syndicated) and companies, insuring against, among other things, theft of certain of the Debtors' precious stone inventory.

Executory Contracts and Unexpired Leases

• On the Effective Date, the Debtors assume all executory contracts and unexpired leases listed on the Schedule of Assumed Agreements and retain or assign them as set forth thereon; all other executory contracts and unexpired leases are rejected, other than those previously assumed or rejected. Any assumed contracts and leases not assigned to a third party are transferred to the Liquidation Trust and constitute Liquidation Trust Assets.
  • The Debtors reserve the right to amend the Schedule of Assumed Agreements at any time prior to the Effective Date, with notice to affected counterparties. The Confirmation Order constitutes approval of the assumption and assignment, and of the rejection, of contracts and leases as applicable.
  • Cure Payments identified on the Schedule of Assumed Agreements must be made in Cash within ten Business Days following the later of the Effective Date and entry of a Final Order resolving disputes regarding the Cure Payment amount, adequate assurance of future performance, or any other assumption and assignment matter. Payment of the Cure Payment satisfies in full any prepetition or postpetition arrearage or other Claim with respect to such contract or lease.
  • Objections to assumption or assignment, including the proposed Cure Payment, must be Filed and served by the deadline established by the Disclosure Statement Order; failure to do so waives all such objections. Absent a timely objection, the Confirmation Order is a conclusive determination of the cure and compensation due and a conclusive finding that the Liquidation Trust has demonstrated adequate assurance of future performance. Upon tender of the Cure Payment, any related Filed or Scheduled Claim is disallowed with prejudice without further order.
• Insurance policies: On the Effective Date, the Theft Policy, the Debtors' directors and officers liability insurance contracts, and any other Insurance Contracts set forth in the Plan Supplement that are in force, current, and not expired are treated as executory contracts, assumed by the Debtors, and assigned to the Liquidation Trust under Bankruptcy Code § 365 (the "Insurance Rights Transfer"). All other Insurance Contracts, if deemed executory, are rejected as of the Petition Date.
• Insurance-related protections: Nothing in the Plan alters the rights and obligations of the Debtors, the Estates, the Post-Confirmation Debtor, the Liquidation Trust, and the Insurers under the Insurance Contracts, modifies coverage or its terms, or affects insurers' rights in collateral or security. The automatic stay and the Plan's injunctions are deemed modified to permit claimants with valid workers' compensation or direct action claims to proceed and to permit insurers to administer, defend, settle, and pay such claims in the ordinary course; the Liquidation Trust is never liable for such Claims. Each Insurer is enjoined from denying, refusing, altering, or delaying coverage on any basis related to the Chapter 11 Cases or the Plan, though insurers may exercise setoff or recoupment permitted by law or the policies and must return remaining collateral to the Liquidation Trust. Any party legally precluded from transferring insurance rights must take actions reasonably requested to pursue them for the Liquidation Trust's benefit and promptly turn over recoveries, holding any such amounts for the Trust in the meantime.
• Directors' and officers' rights preserved: Nothing in the Plan or the Liquidation Trust Agreement transfers to the Liquidation Trust, impairs, enjoins, or precludes any director's or officer's assertion of setoff, recoupment, or other defense — including any arising from indemnification obligations or D&O insurance — in connection with any Cause of Action asserted against them by or on behalf of the Debtors, the Estates, the Liquidation Trust, or their successors; releases or limits their rights to coverage, indemnification, advancement of expenses, or contribution under the Debtors' organizational documents, any agreement with a Debtor, or applicable law (subject to the Bar Date Order, the Plan, and the Confirmation Order); requires them to seek relief from the automatic stay or the Plan's injunctions to access coverage; or grants the Estates or the Liquidation Trust any interest in payments made to or on behalf of them under such policies. The Debtors, the Estates, and the Liquidation Trust otherwise reserve all rights to pursue Causes of Action against directors and officers and to oppose any such assertion.
• Rejection Claims must be Filed and served no later than the Rejection Claims Bar Date — the first Business Day 30 calendar days after the Effective Date for rejections under the Plan or Confirmation Order — failing which they are forever disallowed, barred, and unenforceable, with no Distributions on account thereof. The Liquidation Trust may object to timely Filed Rejection Claims on or prior to the Claim Objection Deadline.

Provisions Governing Distributions

• The Liquidation Trustee makes all Distributions under the Plan to Holders of Allowed Claims and is the Estates' disbursing agent for Distributions from the Effective Date Reserves, without any bond, surety, or other security. Distributions to Liquidation Trust Beneficiaries are governed by the Liquidation Trust Agreement, and the Liquidation Trustee calculates Liquidation Trust Available Cash and related Distribution amounts, including the Disputed Claims Reserve, in his reasonable discretion, with authority to hold back reasonable reserves for other contingencies.
• The Distribution Record Date is the later of the Confirmation Date and the date, not later than the Effective Date, established by the Liquidation Trust Agreement. At the close of business on that date the claims register closes, and neither the Liquidation Trustee nor his Related Parties has any obligation to recognize any putative transfer of Claims occurring thereafter.
• Cash payments are made, at the Liquidation Trustee's sole discretion, by check or by wire, electronic funds transfer, or ACH from a domestic bank, and to foreign Holders by means customary in the applicable jurisdiction. All Distributions are made in U.S. Dollars, with Claims denominated in foreign currency converted at the rate in place as of the Petition Date in accordance with Bankruptcy Code § 502(b). Checks are void if not cashed within 180 calendar days of issuance.
• Except as provided in Bankruptcy Code § 506(b) and Allowed by Final Order, the Plan, the Confirmation Order, or the Liquidation Trust Agreement, postpetition interest does not accrue and is not paid on Claims, and no Holder is entitled to interest, penalties, fees, or late charges from and after the Petition Date; Holders of General Beneficial Interests remain entitled to GUC Interest.
• No Distribution of fractional cents is made (fractions are rounded to the nearest whole cent, half cents rounding up), and the Liquidation Trustee is not required to and will not Distribute where the amount payable on a Distribution Date is less than $10.00, with such amounts redistributed to other Creditors and the Holder forever barred from asserting any Claim as to the eliminated Distribution.
• No Distribution or other consideration is made on account of a Contingent, Disputed, or Unliquidated Claim unless and until it becomes an Allowed Claim. For purposes of calculating Distributions, such Claims are treated as if Allowed — for Unliquidated Claims, in amounts determined in the Liquidation Trustee's reasonable discretion, or in the amount estimated by the Bankruptcy Court — and amounts that may become due are held in the Disputed Claims Reserve, which the Liquidation Trust elects to treat as a "disputed ownership fund" under Treasury Regulation § 1.468B-9(c)(2)(ii), such that Creditors holding those Claims are not treated as transferors of the property transferred to the reserve. When an order allowing a Disputed Claim becomes a Final Order, the Holder receives a catch-up Distribution on the earlier of the next regularly scheduled Distribution Date and 30 days thereafter, with any taxes payable by the reserve withheld.
• Distributions are made to the addresses in the applicable proof of claim, the Schedules where no proof of claim was Filed, or any written notice of address change delivered to the Claims Agent or the Liquidation Trustee; the Holder bears responsibility for providing a current address. Undeliverable Distributions are held in trust until the earlier of the date claimed and 180 calendar days after the Distribution, after which the Liquidation Trustee deals with the Cash as the Liquidation Trust Agreement provides.
• All Distributions are subject to applicable Tax withholding, payment, and reporting requirements, and the Liquidation Trustee may require an executed Form W-9, Form W-8, or similar form as a prerequisite to Distribution. Each Holder bears sole and exclusive responsibility for its own Tax obligations, and no Distribution is made until arrangements reasonably satisfactory to the Liquidation Trustee are made.
• A Holder that fails to cash a check within 180 calendar days, fails to claim an undeliverable Distribution within the applicable period, or fails to return the required Tax form within 180 calendar days of request is deemed to have forfeited its right to all reserved and future Distributions, which become Liquidation Trust Available Cash notwithstanding any federal or state escheat law to the contrary.
• Distributions are deemed allocated first to the principal amount of the Claim and then to accrued interest. The Liquidation Trust holds all of the Debtors' and Estates' rights under Bankruptcy Code § 558, and the Liquidation Trustee may (but need not), with prior notice to the affected Creditor, set off claims against any Claim or Distribution, without waiving any such claim by failing to do so. The Liquidation Trustee may also make Distributions jointly to a Holder and any other Person determined to have an interest in the Claim.

Disputed, Contingent, and Unliquidated Claims

• From and after the Effective Date, and except as otherwise provided in the Liquidation Trust Agreement, the Liquidation Trust has the exclusive authority to compromise, resolve, and Allow any Disputed Claim without Bankruptcy Court approval, and any agreement it enters regarding Allowance is conclusive evidence and a final determination of that Allowance. Until the Effective Date, the Debtors expressly reserve the right to compromise and settle Claims, Avoidance Actions, and Causes of Action, subject to Bankruptcy Court approval.
• All objections to, or requests to estimate, Claims other than Professional Fee Claims must be Filed by the Claim Objection Deadline, which may be extended on the Liquidation Trustee's motion made before expiration and is automatically extended under Local Rule 9006-2 upon the filing of such a motion. If no timely objection is Filed to a proof of claim, and the Schedules are not amended with respect to a Claim that was Scheduled but not as contingent, unliquidated, or disputed, the Claim is treated as an Allowed Claim.
• The Liquidation Trust may at any time move to estimate any Contingent, Disputed, or Unliquidated Claim under Bankruptcy Code § 502(c), regardless of whether an objection was previously filed or ruled on, and the Bankruptcy Court retains jurisdiction to estimate Claims at any time during litigation, including on appeal. Subject to § 502(j), the estimated amount constitutes the maximum recovery for that Holder irrespective of the amount ultimately Allowed. The objection, estimation, and resolution procedures are cumulative and not exclusive of one another.
• Under the Liquidation Trust Agreement, the Liquidation Trustee may settle or otherwise resolve a Disputed Claim asserted in an amount below $250,000 without Oversight Board approval; asserted at $250,000 or more but less than $1.5 million without approval if the Oversight Board does not object within five business days of written notice of the proposed resolution; and asserted at $1.5 million or more only with Oversight Board approval. The Liquidation Trustee may, but need not, seek Bankruptcy Court approval of any settlement of a Disputed Claim.

Releases, Exculpation, and Injunction

• Released Parties comprise: (a) the Debtors, each of the Estates, any of their subsidiaries, and their retained Professionals and Ordinary Course Professionals, together with directors and officers Frederic Cumenal, David Arnold, L. Spencer Wells (including as a Special Committee member), Thomas FitzGerald (including as a Special Committee member), Stuart Winston, Lisa Calvert, and Christoph Pachler; (b) the Creditors' Committee and its individual members solely in their capacities as such, together with their retained Professionals, agents, and other representatives; and (c) the CODI Parties and each of their Related Parties. No Excluded Party is a Released Party.
• Releasing Parties comprise, in each case in its capacity as such: (a) the Debtors and each of the Estates; (b) L. Spencer Wells and Thomas FitzGerald; (c) any successor to the Debtors or other representative of the Estates under Bankruptcy Code § 1123(b)(3), including the Liquidation Trust; (d) all holders of Claims, other than holders of Claims only in Classes 6 and 7, who do not make an Opt-Out Election; (e) each Released Party; and (f) each Related Party of the entities described in clauses (a) through (c), solely to the extent such Related Party may assert Claims or Causes of Action on behalf of, or in a derivative capacity by or through, such an entity. An entity is not a Releasing Party if it makes an Opt-Out Election, and no Excluded Party is a Releasing Party.
  • Excluded Parties comprise (a) the Ferder Affiliated Parties, (b) GT, (c) Josh Gaynor, (d) Investment Contract Counterparties, (e) any Person or entity set forth on Exhibit I.69 to the Plan Supplement, (f) any relative, shareholder, member, advisor, attorney, professional, Related Party, or beneficiary of any of the foregoing, and (g) any immediate or mediate transferee of property from any of the foregoing. Not Excluded Parties are the CODI Parties, the Debtors, the Lugano Prive Investment Trust, the Creditors' Committee and its members solely in their capacities as Committee members, and the Related Parties of those Persons who are neither Ferder Affiliated Parties nor otherwise specifically identified in the definition. If a Person is both an Excluded Party and a Released Party, that Person is only an Excluded Party and not a Released Party.
  • Ferder Affiliated Parties comprise Mordechai Haim Ferder; Edit (Idit) Ferder; Tom Ferder; the RF 2021 Irrevocable Trust and the TF 2021 Irrevocable Trust, each dated Aug. 30, 2021; Simba IL Holdings, LLC; Serenade Newport, LLC; The Haim Family Trust dated Feb. 24, 2009; VAD & Company, Inc.; any relative, shareholder, member, advisor, attorney, professional, Related Party, or beneficiary of the foregoing; and any immediate or mediate transferee of property from any of them. The Debtors and the CODI Parties are not Ferder Affiliated Parties.
• Debtor releases: Effective on the Effective Date, each Released Party is released and discharged by the Debtors and their Estates from all Claims and Causes of Action arising from or relating to the Debtors, the Chapter 11 Cases, the Debtors' restructuring efforts, Avoidance Actions, intercompany transactions, the Disclosure Statement, the DIP Order and Cash Collateral Order, the Plan and Plan Supplement, the Liquidation Trust Agreement, the Plan Support Agreement, and the CODI Settlement Agreement, among other matters, except for acts or omissions determined by Final Order to have constituted actual fraud, willful misconduct, or gross negligence — provided that this exception does not apply to the CODI Parties with respect to claims within the scope of those settled by the CODI Settlement Agreement.
• Third-party releases: Except as otherwise expressly set forth in the Plan or Confirmation Order, and except to the extent a Holder of a Claim makes an Opt-Out Election, each Released Party is conclusively, absolutely, unconditionally, irrevocably, and forever released by each Releasing Party from substantially the same categories of Claims and Causes of Action, except for acts or omissions determined by Final Order to have constituted actual intentional fraud, willful misconduct, or gross negligence.
  • An Opt-Out Election may be made by checking the "opt out" box on the Ballot or by submitting an Opt-Out Form. A Holder that opts out is not bound by the release of non-Debtor Released Parties but remains bound by the other releases, exculpations, and injunctions in the Plan.
• Neither the Debtor releases nor the third-party releases release post-Effective Date obligations under the Plan, the Confirmation Order, the Liquidation Trust Agreement, the Plan Support Agreement, the CODI Settlement Agreement, or implementing documents. The third-party releases additionally do not release Claims a CODI Party would be entitled to assert against another CODI Party or any of their officers, directors, members, managers, trustees, or employees, or Allowed Claims solely against the Debtors.
• Settlement releases: Under the CODI Settlement Agreement, the Bankruptcy Release Parties (the Debtors and Estates, the UCC and its members solely in their Committee capacities, and their Related Parties, excluding any Excluded Party), to the extent controlled by a Party, forever release the CODI Release Parties (the CODI Parties and CODI Related Parties, which include Patrick A. Maciariello and Raj U. Dalal) from all Claims as of the Plan Effective Date, including those arising out of or related to prepetition matters with the Debtors, the Debtors' business, the Debtors' actual or alleged fraud, the Chapter 11 Cases, and the CODI Claims. The CODI Release Parties provide a reciprocal release to the Bankruptcy Release Parties.
  • Excluded from these settlement releases are: the CODI Claims; the CODI Recoveries; Claims a CODI Party would be entitled to assert against another CODI Party or any of their officers, directors, members, managers, trustees, or employees; any obligation of a Party arising under or created by the Agreement; and any Claim or litigation by a Party against a third party not expressly released, including Claims by the Debtors, Estates, Liquidation Trust, or CODI Release Parties against any Excluded Party, any member of the UCC (in a capacity other than as a UCC member), and any Investment Contract Counterparty.
• Exculpation: The Exculpated Parties — the Debtors, the Creditors' Committee and each of its members solely in that capacity, Thomas FitzGerald, L. Spencer Wells, and their respective Related Parties serving in such capacities after the Petition Date to the extent they are Estate fiduciaries, but excluding any Ferder Affiliated Party — are exculpated from Causes of Action for any Claim related to acts or omissions between the Petition Date and the Effective Date in connection with the Chapter 11 Cases, the Disclosure Statement, the Plan, the Confirmation Order, the Liquidation Trust Agreement, the CODI Settlement Agreement, the Plan Support Agreement, and related documents, except for acts or omissions determined by Final Order to have constituted actual fraud, willful misconduct, or gross negligence.
• Injunction: Parties who have held, hold, or may hold a Claim against a Debtor, along with their present and former employees, agents, officers, directors, members, principals, and Affiliates, are permanently enjoined, solely with respect to Claims, Equity Interests, and Causes of Action dealt with under the Plan, from commencing or continuing any action against property dealt with by the Plan; enforcing, levying, attaching, collecting, or recovering any judgment or order against such property; creating, perfecting, or enforcing any Lien against such property; asserting setoff (unless formally asserted in a timely Filed proof of Claim or a document Filed prior to entry of the Confirmation Order) or subrogation rights; and acting in any manner that interferes with implementation or consummation of the Plan.
  • The injunction does not apply to any action taken by one CODI Party against another CODI Party. By accepting any Distribution, each Holder of an Allowed Claim is deemed to have specifically consented to the injunction.
  • All injunctions or stays in existence on the Confirmation Date under Bankruptcy Code §§ 105 or 362 remain in full force and effect until the Chapter 11 Cases are closed. Consistent with 11 U.S.C. § 1141(d)(3), the Debtors do not receive a discharge.

Confidentiality and Cooperation

• Except as explicitly provided in the Plan or required under applicable law, the Parties must keep all Mediation Materials — all communications, documents, information, and other materials disclosed or submitted during the May 6–7, 2026 mediation — confidential to the maximum extent allowable by Law, and must not make or cause any public statements or other communications concerning the Agreement or its subject matter.
  • A Party making a good faith determination that disclosure is necessary to comply with its obligations must, to the extent reasonably possible, provide the other Parties reasonably prompt advance written notice to permit consultation. A Party receiving a filing, subpoena, or similar request for compelled disclosure must promptly provide a copy to the other Parties. The notice and consultation requirement does not obligate any Party to forego or resist disclosure. These obligations survive termination of the Agreement regardless of whether the Effective Date has occurred.
• To the extent the Parties remain in existence at the relevant time — it being understood that the Debtors (other than the Post-Confirmation Debtor) and the UCC cease to exist on the Plan Effective Date — the Parties must cooperate reasonably with each other and their representatives in connection with steps required under the Agreement, including furnishing further information, executing and delivering documents, and performing such other acts as reasonably requested to carry out the contemplated transactions and compromises, and to obtain third-party consents and authorizations and make necessary filings and notices.
• Third-Party Litigation cooperation: Third-Party Litigation means any litigation or investigation between a third party and CODI relating to the Debtors. Each Party agrees to respond, at the requesting Party's expense, to reasonable requests for information relating to any Third-Party Litigation for 24 months after the Effective Date, and, upon request and to the extent a common interest or joint defense exists, to enter into a reasonable Common Interest Agreement or Joint Defense Agreement.
  • No Party is required to participate in Third-Party Litigation in which it is not a party, to create or provide work product or other documents that do not already exist, or to take, assist with, or support any position or action it does not support or agree with in its sole or absolute discretion. Nothing alters any Party's obligation to respond to a valid subpoena or right to object to one, and no CODI Release Party is required to incur any expenses or costs in providing such cooperation.
  • No Party may encourage or voluntarily cooperate in any litigation or anticipated litigation against the CODI Release Parties.

Conditions Precedent to the Effective Date

• The Effective Date does not occur and the Plan is not consummated unless and until each of the following has been satisfied or duly waived:
  • The Bankruptcy Court enters the Confirmation Order;
  • The Confirmation Order is not subject to any stay;
  • All governmental and material third-party approvals and consents necessary in connection with the transactions contemplated by the Plan, if any, have been obtained and are in full force and effect;
  • All actions and all agreements, instruments, or other documents necessary to implement the Plan, including the Liquidation Trust Agreement, are effected or executed and delivered; and
  • The Liquidation Trust Expense Reserve, Professional Fee Reserve, Disputed Claim Reserve, and Effective Date Reserves are funded in the amounts set forth in the Plan Supplement.
• The third and fourth conditions — governmental and third-party approvals, and execution of implementing documents — may be waived only in a joint writing by the Debtors, the Creditors' Committee, and CODI; the Plan specifies no waiver mechanism for the remaining conditions. Nothing exempts the Debtors from complying with their legal obligations.
• If the conditions are not capable of being satisfied and are not duly waived, upon notification Filed by the Debtors: the Confirmation Order is vacated; no Distributions will be made; the Debtors, the Estates, and all Creditors are restored to the status quo immediately preceding entry of the Confirmation Order; and all obligations with respect to Claims remain unchanged, with no waiver or release of Causes of Action and no prejudice to the rights, claims, or defenses of any Person.
• Promptly after the Effective Date, the Liquidation Trust must File and mail to all Creditors a notice of entry of the Confirmation Order and confirmation of the Plan, the occurrence of the Effective Date, the assumption, assignment, and rejection of executory contracts and unexpired leases and the resulting Rejection Claims deadline, the Administrative Claims filing deadline, and such other matters as the Liquidation Trustee deems appropriate.

Voting and Solicitation

• Classes 3, 4, and 5 are Impaired and entitled to vote on the Plan. Because at least one Impaired Class is deemed to have rejected the Plan, the Debtors request confirmation under Bankruptcy Code § 1129(b) and reserve the right to alter, amend, modify, revoke, or withdraw the Plan, the Plan Supplement, or any schedule or exhibit, including to satisfy the requirements of § 1129(b).
• Following the Voting Deadline, no Creditor entitled to vote may change its vote or any attendant elections or preferences without the Debtors' written consent, which may be given or withheld in the Debtors' reasonable discretion.
• Any Class that does not contain, as of the commencement of the Confirmation Hearing, a Holder of an Allowed Claim or a Claim temporarily allowed under Bankruptcy Rule 3018 is deemed deleted from the Plan for purposes of determining acceptance under § 1129(a)(8).
• Holders of General Unsecured Claims may make a Convenience Class Election on the Ballot to reduce their Claim to $10,000 and become a Convenience Class Claim, and may elect on the Ballot or Contribution Form to become a Contributing Creditor by contributing to the Liquidation Trust their Causes of Action against GT related in any way to the Debtors, their predecessors, affiliates, businesses, or any Excluded Party.
• The Disclosure Statement Order — conditionally approving the Disclosure Statement, authorizing solicitation, and establishing related procedures and deadlines — must be acceptable to the CODI Parties and the Creditors' Committee in all respects.

Key Dates and Deadlines

• Petition Date: Nov. 16, 2025
• DIP Loan Agreement: Superpriority Secured Debtor-in-Possession Credit Agreement dated Nov. 18, 2025, by and among the Debtors and CODI as DIP Lender, annexed as Exhibit 1 to the DIP Order — the interim financing order — entered Nov. 19, 2025 [Dkt. No. 66]
• Bar Date Order entered: Dec. 19, 2025 [Dkt. No. 223]
• Schedules of Assets and Liabilities Filed: Dec. 13, 2025, subject to amendment under Bankruptcy Rule 1009
• General Claims Bar Date: Jan. 27, 2026 (also the Claims Bar Date for Section 503(b)(9) Claims)
• Cash Collateral Order entered: Feb. 10, 2026 [Dkt. No. 364]
• Governmental Claims Bar Date: May 15, 2026
• Amended Schedules Bar Date: for an amendment reducing the undisputed, noncontingent, and liquidated amount of a Scheduled Claim, changing its nature or classification, or adding a new Claim, the later of the applicable General or Governmental Bar Date and 11:59 p.m. (ET) on the date 21 days after the Debtors give notice of the amendment
• Voting Deadline: the date and time set in the Disclosure Statement Order or a subsequent order by which Ballots must be received to be counted
• Distribution Record Date: the later of the Confirmation Date and the date, not later than the Effective Date, established by the Liquidation Trust Agreement
• Administrative Claims Bar Date: the first Business Day 35 calendar days after the Effective Date, or such subsequent date set by the Bankruptcy Court with the consent of the Liquidation Trustee
• Rejection Claims Bar Date: the first Business Day 30 calendar days after the Effective Date for rejections under the Plan or Confirmation Order; for rejections under any other order, the earlier of the date established by such prior order and that same date
• Claim Objection Deadline: the latest of the first Business Day 90 calendar days after the Effective Date; 45 days after the Claim is Filed; such date as agreed by the Liquidation Trustee and the Holder; or such other period fixed by the Plan, the Confirmation Order, or the Bankruptcy Court, subject to extension
• Administrative Claims Objection Deadline: the latest of the first Business Day 90 days after the Administrative Claims Bar Date; 45 days after the Filing of any request for payment; such date as agreed by the Liquidation Trustee and the Holder; or such other period fixed by the Plan, Confirmation Order, or Bankruptcy Court, subject to extension
• Plan Supplement: Filed on or before the date that is seven calendar days prior to the Voting Deadline, subject to amendment and supplement prior to the Confirmation Hearing

Plan Modification and Withdrawal

• Subject to Bankruptcy Code § 1127, Bankruptcy Rule 3019, and Sections 11.03 and 11.11 of the Plan, the Debtors reserve the right to alter, amend, modify, revoke, or withdraw the Plan prior to its substantial consummation.
  • The Debtors may alter, amend, or modify the Plan under § 1127(a) at any time at or prior to the conclusion of the Confirmation Hearing with the consent of the Creditors' Committee and CODI, with notice to parties in interest as required. A Creditor that has accepted the Plan is deemed to have accepted it as altered, amended, modified, or clarified if the change does not materially and adversely change the treatment of its Claim.
  • After entry of the Confirmation Order and prior to the Effective Date, the Debtors may institute proceedings under § 1127(b) to remedy any defect or omission or reconcile inconsistencies in the Plan, Disclosure Statement, Confirmation Order, or Liquidation Trust Agreement, so long as such proceedings do not adversely affect the treatment of Holders of Claims.
• The Debtors reserve the right to revoke or withdraw the Plan at any time prior to the Confirmation Hearing and to File subsequent plans. If the Plan is revoked or withdrawn, or the Effective Date does not occur, the Plan is void in all respects, and nothing contained in the Plan or acts taken in preparation for consummation waives or releases any Claims, Equity Interests, or Causes of Action, prejudices the rights of any Person in further proceedings, or constitutes an admission of any sort.

Governing Law, Jurisdiction, and Related Provisions

• Unless a rule of law or procedure is supplied by federal law, Delaware law governs the construction and implementation of the Plan and related agreements, documents, and instruments, and the laws of each Debtor's state of incorporation or formation govern corporate or limited liability company governance matters, in each case without giving effect to conflicts of law principles. The Liquidation Trust Agreement and the Settlement Agreement are likewise governed by Delaware law.
  • Any applicable nonbankruptcy law that would prohibit, limit, or restrict implementation of the Plan based on the commencement of the Chapter 11 Cases, the appointment of the Liquidation Trustee, the wind down of the Debtors, the liquidation of Liquidation Trust Assets, or any other act contemplated by the Plan is superseded and rendered inoperative.
• The Bankruptcy Court retains jurisdiction and power under Bankruptcy Code §§ 105(a) and 1142 over all matters arising in, arising under, or related to the Chapter 11 Cases and the Plan to the fullest extent permitted by law, including to hear and determine matters arising in connection with the Plan, the Plan Supplement, the Disclosure Statement, the Confirmation Order, the Liquidation Trust Agreement, and the CODI Settlement Agreement; to hear and determine all disputes involving the existence, nature, or scope of the Plan's release, exculpation, and injunction provisions; to resolve cases, controversies, suits, or disputes related to the Liquidation Trust and the Liquidation Trustee; and to enter a final decree closing any or all of the Chapter 11 Cases.
  • If the Bankruptcy Court abstains from exercising, declines to exercise, or is otherwise without jurisdiction over any matter, Article X has no effect on, and does not control, limit, or prohibit, the exercise of jurisdiction by any other court of competent jurisdiction. All parties to the Liquidation Trust Agreement consent and submit to the exclusive jurisdiction of the Bankruptcy Court for proceedings to enforce and construe that agreement.
• Reserved rights to seek approval: Notwithstanding any provision permitting an act without Bankruptcy Court approval, the Liquidation Trustee may submit any question to the Bankruptcy Court for explicit approval — including as to the administration, settlement, distribution, or proposed sale of Estate Assets or Liquidation Trust Assets — and the Bankruptcy Court retains jurisdiction to approve or disapprove such action on motion.
• Conflicts: The Plan controls over the Disclosure Statement and over any order entered in the Chapter 11 Cases. The Confirmation Order controls over the Plan and any agreement entered into under the Plan, other than the CODI Settlement Agreement and the Liquidation Trust Agreement. The Plan controls over the Liquidation Trust Agreement and the CODI Settlement Agreement, unless the Confirmation Order specifically refers to Section 11.21, in which case the Confirmation Order controls.
• Severability: If the Bankruptcy Court holds at or before the Confirmation Hearing that any Plan term is invalid, void, or unenforceable, it may alter or interpret the term to be valid and enforceable to the maximum extent consistent with its original purpose, the remaining terms remain in full force and effect, and the Confirmation Order constitutes a judicial determination that each term as so altered or interpreted is valid and enforceable.
• Cancellation of instruments: Except with respect to executory contracts and unexpired leases assumed and assigned to the Liquidation Trust or pursuant to a Final Order, any instrument or document evidencing or creating any indebtedness or obligation of the Debtors is deemed cancelled on the Effective Date, all related Liens, mortgages, pledges, grants, trusts, and other interests are automatically cancelled, and all obligations thereunder are discharged.
• Binding effect: Upon the Effective Date, Bankruptcy Code § 1141 becomes applicable and the Plan binds all Persons to the fullest extent permitted by § 1141(a), including each Holder of a Claim or Equity Interest, whether or not Allowed, whether or not Impaired, and whether or not such Holder has accepted the Plan.
• Good faith: Confirmation constitutes a conclusive determination that the Plan and all transactions and settlements contemplated thereby have been proposed in good faith and in compliance with all applicable provisions of the Bankruptcy Code and Bankruptcy Rules, and that solicitation has likewise been in good faith and in compliance.
• Post-Effective Date notices: Persons or entities wishing to continue receiving documents under Bankruptcy Rule 2002 must file a renewed request after the Effective Date, and the Liquidation Trustee is authorized to limit the Rule 2002 service list to those who file renewed requests and those whose rights are directly affected by the particular documents.
• Transfer tax exemption: Pursuant to Bankruptcy Code § 1146, the vesting of the Liquidation Trust Assets in the Liquidation Trust, the vesting of the Tax Refund in the Post-Confirmation Debtor, the issuance of the Liquidation Trust Interests, the issuance, transfer, or exchange of any equity securities under the Plan, the creation of any mortgage, deed of trust, lien, pledge, or other security interest, and the making or assignment of any lease or sublease or delivery of any deed or other instrument of transfer in connection with the Plan are not subject to any stamp, real estate transfer, mortgage recording, or other similar Tax.