TreeSap Farms - Plan / RSA Terms

RSA Terms

Overview

• The debtors’ chapter 11 plan provides for the liquidation of their assets, premised on a sale of substantially all assets and the subsequent wind-down of the remaining estates.
• The plan provides for the substantive consolidation of the debtors solely for the purposes of voting, confirming the plan, and making distributions on claims and interests.
• A plan administrator will be appointed to oversee the wind-down, make distributions, and administer and liquidate remaining property, including any retained causes of action.

Sale Transaction

• The plan facilitates the sale of substantially all of the debtors’ assets to a purchaser pursuant to a previously approved Asset Purchase Agreement.
• Post-closing, the plan administrator and the purchaser are required to provide each other with reasonable access and assistance to reconcile claims, complete the wind-down, and perform obligations related to assumed liabilities.

Plan Administrator

• David A. Zdunkewicz will be appointed as the plan administrator to implement the plan and wind down the debtors’ affairs.
• The plan administrator is authorized to, among other things:
  • Manage the claims reconciliation process, including objecting to, compromising, or settling claims.
  • Make distributions to holders of allowed claims.
  • Oversee the liquidation or abandonment of the debtors’ remaining assets.
  • Analyze, pursue, litigate, or settle any retained causes of action on behalf of the estates.
• The plan administrator and other retained professionals are indemnified for actions or omissions related to their duties, except for those resulting from willful misconduct or gross negligence.

Treatment of Claims and Interests

• DIP Facility Claims: To the extent not already satisfied at the closing of the sale transaction, allowed DIP facility claims will be paid in full in cash on or after the effective date. Upon full satisfaction, all related liens and security interests will be terminated.
• Administrative and Priority Claims:
  • Unless a bar date has already passed, requests for payment of administrative claims must be filed within 30 days of the effective date.
  • Allowed administrative claims, priority tax claims, and other priority claims will be paid in full in cash.
  • Any claims expressly assumed by the purchaser under the sale transaction will be paid by the purchaser and will not receive a distribution under the plan.
• Professional Fee Claims:
  • Final applications for professional fees must be filed within 30 days of the effective date.
  • A professional fee escrow account will be established and funded to pay allowed professional fee claims.
• Other Secured Claims: At the plan administrator’s option, each holder of an allowed other secured claim will receive either (i) payment in full in cash, (ii) the collateral securing its claim, or (iii) other treatment that renders the claim unimpaired.
• Prepetition Lenders Secured Claims:
  • The prepetition lenders secured claim is allowed in an aggregate amount of at least $161 million.
  • In satisfaction of their claim, the prepetition lenders will receive the remaining retained cash after the full satisfaction of DIP facility claims and the funding of the post-effective date budget.
  • The prepetition lenders deficiency claim will be treated as a general unsecured claim. Pursuant to a settlement, this deficiency claim is allowed in an amount of at least $119.7 million and is waived with respect to recoveries from the settlement amount.
• General Unsecured Claims: Holders of allowed general unsecured claims will receive a pro rata share of (i) a $100,000 GUC recovery pool and (ii) any proceeds realized from the pursuit of retained causes of action.
• Intercompany Claims and Interests: All intercompany claims and interests will be canceled, released, and extinguished without any distribution.
• Equity Interests: All existing equity interests will be canceled, released, and extinguished without any distribution.

Distributions

• The plan administrator or another designated disbursing agent will make all distributions under the plan.
• No distributions will be made on disputed claims until such claims are resolved and become allowed.
• The disbursing agent is not required to make any distribution of less than $50.
• Any distribution returned as undeliverable will be deemed unclaimed if a current address is not determined within 90 days, at which point the funds will revert to the post-effective date debtors. Checks not negotiated within 90 days of issuance will be null and void.
• After all budgeted expenses are paid, any remaining funds in the wind-down amount (excluding the GUC recovery pool) will be paid to the prepetition lenders. Any unused cash from the GUC recovery pool will be donated to a charitable organization selected by the plan administrator.

Global Settlement

• The plan incorporates the terms of a global settlement among the debtors, the official committee of unsecured creditors, HCR Moorpark Investors LLC, and Capital Farm Credit ACA.
• Pursuant to the settlement:
  • HCR will have an allowed general unsecured claim of $12.6 million.
  • All claims and causes of action held by the debtors’ estates against HCR are released and waived.
  • The prepetition lenders will have an allowed deficiency claim of at least $119.7 million.
• In the event of any conflict between the terms of the settlement and the plan, the settlement terms will govern.

Executory Contracts and Leases

• On the effective date, all executory contracts and unexpired leases not previously assumed, assigned, or rejected will be deemed rejected.
• A bar date for filing proofs of claim arising from such rejections is set for 30 days after the effective date. Any allowed rejection damage claims will be treated as Class 4 general unsecured claims.

Insurance

• The plan provides for the assumption of all directors and officers liability insurance policies that were not assumed and assigned as part of the sale transaction.
• D&O tail coverage will be purchased, and all directors and officers who served prior to the effective date will be entitled to the full benefits of such coverage.

Releases, Exculpation, and Injunction

• Releases: The plan provides for releases by the debtors and their estates of the released parties, which include the debtors, the CRO, the DIP lender, the prepetition agent and lenders, the plan administrator, and the committee and its members, among others.
• Exculpation: The exculpated parties, which include the debtors, the independent director, and the committee and its members, are exculpated from liability for any act or omission in connection with the chapter 11 cases, except for actions determined to constitute actual fraud, gross negligence, or willful misconduct.
• Injunction: The plan permanently enjoins any party from commencing or prosecuting any claim that has been released or exculpated under the plan.

Retained Causes of Action

• The debtors, and subsequently the plan administrator, will retain the right to pursue any and all causes of action owned by the estates that are not released under the plan or transferred as part of the sale transaction.
• No preclusion doctrines, such as res judicata or collateral estoppel, will apply to these retained causes of action based on the plan or confirmation order.

Governance

• On the effective date, the plan administrator will serve as the sole shareholder, officer, director, or manager for each of the post-effective date debtors.
• The official committee of unsecured creditors will be dissolved on the effective date, and its members and professionals will be released from all further duties and obligations related to the chapter 11 cases.