Case KG Doc 3961 Filed 11/12/18 Page 1 of 48 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case KG Doc 3961 Filed 11/12/18 Page 1 of 48 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) In re: ) Chapter 11 ) HH Liquidation, LLC, et al., 1 ) Case No (KG) ) Debtors. ) Jointly Administered ) ) DEBTOR S MEMORANDUM OF LAW IN SUPPORT OF CONFIRMATION OF PLAN OF LIQUIDATION FOR HH LIQUIDATION, LLC PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE Dated: Wilmington, Delaware November 12, 2018 YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square, 1000 North King Street Wilmington, Delaware Telephone: (302) Facsimile: (302) and - STROOCK & STROOCK & LAVAN LLP 180 Maiden Lane New York, New York Telephone: (212) Facsimile: (212) Counsel for the Debtors and Debtors in Possession 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: HH Liquidation, LLC (f/k/a Haggen Holdings, LLC) (7558), HH Operations, LLC (f/k/a Haggen Operations Holdings, LLC) (6341), HH Opco South, LLC (f/k/a Haggen Opco South, LLC) (7257), HH Opco North, LLC (f/k/a Haggen Opco North, LLC) (5028), HH Acquisition, LLC (f/k/a Haggen Acquisition, LLC) (7687), and HH Legacy, Inc. (f/k/a Haggen, Inc.) (4583). The mailing address for each of the Debtors is Aliso Creek Road, Suite B-1003, Aliso Viejo, California

2 Case KG Doc 3961 Filed 11/12/18 Page 2 of 48 TABLE OF CONTENTS TABLE OF AUTHORITIES... iii I. PRELIMINARY STATEMENT...1 II. PROCEDURAL BACKGROUND...2 III. OVERVIEW OF THE PLAN...4 IV. A. Highlights of the Plan...4 B. Plan Solicitation and Results Thereof...4 THE PLAN SHOULD BE CONFIRMED BECAUSE IT COMPLIES WITH THE REQUIREMENTS OF SECTION 1129 OF THE BANKRUPTCY CODE...7 A. The Plan Satisfies All Section 1129(a) Requirements Section 1129(a)(1) The Plan Complies with the Applicable Provisions of the Bankruptcy Code...7 a. The Plan Satisfies the Classification Requirements of Section b. The Plan Satisfies the Requirements of Section Section 1129(a)(2) The Debtor Has Complied with the Applicable Provisions of the Bankruptcy Code Section 1129(a)(3) The Plan Has Been Proposed in Good Faith and Not By Any Means Forbidden by Law Section 1129(a)(4) The Plan Provides That Payments for Services or Costs and Expenses Are Subject to Court Approval Section 1129(a)(5) The Debtor Will Have Disclosed All Necessary Information Regarding Directors, Officers and Insiders Section 1129(a)(6) The Plan Does Not Contain Any Rate Changes Subject to the Jurisdiction of Any Governmental Regulatory Commission Section 1129(a)(7) The Plan is in the Best Interests of Holders of Claims and Equity Interests Section 1129(a)(8) Acceptance by Impaired Classes Section 1129 (a)(9) The Plan Provides for the Payment in Full of All Allowed Priority Claims Section 1129 (a)(10) At Least One Class of Impaired Claims has Accepted the Plan Section 1129(a)(11) The Plan Meets the Feasibility Requirement of the Bankruptcy Code Section 1129(a)(12) All Statutory Fees Have Been or Will Be Paid Sections 1129(a)(13), 1129(a)(14), 1129(a)(15) and 1129(a)(16) Are Inapplicable i-

3 Case KG Doc 3961 Filed 11/12/18 Page 3 of 48 B. The Plan Satisfies the Section 1129(b) Cram Down Requirements Section 1129(b)(1) The Plan Does Not Discriminate Unfairly Section 1129(b)(1) The Plan is Fair and Equitable...36 C. Principal Purpose of the Plan (Section 1129(d))...36 V. SATISFACTION OF BANKRUPTCY RULE VI. WAIVER OF STAY WITH RESPECT TO CONFIRMATION ORDER...37 VII. CONCLUSION ii-

4 Case KG Doc 3961 Filed 11/12/18 Page 4 of 48 TABLE OF AUTHORITIES Page(s) Cases In re 11,111, Inc., 117 B.R. 471,478 (Bankr. D. Minn. 1990)...48 In re 203 N. LaSalle St. Ltd. P ship., 190 B.R. 567 (Bankr. N.D. Ill. 1995), rev d on other grounds, 526 U.S. 434 (1999)...48 In re Abbotts Dairies of Pennsylvania, Inc. 788 F.2d 143 (3d Cir. 1986)...20 In re Adelphia Commc ns. Corp., 368 B.R. 140 (Bankr. S.D.N.Y. 2007)...38 In re Alta+Cast, LLC, 2004 Bankr. LEXIS 219 (Bankr. D. Del. 2004)...12 In re Ambanc La Mesa Ltd. P ship, 115 F.3d 650 (9th Cir. 1997)...49 In re AOV Indus., Inc., 792 F.2d 1140 (D.C. Cir. 1986)...13 In re Armstrong World Indus., Inc., 432 F.3d 507, 513 (3d Cir. 2005)...34 In re Armstrong World Indus., 348 B.R. 111 (D. Del. 2006)...12, 20, 32, 49 In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989)...49 Bank of Am. Nat l Tr. & Sav. Ass n v. 203 N. LaSalle St. P ship, 526 U.S. 434 (1999)...37 Borman s, Inc. v. Allied Supermarkets, Inc., 706 F.2d 187 (6th Cir. 1983), cert. denied, 464 U.S. 908 (1983)...20 In re Bowles, 48 B.R. 502 (Bankr. E.D. Va. 1985)...48 In re Briscoe Enters., Ltd., 994 F.2d 1160 (5th Cir. 1993)...42, 43 -iii-

5 Case KG Doc 3961 Filed 11/12/18 Page 5 of 48 In re Buffets Holdings, Inc., Case No (MFW) (Bankr. D. Del Apr. 17, 2009)...29 In re Cajun Elec. Power Co-op., Inc., 150 F.3d 503 (5th Cir. 1998)...48 In re Caldwell, 76 B.R. 643 (Bankr. E.D. Tenn. 1987)...13 In re Calpine Corp., No BRL, 2007 WL (Bankr. S.D.N.Y. Dec. 19, 2007)...28 In re Combustion Eng g, Inc., 391 F.3d 190 (3d Cir. 2004), as amended (Feb. 23, 2005)...32 In re Conseco, Inc., 301 B.R. 525 (Bankr. N.D. Ill. 2003)...28 In re Coram Healthcare Corp., 315 B.R. 321 (Bankr. D. Del. 2004)...52, 53 Corestates Bank, N.A. v. United Chem. Techs., Inc., 202 B.R. 33 (E.D. Pa. 1996)...43 In re Drexel Burnham Lambert Grp., Inc., 138 B.R. 723 (Bankr. S.D.N.Y. 1992)...23 In re Eddington Thread Mfg. Co., Inc., 181 B.R. 826 (Bankr. E.D. Pa. 1995)...42, 43 In re Exide Techs., 303 B.R. 48 (Bankr. D. Del. 2003)...14, 24 In re Filene s Basement, LLC, No (KJC), 2014 WL (Bankr. D. Del. Apr. 29, 2014)...52 In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996)...48 In re G-1 Holdings Inc., 420 B.R. 216 (D.N.J. 2009)...33 In re Genco Shipping & Trading Ltd., No , slip op. (Bankr. S.D.N.Y. July 2, 2014)...28 In re Genesis Health Ventures, Inc., 266 B.R. 591 (Bankr. D. Del. 2001), appeal dismissed as moot, 280 B.R. 339 (D. Del. 2002) iv-

6 Case KG Doc 3961 Filed 11/12/18 Page 6 of 48 In re Greate Bay Hotel & Casino, Inc., 251 B.R. 213 (Bankr. D.N.J. 2000)...43 In re Indianapolis Downs, LLC, 486 B.R. 286 (Bankr. D. Del. 2013)...25, 27, 28 In re Indianapolis Downs, LLC, Case No (BLS) (Bankr. D. Del. March 20, 2013)...29 John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs., 987 F.2d 154 (3d Cir. 1993)...48 In re Johns-Manville Corp., 68 B.R. 618 (Bankr. S.D.N.Y. 1986), aff d sub nom., 78 B.R. 407 (S.D.N.Y. 1987), aff d sub nom., 843 F.2d 636 (2d Cir. 1988)...34, 49 Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988)...13, 43 In re Kennedy, 158 B.R. 589 (Bankr. D.N.J. 1993)...49 In re Lason, Inc., 300 B.R. 227 (Bankr. D. Del. 2003)...37 In re Martin, 91 F.3d 389 (3d Cir. 1996)...53 In re Master Mortgage Investment Fund, Inc., 168 B.R. 930 (Bankr. W.D. Mo. 1994)...14 In re Sound Radio, Inc., 93 B.R. 849 (Bankr. D.N.J. 1988)...20 In re Mayer Pollack Steel Corp., 174 B.R. 414 (Bankr. E.D. Pa. 1994)...43 Mercury Capital Corp. v. Milford Connecticut Assocs., L.P., 354 B.R. 1 (D. Conn. 2006)...43 In re Montgomery Court Apartments of Ingham Cty., Ltd., 141 B.R. 324 (Bankr. S.D. Ohio 1992)...33 Nellis v. Shugrue, 165 B.R. 115 (S.D.N.Y. 1994)...52 In re Nutritional Sourcing Corp., 398 B.R. 816 (Bankr. D. Del. 2008) v-

7 Case KG Doc 3961 Filed 11/12/18 Page 7 of 48 In re Pinnacle Brands, Inc., 259 B.R. 46 (Bankr. D. Del. 2001)...20 Platinum Capital, Inc. v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d 1070 (9th Cir. 2002)...33 In re PPI Enterprises (U.S.), Inc., 228 B.R. 339 (Bankr. D. Del. 1998)...21 In re Prussia Assocs., 322 B.R. 572 (Bankr. E.D. Pa. 2005)...43 In re PWS Holding Corp., 228 F.3d 224 (3d Cir. 2000)...29, 30, 31, 32 In re Residential Capital, LLC, 497 B.R. 720 (Bankr. S.D.N.Y. 2013)...53 In re Resorts Int l, Inc., 145 B.R. 412 (Bankr. D.N.J. 1990)...34, 49 Sharon Steel Corp. v. Nat l Fuel Distribution Corp., 872 F.2d 36 (3d Cir. 1989)...19 In re Sierra-Cal, 210 B.R. 168, 171 (Bankr. E.D. Cal. 1997)...25 In re Spansion, Inc., 426 B.R. 114 (Bankr. D. Del. 2010)...17 In re Surfango, Inc., 2009 WL (Bankr. D.N.J. Dec. 18, 2009)...32 In re T-H New Orleans Ltd. P ship, 116 F.3d 790 (5th Cir. 1997)...33, 42, 43 In re Tribune Co., 464 B.R. 126 (Bankr. D. Del 2011)...29, 53 In re Trump Entm t Resorts, Inc., Case No (KG) (Bankr. D. Del. Mar. 12, 2015)...18 In re Union Meeting Partners, 165 B.R. 553 (Bankr. E.D. Pa. 1994), subsequently aff d, 52 F.3d 317 (3d Cir. 1995)...51 United States v. Energy Res. Co., 495 U.S. 545 (1990) vi-

8 Case KG Doc 3961 Filed 11/12/18 Page 8 of 48 In re W.R. Grace & Co., 475 B.R. 34 (D. Del. 2012)...52 In re Washington Mut., Inc., 442 B.R. 314 (Bankr. D. Del. 2011)...15, 24, 29, 30 In re WorldCom, Inc., 2003 Bankr. LEXIS 1401 (Bankr. S.D.N.Y. 2003)...43 In re Zenith Elecs. Corp., 241 B.R. 92 (Bankr. D. Del. 1999)... passim Statutes 11 U.S.C. 101(31)(B) U.S.C , U.S.C. 503(b) U.S.C. 507(a)(2) U.S.C , U.S.C. 1122(a)...13, U.S.C , 52, U.S.C. 1123(a)(4)...15, U.S.C. 1123(a)(5)...16, U.S.C. 1123(a)(7)...17, U.S.C. 1123(a)(l)-(8) U.S.C. 1123(b) U.S.C. 1123(b)(3)(A) U.S.C. 1123(b)(6)...18, U.S.C U.S.C , U.S.C. 1125(e) U.S.C vii-

9 Case KG Doc 3961 Filed 11/12/18 Page 9 of U.S.C. 1126(c) U.S.C. 1126(f)...38, 40, U.S.C , U.S.C. 1129(a)...12, 13, 47, U.S.C. 1129(a)(1) U.S.C. 1129(a)(2) U.S.C. 1129(a)(3)...32, 33, U.S.C. 1129(a)(4)... passim 11 U.S.C. 1129(a)(5)...35, U.S.C. 1129(a)(6) U.S.C. 1129(a)(7)...37, 38, U.S.C. 1129(a)(8)...13, 40, U.S.C. 1129(a)(9) U.S.C. 1129(a)(10) U.S.C. 1129(a)(11)...42, U.S.C. 1129(a)(12) U.S.C. 1129(a)(13) U.S.C. 1129(a)(14) U.S.C. 1129(a)(14) U.S.C. 1129(a)(15) U.S.C. 1129(a)(16) U.S.C. 1129(a)(7)(A)(i)-(ii) U.S.C. 1129(b)... passim 11 U.S.C. 1129(b)(1)... passim 11 U.S.C. 1129(b)(2) viii-

10 Case KG Doc 3961 Filed 11/12/18 Page 10 of U.S.C. 1129(b)(2)(B)(ii) U.S.C. 1129(d)...35 Other Authorities Bankruptcy Rule 3016(c)...31 Bankruptcy Rule Bankruptcy Rule Bankruptcy Rule , 52, 53 H.R. Rep. No , at 145 (2005), reprinted in 2005 U.S.C.C.A.N. 88, H.R. Rep. No. 595, 95th Cong., 1st Sess., at 412 (1977)...31 S. Rep. No. 989, 95th Cong., 2d Sess., at 126 (1978) ix-

11 Case KG Doc 3961 Filed 11/12/18 Page 11 of 48 HH Liquidation, LLC (the Debtor, and together with its above-captioned affiliated debtors and debtors in possession, the Debtors ) respectfully submits this memorandum (this Memorandum ) in support of Confirmation of the Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code, which is attached as Exhibit 1 to the Disclosure Statement (as may be amended, modified or supplemented, the Plan ). 2 In support of Confirmation, the Debtor respectfully submits: (a) the Declaration of Marc Beilinson in Support of (I) Confirmation of Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code and (II) Dismissal of the Opco Debtors Bankruptcy Cases (the Beilinson Declaration ); (b) the Declaration of Matthew Henry In Support of Confirmation of Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code (the Henry Declaration ); and (c) the Declaration of Michael Paque of Kurtzman Carson Consultants LLC Regarding the Solicitation of Votes and Tabulation of Ballots Cast on the Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code (the Voting Report and, together with the Beilinson Declaration and the Henry Declaration, the Declarations ), each of which are filed contemporaneously herewith and incorporated herein by reference. In further support of Confirmation, the Debtor respectfully states as follows: I. PRELIMINARY STATEMENT 1. The Bankruptcy Cases were commenced for the purpose of allowing the Debtors to preserve as much of their businesses as possible as a going concern, and to maximize the value of their assets through either one or more sale transactions and/or a chapter 11 plan. The Debtors successfully consummated sales constituting substantially all of their assets, which resulted in the payment in full of their debtor in possession financing, the preservation of jobs for many of 2 Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan or the Solicitation Procedures Order, as applicable. In the event of an inconsistency between the summary of any terms of the Plan in this Memorandum and the Plan itself, the terms of the Plan will control.

12 Case KG Doc 3961 Filed 11/12/18 Page 12 of 48 the Debtors employees, the preservation of value for the Debtors stakeholders and the orderly wind-down of the Debtors businesses and affairs. 2. However, in light of the Opco Debtors administrative insolvency and the status of the Committee Litigation, the Debtors, in an exercise of their sound business judgment, entered into the Global Settlement Agreement by and between the Debtors, the Committee, the Comvest Entities, the Propco Entities, SLB, the Individual Defendants and the Consenting 503(b)(9) Claimants (each as defined therein) (collectively, the Settlement Parties ), in order to facilitate, among other things, a path for the Debtors to wind down the Bankruptcy Cases and provide distributions on account of allowed claims and interests against their Estates. 3. The Settlement Parties agreed to implement the Global Settlement Agreement through (a) with respect to the Debtor, Confirmation of the Plan, and (b) with respect to the Opco Debtors, the dismissal of their Bankruptcy Cases, with such dismissal to occur simultaneously with the Effective Date of the Plan. 3 Accordingly, both the Confirmation of the Debtor s Plan and the dismissal of the Opco Debtors Bankruptcy Cases are necessary and integral components of the Global Settlement Agreement, and without them, the Debtors do not believe that the non- Debtor Settlement Parties would have entered into such agreement, which provides the best possible recoveries to the Debtors creditors under the circumstances of the Bankruptcy Cases. As a result, the Debtor respectfully requests that the Bankruptcy Court confirm the Plan. II. PROCEDURAL BACKGROUND 4. On August 24, 2018, the Debtor filed the Disclosure Statement for Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code, dated August 24, 2018 [Docket No. 3810] (the Disclosure Statement ). By order dated October 4, 3 To that end, the Debtors filed a motion seeking approval of the structured dismissal of the Opco Debtors Bankruptcy Cases [Docket No. 3812]. -2-

13 Case KG Doc 3961 Filed 11/12/18 Page 13 of [Docket No. 3887] (the Solicitation Procedures Order ), the Bankruptcy Court approved the Disclosure Statement, in the form attached as Exhibit 3 to the Disclosure Statement Order, as containing adequate information within the meaning of section 1125 of the Bankruptcy Code, and authorized the Debtor to solicit votes to accept or reject the Plan. 5. On October 26, 2018, the Debtor filed the Plan Supplement for the Plan of Liquidation for HH Liquidation, LLC Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 3924] (the Plan Supplement ). 6. A hearing on Confirmation is scheduled for November 14, 2018 (the Confirmation Hearing ). In connection with the Confirmation Hearing, the Debtor submits this Memorandum to address the basic requirements set forth in title 11 of the United States Code (the Bankruptcy Code ) for Confirmation. The Debtor will also present evidence at the Confirmation Hearing to establish the factual predicates necessary for Confirmation. 7. Following the solicitation of acceptances of the Plan, which ended on November 7, 2018, all Holders of Claims and Equity Interests in Class 4 (SLB Unsecured Claims) and Class 7 (Class A Equity Interests), respectively, voted in favor of accepting the Plan. 8. As a result of the Settlement Parties efforts to present a consensual chapter 11 plan, the Debtor only received one formal objection to Confirmation, which objection was filed by Los Angeles County Treasurer and Tax Collector [Docket No. 3949]. The movant has agreed to withdraw such objection. The Debtor also received an informal objection from the United States Trustee, which the Debtor believes has been resolved through discussions with the objecting party. -3-

14 Case KG Doc 3961 Filed 11/12/18 Page 14 of 48 III. OVERVIEW OF THE PLAN A. Highlights of the Plan 4 9. The Plan constitutes a liquidating chapter 11 plan for the Debtor. The Plan provides for the Debtor Assets to be liquidated and for the proceeds thereof to be distributed to Holders of Allowed Claims and Allowed Equity Interests in accordance with the terms and conditions of the Plan and the applicable priorities of the Bankruptcy Code. Except as otherwise provided by order the Bankruptcy Court, Distributions to such Holders will occur as provided for in the Plan. Subsequent to the Effective Date and upon entry of a final decree closing the Debtor s Bankruptcy Case, the Plan Debtor will be dissolved as soon as practicable. 10. The Plan also implements the Global Settlement Agreement, which governs, among other things, the minimum initial Distribution to Holders of Class A Equity Interests and the dismissal, with prejudice, of the Committee Litigation. The Global Settlement Agreement was the product of extensive arms length and good faith negotiations among the Settlement Parties in a concerted effort to develop a fully consensual chapter 11 plan, and ultimately resulted in the filing of the Plan. The Debtor believes that the Plan is in the best interest of the Debtor s Estate and Holders of Claims and Equity Interests, and represents a sound exercise of the Debtor s business judgment. B. Plan Solicitation and Results Thereof 11. On October 10, 2018, 5 in accordance with the Solicitation Procedures Order, the Debtor, through Kurtzman Carson Consultants LLC ( KCC ), the Debtor s claims agent, 4 The description of the Plan or any settlement contained herein is subject to and qualified in its entirety by the Plan and any other definitive documentation governing such settlement. In the event of any conflict between the description of the Plan and any settlement contained herein, the terms of the Plan and the definitive documentation governing such settlement shall control. -4-

15 Case KG Doc 3961 Filed 11/12/18 Page 15 of 48 commenced solicitation by transmitting Solicitation Packages to all known Holders, as of October 4, 2018 (the Voting Record Date ), of Claims and Equity Interests in each Impaired Class entitled to vote to accept or reject the Plan, which Solicitation Packages contained copies of: (a) the Disclosure Statement, including the Plan and all other exhibits annexed thereto; (b) the Disclosure Statement Order (excluding exhibits); (c) the Confirmation Hearing Notice; (d) a single ballot to be used in voting to accept or reject the Plan, and applicable Voting Instructions; and (e) a pre-addressed, postage pre-paid return envelope. Specifically, the Solicitation Package was distributed to Holders of Claims and Equity Interests in Class 4 (SLB Unsecured Claims) and Class 7 (Class A Equity Interests), respectively. See Affidavit of Service [Docket No. 3923]. 12. Additionally, as required by the Solicitation Procedures Order, the Debtor, through KCC, timely distributed to all Holders, as of the Voting Record Date, of Claims and Equity Interests not entitled to vote on the Plan, including Holders, as of the Voting Record Date, of (a) Unimpaired Claims in (i) Class 1 (Priority Non-Tax Claims), (ii) Class 2 (Secured Claims), (iii) Class 3 (Albertsons Settlement Claim), (iv) Class 5 (General Unsecured Claims) and (v) Class 6 (Intercompany Claims) that are deemed to accept the Plan, (b) Administrative Claims, Professional Fee Claims and Priority Tax Claims and (c) Impaired Equity Interests in Class 8 (Other Equity Interests) that are deemed to reject the Plan, a copy of the Confirmation Hearing Notice. See Affidavit of Service [Docket No. 3923]. 13. As further required by the Solicitation Procedures Order, the Debtor, through KCC, also timely distributed to the United States Trustee, governmental units having an interest in the Bankruptcy Cases and those parties requesting notice pursuant to Bankruptcy Rule Pursuant to the Solicitation Order, the later of October 10, 2018 and three (3) Business Days after entry of the Disclosure Statement Order was established as the deadline for the mailing of Solicitation Packages to Holders of Claims and Equity Interests entitled to vote on the Plan. -5-

16 Case KG Doc 3961 Filed 11/12/18 Page 16 of 48 that had not otherwise received a Solicitation Package pursuant to the procedures set forth in the Solicitation Procedures Order, Information Packages containing copies of: (a) the Disclosure Statement, including the Plan and all other exhibits annexed thereto; (b) the Disclosure Statement Order (excluding exhibits); and (c) the Confirmation Hearing Notice. See Affidavit of Service [Docket No. 3923]. 14. Pursuant to the Solicitation Procedures Order, the deadline for returning ballots accepting or rejecting the Plan was set at 4:00 p.m. (ET) on November 7, 2018 (the Voting Deadline ), unless such deadline was extended by the Debtor in accordance with the Solicitation Procedures Order. 15. The following chart illustrates the voting results provided by KCC to the Debtors: Class Class Description 4 SLB Unsecured Claims 7 Class A Equity Interests Number Number Amount Amount Accepting Rejecting Accepting Rejecting % % % % Class Voting Result 2 0 $23,697,511 0 Accept 100% 0% 100% 0% 2 0 2,183,281 0 Accept 100% 0% 100% 0% 16. Because Class 8 (Other Equity Interests) is deemed to have rejected the Plan, the Debtor seeks Confirmation pursuant to section 1129(b) of the Bankruptcy Code as to such Class. As set forth more fully in this Memorandum and as the Debtor will establish at the Confirmation Hearing, the Plan satisfies each applicable standard under section 1129, and all other applicable provisions, of the Bankruptcy Code. The Debtor therefore respectfully requests that the Bankruptcy Court confirm the Plan and overrule any objections, responses or reservations of rights with respect to Confirmation that have not been resolved, withdrawn, waived, adjourned or settled prior to entry of this Order or otherwise resolved herein or as stated on the record of the Confirmation Hearing. -6-

17 Case KG Doc 3961 Filed 11/12/18 Page 17 of 48 IV. THE PLAN SHOULD BE CONFIRMED BECAUSE IT COMPLIES WITH THE REQUIREMENTS OF SECTION 1129 OF THE BANKRUPTCY CODE A. The Plan Satisfies All Section 1129(a) Requirements 17. To confirm the Plan, the Bankruptcy Court must find that both the Plan and the Debtor, as the proponent of the Plan, satisfy the requirements of section 1129(a) of the Bankruptcy Code under a preponderance of the evidence standard. See In re Armstrong World Indus., Inc., 348 B.R. 111, (D. Del. 2006); In re Genesis Health Ventures, Inc., 266 B.R. 591, 616 n.23 (Bankr. D. Del. 2001), appeal dismissed as moot, 280 B.R. 339 (D. Del. 2002). 18. As set forth below in detail, the Plan and the Debtor, as applicable, satisfy all of the applicable requirements of section 1129(a) of the Bankruptcy Code (other than section 1129(a)(8)) and section 1129(b)(1) of the Bankruptcy Code, which enables the Plan to be confirmed notwithstanding the fact that not all Impaired Classes of Claims and Equity Interests have accepted the Plan. Furthermore, the Plan is fair and equitable with respect to such nonaccepting Impaired Classes and does not unfairly discriminate against such Classes. Accordingly, the Plan should be confirmed pursuant to section 1129 of the Bankruptcy Code. 1. Section 1129(a)(1) The Plan Complies with the Applicable Provisions of the Bankruptcy Code 19. Section 1129(a)(1) of the Bankruptcy Code provides that a court may confirm a plan of reorganization only if [t]he plan complies with the applicable provisions of this title. See 11 U.S.C. 1129(a)(1). The phrase applicable provisions has been interpreted to include sections 1122 and 1123 of the Bankruptcy Code, which govern the classification of claims and interests and the contents of a plan of reorganization. See, e.g., Kane v. Johns-Manville Corp., 843 F.2d 636, (2d Cir. 1988). -7-

18 Case KG Doc 3961 Filed 11/12/18 Page 18 of 48 a. The Plan Satisfies the Classification Requirements of Section Section 1122(a) of the Bankruptcy Code provides that a plan may place a claim or interest in a particular class only if it is substantially similar to other claims or interests in that class. See In re Caldwell, 76 B.R. 643, 644 (Bankr. E.D. Tenn. 1987). Claims or interests in a class need not be identical, but should be similar in legal character or effect with respect to the debtor. See In re AOV Indus., Inc., 792 F.2d 1140, (D.C. Cir. 1986) (affirming plan confirmation where claims guaranteed by third party were grouped with non-guaranteed claims). 21. Here, the Plan designates a total of eight (8) Classes of Claims and Equity Interests. This classification scheme complies with section 1122(a) of the Bankruptcy Code because each Class contains only Claims or Equity Interests that are substantially similar to each other. Furthermore, the classification scheme created by the Plan is based on the similar nature of Claims or Equity Interests contained in each Class and not on an impermissible classification factor. Finally, similar Claims and Equity Interests have not been placed into different Classes in order to affect the outcome of the vote on the Plan. 22. Because each Class consists of only substantially similar Claims or Equity Interests, the Bankruptcy Court should approve the classification scheme as set forth in the Plan as consistent with section 1122(a) of the Bankruptcy Code. b. The Plan Satisfies the Requirements of Section 1123 i. Mandatory Provisions 23. The Plan meets the seven mandatory requirements of sections 1123(a)(1)-(7) of the Bankruptcy Code, 6 which require that a plan: (1) designate classes of claims and interests; 6 Section 1123(a)(8) is applicable only in cases in which the debtor is an individual. 11 U.S.C. 1123(a)(8). -8-

19 Case KG Doc 3961 Filed 11/12/18 Page 19 of U.S.C. 1123(a)(1)-(7). (2) specify unimpaired classes of claims and interests; (3) specify treatment of impaired classes of claims and interests; (4) provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim agrees to a less favorable treatment of such particular claim or interest; (5) provide adequate means for implementation of the plan; (6) provide for the prohibition of nonvoting equity securities and provide an appropriate distribution of voting power among the classes of securities; and (7) contain only provisions that are consistent with the interests of the creditors and equity security holders and with public policy with respect to the manner of selection of officers and directors. 24. Specifically, Article III of the Plan satisfies the first three requirements of section 1123(a) by: (a) designating Classes of Claims and Equity Interests, as required by section 1123(a)(1); (b) specifying the Classes of Claims and Equity Interests that are Unimpaired under the Plan, as required by section 1123(a)(2); and (c) specifying the treatment of each Class of Claims and Equity Interests that is Impaired, as required by section 1123(a)(3). 25. Section III.B. of the Plan satisfies section 1123(a)(4) because the treatment of each Claim or Equity Interest within a Class is the same as the treatment of each other Claim or Equity Interest within that Class (unless otherwise consented to). 26. The Plan also satisfies section 1123(a)(5) of the Bankruptcy Code, which requires that a plan provide adequate means for the plan s implementation, and provides several examples of what may constitute adequate means. 7 In particular, various provisions of the 7 Adequate means for the plan s implementation under section 1123(a)(5) includes: (A) retention by the debtor of all or any part of the property of the estate; (B) transfer of all or any part of the property of the estate to one or more entities, whether organized before or after confirmation of such plan; (C) merger or consolidation of the debtor with one or more persons; (D) sale of all or any part of property of the estate... among those having an interest in such property of the estate; (E) satisfaction or -9-

20 Case KG Doc 3961 Filed 11/12/18 Page 20 of 48 Plan, including Article IV of the Plan, set forth the means for implementation of the Plan, including, among other things, the vesting of all Debtor Assets in the Plan Debtor, and the appointment of a Plan Administrator to implement the Plan and administer and distribute the Debtor Assets and wind down the business and affairs of the Debtor and the Plan Debtor. 27. Additionally, Section IV.D. of the Plan provides for the dissolution of the Debtor and, therefore, section 1123(a)(6) of the Bankruptcy Code is inapplicable. 28. The Plan also satisfies section 1123(a)(7) and contain[s] only provisions that are consistent with the interests of creditors and equity security holders and with public policy with respect to the manner of selection of any officer, director, or trustee under the plan and any successor to such officer, director, or trustee. 11 U.S.C. 1123(a)(7). Specifically, Section IV.B.1 of the Plan provides that, on the Effective Date, (a) the authority, power and incumbency of the Persons then acting as members, managers and officers of the Debtor shall be terminated and such members, managers and officers shall be deemed to have resigned; and (b) the Plan Administrator shall be deemed appointed and shall succeed to such powers as would have been applicable to the Debtor s members, managers and officers. The Plan Administration Agreement filed as part of the Plan Supplement identifies the Person proposed to serve, as of the Effective Date, as the Plan Administrator. 29. Because the Plan does not provide for the reorganization of the Debtor s business, but rather for the Debtor Assets to be liquidated and for the proceeds thereof to be distributed to Holders of Allowed Claims and Allowed Equity Interests in accordance with the terms and modification of any lien; (F) cancellation or modification of any indenture or similar instrument; (G) curing or waiving of any default; (H) extension of a maturity date or a change in an interest rate or other term of outstanding securities; (I) amendment of the debtor s charter; or (J) issuance of securities of the debtor, or of any entity referred to in subparagraph (B) or (C) of this paragraph, for cash, for property, for existing securities, or in exchange for claims or interests, or for any other appropriate purpose. 11 U.S.C. 1123(a)(5). -10-

21 Case KG Doc 3961 Filed 11/12/18 Page 21 of 48 conditions of the Plan and the applicable priorities of the Bankruptcy Code, the selection and appointment of the Plan Administrator is consistent with the best interests of Holders of Claims and Equity Interests and with public policy, and no party in interest in the Bankruptcy Cases has suggested anything to the contrary. Thus, the Plan complies with section 1123(a)(7) of the Bankruptcy Code. ii. Permissive Provisions 30. Section 1123(b) of the Bankruptcy Code grants broad authority to proponents of chapter 11 plans to include discretionary plan provisions. See United States v. Energy Res. Co., 495 U.S. 545, 549 (1990) ( The [Bankruptcy] Code [ ] grants the bankruptcy courts residual authority to approve [chapter 11] plans including any... appropriate provision not inconsistent with the applicable provisions of this title. ) (quoting 11 U.S.C. 1123(b)(5)). In particular, section 1123(b)(6) permits inclusion in a plan of any other appropriate provision not inconsistent with the applicable provisions of this title. 31. In accordance with the discretionary authority set forth in section 1123(b), the Plan employs a variety of discretionary provisions, each intended to facilitate the wind down of the Debtor s Bankruptcy Case and appropriate under the circumstances. 8 8 Section 1123(b) provides that [s]ubject to subsection (a) of this section, a plan may (1) impair or leave unimpaired any class of claims, secured or unsecured, or of interests; (2) subject to section 365 of this title, provide for the assumption, rejection, or assignment of any executory contract or unexpired lease of the debtor not previously rejected under such section; (3) provide for (A) the settlement or adjustment of any claim or interest belonging to the debtor or to the estate; or (B) the retention and enforcement by the debtor, by the trustee, or by a representative of the estate appointed for such purpose, of any such claim or interest; (4) provide for the sale of all or substantially all of the property of the estate, and the distribution of the proceeds of such sale among holders of claims or interests; (5) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims; and (6) include any other appropriate provision not inconsistent with the applicable provisions of this title. -11-

22 Case KG Doc 3961 Filed 11/12/18 Page 22 of 48 Impairment of Certain Claims 32. Specifically, in accordance with section 1123(b)(1), Article III of the Plan impairs certain Classes of Claims and Equity Interests while leaving others Unimpaired. The Treatment of Executory Contracts and Unexpired Leases Should be Approved 33. Furthermore, as permitted by section 1123(b)(2), Section V.A. of the Plan provides that any executory contract or unexpired lease which has not expired by its own terms on or prior to the Effective Date, which has not been assumed, assumed and assigned, or rejected with the approval of the Bankruptcy Court, or which the Debtor has obtained the authority to reject but has not rejected as of the Effective Date, or which is not the subject of a motion to assume or reject the same pending as of the Effective Date, shall be deemed rejected by the Debtor as of the Confirmation Date. 34. Rejection of an executory contract is appropriate where, in the exercise of the debtor s sound business judgment, the debtor determines that rejection of the contract would benefit the estate. See Sharon Steel Corp. v. Nat l Fuel Distribution Corp., 872 F.2d 36, 40 (3d Cir. 1989). The decision to reject or assume an executory contract is a matter within the business judgment of the debtor. See Armstrong World Indus., 348 B.R. at 162 ( Courts have uniformly deferred to the business judgment of the debtor to determine whether the rejection of an executory contract or unexpired lease by the debtor is appropriate.... ); In re Pinnacle Brands, Inc., 259 B.R. 46, 53 (Bankr. D. Del. 2001) ( The [d]ebtors decision to assume or reject an executory contract is based upon its business judgment. ) (citations omitted). Furthermore, the burden or hardship on the contract party to a rejected contract is not a factor to be considered. Borman s, Inc. v. Allied Supermarkets, Inc., 706 F.2d 187, 189 (6th Cir. 1983). -12-

23 Case KG Doc 3961 Filed 11/12/18 Page 23 of The Debtor s determination to reject the executory contracts and unexpired leases described in Paragraph 33 is an exercise of its business judgment. In light of the pending wind down of the Debtor s Estate, the Debtor respectfully submits that its determination to reject such executory contracts and unexpired leases embodied in the Plan is appropriate and consistent with the applicable provisions of the Bankruptcy Code. As a result, the proposed rejections provided for in the Plan should be approved in connection with Confirmation. The Releases Should be Approved 36. Section IX.D.1 of the Plan provides for certain releases by the Debtor and the Plan Debtor of the Released Parties 9 (the Debtor Releases ), and Section IX.D.2 of the Plan provides for certain releases of the Released Parties by: (a) each of the Released Parties; (b) each Holder of an Allowed SLB Unsecured Claim and Allowed Class A Equity Interest that voted to accept this Plan but that did not validly exercise the Release Opt-Out; and (c) each Holder of a Claim deemed in the Plan to have accepted the Plan that did not file, prior to the deadline to object to Confirmation, an objection to the granting of the releases in the Plan (the Third-Party Releases and, together with the Debtor Releases, the Releases ), both of which are appropriately tailored under the facts and circumstances of the Debtor s Bankruptcy Case and are supported by ample consideration The term Released Parties is defined in the Plan as including each of the following parties in their respective capacities as such: (a) the Debtors, their Estates and each of the Debtors affiliates; (b) each financial advisor, restructuring advisor, attorney or other professional employed by or serving the Debtors, their Estates or any affiliate of the Debtors; (c) each of the current or former officers, directors, members and managers of the Debtors or any of their affiliates, including the Independent Manager; (d) the Committee; (e) each member of the Committee, but only in their capacity as a member of the Committee; (f) each of the Committee s Professionals and representatives; (g) the Comvest Entities; (h) each of the Comvest Entities financial advisors, attorneys and representatives; (i) each of the Comvest Entities current and former officers, directors, equity holders, limited partners, and general partners; (j) the Propco Entities; (k) each of the Propco Entities financial advisors, attorneys and representatives; and (l) each of the Propco Entities current or former officers and directors. 10 Section 1123(b)(3)(A) also provides that a debtor may settle or adjust any claim or interest of the debtor or the estate. 11 U.S.C. 1123(b)(3)(A). -13-

24 Case KG Doc 3961 Filed 11/12/18 Page 24 of The Releases each of which are subject to the occurrence of the Effective Date are consensual and represent an integral part of the Plan. The Releases provide appropriate levels of protection to parties whose participation in the resolution of the Debtor s Bankruptcy Case and the related wind down process is critical. Moreover, the scope of the Releases is appropriately tailored and limited to the Debtors and various aspects of the chapter 11 proceedings and related transactions, and are subject to the standard exclusion for fraud, gross negligence and willful misconduct. Furthermore, as set forth in the Beilinson Declaration, under the circumstances of the Bankruptcy Cases, and given the significant costs attendant to any further litigation, pursuing additional causes of action against the Released Parties will not serve the ultimate goal of preserving and maximizing the value of the Debtor s Estate. Accordingly, the Releases represent the valid exercise of the Debtor s business judgment and are permissible under section 1123(b)(6) of the Bankruptcy Code. 38. In evaluating releases, courts distinguish between the debtor s release of nondebtors and third parties release of non-debtors. See In re Washington Mut., Inc., 442 B.R. 314, 346 (Bankr. D. Del 2011) (citing In re Exide Techs., 303 B.R. 48, (Bankr. D. Del. 2003)). With respect to a debtor s release of a non-debtor, courts consider the five Zenith factors : (1) an identity of interest between the debtor and the third party, such that a suit against the third party is, in essence, a suit against the debtor or will deplete assets of the estate; (2) substantial contribution by the third party to the plan; (3) the essential nature of the release to the debtor s plan; (4) an agreement by a substantial majority of creditors to support the plan and the release; and (5) provision in the plan for payment of all or substantially all of the claims of the creditors and interest holders under the plan. -14-

25 Case KG Doc 3961 Filed 11/12/18 Page 25 of 48 In re Zenith Elecs. Corp., 241 B.R. 92, 110 (Bankr. D. Del. 1999) (citing In re Master Mortgage Investment Fund, Inc., 168 B.R. 930 (Bankr. W.D. Mo. 1994)); In re Washington Mut., Inc., 442 B.R. at 346. No factor is dispositive, nor is a proponent required to establish each factor required for the release to be approved; rather, the factors are intended to provide guidance to the bankruptcy court in determining the fairness of the releases. See In re Washington Mut., Inc., 442 B.R. at 346; see also Exide Techs., 303 B.R. at 72 (finding that factors are not exclusive or conjunctive requirements); In re Indianapolis Downs, LLC., 486 B.R. 286, 304 (Bankr. D. Del. 2013) (approving the debtors releases despite not meeting the third and fifth Zenith factors). 39. First, the Debtor submits that each Zenith factor supports the proposed Debtor Releases. As to the first factor, there is an identity of interest between the Released Parties and the Debtor and Plan Debtor insofar as the Debtor Releases include certain Settlement Parties, and their respective counsel and professional advisors, who share the common goal of confirming the Plan and implementing the terms of the broadly supported agreements and compromises contained therein. See Zenith Elecs. Corp., 241 B.R. at 110 (concluding that the first factor was satisfied where released parties who were instrumental in formulating the Plan shared an identity of interest with the debtor in seeing that the Plan succeed ). 40. Here, nearly all of the Released Parties either participated in (or represented, or were represented by, parties participating in) the negotiation of the key terms of the Global Settlement Agreement and the Plan. Moreover, certain of the Debtors officers, directors, managers and members also share an identity of interest with the Debtor and the Plan Debtor based on their rights to indemnification from the Debtor, such that pursuing litigation against them amounts to litigation against the Debtor or its insurance coverage. See Indianapolis Downs -15-

26 Case KG Doc 3961 Filed 11/12/18 Page 26 of 48 LLC, 486 B.R. at 303 ( An identity of interest exists when... the debtor has a duty to indemnify the nondebtor receiving the release. ) (internal citation omitted). 41. As to the second factor, the Debtor Releases are predicated on substantial contributions by the Released Parties. The Debtor Releases include parties that have provided a direct benefit to the Debtor s Estate, such as the Debtors officers, directors, managers and managers, whose efforts were indispensable to administering the Bankruptcy Cases and effectuating the Debtors asset sales and operating the Debtors businesses while under extremely difficult circumstances. The Comvest Entities and the Propco Entities also made significant contributions to the Bankruptcy Cases, including the consensual compromise of the Propco Secured Claim in order to ensure, among other things, the administrative solvency of the Opco Debtors Estates and the development of a consensual Plan. Additionally, as part of the Global Settlement Agreement, the Committee has agreed to file a stipulation dismissing, with prejudice, the Committee Litigation no later than five (5) Business Days after the Effective Date. 42. As to the third factor, the Debtor Releases are absolutely essential to the Plan itself. The Debtor Releases are a critical component of the Global Settlement Agreement that, in turn, forms the basis for the Plan. Through the Global Settlement Agreement, the Settlement Parties resolved what may have otherwise involved complex, costly and ultimately uncertain litigation, which resolution allowed the Debtors to provide their stakeholders with enhanced recoveries. Without the Debtor Releases, the Debtor does not believe that the manifest benefits arising under that settlement and the Plan would be possible. 43. As to the fourth and fifth factors, and as described above, the Plan implements the Global Settlement Agreement with nearly all the Debtor s main constituents, which parties support the Plan and the Releases contained therein. In fact, the Global Settlement Agreement -16-

27 Case KG Doc 3961 Filed 11/12/18 Page 27 of 48 facilitates a recovery to all Holders, which may not otherwise be available if the Committee Litigation were to continue or new litigation were to ensue. 44. Furthermore, the Debtor is not aware of any valid claims against the Released Parties. The Committee has already been granted standing, and elected, to commence the Committee Litigation against certain Released Parties, including the Comvest Entities, the Propco Entities, Haggen SLB, LLC and the former officers, directors and managers of the Debtors. Pursuant to such litigation, the Committee alleged, among other things, that (a) such Released Parties had committed actual fraud, made fraudulent transfers and breached their fiduciary duties, and (b) the Propco Secured Claim should be equitably subordinated or otherwise recharacterized. The Committee also sought to substantively consolidate the Debtors with certain of their non-debtor affiliates. After a five-day evidentiary trial, the submission of post-trial briefs and closing arguments, on January 22, 2018, the Bankruptcy Court issued an opinion finding for the defendants with respect to each count, and denying all of the relief requested by the Committee in its complaint in the Committee Litigation. In light of the broad scope of claims asserted against Released Parties pursuant the Committee Litigation, which claims were found, after extensive evidentiary litigation, to be meritless, the Debtors believe that meaningful claims against the Released Parties simply do not exist. Thus, pursuing additional causes of action against the Released Parties will not serve the ultimate goal of preserving and maximizing the value of the Debtor s Estate. 45. Thus, the Debtor Releases reflect a proper exercise of the Debtor s judgment, are in the best interests of the Debtor s Estate and should be approved. 46. Second, the Third-Party Releases should be approved. As a threshold matter, the Third-Party Releases are consensual in nature and may therefore be approved on the basis that -17-

28 Case KG Doc 3961 Filed 11/12/18 Page 28 of 48 they are premised upon the releasing party s consent. See Indianapolis Downs LLC, 486 B.R. at 306; In re Spansion, Inc., 426 B.R. 114, 144 (Bankr. D. Del. 2010); In re Genco Shipping & Trading Ltd., No , slip op. at 58 (Bankr. S.D.N.Y. July 2, 2014). 47. Courts have found that a release of a non-debtor is consensual where the creditor was given the opportunity to opt-out of the release (as is the case here) but failed to do so. See Indianapolis Downs LLC, 486 B.R. at 306 ( [T]he record reflects these parties were provided detailed instructions on how to opt out, and had the opportunity to do so by marking their ballots. Under these circumstances, the [t]hird [p]arty [r]eleases may be properly characterized as consensual and will be approved. ); Spansion, 426 B.R. at 144; Genco Shipping & Trading Ltd., No at Thus, by declining to return a ballot, or by not opting out of a release, the creditor may be deemed to consent to the release. See In re Conseco, Inc., 301 B.R. 525, 528 (Bankr. N.D. Ill. 2003) (approving releases as consensual where creditors [] agreed to be bound, either by voting for the Plan or by choosing not to opt out of the release ); In re Calpine Corp., No BRL, 2007 WL at *10 (Bankr. S.D.N.Y. Dec. 19, 2007) (approving release by Holders of Claims and Interests that vote in favor of the Plan, who abstain from voting and choose not to opt out of the releases, or who have otherwise consented to give a release, and are consensual ). Consensual Third-Party Releases such as those proposed here are commonly approved in this District. See, e.g., In re Trump Entm t Resorts, Inc., Case No (KG) (Bankr. D. Del. Mar. 12, 2015); In re Indianapolis Downs, LLC, Case No (BLS) (Bankr. D. Del. March 20, 2013). 48. Similarly, courts in this jurisdiction have found that third-party releases are consensual where the affected claimants are unimpaired and deemed to accept the plan. See Indianapolis Downs LLC, 486 B.R. at 306 (finding third-party releases consensual that bind -18-

29 Case KG Doc 3961 Filed 11/12/18 Page 29 of 48 unimpaired creditors who are deemed to accept the plan because [those] creditors [were] being paid in full and have therefore received consideration for the releases ); Spansion, 426 B.R. at 145 (finding that deemed acceptance of the releases by unimpaired classes was not overreaching because the unimpaired classes were being paid in full and received adequate consideration for the release). Here, each Holder of a Claim deemed in the Plan to have accepted the Plan that did not file an objection to Confirmation is deemed to have granted the Third-Party Release. The notice of the Confirmation Hearing, as well as the Plan and the Disclosure Statement, each conspicuously advised such Holders of this, and each was provided an opportunity to object to this provision and the granting of the Third-Party Release. No such objections were received from such Holders. Thus, consistent with caselaw in this District, the Plan s inclusion of creditors conclusively deemed to accept the Plan as providing the Third-Party Release is appropriate. 49. Additionally, as demonstrated above, the Third-Party Releases are an integral part of the Plan, are necessary parts of the Global Settlement Agreement and otherwise satisfy the five-part Zenith test for the same reasons as the Debtor Releases. Furthermore, the non-debtor Released Parties have made significant contributions to the Bankruptcy Cases, and their inclusion in the Third-Party Releases was also a material inducement for their participation, negotiation and ultimate resolution of claims through the Global Settlement Agreement. 50. Accordingly, the Third-Party Releases should be approved. The Exculpation Should be Approved 51. Section IX.E. of the Plan provides an exculpation of the Exculpated Parties 11 with respect to the Bankruptcy Cases, subject to an exclusion for fraud, gross negligence and willful 11 The term Exculpated Parties is defined in the Plan as meaning each of the following parties in their respective capacities as such: (a) the Debtors; (b) the Debtors current and former directors, officers, members and -19-