rdd Doc 1317 Filed 04/12/19 Entered 04/12/19 12:45:08 Main Document Pg 1 of 18

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1 Pg 1 of 18 Hearing Date and Time: April 16, 2019 at 10:00 a.m. (prevailing Eastern Time) Jeffrey R. Gleit, Esq. Allison H. Weiss, Esq. Clark A. Freeman, Esq. SULLIVAN & WORCESTER LLP 1633 Broadway New York, New York (212) (Telephone) (212) (Facsimile) Counsel to the Reorganized Debtors UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ) In re: ) Chapter 11 ) 21st CENTURY ONCOLOGY HOLDINGS, INC., et al., 1 ) Case No (RDD) ) Reorganized Debtors. ) (Jointly Administered) ) REORGANIZED DEBTORS REPLY TO OBJECTION AND IN FURTHER SUPPORT OF REORGANIZED DEBTORS MOTION TO REOPEN CHAPTER 11 CASE 1 Each of the Reorganized Debtors in the above-captioned jointly administered chapter 11 cases and their respective tax identification numbers are set forth in the Order Directing Joint Administration of Chapter 11 Cases [Docket No. 30]. The location of 21st Century Oncology Holdings, Inc. s corporate headquarters and the Debtors service address is: 2270 Colonial Boulevard, Fort Myers, Florida

2 Pg 2 of 18 TABLE OF CONTENTS PRELIMINARY STATEMENT... 1 ARGUMENT... 2 I. The Reorganized Debtors Are Likely to Succeed in Obtaining the Underlying Relief Requested A. Plaintiffs Claims Accrued Prepetition B. Plaintiffs Were Required to Raise Their Objections at Confirmation C. The Release Set Forth in Section 8.3 of the Plan Is Binding on Plaintiffs II. The Other Factors Favor Reopening the Case A. The Bankruptcy Case Was Active and Open Until Only a Few Months Ago B. This Court Has Exclusive Jurisdiction C. Reopening Would Benefit the Reorganized Debtors D. There Is No Prejudice to Plaintiffs i

3 Pg 3 of 18 Cases TABLE OF AUTHORITIES ii Page(s) Baeshen v. Arcapita Bank B.S.C.(c) (In re Arcapita Bank B.S.C.(c)), 520 B.R. 15 (Bankr. S.D.N.Y. 2014)... 8 In re 243rd St. Bronx R&R LLC, 11 B (ALB), 2013 Bankr. LEXIS 1161 (Bankr. S.D.N.Y. Mar. 21, 2013)... 8 In re Best Prods. Co., 168 B.R. 35 (Bankr. S.D.N.Y. 1994)... 8 In re Child World, 147 B.R. 847 (Bankr. S.D.N.Y. 1992) In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188 (E.D.N.Y. 2003)... 5 In re Lear Corp., No (ALG), 2012 Bankr. LEXIS 440 (Bankr. S.D.N.Y. Feb. 10, 2012)... 6, 7 In re N. Parent, Inc., 221 B.R. 609 (Bankr. D. Mass 1998) In re The Great Atlantic and Pac. Tea Co., Inc., 544 B.R. 43 (Bankr. S.D.N.Y. 2016)... 8 Ka Kin Wong v. HSBC Bank USA, N.A., (In re Lehman Bros. Holdings Inc.), 532 B.R. 203 (S.D.N.Y. 2015) Luan Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223 (2d Cir. 2002)... 9 LTV Corp. v. Back (In re Chateaugay Corp.), 201 B.R. 48 (Bankr. S.D.N.Y. 1996)... 9 N. Carolina Elec. Membership Corp. v. Carolina Power & Light Co., 780 F. Supp. 322 (M.D.N.C. 1991)... 6 Orion Pictures Corp. v. Showtime Networks (In re Orion Pictures Corp.), 4 F.3d 1095 (2d Cir. 1993)... 8 Reisman v. Gen. Motors Corp., 845 F.2d 289 (11th Cir. 1988)... 3, 4 Statutory Comm. of Unsecured Creditors v. Motorola (In Re Iridium Operating LLC), 285 B.R. 822 (S.D.N.Y. 2002) Tam Travel Inc. v. Delta Airlines Inc. (In re Travel Agent Comm n Antitrust Litig.), 583 F.3d 896 (6th Cir. 2009)... 5, 7

4 Pg 4 of 18 Thompson v. Metro. Multi-List, Inc., 934 F.2d 1566 (11th Cir. 1991)... 5 Todorov v. DCH Healthcare Auth., 921 F.2d 1438 (11th Cir. 1991)... 5 Vitale v. Marlborough Gallery, No. 93 CIV. (PKL) 6276, 1994 U.S. Dist. LEXIS 9006 (S.D.N.Y. July 5, 1994)... 5, 6 Zardinovsky v. Arctic Glacier Income Fund (In re Arctic Glacier Int l, Inc.), 901 F.3d 162 (3d Cir. 2018) Statutes 11 U.S.C. 350(b) U.S.C. 15b U.S.C. 152(b)(2)(A) U.S.C. 157(d) iii

5 Pg 5 of 18 Hearing Date and Time: April 16, 2019 at 10:00 a.m. (prevailing Eastern Time) TO THE HONORABLE ROBERT D. DRAIN UNITED STATES BANKRUPTCY JUDGE: The above-captioned reorganized debtors (collectively, the Reorganized Debtors and, prior to the Effective Date, as defined herein, the Debtors ), by and through their undersigned counsel, hereby file this reply (the Reply ) to the Plaintiffs Objection (the Objection ) [Docket No. 1316] and in further support of the Reorganized Debtors Motion Pursuant to 11 U.S.C. 350(b), Rule 5010 of the Federal Rules of Bankruptcy Procedure and Local Rule of the Local Bankruptcy Rules for the Southern District of New York to Reopen Chapter 11 Case (the Motion to Reopen ) [Docket No. 1312], and respectfully represent as follows: PRELIMINARY STATEMENT 2 1. There is one issue before the Court and it is simple; i.e., whether the Bankruptcy Case (as defined herein) should be reopened so that the Reorganized Debtors can seek to enforce the Plan and Confirmation Order and enjoin the Plaintiffs from their attempts to invalidate their Non-Compete and Non-Solicitation Clauses in the Florida Action. The issue before the Court requires application of black letter bankruptcy law, not substantive antitrust or employment law. It is also one that falls exclusively within the jurisdiction of this Court. 2. The Plaintiffs alleged claims accrued prepetition and were, therefore, released by their (i) failure to object to the assumption of their Employment Agreements, (ii) failure to object to confirmation of the Plan, and (iii) status as Releasing Parties under the Plan. 3. The Court should reopen the Bankruptcy Case because all of the relevant factors favor doing so, including that the Reorganized Debtors are likely to obtain the ultimate relief 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion to Reopen.

6 Pg 6 of 18 they seek. Consequently, the Reorganized Debtors respectfully request that the Court enter an Order granting the Motion to Reopen and overruling the Objection. 3 ARGUMENT 4. The Reorganized Debtors have adequately demonstrated sufficient cause to reopen the Bankruptcy Case under section 350(b) of the Bankruptcy Code. As set forth in the Reorganized Debtors Motion to Reopen, each of the factors that bankruptcy courts consider upon a motion to reopen favors reopening the Bankruptcy Case. I. The Reorganized Debtors Are Likely to Succeed in Obtaining the Underlying Relief Requested. A. Plaintiffs Claims Accrued Prepetition. 5. Plaintiffs claims in the Florida Action accrued prepetition and are full[y] release[d] because the Plaintiffs failed to object to the assumption of the Employment Agreements under the Plan or to confirmation of the Plan itself. See Confirmation Order at Plaintiffs assert that the issue of the enforceability of the Non-Compete and Non- Solicitation Clauses was not ripe until they terminated their employment with the Reorganized Debtors. Plaintiffs are wrong. 7. By their terms, the Non-Compete and Non-Solicitation Clauses at issue were effective upon execution (not as Plaintiffs contend, upon termination 4 ) and restricted the 3 4 The Reorganized Debtors respectfully request that the Court reopen the main bankruptcy case, , as well as the following two cases: In re 21st Century Oncology, Inc., , and In re 21st Century Oncology, LLC, (collectively, the Bankruptcy Case ). These three cases are for the Reorganized Debtors that are named as defendants in the Florida Action. The order that Reorganized Debtors submit to Chambers in connection with the Motion will clarify the scope of the relief sought on the Motion to Reopen. Plaintiffs do not maintain a consistent argument about when their claims did accrue. In the same paragraph, they argue that a claim accrued for Plaintiff Katin upon his last day of employment (March 6, 2019), but accrued for the other Plaintiffs on the day they submitted their resignations (March 15, 2019). But Plaintiff Katin tendered his resignation months prior to his last day of work (December 6, 2018), and Plaintiffs Dosoretz and Rubenstein continue to work for 21C today. See Objection at 24. 2

7 Pg 7 of 18 Plaintiffs ability to compete with 21C during the terms of their employment and for a period of time thereafter. For example, Rubenstein s Employment Agreement provides at 6: (a) During the term of this Agreement and any renewal period, Physician shall not undertake any professional service except as directed and authorized by 21st Century and shall not engage in any profession other than the rendition of the professional services as directed by 21st Century, other than pursuant to the [Employment] Agreement. (b) In consideration of the transactions contemplated hereby and the payment of the Merger Consideration... in the event of the termination of this Agreement for any reason, Physician agrees not to directly or indirectly engage in the practice of radiation therapy or oncology, or otherwise compete with 21st Century, or any of its physician providers... for a period beginning on the date of this Agreement and ending on the later of (a) the fifth anniversary of this Agreement and (b) three (3) years after the date of such actual termination of this Agreement. Rubenstein Employment Agreement at 6 (emphasis added). Pursuant to his Non-Compete and Non-Solicitation Clause, Rubenstein was, for example, prohibited from providing professional services for another physician group besides 21C during the term of his employment. The restrictions to his ability to compete are not new. Each of the other Plaintiffs Employment Agreements has substantively similar provisions Nothing in the Employment Agreements relating to the Non-Compete and Non- Solicitation Clauses has changed since execution; such covenants have been and remain the same today as they did on (i) the pre-petition date the agreements were executed, (ii) the Effective Date the agreements were assumed, (iii) the closing date of the Chapter 11 Cases, and (iv) the date the Antitrust Complaint was filed. Accordingly, any issues with respect to enforceability of the Non-Compete and Non-Solicitation Clauses were ripe upon the assumption of the Employment Agreements, i.e., at confirmation. See Reisman v. Gen. Motors Corp., 845 F.2d 5 It is worth repeating that certain of the Employment Agreements were signed by Danny Dosoretz himself. And, at the time Plaintiffs signed certain if not all of their Employment Agreements, Plaintiffs counsel in the Florida Action represented certain of the Reorganized Debtors, including with respect to the enforcement of the restrictive covenants in physician employment agreements. 3

8 Pg 8 of , 291 (11th Cir. 1988) (explaining that [a]s a general rule a cause of action accrues when there has been notice of an invasion of legal rights or a person has been put on notice of his right to a cause of action ). Plaintiffs cannot now disregard those provisions. 9. In the face of this inevitable conclusion, Plaintiffs spend considerable time in their Objection arguing that their claims nonetheless accrued post-confirmation because they allege other acts in violation of antitrust laws and because they have creatively styled their claims as seeking prospective, declaratory relief. See Objection at 24-27; These arguments misstate the facts and misunderstand the law. 10. As an initial matter, despite their bold protests to the contrary, nowhere on the face of their Antitrust Complaint do Plaintiffs actually allege any conduct that was initiated postconfirmation (let alone that violates the antitrust laws). 6 Indeed, the six subparagraphs Plaintiffs devote in their Objection to other conduct by 21C (e.g., internal bonus pools and financial incentives for referrals which they concede are lawful under the Stark Law, exclusive hospital contracts, purchase of competitors, and restrictive covenants) contain no specifics about the timeline of such conduct. See Objection at 28. The Plaintiffs do not allege that any of these purported acts were initiated post-confirmation because, as former co-founders, officers and/or senior physicians of 21C, Plaintiffs know that any such allegations would be false. It is irrelevant whether the same (legal) conduct continued after the Effective Date, because the Plaintiffs claims with respect to such conduct had already accrued and been discharged/released under the Plan and Confirmation Order. 11. More importantly, even apart from the actual timing of any of the other acts alleged by Plaintiffs, nowhere in their Antitrust Complaint do Plaintiffs allege that those other 6 To be clear, the Reorganized Debtors are not requesting that the Bankruptcy Court adjudicate the substance of the Plaintiffs alleged antitrust claims but rather, only that such claims were released upon the Plaintiffs failure to object to the assumption of the Employment Agreements and confirmation of the Plan. 4

9 Pg 9 of 18 acts create new, post-confirmation liability for the Reorganized Debtors. To invoke a continuing violation exception, Plaintiffs must identify an overt act sufficient to demonstrate postconfirmation liability. 7 See Tam Travel Inc. v. Delta Airlines, Inc. (In re Travel Agent Comm n Antitrust Litigation), 583 F.3d 896, 902 (6th Cir. 2009) (evaluating the applicability of a bankruptcy discharge when plaintiffs allege a continuing violation theory). An overt act is characterized by two elements: (1) it must be a new and independent act that is not merely a reaffirmation of a prior act, and (2) it must inflict new and accumulating injury on the plaintiff. See In re Ciprofloxacin, 261 F. Supp. 2d at 228. Plaintiffs claims do not meet this standard. 12. Plaintiffs only claimed injury here flows exclusively from their continuing obligations under their Employment Agreements. 8 But the mere fact that Plaintiffs obligations, and Reorganized Debtor s rights to enforce those obligations, continue post-confirmation does not give rise to new liability against the Reorganized Debtors. See Tam Travel Inc., 583 F.3d at 902 (holding antitrust claims discharged where defendant s post-bankruptcy continuation of a pricing practice alleged to be the result of illegal price-fixing was not an overt act, but instead was merely a reaffirmation of a pre-petition act); In re Ciprofloxacin, 261 F. Supp. 2d at 230 (finding that the performance of an allegedly anticompetitive, pre-existing contract was not a new overt act sufficient to restart the statute of limitations period because they were merely the 7 8 Courts within the Second Circuit have consistently looked unfavorably on continuing violation arguments. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp. 2d 188, 228 (E.D.N.Y. 2003) (citing Vitale v. Marlborough Gallery, No. 93 CIV. (PKL) 6276, 1994 U.S. Dist. LEXIS 9006, at *20 (S.D.N.Y. July 5, 1994). Although outside of the scope of the issues before this Court, for the avoidance of doubt, Plaintiffs lack standing to bring their alleged antitrust claims because they have not suffered an antitrust injury, which is an essential element of antitrust standing. See Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1449 (11th Cir. 1991). To establish antitrust injury, a plaintiff must allege that it suffered an injury of the type that the antitrust laws were intended to prevent, id. at 1449 that is, an injury that derives from some anticompetitive conduct. Thompson v. Metro. Multi-List, Inc., 934 F.2d 1566, 1571 (11th Cir. 1991). Because Plaintiffs continuing obligations under their Non-Compete and Non-Solicitation Clauses are legitimate and enforceable under Florida law, Plaintiffs have not and cannot allege antitrust injury as a result of their continuing obligations under those provisions. 5

10 Pg 10 of 18 inertial consequences of the pre-limitations contract execution); Vitale, 1994 U.S. Dist. LEXIS 9006 at *20 (rejecting a continuing violations argument when plaintiffs only alleged that defendants continued to adhere to their prior refusal deal) Plaintiffs do not allege injury that arises from new, post-confirmation conduct, as was the case in the Lear (a case prominently cited by Plaintiffs in their Objection). See In re Lear Corp., No (ALG), 2012 Bankr. LEXIS 440, at *34-35 (Bankr. S.D.N.Y. Feb. 10, 2012). In Lear, the plaintiffs alleged that the defendant re-joined an antitrust conspiracy after emerging from Chapter 11 bankruptcy proceedings and continued selling price-fixed products at supra-competitive pricing. See Lear, 2012 Bankr. LEXIS 440 at * At oral argument, the plaintiffs effectively conceded that their claims would be barred by the applicable bankruptcy release to the extent their injury flowed from pre-effective date conduct. Id. They argued instead that they would amend their claims to allege facts evidencing injury flowing from new, posteffective date conduct. Id. Accepting the plaintiffs affirmation, the bankruptcy court enjoined the plaintiffs claims to the extent they were based on pre-effective date conduct and left for the plaintiffs to address with the District Court the adequacy of any claimed injury flowing from alleged post-effective date conduct. The bankruptcy court reasoned that if bankruptcy law discharges a liability, but the debtor takes new action and incurs a similar liability after 9 Relatedly, Plaintiffs alleged antitrust claims are barred under the statute of limitations for the same reasons. A claim under Section 2 of the Sherman Act must be brought within four years of when the cause of action accrued. See 15 U.S.C. 15b. Here, Plaintiffs negotiated and executed the employment contracts at issue more than four years ago, have been subject to the non-compete restrictions since that time, and can point to no new acts causing harm to them since then that would justify extending the statute of limitations. Plaintiffs antitrust claims are, therefore, time barred. See N. Carolina Elec. Membership Corp. v. Carolina Power & Light Co., 780 F. Supp. 322, 331 (M.D.N.C. 1991) (barring a claim as outside the statute of limitations when plaintiffs knew for decades that a contract term prevented them from competing in the market yet they waited, reaping the benefits of the contract). 6

11 Pg 11 of 18 receiving its discharge, there may be no entitlement to an injunction.... Id. (emphasis added) Here, unlike Lear, Plaintiffs fail to allege that any new, post-effective date conduct creates a new liability against the Reorganized Debtors. Instead, they merely argue that Reorganized Debtors conduct is continuing and so it exists post-effective date. Objection at 28. These allegations fail under the reasoning of Lear: Plaintiffs have not and cannot allege a new liability against the Reorganized Debtors that arose post-confirmation. Instead, they are on all fours with the facts in Tam, 583 F.3d at 902, where the Sixth Circuit upheld the finding that the plaintiffs claim of injury flowing from a continuing violation was discharged by the Chapter 11 bankruptcy proceedings. The Court should conclude similarly here. 15. Indeed, the Court should deny Plaintiffs obvious attempt to circumvent their Non-Compete and Non-Solicitation Clauses based on alleged pre-confirmation conduct that they not only could have objected to, but in fact, would have participated in based on their positions with the Reorganized Debtors. Motion at 49. The Court should, consistent with Tam Travel and Lear, conclude that any alleged continuing violation (which there was none) accrued preconfirmation and was released upon confirmation of the Plan. 10 Notably, on appeal to the Southern District of New York, the District Court held that the questions directed to it whether Lear s post-effective date conduct could revive discharged claims and whether, if Lear engaged in post-effective date conduct, the bankruptcy discharge precluded Lear from being held jointly and severally liable for pre-effective date damages were properly before the Bankruptcy Court. See In re Lear Corp., No. 12 Civ KBF, 2012 WL , at *3 (S.D.N.Y. Nov. 5, 2012) ( Both questions directly require interpretation of the scope of a bankruptcy discharge. They turn on the interpretation of the Bankruptcy Code and not on antitrust law or state law. They do not require the bankruptcy court to decide whether certain conduct can result in antitrust violations or whether post Effective Date conduct can result in post Effective Date damages only. They do not require the bankruptcy court to decide whether antitrust laws require or permit co-conspirators to be held jointly and severally liable for damages from before they entered the conspiracy. In short, they are questions that were properly before the bankruptcy court, that the bankruptcy court was best positioned to answer, and for which abstention was not appropriate. ). 7

12 Pg 12 of 18 B. Plaintiffs Were Required to Raise Their Objections at Confirmation. 16. Plaintiffs improperly treat the assumption of an executory contract pursuant to a plan in the same manner as the assumption pursuant to motion. The Objection contends that the assumption of an executory contract has no preclusive effect with respect to the proper construction and application being assumed, and cannot foreclose or adjudicate claims arising from that contract. See Objection at 46 (citing Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095, 1098 (2d Cir. 1993)). This argument misses the mark. While true that the assumption of an executory contract pursuant to motion, without objection, may be insufficient for preclusive effect of certain substantive issues, see, e.g., In re The Great Atlantic and Pac. Tea Co., Inc., 544 B.R. 43, 50 (Bankr. S.D.N.Y. 2016), the assumption of an executory contract pursuant to the Plan does have such preclusive effect. See In re 243rd St. Bronx R&R LLC, 11 B (ALB), 2013 Bankr. LEXIS 1161, at *13 (Bankr. S.D.N.Y. Mar. 21, 2013) ( By contrast [to assumption hearings], plan confirmation is intended to resolve all issues related to the plan, and it is not a summary proceeding. ) (emphasis added); In re Best Prods. Co., 168 B.R. 35, 69 (Bankr. S.D.N.Y. 1994) ( Orion is also inapplicable here because a confirmation hearing, unlike a hearing on a motion to assume an executory contract most decidedly is not a proceeding in which a bankruptcy judge sits as a quasi-business person. ); see also Baeshen v. Arcapita Bank B.S.C.(c) (In re Arcapita Bank B.S.C.(c)), 520 B.R. 15, 21 (Bankr. S.D.N.Y. 2014) (holding confirmation order has res judicata effect) (internal citations omitted). 17. As such, although the Objection asserts that the Bankruptcy Court had no power to resolve the enforceability of the non-compete provisions at the time of assumption and 8

13 Pg 13 of 18 certainly has no such power now 11 (Objection at 47), it ignores the fact that the confirmation of the Plan is binding without objection. Moreover, the unambiguous text of the Assumption Notice, confirmed by the Bankruptcy Court in 72 of the Confirmation Order, clearly advised parties, including the Plaintiffs, that failure to object to an executory contract assumed by the Plan would result in a full release of all claims, including nonmonetary claims. 18. The Plaintiffs failure to object based on the alleged anticompetitive behavior prior to and during the Chapter 11 Cases is particularly inexcusable given their positions and given the Debtors disclosures. The Debtors widely disseminated notices regarding potential liability from alleged pre-petition Date anticompetitive conduct, including allegations of conduct involving the then-ceo Danny Dosoretz. The Debtors widely provided this notice in order to fully cleanse themselves of any liabilities and obtain a fresh start for the new owners. C. The Release Set Forth in Section 8.3 of the Plan Is Binding on Plaintiffs. 19. Each of the Plaintiffs received an individualized notice making clear that the Plan contained a release of claims against the Reorganized Debtors. Each Assumption Notice contained bolded capitalized language in an outlined box stating: ARTICLE VIII OF THE PLAN CONTAINS RELEASE, EXCULPATION, AND INJUNCTION PROVISIONS, AND ARTICLE VIII.8.3 CONTAINS A THIRD-PARTY RELEASE. THUS, YOU ARE ADVISED TO REVIEW AND CONSIDER THE PLAN CAREFULLY BECAUSE YOUR RIGHTS MIGHT BE AFFECTED THEREUNDER. See, e.g., Dosoretz Assumption Notice at 5 (emphasis in original). 11 A bankruptcy court retains post-confirmation jurisdiction to interpret and enforce its own orders, particularly when disputes arise over a bankruptcy plan of reorganization. Luan Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223, 230 (2d Cir. 2002). Further, [t]he retention of jurisdiction by the bankruptcy court is particularly appropriate where, as here, the bankruptcy court expressly retains jurisdiction under the plan. LTV Corp. v. Back (In re Chateaugay Corp.), 201 B.R. 48, 66 (Bankr. S.D.N.Y. 1996) (internal citations omitted). 9

14 Pg 14 of Because the Plaintiffs had notice of the Plan and the effect of the release, the entire Plan is res judicata, including the release. See Zardinovsky v. Arctic Glacier Income Fund (In re Arctic Glacier Int l, Inc.), 901 F.3d 162, 166 (3d Cir. 2018) ( A plan s preclusive effect is a principle that anchors bankruptcy law: A confirmation order is res judicata as to all issues decided or which could have been decided at the hearing on confirmation. Thus, the entire Plan is res judicata, including its releases. ) (emphasis added) (internal citations and quotations omitted). 21. Section 8.3 of the Plan makes clear that employees of the Reorganized Debtors released the Reorganized Debtors from any and all claims,... rights, suits, damages, causes of action, remedies and liabilities whatsoever,... whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise. 22. It is undisputed that all four Plaintiffs were employees of the Reorganized Debtors as of the date of confirmation of the Plan and thus are Releasing Parties under the Plan. See Plan, Art I, 1.1, 194; Plan, Art. VIII, 8.3. Rubenstein and Katin, as former owners of 21C, affirmatively voted to accept the Plan and thus doubly qualify as Releasing Parties thereunder. As a result, pursuant to the release in Section 8.3 of the Plan, Plaintiffs released the Reorganized Debtors from their claims in the Florida Action. 23. In sum, Plaintiffs were bound by the Non-Compete and Non-Solicitation Clauses that serve as the only basis for the liability they seek to remedy in the Florida Action preconfirmation; received unequivocal Assumption Notices warning that without an objection to confirmation, all monetary and nonmonetary claims with respect to the Employment Agreements would be released, failed to object to the confirmation of the Plan; and are Releasing Parties under Section 8.3 of the Plan. 10

15 Pg 15 of The claims, therefore, were fully released and the Reorganized Debtors are likely to succeed in obtaining the injunctive relief that they will request upon the reopening of the Bankruptcy Case. II. The Other Factors Favor Reopening the Case. A. The Bankruptcy Case Was Active and Open Until Only a Few Months Ago. 25. In the Objection, the Plaintiffs state that [l]ittle activity of any substance has occurred in this case now for more than 14 months. Objection at 19. This assertion is as offensive as it is untrue. The Bankruptcy Case was active right up until the lead case was closed a few months ago. Additionally, the recency of the closing favors reopening the Bankruptcy Case now. 26. The claims resolution process was involved and time consuming. In total, 2,713 proofs of claim were filed against the Debtors estates in the aggregate amount of approximately $729,600,000. Following the Effective Date, the Reorganized Debtors conducted an exhaustive review of their books and records, along with all proofs of claims filed against their estates and resolved all claims, either by objection, negotiated stipulation, or litigation, within less than one year of the Effective Date. 27. Plaintiffs focus in the Objection on March 23, 2018 as the closing date of the Bankruptcy Case is deliberately misleading. 12 The lead case was not closed until December 18, 2018, only a few months ago. Therefore, this factor favors reopening the Bankruptcy Case. 12 Although on March 23, 2018, the Court entered an Order closing sixty (60) of the sixty-one (61) cases, to relieve the Reorganized Debtors from both (i) the administrative burden of professional costs and internal resources in maintaining all 61 cases, and (ii) the continued payment of U.S. Trustee Fees that the Reorganized Debtors were required to pay every quarter for each of 61 cases, the lead case remained open until December 18,

16 Pg 16 of 18 B. This Court Has Exclusive Jurisdiction. 28. The Bankruptcy Court has exclusive jurisdiction to resolve matters like this one related to Executory Contracts, including: (a) the assumption or assignment of any Executory Contract... ; [and] (b) any potential obligation under any Executory Contract... that is assumed.... Plan, Art. XI, 3. Consequently, it is the only venue for granting the relief that the Reorganized Debtors intend to seek should the Court reopen the case. 29. Plaintiffs argue in their Objection that venue is proper in the Middle District of Florida because of a forum selection clause in the Employment Agreements. See Objection at 22-23, 61, However, questions regarding the administration of the bankruptcy estate including questions regarding the assumption or rejection of contracts under section 365 of the Bankruptcy Code and related challenges are core proceedings in accordance with 28 U.S.C. 152(b)(2)(A). See In re Child World, 147 B.R. 847, 853 (Bankr. S.D.N.Y. 1992). 13 Where a proceeding falls within a bankruptcy court s core jurisdiction, a forum selection clause will not override that jurisdiction. See Statutory Comm. of Unsecured Creditors v. Motorola (in Re Iridium Operating LLC), 285 B.R. 822, (S.D.N.Y. 2002); In re N. Parent, Inc., 221 B.R. 609, (Bankr. D. Mass 1998). The forum selection clause is therefore inapplicable in light of the strong public policy of centralizing bankruptcy matters in the bankruptcy court. 13 As previously stated herein, the Reorganized Debtors will be seeking only to enforce the release with respect to the assumption of the Employment Agreements and application of Sections 8.3 and 8.5 of the Plan, something that certainly, despite the Plaintiffs contention, does not require substantial and material consideration of antitrust laws, making 28 U.S.C. 157(d) inapplicable. See Ka Kin Wong v. HSBC Bank USA, N.A., (In re Lehman Bros. Holdings Inc.), 532 B.R. 203, (S.D.N.Y. 2015) ( [28 U.S.C. 157(d)] is construed narrowly in the Second Circuit.... Courts within this district construe the phrase substantial and material consideration to require significant interpretation of [non-bankruptcy] federal laws. Issues arising under non-title 11 laws must dominate those arising under title 11 to warrant mandatory withdrawal.") (internal quotations omitted). 12

17 Pg 17 of This Court therefore has exclusive jurisdiction over the matter, this Court is the only forum, and this factor favors reopening the Bankruptcy Case. 14 C. Reopening Would Benefit the Reorganized Debtors. 31. The Reorganized Debtors will benefit greatly from the Bankruptcy Court reopening the Bankruptcy Case. Again, the only issue the Reorganized Debtors seek to resolve before the Bankruptcy Court is whether Plaintiffs are barred from continuing the Florida Action and asserting their unfounded claims relating to the validity and enforceability of the Non- Compete and Non-Solicitation Clauses in the Employment Agreements because the Plaintiffs (i) failed to object to the assumption of the Employment Agreements, (ii) failed to object to confirmation of the Plan, and (iii) are Releasing Parties under the Plan. This determination is clearly within the purview and subject to the exclusive jurisdiction of the Bankruptcy Court. 32. This factor favors reopening the Bankruptcy Case. D. There Is No Prejudice to Plaintiffs. 33. Plaintiffs fail to identify any cognizable prejudice to them by having the Bankruptcy Court adjudicate whether the claims they assert in the Florida Action were released as a result of Plaintiffs failure to object to the assumption of the Employment Agreements and confirmation of the Plan. As stated herein, Plaintiffs reliance on forum selection clauses are either inapplicable and/or insufficient to defeat the Bankruptcy Court s exclusive jurisdiction. Additionally, the resolution of this discrete issue will not involve document productions or the 14 The Plaintiffs reliance on the Reorganized Debtors commencement of an action (the Lease Action ) in the Circuit Court for Lee County, Florida against 3680 Broadway Building Associates (the Landlord ) to undermine the Reorganized Debtors argument that the Bankruptcy Court has exclusive jurisdiction over this matter is without merit. In the Lease Action, the Reorganized Debtors assert a post-effective Date breach, i.e., that the Landlord breached the lease by giving improper notice of termination with respect thereto. Clearly, a post-effective Date breach of contract action differs from this action, which is related to the release of the Plaintiffs claims in connection with the assumption of the Employment Agreements pure bankruptcy issues that this Court clearly has jurisdiction over, both pursuant to the Plan and in accordance with the Bankruptcy Code. 13

18 Pg 18 of 18 testimony of witnesses located in Florida. Moreover, Plaintiffs are represented by sophisticated counsel admitted in New York who have already participated in the Bankruptcy Case. 34. This lack of prejudice to Plaintiffs favors reopening the Bankruptcy Case. WHEREFORE, the Reorganized Debtors respectfully request that the Court enter an order, reopening the Bankruptcy Case and granting such other and further relief as the Court deems just and proper. Dated: New York, New York April 12, 2019 SULLIVAN & WORCESTER LLP By: /s/ Jeffrey R. Gleit Jeffrey R. Gleit, Esq. Allison H. Weiss, Esq. Clark A. Freeman, Esq Broadway New York, New York (212) (Telephone) (212) (Facsimile) _ John Terzaken, Esq. Abram J. Ellis, Esq. SIMPSON THACHER & BARTLETT LLP 900 G Street, N.W. Washington, D.C (202) (Telephone) (202) (Facsimile) john.terzaken@stblaw.com aellis@stblaw.com Counsel for the Reorganized Debtors 14