In re Caduceus Physicians Medical Group, Bankr. C.D. Cal. 8:24-bk-11945, Disclosure Statement (Doc. 414), Nov. 25, 2025
Summary
A Disclosure Statement Describing Debtors' First Amended Chapter 11 Plan of Liquidation, Doc 414, filed November 25, 2025, in the jointly administered chapter 11 cases of Caduceus Physicians Medical Group and Caduceus Medical Services, LLC, Case No. 8:24-bk-11945-SC in the U.S. Bankruptcy Court for the Central District of California. Its table of contents lists sections on the Debtors' business and the impact of the COVID-19 pandemic, the chapter 11 case, a summary of the plan, alternatives to confirmation, federal tax consequences, risk factors, and a recommendation. The disclaimer states that it is provided under § 1125 of the Bankruptcy Code for the solicitation of votes and that the Debtors recommend creditors vote to accept the plan.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“In re Caduceus Physicians Medical Group, Bankr. C.D. Cal. 8:24-bk-11945, Disclosure Statement (Doc. 414), Nov. 25, 2025.”
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1 MATTHEW W. GRIMSHAW, #210424
grimshaw@marshackhays.com
2 DAVID A. WOOD, #272406
dwood@marshackhays.com
3 AARON E. DE LEEST, #216832
shasselberger@marshackhays.com
4 MARSHACK HAYS WOOD LLP
870 Roosevelt, Irvine, CA 92620
5 Telephone: 949-333-7777
Facsimile: 949-333-7778
6
Attorneys for Debtors,
7 CADUCEUS PHYSICIANS MEDICAL GROUP,
a Professional Medical Corporation, dba
8 CADUCEUS MEDICAL GROUP and
CADUCEUS MEDICAL SERVICES, LLC
9
UNITED STATES BANKRUPTCY COURT
10 CENTRAL DISTRICT OF CALIFORNIA – SANTA ANA DIVISION
11 Case No. 8:24-bk-11945-SC
In re
12 Chapter 11
CADUCEUS PHYSICIANS MEDICAL
13 GROUP, a Professional Medical Corporation, (Jointly Administered with 8:24-
dba CADUCEUS MEDICAL GROUP, bk-11946-SC)
14
Debtor. DISCLOSURE STATEMENT
15 DESCRIBING DEBTORS’ FIRST
☒ ALL DEBTORS AMENDED CHAPTER 11 PLAN OF
16 LIQUIDATION; CHAPTER 11 PLAN OF
☐ Caduceus Physicians Medical Group, dba LIQUIDATION (EXHIBIT A; AND
17 Caduceus Medical Group, ONLY LIQUIDATION ANALYSIS (EXHIBIT B)
18 ☐ Caduceus Medical Services, LLC, ONLY
19
20
21 / / /
22 / / /
23
24
25
26
27
28
1
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1 TABLE OF CONTENTS
2
3 DISCLAIMER .....................................................................................................................................2
4 I. INTRODUCTION ............................................................................................................................6
5 II. DESCRIPTION OF THE DEBTORS’ BUSINESS AND REASONS FOR THE
DEBTORS’ CHAPTER 11 FILING .......................................................................................8
6
A. CPMG ..........................................................................................................................8
7
B. The Impact of the COVID-19 Pandemic .....................................................................8
8
C. Additional Financial Difficulties .................................................................................9
9
D. Mitigation Efforts ........................................................................................................9
10
III. THE CHAPTER 11 CASE ..........................................................................................................10
11
A. Significant Events During the Bankruptcy Case .......................................................10
12
1. Bankruptcy Filing and Joint Administration .................................................10
13
2. Joint Administration ......................................................................................10
14
3. The Employment of Professionals .................................................................10
15
4. Appointment of Patient Care Ombudsman ....................................................11
16
5. Appointment of Consumer Privacy Ombudsman ..........................................11
17
6. The Debtors’ Sale Process .............................................................................12
18
7. Potential Assets ..............................................................................................13
19
8. Potential Causes of Action and Avoidance Actions ......................................13
20
9. Establishment of Bar Dates ...........................................................................14
21
IV. SUMMARY OF THE PLAN ......................................................................................................14
22
A. Introduction................................................................................................................15
23
B. Voting Procedures and Confirmation Requirements .................................................15
24
1. Ballots and Voting Deadlines ........................................................................15
25
2. Parties in Interest Entitled to Vote .................................................................16
26
3. Definition of Impairment ...............................................................................16
27
C. Confirmation Procedure.............................................................................................17
28
i
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1 1. Confirmation Hearing ....................................................................................17
2 2. Procedure for Objections ...............................................................................17
3 3. Requirements for Confirmation .....................................................................18
4 4. Voting and Acceptance of the Plan ...............................................................18
5 5. Best Interests Test ..........................................................................................18
6 6. The Feasibility Test .......................................................................................19
7 7. Unfair Discrimination and the Fair and Equitable Test .................................19
8 8. Other Requirements of Section 1129 .............................................................20
9 D. Classification of Claims and Interests .......................................................................20
10 1. Classification of Claims .................................................................................20
11 2. Unclassified Claims .......................................................................................20
12 (a) Administrative Expense Claims ........................................................21
13 i. U.S. Trustee Fees ...................................................................21
14 ii. Professional Fee Claims ........................................................21
15 iii. Other Administrative Expense Claims ..................................24
16 iv. Priority Tax Claims................................................................24
17 3. Classified Claims ...........................................................................................24
18 (a) Class 1 ................................................................................................25
19 (b) Class 2 ................................................................................................25
20 (c) Class 3 ................................................................................................25
21 4. Objections to Claims......................................................................................26
22 E. Estimated Potential Recoveries for Impaired Classes of Claims...............................26
23 F. Confirmability of Plan and Cramdown......................................................................27
24 G. Executory Contracts and Unexpired Leases ..............................................................27
25 1. Rejection of Executory Contracts and Unexpired Leases .............................27
26 2. Claims Based on Rejection of Executory Contracts and Unexpired
Leases ............................................................................................................27
27
3. Contracts and Leases Entered Into After the Petition Date ...........................28
28
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1 H. Disputed Claims and Interests; Setoff and Recoupment ...........................................28
2 1. Objections to Claims......................................................................................28
3 2. No Distributions with Respect to Disputed Claims .......................................28
4 3. Extension of the Claims Objection Deadline.................................................28
5 4. Authority to Compromise Disputed Claims ..................................................29
6 5. Setoff and Recoupment..................................................................................29
7 I. Means for Implementation of the Plan ......................................................................29
8 1. From the Confirmation Date to the Effective Date .......................................29
9 2. Estate Property and the ERC .........................................................................29
10 3. Preservation of Causes of Action ..................................................................29
11 4. Management of the Debtors...........................................................................30
12 5. The Liquidating Trust ....................................................................................30
13 (a) Establishment of the Liquidating Trust .............................................30
14 (b) Appointment of the Liquidating Trustee ...........................................30
15 (c) Beneficiaries of the Liquidating Trust ...............................................31
16 (d) Transfer of Property to the Liquidating Trust....................................31
17 (e) Liquidating Trust’s Distribution of Cash ...........................................32
18 (f) Powers and Duties of the Liquidating Trustee ..................................32
19 (g) Liquidating Trustee’s Employment of Professionals;
Compensation ....................................................................................34
20
(h) Compliance with Tax Requirements .................................................35
21
(i) No Recourse Against the Liquidating Trustee...................................36
22
(j) Termination and Dissolution of the Liquidating Trust ......................36
23
6. Undeliverable or Non-Negotiated Distributions ............................................36
24
7. Dissolution of the Debtors .............................................................................36
25
(a) Cancellation of Interests ....................................................................36
26
(b) Termination of Services of the Debtors’ Director and CRO .............37
27
(c) Dissolution of the Debtors .................................................................37
28
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1 J. Effects of Confirmation .............................................................................................37
2 1. Binding Effect of the Plan .............................................................................37
3 2. Vesting of Assets ...........................................................................................38
4 3. No Discharge .................................................................................................38
5 4. Continuation of Automatic Stay; Creditor Action Restrained .......................38
6 5. No Liability for Solicitation or Participation .................................................39
7 K. Retention of Jurisdiction ............................................................................................39
8 L. Effective Date Conditions..........................................................................................41
9 1. Conditions to the Effectiveness of the Plan ...................................................41
10 2. Effect of Failure of Conditions to the Effectiveness of the Plan ...................42
11 3. Effect of Entry of Order Denying Confirmation of the Plan .........................42
12 M. Miscellaneous Provisions ..........................................................................................42
13 1. Exculpation ....................................................................................................42
14 2. Exemption from Transfer Taxes ....................................................................43
15 3. Expedited Tax Determination ........................................................................43
16 4. Securities Laws ..............................................................................................43
17 (a) Exemption from Registration Issues ..................................................43
18 (b) Exchange Act Reporting Obligations and Registration under
Investment Company Act ..................................................................44
19
5. Payment of Statutory Fees .............................................................................44
20
6. Amendment, Modification or Withdrawal of the Plan ..................................44
21
7. Governing Law ..............................................................................................45
22
8. Waiver of FRBP 7062 ...................................................................................45
23
9. Exhibits and Schedules ..................................................................................45
24
10. Conflict ..........................................................................................................45
25
11. Successors and Assigns .................................................................................45
26
12. Saturday, Sunday or Legal Holiday ...............................................................45
27
13. Post-Effective Date Effect of Evidences of Claims or Interests ....................46
28
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1 14. Severability of Plan Provisions ......................................................................46
2 15. No Admissions or Waiver of Objections .......................................................46
3 16. Survival of Settlements ..................................................................................46
4 17. Post-Confirmation Status Reports .................................................................47
5 18. Effect of Post-Confirmation Conversion to Chapter .....................................47
6 19. Final Decree ...................................................................................................47
7 V. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN ............47
8 A. Chapter 7 Liquidation ................................................................................................47
9 B. Alternative Plan Pursuant to Chapter 11 of the Bankruptcy Code ............................48
10 C. Dismissal of the Debtors’ Case..................................................................................48
11 VI. CERTAIN FEDERAL TAX CONSEQUENCES .......................................................................49
12 A. General .......................................................................................................................49
13 B. Certain U.S. Federal Income Tax Consequences of the Liquidating Trust ...............51
14 C. U.S. Federal Income Tax Treatment with Respect to Holders of Allowed
Claims that Are Beneficiaries of the Liquidating Trust.............................................53
15
VII. RISK FACTORS IN CONNECTION WITH THE PLAN ........................................................55
16
A. Bankruptcy Considerations ........................................................................................55
17
B. No Duty to Update Disclosures .................................................................................56
18
C. Representations Outside this Disclosure Statement ..................................................56
19
D. No Admission ............................................................................................................56
20
E. Tax and Other Related Considerations ......................................................................57
21
VIII. RECOMMENDATION AND CONCLUSION........................................................................57
22
23
24
25
26
27
28
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1 DISCLAIMER
2 THIS DISCLOSURE STATEMENT, THE DEBTORS’ CHAPTER 11 PLAN OF
3 LIQUIDATION, ATTACHED HERETO AS EXHIBIT A (THE “PLAN”), AND THE
4 ACCOMPANYING BALLOT AND RELATED MATERIALS DELIVERED HEREWITH, ARE
5 BEING PROVIDED BY CADUCEUS PHYSICIANS MEDICAL GROUP, A PROFESSIONAL
6 MEDICAL CORPORATION DBA CADUCEUS MEDICAL GROUP (“CPMG”) AND
7 CADUCEUS MEDICAL SERVICES, LLC (“CMS”) (COLLECTIVELY, “DEBTORS”) TO
8 KNOWN HOLDERS OF CLAIMS PURSUANT TO § 1125 OF THE BANKRUPTCY CODE IN
9 CONNECTION WITH THE SOLICITATION OF VOTES TO ACCEPT THE PLAN PROPOSED
10 BY THE DEBTORS.
11 IF YOU ARE ENTITLED TO VOTE ON THE PLAN, YOU ARE RECEIVING A
12 BALLOT WITH YOUR NOTICE OF THIS DISCLOSURE STATEMENT. THE DEBTORS
13 URGE YOU TO VOTE TO ACCEPT THE PLAN.
14 EACH HOLDER OF A CLAIM AGAINST THE DEBTORS ENTITLED TO VOTE TO
15 ACCEPT OR REJECT THE PLAN SHOULD READ THIS DISCLOSURE STATEMENT AND
16 THE PLAN IN THEIR ENTIRETY BEFORE VOTING. NO SOLICITATION OF VOTES TO
17 ACCEPT OR REJECT THE PLAN MAY BE MADE EXCEPT PURSUANT TO THIS
18 DISCLOSURE STATEMENT AND BANKRUPTCY CODE § 1125. NO HOLDER OF A
19 CLAIM SHOULD RELY ON ANY INFORMATION RELATING TO THE DEBTORS, THEIR
20 PROPERTY, OR THE PLAN OTHER THAN THAT CONTAINED IN THIS DISCLOSURE
21 STATEMENT AND THE ATTACHED EXHIBITS.
22 THIS DISCLOSURE STATEMENT IS THE ONLY DOCUMENT AUTHORIZED BY
23 THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE PLAN. NO
24 SOLICITATIONS FOR OR AGAINST THE PLAN MAY BE MADE EXCEPT THROUGH
25 THIS DISCLOSURE STATEMENT.
26 THIS DISCLOSURE STATEMENT CONTAINS A SUMMARY OF CERTAIN
27 PROVISIONS OF THE PLAN. ALTHOUGH THE DEBTORS HAVE MADE EVERY EFFORT
28 TO ENSURE THAT THIS SUMMARY PROVIDES ADEQUATE INFORMATION WITH
2
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1 RESPECT TO THE PLAN, IT DOES NOT PURPORT TO BE COMPLETE AND IS
2 QUALIFIED TO THE EXTENT IT DOES NOT SET FORTH THE ENTIRE TEXT OF THE
3 PLAN. IF THERE IS ANY INCONSISTENCY BETWEEN THE PLAN AND THE SUMMARY
4 OF THE PLAN CONTAINED IN THIS DISCLOSURE STATEMENT, THE PLAN SHALL
5 CONTROL. ACCORDINGLY, EACH HOLDER OF A CLAIM SHOULD REVIEW THE PLAN
6 IN ITS ENTIRETY.
7 THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH
8 BANKRUPTCY CODE § 1125 AND BANKRUPTCY RULE 3016, AND NOT IN
9 ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAW OR OTHER APPLICABLE
10 NON-BANKRUPTCY LAW. PERSONS OR ENTITIES TRADING IN OR OTHERWISE
11 PURCHASING, SELLING OR TRANSFERRING CLAIMS AGAINST THE DEBTORS
12 SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF
13 THE PURPOSE FOR WHICH IT WAS PREPARED. THIS DISCLOSURE STATEMENT
14 SHALL NOT BE CONSTRUED TO BE ADVICE ON THE TAX, SECURITIES, OR OTHER
15 LEGAL EFFECTS OF THE REORGANIZATION OR LIQUIDATION OF THE DEBTORS AS
16 TO HOLDERS OF CLAIMS AGAINST THE DEBTORS. NO PERSON OR ENTITY SHOULD
17 RELY ON THE INFORMATION CONTAINED IN, OR THE TERMS OF, THIS DISCLOSURE
18 STATEMENT OR THE PLAN, INCLUDING IN CONNECTION WITH ANY PURCHASE OR
19 SALE OF THE DEBTORS’ SECURITIES PRIOR TO THE CONFIRMATION OF THE PLAN
20 BY THE BANKRUPTCY COURT.
21 IRS CIRCULAR 230 NOTICE: TO ENSURE COMPLIANCE WITH IRS CIRCULAR
22 230, HOLDERS OF CLAIMS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF
23 U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS DISCLOSURE
24 STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED,
25 BY HOLDERS OF CLAIMS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY
26 BE IMPOSED ON THEM UNDER THE INTERNAL REVENUE CODE; (B) SUCH
27 DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING
28 BY THE DEBTORS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND
3
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1 (C) HOLDERS OF CLAIMS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR
2 CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
3 THIS DISCLOSURE STATEMENT WAS NOT FILED WITH THE SECURITIES AND
4 EXCHANGE COMMISSION OR ANY STATE AUTHORITY AND NEITHER THE
5 SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE AUTHORITY HAS
6 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE STATEMENT
7 OR UPON THE MERITS OF THE PLAN. NEITHER THIS DISCLOSURE STATEMENT NOR
8 THE SOLICITATION OF VOTES TO ACCEPT OR REJECT THE PLAN CONSTITUTES AN
9 OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY
10 STATE OR JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
11 AUTHORIZED.
12 THIS DISCLOSURE STATEMENT MAY CONTAIN “FORWARD LOOKING
13 STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
14 REFORM ACT OF 1995. SUCH STATEMENTS CONSIST OF ANY STATEMENT OTHER
15 THAN A RECITATION OF HISTORICAL FACT AND CAN BE IDENTIFIED BY THE USE
16 OF FORWARD LOOKING TERMINOLOGY SUCH AS “MAY,” “EXPECT,” “ANTICIPATE,”
17 “ESTIMATE” OR “CONTINUE” OR THE NEGATIVE THEREOF OR OTHER VARIATIONS
18 THEREON OR COMPARABLE TERMINOLOGY. THE READER IS CAUTIONED THAT
19 ALL FORWARD LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND
20 THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
21 EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE REFERRED TO IN SUCH
22 FORWARD LOOKING STATEMENTS.
23 HOLDERS OF CLAIMS SHOULD NOT CONSTRUE THE CONTENTS OF THIS
24 DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL, OR
25 TAX ADVICE. EACH SUCH HOLDER SHOULD CONSULT WITH ITS OWN LEGAL,
26 BUSINESS, FINANCIAL AND TAX ADVISORS AS TO ANY SUCH MATTERS
27 CONCERNING THE SOLICITATION, THE PLAN, AND THE TRANSACTIONS
28 CONTEMPLATED THEREBY.
4
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1 HOLDERS OF CLAIMS AND OTHER THIRD PARTIES SHOULD BE AWARE THAT
2 THE PLAN CONTAINS INJUNCTIONS AND RELEASES THAT MAY MATERIALLY
3 AFFECT THEIR RIGHTS.
4 ALL OF THE PROJECTED RECOVERIES TO CREDITORS ARE BASED UPON THE
5 ANALYSES PERFORMED BY THE DEBTORS AND THEIR PROFESSIONALS.
6 ALTHOUGH THE DEBTORS HAVE MADE EVERY EFFORT TO VERIFY THE ACCURACY
7 OF THE INFORMATION PRESENTED HEREIN AND IN THE EXHIBITS ATTACHED
8 HERETO, THE DEBTORS CANNOT MAKE ANY REPRESENTATIONS OR WARRANTIES
9 REGARDING THE ACCURACY OF THE INFORMATION.
10 AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER
11 ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT
12 CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY,
13 STIPULATION OR WAIVER, BUT RATHER AS THE DEBTORS’ STATEMENT OF THE
14 STATUS OF THE RESPECTIVE MATTER.
15 THE DEBTORS RECOMMEND THAT CREDITORS SUPPORT AND VOTE TO
16 ACCEPT THE PLAN. IT IS THE OPINION OF THE DEBTORS THAT THE TREATMENT OF
17 CREDITORS UNDER THE PLAN CONTEMPLATES A GREATER RECOVERY THAN THAT
18 WHICH IS LIKELY TO BE ACHIEVED UNDER OTHER ALTERNATIVES FOR THE
19 REORGANIZATION OR LIQUIDATION OF THE DEBTORS. ACCORDINGLY, THE PLAN
20 PROPONENTS BELIEVE THAT CONFIRMATION OF THE PLAN IS IN THE BEST
21 INTERESTS OF CREDITORS.
22 THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS ______, 2025,
23 UNLESS EXTENDED BY ORDER OF THE UNITED STATES BANKRUPTCY COURT FOR
24 THE CENTRAL DISTRICT OF CALIFORNIA. YOUR VOTE ON THE PLAN IS
25 IMPORTANT.
26
27
28
5
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1 I.
2 INTRODUCTION
3 The Debtors submit this disclosure statement (the “Disclosure Statement”) pursuant to 1125
4 of the Bankruptcy Code in connection with the solicitation of votes to accept or reject their Chapter
5 11 Plan of Liquidation, a copy of which is attached hereto as Exhibit A (the “Plan”). The summary
6 of the Plan provided herein is qualified in its entirety by reference to the Plan. To the extent that
7 the information provided in this Disclosure Statement and the Plan (including any Plan
8 supplements or amendments) conflict, the terms of the Plan (including any Plan supplements or
9 amendments) will control. Terms not otherwise specifically defined herein will have the meanings
10 attributed to them in the Plan. Each definition in this Disclosure Statement and in the Plan includes
11 both the singular and plural. Headings are for convenience or reference and shall not affect the
12 meaning or interpretation of this Disclosure Statement.
13 At a hearing on _____, 2025, the Court approved this Disclosure Statement as containing
14 “adequate information” in accordance with § 1125(b) of the Bankruptcy Code to enable a
15 hypothetical, reasonable investor typical of claimholders in a Class of Claims entitled to vote as set
16 forth in the Plan to make an informed judgment about whether to accept or reject the Plan.
17 A hearing to consider confirmation of the Plan (the “Confirmation Hearing”) will be held
18 on _____, 2025 at __:_00 _.m., before the Honorable Scott C. Clarkson, United States Bankruptcy
19 Judge, at the Bankruptcy Court, 411 West Fourth Street, Courtroom 5C, Santa Ana, CA 92701-
20 4593. At the Confirmation Hearing, the Bankruptcy Court will consider whether the Plan satisfies
21 the various requirements for confirmation under the Bankruptcy Code.
22 The Bankruptcy Court has directed that objections (together with all evidence and
23 declarations), if any, to confirmation of the Plan must be filed and served so they are received on or
24 before _____, 2025, in the manner described in section V.C. of this Disclosure Statement. The
25 Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without
26 further notice except for the announcement of the adjournment date made at the Confirmation
27 Hearing or at any subsequent adjourned Confirmation Hearing.
28 / / /
6
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1 The following documents are attached as Exhibits to this Disclosure Statement:
2 Exhibit A: The Plan
3 Exhibit B: Liquidation Analysis
4 Voting instructions are contained in section VI.B. of this Disclosure Statement, as well as
5 on the ballot you received in connection with this Disclosure Statement. To be counted, your
6 original ballot must be actually received on _____, 2025.
7 If your ballot is not timely received, it may not be counted in determining whether the Plan
8 has been accepted. You are urged to carefully review the contents of the Plan and Disclosure
9 Statement, including all exhibits attached thereto, before making your decision to vote to accept or
10 reject the Plan. Pursuant to the provisions of the Bankruptcy Code, only holders of Allowed
11 Claims in Classes of Claims that are “impaired” (as defined in section V.B. of this Disclosure
12 Statement) and not deemed to have rejected the Plan are entitled to vote to accept or reject the Plan.
13 Particular attention should be directed to the provisions of the Plan affecting or impairing your
14 rights as they may presently exist, including, but not limited to, the provisions which provide for
15 injunctions and releases.
16 This Disclosure Statement is intended to provide adequate information of a kind, and in
17 sufficient detail, to enable the Debtors’ creditors to make an informed judgment about the Plan,
18 including whether to accept or reject the Plan. This Disclosure Statement sets forth certain
19 information regarding (i) the Debtors’ prepetition operating and financial history; (ii) the Debtors’
20 need to file for relief under Chapter 11 of the Bankruptcy Code; (iii) significant events that have
21 occurred during the Debtors’ Chapter 11 Case; (iv) the terms of the Plan; (v) the manner in which
22 distributions will be made under the Plan; (vi) certain effects of confirmation of the Plan; (vii)
23 certain risk factors associated with the Plan; and (viii) the confirmation process and the voting
24 procedures that Holders of Claims entitled to vote under the Plan must follow for their votes to be
25 counted.
26 This Disclosure Statement was approved by the Bankruptcy Court as containing
27 information of a kind, and in sufficient detail, adequate to enable a hypothetical, reasonable
28 investor typical of each of the Classes whose votes are being solicited to make an informed
7
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1 judgment with respect to the Plan. THE BANKRUPTCY COURT’S APPROVAL OF THIS
2 DISCLOSURE STATEMENT DOES NOT CONSTITUTE A DETERMINATION WITH
3 RESPECT TO THE MERITS OF THE PLAN. ALL CREDITORS ARE ENCOURAGED TO
4 READ THIS DISCLOSURE STATEMENT AND ITS EXHIBITS CAREFULLY AND IN THEIR
5 ENTIRETY BEFORE DECIDING TO VOTE TO ACCEPT OR REJECT THE PLAN.
6 II.
7 DESCRIPTION OF THE DEBTORS’ BUSINESS AND REASONS FOR THE DEBTORS’
8 CHAPTER 11 FILING
9 A. CPMG
10 CPMG was incorporated in California and founded in November 1998 by Dr. Gregg
11 DeNicola. CPMG is a multi-specialty medical group with a wrap-around staff model and was
12 among the largest remaining doctor-owned medical practices in the Orange County service area.
13 CPMG provided medical care at its offices in Irvine, Laguna Beach, and Yorba Linda.
14 Additionally, CPMG operated various urgent care facilities in Orange County under the trade name
15 PDQ Urgent Care and More.
16 CPMG’s medical staff model-count included 60 licensed providers, consisting of 42
17 employed primary care and multi-specialty physicians plus 18 contracted providers. Additionally,
18 CPMG employed approximately 125 clinical and non-clinical staff involved in day-to-day
19 operations at its various medical offices. Among all office locations, CPMG’s medical staff
20 provided 125,000 – 130,000 patient visits annually.
21 B. The Impact of the COVID-19 Pandemic
22 The COVID pandemic strained CPMG’s financial condition as its costs increased while its
23 revenue decreased. First, when businesses across the nation closed, CPMG remained open,
24 expanding its hours of operation to meet the critical care needs of the Orange County community.
25 The heavy staffing demands associated with CPMG’s expanded hours could only be met by
26 increasing wages. In the aggregate, CPMG’s labor costs increased by approximately 20%.
27 Concurrently, CPMG’s revenue declined for various reasons. For example, the number of
28 medical procedures and surgeries performed by CPMG’s medical staff decreased significantly.
8
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1 Further, a significant number of CPMG’s patients transitioned to telehealth visits for less acute
2 care, with such telehealth visits having lower reimbursement rates than in-person visits. This
3 combination of increased costs and reduced revenue resulted in losses beginning in calendar year
4 2021 and continued each year thereafter.
5 C. Additional Financial Difficulties
6 Two other events occurred in late 2022 that negatively impacted CPMG’s financial
7 condition. First, a short-term cash crunch arose in early November 2022. After spending significant
8 time courting a potential buyer, and with a sale transaction scheduled to close shortly thereafter, the
9 buyer abruptly terminated the transaction. Shortly thereafter, in connection with the renewal of
10 CPMG’s contract with the insurance company used by the majority of its patients for payment of
11 CPMG’s medical services, the payment terms were altered significantly. As a result, CPMG’s
12 revenue decreased by approximately $350,000 per month.
13 D. Mitigation Efforts
14 Throughout 2022, CPMG was actively taking steps to mitigate future losses. The two
15 events in November 2022 described above created a financial tsunami for CPMG. Thus, in 2023,
16 CPMG’s loss mitigation efforts intensified. CPMG laid off employees, which reduced its monthly
17 labor costs by $140,000. Through consistent cost-cutting and simultaneous efforts to grow revenue,
18 CPMG reduced its operating losses from $240,000 per month at the beginning of 2023 to $150,000
19 per month by the end of the year.
20 CPMG’s mitigation efforts in 2023 included seeking outside investments and exploring sale
21 or merger opportunities. To that end, in July 2023, Caduceus Medical Services, LLC (“CMS”) was
22 formed to act as a management services company and was intended to provide all the non-clinical
23 business support required by CPMG. Additionally, a long-term management agreement between
24 CPMG and CMS was signed. With this structure in place, the Debtors’ access to investment
25 funding and potential sale transactions increased significantly as the formation of CMS allowed the
26 Debtors access to funding from people and entities not holding a medical license.
27
28
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1 Debtors’ pursuit of funding or a sale transaction generated significant interest from parties
2 with active medical practices in Orange County. However, to ensure that Debtors were prepared for
3 a sale transaction, the chapter 11 cases were filed.
4 III.
5 THE CHAPTER 11 CASE
6 The foregoing events and conditions affecting the Debtors’ cash flow, among others,
7 resulted in the decline in the Debtors’ financial condition and led to the filing of the Case.
8 A. Significant Events During the Bankruptcy Case
9 1. Bankruptcy Filing and Joint Administration
10 On August 1, 2025 (the “Petition Date”), the Debtors filed a voluntary petition for relief
11 under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United
12 States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). Since the
13 Petition Date, the Debtors have remained in possession of their assets, and managed their business
14 as debtors-in-possession, pursuant to §§ 1107 and 1108 of the Bankruptcy Code.
15 No committee of unsecured creditors pursuant was appointed by the United States Trustee
16 (U.S. Trustee”).
17 2. Joint Administration
18 On the Petition Date, as Dk. No. 2, Debtors filed the Ex Parte Motion for Joint
19 Administration Pursuant to 11 U.S.C. § 105(a), Federal Rule of Bankruptcy Procedure 1015, and
20 Local Bankruptcy Rule 9013-1(Q) (“Joint Administration Motion”). In the Joint Administration
21 Motion, Debtors sought an order to jointly administer both cases under case number 8:24-bk-
22 11945-SC, to foster efficiency, reduce administrative fees and costs, and preserve the time and
23 resources of Debtors, the Court, and other parties in interest. On August 5, 2024, as Dk. No. 5, the
24 Court entered an order granting the Joint Administration Motion.
25 3. The Employment of Professionals
26 During the course of the Chapter 11 Case, the Court approved the employment of the
27 following professionals:
28
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1 1. Marshack Hays Wood LLP, as general bankruptcy and restructuring counsel
2 for the Debtors, application filed on August 20, 2024, as Dk. No. 56, employment order entered on
3 September 11, 2024, as Dk. No. 93;
4 2. Howard B. Grobstein of Grobstein Teeple, LLP, as the Debtors’ chief
5 restructuring officer, application filed on August 30, 2024, as Dk. No. 75, employment order
6 entered on November 18, 2024, as Dk. No. 160;
7 3. ArentFox Schiff LLP, as the Debtors’ special healthcare counsel, application
8 filed on September 12, 2024, as Dk. No., employment order entered on October 10, 2024, as Dk.
9 No. 129;
10 4. CAPATA, as accountants for the Debtors, application filed on October 3,
11 2024, as Dk. No. 118, employment order entered on October 25, 2024, as Dk. No. 138; and
12 5. Stretto, Inc., as claims and noticing agent, application filed on October 31,
13 2024, as Dk. No. 148, employment order entered on November 25, 2024, as Dk. No. 169.
14 4. Appointment of Patient Care Ombudsman
15 On August 16, 2024, as Dk. No. 53, the United States Trustee and Debtors entered into a
16 stipulation regarding the appointment of a patient care ombudsman (“PCO Stipulation”).
17 On August 19, 2024, as Dk. No. 55, the Court entered an order ordering that the United
18 States Trustee appoint a patient care ombudsman.
19 On August 20, 2024, as Dk. No. 58, the United States Trustee appointed a Stanley Otake as
20 the patient care ombudsman (“PCO”).
21 On August 22, 2024, as Dk. No. 61, Stanley Otake filed the Notice of Acceptance as PCO.
22 On September 3, 2024, as Dk. No. 80, February 12, 2025, as Dk. No. 218, April 16, 2025,
23 as Dk. No. 309, and June 18, 2025, as Dk. No. 364, the PCO filed his interim reports to the Court.
24 5. Appointment of Consumer Privacy Ombudsman
25 On February 11, 2025, as Dk. No. 216, the United States Trustee and Debtors entered into a
26 stipulation regarding the appointment of a consumer privacy ombudsman (“CPO Stipulation”).
27 On February 12, 2025, as Dk. No. 220, the Court entered an order ordering that the United
28 States Trustee appoint a consumer privacy ombudsman.
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1 On February 19, 2025, as Dk. No. 231, the United States Trustee appointed Lucy L.
2 Thomson as the consumer privacy ombudsman (“CPO”).
3 The Court approved the appointment on February 20, 2025, as DK No. 237.
4 On March 18, 2025, as Dk. No. 280, the CPO filed her Report to the Court.
5 6. The Debtors’ Sale Process
6 On February 5, 2025, as Dk. No. 211, the Debtors’ filed a motion for approval of sale and
7 bidding procedures for sale of certain tangible and intangible assets (“Purchased Assets”), used in
8 connection with Debtors’ medical practices operated at the Debtors’ clinic located at 18200 Yorba
9 Linda Boulevard, Suite 111, Yorba Linda, California 92886 (the “Clinic,” and the medical
10 practices operated at the Clinic referred to herein as the “Business”) (“Bid Procedure Motion”).
11 Through the Bid Procedure Motion, the Debtors’ set forth the schedule for the marketing, and sale
12 of the Debtors’ assets. On February 12, 2025, the Court entered an order approving the Bid
13 Procedure Motion (“Bid Procedures Order”).
14 On February 26, 2025, as Dk. No. 248, the Debtors filed a motion to approve the sale under
15 the Bid Procedures Order (“Sale Motion”), and thereafter, on April 4, 2025, the Court entered an
16 order approving the Sale Motion (“Sale Order”).
17 Pursuant to the Sale Order, the Purchased Assets (as defined in the Sale Motion and Sale
18 Order) were to be sold to Regal Medical Group, Inc. (“Buyer”). However, as disclosed at the
19 hearing on the Sale Motion, the underlying asset purchase agreement had a contingency whereby
20 the Buyer and the landlord for the Yorba Linda Property (“YL Landlord”) had to come to terms on
21 a lease as a condition precedent to closing. Unfortunately, the Buyer and the YL Landlord were
22 unable to come to an agreement, and the Buyer informed the Debtors that they were terminating the
23 sale contemplated in the stalking horse asset purchase agreement, Sale Motion, and Sale Order.
24 Fortunately, the Debtors anticipated this issue and through the Sale Order the Court
25 authorized that “[i]f Buyer fails to consummate the Sale on the terms set forth in the [stalking
26 horse] APA, then Debtors are authorized to consummate a transaction with the Back-up Bidder.”
27 On May 7, 2025, as Dk. No. 331, the Court entered an amended Sale Order with Anchor
28 Medical Group, P.C. (“Anchor Medical”) and Anchor Medical Management, Inc. (“Anchor
12
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1 Management” and collectively with Anchor Medical, “Anchor”) as the back-up bidder (“Amended
2 Sale Order”) and attaching the Asset Purchase Agreement by and among Caduceus Medical
3 Services, LLC and Caduceus Physicians Medical Group, as Sellers, and Anchor Medical Group,
4 P.C., and Anchor Medical Management, Inc., as Buyers, dated May 6, 2025 (“APA”) and the
5 accompanying Interim Administrative Services Agreement (“ASA”).
6 Since the entry of the Amended Sale Order, the sale contemplated therein successfully
7 closed to Anchor.
8 7. Potential Assets
9 The assets of the Estates include the Debtors Cash on hand as of the Effective Date, which
10 will be transferred to the Liquidating Trust as of the Effective Date, proceeds from the investment
11 of such Cash, the Debtors’ employee retention credit (“ERC”), and any Causes of Action and
12 Avoidance Actions.
13 The Debtors believe that there are no remaining Secured Claims in this Case. All remaining
14 assets are unencumbered and available for distribution to Holders of Allowed Administrative
15 Expense Claims and Claims in the order of their priority.
16 8. Potential Causes of Action and Avoidance Actions
17 Except as otherwise provided in the Plan, each Cause of Action held by the Debtors and the
18 Estates shall be preserved and, along with the exclusive right to enforce such Cause of Action, shall
19 vest on the Effective Date exclusively in the Liquidating Trustee, on behalf of the Liquidating
20 Trust. Unless a Cause of Action is expressly waived, relinquished, released or compromised in the
21 Plan or an order of the Court, the Liquidating Trustee expressly reserves such Cause of Action for
22 later adjudication and, accordingly, no doctrine of res judicata, collateral estoppel, issue preclusion,
23 claim preclusion, estoppel (judicial, equitable or otherwise), laches or other preclusion doctrine
24 shall apply to such Cause of Action as a consequence of the Confirmation, the Plan, the vesting of
25 such Cause of Action in the Liquidating Trustee on behalf of the Liquidating Trust, any order of the
26 Court or this Case.
27
28
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1 No Person or Entity may rely on the absence of a specific reference in the Plan or the
2 Disclosure Statement to any Cause of Action against such Person or Entity as any indication that
3 the Liquidating Trustee will not pursue such Cause of Action.
4 This Disclosure Statement constitutes notice to any party in interest of the intent to pursue
5 any and all such causes of action to judgment and collection, and that the proceeds of all such
6 causes of action are essential to the Plan.
7 9. Establishment of Bar Dates
8 The Court set a deadline of November 25, 2024, as the last day for the filing of proofs of
9 claim in this case for all Claims against the Debtors arising prior to the Petition Date (including any
10 claims arising under § 503(b)(9) of the Bankruptcy Code) (the “General Bar Date”), except for
11 claims by Governmental Units. The bar date for Governmental Claims was January 28, 2025, 180
12 days after the Petition Date (the “Governmental Bar Date,” and together with the General Bar Date,
13 the “Bar Dates”).
14 Any Claims required to be filed before the Bar Dates that were not timely filed are forever
15 barred from assertion against the Debtors, the Estates or property thereof, and/or the Liquidating
16 Trust or Liquidating Trust Assets, and the holder of such Claim is not entitled to vote on the Plan or
17 to participate in any distribution in this case.
18 The Plan provides that the deadline for filing any Administrative Expense Claims is 30
19 calendar days after the Effective Date. Notwithstanding the fact that a Creditor may have provided
20 goods or services to the Debtors and such Claim may be entitled to administrative expense status or
21 listed on the Debtors’ books and records, the Plan expressly provides that only Creditors who
22 timely filed motion requesting allowance of the Claim and such Claim becomes Allowed will be
23 entitled to participate in any distribution as Holders of Administrative Expense Claims in this Case.
24 IV.
25 SUMMARY OF THE PLAN
26 THIS SECTION PROVIDES A SUMMARY OF THE STRUCTURE, CLASSIFICATION,
27 TREATMENT AND IMPLEMENTATION OF THE PLAN, AND IS QUALIFIED IN ITS
28 ENTIRETY BY REFERENCE TO THE PLAN, WHICH IS ATTACHED TO THIS
14
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1 DISCLOSURE STATEMENT AS EXHIBIT A. THIS SUMMARY DOES NOT PURPORT TO
2 BE COMPLETE, AND CREDITORS ARE URGED TO READ THE PLAN IN FULL.
3 The Claims against the Debtors are divided into Classes according to their seniority and
4 other criteria. The Classes of Claims for the Debtors and the funds and other property to be
5 distributed under the Plan are described more fully below.
6 A. Introduction
7 Pursuant to the Plan, the Debtors propose an orderly liquidation of their remaining assets.
8 The Plan provides for the transfer all assets of the Debtors’ Estates into a Liquidating Trust that
9 will be administered by the Liquidating Trustee. The Liquidating Trustee will be responsible for
10 administering and liquidating the assets, including the pursuit and resolution of any Causes of
11 Action, and making distributions to creditors in accordance with the terms of the Plan and in
12 accordance with the distributive priorities of the Bankruptcy Code and the Plan. The Debtors’
13 assets will be transferred to the Liquidating Trust on the Effective Date of the Plan.
14 B. Voting Procedures and Confirmation Requirements
15 1. Ballots and Voting Deadlines
16 Accompanying this Disclosure Statement is a Ballot for acceptance or rejection of the Plan.
17 The Bankruptcy Court has directed that, to be counted for voting purposes, Ballots for the
18 acceptance or rejection of the Plan must be received by Debtors’ counsel, Marshack Hays Wood
19 LLP, Attn: David A. Wood, 870 Roosevelt, Irvine, CA 92620, by _____, 2025 (the “Voting
20 Deadline”). Ballots not actually received by the Voting Deadline may not be counted, and Ballots
21 that do not indicate either an acceptance or rejection of the Plan will be deemed to constitute an
22 acceptance of the Plan. If you have any questions regarding the procedure for voting, please
23 contact:
24 DAVID A. WOOD
AARON DE LEEST
25 MARSHACK HAYS WOOD LLP
870 Roosevelt, Irvine, California 92620
26
dwood@marshackhays.com
27 949-333-7777
28
15
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1 Correspondence sent by hand delivery or overnight mail should be sent to the address
2 provided above.
3 It is important for all creditors that are entitled to vote on the Plan to exercise their right to
4 vote to accept or reject the Plan. Even if you do not vote to accept the Plan, you may be bound by
5 the Plan if it is accepted by the requisite Holders of Claims and confirmed by the Bankruptcy
6 Court.
7 2. Parties in Interest Entitled to Vote
8 Pursuant to the provisions of the Bankruptcy Code, only Holders of Allowed Claims in
9 Classes of Claims that are “impaired” (see subsection below) and not deemed to have rejected the
10 Plan are entitled to vote to accept or reject the Plan. In addition, any Claim to which an objection
11 has been filed is not entitled to vote unless the Bankruptcy Court, upon application of the Holder of
12 the Claim, temporarily allows the Claim in an amount that it deems proper for the purpose of
13 accepting or rejecting the Plan. Any such application must be heard and determined by the
14 Bankruptcy Court on or before the Voting Deadline. A vote may be disregarded if the Bankruptcy
15 Court determines, after notice and a hearing, that the vote was not solicited or procured in good
16 faith or in accordance with the provisions of the Bankruptcy Code.
17 3. Definition of Impairment
18 Pursuant to § 1124 of the Bankruptcy Code, a class of claims is impaired under a plan
19 unless, with respect to each claim of such class, the plan:
20 (1) leaves unaltered the legal, equitable, and contractual rights to
which such claim or interest entitles the holder of such claim or
21 interest; or
22 (2) notwithstanding any contractual provision or applicable law that
entitles the holder of such claim or interest to demand or receive
23 accelerated payment of such claim or interest after the occurrence of
a default—
24
(A) cures any such default that occurred before or after the
25 commencement of the case under this title, other than a default of a
kind specified in section 365(b)(2) of this title or of a kind that
26 section 365(b)(2) expressly does not require to be cured;
27 (B) reinstates the maturity of such claim or interest as such
maturity existed before such default;
28
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1 (C) compensates the holder of such claim or interest for any
damages incurred as a result of any reasonable reliance by such
2 holder on such contractual provision or such applicable law;
3 (D) if such claim or such interest arises from any failure to
perform a nonmonetary obligation, other than a default arising from
4 failure to operate a nonresidential real property lease subject to
section 365(b)(1)(A), compensates the holder of such claim or such
5 interest (other than the debtor or an insider) for any actual pecuniary
loss incurred by such holder as a result of such failure; and
6
(E) does not otherwise alter the legal, equitable, or contractual
7 rights to which such claim or interest entitles the holder of such claim
or interest.
8
The following Classes are impaired under the Plan and not deemed to have rejected the Plan
9
and are thus entitled to vote:
10
1. Class 1 (General Unsecured Claims).
11
2. Class 2 (Interests – CPMG)
12
3. Class 3 (Interest – CMS)
13
C. Confirmation Procedure
14
1. Confirmation Hearing
15
A hearing before the Honorable Scott A. Clarkson, United States Bankruptcy Judge, has
16
been scheduled for _____, 2025 at __:_0 _.m., at the Bankruptcy Court, 411 West Fourth Street,
17
Courtroom 5C, Santa Ana, California 92701-4593, to consider confirmation of the Plan (the
18
“Confirmation Hearing”). The Confirmation Hearing may be adjourned from time to time by the
19
Bankruptcy Court without further notice, except for an announcement of the adjourned date made
20
at the Confirmation Hearing.
21
2. Procedure for Objections
22
Any objection to confirmation of the Plan must be made in writing and specify in detail the
23
name and address of the objector, all grounds for the objection (together with all evidence and
24
supporting declarations) and the amount of the Claim held by the objector. Any such objection
25
must be filed with the Bankruptcy Court and served on counsel for the Debtors and all parties who
26
have filed a notice of appearance by _____, 2025. Unless an objection is timely filed and served, it
27
may not be considered by the Bankruptcy Court.
28
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1 3. Requirements for Confirmation
2 The Bankruptcy Court will confirm the Plan only if it meets all the requirements of § 1129
3 of the Bankruptcy Code. Among the requirements for confirmation are that the Plan be: (a)
4 accepted by all impaired classes of Claims that are entitled to vote or, if rejected by an impaired
5 Class, that the Plan “does not discriminate unfairly” against and is “fair and equitable” with respect
6 to such Class; (b) feasible; and (c) in the “best interests” of creditors impaired under the Plan that
7 have not voted to accept the Plan. The Bankruptcy Court also must find that:
8 1. the Plan has classified Claims in a permissible manner;
9 2. the Plan complies with the technical requirements of Chapter 11 of the Bankruptcy
10 Code; and
11 3. the Plan has been proposed in good faith.
12 4. Voting and Acceptance of the Plan
13 As a condition to confirmation of the Plan, the Bankruptcy Code requires each Class of
14 “impaired” Claims entitled to vote on the Plan to vote to accept the Plan. The Bankruptcy Code
15 defines acceptance of a plan by a class of creditors as acceptance by holders of two-thirds (2/3) in
16 dollar amount and more than one-half (1/2) number of those claims in that class actually voting.
17 Holders of Claims who fail to vote will not be counted as either accepting or rejecting the Plan. A
18 vote, moreover, may be disregarded if the Bankruptcy Court determines, after notice and a hearing,
19 that it was not made or solicited in good faith.
20 Classes of Claims that are not “impaired” under the Plan are conclusively presumed to have
21 accepted the Plan and, therefore, are not entitled to vote. Classes of Claims that receive no
22 distribution under the Plan are conclusively presumed to have rejected the Plan and are not entitled
23 to vote.
24 5. Best Interests Test
25 The “best interests” of impaired creditors test requires that each Holder of a Claim that has
26 not voted to accept the Plan and belongs to an impaired Class receive or retain under the Plan
27 property of a value that is not less than the value such Holder would receive or retain if the Debtors
28 were liquidated under Chapter 7 of the Bankruptcy Code. To determine what members of each
18
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1 impaired Class of Claims would receive if the Debtors were liquidated, the Bankruptcy Court must
2 determine the dollar amount that a liquidation of the Debtors’ assets would generate in the context
3 of a Chapter 7 liquidation. The amount available for satisfaction of Claims would consist of the
4 proceeds resulting from the liquidation, reduced by the Claims of secured creditors (of which there
5 are none) to the extent of the value of their collateral, and the costs and expenses of the liquidation.
6 Because the Plan is a plan of liquidation, each Class of Creditors will receive substantially
7 the same treatment it would receive if the Debtors’ assets were liquidated pursuant to Chapter 7 of
8 the Bankruptcy Code, except that the Estates will neither be taxed with the additional expenses and
9 commissions of a Chapter 7 trustee nor delayed by such a trustee’s appointment and need to
10 become familiar with this case. Attached as Exhibit B is a liquidation analysis prepared by the
11 Debtors’ CRO, reflecting a greater distribution to creditors pursuant to the Plan than creditors
12 would receive in a hypothetical Chapter 7 liquidation. Accordingly, the Plan Proponents believe the
13 Plan satisfies the “best interests” of impaired creditors test.
14 6. The Feasibility Test
15 The “feasibility” test requires the Bankruptcy Court to find that confirmation of the Plan is
16 not likely to be followed by the liquidation or the need for further reorganization of the Debtors.
17 Substantially all of the Debtors’ assets have been sold, and the Plan provides for the orderly
18 liquidation of the Debtors’ assets. Thus, confirmation of the Plan will not be followed by a
19 liquidation (other than the orderly liquidation provided for in the Plan) or further reorganization.
20 7. Unfair Discrimination and the Fair and Equitable Test
21 If any impaired Class of Claims does not accept the Plan, the Bankruptcy Court may still
22 confirm the Plan despite such non-acceptance under the “cram down” provisions set forth in §
23 1129(b) of the Bankruptcy Code. To obtain a confirmation under those circumstances, the Debtors
24 must show, among other things, that the Plan “does not discriminate unfairly” against and is “fair
25 and equitable” with respect to each impaired Class of Claims that has rejected the plan.
26 Under § 1129(b) of the Bankruptcy Code, a plan is “fair and equitable” to a class of claims
27 or equity interests if, among other things, the plan provides: (i) with respect to secured claims, that
28 each holder of a claim included in the rejecting class will receive or retain on account of its claim
19
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1 property that has a value, as of the effective date of the plan, equal to the allowed amount of such
2 claim; and (ii) with respect to unsecured claims and equity interest, that the holder of any claim or
3 equity interest that is junior to the claims or equity interest of such class will not receive or retain
4 on account of such junior claim or equity interest any property at all unless the senior class is paid
5 in full. A plan does not discriminate unfairly if the legal rights of a dissenting class are treated in a
6 manner consistent with the treatment of other classes whose legal rights are similar to those of the
7 dissenting class and if no class receives more than it is entitled to receive on account of its claim or
8 interest.
9 8. Other Requirements of Section 1129
10 The Debtors believe that the Plan meets all the other technical requirements of § 1129 of the
11 Bankruptcy Code, including that the Plan has been proposed in good faith.
12 D. Classification of Claims and Interests
13 1. Classification of Claims
14 Section 1122 of the Bankruptcy Code requires the Plan to place a Claim in a particular
15 Class only if such Claim is substantially similar to the other Claims in that Class. The Debtors
16 believe the Plan’s classifications place substantially similar Claims in the same Class and thus meet
17 the requirements of § 1122 of the Bankruptcy Code.
18 The Plan classifies Claims into three (3) Classes: Class 1 consisting of General Unsecured
19 Claims; Class 2 consisting of the CPMG Interests, and Class 3 consisting of the CMS Interests.
20 For each Class, the Plan states whether the Claims are Impaired (Classes 1, 2, and 3) or not
21 Impaired (no Classes) and how the Holders of the Claims will be treated under the Plan. The
22 Classes and proposed treatment of Allowed Claims of each Class under the Plan are summarized
23 and described below. After Confirmation, and upon the occurrence of the Effective Date, the Plan
24 binds the Debtors and all creditors, whether or not those creditors have accepted the Plan.
25 2. Unclassified Claims
26 Pursuant to § 1123(a)(1) of the Bankruptcy Code, Claims of a kind specified in §§ 507(a)(2)
27 or (8) of the Bankruptcy Code are not to be designated in a class. Thus, Administrative Expense
28
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1 Claims and Priority Tax Claims against the Debtors, as well as statutory fees under 28 U.S.C. §
2 1930, are treated separately under the Plan as unclassified Claims.
3 (a) Administrative Expense Claims
4 Administrative expenses are Claims for fees, costs or expenses of administering the
5 Debtors’ Chapter 11 Case that are allowed under § 503(b) of the Bankruptcy Code, including all
6 professional compensation requests pursuant to §§ 330 and 331 of the Bankruptcy Code.
7 Administrative Expense Claims are estimated to be $0, not including Professional Fee Claims.
8 i. U.S. Trustee Fees
9 The Plan provides that all fees due and payable pursuant to § 1930 of Title 28 of the United
10 States Code prior to the Effective Date shall be paid by the Debtors on or before the Effective Date.
11 All fees payable pursuant to § 1930 of Title 28 of the United States Code after the Effective Date
12 shall be paid by the Liquidating Trustee when due and payable.
13 ii. Professional Fee Claims
14 The Plan provides that all Professionals seeking payment of Professional Fee Claims shall
15 file their respective final fee application or motion requesting allowance of the Claim on or before
16 the Administrative Expense Bar Date (i.e., 30 days after the Effective Date). Notice of the hearing
17 on the fee application or motion for a Professional Fee Claim shall be given in accordance with
18 Local Rule 2016-1(c), on not less than 21 days’ notice. The Liquidating Trustee or any other party
19 in interest may File an objection to the application or motion within the time provided by the Local
20 Rules, or within any other period that the Court establishes. A Professional Fee Claim will be
21 Allowed only if: (1) on or before the Administrative Expense Claim Bar Date the Holder of the
22 Claim Files with the Court a final fee application or a motion requesting allowance of the Claim;
23 and (2) the Court subsequently enters an order allowing the Claim. All Professional Fee Claims
24 shall be treated as Administrative Expense Claims as set forth in section V.A.2 of the Plan. Unless
25 otherwise agreed by the Holder of an Allowed Professional Fee Claim, an Allowed Professional
26 Fee Claim shall be paid in the full Allowed amount of such Claim in Cash on or before 10 Business
27 Days after the date on which the Court enters an order determining such Claim to be an Allowed
28 Professional Fee Claim.
21
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1 The following chart lists all the Debtor’s §507(a)(2) unpaid administrative claims and their
2 treatment under the Plan:
3 Description Estimated Treatment
Amount Owed1
4 Clerk’s Office Fees $0.002 Paid in full on or before the Effective Date.
5 Office of the United States $0.00 Paid in full.
Trustee Quarterly Fees
6
Ordinary-Course $0.00 Unless the Debtors object to the ordinary-
7 Administrative Claims course administrative claim, the claim will
be allowed in accordance with the terms and
8 conditions of the particular transaction
9 giving rise to the ordinary-course
administrative claim, and the person holding
10 the ordinary-course administrative claim
need not file any request for payment of its
11 claim and will be paid in the ordinary course
of business.
12
Non-Ordinary Course $0.00 To the extent that any non-ordinary course
13 Administrative Claim administrative claims are allowed, they will
be paid in full by the Debtors on the later of
14 the Effective Date or immediately after the
Court enters a final order allowing the non-
15 ordinary course administrative claim.
Administrative Tax Claim $0.00 Unless the Debtors object to an
16
administrative tax claim or otherwise
17 disputes the administrative tax claim in
accordance with applicable law, the claim
18 will be allowed in accordance with the terms
and conditions of the particular transaction
19 that gave rise to the administrative tax claim,
and the person holding the administrative tax
20
claim need not file any request for payment
21 of its claim. Any allowed administrative tax
claim will be paid in the ordinary course of
22 business, currently and timely as they are
incurred and billed, unless the Debtors
23
1
24 The estimate of professional fee claims in this chart is only an estimate and may change based
upon the legal or financial services required during this Case and upon what the Court ultimately
25 awards to professionals. The Estate remains liable for all allowed professional fees and costs
regardless of the estimates. These amounts are in addition to what the professionals have been paid
26 on an interim basis.
27 2
The Debtors have not commenced any adversary proceedings or filed any motions for which any
28 fee would be due at the conclusion of the case.
22
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1 object to or otherwise disputes such
administrative tax claim in accordance with
2 applicable law. In an event of default, and to
the extent such administrative tax claim is
3
also secured, the payment thereof will
4 include all costs, fees, charges and interest, if
applicable, as required under 11 U.S.C. §§
5 506(b) and 511, and applicable non-
bankruptcy law.
6 Marshack Hays Wood LLP $275,000 Paid on the later of (i) the Effective Date or
7 (“MHW”) estimated as of (ii) upon entry of an order approving the
the Effective professional fee claim, except to the extent
8 Date that the holder of such claim agrees to other
terms. MHW anticipates and understands
9 that it will be paid through the ERC funds.
Grobstein Teeple LLP $350,000 Paid on the later of (i) the Effective Date or
10
(“CRO”) estimated as of (ii) upon entry of an order approving the
11 the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
12 terms. CRO anticipates and understands that
it will be paid through the ERC funds.
13 ArentFox Schiff LLP $125,000 Paid on the later of (i) the Effective Date or
(“ArentFox”) estimated as of (ii) upon entry of an order approving the
14
the Effective professional fee claim, except to the extent
15 Date that the holder of such claim agrees to other
terms. ArentFox anticipates and understands
16 that it will be paid through the ERC funds.
Stretto, Inc. $75,000 Paid on the later of (i) the Effective Date or
17 Claims Noticing Agent estimated as of (ii) upon entry of an order approving the
18 the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
19 terms. Stretto anticipates and understands
that it will be paid through the ERC funds.
20 CAPATA $50,000 Paid on the later of (i) the Effective Date or
Accountant for Debtors estimated as of (ii) upon entry of an order approving the
21 the Effective professional fee claim, except to the extent
22 Date that the holder of such claim agrees to other
terms. Accountant anticipates and
23 understands that it will be paid through the
ERC funds.
24 Stanley Otake $7,455 estimated Paid on the later of (i) the Effective Date or
Patient Care Ombudsman as of the (ii) upon entry of an order approving the
25 (“PCO”) Effective Date professional fee claim, except to the extent
26 that the holder of such claim agrees to other
terms. PCO anticipates and understands that
27 it will be paid through the ERC funds.
28
23
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1 Lucy L. Thomson $24,900 Paid on the later of (i) the Effective Date or
Consumer Privacy estimated as of (ii) upon entry of an order approving the
2 Ombudsman (“CPO”) the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
3
terms. CPO anticipates and understands that
4 it will be paid through the ERC funds.
5 TOTAL $907,355
6
7 iii. Other Administrative Expense Claims
8 The Plan provides that Holders of Other Administrative Expense Claims will be allowed
9 only if: (1) on or before the Administrative Expense Bar Date (i.e., 30 days after the Effective
10 Date), the Holder of the Claim Files with the Court a final fee application or a motion requesting
11 allowance of the Claim; and (2) the Court subsequently enters an order allowing the Claim. Unless
12 otherwise agreed by the Holder of an Other Administrative Expense Claim, an Allowed Other
13 Administrative Expense Claim shall be paid in the full Allowed amount of such Claim in Cash on
14 or before 10 Business Days after the date any order determining such Claim to be an Allowed
15 Other Administrative Expense Claim becomes a Final Order.
16 iv. Priority Tax Claims
17 The Plan provides that a Priority Tax Claim shall be Allowed only if it satisfies the
18 definitional requirements of an Allowed Claim. Unless otherwise agreed by the Holder of a
19 Priority Tax Claim, an Allowed Priority Tax Claim shall be paid in the full Allowed amount of
20 such Claim, plus interest at the Legal Rate, on or before the first day of the first full calendar
21 quarter after the Claims Objection Deadline. Notwithstanding the foregoing, if an objection to a
22 Priority Tax Claim is timely Filed, an Allowed Priority Tax Claim shall be paid in the full Allowed
23 amount of such Claim on or before 10 Business Days after the date any order determining such
24 Claim to be an Allowed Priority Tax Claim becomes a Final Order.
25 3. Classified Claims
26 The following describes the Plan’s classification of those Claims against the Debtors
27 required to be classified under the Bankruptcy Code:
28
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1 (a) Class 1
2 Class 1 consists of General Unsecured Claims, including the unsecured deficiency claims of
3 Despierta LLC, Austin Business Finance LLC dba Backd, LendSpark Corporation, and Rise Health
4 Services, Inc. Entities known or believed by the Debtors to hold or otherwise assert Class 1 Claims
5 are identified in Exhibit 2 to the Plan. Allowed Class 1 Claims will be transferred to the
6 Liquidating Trust. Unless otherwise agreed by the Holder of a Class 1 Claim, each Holder of a
7 Class 1 Claim will be paid pro rata from funds received by the Liquidating Trust after payment of
8 U.S. Trustee Fees, Professional Fee Claims, Other Administrative Expense Claims, Priority Tax
9 Claims, and the expense of administration of the Liquidating Trust.
10 Class 1 is Impaired. Therefore, Holders of Class 1 Claims are entitled to vote to accept or
11 reject the Plan.
12 (b) Class 2
13 Class 2 consists of Interests in CPMG. The Holder of an Interest in CPMG is (1) Dr.
14 Michael Hall (who owns 50.0% of the company); (2) Dr. Dennis Ponzio (who owns 41.38% of the
15 company); and (3) Dr. Thomas Parsa (who owns 8.62% of the company). See SOFA, Dk. No. 81,
16 pg. 286-287. On the Effective Date, all Interests in CPMG shall be cancelled, annulled, and
17 extinguished and of no further force or effect without any further action by any party. Holders of
18 Class 2 Interests are not entitled to vote to accept or reject the Plan because they are deemed to
19 have rejected the Plan because Class 2 will not receive or retain any property under the Plan on
20 account of Class 2 Interests in CPMG. Class 2 is Impaired.
21 (c) Class 3
22 Class 3 consists of Interests in CMS. The only Holder of an Interest in CMS is CPMG.
23 On the Effective Date, all Interests in CMS shall be cancelled, annulled, and extinguished
24 and of no further force or effect without any further action by any party. Holders of Class 3
25 Interests are not entitled to vote to accept or reject the Plan because they are deemed to have
26 rejected the Plan because Class 3 will not receive or retain any property under the Plan on account
27 of Class 3 Interests in the Debtors. Class 2 is Impaired.
28
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1 4. Objections to Claims
2 Procedures for objections to Claims, other than Professional Fee Claims, are set forth in
3 section IX.A of the Plan. Any objection to a Claim, other than a Professional Fee Claim, shall be
4 Filed and served upon the Holder of such Claim on or before the Claims Objection Deadline. Any
5 Claim to which an objection remains pending on the Claims Objection Deadline, shall be deemed a
6 Disputed Claim until the Claim is Allowed or disallowed by a Final Order. Procedures for
7 objections to Professional Fee Claims are set forth in section V.A.2 of the Plan.
8 E. Estimated Potential Recoveries for Impaired Classes of Claims
9 The estimated potential recovery to holders of Allowed Claims in the Classes of Impaired
10 Claims is set forth in the chart below. The estimated potential recoveries set forth below is not a
11 guarantee of actual results, but is an estimate based on the currently available information and
12 assumptions that are subject to material change. The actual distributions to holders of Allowed
13 Claims in the Classes of Impaired Claims will necessarily be affected by a variety of contingencies
14 that cannot be determined with certainty at this time, including, without limitation, the ultimate
15 amount of funds that will be available for distribution with respect to the Allowed Claims after
16 payment in full of unclassified Claims, Claims senior in priority to each such Class, and the
17 expenses of effectuating the Plan and administering the Liquidating Trust; the aggregate amount of
18 Allowed Claims in each such Class; the results of the claim objection and reconciliation process;
19 and the results of prosecution of any Avoidance Actions or other Causes of Action, which may
20 have a material effect on funding a distribution to holders of Allowed Claims in Classes of
21 Impaired Claims.
22
Class Estimated Recovery
23
Class 1 – General Unsecured Claims Pro Rata share from funds received by the
24 Liquidating Trust after payment of U.S.
Trustee Fees, Professional Fee Claims,
25 Licensor Administrative Expense Claims,
Other Administrative Expense Claims,
26 Priority Tax Claims, Class 1 Claims, and the
expense of administration of the Liquidating
27
Trust. Estimated recovery projected to be
28 1.3%.
26
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1
Class 2 – Interests in CPMG No distribution
2
3 Class 3 – Interests in CMG No distribution
4
5 Based on the scheduled claims in the case, it is expected that the total Allowed General
6 Unsecured Claims will be approximately $6,423,136. The Debtors project that approximately
7 $82,246 will be available to satisfy the Allowed Claims in Class 1 (General Unsecured Claims).
8 The actual amount distributed to Holders of Class 1 General Unsecured Claims (and the timing any
9 such distributions) will vary based on the assets recovered. Holders of Classes 2 and 3 Interests
10 will not receive a distribution under the Plan.
11 F. Confirmability of Plan and Cramdown
12 If Class 1 votes to reject the Plan, the Plan will not be confirmed and the Debtors will not
13 request that the Court confirm the Plan under the cramdown provisions of the Bankruptcy Code.
14 G. Executory Contracts and Unexpired Leases
15 1. Rejection of Executory Contracts and Unexpired Leases
16 On the Effective Date and subject to section VIII of the Plan, all Executory Contracts and
17 Unexpired Leases shall be deemed rejected as of the Effective Date, except for Executory Contracts
18 and Unexpired Leases that (a) have been assumed pursuant to the Sale Order or other order of the
19 Court, or (b) are the subject of a motion for such an order pending as of the Confirmation Hearing.
20 Entry of the Confirmation Order by the Court shall constitute an order approving the rejection of
21 Executory Contracts and Unexpired Leases as set forth in the Plan, all pursuant to §§ 365(a) and
22 1123 of the Bankruptcy Code, effective as of the Effective Date.
23 2. Claims Based on Rejection of Executory Contracts and Unexpired Leases
24 If the rejection of an Executory Contract or Unexpired Lease gives rise to a Rejection
25 Damages Claim, a proof of claim asserting a Rejection Damages Claim shall be Filed no later than
26 30 days after the Effective Date. If no objection to the Rejection Damages Claim is Filed on or
27 before the Claims Objection Deadline, the Rejection Damages Claim shall become an Allowed
28 Claim. Each Allowed Rejection Damages Claim shall be classified and treated as a Class 1 Claim.
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1 The Holder of a Rejection Damages Claim that does not timely File a proof of claim
2 asserting such a Claim shall be forever barred from asserting such Claim against the Debtors, the
3 Estates, the Liquidating Trust, or their respective property.
4 3. Contracts and Leases Entered Into After the Petition Date
5 After the Effective Date, contracts and leases entered into after the Petition Date by the
6 Debtors, including the APA and ASA, shall be performed by the Liquidating Trustee only if said
7 contract or lease was previously approved the Court.
8 H. Disputed Claims and Interests; Setoff and Recoupment
9 1. Objections to Claims
10 Except as provided in section V.A.2 of the Plan (regarding Professional Fee Claims), any
11 objection to a Claim shall be Filed and served upon the Holder of such Claim on or before the
12 Claims Objection Deadline. Any Claim to which an objection remains pending on the Claims
13 Objection Deadline, shall be deemed a Disputed Claim until the Claim is Allowed or disallowed by
14 a Final Order.
15 2. No Distributions with Respect to Disputed Claims
16 Notwithstanding any other provision of the Plan, as provided in section IX.B of the Plan
17 distributions will be made by the Liquidating Trustee on account of a Disputed Claim only after,
18 and only to the extent that, the Disputed Claim becomes an Allowed Claim or is deemed to be an
19 Allowed Claim for distribution purposes.
20 3. Extension of the Claims Objection Deadline
21 After the Effective Date, the Liquidating Trustee may File a motion with the Court to
22 extend the Claims Objection Deadline. The filing of such a motion shall automatically extend the
23 Claims Objection Deadline. If the motion is denied by the Court, the Claims Objection Deadline
24 shall be 30 calendar days after the date of entry of the order denying the motion. In the event of an
25 appeal, the Claims Objection Deadline shall automatically extend to the later of the then-current
26 Claims Objection Deadline (as previously extended, if applicable) or 30 calendar days after entry of
27 a Final Order affirming or denying the Court's order granting or denying the motion to extend the
28 Claims Objection Deadline.
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1 4. Authority to Compromise Disputed Claims
2 After the Effective Date, the Liquidating Trustee may settle and compromise a Disputed
3 Claim in the Liquidating Trustee’s sole discretion without Court approval.
4 5. Setoff and Recoupment
5 The Liquidating Trustee may set off, recoup, or withhold against distributions to be made
6 on account of any Allowed Claim any claims that the Debtors, the Estates, or the Liquidating Trust
7 may have against the Holder of such Allowed Claim. The Liquidating Trustee will not waive or
8 release any claim against those entities by failing to effect such a setoff or recoupment, by allowing
9 any Claim against the Debtors or the Estates, or by making a distribution on account of an Allowed
10 Claim.
11 I. Means for Implementation of the Plan
12 1. From the Confirmation Date to the Effective Date
13 Although the Plan will become effective only on the Effective Date, on and after the
14 Confirmation Date until the Effective Date, the Debtors shall take or cause to be taken all actions
15 which are necessary to enable the Plan to become effective on the Effective Date and to implement
16 and perform the Plan on and after the Effective Date. The Plan will be funded when the ERC funds
17 have been received by the Debtors.
18 2. Estate Property and the ERC
19 Pursuant to the Sale Order, the Debtors sold substantially all assets of the Estates to Anchor.
20 Under the APA. On the Effective Date, all property of the Estates, including any remaining Cash
21 and the ERC shall vest in the Liquidating Trustee, on behalf of the Liquidating Trust, free and clear
22 of all Liens, Claims, and other interests of creditors and equity security holders.
23 3. Preservation of Causes of Action
24 Except as otherwise provided in the Plan, each Cause of Action held by the Debtors and the
25 Estates shall be preserved and, along with the exclusive right to enforce such Cause of Action, shall
26 vest on the Effective Date exclusively in the Liquidating Trustee, on behalf of the Liquidating
27 Trust. Unless a Cause of Action is expressly waived, relinquished, released or compromised in the
28 Plan or an order of the Court, the Liquidating Trustee expressly reserves such Cause of Action for
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1 later adjudication and, accordingly, no doctrine of res judicata, collateral estoppel, issue preclusion,
2 claim preclusion, estoppel (judicial, equitable or otherwise), laches or other preclusion doctrine
3 shall apply to such Cause of Action as a consequence of the Confirmation, the Plan, the vesting of
4 such Cause of Action in the Liquidating Trustee on behalf of the Liquidating Trust, any order of the
5 Court or this Case.
6 No Entity may rely on the absence of a specific reference in the Plan or the Disclosure
7 Statement to any Cause of Action against such Entity as any indication that the Liquidating Trustee
8 will not pursue such Cause of Action.
9 Nothing in this section shall limit the ability of any party in interest to object to any Claim
10 prior to the Claims Objection Deadline unless otherwise ordered by the Court.
11 4. Management of the Debtors
12 No Person will manage the Debtors after the Effective Date because, pursuant to section
13 X.G.3 of the Plan, the Debtors will be dissolved as of the Effective Date.
14 5. The Liquidating Trust
15 (a) Establishment of the Liquidating Trust
16 On the Effective Date, the Liquidating Trust shall be created pursuant to the Liquidating
17 Trust Agreement and the Plan for the benefit of the Holders of Allowed Claims. The Liquidating
18 Trust shall be known as “The Caduceus Liquidating Trust.”
19 The Confirmation Order shall approve the Liquidating Trust Agreement. If it is not
20 previously signed, the Debtors and the Liquidating Trustee shall execute the Liquidating Trust
21 Agreement on the Effective Date.
22 The functions and procedures applicable to the Liquidating Trust, powers and duties of the
23 Liquidating Trustee, and rights of Holders of beneficial interests in the Liquidating Trust, shall be
24 governed by the provisions of the Liquidating Trust Agreement. However, if there is any conflict,
25 the terms of the Plan shall govern.
26 (b) Appointment of the Liquidating Trustee
27 The Confirmation Order shall appoint Howard B. Grobstein to serve as the Liquidating
28 Trustee and such appointment will become effective on the Effective Date. The Liquidating
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1 Trustee shall act in accordance with the Liquidating Trust Agreement and the Plan for the duration
2 of the Liquidating Trust, subject to earlier death, resignation, incapacity or removal as provided in
3 the Liquidating Trust Agreement.
4 The Liquidating Trustee may serve without any bond, but is not prohibited from securing a
5 bond if, in the Liquidating Trustee’s discretion, the Liquidating Trustee concludes that doing so is
6 appropriate.
7 (c) Beneficiaries of the Liquidating Trust
8 In accordance with Treasury Regulations § 301.7701-4(d), the Beneficiaries of the
9 Liquidating Trust are the Holders of Class 1 Claims.
10 On the Effective Date, the Beneficiaries shall receive, on account of their unpaid Claims
11 against the Estates, an allocation of Liquidating Trust Interests as provided for in the Liquidating
12 Trust Agreement, in order to implement the distributions provided for herein, and shall receive on
13 account of their respective Liquidating Trust Interests, distributions from the Liquidating Trust in
14 compliance with the Plan. These distributions from the Liquidating Trust, which may be less than
15 the full Allowed Claim amounts, are in full and complete satisfaction, discharge, exchange, and
16 release of the Allowed Claim amounts.
17 Liquidating Trust Interests will not be evidenced by any certificate or other instrument or
18 document. The Claims underlying the Liquidating Trust Interest remain subject to claim objections
19 by the Liquidating Trustee, and the Liquidating Trust Interest remains subject to revocation by the
20 Liquidating Trustee if an underlying Class 1 Claim subsequently becomes a Disallowed Claim.
21 Liquidating Trust Interests are transferable and assignable, as set forth in section 2.2 of the
22 Liquidating Trust Agreement.
23 (d) Transfer of Property to the Liquidating Trust
24 On the Effective Date, pursuant to the Plan and §§ 1123, 1141 and 1146(a) of the
25 Bankruptcy Code, the Debtors shall transfer, grant, assign, convey, set over, and deliver to the
26 Liquidating Trustee, for the benefit of the Liquidating Trust, all of the Debtors’ and the Estates’
27 right, title and interest in and to the Liquidating Trust Assets, free and clear of all Liens, Claims,
28 and other interests of any kind in such property, except as contemplated by the Plan. To the extent
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1 required to implement the transfer of Liquidating Trust Assets from the Debtors and the Estates to
2 the Liquidating Trust and the Liquidating Trustee, all Persons shall cooperate with the Debtosr to
3 assist in implementing said transfers.
4 For all United States federal income tax purposes, all parties will treat the transfer of assets
5 to the Liquidating Trust as a transfer of such assets to the holders of beneficial interests in the
6 Liquidating Trust followed by a transfer of such assets by such holders of beneficial interests to the
7 Liquidating Trust, with the holders of beneficial interests in the Liquidating Trust being treated as
8 the grantors and owners of the Liquidating Trust. The Liquidating Trust is intended to qualify as a
9 “grantor trust” for United States federal income tax purposes with the holders of beneficial interests
10 in the Liquidating Trust being treated as the grantors and owners of the Liquidating Trust.
11 Accordingly, because a grantor trust is treated as a pass-through entity for United States federal
12 income tax purposes, generally no tax should be imposed on the Liquidating Trust as a result of the
13 transfer of assets thereto or on the income earned or gain recognized by the Liquidating Trust.
14 Instead, the holders of beneficial interests in the Liquidating Trust may be taxed on their allocable
15 share of such net income or gain in each taxable year of the Liquidating Trust (determined in
16 accordance with the Liquidating Trust Agreement), and will be responsible for paying the taxes
17 associated with such allocable net income and gain whether or not they received any distributions
18 from the Liquidating Trust in such taxable year.
19 (e) Liquidating Trust’s Distribution of Cash
20 After the Effective Date, the Liquidating Trustee shall pay all expenses of the Liquidating
21 Trust from property in the Liquidating Trust, establish and maintain reserves in accordance with
22 the Liquidating Trust Agreement and the Plan, and make, at the Trustee's discretion, periodic
23 distributions of Cash to the Holders of Allowed Claims (including Allowed Administrative
24 Expense Claims) from the Liquidating Trust in accordance with the Liquidating Trust Agreement
25 and the Plan.
26 (f) Powers and Duties of the Liquidating Trustee
27 Among other things, the Liquidating Trustee shall have the following rights, powers and
28 duties, at all times in accordance with the Liquidating Trust Agreement:
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1 (a) accept delivery from the Debtors of all assets to be transferred from the Debtors and
2 the Estates to the Liquidating Trust pursuant to the Liquidating Trust Agreement and
3 the Plan;
4 (b) hold and distribute, in accordance with the Liquidating Trust Agreement and the
5 Plan, all assets transferred to the Liquidating Trust;
6 (c) manage the affairs of the Liquidating Trust;
7 (d) except as specified in the Plan, determine the frequency and amount of payments in
8 accordance with section 4.1 of the Liquidating Trust Agreement;
9 (e) establish and maintain reserves for payment of Liquidating Trust Expenses,
10 Disputed Claims, and unclaimed distributions in accordance with the Plan and the
11 Liquidating Trust Agreement;
12 (f) collect and marshal all assets of the Debtors and the Estates, reduce such assets to
13 cash, and make interim and final distributions in accordance with the Plan and the
14 Liquidating Trust Agreement;
15 (g) monitor and enforce the implementation of the Plan;
16 (h) file all federal, state, and local tax and regulatory forms, returns, reports and other
17 documents required with respect to the Debtors, the Estates and the Liquidating
18 Trust, and pay any taxes shown as due thereon;
19 (i) in the Liquidating Trustee’s reasonable business judgment, investigate, prosecute
20 and/or settle actions or litigation of the Debtors, the Estates, or the Liquidating
21 Trust, including all Causes of Action, without supervision by the Court and free of
22 any restrictions of the Bankruptcy Code or FRBP, other than any restrictions
23 expressly imposed by the Plan;
24 (j) in the Liquidating Trustee’s reasonable business judgment, investigate and prosecute
25 objections to Claims, pursuant to the Plan and the Liquidating Trust Agreement;
26 (k) preserve and maintain, at the expense of the Liquidating Trust, the Debtors’ books
27 and records, provided that the Liquidating Trustee, in the Liquidating Trustee’s
28
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1 reasonable business judgment, may destroy any and all books and records of the
2 Debtors if they are no longer of any value to the Liquidating Trust;
3 (l) submit all required U.S. Trustee and Court reports, and pay all required U.S. Trustee
4 Fees until the Case is closed;
5 (m) take all actions necessary and create any documents necessary to wind up the affairs
6 of the Liquidating Trust and implement the Plan; and
7 (n) take all necessary actions and File all appropriate motions to obtain an order closing
8 the Case.
9 The Liquidating Trustee shall succeed to all of the rights and powers of the Debtors and the
10 Estates with respect to all Liquidating Trust Assets and Causes of Action, and the Liquidating
11 Trustee shall be substituted and shall replace the Debtors and the Estates, as applicable, as the party
12 in interest in any litigation pending as of the Effective Date.
13 The Liquidating Trustee, on behalf of the Liquidating Trust, shall be authorized to execute
14 any documents that implement or are in aid of this section, in particular, and the Plan in general.
15 (g) Liquidating Trustee’s Employment of Professionals; Compensation
16 On and after the Effective Date, the Liquidating Trustee may employ and compensate such
17 professionals, agents and representatives as the Liquidating Trustee determines is necessary or
18 appropriate pursuant to the terms of the Liquidating Trust Agreement and the Plan, including
19 professionals, agents and representatives employed by the Estates prior to the Effective Date.
20 Within 30 days after engagement by the Liquidating Trustee of any professional person, the
21 Liquidating Trustee shall cause a notice of employment of such professional person to be Filed
22 with the Court. Any party objecting to said employment must do so by filing a written objection
23 with the Court within 14 days of the date of such notice.
24 After the entry of an order approving such employment, the Liquidating Trustee and the
25 professionals employed by the Liquidating Trustee may be compensated each month at the rate of
26 100% of fees incurred plus 100% of out-of-pocket costs expended for the prior month (including
27 for fees and costs incurred prior to entry of the order approving the professional’s employment).
28 The Liquidating Trustee and professionals employed by the Liquidating Trustee must file
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1 applications for interim and final compensation pursuant to the standards and procedures applicable
2 to interim and final applications filed pursuant to §§ 330 and 331 of the Bankruptcy Code, FRBP
3 2016, Local Rule 2016-1, and any other applicable rules and procedures of the Court.
4 (h) Compliance with Tax Requirements
5 The Liquidating Trust shall comply with all applicable withholding, payment and reporting
6 requirements imposed on it by governmental units, and all distributions pursuant to the Plan shall
7 be subject to such withholding, payment and reporting requirements. The Liquidating Trustee shall
8 be authorized to take any and all actions that may be necessary or appropriate to comply with such
9 withholding, payment, and reporting requirements. All amounts withheld from distributions to the
10 Holder of an Allowed Claim or Holder of a Liquidating Trust Interest and paid over to the
11 applicable governmental unit on account of such Holder shall be treated as part of the distributions
12 to such Holder.
13 Each Entity holding an Allowed Claim or Liquidating Trust Interest shall provide any
14 information necessary to effect the necessary reporting and withholding of applicable taxes with
15 respect to distributions to be made under the Plan. The Liquidating Trustee shall be entitled in its
16 sole discretion to withhold any distributions to a Holder of an Allowed Claim or Liquidating Trust
17 Interest that fails to provide tax identification or social security information upon written request.
18 Notwithstanding any other provision of the Plan, (a) each Holder of an Allowed Claim or
19 Liquidating Trust Interest that is to receive a distribution on account thereof pursuant to the Plan or
20 Liquidating Trust Agreement shall have sole and exclusive responsibility for the satisfaction and
21 payment of any tax obligations imposed by any governmental unit, including income, withholding,
22 and other tax obligations, on account of such distribution, and (b) no distribution shall be made to
23 or on behalf of such Holder pursuant to the Plan unless and until such Holder has made
24 arrangements satisfactory to the Liquidating Trustee for the payment and satisfaction of such
25 withholding tax obligations or such tax obligation that would be imposed upon the Liquidating
26 Trust in connection with such distribution. Any property to be distributed pursuant to the Plan
27 shall, pending the implementation of such arrangements, be treated as an unclaimed distribution
28 pursuant to section XI.F of the Plan.
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1 (i) No Recourse Against the Liquidating Trustee
2 No recourse shall ever be had, directly or indirectly, against the Liquidating Trustee or any
3 of the officers, employees, professionals, agents or representatives of the Liquidating Trust,
4 whether by legal, equitable or other proceedings, pursuant to any law, statute, regulation or
5 otherwise, by virtue of any indebtedness of the Debtors, the Estates, or the Liquidating Trust. All
6 liabilities of the Liquidating Trust shall be enforceable only against and be satisfied only out of the
7 Liquidating Trust Assets or shall be evidence only of a right to payment out of the Liquidating
8 Trust Assets, as the case may be.
9 (j) Termination and Dissolution of the Liquidating Trust
10 The Liquidating Trust shall be dissolved upon the determination by the Liquidating Trustee
11 to dissolve the Liquidating Trust upon performance and completion of all obligations and duties of
12 the Liquidating Trust and Liquidating Trustee, as set forth in the Liquidating Trust Agreement.
13 6. Undeliverable or Non-Negotiated Distributions
14 If any distribution is returned as undeliverable, (1) the Liquidating Trustee shall make
15 reasonable efforts to determine the address of such Holder of an Allowed Claim or Holder of a
16 Liquidating Trust Interest and (2) no further distributions to the applicable Holder of an Allowed
17 Claim or Holder of a Liquidating Trust Interest shall be made unless and until the Liquidating
18 Trustee is notified in writing of such Holder of an Allowed Claim or Holder of a Liquidating Trust
19 Interest’s then-current address, at which time the undelivered distribution shall be made to such
20 Holder of an Allowed Claim or Holder of a Liquidating Trust Interest without interest or dividends.
21 All distributions that remain unclaimed for 90 days after attempted distribution shall indefeasibly
22 revert to the Liquidating Trust. Upon such reversion, the Holder of an Allowed Claim or Holder of
23 a Liquidating Trust Interest’s entitlement to the distribution shall be automatically discharged and
24 forever barred, notwithstanding any federal or state escheat laws to the contrary.
25 7. Dissolution of the Debtors
26 (a) Cancellation of Interests
27 On the Effective Date, all Interests in the Debtors shall be cancelled, annulled, and
28 extinguished and of no further force or effect without any further action by any party.
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1 (b) Termination of Services of the Debtors’ Director and CRO
2 On the Effective Date, and without further action by any party, the Debtors shall have no
3 right to operate a business, and the services of the Debtors’ directors and officers, including its
4 current Chief Restructuring Officer, automatically are terminated. Notwithstanding the foregoing,
5 the Liquidating Trustee shall have, and retain, authority as set forth in the Plan and the Liquidating
6 Trust Agreement to dispose of the Liquidating Trust Assets and otherwise implement the Plan in
7 accordance with its terms.
8 (c) Dissolution of the Debtors
9 On the Effective Date, the Debtors shall be deemed liquidated and dissolved as a legal
10 entity, for all purposes, pursuant to applicable federal and state law, without further action by any
11 entity, and the Confirmation Order shall contain a provision to such effect.
12 Notwithstanding the foregoing, without the need for any further approval, the Liquidating
13 Trustee in the Liquidating Trustee’s discretion may execute and file documents and take all other
14 actions as the Liquidating Trustee deems appropriate relating to the dissolution of the Debtors
15 under the applicable laws of any states, and in such event, all applicable regulatory or governmental
16 agencies shall take all steps necessary to allow and effect the prompt dissolution of the Debtors as
17 provided herein, without the payment of any fee, tax, or charge and without need for the filing of
18 reports or certificates. Any actions by the Liquidating Trustee pursuant to the preceding sentence
19 shall not modify, alter, or otherwise affect the deemed dissolution of the Debtors as of the Effective
20 Date pursuant to this Section.
21 J. Effects of Confirmation
22 1. Binding Effect of the Plan
23 Except as provided in section 1141(d)(3) of the Bankruptcy Code, the provisions of the Plan
24 bind the Debtors, any entity acquiring property under the Plan, any creditor or equity security
25 holder, and their successors, assigns, heirs, executors, administrators and representatives, whether
26 or not the Claim or Interest of such creditor or equity security holder is impaired under the Plan and
27 whether or not such creditor or equity security holder has accepted the Plan.
28
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1 2. Vesting of Assets
2 Pursuant to sections 1123(b) and 1141(b) of the Bankruptcy Code, upon Plan confirmation,
3 Plan property of the Estates will remain property of the Estates until the Effective Date. Upon the
4 Effective Date, except as otherwise provided in (a) the Plan, (b) any contract, instrument, release or
5 other agreement or document that is created pursuant to the Plan, or (c) the Confirmation Order, all
6 property of the Debtors and the Estates shall vest in the Liquidating Trustee, on behalf of the
7 Liquidating Trust, free and clear of all Liens, Claims, and other interests of creditors and equity
8 security holders.
9 The following shall be preserved and vest in the Liquidating Trust on the Effective Date,
10 pursuant to sections 1123(b) and 1141(b) of the Bankruptcy Code, to the extent not released
11 pursuant to the Plan, the Confirmation Order, or any other order of the Court: (a) Causes of Action
12 of the Debtors and the Estates against any Entity; (b) all defenses, offsets, rights of recoupment,
13 rights of disallowance, recharacterization and/or equitable subordination of the Debtors and the
14 Estates with respect to Claims against the Debtors and the Estates; and (c) all rights of the Debtors,
15 the Estates, and the Liquidating Trust arising from the Plan itself. Pursuant to sections 1123(b) and
16 1141(b) of the Bankruptcy Code, upon the vesting of all property of the Debtors and the Estates in
17 the Liquidating Trustee, on behalf of the Liquidating Trustee, on the Effective Date, the Estates
18 will cease to exist.
19 3. No Discharge
20 This Plan provides for the liquidation of all or substantially all of the property of the
21 Estates. As a result, pursuant to section 1141(d)(3) of the Bankruptcy Code, the Debtors is not
22 eligible to receive a discharge.
23 4. Continuation of Automatic Stay; Creditor Action Restrained
24 Except as provided in section 362(b) of the Bankruptcy Code or an order entered pursuant
25 to section 362(d) of the Bankruptcy Code, the automatic stay of section 362(a) of the Bankruptcy
26 Code shall remain in full force and effect with respect to the Debtors, the Estates, the Liquidating
27 Trust, and property thereof.
28
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1 This Plan is binding on every creditor and shareholder whose Claims and Interests are
2 provided for in the Plan, whether or not such creditor or shareholder votes to accept the Plan. No
3 creditor or shareholder may take any action to enforce any Claim against the Debtors, the Estates,
4 or the Liquidating Trust except as provided in the Plan and the Liquidating Trust Agreement.
5 5. No Liability for Solicitation or Participation
6 As specified in section 1125(e) of the Bankruptcy Code, Persons that solicit acceptances or
7 rejections of the Plan and/or that participate in the offer, issuance, sale, or purchase of securities
8 offered or sold under the Plan, in good faith and in compliance with the applicable provisions of the
9 Bankruptcy Code, shall not be liable, on account of such solicitation or participation, for violation
10 of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of
11 the Plan or the offer, issuance, sale, or purchase of securities.
12 K. Retention of Jurisdiction
13 Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective
14 Date, the Court will retain jurisdiction over the Case after the Effective Date to the fullest extent
15 permitted by law, including, without limitation, jurisdiction to:
16 1. hear and determine objections to Claims;
17 2. hear and determine any dispute arising under the APA and ASA;
18 3. hear and determine any dispute arising under the Plan or Liquidating Trust
19 Agreement, their implementation and the execution of any necessary documents thereunder;
20 4. enter and implement other orders, or take such other actions as may be necessary or
21 appropriate to restrain interference by any entity with consummation or enforcement of the Plan;
22 5. grant extensions of any deadlines set forth in the Confirmation Order as may be
23 appropriate;
24 6. enforce all discharge, release and injunction provisions of the Plan;
25 7. consider and rule upon requests for final compensation;
26 8. hear and determine all motions, adversary proceedings, applications, and contested
27 or litigated matters that may be pending on the Effective Date or that, pursuant to the Plan, may be
28 instituted by the Liquidating Trustee after the Effective Date;
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1 9. resolve any matters related to the assumption or rejection of any executory contract
2 or unexpired lease to which the Debtors are a party or with respect to which the Debtors may be
3 liable, and to hear, determine and, if necessary, liquidate any Claims arising therefrom;
4 10. ensure that distributions to Holders of Allowed Claims are accomplished as
5 provided herein via the Liquidating Trust;
6 11. resolve disputes as to the ownership of any Claim;
7 12. hear and determine objections to Administrative Expense Claims and Claims;
8 13. enter and implement such orders as may be appropriate in the event the
9 Confirmation Order is for any reason stayed, revoked, modified or vacated;
10 14. issue such orders in aid of execution of the Plan, to the extent authorized by section
11 1142 of the Bankruptcy Code;
12 15. consider any modifications of the Plan, to cure any defect or omission, or to
13 reconcile any inconsistency in any order of the Court, including the Confirmation Order;
14 16. hear and determine all applications for compensation and reimbursement of
15 expenses of Professionals under sections 330, 331 and 503(b) of the Bankruptcy Code;
16 17. hear and determine any issue for which the Plan requires a Final Order of the Court;
17 18. hear and determine matters concerning state, local, and federal taxes in accordance
18 with sections 346, 505 and 1146 of the Bankruptcy Code;
19 19. hear and determine Causes of Action preserved under the Plan, including Avoidance
20 Actions;
21 20. hear and determine any matter regarding the existence, nature, and scope of the
22 releases, exculpation, indemnification and injunctions provided in the Plan; and
23 21. enter a final decree closing the Case.
24 The foregoing list is illustrative only and not intended to limit in any way the Court’s
25 exercise of jurisdiction. If the Court abstains from exercising jurisdiction or is otherwise without
26 jurisdiction over any matter arising out of the Case, including matters set forth above, this section
27 shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any
28 other court having competent jurisdiction with respect to such matter.
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1 L. Effective Date Conditions
2 1. Conditions to the Effectiveness of the Plan
3 The following events must occur and be satisfied on or before the Effective Date for the
4 Plan to be effective on the Effective Date:
5 1. Entry on the Docket of a Confirmation Order. The Conformation Order shall
6 include provisions which, among other things:
7 (a) confirms and approves the Plan;
8 (b) authorizes and approves the Liquidating Trust Agreement and all other
9 documents, instruments and agreements to be executed and delivered in connection with the
10 confirmation and effectiveness of the Plan;
11 (c) appoints or approves the appointment of the Liquidating Trustee; and
12 (d) orders that the transfers contemplated under the Plan (i) are or will be legal,
13 valid and effective transfers of property for fair and reasonable consideration, (ii) vest or will vest
14 in the transferee good title to such property free and clear of all Liens, Claims and other interests of
15 any kind and in accordance with section 1123(a)(5) and (b)(5) of the Bankruptcy Code, except
16 those expressly provided for under the Plan, (iii) do not and will not constitute fraudulent
17 conveyances or transfers or unlawful distributions under any applicable law, and (iv) do not and
18 will not, except as expressly contemplated by the Liquidating Trust Agreement, subject the
19 Liquidating Trust, the Liquidating Trustee, the Estates, the Debtors, or any of their current or future
20 officers, directors, employees, owners, partners, beneficiaries, members, professionals, agents or
21 representatives or any of the property transferred to any liability by reason of such transfer under
22 any applicable law, including any laws relating to fiduciary duty or successor or transferee liability.
23 2. Any stay of enforcement of the Confirmation Order has expired or is otherwise no
24 longer in effect.
25 3. Execution and delivery of the Liquidating Trust Agreement and all documents,
26 instruments and agreements to be executed in connection therewith.
27
28
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1 The second and third conditions set forth above may be waived in whole or in part by the
2 Debtors. The first condition regarding entry of the Conformation Order and provisions required to
3 be included therein may not be waived.
4 2. Effect of Failure of Conditions to the Effectiveness of the Plan
5 If the Effective Date does not occur, upon notification submitted by the Debtors to the
6 Court: (a) the Confirmation Order shall be vacated, (b) no distributions under the Plan shall be
7 made, (c) the Debtors, the Estates, and all Holders of Claims and Interests shall be restored to the
8 status quo ante as of the day immediately preceding the Confirmation Date as though the
9 Confirmation Date had never occurred, and (d) the Debtors’ and the Estates’ obligations with
10 respect to the Claims and Interests shall remain unchanged and nothing contained in the Plan shall
11 constitute or be deemed a waiver or release of any Claims or Interests by or against the Debtors, the
12 Estates, or any other person, or to prejudice in any manner the rights of the Debtors, the Estates, or
13 any person in any further proceedings involving the Debtors or the Estates.
14 3. Effect of Entry of Order Denying Confirmation of the Plan
15 If an order denying confirmation of the Plan is entered, then the Plan shall be null and void
16 in all respects, and nothing contained in the Plan shall (a) constitute a waiver or release of any
17 Claims against or Interests in the Debtors and the Estates; (b) prejudice in any manner the rights of
18 the Holder of any Claim against, or Interest in, the Debtors and the Estates; (c) prejudice in any
19 manner any right, remedy or claim of the Debtors or the Estates, or (d) be deemed an admission
20 against interest by the Debtors or the Estates.
21 M. Miscellaneous Provisions
22 1. Exculpation
23 Except as otherwise specially provided in the Plan or the Confirmation Order, none of the
24 Debtors, the Estates, Howard B. Grobstein of Grobstein Teeple LLP (Debtor’s Chief Restructuring
25 Officer) and the Debtor’s professionals employed in this case (collectively the “Exculpated
26 Parties”) shall have or incur any liability to any Holder of a Claim or Interest for any act or
27 omission occurring on or after the Petition Date to the Effective Date in connection with, related to,
28 or arising out of the Case and pursuit of implementation, confirmation or consummation of this
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1 Plan, except for willful misconduct or gross negligence, fraud or malpractice as construed under
2 CA PRC 1.8.8.Nothing in this Section shall limit the liability of any Person for breach of any
3 express obligation such Person has under the terms of the Plan, or under any postpetition agreement
4 or other postpetition document entered into by such Person, or in accordance with the terms of the
5 Plan, or for any breach of a duty of care owed to any other Person occurring after the Effective
6 Date.
7 2. Exemption from Transfer Taxes
8 Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of
9 notes or equity securities under the Plan, the creation of any mortgage, deed of trust or other
10 security interest, the making or assignment or any lease or sublease, or the making or delivery of
11 any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan,
12 including any agreements of consolidation, deeds, bills of sale or assignments executed in
13 connection with any of the transactions contemplated under the Plan shall not be subject to any
14 stamp, real estate transfer, mortgage recording, license transfer or other similar tax. For the
15 avoidance of doubt, the transactions contemplated under the Plan include, among other things, all
16 transactions and transfers contemplated in the Plan, including, without limitation, the transfer of the
17 Debtors and the Estates’ right, title and interest in property to the Liquidating Trust.
18 3. Expedited Tax Determination
19 The Liquidating Trustee may request an expedited determination of taxes under section
20 505(b) of the Bankruptcy Code for all returns filed for or on behalf of the Debtors or the Estates for
21 all taxable periods ending on or before the Effective Date.
22 4. Securities Laws
23 (a) Exemption from Registration Issues
24 In reliance upon an exemption from the registration requirements of the Securities Act of
25 1933, as amended (the “Securities Act”), and of state and local securities laws afforded by section
26 1145 of the Bankruptcy Code, the Liquidating Trust interests to be issued pursuant to the Plan on
27 and after the Effective Date need not be registered under the Securities Act or any state or local
28 securities laws.
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1 (b) Exchange Act Reporting Obligations and Registration under Investment
2 Company Act
3 The Debtors anticipates that the Liquidating Trust may, under certain circumstances, be
4 required to register or otherwise report under the Securities Act of 1934, as amended (the
5 “Exchange Act”), and accordingly be required to file with the SEC and send to the holders of
6 Liquidating Trust interests certain periodic reports and other information pursuant to the Exchange
7 Act. The reports may be the same as or different from those required to be distributed to the
8 holders of Liquidating Trust Interests pursuant to the Plan and the Liquidating Trust Agreement.
9 In addition, the Debtors currently anticipate that the Liquidating Trust will be exempt from
10 registration under the Investment Company Act of 1940 ("Investment Company Act"). Exemptions
11 may be sought from the SEC from all or some of the reporting requirements of the Exchange Act or
12 the Investment Company Act, if it is determined that such reporting is required and that compliance
13 with such requirements would be burdensome. The Debtors has not yet made any determinations
14 regarding whether any such exemptions will be sought and the SEC had not yet made any
15 determinations regarding such matters. There is no assurance that any such exemptions, if deemed
16 necessary and applied for, will be granted
17 5. Payment of Statutory Fees
18 All fees payable on or before the Effective Date pursuant to 28 U.S.C. § 1930 shall be paid
19 on or before the Effective Date. After the Effective Date, the Liquidating Trustee shall pay all fees
20 payable under 28 U.S.C. § 1930 until the Case is closed, dismissed, or converted.
21 6. Amendment, Modification or Withdrawal of the Plan
22 The Debtors reserve the right, in accordance with the Bankruptcy Code and subject to Court
23 approval, to amend or modify the Plan prior to the entry of the Confirmation Order. After the entry
24 of the Confirmation Order, the Liquidating Trustee may amend or modify the Plan and Liquidating
25 Trust Agreement, or remedy any defect or omission or reconcile any inconsistency in the Plan, in
26 accordance with the Bankruptcy Code and subject to Court approval, and in such a manner as may
27 be necessary to carry out the purpose and intent of the Plan and Liquidating Trust Agreement.
28
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1 7. Governing Law
2 Unless a rule of law or procedure is supplied by (a) federal law (including the Bankruptcy
3 Code and FRBP), or (b) an express choice of law provision in any agreement, contract, instrument,
4 or document provided for, or executed in connection with, the Plan, the rights and obligations
5 arising under the Plan and any agreements, contracts, documents, and instruments executed in
6 connection with the Plan shall be governed by, and construed and enforced in accordance with, the
7 laws of the State of California without giving effect to the principles of conflict of laws thereof.
8 8. Waiver of FRBP 7062
9 The Debtors may request that the Confirmation Order include (a) a finding that FRCP
10 62(a), made applicable by FRBP 7062, shall not apply to the Confirmation Order, and (b)
11 authorization for the Debtors to consummate the Plan immediately after entry of the Confirmation
12 Order.
13 9. Exhibits and Schedules
14 All exhibits and schedules to the Plan and Disclosure Statement are incorporated into and
15 constitute a part of the Plan as if set forth herein.
16 10. Conflict
17 The terms of the Plan shall govern in the event of any inconsistency with the summaries of
18 the Plan set forth in the Disclosure Statement. If there is any conflict between the Plan and the
19 Liquidating Trust Agreement, the terms of the Plan shall govern.
20 11. Successors and Assigns
21 The rights, benefits and obligations of any Entity named or referred to in the Plan shall be
22 binding on, and shall inure to the benefit of, any heir, executor, trustee, administrator, successor or
23 assign of such Entity.
24 12. Saturday, Sunday or Legal Holiday
25 If any payment or act under the Plan is required to be made or performed on a day that is
26 not a Business Day, then the payment or act may be completed on the next day that is a Business
27 Day, in which event the payment or act will be deemed to have been completed on the required
28 day.
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1 13. Post-Effective Date Effect of Evidences of Claims or Interests
2 Notes, bonds, stock certificates and other evidences of Claims against or Interests in the
3 Debtors, and all instruments of the Debtors (in either case, other than those executed and delivered
4 as contemplated hereby in connection with the consummation of the Plan, if any), shall, effective
5 upon the Effective Date, represent only the right to participate in the distributions contemplated by
6 the Plan.
7 14. Severability of Plan Provisions
8 If, before the Confirmation Date, the Court holds that any Plan term or provision is invalid,
9 void, or unenforceable, the Court may alter or interpret that term or provision so that it is valid and
10 enforceable to the maximum extent possible consistent with the original purpose of that term or
11 provision. That term or provision will then be applicable as altered or interpreted.
12 Notwithstanding any such holding, alteration, or interpretation, the Plan’s remaining terms and
13 provisions will remain in full force and effect and will in no way be affected, impaired, or
14 invalidated. The Confirmation Order will constitute a judicial determination providing that each
15 Plan term and provision, as it may have been altered or interpreted in accordance with this Section,
16 is valid and enforceable under its terms.
17 15. No Admissions or Waiver of Objections
18 Notwithstanding anything to the contrary in the Plan, if the Plan is not confirmed, is
19 revoked or otherwise the Effective Date does not occur, the Plan will be null and void, and nothing
20 contained in the Plan or the Disclosure Statement will (1) be deemed to be an admission by the
21 Debtors with respect to any matter discussed in the Plan, including liability on any Claim or the
22 propriety of any Claim’s classification, (2) constitute a waiver, acknowledgement, or release of any
23 Claims, or (3) prejudice in any manner the rights of the Debtors or any other Entity in any further
24 proceedings.
25 16. Survival of Settlements
26 All settlements approved by the Court pursuant to FRBP 9019 or otherwise shall survive
27 consummation of the Plan. If the terms of the Plan are inconsistent with the terms of any Court-
28 approved settlement, the terms of the Plan shall supersede any inconsistent settlement provisions.
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1 17. Post-Confirmation Status Reports
2 Pursuant to Local Rule 3020-1(b), the Confirmation Order shall provide as follows:
3 Within 120 days of the entry of this order, the Liquidating Trustee shall
file a status report explaining what progress has been made toward
4 consummation of the Plan. The initial report shall be served on the
United States trustee, the 20 largest unsecured creditors, and those
5 parties who have requested special notice. Further reports shall be filed
every 180 days thereafter and served on the same entities, unless
6 otherwise ordered by the court.
7
18. Effect of Post-Confirmation Conversion to Chapter
8
If, after the Effective Date, the Court enters an order converting the Case to one under
9
chapter 7 of the Bankruptcy Code, the Liquidating Trust Assets shall not be vested in the chapter 7
10
estate. This means that there would be no assets for a chapter 7 trustee to administer if this case
11
were converted to chapter 7 after the plan is confirmed.
12
19. Final Decree
13
Once the Estates have been fully administered within the meaning of FRBP 3022, the
14
Liquidating Trustee shall file a motion with the Court to obtain a final decree to close the Case.
15
V.
16
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
17
The Debtors believe the Plan is in the best interests of the creditors and should accordingly
18
be accepted and confirmed. If the Plan as proposed, however, is not confirmed, the following three
19
alternatives may be available to the Debtors: (i) a liquidation of the Debtors’ Assets pursuant to
20
Chapter 7 of the Bankruptcy Code; (ii) an alternative plan of liquidation may be proposed and
21
confirmed; or (iii) the Debtors’ Case may be dismissed.
22
A. Chapter 7 Liquidation
23
If a plan pursuant to Chapter 11 of the Bankruptcy Code is not confirmed by the
24
Bankruptcy Court, the Debtors’ Case may be converted to a liquidation case under Chapter 7 of the
25
Bankruptcy Code, in which case a trustee would be elected or appointed, pursuant to applicable
26
provisions of Chapter 7 of the Bankruptcy Code, to liquidate the assets of the Debtors for
27
distribution in accordance with the priorities established by the Bankruptcy Code. The Debtors
28
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1 believe that such a liquidation would result in smaller distributions being made to the Debtors’
2 creditors than those provided for in the Plan because (a) additional administrative expenses
3 attendant to the appointment of a trustee and the trustee’s employment of attorneys and other
4 professionals, (b) additional expenses and Claims, some of which would be entitled to priority,
5 which would be generated during the liquidation. The Debtors have determined that confirmation
6 of the Plan will provide each Holder of an Allowed Claim with a recovery that is not less than such
7 Holder would receive pursuant to liquidation of the Debtors under Chapter 7 of the Bankruptcy
8 Code.
9 B. Alternative Plan Pursuant to Chapter 11 of the Bankruptcy Code
10 If the Plan is not confirmed, the Debtors may propose a different plan, which might involve
11 an alternative means for the reorganization or liquidation of the Debtors’ assets. However, it is
12 difficult to speculate on or assess the terms and potential treatment of Allowed Claims under any
13 such alternative plan. Furthermore, for the Debtors and/or creditors to formulate, solicit and
14 confirm any such alternative plan would likely require the Estates to incur additional administrative
15 and other expenses, may substantially delay distributions to creditors, and may result in lower
16 recoveries to creditors than the proposed Plan. The Debtors believe that the terms of the Plan
17 provide for an orderly and efficient liquidation and distribution of the Debtors’ assets and will
18 result in the realization of the most value for Holders of Claims against the Debtors’ Estates.
19 C. Dismissal of the Debtors’ Case
20 Dismissal of the Debtors’ Cases would have the effect of restoring (or attempting to restore)
21 all parties to the status quo ante. Upon dismissal of the Debtors’ Cases, the Debtors would lose the
22 protection of the Bankruptcy Code, thereby requiring, at the very least, an extensive and time-
23 consuming process of negotiation with the various creditors of the Debtors, and possibly resulting
24 in costly and protracted litigation in various jurisdictions. Dismissal would also permit unpaid
25 unsecured creditors to obtain and enforce judgments against the Debtors. The Debtors believe that
26 these actions could lead ultimately to the liquidation of the Debtors’ assets under Chapter 7 of the
27 Bankruptcy Code. Therefore, the Debtors believe that dismissal of the Chapter 11 Case is not a
28 preferable alternative to the Plan.
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1 VI.
2 CERTAIN FEDERAL TAX CONSEQUENCES
3 THE FOLLOWING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF
4 CERTAIN U.S. FEDERAL TAX CONSEQUENCES OF THE PLAN AND IS NOT A
5 SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. THE
6 FOLLOWING DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT TAX
7 ADVICE. THE TAX CONSEQUENCES ARE IN MANY CASES UNCERTAIN AND MAY
8 VARY DEPENDING ON A HOLDER’S PARTICULAR CIRCUMSTANCES. ACCORDINGLY,
9 EACH HOLDER IS STRONGLY URGED TO CONSULT ITS TAX ADVISOR REGARDING
10 THE U.S. FEDERAL, STATE, LOCAL, AND APPLICABLE NON-U.S. INCOME AND OTHER
11 TAX CONSEQUENCES OF THE PLAN.
12 TO COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230, TAXPAYERS
13 ARE HEREBY NOTIFIED THAT (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES
14 CONTAINED OR REFERRED TO IN THIS DISCLOSURE STATEMENT (INCLUDING ANY
15 ATTACHMENTS) IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE
16 USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY
17 BE IMPOSED ON A TAXPAYER UNDER THE INTERNAL REVENUE CODE, (B) ANY
18 SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR
19 MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN, AND (C)
20 TAXPAYERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR
21 CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
22 A. General
23 The following discussion summarizes certain material U.S. federal income tax
24 consequences to the Debtors, the Liquidating Trust, and Holders entitled to vote on the Plan. This
25 discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the
26 “IRC”), applicable Treasury Regulations, judicial authority and current administrative rulings and
27 pronouncements of the Internal Revenue Service (the “Service”). There can be no assurance that
28
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1 the Service will not take a contrary view, no ruling from the Service has been or will be sought nor
2 will any counsel provide a legal opinion as to any of the expected tax consequences set forth below.
3 Legislative, judicial or administrative changes or interpretations may be forthcoming that
4 could alter or modify the statements and conclusions set forth herein. Any such changes or
5 interpretations may or may not be retroactive and could affect the tax consequences to Holders of
6 Claims, the Liquidating Trust or the Debtors. It cannot be predicted at this time whether any tax
7 legislation will be enacted or, if enacted, whether any tax law changes contained therein would
8 affect the tax consequences described herein.
9 The following summary is for general information only. The tax treatment of a Holder may
10 vary depending upon such Holder’s particular situation. This summary does not address all of the
11 tax consequences that may be relevant to a Holder, including any alternative minimum tax
12 consequences and does not address the tax consequences to a Holder that has made an agreement to
13 resolve its claim in a manner not explicitly provided for in the Plan. This summary also does not
14 address the U.S. federal income tax consequences to persons not entitled to vote on the Plan or
15 Holders subject to special treatment under the U.S. federal income tax laws, such as brokers or
16 dealers in securities or currencies, certain securities traders, tax-exempt entities, financial
17 institutions, insurance companies, foreign persons, partnerships and other pass-through entities,
18 Holders that have a “functional currency” other than the United States dollar and Holders that have
19 acquired Claims in connection with the performance of services. The following summary assumes
20 that the Claims are held by Holders as “capital assets” within the meaning of § 1221 of the IRC and
21 that all Claims denominated as indebtedness are properly treated as debt for U.S. federal income
22 tax purposes.
23 The tax treatment of Holders and the character, amount and timing of income, gain or loss
24 recognized as a consequence of the Plan and the distributions provided for by the Plan may vary,
25 depending upon, among other things: (i) whether the Claim (or portion thereof) constitutes a Claim
26 for principal or interest; (ii) the type of consideration received by the Holder in exchange for the
27 Claim and whether the Holder receives distributions under the Plan in more than one taxable year;
28 (iii) whether the Holder is a citizen or resident of the United States for tax purposes, is otherwise
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1 subject to U.S. federal income tax on a net basis, or falls into any special class of taxpayers, such as
2 those that are excluded from this discussion as noted above; (iv) the manner in which the Holder
3 acquired the Claim; (v) the length of time that the Claim has been held; (vi) whether the Claim was
4 acquired at a discount; (vii) whether the Holder has taken a bad debt deduction with respect to the
5 Claim (or any portion thereof) in the current or prior years; (viii) whether the Holder has previously
6 included in income accrued but unpaid interest with respect to the Claim; (ix) the method of tax
7 accounting of the Holder; (x) whether the Claim is an installment obligation for U.S. federal
8 income tax purposes; and (xi) whether the “market discount” rules are applicable to the Holder.
9 Therefore, each Holder should consult its tax advisor for information that may be relevant to its
10 particular situation and circumstances, and the particular tax consequences to such Holder of the
11 transactions contemplated by the Plan.
12 B. Certain U.S. Federal Income Tax Consequences of the Liquidating Trust
13 It is intended that the Liquidating Trust will be treated as a “grantor trust” for U.S. federal
14 income tax purposes. In general, a grantor trust is not a separate taxable entity. The Service, in
15 Revenue Procedure 94-45, 1994-2 C.B. 684, set forth the general criteria for obtaining an advanced
16 ruling as to the grantor trust status of a liquidating trust under a Chapter 11 plan. The Debtors are
17 not requesting a private letter ruling regarding the status of the Liquidating Trust as a grantor trust.
18 Consistent with the requirements of Revenue Procedure 94-45, however, the Liquidating Trust
19 Agreement provides that, the Liquidating Trust Assets shall be treated by all parties (including the
20 Debtors, the Trustee, and the Beneficiaries) for tax purposes as being transferred (subject to the
21 liabilities specified) by the Debtors or the Estates to the Beneficiaries, and then by the Beneficiaries
22 to the Trust in exchange for a Liquidating Trust Interest, which interests shall be distributed by the
23 Trustee to the Beneficiaries in exchange for their unpaid Claims against the Estates in accordance
24 with the Plan. The beneficiaries of the Liquidating Trust shall be treated as the grantors and
25 owners of the Liquidating Trust. Each beneficiary of the Liquidating Trust will generally
26 recognize gain (or loss) in its taxable year that includes the Effective Date in an amount equal to
27 the difference between the amount realized in respect of its Claim and its adjusted tax basis in such
28 Claim. The amount realized for this purpose should generally equal the amount of cash and the fair
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1 market value of any other assets received or deemed received for U.S. federal income tax purposes
2 under the Plan in respect of such Holder’s Claim. A Holder that is deemed to receive for U.S.
3 federal income tax purposes a non-cash asset under the Plan in respect of its Claim should
4 generally have a tax basis in such asset in an amount equal to the fair market value of such asset on
5 the date of its deemed receipt.
6 The Liquidating Trust Agreement generally provides that the Liquidating Trustee must
7 value the assets of the Liquidating Trust consistently for all U.S. federal, state, and local income tax
8 purposes. As soon as possible after the Effective Date, the Liquidating Trustee shall make a good
9 faith valuation of the assets transferred to the Liquidating Trust.
10 Consistent with the treatment of the Liquidating Trust as a grantor trust, each Holder will be
11 required to report on its U.S. federal income tax return its allocable share of the Liquidating Trust’s
12 income. Therefore, a Holder may incur a U.S. federal income tax liability with respect to its
13 allocable share of the income of the Liquidating Trust whether or not the Liquidating Trust has
14 made any distributions to such Holder. The character of items of income, gain, deduction, and
15 credit to any Holder and the ability of such Holder to benefit from any deduction or losses will
16 depend on the particular situation of such Holder.
17 In general, a distribution of underlying assets from the Liquidating Trust to a Beneficiary
18 thereof may not be taxable to such Holder because such Holders are already regarded for U.S.
19 federal income tax purposes as owning such assets. Holders are urged to consult their tax advisors
20 regarding the appropriate U.S. federal income tax treatment of distributions from the Liquidating
21 Trust.
22 The Liquidating Trustee will file with the Service tax returns for the Liquidating Trust as a
23 grantor trust pursuant to Treasury Regulation § 1.671-4(a) and will also send to each Holder a
24 separate statement setting forth such Holder’s share of items of Liquidating Trust income, gain,
25 loss, deduction, or credit. Each such Holder will be required to report such items on its U.S.
26 federal income tax return.
27 The discussion above assumes that the Liquidating Trust will be respected as a grantor trust
28 for U.S. federal income tax purposes. If the Service were to successfully challenge such
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1 classification, the U.S. federal income tax consequences to the Liquidating Trust and the
2 beneficiaries of the Liquidating Trust could differ materially from those discussed herein (including
3 the potential for an entity level tax to be imposed on all income of the Liquidating Trust).
4 C. U.S. Federal Income Tax Treatment with Respect to Holders of Allowed Claims that
5 Are Beneficiaries of the Liquidating Trust
6 Holders of Allowed Claims as of the Effective Date that are Beneficiaries of the Liquidating
7 Trust should be treated as receiving from the Debtors their respective shares of the applicable assets
8 of the Liquidating Trust in satisfaction of their Allowed Claims, and simultaneously transferring
9 such assets to the Liquidating Trust. Accordingly, a Holder of such Claim should generally
10 recognize gain or loss in an amount equal to the amount deemed realized on the Effective Date (as
11 described above) less its adjusted tax basis of its Claim. Additionally, such Holders should
12 generally recognize their allocable share of income, gain, loss and deductions recognized by the
13 Liquidating Trust on an annual basis.
14 Because a Holder’s ultimate share of the assets of the Liquidating Trust based on its
15 Allowed Claim will not be determinable on the Effective Date due to, among other things, the
16 existence of any Disputed Claims and the value of the assets at the time of actual receipt not being
17 ascertainable on the Effective Date, such Holder should recognize additional or offsetting gain or
18 loss if, and to the extent that, the aggregate amount of cash and fair market value of the assets of
19 the Liquidating Trust ultimately received by such Holder is greater than or less than the amount
20 used in initially determining gain or loss in accordance with the procedures described in the
21 preceding paragraph. It is unclear when a Holder of an Allowed Claim that is a beneficiary of the
22 Liquidating Trust should recognize, as an additional amount received for purposes of computing
23 gain or loss, an amount attributable to the disallowance of a Disputed Claim.
24 The character of any gain or loss as capital gain or loss or ordinary income or loss and, in
25 the case of capital gain or loss, as short-term or long-term, will depend on a number of factors,
26 including: (i) the nature and origin of the Claim; (ii) the tax status of the Holder of the Claim; (iii)
27 whether the Claim has been held for more than one year; (iv) the extent to which the Holder
28 previously claimed a loss or bad debt deduction with respect to the Claim; and (v) whether the
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1 Claim was acquired at a market discount. A Holder that purchased its Claim from a prior Holder at
2 a market discount may be subject to the market discount rules of the IRC. Under those rules
3 (subject to a de minimis exception), assuming that such Holder has made no election to accrue the
4 market discount and include it in income on a current basis, any gain recognized on the exchange
5 of such Claim generally would be characterized as ordinary income to the extent of the accrued
6 market discount on such Claim as of the date of the exchange.
7 It is possible that the Service may assert that any loss should not be recognizable until the
8 Liquidating Trustee makes its final distribution of the assets of the Liquidating Trust. Holders
9 should consult their tax advisors regarding the possibility that the recognition of gain or loss may
10 be deferred until the final distribution of the assets of the Liquidating Trust.
11 Although not free from doubt, Holders of Disputed Claims should not recognize any gain or
12 loss on the date that the Liquidating Trust Assets are transferred to the Liquidating Trust, but
13 should recognize gain or loss in an amount equal to: (i) the amount of cash and the fair market
14 value of any other property actually distributed to such Holder less (ii) the adjusted tax basis of its
15 Claim. It is possible, however, that such Holders may be required to recognize the fair market
16 value of such Holder’s allocable share of the Liquidating Trust Assets, as an amount received for
17 purposes of computing gain or loss, either on the Effective Date or the date such Holder’s Claim
18 becomes an Allowed Claim.
19 Holders of Allowed Claims will be treated as receiving a payment of interest (includible in
20 income in accordance with the Holder’s method of accounting for tax purposes) to the extent that
21 any cash or other property received (or deemed received) pursuant to the Plan is attributable to
22 accrued but unpaid interest, if any, on such Allowed Claims. The extent to which the receipt of
23 cash or other property should be attributable to accrued but unpaid interest is unclear. The Debtors
24 and the Liquidating Trust intend to take the position, that such cash or property distributed pursuant
25 to the Plan will first be allocable to the principal amount of an Allowed Claim and then, to the
26 extent necessary, to any accrued but unpaid interest thereon. Each Holder should consult its tax
27 advisor regarding the determination of the amount of consideration received under the Plan that is
28
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1 attributable to interest (if any). A Holder generally will be entitled to recognize a loss to the extent
2 any accrued interest was previously included in its gross income and is not paid in full.
3 VII.
4 RISK FACTORS IN CONNECTION WITH THE PLAN
5 The Holders of Claims against the Debtors should read and carefully consider the following
6 risk factors, as well as the other information set forth in this Disclosure Statement (and the
7 documents delivered together herewith), before deciding whether to vote to accept or reject the
8 Plan. These risk factors should not, however, be regarded as constituting the only risks associated
9 with the Plan and its implementation.
10 A. Bankruptcy Considerations
11 Although the Debtors believe that the Plan will satisfy all requirements necessary for
12 confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will
13 confirm the Plan as proposed. Moreover, there can be no assurance that modifications of the Plan
14 will not be required for confirmation or that such modifications would not necessitate the re-
15 solicitation of votes.
16 In addition, the occurrence of the Effective Date is conditioned on the satisfaction of the
17 conditions precedent set forth in the Plan, and there can be no assurance that such conditions will
18 be satisfied. In the event the conditions precedent described in the Plan have not been satisfied as
19 of the Effective Date, then the Confirmation Order will be vacated, no distributions will be made
20 pursuant to the Plan, and the Debtors and all Holders of Claims will be restored to the status quo
21 ante as of the day immediately preceding the Confirmation Date as though the Confirmation Date
22 had never occurred.
23 Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an equity
24 interest in a particular class only if such claim or equity interest is substantially similar to the other
25 claims or equity interests in such class. The Debtors believe that the classification of Claims and
26 Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because
27 each Class of Claims and Interests encompass Claims or Interests, as applicable, that are
28
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1 substantially similar to the other Claims and Interests in each such Class. Nevertheless, there can
2 be no assurance that the Bankruptcy Court will reach the same conclusion.
3 The liquidation of certain assets and the prosecution of certain Causes of Action may result
4 in the availability of additional assets for distribution pursuant to the Plan’s terms. The potential
5 recoveries from any such actions, however, are unknown. In addition, there can be no assurance
6 that the Liquidating Trust assets will be sufficient to pay the fees and expenses of the Liquidating
7 Trustee or make any distributions to the Beneficiaries.
8 As to each Impaired Class that has not accepted the Plan, the Plan may be confirmed if the
9 Bankruptcy Court determines that the Plan “does not discriminate unfairly” and is “fair and
10 equitable” with respect to these Classes. The Plan Proponents believe that the Plan satisfies these
11 requirements. Nevertheless, there can be no assurance that the Bankruptcy Court will reach the
12 same conclusion.
13 B. No Duty to Update Disclosures
14 The Debtors have no duty to update the information contained in this Disclosure Statement,
15 unless otherwise specified herein, or unless the Debtors are required to do so pursuant to an order
16 of the Bankruptcy Court.
17 C. Representations Outside this Disclosure Statement
18 This Disclosure Statement contains representations concerning or related to the Debtors and
19 the Plan that are authorized by the Bankruptcy Code and the Bankruptcy Court. Please be advised
20 that any representations or inducements made outside this Disclosure Statement and any related
21 documents which are intended to secure your acceptance or rejection of the Plan should not be
22 relied upon by Holders of Claims that are entitled to vote to accept or reject the Plan.
23 D. No Admission
24 The information and representations contained herein shall not be construed to constitute an
25 admission of, or be deemed evidence of, any legal effect of the Plan on the Debtors, the Liquidating
26 Trustee, or Holders of Claims.
27
28
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1 E. Tax and Other Related Considerations
2 A discussion of potential tax consequences of the Plan is set forth in this Disclosure
3 Statement. However, the content of this Disclosure Statement is not intended and should not be
4 construed as tax, legal, business or other professional advice. Holders of Claims should seek advice
5 from their own independent tax, legal or other professional advisors based on their own individual
6 circumstances.
7 VIII.
8 RECOMMENDATION AND CONCLUSION
9 The Debtors believe the Plan provides the best available alternative for maximizing the
10 recoveries that creditors may receive from the Estates. Therefore, the Debtors recommend that all
11 creditors that are entitled to vote on the Plan vote to accept the Plan.
12
13 DATED: November 25, 2025 MARSHACK HAYS WOOD LLP
14 /s/ Aaron E. de Leest
By:
15
MATTHEW W. GRIMSHAW
16 DAVID A. WOOD
AARON E. DE LEEST
17 Attorneys for Debtors CADUCEUS PHYSICIANS
MEDICAL GROUP, A PROFESSIONAL MEDICAL
18 CORPORATION dba CADUCEUS MEDICAL GROUP
19 and CADUCEUS MEDICAL SERVICES, LLC.
20
21
22
23
24
25
26
27
28
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EXHIBIT A
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1 MATTHEW W. GRIMSHAW, #210424
grimshaw@marshackhays.com
2 DAVID A. WOOD, #272406
dwood@marshackhays.com
3 AARON E. DE LEEST, #216832
shasselberger@marshackhays.com
4 MARSHACK HAYS WOOD LLP
870 Roosevelt, Irvine, CA 92620
5 Telephone: 949-333-7777
Facsimile: 949-333-7778
6
Attorneys for Debtors,
7 CADUCEUS PHYSICIANS MEDICAL GROUP,
a Professional Medical Corporation, dba
8 CADUCEUS MEDICAL GROUP and
CADUCEUS MEDICAL SERVICES, LLC
9
UNITED STATES BANKRUPTCY COURT
10 CENTRAL DISTRICT OF CALIFORNIA – SANTA ANA DIVISION
11 Case No. 8:24-bk-11945-SC
In re
12 Chapter 11
CADUCEUS PHYSICIANS MEDICAL
13 GROUP, a Professional Medical Corporation, (Jointly Administered with 8:24-
dba CADUCEUS MEDICAL GROUP, bk-11946-SC)
14
Debtor. DEBTORS’ FIRST AMENDED
15 CHAPTER 11 PLAN OF LIQUIDATION
☒ ALL DEBTORS
16
☐ Caduceus Physicians Medical Group, dba
17 Caduceus Medical Group, ONLY
18 ☐ Caduceus Medical Services, LLC, ONLY
19
20
21
22 / / /
23 / / /
24
25
26
27
28
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1 TABLE OF CONTENTS
2
I. INTRODUCTION ............................................................................................................................1
3
II. DEFINITIONS; RULES OF INTERPRETATION; AND COMPUTATION OF TIME ..............2
4
A. Definitions ...................................................................................................................2
5
B. Rules of Interpretation .................................................................................................2
6
C. Time Periods ................................................................................................................3
7
III. EFFECTIVE DATE CONDITIONS .............................................................................................3
8
A. Conditions to the Effectiveness of the Plan .................................................................3
9
B. Effect of Failure of Conditions to the Effectiveness of the Plan .................................4
10
C. Effect of Entry of Order Denying Confirmation of the Plan .......................................5
11
IV. CLASSIFICATION OF CLAIMS AND INTERESTS .................................................................5
12
A. General Overview ........................................................................................................5
13
B. Unclassified Claims .....................................................................................................5
14
C. Classified Claims and Interests ....................................................................................5
15
V. ALLOWANCE AND TREATMENT OF UNCLASSIFIED CLAIMS.........................................6
16
A. Administrative Expense Claims ..................................................................................6
17
1. U.S. Trustee Fees .............................................................................................6
18
2. Professional Fee Claims ..................................................................................6
19
3. Other Administrative Expense Claims ............................................................9
20
B. Priority Tax Claims....................................................................................................10
21
VI. TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS ...............................................11
22
A. Class 1 (General Unsecured Claims) .........................................................................11
23
B. Class 2 (Interests of CPMG) ......................................................................................12
24
C. Class 3 (Interests of CMG) ........................................................................................12
25
VII. CONFIRMABILITY OF PLAN AND CRAMDOWN .............................................................13
26
VIII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES ................................................13
27
A. Rejection of Executory Contracts and Unexpired Leases .........................................13
28
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1 TABLE OF CONTENTS
(Continued)
2 Page
3 B. Claims Based on Rejection of Executory Contracts and Unexpired Leases .............13
4 C. Contracts and Leases Entered Into After the Petition Date .......................................13
5 IX. DISPUTED CLAIMS AND INTERESTS; SETOFF AND RECOUPMENT............................14
6 A. Objections to Claims..................................................................................................14
7 B. No Distributions with Respect to Disputed Claims ...................................................14
8 C. Extension of the Claims Objection Deadline.............................................................14
9 D. Authority to Compromise Disputed Claims ..............................................................14
10 E. Setoff and Recoupment..............................................................................................14
11 X. MEANS OF IMPLEMENTATION..............................................................................................15
12 A. From the Confirmation Date to the Effective Date ...................................................15
13 B. Sale of Estates Property .............................................................................................15
14 C. Preservation of Causes of Action ..............................................................................15
15 D. Management of the Debtors.......................................................................................16
16 E. The Liquidating Trust ................................................................................................16
17 1. Establishment of the Liquidating Trust .........................................................16
18 2. Appointment of the Liquidating Trustee .......................................................16
19 3. Beneficiaries of the Liquidating Trust ...........................................................17
20 4. Transfer of Property to the Liquidating Trust................................................17
21 5. Liquidating Trust’s Distribution of Cash .......................................................18
22 6. Powers and Duties of the Liquidating Trustee ..............................................18
23 7. Liquidating Trustee’s Employment of Professionals; Compensation ...........20
24 8. Compliance with Tax Requirements .............................................................20
25 9. No Recourse Against the Liquidating Trustee...............................................21
26 10. Termination and Dissolution of the Liquidating Trust ..................................22
27 F. Undeliverable and Unclaimed Distributions .............................................................22
28 G. Dissolution of the Debtors .........................................................................................22
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1 TABLE OF CONTENTS
(Continued)
2 Page
3 1. Cancellation of Interests ................................................................................22
4 2. Termination of Services of the Debtors’ Director and CRO .........................22
5 3. Dissolution of the Debtors .............................................................................23
6 XI. EFFECTS OF CONFIRMATION ...............................................................................................23
7 A. Binding Effect of the Plan .........................................................................................23
8 B. Vesting of Assets .......................................................................................................23
9 C. No Discharge .............................................................................................................24
10 D. Continuation of Automatic Stay; Creditor Action Restrained ...................................24
11 E. No Liability for Solicitation or Participation .............................................................25
12 XII. RETENTION OF JURISDICTION ...........................................................................................25
13 XIII. MISCELLANEOUS PROVISIONS.........................................................................................27
14 A. Exculpation ................................................................................................................27
15 B. Exemption from Transfer Taxes ................................................................................27
16 C. Expedited Tax Determination ....................................................................................28
17 D. Securities Laws ..........................................................................................................28
18 1. Exemption from Registration Issues ..............................................................28
19 2. Exchange Act Reporting Obligations and Registration under
Investment Company Act ..............................................................................28
20
E. Payment of Statutory Fees .........................................................................................29
21
F. Amendment, Modification or Withdrawal of the Plan ..............................................29
22
G. Governing Law ..........................................................................................................29
23
H. Waiver of FRBP 7062 ...............................................................................................29
24
I. Exhibits and Schedules ..............................................................................................29
25
J. Conflict ......................................................................................................................30
26
K. Successors and Assigns .............................................................................................30
27
L. Saturday, Sunday or Legal Holiday ...........................................................................30
28
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1 TABLE OF CONTENTS
(Continued)
2 Page
3 M. Post-Effective Date Effect of Evidences of Claims or Interests ................................30
4 N. Severability of Plan Provisions ..................................................................................30
5 O. No Admissions or Waiver of Objections ...................................................................31
6 P. Survival of Settlements ..............................................................................................31
7 Q. Post-Confirmation Status Reports .............................................................................31
8 R. Effect of Post-Confirmation Conversion to Chapter 7 ..............................................31
9 S. Final Decree ...............................................................................................................32
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
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1 I.
2 INTRODUCTION
3 On August 1, 2024 (“Petition Date”), Caduceus Physicians Medical Group, a Professional
4 Medical Corporation dba Caduceus Medical Group (“CPMG”) and Caduceus Medical Services,
5 LLC (“CMS”), each filed a voluntary Chapter 11 petitions for relief under the Bankruptcy Code.
6 This document is the Chapter 11 Plan (the “Plan”) proposed by CPMG and CMS. The two
7 plan proponents, whose bankruptcy cases are being jointly administered, are collectively referred to
8 herein as “Debtors.”
9 This document is the Chapter 11 Plan (“Plan”) proposed by the Debtors. This Plan
10 proposes to transfer all assets of the Debtors’ bankruptcy estates (“Estates”) into a liquidating trust
11 (“Liquidating Trust”), which will be governed by the terms of the “Liquidating Trust Agreement”
12 attached as Exhibit 1 hereto. All creditors who hold Allowed General Unsecured Claims against
13 the Estates will become beneficiaries of the Liquidating Trust (collectively the “Beneficiaries”). A
14 “Liquidating Trustee” will hold all of the Estates’ assets, may pursue claims and causes of action
15 the Estates have or may have against third parties, and, after paying costs of administration, will
16 distribute all of the Liquidating Trust’s assets to the Beneficiaries.
17 If the Plan is approved, the Liquidating Trustee will be Howard B. Grobstein, Debtors’
18 current Chief Restructuring Officer. It is anticipated that the Liquidating Trustee will retain
19 Debtors’ counsel, Marshack Hays Wood, LLP, as his counsel to assist in fulfilling his duties as the
20 Liquidating Trustee, as well as other professionals if it is appropriate to do so. The Debtors believe
21 Mr. Grobstein’s retention of Marshack Hays Wood, LLP will promote the efficient administration
22 of the remaining assets of the Estates for the benefit of creditors.
23 All Holders of Claims and Interests are encouraged to read this Plan and the
24 accompanying Disclosure Statement in their entirety before voting to accept or reject this Plan.
25 If confirmed, this Plan will bind all persons it provides for, whether or not they accept this
26 Plan, object to confirmation, file a proof of claim or interest, or have their claims or interests
27 allowed.
28
1
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1 Your rights may be affected. Read these papers carefully and discuss them with your
2 attorney. If you do not have an attorney, you may wish to consult one.
3 II.
4 DEFINITIONS; RULES OF INTERPRETATION;
5 AND COMPUTATION OF TIME
6 A. Definitions
7 In this document, capitalized terms have the meanings ascribed to them in the foregoing
8 Introduction and in Exhibit A.
9 B. Rules of Interpretation
10 For purposes of this Plan:
11 1. the rules of construction set forth in section 102 of the Bankruptcy Code shall apply;
12 2. in the appropriate context, each term, whether stated in the singular or the plural,
13 shall include both the singular and the plural, and pronouns stated in the masculine, feminine or
14 neuter gender shall include the masculine, feminine and the neuter gender;
15 3. any reference herein to the word “including” or any word of similar import shall be
16 read to mean “including without limitation”;
17 4. unless otherwise specified, all references to “Sections” or “Exhibits” are references
18 to the Plan’s sections or exhibits;
19 5. unless otherwise specified, the words “herein,” “hereof” and “hereto” refer to the
20 Plan in its entirety rather than a particular portion of the Plan;
21 6. captions and headings to Sections are inserted for the convenience of reference only
22 and are not intended to be a part of or to affect the interpretation of the Plan;
23 7. any reference herein to a contract, agreement, lease, plan, policy, document or
24 instrument being in a particular form or on particular terms and conditions means that the same
25 shall be substantially in that form or substantially on those terms and conditions;
26 8. any reference herein to a contract, agreement, lease, plan, policy, document or
27 instrument or schedule or exhibit thereto, whether or not filed, shall mean the same as amended,
28
2
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1 restated, modified or supplemented from time to time in accordance with the terms hereof or
2 thereof;
3 9. any reference to an Entity as a Holder of a Claim or Interest includes that Entity’s
4 successors and permitted assigns;
5 10. unless otherwise specified, anything required to be done by the Debtors or the
6 Liquidating Trustee, as applicable, on the Effective Date may be done on the Effective Date or as
7 soon as reasonably practicable thereafter; and
8 11. any term that is used but not defined herein has the meaning attributed to that term,
9 if any, in the Bankruptcy Code or the FRBP.
10 C. Time Periods
11 In computing any period of time prescribed or allowed by the Plan, unless otherwise
12 expressly provided, the provisions of FRBP 9006(a) shall apply. If any payment, distribution, act
13 or deadline under the Plan is required to be made or performed or occurs on a day that is not a
14 Business Day, then the making of such payment or distribution, the performance of such act or the
15 occurrence of such deadline shall be deemed to be on the next succeeding Business Day, but shall
16 be deemed to have been completed or to have occurred as of the required date.
17 III.
18 EFFECTIVE DATE CONDITIONS
19 A. Conditions to the Effectiveness of the Plan
20 The following events must occur and be satisfied on or before the Effective Date for the
21 Plan to be effective on the Effective Date:
22 1. Entry on the Docket of a Confirmation Order. The Conformation Order shall
23 include provisions which, among other things:
24 (a) confirms and approves the Plan;
25 (b) authorizes and approves the Liquidating Trust Agreement and all other
26 documents, instruments and agreements to be executed and delivered in connection with the
27 confirmation and effectiveness of the Plan;
28 (c) appoints or approves the appointment of the Liquidating Trustee; and
3
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1 (d) orders that the transfers contemplated under the Plan (i) are or will be legal,
2 valid and effective transfers of property for fair and reasonable consideration, (ii) vest or will vest
3 in the transferee good title to such property free and clear of all Liens, Claims and other interests of
4 any kind and in accordance with section 1123(a)(5) and (b)(5) of the Bankruptcy Code, except
5 those expressly provided for under the Plan, (iii) do not and will not constitute fraudulent
6 conveyances or transfers or unlawful distributions under any applicable law, and (iv) do not and
7 will not, except as expressly contemplated by the Liquidating Trust Agreement, subject the
8 Liquidating Trust, the Liquidating Trustee, the Estates, the Debtors, or any of their current or future
9 officers, directors, employees, owners, partners, beneficiaries, members, professionals, agents or
10 representatives or any of the property transferred to any liability by reason of such transfer under
11 any applicable law, including any laws relating to fiduciary duty or successor or transferee liability.
12 2. Any stay of enforcement of the Confirmation Order has expired or is otherwise no
13 longer in effect.
14 3. Execution and delivery of the Liquidating Trust Agreement and all documents,
15 instruments and agreements to be executed in connection therewith.
16 The second and third conditions set forth above may be waived in whole or in part by the
17 Debtors. The first condition regarding entry of the Conformation Order and provisions required to
18 be included therein may not be waived.
19 B. Effect of Failure of Conditions to the Effectiveness of the Plan
20 If the Effective Date does not occur, upon notification submitted by the Debtors to the
21 Court: (a) the Confirmation Order shall be vacated, (b) no distributions under the Plan shall be
22 made, (c) the Debtors, the Estates, and all Holders of Claims and Interests shall be restored to the
23 status quo ante as of the day immediately preceding the Confirmation Date as though the
24 Confirmation Date had never occurred, and (d) the Debtors’ and the Estates’ obligations with
25 respect to the Claims and Interests shall remain unchanged and nothing contained in the Plan shall
26 constitute or be deemed a waiver or release of any Claims or Interests by or against the Debtors, the
27 Estates, or any other person, or to prejudice in any manner the rights of the Debtors, the Estates, or
28 any person in any further proceedings involving the Debtors or the Estates.
4
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1 C. Effect of Entry of Order Denying Confirmation of the Plan
2 If an order denying confirmation of the Plan is entered, then the Plan shall be null and void
3 in all respects, and nothing contained in the Plan shall (a) constitute a waiver or release of any
4 Claims against or Interests in the Debtors and the Estates; (b) prejudice in any manner the rights of
5 the Holder of any Claim against, or Interest in, the Debtors and the Estates; (c) prejudice in any
6 manner any right, remedy or claim of the Debtors or the Estates, or (d) be deemed an admission
7 against interest by the Debtors or the Estates.
8 IV.
9 CLASSIFICATION OF CLAIMS AND INTERESTS
10 A. General Overview
11 As required by the Bankruptcy Code, the Plan classifies Claims and Interests according to
12 their right to priority of payment as provided in the Bankruptcy Code. Except for certain types of
13 Claims that do not get put into classes, the Plan classifies Claims for all purposes, including voting,
14 confirmation and distributions under the Plan. A Claim is classified in a particular Class only to
15 the extent that it falls within the class description.
16 B. Unclassified Claims
17 Certain types of claims are not placed into voting classes; instead they are unclassified.
18 They are not considered impaired and they do not vote on the Plan because they are automatically
19 entitled to a specific treatment provided for them in the Bankruptcy Code. Unclassified Claims
20 consist of (1) Administrative Expense Claims and (2) Priority Tax Claims.
21 C. Classified Claims and Interests
22 All other Claims and Interests are separated into the following voting classes:
23 • Class 1 consists of General Unsecured Claims. This Class is Impaired. Each Holder
24 of an Allowed Class 1 Claim, and each Holder of an Allowed Class 1 Claim that has
25 been temporarily allowed for voting purposes by order under FRBP 3018(a), is
26 entitled to vote to accept or reject the Plan.
27
28
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1 • Class 2 consists of Interests of CPMG. This Class is Impaired. The Holder of an
2 Allowed Class 2 Interest is not entitled to vote to accept or reject the Plan because
3 Class 2is deemed to have voted to reject the Plan since Class 2 will not receive or
4 retain any property under the Plan.
5 • Class 3 consists of Interests of CMS. This Class is Impaired. The Holder of an
6 Allowed Class 3 Interest is not entitled to vote to accept or reject the Plan because Class
7 3 is deemed to have voted to reject the Plan since Class 3 will not receive or retain any
8 property under the Plan.
9 V.
10 ALLOWANCE AND TREATMENT OF UNCLASSIFIED CLAIMS
11 A. Administrative Expense Claims
12 1. U.S. Trustee Fees
13 Allowance: U.S. Trustee Fees shall be allowed in accordance with 28 U.S.C. § 1930.
14 Treatment: All fees due and payable pursuant to 28 U.S.C. § 1930 prior to the Effective
15 Date shall be paid by the Debtors on or before the Effective Date. After the Effective Date, the
16 Liquidating Trustee shall pay any and all such fees when due and payable.
17 2. Professional Fee Claims
18 Identity of Professional Fee Claims: Entities known or believed by the Debtors to hold or
19 otherwise assert Professional Fee Claims, and estimates of the fees that costs that will be owed to
20 them as of the Effective Date, are as follows:
21 / / /
22 / / /
23
24
25
26
27
28
6
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1 Description Estimated Treatment
Amount Owed1
2 Clerk’s Office Fees $0.002 Paid in full on or before the Effective Date.
Office of the United States $0.00 Paid in full.
3 Trustee Quarterly Fees
4 Ordinary-Course $0.00 Unless the Debtors object to the ordinary-
Administrative Claims course administrative claim, the claim will be
5 allowed in accordance with the terms and
conditions of the particular transaction giving
6 rise to the ordinary-course administrative
claim, and the person holding the ordinary-
7
course administrative claim need not file any
8 request for payment of its claim and will be
paid in the ordinary course of business.
9 Non-Ordinary Course $0.00 To the extent that any non-ordinary course
Administrative Claim administrative claims are allowed, they will be
10 paid in full by the Debtors on the later of the
Effective Date or immediately after the Court
11
enters a final order allowing the non-ordinary
12 course administrative claim.
Administrative Tax Claim $0.00 Unless the Debtors object to an administrative
13 tax claim or otherwise disputes the
administrative tax claim in accordance with
14 applicable law, the claim will be allowed in
15 accordance with the terms and conditions of
the particular transaction that gave rise to the
16 administrative tax claim, and the person
holding the administrative tax claim need not
17 file any request for payment of its claim. Any
allowed administrative tax claim will be paid
18 in the ordinary course of business, currently
19 and timely as they are incurred and billed,
unless the Debtors object to or otherwise
20 disputes such administrative tax claim in
accordance with applicable law. In an event of
21 default, and to the extent such administrative
tax claim is also secured, the payment thereof
22 will include all costs, fees, charges and
23 interest, if applicable, as required under 11
1
24 The estimate of professional fee claims in this chart is only an estimate and may change based
upon the legal or financial services required during this Case and upon what the Court ultimately
25 awards to professionals. The Estate remains liable for all allowed professional fees and costs
regardless of the estimates. These amounts are in addition to what the professionals have been paid
26 on an interim basis.
27 2
The Debtors have not commenced any adversary proceedings or filed any motions for which any
28 fee would be due at the conclusion of the case.
7
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1 U.S.C. §§ 506(b) and 511, and applicable non-
bankruptcy law.
2 Marshack Hays Wood LLP $275,000 Paid on the later of (i) the Effective Date or
3 (“MHW”) estimated as of (ii) upon entry of an order approving the
the Effective professional fee claim, except to the extent
4 Date that the holder of such claim agrees to other
terms. MHW anticipates and understands that
5 it will be paid through the ERC funds.
Grobstein Teeple LLP $350,000 Paid on the later of (i) the Effective Date or
6 (“CRO”) estimated as of (ii) upon entry of an order approving the
7 the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
8 terms. CRO anticipates and understands that it
will be paid through the ERC funds.
9 ArentFox Schiff LLP $125,000 Paid on the later of (i) the Effective Date or
(“ArentFox”) estimated as of (ii) upon entry of an order approving the
10
the Effective professional fee claim, except to the extent
11 Date that the holder of such claim agrees to other
terms. ArentFox anticipates and understands
12 that it will be paid through the ERC funds.
Stretto, Inc. $75,000 Paid on the later of (i) the Effective Date or
13 Claims Noticing Agent estimated as of (ii) upon entry of an order approving the
14 the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
15 terms. Stretto anticipates and understands that
it will be paid through the ERC funds.
16 CAPATA $50,000 Paid on the later of (i) the Effective Date or
Accountant for Debtors estimated as of (ii) upon entry of an order approving the
17 the Effective professional fee claim, except to the extent
18 Date that the holder of such claim agrees to other
terms. Accountant anticipates and understands
19 that it will be paid through the ERC funds.
Stanley Otake $7,455 estimated Paid on the later of (i) the Effective Date or
20 Patient Care Ombudsman as of the (ii) upon entry of an order approving the
(“PCO”) Effective Date professional fee claim, except to the extent
21
that the holder of such claim agrees to other
22 terms. PCO anticipates and understands that it
will be paid through the ERC funds.
23 Lucy L. Thomson $24,900 Paid on the later of (i) the Effective Date or
Consumer Privacy estimated as of (ii) upon entry of an order approving the
24 Ombudsman (“CPO”) the Effective professional fee claim, except to the extent
Date that the holder of such claim agrees to other
25
terms. CPO anticipates and understands that it
26 will be paid through the ERC funds.
27 TOTAL $907,355
28
8
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1 Allowance: A Professional Fee Claim will be Allowed only if: (1) on or before the
2 Administrative Expense Claim Bar Date (i.e., 30 days after the Effective Date), the Holder of the
3 Claim Files with the Court a final fee application or a motion requesting allowance of the Claim;
4 and (2) the Court subsequently enters an order allowing the Claim.
5 Notice of the hearing on the fee application or motion shall be given in accordance with
6 Local Rule 2016-1(c), on not less than 21 days’ notice. The Liquidating Trustee or any other party
7 in interest may File an objection to the application or motion within the time provided by the Local
8 Rules, or within any other period that the Court establishes.
9 Treatment: Unless otherwise agreed by the Holder of an Allowed Professional Fee Claim,
10 an Allowed Professional Fee Claim shall be paid in the full Allowed amount of such Claim in Cash
11 on or before 10 Business Days after the date on which the Court enters an order determining such
12 Claim to be an Allowed Professional Fee Claim.
13 If the Court enters an order allowing a Professional Fee Claim, and an appeal of the order is
14 Filed by the Holder of the Claim or a party that objected to allowance of the Claim, the Liquidating
15 Trustee shall pay the Allowed amount of the Claim on or before 10 Business Days after the date on
16 which the Court enters the order allowing the Claim. Until the order becomes a Final Order, such
17 payment shall be deemed an interim payment subject to disgorgement or supplement in the event
18 that an appeal is filed and the Professional Fee Claim ultimately is Allowed in a different amount,
19 or Disallowed, by a Final Order of the Court.
20 3. Other Administrative Expense Claims
21 Identity of Other Administrative Expense Claims: Entities known or believed by the
22 Debtors to hold or otherwise assert Other Administrative Expense Claims are as follows:
23 Claimant Basis for Claim Estimate
24 Internal Revenue Service Postpetition taxes $0
25 Franchise Tax Board Postpetition taxes $0
26
27
28
9
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1 The above list may not be inclusive of all Other Administrative Expense Claims that may
2 be asserted against the Estates. Any Holder of an Other Administrative Expense Claim must seek
3 allowance of such Claim as set forth below.
4 Allowance: An Other Administrative Expense Claim shall be Allowed only if: (1) on or
before the Administrative Expense Bar Date (which is 30 days after the Effective Date), the Holder
5
of the Claim Files with the Court a final fee application or a motion requesting allowance of the
6
Claim; and (2) the Court subsequently enters an order allowing the Claim.
7
The motion shall be Filed and determined pursuant to Local Rule 9013-1(o), upon notice of
8
opportunity to object and request a hearing. The Liquidating Trustee or any other party in interest
9
may File and serve a response and request a hearing on or before 30 days after the Administrative
10
Expense Bar Date, unless such time period is extended by the Court. If the response period expires
11
without the filing of any response and request for hearing, the Holder of the Other Administrative
12
Expense Claim may file a declaration and lodge a proposed order pursuant to Local Rule 9013-
13
1(o)(3). If a timely response and request for hearing is Filed, the Holder of the Claim shall
14
schedule a hearing and give not less than 14 days’ notice of the hearing pursuant to Local Rule
15
9013-1(o)(4).
16
The Holder of an Other Administrative Expense Claim that does not timely File a motion
17
requesting allowance of the Claim will be forever barred from asserting the Claim against the
18
Debtors, the Estates, the Liquidating Trust, or their respective property.
19
Treatment: Unless otherwise agreed by the Holder of an Other Administrative Expense
20
Claim, an Allowed Other Administrative Expense Claim shall be paid in the full Allowed amount
21
of such Claim in Cash on or before 10 Business Days after the date any order determining such
22
Claim to be an Allowed Other Administrative Expense Claim becomes a Final Order.
23
B. Priority Tax Claims
24
Identity of Priority Tax Claims: Entities known or believed by the Debtors to hold or
25
otherwise assert Priority Tax Claims are as follows:
26
27 Claimant Claim Amt.
28 Internal Revenue Service $40,550.01
10
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1 Franchise Tax Board $1,692.72
2 County of Orange Treasurer-Tax Collector $9,705.71
3
4 Allowance: A Priority Tax Claim shall be Allowed only if it satisfies the definitional
5 requirements of an Allowed Claim.
6 The Liquidating Trustee or any other party in interest may File an objection to a Priority
7 Tax Claim on before the Claims Objection Deadline. Objections to Priority Tax Claims shall be
8 Filed, served and set for hearing in accordance with FRBP 3007, Local Rule 3007-1, and any and
9 all other rules and procedures applicable to objections to claims brought before the Court.
10 Treatment: Unless otherwise agreed by the Holder of a Priority Tax Claim, an Allowed
11 Priority Tax Claim shall be paid in the full Allowed amount of such Claim, plus interest at the
12 Legal Rate, not later than five (5) years after the Petition Date, as provided in Section
13 1129(a)(9)(C). Notwithstanding the foregoing, if an objection to a Priority Tax Claim is timely
14 Filed, an Allowed Priority Tax Claim shall be paid in the full Allowed amount of such Claim on or
15 before 10 Business Days after the date any order determining such Claim to be an Allowed Priority
16 Tax Claim becomes a Final Order.
17 VI.
18 TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
19 The following is a summary of the classes of Claims and Interests for which treatment is
20 provided under the Plan:
21 Class # Description Impairment
22 1 General Unsecured Claims Impaired
2 Interests - CPMG Impaired
23
3 Interests - CMS Impaired
24
25 A. Class 1 (General Unsecured Claims)
26 Classification. Class 1 consists of all General Unsecured Claims, including the unsecured
27 deficiency claims of Despierta LLC, Austin Business Finance LLC dba Backd, LendSpark
28 Corporation, and Rise Health Services, Inc. Entities known or believed by the Debtors to hold or
11
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1 otherwise assert Class 1 Claims are identified in Exhibit 2 to the Plan. The scheduled amount of
2 Class 1 Claims asserted against the Estates is $6,423,136.
3 Impairment. Class 1 is impaired under the Plan.
4 Voting. Holders of Class 1 Claims are entitled to vote to accept or reject the Plan.
5 Treatment. Allowed Class 1 Claims will be transferred to the Liquidating Trust. Unless
6 otherwise agreed by a Holder of a Class 1 Claim, each Holder of a Class 1 Claim shall be paid pro
7 rata from funds received by the Liquidating Trust after payment of U.S. Trustee Fees, Professional
8 Fee Claims, Other Administrative Expense Claims, Priority Tax Claims, Class 1 Claims, and the
9 expense of administration of the Liquidating Trust.
10 B. Class 2 (Interests of CPMG)
11 Classification. Class 2 consists of Interests in CPMG. The Holder of an Interest in CPMG
12 is (1) Dr. Michael Hall (who owns 50.0% of the company); (2) Dr. Dennis Ponzio (who owns
13 41.38% of the company); and (3) Dr. Thomas Parsa (who owns 8.62% of the company). See
14 SOFA, Dk. No. 81, pg. 286-287.
15 Impairment. Class 2 is impaired under the Plan.
16 Voting. Holders of Class 2 Interests are not entitled to vote to accept or reject the Plan
17 because they are deemed to have rejected the Plan because Class 2 will not receive or retain any
18 property under the Plan on account of Class 2 Interests in CPMG.
19 Treatment. On the Effective Date, all Interests in CPMG shall be cancelled, annulled, and
20 extinguished and of no further force or effect without any further action by any party.
21 C. Class 3 (Interests of CMG)
22 Classification. Class 3 consists of Interests in CMG. The only Holder of an Interest in
23 CMS is CPMG.
24 Impairment. Class 3 is impaired under the Plan.
25 Voting. Holders of Class 3 Interests are not entitled to vote to accept or reject the Plan
26 because they are deemed to have rejected the Plan because Class 3 will not receive or retain any
27 property under the Plan on account of Class 3 Interests in CMG.
28
12
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1 Treatment. On the Effective Date, all Interests in CMG shall be cancelled, annulled, and
2 extinguished and of no further force or effect without any further action by any party.
3 VII.
4 CONFIRMABILITY OF PLAN AND CRAMDOWN
5 If Class 1 votes to reject the Plan, the Plan will not be confirmed and the Debtors will not
6 request that the Court confirm the Plan under the cramdown provisions of the Bankruptcy Code.
7 VIII.
8 EXECUTORY CONTRACTS AND UNEXPIRED LEASES
9 A. Rejection of Executory Contracts and Unexpired Leases
10 All Executory Contracts and Unexpired Leases shall be deemed rejected as of the Effective
11 Date, except for Executory Contracts and Unexpired Leases that (a) have been assumed pursuant to
12 the Sale Order or other order of the Court, or (b) are the subject of a motion for such an order
13 pending as of the Confirmation Hearing. Entry of the Confirmation Order by the Court shall
14 constitute an order approving the rejection of Executory Contracts and Unexpired Leases as set
15 forth in the Plan, all pursuant to sections 365(a) and 1123 of the Bankruptcy Code, effective as of
16 the Effective Date.
17 B. Claims Based on Rejection of Executory Contracts and Unexpired Leases
18 A proof of claim asserting a Rejection Damages Claim shall be Filed no later than 30 days
19 after the Effective Date. If no objection to the Rejection Damages Claim is Filed on or before the
20 Claims Objection Deadline, the Rejection Damages Claim shall become an Allowed Claim. Each
21 Allowed Rejection Damages Claim shall be classified and treated as a Class 1 Claim.
22 The Holder of a Rejection Damages Claim that does not timely File a proof of claim
23 asserting such a Claim shall be forever barred from asserting such Claim against the Debtors, the
24 Estates, the Liquidating Trust, or their respective property.
25 C. Contracts and Leases Entered Into After the Petition Date
26 After the Effective Date, contracts and leases entered into after the Petition Date by the
27 Debtors, including the APA, shall be performed by the Liquidating Trustee only if said contract or
28 lease was previously approved the Court.
13
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1 IX.
2 DISPUTED CLAIMS AND INTERESTS;
3 SETOFF AND RECOUPMENT
4 A. Objections to Claims
5 Except as provided in Section V.A.2 (regarding Professional Fee Claims), any objection to
6 a Claim shall be Filed and served upon the Holder of such Claim on or before the Claims Objection
7 Deadline. Any Claim to which an objection remains pending on the Claims Objection Deadline,
8 shall be deemed a Disputed Claim until the Claim is Allowed or disallowed by a Final Order.
9 B. No Distributions with Respect to Disputed Claims
10 Notwithstanding any provision of the Plan, distributions will be made by the Liquidating
11 Trustee on account of a Disputed Claim only after, and only to the extent that, the Disputed Claim
12 becomes an Allowed Claim or is deemed to be an Allowed Claim for distribution purposes.
13 C. Extension of the Claims Objection Deadline
14 After the Effective Date, the Liquidating Trustee may File a motion with the Court to
15 extend the Claims Objection Deadline. The filing of such a motion shall automatically extend the
16 Claims Objection Deadline. If the motion is denied by the Court, the Claims Objection Deadline
17 shall be 30 calendar days after the date of entry of the order denying the motion. In the event of an
18 appeal, the Claims Objection Deadline shall automatically extend to the later of the then-current
19 Claims Objection Deadline (as previously extended, if applicable) or 30 calendar days after entry of
20 a Final Order affirming or denying the Court's order granting or denying the motion to extend the
21 Claims Objection Deadline.
22 D. Authority to Compromise Disputed Claims
23 After the Effective Date, the Liquidating Trustee may settle and compromise a Disputed
24 Claim in the Liquidating Trustee’s sole discretion without Court approval.
25 E. Setoff and Recoupment
26 The Liquidating Trustee may set off, recoup, or withhold against distributions to be made
27 on account of any Allowed Claim any claims that the Debtors, the Estates, or the Liquidating Trust
28 may have against the Holder of such Allowed Claim. The Liquidating Trustee will not waive or
14
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1 release any claim against those entities by failing to effect such a setoff or recoupment, by allowing
2 any Claim against the Debtors or the Estates, or by making a distribution on account of an Allowed
3 Claim.
4 X.
5 MEANS OF IMPLEMENTATION
6 A. From the Confirmation Date to the Effective Date
7 Although the Plan will become effective only on the Effective Date, on and after the
8 Confirmation Date until the Effective Date, the Debtors shall take or cause to be taken all actions
9 which are necessary to enable the Plan to become effective on the Effective Date and to implement
10 and perform the Plan on and after the Effective Date.
11 B. Sale of Estates Property
12 Pursuant to the Sale Order, the Debtors sold substantially all assets of the Estates to Anchor
13 Medical Group, P.C. (“Anchor Medical”) and Anchor Medical Management, Inc. (“Anchor
14 Management” and collectively with Anchor Medical, “Anchor”).
15 C. Preservation of Causes of Action
16 Except as otherwise provided in the Plan, each Cause of Action held by the Debtors and the
17 Estates shall be preserved and, along with the exclusive right to enforce such Cause of Action, shall
18 vest on the Effective Date exclusively in the Liquidating Trustee, on behalf of the Liquidating
19 Trust. Unless a Cause of Action is expressly waived, relinquished, released or compromised in the
20 Plan or an order of the Court, the Liquidating Trustee expressly reserves such Cause of Action for
21 later adjudication and, accordingly, no doctrine of res judicata, collateral estoppel, issue preclusion,
22 claim preclusion, estoppel (judicial, equitable or otherwise), laches or other preclusion doctrine
23 shall apply to such Cause of Action as a consequence of the Confirmation, the Plan, the vesting of
24 such Cause of Action in the Liquidating Trustee on behalf of the Liquidating Trust, any order of the
25 Court or this Case.
26 No Entity may rely on the absence of a specific reference in the Plan or the Disclosure
27 Statement to any Cause of Action against such Entity as any indication that the Liquidating Trustee
28 will not pursue such Cause of Action.
15
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1 Nothing in this Section shall limit the ability of any party in interest to object to any Claim
2 prior to the Claims Objection Deadline unless otherwise ordered by the Court.
3 D. Management of the Debtors
4 No Person will manage the Debtors after the Effective Date because, pursuant to Section
5 X.G.3 of the Plan, the Debtors will be dissolved as of the Effective Date.
6 E. The Liquidating Trust
7 1. Establishment of the Liquidating Trust
8 On the Effective Date, the Liquidating Trust shall be created pursuant to the Liquidating
9 Trust Agreement and the Plan for the benefit of the Holders of Allowed Claims. The Liquidating
10 Trust shall be known as “The Caduceus Liquidating Trust.”
11 The Confirmation Order shall approve the Liquidating Trust Agreement. If it is not
12 previously signed, the Debtors and the Liquidating Trustee shall execute the Liquidating Trust
13 Agreement on the Effective Date.
14 The functions and procedures applicable to the Liquidating Trust, powers and duties of the
15 Liquidating Trustee, and rights of Holders of beneficial interests in the Liquidating Trust, shall be
16 governed by the provisions of the Liquidating Trust Agreement. However, if there is any conflict,
17 the terms of the Plan shall govern.
18 2. Appointment of the Liquidating Trustee
19 The Confirmation Order shall appoint Howard B. Grobstein to serve as the Liquidating
20 Trustee and such appointment will become effective on the Effective Date. The Liquidating
21 Trustee shall act in accordance with the Liquidating Trust Agreement and the Plan for the duration
22 of the Liquidating Trust, subject to earlier death, resignation, incapacity or removal as provided in
23 the Liquidating Trust Agreement.
24 The Liquidating Trustee may serve without any bond, but is not prohibited from securing a
25 bond if, in the Liquidating Trustee’s discretion, the Liquidating Trustee concludes that doing so is
26 appropriate.
27
28
16
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1 3. Beneficiaries of the Liquidating Trust
2 In accordance with Treasury Regulations Section 301.7701-4(d), the Beneficiaries of the
3 Liquidating Trust are the Holders of Class 1 Claims.
4 On the Effective Date, the Beneficiaries shall receive, on account of their unpaid Claims
5 against the Estates, an allocation of Liquidating Trust Interests as provided for in the Liquidating
6 Trust Agreement, in order to implement the distributions provided for herein, and shall receive on
7 account of their respective Liquidating Trust Interests, distributions from the Liquidating Trust in
8 compliance with the Plan. These distributions from the Liquidating Trust, which may be less than
9 the full Allowed Claim amounts, are in full and complete satisfaction, discharge, exchange, and
10 release of the Allowed Claim amounts.
11 Liquidating Trust Interests will not be evidenced by any certificate or other instrument or
12 document. The Claims underlying the Liquidating Trust Interest remain subject to claim objections
13 by the Liquidating Trustee, and the Liquidating Trust Interest remains subject to revocation by the
14 Liquidating Trustee if an underlying Class 1 Claim subsequently becomes a Disallowed Claim.
15 Liquidating Trust Interests are transferable and assignable, as set forth in section 2.2 of the
16 Liquidating Trust Agreement.
17 4. Transfer of Property to the Liquidating Trust
18 On the Effective Date, pursuant to the Plan and sections 1123, 1141 and 1146(a) of the
19 Bankruptcy Code, the Debtors shall transfer, grant, assign, convey, set over, and deliver to the
20 Liquidating Trustee, for the benefit of the Liquidating Trust, all of the Debtors’ and the Estates’
21 right, title and interest in and to the Liquidating Trust Assets, free and clear of all Liens, Claims,
22 and other interests of any kind in such property, except as contemplated by the Plan. To the extent
23 required to implement the transfer of Liquidating Trust Assets from the Debtors and the Estates to
24 the Liquidating Trust and the Liquidating Trustee, all Persons shall cooperate with the Debtors to
25 assist in implementing said transfers.
26 For all United States federal income tax purposes, all parties will treat the transfer of assets
27 to the Liquidating Trust as a transfer of such assets to the holders of beneficial interests in the
28 Liquidating Trust followed by a transfer of such assets by such holders of beneficial interests to the
17
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1 Liquidating Trust, with the holders of beneficial interests in the Liquidating Trust being treated as
2 the grantors and owners of the Liquidating Trust. The Liquidating Trust is intended to qualify as a
3 “grantor trust” for United States federal income tax purposes with the holders of beneficial interests
4 in the Liquidating Trust being treated as the grantors and owners of the Liquidating Trust.
5 Accordingly, because a grantor trust is treated as a pass-through entity for United States federal
6 income tax purposes, generally no tax should be imposed on the Liquidating Trust as a result of the
7 transfer of assets thereto or on the income earned or gain recognized by the Liquidating Trust.
8 Instead, the holders of beneficial interests in the Liquidating Trust may be taxed on their allocable
9 share of such net income or gain in each taxable year of the Liquidating Trust (determined in
10 accordance with the Liquidating Trust Agreement), and will be responsible for paying the taxes
11 associated with such allocable net income and gain whether or not they received any distributions
12 from the Liquidating Trust in such taxable year.
13 5. Liquidating Trust’s Distribution of Cash
14 After the Effective Date, the Liquidating Trustee shall pay all expenses of the Liquidating
15 Trust from property in the Liquidating Trust, establish and maintain reserves in accordance with
16 the Liquidating Trust Agreement and the Plan, and make, at the Trustee's discretion, periodic
17 distributions of Cash to the Holders of Allowed Claims (including Allowed Administrative
18 Expense Claims) from the Liquidating Trust in accordance with the Liquidating Trust Agreement
19 and the Plan.
20 6. Powers and Duties of the Liquidating Trustee
21 Among other things, the Liquidating Trustee shall have the following rights, powers and
22 duties, at all times in accordance with the Liquidating Trust Agreement:
23 (a) accept delivery from the Debtors of all assets to be transferred from the Debtors and
24 the Estates to the Liquidating Trust pursuant to the Liquidating Trust Agreement and
25 the Plan;
26 (b) hold and distribute, in accordance with the Liquidating Trust Agreement and the
27 Plan, all assets transferred to the Liquidating Trust;
28 (c) manage the affairs of the Liquidating Trust;
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1 (d) except as specified in the Plan, determine the frequency and amount of payments in
2 accordance with section 4.1 of the Liquidating Trust Agreement;
3 (e) establish and maintain reserves for payment of Liquidating Trust Expenses,
4 Disputed Claims, and unclaimed distributions in accordance with the Plan and the
5 Liquidating Trust Agreement;
6 (f) collect and marshal all assets of the Debtors and the Estates, reduce such assets to
7 cash, and make interim and final distributions in accordance with the Plan and the
8 Liquidating Trust Agreement;
9 (g) monitor and enforce the implementation of the Plan;
10 (h) file all federal, state, and local tax and regulatory forms, returns, reports and other
11 documents required with respect to the Debtors, the Estates and the Liquidating
12 Trust, and pay any taxes shown as due thereon;
13 (i) in the Liquidating Trustee’s reasonable business judgment, investigate, prosecute
14 and/or settle actions or litigation of the Debtors, the Estates, or the Liquidating
15 Trust, including all Causes of Action, without supervision by the Court and free of
16 any restrictions of the Bankruptcy Code or FRBP, other than any restrictions
17 expressly imposed by the Plan;
18 (j) in the Liquidating Trustee’s reasonable business judgment, investigate and prosecute
19 objections to Claims, pursuant to the Plan and the Liquidating Trust Agreement;
20 (k) preserve and maintain, at the expense of the Liquidating Trust, the Debtors’ books
21 and records, provided that the Liquidating Trustee, in the Liquidating Trustee’s
22 reasonable business judgment, may destroy any and all books and records of the
23 Debtors if they are no longer of any value to the Liquidating Trust;
24 (l) submit all required U.S. Trustee and Court reports, and pay all required U.S. Trustee
25 Fees until the Case is closed;
26 (m) take all actions necessary and create any documents necessary to wind up the affairs
27 of the Liquidating Trust and implement the Plan; and
28
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1 (n) take all necessary actions and File all appropriate motions to obtain an order closing
2 the Case.
3 The Liquidating Trustee shall succeed to all of the rights and powers of the Debtors and the
4 Estates with respect to all Liquidating Trust Assets and Causes of Action, and the Liquidating
5 Trustee shall be substituted and shall replace the Debtors and the Estates, as applicable, as the party
6 in interest in any litigation pending as of the Effective Date.
7 The Liquidating Trustee, on behalf of the Liquidating Trust, shall be authorized to execute
8 any documents that implement or are in aid of this Section, in particular, and the Plan in general.
9 7. Liquidating Trustee’s Employment of Professionals; Compensation
10 On and after the Effective Date, the Liquidating Trustee may employ and compensate such
11 professionals, agents and representatives as the Liquidating Trustee determines is necessary or
12 appropriate pursuant to the terms of the Liquidating Trust Agreement and the Plan, including
13 professionals, agents and representatives employed by the Estates prior to the Effective Date.
14 Within 30 days after engagement by the Liquidating Trustee of any professional person, the
15 Liquidating Trustee’s retention of professionals after the Effective Date shall not be subject to
16 Court approval. For sake of continuity, the Liquidating Trustee may employ Debtors’ employed
17 professionals after the Effective Date and without further Court approval.
18 The Liquidating Trustee and the professionals employed by the Liquidating Trustee may be
19 compensated each month at the rate of 100% of fees incurred plus 100% of out-of-pocket costs
20 expended for the prior month (including for fees and costs incurred prior to entry of the order
21 approving the professional’s employment). The Liquidating Trustee and professionals employed
22 by the Liquidating Trustee must file applications for final compensation pursuant to the standards
23 and procedures applicable to final applications filed pursuant to sections 330 and 331 of the
24 Bankruptcy Code, FRBP 2016, Local Rule 2016-1, and any other applicable rules and procedures
25 of the Court.
26 8. Compliance with Tax Requirements
27 The Liquidating Trust shall comply with all applicable withholding, payment and reporting
28 requirements imposed on it by governmental units, and all distributions pursuant to the Plan shall
20
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1 be subject to such withholding, payment and reporting requirements. The Liquidating Trustee shall
2 be authorized to take any and all actions that may be necessary or appropriate to comply with such
3 withholding, payment, and reporting requirements. All amounts withheld from distributions to the
4 Holder of an Allowed Claim or Holder of a Liquidating Trust Interest and paid over to the
5 applicable governmental unit on account of such Holder shall be treated as part of the distributions
6 to such Holder.
7 Each Entity holding an Allowed Claim or Liquidating Trust Interest shall provide any
8 information necessary to effect the necessary reporting and withholding of applicable taxes with
9 respect to distributions to be made under the Plan. The Liquidating Trustee shall be entitled in its
10 sole discretion to withhold any distributions to a Holder of an Allowed Claim or Liquidating Trust
11 Interest that fails to provide tax identification or social security information upon written request.
12 Notwithstanding any other provision of the Plan, (a) each Holder of an Allowed Claim or
13 Liquidating Trust Interest that is to receive a distribution on account thereof pursuant to the Plan or
14 Liquidating Trust Agreement shall have sole and exclusive responsibility for the satisfaction and
15 payment of any tax obligations imposed by any governmental unit, including income, withholding,
16 and other tax obligations, on account of such distribution, and (b) no distribution shall be made to
17 or on behalf of such Holder pursuant to the Plan unless and until such Holder has made
18 arrangements satisfactory to the Liquidating Trustee for the payment and satisfaction of such
19 withholding tax obligations or such tax obligation that would be imposed upon the Liquidating
20 Trust in connection with such distribution. Any property to be distributed pursuant to the Plan
21 shall, pending the implementation of such arrangements, be treated as an unclaimed distribution
22 pursuant to Section XI.F of the Plan.
23 9. No Recourse Against the Liquidating Trustee
24 No recourse shall ever be had, directly or indirectly, against the Liquidating Trustee or any
25 of the officers, employees, professionals, agents or representatives of the Liquidating Trust,
26 whether by legal, equitable or other proceedings, pursuant to any law, statute, regulation or
27 otherwise, by virtue of any indebtedness of the Debtors, the Estates, or the Liquidating Trust. All
28 liabilities of the Liquidating Trust shall be enforceable only against and be satisfied only out of the
21
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1 Liquidating Trust Assets or shall be evidence only of a right to payment out of the Liquidating
2 Trust Assets, as the case may be.
3 10. Termination and Dissolution of the Liquidating Trust
4 The Liquidating Trust shall be dissolved upon the determination by the Liquidating Trustee
5 to dissolve the Liquidating Trust upon performance and completion of all obligations and duties of
6 the Liquidating Trust and Liquidating Trustee, as set forth in the Liquidating Trust Agreement.
7 F. Undeliverable and Unclaimed Distributions
8 If any distribution is returned as undeliverable, (1) the Liquidating Trustee shall make
9 reasonable efforts to determine the address of such Holder of an Allowed Claim or Holder of a
10 Liquidating Trust Interest and (2) no further distributions to the applicable Holder of an Allowed
11 Claim or Holder of a Liquidating Trust Interest shall be made unless and until the Liquidating
12 Trustee is notified in writing of such Holder of an Allowed Claim or Holder of a Liquidating Trust
13 Interest’s then-current address, at which time the undelivered distribution shall be made to such
14 Holder of an Allowed Claim or Holder of a Liquidating Trust Interest without interest or dividends.
15 All distributions that remain unclaimed for 90 days after attempted distribution shall indefeasibly
16 revert to the Liquidating Trust. Upon such reversion, the Holder of an Allowed Claim or Holder of
17 a Liquidating Trust Interest’s entitlement to the distribution shall be automatically discharged and
18 forever barred, notwithstanding any federal or state escheat laws to the contrary.
19 G. Dissolution of the Debtors
20 1. Cancellation of Interests
21 On the Effective Date, all Interests in the Debtors shall be cancelled, annulled, and
22 extinguished and of no further force or effect without any further action by any party.
23 2. Termination of Services of the Debtors’ Director and CRO
24 On the Effective Date, and without further action by any party, the Debtors shall have no
25 right to operate a business, and the services of the Debtors’ directors and officers, including its
26 current Chief Restructuring Officer, automatically are terminated. Notwithstanding the foregoing,
27 the Liquidating Trustee shall have, and retain, authority as set forth in the Plan and the Liquidating
28
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1 Trust Agreement to dispose of the Liquidating Trust Assets and otherwise implement the Plan in
2 accordance with its terms.
3 3. Dissolution of the Debtors
4 On the Effective Date, the Debtors shall be deemed liquidated and dissolved as a legal
5 entity, for all purposes, pursuant to applicable federal and state law, without further action by any
6 entity, and the Confirmation Order shall contain a provision to such effect.
7 Notwithstanding the foregoing, without the need for any further approval, the Liquidating
8 Trustee in the Liquidating Trustee’s discretion may execute and file documents and take all other
9 actions as the Liquidating Trustee deems appropriate relating to the dissolution of the Debtors
10 under the applicable laws of any states, and in such event, all applicable regulatory or governmental
11 agencies shall take all steps necessary to allow and effect the prompt dissolution of the Debtors as
12 provided herein, without the payment of any fee, tax, or charge and without need for the filing of
13 reports or certificates. Any actions by the Liquidating Trustee pursuant to the preceding sentence
14 shall not modify, alter, or otherwise affect the deemed dissolution of the Debtors as of the Effective
15 Date pursuant to this Section.
16 XI.
17 EFFECTS OF CONFIRMATION
18 A. Binding Effect of the Plan
19 Except as provided in section 1141(d)(3) of the Bankruptcy Code, the provisions of the Plan
20 bind the Debtors, any entity acquiring property under the Plan, any creditor or equity security
21 holder, and their successors, assigns, heirs, executors, administrators and representatives, whether
22 or not the Claim or Interest of such creditor or equity security holder is impaired under the Plan and
23 whether or not such creditor or equity security holder has accepted the Plan.
24 B. Vesting of Assets
25 Pursuant to sections 1123(b) and 1141(b) of the Bankruptcy Code, upon Plan confirmation,
26 Plan property of the Estates will remain property of the Estates until the Effective Date. Upon the
27 Effective Date, except as otherwise provided in (a) the Plan, (b) any contract, instrument, release or
28 other agreement or document that is created pursuant to the Plan, or (c) the Confirmation Order, all
23
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1 property of the Debtors and the Estates shall vest in the Liquidating Trustee, on behalf of the
2 Liquidating Trust, free and clear of all Liens, Claims, and other interests of creditors and equity
3 security holders.
4 The following shall be preserved and vest in the Liquidating Trust on the Effective Date,
5 pursuant to sections 1123(b) and 1141(b) of the Bankruptcy Code, to the extent not released
6 pursuant to the Plan, the Confirmation Order, or any other order of the Court: (a) Causes of Action
7 of the Debtors and the Estates against any Entity; (b) all defenses, offsets, rights of recoupment,
8 rights of disallowance, recharacterization and/or equitable subordination of the Debtors and the
9 Estates with respect to Claims against the Debtors and the Estates; and (c) all rights of the Debtors,
10 the Estates, and the Liquidating Trust arising from the Plan itself. Pursuant to sections 1123(b) and
11 1141(b) of the Bankruptcy Code, upon the vesting of all property of the Debtors and the Estates in
12 the Liquidating Trustee, on behalf of the Liquidating Trustee, on the Effective Date, the Estates
13 will cease to exist.
14 C. No Discharge
15 This Plan provides for the liquidation of all or substantially all of the property of the
16 Estates. As a result, pursuant to section 1141(d)(3) of the Bankruptcy Code, the Debtors is not
17 eligible to receive a discharge.
18 D. Continuation of Automatic Stay; Creditor Action Restrained
19 Except as provided in section 362(b) of the Bankruptcy Code or an order entered pursuant
20 to section 362(d) of the Bankruptcy Code, the automatic stay of section 362(a) of the Bankruptcy
21 Code shall remain in full force and effect with respect to the Debtors, the Estates, the Liquidating
22 Trust, and property thereof.
23 This Plan is binding on every creditor and shareholder whose Claims and Interests are
24 provided for in the Plan, whether or not such creditor or shareholder votes to accept the Plan. No
25 creditor or shareholder may take any action to enforce any Claim against the Debtors, the Estates,
26 or the Liquidating Trust except as provided in the Plan and the Liquidating Trust Agreement.
27
28
24
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1 E. No Liability for Solicitation or Participation
2 As specified in section 1125(e) of the Bankruptcy Code, Persons that solicit acceptances or
3 rejections of the Plan and/or that participate in the offer, issuance, sale, or purchase of securities
4 offered or sold under the Plan, in good faith and in compliance with the applicable provisions of the
5 Bankruptcy Code, shall not be liable, on account of such solicitation or participation, for violation
6 of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of
7 the Plan or the offer, issuance, sale, or purchase of securities.
8 XII.
9 RETENTION OF JURISDICTION
10 Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective
11 Date, the Court will retain jurisdiction over the Case after the Effective Date to the fullest extent
12 permitted by law, including, without limitation, jurisdiction to:
13 1. hear and determine objections to Claims;
14 2. hear and determine any dispute arising under the APA and the accompanying
15 Interim Administrative Services Agreement (“ASA”);
16 3. hear and determine any dispute arising under the Plan or Liquidating Trust
17 Agreement, their implementation and the execution of any necessary documents thereunder;
18 4. enter and implement other orders, or take such other actions as may be necessary or
19 appropriate to restrain interference by any entity with consummation or enforcement of the Plan;
20 5. grant extensions of any deadlines set forth in the Confirmation Order as may be
21 appropriate;
22 6. enforce all discharge, release and injunction provisions of the Plan;
23 7. consider and rule upon requests for final compensation;
24 8. hear and determine all motions, adversary proceedings, applications, and contested
25 or litigated matters that may be pending on the Effective Date or that, pursuant to the Plan, may be
26 instituted by the Liquidating Trustee after the Effective Date;
27
28
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1 9. resolve any matters related to the assumption or rejection of any executory contract
2 or unexpired lease to which the Debtors are a party or with respect to which the Debtors may be
3 liable, and to hear, determine and, if necessary, liquidate any Claims arising therefrom;
4 10. ensure that distributions to Holders of Allowed Claims are accomplished as
5 provided herein via the Liquidating Trust;
6 11. resolve disputes as to the ownership of any Claim;
7 12. hear and determine objections to Administrative Expense Claims and Claims;
8 13. enter and implement such orders as may be appropriate in the event the
9 Confirmation Order is for any reason stayed, revoked, modified or vacated;
10 14. issue such orders in aid of execution of the Plan, to the extent authorized by section
11 1142 of the Bankruptcy Code;
12 15. consider any modifications of the Plan, to cure any defect or omission, or to
13 reconcile any inconsistency in any order of the Court, including the Confirmation Order;
14 16. hear and determine all applications for compensation and reimbursement of
15 expenses of Professionals under sections 330, 331 and 503(b) of the Bankruptcy Code;
16 17. hear and determine any issue for which the Plan requires a Final Order of the Court;
17 18. hear and determine matters concerning state, local, and federal taxes in accordance
18 with sections 346, 505 and 1146 of the Bankruptcy Code;
19 19. hear and determine Causes of Action preserved under the Plan, including Avoidance
20 Actions;
21 20. hear and determine any matter regarding the existence, nature, and scope of the
22 releases, exculpation, indemnification and injunctions provided in the Plan; and
23 21. enter a final decree closing the Case.
24 The foregoing list is illustrative only and not intended to limit in any way the Court’s
25 exercise of jurisdiction. If the Court abstains from exercising jurisdiction or is otherwise without
26 jurisdiction over any matter arising out of the Case, including matters set forth above, this Section
27 shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any
28 other court having competent jurisdiction with respect to such matter.
26
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1 XIII.
2 MISCELLANEOUS PROVISIONS
3 A. Exculpation
4 Except as otherwise specially provided in the Plan or the Confirmation Order, none of the
5 Debtors, the Estates, Howard B. Grobstein of Grobstein Teeple LLP (Debtor’s Chief Restructuring
6 Officer) and the Debtor’s professionals employed in this case (collectively the “Exculpated
7 Parties”) shall have or incur any liability to any Holder of a Claim or Interest for any act or
8 omission occurring on or after the Petition Date to the Effective Date in connection with, related to,
9 or arising out of the Case and pursuit of implementation, confirmation or consummation of this
10 Plan, except for willful misconduct or gross negligence, fraud or malpractice as construed under
11 CA PRC 1.8.8.
12 Nothing in this Section shall limit the liability of any Person for breach of any express
13 obligation such Person has under the terms of the Plan, or under any postpetition agreement or
14 other postpetition document entered into by such Person, or in accordance with the terms of the
15 Plan, or for any breach of a duty of care owed to any other Person occurring after the Effective
16 Date.
17
18 B. Exemption from Transfer Taxes
19 Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of
20 notes or equity securities under the Plan, the creation of any mortgage, deed of trust or other
21 security interest, the making or assignment or any lease or sublease, or the making or delivery of
22 any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan,
23 including any agreements of consolidation, deeds, bills of sale or assignments executed in
24 connection with any of the transactions contemplated under the Plan shall not be subject to any
25 stamp, real estate transfer, mortgage recording, license transfer or other similar tax. For the
26 avoidance of doubt, the transactions contemplated under the Plan include, among other things, all
27 transactions and transfers contemplated in the Plan, including, without limitation, the transfer of the
28 Debtors and the Estates’ right, title and interest in property to the Liquidating Trust.
27
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1 C. Expedited Tax Determination
2 The Liquidating Trustee may request an expedited determination of taxes under section
3 505(b) of the Bankruptcy Code for all returns filed for or on behalf of the Debtors or the Estates for
4 all taxable periods ending on or before the Effective Date.
5 D. Securities Laws
6 1. Exemption from Registration Issues
7 In reliance upon an exemption from the registration requirements of the Securities Act of
8 1933, as amended (the “Securities Act”), and of state and local securities laws afforded by section
9 1145 of the Bankruptcy Code, the Liquidating Trust interests to be issued pursuant to the Plan on
10 and after the Effective Date need not be registered under the Securities Act or any state or local
11 securities laws.
12 2. Exchange Act Reporting Obligations and Registration under Investment
13 Company Act
14 The Debtors anticipates that the Liquidating Trust may, under certain circumstances, be
15 required to register or otherwise report under the Securities Act of 1934, as amended (the
16 “Exchange Act”), and accordingly be required to file with the SEC and send to the holders of
17 Liquidating Trust interests certain periodic reports and other information pursuant to the Exchange
18 Act. The reports may be the same as or different from those required to be distributed to the
19 holders of Liquidating Trust Interests pursuant to the Plan and the Liquidating Trust Agreement.
20 In addition, the Debtors currently anticipate that the Liquidating Trust will be exempt from
21 registration under the Investment Company Act of 1940 ("Investment Company Act"). Exemptions
22 may be sought from the SEC from all or some of the reporting requirements of the Exchange Act or
23 the Investment Company Act, if it is determined that such reporting is required and that compliance
24 with such requirements would be burdensome. The Debtors has not yet made any determinations
25 regarding whether any such exemptions will be sought and the SEC had not yet made any
26 determinations regarding such matters. There is no assurance that any such exemptions, if deemed
27 necessary and applied for, will be granted.
28
28
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1 E. Payment of Statutory Fees
2 All fees payable on or before the Effective Date pursuant to 28 U.S.C. § 1930 shall be paid
3 on or before the Effective Date. After the Effective Date, the Liquidating Trustee shall pay all fees
4 payable under 28 U.S.C. § 1930 until the Case is closed, dismissed, or converted.
5 F. Amendment, Modification or Withdrawal of the Plan
6 The Debtors reserve the right, in accordance with the Bankruptcy Code and subject to Court
7 approval, to amend or modify the Plan prior to the entry of the Confirmation Order. After the entry
8 of the Confirmation Order, the Liquidating Trustee may amend or modify the Plan and Liquidating
9 Trust Agreement, or remedy any defect or omission or reconcile any inconsistency in the Plan, in
10 accordance with the Bankruptcy Code and subject to Court approval, and in such a manner as may
11 be necessary to carry out the purpose and intent of the Plan and Liquidating Trust Agreement.
12 G. Governing Law
13 Unless a rule of law or procedure is supplied by (a) federal law (including the Bankruptcy
14 Code and FRBP), or (b) an express choice of law provision in any agreement, contract, instrument,
15 or document provided for, or executed in connection with, the Plan, the rights and obligations
16 arising under the Plan and any agreements, contracts, documents, and instruments executed in
17 connection with the Plan shall be governed by, and construed and enforced in accordance with, the
18 laws of the State of California without giving effect to the principles of conflict of laws thereof.
19 H. Waiver of FRBP 7062
20 The Debtors may request that the Confirmation Order include (a) a finding that FRCP
21 62(a), made applicable by FRBP 7062, shall not apply to the Confirmation Order, and (b)
22 authorization for the Debtors to consummate the Plan immediately after entry of the Confirmation
23 Order.
24 I. Exhibits and Schedules
25 All exhibits and schedules to the Plan and Disclosure Statement are incorporated into and
26 constitute a part of the Plan as if set forth herein.
27
28
29
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1 J. Conflict
2 The terms of the Plan shall govern in the event of any inconsistency with the summaries of
3 the Plan set forth in the Disclosure Statement. If there is any conflict between the Plan and the
4 Liquidating Trust Agreement, the terms of the Plan shall govern.
5 K. Successors and Assigns
6 The rights, benefits and obligations of any Entity named or referred to in the Plan shall be
7 binding on, and shall inure to the benefit of, any heir, executor, trustee, administrator, successor or
8 assign of such Entity.
9 L. Saturday, Sunday or Legal Holiday
10 If any payment or act under the Plan is required to be made or performed on a day that is
11 not a Business Day, then the payment or act may be completed on the next day that is a Business
12 Day, in which event the payment or act will be deemed to have been completed on the required
13 day.
14 M. Post-Effective Date Effect of Evidences of Claims or Interests
15 Notes, bonds, stock certificates and other evidences of Claims against or Interests in the
16 Debtors, and all instruments of the Debtors (in either case, other than those executed and delivered
17 as contemplated hereby in connection with the consummation of the Plan, if any), shall, effective
18 upon the Effective Date, represent only the right to participate in the distributions contemplated by
19 the Plan.
20 N. Severability of Plan Provisions
21 If, before the Confirmation Date, the Court holds that any Plan term or provision is invalid,
22 void, or unenforceable, the Court may alter or interpret that term or provision so that it is valid and
23 enforceable to the maximum extent possible consistent with the original purpose of that term or
24 provision. That term or provision will then be applicable as altered or interpreted.
25 Notwithstanding any such holding, alteration, or interpretation, the Plan’s remaining terms and
26 provisions will remain in full force and effect and will in no way be affected, impaired, or
27 invalidated. The Confirmation Order will constitute a judicial determination providing that each
28
30
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1 Plan term and provision, as it may have been altered or interpreted in accordance with this Section,
2 is valid and enforceable under its terms.
3 O. No Admissions or Waiver of Objections
4 Notwithstanding anything to the contrary in the Plan, if the Plan is not confirmed, is
5 revoked or otherwise the Effective Date does not occur, the Plan will be null and void, and nothing
6 contained in the Plan or the Disclosure Statement will (1) be deemed to be an admission by the
7 Debtors with respect to any matter discussed in the Plan, including liability on any Claim or the
8 propriety of any Claim’s classification, (2) constitute a waiver, acknowledgement, or release of any
9 Claims, or (3) prejudice in any manner the rights of the Debtors or any other Entity in any further
10 proceedings.
11 P. Survival of Settlements
12 All settlements approved by the Court pursuant to FRBP 9019 or otherwise shall survive
13 consummation of the Plan. If the terms of the Plan are inconsistent with the terms of any Court-
14 approved settlement, the terms of the Plan shall supersede any inconsistent settlement provisions.
15 Q. Post-Confirmation Status Reports
16 Pursuant to Local Rule 3020-1(b), the Confirmation Order shall provide as follows:
17 Within 120 days of the entry of this order, the Liquidating
Trustee shall file a status report explaining what progress has been
18 made toward consummation of the Plan. The initial report shall be
served on the United States trustee, the 20 largest unsecured creditors,
19 and those parties who have requested special notice. Further reports
shall be filed every 180 days thereafter and served on the same entities,
20 unless otherwise ordered by the court.
21
R. Effect of Post-Confirmation Conversion to Chapter 7
22
If, after the Effective Date, the Court enters an order converting the Case to one under
23
chapter 7 of the Bankruptcy Code, the Liquidating Trust Assets shall not be vested in the chapter 7
24
estate. This means that there would be no assets for a chapter 7 Trustee to administer if this case
25
were converted to chapter 7 after the plan is confirmed.
26
27
28
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1 S. Final Decree
2 Once the Estates has been fully administered within the meaning of FRBP 3022, the
3 Liquidating Trustee shall file a motion with the Court to obtain a final decree to close the Case.
4
5 DATED: November 21, 2025 MARSHACK HAYS WOOD LLP
6 /s/ Aaron E. de Leest
By:
7
MATTHEW W. GRIMSHAW
8 DAVID A. WOOD
AARON E. DE LEEST
9 Attorneys for Debtors CADUCEUS
PHYSICIANS MEDICAL GROUP, A
10 PROFESSIONAL MEDICAL CORPORATION
11 dba CADUCEUS MEDICAL GROUP and
CADUCEUS MEDICAL SERVICES, LLC.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
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1 EXHIBIT A
2 DEFINITIONS
3 Administrative means any Claim against the Estates for administrative costs or
Expense Claim expenses entitled to priority under § 507(a)(2) or (b).
4
Administrative means the date that is 30 calendar days after the Effective Date.
5 Expense Claim Bar
Date
6
Affiliate has the meaning set forth in § 101(2) of the Bankruptcy Code.
7
Allowed means, with respect to any Claim or Interest, except as otherwise
8 provided in the Plan:
9 (a) a Claim or Interest arising before the Effective Date (i) as to
which a proof of claim has been filed in the Case, which has not been
10 withdrawn and as to which no objection has been filed by the Claims
Objection Deadline, or (ii) that is allowed or determined by Final
11 Order of a court of competent jurisdiction;
12 (b) any Claim or Interest that is agreed to, compromised, settled
or otherwise resolved by the Debtors or the Liquidating Trustee; or
13
(c) any Claim or Interest expressly allowed in the Plan.
14
15
APA means the ASSET PURCHASE AGREEMENT by and among
16 CADUCEUS MEDICAL SERVICES, LLC, and CADUCEUS
PHYSICIANS MEDICAL GROUP, as Sellers, and ANCHOR
17 MEDICAL GROUP, P.C., and ANCHOR MEDICAL
MANAGEMENT, INC., as Buyers Dated: May 6, 2025
18
Avoidance Actions means any and all avoidance, recovery, subordination or other
19 claims, actions or remedies that may be brought by or on behalf of
the Debtors or the Estates or other authorized parties in interest under
20 the Bankruptcy Code or applicable non-bankruptcy law, including
actions or remedies under §§ 502, 510, 542, 544, 545, 547 through
21 and including 553, and 724(a) of the Bankruptcy Code or under
similar local, state, federal or foreign statutes and common law,
22 including fraudulent transfer laws.
23 Ballot means the voting form distributed to each Holder of an Impaired
Claim entitled to vote on the Plan, on which the Holder is to indicate
24 acceptance or rejection of the Plan and make any other elections or
representations required pursuant to the Plan and which must be
25 actually received on or before the Voting Deadline.
26 Bankruptcy Code means title 11 of the United States Code (11 U.S.C. §§ 101-1532).
27 Bar Date Notice means the Notice of Bar Date for Filing Proofs of Claim Filed in the
Case on September 25, 2024, Docket No. 106.
28
1
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1
2 Beneficiaries means Holders of Allowed Claims in the Classes established under
the Plan.
3
Business Day means a day that is not a Saturday, Sunday, a day designated as a
4 legal holiday in FRBP 9006(a)(6), or any other day on which
banking institutions in Los Angeles, California, are required or
5 authorized to close by law or executive order.
6 Cash means legal tender of the United States of America or equivalents
thereof.
7
Case(s) means the Debtors’ chapter 11 case, jointly administered as case
8 number 8:24-bk-11945-SC, pending in the Court.
9 Cause of Action means any action, claim, cause of action, controversy, proceeding,
reimbursement claim, affirmative defense, demand, right, Lien,
10 indemnity, guaranty, suit, obligation, liability, loss, damage, remedy,
judgment, account, defense, offset (including setoff or recoupment
11 rights), power, privilege, license and franchise of any kind or
character whatsoever, known or unknown, foreseen or unforeseen,
12 contingent or non-contingent, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, disputed or undisputed,
13 secured or unsecured, assertable directly or derivatively, whether
arising before, on, or after the Petition Date, in contract or in tort, in
14 law or in equity or pursuant to any other theory of law. For the
avoidance of doubt, the term Cause of Action includes: (i) any right
15 of setoff, counterclaim or recoupment and any claim for breach of
contract or for breach of duties imposed by law or in equity; (ii) the
16 right to object to or otherwise contest Claims or Interests; 44(iii) any
claim pursuant to section 362 or chapter 5 of the Bankruptcy Code;
17 (iv) any Avoidance Action; (v) any claim or defense, including fraud,
mistake, duress and usury, and any other defenses set forth in § 558
18 of the Bankruptcy Code and (vi) any claim under any state or foreign
law, including any fraudulent transfer or similar claim.
19
Claim has the meaning set forth in § 101(5) of the Bankruptcy Code.
20
Claims Bar Date means the last date for filing proofs of Claims and Interests arising
21 prior to the Petition Date, and such other deadlines for filing Claims
against the Estates as may be set forth in the Bankruptcy Code or an
22 order or orders of the Court.
23 Claims Objection means 11:59 p.m. (prevailing California time) on the 120th calendar
Deadline day after the Effective Date, subject to extensions and/or exceptions
24 as may be ordered by the Court.
25 Class means a category of Claims or Interests designated in the Plan.
26 Class ** Claim means a Claim in the particular Class described.
27 Class ** Interest means an Interest in the particular Class described.
28
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1 Clerk means the Clerk of the Court.
2
3 Confirmation means the entry of the Confirmation Order on the Docket.
4 Confirmation Date means the date on which the Court enters the Confirmation Order.
5 Confirmation means the hearing by the Court pursuant to § 1128(a) of the
Hearing Bankruptcy Code to consider Confirmation of the Plan, as such
6 hearing may be, or may have been, continued from time to time.
7 Confirmation Order means the order of the Court confirming the Plan pursuant to § 1129
of the Bankruptcy Code.
8
Convenience Claim means a Claim in an amount equal to or less than $500.
9
Court means the United States Bankruptcy Court for the Central District of
10 California having jurisdiction over the Case.
11 Creditor means any Holder of a Claim against the Debtors.
12 CRO means Howard B. Grobstein, solely in his capacity as the Debtors’
Chief Restructuring Officer.
13
14
Debtors means Caduceus Physicians Medical Group, a Professional Medical
15 Corporation dba Caduceus Medical Group (“CPMG”) and Caduceus
Medical Services, LLC (“CMS”).
16
Debtor(s) in means the Debtors in their capacity a a debtor in possession pursuant
17 Possession to §§ 1107(a) and 1108 of the Bankruptcy Code.
18 Disallowed Claim means a Claim against the Debtors that: (a) is not listed on the
Schedules, or is listed on the Schedules as contingent, unliquidated,
19 disputed, subject to adjustment, unknown, or in an amount equal to
zero, and whose Holder has failed to timely File a proof of Claim; or
20 (b) the Court has disallowed pursuant to order of the Court.
21 Disclosure Statement means the disclosure statement relating to the Plan, including all
exhibits, appendices and schedules thereto, as amended,
22 supplemented or modified from time to time.
23 Disputed means, with respect to any Claim or Interest, a Claim or Interest or
any portion thereof that is not Allowed but has not been disallowed
24 by a Final Order.
25 Docket means the official docket maintained by the Clerk for the Case.
26
27
28
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1 Effective Date means the Business Day selected by the Debtor that is (a) on or after
the Confirmation Date and the date on which the Confirmation Order
2 shall have become a Final Order, and (b) on or after the date on
which the conditions to the effectiveness of the Plan specified in
3 Section III of the Plan have been either satisfied or waived as set
forth therein.
4
Entity has the meaning set forth in § 101(15) of the Bankruptcy Code.
5
Estates means the bankruptcy estates created upon the filing of the Cases
6 pursuant to § 541 of the Bankruptcy Code.
7 Executory Contract means a contract to which the Debtors is a party and that is subject to
assumption or rejection pursuant to § 365 of the Bankruptcy Code.
8
Exculpated Parties means the parties described in Section XIII.A of the Plan.
9
Filed, File, or Filing means duly and properly filed with the Court and reflected on the
10 Docket, or the act of duly and properly filing a document with the
Court that is reflected on the Docket.
11
Final Order means an order or judgment of the Court entered on the Docket:
12
(a) that has not been reversed, rescinded, stayed,
13 modified, or amended;
14 (b) that is in full force and effect; and
15 (c) with respect to which (i) the time to appeal or to seek
review, remand, rehearing, or a writ of certiorari has expired and as
16 to which no timely Filed appeal or petition for review, rehearing,
remand, or writ of certiorari is pending, or (ii) any such appeal or
17 petition has been dismissed or resolved by the highest court to which
the order or judgment was appealed or from which review, rehearing,
18 remand, or a writ of certiorari was sought.
19 FRBP means the Federal Rules of Bankruptcy Procedure.
20 FRCP means the Federal Rules of Civil Procedure.
21 General Unsecured means any Claim against the Debtors that is not an Administrative
Claim Claim, Priority Tax Claim, or Other Priority Claim.
22
Governmental Unit has the meaning set forth in § 101(27) of the Bankruptcy Code.
23
Holder means an Entity holding a Claim or an Interest, as applicable.
24
Impaired means, with respect to any Claim or Interest, a Claim against or
25 Interest in the Debtors that is in a Class that is impaired within the
meaning of § 1124 of the Bankruptcy Code.
26
Insider has the meaning set forth in § 101(31) of the Bankruptcy Code.
27
28
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1 Interest has the meaning set forth in § 101(16) of the Bankruptcy Code for
“equity security.”
2
Legal Rate means 4.83% per annum, which is the interest rate on federal
3 judgments for the calendar week preceding the Petition Date, and is
based on the weekly average one-year constant maturity Treasury
4 yield, as published by the Federal Reserve.
5
6
7 Lien has the meaning set forth in § 101(37) of the Bankruptcy Code.
8 Liquidating Trust means The Caduceus Liquidating Trust established on the Effective
Date pursuant to the Plan and the Liquidating Trust Agreement.
9
Liquidating Trust means the agreement pursuant to which the Liquidating Trust will be
10 Agreement formed and implemented, the substantially final version of which is
attached as Exhibit 1 to the Plan.
11
Liquidating Trust means (a) the Preserved Claims and any other claims, rights and
12 Assets causes of action vested in the Liquidating Trust, and (b) all other
property of the Estates as of the Effective Date, which property shall
13 vest in the Liquidating Trust on the Effective Date pursuant to the
Liquidating Trust Agreement and the Plan.
14
Liquidating Trust means the expenses incurred by the Liquidating Trust following the
15 Expenses Effective Date (including the fees and costs of attorneys, advisors,
other professionals and agents) for the purpose of (a) liquidating,
16 selling, abandoning or collecting upon any of the Liquidating Trust
Assets, (b) resolving Disputed Claims and effectuating Distributions
17 to Creditors under the Plan, (c) otherwise implementing the Plan and
administering the Liquidating Trust.
18
Liquidating Trust means a beneficial interest in the Liquidating Trust entitling the
19 Interest Holder thereof to the applicable treatment provided for under the
Plan.
20
Liquidating Trustee means Howard B. Grobstein, in his capacity as the trustee of the
21 Liquidating Trust, pursuant to the Liquidating Trust Agreement, or
any successor thereto as trustee of the Liquidating Trust.
22
Local Rules means the Local Bankruptcy Rules of the United States Bankruptcy
23 Court for the Central District of California.
24 Order means an order or judgment of the Court as entered on the Docket.
25 Other Administrative means an Administrative Expense Claim other than (a) a Claim for
Expense Claim U.S. Trustee Fees, (b) a Professional Fee Claim, and (c) a Licensor
26 Administrative Expense Claim.
27
28
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1 Other Priority Claim means a Claim against the Debtors entitled to priority in right of
payment pursuant to § 507(a) of the Bankruptcy Code, other than
2 (a) an Administrative Expense Claim or (b) a Priority Tax Claim.
3 Person has the meaning set forth in § 101(41) of the Bankruptcy Code.
4 Petition Date means August 1, 2024.
5 Plan means Debtors’ Chapter 11 Plan of Liquidation, as it may be
amended or modified, from time to time, together with all addenda,
6 exhibits, schedules, supplements or other attachments, if any.
7 Postpetition means the time after the Petition Date.
8 Postpetition Tax means Administrative Claims and other Claims by a governmental
Claims unit for taxes against any of the Debtors (and for a reasonable rate of
9 interest related to such taxes) for any tax year or period, all or any
portion of which occurs or falls within the period from and including
10 the Petition Date through and including the Effective Date.
11 Preserved Claim means any Cause of Action held by the Debtors or the Estates on the
Effective Date, including Avoidance Actions.
12
Priority Claim means a Claim entitled to priority under § 507(a)(4), (a)(5), (a)(7) or
13 (a)(8) of the Bankruptcy Code.
14 Priority Non-Tax means a Priority Claim other than a Priority Tax Claim.
Claim
15
Priority Tax Claim means a Claim of a Governmental Unit against the Debtors entitled
16 to priority pursuant to § 507(a)(8) of the Bankruptcy Code.
17 Pro Rata means, with respect to an Allowed Claim, the percentage represented
by a fraction (a) the numerator of which shall be an amount equal to
18 such Claim and (b) the denominator or which shall be an amount
equal to the aggregate amount of Allowed and estimated Claims in
19 the same Class as such Claim, except in cases where Pro Rata is used
in reference to multiple Classes, in which case Pro Rata means the
20 portion of such Holder’s Claim in a particular class bears to the
aggregate amount of all Allowed and estimated Claims in such
21 multiple Classes.
22 Professional means a professional (including an attorney, accountant, or other
advisor or agent) employed by the Debtors at the expense of the
23 Estate pursuant to §§ 327, 328, 363 or 1103 of the Bankruptcy Code.
24 Professional Fee means any Claim of a Professional seeking an award by the Court of
Claim compensation for services rendered or reimbursement of expenses
25 incurred through and including the Effective Date under §§ 330, 331,
503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code.
26
Proof of Claim means a proof of claim against a Debtor Filed in the Case by a
27 Holder of a Claim against the Debtors.
28
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1 Rejection Damages means a Claim arising from the rejection of an Executory Contract or
Claim Unexpired Lease pursuant to § 365 of the Bankruptcy Code.
2
3
Sale Order means the Amended Order Granting Debtors' Motion For Order:
4 Authorizing Sale Of Certain Tangible And Intangible Assets
("Purchased Assets"), Used In Connection With Debtors' Medical
5 Practices; (A) Outside The Ordinary Course Of Business; (B) Free
And Clear Of Liens, Claims, And Encumbrances; (C) Subject To
6 Overbid; (D) For Determination Of Good Faith Purchaser Under 11
U.S.C. § 363(M); (E) For Waiver Of 14-Day Stay; And (F)
7 Amending Bid Procedures entered on the Docket on May 7, 2025,
Docket No. 331.
8
Scheduled means set forth on the Schedules.
9
Schedules means the schedules of assets and liabilities filed by the Debtors
10 pursuant to § 521 of the Bankruptcy Code and FRBP 1007, including
any amendments and modifications thereto through the Confirmation
11 Date.
12 Secured Claim means a Claim that is secured by a Lien on property in which the
Debtors or the Estates has an interest, which Lien is valid, perfected,
13 and enforceable under applicable law and not subject to avoidance
under the Bankruptcy Code or applicable non-bankruptcy law. A
14 Claim is a Secured Claim only to the extent of the value of the
Holder’s interest in the Estates’ interest in the collateral, or to the
15 extent of the amount subject to setoff, as the case may be, and as
determined under § 506(a) of the Bankruptcy Code.
16
Unexpired Lease means a lease to which the Debtors is a party and that is subject to
17 assumption or rejection under § 365 of the Bankruptcy Code.
18 Unimpaired means, with respect to a Claim, Interest or Class of Claims or
Interests, not “impaired” within the meaning of such term in § 1124
19 of the Bankruptcy Code.
20 U.S. Trustee means the Office of the United States Trustee for the Central District
of California.
21
U.S. Trustee Fees means fees or charges arising under 28 U.S.C. § 1930(a)(6) and, to
22 the extent applicable, accrued interest thereon arising under 31
U.S.C. § 3717.
23
Voting Deadline means 5:00 p.m. (prevailing California time) on ___________, 2025.
24
Voting Instructions means the instructions for voting on the Plan contained in Section __
25 of the Disclosure Statement and the Ballots.
26 Voting Record Date means __, 2025, the date designated by the Court set forth in the
Disclosure Statement as the date for determining the Holders of
27 Claims and Interests entitled to vote to accept or reject the Plan.
28
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LIQUIDATING TRUST AGREEMENT
This Liquidating Trust Agreement (“Agreement”), by and between Caduceus
Physicians Medical Group, a Professional Medical Corporation dba Caduceus Medical
Group (“CPMG”) and Caduceus Medical Services, LLC (“CMS”), collectively referred to
herein as “Debtors”, the chapter 11 bankruptcy estates of the Debtors ("Estates"), and
Howard B. Grobstein (“Trustee”), is executed in connection with the Debtors’ Chapter 11
Plan of Liquidation (“Plan”). Except with respect to the terms defined herein, all
capitalized terms contained herein shall have the meanings ascribed to them in the Plan.
RECITALS
A. On August 1, 2024, the Debtors each filed a voluntary petition for relief
under chapter 11 of title 11 of the United States Code (“Bankruptcy Code”), in the United
States Bankruptcy Court for the Central District of California, San Fernando Valley
Division (“Court”), which are jointly administered as Case No. 8:24-bk-11945-SC
(“Case”).
B. On ____, 2025, the Court entered an order confirming the Plan
(“Confirmation Order”).
C. The Plan provides for the creation of a post-confirmation liquidation trust
(“Trust”) to hold and administer the Trust Assets (defined below), to liquidate the non-
Cash Trust Assets, and to distribute the proceeds of the Trust Assets to the Beneficiaries
in accordance with the terms of the Plan and this Agreement.
D. The Trust is established for the sole purpose of liquidating the Trust Assets
for the benefit of the Beneficiaries in accordance with Treasury Regulation Section
301.7701-4(d), with no objective or authority to continue or engage in the conduct of a
trade or business except to the extent reasonably necessary to, and consistent with, the
liquidating purpose of the Trust, including the wind down and closure of the Estates.
E. The Trust is intended to qualify as a liquidating trust within the meaning of
Treasury Regulation Section 301.7701-4(d) for United States federal income tax purposes.
F. The powers, authority, responsibilities and duties of the Trustee shall be
governed by this Agreement, the Plan, the Confirmation Order, and other applicable
orders issued by the Court.
G. This Agreement is intended to supplement, complement and implement the
Plan. If any of the terms and/or provisions of this Agreement conflict with the terms
and/or provisions of the Plan, the terms and/or provisions of the Plan shall govern.
1
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ARTICLE 1
ESTABLISHMENT OF THE TRUST
1.1 Establishment of Trust. Pursuant to the Plan, the Trust is hereby
established on behalf of, and for the benefit of, the Beneficiaries.
1.2 Appointment of Trustee. The Trustee has been selected pursuant to the
terms of the Plan. Confirmation of the Plan shall constitute the Court’s approval of
Howard B. Grobstein as Trustee, who shall hold such position until the Trustee’s removal,
resignation, or death.
1.3 Purpose of the Trust. The Trust shall be established for the purpose of
liquidating the Trust Assets and taking all actions necessary to wind down and close the
Estates as set forth in the Plan, in accordance with Treasury Regulations Section
301.7701-4(d), with no objective to continue or engage in the conduct of a trade or
business. Accordingly, the Trustee shall, in an expeditious but orderly manner, liquidate
and convert to Cash the Trust Assets, make timely distributions, and not unduly prolong
the duration of the Trust. The liquidation of the Trust Assets may be accomplished either
through the sale of Trust Assets (in whole or in combination), including the sale of any
rights of action, or through the prosecution or settlement of any rights of action, or
otherwise. The Trust shall not be deemed a successor-in-interest of the Debtors for any
purpose other than as specifically set forth herein or in the Plan.
1.4 Transfer of Assets and Rights to the Trustee.
1.4.1 Except as provided otherwise in the Plan or this Agreement, as of
the Effective Date, the Debtors and the Estates hereby transfer, assign, convey and deliver
to the Trustee all of its right, title, and interest in each and every asset of the Debtors and
the Estates free and clear of any lien, claim or interest of any other Person or Entity in
such property (“Trust Assets”).
1.4.2 The Trust Assets are transferred, assigned, conveyed and
delivered to the Trustee subject to the following liabilities, if any: (a) any expenses
incurred and unpaid, or to be incurred, by the Trustee in the performance of the Trustee’s
duties (including, without limitation, the filing of any tax returns and the payment of any
taxes shown thereon, and any tax liability determined to be due and owing pursuant to
requests for expedited determinations under Section 505 of the Bankruptcy Code); and
(b) any obligations owing pursuant to the Plan and unpaid (including, without limitation,
obligations incurred before the Effective Date and approved by Court order).
1.4.3 Upon the transfer of the Trust Assets, the Trustee shall succeed
to all of the Debtors’ and the Estates’ right, title and interest in and to the Trust Assets
and neither the Debtors nor the Estates will have any further interest in or with respect
to the Trust Assets or this Trust.
1.4.4 The Trustee agrees to accept and hold the Trust Assets in trust on
behalf of, and for the benefit of, the Beneficiaries, subject to the terms of this Agreement
2
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and the Plan, and agrees to assume the role and duties of the Trustee as provided in this
Agreement and the Plan.
1.4.5 The Trustee shall be entitled to transfer to the Trust any and all
assets of the Debtors and the Estates, and to execute and record any agreements,
documents and instruments necessary to effectuate such transfer, in the Trustee’s own
name, on behalf of the Debtors and the Estates.
1.5 Treatment of Transfer of Trust Assets. The transfer of the Trust Assets to
the Trust shall be made for the benefit of the Beneficiaries. The Trust Assets shall be
treated by all parties (including the Debtors, the Trustee, and the Beneficiaries) for tax
purposes as being transferred (subject to the liabilities specified) by the Debtors or the
Estate to the Beneficiaries, and then by the Beneficiaries to the Trust in exchange for a
Liquidating Trust Interest, which interests shall be distributed by the Trustee to the
Beneficiaries in exchange for their unpaid Claims against the Estates in accordance with
the Plan. The Beneficiaries of this Trust shall be treated as the grantors and owners
hereof.
1.6 Reliance. The Trustee may rely upon the Debtors’ filed schedules and
statement of financial affairs and all other information provided by the Debtors or its
representatives to the Trustee concerning Claims against the Estates, and the Debtors’
reconciliation, if any, and other documents supporting such reconciliation.
1.7 Valuation of Trust Assets. The Trustee shall value the Trust Assets and
assumed liabilities consistently for federal, state and local income tax purposes. After the
Effective Date, the Trustee, in reliance upon such professionals as the Trustee may retain,
shall make a good faith valuation of the Trust Assets (“Trust Assets Valuation”) within a
reasonable time as determined by the Trustee. Such valuation shall be made available
from time to time, to the extent necessary or appropriate as reasonably determined by the
Trustee in reliance on the Trustee’s professionals, and used consistently by all parties
(including, without limitation, the Trustee and the Beneficiaries) for federal, state and
local income tax purposes.
1.8 Governance of the Trust. The Trust shall be governed by the Trustee subject
to the provisions set forth in this Agreement, the Plan, the Confirmation Order, and other
applicable orders issued by the Court. The Trustee’s powers are exercisable solely in a
fiduciary capacity consistent with, and in furtherance of, the purposes of the Trust and
not otherwise, except that the Trustee may deal with the Trust Assets for the Trustee’s
own account as provided herein. Subject to the terms and conditions of this Agreement,
the Trustee may delegate responsibility for discrete issues or decisions to third parties
subject to continued oversight by the Trustee.
1.9 Funding of the Trust. The Trustee may from time to time make withdrawals
from unencumbered Trust Assets in amounts and at times that the Trustee deems
necessary or appropriate to fund any and all costs and expenses that the Trustee and the
Trust incur subsequent to the Effective Date in accordance with this Agreement and the
Plan.
3
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1.10 Name. The Trust shall be named and known as the Caduceus Liquidating
Trust.
ARTICLE 2
LIQUIDATING TRUST INTERESTS
2.1 Identification of Holders of Liquidating Trust Interests. The record Holders
of Liquidating Trust Interests shall be the Holders of Class 1 Claims as set forth in the
Plan.
2.2 Transferability of Liquidating Trust Interests. Subject to compliance with
applicable law, the Liquidating Trust Interests are transferable upon written notice to the
Trustee; provided, however, that neither the Trust nor the Trustee shall take any steps,
directly or indirectly, to facilitate the development of a secondary market in the
Liquidating Trust Interests, including without limitation (a) listing the Liquidating Trust
Interests on any national securities exchange or on the NASDAQ Stock Market,
(b) placing advertisements designed to facilitate the transfer of the Liquidating Trust
Interests, (c) distributing marketing materials regarding the Liquidating Trust Interests,
or (d) collecting or publishing information regarding prices at which the Liquidating
Trust Interests may be transferred.
2.3 Holders of Liquidating Trust Interests Have No Rights in Connection with
Administration of the Trust. Except as provided in the Plan, this Agreement grants
exclusive authority over administration of the Trust to the Trustee. Accordingly, Holders
of Liquidating Trust Interests have no voting rights and no rights to administer the Trust.
ARTICLE 3
THE TRUSTEE
3.1 Role of the Trustee. In furtherance of and consistent with the purpose of
the Trust and the Plan, the Trustee shall, for the benefit of the Beneficiaries and subject
to the provisions set forth in this Agreement and the Plan: (a) have the power and
authority to hold, manage, and distribute the Trust Assets; (b) have the power and
authority to hold, manage, and distribute the Cash or non-Cash Trust Assets obtained
through the exercise of the Trustee’s power and authority; and (c) have the power and
responsibility to (i) take all actions necessary to implement the Plan, including objecting
to any and all Claims underlying the Liquidating Trust Interests, (ii) file all required tax
returns, and (iii) file and receive approval of a final report from the Court, all as may be
provided for in additional and further detail below.
3.2 Authority of Trustee. In connection with the administration of the Trust,
subject to and except as otherwise set forth in this Agreement or the Plan, the Trustee is
4
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authorized to perform any and all acts necessary or desirable to accomplish the purposes
of the Trust. Except as otherwise provided in the Plan, nothing in this Agreement shall
require the Trustee to file any accounting or seek approval of any court with respect to the
administration of the Trust, or as a condition for managing any payment or distribution
out of the Trust Assets, although the Trustee may seek approval of the Court for any such
action. Without limiting, but subject to the foregoing, the Trustee shall be expressly
authorized to:
3.2.1 hold legal title to any and all rights of the Holders of the
Liquidating Trust Interests in or arising from the Trust Assets, including but not limited
to collecting, receiving any and all money and other property belonging to the Trust and
the right to vote any claim or interest in a case under the Bankruptcy Code and receive
any distribution therein; provided, however, the Trustee shall have the power to cause
legal title (or evidence of title) to any of the Trust Assets to be held by any nominee, on
such terms and in such manner as the Trustee may determine;
3.2.2 commence, prosecute or settle objection to Claims, enforce
contracts, and assert claims, defenses, offsets and privileges previously held by either the
Debtors or the Estates;
3.2.3 protect and enforce the rights to the Trust Assets by any necessary
or appropriate means, including by judicial proceedings or pursuant to any applicable
bankruptcy, insolvency, moratorium or similar law and general principles of equity;
3.2.4 compromise, adjust, arbitrate, sue on or defend, pursue,
prosecute, file, abandon, settle or otherwise resolve, claims and rights of action in favor
of, or against the Debtors, the Estates, the Trust and the Trustee, including those based
upon Sections 544, 547, 548, 549, 550, 551 or 553(b) of the Bankruptcy Code, as the
Trustee deems advisable, and to take any and all actions necessary or appropriate to the
foregoing;
3.2.5 avoid and recover transfers of the Debtors’ property as may be
permitted by the Bankruptcy Code or applicable state law, including those identified in
the Disclosure Statement, if any;
3.2.6 determine and satisfy any and all liabilities created, incurred or
assumed by the Trust;
3.2.7 file all tax and information returns with respect to the Trust and
pay taxes properly payable by the Trust, if any, including income taxes and employment
taxes;
3.2.8 exercise any and all rights afforded a debtor under Section 505 of
the Bankruptcy Code to request a prompt determination of federal and state tax liabilities
of the Debtors or the Estates, whether such liabilities were incurred prior to the Petition
Date, during the pendency of the Case, or before the Effective Date;
3.2.9 execute offsets against claims as provided for in the Plan;
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3.2.10 assert or waive any privilege or defense on behalf of the Trust, the
Debtors, or the Estates;
3.2.11 pay any expense incurred by the Trust or the Trustee in the course
of administering the Trust;
3.2.12 pay any Court-approved fees and reimburse expenses of any
professionals or employees employed by the Debtors or the Estates;
3.2.13 at the expense of the Trust, and in Trustee's sole discretion,
obtain insurance coverage with respect to the liabilities and obligations of the Trustee
under this Agreement (in the form of an errors and omissions policy or otherwise);
3.2.14 obtain insurance coverage with respect to real and personal
property which may become Trust Assets, if any;
3.2.15 retain and pay legal counsel to the Trust (including any law firm
or attorney previously retained by the Debtors or the Estates to aid in the administration
of the Trust, to prosecute or defend any claims or rights of action that constitute the Trust
Assets, and to perform such other functions as may be appropriate;
3.2.16 retain and pay one or more public accounting firms or public
accountants (including any accounting firm or public accountant previously retained by
the Debtors or the Estates) to perform such reviews and/or audits of the financial books
and records of the Trust, if any, as may be appropriate and to prepare and file any tax
returns or information returns for the Trust as may be required;
3.2.17 retain and pay any other professionals (including any other
professionals previously retained by the Debtors or the Estates) to assist the Trustee in
carrying out the powers and duties of the Trustee under this Agreement;
3.2.18 employ one or more employees (including employees previously
retained by the Debtors or the Estates) to assist the Trustee in carrying out the powers
and duties of the Trustee under this Trust Agreement;
3.2.19 invest any moneys held as part of the Trust in accordance with
the terms of Section 3.14 hereof, limited to such investments that are consistent with the
Trust's status as a liquidating trust within the meaning of Treasury Regulations Section
301.7701-4(d);
3.2.20 request any appropriate tax determination with respect to the
Trust, including, without limitation, a determination pursuant to Section 505 of the
Bankruptcy Code;
3.2.21 seek the examination of any Entity under, and subject to, the
provisions of FRBP 2004;
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3.2.22 seek estimation of contingent or unliquidated claims under
Section 502(c) of the Bankruptcy Code;
3.2.23 sell, auction, lease, rent, encumber or transfer any Trust Assets,
consistent with the purposes of the Trust as the Trustee shall deem advisable, and to take
any and all actions necessary or appropriate to accomplish the foregoing; provided that
the Trustee shall give notice and opportunity for hearing to the U.S. Trustee and all parties
requesting special notice in connection with sales of Trust Assets, unless otherwise
ordered by the Court;
3.2.24 except as otherwise provided in the Plan, abandon any Trust
Assets that cannot be sold or otherwise disposed of for value and whose distribution to
Holders of Liquidating Trust Interests would not be feasible or cost-effective based on the
judgment and discretion of the Trustee;
3.2.25 file with the Court the reports and other documents required by
the Plan or otherwise required to close the Case;
3.2.26 appear in, defend, or otherwise be heard as a party in interest in
(a) appeals from the Confirmation Order and any proceedings related thereto;
(b) proceedings related to the enforcement or interpretation of the Plan or this
Agreement; (c) proceedings related to modifications or amendments to the Plan or this
Agreement; (d) proceedings related to the establishment and administration of the Trust;
and (e) proceedings related to the allowance of claims for compensation or expenses of
counsel, accountants, professionals or employees employed by the Debtors, the Estates,
the Trustee, or the Trust;
3.2.27 file motions with the Court seeking instruction or approval of any
matter affecting the administration of the Trust;
3.2.28 take, or refrain from taking, any and all actions the Trustee
reasonably deems necessary for the continuation, protection and maximization of the
Trust Assets or to carry out the purposes hereof; and
3.2.29 retain and employ any professionals or employees, as provided
herein, with approval of the Court.
3.3 Limitation of Trustee’s Authority.
3.3.1 The Trustee shall have no power or authority except as set forth
in this Agreement, the Plan, or Confirmation Order.
3.3.2 Notwithstanding anything herein to the contrary, the Trustee is
not authorized to engage in any trade or business, and shall not take actions inconsistent
with (a) the orderly liquidation of the Trust Assets and distributions to Beneficiaries as
are required or contemplated by applicable law, the Plan and this Agreement, or (b) the
actions necessary to wind down and dissolve the Trust. The Trustee is not authorized to
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engage in any investments or activities inconsistent with the treatment of the Trust as a
liquidating trust within the meaning of Treasury Regulations Section 301.7701-4(d).
3.3.3 The Trustee shall not commingle any of the Trust Assets with the
Trustee’s own property or the property of any other Person, or Entity.
3.3.4 Neither the Trust nor the Trustee shall take any action that would
result in the Trust becoming subject to registration as an “investment company” pursuant
to the Investment Company Act of 1940, as amended.
3.4 Books and Records.
3.4.1 The Trustee shall have access to the books and records of the
Debtors and the Estates, as may be needed to fulfill the actions set forth herein.
3.4.2 The Trustee shall maintain books and records relating to the
Trust Assets, income of the Trust, and the payment of expenses of, and liabilities of claims
against or assumed by, the Trust in such detail and for such period of time as may be
necessary to enable it to make full and proper accounting in respect thereof. Such books
and records shall be maintained, at the Trustee's discretion, on a modified cash or other
comprehensive basis of accounting necessary to facilitate compliance with the tax
reporting requirements of the Trust.
3.4.3 Subject to all applicable privileges, the Beneficiaries shall have
the right, upon twenty (20) days’ prior written notice to the Trustee, to request a
reasonable inspection of the books and records held by the Trustee. All reasonable costs
associated with such inspection shall be paid by such requesting Beneficiary. The Trustee
may require, to the extent the Trustee deems it necessary or appropriate, that any
Beneficiary requesting information enter into a confidentiality agreement satisfactory in
form and substance to the Trustee prior to obtaining the information. Nothing in this
Agreement provides any Beneficiary with a right to review, inspect, seek discovery of, or
otherwise obtain any information that is privileged or subject to a third party’s rights of
privacy or confidentiality.
3.4.4 One (1) year after dissolution of the Trust, the Trustee is
authorized to destroy any and all books and records without further notice or Court order,
unless the Court has ordered otherwise. The Trustee may move the Court for entry of an
order authorizing the destruction of any and all books and records prior to expiration of
the one (1) year period following dissolution of the Trust.
3.5 Additional Powers. Except as otherwise set forth in this Agreement or in
the Plan, and subject to the Treasury Regulations governing liquidating trusts and the
retained jurisdiction of the Court as provided for in the Plan, but without prior or further
authorization, the Trustee may control and exercise authority over the Trust Assets and
over the protection, conservation and disposition thereof. No Person dealing with the
Trust shall be obligated to inquire into the authority of the Trustee in connection with the
protection, conservation or disposition of the Trust Assets.
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3.6 Tax and Reporting Duties of the Trustee.
3.6.1 Subject to definitive guidance from the Internal Revenue Service
or a court of competent jurisdiction to the contrary (including the receipt by the Trustee
of a private letter ruling if the Trustee so requests one, or the receipt of an adverse
determination by the Internal Revenue Service upon audit if not contested by the
Trustee), the Trustee shall file returns for the Trust as a grantor trust pursuant to Treasury
Regulations Section 1.671-4(a).
3.6.2 The Trustee shall comply with all withholding and reporting
requirements imposed by any federal, state, local or foreign taxing authority, including,
without limitation, any requirements imposed with respect to Distributions (defined
below) hereunder and under the Plan.
3.6.3 The Trustee shall file (or cause to be filed) any other statements,
returns, reports or disclosures relating to the Trust that are required by any governmental
authority, and all such statements, returns, reports or disclosures shall be prepared in
reasonable detail in accordance with all applicable laws.
3.7 Compliance with Laws. Any and all Distributions of Trust Assets and
proceeds of borrowings, if any, shall be in compliance with applicable federal and state
laws. The Trustee may withhold a Distribution from any Beneficiary if the Trustee is
unable, after reasonable investigation, to obtain taxpayer identification information for
any Beneficiary sufficient to permit the Trustee to make any Distribution in compliance
with applicable law.
3.8 Confidentiality. The Trustee shall forever hold in strict confidence and not
use for personal gain any material, non-public information of or pertaining to the Trust
Assets, or the operation of the Trust and any other entity to which any of the Trust Assets
may at any time relate.
3.9 Expense Reimbursement and Compensation to the Trustee.
3.9.1 The Trustee shall be entitled to reimbursement out of any
available Cash in the Trust for the Trustee’s actual, necessary out-of-pocket expenses and
against and from any and all loss, liability, or damage which the Trustee actually sustains
in good faith and without misconduct, negligence, or fraud in the exercise and
performance of any of the Trustee’s powers and duties under this Trust.
3.9.2 As compensation for the performance of the Trustee’s duties, the
Trustee shall be compensated for actual and necessary services rendered at the following
initial hourly rate: For services rendered by Howard B. Grobstein, $700 per hour. No
more than once per calendar year, the Trustee may increase the hourly rate upon ten (10)
days’ written notice, filed with the Court in the Case, provided that any such annual
increase shall not exceed five percent (5.0%).
3.9.3 Upon the request of a Beneficiary, within ten (10) business days
following the Trustee’s receipt of any such request, the Trustee shall make available all
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billing statements concerning (a) the actual and necessary services for which the Trustee
and the Trustee’s staff, if any, were compensated, and (b) the actual and necessary
expenses for which the Trustee received reimbursement.
3.10 Costs and Expenses of the Trustee. All costs and expenses of the Trustee
and the Trust shall be borne by and as a charge against the Trust Assets. The Trustee, in
conjunction with its counsel, shall undertake reasonable best efforts to review each Cause
of Action before such claims are filed, to determine the viability, chance of success, and
potential recovery on such claim; and the Trustee shall not file a particular claim if that
review indicates that, in the Trustee's sole discretion, the chance of success of any
particular Cause of Action is low and/or the possible recovery on the Cause of Action is
minimal.
3.11 Compensation Procedures. The Trustee and all professionals employed by
the Trustee shall be entitled to payment of their fees and reimbursement of all reasonable
expenses on a monthly basis in accordance with the Plan. Applications for compensation
and reimbursement of expenses shall be filed in accordance with the Plan.
3.12 Reliance by Trustee.
3.12.1 The Trustee may rely, and shall be protected in acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, or other paper or document believed by the Trustee to be genuine and to have been
signed or presented by the proper party or parties.
3.12.2 The Trustee may consult with and shall not be liable for any
actions taken or suffered by the Trustee in accordance with the advice of such counsel or
other professionals, and may also consult with and rely upon accountants and former
consultants or advisors of the Debtors or the Estates, present and former officers,
directors and consultants of the Debtors’ affiliates or subsidiaries.
3.13 Reliance by Persons Dealing with the Trust. Persons dealing with the
Trustee shall look only to the Trust Assets to satisfy any liability incurred by the Trustee
to such Person in carrying out the terms of this Agreement, and the Trustee shall not have
any personal obligation to satisfy any such liability, except to the extent that actions taken
or not taken after the Effective Date by the Trustee are determined by a Final Order to be
solely due to the Trustee’s gross negligence, fraud or willful misconduct.
3.14 Investment and Safekeeping of Trust Assets. The right and power of the
Trustee to invest Trust Assets, the proceeds thereof, or any income earned by the Trust,
shall be limited to the right and power that a Trust, within the meaning of Treasury
Regulations Section 301.7701-4(d), is permitted to hold, pursuant to the Treasury
Regulations, or any modification in the IRS guidelines, whether set forth in IRS rulings,
other IRS pronouncements or otherwise.
3.15 Authorization to Expend Trust Assets. The Trustee may expend the Trust
Assets: (a) as reasonably necessary to maintain the value of the Trust Assets during
liquidation: (b) to pay all costs and expenses of the Trust (including, without limitation,
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any taxes imposed on the Trust); and (c) to satisfy all other liabilities incurred or assumed
by the Trust (or to which the Trust Assets are otherwise subject) in accordance with this
Agreement, the Plan, or an order of the Court.
3.16 Termination. The duties, responsibilities and powers of the Trustee will
terminate on the date the Trust is dissolved under applicable law in accordance with the
Plan, Article 8 of this Agreement, or by an order of the Court.
3.17 Reliance. Any Person dealing with the Trustee shall be fully protected in
relying upon the Trustee’s certificate or instrument signed by the Trustee that the Trustee
has authority to take any action under this Trust.
3.18 Trustee’s Funds. No provision of this Agreement or the Plan shall require
the Trustee to expend or risk the Trustee’s own funds or otherwise incur any financial
liability in the performance of any of the Trustee’s duties as Trustee hereunder or under
the Plan, or in the exercise of any of the Trustee’s rights or powers, if the Trustee shall
have reasonable grounds for believing that repayment of funds or adequate indemnity or
security satisfactory to the Trustee against such risk or liability is not reasonably assured
to the Trustee.
3.19 Bond. The Trustee shall serve without a bond.
3.20 Confidentiality. The Trustee shall, (a) while serving as Trustee under this
Agreement, (b) following the termination of this Agreement, or (c) following the earlier
of the Trustee’s removal or resignation hereunder, hold strictly confidential and not use
for personal gain any material, non-public information of or pertaining to any entity to
which any of the Trust Assets relates or of which he has become aware in the Trustee’s
capacity as Trustee.
ARTICLE 4
DISTRIBUTIONS
4.1 Distribution; Withholding. The Trustee shall distribute from the Trust to
the Beneficiaries whose underlying Claims are Allowed, Cash on hand (including, without
limitation, all net Cash income plus all net Cash proceeds from the Trust Assets, including,
without limitation, as Cash for this purpose, all permissible investments described in
Section 2.13) from the Trust to the Beneficiaries (such distributions being referred to
herein as “Distributions”). The timing and amount of such Distributions shall be at the
Trustee's discretion and in accordance with Section VI of the Plan.
4.2 Reserve for Disputed Claims. When a Distribution is made, the Trustee
shall reserve from the Distribution an amount equal to the Pro Rata amount that would
have been distributed to the Beneficiaries holding Disputed Claims had the Disputed
Claims been Allowed Claims at the time of the Distribution. In the event a Disputed Claim
is ultimately Allowed, the Beneficiary holding the previously Disputed Claim shall receive
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the Beneficiary's Pro Rata share of the reserved Distribution. The Trustee shall follow the
procedures for objecting to Disputed Claims as set forth in Section IX of the Plan.
4.3 Undeliverable Distributions. If the Distribution to a Trust Beneficiary is
returned to the Trustee as undeliverable (“Undeliverable Distributions”), no further
Distribution shall be made to such Trust Beneficiary unless and until the Trustee is
notified in writing of such Trust Beneficiary’s then current address. Undeliverable
Distributions shall remain in the possession of the Trustee until the earlier of (i) such time
as a Distribution becomes deliverable or (ii) such Undeliverable Distribution becomes an
Unclaimed Distribution under this Agreement and the Plan. The Trustee shall make
reasonable efforts to update or correct contact information for recipients of undeliverable
Distributions, provided, however, to the extent consistent with the Plan, this Agreement
shall not require the Trustee to locate any Trust Beneficiary.
4.4 Unclaimed Distributions. Any entity which fails to claim any Cash within
90 days from the date upon which a Distribution is first made to such entity (“Unclaimed
Distribution”) shall forfeit all rights to any distribution under the Plan, and the Trustee
shall be authorized to cancel any distribution that is not timely claimed. Pursuant to
section 347(b) of the Bankruptcy Code, upon forfeiture, such Cash (including interest
thereon, if any) shall revert to the source of such distribution (i.e., the Trust) free of any
restrictions under the Plan, the Bankruptcy Code or the FRBP. Upon forfeiture, the claim
of any creditor or Interest Holder with respect to such funds shall be irrevocably waived
and forever barred against the Debtors, the Estates, and the Trustee, notwithstanding any
federal or state escheat laws to the contrary, and such creditor or Interest Holder shall
have no claim whatsoever against the any of the foregoing or to any Holder of a Claim to
whom distributions are made.
4.5 Allocation of Tax Items.
4.5.1 Unless otherwise required by applicable tax law, items of income,
gain, loss and deduction recognized or incurred by the Trust and the amount of
distributions received by the Trust shall be allocated Pro Rata among the Beneficiaries
who are entitled to receive Distributions in the tax year in accordance with this Agreement
and the Plan.
4.5.2 Absent definitive guidance from the IRS or a court of competent
jurisdiction to the contrary, the Trustee shall:
(a) treat all Trust Assets allocable to, or retained on account of,
Disputed Claims, as a discrete trust for federal income tax
purposes, consisting of separate and independent shares to be
established in respect of each Disputed Claim;
(b) on the last day of each calendar year, to the extent there is a
reserve for Disputed Claims on that date, treat as taxable
income or loss of this separate trust, the portion of the annual
taxable income or loss of the Trust that would have been
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allocated to the Holders of such Disputed Claims had such
Disputed Claims been Allowed on the Effective Date;
(c) treat as a distribution from this separate trust any increased
amounts distributed by the Trust as a result of any Disputed
Claim resolved earlier in the taxable year; and
(d) to the extent permitted by applicable law, report consistently
for state and local income tax purposes.
ARTICLE 5
SUCCESSOR TRUSTEE
5.1 Resignation of Trustee. The Trustee may resign by giving written notice
thereof filed with the Court and served on the Beneficiaries. Such resignation shall
become effective on the earlier to occur of: (a) sixty (60) days after the filing of such
notice, or (b) the appointment of a successor and the acceptance by such successor of such
appointment.
5.2 Removal of Trustee. The Trustee may be removed by the Court, for Cause,
upon motion of a Beneficiary. For purposes of this Section, “Cause” means (a) willful
misconduct, gross negligence or fraud by the Trustee in connection with the affairs of the
Trust, (b) such physical or mental disability as substantially prevents the Trustee from
performing the Trustee’s duties as Trustee hereunder, or (c) a breach of fiduciary duty or
an unresolved material conflict of interest. Such removal shall become effective on the
date specified by the Court. In the event such removal occurs, a notice of the identity of
the successor Trustee shall be filed with the Court and served on the Beneficiaries.
5.3 Appointment of Successor Trustee upon Resignation, Removal, or Death. If
the Trustee resigns pursuant to Section 5.1, is removed pursuant to Section 5.2, or dies,
the Court shall appoint a successor Trustee. Any successor Trustee appointed hereunder
shall execute and file a statement accepting such appointment and agreeing to be bound
by the terms of the Plan and this Agreement. Upon such filing, the successor Trustee shall
immediately become vested with all the rights, powers, trusts and duties of the Trustee.
Notice of such successor Trustee shall be filed with the Court and served on the
Beneficiaries.
5.4 Acceptance of Appointment by Successor Trustee. Any successor Trustee
appointed pursuant to this Article 5 shall execute an instrument accepting such
appointment as the Trustee under this Agreement and shall file and maintain such
acceptance with the books and records of the Trust. Upon acceptance of such
appointment as aforesaid, such successor Trustee shall, without any further act, become
vested with all the estates, properties, rights, powers, trusts and duties of its predecessor
in the Trust with like effect as if originally named herein; provided, however, that a
removed or resigning Trustee shall, nevertheless, when requested in writing by the
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successor Trustee, execute and deliver an instrument or instruments conveying and
transferring to such successor Trustee under the Trust all the estates, properties, rights,
powers, and trusts of such predecessor Trustee.
ARTICLE 6
EXCULPATION AND INDEMNIFICATION
6.1 Standard of Care/Exculpation. Except in the case of willful misconduct,
gross negligence or fraud, the Trustee and the Trustee’s attorneys, accountants,
professionals, employees and any other duly designated agents or representatives shall
not be liable for any loss or damage by reason of any action taken or omitted by them in
their capacity as Trustee or attorney, accountant, professional, employee or other agent
or representative of the Trustee.
6.2 No Liability for Acts of Predecessor Trustees. No successor Trustee shall be
in any way liable for the acts or omissions of any predecessor Trustee unless a successor
Trustee expressly assumes such responsibility.
6.3 No Implied Obligations. The Trustee shall not be liable for any duties or
obligations except for the performance of such duties and obligations as are specifically
set forth herein and in the Plan, and no implied covenants or obligations shall be read
into this Agreement.
6.4 No Personal Liability. Persons dealing with the Trust must look solely to
the Trust or Trust Assets for the enforcement of any claims against the Trust or to satisfy
any liability incurred by the Trustee to such Persons in carrying out the terms of the Trust,
and neither the Trustee nor any other Person shall have any personal liability or
individual obligation to satisfy any such liability.
6.5 Indemnification. The Trust shall indemnify and hold harmless the Trustee
and the Trustee’s attorneys, accountants, professionals, employees and all other duly
designated agents and representatives from and against and in respect to any and all
liabilities, losses, damages, claims, costs and expenses, including attorneys’ fees and costs
arising out of or due to their actions or omissions, or consequences of such actions or
omissions, with respect to the Trust or the implementation or administration of the Plan;
provided, however, that no such indemnification will be made to such persons for such
actions or omissions as a result of willful misconduct, gross negligence or fraud. The
Trustee shall only be entitled to indemnification from the Trust under this Section to the
extent that the Trustee is not covered by insurance, if any.
6.6 Advancement. If the Trustee becomes involved in any action, proceeding,
or investigation in connection with any matter arising out of or in connection with this
Agreement, the Plan, or the affairs of the Trust, the Trust shall periodically advance or
otherwise reimburse on demand the Trustee’s reasonable legal and other expenses
(including the cost of any investigation, and attorneys’ fees, disbursements and related
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expenses) incurred in connection therewith. The Trustee shall be required to repay
promptly to the Trust the amount of any such advanced or reimbursed expenses paid to
the Trustee to the extent that it is ultimately determined that the Trustee engaged in
willful misconduct, gross negligence, or fraud in connection with the affairs of the Trust
with respect to which such expenses were paid.
ARTICLE 7
REPORTS
7.1 Securities Laws Reporting. Under Section 1145 of the Bankruptcy Code, the
issuance of Trust Interests under the Plan shall be exempt from registration under the
Securities Act of 1933, as amended, and applicable state and local laws requiring
registration of securities, if applicable. If the Trustee determines that the Trust is required
to comply with the registration and reporting or other requirements of the Securities and
Exchange Act of 1934, as amended, or the Investment Company Act of 1940, as amended,
the Trustee shall take any and all actions to comply with, or qualify for exemption from,
such reporting or other requirements and to file periodic reports with the Securities and
Exchange Commission as necessary.
7.2 Tax Reporting. Promptly following the end of each calendar year, the
Trustee shall submit to each Beneficiary appearing on its records during such year a
separate statement setting forth the Beneficiary’s share of items of income, gain, loss,
deduction or credit. The Trust’s tax return shall suffice. The Trust’s taxable income, gain,
loss, deduction, and credit shall be allocated Pro Rata to the Beneficiaries in accordance
with such Beneficiaries’ respective beneficial interests in the Trust Assets. In addition,
the Trustee shall file all tax returns required to be filed and shall pay all taxes on such
returns, if any, from the Trust Assets. The Trustee shall file (or cause to be filed) any other
statements, returns, or disclosures relating to the Trust that are required by any
governmental authority.
7.3 Reporting to the U.S. Trustee. If and as required by the Plan, the
Confirmation Order or the Court, the Trustee shall file reports with the Office of the
United States Trustee (“U.S. Trustee”) (if required by the U.S. Trustee) and shall promptly
pay any and all fees assessed by the U.S. Trustee; provided, however, that the Trustee
shall only be required to file such periodic reports and pay such fees to the extent required
by the U.S. Trustee and the Court, as the case may be. The funding for such payments
shall be pursuant to Section 3.10.
7.4 Other Reporting. If and as required by the Plan, the Confirmation Order or
the Court, the Trustee shall cause to be prepared such reports as are required or advisable
to provide: (a) a report of annual receipts and disbursements, (b) a schedule of all asset
dispositions, (c) a schedule of Distributions made, (d) a summary listing of the status of
the resolution of Causes of Action and objections to Claims, (e) the status of any Trust
Assets not yet distributed, and (f) a list of payments made to Trust Professionals.
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ARTICLE 8
TERMINATION AND FINAL DISTRIBUTION
8.1 Termination of Trust. The Trust shall terminate on the earlier of: (a) thirty
(30) days after the full and final Distribution of the Trust Assets or proceeds thereof in
accordance with the terms of this Agreement and the Plan, or (b) the fifth (5th)
anniversary of the Effective Date; provided, however, that within six months of the fifth
(5th) anniversary of the Effective Date, the Court, upon a motion by the Trustee or any
party in interest, may extend the term of the Trust for an additional term of not more than
five (5) years if it is necessary for the liquidation of the Trust Assets. Notwithstanding the
foregoing, the Trustee shall not unduly prolong the duration of the Trust and shall at all
times endeavor to resolve, settle or otherwise dispose of all property and Claims that
constitute Trust Assets and to effect the full and final Distribution of the Trust Assets to
the Beneficiaries in accordance with the terms hereof and the Plan and, thereafter,
terminate the Trust as soon as practicable. Notwithstanding anything to the contrary
herein, any termination of the Trust is conditioned upon payment of all costs and fees
payable to the U.S. Trustee and filing and receiving Court approval of an order to close
the Case.
8.2 Final Distribution. Prior to and upon termination of the Trust, the Trust
Assets will be finally distributed to the Beneficiaries pursuant to the provisions set forth
herein. If any Trust Assets are not duly claimed, such Trust Assets will be redistributed
to all other Beneficiaries on a Pro Rata basis in accordance with the terms of this
Agreement and the Plan.
8.3 Remainder Amounts After Final Distribution. After final Distributions have
been made in accordance with the terms of the Plan, if the aggregate amount of Unclaimed
Distributions and Undeliverable Distributions is less than $10,000, the Trustee may
donate such amount to a non-profit organization agreeable to counsel for the Debtors.
8.4 De Minimis Distributions. If any interim distribution under the Plan to the
Holder of an Allowed Claim would be less than $50.00, the Trustee may withhold such
distribution until a final distribution is made to such Holder. If any final distribution
under the Plan to the Holder of an Allowed Claim would be less than $50.00, the Trustee
may cancel such distribution. Any potential distributions pursuant to this Section shall be
treated as an Unclaimed Distribution.
ARTICLE 9
AMENDMENT AND WAIVER
9.1 Amendment and Waiver. Any substantive provision of this Agreement may
be amended, modified, supplemented or waived by the Trustee upon approval of the
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Court. Any amendment, modification or supplement to this Agreement shall not be
inconsistent with the purpose and intention of the Trust to liquidate in an expeditious but
orderly manner the Trust Assets in accordance with the Plan and Treasury Regulations
Section 301.7701-4(d).
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Intention of Parties to Establish Liquidating Trust. This Agreement is
intended to create a liquidating trust for federal income tax purposes and, to the extent
provided by law, shall be governed and construed in all respects as such a trust and any
ambiguity herein shall be construed consistent with such intent and purpose. If
necessary, this Agreement may be amended to comply with such federal income tax laws,
which amendments may be made to apply retroactively.
10.2 Preservation of Privilege and Defenses. Any attorney-client privilege, work-
product privilege or other privilege or immunity to which the Debtors or the Estates are
entitled shall vest in the Trust, and the Trustee shall be entitled to assert such privilege or
immunity to the extent that the Debtors or the Estates would be entitled prior to the
Effective Date. The Trustee shall be entitled to waive any privilege or immunity in the
Trustee’s sole discretion.
10.3 Cooperation and Further Assurances of the Debtors and Estates. The
Debtors and the Estates shall, upon reasonable request of the Trustee, execute,
acknowledge, and deliver such further instruments and do such further acts as may be
necessary or proper to transfer to the Trustee any portion of the Trust Assets intended to
be conveyed in the form and manner provided for in the Plan and to vest in the Trustee
the powers, instructions, or funds in trust hereunder. The Debtors and the Estates, for
itself and any predecessor or successor entity, hereby disclaims and waives any and all
rights to any reversionary interests in any of the Trust Assets. The Debtors and the Estates
shall upon the request of the Trustee relinquish to the Trustee its books and records.
10.4 Prevailing Party. If the Trustee or the Trust, as the case may be, is the
prevailing party in a dispute regarding the provisions of this Agreement or the
enforcement thereof, the Trustee or the Trust, as the case may be, shall be entitled to
collect any and all costs, expenses and fees, including attorneys’ fees, from the non-
prevailing party incurred in connection with such dispute or enforcement action.
10.5 Laws as to Construction. This Agreement shall be governed and construed
in accordance with the laws of the State of California, without giving effect to rules
governing the conflict of laws, and federal bankruptcy law to the extent applicable.
10.6 Retention of Jurisdiction. To the fullest extent permitted by law, the Court
shall retain exclusive jurisdiction to resolve any matters concerning the interpretation
and enforcement of this Agreement, and any disputes arising under or in connection with
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this Agreement between or among the Trustee, the Trust, any Beneficiary, and/or any
other party in interest.
10.7 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance shall be finally determined by a court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement,
or the application of such provision to Persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and such provision
of this Agreement shall be valid and enforced to the fullest extent permitted by law.
10.8 Notices. Any notice or other communication under this Agreement shall be
in writing and shall be deemed to have been sufficiently given, for all purposes, if
deposited, postage prepaid, in a post office or letter box addressed to the person for whom
such notice is intended:
If to the Trustee: Howard B. Grobstein
6300 Canoga Avenue
Suite 1500W
Woodland Hills CA 91367
with a copy to: David A. Wood
Matthew Grimshaw
Aaron E. de Leest
Marshack Hays Wood LLP
870 Roosevelt
Irvine, CA 92620
If to a Beneficiary: For each Beneficiary that is a creditor, notices
shall be sent to the address on such Holder’s
Proof of Claim filed with the Court (or if no
Proof of Claim has been filed, the address shown
for such claimant in the Debtors’ schedules),
unless such Beneficiary has since (a) filed a
change of address notification with the Court, or
(b) following the Effective Date, notified the
Trustee in writing of such Beneficiary’s change
of address.
10.9 Headings. The section headings contained in this Agreement are solely for
convenience of reference and shall not affect the meaning or interpretation of this
Agreement or of any term or provision hereof.
10.10 Integration. This Agreement and the Plan constitute the entire agreement
of the parties with respect to the subject matter hereof and thereof and supersede all oral
negotiations and prior writings with respect to the subject matter hereof and thereof.
10.11 Further Assurances. From and after the Effective Date, the parties hereto
covenant and agree to execute and deliver all such documents and notices and to take all
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such further actions as may reasonably be required from time to time to carry out the
intent and purposes of the Trust and to consummate the transactions contemplated
hereby.
10.12 Successors and Assigns. The terms of this Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto, and their respective successors and
assigns.
10.13 Agreement Purpose and Plan Incorporation. The principal purpose of this
Agreement is to aid in the implementation of the Plan and therefore this Agreement
incorporates the provisions of the Plan. If any provisions of this Agreement are found to
be inconsistent with the provisions of the Plan, the provisions of the Plan shall control.
10.14 Counterparts. This Agreement may be signed by the parties hereto in
counterparts, which, taken together, shall constitute one and the same document, and the
counterparts may be delivered by facsimile transmission or by electronic mail in portable
document format (.pdf).
IN WITNESS WHEREOF, the parties hereto have either executed and
acknowledged this Agreement, or caused it to be executed and acknowledged on their
behalf by their duly authorized officers all as of the date first above written.
DATED: _____, 2025 CADUCEUS PHYSICIANS MEDICAL GROUP, A
PROFESSIONAL MEDICAL CORPORATION
DBA CADUCEUS MEDICAL GROUP AND
CADUCEUS MEDICAL SERVICES, LLC
By: Howard B. Grobstein
Its: Chief Restructuring Officer on behalf of the
Debtors and the Debtors’ Bankruptcy Estates
LIQUIDATING TRUSTEE
Howard B. Grobstein
19
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EXHIBIT 2
EXHIBIT A, PAGE 123
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[INTENTIONALLY LEFT BLANK]
TO BE PROVIDED
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EXHIBIT B
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Caduceus Physician's Medical Group
Liquidation Analysis
Book Carrying Adjustment for Estimated Chapter 7 Chapter 11 Plan of
Value Liquidation Liquidation Value Reorganization
Sources of Cash
Cash - CPMG - 100% - -
Cash - CMS 11,010 100% 11,010 11,010
ERTC - CPMG 1,884,476 100% 1,884,476 1,884,476
Liquidated Cash Available for Creditors 1,895,486
Chapter 11 Plan of Reorganization Contributions 1,895,486
Uses of Cash
Chapter 7 Administrative Fees (Estimated)
Bankruptcy Trustee (80,115)
Trustee Counsel (100,000)
Trustee Financial Advisor (100,000)
Total Chapter 7 Admin Fees (Estimated) (280,115)
Cash Available for Chapter 11 Admins 1,615,371
Chapter 11 Administrative Fees (Estimated)
DIP Chief Restructruing Officer - fee app (243,000) (243,000)
DIP Chief Restructruing Officer - reserve (125,000) (125,000)
DIP Bankruptcy Counsel - fee app (214,991) (214,991)
DIP Bankruptcy Counsel - reserve (50,000) (50,000)
DIP Special Counsel - fee app (109,758) (109,758)
DIP Special Counsel - reserve (25,000) (25,000)
Landlord - Romanov post-petition (657,037) (657,037)
Landlord - Romanov - April post-petition unpaid (159,055) (159,055)
Landlord - Romanov - May pro-rata unpaid 9 days (47,717) (47,717)
Landlord - Bates post-petition (46,421) (46,421)
Capata (36,543) (36,543)
Capata - reserve (15,000) (15,000)
Consumer Privacy Ombudsman - fee app final (24,900) (24,900)
Patient Care Ombudsman - fee app (paid) - -
Patient Care Ombudsman - reserve (10,000) (10,000)
United States Trustee Fees - 2025 Q2 (28,819) (28,819)
United States Trustee Fees - reserve - (20,000)
Total Chatper 11 Administrative Fees (Estimated) (1,793,240) (1,813,240)
Total Chapter 11 Administrative Fees Paid (Estimated) (1,615,371) (1,813,240)
Cash Available for Secured Claims - 82,246
Secured Claims
Secured Claims - -
Cash Available for Priority Claims - 82,246
Priority Claims
Wages & Payroll Taxes - -
Cash Available for General Unsecured Claims - 82,246
General Unsecured Claims
Scheduled Class 1 Claims as defined in the Plan (6,423,136) (6,423,136)
Estimated % Recovery for GUC 0.0% 1.3%
9/2/2025 1 of 1
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PROOF OF SERVICE OF DOCUMENT
I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is:
870 Roosevelt, Irvine, CA 92620.
A true and correct copy of the foregoing document entitled: DISCLOSURE STATEMENT
DESCRIBING DEBTORS’ FIRST AMENDED CHAPTER 11 PLAN OF LIQUIDATION; CHAPTER 11 PLAN OF
LIQUIDATION (EXHIBIT A; AND LIQUIDATION ANALYSIS (EXHIBIT B) will be served or was served (a) on the judge
in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below:
1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General
Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On
November 25, 2025, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that
the following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses stated
below:
Service information continued on attached page
2. SERVED BY UNITED STATES MAIL: On November 25, 2025, I served the following persons and/or entities at the
last known addresses in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a
sealed envelope in the United States mail, first class, postage prepaid, and addressed as follows. Listing the judge here
constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed.
DEBTOR DEBTOR / CREDITOR / POC ADDRESS
CADUCEUS MEDICAL SERVICES LLC CADUCEUS PHYSICIANS MEDICAL GROUP, A
18200 YORBA LINDA BLVD STE 111 PROFESSIONAL CORPORATION
YORBA LINDA, CA 92886-4043 18200 YORBA LINDA BLVD STE 111
YORBA LINDA, CA 92886-4043
Service information continued on attached page
3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL: Pursuant to
F.R.Civ.P. 5 and/or controlling LBR, on November 25, 2025, I served the following persons and/or entities by personal
delivery, overnight mail service, or (for those who consented in writing to such service method), by facsimile transmission
and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on, or overnight mail to, the
judge will be completed no later than 24 hours after the document is filed.
PRESIDING JUDGE’S COPY – VIA PERSONAL DELIVERY VIA EMAIL:
HONORABLE SCOTT C. CLARKSON DEBTOR'S CHIEF RESTRUCTURING
UNITED STATES BANKRUPTCY COURT OFFICER
CENTRAL DISTRICT OF CALIFORNIA HOWARD GROBSTEIN
RONALD REAGAN FEDERAL BUILDING AND COURTHOUSE hgrobstein@gtllp.com
411 WEST FOURTH STREET, SUITE 5130 / COURTROOM 5C
SANTA ANA, CA 92701-4593
Service information continued on attached page
I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.
November 25, 2025 Layla Buchanan /s/ Layla Buchanan
Date Printed Name Signature
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012 F 9013-3.1.PROOF.SERVICE
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Main Document Page 134 of 134
1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): CONTINUED:
• INTERESTED PARTY COURTESY NEF: Samuel Mushegh Boyamian samuel@marguliesfaithlaw.com,
Angela@MarguliesFaithLaw.com; Vicky@MarguliesFaithLaw.com; Amber@MarguliesFaithLaw.com
• ATTORNEY FOR SECURED CREDITOR BMO BANK NATIONAL ASSOCIATION: Christopher Crowell
ccrowell@hrhlaw.com
• ATTORNEY FOR DEBTOR CADUCEUS PHYSICIANS MEDICAL GROUP, A PROFESSIONAL MEDICAL
CORPORATION: Aaron E. De Leest on behalf adeleest@marshackhays.com, adeleest@marshackhays.com,
alinares@ecf.courtdrive.com
• INTERESTED PARTY COURTESY NEF: Jeremy Faith Jeremy@MarguliesFaithlaw.com,
Angela@MarguliesFaithLaw.com; Vicky@MarguliesFaithLaw.com; Amber@MarguliesFaithLaw.com
• SPECIAL COUNSEL ARENTFOX SCHIFF LLP: M Douglas Flahaut df@echoparklegal.com
• ATTORNEY FOR DEBTOR CADUCEUS MEDICAL SERVICES LLC and DEBTOR CADUCEUS PHYSICIANS
MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION: Matthew Grimshaw
mgrimshaw@marshackhays.com, mgrimshaw@ecf.courtdrive.com; alinares@ecf.courtdrive.com
• ATTORNEY FOR CREDITOR REGAL MEDICAL GROUP, INC.: Payam Khodadadi
pkhodadadi@mcguirewoods.com, dkiker@mcguirewoods.com
• INTERESTED PARTY COURTESY NEF: Marc A Lieberman marc.lieberman@flpllp.com, addy@flpllp.com,
andrea@flpllp.com
• SPECIAL COUNSEL ARENTFOX SCHIFF LLP: Aram Ordubegian ordubegian.aram@arentfox.com
• ATTORNEY FOR CREDITOR BATES JOHNSON BUILDING, LTD.: Brett Ramsaur brett@ramsaurlaw.com,
alecia@ramsaurlaw.com;paralegal@ramsaurlaw.com
• ATTORNEY FOR CREDITOR ROMANOV GROUP, LLC: Jeremy H Rothstein jrothstein@gblawllp.com,
msingleman@gblawllp.com;mbowes@gblawllp.com
• INTERESTED PARTY COURTESY NEF: Andrew Still astill@swlaw.com, kcollins@swlaw.com
• U.S. TRUSTEE: United States Trustee (SA) ustpregion16.sa.ecf@usdoj.gov
• ATTORNEY FOR DEBTOR CADUCEUS MEDICAL SERVICES LLC and DEBTOR CADUCEUS PHYSICIANS
MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION: Ronghua Sophia Wang
sophia.wang@afslaw.com
• INTERESTED PARTY COURTESY NEF: Pamela Kohlman Webster pwebster@buchalter.com,
smartin@buchalter.com
• ATTORNEY FOR SECURED CREDITOR DESPIERTA, LLC, ITS SUCCESSORS AND/OR ASSIGNEES: Reilly
D Wilkinson rwilkinson@scheerlawgroup.com, rwilkinson@ecf.courtdrive.com
• ATTORNEY FOR DEBTOR CADUCEUS MEDICAL SERVICES LLC and DEBTOR CADUCEUS PHYSICIANS
MEDICAL GROUP, A PROFESSIONAL MEDICAL CORPORATION: David Wood dwood@marshackhays.com,
dwood@ecf.courtdrive.com; lbuchananmh@ecf.courtdrive.com; spineda@ecf.courtdrive.com;
alinares@ecf.courtdrive.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012 F 9013-3.1.PROOF.SERVICE
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