in the united states bankruptcy court for the … · 2020-02-10 · i in the united states...

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

) In re: ) Chapter 11 ) PES HOLDINGS, LLC, et al.,1 ) Case No. 19-11626 (KG) ) Debtors. ) (Jointly Administered) )

DEBTORS’ MEMORANDUM OF LAW IN SUPPORT OF AN ORDER CONFIRMING THE DEBTORS’ THIRD AMENDED JOINT CHAPTER 11 PLAN

OF REORGANIZATION OF PES HOLDINGS, LLC AND ITS DEBTOR AFFILIATES

Edward O. Sassower, P.C.

Laura Davis Jones (DE Bar No. 2436)

Steven N. Serajeddini, P.C. (admitted pro hac vice) James E. O’Neill (DE Bar No. 4042) Matthew C. Fagen (admitted pro hac vice) Peter J. Keane (DE Bar No. 5503) KIRKLAND & ELLIS LLP PACHULSKI STANG ZIEHL &

JONES LLP KIRKLAND & ELLIS INTERNATIONAL LLP 919 North Market Street, 17th Floor 601 Lexington Avenue P.O. Box 870 New York, New York 10022 Wilmington, Delaware 19899 Telephone: (212) 446-4800 Telephone: (302) 652-4100 Facsimile: (212) 446-4900 Facsimile: (302) 652-4400 Email: [email protected] Email: [email protected] [email protected] [email protected] [email protected] [email protected] Dated: February 10, 2020

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification

number, are: PES Holdings, LLC (8157); North Yard GP, LLC (5458); North Yard Logistics, L.P. (5952); PES Administrative Services, LLC (3022); PES Energy Inc. (0661); PES Intermediate Holdings, LLC (0074); PES Ultimate Holdings, LLC (6061); and Philadelphia Energy Solutions Refining and Marketing LLC (9574). The Debtors’ service address is: 1735 Market Street, Philadelphia, Pennsylvania 19103.

Case 19-11626-KG Doc 950 Filed 02/10/20 of 104

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TABLE OF CONTENTS

Page(s)

Preliminary Statement ...................................................................................................................1

Argument ........................................................................................................................................5

I. Case Background and Objections ........................................................................................6

A. Procedural History. ..................................................................................................6

B. Global Settlement.....................................................................................................9

C. The Plan Solicitation and Notification Process. ....................................................10

D. Remaining Confirmation Objections. ....................................................................12

II. The Plan Satisfies the Requirements of Section 1129 of the Bankruptcy Code. ...............13

A. The Plan Complies with the Applicable Provisions of the Bankruptcy Code (§ 1129(a)(1)). ..............................................................................................14

1. The Plan Satisfies the Classification Requirements of Section 1122 of the Bankruptcy Code. ............................................................................14

2. The Plan Satisfies the Mandatory Plan Requirements of Section 1123(a) of the Bankruptcy Code. ..................................................17

3. The Plan Complies with the Discretionary Provisions of Section 1123(b) of the Bankruptcy Code. ..................................................23

B. The Plan Complies with Section 1123(d) of the Bankruptcy Code. ......................40

C. The Debtors Complied with the Applicable Provisions of the Bankruptcy Code (§ 1129(a)(2)). ...........................................................................40

1. The Debtors Complied with Section 1125 of the Bankruptcy Code. ........41

2. The Debtors Complied with Section 1126 of the Bankruptcy Code. ........42

D. The Plan Was Proposed in Good Faith (§ 1129(a)(3)). .........................................43

E. The Plan Provides that the Debtors’ Payment of Professional Fees and Expenses Are Subject to Court Approval (§ 1129(a)(4)). .....................................45

F. The Plan Does Not Require Additional Disclosures Regarding Directors, Officers, and Insiders (§ 1129(a)(5)). ....................................................................46


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G. The Plan Does Not Require Governmental Regulatory Approval (§ 1129(a)(6)). ........................................................................................................47

H. The Plan Is in the Best Interests of All the Debtors’ Creditors (§ 1129(a)(7)). ........................................................................................................47

I. The Plan Is Confirmable Notwithstanding the Requirements of Section 1129(a)(8) of the Bankruptcy Code. .........................................................49

J. The Plan Provides for Payment in Full of All Allowed Priority Claims (§ 1129(a)(9)). ........................................................................................................50

K. At Least One Class of Impaired, Non-Insider Claims Accepted the Plan (§ 1129(a)(10)). ......................................................................................................51

L. The Plan Is Feasible (§ 1129(a)(11)). ....................................................................51

M. All Statutory Fees Have Been or Will Be Paid (§ 1129(a)(12)). ...........................53

N. No Remaining Retiree Benefits Obligations (§ 1129(a)(13)). ...............................54

O. Sections 1129(a)(14) through 1129(a)(16) Do Not Apply to the Plan. .................54

P. The Plan Satisfies the “Cram Down” Requirements of Section 1129(b) of the Bankruptcy Code. .............................................................................................55

1. The Plan Is Fair and Equitable (§ 1129(b)(2)(B)(ii)). ................................55

2. The Plan Does Not Unfairly Discriminate with Respect to the Impaired Classes that Have Not Voted to Accept the Plan (§ 1129(b)(1)). ............................................................................................57

Q. The Debtors Complied with Section 1129(d) of the Bankruptcy Code. ................58

R. Modifications to the Plan. ......................................................................................59

S. Good Cause Exists to Waive the Stay of the Confirmation Order. .......................60

III. The Objections to the Plan Should be Overruled. ..............................................................61

A. The Sale Transaction Should be Approved as a Sound Exercise of the Debtors’ Business Judgement. ...............................................................................61

1. The Sale Transaction Represents a Sound Exercise of the Debtors’ Business Judgment and Should Be Approved. ..........................................65

2. The Successful Bid is the Best Bid. ...........................................................68

B. The Objection of the U.S. Trustee Should be Overruled. ......................................70


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1. The Discharge of Acquired Reorganized Debtors Is Appropriate. ............70

2. The Third-Party Release Is Consensual and Permissible. .........................71

3. The Debtor Release and Third-Party Release are Reasonable. ..................76

4. The Plan’s Compromise Language Has Been Restricted Such That the U.S. Trustee’s Objection Thereon Is Resolved. ...................................77

5. The Plan No Longer Provides that Entry of the Confirmation Order Shall Close the Cases of the Acquired Reorganized Entities Such That the U.S. Trustee’s Objection Thereon Is Resolved. ..........................77

C. The Objection of the USW Should be Overruled. .................................................78

1. The Treatment of the USW Before and During the Auction was Reasonable and Consistent with the Bidding Procedures. .........................78

2. The Solicitation Materials and the Plan Supplement Provide Adequate Information about the Plan. .......................................................79

3. The MIP Will Maximize Value for the Estate. ..........................................80

D. The Insurers’ Objection Should Be Overruled. .....................................................80

1. The Plan Does Not Negatively Impact or Alter the Insurers’ Rights ........80

2. The Extension of the Automatic Stay Beyond Plan Confirmation is Appropriate and Necessary to Facilitate the Administration of the Estate ..........................................................................................................82

3. The Court’s Jurisdiction over the Insurance Adversary Proceedings Is Appropriate and Necessary to Facilitate the Administration of the Estate ....................................................................................................83

E. PBRE’s Objection Should be Overruled................................................................85

Conclusion ....................................................................................................................................87


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TABLE OF AUTHORITIES

Page(s)

Cases

Bank of Am. Nat. Trust & Sav. Ass’n v. 203 N. LaSalle St. P’ship, 526 U.S. 434 (1999) ...........................................................................................................48, 56

Brite v. Sun Country Dev., Inc. (In re Sun Country Dev., Inc.), 764 F.2d 406 (5th Cir. 1985) ...................................................................................................44

Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612 (Bankr. S.D.N.Y. 1986) ...........................................................................38, 39, 65

Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063 (2d Cir. 1983)...................................................................................................38

Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599 (2d Cir. 1983).....................................................................................................26

Fin. Sec. Assurance Inc. v. T-H New Orleans Ltd. P’ship (In re T-H New Orleans Ltd. P’ship), 116 F.3d 790 (5th Cir. 1997) ...................................................................................................44

Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944 (2d Cir. 1993).......................................................................................................15

Gillman v. Continental Airlines (In re Continental Airlines), 203 F.3d 203 (3d Cir. 2000)...............................................................................................32, 74

In re 203 N. LaSalle St. Ltd. P’ship., 190 B.R. 567 (Bankr. N.D. Ill. 1995), rev’d on other grounds, Bank of Am., 526 U.S. 434 (1999) .................................................................................................................57

In re 500 Fifth Ave. Assocs., 148 B.R. 1010 (Bankr. S.D.N.Y. 1993) ...................................................................................15

In re Abbotts Dairies of Pa., Inc., 788 F.2d 143 (3d Cir. 1986).....................................................................................................44

In re Abeinsa Holding, Inc., 562 B.R. 265 (Bankr. D. Del. 2016) ........................................................................................27

In re Adelphia Commc’ns. Corp., 368 B.R. 140 (Bankr. S.D.N.Y. 2007) .....................................................................................48


Page(s)

v

In re Aleris Int’l, Inc., 2010 WL 3492664 (Bankr. D. Del. May 13, 2010) ...........................................................41, 58

In re Ambanc La Mesa L.P., 115 F.3d 650 (9th Cir. 1997) .............................................................................................56, 58

In re Armstrong World Indus., Inc., 348 B.R. 111 (D. Del. 2006) ........................................................................................13, 14, 58

In re Avaya Inc., No. 17-10089 (SMB) (Bankr. S.D.N.Y. Nov. 3, 2017) ...........................................................76

In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989) .................................................................................58

In re Blackhawk Mining LLC, No. 19-11595 (LSS) (Bankr. D. Del. Aug. 29, 2019) ........................................................29, 77

In re Bridgeport Hldgs., Inc., 388 B.R. 548 (Bankr. D. Del. 2008) ........................................................................................65

In re Burns & Roe Enters., Inc., No. 08-4191 (GEB), 2009 WL 438694 (D.N.J. Feb. 23, 2009) ..............................................60

In re Capmark Fin. Grp. Inc., No. 09-13684 (CSS), 2011 WL 6013718 (Bankr. D. Del. Oct. 5, 2011) ................................52

In re Century Glove, Cir. A. Nos. 90-400 and 90-401, 1993 WL 239489 (D. Del. Feb. 10, 1993) ....................44, 48

In re Chapel Gate Apartments, Ltd., 64 B.R. 569 (Bankr. N.D. Tex. 1986) ......................................................................................45

In re Chassix Holdings, Inc., 533 B.R. 64 (Bankr. S.D.N.Y. 2015) .......................................................................................72

In re Checkout Holding Corp., No. 18-12794 (KG) (Bankr. D. Del. Jan. 31, 2019) ................................................................29

In re Conseco, Inc., 301 B.R. 525 (Bankr. N.D. Ill. 2003) ..........................................................................31, 72, 76

In re Coram Healthcare Corp., 315 B.R. 321 (Bankr. D. Del. 2004) ............................................................................26, 31, 58

In re DBSD N. Am., Inc., 419 B.R. 179 (Bankr. S.D.N.Y. 2009) aff’d 2010 WL 1223109 (S.D.N.Y. March 24, 2010), modified on other grounds, 634 F.3d 79 (2d Cir. 2011) .................31, 72, 76


Page(s)

vi

In re Dex One Corp., No. 13-10533 (KG) (Bankr. D. Del. Apr. 29, 2013)................................................................61

In re Drexel Burnham Lambert Grp. Inc., 138 B.R. 723 (Bankr. S.D.N.Y. 1992) .....................................................................................15

In re Emerald Oil, Inc., No. 16-10704 (CSS) (Bankr. D. Del. Mar. 9, 2017) ................................................................77

In re Enron Corp., 326 B.R. 497 (S.D.N.Y. 2005) .................................................................................................35

In re EV Energy Partners, L.P., No. 18-10814 (Bankr. D. Del. 2018) .......................................................................................74

In re Exaeris, Inc., 380 B.R. 741 (Bankr. D. Del. 2008) ........................................................................................26

In re FAH Liquidating Corp., No. 13-13087 (KG) (Bankr. D. Del. July 28, 2014) ................................................................34

In re Filene’s Basement, LLC, 11-13511 (KJC), 2014 WL 1713416 (Bankr. D. Del. Apr. 29, 2014) .....................................39

In re Flintkote Co., 486 B.R. 99 (Bankr. D. Del. 2012) ..........................................................................................52

In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996) .................................................................................58

In re Future Energy Corp., 83 B.R. 470 (Bankr. S.D. Ohio 1988) ......................................................................................45

In re Gatehouse Media, Inc., No. 13-12503 (MFW) (Bankr. D. Del. Nov. 6, 2013) .............................................................61

In re Genesis Health Ventures, Inc., 266 B.R. 591 (Bankr. D. Del. 2001) ............................................................................13, 32, 74

In re GenOn Energy, Inc., No. 17-33695 (Bankr. S.D. Tex. Dec. 12, 2017) .....................................................................74

In re Geokinetics Inc., No. 13-10472 (KJC) (Bankr. D. Del. Apr. 25, 2013) ..............................................................61

In re Glob. Safety Textiles Holdings LLC, No. 09-12234 (KG), 2009 WL 6825278 (Bankr. D. Del. Nov. 30, 2009) ...............................60


Page(s)

vii

In re GSC, Inc., 453 B.R. 132 (Bankr. S.D.N.Y. 2011) .....................................................................................39

In re GSE Envtl., Inc., No. 13-11126 (MFW) (Bankr. D. Del. July 25, 2014) ............................................................61

In re Heritage Org., L.L.C., 375 B.R. 230 (Bankr. N.D. Tex. 2007) ....................................................................................15

In re Horsehead Holding Corp., No. 16-10287 (CSS) (Bankr. D. Del. Sep. 9, 2016) ................................................................30

In re Indianapolis Downs, LLC, 486 B.R. 286 (Bankr. D. Del. 2013) ................................................................................ passim

In re Integrated Res., Inc., 147 B.R. 650 (S.D.N.Y. 1992), appeal dismissed, 3 F.3d 49 (2d Cir. 1993) ....................39, 65

In re ION Media Networks, Inc., No. 09-13125 (JMP) (Bankr. S.D.N.Y. Nov. 24, 2009) ..........................................................57

In re Jersey City Med. Ctr., 817 F.2d 1055 (3d Cir. 1987)...................................................................................................15

In re Johns-Manville Corp., 68 B.R. 618 (Bankr. S.D.N.Y. 1986) .......................................................................................58

In re Laboratory Partners, Inc., No. 13-12769 (PJW) (Bankr. D. Del. July 10, 2014) ..............................................................34

In re Lapworth, 1998 WL 767456 (DWS) (Bankr. E.D. Pa. Nov. 2, 1998) ......................................................41

In re Lason, Inc., 300 B.R. 227 (Bankr. D. Del. 2003) ........................................................................................49

In re Lernout & Hauspie Speech Prods., N.V., 301 B.R. 651 (Bankr. D. Del. 2003) ........................................................................................58

In re Lisanti Foods, 329 B.R. 491 (Bankr. D.N.J. 2005), aff’d, 241 F. App’x 1 (3d Cir. 2007) ..............................45

In re Magnum Hunter Resources Corp., No. 15-12533 (Bankr. D. Del. Mar. 14, 2016).........................................................................77

In re Martin, 91 F.3d 389 (3d. Cir. 1996)......................................................................................................38


Page(s)

viii

In re Master Mortg. Inv. Fund, Inc., 168 B.R. 930 (Bankr. W.D. Mo. 1994)....................................................................................27

In re Mission Coal Co., No. 18-04177 (TOM) (Bankr. N.D. Ala. Apr. 4, 2019)...........................................................81

In re Moore, 608 F.3d 253 (5th Cir. 2010) ...................................................................................................69

In re NII Holdings, Inc., 288 B.R. 356 (Bankr. D. Del. 2002) ........................................................................................44

In re Nutritional Sourcing Corp., 398 B.R. 816 (Bankr. D. Del. 2008) ........................................................................................14

In re One Aviation Corp., No. 18-12309 (CSS) (Bankr. D. Del. Sep. 18, 2019) ..............................................................29

In re PES Holdings, LLC, No. 18-10122 (KG), Docket Nos. 244, 347, 510 ...........................................................6, 74, 77

In re Physiotherapy Holdings, Inc., No. 13-12965 (KG) (Bankr. D. Del. Dec. 23, 2013) ...............................................................61

In re Premier Int’l Holdings, Inc., 2010 WL 2745964 (CSS) (Bankr. D. Del. Apr. 29, 2010) ......................................................35

In re Prussia Assocs., 322 B.R. 572 (Bankr. E.D. Pa. 2005) ......................................................................................52

In re PWS Holding Corp., 228 F.3d 224 (3d Cir. 2000).........................................................................................35, 37, 44

In re Resorts Int’l, Inc., 372 F.3d 154 (3d Cir. 2004).....................................................................................................85

In re S&W Enter., 37 B.R. 153 (Bankr. N.D. Ill. 1984) ........................................................................................14

In re Samson Resources Corp., No. 14-11934 (CSS) (Bankr. D.Del. Feb. 13, 2017) ...............................................................30

In re Schipper, 933 F.2d 513 (7th Cir. 1991) ...................................................................................................38

In re Scimeca Found, Inc., 497 B.R. 753 (Bankr. E.D. Pa. 2013) ......................................................................................69


Page(s)

ix

In re Sea Garden Motel & Apartments, 195 B.R. 294 (D. N.J. 1996) ....................................................................................................52

In re Source Home Entm’t, LLC, No. 14-11553 (KG) (Bankr. D. Del, Feb. 20, 2015) ................................................................61

In re Southcross Holdings, LP, No. 16-20111 (Bankr. S.D. Tex. Apr. 11, 2016) .....................................................................74

In re Spansion, 2010 WL 2905001 (Bankr. D. Del. April 16, 2010) ................................................................36

In re Spansion, Inc., 426 B.R. 114 (Bankr. D. Del. 2010) ................................................................................ passim

In re Specialty Equip. Corp., 3 F.3d 1043 (7th Cir. 1993) .........................................................................................31, 72, 76

In re Telesphere Commc’s, Inc., 179 B.R. 544 (Bankr. N.D. Ill. 1999) ......................................................................................38

In re TK Holdings Inc., No. 17-11375 (BLS) (Bankr. D. Del. Feb. 21, 2018) ..............................................................29

In re Tresha-Mob, LLC, No. 18-52420-RBK, 2019 WL 1785431 (Bankr. W.D. Tex. Ap. 3, 2019) .............................69

In re Tribune Co., 464 B.R. 126 (Bankr. D. Del. 2011), overruled in part on other grounds, 464 B.R. 208 (Bankr. D. Del. 2011) ...............................................................................................52

In re U.S. Fidelis, 481 B.R. 503 (Bankr. E.D. Mo. 2012) .....................................................................................74

In re U.S. Truck Co., 47 B.R. 932 (E.D. Mich. 1985), aff’d, 800 F.2d 581 (6th Cir. 1986) ......................................52

In re Ultra Petroleum Corp., No. 16-32202 (MI) (Bankr. S.D. Tex. Mar. 14, 2017) ............................................................77

In re VER Techs. HoldCo LLC, No. 18-10834 (KG) (Bankr. D. Del. July 9, 2019) ............................................................76, 77

In re Verso Corp., No. 16-10163 (KG) (Bankr. D. Del. June 23, 2016) ...............................................................37

In re W.R. Grace & Co., 475 B.R. 34 (D. Del. 2012) ................................................................................................44, 52


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In re Wash. Mut., Inc., 442 B.R. 314 (Bankr. D. Del. 2011) ................................................................................ passim

In re Westmoreland Coal Co., No. 18-35672 (DRJ) (Bankr. S.D. Tex. Mar. 2, 2019) ............................................................81

In re World Health Alts., Inc., 344 B.R. 291 (Bankr. D. Del. 2006) ........................................................................................26

In re Z Gallerie LLC, No. 19-10488 (LSS) (Bankr. D. Del. Jun. 20, 2019) ...............................................................81

In re Zenith Elecs. Corp., 241 B.R. 92 (Bankr. D. Del. 1999) ..............................................................................27, 28, 72

John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs., 987 F.2d 154 (3d Cir. 1993)...............................................................................................15, 56

Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988).....................................................................................................52

Lawsky v. Condor Capital Corp., No. 14 CIV. 2863 CM, 2015 WL 4470332 (S.D.N.Y. July 21, 2015) ....................................69

Momentum Mfg. Corp. v. Emp. Creditors Comm. (In re Momentum Mfg. Corp.), 25 F.3d 1132 (2d Cir. 1994).....................................................................................................42

Pacor v. Higgins, 743 F.2d 984 (3d Cir.1984)......................................................................................................85

Pizza of Haw., Inc. v. Shakey’s, Inc. (In re Pizza of Haw., Inc.), 761 F.2d 1374 (9th Cir. 1985) .................................................................................................52

Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985) ..................................................................................................39, 65

United Artists Theatre Co. v. Walton, 315 F.3d 217 (3d Cir. 2000).....................................................................................................32

United States v. Chem. Found., 5 F.2d 191 (3d Cir. 1925) aff’d as modified, 272 U.S. 1 (1926) ..............................................69

Statutes

11 U.S.C. §§ 101–1532 ....................................................................................................................1

11 U.S.C. § 101(31) .......................................................................................................................47

11 U.S.C. § 363 ..............................................................................................................................38


Page(s)

xi

11 U.S.C. § 363(b) ...................................................................................................................39, 69

11 U.S.C. § 363(b)(1) ........................................................................................................38, 39, 65

11 U.S.C. § 365 ........................................................................................................................24, 40

11 U.S.C. § 365(a) .........................................................................................................................88

11 U.S.C. § 365(f) ..........................................................................................................................61

11 U.S.C. § 365(h)(1)(A)(ii) ..............................................................................................86, 87, 88

11 U.S.C. § 503(b) .........................................................................................................................51

11 U.S.C. § 507(a)(1) .....................................................................................................................51

11 U.S.C. § 507(a)(2) ...............................................................................................................50, 54

11 U.S.C. § 507(a)(8) .....................................................................................................................51

11 U.S.C. § 510(b) .......................................................................................................10, 16, 43, 57

11 U.S.C. §§ 701-784 ............................................................................................................ passim

11 U.S.C. § 727(a) .........................................................................................................................71

11 U.S.C. §§ 1101-1195 ........................................................................................................ passim

11 U.S.C. § 1102 ..............................................................................................................................1

11 U.S.C. § 1107(a) .........................................................................................................................1

11 U.S.C. § 1108 ..............................................................................................................................1

11 U.S.C. § 1114 ............................................................................................................................54

11 U.S.C. § 1122 .................................................................................................................... passim

11 U.S.C. § 1122(a) .......................................................................................................................14

11 U.S.C. § 1123 .................................................................................................................... passim

11 U.S.C. § 1123(a) .......................................................................................................................17

11 U.S.C. § 1123(a)(1) ...................................................................................................................17

11 U.S.C. § 1123(a)(2) ...................................................................................................................17

11 U.S.C. § 1123(a)(3) .................................................................................................18, 36, 44, 45


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11 U.S.C. § 1123(a)(4) .......................................................................................................18, 45, 46

11 U.S.C. § 1123(a)(5) .............................................................................................................18, 20

11 U.S.C. § 1123(a)(6) .............................................................................................................21, 22

11 U.S.C. § 1123(a)(7) .............................................................................................................22, 23

11 U.S.C. § 1123(b) ............................................................................................................... passim

11 U.S.C. § 1123(b)(1) ..................................................................................................................24

11 U.S.C. § 1123(b)(1)–(6) ......................................................................................................23, 24

11 U.S.C. § 1123(b)(2) ..................................................................................................................24

11 U.S.C. § 1123(b)(3)(A) .............................................................................................................26

11 U.S.C. § 1123(b)(4) ............................................................................................................38, 39

11 U.S.C. § 1123(d) .......................................................................................................................40

11 U.S.C. § 1125 .................................................................................................................... passim

11 U.S.C. § 1125(a) .......................................................................................................................42

11 U.S.C. § 1125(a)(1) ...................................................................................................................42

11 U.S.C. § 1125(b) .................................................................................................................41, 42

11 U.S.C. § 1125(c) .......................................................................................................................42

11 U.S.C. § 1126 .................................................................................................................... passim

11 U.S.C. § 1126(c) .................................................................................................................43, 44

11 U.S.C. § 1126(e) .......................................................................................................................44

11 U.S.C. § 1126(f) ........................................................................................................................43

11 U.S.C. § 1126(g) .......................................................................................................................43

11 U.S.C. § 1127 ............................................................................................................................60

11 U.S.C § 1127(a) ........................................................................................................................59

11 U.S.C. § 1129 ..............................................................................................................1, 3, 13, 14

11 U.S.C. § 1129(a) .......................................................................................................................55


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xiii

11 U.S.C. § 1129(a)(1) .............................................................................................................14, 40

11 U.S.C. § 1129(a)(2) .......................................................................................................36, 41, 44

11 U.S.C. § 1129(a)(3) ...................................................................................................................44

11 U.S.C. § 1129(a)(5) .............................................................................................................46, 47

11 U.S.C. § 1129(a)(5)(A)(i) .........................................................................................................46

11 U.S.C. § 1129(a)(5)(A)(ii) ........................................................................................................46

11 U.S.C. § 1129(a)(5)(B) .............................................................................................................47

11 U.S.C. § 1129(a)(6) ...................................................................................................................47

11 U.S.C. § 1129(a)(7) .............................................................................................................48, 49

11 U.S.C. § 1129(a)(7)(A) .............................................................................................................49

11 U.S.C. § 1129(a)(8) .......................................................................................................50, 52, 55

11 U.S.C. § 1129(a)(9) .............................................................................................................50, 51

11 U.S.C. § 1129(a)(9)(A) .......................................................................................................50, 51

11 U.S.C. § 1129(a)(9)(B) .............................................................................................................51

11 U.S.C. § 1129(a)(9)(C) .............................................................................................................51

11 U.S.C. § 1129(a)(10) .....................................................................................................50, 51, 52

11 U.S.C. § 1129(a)(11) .....................................................................................................52, 53, 54

11 U.S.C. § 1129(a)(12) .................................................................................................................54

11 U.S.C. § 1129(a)(13) .................................................................................................................54

11 U.S.C. § 1129(a)(14) .................................................................................................................55

11 U.S.C. § 1129(a)(15) .................................................................................................................55

11 U.S.C. § 1129(a)(16) .................................................................................................................55

11 U.S.C. § 1129(b) .....................................................................................................55, 56, 57, 58

11 U.S.C. § 1129(b)(1) ................................................................................................55, 57, 58, 59

11 U.S.C. § 1129(b)(2)(B)(i) .........................................................................................................56


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xiv

11 U.S.C. § 1129(b)(2)(B)(ii) ........................................................................................................56

11 U.S.C. § 1129(d) .................................................................................................................50, 59

11 U.S.C. § 1141 ............................................................................................................................71

11 U.S.C. § 1141(d)(3) ..................................................................................................................71

28 U.S.C. § 157(b)(2) ....................................................................................................................84

28 U.S.C. § 157(b)(2)(A) .........................................................................................................84, 85

28 U.S.C. § 1930 ............................................................................................................................54

Securities Act of 1933 § 5 ..............................................................................................................59

Rules

Fed. R. Bankr. P. 1015(b) ................................................................................................................1

Fed. R. Bankr. P. 3017 ...................................................................................................................41

Fed. R. Bankr. P. 3018 ...................................................................................................................41

Fed. R. Bankr. P. 3019 .............................................................................................................59, 60

Fed. R. Bankr. P. 3020 ...................................................................................................................61

Fed. R. Bankr. P. 3020(e) ..............................................................................................................60

Fed. R. Bankr. P. 6004 ...................................................................................................................61

Fed. R. Bankr. P. 6004(h) ..............................................................................................................60

Fed. R. Bankr. P. 6006 ...................................................................................................................61

Fed. R. Bankr. P. 6006(d) ..............................................................................................................60

Fed. R. Bankr. P. 9019 ...................................................................................................................26

Other Authorities

H.R. Rep. No. 95-595, reprinted in 1978 U.S.C. C.A.N. 5963 (1977) .........................................14

H.R. Rep. No. 595, 95th Cong., 1st Sess. (1977) ..........................................................................41

New York Times ...............................................................................................................................8

S. Rep. No. 95-989, reprinted in 1978 U.S.C. C.A.N. 5787 (1978) ..............................................14


Page(s)

xv

S. Rep. No. 989, 95th Cong., 2d Sess. (1978) ...............................................................................41

USA Today .......................................................................................................................................7


1

The above-captioned debtors (collectively, the “Debtors”) submit this memorandum of law

(this “Memorandum”) in support of confirmation of the Third Amended Joint Chapter 11 Plan of

PES Holdings, LLC and its Debtor Affiliates filed contemporaneously herewith (as modified,

amended, or supplemented from time to time, the “Plan”),2 pursuant to section 1129 of title 11 of

the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”). The Debtors hereby

incorporate into this Memorandum the Debtors’ Response In Support of an Order Confirming the

Debtors’ Third Amended Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its

Debtor Affiliates (the “Debtors’ Response to the Committee”), filed contemporaneously herewith.

In support of confirmation of the Plan and in response to the objections thereto (collectively,

the “Objections”), the Debtors respectfully state as follows.

Preliminary Statement

1. Early in the morning on June 21, 2019, a large-scale, catastrophic explosion at the

alkylation unit at the Debtors’ Girard Point refining facility caused substantial property damage

and left the Girard Point refinery largely inoperable. This incident forced the Debtors into a

preservation-focused operational status, leaving the Debtors with no choice but to commence these

2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Plan, the

Confirmation Order (as defined herein), or the Debtors’ Response In Support of an Order Confirming the Debtors’ Third Amended Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates (filed contemporaneously herewith), as applicable.

A detailed description of the Debtors and their businesses, and the facts and circumstances surrounding the Debtors’ Chapter 11 Cases, are set forth in greater detail in the Declaration of Jeffrey S. Stein, Chief Restructuring Officer of the Debtors, in Support of Chapter 11 Petitions and First Day Motions [Docket No. 32]. On July 21, 2019 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors are operating their business and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. The Debtors’ chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Bankruptcy Rule 1015(b) [Docket No. 99]. No party has requested the appointment of a trustee or examiner in these chapter 11 cases. On October 11, 2019, the United States Trustee for the District of Delaware (the “U.S. Trustee”) appointed an official committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code (the “Committee”) [Docket No. 197].


2

Chapter 11 Cases with the goals of preserving the safe operation of their refinery complex and

maximizing value for all stakeholders. The Debtors’ path forward was anything but certain, and

the estate fiduciaries were left with a litany of operational challenges in the wake of this

catastrophe. Although the path forward was once uncertain, through the tireless efforts of all

involved, including the DIP Lenders, the Intermediation Provider, and the Committee, the Debtors

stand before the Court having secured operations on their refinery site, established adequate

financing to pursue recovery of insurance claims, and secured a commitment for a reorganization

of certain debtor entities pursuant to a transaction with the Plan Sponsor that maximizes

distributable value to key creditors and contemplates the investment of billions in the site and the

creation of thousands of new jobs at the site (substantially more than what was lost).

2. The Debtors have diligently pursued all available paths to maximize distributable

value for all case constituents. First, the Debtors have pursued insurance recovery proceeds for

losses suffered in connection with the fire that occurred in the Girard Point refinery on or around

June 21, 2019 (the “June 21 Incident”). As of December 6, 2019, the Debtors, ICBC Standard

Bank Plc (“ICBCS”), and the Committee completed briefing to determine whether the insurance

proceeds for business interruption losses from the June 21 Incident constitute Term Loan Priority

Collateral. These issues were argued in front of the Court on January 14, 2020 and a ruling from

this Court is currently pending. Simultaneously, the Debtors and their management team continue

to pursue claims under the Business Interruption and Property Damage Insurance Policies.

3. Second, beginning in August 2019, just weeks after the Petition Date, the Debtors

embarked on a comprehensive sale process to evaluate potential strategic and/or financial buyers,

refinery restart bidders, land redevelopment and/or real estate bidders, alternative fuel facility

bidders, and decommissioning and environmental remediation bidders. Following three rounds of


3

competitive bidding, diligence requests and site visits, and management discussions, the Debtors

ultimately conducted an auction (the “Auction”) between two parties that submitted Qualified Bids

(as defined in the Bidding Procedures3). The Auction culminated in a “best and final” offer from

HRP Philadelphia Holdings, LLC (“HRP” or the “Plan Sponsor”) of $240 million, which

represented an increase of $86 million from HRP’s Qualified Bid. Moreover, HRP’s bid is secured

by a $30 million deposit, which is indicative of its commitment to close on this transaction.

Following consultation with the Term Loan Lenders and the Committee, the Debtors announced

HRP as the Winning Bidder (as defined in the Bidding Procedures Order), and executed the

Purchase and Sale Agreement moments later.

4. The Debtors now seek to confirm the Plan, which provides the Debtors with a path

to swiftly conclude their Chapter 11 Cases, while simultaneously providing recoveries to all

funded debt holders and Holders of General Unsecured Claims. Pursuant to the Plan and the

Purchase Agreement, the Debtors will sell 100% of the equity interests of PES Holdings, LLC to

Plan Sponsor.4 The Plan establishes certain reserves to ensure payment of Claims and Interests

pursuant to the Plan that will be funded as proceeds of the insurance recovery process are received

by the Liquidating Trust. The Plan has the support of the Debtors’ key constituents, including

100% of Holders of Class 3 Term Loan Secured Claims, Class 4 Intermediation Secured Claims,

and Class 6 Subordinated Remaining Volume Claims. In addition, as forth herein, the Plan

satisfies all applicable provisions of the Bankruptcy Code, including section 1129 of the

Bankruptcy Code.

3 For the avoidance of doubt, the term “Bidding Procedures” has the meaning ascribed to it in the Order (A)

Establishing Bidding Procedures, (B) Approving Bid Protections, and (C) Granting Related Relief [Docket No. 583] (the “Bidding Procedures Order”).

4 The Purchase Agreement was filed in the Plan Supplement [Docket No. 780].


4

5. Following the Bid Deadline, the Debtors engaged in several weeks of

round-the-clock, good-faith negotiations with all key stakeholders and Plan Sponsor to develop

and finalize the proposed transaction structure. During these negotiations, each party agreed to

make material concessions in furtherance of the Debtors’ restructuring.

6. The Debtors are continuing discussions and negotiations with the objecting parties,

and have made a host of clarifications in the Plan and in their proposed version of the order

confirming the Plan (the “Confirmation Order”) to provide the objectors comfort, with hope that

these issues can be resolved in their entirety in advance of the hearing to consider Confirmation of

the Plan (the “Confirmation Hearing”). Additionally, the Debtors have made modifications to the

Plan, or included provisions in the proposed order confirming the Plan, that address each of the

resolved Objections, as well as informal objections asserted by other parties in interest. The

Debtors will continue working with objecting parties to resolve any remaining issues and will

strive to obtain confirmation of the Plan on an uncontested basis. To the extent any of the

Objections remain unresolved, the Debtors reserve all rights to supplement this Memorandum in

advance of the Confirmation Hearing.

7. Given the history at play in these chapter 11 cases, the Plan is a remarkable result.

Following the June 21 Incident, the Debtors were facing several possible outcomes, and none of

them were promising. Approximately eight months have now passed from the explosion that

changed the course of the Debtors’ future and that of the surrounding community. The Debtors

have used this time to run a robust marketing process, ultimately culminating in a $240 million

purchase offer from a seasoned redeveloper that is dead-set on swiftly closing and concluding

these cases. Inevitably, a catastrophe case leaves some parties dissatisfied. But, through the

morass of challenges inherent to this enterprise, the Debtors have marched forward, and now stand


5

at the goal line of achieving a value-maximizing Plan that promises a hopeful future for this

Philadelphia institution.

8. Because the Plan satisfies all applicable provisions of the Bankruptcy Code, and as

set forth more fully in this Memorandum, and the Debtors’ Response to the Committee (filed

contemporaneously herewith), the Plan should be confirmed.

Argument

9. This Memorandum is divided into three parts. Part I provides the procedural history

of the Plan and Disclosure Statement, the Debtors’ solicitation efforts and voting results, and a

summary of the various Objections filed with respect to the Plan. Part II establishes the Plan’s

compliance with each of the applicable requirements for Confirmation, including that certain of

the discretionary contents of the Plan, including the Plan’s release provisions, are appropriate and

should be approved. Part III establishes that the remaining Objections to the Plan should be

overruled. In further support of Confirmation of the Plan, the Debtors have filed

contemporaneously herewith:

• the Declaration of Paul H. Deutch on Behalf of Omni Management Group, Inc. Regarding Service of Solicitation Packages and Tabulation of Ballots Cast on the Second Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates (the “Voting Report”);

• the Declaration of Jeffrey S. Stein in Support of Confirmation of the Second Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates (the “Stein Declaration”);

• the Declaration of John Singh in Support of Confirmation of the Second Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates (the “Singh Declaration”);

• the Declaration of Josephine Gartrell in Support of the Debtors’ Motion Seeking Entry of an Order (I) Approving the Debtors’ KEIP and (II) Granting Related Relief (the “Gartrell Declaration”);

• the Declaration of Joseph J. Sciametta in Support of Confirmation of Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor Affiliates (the “Sciametta


6

Declaration” and, together with the Voting Report, the Stein Declaration, the Singh Declaration, and the Gartrell Declaration, the “Declarations”).

10. For the reasons stated herein and in light of the evidentiary support to be offered at

the Confirmation Hearing, the Debtors respectfully request that the Court find that the Debtors

have satisfied their burden and confirm the Plan.

I. Case Background and Objections

A. Procedural History.

11. The Plan is the product of extensive, good-faith, arm’s-length negotiations between

the Debtors and their primary creditor constituencies, including, namely, the Term Loan Lenders,

ICBCS, and the Committee. Since the Petition Date, the Debtors have engaged in a multi-faceted

process to maximize the value of the Debtors’ estates for their stakeholders, including a

comprehensive marketing process for the sale of the Debtors’ business and a complex insurance

process to recover on the Debtors’ property damage and business interruption insurance policy

claims relating to the June 21 Incident.

12. The Debtors’ marketing efforts have paid off. The Debtors now intend to

implement the Plan through the sale of 100% of PES Holdings, LLC’s equity to HRP, acting as

Plan Sponsor pursuant to the Purchase Agreement. The main features of the Sale Transaction

under the Plan include, among other things:

• the transfer of 100% of PES Holdings, LLC’s membership interests to the Plan Sponsor;

• submission of a $30 million deposit, which is currently held in escrow, to secure the Plan Sponsor’s commitment to close on the transaction; and


7

• assumption of PESRM’s outstanding environmental compliance obligations, including potential obligations of PESRM under the Consent Decree.5

13. On October 10, 2019, the Debtors filed with the United States Bankruptcy Court

for the District of Delaware (the “Court”), among other pleadings, the Joint Chapter 11 Plan of

PES Holdings, LLC and its Debtor Affiliates and the Corrected Disclosure Statement for the Joint

Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates [Docket No. 462], along with the

Disclosure Statement Motion6 pursuant to which the Debtors sought a hearing on approval of the

Disclosure Statement and the related Solicitation and Voting Procedures. On December 11, 2019,

the Debtors filed the First Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor

Affiliates and the Disclosure Statement for the First Amended Joint Plan of PES Holdings, LLC

and its Debtor Affiliates (the “Disclosure Statement”). On December 11, 2019, the Court entered

the Disclosure Statement Order7 which, in relevant part: (a) established February 3, 2020, at

5:00 p.m. prevailing Eastern Time, as the deadline to object to the Plan; (b) approved the

solicitation procedures set forth in the Disclosure Statement; and (c) approved the form and

manner of the Confirmation Hearing Notice (as defined in the Disclosure Statement Order). The

Debtors caused the Notice and Claims Agent, on or about December 17, 2019, to serve the

Solicitation Packages and the Confirmation Hearing Notice in accordance with the terms of the

5 “Consent Decree” shall mean the Consent Decree and Environmental Settlement Agreement entered by the Court

in the Debtors’ prior bankruptcy case, see In re PES Holdings, LLC, No. 18-10122 (KG), Docket Nos. 244, 347, 510.

6 See Debtors’ Motion for Entry of an Order (I) Approving the Adequacy of Information in the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures, (III) Approving the Forms of Ballots and Notices In Connection Therewith, (IV) Scheduling Certain Dates with Respect Thereto, and (V) Granting Related Relief [Docket No. 464] (the “Disclosure Statement Motion”).

7 See Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures, (III) Approving the Forms of Ballots and Notices in Connection Therewith, (IV) Scheduling Certain Dates with Respect Thereto, and (V) Granting Related Relief [Docket No. 671] (the “Disclosure Statement Order”).


8

Disclosure Statement Order.8 The Debtors caused the Publication Notice (as defined in the

Disclosure Statement Order) to be published in USA Today (national edition) and

The New York Times (national edition) on December 16, 2019, as evidenced by the Affidavit of

Service of Publication [Docket No. 704].9

14. On January 22, 2020, the Debtors filed with the Court the Plan Supplement

[Docket No. 780], which included the following exhibits: (a) the Schedule of Assumed Executory

Contracts and Unexpired Leases; (b) a list of retained Causes of Action; (c) the form of

Management Incentive Plan; (d) the Purchase Agreement; (e) the description of successful bid;

(f) the form of Liquidating Trust Agreement; (g) the 1129(a)(5) disclosures; (h) the notice of sale

restructuring and successful bid; (i) a disclosure table detailing the projected creditor recoveries

following the Auction; (j) an updated liquidation analysis taking into account estimated recoveries

based on the successful bid; and (k) a summary explanation of any Plan changes. On January 22,

2020, the Debtors caused the notice of filing of the foregoing Plan Supplement documents to be

delivered, and the foregoing Plan Supplement documents in clauses (h) to (k) and the letter from

the Committee recommending how Holders of General Unsecured Claims should vote on the

revised Plan to be delivered by overnight mail, upon the parties receiving notice of the Disclosure

Statement, in accordance with paragraph 16 of the Disclosure Statement Order.

15. On January 28, 2020, the Debtors filed the First Amended Plan Supplement for the

First Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates [Docket

8 See Affidavit of Service [Docket No. 713] (the “Affidavit of Solicitation”).

9 Due to a clerical error, the letter from the Committee recommending that Holders wait to receive the Plan Supplement to vote was inadvertently excluded from the Solicitation Packages (as defined in the Disclosure Statement Order) sent to Holders entitled to vote on the Plan. On January 27, 2020, the Debtors served a letter to all Holders that had voted prior to the filing of such Plan Supplement asking that such Holders submit a new vote either in favor or against the Debtors’ Plan (the “Supplemental Solicitation Letter”).


9

No. 819], which included a revised Schedule of Assumed Executory Contracts and Unexpired

Leases, and Amended Retained Causes of Action List. On February 6, 2020, the Debtors filed the

Second Amended Plan Supplement for the Second Amended Joint Chapter 11 Plan of PES

Holdings, LLC and Its Debtor Affiliates [Docket No. 926], which included a further revised

Schedule of Assumed Executory Contracts and Unexpired Leases.

16. On January 29, 2020, the Debtors filed the Second Amended Joint Chapter 11 Plan

of PES Holdings, LLC and Its Debtor Affiliates [Docket No. 827].

17. The deadline for all Holders of Claims and Interests entitled to vote on the Plan to

cast their ballots was February 3, 2020. The deadline to file objections to the Plan was February

3, 2020 at 4:00 p.m., prevailing Eastern Time. The Confirmation Hearing is scheduled for

February 12, 2020 at 9:30 a.m., prevailing Eastern Time. Concurrently with the filing of this

Memorandum, the Debtors have submitted a proposed Confirmation Order (the “Proposed

Confirmation Order”).

B. Global Settlement.

18. The Plan embodies a good-faith compromise and settlement (the “Settlement”) of

Claims, Interests, Causes of Action, and controversies related to the Debtors and the restructuring.

The Settlement is designed to achieve a beneficial and efficient resolution of the Chapter 11 Cases

for all parties in interest.10 The Debtors thoroughly analyzed those Claims, Interests, Causes of

Action, and controversies and found that the Settlement will maximize the value of the Estates and

maximize recoveries to Holders of Claims and Interests and is essential to the successful

implementation of the Plan.11

10 See Stein Decl. ¶ 59.

11 Id.


10

19. To effectuate this global settlement, the Plan includes mutual, consensual, and

customary releases of claims held by the Debtors and parties in interest. This global settlement is

critical to bring closure to the Debtors, the Acquired Reorganized Debtors, and all parties in

interest and to maximize recoveries for all stakeholders.

20. The Debtors submit that the Sale Restructuring effectuated through the Plan is in

the best interests of the Debtors’ Estates, represents the best available restructuring option, and

will maximize value the value of the Estates and maximize recoveries to all Holders of Claims and

Interests.

C. The Plan Solicitation and Notification Process.

21. The Plan constitutes a separate Plan for each of the Debtors, and the classification

of Claims and Interests set forth herein applies separately to each of the Debtors. For purposes of

administrative convenience, the Plan consolidates the process by which distributions will be made

under the Plan, but the Plan does not contemplate substantive consolidation.

22. In compliance with the Bankruptcy Code, only Holders of Claims and Interests in

Impaired Classes receiving or retaining property on account of such Claims or Interests were

entitled to vote on the Plan.12 Holders of Claims and Interests were not entitled to vote if their

rights are Unimpaired. The following Classes of Claims and Interests were not entitled to vote on

the Plan, and the Debtors did not solicit votes from Holders of such Claims and Interests:

Class Claim or Interest Status Voting Rights

1 Other Secured Claims Unimpaired Not Entitled to Vote (Presumed to Accept)

2 Other Priority Claims Unimpaired Not Entitled to Vote (Presumed to Accept)

7 Intercompany Claims Impaired Not Entitled to Vote (Deemed to Reject)

8 Intercompany Interests Unimpaired / Impaired Not Entitled to Vote (Presumed to Accept / Deemed to Reject)

12 See 11 U.S.C. § 1126.


11

Class Claim or Interest Status Voting Rights

9 Interests in PES Energy and PES Ultimate Interests Impaired Not Entitled to Vote

(Deemed to Reject)

10 Section 510(b) Claims Impaired Not Entitled to Vote (Deemed to Reject)

23. The Debtors solicited votes on the Plan only from Holders of Claims in Impaired

Classes receiving or retaining property on account of such Claims. The voting results, as reflected

in the Voting Report, are summarized as follows:

Class Class Description

Number Accepting

(%)

Number Rejecting

(%)

Amount Accepting

(%)

Amount Rejecting

(%)

Class Voting Result

3 Term Loan Secured Claims 100.0 0.0 100.0 0.0 Accepted

4 Intermediation Secured Claims 100.0 0.0 100.0 0.0 Accepted

5 General

Unsecured Claims

23.4 76.6 1.8 98.2 Rejected

6 Subordinated Remaining

Volume Claim 100.0 0.0 0.0 0.0 Accepted

24. As set forth above and in the Voting Report, Holders of Claims and Interests in

Classes 3, 4, 5, and 6 were entitled to vote to accept or reject the Plan (collectively,

the “Voting Classes”).

25. As a direct result of the Debtors’ efforts to engage their key constituencies, the Plan

enjoys the support of the Debtors’ primary stakeholders—100 percent of Holders of Term Loan

Secured Claims, Intermediation Secured Claims, and the Subordinated Remaining Volume Claim

voted in favor of the Plan.

26. The Plan facilitates the maximization of value of the Estates on terms supported by

major parties in interest in these Chapter 11 Cases. More specifically, the Plan details, among

other things: (a) the consummation of the Sale Restructuring; including the vesting of the

Purchased Interests and other interest and assets in the Plan Sponsor and the Liquidating Trust, as


12

applicable (b) the sources of consideration for Plan distributions; (c) authorization of the

Reorganized Debtors and Liquidating Trust, as applicable, to take all actions necessary to

effectuate the Plan, including those actions necessary to effect the Sale Transactions, and all other

actions contemplated under or necessary to implement the Plan; (d) the settlement and discharge

of Claims and Interests as set forth in the Plan; and (e) the preservation and vesting of certain

Causes of Action that constitute “Excluded Assets” under the Purchase Agreement in the

Liquidating Trust.

27. The formulation of the Plan is a significant achievement for the Debtors and

represents months of tireless discussions with parties in interest following the June 21 Incident.

Each of the Debtors strongly believes that the Plan is in the best interests of its estate and represents

the best available alternative for all of its stakeholders. The transactions embodied in the Plan will

maximize the value of the Estates and maximize recoveries to Holders of Claims and Interests.

D. Remaining Confirmation Objections.

28. The Debtors received 13 formal objections with respect to Confirmation of the Plan

(each, an “Objection”). The formal Objections were filed by the U.S. Trustee [Docket No. 851]

(the “UST Objection”); Westchester Fire Insurance Company and its affiliated sureties [Docket

No. 858] (the “Westchester Objection”); the United Steel, Paper and Forestry, Rubber,

Manufacturing, Energy Allied Industrial and Service Workers International Union (the “United

Steelworkers”) [Docket No 866] (the “USW Objection”); Cypress Fairbanks Independent School

District and Harris County [Docket No. 870] (the “Texas Local Tax Authorities Objection”); the

United States, on behalf of the Internal Revenue Service, the Bureau of Customs and Border

Protection, and the Federal Communications Commission [Docket No. 915] (the “US Objection”);

the Committee [Docket No. 924] (the “Committee Objection”); and multiple insurers [Docket

No. 928] (the “Insurers Objection”). Formal limited objections were filed by Murex LLC [Docket


13

No. 857] (Limited Objection) (the “Murex Objection”); Point Breeze Renewable Energy, LLC

[Docket No. 865] (Limited Objection) (the “PBRE Objection”); ETC Sunoco Holdings LLC f/k/a

Sunoco, Inc. and certain affiliates and subsidiaries [Docket Nos. 868–869] (Limited Objection)

(the “Sunoco Objection”). Additionally, a Protective Objection was filed by the United States of

America, on behalf of the United States Environmental Protection Agency [Docket No. 911]

(the “EPA Objection”); and a Response and Reservation of Rights was filed by Merill Lynch

Commodities, Inc. (the “MLC Reservation of Rights”) [Docket No. 855]. After the Objection

Deadline, OSG Delaware Bay Lightering LLC filed a joinder to the Committee Objection [Docket

No. 925] (the “OSG Joinder”).

29. The Debtors also received informal requests for clarification from ICBCS, ACE

American Insurance Company and certain of its U.S.-based affiliated insurance companies

(“Chubb”), and the Pennsylvania Department of Environmental Protection (collectively, the

“Requesting Parties”). The Debtors and the Requesting Parties agreed to certain technical

modifications to the Plan and the inclusion of additional language in the Confirmation Order.

30. The Debtors will continue to seek to resolve those remaining Objections in advance

of the Confirmation Hearing, but to the extent the Debtors are unable to consensually resolve such

Objections in that time, the Debtors request that the Court overrule such Objections, as set forth in

section III herein.

II. The Plan Satisfies the Requirements of Section 1129 of the Bankruptcy Code.

31. To confirm the Plan, the Court must find that the Debtors have satisfied the

provisions of section 1129 of the Bankruptcy Code by a preponderance of the evidence.13 As set

13 See In re Armstrong World Indus., Inc., 348 B.R. 111, 120, n.15 (D. Del. 2006); In re Genesis Health Ventures,

Inc., 266 B.R. 591, 616 n.23 (Bankr. D. Del. 2001).


14

forth herein, the Plan fully complies with all relevant sections of the Bankruptcy Code—including

sections 1122, 1123, 1125, 1126, and 1129—as well as the Bankruptcy Rules and applicable

non-bankruptcy law.

A. The Plan Complies with the Applicable Provisions of the Bankruptcy Code (§ 1129(a)(1)).

32. Under section 1129(a)(1) of the Bankruptcy Code, a plan must “compl[y] with the

applicable provisions of [the Bankruptcy Code].” The legislative history of section 1129(a)(1) of

the Bankruptcy Code explains that this provision also encompasses the requirements of sections

1122 and 1123 of the Bankruptcy Code, which govern the classification of claims and the contents

of a plan of reorganization, respectively.14 As explained below, the Plan complies with the

requirements of sections 1122, 1123, and 1129 of the Bankruptcy Code, as well as other applicable

provisions.

1. The Plan Satisfies the Classification Requirements of Section 1122 of the Bankruptcy Code.

33. The classification requirement of section 1122(a) of the Bankruptcy Code provides,

in pertinent part, as follows:

Except as provided in subsection (b) of this section, a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class.

34. For a classification structure to satisfy section 1122 of the Bankruptcy Code, not all

substantially similar claims or interests need to be grouped in the same class.15 Instead, claims or

14 S. Rep. No. 95-989, at 126, reprinted in 1978 U.S.C. C.A.N. 5787, 5912 (1978); H.R. Rep. No. 95-595, at 412,

reprinted in 1978 U.S.C. C.A.N. 5963, 6368 (1977); In re S&W Enter., 37 B.R. 153, 158 (Bankr. N.D. Ill. 1984) (“An examination of the Legislative History of [section 1129(a)(1)] reveals that although its scope is certainly broad, the provisions it was most directly aimed at were [s]ections 1122 and 1123.”); In re Nutritional Sourcing Corp., 398 B.R. 816, 824 (Bankr. D. Del. 2008).

15 Armstrong World Indus., Inc., 348 B.R. at 159.


15

interests designated to a particular class must be substantially similar to each other.16 Courts in

this jurisdiction and others have recognized that plan proponents have significant flexibility in

placing similar claims into different classes, provided there is a rational basis to do so.17

35. The Plan’s classification of Claims and Interests satisfies the requirements of

section 1122 of the Bankruptcy Code because the Plan places Claims and Interests into ten separate

Classes, with Claims and Interests in each Class differing from the Claims and Interests in each

other Class in a legal or factual way or based on other relevant criteria.18 Specifically, the Plan

provides for the separate classification of Claims and Interests into the following Classes:

a. Class 1: Other Secured Claims;

b. Class 2: Other Priority Claims;

c. Class 3: Term Loan Secured Claims;

d. Class 4: Intermediation Secured Claims;

e. Class 5: General Unsecured Claims;

f. Class 6: Subordinated Remaining Volume Claim;

16 Id.

17 Courts have identified grounds justifying separate classification, including: (a) where members of a class possess different legal rights, and (b) where there are good business reasons for separate classification. See John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs., 987 F.2d 154, 158–59 (3d Cir. 1993) (holding that, as long as each class represents a voting interest that is “sufficiently distinct and weighty to merit a separate voice in the decision whether the proposed reorganization should proceed,” the classification is proper); In re Jersey City Med. Ctr., 817 F.2d 1055, 1061 (3d Cir. 1987) (recognizing that separate classes of claims must be reasonable and allowing a plan proponent to group similar claims in different classes); see also Frito-Lay, Inc. v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 956–57 (2d Cir. 1993) (finding separate classification appropriate because classification scheme had a rational basis on account of the bankruptcy court-approved settlement); In re Heritage Org., L.L.C., 375 B.R. 230, 303 (Bankr. N.D. Tex. 2007) (explaining that “the only express prohibition on separate classification is that it may not be done to gerrymander an affirmative vote on a reorganization plan”); In re 500 Fifth Ave. Assocs., 148 B.R. 1010, 1018 (Bankr. S.D.N.Y. 1993) (holding that, although discretion is not unlimited, “the proponent of a plan of reorganization has considerable discretion to classify claims and interests according to the facts and circumstances of the case”) (internal quotations omitted); In re Drexel Burnham Lambert Grp. Inc., 138 B.R. 723, 757 (Bankr. S.D.N.Y. 1992) (“Courts have found that the Bankruptcy Code only prohibits the identical classification of dissimilar claims. It does not require that similar classes be grouped together . . . .”).

18 See Plan Art. III.


16

g. Class 7: Intercompany Claims;

h. Class 8: Intercompany Interests;

i. Class 9: Interests in PES Energy and PES Ultimate Interests; and

j. Class 10: Section 510(b) Claims.

36. Claims and Interests assigned to each particular Class described above are

substantially similar to the other Claims and Interests in such Class.19 In addition, valid business,

legal, and factual reasons justify the separate classification of the particular Claims or Interests

into the Classes created under the Plan, and no unfair discrimination exists between or among

Holders of Claims and Interests.20 Namely, the Plan separately classifies the Claims because each

Holder of such Claims or Interests may hold (or may have held) rights in the estates legally

dissimilar to the Claims or Interests in other Classes or because substantial administrative

convenience resulted from such classification.

37. For example, the classification scheme distinguishes between Holders of Term

Loan Secured Claims (Class 3) from Holders of DIP Claims (unclassified), because of the different

circumstances of each class. Other Priority Claims (Class 2) are classified separately due to their

required treatment under the Bankruptcy Code.21 In addition, the Plan classifies Interests in PES

Energy and PES Ultimate Interests (Class 9) separately from Interests that a Debtor holds in

another Debtor because the Debtors’ ownership structure is dependent upon maintaining the

Intercompany Interests and, therefore, the Intercompany Interests may be preserved under the Plan


20 See id. ¶ 26.

21 See id. ¶ 27.


17

for the administrative convenience of ensuring the preservation of the Debtors’ corporate structure

after the Effective Date.22

38. Accordingly, the Claims or Interests assigned to each particular Class described

above are substantially similar to the other Claims or Interests in each such Class and the

distinctions among Classes are based on valid business, factual, and legal distinctions.

The Debtors submit that the Plan fully complies with and satisfies section 1122 of the Bankruptcy

Code, and no party has asserted otherwise.

2. The Plan Satisfies the Mandatory Plan Requirements of Section 1123(a) of the Bankruptcy Code.

39. Section 1123(a) of the Bankruptcy Code sets forth seven criteria that every

chapter 11 plan must satisfy. The Plan satisfies each of these requirements, and no party has

asserted otherwise.

(1) Designation of Classes of Claims and Equity Interests (§ 1123(a)(1))

40. For the reasons set forth above, Article III of the Plan properly designates classes

of Claims and Interests and thus satisfies the requirement of section 1122 of the

Bankruptcy Code.23

(2) Specification of Unimpaired Classes (§ 1123(a)(2))

41. Section 1123(a)(2) of the Bankruptcy Code requires that the Plan “specify any class

of claims or interests that is not impaired under the plan.” The Plan meets this requirement by

identifying each Class in Article III that is Unimpaired.24

22 See id.


24 See Plan Art. III.A.1; Stein Decl. ¶ 24.


18

(3) Treatment of Impaired Classes (§ 1123(a)(3))

42. Section 1123(a)(3) of the Bankruptcy Code requires that the Plan

“specify the treatment of any class of claims or interests that is impaired under the plan.” The Plan

meets this requirement by setting forth the treatment of each Class in Article III that is Impaired.25

(4) Equal Treatment within Classes (§ 1123(a)(4))

43. Section 1123(a)(4) of the Bankruptcy Code requires that the Plan “provide the same

treatment for each claim or interest of a particular class, unless the holder of a particular claim or

interest agrees to a less favorable treatment of such particular claim or interest.”26 The Plan meets

this requirement because holders of Allowed Claims or Interests will receive the same rights and

treatment as other holders of Allowed Claims or Interests within such holders’ respective Class.27

(5) Means for Implementation (§ 1123(a)(5))

44. Section 1123(a)(5) of the Bankruptcy Code requires that the Plan provide

“adequate means” for its implementation.28 The Plan satisfies this requirement because Article IV

of the Plan, as well as other provisions thereof, provide for the means by which the Plan will be

implemented.29 Among other things, Article IV of the Plan provides for:

a. the consummation of the Sale Transactions, including, among other things, the transfer and vesting of the Purchased Interests and other assets or equity, as set forth in the Purchase Agreement, in the Plan Sponsor free and clear of all Liens, Claims, charges, or other encumbrances to the maximum extent permitted by applicable law, other than the

25 See id.

26 11 U.S.C. § 1123(a)(4).


28 11 U.S.C. § 1123(a)(5).



19

Transferring Liens, pursuant to the terms of the Purchase Agreement and Confirmation Order;

b. the sources of consideration for Plan distributions, which include Cash on hand on the Effective Date and the revenues and proceeds of all interests and assets sold to the Plan Sponsor under the Purchase Agreement and proceeds from all Causes of Action constituting Excluded Assets, and not settled, released, discharged, enjoined, or exculpated under the Plan or otherwise on or prior to the Effective Date, including the proceeds from the Business Interruption and Property Damage Insurance Policies;

c. the dissolution of the existing board of directors or managers, as applicable, of the Debtors, the dismissal of any remaining officers, directors, managers, or managing members of any Debtor, and the dissolution of the Non-Acquired Reorganized Debtors on the Effective Date;

d. the formation of the Liquidating Trust for the benefit of the Liquidating Trust beneficiaries as determined by the Liquidating Trust Agreement, to administer and distribute the Liquidating Trust Assets and fulfill the Liquidating Trust Obligations;

e. the establishment by the Liquidating Trust of each of the Distribution Reserve Accounts for distribution of Distribution Proceeds to Holders of Allowed Claims and Interests under the Plan;

f. the automatic termination of all Liens on any property of any Debtors or the Acquired Reorganized Debtors, the automatic release of all property subject to such Liens, and the automatic discharge and release of all guarantees of any Debtors or the Acquired Reorganized Debtors; provided, subject to the funding of the Professional Fee Escrow Account, until the DIP Claims are satisfied in accordance with Article II.C of the Plan, the Term Loan Claims are satisfied in accordance with Article III.B.3 of the Plan, and the Intermediation Claims are satisfied in accordance with Article III.B.4 of the Plan, the Liens of the DIP Lenders, Term Loan Lenders, and Intermediation Provider shall attach to the proceeds of the Sale Transactions and shall continue to attach to (x) the assets of the Debtors that are not Acquired Reorganized Debtors (other than assets sold to the Plan Sponsor pursuant to the Purchase Agreement) and


20

(y) the assets defined as Excluded Assets in the Purchase Agreement;

g. the authorization and approval in all respects of all actions contemplated under the Plan, regardless of whether taken before, on, or after the Effective Date, including: (a) the implementation of the Restructuring Transactions; (b) consummation of the Sale Transactions; and (c) all other actions contemplated under or necessary to implement the Plan (whether to occur before, on, or after the Effective Date), and, on or after the Effective Date, the authorization of the appropriate officers of the Debtors or the Liquidating Trust, as applicable, to issue, execute, and deliver the agreements, documents, securities, and instruments contemplated under the Plan (or necessary or desirable to effect the transactions contemplated under the Plan) in the name of and on behalf of the Debtors or the Liquidating Trust, as applicable;

h. unless any Cause of Action against an Entity is expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or a Final Order, in accordance with section 1123(b) of the Bankruptcy Code, the Debtors shall convey, on the Effective Date, to the Liquidating Trust all rights to commence, prosecute, or settle, as appropriate, any and all Causes of Action constituting Excluded Assets (including, subject to the Litigation Control Agreement, the control over any Retained Matters), whether arising before or after the Petition Date, which shall vest in the Liquidating Trust pursuant to the terms of the Plan; and

i. the settlement and discharge of Claims and Interests as set forth in the Plan.

45. The precise terms governing the execution of these transactions are set forth in the

applicable definitive documents or forms of agreements included in the Plan Supplement.

The Debtors submit that the Plan satisfies section 1123(a)(5) of the Bankruptcy Code.


21

(6) Issuance of Non-Voting Securities (§ 1123(a)(6))

46. Section 1123(a)(6) of the Bankruptcy Code requires that a debtor’s corporate

constituent documents prohibit the issuance of nonvoting equity securities.30 On the Effective

Date, other than the interests and assets sold to the Plan Sponsor under the pursuant to the Purchase

Agreement, all assets of the Debtors, including the assets defined as “Excluded Assets” in the

Purchase Agreement, will be transferred to the Liquidating Trust.31 The Liquidating Trust shall

be responsible for, inter alia: (a) resolving Disputed Claims; (b) making all distributions to

Holders of Allowed Claims as provided under the Plan; (c) establishing and funding the

Distribution Reserve Accounts; (d) enforcing and prosecuting claims, interests, rights, and

privileges under the Causes of Action on the Retained Causes of Action List that are Liquidating

Trust Assets and only to the extent the benefits of such enforcement or prosecution are reasonably

believed to outweigh the costs associated therewith;(e) filing appropriate tax returns; (f) complying

with continuing obligations under the Purchase Agreement, if any, and the DIP and Cash Collateral

Orders (as applicable), and (g) administering the Plan in an efficacious manner.32 The Liquidating

Trust will also be responsible for winding-down the Debtors’ estates, and Non-Acquired

Reorganized Debtors shall also be deemed to be dissolved as of the Effective Date, subject to the

provision of the Plan.33 Accordingly, the requirements of section 1123(a)(6) of the Bankruptcy

Code are inapplicable to the Non-Acquired Reorganized Debtors.34 On the Effective Date, the

30 11 U.S.C. § 1123(a)(6).

31 See Plan Art. I.A.93.

32 Id. Art. VII.A.

33 Id. Art. VII.G.

34 Stein Decl. ¶ 29 n.4.


22

charters or equivalent organizational documents of the Acquired Reorganized Debtors will be

amended to prohibit the issuance of nonvoting equity securities. Because the Acquired

Reorganized Debtors will not have multiple classes of voting equity securities, the provision of

section 1123(a)(6) regarding the distribution of voting power is not applicable. Accordingly, the

Plan complies with section 1123(a)(6) of the Bankruptcy Code, and no parties have asserted

otherwise.

(7) Directors and Officers (§ 1123(a)(7))

47. Section 1123(a)(7) of the Bankruptcy Code requires that plan provisions with

respect to the manner of selection of any director, officer, or trustee, or any other successor thereto,

be “consistent with the interests of creditors and equity security holders and with public policy.”

In accordance with Article IV.F.3 of the Plan, as of the Effective Date, the existing board of

directors or managers, as applicable, of the Debtors shall be dissolved without any further action

required, and any remaining officers, directors, managers, or managing members of any Debtor

shall be dismissed without any further action required. Article VII.E also provides for the

dissolution of the Non-Acquired Reorganized Debtors on the Effective Date and the formation of

the Liquidating Trust to manage the Liquidating Trust Assets, which include all assets and interests

of the Debtors that are not transferred to the Plan Sponsor or retained by the Acquired Reorganized

Debtors, including Excluded Assets. The selection of the members of the Liquidating Trust Board

by the Required Term Loan Lenders, the Intermediation Provider, the Committee, pursuant to the

Liquidating Trust Agreement to manage the affairs of the Liquidating Trust is consistent with the

interests of Holders of Claims and Interests and public policy.35 To the extent the standard under

section 1123(a)(7) applies to the Acquired Reorganized Debtors, the manner of selecting of



23

officers, directors, and/or managers of such Acquired Reorganized Debtors by the Plan Sponsor

also is consistent with the interests of Holders of Claims and Interests and public policy.

Accordingly, the Plan satisfies the requirements of section 1123(a)(7) of the Bankruptcy Code,

and no party has asserted otherwise.

3. The Plan Complies with the Discretionary Provisions of Section 1123(b) of the Bankruptcy Code.

48. Section 1123(b) of the Bankruptcy Code sets forth various discretionary provisions

that may be incorporated into a chapter 11 plan. Among other things, section 1123(b) of the

Bankruptcy Code provides that a plan may: (a) impair or leave unimpaired any class of claims or

interests; (b) modify or leave unaffected the rights of holders of secured or unsecured claims;

(c) provide for the settlement or adjustment of claims against or interests in a debtor or its estate

or the retention and enforcement by a debtor, trustee, or other representative of claims or interests;

(d) provide for the assumption or rejection of executory contracts and unexpired leases; (e) provide

for the sale of all or substantially all of the property of the Debtors’ estates, and the distribution of

the proceeds of such sale among holders of claims or interests; or (f) “include any other appropriate

provision not inconsistent with the applicable provisions of [the Bankruptcy Code].”36

49. The Plan is consistent with section 1123(b) of the Bankruptcy Code. Specifically,

under Article III of the Plan, Classes 1, 2, and 8 are Unimpaired because the Plan leaves unaltered

the legal, equitable, and contractual rights of the Holders of Claims and Interests within such

Classes.37 On the other hand, Classes 3, 4, 5, 6, 7, 9, and 10 are Impaired since the Plan modifies

36 See 11 U.S.C. § 1123(b)(1)–(6).

37 See Plan Art. III.


24

the rights of the Holders of Claims and Interests within such Classes as contemplated in

section 1123(b)(1) of the Bankruptcy Code.38

50. In addition, and under section 1123(b)(2) of the Bankruptcy Code, Article V of the

Plan provides for the rejection of all Executory Contracts and Unexpired Leases under section 365

of the Bankruptcy Code, except to the extent set forth in the Plan.39

51. The Plan also contains provisions implementing certain releases and exculpations,

compromising claims and interests, and permanently enjoining certain causes of action.

Additionally, the Plan provides for the sale of the Purchased Interests, which includes all assets of

the Acquired Reorganized Debtors (excluding Excluded Assets), to the Plan Sponsor pursuant to

the Purchase Agreement.

52. Each of these provisions are appropriate because, among other things, they (a) are

the product of arm’s-length negotiations, (b) have been critical to obtaining the support of the

various constituencies for the Plan, (c) are given for valuable consideration, (d) are fair and

equitable and in the best interests of the Debtors, their estates, and these chapter 11 cases, and

(e) are consistent with the relevant provisions of the Bankruptcy Code and Third Circuit law. Such

provisions are discussed in turn below, but, in summary, satisfy the requirements of

section 1123(b) and no party has asserted otherwise.

(1) The Plan Settlement of Claims and Controversies Is Fair and Equitable and Should be Approved.

53. The Plan incorporates the Settlement which provides for the compromise and

settlement of numerous Claims, Interests, Causes of Action, and controversies designed to achieve

38 See id.

39 See Plan Art. V.


25

a beneficial and efficient resolution of the Chapter 11 Cases for all parties in interest. Through the

Settlement, the Plan resolves a host of alleged Claims and Causes of Actions, which are all highly

uncertain to succeed and pursuit thereof could cause extensive delay, cost, and uncertainty in these

Chapter 11 Cases and otherwise. Accordingly, except as otherwise set forth in the Plan or herein,

in consideration for the distribution and other benefits provided under the Plan, including various

release, exculpation, and injunction provisions, the Plan shall constitute a good-faith compromise

and settlement of all Claims and controversies resolved pursuant to the Plan. Each component of

the Settlement is an integral, integrated, and inextricably linked part of the Settlement.40

54. The compromises set forth in the Plan are critical to bringing closure to these and

other matters addressed in the Plan and to permitting the Debtors to maximize the value of the

Estate for the benefit of all parties in interest and maximize recoveries for all Holders of Claims

and Interests.41

(2) The Plan’s Release, Exculpation, and Injunction Provisions Satisfy Section 1123(b) of the Bankruptcy Code.

55. The Plan also includes certain releases, an exculpation provision, and an injunction

provision. These discretionary provisions are proper because, among other things, they are the

product of extensive good-faith, arm’s-length negotiations, are supported by the Debtors and their

key constituents, and are consistent with applicable precedent.42

(i) The Debtor Release Is Appropriate.





26

56. Section 1123(b)(3)(A) of the Bankruptcy Code provides that a chapter 11 plan may

provide for “the settlement or adjustment of any claim or interest belonging to the debtor or to the

estate.”43 Further, a debtor may release claims under section 1123(b)(3)(A) of the Bankruptcy

Code “if the release is a valid exercise of the debtor’s business judgment, is fair, reasonable, and

in the best interests of the estate.”44 Article X.E. of the Plan provides for releases by the Debtors,

the Liquidating Trust, and their Estates, and the Acquired Reorganized Debtors, as of the Effective

Date, of, among things, certain Claims, rights, and causes of action that the Debtors, the

Liquidating Trust, and their Estates, and the Acquired Reorganized Debtors may have against the

Released Parties (the “Debtor Release”).45

43 See In re Coram Healthcare Corp., 315 B.R. 321, 334–35 (Bankr. D. Del. 2004) (holding that standards for

approval of settlement under section 1123 of the Bankruptcy Code are generally the same as those under Bankruptcy Rule 9019). Generally, courts in the Third Circuit approve a settlement by the debtors if the settlement “exceed[s] the lowest point in the range of reasonableness.” In re Exaeris, Inc., 380 B.R. 741, 746–47 (Bankr. D. Del. 2008) (citation omitted); see also Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 1983) (examining whether settlement “fall[s] below the lowest point in the range of reasonableness”) (alteration in original) (citation omitted); In re World Health Alts., Inc., 344 B.R. 291, 296 (Bankr. D. Del. 2006) (stating that settlement must be within reasonable range of litigation possibilities).

44 In re Spansion, Inc., 426 B.R. 114, 143 (Bankr. D. Del. 2010); see also In re Wash. Mut., Inc., 442 B.R. 314, 327 (Bankr. D. Del. 2011) (“In making its evaluation [whether to approve a settlement], the court must determine whether ‘the compromise is fair, reasonable, and in the best interest of the estate.”) (internal citations omitted).

45 “Released Parties” means, collectively, and in each case in its capacity as such: (a) the DIP Lenders; (b) the DIP Agent; (c) the Term Loan Lenders; (d) the Term Loan Administrative Agent; (e) any Plan Sponsor; (f) the Acquired Reorganized Debtors; (g) any Holder of a Claim or Interest that does not opt out of the releases in the Plan; (h) with respect to each of the Debtors, and each of the foregoing entities in clauses (a) through (g), each such Entity’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), subsidiaries, direct and indirect equityholders, funds, portfolio companies, and management companies; and (i) with respect to each of the foregoing Entities in clauses (a) through (g), each of their respective current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, trustees investment bankers, and other professional advisors (with respect to clause (i), each solely in their capacity as such); provided, however, that any Holder of a Claim or Interest that opts out of the releases in the Plan shall not be a “Released Party.” See Plan Art. I.A.129.


27

57. Courts in this jurisdiction generally analyze five factors when determining the

propriety of a debtor release, commonly known as the Zenith or Master Mortgage factors.46

The analysis includes an inquiry into whether there is: (1) identity of interest between the debtor

and non-debtor; (2) substantial contribution to the plan by the non-debtor; (3) the necessity of the

release to the reorganization; (4) overwhelming acceptance of the plan and release by creditors and

interest holders; and (5) payment of all or substantially all of the claims of the creditors and interest

holders.47 These factors are “neither exclusive nor conjunctive requirements” but rather serve as

guidance to courts in determining fairness of a debtor’s releases.48

58. The Debtor Release meets the applicable standard because it is fair, reasonable, and

in the best interests of the Debtors’ estates. As described in the Stein Declaration,49 and as an

analysis of the Zenith factors demonstrates, the Debtor Release embodied in Article X.E of the

Plan should be approved.

First, an identity of interest exists between the Debtors and the parties to be released. Each of the Released Parties, as a stakeholder and critical participant in the Plan process, shares a common goal with the Debtors in seeing the Plan succeed and would have been unlikely to participate in the negotiations and compromises that led to the ultimate formation of the Plan and Purchase Agreement without the Debtor Releases. Like the Debtors, these parties seek to confirm the Plan and implement the transaction.50 Moreover, with respect to certain of the releases—e.g., those releasing

46 See In re Indianapolis Downs, LLC, 486 B.R. 286, 303 (Bankr. D. Del. 2013) (citing In re Zenith Elecs. Corp.,

241 B.R. 92, 105 (Bankr. D. Del. 1999)); In re Master Mortg. Inv. Fund, Inc., 168 B.R. 930, 937 (Bankr. W.D. Mo. 1994).

47 See In re Washington Mut., Inc., 442 B.R. 314, 346 (Bankr. D. Del. 2011) (citing In re Zenith Elecs. Corp., 241 B.R. at 110 and In re Master Mortg. Inv. Fund, Inc., 168 B.R. at 937)

48 Id. (citing In re Master Mortg., 168 B.R. at 935).

49 See Stein Decl. ¶¶ 34–41.

50 See In re Abeinsa Holding, Inc., 562 B.R. 265, 284 (Bankr. D. Del. 2016) (finding that “there is an identity of interest between the Debtors and the released parties arising out the shared common goal of confirming and implementing the Plan.”); see also Zenith, 241 B.R. at 110 (concluding that certain releasees who “were instrumental in formulating the Plan” shared an identity of interest with the debtor “in seeing that the Plan succeed and the company reorganize”).


28

the Debtors’ current and former directors, officers, affiliates, and principals—there is a clear identity of interest supporting the release because the Debtors will assume certain indemnification obligations under the Plan that will be honored by the Debtors.51 Thus, a lawsuit commenced by the Debtors (or derivatively on behalf of the Debtors) against certain individuals would effectively be a lawsuit against the Debtors themselves.

Second, the substantial contributions are clear. The Released Parties played an integral role in the formation of the Plan and have expended significant time and resources analyzing and negotiating the issues present in these Chapter 11 Cases to reach a value-maximizing transaction and avoid a liquidation. As Delaware bankruptcy courts have recognized, a wide variety of acts may illustrate a substantial contribution to a debtor’s reorganization.52 Moreover, the Released Parties have expended time and resources analyzing and negotiating the issues presented by the Debtors’ capital structure and the material barriers to the resolution thereof. Here, the value contributed by the Released Parties is certainly substantial. Specifically, in addition to providing significant non-monetary value, the Term Loan Lenders provided a $100 million DIP Facility but agreed to accept less than payment in full on their prepetition Term Loan Secured Claim and participate in the transaction in order to ensure the success of the Plan. Likewise, the Intermediation Provider agreed to the Debtors’ use of its cash collateral and on a consensual path forward regarding the extraction of its collateral, thereby providing the Debtors with the required liquidity and support to successfully emerge from these Chapter 11 Cases. Without the contributions of each of these parties, the Plan and the transaction contemplated therein would not be possible.

Third, the Debtor Release is essential to the Debtors’ reorganization because it constitutes an integral term of the Plan. Indeed, absent the Debtor Release, it is highly unlikely the Released Parties would have agreed to support the Plan and the Restructuring Transactions contemplated therein. As described above, each of the Released Parties contributed substantial value to these Chapter 11 Cases, and did so with the understanding that they would receive releases from the Debtors. In the absence of these parties’ support, the Debtors would not be in a position to confirm the Plan and emerge from chapter 11. The Debtor Release, therefore, is essential to the Debtors’ reorganization.

51 See In re Indianapolis Downs, LLC, 486 B.R. at 303 (“An identity of interest exists when, among other things,

the debtor has a duty to indemnify the nondebtor receiving the release.”).

52 See Id. at 304 (finding that the non-debtor party had substantially contributed by performing services for the debtors post-petition without receiving compensation); In re Wash. Mut., Inc., 442 B.R. at 347 (finding substantial contribution required the contribution of “cash or anything else of a tangible value to the [plan of reorganization] or to creditors”); In re Zenith Elecs. Corp., 241 B.R. at 111 (finding that prepetition contribution of work in negotiating a plan constituted adequate consideration for debtor’s release).


29

Fourth, as evidenced by the Voting Report and noted herein, in the aggregate, the majority of the Debtors’ stakeholders support the Plan.53 Broken out by class, creditors in Class 3 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan. Creditors in Class 4 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan, creditors in Class 6 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan, and creditors in Class 5 representing approximately 98 percent by amount of voted claims andapproximately 76 percent by number in the aggregate voted to reject the Plan. 54 In the aggregate, this amounts to creditors representing 86.2 percent by amount of voted claims and 75.6 percent by number in the aggregate voting to accept the Plan. 55 Given the critical nature of the Debtor Release, these figures evidence the Debtors’ key stakeholders’ support for the Debtor Release and the Plan. Even if the Court determined that this support does not constitute “overwhelming acceptance,” as noted above, these factors are neither exclusive nor conjunctive.56

Fifth, the Plan provides for meaningful recoveries under the circumstances for all creditors potentially giving up colorable claims under the releases. As demonstrated by the transaction and marketing process and the Liquidation Analysis filed as part of the Plan Supplement, the ranges of recoveries for Holders of Term Loan Secured Claims, Intermediation Secured Claims, and General Unsecured Claims are materially higher under the Plan than they would have been in a chapter 7 liquidation scenario.57 Through the Sale Transaction, the Plan maximizes value and provides meaningful recoveries for all stakeholders under the circumstances.

59. For the reasons set forth above, and as supported by the Stein Declaration, the

Zenith factors supports approval of the Debtor Release. Moreover, the breadth of the Debtor

Release is consistent with those regularly approved in this jurisdiction and others.58 The Debtors

53 See Voting Decl., Exhibit E.

54 See id.

55 See id.

56 See In re Washington Mut., Inc., 442 B.R. at 346.

57 See Docket No. 780, Ex. J.

58 See, e.g., In re One Aviation Corp., No. 18-12309 (CSS) (Bankr. D. Del. Sep. 18, 2019) (approving Plan providing for definition of Released Parties including, among others, the Debtors’ directors and officers); In re Blackhawk Mining LLC, No. 19-11595 (LSS) (Bankr. D. Del. Aug. 29, 2019) (same); In re Checkout Holding Corp., No. 18-12794 (KG) (Bankr. D. Del. Jan. 31, 2019) (same); In re TK Holdings Inc., No. 17-11375 (BLS) (Bankr. D. Del. Feb. 21, 2018) (same); In re Samson Resources Corp., No. 14-11934 (CSS) (Bankr. D.Del. Feb. 13, 2017) (same); In re Horsehead Holding Corp., No. 16-10287 (CSS) (Bankr. D. Del. Sep. 9, 2016) (same).


30

have satisfied the business judgment standard in granting the Debtor Release under the Plan. The

Debtor Release easily meet the applicable standard because it is fair, reasonable, and in the best

interests of the Debtors’ Estates. Thus, the Court should approve the Debtor Release in the Plan.

(ii) The Third-Party Release is Wholly Consensual and Is Appropriate.

60. Specifically, Article X.F of the Plan provides that each Releasing Party shall release

any and all Causes of Action such parties could assert against the Debtors and other Released

Parties (the “Third-Party Release,” and together with the Debtor Release, the “Releases”).

The Releasing Parties include, among others, the Debtors, the Non-Acquired Reorganized

Debtors, the Acquired Reorganized Debtors, the DIP Lenders, the DIP Agent, the Term Loan

Lenders, the Term Loan Administrative Agent, the Plan Sponsor, and all Holders of Claims or

Interests that do not affirmatively opt out of the Releases.59 The Third-Party Release is consensual,

consistent with established Third Circuit law, and integral to the Plan and therefore should be

approved.

61. Numerous courts have recognized that a chapter 11 plan may include a release of

non-debtors by other non-debtors when such release is consensual.60 Consensual releases are

59 “Releasing Parties” means, collectively, and in each case in its capacity as such: (a) the Debtors; (b) the Non-

Acquired Reorganized Debtors; (c) the Acquired Reorganized Debtors; (d) the DIP Lenders; (e) the DIP Agent; (f) the Term Loan Lenders; (g) the Term Loan Administrative Agent; (h) any Plan Sponsor; (i) with respect to each of the Debtors, and each of the foregoing entities in clauses (a) through (h), each such Entity’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), subsidiaries, direct and indirect equityholders, funds, portfolio companies, and management companies; and (j) with respect to each of the foregoing Entities in clauses (a) through (i), each of their respective current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, trustees investment bankers, and other professional advisors (with respect to clause (i), each solely in their capacity as such); and (k) all Holders of Claims and Interests not described in the foregoing clauses (a) through (i); provided, however, that any Holder of a Claim or Interest that opts out of the releases in the Plan shall not be a “Releasing Party.” See Plan Art. I.A.124.

60 See, e.g., Indianapolis Downs, 486 B.R. at 305 (collecting cases); Spansion, 426 B.R. at 144 (stating that “a third party release may be included in a plan if the release is consensual”).


31

permissible on the basis of general principles of contract law.61 The law is clear that a release is

consensual where parties have received sufficient notice of a plan’s release provisions and have

had an opportunity to object to or opt out of the release and failed to do so (including where such

holder abstains from voting altogether).62 Here, all parties in interest had ample opportunity to

evaluate and exercise their right to opt out of the Third-Party Release. The ballots distributed to

Holders of Claims entitled to vote on the Plan quoted the entirety of the Third-Party Release

provision in the Plan and clearly informed such of Holders of the steps they should take if they

disagreed with the scope of the Third-Party Release. Likewise, the notices distributed to Holders

of Claims or Interest not entitled to vote on the Plan informed such Holders of their ability to opt

out of the Third-Party Release by filing an objection thereto with the Court. Thus, affected parties

were on notice of the Third-Party Release and of their ability to opt out. Tellingly, the fact that

approximately [43]% of ballots of Holders in Class 5 opted out of the Third-Party Release is a

prime illustration that Holders were in fact adequately put on notice of their ability to opt out. As

such, the Third-Party Release is consensual as to all Claims and Interest Holders who decided not

affirmatively opt out of the Third-Party Release.

61 In Coram Healthcare Corp., 315 B.R. 321, 336 (Bankr. D. Del. 2004).

62 See, e.g., In re Indianapolis Downs, LLC, 486 B.R. at 306 (“As for those impaired creditors who abstained from voting on the Plan, or who voted to reject the Plan and did not otherwise opt out of the releases, the record reflects these parties were provided detailed instructions on how to opt out, and had the opportunity to do so by marking their ballots. Under these circumstances, the Third-Party Releases may be properly characterized as consensual and will be approved.”); In re DBSD N. Am., Inc., 419 B.R. 179, 218-19 (Bankr. S.D.N.Y. 2009) (“Except for those who voted against the Plan, or who abstained and then opted out, I find the Third Party Release provision consensual and within the scope of releases permitted in the Second Circuit.”); aff’d 2010 WL 1223109 (S.D.N.Y. March 24, 2010), modified on other grounds, 634 F.3d 79 (2d Cir. 2011); In re Conseco, Inc., 301 B.R. 525, 528 (Bankr. N.D. Ill. 2003) (“The Article X release now binds only those creditors who agreed to be bound, either by voting for the Plan or by choosing not to opt out of the release. Therefore, the Article X release is purely consensual and within the scope of releases that Specialty Equipment permits.”) (citing In re Specialty Equip. Corp., 3 F.3d 1043 (7th Cir. 1993)).


32

62. Based on the foregoing, the Debtors have established that the Third-Party Release

is consensual, and there is no need to consider the factors governing non-consensual third-party

releases under Continental63 and its progeny. Nonetheless, even if the court determines that such

releases are non-consensual, the Third-Party Release is appropriate and should be approved.

63. Courts in the Third Circuit have held that a non-consensual release may be

approved if such release is fair and necessary to the reorganization, and the court makes specific

factual findings to support such conclusions.64 In addition, the Third Circuit has found that, for

such releases to be permissible, fair consideration must be given in exchange for the release.65

64. The circumstances of these Chapter 11 Cases warrant the Third-Party Release

because it is critical to the success of the Plan and it is fair and appropriate. Without the efforts of

the Released Parties both in providing bridge financing, providing the DIP Financing and

consensual use of cash collateral, and actively participating in the transaction and Plan

negotiations, the Debtors would not be seeking a Sale Transaction at this juncture.66 In addition,

many of the Released Parties have been instrumental in supporting these Chapter 11 Cases and

63 See Gillman v. Continental Airlines (In re Continental Airlines), 203 F.3d 203, 213-14 (3d Cir. 2000).

64 See id. (noting that the “hallmarks of permissible non-consensual releases [are] fairness, necessity to the reorganization, specific factual findings to support these conclusions”); In re Spansion, Inc., 426 B.R. 114, 144 (Bankr. D. Del. 2010) (evaluating certain factors to determine whether the “hallmarks” of permissible non-consensual releases are met, including “(i) the non-consensual release is necessary to the success of the reorganization, (ii) releases have provided a critical financial contribution to the Debtors’ plan; (iii) the releasee’s financial contribution is necessary to make the plan feasible; and (iv) the release is fair to the non-consenting creditors, i.e., whether the non-consenting creditors received reasonable compensation in exchange for the release”); In re Genesis Health Ventures, Inc., 266 B.R. 591, 607-08 (Bankr. D. Del. 2001) (evaluating similar factors to determine whether non-consensual third party releases were permissible); cf. Washington Mutual, 442 B.R. at 355 (“[T]he Court concludes that any third party release is effective only with respect to those who affirmatively consent to it by voting in favor of the Plan and not opting out of third party releases.”).

65 See United Artists Theatre Co. v. Walton, 315 F.3d 217, 227 (3d Cir. 2000) (citing In re Continental Airlines, 203 F.3d at 215)).

66 Stein Decl. ¶ 45.


33

facilitating a smooth administration thereof.67 Finally, throughout the entire case and all these

negotiations, the Debtors’ directors and officers steadfastly maintained their duties to maximize

value for the benefit of all stakeholders, investing countless hours both pre- and postpetition,

including by expending substantial time to cooperate with the Intermediation Provider to develop

and implement processes that facilitate the Intermediation Provider’s preservation and extraction

of its collateral and to pursue the Debtors’ insurance recovery process.68

65. Moreover, the third parties bound by the Releases have received sufficient

consideration in exchange for the release of their Claims against the Released Parties to justify the

Third-Party Release.69 The DIP Lenders, the DIP Agent, the Term Loan Lenders, the Term Loan

Administrative Agent, the Plan Sponsor, Holders of General Unsecured Claims, and other

Released Parties have made massive concessions and commitments that have allowed the Debtors

to maximize the value of their estates and enabled the Debtors to effectuate the Sale Transactions.70

The Released Parties have been active and important participants in the development of the Plan

and have expended significant time and resources analyzing and negotiating the issues presented

by the Debtors’ capital structure and the material barriers to the resolution thereof.71 Specifically,

as discussed above, in addition to providing significant non-monetary value, the Term Loan

Lenders provided a $100 million DIP Facility but agreed to accept less than payment in full on

their prepetition Term Loan Secured Claim and participate in the transaction in order to ensure the

67 Id.

68 Id.

69 Id. ¶ 46.

70 Id.

71 Id.


34

success of the Plan.72 Likewise, the Intermediation Provider agreed to the Debtors’ use of its cash

collateral and on a consensual path forward regarding the extraction of its collateral, thereby

providing the Debtors with the required liquidity and support to successfully emerge from these

Chapter 11 Cases.73 Without the contributions of each of these parties, the Plan and the transaction

contemplated therein would not be possible.74 In addition to significant concessions under the

Plan, the Released Parties made the contributions as discussed above, each in exchange for, among

other things, the Third-Party Release.75

66. The Debtors submit that the Third-Party Release is consensual or otherwise

appropriate under Continental and its progeny. Accordingly, the Third-Party Release should be

approved.

(iii) The Exculpation Provision Is Appropriate.

67. Article X.G of the Plan provides for the exculpation of the Exculpated Parties.

The exculpation is fair and appropriate under both applicable law76 and the facts and circumstances

of these Chapter 11 Cases. The Plan’s exculpation provision is the product of arm’s-length

negotiations, was critical to obtaining the support of various constituencies for the Plan, and, as

part of the Plan, has received support from the Debtors’ major stakeholders.77 The exculpation

72 Id.

73 Id.

74 Id.

75 Id.

76 See In re Laboratory Partners, Inc., No. 13-12769 (PJW) (Bankr. D. Del. July 10, 2014) (finding that exculpation was appropriately extended to secured lender who funded the chapter 11 case); In re FAH Liquidating Corp., No. 13-13087 (KG) (Bankr. D. Del. July 28, 2014) (finding that exculpation as applied to a non-debtor Plan Sponsor was appropriate under section 1123(b)).



35

provision was important to the development of a feasible, confirmable Plan, and the Exculpated

Parties participated in these Chapter 11 Cases in reliance upon the protections afforded to those

constituents by the exculpation.78

68. Courts evaluate the appropriateness of exculpation provisions based on a number

of factors, including whether the plan was proposed in good faith, whether liability is limited, and

whether the exculpation provision was necessary for plan negotiations.79 Exculpation provisions

that are limited to claims not involving actual fraud, willful misconduct, or gross negligence, are

customary and generally approved in this district under appropriate circumstances.80 Unlike

third-party releases, exculpation provisions do not affect the liability of third parties per se, but

rather set a standard of care of gross negligence or willful misconduct in future litigation by a

non-releasing party against an “Exculpated Party” for acts arising out of the Debtors’

restructuring.81

69. The Exculpated Parties have participated in good faith in formulating and

negotiating the Plan as it relates to the Debtors, and they should be entitled to protection from

exposure to any lawsuits filed by disgruntled creditors or other unsatisfied parties.82 Moreover,

78 Id.

79 See, e.g., In re Enron Corp., 326 B.R. 497, 503 (S.D.N.Y. 2005) (evaluating the exculpation clause based on the manner in which the clause was made a part of the agreement, the necessity of the limited liability to the plan negotiations, and that those who participated in proposing the plan did so in good faith).

80 See Wash. Mut., 442 B.R. at 350-51 (holding that an exculpation clause that encompassed “the fiduciaries who have served during the chapter 11 proceeding: estate professionals, the [c]ommittees and their members, and the [d]ebtors’ directors and officers” was appropriate).

81 See In re PWS Holding Corp., 228 F.3d 224, 245 (3d Cir. 2000) (finding that an exculpation provision “is apparently a commonplace provision in Chapter 11 plans, [and] does not affect the liability of these parties, but rather states the standard of liability under the Code”); see also In re Premier Int’l Holdings, Inc., 2010 WL 2745964, at *10 (CSS) (Bankr. D. Del. Apr. 29, 2010) (approving a similar exculpation provision as that provided for under the Plan); In re Spansion, 2010 WL 2905001, at *16 (Bankr. D. Del. April 16, 2010) (same).



36

the exculpation provision and the liability standard it sets represents a conclusion of law that flows

logically from certain findings of fact that the Court must reach in confirming the Plan as it relates

to the Debtors. As discussed above, this Court must find, under section 1129(a)(2), that the

Debtors have complied with the applicable provisions of the Bankruptcy Code. Additionally, this

Court must find, under section 1129(a)(3), that the Plan has been proposed in good faith and not

by any means forbidden by law. These findings apply to the Debtors and, by extension, to the

Debtors’ officers, directors, employees, and professionals. Further, these findings imply that the

Plan was negotiated at arm’s-length and in good faith.

70. Here, the Debtors and their officers, directors, and professionals, actively

negotiated with Holders of Claims and Interests across the Debtors’ capital structure in connection

with the Plan and these Chapter 11 Cases.83 Such negotiations were extensive and the resulting

agreements were implemented in good faith with a high degree of transparency, and as a result,

the Plan enjoys support from Holders of Claims entitled to vote.84 The Exculpated Parties played

a critical role in negotiating, formulating, and implementing the Disclosure Statement, the Plan,

the Purchase Agreement, and related documents in furtherance of the Sale Transaction

contemplated by the Plan.85 Furthermore, the exculpation provision is limited to acts during these

Chapter 11 Cases and does not extend beyond such time period. Accordingly, the Court’s findings

of good faith vis-à-vis the Debtors’ Chapter 11 Cases should also extend to the Exculpated Parties.

83 Id.

84 See Voting Report.

85 See Hr’g Tr. 58:18–19, In re Verso Corp., No. 16-10163 (KG) (Bankr. D. Del. June 23, 2016) (“[T]he debtors did not do this alone; they did it with the help of many others.”).


37

71. Additionally, the promise of exculpation played a significant role in facilitating

Plan negotiations.86 All of the Exculpated Parties played a key role in developing the Plan that

paved the way for a successful reorganization, and likely would not have been so inclined to

participate in the plan process without the promise of exculpation.87 Exculpation for parties

participating in the plan process is appropriate where plan negotiations could not have occurred

without protection from liability.

72. Under the circumstances, it is appropriate for the Court to approve the exculpation

provision, and to find that the Exculpated Parties have acted in good faith and in compliance with

the law.88

(iv) The Injunction Provision Is Appropriate.

73. The injunction provision set forth in Article X.H of the Plan merely implements the

Plan’s release, discharge, and exculpation provisions, in part, by permanently enjoining all entities

from commencing or maintaining any action against the Debtors, the Liquidating Trust, or the

other Released Parties on account of or in connection with or with respect to any such claims or

interests released, discharged, or subject to exculpation. Thus, the injunction provision is a key

provision of the Plan because it enforces the release, discharge, and exculpation provisions that

are centrally important to the Plan. As such, to the extent the Court finds that the exculpation and

release provisions are appropriate, the Debtors respectfully submit that the injunction provision


87 Id.

88 See PWS Holding Corp., 228 F.3d at 246–47 (approving plan exculpation provision with willful misconduct and gross negligence exceptions); In re Indianapolis Downs, LLC, 486 B.R. at 306 (same).


38

must also be appropriate. Moreover, this injunction provision is narrowly tailored to achieve its

purpose.

(3) The Restructuring Transaction Should Be Approved Under Sections 363(b)(1) and 1123(b)(4) of the Bankruptcy Code as Sound Exercise of the Debtors’ Business Judgment.

74. The Court may authorize the Debtors to sell the Purchased Interests and all other

assets and equity transferred to the Plan Sponsor under the Purchase Agreement pursuant to

sections 363(b)(1) and 1123(b)(4) of the Bankruptcy Code. Section 363(b)(1) of the Bankruptcy

Code provides, in relevant part, that “[t]he [debtor], after notice and a hearing, may use, sell, or

lease, other than in the ordinary course of business, property of the estate.” Similarly,

section 1123(b)(4) provides that a “plan may provide for the sale of all or substantially all of the

property of the estate.” To approve a sale under section 363(b)(1) of the Bankruptcy Code, the

debtor is required to show that the decision to sell the property outside of the ordinary course of

business was based on a sound exercise of the debtor’s business judgment.89 Accordingly, for the

purpose of selling property of the estate, the Debtors need only show a legitimate business

justification for the proposed action.90

75. The business judgment rule shields a debtor’s management decisions from judicial

second guessing.91 Once a debtor articulates a valid business justification, the law vests the

89 See, e.g., In re Martin, 91 F.3d 389, 395 (3d. Cir. 1996) (“Under Section 363, the debtor in possession can sell

property of the estate . . . if he has an ‘articulated business justification’ . . . .”); see also In re Schipper, 933 F.2d 513, 515 (7th Cir. 1991) (same); Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983); In re Telesphere Commc’s, Inc., 179 B.R. 544, 552 (Bankr. N.D. Ill. 1999).

90 See, e.g., Lionel, 722 F.2d at 1070; Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (“Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor’s conduct.”).

91 Johns-Manville Corp., 60 B.R. at 615-16 (a “presumption of reasonableness attaches to a debtor’s management decisions” and courts will generally not entertain objections to the debtor’s conduct after a reasonable basis is set forth).


39

debtor’s decision to use property outside of the ordinary course of business with a strong

presumption that “in making a business decision the directors of a corporation acted on an

informed basis, in good faith and in the honest belief that the action taken was in the best interests

of the company.”92 Parties challenging a debtor’s decision must make a showing of “bad faith,

self-interest or gross negligence.”93 Generally, if a debtor’s actions satisfy the business judgment

rule, then the transaction in question should be approved under section 363(b)(1) of the Bankruptcy

Code.

76. The Debtors’ sale of the equity and assets under the Purchase Agreement

Transaction represents a sound exercise of the Debtors’ business judgment, is essential to the

Debtors’ Plan, and is justified under section 363(b) of the Bankruptcy Code. The Debtors believe

that the Sale Transaction represents the most efficient and appropriate means of maximizing the

value of the Debtors’ estate. Moreover, the sale is appropriate under section 1123(b)(4) as it is

provided for by the Plan, which, for the reasons set forth in herein, satisfies all of the requirements

to be confirmed. Accordingly, the sale of the Purchased Interests pursuant to the Purchase

Agreement should be approved.

77. Accordingly, the Debtors submit that the discretionary provisions of the Plan are

consistent with and permissible under section 1123(b) of the Bankruptcy Code. In light of the

foregoing, because the Plan fully complies with section 1122 and 1123 of the Bankruptcy Code,

92 In re GSC, Inc., 453 B.R. 132, 174 (Bankr. S.D.N.Y. 2011) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872

(Del. 1985)); see also In re Filene’s Basement, LLC, 11-13511 (KJC), 2014 WL 1713416, at *12 (Bankr. D. Del. Apr. 29, 2014) (“If a valid business justification exists, then a strong presumption follows that the agreement at issue was negotiated in good faith and is in the best interests of the estate”) (citations omitted); In re Integrated Res., Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992), appeal dismissed, 3 F.3d 49 (2d Cir. 1993).

93 Integrated Res., 147 B.R. at 656 (citations omitted).


40

the Debtors submit that the Plan fully complies with and satisfies the requirements of

section 1129(a)(1) of the Bankruptcy Code.

B. The Plan Complies with Section 1123(d) of the Bankruptcy Code.

78. Section 1123(d) of the Bankruptcy Code provides that “if it is proposed in a plan to

cure a default the amount necessary to cure the default shall be determined in accordance with the

underlying agreement and nonbankruptcy law.”

79. The Plan complies with section 1123(d) of the Bankruptcy Code. The Plan

provides for the satisfaction of monetary defaults under each Executory Contract and Unexpired

Lease to be assumed under the Plan by payment of the default amount, if any, on the Effective

Date, subject to the limitations described in Article V of the Plan or the Confirmation Order.94

In accordance with the Proposed Confirmation Order and the amounts set forth in the Plan

Supplement and section 365 of the Bankruptcy Code, the Plan Sponsor will satisfy monetary

defaults under each Executory Contract and Unexpired Lease to be assumed under the Plan on the

Effective Date or on such other terms as the parties to such Executory Contracts or Unexpired

Leases otherwise agree.

C. The Debtors Complied with the Applicable Provisions of the Bankruptcy Code (§ 1129(a)(2)).

80. The Debtors have satisfied section 1129(a)(2) of the Bankruptcy Code, which

requires the plan proponent to comply with the applicable provisions of the Bankruptcy Code.95

The legislative history to section 1129(a)(2) provides that section 1129(a)(2) is intended to

encompass the disclosure and solicitation requirements set forth in section 1125 and the plan

94 See Plan Art. V.C.

95 See 11 U.S.C. § 1129(a)(2).


41

acceptance requirements set forth in section 1126 of the Bankruptcy Code.96 As set forth below,

the Debtors have complied with these provisions, including sections 1125 and 1126 of the

Bankruptcy Code, as well as Bankruptcy Rules 3017 and 3018, by distributing the Disclosure

Statement and soliciting acceptances of the Plan through their Notice and Claims Agent in

accordance with the Disclosure Statement Order.

1. The Debtors Complied with Section 1125 of the Bankruptcy Code.

81. Section 1125 of the Bankruptcy Code prohibits the solicitation of acceptances or

rejections of a plan of reorganization “unless, at the time of or before such solicitation, there is

transmitted to such holder the plan or a summary of the plan, and a written disclosure statement

approved, after notice and a hearing, by the court as containing adequate information.”23F

97

Section 1125 ensures that parties in interest are fully informed regarding the debtor’s condition so

that they may make an informed decision whether to approve or reject the plan.98

82. Section 1125 is satisfied here. Before the Debtors solicited votes on the Plan, the

Court approved the Disclosure Statement in accordance with section 1125(a)(1).99 The Court also

approved the contents of the solicitation materials provided to Holders of Claims entitled to vote

on the Plan, the non-voting materials provided to parties not entitled to vote on the Plan, and the

96 See In re Lapworth, 1998 WL 767456, at *3 (DWS) (Bankr. E.D. Pa. Nov. 2, 1998) (“The legislative history of

§ 1129(a)(2) specifically identifies compliance with the disclosure requirements of § 1125 as a requirement of § 1129(a)(2).”); In re Aleris Int’l, Inc., 2010 WL 3492664, at *20 (Bankr. D. Del. May 13, 2010) (“[S]ection 1129(a)(2) of the Bankruptcy Code reflects that this provision is intended to encompass the solicitation and disclosure requirements under sections 1125 and 1126 of the Bankruptcy Code.”); S. Rep. No. 989, 95th Cong., 2d Sess., at 126 (1978); H.R. Rep. No. 595, 95th Cong., 1st Sess., at 412 (1977).

97 11 U.S.C. § 1125(b).

98 See Momentum Mfg. Corp. v. Emp. Creditors Comm. (In re Momentum Mfg. Corp.), 25 F.3d 1132, 1136 (2d Cir. 1994) (finding that section 1125 of the Bankruptcy Code obliges a debtor to engage in full and fair disclosure that would enable a hypothetical reasonable investor to make an informed judgment about the plan).

99 See generally Disclosure Statement Order.


42

relevant dates for voting and objecting to the Plan.100 As stated in the Voting Report, the Debtors,

through the Notice and Claims Agent, complied with the content and delivery requirements of the

Disclosure Statement Order, thereby satisfying sections 1125(a) and (b) of the Bankruptcy

Code.101 The Debtors also satisfied section 1125(c) of the Bankruptcy Code, which provides that

the same disclosure statement must be transmitted to each holder of a claim or interest in a

particular Class. Here, the Debtors caused the Disclosure Statement to be transmitted to all parties

entitled to vote on the Plan and parties deemed to reject the Plan.102

83. Based on the foregoing, the Debtors submit that they have complied in all respects

with the solicitation requirements of section 1125 of the Bankruptcy Code and the Disclosure

Statement Order, and no party has asserted otherwise.

2. The Debtors Complied with Section 1126 of the Bankruptcy Code.

84. Section 1126 of the Bankruptcy Code provides that only holders of allowed claims

and equity interests in impaired classes that will receive or retain property under a plan on account

of such claims or equity interests may vote to accept or reject a plan. F

103 As noted above, the

Debtors did not solicit votes on the Plan from the following Classes:

• Classes 1 (Other Secured Claims), 2 (Other Priority Claims), and 8 (Intercompany Interests), which are Unimpaired under the Plan (collectively, the “Unimpaired Classes”).104 Pursuant to section 1126(f) of the Bankruptcy Code, holders of

100 Id.

101 See Voting Decl. ¶¶ 6–12; see also Affidavit of Solicitation. As previously noted, due to a clerical error, the letter from the Committee recommending that Holders wait to receive the Plan Supplement to vote was inadvertently excluded from the Solicitation Packages sent to Holders entitled to Vote on the Plan. On January 27, 2020, the Debtors served the Supplemental Solicitation Letter to all Holders that had voted prior to the filing of such Plan Supplement asking that such Holders submit a new vote either in favor or against the Debtors’ Plan.

102 See Voting Decl. ¶¶ 4–5; see also generally Affidavit of Solicitation.

103 See 11 U.S.C. § 1126.

104 See Plan, Art. III.A.


43

Claims in the Unimpaired Classes are conclusively presumed to have accepted the Plan and, therefore, were not entitled to vote on the Plan.

• Classes 7 (Intercompany Claims), 9 (Interests in PES Energy and PES Ultimate Interests) and 10 (Section 510(b) Claims) are Impaired under the Plan (the “Deemed Rejecting Classes”).3

105 Pursuant to section 1126(g) of the Bankruptcy Code, holders of Claims and Interests in the Deemed Rejecting Classes are deemed to have rejected the Plan and, therefore, were not entitled to vote on the Plan.

85. Accordingly, the Debtors solicited votes only from the Voting Classes, Holders of

Allowed Claims and Interests in Classes 3, 4, 5, and 6, because each of these Classes is Impaired

and entitled to receive a distribution under the Plan.106 With respect to the Voting Classes of

Claims, section 1126(c) of the Bankruptcy Code provides that:

A class of claims has accepted a plan if such plan has been accepted by creditors, other than any entity designated under subsection (e) of [section 1126], that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors, other than any entity designated under subsection (e) of [section 1126], that have accepted or rejected such plan.107

86. The Voting Report, summarized above, reflects the results of the voting process in

accordance with section 1126 of the Bankruptcy Code.108 Based on the foregoing, the Debtors

submit that they have satisfied the requirements of section 1129(a)(2), and no party has asserted

otherwise.

D. The Plan Was Proposed in Good Faith (§ 1129(a)(3)).

87. Section 1129(a)(3) of the Bankruptcy Code requires that a chapter 11 plan be

“proposed in good faith and not by any means forbidden by law.” Where a plan satisfies the

105 Id.

106 Id. See generally Affidavit of Solicitation.

107 11 U.S.C. § 1126(c).

108 See generally Voting Decl., Exhibit E.


44

purposes of the Bankruptcy Code and has a good chance of succeeding, the good faith requirement

of section 1129(a)(3) of the Bankruptcy Code is satisfied.109 To determine whether a plan seeks

relief consistent with the Bankruptcy Code, courts consider the totality of the circumstances

surrounding the development of the plan.110

88. The Plan was proposed with honesty, good intentions, and with the goal of

maximizing stakeholder recoveries. Throughout these cases, the Debtors, their board of managers,

and their senior management team have upheld their fiduciary duties to stakeholders and protected

the interests of all constituents with an even hand. The Plan follows an extensive marketing

process to solicit interest in the Debtors and extensive arm’s-length negotiations among the

Debtors, the DIP Lenders, the Intermediation Provider, the Committee, the Plan Sponsor and other

parties interested in ensuring that stakeholders realize the highest possible recoveries under the

circumstances.111 Indeed, the Debtors’ management team and advisors expended countless hours

to conduct comprehensive and complex marketing and insurance recovery processes and

evaluating and negotiating the Restructuring Transaction to provide the most value for their

stakeholders.112 Importantly, the Plan is supported by the Debtors’ key economic stakeholders,

109 E.g., PWS Holding Corp., 228 F.3d at 242 (quoting In re Abbotts Dairies of Pa., Inc., 788 F.2d 143, 150 n.5

(3d Cir. 1986)); Fin. Sec. Assurance Inc. v. T-H New Orleans Ltd. P’ship (In re T-H New Orleans Ltd. P’ship), 116 F.3d 790, 802 (5th Cir. 1997) (quoting Brite v. Sun Country Dev., Inc. (In re Sun Country Dev., Inc.), 764 F.2d 406, 408 (5th Cir. 1985)); In re Century Glove, Inc., Civ. A. Nos. 90-400 and 90-401, 1993 WL 239489, at *4 (D. Del. Feb. 10, 1993); In re NII Holdings, Inc., 288 B.R. 356, 362 (Bankr. D. Del. 2002).

110 E.g., T-H New Orleans, 116 F.3d at 802 (quoting In re Sun Country Dev., Inc., 764 F.2d at 408); In re W.R. Grace & Co., 475 B.R. 34, 87 (D. Del. 2012); Century Glove, 1993 WL 239489, at *4.


112 Id.


45

namely, the Term Loan Lenders and DIP Lenders. Accordingly, the Plan and the Debtors’ conduct

satisfy section 1129(a)(3) of the Bankruptcy Code.

E. The Plan Provides that the Debtors’ Payment of Professional Fees and Expenses Are Subject to Court Approval (§ 1129(a)(4)).

89. Section 1129(a)(4) of the Bankruptcy Code requires that certain fees and expenses

paid by the plan proponent, by the debtor, or by a person receiving distributions of property under

the plan, be subject to approval by the Court as reasonable. Courts have construed this section to

require that all payments of professional fees paid out of estate assets be subject to review and

approval by the Court as to their reasonableness.113

90. The Plan satisfies section 1129(a)(4) of the Bankruptcy Code.114 All payments

made or to be made by the Debtors for services or for costs or expenses in connection with these

Chapter 11 Cases prior to the Effective Date, including all Professional Fee Claims, have been

approved by, or are subject to approval of, the Court.115 Article II.B of the Plan provides that all

final requests for payment of Professional Fee Claims shall be filed no later than 45 days after the

Effective Date for determination by the Court, after notice and a hearing, in accordance with the

procedures established by the Court.116 Accordingly, the Plan fully complies with the requirements

of section 1129(a)(4) of the Bankruptcy Code, and no party has asserted otherwise.

113 Lisanti Foods, 329 B.R. at 503 (“Pursuant to § 1129(a)(4), a [p]lan should not be confirmed unless fees and

expenses related to the [p]lan have been approved, or are subject to the approval, of the Bankruptcy Court”), aff’d, 241 F. App’x 1 (3d Cir. 2007); In re Future Energy Corp., 83 B.R. 470, 488 (Bankr. S.D. Ohio 1988); In re Chapel Gate Apartments, Ltd., 64 B.R. 569, 573 (Bankr. N.D. Tex. 1986) (noting that before a plan may be confirmed, “there must be a provision for review by the Court of any professional compensation”).


115 See Plan, Art. II

116 Id.


46

F. The Plan Does Not Require Additional Disclosures Regarding Directors, Officers, and Insiders (§ 1129(a)(5)).

91. The Bankruptcy Code requires the plan proponent to disclose the affiliation of any

individual proposed to serve as a director or officer of the debtor or a successor to the debtor under

the plan.117 Section 1129(a)(5)(A)(ii) further requires that the appointment or continuance of such

officers and directors be consistent with the interests of creditors and equity security holders and

with public policy.118

92. Here, Article IV.E of the Plan provides for the dissolution the existing board of

directors or managers, as applicable, of the Debtors and the dismissal of any remaining directors

or officers of the Debtors. The Plan also provides that all Non-Acquired Reorganized Debtors

shall be deemed dissolved on the Effective Date. As such, section 1129(a)(5) of the Bankruptcy

Code is inapplicable to the Plan. To the extent section 1129(a)(5) applies to the Liquidating Trust,

it will have satisfied the requirements of this provision by, among other things, disclosing the

manner by which the Liquidating Trust Board members will be selected in the Plan Supplement.119

93. In addition, section 1129(a)(5)(B) also requires a plan proponent to disclose the

identity of any “insider” (as defined by 11 U.S.C. § 101(31)) to be employed or retained by the

reorganized debtor and the nature of any compensation for such insider.120 Here, as described

above, the Plan provides that all Non-Acquired Reorganized Debtors shall be deemed dissolved

117 11 U.S.C. § 1129(a)(5)(A)(i).

118 11 U.S.C. § 1129(a)(5)(A)(ii).

119 See Docket No. 780-9, Ex. H.

120 11 U.S.C. § 1129(a)(5)(B).


47

on the Effective Date, and no reorganized debtor will subsist following the Effective Date.

Therefore, section 1129(a)(5)(B) is inapplicable to the Plan.

G. The Plan Does Not Require Governmental Regulatory Approval (§ 1129(a)(6)).

94. Section 1129(a)(6) of the Bankruptcy Code permits confirmation only if any

regulatory commission that has or will have jurisdiction over a debtor after confirmation has

approved any rate change provided for in the plan. Section 1129(a)(6) of the Bankruptcy Code is

inapplicable to these Chapter 11 Cases.

H. The Plan Is in the Best Interests of All the Debtors’ Creditors (§ 1129(a)(7)).

95. Section 1129(a)(7) of the Bankruptcy Code, commonly known as the “best interests

test,” provides, in relevant part:

With respect to each impaired class of claims or interests—

(A) each holder of a claim or interest of such class—

(i) has accepted the plan; or

(ii) will receive or retain under the plan on account of such claim or interest property of a value, as of the effective date of the plan, that is not less than the amount that such holder would so receive or retain if the debtor were liquidated under chapter 7 of [the Bankruptcy Code] on such date . . . .

96. The best interests test applies to individual dissenting holders of impaired claims

and interests rather than classes, and is generally satisfied through a comparison of the estimated

recoveries for a debtor’s stakeholders in a hypothetical chapter 7 liquidation of that debtor’s estate

against the estimated recoveries under that debtor’s plan of reorganization.121

121 Bank of Am. Nat. Trust & Sav. Ass’n v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 441 n.13 (1999) (“The ‘best

interests’ test applies to individual creditors holding impaired claims, even if the class as a whole votes to accept the plan.”); Century Glove, 1993 WL 239489, at *7; In re Adelphia Commc’ns. Corp., 368 B.R. 140, 251 (Bankr.


48

As section 1129(a)(7) of the Bankruptcy Code makes clear, the best interests test applies only to

holders of non-accepting impaired claims or interests. Class 3, Class 4, and Class 6 have voted to

accept the Plan. Class 5 has voted to reject the Plan. The Deemed Rejecting Classes did not vote

on the Plan. Accordingly, to satisfy the best interests test, the Debtors must demonstrate that each

Holder of a Claim in Classes 5 and in the Deemed Rejecting Classes will receive at least as much

under the Plan as that Holder would receive in a chapter 7 liquidation.122

97. The Plan satisfies section 1129(a)(7) of the Bankruptcy Code and the best interests

test. As set forth in the Plan Supplement,123 the Stein Declaration,124 and the Sciametta

Declaration,125 the Debtors, with the assistance of Alvarez & Marsal North America, LLC, the

Debtors’ restructuring advisors, prepared a supplement unaudited liquidation analysis, which is

attached to the Plan Supplement as Exhibit J (the “Liquidation Analysis”).126 The Liquidation

Analysis compares the projected range of recoveries that would result from the liquidation of the

Debtors in a hypothetical case under chapter 7 of the Bankruptcy Code with the estimated

distributions to Holders of Allowed Claims and Interests under the Plan.127 The Liquidation

Analysis is based on the value of the Debtors’ assets and liabilities as of a certain date and

S.D.N.Y. 2007) (stating that section 1129(a)(7) is satisfied when an impaired holder of claims would receive “no less than such holder would receive in a hypothetical chapter 7 liquidation”).

122 See In re Lason, Inc., 300 B.R. 227, 232 (Bankr. D. Del. 2003) (“Section 1129(a)(7)(A) requires a determination whether ‘a prompt chapter 7 liquidation would provide a better return to particular creditors or interest holders than a chapter 11 reorganization.’”) (internal citations omitted).

123 See Plan Supplement Ex. I, Ex. J.


125 See Sciametta Decl. ¶ 10.

126 See Plan Supplement, Ex. J.

127 See Sciametta Decl. ¶ 14


49

incorporates various estimates and assumptions, including a hypothetical conversion to a chapter

7 liquidation as of a certain date.128 Further, the Liquidation Analysis is subject to potentially

material changes, including with respect to economic and business conditions and legal rulings.129

98. Based on the unaudited Liquidation Analysis, and the assumptions included therein,

the value of any distributions if the chapter 11 cases were converted to cases under chapter 7 of

the Bankruptcy Code would be no greater than the value of distributions under the Plan.130 As a

result, Holders of Claims and Interests in all Impaired Classes will recover at least as much as a

result of Confirmation of the Plan as they would recover through a hypothetical chapter 7

liquidation.131 Based on the recoveries set forth above, the Plan satisfies the best interests test as

required by the Bankruptcy Code.

I. The Plan Is Confirmable Notwithstanding the Requirements of Section 1129(a)(8) of the Bankruptcy Code.

99. Section 1129(a)(8) of the Bankruptcy Code requires that each class of claims or

interests must either accept a plan or be unimpaired under a plan. Holders of Claims in Classes 4,

5, and 6, and Holders of Claims and Interests in the Deemed Rejecting Classes are deemed to have

rejected the Plan and, thus, were not entitled to vote. Consequently, while the Plan does not satisfy

section 1129(a)(8) of the Bankruptcy Code with respect to Classes 4, 5, and 6 and to the Deemed

Rejecting Classes, the Plan is confirmable nonetheless because it satisfies sections 1129(a)(10)

and 1129(b) of the Bankruptcy Code, as discussed below.

128 See id.

129 See id.


131 See Sciametta Decl. ¶ 20.


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J. The Plan Provides for Payment in Full of All Allowed Priority Claims (§ 1129(a)(9)).

100. Section 1129(a)(9) of the Bankruptcy Code requires that certain priority claims be

paid in full on the effective date of a plan and that the holders of certain other priority claims

receive deferred cash payments. In particular, pursuant to section 1129(a)(9)(A) of the Bankruptcy

Code, holders of claims of a kind specified in section 507(a)(2) of the Bankruptcy Code—

administrative claims allowed under section 503(b) of the Bankruptcy Code—must receive on the

effective date cash equal to the allowed amount of such claims. Section 1129(a)(9)(B) of the

Bankruptcy Code requires that each holder of a claim of a kind specified in section 507(a)(1) or

(4) through (7) of the Bankruptcy Code—generally wage, employee benefit, and deposit claims

entitled to priority—must receive deferred cash payments of a value, as of the effective date of the

plan, equal to the allowed amount of such claim (if such class has accepted the plan), or cash of a

value equal to the allowed amount of such claim on the effective date of the plan (if such class has

not accepted the plan). Finally, section 1129(a)(9)(C) of the Bankruptcy Code provides that the

holder of a claim of a kind specified in section 507(a)(8) of the Bankruptcy Code—i.e., priority

tax claims—must receive cash payments over a period not to exceed five years from the petition

date, the present value of which equals the allowed amount of the claim.

101. The Plan satisfies section 1129(a)(9) of the Bankruptcy Code. First, Article II.A

of the Plan satisfies section 1129(a)(9)(A) of the Bankruptcy Code because it provides that each

holder of an Allowed Administrative Claim will receive payment in full in Cash on the Effective

Date. Second, the Plan satisfies section 1129(a)(9)(B) of the Bankruptcy Code because no holders

of the types of Claims specified by 1129(a)(9)(B) are Impaired under the Plan and such Claims

have been paid in the ordinary course. Third, Article II.A of the Plan satisfies

section 1129(a)(9)(C) of the Bankruptcy Code because it provides that holders of Allowed Priority


51

Tax Claims payment in full in Cash on the Effective Date. The Plan thus satisfies each of the

requirements of section 1129(a)(9) of the Bankruptcy Code.

K. At Least One Class of Impaired, Non-Insider Claims Accepted the Plan (§ 1129(a)(10)).

102. Section 1129(a)(10) of the Bankruptcy Code provides that, to the extent there is an

impaired class of claims, at least one impaired class of claims must accept the plan, “without

including any acceptance of the plan by any insider,” as an alternative to the requirement under

section 1129(a)(8) of the Bankruptcy Code that each class of claims or interests must either accept

the plan or be unimpaired under the plan.

103. Class 3, Class 4, and Class 6, which are Impaired, voted to accept the Plan

independent of any insiders’ votes. Thus, the Plan satisfies the requirements of


L. The Plan Is Feasible (§ 1129(a)(11)).

104. Section 1129(a)(11) of the Bankruptcy Code requires that the Court find that a plan

is feasible as a condition precedent to confirmation. Specifically, the Court must determine that:

Confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.132

132 11 U.S.C. § 1129(a)(11).


52

To demonstrate that a plan is feasible, it is not necessary for a debtor to guarantee success.133

Rather, a debtor must provide only a reasonable assurance of success.134 There is a relatively low

threshold of proof necessary to satisfy the feasibility requirement.135

105. Here, the Plan is feasible. The Plan satisfies the feasibility requirements of

section 1129(a)(11) of the Bankruptcy Code by providing for a clear path to emergence from these

Chapter 11 Cases and the ability of the Debtors to satisfy all of their obligations under the Plan.

The implied value of the transactions contemplated by the Plan includes:

• $240 million of cash from the Plan Sponsor;

• the retention by the Plan Sponsor of all liabilities of the Acquired Reorganized Debtors, except for those expressly retained by the Estates;

• the retention by the Estates of certain Causes of Action that constitute Excluded Assets; and

• the receipt of up to $1.25 billion in insurance proceeds under the Business Interruption and Property Damage Insurance Policies, including $65 million of insurance proceeds advance already received by the Debtors.136

133 Kane v. Johns-Manville Corp., 843 F.2d 636, 649 (2d Cir. 1988) (“[T]he feasibility standard is whether the plan

offers a reasonable assurance of success. Success need not be guaranteed.”); In re Flintkote Co., 486 B.R. 99, 139 (Bankr. D. Del. 2012); W.R. Grace & Co., 475 B.R. at 115; In re U.S. Truck Co., 47 B.R. 932, 944 (E.D. Mich. 1985) (“‘Feasibility’ does not, nor can it, require the certainty that a reorganized company will succeed.”), aff’d, 800 F.2d 581 (6th Cir. 1986).

134 Kane, 843 F.2d at 649; Flintkote Co., 486 B.R. at 139; W.R. Grace & Co., 475 B.R. at 115; see also Pizza of Haw., Inc. v. Shakey’s, Inc. (In re Pizza of Haw., Inc.), 761 F.2d 1374, 1382 (9th Cir. 1985) (citations omitted) (holding that “[t]he purpose of section 1129(a)(11) is to prevent confirmation of visionary schemes which promise creditors and equity security holders more under a proposed plan than the debtor can possibly attain after confirmation”); accord In re Capmark Fin. Grp. Inc., No. 09-13684 (CSS), 2011 WL 6013718, at *61 (Bankr. D. Del. Oct. 5, 2011) (same).

135 See, e.g., In re Prussia Assocs., 322 B.R. 572, 584 (Bankr. E.D. Pa. 2005) (quoting approvingly that “[t]he Code does not require the debtor to prove that success is inevitable, and a relatively low threshold of proof will satisfy § 1129(a)(11) so long as adequate evidence supports a finding of feasibility”) (internal citations omitted); In re Sea Garden Motel & Apartments, 195 B.R. 294, 305 (D. N.J. 1996); In re Tribune Co., 464 B.R. 126, 185 (Bankr. D. Del. 2011), overruled in part on other grounds, 464 B.R. 208 (Bankr. D. Del. 2011).



53

106. The Debtors project that the value created by such transactions will be sufficient to

satisfy all Priority and Administrative Claims under the Plan, including all DIP Claims,

Professional Fee Claims.137 In addition, the Debtors anticipate and project that the Sale Proceeds,

the insurance proceeds, and Retained Causes of Action that are Excluded Assets will provide

sufficient cash to honor all requirements and obligations under the Plan and Purchase Agreement,

including resolving Disputed Claims.138

107. The Debtors have therefore established that the Liquidating Trust will have

sufficient funds to satisfy all requirements and obligations under the Plan.139 Accordingly, the

Debtors submit that the Plan fully complies with and satisfies all of the requirements of


M. All Statutory Fees Have Been or Will Be Paid (§ 1129(a)(12)).

108. Section 1129(a)(12) of the Bankruptcy Code requires the payment of “[a]ll fees

payable under section 1930 of title 28 [of the United States Code], as determined by the court at

the hearing on confirmation of the plan.” Section 507(a)(2) of the Bankruptcy Code provides that

“any fees and charges assessed against the estate under [section 1930 of] chapter 123 of title 28”

are afforded priority as administrative expenses.

109. The Plan satisfies section 1129(a)(12) of the Bankruptcy Code because Article II.D

of the Plan provides (a) all fees due and payable pursuant to section 1930 of Title 28 of the United

States Code before the Effective Date shall be paid by the Debtors, (b) on and after the Effective

Date, to the extent applicable, the Liquidating Trust shall pay any and all such fees when due and

137 See id. ¶ 70.

138 See id.

139 See id. ¶ 71.


54

payable, and (c) the Liquidating Trust shall remain obligated to pay quarterly fees to the

U.S. Trustee until the earliest of the applicable Reorganized Debtor’s Chapter 11 Case being

closed, dismissed, or converted to a case under chapter 7 of the Bankruptcy Code.

N. No Remaining Retiree Benefits Obligations (§ 1129(a)(13)).

110. Section 1129(a)(13) of the Bankruptcy Code requires that all retiree benefits

continue post-confirmation at any levels established in accordance with section 1114 of the

Bankruptcy Code. The Debtors do not have any remaining obligations to pay retiree benefits (as

defined in section 1114 of the Bankruptcy Code).140 Therefore, section 1129(a)(13) of the

Bankruptcy Code is inapplicable to these Chapter 11 Cases or the Plan.

O. Sections 1129(a)(14) through 1129(a)(16) Do Not Apply to the Plan.

111. Section 1129(a)(14) of the Bankruptcy Code relates to the payment of domestic

support obligations. Since the Debtors are not subject to any domestic support obligations, the

requirements of section 1129(a)(14) of the Bankruptcy Code do not apply.141 Likewise,

section 1129(a)(15) of the Bankruptcy Code applies only in cases in which the debtor is an

“individual” as defined in the Bankruptcy Code. Because none of the Debtors is an “individual,”

the requirements of section 1129(a)(15) of the Bankruptcy Code do not apply.142 Finally, each of

the Debtors are a moneyed, business, or commercial corporation and, therefore,

section 1129(a)(16) of the Bankruptcy Code, which provides that property transfers by a

corporation or trust that is not a moneyed, business, or commercial corporation or trust be made in


141 See id.

142 See id.


55

accordance with any applicable provisions of nonbankruptcy law, is not applicable to these

Chapter 11 Cases.143

P. The Plan Satisfies the “Cram Down” Requirements of Section 1129(b) of the Bankruptcy Code.

112. Section 1129(b)(1) of the Bankruptcy Code provides that, if all applicable

requirements of section 1129(a) of the Bankruptcy Code are met other than section 1129(a)(8) of

the Bankruptcy Code, a plan may be confirmed so long as the requirements set forth in

section 1129(b) of the Bankruptcy Code are satisfied. To confirm a plan that has not been accepted

by all impaired classes (thereby failing to satisfy section 1129(a)(8) of the Bankruptcy Code), the

plan proponent must show that the plan does not “discriminate unfairly” and is “fair and equitable”

with respect to the non-accepting impaired classes.144

113. As noted above, Class 3, Class 4, and Class 6, which are Impaired Classes of Claims

entitled to vote on the Plan, have voted in favor of the Plan. However, Holders of Claims in Class

5 and the Deemed Rejecting Class have or are deemed to have rejected the Plan. Nonetheless, as

set forth below, the Plan satisfies the requirements under section 1129(b) of the Bankruptcy Code

1. The Plan Is Fair and Equitable (§ 1129(b)(2)(B)(ii)).

114. A plan is “fair and equitable” with respect to an impaired class of claims or interests

that rejects a plan (or is deemed to reject a plan) if it follows the “absolute priority” rule.145

143 See id.

144 John Hancock, 987 F.2d at 157 n.5; In re Ambanc La Mesa L.P., 115 F.3d 650, 653 (9th Cir. 1997) (“the [p]lan satisfies the ‘cramdown’ alternative . . . found in 11 U.S.C. § 1129(b), which requires that the [p]lan ‘does not discriminate unfairly’ against and ‘is fair and equitable’ towards each impaired class that has not accepted the [p]lan.”).

145 Bank of Am., 526 U.S. at 441–42 (“As to a dissenting class of impaired unsecured creditors, such a plan may be found to be ‘fair and equitable’ only if the allowed value of the claim is to be paid in full, § 1129(b)(2)(B)(i), or, in the alternative, if ‘the holder of any claim or interest that is junior to the claims of such [impaired unsecured] class will not receive or retain under the plan on account of such junior claim or interest any property,’ § 1129(b)(2)(B)(ii). That latter condition is the core of what is known as the ‘absolute priority rule.’”).


56

This requires that an impaired rejecting class of claims or interests either be paid in full or that a

class junior to the impaired accepting class not receive any distribution under a plan on account of

its junior claim or interest.146

115. The Plan satisfies section 1129(b) of the Bankruptcy Code. Notwithstanding the

fact that Class 5 and the Deemed Rejecting Classes have or are deemed to have rejected the Plan,

respectively, the Plan is confirmable.147 Class 4 (Intermediation Secured Claims) is comprised of

all Allowed Intermediation Secured Claims. Class 5 (General Unsecured Claims) is comprised of

all General Unsecured Claims. Class 6 (Subordinated Remaining Volume Claim) is comprised of

the Subordinated Remaining Volume Claim. Class 7 (Intercompany Claims) is comprised of all

Claims held by a Debtor or a Debtor’s Affiliate against a Debtor or a Debtor’s Affiliate, Class 9

(Interests in PES Energy and PES Ultimate Interests) is comprised of all Interests in PES Energy

and PES Ultimate Interests, and Class 10 (Section 510(b) Claims) is comprised of all Section

510(b) Claims. There are no Claims or Interests that are junior to Intermediation Secured Claims,

General Unsecured Claims, the Subordinated Remaining Volume Claim, Intercompany Claims,

Interests in PES Energy and PES Ultimate Interests, or to Section 510(b) Claims that are receiving

any recovery under the Plan before any Class that is senior in priority, nor is any Holder of a Claim

or Interest receiving more than payment in full of its Claim or Interest.

116. In addition, although Intercompany Interests may be reinstated under the Plan and,

therefore, become Unimpaired, such treatment is for the purposes of preserving the Debtors’

146 Id.

147 To the extent any rejecting class amends its vote and determines to accept the Plan, the Debtors will file an amended Voting Report to reflect such update.


57

corporate structure and will have no economic substance.148 Accordingly, the Plan is “fair and

equitable” with respect to all Impaired Classes of Claims and Interests and satisfies section 1129(b)

of the Bankruptcy Code.

2. The Plan Does Not Unfairly Discriminate with Respect to the Impaired Classes that Have Not Voted to Accept the Plan (§ 1129(b)(1)).

117. Although the Bankruptcy Code does not provide a standard for determining when

“unfair discrimination” exists, courts typically examine the facts and circumstances of the

particular case to make the determination.149 In general, courts have held that a plan unfairly

discriminates in violation of section 1129(b) of the Bankruptcy Code only if it provides materially

different treatment for creditors and interest holders with similar legal rights without compelling

justifications for doing so.150 A threshold inquiry to assessing whether a proposed plan of

148 See In re ION Media Networks, Inc., No. 09-13125 (JMP) (Bankr. S.D.N.Y. Nov. 24, 2009) (“This technical

preservation of equity is a means to preserve the corporate structure that does not have any economic substance and that does not enable any junior creditor or interest holder to retain or recover any value under the Plan. The Plan’s retention of intercompany equity interests for holding company purposes constitutes a device utilized to allow the Debtors to maintain their organizational structure and avoid the unnecessary cost of having to reconstitute that structure.”).

149 In re 203 N. LaSalle St. Ltd. P’ship., 190 B.R. 567, 585 (Bankr. N.D. Ill. 1995), rev’d on other grounds, Bank of Am., 526 U.S. 434 (1999) (noting “the lack of any clear standard for determining the fairness of a discrimination in the treatment of classes under a Chapter 11 plan” and that “the limits of fairness in this context have not been established.”); In re Aztec Co., 107 B.R. 585, 589–91 (Bankr. M.D. Tenn. 1989) (“Courts interpreting language elsewhere in the Code, similar in words and function to § 1129(b)(1), have recognized the need to consider the facts and circumstances of each case to give meaning to the proscription against unfair discrimination.”); In re Freymiller Trucking, Inc., 190 B.R. 913, 916 (Bankr. W.D. Okla. 1996) (holding that a determination of unfair discrimination requires a court to “consider all aspects of the case and the totality of all the circumstances”).

150 See Coram, 315 B.R. at 349 (citing cases and noting that separate classification and treatment of claims is acceptable if the separate classification is justified because such claims are essential to a reorganized debtor’s ongoing business); In re Lernout & Hauspie Speech Prods., N.V., 301 B.R. 651, 661 (Bankr. D. Del. 2003) (permitting different treatment of two classes of similarly situated creditors upon a determination that the debtors showed a legitimate basis for such discrimination); Ambanc La Mesa, 115 F.3d at 656–57 (same); Aztec Co., 107 B.R. at 589–91 (stating that plan which preserved assets for insiders at the expense of other creditors unfairly discriminated); In re Johns-Manville Corp., 68 B.R. 618, 636 (Bankr. S.D.N.Y. 1986) (stating that interests of objecting class were not similar or comparable to those of any other class and thus there was no unfair discrimination).


58

reorganization unfairly discriminates against a dissenting class is whether the dissenting class is

equally situated to a class allegedly receiving more favorable treatment.151

118. Here, the Plan’s treatment of the non-accepting Impaired Class (i.e., Classes 4, 5,

and 6 and the Deemed Rejecting Classes) is proper because all similarly situated Holders of Claims

and Interests will receive substantially similar treatment and the Plan’s classification scheme rests

on a legally acceptable rationale. Claims in Classes 4, 5, and 6 and in the Deemed Rejecting

Classes are not similarly situated to any other Classes, given their distinctly different legal

character from all other Claims and Interests. The Plan’s treatment of Class 4, 5, and 6 and the

Deemed Rejecting Classes is proper because no similarly situated class will receive more favorable

treatment. Furthermore, where the Plan provides differing treatment for certain Classes of Claims

or Interests, the Debtors have a rational basis for doing so.

119. For the reasons set forth above, the Plan does not discriminate unfairly in

contravention of section 1129(b)(1) of the Bankruptcy Code and the Plan may be confirmed

notwithstanding the rejection by Classes 4, 5, and 6 and the deemed rejection by the Deemed

Rejecting Classes.

Q. The Debtors Complied with Section 1129(d) of the Bankruptcy Code.

120. The purpose of the Plan is not to avoid taxes or the application of section 5 of the

Securities Act of 1933.152 Moreover, no governmental unit or any other party has requested that

the Court decline to confirm the Plan on such grounds.153 Accordingly, the Plan satisfies the

requirements of section 1129(d) of the Bankruptcy Code.

151 See Aleris Int’l, Inc., 2010 WL 3492664, at *31 (citing Armstrong World Indus., 348 B.R. at 121).


153 Id.


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R. Modifications to the Plan.

121. Section 1127(a) of the Bankruptcy Code provides that a plan proponent may

modify its plan at any time before confirmation as long as such modified plan meets the

requirements of sections 1122 and 1123 of the Bankruptcy Code. Further, when the proponent of

a plan files the plan with modifications with the court, the plan as modified becomes the

plan. Bankruptcy Rule 3019 provides that modifications after a plan has been accepted will be

deemed accepted by all creditors and equity security holders who have previously accepted the

plan if the court finds that the proposed modifications do not adversely change the treatment of the

claim of any creditor or the interest of any equity security holder. Interpreting Bankruptcy

Rule 3019, courts consistently have held that a proposed modification to a previously accepted

plan will be deemed accepted where the proposed modification is not material or does not

adversely affect the way creditors and stakeholders are treated.154

122. The Debtors previously revised the Plan with certain technical modifications

mainly designed to embody the Debtors’ choice to effectuate the Sale Transaction and reflect the

terms of transaction contemplated in the Purchase Agreement. The Debtors then later made certain

modifications to resolve formal and informal comments to the Plan by parties in interest

(collectively, the “Modifications”).155 Following the launch of the solicitation process, the Debtors

filed a second amended Plan on January 29, 2020 [Docket No. 827] and a third amended Plan filed

substantially contemporaneously herewith. The Modifications are immaterial or otherwise do not

154 See, e.g., In re Glob. Safety Textiles Holdings LLC, No. 09-12234 (KG), 2009 WL 6825278, at *4 (Bankr. D.

Del. Nov. 30, 2009) (finding that nonmaterial modifications to plan do not require additional disclosure or resolicitation); In re Burns & Roe Enters., Inc., No. 08-4191 (GEB), 2009 WL 438694, at *23 (D.N.J. Feb. 23, 2009) (confirming plan as modified without additional solicitation or disclosure because modifications did “not adversely affect creditors”).

155 See Docket Nos. 827, 828.


60

affect the treatment of creditors and stakeholders and thus comply with section 1127 of the

Bankruptcy Code and Bankruptcy Rule 3019. Accordingly, the Debtors submit that no additional

solicitation or disclosure is required on account of the Modifications, and that such Modifications

should be deemed accepted by all creditors that previously accepted the Plan.

S. Good Cause Exists to Waive the Stay of the Confirmation Order.

123. Bankruptcy Rule 3020(e) provides that “[a]n order confirming a plan is stayed until

the expiration of 14 days after the entry of the order, unless the Court orders otherwise.”

Bankruptcy Rules 6004(h) and 6006(d) provide similar stays to orders authorizing the use, sale or

lease of property (other than cash collateral) and orders authorizing a debtor to assign an executory

contract or unexpired lease under section 365(f) of the Bankruptcy Code. Each rule also permits

modification of the imposed stay upon court order.

124. The Debtors submit that good cause exists for waiving and eliminating any stay of

the Confirmation Order pursuant to Bankruptcy Rules 3020, 6004, and 6006 so that the

Confirmation Order will be effective immediately upon its entry.156 As noted above, these

Chapter 11 Cases and the related transactions have been negotiated and implemented in good faith

and with a high degree of transparency and public dissemination of information. Additionally,

each day the Debtors remain in chapter 11 they incur significant administrative and professional

costs.157

156 See, e.g., In re Source Home Entm’t, LLC, No. 14-11553 (KG) (Bankr. D. Del, Feb. 20, 2015) (waiving stay of

confirmation order and causing it to be effective and enforceable immediately upon its entry by the court); In re GSE Envtl., Inc., No. 13-11126 (MFW) (Bankr. D. Del. July 25, 2014) (same); In re Physiotherapy Holdings, Inc., No. 13-12965 (KG) (Bankr. D. Del. Dec. 23, 2013) (same); In re Gatehouse Media, Inc., No. 13-12503 (MFW) (Bankr. D. Del. Nov. 6, 2013) (same); In re Dex One Corp., No. 13-10533 (KG) (Bankr. D. Del. Apr. 29, 2013) (same); In re Geokinetics Inc., No. 13-10472 (KJC) (Bankr. D. Del. Apr. 25, 2013) (same).

157 See Stein Decl. at ¶ 10.


61

125. Based on the foregoing, the Debtors request a waiver of any stay imposed by the

Bankruptcy Rules so that the Confirmation Order may be effective immediately upon its entry.

III. The Objections to the Plan Should be Overruled.

126. The deadline to file objections to the Plan was February 3, 2020, at 4:00 p.m.,

prevailing Eastern Time (the “Plan Objection Deadline”). As of the Plan Objection Deadline

(as extended for certain parties), the Debtors received thirteen objections to confirmation of the

Plan. The Debtors are optimistic that the majority of the remaining objections will be resolved in

advance of the Confirmation Hearing—specifically, based on ongoing negotiations and

conversations, the Debtors believe that the DOJ Objection, the EPA Objection, the Sunoco

Objection, the Taxing Authorities Objection, and the Westchester Objection will be partially or

fully resolved through proposed language in the revised Plan and/or the Confirmation Order.

Attached hereto as Exhibit A is a chart summarizing the objections received, the resolutions

reached to date between the Debtors and the various objecting parties, and the Debtors’ position

with respect to each objection to the extent a resolution has not been reached. The Debtors will

update the Court regarding the status of all objections prior to or at the Confirmation Hearing. To

the extent that the Debtors do not anticipate reaching resolution with the Objecting Parties ahead

of the Confirmation Hearing, a reply to their Objections follows.

A. The Sale Transaction Should be Approved as a Sound Exercise of the Debtors’ Business Judgement.

127. As described more fully in the Debtors’ Response to the Committee, the

Committee questions the Debtors’ selection of the Successful Bid,158 alleges that Industrial Realty

Group, LLC (“IRG”) “may present a proposal that is both higher and better” and “contests, on

158 For the avoidance of doubt, the term “Successful Bidder” shall have the meaning ascribed to it in the Bidding

Procedures.


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substantive grounds, the Debtors’ decision to continue advancing with the inferior HRP bid.”159

The Committee has no ground to stand on. The Sale Transaction, and the Debtors’ actions

following the Sale Transaction, represent a sound exercise of the Debtors’ business judgment, and

the HRP bid is superior to any other bids received.

128. As further explained in the Singh Declaration, from August 2019 through January

2020, the Debtors and their advisors, in consultation with the Consultation Parties (as defined in

the Bidding Procedures), conducted a thorough and comprehensive marketing and sale process for

the sale of the Debtors’ business.160 As part of this months-long process, the Debtors’ advisors

contacted hundreds of potential bidders, supported extensive diligence through provision of

documents, site visits, and management meetings, and facilitated three rounds of bidding. These

efforts culminated in January 2020 with the Debtors holding four days of intensive negotiations

with final bidders at the offices of the Debtors’ counsel, Kirkland & Ellis LLP (“Kirkland & Ellis”)

and a formal Auction to determine the best bid for the Debtors’ assets. At the conclusion of the

Auction, the Debtors, in consultation with the Consultation Parties, determined in their business

judgement that HRP’s bid was the Successful Bid and received approval of the selection of HRP

as the Winning Bidder from the Restructuring Committee of the Debtors’ Board of Directors.

129. While IRG’s final bid at the Auction contained a headline purchase price $25

million higher than HRP’s, the Debtors did not believe that this premium justified the risks

associated with the IRG bid.

130. First, and most importantly, IRG has not presented sufficient committed

financing to support its proposal. This was the case when IRG submitted its final bid on January

159 Committee Obj. at n. 4.

160 Singh Decl. at ¶¶ 7-13.


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10, and that remained the case at the January 17 Auction, when the Debtors, in consultation with

the Consultation Parties, selected HRP as the Successful Bidder. IRG’s final bid at the Auction

contained a 30-day financing contingency that would allow them to walk away (only losing its $5

million deposit) at any time during this 30-day period.

131. Second, at the Auction, IRG offered only a $5 million deposit, representing less

than 2 percent of the proposed $265 million purchase price. As described in the Singh Declaration,

the Debtors made clear to IRG during the Auction process that this deposit was insufficient.161

Moreover, coupling this small deposit with a financing contingency created significant closing

risk. Particularly in light of HRP’s refusal to allow their bid to serve as the Back-Up Bid,162 the

Debtors would have been left with no alternative Qualified Bid had they selected IRG as the

Winning Bidder and financing did not materialize.

132. Third, even assuming IRG were able to secure financing in a timely fashion, the

Debtors had other concerns with regards to IRG’s preparation and ability to timely close. A

proposal that increases the distributable value available for creditors by $25 million, while

certainly important to evaluate, does not fundamentally change this calculus in light of how quickly

tens of millions are absorbed by debt service, estate operational costs, and professional fee

accruals. No amount of committed funding will cure the Debtors’ inability to timely consummate

a transaction in the absence of the necessary diligence. IRG has simply failed to commit any

substantial form of diligence effort to place itself in a position to consummate a transaction with

161 Singh Decl. at ¶ 15.

162 For the avoidance of doubt, the term “Back-Up Bid” has the meaning ascribed to it in the Bidding Procedures Order.


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the Debtors. Conversely, HRP has engaged in a tremendous amount of effort and diligence to

close the transaction, including by:

• seeking the Pennsylvania Department of Environmental Protection’s (“PaDEP”) approval of a soil development plan;

• engaging with various constituencies with regards to settlement of certain of the Debtors’ outstanding liabilities, including Sunoco (and its subsidiaries); and

• engaging with the EPA, the USW, and the City of Philadelphia with regards to potential go-forward usage of the refinery site.

133. The obstacles to consummation are significant, well-known, and not subject to

dispute. And if an IRG proposal ultimately fails to satisfy conditions to closing—including, among

others, receiving approval from PaDEP—there is no way to measure how much lower the next

proposal—if there is a next proposal—will be. Simply put, the Debtors do not have a proposal

from any other party reflecting the same level—indeed any discernible level—of certainty

supporting the Purchase Agreement.

134. The Committee apparently objects to the selection of HRP as the Winning Bidder

and instead seeks approval of a fantasy alternate sale to IRG.163 The Committee’s objection should

be overruled and its unjustified effort to force the Debtors to participate in a speculative sale of

their Interests to IRG should be denied.

• First, the proposed Sale Transaction represents a sound exercise of the Debtors’ business judgment.

• Second, the Back-Up Bid is far less compelling given that the proposed Sale Transaction due to the fact that the Back-Up Bid transaction, unlike the proposed Sale Transaction, is subject to material contingencies not present in the Successful Bid.

163 See Committee Obj. at ¶28-29.


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1. The Sale Transaction Represents a Sound Exercise of the Debtors’ Business Judgment and Should Be Approved.

135. As a rule, and as previously mentioned, a debtor’s decision to sell property out of

the ordinary course of business enjoys a strong presumption “that in making a business decision

the directors . . . acted on an informed basis, in good faith and in an honest belief that the action

taken was in the best interests of the company.”164 In objecting to the proposed Sale Transaction,

the Committee must actually establish “bad faith, self-interest, or gross negligence.”165 In other

words, if the proposed Sale Transaction satisfies the business judgment rule, then it should be

approved under section 363(b)(1) of the Bankruptcy Code. As the Committee knows, it cannot

satisfy this burden. The Debtors’ transactions with the Plan Sponsor result from an independent,

arm’s length process. The marketing process and the Court-approved Bidding Procedures for the

Debtors’ assets were designed to test the market to solicit the highest and best offer for the Debtors’

assets. The discussions between the Debtors and the Plan Sponsor and all other potential bidders

were led by the Debtors’ independent Chief Restructuring Officer and the Debtors’ restructuring

professionals and in consultation with the Consultation Parties pursuant to the Bidding Procedures.

The proposed Sale Transaction, therefore, is entitled to deference under the business judgment

standard and should be approved. Indeed, the Committee does not actually argue that the Debtors

must undertake another marketing process. Rather, the Committee has requested that the Debtors

select a different Winning Bidder by fiat.

164 In re Integrated Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d

858, 872 (Del. 1985)). See also In re Bridgeport Hldgs., Inc., 388 B.R. 548, 567 (Bankr. D. Del. 2008) (stating that directors enjoy a presumption of honesty and good faith with respect to negotiating and approving a transaction involving a sale of assets).

165 Integrated Res., 147 B.R. at 656. See also In re Johns-Manville Corp., 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986).


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136. In any event, the Debtors respectfully submit that sound business reasons support

their decision to enter into the Purchase Agreement with the Plan Sponsor. Inexplicably, the

Committee would prefer that the Debtors give up these major concessions for a highly speculative

path that seeks essentially the same result.

• First, the Sale Transaction provides manifest benefits to these estates, including the headline purchase price of $240 million;

• Second, the Debtors extensively marketed their assets during the sale and marketing processes for nearly six months;166

• Third, the Debtors respectfully submit that it is reasonably likely that IRG will not submit a revised bid approaching, let alone exceeding, the amount of closing certainty of the Successful Bid. And should IRG in fact submit a similar or even better bid than HRP’s, the contingencies associated with the IRG bid and, conversely, the substantial diligence efforts already carried out by HRP following its selection as Plan Sponsor make HRP’s bid substantially more likely to close than any bid that IRG could submit.

• Fourth, the transaction will enable the Debtors to expeditiously exit from their chapter 11 cases without incurring additional operating expenses at a time when the Debtors have limited cash on hand.

137. In addition, as detailed above, following the Auction, the Debtors have continued

to engage in discussions with the Plan Sponsor regarding ways to improve the value of the

proposed Sale Transaction in connection with settlement discussions with the Environmental

Protection Agency and Sunoco.

138. Notwithstanding these uncertainties, as an exercise of their ongoing fiduciary

obligation to maximize recoveries to the estates, and in accordance with the fiduciary flexibilities

in the Bidding Procedures Order, the Debtors remained open to continuing a dialogue with IRG or

any other party in interest to discuss the terms of a value maximizing transaction. On Thursday,

January 30, the Debtors received a revised form of proposed Purchase Agreement from IRG.

166 See Singh Decl. at ¶¶ 7-13.


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Unfortunately, several key terms in this document were either wholly missing or were inadequate,

rendering the document incomplete:

• No reference to an amount of a deposit for the security of IRG’s performance was included;

• No signature was provided, thus the document could not be evaluated as a binding proposal;

• No business plan was provided, thus the Debtors were left unable to evaluate how they IRG was planning to use the property or address issues operational and/or employment issues; and

• No disclosure schedules and/or exhibits were provided—including the form Litigation Control Agreement, the form Confirmation Order, the Facility Turnover Requirements, and/or the Form Assignment and Assumption and FIRPTA Certificate.

139. Although this document did indicate some improvements as compared to IRG’s

Auction Bid, including removal of a 30-day financing period, together, the sea of missing

information precluded the Debtors from even evaluating IRG’s proposal as a binding Bid (as

defined in the Bidding Procedures). Even assuming the Debtors were able to evaluate IRG’s form

Purchase Agreement as a binding Bid, this form document contained material revisions as

compared to the IRG’s “Auction” form Purchase Agreement which were unfavorable to the

Debtors.

140. On February 3, 2020, the Debtors finally received a proposed execution version of

the Purchase Agreement from IRG. Again, the revised document from IRG represented certain

improvements but remained deficient as compared to HRP’s documentation. Specifically, the

proposed escrow amount of $15 million represented only 50% of HRP’s $30 million deposit offer.

Among other issues which effectively fictionalized the scenario of a timely closing, this document

also included at least a 100-day closing requirement (increased from 60-days). The following day,

the Debtors received IRG’s $15 million deposit. At this point, the Debtors, together with their


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advisors and the Board of Directors’ (the “Board”) Restructuring Committee began to evaluate

IRG’s proposal as a binding Bid and vowed to continue working with IRG (and their counsel) to

improve the terms of this bid. Ultimately, the terms of IRG’s bid did not improve materially, and

thus the Debtors together with the Restructuring Committee, determined that the HRP bid was the

value-maximizing offer. The Debtors eventually received a revised proposal from IRG on

February 9, 2020. Although the Debtors are still evaluating the terms of this proposal as of the

submission of this Memorandum, the revised proposal does not appear to represent significant

material changes from IRG’s prior proposals.

141. For all the reasons stated above, the HRP transaction was proposed in good faith

and has a sound business purpose. There are simply no other actionable alternatives that

comparably embrace the Debtors’ primary principles of maximizing distributable value and

minimizing consummation risk.

142. Moreover, all potentially interested parties have had a significant period of time in

which to develop a reasonably comparable proposal. None have emerged. Allowing such parties

additional time in the hopes that another white knight Plan Sponsor will emerge when none has

following a 6-months marketing process is a reckless proposition. Indeed, should those efforts

prove to be unsuccessful (as they are very likely to be), the very creditors that are objecting to the

Purchase Agreement will suffer the consequences. And such a reckless set of circumstances puts

at risk the recoveries of the Debtors’ creditors who have not objected to the Motion.

2. The Successful Bid is the Best Bid.

143. The Committee proposes that this Court (and the Debtors) apply an incorrect legal

standard. In the context of a sale outside of the ordinary course of business under section 363(b),

the debtor must “demonstrate that the proposed sale price is the highest and best offer, though a


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bankruptcy court may accept a lower bid in the presence of sound business reasons.”167

Importantly, the Debtors have a duty to maximize the value of their estates that requires them to

consider multiple relevant factors when selecting the highest or best offer for their assets.168

Specifically, “[i]n determining whether the highest bid is the ‘best bid,’ the fiduciary and reviewing

court must consider factors such as ‘the risks associated with each bid and the probabilities that

the proposed terms will come to fruition’ as well as ‘contingencies, conditions, timing or other

uncertainties in an offer that may render it less appealing.’”169

144. Although the Auction ended with IRG’s bid having a higher headline purchase

price than HRP’s, during and after the Auction the two bids were—and, as they continue to evolve,

remain—vastly different in terms of diligence effort and contingencies, among other things. As

described above, the Debtors, with the assistance of their advisors and in consultation with the

Consultation Parties, have identified and valued all material differences between the bids,

including the IRG Bid’s $15 million deposit (as compared to the $30 million deposit of the

Winning Bid) and the higher likelihood of consummating the Winning Bid. Taking all of these

factors into account, the Debtors, in the exercise of their business judgement, have valued the

Successful Bid as the value-maximizing bid.

145. The testimony will show that the selection of the Successful Bid has been fair and,

if anything, conservative with respect to the value of the various deficiencies in IRG’s bids at the

167 In re Moore, 608 F.3d 253, 263 (5th Cir. 2010).

168 See, e.g., In re Scimeca Found, Inc., 497 B.R. 753, 779 (Bankr. E.D. Pa. 2013); Lawsky v. Condor Capital Corp., No. 14 CIV. 2863 CM, 2015 WL 4470332, at *9 (S.D.N.Y. July 21, 2015); see generally United States v. Chem. Found., 5 F.2d 191, 206 (3d Cir. 1925) (“It is common knowledge of all lawyers and many business men that the highest bid is not always the best bid and that a lower bid may be the best bid when based on conditions sufficient to overbalance the difference between the two.”) aff’d as modified, 272 U.S. 1 (1926).

169 In re Tresha-Mob, LLC, No. 18-52420-RBK, 2019 WL 1785431 at *2 (Bankr. W.D. Tex. Ap. 3, 2019) (quoting Lawsky, 2015 WL 4470332, at *9)


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Auction and afterward. The Debtors’ decision to select the Plan Sponsor as the Winning Bidder

was not taken lightly and was the product of careful consideration of the value of each component

of the bidders’ proposals, and input from key constituents, including the DIP Lenders and the

Debtors’ Board, who are supportive of the Debtors’ designation of the Successful Bid. To be sure,

valuing bids with different terms, credit support and conditionality involves discretion. That

discretion was exercised reasonably by the Debtors at the Auction and should be upheld by the

Court here.

B. The Objection of the U.S. Trustee Should be Overruled.

1. The Discharge of Acquired Reorganized Debtors Is Appropriate.

146. The U.S. Trustee objects to the granting of a discharge to the Debtors under

section 1141 of the Bankruptcy Code on the basis that “the Debtors are not remaining in

business.”170

147. Under section 1141(d)(3), “the confirmation of a plan does not discharge a debtor

if (A) the plan provides for the liquidation of all or substantially all of the property of the estate;

(B) the debtor does not engage in business after consummation of the plan; and (C) the debtor

would be denied a discharge under Section 727(a) of [the Bankruptcy Code] if the case were a case

under chapter 7 of [the Bankruptcy Code].”171 While the Debtors believe that all Debtors are

entitled to a discharge under section 1141(d)(3), in an effort to reach consensual resolution with

the U.S. Trustee, the Debtors have revised the discharge provision of the Plan such that the

discharge solely applies to Debtors that constitute Acquired Reorganized Debtors.172 The

170 See U.S. Trustee Obj. ¶ 24.

171 U.S.C. § 1141(d)(3).

172 See Plan Art. X.B.


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Acquired Reorganized Debtors are wholly entitled to a discharge because such Acquired

Reorganized Debtors will remain in business after the Effective Date. The conjunctive

requirements of section 1141(d)(3) do not apply to such Acquired Reorganized Debtors.

148. The property of the Acquired Reorganized Debtors’ will not be liquidated under

the Plan. On the opposite, while the Purchased Interests are being sold to the Plan Sponsor under

the Purchase Agreement, none of the assets of the Acquired Reorganized Debtors will be liquidated

but, instead, will transfer to the Plan Sponsor and remain with the Acquired Reorganized

Debtors.173

149. For these reasons, the U.S. Trustee’s objection to the discharge of the Acquired

Reorganized Debtors should be overruled.

2. The Third-Party Release Is Consensual and Permissible.

150. The U.S. Trustee argues that the Third-Party Release in Article X of the Plan is

non-consensual and overly broad.174

151. First, the Third-Party Release is consensual. The case law is clear that a release

is consensual where parties have received sufficient notice of the plan’s release provisions and

have had an opportunity to object to or opt out of the release and failed to do so (including where

such holder abstains from voting altogether).175 Generally, voting in favor of a plan is sufficient

173 See Plan Art. IV.E.

174 See UST Obj. ¶¶ 27–33.

175 See, e.g., Indianapolis Downs, 486 B.R. at 306 (“As for those impaired creditors who abstained from voting on the Plan, or who voted to reject the Plan and did not otherwise opt out of the releases, the record reflects these parties were provided detailed instructions on how to opt out, and had the opportunity to do so by marking their ballots. Under these circumstances, the Third Party Releases may be properly characterized as consensual and will be approved”); In re DBSD N. Am., Inc., 419 B.R. 179, 218-19 (Bankr. S.D.N.Y. 2009) (“Except for those who voted against the Plan, or who abstained and then opted out, I find the Third Party Release provision consensual and within the scope of releases permitted in the Second Circuit.”); In re Conseco, Inc., 301 B.R. 525, 528 (Bankr. N.D. Ill. 2003) (“The Article X release now binds only those creditors who agreed to be bound,


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to demonstrate consent to any third-party release contained therein.176 Similarly, those Holders of

Claims that have not objected to the releases in the Plan or are paid in full and thus deemed to have

accepted the Plan, may generally, and consensually, be bound by third-party release provisions.177

Article X.F. of the Plan provides that each Releasing Party—including all Holders of Claims and

Interests not otherwise described as Releasing Party—shall release any and all Claims and causes

of action such parties could assert against the Debtors, the Non-Acquired Reorganized Debtors,

and the Released Parties from any and all Causes of Action taking place on or before the Effective

Date.178 However, the Plan expressly provides that such Third-Party Release shall exclude any

Holder of a Claim or Interest that opts out of the releases.179

152. As previously mentioned, all parties in interest had ample opportunity to evaluate

and exercise their right to opt out of the Third-Party Release. The ballots distributed to Holders

of Claims entitled to vote on the Plan quoted the entirety of the Third-Party Release provision in

the Plan and clearly informed such of Holders of the steps they should take if they disagreed with

either by voting for the Plan or by choosing not to opt out of the release. Therefore, the Article X release is purely consensual and within the scope of releases that Specialty Equipment permits.”).

176 See, e.g., In re Zenith Elecs. Corp., 241 B.R. 92, 111 (Bankr. D. Del. 1999) (finding that a third-party release binds those voting in favor of the plan); In re Washington Mut., Inc., 442 B.R. 314, 355 (Bankr. D. Del. 2011) (same); In re Specialty Equip. Companies, Inc., 3 F.3d 1043, 1047 (7th Cir. 1993) (same); In re Chassix Holdings, Inc., 533 B.R. 64, 82 (Bankr. S.D.N.Y. 2015) (same).

177 See, e.g., Indianapolis Downs, 486 B.R. at 306 (“In this case, the third-party releases in question bind certain unimpaired creditors who are deemed to accept the Plan: these creditors are being paid in full and have therefore received consideration for the releases.”); In re Spansion, Inc., 426 B.R. 114, 144 (Bankr. D. Del. 2010) (“I note that no creditor or interest holder whose rights are affected by the ‘deemed’ acceptance language has objected to the Plan. While I recognize—and fully appreciate—the importance of the UST’s supervision of the administration of bankruptcy cases . . . the silence of the unimpaired classes on this issue is persuasive. This aspect of the Third-Party Release is not over-reaching. The unimpaired classes are being paid in full and have received adequate consideration for the release.”).

178 See Plan Art. X.F.

179 See Plan Art. I.A.130.


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the scope of the Third-Party Release. Likewise, the notices distributed to Holders of Claims or

Interest not entitled to vote on the Plan informed such Holders of their ability to opt out of the

Third-Party Release by filing an objection thereto with the Court. Thus, affected parties were on

notice of the Third-Party Release and of their ability to opt out. Tellingly, the fact that

approximately 43% of Holders in Class 5 opted out of the Third-Party Release is a prime

illustration that Holders were in fact adequately put on notice of their ability to opt out. As such,

there can be no dispute that the Third-Party Release, which only applies only to Holders that chose

not to opt out, it is consensual under the weight of authority (in this district and others) of what

constitutes consent in the context of a third-party release.180

153. Second, even if the Court were to find that the Third-Party Release is non-

consensual with respect to certain Releasing Parties—which it should not find—the Court should

nevertheless approve the Third-Party Release under the circumstances of the Chapter 11 Cases.

154. As previously mentioned, the Third Circuit has identified the factors necessary to

approve nonconsensual third-party releases. Specifically, the Third Circuit has explained that the

“hallmarks” of permissible nonconsensual third-party releases are “fairness, necessity to the

reorganization, and specific factual findings to support these conclusions.”181 Delaware courts that

have subsequently ruled on this issue have considered, among other things, whether (a) the

releasee has provided a critical contribution to the debtor’s plan and (b) whether the release is fair

180 See, e.g., EV Energy Partners, L.P., No. 18-10814 (CSS) (Bankr. D. Del. 2018) (approving third-party releases

with objection “opt-out” mechanic); In re PES Holdings, LLC, No. 18-10122 (KG) (Bankr. D. Del. Apr. 2, 2018) (same); In re GenOn Energy, Inc., No. 17-33695 (Bankr. S.D. Tex. Dec. 12, 2017) (same); In re Southcross Holdings, LP, No. 16-20111 (Bankr. S.D. Tex. Apr. 11, 2016) (same); see also In re U.S. Fidelis, 481 B.R. 503, 517 (Bankr. E.D. Mo. 2012) (holding that a creditor must file an objection in order for the third-party release to be deemed non-consensual).

181 In re Cont’l Airlines, 203 F.3d 203, 214 (3d Cir. 2000).


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to the nonconsenting creditors (i.e., whether the nonconsenting creditor was compensated for their

contributions).182

155. Here, the factors identified by the Third Circuit counsel in favor of the Third-Party

Release in the Plan, even on a nonconsensual basis. First, the Third-Party Release was offered in

exchange for key pieces of the Plan, such as the DIP Facility and the Purchase Agreement, among

others. The support of the Term Loan Lenders and the Plan Sponsor was critical in the strategic

development of the Plan and in paving the way for a successful emergence from these Chapter 11

Cases. And absence of support of the Term Loan Lenders, and the Plan Sponsor would doom the

prospects of this Plan that satisfies all Other Secured Claims and Other Priority Claims in full, and

would threaten the feasibility, or otherwise jeopardize the prospects of reorganization under any

alternative Plan. Second, and as noted previously, all Holders of Other Secured Claims and Other

Priority Claims are receiving payment in full of their Allowed Claims and otherwise are being

rendered Unimpaired, and have, therefore, received adequate consideration in exchange for the

Third-Party Release.

156. Importantly, the U.S. Trustee’s argument that the Third-Party Release improperly

releases claims held by Holders of Class 9 Interests (Interests in PES Energy and PES Ultimate

Interests) is entirely misplaced.

157. First, the U.S. Trustee argues that releases from Interest Holders in Class 9 are

inappropriate given that such interests holders “are not receiving any distribution under the Plan,

and therefore no consideration for giving any releases.”183 Contrary to the U.S. Trustee’s

182 See In re Spansion, Inc., 426 B.R. 114, 145 (Bankr. D. Del. 2010) (citing In re Genesis Health Ventures, Inc.,

266 B.R. 591, 607-08 (Bankr. D. Del. 2001) (describing the factual conclusions that may support nonconsensual third-party releases).

183 See UST Objection ¶ 29.


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assertions, Interest Holders in Class 9 do receive a distribution under the Plan. Specifically, the

Plan now provides that Interest Holders in Class 9 may receive their Pro Rata Share of the

Distribution Proceeds if any such Distribution Proceeds remain available following distribution to

all other Holders entitled to distribution under the Plan, in accordance with the priority scheme of

the Bankruptcy Code.184

158. Second, the U.S. Trustee alleges that “Class 9 Interests Holders are deemed to reject

the Plan and do not get to vote but are required to object to the Plan or they will be deemed to have

consented to the third-party releases.”185 However, and as previous mentioned, courts have

recognized that consensual releases are permissible, and that a release is consensual where parties

have received sufficient notice of a plan’s release provisions and have had an opportunity to object

to or opt out of the release and failed to do so.186 The notices distributed to Interest Holders in

Class 9 informed them of their ability to opt out of the Third-Party Release by filing an objection

thereto with the Court. As such, Interest Holders in Class 9 were on notice of the Third-Party

Release and their ability to opt out thereof. Accordingly, the Third-Party Release is consensual

184 See Plan Arts. III.B.9, VIII.K.

185 See UST Objection ¶ 29.

186 See, e.g., In re Indianapolis Downs, LLC, 486 B.R. at 306 (“As for those impaired creditors who abstained from voting on the Plan, or who voted to reject the Plan and did not otherwise opt out of the releases, the record reflects these parties were provided detailed instructions on how to opt out, and had the opportunity to do so by marking their ballots. Under these circumstances, the Third-Party Releases may be properly characterized as consensual and will be approved.”); In re DBSD N. Am., Inc., 419 B.R. 179, 218-19 (Bankr. S.D.N.Y. 2009) (“Except for those who voted against the Plan, or who abstained and then opted out, I find the Third Party Release provision consensual and within the scope of releases permitted in the Second Circuit.”); aff’d 2010 WL 1223109 (S.D.N.Y. March 24, 2010), modified on other grounds, 634 F.3d 79 (2d Cir. 2011); In re Conseco, Inc., 301 B.R. 525, 528 (Bankr. N.D. Ill. 2003) (“The Article X release now binds only those creditors who agreed to be bound, either by voting for the Plan or by choosing not to opt out of the release. Therefore, the Article X release is purely consensual and within the scope of releases that Specialty Equipment permits.”) (citing In re Specialty Equip. Corp., 3 F.3d 1043 (7th Cir. 1993).


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with respect to Interest Holders in Class 9 who did not affirmatively chose to opt out of the Third-

Party Release.

159. Accordingly, the Third-Party Release is justified, including with respect to

Interest Holders in Class 9, even on a nonconsensual basis.187

3. The Debtor Release and Third-Party Release are Reasonable.

160. The Plan’s release provisions are reasonable and appropriate. The U.S. Trustee

argues that the Debtor Release and Third-Party Release are overly broad and contrary to applicable

law. First, the Debtor Release and Third-Party Release easily meet the applicable standard

because they are fair, reasonable, and in the best interests of the Debtors’ estates. The breadth of

the Debtor Release and Third-Party Release is consistent with those regularly approved in this

jurisdiction and others,188 and is limited by the subject-matter limitation clearly contained in the

releases.189

187 The U.S. Trustee’s Objection that the list of retained Causes of Action filed as part of the Plan Supplement

provides “illusory” mutual releases to holders listed thereon because it would exclude those parties from the “Released Parties” while remaining a “Releasing Party” unless the entity opts out must also be overruled. See UST Obj. ¶ 47. As further described herein, holders were provided adequate notice of the releases and of their ability to opt out as well as of the filing of the plan supplement. See Docket No. 845. Lists of retained causes of action with similar language are regularly filed in this jurisdiction or others in advance of the voting deadline. See In re VER Techs. HoldCo LLC, No. 18-10834 (KG) (Bankr. D. Del. July 9, 2019) (fourteen days between filing of retained causes of action list and voting deadline); In re Avaya Inc., No. 17-10089 (SMB) (Bankr. S.D.N.Y. Nov. 3, 2017) (twenty-one days between filing of retained causes of action list and voting deadline); In re Emerald Oil, Inc., No. 16-10704 (CSS) (Bankr. D. Del. Mar. 9, 2017) (five days between filing of retained causes of action list and voting deadline); In re Magnum Hunter Resources Corp., No. 15-12533 (Bankr. D. Del. Mar. 14, 2016) (fourteen days between filing of retained causes of action list and voting deadline).

188 See, e.g., In re Blackhawk Mining LLC, No. 19-11595 (LSS) (Bankr. D. Del. Aug. 29, 2019) (approving similar debtor and third-party release provisions including, among other categories, direct and indirect equity holders and professional and financial advisors); In re VER Techs. HoldCo LLC, No. 18-10834 (KG) (Bankr. D. Del. July 26, 2018) (same); In re PES Holdings, LLC, No. 18-10122 (KG) (Bankr. D. Del. Apr. 2, 2018) (same); In re Ultra Petroleum Corp., No. 16-32202 (MI) (Bankr. S.D. Tex. Mar. 14, 2017).

189 See Plan Art. X.E–F (providing that the releases do not release any post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Document, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan).


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161. Second, the releases form an integral part of the Plan. Each of the released parties,

as stakeholders and critical participants in the Debtors’ reorganization process, share a common

goal with the Debtors in seeing the Plan succeed, and have afforded value to the Debtors and aided

in the reorganization process.190 Specifically, the U.S. Trustee’s contention that the Debtors’

directors and officers should not be entitled to a release in these cases is particularly egregious

given their critical and uncontested role in bringing value to the estate.191 Accordingly, the Court

should overrule the Objections to the scope of the Debtor Release and Third-Party Release.

4. The Plan’s Compromise Language Has Been Restricted Such That the U.S. Trustee’s Objection Thereon Is Resolved.

162. The Plan has been revised to exclude Holders of Claims and Interests that have not

expressly entered into a settlement with the Debtors from the Plan’s compromise language.192

As such, the U.S. Trustee has represented that his objection thereon is resolved.

5. The Plan No Longer Provides that Entry of the Confirmation Order Shall Close the Cases of the Acquired Reorganized Entities Such That the U.S. Trustee’s Objection Thereon Is Resolved.

163. The Plan no longer provides that entry of the Confirmation Order shall close the

cases of the Acquired Reorganized Debtors, and the Liquidating Trustee shall remain liable for

paying quarterly fees of the U.S. Trustee until all Chapter 11 Cases of the Debtors are closed.

As such, the U.S. Trustee has represented that his objection thereon is resolved.


191 See id.

192 See Plan Arts. IV.A, X.A, X.E., X.F.


78

C. The Objection of the USW Should be Overruled.

1. The Treatment of the USW Before and During the Auction was Reasonable and Consistent with the Bidding Procedures.

164. The USW contends that they were deprived of their rights as Consultation Parties

during the Auction because the USW was not “asked for its view as to the highest or best bid.”193

165. Pursuant to the Bidding Procedures Order, “[u]pon the conclusion of the Auction

. . . or upon such other time that the Debtors, in the exercise of their reasonable, good-faith business

judgment, and in consultation with the Consultation Parties, identify the highest or otherwise best

Qualified Bid or Qualified Bids for the Interests and/or some or all Assets, as applicable (each, a

“Successful Bid”), which will be determined by considering, among other things, (a) whether the

Bid or Bids are for the purchase of the Interests or for some or all of the Assets, . . . and (f) any

other criteria as may be considered by the Debtors in their reasonable, good-faith business

judgment and in consultation with the Consultation Parties.”194 Counsel to the USW is a

Consultation Party under the Bidding Procedures Order, and thus entitled to certain rights in

connection to the Auction.195

166. Consistent with the Bidding Procedures Order, counsel to the USW was invited to

the Auction at Kirkland & Ellis’ New York offices, attended the all-day Auction, and even made

an on the record statement during the Auction.196 Aside from this active participation, the USW

193 USW Obj. at ¶ 8.

194 Bidding Procedures Order, Exh. 1 at Art. I.

195 Id. at Art. A.

196 See 1/17/2020 Auction Tr: at 6:15 and 30:20-25, 31:2-13 ("Richard Seltzer of Cohen, Weiss and Simon, the United Steel Workers, a consultation party. We’re incredibly disappointed that to our knowledge the bidder chose, and there’s no commitment or plans for refinery operations. We also reserve all our rights as to the auction and our contract. We expect that there will (sic.) clarification and confirmation that all maintenance and safety work that’s currently being done by the members of the steel worker’s union will be continued as long as those


79

was free to make other comments or raise any issues, including to the Debtors’ representatives. It

did not. The Debtors fulfilled their obligations under the Bidding Procedures Order and the USW

cannot now, long after the Auction has concluded, allege that it was afforded less than fair

treatment.

167. In addition, the USW’s consultation rights are supplemented by virtue of the fact

that the USW is a member of the Committee , which is also a Consultation Party under the Bidding

Procedures Order.197 Whatever rights that the USW was entitled at the Auction were further

protected by the Debtors’ continuing input from and consistent negotiations with the Committee.

2. The Solicitation Materials and the Plan Supplement Provide Adequate Information about the Plan.

168. The USW contends that it did not receive adequate information about the sale,

potential recoveries, feasibility, the sufficiency of funds for administrative or priority claims, or

the basis for the release and exculpation provisions of the Plan.198

169. As described at length above in response to the Committee’s Objection, the Debtors

have met the requirements for solicitation pursuant to section 1125.199 The Plan Supplement

contained numerous documents that explained the projected recoveries for creditors, expected

recoveries in a liquidation, and the source of funds for distributions under the Plan.200 The USW

also received the Disclosure Statement and ballots, which contained extensive information about

maintenance and safety operations continue and will be done by those workers. We expect that if there is any refinery operations on the site, those also will be conducted by members represented by the Steel Workers.”).

197 Bidding Procedures Order at Art. A.

198 USW, Obj. at ¶ 7.

199 To the extent that the Debtors address the solicitation elsewhere in this Memorandum, the Debtors incorporate that response here.

200 See Plan Supplement.


80

the releases and exculpation provisions.201 There is simply no basis for the USW to claim that it

did not receive adequate information.

3. The MIP Will Maximize Value for the Estate.

170. The USW objects to the MIP, arguing in tandem with the Committee that the MIP

is a “give-away” to the MIP executives. To the extent the Debtors address the MIP elsewhere in

this Memorandum and/or the Debtors’ Response to the Committee, the Debtors incorporate that

response here.

D. The Insurers’ Objection Should Be Overruled.

1. The Plan Does Not Negatively Impact or Alter the Insurers’ Rights

171. The Insurers202 claim that the Plan and the Sale Transaction documents infringe

upon the Insurers’ rights by granting the Debtors greater rights than they otherwise would have

outside of bankruptcy, specifically contesting the inclusion of the “free and clear” language

provided for in the Plan and the Sale Transaction documents. The Insurers additionally generally

allege that the Plan and Sale Transaction documents undercut the Insurers’ rights, and that

confirmation of the Plan would be tantamount to an “implicit adjudication of any such coverage

defenses that the Insurers might otherwise have.203

172. None of the provisions of the Plan or the Sale Transaction documents impinge upon

the Insurers’ rights under the Insurance Policies. The “free and clear” language contained in the

Plan and Sale Transaction documents does not abuse the chapter 11 process to gain a strategic

advantage or additional rights, as the Insurers allege. Given that the Insurers are not challenging

201 See Affidavit of Service, [Docket No. 713].

202 For the avoidance of doubt, the term “Insurers” shall have the meaning ascribed to it in the Insurers Objection.

203 See Insurers Objection ¶ 9.


81

the validity of the Sale Transaction itself, the Insurers are myopic in focusing on the specific “free

and clear” portion of the Plan. It is common practice for plans providing for similar equity sales

to include this free and clear language in a recognition of bankruptcy courts’ ability to approve

such sales.204 In contrast, in support of what they characterize as “regularly approved” insurance

neutrality provisions, the Insurers cite to only one case from 2004, and point to no other precedent

or examples of such language. The contrast between the regularity with which courts approve the

Debtors’ “free and clear language” and the lack of precedent for the Insurers’ proposed language

raises concerns about the “neutrality” of the Insurers’ proposed insurance neutrality provisions.

173. In their critique of the Liquidating Trust structure, the Insurers speak in

hypotheticals, listing no concrete rights that are actually undermined by the Plan.205 Instead, their

objection simply gestures towards rights they allege may be undermined in an attempt to disrupt

the Debtors’ insurance recovery process, a crucial step in effectuating the Debtors’ chapter 11

Plan. As discussed in the supplemental , the Liquidating Trust structure set forth in the Plan is a

commonly utilized conflict resolution structure that courts routinely approve in balancing the need

for expediency and timely resolution of a chapter 11 case with the need for a structured resolution

of litigation impacting a debtor’s estate.

174. Although the Insurers claim otherwise, the Plan and Sale Transaction documents

are neutral with respect to insurance-coverage issues, and do not seek to augment the Estate by

taking advantage of the bankruptcy process. Accordingly, the “insurance neutrality” provisions

204 See, e.g., In re Z Gallerie LLC, No. 19-10488 (LSS) (Bankr. D. Del. Jun. 20, 2019) (approving chapter 11 plan

providing for asset sale to purchaser free and clear of all liens, claims, charges, interest, or other encumbrances); In re Mission Coal Co., No. 18-04177 (TOM) (Bankr. N.D. Ala. Apr. 4, 2019) (same); In re Westmoreland Coal Co., No. 18-35672 (DRJ) (Bankr. S.D. Tex. Mar. 2, 2019) (same).

205 See Insurers’ Objection ¶ 9 (If the same transaction were done outside bankruptcy, it might give rise to potential defenses to coverage. For example, the Insurers may have arguments . . . (emphasis added)).


82

suggested by the Insurers are superfluous and unnecessary, as the Plan already supports the balance

of rights and protections accorded both parties under the Insurance Policies and does not seek to

undermine the Insurers’ rights under the Insurance Policies.

2. The Extension of the Automatic Stay Beyond Plan Confirmation is Appropriate and Necessary to Facilitate the Administration of the Estate

175. The Insurers allege that the Debtors are intending to use the automatic stay to

“obtain a litigation advantage against third parties” with “no basis.”206 However, the extension of

the automatic stay contemplated by the Plan is requested with careful consideration to the

exigencies of the case and not proposed as a play to obtain an unfair advantage.

176. The cases the Insurers cite for support of their Objection are distinguishable from

the circumstances here, as most represent cases where the resolution of all outstanding litigation

impacting upon the debtors’ estate had been achieved at the time of confirmation. In the cases

cited by the Insurers, as well as in many other chapter 11 cases, it may make sense to terminate

the automatic stay upon plan confirmation as the case has been resolved and the objectives of

chapter 11 have been achieved—thus, in “normal” or “ordinary” chapter 11 cases there is no need

for the automatic stay post-confirmation. However, this situation, particularly the insurance

recovery portion of the case, is no normal situation. As the insurance recovery portion is an

integral aspect of the case that may become the majority of the recognized recoveries of the plan,

unlike in many chapter 11 cases the Debtors’ case is not “complete” until the insurance recovery

proceedings portion has been resolved.

177. The Insurers additionally urge a reading of the Plan that the “confirmation of the

Plan will vest the property of the estate in the Liquidating Trust or the Plan Sponsor, and it will

206 See Insurers Objection ¶¶ 14, 20.


83

grant the Debtors a discharge” from the automatic stay. This would certainly be true if the amount

of insurance proceeds that would be received as property of the estate had been fully litigated and

ascertained at the time of Plan confirmation. However, given that the amount of insurance

proceeds will not be determined at the time of Plan confirmation, it is inaccurate to say that the

property has sufficiently vested in the Liquidating Trust such that the automatic stay can be

discharged. The extension of the automatic stay until the insurance disputes have run their course

reflects the Debtors’ careful balancing of (a) the need for the protection of the automatic stay and

this recognition that the proceeds haven’t “vested” in the Liquidating Trust until the amount of

proceeds has been ascertained, and (b) the recognition of the cash burn that would occur should

the Debtors not consummate the Plan. Accordingly, the extension of the automatic stay is not

intended to obtain an unfair advantage; instead, the unique circumstances at hand compel such an

extension.

3. The Court’s Jurisdiction over the Insurance Adversary Proceedings Is Appropriate and Necessary to Facilitate the Administration of the Estate

178. The Insurers contest the Plan’s provision retaining jurisdiction over the ongoing

proceedings relating to the insurance recovery in an “absence of statutory authority.” However,

the Court’s jurisdiction over these Chapter 11 Cases necessarily covers the insurance recovery

litigation, as it is a core element in the Debtors’ reorganization. Far from “purporting to retain”

jurisdiction in a gamesmanship-like manner, the Plan contemplates the Court’s jurisdiction over

the insurance-related dispute in recognition of the integral role that such litigation plays in the

Debtors’ successful implementation of the Plan. The Court has statutory authorization to exercise

its jurisdiction because of this integral role.

179. Bankruptcy courts have jurisdiction under 28 U.S.C. § 157(b)(2) over all core

proceedings in a chapter 11 case, which are defined in a non-exclusive list. Estate administration


84

is one such core proceeding under § 157(b)(2)(A), and the Third Circuit has noted that an action

is related to the bankruptcy proceedings “if the outcome could alter the debtor's rights, liabilities,

options or freedom of action (either positively or negatively) and which in any way impacts upon

the handling and administration of the bankrupt estate.”207 The bulk of the recoveries under the

Plan turn on the Debtors’ ability to obtain the insurance proceeds. Rather than being a standalone

proceeding that can be severed from the rest of the administration of the estates, the insurance

dispute is an integral portion of the Court’s overall administration of the case. Accordingly, the

insurance litigation qualifies as a core proceeding under § 157(b)(2)(A), and the Court has

jurisdiction over the insurance adversary proceedings because the proceedings are a crucial

element of the Debtors’ administration of the estate.

180. Even if it is not a core proceeding and the Court considers the insurance dispute to

be a collateral matter rather than a core proceeding, the Court still retains jurisdiction as the Third

Circuit’s “close nexus” test is satisfied. Under the close nexus test, a bankruptcy court has

jurisdiction over a collateral matter to the chapter 11 proceedings if “there is a close nexus to the

bankruptcy plan or proceeding sufficient to uphold bankruptcy court jurisdiction over the

matter.”208 The close nexus test scrutinizes the relationship between the collateral causes of action

and the bankruptcy proceedings, with matters affecting the “interpretation, implementation,

consummation, execution, or administration” of the confirmed plan having a sufficient connection

to the case to satisfy the close nexus test and thus allowing the bankruptcy court to exercise

jurisdiction.209 As noted above, the insurance recovery is intricately tied to the overall

207 Pacor v. Higgins, 743 F.2d 984, 994 (3d Cir.1984)

208 In re Resorts Int’l, 372 F.3d at 166–67.

209 Id. at 169.


85

restructuring proceeding and to the administration of the Debtors’ estates as contemplated by the

Plan. This heightened level of interconnectedness between the insurance litigation and the these

Chapter 11 Cases, if not a core proceeding, certainly satisfies the close nexus test as a collateral

proceeding, and the Court is permitted by law to exercise jurisdiction over the dispute.

E. PBRE’s Objection Should be Overruled.

181. Point Breeze Renewable Energy, LLC (“PBRE”) objects on a limited basis to

confirmation of the Plan to the extent the Plan seeks to reject a certain Option Agreement (the

“Option Agreement”) and a certain Site Lease Agreement (the “Site Lease Agreement”), both

dated November 1, 2017. PBRE contends that, even if the Option and Site Lease Agreements are

rejected, that it would retain its alleged possessory rights in the Debtors’ property pursuant to 11

U.S.C. § 365(h)(1)(A)(ii). PBRE further argues that the Option Agreement was not executory and

therefore not eligible for rejection.

182. 11 U.S.C. § 365(h)(1)(A)(ii) provides that if the Debtors “reject an unexpired lease

of real property under which the Debtor is lessor and . . . (ii) if the term of such lease has

commenced, the lessee may retain its rights under such lease (including rights such as those

relating to . . . any right of use, possession, quiet enjoyment, subletting, assignment, or

hypothecation) that are in or appurtenant to the real property for the balance of the term of such

lease and for any renewal or extension of such rights to the extent that such rights are enforceable

under applicable nonbankruptcy law.”

183. On November 1, 2017, PBRE and PESRM entered into a series of related

agreements relating to certain land owned by the Debtors. Among these agreements was the Site

Lease Agreement, the effectiveness of which was conditioned on the exercise of a related Option

Agreement. The Option Agreement contained various conditions precedent, including

subdivision approval and PBRE’s acquisition of financing. The Option Agreement also required


86

PBRE to deliver written notice and consideration to the Debtors in order to exercise its option to

lease.

184. As of the Petition Date, PBRE had not satisfied the conditions precedent. The Site

Lease Agreement, therefore, had not gone effective and PBRE had no possessory rights.

Subsequently, on January 9, 2020, after the Debtors’ automatic stay was in place, PBRE attempted

to waive the conditions precedent and exercise the Option Agreement.

185. .PBRE’s attempt to exercise the option is void as a violation of the automatic stay.

Section 362(a)(3) forbids any act to “obtain possession of property of the estate or of property

from the estate or to exercise control over property of the estate.” Any action taken in violation of

the automatic stay is void and without effect, even if the party taking such action had no knowledge

of the bankruptcy filing. Thus, PBRE’s January 9, 2020 letter purporting to exercise the option

was ineffective as an attempt to take control over property of the Debtors’ estate. PBRE does not

have a valid lease and therefore has no right to possession pursuant section 365(h)(1)(A)(ii).

186. Even if the Option Agreement was not executory and thus not eligible for rejection,

PBRE would still not have possessory rights because the term of the lease had not commenced on

the Petition Date. Pursuant to section 365(h)(1)(A)(ii), a non-debtor lease may retain its rights

under a lease only when the “term of such lease has commenced.” The Bankruptcy Code does not

define the word “term,” but courts in this district have voiced support of the principle that a “word

is known by the company it keeps,—that is to say, which of various possible meanings a word

should be given must be determined in a manner that makes it ‘fit’ with the words with which it is

closely associated.”

187. In this context, it is clear that the “term” of the lease had not commenced. On the

Petition Date, PBRE had not satisfied the conditions precedent and, by its own terms, the Site


87

Lease had not gone effective. There were no rights under the Site Lease for PBRE to “retain.”

Section 365(h)(1)(A)(ii) is therefore inapplicable and PBRE has no possessory rights in the

Debtor’s property.

188. Through the Plan, the Debtors seek to reject the Option Agreement and all of the

agreements related thereto. The Debtors submit this is a sound exercise of their business

judgment, will maximize value for the estate by unburdening the Debtors’ property from these

onerous agreements, and is an appropriate exercise of the Debtors right to reject an executory

contract pursuant to section 365(a).

Conclusion

189. For all of the reasons set forth herein and in the Stein Declaration, the Singh

Declaration, the Sciametta Declaration, the Gartrell Declaration, and the Voting Report, and as

will be further shown at the Confirmation Hearing, the Debtors respectfully request that the Court

confirm the Plan as fully satisfying all of the applicable requirements of the Bankruptcy Code by

entering the Proposed Confirmation Order, overruling any remaining objections, and granting such

other and further relief as is just and proper.

[Remainder of page intentionally left blank]


Dated: February 10, 2020 /s/ Laura Davis Jones Wilmington, Delaware Laura Davis Jones (DE Bar No. 2436)

James E. O’Neill (DE Bar No. 4042) Peter J. Keane (DE Bar No. 5503) PACHULSKI STANG ZIEHL & JONES LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, Delaware 19899-8705 (Courier 19801) Telephone: (302) 652-4100Facsimile: (302) 652-4400Email: [email protected]

[email protected]@pszjlaw.com

- and -

Edward O. Sassower, P.C. Steven N. Serajeddini, P.C. (admitted pro hac vice) Matthew C. Fagen (admitted pro hac vice) KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Email: [email protected]

[email protected] [email protected]

Co-Counsel to the Debtors and Debtors in Possession


A-1

Exhibit A

Objection Response Chart

Case 19-11626-KG Doc 950-1 Filed 02/10/20 Page 1 of 6

A-2

IN RE PES HOLDINGS, LLC, ET AL., CASE NO. 19-11626-KG

CHART OF OBJECTIONS AND PROPOSED ACTIONS TO THE THIRD AMENDED JOINT CHAPTER 11 PLAN OF PES HOLDINGS, LLC AND ITS DEBTOR

AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE (THE “PLAN”)1

OBJECTING PARTY / STATUS OBJECTION PROPOSED ACTION/RESPONSE

United States Trustee for the District of Delaware (the “U.S. Trustee”) [Docket No. 851].

• The U.S. Trustee objects to the Plan’s discharge provisions, the Debtor Release and Third-Party Release, the Plan’s compromise language, and to the Plan’s provisions affecting payment of U.S. Trustee’s fees.

• The Debtors have revised the Plan and Confirmation Order to address the U.S. Trustee’s objection with respect to discharge, the compromise language, and the payment of U.S. Trustee’s fees.

• The U.S. Trustee is resolved on its objection to the compromise and payment of U.S. Trustee’s fees language.

• The U.S Trustee’s unresolved objections are addressed in the Memorandum. See ¶¶ 146–160.

Merrill Lynch Commodities, Inc. (“MLC”) [Docket No. 855]

• MLC reserves its rights to setoff pursuant to Article X.H of the Plan.

• N/A

Murex LLC (“Murex”) [Docket No. 857].

• Murex contends that the Debtors have failed to show that the Plan is feasible and that the Debtors are administratively solvent.

• The Debtors have made an ample showing that the Plan is feasible and that the Liquidating Trust will have sufficient funds to satisfy all Claims and Interests pursuant to the Plan. See ¶¶ 104–107; see also Debtors’ Response to the Committee.

Westchester Fire Insurance Company and its affiliated sureties (“Westchester”) [Docket No. 858]

• Westchester objects to the Plan to the extent that it purports to abandon environmental obligations, to the extent that it would require governmental units to file applications for allowance of administrative claims, to the subrogation provision of the Plan. Westchester otherwise opt-out of the Third-Party Release provisions of the Plan.

• The Debtors are working with Westchester to revise the Plan and/or Confirmation Order to resolve Westchester’s objection in advance of the Confirmation Hearing.

1 Capitalized terms used but not defined herein have the meanings given to them in the Plan or the Memorandum, as applicable.

* Denotes late-filed objections. The Debtors reserve all rights to contest the validity of any late-filed objection.


A-3


Point Breeze Renewable Energy, LLC (“PBRE”) [Docket No. 865]

• PBRE objects to confirmation unless the Site Lease Agreement (“SLA”) is assumed by a purchaser who agrees to, and can, provide adequate assurance of future performance, or in the alternative required that the Plan be amended to explicitly preserve PBRE’s rights if the SLA is rejected.

• PBRE’s objections are addressed in the Memorandum. See ¶¶ 181-189.

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy Allied Industrial and Service Workers International Union (“USW”) [Docket No. 866]

• USW argues that the Plan does not provide adequate information in relation to the sale, recoveries for creditors, feasibility, or the basis for discharge, releases, third party releases, exculpation, and the treatment of employees and creditors. The USW also objects to its treatment at the Auction as a Consultation Party, to the Plan to the extent it seeks to reject the collective bargaining agreement, and to the Management Incentive Plan.

• The USW’s objections are addressed in the Memorandum. See ¶¶ 164-170.

ETC Sunoco Holdings LLC f/k/a Sunco, Inc. and certain affiliates and subsidiaries (collectively, “Sunoco”) [Docket No. 868]

• Sunoco objects to the sale to the extent it is free and clear of the restrictive covenants in the Special Warranty Deed and Buyer-Seller Agreement and reserves its rights to the treatment of the SLPO’s claim, the selection of the purchaser, and the use of the Debtors’ assets post-Effective Date until an agreement with respect thereto is reached. Sunoco also asserts that Subzone Letter Agreement (including the Amendment thereto) should be listed as assumed contract, objects to the rejection of the Connection Agreements, and reserves all rights and remedies with respect to any and all covenants and restrictions in the Deeds.

• The Debtors are working with Sunoco to revise the Plan and/or Confirmation Order to resolve Sunoco’s objection in advance of the Confirmation Hearing.

Cypress Fairbanks Independent School District and Harris County (the “Taxing Authorities”) [Docket No. 870]

• The Taxing Authorities objects to Plan’s treatment of Taxing Authorities’ Claims

• The Taxing Authorities’ dispute relates to an unrelated non-Debtor entity located in Texas named PES Holdings. The Debtors have communicate this issue to the Taxing Authorities and are seeking from the Taxing Authorities a withdrawal of this objection in advance of the Confirmation Hearing.


A-4


United States of America, on behalf of the U.S. Environmental Protection Agency (“EPA) [Docket No. 911]

• The EPA asserts that the exculpation, discharge and release provisions under the Plan are overbroad, including with respect to an entity’s liability as a future owner or operator, and that the Plan seeks to limit the United States’ right of setoff. The EPA also objects to any treatment of consent decrees and administrative settlement decrees as executory contracts. The EPA also objects to the Plan’s lack of mechanism for RINs compliance obligations, such that the Plan is not feasible and has not been proposed in good faith. The EPA also objects to the Plan’s language authorizing the Debtors to amend the Plan post-confirmation without notice and opportunity to object.

• The Plan does not seek to discharge any non-dischargeable compliance obligations, and the Plan has been revised so that only Acquired Reorganized Debtors, which are remaining in business, are entitled to a discharge. See ¶¶ 146–149.

• The Plan does not seek to limit any entity’s liability as future owner or operator; such environmental liability will subsist and be treated pursuant to applicable law and the Purchase Agreement.

• The Plan’s setoff provisions are appropriate. • The consent decrees and administrative settlement

agreements have been removed from the List of Assumed Contracts and are not treated as executory contracts under the Plan.

• The Debtors’ Plan is feasible and proposed in good faith. The Debtors are working with the EPA and other parties in interest to address the EPA’s issues with RINs compliance.

• The exculpation provision of the Plan is appropriate. See ¶¶ 67–72.

• The Plan may appropriately be amended post-confirmation to implement the terms of the Sale Transactions.

United States, on behalf of the Internal Revenue Service, the Bureau of Customs and Border Protection, and the Federal Communications Commission (the “DOJ”) [Docket No. 915]

• The DOJ asserts that adequate notice of substantive changes to the Plan was not provided to creditors, objects to the Plan to the extent that it does not provide for the payment of interest on the administrative expense and tax claims of the United States, and asserts that the Plan’s discharge provisions are overly broad. The DOJ also objects to the scope of estimation procedures governing Plan distributions, to the Plan’s non-Debtor releases, to the Plan to the extent it fails to preserve to preserve the United States’ setoff and recoupment rights, asserts that the Plan inaccurately defines secured tax claims, objects to the assumption or assignment by the Debtors of governmental

• The Plan Modifications are consistent with section 1127(a) of the Bankruptcy Code, such that additional notice was not required. See ¶¶ 121–122.

• The Plan’s treatment of interest on administrative expense and tax claims of the United States is appropriate.

• The Plan has been revised so that only Acquired Reorganized Debtors, which are remaining in business, are entitled to a discharge. See ¶¶ 146–149.

• The Plan does not broaden the scope of section 502(c) of the Bankruptcy Code.


A-5


contracts or interests without obtaining government consent and complying with applicable non-bankruptcy law, and asserts that the Plan does not comply with section 505 of the Bankruptcy Code. The DOJ further objects to the extent the Plan purports to transfer FCC licenses or control thereof without compliance with the Communications Act of 1934 and FCC rules. The DOJ objects to the treatment of claims paid by third parties as unfair and discriminatory, objects to the expungement of amended claims absent Court approval, and objects to Plan language providing that the claims and actions of the United States have been settled pursuant to Bankruptcy Rule 9019. The DOJ also objects to the bankruptcy court’s exclusive jurisdiction and objects to Plan’s waiver of automatic stay protections for creditors.

• The Debtors has satisfied their burden of proof that the Third-Party Release contained in the Plan are appropriate. See ¶¶ 150–161.

• The Plan’s setoff provisions are appropriate. • The language relating to “secured tax claims” has

been removed from the Plan. • The Plan does not seek to assume or assign

governmental contracts or interests in violation of applicable non-bankruptcy law.

• The Plan complies with section 505 of the Bankruptcy Code, and the DOJ does not set forth any argument to the contrary.

• The Plan does not purport to transfer FCC licenses or control thereof in violation of the Communications Act of 1934 or FCC Rules, and the DOJ does not set forth any argument to the contrary.

• The Plan’s treatment of claims paid by third parties is adequate, and the DOJ does not set forth any argument to the contrary.

• The automatic expungement of Claims that have been paid in full is adequate.

• The Plan no longer seek to approve a settlement of claims under Bankruptcy Rule 9019.

• The Court’s jurisdiction is appropriate given that it shall retain jurisdiction over the Liquidating Trust solely “to the maximum extent authorized by law.” See Liquidating Trust Agreement ¶ 10.11.

• The waiver of the automatic stay is appropriate. Official Committee of Unsecured Creditors (the Committee”) [Docket No. 924]

• The Creditors’ Committee asserts that solicitation and notice were not adequate, objects to the Liquidation Analysis, argues that the Debtors did not propose the Plan in good faith, objects to releases of prepetition retention payments, objects to KEIP/MIP, objects to proposed governance of the Liquidating Trust, argues that the Sale is not feasible, objects to sale process, including the selection of HRP as the Sale Sponsor,

• The Committee Objection is addressed in the Memorandum ¶¶ 135–145 and in the Debtors’ Response to the Committee filed contemporaneously herewith.


A-6


asserts that the Plan discriminate unfairly and is not fair and equitable, and requests a stay pending appeal.

OSG Bulk Ships Inc., OSG Ship Management, Inc., and OSG Delaware Bay Lightering LLC (collectively, “OSG”) [Docket No. 925]*

• Joinder to Committee Objection. • The Committee Objection is addressed in the Memorandum ¶¶ 135–145 and in the Debtors’ Response to the Committee filed contemporaneously herewith.

Multiple insurers (the “Insurers”) listed on Annex 1 to the Insurers Objection [Docket No. 928]

• The Insurers argue that Plan is not insurance neutral and that it alters the Insurers’ rights with respect to insurance-coverage issues. The Insurers also argue that the Plan should not extend the automatic stay beyond Confirmation of the Plan and reserve their rights with regard to jurisdictional provisions of the Plan.

• The Insurers’ Objection is addressed in the Memorandum. See ¶¶ 171–174.


B-1

Exhibit B

Voting Report




DECLARATION OF PAUL H. DEUTCH ON

BEHALF OF OMNI MANAGEMENT GROUP, INC. REGARDING SERVICE OF SOLICITATION PACKAGES AND

TABULATION OF BALLOTS CAST ON THE SECOND AMENDED JOINT CHAPTER 11 PLAN OF PES HOLDINGS, LLC AND ITS DEBTOR AFFILIATES

_____________________________________________________________________________

I, Paul H. Deutch, under penalty of perjury, declare as follows:

1. I am the Executive Vice President of Omni Management Group, Inc. (“Omni”), a

chapter 11 administrative services firm, whose offices are located at 1120 Avenue of the Americas,

4th Floor, New York, NY 10036 and 5955 DeSoto Drive, Woodland Hills, CA, 91367. I am over

the age of 18 years and do not have a direct interest in this chapter 11 case.

2. I submit this declaration with respect to the Second Amended Joint Chapter 11 Plan

of PES Holdings, LLC and Its Debtor Affiliates [Docket No. 827] (as may be modified, amended,

or supplemented from time to time, the “Plan”).2 Except as otherwise indicated herein, all facts

set forth herein are based upon my personal knowledge, my review of relevant documents, and/or

my communications with other Omni personnel. I am authorized to submit this Declaration on


number, are: PES Holdings, LLC (8157); North Yard GP, LLC (5458); North Yard Logistics, L.P. (5952); PES Administrative Services, LLC (3022); PES Energy Inc. (0661); PES Intermediate, LLC (0074); PES Ultimate Holdings, LLC (6061); and Philadelphia Energy Solutions Refining and Marketing LLC (9574). The Debtors’ service address is: 1735 Market Street, Philadelphia, Pennsylvania 19103.

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan.


2

behalf of Omni. If I were called upon to testify, I could and would testify competently as to the

facts set forth herein.

3. In accordance with the (a) Order (I) Authorizing and Approving the Appointment

of Omni Management Group, Inc. as Claims and Noticing Agent and (II) Granting Related Relief

[Docket No. 76] and (b) Order (I) Approving the Adequacy of the Disclosure Statement,

(II) Approving the Solicitation and Notice Procedures, (III) Approving the Forms of Ballots and

Notices in Connection Therewith, (IV) Scheduling Certain Dates with Respect Thereto, and

(V) Granting Related Relief, dated December 11, 2020, [Docket No. 671] (the “Disclosure

Statement Order”), Omni was appointed and authorized to assist the Debtors with, inter alia,

soliciting, receiving, reviewing, determining the validity of, and tabulating Ballots cast on the Plan

by holders of Claims in the Voting Classes (as defined below).

Service of Solicitation Packages

4. On behalf of the Debtors, Omni served the following materials:

a. Disclosure Statement for The First Amended Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates, dated December 11, 2019 with all exhibits thereto (the “Disclosure Statement”);

b. Class 3 Ballot for Voting on the Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates (the “Class 3 Ballot”), a copy of which is attached as Exhibit A hereto;

c. Class 4 Ballot for Voting on the Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates (the “Class 4 Ballot”), a copy of which is attached as Exhibit B hereto;

d. Class 5 Ballot for Voting on the Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates (the “Class 5 Ballot”), a copy of which is attached as Exhibit C hereto; and

e. Class 6 Ballot for Voting on the Joint Chapter 11 Plan of Reorganization of PES Holdings, LLC and its Debtor Affiliates (the “Class 6 Ballot”), a copy of which is attached as Exhibit D hereto.


3

5. Unless otherwise noted below, on December 17, 2019, Omni caused true and

correct copies of the above documents to be served via first class mail.

6. Additionally, pursuant to the Disclosure Statement Order, Omni served the Plan

Supplement for The First Amended Joint Chapter 11 Plan of Reorganization of PES Holdings,

LLC and its Debtor Affiliates, dated January 22, 2020 with all exhibits thereto, (the “Plan

Supplement”) and certain additional solicitation materials, each dated January 22, 2020,

(the “Supplemental Solicitation Materials”), in accordance with paragraph 16 of the Disclosure

Statement Order. Unless otherwise noted below, on January 22, 2020, Omni caused true and

correct copies of the Plan Supplement and Supplemental Solicitation Materials to be served via

overnight mail.

7. A letter from the Creditors’ Committee recommending that Holders of General

Unsecured Claims wait to vote until they receive additional information with respect to the Plan

and the Creditors’ Committee’s voting recommendation, was inadvertently excluded from the

Solicitation Packages sent to Holders of Class 5 Claims. On January 22, 2020, a true and correct

copy of the Creditors’ Committee’s voting recommendation letter was included with the Plan

Supplement and served on all Holders of General Unsecured Claims.

8. On January 27, 2020, Omni served, on behalf of the Debtors, a letter to all Holders

of General Unsecured Claims that had voted prior to the filing of the Plan Supplement

(the “Supplemental Solicitation Letter”). The Supplemental Solicitation Letter contained

additional information with respect to the Plan and service of the Creditors’ Committee’s voting

recommendation letter and directed such Holders to submit a new vote in favor of, or against, the

Debtors’ Plan. At the Creditors’ Committee’s request, the Supplemental Solicitation Letter also


4

informed such Holders that any votes submitted prior to service of the Creditors’ Committee’s

voting recommendation letter would not be counted.

Vote Declaration

9. Under the Plan, only Holders of claims (“Claims”) in the following classes

(the “Voting Classes”) were designated as being entitled to vote to accept or reject the Plan:

Class Class Description

3 Term Loan Secured Claims 4 Intermediation Secured Claims 5 General Unsecured Claims 6 Subordinated Remaining Volume Claim

10. The Debtors established December 6, 2019, as the record date (the “Voting Record

Date”) for determining which Holders of Claims in the Voting Classes were entitled to vote on the

Plan.

11. The procedures for the solicitation and tabulation of votes on the Plan

(the “Solicitation Procedures”) are outlined in the Disclosure Statement Order. Omni was

instructed to solicit, review, determine the validity of, and tabulate Ballots submitted with respect

to the Plan by the Holders of Claims in the Voting Classes in accordance with the Solicitation

Procedures.

12. In accordance with the Disclosure Statement Order, Omni solicited the holders of

Claims in the Voting Classes as of the Voting Record Date. Omni’s Affidavit of Service of

Solicitation Materials was filed with the Court on January 3, 2020 [Docket No. 713], the

Supplemental Affidavit of Service of Solicitation Materials was filed with the Court on January 17,

2020 [Docket No. 763], and the Affidavit of Service of Notice of Plan Supplement Documents was

filed with the Court on February 3, 2020 [Docket No. 875]. Ballots returned via Omni’s online


5

voting portal, by hand delivery, or overnight courier were received by Omni personnel at the

offices of Omni in Woodland Hills, CA. All Ballots received by Omni were, and continue to be,

processed in accordance with the Solicitation Procedures.

13. In order for a Ballot to be counted as valid, the Ballot must (a) be properly

completed in accordance with the procedures set forth in the Disclosure Statement Order,

(b) contain sufficient information to permit the identification of the Holder, be signed, and indicate

an acceptance or rejection of the Plan, and (c) be received by Omni by the relevant deadline. The

deadline with respect to the Voting Classes was 5:00 p.m. (Prevailing Eastern Time) on

February 3, 2020 (the “Voting Deadline”). All validly completed and executed Ballots cast by

holders in the Voting Classes that were received by Omni on or before the Voting Deadline were

tabulated as outlined in the Disclosure Statement Order.3 The below chart summarizes the results

of that tabulation.

Class 3 – Term Loan Secured Claims Result

Ballots Received

135 votes accepting the Plan 0 votes rejecting the Plan

Accept Acceptance 100.00% in number of votes accepting the Plan

100.00% in dollar amount accepting the Plan ($577,113,019.43)

Rejection 0.00% in number of votes rejecting the Plan 0.00% in dollar amount rejecting Plan ($0.00)

Class 4 – Intermediation Secured Claims Result Ballots

Received 1 votes accepting the Plan 0 vote rejecting the Plan

Accept Acceptance 100.00% in number of votes accepting the Plan 100.00% in dollar amount accepting the Plan ($1.00)


3 Forty-eight Class 5 votes were not counted as a result of being submitted prior to receiving the Creditors’

Committee Letter. Of the parties who submitted those ballots, ten re-submitted ballots.


6

Class 5 – General Unsecured Claims Result Ballots

Received 15 votes accepting the Plan 49 votes rejecting the Plan

Reject Acceptance 23.44% in number of votes accepting the Plan 1.78% in dollar amount accepting the Plan ($1,707,416.48)

Rejection 76.56% in number of votes rejecting the Plan 98.22% in dollar amount rejecting Plan ($94,244,758.72)

Class 6 – Subordinated Remaining Volume Claims Result Ballots

Received 1 votes accepting the Plan 0 vote rejecting the Plan

Accept Acceptance 100.00% in number of votes accepting the Plan

100.00% in dollar amount accepting the Plan ($9,956,573.00)


14. The full and final tabulation of the votes cast through timely and properly

completed Ballots in the Voting Classes received by Omni by the Voting Deadline

(the “Tabulation Report”) is attached as Exhibit E hereto.



Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true

and correct to the best of my information, knowledge, and belief.

Dated: February 10, 2020 New York, NY /s/ Paul H. Deutch Paul H. Deutch

Executive Vice President Omni Management Group


Exhibit A

Class 3 Ballot


CLASS 3 BALLOT FOR VOTING ON THE AMENDED JOINT

CHAPTER 11 PLAN OF REORGANIZATION FOR PES HOLDINGS, LLC

AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE1

IMPORTANT NOTE: Please carefully read and follow the enclosed instructions for completing this ballot and the

joint plan of reorganization (the “Plan”)2

of PES Holdings, LLC and its debtor affiliates

(the “Debtors”) pursuant to chapter 11 of the Bankruptcy Code included with this ballot before

completing this ballot. This ballot permits you to vote on the Plan, which is subject to

bankruptcy court approval and which contemplates a comprehensive restructuring transaction

(the “Restructuring Transaction”) upon the emergence of the Debtors from chapter 11. The

Debtors commenced chapter 11 cases on July 21, 2019 in the United States Bankruptcy Court

for the District of Delaware.

DEADLINE: This ballot must be completed, executed, and returned so that it is actually received by Omni

Management Group, Inc. (the “Solicitation Agent”) prior to 5:00 p.m. prevailing eastern time

on February 3, 2020 (the “Voting Deadline”).

QUESTIONS: If you have any questions regarding this Ballot, the enclosed voting instructions, the procedures

for voting, or need to obtain additional solicitation materials, please contact the Solicitation

Agent by (i) emailing [email protected], (ii) calling (866) 989-6147 (domestic toll-free) or

(818)-906-8300 (international toll) (ask for Solicitation Group), or (iii) writing to the following

address: PES Ballot Processing, c/o Omni Agent Solutions, 5955 De Soto Ave., Suite 100,

Woodland Hills, CA 91367.

CLASS 3 NOTICE: You have received this Ballot because the Debtors’ books and records indicate that you are a

Holder of a Class 3 Term Loan Claim as of December 6, 2019 (the “Voting Record Date”).

Accordingly, you have the right to execute this Ballot and to vote to accept or reject the Plan.

This Ballot may not be used for any purpose other than for casting votes with respect to the

Plan and making certain certifications with respect to the Plan. If you believe you have received

this Ballot in error, or if you believe that you have received the wrong Ballot, please contact

the Solicitation Agent immediately.

You should review the Plan before you vote. You may wish to seek legal advice concerning

the proposals related to the Plan.

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: PES Holdings,

LLC (8157); North Yard GP, LLC (5458); North Yard Logistics, L.P. (5952); PES Administrative Services, LLC (3022); PES Energy Inc.

(0661); PES Intermediate, LLC (0074); PES Ultimate Holdings, LLC (6061); and Philadelphia Energy Solutions Refining and Marketing

LLC (9574). The Debtors’ service address is: 1735 Market Street, Philadelphia, Pennsylvania 19103.

2 All capitalized terms used but otherwise not defined herein shall have the meanings set forth in the Plan.


RESTRUCTURING

TRANSACTION

BACKGROUND:

The Debtors are soliciting votes to accept or reject the Plan from the Holders of Term Loan

Claims, Holders of Intermediation Claims, Holders of General Unsecured Claims, and Holders

of Subordinated Remaining Volume Claims. On July 21, 2019, the Debtors filed Chapter 11

Cases in the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) and are

now seeking to consummate the Restructuring Transaction through the chapter 11 bankruptcy

process and the Plan. Once completed and returned in accordance with the attached

instructions, your vote on the Plan will be counted as set forth herein. The Bankruptcy Court

may approve the Plan, which contemplates effecting the Restructuring Transactions, and the

Plan then would be binding on you, if holders of at least two-thirds in amount and more than

one-half in number of Allowed Claims in each Class of Claims that vote on the Plan vote to

accept the Plan, and/or if the Plan otherwise satisfies the requirements of section 1129 of the

Bankruptcy Code.

TREATMENT OF

YOUR CLASS 3

TERM LOAN

CLAIM:

Subject to the terms and conditions of the Plan, you will receive: your share, in accordance

with section 7.03(a) of the Term Loan Credit Agreement, of: (i) if an Equitization Restructuring

occurs, (a) the New PES Interests, if any, after dilution by the Plan Sponsor Investment and (b)

any Cash (other than Cash constituting Intermediation Priority Collateral or SOA Separate

Assets and Collateral) in excess of the Minimum Liquidity Amount that is not required to make

distributions to Administrative Claims, Priority Tax Claims, or Other Secured Claims, fund the

Priority Claims Reserve or pay fees and expenses that are required to be paid pursuant to the

Plan, including the Professional Fee Claims; (ii) if an Asset Sale Restructuring occurs, (a) the

Distribution Proceeds available for distribution to Holders of Allowed Term Loan Secured

Claims from time to time as provided in Article VIII of the Plan; and (b) the Liquidating Trust

Units as provided in the Liquidating Trust Agreement and in accordance with Article IV.G of

the Plan; and (iii) whether an Equitization Restructuring or Asset Sale Restructuring occurs,

Cash proceeds of the Intermediation Priority Collateral to the extent such proceeds remain

available after Holders of Allowed Intermediation Secured Claims are paid in full in accordance

with Article III.B.4 of the Plan. To the extent that such distribution is not sufficient to pay the

Allowed Term Loans Claims in full, any unsatisfied amount shall constitute an Allowed Term

Loan Deficiency Claim.

For additional discussion of your treatment and rights under the Plan, please read the

Disclosure Statement and the Plan.

[Remainder of Page Intentionally Left Blank]


VOTING — COMPLETE THIS SECTION

ITEM 1:

PRINCIPAL

AMOUNT OF

CLASS 3 TERM

LOAN CLAIMS

The undersigned hereby certifies that, as of the Voting Record Date, the undersigned was the

Holder of Class 3 Term Loan Claims in the following aggregate principal amount (please fill

in the amount if not otherwise completed):

Amount of Claims: $__________________________

ITEM 2:

VOTE TO ACCEPT

OR REJECT THE

PLAN

The Holder of the Class 3 Term Loan Claims set forth in Item 1 above votes to (please check

one and only one):

ACCEPT (VOTE FOR) THE PLAN

REJECT (VOTE AGAINST) THE PLAN

Please note that you are voting all of your Class 3 Term Loan Claims either to accept or reject

the Plan. You may not split your vote. If you do not indicate that you either accept or reject

the Plan by checking the applicable box above, your Ballot with respect to this Item 2 will not

be counted. If you indicate that you both accept and reject the Plan by checking both boxes

above, your Ballot with respect to this Item 2 will not be counted.

The Plan, though proposed jointly, constitutes a separate Plan proposed by each Debtor.

Accordingly, your vote cast above will be applied in the same manner and in the same amount

in Class 3 against each applicable Debtor.

If you do not consent to the releases contained in the Plan and the related injunction, you may

elect not to grant such releases, but only if you check the box “opting out” of the Plan releases.

The undersigned holder of Class 3 Term Loan Claim set forth in Item 1 elects to:

Opt Out of the Third Party Release in Article X.F of the Plan

SUBJECT TO ANY FINAL ORDER OF THE BANKRUPTCY COURT TO THE

CONTRARY, IF YOU EITHER (A) VOTE TO ACCEPT THE PLAN OR (B) VOTE TO

REJECT THE PLAN OR DO NOT VOTE TO ACCEPT OR REJECT THE PLAN BUT DO

NOT RETURN A BALLOT CHECKING THE BOX TO “OPT OUT” OF THE PLAN’S

THIRD-PARTY RELEASE PROVISIONS AND YOUR INCLUSION AS A RELEASING

PARTY THEREUNDER, THEN YOU WILL BE DEEMED TO CONSENT TO THE

THIRD-PARTY RELEASES SET FORTH IN ARTICLE X.F OF THE PLAN.


ITEM 3:

RECOVERY

Pursuant to Article III.B.3 of the Plan, Holders of Term Loan Claims will receive their share,

in accordance with section 7.03(a) of the Term Loan Credit Agreement, of: (i) if an

Equitization Restructuring occurs, (a) the New PES Interests, if any, after dilution by the Plan

Sponsor Investment and (b) any Cash (other than Cash constituting Intermediation Priority

Collateral or SOA Separate Assets and Collateral) in excess of the Minimum Liquidity Amount

that is not required to make distributions to Administrative Claims, Priority Tax Claims, or

Other Secured Claims, fund the Priority Claims Reserve or pay fees and expenses that are

required to be paid pursuant to the Plan, including the Professional Fee Claims; (ii) if an Asset

Sale Restructuring occurs, (a) the Distribution Proceeds available for distribution to Holders

of Allowed Term Loan Secured Claims from time to time as provided in Article VIII of the

Plan; and (b) the Liquidating Trust Units as provided in the Liquidating Trust Agreement and

in accordance with Article IV.G of the Plan; and (iii) whether an Equitization Restructuring or

Asset Sale Restructuring occurs, Cash proceeds of the Intermediation Priority Collateral to the

extent such proceeds remain available after Holders of Allowed Intermediation Secured

Claims are paid in full in accordance with Article III.B.4 of the Plan. To the extent that such

distribution is not sufficient to pay the Allowed Term Loans Claims in full, any unsatisfied

amount shall constitute an Allowed Term Loan Deficiency Claim.


ITEM 4:

IMPORTANT

INFORMATION

REGARDING THE

THIRD-PARTY

RELEASE

The Plan contains a series of releases that are part of the overall restructuring set forth in the

Plan and described in greater detail in the Disclosure Statement. In that respect, parties should

be aware that, if the Plan is confirmed and the Effective Date occurs, certain parties will be

getting releases and certain parties will be giving releases as set forth in Article X.F of the Plan

and as further described in Article IV.L of the Disclosure Statement. For your convenience,

excerpts of the release provisions from the Plan are set forth below, however, you should

carefully read the enclosed Disclosure Statement and Plan with respect to the releases.

ARTICLE X.F OF THE PLAN PROVIDES FOR A THIRD PARTY RELEASE

(THE “THIRD-PARTY RELEASE”):

AS OF THE EFFECTIVE DATE, EACH RELEASING PARTY IS DEEMED TO

HAVE RELEASED AND DISCHARGED EACH DEBTOR OR REORGANIZED

DEBTOR, AS APPLICABLE, AND OTHER RELEASED PARTY FROM ANY AND

ALL CAUSES OF ACTION, INCLUDING ANY DERIVATIVE CLAIMS ASSERTED

ON BEHALF OF THE DEBTORS, THAT SUCH ENTITY WOULD HAVE BEEN

LEGALLY ENTITLED TO ASSERT (WHETHER INDIVIDUALLY OR

COLLECTIVELY), BASED ON OR RELATING TO, OR IN ANY MANNER ARISING

FROM, IN WHOLE OR IN PART: (A) THE DEBTORS, THE DEBTORS’ IN- OR

OUT-OF-COURT RESTRUCTURING EFFORTS, INTERCOMPANY

TRANSACTIONS, THE FORMULATION, PREPARATION, DISSEMINATION,

NEGOTIATION, OR FILING OF THE OTHER RESTRUCTURING DOCUMENTS;

(B) ANY RESTRUCTURING DOCUMENT, CONTRACT, INSTRUMENT,

RELEASE, OR OTHER AGREEMENT OR DOCUMENT (INCLUDING PROVIDING

ANY LEGAL OPINION REQUESTED BY ANY ENTITY REGARDING ANY

TRANSACTION, CONTRACT, INSTRUMENT, DOCUMENT, OR OTHER

AGREEMENT CONTEMPLATED BY THE PLAN OR THE RELIANCE BY ANY

RELEASED PARTY ON THE PLAN OR THE CONFIRMATION ORDER IN LIEU

OF SUCH LEGAL OPINION) CREATED OR ENTERED INTO IN CONNECTION

WITH THE DISCLOSURE STATEMENT OR THE PLAN; (C) THE CHAPTER 11

CASES, THE DISCLOSURE STATEMENT, THE PLAN, THE DIP AGREEMENT,

THE FILING OF THE CHAPTER 11 CASES, THE PURSUIT OF CONFIRMATION,

THE PURSUIT OF CONSUMMATION, THE ADMINISTRATION AND

IMPLEMENTATION OF THE PLAN, INCLUDING THE ISSUANCE OR

DISTRIBUTION OF SECURITIES PURSUANT TO THE PLAN, OR THE

DISTRIBUTION OF PROPERTY UNDER THE PLAN OR ANY OTHER RELATED

AGREEMENT; OR (D) THE BUSINESS OR CONTRACTUAL ARRANGEMENTS

BETWEEN ANY DEBTOR AND ANY RELEASED PARTY, AND ANY OTHER ACT

OR OMISSION, TRANSACTION, AGREEMENT, EVENT, OR OTHER

OCCURRENCE TAKING PLACE ON OR BEFORE THE EFFECTIVE DATE

RELATING TO ANY OF THE FOREGOING.

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING,

THE RELEASES SET FORTH ABOVE DO NOT RELEASE ANY POST-EFFECTIVE

DATE OBLIGATIONS OF ANY PARTY OR ENTITY UNDER THE PLAN, ANY

RESTRUCTURING DOCUMENT, OR ANY DOCUMENT, INSTRUMENT, OR

AGREEMENT (INCLUDING THOSE SET FORTH IN THE PLAN SUPPLEMENT)

EXECUTED TO IMPLEMENT THE PLAN.

ENTRY OF THE CONFIRMATION ORDER SHALL CONSTITUTE THE

BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE

9019, AND, FOR THE AVOIDANCE OF DOUBT, SOLELY WITH RESPECT TO THE

RELEASED PARTIES AND RELEASING PARTIES, OF THE THIRD-PARTY

RELEASE SET FORTH ABOVE, WHICH INCLUDES BY REFERENCE EACH OF

THE RELATED PROVISIONS AND DEFINITIONS CONTAINED HEREIN, AND

FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT


THE THIRD-PARTY RELEASE SET FORTH ABOVE IS: (1) IN EXCHANGE FOR

THE GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED

PARTIES; (2) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE

CLAIMS RELEASED BY THE RELEASING PARTIES; (3) IN THE BEST

INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS AND

INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND MADE

AFTER NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO ANY

OF THE RELEASING PARTIES ASSERTING ANY CLAIM RELEASED BY THE

THIRD-PARTY RELEASE SET FORTH ABOVE AGAINST ANY OF THE

RELEASED PARTIES.

IMPORTANT INFORMATION REGARDING THE THIRD-PARTY RELEASE

UNDER THE PLAN, “RELEASING PARTIES” MEANS, COLLECTIVELY, AND IN EACH

CASE IN ITS CAPACITY AS SUCH: (A) THE DEBTORS; (B) THE REORGANIZED

DEBTORS; (C) THE DIP LENDERS; (D) THE DIP AGENT; (E) THE EXIT FACILITY

LENDERS; (F) THE TERM LOAN LENDERS; (G) ANY PURCHASER; (H) THE PLAN

SPONSOR; (I) WITH RESPECT TO EACH OF THE DEBTORS, THE REORGANIZED

DEBTORS, AND EACH OF THE FOREGOING ENTITIES IN CLAUSES (A) THROUGH

(H), EACH SUCH ENTITY’S CURRENT AND FORMER PREDECESSORS,

SUCCESSORS, AFFILIATES (REGARDLESS OF WHETHER SUCH INTERESTS ARE

HELD DIRECTLY OR INDIRECTLY), SUBSIDIARIES, DIRECT AND INDIRECT

EQUITYHOLDERS, FUNDS, PORTFOLIO COMPANIES, AND MANAGEMENT

COMPANIES; AND (J) WITH RESPECT TO EACH OF THE FOREGOING ENTITIES IN

CLAUSES (A) THROUGH (I), EACH OF THEIR RESPECTIVE CURRENT AND

FORMER DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES, PARTNERS,

MANAGERS, INDEPENDENT CONTRACTORS, AGENTS, REPRESENTATIVES,

PRINCIPALS, PROFESSIONALS, CONSULTANTS, FINANCIAL ADVISORS,

ATTORNEYS, ACCOUNTANTS, TRUSTEES INVESTMENT BANKERS, AND OTHER

PROFESSIONAL ADVISORS (WITH RESPECT TO CLAUSE (J), EACH SOLELY IN

THEIR CAPACITY AS SUCH); AND (K) ALL HOLDERS OF CLAIMS AND INTERESTS

NOT DESCRIBED IN THE FOREGOING CLAUSES (A) THROUGH (J); PROVIDED,

HOWEVER, THAT ANY HOLDER OF A CLAIM OR INTEREST THAT OPTS OUT

OF THE RELEASES IN THE PLAN SHALL NOT BE A “RELEASING PARTY.”

YOU WILL BE A “RELEASING PARTY” UNDER THE PLAN UNLESS YOU (A) VOTE

TO REJECT THE PLAN OR DO NOT VOTE TO ACCEPT OR REJECT THE PLAN AND

(B) RETURN A BALLOT CHECKING THE BOX TO “OPT OUT” OF THE PLAN’S

THIRD-PARTY RELEASES. SUBJECT TO ANY FINAL ORDER OF THE

BANKRUPTCY COURT TO THE CONTRARY, IF YOU EITHER (A) VOTE TO ACCEPT

THE PLAN OR (B) VOTE TO REJECT THE PLAN OR DO NOT VOTE TO ACCEPT OR

REJECT THE PLAN BUT DO NOT RETURN A BALLOT CHECKING THE BOX TO

“OPT OUT” OF THE PLAN’S THIRD-PARTY RELEASE PROVISIONS AND YOUR

INCLUSION AS A RELEASING PARTY THEREUNDER, THEN YOU WILL BE

DEEMED TO CONSENT TO THE THIRD-PARTY RELEASES SET FORTH IN ARTICLE

X.F OF THE PLAN.

ITEM 5:

CERTIFICATIONS

By signing and returning this Ballot, the undersigned certifies to the Debtors and the

Bankruptcy Court that:

1. the undersigned is (a) the Holder of the Term Loan Claims (Class 3) being voted, or

(b) the authorized signatory for an entity that is a Holder of such Term Loan Claims;


2. the undersigned has received a copy of the solicitation materials, including the Plan and

the Disclosure Statement, and acknowledges that the undersigned’s vote as set forth on

this Ballot is subject to the terms and conditions set forth therein and herein;

3. the undersigned has cast the same vote with respect to all of its Term Loan Claims

(Class 3) in connection with the Plan; and

4. (a) no other Ballot with respect to the same Term Loan Claims (Class 3) identified in

Item 1 has been cast or (b) if any other Ballot has been cast with respect to such Term

Loan Claims, then any such earlier Ballots are hereby revoked and deemed to be null and

void.

ITEM 6:

BALLOT

COMPLETION

AND DELIVERY

INSTRUCTIONS

BALLOT COMPLETION INFORMATION — COMPLETE THIS SECTION

Name of Holder:

Signature:

Signatory Name (if other than

the Holder):

Title:

Address:

Email Address:

Telephone Number:

Date Completed:

No fees, commissions, or other remuneration will be payable to any broker, dealer, or other person for soliciting votes

on the Plan. This Ballot shall not constitute or be deemed a proof of claim or equity interest or an assertion of a claim

or equity interest.

PLEASE COMPLETE, SIGN, AND DATE THIS BALLOT AND RETURN IT IN ACCORDANCE WITH

INSTRUCTIONS CONTAINED HEREIN. THIS BALLOT MUST BE COMPLETED, EXECUTED, AND

RETURNED SO THAT IT IS ACTUALLY RECEIVED BY THE SOLICITATION AGENT PRIOR TO THE

VOTING DEADLINE: (I) IN THE ENCLOSED PRE-PAID, PRE-ADDRESSED ENVELOPE RETURN

ENVELOPE; (II) VIA FIRST CLASS MAIL, OVERNIGHT COURIER, OR HAND DELIVERY TO THE

ADDRESS SET FORTH BELOW, OR (III) VIA THE ONLINE VOTING PORTAL AT

HTTPS://CASES.OMNIAGENTSOLUTIONS.COM/PESHOLDINGS2019/. PLEASE CHOOSE ONLY ONE

METHOD TO RETURN YOUR BALLOT.

PES BALLOT PROCESSING

C/O OMNI AGENT SOLUTIONS

5955 DE SOTO AVE., SUITE 100

WOODLAND HILLS, CA 91367

TELEPHONE: (866) 989-6147 (Domestic Toll-Free) or

(818)-906-8300 (International Toll) (ask for Solicitation Group)

EMAIL: [email protected]


Important Information Regarding Releases under the Plan:

The Plan includes the following release provisions and definitions:3

“Released Party” means, collectively, and in each case in its capacity as such: (a) the DIP Lenders; (b) the DIP

Agent; (c) the Exit Facility Lenders; (d) the Term Loan Lenders; (e) the Term Loan Administrative Agent;

(f) any Purchaser; (g) the Plan Sponsor; (h) any Holder of a Claim or Interest that does not opt out of the

releases in the Plan; (i) with respect to each of the Debtors, the Reorganized Debtors, and each of the foregoing

entities in clauses (a) through (h), each such Entity’s current and former predecessors, successors, Affiliates

(regardless of whether such interests are held directly or indirectly), subsidiaries, direct and indirect

equityholders, funds, portfolio companies, and management companies; and (i) with respect to each of the

foregoing Entities in clauses (a) through (h), each of their respective current and former directors, officers,

members, employees, partners, managers, independent contractors, agents, representatives, principals,

professionals, consultants, financial advisors, attorneys, accountants, trustees investment bankers, and other

professional advisors (with respect to clause (i), each solely in their capacity as such); provided, however, that

any Holder of a Claim or Interest that opts out of the releases in the Plan shall not be a “Released Party.”

Article X.E: Release by the Debtors

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after

the Effective Date, each Released Party is deemed released and discharged by the Debtors, the Reorganized

Debtors, Plan Administrator, and their Estates from any and all Causes of Action, including any derivative

claims asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors, Plan Administrator, or

their Estates would have been legally entitled to assert in their own right (whether individually or collectively)

or on behalf of the Holder of any Claim or Interest, or that any Holder of any Claim or Interest could have

asserted on behalf of the Debtors, based on or relating to, or in any manner arising from, in whole or in part:

(a) the Debtors, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions, the

formulation, preparation, dissemination, negotiation, or filing of the Restructuring Documents;

(b) any Restructuring Document, contract, instrument, release, or other agreement or document

(including providing any legal opinion requested by any Entity regarding any transaction, contract,

instrument, document, or other agreement contemplated by the Plan or the reliance by any Released Party on

the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in connection with the

Disclosure Statement or the Plan;

(c) the Chapter 11 Cases, the Disclosure Statement, the Plan, the DIP Agreement, the Asset Purchase

Agreement, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the

administration and implementation of the Plan, including the issuance or distribution of Securities (including

the New PES Interests) pursuant to the Plan, or the distribution of property under the Plan or any other related

agreement; or

(d) the business or contractual arrangements between any Debtor and any Released Party, and any other

act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date

relating to any of the foregoing.

Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release any

post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Document, or any

document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement

the Plan.

3 The Plan provisions referenced herein are for summary purposes only and do not include all provisions of the Plan that may affect your rights.

If there is any inconsistency between the provisions set forth herein and the Plan, the Plan governs. You should read the Plan before completing

this Ballot.


Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to

Bankruptcy Rule 9019, of the releases set forth above, which includes by reference each of the related provisions

and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the releases

set forth above are: (1) in exchange for the good and valuable consideration provided by the Released Parties;

(2) a good faith settlement and compromise of the claims released by the releases set forth above; (3) in the best

interests of the Debtors and all Holders of Claims and Interests; (4) fair, equitable, and reasonable; (5) given

and made after reasonable investigation by the Debtors and after notice and opportunity for hearing; and (6) a

bar to any of the Debtors asserting any claim released by the releases set forth above against any of the Released

Parties.

Article X.F: Releases by Holders of Claims and Interests

As of the Effective Date, each Releasing Party is deemed to have released and discharged each Debtor or

Reorganized Debtor, as applicable, and other Released Party from any and all Causes of Action, including any

derivative claims asserted on behalf of the Debtors, that such Entity would have been legally entitled to assert

(whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in

part:


formulation, preparation, dissemination, negotiation, or filing of the other Restructuring Documents;






(c) the Chapter 11 Cases, the Disclosure Statement, the Plan, the DIP Agreement, the filing of the Chapter

11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation

of the Plan, including the issuance or distribution of Securities pursuant to the Plan, or the distribution of

property under the Plan or any other related agreement; or




Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release any post-

Effective Date obligations of any party or Entity under the Plan, any Restructuring Document, or any


the Plan.


Bankruptcy Rule 9019, and, for the avoidance of doubt, solely with respect to the Released Parties and

Releasing Parties, of the third-party release set forth above, which includes by reference each of the related

provisions and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that

the third-party release set forth above is: (1) in exchange for the good and valuable consideration provided by

the Released Parties; (2) a good faith settlement and compromise of the claims released by the Releasing Parties;

(3) in the best interests of the Debtors and all Holders of Claims and Interests; (4) fair, equitable, and

reasonable; (5) given and made after notice and opportunity for hearing; and (6) a bar to any of the Releasing

Parties asserting any Claim released by the third-party release set forth above against any of the Released

Parties.

Article X.G: Exculpation


Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur, and

each Exculpated Party is hereby released and exculpated from any Cause of Action for any claim related to

any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the Disclosure

Statement, the Plan, the DIP Agreement, the Asset Purchase Agreement, the Exit Facility Credit Agreement,

the Exit Facility Documents, or any Restructuring Document, contract, instrument, release or other agreement

or document (including providing any legal opinion requested by any Entity regarding any transaction,

contract, instrument, document, or other agreement contemplated by the Plan or the reliance by any

Exculpated Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into

in connection with the Disclosure Statement or the Plan, the filing of the Chapter 11 Cases, the pursuit of

Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the

issuance of Securities pursuant to the Plan, or the distribution of property under the Plan or any other related

agreement, except for claims related to any act or omission that is determined in a final order to have

constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be

entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant

to the Plan. The Exculpated Parties have, and upon closing of the Chapter 11 Cases or the Effective Date shall

be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the

solicitation of, and distribution of, consideration pursuant to the Plan and, therefore, are not, and on account

of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation

governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the

Plan.

Article X.H: Injunction

Except with respect to the obligations arising under the Plan or the Confirmation Order, and except

as otherwise expressly provided in the Plan or the Confirmation Order, all Entities that held, hold, or may hold

claims or interests that have been released, discharged, or exculpated pursuant to the Plan, are permanently

enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the

Debtors or Reorganized Debtors, or the other Released Parties: (1) commencing or continuing in any manner

any action or other proceeding of any kind on account of or in connection with or with respect to any such

claims or interests; (2) enforcing, attaching, collecting, or recovering by any manner or means any judgment,

award, decree, or order against such Entities on account of or in connection with or with respect to any such

claims or interests; (3) creating, perfecting, or enforcing any Lien or encumbrance of any kind against such

Entities or the property of such Entities on account of or in connection with or with respect to any such claims

or interests; (4) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due

from such Entities or against the property of such Entities on account of or in connection with or with respect

to any such claims or interests unless such Entity has timely asserted such setoff right in a document filed with

the Bankruptcy Court explicitly preserving such setoff, and notwithstanding an indication of a claim or interest

or otherwise that such Entity asserts, has, or intends to preserve any right of setoff pursuant to applicable law

or otherwise; and (5) commencing or continuing in any manner any action or other proceeding of any kind on

account of or in connection with or with respect to any such claims or interests released or settled pursuant to

the Plan.



HOW TO VOTE

1. This Ballot contains voting options with respect to the Plan.

2. To vote, you MUST: (a) fully complete this Ballot; (b) clearly indicate your decision to accept or reject

the Plan in Item 2 of this Ballot; and (c) sign, date, and return this Ballot (i) via first class mail in the

enclosed pre-addressed envelope, (ii) via first class mail, overnight courier, or hand delivery to the address

set forth in Item 6 of the Ballot, or (iii) via the Solicitation Agent’s online voting portal as described more

fully below.

To submit your Ballot via the online voting portal, please visit

https://cases.omniagentsolutions.com/pesholdings2019/. Click on the “Submit E-Ballot” section of the

website and follow the instructions to submit your Ballot.

IMPORTANT NOTE: You will need the following information to retrieve and submit your

customized E-Ballot:

Unique E-Ballot ID#: ____________________________________________

PIN#: ________________________________________________________

The Solicitation Agent’s online voting platform is the sole manner in which Ballots will be accepted via

electronic or online transmission. Ballots submitted by facsimile, e-mail or other means of electronic

transmission will not be counted.

Each E-Ballot ID# is to be used solely for voting only those Claims described in Item 1 of your Ballot.

Please complete and submit a Ballot for each E-Ballot ID# you receive, as applicable. Creditors who cast

a Ballot using the Solicitation Agent’s online voting portal should NOT also submit a hard copy Ballot.

3. Any Ballot submitted that is incomplete or illegible, indicates unclear or inconsistent votes with respect

to the Plan, or is improperly signed and returned will NOT be counted unless the Debtors otherwise

determine.

4. To vote, you MUST deliver your completed Ballot so that it is ACTUALLY RECEIVED by the

Solicitation Agent on or before the Voting Deadline by one of the methods described above. The Voting

Deadline is 5:00 p.m. prevailing Eastern Time on February 3, 2020.

5. Any Ballot received by the Solicitation Agent after the Voting Deadline will not be counted with respect

to acceptance or rejection of the Plan, as applicable, unless the Debtors otherwise determine. No Ballot

may be withdrawn or modified after the Voting Deadline without the Debtors’ prior consent.

6. Delivery of a Ballot reflecting your vote to the Solicitation Agent will be deemed to have occurred only

when the Solicitation Agent actually receives the originally executed Ballot (for the avoidance of doubt,

a Ballot submitted via the Solicitation Agent’s online voting portal shall be deemed to contain an original

signature). In all cases, you should allow sufficient time to assure timely delivery.

7. If you deliver multiple Ballots to the Solicitation Agent, ONLY the last properly executed Ballot timely

received will be deemed to reflect your intent and will supersede and revoke any prior received Ballot (s).

8. You must vote all of your Class 3 Term Loan Claims either to accept or reject the Plan, and may not split

your vote. Further, if a Holder has multiple Claims within Class 3, the Debtors may direct the Solicitation

Agent to aggregate the Claims of any particular Holder within Class 3 for the purpose of counting votes.

9. This Ballot does not constitute, and shall not be deemed to be, a Proof of Claim or Interest, or an assertion

or admission of a Claim or an Interest, in the Debtors’ Chapter 11 Cases.


10. You should not rely on any information, representations, or inducements made to obtain an acceptance of

the Plan that are other than as set forth, or are inconsistent with, the information contained in the Disclosure

Statement, the documents attached to or incorporated in the Disclosure Statement, and the Plan.

11. SIGN AND DATE your Ballot.4 Please provide your name and mailing address in the space provided on

this Ballot if it is different from that set forth on the Ballot or if no address is presented on the Ballot.

12. If your Claim is held in multiple accounts, you may receive more than one Ballot coded for each

such account for which your Claims are held. Each Ballot votes only your Claims indicated on that

Ballot. Accordingly, complete and return each Ballot you receive.


4 If you are signing a Ballot in your capacity as a trustee, executor, administrator, guardian, attorney-in-fact, or officer of a corporation or

otherwise acting in a fiduciary or representative capacity, you must indicate such capacity when signing and, if required or requested by the

Solicitation Agent, the Debtors, the Debtors’ proposed counsel, or the Bankruptcy Court, must submit proper evidence to the requesting party

of authority to so act on behalf of such holder.


Exhibit B

Class 4 Ballot
























Holder of a Class 4 Intermediation Claim as of December 6, 2020 (the “Voting Record Date”).

Accordingly, you have the right to execute this Ballot and to vote to accept or reject the Plan.













RESTRUCTURING

TRANSACTION

BACKGROUND:












Bankruptcy Code.

TREATMENT OF

YOUR CLASS 4

INTERMEDIATION

CLAIM:

Subject to the terms and conditions of the Plan, whether an Equitization Restructuring or Asset

Sale Restructuring occurs, you will receive your Pro Rata share of: (a) Cash proceeds of

Intermediation Priority Collateral and the SOA Separate Assets and Collateral; provided, for

the avoidance of doubt, that the amount of any surcharge applied pursuant to the Final DIP

Order shall reduce the amount of the Intermediation Priority Collateral proceeds but not be

deducted from the Intermediation Claims; (b) all other assets that constitute Intermediation

Priority Collateral or the net Cash proceeds thereof; and (c) Cash proceeds of the Term Loan

Priority Collateral to the extent such proceeds remain available after Holders of Allowed Term

Loan Secured Claims are paid in full in accordance with Article III.B.3 of the Plan (or, to the

extent applicable, Liquidating Trust Units on account thereof). In the event that an Equitization

Restructuring occurs and, pursuant to the Plan, Holders of Term Loan Secured Claims are to

receive Plan distributions in excess of one hundred percent (100%) of the total amount of the

Allowed Term Loan Claims, then Holders of Allowed Intermediation Secured Claims shall

receive such additional consideration as such Holders may consent to or as necessary to satisfy

the terms of section 1129(b) of the Bankruptcy Code. To the extent such distribution is not

sufficient to pay the Allowed Intermediation Secured Claims in cash in full, any unsatisfied

amount shall constitute an Allowed Intermediation Deficiency Claim Accrued and unpaid

interest and fees thereon as of the Petition Date plus, to the extent the Intermediation Secured

Claims are secured, accrued interest and fees (including any attorneys’, accountants’,

appraisers’ and financial advisors’ fees, in each case that are chargeable or reimbursable under

the Intermediation Facility) to the extent permitted by section 506(b) of the Bankruptcy Code.






ITEM 1:

PRINCIPAL

AMOUNT OF

CLASS 4

INTERMEDIATION

CLAIMS


Holder of Class 4 Intermediation Claims in the following aggregate principal amount (please

fill in the amount if not otherwise completed):

Amount of Claims: $__________________________

ITEM 2:

VOTE TO ACCEPT

OR REJECT THE

PLAN

The Holder of the Class 4 Intermediation Claims set forth in Item 1 above votes to (please

check one and only one):



Please note that you are voting all of your Class 4 Intermediation Claims either to accept or

reject the Plan. You may not split your vote. If you do not indicate that you either accept or

reject the Plan by checking the applicable box above, your Ballot with respect to this Item 2

will not be counted. If you indicate that you both accept and reject the Plan by checking both

boxes above, your Ballot with respect to this Item 2 will not be counted.






The undersigned holder of Class 4 Intermediation Claim set forth in Item 1 elects to:










ITEM 3:

RECOVERY

Pursuant to Article III.B.4 of the Plan, Holders of Intermediation Claims will receive: their Pro

Rata share of: (a) Cash proceeds of Intermediation Priority Collateral and the SOA Separate

Assets and Collateral; provided, for the avoidance of doubt, that the amount of any surcharge

applied pursuant to the Final DIP Order shall reduce the amount of the Intermediation Priority

Collateral proceeds but not be deducted from the Intermediation Claims; (b) all other assets

that constitute Intermediation Priority Collateral or the net Cash proceeds thereof; and (c) Cash

proceeds of the Term Loan Priority Collateral to the extent such proceeds remain available

after Holders of Allowed Term Loan Secured Claims are paid in full in accordance with Article

III.B.3 of the Plan (or, to the extent applicable, Liquidating Trust Units on account thereof).

In the event that an Equitization Restructuring occurs and, pursuant to the Plan, Holders of

Term Loan Secured Claims are to receive Plan distributions in excess of one hundred percent

(100%) of the total amount of the Allowed Term Loan Claims, then Holders of Allowed

Intermediation Secured Claims shall receive such additional consideration as such Holders

may consent to or as necessary to satisfy the terms of section 1129(b) of the Bankruptcy Code.

To the extent such distribution is not sufficient to pay the Allowed Intermediation Secured

Claims in cash in full, any unsatisfied amount shall constitute an Allowed Intermediation

Deficiency Claim Accrued and unpaid interest and fees thereon as of the Petition Date plus,

to the extent the Intermediation Secured Claims are secured, accrued interest and fees

(including any attorneys’, accountants’, appraisers’ and financial advisors’ fees, in each case

that are chargeable or reimbursable under the Intermediation Facility) to the extent permitted

by section 506(b) of the Bankruptcy Code.

ITEM 4:

IMPORTANT

INFORMATION

REGARDING THE

THIRD-PARTY

RELEASE
















































BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY RULE

9019, AND, FOR THE AVOIDANCE OF DOUBT, SOLELY WITH RESPECT TO THE

RELEASED PARTIES AND RELEASING PARTIES, OF THE THIRD-PARTY

RELEASE SET FORTH ABOVE, WHICH INCLUDES BY REFERENCE EACH OF

THE RELATED PROVISIONS AND DEFINITIONS CONTAINED HEREIN, AND

FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S FINDING THAT

THE THIRD-PARTY RELEASE SET FORTH ABOVE IS: (1) IN EXCHANGE FOR

THE GOOD AND VALUABLE CONSIDERATION PROVIDED BY THE RELEASED

PARTIES; (2) A GOOD FAITH SETTLEMENT AND COMPROMISE OF THE

CLAIMS RELEASED BY THE RELEASING PARTIES; (3) IN THE BEST

INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS AND

INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND MADE

AFTER NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO ANY

OF THE RELEASING PARTIES ASSERTING ANY CLAIM RELEASED BY THE

THIRD-PARTY RELEASE SET FORTH ABOVE AGAINST ANY OF THE

RELEASED PARTIES.


































X.F OF THE PLAN.

ITEM 5:

CERTIFICATIONS



1. the undersigned is (a) the Holder of the Intermediation Claims (Class 4) being voted, or

(b) the authorized signatory for an entity that is a Holder of such Intermediation Claims;




3. the undersigned has cast the same vote with respect to all of its Intermediation Claims


4. (a) no other Ballot with respect to the same Intermediation Claims (Class 4) identified in

Item 1 has been cast or (b) if any other Ballot has been cast with respect to such

Intermediation Claims, then any such earlier Ballots are hereby revoked and deemed to

be null and void.

ITEM 6:

BALLOT

COMPLETION

AND DELIVERY

INSTRUCTIONS


Name of Holder:

Signature:


the Holder):

Title:

Address:

Email Address:

Telephone Number:

Date Completed:




or equity interest.


















































agreement; or







the Plan.



this Ballot.



Bankruptcy Rule 9019, of the releases set forth above, which includes by reference each of the related provisions

and definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the releases

set forth above are: (1) in exchange for the good and valuable consideration provided by the Released Parties;

(2) a good faith settlement and compromise of the claims released by the releases set forth above; (3) in the best




Parties.






part:


















the Plan.



Releasing Parties, of the third-party release set forth above, which includes by reference each of the related







Parties.






















Plan.



















the Plan.



HOW TO VOTE






fully below.







PIN#: ________________________________________________________









determine.












received will be deemed to reflect your intent and will supersede and revoke any prior received Ballot(s).

8. You must vote all of your Class 4 Intermediation Claims either to accept or reject the Plan, and may not

split your vote. Further, if a Holder has multiple Claims within Class 4, the Debtors may direct the

Solicitation Agent to aggregate the Claims of any particular Holder within Class 4 for the purpose of

counting votes.









12. If your Claim is held in multiple accounts, you may receive more than one Ballot coded for each such

account for which your Claims are held. Each Ballot votes only your Claims indicated on that Ballot.

Accordingly, complete and return each Ballot you receive.







Exhibit C

Class 5 Ballot
























Holder of a Class 5 General Unsecured Claim as of December 6, 2019

(the “Voting Record Date”). Accordingly, you have the right to execute this Ballot and to vote

to accept or reject the Plan.













RESTRUCTURING

TRANSACTION

BACKGROUND:












Bankruptcy Code.

TREATMENT OF

YOUR CLASS 5

GENERAL

UNSECURED

CLAIM:

Subject to the terms and conditions of the Plan, you will receive your Pro Rata share of: (i) if

an Equitization Restructuring occurs, the GUC Equitization Reserve; and (ii) if an Asset Sale

Restructuring occurs, the Distribution Proceeds as provided in Article VIII.H of the Plan. Any

such distributions on account of Term Loan Deficiency Claims shall be made in accordance

with section 7.03 of the Term Loan Credit Agreement.






ITEM 1:

PRINCIPAL

AMOUNT OF

CLASS 5 GENERAL

UNSECURED

CLAIMS


Holder of Class 5 General Unsecured Claims in the following aggregate principal amount

(please fill in the amount if not otherwise completed):

Amount of Claims: $__________________________

ITEM 2:

VOTE TO ACCEPT

OR REJECT THE

PLAN

The Holder of the Class 5 General Unsecured Claims set forth in Item 1 above votes to (please

check one and only one):



Please note that you are voting all of your Class 5 General Unsecured Claims either to accept

or reject the Plan. You may not split your vote. If you do not indicate that you either accept

or reject the Plan by checking the applicable box above, your Ballot with respect to this Item 2

will not be counted. If you indicate that you both accept and reject the Plan by checking both

boxes above, your Ballot with respect to this Item 2 will not be counted.






The undersigned holder of Class 5 General Unsecured Claim set forth in Item 1 elects to:









ITEM 3:

RECOVERY

Pursuant to Article III.B.5 of the Plan, Holders of General Unsecured Claims will receive their

Pro Rata share of (i) if an Equitization Restructuring occurs, the GUC Equitization Reserve;

and (ii) if an Asset Sale Restructuring occurs, the Distribution Proceeds as provided in Article

VIII.H of the Plan. Any such distributions on account of Term Loan Deficiency Claims shall

be made in accordance with section 7.03 of the Term Loan Credit Agreement.


ITEM 4:

IMPORTANT

INFORMATION

REGARDING THE

THIRD-PARTY

RELEASE















































BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY

RULE 9019, AND, FOR THE AVOIDANCE OF DOUBT, SOLELY WITH RESPECT

TO THE RELEASED PARTIES AND RELEASING PARTIES, OF THE THIRD-

PARTY RELEASE SET FORTH ABOVE, WHICH INCLUDES BY REFERENCE

EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED

HEREIN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S


FINDING THAT THE THIRD-PARTY RELEASE SET FORTH ABOVE IS: (1) IN

EXCHANGE FOR THE GOOD AND VALUABLE CONSIDERATION PROVIDED

BY THE RELEASED PARTIES; (2) A GOOD FAITH SETTLEMENT AND

COMPROMISE OF THE CLAIMS RELEASED BY THE RELEASING PARTIES; (3)

IN THE BEST INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS

AND INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND

MADE AFTER NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO

ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM RELEASED BY

THE THIRD-PARTY RELEASE SET FORTH ABOVE AGAINST ANY OF THE

RELEASED PARTIES.

































X.F OF THE PLAN.

ITEM 5:

CERTIFICATIONS



1. the undersigned is (a) the Holder of the General Unsecured Claims (Class 5) being voted,

or (b) the authorized signatory for an entity that is a Holder of such General Unsecured

Claims;





3. the undersigned has cast the same vote with respect to all of its General Unsecured Claims


4. (a) no other Ballot with respect to the same General Unsecured Claims (Class 5)

identified in Item 1 has been cast or (b) if any other Ballot has been cast with respect to

such General Unsecured Claims, then any such earlier Ballots are hereby revoked and

deemed to be null and void.

ITEM 6:

BALLOT

COMPLETION

AND DELIVERY

INSTRUCTIONS


Name of Holder:

Signature:


the Holder):

Title:

Address:

Email Address:

Telephone Number:

Date Completed:



or equity interest.


















































agreement; or







the Plan.



this Ballot.




Releasing Parties, of the releases set forth above, which includes by reference each of the related provisions and

definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the releases set

forth above are: (1) in exchange for the good and valuable consideration provided by the Released Parties; (2)

a good faith settlement and compromise of the claims released by the releases set forth above; (3) in the best




Parties.






part:


















the Plan.


Bankruptcy Rule 9019, of the third-party release set forth above, which includes by reference each of the related







Parties.






















Plan.



















the Plan.



HOW TO VOTE






fully below.







PIN#: ________________________________________________________









determine.













8. You must vote all of your Class 5 General Unsecured Claims either to accept or reject the Plan, and may

not split your vote. Further, if a Holder has multiple Claims within Class 5, the Debtors may direct the

Solicitation Agent to aggregate the Claims of any particular Holder within Class 5 for the purpose of

counting votes.




Exhibit D

Class 6 Ballot
























Holder of a Class 6 Subordinated Remaining Volume Claim as of December 6, 2019

(the “Voting Record Date”). Accordingly, you have the right to execute this Ballot and to vote

to accept or reject the Plan.













RESTRUCTURING

TRANSACTION

BACKGROUND:












Bankruptcy Code.

TREATMENT OF

YOUR CLASS 6

SUBORDINATED

REMAINING

VOLUME CLAIM:

Subject to the terms and conditions of the Plan, following the full satisfaction of all Allowed

General Unsecured Claims, you will receive your Pro Rata share of: (i) if an Equitization

Restructuring occurs, the GUC Equitization Reserve; and (ii) if an Asset Sale Restructuring

occurs, the Distribution Proceeds as provided in Article VIII.H of the Plan.






ITEM 1:

PRINCIPAL

AMOUNT OF

CLASS 6

SUBORDINATED

REMAINING

VOLUME CLAIMS


Holder of Class 6 Subordinated Remaining Volume Claims in the following aggregate

principal amount (please fill in the amount if not otherwise completed):

Amount of Claims: $__________________________

ITEM 2:

VOTE TO ACCEPT

OR REJECT THE

PLAN

The Holder of the Class 6 Subordinated Remaining Volume Claims set forth in Item 1 above

votes to (please check one and only one):



Please note that you are voting all of your Class 6 Subordinated Remaining Volume Claims

either to accept or reject the Plan. You may not split your vote. If you do not indicate that you

either accept or reject the Plan by checking the applicable box above, your Ballot with respect

to this Item 2 will not be counted. If you indicate that you both accept and reject the Plan by

checking both boxes above, your Ballot with respect to this Item 2 will not be counted.






The undersigned holder of Class 6 Subordinated Remaining Volume Claim set forth in Item 1

elects to:









ITEM 3:

RECOVERY

Pursuant to Article III.B.6 of the Plan, Holders of Subordinated Remaining Volume Claims

will receive, following the full satisfaction of all Allowed General Unsecured Claims, their Pro

Rata share of (i) if an Equitization Restructuring occurs, the GUC Equitization Reserve; and

(ii) if an Asset Sale Restructuring occurs, the Distribution Proceeds as provided in Article

VIII.H of the Plan.


ITEM 4:

IMPORTANT

INFORMATION

REGARDING THE

THIRD-PARTY

RELEASE















































BANKRUPTCY COURT’S APPROVAL, PURSUANT TO BANKRUPTCY

RULE 9019, AND, FOR THE AVOIDANCE OF DOUBT, SOLELY WITH RESPECT

TO THE RELEASED PARTIES AND RELEASING PARTIES, OF THE THIRD-

PARTY RELEASE SET FORTH ABOVE, WHICH INCLUDES BY REFERENCE

EACH OF THE RELATED PROVISIONS AND DEFINITIONS CONTAINED

HEREIN, AND FURTHER, SHALL CONSTITUTE THE BANKRUPTCY COURT’S


FINDING THAT THE THIRD-PARTY RELEASE SET FORTH ABOVE IS: (1) IN

EXCHANGE FOR THE GOOD AND VALUABLE CONSIDERATION PROVIDED

BY THE RELEASED PARTIES; (2) A GOOD FAITH SETTLEMENT AND

COMPROMISE OF THE CLAIMS RELEASED BY THE RELEASING PARTIES; (3)

IN THE BEST INTERESTS OF THE DEBTORS AND ALL HOLDERS OF CLAIMS

AND INTERESTS; (4) FAIR, EQUITABLE, AND REASONABLE; (5) GIVEN AND

MADE AFTER NOTICE AND OPPORTUNITY FOR HEARING; AND (6) A BAR TO

ANY OF THE RELEASING PARTIES ASSERTING ANY CLAIM RELEASED BY

THE THIRD-PARTY RELEASE SET FORTH ABOVE AGAINST ANY OF THE

RELEASED PARTIES.

































X.F OF THE PLAN.

ITEM 5:

CERTIFICATIONS



1. the undersigned is (a) the Holder of the Subordinated Remaining Volume Claims

(Class 6) being voted, or (b) the authorized signatory for an entity that is a Holder of such

Subordinated Remaining Volume Claims;





3. the undersigned has cast the same vote with respect to all of its Subordinated Remaining

Volume Claims (Class 6) in connection with the Plan; and

4. (a) no other Ballot with respect to the same Subordinated Remaining Volume Claims

(Class 6) identified in Item 1 has been cast or (b) if any other Ballot has been cast with

respect to such Subordinated Remaining Volume Claims, then any such earlier Ballots

are hereby revoked and deemed to be null and void.

ITEM 6:

BALLOT

COMPLETION

AND DELIVERY

INSTRUCTIONS


Name of Holder:

Signature:


the Holder):

Title:

Address:

Email Address:

Telephone Number:

Date Completed:



or equity interest.


















































agreement; or







the Plan.



this Ballot.




Releasing Parties, of the releases set forth above, which includes by reference each of the related provisions and

definitions contained herein, and further, shall constitute the Bankruptcy Court’s finding that the releases set

forth above are: (1) in exchange for the good and valuable consideration provided by the Released Parties; (2)

a good faith settlement and compromise of the claims released by the releases set forth above; (3) in the best




Parties.






part:


















the Plan.


Bankruptcy Rule 9019, of the third-party release set forth above, which includes by reference each of the related







Parties.






















Plan.



















the Plan.



HOW TO VOTE






fully below.







PIN#: ________________________________________________________









determine.













8. You must vote all of your Class 6 Subordinated Remaining Volume Claims either to accept or reject the

Plan, and may not split your vote. Further, if a Holder has multiple Claims within Class 6, the Debtors

may direct the Solicitation Agent to aggregate the Claims of any particular Holder within Class 6 for the

purpose of counting votes.




Exhibit E

Tabulation Report


Debtor: PES Holdings, LLC, et al.Case No. 19-11626Claims Ballot Detail ResultsClass 3 - Term Loan Secured Claims

135 0 50

100.00%

135

0.00%

$577,113,019.43

100.00%

$577,113,019.43 $0.00

0.00%

Total Valid Accepted Rejected Invalid# Votes:

Vote %:

Amt:

Amt %:

Class Summary Voting Outcome: Accepted

185Total Received

CreditorTabulated

Vote Amount VoteDate

ReceivedBallot # CommentPrinted Ballot

AmountOpt Out ElectionClm Sch

AMMC CLO 21, LIMITED $1,860,916.702/3/2020 Accept7525 Claimant wrote in $1,872,320.79 as ballot amount. Tabulated at scheduled amount.

$1,860,916.70S6577-0

AMMC CLO XII, LIMITED $2,276,299.982/3/2020 Accept7526 Claimant wrote in $2,290,249.65 as ballot amount. Tabulated at scheduled amount.

$2,276,299.98S6578-0

AMMC CLO XIII, LIMITED $1,661,532.732/3/2020 Accept7527 Claimant wrote in $1,671,714.98 as ballot amount. Tabulated at scheduled amount.

$1,661,532.73S6579-0

AMMC CLO XIV, LIMITED $834,962.222/3/2020 Accept7528 Claimant wrote in $840,079.04 as ballot amount. Tabulated at scheduled amount.

$834,962.22S6580-0

ASCENSION ALPHA FUND, LLC $5,150,028.992/3/2020 Accept7513 Creditor did not write in ballot amount. Tabulated at scheduled claim amount

$5,150,028.99S6564-0

ASCENSION HEALTH MASTER PENSION TRUST

$2,958,164.302/3/2020 Accept7532 Creditor did not enter a ballot amount. Tabulated at scheduled claim amount

$2,958,164.30S6584-0

ATRIUM IX $4,821,927.682/1/2020 Accept7551 $4,821,927.68S6603-0

ATRIUM VIII $3,475,294.732/1/2020 Accept7552 $3,475,294.73S6604-0

ATRIUM X $4,339,716.002/3/2020 Accept7553 $4,339,716.00S6605-0

ATRIUM XI $5,875,564.992/1/2020 Accept7554 $5,875,564.99S6606-0

AUSTRALIANSUPER $9,975,869.062/3/2020 Accept7555 $9,975,869.06S6607-0

BA/CSCREDIT 1 LLC $828,684.212/1/2020 Accept7556 $828,684.21S6608-0

BANK OF AMERICA, N.A. $6,660,627.922/3/2020 Accept7770 Amount was aggregated

BANK OF AMERICA, N.A. $0.00 2/3/2020 Invalid7769 Amount aggregated on Ballot ID 7770

Page 1 of 10Tuesday, February 4, 2020

OMNI MANAGEMENT GROUP5955 DE SOTO AVENUE, SUITE 100WOODLAND HILLS, CA 91367

Visit us on the Web at www.omnimgt.comE-Mail: [email protected]

PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




BARDIN HILL $7,528,571.432/3/2020 Accept7511 Ballot amount has been aggregated$2,507,616.30S6562-0

BARDIN HILL $0.00 2/3/2020 Invalid7503 Amount was aggregated on Ballot ID 7511$5,020,955.13S6554-0

BENTHAM STRATEGIC LOAN FUND $1,750,000.002/1/2020 Accept7660 $1,750,000.00S6712-0

BENTHAM STRATEGIC LOAN FUND $2,718,540.542/2/2020 Accept7557 $2,718,540.54S6609-0

BENTHAM SYNDICATED LOAN FUND $0.00 2/1/2020 Invalid7558 Amount aggregated on Ballot ID 7520$7,278,334.21S6610-0

BENTHAM SYNDICATED LOAN FUND $16,567,516.162/1/2020 Accept7520 Ballot amount has been aggregated.$4,653,337.59S6571-0

BENTHAM SYNDICATED LOAN FUND $0.00 2/1/2020 Invalid7661 Amount aggregated on Ballot ID 7520$4,635,844.36S6713-0

BLANFORD CAPITAL COMPANY #11, LLC $10,730,892.752/3/2020 Accept7686 $10,730,892.75S6738-0

CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM

$4,502,001.702/1/2020 Accept7521 Ballot amount has been aggregated$664,762.51S6572-0

CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM

$0.00 2/3/2020 Invalid7559 Amount was aggregated on Ballot ID 7521$2,924,975.71S6611-0

CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM

$0.00 2/1/2020 Invalid7662 Amount was aggregated on Ballot ID 7521$912,263.48S6714-0

CITIZENS BANK $8,857,142.862/3/2020 Accept7500 $8,857,142.86S6550-0

CITY OF NEW YORK GROUP TRUST- CREDIT SUISSE

$5,231,901.882/1/2020 Accept7560 $5,231,901.88S6612-0

COMMONWEALTH OF PENNSYLVANIA TREASURY DEPARTMENT

$826,612.572/1/2020 Accept7561 $826,612.57S6613-0

CONCISE SHORT TERM HIGH YIELD MASTER FUND SPC

$3,588,000.001/30/2020 Accept7721

COPPERHILL LOAN FUND I, LLC $838,718.462/1/2020 Accept7562 $838,718.46S6614-0

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

$7,528,571.421/27/2020 Accept7501 Claimant wrote in $7,529,000.00 as ballot amount, tabulated at scheduled amount.

$7,528,571.42S6552-0

CREDIT SUISSE FLOATING RATE HIGH INCOME FUND





$24,090,895.092/1/2020 Accept7523 Ballot amount has been aggregated.$3,988,575.08S6574-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




CREDIT SUISSE FLOATING RATE TRUST $2,091,643.862/1/2020 Accept7564 $2,091,643.86S6616-0

CREDIT SUISSE HIGH YIELD BOND FUND $2,504,886.542/1/2020 Accept7565 $2,504,886.54S6617-0

CREDIT SUISSE NOVA (LUX) GLOBAL SENIOR LOAN FUND





$59,291,088.132/3/2020 Accept7566 Ballot amount has been aggregated$19,865,438.31S6618-0

CREDIT SUISSE STRATEGIC INCOME FUND $834,962.222/1/2020 Accept7567 $834,962.22S6619-0

DOLLAR SENIOR LOAN FUND, LTD. $0.00 2/1/2020 Invalid7522 Amount aggregated on Ballot ID 7568$664,762.51S6573-0

DOLLAR SENIOR LOAN FUND, LTD. $0.00 2/1/2020 Invalid7665 Amount aggregated on Ballot ID 7568$912,263.48S6717-0

DOLLAR SENIOR LOAN FUND, LTD. $6,118,105.832/1/2020 Accept7568 Amount has been aggregated$4,541,079.84S6620-0

ELLINGTON CLO I, LTD. $3,473,767.452/3/2020 Accept7594 $3,473,767.45S6646-0

ELLINGTON CLO III, LTD. $3,278,693.042/3/2020 Accept7595 $3,278,693.04S6647-0

ELLINGTON CLO IV, LTD., $3,922,100.562/3/2020 Accept7596 $3,922,100.56S6648-0

EMGH INVESTMENTS LLC $453,139.002/3/2020 Accept7682 $453,139.00S6734-0

EPO (B) SPECIAL HOLDINGS LTD $1,051,529.002/3/2020 Accept7683 $1,051,529.00S6735-0

EPO II (B) SPECIAL HOLDINGS LTD. $1,895,256.512/3/2020 Accept7684 $1,895,256.51S6736-0

EVERSOURCE RETIREMENT PLAN MASTER TRUST

$7,702,949.712/3/2020 Accept7533 Creditor did not write in an amount for the ballot. Tabulated at scheduled claim amount.

$7,702,949.71S6585-0

FLATIRON CLO 2015-1 LTD. $1,010,676.271/29/2020 Accept7631 $1,010,676.27S6683-0

FRANCISCAN ALLIANCE INC. $0.00 2/3/2020 Invalid7534 Vote not indicated Claimant did not enter an amount as ballot amount. Tabulated at scheduled claim amount.

$1,009,650.23S6586-0

GOLDMAN, SACHS & CO. $14,439,826.822/3/2020 Accept7510 Ballot amount has been aggregated.$9,742,857.14S6561-0

GOLDMAN, SACHS & CO. $0.00 2/3/2020 Invalid7502 Amount aggregated on Ballot ID 7510$4,696,969.68S6553-0

GREAT AMERICAN INSURANCE COMPANY $618,957.582/3/2020 Accept7529 Claimant wrote in $626,438.00 as ballot amount, tabulated at scheduled amount. No claim has been filed.

$618,957.58S6581-0

GREAT AMERICAN LIFE INSURANCE COMPANY

$1,856,872.712/3/2020 Accept7530 Claimant wrote in $1,879,313.99 as ballot amount, tabulated at scheduled amount. No claim has been filed.

$1,856,872.71S6582-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




HALCYON LOAN ADVISORS FUNDING 2012-1, LTD.

$5,293,908.632/3/2020 Accept7535 $5,293,908.63S6587-0


$8,690,432.272/3/2020 Accept7536 $8,690,432.27S6588-0


$483,534.732/3/2020 Accept7649 Claimant did not enter an amount as ballot amount, tabulated at scheduled amount. No claim has been filed.

$483,534.73S6701-0


$7,798,459.312/3/2020 Accept7540 Claimant did not enter an amount as ballot amount, tabulated at scheduled amount. No claim has been filed.

$7,798,459.31S6592-0

HALCYON LOAN ADVISORS FUNDING 2015-1 LTD.


$1,237,167.68S6703-0



$3,575,911.36S6594-0



$1,250,653.85S6705-0



$2,184,025.21S6596-0



$1,128,194.25S6707-0



$2,588,835.76S6598-0

HARTFORD TOTAL RETURN BOND HLS FUND $686,088.432/3/2020 Accept7637 Claimant wrote in $690,292.93 as ballot amount. Tabulated at scheduled amount.

$686,088.43S6689-0

KP FIXED INCOME FUND $597,407.642/1/2020 Accept7569 $597,407.64S6621-0

LCM XIII LIMITED PARTNERSHIP $1,514,387.992/3/2020 Accept7753 Claimant wrote in $1,497,135.91 as ballot amount, tabulated at scheduled amount. No claim has been filed.

LCM XIV LIMITED PARTNERSHIP $1,299,683.422/3/2020 Accept7755 Creditor wrote in $1,284,877.31 as ballot amount. Tabulated at scheduled claim amount

LCM XIX LIMITED PARTNERSHIP $2,290,493.552/3/2020 Accept7760 Creditor wrote in $2,264,400.01 as ballot amount. Tabulated at scheduled claim amount

LCM XV LIMITED PARTNERSHIP $1,750,885.202/3/2020 Accept7756 Creditor wrote in $1,730,938.96 as ballot amount. Tabulated at scheduled claim amount.




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




LCM XVI LIMITED PARTNERSHIP $1,787,403.182/3/2020 Accept7757 Creditor wrote in $1,767,040.88 as ballot amount. Tabulated at scheduled claim amount

LCM XVII LIMITED PARTNERSHIP $1,168,830.542/3/2020 Accept7758 Creditor wrote in $1,155,515.10 as ballot amount. Tabulated at scheduled claim amount

LCM XVIII LIMITED PARTNERSHIP $2,011,549.822/3/2020 Accept7759 Creditor wrote in $1,988,634.04 as ballot amount. Tabulated at scheduled claim amount

LCM XX LIMITED PARTNERSHIP $2,556,577.562/3/2020 Accept7761 Creditor wrote in $2,527,452.75 as ballot amount. Tabulated at scheduled claim amount

LCM XXI LIMITED PARTNERSHIP $1,396,232.272/3/2020 Accept7762 Creditor wrote in $1,380,326.26 as ballot amount. Tabulated at scheduled claim amount

LCM XXII LTD. $795,892.482/3/2020 Accept7767 Creditor wrote in $786,825.59 as ballot amount. Tabulated at scheduled claim amount

LCM XXIII LTD. $1,216,402.012/3/2020 Accept7768 Creditor wrote in $1,202,544.63 as ballot amount. Tabulated at scheduled claim amount

LCM XXIV LTD. $1,628,598.902/3/2020 Accept7771 Creditor wrote in $1,610,045.73 as ballot amount. Tabulated at scheduled claim amount

MADISON PARK FUNDING III LTD $3,306,450.282/1/2020 Accept7570 $3,306,450.28S6622-0

MADISON PARK FUNDING IX, LTD. $2,910,448.702/1/2020 Accept7571 $2,910,448.70S6623-0

MADISON PARK FUNDING V LTD $3,932,671.922/1/2020 Accept7572 $3,932,671.92S6624-0

MADISON PARK FUNDING VI, LTD. $3,118,842.012/1/2020 Accept7573 $3,118,842.01S6625-0

MADISON PARK FUNDING X, LTD. $5,047,397.972/1/2020 Accept7574 Ballot amount has been aggregated$4,135,134.49S6626-0

MADISON PARK FUNDING X, LTD. $0.00 2/1/2020 Invalid7666 Amount was aggregated on Ballot ID 7574$912,263.48S6718-0

MADISON PARK FUNDING XI, LTD. $4,258,469.802/3/2020 Accept7575 Ballot amount has been aggregated$3,346,206.32S6627-0

MADISON PARK FUNDING XI, LTD. $0.00 2/1/2020 Invalid7667 Amount was aggregated on Ballot ID 7575$912,263.48S6719-0

MADISON PARK FUNDING XII, LTD. $5,392,730.902/1/2020 Accept7576 Amount has been aggregated$3,568,203.94S6628-0

MADISON PARK FUNDING XII, LTD. $0.00 2/1/2020 Invalid7668 Amount was aggregated on Ballot ID 7576$1,824,526.96S6720-0

MADISON PARK FUNDING XIII, LTD. $0.00 2/1/2020 Invalid7669 Amount was aggregated on Ballot ID 7577$912,263.48S6721-0

MADISON PARK FUNDING XIII, LTD. $4,997,634.172/1/2020 Accept7577 Ballot amount has been aggregated$4,085,370.69S6629-0

MADISON PARK FUNDING XIV, LTD. $6,289,648.862/1/2020 Accept7578 Ballot amount has been aggregated$4,465,121.90S6630-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




MADISON PARK FUNDING XIV, LTD. $0.00 2/3/2020 Invalid7670 Amount was aggregated on Ballot ID 7578$1,824,526.96S6722-0

MADISON PARK FUNDING XIX, LTD. $4,940,112.962/1/2020 Accept7579 Ballot amount has been aggregated$4,027,849.48S6631-0

MADISON PARK FUNDING XIX, LTD. $0.00 2/1/2020 Invalid7671 Amount was aggregated on Ballot ID 7579$912,263.48S6723-0

MADISON PARK FUNDING XLI, LTD. $5,263,930.372/1/2020 Accept7580 Ballot amount has been aggregated$3,439,403.41S6632-0

MADISON PARK FUNDING XLI, LTD. $0.00 2/1/2020 Invalid7672 Amount was aggregated on Ballot ID 7580$1,824,526.96S6724-0

MADISON PARK FUNDING XV, LTD. $0.00 2/1/2020 Invalid7673 Amount was aggregated on Ballot ID 7581$912,263.48S6725-0

MADISON PARK FUNDING XV, LTD. $4,688,666.082/1/2020 Accept7581 Ballot amount has been aggregated$3,776,402.60S6633-0

MADISON PARK FUNDING XVI, LTD. $4,286,214.282/1/2020 Accept7582 Ballot amount has been aggregated$3,373,950.80S6634-0

MADISON PARK FUNDING XVI, LTD. $0.00 2/1/2020 Invalid7674 Amount was aggregated on Ballot ID 7582$912,263.48S6726-0

MADISON PARK FUNDING XVII, LTD. $5,142,629.102/1/2020 Accept7583 Ballot amount has been aggregated$4,230,365.62S6635-0

MADISON PARK FUNDING XVII, LTD. $0.00 2/1/2020 Invalid7675 Amount was aggregated on Ballot ID 7583$912,263.48S6727-0

MADISON PARK FUNDING XVIII, LTD. $5,140,460.802/1/2020 Accept7584 Ballot amount has been aggregated$4,228,197.32S6636-0

MADISON PARK FUNDING XVIII, LTD. $0.00 2/1/2020 Invalid7676 Amount was aggregated on Ballot ID 7584$912,263.48S6728-0

MADISON PARK FUNDING XX, LTD. $4,014,716.832/1/2020 Accept7585 Ballot amount has been aggregated$3,102,453.35S6637-0

MADISON PARK FUNDING XX, LTD. $0.00 2/1/2020 Invalid7677 Amount was aggregated on Ballot ID 7585$912,263.48S6729-0

MADISON PARK FUNDING XXI, LTD. $0.00 2/1/2020 Invalid7678 Amount was aggregated on Ballot ID 7586$912,263.48S6730-0

MADISON PARK FUNDING XXI, LTD. $4,475,430.892/2/2020 Accept7586 Ballot amount has been aggregated$3,563,167.41S6638-0

MADISON PARK FUNDING XXII, LTD. $4,691,431.692/2/2020 Accept7587 Ballot amount has been aggregated$3,779,168.21S6639-0

MADISON PARK FUNDING XXII, LTD. $0.00 2/1/2020 Invalid7679 Amount was aggregated on Ballot ID 7587$912,263.48S6731-0

MADISON PARK FUNDING XXIV, LTD. $5,199,679.992/2/2020 Accept7588 Ballot amount has been aggregated$4,287,416.51S6640-0

MADISON PARK FUNDING XXIV, LTD. $0.00 2/1/2020 Invalid7680 Amount was aggregated on Ballot ID 7588$912,263.48S6732-0

MADISON PARK FUNDING XXVI, LTD. $3,605,016.542/2/2020 Accept7589 Ballot amount has been aggregated$2,692,753.06S6641-0

MADISON PARK FUNDING XXVI, LTD. $0.00 2/1/2020 Invalid7681 Amount was aggregated on Ballot ID 7589$912,263.48S6733-0

MAINSTAY FLOATING RATE FUND, A SERIES OF MAINSTAY FUNDS TRUST

$1,838,461.901/29/2020 Accept7632 $1,838,461.90S6684-0

MAINSTAY VP FLOATING RATE PORTFOLIO A SERIES OF MAINSTAY VP FUNDS TRUST

$1,078,185.211/29/2020 Accept7633 $1,078,185.21S6685-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




MARBLE RIDGE MASTER FUND LP $15,973,294.162/3/2020 Accept7687 $15,973,294.16S6739-0

MERCER QIF FUND PLC - MERCER INVESTMENT FUND 1

$6,891,000.001/30/2020 Accept7722

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

$1,033,265.711/29/2020 Accept7634 $1,033,265.71S6686-0

NEW YORK LIFE INSURANCE COMPANY $1,033,265.711/29/2020 Accept7635 $1,033,265.71S6687-0

PARTNERS CAPITAL PHOENIX FUND II LTD - DIVERSIFIED INCOME FUND

$2,710,376.092/3/2020 Accept7549 Claimant did not enter an amount as ballot amount Tabulated at scheduled amount.

$2,710,376.09S6601-0

REPUBLIC FIRST BANK D/B/A REPUBLIC BANK

$2,214,285.722/3/2020 Accept7754 Claimant wrote in $2,214,285.69 as ballot amount. Tabulated at scheduled amount.

ROCK BLUFF STRATEGIC FIXED INCOME PARTNERSHIP, L.P.

$9,355,887.512/3/2020 Accept7550 Claimant did not enter an amount as ballot amount. Tabulated at scheduled amount.

$9,355,887.51S6602-0

SAFETY INSURANCE COMPANY $177,721.702/3/2020 Accept7638 Creditor wrote in $178,810.82 as ballot amount. Tabulated at scheduled claim amount

$177,721.70S6690-0

SENIOR SECURED FLOATING RATE LOAN FUND

$819,937.162/2/2020 Accept7590 $819,937.16S6642-0

SERENGETI ASSET MANAGEMENT LP $6,733,860.962/1/2020 Accept7505 Ballot amount has been aggregated$4,893,235.96S6556-0

SERENGETI ASSET MANAGEMENT LP $0.00 2/1/2020 Invalid7512 Amount aggregated on Ballot ID 7505$1,840,625.00S6563-0

SERENGETI LYCAON MM LP $2,276,146.842/1/2020 Accept7517 $2,276,146.84S6568-0

SERENGETI MULLTI-SERIES MASTER LLC - SERIES E

$914,713.222/1/2020 Accept7515 $914,713.22S6566-0

ST. BERNARD OPPORTUNITY FUND I, LTD. $1,574,019.002/3/2020 Accept7685 $1,574,019.00S6737-0

STATE OF NEW MEXICO STATE INVESTMENT COUNCIL

$831,847.212/2/2020 Accept7591 $831,847.21S6643-0

SUNAMERICA SENIOR FLOATING RATE FUND, INC. - AIG SENIOR FLOATING RATE FUND

$789,415.012/3/2020 Accept7639 Creditor wrote in $794,252.71 as ballot amount. Tabulated at scheduled claim amount

$789,415.01S6691-0

THE BEEBEE FOUNDATION $521,000.001/30/2020 Accept7720

THE EATON CORPORATION MASTER RETIREMENT TRUST

$844,046.442/2/2020 Accept7592 $844,046.40S6644-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




THE HARTFORD FLOATING RATE FUND $12,234,724.672/3/2020 Accept7640 Claimant wrote in $12,309,701.78 as ballot amount. Tabulated at scheduled amount.

$12,234,724.67S6692-0

THE HARTFORD STRATEGIC INCOME FUND $82,661.262/3/2020 Accept7641 Claimant wrote in $83,167.82 as ballot amount, tabulated at scheduled amount. No claim has been filed.

$82,661.26S6693-0

THE HARTFORD TOTAL RETURN BOND FUND $305,846.652/3/2020 Accept7642 Claimant wrote in $307,720.95 as ballot amount. Tabulated at scheduled amount.

$305,846.65S6694-0

THE HUNTINGTON NATIONAL BANK $8,857,142.862/3/2020 Accept7478 Claimant wrote in $9,056,056.69 as ballot amount, tabulated at scheduled amount. No claim has been filed.

$8,857,142.86S6557-0

THIRD POINT LOAN LLC $48,890,281.442/3/2020 Accept7636 $48,890,281.44S6688-0

VENTURE 35 CLO, LIMITED $2,049,589.102/3/2020 Accept7611 Ballot amount has been aggregated$1,667,948.51S6663-0

VENTURE 35 CLO, LIMITED $0.00 2/3/2020 Invalid7688 Amount was aggregated on Ballot ID 7611$381,640.59S6740-0

VENTURE VII CDO LIMITED $5,206,472.522/3/2020 Accept7612 $5,206,472.52S6664-0

VENTURE XII CLO, LIMITED $0.00 2/3/2020 Invalid7689 Amount was aggregated on Ballot ID 7613$381,640.59S6741-0

VENTURE XII CLO, LIMITED $2,384,779.532/3/2020 Accept7613 Ballot amount has been aggregated.$2,003,138.94S6665-0

VENTURE XIII CLO, LIMITED $0.00 2/3/2020 Invalid7690 Amount was aggregated on Ballot 7614$381,640.59S6742-0

VENTURE XIII CLO, LIMITED $1,207,180.082/3/2020 Accept7614 Ballot amount has been aggregated$825,539.49S6666-0

VENTURE XIV CLO, LIMITED $1,509,311.412/3/2020 Accept7615 Ballot amount has been aggregated$1,127,670.82S6667-0

VENTURE XIV CLO, LIMITED $0.00 2/3/2020 Invalid7691 Amount was aggregated on Ballot ID 7615$381,640.59S6743-0

VENTURE XIX CLO, LIMITED $0.00 2/3/2020 Invalid7692 Amount was aggregated on Ballot ID 7616$381,640.59S6744-0

VENTURE XIX CLO, LIMITED $632,747.062/3/2020 Accept7616 Ballot amount has been aggregated$251,106.47S6668-0

VENTURE XV CLO, LIMITED $0.00 2/3/2020 Invalid7693 Amount was aggregated on Ballot ID 7617$381,640.59S6745-0

VENTURE XV CLO, LIMITED $1,750,312.722/3/2020 Accept7617 Ballot amount has been aggregated$1,368,672.13S6669-0

VENTURE XVI CLO, LIMITED $381,640.592/3/2020 Accept7694 Amount was aggregated on Ballot ID 7618$381,640.59S6746-0

VENTURE XVI CLO, LIMITED $1,054,575.942/3/2020 Accept7618 Ballot amount has been aggregated$672,935.35S6670-0

VENTURE XVII CLO LIMITED $1,456,648.172/3/2020 Accept7619 Ballot amount has been aggregated$1,075,007.58S6671-0

VENTURE XVII CLO LIMITED $0.00 2/3/2020 Invalid7695 Amount was aggregated on Ballot ID 7619$381,640.59S6747-0

VENTURE XVIII CLO, LIMITED $0.00 2/3/2020 Invalid7696 Amount was aggregated on Ballot ID 7620$381,640.59S6748-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




VENTURE XVIII CLO, LIMITED $1,832,890.512/3/2020 Accept7620 Ballot amount has been aggregated$1,451,249.92S6672-0

VENTURE XX CLO, LIMITED $0.00 2/3/2020 Invalid7697 Amount was aggregated on Ballot ID 7621$381,640.59S6749-0

VENTURE XX CLO, LIMITED $724,277.922/3/2020 Accept7621 Ballot amount has been aggregated$342,637.33S6673-0

VENTURE XXI CLO, LIMITED $0.00 2/3/2020 Invalid7698 Amount was aggregated on Ballot ID 7622$381,640.59S6750-0

VENTURE XXI CLO, LIMITED $2,490,346.142/3/2020 Accept7622 Ballot amount has been aggregated$2,108,705.55S6674-0

VENTURE XXII CLO LIMITED $724,277.922/3/2020 Accept7623 Ballot amount has been aggregated$342,637.33S6675-0

VENTURE XXII CLO LIMITED $0.00 2/3/2020 Invalid7699 $381,640.59S6751-0

VENTURE XXIII CLO, LIMITED $0.00 2/3/2020 Invalid7700 Amount aggregated on Ballot ID 7624$381,640.59S6752-0

VENTURE XXIII CLO, LIMITED $724,277.922/3/2020 Accept7624 Ballot amount has been aggregated$342,637.33S6676-0

VENTURE XXIV CLO, LIMITED $0.00 2/3/2020 Invalid7701 Amount was aggregated on Ballot ID 7625$381,640.59S6753-0

VENTURE XXIV CLO, LIMITED $724,277.922/3/2020 Accept7625 Ballot amount has been aggregated$342,637.33S6677-0

VENTURE XXV CLO, LIMITED $828,188.262/3/2020 Accept7626 Ballot amount has been aggregated$446,547.68S6678-0

VENTURE XXV CLO, LIMITED $0.00 2/3/2020 Invalid7702 Amount was aggregated on Ballot ID 7626$381,640.58S6754-0

VENTURE XXVI CLO, LIMITED $823,092.792/3/2020 Accept7627 Ballot amount has been aggregated$441,452.21S6679-0

VENTURE XXVI CLO, LIMITED $0.00 2/3/2020 Invalid7703 Amount was aggregated on Ballot ID 7627$381,640.58S6755-0

VENTURE XXVII CLO LIMITED $0.00 2/3/2020 Invalid7704 Amount was aggregated on Ballot ID 7628$381,640.58S6756-0

VENTURE XXVII CLO LIMITED $823,092.792/3/2020 Accept7628 Ballot amount has been aggregated$441,452.21S6680-0

VENTURE XXVIII CLO LTD $2,634,577.002/3/2020 Accept7629 Ballot amount has been aggregated$2,252,936.42S6681-0

VENTURE XXVIII CLO LTD $0.00 2/3/2020 Invalid7705 Amount was aggregated on Ballot ID 7629$381,640.58S6757-0

WEBSTER BANK $7,528,571.422/3/2020 Accept7507 $7,528,571.42S6558-0

WELLINGTON TRUST COMPANY, NA $0.00 2/3/2020 Invalid7645 Amount was aggregated on Ballot ID 7643.$82,661.26S6697-0

WELLINGTON TRUST COMPANY, NA $0.00 2/3/2020 Invalid7644 Amount was aggregated on Ballot ID 7643.$438,104.66S6696-0

WELLINGTON TRUST COMPANY, NA $1,239,918.852/3/2020 Accept7643 Ballot amount has been aggregated.$719,152.93S6695-0

WESPATH FUNDS TRUST - (CREDIT SUISSE) $1,864,594.952/2/2020 Accept7593 $1,864,594.95S6645-0

WESPATH FUNDS TRUST (WELLINGTON) $235,584.582/3/2020 Accept7646 Creditor wrote in $237,028.30 as ballot amount. Tabulated at scheduled claim amount

$235,584.58S6698-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




WILMINGTON SAVINGS FUND SOCIETY, FSB ( WSFSBANK)

$6,642,857.141/31/2020 Accept7730 Claimant wrote in $6,642,857.00 as ballot amount, tabulated at scheduled amount. No claim has been filed.




PHONE: (818) 906-8300FAX: (818) 783-2737


Debtor: PES Holdings, LLC, et al.Case No. 19-11626Claims Ballot Detail ResultsClass 4 - Intermediation Secured Claims

1 0 4

100.00%

1

0.00%

$1.00

100.00%

$1.00 $0.00

0.00%


Vote %:

Amt:

Amt %:


5Total Received

CreditorTabulated




ICBC STANDARD BANK PLC $0.00 2/3/2020 Invalid6966 Aggregated on Ballot ID 6938$1.00S4238-148



ICBC STANDARD BANK PLC $1.002/3/2020 Accept6938 Creditor wrote in $334,000,000 as ballot amount. Tabulated at unliquidated scheduled claim amount.

$1.00S4214-148


Page 1 of 1Monday, February 10, 2020



PHONE: (818) 906-8300FAX: (818) 783-2737


Debtor: PES Holdings, LLC, et al.Case No. 19-11626Claims Ballot Detail ResultsClass 5 - General Unsecured Claims

15 49 85

23.44%

64

76.56%

$1,707,416.48

1.78%

$95,952,175.20 $94,244,758.72

98.22%


Vote %:

Amt:

Amt %:

Class Summary Voting Outcome: Rejected

149Total Received

CreditorTabulated




ADVANSIX, INC. $1.001/31/2020 Reject6589 $1.00C387-0

AET INC. LIMITED $1,300.001/31/2020 Accept6731 $1,300.00C500-0

AIRGAS USA LLC $33,430.641/28/2020 Reject7710 Claimant wrote in $93,236.52 as ballot amount, tabulated at filed claim amount.

ALEXANDER PETROSKE $2,542.641/29/2020 Reject6864 $2,542.64C235CR12

ALL4 LLC $15,312.742/3/2020 Reject6309 $15,312.74C138-0

ALLIANZ GLOBAL RISKS US INS. CO. $0.00 1/27/2020 Invalid6552 Voted prior to resolicitation$1.00C353-0

ALLSTATE POWER VAC INC $780,133.841/28/2020 Reject6749 $780,133.84C516-0

AMBER FULLER $6,317.522/3/2020 Reject6911 Claimant wrote in $20,000.00 as ballot amount, tabulated at filed claim amount.

$6,317.52C497CR46

AMERICAN MACHINE TOOL REPAIR & REBUILDING CO INC

$7,732.501/31/2020 Reject7733

ANCHOR PUMP & ENGINEERED EQUIP $3,637.101/28/2020 Reject2779 Claimant wrote in $21,741.10 as ballot amount, tabulated at scheduled amount.

$3,637.10S4269-0

ANDERSON CONSTRUCTION SERVICES, INC. $0.00 1/31/2020 Invalid7139 Vote not indicated$503,141.52C382-1199

ARI LEASING, LLC $1.002/3/2020 Reject6590 Claimant wrote in $800,000.00 as ballot amount, tabulated at filed claim amount.

$1.00C388-0

ATLAS COPCO RENTAL LLC $0.00 1/6/2020 Invalid6474 Vote not indicated Voted prior to resolicitation$231,632.96C281-0

BAKER HUGHES $1,499,624.651/31/2020 Reject2787 Claimant wrote in $3,278,179.12 as ballot amount, tabulated at filed claim amount.

$1,499,624.65S4284-0

Page 1 of 8Saturday, February 8, 2020



PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




BAYVIEW SHIPPING CO. S.A. $0.00 1/30/2020 Invalid7717 Duplicate conflicting ballot

BAYVIEW SHIPPING CO. S.A. $146,295.401/30/2020 Reject6492 $146,295.40C299-0

BNSF RAILWAY COMPANY $0.00 1/31/2020 Invalid7389 Vote not indicated$5,092,608.67C518-1382

BNSF RAILWAY COMPANY $0.00 1/31/2020 Invalid7395 Vote not indicated$314,209,245.00C522-1387

BRENNTAG NORTHEAST, LLC $517,535.791/31/2020 Accept7728

BRENNTAG NORTHEAST, LLC $0.00 1/23/2020 Invalid7708 Voted prior to resolicitation$517,535.79C12-0

BRIGGS COMPANY $0.00 2/3/2020 Invalid7764 Duplicate conflicting ballot

BRIGGS COMPANY $0.00 1/23/2020 Invalid2796 Voted prior to resolicitation$39,637.10S4297-0

CCKX INC $0.00 1/24/2020 Invalid6433 Voted prior to resolicitation$18,156.80C240-0

CHARLES E. LUDVIG $7,336.642/3/2020 Reject6847 $7,336.64C190CR3-

CHRISTINE WILLIAMS $300.001/28/2020 Reject7711

CHRISTINE WILLIAMS $0.00 1/13/2020 Invalid6875 Voted prior to resolicitation$300.00C282CR19

CIRCUIT BREAKER SALES NE INC $5,000.0012/26/2019 Accept2807 Voted prior to resolicitation$5,000.00S4325-0

CITY OF PHILA. DEPT. OF PUBLIC HEALTH/AIR MGMT SERVICES

$9,330.002/3/2020 Accept7751 Claimant wrote in $425,576.36 as ballot amount, tabulated at scheduled amount.

CITY OF PHILADELPHIA $0.00 1/31/2020 Invalid2808 Duplicate conflicting ballot$9,330.00S4326-0

CM TOWERS, INC. $86,811.982/3/2020 Reject6536 $86,811.98C338-0

COMMODORE MARINE CO. S.A $9,108.601/30/2020 Reject6519 $9,108.60C321-0

COMMODORE MARINE CO. S.A $0.00 1/30/2020 Invalid7718 Duplicate conflicting ballot

CONTROL ANALYTICS, INC $99,999.301/30/2020 Reject7724

CSX TRANSPORTATION INC $16,782,202.262/3/2020 Reject6577 Amount has been aggregated.$12,000,000.00C375-0

CSX TRANSPORTATION INC $0.00 2/3/2020 Invalid6578 Amount aggregated to Ballot ID 6577$4,782,202.26C376-0

DELAWARE RIVER BASIN COMMISSION $68,541.762/3/2020 Accept7117 $68,541.76C345-1154

E & S AUTO PARTS INC $0.00 1/10/2020 Invalid2828 Voted prior to resolicitation$1,723.80S4361-0

E & S AUTO PARTS INC $1,723.801/30/2020 Reject7723

ENERGY PRODUCTS CO $0.00 1/17/2020 Invalid6448 Voted prior to resolicitation$16,869.00C255-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




ENSONO, INC $165,039.002/3/2020 Accept7065 $165,038.96C164-957

ENVIRO TEC SPECIALTIES INC $0.00 1/27/2020 Invalid6538 Voted prior to resolicitation$137,640.00C340-0

ERNEST D MENOLD INC $5,490.041/31/2020 Reject7090 $5,490.04C243-1042

EXXONMOBIL CATALYST AND LICENSING LLC

$788,438.582/3/2020 Accept7299 $788,438.58C459-1291

FISHER TANK COMPANY $0.00 1/24/2020 Invalid6526 Voted prior to resolicitation$503,208.99C328-0

FLOWSERVE US INC $0.00 1/27/2020 Invalid6661 Voted prior to resolicitation$256,478.15C438-0

GATX CORPORATION $0.00 1/31/2020 Invalid6707 Vote not indicated$1.00C468-0

GATX RAIL CORPORATION $0.00 1/31/2020 Invalid2846 Vote not indicated$31,649.04S4393-0

GULFVIEW SHIPPING CO. S.A. $140,343.861/30/2020 Reject6495 $140,343.86C302-0

HEAT TRANSFER EQUIPMENT CO $0.00 1/6/2020 Invalid6407 Voted prior to resolicitation$12,960.00C206-0

ICBC STANDARD BANK PLC $1.002/3/2020 Reject7746 Creditor wrote in $334,000,000 as ballot amount. Tabulated at unliquidated claim amount

$1.00C531-0

INDUSTRIAL SCIENTIFIC CORP. $19,885.051/30/2020 Accept7719

INDUSTRIAL SUPPLIES CO $0.00 1/25/2020 Invalid6291 Voted prior to resolicitation$19,591.67C123-0

INFORMATION MANAGEMENT SOLUTIONS $0.00 1/10/2020 Invalid2863 Voted prior to resolicitation$1,225.72S4422-0

J.J. WHITE, INC. $748,595.362/1/2020 Reject7127 Claimant wrote in $398,595.36 as ballot amount, tabulated at filed claim amount.

$748,595.36C365-1782

JOHN BRIDGE SONS INC $0.00 1/24/2020 Invalid7038 Voted prior to resolicitation$74,716.94C16-16

JOY SERVICES INC $0.00 1/30/2020 Invalid6322 Voted prior to resolicitation$65,534.33C147-0

KEITH HOLLY $50,500.001/29/2020 Accept6891 $50,500.00C360CR29

KEVIN KOCSI $0.00 1/2/2020 Invalid6846 Voted prior to resolicitation$25,000.00C128CR2-

KINDER MORGAN LIQUID TERMINALS, LLC $0.00 2/1/2020 Invalid6972 Vote not indicated$357,631.94S4453-169

L&J ENGINEERING $301.271/30/2020 Reject6373 Claimant wrote in $19,361.27 as ballot amount, tabulated at filed claim amount.

$301.27C177-0

LABORATORY CORPORATION OF AMERICA $9,172.701/2/2020 Accept6438 Voted prior to resolicitation$9,172.70C244-0

LIGHTNING ELIMINATORS & CONSULTANTS $0.00 1/6/2020 Invalid2885 Voted prior to resolicitation$7,613.47S4459-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




MAN ENERGY SOLUTIONS USA INC. $521,824.821/30/2020 Reject6376 $521,824.82C180-0

MARK G FLEET $0.00 1/27/2020 Invalid6878 Voted prior to resolicitation$25,750.24C286CR20

MATTHEW CUNNINGHAM $0.00 1/7/2020 Invalid6895 Voted prior to resolicitation$23,734.61C372CR30

MERRILL LYNCH COMMODITIES, INC $1.002/3/2020 Reject6708 $1.00C469-0

MORAN TOWING CORPORATION, ON BEHALF OF ITSELF AND AFFILIATES

$0.00 2/3/2020 Invalid7148 Vote not indicated$176,533.99C390-1317

MOTOR TECHNOLOGY INC. $25,938.041/31/2020 Reject7727 Claimant wrote in $29,636.27 as ballot amount, tabulated at filed claim amount.

MSC INDUSTRIAL SUPPLY COMPANY $935.802/1/2020 Accept6264 $935.80C100-0

NATHAN J RUTKOWSKI $0.00 1/29/2020 Invalid6903 Voted prior to resolicitation$16,000.00C489CR41

NATIONAL BASIC SENSOR $34,130.511/28/2020 Reject6549 Claimant wrote in $34,103.51 as ballot amount, tabulated at filed claim amount.

$34,130.51C350-0

NORTH EAST TECHNICAL SALES, INC. $23,706.711/31/2020 Reject6457 $23,706.71C262-0

ORACLE AMERICA, INC $0.00 1/16/2020 Invalid6974 Vote not indicated Voted prior to resolicitation$52,488.11S4510-158

OSG BULK SHIPS INC, AND/OR OSG DELAWARE BAY LIGHTERING LLC

$22,237,455.472/3/2020 Reject6505 $22,237,455.47C310-0

PA DEPARTMENT OF ENVIRONMENTA PROTECTION

$0.00 1/31/2020 Invalid7732 Vote not indicated

PAUL GRASSI $0.00 1/30/2020 Invalid6924 Voted prior to resolicitation$30,000.00C529CR48

PEAKER SERVICE INC $0.00 1/2/2020 Invalid2922 Voted prior to resolicitation$40,540.60S4514-0

PEAKER SERVICE INC $40,540.601/28/2020 Accept7712 Claimant wrote in $49,902.43 as ballot amount, tabulated at scheduled amount.

PETROLEUM SYS SERVICES CORP $0.00 1/23/2020 Invalid2927 Voted prior to resolicitation$1,438.00S4520-0

PETROLEUM SYS SERVICES CORP $0.00 1/29/2020 Invalid7714 Duplicate conflicting ballot

PETROLEUM SYSTEMS SERVICES CORPORATION

$0.00 1/29/2020 Invalid7715


$804.001/29/2020 Reject7716 Amount was aggregated




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated





$0.00 1/23/2020 Invalid6288 Voted prior to resolicitation$170.00C120-0


$0.00 1/29/2020 Invalid6290 Voted prior to resolicitation$634.00C122-0

POINT BREEZE RENEWABLE ENERGY, LLC $0.00 1/27/2020 Invalid7713 Voted prior to resolicitation

PRECISION FILTRATION PRODUCTS $0.00 1/2/2020 Invalid2936 Voted prior to resolicitation$3,609.55S4533-0

PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 2/3/2020 Invalid6276 Amount aggregated on Ballot ID 6275$7,697.50C110-0


PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 1/31/2020 Invalid7744 Duplicate conflicting ballot








PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 2/3/2020 Invalid6285 Amount aggregated on Ballot ID 6275$78.75C117-0


PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 2/3/2020 Invalid6277 Aggregated on Ballot ID 6275$5,440.00C111-0

PROACTIVE PERFORMANCE SOLUTIONS, INC. $34,769.512/3/2020 Reject6275 Ballot amount has been aggregated$5,939.50C109-0

PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 2/3/2020 Invalid6283 Aggregated on Ballot ID 6275$6,240.00C115-0

PROACTIVE PERFORMANCE SOLUTIONS, INC. $0.00 2/3/2020 Invalid6284 Aggregated on Ballot ID 6275$132.00C116-0

PROJECT CONTROL SERVICES INC $50,846.451/30/2020 Reject6537 $50,846.45C339-0

QUALITY TESTING SERVICES INC $0.00 1/6/2020 Invalid6329 Voted prior to resolicitation$120,034.81C151-0

RFA ARCHITECTURE LLC $24,700.001/30/2020 Accept7725

RIGGS DISTLER & COMPANY $678,899.421/30/2020 Reject2952 $678,899.42S4556-0

ROBINSON FANS, INC $0.00 1/6/2020 Invalid6408 Voted prior to resolicitation$13,413.00C207-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




S D MYERS LLC $42,733.001/31/2020 Reject7736

SAFETY-KLEEN/CLEAN HARBORS $0.00 1/23/2020 Invalid6746 Voted prior to resolicitation$496,348.92C514-0

SAFETY-KLEEN/CLEAN HARBORS $496,348.921/31/2020 Reject7729 Claimant wrote in $434,311.96 as ballot amount, tabulated at filed claim amount.

SCHECK MECHANICAL CORPORATION $0.00 1/28/2020 Invalid6533 Voted prior to resolicitation$165,243.50C335-0

SCOTT ALAN SEIGER $0.00 2/3/2020 Invalid6881 Duplicate conflicting ballot$43,974.53C289CR24

SCOTT ALAN SEIGER $43,974.532/1/2020 Reject7747

SEALTEC $1,309.491/29/2020 Reject2964 $1,309.49S4576-0

SGS CANADA INC $1,150.001/30/2020 Reject6312 Voted prior to resolicitation. Received duplicate ballot, vote changed to Reject

$1,150.00C142-0

SISU GROUP INC $833.752/1/2020 Reject6297 Voted prior to resolicitation. Received duplicate ballot vote change to reject.

$833.75C126-0

SKYVIEW MARINE CO. S.A. $309,597.431/30/2020 Reject6499 $309,597.43C304-0

SPECIALTY SUPPORT SYSTEMS, INC. $10,005.001/31/2020 Reject6281 $10,005.00C114-0

SPECTRUM INSPECTION $0.00 1/15/2020 Invalid6395 Voted prior to resolicitation$1.00C197-0

SPECTRUM INSPECTION $1.001/30/2020 Accept7726

THE BRIGGS COMPANY $39,637.102/3/2020 Reject7766

THE BRIGGS COMPANY $0.00 1/23/2020 Invalid6242 Received updated Ballot ID 7766. Vote changed to reject$39,637.10C21-0

THOMAS J SCARGLE $0.00 1/13/2020 Invalid2986 Voted prior to resolicitation$10,000.00S4617-0

TIOGA PIPE SUPPLY CO INC $0.00 1/30/2020 Invalid7452 Voted prior to resolicitation$6,489.45C572-1464

TORCO SUPPLY $0.00 1/13/2020 Invalid6416 Voted prior to resolicitation$6,994.10C213-0

TORCO SUPPLY COMPANY $0.00 1/13/2020 Invalid6315 Voted prior to resolicitation$6,994.10C143-0

TRANSPORTATION COMPLIANCE $0.00 1/24/2020 Invalid2991 Voted prior to resolicitation$1,285.00S4629-0

TRINITY INDUSTRIES LEASING COMPANY $0.00 2/3/2020 Invalid6734 Duplicate conflicting ballot Received updated ballot ID 7765

$48,103,957.96C505-0

TRINITY INDUSTRIES LEASING COMPANY $48,103,957.962/3/2020 Reject7765

TRI-STATE TECHNICAL SALES CORPORATION $0.00 12/30/2019 Invalid6308 Voted prior to resolicitation$27,896.16C137-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




U S METALS INC $6,496.201/28/2020 Accept6798 $6,496.20C551-0

UNION TANK CAR COMPANY $187,830.001/31/2020 Reject7107 $80,321.66C309-1712

UNITED STEELWORKERS $0.00 2/3/2020 Invalid7752 Creditor not a voting party

VAREC INC $0.00 12/26/2019 Invalid7294 Voted prior to resolicitation$43,458.00C455-1287

VAREC INC $0.00 12/26/2019 Invalid6684 Voted prior to resolicitation$43,458.00C455-0

VENEZIA HAULING INC $0.00 1/13/2020 Invalid6349 Voted prior to resolicitation$119,717.50C166-0

VEOLIA NORTH AMERICA REGENERATION SERVICES, LLC

$233,225.691/29/2020 Reject6339 $233,225.69C160-0

VEOLIA WATER NORTH AMERICA OPERATING SERVICES, LLC

$500,100.881/29/2020 Reject6340 $500,100.88C161-0

WATERVIEW ENTERPRISES $140,513.651/30/2020 Reject6500 $140,513.65C305-0

WESLEY L HENDRICKSON JR $39,860.991/28/2020 Reject6849 $39,860.99C215CR5-

WESTCHESTER FIRE INSURANCE COMPANY $0.00 2/3/2020 Invalid7378 Vote not indicated$3,784,728.98C513-1791

WESTCHESTER FIRE INSURANCE COMPANY $0.00 2/3/2020 Invalid7214 Vote not indicated$1.00C434-1785

WESTCHESTER FIRE INSURANCE COMPANY $0.00 2/3/2020 Invalid7377 Vote not indicated$3,784,728.98C513-1790

WESTCHESTER FIRE INSURANCE COMPANY $0.00 2/3/2020 Invalid6745 Vote not indicated Claimant wrote in $11,560,155.73 as ballot amount, tabulated at filed claim amount.

$3,784,728.98C513-0

WESTCHESTER FIRE INSURANCE COMPANYWESTCHESTER FIRE INSURANCE COMPANYWESTCHESTER FIRE INSURANCE COMPANY

$0.00 2/3/2020 Invalid6738 Vote not indicated$1.00C508-0





WESTERN OILFIELDS SUPPLY CO. D/B/A RAIN FOR RENT

$0.00 1/24/2020 Invalid6336 Voted prior to resolicitation$73,475.26C156-0




PHONE: (818) 906-8300FAX: (818) 783-2737



CreditorTabulated




WORLEY FIELD SERVICES INC. $108,061.261/30/2020 Reject6736 $108,061.26C507-0




PHONE: (818) 906-8300FAX: (818) 783-2737


Debtor: PES Holdings, LLC, et al.Case No. 19-11626Claims Ballot Detail ResultsClass 6 - Subordinated Remaining Volume Claim

1 0 0

100.00%

1

0.00%

$9,956,573.00

100.00%

$9,956,573.00 $0.00

0.00%


Vote %:

Amt:

Amt %:


1Total Received

CreditorTabulated




ICBC STANDARD BANK PLC $9,956,573.002/3/2020 Accept4861 Creditor wrote in $334,000,000 as ballot amount. Tabulated at scheduled claim amount

$9,956,573.00S6547-0

Page 1 of 1Monday, February 10, 2020



PHONE: (818) 906-8300FAX: (818) 783-2737


C-1

Exhibit C

Stein Declaration



) In re: ) Chapter 11 ) PES HOLDINGS, LLC, et al., 1 ) Case No. 19-11626 (KG) ) Debtors. ) (Jointly Administered) )

DECLARATION OF JEFFREY S. STEIN IN SUPPORT

OF CONFIRMATION OF THE SECOND AMENDED JOINT PLAN OF REORGANIZATION OF PES HOLDINGS, LLC AND ITS DEBTOR AFFILIATES

I, Jeffery S. Stein, hereby declare under penalty of perjury as follows:

1. I am the Chief Restructuring Officer of the above-captioned debtors and debtors

in possession (collectively, the “Debtors”). I am also a member of the board of directors

(the “Board”) of PES Energy Inc., the indirect parent of PES Holdings, LLC, and have held that

position since July 8, 2019.

2. I am a member of the Board’s restructuring committee (the “Restructuring

Committee”), which, in light of any potential conflicts of interests amongst other Board

members, vets and ensures all decisions are made in the Debtors’ best interests. The

Restructuring Committee includes no representatives from any of the Debtors’ lenders, and the

Restructuring Committee has made all material decisions relating to the Debtors’ restructuring

since I rejoined the Board. In addition, prior to and during the Debtors’ 2018 chapter 11 cases, I

was an independent board member of Debtor North Yard GP, LLC.




2

3. In my capacity as Chief Restructuring Officer, I am very familiar with the

above-captioned Debtors day-to-day operations, business affairs, and books and records, as well

as the Debtors’ restructuring efforts. I have also played an active role in the formulation of the

Second Amended Joint Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates [Docket

No. 827] (as modified, amended, or supplemented from time to time, the “Plan”).2 Accordingly,

I am familiar with the terms of the Plan as well as its negotiation and development.

4. In addition, I am the Managing Partner of Stein Advisors LLC, a financial

advisory firm that provides consulting services to institutional investors focused on distressed

debt and special situations equity investments. Prior to founding Stein Advisors LLC in 2010,

from January 2003 through December 2009, I served as Principal of Durham Asset Management

LLC, a global event-driven distressed debt and special situations equity asset management firm

that I co-founded. In that capacity, I was responsible for the identification, evaluation and

management of investments for various investment portfolios. From July 1997 to

December 2002, I served as Co-Director of Research at The Delaware Bay Company, Inc., a

boutique research and investment banking firm focused on the distressed debt and special

situations equity asset classes. From September 1991 to August 1995, I was an Associate and

Assistant Vice President at Shearson Lehman Brothers in the Capital Preservation and

Restructuring Group. I received a B.A. in Economics from Brandeis University and an M.B.A.

with Honors in Finance and Accounting from New York University. I have played various roles

on boards of other entities prior to my involvement with the Debtors. Among other things, I

have been a director and board member of Ambac Financial Group, Inc. (“Ambac”) since 2013.

2 Capitalized terms used but not defined herein have the meaning ascribed to such terms in the Plan, Purchase

Agreement, or the Confirmation Order, as applicable.


3

Ambac is a holding company that is heavily and significantly involved in the global insurance

industry.

5. I have over twenty-seven years of experience providing management services to

distressed companies, including the development and implementation of plans of reorganization.

This experience includes working with management teams and boards of directors of large

companies facing financial challenges similar to those of the Debtors. I am above eighteen years

of age and am competent to testify.

6. Except as otherwise indicated, all matters set forth in this declaration

(the “Declaration”) are based on: (a) my personal knowledge of the Debtors’ business

operations, my review of relevant information provided to me by other members of the Debtors’

management and the Debtors’ professional advisors, including Kirkland & Ellis LLP (“K&E”),

Alvarez & Marsal North America, LLC (“A&M”), PJT Partners LP (“PJT”); (b) my opinion

based upon my experience, knowledge, and information concerning the Debtors’ operations; and

(c) my review of relevant documents. Additionally, in my professional career, I have been part

of the formulation of many plans of reorganization substantially similar to the one contemplated

by the Debtors. I am generally familiar with similar plans approved in other chapter 11 cases, as

it is relevant to my professional career. If I were called upon to testify, I could and would testify

competently to the facts set forth herein.

I. Employee Matters.

A. The Consequences of the Girard Point Incident.

7. As a result of the historic, large-scale, catastrophic incident involving an

explosion at the alkylation unit at the Debtors’ Girard Point refining facility (the “Girard Point

Incident”), the refining facility was rendered inoperable and requires an extensive rebuild.

Consequently, the Debtors ceased certain operations at the complex and took immediate steps to


4

reduce their workforce and manage their payables to preserve liquidity while ensuring to health,

safety, and environmental obligations. Specifically, the Debtors retained only those employees

critical to maintain safety and run the refinery at greatly reduced rates to process remaining crude

inventory. The Debtors’ decision to reduce their workforce was a direct result of the

unforeseeable Girard Point Incident, which caused certain employees’ jobs to be obsolete, and

was driven by the necessity to preserve liquidity as a result thereof.

8. In my capacity as Chief Restructuring Officer, I reviewed and evaluated the

Debtors’ decision to reduce their workforce, and it is my business judgment that taking such

action was a reasonable exercise of the Debtors’ business judgment.

B. Prepetition of Retention Payments.

9. Additionally, shortly after the Girard Point Incident and prior to commencing

these chapter 11 cases, the Board approved certain one-time retention payments (the “Prepetition

Retention Awards”) to a select group of key management employees (the “Award Recipients”),

subject to claw back if the Award Recipient left the Company prior to a date certain. The Board

reviewed, evaluated, and ultimately approved the Prepetition Retention Awards after consulting

with the Debtors’ compensation consultants, Willis Towers Watson (“WTW”), regarding the

appropriateness of the amounts of the payments. In my capacity as Chief Restructuring Officer,

I also reviewed and evaluated the Prepetition Retention Awards, including any and all material

potential Claims related thereto, and, based on my knowledge of the Debtors’ business and

compensation practices and my experience in the energy industry generally, it is my business

judgment that the Prepetition Retention Awards were and are reasonable and appropriate. The

Debtors received substantial value from the Prepetition Retention Awards between the time that

they were granted in early July 2019 and the time that they fully vested in mid-December 2019.


5

10. At that critical juncture in time immediately following the explosion, the Debtors

were forced to pivot quickly to contingency preparations for these chapter 11 cases, while also

evaluating and negotiating with the Insurers regarding recovery under the Business Interruption

and Property Damage Insurance Policies, while still making critical operational decisions,

including highly-charged dispute resolution with the Debtors’ intermediation provider, ICBCS,

who had a substantial amount of property on the Debtors’ refinery site, and—perhaps most

importantly—ensuring the Debtors’ facilities were safe and engaging with a slew of

investigatory and regulatory bodies regarding the current and future status of the site.

The Debtors also faced a situation where, because of the explosion, the Award Recipients’

previous incentive pay opportunities had effectively been eliminated, and there were effectively

no incentives for the Award Recipients to stay and complete the arduous tasks that lay ahead.

I believe that it was absolutely imperative that the Award Recipients were properly incentivized

to remain with the Debtors in order to meet the difficult goals ahead and to maximize value for

stakeholders.

11. I also understand that the Award Recipients’ prior compensation opportunities

were no longer viable: the prior severance agreements would not be honored in a highly likely

chapter 11 proceeding, and payments under the prior incentive programs were contingent upon

achieving certain operational thresholds which, in light of the Girard Point Incident, were no

longer attainable. As a result of the explosion, the Award Recipients’ total direct compensation

opportunities were well below market levels, creating a real threat of senior management loss

absent the implementation of an additional compensation opportunity. But for payments like the

Prepetition Retention Awards, there was effectively no reason for these employees to stay and

lead the Debtors through the difficult terrain ahead.


6

12. The Board, in consultation with WTW carefully considered an updated

compensation structure that aligned with the Debtors’ restructuring realities and ensured

competitive total direct compensation opportunities. I understand that, in particular, the Board

compared the Debtors’ compensation opportunities to market levels, and evaluated the need to

retain employees included in the Prepetition Retention Awards in order to stabilize the Debtors’

business in anticipation of and during the pendency of these chapter 11 cases.

13. The loss of key employees would also have had—and would in the future have—

a significant impact on the Debtors’ insurance collection efforts. In my over twenty-seven years

of experience, I have been involved in numerous negotiations with insurance providers similar to

those currently being undertaken by the Debtors regarding recovery under the Business

Interruption and Property Damage Insurance Policies. The reality is that recovering under the

Business Interruption and Property Damage Insurance Policies will require tremendous amounts

of work from the management team. The Insurers know this, also, and will exploit any sign of

weakness, including mass turnover at the management level. It is my belief that, had the Award

Recipients not received the Prepetition Retention Awards, key members of the management team

would likely have terminated employment with the Debtors to pursue other opportunities, to the

severe detriment of the Debtors’ ability to successfully pursue any litigation on account of the

insurance proceeds recovery efforts.

14. Additionally, had the Award Recipients left the Debtors, the safing process and

continued environmental compliance of the refining facility would have been severely

jeopardized, to the detriment of the Debtors and their stakeholders. Specifically, certain of the

Award Recipients were instrumental to leading the necessary processes and discussions with the

applicable governmental and regulatory authorities, including with respect to ongoing


7

investigations into the Girard Point Incident. Absent their contributions to achieve these goals

and maintain these processes, any potential sale or restart of the refining complex likewise would

have been severely jeopardized. Indeed, the Award Recipients’ contributions to safing and

environmental compliance obligations were critical to even getting the Debtors’ assets in a

position to be marketable at all.

15. Further, as set forth in the DIP Order and the agreements attached thereto, the

Debtors engaged in months of extensive negotiations with their Intermediation Provider, ICBCS,

with respect to the extraction of ICBCS’s property on the site. These efforts culminated in a

global agreement that provided value to the estate during a time in which the Debtors were

otherwise generating significant revenue as a direct result of the Girard Point Incident.

The Award Recipients are, and continue to be, directly responsible for this complex process.

Specifically, the Award Recipients developed and maintain a detailed tank stripping and

consolidation plan, manage the gasoline blending plan, direct refinery operations and

maintenance teams with respect to the plans, routinely interface with ICBCS to ensure continued

alignment, and work with the Debtors’ and ICBCS’s commercial teams to maximize product

values as barrels are consolidated and sold. The Award Recipients also insure that compliance

requirements are documented as it affects the ICBCS extraction efforts. Had the Award

Recipients not been properly incentivized to stay with the Debtors, the Debtors would not have

had the requisite employee skills and knowledge to effectuate the extraction process,

endangering not only resolution with ICBCS, but also significant revenue to their estates.

16. Accordingly, based on my independent assessment as Chief Restructuring

Officer, it is my business judgment that the Prepetition Retention Awards substantially benefited

the Debtors and their stakeholders. The Prepetition Retention Awards were necessary for the


8

Debtors to provide competitive compensation to retain their high-quality workforce immediately

following the Girard Point Incident during a time of sever uncertainty, prior to and throughout

the pendency of these chapter 11 cases. Without the Prepetition Retention Awards, I am

convinced that the Debtors would have been exposed to significant risk, both of their business

and ability to recover any insurance proceeds, to the detriment of the Debtors, their estates, and

all stakeholders. Further, had the proposed Plan (discussed further herein) not contemplated a

release of the Debtors’ employees and directors, including the Award Recipients, I believe the

Award Recipients would have ceased provided services to the Debtors, to the severe detriment of

the Debtors and their stakeholders.

II. General Background and the Development of the Plan.

17. On October 10, 2019, the Debtors filed with the United States Bankruptcy Court

for the District of Delaware (the “Court”), among other pleadings, the Plan and Disclosure

Statement, along with the Disclosure Statement Motion,3 pursuant to which the Debtors sought a

hearing on approval of the Disclosure Statement and the related Solicitation and Voting

Procedures. These initial filings contemplated a “toggle” mechanism by which the Debtors

would explore both a sale (the “Sale Restructuring”) or plan to equitize certain claim holders (the

“Equitization Restructuring”) to determine which offered the greatest benefit to the estates and to

stakeholders. On December 11, 2019, the Court entered the Disclosure Statement Order which,

in relevant part, (a) established February 3, 2020, at 5:00 p.m. prevailing Eastern Time, as the

deadline to object to the Plan, (b) approved the Solicitation Procedures set forth in the Disclosure

Statement, and (c) approved the form and manner of the Confirmation Hearing Notice.

3 See Debtors’ Motion for Entry of an Order (I) Approving the Adequacy of Information in the Disclosure

Statement, (II) Approving the Solicitation and Notice Procedures, (III) Approving the Forms of Ballots and Notices In Connection Therewith, (IV) Scheduling Certain Dates with Respect Thereto, and (V) Granting Related Relief [Docket No. 464] (the “Disclosure Statement Motion”).


9

On December 13, 2019, Omni, on behalf of the Debtors, served the Confirmation Hearing Notice

in accordance with the terms of the Disclosure Statement Order. The Debtors also published the

Publication Notice (as defined in the Disclosure Statement Order) in USA Today (national

edition) and the New York Times (national edition) on December 16, 2019.

18. On January 17, 2020, in accordance with the Bidding Procedures Order, the

Debtors, with the assistance of their advisors, conducted an Auction between two parties that

submitted Qualified Bids (as defined in the Bidding Procedures Order). The Auction was, in my

opinion, successful in maximizing value for the estates. The Auction, which was attended by

representatives and/or principals of nearly every significant case constituents, culminated in a

blind round where both Qualified Bidders (as defined in the Bidding Procedures Order)

submitted their “best and final” offers for the Debtors to consider. HRP Philadelphia Holdings,

LLC (“HRP”) offered a purchase price of $240 million, secured by a $30 million deposit. This

price represented an increase of $86 million from their Qualified Bid prior to the commencement

of the Auction. Additionally, HRP’s history in remediating industrial sites for new uses, and the

tremendous amount of work that HRP has done to prepare to assume control of the site,

suggested both that its Bid was more likely to close and that its Bid would also have significant

additional economic benefit to the city of Philadelphia, creating substantial numbers of jobs and

economic activity never before present at the site.

19. The other Qualified Bidder offered an approximately 10 percent premium to the

HRP purchase price, but at the cost of only offering a $5 million deposit, more than 70 percent

lower than that of HRP and less than 2 percent of the total purchase price. The other Qualified

Bidders’ Bid also contained material contingencies, including 30 days of a financing contingency

that would effectively permit this bidder to walk away (only losing its $5 million deposit) at any


10

time during the 30 day period. The Debtors and their advisors made clear to the competing

Qualified Bidder that the size of the deposit was a critical factor of the decision-making, and that

the proposed $5 million deposit, which was not actually provided until weeks later (this bidder

has subsequently posted a total of a $15 million deposit in an effort to improve its bid after the

Auction was complete), was insufficient. Coupling the competing bidder’s abnormally small

deposit and a financing contingency that created real risk over whether the Bid would ever close.

This problem was particularly acute because HRP refused to permit its Bid to serve as a backup

Bid. Thus, if the Debtors had selected the competing Bid at Auction, and the competing bidder

decided to exercise its 30-day out, the Debtors would have had no backstop and HRP could have

returned to its $154 million opening Bid (or bid even lower), saving itself up to $90 million (or

more) while likely remaining this highest and best Bid.

20. On January 17, 2020, HRP and the Debtors entered into the Purchase Agreement,

whereby the Debtors will agree to sell, and HRP will agree to acquire, substantially all of the

Debtors’ Interests free and clear of all Liens (the “Acquired Interest”), as set forth in the Plan and

Purchase Agreement. The Purchase Agreement was filed on January 22, 2020 in the Plan

Supplement for the First Amended Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor

Affiliates [Docket No. 780, Ex. E].

21. I believe that the Plan and the Sale Transaction contemplated therein will provide

sufficient liquidity to fund the Debtors’ performance, pay all administrative and priority claims,

and reflect the most efficient and appropriate means of maximizing the value of the Debtors’

estate. Further, the compromises set forth in the Plan are critical to bringing closure to these and

other matters addressed in the Plan and to permitting the Debtors to maximize the value of the

estate for the benefit of all parties in interest and maximize recoveries for all Holders of Claims


11

and Interests. As a result, in light of the foregoing and as discussed herein, I believe that the

prompt confirmation and consummation of the Plan is in the best interest of the Debtors, their

creditors, and all other parties in interest.

The Plan

22. It is my understanding that the Plan: (a) complies with all applicable provisions

of the Bankruptcy Code as required by section 1129(a)(1) of the Bankruptcy Code, including

sections 1122 and 1123 of the Bankruptcy Code; (b) satisfies the mandatory requirements of

section 1123(a) of the Bankruptcy Code; and (c) is consistent with section 1123(b) of the

Bankruptcy Code.

I. The Plan Satisfies Each Requirement for Confirmation.

A. The Plan Complies with the Applicable Provisions of the Bankruptcy Code (Section 1129(a)(1)).

23. It is my understanding that the Plan complies with 11 U.S.C. § 1129(a)(1), which

requires the Plan to comply with 11 U.S.C. §§ 1122 and 1123 in all respects.


12

1. The Plan’s Classification of Claims and Interests Under Section 1122.

24. Article III.A of the Plan provides for the separate classification of Claims and

Interests as follows:

Class Claim/Interest Status Voting Rights

1 Other Secured Claims Unimpaired Presumed to Accept

2 Other Priority Claims Unimpaired Presumed to Accept

3 Term Loan Secured Claims Impaired Entitled to Vote

4 Intermediation Secured Claims Impaired Entitled to Vote

5 General Unsecured Claims Impaired Entitled to Vote

6 Subordinated Remaining Volume Claim Impaired Entitled to Vote

7 Intercompany Claims Impaired Not Entitled to Vote

8 Intercompany Interests Impaired/Unimpaired Not Entitled to Vote

9 Interests in PES Energy and PES Ultimate Interests

Impaired Deemed to Reject

10 Section 510(b) Claims Impaired Deemed to Reject

25. Each Class is composed of substantially similar Claims or Interests, and each

instance of separate classifications of similar Claims and Interests was based on valid business,

factual, and legal reasons. No classification has been made for purposes of gerrymandering

votes.

26. First, dissimilar Claims and Interests are not classified together under the Plan.

Generally speaking, the classification scheme follows the Debtors’ capital structure. For

example, debt and equity are classified separately and secured debt is classified separately from

unsecured debt. It is my understanding that other aspects of the classification scheme reasonably

recognize the different legal or factual nature of Claims or Interests.

27. Specifically, the Debtors’ prepetition secured Claims are divided into three

separate classes according to the relative priority of each class of creditors in the collateral

securing such Claims. Class 3 contains the Secured Term Loan Claims, Class 4 contains the

Secured Intermediation Claims, and Class 1 contains the remainder of the Debtors’ Secured


13

Claims. These secured claims are separated from each other, as well as from the Holders of DIP

Claims (unclassified), because of the different circumstances of each class. Claims in Class 2 are

separately classified to reflect the priority of such Claims under section 507 of the Bankruptcy

Code. The Debtors’ prepetition general unsecured debt is classified together in Class 5 based on

their identical treatment under the Plan. Class 6 consists of the Subordinated Remaining Volume

Claims which stem from the Hydrocarbon Extraction & Evacuation Plan as more fully described

in the DIP Order. Class 7 Intercompany Claims include those claims that do not involve third-

party creditors. Although Intercompany Interests may be reinstated under the Plan and,

therefore, become Unimpaired, such treatment is for the purposes of preserving the Debtors’

corporate structure and will have no economic substance. Interests in PES Energy and PES

Ultimate Interests (Class 9) are separate from Intercompany Interests because the Debtors’

ownership structure is dependent upon maintaining the Intercompany Interests (Class 8), which

will be preserved under the Plan. Finally, Class 10 Section 510(b) Claims are separately

classified to reflect the treatment of such Claims under section 510(b) of the Bankruptcy Code.

28. It is my understanding that valid factual and legal reasons exist for separately

classifying the various Classes of Claims and Interests created under the Plan. In each instance,

the Plan classifies Claims based upon their different rights and attributes. Additionally, each of

the Claims or Interests in each particular Class is substantially similar to the other Claims or

Interests in such Class. Accordingly, I believe the Plan fully complies with and satisfies

section 1122 of the Bankruptcy Code.


14

2. The Plan Satisfies the Mandatory Requirements of Section 1123(a) of the Bankruptcy Code.

29. I have been advised and believe that the Plan satisfies the six applicable4

requirements set forth in section 1123(a) of the Bankruptcy Code because:

• Article III of the Plan designates classes of claims and interests;

• Article III of the Plan identifies unimpaired classes of claims and interests;

• Article III of the Plan specifies treatment of impaired classes of claims and interests;

• Article III the Plan provides the same treatment for each claim or interest of a particular class, unless the holder of a particular claim agrees to a less favorable treatment of such particular claim or interest;

• Article IV of the Plan provides adequate means for its implementation, including by providing for consummation of the Sale Transactions, consideration regarding Plan distributions, dissolution of the existing board of directors, the Settlement and discharge of claims, the establishment of a Liquidating Trust, and mechanics for the vesting of the Purchased Interest; and

• Article IV of the Plan provides for the dissolution and dismissal of the existing board of directors and managers. Article VII provides for the dissolution of the Non-Acquired Reorganized Debtors and the formation of a Liquidating Trust. Selection of the Liquidating Trust Board by Nominating Parties for the Required Term Loan Lenders, the Intermediation Provider, and the Creditors’ Committee, pursuant to the Liquidating Trust Agreements is consistent with the interests of Holders of Claims and with public policy. To the extent the standard under section 1123(a)(7) applies to the Acquired Reorganized Debtors, the manner of selecting officers, directors, and/or managers of such Acquired Reorganized Debtors by the Plan Sponsor also is consistent with the interests of Holders of Claims and Interests and public policy.

B. The Discretionary Contents of the Plan Are Appropriate and Should Be Approved.

30. It is my understanding that the Plan includes various discretionary provisions that

are consistent with section 1123(b) of the Bankruptcy Code. For example, the Plan impairs

certain Classes of Claims and Interests and leaves others Unimpaired, proposes treatment for 4 It is my understanding that, because the Non-Acquired Reorganized Debtors are selling substantially all of their

interest and winding down the remaining assets, the confirmation requirements set forth in section 1123(a)(6) of the Bankruptcy Code are inapplicable the Non-Acquired Reorganized Debtors. In addition, section 1123(a)(8) of the Bankruptcy Code is only applicable to individual debtors.


15

Executory Contracts and Unexpired Leases, provides a structure for Claim allowance and

disallowance and establishes a distribution process for the satisfaction of Allowed Claims

entitled to distributions under the Plan. In addition, the Plan contains provisions implementing

certain releases and exculpations, discharging claims and interests and permanently enjoining

certain causes of action. The Plan also provides for the sale of the Membership Interests, which

includes all assets of the Acquired Entities (excluding Excluded Assets), to the Purchaser

pursuant to the Purchase Agreement.

31. I believe each of these provisions are appropriate because, among other things,

they (a) are the product of arm’s-length negotiations, (b) have been critical to obtaining the

support of the various constituencies for the Plan, (c) are given for valuable consideration, (d) are

fair and equitable and in the best interests of the Debtors, these Estates, and the Chapter 11

Cases, and (e) are consistent with the relevant provisions of the Bankruptcy Code and Third

Circuit law. Such provisions are discussed in turn below, but, in summary, satisfy the

requirements of section 1123(b).

1. The Plan’s Release, Exculpation, and Injunction Provisions Satisfy Section 1123(b) of the Bankruptcy Code.

32. To effectuate the Settlement, the Plan includes mutual, consensual, and customary

releases of Claims held by the Debtors and parties in interest. This global Settlement is critical

to bringing closure to the Debtors, the Acquired Reorganized Debtors, and all parties in interest

and to maximize recoveries for all stakeholders. I believe these discretionary provisions are

proper because, among other things, they are the product of extensive good-faith, arm’s-length

negotiations, are supported by the Debtors and their key constituents, and, as I have been

advised, are consistent with applicable precedent.


16

a. The Debtor Releases in the Plan Are Appropriate.

33. I believe that the Debtor Releases are appropriate, justified, in the best interests of

the stakeholders, and an integral part of the Plan. Article X of the Plan provides for releases by

the Debtors, the Liquidating Trust, and their Estates, and the Acquired Entities, as of the

Effective Date, of, among other things, certain Claims, rights, and causes of action that the

Debtors, the Liquidating Trust Administrator, and their Estates, and the Acquired Entities may

have against the Released Parties (the “Debtor Release”).5

34. I believe that the the Debtor Releases meet the applicable standard because they

are fair, reasonable, and in the best interests of the Debtors’ Estates. First, an identity of interest

exists between the Debtors and the parties to be released. Each of the Released Parties, as a

stakeholder and critical participant in the Plan process, shares a common goal with the Debtors in

seeing the Plan succeed and would have been unlikely to participate in the negotiations and

compromises that led to the ultimate formation of the Plan and Purchase and Sale Agreement

without the Debtor Releases. Like the Debtors, these parties seek to confirm the Plan and

implement the Sale Transaction. Moreover, with respect to certain of the releases—e.g., those

releasing the Debtors’ current and former directors, officers, affiliates, and principals—there is a

clear identity of interest supporting the release because the Debtors will assume certain

indemnification obligations under the Plan that will be honored by the Liquidating Trust. 5 “Released Parties” means, collectively, and in each case in its capacity as such: (a) the DIP Lenders; (b) the

DIP Agent; (c) the Term Loan Lenders; (d) the Term Loan Administrative Agent; (e) any Purchaser; (f) the Acquired Entities; (g) any Holder of a Claim or Interest that does not opt out of the releases in the Plan; (h) with respect to each of the Debtors, and each of the foregoing entities in clauses (a) through (g), each such Entity’s current and former predecessors, successors, Affiliates (regardless of whether such interests are held directly or indirectly), subsidiaries, direct and indirect equityholders, funds, portfolio companies, and management companies; and (i) with respect to each of the foregoing Entities in clauses (a) through (g), each of their respective current and former directors, officers, members, employees, partners, managers, independent contractors, agents, representatives, principals, professionals, consultants, financial advisors, attorneys, accountants, trustees investment bankers, and other professional advisors (with respect to clause (i), each solely in their capacity as such); provided, however, that any Holder of a Claim or Interest that opts out of the releases in the Plan shall not be a “Released Party.” See Plan Art. I.A.122.


17

Additionally, the Debtors will need the services of the Debtors’ current management team to

close the sale and prosecute the Debtors’ Insurance Claims to maximize value—which simply

would not occur if the Debtors decided to initiate lawsuits against these individuals. Thus, a

lawsuit commenced by the Debtors (or derivatively on behalf of the Debtors) against certain

individuals would effectively be a lawsuit against the Liquidating Trust itself.

35. Second, the substantial contributions are clear. The Released Parties played an

integral role in the formation of the Plan and have expended significant time and resources

analyzing and negotiating the issues present in these chapter 11 cases to reach a

value-maximizing transaction and avoid a liquidation. Moreover, the Released Parties have

expended time and resources analyzing and negotiating the issues presented by the Debtors’

capital structure and the material barriers to the resolution thereof. Here, the value contributed

by the Released Parties is certainly substantial. Specifically, in addition to providing significant

non-monetary value, the Term Loan Lenders provided a $100 million DIP Facility but agreed to

accept less than payment in full on their prepetition Term Loan Secured Claim and participate in

the transaction in order to ensure the success of the Plan. Likewise, the Intermediation Provider

agreed to the Debtors’ use of its Cash Collateral and on a consensual path forward regarding the

extraction of its collateral, thereby providing the Debtors with the required liquidity and support

to successfully emerge from these Chapter 11 Cases. Without the contributions of each of these

parties, the Plan and the Sale Restructuring contemplated therein would not be possible.

36. Moreover, as described briefly above, commencing a lawsuit against the

management team in an attempt to recover the Prepetition Incentive Awards or any other monies

paid to them on account of their contracts with the Company would be wasteful, fruitless, and

massively value-destructive. Each member of the management team provided substantial value


18

to the Debtors that exceeded the compensation that they were paid by leaps and bounds. And the

Debtors will continue to need the services of each of these people to close the sale to HRP (or

indeed to close any sale to any buyer) and to pursue the insurance coverage to which the Debtors

believe they are entitled. Accordingly, any suit against any member of the Debtors’ management

team would be particularly ill-advised.

37. Third, the Debtor Releases are essential to the Debtors’ reorganization because it

constitutes an integral term of the Plan. Indeed, absent the Debtor Release, it is highly unlikely

the Released Parties would have agreed to support the Plan and the restructuring transaction

contemplated therein. As described above, each of the Released Parties contributed substantial

value to these chapter 11 cases, and did so with the understanding that they would receive

releases from the Debtors. In the absence of these parties’ support, the Debtors would not be in a

position to confirm the Plan and emerge from chapter 11. The Debtor Release, therefore, is

essential to the Debtors’ reorganization.

38. Fourth, as evidenced by the Voting Report and noted herein, while not all

creditors voted in favor, there is extensive support for the Plan. Creditors in Class 3 representing

100 percent by amount of voted claims and 100 percent by number in the aggregate voted to

accept the Plan, creditors in Class 4 representing approximately 100 percent by amount of voted

claims and 100 percent by number in the aggregate voted to accept the Plan, creditors in Class 5

representing approximately 98 percent by amount of voted claims and approximately 76 percent

by number in the aggregate voted to reject the Plan, and creditors in Class 6 representing 100

percent by amount of voted claims and 100 percent by number in the aggregate voted to accept

the Plan. In the aggregate, this amounts to creditors representing approximately 86.2 percent by

amount of voted claims and 75.6 percent by number in the aggregate voting to accept the Plan.


19

Given the critical nature of the Debtor Release, this degree of consensus evidences the Debtors’

stakeholders’ support for the Debtor Release and the Plan.

39. Fifth, the Debtors are not giving up anything meaningful in exchange for the

releases. There is no indication that any Claims being released would have merit or would have

a net positive value for the Debtors or for creditors if they were pursued.

40. In particular, the Debtors investigated any and all potential claims or causes of

action against KEIP participants before granting a release. In conjunction with our advisors, the

Debtors investigated claims against insiders including, among other things, fraudulent transfer

and the equivalent value received for retention payments. Based on this evaluation, the company

could find no viable claim or cause of action against KEIP participants and no claim that could

represent a material benefit to the estate if perused. On the contrary, The KEIP participants have

provided, and continue to provide, valuable consideration to the Debtors, as they commit

substantial time and effort to the Debtors’ Estates and to driving restructuring efforts forward

under uniquely trying circumstances. Accordingly, the company concluded that there were no

material costs associated with granting the releases but that KEIP participants provided

substantial benefit to the Debtors’ Estates in return.

41. I believe the Debtors have satisfied the business judgment standard in granting the

Debtor Releases under the Plan. The Debtor Releases easily meet the applicable standard

because it is fair, reasonable, and in the best interests of the Debtors’ Estates.

b. The Third-Party Releases are Wholly Consensual

42. In addition to the Debtor Release, the Plan provides for releases by certain

Holders of Claims and Interests. Specifically, Article X of the Plan provides that each Releasing

Party shall release any and all Claims and Causes of Action such parties could assert against the

Debtors, and the Released Parties (the “Third-Party Release” and together with the Debtor


20

Release, the “Releases”). The Releasing Parties include, among others, the DIP Lenders, the

DIP Agent, the Term Loan Lenders, the Term Loan Administrative Agent, the Purchaser, and all

Holders of Claims or Interests that do not affirmatively opt out of the Releases. I believe the

Third-Party Releases are consensual and integral to the Plan, and I have been advised that they

are consistent with established Third Circuit law.

43. I believe the Third-Party Releases are consensual. All parties in interest had

ample opportunity to evaluate and opt out of the Third-Party Releases by objecting to the

Third Party Release. Importantly the ballots distributed to Holder of Claim entitled to vote on

the Plan quoted the entirety of the Third-Party Release, clearly informing holders of Claims

entitled to vote of the steps they should take if they disagreed with the scope of the release.

Thus, affected parties received a notice of the Third-Party Release, including the option to opt

out of the Third-Party Release. As such, I believe the Third-Party Releases are consensual

releases of all creditors and interest holders who did not object.

44. Moreover, I believe the Third-Party Releases are fair and necessary to the

reorganization, and fair consideration is given in exchange for the release.

45. The circumstances of these Chapter 11 Cases warrant the Third-Party Releases

because they are critical to the success of the Plan and the Debtors’ restructuring. Without the

efforts of the Released Parties both in providing bridge financing, providing the DIP Financing

and consensual use of Cash Collateral, and actively participating in the transaction and Plan

negotiations, the Debtors would not be seeking a Sale Restructuring at this juncture. In addition,

many of the Released Parties have been instrumental in supporting these Chapter 11 Cases and

facilitating a smooth administration thereof. Finally, throughout the entire case and all these

negotiations, the Debtors’ directors and officers steadfastly maintained their duties to maximize


21

value for the benefit of all stakeholders, investing countless hours both pre- and postpetition,

including by expending substantial time to cooperate with the Intermediation Provider to develop

and implement processes that facilitate the Intermediation Provider’s preservation and extraction

of its collateral and to pursue the Debtors’ insurance recovery process.

46. Moreover, the third parties bound by the Releases have received sufficient

consideration in exchange for the release of their Claims against the Released Parties to justify

the Third-Party Release. The DIP Lenders, the DIP Agent, the Term Loan Lenders, the Term

Loan Administrative Agent, the Purchaser, Holders of General Unsecured Claims, and other

Released Parties have made massive concessions and commitments that have allowed the

Debtors to maximize the value of their estates and enabled the Debtors to effectuate the Sale

Transactions. The Released Parties have been active and important participants in the

development of the Plan and have expended significant time and resources analyzing and

negotiating the issues presented by the Debtors’ capital structure and the material barriers to the

resolution thereof. Specifically, as discussed above, in addition to providing significant

non-monetary value, the Term Loan Lenders provided a $100 million DIP Facility but agreed to

accept less than payment in full on their prepetition Term Loan Secured Claim and participate in

the transaction in order to ensure the success of the Plan. Likewise, the Intermediation Provider

agreed to the Debtors’ use of its Cash Collateral and on a consensual path forward regarding the

extraction of its collateral, thereby providing the Debtors with the required liquidity and support

to successfully emerge from these Chapter 11 Cases. Without the contributions of each of these

parties, the Plan and the transaction contemplated therein would not be possible. In addition to

significant concessions under the Plan, the Released Parties made the contributions as discussed

above, each in exchange for, among other things, the Third-Party Release.


22

47. Accordingly, for all of the above reasons, I believe that the Debtors have a

good-faith basis for including the Releases in the Plan. I further believe that the Third-Party

Releases are reasonable and appropriate in light of the unique circumstances of the Chapter 11

Cases, satisfies all applicable requirements of the Bankruptcy Code.

C. The Exculpation Provision Is Appropriate.

48. Article X of the Plan provides for the exculpation of the Exculpated Parties.

I believe the exculpation is fair and appropriate under the facts and circumstances of these

chapter 11 cases. The Plan’s exculpation provision is the product of arm’s-length negotiations,

was critical to obtaining the support of various constituencies for the Plan, and, as part of the

Plan, has received support from the Debtors’ major stakeholders. The exculpation provision was

important to the development of a feasible, confirmable Plan, and the Exculpated Parties

participated in these chapter 11 cases in reliance upon the protections afforded to those

constituents by the exculpation.

49. The Exculpated Parties have participated in good faith in formulating and

negotiating the Plan as it relates to the Debtors, and they should be entitled to protection from

exposure to any lawsuits filed by disgruntled creditors or other unsatisfied parties. Here, the

Debtors and their officers, directors, and professionals, actively negotiated with Holders of

Claims and Interests across the Debtors’ capital structure in connection with the Plan and these

Chapter 11 Cases. Such negotiations were extensive and the resulting agreements were

implemented in good faith with a high degree of transparency, and as a result, the Plan enjoys

support from the majority of Holders of Claims that voted on the Plan. The Exculpated Parties

played a critical role in negotiating, formulating, and implementing the Disclosure Statement, the

Plan, the Purchase and Sale Agreement, and related documents in furtherance of the Sale

Restructuring contemplated by the Plan. Furthermore, the exculpation provision is limited to


23

acts during these Chapter 11 Cases and does not extend beyond such time period. Accordingly,

the Court’s findings of good faith vis-à-vis the Debtors’ Chapter 11 Cases should also extend to

the Exculpated Parties.

50. Additionally, the promise of exculpation played a significant role in facilitating

Plan negotiations. All of the Exculpated Parties played a key role in developing the Plan that

paved the way for a successful reorganization, and likely would not have been so inclined to

participate in the plan process without the promise of exculpation. It is my understanding that

Exculpation for parties participating in the plan process is appropriate where plan negotiations

could not have occurred without protection from liability.

D. The Plan Complies with Section 1123(d) of the Bankruptcy Code.

51. Article V of the Plan provides for the satisfaction of all monetary defaults under

each Executory Contract and Unexpired Lease assumed pursuant to the Plan. In accordance with

the proposed Confirmation Order and section 365 of the Bankruptcy Code, the Purchaser will

satisfy monetary defaults under each Executory Contract and Unexpired Lease to be assumed

under the Plan on the Effective Date or on such other terms as the parties to such Executory

Contracts or Unexpired Leases otherwise agree.

52. Accordingly, it is my understanding that the Plan complies with section 1123(d)

of the Bankruptcy Code.

E. The Debtors Have Complied with the Applicable Provisions of the Bankruptcy Code (Section 1129(a)(2)).

53. It is my understanding that, the Debtors have satisfied section 1129(a)(2) of the

Bankruptcy Code, which requires the plan proponent to comply with the applicable provisions of

the Bankruptcy Code. As set forth below, I have been advised that the Debtors have complied

with these provisions, including sections 1125 and 1126 of the Bankruptcy Code, as well as


24

Bankruptcy Rules 3017 and 3018, by distributing the Disclosure Statement and soliciting

acceptances of the Plan through their Notice and Claims Agent in accordance with the Disclosure

Statement Order.

1. The Debtors Have Complied with the Disclosure and Solicitation Requirements of Section 1125.

54. Before the Debtors solicited votes on the Plan, the Court approved the Disclosure

Statement in accordance with section 1125(a)(1). The Court also approved the contents of the

Solicitation Packages provided to holders of Claims entitled to vote on the Plan, the non-voting

materials provided to parties not entitled to vote on the Plan, and the relevant dates for voting

and objecting to the Plan. As stated in the Voting Report, the Debtors, through the Notice and

Claims Agent, complied with the content and delivery requirements of the Disclosure Statement

Order, thereby satisfying sections 1125(a) and (b) of the Bankruptcy Code. It is my

understanding that the Debtors also satisfied section 1125(c) of the Bankruptcy Code, which

provides that the same disclosure statement must be transmitted to each holder of a claim or

interest in a particular Class. Here, the Debtors caused the Disclosure Statement to be

transmitted to all parties entitled to vote on the plan and parties deemed to reject the plan.

55. Based on the foregoing, it is my understanding that the Debtors have complied in

all respects with the solicitation requirements of section 1125 of the Bankruptcy Code and the

Disclosure Statement Order.

2. The Debtors Have Satisfied the Plan Acceptance Requirements of Section 1126.

56. The Debtors solicited votes only from the Voting Classes, holders of Allowed

Claims and Interests in Classes 3, 4, 5, and 6, because each of these Classes is Impaired and

entitled to receive a distribution under the Plan.


25

57. The Voting Report, summarized above, reflects the results of the voting process in

accordance with section 1126 of the Bankruptcy Code. As set forth in the Voting Report,

majority of Holders of Claims entitled to vote voted in favor of the Plan. Based on the

foregoing, I believe that the Debtors have satisfied the requirements of section 1129(a)(2).

F. The Plan Has Been Proposed in Good Faith and Not by Any Means Forbidden by Law (Section 1129(a)(3)).

58. The Plan was proposed with honesty, good intentions, and a desire to maximize

the value of the Debtors’ business. Throughout these cases, the Debtors, their Restructuring

Committee, and their senior management team have upheld their fiduciary duties to stakeholders

and protected the interests of all constituents with an even hand. The Plan follows an extensive

marketing process to solicit interest in the Debtors (through acquisition or plan sponsorship) and

extensive arm’s-length negotiations among the Debtors, the DIP Lenders, the Intermediation

Provider, the Purchaser, the Creditor’s Committee, and other parties interested in ensuring that

stakeholders realize the highest possible recoveries under the circumstances. Indeed, the

Debtors’ management team and advisors expended countless hours to conduct comprehensive

and complex marketing and insurance recovery processes and evaluating and negotiating the

Restructuring Transaction to provide the most value for their stakeholders. Importantly, the Plan

is supported by key economic stakeholders including, among others, the DIP Lenders, and the

Term Loan Lenders.

59. The Plan and Settlement embody a good-faith resolution to Claims, Interests,

Causes of Action, and controversies related to the Debtors and the restructuring, many of which

are highly uncertain and the pursuit thereof could cause extensive delay, cost, and uncertainty in

these Chapter 11 Cases. The Settlement is designed to achieve a beneficial and efficient

resolution of the Chapter 11 Cases for all parties in interest. The Debtors thoroughly analyzed


26

those Claims, Interests, Causes of Action, and controversies and found that the Settlement will

maximize the value of the estates and maximize recoveries to Holders of Claims and Interests

and is essential to the successful implementation of the Plan. Each component of the Settlement

is an integral, integrated, and inextricably linked part of the Settlement.

60. Accordingly, I have been advised that the Plan fully complies with and satisfies

all of the requirements of section 1129(a)(3) of the Bankruptcy Code.

G. The Plan Provides for Court Approval of Certain Administrative Payments (Section 1129(a)(4)).

61. It is my understanding that all payments made or to be made by the Debtors for

services or for costs or expenses in connection with these chapter 11 cases prior to the Effective

Date, including all budgeted Professional Fee Claims, have been approved by, or are subject to

approval of, the Court. Article II.B of the Plan provides that all final requests for payment of

Professional Fee Claims shall be filed no later than 45 days after the Effective Date for

determination by the Court, after notice and a hearing, in accordance with the procedures

established by the Court. Therefore, it is my understanding that the Plan complies with the

requirements of section 1129(a)(4) of the Bankruptcy Code.

H. Post-Emergence Board Composition Has Been Appropriately Disclosed and Is Consistent with Public Policy (Section 1129(a)(5)).

62. Article IV of the Plan provides for a board of trustees to supervise the Liquidating

Trust. The Plan provides that the identity of the trustees will be disclosed prior to the

confirmation hearing after being selected through the process set forth in Article IV. The Board

of Trustees will act for the Liquidating Trust in the same fiduciary capacity as applicable to a

board of managers, directors, and officers and also provides that on the Effective Date, the

authority, power, and incumbency of the persons acting as managers and officers of the Debtors

shall be deemed to have resigned, solely in their capacities as such.


27

63. As described above, the Plan provides that a Liquidating Trust Board will be

appointed as the sole managers of the Liquidating Trust. No insider will be employed or retained

by the Liquidating Trust. Accordingly, I believe the above facts and circumstances comply with

all of the elements of section 1129(a)(5) of the Bankruptcy Code.

I. The Plan Does Not Require Governmental Approval of Rate Changes (Section 1129(a)(6)).

64. It is my understanding that there is no governmental regulatory commission that

has jurisdiction over the Debtors’ rates.

J. The Plan Is in the Best Interests of Creditors and Interest Holders (Section 1129(a)(7)).

65. A&M, along with the Debtors, prepared the liquidation analysis that was filed as

Exhibit J to the Plan Supplement (the “Liquidation Analysis”) to determine the respective value

of distributions (if any) that holders of Claims and Interests would receive on account of such

Claims and Interests if the Debtors were to be liquidated under chapter 7 of the Bankruptcy

Code. Based on the unaudited Liquidation Analysis, and the assumptions included therein, the

value of any distributions if the chapter 11 cases were converted to cases under chapter 7 of the

Bankruptcy Code would be no greater than the value of distributions under the Plan. As a result,

Holders of Claims and Interests in all Impaired Classes will recover at least as much as a result

of Confirmation of the Plan as they would recover through a hypothetical chapter 7 liquidation.

K. The Plan Can Be Confirmed Notwithstanding the Requirements of Section 1129(a)(8).

66. As will be discussed in greater detail below, I have been advised that although the

Classes of Claims entitled to vote on the Plan voted to accept the Plan, certain Classes of Claims

and Interests are deemed to reject the Plan under section 1126(g) of the Bankruptcy Code

because holders of Claims and Interests in such Classes are not entitled to receive or retain any


28

property under the Plan. Notwithstanding this deemed rejection, it is my understanding that the

Plan is confirmable because it satisfies section 1129(b) of the Bankruptcy Code.

L. The Plan Complies with Statutorily Mandated Treatment of Administrative and Priority Tax Claims (Section 1129(a)(9)).

67. Article II of the Plan provides that each holder of an Allowed Administrative

Claim will receive Cash equal to the amount of the unpaid portion of such Allowed

Administrative Claim on the Effective Date. Additionally, no holders of the types of Claims

specified by 1129(a)(9)(B) are Impaired under the Plan and such Claims have been paid in the

ordinary course. Finally, Allowed Priority Tax Claims will be paid in accordance with the terms

set forth in section 1129(a)(9)(C) of the Bankruptcy Code.

68. It is my understanding that, because the Plan provides for specified Cash

payments to Holders of Claims entitled to priority under section 507(a), it is in compliance with


M. At Least One Impaired Class of Claims Has Accepted the Plan, Excluding the Acceptance of Insiders (Section 1129(a)(10)).

69. I have been informed that section 1129(a)(10) of the Bankruptcy Code is an

alternative to the requirement set forth in section 1129(a)(8) of the Bankruptcy Code that each

class of claims or interests must either accept a plan or be unimpaired under the plan. It provides

that if a class of claims is impaired under a plan, at least one impaired class of claims must

accept the plan, excluding acceptance by any insider. Therefore, it is my belief that the Plan

fully complies with and satisfies all of the requirements of section 1129(a)(10) of the Bankruptcy

Code.

N. The Plan Is Feasible (Section 1129(a)(11)).

70. I believe the Plan satisfies the feasibility requirements of section 1129(a)(11) of

the Bankruptcy Code by providing for a clear path to emergence from these Chapter 11 Cases


29

and the ability of the Debtors to satisfy all of their obligations under the Plan. The implied value

of the transaction contemplated by the Plan includes:

• $240 million of cash from the Purchaser;

• the retention by the Purchaser of all liabilities of the Acquired Entities, except for those expressly retained by the Estates; and

• the retention by the Estates of certain Causes of Action that constitute Excluded Assets;

• the receipt of up to $1.25 billion in insurance proceeds under the Business Interruption and Property Damage Policies, including $65 million of insurance proceeds advance already received by the Debtors.

71. The Debtors project that the value created by such a transaction will be sufficient

to satisfy all priority and administrative Claims under the Plan, including all DIP Claims,

Professional Fee Claims, and other administrative and priority claims. In addition, the Debtors

anticipate and project that the Sale Proceeds, insurance proceeds, and Retained Causes of Action

will provide sufficient cash to honor all requirements and obligations under the Plan and

Purchase Agreement, including resolving disputed Claims.

72. The Debtors have therefore established that the Liquidating Trust will have

sufficient funds to satisfy all requirements and obligations under the Plan. Accordingly, I believe

that confirmation and consummation of the Plan is feasible.

O. The Plan Provides for Payment of All Fees Under 28 U.S.C. § 1930 (Section 1129(a)(12)).

73. It is my understanding that Article II of the Plan provides that the Debtors shall

pay all fees and applicable interest under section 1930(a) of the Judicial Code and 31 U.S.C.

§ 3717, as applicable, as determined by the Bankruptcy Court, for each quarter (including any

fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever


30

occurs first. Accordingly, it is my understanding that the Plan fully complies with and satisfies

the requirements of section 1129(a)(12) of the Bankruptcy Code.

P. Non-Applicability of Certain Sections (11 U.S.C. §§ 1129(a)(13), (14), (15), and (16)).

74. It is my understanding that Sections 1129(a)(13) through 1129(a)(16) do not

apply to the Plan because the Debtors have no obligation to pay retiree benefits, the Debtors are

not subject to domestic support obligations, are not “individuals,” and are moneyed, business, or

commercial corporations.

Q. The Plan Complies with the Other Provisions of Section 1129 of the Bankruptcy Code (Section 1129(c)–(e)).

75. It is my understanding that the Plan satisfies the remaining provisions of section

1129 of the Bankruptcy Code. Section 1129(c), prohibiting confirmation of multiple plans, is

not implicated because there is only one proposed plan of reorganization. Moreover, the Plan

has not been filed for the purpose of avoidance of taxes or the application of section 5 of the

Securities Act. In addition, no party that is a governmental unit, or any other entity, has

requested that the Bankruptcy Court decline to confirm the Plan on the grounds that the principal

purpose of the Plan is the avoidance of taxes or the avoidance of the application of section 5 of

the Securities Act. Rather, I believe the Debtors filed the Plan to accomplish their objective of

efficiently and responsibly maximizing the value of their business and providing recoveries to

their stakeholders. Accordingly, I believe that the Debtors have satisfied the requirements of

section 1129(d) of the Bankruptcy Code.

76. Lastly, it is my understanding that section 1129(e) of the Bankruptcy Code is

inapplicable because none of the Debtors’ chapter 11 cases is a “small business case.” Thus, the

Plan satisfies the Bankruptcy Code’s mandatory confirmation requirements.


31

R. The Plan Satisfies the Requirements of Section 1129(b) of the Bankruptcy Code.

77. Holders of Impaired Class of Claims entitled to vote on the PlanClass 3, Class

4, and Class 6 voted in favor of the Plan. Holders of Claims in Class 5 voted to reject the

Plan, and Holders of Claims in the Deemed Rejecting Class are deemed to have rejected the

Plan. It is my understanding that nonetheless, as set forth below, the Plan is “fair and equitable”,

and therefore satisfies the requirements under section 1129(b) of the Bankruptcy Code.

1. The Plan Does Not Unfairly Discriminate With Respect to the Classes That Were Deemed to Have Rejected the Plan.

78. I believe the Plan is “fair and equitable” to holders of Claims and Interests in

those Classes that were deemed to reject the Plan because the Plan satisfies the absolute priority

rule with respect to each of these non-accepting Impaired Classes. Specifically, no holder of any

junior claim or interest will receive or retain any property under the Plan on account of such

junior claim or interest unless Holders of General Unsecured Claims are paid in full.

Accordingly, I believe the Plan does not discriminate unfairly with respect to the holders of

Claims and Interests in Classes that are deemed to reject the Plan.

2. The Plan Does Not Unfairly Discriminate with Respect to Impaired Classes.

79. The Plan’s treatment of those Classes that are deemed to reject the Plan is proper

and not “unfair” because no similar class of interests exists and all holders of Claims or Interests

in such Classes will receive identical treatment. Accordingly, the Plan does not discriminate

unfairly with respect to Classes of Claims and Interests that are deemed to reject the Plan.

80. It is my understanding that the Plan fully complies with and satisfies the “fair and

equitable” requirements of Section 1129(b) of the Bankruptcy Code.


32

II. The Waiver of a Stay of the Confirmation Order and the Proposed Modifications to the Plan Are Appropriate.

A. Cause Exists to Waive a Stay of the Confirmation Order.

81. I have been advised that cause exists for waiving the stay of the entry of the

Confirmation Order such that the Confirmation Order will be effective immediately upon its

entry.1 As noted above, the Debtors have undertaken great efforts to facilitate their restructuring

to exit chapter 11 as soon as practicable. Each day the Debtors remain in chapter 11 they incur

significant administrative and professional costs.

B. Modifications to the Plan.

82. It is my understanding that the Debtors’ modifications to the Plan are intended to

implement the terms of the Sale Restructuring and do not adversely impact creditors who have

not consented to such modified treatment. The Debtors previously revised the Plan with certain

technical modifications designed to conform to the Debtors’ election to pursue a Sale

Restructuring with HRP as Purchaser, and then later made certain modifications to resolve

formal and informal comments to the Plan by parties in interest (collectively,

the “Modifications”). The Debtors filed a second amended Plan on January 29, 2020 [Docket

No. 827] and a third amended Plan substantially contemporaneously herewith.

The Modifications are immaterial or otherwise do not affect the treatment of creditors and

stakeholders. I believe that the changes are permissible modifications to the Plan and are

supported by the Debtors, and either improve or do not reflect material differences to recoveries

of each affected class—i.e., no holder is “likely” to reconsider its acceptance. The Debtors’ key

stakeholders support the modifications.

[Remainder of page intentionally left blank.]


33


and correct to the best of my knowledge, information, and belief.

Dated: February 10, 2020

Respectfully submitted,

/s/ Jeffrey S. Stein Jeffrey S. Stein

Chief Restructuring Officer PES Holdings, LLC


D-1

Exhibit D

Singh Declaration


1



DECLARATION OF JOHN SINGH IN SUPPORT OF

CONFIRMATION OF THE SECOND AMENDED JOINT PLAN OF REORGANIZATION OF PES HOLDINGS, LLC AND ITS DEBTOR

AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

I, John Singh, declare under penalty of perjury as follows:

1. I am above 18 years of age, and I am competent to testify. I am a Partner in the

Restructuring and Special Situations Group at PJT Partners LP (“PJT”), an investment banking

firm listed on the New York Stock Exchange with its principal offices at 280 Park Avenue, New

York, New York 10017. In June 2019, the above captioned debtors and debtors in possession

(collectively, the “Debtors”) retained PJT as their investment bank.

2. Except as otherwise indicated herein, all facts set forth in this declaration

(“Declaration”) are based on my personal knowledge of the Debtors’ operations and finances,

information learned from my review of relevant documents, or information that I have received

from the Debtors’ employees or advisors, or employee of PJT working directly with me or under

my supervision, direction or control, or supplied by members of the Debtors’ management team




2

and the Debtors’ other advisors. If called upon to testify, I could and would competently testify to

the facts set forth in this Declaration on that basis.

3. I offer this Declaration in support of confirmation of the Second Amended Joint

Chapter 11 Plan of PES Holdings, LLC and Its Debtor Affiliates [Docket No. 827] (as may be

modified, amended, or supplemented from time to time, the “Plan”).2

Professional Background and Qualifications

4. PJT was spun off from The Blackstone Group L.P. (“Blackstone”) effective

October 1, 2015. Upon the consummation of the spin-off, Blackstone’s Restructuring and

Reorganization advisory group became a part of PJT, and Blackstone’s restructuring professionals

became employees of PJT. PJT and its senior professionals have extensive experience in the

reorganization and restructuring of distressed companies, both out-of-court and in chapter 11

proceedings. PJT has over 600 employees located in New York, San Francisco, Boston, Chicago,

London, Sydney, Hong Kong, and Madrid. PJT is a registered broker-dealer with the United States

Securities and Exchange Commission and is a member of the Securities Investor Protection

Corporation and is regulated by the Financial Industry Regulatory Authority.

5. I received a BS in Finance and Economics from New York University and a MBA

from the Wharton School of the University of Pennsylvania. I have approximately eleven (11)

years of investment banking and restructuring experience and three (3) years of experience as a

fixed income analyst before that. Prior to joining PJT, I was a Vice President in Blackstone’s

Restructuring & Reorganization Group. Since joining Blackstone in 2009, and continuing at PJT,

I have worked on a broad range of restructuring and reorganization assignments for companies,

creditor groups, special committees, governmental entities and acquirers of distressed assets. Over

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the

Plan, Purchase Agreement, Bidding Procedures Order, or Confirmation Order as applicable.


3

the course of my career, I have advised senior management and boards of directors in a wide

variety of industries in connection with restructurings, mergers and acquisitions, and financing

transactions. In particular, I have been involved in numerous restructurings, including, among

others: Automotores Gildemeister S.A.; Cecon ASA (re: Davie Shipyard); Bristow Group; CHC

Helicopter; Desarrolladora Homex, S.A.B. de C.V.; Financial Guaranty Insurance Company;

Fusion Connect, Inc.; High Ridge Brands Co.; Homer City Generation; Houston Astros;

Inversiones Alsacia S.A.; Kerzner International; MBIA, Inc. (re: Bank of America); M&G

Chemicals S.A.; Mortgage Guaranty Insurance Corporation; Nortel Networks Corporation; Pacific

Exploration & Production Corporation; Pension Benefit Guaranty Corporation (re: Smurfit Stone);

Pierre Foods, Inc.; PHI, Inc.; Simmons Bedding Company; Syncreon; Twin River; and

Westinghouse Electric Company LLC.

The Auction Process and Selection of the Winning Bidder

6. Pursuant to the Bidding Procedures Order, the Debtors, with the assistance of PJT,

conducted an extensive marketing process to solicit interest in the Debtors’ assets in order to obtain

value-maximizing Bids for the benefit of all stakeholders.

7. The Debtors’ marketing process began in August 2019. Between the explosion at

the Girard Point refinery on June 21, 2019, and the beginning of the marketing process, massive

amounts of work were done, and needed to be done, by the Debtors’ management team to prepare

for the marketing process. The work of these people—including the Debtors’ Chief Restructuring

Officer Jeff Stein, Executive Chairman Mark Cox, Chief Executive Officer Mark Smith, Chief

Financial Officer Rachel Celiberti, General Counsel John McShane, Deputy General Counsel

Anthony Lagreca, Mark Brandon, Dan Statile, and Stephanie Eggert—was critical to setting up

the Company to the sale process. These individuals had to—before the process could even begin—


4

identify and address the issues caused by the fire, limit the damage, and ensure that by-products

of the fire were removed, such as highly toxic hydrofluoric acid on site. They then had to work

closely with PJT to identify the assets that could potentially be sold, including the

interconnectedness of the land and other available assets (related and unrelated to the refinery).

8. The Debtors’ marketing and diligence exercise also required, like the pre-marketing

efforts, substantial input and contribution from the Debtors’ management team, including.Mark

Smith, Chief Executive Officer, Jeffrey S. Stein, Chief Restructuring Officer, Mark Cox,

Executive Chairman of the Debtors’ board of directors, Rachel Celiberti, Chief Financial Officer,

Anthony Lagreca, General Counsel, John McShane, Regulatory Affairs Counsel, Mark Brandon,

Vice President of Strategy and Corporate Development, and Daniel Statile, Vice President and

General Manager of the Refining Complex, and Stephanie Eggert, Vice President of Business

Planning. PJT, in conjunction with the Debtors’ management team, prepared two versions of a

“teaser” to cater to the different categories of potential bidders, drawing on the management team’s

expertise regarding the refining site, the array of assets, various other property leases, and the

various and interconnected liens and other interests across the various assets. The Debtors’

management team also was heavily involved in preparing the confidential investment

memorandum (“CIM”) and the establishment and population of a virtual dataroom to provide the

necessary diligence to interested parties. This was a highly complex sale process that could not

have been completed effectively, and will not be completed effectively, without the services of the

Debtors’ management team.

9. Beginning in August, the Debtors, with the assistance of PJT, contacted

approximately 223 potential strategic and/or financial buyers, including, among others, refinery

restart bidders, land redevelopment and/or real estate bidders, alternative fuel facility bidders, and


5

decommissioning and environmental remediation bidders. Additionally, PJT, on behalf of the

Debtors, solicited input from their stakeholders, including the Creditors’ Committee, the Term

Loan Lenders, and their advisors, who suggested certain additional, potential bidders whom the

Debtors contacted in order to gauge interest in the Debtors’ assets. Ultimately, approximately 38

parties executed nondisclosure agreements with the Debtors and engaged in conversations with

PJT regarding the sale, 36 parties were granted access to the Debtors’ virtual data room, and 15

parties submitted indications of interest in the first round of the Bidding Procedures, in or around

September 23, 2019.

10. Through bidding rounds two and three, from October 15, 2019 through January 9,

2020, the Debtors organized and conducted 43 site visits at the refinery complex and management

meetings with potential bidders. Given the nature and complexity of the Debtors’ assets, PJT and

the Debtors (particularly the management team referenced above) continued facilitating additional

diligence requests, site visits, as well as any management discussions or meetings as requested by

potential bidders, in order to ensure that enough time was provided for bidders to complete their

analysis and make informed decisions. Over this period, the Debtors provided potential bidders

with more than 5,000 documents via a secure dataroom and fielded 642 diligence questions from

the round three parties alone. In the final weeks leading up to the January live auction (the

“Auction”), the Debtors and their advisors held additional and extensive meetings, facilitated

diligence, and communicated with various parties orally and in writing. Mr. Smith, Mr. Stein, Mr.

Cox, Ms. Celiberti, Mr. Lagreca, Mr. McShane, Mr. Brandon, Ms. Eggert, and Mr. Statile provided

critical support in facilitating the necessary meetings, site visits, diligence and information

requested by the potential bidders (and will continue to play pivotal roles in ensuring the ultimate

close of a transaction after confirmation).


6

11. During this time, the Debtors and their advisors made progress in improving

potential Bids and were able to achieve higher levels of certainty with respect to financing

commitments, closing timelines, and reducing conditionality. At the conclusion of each round of

the Bidding Procedures, the Creditors’ Committee was provided access to information regarding

the Bids. Additionally, pursuant to the Bidding Procedures Order, the Debtors consulted with the

Consultation Parties (including counsel to the Committee), providing continuous updates,

including access to the applicable bid portions of the Preliminary Qualification Documents; update

calls with regarding the Preliminary Qualification Documents; disclosure of key information

received in connection with the Bid Requirements; and copies of Bids received from Qualified

Bidders.

12. The Debtors, with the help of PJT, made every effort to solicit and negotiate a

variety of Bids, including Bids that contemplated a restart of the facility. In particular, and in

efforts to obtain the best overall Bid, the Debtors facilitated access for a potential restart bidder,

Philip Rinaldi, to meet directly, in-person with the Creditors’ Committee, and provided a direct

line of communication to the Debtors to further facilitate a potential Qualified Bid. Ultimately,

and despite the substantial investment and time in trying to procure a proposal from him,

Mr. Rinaldi did not submit a Bid at all, and only two Qualified Bids3 were submitted, neither of

3 To constitute a “Qualified Bid,” a written, irrevocable and binding offer must be determined by the Debtors to

satisfy, among others, each of the following conditions: (a) state with specificity the Interests, Assets, and liabilities to be assumed; (b) clearly set forth the purchase price and form of consideration; (c) be accompanied by a cash deposit equal to ten percent of the aggregate value of the cash and non-cash consideration of the Bid; provided that the Debtors, in consultation with the Consultation Parties may waive this condition; (d) demonstrate committed financing to consummate the Sale; (e) be accompanied by executed and marked transaction documents; (f) not be conditioned on any contingency, including, among others, on obtaining financing, corporate governance approval, or outcome or completion of a due diligence review; (g) be accompanied by sufficient and adequate financial and other information to demonstrate a strong probability of consummating the proposed Sale transaction; and (h) be reasonably likely to be consummated within a time frame reasonably acceptable to the Debtors in consultation with the Consultation Parties. The full list of requirements is set forth in the Bidding Procedures.


7

which contemplated a restart of the facility. Further, neither of the Qualified Bids indicated any

willingness to assume the collective bargaining agreement between certain Debtors and the United

Steelworkers (the “Union”); both bids required either mutual modifications agreed to between the

bidder and the Union, or rejection of the collective bargaining agreement.

13. The only Bid received that contemplated a restart of the facility, from someone

other than Mr. Rinaldi, was not a Qualified Bid and contained numerous deficiencies, including,

among others, late submission, non-binding status, non-finalized transaction documents, lack of

committed financing, and numerous unacceptable contingencies including an additional 3-4 weeks

for diligence for a capital provider that had not been involved in the process thus far and had made

no commitments even if given the additional 3-4 weeks for diligence, as well as governance board

approvals. Despite the deficiencies, the Debtors and PJT attempted to continue to work with this

bidder, including hosting additional meetings at Kirkland & Ellis’s offices, to cure the Bid

deficiencies and preserve the potential for a refinery restart Qualified Bid. However, it became

clear that too many deficiencies remained to qualify the bidder as a Qualified Bidder. This non-

qualified, highly contingent proposal also contemplated a sale price that was far lower than either

of the Qualified Bidders’ who participated at the Auction.

14. On January 17, 2020, in accordance with the Bidding Procedures Order, the

Debtors, with the assistance of PJT, conducted an Auction between the two parties that submitted

Qualified Bids. The Auction was, in my opinion, successful in maximizing value for the estates.

The Auction, which was attended by representatives and/or principals of nearly every significant

case constituent, culminated in a blind round where both Qualified Bidders submitted their “best

and final” offers for the Debtors to consider. HRP Philadelphia Holdings, LLC (“HRP”) offered

a purchase price of $240 million, secured by a $30 million deposit. This price represented an


8

increase of $86 million from their Qualified Bid prior to the commencement of the Auction.

15. The other Qualified Bidder, Industrial Realty Group, LLC (“IRG”) offered an

approximately 10 percent premium to the HRP purchase price, but at the cost of only offering a $5

million deposit, more than 70 percent lower than that of HRP and less than 2 percent of the total

purchase price. IRG’s Bid also contained material contingencies, including 30 days of a financing

contingency that would effectively permit this bidder to walk away (only losing its $5 million

deposit) at any time during the 30 day period. The Debtors and PJT made clear to IRG that the

size of the deposit was a critical factor of the decision-making, and that the proposed $5 million

deposit, which was never actually provided (until weeks after the Auction was completed), was

insufficient. Coupling the competing bidder’s abnormally small deposit and a financing

contingency that created real risk over whether the Bid would ever close. This problem was

particularly acute because HRP refused to permit its Bid to serve as a backup Bid. Thus, if the

Debtors had selected the IRG Bid, and they decided to exercise their 30-day out, the Debtors would

have had no backstop and HRP could have returned to its $154 million opening Bid (or bid even

lower) saving itself almost $90 million while likely remaining this highest and best Bid.

16. Following the completion of the Auction, the Debtors, in consultation with their

advisors, including PJT, and the Consultation Parties, selected HRP as the Winning Bidder, as set

forth in the Plan Supplement for the First Amended Joint Chapter 11 Plan of PES Holdings, LLC

and its Debtor Affiliates [Docket No. 780] (the “Plan Supplement”). In selecting the Winning

Bidder, the Debtors considered the total and expected consideration, the likelihood and timing of

a potential close, the expected net benefit to the estate, the certainty of confirmation, and any other

criteria relevant to the Debtors and deemed reasonable in consultation with the Consultation

Parties. Notably, the Debtors, in consultation with their advisors, including PJT, believed that the


9

small premium offered by IRG did not sufficiently compensate the Debtors for the materially

higher risk profile evidence, in part, by the financing contingencies and small deposit relative to

purchase price.

17. Following the completion of the Auction, the Debtors continued correspondence

with HRP and IRG, consistent with their goal of maximizing recovery to the estates. On Thursday,

January 30, 2020, the Debtors received a revised form of proposed Purchase Agreement from IRG.

This was merely a draft, did not include any exhibits and was missing material information such

as the amount of the proposed deposit. On February 3, 2020, the Debtors received a proposed

execution version of proposed Purchase Agreement from IRG; related exhibits and other

documents were not provided until later. But while IRG has improved its bid, and it has made a

larger deposit ($15 million), it is still inferior to HRP’s bid at this time. HRP’s bid is still much

more likely to close. Throughout the process, HRP has done substantially more diligence than

IRG, so it is much further along than IRG in moving toward a closing. Among other things, while

(to our knowledge) neither bidder has reached final agreement on a soil management plan with

PaDEP or the related underlying matters regarding indemnity and deed restrictions with Sunoco,

HRP has had numerous discussions with both PaDEP and Sunoco and we understand (from

discussions with HRP) that progress has been made. We have not been provided any assurances

that IRG has engaged with either party in any material way, nor have they made any significant

progress with Sunoco regarding a revision to the underlying deed on the property (a condition to

closing under the IRG agreement). Overall, since the Auction, the Debtors have observed only


10

minimal engagement from IRG, a belabored effort to make the deposit, and little work towards

advancing their bid.

18. The risks of picking a bidder other than HRP remain. If the IRG Bid was chosen

and did not close, the Debtors would be left with no binding Bid, and would likely ultimately

receive far less than the $240 million offer on the table from HRP. And the Debtors have limited

cash, leaving them with little time to waste. Having discussed this issue at length with the Debtors’

management, including, Mr. Smith, Mr. Stein, Mr. Cox, Ms. Celiberti, Mr. Lagreca, and Mr.

McShane, and the Restructuring Committee of the Debtors’ board of directors, I believe that their

determination that HRP’s Bid was the best Bid because it offered greater security, and thus greater

expected returns with less down side potential, was reasonable under the circumstances at the time,

remains true today, and represents a sound exercise of the Debtors’ business judgment.

The Purchase Agreement and Consummation of the Plan

19. As I understand, upon conclusion of the Auction, HRP and the Debtors executed a

Purchase Agreement (as amended, amended and restated, modified or supplemented from time to

time, the “Purchase Agreement”), whereby the Debtors agreed to sell, and HRP agreed to acquire,

substantially all of the Debtors’ Interests free and clear of all Liens other than Transferring Liens

(the “Acquired Interests”), as set forth in the Plan and Purchase Agreement. The Purchase

Agreement was filed as part of the Plan Supplement on January 22, 2020.

20. PJT, along with the Debtors’ legal counsel and management team, including, Mr.

Smith, Mr. Stein, Ms. Celiberti, Mr. Lagreca, and Mr. McShane, were present and, with the

addition of Mr. Cox, involved with substantially all of the negotiations related to the Purchase

Agreement and the transactions contemplated thereunder. The Plan and Purchase Agreement

follow an extensive marketing process to solicit interest in the Debtors (through acquisition or plan


11

sponsorship) and extensive arm’s-length negotiations among the Debtors, the DIP Lenders, HRP,

the Creditors’ Committee, and other parties interest in ensuring that stakeholders realize the

highest possible recoveries under the circumstances. I believe the Winning Bidder proceeded in

good faith in all respects in connection with this proceeding. I am not aware of any side deals or

other arrangements that would evidence a lack of good faith. Further, I have no knowledge of the

Winning Bidder engaging in any improper action or inaction, including collusion or fraud of any

kind, which would cause or permit the Purchase Agreement or the Sale Transaction to be avoided

or impose any costs or damages.

21. Given the circumstances of this case, and on the basis of the process conducted, I

believe the Purchase Agreement reflects the best offer for the Acquired Assets and will provide a

greater recovery for the Debtors’ estates than would be provided by any other available alternative.

I believe the terms of the Purchase Agreement were negotiated in good faith and at arm’s-length.

22. I also believe the Purchase Agreement represents a fair and reasonable offer to

purchase the Acquired Interest given the circumstances of these chapter 11 cases. No other person,

entity, or group of entities has offered to purchase the Acquired Interest for greater overall value

to the Debtors’ estates than the Winning Bidder.

23. The Bid provides for the greatest combination of value and security for the Debtors’

stakeholders. Approval of the Purchase Agreement and entry into the Sale Transaction is, in my

opinion, in the best interests of the Debtors, their estates, stakeholders, and other parties in interest.




and correct to the best of my knowledge, information, and belief.

Dated: February 10, 2020

Respectfully submitted,

/s/ John Singh John Singh Partner PJT Partners LP

Investment Banker for the Debtors


E-1

Exhibit E

Gartrell Declaration




DECLARATION OF JOSEPHINE GARTRELL IN SUPPORT OF DEBTORS’ MOTION SEEKING ENTRY OF AN ORDER

(I) APPROVING THE DEBTORS’ MIP AND (II) GRANTING RELATED RELIEF

I, Josephine Gartrell, hereby declare under penalty of perjury:

1. I am a Director at Willis Towers Watson US LLC (“WTW”). In June 2019, PES

Holdings, LLC (“PES”), one of the above captioned debtors and debtors in possession

(the “Debtors”), engaged WTW to provide compensation consulting services both before and after

the commencement of these chapter 11 cases, after having previously engaged WTW in August

2017 to provide services as it relates to the Debtors’ prior chapter 11 cases. I am familiar with the

prepetition and postpetition structure of the Debtors’ compensation programs, including the

Management Incentive Plan (the “MIP”) as it is set forth in the Debtors’ Motion for Entry of an

Order Authorizing and Approving the Debtors’ KEIP (the “Motion”),2 filed on November 22,

2019 [Docket No. 605] and the Supplemental Declaration of Jeffrey S. Stein in Support of Debtors’

Motion for Entry of an Order (I) Approving the Debtors’ Key Employee Incentive Program and


number, are: PES Holdings, LLC (8157); North Yard GP, LLC (5458); North Yard Logistics, L.P. (5952); PES Administrative Services, LLC (3022); PES Energy Inc. (0661); PES Intermediate, LLC (0074); PES Ultimate Holdings, LLC (6061); and Philadelphia Energy Solutions Refining and Marketing LLC (9574). The Debtors’ service address is: 1735 Market Street, Philadelphia, Pennsylvania 19103.

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.


2

(II) Granting Related Relief, filed on January 21, 2020 [Docket No. 779] (the “Supplemental Stein

Declaration”).3

2. I submit this declaration in support of the Motion. Except as otherwise indicated,

I have personal knowledge of all facts in this declaration, based on my review of the Debtors’

compensation programs, my research into compensation practices for companies in the energy

industry and those that have recently filed for chapter 11 protection, and information supplied to

me by members of the Debtors’ management team, my team at WTW, and the Debtors’ other

advisors. For the reasons described below, it is my opinion that the MIP is reasonable and

generally consistent with market norms for companies in the energy industry and those in

chapter 11. If called upon to testify, I could and would testify competently to the facts and opinions

set forth in this declaration.

Background and Qualifications

3. I received my Juris Doctor from University of San Diego School of Law in 1998,

graduating Magna Cum Laude and Order of the Coif, and my Bachelor of Arts in international

business from San Diego State University in 1994. After working at Gibson Dunn as an associate

in the corporate practice, Pillsbury Winthrop as an associate in the executive compensation

practice, and The Loftin Firm, P.C where I was a partner and then of counsel in the corporate

practice, I became an executive compensation consultant at the Hay Group LLC in 2014. I joined

Willis Towers Watson in 2016 where I have been continuously employed ever since.

4. WTW is an international professional services firm that offers a wide variety of

services to public and private clients, including expert analysis of executive and management

3 The Management Incentive Plan is the same in all material respects as the previously filed KEIP. For ease of

reference and continuity, I refer to the incentive program as the MIP throughout this Declaration.


3

compensation. WTW designs and delivers solutions that manage risk, optimize benefits, cultivate

talent, and expand the power of capital to protect and strengthen institutions and individuals.

WTW focuses on four key business segments: corporate risk and broking, human capital and

benefits, exchange solutions, and investment, risk, and reinsurance.

5. My responsibilities at WTW have primarily involved consulting to for-profit

companies and not-for profit organizations, specifically regarding executive compensation.

I routinely work with public and private companies in various industries regarding compensation

philosophy, pay competitiveness, incentive plan design, and other compensation-related analyses

and have participated in the development and design of hundreds of management and employee

incentive plans for companies in and outside of bankruptcy.

6. I am highly experienced in executive, management, and employee compensation

with over 20 years of experience in the field. During my tenure at Willis Towers Watson, I have

worked closely with a range of companies undergoing a financial restructuring in developing a

variety of pre-petition and post-petition compensation arrangements, including compensation

plans and programs for senior executive and non-executive employees. Specifically, I have led or

co-led the review and design of key employee incentive plans, key employee retention plans, and

other similar plans in a number of chapter 11 cases, including Aegean Marine Petroleum Network

Inc., et al., Case No. 18-13374 (MEW), Bankr. S.D.N.Y.; In re ATD Corporation, et al., Case No.

18-12221 (KJC), Bankr. D. Del.; In re Claire’s Stores Inc., et al., Case No. 18-10584 (MFW),

Bankr. D. Del.; In re FULLBEAUTY Brands Holdings Corp., et al., Case No. 19-22185 (RDD),

Bankr. S.D.N.Y.; In re Parker Drilling Company, et al., Case No. 18-36958 (MI), Bankr. S.D.

Tex.; In re Westmoreland Coal Company, et al., Case No. 18-35672 (DRJ), Bankr. S.D. Tex.


4

Willis Towers Watson’s Role with the Debtors

7. In 2017, the Debtors originally retained WTW to provide compensation and

consulting services as it related to its 2017 compensation programs.

8. In June 2019, and prior to the Petition Date, WTW further assisted the Debtors in

the development of a pre-bankruptcy retention-based compensation program, which was intended

to foster retention of eight officers, and a limited number of key employees who the company

identified as critical to maximizing value and ensuring compliance with health, safety, and

environmental obligations, through either September or December 15, 2019, depending on the

employee. The program was also designed to reflect market-based retention plans approved in the

pre-bankruptcy context.

9. In assessing the design and reasonableness of the retention program, WTW

identified seven examples of large companies (with revenues greater than $2B) that implemented

a pre-bankruptcy retention plan for officers and other key employees. WTW concluded that,

compared to the other large organizations, the participation size, form of payment, and payout

requirements were wholly consistent with the market, and that the retention period was reasonable

given the strategic options being evaluated. WTW also concluded that PES’s anticipated costs as

a percentage of revenues for the program were below the 25th percentile of other large

organizations that implemented retention programs on a pre-petition basis.

10. WTW further concluded that the award opportunities and resulting annualized total

compensation levels provided to the eight officer participants were reasonable when compared to


5

the targeted compensation levels for comparable roles at other similarly-sized energy services

industry companies.

11. In connection with WTW’s work on the retention program, WTW also reviewed

Mark Cox’s Consulting Agreement, which was entered into in conjunction with Mark Cox’s

assumption of the Executive Chairman role. Based on its review, WTW concluded the annualized

compensation levels of the arrangement were within the range of market practice for Executive

Chairman roles at similarly sized general industry organizations. WTW’s review was presented

to the company’s Board of Directors for its consideration, before the retention program and

Consulting Agreement was approved.

12. Further, in the latter half of 2019, and as it relates to the MIP as it is set forth in the

Motion and the Supplemental Stein Declaration, WTW performed the following services (which I

peer reviewed and with which I agree regarding the methodology used and conclusions):

conducted a preliminary review of a straw model MIP, including an assessment of how the

proposed terms compared to market practice in other similarly-situated restructuring cases;

performed a market analysis of proposed MIP Participants’ total direct compensation with and

without the MIP; and determined how the aggregate cost of the MIP under various performance

scenarios compared in aggregate to similarly structured KEIPs/MIPs in other recent restructuring

cases. For purposes of performing the total direct compensation market analysis, WTW gathered

relevant market compensation data, including salary, short-term compensation, and long-term

compensation offered by similarly sized companies in the energy industry. I have also familiarized

myself with the status of the Debtors’ bankruptcy process.

13. WTW worked with the Debtors and their outside advisors to assess and refine the

MIP to align with the Debtors’ restructuring objectives, and my team worked closely with the


6

Debtors’ outside advisors to update our analyses as appropriate, and finalize the MIP. My primary

goal has been to provide independent advice concerning compensation designs that drew directly

upon relevant market data as well as my experience in designing such programs for similarly-

situated companies.

MIP Background

14. During WTW’s work with the Debtors, I learned that, prior to the Petition Date,

they maintained compensation programs that were designed to provide, in a highly competitive

environment, reasonable market-based incentive compensation for their key employees to

incentivize the creation of long-term value for stakeholders.

15. Prior to the Petition Date, the Debtors, through their advisors, approached WTW to

review proposed designs for the postpetition incentive plan—i.e., the plan that would ultimately

become the proposed MIP. Based upon the diligence and comprehensive market analysis WTW

undertook, I concluded that the general design of the proposed MIP was consistent with typical

market practice in similar restructuring situations. Further, absent implementation of a reasonable

incentive plan, the MIP Participants’ total compensation would fall significantly below the 25th

percentile of comparable energy industry market practice.

The Proposed MIP

16. As further described in the Motion, the MIP is designed to incentivize eight key

insider management members to achieve two Performance Goals: (a) to maximize the Net

Proceeds; and (b) to confirm a plan of reorganization within fifteen months of the Petition Date.

The MIP provides the MIP Participants with the opportunity to earn incentive-based cash awards

from maximizing Net Proceeds only if the Debtors and/or the MIP Participants can achieve Net

Proceeds in excess of a $300 million performance hurdle (the “Threshold”). The MIP Participants

are eight of the Debtors’ senior management members. It is my understanding that these insiders


7

are essential for the Debtors’ successful operations, financial stability and restructuring process.

It is also my understanding that the MIP will not include anyone other than the eight MIP

Participants.

17. If a MIP Participant is terminated without cause or resigns for good reason prior to

a reorganization or sale (“Qualifying Termination”) and has not had the opportunity to fully earn

their MIP awards, he or she would receive any MIP awards (whether vested or unvested) already

earned based on the MIP Participant’s percentage. In addition, MIP participants will earn cash

payments in respect of any proceeds generated following a Qualifying Termination, determined

based on the MIP Participant’s percentage, conditioned on the execution of a general release. If,

however, a MIP Participant leaves the Debtors’ employment under circumstances that do not

constitute a Qualifying Termination, the MIP Participant forfeits any unpaid portions of his or her

MIP award.

18. WTW evaluated the estimated cost of the MIP under a variety of potential

performance outcomes. In each case, Net Proceeds must exceed the Threshold ($300.0 million)

to be allocated to the MIP pool (the “Budget”). For every incremental dollar in Net Proceeds

realized over $300.0 million, 2.5 percent will be allocated to the Budget. Additionally, if the

Debtors confirm a plan of reorganization within fifteen months of the Petition Date, a flat

$2.5 million will be allocated to the Budget.

19. Further, the MIP Participants are separated into six separate ranges based on

varying levels of responsibility. Mark Smith, Chief Executive Officer, earns 27 percent of the

Budget; Mark Cox, Executive Chair, earns 23 percent of the Budget; Rachel Celiberti, Chief

Financial Officer and Treasurer, earns 18 percent of the Budget; Anthony Lagreca, Executive Vice

President, General Counsel earns 14 percent of the Budget; John McShane, Executive Vice


8

President, Regulatory Affairs Counsel, earns 6 percent of the Budget; Mark Brandon, Vice

President of Strategy and Corporate Development, Stephanie Eggert, Vice President of Business

Planning, and Daniel Statile, Vice President and General Manager of the Refining Complex, earn

4 percent of the Budget. The ranges under potential performance scenarios are broken out as

follows:

MIP Participant4

Range $300.0 $500.0 $600.0 $800.0 $1,000.0

Budget Amount $2.5 $7.5 $10.0 $15.0 $20.0

Mark Smith

(27.0% of Budget) $0.675 $2.025 $2.70 $4.05 $5.40

Mark Cox

(23.0% of Budget) $0.575 $1.725 $2.30 $3.45 $4.60

Rachel Celiberti

(18.0% of Budget) $0.45 $1.35 $1.80 $2.70 $3.60

Anthony Lagreca

(14.0% of Budget) $0.35 $1.05 $1.40 $2.10 $2.80

John McShane

(6.0% of Budget) $0.15 $0.45 $0.60 $0.90 $1.20

Mark Brandon

(4.0% of Budget) $0.10 $0.30 $0.40 $0.60 $0.80

Daniel Statile

(4.0% of Budget) $0.10 $0.30 $0.40 $0.60 $0.80

Stephanie Eggert

(4.0% of Budget) $0.10 $0.30 $0.40 $0.60 $0.80

4 Amounts listed within this chart are in millions.


9

I. Analysis of Compensation for MIP Participants.

20. In assessing the reasonableness of the MIP, WTW analyzed each MIP Participant’s

competitive “target total direct compensation,” which is a compensation-industry term that means

the sum of base salary, target annual incentive opportunities, and long-term incentive grant values.

Market compensation data for each MIP Participant was derived from the 2018 WTW Energy

Services Industry Survey, reflecting similarly-sized energy services industry companies. This

survey includes robust data and large sample sizes to appropriately reflect the size of the Debtors’

operations (i.e., approximately $9.6 billion in revenue). Despite the Debtors’ current

non-operational status, revenue is an appropriate and reasonable benchmarking metric, as it

captures the precise type of companies at which the MIP Participants could obtain employment

rather than remaining with the Debtors. Further, in my experience, revenue is the metric most

directly correlated to compensation and is less volatile than alternative metrics.

21. WTW surveyed standard market compensation benchmarks and discussed the

results with the Debtors’ management. This methodology for developing market compensation

data is consistent with my chapter 11 and ordinary course experience in evaluating compensation

programs.

22. WTW compared the total direct compensation opportunities (reflecting base

compensation, plus the value of potential MIP awards under various performance scenarios) for

each MIP Participant to target total direct compensation data for comparable roles from the

above-referenced market data. Absent Court approval of the MIP, total direct compensation

opportunities for the MIP Participants will comprise of base compensation only, and thus total

direct compensation opportunities will be 71 percent below the 25th percentile of the market, on

average. In my opinion, this could significantly undermine the Debtors’ ability to continue to


10

motivate the MIP Participants to achieve desired business objectives. If, however, the MIP is

approved, the aggregate total direct compensation opportunities for the MIP Participants

(reflecting the sum of current base compensation and earned MIP awards under various

performance scenarios) will be positioned more competitively with energy industry market

practices, summarized as follows:

Total Direct Compensation (“TDC”) for MIP Participants

TDC Outcome Relation to the 25th Percentile of Market

TDC

Relation to 50th Percentile of Market

TDC

Relation to 75th Percentile of Market

TDC

Base Compensation Only (No MIP)

-71% -80% -86%

Base Compensation, Plus MIP Payout (at $300M in Net Proceeds)

-50% -64% -75%

Base Compensation, Plus MIP Payout (at $600M in Net Proceeds)

+14% -19% -43%

Base Compensation, Plus MIP Payout (at $1.0B in Net Proceeds)

+100% +42% +0%

23. Based on the results of these benchmarking analyses, and my experience with

incentive compensation plans adopted by other companies, both inside and outside the chapter 11

context, I believe the award opportunities provided by the MIP are reasonable. Critically, the

absence of an incentive opportunity for the participants would, in my opinion, significantly

undermine the current competitiveness of the Debtors’ compensation structure (as it would be

comprised of only base compensation, which is significantly below market total compensation).

II. Analysis of the MIP Structure.

24. I believe the overall design and structure of the MIP is consistent with market

practice in similar restructuring situations, and appropriate considering the Debtors’ particular


11

business and circumstances. WTW advised that the MIP metrics should be objectively measured,

performance-based metrics with “stretch” goals.

25. To assess the reasonableness of the design of the MIP, WTW analyzed the publicly

disclosed KEIPs from twelve companies with revenues in excess of $1 billion that recently adopted

court-approved, post-petition KEIPs tied to asset sale value and/or value creation metrics. The

companies are: Alpha Natural Resources, Inc., Furniture Brands International, Gander Mountain

Company, Inc., GenOn Energy, hhgregg, Inc., Marsh Supermarkets, NII Holdings, Inc., Quiksilver

Inc., RadioShack (RS Legacy Corporation), Real Industry, Inc., Sears Holdings Corporation, and

SunEdison (collectively, the “Peer Companies”). In the Declaration of John T. Young, Jr. in

Response to the Debtors’ Motion for Entry of an Order (I) Approving the Debtors’ Key Employee

Incentive Plan and (II) Granting Related Relief; and the Plan Supplement for the First Amended

Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor Affiliates [Docket No. 924

(the “Young Declaration”), Mr. Young acknowledges the unique circumstances of the Debtors and

their chapter 11 proceedings. Young Decl., ¶ 28 (“I am not aware of any bankruptcy cases with

KEIPs in circumstances identical to the Debtors.”). Accordingly, in reviewing this analysis, I

relied upon my significant consulting experience in the analysis and design of incentive plans

generally for similarly-sized companies in chapter 11.

26. Importantly, in the Young Declaration, Mr. Young fundamentally erred in his

analysis of the Debtors’ proposed MIP. Mr. Young makes an unfair comparison by comparing

total direct compensation of the MIP Participants against only total incentive plan costs of the Peer

Companies to reach his conclusion that the MIP is “two times greater than the 75th percentile from

WTW’s Annualized Plan Costs sample.” Young Decl., ¶ 22. The Annualized Plan Costs sample

pool utilized by WTW was specifically to assess the reasonableness of the total plan cost of the


12

MIP, not total direct compensation. Indeed, WTW did analyze the MIP Participants’ relative

position against similarly situated companies with respect to total direct compensation, taking into

account the award amounts at each Threshold and, as reflected above, concluded that the MIP

Participants would fall well within market practice.

27. Based upon my review, the structure of the MIP comports with the structure of

incentive plans of the Peer Companies. Specific aspects of the MIP design that are aligned with

common market practice include:

• Denominated and paid in cash;

• Number of participants;

• Explicit value creation metric; and

• Payout opportunities are tied to achieving larger sales proceeds.

28. For these reasons, and based on my experience with incentive-based compensation

programs employed by companies in chapter 11, I believe the structure of the MIP is reasonable

and consistent with market practice.

III. Analysis of the MIP Total Cost.

29. WTW also compared the cost of the MIP at various performance levels on both an

absolute basis and as a percentage of revenue to the annualized target or equivalent cost of the Peer

Companies’ KEIPs/MIPs. The analysis showed that:

a. The cost of the MIP under a $300 million Net Proceeds scenario (resulting in costs of $2.5 million), reflected as a percentage of revenue (approximately 0.03 percent) is positioned well below market 25th percentile levels among the Peer Companies;

b. The cost of the MIP under a $600 million Net Proceeds scenario (resulting in costs of $10.0 million), reflected as a percentage of revenue (approximately 0.10 percent) is positioned near the market 25th percentile levels among the Peer Companies; and

c. The cost of the MIP under a $1.0 billion Net Proceeds scenario (resulting in costs of $20.0 million), reflected as a percentage of revenue (approximately 0.21 percent)


13

is positioned between the market 25th percentile and 50th percentile levels among the Peer Companies.

30. For these reasons, and based on my experience with incentive-based compensation

programs employed by companies in chapter 11, I believe the cost of the MIP is reasonable and

consistent with market practice.

Conclusion

31. Based on my education, experience, and the work I have done in this case, and

having consulted and considered the input of the Debtors’ other advisors; and through them the

DIP Lenders; it is my opinion that the overall cost of the MIP is reasonable and consistent with the

cost of similar programs in other bankruptcy cases when considering the Debtors’ size and should

be approved for the reasons set forth herein.

32. I further believe that but for the MIP, the MIP Participants would, on the whole,

have significantly below-market compensation and lack incentive opportunities, which could

impact the Debtors’ ability to motivate current staff to achieve desired business objectives. It is

also my opinion that the MIP provides award levels under various performance scenarios, which

if achieved, will provide compensation opportunities that are consistent with market practice and

are not excessive when compared with industry benchmarks.

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing

statements are true and correct to the best of my knowledge, information, and belief.

Dated: February 10, 2020 /s/ Josephine Gartrell Josephine Gartrell Director

Willis Towers Watson US LLC


F-1

Exhibit F

Sciametta Declaration


IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

)

In re: ) Chapter 11

)

PES HOLDINGS, LLC, et al.,1 ) Case No. 19-11626 (KG)

)

Debtors. ) (Jointly Administered)

)

DECLARATION OF JOSEPH J. SCIAMETTA IN

SUPPORT OF CONFIRMATION OF THE JOINT CHAPTER 11

PLAN OF PES HOLDINGS, LLC AND ITS DEBTOR AFFILIATES

I, Joseph J. Sciametta, hereby declare under penalty of perjury as follows:

1. I am a Managing Director at Alvarez & Marsal North America, LLC (“A&M”),

which has a principal place of business at 600 Madison Avenue, 8th Floor, New York, New York

10022. I am familiar with the above-captioned debtors’ and debtors in possession’s (collectively,

the “Debtors”) operations, business affairs, financial performance, and restructuring efforts. A&M

has been retained by the above-captioned debtors and debtors-in possession (collectively,

the “Debtors”) in these chapter 11 cases.

2. I am generally familiar with the Debtors’ operations, business and financial affairs.

3. Except as otherwise stated herein, the statements in this Declaration are, except

where specifically noted, based on my personal knowledge or opinion, on information that I have

received from the Debtors’ employees or advisors, or employees of A&M working directly with

me or under my supervision, direction, or control, or from the Debtors’ books and records


number, are: PES Holdings, LLC (8157); North Yard GP, LLC (5458); North Yard Logistics, L.P. (5952); PES

Administrative Services, LLC (3022); PES Energy Inc. (0661); PES Intermediate, LLC (0074); PES Ultimate

Holdings, LLC (6061); and Philadelphia Energy Solutions Refining and Marketing LLC (9574). The Debtors’

service address is: 1735 Market Street, Philadelphia, Pennsylvania 19103.


2

maintained in the ordinary course of their businesses. I submit this declaration in support of

confirmation of the Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor Affiliates (as

modified, amended, or supplemented from time to time, the “Plan”).2 I am authorized to submit

this declaration on behalf of the Debtors, and, if I were called upon to testify, I could and would

testify competently to the facts set forth herein on that basis.

4. Neither A&M nor I am being specifically compensated for this Declaration, other

than compensation to A&M as a professional services firm employed by the Debtors.

Qualifications

5. A&M is a leading restructuring consulting firm with extensive experience and an

excellent reputation for providing high quality, specialized management and restructuring advisory

services to debtors and distressed companies. Specifically, A&M’s core services include

turnaround advisory services, corporate performance improvement, valuation, and investigations

and dispute advisory. A&M provides a wide range of debtor advisory services targeted at

stabilizing and improving a company’s financial position, including: developing or validating

forecasts, business plans, and related strategic plans; monitoring and managing cash, cash flow,

and supplier relationships; assessing and recommending cost reduction strategies; and designing

and negotiating financial restructuring packages. Additionally, A&M provides advice on specific

aspects of the turnaround process and helps manage complex constituency relations and

communications. A&M is known for its ability to work alongside company management and key

constituents during chapter 11 restructurings to develop a feasible and executable plan of

reorganization. One of the services A&M provides is preparing liquidation analyses for purposes

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan or

the Debtors’ Memorandum of Law in Support of an Order Confirming the Debtors’ Second Amended Joint

Chapter 11 Plan of PES Holdings, LLC and its Debtor Affiliates filed contemporaneously herewith.


3

of determining whether proposed chapter 11 plans comply with the requirements of section

1129(a)(7) of the Bankruptcy Code.

6. I graduated from Fairfield University with a Bachelor’s degree and a Master’s

degree in business administration. I have over 20 years of restructuring experience, specializing

in business plan development and review, liquidity and working capital management forecasting,

and chapter 11 planning, much of which has involved advising distressed companies, in a diverse

range of industries.

7. As an advisor, I have conducted numerous financial and/or liquidation analyses for

various companies, including Bristow Group, Remington Outdoor Company, USA Discounters,

Lehman Brothers, Aleris International and Interstate Bakeries Corporation, as well as numerous

other matters. I also advised the Debtors during their prior chapter 11 cases in 2018.

8. I have previously submitted declarations in connection with plan confirmation

proceedings, including with respect to the best interests test in numerous cases, including the

Debtors’ 2018 chapter 11 cases.

Preliminary Statement

9. In June 2019, the Debtors retained A&M to provide assistance in connection with

the Debtors’ evaluation of their liquidity, financial forecasting, and contingency planning. From

early in A&M’s retention and during the Debtors’ previous chapter 11 cases in 2018, I worked

closely with the Debtors’ management and other advisors to evaluate the Debtors’ liquidity and

cash needs, including in the event of a chapter 11 filing.

10. On September 24, 2019, the Court entered the Order Authorizing the Retention of

Alvarez & Marsal North America, LLC as Restructuring Advisors to the Debtors and Debtors in

Possession Pursuant to Sections 327(a) and 328 of the Bankruptcy Code, Effective Nunc Pro Tunc

to the Petition Date [Docket No. 427].


4

The Plan Satisfies the Best Interests Test

11. Relying on information from the Debtors’ management, the Debtors’ advisors,

including members of A&M, and my own personal knowledge, I have reviewed the classification

of claims and interests under the Plan and the proposed distributions to each class of claims. My

testimony below that the Plan should be confirmed is informed by this knowledge. Specifically, I

believe that the Plan satisfies the requirements under the Bankruptcy Code regarding the “best

interests of creditors” test.

12. It is my understanding that section 1129(a)(7) of the Bankruptcy Code requires that

each holder of an Impaired Claim or Interest either (a) accept the Plan or (b) receive or retain under

the Plan property of a value, as of the Effective Date, that is not less than the value such holder

would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code.

This requirement is known as the “best interests” test.

13. In order to determine whether the Plan satisfies the best interests test, A&M, with

the assistance of the Debtors, prepared a liquidation analysis, which is attached to the Plan

Supplement for the First Amended Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor

Affiliates [Docket No. 780] (the “Plan Supplement”) as Exhibit J (the “Liquidation Analysis”).3

I personally oversaw the preparation of the Liquidation Analysis, and worked closely with a team

of A&M staff in its development. The Liquidation Analysis was completed after due diligence by

the Debtors and A&M, and was based on a variety of assumptions, which I believe are reasonable.

14. The Liquidation Analysis compares the projected recoveries that would result from

the liquidation of the Debtors in a hypothetical conversion to chapter 7 of the Bankruptcy Code

3 Prior to this Liquidation Analysis, the Debtors filed a liquidation analysis attached as Exhibit C to the Disclosure

Statement for the First Amended Joint Chapter 11 Plan of PES Holdings, LLC and Its Debtor Affiliates [Docket

No. 662]. This Declaration addresses only the Liquidation Analysis that was attached to the Plan Supplement.


5

commencing on or about January 24, 2020 (the “Conversion Date”), with the estimated recoveries

to holders of Allowed Claims and Interests under the Plan. The Liquidation Analysis is based on

the estimated value of the Debtors’ assets and liabilities as of the Conversion Date in a forced sale

by a chapter 7 trustee, and incorporates various estimates and assumptions, including the projected

costs associated with the administration of the estate and the wind-down of the Debtors’ operations

in a hypothetical conversion to a chapter 7 liquidation.

15. Estimated Plan recoveries were determined, where applicable, based on the

projected creditor recoveries analysis prepared by A&M, which is attached to the Plan Supplement

as Exhibit I (the “Recovery Analysis”). The Recovery Analysis estimates a range of total

enterprise and equity value of the Reorganized Debtors. As with the Recovery Analysis,

the Liquidation Analysis contemplated three different scenarios in which recoveries by class of

claim may vary depending on the potential resolution of projected priorities of claims against the

business interruption insurance proceeds. The low case represents the lowest recovery of the three

scenarios while the high case represents the highest estimate of the three scenarios outlined in

the Plan Supplement.

16. Informed by the Recovery Analysis, the projected recoveries under the Plan and the

results of the Debtors’ Liquidation Analysis for all holders of Claims and Interests are as follows:


6

SUMMARY OF ESTIMATED RECOVERIES

Class Claim/Interest Projected Plan Recovery Liquidation Recovery

1 Other Secured Claims 100% 100%

2 Other Priority Claims4 100% Low: 0% + BI5

High: 100%

3 Term Loan Secured Claims Low: 5% + PBI6

High: 100%

Low: 4%

High: 15% + PBI

4 Intermediation Secured

Claims

Low: 0% + BI

High: 100% 0% + BI

5 General Unsecured Claims Low: 0% + BI

High: 80% 0% + BI

6 Subordinated Remaining

Volume Claims 0% 0%

7 Intercompany Claims 0% 0%

8 Intercompany Interests 0% 0%

9 Interests in PES Energy and

PES Ultimate Interests 0% 0%

10 Sections 510(b) Claims 0% 0%

17. As noted in the Liquidation Analysis, the net recoveries associated with the pursuit

of the Debtors’ property damage and business interruption insurance claim

4 Pursuant to the Plan, “Other Priority Claim” means any Claim entitled to priority in right of payment under

section 507(a) of the Bankruptcy Code, other than: (a) an Administrative Claim (that includes the DIP Claims);

or (b) a Priority Tax Claim, to the extent such Claim has not already been paid during the Chapter 11 Cases. In

accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims have

not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article III of the

Plan. Under the Liquidation Analysis, liquidation recovery for Administrative and Priority Claims will be 0% +

BI Insurance Proceeds; and 100% for DIP claims, RINS reserve, estate liquidation reserve, and Professional Fee

Claims.

5 “BI” means Business Interruption Insurance Proceeds.

6 “PBI” means Property Damage and Business Interruption Insurance Proceeds.


7

(the “Insurance Claim”) are difficult to estimate and, in a liquidation scenario, are expected to be

materially less than those net recoveries from the pursuit of such claims under the Debtors’ chapter

11 plan. The ability of a chapter 7 trustee to pursue such claims in a liquidation would be

significantly limited by, among other things, (i) the loss of the management team who possess

critical institutional knowledge, factual background, and experience that is necessary for the

Debtors to articulate, advocate for, and ultimately litigate (if necessary) the Debtors’ Insurance

Claim fully; and (ii) inadequate funding to cover legal costs, expert costs, and other costs of

litigation out of pocket, which would likely result in lower net recoveries due to the need to finance

litigation efforts directly or indirectly.

18. It is my understanding that a conversion of the Debtors’ cases to chapter 7 would

be an event of default under the Purchase Agreement, as well as the other Bid (as defined in

the Bidding Procedures) that the Debtors considered at the Auction. Thus conversion of

the Debtors’ cases to chapter 7 would leave the Debtors with no binding Bids. In addition, under

the Liquidation Analysis, it is assumed that a chapter 7 trustee would find it difficult to meet the

closing conditions under the Purchase Agreement without the assistance and knowledge of the

management team and could experience delays in the process, which could be significant.

As such, the net proceeds from the sale could be materially less. To adjust for this uncertainty, in

the high scenario under the Liquidation Analysis, it is assumed that the sale is successfully

consummated for $220 million, and $150 million in the low scenario. Under the Plan, the Sale

proceeds are currently estimated to be $240 million.

19. As aforementioned, the net recoveries associated with the pursuit of the Debtors’

Insurance Claim are difficult to estimate and, in a liquidation scenario, are expected to be

materially less than those net recoveries from the pursuit of such claims under the Plan. To help


8

assess the comparison of recoveries in the Liquidation Analysis to those in the Recovery Analysis,

A&M has prepared the analysis included herein as Exhibit A. The analysis compares recoveries

for General Unsecured Claims in the Recovery Analysis to the Liquidation Analysis in various

hypothetical scenarios:

(a) For illustrative purposes only, anticipated proceeds from the Insurance

Claim in the Recovery Analysis and Liquidation Analysis were adjusted to

reflect three different potential cases, based on the collection of (i) 25% of

the remaining amount of Insurance Claims to be collected up to the policy

limit, (ii) 67% of the remaining amount of Insurance Claims to be collected

up to the policy limit, and (iii) 100% of the remaining amount of Insurance

Claims to be collected up to the policy limit;

(b) The Liquidation Analysis was adjusted to include the costs associated with

the pursuit of the Insurance Claim, as was included in the Recovery

Analysis;

(c) The Liquidation Analysis was adjusted to include $16 million of estimated

demolition costs required to pursue the Insurance Claim, as was included in

the Recovery Analysis;

(d) The Liquidation Analysis was adjusted to include an additional $3 million

of professional fees, representing the time and expenses that it would take

for case professionals to get “up to speed” in the pursuit of the Insurance

Claim; and

(e) The Recovery Analysis was adjusted to assume an additional recovery of

$5 million to Holders of General Unsecured Claims.

20. A comparison of the range of projected recoveries under the Liquidation Analysis

to the estimated Plan recoveries, including those contained in Exhibit A, coupled with the impact

that a chapter 7 could have on the recoveries of the Insurance Claim, indicates that each holder of

an Impaired Claim or Interest will receive or retain under the Plan property of a value, as of

the Effective Date, that is not less than the value such holder would receive if the Debtors were

liquidated under chapter 7 of the Bankruptcy Code. Based on the Debtors’ and their advisors’ Plan

valuation and recoveries set forth in the Plan, these liquidation recoveries are lower than the

estimated recoveries provided by the Plan. In sum, as described in the Liquidation Analysis and


9

Recovery Analysis, I believe that the Plan satisfies the “best interests of creditors” test and that it

satisfies the requirements of section 1129(a)(7) of the Bankruptcy Code.



10

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the facts set

forth in the foregoing Declaration are true and correct to the best of my knowledge, information,

and belief.

February 10, 2020 /s/ Joseph J. Sciametta

Joseph J. Sciametta

Managing Director

Alvarez & Marsal North America, LLC


Exhibit A

General Unsecured Claims Recoveries


17%

49%

78%

19%

52%

81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

25% of Remaining InsuranceRecoveries



Gen

eral

Un

secu

red

Cre

dit

or

Rec

ove

ries

-%

General Unsecured Claims Recoveries Chapter 7 vs Chapter 11

Chapter 7 Chapter 11
