Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 1 of 36 Desc Main IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION IN RE: WEST SIDE COMMUNITY HOSPITAL INC., GARFIELD KIDNEY CENTER, LLC, SUPERIOR HOME HEALTH, L.L.C., Debtors. ) ) ) ) ) ) ) ) ) ) Chapter 11 Honorable Eugene R. Wedoff Case No. 13-27091 (Jointly Administered) Case No. 13-27092 Case No. 13-27093 DISCLOSURE STATEMENT TO SECOND AMENDED JOINT CHAPTER 11 PLAN AS MORE FULLY DESCRIBED IN SECTION IV, (I) OBJECTIONS TO THE ADEQUACY OF THIS DISCLOSURE STATEMENT OR TO THE PLAN MAY BE FILED WITH THE BANKRUPTCY COURT AND SERVED ON COUNSEL FOR THE DEBTOR, ON OR BEFORE JUNE 9, 2015 AND (II) BALLOTS ON THE PLAN MUST BE RECEIVED BY THE CLERK OF THE BANKRUPTCY COURT NO LATER THAN JUNE 9, 2015, WITH THE CONFIRMATION HEARING ON THE PLAN COMMENCING ON JUNE 17, 2015 AT 10:00 A.M. May 6, 2015 Robert M. Fishman Allen J. Guon David R. Doyle Shaw Fishman Glantz & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Illinois 60610 [email protected] [email protected] [email protected] Counsel for Debtors {10615‐001 PLN A0364770.DOCX 14} Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 2 of 36 Desc Main DISCLAIMER THIS DISCLOSURE STATEMENT HAS BEEN PREPARED FOR PURPOSES OF SOLICITING ACCEPTANCES OF THE SECOND AMENDED JOINT CHAPTER 11 PLAN (THE “PLAN”) OF WEST SIDE COMMUNITY HOSPITAL, INC., GARFIELD KIDNEY CENTER, LLC, AND SUPERIOR HOME HEALTH, L.L.C. A COPY OF THE PLAN IS ATTACHED HERETO AS EXHIBIT 1. THE INFORMATION CONTAINED HEREIN MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN. ALL CLAIM AND INTEREST HOLDERS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF TITLE 11 OF THE UNITED STATES CODE AND RULE 3016(b) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE, AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NONBANKRUPTCY LAW. AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, A STIPULATION, OR A WAIVER, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NONBANKRUPTCY PROCEEDING (FOR EVIDENTIARY PURPOSES OR OTHERWISE), NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE LEGAL EFFECTS OF THE PLAN AS TO CLAIMHOLDERS OR INTEREST HOLDERS WEST SIDE COMMUNITY HOSPITAL, INC., GARFIELD KIDNEY CENTER, LLC, AND SUPERIOR HOME HEALTH, L.L.C. THE BANKRUPTCY COURT HAS NOT YET APPROVED THIS DISCLOSURE STATEMENT OR DETERMINED WHETHER THE PLAN MEETS THE LEGAL REQUIREMENTS FOR CONFIRMATION. THIS DISCLOSURE STATEMENT IS SUBJECT TO BANKRUPTCY COURT APPROVAL AT THE HEARING ON CONFIRMATION OF THE PLAN. {10615‐001 PLN A0364770.DOCX 14} Case 13-27091 Doc 456 I. Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 3 of 36 Desc Main INTRODUCTION On July 2, 2013 (the “Petition Date”), West Side Community Hospital, Inc. d/b/a Sacred Heart Hospital (“Sacred Heart”), Garfield Kidney Center, LLC (“Garfield”), and Superior Home Health, L.L.C. (“Superior,” and together with Sacred Heart and Garfield, the “Debtors”) filed petitions for relief under title 11 of the United States Code (the “Bankruptcy Code”) before the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court” or “Court”). Pursuant to order of the Bankruptcy Court, the Debtors’ cases are being jointly administered as Case No. 13-27091. The Debtors hereby submit this disclosure statement (this “Disclosure Statement”) pursuant to section 1125 of the Bankruptcy Code. This Disclosure Statement is prepared for use in the solicitation of votes on the Plan proposed by the Debtors and filed with the Bankruptcy Court. Capitalized terms not defined herein shall have the meanings ascribed to them in the Plan. This Disclosure Statement sets forth certain relevant information regarding the Debtors’ prepetition operating and financial history, the need to seek chapter 11 protection, significant events that have occurred during the Debtors’ Cases, and the anticipated procedures for liquidating the Debtors’ assets and liabilities. This Disclosure Statement also describes terms and provisions of the Plan, including certain alternatives to the Plan, certain effects of confirmation of the Plan, certain risk factors associated with the Plan, and the manner in which distributions will be made under the Plan. In addition, this Disclosure Statement discusses the confirmation process and the voting procedures that Holders of Claims and Interests must follow for their votes to be counted. FOR A DESCRIPTION OF THE PLAN AND VARIOUS RISK AND OTHER FACTORS PERTAINING TO THE PLAN AS IT RELATES TO CLAIMS AGAINST AND INTERESTS IN THE DEBTORS, PLEASE SEE SECTION II OF THIS DISCLOSURE STATEMENT, ENTITLED “SUMMARY OF PRINCIPAL PROVISIONS OF THE PLAN,” AND SECTION VIII, ENTITLED “RISK FACTORS AFFECTING PLAN.” THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN THE CASES, AND FINANCIAL INFORMATION. ALTHOUGH THE DEBTORS BELIEVE THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. THE DEBTORS DO NOT WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT ANY MATERIAL INACCURACY OR OMISSION. II. SUMMARY OF PRINCIPAL PROVISIONS OF THE PLAN IN ACCORDANCE WITH LOCAL RULE 3016-1, THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THE PLAN. ALL CREDITORS, INTEREST HOLDERS AND OTHER PARTIES-IN-INTEREST ARE URGED {10615‐001 PLN A0364770.DOCX 14} 2 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 4 of 36 Desc Main TO REVIEW THE PLAN IN ITS ENTIRETY BEFORE VOTING ON THE PLAN OR TAKING ANY OTHER ACTION WITH RESPECT THERETO. A. Overview of the Plan. The Plan constitutes a joint plan of liquidation for all of the Debtors. It provides for the transfer of each of the Debtors assets to a Liquidating Trust, the liquidation of all of each Debtor’s property, and a distribution of property consistent with section 726 of the Bankruptcy Code (the general distribution section for liquidation cases). The Plan is intended to maximize distributions payable to holders of Allowed Claims and Interests, and it is therefore designed to allow holders of Claims and Interests to receive distributions in excess of those which would be available if the Debtors were liquidated under chapter 7 of the Bankruptcy Code. The approval and consummation of the Plan and other related agreements will enable the Debtors to make distributions to Holders of Allowed Claims and Interests pursuant to the Plan. B. Summary of Plan, Classification of Claims and Interests and their Treatment. The following summary of the Plan is qualified in its entirety by, and should be read in conjunction with, the Plan. Under the Plan, Claims against and Interests in each of the three Debtors are divided into Classes which group together substantially similar claims and interests. For classification purposes, the Debtors are identified as follows: Class No. 1 2 3 Debtor Sacred Heart Garfield Superior The following summarizes the classification and treatment of Claims and Interests by the Debtors under the Plan. There can be no assurance that the amounts estimated in this Disclosure Statement are correct, and the actual amount of Allowed Claims and number of Allowed Interests may be significantly different from the estimates. Class Estimated Claims and Interests in each Class Summary of Plan Treatment Status Class 1A, 2A and 3A (NonTax Priority Claims) 1A: Approximately 150 claims in the amount of $145,289.16. Allowed Priority Non-Tax Claim will paid in full on Effective Date or as soon thereafter as practical. Distribution estimated at 100%. Unimpaired. 2A: 0 claims 3A: 0 claims {10615‐001 PLN A0364770.DOCX 14} 3 Voting Rights Deemed to Accept. Case 13-27091 Doc 456 Class Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 5 of 36 Estimated Claims and Interests in each Class Summary of Plan Treatment Status Desc Main Voting Rights Class 1B (WARN Priority Class Claim) 1 claim in the amount of $360,000. The WARN Priority Class Claim will be paid in full within 21 days of the Effective Date. The $360,000 shall be allocated to the WARN Plaintiffs and their counsel pursuant to terms of the proposed WARN Class Settlement. Distribution estimated at 100% Unimpaired. Deemed to Accept. Class 1C, 2B and 3B (FirstMerit Secured Claims) 3 claims in the amount of $5,075,000. FirstMerit’s Secured Claims shall be secured by (i) $4.9 million to be held in the FirstMerit Cash Collateral Account, and (ii) the Garfield Payment in the amount of $175,000. FirstMerit’s Secured Claim shall be Allowed in the aggregate amount of all LC Draws plus (i) the Garfield Payment and (ii) to the extent that funds are available in the FirstMerit Cash Collateral Account after any LC Draw, termination or expiration of the Letter of Credit, any Shortfall Amount; provided, however, FirstMerit’s total Allowed Claims shall not exceed the aggregate amount of $5,075,000. All other liens of FirstMerit shall be released and First shall have no other recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets. The FirstMerit Reimbursement Agreement shall remain in full force and effect except to the extent modified by this Plan, which modifications shall be deemed to be amendments to the FirstMerit Reimbursement Agreement. To the extent Allowed, the distribution is estimated at 100%. Impaired. Entitled to vote. Class 1D (HHS Secured Claim) 1 claim in the amount of $1.9 million. To the extent Allowed, HHS’s Secured Claims shall be rendered Unimpaired. Any balance of the Class 1D Claims not paid by setoff of such amounts shall be treated as a Class 1G Claim. Distribution estimated at 100% Unimpaired. Deemed to accept. {10615‐001 PLN A0364770.DOCX 14} 4 Case 13-27091 Doc 456 Class Estimated Claims and Interests in each Class Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 6 of 36 Summary of Plan Treatment Status Desc Main Voting Rights Class 1E (Other Secured Claims against Sacred Heart) 0 claims. Holders of Allowed Other Secured Claims shall be rendered Unimpaired. Any balance of the Class 1E Claims, to the extent not secured, shall be treated as a Class 1F Claim. Distribution estimated at 100%. Unimpaired. Deemed to accept. Class 2C (General Unsecured Claims against Garfield) Approximately 45 claims in the approximate amount of $101,810.04. Holders of Allowed General Unsecured Claim against Garfield shall receive their pro rata share of Garfield Liquidation Proceeds. Garfield Liquidation Proceeds remaining after payment of all Allowed Claims against Garfield shall be made available for Holders of Claims and Interests against Sacred Heart. Distribution estimated at 100%. Impaired Entitled to vote. Class 3C (General Unsecured Claims against Superior) Approximately 27 claims in the approximate amount of $37,709.54. Holders of Allowed General Unsecured Claim against Garfield shall receive their pro rata share of Superior Liquidation Proceeds and the Superior Unsecured Creditor Carveout in an amount not to exceed $50,000. Distribution estimated at 100%. Impaired. Entitled to vote. Class 1F (General Unsecured Claims against Sacred Heart) Approximately 320 claims in the approximate amount of $3,012,138.67. Holders of Allowed General Unsecured Claims shall receive their pro rata share of Sacred Heart Unsecured Creditor Carveout in the amount of $300,000. In addition, if Sacred Heart Liquidation Proceeds remain available for distribution after payment of the HHS Deficiency Carveout, Holders of Allowed General Unsecured Claims shall receive their pro rata share of the remaining Sacred Heart Liquidation Proceeds on an equal basis with any Allowed HHS Deficiency Claims. Distribution estimated at 10% to 22.6%. Impaired. Entitled to vote. {10615‐001 PLN A0364770.DOCX 14} 5 Case 13-27091 Doc 456 Class Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 7 of 36 Estimated Claims and Interests in each Class Summary of Plan Treatment Status Desc Main Voting Rights Class 1G (HHS Deficiency Claims) 1 claim in the amount of $12,873,174.04. Holders of Allowed HHS Deficiency Claims shall receive their pro rata share of (a) $100,000.00 and (b) if Sacred Heart Liquidation Proceeds are available for distribution, the HHS Deficiency Carveout (an amount necessary to provide the same percentage recovery for Class 1G Claims as Holders of Class 1F Claims received for the Sacred Heart Unsecured Carveout). In addition, if Sacred Heart Liquidation Proceeds remain available for distribution after payment of the HHS Deficiency Carveout, Holders of Allowed HHS Deficiency Claims shall receive their pro rata share of the remaining Sacred Heart Liquidation Proceeds on an equal basis with Sacred Heart General Unsecured Claims. Distribution estimated at 2.9% to 22.6%. Impaired. Entitled to vote. Class 1H – (Ownership Subordinated Claims against Sacred Heart) 3 claims; amount unknown. Holders of Allowed Ownership Subordinated Claims shall receive their pro rata share of the Sacred Heart Liquidation Proceeds after all other Allowed Claims against Sacred Heart and expenses of the Liquidating Trust have been paid in full. Distribution estimated at 0%. Impaired Entitled to vote. Class 2D and 3D (Equity Interest in Garfield and Superior) Equity Interests Holders of Equity Interests in Garfield and Superior shall receive the releases granted in Article 7.4(b) and the injunction granted in Article 7.5. Other than the foregoing releases and injunction, such Holders shall neither receive nor retain any property under this Plan on account of such Interests. Garfield Liquidation Proceeds and Superior Liquidation Proceeds remaining after payment of all Allowed Claims against Garfield and Superior shall be made available for Holders of Claims and Interests against Sacred Heart. Impaired. Entitled to vote. {10615‐001 PLN A0364770.DOCX 14} 6 Case 13-27091 Doc 456 Class Class 1I (Equity Interests in Sacred Heart) Estimated Claims and Interests in each Class Equity Interests Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 8 of 36 Summary of Plan Treatment Status Holders of Equity Interests shall retain their Equity Interests in Sacred Heart. Unimpaired. Desc Main Voting Rights Class 1I has consented to the proposed treatment and is deemed to accept. C. Additional Information Regarding Classification and Treatment of Claims and Interests. Following is a more detailed summary of the classifications and treatment of Claims and Interests under the Plan. Unclassified Administrative Claims and Priority Tax Claims against all Debtors. Administrative Claims and Priority Tax Claims are not classified because the Bankruptcy Code requires, and their Holders shall receive, payment in full in Cash either on the Effective Date (because these Claims are liquidated), or at such time as may be agreed to with such Holders. Administrative Claims include: (i) the Claims of Professionals retained in the Cases (ii) Claims for goods provided to the Debtors within 20 days before the Petition Date in the ordinary course of the Debtors’ business, if any (“§ 503(b)(9) Claims”), and (iii) Claims for goods and services provided to the Debtors after the Petition Date in the ordinary course of the Debtors’ business. Subject to the provisions of Article II of the Plan, Holders of Allowed Administrative Claims and Priority Tax Claims shall receive (a) Cash equal to the unpaid portion of such Allowed Administrative Claim or Priority Tax Claim, or (b) such other treatment upon which the Debtors and such Holder shall have agreed. As of April 20, 2015, the claims registers as maintained by the claims agent reflect (i) approximately $168,000 in Administrative Claims against Sacred Heart, (ii) approximately $33,600 in Administrative Claims against Garfield, and (iii) approximately $6,000 in Administrative Claims against Superior. However, certain of those Administrative Claims are improperly classified as Administrative Claims and subject to objection. Except for Professional Fee Claims and § 503(b)(9) Claims, the Debtors have been paying most administrative creditors in the ordinary course of business on a postpetition basis. Therefore, at present, the Debtors estimate that Administrative Claims (net of Professional Fee Claims) will total approximately $48,000 against Sacred Heart, $30,000 against Garfield, and $0 against Superior. The Debtors estimate that, as of the Effective Date, unpaid Professional Fee Claims will total approximately $360,000 for Sacred Heart, $360,000 for Garfield and $65,000 for Superior. Importantly, Alvarez & Marsal’s Healthcare Industry Group LLC (“A&M”) has agreed to waive approximately $500,000 of its Professional Fee Claim upon the Effective Date of the Plan. With respect to Priority Tax Claims, Sacred Heart scheduled $197,000 in Priority Tax Claims, Garfield scheduled $1,500 Priority Tax Claims and Superior scheduled $0.00 in Priority Tax Claims. As of April 20, 2015, the claims registers as maintained by the claims agent reflect {10615‐001 PLN A0364770.DOCX 14} 7 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 9 of 36 Desc Main (i) approximately $258,258.37 in Priority Tax Claims against Sacred Heart, (ii) approximately $2,762.56 in Priority Tax Claims against Garfield, and (iii) approximately $8,625.26 in Priority Tax Claims against Superior. Subject to a final claims reconciliation, the Debtors estimate that Allowed Priority Tax Claims will total $256,697.77 against Sacred Heart, $0.00 against Garfield and $6,639.32 against Superior. Class 1A, 2A and 3A – Non-Tax Priority Claims against all Debtors: Class 1A, 2A and 3A Claims consist of all Allowed Claims, other than Administrative Claims, Priority Tax Claims or WARN Class Priority Claims, that are entitled to priority in payment pursuant to sections 507(a)(1) – (9) of the Bankruptcy Code. These Claims are Unimpaired under the Plan. Under the Plan, each Holder of an Allowed Non-Tax Priority Claim shall be paid in full, without interest, or on such other terms as may be agreed upon by such Holder and the Debtors, on the Effective Date or as soon thereafter as may be practicable. Sacred Heart scheduled $1,009,000 in Non-Tax Priority Claims, Garfield scheduled $115,000 Non-Tax Priority Claims and Superior scheduled $87,000 Non-Tax Priority Claims. As of April 20, 2015, the claims registers as maintained by the claims agent reflect, taking into account scheduled claims, (i) approximately $3,363,050.42 in Non-Tax Priority Claims against Sacred Heart, (ii) $113,714.00 Non-Tax Priority Claims against Garfield, and (iii) approximately $87,524.00 in Non-Tax Priority Claims against Superior. However, $2,000,000 of the filed NonTax Priority Claims against Sacred Heart relate to an alleged class WARN Class Priority Claim that is addressed in Class 1B below. In addition, most of the scheduled and filed Non-Tax Priority Claims relate to employee wage claims that were paid by the Debtors during their Cases. Subject to a final claims reconciliation, the Debtors estimate that (i) the Non-Tax Priority Claims against Sacred Heart (but excluding WARN Class Priority Claims) will be approximately $145,289.16, (ii) the Non-Tax Priority Claims against Garfield will be approximately $0.00, and (iii) the Non-Tax Priority Claims against Superior will be approximately $0.00. Class 1B – WARN Class Priority Claims against Sacred Heart: The Class 1B Claim consists of the WARN Class Priority Claim to be allowed in the amount of $360,000 and paid within 21 days of the Effective Date pursuant to the terms of the proposed WARN Class Settlement. This Claim is unimpaired. A copy of the proposed WARN Class Settlement is attached as Exhibit B to the Plan. The WARN Class Priority Claim arises out of the WARN Adversary Proceeding filed in the Bankruptcy Court on or about July 9, 2013 by Quinolla McCullough (the “Class Representative”) asserting claims against Sacred Heart under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (the “WARN Adversary Proceeding”).1 In the complaint, the plaintiff, on behalf of herself and certain former employees of Sacred Heart, alleged that Sacred Heart had failed to provide 60 days written notice before laying off certain of its employees on or about July 1, 2013, as required by the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq. and sought approximately $1.3 million, plus attorneys’ fees and expenses. On January 15, 2014, the Bankruptcy Court certified a class 1 The WARN Adversary Proceeding is entitled McCullough v. West Side Community Hospital, Inc., et al. pending before the Bankruptcy Court as Adv. Pro. No. 13-00954. {10615‐001 PLN A0364770.DOCX 14} 8 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 10 of 36 Desc Main pursuant to the Consent Order Granting Plaintiff’s Motion for Class Certification and Related Relief, which is comprised of former employees of Sacred Heart who: (i) worked at the Sacred Heart’s facility and alleged that they were terminated without cause as part of, or as the result of, the layoffs on or about July 1, 2013; and (ii) who were not provided 60 days’ advance written notice of their terminations by Sacred Heart (collectively, with the Class Representative, the “WARN Plaintiffs”) Sacred Heart subsequently agreed to the terms of the WARN Class Settlement, pursuant to which the WARN Class Priority Claim shall be allowed in the total aggregate amount of $360,000, including attorneys’ fees and expenses to counsel for WARN Plaintiffs. The WARN Class Priority Claim is to be allocated and paid to the WARN Plaintiffs within 21 days of the Effective Date pursuant to the allocation and distribution procedures set forth in the WARN Class Settlement. The WARN Class Settlement remains subject to Bankruptcy Court approval. On March 18, 2015, Sacred Heart and the WARN Plaintiffs filed a joint motion with the Class Representative seeking entry of an order establishing a two-step approval process to facilitate notice to WARN Plaintiffs and approval of the Settlement Agreement. On April 8, 2015, the Court approved the form of notice and procedures for obtaining approval by the WARN Plaintiffs and scheduled the Fairness Hearing for May 20, 2015. Class 1C, 2B and 3B – FirstMerit Claims against all Debtors: Class 1C, 2B, 3B Claims consist of the Debtors’ obligations to FirstMerit under that certain Reimbursement Agreement dated May 25, 2012 with FirstMerit Bank, N.A. (“FirstMerit”) pursuant to which FirstMerit issued a $4.9 million letter of credit (“Letter of Credit”) for the account of the Bentley Management Group, LLC and BMG Management, LLC (collectively, the “Bentley Entities”) in favor of Comerica Bank. FirstMerit asserts liens on substantially all of the Debtors’ assets under the Reimbursement Agreement as security for the Letter of Credit. FirstMerit is currently holding in the FirstMerit Cash Collateral Account approximately $3.6 million and $1.3 is held in reserve in Garfield’s deposit account at FirstMerit. Of the $3.6 million held by FirstMerit in the FirstMerit Cash Collateral Account, approximately $2.8 million is Cash transferred from Sacred Heart, $400,000 was transferred from Garfield and $400,000 was transferred from Superior. FirstMerit’s Class 1C, 2B and 3B Claims are impaired under the Plan. On the Effective Date, Garfield shall (i) deliver to FirstMerit Cash the amount of $1,300,000, which FirstMerit will deposit in the FirstMerit Cash Collateral Account and (ii) pay FirstMerit the amount of $175,000 in partial satisfaction of FirstMerit’s Secured Claims against the Debtors (“Garfield Payment”), which FirstMerit is authorized to retain immediately. FirstMerit’s Secured Claims shall be deemed Allowed in the aggregate amount of all Letter of Credit draws (“LC Draws”) plus (i) the Garfield Payment and (ii) to the extent that funds are available in the FirstMerit Cash Collateral Account after any LC Draw, termination or expiration of the Letter of Credit, any Shortfall Amount; provided, however, FirstMerit’s total Allowed Class 1C, 2B and 3B Claims shall not exceed the aggregate amount of $5,075,000. FirstMerit shall also receive the releases granted in Article 7.4(e) of the Plan. {10615‐001 PLN A0364770.DOCX 14} 9 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 11 of 36 Desc Main FirstMerit’s Class 1C, 2B and 3B shall be secured solely by the Cash on deposit in the Cash Collateral Account as of the Effective Date and the Garfield Payment and all other security interests and liens of FirstMerit on the Debtors’ Assets shall be released. FirstMerit’s sole recourse for its Claims against the Debtors shall be from the Cash held in the FirstMerit Cash Collateral Account and the Garfield Payment. FirstMerit shall have no recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets FirstMerit will extend the Letter of Credit through and including May 30, 2018, and will not issue any notification to Comerica Bank that the Letter of Credit will not be extended prior to February 15, 2018. Upon the occurrence of a LC Draw, FirstMerit may immediately remove Cash from the FirstMerit Cash Collateral Account in the amount of a LC Draw and apply it to FirstMerit’s Allowed Class 2B Claim. Upon expiration of the Letter of Credit, all funds remaining in the FirstMerit Cash Collateral Account, after FirstMerit is reimbursed for all LC Draws, shall be promptly transferred by FirstMerit to the Liquidating Trust. The FirstMerit Reimbursement Agreement shall remain in full force and effect except to the extent modified by this Plan, which modifications shall be deemed to be amendments to the FirstMerit Reimbursement Agreement. Class 2C – General Unsecured Claims against Garfield: Class 2C Claims are Impaired under the Plan. Each Holder of an Allowed Class 2C Claim shall receive an amount equal to the Holder’s pro rata share of the Garfield Liquidation Proceeds, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 2C Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 2C Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. Any Garfield Liquidation Proceeds remaining after payment of all Allowed 2C Claims against Garfield shall be paid to the Liquidation Trustee for the benefit of Holders of Claims and Interests against Sacred Heart. The schedules of Garfield reflect liquidated General Unsecured Claims of approximately $263,000. As of April 20, 2015, the claims registers as maintained by the claims agent reflect approximately $435,620.26 in aggregate, liquidated General Unsecured Claims against Garfield. However, certain of those General Unsecured Claims are grossly inflated and subject to objection. Based on the amount of General Unsecured Claims filed and the Debtors’ Claims analysis to date, the Debtors estimate that total General Unsecured Claims will be approximately $101,810.04. Class 3C – General Unsecured Claims against Superior: Class 3C Claims are Impaired under the Plan. Each Holder of an Allowed Class 3C Claim shall receive an amount equal to the Holder’s pro rata share of the Superior Liquidation Proceeds and the Superior General Unsecured Carveout, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 3C Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 3C Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. {10615‐001 PLN A0364770.DOCX 14} 10 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 12 of 36 Desc Main The schedules of Superior reflect liquidated General Unsecured Claims of approximately $36,500. As of April 20, 2015, the claims registers as maintained by the claims agent reflect approximately $48,392.00 in aggregate, liquidated General Unsecured Claims against Superior. However, certain of those General Unsecured Claims are inflated and subject to objection. Based on the amount of General Unsecured Claims filed and the Debtors’ Claims analysis to date, the Debtors estimate that total General Unsecured Claims will be approximately $37,709.54. Class 1D – HHS Secured Claims against Sacred Heart: Class 1D Claims are Unimpaired under the Plan and consist of all HHS’s Secured Claims. Each Allowed Class 1D Claim shall be fully settled and satisfied by setoff of all funds due Sacred Heart by HHS, which are unpaid on the date the Class 1D Claim is Allowed. Any balance of the Class 1D Claims not paid by setoff of such amounts shall be a Class 1G Claim. The HHS has filed a Secured Claim for alleged Medicare overpayments against Sacred Heart in the amount of $14,773,174. The Debtors believe that the Secured Claims filed by HHS are inflated and subject to objection. It is Sacred Heart’s position that HHS is currently withholding over $1.9 million in Medicare receivables owed to Sacred Heart based on alleged overpayments. To the extent that any Secured Claims of HHS are ultimately Allowed, the Debtors estimate a 100% distribution to Class 1D Claims. Class 1E – Other Secured Claims against Sacred Heart: Class 1E Claims are Unimpaired under the Plan and consist of all Secured Claims against Sacred Heart other than FirstMerit’s Class 1C Claim and HHS’s Class 1D Claim. Holders of Class 1E Claims shall receive the properties on which they hold liens or which is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim Holder’s interest in Sacred Heart’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code and Bankruptcy Rule 3012 or, in the case of a setoff, pursuant to section 553 of the Bankruptcy Code. Any balance of the Secured Claims, to the extent not secured by the Assets on which they hold liens or which is subject to setoff under section 553 of the Bankruptcy Code, shall be treated as General Unsecured Claims in Class 1F. The Debtors have not scheduled any Secured Claims in their Cases. As of April 20, 2015, the claims registers as maintained by the claims agent reflect that, other than HHS Secured Claims addressed in Class 1D, approximately five Secured Claims totaling $59,185.92 have been filed against Sacred Heart. The Debtors believe that none of these claims may be allowed. Additionally, no Secured Claims have been filed against Garfield or Superior. Class 1F – General Unsecured Claims of Sacred Heart: Class 1F Claims are Impaired under the Plan. Each Holder of an Allowed Class 1F Claim shall receive an initial payment of Cash in an amount equal to the Holder’s pro rata share of Unsecured Creditor Carveout in the amount of $300,000, provided solely for the benefit of the Allowed Class 1F Claims. In addition, if Sacred Heart Liquidation Proceeds remain for distribution after payment of the HHS Deficiency Carveout, each Holder of an Allowed Class 1F Claim and each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of the remaining Sacred Heart Liquidation Proceeds. Payment shall be made by the Liquidating {10615‐001 PLN A0364770.DOCX 14} 11 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 13 of 36 Desc Main Trustee, in the Liquidating Trustee’s sole discretion, after (a) all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Class 1A Claims, and Allowed Class 1B against Sacred Heart have been paid in full, (b) the HHS Deficiency Carveout has been paid in full; and (c) the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. Each Holder of an Allowed Class 1F Claim shall receive up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1F Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1F Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. The schedules of Sacred Heart reflect liquidated General Unsecured Claims of approximately $1,700,000. As of April 20, 2015, the claims registers as maintained by the claims agent reflect approximately 346 claims totaling $103,513,891.97 in aggregate, liquidated General Unsecured Claims against Sacred Heart. However, certain of those General Unsecured Claims are grossly inflated and subject to objection. In addition, many of the Claims are based on former employees’ claims for wages that have been paid in full. Moreover, certain creditors have filed duplicative Claims, and Sacred Heart intends to object to such duplicative Claims such that each Holder with an Allowed Claim will be entitled to a single recovery. Based on the amount of General Unsecured Claims filed and Sacred Heart’s Claims analysis to date, Sacred Heart estimates that total Allowed General Unsecured Claims will be approximately $2,912,138.67. Class 1G – HHS Deficiency Claims Against Sacred Heart: Class 1G Claims are Impaired under the Plan. Each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of (a) $100,000.00 and (b) the HHS Deficiency Carveout. Payment of the HHS Deficiency Carveout shall be made by the Liquidating Trustee, in the Liquidating Trustee’s sole discretion, after (x) all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Class 1A, 1B, 1C Claims have been paid in full and (y) the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. In addition, if Sacred Heart Liquidation Proceeds remain for distribution after payment of the HHS Deficiency Carveout, each Holder of an Allowed Class 1F Claim and each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of the remaining Sacred Heart Liquidation Proceeds. Payment shall be made by the Liquidating Trustee, in the Liquidating Trustee’s sole discretion, after the Liquidating Trustee has determined that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. Each Holder of an Allowed Class 1G shall receive up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1G Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1G Claim for postpetition interest, {10615‐001 PLN A0364770.DOCX 14} 12 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 14 of 36 Desc Main attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. HHS has filed a Secured Claim for alleged Medicare overpayments against Sacred Heart in the amount of $14,773,174. The Debtors believe that the Claims filed by HHS are grossly inflated and subject to objection. It is Sacred Heart’s position that HHS is currently withholding over $1.9 million in Medicare receivables owed to Sacred Heart based on alleged overpayments. To the extent that HHS’s Claims are ultimately Allowed, after reduction for its Secured Claim, the Debtors estimate a 2.9% to 22.6% distribution to Class 1G Claims. Class 1H – Ownership Subordinated Claims: Class 1H Claims are Impaired under the Plan. Each Holder of an Allowed Class 1H Claim shall receive Cash in an amount equal to the Holder’s pro rata share of the Sacred Heart Liquidation Proceeds, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1H Claim after all Allowed Administrative Claims, Allowed Priority Tax Claims and Allowed Class 1A, 1B, 1C, 1D, 1E, 1F and 1G Claims against Sacred Heart have been paid or satisfied in full and the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1H Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. Pursuant to the terms of the Novak Party Settlement, the Novak parties were entitled to retain three allowed fully subordinated general unsecured claim against Sacred Heart (collectively, the “Novak Party Subordinated Claim”). Although the allowed amount of the Novak Party Subordinated Claim are undetermined at this time, Sacred Heart does not anticipate any recovery for Class 1H Claims since all other Claims against Sacred Heart will not be paid in full. Class 2D and 3D – Equity Interests in Garfield and Superior: Class 2D and 3D Interests are Impaired under the Plan. Holders of Class 2D and 3D Interests shall neither receive nor retain any property under this Plan on account of such Interests. Any Cash remaining after payment of all Allowed Claims against Garfield shall be paid to the Liquidation Trustee for the benefit of Holders of Claims and Interests against Sacred Heart. The Debtors anticipate that, after payment of all Garfield Claims in full, approximately $66,000 will be available for distribution for the payment of Allowed Claims against Sacred Heart. The Debtors anticipate that, after payment of all Superior Claims in full, no additional funds will be available for distribution for the payment of Allowed Claims against Sacred Heart. Class 1I – Equity Interest in Sacred Heart: Class 1I Interests are Unimpaired under the Plan. Holders of Allowed Interests shall retain their Equity Interests under the Plan. To the extent that any Sacred Heart Liquidation Proceeds remain after all Allowed Claims against Sacred Heart have been paid or satisfied in full pursuant to this Plan, such Sacred Heart Liquidation Proceeds shall be distributed to the Holder of the Allowed Classes 1I Interests. {10615‐001 PLN A0364770.DOCX 14} 13 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 15 of 36 Desc Main Sacred Heart does not anticipate any recovery for Class 1H Claims since all other Claims against Sacred Heart will not be paid in full. D. Summary of Implementation of the Plan: As of the Effective Date, the Liquidation Proceeds and all other Assets of each Estate shall be transferred, conveyed and assigned to the Liquidating Trust. The Liquidation Proceeds and all other Assets of their respective Estates transferred to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement shall be held in segregated accounts for the benefit the Holders of Claims and Interests against each respective Estate. On the Effective Date, any executory contracts that (i) the Debtors entered into prior to the Petition Date, (ii) are executory as of the Effective Date, and (iii) have not been assumed or rejected pursuant to section 365 of the Bankruptcy Code before the Effective Date, shall be deemed rejected. As set forth in the Plan, the Richard M. Fogel shall be appointed as the Liquidating Trustee pursuant to the Liquidating Trust Agreement and shall be responsible for liquidating and administering the Trust Assets for all distributions pursuant to the Plan. All proofs of claim shall be liquidated and the Liquidating Trustee shall make one or more distributions to Allowed Claims pursuant to the terms of the Plan. E. Novak Party Settlement. On the Effective Date, the Escrow Agent shall release the Escrowed Settlement Funds in the amount of $500,000 to the Liquidating Trustee to fund the obligations under this Plan. West Side Management Corp. consents to the treatment of its Claims and Interests against the Debtors in this Plan. The Novak Parties shall receive the applicable releases set forth in Article VII of this Plan and the Confirmation Order. In particular, each Holder of a Claim (other than a Claim of a Governmental Unit) that receives a distribution under this Plan unconditionally releases each of the Novak Parties from any Claims. The Novak Parties shall also grant the applicable releases set forth in Article VII of this Plan and the Confirmation Order. No release shall be granted on behalf of a Governmental Unit. Notwithstanding the terms of the Novak Party Settlement, nothing in the Plan shall release any claims against the Bentley Entities until such time as the Debtors (or the Liquidating Trustee after the Effective Date) enter a settlement with the Bentley Entities approved pursuant to a Final Order of the Bankruptcy Court. F. Maintenance of Cash Collateral Account By Trustee. To the extent the Letter of Credit has not been drawn upon pursuant to its terms prior to the Effective Date, the Liquidating Trustee shall be substituted for the Debtors and/or the Bentley Entities as the account holder of record with respect to the FirstMerit Cash Collateral Account. Until such time as the Letter of Credit is drawn upon, expires by its own terms or is otherwise released by beneficiary, the FirstMerit Cash Collateral Account shall secure the Debtors’ obligations under the Letter of Credit. G. Termination of Cash Collateral Account. To the extent that Comerica Bank draws on the Letter of Credit or the Letter of Credit expires on or after the Effective Date, any funds remaining in the FirstMerit Cash Collateral Account after satisfaction of any Allowed Class 1C, 2B and 3B Claims, shall thereafter be delivered to the Liquidating Trustee for distribution pursuant to the terms of this Plan and the Cash Collateral Account shall thereafter be closed. H. Dissolution of Garfield and Superior. Immediately upon the transfer, conveyance and assignment of the Liquidation Proceeds and all other Assets of the Garfield and {10615‐001 PLN A0364770.DOCX 14} 14 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 16 of 36 Desc Main Superior Estates to the Liquidating Trust, each of Garfield and Superior shall be deemed to be dissolved without any further action by the Liquidating Trustee being required to effect such dissolution. Notwithstanding the foregoing, nothing in this Plan is intended to substantively consolidate, nor shall have the effect of substantively consolidating, any of the Debtors or their respective Estates. As of the Effective Date, all Equity Interests in Superior and Garfield shall be deemed cancelled. I. Continued Corporate Existence of Sacred Heart. Subject to the provisions of the Plan, Sacred Heart shall continue to exist after the Effective Date, in accordance with applicable law and pursuant to its articles of incorporation and by-laws in effect prior to the Effective Date; provided, however, (i) the Liquidation Proceeds and all other Assets (including Litigation Claims) of Sacred Heart’s Estate shall be transferred to the Liquidating Trust pursuant to the terms of Article V of the Plan and (ii) the corporate purpose of Sacred Heart shall be limited to taking such actions consistent with the implementation the Plan. On the Effective Date, the Equity Interests in Sacred Heart shall revert to the Holders of Class 1I Interests and Novak shall be its sole director and president. After the Effective Date, Sacred Heart shall be solely responsible for all required tax disclosures or filings and for complying with all corporate reporting requirements. None of the Estates, the Debtors, the Liquidating Trustee Protected Parties, the Postpetition Releasees or any of their respective professionals, or their successors or assigns shall incur any liability based upon actions taken by Sacred Heart after the Effective Date. J. Medical Records. Notwithstanding anything in the Plan to the contrary, neither the Liquidating Trustee nor the Liquidating Trust shall be covered entities as that term is defined under HIPAA and the HIPAA Rules; provided, however, the Liquidating Trustee shall have access to protected health information of former patients of the Debtors solely for the purposes of implementing the Plan. In the Case, The Debtors entered into agreements with Recall Total Information Management, Inc., Computer Programs & Systems, Inc. and APGME, Inc. that provided for the continued access, storage and eventual secured destruction of certain protected health information of former patients of the Debtors. The contact for information Recall Total Information Management, Inc. is as follows: Recall Corporation, 4242 W. 42nd Street, Chicago, Illinois 60632, Attn.: Lori Olson or Sales Manager; Phone: (312) 545-0463, Fax: (773) 9130564. The contact information for Computer Programs & Systems, Inc. is Computer Programs & Systems, Inc. c/o Helmsing, Leach, Herlong, Newman and Rouse, P.C., 150 Government Street, Suite 2000, Mobile Alabama, AL 36602, Attn: Christopher Conte, Phone: 251-434-0888; E-mail: [email protected]. The contact for information APGME, Inc. is as follows: APGME, Inc. c/o Zayyad Law Offices, P.C., 9723 Southwest Highway, Oak Lawn, IL 60453, Attn.: Nehad Zayyad, Phone: (708) 576-4300. K. Summary of Recovery Analysis: The Plan provides for the orderly liquidation of the Estates. The Debtors believe that if the Plan is not consummated, it is likely that Holders of Claims will receive less than what they would otherwise receive if the Plan is confirmed because liquidation through any other means would, at a minimum, require payment in full of all of the Professional Fee Claims of A&M. In addition, Sacred Heart would be required to return to the Novak Parties the $500,000 settlement payment currently held in escrow. If this is the case, distributions to unsecured creditors of Sacred Heart and Superior would be greatly reduced – if not eliminated. Accordingly, the Debtors believe that the Plan provides the best {10615‐001 PLN A0364770.DOCX 14} 15 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 17 of 36 Desc Main recoveries possible for the Holders of Claims against and Interests in the Debtors, and therefore, the Debtors strongly recommend that you vote to accept the Plan. L. Timing of Distributions Under the Plan: As detailed in Article VI of the Plan, distributions under the Plan shall be made under the terms of the Liquidating Trust Agreement and the Plan as soon as is practicable on the later to occur of (a) the Effective Date, (b) when a Claim becomes an Allowed Claim, or (c) when Cash is available for distribution to a particular Class pursuant to the treatment of such Class under the Plan. III. GENERAL INFORMATION REGARDING DISCLOSURE STATEMENT A. Purpose of Disclosure Statement. Pursuant to section 1125 of the Bankruptcy Code, the Debtors have disseminated this Disclosure Statement, to all known Holders of Claims against and Interests in the Debtors. The Disclosure Statement serves the following two purposes: (i) solicitation of acceptances from those entitled to vote on the Plan; and (ii) notification of the hearing in the Bankruptcy Court on confirmation of the Plan. This Disclosure Statement is filed with respect to the Plan to describe, among other things, the treatment of the various Classes of Claims against and Interests in the Debtors under the Plan and the means for execution of the Plan. A copy of the Plan accompanies the Disclosure Statement and is attached hereto as Exhibit 1. The rules of construction and definitions contained in the Bankruptcy Code and Bankruptcy Rules are applicable to this Disclosure Statement. Unless otherwise indicated, all statutory references in this Disclosure Statement shall refer to the Bankruptcy Code and Bankruptcy Rules, as applicable. B. Approval of Disclosure Statement. The Bankruptcy Court has not yet determined whether this Disclosure Statement contains information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the Debtors and the condition of the Debtors’ books and records, which would enable a hypothetical investor to make an informed judgment about the Plan. In determining whether this Disclosure Statement provides adequate information, the Bankruptcy Court will consider the complexity of these cases, the benefit of additional information to creditors and other parties in interest, and the cost of providing additional information. Approval of this Disclosure Statement, however, does not constitute a determination by the Bankruptcy Court as to the fairness or merits of the Plan. Furthermore, this Disclosure Statement is not intended to be an offering memorandum or securities prospectus and is exempt from all applicable federal and state securities laws pursuant to section 1125(e) of the Bankruptcy Code. C. Dissemination of Disclosure Statement. This Disclosure Statement has been provided to each party in interest whose Claim or Interest has been scheduled or who has filed a proof of Claim or Interest in these Cases. It is intended to assist such parties in evaluating the Plan and determining whether to accept or reject the Plan. This Disclosure Statement has been made available online on the Claim Agent’s website at http://cases.gcginc.com/sacredheart/ and from the Debtors’ counsel. Under the Bankruptcy Code, your vote for acceptance or rejection of the Plan may not be solicited unless you receive a copy of this Disclosure Statement prior to or concurrently with such solicitation. Each Holder of a Claim or Interest should carefully read this Disclosure Statement and the Plan in their entirety before voting on the Plan. {10615‐001 PLN A0364770.DOCX 14} 16 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 18 of 36 Desc Main D. Sources of Information and Disclaimer. This Disclosure Statement may not be relied upon for any purpose other than to determine whether to accept or reject the Plan. Nothing contained in this Disclosure Statement shall constitute an admission by the Debtors or any other party regarding the subject matter of the Disclosure Statement, be admissible in any proceeding (for evidentiary purposes or otherwise) involving the Debtors or any other party, or be deemed advice on the tax or other legal effects of the Plan on Claim or Interest Holders. In the event of any inconsistency between this Disclosure Statement and the Plan, the terms of the Plan shall control. Except as otherwise expressly indicated herein, the information contained in this Disclosure Statement has been obtained from the Debtors’ books and records and certain pleadings, papers and other documents filed with the Bankruptcy Court. There has been no independent audit of the financial information contained in this Disclosure Statement. IV. CONFIRMATION PROCEDURES A. Restrictions on Solicitation of Votes. No information concerning the Plan or any assets or liabilities of the Debtors has been authorized by the Bankruptcy Court to be disseminated in connection with the solicitation of acceptances or rejections of the Plan other than as set forth in this Disclosure Statement. No party has been authorized to solicit acceptances or rejections of the Plan other than the Debtors as the proponents of the Plan. Any inducements to secure your acceptance or rejection of the Plan other than as contained in this Disclosure Statement should not be relied upon by Holders of Claims or Interests in voting on the Plan. Any such information or inducement should be reported immediately to the Debtors for further action as may be appropriate before the Bankruptcy Court. B. Classes Entitled to Vote. There are seventeen (17) different classes of Claims and Interests under the Plan. Classes 1A, 1B, 1D, 1E, 1I, 2A, and 3A are unimpaired and are presumed to have accepted the Plan pursuant to section 1126 of the Bankruptcy Code. Holders of Claims and Interests in Classes 1C, 1F, 1G, 1H, 2B, 2C, 2D, 3B, and 3C and 3D are impaired under the Plan and are entitled to vote on the Plan. Pursuant to section 1123(a) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims are not subject to classification. As such, the Holders thereof are not entitled to vote on the Plan. The treatment of Administrative Claims and Priority Tax Claims is set forth in Article II of the Plan. C. Voting on the Plan. In order to vote on the Plan, Holders of Claims and Interests in Classes eligible to vote should complete the enclosed ballot and return it to the following address so that it is received by on or before June 9, 2015: Clerk of the United States Bankruptcy Court Northern District of Illinois, Eastern Division 219 South Dearborn, Room 713 Chicago, Illinois 60604 {10615‐001 PLN A0364770.DOCX 14} 17 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 19 of 36 Desc Main ONLY THOSE BALLOTS RETURNED IN A TIMELY MANNER WILL BE COUNTED IN DETERMINING WHETHER A PARTICULAR CLASS OF CLAIM OR INTEREST HOLDERS HAS ACCEPTED OR REJECTED THE PLAN. D. Confirmation Hearing. Pursuant to section 1128 of the Bankruptcy Code, the Bankruptcy Court has scheduled a hearing to consider the adequacy of this Disclosure Statement and the confirmation of the Plan (the “Confirmation Hearing”) on June 17, 2015 at 10:00 a.m. (prevailing central time), and it has directed that notice thereof be transmitted to all parties in interest. The Confirmation Hearing will be held before the Honorable Eugene R. Wedoff, Courtroom 744, 219 South Dearborn, Chicago, Illinois. Any objections to the adequacy of the disclosure statement or confirmation of the Plan must be in writing and must be filed with the Bankruptcy Court on or before June 9, 2015. Objections must be served at the same time upon counsel for the Debtors: Robert M. Fishman Allen J. Guon David R. Doyle Shaw Fishman Glantz & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Illinois 60654 The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice other than by announcement of the next adjourned date at the Confirmation Hearing or any adjourned Confirmation Hearing. At the Confirmation Hearing or any adjourned Confirmation Hearing, the Bankruptcy Court shall enter an order confirming the Plan if sufficient acceptances thereof have been received from Holders of Claims and Interests entitled to vote on the Plan and if all other statutory requirements have been satisfied. E. Acceptances Necessary for Confirmation. At the Confirmation Hearing, the Bankruptcy Court will determine, among other things, whether the Plan has been accepted by each Class that is Impaired under the Plan. Under section 1126 of the Bankruptcy Code, an Impaired Class of Claim Holders is deemed to have accepted the Plan if members of the class that hold two-thirds (2/3) in amount, and more than one-half (1/2) in number, of the Allowed Claims voting on the Plan have voted for acceptance of the Plan. An Impaired Class of Interest Holders is deemed to have accepted the Plan if members of the class holding two-thirds (2/3) in amount of the Allowed Interests voting on the Plan have voted for acceptance of the Plan. Unless there is unanimous acceptance of the Plan by each Holder of a Claim or Interest in an Impaired Class, the Bankruptcy Court, as an additional requirement for Confirmation, must determine that, under the Plan, the members of each such Class will receive property of a value, as of the Effective Date of the Plan, that is not less than the value that each such Class member would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code on the Effective Date of the Plan. F. Confirmation Without Necessary Acceptances. Even if one or more classes of Claims or Interests that are Impaired under the Plan reject the Plan, or are deemed to have rejected the Plan, the Bankruptcy Court may confirm the Plan if it finds that at least one (1) {10615‐001 PLN A0364770.DOCX 14} 18 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 20 of 36 Desc Main Impaired Class of Claims has voted to accept the Plan (determined without including any acceptance of the Plan by an insider) and that the Plan does not “discriminate unfairly,” and is “fair and equitable” as to each Impaired Class of Claims or Interests that has not accepted the Plan. This authority is contained in §§ 1129(a)(10) and 1129(b) of the Bankruptcy Code. V. HISTORY OF THE DEBTORS AND THEIR CHAPTER 11 CASES A. The Debtors’ Businesses Sacred Heart, an Illinois corporation, was a 119-bed acute care hospital located at 3240 West Franklin Boulevard, Chicago, Illinois that also owned and operated medical clinics in the Garfield Park neighborhood of Chicago, Illinois. Prior to the events leading up to the filing of these Cases, Sacred Heart had annual revenues in excess of $40 million and net income of approximately $10 million and employed approximately 270 employees. Garfield, an Illinois limited liability company, is affiliated with Sacred Heart and operated a 16-station hemodialysis center located at 3250 West Franklin Boulevard, Chicago, Illinois. Garfield was a safety net provider of dialysis services to end stage renal disease patients located in the Garfield Park and Humboldt Park neighborhoods of Chicago. At the time of the bankruptcy filing, Garfield had annual revenues of approximately $3.2 million and employed approximately 18 employees. Superior, an Illinois limited liability company, provided home health care services within Cook County, DuPage County and Will County, Illinois out of a facility at 4054 W. North Ave., 2nd Floor, Chicago, Illinois. At the time of the bankruptcy filing, Superior had annual revenues of approximately $2.0 million and employed 20 full and part-time personnel. Edward Novak is the sole shareholder of Sacred Heart, and is also the sole shareholder of West Side Management Corporation (“WSMC”). WSMC, in turn, is the sole the sole member of Superior and Garfield. B. Criminal Indictment and Trial On April 16, 2013, the U.S. Attorney for the Northern District of Illinois arrested certain principals and insiders of the Sacred Heart, alleging that they had engaged in an illegal kickback scheme to increase the hospital census and revenues by inducing patient referrals. Among those arrested and charged included Edward Novak; Roy Payawal, the chief financial officer of Sacred Heart; Dr. Percy Conrad May, Jr.; Dr. Subir Maitra; and Dr. Shanin Moshiri (the “Criminal Action”). Also on April 16, 2013, federal authorities seized $1,924,381, an amount sufficient to cover the potential liability resulting from the alleged fraud (the “Seizure”). Federal authorities also seized certain financial and operational files and documents. The Debtors were not charged with any wrongdoing by the federal authorities and continued to operate after the arrests. On October 22, 2013, a federal grand jury returned a 17-count indictment from the U.S. Attorney for the Northern District of Illinois, charging the initial five defendants and three additional defendants: Anthony Puorro, the chief operating officer of Sacred Heart; Dr. Rajiv Kandala; and Noemi Velgara. The indictment alleges that Sacred Heart’s owners, executives, {10615‐001 PLN A0364770.DOCX 14} 19 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 21 of 36 Desc Main and administrators conspired between 2004 and April 2013 to pay physicians bribes concealed as consulting, employment, and personal services compensation, rent, and instructional stipends in return for referrals of Medicare and Medicaid patients. Although styled as payments for legitimate services, the payments allegedly contained disguised bribes paid to and for the benefit of Drs. May, Maitra, Moshiri, and Kandala in exchange for patient referrals. On or about March 19, 2015, after a trial in the Criminal Action, the jury returned a verdict finding Novak guilty of conspiracy and Medicare fraud. The jury verdict also found Pawayal and Clarence Naglevoort, Sacred Heart’s former chief operating officer, guilty of conspiracy and fraud. C. Retention of Alvarez & Marsal On April 26, 2013, Mr. Novak retained A&M to oversee operations for the Debtors, appointed Paul Rundell, a managing director at A&M, the Chief Restructuring Officer (“CRO”), and ceded all operational control to the CRO and A&M. Mr. Novak also appointed an independent board of directors, comprised of three physicians that had no involvement with any alleged wrongdoing, to manage the Debtors. The prior executive management personnel involved with the alleged fraud were also removed. D. Withholding of Medicare Receivables by CMS As a result of the criminal charges, the Debtors suffered severe cash flow and reserve shortages. Between the federal authorities’ Seizure and FirstMerit’s setoff against Sacred Heart’s deposit accounts, over $4.7 million in cash was depleted from Sacred Heart, Garfield and Superior, leaving barely enough cash for the hospital to operate. Effective May 7, 2013, Centers for Medicare and Medicaid Services (“CMS”) began to withhold Medicare payments from Sacred Heart, without notification, due to suspicion of fraud. On May 21, 2013, Sacred Heart received a notice from CMS formally withholding all further Medicare payments. On May 22, 2013, Sacred Heart sent a rebuttal to CMS urging it to resume payments and warning that, without Medicare funding, the hospital would have to shut down. CMS responded that it would continue to withhold payments for 180 days. Sacred Heart also experienced a decline in patient census. Prior to the arrests, the average daily census at Sacred Heart was approximately 40 patients per day. Shortly after the arrests, Sacred Heart experienced more than a fifty percent (50%) decline in the average daily census. As a result of CMS’ refusal to resume Medicare payments, Sacred Heart had insufficient cash to fund payroll and was unable to continue operations. On July 1, 2013, Sacred Heart properly transitioned all of its patients to other healthcare facilities in the area. On July 2, 2013, Sacred Heart suspended all patient care and terminated approximately 200 of their 270 employees. It is Sacred Heart’s position that, as of the Petition Date, the amount of Medicare payments withheld by CMS exceeded $1.9 million. CMS has continued withhold Medicare payments from Sacred Heart. In addition, the Illinois Department of Health and Family Services has also withheld the approximately $400,000 in Medicaid payments. {10615‐001 PLN A0364770.DOCX 14} 20 Case 13-27091 Doc 456 E. Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 22 of 36 Desc Main The Debtors’ Bankruptcy Filings and First Day Motions The Debtors believed that the chapter 11 process would provide the most efficient platform to economically wind-down the businesses of the Debtors; maximize the value of the Debtors through sales of their assets under 363 of the Bankruptcy Code; manage the claims of CMS and other creditors of the Debtors; and provide a forum to resolve the transfers to FirstMerit and Bentley Entities. On or shortly after the Petition Date, the Debtors filed a number of so-called “First-Day” motions or applications, including an application to employ Shaw Fishman Glantz & Towbin LLC as the Debtors’ bankruptcy attorneys; an application to employ Paul Rundell and A&M as the Debtors’ chief restructuring officer and other personnel; a motion to pay prepetition wages and to continue postpetition employee benefit plans; a motion to authorize the continued use of the Debtors’ existing business forms and records; a motion to provide adequate assurance of payment to utilities; and an application to employ Garden City Group, Inc., as the Debtors’ claims and noticing agent. The Bankruptcy Court entered orders granting all of these First-Day motions. Subsequently, the Debtors filed a motion seeking the entry of an order finding the appointment of a patient care ombudsman unnecessary. In the motion, the Debtors contended that an ombudsman was unnecessary because (i) the assets of Superior had already been sold, (ii) Sacred Heart had ceased operating, and (iii) Garfield already had sufficient safeguards in place to ensure patient wellbeing pending a sale of its assets. The Bankruptcy Court entered an order granting the motion. F. PostPetition Financing and Cash Collateral 1. Postpetition Financing Sacred Heart required Postpetition Financing to pay expenses incurred in the ordinary course of their businesses associated with the maintenance and preservation of its assets. These expenses included payroll, employee related expenses, maintenance costs, security, taxes, and insurance. Accordingly, on July 3, 2013, in conjunction with their other First Day motions, the Debtors filed a motion (“DIP Motion”) seeking authority to obtain postpetition financing (“Postpetition Financing”) in the amount of $410,000 from BCL-M&E LLC (“BCL”). Under the Postpetition Financing agreement, BCL was entitled to $10,000 for closing fees and expenses, an interest fee of $75,000 for the first three months, and $30,000 for each subsequent month that the loan remained outstanding. On July 3, 2013, the Bankruptcy Court entered an interim order granting the relief requested by the DIP Motion and authorizing the Postpetition Financing in the full amount and set a final hearing on the motion for July 30, 2013. On July 30, 2013, the Bankruptcy Court held a final hearing on the DIP Motion and entered a final order authorizing the Postpetition Financing. As security for the Postpetition Financing, the Court granted BCL priming liens on substantially all of the real and personal property of Debtors (but not including any avoidance claims under the Bankruptcy Code). {10615‐001 PLN A0364770.DOCX 14} 21 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 23 of 36 Desc Main In October, 2013, Sacred Heart paid BCL the amount of $545,000 which satisfied the Postpetition Financing in full. 2. Use of Cash Collateral On August 9, 2013, the Debtors filed a motion for authority to use cash collateral of FirstMerit, with the exception of the $4.9 million that was in the possession of FirstMerit, to pay the actual, ordinary and necessary expenses of the Debtors’ businesses and estates. As noted above, FirstMerit asserts liens on substantially all of the Debtors’ assets as security for the Letter of Credit. The motion sought authority to use cash collateral of FirstMerit and asked the Bankruptcy Court grant FirstMerit replacement liens subject to the liens of BCL, subordinate to its own prepetition liens, and pari passu with the replacement liens granted in connection with the DIP Motion. FirstMerit agreed to the relief sought in the motion, acknowledging that it was over-secured. Accordingly, on August 21, 2013, the Bankruptcy Court entered an order authorizing the Debtors to use FirstMerit’s cash collateral and granting the motion. On April 22, 2014, Garfield and Sacred Heart filed a motion for authority for Sacred Heart to use $1.3 million of FirstMerit’s cash collateral that was held in the FirstMerit Cash Collateral Account to pay administrative expenses and to provide partial funding for the Plan. FirstMerit also obtained replacement liens. On May 7, 2014, the Court entered an order granting the motion and authorizing Sacred Heart’s use of FirstMerit’s cash collateral. As adequate protection for FirstMerit, among other things, Garfield is required to hold a $1.3 million reserve in a deposit account at FirstMerit. G. Dispute with CMS and Retention of McGuireWoods After the Petition Date, Sacred Heart continued its efforts to negotiate the release of over $1.9 million in Medicare receivables from CMS. As part of that process, Sacred Heart obtained Bankruptcy Court authority to employ law firm of McGuireWoods LLP, as its healthcare regulatory counsel. Sacred Heart, with the assistance of its counsel, has also responded to numerous requests for certain medical records from CMS’s contractors. H. The Marketing and Sale of the Debtors’ Assets Since before the Petition Date, A&M actively marketed the Debtors’ assets for sale. As a result of those efforts, the Debtors were able to liquidate all of the Debtors’ assets during these Cases. The following is a summary of the sales of substantially all of the assets of Superior, Garfield, and Sacred Heart. 1. The Sale of Superior Superior received an offer from Attentive Services Home Health II, Inc. (“Attentive”) to buy its assets for a purchase price of $5,000, plus the assumption of all of Superior’s employeerelated obligations in amount of $82,177.10. Had Superior not received the offer, it intended to terminate its 20 full and part-time employees and cease operating. On July 16, 2013, Superior filed a motion seeking authority to sell its assets as a going concern to Attentive, free of all liens, claims and encumbrances pursuant to section 363(f) of the Bankruptcy Code. On July 24, 2013, the Court conducted the sale hearing, granted the motion and entered an order authorizing the {10615‐001 PLN A0364770.DOCX 14} 22 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 24 of 36 Desc Main sale of Superior to Attentive free and clear of all liens, claims and encumbrances pursuant to § 363(f) of the Bankruptcy Code. Superior and Attentive closed the sale on July 24, 2013. 2. The Sale of Garfield A. Marketing Efforts Beginning in late April 2013, Garfield, through the efforts of A&M, marketed and solicited bids for Garfield’s hemodialysis business and related assets. As a result of those efforts, Garfield received a letter of intent from Total Renal Care, Inc. (the “TRC”) contained a proposed $5.5 million purchase price, subject to a ten percent (10%) escrow holdback for potential adjustments. The letter of intent also remained subject to additional due diligence and the approval of a certificate of need permit from the Illinois Health Facilities and Services Review Board (“HSFRB”). After conducting extensive due diligence, the TRC adjusted its purchase price to $3,250,000, subject to certain adjustments and holdbacks, and the assumption and assignment of certain unexpired leases and executory contracts. Despite this purchase price reduction, Garfield ultimately determined that the transaction proposed by the Buyer presented the highest and best opportunity to maximize value for the estate because (i) the issues uncovered during the due diligence review would likely adversely impact the purchase price with respect to any potential purchasers that have not yet conducted extensive due diligence; (ii) the Buyer was one of the leading providers of hemodialysis services in the United States and, as a result, Garfield believed that the Buyer had the qualifications, background and financial wherewithal to promptly obtain a Certificate of Need from the HFSRB; and (iii) the Sale would enable Garfield to satisfy all creditor claims in full and was supported by WSMC, Garfield’s sole member. On or about November 20, 2013, the Court entered an order authorizing Garfield to sell substantially all of its assets to TRC and the sale closed in December 2013 and generated net proceeds of $2.7 million (excluding a $250,000 holdback). Garfield and the Buyer have engaged in discussions regarding the return of the Holdback to Garfield, the holdback is not likely to be recovered without litigation. 3. The Sale of Sacred Heart A. Marketing Efforts and Sale of Equipment Beginning in May 2013, Sacred Heart, through the efforts of A&M, actively marketed and solicited bids from buyers interested in reopening the hospital and rehiring many of Sacred Heart’s former employees. In this regard, A&M canvassed potential interested parties for the hospital and developed a list of approximately fifteen (15) potential buyers that would have an interest in restarting the hospital. The list consisted of (i) competitors and companies in the healthcare business; (ii) financial buyers with prior or current interest in the healthcare business sector; and (iii) any other companies referred to A&M by, among other parties, Sacred Heart’s employees who were knowledgeable about the business. From May to November 2013, A&M contacted each of those potential purchasers and provided them with publically available information and a non-disclosure agreement to be executed by any party wanting to receive non-public information concerning Sacred Heart’s {10615‐001 PLN A0364770.DOCX 14} 23 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 25 of 36 Desc Main business. Out of this group, five (5) parties expressed an interest in purchasing the hospital assets and executed a non-disclosure agreement. A&M sent confidential financial information to all such restricted parties. In the meantime, on August 9, 2013, Sacred Heart filed a motion to approve its retention of Ettin Group, LLC (the “Auctioneer”) to auction the personal property (namely, inventory, equipment, machinery and rolling stock) of Sacred Heart as a “back-up plan” if it was unable to find a buyer of the hospital as a going concern. The motion also sought authority to conduct the auction and sell the personal property of Sacred Heart if no buyer was found. On August 20, 2013, the Court approved the motion to retain the auctioneer. Ultimately, Sacred Heart determined that none of the potential purchasers were interested in purchasing or restarting the hospital as a going concern. Accordingly, on October 15, 2013, the Auctioneer conducted an auction of the personal property of Sacred Heart, generating over $900,000 in gross proceeds, of which $545,000 was used to repay the Postpetition Financing. B. Sale of Real Estate Sacred Heart also found it difficult to sell its real property (the “Real Estate”). Sacred Heart, through A&M, consulted several real estate brokers, who independently concluded that, due to the location of the Real Estate and the size, age and condition of the hospital and ancillary buildings, the Real Estate had had little value and would be difficult to sell in a reasonable time period. In addition, the monthly administrative expenses associated with maintaining, securing, insuring the buildings, along with accruing real estate taxes are currently in excess of $50,000.00 per month. In December 2013, APGME Corp. (“APGME”) approached Sacred Heart and offered to purchase the Real Estate. Specifically, APGME agreed to pay Sacred Heart the amount of $250,000 for the Real Estate, subject to certain customary purchase price adjustments, and to maintain Sacred Heart’s medical and business records in accordance with applicable federal and state law. In light of the difficulty in selling the Real Estate and the expense of maintaining the medical records, Sacred Heart agreed. Accordingly, on November 26, 2013, Sacred Heart filed a motion to authorize the sale of the Real Estate of Sacred Heart to APGME free and clear of all liens and interests on the terms set forth above. On December 17, 2013, the Court granted the motion and authorized the sale. Sacred Heart and APGME closed the sale of the Real Estate on or about December 23, 2013. I. Civil Forfeiture Action On June 27, 2014, the U.S. government commenced a civil forfeiture action in the United States District Court for the Northern District of Illinois, Case No. 14 C 4888 (the “Civil Forfeiture Action”) with respect to the funds taken in the Seizure. The government alleged that the funds are traceable to fraudulent referrals of Medicare and Medicaid patients by Drs. Kuchipudi and Kandala to Sacred Heart. On August 6, 2014, Sacred Heart filed its Verified Claim of West Side Community Hospital, Inc. (the “Claim”), asserting its interest in and right to the seized funds. {10615‐001 PLN A0364770.DOCX 14} 24 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 26 of 36 Desc Main On or about August 18, 2014, Sacred Heart moved to stay the Civil Forfeiture Action pending conclusion of the trial in the Criminal Action and confirmation of the Plan. The district court granted the motion, and the Civil Forfeiture Action remains stayed before the district court. J. Investigation of Bentley Transfers The Bentley Entities are non-debtor affiliates that are owned or controlled by Novak. The Bentley Entities are in the medical reinsurance business and own two medical malpractice reinsurance funds. On or about May 25, 2012, the Debtors and the Bentley Entities entered into a Reimbursement Agreement with FirstMerit pursuant to which FirstMerit issued the Letter of Credit in the amount of $4.9 million for the account of the Bentley Entities in favor of Comerica Bank. Comerica Bank, in turn, issued a Standby Letter of Credit in the amount of $4.9 million in favor of First Professionals Insurance Company, Inc. for the account of the Bentley Entities and Magna Carta Insurance, Ltd. The Debtors each pledged substantially all of their assets, including cash, as security under the Reimbursement Agreement. As of the Petition Date, FirstMerit held approximately $4.9 million of the Debtors’ cash to secure the LOC, of which approximately $4.1 million came directly or indirectly from Sacred Heart. Between May 30, 2012, and April 17, 2013, Sacred Heart made the following transfers directly or indirectly to FirstMerit to secure the Letter of Credit as follows (the “Initial Bentley Transfers”): Date of Transfer 05/30/12 08/30/12 10/31/12 11/30/12 12/31/12 01/02/13 02/04/13 03/04/13 04/02/13 Total: Amount $1,121,045 $360,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 $2,321,045.00 On April 17, 2013, FirstMerit asserted its purported right of setoff and withdrew the amount of $2,810,950 from the Debtors’ accounts in order to further secure the Letter of Credit (the “Subsequent Bentley Transfers,” and with the Initial Bentley Transfers, the “Bentley Transfers”). The Transfers are as follows: Debtor Sacred Heart Garfield Superior {10615‐001 PLN A0364770.DOCX 14} Date of Transfer April 17, 2013 April 17, 2013 April 17, 2013 Total: 25 Amount $2,010,950 $400,000 $400,000 $2,810,950.00 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 27 of 36 Desc Main The Debtors have investigated the Transfers and the potential recovery of those assets for the benefit of their respective estates. In December 2014, after months of arm’s length negotiations, the Debtors agreed to settle all claims with Novak and certain of his affiliated entities, West Side Community Hospital Limited Partnership (“WSCHLP”), WSMC, Park Place, L.L.C. (“Park Place,” and together with Novak, WSCHLP and WSMC, the “Novak Parties”). On January 29, 2015, the Bankruptcy Court approved the settlement pursuant to the Order Approving Settlement with the Novak Parties and Granting Related Relief (the “Novak Party Settlement”). Pursuant to the Novak Party Settlement, the Novak Parties agreed to pay Sacred Heart $1,000,000, of which $500,000 would be paid immediately and $500,000 was placed into escrow pending confirmation of a Plan which provided for (1) mutual releases between the Debtors and the Novak Parties, (2) the Novak Parties to retain their interests as holders of equity securities in any of the Debtors, (3) a release of the Novak Parties by all non-governmental creditors accepting payment under a Plan, and (4) a settlement between the Debtors, Bentley Entities and such other parties as may be necessary under which the Debtors shall recover an amount not greater than $2.8 million (the “Bentley Settlement”). In addition, the Novak Parties assigned to Sacred Heart any claims they had against a Management Liability Package Policy issued by Allied World Assurance Company, Ltd. (as discussed in detail below) for reimbursement of attorneys’ fees and expenses incurred in responding to certain governmental regulatory proceedings. As part of the settlement, the Novak Parties were allowed to retain certain claims against Sacred Heart that are subordinated to all other creditors. The parties have agreed in principal to the Bentley Settlement, but the parties have not been able to formally document their agreement prior to the deadline for the filing of the Plan and Disclosure Statement. The Plan also incorporates a settlement with FirstMerit concerning the Debtors’ claims against FirstMerit regarding the Transfers and Reimbursement Agreement. As a result of the settlement, and as set forth in Section II.B above, FirstMerit’s Secured Claims shall not exceed the amount of $5,075,000 and shall be secured solely by (i) $4.9 million to be held in the FirstMerit Cash Collateral Account, and (ii) a payment from Garfield in the amount of $175,000. All other liens of FirstMerit shall be released and FirstMerit shall have no other recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets. In addition, FirstMerit has agreed to not give a notice of non-renewal of the Letter of Credit until February 15, 2018, which effectively extends the Letter of Credit through May 30, 2018. K. Insurance Recoveries On or about September 1, 2012, Allied World Assurance Company, Ltd. (“Allied”) issued a Management Liability Package Policy (the “Policy”) to Sacred Heart, with Superior, Garfield and other entities named as additional insureds. The Policy contains multiple “Insuring Agreements” that, in relevant part, provide coverage for discrete types of claims and losses in connection with Wrongful Acts and Regulatory Wrongful Acts, including the Defense Costs relating to defending Insureds from Claims (all as defined in the Policy). Insuring Agreement E applies to regulatory claims against any insured for losses the insured persons or the Debtors would be required to pay in connection with Regulatory Wrongful Acts. Insuring Agreement E also has a liability sublimit of $200,000 (“Regulatory Sublimit”), such that Allied will not pay {10615‐001 PLN A0364770.DOCX 14} 26 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 28 of 36 Desc Main for losses related to Regulatory Claims in excess of that amount. The Policy obligates Allied to pay losses covered by the Insuring Agreements, including reasonable Defense Costs until the regulatory sublimit has been exhausted. The Debtors incurred substantial costs related to the Criminal Action, and assert that they have met the contractual conditions of Insuring Agreement E, including the $200,000 deductible, and are entitled to payment from Allied in the full amount of the Regulatory Sublimit. Certain former officers and directors of the Debtors have also asserted a right to recover from Allied under Insuring Agreement E. The Debtors are currently negotiating the terms of a settlement with Allied and the other former officers of Sacred Heart whereby the Debtors would receive the amount of $99,000 from Allied in satisfaction of all amounts due under the Regulatory Sublimit. The proposed settlement, when finalized, will require bankruptcy court approval. L. Storage of Medical Information The Debtors qualify as a “Covered Entity” as defined under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the HIPAA Privacy and Security Rules, 45 C.F.R. Parts 160 and 164, as amended (“HIPAA Rules”). Accordingly, under the various laws, rules and regulations governing access to patient records and confidentiality of patient protected health information, including, without limitation HIPAA, the HIPAA Rules, and the Illinois records retention requirement, the Debtors must comply with certain guidelines and timetables for the retention, destruction and provision of access to the protected health information. Notwithstanding the fact that the medical records were stored at the former Sacred Heart hospital, the Debtors needed a long-term solution to securely store, index, provide access, maintain and eventually destroy medical records and other protected health information in compliance with applicable law long after the Debtors cease to exist. As part of that long-term solution, the Debtors’ tangible medical records and certain other media which likely contained protected health information were delivered to Recall Total Information Management, Inc. (“Recall”) pursuant to the Order Authorizing the Debtors to Enter into an Agreement with Recall for the Storage and Disposition of Protected Health Information dated October 29, 2014. In addition to the information provided to Recall, Sacred Heart had also maintained certain electronic records containing protected health information that may be accessed via the medical billing and related software licensed from CPSI located on computer servers purchased from CPSI (collectively, the “CPSI Agreements”). Pursuant to the Order Approving Settlement with Computer Programs & Systems, Inc. and Granting Related Relief dated December 19, 2014, the Court approved a settlement with CPSI whereby CPSI agreed to permanently store, maintain, provide access and, eventually securely destroy the Records. In exchange, CPSI received a general unsecured claim against Sacred Heart in the amount of $49,225.00, the CPSI Agreements were rejected, and CPSI retained the rights to the servers and related computer hardware holding the electronic records. VI. SUMMARY OF OTHER SIGNIFICANT PROVISIONS OF THE PLAN A. Means for Execution of the Plan. In accordance with sections 1123(a)(5)(D) and 1123(b)(4) of the Bankruptcy Code, all Assets shall be sold, otherwise liquidated or {10615‐001 PLN A0364770.DOCX 14} 27 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 29 of 36 Desc Main abandoned. This Plan shall be funded by the Cash held by Sacred Heart, Garfield and Superior and from liquidation of such other Assets of the Estates, including the net proceeds of the sale or disposition of any Litigation Claims. B. Liquidating Trust. On or before the Effective Date, the Debtors shall establish a liquidating trust in accordance with the Liquidating Trust Agreement. On the Effective Date, the Debtors shall be deemed to have transferred the Liquidation Proceeds and all other Assets of their respective Estates to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement. The Liquidation Proceeds and all other Assets of their respective Estates transferred to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement shall be held in segregated accounts for the benefit of the Holders of Claims and Interests against each respective Estate. By confirmation of the Plan, the Bankruptcy Court will specifically approve and designate the Liquidating Trust and the Liquidating Trustee as the representative of the respective Estates and will find that the Liquidating Trust and the Liquidating Trustee are acting on behalf of and for the benefit of the Liquidating Trust’s beneficiaries. C. Liquidating Trustee. The Liquidating Trustee shall be appointed pursuant to the Liquidating Trust Agreement and shall be responsible for liquidating and administering the Trust Assets for all distributions pursuant to the Plan. On the Effective Date, the Liquidating Trustee shall become the appointed representative of the respective Estates in accordance with section 1123(b)(3) of the Bankruptcy Code, shall assume all surviving liabilities of each of the Estates and shall pay such liabilities as provided under this Plan. The Liquidating Trustee shall have and perform all of the duties, responsibilities, rights and obligations set forth in the Liquidating Trust Agreement. The Liquidating Trust and the Liquidating Trustee shall be bound by all orders of the Bankruptcy Court entered prior to the Effective Date, to the same extent as the Debtors were bound by the terms of such orders. The Liquidating Trustee may retain counsel and other professionals as the Liquidating Trustee, in his sole discretion, deem appropriate, without further order of the Bankruptcy Court, to assist the Liquidating Trustee in performing his duties, rights and obligations under this Plan. D. Plan Injunction. Article 7.2 of the Plan contains the following injunction: Except for actions as Holders may take to prosecute or defend their respective Claims or Interests in the Bankruptcy Court against the Debtors or Liquidating Trustee, entry of a Confirmation Order will operate as an injunction against the commencement or continuation of an action, the employment of process, or any act to collect, recover or offset any Claim of any Holder against the Debtors, their Estates, or the Liquidating Trust; provided, however, that to the extent that the provisions of § 362(a) have been modified by the Bankruptcy Court prior to the Effective Date, actions against the Debtors consistent with such modification and the Plan are permitted. E. Exculpation and Indemnification. Article 7.3 of the Plan contains the following exculpation and indemnification provisions in favor of (a) the Debtors’ Postpetition Officers, Directors and Professionals, and (b) the Liquidating Trust and the Liquidating Trustee: (a) From and after the Effective Date, to the fullest extent permitted by applicable law, (i) Paul Rundell, David McLaughlin, Karen Davis, Aisha M. Jaleel, Zivojin Pavlovic, Spiros Stamelous, Thomas Abraham, and Sherry Hendrix; (ii) the Debtors’ {10615‐001 PLN A0364770.DOCX 14} 28 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 30 of 36 Desc Main agents, attorneys, accountants, consultants, financial advisors (and their officers, directors, and shareholders) retained or employed by order of the Bankruptcy Court; and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives (collectively, the “Postpetition Releasees”) shall not have and shall not incur any liability to any Person for any and all claims, causes of action and other assertions of liability, or for any act or omission arising in connection with, relating to or arising out of the Cases, the pursuit of confirmation of this Plan, the pursuit of the approval of the adequacy of the Disclosure Statement, the confirmation and implementation of this Plan, the consummation of this Plan, or the administration of this Plan, the existence of the Trust Assets, or any other property to be distributed or abandoned under this Plan (the “Postpetition Released Matters”) except for such Postpetition Releasees’ willful misconduct or fraud as determined by a Final Order. To the fullest extent permitted by applicable law, the Liquidating Trust shall indemnify, defend, and hold harmless the Postpetition Releasees (without the Postpetition Releasees having to first pay from their own funds) from and against any and all Claims, causes of action, liabilities, obligations, losses, costs, judgments, damages (including attorney fees and costs) for any act or omission in connection with, relating to or arising out of the Postpetition Released Matters, other than acts or omissions to act to the extent determined by a Final Order to be due to such Postpetition Releasee’s own respective willful misconduct or fraud. This exculpation and indemnification shall not apply to any causes of action against the Postpetition Releasees arising under Chapter 5 of the Bankruptcy Code. All rights of the Persons exculpated and indemnified pursuant hereto shall survive confirmation of the Plan and the closing of the Cases. (b) From and after the Effective Date, to the fullest extent permitted by applicable law, the Liquidating Trustee and each of his officers, directors, shareholders, employees and representatives together with any Person that may be liable derivatively through any of the foregoing and each of their representatives (collectively the “Liquidating Trustee Protected Parties”) shall not have and shall not incur any liability to any Person for any and all Claims, causes of action and other assertions of liability, or for any act or omission, (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee Protected Parties’ own respective willful misconduct or fraud. No Holder of a Claim or Interest, or any other party in interest, will have or pursue any claim or cause of action against the Liquidating Trustee Protected Parties (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, or (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee Protected Parties’ own respective willful misconduct or fraud. Any act taken pursuant to the Plan, the Liquidating Trust or court order, will be conclusively deemed not to constitute fraud or willful misconduct. To the fullest extent permitted by applicable law, the Liquidating Trust shall indemnify, {10615‐001 PLN A0364770.DOCX 14} 29 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 31 of 36 Desc Main defend, and hold harmless the Liquidating Trustee Protected Parties (without the Liquidating Trustee Protected Parties having to first pay from their own funds) and each of their designated representatives from and against any and all Claims, causes of action, liabilities, obligations, losses, costs, judgments, damages (including attorney fees and cost), except for willful misconduct or fraud as determined by a Final Order. All rights of the Liquidating Trustee Protected Parties exculpated and indemnified pursuant hereto shall survive confirmation of the Plan and the closing of the Cases. F. Releases. Article 7.4 of the Plan grants the following releases: (a) On the Effective Date, the Debtors and their Estates and any other entity acting on any of their behalves, release unconditionally, and are hereby deemed to release unconditionally, each of the Novak Parties from any and all Claims, obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code), whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date; provided, however, nothing in this Article 7.4(a) shall release any Claims against the Bentley Entities or any of the obligations of the Novak Parties under the terms and conditions of this Plan or the Novak Party Settlement. For the avoidance of any doubt, and notwithstanding anything to the contrary contained herein, all claims of the Debtors, the Estates and the Liquidating Trustee against the Bentley Entities are preserved and not released under this Plan. (b) On the Effective Date, each Holder of a Claim (other than a Claim of a Governmental Unit or FirstMerit) that receives a distribution under this Plan releases unconditionally, and is hereby deemed to have unconditionally released each of the Novak Parties from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates. This release shall also apply to: (i) any Person or Entity that is or was the Holder of a Claim (other than a Claim of any Governmental Unit or FirstMerit) on or after the Petition Date and (ii) any Person or Entity acquiring a Claim directly or indirectly from a Person or Entity that is bound by the release pursuant to this Article 7.4(b) as if such acquiring Person or Entity has agreed to be bound to such release with respect to such acquired Claim. For the avoidance of any doubt, and notwithstanding anything to the contrary contained herein, (i) nothing in this Plan is intended to or shall affect, release or compromise any Claim, cause of action, remedy, defense, right of setoff or recoupment or right of seizure or forfeiture that the United States or any of its agencies has, may have or may assert against Novak or the Novak Parties, including any such claims of the United States against Novak or the Novak Parties under the Federal Debt Collection Procedures Act (28 U.S.C. § 3001 et seq.) and (ii) nothing in this Plan is intended to or shall release or adversely affect any claims that FirstMerit may have or assert against the Novak Parties. {10615‐001 PLN A0364770.DOCX 14} 30 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 32 of 36 Desc Main (c) On the Effective Date, the Novak Parties release unconditionally, and are hereby deemed to have unconditionally released (i) the Debtors’ managers, directors, members, member officers, officers, and employees; (ii) the Debtors’ agents, attorneys, accountants, consultants (and their officers, directors, and shareholders); and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates, provided, however, nothing in this Article 7.4(c) shall release any Allowed Class 1H Claims or Allowed Class 1I Interests. (d) WARN Employee Releases of the Debtors and their Estates and the Novak Parties. On the Effective Date, the WARN Plaintiffs unconditionally release the Debtors, their current and former managers, directors, officers, agents, attorneys, accountants, consultants, and their Estates from all WARN Claims other than those WARN Claims entitled to treatment under Classes 1B of this Plan. For the avoidance of doubt, this release is intended to include a release of all WARN Class Priority Claims against Sacred Heart, Garfield and Superior. Nothing in this Article shall impair or diminish the releases granted under the WARN Class Settlement. (e) On the Effective Date, the Debtors and their Estates and any other entity acting on any of their behalves, release unconditionally, and are hereby deemed to release unconditionally, the FirstMerit Parties from any and all Claims, obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code), whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date; provided, however, nothing in this Article 7.4(e) shall release any of the obligations of FirstMerit under the terms and conditions of this Plan. (f) On the Effective Date, FirstMerit releases unconditionally, and is hereby deemed to have unconditionally released (i) the Debtors’ managers, directors, members, member officers, officers, and employees; (ii) the Debtors’ agents, attorneys, accountants, consultants (and their officers, directors, and shareholders); and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates, provided, however, nothing in this Article 7.4(f) is intended to or shall release any claims that FirstMerit may have or assert against the Novak Parties, the Bentley Entities or {10615‐001 PLN A0364770.DOCX 14} 31 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 33 of 36 Desc Main any of the obligations of the Debtors or Liquidating Trustee under the terms and conditions of this Plan. (g) Notwithstanding anything to the contrary in the Plan, the provisions of Articles 7.4(a), 7.4(b) and 7.5 shall only take effect after the Escrowed Settlement Funds are transferred by the Escrow Agent to the Liquidating Trust and all other obligations of the Novak Parties under this Plan have been performed. G. Novak Party Injunction. Article 7.5 of the Plan contains the following injunction in favor of the Novak Parties: In consideration for the Novak Parties’ funding the Novak Party Settlement, entry of a Confirmation Order will operate as an injunction against the commencement or continuation of an action, the employment of process, or any act to collect, recover or offset any Claim of any Holder (other than a Claim by any Governmental Unit) that receives a distribution under this Plan against the Novak Parties, which injunction shall be effective so long as the Novak Parties are performing their obligations under the Plan and no default has occurred. H. Disputed Claims. The Debtors, prior to the Effective Date, and the Liquidating Trustee, from and after the Effective Date, reserve all rights to prosecute any and all objections to Claims and Interests, including Administrative Claims. All objections to Claims must be filed and served on the holders of such Claims by the Claims Objection Deadline. Unless a Claim is objected to by the Claims Objection Deadline, such Claim shall be deemed Allowed in the amount requested. All Claim objections by the Liquidating Trustee shall be litigated to a Final Order except to the extent the Liquidating Trustee, in his discretion, elects to withdraw any such objections or compromise, settle or otherwise resolve any such objection, in accordance with the terms of the Liquidating Trust Agreement, in which event the Liquidating Trustee may settle, compromise or otherwise resolve any Disputed Claim without approval of the Bankruptcy Court. Within thirty (30) days of the Claims Objection Deadline, Novak shall have the right, at his sole expense, to object to any Claim against Sacred Heart that is not already Allowed or subject to a pending Claim objection filed by the Liquidating Trustee. I. Retention of Litigation Claims. Pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, the Litigation Claims, including any and all avoidance and other actions arising under chapter 5 of the Bankruptcy Code, and actions to collect the Debtors’ accounts receivable shall be retained, prosecuted and enforced by the Liquidating Trustee, except to the extent expressly released through this Plan. The Liquidating Trustee may enforce, sue on, settle or compromise any or all such Litigation Claims or, in the exercise of his discretion, may elect to not pursue certain Litigation Claims. The Liquidating Trustee may designate and employ any professional employed in the Cases to represent him in connection with the claims retained herein, and the Liquidating Trustee shall retain any and all defenses, counterclaims and rights held by the Debtors or their Estates. Further, the net proceeds of the Litigation Claims shall be paid into the Liquidation Proceeds for use or distribution pursuant to the Plan. J. Intercompany Claims. No distributions shall be made under the Plan on account of inter-company claims or interests between and among any of the Debtors. {10615‐001 PLN A0364770.DOCX 14} 32 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 34 of 36 Desc Main K. Administrative Expense Claims. All requests for the allowance and/or payment of an Administrative Claim (other than Professional Fee Claims) must be filed with the Bankruptcy Court and served on counsel for the Debtors and the Liquidating Trustee no later than thirty (30) days after the Effective Date. Unless such request is objected to, such Administrative Claim shall be deemed allowed in the amount requested. In the event that an Administrative Claim is objected to, the Bankruptcy Court shall determine the Allowed amount of such Administrative Claim. VII. ADMINISTRATION OF THE LIQUIDATING TRUST AFTER CONFIRMATION On the Effective Date, the Liquidating Trustee will be appointed pursuant to the Liquidating Trust Agreement. The Liquidating Trustee will complete the liquidation of the Debtors’ assets and will administer the Liquidating Trust. Pursuant to the Liquidating Trust Agreement, approximately every three (3) months after the Effective Date, the Liquidating Trustee shall file with the Bankruptcy Court a status report disclosing any material events relating to the liquidation, the likelihood of distributions to Holders of Claims during the next three (3) month period subsequent to the filing of the report, and the amounts of any payments made and expenses incurred during such six-month period. The actions contemplated by the Liquidating Trustee following confirmation include, but are not limited to, the following: objections to Claims where appropriate; prosecution of avoidance actions, claims and other Litigation Claims; and recovery of refunds and prepaid expenses due where practicable. The Plan provides for the Court to reserve jurisdiction to resolve any litigation and other disputes that may arise from activities under the Plan. The Liquidating Trustee may also pay all post-confirmation claims in the ordinary course of business, including their professional fees and costs, without application to or approval by the Court. The Liquidating Trustee shall be entitled to compensation and the reimbursement of the actual and necessary expenses that he incurs in his duties as the Liquidating Trustee. To the extent the Liquidating Trustee requires any employees or staff, such persons will receive such compensation as is customary for the services required to be performed. The Liquidating Trustee may retain, employ and compensate such professionals as may be necessary to assist the Liquidating Trustee in performing his duties under the Plan. VIII. RISK FACTORS TO BE CONSIDERED Any objection to the Plan filed by a member of a Class could either prevent or delay confirmation of the Plan and the Debtors’ estimate as to the final amounts of Allowed Claims in each Class may prove to be lower than the actual amount of Allowed Claims. IX. ACCEPTANCE AND CONFIRMATION To confirm the Plan, the Bankruptcy Code requires that the Court make a series of determinations concerning the Plan with respect to the Debtors and the Debtors’ Estates, including that: (i) the Plan has classified Claims in a permissible manner; (ii) the contents of the Plan comply with the technical requirements of Chapter 11 of the Bankruptcy Code; (iii) the Debtors have proposed the Plan in good faith; and (iv) the Debtors’ disclosures concerning the Plan have been adequate and have included information concerning all payments made or {10615‐001 PLN A0364770.DOCX 14} 33 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 35 of 36 Desc Main promised in connection with the Plan and the Debtors’ Cases, as well as the identity and affiliations of, and compensation to be paid to, all insiders. The Debtors believe that all of these conditions have been met or will be met and will seek findings of the Court to this effect at the hearing on confirmation of the Plan. The Bankruptcy Code also requires that the Plan be accepted by the requisite votes of holders of Claims, that the Plan be feasible, and that confirmation of the Plan be in the “best interests” (absent unanimity) of the holders in each impaired class of Claims and Interests. To confirm the Plan, the Court must find that all of these conditions are met. Thus, even if all classes of Claims accept the Plan by the requisite votes, the Court must make independent findings respecting the Plan’s feasibility and whether it is in the best interests of Holders of Claims and Interests before it may confirm the Plan. The classification, “best interests,” and feasibility conditions to confirmations are discussed below. A. Classification of Claims. The Bankruptcy Code requires that the Plan place each Claim or Interest in a class with other Claims or Interests which are substantially similar. The Debtors believe that the Plan satisfies the Bankruptcy Code’s standards for appropriate classification. B. Best Interests of Impaired Classes. Notwithstanding acceptance of the Plan by each impaired class of Claims, in order to confirm the Plan, the Court must determine that the Plan is in the “best interests” of creditors and equity security holders. The “best interests” test requires that the Court find that the Plan will provide to each member of each impaired class of Claims property of a value, as of the Effective Date of the Plan, at least equal to the amount such member would receive or retain if the Debtors were liquidated under chapter 7 of the Bankruptcy Code. Importantly, A&M has agreed to subordinate to General Unsecured Creditors approximately $500,000 of its Administrative Claim against the Estates, but only if the Plan is confirmed. Sacred Heart prepared the liquidation analysis for its Assets which is attached hereto as Exhibit 2. You should review this liquidation analysis, which sets forth the amounts that Sacred Heart expect that the Liquidating Trustee will distribute to the Debtors’ creditors versus the amounts that the Debtors believe would be available in the event of a chapter 7 liquidation. No liquidation analysis has been prepared for Garfield and Superior as the Plan contemplates that Holders of Claims will be paid in full. C. Feasibility. As a condition to confirmation, the Bankruptcy Code generally requires that confirmation is not likely to be followed by the liquidation of the Debtors or the need for further financial reorganization. Since the Debtors are being liquidated under the Plan, this standard is not relevant to confirmation of the Plan. D. Acceptance. As another condition to confirmation, the Bankruptcy Code requires that each impaired class of Claims or Interests accept the Plan. The Bankruptcy Code defines acceptance of the Plan by a class of Claims as acceptance by the holders of two-thirds in amount and a majority in the number of Claims in that class. For a class of Interests, acceptance is defined as acceptances by the holders of two-thirds in amount. For both purposes only those who actually vote to accept or reject the Plan are counted. {10615‐001 PLN A0364770.DOCX 14} 34 Case 13-27091 Doc 456 Filed 05/06/15 Entered 05/06/15 15:18:43 Document Page 36 of 36 Desc Main X. ALTERNATIVES TO THE PLAN The Debtors believe that the Plan provides holders of Claims with the earliest and greatest possible value that can be realized on their Claims. The alternatives to confirmation of the Plan include the submission of an alternative plan or plans of liquidation by one or more other parties in interest or the chapter 7 liquidation of the Debtors. As of the date of this Disclosure Statement, no alternative plans have been filed. As set forth above, the results of a chapter 7 liquidation are likely to result in no material distribution to Holders of Allowed Claims. XI. TAX CONSEQUENCES A detailed discussion of the federal and state income tax consequences of the Plan is not practicable under the circumstances of these cases, and the Debtors express no opinion thereon. Because the income tax consequences of the Plan may be different for different parties, each party is urged to seek advice from its own tax advisor with respect to the income tax consequences of the Plan. The Debtors believe, however, that there will be no adverse tax consequences to the Estates as a result of the Plan’s consummation, and that the Estates have sufficient tax attributes to prevent any negative tax implications resulting from the Plan’s consummation. XII. Conclusion The Debtors believe the Plan is feasible and in the best interests of the Debtors’ creditors and equity security holders. Accordingly, the Debtors ask that you vote to accept the Plan. A ballot for acceptance or rejection of the Plan is enclosed. Your vote is important. West Side Community Hospital, Inc., Garfield Kidney Center, LLC, and Superior Home Health, L.L.C. Dated: May 6, 2015 By Robert M. Fishman (IL ARDC 3124316) Allen J. Guon (IL ARDC 6244526) David R. Doyle (IL ARDC 6303215) Shaw Fishman Glantz & Towbin LLC 321 North Clark Street, Suite 800 Chicago, IL 60654 Phone: (312) 541-0151 Counsel for Debtors {10615‐001 PLN A0364770.DOCX 14} 35 /s/ Allen J. Guon One of their attorneys Case 13-27091 Doc 456-1 Filed 05/06/15 Entered 05/06/15 15:18:43 1 Page 1 of 69 EXHIBIT 1 Desc Exhibit Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 2 of 69 1 of 34 Desc Main Exhibit IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION IN RE: WEST SIDE COMMUNITY HOSPITAL INC. GARFIELD KIDNEY CENTER, LLC SUPERIOR HOME HEALTH, L.L.C., Debtors. ) ) ) ) ) ) ) ) ) ) Chapter 11 Honorable Eugene R. Wedoff Case No. 13-27091 (Jointly Administered) Case No. 13-27092 Case No. 13-27093 SECOND AMENDED JOINT CHAPTER 11 PLAN May 6, 2015 Robert M. Fishman Allen J. Guon David R. Doyle Shaw Fishman Glantz & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Illinois 60654 [email protected] [email protected] [email protected] Counsel for Debtors {10615‐001 PLN A0364558.DOCX 18} Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 3 of 69 2 of 34 Desc Main Exhibit INTRODUCTION West Side Community Hospital Inc. d/b/a Sacred Heart Hospital, Garfield Kidney Center, LLC, and Superior Home Health, L.L.C., jointly propose this Second Amended Joint Chapter 11 Plan to govern the liquidation of the Debtors’ Assets, the distribution of the proceeds thereof and the satisfaction of the claims asserted by their creditors. All of the Debtors’ operating assets have been sold during the Cases and this Plan specifies how the sale proceeds thereof, as well as the proceeds of any remaining Assets will be allocated among the Debtors’ creditors. In general, the creditors of Garfield and Superior will likely be paid in full, while the creditors of Sacred Heart will receive an initial pro rata distribution from (a) funds marshalled from the remaining sale proceeds; (b) collections from accounts and (c) a payment of $1 million from ownership. Subsequent distributions to the creditors of Sacred Heart may also be made from (x) recoveries of withheld Medicare and Medicaid receivables, (y) proceeds from litigation recoveries and (z) recoveries of funds held as collateral for a certain letter of credit issued by FirstMerit. The accompanying Creditor Information Sheet includes a high-level summary of this Plan and its implementation and the accompanying Disclosure Statement includes a full discussion of the Debtors’ history, business, and operations and other related matters. ARTICLE I DEFINED TERMS AND RULES OF INTERPRETATION 1.1 Defined Terms. As used herein, capitalized terms have the meanings set forth in the text or the Glossary contained in Article X. Any capitalized term that is not otherwise defined herein has the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable. 1.2 Rules of Interpretation and Computation of Time. For purposes of this Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions; (c) any reference in this Plan to an existing document or schedule, filed or to be filed, means such document or schedule, as it may have been or may be amended, modified or supplemented pursuant to this Plan; (d) any reference to an entity as a Holder of a Claim or Interest includes that entity’s successors and assigns; (e) all references in this Plan to Sections or Articles are references to Sections or Articles of this Plan; (f) the words “herein,” “hereunder” and “hereto” refer to this Plan in its entirety rather than to a particular portion of this Plan; (g) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (h) the rules of construction set forth in section 102 of the Bankruptcy Code and in the Bankruptcy Rules will apply; and (i) in computing any period of time prescribed or allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) will apply. {10615-001 PLN A0364558.DOCX 18} 2 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 4 of 69 3 of 34 Desc Main Exhibit ARTICLE II CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS 2.1 Debtor Classification And Identification. Class No. 1 2 3 2.2 Debtor West Side Community Hospital, Inc. Garfield Kidney Center, LLC Superior Home Health, L.L.C. Unclassified Claims. (a) Administrative Claims. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims have not been classified. Each Holder of an allowed Administrative Claim shall be paid in full, without interest, or on such other terms as may be agreed upon by such Holder and the applicable Debtor, on the Effective Date or as soon thereafter as may be practicable, by the Estate of the applicable Debtor, provided, however, that if such Holder’s Administrative Claim is (a) disputed as to amount, validity, priority or enforceability or (b) subject to setoff by reason of an action that is or may be brought by the Debtors, or otherwise, then such Administrative Claim shall be payable only to the extent allowed by order of the Bankruptcy Court. Furthermore, no payment of a Professional’s fees allowable pursuant to sections 330 and 331 of the Bankruptcy Code shall be made until such Professional Fee Claim is allowed by order of the Bankruptcy Court. U.S. Trustee’s fees accrued and payable pursuant to 28 U.S.C. § 1930 through and including the Effective Date shall be paid in full on or before the Effective Date. (b) Priority Tax Claims. In accordance with section 1123(a)(1) of the Bankruptcy Code, Priority Tax Claims have not been classified. Each Holder of an Allowed Claim for taxes entitled to priority pursuant to section 507(a)(8) of the Bankruptcy Code shall be paid by the applicable Debtor in full, without interest, or on such other terms as may be agreed upon by such Holder and the applicable Debtor, on the Effective Date or as soon thereafter as may be practicable. Notwithstanding the foregoing, any Holder of an Allowed Priority Tax Claim will not be entitled to receive any payment on account of any penalty arising with respect to or in connection with the Allowed Priority Tax Claim. Any such penalty will be subject to treatment as a General Unsecured Claim against the applicable Debtor, and the Holder of an Allowed Priority Tax Claim will not be permitted to otherwise assess or attempt to collect such penalty from the applicable Debtors or the Liquidating Trust. 2.3 Allowance of Claims. In accordance with section 502 of the Bankruptcy Code, the Bankruptcy Court shall have jurisdiction over the allowance of Claims and Interests. However, nothing in this Plan shall be construed as to limit the jurisdiction of other courts or agencies which may also have jurisdiction to adjudicate the Claim of a Governmental Unit. 2.4 Classification of Claims and Interests. A Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and such Claim or Interest has not been paid, released or otherwise settled before the Effective Date. The {10615-001 PLN A0364558.DOCX 18} 3 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 5 of 69 4 of 34 Desc Main Exhibit Bankruptcy Court shall have exclusive jurisdiction over any dispute concerning the classification of Claims or Interests, and resolution of any such dispute shall not be a condition precedent to entry of a Confirmation Order or consummation of this Plan. The Claims or Interests against or in the Debtors are classified as follows: Classification and Treatment of Claims: Sacred Heart 1. 2. Class 1A – Non-Tax Priority Claims. (a) Classification: Class 1A Claims consist of all Allowed Non-Tax Priority Claims against Sacred Heart. (b) Treatment: Class 1A Claims are Unimpaired under the Plan. Under this Plan, each Holder of an Allowed Non-Tax Priority Claim against Sacred Heart shall be paid in full, without interest, or on such other terms as may be agreed upon by such Holder and Sacred Heart, on the Effective Date or as soon thereafter as may be practicable. (c) Voting: Class 1A Claims are Unimpaired and the Holders of Class 1A Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Claims in Class 1A are not entitled to vote to accept or reject the Plan. Class 1B – WARN Priority Claims. (a) Classification: Class 1B Claims consist of the WARN Class Priority Claims against Sacred Heart. (b) Treatment: The Class 1B Claims are Unimpaired under the Plan. Each Holder of an Allowed Class 1B Claim shall receive Cash to be paid in the amount and manner specified in the WARN Settlement Agreement. (c) Voting: Class 1B Claims are Unimpaired and the Holders of Class 1B Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Claims in Class 1B are not entitled to vote to accept or reject the Plan. 3. Class 1C – FirstMerit Secured Claim. (a) Classification: The Class 1C Claim consists of the FirstMerit Secured Claims against Sacred Heart. (b) Treatment: FirstMerit’s Class 1C Claim is Impaired under the Plan. FirstMerit’s 1C Claim shall be deemed Allowed in the aggregate amount of the LC Draws plus (i) the Garfield Payment and (ii) to the extent that funds are available in the FirstMerit Cash Collateral Account after any LC Draw, termination or expiration of the Letter of Credit, any Shortfall Amount; provided, however, FirstMerit’s total Allowed Class 1C, 2B and {10615-001 PLN A0364558.DOCX 18} 4 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 6 of 69 5 of 34 Desc Main Exhibit 3B Claims shall not exceed the aggregate amount of $5,075,000. All payments received by FirstMerit on account of the Allowed Class 1C Claim shall also constitute payment of FirstMerit’s Allowed Class 2B and 3B Claims. Holders of Class 1C, 2B and 3B Claims shall receive the releases granted in Article 7.4(e). (c) FirstMerit’s Allowed Class 1C Claim shall be secured solely by the Cash on deposit in the Cash Collateral Account as of the Effective Date and the Garfield Payment and all other security interests and liens of FirstMerit on Sacred Heart Assets shall be released. FirstMerit’s sole recourse for its Class 1C Claim against Sacred Heart and its Estate shall be from the Cash held in the FirstMerit Cash Collateral Account and the Garfield Payment. FirstMerit shall have no recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets. (d) FirstMerit will extend the Letter of Credit through and including May 30, 2018, and will not issue any notification to Comerica Bank that the Letter of Credit will not be extended prior to February 15, 2018. Upon the occurrence of a LC Draw, FirstMerit may immediately remove Cash from the FirstMerit Cash Collateral Account in the amount of a Comerica Bank Draw and apply it to FirstMerit’s Allowed Class 1C Claim. Upon expiration of the Letter of Credit, all funds remaining in the FirstMerit Cash Collateral Account, after FirstMerit is reimbursed for all LC Draws, shall be promptly transferred by FirstMerit to the Liquidating Trust. The FirstMerit Reimbursement Agreement shall remain in full force and effect except to the extent modified by this Plan, which modifications shall be deemed to be amendments to the FirstMerit Reimbursement Agreement. (e) Voting: The Class 1C Claim is Impaired and the Holder of the Class 1C Claim is entitled to vote to accept or reject the Plan. 4. Class 1D – HHS Secured Claims. (a) Classification: Class 1D Claims consist of the HHS Secured Claims against Sacred Heart. (b) Treatment: Each Allowed Class 1D Claim shall be fully settled and satisfied by setoff of all funds due Sacred Heart by HHS, which are unpaid on the date the Class 1D Claim is Allowed. Any balance of the Class 1D Claims not paid by setoff of such amounts shall be a Class 1G Claim. (c) Voting: Class 1D Claims are Unimpaired and Holders of Class 1D Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Class 1D Claims are not entitled to vote to accept or reject the Plan {10615-001 PLN A0364558.DOCX 18} 5 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 7 of 69 6 of 34 Desc Main Exhibit 5. Class 1E – Other Secured Claims. (a) Classification: Class 1E Claims consist of all Other Secured Claims against Sacred Heart other than the FirstMerit Secured Claims and the HHS Secured Claims. (b) Treatment: Class 1E Claims are Unimpaired under the Plan. Each Holder of a Class 1E Claim shall receive the Assets on which it holds liens or which is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Holder’s interest in Sacred Heart’s interest in such Assets or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code and Bankruptcy Rule 3012 or, in the case of a setoff, pursuant to section 553 of the Bankruptcy Code. Any balance of the Class 1E Claims, to the extent not secured by the Assets on which they hold liens or which is subject to setoff under section 553 of the Bankruptcy Code, shall be treated as a Class 1F Claim. (c) Voting: Class 1E Claims are Unimpaired and Holders of Class 1E Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Class 1E Claims are not entitled to vote to accept or reject the Plan. 6. Class 1F – General Unsecured Claims. (a) Classification: Class 1F Claims consist of all Allowed General Unsecured Claims against Sacred Heart. (b) Treatment: (i) Class 1F Claims are Impaired under the Plan. Each Holder of an Allowed Class 1F Claim shall receive an initial payment of Cash in an amount equal to the Holder’s pro rata share of the Sacred Heart Unsecured Creditor Carveout, provided solely for the benefit of the Allowed Class 1F Claims. (ii) In addition, if Sacred Heart Liquidation Proceeds remain for distribution after payment of the HHS Deficiency Carveout, each Holder of an Allowed Class 1F Claim and each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of the remaining Sacred Heart Liquidation Proceeds. Payment shall be made by the Liquidating Trustee, in the Liquidating Trustee’s sole discretion, after (a) all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Class 1A Claims, and Allowed Class 1B against Sacred Heart have been paid in full, (b) the HHS Deficiency Carveout has been paid in full; and (c) the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart {10615-001 PLN A0364558.DOCX 18} 6 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 8 of 69 7 of 34 Desc Main Exhibit Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. (iii) (c) Each Holder of an Allowed Class 1F Claim shall receive up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1F Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1F Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. Voting: Class 1F Claims are Impaired and Holders of Class 1F Claims are entitled to vote to accept or reject the Plan. 7. Class 1G – HHS Deficiency Claims. (a) Classification: Class 1G Claims consist of all Allowed HHS Deficiency Claims against Sacred Heart. (b) Treatment: (i) Class 1G Claims are Impaired under the Plan. Each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of (a) $100,000.00 and (b) the HHS Deficiency Carveout. Payment of the HHS Deficiency Carveout shall be made by the Liquidating Trustee, in the Liquidating Trustee’s sole discretion, after (x) all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Class 1A, 1B, 1C Claims have been paid in full and (y) the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. (ii) In addition, if Sacred Heart Liquidation Proceeds remain for distribution after payment of the HHS Deficiency Carveout, each Holder of an Allowed Class 1F Claim and each Holder of an Allowed Class 1G Claim shall receive Cash in an amount equal to such Holder’s pro rata share of the remaining Sacred Heart Liquidation Proceeds. Payment shall be made by the Liquidating Trustee, in the Liquidating Trustee’s sole discretion, after the Liquidating Trustee has determined that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. (iii) Each Holder of an Allowed Class 1G shall receive up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1G Claim, payable as provided in Article VI of the {10615-001 PLN A0364558.DOCX 18} 7 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 9 of 69 8 of 34 Desc Main Exhibit Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1G Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. (c) Voting: Class 1G Claims are Impaired and Holders of Class 1G Claims are entitled to vote to accept or reject the Plan. 8. Class 1H – Ownership Subordinated Claims. (a) Classification: Class 1H Claims consist of all Ownership Subordinated Claims against Sacred Heart. (b) Treatment: Class 1H Claims are Impaired under the Plan. Each Holder of an Allowed Class 1H Claim shall receive Cash in an amount equal to the Holder’s pro rata share of the Sacred Heart Liquidation Proceeds, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 1H Claim after all Allowed Administrative Claims, Allowed Priority Tax Claims and Allowed Class 1A, 1B, 1C, 1D, 1E, 1F and 1G Claims against Sacred Heart have been paid or satisfied in full and the Liquidating Trustee has determined, in his sole discretion, that there are sufficient Sacred Heart Liquidation Proceeds remaining to satisfy all reasonably anticipated expenses of the Liquidating Trust. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 1H Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. (c) Voting: Class 1H Claims are Impaired and Holders of Class 1H Claims are entitled to vote to accept or reject the Plan. 9. Class 1I – Equity Interests. (a) Classification: Class 1I Interests consist of all Interests in Sacred Heart. (b) Treatment: Class 1I Interests are Unimpaired under the Plan. Holders of Allowed Interests shall retain their Equity Interests under the Plan. To the extent that any Sacred Heart Liquidation Proceeds remain after all Allowed Claims against Sacred Heart have been paid or satisfied in full pursuant to this Plan, such Sacred Heart Liquidation Proceeds shall be distributed to the Holder of the Allowed Classes 1I Interests. (c) Voting: Class 1I Interests are Unimpaired and the Holder of the Class 1I Interests are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. The Holder of Class 1I Interests is not entitled to vote to accept or reject the Plan. {10615-001 PLN A0364558.DOCX 18} 8 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 Page Page 10 of 69 9 of 34 Desc Main Exhibit Classification and Treatment of Claims: Garfield 10. Class 2A – Non-Tax Priority Claims. (a) Classification: Class 2A Claims consist of all Allowed Non-Tax Priority Claims against Garfield. (b) Treatment: Class 2A Claims are Unimpaired under the Plan. Under this Plan, each Holder of an Allowed Non-Tax Priority Claim against Garfield shall be paid in full, without interest, or on such other terms as may be agreed upon by such Holder and Garfield, on the Effective Date or as soon thereafter as may be practicable. (c) Voting: Class 2A Claims are Unimpaired and the Holders of Class 2A Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Claims in Class 2A are not entitled to vote to accept or reject the Plan. 11. Class 2B – FirstMerit Secured Claims. (a) Classification: The Class 2B Claim consists of the FirstMerit Secured Claim against Garfield. (b) Treatment: FirstMerit’s Class 2B Claim is Impaired under the Plan. FirstMerit’s Allowed 2B Claim shall be deemed Allowed in the aggregate amount of all LC Draws plus (i) the Garfield Payment and (ii) to the extent that funds are available in the FirstMerit Cash Collateral Account after any LC Draw, termination or expiration of the Letter of Credit, any Shortfall Amount; provided, however, FirstMerit’s total Allowed Class 1C, 2B and 3B Claims shall not exceed the aggregate amount of $5,075,000. All payments received by FirstMerit on account of the Allowed Class 2B Claim shall also constitute payment of FirstMerit’s Allowed Class 1C and 3B Claims. Holders of Class 1C, 2B and 3B Claims shall receive the releases granted in Article 7.4(e). (c) On the Effective Date, Garfield shall (i) deliver to FirstMerit Cash the amount of $1,300,000, which FirstMerit will deposit in the FirstMerit Cash Collateral Account and (ii) pay FirstMerit the amount of $175,000 in partial satisfaction of FirstMerit’s Class 1C, 2B, and 3C Claims against the Debtors (“Garfield Payment”), which FirstMerit is authorized to retain immediately. (d) FirstMerit’s Allowed Class 2B Claim shall be secured solely by the Cash on deposit in the Cash Collateral Account as of the Effective Date and the Garfield Payment and all other security interests and liens of FirstMerit on Garfield Assets shall be released. FirstMerit’s sole recourse for its Class 2B Claim against Garfield and its Estate shall be from the Cash held in the FirstMerit Cash Collateral Account and the Garfield Payment. {10615-001 PLN A0364558.DOCX 18} 9 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 11 of 10 69 of 34 Desc Main Exhibit FirstMerit shall have no recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets. (e) FirstMerit will extend the Letter of Credit through and including May 30, 2018, and will not issue any notification to Comerica Bank that the Letter of Credit will not be extended prior to February 15, 2018. Upon the occurrence of a LC Draw, FirstMerit may immediately remove Cash from the FirstMerit Cash Collateral Account in the amount of a LC Draw and apply it to FirstMerit’s Allowed Class 2B Claim. Upon expiration of the Letter of Credit, all funds remaining in the FirstMerit Cash Collateral Account, after FirstMerit is reimbursed for all LC Draws, shall be promptly transferred by FirstMerit to the Liquidating Trust. The FirstMerit Reimbursement Agreement shall remain in full force and effect except to the extent modified by this Plan, which modifications shall be deemed to be amendments to the FirstMerit Reimbursement Agreement. (f) Voting: The Class 2B Claim is Impaired and the Holder of the Class 2B Claim is entitled to vote to accept or reject the Plan. 12. Class 2C –General Unsecured Claims. (a) Classification: Class 2C Claims consist of all Allowed General Unsecured Claims against Garfield. (b) Treatment: Class 2C Claims are Impaired under the Plan. Each Holder of an Allowed Class 2C Claim shall receive an amount equal to the Holder’s pro rata share of the Garfield Liquidation Proceeds, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 2C Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 2C Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. Any Garfield Liquidation Proceeds remaining after payment of all Allowed 2C Claims against Garfield shall be paid to the Liquidation Trustee for the benefit of Holders of Claims and Interests against Sacred Heart. (c) Voting: Class 2C Claims are Impaired and Holders of Class 2C Claims are entitled to vote to accept or reject the Plan. 13. Class 2D – Equity Interests. (a) Classification: Class 2D Interests consist of all Interests in Garfield. (b) Treatment: Class 2D Interests are Impaired under the Plan. Holders of Class 2D Interests shall receive the releases granted in Article 7.4(b) and the injunction granted in Article 7.5. Other than releases granted in Article 7.4(b) and the injunction granted in Article 7.5., Holders of Class {10615-001 PLN A0364558.DOCX 18} 10 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 12 of 11 69 of 34 Desc Main Exhibit 2D Interests shall neither receive nor retain any property under this Plan on account of such Interests. Any Garfield Liquidation Proceeds remaining after payment of all Allowed Claims against Garfield shall be paid to the Liquidation Trustee for the benefit of Holders of Claims and Interests against Sacred Heart. (c) Voting: The Class 2D Interests are Impaired and Holders of the Class 2D Interests are entitled to vote to accept or reject the Plan. Classification and Treatment of Claims and Interests: Superior 14. Class 3A – Non-Tax Priority Claims. (a) Classification: Class 3A Claims consist of all Allowed Non-Tax Priority Claims against Superior. (b) Treatment: Class 3A Claims are Unimpaired under the Plan. Under this Plan, each Holder of an Allowed Non-Tax Priority Claim against Superior shall be paid in full, without interest, or on such other terms as may be agreed upon by such Holder and Superior, on the Effective Date or as soon thereafter as may be practicable. (c) Voting: Class 3A Claims are Unimpaired and the Holders of Class 3A Claims are deemed conclusively to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Holders of Claims in Class 3A are not entitled to vote to accept or reject the Plan. 15. Class 3B – FirstMerit Secured Claim. (a) Classification: The Class 3B Claim consists of the FirstMerit Secured Claim against Superior. (b) Treatment: FirstMerit’s Class 3B Claim is Impaired under the Plan. FirstMerit’s Allowed 3B Claim shall be deemed Allowed in the aggregate amount of all LC Draws plus (i) the Garfield Payment and (ii) to the extent that funds are available in the FirstMerit Cash Collateral Account after any LC Draw, termination or expiration of the Letter of Credit, any Shortfall Amount; provided, however, FirstMerit’s total Allowed Class 1C, 2B and 3B Claims shall not exceed the aggregate amount of $5,075,000. All payments received by FirstMerit on account of the Allowed Class 3B Claim shall also constitute payment of FirstMerit’s Allowed Class 1C and 2B Claims. Holders of Class 1C, 2B and 3B Claims shall receive the releases granted in Article 7.4(e). (c) FirstMerit’s Allowed Class 3B Claim shall be secured solely by the Cash on deposit in the Cash Collateral Account as of the Effective Date and the Garfield Payment and all other security interests and liens of FirstMerit on Superior Assets shall be released. FirstMerit’s sole recourse for its {10615-001 PLN A0364558.DOCX 18} 11 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 13 of 12 69 of 34 Desc Main Exhibit Class 3B Claim against Superior and its Estate shall be from the Cash held in the FirstMerit Cash Collateral Account and the Garfield Payment. FirstMerit shall have no recourse against any of the Debtors, their Estates, the Liquidating Trust or any of the Liquidating Trust Assets. (d) FirstMerit will extend the Letter of Credit through and including May 30, 2018, and will not issue any notification to Comerica Bank that the Letter of Credit will not be extended prior to February 15, 2018. Upon the occurrence of a LC Draw, FirstMerit may immediately remove Cash from the FirstMerit Cash Collateral Account in the amount of a LC Draw and apply it to FirstMerit’s Allowed Class 3B Claim. Upon expiration of the Letter of Credit, all funds remaining in the FirstMerit Cash Collateral Account, after FirstMerit is reimbursed for all LC Draws, shall be promptly transferred by FirstMerit to the Liquidating Trust. The FirstMerit Reimbursement Agreement shall remain in full force and effect except to the extent modified by this Plan, which modifications shall be deemed to be amendments to the FirstMerit Reimbursement Agreement. (e) Voting: The Class 3B Claim is Impaired and the Holder of the Class 3B Claim is entitled to vote to accept or reject the Plan. 16. Class 3C – General Unsecured Claims. 17. (a) Classification: Class 3C Claims consist of all Allowed General Unsecured Claims against Superior. (b) Treatment: Class 3C Claims are Impaired under the Plan. Each Holder of an Allowed Class 3C Claim shall receive an amount equal to the Holder’s pro rata share of the Superior Liquidation Proceeds and the Superior General Unsecured Carveout, up to a maximum of one hundred percent (100%) of the Allowed amount of its Class 3C Claim, payable as provided in Article VI of the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Class 3C Claim for postpetition interest, attorneys’ fees or costs, or for any punitive or exemplary damages, or for a fine, penalty or forfeiture of any kind. (c) Voting: Class 3C Claims are Impaired and Holders of Class 3C Claims are entitled to vote to accept or reject the Plan. Class 3D – Equity Interests. (a) Classification: Class 3D Interests consist of all Interests in Superior. (b) Treatment: Class 3D Interests are Impaired under the Plan. Holders of Class 3D Interests shall receive the releases granted in Article 7.4(b) and the injunction granted in Article 7.5. Other than releases granted in Article 7.4(b) and the injunction granted in Article 7.5., Holders of Class 3D {10615-001 PLN A0364558.DOCX 18} 12 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 14 of 13 69 of 34 Desc Main Exhibit Interests shall neither receive nor retain any property under this Plan on account of such Interests. Any Cash remaining after payment of all Allowed Claims against Superior shall be paid to the Liquidation Trustee for the benefit of Holders of Claims and Interests against Sacred Heart. (c) Voting: The Class 3D Interests are Impaired and Holders of the Class 3D Interests are entitled to vote to accept or reject the Plan. 2.5 Retention of Defenses and Rights of Setoff Regarding Claims. Except as otherwise provided in this Plan, nothing shall prejudice the Debtors’ or the Liquidating Trustee’s rights and defenses, both legal and equitable, with respect to any Claims, including, but not limited to, all rights of setoffs or recoupment with respect to such Claims. ARTICLE III ACCEPTANCE OR REJECTION OF THE PLAN 3.1 Acceptance by Impaired Classes. In accordance with section 1126(c) of the Bankruptcy Code and except as provided under sections 1126(e) and (g) of the Bankruptcy Code, an Impaired Class of Claims or Interests shall have accepted the Plan if the Plan is accepted by the Holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the Allowed Claims or Interests of such Class that have timely and properly voted to accept or reject the Plan. 3.2 Acceptance by Unimpaired Classes and Unclassified Claims. Pursuant to section 1126(f) of the Bankruptcy Code, each Unimpaired Class of Claims is presumed to have accepted the Plan and, therefore, the votes to accept or reject this Plan will not be solicited from such Classes. 3.3 Cramdown. If any Impaired Class of Claims or Interests entitled to vote shall not accept the Plan by the requisite majorities provided in section 1126(c) or 1126(d) of the Bankruptcy Code, as applicable, the Debtors reserve the right to (i) amend the Plan, or (ii) undertake to have the Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy Code, or (iii) both amend this Plan and seek Confirmation of any amended plan pursuant to section 1129(b) of the Bankruptcy Code. ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN 4.1 Funding. In accordance with sections 1123(a)(5)(D) and 1123(b)(4) of the Bankruptcy Code, all Assets shall be sold, otherwise liquidated or abandoned. This Plan shall be funded by the Cash held by Sacred Heart, Garfield and Superior and from liquidation of such other Assets of the Estates, including the Novak Settlement Payment (defined below) and the net proceeds of the sale or disposition of any Litigation Claims. As of the Effective Date, the Liquidation Proceeds and all other Assets of each Estate shall be transferred, conveyed and assigned to the Liquidating Trust. {10615-001 PLN A0364558.DOCX 18} 13 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 15 of 14 69 of 34 Desc Main Exhibit 4.1 Novak Party Settlement. On the Effective Date, the Escrow Agent shall release the Escrowed Settlement Funds to the Liquidating Trustee to fund the obligations under this Plan including, but not limited to the payment of the Sacred Heart Unsecured Creditor Carveout and (ii) to the extent necessary, the payment of the Superior General Unsecured Creditor Carveout. West Side Management Corp. consents to the treatment of its Claims and Interests against the Debtors in this Plan. The Novak Parties shall receive the applicable releases set forth in Article VII of this Plan and the Confirmation Order. The Novak Parties shall grant the applicable releases set forth in Article VII of this Plan and the Confirmation Order. No release shall be granted on behalf of a Governmental Unit. Notwithstanding the terms of the Novak Party Settlement, nothing in this Plan shall release any claims against the Bentley Entities until such time as the Debtors (or the Liquidating Trustee after the Effective Date) enter a settlement with the Bentley Entities approved pursuant to a Final Order of the Bankruptcy Court. 4.2 Maintenance of Cash Collateral Account By Trustee. To the extent the Letter of Credit has not been drawn upon pursuant to its terms prior to the Effective Date, the Liquidating Trustee shall be substituted for the Debtors and/or the Bentley Entities as the account holder of record with respect to the FirstMerit Cash Collateral Account. Until such time as the Letter of Credit is drawn upon, expires by its own terms or is otherwise released by beneficiary, the FirstMerit Cash Collateral Account shall secure the Debtors’ obligations under the Letter of Credit. 4.3 Termination of Cash Collateral Account. To the extent that Comerica Bank draws on the Letter of Credit or the Letter of Credit expires on or after the Effective Date, any funds remaining in the FirstMerit Cash Collateral Account after satisfaction of any Allowed Class 1C, 2B and 3B Claims, shall thereafter be delivered to the Liquidating Trustee for distribution pursuant to the terms of this Plan and the Cash Collateral Account shall thereafter be closed. 4.4 Intercompany Claims. No distributions shall be made under the Plan on account of inter-company claims or interests between and among any of the Debtors. All intercompany claims shall be released, discharged and satisfied on the Effective Date. 4.5 Dissolution of Garfield and Superior. Immediately upon the transfer, conveyance and assignment of the Liquidation Proceeds and all other Assets of each Estate to the Liquidating Trust, each of Garfield and Superior shall be deemed to be dissolved without any further action by the Debtors or the Liquidating Trustee being required to effect such dissolution. Notwithstanding the foregoing, nothing in this Plan is intended to substantively consolidate, nor shall have the effect of substantively consolidating, the Debtors or their respective Estates. 4.6 Cancellation of Garfield and Superior Interests. As of the Effective Date, all Equity Interests in Superior and Garfield shall be deemed cancelled. 4.7 Continued Corporate Existence of Sacred Heart. Subject to the provisions of this Plan, Sacred Heart shall continue to exist after the Effective Date, in accordance with applicable law and pursuant to its articles of incorporation and by-laws in effect prior to the Effective Date; provided, however, (i) the Liquidation Proceeds and all other Assets (including Litigation Claims) of Sacred Heart’s Estate shall be transferred to the Liquidating Trust pursuant to the terms of Article V of the Plan and (ii) the corporate purpose of Sacred Heart shall be {10615-001 PLN A0364558.DOCX 18} 14 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 16 of 15 69 of 34 Desc Main Exhibit limited to taking such actions consistent with the implementation this Plan. On the Effective Date, the Equity Interests in Sacred Heart shall revert to the Holders of Class 1I Interests and Novak shall be its sole director and president. After the Effective Date, Sacred Heart shall be solely responsible for all required tax disclosures or filings and for complying with all corporate reporting requirements. None of the Estates, the Debtors, the Liquidating Trustee Protected Parties, the Postpetition Releasees or any of their respective professionals, or their successors or assigns shall incur any liability based upon actions taken by Sacred Heart after the Effective Date. 4.8 Executory Contracts. All executory contracts that (i) the Debtors entered into prior to the Petition Date, (ii) are executory as of the Effective Date, and (iii) have not been assumed or rejected pursuant to section 365 of the Bankruptcy Code before the Effective Date, shall be deemed rejected as of the Effective Date. Unless otherwise ordered by the Bankruptcy Court, any claim arising from such rejection under this Plan shall be filed on or before thirty (30) days after the Effective Date or forever be barred from recovery against the Estates. ARTICLE V THE LIQUIDATING TRUST 5.1 Liquidating Trust. On or before the Effective Date, the Debtors shall establish a liquidating trust in accordance with the Liquidating Trust Agreement. On the Effective Date, the Debtors shall be deemed to have transferred the Liquidation Proceeds and all other Assets of their respective Estates to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement. The Liquidation Proceeds and all other Assets of their respective Estates transferred to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement shall be held in segregated accounts for the benefit the Holders of Claims and Interests against each respective Estate. By confirmation of the Plan, the Bankruptcy Court will specifically approve and designate the Liquidating Trust and the Liquidating Trustee as the representative of the respective Estates and will find that the Liquidating Trust and the Liquidating Trustee are acting on behalf of and for the benefit of the Liquidating Trust’s beneficiaries. 5.2 Liquidating Trustee. The Liquidating Trustee shall be appointed pursuant to the Liquidating Trust Agreement and shall be responsible for liquidating and administering the Trust Assets for all distributions pursuant to the Plan. On the Effective Date, the Liquidating Trustee shall become the appointed representative of the respective Estates in accordance with section 1123(b)(3) of the Bankruptcy Code, shall assume all surviving liabilities of each of the Estates and shall pay such liabilities as provided under this Plan. The Liquidating Trustee shall have and perform all of the duties, responsibilities, rights and obligations set forth in the Liquidating Trust Agreement. The Liquidating Trust and the Liquidating Trustee shall be bound by all orders of the Bankruptcy Court entered prior to the Effective Date, to the same extent as the Debtors were bound by the terms of such orders. The Liquidating Trustee may retain counsel and other professionals as the Liquidating Trustee, in his sole discretion, deem appropriate, without further order of the Bankruptcy Court, to assist the Liquidating Trustee in performing his duties, rights and obligations under this Plan. {10615-001 PLN A0364558.DOCX 18} 15 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 17 of 16 69 of 34 Desc Main Exhibit 5.3 Liquidating Trustee’s Rights, Powers and Duties. On and after the Effective Date, the Liquidating Trustee shall have, among others, the following rights and powers (including all of the rights and powers of a trustee appointed under the Bankruptcy Code) with respect to the implementation of this Plan: 1. To receive, control, manage and dispose of all Trust Assets for the benefit of holders of Allowed Claims who may receive distributions under the Plan; 2. To act as custodian of the Trust Assets, and liquidate and reduce such assets to cash at such time as the Liquidating Trustee deems appropriate to accomplish the purpose of the Liquidating Trust, in accordance with the terms of the Plan and the Liquidating Trust Agreement; 3. Calculate and pay all distributions required or permitted to be made under the Plan, the Liquidating Trust Agreement and/or orders of the Bankruptcy Court; 4. Subject to the provisions of the Plan and the Liquidating Trust Agreement, to establish, fund, and/or administer one or more bank accounts to maintain all Cash and the Liquidation Proceeds; 5. To employ, supervise and compensate such Persons as may be necessary to assist the Liquidating Trustee in the performance of his duties under the Plan; 6. To employ, supervise and compensate attorneys, accountants, and other professionals or other Persons retained to represent the interests of and serve on behalf of the Liquidating Trust and waive any conflicts of interest as deemed necessary or appropriate in its discretion; 7. To file such tax returns as may be required by federal, state or local taxing authorities and consistent with the treatment of the Liquidating Trust as a grantor trust for federal income tax purposes; 8. To object to or seek to recharacterize, reclassify or subordinate Claims (exclusive of Class 1C, 2B or 3B Claims) filed against any of the Debtors or their Estates on any basis, and pursuant to Bankruptcy Rule 9019(b) and section 105(a) of the Bankruptcy Code, to compromise and settle any such Claims including Disputed Claims; 9. To seek estimation of contingent or unliquidated claims under section 502(c) of the Bankruptcy Code; 10. To seek determination of tax liability under section 505 of the Bankruptcy Code; {10615-001 PLN A0364558.DOCX 18} 16 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 18 of 17 69 of 34 Desc Main Exhibit 11. To prosecute, settle, dismiss, abandon or otherwise dispose of turnover actions under sections 542 and 543 of the Bankruptcy Code (to the extent not released under Article 7.4); 12. To prosecute, settle, dismiss, abandon or otherwise dispose of any and all causes of action of the Debtors or their Estates (to the extent not released under Article 7.4) including, without limitation, all causes of action arising under sections 510(c), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code, including the Litigation Claims, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code; 13. To pay all expenses and make other necessary payments relating to the Liquidating Trust Assets; 14. To assert or waive any privilege or defense of the Debtors, including the attorney-client privilege; 15. To seek the examination of any entity (excluding FirstMerit) under Bankruptcy Rule 2004; 16. To provide indemnity for any entity entitled to indemnification under Article 7.3 of this Plan; 17. To perform any and all acts necessary or appropriate for the conservation and protection of the Liquidating Trust Assets; 18. To amend or modify this Plan in accordance with section 1127 of the Bankruptcy Code; and 19. To file and prosecute such motions, applications or other pleadings in the Bankruptcy Court or other appropriate forum, and exercise all other powers and rights, and take all other actions necessary or appropriate to implement this Plan. 5.4 Retention of Litigation Claims. Pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, the Litigation Claims, including any and all avoidance and other actions arising under chapter 5 of the Bankruptcy Code (to the extent not released under Article 7.4), and actions to collect the Debtors’ accounts receivable shall be retained, prosecuted and enforced by the Liquidating Trustee, except to the extent expressly released through this Plan. The Liquidating Trustee may enforce, sue on, settle or compromise any or all such Litigation Claims or, in the exercise of his discretion, may elect to not pursue certain Litigation Claims. The Liquidating Trustee may designate and employ any professional employed in the Cases to represent him in connection with the claims retained herein, and the Liquidating Trustee shall retain any and all defenses, counterclaims and rights held by the Debtors or their Estates. Further, the net proceeds of the Litigation Claims shall be paid into the Liquidation Proceeds for use or distribution pursuant to the Plan. {10615-001 PLN A0364558.DOCX 18} 17 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 19 of 18 69 of 34 Desc Main Exhibit 5.5 Compensation of Liquidating Trustee. The Liquidating Trustee shall be compensated pursuant to the terms of the Liquidating Trust Agreement. As compensation for the performance of his duties, the Liquidating Trustee shall be entitled to Liquidating Trustee’s standard hourly rate and shall be entitled to reimbursement of his reasonable costs and expenses incurred in carrying out his duties as the Liquidating Trustee. Any agents, financial advisors, attorneys, consultants, independent contractors, representatives and other professionals, as appropriate, retained or utilized by the Liquidating Trustee shall be entitled to reasonable compensation for services rendered and reimbursement of expenses incurred. After the Effective Date, the payment of the fees and expenses of the Liquidating Trustee and his agents, financial advisors, attorneys, consultants, independent contractors, representatives and other professionals shall be made in the ordinary course of business and shall not be subject to the approval of the Bankruptcy Court. Any successor Liquidating Trustee shall receive such reasonable compensation and reimbursement of expenses in the same manner for service as the Liquidating Trustee. 5.6 Post-Confirmation Management. From and after the Effective Date, the Liquidating Trustee shall manage the Liquidating Trust and control and perform all postConfirmation responsibilities, including implementation of the Plan. The Debtors’ managers, members, directors, employees, agents or other representatives will have no rights to possess, control, or manage the Debtors’ or Estates’ former Assets. 5.7 Accounts. From and after the Effective Date, the Liquidating Trustee may establish or maintain one or more interest-bearing accounts as he may determine may be necessary or appropriate to effectuate the provisions of this Plan consistent with section 345 of the Bankruptcy Code. 5.8 Substitution of Liquidating Trustee for the Debtors in Pending Litigation. To the extent that any Party has sought and received relief from the provisions of section 362(a) of the Bankruptcy Code prior to the Effective Date to proceed with litigation against the Debtors in a forum other than the Bankruptcy Court, the Liquidating Trustee shall be substituted for the Debtors in any such litigation. 5.9 Medical Records. Notwithstanding anything in the Plan to the contrary, neither the Liquidating Trustee nor the Liquidating Trust shall be covered entities as that term is defined under HIPAA and the HIPAA Rules; provided, however, the Liquidating Trustee shall have access to protected health information of former patients of the Debtors solely for the purposes of implementing this Plan. The Debtors entered into agreements with Recall Total Information Management, Inc., Computer Programs & Systems, Inc. and APGME, Inc. that provided for the continued access, storage and eventual secured destruction of certain protected health information of former patients of the Debtors. The contact for information Recall Total Information Management, Inc. is as follows: Recall Corporation, 4242 W. 42nd Street, Chicago, Illinois 60632, Attn.: Lori Olson or Sales Manager; Phone: (312) 545-0463, Fax: (773) 9130564. The contact information for Computer Programs & Systems, Inc. is Computer Programs & Systems, Inc c/o Helmsing, Leach, Herlong, Newman and Rouse, P.C., 150 Government Street, Suite 2000, Mobile Alabama, AL 36602, Attn: Christopher Conte, Phone: 251-434-0888; E-mail: [email protected]. The contact for information APGME, Inc. is as follows: {10615-001 PLN A0364558.DOCX 18} 18 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 20 of 19 69 of 34 Desc Main Exhibit APGME, Inc. c/o Zayyad Law Offices, P.C., 9723 Southwest Highway, Oak Lawn, IL 60453, Attn.: Nehad Zayyad, Phone: (708) 576-4300. ARTICLE VI PROVISIONS GOVERNING DISTRIBUTIONS AND CLAIMS RESOLUTION 6.1 Distributions. All distributions under this Plan shall be made by the Liquidating Trustee pursuant to the terms and conditions contained in this Plan and the Liquidating Trust Agreement; provided, however that no distribution shall be made on behalf of any Disputed Claim prior to the resolution of such dispute. The Liquidating Trustee shall reserve sufficient funds to satisfy any Disputed Claim to the extent provided for in this Plan. At the close of business forty-five (45) days after the Effective Date (“Closing Date”), the Claims register shall be closed, and there shall be no further changes in the record holders of any Claims or Interests. The Liquidating Trustee shall have no obligation to recognize any transfer of any Claims or Interests occurring after the applicable Closing Date. The Liquidating Trustee shall instead be entitled to recognize and deal for all purposes under this Plan (except as to voting to accept or to reject this Plan) with only those record holders stated on the Claims register as of the close of business on the applicable Closing Date. 6.2 Effective Date Payments. As soon as is practicable after the Effective Date, the Liquidating Trustee shall make distributions to Holders of Allowed Administrative Claims, Allowed Priority Tax Claims, and Allowed Class 1A, 1B, 2A, and 3A Claims entitled to such distributions pursuant to the Plan. All payments shall be made in accordance with the priorities established by the Plan. Except to the extent required by the Bankruptcy Code or ordered by the Bankruptcy Court, no distribution will be made on account of any Penalty Claims. 6.3 Distributions on a Subsequent Distribution Date. Unless otherwise provided in the Plan, to the extent that Cash or other assets are available subsequent to the date of making the payments required by Article 6.2 of this Plan (“Initial Distribution Date”), the Liquidating Trustee may, on one or more subsequent dates (each a “Subsequent Distribution Date”), distribute such Cash or other assets to the Holders of Allowed Claims and Interests in other Classes and Holders of Claims entitled to distributions under the Plan that were Allowed on the Initial Distribution Date or subsequently have become Allowed Claims on or before such Subsequent Distribution Date in accordance with the treatment and priority of Claims established by the Plan. 6.4 Distributions on the Final Distribution Date. Unless otherwise provided in the Plan, to the extent that Cash or other assets are available subsequent to the Initial Distribution Date and any Subsequent Distribution Date, after the liquidation of all Trust Assets, the Liquidating Trustee shall establish a final distribution date (“Final Distribution Date”) upon which the Liquidating Trustee shall distribute such Cash or other assets to the holders of Claims and Interests entitled to distributions under the Plan that were Allowed on the Effective Date or subsequently have become Allowed Claims on or before the Final Distribution Date in accordance with the treatment and priority of Claims and Interests established by the Plan. {10615-001 PLN A0364558.DOCX 18} 19 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 21 of 20 69 of 34 Desc Main Exhibit 6.5 Fractional Dollars; De Minimis Distributions. The Liquidating Trustee shall have no obligation to make any distribution to a specific Holder of an Allowed Claim or Interest if the amount to be distributed to that Holder on the relevant Distribution Date is less than $5. 6.6 Unclaimed Disbursements. Unless otherwise provided for in this Plan, distributions to Holders of Allowed Claims and Interests shall be made at the address of each such Holder as set forth on the Schedules or List of Equity Security Holders, as applicable, filed with the Bankruptcy Court unless superseded by the address as set forth on the proof of Claim or Interest filed by such Holders or by notifying the Liquidating Trustee, in writing, of a change of address in accordance with the notice provisions of the Liquidating Trust Agreement. If any Holder’s distribution is returned as undeliverable, no further distributions to such Holder shall be made unless and until the Liquidating Trustee is notified by the Holder in accordance with the provisions of this section, of such Holder’s then current address within 30 days of the postmark of the returned distribution. Claims held by Holders whose distributions are returned as undeliverable and who fail to notify the Liquidating Trustee of their respective correct addresses within the 30-day period provided shall be disallowed. All unclaimed property shall, in the discretion of the Liquidating Trustee, be used to satisfy the costs of administering the Plan or become available for distribution in accordance with the Plan, and the Holder of any disallowed Claim or Interest shall not be entitled to any other or further distribution under the Plan on account of such disallowed Claim or Interest. To the extent any unclaimed property is not used by the Liquidating Trustee to satisfy the foregoing costs of administration or for redistribution, the Liquidating Trustee may donate such unclaimed property to the Credit Abuse Resistance Education Program. 6.7 Time Bar to Cash Payments. All distributions made pursuant to this Plan that are not negotiated within sixty (60) days after the relevant Distribution Date and that consequently become unclaimed shall revert to and become property of the Liquidating Trust, free and clear of any and all Claims, Interests, demands and causes of action, but subject to further redistribution in accordance with the Plan. 6.8 Setoffs and Recoupments. The Liquidating Trustee may set off or recoup against any Allowed Claim (to the extent not released under Article 7.4) and the distributions to be made pursuant to the Plan on account of such Claim (before any distribution is made on account of such Claim), the claims, rights and causes of action of any nature that the Debtors may hold against the Holder of such Allowed Claim; provided, however that neither the failure to effect such a setoff or recoupment nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors or the Liquidating Trustee of any such claims, rights and causes of action that the Debtors or the Liquidating Trustee may possess against such Holder. 6.9 Disputed Payments. If any dispute arises as to the identity of a Holder of an Allowed Claim who is to receive any distribution, the Liquidating Trustee may, in lieu of making such distribution to such Person, either (i) retain such distribution or (ii) make such distribution into an escrow account until the disposition thereof shall be determined by the Bankruptcy Court or by written agreement among the interested parties to such dispute. 6.10 No Recourse to Estates or Liquidating Trust. Notwithstanding that the Allowed amount of any particular Disputed Claim may be reconsidered under the applicable {10615-001 PLN A0364558.DOCX 18} 20 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 22 of 21 69 of 34 Desc Main Exhibit provisions of the Bankruptcy Code and Bankruptcy Rules or Allowed in an amount for which there is insufficient cash in the relevant account to provide a recovery equal to that received by other Holders of Allowed Claims in the relevant Class, no such Holder shall have recourse to the Estates, the Debtors, the Liquidating Trustee Protected Parties, Postpetition Releasees or any of their respective professionals, or their successors or assigns, or the Holder of any other Claim or Interest, or any of their respective property. Nothing in the Plan, however, shall modify any right of a Holder of a Claim under section 502(j) of the Bankruptcy Code. 6.11 Claims Adjudication and Objection Deadline. The Debtors, prior to the Effective Date, and the Liquidating Trustee, from and after the Effective Date, reserve all rights to prosecute any and all objections to Claims and Interests, including Administrative Claims. All objections to Claims must be filed and served on the holders of such Claims by the Claims Objection Deadline. Unless a Claim is objected to by the Claims Objection Deadline, such Claim shall be deemed Allowed in the amount requested. All Claim objections by the Liquidating Trustee shall be litigated to a Final Order except to the extent the Liquidating Trustee, in his discretion, elects to withdraw any such objections or compromise, settle or otherwise resolve any such objection, in accordance with the terms of the Liquidating Trust Agreement, in which event the Liquidating Trustee may settle, compromise or otherwise resolve any Disputed Claim without approval of the Bankruptcy Court. Within thirty (30) days of the Claims Objection Deadline, Novak shall have the right, at his sole expense, to object to any Claim against Sacred Heart that is not already Allowed or subject to a pending Claim objection filed by the Liquidating Trustee. 6.12 Estimation of Claims and Interests. The Debtors, prior to the Effective Date, and the Liquidating Trustee, from and after the Effective Date, may (but are not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim or Interest that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason, regardless of whether any party previously has objected to such Claim or Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim or Interest, including during the litigation of any objection to any Claim or Interest or during the appeal relating to such objection. Notwithstanding any provision otherwise in the Plan, a Claim or Interest that has been disallowed, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest, that estimated amount shall constitute a maximum limitation on such Claim or interest for all purposes under the Plan (including for purposes of distributions), and the Liquidating Trustee, may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim or Interest. Notwithstanding section 502(j) of the Bankruptcy Code, in no event shall any Holder of a Claim or Interest that has been estimated pursuant to section 502(c) of the Bankruptcy Code or otherwise be entitled to seek reconsideration of such estimation unless such Holder has filed a motion requesting the right to seek such reconsideration on or before fourteen (14) days after the date on which such Claim is estimated. 6.13 Administrative Claims Bar Date. All requests for the allowance and/or payment of an Administrative Claim (other than as set forth in Article 6.14 of this Plan) must be filed with the Bankruptcy Court and served on counsel for the Debtors and the Liquidating {10615-001 PLN A0364558.DOCX 18} 21 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 23 of 22 69 of 34 Desc Main Exhibit Trustee no later than thirty (30) days after the Effective Date. Unless such request is objected to, such Administrative Claim shall be deemed allowed in the amount requested. In the event that an Administrative Claim is objected to, the Bankruptcy Court shall determine the Allowed amount of such Administrative Claim. 6.14 Professional Fee Claims. All final requests for compensation or reimbursement of Professional fees pursuant to sections 327, 328, 330, 331, or 503(b) of the Bankruptcy Code for services rendered prior to the Effective Date and substantial contribution claims under section 504(b)(4) must be filed and served no later than sixty (60) days after the Effective Date, or such later date as the Bankruptcy Court may allow. Objections to applications of such Professionals or other entities for compensation or reimbursement of expenses must be filed and served on the requesting Professional no later than ten (10) days (or such longer period as may be allowed by order of the Bankruptcy Court) after the date on which the applicable application for compensation or reimbursement was served. ARTICLE VII EFFECT OF CONFIRMATION 7.1 No Discharge. The Confirmation Order shall not discharge any Debtor from any debt and liability that arose before the Confirmation Date, as provided in section 1141(d)(3)(A) of the Bankruptcy Code. 7.2 Injunction. Except for actions as Holders may take to prosecute or defend their respective Claims or Interests in the Bankruptcy Court against the Debtors or Liquidating Trustee, entry of a Confirmation Order will operate as an injunction against the commencement or continuation of an action, the employment of process, or any act to collect, recover or offset any Claim of any Holder against the Debtors, their Estates, or the Liquidating Trust; provided, however, that to the extent that the provisions of § 362(a) have been modified by the Bankruptcy Court prior to the Effective Date, actions against the Debtors consistent with such modification and the Plan are permitted. 7.3 Exculpation and Indemnification of (a) the Debtors’ Officers, Directors and Professionals and (b) the Liquidating Trust and Liquidating Trustee. (a) From and after the Effective Date, to the fullest extent permitted by applicable law, (i) Paul Rundell, David McLaughlin, Karen Davis, Aisha M. Jaleel, Zivojin Pavlovic, Spiros Stamelous, Thomas Abraham, and Sherry Hendrix; (ii) the Debtors’ agents, attorneys, accountants, consultants, financial advisors (and their officers, directors, and shareholders) retained or employed by order of the Bankruptcy Court; and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives (collectively, the “Postpetition Releasees”) shall not have and shall not incur any liability to any Person for any and all claims, causes of action and other assertions of liability, or for any act or omission arising in connection with, relating to or arising out of the Cases, the pursuit of confirmation of this Plan, the pursuit of the approval of the adequacy of the Disclosure Statement, the confirmation and implementation of this Plan, the consummation of this Plan, or the administration of this Plan, the existence of the Trust Assets, or any other property to be distributed or {10615-001 PLN A0364558.DOCX 18} 22 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 24 of 23 69 of 34 Desc Main Exhibit abandoned under this Plan (the “Postpetition Released Matters”) except for such Postpetition Releasees’ willful misconduct or fraud as determined by a Final Order. To the fullest extent permitted by applicable law, the Liquidating Trust shall indemnify, defend, and hold harmless the Postpetition Releasees (without the Postpetition Releasees having to first pay from their own funds) from and against any and all Claims, causes of action, liabilities, obligations, losses, costs, judgments, damages (including attorney fees and costs) for any act or omission in connection with, relating to or arising out of the Postpetition Released Matters, other than acts or omissions to act to the extent determined by a Final Order to be due to such Postpetition Releasee’s own respective willful misconduct or fraud. This exculpation and indemnification shall not apply to any causes of action against the Postpetition Releasees arising under Chapter 5 of the Bankruptcy Code. All rights of the Persons exculpated and indemnified pursuant hereto shall survive confirmation of the Plan and the closing of the Cases. (b) From and after the Effective Date, to the fullest extent permitted by applicable law, the Liquidating Trustee and each of his officers, directors, shareholders, employees and representatives together with any Person that may be liable derivatively through any of the foregoing and each of their representatives (collectively the “Liquidating Trustee Protected Parties”) shall not have and shall not incur any liability to any Person for any and all Claims, causes of action and other assertions of liability, or for any act or omission, (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee Protected Parties’ own respective willful misconduct or fraud. No Holder of a Claim or Interest, or any other party in interest, will have or pursue any claim or cause of action against the Liquidating Trustee Protected Parties (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, or (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee Protected Parties’ own respective willful misconduct or fraud. Any act taken pursuant to the Plan, the Liquidating Trust or court order, will be conclusively deemed not to constitute fraud or willful misconduct. To the fullest extent permitted by applicable law, the Liquidating Trust shall indemnify, defend, and hold harmless the Liquidating Trustee Protected Parties (without the Liquidating Trustee Protected Parties having to first pay from their own funds) and each of their designated representatives from and against any and all Claims, causes of action, liabilities, obligations, losses, costs, judgments, damages (including attorney fees and cost), except for willful misconduct or fraud as determined by a Final Order. All rights of the Liquidating Trustee Protected Parties exculpated and indemnified pursuant hereto shall survive confirmation of the Plan and the closing of the Cases. {10615-001 PLN A0364558.DOCX 18} 23 Case Case 13-27091 13-27091 Doc Doc 456-1 455 7.4 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 25 of 24 69 of 34 Desc Main Exhibit Releases. (a) On the Effective Date, the Debtors and their Estates and any other entity acting on any of their behalves, release unconditionally, and are hereby deemed to release unconditionally, each of the Novak Parties from any and all Claims, obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code), whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date; provided, however, nothing in this Article 7.4(a) shall release any Claims against the Bentley Entities or any of the obligations of the Novak Parties under the terms and conditions of this Plan or the Novak Party Settlement. For the avoidance of any doubt, and notwithstanding anything to the contrary contained herein, all claims of the Debtors, the Estates and the Liquidating Trustee against the Bentley Entities are preserved and not released under this Plan. (b) On the Effective Date, each Holder of a Claim (other than a Claim of a Governmental Unit or FirstMerit) that receives a distribution under this Plan releases unconditionally, and is hereby deemed to have unconditionally released each of the Novak Parties from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates. This release shall also apply to: (i) any Person or Entity that is or was the Holder of a Claim (other than a Claim of any Governmental Unit or FirstMerit) on or after the Petition Date and (ii) any Person or Entity acquiring a Claim directly or indirectly from a Person or Entity that is bound by the release pursuant to this Article 7.4(b) as if such acquiring Person or Entity has agreed to be bound to such release with respect to such acquired Claim. For the avoidance of any doubt, and notwithstanding anything to the contrary contained herein, (i) nothing in this Plan is intended to or shall affect, release or compromise any Claim, cause of action, remedy, defense, right of setoff or recoupment or right of seizure or forfeiture that the United States or any of its agencies has, may have or may assert against Novak or the Novak Parties, including any such claims of the United States against Novak or the Novak Parties under the Federal Debt Collection Procedures Act (28 U.S.C. § 3001 et seq.) and (ii) nothing in this Plan is intended to or shall release or adversely affect any claims that FirstMerit may have or assert against the Novak Parties. (c) On the Effective Date, the Novak Parties release unconditionally, and are hereby deemed to have unconditionally released (i) the Debtors’ managers, directors, members, member officers, officers, and employees; (ii) the Debtors’ agents, attorneys, accountants, consultants (and their officers, directors, and shareholders); and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, {10615-001 PLN A0364558.DOCX 18} 24 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 26 of 25 69 of 34 Desc Main Exhibit foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates, provided, however, nothing in this Article 7.4(c) shall release any Allowed Class 1H Claims or Allowed Class 1I Interests. (d) WARN Employee Releases of the Debtors and their Estates and the Novak Parties. On the Effective Date, the WARN Plaintiffs unconditionally release the Debtors, their current and former managers, directors, officers, agents, attorneys, accountants, consultants, and their Estates from all WARN Claims other than those WARN Claims entitled to treatment under Classes 1B of this Plan. For the avoidance of doubt, this release is intended to include a release of all WARN Class Priority Claims against Sacred Heart, Garfield and Superior. Nothing in this Article shall impair or diminish the releases granted under the WARN Class Settlement. (e) On the Effective Date, the Debtors and their Estates and any other entity acting on any of their behalves, release unconditionally, and are hereby deemed to release unconditionally, the FirstMerit Parties from any and all Claims, obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code), whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date; provided, however, nothing in this Article 7.4(e) shall release any of the obligations of FirstMerit under the terms and conditions of this Plan. (f) On the Effective Date, FirstMerit releases unconditionally, and is hereby deemed to have unconditionally released (i) the Debtors’ managers, directors, members, member officers, officers, and employees; (ii) the Debtors’ agents, attorneys, accountants, consultants (and their officers, directors, and shareholders); and (iii) any Person that may be liable derivatively through any of the foregoing and each of their representatives from any and all Claims (including, without limitation, derivative claims), obligations, rights, suits, damages, Litigation Claims, remedies, and liabilities whatsoever (including those existing under the Bankruptcy Code) whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, based in whole or in part on any act, omission, transaction, event or other occurrence taking place prior to the Effective Date and relating in any way whatsoever to the Debtors or their Estates, provided, however, nothing in this Article 7.4(f) is intended to or shall release any claims that FirstMerit may have or assert against the Novak Parties, the Bentley Entities or any of the obligations of the Debtors or Liquidating Trustee under the terms and conditions of this Plan. (g) Notwithstanding anything to the contrary in the Plan, the provisions of Articles 7.4(a), 7.4(b) and 7.5 shall only take effect after the Escrowed Settlement Funds are transferred by the Escrow Agent to the Liquidating Trust and all other obligations of the Novak Parties under this Plan have been performed. {10615-001 PLN A0364558.DOCX 18} 25 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 27 of 26 69 of 34 Desc Main Exhibit 7.5 Novak Party Injunction. In consideration for the Novak Parties’ funding the Novak Party Settlement, entry of a Confirmation Order will operate as an injunction against the commencement or continuation of an action, the employment of process, or any act to collect, recover or offset any Claim of any Holder (other than a Claim by any Governmental Unit) that receives a distribution under this Plan against the Novak Parties, which injunction shall be effective so long as the Novak Parties are performing their obligations under the Plan and no default has occurred. ARTICLE VIII RETENTION OF JURISDICTION 8.1 Jurisdiction. The entry of a Confirmation Order shall not diminish or impair the Court’s subject matter jurisdiction. Until the entry of a final decree, the Bankruptcy Court shall retain subject matter jurisdiction of the Cases, and all proceedings arising therein or related thereto, including proceedings that aid the consummation and effectuation of this Plan and the implementation of the Liquidating Trust. ARTICLE IX MISCELLANEOUS PROVISIONS 9.1 Amendments, Modifications, Revocation and Interpretation of the Plan. Before the Confirmation Date, the Debtors may alter, amend, modify or withdraw the Plan at any time subject to section 1127 of the Bankruptcy Code. In the event that inconsistencies exist between the Plan and the Disclosure Statement, the Plan shall govern. 9.2 Effectuating Documents and Further Transactions. From and after the Confirmation Date until the Effective Date, the Debtors shall be authorized to execute, deliver, file, or record such contracts, instruments, releases and other agreements or documents and take such actions on behalf of the Debtors as may be necessary or appropriate to effectuate and further evidence the terms and conditions of this Plan. 9.3 Payment of Statutory Fees. All fees payable pursuant to 28 U.S.C. § 1930 shall be paid by the Debtors on the Effective Date and thereafter by the Liquidating Trust through the entry of a final decree closing these Cases. 9.4 Severability of Plan Provisions. If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void or unenforceable, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalided by such holding, alteration or interpretation. The Confirmation Order will constitute a judicial determination and will provide that each term and provision of the Plan, as it may be altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms. 9.5 Effect of Appeals. Provided that the Confirmation Order is not stayed pending appeal, the Debtors may consummate the Plan notwithstanding such pending appeal, or the {10615-001 PLN A0364558.DOCX 18} 26 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 28 of 27 69 of 34 Desc Main Exhibit timely service and filing of a motion pursuant to any Bankruptcy Rule or Federal Rules of Civil Procedure. ARTICLE X GLOSSARY 10.1 Definitions “Administrative Claim” means a Claim for a cost or expense of administration of the Cases allowable under sections 503(b) of the Bankruptcy Code and entitled to priority pursuant to section 507(a) of the Bankruptcy Code, including: (i) any actual and necessary costs and expense, incurred by the Debtors after the Petition Date, of preserving the Estates and operating the Debtors’ businesses, including wages, salaries or commissions for services rendered after the commencement of the Cases; (ii) Professional Fee Claims; (iii) all fees and charges properly assessed against the Estates pursuant to 28 U.S.C. § 1930; and (iv) all Allowed Claims that are entitled to treatment as Administrative Claims pursuant to a Final Order of the Bankruptcy Court. “Allowed” means, with respect to Claims or Interests: (a) any Claim or Interest scheduled by the Debtors as undisputed, not contingent and liquidated; (b) any Claim or Interest as to which no objection, adversary proceeding, or request for estimation has been filed; (c) any Claim or Interest as to which any objection has been settled, waived, withdrawn or denied by a Final Order; or (d) any Claim or Interest that is Allowed (i) by a Final Order, (ii) by an agreement between the Holder of such Claim or Interest and the Debtors or the Liquidating Trustee, or (iii) pursuant to this Plan. For the purpose of computing distributions under this Plan, Allowed Claims shall not include penalties, punitive damages or interest with respect to such Claims accruing from and after the Petition Date, except as provided in section 506(b) of the Bankruptcy Code, or as otherwise expressly set forth in this Plan. “Allowed Class __ Claim” means a Claim designated as falling under one of the Classes of Claims described in Article III of this Plan that is an Allowed Claim. “Allowed Class __ Interest” means an Interest designated as falling under one of the Classes of Interests described in Article III of this Plan that is an Allowed Interest. “Assets” means any and all assets and property of each of the respective Debtors, whether tangible, intangible, real or personal, that constitute property of their respective Estates pursuant to section 541 of the Bankruptcy Code. Assets may be referred to as “Sacred Heart Assets,” “Garfield Assets,” or “Superior Assets” when describing the Assets of a particular Debtor. “Bankruptcy Code” means title 11, United States Code, as now in effect or as hereafter amended. “Bankruptcy Court” means the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. {10615-001 PLN A0364558.DOCX 18} 27 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 29 of 28 69 of 34 Desc Main Exhibit “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure and the Local Rules of the Bankruptcy Court, as now in effect or hereafter amended. “Bentley Entities” shall mean Bentley Management Group, LLC and BMG Management, LLC and any subsidiaries, insiders and affiliates (other than the Novak Parties). “Cash” means legal tender of the United States of America and equivalents thereof. “Cases” means the cases under chapter 11 of the Bankruptcy Code commenced by the Debtors in the Bankruptcy Court. “Claims Bar Date” means November 15, 2013 except for (i) the Claim of any governmental unit (as defined in 11 U.S.C. § 101(27)) in which case Claims Bar Date shall mean December 30, 2013, and (ii) any Claim arising from the rejection of an executory contract or unexpired lease of the Debtors in which case Claims Bar Date shall mean the later of (a) November 15, 2013 or (b) the date that is thirty (30) days after the effective date of rejection of such executory contract or unexpired lease. “Claims Objection Deadline” means the last day for filing objections to Claims, which day shall be six (6) months after the Effective Date (notwithstanding any previous order entered by the Bankruptcy Court establishing a claims objection deadline prior to the Effective Date), unless such date is extended by the Bankruptcy Court upon request by the Debtors or the Liquidating Trustee. “Class” means a category of Holders of Claims or Interests as described in Article III of this Plan. “Closing Date” shall have the meaning set forth in Article 6.1 of the Plan. “Confirmation Date” means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on the docket of the Bankruptcy Court. “Confirmation Order” means the order of the Bankruptcy Court, in form and substance satisfactory to the Debtors, confirming this Plan pursuant to section 1129 of the Bankruptcy Code. “Debtors” means Sacred Heart, Garfield, and Superior, collectively. “Deficiency Claim” means any Allowed Claim remaining of a Holder of an Allowed Secured Claim, after application of all net proceeds from the liquidation of the Collateral applicable to such Allowed Secured Claim. All Deficiency Claims are General Unsecured Claims. “Dispose (or Disposed or Disposition)” means sell, transfer or otherwise dispose of an Asset such that the entire value of the Asset is liquidated to the form of Cash proceeds. “Disputed Claim” means any Claim (a) as to which the Debtors or Liquidating Trustee have interposed a timely objection or request for estimation in accordance with the Bankruptcy {10615-001 PLN A0364558.DOCX 18} 28 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 30 of 29 69 of 34 Desc Main Exhibit Code and the Bankruptcy Rules, (b) scheduled as disputed, unliquidated or contingent, or not scheduled, (c) subject to setoff, recoupment or any avoidance action arising under sections 544 through 550 of the Bankruptcy Code, or (d) otherwise disputed by the Debtors or the Liquidating Trustee in accordance with applicable law, which objection has not been withdrawn or determined by a Final Order. “Disclosure Statement” means that certain document as defined in section 1125(b) of the Bankruptcy Code relating to this Plan, including all exhibits and schedules thereto, as amended or supplemented from time to time, as approved by order of the Bankruptcy Court. “Distribution Date” means any of the Initial Distribution Date, any Subsequent Distribution Date, and the Final Distribution Date. “Effective Date” means the business day on which the Plan becomes binding and effective. “Escrow Agent” means First American Title Insurance Company in its capacity as escrow agent pursuant to the terms of the Strict Joint Order Escrow dated as of February 19, 2015. “Escrowed Settlement Funds” means the $500,000 held in escrow by the Escrow Agent pursuant to the terms of the Novak Party Settlement. “Estate” refers to the respective estate of each Debtor created under section 541 of the Bankruptcy Code. “Estates” refers to such estates collectively. “Equity Interests” means an ownership interest in any of the Debtors, whether or not transferable, and any option, warrant, or right, contractual or otherwise, to acquire any such interest. “Final Distribution Date” shall have the meaning set forth in Article 6.4 of this Plan. “Final Order” means an order of the Bankruptcy Court as to which the time to appeal, petition for certiorari or motion for reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue or rehear shall have been waived in writing in form and substance satisfactory to the Debtors or, in the event that an appeal, writ of certiorari or reargument or rehearing thereof has been sought, such order of the Bankruptcy Court shall have been determined by the highest court to which such order was appealed, or certiorari, reargument or rehearing shall have been denied and the time to take any further appeal, petition for certiorari or motion for reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed with respect to such order shall not preclude such order from being a Final Order. “FirstMerit” means FirstMerit Bank, N.A. {10615-001 PLN A0364558.DOCX 18} 29 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 31 of 30 69 of 34 Desc Main Exhibit “FirstMerit Parties” means FirstMerit, its parents, shareholders, sibling entities, affiliates and their respective directors, officers, employees, agents, attorneys, accountants, consultants and advisors. “FirstMerit Cash Collateral Account” means the restricted bank account maintained at FirstMerit, Account no. 5547001796 which has a Cash balance of approximately $3,500,000 million and secures the obligations under the Letter of Credit. “FirstMerit Reimbursement Agreement Documents” means Reimbursement Agreement dated as of May 25, 2012, by and between FirstMerit, the Debtors, Bentley Management Group, LLC and BMG Management, LLC and all related security agreements, guaranties, the Letter of Credit and all other agreements and documents related thereto. “FirstMerit Shortfall” means the amount calculated by subtracting the amount of the Garfield Payment from the sum of (i) the aggregate of presently unpaid LC renewal fees due under the Reimbursement Agreement ($33,500), (ii) the aggregate of LC renewal fees that will accrue under the Reimbursement Agreement until May 29, 2018 ($222,000, unless terminated earlier), and (iii) unpaid legal fees and costs incurred by FirstMerit under the Reimbursement Agreement (currently $76,315). “Garfield” shall mean Garfield Kidney Center, LLC, and Illinois Limited Liability Company and the debtor in Case No. 13-27092 pending before the Bankruptcy Court. “Garfield Liquidation Proceeds” shall mean the Liquidation Proceeds of Garfield after appropriate reserves and deductions are made in amounts sufficient to pay fully or otherwise satisfy (i) Allowed Administrative Claims against Garfield, Allowed Priority Tax Claims against Garfield, and Allowed Class 2A Claims and (ii) any incurred or anticipated costs of administering the Liquidation Trust. “Garfield Payment” shall have the meaning set forth in Article 2.4.11(c) of the Plan. “General Unsecured Claim” means a Claim that is not an Administrative Claim, a Priority Tax Claim, a Non-Tax Priority Claim, a WARN Priority Class Claim, a FirstMerit Secured Claim, a HHS Secured Claim, a HHS Deficiency Claim, an Other Secured Claim or a Novak Party Subordinated Claim. A Claim arising from the rejection of an executory contract or unexpired lease, Claims allowed pursuant to sections 502(g), 502(h) and 502(i) of the Bankruptcy Code, and deficiency Claims allowed pursuant to section 506(a) of the Bankruptcy Code and Bankruptcy Rule 3012 shall be General Unsecured Claims. “Governmental Unit” shall have the meaning set forth in section 101(27) of the Bankruptcy Code. “HHS” means the United States Department of Health & Human Services. “HHS Deficiency Carveout” means a carveout from the Sacred Heart Trust Proceeds for the purpose of making payments to Holders of Class 1G Claims. The amount of the HHS Deficiency Carveout shall be equal to the amount necessary to provide the same percentage {10615-001 PLN A0364558.DOCX 18} 30 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 32 of 31 69 of 34 Desc Main Exhibit recovery for Holders of Class 1G Claims as Holders of Class 1F General Unsecured Claims received from the Sacred Heart Unsecured Creditor Carveout. “HIPAA and the HIPAA Rules” means the Health Insurance Portability and Accountability Act of 1996 42 U.S.C. § 1320d) and its implementing regulations at 45 CFR Parts 160 and 164. “Holder” means an Entity, Person or Governmental Unit that owns a Claim or Interest. “Impaired” means, when used in reference to a Claim or Interest, a Claim or Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code. “Initial Distribution Date” shall have the meaning set forth in Article 6.3 of this Plan. “Interest” means the legal, equitable, contractual and other rights of the Holders of any of the Debtors’ Equity Interests. “LC Draw” means a timely draw made by Comerica Bank in compliance with the terms of the Letter of Credit. “Letter of Credit” means that certain Irrevocable Letter of Credit number SB1200001410, in favor of Comerica Bank, as beneficiary, for the account of Bentley Management Group, LLC and BMG Management, LLC in an amount not to exceed $4,900,000 dated as of May 30, 2012, any amendment thereto, and any replacement letter of credit. “Liquidation Proceeds” means each of the respective Debtor’s available Cash on hand as of the Effective Date in addition to Cash to be received from the resolution of any Litigation Claims, the Novak Party Settlement and the net proceeds generated from the Disposition of the Debtor’s remaining Assets including all interest thereon. “Liquidating Trust” means a liquidating trust that will be established for the benefit of Holders of Allowed Claims and Interests pursuant to the Plan and in accordance with the terms of the Liquidating Trust Agreement. “Liquidating Trust Agreement” means the Liquidating Trust Agreement through which the Liquidating Trust will be established. A copy of the Liquidating Trust Agreement is attached hereto as Exhibit A. “Liquidating Trustee” means Richard M. Fogel, not individually but solely as the liquidating trustee pursuant to this Plan. “Liquidating Trustee Protected Parties” shall have the meaning set forth in Article 7.3(b) of the Plan. “Litigation Claims” means the causes of action, rights, suits or proceedings, whether in law or in equity, whether known or unknown, whether pending or not, that the Debtors or their respective Estates hold or may hold against any Person, Entity or Governmental Unit arising (a) under the Bankruptcy Code, or (b) under any non-bankruptcy law, statute, rule, regulation or {10615-001 PLN A0364558.DOCX 18} 31 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 33 of 32 69 of 34 Desc Main Exhibit ordinance. Litigation Claims include, but are not limited to, causes of action: (1) arising under chapter 5 of the Bankruptcy Code; (2) related to the Debtors’ claims against any of the Bentley Entities; (3) related to the Debtors’ claims against FirstMerit or Comerica Bank in connection with the Reimbursement Agreement or otherwise; (4) related to the Debtors’ claims to the proceeds of any policy of insurance provided by Allied World Assurance Company, Ltd.; or (5) related to the Debtors’ claims against the Department of Health and Human Services, Centers for Medicare & Medicaid Services, including, but not limited to, claims to recover Medicare and Medicaid receivables. “Non-Tax Priority Claim” means a Class 1A, 2A, or 3A Claim, other than an Administrative Expense Claim, WARN Class Priority Claim, or Priority Tax Claim, that is entitled to priority in payment pursuant to sections 507(a)(1) – (10) of the Bankruptcy Code. “Novak” means Edward Novak, individually, his spouse, his children and his heirs. “Novak Parties” means Novak, West Side Community Hospital Limited Partnership, Chen Medical Center, LLC, West Side Management Corporation, Park Place, LLC, provided, however, the terms Novak Parties do not include any of the Bentley Entities. “Novak Party Settlement” means the Settlement Agreement dated as of December ___, 2014, by and among the Novak Parties and the Debtors approved by the Court pursuant to the Order Approving Settlement with the Novak Parties and Granting Related Relief entered on January 29, 2015. “Other Secured Claims” means a Claim that is secured by a Lien on property in which the Estate has an interest or that is subject to setoff under section 553 of the Bankruptcy Code (other than the Secured Claims of FirstMerit and HHS), to the extent of the value of the Holder’s interest in the Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code or, in the case of a setoff, pursuant to section 553 of the Bankruptcy Code. “Ownership Subordinated Claim” means any and all Claims of any of the Novak Parties. “Penalty Claims” means any Allowed Claim, whether Secured or unsecured, for any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive damages, arising before the Petition Date, to the extent that such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the Holder of such Claim. “Petition Date” means July 2, 2013, the date on which the Debtors filed their petitions for relief commencing the Cases. “Plan” means this Second Amended Joint Chapter 11 Plan and all supplements, appendices and schedules hereto, either in its present form or as the same may be altered, amended or modified from time to time. “Professional” means (a) any professional employed in the Cases pursuant to section 327 or 1103 of the Bankruptcy Code or otherwise, and (b) any professional or other entity {10615-001 PLN A0364558.DOCX 18} 32 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 34 of 33 69 of 34 Desc Main Exhibit seeking compensation or reimbursement of expenses in connection with the Cases pursuant to section 503(b)(4) of the Bankruptcy Code. “Policy” shall mean the Management Liability Package Policy issued by Allied World Assurance Company, Ltd. to Sacred Heart on or about September 1, 2012. “Postpetition Released Matters” shall have the meaning set forth in Article 7.3(a) of the Plan. “Postpetition Releasees” shall have the meaning set forth in Article 7.3(a) of the Plan. “Priority Tax Claim” means a Claim of a Governmental Unit of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code. “Professional Fee Claim” means a Claim of a Professional for compensation or reimbursement of costs and expenses relating to services rendered after the Petition Date and prior to and including the Effective Date. “Sacred Heart” means West Side Community Hospital, Inc., d/b/a Sacred Heart Hospital, an Illinois Corporation and the debtor in Case No. 13-27091 pending before the Bankruptcy Court. “Sacred Heart Liquidation Proceeds” shall mean the Liquidation Proceeds of Sacred Heart after appropriate reserves and deductions are made in amounts sufficient to pay fully or otherwise satisfy (i) all Allowed Administrative Claims, Allowed Non-Tax Priority Claims, Allowed Class 1A Claims and Allowed Class 1B Claims against Sacred Heart, (ii) the Sacred Heart Unsecured Creditor Carveout provided solely for the benefit of Allowed Class 1F claims, and (iii) any incurred or anticipated costs of administering the Liquidation Trust. “Sacred Heart Unsecured Creditor Carveout” means the amount of $300,000 of the Escrowed Settlement Funds provided solely for the benefit of Allowed 1F Claims pursuant to the Novak Party Settlement. “Secured Claim” means a Claim that is secured by a lien on Assets or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim Holder’s interest in the Debtors’ interest in such Assets or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code and Bankruptcy Rule 3012 or, in the case of a setoff, pursuant to section 553 of the Bankruptcy Code. “Subsequent Distribution Date” shall have the meaning set forth in Article 6.3 of the Plan. “Superior” shall mean Superior Home Health, L.L.C., an Illinois Limited Liability Company and the debtor in Case No. 13-27093 pending before the Bankruptcy Court. “Superior Unsecured Carveout” means an amount up to $50,000 of the Escrowed Settlement Funds provided solely for the benefit of Allowed 3C Claims pursuant to the Novak Party Settlement. {10615-001 PLN A0364558.DOCX 18} 33 Case Case 13-27091 13-27091 Doc Doc 456-1 455 Filed 05/06/15 Entered 05/06/15 15:07:07 15:18:43 Document 1 PagePage 35 of 34 69 of 34 Desc Main Exhibit “Superior Liquidation Proceeds” shall mean the Liquidation Proceeds of Superior after appropriate reserves and deductions are made in amounts sufficient to pay fully or otherwise satisfy (i) Allowed Administrative Claims against Superior, Allowed Priority Tax Claims against Superior, and Allowed Class 3A Claims and (ii) any incurred or anticipated costs of administering the Liquidation Trust. “Trust Assets” means all assets of the respective Estates that will be transferred to the Liquidating Trust, along with all accrued interest thereon, the Liquidation Proceeds and all other Assets of the respective Estates. Trust Assets may be referred to as “Sacred Heart Trust Assets,” “Garfield Trust Assets,” or “Superior Trust Assets” when describing the segregated Assets of a particular Debtor that have been transferred to the Liquidating Trust. “Unimpaired” means a Claim that is not impaired within the meaning of section 1124 of the Bankruptcy Code. “WARN Adversary Proceeding” means the adversary proceeding entitled McCullough v. West Side Community Hospital, Inc., et al. pending the Bankruptcy Court as Adv. Pro. No. 1300954, asserting claims against Sacred Heart under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. “WARN Plaintiffs” means Quinola McCullough, on behalf of herself and all of the members of the class of former employees of Sacred Heart that was certified by the Bankruptcy Court pursuant to the Consent Order Granting Plaintiff’s Motion for Class Certification and Related Relief entered on January 15, 2014 in the WARN Adversary Proceeding. “WARN Class Priority Claims” means all of the Claims of the WARN Plaintiffs that are fixed in the total amount of $360,000 pursuant to the WARN Class Settlement. “WARN Class Settlement” the Settlement and Release Agreement, dated as of February 20, 2015 between Sacred Heart and Quinola McCullough, on behalf of herself and the WARN Plaintiffs. A copy of the WARN Class Settlement is attached hereto as Exhibit B. West Side Community Hospital, Inc., Garfield Kidney Center, LLC, and Superior Home Health, L.L.C. Dated: May 6, 2015 By: Robert M. Fishman (IL ARDC 3124316) Allen J. Guon (IL ARDC 6244526) David R. Doyle (IL ARDC 6303215) Shaw Fishman Glantz & Towbin LLC 321 North Clark Street, Suite 800 Chicago, IL 60654 Phone: (312) 541-0151 Counsel for Debtors {10615-001 PLN A0364558.DOCX 18} 34 /s/ Allen J. Guon One of their attorneys Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page36 1 of of 15 69 EXHIBIT A {10615‐001 AGR A0375116.DOCX 4} Desc Exhibit Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page37 2 of of 15 69 Desc Exhibit LIQUIDATING TRUST AGREEMENT This Trust Agreement (the “Trust Agreement”), dated as of June __, 2015, by and between West Side Community Hospital, Inc. (“Sacred Heart”), Garfield Kidney Center, LLC (“Garfield”), and Superior Home Health, L.L.C. (“Superior”), debtors in possession (together, the “Debtors”), as settlors, and Richard M. Fogel, not individually, but solely as the liquidating trustee of the Liquidating Trust (the “Liquidating Trustee”) as trustee, is executed to facilitate the implementation of the Debtors’ Second Amended Joint Chapter 11 Plan of Reorganization dated as of May 6, 2015 (the “Plan”)1 that provides for (a) the establishment of the Liquidating Trust (as defined below) created by this Trust Agreement and the retention and preservation of the Trust Assets (as defined below) by the Liquidating Trustee, as the representative of the Debtors’ bankruptcy estates in accordance with Sections 1123(b)(3)(B) and 1145(a)(1) of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1330, as amended (the “Bankruptcy Code”), all for the benefit of the Holders of Allowed Claims (as such classes are designated in the Plan) (collectively the “Claimholders”) and (b) the collection, liquidation, and distribution of the Trust Assets (as defined below), as required by the Plan. The Liquidating Trustee’s activities, powers and duties are those determined to be reasonably necessary to, and consistent with, accomplishment of these purposes. Recitals WHEREAS, the Plan contemplates, among other things, the transfer of all assets of the Debtors’ Estates (the “Trust Assets”) to a trust created for the benefit of the Claimholders, free and clear of all liens, claims, and encumbrances pursuant to Section 1123(a)(5) of the Bankruptcy Code, all as described in greater detail in the Plan and this Trust Agreement (the “Liquidating Trust”); and WHEREAS, pursuant to the Plan, the Liquidating Trust is being created so that the Trust Assets may be transferred to a trust created for the benefit of the Claimholders, free and clear of all liens, claims, and encumbrances pursuant to Section 1123(a)(5) of the Bankruptcy Code in accordance with the Plan and this Trust Agreement; and WHEREAS, under the terms of the Plan and the Order confirming the same (the “Confirmation Order”), as of the Effective Date, the Debtors shall be deemed to have granted, transferred, conveyed, and delivered to the Liquidating Trust, on behalf of, and for the benefit of, the Claimholders, control of, and all the rights, title and interests in and to, the Trust Assets, free and clear of all liens, claims, and encumbrances pursuant to Section 1123(a)(5) of the Bankruptcy Code; and WHEREAS, the Liquidating Trust is established pursuant to the Plan as a liquidating trust in accordance with Treasury Regulation Section 301.7701-4(d) with no objective to continue or engage in the conduct of a trade or business except, to the extent reasonably necessary to, and consistent with, the liquidating purpose of the Liquidating Trust and the Plan; and 1 Capitalized terms not defined herein shall have the meanings ascribed to them in the Plan. {10615‐001 AGR A0375116.DOCX 4} Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page38 3 of of 15 69 Desc Exhibit WHEREAS, the Liquidating Trust is intended to qualify as a “grantor trust” for U.S. federal income tax purposes, pursuant to Sections 671-677 of the Internal Revenue Code of 1986, as amended, with the Claimholders treated as the grantors and owners of the trust. NOW, THEREFORE, in consideration of the premises and agreements contained herein, the parties hereto agree as follows: ARTICLE I Establishment of Liquidating Trust Section 1.1 Creation and Name. There is hereby created a trust which shall be known as the “Joint Plan Liquidating Trust” which is the Liquidating Trust created by the Plan. Section 1.2 Declaration of Trust. In order to declare the terms and conditions hereof, and in consideration of the confirmation of the Plan under the Bankruptcy Code, the Debtors and the Liquidating Trustee have executed this Trust Agreement and effective as of the Effective Date of the Plan, the Debtors hereby irrevocably transfer to the Liquidating Trust, and to its successors and assigns, all of the right, title and interests of the Debtors in and to the Trust Assets to have and to hold unto the Liquidating Trust and its successors and assigns forever, under and subject to the terms and conditions set forth in this Trust Agreement and in the Plan for the benefit of the Claimholders and their successors and assigns as provided for in this Trust Agreement and in the Plan. The proceeds of the Trust Assets shall be used and distributed in accordance with this Trust Agreement and the Plan. Section 1.3 Purpose of Trust; Nature of Beneficial Interests. The Liquidating Trust is organized for the primary purpose of liquidating the Trust Assets in an expeditious and orderly manner for the benefit of the Claimholders and in accordance with the Plan, with no objective to engage in the conduct of a trade or business. Claimholders with Allowed Claims shall be automatically treated as having interests in the Trust. Claimholders shall have no voting rights with respect to such interests. In the event of any inconsistency between the recitation of the duties and powers of the Liquidating Trustee as set forth in this Trust Agreement and the Plan, the provisions of the Plan shall govern. Section 1.4 Liquidating Trustee’s Acceptance. The Liquidating Trustee accepts the trust imposed upon them by this Trust Agreement and agrees to observe and perform that trust, on and subject to the terms and conditions set forth in this Trust Agreement and the Plan. In connection with and in furtherance of the purposes of the Trust, the Liquidating Trust hereby expressly accepts the transfer of the Trust Assets, subject to the provisions of the Confirmation Order and the Plan. Section 1.5 Segregation of Trust Assets. The Sacred Heart Trust Assets, the Garfield Trust Assets and the Superior Trust Assets shall be held in separate segregated accounts and shall not be comingled. {10615-001 AGR A0375116.DOCX 4} 3 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page39 4 of of 15 69 Desc Exhibit ARTICLE II Distribution of Trust Assets Section 2.1 Distribution of Trust Assets. Proceeds of the Trust Assets shall be distributed in accordance with Article IV of the Plan. Section 2.2 Generally. Except as otherwise set forth in the Plan, or as ordered by the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”), all distributions to Holders of Allowed Claims and Interests as of the Effective Date shall be made as soon as practicable after the Effective Date. Section 2.3 Distributions by the Liquidating Trust. The Liquidating Trust shall act as the Disbursing Agent and shall make all distributions required under this Liquidating Trust and the Plan. Section 2.4 Fractional Dollars; De Minimis Distributions. The Liquidating Trust shall not have any obligation to make any distribution to a specific Holder of an Allowed Claim or Interest if the amount to be distributed to that Holder on the relevant Distribution Date is less than $5. Section 2.5 Delivery of Distributions. Unless otherwise provided for in the Plan, distributions to Holders of Allowed Claims shall be made at the address of each such Holder as set forth on the Schedules or List of Equity Security Holders, as applicable, filed with the Bankruptcy Court unless superseded by the address as set forth on the proof of claim or Interest filed by such Holders or by notifying the Liquidating Trustee, in writing, of a change of address in accordance with the notice provisions of the Liquidating Trust Agreement. If any Holder’s distribution is returned as undeliverable, no further distributions to such Holder shall be made unless and until the Liquidating Trustee is notified by the Holder in accordance with the provisions of this section, of such Holder’s then current address within 30 days of the postmark of the returned distribution. Claims held by Holders whose distributions are returned as undeliverable and who fail to notify the Liquidating Trustee of their respective correct addresses within the 30-day period provided shall be disallowed. All unclaimed property shall, in the discretion of the Liquidating Trustee, be used to satisfy the costs of administering the Plan or become available for distribution in accordance with the Plan, and the Holder of any disallowed Claim shall not be entitled to any other or further distribution under the Plan on account of such disallowed Claim. To the extent any unclaimed property is not used by the Liquidating Trustee to satisfy the foregoing costs or for redistribution, the Liquidating Trustee may donate such unclaimed property to the Current Abuse Resistance Education Program. {10615-001 AGR A0375116.DOCX 4} 4 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page40 5 of of 15 69 Desc Exhibit Section 2.6 Withholding and Reporting Requirements. In connection with this Liquidating Trust and the Plan, the Liquidating Trustee shall, to the extent applicable, comply with all tax withholding and reporting requirements imposed by any federal, state, provincial, local, or foreign taxing authority and all distributions hereunder shall be subject to any such withholding and reporting requirements. The Liquidating Trustee shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements. Notwithstanding any other provision of the Plan each Holder of an Allowed Claim that is to receive a distribution pursuant to the Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. ARTICLE III Disputed Claims Section 3.1 Treatment of Disputed Claims. In accordance with the Plan and this Trust Agreement, the Liquidating Trustee reserves all rights to prosecute any and all timely filed objections to Claims after the Confirmation Date. No payments or distributions of Trust Assets, including payments on account of any alleged Administrative Claims, will be made on account of a Disputed Claim, or, if less than the entire Claim is a Disputed Claim, the portion of a Claim that is disputed, until such Claim becomes an Allowed Claim. Section 3.2 Disputed Claims Reserve. Prior to making any distributions of Trust Assets to the Holders of Allowed Claims or Interests, and to the extent provided for in the Plan, the Liquidating Trustee shall establish appropriate reserves for Disputed Claims for each Class as if such Disputed Claims were Allowed Claims in their Disputed Claim Amount. ARTICLE IV General Powers, Rights and Obligations of the Liquidating Trustee Section 4.1 Appointment of Liquidating Trustee. Richard M. Fogel, not individually but solely as Liquidating Trustee of the Liquidating Trust shall become the Liquidating Trustee on the Effective Date. Section 4.2 Legal Title. The Liquidating Trust shall hold legal title to all Trust Assets except that the Liquidating Trustee may cause legal title or evidence of title to any of the Trust Assets to be held by any nominee or person, on such terms, in such manner and with such power as the Liquidating Trustee may determine advisable. Section 4.3 General Powers. (a) Except as otherwise provided in this Trust Agreement or the Plan, and subject to the retained jurisdiction of the Bankruptcy Court as provided for in the Plan, but without prior or further authorization, the Liquidating Trustee may control and exercise authority over the Trust Assets, over the acquisition, management and disposition thereof and over the management and conduct of the business of the Liquidating Trust to the same extent as if the Liquidating Trust were the sole owner of the Trust Assets in its own right. {10615-001 AGR A0375116.DOCX 4} 5 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page41 6 of of 15 69 Desc Exhibit No person dealing with the Liquidating Trust shall be obligated to inquire into the Liquidating Trustee’s authority in connection with the acquisition, management or disposition of Trust Assets. (b) In connection with the management and use of the Trust Assets, the Liquidating Trustee, except as otherwise expressly limited in this Trust Agreement, the Plan, and the Confirmation Order, shall have, in addition to any powers conferred on it by any other provision of this Trust Agreement, the power to take any and all actions as are necessary or advisable to effectuate the purposes of the Liquidating Trust, including, without limitation, the power and authority: (i) To accept the assets, on behalf of the Liquidating Trust, transferred and provided to the Liquidating Trust under this Trust Agreement and the Plan; (ii) To invest all Cash of the Liquidation Proceeds; (iii) Calculate and pay all distributions required or permitted to be made under the Plan, this Trust Agreement and/or orders of the Bankruptcy Court; (iv) To sell, convey, transfer, assign, liquidate, collect or abandon Trust Assets, or any part thereof or any interest therein, on such terms and for such consideration as the Liquidating Trustee deems desirable or appropriate; (v) To act, not individually but solely in his representative capacity of Liquidating Trustee for the Liquidating Trust, as custodian of the Trust Assets and liquidating and reducing such assets to cash at such time as the Liquidating Trustee deems appropriate to accomplish the purpose of the Liquidating Trust, in accordance with the terms of the Plan; (vi) To employ, supervise and compensate professionals retained to represent the interests of the Liquidating Trustee in connection with this Trust Agreement and the Plan; (vii) To make and file tax returns as required by applicable state, federal or local laws; (viii) To object to Claims or Interests filed or otherwise asserted against the Debtors, the Debtors’ Estates and property of the Debtors or the Debtors’ Estates; (ix) To assert or waive any privilege or defense of the Debtors, including the attorney-client privilege; (x) To seek the examination of any entity under Bankruptcy Rule 2004 (excluding FirstMerit Bank, N.A.); {10615-001 AGR A0375116.DOCX 4} 6 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page42 7 of of 15 69 Desc Exhibit (xi) To object to or seek to recharacterize, reclassify or subordinate Claims (exclusive of Class 1C, 2B or 3B Claims) filed against any of the Debtors or their Estates on any basis, and pursuant to Bankruptcy Rule 9019(b) and section 105(a) of the Bankruptcy Code, to compromise and settle any such Claims including Disputed Claims; (xii) To seek an estimation of contingent or unliquidated Claims under section 502(c) of the Bankruptcy Code; (xiii) To seek the determination of the Debtors’ tax liabilities under section 505 of the Bankruptcy Code; (xiv) To prosecute, settle, dismiss, abandon or otherwise dispose of turnover actions under sections 542 and 543 of the Bankruptcy Code (to the extent not released under Article 7.4 of the Plan); (xv) To prosecute, settle, dismiss, abandon or otherwise dispose of any and all causes of action of the Debtors or their Estates (to the extent not released under Article 7.4 of the Plan) including, without limitation, all causes of action arising under sections 510(c), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code, including the Litigation Claims, in accordance with section 1123(b)(3)(B) of the Bankruptcy Code; (xvi) To provide indemnity for indemnification under Article 7.3 of the Plan; any entity entitled to (xvii) To prosecute all Litigation Claims whether pending as of the Effective Date or commenced thereafter; (xviii) To amend or modify the Plan in accordance with section 1127 of the Bankruptcy Code; (xix) To file and prosecute such motions, applications or other pleadings in the Bankruptcy Court or other appropriate forum, and exercise all other powers and rights, and take all other actions necessary or appropriate to implement the Plan; (xx) To engage in all acts that would constitute the ordinary course of business in performing the obligations of a Liquidating Trustee under a trust of this type; (xxi) To change the state of domicile of the Liquidating Trust; (xxii) To establish and maintain funds, reserves and accounts within the Liquidating Trust as deemed by the Liquidating Trustee, in his discretion, to be useful in carrying out the purposes of the Liquidating Trust; (xxiii) {10615-001 AGR A0375116.DOCX 4} To sue and be sued and participate, as a party or otherwise, 7 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page43 8 of of 15 69 Desc Exhibit in any judicial, administrative, arbitration or other proceeding and to settle, compromise, or dismiss any such proceeding, except as otherwise provided for in this Liquidating Trust Agreement; (xxiv) To delegate any or all of the discretionary power and authority herein conferred at any time with respect to all or any portion of the Liquidating Trust to any one or more reputable individuals or recognized institutional advisors or investment managers without liability for any action taken or omission made because of such delegation, except for such liability as is provided herein; (xxv) To seek the entry of a final decree closing the Chapter 11 Cases prior to the distribution of all Trust Assets or to reopen the Chapter 11 Cases if necessary to carry out the purposes of the Liquidating Trust or Plan; and (xxvi) To perform such other acts and undertake such other conduct as the Liquidating Trustee believes is necessary to carry out the purposes and intent of this Liquidating Trust. (c) The Liquidating Trustee shall not at any time, on behalf of the Liquidating Trust or the Holders, enter into or engage in any trade or business other than as a landlord of real property included in the Trust Assets, and the Liquidating Trustee shall not use or dispose of any part of the Trust Assets in furtherance of any such trade or business. Section 4.4 Litigation. The Trust Assets shall include all Litigation Claims and the Liquidating Trustee may enforce, sue on, settle, compromise (or decline to do any of the foregoing) all Litigation Claims. The Liquidating Trust hereby expressly assumes, undertakes and shall control the litigation of Litigation Claims. In connection with any Litigation Claims, the Liquidating Trustee shall: (a) take such steps as it deems necessary to investigate, pursue, litigate, settle and/or compromise the Litigation Claims, to reduce the Litigation Claims to cash proceeds and to make distributions of the cash proceeds as required under this Trust Agreement, but the Liquidating Trustee’s actions with respect to disposition of the Litigation Claims will be taken in a manner so as to reasonably maximize the value of the Litigation Claims; and (b) on the Effective Date, and without having to obtain any further order of the Bankruptcy Court, be deemed to have intervened as plaintiff, movant or additional party, or substituted as the real party in interest, as appropriate, in any causes of action, including adversary proceedings, contested matters, avoidance actions or motions which were filed by the Debtors prior to the Effective Date, where the subject matter of such action involves a Litigation Claim or any other Claim to the extent such Claim impacts the Trust Assets. Section 4.5 Retention of Attorneys, Accountants and Other Professionals. The Liquidating Trustee shall have authority to retain professionals to aid in the performance of its responsibilities pursuant to the terms of the Plan and this Trust Agreement including, without limitation, the litigation of Litigation Claims and distribution of Trust Assets: {10615-001 AGR A0375116.DOCX 4} 8 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1A Page Page44 9 of of 15 69 Desc Exhibit (a) Such law firm(s) as the Liquidating Trustee may deem advisable to aid in the liquidation of the Litigation Claims and to perform such other functions as may be appropriate to carry out the purposes of the Liquidating Trust. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such law firm(s) reasonable compensation from the Trust Assets for services rendered and expenses incurred. The Liquidating Trustee may also engage such law firm(s) on a contingent fee basis as permitted by applicable law; (b) An independent public accounting firm to review and audit the financial books and records of the Liquidating Trust and to perform such other reviews and/or audits as the Liquidating Trustee may deem advisable to carry out the primary purposes of the Liquidating Trust. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such accounting firm reasonable compensation from the Trust Assets for services rendered and expenses incurred; and (c) Such experts, advisors, consultants, investigators, appraisers, registrars, transfer agents, custodians, auctioneers, brokers or other professionals as are advisable to carry out the purposes of the Liquidating Trust. The Liquidating Trustee may commit the Liquidating Trust to and shall pay all such persons or entities reasonable compensation from the Trust Assets for services rendered and expenses incurred. Section 4.6 Compensation of Liquidating Trustee and his Professionals. All fees shall be paid to the Liquidating Trustee’s professionals without approval of the Bankruptcy Court in accordance with Article 5.4 of the Plan. As compensation for the performance of his duties, the Liquidating Trustee shall be entitled to the Liquidating Trustee’s standard hourly rate and shall be entitled to reimbursement of his reasonable costs and expenses incurred in carrying out his duties as the Liquidating Trustee. If the Liquidating Trustee objects to the fees of any professional, the parties shall attempt to consensually resolve such objections and if the parties are unable to reach a consensual resolution of any such objection, the party who received an objection to its fees may seek payment of such fees by filing a motion with the Bankruptcy Court and providing notice to the Liquidating Trustee. The Liquidating shall use reasonable efforts to allocate fees and expenses of the Liquidating Trustee and the Liquidating Trustee’s professionals between the Sacred Heart Trust Assets, the Garfield Trust Assets and the Superior Trust Assets. Section 4.7 Standard of Care; Exculpation. The Liquidating Trustee shall perform the duties and obligations imposed on the Liquidating Trustee by this Trust Agreement with reasonable diligence and care under the circumstances. From and after the Effective Date, to the fullest extent permitted by applicable law, the Liquidating Trustee and each of his officers, directors, shareholders, employees and representatives together with any Person that may be liable derivatively through any of the foregoing and each of their representatives (collectively the “Liquidating Trustee Protected Parties”) shall not have and shall not incur any liability to any Person for any and all Claims, causes of action and other assertions of liability, or for any act or omission, (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, or (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee {10615-001 AGR A0375116.DOCX 4} 9 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 45 10 of 69 15 Desc Exhibit Protected Parties’ own respective willful misconduct or fraud after the effective date of the Trust Agreement. No Holder of a Claim or Interest, or any other party in interest, will have or pursue any claim or cause of action against the Liquidating Trustee Protected Parties (i) arising out of the discharge of the powers and duties conferred upon the Liquidating Trustee by the Plan, the Liquidating Trust, or any court order, (ii) relating to or taken in furtherance of the Plan, the Liquidating Trust or any court order, (iii) relating to the character, nature or existence of the Trust Assets, or (iv) relating to the Postpetition Released Matters, except for acts or omissions to act to the extent determined by a Final Order to be due to such Liquidating Trustee Protected Parties’ own respective willful misconduct or fraud after the effective date of the Trust Agreement. Any act taken pursuant to the Plan, the Liquidating Trust or court order, will be conclusively deemed not to constitute fraud or willful misconduct. To the fullest extent permitted by applicable law, the Liquidating Trust shall indemnify, defend, and hold harmless the Liquidating Trust Protected Parties (without the Liquidating Trust Protected Parties having to first pay from their own funds) and each of their designated representatives from and against any and all Claims, causes of action, liabilities, obligations, losses, costs, judgments, damages (including attorney fees and cost), except for willful misconduct or fraud as determined by a Final Order. All rights of the Liquidating Trust Protected Parties exculpated and indemnified pursuant hereto shall survive confirmation of the Plan and the closing of the Chapter 11 Cases. The Liquidating Trustee shall not be obligated to give any bond or surety or other security for the performance of any of his duties; the Liquidating Trustee Protected Parties shall be fully protected. Section 4.8 Reliance by Liquidating Trustee Protected Parties. The Liquidating Trustee Protected Parties may rely, and shall be fully protected, both in its/their representative capacity and individually in acting upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order or other instrument or document that it has no reason to believe to be other than genuine and to have been signed or presented other than by the proper party or parties or, in the case of facsimile transmissions, to have been sent other than by the proper party or parties, in each case without obligation to satisfy itself that the same was given in good faith and without responsibility for errors in delivery, transmission or receipt. In the absence of willful misconduct or fraud, the Liquidating Trustee Protected Parties may rely as to the truth of statements and correctness of the facts and opinions expressed therein and shall be fully protected personally in acting thereon. The Liquidating Trustee may consult with legal counsel, accounting, tax, or other professionals within the performance of his duties, and the Liquidating Trustee Protected Parties shall be fully protected in respect of any action taken or suffered by it/them in accordance with such advice or opinion of legal counsel. The Liquidating Trustee may at any time seek instructions from the Bankruptcy Court concerning the acquisition, management or disposition of the Trust Assets or any other matter pertaining to this Trust Agreement and the Plan. Section 4.9 Investment Obligations. The Liquidating Trustee shall invest and re-invest the liquid Trust Assets consistent with the obligations of a trustee under Section 345 of the Bankruptcy Code. The Liquidating Trustee shall not be liable in any way for any loss or other liability arising from any investment, or the sale or other disposition of any investment, made in accordance with this Section. Section 4.10 Quarterly Reports. The Liquidating Trustee shall submit quarterly status reports to the Bankruptcy Court. Each status report shall be due on the thirtieth (30th) day {10615-001 AGR A0375116.DOCX 4} 10 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 46 11 of 69 15 Desc Exhibit following the last day of the period covered by the report (or the next business day if the thirtieth day following the last day of any calendar quarter year is not a business day). The Liquidating Trustee shall continue to submit status reports until the Trust Assets are fully distributed or the Bankruptcy Court determines on motion that such reports are no longer necessary. Each status report shall contain a summary of all activity during the previous three (3) months, a summary of the professional fees sought and obtained in the prior three (3) months and a summary of cash receipts to and disbursements from the Liquidating Trustee, a summary of cash receipts to and disbursements from the Liquidating Trust, and such other information as the Liquidating Trustee deems appropriate for inclusion. Section 4.11 Tax Filings and Notices; Withholding and Reporting Requirements. The Liquidating Trustee shall prepare and provide to, or file with, the appropriate parties such notices, tax returns and other filings, including all federal, state and local tax returns for the Liquidating Trust as a grantor trust pursuant to Section 1.671-1(a) of the Treasury Regulations, as may be required under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), the Plan, or as may be required by applicable law of other jurisdictions including, if required under applicable law, notices required to report interest, dividends or gross proceeds. The Liquidating Trustee shall comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions made hereunder shall be subject to any such withholding and reporting requirements. The Liquidating Trustee shall, when specifically requested by a Claimholder in writing, provide such Claimholder with such tax information as is necessary for the preparation by such Claimholder of its income tax return to the extent available to the Liquidating Trustee. Section 4.12 Compliance with Reporting Laws. To the extent consistent with the Plan, the Liquidating Trustee shall file with the applicable federal and state governmental agencies the reports and other documents and take any other actions necessary to comply with federal or state laws. Section 4.13 Timely Performance. The Liquidating Trustee will make continuing efforts to prosecute or settle the Litigation Claims, liquidate Trust Assets, make timely distributions, and not unduly prolong the duration of the Liquidating Trust. Section 4.14 Resignation. The Liquidating Trustee may resign as Liquidating Trustee by giving written notice of his resignation to the Bankruptcy Court. The Liquidating Trustee shall continue to serve as Liquidating Trustee for the shorter of (a) 90 days following the tender of the notice of resignation or (b) until the appointment of a successor Liquidating Trustee shall become effective in accordance with Section 4.15 of this Trust Agreement. In the event of the death (in the case of a Liquidating Trustee that is a natural person), dissolution (in the case of a Liquidating Trustee that is not a natural person), resignation, incompetency or removal of the Liquidating Trustee prior to the full administration of the Trust Assets, the successor Liquidating Trustee may petition the Bankruptcy Court or any other court of competent jurisdiction to resolve any issues regarding the compensation paid pursuant to Section 4.5 of this Trust Agreement. Section 4.15 Appointment of Successor Liquidating Trustees. In the event of the death, dissolution, resignation, incompetency or removal of a Liquidating Trustee, Ira Bodenstein shall be the successor Liquidating Trustee, which appointment shall be effective upon {10615-001 AGR A0375116.DOCX 4} 11 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 47 12 of 69 15 Desc Exhibit the death, resignation, incompetency or removal of the applicable Liquidating Trustee. Such successor Liquidating Trustee, shall execute an instrument accepting the appointment under this Trust Agreement and agreeing to be bound thereto, and thereupon, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Liquidating Trustee. Unless the Liquidating Trustee is removed for cause, the Liquidating Trustee Protected Parties shall continue to be protected under the provisions of this Trust Agreement. ARTICLE V Retention of Jurisdiction Pursuant to the Plan and Confirmation Order, the Bankruptcy Court shall retain exclusive jurisdiction to hear and determine all matters arising out of, and related to the Chapter 11 Cases and the Plan, in addition to jurisdiction to hear and determine all matters arising out of, and related to, this Trust Agreement. ARTICLE VI Termination The Liquidating Trust shall continue until such time as the termination of the Liquidating Trust is approved by the Bankruptcy Court after distribution of all of the Trust Assets or, if the Bankruptcy Court has previously entered a final decree closing the Chapter 11 Cases, the Liquidating Trustee may terminate the Liquidating Trust without Bankruptcy Court approval after distribution of all Trust Assets. The Liquidating Trustee shall at all times endeavor to liquidate the Trust Assets expeditiously, and in no event shall the Liquidating Trustee unduly prolong the duration of the Liquidating Trust. Notwithstanding the foregoing, after the termination of the Liquidating Trust, the Liquidating Trustee shall have the power to exercise all the powers, authorities and discretions herein conferred solely for the purpose of liquidating and winding up the affairs of the Liquidating Trust. On distribution of all of the Trust Assets, the Liquidating Trustee shall retain the books, records and files that shall have been delivered to or created by the Liquidating Trustee. At the Liquidating Trustee’s discretion, all of such records and documents may be destroyed at any time after two years from the distribution of all of the Trust Assets. ARTICLE VII Miscellaneous Section 7.1 Notices. All notices, requests or other communications required or permitted to be made in accordance with this Trust Agreement shall be in writing and shall be delivered personally or by facsimile transmission or mailed by first-class mail or by overnight delivery service: {10615-001 AGR A0375116.DOCX 4} 12 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 48 13 of 69 15 Desc Exhibit If to the Liquidating Trustee and the Debtors, at: Shaw Fishman Glantz & Towbin LLC 321 N. Clark St., Suite 800 Chicago, IL 60654 Attn: Richard M. Fogel Email: [email protected] Fax: (312) 980-3888 Alvarez & Marsal Healthcare Industry Group LLC 55 West Monroe Suite 4000 Chicago, IL 60603 Attn: Paul Rundell Email: [email protected] Fax: (847) 557-9010 With a copy to: Shaw Fishman Glantz & Towbin LLC 321 N. Clark St., Suite 800 Chicago, IL 60654 Attn: Allen J. Guon Email: [email protected] Fax: (312) 980-3888 Notices sent out by facsimile transmission shall be deemed delivered when actually received, and notices sent by first-class mail shall be deemed delivered when received and notices sent by overnight delivery service shall be deemed delivered the next business day after mailing. Section 7.2 Effective Date. Effectiveness. This Trust Agreement shall become effective on the Section 7.3 Intention of Parties to Establish Trust. This Trust Agreement is intended to create a trust, and the Liquidating Trust created hereunder shall be governed and construed in all respects as a trust. Section 7.4 Investment Company Act. The Liquidating Trust is organized as a liquidating entity in the process of liquidation, and therefore should not be considered, and the Liquidating Trust does not and will not hold itself out as, an “investment company” or an entity “controlled” by an “investment company” as such terms are defined in the Investment Company Act. Section 7.5 Taxation. For United States federal income tax purposes, it is intended that the Liquidating Trust be classified as a liquidating trust under § 301.7701-4 of the Treasury Regulations and as a grantor trust subject to the provisions of Subchapter J, Subpart E of {10615-001 AGR A0375116.DOCX 4} 13 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 49 14 of 69 15 Desc Exhibit the Internal Revenue Code that is owned by the Claimholders as grantors. Accordingly, the parties hereto intend that, for United States federal income tax purposes, the Claimholders be treated as if they had received a distribution of an undivided interest in the Trust Assets and then contributed such interests to the Liquidating Trust. All Liquidating Trust earnings, including those retained in the reserve account established for Disputed Claims, shall be taxable to the Claimholders. Section 7.6 Counterparts. This Trust Agreement may be executed in one or more counterparts (via facsimile or otherwise), each of which shall be deemed an original but which together shall constitute but one and the same instrument. Section 7.7 Governing Law and Domicile of Liquidating Trust. This Liquidating Trust Agreement shall be governed by, construed under and interpreted in accordance with the laws of the State of Illinois. The domicile and situs of the Liquidating Trust shall be Illinois. Section 7.8 Headings. Sections, subheadings and other headings used in this Trust Agreement are for convenience only and shall not affect the construction of this Trust Agreement. Section 7.9 Severability. Any provision of this Trust Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions of this Trust Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable any such provision in any other jurisdiction. Section 7.10 Successors. This Trust Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. Section 7.11 No Suits by Claimholders. No Claimholder shall have any right by virtue of any provision of this Trust Agreement to institute any action or proceeding in law or in equity against any party other than the Liquidating Trustee on or under or with respect to the Trust Assets. Section 7.12 Irrevocability. The Liquidating Trust is irrevocable, but is subject to amendment as provided for herein. Section 7.13 Trust Continuance. The death, dissolution, resignation, incompetency or removal of any Liquidating Trustee shall not operate to terminate the Liquidating Trust created by this Trust Agreement or to revoke any existing agency created under the terms of this Trust Agreement or invalidate any action theretofore taken by the Liquidating Trustee. In the event of the resignation or removal of any Liquidating Trustee, such Liquidating Trustee shall promptly (a) execute and deliver such documents, instruments and other writings as may be requested by the Bankruptcy Court or reasonably requested by the Debtors or a successor Liquidating Trustee to effect the termination of the Liquidating Trustee’s capacity under this Trust Agreement, (b) deliver to the Bankruptcy Court or a successor Liquidating Trustee all documents, instruments, records and other writings related to the Liquidating Trust as may be in the possession of such Liquidating Trustee and (c) otherwise assist and cooperate in effecting the assumption of its obligations and functions by a successor Liquidating Trustee. {10615-001 AGR A0375116.DOCX 4} 14 Case 13-27091 Doc 456-1 455-1 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 A 1 Page 50 15 of 69 15 Desc Exhibit Section 7.14 Enforcement and Administration. The Bankruptcy Court shall enforce and administer the provisions of this Trust Agreement as set forth in the Plan. IN WITNESS WHEREOF, the parties hereto have executed this Liquidating Trust Agreement or caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the date first above written. WEST SIDE COMMUNITY HOSPITAL, INC., GARFIELD KIDNEY CENTER, LLC, AND SUPERIOR HOME HEALTH, L.L.C. Dated: June __, 2015 By: Paul Rundell Chief Restructuring Officer of West Side Community Hospital, Inc., Garfield Kidney Center, LLC, and Superior Home Health, L.L.C. RICHARD M. FOGEL, NOT INDIVIDUALLY BUT SOLELY AS THE LIQUIDATING TRUSTEE Dated: June __, 2015 By: Richard M. Fogel {10615-001 AGR A0375116.DOCX 4} 15 Case 13-27091 Doc 456-1 455-2 Filed 05/06/15 Entered 05/06/15 15:18:43 15:07:07 1B Page Page51 1 of of 19 69 EXHIBIT B Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page52 2 of of 19 69 Desc Exhibit SETTLEMENT AND RELEASE AGREEMENT This Settlement and Release Agreement, dated as of February 20, 2015 (this “Settlement Agreement” or “Settlement”), is entered into by and between West Side Community Hospital Inc. d/b/a Sacred Heart Hospital (“Debtor”), on the one hand, and Quinola McCullough (“Class Representative”), on behalf of herself and members of the certified Class (together with the Class Representative, but excluding the Opt-Outs (as hereinafter defined), the “Class Members” or “Class”), on the other hand. The Debtor and the Class Members are collectively referred to herein as the “Parties,” or, as to each, a “Party.” RECITALS WHEREAS, on July 2, 2013 (“Petition Date”), Debtor, together with its affiliated entities Garfield Kidney Center, LLC (“Garfield”) and Superior Home Health, L.L.C. (“Superior”), filed voluntary petitions for relief in the United States Bankruptcy Court for the Northern District of Illinois (“Bankruptcy Court”) under chapter 11 of title 11, United States Code (“Bankruptcy Code”). The filing of the chapter 11 petitions commenced the bankruptcy cases (“Cases”) pending before the Bankruptcy Court and styled as In re West Side Community Hospital, Inc., Case No. 13-27091 (Jointly Administered). Since the Petition Date, the Debtor, Garfield and Superior have remained in possession of their assets as debtors in possession in accordance with 11 U.S.C. §§ 1107 and 1108; WHEREAS, prior to the Petition Date, Debtor employed certain employees, including the Class Members, in its business operations; WHEREAS, prior to the Petition Date, Debtor terminated certain of its employees, on or about July 1, 2013, and within 30 days of that date; WHEREAS, Debtor believes that all of the terminations made were in compliance with all applicable laws, including the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq., and the Illinois Worker Adjustment and Retraining Act, 820 ILCS 65/10(a) (collectively, the “WARN Act”); WHEREAS, on or about July 9, 2013, the Class Representative filed with the Bankruptcy Court a class-action adversary complaint commencing an adversary proceeding (“WARN Action”) against Debtor, on behalf of herself and on behalf of the Class Members, alleging that Debtor violated the WARN Act by ordering plant closings and/or mass layoffs on or about July 1, 2013 without providing sixty (60) days advance notice thereof. The Class Representative further asserted that, as a consequence of this alleged failure, the Class Members have a partial priority administrative expense claim, pursuant to 11 U.S.C § 503(b)(1)(A), or alternatively, full priority status, under 11 U.S.C. § 507(a)(4) and (5), up to the $12,475 priority cap, with the balance, if any, being a general unsecured claim against Debtor for damages for the alleged sixty (60) day violation period. The WARN Action is entitled McCullough v. West Side Community Hospital Inc., et al., Adv. No. 13-00954 (Bankr. N.D. Ill.); WHEREAS, on August 27, 2013, the Plaintiff filed a First Amended Complaint {10615-001 SET A0397075.DOCX 5} 2 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page53 3 of of 19 69 Desc Exhibit (“Complaint”) and voluntarily dismissed Defendants Superior and Garfield from the WARN Action; WHEREAS, a tentative settlement has been reached by counsel for the parties as a result of negotiations; and WHEREAS, all Parties recognize that the outcome of the WARN Action is uncertain. The Parties also acknowledge that Debtor has limited resources and that recoveries to Class Members and other creditors can best be maximized by resolving the WARN Action in a consensual manner and avoiding extensive, costly and uncertain litigation. SETTLEMENT NOW, THEREFORE, as material consideration and inducements to the execution of this Settlement Agreement, and in consideration of the mutual promises and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intended to be binding, the Parties hereby agree as follows: 1. Settlement Filings. The Parties shall file a joint motion in the Cases under Fed. R. Bankr. P. 9019 and 7023 for approval of the Settlement through a bifurcated hearing process (“Settlement Motion”). The Settlement Motion shall request an initial hearing at which time the Parties shall seek entry of an order of the Bankruptcy Court preliminarily approving the Settlement, and approving the form and manner of notice to the Class Members of the Settlement, including, among other things, their right to object to the Settlement in person or to appear by counsel. The Parties shall also request a date for a fairness hearing (“Fairness Hearing”). At the Fairness Hearing, the Bankruptcy Court shall consider final approval of the Settlement. The Settlement is subject to the entry of a final order by the Bankruptcy Court approving this Settlement Agreement under Fed. R. Bankr. P. 9019 and 7023, after notice and hearing to creditors and parties in interest, in accordance with applicable law and local rules (“Settlement Order”). The Settlement Order shall be deemed final when fourteen (14) days have elapsed from the entry Settlement Order, with no notice of appeal filed or after the Settlement Order is finally affirmed on appeal, whichever first occurs. 2. Class Certification. On January 15, 2014, this Court certified a class comprised of former employees of the Debtor who: (i) worked at the Debtor’s facility located at 3240 W. Franklin Boulevard, Chicago, Illinois and allege that they were terminated without cause as part of, or as the result of, mass layoffs or plant closings ordered by the Debtor on or about July 1, 2013; (ii) who were not provided 60 days’ advance written notice of their terminations by the Debtor; and (iii) who have not filed a timely request to opt-out of the Class. All former employees who timely filed a request to opt-out of the Class are collectively referred to as the “Opt-Outs.” In addition, the Court appointed Outten & Golden, LLP as class counsel (“Class Counsel”) and Quinola McCullough as the Class Representative. 3. Effective Date. The “Effective Date” of this Settlement Agreement shall be the later of (i) the date upon which Settlement Order has become final and (ii) the occurrence of the effective date of the Debtor’s chapter 11 plan (“Plan”) confirmed by the Bankruptcy Court to 11 U.S.C. § 1129. In the event that the Effective Date does not occur: (a) this Settlement {10615-001 SET A0397075.DOCX 5} 3 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page54 4 of of 19 69 Desc Exhibit Agreement and the recitals contained herein shall be without force or effect, and the Settlement Agreement, nor any of the statements contained herein, shall be admissible in any proceeding involving the Parties; (b) neither the Settlement Motion nor any of the pleadings filed in support thereof shall be admissible in any proceeding involving the Parties; and (c) none of the provisions hereof shall prejudice or impair any rights, remedies or defenses of any of the Parties. 4. The Priority Claim. (a) Upon the Effective Date, the Class shall be awarded an allowed priority claim pursuant to 11 U.S.C. §§ 507(a)(4) in the amount of Three Hundred Sixty Thousand Dollars ($360,000.00) against Debtor (“WARN Claim”). The WARN Claim shall be satisfied in full by a payment in the amount of Three Hundred Sixty Thousand Dollars ($360,000.00) (“Settlement Payment”) to be distributed in accordance with the terms set forth below and the Plan as soon as reasonably practicable following the Effective Date, but not later than 21 days. All distributions made by Debtor on account of the WARN Claim shall be referred to herein as the “WARN Claim Distributions” and the Settlement Payment to be distributed pursuant to the Settlement shall be referred to herein as the “Settlement Fund.” (b) The Parties agree that the WARN Claim shall be allowed against Debtor in favor of the Class in complete and total satisfaction of all claims and potential claims of the Class Members against Debtor under the WARN Act. The Parties further agree that, except as otherwise expressly set forth in this Settlement Agreement, any and all payments by, and obligations of, Debtor under this Settlement Agreement, including, but not limited to, the obligation to pay the Class Representative Service Payments, Class Counsel’s Fees, Class Counsel’s Expenses,1 and the Class Members’ individual share of applicable employee taxes, shall be payable exclusively from the WARN Claim. For the avoidance of doubt, the Debtor shall be responsible for the payment of the employer’s share of applicable taxes, which is the only payment obligation of the Debtor under the Settlement that shall not be paid from the WARN Claim. (c) Notwithstanding anything to the contrary in this Settlement Agreement, nothing herein shall prohibit the Debtor from objecting to (i) any Class Members’ status as a member of the Class or (ii) any claim filed by a Class Member that is not a WARN Claim. 5. Responsibilities of Class Counsel. Class Counsel shall be responsible for the production and mailing of all notices required to be provided to the Class Members (“Class Notices”). The address of Class Counsel will be used as the return address for the Class Notices and Class Counsel will respond to all inquiries of the Class arising from or related to this Settlement. Subject to the Debtor’s review and approval, Class Counsel shall be responsible for calculating the allocation of each Class Member’s net share of the WARN Claim as set forth in paragraph 6(d) below. 1 The terms Class Representative Service Payments, Class Counsel’s Fees and Class Counsel’s Expenses are defined in Section 5 below. {10615-001 SET A0397075.DOCX 5} 4 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page55 5 of of 19 69 Desc Exhibit 6. The Allocation of the Settlement Fund and Disbursement of the Net Settlement Fund to Class Members. (a) Disbursement of Settlement Fund Payments. The liquidating trustee of Debtor’s estate appointed under the Plan (“Liquidating Trustee”) shall be responsible for the preparation and mailing of the individual settlement checks to Class Members, withholding and paying all applicable taxes, remitting Class Counsel’s Fees and Expenses, preparing all tax forms required in connection with this Settlement in accordance herewith and with any other orders of the Bankruptcy Court, and shall bear the expense for the preparation and mailing of such settlement checks and tax forms. (b) Class Counsel’s Fees and Class Counsel’s Expenses. Class Counsel is entitled to attorneys’ fees (“Class Counsel’s Fees”) in the amount of thirty-three and one third percent (33⅓%) of the Settlement Fund, net of (a) litigation expenses (including costs associated with the production and mailing of the class notice) not to exceed $7,500 (“Class Counsel’s Expenses”), and (b) the Class Representative Service Payment (defined below). Class Counsel’s Fees and Class Counsel’s Expenses will be distributed to Class Counsel (according to instructions to be supplied by Class Counsel) contemporaneously with the distribution of proceeds from the WARN Claim to Class Members and shall be payment in full for Class Counsel’s work and expenses in connection with this matter. For the avoidance of doubt, the Parties agree that Class Counsel’s Fees and Class Counsel’s Expenses shall be payable solely from WARN Claim Distributions and from no other source. Class Counsel shall be issued a Form 1099 by Debtor for Class Counsel’s Fees and Class Counsel’s Expenses. (c) Service Payments to Class Representative. The Class Representative shall receive a one-time payment of Five Thousand Dollars ($5,000.00) as compensation for her service in this matter (“Class Representative Service Payment”). The Liquidating Trustee shall distribute this payment to the Class Representative in addition to her individualized WARN Claim Distribution and Class Counsel’s Fees shall not be deducted from the Class Representative Service Payment. For the avoidance of doubt, the Parties agree that the Class Representative Service Payment shall be payable solely from WARN Claim Distributions and from no other source. The Class Representative Service Payment shall be characterized as non-employee compensation to the Class Representative and shall be reported to any applicable taxing authorities on behalf of the Class Representative on a Form 1099 issued to the Class Representative with her taxpayer identification number. (d) Allocation of the Settlement Fund to Class Members. The WARN Claim Distributions, after being first reduced by (i) the Class Representative Service Payment, (ii) Class Counsel’s Fees and (iii) Class Counsel’s Expenses, shall be allocated to each Class Member on a pro rata basis based on the relationship that such Class Member’s potential damages under the WARN Act bears to the aggregate potential damages of all Class Members under the WARN Act, and shall be made directly to Class Members (“Class Members’ Pro Rata Share”). The WARN Claim Distributions made to individual Class Members shall be characterized as employee compensation and shall be reported to any applicable taxing authorities on a Form W-2 issued by Debtor to such Class Member with his or her taxpayer identification number. Each Class Member’s total allowed priority claim under 11 U.S.C. § 507(a) against the Debtor shall be reduced by the Class Members’ Pro Rata Share without reduction for the (i) the Class {10615-001 SET A0397075.DOCX 5} 5 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page56 6 of of 19 69 Desc Exhibit Representative Service Payment, (ii) Class Counsel’s Fees and (iii) Class Counsel’s Expenses (i.e., assuming that the full $360,000 was distributed among Class Members). The Settlement Fund shall be allocated to each Class Member and the total reduction of each Class Member’s remaining priority claim under 11 U.S.C. § 507(a) is attached hereto as Exhibit A. 7. Settlement Checks. Following the WARN Claim Distributions, upon Class Counsel’s written request, including email, the Liquidating Trustee shall provide Class Counsel with the names of those Class Members whose settlement checks have been (i) returned as undeliverable or (ii) remain uncashed or unnegotiated. Upon Class Counsel’s written notice of a Class Member’s updated correct address for any returned settlement checks, the Liquidating Trustee shall, within 10 days of receipt of said notice from Class Counsel, mail the returned settlement check to the Class Member at such corrected address. Upon Class Counsel’s written notice of a Class Member’s need for a “stop payment” on their settlement check and reissuance, the Liquidating Trustee shall, within five business days of receipt of said notice from Class Counsel, stop payment on the settlement check and reissue it, as requested. In the event that there are any Settlement Funds remaining for any reason, including Settlement checks which are not deposited, endorsed or negotiated, within ninety (90) days of their issuance, such residual funds shall be held another sixty (60) days (“Residual Fund Waiting Period”) to be used to make distributions to any individual who is subsequently determined to have been eligible to receive a distribution as a Class Member but was not on the Class Member distribution list. Undistributed funds remaining after the Residual Fund Waiting Period, shall become property of the liquidating trust to be established under the Plan, free and clear of any and all claims and interests of the Class Members, but subject to further redistribution in accordance with the Plan. 8. The Class Notice. Class Counsel shall bear the responsibility of the preparation of the Class Notices. Class Counsel’s address will be used as the return address for the Class Notices so that any returned Class Notices will be returned to Class Counsel. Class Counsel shall mail the Class Notices by first class mail to the Class Members no later than five (5) business days after preliminary approval of this Settlement by the Bankruptcy Court. The Class Notice, which includes the objection form (“Objection Form”), shall be in substantially the form annexed hereto as Exhibit B or such substantially similar form as may be approved by the Bankruptcy Court. In the event that a Class Notice is returned as undeliverable, Class Counsel shall mail the Class Notice to the corrected address of the intended Class Member recipient as may be determined by Class Counsel through a search of a national database or as may otherwise be obtained by the Parties. 9. Contents of the Class Notice. The Class Notice shall contain the following information, which shall be individualized for each Class Member: That the Settlement shall become effective only if it is finally approved by the Bankruptcy Court under Fed. R. Bankr. P. 7023 and 9019; That, if so approved, the Settlement shall be effective as to all Class Members; That such Class Member has the right to object to this Settlement either in person or through counsel and be heard at the Fairness Hearing; and {10615-001 SET A0397075.DOCX 5} 6 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page57 7 of of 19 69 Desc Exhibit That all Released Claims (defined below) of a Class Member (other than those claims to be paid under the terms of this Settlement) shall be waived, and that no person, including the Class Member, shall be entitled to any further distribution thereon. 10. Objection to Settlement Procedures. At or before such time as may be fixed by the Bankruptcy Court for final approval of this Settlement at the Fairness Hearing, a Class Member may object to this Settlement by sending timely written notice of such objection (“Notice of Objection”) to Class Counsel and counsel to Debtor and at the addresses set forth in Section 15(d) below and filing such Notice of Objection with the Bankruptcy Court. Such objection shall clearly specify the relief sought and the grounds for such relief. In addition: (a) To be effective, the Notice of Objection must be postmarked no later than the date fixed by the Bankruptcy Court. Class Counsel shall provide Debtor with copies of each Notice of Objection received from Class Members within one (1) business day following receipt thereof. (b) Any Class Member whose objection is sustained by the Court shall not have an allowed claim against Debtor by reason of this Settlement Agreement and shall retain his or her rights against the Debtor, if any. The Debtor reserves all rights against any Class Member who is excluded from this Settlement including the right to assert that such Class Member did not file a timely proof of claim in the Case. (c) Notwithstanding anything to the contrary in this Settlement, nothing contained herein shall release or impair the rights and claims, if any, of any Class Member who does not participate in this Settlement, nor shall anything contained herein affect the defenses and offsets that Debtor, its estate, its respective subsidiaries, its respective affiliates, any successors or assigns thereto, or any of the present or former officers, directors, employees, agents, attorneys, consultants, stockholders or members of any thereof may have against any such rights or claims. 11. The Waiver and Release of any Released Claims by All Class Members if the Settlement Becomes Effective. (a) Released Claims of Class Members. Except for the rights arising out of, provided for, or reserved in this Settlement Agreement, upon the Effective Date, the Class Members, for and on behalf of themselves, and their respective predecessors, successors, assigns, heirs, personal representative and estates (collectively, the “Releasing Parties”), do hereby fully and forever release and discharge (i) the Debtor, Garfield, Superior and their respective estates, (ii) Edward Novak, West Side Community Hospital Limited Partnership, West Side Management Corporation, and Park Place, L.L.C., and (iii) for each of the persons and entities listed in (i) and (ii), their current and former shareholders, officers, directors, employees, accountants, attorneys, representatives and other agents, and all of their respective predecessors, successors and assigns (collectively, the “Released Parties”), of and from any and all claims, demands, debts, liabilities, obligations, liens, actions and causes of action, costs, expenses, attorneys’ fees and damages of whatever kind or nature, at law, in equity and otherwise, whether known or unknown, anticipated, suspected or disclosed, which the Releasing Parties may now {10615-001 SET A0397075.DOCX 5} 7 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page58 8 of of 19 69 Desc Exhibit have or hereafter may have against the Released Parties, which relate to or are based on the WARN Act or back or severance pay or benefits under any federal, state or local law or regulation arising out of the termination of the Class Members’ employment by the Debtor, including, but not limited to: (a) all claims asserted or that could have been asserted in the WARN Action; (b) the individual WARN Act claims; and (c) any other claims for back or severance pay or benefits based on or arising out of any federal, state or local statute, ordinance or regulation; provided, however, that the following claims and/or rights shall not be released: (x) any claims for continuation of health or medical coverage, at the Class Member’s expense, or at the expense of a beneficiary or dependent of a Class Member, to the extent allegedly required by the relevant provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985; and (y) rights, if any, unrelated to Class Members’ WARN claims, under the Debtors’ 401(k) plans. The claims released hereunder are referred to herein as the “Released Claims.” The Released Parties expressly reserve the right to object to, offset or oppose any and all claims, obligations, or causes of action, of any type, except those claims expressly allowed hereunder. On the Effective Date, in accordance with this Settlement, the Class Members agree that any claims that have been scheduled on behalf of, or filed by, the Class Representative or the Class Members in the Cases, on account of any alleged violation of the WARN Act or severance pay or benefits under any federal, state or local law or regulation, including, without limitation, the individual WARN claims are disallowed in their entirety and shall be deemed expunged from Debtor’s schedules or claims register, as applicable. In addition, each Releasing Party shall be deemed as of the Effective Date to have released the Class Representative from any and all claims whether liquidated or unliquidated, contingent or non-contingent, asserted or unasserted, fixed or not, matured or unmatured, disputed or undisputed, legal or equitable, known or unknown that he or she may have against the Class Representative, any successors or assignees to their legal interests, or any of their present or former agents, attorneys or consultants arising out of any Released Claim or the terms of this Settlement. (b) Dismissal of WARN Act Litigation. Dismissal with prejudice of the WARN Action shall be executed in a form agreeable to the Parties (“Dismissal”). Class Counsel shall file the Dismissal with the Bankruptcy Court within fourteen (14) days following the WARN Claim Distributions in accordance with this Settlement and the Plan. Dismissal of the WARN Action shall not abate or limit the effectiveness of the Settlement Order, including the releases set forth herein and the terms and conditions of this Settlement. (c) Plan Releases. The Plan shall also contain provisions providing that the Releasing Parties shall release the Released Parties from the Released Claims. 12. No Litigation. Except as may be necessary to enforce the terms of this Settlement, the Debtor, the Class Representative, Class Counsel, the Releasing Parties, and any other person who accepts payment hereunder agree that she or he shall not commence or proceed with any action, claim, suit, proceeding or litigation on the Released Claims, or take any action inconsistent with the terms of the Settlement. 13. No Admission of Liability. This Settlement is intended to settle and dispose of the Released Claims. Nothing herein shall be construed as an admission by any Party of any facts or liability of any kind. {10615-001 SET A0397075.DOCX 5} 8 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 1B A Page Page59 9 of of 19 69 Desc Exhibit 14. Representations and Warranties. Each Party represents and warrants that upon Bankruptcy Court approval of this Settlement and Plan effectiveness, it will have the legal right and authority to enter into this Settlement and the transactions and releases contemplated hereby. 15. Further Assurances. The Parties shall cooperate fully and shall execute and deliver any and all supplemental papers, documents, instruments and other assurances and shall do any and all acts that may be reasonably necessary or appropriate to give full force and effect to the terms and intent of this Settlement. 16. Miscellaneous. (a) Continuing Jurisdiction of Bankruptcy Court. The Bankruptcy Court shall have full jurisdiction over this Settlement and any dispute or controversy arising from or related to the interpretation or enforcement of this Settlement. (b) Governing Law/Jurisdiction. Except where superseded by applicable federal law, this Settlement Agreement shall be governed by the laws of the State of Illinois. (c) Governing Provisions. Except as provided herein, in the event of a conflict between the Plan and this Settlement, the terms of this Settlement Agreement shall govern. (d) Notices. Any notice or other communication required or permitted to be delivered under this Settlement between Class Counsel, Debtor or from any Class Member to the Class Counsel, Debtor and/or the Bankruptcy Court shall be (i) in writing, (ii) delivered personally, by courier service or by certified or registered mail, first-class postage prepaid and return receipt requested, (iii) deemed to have been received on the date of delivery, and (iv) addressed as follows (or to such other address as the Party entitled to notice shall hereafter designate by a written notice filed with the Bankruptcy Court): If to the Debtor, to: SHAW FISHMAN GLANTZ & TOWBIN LLC 321 North Clark Street, Suite 800 Chicago, Illinois 60654 Attention: Allen J. Guon If to Class Members or Class Counsel, to: OUTTEN & GOLDEN LLP 3 Park Avenue, 29th Floor New York, New York 10016 Attention: Jack A. Raisner René S. Roupinian {10615-001 SET A0397075.DOCX 5} 9 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 A B 1 Page 60 10 of 69 19 Desc Exhibit (e) Non-Severability. Each of the provisions of this Settlement is a material and integral part hereof. In the event that one or more of the provisions of this Settlement shall become invalid, illegal or unenforceable in any respect, the entire Settlement shall be deemed null and void unless all the Parties agree otherwise. (f) Amendments. This Settlement may not be modified, amended or supplemented by the Parties except by a written agreement that the Parties have signed with any required approval of the Bankruptcy Court. (g) Integration. This Settlement contains the entire agreement among the Parties with respect to the matters covered by this Settlement, and no promise or understanding or representation made by any Party or agent, director, officer, employee or attorney of any Party that is not expressly contained in this Settlement shall be binding or valid. (h) Interpretation. This Settlement was the product of negotiations between the parties and any rule of construction requiring that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Settlement. (i) Headings. The headings of this Settlement are for convenience only and are not part of the Settlement and do not in any way define, limit, extend, describe or amplify the terms, provisions or scope of this Settlement and shall have no effect on its interpretation. Where appropriate, the use of the singular shall include the plural and the use of the masculine gender shall include the feminine gender as well. (j) Signatures. Facsimile or other electronic copies of signatures on this Settlement are acceptable, and a facsimile or other electronic copy of a signature on this Settlement shall be deemed to be an original. (k) Counterparts. This Settlement may be executed in one or more counterparts, each of which together or separately shall constitute an original and which, when taken together, shall be considered one and the same binding agreement. (l) Cooperation. The Parties agree to cooperate with one another to effectuate an efficient and equitable implementation of this Settlement; provided that nothing herein shall require the Debtor to breach any commitments that they may have to any other person or entity, including the purchaser of their assets and any secured lenders. (m) Binding Nature of Settlement. This Settlement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors, transferees, assigns, heirs and estates (n) Recitals. The Recitals are hereby incorporated in full and made a part of this Settlement Agreement. [Remainder of Page Intentional Left Blank] {10615-001 SET A0397075.DOCX 5} 10 Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 A B 1 Page 61 11 of 69 19 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 A B 1 Page 62 12 of 69 19 Desc Exhibit IN WITNESS WHEREOF, the Parties have executed and delivered this Settlement Agreement as of the date first written above. West Side Community Hospital, Inc. By: Name: Paul Rundell Title: Chief Restructuring OUTTEN Ec GOLDEN on behalf Memb (10615-001 SET A0397075,DOCX 5) 12 Officer LLP of the Class Representative NalnI1e: Ja~cA. R&sner Title: Rene S, Roupinian Class Counsel and Class Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 A B 1 Page 63 13 of 69 19 EXHIBIT A Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 Emp ID 20002 20459 20993 20938 20008 20926 20009 20409 21032 20633 21213 21106 21124 20889 20013 20014 20016 20017 20020 20825 21187 21200 20669 20964 20028 20031 20489 20413 20596 20440 21208 20040 21230 21217 20656 21211 21119 20046 20368 21143 21008 21120 21166 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side64 Community A B 1 West Page 14 of 69 19 Hospital Adversary Proceeding #: 13-00954 Gross Pro Rata Net Pro Rata Damages Damages $3,429.84 $2,207.28 $645.08 $415.14 $3,812.00 $2,453.21 $844.61 $543.55 $1,931.42 $1,242.97 $684.08 $440.24 $879.17 $565.79 $564.92 $363.55 $1,028.33 $661.78 $949.02 $610.74 $658.02 $423.47 $253.61 $163.21 $2,403.05 $1,546.48 $471.20 $303.24 $1,118.05 $719.52 $1,118.05 $719.52 $2,067.80 $1,330.74 $1,773.33 $1,141.23 $1,691.94 $1,088.85 $180.47 $116.14 $748.14 $481.47 $3,389.92 $2,181.59 $1,982.53 $1,275.86 $3,297.67 $2,122.22 $4,817.65 $3,100.40 $615.36 $396.02 $528.71 $340.25 $3,603.15 $2,318.81 $937.36 $603.24 $500.70 $322.23 $482.95 $310.80 $2,123.99 $1,366.90 $1,523.07 $980.17 $1,424.26 $916.58 $2,108.81 $1,357.13 $312.36 $201.02 $1,277.94 $822.42 $8,360.97 $5,380.71 $1,329.26 $855.44 $931.88 $599.71 $606.92 $390.58 $1,067.90 $687.25 $458.65 $295.16 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 21098 21192 21077 21091 21114 20061 21221 21113 21131 20068 20500 20789 20670 20750 20060 21086 21185 20070 21214 20363 20073 21093 21053 21153 20878 20731 21133 20590 21195 21116 20913 21028 20983 20782 21162 21089 20802 20270 20909 20456 20083 20084 21019 21024 20373 21238 20315 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side65 Community A B 1 West Page 15 of 69 19 Hospital Adversary Proceeding #: 13-00954 $3,387.92 $4,296.72 $929.41 $1,929.11 $2,081.87 $2,200.88 $1,181.38 $1,263.68 $1,349.74 $9,216.46 $1,071.72 $2,197.49 $908.99 $1,188.30 $3,193.79 $1,546.67 $2,986.83 $408.26 $773.61 $1,257.06 $2,143.05 $2,379.72 $896.93 $951.01 $1,162.21 $705.35 $3,576.38 $2,025.20 $808.28 $2,997.52 $1,185.59 $2,051.06 $1,890.14 $3,214.97 $2,058.77 $1,027.20 $1,027.20 $1,027.20 $992.37 $992.37 $2,663.32 $1,014.02 $1,100.05 $509.45 $1,201.55 $267.26 $2,093.82 $2,180.30 $2,765.15 $598.12 $1,241.48 $1,339.79 $1,416.38 $760.28 $813.24 $868.63 $5,931.26 $689.70 $1,414.20 $584.98 $764.73 $2,055.37 $995.36 $1,922.18 $262.74 $497.86 $808.98 $1,379.16 $1,531.47 $577.22 $612.02 $747.94 $453.93 $2,301.58 $1,303.32 $520.17 $1,929.06 $762.99 $1,319.96 $1,216.40 $2,069.00 $1,324.92 $661.06 $661.06 $661.06 $638.64 $638.64 $1,713.98 $652.58 $707.94 $327.85 $773.26 $171.99 $1,347.48 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 20939 20098 20666 20593 20442 21151 21036 20773 20544 20655 20109 21048 21228 20688 21145 21196 20483 20611 20628 21092 21015 20659 20961 20821 20250 20126 20922 21141 20660 21096 20130 21004 21180 20133 20135 20570 20992 20930 20947 20519 20945 21018 20141 20143 20714 20144 20145 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side66 Community A B 1 West Page 16 of 69 19 Hospital Adversary Proceeding #: 13-00954 $1,904.29 $1,904.29 $3,057.92 $1,610.94 $1,610.94 $665.00 $2,455.85 $2,277.80 $1,294.11 $468.89 $1,367.88 $1,367.88 $783.00 $1,147.86 $2,564.72 $626.53 $2,346.43 $973.50 $1,355.87 $790.63 $88.88 $1,815.05 $1,498.35 $1,438.41 $1,804.76 $641.23 $641.23 $646.49 $178.29 $434.83 $1,045.49 $1,461.30 $2,545.30 $2,294.74 $2,489.49 $1,180.97 $4,312.15 $529.01 $1,397.98 $2,676.93 $814.45 $1,156.38 $5,508.62 $1,076.60 $1,067.08 $1,017.91 $2,823.42 $1,225.51 $1,225.51 $1,967.92 $1,036.72 $1,036.72 $427.96 $1,580.47 $1,465.88 $832.83 $301.76 $880.30 $880.30 $503.90 $738.70 $1,650.53 $403.20 $1,510.04 $626.50 $872.57 $508.81 $57.20 $1,168.08 $964.26 $925.69 $1,161.46 $412.66 $412.66 $416.05 $114.74 $279.83 $672.83 $940.42 $1,638.03 $1,476.78 $1,602.11 $760.02 $2,775.08 $340.45 $899.67 $1,722.74 $524.14 $744.19 $3,545.08 $692.85 $686.72 $655.08 $1,817.01 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 21081 20829 21229 21108 20625 21148 21173 21224 21239 21128 20158 21071 20367 21149 21234 21237 21241 21220 20165 21168 20168 21058 20172 20174 20703 21067 20177 21115 20179 21099 21104 21150 20186 20690 20187 20777 21070 21210 21011 20991 20956 20976 21176 20803 20192 21027 20962 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side67 Community A B 1 West Page 17 of 69 19 Hospital Adversary Proceeding #: 13-00954 $982.19 $656.67 $538.08 $1,418.19 $1,425.96 $1,322.07 $2,297.52 $471.57 $780.43 $3,360.11 $130.75 $1,410.20 $931.16 $1,322.07 $135.38 $173.63 $200.62 $733.59 $2,227.94 $462.64 $2,547.78 $2,628.95 $717.38 $1,156.93 $469.09 $2,025.72 $1,747.23 $2,897.30 $2,515.00 $3,360.77 $2,224.55 $477.71 $1,684.05 $663.26 $3,405.87 $798.36 $1,410.20 $1,616.67 $1,492.64 $1,980.28 $1,932.94 $1,075.28 $1,208.36 $765.89 $941.42 $1,865.84 $1,498.35 $632.09 $422.60 $346.28 $912.68 $917.68 $850.82 $1,478.57 $303.48 $502.24 $2,162.40 $84.15 $907.54 $599.25 $850.82 $87.12 $111.74 $129.11 $472.10 $1,433.79 $297.73 $1,639.63 $1,691.86 $461.67 $744.54 $301.88 $1,303.65 $1,124.43 $1,864.56 $1,618.53 $2,162.82 $1,431.61 $307.43 $1,083.77 $426.84 $2,191.85 $513.79 $907.54 $1,040.41 $960.59 $1,274.41 $1,243.95 $692.00 $777.64 $492.89 $605.85 $1,200.76 $964.26 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 20485 20197 20892 21227 21121 21209 21132 20675 21035 20898 21043 20343 20984 21137 20788 20775 20566 21083 20205 20206 20359 20738 20589 20755 20268 21189 20213 20859 21184 20216 20860 20550 21163 21171 20867 20319 20505 20219 21123 21142 20943 21122 20912 20751 21044 21134 20104 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side68 Community A B 1 West Page 18 of 69 19 Hospital Adversary Proceeding #: 13-00954 $1,592.55 $1,703.33 $1,966.13 $244.14 $2,053.36 $2,100.23 $600.16 $600.16 $617.74 $1,294.45 $894.77 $1,017.12 $2,224.38 $497.96 $1,983.10 $3,511.41 $2,203.45 $2,051.52 $983.87 $1,089.55 $1,132.57 $1,136.48 $2,190.57 $928.63 $2,415.31 $2,415.31 $1,651.07 $1,353.63 $2,299.42 $2,137.12 $1,161.57 $707.60 $1,396.71 $1,820.79 $795.02 $1,365.92 $2,089.27 $1,424.82 $1,836.21 $949.90 $1,672.55 $2,002.60 $2,373.24 $0.00 $0.00 $0.00 $0.00 $1,024.89 $1,096.18 $1,265.31 $157.12 $1,321.44 $1,351.61 $386.23 $386.23 $397.54 $833.04 $575.83 $654.57 $1,431.50 $320.46 $1,276.23 $2,259.77 $1,418.03 $1,320.25 $633.17 $701.18 $728.87 $731.38 $1,409.74 $597.62 $1,554.38 $1,554.38 $1,062.55 $871.13 $1,479.79 $1,375.35 $747.53 $455.37 $898.85 $1,171.77 $511.64 $879.04 $1,344.55 $916.94 $1,181.69 $611.31 $1,076.37 $1,288.77 $1,527.30 $0.00 $0.00 $0.00 $0.00 Desc Exhibit Case 13-27091 Doc 456-1 407-1 455-2 Filed 05/06/15 03/18/15 Entered 05/06/15 03/18/15 15:18:43 13:41:13 15:07:07 McCullough v. Side69 Community A B 1 West Page 19 of 69 19 Hospital Adversary Proceeding #: 13-00954 20971 20162 20171 21057 Total: $0.00 $0.00 $0.00 $0.00 $360,000.00 Breakdown of Settlement Gross Award Less Class Counsel's Expenses Less Class Rep Service Fee $360,000.00 Total Less Class Counsel's Fees Net Distribution to Class $347,500.00 $115,821.75 $231,678.25 $7,500.00 $5,000.00 $0.00 $0.00 $0.00 $0.00 $231,678.25 Desc Exhibit Case 13-27091 Doc 456-2 Filed 05/06/15 Entered 05/06/15 15:18:43 2 Page 1 of 2 EXHIBIT 2 Desc Exhibit Case 13-27091 Doc 456-2 Filed 05/06/15 Entered 05/06/15 15:18:43 2 Page 2 of 2 Desc Exhibit Sacred Heart Hospital Chapter 11 Plan as of April 20th Garfield Cash Balance as of April 15th Transfer to First Merit Garfield Reserve to First Merit Garfield Unpaid Administrative Claims Garfield Professional Fees through (June 2014 ‐ June 2015) Garfield Unsecured Claims Chapter 11 High Chapter 11 Low Chapter 7 $ 2,041 (1,300) (175) (20) (360) (120) $ 2,041 (1,300) (175) (20) (360) (120) $ 2,041 (1,300) (175) (20) (360) (120) Funds Available after Payment of Garfield Claims $ 66 $ 66 $ 66 Sacred Heart Cash Balance as of April 15th Excess Cash from Garfield First Merit Cash Collateral Account HHS Accounts Receivable Medicare & Medicaid Recoveries (unknown) Seized Funds Allied Settlement Settlement Contribution from Equity Add‐back of Voluntary Fee Deductions Proceeds from Bentley Recoveries Litigation Recoveries from First Merit/Preferences 1,787 66 3,600 1,900 ‐ ‐ 99 450 ‐ 2,800 ‐ 1,787 66 3,600 1,900 ‐ ‐ 99 450 ‐ ‐ ‐ 1,787 66 3,600 1,900 ‐ ‐ 99 (500) (500) ‐ ‐ Total Sources $ 10,702 $ 7,902 $ 6,452 First Merit Secured Claim (1) HHS Secured Claim 3,600 1,900 3,600 1,900 3,600 1,900 Total Secured Claims $ 5,500 $ 5,500 $ 5,500 Unpaid Administrative Expenses 503(b)(9) Claims Administrative Expenses (April ‐ June) Administrative Employee Claims Wages & Vacation Professional Fees through (June 2014 ‐ June 2015) Liquidating Trustee & Professional Fees Chapter 7 Trustee Fees 50 50 50 33 360 250 ‐ 100 75 100 33 360 250 ‐ 100 75 100 33 360 ‐ 100 Total Administrative Claims $ 793 $ 918 $ 768 Priority Tax Claims Priority Employee Claims Wages & Vacation Priority WARN Claims Taxes on WARN Claims 268 164 360 24 268 164 360 24 268 164 1,300 87 Total Priority Claims $ 816 $ 816 $ 1,819 Amount for Unsecured Claims $ 3,593 $ 668 $ (1,635) HHS Payment per the Plan Unsecured Creditor Carveout Claims (10%) 100 300 100 300 ‐ ‐ HHS Deficiency Carveout Remaining Amount for Unsecured Claims Remaining Amount for HHS Deficiency Claim 1,187 379 1,627 268 ‐ ‐ ‐ ‐ ‐ Total Unsecured Claims Paid $ 3,593 $ 668 $ ‐ Payout for HHS Unsecured Claims Payout for Other Unsecured Claims 22.6% 22.6% 2.9% 10.0% 0.0% 0.0% HHS Claims Unsecured Trade Claims Personal Injury Claims Physician Claims 12,873 2,150 750 100 12,873 2,150 750 100 12,873 2,150 750 100 Unsecured Claims $ 15,873 $ 15,873 $ 15,873 (1) Total amount held in First Merit cash collateral account is $5.075M and is comprised of $3.6M plus $1.475 transferred from Garfield. 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