Illinois
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33-42498
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65-0254624
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(State or other jurisdiction of
incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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10300 W. Charleston Blvd., Suite 13-312 | ||||
Las Vegas, NV | 89135 | |||
(Address of Principal Executive Offices)
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(Zip Code) |
☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Exhibit No.
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Description of Exhibit
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2.1
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2.2
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2.3
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QUADRANT 4 SYSTEM CORPORATION
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By:
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/s/ Robert Steele
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Robert H. Steele, Chief Executive Officer
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Exhibit No.
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Description of Exhibit
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2.1
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2.2
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2.3
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In re: | ) |
Chapter 11
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) |
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QUADRANT 4 SYSTEM CORPORATION, et al.
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) |
Case No. 17-19689
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) |
(Jointly Administered)
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Debtors.
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) |
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) |
Honorable Jack B. Schmetterer
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) |
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1.
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The Motion be and is hereby granted as provided herein.
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2.
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The Disclosure Statement Hearing shall be held on July 12, 2018 at 11:00 a.m.
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3.
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Any objections to the Disclosure Statement must be filed with the CoUI1 on or before July 10, 2018.
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4.
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The form and manner of the Disclosure Statement Hearing Notice attached hereto as Exhibit A be and hereby is approved.
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5.
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The Debtors shall file the Disclosure Statement Motion and tender service of the same not less than twenty-eight (28) days prior to the Objection Deadline, by CM/ECF, upon: (a)
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the U.S. Securities and Exchange Commission; (b) the Office of the United States Trustee for the Northern District of Illinois; (c) counsel to the Committee; (d) counsel to the Debtor’s secured lenders; and (e) all other parties who have requested notice and service of pleadings in the Chapter II Cases via CM/ECF.
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6.
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The Debtors shall serve the Disclosure Statement Hearing Notice not less than twenty-eight (28) days prior to the Objection Deadline, by First-Class Mail, postage prepaid, upon all Known Creditors and Known Equity Interest Holders.
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7.
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The Debtors shall cause the Disclosure Statement Hearing Notice to be published on one (I) occasion in a newspaper of national circulation on a date that is at least twenty-eight (28) days prior to the Objection Deadline.
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8.
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The Debtors shall file or cause to be filed proof of service and publication of the Disclosure Statement Hearing Notice with the Court.
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9.
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Service as described herein shall constitute sufficient service of notice of the Disclosure Statement Hearing, and no other or further notice hall be required.
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In re: | ) |
Chapter 11
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) |
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QUADRANT 4 SYSTEM CORPORATION, et al.1
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) |
Case No. 17-19689
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) |
(Jointly Administered)
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Debtors.
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) |
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) |
Honorable Jack B. Schmetterer
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) |
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) |
Hearing Date: July 12, 2018
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) |
Hearing Time: 11:00 a.m.
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1
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This case was filed on June 29, 2017, as Case No. 17-19689, and is being jointly administered with the pending Chapter 11 case filed by Quadrant 4 System Corporation’s wholly owned subsidiary, Stratitude, Inc., on October 13, 2017 as Case No. 17-30724, pursuant an order of this Court entered on October 19, 2017.
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2
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Capitalized terms used but not otherwise defined shall have the meaning ascribed to such terms in the Motion.
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Dated: June 6, 2018 |
Respectfully submitted,
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QUADRANT 4 SYSTEM CORPORATION |
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and STRATITUDE, INC. |
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By: /s/ Chad H. Gettleman
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One of their attorneys
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CHAD H. GETTLEMAN, ESQ. (ARDC#944858) | |
ERICH S. BUCK, ESQ. (ARDC #6274635) | |
NICHOLAS R. DWAYNE (ARDC #6308927) | |
ADELMAN &GETTLEMAN,LTD . | |
53 West Jackson Blvd, Suite 1050 | |
Chicago, Illinois 60604 | |
Tel (312) 435-1050 | |
Fax (312) 435-1059 | |
chg@ag-ltd.com | |
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esb@ag-ltd.com
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nrd@ag-ltd.com
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Counsel for the Debtors
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In re
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Chapter 11 |
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QUADRANT 4 SYSTEM
CORPORATION, et al.1
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Case No. 17-19689
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(Jointly administered)
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Debtors. | Honorable Jack B. Schmetterer |
Chad H. Gettleman, Esq. (ARDC #944858)
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Mark S. Melickian, Esq. (ARDC #6229843)
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Erich S. Buck, Esq. (ARDC #6274635)
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Michael A. Brandess, Esq. (ARDC #6299158)
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Nicholas R. Dwayne, Esq. (ARDC | SUGAR FELSENTHAL GRAIS & HELSINGER LLP |
#6308927)
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30 N. LaSalle St., Ste. 3000
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ADELMAN & GETTLEMAN, LTD.
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Chicago, Illinois 60602
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53 W. Jackson Blvd., Ste. 1050
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Telephone: 312.704.9400
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Chicago, Illinois 60604
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Facsimile: 312.372.7951
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Telephone: 312.435.1050 |
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Facsimile: 312.435.1059
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Counsel to the Official Committee of
Unsecured Creditors
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Counsel to the Debtors
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1
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The Debtors in these jointly administered Chapter 11 cases are Quadrant 4 Systems Corporation and Stratitude, Inc.
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1.1
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Administrative Claim means any cost or expense of administration of the Chapter 11 Cases Allowed by the Bankruptcy Court under Section 503(b) of the Bankruptcy Code, including Professional Fee Claims.
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1.2
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Administrative Claims Bar Date means the applicable date on which an Administrative Claim, including but not limited to any Claim under Section 503(b)(9), must be Filed, as established by Section 7.10 of the Plan.
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1.3
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Agama means Agama Solutions, Inc., a California corporation.
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1.4
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Allowed, Allowed Claim, or Allowed Equity Interest, means all or a portion of a Claim against the Debtors or an Equity Interest in the Debtors (a) that has been listed by the Debtors in the Debtors’ Schedules as liquidated in amount and not Disputed or contingent, and with respect to which no contrary proof of Claim or Equity Interest has been Filed, (b) as to which no objection or request for estimation has been Filed on or before the applicable claims objection deadline or the expiration of such other applicable period fixed by the Bankruptcy Court, (c) as to which any objection has been settled, waived, withdrawn or denied by a Final Order, or (d) that is allowed (i) by a Final Order, (ii) by an agreement between the Holder of such Claim or Equity Interest and the Plan Proponents prior to the Effective Date or the Liquidating Trustee on or after the Effective
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1.5
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Assets of the Estates means any and all right, title, and interest of any of the Debtors in and to property of whatever type or nature.
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1.6
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Avoidance Actions means any and all pending or possible actions, proceedings, accounts, controversies, agreements, promises, claims, and rights, of the Debtors and their Estates to avoid or recover a transfer of property of any of the Debtors’ Estates or an interest of any of the Debtors in property, including actions arising under Sections 502, 510, 542, 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any other applicable federal, state, or common law, including fraudulent transfers, whether or not litigation has been commenced with respect to such Causes of Action as of the Effective Date. Avoidance Actions expressly exclude Director Causes of Action.
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1.7
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Bankruptcy Code means Title 11 of the United States Code, 11 U.S.C. § 101 et seq.
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1.8
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Bankruptcy Court means the United States Bankruptcy Court for the Northern District of Illinois or any court having jurisdiction over the Chapter 11 Cases or a proceeding arising in, arising under, or related to the Chapter 11 Cases.
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1.9
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Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure and the Local Rules of the Bankruptcy Court, as now in effect.
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1.10
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BIP means BIP Quadrant 4 System Debt Fund I, LLC.
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1.11
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BMO means BMO Harris Bank N.A.
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1.12
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BMO Motion for Relief From Stay means that certain Unopposed Motion of BMO Harris Bank N.A. for Relief From the Automatic Stay Pursuant to 11 U.S.C. § 362 filed on January 30, 2018 [Dkt. # 317] and granted by order entered on February 7, 2018 [Dkt. # 348].
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1.13
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Chapter 11 Cases mean the jointly-administered cases commenced under Chapter 11 of the Bankruptcy Code by the Debtors styled In re QUADRANT 4 SYSTEM CORPORATION, et al., Case No. 17-19689, currently pending before the Bankruptcy Court.
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1.14
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Cash means legal tender of the United States of America and its equivalents.
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1.15
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Causes of Action means any and all actions, causes of action, proceedings, controversies, liabilities, obligations, rights, suits, claims for money or refunds due, indebtedness (for borrowed money or in the nature of a guarantee), damages, judgments, Claims,
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1.16
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Claim means any right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, as defined by Section 101(5) of the Bankruptcy Code.
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1.17
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Class means a class of Holders of Claims as described in the Plan.
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1.18
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Committee means the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases under Section 1102 of the Bankruptcy Code.
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1.19
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Confirmation Date means the date of entry of the Confirmation Order.
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1.20
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Confirmation Hearing means, collectively, the hearing or hearings held by the Bankruptcy Court on confirmation of the Plan, as such hearing or hearings may be continued from time to time.
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1.21
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Confirmation Order means the order confirming the Plan.
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1.22
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Creditors means all creditors of the Debtors holding Claims for debts, liabilities, demands or other Claims of any character whatsoever.
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1.23
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Criminal Defendants means Nandu Thondavadi, the Debtors’ former Chief Executive Officer, and Dhru Desai, the Debtors’ former Chairman of the Board and Chief Financial Officer.
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1.24
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Debtors or Debtors-in-Possession means Q4 and Stratitude.
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1.25
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Director Causes of Action means those Claims the Estates have against the members of the Debtors’ Board of Directors for all pre-petition acts or failures to act. BIP shall be entitled to pursue these Causes of Action on behalf of itself and the Liquidating Trust, remitting any Net Proceeds, after satisfaction of its Claims, to the Liquidating Trust.
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1.26
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Disallowed, Disallowed Claim, or Disallowed Equity Interest, means (a) a Claim or Equity Interest, or any portion thereof, that has been disallowed by a Final Order or by other agreement of a Holder of a Claim or Equity Interest; (b) a Claim or Equity Interest that has been listed in the Schedules at zero or as contingent, disputed, or unliquidated and as to which no proof of Claim or Equity Interest has been timely Filed or deemed timely Filed with the Bankruptcy Court pursuant to the Bankruptcy Code, a Final Order, or other applicable law; or (c) a Claim or Equity Interest that has not been listed in the Schedules and as to which no proof of Claim or Equity Interest has been timely Filed or deemed timely Filed with the Bankruptcy Court pursuant to the Bankruptcy Code, a Final Order, or other applicable law.
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1.27
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Disclosure Statement means the Disclosure Statement for Joint Plan Of Liquidation of Quadrant 4 System Corporation and Stratitude, Inc. and The Official Committee of Unsecured Creditors, as it may be modified or amended.
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1.28
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Disputed, Disputed Claim, or Disputed Equity Interest means any Claim or Equity Interest (other than an Allowed Claim or Allowed Equity Interest) which is either a Claim or Equity Interest scheduled by the Debtors or a Claim or Equity Interest which is the subject of a proof of Claim or Equity Interest Filed with the Bankruptcy Court, as to which the Debtors, the Committee or the Liquidating Trustee has indicated a dispute, or for which a timely objection to the Claim’s or Equity Interest’s allowance has been filed by a party entitled to make such an objection, but as to which the Bankruptcy Court has not yet entered a Final Order. No distribution will be made on account of a Disputed Claim or Disputed Equity Interest unless such claim or interest is allowed by a Final Order.
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1.29
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Distribution Record Date shall be a date established for determining the Holders of
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1.30
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Effective Date means the day on which the conditions to the Effective Date of the Plan have been satisfied pursuant to Section 7.9 of the Plan.
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1.31
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Equity Interest shall have the meaning provided by Section 101(16) of the Bankruptcy Code.
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1.32
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Equity Interest Holder shall have the meaning provided by Section 101(17) of the Bankruptcy Code.
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1.33
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Estate or Estates means the individual estate or jointly-administered estates of the Debtors created in the Chapter 11 Cases under Section 541 of the Bankruptcy Code.
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1.34
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Fifth Third Account Funds means the amounts on deposit with Fifth Third Bank in the name of Quadrant 4 Systems Corporation.
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1.35
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Filed refers to any proof of Claim or Equity Interest filed with the Bankruptcy Court.
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1.36
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Final Order means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Chapter 11 Cases, or either of them, or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek certiorari or move for a new trial, reargument or rehearing has expired, and no appeal or petition for certiorari or other proceedings for a new trial, reargument or rehearing has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been timely filed has been withdrawn or resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought or the new trial, reargument or rehearing has been denied or resulted in no modification of such order, 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 or applicable state court rules of civil procedure, may be filed with respect to such order shall not cause such order not to be a Final Order.
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1.37
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Former Stratitude Shareholders means Ashish Sanan; Pankaj Kalra who served as Agama’s CEO; and Khannan Sankaran, who served as Stratitude’s CEO.
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1.38
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General Unsecured Claim means any Unsecured Claim against either Debtor, arising before the respective Petition Date of such Debtor, that is not a Professional Fee Claim, Administrative Claim, Priority Non-Tax Claim, Priority Tax Claim or Insider Claim.
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1.39
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General Unsecured Claims and Insider Claims Bar Date means September 29, 2017 [Dkt. #56]2 with respect to General Unsecured Claims and Insider Claims against Q4, and May 7, 2018 [Stratitude Dkt. #57] with respect to General Unsecured Claims and Insider Claims against Stratitude.
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1.40
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Governmental Claim means any claim Filed by a Governmental Unit, pursuant to Section 502(b)(9) of the Bankruptcy Code.
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1.41
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Governmental Claims Bar Date means December 26, 2017 [Dkt. #56] with respect to Governmental Claims against Q4, and May 7, 2018 [Stratitude Dkt. #57] with respect to Governmental Claims against Stratitude.
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1.42
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Governmental Unit means a “governmental unit” as that term is defined under Section 101(27) of the Bankruptcy Code.
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2
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Unless otherwise indicated, references herein to “Dkt.” shall mean the Chapter 11 docket of Q4, Case No. 17-19689.
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1.43
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Holder means the Person that is the owner of record of a Claim or Equity Interest, as applicable, including such Person’s successors and/or assigns.
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1.44
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Impaired means any Class, or any Claim or Equity Interest in a Class, that is impaired within the meaning of Section 1124 of the Bankruptcy Code, and includes Classes 1, 2, 3, 4(a)-(b), 5(a)-(b), and 7.
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1.45
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Insider or Insiders means an “insider” of the Debtors, or either of them, as that term is defined under Section 101(31) of the Bankruptcy Code, and includes the following: all current officers and directors of the Debtors, including the Criminal Defendants; all former officers and directors of the Debtors; relatives and affiliated entities of any of the foregoing, including Q4 India; and certain of the Former Stratitude Shareholders.
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1.46
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Insider Claim means any Unsecured Claim against either Debtor, arising before the respective Petition Date of such Debtor, that is not a Professional Fee Claim, Administrative Claim, Priority Non-Tax Claim, Priority Tax Claim or General Unsecured Claim.
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1.47
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Insider Causes of Action means any Causes of Action held by either of the Debtors, the Debtors’ Estates, the Committee, or the Liquidating Trust against any Insider.
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1.48
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Lien means a “lien” as that term is defined under Section 101(37) of the Bankruptcy Code.
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1.49
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Liquidating Trust means a common law trust to be established under the Plan, the Liquidating Trust Agreement, and the Confirmation Order. The Liquidating Trust shall liquidate and distribute the Liquidating Trust Assets according to the Liquidating Trust Agreement.
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1.50
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Liquidating Trust Agreement means the Quadrant 4 Liquidating Trust Agreement to be executed as soon as reasonably practicable after the Confirmation Date among the Committee and the Liquidating Trustee, in a form substantially similar to the Liquidating Trust Agreement attached hereto as Exhibit A, which shall govern the obligations of the Liquidating Trustee with respect to oversight of the distribution of the Net Proceeds of the Liquidating Trust Assets, as further set forth in the Liquidating Trust Agreement and the Plan.
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1.51
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Liquidating Trust Assets means those assets to be transferred to and vested in the Liquidating Trust under the Plan and the Confirmation Order, plus all proceeds, earnings and replacements arising from or relating to these assets and all assets acquired by the Liquidating Trust at any time.
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1.52
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Liquidating Trustee means Sheldon Stone, a partner in the financial advisory firm of Amherst Partners LLC, or any successor thereto, who will serve pursuant to the Plan and the Liquidating Trust Agreement after Confirmation of the Plan.
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1.53
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Liquidating Trustee’s Expenses means the reasonable fees, costs and expenses incurred by the Liquidating Trustee and any Professionals retained by him or her in connection with the performance of his duties and responsibilities under the Plan and Liquidating Trust Agreement, as well as any other reasonable and necessary costs of administration of the Liquidating Trust, including U.S. Trustee Fees incurred during the post-Effective Date period, which may be paid from the Liquidating Trust Assets.
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1.54
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Net Proceeds means the Cash proceeds received by the Liquidating Trustee from time to time from the sale or disposition, through litigation, settlement or otherwise, of the Liquidating Trust Assets, net of the reasonable or necessary costs of such sale or other disposition, including reasonable fees and expenses of the Liquidating Trustee’s legal counsel and other Professionals incurred in connection with obtaining the Cash proceeds.
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1.55
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Person means an individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, estate, unincorporated organization or other entity.
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1.56
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Petition Date or Petition Dates means the dates of the filing of the Chapter 11 Cases, and each of them. Q4’s Petition Date was June 29, 2017. Stratitude’s Petition Date was October 13, 2017.
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1.57
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Plan means the Joint Plan of Liquidation of Quadrant 4 Systems Corporation and Stratitude, Inc., and the Official Committee of Unsecured Creditors as it may be modified or amended.
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1.58
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Priority Non-Tax Claim means a Claim of the kind specified under Sections 507(a)(1), (4), (5), (6), (7), (9) or (10) of the Bankruptcy Code.
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1.59
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Priority Tax Claim means a Claim of a Governmental Unit of the kind specified under Section 507(a)(8) of the Bankruptcy Code.
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1.60
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Professional means any professional employed in the Chapter 11 Cases under Sections 327, 328 or 1103 of the Bankruptcy Code, including attorneys, accountants and financial advisors retained by the Debtors, the Committee or the Liquidating Trustee, or
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1.61
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Professional Fee Claim means a Claim of a Professional for compensation or reimbursement of costs and expenses relating to services incurred during the period from the Petition Date to the Effective Date.
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1.62
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Professional Fee Claim Bar Date means the applicable date on which a Professional Fee Claim must be Filed, as established by Section 7.10 of the Plan.
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1.63
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Pro Rata when used in the context of distributions to creditors, means proportionately so that the ratio of the amount of the distribution made on account of a particular Allowed Claim or Allowed Equity Interest to the distribution made on account of all Allowed Claims or Allowed Equity Interests of the Class in which the particular Allowed Claim or Allowed Equity Interest is included is the same as the ratio of the amount of a particular Allowed Claim or Allowed Equity Interest to the total amount of the Allowed Claims or Allowed Equity Interests of the Class in which a particular Allowed Claim or Allowed Equity Interest is included.
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1.64
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Q4 means Quadrant 4 System Corporation, an Illinois corporation.
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1.65
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Q4 Causes of Action means those Causes of Action in which Q4 or its Estate has a legal or equitable interest.
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1.66
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Q4 India means Quadrantfour Software Solutions (Pvt) Limited.
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1.67
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Q4 Liquidating Trust Assets means those Liquidating Trust Assets assigned by Q4 to the Liquidating Trust.
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1.68
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Rejection Damages Claim means a Class 4(a) or 4(b) General Unsecured Claim held by a party to a rejected executory contract or lease agreement under 11 U.S.C. § 365.
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1.69
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Residual Assets means those healthcare industry-related assets of Q4, including software assets identified as the QHIX and EmpowHR software platforms, sold by Q4 to BIP in consideration of a $1 million credit bid by BIP, as approved by the Bankruptcy Court by order entered on March 21, 2018 [Dkt. # 380].
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1.70
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Scheduled refers to any Claim or Equity Interest set forth on the Schedules.
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1.71
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Schedules means the Schedules of Assets and Liabilities filed by the Debtors, as such Schedules may be amended from time to time according to Bankruptcy Rule 1009.
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1.72
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Secured Claim means, pursuant to Section 506 of the Bankruptcy Code, that portion of a Claim that is (a) secured by a valid, perfected and enforceable security interest, lien, mortgage, or other encumbrance, that is not subject to avoidance under applicable
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1.73
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Secured Creditor means the Holder of a Secured Claim.
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1.74
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Stratitude means Stratitude, Inc., a California corporation.
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1.75
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Stratitude Causes of Action means those Causes of Action in which Stratitude or its Estate has a legal or equitable interest.
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1.76
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Stratitude Liquidating Trust Assets means those Liquidating Trust Assets assigned by Stratitude to the Liquidating Trust.
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1.77
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Stipulation means that certain Stipulation and Order Resolving Motion for Authority to Enter into Modification Agreement entered by the Bankruptcy Court on February 7, 2018 [Dkt. # 351].
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1.78
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Tax Code means Title 26 of the United States Code, 26 U.S.C. § 1 et seq.
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1.79
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TriZetto means Cognizant TriZetto Software Group, Inc. (f/k/a TriZetto Corporation).
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1.80
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TriZetto License Agreement means that certain Source Code License and Services Agreement, pursuant to which Q4 agreed to grant TriZetto a license to use certain Q4 software products, including the QHIX Source Code, and Q4 would provide certain services to TriZetto related thereto. In exchange, TriZetto agreed to, among other things, pay the TriZetto Royalty Payments to Q4.
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1.81
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TriZetto Modification Agreement means that certain TriZetto Modification Agreement (Source Code License and Services Agreement), dated as of January 15, 2018 between Q4 and TriZetto, as approved by Bankruptcy Court order entered on February 6, 2018 [Dkt. # 352] in the Chapter 11 Cases.
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1.82
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TriZetto Royalty Payments means all payments made under the TriZetto Modification Agreement, which shall first be paid directly to BMO until its Class 1 Claims have been satisfied, then to BIP until its Class 2 Claims have been satisfied, and then to the Q4 Estate for further distribution under the Plan.
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1.83
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Unclassified Priority Claim means Unsecured Claims of the kind specified in Section 507(a)(2), (3) and (8) of the Bankruptcy Code.
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1.84
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Unsecured Claim means a Claim of a Creditor not secured by a Lien on property of the Estate and not entitled to be classified as a Priority Non-Tax Claim or an Unclassified Priority Claim under Section 507 of the Bankruptcy Code.
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1.85
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U.S. Trustee means the United States Trustee.
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1.86
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U.S. Trustee Fees means any fees due the U.S. Trustee pursuant to 28 U.S.C. § 1930(a)(6).
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1.87
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Voting Class means any of Classes 1, 2, 3, 4(a)-(b), 5(a)-(b) and 7, which are Impaired and entitled to vote on the Plan.
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2.1
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Allowed Administrative Claims.
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(A)
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Allowed Professional Fee Claims shall include Allowed Professional Fee Claims of the Debtors’ Professionals and the Committee’s Professionals.
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(B)
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Allowed Administrative Claims shall include the Allowed Administrative Claims other than Professional Fee Claims, including U.S. Trustee Fees.
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2.2
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Priority Tax Claims.
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3.1
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Class 1 Claims. Class 1 Claims shall consist of the Secured Claims of BMO.
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3.2
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Class 2 Claims. Class 2 Claims shall consist of the Secured Claims of BIP.
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3.3
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Class 3 Claims. Class 3 Claims shall consist of Priority Non-Tax Claims.
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3.4
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Class 4 Claims.
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3.5
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Class 5 Claims.
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3.6
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Class 6 Equity Interests. Class 6 Equity Interests shall consist of the Equity Interests of Equity Interest Holders in Q4, other than Equity Interests held by Insiders of Q4.
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3.7
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Class 7 Equity Interest. Class 7 Equity Interests shall consist of the 100% Equity Interest held by Q4 in Stratitude.
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3.8
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Class 8 Equity Interests. Class 8 Equity Interests shall consist of Equity Interests in Q4 held by Insiders of Q4.
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4.1
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Impaired Classes of Claims Entitled to Vote.
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4.2
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Classes Deemed to Reject the Plan.
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4.3
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Cramdown.
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5.1
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Administrative Claims (Unclassified).
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5.2
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Priority Tax Claims (Unclassified).
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(a)
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the Effective Date of the Plan; (b) allowance by the Bankruptcy Court; or (c) the date upon which the Liquidating Trustee determines there are sufficient Net Proceeds to pay such Claims. Allowed Priority Tax Claims shall include simple interest accruing at the rate prescribed by Section 511 of the Bankruptcy Code beginning on the Effective Date until paid in full. This treatment of Allowed Priority Tax Claims is intended to comply with the requirements of Sections 507(a) and 1129(a)(9)(C) of the Bankruptcy Code.
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5.3
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Class 1 Secured Claims of BMO.
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5.4
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Class 2 Secured Claims of BIP.
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5.5
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Class 3 Priority Non-Tax Claims.
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5.6
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Class 4 Claims (General Unsecured Claims).
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5.7
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Class 5 Claims (Insider Claims).
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5.8
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Class 6 Equity Interests (Q4 Equity Interest Holders). Class 6 Equity Interests shall consist of the Equity Interests of Equity Interest Holders in Q4, other than Equity Interests held by Insiders of Q4.
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5.9
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Class 7 Equity Interest (Stratitude Equity Interest Holder). Class 7 Equity Interests shall consist of the 100% Equity Interest held by Q4 in Stratitude.
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5.10
|
Class 8 Equity Interests (Insider Equity Interests). Class 8 Equity Interests shall consist of Equity Interests in Q4 held by Insiders of Q4.
|
5.11
|
Acceptance by Impaired Classes. An Impaired Class of Claims shall have accepted the Plan if: (a) the Holders (other than any Holder designated under Section 1126(e) of the Bankruptcy Code) of at least two-thirds (2/3) in amount of the Allowed Claims actually voting in such Class have voted to accept the Plan, and (b) the Holders (other than any Holder designated under Section 1126(e) of the Bankruptcy Code) of more than one-half (1/2) in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. Each subclass of Class 4 Claims and Class 5 Claims – i.e., 4(a) and 4(b) of Class 4, and 5(a) and 5(b) of Class 5 – must accept the Plan in order for the Plan to be considered accepted by each such Class as a whole.
|
6.1
|
Executory Contracts and Unexpired Leases.
|
6.2
|
Bar Date for Rejection Damages Claims.
|
6.3
|
Insurance.
|
7.1
|
Vesting of Liquidating Trust Assets.
|
7.2
|
TriZetto License Agreement. On the Effective Date, Q4 shall be automatically deemed to have assigned to BMO, without further act, notice, deed or court order, any and all rights, title and interest of Q4 in and to the TriZetto License Agreement.
|
7.3
|
Liquidating Trustee.
|
7.4
|
Trust Asset Administration.
|
7.5
|
Retention and Preservation of Causes of Action.
|
A.
|
Potential Preference Litigation.
|
B.
|
Potential Fraudulent Transfer Claims.
|
C.
|
Other Potential Litigation against Insiders and Related Parties.
|
7.6
|
Liquidating Trustee’s Professionals.
|
7.7
|
Case Administration.
|
a)
|
have the right to appear and be heard on matters brought before the Bankruptcy Court or other courts of competent jurisdiction;
|
b)
|
have the right to obtain records of, or related to, the Debtors (including bank statements and cancelled checks);
|
c)
|
be entitled to notice and opportunity for hearings;
|
d)
|
be entitled to participate in all matters brought before the Bankruptcy Court, including adversary proceedings;
|
e)
|
have exclusive standing including derivative standing to pursue Causes of Action on behalf of the Debtors;
|
f)
|
be entitled to liquidate the Liquidating Trust Assets without further Bankruptcy Court approval, including all personal property;
|
g)
|
be entitled to request the Bankruptcy Court to enter a final decree closing the Chapter 11 Cases; and
|
h)
|
be entitled to receive notice of all applications, motions and other papers and pleadings set before the Bankruptcy Court in the Chapter 11 Cases.
|
7.8
|
Liquidating Trustee - Court Approvals.
|
a)
|
The sale or liquidation of an Estate asset for a Cash amount equal to or greater than $100,000;
|
b)
|
The settlement of a Cause of Action for which damages of $250,000 or more had been sought;
|
c)
|
The allowance of a Disputed Claim in an Allowed Amount equal to or greater than $250,000; and
|
d)
|
The granting of a release of any Insider entered into on behalf of the Debtors’ Estates.
|
7.9
|
Conditions to Effective Date.
|
7.10
|
Administrative Claim Bar Date and Professional Fee Bar Date.
|
7.11
|
Governmental Claims Bar Date.
|
7.12
|
General Unsecured Claims and Insider Claims Bar Date.
|
7.13
|
Termination of the Creditors’ Committee.
|
7.14
|
Officers and Directors of the Debtors.
|
7.15
|
Filing Additional Documents.
|
7.16
|
Notices.
|
7.17
|
Minimum Distributions.
|
7.18
|
Permanent Injunction.
|
a)
|
with respect to the Enjoined Claims, commencing, conducting or continuing in any manner, directly or indirectly, any suit, action, claim, cross-claim, or other proceeding (including, without limitation, any suit, action, claim, cross- claim, or other proceeding in a judicial, arbitral, administrative or other forum) against or affecting the Releasees, or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, the Releasees, or any property of any such transferee or successor;
|
b)
|
with respect to the Enjoined Claims, enforcing, levying, attaching (including, without limitation, any pre-judgment attachment), collecting or otherwise recovering by any means or in any manner, whether directly or indirectly, any judgment, award, decree or other order against the Releasees, or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, the Releasees, or any property of any such transferee or successor;
|
c)
|
with respect to the Enjoined Claims, creating, perfecting or otherwise enforcing in any manner, directly or indirectly, any encumbrance against the Releasees, or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, the Releasees, or any property of any such transferee or successor;
|
d)
|
with respect to the Enjoined Claims, setting off, seeking reimbursement of, contribution from or subrogation against or otherwise recouping in any manner, directly or indirectly, any amount against any liability owed to the
|
e)
|
with respect to the Enjoined Claims, proceeding in any manner in any place with regard to any matter that is subject to resolution pursuant to the terms of the Plan, except in conformity and compliance herewith.
|
7.19
|
Binding Effect.
|
7.20
|
Term of Bankruptcy Stays.
|
7.21
|
Exculpation and Limitation of Liability.
|
7.22
|
Semi-Annual Reports.
|
a)
|
a description of all distributions to beneficiaries during the period covered by the Semi-Annual Report;
|
b)
|
a summary of the Liquidating Trust deposits and disbursements during the period covered by such Semi-Annual Report; and
|
c)
|
a summary of the Liquidating Trust Assets.
|
7.23
|
Substantive Consolidation.
|
7.24
|
Wind Down.
|
7.25
|
Closing of the Chapter 11 Cases.
|
8.1
|
Modification of the Plan.
|
8.2
|
Releases.
|
9.1
|
Headings for Convenience Only.
|
9.2
|
U.S. Trustee Fees.
|
9.3
|
Interest and Penalties.
|
9.4
|
Objections to Claims.
|
9.5
|
Disputed Claims and Equity Interests.
|
9.6
|
Setoff.
|
9.7
|
Lapsed Distributions.
|
9.8
|
Undeliverable and Unclaimed Distributions.
|
9.9
|
Confirmation under Section 1129(b).
|
9.10
|
Severability.
|
9.11
|
Binding Effect.
|
9.12
|
Subordination Rights.
|
9.13
|
Exemption from Section 1146.
|
9.14
|
Compliance with Applicable Law.
|
9.15
|
Governing Law.
|
10.1
|
The Bankruptcy Court shall retain jurisdiction over the Chapter 11 Cases, and over the Liquidating Trust, subsequent to the Confirmation Date to the fullest extent permitted under Section 1334 of Title 28 of the United States Code, including, without limitation, for the following purposes:
|
a)
|
To determine any requests for subordination pursuant to the Plan and Bankruptcy Code Section 510, whether as part of an objection to Claim or otherwise;
|
b)
|
To determine any motion for the sale of the Debtors’ property, or to compel re- conveyance of a Lien against or Interest in such property upon payment, in full, of a Claim secured under the Plan;
|
c)
|
To determine any and all proceedings related to allowance of Claims or objections to the allowance of Claims, including objections to the Classification of any Claim and determination of any deficiency Claim following any event of default under the Plan, and including, on an appropriate motion pursuant to Bankruptcy Rule 3008, reconsidering Claims that have been Allowed or Disallowed prior to the Confirmation Date;
|
d)
|
To determine any and all applications of Professionals and any other fees and expenses authorized to be paid or reimbursed in accordance with the Bankruptcy Code or the Plan;
|
e)
|
To determine any and all pending applications for the assumption or rejection of executory contracts, or for the assumption and assignment of unexpired leases to which the Debtors are a party or with respect to which the Debtors may be liable, and to hear and determine and, if necessary, liquidate any and all Claims arising therefrom;
|
f)
|
To hear and determine any and all actions initiated by the Liquidating Trustee to collect, realize upon, reduce to judgment or otherwise liquidate any Claim, to the extent that such Claim was property of the Estates prior to the Effective Date;
|
g)
|
To determine any and all applications, motions, adversary proceedings and contested or litigated matters whether pending before the Bankruptcy Court on the Confirmation Date or filed or instituted after the Confirmation Date, including, without limitation, proceedings under the Bankruptcy Code or other applicable law seeking to avoid and recover any transfer of an interest of the Debtors in property or of obligations incurred by the Debtors, or to exercise any rights pursuant to Sections 506, 544-551, and 553 of the Bankruptcy Code;
|
h)
|
To modify the Plan, or to remedy any defect or omission or reconcile any inconsistency in any order of the Bankruptcy Court (including the Confirmation Order), the Plan, or the Disclosure Statement in such manner as may be necessary to carry out the purposes and effects of the Plan;
|
i)
|
To determine disputes regarding title of the property of the Estates claimed to be property of the Estates or of the Debtors, but not as to title to real property acquired after the Effective Date;
|
j)
|
To ensure that the distributions to Holders of Claims are accomplished in accordance with the provisions of the Plan and the Liquidating Trust Agreement;
|
k)
|
To liquidate or estimate any undetermined Claim or Equity Interest;
|
l)
|
To enter such orders as may be necessary to consummate and effectuate the operative provisions of the Plan, including actions to enjoin enforcement of Claims inconsistent with the terms of the Plan;
|
m)
|
To hear and determine disputes concerning any event of default or alleged event of default under the Plan, as well as disputes concerning remedies upon any event of default, including but not limited to determination of the commercial
|
n)
|
To hear any other matter not inconsistent with Chapter 11 of the Bankruptcy Code;
|
o)
|
To enter a final decree closing the Chapter 11 Cases;
|
p)
|
To enter and implement such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked or vacated; and
|
q)
|
To determine such other matters as may arise in connection with the Plan, the Disclosure Statement, or the Confirmation Order.
|
10.2
|
If the Bankruptcy Court abstains from exercising or declines to exercise jurisdiction, or is otherwise without jurisdiction, over any matter arising out of the Chapter 11 Cases, this post-confirmation jurisdiction section shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.
|
Respectfully submitted,
|
|
QUADRANT 4 SYSTEM |
THE OFFICIAL COMMITTEE OF
|
CORPORATION and STRATITUDE, |
UNSECURED CREDITORS
|
INC.
|
|
By: /s/ Erich S. Buck | By: /s/ Michael A. Brandess |
One of their attorneys
|
One of their attorneys
|
Chad H. Gettleman, Esq. (ARDC #944858)
|
Mark S. Melickian, Esq. (ARDC #6229843)
|
Erich S. Buck, Esq. (ARDC #6274635)
|
Michael A. Brandess, Esq. (ARDC #6299158)
|
Nicholas R. Dwayne, Esq. (ARDC | SUGAR FELSENTHAL GRAIS & HELSINGER LLP |
#6308927)
|
30 N. LaSalle St., Ste. 3000
|
ADELMAN & GETTLEMAN, LTD.
|
Chicago, Illinois 60602
|
53 W. Jackson Blvd., Ste. 1050
|
Telephone: 312.704.9400
|
Chicago, Illinois 60604
|
Facsimile: 312.372.7951
|
Telephone: 312.435.1050 |
|
Facsimile: 312.435.1059
|
Counsel to the Official Committee of
Unsecured Creditors
|
Counsel to the Debtors
|
In re
|
Chapter 11 |
|
|
QUADRANT 4 SYSTEM
CORPORATION, et al.1
|
Case No. 17-19689
|
(Jointly administered)
|
|
Debtors. | Honorable Jack B. Schmetterer |
Chad H. Gettleman, Esq. (ARDC #944858)
|
Mark S. Melickian, Esq. (ARDC #6229843)
|
Erich S. Buck, Esq. (ARDC #6274635)
|
Michael A. Brandess, Esq. (ARDC #6299158)
|
Nicholas R. Dwayne, Esq. (ARDC | SUGAR FELSENTHAL GRAIS & HELSINGER LLP |
#6308927)
|
30 N. LaSalle St., Ste. 3000
|
ADELMAN & GETTLEMAN, LTD.
|
Chicago, Illinois 60602
|
53 W. Jackson Blvd., Ste. 1050
|
Telephone: 312.704.9400
|
Chicago, Illinois 60604
|
Facsimile: 312.372.7951
|
Telephone: 312.435.1050 |
|
Facsimile: 312.435.1059
|
Counsel to the Official Committee of
Unsecured Creditors
|
Counsel to the Debtors
|
1
|
The Debtors in these jointly-administered Chapter 11 cases are Quadrant 4 Systems Corporation and Stratitude, Inc.
|
A.
|
On June 29, 2017 (the “Q4 Petition Date”), Quadrant Four System Corporation (“Q4”) filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, commencing its Chapter 11 case. Since the Q4 Petition Date, Q4 has remained in possession of its assets and has continued to operate its businesses as a debtor in possession in accordance with Sections 1107(a) and 1108 of the Bankruptcy Code.
|
B.
|
On October 13, 2017 (the “Stratitude Petition Date”), Stratitude, Inc. (“Stratitude”) a wholly-owned subsidiary of Q4, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, commencing its own Chapter 11 case. Since the Stratitude Petition Date, Stratitude has remained in possession of its assets and has continued to operate its businesses as a debtor in possession in accordance with Sections 1107(a) and 1108 of the Bankruptcy Code.
|
C.
|
On October 19, 2017, this Court entered an order holding that the Q4 and Stratitude Chapter 11 cases would be jointly administered for procedural purposes only with the Q4’s Chapter 11 case serving as the lead case [Dkt. No. 192].
|
D.
|
The Office of the United States Trustee (the “U.S. Trustee”) appointed the Committee on July 6, 2017 [Dkt. No. 49]. The U.S. Trustee filed an amended notice of appointment on October 24, 2017 [Dkt. No. 195], to reflect the addition of a creditor of the Stratitude bankruptcy estate. The Committee is made up of the following unsecured creditors:
|
2
|
Capitalized terms not defined in this Liquidating Trust Agreement shall have the meanings ascribed to them in the Plan.
|
Member
|
Maksim Saitskiy
|
FisherBroyles, LLP
|
Micah Winkelspecht
|
Varnar Inc.
|
E.
|
The Plan Documents provide for the creation of a liquidating trust (the “Liquidating Trust”) for the benefit of creditors entitled to distribution under the Plan (each a “Beneficiary,” and collectively referred to as the “Beneficiaries”), and for the assignment of assets of the bankruptcy estates upon the Effective Date to the Liquidating Trust for administration by the Liquidating Trustee. Except as otherwise provided in the Plan, the Liquidating Trust Assets include all Assets of the Estates, including but not limited to: (a) all Cash held by the Debtors or Debtors’ Professionals in escrow on behalf of the Debtors or their Estates; (b) all Cash to which the Committee is entitled under the Stipulation; (c) recoveries from all Causes of Action which may lie in favor of one or both of the Debtors; and (d) such other sources of funds which may exist as determined by the Liquidating Trustee.
|
F.
|
The Plan Documents provide that the Liquidating Trustee shall be appointed as of the Effective Date and shall administer the Liquidating Trust Assets.
|
G.
|
The powers, authority, responsibilities, and duties of the Liquidating Trustee are governed by this Liquidating Trust Agreement, the Plan, applicable orders issued by the Bankruptcy Court (including the Confirmation Order), and general fiduciary obligations of trustees under Illinois law.
|
H.
|
This Liquidating Trust Agreement is intended to supplement and complement the Plan and the Confirmation Order, provided, however, that if any term or provision of this Liquidating Trust Agreement conflicts with the terms or provisions of the Plan or Confirmation Order, Confirmation Order and the Plan shall govern, in that order.
|
I.
|
The Liquidating Trust is intended to qualify as a “liquidating trust” under the Internal Revenue Code of 1986 and the regulations promulgated thereunder, specifically Treasury Regulation § 301.7701-4(d), and any comparable provisions of state or local law, and as such is a “grantor trust” for federal income tax purposes, with the Beneficiaries treated as the grantors and owners of the Liquidating Trust Assets. In particular:
|
(1)
|
The Liquidating Trust is organized for the primary purpose of liquidating the Liquidating Trust Assets, with no objective to conduct a trade or business except to the extent reasonably necessary to, and consistent with,
|
(2)
|
The Beneficiaries of the Liquidating Trust will be treated as the grantors of the Liquidating Trust and deemed-owners of the Liquidating Trust Assets. This Liquidating Trust Agreement requires the Liquidating Trustee to file returns for the Liquidating Trust as a grantor trust under Treas. Reg. § 1.671-4(a);
|
(3)
|
This Liquidating Trust Agreement provides for consistent valuations of the transferred property by the Liquidating Trustee and the Beneficiaries, and those valuations shall be used for federal income tax purposes;
|
(4)
|
All of the Liquidating Trust’s income is to be treated as subject to tax on a current basis to the Beneficiaries, who will be responsible for payment of any tax due;
|
(5)
|
The investment powers of the Liquidating Trustee, other than those reasonably necessary to maintain the value of the Liquidating Trust Assets and to further the liquidating purpose of the Liquidating Trust, are limited to powers to invest in: demand and time deposits such as short-term certificates of deposit; banks or other savings institutions; or other temporary, liquid investments, such as treasury bills; and
|
(6)
|
The Liquidating Trustee is authorized to take any action necessary to maintain compliance with Treas. Reg. § 301.7701-4(d), or his successor, that does not contradict the terms of the Plan Documents.
|
1.1
|
Establishment of & Name of Liquidating Trust
|
1.2
|
Purpose of the Liquidating Trust
|
1.3
|
Transfer of Assets to the Liquidating Trust
|
1.3.1
|
As provided for in the Plan, the Debtors and their Estates have transferred, assigned, and delivered to the Liquidating Trust, on behalf of the Beneficiaries, all of their rights, title, and interests in the Liquidating Trust Assets, notwithstanding any prohibitions against assignment under applicable nonbankruptcy law. The Liquidating Trust agrees to accept and hold the Liquidating Trust Assets for the benefit of the Beneficiaries, subject to the terms of the Plan Documents.
|
1.3.2
|
To the extent any of the Debtors’ assets cannot be transferred to the Liquidating Trust because of a restriction on transferability under applicable nonbankruptcy law that is not superseded by § 1123 or any other provision of the Bankruptcy Code, such assets shall be retained by the Debtors (the “Retained Assets”). The proceeds of any Retained Assets shall be paid to the Liquidating Trust. The Parties do not believe that any such Retained Assets exist.
|
1.3.3
|
All rights associated with the vesting and transfer of the Liquidating Trust Assets, including the Causes of Action, will vest with the Liquidating Trust, including by not limited to: attorney-client privileges; work-product protections; and other privileges or immunities attaching to any documents or communications of the Debtors’ or the Committee’s professionals (whether written or oral).
|
1.3.4
|
All bank accounts established by the Debtors will be transferred to and held in the Liquidating Trust on behalf of the Beneficiaries, subject to the provisions of the Plan and this Liquidating Trust Agreement. The Parties, including the Debtors’ counsel, Adelman & Gettleman Ltd., are further authorized to take all necessary actions to effectuate the transfer, assignment, and delivery of assets to the Liquidating Trust.
|
1.4
|
Title to Assets
|
1.4.1
|
Notwithstanding any prohibition of assignability under applicable nonbankruptcy law, all assets and properties transferred to the Liquidating Trust pursuant to the Plan shall vest in the Liquidating Trust according to § 1141 of the Bankruptcy
|
1.4.2
|
For federal income tax purposes, all parties (including the Debtors, the Liquidating Trustee, and the Beneficiaries) shall treat the transfer of the Liquidating Trust Assets from the Debtors and their Estates to the Liquidating Trust as a transfer of such assets by the Debtors and their Estates to the Holders of Allowed Claims entitled to distributions under the Plan and Confirmation Order, followed by a transfer by such Holders to the Liquidating Trust. Thus, the Beneficiaries shall be treated as the grantors and owners of a grantor trust for federal income tax purposes.
|
1.4.3
|
To any extent not effectuated by the Confirmation Order, the Debtors and the Committee shall execute and deliver, or cause the execution and delivery of, all documents (in recordable form where necessary or appropriate), and the Debtors and the Committee shall take, or cause, any further action as may reasonably be necessary or appropriate to vest, perfect in, or confirm to the Liquidating Trust title to and possession of the Liquidating Trust Assets.
|
1.5
|
Valuation of Assets
|
1.6
|
Claims Against the Liquidating Trust Assets
|
3.1
|
Generally
|
3.2
|
Scope of Authority
|
(a)
|
collect and liquidate the Liquidating Trust Assets, and distribute the Liquidating Trust Assets to the Beneficiaries according to the Plan Documents;
|
(b)
|
have the right to appear and be heard on matters brought before the Bankruptcy Court or other courts of competent jurisdiction;
|
(c)
|
have the right to obtain records of, or related to, the Debtors (including bank statements and cancelled checks);
|
(d)
|
be entitled to participate in all matters brought before the Bankruptcy Court, including adversary proceedings;
|
(e)
|
have exclusive standing (including derivative standing to pursue Causes of Action on behalf of the Debtors) to commence Causes of Action;
|
(f)
|
be entitled to request the Bankruptcy Court to enter a final decree closing the Cases;
|
(g)
|
be entitled to receive notice of all applications, motions and other papers and pleadings set before the Bankruptcy Court in this Cases;
|
(h)
|
facilitate the prosecution or settlement of objections to, or estimations of Claims according to, but subject to the limitations set forth in, the Plan;
|
(i)
|
analyze, prosecute and settle Causes of Action;
|
(j)
|
file all required tax returns, and paying any taxes or other obligations on behalf of the Debtors and the Liquidating Trust from funds held by the Liquidating Trust;
|
(k)
|
provide periodic reports to the Bankruptcy Court and other parties in interest regarding the status of the Claims resolution process, prosecution of Causes of Action, distributions to Beneficiaries, and the financial status of the Liquidating Trust;
|
(l)
|
seek the substantive consolidation of two or more of the Debtors; and (m)carry out any other responsibilities not specifically set forth in this
|
3.3
|
Court Approvals
|
a)
|
The sale or liquidation of an estate asset for a Cash amount equal to or greater than $100,000;
|
b)
|
The settlement of a Cause of Action for which damages of $250,000 or more had been sought;
|
c)
|
The allowance of a Disputed Claim in an Allowed Amount equal to or greater than $250,000; and
|
d)
|
The granting of a release of any Insider entered into on behalf of the Debtors’ estates.
|
3.4
|
Consultation with BIP
|
3.5
|
Fiduciary Obligations to the Liquidating Trust & Beneficiaries
|
3.6
|
Liquidating Trustee Powers & General Authority
|
(a)
|
hold legal title (on behalf of the Liquidating Trust as Liquidating Trustee, but not individually) to the Liquidating Trust Assets;
|
(b)
|
effect all actions and execute all agreements, instruments and other documents necessary to implement the Plan;
|
(c)
|
protect and enforce the rights to the Liquidating Trust Assets vested in the Liquidating Trust by the Plan and the Confirmation Order by any method deemed appropriate, including by judicial proceedings or under any applicable bankruptcy, insolvency, moratorium or similar law, and general principles of equity;
|
(d)
|
invest funds (as described at Section 3.9 of this Liquidating Trust Agreement), make distributions, and pay taxes and other obligations owed by the Liquidating Trust from funds held by the Liquidating Trustee or the Liquidating Trust according to the Plan and Confirmation Order;
|
(e)
|
prosecute, defend, compromise, adjust, arbitrate, abandon or otherwise deal with and settle, according to the terms of the Plan Documents, all actions arising under state law or the Bankruptcy Code, including Avoidance Actions arising under or relating to Chapter 5 of the Bankruptcy Code and all other Causes of Action;
|
(f)
|
determine, compromise and satisfy any liabilities created, incurred, or assumed by the Liquidating Trust;
|
(g)
|
file, if necessary, any and all Tax and information returns with respect to the Debtors (from the Petition Date through the effective date of the Liquidating Trust) and the Liquidating Trust and pay Taxes properly payable by the Liquidating Trust and the Debtors, if any, commensurate with the Liquidating Trust’s classification as a grantor trust pursuant to Treas. Reg. § 1.671-4(a) with respect to Taxes, if any, due from the Liquidating Trust;
|
(h)
|
withhold all necessary taxes, and make tax elections on behalf of the Liquidating Trust;
|
(i)
|
exercise discretion regarding the preparation and transmittal of annual, individualized statements for the Beneficiaries, stating each Beneficiary’s share of income, gains, losses, deductions, or credits, and instruct the Beneficiaries to report such items on their federal tax returns;
|
(j)
|
maintain a register, relying on the Claims List (defined below) provided by the Debtors, evidencing the beneficial interest held by each Beneficiary in the Liquidating Trust as part of the Liquidating Trustee’s books and records;
|
(k)
|
administer, reconcile, compromise, estimate, or resolve Claims according to the provisions and limitations of the Plan (including filing objections to Claims where appropriate);
|
(l)
|
establish reserves for Disputed Claims, taxes, assessments, Professional fees, and other expenses necessary for the proper operation of matters incidental to properly administering the Liquidating Trust;
|
(m)
|
make distributions called for under the Plan Documents;
|
(n)
|
open and maintain bank accounts on the Liquidating Trust’s behalf, or in its name;
|
(o)
|
pay expenses and make disbursements necessary to preserve, liquidate, and enhance the Liquidating Trust Assets;
|
(p)
|
purchase insurance coverage the Liquidating Trustee deems necessary with respect to the liabilities and obligations of the Liquidating Trustee (in the form of an errors and omissions policy, fiduciary policy or otherwise);
|
(q)
|
purchase insurance coverage the Liquidating Trustee deems necessary with respect to real and personal property, which may be or become Liquidating Trust Assets;
|
(r)
|
retain and pay Professionals and Non-Professionals as provided for in Article 10.1 of this Liquidating Trust Agreement to assist the Liquidating Trust or the Liquidating Trustee with respect to his responsibilities to the extent permitted by the Plan Documents;
|
(s)
|
take actions necessary to close or dismiss the Cases;
|
(t)
|
take actions necessary to terminate the existence of the Debtors, to the extent not already effectuated by the Plan;
|
(u)
|
terminate and dissolve the Liquidating Trust according to the terms of the Plan and this Liquidating Trust Agreement;
|
(v)
|
assume any other powers that may be vested in, or assumed by, the Liquidating Trust under the Plan or by an order of the Bankruptcy Court, or that may be necessary to properly carry out the provisions of the Plan Documents;
|
(w)
|
withhold from the amount distributable to any person or entity, amounts sufficient to pay any tax or other charges which the Liquidating Trustee determines, based upon advice of his agents and professionals, may be required to be withheld under applicable income tax laws of the United States, or any state or local government body; and
|
(x)
|
take any and all actions authorized or required by the Plan Documents.
|
3.7
|
Limits to Liquidating Trustee’s Authority; No Ongoing Business
|
3.7.1
|
The Liquidating Trustee’s authority is limited to the provisions of the Plan Documents. For federal tax purposes, the Liquidating Trustee does not have authority to engage in any trade or business with respect to the Liquidating Trust Assets, except to the extent reasonably necessary to, and consistent with, the liquidating purpose of the Liquidating Trust.
|
3.7.2
|
The Liquidating Trustee shall take such actions consistent with the prompt orderly liquidation of the Liquidating Trust Assets as required by applicable law and consistent with the treatment of the Liquidating Trust as a liquidating trust under Treas. Reg. § 301.7701-4(d), to the extent such actions are permitted by this Liquidating Trust Agreement.
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3.8
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Other Activities of the Liquidating Trustee
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3.9
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Investment & Safekeeping of Liquidating Trust Assets
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3.9.1
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Until distributed or paid-over as provided by this Liquidating Trust Agreement, all monies and other assets received by the Liquidating Trust shall be held in trust for the benefit of the Beneficiaries, but need not be segregated from other Liquidating Trust Assets.
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3.9.2
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The Liquidating Trustee shall promptly invest any such monies in the manner set forth herein, but shall otherwise be under no liability for interest or income on any monies received by the Liquidating Trust and held for distribution or payment to the Beneficiaries, except as such interest is actually received by the Liquidating Trustee.
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3.9.3
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Investment of any monies held by the Liquidating Trust shall be administered according to the Liquidating Trustee’s general duties and obligations, and in view of the Liquidating Trustee’s general fiduciary duties under Illinois law. The rights and powers of the Liquidating Trustee to invest the Liquidating Trust Assets transferred to the Liquidating Trust, the proceeds of those assets, or any income earned by the Liquidating Trust, shall be limited to the right and power to:
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(a)
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invest such Liquidating Trust Assets (pending distributions according to the Plan and the Confirmation Order) in (i) short-term direct obligations of, or obligations guaranteed by, the United States of America; or (ii) short-term obligations of any agency or corporation which is or may hereafter be created by or pursuant to an act of the Congress of the United States as an agency or instrumentality thereof; or
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(b)
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deposit such assets in demand accounts at any bank or trust company, which has, at the time of the deposit, a capital stock and surplus (collectively, the “Permissible Investments”); provided, however, that the scope of any Permissible Investments shall be limited to only those investments that a liquidating trust, within the meaning of Treas. Reg. § 301.7701-4(d), is permitted to hold, pursuant to the Treasury Regulations, or any modification in the Internal Revenue Service (“IRS”) guidelines, whether set forth in IRS rulings, other IRS pronouncements or otherwise.
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3.10
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Authority to Expend Liquidating Trust Assets
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(a)
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satisfy and discharge liabilities and to maintain the value of the Liquidating Trust Assets during liquidation;
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(b)
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pay Liquidating Trust Expenses (including taxes imposed on the Liquidating Trust, and fees and expenses related to litigation or compensation of the Liquidating Trustee according to Section 4.1 below);
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(c)
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satisfy other liabilities incurred or assumed by the Liquidating Trust (or to which the Liquidating Trust Assets are otherwise subject) according to the Plan Documents; and
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(d)
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make distributions to Beneficiaries on account of their Allowed Claims according to the Plan Documents.
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3.11
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Substantive Consolidation
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3.11.1
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The Liquidating Trustee shall have the authority to seek substantive consolidation of the Debtors at any time following the Effective Date upon motion to the Bankruptcy Court, pursuant to the terms of the Plan, the Confirmation Order and this Liquidating Trust Agreement.
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3.11.2
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Upon the Bankruptcy Court’s approval of the substantive consolidation of two or more of the Debtors, the Liquidating Trustee will file a notice with the Bankruptcy Court (the “Substantive Consolidation Notice”) and serve the Substantive Consolidation Notice on all parties who have requested service in the Cases.
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4.1
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Compensation
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4.1.1
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Subject to Section 10.2, the Liquidating Trustee may receive reasonable compensation for services rendered on behalf of the Liquidating Trust, including reasonable compensation for preparing this Liquidating Trust Agreement. All compensation and other amounts payable to the Liquidating Trustee shall be paid from the Liquidating Trust Assets by the Liquidating Trustee upon receipt of periodic billings.
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4.1.2
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The Liquidating Trust shall reimburse the Liquidating Trustee for his actual reasonable out-of-pocket expenses incurred, including any expenses or liabilities
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4.1.3
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The majority of work performed on behalf of the Liquidating Trust shall be performed by the Professionals employed by the Liquidating Trustee, who shall be compensated by the Liquidating Trust following the Liquidating Trustee’s review of such fees and expenses as set forth in Article 10.1 of this Liquidating Trust Agreement.
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4.2
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Term of Service
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(a)
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completion of all the Liquidating Trustee’s duties, responsibilities, and obligations under the Plan Documents;
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(b)
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termination of the Liquidating Trust under this Liquidating Trust Agreement; or
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(c)
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the Liquidating Trustee’s resignation or removal.
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4.3
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No Bond
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4.4
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Removal
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4.4.1
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The Liquidating Trustee may be removed for cause at any time by any person upon entry of an order of the Bankruptcy Court following notice and a motion for removal served upon the Liquidating Trustee (and his Professionals); provided, however, that the Liquidating Trustee may not be removed until a successor Liquidating Trustee has been named. Any person seeking removal of the Liquidating Trustee through an order of the Bankruptcy Court must demonstrate to the Bankruptcy Court that such removal is appropriate for cause. The removal shall be effective on the date specified in the order granting such a motion.
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4.4.2
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“Cause” shall include, but not be limited to: (a) the undue prolongation of the duration of the Liquidating Trust and of distributions of the Liquidating Trust Assets to the Beneficiaries; (b) gross negligence, fraud or willful misconduct (as determined by a Final Order) in connection with the affairs of the Liquidating Trust; (c) a physical or mental disability that substantially prevents the
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4.5
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Resignation
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4.6
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Appointment of Successor Trustee
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4.6.1
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In the event the Liquidating Trustee resigns, the Liquidating Trustee shall designate a successor Liquidating Trustee acceptable to the Bankruptcy Court to be appointed by motion before the Bankruptcy Court, within fifteen (15) days before the proposed effective date of his resignation.
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4.6.2
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In the event the Liquidating Trustee is removed, any beneficiary may petition the Bankruptcy Court to appoint a proposed successor Liquidating Trustee within thirty (30) days after the occurrence of the Liquidating Trustee’s removal.
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4.6.3
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If the Liquidating Trustee or any Beneficiary fails to appoint a successor Liquidating Trustee within the prescribed periods, then the Bankruptcy Court may independently appoint a successor Liquidating Trustee.
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4.6.4
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Any successor Liquidating Trustee appointed under this Liquidating Trust Agreement shall execute an instrument accepting the appointment, which shall be submitted to the Bankruptcy Court. Upon submission of the written acceptance to the Bankruptcy Court, the successor Liquidating Trustee shall be vested with all of the properties, rights, powers, trusts and duties of its predecessor in the Liquidating Trust with like effect as if originally named the Liquidating Trustee under this Liquidating Trust Agreement; provided, however, that the removed or resigning Liquidating Trustee shall, nevertheless, when requested in writing by the successor Liquidating Trustee, execute and deliver any reasonable instrument or instruments conveying and transferring to the successor Liquidating Trustee the estate, properties, rights, powers and trusts of the removed or resigning Liquidating Trustee.
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4.7
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Liquidating Trust Continuance
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5.1
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Identification of Beneficiaries
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5.2
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Beneficial Interest Only
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5.3
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Ownership of Beneficial Interests in Liquidating Trust
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5.4
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Evidence of Beneficial Interests
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5.5
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Limits on Transferability
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5.5.1
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Beneficial interests in the Liquidating Trust shall be non-assignable during the term of this Liquidating Trust Agreement except by operation of law. An assignment by operation of law shall not be effective until appropriate notice and proof of such assignment is submitted to the Liquidating Trustee, and the Liquidating Trustee may continue to pay all amounts to or for the benefit of the assigning Beneficiary until it receives proper notice and proof of the assignment by operation of law. The Liquidating Trustee may rely upon such proof without the requirement of any further investigation.
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5.5.2
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Notice of a change of beneficial interest ownership as permitted by operation of law must be submitted to the Liquidating Trustee by registered or certified mail according to the notice provisions set forth in Section 13.10 of this Liquidating Trust Agreement. The notice shall be executed by both the transferee and the
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5.6
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Conflicting Claims
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6.1
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Timing and Methods of Distributions
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6.1.1
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Generally
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6.1.2
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Priority of Distributions
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6.1.3
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Distributions by the Liquidating Trustee
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6.1.4
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Withholdings from Distributions
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6.1.5
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Claims Lists
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6.2
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Delivering Distributions
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6.3
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No Post-Petition or Post-Confirmation Interest on Claims
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6.3.1
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Unless required by applicable bankruptcy law, or expressly allowed by the Plan or Confirmation Order, or any contract, instrument, release, settlement, or other agreement entered into in connection with the Plan, post-petition interest will not accrue on account of any Claim.
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6.3.2
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Post-Confirmation Date interest will similarly not accrue on account of any Claim.
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6.4
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Undeliverable and Lapsed Distributions
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6.4.1
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If any distribution is returned to the Liquidating Trustee as undeliverable without forwarding information, no further distributions will be made on the Claim at issue, unless the Liquidating Trustee is notified in writing of the appropriate address to submit the distribution. Upon receipt of a notice of appropriate address, the Liquidating Trustee will remit any missed distributions to the relevant party without interest.
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6.4.2
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The Liquidating Trustee is not required to attempt to locate any Holder of an Allowed Claim.
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6.4.3
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If a distribution on an Allowed Claim is returned to the Liquidating Trustee as undeliverable but includes specific forwarding information, the Liquidating Trustee shall attempt to make the distribution using the forwarding information provided.
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6.4.4
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Any unclaimed distributions that are not redistributed to remaining beneficiaries because such redistributions fall below the distribution threshold of $25 to individual beneficiaries, or remain uncashed for any other reason after ninety (90) days following such redistribution, may be, at the Liquidating Trustee’s option and net of costs, deposited with the Clerk or Court, or donated cy pres to an Illinois not for profit organization providing legal services to the underserved to be chosen by the Liquidating Trustee.
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6.5
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Compliance with Tax Requirements & Allocations
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6.6
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Fractional Dollars & De Minimis Distributions
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6.6.1
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Except as provided in this Liquidating Trust Agreement, payments of fractions of dollars will not be made. Whenever any payment of a fraction of a dollar under the Plan Documents would otherwise be called for, the actual payment made will reflect a rounding of such fraction to the nearest dollar (up or down), with half dollars being rounded down.
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6.6.2
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The Liquidating Trustee is not required to make any payment of less than $25.00 on account of any Allowed Claim. To the extent that any interim distribution is not paid to a Beneficiary on the grounds that it amounts to less than $25.00, the amount of the withheld distribution shall be reserved for addition to any future
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6.7
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Setoffs
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6.8
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Debtors’ Subordination Rights Preserved
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7.1
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Objections to Claims; Prosecuting Disputed Claims
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7.1.1
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The Liquidating Trustee may file objections to Claims, even if a Claim was scheduled by the Debtors as undisputed, liquidated, and non-contingent. The Liquidating Trustee has the authority to file, settle, compromise, or withdraw objections to Claims without approval of the Bankruptcy Court.
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7.1.2
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The Liquidating Trustee shall file objections to Claims before the latest of the following occurs:
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(a)
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October 13, 2018, subject to extension by order of the Bankruptcy Court;
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(b)
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45 days after a proof of claim is filed to document a Claim; or
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(c)
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the expiration of another period of limitation fixed by the Plan, Confirmation Order, the Bankruptcy Rules, or a Final Order of the Bankruptcy Court.
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7.1.3
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The dates set forth in Section 7.1.2 of this Liquidating Trust Agreement may be extended by the Bankruptcy Court.
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7.2
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Estimating Claims
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7.2.1
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The Liquidating Trustee may request that the Bankruptcy Court estimate any contingent or Disputed Claim under § 502(c) of the Bankruptcy Code, regardless of whether the Debtors, the Committee, or the Liquidating Trustee previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection.
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7.2.2
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The Bankruptcy Court will retain jurisdiction to estimate any Claim, at any time, during litigation concerning an objection to a Claim, including while an appeal relating to an objection is pending.
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7.2.3
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Subject to the provisions of § 502(j) of the Bankruptcy Code, in the event that the Bankruptcy Court estimates any contingent or Disputed Claim, the estimated amount shall constitute the maximum allowed amount of the Claim. If the estimated amount constitutes a maximum limitation on the amount of the Claim, the Liquidating Trust may pursue supplementary proceedings to object to the allowance of the Claim.
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7.2.4
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These procedures for objecting to, estimating, and resolving contingent or Disputed Claims are intended to be cumulative and not exclusive of one another. Claims may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
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7.3
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Disputed Claims
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7.3.1
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If the Liquidating Trustee has objected to a Claim, or alternatively, if a Claim Holder is subject to an Avoidance Action in which the Liquidating Trustee has sought to disallow the Claim under § 502(d) of the Bankruptcy Code, distributions on the Claim will be withheld, limited to the amount actually in dispute. An objection shall not affect payments or distributions under the Plan on the undisputed portion of the Claim.
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7.3.2
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The Liquidating Trustee shall maintain one or more Disputed Claims Reserve called for under the Plan Documents.
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7.3.3
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Once a Disputed Claim becomes an Allowed Claim under a Final Order entered by the Bankruptcy Court, the Liquidating Trustee shall, as soon as practicable, make a distribution from the respective Disputed Claims Reserve to the Holder of the Allowed Claim in the amount allowed, as if the Claim were an Allowed Claim on the Confirmation Date, less the Holder’s share of any taxes paid or payable from a Disputed Claims Reserve.
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7.3.4
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If a Disputed Claim is disallowed, in whole or part, the Liquidating Trustee shall reallocate the amounts held in the Disputed Claims Reserve corresponding to the disallowed portion of the Disputed Claim among the Beneficiaries and the Disputed Claims Reserve on behalf of remaining, unresolved, Disputed Claims, as applicable, to be distributed under Article 7.3.3 of this Liquidating Trust Agreement.
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8.1
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Standard of Liability & Sources of Recovery
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8.1.1
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Neither the Liquidating Trustee nor any of his present and former affiliates, employees, advisors, attorneys or agents acting in such capacity or any of their successors or assigns, shall have or incur any liability to, or be subject to any right of action by, any person or entity, for any act or omission in connection with, relating to or arising out of, the Cases, the pursuit of confirmation of the Plan or the Plan’s implementation, except for their fraud, willful misconduct or gross negligence, and in all respects shall be entitled to rely reasonably upon the advice of counsel with respect to their duties and responsibilities under the Plan.
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8.1.2
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The Liquidating Trust, the Liquidating Trustee, or their respective Professionals, Non-Professionals, or other representatives may be held personally liable to the extent that the action taken or omitted to be taken by each of the same or their respective Professionals, Non-Professionals or representatives is determined by a Final Order to be solely due to their own gross negligence, willful misconduct, fraud, or breach of fiduciary duty. Any act or abstention performed with the approval of the Bankruptcy Court or undertaken pursuant to the advice of counsel will be conclusively deemed not to constitute fraud or a breach of fiduciary duty.
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8.1.3
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Any Person dealing with the Liquidating Trustee shall look only to the Liquidating Trust Assets to satisfy any liability incurred by the Liquidating Trustee in carrying out the terms of this Liquidating Trust Agreement, and the Liquidating Trustee shall have no personal obligation to satisfy any such liability, unless a Final Order is entered finding the Liquidating Trustee’s actions after the Effective Date were solely due to the Liquidating Trustee’s own fraud or breach of fiduciary duty.
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8.2
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Reliance by Liquidating Trustee
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8.3
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Indemnification
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8.4
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Insurance
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9.1
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Books & Records
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9.1.1
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The Liquidating Trustee shall maintain books and records relating to the Liquidating Trust’s assets; income; expense disbursements; liabilities; and claims made against or assumed by the Liquidating Trust in such detail and for such period of time as the Liquidating Trustee determines necessary to make a full and proper accounting for the Liquidating Trust, and to comply with applicable provisions of law.
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9.1.2
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The Liquidating Trust is not required to file any accounting or seek approval of any court with respect to the administration of the Liquidating Trust, or as a condition for making any payment or distribution out of the Liquidating Trust Assets.
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9.1.3
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Subject to applicable privileges, the Beneficiaries may request a reasonable inspection (as determined by the Liquidating Trustee) of the Liquidating Trust
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9.1.4
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Before inspecting the Liquidating Trust books and records, the requesting Beneficiary must first enter into a confidentiality agreement satisfactory in form and substance to the Liquidating Trustee; make such other reasonable arrangements for the inspection as requested by the Liquidating Trustee; and bear all costs and expenses associated with the inspection.
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9.2
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Semi-Annual Reports
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(a)
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a description of all distributions to Beneficiaries during the period covered by the Semi-Annual Report;
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(b)
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a summary of the Liquidating Trust deposits and disbursements during the period covered by such Semi-Annual Report; and
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(c)
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a summary of the Liquidating Trust Assets.
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9.3
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Legal Compliance
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10.1
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Retaining Professionals & Non-Professionals
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(a)
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Retaining Professionals
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(b)
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Retaining Non-Professionals
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10.2
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Compensation for Professionals & Non-Professionals
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11.1
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Tax Returns & Payments
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(a)
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preparing and timely filing all required federal, state, and local tax returns for the Liquidating Trust and the Debtors;
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(b)
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paying any taxes shown on such returns as owing by the Liquidating Trust or the Debtors (as applicable) from applicable Liquidating Trust Assets; and
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(c)
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preparing and distributing any necessary federal, state, or local information returns to the Beneficiaries.
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11.2
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Liquidating Trust
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11.3
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Disputed Claims Reserve
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11.4
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Tax Withholding & Reporting; Liability for Taxes
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12.1
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Duration & Extension
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12.2
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Termination Upon Distribution of All Liquidating Trust Assets
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(a)
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payment of all costs, expenses, and obligations incurred in connection with administering the Liquidating Trust;
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(b)
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distribution of all remaining Liquidating Trust Assets;
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(c)
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closure or dismissal of the Cases; and
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(d)
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completion of any necessary or appropriate reports, tax returns or other documentation determined necessary by the Liquidating Trustee, in his reasonable discretion.
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12.3
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Diligent Administration
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12.4
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Notice of Termination; Authority to Conclude Trust Administration; Retention of Documents
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13.1
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Privilege Preserved
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13.2
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Cooperation with the Liquidating Trustee
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13.3
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Statutory Fees
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13.4
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Prevailing Party
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13.5
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Liquidating Trustee’s Implied Authority
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13.6
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Confidentiality
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(a)
|
is, or becomes, generally available to the public other than by a disclosure made by a Confidential Party;
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(b)
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was available to the Confidential Parties on a non-confidential basis before its disclosure to the Confidential Parties under this Liquidating Trust Agreement;
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(c)
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becomes available to the Confidential Parties on a non-confidential basis from a source other than their work in connection with the Debtors or the Liquidating Trust, provided that the source is not also bound by a confidentiality agreement with the Debtors or the Liquidating Trust; or
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(d)
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must be disclosed by the Confidential Parties because of a legal process including a subpoena or other court order, or other applicable laws or regulations.
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13.7
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Governing Law; Submission to Jurisdiction; Service of Process
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13.8
|
Severability of Provisions
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13.9
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Notices
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13.10
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Notices to Beneficiaries
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13.11
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Headings Used for Convenience Only
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13.12
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Counterparts & Electronic Signatures
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13.13
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Amendment or Waiver
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13.14
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Intervention
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Sheldon Stone, solely in his capacity as |
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Liquidating Trustee for the Quadrant 4
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Liquidating Trust |
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By:
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Its:
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|
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Quadrant 4 System Corporation |
Stratitude, Inc.
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|
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By:
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By:
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Its:
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Its:
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