20-10161-jlg doc 538 filed 07/03/20 entered 07/03/20 22:02 ... · 10.6(a) of the plan (the...

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- x : In re : Chapter 11 : FAIRWAY GROUP HOLDINGS CORP., et al., : Case No. 20-10161 (JLG) : Debtors.1 : (Jointly Administered) : --------------------------------------------------------------- x

DISCLOSURE STATEMENT FOR JOINT CHAPTER 11 PLAN OF FAIRWAY GROUP HOLDINGS CORP. AND ITS AFFILIATED DEBTORS

WEIL, GOTSHAL & MANGES LLP Ray C. Schrock, P.C. Sunny Singh 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for Debtors and Debtors in Possession

Dated: July 3, 2020 New York, New York

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Fairway Group Holdings Corp. (2788); Fairway Group Acquisition Company (2860); Fairway Bakery LLC (4129); Fairway Broadway LLC (8591); Fairway Chelsea LLC (0288); Fairway Construction Group, LLC (2741); Fairway Douglaston LLC (2650); Fairway East 86th Street LLC (3822); Fairway eCommerce LLC (3081); Fairway Georgetowne LLC (9609); Fairway Greenwich Street LLC (6422); Fairway Group Central Services LLC (7843); Fairway Group Plainview LLC (8643); Fairway Hudson Yards LLC (9331); Fairway Kips Bay LLC (0791); FN Store LLC (9240); Fairway Paramus LLC (3338); Fairway Pelham LLC (3119); Fairway Pelham Wines & Spirits LLC (3141); Fairway Red Hook LLC (8813); Fairway Stamford LLC (0738); Fairway Stamford Wines & Spirits LLC (3021); Fairway Staten Island LLC (1732); Fairway Uptown LLC (8719); Fairway Westbury LLC (6240); and Fairway Woodland Park LLC (9544). The location of the Debtors’ corporate headquarters is 2284 12th Avenue, New York, New York 10027. Fairway Community Foundation Inc., a charitable organization, owned by Fairway Group Holdings Corp., is not a debtor in these proceedings.

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THIS IS NOT A SOLICITATION OF VOTES OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THE DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEEN APPROVED BY THE BANKRUPTCY COURT.

DISCLOSURE STATEMENT, DATED July 3, 2020

Solicitation of Votes on the Chapter 11 Plan of

FAIRWAY GROUP HOLDINGS CORP., ET AL.

THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 4:00 P.M., EASTERN TIME, ON SEPTEMBER 14, 2020 UNLESS EXTENDED BY THE DEBTORS. THE RECORD DATE FOR DETERMINING WHICH HOLDERS OF CLAIMS OR INTERESTS MAY VOTE ON THE PLAN IS AUGUST 10, 2020 (THE “RECORD DATE”).

RECOMMENDATION BY THE DEBTORS AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

It is the Debtors’ opinion that confirmation and implementation of the Plan is in the best interests of the Debtors’ estates and creditors. Therefore, the Debtors recommend that all creditors whose votes are being solicited submit a ballot to accept the Plan. Holders of over 91% of the Prepetition Loan Claims have already agreed to vote in favor of the Plan. The Official Committee of Unsecured Creditors has negotiated the Plan with the Debtors and other parties in interest and also supports confirmation of the Plan and recommends that all creditors entitled to vote submit a ballot to accept the Plan.

A HEARING TO CONSIDER CONFIRMATION OF THE PLAN (THE “CONFIRMATION HEARING”) WILL BE HELD BEFORE THE HONORABLE JAMES L. GARRITY, JR., UNITED STATES BANKRUPTCY JUDGE, IN COURTROOM 601 OF THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ONE BOWLING GREEN, NEW YORK, NEW YORK 10004 ON SEPTEMBER 29, 2020 AT 11:00 A.M. (EASTERN TIME), OR AS SOON THEREAFTER AS COUNSEL MAY BE HEARD. THE BANKRUPTCY COURT HAS DIRECTED THAT ANY OBJECTIONS TO CONFIRMATION OF THE PLAN BE SERVED AND FILED ON OR BEFORE SEPTEMBER 14, 2020 AT 4:00 P.M. (EASTERN TIME).

PLEASE READ THIS DISCLOSURE STATEMENT, INCLUDING THE PLAN, IN ITS ENTIRETY. A COPY OF THE PLAN IS ANNEXED HERETO AS EXHIBIT A. THE DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN, BUT SUCH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE ACTUAL PROVISIONS OF THE PLAN. ACCORDINGLY, IF THERE ARE ANY INCONSISTENCIES BETWEEN THE PLAN AND THIS DISCLOSURE STATEMENT, THE TERMS OF THE PLAN SHALL CONTROL.


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HOLDERS OF CLAIMS SHOULD NOT CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE AND SHOULD CONSULT WITH THEIR OWN ADVISORS BEFORE CASTING A VOTE WITH RESPECT TO THE PLAN. THE ISSUANCE AND THE DISTRIBUTION UNDER THE PLAN OF THE NEW COMMON STOCK SHALL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND ANY OTHER APPLICABLE SECURITIES LAWS PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE.

THE AVAILABILITY OF THE EXEMPTION UNDER SECTION 1145 OF THE BANKRUPTCY CODE OR ANY OTHER APPLICABLE SECURITIES LAWS SHALL NOT BE A CONDITION TO THE OCCURRENCE OF THE EFFECTIVE DATE.

THE NEW COMMON STOCK TO BE ISSUED ON THE EFFECTIVE DATE HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL, OR REGULATORY AUTHORITY, AND NEITHER THE SEC NOR ANY SUCH AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF THE PLAN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

CERTAIN STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, INCLUDING STATEMENTS INCORPORATED BY REFERENCE, PROJECTED FINANCIAL INFORMATION, AND OTHER FORWARD-LOOKING STATEMENTS, ARE BASED ON ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES. FORWARD-LOOKING STATEMENTS ARE PROVIDED IN THIS DISCLOSURE STATEMENT PURSUANT TO THE SAFE HARBOR ESTABLISHED UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND SHOULD BE EVALUATED IN THE CONTEXT OF THE ESTIMATES, ASSUMPTIONS, UNCERTAINTIES, AND RISKS DESCRIBED HEREIN.

READERS ARE CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS HEREIN ARE BASED ON ASSUMPTIONS THAT ARE BELIEVED TO BE REASONABLE, BUT ARE SUBJECT TO A WIDE RANGE OF RISKS IDENTIFIED IN THIS DISCLOSURE STATEMENT. DUE TO THESE UNCERTAINTIES, READERS CANNOT BE ASSURED THAT ANY FORWARD-LOOKING STATEMENTS WILL PROVE TO BE CORRECT. THE DEBTORS ARE UNDER NO OBLIGATION TO (AND EXPRESSLY DISCLAIM ANY OBLIGATION TO) UPDATE OR ALTER ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE, UNLESS INSTRUCTED TO DO SO BY THE BANKRUPTCY COURT.

NO INDEPENDENT AUDITOR OR ACCOUNTANT HAS REVIEWED OR APPROVED THE LIQUIDATION ANALYSIS HEREIN.

THE DEBTORS HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR ADVICE, OR TO MAKE ANY REPRESENTATION, IN CONNECTION WITH THE PLAN OR THIS DISCLOSURE STATEMENT.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. THE TERMS OF THE PLAN


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GOVERN IN THE EVENT OF ANY INCONSISTENCY WITH THIS DISCLOSURE STATEMENT.

THE INFORMATION IN THIS DISCLOSURE STATEMENT IS BEING PROVIDED SOLELY FOR PURPOSES OF VOTING TO ACCEPT OR REJECT THE PLAN OR OBJECTING TO CONFIRMATION. NOTHING IN THIS DISCLOSURE STATEMENT MAY BE USED BY ANY PARTY FOR ANY OTHER PURPOSE.

ALL EXHIBITS TO THE DISCLOSURE STATEMENT ARE INCORPORATED INTO AND ARE A PART OF THIS DISCLOSURE STATEMENT AS IF SET FORTH IN FULL HEREIN.


Table of Contents Page

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I. INTRODUCTION ..................................................................................................................................... 1

A. Background and Overview of the Plan ............................................................................... 1

B. Summary of Plan Classification and Treatment of Claims ................................................. 4

C. Summary of Plan Release and Exculpation Provisions .................................................... 12

D. Disclosure Statement Enclosures ...................................................................................... 13

E. Inquiries ............................................................................................................................ 13

II. OVERVIEW OF DEBTORS’ OPERATIONS ...................................................................................... 14

A. Debtors’ Business ............................................................................................................. 14

B. Debtors’ Organizational Structure .................................................................................... 15

C. Directors and Officers ....................................................................................................... 15

D. Debtors’ Capital Structure ................................................................................................ 15

1. Prepetition Indebtedness ...................................................................................... 15

2. Equity Ownership ................................................................................................ 18

III. KEY EVENTS LEADING TO COMMENCEMENT OF CHAPTER 11 CASES .............................. 18

A. The 2016 Cases ................................................................................................................. 18

B. The 2018 Rescue Financing .............................................................................................. 19

C. Competitive Industry ........................................................................................................ 19

D. Liquidity Constraints ........................................................................................................ 20

E. Inability to Make Capital Investments .............................................................................. 20

F. Labor and Pension Costs ................................................................................................... 20

G. Prepetition Sale Process .................................................................................................... 21

H. Restructuring Support Agreement .................................................................................... 21

IV. OVERVIEW OF THE CHAPTER 11 CASES ..................................................................................... 22

A. Commencement of Chapter 11 Cases ............................................................................... 22

B. First Day Motions ............................................................................................................. 22

C. Appointment of the Creditors’ Committee ....................................................................... 22

D. Debtor-in-Possession Financing ....................................................................................... 23

E. Bar Date ............................................................................................................................ 24

F. Exclusivity ........................................................................................................................ 25

G. Sale Strategy and Bidding Procedures .............................................................................. 25

H. Lease Rejection Procedures .............................................................................................. 26

I. Store Closing Sales ........................................................................................................... 26

J. Employee Compensation Matters ..................................................................................... 27

K. UFCW Settlement ............................................................................................................. 27


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L. Global Settlement ............................................................................................................. 28

V. SUMMARY OF PLAN ......................................................................................................................... 29

A. Administrative Expense and Priority Claims .................................................................... 30

1. Administrative Expense Claims ........................................................................... 30

2. Fee Claims ........................................................................................................... 30

3. Priority Tax Claims .............................................................................................. 31

4. DIP Claims. .......................................................................................................... 31

5. Restructuring Expenses ........................................................................................ 31

B. Classification of Claims and Interests ............................................................................... 32

1. Classification in General ...................................................................................... 32

2. Grouping of Debtors for Convenience Only ........................................................ 32

3. Summary of Classification ................................................................................... 32

4. Special Provision Governing Unimpaired Claims ............................................... 33

5. Elimination of Vacant Classes ............................................................................. 33

6. Voting Classes; Presumed Acceptance by Non-Voting Classes .......................... 33

7. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code ................................................................................................. 33

C. Treatment of Claims and Interests. ................................................................................... 33

1. Priority Non-Tax Claims (Class 1) ...................................................................... 33

2. Other Secured Claims (Class 2) ........................................................................... 34

3. Senior First Out Term Loan Claims (Class 3) ..................................................... 34

4. Senior Last Out Term Loan Claims (Class 4) ...................................................... 35

5. Holdco Loan Claims (Class 5) ............................................................................. 35

6. General Unsecured Claims (Class 6) ................................................................... 36

7. Intercompany Claims (Class 7) ............................................................................ 36

8. Intercompany Interests (Class 8) ......................................................................... 36

9. Parent Equity Interests (Class 9) .......................................................................... 37

10. Subordinated Securities Claims (Class 10) .......................................................... 37

D. Means For Implementation. .............................................................................................. 38

1. No Substantive Consolidation ............................................................................. 38

2. Incorporation of UFCW Settlement ..................................................................... 38

3. Compromise and Settlement of Claims, Interests, and Controversies ................. 38

4. Sources of Consideration for Plan Distributions ................................................. 40

5. Reorganized Equity Plan Election Notice ............................................................ 40

6. Reorganization Transaction ................................................................................. 40

7. Wind Down and Dissolution of the Debtors ........................................................ 41

8. Employee Matters ................................................................................................ 43

9. Effectuating Documents; Further Transactions ................................................... 43

10. Securities Law Exemptions ................................................................................. 44

11. Cancellation of Existing Securities and Agreements ........................................... 44


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12. Cancellation of Liens ........................................................................................... 45

13. Subordination Agreements .................................................................................. 46

14. Nonconsensual Confirmation .............................................................................. 46

15. Closing of Chapter 11 Cases ................................................................................ 46

16. Notice of Effective Date ...................................................................................... 46

17. Separability .......................................................................................................... 46

18. GUC Recovery Trust ........................................................................................... 46

E. Distributions. ..................................................................................................................... 49

1. Distributions Generally ........................................................................................ 49

2. Distribution Record Date ..................................................................................... 49

3. Date of Distributions ............................................................................................ 50

4. Disbursing Agent ................................................................................................. 50

5. Rights and Powers of Disbursing Agent .............................................................. 50

6. Expenses of Disbursing Agent ............................................................................. 51

7. No Postpetition Interest on Claims ...................................................................... 51

8. Delivery of Distributions ..................................................................................... 51

9. Distributions after Effective Date ........................................................................ 52

10. Unclaimed Property ............................................................................................. 52

11. Time Bar to Cash Payments ................................................................................. 52

12. Manner of Payment under Plan ........................................................................... 52

13. Satisfaction of Claims .......................................................................................... 52

14. Minimum Cash Distributions ............................................................................... 52

15. Setoffs and Recoupments ..................................................................................... 53

16. Allocation of Distributions between Principal and Interest ................................. 53

17. No Distribution in Excess of Amount of Allowed Claim .................................... 53

18. Distributions Free and Clear ................................................................................ 53

19. Withholding and Reporting Requirements .......................................................... 53

F. Procedures For Disputed Claims ...................................................................................... 54

1. Objections to Claims ............................................................................................ 54

2. Resolution of Disputed Administrative Expenses and Disputed Claims ............. 54

3. Payments and Distributions with Respect to Disputed Claims ............................ 55

4. Distributions after Allowance .............................................................................. 55

5. Disallowance of Claims ....................................................................................... 55

6. Estimation of Claims ........................................................................................... 55

7. No Distributions Pending Allowance .................................................................. 55

8. Claim Resolution Procedures Cumulative ........................................................... 55

9. Interest ................................................................................................................. 56

10. Insured Claims ..................................................................................................... 56

G. Executory Contracts and Unexpired Leases ..................................................................... 56

1. General Treatment ............................................................................................... 56

2. Determination of Assumption Disputes and Deemed Consent ............................ 56


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3. Rejection Damages Claims .................................................................................. 58

4. Insurance Policies ................................................................................................ 58

5. Intellectual Property Licenses and Agreements ................................................... 58

6. Tax Agreements ................................................................................................... 59

7. Assignment .......................................................................................................... 59

8. Modifications, Amendments, Supplements, Restatements, or Other Agreements .......................................................................................................... 59

9. Reservation of Rights ........................................................................................... 59

H. Conditions Precedent To Confirmation of Plan and Effective Date ................................. 60

1. Conditions Precedent to Confirmation of Plan .................................................... 60

2. Conditions Precedent to Effective Date ............................................................... 60

3. Waiver of Conditions Precedent .......................................................................... 61

4. Effect of Failure of a Condition ........................................................................... 62

I. Effect of Confirmation of Plan ......................................................................................... 62

1. Vesting of Assets ................................................................................................. 62

2. Binding Effect ...................................................................................................... 62

3. Discharge of Claims and Termination of Interests .............................................. 62

4. Term of Injunctions or Stays ............................................................................... 63

5. Injunction ............................................................................................................. 63

6. Releases ............................................................................................................... 64

7. Exculpation .......................................................................................................... 65

8. Subordinated Claims ............................................................................................ 66

9. Retention of Causes of Action/Reservation of Rights ......................................... 66

10. Solicitation of Plan............................................................................................... 66

11. Corporate and Limited Liability Company Action .............................................. 67

J. Retention of Jurisdiction ................................................................................................... 67

1. Retention of Jurisdiction ...................................................................................... 67

2. Courts of Competent Jurisdiction ........................................................................ 69

K. Miscellaneous Provisions ................................................................................................. 69

1. Payment of Statutory Fees ................................................................................... 69

2. Substantial Consummation of the Plan ................................................................ 69

3. Plan Supplement .................................................................................................. 69

4. Request for Expedited Determination of Taxes ................................................... 69

5. Exemption from Certain Transfer Taxes ............................................................. 70

6. Amendments ........................................................................................................ 70

7. Effectuating Documents and Further Transactions .............................................. 70

8. Revocation or Withdrawal of Plan ....................................................................... 71

9. Dissolution of Creditors’ Committee ................................................................... 71

10. Severability of Plan Provisions ............................................................................ 71

11. Governing Law .................................................................................................... 71

12. Time ..................................................................................................................... 72


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13. Dates of Actions to Implement the Plan .............................................................. 72

14. Immediate Binding Effect .................................................................................... 72

15. Deemed Acts ........................................................................................................ 72

16. Successor and Assigns ......................................................................................... 72

17. Entire Agreement ................................................................................................. 72

18. Exhibits to Plan .................................................................................................... 72

19. Notices ................................................................................................................. 72

VI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF PLAN .............................................. 73

A. Certain U.S. Federal Income Tax Consequences to the Debtors ...................................... 74

1. Asset Dispositions................................................................................................ 75

2. Cancellation of Debt and Reduction of Tax Attributes ........................................ 75

3. Transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust, and of the Wind Down Co Assets to Wind Down Co ......................................... 77

B. Consequences for Holders of Claims ................................................................................ 78

1. Holders of Claims ................................................................................................ 78

2. Distributions in Discharge of Accrued OID or Interest ....................................... 81

3. Character of Gain or Loss .................................................................................... 81

C. Tax Treatment of the GUC Recovery Trust and Holders of Beneficial Interests ............. 82

1. Classification of the GUC Recovery Trust as a Liquidating Trust ...................... 82

2. General Tax Reporting by the GUC Recovery Trust and Holders of General Unsecured Claims Receiving the GUC Recovery Trust Interests .......... 82

3. Tax Reporting for the GUC Recovery Trust Assets Allocable to Disputed Claims .................................................................................................................. 84

D. Information Reporting and Back-Up Withholding ........................................................... 84

VII. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL SECURITIES LAWS ............................................................................................................................................ 85

VIII. CERTAIN RISK FACTORS TO BE CONSIDERED ....................................................................... 86

A. Certain Bankruptcy Law Considerations .......................................................................... 86

1. Risk of Non-Confirmation of Plan ....................................................................... 86

2. Risk of Failing to Satisfy the Vote Requirement ................................................. 86

3. Non-Consensual Confirmation ............................................................................ 86

4. Risk Related to Parties in Interest Objecting to the Debtors’ Classification of Claims and Interests.................................................................. 86

5. Risks Related to Possible Objections to the Plan ................................................. 87

6. Releases, Injunctions, and Exculpation Provisions May Not Be Approved ........ 87

7. Risk of Non-Occurrence of Effective Date .......................................................... 87

8. Risk of Termination of Restructuring Support Agreement .................................. 87

9. Risk of Conversion into Chapter 7 Cases ............................................................ 87

B. Additional Factors Affecting the Value of Reorganized Debtors ..................................... 87


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1. Claims Could Be More Than Projected ............................................................... 87

2. Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary .............................................................................. 88

C. Risks Relating to the Debtors’ Business and Financial Condition ................................... 88

1. DIP Facility and Use of Cash Collateral .............................................................. 88

D. Risks Related to Unreleased Avoidance Actions .............................................................. 88

E. Additional Factors ............................................................................................................. 88

1. Debtors Could Withdraw Plan ............................................................................. 88

2. Debtors Have No Duty to Update ........................................................................ 88

3. No Representations Outside this Disclosure Statement Are Authorized ............. 89

4. No Legal or Tax Advice Is Provided by this Disclosure Statement .................... 89

5. No Admission Made ............................................................................................ 89

6. Certain Tax Consequences ................................................................................... 89

IX. VOTING PROCEDURES AND REQUIREMENTS ........................................................................... 89

A. Voting Instructions and Voting Deadline ......................................................................... 89

B. Parties Entitled to Vote ..................................................................................................... 90

C. Agreements Upon Furnishing Ballots ............................................................................... 91

D. Change of Vote ................................................................................................................. 91

E. Waivers of Defects, Irregularities, etc. ............................................................................. 91

F. Miscellaneous ................................................................................................................... 92

G. Further Information, Additional Copies ........................................................................... 92

X. CONFIRMATION OF PLAN................................................................................................................ 93

A. Confirmation Hearing ....................................................................................................... 93

B. Objections to Confirmation .............................................................................................. 93

C. Requirements for Confirmation of Plan ............................................................................ 94

1. Requirements of Section 1129(a) of the Bankruptcy Code ................................. 94

2. The Estate Releases, Third-Party Releases, and Exculpation Provisions ............ 97

XI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN ................... 100

A. Alternative Chapter 11 Plan ............................................................................................ 100

B. Liquidation Under Chapter 7 or Applicable Non-Bankruptcy Law ................................ 100

XII. CONCLUSION AND RECOMMENDATION ................................................................................ 100

EXHIBIT A: Plan

EXHIBIT B: Organizational Structure

EXHIBIT C: Liquidation Analysis


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I. INTRODUCTION

A. Background and Overview of the Plan2

This is the disclosure statement (the “Disclosure Statement”) of Fairway Group Holdings Corp. (“Holdings”) and its debtor affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (each a “Debtor”, collectively, the “Debtors” and, together with their non-debtor affiliate, “Fairway”) pending in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Disclosure Statement has been filed pursuant to section 1125 of the Bankruptcy Code in connection with the solicitation of votes on the Chapter 11 Plan of Fairway Group Holdings Corp. and Its Affiliated Debtors, dated July 3, 2020 (the “Plan”), a copy of which is annexed to this Disclosure Statement as Exhibit A.3

The Debtors commenced these chapter 11 cases to implement a strategic asset sale strategy (the “Sale Strategy”) to maximize recoveries for all creditors and preserve as many jobs as possible. To that end, on January 23, 2020, the Debtors filed the Motion of Debtors for Entry of Orders (I)(A) Approving Bidding Procedures for Sales of Debtors’ Assets, (B) Approving Stalking Horse Bid Protections, (C) Authorizing Designation of Additional Stalking Horse Bidders, (D) Scheduling Auctions for and Hearings to Approve Sales of Debtors’ Assets, (E) Approving Form and Manner of Notice of Sales, Auctions, And Sale Hearings, (F) Approving Assumption And Assignment Procedures And Form And Manner of Notice of Assumption and Assignment, and (G) Granting Related Relief; and (II)(A) Authorizing Sale of Debtors’ Assets Free and Clear of Liens, Claims, Interests, and Encumbrances, (B) Authorizing Assumption and Assignment of Executory Contracts and Unexpired Leases, and (C) Granting Related Relief (the “Bidding Procedures Motion”) (ECF No. 21), and commenced a postpetition sale and marketing process for substantially all of the Debtors’ assets (the “Assets”). On February, 21, 2020, the Bankruptcy Court entered an order approving the relief requested in the Bidding Procedures Motion (ECF No. 202) (the “Bidding Procedures Order”), including auction and sale procedures for the sale of the Assets (the “Bidding Procedures”).

As described more fully herein, the Debtors successfully conducted a robust marketing process, followed by a nine-day global auction (the “Global Auction”) for the sale of the Assets, which commenced on March 16, 2020. On March 25, 2020, the Debtors announced in the Notice Of Successful Bidders At Global Auction (ECF No. 378) the following three (3) Successful Bids (as defined in the Bidding Procedures) for an aggregate purchase price of approximately $82.5 million: (i) a going concern sale of five (5) stores, the lease for the parking lot at the Debtors’ Harlem location, and the Debtors’ 240,000 square foot production and distribution center (the “PDC”) and related assets to Village Super Market, Inc. (“Village” or the “Stalking Horse Bidder”) for a purchase price of approximately $76 million (the “Village Sale Transaction”), (ii) a going concern sale of the Debtors’ Georgetowne store to Seven Seas Georgetowne, LLC (“Key Food”) for a purchase price of approximately $5 million (the “Key Food Sale Transaction”), and (iii) a sale of the store leases relating to the Debtors’ Paramus and Woodland Park stores to Amazon Retail, LLC for a purchase price of $1.5 million (the “Amazon Sale Transaction,” and together with the Village Sale Transaction and the Key Food Sale Transaction, the “Sale Transactions”). 2 This overview is qualified in its entirety by reference to the Plan. The treatment of Claims and Interests (as defined in the Plan) under the Plan is not intended to, and will not, waive, compromise, or limit any rights, claims or causes of action if the Plan is not confirmed. You should read the Plan in its entirety before voting to accept or reject the Plan.

3 Capitalized terms used in this Disclosure Statement, but not defined herein, have the meanings ascribed to them in the Plan. To the extent any inconsistencies exist between this Disclosure Statement and the Plan, the Plan shall govern.


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On April 20, 2020 the Bankruptcy Court entered orders approving the Village Sale Transaction (ECF No. 449) (the “Village Sale Order”), the Key Food Sale Transaction (ECF No. 448) (the “Key Food Sale Order”), and the Amazon Sale Transaction (ECF No. 445) (the “Amazon Sale Order”). On May 1, 2020, the Debtors and Key Food closed the Key Food Sale Transaction. On May 13, 2020, the Debtors and Village concluded the closing of the Village Sale Transaction. On July 2, 2020, the Debtors closed the Amazon Sale Transaction.

The final phase in these chapter 11 cases is the confirmation and consummation of the Plan, pursuant to which the Debtors will distribute the cash proceeds from the sale of their assets (the “Sale Proceeds”) to creditors generally in accordance with the absolute priority rule and section 1129 of the Bankruptcy Code, including full payment of any outstanding DIP Claims (unless the Plan Sponsor (as defined below) voluntarily elects to convert such DIP Claims into an exit facility and/or exchange all or a portion of its outstanding DIP Claims for the New Common Stock (the “DIP Conversion Election”), as defined below). As part of the Global Settlement among the Debtors, the Creditors’ Committee, the UFCW Parties and the Ad Hoc Group, $1.5 million will be contributed to a general unsecured recovery trust for the benefit of Allowed General Unsecured Claims.

In addition, on or before August 15, 2020 (the “Reorganized Equity Plan Election Date”), Special Situations Investing Group, Inc. (the “Plan Sponsor”) may make the Reorganized Equity Plan Election, pursuant to which certain of the Debtors (including Holdings) will pursue the Reorganization Transaction and reorganize around certain of the Debtors’ liquor licenses, inventory and related wine business (the “Reorganized Assets”), in exchange for the Plan Sponsor forfeiting the Reallocated Amount, which proceeds will be distributed on a Pro Rata basis to the other Senior First Out Term Loan Claimholders (other than Plan Sponsor). If the Plan Sponsor does not make the Reorganized Equity Plan Election, the Reorganization Transaction will not be implemented, and the Reorganized Assets will be liquidated and distributed to Claimholders in accordance with the Plan. Specifically, the Plan provides for the following treatment of Claims and Interests:

Holders of Senior First Out Term Loan Claims (Class 3), Senior Last Out Term Loan Claims (Class 4), and Holdco Loan Claims (Class 5) will receive their respective shares of the Net Cash Proceeds on a Pro Rata basis after directly senior Claims are satisfied in full.

If the Plan Sponsor makes the Reorganized Equity Plan Election by the Reorganized Equity Plan Election Date, the Plan Sponsor will receive 100% of the New Common Stock of Reorganized Holdings, and in exchange, the first $2.75 million of the Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to the Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than the Plan Sponsor) on a Pro Rata basis (excluding the Claims held by the Plan Sponsor from the denominator for purposes of such calculation); provided that if the Reallocated Amount is less than $2.75 million, the Cash payable by the Debtors to satisfy DIP Claims in cash in full on the Effective Date in an amount equal to the difference between $2.75 million and the Reallocated Amount (such amount, the “Reallocation Amount Shortfall”) shall be distributed to the holders of Allowed Senior First Out Term Loan Claims (other than the Plan Sponsor) in an amount equal to the Reallocation Amount Shortfall; provided further that if the Debtors do not have sufficient cash on hand to make or reserve for distributions to holders of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Allowed Other Secured Claims on the Effective Date in accordance with the terms of the Plan (such amount, the “Plan Confirmation Shortfall”), the Plan Sponsor shall be entitled to make a DIP Conversion Election in an amount necessary to cover such Plan


3 WEIL:\97306037\17\44444.0008

Confirmation Shortfall, and the amount of such Plan Confirmation Shortfall shall reduce, on a dollar-for-dollar basis, the Reallocation Amount Shortfall.

If the Plan Sponsor does not make the Reorganized Equity Plan Election by the Reorganized Equity Plan Election Date, the Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to the Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims in an amount equal to the difference between $2.75 million and the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets (to the extent the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets is less than $2.75 million) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by the Plan Sponsor from the denominator for purposes of such calculation).

The GUC Recovery Trust Amount and the Unreleased Avoidance Actions (each as defined below) will be contributed to a recovery trust (the “GUC Recovery Trust”) for the exclusive benefit of Allowed General Unsecured Claims and proceeds thereof will be available for all holders of Allowed General Unsecured Claims to share on a Pro Rata basis. Holders of Allowed General Unsecured Claims will also be released of any preference or avoidance claims of the Debtors if such holders vote to accept the Plan or do not opt of the releases in Section 10.6(b) of the Plan.

The DIP Claims, to the extent any DIP Obligations remain unpaid and the DIP Documents have not been terminated, will be paid in full in Cash or converted on a dollar-for-dollar basis, into the Reorganized Debtors Exit Facility or New Common Stock in the sole discretion of the Plan Sponsor.

All Administrative Expense Claims, Priority Tax Claims, Priority Non-Tax Claims, Other Secured Claims, and Intercompany Interests are unimpaired by the Plan.

If the Reorganized Equity Plan Election is made, all Parent Equity Interests shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force or effect, whether surrendered for cancellation or not. If the Reorganization Transaction is not implemented, all holders of Parent Equity Interests will receive the entitlement to receive their share of any assets of the Wind Down Estates remaining after all Allowed Claims have been satisfied in full in accordance with the Bankruptcy Code and the Plan, consistent with such holders’ rights of payment existing immediately prior to the Commencement Date.

In advance of the chapter 11 filing, the Debtors approached an ad hoc group of the Debtors’ prepetition lenders represented by King & Spalding LLP holding over 91% of all outstanding obligations of the Debtors under the Prepetition Credit Agreement (as defined in the First Day Declarations) (and in excess of 66.67% of each tranche of debt thereunder) (the “Ad Hoc Group”) regarding the need to file for chapter 11 protection. These discussions culminated in that certain restructuring support agreement, dated as of January 22, 2020, by and among the Debtors and the Consenting Creditors (as amended, supplemented, or modified from time to time in accordance with the terms thereof) annexed to the Porter First Day Declaration as Exhibit B (the “RSA”). The Ad Hoc Group has played a critical role throughout these chapter 11 cases. In support of the Debtors’ chapter 11 filing, the Ad Hoc Group agreed to provide the Debtors with an up to $25 million debtor-in-possession new money credit facility (the “DIP Facility”). As described in further detail at Section IV.D below, the DIP Facility, together with the consensual use of cash collateral, has provided the Debtors with liquidity to implement the Sale Strategy in an orderly and value-maximizing manner. In addition, the Ad Hoc Group was actively involved in the analysis conducted in connection with the Sale Strategy and in the Debtors’ labor negotiations during these chapter 11 cases.


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As described in further detail at Section IV.D below, on June 5, 2020, the Debtors paid down the $20 million New Money DIP Loans to the DIP Agent (both defined herein) for distribution to the DIP Lenders, and on June 30, 2020, the Debtors paid down $40.3 million of the Roll-Up DIP Loans to the DIP Agent for distribution to the DIP Lenders pursuant to the DIP Stipulation (defined below). Pursuant to the DIP Stipulation, $3 million was held back and placed in a segregated account to reserve cash for the payment of 503(b)(9) Claims (defined below), strictly conditioned on consummation of the Plan.

Throughout the sale process, both leading up to and during the Global Auction, the Debtors and the Ad Hoc Group constructively engaged with the UFCW Parties (defined below) and the Official Committee of Unsecured Creditors (the “Creditors’ Committee”) ultimately culminating in a global settlement with the UFCW Parties (the “UFCW Settlement”) and a proposed compromise and settlement of all chapter 11 plan issues by and among the Debtors, the UFCW Parties, the Creditors’ Committee, and the Consenting Creditors (the “Global Settlement”). The UFCW Settlement provides that so long as the Plan is materially consistent with the terms of the Global Settlement, the UFCW Parties agree to support the Plan, will vote all of their claims in favor of the proposed Plan and will not opt out of any releases provided for in the Plan. On March 26, 2020, the Debtors filed a motion to approve the UFCW Settlement (ECF No. 382), and on April 17, 2020, the Bankruptcy Court entered an order approving the UFCW Settlement (ECF No. 443) (the “UFCW Settlement Order”). The UFCW Settlement is described in more detail herein at Section IV.K.

The Plan incorporates the Global Settlement, which settles all disputes and potential litigation of all Claims and controversies relating to the Debtors and the treatment of General Unsecured Claims. In particular, the Global Settlement provides for, among other things, (i) the establishment of the GUC Recovery Trust in accordance with Section 5.17 of the Plan, (ii) a one-time payment in cash by the Debtors in the aggregate amount of $1,500,000 (the “GUC Recovery Trust Amount”) as a carve out of the Prepetition Lenders’ Collateral to be transferred to the GUC Recovery Trust and contributed for the benefit of General Unsecured Claims, free and clear of all Liens, charges, Claims, encumbrances, and interests for the benefit of the holders of Allowed General Unsecured Claims, (iii) $150,000 (the “GUC Recovery Trust Administrative Contribution Amount”) to be transferred by the Debtors to the GUC Recovery Trust and contributed for the administration of the GUC Recovery Trust, including any advisor fees, (iv) the Creditors’ Committee Budget to be provided by the Debtors to the Creditors’ Committee in an amount not exceeding $175,000 per month incurred by the Creditors’ Committee’s advisors from April 1, 2020 through and including the Plan Effective Date, and (v) a commitment by the Creditors’ Committee not to object to or take any other action that is inconsistent with the Plan or approval of the Global Settlement. The Global Settlement is described in more detail herein at Section IV.K.

The Plan is the product of good-faith arm’s-length negotiations and is consistent with the objectives of chapter 11. Throughout these chapter 11 cases, the Debtors worked closely and in coordination with their key stakeholders, including the Ad Hoc Group and the Creditors’ Committee, both of which actively participated in the development and negotiation of the Plan and support confirmation of the Plan. The UFCW Parties have also committed to accept the Plan so long as the Plan is consistent with the UFCW Settlement.

B. Summary of Plan Classification and Treatment of Claims

WHO IS ENTITLED TO VOTE: Under the Bankruptcy Code, only holders of claims or interests in “impaired” Classes are entitled to vote on the Plan (unless, for reasons discussed in more detail below, such holders are deemed to reject the Plan pursuant to section 1126(g) of the Bankruptcy Code). Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” unless (i) the Plan leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder thereof or (ii) notwithstanding any legal right to an accelerated payment of such claim


5 WEIL:\97306037\17\44444.0008

or interest, the Plan, among other things, cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

THE PLAN PROVIDES THAT HOLDERS OF IMPAIRED CLAIMS WHO ABSTAIN FROM VOTING ON THE PLAN BUT DO NOT OPT OUT OF THE RELEASE PROVISIONS OF THE PLAN ARE DEEMED TO HAVE GRANTED THE RELEASES THEREIN.

Holders of Claims and Interests in the following Classes are being solicited under and are entitled to vote on the Plan:

Senior First Out Term Loan Claims

Senior Last Out Term Loan Claims

Holdco Loan Claims

General Unsecured Claims

The following table summarizes (i) the treatment of Claims and Interests under the Plan, (ii) which Classes are impaired by the Plan, (iii) which Classes are entitled to vote on the Plan, and (iv) the estimated recoveries for holders of Claims and Interests to the extent calculable. The table is qualified in its entirety by reference to the full text of the Plan. For a more detailed summary of the terms and provisions of the Plan, see Section V—Summary of the Plan, below. A detailed discussion of the analysis underlying the estimated recoveries, including the assumptions underlying such analysis, is set forth in the Liquidation Analysis attached hereto at Exhibit C.

Class Claim or Interest

Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan

Approx. Allowed Amount4

Approx. Percentage Recovery

1 Priority Non-Tax Claims

Except to the extent that a holder of an Allowed Priority Non-Tax Claim against the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction, settlement and release of such Allowed Priority Non-Tax Claim, at the sole option of the Debtors, Wind Down Co, or the Plan Administrator, as applicable: (i) each such holder shall receive payment in full in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days

Unimpaired No (Presumed to accept)

$0.7 million

100%

4 The amounts set forth herein are estimates primarily based on the Debtors’ books and records. Actual Allowed amounts will depend upon, among other things, final reconciliation and resolution of all Claims. Consequently, the actual Allowed Claim amounts may differ materially from these estimates.


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



after the date on which such Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as is reasonably practicable; or (ii) such holder shall receive such other treatment so as to render such holder’s Allowed Priority Non-Tax Claim Unimpaired.

2 Other Secured Claims

Except to the extent that a holder of an Allowed Other Secured Claim agrees to different treatment, on the later of the Effective Date and the date that is ten (10) Business Days after the date such Other Secured Claim becomes an Allowed Claim, or as soon thereafter as is reasonably practicable, each holder of an Allowed Other Secured Claim will receive, on account and in full satisfaction of such Allowed Claim, at the sole option of the Debtors, Wind Down Co, or the Plan Administrator, as applicable: (i) Cash in an amount equal to the Allowed amount of such Claim; (ii) return of the applicable collateral or the proceeds thereof in satisfaction of the Allowed amount of such Other Secured Claim; or (iii) such other treatment sufficient to render such holder’s Allowed Other Secured Claim Unimpaired.


$0.04 million

100%

3 Senior First Out Term

Loan Claims

Except to the extent that a holder of an Allowed Senior First Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior First Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds, until all Allowed Senior First Out Term Loan Claims are satisfied in full; provided that (A) upon the

Impaired Yes $76.5 million

6.8% - 12.7%


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



Reorganized Equity Plan Election, (i) the Reallocated Amount (defined below) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation); (ii) Plan Sponsor shall receive 100% of the New Common Stock; and (iii) the amount of Plan Sponsor’s share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims exceeding the Reallocated Amount shall be distributed to Plan Sponsor; provided that if the Reallocated Amount is less than $2.75 million, the Cash payable by the Debtors to satisfy DIP Claims in cash in full on the Effective Date in an amount equal to the difference between $2.75 million and the Reallocated Amount (such amount, the “Reallocation Amount Shortfall”) shall be distributed to the holders of Allowed Senior First Out Term Loan Claims (other than the Plan Sponsor) in an amount equal to the Reallocation Amount Shortfall; provided further that if the Debtors do not have sufficient cash on hand to make or reserve for distributions to holders of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Allowed Other Secured Claims on the Effective Date in accordance with the terms of the Plan (such amount, the “Plan Confirmation Shortfall”), the Plan Sponsor shall be entitled to make a DIP Conversion Election in an amount


8 WEIL:\97306037\17\44444.0008


Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



necessary to cover such Plan Confirmation Shortfall, and the amount of such Plan Confirmation Shortfall shall reduce, on a dollar-for-dollar basis, the Reallocated Amount Shortfall; and (B) if the Reorganized Equity Plan Election is not made, (i) Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims in an amount equal to the difference between $2.75 million and the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets (to the extent the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets is less than $2.75 million) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation).

4 Senior Last Out Term

Loan Claims

Except to the extent that a holder of an Allowed Senior Last Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior Last Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior First Out Term Loan Claims are satisfied in full in Cash, until all Allowed Senior Last Out


0%


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



Term Loan Claims are satisfied in full.

5 Holdco Loan Claims

Except to the extent that a holder of an Allowed Holdco Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Holdco Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior Last Out Term Loan Claims are satisfied in full in Cash, until all Allowed Holdco Loan Claims are satisfied in full.


0%

6 General Unsecured

Claims

Except to the extent that a holder of an Allowed General Unsecured Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed General Unsecured Claim, each such holder thereof shall receive (i) such holder’s Pro Rata share of (x) the GUC Recovery Trust Interests (entitling such holder to a Pro Rata share of the GUC Recovery Trust Net Assets in accordance with the GUC Recovery Trust Agreement); and (y) the Net Cash Proceeds after the Prepetition Loan Claims are satisfied in full in Cash, until all Allowed General Unsecured Claims are satisfied in full; and (ii) if such holder of an Allowed General Unsecured Claim satisfies the requirements to be a Released Avoidance Party, such holder shall be treated as a Released Avoidance Party. For the avoidance of doubt, a holder of a Prepetition Loan Deficiency Claim shall not receive

Impaired Yes $100 -145

million

1.0% -1.5%


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



distributions in accordance with Section 4.5(b) of the Plan and such claims are waived.

7 Intercompany Claims

On or after the Effective Date, all Intercompany Claims will be cancelled and not entitled to distribution or any recovery under the Plan.

Impaired No (Deemed to

reject)

N/A5 0%

8 Intercompany Interests

On or after the Effective Date, all Intercompany Interests shall be cancelled, reinstated or receive such other treatment as determined by the Debtors, or Wind Down Co, as applicable, and the Requisite Consenting Creditors, in their respective reasonable discretion; provided, that holders of Intercompany Interests shall not receive Cash on account of such Intercompany Interests


N/A 100%

9 Parent Equity Interests

If the Reorganized Equity Plan Election is made, all Parent Equity Interests shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force or effect, whether surrendered for cancellation or not. If the Reorganized Equity Plan Election is not made: On the Effective Date, all Parent Equity Interests shall be cancelled and Holdings Single Share (defined below) shall be issued to the Plan Administrator to hold in trust as custodian for the benefit of the former holders of Fairway Holdings common stock and preferred stock consistent with their former relative priority and economic entitlements. The Holdings Single Share shall be recorded on the books and records maintained by the Plan


reject)

$0 0%

5 “N/A” indicates that the amount cannot be calculated.


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



Administrator; Each former holder of a Parent Equity Interest (through their interest in the Holdings Single Share, as applicable) shall neither receive nor retain any property of the Estate or direct interest in property of the Estate on account of such Parent Equity Interest; provided, that in the event that all Allowed Claims have been satisfied in full in accordance with the Bankruptcy Code and the Plan, each former holder of a Parent Equity Interest may receive its share of any remaining assets of Fairway Holdings consistent with such holder’s rights of payment existing immediately prior to the Commencement Date. Unless otherwise determined by the Plan Administrator, on the date that Fairway Holdings’ Chapter 11 Case is closed in accordance with Section 5.15 of the Plan, the Holdings Single Share issued on the Effective Date shall be deemed cancelled and of no further force and effect; provided that such cancellation does not adversely impact the Debtors’ Estates; and the continuing rights of former holders of Parent Equity Interests (including through their interest in Holdings Single Share or otherwise) shall be nontransferable except by operation of law, or, subject to the Plan Administrator’s consent, for administrative transfers where the ultimate beneficiary has not changed.


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Treatment Impaired

or Unimpaired

Entitlement to

Vote on the Plan



10 Subordinated Securities

Claims

Holders of Subordinated Securities Claims shall not receive or retain any property under the Plan on account of such Subordinated Securities Claims. On the Effective Date, all Subordinated Securities Claims shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force and effect, whether surrendered for cancellation or otherwise.


reject)

$0 0%

C. Summary of Plan Release and Exculpation Provisions

The Plan provides for the release of the Released Parties (as defined below) and the exculpation of the Exculpated Parties (as defined below). The Debtors’ releases of the Released Parties pursuant to Section 10.6(a) of the Plan (the “Estate Releases”), the third-party releases of the Released Parties pursuant to Section 10.6(b) of the Plan (the “Third-Party Releases”), and the exculpation of the Exculpated Parties pursuant to Section 10.7 of the Plan are an integral part of the Plan and the Global Settlement.

With respect to Third-Party Releases, the “Releasing Parties” are collectively, the (i) the holders of Claims who vote to accept the Plan, (ii) the Consenting Creditors, (iii) the Released Avoidance Parties (iv) the Creditors’ Committee and each of its members in their capacity as such, (v) each of the Released Parties (other than the Debtors, Wind Down Estates, the GUC Recovery Trust, and the Reorganized Debtors), and, (vi) with respect to any Entity in the foregoing clauses (i) through (v), such Entity’s (x) predecessors, successors, and assigns (y) subsidiaries, affiliates, managed accounts or funds, managed or controlled by such Entity and (z) all Persons entitled to assert Claims through or on behalf of such Entities with respect to the matters for which the releasing entities are providing releases.

The “Released Parties” are collectively, and in each case, solely in their capacities as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the Wind Down Estates; (d) the Consenting Creditors; (e) the Prepetition Agent; (f) the DIP Credit Parties; (g) the Creditors’ Committee and each of its members in their capacity as such; (h) the GUC Recovery Trust; (i) Released Avoidance Parties; and (j) Related Parties for each of the foregoing.

The “Exculpated Parties” are collectively the: (a) Debtors; (b) Reorganized Debtors; (c) Plan Administrator; (d) Wind Down Estates; (e) Consenting Creditors; (f) Prepetition Agent; (g) DIP Credit Parties; (h) Creditors’ Committee and each of its members in their capacity as such; (i) GUC Recovery Trustee; (j) UFCW Parties and UFCW International; and (k) with respect to each of the foregoing Entities in clauses (a) through (k), all Related Parties who acted on their behalf in connection with the matters as to which exculpation is provided herein.

The Debtors believe that the Estate Releases satisfy the business judgment standard. In exchange for the material benefits they will receive through the Plan, the Debtors have determined to release the Released Parties. With respect to the limited Third-Party Releases, the Debtors believe that such releases are


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appropriate and may become binding in accordance with section 1141(a) of the Bankruptcy Code and applicable law. The Debtors believe that parties who abstain from voting and are given an opportunity to opt out of the Third-Party Releases but do not opt out may be deemed to consent to such releases under section 1141(a) of the Bankruptcy Code and applicable law. Such parties will also receive the benefit of a release by the Debtors of Avoidance Actions against them.

If the Court determines that any of the Third-Party Releases are not consensual, the Debtors will demonstrate at the Confirmation Hearing that the Released Parties are nevertheless entitled to such releases because the Released Parties have made substantial and valuable contributions to the Debtors’ restructuring through, among other things, efforts to negotiate and implement the Plan, which will maximize the value of the Debtors’ estates for the benefit of all economic parties in interest. In addition, each of the Exculpated Parties has made a substantial contribution to the Debtors’ reorganization efforts and played an integral role in working towards an expeditious resolution of these chapter 11 cases. The Debtors believe that the exculpation provisions are appropriately limited to the Exculpated Parties’ participation in these chapter 11 cases and have appropriate carve outs for liability resulting from gross negligence, willful misconduct, or intentional fraud. Accordingly, each of the Released Parties and the Exculpated Parties warrant the benefit of the release and exculpation provisions.

The Debtors believe that the release and exculpation provisions in the Plan are necessary and appropriate and meet the requisite legal standard promulgated by the United States Court of Appeals for the Second Circuit (the “Second Circuit”). Moreover, the Debtors will present evidence at the Confirmation Hearing to demonstrate the basis for and propriety of the release and exculpation provisions. Additional discussion regarding the Debtors’ justification for providing the releases and exculpations contained in Sections 10.6 and 10.7 of the Plan is provided in Section X.C.2 herein.

D. Disclosure Statement Enclosures

The following three enclosures accompany this Disclosure Statement:

1. Disclosure Statement Order. A copy of the Disclosure Statement Order (without exhibits), which, among other things, approves this Disclosure Statement, establishes procedures for voting on the Plan (the “Voting Procedures”), and schedules the Confirmation Hearing and the deadline for objecting to confirmation of the Plan.

2. Confirmation Hearing Notice. A copy of the notice of the Voting Deadline and, among other things, notice of the date, time, and place of the Confirmation Hearing and the deadline for filing objections to confirmation of the Plan (the “Confirmation Hearing Notice”).

3. Ballot. One or more Ballots (and return envelopes) for voting to accept or reject the Plan unless you are not entitled to vote because you are (a) not impaired under the Plan and are presumed to accept the Plan, (b) not receiving or retaining any property under the Plan and are deemed to reject the Plan, or (c) a holder of a Claim subject to an objection filed by the Debtors, which Claim is temporarily disallowed for voting purposes. See Section IX of this Disclosure Statement for an explanation of which parties are entitled to vote and a description of the Voting Procedures.

E. Inquiries

If you have any questions about the packet of materials you have received, please contact Omni Agent Solutions (“Omni”), the Debtors’ voting agent (the “Voting Agent”), at (866) 662-2295 (domestic toll-


14 WEIL:\97306037\17\44444.0008

free) or at [email protected]. Additional copies of this Disclosure Statement, the Plan, or the Plan Supplement are available upon written request made to the Voting Agent at the following address:

If by standard or overnight mail or hand delivery:

If by e-mail to:

Fairway Group Holdings Corp. Fairway Ballot Processing c/o Omni Agent Solutions 5955 De Soto Avenue, Suite 100 Woodland Hills, CA 91367

[email protected] with a reference to “Fairway – Balloting” in the subject line

Copies of this Disclosure Statement, which includes the Plan are also available on the Voting Agent’s website, https://cases.omniagentsolutions.com/fairway. PLEASE DO NOT DIRECT INQUIRIES TO THE BANKRUPTCY COURT.

II. OVERVIEW OF DEBTORS’ OPERATIONS

A. Debtors’ Business

Fairway is a food retailer offering customers a differentiated one-stop shopping experience “Like No Other Market.” Since beginning as a small neighborhood market in the 1930s, Fairway established itself as a leading food retailing destination in the Greater New York City metropolitan area. Fairway’s stores emphasize an extensive selection of fresh, natural, and organic products, prepared foods, and hard-to-find specialty and gourmet offerings, along with a full assortment of conventional groceries. At the time of its chapter 11 filing, Fairway operated fourteen (14) supermarkets across the New York, New Jersey and Connecticut tri-state area, including two with freestanding wine and liquor stores (the Stamford and Pelham locations) and two with in-store wine and liquor stores (the Woodland Park and Paramus locations). As of the Commencement Date, 83% of the Debtors’ employees (over 3,000 individuals) were represented by unions, including 2,303 employees represented by the United Food and Commercial Workers Local 1500 (the “UFCW Local 1500”), 127 employees represented by the United Food and Commercial Workers Local 1262 (the “UFCW Local 1262”), and 140 employees represented by the United Food and Commercial Workers Local 371 (the “UFCW Local 371,” and together with the UFCW Local 1500 and the UFCW Local 1262, the “UFCW Locals”, and the employee members of the UFCW Locals collectively, the “Union-Represented Employees”).

As of the Commencement Date, the Debtors were also party to four (4) collective bargaining agreements with the various bargaining units of the UFCW Locals (the “UFCW Local CBAs”), pursuant to which the Debtors were required to contribute to a multi-employer pension plan administered by a local United Food and Commercial Workers union that also covers collectively-bargained employees of certain unaffiliated entities (the “Pension Fund”). As of the Commencement Date, the Pension Fund covered all of the Debtors’ union-represented employees.

In the 52 weeks ending December 1, 2019, Fairway’s unaudited consolidated financial statements reflected total revenues of approximately $643.3 million and a net loss of approximately $65.8 million for the previous twelve month period and assets totaling approximately $158.9 million and liabilities totaling approximately $288.7 million.


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B. Debtors’ Organizational Structure

Holdings was founded in September 2006 as a Delaware corporation. Holdings’ address is 2284 12th Avenue, New York, New York 10027. Holdings is the sole owner of Fairway Group Acquisition Company (“Fairway Acquisition”), which was also formed in September 2006 as a Delaware corporation. A separate Delaware limited liability company houses each individual grocery store. Fairway Acquisition is the sole equity holder of each of these limited liability companies. Thus, all of the Debtors are direct or indirect subsidiaries of Holdings.

An organizational chart illustrating the corporate structure of the Debtors is annexed hereto as Exhibit B.

C. Directors and Officers

Holdings’ current board of directors is comprised of the following five (5) members, including two (2) independent directors:

Name Position Ken Martindale Chairman of the Board Errol Schweizer Director Tom Furphy Director Eugene Davis Director (independent) Neal Goldman Director (independent)

Fairway’s current senior management team is comprised of the following individuals:

Name Position Abel T. Porter Chief Executive Officer Brad Schneider Chief Financial Officer Maureen P. Page Senior Vice President—Finance Nathalie Augustin Senior Vice President—General Counsel

Prior to commencing these chapter 11 cases, Fairway took measures to ensure a seamless transition into chapter 11. First, Fairway appointed a new independent director to its Board of Directors (the “Board”): Neal P. Goldman, Managing Member of SAGE Capital Investments. Fairway now has two independent directors, Mr. Goldman and Eugene Davis, Chairman and Chief Executive Officer of PIRINATE Consulting Group, LLC. These individuals bring decades of restructuring and operational turnaround and transformation experience to Fairway. Second, the Board formed a special committee (the “Special Committee”), composed solely of its two independent directors, Mr. Goldman and Mr. Davis, to oversee Fairway’s restructuring process and chapter 11 cases.

In addition, effective upon to the Commencement Date, Michael Nowlan of Mackinac Partners was appointed Chief Restructuring Officer (“CRO”) of each of the Debtors.

D. Debtors’ Capital Structure

1. Prepetition Indebtedness

As of the Commencement Date, the Debtors had outstanding funded debt obligations in the amount of approximately $227.1 million in the aggregate under the Prepetition Credit Agreement (defined below), consisting of (i) approximately $16 million outstanding under the Super Senior Secured Term Loans; (ii) approximately $26.8 million outstanding under the Super Senior Secured L/C Facility,


16 WEIL:\97306037\17\44444.0008

(iii) approximately $76.5 million outstanding under the Senior First Out Term Loans; (iv) approximately $56.8 million outstanding under the Senior Last Out Term Loan, and (v) approximately $51 million outstanding under the Holdco Loans (each as defined below). The Debtors’ secured financing obligations are described in greater detail below.

The Debtors’ Prepetition Capital Structure

Classes of Loans in Descending Priority Loan Amount Super Senior Secured L/C Facility $26.8 mm Super Senior Secured Term Loans $16 mm

Aggregate Total $42.8mm Senior First Out Term Loans $76.5 mm Senior Last Out Term Loans $56.8 mm Holdco Loans $51.0 mm

Debtors’ Total Funded Indebtedness $227.1 mm

(a) Super Senior Secured Claims

Super Senior Secured Term Loans. Pursuant to that certain Super Senior Credit Agreement, dated as of August 28, 2018 (as amended or modified by that certain First Amendment to Super Senior Credit Agreement, dated as of July 29, 2019, that certain Second Amendment to and Extension under Super Senior Credit Agreement, dated as of August 28, 2019, that certain Third Amendment and Limited Waiver to Super Senior Credit Agreement, dated as of October 7, 2019, and that certain Limited Waiver to Super Senior Credit Agreement, dated as of January 8, 2020, and as may be further amended, supplemented, or modified from time to time, the “Prepetition Credit Agreement”), among Fairway Acquisition, Holdings, the lenders from time to time party thereto (each, a “Prepetition Lender”, and collectively, the “Prepetition Lenders”) and Ankura Trust Company, LLC, as administrative agent and collateral agent for the Prepetition Lenders, certain Prepetition Lenders provided Fairway Acquisition with a super senior secured delayed draw first out term loan in the aggregate principal amount of $14.5 million (the “Super Senior Secured Term Loans”). The Super Senior Secured Term Loans mature on August 28, 2023. As of the Commencement Date, the aggregate amount outstanding under the Super Senior Secured Term Loans is approximately $16 million in unpaid principal, plus accrued and unpaid interest, fees, and other expenses. The Super Senior Secured Term Loans is pari passu in priority with the Super Senior Secured L/C Facility (as defined below), and represents (together with the Super Senior Secured L/C Facility) the Debtors’ senior-most tranche of prepetition funded debt.

Super Senior Secured L/C Facility. The Prepetition Credit Agreement also provided for a super senior secured credit facility in the aggregate principal amount of $22.66 million (the “Super Senior Secured L/C Facility”) provided by certain of the Prepetition Lenders to Fairway Acquisition for the purpose of cash collateralizing letters of credit issued by third-party issuers (i.e., entities that are not lenders under the Prepetition Credit Agreement) for the benefit of certain landlords, vendors, and other creditors of Fairway. The Super Senior Secured L/C Facility matures on August 28, 2023. As of the date hereof, the aggregate amount outstanding under the Super Senior Secured L/C Facility is approximately $26.8 million in unpaid principal, plus accrued and unpaid interest, fees, and other expenses. As set forth above, the Super Senior Secured L/C Facility is pari passu in priority with the Super Senior Secured Term Loans (as defined below), and represents (together with the Super Senior Secured Term Loans) the Debtors’ senior-most tranche of prepetition funded debt.

During these chapter 11 cases, all of the extensions of credit outstanding under the Super Senior Secured Term Loans and the Super Senior Secured L/C Facility Loans were “rolled up” into the DIP Facility upon the entry of the Final DIP Order (defined below), subject to certain challenge rights of the Creditors’


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Committee set forth in the Final DIP Order. Consequently, no amounts under the Super Senior Secured Term Loans or the Super Senior Secured L/C Facility remain outstanding.

(b) Senior First Out Term Loan

The Prepetition Credit Agreement also provided for secured first out term loans in the aggregate principal amount of approximately $65.14 million (the “Senior First Out Term Loan”) provided by certain of the Prepetition Lenders to Fairway Acquisition. The Senior First Out Term Loan matures on November 28, 2023. As of the Commencement Date, the aggregate amount outstanding under the Senior First Out Term Loan is approximately $76.5 million in unpaid principal, plus accrued and unpaid interest, fees, and other expenses. The Senior First Out Term Loan is junior in priority to the Super Senior Secured Term Loans and the Super Senior L/C Facility (but senior in priority to the Senior Last Out Term Loan (as defined below)).

(c) Senior Last Out Term Loan

The Prepetition Credit Agreement also provided for secured last out term loans in the aggregate principal amount of approximately $49.7 million (the “Senior Last Out Term Loan”) provided by certain of the Prepetition Lenders to Fairway Acquisition. The Senior Last Out Term Loan matures on November 28, 2023. As of the Commencement Date, the aggregate amount outstanding under the Senior Last Out Term Loan is approximately $56.8 million in unpaid principal, plus accrued and unpaid interest, fees, and other expenses. The Senior Last Out Term Loan is junior in priority to the Super Senior Secured Term Loans, the Super Senior L/C Facility, and the Senior First Out Term Loans.

(d) Holdco Loan

Lastly, the Prepetition Credit Agreement also provided for secured term loans in the aggregate principal amount of approximately $44 million (the “Holdco Loan,” and together with the Super Senior Secured Term Loans, Super Senior Secured L/C Loans, Senior First Out Term Loans, and the Senior Last Out Term Loans, the “Prepetition Secured Loans”) provided by certain of the Prepetition Lenders to Holdings, which Fairway Acquisition is also obligated to repay. The Holdco Loan matures on February 24, 2024. As of the Commencement Date, the aggregate amount outstanding under the Holdco Loan is approximately $51 million in unpaid principal, plus accrued and unpaid interest, fees, and other expenses. The Holdco Loan is junior in priority to the Super Senior Secured Term Loans, the Super Senior L/C Facility, the Senior First Out Term Loan, and the Senior Last Out Term Loan.

(e) Prepetition Security Agreement

The obligations under the Prepetition Credit Agreement are guaranteed by Holdings and certain subsidiaries of Holdings and are secured, in each case, in accordance with the terms of a Super Senior Guarantee and Collateral Agreement, dated as of August 28, 2018 (as amended, supplemented, or modified from time to time, the “Prepetition Security Agreement”). Pursuant to the terms of the Prepetition Security Agreement, each Debtor granted liens on substantially all of its assets (with certain specified exceptions) including, but not limited to, all accounts, chattel paper, cash and deposit accounts, documents, equipment, general intangibles, instruments, inventory, investment property, letter of credit rights, commercial tort claims and certain other personal property and real estate.

(f) Trade Claims

In the ordinary course of business, the Debtors incur various fixed, liquidated, and undisputed payment obligations (the “Trade Claims”) to various third-party providers of goods and services (the “Trade


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Creditors”) that are sold in the Debtors’ stores or facilitate the Debtors’ business operations. As of the Commencement Date, the Debtors estimate that the aggregate amount of Trade Claims outstanding was approximately $33.2 million. Certain of the Trade Claims are entitled to statutory priority, such as under the Perishable Agricultural Commodities Act of 1930, as amended, 7 U.S.C. §§ 499a et seq. (“PACA”) or the Packers and Stockyards Act of 1921 as amended, 7 U.S.C. § 181 et seq. (“PASA”), or under section 503(b)(9) of the Bankruptcy Code, may give rise to shippers, warehouseman, or mechanics liens against the Debtors’ property if unpaid, relate to funds held in trust by the Debtors that are not the property of the Debtors’ estates, or are secured by letters of credit, security deposits, or rights of setoff (collectively, the “Priority Trade Claims”). Excluding the Priority Trade Claims, the Debtors estimate that the total Trade Claims equaled approximately $14.0 million (the “Non-Priority Trade Claims”). Pursuant to the first day orders for relief, including the order allowing payment of certain prepetition claims of critical vendors, the Debtors have paid $11.3 million in Trade Claims, including $7.1 million in Priority Trade Claims, during these chapter 11 cases. As of May 28, 2020, 2020, over 1,000 proofs of Claim have been filed against the Debtors in the aggregate amount of approximately $2.2 billion, including approximately $33.9 million in alleged Trade Claims. This amount includes Claims asserted against each of the Debtors on a joint and several basis.

(g) Intercompany Claims

Certain Fairway entities hold Claims against Debtor entities resulting primarily from the normal functioning of Fairway’s centralized cash management system as well as, in some cases, the provision of intercompany services by one Fairway entity to another Fairway entity, such as, for example, administrative support services. Historically, such intercompany claims were recorded in Fairway’s books and records but not paid in cash.

2. Equity Ownership

As of the Commencement Date, the outstanding equity interests in Holdings were held (either directly and/or through subsidiaries or affiliates) approximately 33.6% by funds or entities affiliated with or managed by Brigade Capital Management, LP, approximately 29.9% by Goldman Sachs & Co, approximately 22.2% by funds or entities affiliated with or managed by FS KKR Capital Corp., with certain other holders each holding approximately 5% or less of the remaining 14.3% of the equity in Holdings.

The lenders comprising the Ad Hoc Group (or their affiliates) also hold approximately 86% of the equity of Holdings (with the remaining approximately 14% of the equity being held by the lenders under the Prepetition Credit Agreement not included in the Ad Hoc Group), all of which was received in exchange for their debt claims in connection with Company’s 2016 bankruptcy cases (discussed below). None of the lenders (including lenders in the Ad Hoc Group) hold more than 35% of the equity of Holdings.

III. KEY EVENTS LEADING TO COMMENCEMENT OF CHAPTER 11 CASES

A. The 2016 Cases

Unfortunately, the current chapter 11 cases are Fairway’s second chapter 11 filing in four (4) years. In June 2016, Fairway emerged from chapter 11 following a prepackaged chapter 11 case that adjusted its capital structure and paid all general unsecured creditors in full with no impact on Fairway’s union and


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pension obligations.6 Fairway’s prior third party lenders converted a substantial portion of their debt to substantially all of the reorganized equity of Fairway and also received take back debt. Since Fairway’s emergence, market pressures and other issues discussed herein have continued to be a drain on Fairway. As stated, Fairway’s prepetition lenders remained supportive of Fairway throughout these chapter 11 cases, as evidenced by their entering into the Restructuring Support Agreement (defined below) and by agreeing to finance these chapter 11 cases with the DIP Facility of up to $25 million in new money debtor-in-possession financing commitment, as described in more detail at Section IV.D below.

More specifically, under the 2016 prepackaged plan, Fairway’s then-existing secured creditors received (i) 100% of equity of the reorganized Company (subject to dilution by up to 10% by a management incentive program), (ii) a $45 million last out exit term loan (the “Last Out Exit Term Loan”) with Fairway Acquisition as borrower and each of the other Fairway subsidiaries as guarantors, secured by all of the assets of Fairway, and (iii) a $39 million unsecured subordinated term loan (the “Subordinated Term Loan”) with Holdings as borrower, but which was not guaranteed by the other Fairway subsidiary entities. The 2016 prepackaged plan was confirmed in June 2016. In re Fairway Group Holdings Corp., (Bankr. S.D.N.Y. June 8, 2016) (ECF No. 156). In August 2018, the facilities existing upon exit from the 2016 chapter 11 cases, including the Last Out Exit Term Loan and the Subordinated Term Loan were either repaid in full or otherwise converted into loans under the Prepetition Credit Agreement.

B. The 2018 Rescue Financing

Following Fairway’s emergence from chapter 11 in June 2016, Fairway continued to face headwinds in the market, which have continued to this date and are described in further detail below. As a result, Fairway required and obtained rescue financing from certain of their Prepetition Lenders in August 2018, resulting in the execution of the Prepetition Credit Agreement, whereby certain of the Prepetition Lenders provided Fairway the $14.5 million Super Senior Secured Term Loans and $22.66 million Super Senior Secured L/C Facility.

C. Competitive Industry

The food retail industry as a whole, particularly in the Greater New York City metropolitan area, is highly competitive, and increasingly so in recent years. Fairway experienced competitive pressures across multiple market segments including from local, regional, national and international supermarket grocers convenience stores, dollar stores, retail drug chains, supercenters, club stores, and numerous independent and specialty stores. Fairway also faced rapidly intensifying competition from well-capitalized online retail grocery giants, as well as local online grocers and meal-kit operators.

Given Fairway’s extensive prepared and fresh food offering, it competed directly with countless full service, casual dining, fast casual, quick service restaurants, many of which offer free delivery, specialty coffee shops such as Starbucks and other specialty food retailers, particularly in Manhattan. In addition, some of Fairway’s competitors have expanded aggressively in marketing a range of natural and organic foods, prepared foods and quality specialty grocery items. Some of Fairway’s competitors have more experience operating multiple store locations and have greater financial or marketing resources than Fairway, which allow them to devote greater resources to sourcing, promoting, and selling their products. The density of the Greater New York City metropolitan area compounds the problem because of the geographic proximity between Fairway’s stores and those of their competitors.

6 An order closing the cases was entered on December 23, 2016. In re Fairway Group Holdings Corp., Case No. 16-11241 (Bankr. S.D.N.Y. June 6, 2016) (ECF No. 237).


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Extremely large grocers have extensive scale advantages including investment grade credit ratings, which makes their cost of capital meaningfully lower and affords them extraordinary capacity to invest in lower prices, higher wages, more advertising, more effective modern technology and further growth, all of which enhance the probability a consumer will become and remain their customers.

Additionally, as described in more detail below, approximately 83% of Fairway’s workforce is unionized. The workforces of some of Fairway’s most significant competitors are not unionized, resulting in lower labor, pension, and benefit costs than Fairway faces. As a result, these competitors can offer lower prices to their customers, putting pressure on Fairway to do the same, further reducing Fairway’s profit margin. Non-union grocers also generally have more free cash flow to invest in advertising and technology to drive customer traffic and loyalty. In light of all of the foregoing, the Debtors require capital resources to effectively compete for market share.

D. Liquidity Constraints

Leading up to the Commencement Date, the Debtors were experiencing historically low EBITDA generation as a result of the industry pressures discussed above. The reduced EBITDA increased the Debtors’ leverage and imposed significant strains on the Debtors’ liquidity and cash flows. The strain on the Debtors’ liquidity was exacerbated by the costs associated with the Debtors’ labor and pension costs, described below.

E. Inability to Make Capital Investments

Capital improvements and investment in operations are imperative for food retailers to keep pace with their competition. Market participants are introducing technological advances and other initiatives to customize and improve consumer experience. Companies are also implementing cost-saving technologies and practices that allow them to further lower their prices, including in the areas of labor scheduling, ordering, receiving, payment processing, and data analytics. Additionally, some of Fairway’s stores required renovations that would enhance customers’ shopping experience and generate increased revenues.

Fairway’s increased leverage and liquidity constraints, however, impeded its ability to invest in store renovations and in other capital and operational expenditures at the level and speed at which the food industry is evolving. Indeed, Fairway did not undertake a substantial portion of the capital improvement projects and initiatives that it had previously planned to implement in 2019. Furthermore, as discussed above, the grocery sector has recently been faced with significant headwinds, making it an inopportune time to raise capital to invest in Fairway’s business.

F. Labor and Pension Costs

The Debtors’ cost structure includes certain employee and labor-related costs that have historically driven down their profit margins. Pursuant to the UFCW Local CBAs, the Debtors are required to contribute to the Pension Fund. As of the Commencement Date, the Pension Fund was underfunded in part due to increases in the costs of benefits provided or paid under the Pension Fund as well as lower returns on plan assets. On March 20, 2020, the UFCW Parties provided the Debtors with actuarial information that estimates the withdrawal liability as to unfunded pension liabilities of the Debtors, as of December 31, 2019, at $68,867,103 (the “Withdrawal Liability”). The Debtors’ payments on account of the Pension Fund amount to $361,731 per month, which the Debtors have diligently paid over time until shortly prior to filing these chapter 11 cases, when liquidity became severely restricted.


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The Debtors also participate in a multiemployer health and welfare plan (the “Welfare Fund”) that provides benefits to employees represented by UFCW Local 1500, UFCW Local 371 and UFCW Local 1262. The expenses for the Welfare Fund total approximately $750,000 per month (or approximately $9 million in the aggregate in 2019), of which the Debtors pay approximately 92% (approximately $8.3 million per year), and approximately $4,000 per month to the Legal Services Fund (together with the Pension Fund, the Welfare Fund, and the UFCW Local 1500 Scholarship Fund, the “Funds”).

During the Global Auction, the Debtors, with the help of their advisors and the support of the Ad Hoc Group, reached the UFCW Settlement with the UFCW Parties. Pursuant to the UFCW Settlement, on the CBA Termination Date (defined below), the UFCW Local CBAs will be deemed terminated and the Debtors will completely withdraw from the Pension Fund and cease to have any obligation to contribute to the Funds in exchange for a number of economic and non-economic benefits for the members of the UFCW Parties, as described in more detail at Section IV.K, below.

G. Prepetition Sale Process

Prior to the chapter 11 cases, the Debtors explored strategic options including a potential out-of-court sale, but ultimately concluded that such transactions were not, at that time, in the best interests of the Debtors and their stakeholders. Beginning in July 2019, the Debtors’ investment banker PJ Solomon, L.P. (“Solomon”) actively marketed the Debtors’ assets for going concern sales in an organized prepetition bidding process, contacting over 80 potential buyers, including twenty-six (26) potential strategic buyers (the “Prepetition Sale Process”).

On September 12, 2019, six (6) indications of interest were received for the acquisition of all or certain portions of the business. Ultimately, two parties emerged as potential stalking horse bidders. After extensive negotiations with the bidders and deliberations with their advisors the Debtors entered into a stalking horse asset purchase agreement (the “Stalking Horse APA”) with Village on January 22, 2020 for the purchase of five (5) stores and the PDC and certain related assets (the “Stalking Horse Package”), for an aggregate purchase price of approximately $68.6 million (the “Stalking Horse Bid”), and was subject to higher or better offers in accordance with the Bidding Procedures (defined below.)

Although the Prepetition Sale Process was successful, it also confirmed to the Debtors that their businesses were not sustainable over the long term under the existing cost structure. No bidder was willing to assume Fairway’s liabilities—in particular, the Debtors’ substantial labor and pension obligations—in connection with a purchase of Fairway’s stores. To the contrary, the Stalking Horse Bidder and all other bidders in the Prepetition Sale Process conditioned their purchase of the Debtors’ assets free and clear of all liabilities, such as liabilities arising under or related to the Collective Bargaining Agreements, including the multi-employer contribution and withdrawal liabilities relating thereto.

Given these and other considerations, the Debtors concluded in the exercise of their business judgment and as fiduciaries for all stakeholders that the best and only viable path to maximize the value of their business and potentially preserve many jobs was a strategic chapter 11 filing to facilitate sales free and clear of liabilities.

H. Restructuring Support Agreement

As described above, in advance of the chapter 11 filing, the Debtors worked closely with their major stakeholders, including the Ad Hoc Group holding over 91% in the aggregate of all of Fairway’s outstanding loans under the Prepetition Credit Agreement (and in excess of 66⅔% if each tranche of debt thereunder).


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These efforts culminated in execution of the RSA on January 22, 2020. Pursuant to the RSA, members of the Ad Hoc Group agreed to vote in favor of and support confirmation of a chapter 11 plan incorporating the terms embodied by the term sheet annexed to the RSA as Exhibit A (the “RSA Term Sheet”), including the commitment to provide the Debtors with the DIP Facility, as defined and discussed in more detail at Section IV.C below. In exchange, the Debtors agreed to, among other things, (i) commence these chapter 11 cases, and (ii) prosecute the Plan and Disclosure Statement.

IV. OVERVIEW OF THE CHAPTER 11 CASES

A. Commencement of Chapter 11 Cases

On January 23, 2020 (the “Commencement Date”) the Debtors commenced these chapter 11 cases. The Debtors continue to manage their estates as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

B. First Day Motions

On the Commencement Date, the Debtors filed multiple motions seeking various relief from the Bankruptcy Court to promote a seamless transition into chapter 11, and minimize any disruptions between the Debtors’ prepetition and postpetition business operations (the “First Day Motions”). At the first day hearing held on January 27, 2020, the Bankruptcy Court granted substantially all of the relief requested in the First Day Motions and entered various orders authorizing the Debtors to, among other things:

continue paying employee wages and benefits (ECF No. 73);

continue to use the Debtors’ cash management system, bank accounts, and business forms (ECF No. 69);

pay certain critical vendors and obligations with respect to prepetition orders of goods and services to be delivered postpetition (ECF No. 74);

pay prepetition claims of shippers and other lien claimants (ECF No. 76);

continue insurance and workers’ compensation programs, the processing of workers’ compensation claims, and continue the Debtors’ surety bond program (ECF No. 80);

continue to pay all taxes, fees, and similar charges and assessments, whether arising prepetition or postpetition, to the appropriate taxing, regulatory, or other governmental authority in the ordinary course (ECF No. 86);

continue customer programs (ECF No. 81); and

obtain debtor-in-possession financing and use cash collateral (ECF No. 78), as discussed in more detail herein.

C. Appointment of the Creditors’ Committee

On February 4, 2020, the Creditors’ Committee was appointed by the Office of the United States Trustee for Region 2 (the “U.S. Trustee”) pursuant to section 1102 of the Bankruptcy Code as set forth in the Appointment of Official Committee of Unsecured Creditors (ECF No. 105), to represent the interests of unsecured creditors in these chapter 11 cases.


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The members of the Creditors’ Committee are (i) CBA Industries, Inc., (ii) DHH Company LLC and 2828 on Twelfth, LLC., (iii) U.F.C.W. Local 1500 Pension Fund, (iv) United Natural Foods, Inc., (v) UFCW Local 1500, (vi) Maplebear Inc., and (vii) 7 Yale & Towne LLC.

The Creditors’ Committee retained Pachulski Stang Ziehl & Jones LLP as its counsel and BRG Capital Advisors, LLC as its financial advisor. The Debtors have consulted with the Creditors’ Committee throughout these chapter 11 cases and have participated in numerous teleconferences and meetings with advisors to the Creditors’ Committee to discuss and consult with respect to the administration of these chapter 11 cases, the Sale Strategy, and the Plan.

As stated, the Debtors, the Creditors’ Committee, the Ad Hoc Group and the UFCW Parties have negotiated a Global Settlement that is incorporated in the Plan and provides, among other things, a $1.5 million contribution to a general unsecured trust for the benefit of Allowed General Unsecured Claims and a waiver of estate preference and avoidance claims against parties who vote in favor of the plan or abstain but do not opt out of the releases.

The Creditors’ Committee supports confirmation of the Plan and recommends that holders of General Unsecured Claims vote to accept the Plan.

D. Debtor-in-Possession Financing

As of the Commencement Date, the Debtors had less than $1 million in cash on hand. To address their working capital needs and fund their chapter 11 cases, the Ad Hoc Group agreed to provide a debtor-in-possession credit facility consisting of (a) a new money multiple draw term loan facility in an aggregate principal amount of $20,000,000, (b) a new money delayed draw credit facility in an aggregate principal amount of $5,000,000 (the “New Money DIP Loans”), and (c) a roll-up facility in the aggregate principal amount of $42,845,376.0 (the “Roll-Up Dip Loans,” together with the New Money DIP Loans, the “DIP Facility”, and the financial institutions party thereto from time to time as lenders, as provided in the DIP Credit Agreement (defined below), the “DIP Lenders”).

The DIP Facility is a senior secured, superpriority debtor-in-possession term loan facility provided pursuant to the terms of that certain Superpriority Secured Debtor-In-Possession Credit Agreement, dated as of January 28, 2020 (as amended from time to time, the “DIP Credit Agreement”), by and among Fairway Group Acquisition Company, as borrower, the other Debtors party thereto, the DIP Lenders, and Ankura Trust Company, LLC, as administrative agent and collateral agent (in such capacities, the “DIP Agent”). The DIP Facility is secured by all personal property, whether now existing or hereafter arising and wherever located, tangible and intangible, of the Debtors, subject to certain exceptions.

Upon entry of the order approving the DIP Motion on an interim basis (the “Interim DIP Order”) (ECF No. 199), the Debtors received a new money term loan in a principal amount of $15,000,000. Upon entry of the order approving the DIP Motion on a final basis (ECF No. 199) (the “Final DIP Order”), the Debtors received a new money term loan in a principal amount of $5,000,000. Upon entry of the Final DIP Order, a roll-up loan in the aggregate principal amount of $42,845,376.03, which represents the full amount of the DIP Lenders’ “L/C Loans” and “New Term Loans” under the Prepetition Credit Agreement held as of the Commencement Date, was deemed to occur and be borrowed under the DIP Facility, subject to challenge by the Creditors’ Committee and parties in interest. The deadline for parties in interest other than the Creditors’ Committee has expired with no challenge asserted. Under the Global Settlement, the challenge period for the Creditors’ Committee will expire contemporaneously upon consummation of the Plan.


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On June 5, 2020, the Debtors paid down the $20 million New Money DIP Loans to the DIP Agent for distribution to the DIP Lender, and on June 30, 2020, the Debtors paid down $40.3 million of the Roll-Up DIP Loans to the DIP Agent for distribution to the DIP Lenders pursuant to the Stipulation and Order With Respect to Dip Paydown And Related Matters (ECF No. 536) (the “DIP Stipulation”). Pursuant to the DIP Stipulation, $3 million was held back and placed in a segregated account (the “503(b)(9) Segregated Account”) to reserve cash for the payment of administrative expense claims arising under section 503(b)(9) of the Bankruptcy Code (“503(b)(9) Claims”) strictly conditioned on consummation of the Plan. Another $2.7 million will be transferred to the 503(b)(9) Segregated Account in accordance with the DIP Stipulation.

The DIP Facility, together with the consensual use of cash collateral, provided the Debtors with essential liquidity needed to implement the Sale Strategy in an orderly and value-maximizing manner and to conduct the subsequent wind-down of the Debtors’ estates.

The DIP Credit Agreement and the RSA set forth milestones (the “Milestones”) pursuant to which the Debtors must accomplish various objectives in an expeditious manner, most of which have been satisfied. The remaining Milestones, which have been extended from time to time, include the following:

Milestone Deadline

Sale Process Milestones

Consummation of the sale(s) of the Other Assets to the winning bidder(s) at the Auction, if applicable

August 1, 2020

Plan Milestones

Entry of the Order approving the Disclosure Statement

August 17, 2020

Commencement of Solicitation August 22, 2020

Entry of the order confirming the Plan October 7, 2020

Effective date of the Plan October 11, 2020

E. Bar Date

On February 21, 2020, the Bankruptcy Court entered the Order Establishing Deadline for Filing Proofs of Claim and Approving the Form and Manner of Notice Thereof (ECF No. 204) (the “Bar Date Order”), which, among other things, (i) established March 27, 2020 (the “General Bar Date”) as the deadline for certain persons and entities to file proofs of claim in these chapter 11 cases, (ii) established August 17, 2020 (the “Governmental Bar Date”, and, together with the General Bar Date, the “Bar Dates”) as the deadline for “Governmental Units” (as defined in section 101(27) of the Bankruptcy Code) to file proofs of Claim in these chapter 11 cases, (iii) approved the form and manner of notice of the Bar Dates, and (iv) approved the procedures for filing proofs of claim. The Debtors provided notice of the Bar Date as required by the Bar Date Order.


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On April 6, 2020, the Bankruptcy Court entered an order extending the General Bar Date to April 27, 2020 at 5:00 p.m. (ECF No. 411). As of May 28, 2020, 1,011 proofs of Claim have been filed against the Debtors in the aggregate amount of $2,170,365,217.86, including $33,923,294.42 for Trade Claims.7 This amount includes Claims asserted against each of the Debtors on a joint and several basis.

On March 23, 2020, the Debtors filed their schedules of assets and liabilities, statements of executory contracts, and unexpired leases and statements of financial affairs.

F. Exclusivity

Section 1121(b) of the Bankruptcy Code provides for a period of 120 days after the commencement of a chapter 11 case during which time a debtor has the exclusive right to file a plan of reorganization (the “Exclusive Plan Period”). In addition, section 1121(c)(3) of the Bankruptcy Code provides that if a debtor files a plan within the Exclusive Plan Period, it has a period of 180 days after commencement of the chapter 11 case to obtain acceptances of such plan (the “Exclusive Solicitation Period,” and together with the Exclusive Plan Period, the “Exclusive Periods”). Pursuant to section 1121(d) of the Bankruptcy Code, the Bankruptcy Court may, upon a showing of cause, extend the Exclusive Periods.

On April 23, 2020, the Debtors filed the Motion of Debtors Pursuant to Section 1121(d) of the Bankruptcy Code to Extend Exclusive Periods (ECF No. 454) and on May 13, 2020, the Bankruptcy Court entered an order extending the Exclusive Plan Period to September 23, 2020, and the Exclusive Solicitation Period to November 22, 2020. The Exclusive Periods may be further extended by the Bankruptcy Court subject to section 1121(d) of the Bankruptcy Code.

G. Sale Strategy and Bidding Procedures

As stated above, the Sale Strategy is the foundation of these chapter 11 cases and was critical to maximizing recoveries for all creditors and preserving potentially thousands of jobs. In support of the Sale Strategy, the Debtors and their advisors obtained Bankruptcy Court approval of the Bidding Procedures for the marketing and sale of their business in these chapter 11 cases in an orderly and value maximizing manner. The Bidding Procedures set forth an expedited bidding and sale process to implement the Sale Strategy.

Under the Bidding Procedures, interested parties could bid for any of the Debtors’ locations and related assets, either individually or on a package basis, whether or not a particular or package of stores was included in a Stalking Horse Bid. The deadline to submit qualified bids in respect of the assets included in the Stalking Horse Package (the “Stalking Horse Assets”) was March 4, 2020, and the deadline for submitting qualified bids for assets not included in the Stalking Horse Package (the “Other Assets) was March 9, 2020.

On March 11, 2020, the Debtors filed the Notice of (1) Qualified Bids and (II) Designation of Baseline Bid with Respect to Stalking Horse Package (ECF No. 295) qualifying (a) the Stalking Horse Bid, and (b) the bid of Bogopa Enterprises, Inc. (the “Bogopa Bid”) for all of the store locations included in the Stalking Horse Package, plus the Debtors’ location at 847 Pelham Parkway, Pelham Manor, New York 10803 (the “Pelham Store”) for a purchase price of $75 million, and designating the Bogopa Bid as the highest or best Qualified Bid (as defined in the Bidding Procedures Order) for the locations in the Stalking Horse Package and the Pelham Store.

7 These claim amounts are based on the value of all claims listed on the applicable claims form, and have not yet been reconciled.


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On March 13, 2020, the Debtors filed the Notice Regarding Global Auction (ECF No. 298), qualifying four (4) bids for Other Assets not included in the Stalking Horse Package. On March 16, 2020, due to the public health concerns associated with COVID-19, the Debtors commenced the Global Auction completely virtually. Throughout the Global Auction, the Debtors and their advisors worked diligently to increase the value reflected in the Stalking Horse Bid. The Debtors—together with their advisors and in consultation with the Ad Hoc Group, the UFCW Parties, the Creditors’ Committee and each of their advisors—engaged in many rounds of hard-fought, arm’s length negotiations and made significant improvements to the Qualified Bids.

The Global Auction concluded on March 25, 2020, with the Debtors announcing the three Successful Bids: the Village Sale Transaction, the Key Food Sale Transaction, and the Amazon Sale Transaction.

On April 20, 2020, the Bankruptcy Court entered Village Sale Order, the Key Food Sale Order, and the Amazon Sale Order. On May 1, 2020, the Debtors and Key Food completed the Key Food Sale Transaction. On May 13, 2020, the Debtors and Village completed the Village Sale Transaction. On July 2, 2020, the Debtors closed the Amazon Sale Transaction.

H. Lease Rejection Procedures

To facilitate the Debtors’ efforts to reject burdensome unexpired nonresidential real property leases, on March 3, 2020, the Bankruptcy Court approved procedures to reject unexpired leases, establish procedures for rejection of unexpired leases of nonresidential real property and abandon certain personal property in connection therewith (the “Lease Rejection Procedures”) (ECF No. 103). Pursuant to the Lease Rejection Procedures, the Debtors have already rejected three (3) leases. These leases were “dark” locations where the Debtors had already ceased ongoing operations.

I. Store Closing Sales

On March 5, 2020, the Bankruptcy Court approved the Debtors’ proposed procedures to (i) commence store closing sales at stores identified for closure in accordance with certain procedures (the “Store Closing Procedures”), notwithstanding any contractual provisions or state and local laws restricting such sales (the “Store Closing Sales”) and (ii) sell certain of the Debtors’ assets in connection with the Store Closing Sales free and clear of all liens, claims, and encumbrances (ECF No. 267). On May 7, 2020, the Debtors filed a notice of intent to commence a Store Closing Sale at the Debtors’ Paramus location (ECF No. 467).

On May 21, 2020, the Debtors filed the Motion of Debtors for Entry of an Order (I) Authorizing Debtors To Enter Into the Liquidation Consultant Agreement and (II) Granting Related Relief (ECF No. 488) (the “Liquidation Consultant Motion”) seeking authority to enter into the Consultant Agreement, dated as of May 12, 2020, between the Debtors and Great American Group, LLC (the “Liquidation Consultant”), nunc pro tunc to May 12, 2020, in connection with facilitating the Store Closing Sales of the Debtors’ inventory, furniture, fixtures, and equipment. The order approving the Liquidation Consultant Motion was entered on June 21, 2020 (ECF No. 518). On June 11, 2020, the Debtors filed the Notice of Intent to Conduct Store Closing Sales to commence a Store Closing Sale at the Debtors’ Woodland Park store on or after June 14, 2020 (ECF No. 505), and on June 23, 2020, the Debtors filed the Notice of Intent to Conduct Store Closing Sales to commence Store Closing Sales at the Plainview and Uptown stores on or after June 26, 2020 (ECF No. 523).


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J. Employee Compensation Matters

As noted above, as of the Commencement Date, the Debtors employed approximately 3,000 employees—700 full-time employees and 2,300 part-time employees.

The Debtors’ significant accomplishments to date, including the Sale Strategy, the Global Auction, and the ongoing operation of the Stores throughout these chapter 11 cases, would not have been possible without the efforts, dedication and support of certain of the Debtors’ key employees (collectively, the “Key Employees”).

On March 20, 2020, the Debtors, led by their advisors and with the support of the Ad Hoc Group, filed a motion (ECF No. 200) (the “KEIP/KERP Motion”) seeking Court approval of a key employee incentive plan (“KEIP”) for nine (9) Key Employees (the “KEIP Participants”), including six (6) “insiders” (as such term is defined in section 101(31) of the Bankruptcy Code) and a key employee retention plan (the “KERP”) for twenty-five (25) non-insider Key Employees (the “KERP Participants”).

The KEIP provides for two payments to be made to the KEIP Participants—one prepetition and one postpetition. The prepetition payments were made to KEIP Participants on January 21, 2020, and are subject to clawback, should an employee voluntarily terminate their employment within nine (9) months of the January 21, 2020 agreement execution date. The second installment of the KEIP is tied to recoveries of the Senior First Out Term Loans. The KERP provides for the payment of cash amounts in two installments upon each of (i) the sale or disposition of all or substantially all of the Debtors’ assets (the “Transaction”) and (ii) the earlier of (a) three (3) months following the date of the Transaction, or (b) termination of such KERP Participant by the Debtors without cause. The first installment of the KERP is subject to clawback.

On April 17, 2020, the Bankruptcy Court entered an order approving the KEIP and the KERP (ECF No. 444).

K. UFCW Settlement

As described above, as of the Commencement Date, approximately 83% of the Debtors’ employees were represented by the UFCW Locals, and the UFCW Local CBAs obligate the Debtors to make monthly contributions of $361,731 to the Pension Fund, which covers all of the Debtors’ union-represented employees (approximately 3,000 total participants). The Debtors made these contributions diligently until shortly prior to filing these chapter 11 cases, and did not make any post-petition monthly contributions to the Pension Fund.8 As described above, the most recent estimate of the Withdrawal Liability (as of December 31, 2019) is $68,867,103. As of the Commencement Date, the Debtors were current on their $750,000 monthly contributions to the Welfare Fund and $4,000 monthly contributions to the Legal Services Fund.

Balancing the needs of their employees and the goals of the Sale Strategy, the Debtors, with the help of their advisors and the support of the Ad Hoc Group, negotiated a settlement of all issues with the UFCW Parties. As a result of hard-fought, arm’s length negotiations, the Debtors, UFCW Parties, and the Ad Hoc Group ultimately agreed to enter a comprehensive global settlement (the “UFCW Settlement”), the key components of which are the following:

8 The Debtors have made regular monthly payments to the Welfare Fund and the Legal Fund. No prepetition amounts were outstanding as of the Commencement Date to the Welfare Fund or the Legal Fund.


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(i) All UFCW Local CBAs will terminate upon the (1) date that the Bankruptcy Court approves the UFCW Settlement (the “Settlement Effective Date”) and (2) final closure or sale of every one of the Debtors’ stores (the “CBA Termination Date”);

(ii) Upon the CBA Termination Date, the Debtors will withdraw from the Pension Fund, and any obligations to make payments to the Funds will terminate. The Pension Fund shall receive (1) an allowed prepetition general unsecured non-priority claim of $68,867,103.00, and (2) a prepetition general unsecured priority claim of $728,129.87. Payment and treatment of unpaid post-petition monthly contributions due under the Pension Fund and the UFCW Local CBAs will also be made in agreed amounts;

(iii) The UFCW Parties will support and vote all of their claims in favor of the Plan;

(iv) The UFCW Local 1500 have entered into a new collective bargaining agreement with Village that is applicable to the stores and PDC purchased by Village, and the UFCW Local 1500 did not oppose the sale of the Stalking Horse Package to Village;

(v) The UFCW Parties did not object to the sale of stores not included in the Stalking Horse Package to the prospective buyers announced as the winning buyers at the Global Auction;

(vi) After the Settlement Effective Date, the Debtors implemented a severance program and health care coverage program for terminated employees who execute release agreements, who will receive between one (1) and four (4) weeks of pay depending on their tenure, and two (2) months of health care coverage beyond the coverage otherwise received under their respective collective bargaining agreement; and

(vii) The Debtors, the UFCW Parties, and the Ad Hoc Group exchanged mutual releases with certain exceptions, including any claim on account of accrued or unused paid time off (“PTO”) held by or on account of an employee hired by a buyer of stores or the PDC, which will not be released but will instead be carried and reduced for PTO provided by the applicable buyer and used by the employee during the post-petition period and subject to a cap.

On April 14, 2020, the Bankruptcy Court entered the UFCW Settlement Order.

L. Global Settlement

Simultaneously with negotiating the UFCW Settlement and conducting the Global Auction, the Debtors negotiated the Global Settlement—a compromise and settlement of chapter 11 plan issues by and among the Debtors, the UFCW Parties, the Creditors’ Committee, and the Consenting Creditors. The Global Settlement resolves all disputes and potential litigation of all claims and controversies relating to the Debtors and the treatment of General Unsecured Claims, which is embodied in the Plan.

Pursuant to the Global Settlement, on the Effective Date, among other things:

(i) On the Effective Date, the GUC Recovery Trust shall be established and governed and administered in accordance with the GUC Recovery Trust Agreement.

(ii) Solely for purposes of distributions from the GUC Recovery Trust: (1) all General Unsecured Claims against each of the Debtors shall be deemed merged or treated as liabilities of the GUC Recovery Trust to the extent Allowed; (2) all General Unsecured Claim guaranties of the Debtors of the obligations of any other Debtor shall be deemed eliminated and extinguished so that any


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General Unsecured Claim against any Debtor and any guarantee thereof executed by any Debtor and any joint or several General Unsecured Claim against any of the Debtors shall be deemed to be one obligation of the GUC Recovery Trust; (3) each and every General Unsecured Claim filed in any of the Chapter 11 Cases shall be treated as filed against the consolidated Debtors and shall be treated as one General Unsecured Claim against and obligation of the GUC Recovery Trust.

(iii) The Debtors and the Estates shall transfer the GUC Recovery Trust Assets to the GUC Recovery Trust, free and clear of all Liens, charges, Claims, encumbrances, and interests for the benefit of the holders of Allowed General Unsecured Claims.

(iv) The Debtors and their Estates waive the right to prosecute any Avoidance Actions against the Released Avoidance Parties. Any Unreleased Avoidance Actions shall be transferred to the GUC Recovery Trust. For the avoidance of doubt, Causes of Action arising under section 542 or section 549 of the Bankruptcy Code shall remain with the Debtors or Wind Down Co.

(v) The GUC Recovery Trustee shall determine whether to enforce, settle, release, or compromise Unreleased Avoidance Actions (or decline to do any of the foregoing). The Wind Down Co, Reorganized Debtors, and the Plan Administrator, as applicable, shall not be subject to any claims or counterclaims of the GUC Recovery Trust, including with respect to the Unreleased Avoidance Actions.

(vi) On the Effective Date, all Prepetition Loan Deficiency Claims on account of Allowed Senior First Out Term Loan Claims, Allowed Senior Last Out Term Loan Claims, and the Holdco Loan Claims shall be waived and released and shall not participate in any distributions from the GUC Recovery Trust.

(vii) The Creditors’ Committee shall be subject to the Creditors’ Committee Budget.

(viii) On the Effective Date, the Challenge Deadline (as defined in the DIP Order) shall be deemed expired with respect to the Creditors’ Committee.

(ix) As a condition precedent to consummation of the Global Settlement, the Creditors’ Committee shall not object to or take any other action that is inconsistent with or that would reasonably be expected to prevent, interfere with, delay, or impede the confirmation and consummation of the Plan or approval of the Global Settlement.

The treatment provided for in the Plan for General Unsecured Claims incorporates and reflects the Global Settlement. The Plan will be deemed to constitute a motion pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, seeking approval of the Global Settlement, and the entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of such motion and each of the compromises or settlements that comprise the Global Settlement. Furthermore, the Bankruptcy Court’s findings will constitute its determination that such compromises and settlements are within the range of reasonableness, in the best interests of the Debtors, their Estates, their creditors, and other parties-in-interest, and fair and equitable.

V. SUMMARY OF PLAN

This section of the Disclosure Statement summarizes the Plan, a copy of which is annexed hereto as Exhibit A. This summary is qualified in its entirety by reference to the Plan.


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A. Administrative Expense and Priority Claims

1. Administrative Expense Claims

Except to the extent that a holder of an Allowed Administrative Expense Claim agrees to less favorable treatment, each holder of an Allowed Administrative Expense Claim (other than a Fee Claim, a DIP Claim, or a Restructuring Expense) shall receive, in full and final satisfaction, settlement, and release of such Claim against the Debtors, Cash in an amount equal to such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, the later of (a) the Effective Date, and (b) the first Business Day after the date that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim; provided, that Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors, as Debtors in Possession, shall be paid by the Debtors, Wind Down Estates, or the Plan Administrator, as applicable, in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any course of dealing or agreements governing, instruments evidencing, or other documents relating to such transactions; provided, further, that the Allowed amounts of any 503(b)(9) Claims agreed to by the Debtors or the Plan Administrator shall each be satisfactory to the Requisite Consenting Creditors.

2. Fee Claims

(a) All Entities seeking an award by the Bankruptcy Court of Fee Claims shall file and serve on counsel to the Debtors, the U.S. Trustee, the Creditors’ Committee, and counsel to the Requisite Consenting Creditors, on or before the date that is forty-five (45) days after the Effective Date, their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred from the Commencement Date through the Effective Date. Objections to any Fee Claims must be filed and served on counsel to the Debtors, the U.S. Trustee, the Creditors’ Committee, counsel to the Requisite Consenting Creditors, and the requesting party no later than twenty-one (21) calendar days after the filing of the final applications for compensation or reimbursement (unless otherwise agreed by the Debtors or the Plan Administrator, as applicable, and the party requesting compensation of a Fee Claim).

(b) Allowed Fee Claims shall be paid in full, in Cash, in such amounts as are Allowed by the Bankruptcy Court (i) on the date upon which an order relating to any such Allowed Fee Claim is entered or as soon as reasonably practicable thereafter; or (ii) upon such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors, Wind Down Estates, or the Plan Administrator, as applicable. Notwithstanding the foregoing, any Fee Claims that are authorized to be paid pursuant to any administrative orders entered by the Bankruptcy Court may be paid at the times and in the amounts authorized pursuant to such orders.

(c) On or about the Effective Date, holders of Fee Claims shall provide a reasonable estimate of unpaid Fee Claims incurred in rendering services before the Effective Date to the Debtors or the Creditors’ Committee, as applicable, and the Debtors or Wind Down Estates, as applicable, shall separately escrow such estimated amounts in the Professional Fees Escrow Account for the benefit of the holders of the Fee Claims until the fee applications related thereto are resolved by Final Order or agreement of the parties. If a holder of a Fee Claim does not provide an estimate, the Debtors, Wind Down Estates, or Plan Administrator, as applicable, may estimate the unpaid and unbilled reasonable and necessary fees and out-of-pocket expenses of such holder of a Fee Claim. The Professional Fee Escrow Account shall be treated as a trust account for the benefit of holders of Fee Claims and otherwise subject to the terms of the DIP Order. When all such Allowed Fee Claims have been paid in full, any remaining amount in the Professional Fee Escrow Account shall promptly be released from such escrow and revert


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to, and ownership thereof shall vest in, Wind Down Estates without any further action or order of the Bankruptcy Court.

(d) Wind Down Estates or the Plan Administrator, as applicable, are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval.

3. Priority Tax Claims

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to less favorable treatment, each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction, settlement, and release of such Allowed Priority Tax Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, with the consent of the Requisite Consenting Creditors as applicable, (a) Cash in an amount equal to such Allowed Priority Tax Claim on, or as soon thereafter as is reasonably practicable, the later of (i) the Effective Date, to the extent such Claim is an Allowed Priority Tax Claim on the Effective Date; (ii) the first Business Day after the date that is thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax Claim; and (iii) the date such Allowed Priority Tax Claim is due and payable in the ordinary course as such obligation becomes due; provided, that the Debtors reserve the right to prepay all or a portion of any such amounts at any time under this option without penalty or premium; or (b) equal annual Cash payments in an aggregate amount equal to the amount of such Allowed Priority Tax Claim, together with interest at the applicable rate under section 511 of the Bankruptcy Code, over a period not exceeding five (5) years from and after the Commencement Date.

4. DIP Claims.

On the Effective Date, in full and final satisfaction of the Allowed DIP Claims, to the extent any DIP Obligations remain unpaid and the DIP Documents have not been terminated, the commitments of the DIP Credit Parties under the DIP Documents shall be terminated and DIP Claims shall be paid in full in Cash, provided that Plan Sponsor may, at its option and only if the Reorganized Equity Plan Election is made, (a) convert all or a portion of its outstanding DIP Claims, on a dollar-for-dollar basis, into a new exit financing facility under which the Reorganized Debtors will be the borrower(s) and guarantors (as applicable), on terms mutually acceptable to the Debtors and Plan Sponsor and consistent with the Reorganized Debtors Exit Facility Term Sheet (the “Reorganized Debtors Exit Facility,” and the Claims thereunder, the “Reorganized Debtors Exit Facility Claims”) and/or (b) exchange all or a portion of its outstanding DIP Claims for the New Common Stock (the “DIP Conversion Election”). The Debtors’ and their respective Affiliates’ contingent or unliquidated expense reimbursement and indemnity obligations under the DIP Documents, to the extent not paid in full in Cash on the Effective Date or otherwise satisfied by the Debtors and their respective Affiliates in a manner reasonably acceptable to the DIP Agent, shall survive the Effective Date and shall not be released or discharged pursuant to the Plan or Confirmation Order, notwithstanding any provision hereof or thereof to the contrary.

5. Restructuring Expenses

To the extent that any Restructuring Expenses remain unpaid as of the Business Day prior to the Effective Date, on the Effective Date, Wind Down Estates, or Plan Administrator, as applicable, shall pay in full in Cash any outstanding Restructuring Expenses that are invoiced without the requirement for the filing of retention applications, fee applications, or any other applications in the Chapter 11 Cases, and without any requirement for further notice or Bankruptcy Court review or approval. For the avoidance of doubt, any Restructuring Expenses invoiced after the Effective Date shall be paid promptly, but no later than ten (10) business days of receiving an invoice.


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B. Classification of Claims and Interests

1. Classification in General

A Claim or Interest is placed in a particular Class for all purposes, including voting, confirmation, and distribution under the Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code; provided, that a Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and such Allowed Claim or Allowed Interest has not been satisfied, released, or otherwise settled prior to the Effective Date.

2. Grouping of Debtors for Convenience Only

The Plan groups the Debtors together solely for the purpose of describing treatment of Claims and Interests under the Plan and confirmation of the Plan. Although the Plan applies to all of the Debtors, the Plan constitutes twenty-six (26) distinct chapter 11 plans, one for each Debtor. Each Class of Claims will be deemed to contain sub-classes for each of the Debtors, to the extent applicable for voting and distribution purposes. To the extent there are no Allowed Claims or Interests with respect to a particular Debtor, such Class is deemed to be omitted with respect to such Debtor. Except as otherwise provided herein, to the extent a holder has a Claim that may be asserted against more than one Debtor, the vote of such holder in connection with such Claims shall be counted as a vote of such Claim against each Debtor against which such holder has a Claim. The grouping of the Debtors in this manner shall not affect any Debtor’s status as a separate legal Entity, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger of consolidation of any legal Entities, or cause the transfer of any Assets, and, except as otherwise provided by or permitted under the Plan, all Debtors shall continue to exist as separate legal Entities.

3. Summary of Classification

The following table designates the Classes of Claims against and Interests in the Debtor and specifies which of those Classes are (a) Impaired or Unimpaired by the Plan; (b) entitled to vote to accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code; and (c) deemed to accept or reject the Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified.

Class Designation Treatment Entitled to Vote 1 Priority Non-Tax Claims Unimpaired No (Presumed to accept) 2 Other Secured Claims Unimpaired No (Presumed to accept) 3 Senior First Out Term Loan Claims Impaired Yes 4 Senior Last Out Term Loan Claims Impaired Yes 5 Holdco Loan Claims Impaired Yes 6 General Unsecured Claims Impaired Yes 7 Intercompany Claims Impaired No (Deemed to reject) 8 Intercompany Interests Unimpaired No (Presumed to accept) 9 Parent Equity Interests Impaired No (Deemed to reject)

10 Subordinated Securities Claims Impaired No (Deemed to reject)


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4. Special Provision Governing Unimpaired Claims

Nothing under the Plan shall affect the rights of the Debtors, Reorganized Debtors, Wind Down Estates, or Plan Administrator, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.

5. Elimination of Vacant Classes

Any Class of Claims against or Interests in the Debtors that, as of the commencement of the Confirmation Hearing, does not have at least one holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.

6. Voting Classes; Presumed Acceptance by Non-Voting Classes

If a Class contains Claims eligible to vote and no holders of Claims eligible to vote in such Class vote to accept or reject the Plan, the Debtors shall request the Bankruptcy Court at the Confirmation Hearing to deem the Plan accepted by the holders of such Claims in such Class.

7. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code

The Debtors shall seek confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests. The Debtors reserve the right to modify the Plan to the extent, if any, that confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification, including by modifying the treatment applicable to a Class of Claims or Interests to render such Class of Claims or Interests Unimpaired to the extent permitted by the Bankruptcy Code and the Bankruptcy Rules.

C. Treatment of Claims and Interests.

1. Priority Non-Tax Claims (Class 1)

(a) Classification: Class 1 consists of Priority Non-Tax Claims

(b) Treatment: Except to the extent that a holder of an Allowed Priority Non-Tax Claim against the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction, settlement and release of such Allowed Priority Non-Tax Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, as applicable: (i) each such holder shall receive payment in full in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as is reasonably practicable; or (ii) such holder shall receive such other treatment so as to render such holder’s Allowed Priority Non-Tax Claim Unimpaired.

(c) Voting: Class 1 is Unimpaired, and holders of Priority Non-Tax Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Priority Non-Tax Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to Priority Non-Tax Claims.


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2. Other Secured Claims (Class 2)

(a) Classification: Class 2 consists of the Other Secured Claims. To the extent that Other Secured Claims are secured by different collateral or different interests in the same collateral, such Claims shall be treated as separate subclasses of Class 2 for purposes of voting to accept or reject the Plan and receiving distributions under the Plan.

(b) Treatment: Except to the extent that a holder of an Allowed Other Secured Claim agrees to different treatment, on the later of the Effective Date and the date that is ten (10) Business Days after the date such Other Secured Claim becomes an Allowed Claim, or as soon thereafter as is reasonably practicable, each holder of an Allowed Other Secured Claim will receive, on account and in full satisfaction of such Allowed Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, with the consent of the Requisite Consenting Creditors, as applicable: (i) Cash in an amount equal to the Allowed amount of such Claim; (ii) return of the applicable collateral or the proceeds thereof in satisfaction of the Allowed amount of such Other Secured Claim; or (iii) such other treatment sufficient to render such holder’s Allowed Other Secured Claim Unimpaired.

(c) Voting: Class 2 is Unimpaired, and holders of Other Secured Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Other Secured Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Other Secured Claims.

3. Senior First Out Term Loan Claims (Class 3)

(a) Classification: Class 3 consists of Senior First Out Term Loan Claims.

(b) Allowance: The Senior First Out Term Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $ 76.5 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Senior First Out Term Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Senior First Out Term Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Senior First Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior First Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds, until all Allowed Senior First Out Term Loan Claims are satisfied in full; provided that (A) upon the Reorganized Equity Plan Election, (i) Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims up to $2.75 million (the “Reallocated Amount”) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation); (ii) Plan Sponsor shall receive 100% of the New Common Stock; and (iii) the amount of Plan Sponsor’s share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims exceeding the Reallocated Amount shall be distributed to Plan Sponsor; provided that if the Reallocated Amount is less than $2.75 million, the Cash payable by the Debtors to satisfy DIP Claims in cash in full on the Effective Date in an amount equal to the difference between $2.75 million and the Reallocated Amount (such amount, the “Reallocation Amount Shortfall”) shall be distributed to the holders of Allowed Senior First Out Term Loan Claims (other than the Plan Sponsor) in an amount equal to the Reallocation Amount Shortfall; provided further that if the Debtors do not have sufficient cash on hand to make or reserve for distributions to holders of Allowed


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Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Allowed Other Secured Claims on the Effective Date in accordance with the terms of the Plan (such amount, the “Plan Confirmation Shortfall”), the Plan Sponsor shall be entitled to make a DIP Conversion Election in an amount necessary to cover such Plan Confirmation Shortfall, and the amount of such Plan Confirmation Shortfall shall reduce, on a dollar-for-dollar basis, the Reallocated Amount Shortfall; and (B) if the Reorganized Equity Plan Election is not made, (i) Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims in an amount equal to the difference between $2.75 million and the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets (to the extent the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets is less than $2.75 million) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation).

(d) Voting: Class 3 is Impaired, and holders of Senior First Out Term Loan Claims are entitled to vote to accept or reject the Plan.

4. Senior Last Out Term Loan Claims (Class 4)

(a) Classification: Class 4 consists of Senior Last Out Term Loan Claims.

(b) Allowance: The Senior Last Out Term Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $56.8 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Senior Last Out Term Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Senior Last Out Term Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Senior Last Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior Last Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior First Out Term Loan Claims are satisfied in full in Cash, until all Allowed Senior Last Out Term Loan Claims are satisfied in full.

(d) Voting: Class 4 is Impaired, and holders of Senior Last Out Term Loan Claims are entitled to vote to accept or reject the Plan.

5. Holdco Loan Claims (Class 5)

(a) Classification: Class 5 consists of Holdco Loan Claims.

(b) Allowance: The Holdco Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $51 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Holdco Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Holdco Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Holdco Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Holdco Loan Claim, each such holder thereof shall receive such holder’s Pro


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Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior Last Out Term Loan Claims are satisfied in full in Cash, until all Allowed Holdco Loan Claims are satisfied in full.

(d) Voting: Class 5 is Impaired, and holders of Holdco Loan Claims are entitled to vote to accept or reject the Plan.

6. General Unsecured Claims (Class 6)

(a) Classification: Class 6 consists of General Unsecured Claims.

(b) Treatment: Except to the extent that a holder of an Allowed General Unsecured Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed General Unsecured Claim, each such holder thereof shall receive (i) such holder’s Pro Rata share of (x) the GUC Recovery Trust Interests (entitling such holder to a Pro Rata share of the GUC Recovery Trust Net Assets in accordance with the GUC Recovery Trust Agreement); and (y) the Net Cash Proceeds after the Prepetition Loan Claims are satisfied in full in Cash, until all Allowed General Unsecured Claims are satisfied in full; and (ii) if such holder of an Allowed General Unsecured Claim satisfies the requirements to be a Released Avoidance Party, such holder shall be treated as a Released Avoidance Party. For the avoidance of doubt, a holder of a Prepetition Loan Deficiency Claim shall not receive distributions in accordance with Section 4.5(b) of the Plan and such claims are waived.

(c) Voting: Class 6 is Impaired, and holders of General Unsecured Claims are entitled to vote to accept or reject the Plan.

7. Intercompany Claims (Class 7)

(a) Classification: Class 7 consists of Intercompany Claims.

(b) Treatment: On or after the Effective Date, all Intercompany Claims will be cancelled and not entitled to distribution or any recovery under the Plan.

(c) Voting: Class 7 is Impaired, and holders of Intercompany Claims are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, holders of Intercompany Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Intercompany Claims.

8. Intercompany Interests (Class 8)

(a) Classification: Class 8 consists of Intercompany Interests.

(b) Treatment: On or after the Effective Date, all Intercompany Interests shall be cancelled, reinstated, or receive such other treatment as determined by the Debtors and the Requisite Consenting Creditors, in their respective reasonable discretion; provided, that holders of Intercompany Interests shall not receive Cash on account of such Intercompany Interests.

(c) Voting: Class 8 is Unimpaired, and holders of Intercompany Interests are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Intercompany Interests are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Intercompany Interests.


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9. Parent Equity Interests (Class 9)

(a) Classification: Class 9 consists of Parent Equity Interests.

(b) Treatment: Except to the extent that a holder of Parent Equity Interests agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of, and in exchange for Parent Equity Interests, each such holder thereof shall receive:

(i) If the Reorganized Equity Plan Election is made, all Parent Equity Interests shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force or effect, whether surrendered for cancellation or not.

(ii) If the Reorganized Equity Plan Election is not made

(1) On the Effective Date, all Parent Equity Interests shall be cancelled and one share of Fairway Holdings common stock (the “Holdings Single Share”) shall be issued to the Plan Administrator to hold in trust as custodian for the benefit of the former holders of Fairway Holdings common stock and preferred stock consistent with their former relative priority and economic entitlements. The Holdings Single Share shall be recorded on the books and records maintained by the Plan Administrator;

(2) Each former holder of a Parent Equity Interest (through their interest in the Holdings Single Share, as applicable) shall neither receive nor retain any property of the Estate or direct interest in property of the Estate on account of such Parent Equity Interest; provided, that in the event that all Allowed Claims have been satisfied in full in accordance with the Bankruptcy Code and the Plan, each former holder of a Parent Equity Interest may receive its share of any remaining assets of Fairway Holdings consistent with such holder’s rights of payment existing immediately prior to the Commencement Date. Unless otherwise determined by the Plan Administrator, on the date that Fairway Holdings’ Chapter 11 Case is closed in accordance with Section 5.15 of the Plan, the Holdings Single Share issued on the Effective Date shall be deemed cancelled and of no further force and effect; provided that such cancellation does not adversely impact the Debtors’ Estates; and

(3) The continuing rights of former holders of Parent Equity Interests (including through their interest in Holdings Single Share or otherwise) shall be nontransferable except by operation of law, or, subject to the Plan Administrator’s consent, for administrative transfers where the ultimate beneficiary has not changed.

(c) Voting: Class 9 is Impaired, and holders of Parent Equity Interests are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, holders of Parent Equity Interests are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Parent Equity Interests.

10. Subordinated Securities Claims (Class 10)

(a) Classification: Class 10 consists of Subordinated Securities Claims.

(b) Treatment: Holders of Subordinated Securities Claims shall not receive or retain any property under the Plan on account of such Subordinated Securities Claims. On the Effective Date, all Subordinated Securities Claims shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force and effect, whether surrendered for cancellation or otherwise.


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(c) Voting: Class 10 is Impaired, and the holders of Subordinated Securities Claims are conclusively deemed to have rejected the Plan. Therefore, holders of Subordinated Securities Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders of Subordinated Securities Claims will not be solicited.

D. Means For Implementation.

1. No Substantive Consolidation

(a) The Plan is being proposed as a joint plan of reorganization of the Debtors for administrative purposes only and constitutes a separate chapter 11 plan of reorganization for each Debtor. The Plan is not premised upon the substantive consolidation of the Debtors with respect to the Classes of Claims or Interests set forth in the Plan, subject to the terms of the Global Settlement set forth in Section 5.3(b) of the Plan.

2. Incorporation of UFCW Settlement

(a) The terms and conditions of the UFCW Settlement are incorporated in the Plan as if fully set forth in the Plan, and shall by binding on the Debtors, Wind Down Estates, the GUC Recovery Trust, and all other parties in interest, to the extent applicable.

3. Compromise and Settlement of Claims, Interests, and Controversies

(a) Pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan and the Global Settlement shall constitute a good faith compromise of Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that a creditor or an Interest holder may have with respect to any Claim or Interest or any distribution to be made on account of an Allowed Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates, and holders of such Claims and Interests, and is fair, equitable, and reasonable.

(b) The treatment provided for hereunder to Allowed General Unsecured Claims, incorporates and reflects a proposed compromise and settlement by and among the Debtors, the Creditors’ Committee, and the Consenting Creditors (the “Global Settlement”). The following constitutes the provisions and conditions of the Global Settlement:

(i) On the Effective Date, and solely for purposes of distributions from the GUC Recovery Trust: (1) all General Unsecured Claims against each of the Debtors shall be deemed merged or treated as liabilities of the GUC Recovery Trust to the extent Allowed; (2) all General Unsecured Claim guaranties by a Debtor of the obligations of any other Debtor shall be deemed eliminated and extinguished so that any General Unsecured Claim against any Debtor and any guarantee thereof executed by any Debtor and any joint or several General Unsecured Claim against any of the Debtors shall be deemed to be one obligation of the GUC Recovery Trust; (3) each and every General Unsecured Claim filed in any of the Chapter 11 Cases shall be treated as filed against the consolidated Debtors and shall be treated as one General Unsecured Claim against and obligation of the GUC Recovery Trust. For the avoidance of doubt, for purposes of determining the availability of the right of set off under section 553 of the Bankruptcy Code, the Debtors, Reorganized Debtors, and Wind Down Estates shall be treated as separate entities so that, subject


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to the other provisions of section 553 of the Bankruptcy Code, debts due to any of the Debtors may not be set off against the liabilities of any of the other Debtors. Such substantive consolidation shall not (other than for purposes relating to the Plan) affect the legal and corporate structures of Wind Down Estates or the Reorganized Debtors. Moreover, such substantive consolidation shall not affect any subordination provisions set forth in any agreement relating to any General Unsecured Claim or the ability of the GUC Recovery Trustee to seek to have any General Unsecured Claim subordinated in accordance with any contractual rights or equitable principles.

(ii) On the Effective Date, the GUC Recovery Trust shall be established in accordance with Section 5.17 of the Plan and shall be governed and administered in accordance with the GUC Recovery Trust Agreement.

(iii) On the Effective Date, the Debtors and the Estates shall transfer the GUC Recovery Trust Assets to the GUC Recovery Trust, free and clear of all Liens, charges, Claims, encumbrances, and interests for the benefit of the holders of Allowed General Unsecured Claims. In accordance with Section 1141 of the Bankruptcy Code, all of the GUC Recovery Trust Assets, as well as the rights and powers of the Debtors’ Estates applicable to the GUC Recovery Trust Assets, shall vest in the GUC Recovery Trust, for the benefit of the holders of Allowed General Unsecured Claims.

(iv) On the Effective Date, the Debtors and their Estates waive the right to prosecute any Avoidance Actions against the Released Avoidance Parties. Any Unreleased Avoidance Actions shall be transferred to the GUC Recovery Trust; provided that the Wind Down Estates and the Plan Administrator shall retain and may prosecute objections pursuant to section 502(d) of the Bankruptcy Code against any party that is not a Released Avoidance Party with respect to any Administrative Expense Claim, Priority Non-Tax Claim, or Secured Claim asserted by such parties. For the avoidance of doubt, Causes of Action arising under section 542 or section 549 of the Bankruptcy Code shall remain property of the Debtors or the Wind Down Estates and are not transferred to the GUC Recovery Trust.

(v) The GUC Recovery Trustee shall determine whether to enforce, settle, release, or compromise Unreleased Avoidance Actions (or decline to do any of the foregoing). The Wind Down Estates, the Reorganized Debtors, and the Plan Administrator, as applicable, shall not be subject to any claims or counterclaims of the GUC Recovery Trust, including with respect to the Unreleased Avoidance Actions.






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4. Sources of Consideration for Plan Distributions

The Wind Down Estates shall fund distributions and satisfy applicable Allowed Claims and Allowed Interests under the Plan using Cash on hand and any Cash generated from the liquidating of the Debtors’ remaining Assets. The GUC Recovery Trust shall fund distributions and satisfy Allowed General Unsecured Claims using GUC Recovery Trust Assets.

5. Reorganized Equity Plan Election Notice

Unless extended by the Debtors, on August 15, 2020 (the “Reorganized Equity Plan Election Date”), Plan Sponsor shall deliver a notice (the “Reorganized Equity Plan Election Notice”) to the Debtors if Plan Sponsor wishes to make the Reorganized Equity Plan Election and consummate the Reorganization Transaction. If Plan Sponsor does not deliver a Reorganized Equity Plan Election Notice by the Reorganized Equity Plan Election Date, the Reorganization Transaction shall not be pursued.

6. Reorganization Transaction

If the Reorganized Equity Plan Election is made, the Debtors shall implement the Reorganization Transaction as set forth in the Plan.

(a) Authorization and Issuance of New Plan Securities

(i) On the Effective Date, the Debtors or the Reorganized Debtors, as applicable, are authorized to issue or cause to be issued and shall issue the New Common Stock in accordance with the terms of the Plan and the Amended Organizational Documents without the need for any further corporate or stockholder action. All of the New Common Stock issuable under the Plan, when so issued, shall be duly authorized, validly issued, fully paid, and non-assessable.

(ii) The distribution of the New Common Stock pursuant to the Plan may be made by means of book-entry registration on the books of a transfer agent for shares of New Common Stock or by means of book-entry exchange through the facilities of a transfer agent reasonably satisfactory to the Debtors, in accordance with the customary practices of such agent, as and to the extent practicable.

(b) Continued Corporate Existence

(i) The Reorganized Debtors shall continue to exist after the Effective Date as a private company in accordance with the applicable laws of the respective jurisdictions in which they are incorporated or organized and pursuant to the Amended Organizational Documents unless otherwise determined in accordance with Section 5.8 of the Plan. After the Effective Date, the continued existence of Wind Down Estates shall be separate from the Reorganized Debtors.

(ii) On or after the Effective Date, the Reorganized Debtors may take such action that may be necessary or appropriate as permitted by applicable law and the Reorganized Debtors’ Amended Organizational Documents, as the Reorganized Debtors may determine is reasonable and appropriate to effect any transaction described in, approved by, or necessary or appropriate to effectuate the Plan.

(c) Vesting of Reorganized Assets


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(i) In accordance with Section 10.1 of the Plan, on the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all of the Reorganized Assets shall vest free and clear of all Claims, Liens, encumbrances, charges, and other interests in the Reorganized Debtors, and all other Assets of the Reorganized Debtors, including rights of settlement, and other Causes of Action, shall be transferred to and vest with Wind Down Co to satisfy Claims in accordance with the Plan.

(ii) The Wind Down Co shall receive the Wind Down Co Assets, and such receipt of assets shall be exempt from any stamp or other similar tax pursuant to section 1146(a) of the Bankruptcy Code. The Reorganized Debtors shall have no reversionary or further interest in or with respect to the Wind Down Co Assets upon the transfer of the Wind Down Co Assets.

(d) Officers and Board of Directors

(i) Upon the Effective Date, the New Board shall consist of a director or directors to be selected by Plan Sponsor. The identities of the director(s) and officers of the Reorganized Debtors, to the extent known, shall be disclosed prior to the Confirmation Hearing in accordance with section 1129(a)(5) of the Bankruptcy Code.

(ii) Except to the extent that a member of the board of directors or managers, as applicable, of a Debtor continues to serve as a director or manager of such Debtor on and after the Effective Date, the members of the board of directors or managers of each Debtor prior to the Effective Date, in their capacities as such, shall have no continuing obligations to the Reorganized Debtors on or after the Effective Date and each such director or manager will be deemed to have resigned or shall otherwise cease to be a director or manager of the applicable Debtor on the Effective Date.

(e) Reorganized Debtors Exit Facility

(i) On the Effective Date, subject to the Reorganized Equity Plan Election and in accordance with Section 2.4 of the Plan, the Reorganized Debtors shall enter into the Reorganized Debtors Exit Facility. Confirmation of the Plan shall be deemed approval and authorization of the Reorganized Debtors to execute all transactions contemplated by the Reorganized Debtors Facility Documents, and to take all actions and undertakings and incur all obligations to be incurred by the Reorganized Debtors in connection therewith, including the payment of all fees, indemnities, and expenses provided for therein.

7. Wind Down and Dissolution of the Debtors

(a) On the Effective Date, the Plan Administrator shall be appointed as the Plan Administrator for each of the Debtors after the Effective Date for the purpose of conducting the Wind Down and shall succeed to such powers as would have been applicable to the Debtors’ officers, directors, and equityholders, and the Debtors shall be authorized to be (and upon the conclusion of the Wind Down, shall be) dissolved by the Plan Administrator. The Plan Administrator shall act for each of the Debtors in the same capacity and shall have the same rights and powers as are applicable to a manager, managing member, board of managers, board of directors or equivalent governing body, as applicable, and to officers, subject to the provisions hereof (and all certificates of formation and limited liability company agreements and certificates of incorporation or by-laws, or equivalent governing documents and all other related documents (including membership agreements, stockholders agreements, or similar instruments), as applicable, are deemed amended pursuant to the Plan to permit and authorize the same). From and after the Effective Date, the Plan Administrator shall be the sole representative of and shall act for each of the Debtors and the Wind Down Estates with the authority set forth in Section


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5.6 of the Plan. For the avoidance of doubt, notwithstanding anything in this paragraph or the Plan, the Plan Administrator shall not have any rights to direct dissolution of, or otherwise manage the affairs or business of, the Reorganized Debtors.

(b) The Plan Administrator shall have the authority and right on behalf of each of the Wind Down Estates, without the need for Bankruptcy Court approval (unless otherwise indicated), to carry out and implement all provisions of the Plan, including, without limitation, to: (a) implement the Wind Down as expeditiously as reasonably possible and administer the liquidation, dissolution, sale and/or abandoning or similar action of the Debtors and their Estates and any assets held by the Wind Down Estates after the Effective Date; (b) except to the extent Claims have been previously Allowed, control and effectuate the Claims reconciliation process, including to object to, seek to subordinate, compromise or settle any and all Claims against the Debtors, other than with respect to General Unsecured Claims; (c) make distributions to holders of Allowed Claims in accordance with the Plan, other than with respect to holders of Allowed General Unsecured Claims; (d) prosecute all Causes of Action on behalf of the Debtors, elect not to pursue any Causes of Action, and determine whether and when to compromise, settle, abandon, dismiss, or otherwise dispose of any such Causes of Action, as the Plan Administrator may determine is in the best interests of the Debtors (other than with respect to the Unreleased Avoidance Actions); (e) create and fund, as necessary, any reserves required under the Plan, including for Disputed Claims and other such reserves as the Plan Administrator deems necessary and appropriate to carry out the provisions of the Plan; (f) retain professionals to assist in performing its duties under the Plan; (g) maintain the books, records, and accounts of the Debtors; (h) complete and file, as necessary, all final or otherwise required federal, state, and local tax returns and other tax reports for the Debtors or Wind Down Estates; (i) represent the interests of each Debtor, its Estates, or the Wind Down before any taxing authority in all matters including, without limitations, any action, suit, proceeding, appeal or audit; and (j) perform other duties and functions that are consistent with the implementation of the Plan or required by the Bankruptcy Code.

(c) Each of the Wind Down Estates (but, if the Reorganized Equity Plan Election is made, excluding the Reorganized Debtors) shall indemnify and hold harmless the Plan Administrator solely in its capacity as such for any losses incurred in such capacity, except to the extent such losses were the result of the Plan Administrator’s gross negligence, willful misconduct, or criminal conduct.

(d) The Plan Administrator shall represent the Wind Down Estates and shall have the right to retain the services of attorneys, accountants, and other professionals that the Plan Administrator determines, in its sole discretion, are necessary to assist the Plan Administrator in performing his or her duties. The Plan Administrator shall pay the reasonable fees and expenses of such professionals without further order of the Bankruptcy Court. Any and all reasonable and documented costs and expenses incurred by the Plan Administrator in connection with the Wind Down shall be paid from the funds of the Wind Down Estates. The Plan Administrator shall be compensated and reimbursed for reasonable costs and expenses as set forth in the Plan Supplement.

(e) Subject to Section 6.3(b) of the Plan, the Debtors shall make an initial distribution on the Effective Date and thereafter, the Plan Administrator shall, in an expeditious but orderly manner, make timely distributions pursuant to the Plan and the Confirmation Order.

(f) If the Reorganized Equity Plan Election is made, on the Effective Date, Wind Down Co shall be formed. Unless the Wind Down Co is formed as a trust in accordance with Section 5.6(g) of the Plan, one new equity interest (the “Single Share”) in the Wind Down Co shall be issued to the Plan Administrator, which shall hold such equity interest in trust as custodian for the benefit


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of all Holders of Allowed Claims of Wind Down Co. The Single Share shall be recorded on the books and records maintained by the Plan Administrator.

(g) If the Reorganized Equity Plan Election is made, and in the event that Wind Down Co is formed as a trust, it will be structured and intended to qualify as a “liquidating trust” within the meaning of Treasury Regulation section 301.7701-4(d), and in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684 and, thus, as a “grantor trust” within the meaning of sections 671 through 679 of the Tax Code to the Holders of Allowed Claims receiving interests in Wind Down Co, consistent with the terms of the Plan. In such event, the Wind Down Co will be governed by provisions substantially similar to those set forth with respect to the GUC Recovery Trust in Section 5.17 of the Plan, with the Plan Administrator acting as the trustee.

(h) The Plan Administrator shall effectuate the Wind Down in accordance with the Wind Down Budget.

(i) The Plan Administrator shall be authorized to file on behalf of the Debtors and any non-Debtor subsidiaries (but, if the Reorganized Equity Plan Election is made, not the Reorganized Debtors), certificates of dissolution and any and all other corporate and company documents necessary to effectuate the Wind Down without further action under applicable law, regulation, order, or rule, including any action by the stockholders, members, the board of directors, or board of directors or similar governing body of the Debtors.

(j) The PACA/PASA Order will continue in effect after the Effective Date and the Wind Down Estates must continue to comply therewith.

(k) All directors and officers of the dissolved Debtors shall be deemed to have resigned in their capacity as of the Effective Date.

8. Employee Matters

(a) The KEIP Incentive Awards and KERP Payments, if applicable, shall be paid in Cash as Allowed Administrative Expense Claims. Distributions of the KEIP Incentive Awards shall be deemed to be distributions made to holders of Allowed Senior First Out Term Loan Claims in accordance with Section 4.3 of the Plan and the KEIP/KERP Order. The Debtors shall assume and honor all KEIP Agreements and honor all KERP Agreements.

9. Effectuating Documents; Further Transactions

(a) On or as soon as practicable after the Effective Date, the Reorganized Debtors, Wind Down Estates, or the Plan Administrator, or the GUC Recovery Trust, or GUC Recovery Trustee, as applicable, may take such actions as may be or become necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan and the Global Settlement, including (i) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, financing, conversion, disposition, transfer, dissolution, transition services, or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable Entities may determine; (ii) the execution and delivery of appropriate instruments of transfer, assignment assumption, or delegation of any Asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Plan and having other terms to which the applicable parties agree; (iii) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, or dissolution and the Amended Organizational Documents pursuant to applicable state law; (iv) the issuance of


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securities, all of which shall be authorized and approved in all respects, in each case, without further action being required under applicable law, regulation, order, or rule; (v) the execution, delivery, or filing of contracts, instruments, releases, and other agreements to effectuate and implement the distribution of the GUC Recovery Trust Interests and the New Common Stock (if applicable) to be issued pursuant hereto without the need for any approvals, authorizations, actions, or consents; and (vi) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law or to reincorporate in another jurisdiction.

(b) Each officer, manager, or member of the board of directors of the Debtors is (and each officer, manager, or member of the board of directors of the Reorganized Debtors, Wind Down Estates, and the Plan Administrator, as applicable, shall be) authorized and directed to issue, execute, deliver, file, or record such contracts, securities, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and conditions of the Plan and the securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors or Wind Down Estates, as applicable, all of which shall be authorized and approved in all respects, in each case, without the need for any approvals, authorization, consents, or any further action required under applicable law, regulation, order, or rule (including, without limitation, any action by the stockholders or directors or managers of the Debtors, the Reorganized Debtors, or the Wind Down Estates) except for those expressly required pursuant to the Plan.

(c) The Debtors shall be authorized to implement the Plan, including the Global Settlement, the creation of the GUC Recovery Trust, and, if the Reorganized Equity Plan Election is made, the Reorganization Transaction, in the manner most tax efficient to the Reorganized Debtors or Wind Down Estates, as determined by the Debtors in their business judgment, given the totality of the circumstances.

(d) All matters provided for in the Plan involving the corporate structure of the Debtors, Reorganized Debtors, or Wind Down Estates, to the extent applicable, or any corporate or related action required by the Debtors, Reorganized Debtors, or Wind Down Estates in connection herewith shall be deemed to have occurred and shall be in effect, without any requirement of further action by the stockholders, members, or directors or managers of the Debtors, Reorganized Debtors, or Wind Down Estates, and with like effect as though such action had been taken unanimously by the stockholders, members, directors, managers, or officers, as applicable, of the Debtors, Reorganized Debtors, or Wind Down Estates.

10. Securities Law Exemptions

If the Reorganized Equity Plan Election is made, the offer, issuance, and distribution of the New Common Stock to Plan Sponsor pursuant to Section 4.3 of the Plan shall be exempt, pursuant to section 1145 of the Bankruptcy Code without further act or action by any Entity, from registration under (i) the Securities Act, and all rules and regulations promulgated thereunder and (ii) any state or local law requiring registration for the offer, issuance, or distribution of securities. However, because Plan Sponsor will be deemed an “underwriter” (as defined in section 1145(b) of the Bankruptcy Code) with respect to such securities, Plan Sponsor may not resell the securities without registration, or an available resale exemption, under the Securities Act or other federal, state or local securities laws.

11. Cancellation of Existing Securities and Agreements

(a) Except for the purpose of evidencing a right to a distribution under the Plan and except as otherwise set forth in the Plan, including with respect to executory contracts or


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unexpired leases that shall be assumed by the Wind Down Estates or the Reorganized Debtors, on the Effective Date, all agreements, instruments, and other documents evidencing or issued pursuant to the Prepetition Credit Agreement, or any indebtedness or other obligations thereunder, and any Interest, and any rights of any holder in respect thereof, shall be deemed cancelled, discharged, and of no force or effect, and the obligations of the Debtors thereunder shall be deemed fully satisfied, released, and discharged.

(b) On the Effective Date, all commercial paper shall be cancelled and discharged and of no further force and effect, except that, notwithstanding such cancellation and discharge, the Prepetition Credit Agreement shall continue in effect solely to the extent necessary to (i) allow the holders of such Claims to receive distributions under the Plan; (ii) allow the Debtors, the Wind Down Estates, the Plan Administer, and the Prepetition Agent, to make post-Effective Date distributions or take such other action pursuant to the Plan on account of such Claims and to otherwise exercise their rights and discharge their obligations relating to the interests of the holders of such Claims; (iii) allow holders of Claims to retain their respective rights and obligations vis-à-vis other holders of Claims pursuant to any applicable loan documents; (iv) allow the Prepetition Agent to enforce its rights, claims, and interests vis-à-vis any party other than the Debtors, including any rights with respect to priority of payment and/or to exercise charging liens; (v) preserve any rights of the Prepetition Agent to payment of fees, expenses, and indemnification obligations as against any money or property distributable to lenders under the Prepetition Credit Agreement including any rights to priority of payment and/or to exercise charging liens; (vi) allow the Prepetition Agent to enforce any obligations owed to it under the Plan; (vii) allow the Prepetition Agent to exercise rights and obligations relating to the interests of lenders under the Prepetition Credit Agreement; (viii) permit the Prepetition Agent to perform any function necessary to effectuate the foregoing; and (ix) allow the Prepetition Agent to appear in the Chapter 11 Cases or in any proceeding in the Bankruptcy Court or any other court relating to the Prepetition Credit Agreement; provided, that nothing in Section 5.10 of the Plan shall affect the discharge of Claims pursuant to the Bankruptcy Code, the Confirmation Order, or the Plan or result in any liability or expense to the Debtors, Reorganized Debtors, or the Wind Down Estates. Notwithstanding anything to the contrary in the Plan, the indemnity obligations of the Debtors under the Prepetition Credit Agreement shall survive the termination thereof and shall not be discharged or released pursuant to the Plan or the Confirmation Order.

(c) Except for the foregoing, subsequent to the performance by the Prepetition Agent of its obligations pursuant to the Plan, the Prepetition Agent and its agents shall be relieved of all further duties and responsibilities related to the Prepetition Credit Agreement.

(d) Notwithstanding the foregoing, any provision in any document, instrument, lease, or other agreement that causes or effectuates, or purports to cause or effectuate, a default, termination, waiver, or other forfeiture of, or by, the Debtors as a result of the cancellations, terminations, satisfaction, releases, or discharges provided for in the Plan shall be deemed null and void and shall be of no force and effect. Nothing contained in the Plan shall be deemed to cancel, terminate, release, or discharge the obligation of the Debtors or any of their counterparties under any executory contract or lease to the extent such executory contract or lease has been assumed by the Debtors pursuant to a Final Order of the Bankruptcy Court or hereunder.

12. Cancellation of Liens

Except as otherwise specifically provided in the Plan, upon the payment in full in Cash of a Secured Claim, any Lien securing a Secured Claim that is paid in full, in Cash, shall be deemed released, and the holder of such Other Secured Claim shall be authorized and directed to release any collateral or other property of the Debtors (including any Cash collateral) held by such holder and to take such actions as


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may be requested by the Debtors or Plan Administrator, as applicable, to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors or Plan Administrator, as applicable.

13. Subordination Agreements

Pursuant to section 510(a) of the Bankruptcy Code, all subordination agreements governing Claims or Interests shall be enforced in accordance with such agreements’ terms.

14. Nonconsensual Confirmation

The Debtors intend to undertake to have the Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy Code as to any Classes that reject or are deemed to reject the Plan.

15. Closing of Chapter 11 Cases

After an Estate has been fully administered, the Wind Down Estates or the Plan Administrator shall seek authority from the Bankruptcy Court to close the applicable Chapter 11 Case(s) in accordance with the Bankruptcy Code and Bankruptcy Rules.

16. Notice of Effective Date

As soon as practicable, but not later than three (3) Business Days following the Effective Date, the Debtors shall file a notice of the occurrence of the Effective Date with the Bankruptcy Court.

17. Separability

Notwithstanding the combination of the separate plans for the Debtors set forth in the Plan for purposes of economy and efficiency, the Plan constitutes a separate chapter 11 plan for each Debtor. Accordingly, if the Bankruptcy Court does not confirm the Plan with respect to one or more Debtors, it may still, subject to the consent of the applicable Debtors, confirm the Plan with respect to any other Debtor that satisfies the confirmation requirements of section 1129 of the Bankruptcy Code.

18. GUC Recovery Trust

(a) Creation and Governance of the GUC Recovery Trust. On the Effective Date, the Debtors shall transfer the GUC Recovery Trust Assets to the GUC Recovery Trust and the Debtors and the GUC Recovery Trustee shall execute the GUC Recovery Trust Agreement and shall take all steps necessary to establish the GUC Recovery Trust in accordance with the Plan and the beneficial interests therein. In the event of any conflict between the terms of the Plan and the terms of the GUC Recovery Trust Agreement, the terms of the Plan shall govern. Additionally, on the Effective Date, the Debtors shall transfer and shall be deemed to transfer to the GUC Recovery Trust all of their rights, title and interest in and to all of the GUC Recovery Trust Assets, and in accordance with section 1141 of the Bankruptcy Code, the GUC Recovery Trust Assets shall automatically vest in the GUC Recovery Trust free and clear of all Claims and Liens, and such transfer shall be exempt from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. The GUC Recovery Trustee shall be the exclusive administrator of the assets of the GUC Recovery Trust for purposes of 31 U.S.C. § 3713(b) and 26 U.S.C. § 6012(b)(3), as well as the representatives of the Estate of each of the Debtors appointed pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, solely for purposes of carrying out the GUC Recovery Trustee’s duties under the GUC Recovery Trust Agreement. The GUC Recovery Trust shall be governed by the GUC Recovery Trust Agreement and administered by the GUC Recovery Trustee. The


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powers, rights, and responsibilities of the GUC Recovery Trustee shall be specified in the GUC Recovery Trust Agreement and shall include the authority and responsibility to, among other things, take the actions set forth in Section 5.17. The GUC Recovery Trustee shall hold and distribute the GUC Recovery Trust Assets in accordance with the provisions of the Plan and the GUC Recovery Trust Agreement. Other rights and duties of the GUC Recovery Trustee shall be as set forth in the GUC Recovery Trust Agreement. After the Effective Date, the Debtors, the Wind Down Estates, and the Reorganized Debtors shall have no interest in the GUC Recovery Trust Assets except as set forth in the GUC Recovery Trust Agreement.

(b) GUC Recovery Trustee and GUC Recovery Trust Agreement. The GUC Recovery Trust Agreement generally will provide for, among other things: (i) the transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust; (ii) the payment of certain reasonable expenses of the GUC Recovery Trust from the GUC Recovery Trust Assets; and (iii) distributions to holders of Allowed General Unsecured Claims, as provided in the Plan and in the GUC Recovery Trust Agreement. The GUC Recovery Trust Agreement may include reasonable and customary provisions that allow for indemnification by the GUC Recovery Trust. Any such indemnification shall be the sole responsibility of the GUC Recovery Trust and payable solely from the GUC Recovery Trust Assets. The GUC Recovery Trustee shall be responsible for all decisions and duties with respect to the GUC Recovery Trust and the GUC Recovery Trust Assets, except as otherwise provided in the GUC Recovery Trust Agreement.

(c) Cooperation of Wind Down Estates. Subject to subsection (d) of Section 5.17 of the Plan, the Debtors, Wind Down Estates, or Plan Administrator, as applicable, upon reasonable notice, shall reasonably cooperate with the GUC Recovery Trustee in the administration of the GUC Recovery Trust, including by providing reasonable access to pertinent documents, including books and records, to the extent the Debtors, Wind Down Estates, or Plan Administrator, as applicable, have such information and/or documents, to the GUC Recovery Trustee sufficient to enable the GUC Recovery Trustee to perform its duties hereunder. The Debtors, Wind Down Estates, and the Plan Administrator shall reasonably cooperate with the GUC Recovery Trustee in the administration of the GUC Recovery Trust, including, by providing reasonable access to documents and current officers and directors with respect to contesting, settling, compromising, reconciling, and objecting to General Unsecured Claims, provided that, in each case, the GUC Recovery Trust agrees upon request to reimburse reasonable out-of-pocket expenses for preservation of documents, copying or similar expenses. The collection, review, and preservation of documents for any investigation or litigation by the GUC Recovery Trustee shall be at the expense of the GUC Recovery Trust.

(d) Preservation of Privilege. The Debtors or Wind Down Estates, as applicable, and the GUC Recovery Trust shall enter into a common interest agreement whereby the Debtors will be able to share documents, information or communications (whether written or oral) relating to the GUC Recovery Trust Assets. The GUC Recovery Trust shall seek to preserve and protect all applicable privileges attaching to any such documents, information, or communications. The GUC Recovery Trustee’s receipt of such documents, information or communications shall not constitute a waiver of any privilege. All privileges shall remain in the control of the Debtors, Wind Down Estates or Plan Administrator, as applicable, and the Debtors, Wind Down Estates or Plan Administrator, as applicable, retain the right to waive their own privileges.

(e) GUC Recovery Trust Assets. From and after the Effective Date, the GUC Recovery Trustee, in accordance with section 1123(b)(3) of the Bankruptcy Code, and on behalf of the GUC Recovery Trust, shall serve as a representative of the Estates, solely for purposes of carrying out the GUC Recovery Trustee’s duties under the GUC Recovery Trust Agreement.


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(f) GUC Recovery Trust Fees and Expenses. From and after the Effective Date, the GUC Recovery Trustee, on behalf of the GUC Recovery Trust, shall, in the ordinary course of business and without the necessity of any approval by the Bankruptcy Court, pay the GUC Recovery Trust Fees and Expenses from the GUC Recovery Trust Assets. The GUC Recovery Trustee is authorized to allocate such expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) to, and pay them from, the GUC Recovery Trust Assets, as the GUC Recovery Trustee may determine in good faith is fair (such as based upon the GUC Recovery Trustee’s good faith determination of the nature or purpose of the fee or expense, the relative amount of General Unsecured Claims, the relative estimated value of the GUC Recovery Trust Assets or such other matters as the GUC Recovery Trustee deems relevant); provided that the GUC Recovery Trustee (i) shall reasonably attribute the expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) of the liquidation, defense or resolution of General Unsecured Claims to the GUC Recovery Trust Assets and pay them therefrom, and (ii) shall reasonably attribute the expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) of calculating, disseminating and administering distributions (e.g., accounting and mailing costs) on General Unsecured Claims to the GUC Recovery Trust Assets and pay them therefrom. The Reorganized Debtors and the Wind Down Estates shall not be responsible for any costs, fees, or expenses of the GUC Recovery Trust.

(g) Tax Treatment. In furtherance of Section 5.17 of the Plan, (i) the GUC Recovery Trust shall be structured to qualify as a “liquidating trust” within the meaning of Treasury Regulation section 301.7701-4(d) and in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684, and, thus, as a “grantor trust” within the meaning of sections 671 through 679 of the Tax Code to the holders of General Unsecured Claims, consistent with the terms of the Plan; (ii) the sole purpose of the GUC Recovery Trust shall be the liquidation and distribution of the GUC Recovery Trust Assets in accordance with Treasury Regulation section 301.7701-4(d), including the resolution of General Unsecured Claims in accordance with the Plan, with no objective to continue or engage in the conduct of a trade or business; (iii) all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) shall report consistently with such treatment; (iv) all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) shall report consistently with the valuation of the GUC Recovery Trust Assets transferred to the GUC Recovery Trust as determined by the GUC Recovery Trustee (or its designee); (v) the GUC Recovery Trustee shall be responsible for filing all applicable tax returns for the GUC Recovery Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a); and (vi) the GUC Recovery Trustee shall annually send to each holder of an interest in the GUC Recovery Trust a separate statement regarding the receipts and expenditures of the trust as relevant for U.S. federal income tax purposes. Subject to definitive guidance from the Internal Revenue Service or a court of competent jurisdiction to the contrary (including the receipt by the GUC Recovery Trustee of a private letter ruling if the GUC Recovery Trustee so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested by the GUC Recovery Trustee), the GUC Recovery Trustee may timely elect to (i) treat any portion of the GUC Recovery Trust allocable to Disputed Claims as a “disputed ownership fund” governed by Treasury Regulation section 1.468B-9 (and make any appropriate elections) and (ii) to the extent permitted by applicable law, report consistently with the foregoing for state and local income tax purposes. If a “disputed ownership fund” election is made, all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) shall report for United States federal, state, and local income tax purposes consistently with the foregoing. The GUC Recovery Trustee may request an expedited determination of taxes of the GUC Recovery Trust, including any reserve for Disputed Claims, under section 505(b) of the Bankruptcy Code for all tax


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returns filed for, or on behalf of, the GUC Recovery Trust for all taxable periods through the dissolution of the GUC Recovery Trust.

(h) Non-Transferability of GUC Recovery Trust Interests. Any and all GUC Recovery Trust Interests shall be non-transferable other than if transferred by will, intestate succession, or otherwise by operation of law. In addition, any and all GUC Recovery Trust Interests will not constitute “securities” and will not be registered pursuant to the Securities Act or any applicable state or local securities law. However, if it should be determined that any such interests constitute “securities,” the exemption provisions of Section 1145 of the Bankruptcy Code will be satisfied and the offer, issuance and distribution under the Plan of the GUC Recovery Trust Interests will be exempt from registration under the Securities Act and all applicable state and local securities laws and regulations

(i) Dissolution of the GUC Recovery Trust. The GUC Recovery Trustee and the GUC Recovery Trust shall be discharged or dissolved, as the case may be, at such time as all distributions required to be made by the GUC Recovery Trustee under the Plan have been made. Upon dissolution of the GUC Recovery Trust, any remaining GUC Recovery Trust Assets shall be distributed to holders of Allowed General Unsecured Claims in accordance with the Plan and the GUC Recovery Trust Agreement, as appropriate.

(j) Single Satisfaction of Allowed General Unsecured Claims. Notwithstanding anything to the contrary in the Plan, in no event shall holders of Allowed General Unsecured Claims recover more than the full amount of their Allowed General Unsecured Claims from the GUC Recovery Trust.

E. Distributions.

1. Distributions Generally

The Disbursing Agents shall make all distributions under the Plan to the appropriate holders of Allowed Claims in accordance with the terms of the Plan.

2. Distribution Record Date

As of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims or Interests as maintained by the Debtors or their respective agents shall be deemed closed for purposes of determining whether a holder of such a Claim or Interest is a record holder entitled to distributions under the Plan, and there shall be no further changes in the record holders or the permitted designees of any such Claims or Interests. The Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, shall have no obligation to recognize any transfer or designation of such Claims or Interests occurring after the close of business on the Distribution Record Date. Any such assigning Prepetition Lender shall immediately turn over any such assigned distributed funds to any such assignee Prepetition Lender immediately upon receipt from the Disbursing Agent and otherwise in accordance with such written agreement. In addition, with respect to payment of any Cure Amounts or assumption disputes, neither the Debtors nor the Disbursing Agent shall have any obligation to recognize or deal with any party other than the non-Debtor party to the applicable executory contract or unexpired lease as of the close of business on the Distribution Record Date, even if such non-Debtor party has sold, assigned, or otherwise transferred its Claim for a Cure Amount. For the avoidance of doubt, all distributions made pursuant to the Plan on account of the Prepetition Loan Claims shall be made by the Disbursing Agent to, or at the direction of, the Prepetition Agent, for further distribution to holders of Prepetition Loan Claims, in accordance with the Plan and the Confirmation Order, subject to and in


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accordance with the terms of the Prepetition Credit Agreement, including, without limitation, subject to the application of the charging lien of the Prepetition Agent for payment of any unpaid fees and expenses.

3. Date of Distributions

(a) Except as otherwise provided in the Plan or in the GUC Recovery Trust Agreement, any distributions and deliveries to be made under the Plan shall be made on the Effective Date, as and when Claims are Allowed in the sole discretion of the Plan Administrator or GUC Recovery Trustee, or as otherwise determined in accordance with the Plan, including, without limitation, the treatment provisions of Article IV of the Plan, or as soon as practicable thereafter; provided, that the Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, shall from time to time announce subsequent distribution dates to the extent they determine them to be appropriate.

(b) The Plan Administrator shall reserve an amount sufficient to pay holders of Disputed Administrative Expense Claims, Disputed Priority Tax Claims, Disputed Non-Priority Tax Claims, and Disputed Other Secured Claims the amount such holders would be entitled to receive under the Plan if such Claims were to become Allowed Claims. After the resolution of Disputed Claims, the Plan Administrator shall treat any amounts that were reserved for such Disputed Claims that do not become Allowed Claims as Net Cash Proceeds.

4. Disbursing Agent

All distributions under the Plan shall be made by the Disbursing Agent on and after the Effective Date as provided in the Plan. The Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties. The Wind Down Estates or Plan Administrator shall use all commercially reasonable efforts to provide the Disbursing Agent (if other than the Plan Administrator) with the amounts of Claims and the identities and addresses of holders of Claims, in each case, as set forth in the Debtors’, or Wind Down Estates’, as applicable, books and records. The Wind Down Estates or Plan Administrator shall cooperate in good faith with the applicable Disbursing Agent (if other than the Plan Administrator) to comply with the reporting and withholding requirements outlined in Section 6.19 of the Plan.

5. Rights and Powers of Disbursing Agent

(a) From and after the Effective Date, the Disbursing Agent, solely in its capacity as Disbursing Agent, shall be exculpated by all Entities, including, without limitation, holders of Claims against and Interests in the Debtors and other parties in interest, from any and all Claims, Causes of Action, and other assertions of liability arising out of the discharge of the powers and duties conferred upon such Disbursing Agent by the Plan or any order of the Bankruptcy Court entered pursuant to or in furtherance of the Plan, or applicable law, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent. No holder of a Claim or Interest or other party in interest shall have or pursue any claim or Cause of Action against the Disbursing Agent, solely in its capacity as Disbursing Agent, for making distributions in accordance with the Plan or for implementing provisions of the Plan, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent.

(b) The Disbursing Agent shall be empowered to (i) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties hereunder; (ii) make all distributions contemplated hereby; and (iii) exercise such other powers as may be vested in


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the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.

6. Expenses of Disbursing Agent

Except as otherwise ordered by the Bankruptcy Court, any reasonable and documented fees and expenses incurred by the Disbursing Agent acting in such capacity (including reasonable documented attorneys’ fees and expenses) on or after the Effective Date shall be paid in Cash; provided, that the fees and expenses incurred by the GUC Recovery Trustee shall be paid solely from the GUC Recovery Trust Assets in accordance with the GUC Recovery Trust Agreement.

7. No Postpetition Interest on Claims

Except as otherwise provided in the Plan, the Confirmation Order, the DIP Order, or another order of the Bankruptcy Court or required by the Bankruptcy Code (including postpetition interest in accordance with sections 506(b) and 726(a)(5) of the Bankruptcy Code), interest shall not accrue or be paid on any Claims on or after the Commencement Date; provided, that if interest is payable pursuant to the preceding sentence, interest shall accrue at the federal judgment rate pursuant to 28 U.S.C. § 1961 on a non-compounded basis from the date the obligation underlying the Claim becomes due and is not timely paid through the date of payment.

8. Delivery of Distributions

(a) Subject to Bankruptcy Rule 9010, all distributions to any holder or permitted designee, as applicable, of an Allowed Claim or Interest shall be made to a Disbursing Agent, who shall transmit such distribution to the applicable holders or permitted designees of Allowed Claims or Interests on behalf of the Debtors. In the event that any distribution to any holder or permitted designee is returned as undeliverable, no further distributions shall be made to such holder or such permitted designee unless and until such Disbursing Agent is notified in writing of such holder’s or permitted designee’s, as applicable, then-current address, at which time all currently-due, missed distributions shall be made to such holder as soon as reasonably practicable thereafter without interest. Nothing in the Plan shall require the Disbursing Agent to attempt to locate holders or permitted designees, as applicable, of undeliverable distributions and, if located, assist such holders or permitted designees, as applicable, in complying with Section 6.14 of the Plan.

(b) Notwithstanding the foregoing, all distributions of Cash on account of Prepetition Loan Claims, if any, shall be deposited with the Prepetition Agent for distribution to holders of Prepetition Loan Claims in accordance with the terms of the Prepetition Credit Agreement. All distributions other than of Cash on account of Prepetition Loan Claims, if any, may, with the consent of the Prepetition Agent, be made by the Disbursing Agent directly to holders of Prepetition Loan Claims in accordance with the terms of the Plan and the Prepetition Credit Agreement. To the extent the Prepetition Agent effectuates, or is requested to effectuate, any distributions hereunder, the Prepetition Agent shall be deemed a “Disbursing Agent” for purposes of the Plan.

(c) As soon as reasonably practicable after the Confirmation Order is entered, the DIP Agent shall provide to counsel to the Debtors a list of all holders of DIP Claims as of such date and such additional information as may be reasonably requested by counsel to the Debtors or the Disbursing Agent to make distributions under the Plan. All distributions to holders of DIP Claims shall be governed by the DIP Documents and the DIP Order and shall be made to each holder of an Allowed DIP Claim or such holder’s authorized designee for purposes of distributions to be made hereunder. All reasonable and documented fees and expenses of the DIP Agent incurred after the


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Effective Date as part of Section 6.8 of the Plan shall be paid by the Debtors or Wind Down Estates, as applicable.

9. Distributions after Effective Date

Distributions made after the Effective Date to holders of Disputed Claims that are not Allowed Claims as of the Effective Date but which later become Allowed Claims shall be deemed to have been made on the Effective Date.

10. Unclaimed Property

Undeliverable distributions shall remain in the possession of the Debtors, Wind Down Estates, or GUC Recovery Trust, as applicable, until such time as a distribution becomes deliverable or holder accepts distribution, or such distribution reverts back to the Debtors, Wind Down Estates, or GUC Recovery Trust, as applicable, and shall not be supplemented with any interest, dividends, or other accruals of any kind. Such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code and forfeited at the expiration of one hundred and twenty (120) days from the applicable date of distribution. After such date, all unclaimed property or interest in property shall revert to and vest in Wind Down Estates, or GUC Recovery Trust, as applicable, and the Claim of any other holder to such property or interest in property shall be discharged and forever barred.

11. Time Bar to Cash Payments

Checks issued by the Disbursing Agent in respect of Allowed Claims shall be null and void if not negotiated within one hundred and twenty (120) days after the date of issuance thereof. Thereafter, the amount represented by such voided check shall immediately and irrevocably revert to the Wind Down Estates (or GUC Recovery Trust in the case of checks issued by the GUC Recovery Trust), and any Claim in respect of such voided check shall be discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Requests for re-issuance of any check prior to the expiration of the one hundred and twenty (120) day period from the date of issuance shall be made to the Disbursing Agent by the holder of the Allowed Claim to whom such check was originally issued.

12. Manner of Payment under Plan

Except as otherwise specifically provided in the Plan, at the option of the Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, any Cash payment to be made hereunder may be made by a check or wire transfer or as otherwise required or provided in applicable agreements or customary practices of the Debtors.

13. Satisfaction of Claims

Except as otherwise specifically provided in the Plan, any distributions and deliveries to be made on account of Allowed Claims under the Plan shall be in complete and final satisfaction, settlement, and discharge of and exchange for such Allowed Claims.

14. Minimum Cash Distributions

The Disbursing Agent shall not be required to make any distribution of Cash less than One Hundred Dollars ($100) to any holder of an Allowed Claim; provided, that if any distribution is not made pursuant to Section 6.14 of the Plan, such distribution shall be added to any subsequent distribution to be made on behalf of the holder’s Allowed Claim.


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15. Setoffs and Recoupments

The Debtors, or Wind Down Estates, as applicable, or such entity’s designee (including, without limitation, the Disbursing Agent) may, but shall not be required to, set off or recoup against any Claim, and any distribution to be made on account of such Claim, any and all claims, rights, and Causes of Action of any nature whatsoever that the Debtors or Wind Down Estates may have against the holder of such Claim pursuant to the Bankruptcy Code or applicable non-bankruptcy law (other than the released Causes of Action in favor of the Released Parties); provided, that neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by a Debtor or Wind Down Estate, or its successor of any claims, rights, or Causes of Action that a Debtor or Wind Down Estate, or its successor or assign may possess against the holder of such Claim (other than the released Causes of Action in favor of the Released Parties).

16. Allocation of Distributions between Principal and Interest

Except as otherwise required by law (as reasonably determined by Wind Down Estates or Plan Administrator, as applicable), distributions with respect to an Allowed Claim shall be allocated first to the principal portion of such Allowed Claim (as determined for United States federal income tax purposes) and, thereafter, to the remaining portion of such Allowed Claim, if any.

17. No Distribution in Excess of Amount of Allowed Claim

Except as provided in Section 6.7 of the Plan, no holder of an Allowed Claim shall receive, on account of such Allowed Claim, distributions in excess of the Allowed amount of such Claim.

18. Distributions Free and Clear

Except as provided in the Plan, any distributions under the Plan shall be free and clear of and Liens, Claims, and encumbrances, and no other entity, including the Debtors or the Plan Administrator, shall have any interest, legal, beneficial, or otherwise, in Assets transferred pursuant to the Plan.

19. Withholding and Reporting Requirements

(a) Withholding Rights. In connection with the Plan, any party issuing any instrument or making any distribution described in the Plan shall comply with all applicable withholding and reporting requirements imposed by any federal, state, or local taxing authority, and all distributions pursuant to the Plan and all related agreements shall be subject to any such withholding or reporting requirements. The Prepetition Agent, Plan Administrator, DIP Agent, GUC Recovery Trustee, Wind Down Estates, Reorganized Debtors. or such other Entity designated thereby, as applicable, shall be authorized to take any actions that they determine, in their reasonable discretion, to be necessary or appropriate to comply with such withholding and reporting requirements, including withholding distributions pending receipt of information necessary to facilitate such issuances or distributions, or establishing any other mechanisms they believe are reasonable and appropriate. In the case of a non-Cash distribution that is subject to withholding, the distributing party may withhold an appropriate portion of such distributed property and either (i) sell such withheld property to generate Cash necessary to pay over the withholding tax (or reimburse the distributing party for any advance payment of the withholding tax), or (ii) pay the withholding tax using its own funds and retain such withheld property. Any amounts withheld pursuant to the preceding sentence shall be deemed to have been distributed to and received by the applicable recipient for all purposes of the Plan. Notwithstanding the foregoing, each holder of an Allowed Claim or any other Entity that receives a distribution pursuant to the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any taxes imposed on such holder by any


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governmental unit, including, without limitation, income, withholding, and other taxes, on account of such distribution. Any party issuing any instrument or making any distribution pursuant to the Plan has the right, but not the obligation, to not make a distribution until such holder has made arrangements satisfactory to such issuing or disbursing party for payment of any such tax obligations.

(b) Forms. Any party entitled to receive any property as an issuance or distribution under the Plan shall, upon request, deliver to the Disbursing Agent or such other Entity designated by the Reorganized Debtors, Wind Down Estates, or GUC Recovery Trustee (which Entity shall subsequently deliver to the Disbursing Agent any applicable Internal Revenue Service Form W-8 or Form W-9 or other tax information received) an appropriate Internal Revenue Service Form W-9 or (if the payee is a foreign Entity) Form W-8, and any other reasonably requested tax information. If such request is made by the Reorganized Debtors, Wind Down Estates, Disbursing Agent, or such other Entity designated by the Reorganized Debtors, Wind Down Estates, or Disbursing Agent and the holder fails to comply before the earlier of (i) the date that is one hundred and eighty (180) days after the request is made and (ii) the date that is one hundred and eighty (180) days after the date of distribution, the amount of any such distribution shall irrevocably revert to the Wind Down Estates, and any Claim in respect of such distribution shall be discharged and forever barred from assertion against the Reorganized Debtors, Wind Down Estates, or such entity’s respective property. If such request is made by the GUC Recovery Trustee, or such other Entity designated by the GUC Recovery Trustee, and the holder fails to comply within ninety (90) days after the request is made, the amount of any such distribution shall irrevocably revert to the GUC Recovery Trust and any General Unsecured Claim in respect of such distribution shall be discharged and forever barred from assertion against the GUC Recovery Trustee, GUC Recovery Trust, or the property of each of them.

F. Procedures For Disputed Claims

1. Objections to Claims

The Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee, as applicable, shall exclusively be entitled to object to Claims. After the Effective Date, the Wind Down Estates, Plan Administrator, or GUC Recovery Trustee, as applicable, shall have and retain any and all rights and defenses that the Debtors had with regard to any Claim to which they may object, except with respect to any Claim that is Allowed. Any objections to proofs of Claim shall be served and filed on or before the later of (a) ninety (90) days after the Effective Date, and (b) on such later date as ordered by the Bankruptcy Court for cause. The expiration of such period shall not limit or affect the Debtors’, Wind Down Estates’, Plan Administrators’, or GUC Recovery Trustee’s, as applicable, rights to dispute Claims asserted in the ordinary course of business other than through a proof of Claim.

2. Resolution of Disputed Administrative Expenses and Disputed Claims

On and after the Effective Date, (a) the Debtors, Wind Down Estates, or the Plan Administrator, as applicable, shall have the exclusive authority to compromise, settle, otherwise resolve, or withdraw any objections to Claims (other than General Unsecured Claims) without approval of the Bankruptcy Court, other than with respect to Fee Claims; and (b) upon the creation of the GUC Recovery Trust, the GUC Recovery Trustee shall have the exclusive authority to compromise, settle, otherwise resolve, or withdraw any objections to General Unsecured Claims without approval of the Bankruptcy Court. The Debtors, Wind Down Estates, or Plan Administrator, as applicable, and the GUC Recovery Trustee shall cooperate with respect to any objections to Claims that seek to convert Claims into General Unsecured Claims, or convert General Unsecured Claims into other senior Claims, and, in each case, the rights and defenses of the Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee, as applicable, to any such objections are fully preserved.


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3. Payments and Distributions with Respect to Disputed Claims

Notwithstanding anything in the Plan to the contrary, if any portion of a Claim is a Disputed Claim, no payment or distribution provided hereunder shall be made on account of such Claim unless and until such Disputed Claim becomes an Allowed Claim.

4. Distributions after Allowance

After such time as a Disputed Claim becomes, in whole or in part, an Allowed Claim, the holder thereof shall be entitled to distributions, if any, to which such holder is then entitled as provided in the Plan, without interest, as provided in Section 7.9 of the Plan. Such distributions shall be made in accordance with Section 6.3 of the Plan.

5. Disallowance of Claims

All proofs of Claim filed on account of an indemnification obligation to a current or former director, officer, or employee shall be deemed satisfied and expunged from the claims register as of the Effective Date to the extent such indemnification obligation is assumed (or honored or reaffirmed, as the case may be) pursuant to the Plan, without any further notice to or action, order, or approval of the Bankruptcy Court.

6. Estimation of Claims

The Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee as to General Unsecured Claims may (a) determine, resolve and otherwise adjudicate all contingent, unliquidated, and Disputed Claims in the Bankruptcy Court and (b) at any time request that the Bankruptcy Court estimate any contingent, unliquidated, or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection. The Bankruptcy Court will retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including, without limitation, during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent, unliquidated, or Disputed Claim, the amount so estimated shall constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, may pursue supplementary proceedings to object to the allowance of such Claim; provided, that such limitation shall not apply to Claims requested by the Debtors to be estimated for voting purposes only.

7. No Distributions Pending Allowance

If an objection, motion to estimate, or other challenge to a Claim is filed, no payment or distribution provided under the Plan shall be made on account of such Claim unless and until (and only to the extent that) such Claim becomes an Allowed Claim.

8. Claim Resolution Procedures Cumulative

All of the objection, estimation, and resolution procedures in the Plan are intended to be cumulative and not exclusive of one another. Claims may be estimated and subsequently settled, compromised, withdrawn, or resolved in accordance with the Plan without further notice or Bankruptcy Court approval.


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9. Interest

To the extent that a Disputed Claim becomes an Allowed Claim after the Effective Date, the holder of such Claim shall not be entitled to any interest that accrued thereon from and after the Effective Date, except as provided in Section 6.7 of the Plan.

10. Insured Claims

If any portion of an Allowed Claim is an Insured Claim, no distributions under the Plan shall be made on account of such Allowed Claim until the holder of such Allowed Claim has exhausted all remedies with respect to any applicable insurance policies. To the extent that the Debtors’ insurers agree to satisfy a Claim in whole or in part, then immediately upon such agreement, the portion of such Claim so satisfied may be expunged without an objection to such Claim having to be filed and without any further notice to or action, order or approval of the Court.

G. Executory Contracts and Unexpired Leases

1. General Treatment

(a) As of and subject to the occurrence of the Effective Date, all executory contracts and unexpired leases to which any of the Debtors are parties shall be deemed rejected, unless such contract or lease (i) was previously assumed or rejected by the Debtors pursuant to an order of the Bankruptcy Court; (ii) previously expired or terminated pursuant to its own terms or by agreement of the parties thereto; (iii) is the subject of a motion to assume filed by the Debtors on or before the Confirmation Date; (iv) is identified in Section 8.4 of the Plan; (v) is a KEIP Agreement or a KERP Agreement; or (vi) is identified for assumption on the Assumption Schedule included in the Plan Supplement.

(b) Subject to the occurrence of the Effective Date, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions, assumptions and assignments, or rejections provided for in the Plan pursuant to sections 365(a) and 1123 of the Bankruptcy Code and a determination by the Bankruptcy Court that the Reorganized Debtors or Wind Down Estates, as applicable, have provided adequate assurance of future performance under such assumed executory contracts and unexpired leases. Each executory contract and unexpired lease assumed or assumed and assigned pursuant to the Plan shall vest in and be fully enforceable by the Reorganized Debtors, or Wind Down Estates, as applicable, in accordance with its terms, except as modified by the provisions of the Plan, any order of the Bankruptcy Court authorizing and providing for its assumption, or applicable law.

2. Determination of Assumption Disputes and Deemed Consent

(a) Any Cure Amount shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the Cure Amount, as reflected in the applicable cure notice, in Cash on the Effective Date, subject to the limitations described below, or on such other terms as the parties to such executory contracts or unexpired leases and the Debtors may otherwise agree. The Debtors or Wind Down Estates, as applicable, shall satisfy all Cure Amounts with the Sale Transaction proceeds.

(b) The Debtors shall file, as part of the Plan Supplement, the Assumption Schedule. At least ten (10) days before the deadline to object to confirmation of the Plan, the Debtors shall serve a notice on parties to executory contracts or unexpired leases to be assumed or assumed and assigned reflecting the Debtors’ intention to potentially assume or assume and assign the contract or lease


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in connection with the Plan and, where applicable, setting forth the proposed Cure Amount (if any). Any objection by a counterparty to an executory contract or unexpired lease to the proposed assumption, assumption and assignment, or related Cure Amount must be filed, served, and actually received by the Debtors within ten (10) days of the service of the assumption notice, or such shorter period as agreed to by the parties or authorized by the Bankruptcy Court. Any counterparty to an executory contract or unexpired lease that does not timely object to the notice of the proposed assumption of such executory contract or unexpired lease shall be deemed to have assented to assumption of the applicable executory contract or unexpired lease notwithstanding any provision thereof that purports to (i) prohibit, restrict, or condition the transfer or assignment of such contract or lease; (ii) terminate or modify, or permit the termination or modification of, a contract or lease as a result of any direct or indirect transfer or assignment of the rights of any Debtor under such contract or lease or a change, if any, in the ownership or control to the extent contemplated by the Plan; (iii) increase, accelerate, or otherwise alter any obligations or liabilities of any Debtor, or any Wind Down Estate, under such executory contract or unexpired lease; or (iv) create or impose a Lien upon any property or Asset of any Debtor, or Wind Down Estates, as applicable. Each such provision shall be deemed to not apply to the assumption of such executory contract or unexpired lease pursuant to the Plan and counterparties to assumed executory contracts or unexpired leases that fail to object to the proposed assumption in accordance with the terms set forth in Section 8.2(b) of the Plan, shall forever be barred and enjoined from objecting to the proposed assumption or to the validity of such assumption (including with respect to any Cure Amounts or the provision of adequate assurance of future performance), or taking actions prohibited by the foregoing or the Bankruptcy Code on account of transactions contemplated by the Plan.

(c) If there is an Assumption Dispute pertaining to assumption of an executory contract or unexpired lease (other than a dispute pertaining to a Cure Amount), such dispute shall be heard by the Bankruptcy Court prior to such assumption being effective, provided, that the Debtors or Wind Down Estates, as applicable, may settle any dispute regarding the Cure Amount or the nature thereof without any further notice to any party or any action, order, or approval of the Bankruptcy Court.

(d) To the extent an Assumption Dispute relates solely to the Cure Amount, the Debtors may assume and/or assume and assign the applicable executory contract or unexpired lease prior to the resolution of the Assumption Dispute; provided, that the Debtors or Wind Down Estates reserve Cash in an amount sufficient to pay the full amount reasonably asserted as the required cure payment by the non-Debtor party to such executory contract or unexpired lease (or such smaller amount as may be fixed or estimated by the Bankruptcy Court or otherwise agreed to by such non-Debtor party and the applicable Wind Down Estate).

(e) Assumption or assumption and assignment of any executory contract or unexpired lease pursuant to the Plan or otherwise shall result in the full release and satisfaction of any Claims against any Debtor or defaults by any Debtor, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed executory contract or unexpired lease at any time before the date that the Debtors assume or assume and assign such executory contract or unexpired lease. Any proofs of Claim filed with respect to an executory contract or unexpired lease that has been assumed or assumed and assigned shall be deemed disallowed and expunged, without further notice to or action, order, or approval of the Bankruptcy Court or any other Entity, upon the assumption of such executory contract or unexpired lease.


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3. Rejection Damages Claims

In the event that the rejection of an executory contract or unexpired lease hereunder results in damages to the other party or parties to such contract or lease, any Claim for such damages shall be classified and treated in Class 6 (General Unsecured Claims). Such Claim shall be forever barred and shall not be enforceable against the Debtors, Reorganized Debtors, Wind Down Estates, the GUC Recovery Trust, or their respective Estates, properties or interests in property as agents, successors, or assigns unless a proof of Claim is filed with the Bankruptcy Court and served upon counsel for the Debtors or Wind Down Estates, as applicable, by the later of (i) thirty (30) days after the filing and service of the notice of the occurrence of the Effective Date; and (ii) thirty (30) days after entry of an Order rejecting such contract or lease if such contract or lease is the subject of a pending Assumption Dispute.

4. Insurance Policies

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice, or claim objection, and any other document related to any of the foregoing, and any other order of the Bankruptcy Court: on the Effective Date (i) all insurance policies issued or providing coverage to the Debtors shall (subject to the applicable insurer’s right to object to such a designation) be assumed in their entirety by the Debtors pursuant to sections 365 and 1123 of the Bankruptcy Code, and coverage for defense costs and indemnification under the D&O Liability Insurance Policies shall remain available to all individuals within the definition of “Insured” in the D&O Liability Insurance Policies, and Wind Down Estates, or Plan Administrator, as applicable, shall remain liable in full for any and all now existing or hereinafter arising obligations, liabilities, terms, provisions and covenants of any of the Debtors under such insurance policies, without the need or requirement for an insurer to file a proof of Claim, Administrative Expense Claim or objection to any cure amount; (ii) nothing shall alter or modify the terms and conditions of and/or any rights, obligations, benefits, claims, rights to payments, or recoveries under the insurance policies without the express written consent of the applicable insurer; and (iii) the automatic stay of Bankruptcy Code section 362(a) and the injunctions set forth in the Plan, if and to the extent applicable, shall be deemed lifted without further order of this Court, solely to permit: (a) claimants with valid workers’ compensation claims or direct action claims against an insurer under applicable nonbankruptcy law to proceed with their claims; (b) insurers to administer, handle, defend, settle, and/or pay, in the ordinary course of business and without further order of the Bankruptcy Court, (I) workers’ compensation claims, (II) claims where a claimant asserts a direct claim against any insurer under applicable non-bankruptcy law, or an order has been entered by the Bankruptcy Court granting a claimant relief from the automatic stay to proceed with its claim, and (III) all costs in relation to each of the foregoing; and (c) the insurers to cancel any insurance policies, and take other actions relating thereto, to the extent permissible under applicable non-bankruptcy law, and in accordance with the terms of the insurance policies.

5. Intellectual Property Licenses and Agreements

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice or claim objection, and any other document related to any of the foregoing, all intellectual property contracts, licenses, royalties, or other similar agreements to which the Debtors have any rights or obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and shall be assumed by the Debtors, Wind Down Estates, and Reorganized Debtors, as applicable and shall continue in full force and effect unless any such intellectual property contract, license, royalty, or other similar agreement otherwise is specifically rejected pursuant to a separate order of the Bankruptcy Court or is the subject of a separate rejection motion filed by the Debtors in accordance with Section 8.1 of the Plan. Unless otherwise noted hereunder, all other intellectual property contracts, licenses, royalties, or other similar agreements shall vest in Wind Down


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Estates and Reorganized Debtors, as applicable, and Wind Down Estates and Reorganized Debtors, as applicable, may take all actions as may be necessary or appropriate to ensure such vesting as contemplated in the Plan.

6. Tax Agreements

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice or claim objection, and any other document related to any of the foregoing, any tax sharing agreements to which the Debtors are a party (of which the principal purpose is the allocation of taxes) in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and, to the extent the Debtors determine (in their sole discretion) such agreements are beneficial to the Debtors, shall be assumed by the Debtors, Wind Down Estates, and Reorganized Debtors, as applicable and shall continue in full force and effect thereafter in accordance with their respective terms, unless any such tax sharing agreement (of which the principal purpose is the allocation of taxes) otherwise is specifically rejected pursuant to a separate order of the Bankruptcy Court or is the subject of a separate rejection motion filed by the Debtors in accordance with Section 8.1 of the Plan. Unless otherwise noted hereunder, all other tax sharing agreements to which the Debtors are a party (of which the principal purpose is the allocation of taxes) shall vest in Wind Down Estates or Reorganized Debtors, as applicable, and Wind Down Estates and Reorganized Debtors, as applicable, may take all actions as may be necessary or appropriate to ensure such vesting as contemplated in the Plan.

7. Assignment

To the extent provided under the Bankruptcy Code or other applicable law, any executory contract or unexpired lease transferred and assigned hereunder shall remain in full force and effect for the benefit of the transferee or assignee in accordance with its terms, notwithstanding any provision in such executory contract or unexpired lease (including those of the type set forth in section 365(b)(2) of the Bankruptcy Code) that prohibits, restricts, or conditions such transfer or assignment. To the extent provided under the Bankruptcy Code or other applicable law, any provision that prohibits, restricts, or conditions the assignment or transfer of any such executory contract or unexpired lease or that terminates or modifies such executory contract or unexpired lease or allows the counterparty to such executory contract or unexpired lease to terminate, modify, recapture, impose any penalty, condition renewal or extension, or modify any term or condition upon any such transfer and assignment, constitutes an unenforceable anti-assignment provision and is void and of no force or effect with respect to any assignment pursuant to the Plan.

8. Modifications, Amendments, Supplements, Restatements, or Other Agreements

Unless otherwise provided in the Plan or by separate order of the Bankruptcy Court, each executory contract and unexpired lease that is assumed shall include any and all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument, or other document is listed in the notice of assumed contracts.

9. Reservation of Rights

(a) The Debtors may amend the Assumption Schedule and any cure notice until the Business Day immediately prior to the commencement of the Confirmation Hearing in order to (i) add, delete, or reclassify any executory contract or unexpired lease or amend a proposed assumption or assumption and assignment and/or (ii) amend the proposed Cure Amount; provided, that if the


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Confirmation Hearing is adjourned for a period of more than two (2) consecutive calendar days, the Debtors’ right to amend such schedules and notices shall be extended to the Business Day immediately prior to the adjourned date of the Confirmation Hearing, with such extension applying in the case of any and all subsequent adjournments of the Confirmation Hearing. The Debtors shall provide notice of such amendment to any affected counterparty as soon as reasonably practicable.

(b) Neither the exclusion nor inclusion of any contract or lease by the Debtors on any exhibit, schedule, or other annex to the Plan or in the Plan Supplement, nor anything contained in the Plan, will constitute an admission by the Debtors that any such contract or lease is or is not in fact an executory contract or unexpired lease or that the Debtors, or Wind Down Estates, or their respective affiliates have any liability thereunder.

(c) Except as otherwise provided in the Plan, nothing in the Plan shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, Claims, Causes of Action, or other rights of the Debtors and Wind Down Estates, under any executory or non-executory contract or any unexpired or expired lease.

(d) Nothing in the Plan will increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtors, Wind Down Estates, as applicable, under any executory or non-executory contract or any unexpired or expired lease.

H. Conditions Precedent To Confirmation of Plan and Effective Date

1. Conditions Precedent to Confirmation of Plan

The following are conditions precedent to confirmation of the Plan

(a) the Disclosure Statement Order shall have been entered;

(b) the Plan Supplement and all of the schedules, documents, and exhibits contained therein shall have been filed;

(c) the RSA shall not have been terminated and shall be in full force and effect; and

(d) to the extent the DIP Obligations have not been fully satisfied prior to the Confirmation Date, the DIP Order and the DIP Documents shall be in full force and effect in accordance with the terms thereof, and no event of default shall be continuing thereunder or occur as a result of entry of the Confirmation Order.

2. Conditions Precedent to Effective Date

(a) The following are conditions precedent to the Effective Date of the Plan:

(i) the Confirmation Order shall have been entered and shall be in full force and effect and no stay thereof shall be in effect;

(ii) to the extent the DIP Obligations have not been fully satisfied prior to the Confirmation Date, an event of default under the DIP Documents shall not be continuing and an acceleration of the obligations or termination of the DIP Lenders’ commitments under the DIP Facility shall not have occurred;


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(iii) the GUC Recovery Trust Agreement shall have been executed and the GUC Recovery Trust shall have received cash in the aggregate amount of $1,650,000 on account of the GUC Recovery Trust Assets;

(iv) all actions, documents, and agreements necessary to implement and consummate the Plan shall have been effected or executed and binding on all parties thereto and, to the extent required, filed with the applicable governmental units in accordance with applicable laws;

(v) all governmental approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by the Plan shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent, or otherwise impose materially adverse conditions on such transactions;

(vi) the RSA shall not have been terminated and shall be in full force and effect; and

(vii) all accrued and unpaid Restructuring Expenses shall have been paid in Cash, to the extent invoiced at least two (2) business days prior to the Effective Date.

(b) Notwithstanding when a condition precedent to the Effective Date occurs, for purposes of the Plan, such condition precedent shall be deemed to have occurred simultaneously upon the completion of the applicable conditions precedent to the Effective Date; provided, that to the extent a condition precedent (a “Prerequisite Condition”) may be required to occur prior to another condition precedent (a “Subsequent Condition”) then, for purposes of the Plan, the Prerequisite Condition shall be deemed to have occurred immediately prior to a Subsequent Condition regardless of when such Prerequisite Condition or Subsequent Condition shall have occurred.

3. Waiver of Conditions Precedent

(a) Except as otherwise provided in the Plan, all actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously and no such action shall be deemed to have occurred prior to the taking of any other such action. Each of the conditions precedent in Section 9.1 and Section 9.2 of the Plan may be waived in writing by the Debtors with the reasonable consent of (i) the Requisite Consenting Creditors; and (ii) solely with respect to the condition set forth in Sections 9.1(d) and 9.2(a)(ii) of the Plan, the DIP Agent (to the extent any DIP Claims are outstanding on the Effective Date), in each case without leave of or order of the Bankruptcy Court and such consent not to be unreasonably withheld; provided, that any such consent provided by the DIP Agent shall solely be for purposes of this Article IX and shall not otherwise limit, restrict or impair any rights or remedies of any DIP Credit Party under the DIP Documents. If the Plan is confirmed for fewer than all of the Debtors as provided for in Section 5.16 of the Plan, only the conditions applicable to the Debtor or Debtors for which the Plan is confirmed must be satisfied or waived for the Effective Date to occur as to such Debtors. Notwithstanding anything to the contrary in the Plan, Sections 9.2(a)(i) or (a)(iii) of the Plan, shall not be waived without the prior written consent of the Creditors’ Committee.

(b) The stay of the Confirmation Order pursuant to Bankruptcy Rule 3020(e) shall be deemed waived by and upon the entry of the Confirmation Order, and the Confirmation Order shall take effect immediately upon its entry.


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4. Effect of Failure of a Condition

If the conditions listed in Section 9.2 of the Plan are not satisfied or waived in accordance with Section 9.3 of the Plan on or before the first Business Day that is more than one hundred and eighty (180) days after the date on which the Confirmation Order is entered or by such later date as set forth by the Debtors in a notice filed with the Bankruptcy Court prior to the expiration of such period, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall (a) constitute a waiver or release of any Claims by or against or any Interests in the Debtors, (b) prejudice in any manner the rights of any Entity, or (c) constitute an admission, acknowledgement, offer, or undertaking by the Debtors, the Requisite Consenting Creditors, or any other Entity.

I. Effect of Confirmation of Plan

1. Vesting of Assets

On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, (i) if the Reorganized Equity Plan Election is made, all of the Reorganized Assets shall vest in the Reorganized Debtors free and clear of all Claims, Liens, encumbrances, charges, and other interests except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement; (ii) if the Reorganized Equity Plan Election is made, all of the Wind Down Co Assets shall be transferred to Wind Down Co free and clear of all Claims, Liens, encumbrances, charges, and other interests except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement; and (iii) all remaining property of the Debtors’ Estates (other than the Reorganized Assets, if the Reorganized Equity Plan Election is made) shall vest in the Wind Down Estates free and clear of all Claims, Liens, encumbrances, charges, and other interests, except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement. On and after the Effective Date, the Reorganized Debtors and Wind Down Estates, as applicable, may take any action, including, without limitation, the operation of their businesses; the use, acquisition, sale, lease and disposition of property; and the entry into transactions, agreements, understandings, or arrangements, whether in or other than in the ordinary course of business, and execute, deliver, implement, and fully perform any and all obligations, instruments, documents, and papers or otherwise in connection with any of the foregoing, free of any restrictions of the Bankruptcy Code or Bankruptcy Rules and in all respects as if there was no pending case under any chapter or provision of the Bankruptcy Code, except as expressly provided herein. Without limiting the foregoing, Wind Down Estates may pay the charges that they incur on or after the Effective Date for professional fees, disbursements, expenses, or related support services without application to the Bankruptcy Court.

2. Binding Effect

As of the Effective Date, the Plan shall bind all holders of Claims against and Interests in the Debtors and their respective successors and assigns, notwithstanding whether any such holders were (a) Impaired or Unimpaired under the Plan; (b) presumed to accept or deemed to reject the Plan; (c) failed to vote to accept or reject the Plan; (d) voted to reject the Plan; or (e) received any distribution under the Plan.

3. Discharge of Claims and Termination of Interests

If the Reorganized Equity Plan Election is made, except as otherwise expressly provided under the Plan, upon the date that all distributions under the Plan have been made, (i) in consideration for such distributions, each holder (as well as any representatives, trustees, or agents on behalf of each holder) of a Claim or Interest and any affiliate of such holder shall be deemed to have forever waived, released, and discharged the Reorganized Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy


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Code, of and from any and all Claims, Interest, rights, and liabilities that arose prior to the Effective Date and (ii) all such holders shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any such discharged Claim against or terminated Interest in the Debtors against the Reorganized Debtors, or any of their Assets or property, whether or not such holder has filed a proof of Claim and whether or not the facts or legal bases therefor were known or existed prior to the Effective Date. For the avoidance of doubt, holders of all Claims, including Administrative Expense Claims, Priority Tax asserting, Priority Non-Tax Claims, and Other Secured Claims shall by forever barred and prohibited from asserting such Claims against the Reorganized Debtors and shall be limited to prosecution of such Claims against the Wind Down Estates or GUC Recovery Trust, as applicable.

4. Term of Injunctions or Stays

Unless otherwise provided in the Plan, the Confirmation Order, or in a Final Order of the Bankruptcy Court, all injunctions or stays arising under or entered during the Chapter 11 Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the later of the Effective Date and the date indicated in the order providing for such injunction or stay.

5. Injunction

(a) Upon entry of the Confirmation Order, all holders of Claims and Interests and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates, shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan in relation to any Claim extinguished, discharged, or released pursuant to the Plan.

(b) Except as expressly provided in the Plan, the Confirmation Order, or a separate order of the Bankruptcy Court or as agreed to by the Plan Administrator and a holder of a Claim against or Interest in the Debtors, all Entities who have held, hold, or may hold Claims against or Interests in the Debtors (whether proof of such Claims or Interests has been filed or not and whether or not such Entities vote in favor of, against or abstain from voting on the Plan or are presumed to have accepted or deemed to have rejected the Plan) and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates are permanently enjoined, on and after the Effective Date, solely with respect to any Claims, Interests, and Causes of Action that will be or are extinguished, discharged, or released pursuant to the Plan from (i) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind (including, without limitation, any proceeding in a judicial, arbitral, administrative or other forum) against or affecting the Debtors, the Reorganized Debtors, Wind Down Estates, or the GUC Recovery Trust, or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (ii) enforcing, levying, attaching (including, without limitation, any prejudgment attachment), collecting, or otherwise recovering by any manner or means, whether directly or indirectly, any judgment, award, decree, or order against the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust, or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (iii) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind against the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (iv) asserting any right of setoff, directly or indirectly, against any obligation due from the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust or against property or interests in property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust, except as


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contemplated or Allowed by the Plan; and (v) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Plan.

(c) By accepting distributions pursuant to the Plan, each holder of an Allowed Claim or Interest extinguished, discharged, or released pursuant to the Plan will be deemed to have affirmatively and specifically consented to be bound by the Plan, including, without limitation, the injunctions set forth in Section 10.5 of the Plan.

(d) The injunctions in Section 10.5 of the Plan shall extend to any successors of the Debtors (including the Wind Down Estates), the Reorganized Debtors, and their respective property and interests in property.

6. Releases

(a) Estate Releases

As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the implementation of the Plan, and except as otherwise provided in the Plan or in the Confirmation Order, the Released Parties shall be deemed forever released and discharged, to the maximum extent permitted by law, by the Debtors, the Reorganized Debtors, and their Estates, Wind Down Estates, and the GUC Recovery Trust, from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, or the Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Debtors or the Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising prior to the Effective Date from, in whole or in part, the Debtors, the Chapter 11 Cases, the pre- and postpetition marketing and sale process, the purchase, sale, or rescission of the purchase or sale of any Security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any of the Debtors and any Released Party, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the RSA, the Plan (including the Plan Supplement), the Sale Documents, Prepetition Credit Documents, and the DIP Documents, or any related agreements, instruments, and other documents (including the Definitive Documents), the DIP Order, the Sale Orders, and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, that the Released Avoidance Parties shall only be released pursuant to Section 10.6(a) of the Plan on account of Avoidance Actions that have been or could be brought against such parties; provided, further, that nothing in Section 10.6(a) of the Plan shall be construed to release the Released Parties from gross negligence, willful misconduct, or intentional fraud as determined by a Final Order. The Debtors, the Reorganized Debtors, and their Estates, the Wind Down Estates, and the GUC Recovery Trust shall be permanently enjoined from prosecuting any of the foregoing Claims or Causes of Action released under Section 10.6(a) of the Plan against each of the Released Parties.

(b) Third-Party Releases

As of the Effective Date, except (i) for the right to enforce the Plan or any right or obligation arising under the Definitive Documents that remain in effect or become effective after the Effective Date;


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(ii) defend against any objections to Claims that may be asserted under the Plan; or (iii) as otherwise expressly provided in the Plan or in the Confirmation Order, in exchange for good and valuable consideration, including the obligations of the Debtors under the Plan and the contributions of the Released Parties to facilitate and implement the Plan, to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably and forever, released, and discharged by:

(i) the holders of Claims who vote to accept the Plan;

(ii) the Consenting Creditors;

(iii) the Released Avoidance Parties;

(iv) the Creditors’ Committee and each of its members in their capacity as such;

(v) each of the Released Parties (other than the Debtors, Wind Down Estates, the GUC Recovery Trust, and the Reorganized Debtors); and

(vi) with respect to any Entity in the foregoing clauses (i) through (v), such Entity’s (x) predecessors, successors, and assigns, (y) subsidiaries, affiliates, managed accounts or funds, managed or controlled by such Entity and (z) all Persons entitled to assert Claims through or on behalf of such Entities with respect to the matters for which the releasing entities are providing releases,

in each case, from any and all Claims, Interests, or Causes of Action whatsoever, including any derivative Claims asserted on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Entity would have been legally entitled to assert (whether individually or collectively), based on, relating to, or arising prior to the Effective Date from, in whole or in part, the Debtors, the restructuring, the Chapter 11 Cases, the pre- and postpetition marketing and sale process, the purchase, sale or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, or consummation of the Plan (including the Plan Supplement), the RSA, the Definitive Documents, the Sale Documents, Prepetition Credit Documents, the DIP Order, the Sale Orders, the DIP Documents, or any related agreements, instruments, or other documents, the solicitation of votes with respect to the Plan, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, that nothing in Section 10.6(b) of the Plan shall be construed to release the Released Parties from any gross negligence, willful misconduct, or intentional fraud as determined by a Final Order. The Persons and Entities in (i) through (vi) of Section 10.6(b) of the Plan shall be permanently enjoined from prosecuting any of the foregoing Claims or Causes of Action released under Section 10.6(b) of the Plan against each of the Released Parties.

(c) Notwithstanding anything to the contrary in the Plan, nothing in the Plan shall limit the liability of attorneys to their respective clients pursuant to Rule 1.8(h) of the New York Rules of Professional Conduct.

7. Exculpation

To the maximum extent permitted by applicable law, no Exculpated Party will have or incur, and each Exculpated Party is hereby released and exculpated from, any claim, obligation, suit, judgment, damage,


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demand, debt, right, cause of action, remedy, loss, and liability for any conduct occurring on or after the Commencement Date in connection with or arising out of the filing and administration of the Chapter 11 Cases, the postpetition marketing and sale process, the purchase, sale, or rescission of the purchase or sale of any security or asset of the Debtors; the negotiation and pursuit of the DIP Facility, Disclosure Statement, the RSA, Sale Transactions, UFCW Settlement including the formulation, negotiation, preparation, dissemination, implementation, administration, confirmation, and consummation thereof, the Reorganization Transaction, the Plan, or the solicitation of votes for, or confirmation of, the Plan; the funding or consummation of the Plan; the occurrence of the Effective Date; the DIP Documents; the administration of the Plan or the property to be distributed under the Plan; the issuance of Securities under or in connection with the Plan; or the transactions in furtherance of any of the foregoing; except for gross negligence, fraud, or willful misconduct, as determined by a Final Order. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations, and any other applicable law or rules protecting such Exculpated Parties from liability.

8. Subordinated Claims

The allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, the Debtors (or the GUC Recovery Trustee, solely with respect to Allowed General Unsecured Claims) reserve the right to reclassify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

9. Retention of Causes of Action/Reservation of Rights

Except as otherwise provided in Sections 10.5, 10.6, and 10.7 of the Plan or the Confirmation Order, nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any rights, Claims, Causes of Action, rights of setoff or recoupment, or other legal or equitable defenses that the Debtors had immediately prior to the Effective Date on behalf of their Estates or itself in accordance with any provision of the Bankruptcy Code or any applicable non-bankruptcy law, including, without limitation, any affirmative Causes of Action against parties with a relationship with the Debtors including Unreleased Avoidance Actions. The Wind Down Estates shall have, retain, reserve, and be entitled to assert all such Claims, Causes of Action, rights of setoff or recoupment, and other legal or equitable defenses as fully as if the Chapter 11 Cases had not been commenced, and all of the Debtors’ legal and equitable rights in respect of any Unimpaired Claim may be asserted after the Confirmation Date and Effective Date to the same extent as if the Chapter 11 Cases had not been commenced. Notwithstanding the foregoing, the Debtors, the Reorganized Debtors, and the Wind Down Estates, as applicable, shall not retain any Claims or Causes of Action released pursuant to the Plan against the Released Parties or the Unreleased Avoidance Actions transferred to the GUC Recovery Trust.

10. Solicitation of Plan

As of and subject to the occurrence of the Confirmation Date: (i) the Debtors shall be deemed to have solicited acceptances of the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including without limitation, sections 1125(a) and (e) of the Bankruptcy Code, and any applicable non-bankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation; and (ii) the Debtors and each of their respective directors, officers, employees, affiliates, agents, financial advisors, investment bankers, professionals, accountants, and attorneys shall be deemed to have participated in good faith and in compliance with the applicable provisions of the


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Bankruptcy Code in the offer and issuance of any securities under the Plan, and therefore are not, and on account of such offer, issuance, and solicitation shall not be, liable at any time for any violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or the offer and issuance of any securities under the Plan.

11. Corporate and Limited Liability Company Action

Upon the Effective Date, all actions contemplated by the Plan (whether to occur before, on, or after the Effective Date) shall be deemed authorized and approved in all respects, in each case, in accordance with and subject to the terms hereof. All matters provided for in the Plan involving the corporate or limited liability company structure of the Debtors, Wind Down Estates, or the Reorganized Debtors, and any corporate or limited liability company action required by the Debtors, Wind Down Estates, or the Reorganized Debtors in connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the Security holders, directors, managers, or officers of the Debtors, Wind Down Estates, or the Reorganized Debtors. On or (as applicable) before the Effective Date, the authorized officers of the Debtors, Wind Down Estates, or the Reorganized Debtors, as applicable, shall be authorized and directed to issue, execute, and deliver the agreements, documents, securities, and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the Wind Down Estates or Reorganized Debtors, as applicable, including, but not limited to: (i) the Amended Organizational Documents; (ii) the GUC Recovery Trust Agreement; and (iii) any and all other agreements, documents, securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by Section 10.11 of the Plan shall be effective notwithstanding any requirements under non-bankruptcy law.

J. Retention of Jurisdiction

1. Retention of Jurisdiction

On and after the Effective Date, the Bankruptcy Court shall retain non-exclusive jurisdiction over all matters arising in, arising under, and related to the Chapter 11 Cases for, among other things, the following purposes:

(a) to hear and determine motions and/or applications for the assumption or rejection of executory contracts or unexpired leases, including Assumption Disputes, and the allowance, classification, priority, compromise, estimation, or payment of Claims resulting therefrom;

(b) to determine any motion, adversary proceeding, application, contested matter, and other litigated matter pending on or commenced after the Confirmation Date;

(c) to ensure that distributions to holders of Allowed Claims are accomplished as provided for in the Plan and Confirmation Order and to adjudicate any and all disputes arising from or relating to distributions under the Plan, including, cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the holder of a Claim or Interest for amounts not timely paid;

(d) to consider the allowance, classification, priority, compromise, estimation, or payment of any Claim;

(e) to enter, implement, or enforce such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked, modified, or vacated;


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(f) to issue injunctions, enter and implement other orders, and take such other actions as may be necessary or appropriate to restrain interference by any Entity with the consummation, implementation, or enforcement of the Plan, the Confirmation Order, or any other order of the Bankruptcy Court;

(g) to hear and determine any application to modify the Plan in accordance with section 1127 of the Bankruptcy Code, to remedy any defect or omission or reconcile any inconsistency in the Plan, or any order of the Bankruptcy Court, including the Confirmation Order, in such a manner as may be necessary to carry out the purposes and effects thereof;

(h) to hear and determine all Fee Claims and Restructuring Expenses;

(i) to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan, the Plan Supplement, the Global Settlement, or the Confirmation Order, or any agreement, instrument, or other document governing or relating to any of the foregoing;

(j) to hear and determine disputes arising in connection with the Sale Orders and Sale Transactions, or any agreement, instrument, or other document governing or relating to any of the foregoing;

(k) to take any action and issue such orders as may be necessary to construe, interpret, enforce, implement, execute, and consummate the Plan;

(l) to determine such other matters and for such other purposes as may be provided in the Confirmation Order;

(m) to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code (including any Disputed Claims for taxes or requests for expedited determinations under section 505(b) of the Bankruptcy Code);

(n) to hear, adjudicate, decide, or resolve any and all matters related to Article X of the Plan, including, without limitation, the releases, discharge, exculpations, and injunctions issued thereunder;

(o) to resolve disputes concerning Disputed Claims or the administration thereof;

(p) to hear and determine any other matters related hereto and not inconsistent with the Bankruptcy Code and title 28 of the United States Code;

(q) to enter one or more final decrees closing the Chapter 11 Cases;

(r) to recover all Assets of the Debtors and property of the Debtors’ Estates, wherever located;

(s) to resolve any disputes concerning whether an Entity had sufficient notice of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, or any bar date established in the Chapter 11 Cases, or any deadline for responding or objection to a Cure Amount, in each case, for the purpose of determining whether a Claim or Interest is discharged hereunder or for any other purpose;


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(t) hear and determine matters or disputes arising from, or in connection with, the Amended Organizational Documents, including with respect to the appointment of a successor Plan Administrator in the event of the Plan Administrator’s death, disability, dissolution, or removal;

(u) hear and determine all disputes involving the Wind Down Budget;

(v) to hear and determine any rights, Claims, or Causes of Action held by or accruing to the Debtors or the GUC Recovery Trustee pursuant to the Bankruptcy Code or pursuant to any federal statute or legal theory; and

(w) to hear and resolve any dispute over the application to any Claim of any limit on the allowance of such Claim set forth in sections 502 or 503 of the Bankruptcy Code, other than defenses or limits that are asserted under non-bankruptcy law pursuant to section 502(b)(1) of the Bankruptcy Code.

2. Courts of Competent Jurisdiction

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Plan, such abstention, refusal, or failure of jurisdiction 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.

K. Miscellaneous Provisions

1. Payment of Statutory Fees

On the Effective Date and thereafter as may be required, the Wind Down Estates shall pay all fees incurred pursuant to sections 1911 through 1930 of chapter 123 of title 28 of the United States Code, together with interest, if any, pursuant to § 3717 of title 31 of the United States Code for the Debtors’ cases, or until such time as a final decree is entered closing the Debtors’ cases, a Final Order converting the Debtors’ cases to cases under chapter 7 of the Bankruptcy Code is entered, or a Final Order dismissing the Debtors’ cases is entered.

2. Substantial Consummation of the Plan

On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101 and 1127(b) of the Bankruptcy Code.

3. Plan Supplement

The Plan Supplement shall be filed with the Clerk of the Bankruptcy Court. Upon its filing with the Bankruptcy Court, the Plan Supplement may be inspected in the office of the Clerk of the Bankruptcy Court during normal court hours. Documents included in the Plan Supplement will be posted at the website of the Debtors’ notice, claims, and solicitation agent.

4. Request for Expedited Determination of Taxes

The Debtors and the Wind Down Estates, as applicable, shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Commencement Date through the Effective Date, and, in the case of the Wind Down Estates, through dissolution of the Wind Down Estates.


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5. Exemption from Certain Transfer Taxes

Pursuant to section 1146 of the Bankruptcy Code, (a) the issuance, transfer or exchange of any securities, instruments or documents pursuant to, in implementation of or as contemplated in the Plan, (b) the creation of any Lien, mortgage, deed of trust, or other security interest, (c) the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance of, or in connection with the Plan, including, without limitation, any deeds, bills of sale, or assignments executed in connection with any of the transactions contemplated under the Plan or the reinvesting, transfer, or sale of any real or personal property of the Debtors pursuant to, in implementation of or as contemplated in the Plan (whether to one or more of the Reorganized Debtors, the Wind Down Estates, the GUC Recovery Trust or otherwise), and (d) the issuance, renewal, modification, or securing of indebtedness by such means, and the making, delivery or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including, without limitation, the Confirmation Order, shall not be subject to any document recording tax, stamp tax, conveyance fee, or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax, or other similar tax or governmental assessment. Consistent with the foregoing, each recorder of deeds or similar official for any county, city, or governmental unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation Order, be ordered and directed to accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax, or similar tax.

6. Amendments

(a) Plan Modifications. Subject to the terms of the RSA and all consent rights contained therein, (i) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend, modify, or supplement the Plan (i) prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code, and (ii) after entry of the Confirmation Order, in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, in each case without additional disclosure pursuant to section 1125 of the Bankruptcy Code. In addition, after the Confirmation Date, so long as such action does not materially and adversely affect the treatment of holders of Allowed Claims or Allowed Interests pursuant to the Plan and subject to the reasonable consent of the Requisite Consenting Creditors, the Debtors may remedy any defect or omission or reconcile any inconsistencies in the Plan or the Confirmation Order with respect to such matters as may be necessary to carry out the purposes or effects of the Plan, and any holder of a Claim or Interest that has accepted the Plan shall be deemed to have accepted the Plan as amended, modified, or supplemented. Any such amendment or modification pursuant to this paragraph or otherwise shall be reasonably acceptable to the Requisite Consenting Creditors and the Creditors’ Committee.

(b) Other Amendments. Subject to the terms of the RSA, before the Effective Date, the Debtors may make appropriate technical adjustments and modifications to the Plan and the documents contained in the Plan Supplement, after consulting with the Requisite Consenting Creditors and the Creditors’ Committee, without further order or approval of the Bankruptcy Court.

7. Effectuating Documents and Further Transactions

Each of the officers, managers, or members of the Reorganized Debtors and Wind Down Estates, as applicable is authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.


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8. Revocation or Withdrawal of Plan

Subject to the terms of the RSA, the Debtors reserve the right to revoke or withdraw the Plan prior to the Effective Date. If the Plan has been revoked or withdrawn prior to the Effective Date, or if confirmation or the occurrence of the Effective Date does not occur, then: (a) the Plan shall be null and void in all respects; (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount any Claim or Interest or Class of Claims or Interests), assumption of executory contracts or unexpired leases affected by the Plan, and any document or agreement executed pursuant to the Plan shall be deemed null and void; and (c) nothing contained in the Plan shall (i) constitute a waiver or release of any Claim by or against, or any Interest in, the Debtors or any other Entity; (ii) prejudice in any manner the rights of the Debtors or any other Entity; or (iii) constitute an admission of any sort by the Debtors, any Consenting Creditors, or any other Entity. This provision shall have no impact on the rights of the Consenting Creditors or the Debtors, as set forth in the RSA, in respect of any such revocation or withdrawal.

9. Dissolution of Creditors’ Committee

On the Effective Date, the Creditors’ Committee shall dissolve and, on the Effective Date, each member (including each officer, director, employee, or agent thereof) of the Creditors’ Committee and each professional retained by the Creditors’ Committee shall be released and discharged from all rights, duties, responsibilities, and obligations arising from, or related to, the Debtors, their membership on the Creditors’ Committee, the Plan, or the Chapter 11 Cases, except with respect to any matters concerning any Fee Claims held or asserted by any professional retained by the Creditors’ Committee.

10. Severability of Plan Provisions

If, before the entry of the Confirmation Order, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors with the reasonable consent of the Requisite Consenting Creditors, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is (a) valid and enforceable pursuant to its terms, (b) integral to the Plan and may not be deleted or modified without the consent of the Debtors, Wind Down Estates, or the Reorganized Debtors (as the case may be), and (c) nonseverable and mutually dependent.

11. Governing Law

Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit hereto or a schedule in the Plan Supplement or a Definitive Document provides otherwise, the rights, duties, and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflict of laws thereof; provided, however, that corporate or entity governance matters relating to any Debtors, Wind Down Estates, or Reorganized Debtors shall be governed by the laws of the state of incorporation or organization of the applicable Debtors, Wind Down Estates, or Reorganized Debtors.


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12. Time

In computing any period of time prescribed or allowed by the Plan, unless otherwise set forth in the Plan or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall apply.

13. Dates of Actions to Implement the Plan

In the event that any payment or act under the Plan is required to be made or performed on a date that is on a Business Day, then the making of such payment or the performance of such act may be completed on or as soon as reasonably practicable after the next succeeding Business Day, but shall be deemed to have been completed as of the required date.

14. Immediate Binding Effect

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the occurrence of the Effective Date, the terms of the Plan and Plan Supplement shall be immediately effective and enforceable and deemed binding upon and inure to the benefit of the Debtors, the holders of Claims and Interests, the Released Parties, and each of their respective successors and assigns, including, without limitation, the Wind Down Estates and the Reorganized Debtors.

15. Deemed Acts

Subject to and conditioned on the occurrence of the Effective Date, whenever an act or event is expressed under the Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred without any further act by any party, by virtue of the Plan and the Confirmation Order.

16. Successor and Assigns

The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor, or permitted assigns, if any, of each Entity.

17. Entire Agreement

On the Effective Date, the Plan, the Plan Supplement, and the Confirmation Order shall supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan.

18. Exhibits to Plan

All exhibits, schedules, supplements, and appendices to the Plan (including the Plan Supplement) are incorporated into and are a part of the Plan as if set forth in full in the Plan.

19. Notices

All notices, requests, and demands to or upon the Debtors to be effective shall be in writing (including by electronic or facsimile transmission) and, unless otherwise expressly provided in the Plan, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

(a) If to the Debtors or the Wind Down Estates:


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Fairway Group Holdings Corp. 2284 12th Avenue New York, NY 10027 Attn: Nathalie Augustin, Esq. Email: [email protected]

-and-

Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attn: Ray C. Schrock, P.C. Sunny Singh, Esq. Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Email: [email protected] [email protected]

(b) If to the Consenting Creditors, Plan Sponsor, or the Reorganized Debtors:

King & Spalding LLP 1185 Avenue of the Americas New York, NY 10036 Attn: W. Austin Jowers, Esq. Michael R. Handler, Esq. Email: [email protected] [email protected]

After the Effective Date, the Debtors and the Wind Down Estates, as applicable, have authority to send a notice to Entities providing that, to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Debtors, the Reorganized Debtors, and Wind Down Estates, as applicable, are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such renewed requests.

VI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF PLAN

The following discussion is a summary of certain U.S. federal income tax consequences of the implementation of the Plan to the Debtors and to certain U.S. Holders (as defined below) of Claims that will receive cash or other property (including beneficial ownership interests in Wind Down Co or GUC Recovery Trust Interests) under the Plan. The following summary does not address the U.S. federal income tax consequences to (i) Plan Sponsor, or (ii) holders of Claims that are unimpaired, deemed to reject the Plan or otherwise entitled to payment in full in cash under the Plan.

The discussion of U.S. federal income tax consequences below is based on the Internal Revenue Code of 1986, as amended (the “Tax Code”), U.S. Treasury Regulations (“Treasury Regulations”), judicial authorities, published positions of the Internal Revenue Service (“IRS”), and other applicable authorities, all as in effect on the date of this Disclosure Statement and all of which are subject to change (including pursuant to any potential future legislation which may be enacted in response to the COVID-19 pandemic) or differing interpretations (possibly with retroactive effect). The U.S. federal income tax


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consequences of the contemplated transactions are complex and subject to significant uncertainties. The Debtors have not requested an opinion of counsel or a ruling from the IRS with respect to any of the tax aspects of the contemplated transactions, and the discussion below is not binding upon the IRS or the courts. Accordingly, there is no assurance that the IRS would not take a contrary position as to the federal income tax consequences described herein.

This summary does not address foreign, state, local, gift, or estate tax consequences of the Plan, nor does it purport to address all aspects of U.S. federal income taxation that may be relevant to a holder in light of its individual circumstances or to a holder that may be subject to special tax rules (such as persons who are related to the Debtors within the meaning of the Tax Code, foreign taxpayers, broker-dealers, banks, mutual funds, insurance companies, financial institutions, small business investment companies, real estate investment trusts, regulated investment companies, tax-exempt organizations, trusts, governmental authorities or agencies, dealers and traders in securities, retirement plans, individual retirement and other tax-deferred accounts, holders that are, or hold Claims through, S corporations, partnerships or other pass-through entities for U.S. federal income tax purposes, persons whose functional currency is not the U.S. dollar, dealers in foreign currency, persons who hold Claims as part of a straddle, hedge, conversion transaction or other integrated investment, persons using a mark-to-market method of accounting, holders of Claims who are themselves in bankruptcy, persons subject to the alternative minimum tax or the “Medicare” tax on net investment income and accrual method taxpayers that report income on an “applicable financial statement”). In addition, this discussion does not address U.S. federal taxes other than income taxes, nor does it address the Foreign Account Tax Compliance Act.

Additionally, this discussion assumes that (i) the various debt and other arrangements to which any of the Debtors is a party will be respected for U.S. federal income tax purposes in accordance with their form and (ii) except where otherwise indicated, the Claims are held as “capital assets” (generally, property held for investment) within the meaning of section 1221 of the Tax Code.

THE FOLLOWING SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE BASED UPON YOUR INDIVIDUAL CIRCUMSTANCES. ALL HOLDERS OF CLAIMS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR THE U.S. FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES APPLICABLE UNDER THE PLAN.

A. Certain U.S. Federal Income Tax Consequences to the Debtors

For U.S. federal income tax purposes, each of the Debtors is a member of an affiliated group of corporations or are disregarded entities, directly or indirectly, wholly-owned by a corporate member, of which Holdings is the common parent and which files a single consolidated U.S. federal income tax return (the “Tax Group”). As of the Commencement Date, the Tax Group reported over $200 million of estimated, consolidated net operating loss (“NOL”) carryforwards and over $20 million in estimated, consolidated federal interest expense carryforwards under Section 163(j) of the Tax Code, without taking into account any potential impact of the Coronavirus Aid, Relief, and Economic Security Act, as may be amended or modified (the “CARES Act”). Approximately $117 million of the Debtors’ NOLs are subject to limitation under Section 382 of the Tax Code due to a prior ownership change. Since the Commencement Date, the Debtors may have generated additional net tax losses, which losses would increase the Debtors’ NOLs. The amount of any such NOLs and other tax attributes, including any deductions for payments of Claims under the Plan (“Tax Attributes”), remain subject to audit and potential adjustment by the IRS.


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The CARES Act, which was enacted on March 27, 2020, implements certain amendments to the Tax Code (some of which are retroactive in effect) that, among other things, relax previously applicable limitations on the use of NOLs and business interest expense deductions. Such changes in law could impact both the amount and makeup of Tax Attributes of the Debtors as of the Commencement Date. In general, NOLs arising in taxable years beginning after 2017 may only be used to offset up to 80% of taxable income in a given year. However, under the CARES Act all NOLs carried over to taxable years beginning before December 31, 2020 may offset up to 100% of taxable income for such year.

As discussed below, in connection with the implementation of the Plan, the Debtors expect that the amount of the Tax Group’s NOL carryforwards will be reduced. In addition, the subsequent utilization of any remaining Tax Attributes of the Debtors following the Effective Date, could become subject to limitation under section 382 of the Tax Code.

1. Asset Dispositions

Pursuant to the Plan, the Plan Administrator will cause the Debtors to dispose of assets in order to satisfy claims. Such dispositions may result in taxable income to the Debtors. The Debtors’ NOLs are expected to be sufficient to offset any such taxable income and no material current tax obligation is expected to result from such dispositions, subject to the potential application of § 382 of the Tax Code, as discussed below.

2. Cancellation of Debt and Reduction of Tax Attributes

In general, the Tax Code provides that a debtor in a bankruptcy case must reduce certain of its tax attributes—such as NOL carryforwards and current year NOLs, capital loss carryforwards, tax credits, and tax basis in assets—by the amount of any cancellation of debt (“COD”) incurred pursuant to a confirmed chapter 11 plan. Although not free from doubt, it is expected that interest expense disallowed and carried over under section 163(j) would not be a tax attribute subject to such reduction. If advantageous, the debtor can elect to reduce the basis of depreciable property prior to any reduction in its NOL carryforwards or other tax attributes. Any reduction in tax attributes in respect of COD generally does not occur until after the determination of the debtor’s net income or loss for the taxable year in which the COD is incurred.

The amount of COD incurred is generally the amount by which the indebtedness discharged exceeds the value of any consideration given in exchange therefor. Certain statutory or judicial exceptions may apply to limit the amount of COD incurred for U.S. federal income tax purposes.

In connection with the implementation of the Plan, the Debtors are expected to incur COD. The exact amount of any COD that will be realized by the Debtors will depend, in part, on the amount of cash available for distribution and the value of the New Common Stock and other property, if any, distributed to holders of Claims pursuant to the Plan and, therefore, will not be determinable until the consummation of the Plan, at earliest. Based on current estimations of the Debtors’ COD, the Debtors expect the Tax Group’s NOLs and other Tax Attributes (including any Tax Attributes arising in connection with the implementation of the Plan) to be reduced but not eliminated. Any such remaining NOLs or other Tax Attributes (including any Tax Attributes arising in connection with the implementation of the Plan) would, subject to the discussion of the impact of section 382 of the Tax Code below, be preserved in the Debtors (in the event there is no Reorganization Transaction) or the Reorganized Debtors (in the event of a Reorganization Transaction).

If the Reorganization Transaction is not implemented, the Debtors intend to treat the Plan as a plan of liquidation for U.S. federal income tax purposes. In such event, the Debtors intend to take the position


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that no COD should be incurred by any Debtor at the time of the implementation of the Plan and prior to the disposition by such Debtor of all or substantially all of its assets (other than to the extent any Allowed Claim’s distribution is subject to a maximum amount, or has been or is separately settled for less than its carrying value). The reduction of tax attributes resulting from such COD (which, as indicated, only occurs as of the end of the tax year in which the COD occurs) generally is not expected to have a material impact on the Debtors. Given the lack of direct authoritative guidance as to when COD occurs in the context of a liquidating chapter 11 plan, there can be no assurance that the IRS will not challenge this position, and there can be no assurance that all or a substantial amount of the COD will not be incurred earlier than as described above.

(a) Limitation of NOL Carryforwards and Other Tax Attributes

Following the Effective Date, any Tax Attributes allocable to tax periods, or portions thereof, prior to the Effective Date (“Pre-Change Losses”) may be subject to certain limitations. Under section 382 of the Tax Code, if a corporation (or consolidated group) undergoes an “ownership change,” and the corporation does not qualify for (or elects out of) the special bankruptcy exception in section 382(l)(5) of the Tax Code discussed below, the amount of its Pre-Change Losses that may be utilized to offset future taxable income generally is subject to an annual limitation. The Debtors anticipate that, in the event of a Reorganization Transaction, the issuance of the New Common Stock pursuant to the Plan will result in an ownership change of the Tax Group.

The Debtors believe that no ownership change under section 382 has occurred during the prior three years, nor will any occur prior to the Effective Date, that would limit the availability of the tax attributes of the Tax Group to offset such taxable income.

(i) Annual Limitation

In the event of an ownership change, the amount of the annual limitation to which a corporation (or consolidated group) that undergoes an ownership change will be subject is generally equal to the product of (A) the fair market value of the stock of the corporation (or common parent corporation of the consolidated group) immediately before the ownership change (with certain adjustments) multiplied by (B) the “long term tax exempt rate” in effect for the month in which the ownership change occurs (0.89% for ownership changes occurring in July 2020). For a corporation (or consolidated group) in bankruptcy that undergoes an ownership change pursuant to a confirmed bankruptcy plan, the fair market value of the stock of the corporation is generally determined immediately after (rather than before) the ownership change after giving effect to the discharge of creditors’ claims, but subject to certain adjustments; in no event, however, can the stock value for this purpose exceed the pre-change gross value of the corporation’s assets. In addition, as discussed below, the annual limitation potentially may be increased in the event the corporation (or consolidated group) has an overall “built-in” gain in its assets at the time of the ownership change. Any portion of the annual limitation that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year.

If a loss corporation (or consolidated group) has a net unrealized built-in gain at the time of an ownership change (taking into account most assets and items of “built-in” income, gain, loss and deduction), any built-in gains recognized (or, according to a current IRS notice, treated as recognized) during the following five years (up to the amount of the original net unrealized built-in gain) generally will increase the annual limitation in the year recognized, such that the loss corporation (or consolidated group) would be permitted to use its Pre-Change Losses against such recognized built-in gain income in addition to its regular annual allowance. Alternatively, if a loss corporation (or consolidated group) has a net unrealized built-in loss at the time of an ownership change, then any built-in losses recognized during the following five years (up to the amount of the original net unrealized built-in loss) generally will be treated as Pre-


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Change Losses and similarly will be subject to the annual limitation. On September 9, 2019, the IRS issued proposed regulations that would significantly modify the calculation and treatment of net unrealized built-in gains and losses; however, the IRS recently amended the proposed effective date provision to exempt from the new regulations ownership changes pursuant to chapter 11 cases filed prior to the regulations becoming effective. The proposed regulations, therefore, should not apply to the Debtors. It is currently uncertain whether the Tax Group will have a net unrealized built-in loss or a net unrealized built-in gain as of the Effective Date.

If a corporation (or consolidated group) does not continue its historic business or use a significant portion of its historic assets in a new business for at least two years after the ownership change, the annual limitation resulting from the ownership change is reduced to zero, thereby precluding any utilization of the corporation’s Pre-Change Losses (absent any increases due to the recognition of any built-in gains as of the time of the ownership change).

(ii) Section 382(l)(5) Bankruptcy Exception

Under section 382(l)(5) of the Tax Code, an exception to the foregoing annual limitation rules generally applies where “qualified creditors” and existing shareholders of a debtor corporation receive, in respect of their claims or equity interests, at least fifty percent of the vote and value of the stock of the reorganized debtor (or a controlling corporation if also in bankruptcy) pursuant to a confirmed chapter 11 plan. The IRS has in private letter rulings applied section 382(l)(5) of the Tax Code on a consolidated basis where the parent corporation is in bankruptcy. Under this exception, a debtor’s Pre-Change Losses are not limited on an annual basis, but, instead, are required to be reduced by the amount of certain previously deducted interest with respect to any debt converted into stock in the reorganization. Moreover, if this exception applies, any further ownership change of the Reorganized Debtors within a two-year period after the Effective Date would preclude the Reorganized Debtor’s subsequent utilization of any Pre-Change Losses in existence at the time of such ownership change. A debtor that qualifies for the section 382(l)(5) exception may, if it so desires, elect not to have the exception apply and to instead be subject to the annual limitation described above.

It is currently expected that the Reorganized Debtors would qualify for the section 382(l)(5) exception, although such qualification is uncertain and subject to certain assumptions, and would not elect out of its application.

3. Transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust, and of the Wind Down Co Assets to Wind Down Co

Pursuant to the Plan, on the Effective Date, the GUC Recovery Trust Assets will be transferred to the GUC Recovery Trust, and, in the event of a Reorganization Transaction, the Wind Down Co Assets (i.e. the assets of the Reorganized Debtors, including Intercompany Interests held by Fairway Acquisition, but excluding the Reorganized Assets) to Wind Down Co. The transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust and, if applicable, of the Wind Down Co Assets to Wind Down Co may result in the recognition of gain or loss by the Debtors, depending in part on the value of such assets on the date of such transfer to the GUC Recovery Trust and Wind Down Co, as applicable, relative to the Debtors’ tax basis in such assets. For U.S. federal income tax purposes, the transfer of such assets to the GUC Recovery Trust and, if applicable, Wind Down Co will be treated as a taxable sale by Debtors of such assets at fair market value. Given Debtors’ tax attributes, such taxable sales are not expected to result in any material tax liability.


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B. Consequences for Holders of Claims

For purposes of this discussion, a “U.S. Holder” is a holder of an Allowed Claim against Holdings or Fairway Acquisition (for the avoidance of doubt, other than a holder of an Allowed Claim receiving New Common Stock in respect of such Claim) that is: (1) an individual citizen or resident of the United States for U.S. federal income tax purposes; (2) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia; (3) an estate the income of which is subject to U.S. federal income taxation regardless of the source of such income; or (4) a trust (A) if a court within the United States is able to exercise primary jurisdiction over the trust’s administration and one or more United States persons have authority to control all substantial decisions of the trust or (B) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

If a partnership (or other entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes) is a holder of a Claim, the tax treatment of a partner (or other beneficial owner) generally will depend upon the status of the partner (or other beneficial owner) and the activities of the partner (or other beneficial owner) and the entity. Partners (or other beneficial owners) of partnerships (or other pass-through entities) that are holders of Claims should consult their respective tax advisors regarding the U.S. federal income tax consequences of the Plan.

1. Holders of Claims

The U.S. federal income tax consequences of the implementation of the Plan to a U.S. Holder of an Allowed Claim will depend, among other things, upon the origin of the holder's Claim, when the holder receives payment in respect of such Claim, whether the holder reports income using the accrual or cash method of tax accounting, whether the holder acquired its Claim at a discount, whether the holder has taken a bad debt deduction with respect to such Claim, and whether the Reorganization Transaction is implemented.

Pursuant to the Plan, generally, (i) a U.S. Holder of an Allowed Claim may receive Cash on or about the Effective Date, and (A) if there is no Reorganization Transaction, may receive additional Cash in connection with the disposition of the Debtors’ assets or (B) if there is a Reorganization Transaction, may receive the right to additional distributions from Wind Down Co, representing the residual interest in the Wind Down Co Assets, in each case, in complete and final satisfaction of such Allowed Claim, and (ii) in addition, a U.S. Holder of an Allowed General Unsecured Claim will receive the right to distributions from the GUC Recovery Trust, representing the residual interest in the GUC Recovery Trust Assets, in complete and final satisfaction of such Allowed Claim.9

(a) U.S. Holder of an Allowed Claim—Receipt of Cash and, if applicable, of Residual Interest in Wind Down Co.

i. If there is no Reorganization Transaction

The following assumes that there is no Reorganization Transaction. In such event, a U.S. Holder of an Allowed Claim (other than a General Unsecured Claim, the treatment of which is described further below) will generally recognize gain or loss with respect to its Allowed Claim in an amount equal to the difference between the sum of the amount of Cash received in exchange for such holder’s Claims (other than any consideration attributable to a Claim for accrued but unpaid interest and possibly accrued original issue discount (“OID”)) and (ii) the adjusted tax basis of the Allowed Claim exchanged therefor

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(other than basis attributable to accrued but unpaid interest previously included in such holder’s taxable income and possibly accrued OID). See Section VI.B.3,“Character of Gain or Loss,” below. As noted above (see SectionVI.A.2, “Cancellation of Debt and Reduction of Tax Attributes”), the transactions executed pursuant to the Plan will be treated by Debtors as an open transaction and, as such, any loss, or a portion of any gain, realized by a U.S. Holder of an Allowed Claim may have to be deferred until all of the distributions to such U.S. Holder are received. With respect to the treatment of accrued but unpaid interest or OID and amounts allocable thereto, see Section VI.B.2, “Distributions in Discharge of Accrued OID or Interest.”

ii. If there is a Reorganization Transaction

The following assumed that there will be a Reorganization Transaction. In such event, it is currently expected, and the following discussion assumes, that Wind Down Co will be taxable as a corporation for U.S. federal income tax purposes. However, if the Debtors determine prior to the Effective Date that it would be beneficial for Wind Down Co to be treated as a “liquidating trust” for U.S. federal income tax purposes, the Debtors reserve the right to structure Wind Down Co accordingly. If the Wind Down Co is structured as a liquidating trust, the U.S. federal income tax consequences to U.S. Holders of Claims receiving rights to additional distributions from Wind Down Co should be equivalent to that described for holders of Allowed General Unsecured Claims described in Section (b)“U.S. Holder of an Allowed General Unsecured Claim—Receipt of Residual Interest in GUC Recovery Trust” and Wind Down Co would be taxable as a “liquidating trust” for U.S. federal income tax purposes as described in Section VI.C, “Tax Treatment of the GUC Recovery Trust and Holders of Beneficial Interests” below. The remainder of this discussion assumes that Wind Down Co will be taxable as a corporation for U.S. federal income tax purposes.

A U.S. Holder of an Allowed Claim (other than a General Unsecured Claim, the treatment of which is described further below) will generally recognize gain or loss with respect to its Allowed Claim in an amount equal to the difference between (i) the sum of the amount of Cash received on or about the Effective Date, plus the aggregate fair market value of the equity (“stock”) in Wind Down Co received, in exchange for such holder’s Claims (other than any consideration attributable to a Claim for accrued but unpaid interest and possibly accrued original issue discount (“OID”)) and (ii) the adjusted tax basis of the Allowed Claim exchanged therefor (other than basis attributable to accrued but unpaid interest previously included in such holder’s taxable income and possibly accrued OID). See Section VI.B.3,“Character of Gain or Loss,” below. With respect to the treatment of accrued but unpaid interest or OID and amounts allocable thereto, see Section VI.B.2 "Distributions in Discharge of Accrued OID or Interest."

The tax treatment of subsequent distributions by Wind Down Co will depend on whether or not such distributions are made pursuant to a plan of liquidation adopted by the Plan Administrator. Generally, if a subsequent distribution is made pursuant to a plan of liquidation, such distribution will be treated as a return of capital to the extent of a holder’s tax basis in the stock (i.e., the fair market value of the stock when received), and thereafter as gain in respect of the sale or exchange of the stock. Otherwise, any distributions with respect to stock of Wind Down Co will be treated as a taxable dividend to the extent paid out of Wind Down Co’s current or accumulated earnings and profits as determined under U.S. federal income tax principles, and will be includible by the U.S. Holder as ordinary income when received. To the extent the amount of any distribution exceeds available earnings and profits with respect to such distribution, the excess will be applied against and will reduce the U.S. Holder’s adjusted tax basis (on a dollar-for-dollar basis) in respect of the stock as to which the distribution was made, but not below zero. Any remaining excess will be treated as gain from the sale or exchange of Wind Down Co stock. Depending on the type of holder and the holder’s particular circumstances, a taxable dividend may be a qualified dividend entitled to a lower tax rate or may be eligible for a dividends received deduction (the benefits of which may be mitigated by the extraordinary dividend rules).


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In the event of the subsequent disallowance of any Disputed Claims (other than Disputed General Unsecured Claims discussed below), it is possible that a holder of a previously Allowed Claim may receive additional distributions in respect of its Claim, except that any such additional distributions will not be treated for U.S. federal income tax purposes as additional consideration received in respect of its Claim to the extent treated as interest income under the imputed interest provisions of the Tax Code. Accordingly, it is possible that the recognition of any loss realized by a holder with respect to an Allowed Claim may be deferred until all Disputed Claims (other than Disputed General Unsecured Claims) are Allowed or Disallowed. Alternatively, it is possible that a holder will have additional gain in respect of any additional distributions received in respect of its Claim. U.S. Holders are urged to consult their tax advisors regarding the appropriate U.S. federal income tax treatment of any subsequent distributions of cash originally retained by Wind Down Co on account of Disputed Claims.

(b) U.S. Holder of an Allowed General Unsecured Claim—Receipt of Residual Interest in GUC Recovery Trust.

It is currently expected, and this discussion assumes, that the GUC Recovery Trust will be taxable as a “liquidating trust” for U.S. federal income tax purposes, and, as discussed below (see Section VI.C, “Tax Treatment of the GUC Recovery Trust and Holders of Beneficial Interests”), that each U.S. Holder of an Allowed General Unsecured Claim that receives a beneficial interest in the GUC Recovery Trust will be treated for U.S. federal income tax purposes as directly receiving, and as a direct owner of, its respective share of the GUC Recovery Trust Assets (consistent with its economic rights in the trust). As a result, a U.S. Holder of an Allowed General Unsecured Claim will generally recognize gain or loss with respect to its Allowed General Unsecured Claim (where such gain or loss is generally expected to be recognized on the Effective Date in the case of the Reorganization Transaction, and in the case of no Reorganization Transaction, on the closure of the open transaction discussed below and in SectionVI.A.2, “Cancellation of Debt and Reduction of Tax Attributes”) in an amount equal to the difference between (i) the sum of the amount of Cash received on or about the Effective Date, plus (A) if there is no Reorganization Transaction, any additional Cash received from the Debtors in connection with the disposition of their assets or (B) if there is a Reorganization Transaction, the aggregate fair market value of the equity (“stock”) in Wind Down Co received, plus, as discussed below, any beneficial interests in the GUC Recovery Trust received in exchange for such holder’s Claims (other than any consideration attributable to a Claim for accrued but unpaid interest and possibly accrued OID) and (ii) the holder’s adjusted tax basis of the Allowed General Unsecured Claim exchanged therefor (other than basis attributable to accrued but unpaid interest previously included in the holder's taxable income and possibly accrued OID). See Section VI.B.3, “Character of Gain or Loss,” below. With respect to the treatment of accrued but unpaid interest or OID and amounts allocable thereto, see Section VI.B.2, “Distributions in Discharge of Accrued OID or Interest.”

A U.S. Holder's share of any proceeds received by the GUC Recovery Trust upon the sale or other disposition of the assets of the GUC Recovery Trust (other than any such amounts received as a result of the subsequent disallowance of Disputed Claims or the reallocation among holders of Allowed Claims of undeliverable distributions pursuant to the Plan) should not be included, for U.S. federal income tax purposes, in the holder's amount realized in respect of its Allowed Claim but should be separately treated as amounts realized in respect of such holder's ownership interest in the underlying assets of the GUC Recovery Trust. See Section VI.C, “Tax Treatment of the GUC Recovery Trust and Holders of Beneficial Interests,” below.

A U.S. Holder's tax basis in its respective share of the GUC Recovery Trust Assets will equal the fair market value of its share of such assets, and the holder's holding period generally will begin the day following the Effective Date. Pursuant to the Plan, the GUC Recovery Trustee will make a good faith valuation of the GUC Recovery Trust Assets transferred to the GUC Recovery Trust, and all parties to the


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GUC Recovery Trust (including, without limitation, the Debtors, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) must report consistently with such valuation for all U.S. federal income tax purposes.

In the event of the subsequent disallowance of any Disputed General Unsecured Claims, it is possible that a holder of a previously Allowed General Unsecured Claim may receive additional distributions in respect of its Claim, except that any such additional distributions will not be treated for U.S. federal income tax purposes as additional consideration received in respect of its Claim to the extent treated as interest income under the imputed interest provisions of the Tax Code. Accordingly, it is possible that the recognition of any loss realized by a holder with respect to an Allowed General Unsecured Claim may be deferred until all Disputed General Unsecured Claims are Allowed or Disallowed. Alternatively, it is possible that a holder will have additional gain in respect of any additional distributions received in respect of its Claim. See also Section VI.C.3, “Tax Reporting for the GUC Recovery Trust Assets Allocable to Disputed Claims,” below.

As noted above (see SectionVI.A.2, “Cancellation of Debt and Reduction of Tax Attributes”), in the event there is no Reorganization Transaction, the transactions executed pursuant to the Plan will be treated by Debtors as an open transaction and, as such, any loss, or a portion of any gain, realized by a U.S. Holder of an Allowed General Unsecured Claim may have to be deferred until all of the distributions to such U.S. Holder are received.

2. Distributions in Discharge of Accrued OID or Interest

In general, to the extent that any consideration received pursuant to the Plan by a U.S. Holder of an Allowed Claim is received in satisfaction of interest accrued or OID accrued, in each case during its holding period, such amount will be taxable to the U.S. Holder as interest income (if not previously included in the U.S. Holder’s gross income). Conversely, a U.S. Holder may be entitled to recognize a loss to the extent any accrued interest or amortized OID was previously included in its gross income and is not paid in full. However, the IRS has privately ruled that a holder of a “security” of a corporate issuer, in an otherwise tax-free exchange, could not claim a current deduction with respect to any unpaid OID. Accordingly, it is also unclear whether, by analogy, a U.S. Holder of an Allowed Claim that does not constitute a “security” would be required to recognize a capital loss, rather than an ordinary loss, with respect to previously included OID that is not paid in full. Holders are urged to consult their tax advisors regarding the allocation of consideration received under the Plan, as well as the deductibility of accrued but unpaid interest (including OID) and the character of any loss claimed with respect to accrued but unpaid interest (including OID) previously included in income for U.S. federal income tax purposes.

Section 6.16 of the Plan provides that the aggregate consideration to be distributed to U.S. Holders of Allowed Claims in each Class will be allocated first to the principal amount of such Allowed Claims, with any excess allocated to unpaid interest that accrued on these Claims, if any. There is no assurance that the IRS will respect such allocation for U.S. federal income tax purposes. U.S. Holders of Claims should consult their own tax advisors regarding the proper allocation of the consideration received by them under the Plan.

3. Character of Gain or Loss

Where gain or loss is recognized by a U.S. Holder, the character of such gain or loss as long-term or short-term capital gain or loss or as ordinary income or loss will be determined by a number of factors, including the tax status of the holder, whether the Claim constitutes a capital asset in the hands of the holder and how long it has been held, whether the Claim was acquired at a market discount, and whether and to what extent the holder previously claimed a bad debt deduction.


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A U.S. Holder that purchased its Claims from a prior holder at a “market discount” (relative to the principal amount of the Claims at the time of acquisition) may be subject to the market discount rules of the Tax Code. In general, a debt instrument is considered to have been acquired with “market discount” if the U.S. Holder’s adjusted tax basis in the debt instrument is less than (i) its stated principal amount or (ii) in the case of a debt instrument issued with OID, its adjusted issue price, in each case, by at least a statutorily defined de minimis amount. Under these rules, any gain recognized on the exchange of Claims (other than in respect of a Claim for accrued but unpaid interest) generally will be treated as ordinary income to the extent of the market discount accrued (on a straight line basis or, at the election of the holder, on a constant yield basis) during the U.S. Holder’s period of ownership, unless the holder elected to include the market discount in income as it accrued. If a U.S. Holder of a Claim did not elect to include market discount in income as it accrued and, thus, under the market discount rules, was required to defer all or a portion of any deductions for interest on debt incurred or maintained to purchase or carry its Claim, such deferred amounts would become deductible at the time of the receipt of cash and other consideration in satisfaction of such Claims.

C. Tax Treatment of the GUC Recovery Trust and Holders of Beneficial Interests

1. Classification of the GUC Recovery Trust as a Liquidating Trust

The GUC Recovery Trust is intended to qualify as a “liquidating trust” for U.S. federal income tax purposes. In general, a liquidating trust is not a separate taxable entity but rather is treated for U.S. federal income tax purposes as a “grantor” trust (i.e., a pass-through entity). The IRS, in Revenue Procedure 94-45, 1994-2 C.B. 684, set forth the general criteria for obtaining an IRS ruling as to the grantor trust status of a liquidating trust under a chapter 11 plan. The GUC Recovery Trust will be structured with the intention of complying with such general criteria. In conformity with Revenue Procedure 94-45, all parties to the GUC Recovery Trust (including, without limitation, the Debtors, holders of Allowed General Unsecured Claims receiving the GUC Recovery Trust Interests, and the GUC Recovery Trustee) will be required to treat the transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust as (1) a transfer of the GUC Recovery Trust Assets (subject to any obligations relating to those assets) directly to the holders of General Unsecured Claims receiving the GUC Recovery Trust Interests (other than to the extent any of the GUC Recovery Trust Assets are allocable to Disputed Claims), followed by (2) the transfer by such holders to the GUC Recovery Trust of the GUC Recovery Trust Assets in exchange for the GUC Recovery Trust Interests. Accordingly, except in the event of contrary definitive guidance, holders of General Unsecured Claims receiving the GUC Recovery Trust Interests (i.e., the beneficiaries of the GUC Recovery Trust) – which, as discussed above and subject to the provisions of GUC Recovery Trust Agreement, is expected to include holders of Allowed General Unsecured Claims – would be treated for U.S. federal income tax purposes as the grantors and owners of their respective share of the GUC Recovery Trust Assets (other than such GUC Recovery Trust Assets as are allocable to Disputed Claims). While the following discussion assumes that the GUC Recovery Trust would be treated as a liquidating trust for U.S. federal income tax purposes, no ruling will necessarily be requested from the IRS concerning the tax status of the GUC Recovery Trust as a grantor trust. Accordingly, there can be no assurance that the IRS would not take a contrary position to the classification of the GUC Recovery Trust as a grantor trust. If the IRS were to successfully challenge such classification, the U.S. federal income tax consequences to the GUC Recovery Trust and the U.S. Holders of Allowed General Unsecured Claims could vary from those discussed herein.

2. General Tax Reporting by the GUC Recovery Trust and Holders of General Unsecured Claims Receiving the GUC Recovery Trust Interests

For all U.S. federal income tax purposes, all parties to the GUC Recovery Trust (including, without limitation, the Debtors, holders of Allowed General Unsecured Claims receiving the GUC Recovery Trust


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Interests, and the GUC Recovery Trustee) must treat the GUC Recovery Trust as a grantor trust of which holders of General Unsecured Claims receiving the GUC Recovery Trust Interests are the owners and grantors (as determined for U.S. federal income tax purposes). Accordingly, holders of General Unsecured Claims receiving the GUC Recovery Trust Interests are treated for U.S. federal income tax purposes as the direct owners of an undivided interest in the GUC Recovery Trust (other than any assets allocable to Disputed Claims), consistent with their economic interests therein. The GUC Recovery Trustee will file tax returns for the GUC Recovery Trust treating the GUC Recovery Trust as a grantor trust pursuant to section 1.671-4(a) of the Treasury Regulations. The GUC Recovery Trustee also shall annually send to each holder of General Unsecured Claims receiving interests in GUC Recovery Trust a separate statement regarding the receipts and expenditures of GUC Recovery Trust as relevant for U.S. federal income tax purposes and will instruct all such holders to use such information in preparing their U.S. federal income tax returns or to forward the appropriate information to such holder's underlying beneficial holders with instructions to utilize such information in preparing their U.S. federal income tax returns.

All taxable income and loss of the GUC Recovery Trust will be allocated among, and treated as directly earned and incurred by, holders of General Unsecured Claims receiving the GUC Recovery Trust Interests with respect to each holder’s undivided interest in the GUC Recovery Trust Assets (and not as income or loss with respect to its prior Claims), with the possible exceptions of amounts due to a reallocation among holders of Allowed General Unsecured Claims of undeliverable distributions and any taxable income and loss allocable to any assets allocable to, or retained on account of, Disputed Claims. The character of any income and the character and ability to use any loss will depend on the particular situation of the holder of Claims receiving the GUC Recovery Trust Interests. The tax book value of the GUC Recovery Trust’s assets for purposes of allocating taxable income and loss shall equal their fair market value on the date of the transfer of such assets to the GUC Recovery Trust, adjusted in accordance with tax accounting principles prescribed by the Tax Code, applicable Treasury Regulations, and other applicable administrative and judicial authorities and pronouncements.

In accordance with the GUC Recovery Trust Agreement, as soon as reasonably practicable after the transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust, the GUC Recovery Trustee will make a good faith valuation of the GUC Recovery Trust Assets. All parties to the GUC Recovery Trust (including, without limitation, the Debtors, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) must report consistently with such valuation for all U.S. federal income tax purposes. The valuation will be made available, from time to time, as relevant for tax reporting purposes.

The U.S. federal income tax obligations of a U.S. Holder of General Unsecured Claims receiving the GUC Recovery Trust Interests are not dependent on the GUC Recovery Trust distributing any cash or other proceeds. Thus, a U.S. Holder of General Unsecured Claims receiving the GUC Recovery Trust Interests may incur a U.S. federal income tax liability with respect to its allocable share of GUC Recovery Trust’s income even if the GUC Recovery Trust does not make a concurrent distribution to the U.S. Holder. In general, other than in respect of cash retained on account of Disputed Claims and distributions resulting from undeliverable distributions (the subsequent distribution of which still relates to a U.S. Holder’s Allowed General Unsecured Claims), a distribution of cash by the GUC Recovery Trust will not be separately taxable to a holder of General Unsecured Claims receiving the GUC Recovery Trust Interests since the U.S. Holder is already regarded for U.S. federal income tax purposes as owning the underlying assets (and was taxed at the time the cash was earned or received by GUC Recovery Trust). U.S. Holders are urged to consult their tax advisors regarding the appropriate U.S. federal income tax treatment of any subsequent distributions of cash originally retained by the GUC Recovery Trust on account of Disputed Claims.


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The GUC Recovery Trust will comply with all applicable governmental withholding requirements. If any beneficiaries of the GUC Recovery Trust are not U.S. persons, the trustee of the GUC Recovery Trust may be required to withhold up to 30% of the income or proceeds allocable to such persons, depending on the circumstances (including whether the type of income is subject to a lower treaty rate). As indicated above, the foregoing discussion of the U.S. federal income tax consequences of the Plan does not generally address the consequences to non-U.S. Holders; accordingly, such holders should consult their tax advisors with respect to the U.S. federal income tax consequences of the Plan, including owning an interest in the GUC Recovery Trust.

3. Tax Reporting for the GUC Recovery Trust Assets Allocable to Disputed Claims

Subject to definitive guidance from the IRS or a court of competent jurisdiction to the contrary (including the receipt by the GUC Recovery Trustee of an IRS private letter ruling if the GUC Recovery Trustee so requests one, or the receipt of an adverse determination by the IRS upon audit if not contested by the GUC Recovery Trustee), the GUC Recovery Trustee (A) may elect to treat any of the GUC Recovery Trust Assets allocable to, or retained on account of, any reserve for Disputed Claims as a “disputed ownership fund” governed by section 1.468B-9 of the Treasury Regulations, if applicable, and (B) to the extent permitted by applicable law, will report consistently for state and local income tax purposes. Accordingly, if a “disputed ownership fund” election is made with respect to any reserve for Disputed Claims, such reserve will be subject to tax annually on a separate entity basis on any net income earned with respect to such assets (including any gain recognized upon the disposition of such assets). All distributions from such reserves (which distributions will be net of the expenses, including taxes, relating to the retention or disposition of such assets) will be treated as received by holders in respect of their Claims as if distributed by the Debtors. All parties to the GUC Recovery Trust (including, without limitation, the Debtors, holders of Allowed General Unsecured Claims receiving the GUC Recovery Trust Interests, and the GUC Recovery Trustee) will be required to report for tax purposes consistently with the foregoing. The reserve for Disputed Claims, if any, shall be responsible for payment, out of the assets allocable to such reserve for Disputed Claims, of any taxes imposed with respect to such reserve for Disputed Claims or such assets. In the event, and to the extent, any cash allocable to any reserve for Disputed Claims is insufficient to pay the portion of any such taxes attributable to the taxable income arising from the assets allocable to such reserve (including any income that may arise upon the distribution of the assets in such reserve), assets allocable to such reserve for Disputed Claims may be sold to pay such taxes.

D. Information Reporting and Back-Up Withholding

All distributions to holders of Allowed Claims under the Plan are subject to any applicable tax withholding. Under U.S. federal income tax law, interest, dividends, and other reportable payments may, under certain circumstances, be subject to “backup withholding” at the then applicable withholding rate (currently 24%). Backup withholding generally applies if the holder (a) fails to furnish its social security number or other taxpayer identification number, (b) furnishes an incorrect taxpayer identification number, (c) fails properly to report interest or dividends, or (d) under certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the tax identification number provided is its correct number and that it is not subject to backup withholding. Backup withholding is not an additional tax but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax. Certain persons are exempt from backup withholding, including, in certain circumstances, corporations and financial institutions. Holders of Allowed Claims are urged to consult their tax advisors regarding the Treasury Regulations governing backup withholding and whether the transactions contemplated by the Plan would be subject to these Treasury Regulations.


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In addition, Treasury Regulations generally require disclosure by a taxpayer on its U.S. federal income tax return of certain types of transactions in which the taxpayer participated, including, among other types of transactions, certain transactions that result in the taxpayer’s claiming a loss in excess of specified thresholds. Holders are urged to consult their tax advisors regarding these Treasury Regulations and whether the transactions contemplated by the Plan would be subject to these Treasury Regulations and require disclosure on the holder’s tax returns.

THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH HOLDER’S CIRCUMSTANCES AND INCOME TAX SITUATION. ALL HOLDERS OF CLAIMS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTIONS CONTEMPLATED BY THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX LAWS.

VII. TRANSFER RESTRICTIONS AND CONSEQUENCES

UNDER FEDERAL SECURITIES LAWS

The issuance and distribution under the Plan of the New Common Stock shall be exempt from registration under the Securities Act and any other applicable securities laws pursuant to section 1145 of the Bankruptcy Code.

Section 1145 of the Bankruptcy Code generally exempts from registration under the Securities Act the offer or sale pursuant to a chapter 11 plan of a security of the debtor, of an affiliate participating in a joint plan with the debtor, or of a successor to the debtor under a plan, if such securities are offered or sold in exchange for a claim against, or an interest in, the debtor or such affiliate, or principally in such exchange and partly for cash.. In reliance upon this exemption, the New Common Stock issued under the Plan to the Plain Sponsor generally will be exempt from the registration requirements of the Securities Act, and state and local securities laws. However, because the Plan Sponsor is an “underwriter” (as defined in section 1145(b) of the Bankruptcy Code) with respect to such securities, the Plan Sponsor may not resell these securities without registration, or an available exemption, under the Securities Act or other federal, state or local securities laws.

Section 1145(b) of the Bankruptcy Code defines “underwriter” as one who, except with respect to ordinary trading transactions, (i) purchases a claim with a view to distribution of any security to be received in exchange for the claim, (ii) offers to sell securities issued under a plan for the holders of such securities, (iii) offers to buy securities issued under a plan from persons receiving such securities, if the offer to buy is made with a view to distribution, or (iv) is an issuer, as used in section 2(a)(11) of the Securities Act, with respect to such securities, which includes control persons of the issuer. “Control,” as defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. The legislative history of Section 1145 of the Bankruptcy Code suggests that a creditor who owns 10% or more of a class of voting securities of a reorganized debtor may be presumed to be a “controlling person” and, therefore, an underwriter.


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VIII. CERTAIN RISK FACTORS TO BE CONSIDERED

Prior to voting to accept or reject the Plan, holders of Claims entitled to vote should read and carefully consider the risk factors set forth below, in addition to the information set forth in this Disclosure Statement together with any attachments, exhibits, or documents incorporated by reference hereto. The factors below should not be regarded as the only risks associated with the Plan or its implementation.

A. Certain Bankruptcy Law Considerations

1. Risk of Non-Confirmation of Plan

Although the Debtors believe that the Plan will satisfy all requirements necessary for confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same conclusion or that modifications to the Plan will not be required for confirmation or that such modifications would not necessitate re-solicitation of votes. Moreover, the Debtors can make no assurances that they will receive the requisite acceptances to confirm the Plan, and even if all voting Classes voted in favor of the Plan or the requirements for “cramdown” are met with respect to any Class that rejects the Plan, the Bankruptcy Court, which may exercise substantial discretion as a court of equity, may choose not to confirm the Plan. If the Plan is not confirmed, it is unclear what distributions holders of Claims or Interests ultimately would receive with respect to their Claims or Interests in a subsequent chapter 11 plan.

2. Risk of Failing to Satisfy the Vote Requirement

In the event that the Debtors are unable to get sufficient votes from the Voting Classes, the Debtors may seek to accomplish an alternative chapter 11 plan or seek to cram down the Plan on non-accepting Classes. There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to holders of Allowed Claims as those proposed in the Plan.

3. Non-Consensual Confirmation

In the event that any impaired class of claims or equity interests does not accept or is deemed not to accept a chapter 11 plan, a bankruptcy court may nevertheless confirm such plan at the proponent’s request if at least one impaired class has accepted the plan (with such acceptance being determined without including the vote of any “insider” in such class), and as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes. Should any Class vote to reject the Plan, then these requirements must be satisfied with respect to such rejecting Classes. The Debtors believe that the Plan satisfies these requirements.

4. Risk Related to Parties in Interest Objecting to the Debtors’ Classification of Claims and Interests

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests in such class. The Debtors believe that the classification of Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code. However, there can be no assurance that a party in interest will not object or that the Bankruptcy Court will approve the classifications.


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5. Risks Related to Possible Objections to the Plan

There is a risk that certain parties could oppose and object to either the entirety of the Plan or specific provisions of the Plan. Although the Debtors believe that the Plan complies with all relevant Bankruptcy Code provisions, there can be no guarantee that a party in interest will not file an objection to the Plan or that the Bankruptcy Court will not sustain such an objection.

6. Releases, Injunctions, and Exculpation Provisions May Not Be Approved

Article 10 of the Plan provides for certain releases, injunctions, and exculpations, for claims and Causes of Action that may otherwise be asserted against the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties, as applicable. The releases, injunctions, and exculpations provided in the Plan are subject to objection by parties in interest and may not be approved. If the releases and exculpations are not approved, certain parties may not be considered Releasing Parties, Released Parties, or Exculpated Parties, and certain Released Parties or Exculpated Parties may withdraw their support for the Plan.

7. Risk of Non-Occurrence of Effective Date

Although the Debtors believe that the Effective Date will occur soon after the Confirmation Date, there can be no assurance as to the timing of the Effective Date. If the conditions precedent to the Effective Date set forth in the Plan have not occurred or have not been waived as set forth in Article IX of the Plan, then the Confirmation Order may be vacated, in which event no distributions would be made under the Plan, the Debtors and all holders of Claims or Interests would be restored to the status quo as of the day immediately preceding the Confirmation Date, and the Debtors’ obligations with respect to Claims and Interests would remain unchanged.

8. Risk of Termination of Restructuring Support Agreement

The Restructuring Support Agreement contains certain provisions that give the Debtors and the Consenting Creditors the ability to terminate the Restructuring Support Agreement. As noted above, termination of the Restructuring Support Agreement could result in protracted chapter 11 cases which could significantly and detrimentally impact the Debtors’ relationships with vendors, suppliers, employees, and major customers.

9. Risk of Conversion into Chapter 7 Cases

If no chapter 11 plan can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of Claims and Interests, these chapter 11 cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code. See Section XI.B hereof, as well as the Liquidation Analysis attached hereto as Exhibit C, for a discussion of the effects that a chapter 7 liquidation would have on the recoveries of holders of Claims and Interests.

B. Additional Factors Affecting the Value of Reorganized Debtors

1. Claims Could Be More Than Projected

There can be no assurance that the estimated Allowed amount of Claims in certain Classes will not be significantly more than projected, which, in turn, could cause the value of distributions to be reduced


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substantially. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate results. Therefore, the actual amount of Allowed Claims may vary from the Debtors’ projections and feasibility analysis, and the variation may be material.

2. Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary

Certain of the information contained in this Disclosure Statement is, by nature, forward-looking, and contains estimates and assumptions which might ultimately prove to be incorrect, and contains projections which may be materially different from actual future experiences. There are uncertainties associated with any projections and estimates, and they should not be considered assurances or guarantees of the amount of funds or the amount of Claims in the various Classes that might be allowed.

C. Risks Relating to the Debtors’ Business and Financial Condition

1. DIP Facility and Use of Cash Collateral

The DIP Facility and the DIP Lenders’ and Prepetition Lenders’ consent to the Debtors’ use of cash collateral is intended to provide liquidity to the Debtors during the pendency of these chapter 11 cases. As approved on February 20, 2020, (ECF No. 199) the DIP Facility and accompanying Final DIP Order provide for the relief stipulated at Section IV.C. Although the Bankruptcy Court has approved the DIP Facility and the use of cash collateral on the terms requested by the Debtors in consultation with interested parties, if these chapter 11 cases take longer than expected to conclude, or in the event of a breach of a milestone or another event of default under the DIP Facility, which could occur if the Plan is not confirmed on the proposed timeline, the Debtors may exhaust or lose access to their financing and the DIP Lenders and/or Prepetition Lenders may not consent to the Debtors’ use of cash collateral. There is no assurance that they will be able to obtain additional financing from their existing lenders or otherwise.

D. Risks Related to Unreleased Avoidance Actions

There is no guarantee that the GUC Recovery Trustee will choose to prosecute any of the Unreleased Avoidance Actions. Furthermore, to the extent the GUC Recovery Trustee determines to prosecute a potential Unreleased Avoidance Action, there is no guarantee as to the success of the GUC Recovery Trustee in pursuing the Unreleased Avoidance Actions. The success of the GUC Recovery Trustee in pursuing any of the Unreleased Avoidance Actions, as well as the expenses incurred in investigating and prosecuting the Unreleased Avoidance Actions, may materially affect the recoveries for the holders of Allowed General Unsecured Claims in Class 6.

E. Additional Factors

1. Debtors Could Withdraw Plan

Subject to the terms of, and without prejudice to, the rights of any party to the Restructuring Support Agreement, the Plan may be revoked or withdrawn prior to the Confirmation Date by the Debtors.

2. Debtors Have No Duty to Update

The statements contained in this Disclosure Statement are made by the Debtors as of the date hereof, unless otherwise specified herein, and the delivery of this Disclosure Statement after that date does not imply that there has been no change in the information set forth herein since that date. The Debtors have no duty to update this Disclosure Statement unless otherwise ordered to do so by the Bankruptcy Court.


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3. No Representations Outside this Disclosure Statement Are Authorized

No representations concerning or related to the Debtors, these chapter 11 cases, or the Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. Any representations or inducements made to secure your acceptance or rejection of the Plan that are other than those contained in, or included with, this Disclosure Statement should not be relied upon in making the decision to accept or reject the Plan.

4. No Legal or Tax Advice Is Provided by this Disclosure Statement

The contents of this Disclosure Statement should not be construed as legal, business, or tax advice. Each holder of a Claim or Interest should consult their own legal counsel and accountant as to legal, tax, and other matters concerning their Claim or Interest.

This Disclosure Statement is not legal advice to you. This Disclosure Statement may not be relied upon for any purpose other than to determine how to vote on the Plan or object to confirmation of the Plan.

5. No Admission Made

Nothing contained herein or in the Plan shall constitute an admission of, or shall be deemed evidence of, the tax or other legal effects of the Plan on the Debtors or holders of Claims or Interests.

6. Certain Tax Consequences

For a discussion of certain U.S. Federal income tax considerations to the Debtors and certain holders of Claims in connection with the implementation of the Plan, see Section VI hereof.

IX. VOTING PROCEDURES AND REQUIREMENTS

Before voting to accept or reject the Plan, each Eligible Holder (defined below) should carefully review the Plan attached hereto as Exhibit A. All descriptions of the Plan set forth in this Disclosure Statement are subject to the terms and provisions of the Plan.

This section is qualified in its entirety by the Debtors’ Motion For an Order (I) Approving Disclosure Statement; (II) Establishing Notice and Objection Procedures For Confirmation of the Plan; (III) Approving Solicitation Packages and Procedures for Distribution Thereof; (IV) Approving the Forms of Ballots and Establishing Procedures for Voting on the Plan; And (V) Granting Related Relief, filed contemporaneously herewith (the “Solicitation Motion”).

A. Voting Instructions and Voting Deadline

All Eligible Holders have been sent a Ballot together with this Disclosure Statement. Such holders should read the Ballot carefully and follow the instructions contained therein. Please use only the Ballot that accompanies this Disclosure Statement to cast your vote.

Holders of Classes 3 (Senior First Out Term Loan Claims), Class 4 (Senior Last Out Term Loan Claims), Class 5 (Holdco Loan Claims), and Class 6 (General Unsecured Claims) (“Eligible Holders”) are entitled to vote to accept or reject the Plan.


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Each ballot contains detailed voting instructions. Each ballot also sets forth in detail, among other things, the deadlines, procedures, and instructions for voting to accept or reject the Plan, the Voting Record Date for voting purposes, and the applicable standards for tabulating ballots. The record date for determining which holders are entitled to vote on the Plan is August 10, 2020.

Please complete the information requested on the ballot, sign, date and indicate your vote on the ballot, and return the completed ballot either (i) via electronic, online transmission through the E-Ballot platform on the Voting Agent’s website; or (ii) by overnight courier or hand delivery in the enclosed pre-addressed postage-paid envelope to:

Fairway Group Holdings Corp. Fairway Ballot Processing c/o Omni Management Group LLC 5955 De Soto Avenue, Suite 100 Woodland Hills, CA 91367 [email protected]

FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE ACTUALLY RECEIVED BY THE VOTING AGENT NO LATER THAN SEPTEMBER 14, 2020, 4:00 P.M. EASTERN TIME (THE “VOTING DEADLINE”), UNLESS EXTENDED BY THE DEBTORS. ANY FAILURE TO FOLLOW THE VOTING INSTRUCTIONS INCLUDED WITH YOUR BALLOT MAY DISQUALIFY YOUR BALLOT AND YOUR VOTE.

ANY BALLOT THAT IS EXECUTED AND RETURNED BUT (A) WHICH DOES NOT INDICATE EITHER AN ACCEPTANCE OR REJECTION OF THE PLAN, (B) PARTIALLY ACCEPTS AND PARTIALLY REJECTS THE PLAN, OR (C) INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN WILL BE COUNTED AS AN ACCEPTANCE.

IF YOU ARE AN ELIGIBLE HOLDER AND YOU DID NOT RECEIVE A BALLOT, RECEIVED A DAMAGED BALLOT, OR LOST YOUR BALLOT, OR IF YOU HAVE ANY QUESTIONS CONCERNING THE PROCEDURES FOR VOTING ON THE PLAN, PLEASE CONTACT OMNI AGENT SOLUTIONS BY CALLING (866) 662-2295 (TOLL FREE) OR BY EMAILING [email protected].

B. Parties Entitled to Vote

Under the Bankruptcy Code, only holders of Claims or Interests in “impaired” classes are entitled to vote on the Plan. Under section 1124 of the Bankruptcy Code, a class of Claims or Interests is “impaired” under the Plan unless (1) the Plan leaves unaltered the legal, equitable, and contractual rights to which such Claim or Interest entitles the holder thereof or (2) notwithstanding any legal right to an accelerated payment of such Claim or Interest, the Plan cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

If, however, the holder of an impaired Claim or Interest will not receive or retain any distribution under the Plan on account of such Claim or Interest, the Bankruptcy Code deems such holder to have rejected the Plan, and, accordingly, holders of such Claims and Interests do not actually vote on the Plan and will not receive a Ballot. If a Claim or Interest is not impaired by the Plan, the Bankruptcy Code presumes the holder of such Claim or Interest to have accepted the Plan and, accordingly, holders of such Claims and Interests are not entitled to vote on the Plan, and also will not receive a Ballot.


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A vote may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the Bankruptcy Code, that it was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code.

The Bankruptcy Code defines “acceptance” of a plan by a class of: (1) claims as acceptance by creditors in that class that hold at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the claims that cast ballots for acceptance or rejection of the plan; and (2) interests as acceptance by interest holders in that class that hold at least two-thirds (2/3) in amount of the interests that cast ballots for acceptance or rejection of the plan.

The Claims in the following classes are impaired under the Plan and entitled to vote to accept or reject the Plan:

Class 3 – Senior First Out Term Loan Claims

Class 4– Senior Las Out Term Loan Claims

Class 5 – General Unsecured Claims

Class 6 – Holdco Loan Claims

Claims in all other Classes are either unimpaired and presumed to accept or impaired and deemed to reject the Plan and are not entitled to vote. For a detailed description of the treatment of Claims and Interests under the Plan, see Section V.C of this Disclosure Statement.

The Debtors will request confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code over the deemed rejection of the Plan by all Intercompany Claims, the Parent Equity Interests, and the Subordinated Securities Claims. Under section 1129(b), a plan may be confirmed by a bankruptcy court if it does not “discriminate unfairly” and is “fair and equitable” with respect to each rejecting class. For a more detailed description of the requirements for confirmation of a nonconsensual plan, see Section VI.A.3 of this Disclosure Statement.

C. Agreements Upon Furnishing Ballots

The delivery of an accepting ballot pursuant to one of the procedures set forth above will constitute the agreement of the creditor with respect to such ballot to accept (i) all of the terms of, and conditions to, this Solicitation; and (ii) the terms of the Plan including the injunction, releases, and exculpations set forth in Sections 10.5, 10.6, and 10.7 therein. All parties in interest retain their right to object to confirmation of the Plan, subject to any applicable terms of the Restructuring Support Agreement, the Global Settlement or the UFCW Settlement.

D. Change of Vote

Except as provided in the Restructuring Support Agreement or UFCW Settlement, any party who has previously submitted to the Voting Agent prior to the Voting Deadline a properly completed ballot may revoke such ballot and change its vote by submitting to the Voting Agent prior to the Voting Deadline a subsequent, properly completed ballot for acceptance or rejection of the Plan.

E. Waivers of Defects, Irregularities, etc.

Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility (including time of receipt), acceptance, and revocation or withdrawals of ballots will be determined by the Voting Agent and/or the Debtors, as applicable, in their sole discretion, which determination will be final


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and binding. The Debtors reserve the right to reject any and all ballots submitted by any of their respective creditors not in proper form, the acceptance of which would, in the opinion of the Debtors or their counsel, as applicable, be unlawful. The Debtors further reserve their respective rights to waive any defects or irregularities or conditions of delivery as to any particular ballot by any of their creditors. The interpretation (including the ballot and the respective instructions thereto) by the applicable Debtor, unless otherwise directed by the Bankruptcy Court, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with deliveries of ballots must be cured within such time as the Debtors (or the Bankruptcy Court) determines. Neither the Debtors nor any other person will be under any duty to provide notification of defects or irregularities with respect to deliveries of ballots nor will any of them incur any liabilities for failure to provide such notification. Unless otherwise directed by the Bankruptcy Court, delivery of such ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots previously furnished (and as to which any irregularities have not theretofore been cured or waived) will be invalidated.

F. Miscellaneous

Unless otherwise ordered by the Bankruptcy Court, ballots that are signed, dated, and timely received, but on which a vote to accept or reject the Plan has not been indicated, will not be counted. The Debtors, in their sole discretion, may request that the Voting Agent attempt to contact such voters to cure any such defects in the ballots. If you return more than one ballot voting different Claims or Interests, the ballots are not voted in the same manner, and you do not correct this before the Voting Deadline, those ballots will not be counted. An otherwise properly executed ballot that attempts to partially accept and partially reject the Plan will likewise not be counted.

The ballots provided to Eligible Holders will reflect the principal amount of such Eligible Holder’s Claim; however, when tabulating votes, the Voting Agent may adjust the amount of such Eligible Holder’s Claim by multiplying the principal amount by a factor that reflects all amounts accrued between the Record Date and the Commencement Date including, without limitation, interest.

Under the Bankruptcy Code, for purposes of determining whether the requisite acceptances have been received, only holders of the Claims or Interests, as applicable, who actually vote will be counted. The failure of a holder to deliver a duly executed ballot to the Voting Agent will be deemed to constitute an abstention by such holder with respect to voting on the Plan and such abstentions will not be counted as votes for or against the Plan.

Except as provided below, unless the ballot is timely submitted to the Voting Agent before the Voting Deadline together with any other documents required by such ballot, the Debtors may, in their sole discretion, reject such ballot as invalid, and therefore decline to utilize it in connection with seeking confirmation of the Plan.

G. Further Information, Additional Copies

If you have any questions or require further information about the voting procedures for voting your Claim, or about the packet of material you received, or if you wish to obtain an additional copy of the Plan, this Disclosure Statement, or any exhibits to such documents, please contact the Voting Agent.


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X. CONFIRMATION OF PLAN

A. Confirmation Hearing

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a confirmation hearing upon appropriate notice to all required parties. The Confirmation Hearing is scheduled for September 29, 2020 at 11:00 a.m. Notice of the Confirmation Hearing will be provided to all known creditors and equity holders or their representatives. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the continuation date made at the Confirmation Hearing, at any subsequent continued Confirmation Hearing, or pursuant to a notice filed on the docket for these chapter 11 cases.

B. Objections to Confirmation

Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to the confirmation of a plan. Any objection to confirmation of the Plan must be in writing, must conform to the Bankruptcy Rules and the Local Rules, must set forth the name of the objector, the nature and amount of Claims held or asserted by the objector against the Debtors’ estates or properties, the basis for the objection and the specific grounds therefore, and must be filed with the Bankruptcy Court, with a copy to the chambers of the Honorable James L. Garrity, Jr., United States Bankruptcy Judge, United States Bankruptcy Court for the Southern District of New York, Courtroom 601, One Bowling Green, New York, New York 10004, together with proof of service thereof, and served upon the following parties, including such other parties as the Bankruptcy Court may order:

To the Debtors, at: Fairway Group Holdings Corp. 2284 12th Avenue New York, New York 10027 Attn: Nathalie Augustin, Esq. Telephone: (646) 616-8070 Facsimile: (646) 616-8072 E-mail: [email protected]

Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ray C. Schrock, P.C. and Sunny Singh, Esq. Telephone: (212) 310-8000 Facsimile: (212) 310-8007 E-mail: [email protected] [email protected]

To the Ad Hoc Group and DIP Lenders, at: King & Spalding LLP 1185 6th Ave # 35, New York, New York 10036 Attn: W. Austin Jowers, Esq. and Michael R. Handler, Esq. Telephone: (212) 373-3000 Facsimile: 757-3990 E-mail: [email protected] [email protected]

To the Administrative Agent under the Prepetition Credit Agreement and DIP Credit Agreement, at: Davis Polk & Wardwell LLP. 450 Lexington Avenue, New York, New York 10017 Attn: Christian Fischer, Esq.; Telephone: (212) 450-4000 Facsimile: (212) 701-5800 E-mail: [email protected]

To the Creditors’ Committee, at: Pachulski Stang Ziehl & Jones LLP 780 3rd Ave #36, New York, New York 10017 Attn: Bradford J. Sandler, Esq. and Robert J.

To the UFCW Parties, at: Cohen, Weiss and Simon LLP 900 Third Ave New York, New York, 10022-4869 Attn: Richard M. Seltzer, Esq.


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To the Debtors, at: Fairway Group Holdings Corp. 2284 12th Avenue New York, New York 10027 Attn: Nathalie Augustin, Esq. Telephone: (646) 616-8070 Facsimile: (646) 616-8072 E-mail: [email protected]

Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Ray C. Schrock, P.C. and Sunny Singh, Esq. Telephone: (212) 310-8000 Facsimile: (212) 310-8007 E-mail: [email protected] [email protected]

Feinstein, Esq. Telephone: 212) 561-7700 Facsimile: (212) 468-7900 E-mail: [email protected] [email protected]

Telephone: 212) 563-4100 Facsimile: (212) 563-6527 E-mail: [email protected]

To the U.S. Trustee, at: 201 Varick Street, Suite 1006, New York, New York 10014 Attn: Greg Zipes, Esq. and [email protected], Esq. Telephone: (212) 515-0500 Facsimile: (212) 668-2255 E-mail: [email protected]

[email protected].

UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.

C. Requirements for Confirmation of Plan

1. Requirements of Section 1129(a) of the Bankruptcy Code

(a) General Requirements.

At the Confirmation Hearing, the Bankruptcy Court will determine whether the confirmation requirements specified in section 1129(a) of the Bankruptcy Code have been satisfied including, without limitation, whether:

(i) the Plan complies with the applicable provisions of the Bankruptcy Code;

(ii) the Debtors have complied with the applicable provisions of the Bankruptcy Code;

(iii) the Plan has been proposed in good faith and not by any means forbidden by law;

(iv) any payment made or promised by the Debtors or by a person issuing securities or acquiring property under the Plan, for services or for costs and expenses in or in connection with these chapter 11 cases, or in connection with the Plan and incident to these chapter 11 cases, has been disclosed to the Bankruptcy Court, and any such payment made before confirmation of the Plan is reasonable, or if such payment is to be fixed after confirmation of the Plan, such payment is subject to the approval of the Bankruptcy Court as reasonable;


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(v) the Debtors have disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the Plan, as a director or officer of the Wind Down Co and Reorganized Debtors, an affiliate of the Debtors participating in a Plan with the Debtors, or a successor to the Debtors under the Plan, and the appointment to, or continuance in, such office of such individual is consistent with the interests holders of Claims and Interests and with public policy, and the Debtors have disclosed the identity of any insider who will be employed or retained by the Wind Down Co or Reorganized Debtors, and the nature of any compensation for such insider;

(vi) with respect to each Class of Claims or Interests, each holder of an impaired Claim has either accepted the Plan or will receive or retain under the Plan, on account of such holder’s Claim, property of a value, as of the Effective Date of the Plan, that is not less than the amount such holder would receive or retain if the Debtors were liquidated on the Effective Date of the Plan under chapter 7 of the Bankruptcy Code;

(vii) except to the extent the Plan meets the requirements of section 1129(b) of the Bankruptcy Code (as discussed further below), each Class of Claims either accepted the Plan or is not impaired under the Plan;

(viii) except to the extent that the holder of a particular Claim has agreed to a different treatment of such Claim, the Plan provides that administrative expenses and priority Claims, other than priority tax Claims, will be paid in full on the Effective Date, and that priority tax Claims will receive either payment in full on the Effective Date or deferred cash payments over a period not exceeding five years after the Commencement Date, of a value, as of the Effective Date of the Plan, equal to the allowed amount of such Claims;

(ix) at least one Class of impaired Claims has accepted the Plan, determined without including any acceptance of the Plan by any insider holding a Claim in such Class;

(x) confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtors or any successor to the Debtors under the Plan; and

(xi) all fees payable under section 1930 of title 28, as determined by the Bankruptcy Court at the Confirmation Hearing, have been paid or the Plan provides for the payment of all such fees on the Effective Date of the Plan.

(b) Acceptance of the Plan.

Under the Bankruptcy Code, a Class accepts a chapter 11 plan if (1) holders of two-thirds (2/3) in amount and (2) with respect to holders of Claims, more than a majority in number of the allowed claims in such class (other than those designated under section 1126(e) of the Bankruptcy Code) vote to accept the Plan. Holders of Claims or Interests that fail to vote are not counted in determining the thresholds for acceptance of the Plan.

If any impaired Class of Claims or Interests does not accept the Plan (or is deemed to reject the Plan), the Bankruptcy Court may still confirm the Plan at the request of the Debtors if, as to each impaired Class of Claims or Interests that has not accepted the Plan (or is deemed to reject the Plan), the Plan “does not discriminate unfairly” and is “fair and equitable” under the so-called “cram down” provisions set forth in section 1129(b) of the Bankruptcy Code. The “unfair discrimination” test applies to classes of claims or interests that are of equal priority and are receiving different treatment under the Plan. A chapter 11 plan does not discriminate unfairly, within the meaning of the Bankruptcy Code, if the legal rights of a dissenting class are treated in a manner consistent with the treatment of other classes whose legal rights


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are substantially similar to those of the dissenting class and if no class of claims or interests receives more than it legally is entitled to receive for its claims or interests. The test does not require that the treatment be the same or equivalent, but that such treatment be “fair.” The “fair and equitable” test applies to classes of different priority and status (e.g., secured versus unsecured; claims versus interests) and includes the general requirement that no class of claims receive more than 100% of the allowed amount of the claims in such class. As to the dissenting class, the test sets different standards that must be satisfied in order for the Plan to be confirmed, depending on the type of claims or interests in such class. The following sets forth the “fair and equitable” test that must be satisfied as to each type of class for a plan to be confirmed if such class rejects the Plan:

Secured Creditors. Each holder of an impaired secured claim either (a) retains its liens on the property, to the extent of the allowed amount of its secured claim, and receives deferred cash payments having a value, as of the effective date of the plan, of at least the allowed amount of such secured claim, (b) has the right to credit bid the amount of its claim if its property is sold and retains its lien on the proceeds of the sale, or (c) receives the “indubitable equivalent” of its allowed secured claim.

Unsecured Creditors. Either (a) each holder of an impaired unsecured claim receives or retains under the plan, property of a value, as of the effective date of the plan, equal to the amount of its allowed claim or (b) the holders of claims and interests that are junior to the claims of the dissenting class will not receive any property under the plan.

Interests. Either (a) each equity interest holder will receive or retain under the plan property of a value equal to the greater of (i) the fixed liquidation preference or redemption price, if any, of such equity interest and (ii) the value of the equity interest or (b) the holders of interests that are junior to the interests of the dissenting class will not receive or retain any property under the plan.

The Debtors believe the Plan satisfies the “fair and equitable” requirement with respect to any rejecting Class.

IF ALL OTHER CONFIRMATION REQUIREMENTS ARE SATISFIED AT THE CONFIRMATION HEARING, THE DEBTORS WILL ASK THE BANKRUPTCY COURT TO RULE THAT THE PLAN MAY BE CONFIRMED ON THE GROUND THAT THE SECTION 1129(b) REQUIREMENTS HAVE BEEN SATISFIED.

(c) Best Interests Test

As noted above, with respect to each impaired class of claims and equity interests, confirmation of a plan requires that each such holder either (i) accept the plan or (ii) receive or retain under the plan property of a value, as of the effective date of the plan, that is not less than the value such holder would receive or retain if the debtors were liquidated under chapter 7 of the Bankruptcy Code. This requirement is referred to as the “best interests test.”

This test requires a Bankruptcy Court to determine what the holders of allowed claims and allowed equity interests in each impaired class would receive from a liquidation of the debtor’s assets and properties in the context of a liquidation under chapter 7 of the Bankruptcy Code. To determine if a plan is in the best interests of each impaired class, the value of the distributions from the proceeds of the liquidation of the debtor’s assets and properties (after subtracting the amounts attributable to the aforesaid claims) is then compared with the value offered to such classes of claims and equity interests under the plan.


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The Debtors believe that under the Plan all holders of impaired Claims and Interests will receive property with a value not less than the value such holder would receive in a liquidation under chapter 7 of the Bankruptcy Code. The Debtors’ belief is based primarily on (i) consideration of the effects that a chapter 7 liquidation would have on the ultimate proceeds available for distribution to holders of impaired Claims and Interests and (ii) the Liquidation Analysis attached hereto as Exhibit C.

The Debtors believe that any liquidation analysis is speculative, as it is necessarily premised on assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which would be beyond the control of the Debtors. The Liquidation Analysis provided in Exhibit C is solely for the purpose of disclosing to holders of Claims the effects of a hypothetical chapter 7 liquidation of the Debtors, subject to the assumptions set forth therein. There can be no assurance as to values that would actually be realized in a chapter 7 liquidation nor can there be any assurance that a bankruptcy court will accept the Debtors’ conclusions or concur with such assumptions in making its determinations under section 1129(a)(7) of the Bankruptcy Code.

(d) Feasibility

Also as noted above, section 1129(a)(11) of the Bankruptcy Code requires that a debtor demonstrate that confirmation of a plan is not likely to be followed by liquidation or the need for further financial reorganization. For purposes of determining whether the Plan meets this requirement, the Debtors have analyzed their ability to meet their obligations under the Plan. Since the Plan provides for the liquidation of the Debtors (other than the Reorganized Debtors), the Bankruptcy Court will find that the Plan is feasible if it determines that the Debtors will be able to satisfy the conditions precedent to the Effective Date and otherwise have sufficient funds to meet their post-Confirmation Date obligations to pay for the costs of administering and fully consummating the Plan, including sufficient funds for the Plan Administrator to liquidate the Debtors’ (other than the Reorganized Debtors) remaining assets. Accordingly, the Debtors believe the Plan satisfies the feasibility requirement imposed by the Bankruptcy Code. Moreover, Section XI hereof sets forth certain risk factors that could impact the feasibility of the Plan.

2. The Estate Releases, Third-Party Releases, and Exculpation Provisions

(a) Estate Releases

Section 10.6(a) of the Plan provides a release of certain claims and Causes of Action of the Debtors, the Reorganized Debtors, and their Estates, Wind Down Estates, and the GUC Recovery Trust, against the Released Parties in exchange for good and valuable consideration and valuable compromises made by the Released Parties. The Estate Releases do not release any claims or Causes of Action arising after the Effective Date against any party or affect the rights of the Debtors or Reorganized Debtors to enforce the terms of the Plan or rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents.

As described in Section 5.3 of the Plan, the Plan will be deemed to constitute a motion pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, seeking approval of the Global Settlement, including the Estate Releases in connection therewith, and the entry of the Confirmation Order will constitute the Bankruptcy Court’s approval of such motion and each of the compromises and settlements that comprise the Global Settlement.

The Debtors believe that the Estate Releases constitute a sound exercise of the Debtors’ business judgment and are an essential component of the Plan. It is well-settled that debtors are authorized to settle or release their claims in a chapter 11 plan. See 11 U.S.C. § 1123(b)(3)(A) (permitting a plan to


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provide for the “settlement or adjustment of any claim or interest belonging to the debtor or to the estate”); see also In re Adelphia Commc’ns Corp., 368 B.R. 140, 263 n.289 (Bankr. S.D.N.Y. 2007) (debtor has “considerable leeway” in releasing its own claims); In re Spiegel, Inc., Case No. 03-11540 (BRL), 2005 WL 1278094, at *11 (Bankr. S.D.N.Y. May 25, 2005) (approving debtor releases pursuant to section 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019(a)); In re Bally Total Fitness of Greater New York, Inc., Case No. 07-12395 (BRL), 2007 WL 2779438, at *12 (Bankr. S.D.N.Y. Sept. 17, 2007) (“To the extent that a release or other provision in the Plan constitutes a compromise of a controversy, this Confirmation Order shall constitute an order under Bankruptcy Rule 9019 approving such compromise.”). Debtor releases are granted by courts in the Second Circuit where the Debtors establish that such releases are a valid exercise of the Debtors’ business judgment and in the best interests of the estate. See JP Morgan Chase Bank, N.A. v. Charter Commc’ns Operating, LLC (In re Charter Commc’ns), 419 B.R. 221, 257-61 (Bankr. S.D.N.Y. 2009) (“When reviewing releases in a debtor’s plan, courts consider whether such releases are in the best interest of the estate.”); In re DBSD N. Am., Inc., 419 B.R. 179, 217 (Bankr. S.D.N.Y. 2009), aff’d, Case No. 09 CIV. 10156 (LAK), 2010 WL 1223109 (S.D.N.Y. Mar. 24 2010), aff’d in part, rev’d in part, 627 F.3d 496 (2d Cir. 2010) (finding debtor releases appropriate where they represented a valid exercise of the debtors’ business judgment and were in the best interests of the estate).

(b) Third-Party Releases

The Third-Party Releases in Section 10.6(b) of the Plan provide for the release of claims and Causes of Action held by the Releasing Parties against the Released Parties in exchange for good and valuable consideration and the valuable compromises made by the Released Parties.

The Plan provides that the following entities will be granting a release of any claims or rights they have or may have as against the Released Parties: (a) all holders of Claims who vote to accept the Plan, (b) the Consenting Creditors; (c) the Released Avoidance Parties; (d) the Creditors’ Committee and each of its members in their capacity as such; (e) each of the Released Parties (other than the Debtors, Wind Down Co, the GUC Recovery Trust, and the Reorganized Debtors); and (f) with respect to any Entity in the foregoing clauses (i) through (v), such Entity’s (x) predecessors, successors, and assigns, (y) subsidiaries, affiliates, managed accounts or funds, managed or controlled by such Entity and (z) all Persons entitled to assert Claims through or on behalf of such Entities with respect to the matters for which the releasing entities are providing releases. The Third-Party Releases include any and all claims whatsoever that such holders may have against the Released Parties, which in any way relate to the Debtors, including any securities of the Debtors, whether purchased or sold, including sales or purchases which have been rescinded, and any transaction that the Released Parties had with the Debtors that gave rise to a Claim or Interest treated under the Plan.

The Debtors will be prepared to demonstrate at confirmation that the Bankruptcy Court has subject matter jurisdiction to grant the Third-Party Releases. The Debtors believe that the Bankruptcy Court has “core” subject matter jurisdiction to consider approval of third-party releases in the plan confirmation context. See, e.g. In re MPM Silicones, LLC, Case No. 14-22503 (RDD), 2014 WL 4436335, at *34 (Bankr. S.D.N.Y. Sept. 9, 2014), aff’d, 531 B.R. 321 (S.D.N.Y. 2015) (“I can issue a final order on [the third-party releases] within the confines of Stern v. Marshall, given that [they are] in the context of the confirmation of the plan, and pertain[] ultimately to the debtors’ rights under the Bankruptcy Code.”); In re Charles Street African Methodist Episcopal Church of Bos., 499 B.R. 66, 99 (Bankr. D. Mass. 2013) (upholding bankruptcy court’s statutory and constitutional authority to order third-party release as part of plan confirmation). The Debtors believe that the Bankruptcy Court also has “related to” subject matter jurisdiction to consider the Third-Party Releases, including because certain of the Released Parties have, among other things, indemnification rights against the Debtors. See, e.g., In re Sabine Oil & Gas Corp., 555 B.R. 180, 288 (Bankr. S.D.N.Y. 2016) (citing In re Quigley, 676 F. 3d 45, 57 (2d Cir. 2012) (finding


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jurisdiction to grant third party releases where debtors had contingent indemnification obligations to creditors); Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984), overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 129 (1995); see also, e.g. In re Walter Investment Mgmt. Corp., Case No. 17-13446 (JLG) (ECF No. 178) (Bankr. S.D.N.Y. Jan. 18, 2018) (finding “related to” subject matter jurisdiction on the basis of both a common law equitable indemnification claim and a contractual indemnification claim because the “third-party non-debtor claims [] directly affect the res of the bankruptcy estate”).

In the Second Circuit, third-party releases are permissible where “unusual circumstances” render the release terms integral to the success of the plan. In re Metromedia Fiber Network, Inc., 416 F.3d 136, 141 (2d Cir. 2005). “Unusual circumstances” include instances in which: (a) the estate received a substantial contribution; (b) the enjoined claims were “channeled” to a settlement fund rather than extinguished; (c) the enjoined claims would indirectly impact the debtors’ reorganization by way of indemnity or contribution; (d) the plan otherwise provided for the full payment of the enjoined claims; and (e) the affected creditors consent. Id. (emphasis added).

Pursuant to Section 10.6(b)(i) of the Plan, holders of Impaired Claims who abstain from voting on the Plan but do not opt out of the Third-Party Releases on the ballots will release and discharge the Released Parties. The Debtors will demonstrate at confirmation that such releases are an integral part of the Plan and can be approved under the Metromedia standard. The Debtors believe such releases are consensual because voting creditors will be given the opportunity to “opt out” of the releases on their ballots. In addition, such parties will receive an estate release of Avoidance Actions. Several courts in the Second Circuit have explicitly held that providing abstaining parties with an “opt out” mechanism that includes clear and appropriate notice of the consequences of not opting out constitutes consent. See, e.g., Hr’g Tr. 94:13-17, 140:20-22, In re Cenveo, Inc., Case No. 17-22178 (RDD) (Bankr. S.D.N.Y. Jun. 7, 2018) (ECF No. 687) (approving third-party releases as consensual where abstaining or rejecting creditors were required to opt out of such releases); Hr’g Tr. 43:6-11, In re 21st Century Oncology Holdings, Inc., Case No. 17-22770 (RDD) (Bankr. S.D.N.Y. Jan. 9, 2018) (confirming plan and approving third-party releases on a consensual basis from creditors who abstained from voting or voted to reject the plan but did not opt out of the releases on their ballot); Hr’g Tr. 139:20-140:18, In re BCBG Max Azria Global Holdings, LLC, Case No. 17-10466 (SCC) (ECF No. 624) (Bankr. S.D.N.Y. July 25, 2017) (approving third-party releases on a consensual basis from creditors who either rejected the plan, abstained from voting on the plan, or were deemed to reject the plan and who did not opt out of the releases). But see In re Chassix Holdings, Inc., 533 B.R. 64, 81 (Bankr. S.D.N.Y. 2015) (holding that “inaction” by abstaining creditors was insufficient to constitute consent to third party releases).

THE DEADLINE TO OPT OUT OF THE THIRD-PARTY RELEASES IS SEPTEMBER 14, 2020

(c) Exculpation

Section 10.7 of the Plan provides for the exculpation of each Exculpated Party for acts and omissions taken in connection with these chapter 11 cases.

The Debtors believe that the exculpation provision in Section 10.7 of the Plan is an integral part of the Plan and otherwise satisfies the governing standards in the Second Circuit. This provision provides customary protections to those parties in interest (whether estate fiduciaries or otherwise) whose efforts were instrumental in achieving the confirmation of the Plan and the conclusion of these chapter 11 cases. In light of the record of these Chapter 11 Cases, the protections afforded by the exculpation provisions are reasonable and appropriate.


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At confirmation, the Debtors will demonstrate that in the Second Circuit, exculpation provisions that include non-estate fiduciaries are frequently approved. See, e.g., In re Cenveo, Inc., Case No. 17-22178 (RDD) (Bankr. S.D.N.Y. Aug. 21, 2018) (ECF No. 685) (confirming plan containing exculpation for non-estate fiduciaries); In re Cengage Learning, Inc., Case No. 13-44106 (ESS) (Bankr. E.D.N.Y. Mar. 14, 2014) (ECF No. 1225) (same); Hr’g Tr. 88:21-22, In re Eastman Kodak Co., Case No. 12-10202 (ALG) (Bankr. S.D.N.Y. Aug. 23, 2013) (ECF No. 4996) (same).

XI. ALTERNATIVES TO CONFIRMATION AND

CONSUMMATION OF THE PLAN

The Debtors have evaluated several alternatives to the Plan. After studying these alternatives, the Debtors have concluded that the Plan is the best alternative and will maximize recoveries to parties in interest, assuming confirmation and consummation of the Plan. If the Plan is not confirmed and consummated, the alternatives to the Plan are (i) the preparation and presentation of an alternative chapter 11 plan, or (ii) a liquidation under chapter 7 of the Bankruptcy Code.

A. Alternative Chapter 11 Plan

If the Plan is not confirmed, the Debtors (or if the Debtors’ exclusive period in which to file a plan of reorganization has expired, any other party in interest) could attempt to formulate a different plan.

B. Liquidation Under Chapter 7 or Applicable Non-Bankruptcy Law

If no plan can be confirmed, these chapter 11 cases may be converted to cases under chapter 7 of the Bankruptcy Code in which a trustee would be elected or appointed to liquidate the assets of the Debtors for distribution to their creditors in accordance with the priorities established by the Bankruptcy Code. The effect a chapter 7 liquidation would have on the recovery of holders of allowed Claims and Interests is set forth in the Liquidation Analysis attached hereto as Exhibit C.

As noted the Liquidation Analysis, the Debtors believe that liquidation under chapter 7 would result in smaller distributions to creditors than those provided for in the Plan because of, among other things, the delay resulting from the conversion of the cases and the additional administrative expenses associated with the appointment of a trustee and the trustee’s retention of professionals who would be required to become familiar with the many legal and factual issues in the Debtors’ Chapter 11 Cases.

XII. CONCLUSION AND RECOMMENDATION

The Debtors believe the Plan is in the best interests of all stakeholders and urge the holders of Senior First Out Term Loan Claims, Senior Last Out Term Loan Claims, Holdco Loan Claims and General Unsecured Claims in Classes 3, 4, 5, and 6 to vote in favor thereof.


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Dated: July 3, 2020

Respectfully submitted,

FAIRWAY GROUP HOLDINGS CORP.

FAIRWAY GROUP ACQUISITION COMPANY

FAIRWAY BAKERY LLC

FAIRWAY BROADWAY LLC

FAIRWAY CHELSEA LLC

FAIRWAY CONSTRUCTION GROUP, LLC

FAIRWAY DOUGLASTON LLC

FAIRWAY EAST 86TH STREET LLC

FAIRWAY ECOMMERCE LLC

FAIRWAY GEORGETOWNE LLC

FAIRWAY GREENWICH STREET LLC

FAIRWAY GROUP CENTRAL SERVICES LLC

FAIRWAY HUDSON YARDS LLC

FAIRWAY GEORGETOWNE LLC

FAIRWAY GROUP PLAINVIEW LLC

FAIRWAY HUDSON YEARDS LLC

FAIRWAY KIPS BAY LLC

FN STORE LLC

FAIRWAY PARAMUS LLC

FAIRWAY PELHAM LLC

FAIRWAY PELHAM WINES & SPIRITS LLC

FAIRWAY RED HOOK LLC

FAIRWAY STAMFORD LLC

FAIRWAY STAMFORD WINES & SPIRITS LLC

FAIRWAY STATEN ISLAND LLC

FAIRWAY UPTOWN LLC

FAIRWAY WESTBURY LLC

FAIRWAY WOODLAND PARK LLC

By: Name: Michael Nowlan Title: Chief Restructuring Officer


A-1 WEIL:\97306037\17\44444.0008

Exhibit A

Plan


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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- x : In re : Chapter 11 : FAIRWAY GROUP HOLDINGS CORP., et al., : Case No. 20-10161 (JLG) : Debtors.1 : (Jointly Administered) : --------------------------------------------------------------- x

JOINT CHAPTER 11 PLAN OF FAIRWAY GROUP HOLDINGS CORP. AND ITS AFFILIATED DEBTORS

WEIL, GOTSHAL & MANGES LLP Ray C. Schrock, P.C. Sunny Singh 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007

Attorneys for Debtors and Debtors in Possession

Dated: July 3, 2020 New York, New York

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are as follows: Fairway Group Holdings Corp. (2788); Fairway Group Acquisition Company (2860); Fairway Bakery LLC (4129); Fairway Broadway LLC (8591); Fairway Chelsea LLC (0288); Fairway Construction Group, LLC (2741); Fairway Douglaston LLC (2650); Fairway East 86th Street LLC (3822); Fairway eCommerce LLC (3081); Fairway Georgetowne LLC (9609); Fairway Greenwich Street LLC (6422); Fairway Group Central Services LLC (7843); Fairway Group Plainview LLC (8643); Fairway Hudson Yards LLC (9331); Fairway Kips Bay LLC (0791); FN Store LLC (9240); Fairway Paramus LLC (3338); Fairway Pelham LLC (3119); Fairway Pelham Wines & Spirits LLC (3141); Fairway Red Hook LLC (8813); Fairway Stamford LLC (0738); Fairway Stamford Wines & Spirits LLC (3021); Fairway Staten Island LLC (1732); Fairway Uptown LLC (8719); Fairway Westbury LLC (6240); and Fairway Woodland Park LLC (9544). The location of the Debtors’ corporate headquarters is 2284 12th Avenue, New York, New York 10027. Fairway Community Foundation Inc., a charitable organization, owned by Fairway Group Holdings Corp., is not a debtor in these proceedings.


Table of Contents

Page

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ARTICLE I DEFINITIONS AND INTERPRETATION. ...................................................................... 7

A. Definitions. The following terms shall have the respective meanings specified below: .............................................................................................................................. 7

B. Interpretation; Application of Definitions and Rules of Construction........................... 20

C. Reference to Monetary Figures. .................................................................................... 20

D. Controlling Document. .................................................................................................. 20

E. Certain Consent Rights. ................................................................................................. 20

ARTICLE II ADMINISTRATIVE EXPENSE AND PRIORITY CLAIMS. ........................................ 21

2.1. Administrative Expense Claims. ................................................................................... 21

2.2. Fee Claims. .................................................................................................................... 21

2.3. Priority Tax Claims. ...................................................................................................... 22

2.4. DIP Claims. ................................................................................................................... 22

2.5. Restructuring Expenses. ................................................................................................ 22

ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS. ................................................... 23

3.1. Classification in General. .............................................................................................. 23

3.2. Grouping of Debtors for Convenience Only. ................................................................ 23

3.3. Summary of Classification. ........................................................................................... 23

3.4. Special Provision Governing Unimpaired Claims. ........................................................ 24

3.5. Elimination of Vacant Classes. ...................................................................................... 24

3.6. Voting Classes; Presumed Acceptance by Non-Voting Classes. .................................. 24

3.7. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code.. ............................................................................................................................. 24

ARTICLE IV TREATMENT OF CLAIMS AND INTERESTS. ........................................................... 24

4.1. Priority Non-Tax Claims (Class 1). ............................................................................... 24

4.2. Other Secured Claims (Class 2). .................................................................................... 25

4.3. Senior First Out Term Loan Claims (Class 3). .............................................................. 25


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4.4. Senior Last Out Term Loan Claims (Class 4). .............................................................. 26

4.5. Holdco Loan Claims (Class 5). ...................................................................................... 27

4.6. General Unsecured Claims (Class 6). ............................................................................ 27

4.7. Intercompany Claims (Class 7). .................................................................................... 27

4.8. Intercompany Interests (Class 8). .................................................................................. 28

4.9. Parent Equity Interests (Class 9).................................................................................... 28

4.10. Subordinated Securities Claims (Class 10). ................................................................... 29

ARTICLE V MEANS FOR IMPLEMENTATION. .............................................................................. 29

5.1. No Substantive Consolidation. ...................................................................................... 29

5.2. Incorporation of UFCW Settlement............................................................................... 29

5.3. Compromise and Settlement of Claims, Interests, and Controversies. .......................... 29

5.4. Sources of Consideration for Plan Distributions. .......................................................... 31

5.5. Reorganized Equity Plan Election Notice ..................................................................... 31

5.6. Reorganization Transaction. .......................................................................................... 31

5.7. Wind Down and Dissolution of the Debtors. ................................................................. 33

5.8. Employee Matters. ......................................................................................................... 35

5.9. Effectuating Documents; Further Transactions. ............................................................ 35

5.10. Securities Law Exemptions. .......................................................................................... 36

5.11. Cancellation of Existing Securities and Agreements. .................................................... 36

5.12. Cancellation of Liens. .................................................................................................... 37

5.13. Subordination Agreements. ........................................................................................... 37

5.14. Nonconsensual Confirmation. ....................................................................................... 37

5.15. Closing of Chapter 11 Cases. ........................................................................................ 37

5.16. Notice of Effective Date. ............................................................................................... 37

5.17. Separability. ................................................................................................................... 37

5.18. GUC Recovery Trust. .................................................................................................... 38


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ARTICLE VI DISTRIBUTIONS. ........................................................................................................... 40

6.1. Distributions Generally. ................................................................................................. 40

6.2. Distribution Record Date. .............................................................................................. 41

6.3. Date of Distributions. .................................................................................................... 41

6.4. Disbursing Agent. .......................................................................................................... 41

6.5. Rights and Powers of Disbursing Agent. ....................................................................... 42

6.6. Expenses of Disbursing Agent. ..................................................................................... 42

6.7. No Postpetition Interest on Claims. ............................................................................... 42

6.8. Delivery of Distributions. .............................................................................................. 42

6.9. Distributions after Effective Date. ................................................................................. 43

6.10. Unclaimed Property. ...................................................................................................... 43

6.11. Time Bar to Cash Payments. ......................................................................................... 43

6.12. Manner of Payment under Plan. .................................................................................... 44

6.13. Satisfaction of Claims. ................................................................................................... 44

6.14. Minimum Cash Distributions. ....................................................................................... 44

6.15. Setoffs and Recoupments. ............................................................................................. 44

6.16. Allocation of Distributions between Principal and Interest. .......................................... 44

6.17. No Distribution in Excess of Amount of Allowed Claim. ............................................. 44

6.18. Distributions Free and Clear. ......................................................................................... 44

6.19. Withholding and Reporting Requirements. ................................................................... 45

ARTICLE VII PROCEDURES FOR DISPUTED CLAIMS. .................................................................. 45

7.1. Objections to Claims. .................................................................................................... 45

7.2. Resolution of Disputed Administrative Expenses and Disputed Claims. ...................... 46

7.3. Payments and Distributions with Respect to Disputed Claims. ..................................... 46

7.4. Distributions after Allowance. ....................................................................................... 46

7.5. Disallowance of Claims. ................................................................................................ 46


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7.6. Estimation of Claims. .................................................................................................... 46

7.7. No Distributions Pending Allowance. ........................................................................... 47

7.8. Claim Resolution Procedures Cumulative. .................................................................... 47

7.9. Interest. .......................................................................................................................... 47

7.10. Insured Claims. .............................................................................................................. 47

ARTICLE VIII EXECUTORY CONTRACTS AND UNEXPIRED LEASES. .............. 47

8.1. General Treatment. ........................................................................................................ 47

8.2. Determination of Assumption Disputes and Deemed Consent. .................................... 48

8.3. Rejection Damages Claims. ........................................................................................... 49

8.4. Insurance Policies. ......................................................................................................... 49

8.5. Intellectual Property Licenses and Agreements. ........................................................... 50

8.6. Tax Agreements. ............................................................................................................ 50

8.7. Assignment. ................................................................................................................... 50

8.8. Modifications, Amendments, Supplements, Restatements, or Other Agreements. ................................................................................................................... 51

8.9. Reservation of Rights. ................................................................................................... 51

ARTICLE IX CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN AND EFFECTIVE DATE. ......................................................................................................... 51

9.1. Conditions Precedent to Confirmation of Plan. ............................................................. 51

9.2. Conditions Precedent to Effective Date. ........................................................................ 52

9.3. Waiver of Conditions Precedent. ................................................................................... 52

9.4. Effect of Failure of a Condition. .................................................................................... 53

ARTICLE X EFFECT OF CONFIRMATION OF PLAN. .................................................................... 53

10.1. Vesting of Assets. .......................................................................................................... 53

10.2. Binding Effect................................................................................................................ 54

10.3. Discharge of Claims and Termination of Interests. ....................................................... 54

10.4. Term of Injunctions or Stays. ........................................................................................ 54


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10.5. Injunction. ...................................................................................................................... 54

10.6. Releases. ........................................................................................................................ 55

10.7. Exculpation. ................................................................................................................... 57

10.8. Subordinated Claims. ..................................................................................................... 57

10.9. Retention of Causes of Action/Reservation of Rights. .................................................. 57

10.10. Solicitation of Plan. ....................................................................................................... 58

10.11. Corporate and Limited Liability Company Action. ....................................................... 58

ARTICLE XI RETENTION OF JURISDICTION. ................................................................................. 59

11.1. Retention of Jurisdiction. ............................................................................................... 59

11.2. Courts of Competent Jurisdiction. ................................................................................. 60

ARTICLE XII MISCELLANEOUS PROVISIONS. ................................................................................ 61

12.1. Payment of Statutory Fees. ............................................................................................ 61

12.2. Substantial Consummation of the Plan. ......................................................................... 61

12.3. Plan Supplement. ........................................................................................................... 61

12.4. Request for Expedited Determination of Taxes. ............................................................ 61

12.5. Exemption from Certain Transfer Taxes. ...................................................................... 61

12.6. Amendments. ................................................................................................................. 62

12.7. Effectuating Documents and Further Transactions. ...................................................... 62

12.8. Revocation or Withdrawal of Plan. ............................................................................... 62

12.9. Dissolution of Creditors’ Committee. ............................................................................ 62

12.10. Severability of Plan Provisions. ..................................................................................... 63

12.11. Governing Law. ............................................................................................................. 63

12.12. Time. .............................................................................................................................. 63

12.13. Dates of Actions to Implement the Plan. ....................................................................... 63

12.14. Immediate Binding Effect. ............................................................................................ 63

12.15. Deemed Acts. ................................................................................................................ 64


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12.16. Successor and Assigns. .................................................................................................. 64

12.17. Entire Agreement. .......................................................................................................... 64

12.18. Exhibits to Plan. ............................................................................................................. 64

12.19. Notices. .......................................................................................................................... 64


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Each of Fairway Group Holdings Corp, Fairway Group Acquisition Company, Fairway Bakery LLC, Fairway Broadway LLC, Fairway Chelsea LLC, Fairway Construction Group, LLC, Fairway Douglaston LLC, Fairway East 86th Street LLC, Fairway eCommerce LLC, Fairway Georgetowne LLC, Fairway Greenwich Street LLC, Fairway Group Central Services LLC, Fairway Group Plainview LLC, Fairway Hudson Yards LLC, Fairway Kips Bay LLC, FN Store LLC, Fairway Paramus LLC, Fairway Pelham LLC, Fairway Pelham Wines & Spirits LLC, Fairway Red Hook LLC, Fairway Stamford LLC, Fairway Stamford Wines & Spirits LLC, Fairway Staten Island LLC, Fairway Uptown LLC, Fairway Westbury LLC, and Fairway Woodland Park LLC (each, a “Debtor” and, collectively, the “Debtors”) propose the following joint chapter 11 plan pursuant to section 1121(a) of the Bankruptcy Code. Capitalized terms used herein shall have the meanings set forth in Article I.A.

ARTICLE I DEFINITIONS AND INTERPRETATION.

A. Definitions. The following terms shall have the respective meanings specified below:

1.1 “503(b)(9) Claim” means an Administrative Expense Claim arising under section 503(b)(9) of the Bankruptcy Code.

1.2 “Accepting Class” means a Class that votes to accept the Plan in accordance with section 1126 of the Bankruptcy Code.

1.3 “Administrative Expense Claim” means any right to payment constituting a cost or expense of administration incurred during the Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code and entitled to priority under sections 507(a)(2), 507(b), or 1114(e)(2) of the Bankruptcy Code, including, without limitation, (a) the actual and necessary costs and expenses incurred after the Commencement Date and through the Effective Date of preserving the Estates and operating the businesses of the Debtors; (b) Fee Claims; (c) Restructuring Expenses; (d) 503(b)(9) Claims; (e) the DIP Claims; and (f) any other such claims expressly provided under the DIP Order.

1.4 “Affiliates” means “Affiliates” as such term is defined in section 101(2) of the Bankruptcy Code.

1.5 “Allowed” means, with reference to any Claim or Interest, a Claim or Interest (a) arising on or before the Effective Date as to which (i) no objection to allowance or priority, and no request for estimation or other challenge, including, without limitation, pursuant to section 502(d) of the Bankruptcy Code or otherwise, has been interposed and not withdrawn within the applicable period fixed by the Plan or applicable law, or (ii) any objection has been determined in favor of the holder of the Claim or Interest by a Final Order; (b) that is compromised, settled, or otherwise resolved pursuant to the authority of the Debtors, Reorganized Debtors, Wind Down Estates, GUC Recovery Trustee, or Plan Administrator, as applicable; (c) as to which the liability of the Debtors, Reorganized Debtors, or the Wind Down Estates, as applicable, and the amount thereof are determined by a Final Order of a court of competent jurisdiction; or (d) expressly allowed hereunder; provided, however, that notwithstanding the foregoing, (x) unless expressly waived by the Plan, the Allowed amount of Claims or Interests shall be subject to and shall not exceed the limitations or maximum amounts permitted by the Bankruptcy Code, including sections 502 or 503 of the Bankruptcy Code, to the extent applicable, and (y) Wind Down Estates, the Reorganized Debtors, and the GUC Recovery Trust, as applicable, shall retain all claims and defenses with respect to Allowed Claims that are Unimpaired pursuant to the Plan.

1.6 “Amended Organizational Documents” means the forms of certificates of incorporation, certificates of formation, limited liability company agreements, or other forms of organizational documents and bylaws, as applicable of the Reorganized Debtors.


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1.7 “Asset” means all of the right, title, and interest of the Debtors in and to property of whatever type or nature (including, without limitation, real, personal, mixed, intellectual, tangible, and intangible property).

1.8 “Assumption Dispute” means a pending objection relating to assumption of an executory contract or unexpired lease pursuant to section 365 of the Bankruptcy Code.

1.9 “Assumption Schedule” means the schedule of executory contracts and unexpired leases to be assumed by the Debtors pursuant to the Plan that will be included in the Plan Supplement.

1.10 “Avoidance Actions” means any and all actual or potential Causes of Action of the Debtors arising under chapter 5 of the Bankruptcy Code (other than section 542 or section 549 of the Bankruptcy Code) or under similar or related state or federal statutes and common law, including, without limitation, all preference, fraudulent conveyance, fraudulent transfer, and/or other similar avoidance action claims, rights, and causes of action, and commercial tort law, to the extent not previously transferred, sold, assigned, or waived under any prior order of the Bankruptcy Court in these Chapter 11 Cases.

1.11 “Ballot” means the form(s) distributed to holders of Impaired Claims entitled to vote on the Plan on which to indicate their acceptance or rejection of the Plan.

1.12 “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. § 101, et seq., as amended from time to time, as applicable to the Chapter 11 Cases.

1.13 “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York having jurisdiction over the Chapter 11 Cases or any other court having jurisdiction over the Chapter 11 Cases, including, to the extent of the withdrawal of any reference under 28 U.S.C. § 157, the United States District Court for the Southern District of New York.

1.14 “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code and any Local Bankruptcy Rules of the Bankruptcy Court, in each case, as amended from time to time and applicable to the Chapter 11 Cases.

1.15 “Business Day” means any day other than a Saturday, a Sunday, or any other day on which banking institutions in New York, New York are required or authorized to close by law or executive order.

1.16 “Cash” means legal tender of the United States of America.

1.17 “Causes of Action” means any action, Claim, cross-claim, third-party claim, cause of action, controversy, demand, right, lien, indemnity, guaranty, suit, obligation, liability, loss, debt, damage, judgment, account, defense, remedies, offset, power, privilege, license and franchise of any kind or character whatsoever, known, unknown, foreseen or unforeseen, existing or hereafter arising, contingent or non-contingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, assertable directly or derivatively, whether arising before, on, or after the Commencement Date, in contract or in tort, in law or in equity or pursuant to any other theory of law (including, without limitation, under any state or federal securities laws). Causes of Action also includes: (a) any right of setoff, counterclaim or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity; (b) the right to object to Claims or Interests; (c) any claim pursuant to section 362 or chapter 5 of the Bankruptcy Code; (d) any claim or defense including fraud, mistake, duress


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and usury and any other defenses set forth in section 558 of the Bankruptcy Code; and (e) any state law fraudulent transfer claim.

1.18 “Chapter 11 Cases” means the jointly administered cases under chapter 11 of the Bankruptcy Code commenced by the Debtors on the Commencement Date in the Bankruptcy Court.

1.19 “Claim” has the meaning set forth in section 101(5) of the Bankruptcy Code, as against any Debtor.

1.20 “Class” means any group of Claims or Interests classified as set forth in Article III of the Plan pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.

1.21 “Commencement Date” means the date on which the Debtors commenced the Chapter 11 Cases.

1.22 “Confirmation Date” means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order.

1.23 “Confirmation Hearing” means the hearing to be held by the Bankruptcy Court to consider confirmation of the Plan, as such hearing may be adjourned or continued from time to time.

1.24 “Confirmation Order” means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code in form and substance reasonably acceptable to the Requisite Consenting Creditors and the Creditors’ Committee.

1.25 “Consenting Creditors” means “Consenting Creditors” as defined in the RSA.

1.26 “Creditors’ Committee” means the statutory committee of unsecured creditors appointed by the U.S. Trustee in the Chapter 11 Cases pursuant to section 1102 of the Bankruptcy Code as set forth in the Appointment of Official Committee of Unsecured Creditors (ECF No. 105) filed on February 4, 2020, as may be reconstituted from time to time.

1.27 “Creditors’ Committee Budget” means the reasonable and documented fees and expenses not to exceed $175,000 per month incurred by the Creditors’ Committee’s advisors from April 1, 2020 through and including the Effective Date; provided, that any amounts incurred by the Creditors’ Committee’s advisors in connection with defending against objections to or prosecuting the approval of the Global Settlement or the Plan shall be excluded from such calculation.

1.28 “Cure Amount” means the payment of Cash by the Debtors or Wind Down Estates, or the distribution of other property (as the parties may agree or the Bankruptcy Court may order), as necessary pursuant to section 365(b)(1)(A) of the Bankruptcy Code to permit the Debtors to assume such executory contract or unexpired lease.

1.29 “D&O Liability Insurance Policies” means, collectively, all insurance policies (including any “tail policy”) of any of the Debtors for current or former directors’, members’, managers’, and officers’ liability.

1.30 “Debtor” or “Debtors” has the meaning set forth in the introductory paragraph of the Plan.


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1.31 “Debtors in Possession” means the Debtors in their capacity as debtors in possession in the Chapter 11 Cases pursuant to sections 1101, 1107(a), and 1108 of the Bankruptcy Code.

1.32 “Definitive Documents” means the documents (including any related orders, agreements, instruments, schedules or exhibits) that are necessary or desirable to implement, or otherwise relate to the Plan, including, but not limited to: (a) the Disclosure Statement; (b) any motion seeking approval of the adequacy of the Disclosure Statement and solicitation of the Plan, (c) the Disclosure Statement Order; (d) the DIP Order; (e) each of the documents comprising the Plan Supplement; (f) the Confirmation Order; and (g) the GUC Recovery Trust Agreement.

1.33 “DIP Agent” means “DIP Agent” as defined in the DIP Order.

1.34 “DIP Claims” means all Claims held by the DIP Credit Parties on account of, arising under or relating to the DIP Documents or the DIP Order, which for the avoidance of doubt, shall include all DIP Obligations, including the Roll-Up Loans.

1.35 “DIP Conversion Election” has the meaning set forth in Section 2.4 of the Plan.

1.36 “DIP Credit Parties” means the DIP Agent and the DIP Lenders.

1.37 “DIP Documents” means “DIP Documents” as defined in the DIP Order.

1.38 “DIP Facility” means “DIP Facility” as defined in the DIP Order.

1.39 “DIP Lenders” means “DIP Lenders” as defined in the DIP Order.

1.40 “DIP Motion” means the Motion of Debtors for (I) Authority to (A) Obtain Postpetition Financing, (B) Use Cash Collateral, (C) Grant Liens and Provide Superpriority Administrative Expense Status, (D) Grant Adequate Protection, (E) Modify the Automatic Stay; and (F) Schedule a Final Hearing; and (II) Related Relief (ECF No. 20).

1.41 “DIP Obligations” means “DIP Obligations” as defined in the DIP Order.

1.42 “DIP Order” means the final order approving the DIP Motion (ECF No. 199).

1.43 “Disallowed” means, with respect to any Claim or Interest, that such Claim or Interest has been determined by a Final Order or specified in a provision of the Plan not to be Allowed.

1.44 “Disbursing Agent” means the Plan Administrator, or any Entity designated by the Plan Administrator, with respect to all Claims other than General Unsecured Claims, and the GUC Recovery Trustee, or any entity designated by the GUC Recovery Trustee, with respect to Allowed General Unsecured Claims.

1.45 “Disclosure Statement” means the disclosure statement filed by the Debtors in support of the Plan, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code (as may be amended, supplemented, or modified from time to time).

1.46 “Disclosure Statement Order” means the order entered by the Bankruptcy Court (a) finding that the Disclosure Statement contains adequate information pursuant to section 1125 of the Bankruptcy Code and (b) authorizing solicitation of the Plan.


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1.47 “Disputed” means with respect to a Claim or Interest, that (a) is neither Allowed nor Disallowed under the Plan or a Final Order, nor deemed Allowed under sections 502, 503, or 1111 of the Bankruptcy Code; or (b) the Debtors or any parties in interest have interposed a timely objection or request for estimation, and such objection or request for estimation has not been withdrawn or determined by a Final Order. If the Debtors dispute only a portion of a Claim, such Claim shall be deemed Allowed in any amount the Debtors do not dispute, and Disputed as to the balance of such Claim.

1.48 “Distribution Record Date” means the Effective Date (or as soon as practicable thereafter) or such other date as agreed upon among the Debtors and the Requisite Consenting Creditors.

1.49 “Effective Date” means the date on which all conditions to the effectiveness of the Plan set forth in Article IX hereof have been satisfied or waived in accordance with the terms of the Plan.

1.50 “Entity” means an individual, corporation, partnership, limited partnership, limited liability company, association, joint stock company, joint venture, estate, trust, unincorporated organization, governmental unit (as defined in section 101(27) of the Bankruptcy Code) or any political subdivision thereof, or other person (as defined in section 101(41) of the Bankruptcy Code) or other entity.

1.51 “Estate” or “Estates” means, individually or collectively, the estate or estates of the Debtors created under section 541 of the Bankruptcy Code.

1.52 “Exculpated Parties” means collectively the: (a) Debtors; (b) Reorganized Debtors; (c) Plan Administrator; (d) Wind Down Estates; (e) Consenting Creditors; (f) Prepetition Agent; (g) DIP Credit Parties; (h) Creditors’ Committee and each of its members in their capacity as such; (i) GUC Recovery Trustee; (j) UFCW Parties and UFCW International; and (k) with respect to each of the foregoing Entities in clauses (a) through (k), all Related Parties who acted on their behalf in connection with the matters as to which exculpation is provided herein.

1.53 “Fairway Acquisition” means Fairway Group Acquisition Company.

1.54 “Fairway Holdings” means Fairway Group Holdings Corp.

1.55 “Fairway Paramus” means Fairway Paramus LLC.

1.56 “Fairway Woodland Park” means Fairway Woodland Park LLC.

1.57 “Fee Claim” means a Claim for professional services rendered or costs incurred on or after the Commencement Date through the Effective Date by professional persons retained by the Debtors or the Creditors’ Committee by an order of the Bankruptcy Court pursuant to sections 327, 328, 329, 330, 331, or 503(b) of the Bankruptcy Code in the Chapter 11 Cases.

1.58 “Final Order” means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court, which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari, or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for a new trial, reargument, or rehearing shall then be pending; or (b) if an appeal, writ of certiorari, new trial, reargument, or rehearing thereof has been sought, such order or judgment shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument, or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument, or rehearing shall have expired; provided, however, that no order or judgment shall fail to be a “Final Order” solely because of the possibility


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that a motion under Rules 59 or 60 of the Federal Rules of Civil Procedure or any analogous Bankruptcy Rule (or any analogous rules applicable in another court of competent jurisdiction) or sections 502(j) or 1144 of the Bankruptcy Code has been or may be filed with respect to such order or judgment.

1.59 “General Unsecured Claim” means any Claim against the Debtors (other than any Intercompany Claims) as of the Commencement Date that is neither secured by collateral nor entitled to priority under the Bankruptcy Code or any order of the Bankruptcy Court; provided, that a General Unsecured Claim shall not include the Prepetition Loan Deficiency Claims.

1.60 “Global Settlement” shall have the meaning ascribed to such term in Section 5.2(b) of the Plan.

1.61 “GUC Recovery Trust” means the trust established pursuant to the GUC Recovery Trust Agreement.

1.62 “GUC Recovery Trust Administrative Contribution Amount” means $150,000 contributed by the Debtors to the GUC Recovery Trust Assets on or about the Effective Date to administer the GUC Recovery Trust, including any advisor fees.

1.63 “GUC Recovery Trust Agreement” means the trust agreement by and among the Debtors and the GUC Recovery Trustee, substantially in the form included in the Plan Supplement and consistent with Section 5.18 of the Plan, which shall be in form and substance reasonably acceptable to the Creditors’ Committee and the Debtors.

1.64 “GUC Recovery Trust Assets” shall consist of (i) Cash in the amount of $1,500,000 as a carve out of the Prepetition Lenders’ collateral; (ii) the GUC Recovery Trust Administrative Contribution Amount; and (iii) proceeds from any Unreleased Avoidance Actions, less any fees and expenses of the Creditors’ Committee’s advisors in excess of the Creditors’ Committee Budget prior to the Effective Date.

1.65 “GUC Recovery Trust Fees and Expenses” shall consist of the reasonable expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) incurred by the GUC Recovery Trust and any professionals retained by the GUC Recovery Trust and any additional amount determined necessary by the GUC Recovery Trustee to adequately reserve for the operating expenses of the GUC Recovery Trust.

1.66 “GUC Recovery Trust Interest” means a non-certificated beneficial interest in the GUC Recovery Trust granted to each holder of an Allowed General Unsecured Claim, which shall entitle such holder to a Pro Rata share in the GUC Recovery Trust Assets in accordance with the GUC Recovery Trust Agreement with other holders of Allowed General Unsecured Claims.

1.67 “GUC Recovery Trust Net Assets” means the GUC Recovery Trust Assets less the GUC Recovery Trust Fees and Expenses.

1.68 “GUC Recovery Trustee” means the Person selected by the Creditors’ Committee to serve as the trustee of the GUC Recovery Trust, and any successor thereto in accordance with the GUC Recovery Trust Agreement.

1.69 “Holdco Loan Claims” means any Claims arising from or in connection with the Holdco Loans under the Prepetition Credit Agreement.


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1.70 “Holdco Loans” means the secured subordinated term loans under the Prepetition Credit Agreement.

1.71 “Impaired” means, with respect to a Claim, Interest, or Class of Claims or Interests, “impaired” within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.

1.72 “Insured Claims” means any Claim or portion of a Claim that is, or may be, insured under any of the Debtors’ insurance policies.

1.73 “Intercompany Claim” means any pre- or postpetition Claim against a Debtor held by another Debtor.

1.74 “Intercompany Interest” means an Interest in a Debtor held by another Debtor. For the avoidance of doubt, an Intercompany Interest shall exclude a Parent Equity Interest.

1.75 “Interests” means any equity security (as defined in section 101(16) of the Bankruptcy Code) of a Debtor, including all ordinary shares, common stock, preferred stock, membership interest, partnership interest or other instrument evidencing any fixed or contingent ownership interest in any Debtor, whether or not transferable, and any share, option, warrant, or other right, contractual or otherwise, to acquire any such interest in the Debtors, whether fully vested or vesting in the future, including, without limitation, equity or equity-based incentives, grants, or other instruments issued, granted or promised to be granted to current or former employees, directors, officers, or contractors of the Debtors, to acquire any such interests in the Debtors that existed immediately before the Effective Date.

1.76 “KEIP Agreement” means “KEIP Agreement” as defined in the KEIP/KERP Motion.

1.77 “KEIP Incentive Award” means “KEIP Incentive Award” as defined in the KEIP/KERP Motion.

1.78 “KEIP/KERP Motion” means the Motion of Debtors for Entry of an Order Approving Debtors’ (I) Key Employee Incentive Program and (II) Key Employee Retention Program (ECF No. 200).

1.79 “KEIP/KERP Order” means the Order Approving Debtors’ (I) Key Employee Incentive Program and (II) Key Employee Retention Program (ECF No. 444).

1.80 “KERP Agreement” means “KERP Agreement” as defined in the KEIP/KERP Motion.

1.81 “KERP Payments” means “KERP Payment” as defined in the KEIP/KERP Motion.

1.82 “Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.

1.83 “New Board” means the new board of directors of Reorganized Fairway Holdings.

1.84 “New Common Stock” means the shares of common stock, par value $0.01 per share to be issued by Reorganized Fairway Holdings authorized pursuant to the Amended Organizational Documents of Reorganized Fairway Holdings, and all of which shall be deemed validly issued, fully-paid, and non-assessable.

1.85 “Net Cash Proceeds” means (a) all Cash of the Debtors less (b) (i) the amount of Cash necessary to pay holders of Allowed (or reserve for Disputed) DIP Claims, Administrative Expense Claims, Fee Claims, Priority Tax Claims, Priority Non-Tax Claims, and Other Secured Claims; (ii) the


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GUC Recovery Trust Administrative Contribution Amount and $1,500,000, which shall be contributed to the GUC Recovery Trust on the Effective Date; (iii) the UFCW Settlement Payments; (iv) the KEIP Incentive Award and the KERP Payments; and (v) the amount of Cash estimated and reserved by the Plan Administrator to adequately fund the Wind Down in accordance with the Wind Down Budget.

1.86 “Other Secured Claim” means a Secured Claim, other than an Administrative Expense Claim, a DIP Claim, a Priority Tax Claim, a Super Senior Secured Claim, a Senior First Out Term Loan Claim, a Senior Last Out Term Loan Claim, or a Holdco Loan Claim.

1.87 “PACA/PASA Order” means the Final Order Authorizing Debtors to (A) Pay Prepetition Claims of Shippers and Miscellaneous Lien Claimants, (B) Confirm Administrative Expense Priority of Undisputed Commencement Date Orders and Satisfy Such Obligations In The Ordinary Course of Business, and (C) Pay PACA/PASA Claims (ECF No. 238).

1.88 “Parent Equity Interests” means any Interest in Fairway Holdings.

1.89 “Person” means any individual, corporation, partnership, limited liability company, association, indenture trustee, organization, joint stock company, joint venture, estate, trust, Governmental Unit or any political subdivision thereof, or any other Entity.

1.90 “Plan” means this joint chapter 11 plan, including all appendices, exhibits, schedules, and supplements hereto (including, without limitation, any appendices, schedules, and supplements to the Plan contained in the Plan Supplement), as the same may be amended, supplemented, or modified from time to time in accordance with the terms hereof and the Bankruptcy Code.

1.91 “Plan Administrator” means a Person or Entity selected by the Debtors and the Requisite Consenting Creditors to serve as plan administrator for each of the Debtors and Wind Down Estates who shall have all powers and authorities as set forth in Section 5.7 of the Plan.

1.92 “Plan Confirmation Shortfall” has the meaning set forth in Section 4.3 of the Plan.

1.93 “Plan Sponsor” means Special Situations Investing Group, Inc.

1.94 “Plan Supplement” means a supplemental appendix to the Plan containing, among other things, forms or term sheets of applicable documents, schedules, and exhibits to the Plan to be filed with the Court, including, but not limited to, the following: (a) Amended Organizational Documents (to the extent such Amended Organizational Documents reflect material changes from the Debtors’ existing organizational documents and bylaws); (b) to the extent known, and in the event of a Reorganization Transaction, information required to be disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code; (c) GUC Recovery Trust Agreement; (d) Assumption Schedule; and (e) in the event of a Reorganization Transaction, the Reorganized Debtors Exit Facility Term Sheet; provided, that through the Effective Date, the Debtors shall have the right to amend the Plan Supplement and any schedules, exhibits, or amendments thereto, in accordance with the terms of the Plan and the RSA. The Plan Supplement shall be filed with the Bankruptcy Court no later than seven (7) calendar days prior to the deadline to object to the Plan. The Debtors shall have the right to amend the documents contained in the Plan Supplement through and including the Effective Date in accordance with Article IX of the Plan.

1.95 “Prepetition Agent” means Ankura Trust Company, LLC, solely in its capacity as administrative agent and collateral agent under the Prepetition Credit Agreement, and its successors and assigns.


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1.96 “Prepetition Credit Agreement” means that certain Super Senior Credit Agreement, dated as of August 28, 2018 (and as amended or modified by that certain First Amendment to Super Senior Credit Agreement, dated as of July 29, 2019, that certain Second Amendment to and Extension under Super Senior Credit Agreement, dated as of August 28, 2019, that certain Third Amendment and Limited Waiver to Super Senior Credit Agreement, dated as of October 7, 2019, and that certain Limited Waiver to Super Senior Credit Agreement, dated as of January 8, 2020), among Fairway Acquisition, as the borrower, Fairway Holdings, the Prepetition Agent, and the other lenders party thereto, as amended, modified, or supplemented from time to time prior to the Commencement Date.

1.97 “Prepetition Credit Documents” means the “Loans Documents” as defined in the Prepetition Credit Agreement.

1.98 “Prepetition Lenders” means “Lenders” as defined in the Prepetition Credit Agreement.

1.99 “Prepetition Loan Claims” mean any Claims arising from or in connection with the Prepetition Credit Agreement, including Super Senior Secured Claims, Senior First Out Term Loan Claims, Senior Last Out Term Loan Claims, and Holdco Loan Claims, but excluding Restructuring Expenses.

1.100 “Prepetition Loan Deficiency Claim” means the deficiency Claims on account of the indebtedness under the Prepetition Credit Agreement under section 506(a) of the Bankruptcy Code.

1.101 “Prepetition Secured Loans” means “Loans” as defined in the Prepetition Credit Agreement.

1.102 “Priority Non-Tax Claim” means any Claim other than an Administrative Expense Claim or a Priority Tax Claim, entitled to priority in payment as specified in section 507(a) of the Bankruptcy Code.

1.103 “Priority Tax Claim” means any Secured Claim or unsecured Claim of a governmental unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

1.104 “Pro Rata” means the proportion that an Allowed Claim or Interest in a particular Class bears to the aggregate amount of Allowed Claims or Interests in that Class, or the proportion that Allowed Claims or Interests in a particular Class bear to the aggregate amount of Allowed Claims and Disputed Claims or Allowed Interests and Disputed Interests in a particular Class and other Classes entitled to share in the same recovery as such Class under the Plan.

1.105 “Professional Fees Escrow Account” shall have the meaning given to such term in the DIP Order.

1.106 “Reinstate,” “Reinstated,” or “Reinstatement” means leaving a Claim Unimpaired under the Plan.

1.107 “Related Parties” means with respect to any Exculpated Party or any Released Party, such Entities’ predecessors, successors and assigns, subsidiaries, Affiliates, managed accounts or funds, all of their respective current and former officers, directors, principals, stockholders (and any fund managers, fiduciaries or other agents of stockholders with any involvement related to the Debtors), members, partners, employees, agents, trustees, advisory board members, advisors, attorneys, accountants, actuaries, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such persons’ respective heirs, executors, estates, servants and nominees, solely to the


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extent such Persons and Entities acted on the behalf of the Released Parties or Exculpated Parties in connection with the matters as to which releases or exculpation are provided herein.

1.108 “Released Avoidance Actions” means Avoidance Actions that are released pursuant to Section 10.6(a) of the Plan against the Released Avoidance Parties.

1.109 “Released Avoidance Parties” means holders of (a) Administrative Expense Claims, Priority Non-Tax Claims, and Other Secured Claims who do not object to confirmation of the Plan or assert any Claims against the Released Parties; and (b) General Unsecured Claims who (i) vote to accept the Plan or abstain from voting but do not opt out of the releases in Section 10.6(b) of the Plan, (ii) who do not object to confirmation of the Plan, or (iii) assert any Claims against the Released Parties.

1.110 “Released Parties” means collectively, and in each case, solely in their capacities as such: (a) the Debtors; (b) the Reorganized Debtors; (c) the Wind Down Estates; (d) the Consenting Creditors; (e) the Prepetition Agent; (f) the DIP Credit Parties; (g) the Creditors’ Committee and each of its members in their capacity as such; (h) the GUC Recovery Trust; (i) Released Avoidance Parties; and (j) Related Parties for each of the foregoing.

1.111 “Reallocated Amount” has the meaning set forth in Section 4.3 of the Plan.

1.112 “Reallocated Amount Shortfall” has the meaning set forth in Section 4.3 of the Plan.

1.113 “Reorganization Transaction” means, collectively, (a) issuance of the New Common Stock; (b) the distribution of the Reallocated Amount to holders of Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) in exchange for 100% of the New Common Stock in accordance with Section 4.3 of the Plan; (c) execution of the Amended Organizational Documents; (d) vesting of the Reorganized Assets in the Reorganized Debtors, in each case, in accordance with the Plan; (e) the Reorganized Debtors Exit Facility, if elected; and (f) the other transactions that the Debtors and the Requisite Term Lenders reasonably determine are necessary or appropriate to implement the foregoing.

1.114 “Reorganized Assets” means collectively, (i) the alcoholic beverages license issued to Fairway Paramus LLC by the State of New Jersey pursuant to license number 0246-44-035-006, (ii) the alcoholic beverages inventory owned by Fairway Paramus, (iii) the alcoholic beverages license issued to Fairway Woodland Park by the State of New Jersey pursuant to license number 1616-44-013-007, and (iv) the alcoholic beverages inventory owned by Fairway Woodland Park LLC; (v) the Intercompany Interests in Fairway Acquisition held by Fairway Holdings; (vi) the Intercompany Interests in Fairway Paramus and Fairway Woodland held by Fairway Acquisition; (vii) all other Assets of the Reorganized Debtors primarily related to items (i) through (v), including, without limitation, any books and records, customer lists, and employee information related thereto; and (vi) and any other Assets to be agreed by the Debtors (which may include certain store locations) and Plan Sponsor and to be identified in the Plan Supplement.

1.115 “Reorganized Debtors” means Reorganized Fairway Holdings, Reorganized Fairway Acquisition, Reorganized Fairway Paramus, and Reorganized Fairway Woodland Park; provided that all references to the Reorganized Debtors shall only be applicable upon the Reorganized Equity Plan Election.

1.116 “Reorganized Equity Plan Election” means the election by Plan Sponsor required to be made on or prior to the Reorganized Equity Plan Election Date, to proceed with the Reorganization Transaction.

1.117 “Reorganized Equity Plan Election Date” means August 15, 2020.


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1.118 “Reorganized Equity Plan Election Notice” has the meaning set forth in Section 5.5 of the Plan.

1.119 “Reorganized Debtors Exit Facility” has the meaning set forth in Section 2.4 of the Plan.

1.120 “Reorganized Debtors Exit Facility Claims” has the meaning set forth in Section 2.4 of the Plan.

1.121 “Reorganized Debtors Exit Facility Documents” means the agreements and related documents governing the Reorganized Debtors Exit Facility, which shall be in form and substance acceptable to Plan Sponsor and the Debtors.

1.122 “Reorganized Debtors Exit Facility Term Sheet” means the exit facility term sheet by and among the Debtors and Plan Sponsor, substantially in the form included in the Plan Supplement and consistent with Section 2.4 of the Plan.

1.123 “Reorganized Fairway Acquisition” means Fairway Acquisition, as reorganized pursuant to and under the Plan on or after the Effective Date.

1.124 “Reorganized Fairway Holdings” means Fairway Holdings, as reorganized pursuant to and under the Plan on or after the Effective Date.

1.125 “Reorganized Fairway Paramus” means Fairway Paramus, as reorganized pursuant to and under the Plan on or after the Effective Date.

1.126 “Reorganized Fairway Woodland Park” means Fairway Woodland Park, as reorganized pursuant to and under the Plan on or after the Effective Date.

1.127 “Requisite Consenting Creditors” means, as of the date of determination, Consenting Creditors holding at least a majority in aggregate principal amount outstanding of the Prepetition Secured Loans held by all Consenting Creditors as of such date, which shall include each of both Brigade Capital Management and Special Situations Investing Group for so long as such institutions and/or their affiliates are Consenting Creditors.

1.128 “Restructuring Expenses” means with respect to (a) the Consenting Creditors, the reasonable and documented fees, costs, and expenses of King & Spalding LLP; and (b) the Prepetition Agent, the reasonable fees, costs, and expenses of (i) the Prepetition Agent and (ii) Davis Polk & Wardwell LLP.

1.129 “Roll-Up DIP Loans” means “Roll-Up DIP Loans” as defined in the DIP Order.

1.130 “RSA” means that certain restructuring support agreement, dated as of January 22, 2020, by and among the Debtors and the Consenting Creditors (as amended by that first amendment dated February 24, 2020, and as may be further amended, supplemented, or modified from time to time in accordance with the terms thereof) annexed to the Declaration of Abel Porter Pursuant to Rule 1007-2 of Local Bankruptcy Rules for Southern District of New York filed on January 23, 2020 (ECF No. 25) as Exhibit B.

1.131 “Sale Documents” means the documentation effectuating the Sale Transactions.


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1.132 “Sale Orders” means one or more orders of the Bankruptcy Court approving the Sale Transactions, including, but not limited to, the Order (I) Approving Asset Purchase Agreement Among the Debtors and Village Super Market, Inc.; (II) Authorizing Sale of Certain of the Debtors’ Assets Free and Clear of Liens, Claims, Interests, and Encumbrances; (III) Authorizing Assumption and Assignment of Certain Executory Contracts and Leases in Connection Therewith; and (IV) Granting Related Relief (ECF No. 449); the Order (I) Approving Asset Purchase Agreement Among the Debtors and Seven Seas Georgetowne, LLC; (II) Authorizing Sale of Certain of the Debtors’ Assets Free and Clear of Liens, Claims, Interests, and Encumbrances; (III) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith; and (IV) Granting Related Relief (ECF No. 448); and the Order (I) Approving Asset Purchase Agreement Among the Debtors and Amazon Retail LLC; (II) Authorizing Sale of Certain of the Debtors’ Assets Free and Clear of Liens, Claims, Interests, and Encumbrances; (III) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith; and (IV) Granting Related Relief (ECF No. 445).

1.133 “Sale Transactions” means one or more sale of the Debtors’ assets pursuant to section 363 of the Bankruptcy Code and pursuant to the Sale Orders.

1.134 “Secured Claim” means a Claim (a) secured by a Lien on collateral to the extent of the value of such collateral as (i) set forth in the Plan, (ii) agreed to by the holder of such Claim and the Debtors, or (iii) determined by a Final Order in accordance with section 506(a) of the Bankruptcy Code; or (b) secured by the amount of any right of setoff of the holder thereof in accordance with section 553 of the Bankruptcy Code.

1.135 “Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.

1.136 “Security” has the meaning set forth in section 101(49) of the Bankruptcy Code.

1.137 “Senior First Out Term Loan Claims” means any Claims arising from or in connection with the Senior First Out Term Loans under the Prepetition Credit Agreement.

1.138 “Senior First Out Term Loans” means the secured first out term loans under the Prepetition Credit Agreement.

1.139 “Senior Last Out Term Loan Claims” means any Claims arising from or in connection with the Senior Last Out Term Loans under the Prepetition Credit Agreement.

1.140 “Senior Last Out Term Loans” means the secured last out term loans under the Prepetition Credit Agreement.

1.141 “Subordinated Securities Claims” means a Claim subject to subordination under section 510(b) of the Bankruptcy Code.

1.142 “Super Senior Secured Claims” means any Claims arising from or in connection with the Super Senior Secured Term Loans and the Super Senior Secured L/C Facility Loans the Prepetition Credit Agreement.

1.143 “Super Senior Secured L/C Facility Loans” means the super senior secured credit facility under the Prepetition Credit Agreement.


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1.144 “Super Senior Secured Term Loans” means the super senior secured delayed draw first out term loans under the Prepetition Credit Agreement.

1.145 “Tax Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.146 “UFCW International” means the United Food and Commercial Workers International Union.

1.147 “UFCW Parties” means the United Food and Commercial Workers Local 1500, the United Food and Commercial Workers Local 371, the United Food and Commercial Workers Local 1262, the United Food and Commercial Workers Local 1500 Pension Fund, the United Food and Commercial Workers Local 1500 Legal Fund, the United Food and Commercial Workers Local 1500 Scholarship Fund, and the United Food and Commercial Workers Local 1500 Welfare Fund.

1.148 “UFCW Settlement” means the settlement described in the UFCW Settlement Motion and approved by the Bankruptcy Court pursuant to the UFCW Settlement Order.

1.149 “UFCW Settlement Motion” means the Debtors’ Motion for (I) Authorization and Approval of Global Settlement Among Debtors, United Food and Commercial Workers Local 1500, Local 1262, and Local 371, United Food and Commercial Workers Local 1500 Pension Fund, and the UFCW Local 1500 Benefit Funds and (II) Related Relief (ECF No. 382).

1.150 “UFCW Settlement Order” means the order approving the UFCW Settlement Motion and the UFCW Settlement (ECF No. 382).

1.151 “UFCW Settlement Payments” means all payments required to be made by the Debtors pursuant to the UFCW Settlement.

1.152 “UFCW Settlement Term Sheet” means the term sheet between the Debtors and the UFCW Parties attached as Exhibit 1 to the UFCW Settlement Order.

1.153 “Unimpaired” means, with respect to a Claim, Interest, or Class of Claims or Interests, not “impaired” within the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.

1.154 “Unreleased Avoidance Actions” means Avoidance Actions that are not released pursuant to Section 10.6 of the Plan.

1.155 “U.S. Trustee” means the United States Trustee for the Southern District of New York.

1.156 “Voting Deadline” means the date by which all persons or Entities entitled to vote on the Plan must vote to accept or reject the Plan.

1.157 “Wind Down” means the process to wind down, dissolve and liquidate the Estates and distribute any remaining assets in accordance with the Plan.

1.158 “Wind Down Budget” means a budget to be agreed between the Debtors and the Requisite Consenting Creditors for the purpose of effectuating the Wind Down as may be modified from time to time.

1.159 “Wind Down Co” means, if the Reorganized Equity Plan Election is made, the corporation, limited liability company, or trust existing or created on the Effective Date (including one of


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the Debtor entities other than any Reorganized Debtor) in accordance with Section 5.7(f) or Section 5.7(g), of the Plan.

1.160 “Wind Down Co Assets” means, if the Reorganized Equity Plan Election is made, the assets of the Reorganized Debtors (excluding the Reorganized Assets), including the Intercompany Interests held by Fairway Acquisition (other than the Intercompany Interests in Fairway Paramus and Fairway Woodland Park, which are Reorganized Assets), which assets shall be transferred to and beneficially owned by the Wind Down Co as of the Effective Date to be treated in accordance with the Plan.

1.161 “Wind Down Estates” means (i) the Debtors (excluding, if the Reorganized Equity Plan Election is made, the Reorganized Debtors) pursuant to and under the Plan on or after the Effective Date, and (ii) if the Reorganized Equity Plan Election is made, Wind Down Co.

B. Interpretation; Application of Definitions and Rules of Construction.

Unless otherwise specified, all section or exhibit references in the Plan are to the respective section in, or exhibit to, the Plan, as the same may be amended, waived, or modified from time to time. The words “herein,” “hereof,” “hereto,” “hereunder,” and other words of similar import refer to the Plan as a whole and not to any particular section, subsection, or clause contained therein. The headings in the Plan are for convenience of reference only and shall not limit or otherwise affect the provisions hereof. For purposes herein: (a) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter gender; (b) any reference herein to a contract, lease, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms and conditions; (c) unless otherwise specified, all references herein to “Sections” are references to Sections hereof or hereto; (d) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; and (e) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be.

C. Reference to Monetary Figures.

All references in the Plan to monetary figures shall refer to the legal tender of the United States of America, unless otherwise expressly provided.

D. Controlling Document.

In the event of any conflict between the terms and provisions in the Plan (without reference to the Plan Supplement) and the terms and provisions in the Disclosure Statement, the Plan Supplement, any other instrument or document created or executed pursuant to the Plan or any order (other than the Confirmation Order) referenced in the Plan (or any exhibits, schedules, appendices, supplements, or amendments to any of the foregoing), the Plan (without reference to the Plan Supplement) shall govern and control; provided, that in the event of a conflict between Confirmation Order, on the one hand, and any of the Plan, the Plan Supplement, the Definitive Documents, or the DIP Order on the other hand, the Confirmation Order shall govern and control in all respects.

E. Certain Consent Rights.

Notwithstanding anything in the Plan to the contrary, any and all consent rights of any of the DIP Credit Parties and the parties to the RSA as set forth in the RSA and the DIP Documents with


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respect to the form and substance of the Plan, the Plan Supplement, and any Definitive Document, including any amendments, restatements, supplements, or other modifications to such documents, and any consents, waivers, or other deviations under or from any such documents, shall be incorporated herein by this reference (including to the applicable definitions in Article I hereof) and fully enforceable as if stated in full herein until such time as the RSA (with respect to the parties to the RSA) or the DIP Documents (with respect to the DIP Credit Parties) is terminated in accordance with its terms.

ARTICLE II ADMINISTRATIVE EXPENSE AND PRIORITY CLAIMS.

2.1. Administrative Expense Claims.

Except to the extent that a holder of an Allowed Administrative Expense Claim agrees to less favorable treatment, each holder of an Allowed Administrative Expense Claim (other than a Fee Claim, a DIP Claim, or a Restructuring Expense) shall receive, in full and final satisfaction, settlement, and release of such Claim against the Debtors, Cash in an amount equal to such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, the later of (a) the Effective Date, and (b) the first Business Day after the date that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim; provided, that Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors, as Debtors in Possession, shall be paid by the Debtors, Wind Down Estates, or the Plan Administrator, as applicable, in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any course of dealing or agreements governing, instruments evidencing, or other documents relating to such transactions; provided, further, that the Allowed amounts of any 503(b)(9) Claims agreed to by the Debtors or the Plan Administrator shall each be satisfactory to the Requisite Consenting Creditors.

2.2. Fee Claims.

(a) All Entities seeking an award by the Bankruptcy Court of Fee Claims shall file and serve on counsel to the Debtors, the U.S. Trustee, the Creditors’ Committee, and counsel to the Requisite Consenting Creditors, on or before the date that is forty-five (45) days after the Effective Date, their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred from the Commencement Date through the Effective Date. Objections to any Fee Claims must be filed and served on counsel to the Debtors, the U.S. Trustee, the Creditors’ Committee, counsel to the Requisite Consenting Creditors, and the requesting party no later than twenty-one (21) calendar days after the filing of the final applications for compensation or reimbursement (unless otherwise agreed by the Debtors or the Plan Administrator, as applicable, and the party requesting compensation of a Fee Claim).

(b) Allowed Fee Claims shall be paid in full, in Cash, in such amounts as are Allowed by the Bankruptcy Court (i) on the date upon which an order relating to any such Allowed Fee Claim is entered or as soon as reasonably practicable thereafter; or (ii) upon such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors, Wind Down Estates, or the Plan Administrator, as applicable. Notwithstanding the foregoing, any Fee Claims that are authorized to be paid pursuant to any administrative orders entered by the Bankruptcy Court may be paid at the times and in the amounts authorized pursuant to such orders.

(c) On or about the Effective Date, holders of Fee Claims shall provide a reasonable estimate of unpaid Fee Claims incurred in rendering services before the Effective Date to the Debtors or the Creditors’ Committee, as applicable, and the Debtors or Wind Down Estates, as applicable, shall separately escrow such estimated amounts in the Professional Fees Escrow Account for the benefit of the holders of the Fee Claims until the fee applications related thereto are resolved by Final Order or agreement


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of the parties. If a holder of a Fee Claim does not provide an estimate, the Debtors, Wind Down Estates, or Plan Administrator, as applicable, may estimate the unpaid and unbilled reasonable and necessary fees and out-of-pocket expenses of such holder of a Fee Claim. The Professional Fee Escrow Account shall be treated as a trust account for the benefit of holders of Fee Claims and otherwise subject to the terms of the DIP Order. When all such Allowed Fee Claims have been paid in full, any remaining amount in the Professional Fee Escrow Account shall promptly be released from such escrow and revert to, and ownership thereof shall vest in, Wind Down Estates without any further action or order of the Bankruptcy Court.

(d) Wind Down Estates or the Plan Administrator, as applicable, are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval.

2.3. Priority Tax Claims.

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to less favorable treatment, each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction, settlement, and release of such Allowed Priority Tax Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, with the consent of the Requisite Consenting Creditors as applicable, (a) Cash in an amount equal to such Allowed Priority Tax Claim on, or as soon thereafter as is reasonably practicable, the later of (i) the Effective Date, to the extent such Claim is an Allowed Priority Tax Claim on the Effective Date; (ii) the first Business Day after the date that is thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax Claim; and (iii) the date such Allowed Priority Tax Claim is due and payable in the ordinary course as such obligation becomes due; provided, that the Debtors reserve the right to prepay all or a portion of any such amounts at any time under this option without penalty or premium; or (b) equal annual Cash payments in an aggregate amount equal to the amount of such Allowed Priority Tax Claim, together with interest at the applicable rate under section 511 of the Bankruptcy Code, over a period not exceeding five (5) years from and after the Commencement Date.

2.4. DIP Claims.

On the Effective Date, in full and final satisfaction of the Allowed DIP Claims, to the extent any DIP Obligations remain unpaid and the DIP Documents have not been terminated, the commitments of the DIP Credit Parties under the DIP Documents shall be terminated and DIP Claims shall be paid in full in Cash; provided that Plan Sponsor may, at its option and only if the Reorganized Equity Plan Election is made, (a) convert all or a portion of its outstanding DIP Claims, on a dollar-for-dollar basis, into a new exit financing facility under which the Reorganized Debtors will be the borrower(s) and guarantors (as applicable), on terms mutually acceptable to the Debtors and Plan Sponsor and consistent with the Reorganized Debtors Exit Facility Term Sheet (the “Reorganized Debtors Exit Facility,” and the Claims thereunder, the “Reorganized Debtors Exit Facility Claims”) and/or (b) exchange all or a portion of its outstanding DIP Claims for the New Common Stock (the “DIP Conversion Election”). The Debtors’ and their respective Affiliates’ contingent or unliquidated expense reimbursement and indemnity obligations under the DIP Documents, to the extent not paid in full in Cash on the Effective Date or otherwise satisfied by the Debtors and their respective Affiliates in a manner reasonably acceptable to the DIP Agent, shall survive the Effective Date and shall not be released or discharged pursuant to the Plan or Confirmation Order, notwithstanding any provision hereof or thereof to the contrary.

2.5. Restructuring Expenses.

To the extent that any Restructuring Expenses remain unpaid as of the Business Day prior to the Effective Date, on the Effective Date, Wind Down Estates, or Plan Administrator, as applicable, shall pay in full in Cash any outstanding Restructuring Expenses that are invoiced without the requirement for


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the filing of retention applications, fee applications, or any other applications in the Chapter 11 Cases, and without any requirement for further notice or Bankruptcy Court review or approval. For the avoidance of doubt, any Restructuring Expenses invoiced after the Effective Date shall be paid promptly, but no later than ten (10) business days of receiving an invoice.

ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS.

3.1. Classification in General.

A Claim or Interest is placed in a particular Class for all purposes, including voting, confirmation, and distribution under the Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code; provided, that a Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and such Allowed Claim or Allowed Interest has not been satisfied, released, or otherwise settled prior to the Effective Date.

3.2. Grouping of Debtors for Convenience Only.

The Plan groups the Debtors together solely for the purpose of describing treatment of Claims and Interests under this Plan and confirmation of this Plan. Although this Plan applies to all of the Debtors, the Plan constitutes twenty-six (26) distinct chapter 11 plans, one for each Debtor. Each Class of Claims will be deemed to contain sub-classes for each of the Debtors, to the extent applicable for voting and distribution purposes. To the extent there are no Allowed Claims or Interests with respect to a particular Debtor, such Class is deemed to be omitted with respect to such Debtor. Except as otherwise provided herein, to the extent a holder has a Claim that may be asserted against more than one Debtor, the vote of such holder in connection with such Claims shall be counted as a vote of such Claim against each Debtor against which such holder has a Claim. The grouping of the Debtors in this manner shall not affect any Debtor’s status as a separate legal Entity, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger of consolidation of any legal Entities, or cause the transfer of any Assets, and, except as otherwise provided by or permitted under this Plan, all Debtors shall continue to exist as separate legal Entities.

3.3. Summary of Classification.

The following table designates the Classes of Claims against and Interests in the Debtor and specifies which of those Classes are (a) Impaired or Unimpaired by the Plan; (b) entitled to vote to accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code; and (c) deemed to accept or reject the Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified.


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Class Designation Treatment Entitled to Vote 1 Priority Non-Tax Claims Unimpaired No (Presumed to accept) 2 Other Secured Claims Unimpaired No (Presumed to accept) 3 Senior First Out Term Loan Claims Impaired Yes 4 Senior Last Out Term Loan Claims Impaired Yes 5 Holdco Loan Claims Impaired Yes 6 General Unsecured Claims Impaired Yes 7 Intercompany Claims Impaired No (Deemed to reject) 8 Intercompany Interests Unimpaired No (Presumed to accept) 9 Parent Equity Interests Impaired No (Deemed to reject)

10 Subordinated Securities Claims Impaired No (Deemed to reject)

3.4. Special Provision Governing Unimpaired Claims.

Nothing under the Plan shall affect the rights of the Debtors, Reorganized Debtors, Wind Down Estates, or Plan Administrator, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.

3.5. Elimination of Vacant Classes.

Any Class of Claims against or Interests in the Debtors that, as of the commencement of the Confirmation Hearing, does not have at least one holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Plan for purposes of voting to accept or reject the Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.

3.6. Voting Classes; Presumed Acceptance by Non-Voting Classes.

If a Class contains Claims eligible to vote and no holders of Claims eligible to vote in such Class vote to accept or reject the Plan, the Debtors shall request the Bankruptcy Court at the Confirmation Hearing to deem the Plan accepted by the holders of such Claims in such Class.

3.7. Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code..

The Debtors shall seek confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests. The Debtors reserve the right to modify the Plan to the extent, if any, that confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification, including by modifying the treatment applicable to a Class of Claims or Interests to render such Class of Claims or Interests Unimpaired to the extent permitted by the Bankruptcy Code and the Bankruptcy Rules.

ARTICLE IV TREATMENT OF CLAIMS AND INTERESTS.

4.1. Priority Non-Tax Claims (Class 1).

(a) Classification: Class 1 consists of Priority Non-Tax Claims.


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(b) Treatment: Except to the extent that a holder of an Allowed Priority Non-Tax Claim against the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction, settlement and release of such Allowed Priority Non-Tax Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, as applicable: (i) each such holder shall receive payment in full in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as is reasonably practicable; or (ii) such holder shall receive such other treatment so as to render such holder’s Allowed Priority Non-Tax Claim Unimpaired.

(c) Voting: Class 1 is Unimpaired, and holders of Priority Non-Tax Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Priority Non-Tax Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to Priority Non-Tax Claims.

4.2. Other Secured Claims (Class 2).

(a) Classification: Class 2 consists of the Other Secured Claims. To the extent that Other Secured Claims are secured by different collateral or different interests in the same collateral, such Claims shall be treated as separate subclasses of Class 2 for purposes of voting to accept or reject the Plan and receiving distributions under the Plan.

(b) Treatment: Except to the extent that a holder of an Allowed Other Secured Claim agrees to different treatment, on the later of the Effective Date and the date that is ten (10) Business Days after the date such Other Secured Claim becomes an Allowed Claim, or as soon thereafter as is reasonably practicable, each holder of an Allowed Other Secured Claim will receive, on account and in full satisfaction of such Allowed Claim, at the sole option of the Debtors, Wind Down Estates, or the Plan Administrator, with the consent of the Requisite Consenting Creditors, as applicable: (i) Cash in an amount equal to the Allowed amount of such Claim; (ii) return of the applicable collateral or the proceeds thereof in satisfaction of the Allowed amount of such Other Secured Claim; or (iii) such other treatment sufficient to render such holder’s Allowed Other Secured Claim Unimpaired.

(c) Voting: Class 2 is Unimpaired, and holders of Other Secured Claims are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Other Secured Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Other Secured Claims.

4.3. Senior First Out Term Loan Claims (Class 3).

(a) Classification: Class 3 consists of Senior First Out Term Loan Claims.

(b) Allowance: The Senior First Out Term Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $ 76.5 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Senior First Out Term Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Senior First Out Term Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Senior First Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior First Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds, until all Allowed Senior First Out Term Loan Claims are


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satisfied in full; provided that (A) upon the Reorganized Equity Plan Election, (i) Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims up to $2.75 million (the “Reallocated Amount”) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation); (ii) Plan Sponsor shall receive 100% of the New Common Stock; and (iii) the amount of Plan Sponsor’s share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims exceeding the Reallocated Amount shall be distributed to Plan Sponsor; provided that if the Reallocated Amount is less than $2.75 million, the Cash payable by the Debtors to satisfy DIP Claims in cash in full on the Effective Date in an amount equal to the difference between $2.75 million and the Reallocated Amount (such amount, the “Reallocated Amount Shortfall”), shall be distributed to the holders of Allowed Senior First Out Term Loan Claims (other than the Plan Sponsor) in an amount equal to the Reallocated Amount Shortfall; provided further that if the Debtors do not have sufficient cash on hand to make or reserve for distributions to holders of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Allowed Other Secured Claims on the Effective Date in accordance with the terms set forth in the Plan (such amount, the “Plan Confirmation Shortfall”), the Plan Sponsor shall be entitled to make a DIP Conversion Election in an amount necessary to cover such Plan Confirmation Shortfall, and the amount of such Plan Confirmation Shortfall shall reduce, on a dollar-for-dollar basis, the Reallocated Amount Shortfall; and (B) if the Reorganized Equity Plan Election is not made, Plan Sponsor’s Pro Rata share of the Net Cash Proceeds distributable to Plan Sponsor on account of its Allowed Senior First Out Term Loan Claims in an amount equal to the difference between $2.75 million and the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets (to the extent the actual amount realized by the Debtors or Wind Down Estates, as applicable, from the liquidation of the Reorganized Assets is less than $2.75 million) shall be distributed to the remaining holders of the Allowed Senior First Out Term Loan Claims (other than Plan Sponsor) on a Pro Rata basis (excluding the Claims held by Plan Sponsor from the denominator for purposes of such calculation).

(d) Voting: Class 3 is Impaired, and holders of Senior First Out Term Loan Claims are entitled to vote to accept or reject the Plan.

4.4. Senior Last Out Term Loan Claims (Class 4).

(a) Classification: Class 4 consists of Senior Last Out Term Loan Claims.

(b) Allowance: The Senior Last Out Term Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $56.8 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Senior Last Out Term Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Senior Last Out Term Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Senior Last Out Term Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Senior Last Out Term Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior First Out Term Loan Claims are satisfied in full in Cash, until all Allowed Senior Last Out Term Loan Claims are satisfied in full.

(d) Voting: Class 4 is Impaired, and holders of Senior Last Out Term Loan Claims are entitled to vote to accept or reject the Plan.


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4.5. Holdco Loan Claims (Class 5).

(a) Classification: Class 5 consists of Holdco Loan Claims.

(b) Allowance: The Holdco Loan Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against the Debtors in the aggregate principal amount of $51 million, plus all accrued but unpaid interest, costs, fees, and expenses then outstanding under the Prepetition Credit Agreement on account of the Holdco Loan Claims. The Prepetition Agent and the Prepetition Lenders shall not be required to file proofs of Claim on account of any Holdco Loan Claims.

(c) Treatment: Except to the extent that a holder of an Allowed Holdco Loan Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed Holdco Loan Claim, each such holder thereof shall receive such holder’s Pro Rata share of the Net Cash Proceeds as such holders are entitled to under applicable nonbankruptcy law after the Senior Last Out Term Loan Claims are satisfied in full in Cash, until all Allowed Holdco Loan Claims are satisfied in full.

(d) Voting: Class 5 is Impaired, and holders of Holdco Loan Claims are entitled to vote to accept or reject the Plan.

4.6. General Unsecured Claims (Class 6).

(a) Classification: Class 6 consists of General Unsecured Claims.

(b) Treatment: Except to the extent that a holder of an Allowed General Unsecured Claim agrees to less favorable treatment, in full and final satisfaction, settlement, and release of, and in exchange for an Allowed General Unsecured Claim, each such holder thereof shall receive (i) such holder’s Pro Rata share of (x) the GUC Recovery Trust Interests (entitling such holder to a Pro Rata share of the GUC Recovery Trust Net Assets in accordance with the GUC Recovery Trust Agreement); and (y) the Net Cash Proceeds after the Prepetition Loan Claims are satisfied in full in Cash, until all Allowed General Unsecured Claims are satisfied in full; and (ii) if such holder of an Allowed General Unsecured Claim satisfies the requirements to be a Released Avoidance Party, such holder shall be treated as a Released Avoidance Party.

For the avoidance of doubt, a holder of a Prepetition Loan Deficiency Claim shall not receive distributions in accordance with this Section 4.5(b) and such claims are waived.

(c) Voting: Class 6 is Impaired, and holders of General Unsecured Claims are entitled to vote to accept or reject the Plan.

4.7. Intercompany Claims (Class 7).

(a) Classification: Class 7 consists of Intercompany Claims.

(b) Treatment: On or after the Effective Date, all Intercompany Claims will be cancelled and not entitled to distribution or any recovery under the Plan.

(c) Voting: Class 7 is Impaired, and holders of Intercompany Claims are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, holders of Intercompany Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Intercompany Claims.


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4.8. Intercompany Interests (Class 8).

(a) Classification: Class 8 consists of Intercompany Interests.

(b) Treatment: On or after the Effective Date, all Intercompany Interests shall be cancelled, reinstated, or receive such other treatment as determined by the Debtors and the Requisite Consenting Creditors, in their respective reasonable discretion; provided, that holders of Intercompany Interests shall not receive Cash on account of such Intercompany Interests.

(c) Voting: Class 8 is Unimpaired, and holders of Intercompany Interests are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, holders of Intercompany Interests are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Intercompany Interests.

4.9. Parent Equity Interests (Class 9).

(a) Classification: Class 9 consists of Parent Equity Interests.

(b) Treatment: Except to the extent that a holder of Parent Equity Interests agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of, and in exchange for Parent Equity Interests, each such holder thereof shall receive:

(i) If the Reorganized Equity Plan Election is made, all Parent Equity Interests shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force or effect, whether surrendered for cancellation or not.

(ii) If the Reorganized Equity Plan Election is not made:

(1) On the Effective Date, all Parent Equity Interests shall be cancelled and one share of Fairway Holdings common stock (the “Holdings Single Share”) shall be issued to the Plan Administrator to hold in trust as custodian for the benefit of the former holders of Fairway Holdings common stock and preferred stock consistent with their former relative priority and economic entitlements. The Holdings Single Share shall be recorded on the books and records maintained by the Plan Administrator;

(2) Each former holder of a Parent Equity Interest (through their interest in the Holdings Single Share, as applicable) shall neither receive nor retain any property of the Estate or direct interest in property of the Estate on account of such Parent Equity Interest; provided, that in the event that all Allowed Claims have been satisfied in full in accordance with the Bankruptcy Code and the Plan, each former holder of a Parent Equity Interest may receive its share of any remaining assets of Fairway Holdings consistent with such holder’s rights of payment existing immediately prior to the Commencement Date. Unless otherwise determined by the Plan Administrator, on the date that Fairway Holdings’ Chapter 11 Case is closed in accordance with Section 5.15 of the Plan, the Holdings Single Share issued on the Effective Date shall be deemed cancelled and of no further force and effect; provided that such cancellation does not adversely impact the Debtors’ Estates; and

(3) The continuing rights of former holders of Parent Equity Interests (including through their interest in Holdings Single Share or otherwise) shall be


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nontransferable except by operation of law, or, subject to the Plan Administrator’s consent, for administrative transfers where the ultimate beneficiary has not changed.

(c) Voting: Class 9 is Impaired, and holders of Parent Equity Interests are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, holders of Parent Equity Interests are not entitled to vote to accept or reject the Plan, and the votes of such holders will not be solicited with respect to such Parent Equity Interests.

4.10. Subordinated Securities Claims (Class 10).

(a) Classification: Class 10 consists of Subordinated Securities Claims.

(b) Treatment: Holders of Subordinated Securities Claims shall not receive or retain any property under the Plan on account of such Subordinated Securities Claims. On the Effective Date, all Subordinated Securities Claims shall be deemed cancelled without further action by or order of the Bankruptcy Court, and shall be of no further force and effect, whether surrendered for cancellation or otherwise.

(c) Voting: Class 10 is Impaired, and the holders of Subordinated Securities Claims are conclusively deemed to have rejected the Plan. Therefore, holders of Subordinated Securities Claims are not entitled to vote to accept or reject the Plan, and the votes of such holders of Subordinated Securities Claims will not be solicited.

ARTICLE V MEANS FOR IMPLEMENTATION.

5.1. No Substantive Consolidation.

The Plan is being proposed as a joint plan of reorganization of the Debtors for administrative purposes only and constitutes a separate chapter 11 plan of reorganization for each Debtor. The Plan is not premised upon the substantive consolidation of the Debtors with respect to the Classes of Claims or Interests set forth in the Plan, subject to the terms of the Global Settlement set forth in Section 5.3(b) of the Plan.

5.2. Incorporation of UFCW Settlement.

The terms and conditions of the UFCW Settlement are incorporated in the Plan as if fully set forth herein, and shall by binding on the Debtors, Wind Down Estates, the GUC Recovery Trust, and all other parties in interest, to the extent applicable.

5.3. Compromise and Settlement of Claims, Interests, and Controversies.

(a) Pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Plan, the provisions of the Plan and the Global Settlement shall constitute a good faith compromise of Claims, Interests, and controversies relating to the contractual, legal, and subordination rights that a creditor or an Interest holder may have with respect to any Claim or Interest or any distribution to be made on account of an Allowed Claim or Interest. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise or settlement of all such Claims, Interests, and controversies, as well as a finding by the Bankruptcy Court that such compromise or settlement is in the best interests of the Debtors, their Estates, and holders of such Claims and Interests, and is fair, equitable, and reasonable.


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(b) The treatment provided for hereunder to Allowed General Unsecured Claims, incorporates and reflects a proposed compromise and settlement by and among the Debtors, the Creditors’ Committee, and the Consenting Creditors (the “Global Settlement”). The following constitutes the provisions and conditions of the Global Settlement:

(i) On the Effective Date, and solely for purposes of distributions from the GUC Recovery Trust: (1) all General Unsecured Claims against each of the Debtors shall be deemed merged or treated as liabilities of the GUC Recovery Trust to the extent Allowed; (2) all General Unsecured Claim guaranties by a Debtor of the obligations of any other Debtor shall be deemed eliminated and extinguished so that any General Unsecured Claim against any Debtor and any guarantee thereof executed by any Debtor and any joint or several General Unsecured Claim against any of the Debtors shall be deemed to be one obligation of the GUC Recovery Trust; (3) each and every General Unsecured Claim filed in any of the Chapter 11 Cases shall be treated as filed against the consolidated Debtors and shall be treated as one General Unsecured Claim against and obligation of the GUC Recovery Trust. For the avoidance of doubt, for purposes of determining the availability of the right of set off under section 553 of the Bankruptcy Code, the Debtors, Reorganized Debtors, and Wind Down Estates shall be treated as separate entities so that, subject to the other provisions of section 553 of the Bankruptcy Code, debts due to any of the Debtors may not be set off against the liabilities of any of the other Debtors. Such substantive consolidation shall not (other than for purposes relating to the Plan) affect the legal and corporate structures of Wind Down Estates or the Reorganized Debtors. Moreover, such substantive consolidation shall not affect any subordination provisions set forth in any agreement relating to any General Unsecured Claim or the ability of the GUC Recovery Trustee to seek to have any General Unsecured Claim subordinated in accordance with any contractual rights or equitable principles.

(ii) On the Effective Date, the GUC Recovery Trust shall be established in accordance with Section 5.18 of the Plan and shall be governed and administered in accordance with the GUC Recovery Trust Agreement.

(iii) On the Effective Date, the Debtors and the Estates shall transfer the GUC Recovery Trust Assets to the GUC Recovery Trust, free and clear of all Liens, charges, Claims, encumbrances, and interests for the benefit of the holders of Allowed General Unsecured Claims. In accordance with Section 1141 of the Bankruptcy Code, all of the GUC Recovery Trust Assets, as well as the rights and powers of the Debtors’ Estates applicable to the GUC Recovery Trust Assets, shall vest in the GUC Recovery Trust, for the benefit of the holders of Allowed General Unsecured Claims.

(iv) On the Effective Date, the Debtors and their Estates waive the right to prosecute any Avoidance Actions against the Released Avoidance Parties. Any Unreleased Avoidance Actions shall be transferred to the GUC Recovery Trust; provided that the Wind Down Estates and the Plan Administrator shall retain and may prosecute objections pursuant to section 502(d) of the Bankruptcy Code against any party that is not a Released Avoidance Party with respect to any Administrative Expense Claim, Priority Non-Tax Claim, or Secured Claim asserted by such parties. For the avoidance of doubt, Causes of Action arising under section 542 or section 549 of the Bankruptcy Code shall remain property of the Debtors or the Wind Down Estates and are not transferred to the GUC Recovery Trust.


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(v) The GUC Recovery Trustee shall determine whether to enforce, settle, release, or compromise Unreleased Avoidance Actions (or decline to do any of the foregoing). The Wind Down Estates, the Reorganized Debtors, and the Plan Administrator, as applicable, shall not be subject to any claims or counterclaims of the GUC Recovery Trust, including with respect to the Unreleased Avoidance Actions.





5.4. Sources of Consideration for Plan Distributions.

The Wind Down Estates shall fund distributions and satisfy applicable Allowed Claims and Allowed Interests under the Plan using Cash on hand and any Cash generated from the liquidating of the Debtors’ remaining Assets.

The GUC Recovery Trust shall fund distributions and satisfy Allowed General Unsecured Claims using GUC Recovery Trust Assets.

5.5. Reorganized Equity Plan Election Notice

Unless extended by the Debtors, on August 15, 2020 (the “Reorganized Equity Plan Election Date”), Plan Sponsor shall deliver a notice (the “Reorganized Equity Plan Election Notice”) to the Debtors if Plan Sponsor wishes to make the Reorganized Equity Plan Election and consummate the Reorganization Transaction. If Plan Sponsor does not deliver a Reorganized Equity Plan Election Notice by the Reorganized Equity Plan Election Date, the Reorganization Transaction shall not be pursued.

5.6. Reorganization Transaction.

If the Reorganized Equity Plan Election is made, the Debtors shall implement the Reorganization Transaction as set forth herein.

(a) Authorization and Issuance of New Plan Securities.

(i) On the Effective Date, the Debtors or the Reorganized Debtors, as applicable, are authorized to issue or cause to be issued and shall issue the New Common Stock in accordance with the terms of the Plan and the Amended Organizational Documents without the need for any further corporate or stockholder action. All of the


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New Common Stock issuable under the Plan, when so issued, shall be duly authorized, validly issued, fully paid, and non-assessable.

(ii) The distribution of the New Common Stock pursuant to the Plan may be made by means of book-entry registration on the books of a transfer agent for shares of New Common Stock or by means of book-entry exchange through the facilities of a transfer agent reasonably satisfactory to the Debtors, in accordance with the customary practices of such agent, as and to the extent practicable.

(b) Continued Corporate Existence.

(i) The Reorganized Debtors shall continue to exist after the Effective Date as a private company in accordance with the applicable laws of the respective jurisdictions in which they are incorporated or organized and pursuant to the Amended Organizational Documents unless otherwise determined in accordance with Section 5.9 of the Plan. After the Effective Date, the continued existence of Wind Down Estates shall be separate from the Reorganized Debtors.

(ii) On or after the Effective Date, the Reorganized Debtors may take such action that may be necessary or appropriate as permitted by applicable law and the Reorganized Debtors’ Amended Organizational Documents, as the Reorganized Debtors may determine is reasonable and appropriate to effect any transaction described in, approved by, or necessary or appropriate to effectuate the Plan.

(c) Vesting of Reorganized Assets.

(i) In accordance with Section 10.1 of the Plan, on the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all of the Reorganized Assets shall vest free and clear of all Claims, Liens, encumbrances, charges, and other interests in the Reorganized Debtors, and all other Assets of the Reorganized Debtors, including rights of settlement, and other Causes of Action, shall be transferred to and vest with Wind Down Co to satisfy Claims in accordance with the Plan.

(ii) The Wind Down Co shall receive the Wind Down Co Assets, and such receipt of assets shall be exempt from any stamp or other similar tax pursuant to section 1146(a) of the Bankruptcy Code. The Reorganized Debtors shall have no reversionary or further interest in or with respect to the Wind Down Co Assets upon the transfer of the Wind Down Co Assets.

(d) Officers and Board of Directors.

(i) Upon the Effective Date, the New Board shall consist of a director or directors to be selected by Plan Sponsor. The identities of the director(s) and officers of the Reorganized Debtors, to the extent known, shall be disclosed prior to the Confirmation Hearing in accordance with section 1129(a)(5) of the Bankruptcy Code.

(ii) Except to the extent that a member of the board of directors or managers, as applicable, of a Debtor continues to serve as a director or manager of such Debtor on and after the Effective Date, the members of the board of directors or managers of each Debtor prior to the Effective Date, in their capacities as such, shall have no continuing obligations to the Reorganized Debtors on or after the Effective Date and each such director


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or manager will be deemed to have resigned or shall otherwise cease to be a director or manager of the applicable Debtor on the Effective Date.

(e) Reorganized Debtors Exit Facility.

(i) On the Effective Date, subject to the Reorganized Equity Plan Election and in accordance with Section 2.4 of the Plan, the Reorganized Debtors shall enter into the Reorganized Debtors Exit Facility. Confirmation of the Plan shall be deemed approval and authorization of the Reorganized Debtors to execute all transactions contemplated by the Reorganized Debtors Facility Documents, and to take all actions and undertakings and incur all obligations to be incurred by the Reorganized Debtors in connection therewith, including the payment of all fees, indemnities, and expenses provided for therein.

5.7. Wind Down and Dissolution of the Debtors.

(a) On the Effective Date, the Plan Administrator shall be appointed as the Plan Administrator for each of the Debtors after the Effective Date for the purpose of conducting the Wind Down and shall succeed to such powers as would have been applicable to the Debtors’ officers, directors, and equityholders, and the Debtors shall be authorized to be (and upon the conclusion of the Wind Down, shall be) dissolved by the Plan Administrator. The Plan Administrator shall act for each of the Debtors in the same capacity and shall have the same rights and powers as are applicable to a manager, managing member, board of managers, board of directors or equivalent governing body, as applicable, and to officers, subject to the provisions hereof (and all certificates of formation and limited liability company agreements and certificates of incorporation or by-laws, or equivalent governing documents and all other related documents (including membership agreements, stockholders agreements, or similar instruments), as applicable, are deemed amended pursuant to the Plan to permit and authorize the same). From and after the Effective Date, the Plan Administrator shall be the sole representative of and shall act for each of the Debtors and the Wind Down Estates with the authority set forth in this Section 5.7. For the avoidance of doubt, notwithstanding anything in this paragraph or the Plan, the Plan Administrator shall not have any rights to direct dissolution of, or otherwise manage the affairs or business of, the Reorganized Debtors.

(b) The Plan Administrator shall have the authority and right on behalf of each of the Wind Down Estates, without the need for Bankruptcy Court approval (unless otherwise indicated), to carry out and implement all provisions of the Plan, including, without limitation, to: (a) implement the Wind Down as expeditiously as reasonably possible and administer the liquidation, dissolution, sale and/or abandoning or similar action of the Debtors and their Estates and any assets held by the Wind Down Estates after the Effective Date; (b) except to the extent Claims have been previously Allowed, control and effectuate the Claims reconciliation process, including to object to, seek to subordinate, compromise or settle any and all Claims against the Debtors, other than with respect to General Unsecured Claims; (c) make distributions to holders of Allowed Claims in accordance with the Plan, other than with respect to holders of Allowed General Unsecured Claims; (d) prosecute all Causes of Action on behalf of the Debtors, elect not to pursue any Causes of Action, and determine whether and when to compromise, settle, abandon, dismiss, or otherwise dispose of any such Causes of Action, as the Plan Administrator may determine is in the best interests of the Debtors (other than with respect to the Unreleased Avoidance Actions); (e) create and fund, as necessary, any reserves required under the Plan, including for Disputed Claims and other such reserves as the Plan Administrator deems necessary and appropriate to carry out the provisions of the Plan; (f) retain professionals to assist in performing its duties under the Plan; (g) maintain the books, records, and accounts of the Debtors; (h) complete and file, as necessary, all final or otherwise required federal, state, and local tax returns and other tax reports for the Debtors or Wind Down Estates; (i) represent the interests of each Debtor, its Estates, or the Wind Down before any taxing authority in all matters including, without


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limitations, any action, suit, proceeding, appeal or audit; and (j) perform other duties and functions that are consistent with the implementation of the Plan or required by the Bankruptcy Code.

(c) Each of the Wind Down Estates (but, if the Reorganized Equity Plan Election is made, excluding the Reorganized Debtors) shall indemnify and hold harmless the Plan Administrator solely in its capacity as such for any losses incurred in such capacity, except to the extent such losses were the result of the Plan Administrator’s gross negligence, willful misconduct, or criminal conduct.

(d) The Plan Administrator shall represent the Wind Down Estates and shall have the right to retain the services of attorneys, accountants, and other professionals that the Plan Administrator determines, in its sole discretion, are necessary to assist the Plan Administrator in performing his or her duties. The Plan Administrator shall pay the reasonable fees and expenses of such professionals without further order of the Bankruptcy Court. Any and all reasonable and documented costs and expenses incurred by the Plan Administrator in connection with the Wind Down shall be paid from the funds of the Wind Down Estates. The Plan Administrator shall be compensated and reimbursed for reasonable costs and expenses as set forth in the Plan Supplement.

(e) Subject to Section 6.3(b) of the Plan, the Debtors shall make an initial distribution on the Effective Date and thereafter, the Plan Administrator shall, in an expeditious but orderly manner, make timely distributions pursuant to the Plan and the Confirmation Order.

(f) If the Reorganized Equity Plan Election is made, on the Effective Date, Wind Down Co shall be formed. Unless the Wind Down Co is formed as a trust in accordance with Section 5.7(g), one new equity interest (the “Single Share”) in the Wind Down Co shall be issued to the Plan Administrator, which shall hold such equity interest in trust as custodian for the benefit of all Holders of Allowed Claims of Wind Down Co. The Single Share shall be recorded on the books and records maintained by the Plan Administrator.

(g) If the Reorganized Equity Plan Election is made, and in the event that Wind Down Co is formed as a trust, it will be structured and intended to qualify as a “liquidating trust” within the meaning of Treasury Regulation section 301.7701-4(d), and in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684 and, thus, as a “grantor trust” within the meaning of sections 671 through 679 of the Tax Code to the Holders of Allowed Claims receiving interests in Wind Down Co, consistent with the terms of the Plan. In such event, the Wind Down Co will be governed by provisions substantially similar to those set forth with respect to the GUC Recovery Trust in Section 5.17 of the Plan, with the Plan Administrator acting as the trustee.

(h) The Plan Administrator shall effectuate the Wind Down in accordance with the Wind Down Budget.

(i) The Plan Administrator shall be authorized to file on behalf of the Debtors and any non-Debtor subsidiaries (but, if the Reorganized Equity Plan Election is made, not the Reorganized Debtors), certificates of dissolution and any and all other corporate and company documents necessary to effectuate the Wind Down without further action under applicable law, regulation, order, or rule, including any action by the stockholders, members, the board of directors, or board of directors or similar governing body of the Debtors.

(j) The PACA/PASA Order will continue in effect after the Effective Date and the Wind Down Estates must continue to comply therewith.


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(k) All directors and officers of the dissolved Debtors shall be deemed to have resigned in their capacity as of the Effective Date.

5.8. Employee Matters.

(a) The KEIP Incentive Awards and KERP Payments, if applicable, shall be paid in Cash as Allowed Administrative Expense Claims. Distributions of the KEIP Incentive Awards shall be deemed to be distributions made to holders of Allowed Senior First Out Term Loan Claims in accordance with Section 4.3 of the Plan and the KEIP/KERP Order. The Debtors shall assume and honor all KEIP Agreements and honor all KERP Agreements.

5.9. Effectuating Documents; Further Transactions.

(a) On or as soon as practicable after the Effective Date, the Reorganized Debtors, Wind Down Estates, or the Plan Administrator, or the GUC Recovery Trust, or GUC Recovery Trustee, as applicable, may take such actions as may be or become necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan and the Global Settlement, including (i) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, financing, conversion, disposition, transfer, dissolution, transition services, or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable Entities may determine; (ii) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any Asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Plan and having other terms to which the applicable parties agree; (iii) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, or dissolution and the Amended Organizational Documents pursuant to applicable state law; (iv) the issuance of securities, all of which shall be authorized and approved in all respects, in each case, without further action being required under applicable law, regulation, order, or rule; (v) the execution, delivery, or filing of contracts, instruments, releases, and other agreements to effectuate and implement the distribution of the GUC Recovery Trust Interests and the New Common Stock (if applicable) to be issued pursuant hereto without the need for any approvals, authorizations, actions, or consents; and (vi) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law or to reincorporate in another jurisdiction.

(b) Each officer, manager, or member of the board of directors of the Debtors is (and each officer, manager, or member of the board of directors of the Reorganized Debtors, Wind Down Estates, and the Plan Administrator, as applicable, shall be) authorized and directed to issue, execute, deliver, file, or record such contracts, securities, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and conditions of the Plan and the securities issued pursuant to the Plan in the name of and on behalf of the Reorganized Debtors or Wind Down Estates, as applicable, all of which shall be authorized and approved in all respects, in each case, without the need for any approvals, authorization, consents, or any further action required under applicable law, regulation, order, or rule (including, without limitation, any action by the stockholders or directors or managers of the Debtors, the Reorganized Debtors, or the Wind Down Estates) except for those expressly required pursuant to the Plan.

(c) The Debtors shall be authorized to implement the Plan, including the Global Settlement, the creation of the GUC Recovery Trust, and, if the Reorganized Equity Plan Election is made, the Reorganization Transaction, in the manner most tax efficient to the Reorganized Debtors or Wind Down Estates, as determined by the Debtors in their business judgment, given the totality of the circumstances.


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(d) All matters provided for herein involving the corporate structure of the Debtors, Reorganized Debtors, or Wind Down Estates, to the extent applicable, or any corporate or related action required by the Debtors, Reorganized Debtors, or Wind Down Estates in connection herewith shall be deemed to have occurred and shall be in effect, without any requirement of further action by the stockholders, members, or directors or managers of the Debtors, Reorganized Debtors, or Wind Down Estates, and with like effect as though such action had been taken unanimously by the stockholders, members, directors, managers, or officers, as applicable, of the Debtors, Reorganized Debtors, or Wind Down Estates.

5.10. Securities Law Exemptions.

(a) If the Reorganized Equity Plan Election is made, the offer, issuance, and distribution of the New Common Stock to Plan Sponsor pursuant to Section 4.3 of this Plan shall be exempt, pursuant to section 1145 of the Bankruptcy Code without further act or action by any Entity, from registration under (i) the Securities Act, and all rules and regulations promulgated thereunder and (ii) any state or local law requiring registration for the offer, issuance, or distribution of securities. However, because Plan Sponsor will be deemed an “underwriter” (as defined in section 1145(b) of the Bankruptcy Code) with respect to such securities, Plan Sponsor may not resell the securities without registration, or an available resale exemption, under the Securities Act or other federal, state or local securities laws.

5.11. Cancellation of Existing Securities and Agreements.

(a) Except for the purpose of evidencing a right to a distribution under the Plan and except as otherwise set forth in the Plan, including with respect to executory contracts or unexpired leases that shall be assumed by the Wind Down Estates or the Reorganized Debtors, on the Effective Date, all agreements, instruments, and other documents evidencing or issued pursuant to the Prepetition Credit Agreement, or any indebtedness or other obligations thereunder, and any Interest, and any rights of any holder in respect thereof, shall be deemed cancelled, discharged, and of no force or effect, and the obligations of the Debtors thereunder shall be deemed fully satisfied, released, and discharged.

(b) On the Effective Date, all commercial paper shall be cancelled and discharged and of no further force and effect, except that, notwithstanding such cancellation and discharge, the Prepetition Credit Agreement shall continue in effect solely to the extent necessary to (i) allow the holders of such Claims to receive distributions under the Plan; (ii) allow the Debtors, the Wind Down Estates, the Plan Administer, and the Prepetition Agent, to make post-Effective Date distributions or take such other action pursuant to the Plan on account of such Claims and to otherwise exercise their rights and discharge their obligations relating to the interests of the holders of such Claims; (iii) allow holders of Claims to retain their respective rights and obligations vis-à-vis other holders of Claims pursuant to any applicable loan documents; (iv) allow the Prepetition Agent to enforce its rights, claims, and interests vis-à-vis any party other than the Debtors, including any rights with respect to priority of payment and/or to exercise charging liens; (v) preserve any rights of the Prepetition Agent to payment of fees, expenses, and indemnification obligations as against any money or property distributable to lenders under the Prepetition Credit Agreement including any rights to priority of payment and/or to exercise charging liens; (vi) allow the Prepetition Agent to enforce any obligations owed to it under the Plan; (vii) allow the Prepetition Agent to exercise rights and obligations relating to the interests of lenders under the Prepetition Credit Agreement; (viii) permit the Prepetition Agent to perform any function necessary to effectuate the foregoing; and (ix) allow the Prepetition Agent to appear in the Chapter 11 Cases or in any proceeding in the Bankruptcy Court or any other court relating to the Prepetition Credit Agreement; provided, that nothing in this Section 5.11 shall affect the discharge of Claims pursuant to the Bankruptcy Code, the Confirmation Order, or the Plan or result in any liability or expense to the Debtors, Reorganized Debtors, or the Wind Down Estates. Notwithstanding anything to the contrary herein, the indemnity obligations of the Debtors under the


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Prepetition Credit Agreement shall survive the termination thereof and shall not be discharged or released pursuant to the Plan or the Confirmation Order.

(c) Except for the foregoing, subsequent to the performance by the Prepetition Agent of its obligations pursuant to the Plan, the Prepetition Agent and its agents shall be relieved of all further duties and responsibilities related to the Prepetition Credit Agreement.

(d) Notwithstanding the foregoing, any provision in any document, instrument, lease, or other agreement that causes or effectuates, or purports to cause or effectuate, a default, termination, waiver, or other forfeiture of, or by, the Debtors as a result of the cancellations, terminations, satisfaction, releases, or discharges provided for in the Plan shall be deemed null and void and shall be of no force and effect. Nothing contained herein shall be deemed to cancel, terminate, release, or discharge the obligation of the Debtors or any of their counterparties under any executory contract or lease to the extent such executory contract or lease has been assumed by the Debtors pursuant to a Final Order of the Bankruptcy Court or hereunder.

5.12. Cancellation of Liens.

Except as otherwise specifically provided herein, upon the payment in full in Cash of a Secured Claim, any Lien securing a Secured Claim that is paid in full, in Cash, shall be deemed released, and the holder of such Other Secured Claim shall be authorized and directed to release any collateral or other property of the Debtors (including any Cash collateral) held by such holder and to take such actions as may be requested by the Debtors or Plan Administrator, as applicable, to evidence the release of such Lien, including the execution, delivery and filing or recording of such releases as may be requested by the Debtors or Plan Administrator, as applicable.

5.13. Subordination Agreements.

Pursuant to section 510(a) of the Bankruptcy Code, all subordination agreements governing Claims or Interests shall be enforced in accordance with such agreements’ terms.

5.14. Nonconsensual Confirmation.

The Debtors intend to undertake to have the Bankruptcy Court confirm the Plan under section 1129(b) of the Bankruptcy Code as to any Classes that reject or are deemed to reject the Plan.

5.15. Closing of Chapter 11 Cases.

After an Estate has been fully administered, the Wind Down Estates or the Plan Administrator shall seek authority from the Bankruptcy Court to close the applicable Chapter 11 Case(s) in accordance with the Bankruptcy Code and Bankruptcy Rules.

5.16. Notice of Effective Date.

As soon as practicable, but not later than three (3) Business Days following the Effective Date, the Debtors shall file a notice of the occurrence of the Effective Date with the Bankruptcy Court.

5.17. Separability.

Notwithstanding the combination of the separate plans for the Debtors set forth in the Plan for purposes of economy and efficiency, the Plan constitutes a separate chapter 11 plan for each Debtor.


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Accordingly, if the Bankruptcy Court does not confirm the Plan with respect to one or more Debtors, it may still, subject to the consent of the applicable Debtors, confirm the Plan with respect to any other Debtor that satisfies the confirmation requirements of section 1129 of the Bankruptcy Code.

5.18. GUC Recovery Trust.

(a) Creation and Governance of the GUC Recovery Trust. On the Effective Date, the Debtors shall transfer the GUC Recovery Trust Assets to the GUC Recovery Trust and the Debtors and the GUC Recovery Trustee shall execute the GUC Recovery Trust Agreement and shall take all steps necessary to establish the GUC Recovery Trust in accordance with the Plan and the beneficial interests therein. In the event of any conflict between the terms of the Plan and the terms of the GUC Recovery Trust Agreement, the terms of the Plan shall govern. Additionally, on the Effective Date, the Debtors shall transfer and shall be deemed to transfer to the GUC Recovery Trust all of their rights, title and interest in and to all of the GUC Recovery Trust Assets, and in accordance with section 1141 of the Bankruptcy Code, the GUC Recovery Trust Assets shall automatically vest in the GUC Recovery Trust free and clear of all Claims and Liens, and such transfer shall be exempt from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. The GUC Recovery Trustee shall be the exclusive administrator of the assets of the GUC Recovery Trust for purposes of 31 U.S.C. § 3713(b) and 26 U.S.C. § 6012(b)(3), as well as the representatives of the Estate of each of the Debtors appointed pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, solely for purposes of carrying out the GUC Recovery Trustee’s duties under the GUC Recovery Trust Agreement. The GUC Recovery Trust shall be governed by the GUC Recovery Trust Agreement and administered by the GUC Recovery Trustee. The powers, rights, and responsibilities of the GUC Recovery Trustee shall be specified in the GUC Recovery Trust Agreement and shall include the authority and responsibility to, among other things, take the actions set forth in this Section 5.18. The GUC Recovery Trustee shall hold and distribute the GUC Recovery Trust Assets in accordance with the provisions of the Plan and the GUC Recovery Trust Agreement. Other rights and duties of the GUC Recovery Trustee shall be as set forth in the GUC Recovery Trust Agreement. After the Effective Date, the Debtors, the Wind Down Estates, and the Reorganized Debtors shall have no interest in the GUC Recovery Trust Assets except as set forth in the GUC Recovery Trust Agreement.

(b) GUC Recovery Trustee and GUC Recovery Trust Agreement. The GUC Recovery Trust Agreement generally will provide for, among other things: (i) the transfer of the GUC Recovery Trust Assets to the GUC Recovery Trust; (ii) the payment of certain reasonable expenses of the GUC Recovery Trust from the GUC Recovery Trust Assets; and (iii) distributions to holders of Allowed General Unsecured Claims, as provided herein and in the GUC Recovery Trust Agreement. The GUC Recovery Trust Agreement may include reasonable and customary provisions that allow for indemnification by the GUC Recovery Trust. Any such indemnification shall be the sole responsibility of the GUC Recovery Trust and payable solely from the GUC Recovery Trust Assets. The GUC Recovery Trustee shall be responsible for all decisions and duties with respect to the GUC Recovery Trust and the GUC Recovery Trust Assets, except as otherwise provided in the GUC Recovery Trust Agreement.

(c) Cooperation of Wind Down Estates. Subject to subsection (d) of this Section 5.18, the Debtors, Wind Down Estates, or Plan Administrator, as applicable, upon reasonable notice, shall reasonably cooperate with the GUC Recovery Trustee in the administration of the GUC Recovery Trust, including by providing reasonable access to pertinent documents, including books and records, to the extent the Debtors, Wind Down Estates, or Plan Administrator, as applicable, have such information and/or documents, to the GUC Recovery Trustee sufficient to enable the GUC Recovery Trustee to perform its duties hereunder. The Debtors, Wind Down Estates, and the Plan Administrator shall reasonably cooperate with the GUC Recovery Trustee in the administration of the GUC Recovery Trust, including, by providing reasonable access to documents and current officers and directors with respect to contesting, settling, compromising, reconciling, and objecting to General Unsecured Claims, provided that, in each case, the


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GUC Recovery Trust agrees upon request to reimburse reasonable out-of-pocket expenses for preservation of documents, copying or similar expenses. The collection, review, and preservation of documents for any investigation or litigation by the GUC Recovery Trustee shall be at the expense of the GUC Recovery Trust.

(d) Preservation of Privilege. The Debtors or Wind Down Estates, as applicable, and the GUC Recovery Trust shall enter into a common interest agreement whereby the Debtors will be able to share documents, information or communications (whether written or oral) relating to the GUC Recovery Trust Assets. The GUC Recovery Trust shall seek to preserve and protect all applicable privileges attaching to any such documents, information, or communications. The GUC Recovery Trustee’s receipt of such documents, information or communications shall not constitute a waiver of any privilege. All privileges shall remain in the control of the Debtors, Wind Down Estates or Plan Administrator, as applicable, and the Debtors, Wind Down Estates or Plan Administrator, as applicable, retain the right to waive their own privileges.

(e) GUC Recovery Trust Assets. From and after the Effective Date, the GUC Recovery Trustee, in accordance with section 1123(b)(3) of the Bankruptcy Code, and on behalf of the GUC Recovery Trust, shall serve as a representative of the Estates, solely for purposes of carrying out the GUC Recovery Trustee’s duties under the GUC Recovery Trust Agreement.

(f) GUC Recovery Trust Fees and Expenses. From and after the Effective Date, the GUC Recovery Trustee, on behalf of the GUC Recovery Trust, shall, in the ordinary course of business and without the necessity of any approval by the Bankruptcy Court, pay the GUC Recovery Trust Fees and Expenses from the GUC Recovery Trust Assets. The GUC Recovery Trustee is authorized to allocate such expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) to, and pay them from, the GUC Recovery Trust Assets, as the GUC Recovery Trustee may determine in good faith is fair (such as based upon the GUC Recovery Trustee’s good faith determination of the nature or purpose of the fee or expense, the relative amount of General Unsecured Claims, the relative estimated value of the GUC Recovery Trust Assets or such other matters as the GUC Recovery Trustee deems relevant); provided that the GUC Recovery Trustee (i) shall reasonably attribute the expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) of the liquidation, defense or resolution of General Unsecured Claims to the GUC Recovery Trust Assets and pay them therefrom, and (ii) shall reasonably attribute the expenses (including, without limitation, any taxes imposed on or payable by the GUC Recovery Trust or in respect of the GUC Recovery Trust Assets and professional fees) of calculating, disseminating and administering distributions (e.g., accounting and mailing costs) on General Unsecured Claims to the GUC Recovery Trust Assets and pay them therefrom. The Reorganized Debtors and the Wind Down Estates shall not be responsible for any costs, fees, or expenses of the GUC Recovery Trust.

(g) Tax Treatment. In furtherance of this Section 5.18 of the Plan, (i) the GUC Recovery Trust shall be structured to qualify as a “liquidating trust” within the meaning of Treasury Regulation section 301.7701-4(d) and in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684, and, thus, as a “grantor trust” within the meaning of sections 671 through 679 of the Tax Code to the holders of General Unsecured Claims, consistent with the terms of the Plan; (ii) the sole purpose of the GUC Recovery Trust shall be the liquidation and distribution of the GUC Recovery Trust Assets in accordance with Treasury Regulation section 301.7701-4(d), including the resolution of General Unsecured Claims in accordance with this Plan, with no objective to continue or engage in the conduct of a trade or business; (iii) all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) shall report consistently with such treatment; (iv) all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and


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the GUC Recovery Trustee) shall report consistently with the valuation of the GUC Recovery Trust Assets transferred to the GUC Recovery Trust as determined by the GUC Recovery Trustee (or its designee); (v) the GUC Recovery Trustee shall be responsible for filing all applicable tax returns for the GUC Recovery Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a); and (vi) the GUC Recovery Trustee shall annually send to each holder of an interest in the GUC Recovery Trust a separate statement regarding the receipts and expenditures of the trust as relevant for U.S. federal income tax purposes. Subject to definitive guidance from the Internal Revenue Service or a court of competent jurisdiction to the contrary (including the receipt by the GUC Recovery Trustee of a private letter ruling if the GUC Recovery Trustee so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested by the GUC Recovery Trustee), the GUC Recovery Trustee may timely elect to (i) treat any portion of the GUC Recovery Trust allocable to Disputed Claims as a “disputed ownership fund” governed by Treasury Regulation section 1.468B-9 (and make any appropriate elections) and (ii) to the extent permitted by applicable law, report consistently with the foregoing for state and local income tax purposes. If a “disputed ownership fund” election is made, all parties (including, without limitation, the Debtors, the Estates, holders of Allowed General Unsecured Claims receiving interests in the GUC Recovery Trust, and the GUC Recovery Trustee) shall report for United States federal, state, and local income tax purposes consistently with the foregoing. The GUC Recovery Trustee may request an expedited determination of taxes of the GUC Recovery Trust, including any reserve for Disputed Claims, under section 505(b) of the Bankruptcy Code for all tax returns filed for, or on behalf of, the GUC Recovery Trust for all taxable periods through the dissolution of the GUC Recovery Trust.

(h) Non-Transferability of GUC Recovery Trust Interests. Any and all GUC Recovery Trust Interests shall be non-transferable other than if transferred by will, intestate succession, or otherwise by operation of law. In addition, any and all GUC Recovery Trust Interests will not constitute “securities” and will not be registered pursuant to the Securities Act or any applicable state or local securities law. However, if it should be determined that any such interests constitute “securities,” the exemption provisions of Section 1145 of the Bankruptcy Code will be satisfied and the offer, issuance and distribution under the Plan of the GUC Recovery Trust Interests will be exempt from registration under the Securities Act and all applicable state and local securities laws and regulations.

(i) Dissolution of the GUC Recovery Trust. The GUC Recovery Trustee and the GUC Recovery Trust shall be discharged or dissolved, as the case may be, at such time as all distributions required to be made by the GUC Recovery Trustee under the Plan have been made. Upon dissolution of the GUC Recovery Trust, any remaining GUC Recovery Trust Assets shall be distributed to holders of Allowed General Unsecured Claims in accordance with the Plan and the GUC Recovery Trust Agreement, as appropriate.

(j) Single Satisfaction of Allowed General Unsecured Claims. Notwithstanding anything to the contrary herein, in no event shall holders of Allowed General Unsecured Claims recover more than the full amount of their Allowed General Unsecured Claims from the GUC Recovery Trust.

ARTICLE VI DISTRIBUTIONS.

6.1. Distributions Generally.

The Disbursing Agents shall make all distributions under the Plan to the appropriate holders of Allowed Claims in accordance with the terms of the Plan.


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6.2. Distribution Record Date.

As of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims or Interests as maintained by the Debtors or their respective agents shall be deemed closed for purposes of determining whether a holder of such a Claim or Interest is a record holder entitled to distributions under the Plan, and there shall be no further changes in the record holders or the permitted designees of any such Claims or Interests. The Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, shall have no obligation to recognize any transfer or designation of such Claims or Interests occurring after the close of business on the Distribution Record Date. Any such assigning Prepetition Lender shall immediately turn over any such assigned distributed funds to any such assignee Prepetition Lender immediately upon receipt from the Disbursing Agent and otherwise in accordance with such written agreement. In addition, with respect to payment of any Cure Amounts or assumption disputes, neither the Debtors nor the Disbursing Agent shall have any obligation to recognize or deal with any party other than the non-Debtor party to the applicable executory contract or unexpired lease as of the close of business on the Distribution Record Date, even if such non-Debtor party has sold, assigned, or otherwise transferred its Claim for a Cure Amount. For the avoidance of doubt, all distributions made pursuant to the Plan on account of the Prepetition Loan Claims shall be made by the Disbursing Agent to, or at the direction of, the Prepetition Agent, for further distribution to holders of Prepetition Loan Claims, in accordance with the Plan and the Confirmation Order, subject to and in accordance with the terms of the Prepetition Credit Agreement, including, without limitation, subject to the application of the charging lien of the Prepetition Agent for payment of any unpaid fees and expenses.

6.3. Date of Distributions.

(a) Except as otherwise provided in the Plan or in the GUC Recovery Trust Agreement, any distributions and deliveries to be made under the Plan shall be made on the Effective Date, as and when Claims are Allowed in the sole discretion of the Plan Administrator or GUC Recovery Trustee, or as otherwise determined in accordance with the Plan, including, without limitation, the treatment provisions of Article IV of the Plan, or as soon as practicable thereafter; provided, that the Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, shall from time to time announce subsequent distribution dates to the extent they determine them to be appropriate.

(b) The Plan Administrator shall reserve an amount sufficient to pay holders of Disputed Administrative Expense Claims, Disputed Priority Tax Claims, Disputed Non-Priority Tax Claims, and Disputed Other Secured Claims the amount such holders would be entitled to receive under the Plan if such Claims were to become Allowed Claims. After the resolution of Disputed Claims, the Plan Administrator shall treat any amounts that were reserved for such Disputed Claims that do not become Allowed Claims as Net Cash Proceeds.

6.4. Disbursing Agent.

All distributions under this Plan shall be made by the Disbursing Agent on and after the Effective Date as provided herein. The Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties. The Wind Down Estates or Plan Administrator shall use all commercially reasonable efforts to provide the Disbursing Agent (if other than the Plan Administrator) with the amounts of Claims and the identities and addresses of holders of Claims, in each case, as set forth in the Debtors’, or Wind Down Estates’, as applicable, books and records. The Wind Down Estates or Plan Administrator shall cooperate in good faith with the applicable Disbursing Agent (if other than the Plan Administrator) to comply with the reporting and withholding requirements outlined in Section 6.19 of the Plan.


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6.5. Rights and Powers of Disbursing Agent.

(a) From and after the Effective Date, the Disbursing Agent, solely in its capacity as Disbursing Agent, shall be exculpated by all Entities, including, without limitation, holders of Claims against and Interests in the Debtors and other parties in interest, from any and all Claims, Causes of Action, and other assertions of liability arising out of the discharge of the powers and duties conferred upon such Disbursing Agent by the Plan or any order of the Bankruptcy Court entered pursuant to or in furtherance of the Plan, or applicable law, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent. No holder of a Claim or Interest or other party in interest shall have or pursue any claim or Cause of Action against the Disbursing Agent, solely in its capacity as Disbursing Agent, for making distributions in accordance with the Plan or for implementing provisions of the Plan, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent.

(b) The Disbursing Agent shall be empowered to (i) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties hereunder; (ii) make all distributions contemplated hereby; and (iii) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.

6.6. Expenses of Disbursing Agent.

Except as otherwise ordered by the Bankruptcy Court, any reasonable and documented fees and expenses incurred by the Disbursing Agent acting in such capacity (including reasonable documented attorneys’ fees and expenses) on or after the Effective Date shall be paid in Cash; provided, that the fees and expenses incurred by the GUC Recovery Trustee shall be paid solely from the GUC Recovery Trust Assets in accordance with the GUC Recovery Trust Agreement.

6.7. No Postpetition Interest on Claims.

Except as otherwise provided in the Plan, the Confirmation Order, the DIP Order, or another order of the Bankruptcy Court or required by the Bankruptcy Code (including postpetition interest in accordance with sections 506(b) and 726(a)(5) of the Bankruptcy Code), interest shall not accrue or be paid on any Claims on or after the Commencement Date; provided, that if interest is payable pursuant to the preceding sentence, interest shall accrue at the federal judgment rate pursuant to 28 U.S.C. § 1961 on a non-compounded basis from the date the obligation underlying the Claim becomes due and is not timely paid through the date of payment.

6.8. Delivery of Distributions.

(a) Subject to Bankruptcy Rule 9010, all distributions to any holder or permitted designee, as applicable, of an Allowed Claim or Interest shall be made to a Disbursing Agent, who shall transmit such distribution to the applicable holders or permitted designees of Allowed Claims or Interests on behalf of the Debtors. In the event that any distribution to any holder or permitted designee is returned as undeliverable, no further distributions shall be made to such holder or such permitted designee unless and until such Disbursing Agent is notified in writing of such holder’s or permitted designee’s, as applicable, then-current address, at which time all currently-due, missed distributions shall be made to such holder as soon as reasonably practicable thereafter without interest. Nothing herein shall require the Disbursing Agent to attempt to locate holders or permitted designees, as applicable, of undeliverable


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distributions and, if located, assist such holders or permitted designees, as applicable, in complying with Section 6.14 of the Plan.

(b) Notwithstanding the foregoing, all distributions of Cash on account of Prepetition Loan Claims, if any, shall be deposited with the Prepetition Agent for distribution to holders of Prepetition Loan Claims in accordance with the terms of the Prepetition Credit Agreement. All distributions other than of Cash on account of Prepetition Loan Claims, if any, may, with the consent of the Prepetition Agent, be made by the Disbursing Agent directly to holders of Prepetition Loan Claims in accordance with the terms of the Plan and the Prepetition Credit Agreement. To the extent the Prepetition Agent effectuates, or is requested to effectuate, any distributions hereunder, the Prepetition Agent shall be deemed a “Disbursing Agent” for purposes of the Plan.

(c) As soon as reasonably practicable after the Confirmation Order is entered, the DIP Agent shall provide to counsel to the Debtors a list of all holders of DIP Claims as of such date and such additional information as may be reasonably requested by counsel to the Debtors or the Disbursing Agent to make distributions under the Plan. All distributions to holders of DIP Claims shall be governed by the DIP Documents and the DIP Order and shall be made to each holder of an Allowed DIP Claim or such holder’s authorized designee for purposes of distributions to be made hereunder. All reasonable and documented fees and expenses of the DIP Agent incurred after the Effective Date as part of this Section 6.8 shall be paid by the Debtors or Wind Down Estates, as applicable.

6.9. Distributions after Effective Date.

Distributions made after the Effective Date to holders of Disputed Claims that are not Allowed Claims as of the Effective Date but which later become Allowed Claims shall be deemed to have been made on the Effective Date.

6.10. Unclaimed Property.

Undeliverable distributions shall remain in the possession of the Debtors, Wind Down Estates, or GUC Recovery Trust, as applicable, until such time as a distribution becomes deliverable or holder accepts distribution, or such distribution reverts back to the Debtors, Wind Down Estates, or GUC Recovery Trust, as applicable, and shall not be supplemented with any interest, dividends, or other accruals of any kind. Such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code and forfeited at the expiration of one hundred and twenty (120) days from the applicable date of distribution. After such date, all unclaimed property or interest in property shall revert to and vest in Wind Down Estates, or GUC Recovery Trust, as applicable, and the Claim of any other holder to such property or interest in property shall be discharged and forever barred.

6.11. Time Bar to Cash Payments.

Checks issued by the Disbursing Agent in respect of Allowed Claims shall be null and void if not negotiated within one hundred and twenty (120) days after the date of issuance thereof. Thereafter, the amount represented by such voided check shall immediately and irrevocably revert to the Wind Down Estates (or GUC Recovery Trust in the case of checks issued by the GUC Recovery Trust), and any Claim in respect of such voided check shall be discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Requests for re-issuance of any check prior to the expiration of the one hundred and twenty (120) day period from the date of issuance shall be made to the Disbursing Agent by the holder of the Allowed Claim to whom such check was originally issued.


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6.12. Manner of Payment under Plan.

Except as otherwise specifically provided in the Plan, at the option of the Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, any Cash payment to be made hereunder may be made by a check or wire transfer or as otherwise required or provided in applicable agreements or customary practices of the Debtors.

6.13. Satisfaction of Claims.

Except as otherwise specifically provided in the Plan, any distributions and deliveries to be made on account of Allowed Claims under the Plan shall be in complete and final satisfaction, settlement, and discharge of and exchange for such Allowed Claims.

6.14. Minimum Cash Distributions.

The Disbursing Agent shall not be required to make any distribution of Cash less than One Hundred Dollars ($100) to any holder of an Allowed Claim; provided, that if any distribution is not made pursuant to this Section 6.14, such distribution shall be added to any subsequent distribution to be made on behalf of the holder’s Allowed Claim.

6.15. Setoffs and Recoupments.

The Debtors, or Wind Down Estates, as applicable, or such entity’s designee (including, without limitation, the Disbursing Agent) may, but shall not be required to, set off or recoup against any Claim, and any distribution to be made on account of such Claim, any and all claims, rights, and Causes of Action of any nature whatsoever that the Debtors or Wind Down Estates may have against the holder of such Claim pursuant to the Bankruptcy Code or applicable non-bankruptcy law (other than the released Causes of Action in favor of the Released Parties); provided, that neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by a Debtor or Wind Down Estate, or its successor of any claims, rights, or Causes of Action that a Debtor or Wind Down Estate, or its successor or assign may possess against the holder of such Claim (other than the released Causes of Action in favor of the Released Parties).

6.16. Allocation of Distributions between Principal and Interest.

Except as otherwise required by law (as reasonably determined by Wind Down Estates or Plan Administrator, as applicable), distributions with respect to an Allowed Claim shall be allocated first to the principal portion of such Allowed Claim (as determined for United States federal income tax purposes) and, thereafter, to the remaining portion of such Allowed Claim, if any.

6.17. No Distribution in Excess of Amount of Allowed Claim.

Except as provided in Section 6.7 of the Plan, no holder of an Allowed Claim shall receive, on account of such Allowed Claim, distributions in excess of the Allowed amount of such Claim.

6.18. Distributions Free and Clear.

Except as provided herein, any distributions under the Plan shall be free and clear of and Liens, Claims, and encumbrances, and no other entity, including the Debtors or the Plan Administrator, shall have any interest, legal, beneficial, or otherwise, in Assets transferred pursuant to the Plan.


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6.19. Withholding and Reporting Requirements.

(a) Withholding Rights. In connection with the Plan, any party issuing any instrument or making any distribution described in the Plan shall comply with all applicable withholding and reporting requirements imposed by any federal, state, or local taxing authority, and all distributions pursuant to the Plan and all related agreements shall be subject to any such withholding or reporting requirements. The Prepetition Agent, Plan Administrator, DIP Agent, GUC Recovery Trustee, Wind Down Estates, Reorganized Debtors, or such other Entity designated thereby, as applicable, shall be authorized to take any actions that they determine, in their reasonable discretion, to be necessary or appropriate to comply with such withholding and reporting requirements, including withholding distributions pending receipt of information necessary to facilitate such issuances or distributions, or establishing any other mechanisms they believe are reasonable and appropriate. In the case of a non-Cash distribution that is subject to withholding, the distributing party may withhold an appropriate portion of such distributed property and either (i) sell such withheld property to generate Cash necessary to pay over the withholding tax (or reimburse the distributing party for any advance payment of the withholding tax), or (ii) pay the withholding tax using its own funds and retain such withheld property. Any amounts withheld pursuant to the preceding sentence shall be deemed to have been distributed to and received by the applicable recipient for all purposes of the Plan. Notwithstanding the foregoing, each holder of an Allowed Claim or any other Entity that receives a distribution pursuant to the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any taxes imposed on such holder by any governmental unit, including, without limitation, income, withholding, and other taxes, on account of such distribution. Any party issuing any instrument or making any distribution pursuant to the Plan has the right, but not the obligation, to not make a distribution until such holder has made arrangements satisfactory to such issuing or disbursing party for payment of any such tax obligations.

(b) Forms. Any party entitled to receive any property as an issuance or distribution under the Plan shall, upon request, deliver to the Disbursing Agent or such other Entity designated by the Reorganized Debtors, Wind Down Estates, or GUC Recovery Trustee (which Entity shall subsequently deliver to the Disbursing Agent any applicable Internal Revenue Service Form W-8 or Form W-9 or other tax information received) an appropriate Internal Revenue Service Form W-9 or (if the payee is a foreign Entity) Form W-8, and any other reasonably requested tax information. If such request is made by the Reorganized Debtors, Wind Down Estates, Disbursing Agent, or such other Entity designated by the Reorganized Debtors, Wind Down Estates, or Disbursing Agent and the holder fails to comply before the earlier of (i) the date that is one hundred and eighty (180) days after the request is made and (ii) the date that is one hundred and eighty (180) days after the date of distribution, the amount of any such distribution shall irrevocably revert to the Wind Down Estates, and any Claim in respect of such distribution shall be discharged and forever barred from assertion against the Reorganized Debtors, Wind Down Estates, or such entity’s respective property. If such request is made by the GUC Recovery Trustee, or such other Entity designated by the GUC Recovery Trustee, and the holder fails to comply within ninety (90) days after the request is made, the amount of any such distribution shall irrevocably revert to the GUC Recovery Trust and any General Unsecured Claim in respect of such distribution shall be discharged and forever barred from assertion against the GUC Recovery Trustee, GUC Recovery Trust, or the property of each of them.

ARTICLE VII PROCEDURES FOR DISPUTED CLAIMS.

7.1. Objections to Claims.

The Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee, as applicable, shall exclusively be entitled to object to Claims. After the Effective Date, the Wind Down Estates, Plan Administrator, or GUC Recovery Trustee, as applicable, shall have and retain any and all rights and defenses that the Debtors had with regard to any Claim to which they may object, except with


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respect to any Claim that is Allowed. Any objections to proofs of Claim shall be served and filed on or before the later of (a) ninety (90) days after the Effective Date, and (b) on such later date as ordered by the Bankruptcy Court for cause. The expiration of such period shall not limit or affect the Debtors’, Wind Down Estates’, Plan Administrators’, or GUC Recovery Trustee’s, as applicable, rights to dispute Claims asserted in the ordinary course of business other than through a proof of Claim.

7.2. Resolution of Disputed Administrative Expenses and Disputed Claims.

On and after the Effective Date, (a) the Debtors, Wind Down Estates, or the Plan Administrator, as applicable, shall have the exclusive authority to compromise, settle, otherwise resolve, or withdraw any objections to Claims (other than General Unsecured Claims) without approval of the Bankruptcy Court, other than with respect to Fee Claims; and (b) upon the creation of the GUC Recovery Trust, the GUC Recovery Trustee shall have the exclusive authority to compromise, settle, otherwise resolve, or withdraw any objections to General Unsecured Claims without approval of the Bankruptcy Court. The Debtors, Wind Down Estates, or Plan Administrator, as applicable, and the GUC Recovery Trustee shall cooperate with respect to any objections to Claims that seek to convert Claims into General Unsecured Claims, or convert General Unsecured Claims into other senior Claims, and, in each case, the rights and defenses of the Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee, as applicable, to any such objections are fully preserved.

7.3. Payments and Distributions with Respect to Disputed Claims.

Notwithstanding anything herein to the contrary, if any portion of a Claim is a Disputed Claim, no payment or distribution provided hereunder shall be made on account of such Claim unless and until such Disputed Claim becomes an Allowed Claim.

7.4. Distributions after Allowance.

After such time as a Disputed Claim becomes, in whole or in part, an Allowed Claim, the holder thereof shall be entitled to distributions, if any, to which such holder is then entitled as provided in this Plan, without interest, as provided in Section 7.9 of the Plan. Such distributions shall be made in accordance with Section 6.3 of the Plan.

7.5. Disallowance of Claims.

All proofs of Claim filed on account of an indemnification obligation to a current or former director, officer, or employee shall be deemed satisfied and expunged from the claims register as of the Effective Date to the extent such indemnification obligation is assumed (or honored or reaffirmed, as the case may be) pursuant to the Plan, without any further notice to or action, order, or approval of the Bankruptcy Court.

7.6. Estimation of Claims.

The Debtors, Wind Down Estates, Plan Administrator, or the GUC Recovery Trustee as to General Unsecured Claims may (a) determine, resolve and otherwise adjudicate all contingent, unliquidated, and Disputed Claims in the Bankruptcy Court and (b) at any time request that the Bankruptcy Court estimate any contingent, unliquidated, or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection. The Bankruptcy Court will retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including, without limitation, during the pendency of any appeal relating to any such objection. In the event that the


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Bankruptcy Court estimates any contingent, unliquidated, or Disputed Claim, the amount so estimated shall constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors, Wind Down Estates, the Plan Administrator, or the GUC Recovery Trustee, as applicable, may pursue supplementary proceedings to object to the allowance of such Claim; provided, that such limitation shall not apply to Claims requested by the Debtors to be estimated for voting purposes only.

7.7. No Distributions Pending Allowance.

If an objection, motion to estimate, or other challenge to a Claim is filed, no payment or distribution provided under the Plan shall be made on account of such Claim unless and until (and only to the extent that) such Claim becomes an Allowed Claim.

7.8. Claim Resolution Procedures Cumulative.

All of the objection, estimation, and resolution procedures in the Plan are intended to be cumulative and not exclusive of one another. Claims may be estimated and subsequently settled, compromised, withdrawn, or resolved in accordance with the Plan without further notice or Bankruptcy Court approval.

7.9. Interest.

To the extent that a Disputed Claim becomes an Allowed Claim after the Effective Date, the holder of such Claim shall not be entitled to any interest that accrued thereon from and after the Effective Date, except as provided in Section 6.7 of the Plan.

7.10. Insured Claims.

If any portion of an Allowed Claim is an Insured Claim, no distributions under the Plan shall be made on account of such Allowed Claim until the holder of such Allowed Claim has exhausted all remedies with respect to any applicable insurance policies. To the extent that the Debtors’ insurers agree to satisfy a Claim in whole or in part, then immediately upon such agreement, the portion of such Claim so satisfied may be expunged without an objection to such Claim having to be filed and without any further notice to or action, order or approval of the Court.

ARTICLE VIII EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

8.1. General Treatment.

(a) As of and subject to the occurrence of the Effective Date, all executory contracts and unexpired leases to which any of the Debtors are parties shall be deemed rejected, unless such contract or lease (i) was previously assumed or rejected by the Debtors pursuant to an order of the Bankruptcy Court; (ii) previously expired or terminated pursuant to its own terms or by agreement of the parties thereto; (iii) is the subject of a motion to assume filed by the Debtors on or before the Confirmation Date; (iv) is identified in Section 8.4 of the Plan; (v) is a KEIP Agreement or a KERP Agreement; or (vi) is identified for assumption on the Assumption Schedule included in the Plan Supplement.

(b) Subject to the occurrence of the Effective Date, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions, assumptions and assignments, or rejections provided for in the Plan pursuant to sections 365(a) and 1123 of the Bankruptcy Code and a determination by the Bankruptcy Court that the Reorganized Debtors or Wind Down Estates, as applicable,


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have provided adequate assurance of future performance under such assumed executory contracts and unexpired leases. Each executory contract and unexpired lease assumed or assumed and assigned pursuant to the Plan shall vest in and be fully enforceable by the Reorganized Debtors, or Wind Down Estates, as applicable, in accordance with its terms, except as modified by the provisions of the Plan, any order of the Bankruptcy Court authorizing and providing for its assumption, or applicable law.

8.2. Determination of Assumption Disputes and Deemed Consent.

(a) Any Cure Amount shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the Cure Amount, as reflected in the applicable cure notice, in Cash on the Effective Date, subject to the limitations described below, or on such other terms as the parties to such executory contracts or unexpired leases and the Debtors may otherwise agree. The Debtors or Wind Down Estates, as applicable, shall satisfy all Cure Amounts with the Sale Transaction proceeds.

(b) The Debtors shall file, as part of the Plan Supplement, the Assumption Schedule. At least ten (10) days before the deadline to object to confirmation of the Plan, the Debtors shall serve a notice on parties to executory contracts or unexpired leases to be assumed or assumed and assigned reflecting the Debtors’ intention to potentially assume or assume and assign the contract or lease in connection with this Plan and, where applicable, setting forth the proposed Cure Amount (if any). Any objection by a counterparty to an executory contract or unexpired lease to the proposed assumption, assumption and assignment, or related Cure Amount must be filed, served, and actually received by the Debtors within ten (10) days of the service of the assumption notice, or such shorter period as agreed to by the parties or authorized by the Bankruptcy Court. Any counterparty to an executory contract or unexpired lease that does not timely object to the notice of the proposed assumption of such executory contract or unexpired lease shall be deemed to have assented to assumption of the applicable executory contract or unexpired lease notwithstanding any provision thereof that purports to (i) prohibit, restrict, or condition the transfer or assignment of such contract or lease; (ii) terminate or modify, or permit the termination or modification of, a contract or lease as a result of any direct or indirect transfer or assignment of the rights of any Debtor under such contract or lease or a change, if any, in the ownership or control to the extent contemplated by the Plan; (iii) increase, accelerate, or otherwise alter any obligations or liabilities of any Debtor, or any Wind Down Estate, under such executory contract or unexpired lease; or (iv) create or impose a Lien upon any property or Asset of any Debtor, or Wind Down Estates, as applicable. Each such provision shall be deemed to not apply to the assumption of such executory contract or unexpired lease pursuant to the Plan and counterparties to assumed executory contracts or unexpired leases that fail to object to the proposed assumption in accordance with the terms set forth in this Section 8.2(b), shall forever be barred and enjoined from objecting to the proposed assumption or to the validity of such assumption (including with respect to any Cure Amounts or the provision of adequate assurance of future performance), or taking actions prohibited by the foregoing or the Bankruptcy Code on account of transactions contemplated by the Plan.

(c) If there is an Assumption Dispute pertaining to assumption of an executory contract or unexpired lease (other than a dispute pertaining to a Cure Amount), such dispute shall be heard by the Bankruptcy Court prior to such assumption being effective, provided, that the Debtors or Wind Down Estates, as applicable, may settle any dispute regarding the Cure Amount or the nature thereof without any further notice to any party or any action, order, or approval of the Bankruptcy Court.

(d) To the extent an Assumption Dispute relates solely to the Cure Amount, the Debtors may assume and/or assume and assign the applicable executory contract or unexpired lease prior to the resolution of the Assumption Dispute; provided, that the Debtors or Wind Down Estates reserve Cash in an amount sufficient to pay the full amount reasonably asserted as the required cure payment by the non-Debtor party to such executory contract or unexpired lease (or such smaller amount as may be fixed or


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estimated by the Bankruptcy Court or otherwise agreed to by such non-Debtor party and the applicable Wind Down Estate).

(e) Assumption or assumption and assignment of any executory contract or unexpired lease pursuant to the Plan or otherwise shall result in the full release and satisfaction of any Claims against any Debtor or defaults by any Debtor, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed executory contract or unexpired lease at any time before the date that the Debtors assume or assume and assign such executory contract or unexpired lease. Any proofs of Claim filed with respect to an executory contract or unexpired lease that has been assumed or assumed and assigned shall be deemed disallowed and expunged, without further notice to or action, order, or approval of the Bankruptcy Court or any other Entity, upon the assumption of such executory contract or unexpired lease.

8.3. Rejection Damages Claims.

In the event that the rejection of an executory contract or unexpired lease hereunder results in damages to the other party or parties to such contract or lease, any Claim for such damages shall be classified and treated in Class 6 (General Unsecured Claims). Such Claim shall be forever barred and shall not be enforceable against the Debtors, Reorganized Debtors, Wind Down Estates, the GUC Recovery Trust, or their respective Estates, properties or interests in property as agents, successors, or assigns, unless a proof of Claim is filed with the Bankruptcy Court and served upon counsel for the Debtors or Wind Down Estates, as applicable, by the later of (i) thirty (30) days after the filing and service of the notice of the occurrence of the Effective Date; and (ii) thirty (30) days after entry of an Order rejecting such contract or lease if such contract or lease is the subject of a pending Assumption Dispute.

8.4. Insurance Policies.

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice, or claim objection, and any other document related to any of the foregoing, and any other order of the Bankruptcy Court: on the Effective Date (i) all insurance policies issued or providing coverage to the Debtors shall (subject to the applicable insurer’s right to object to such a designation) be assumed in their entirety by the Debtors pursuant to sections 365 and 1123 of the Bankruptcy Code, and coverage for defense costs and indemnification under the D&O Liability Insurance Policies shall remain available to all individuals within the definition of “Insured” in the D&O Liability Insurance Policies, and Wind Down Estates, or Plan Administrator, as applicable, shall remain liable in full for any and all now existing or hereinafter arising obligations, liabilities, terms, provisions and covenants of any of the Debtors under such insurance policies, without the need or requirement for an insurer to file a proof of Claim, Administrative Expense Claim or objection to any cure amount; (ii) nothing shall alter or modify the terms and conditions of and/or any rights, obligations, benefits, claims, rights to payments, or recoveries under the insurance policies without the express written consent of the applicable insurer; and (iii) the automatic stay of Bankruptcy Code section 362(a) and the injunctions set forth in the Plan, if and to the extent applicable, shall be deemed lifted without further order of this Court, solely to permit: (a) claimants with valid workers’ compensation claims or direct action claims against an insurer under applicable nonbankruptcy law to proceed with their claims; (b) insurers to administer, handle, defend, settle, and/or pay, in the ordinary course of business and without further order of the Bankruptcy Court, (I) workers’ compensation claims, (II) claims where a claimant asserts a direct claim against any insurer under applicable non-bankruptcy law, or an order has been entered by the Bankruptcy Court granting a claimant relief from the automatic stay to proceed with its claim, and (III) all costs in relation to each of the foregoing; and (c) the insurers to cancel any insurance policies, and take other actions relating thereto, to the extent


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permissible under applicable non-bankruptcy law, and in accordance with the terms of the insurance policies.

8.5. Intellectual Property Licenses and Agreements.

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice or claim objection, and any other document related to any of the foregoing, all intellectual property contracts, licenses, royalties, or other similar agreements to which the Debtors have any rights or obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and shall be assumed by the Debtors, Wind Down Estates, and Reorganized Debtors, as applicable and shall continue in full force and effect unless any such intellectual property contract, license, royalty, or other similar agreement otherwise is specifically rejected pursuant to a separate order of the Bankruptcy Court or is the subject of a separate rejection motion filed by the Debtors in accordance with Section 8.1 of the Plan. Unless otherwise noted hereunder, all other intellectual property contracts, licenses, royalties, or other similar agreements shall vest in Wind Down Estates and Reorganized Debtors, as applicable, and Wind Down Estates and Reorganized Debtors, as applicable, may take all actions as may be necessary or appropriate to ensure such vesting as contemplated herein.

8.6. Tax Agreements.

Notwithstanding anything to the contrary in the Definitive Documents, the Plan, the Plan Supplement, any bar date notice or claim objection, and any other document related to any of the foregoing, any tax sharing agreements to which the Debtors are a party (of which the principal purpose is the allocation of taxes) in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Plan and, to the extent the Debtors determine (in their sole discretion) such agreements are beneficial to the Debtors, shall be assumed by the Debtors, Wind Down Estates, and Reorganized Debtors, as applicable and shall continue in full force and effect thereafter in accordance with their respective terms, unless any such tax sharing agreement (of which the principal purpose is the allocation of taxes) otherwise is specifically rejected pursuant to a separate order of the Bankruptcy Court or is the subject of a separate rejection motion filed by the Debtors in accordance with Section 8.1 of the Plan. Unless otherwise noted hereunder, all other tax sharing agreements to which the Debtors are a party (of which the principal purpose is the allocation of taxes) shall vest in Wind Down Estates or Reorganized Debtors, as applicable, and Wind Down Estates and Reorganized Debtors, as applicable, may take all actions as may be necessary or appropriate to ensure such vesting as contemplated herein.

8.7. Assignment.

To the extent provided under the Bankruptcy Code or other applicable law, any executory contract or unexpired lease transferred and assigned hereunder shall remain in full force and effect for the benefit of the transferee or assignee in accordance with its terms, notwithstanding any provision in such executory contract or unexpired lease (including those of the type set forth in section 365(b)(2) of the Bankruptcy Code) that prohibits, restricts, or conditions such transfer or assignment. To the extent provided under the Bankruptcy Code or other applicable law, any provision that prohibits, restricts, or conditions the assignment or transfer of any such executory contract or unexpired lease or that terminates or modifies such executory contract or unexpired lease or allows the counterparty to such executory contract or unexpired lease to terminate, modify, recapture, impose any penalty, condition renewal or extension, or modify any term or condition upon any such transfer and assignment, constitutes an unenforceable anti-assignment provision and is void and of no force or effect with respect to any assignment pursuant to the Plan.


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8.8. Modifications, Amendments, Supplements, Restatements, or Other Agreements.

Unless otherwise provided herein or by separate order of the Bankruptcy Court, each executory contract and unexpired lease that is assumed shall include any and all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument, or other document is listed in the notice of assumed contracts.

8.9. Reservation of Rights.

(a) The Debtors may amend the Assumption Schedule and any cure notice until the Business Day immediately prior to the commencement of the Confirmation Hearing in order to (i) add, delete, or reclassify any executory contract or unexpired lease or amend a proposed assumption or assumption and assignment and/or (ii) amend the proposed Cure Amount; provided, that if the Confirmation Hearing is adjourned for a period of more than two (2) consecutive calendar days, the Debtors’ right to amend such schedules and notices shall be extended to the Business Day immediately prior to the adjourned date of the Confirmation Hearing, with such extension applying in the case of any and all subsequent adjournments of the Confirmation Hearing. The Debtors shall provide notice of such amendment to any affected counterparty as soon as reasonably practicable.

(b) Neither the exclusion nor inclusion of any contract or lease by the Debtors on any exhibit, schedule, or other annex to the Plan or in the Plan Supplement, nor anything contained in the Plan, will constitute an admission by the Debtors that any such contract or lease is or is not in fact an executory contract or unexpired lease or that the Debtors, or Wind Down Estates, or their respective affiliates have any liability thereunder.

(c) Except as otherwise provided in the Plan, nothing herein shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, Claims, Causes of Action, or other rights of the Debtors and Wind Down Estates, under any executory or non-executory contract or any unexpired or expired lease.

(d) Nothing in the Plan will increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtors, Wind Down Estates, as applicable, under any executory or non-executory contract or any unexpired or expired lease.

ARTICLE IX CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN AND EFFECTIVE DATE.

9.1. Conditions Precedent to Confirmation of Plan.

The following are conditions precedent to confirmation of the Plan:

(a) the Disclosure Statement Order shall have been entered;

(b) the Plan Supplement and all of the schedules, documents, and exhibits contained therein shall have been filed;

(c) the RSA shall not have been terminated and shall be in full force and effect; and

(d) to the extent the DIP Obligations have not been fully satisfied prior to the Confirmation Date, the DIP Order and the DIP Documents shall be in full force and effect in accordance


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with the terms thereof, and no event of default shall be continuing thereunder or occur as a result of entry of the Confirmation Order.

9.2. Conditions Precedent to Effective Date.

(a) The following are conditions precedent to the Effective Date of the Plan:

(i) the Confirmation Order shall have been entered and shall be in full force and effect and no stay thereof shall be in effect;

(ii) to the extent the DIP Obligations have not been fully satisfied prior to the Confirmation Date, an event of default under the DIP Documents shall not be continuing and an acceleration of the obligations or termination of the DIP Lenders’ commitments under the DIP Facility shall not have occurred;

(iii) the GUC Recovery Trust Agreement shall have been executed and the GUC Recovery Trust shall have received cash in the aggregate amount of $1,650,000 on account of the GUC Recovery Trust Assets;

(iv) all actions, documents, and agreements necessary to implement and consummate the Plan shall have been effected or executed and binding on all parties thereto and, to the extent required, filed with the applicable governmental units in accordance with applicable laws;

(v) all governmental approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by the Plan shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent, or otherwise impose materially adverse conditions on such transactions;

(vi) the RSA shall not have been terminated and shall be in full force and effect; and

(vii) all accrued and unpaid Restructuring Expenses shall have been paid in Cash, to the extent invoiced at least two (2) business days prior to the Effective Date.

(b) Notwithstanding when a condition precedent to the Effective Date occurs, for purposes of the Plan, such condition precedent shall be deemed to have occurred simultaneously upon the completion of the applicable conditions precedent to the Effective Date; provided, that to the extent a condition precedent (a “Prerequisite Condition”) may be required to occur prior to another condition precedent (a “Subsequent Condition”) then, for purposes of the Plan, the Prerequisite Condition shall be deemed to have occurred immediately prior to a Subsequent Condition regardless of when such Prerequisite Condition or Subsequent Condition shall have occurred.

9.3. Waiver of Conditions Precedent.

(a) Except as otherwise provided herein, all actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously and no such action shall be deemed to have occurred prior to the taking of any other such action. Each of the conditions precedent in Section 9.1 and Section 9.2 of the Plan may be waived in writing by the Debtors with the


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reasonable consent of (i) the Requisite Consenting Creditors; and (ii) solely with respect to the condition set forth in Sections 9.1(d) and 9.2(a)(ii) of the Plan, the DIP Agent (to the extent any DIP Claims are outstanding on the Effective Date), in each case without leave of or order of the Bankruptcy Court and such consent not to be unreasonably withheld; provided, that any such consent provided by the DIP Agent shall solely be for purposes of this Article IX and shall not otherwise limit, restrict or impair any rights or remedies of any DIP Credit Party under the DIP Documents. If the Plan is confirmed for fewer than all of the Debtors as provided for in Section 5.17 of the Plan, only the conditions applicable to the Debtor or Debtors for which the Plan is confirmed must be satisfied or waived for the Effective Date to occur as to such Debtors. Notwithstanding anything to the contrary herein, Sections 9.2(a)(i) or 9.2(a)(iii) shall not be waived without the prior written consent of the Creditors’ Committee.

(b) The stay of the Confirmation Order pursuant to Bankruptcy Rule 3020(e) shall be deemed waived by and upon the entry of the Confirmation Order, and the Confirmation Order shall take effect immediately upon its entry.

9.4. Effect of Failure of a Condition.

If the conditions listed in Section 9.2 of the Plan are not satisfied or waived in accordance with Section 9.3 of the Plan on or before the first Business Day that is more than one hundred and eighty (180) days after the date on which the Confirmation Order is entered or by such later date as set forth by the Debtors in a notice filed with the Bankruptcy Court prior to the expiration of such period, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall (a) constitute a waiver or release of any Claims by or against or any Interests in the Debtors, (b) prejudice in any manner the rights of any Entity, or (c) constitute an admission, acknowledgement, offer, or undertaking by the Debtors, the Requisite Consenting Creditors, or any other Entity.

ARTICLE X EFFECT OF CONFIRMATION OF PLAN.

10.1. Vesting of Assets.

On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, (i) if the Reorganized Equity Plan Election is made, all of the Reorganized Assets shall vest in the Reorganized Debtors free and clear of all Claims, Liens, encumbrances, charges, and other interests except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement; (ii) if the Reorganized Equity Plan Election is made, all of the Wind Down Co Assets shall be transferred to Wind Down Co free and clear of all Claims, Liens, encumbrances, charges, and other interests except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement; and (iii) all remaining property of the Debtors’ Estates (other than the Reorganized Assets, if the Reorganized Equity Plan Election is made) shall vest in the Wind Down Estates free and clear of all Claims, Liens, encumbrances, charges, and other interests, except as provided pursuant to the Plan, the Confirmation Order, and the GUC Recovery Trust Agreement. On and after the Effective Date, the Reorganized Debtors and Wind Down Estates, as applicable, may take any action, including, without limitation, the operation of their businesses; the use, acquisition, sale, lease and disposition of property; and the entry into transactions, agreements, understandings, or arrangements, whether in or other than in the ordinary course of business, and execute, deliver, implement, and fully perform any and all obligations, instruments, documents, and papers or otherwise in connection with any of the foregoing, free of any restrictions of the Bankruptcy Code or Bankruptcy Rules and in all respects as if there was no pending case under any chapter or provision of the Bankruptcy Code, except as expressly provided herein. Without limiting the foregoing, Wind Down Estates may pay the charges that they incur on or after the Effective Date for professional fees, disbursements, expenses, or related support services without application to the Bankruptcy Court.


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10.2. Binding Effect.

As of the Effective Date, the Plan shall bind all holders of Claims against and Interests in the Debtors and their respective successors and assigns, notwithstanding whether any such holders were (a) Impaired or Unimpaired under the Plan; (b) presumed to accept or deemed to reject the Plan; (c) failed to vote to accept or reject the Plan; (d) voted to reject the Plan; or (e) received any distribution under the Plan.

10.3. Discharge of Claims and Termination of Interests.

If the Reorganized Equity Plan Election is made, except as otherwise expressly provided under the Plan, upon the date that all distributions under the Plan have been made, (i) in consideration for such distributions, each holder (as well as any representatives, trustees, or agents on behalf of each holder) of a Claim or Interest and any affiliate of such holder shall be deemed to have forever waived, released, and discharged the Reorganized Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Interest, rights, and liabilities that arose prior to the Effective Date and (ii) all such holders shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any such discharged Claim against or terminated Interest in the Debtors against the Reorganized Debtors, or any of their Assets or property, whether or not such holder has filed a proof of Claim and whether or not the facts or legal bases therefor were known or existed prior to the Effective Date. For the avoidance of doubt, holders of all Claims, including Administrative Expense Claims, Priority Tax asserting, Priority Non-Tax Claims, and Other Secured Claims shall by forever barred and prohibited from asserting such Claims against the Reorganized Debtors and shall be limited to prosecution of such Claims against the Wind Down Estates or GUC Recovery Trust, as applicable.

10.4. Term of Injunctions or Stays.

Unless otherwise provided herein, the Confirmation Order, or in a Final Order of the Bankruptcy Court, all injunctions or stays arising under or entered during the Chapter 11 Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the later of the Effective Date and the date indicated in the order providing for such injunction or stay.

10.5. Injunction.

(a) Upon entry of the Confirmation Order, all holders of Claims and Interests and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates, shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan in relation to any Claim extinguished, discharged, or released pursuant to the Plan.

(b) Except as expressly provided in the Plan, the Confirmation Order, or a separate order of the Bankruptcy Court or as agreed to by the Plan Administrator and a holder of a Claim against or Interest in the Debtors, all Entities who have held, hold, or may hold Claims against or Interests in the Debtors (whether proof of such Claims or Interests has been filed or not and whether or not such Entities vote in favor of, against or abstain from voting on the Plan or are presumed to have accepted or deemed to have rejected the Plan) and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates are permanently enjoined, on and after the Effective Date, solely with respect to any Claims, Interests, and Causes of Action that will be or are extinguished, discharged, or released pursuant to the Plan from (i) commencing, conducting, or continuing in any manner, directly or indirectly, any


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suit, action, or other proceeding of any kind (including, without limitation, any proceeding in a judicial, arbitral, administrative or other forum) against or affecting the Debtors, the Reorganized Debtors, Wind Down Estates, or the GUC Recovery Trust, or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (ii) enforcing, levying, attaching (including, without limitation, any prejudgment attachment), collecting, or otherwise recovering by any manner or means, whether directly or indirectly, any judgment, award, decree, or order against the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust, or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (iii) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind against the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust or the property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust; (iv) asserting any right of setoff, directly or indirectly, against any obligation due from the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust or against property or interests in property of any of the Debtors, the Reorganized Debtors, the Wind Down Estates, or the GUC Recovery Trust, except as contemplated or Allowed by the Plan; and (v) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Plan.

(c) By accepting distributions pursuant to the Plan, each holder of an Allowed Claim or Interest extinguished, discharged, or released pursuant to the Plan will be deemed to have affirmatively and specifically consented to be bound by the Plan, including, without limitation, the injunctions set forth in this Section 10.5.

(d) The injunctions in this Section 10.5 shall extend to any successors of the Debtors (including the Wind Down Estates), the Reorganized Debtors, and their respective property and interests in property.

10.6. Releases.

(a) Estate Releases.

As of the Effective Date, except for the rights that remain in effect from and after the Effective Date to enforce the Plan and the Definitive Documents, for good and valuable consideration, the adequacy of which is hereby confirmed, including, without limitation, the service of the Released Parties to facilitate the implementation of the Plan, and except as otherwise provided in the Plan or in the Confirmation Order, the Released Parties shall be deemed forever released and discharged, to the maximum extent permitted by law, by the Debtors, the Reorganized Debtors, and their Estates, Wind Down Estates, and the GUC Recovery Trust, from any and all Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, remedies, losses, and liabilities whatsoever, including any derivative claims, asserted or assertable on behalf of the Debtors, or the Estates, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that the Debtors or the Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on or relating to, or in any manner arising prior to the Effective Date from, in whole or in part, the Debtors, the Chapter 11 Cases, the pre- and postpetition marketing and sale process, the purchase, sale, or rescission of the purchase or sale of any Security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any of the Debtors and any Released Party, the restructuring of any Claim or Interest before or during the Chapter 11 Cases, the Disclosure Statement, the RSA, the Plan (including the Plan Supplement), the Sale Documents, Prepetition Credit Documents, and the


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DIP Documents, or any related agreements, instruments, and other documents (including the Definitive Documents), the DIP Order, the Sale Orders, and the negotiation, formulation, or preparation thereof, the solicitation of votes with respect to the Plan, or any other act or omission, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, that the Released Avoidance Parties shall only be released pursuant to this Section 10.6(a) on account of Avoidance Actions that have been or could be brought against such parties; provided, further, that nothing in this Section 10.6(a) shall be construed to release the Released Parties from gross negligence, willful misconduct, or intentional fraud as determined by a Final Order. The Debtors, the Reorganized Debtors, and their Estates, the Wind Down Estates, and the GUC Recovery Trust shall be permanently enjoined from prosecuting any of the foregoing Claims or Causes of Action released under this Section 10.6(a) against each of the Released Parties.

(b) Third-Party Releases.

As of the Effective Date, except (i) for the right to enforce the Plan or any right or obligation arising under the Definitive Documents that remain in effect or become effective after the Effective Date; (ii) defend against any objections to Claims that may be asserted under the Plan; or (iii) as otherwise expressly provided in the Plan or in the Confirmation Order, in exchange for good and valuable consideration, including the obligations of the Debtors under the Plan and the contributions of the Released Parties to facilitate and implement the Plan, to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably and forever, released, and discharged by:

(i) the holders of Claims who vote to accept the Plan;

(ii) the Consenting Creditors;

(iii) the Released Avoidance Parties;

(iv) the Creditors’ Committee and each of its members in their capacity as such;

(v) each of the Released Parties (other than the Debtors, Wind Down Estates, the GUC Recovery Trust, and the Reorganized Debtors); and

(vi) with respect to any Entity in the foregoing clauses (i) through (v), such Entity’s (x) predecessors, successors, and assigns, (y) subsidiaries, affiliates, managed accounts or funds, managed or controlled by such Entity and (z) all Persons entitled to assert Claims through or on behalf of such Entities with respect to the matters for which the releasing entities are providing releases.

in each case, from any and all Claims, Interests, or Causes of Action whatsoever, including any derivative Claims asserted on behalf of a Debtor, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Entity would have been legally entitled to assert (whether individually or collectively), based on, relating to, or arising prior to the Effective Date from, in whole or in part, the Debtors, the restructuring, the Chapter 11 Cases, the pre- and postpetition marketing and sale process, the purchase, sale or rescission of the purchase or sale of any security of the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual


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arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, or consummation of the Plan (including the Plan Supplement), the RSA, the Definitive Documents, the Sale Documents, Prepetition Credit Documents, the DIP Order, the Sale Orders, the DIP Documents, or any related agreements, instruments, or other documents, the solicitation of votes with respect to the Plan, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, that nothing in this Section 10.6(b) shall be construed to release the Released Parties from any gross negligence, willful misconduct, or intentional fraud as determined by a Final Order. The Persons and Entities in (i) through (vi) of this Section 10.6(b) shall be permanently enjoined from prosecuting any of the foregoing Claims or Causes of Action released under this Section 10.6(b) against each of the Released Parties.

(c) Notwithstanding anything to the contrary herein, nothing in the Plan shall limit the liability of attorneys to their respective clients pursuant to Rule 1.8(h) of the New York Rules of Professional Conduct.

10.7. Exculpation.

To the maximum extent permitted by applicable law, no Exculpated Party will have or incur, and each Exculpated Party is hereby released and exculpated from, any claim, obligation, suit, judgment, damage, demand, debt, right, cause of action, remedy, loss, and liability for any conduct occurring on or after the Commencement Date in connection with or arising out of the filing and administration of the Chapter 11 Cases, the postpetition marketing and sale process, the purchase, sale, or rescission of the purchase or sale of any security or asset of the Debtors; the negotiation and pursuit of the DIP Facility, Disclosure Statement, the RSA, Sale Transactions, UFCW Settlement including the formulation, negotiation, preparation, dissemination, implementation, administration, confirmation, and consummation thereof, the Reorganization Transaction, the Plan, or the solicitation of votes for, or confirmation of, the Plan; the funding or consummation of the Plan; the occurrence of the Effective Date; the DIP Documents; the administration of the Plan or the property to be distributed under the Plan; the issuance of Securities under or in connection with the Plan; or the transactions in furtherance of any of the foregoing; except for gross negligence, fraud, or willful misconduct, as determined by a Final Order. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations, and any other applicable law or rules protecting such Exculpated Parties from liability.

10.8. Subordinated Claims.

The allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, the Debtors (or the GUC Recovery Trustee, solely with respect to Allowed General Unsecured Claims) reserve the right to reclassify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

10.9. Retention of Causes of Action/Reservation of Rights.

Except as otherwise provided in Sections 10.5, 10.6, and 10.7 of the Plan or the Confirmation Order, nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any rights, Claims, Causes of Action, rights of setoff or recoupment, or other legal or


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equitable defenses that the Debtors had immediately prior to the Effective Date on behalf of their Estates or itself in accordance with any provision of the Bankruptcy Code or any applicable non-bankruptcy law, including, without limitation, any affirmative Causes of Action against parties with a relationship with the Debtors including Unreleased Avoidance Actions. The Wind Down Estates shall have, retain, reserve, and be entitled to assert all such Claims, Causes of Action, rights of setoff or recoupment, and other legal or equitable defenses as fully as if the Chapter 11 Cases had not been commenced, and all of the Debtors’ legal and equitable rights in respect of any Unimpaired Claim may be asserted after the Confirmation Date and Effective Date to the same extent as if the Chapter 11 Cases had not been commenced. Notwithstanding the foregoing, the Debtors, the Reorganized Debtors, and the Wind Down Estates, as applicable, shall not retain any Claims or Causes of Action released pursuant to the Plan against the Released Parties or the Unreleased Avoidance Actions transferred to the GUC Recovery Trust.

10.10. Solicitation of Plan.

As of and subject to the occurrence of the Confirmation Date: (i) the Debtors shall be deemed to have solicited acceptances of the Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including without limitation, sections 1125(a) and (e) of the Bankruptcy Code, and any applicable non-bankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation; and (ii) the Debtors and each of their respective directors, officers, employees, affiliates, agents, financial advisors, investment bankers, professionals, accountants, and attorneys shall be deemed to have participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code in the offer and issuance of any securities under the Plan, and therefore are not, and on account of such offer, issuance, and solicitation shall not be, liable at any time for any violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or the offer and issuance of any securities under the Plan.

10.11. Corporate and Limited Liability Company Action.

Upon the Effective Date, all actions contemplated by the Plan (whether to occur before, on, or after the Effective Date) shall be deemed authorized and approved in all respects, in each case, in accordance with and subject to the terms hereof. All matters provided for in the Plan involving the corporate or limited liability company structure of the Debtors, Wind Down Estates, or the Reorganized Debtors, and any corporate or limited liability company action required by the Debtors, Wind Down Estates, or the Reorganized Debtors in connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the Security holders, directors, managers, or officers of the Debtors, Wind Down Estates, or the Reorganized Debtors. On or (as applicable) before the Effective Date, the authorized officers of the Debtors, Wind Down Estates, or the Reorganized Debtors, as applicable, shall be authorized and directed to issue, execute, and deliver the agreements, documents, securities, and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the Wind Down Estates or Reorganized Debtors, as applicable, including, but not limited to: (i) the Amended Organizational Documents; (ii) the GUC Recovery Trust Agreement; and (iii) any and all other agreements, documents, securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by this Section 10.11 shall be effective notwithstanding any requirements under non-bankruptcy law.


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ARTICLE XI RETENTION OF JURISDICTION.

11.1. Retention of Jurisdiction.

On and after the Effective Date, the Bankruptcy Court shall retain non-exclusive jurisdiction over all matters arising in, arising under, and related to the Chapter 11 Cases for, among other things, the following purposes:

(a) to hear and determine motions and/or applications for the assumption or rejection of executory contracts or unexpired leases, including Assumption Disputes, and the allowance, classification, priority, compromise, estimation, or payment of Claims resulting therefrom;

(b) to determine any motion, adversary proceeding, application, contested matter, and other litigated matter pending on or commenced after the Confirmation Date;

(c) to ensure that distributions to holders of Allowed Claims are accomplished as provided for in the Plan and Confirmation Order and to adjudicate any and all disputes arising from or relating to distributions under the Plan, including, cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the holder of a Claim or Interest for amounts not timely paid;

(d) to consider the allowance, classification, priority, compromise, estimation, or payment of any Claim;

(e) to enter, implement, or enforce such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked, modified, or vacated;

(f) to issue injunctions, enter and implement other orders, and take such other actions as may be necessary or appropriate to restrain interference by any Entity with the consummation, implementation, or enforcement of the Plan, the Confirmation Order, or any other order of the Bankruptcy Court;

(g) to hear and determine any application to modify the Plan in accordance with section 1127 of the Bankruptcy Code, to remedy any defect or omission or reconcile any inconsistency in the Plan, or any order of the Bankruptcy Court, including the Confirmation Order, in such a manner as may be necessary to carry out the purposes and effects thereof;

(h) to hear and determine all Fee Claims and Restructuring Expenses;

(i) to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan, the Plan Supplement, the Global Settlement, or the Confirmation Order, or any agreement, instrument, or other document governing or relating to any of the foregoing;

(j) to hear and determine disputes arising in connection with the Sale Orders and Sale Transactions, or any agreement, instrument, or other document governing or relating to any of the foregoing;

(k) to take any action and issue such orders as may be necessary to construe, interpret, enforce, implement, execute, and consummate the Plan;


60 WEIL:\97527631\7\44444.0009

(l) to determine such other matters and for such other purposes as may be provided in the Confirmation Order;

(m) to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code (including any Disputed Claims for taxes or requests for expedited determinations under section 505(b) of the Bankruptcy Code);

(n) to hear, adjudicate, decide, or resolve any and all matters related to Article X of the Plan, including, without limitation, the releases, discharge, exculpations, and injunctions issued thereunder;

(o) to resolve disputes concerning Disputed Claims or the administration thereof;

(p) to hear and determine any other matters related hereto and not inconsistent with the Bankruptcy Code and title 28 of the United States Code;

(q) to enter one or more final decrees closing the Chapter 11 Cases;

(r) to recover all Assets of the Debtors and property of the Debtors’ Estates, wherever located;

(s) to resolve any disputes concerning whether an Entity had sufficient notice of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, or any bar date established in the Chapter 11 Cases, or any deadline for responding or objection to a Cure Amount, in each case, for the purpose of determining whether a Claim or Interest is discharged hereunder or for any other purpose;

(t) hear and determine matters or disputes arising from, or in connection with, the Amended Organizational Documents, including with respect to the appointment of a successor Plan Administrator in the event of the Plan Administrator’s death, disability, dissolution, or removal;

(u) hear and determine all disputes involving the Wind Down Budget;

(v) to hear and determine any rights, Claims, or Causes of Action held by or accruing to the Debtors or the GUC Recovery Trustee pursuant to the Bankruptcy Code or pursuant to any federal statute or legal theory; and

(w) to hear and resolve any dispute over the application to any Claim of any limit on the allowance of such Claim set forth in sections 502 or 503 of the Bankruptcy Code, other than defenses or limits that are asserted under non-bankruptcy law pursuant to section 502(b)(1) of the Bankruptcy Code.

11.2. Courts of Competent Jurisdiction.

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Plan, such abstention, refusal, or failure of jurisdiction 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.


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ARTICLE XII MISCELLANEOUS PROVISIONS.

12.1. Payment of Statutory Fees.

On the Effective Date and thereafter as may be required, the Wind Down Estates shall pay all fees incurred pursuant to sections 1911 through 1930 of chapter 123 of title 28 of the United States Code, together with interest, if any, pursuant to § 3717 of title 31 of the United States Code for the Debtors’ cases, or until such time as a final decree is entered closing the Debtors’ cases, a Final Order converting the Debtors’ cases to cases under chapter 7 of the Bankruptcy Code is entered, or a Final Order dismissing the Debtors’ cases is entered.

12.2. Substantial Consummation of the Plan.

On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101 and 1127(b) of the Bankruptcy Code.

12.3. Plan Supplement.

The Plan Supplement shall be filed with the Clerk of the Bankruptcy Court. Upon its filing with the Bankruptcy Court, the Plan Supplement may be inspected in the office of the Clerk of the Bankruptcy Court during normal court hours. Documents included in the Plan Supplement will be posted at the website of the Debtors’ notice, claims, and solicitation agent.

12.4. Request for Expedited Determination of Taxes.

The Debtors and the Wind Down Estates, as applicable, shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Commencement Date through the Effective Date, and, in the case of the Wind Down Estates, through dissolution of the Wind Down Estates.

12.5. Exemption from Certain Transfer Taxes.

Pursuant to section 1146 of the Bankruptcy Code, (a) the issuance, transfer or exchange of any securities, instruments or documents pursuant to, in implementation of or as contemplated in the Plan, (b) the creation of any Lien, mortgage, deed of trust, or other security interest, (c) the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance of, or in connection with the Plan, including, without limitation, any deeds, bills of sale, or assignments executed in connection with any of the transactions contemplated under the Plan or the reinvesting, transfer, or sale of any real or personal property of the Debtors pursuant to, in implementation of or as contemplated in the Plan (whether to one or more of the Reorganized Debtors, the Wind Down Estates, the GUC Recovery Trust or otherwise), and (d) the issuance, renewal, modification, or securing of indebtedness by such means, and the making, delivery or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including, without limitation, the Confirmation Order, shall not be subject to any document recording tax, stamp tax, conveyance fee, or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax, or other similar tax or governmental assessment. Consistent with the foregoing, each recorder of deeds or similar official for any county, city, or governmental unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation Order, be ordered and directed to accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax, or similar tax.


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12.6. Amendments.

(a) Plan Modifications. Subject to the terms of the RSA and all consent rights contained therein, (i) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend, modify, or supplement the Plan (i) prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code, and (ii) after entry of the Confirmation Order, in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, in each case without additional disclosure pursuant to section 1125 of the Bankruptcy Code. In addition, after the Confirmation Date, so long as such action does not materially and adversely affect the treatment of holders of Allowed Claims or Allowed Interests pursuant to the Plan and subject to the reasonable consent of the Requisite Consenting Creditors, the Debtors may remedy any defect or omission or reconcile any inconsistencies in this Plan or the Confirmation Order with respect to such matters as may be necessary to carry out the purposes or effects of this Plan, and any holder of a Claim or Interest that has accepted this Plan shall be deemed to have accepted this Plan as amended, modified, or supplemented. Any such amendment or modification pursuant to this paragraph or otherwise shall be reasonably acceptable to the Requisite Consenting Creditors and the Creditors’ Committee.

(b) Other Amendments. Subject to the terms of the RSA, before the Effective Date, the Debtors may make appropriate technical adjustments and modifications to the Plan and the documents contained in the Plan Supplement, after consulting with the Requisite Consenting Creditors and the Creditors’ Committee, without further order or approval of the Bankruptcy Court.

12.7. Effectuating Documents and Further Transactions.

Each of the officers, managers, or members of the Reorganized Debtors and Wind Down Estates, as applicable is authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.

12.8. Revocation or Withdrawal of Plan.

Subject to the terms of the RSA, the Debtors reserve the right to revoke or withdraw the Plan prior to the Effective Date. If the Plan has been revoked or withdrawn prior to the Effective Date, or if confirmation or the occurrence of the Effective Date does not occur, then: (a) the Plan shall be null and void in all respects; (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount any Claim or Interest or Class of Claims or Interests), assumption of executory contracts or unexpired leases affected by the Plan, and any document or agreement executed pursuant to the Plan shall be deemed null and void; and (c) nothing contained in the Plan shall (i) constitute a waiver or release of any Claim by or against, or any Interest in, the Debtors or any other Entity; (ii) prejudice in any manner the rights of the Debtors or any other Entity; or (iii) constitute an admission of any sort by the Debtors, any Consenting Creditors, or any other Entity. This provision shall have no impact on the rights of the Consenting Creditors or the Debtors, as set forth in the RSA, in respect of any such revocation or withdrawal.

12.9. Dissolution of Creditors’ Committee.

On the Effective Date, the Creditors’ Committee shall dissolve and, on the Effective Date, each member (including each officer, director, employee, or agent thereof) of the Creditors’ Committee and each professional retained by the Creditors’ Committee shall be released and discharged from all rights, duties, responsibilities, and obligations arising from, or related to, the Debtors, their membership on the


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Creditors’ Committee, the Plan, or the Chapter 11 Cases, except with respect to any matters concerning any Fee Claims held or asserted by any professional retained by the Creditors’ Committee.

12.10. Severability of Plan Provisions.

If, before the entry of the Confirmation Order, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors with the reasonable consent of the Requisite Consenting Creditors, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is (a) valid and enforceable pursuant to its terms, (b) integral to the Plan and may not be deleted or modified without the consent of the Debtors, Wind Down Estates, or the Reorganized Debtors (as the case may be), and (c) nonseverable and mutually dependent.

12.11. Governing Law.

Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit hereto or a schedule in the Plan Supplement or a Definitive Document provides otherwise, the rights, duties, and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflict of laws thereof; provided, however, that corporate or entity governance matters relating to any Debtors, Wind Down Estates, or Reorganized Debtors shall be governed by the laws of the state of incorporation or organization of the applicable Debtors, Wind Down Estates, or Reorganized Debtors.

12.12. Time.

In computing any period of time prescribed or allowed by the Plan, unless otherwise set forth herein or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall apply.

12.13. Dates of Actions to Implement the Plan.

In the event that any payment or act under the Plan is required to be made or performed on a date that is on a Business Day, then the making of such payment or the performance of such act may be completed on or as soon as reasonably practicable after the next succeeding Business Day, but shall be deemed to have been completed as of the required date.

12.14. Immediate Binding Effect.

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the occurrence of the Effective Date, the terms of the Plan and Plan Supplement shall be immediately effective and enforceable and deemed binding upon and inure to the benefit of the Debtors, the holders of Claims and Interests, the Released Parties, and each of their respective successors and assigns, including, without limitation, the Wind Down Estates and the Reorganized Debtors.


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12.15. Deemed Acts.

Subject to and conditioned on the occurrence of the Effective Date, whenever an act or event is expressed under the Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred without any further act by any party, by virtue of the Plan and the Confirmation Order.

12.16. Successor and Assigns.

The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor, or permitted assign, if any, of each Entity.

12.17. Entire Agreement.

On the Effective Date, the Plan, the Plan Supplement, and the Confirmation Order shall supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan.

12.18. Exhibits to Plan.

All exhibits, schedules, supplements, and appendices to the Plan (including the Plan Supplement) are incorporated into and are a part of the Plan as if set forth in full herein.

12.19. Notices.

All notices, requests, and demands to or upon the Debtors to be effective shall be in writing (including by electronic or facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

(a) If to the Debtors or the Wind Down Estates:

Fairway Group Holdings Corp. 2284 12th Avenue New York, NY 10027 Attn: Nathalie Augustin, Esq. Email: [email protected]

-and-

Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attn: Ray C. Schrock, P.C. Sunny Singh, Esq. Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Email: [email protected] [email protected]


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(b) If to the Consenting Creditors, Plan Sponsor, or the Reorganized Debtors:

King & Spalding LLP 1185 Avenue of the Americas New York, NY 10036 Attn: W. Austin Jowers, Esq. Michael R. Handler, Esq Email: [email protected] [email protected]

After the Effective Date, the Debtors and the Wind Down Estates, as applicable, have authority to send a notice to Entities providing that, to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Debtors, the Reorganized Debtors, and Wind Down Estates, as applicable, are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such renewed requests.

Dated: July 3, 2020

FAIRWAY GROUP HOLDINGS CORP. on behalf of itself and each of the other Debtors By: /s/ Michael Nowlan Name: Michael Nowlan Title: Chief Restructuring Officer


B-1 WEIL:\97306037\17\44444.0008

Exhibit B

Organizational Structure


100% Owner of

Sole Member of

Fairway Pelham LLC(DE)

Fairway Stamford LLC

(DE)

Fairway Ecommerce LLC

(DE)

* Inactive Subsidiary1 Amount outstanding as of January 7, 2020 based on Lender Register provided by Ankura. 2 "Springing Maturity Date" shall mean (i) July 3, 2019, if an aggregate amount exceeding $0 is outstanding under the Existing First Out Term Loan Facility and the Existing Last Out Term Loan Facility on such date and (ii) April 3, 2021, if an aggregate amount exceeding $0 is outstanding under the Existing Subordinated Holdco Facility on such date; provided that the Springing Maturity Date may be extended by the Required New Facilities Lenders, acting in their sole discretion.3 Scheduled to terminate August 28, 2020 (subject to change based on various triggers in "New Term Loan Delayed Draw Commitment Termination Date").

Fairway Bakery LLC(DE)

Fairway Greenwich Street LLC*

(DE)

Fairway Group Plainview LLC

(DE)

Fairway Group Central Services

LLC(DE)

Fairway Paramus LLC

(DE)

Fairway Chelsea LLC(DE)

Fairway Georgetowne

LLC(DE)

Fairway Staten Island LLC*

(DE)

Fairway Pelham Wines & Spirits

LLC(DE)

Fairway Broadway LLC

(DE)

Fairway Hudson Yards LLC*

(DE)

Fairway Kips Bay LLC(DE)

Fairway Westbury LLC

(DE)

Fairway Red Hook LLC

(DE)

Fairway Uptown LLC(DE)

Fairway Woodland Park

LLC(DE)

FN Store LLC(DE)

Fairway Douglaston LLC

(DE)

Fairway East 86th Street LLC

(DE)

Fairway Stamford Wines & Spirits LLC

(DE)

Fairway Construction Group, LLC

(NY)

Companies Party to the Credit Agreement

Borrower: Fairway Group Acquisition Co., a Delaware corporationHoldings: Fairway Group Holdings Corp., a Delaware corporation

Classes of Loans Under the Credit Agreement2

L/C Loans

Outstanding Amount: $26.8mmInterest Rate: 15.0% (11.0% PIK'd / 4.0% cash pay)Maturity Date: Earlier of 8/28/23 and the Springing Maturity Date2

Collateral: Substantially all assets, subject to limited exclusions

New Term Loans

Outstanding Amount: $16mmInterest Rate: 15.0% (11.0% PIK / 4.0% cash pay)Ticking Fee: 3.0% on undrawn amounts3

Maturity Date: Earlier of 8/28/23 and the Springing Maturity DateCollateral: Substantially all assets, subject to limited exclusions

Senior First Out Term Loans

Outstanding Amount: $76.5mmInterest Rate: (i) if paid in cash, L+ 8.0% or (ii) if PIK'd (at the election of the Borrower), 12%Maturity Date: Earlier of 11/28/23 and the Springing Maturity DateCollateral: Substantially all assets, subject to limited exclusions

Senior Last Out Term Loans

Outstanding Amount: $56.8mmInterest Rate: (i) if partially PIK'd and partially paid in cash, 9.0% (4.5% PIK'd / 4.5% cash pay) or (ii) if 100% PIK'd (at the election of the Borrower), 10.0% Maturity Date: Earlier of 11/28/23 and the Springing Maturity DateCollateral: Substantially all assets, subject to limited exclusions

Holdco Loans

Outstanding Amount: $51.0mmInterest Rate: (i) if partially PIK'd and partially paid in cash, 10.0% (6.0% PIK'd / 4.0% cash pay) or (ii) if 100% PIK'd (at the election of the Borrower), 11.0% Maturity Date: Earlier of 2/24/24 and the Springing Maturity DateCollateral: Substantially all assets, subject to limited exclusions

Fairway Group Acquisition Co.

(DE)

Senior Debt: OutstandingL/C Loans $26.8mmNew Term Loans $16.0mm

$42.8mm

Senior First Lien Term Loan: $76.5mm

Senior Last Out Term Loan: $56.8mm

Holdco Loan: $51.0mm

Total Secured Debt $227.2mm

Outstanding Funded Indebtedness1

Fairway Group Holdings Corp.

(DE)

Fairway Community

Foundation Inc.(DE)

LEGEND

Borrower

Guarantor

Non‐Debtor Entity

20-10161-jlg Doc 538 F

iled 07/03/20 Entered 07/03/20 22:02:39 M

ain Docum

ent P

g 180 of 181

WEIL:\97306037\17\44444.0008

Exhibit C

Liquidation Analysis

[To be Filed]
