FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 9, 1998
(Date of earliest event reported)
LEVITZ FURNITURE INCORPORATED LEVITZ FURNITURE CORPORATION
(Exact name of registrant (Exact name of registrant
as specified in its charter) as specified in its charter)
<TABLE>
<S> <C> <C> <C> <C>
Delaware 1-12046 23-2351830 Florida 33-1534 23-1657490
(State or other (Commission File (IRS Employer (State or other (Commission (IRS Employer
jurisdiction of Number) Identification No.) jurisdiction of File Number) Identification No.)
incorporation) incorporation)
</TABLE>
6111 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487-2799
(561) 994-6006
(Address including zip code, and telephone number including area code
of registrants' principal executive offices)
Item 5. Other Events.
On January 9, 1998, Levitz Furniture Corporation, a Florida
corporation ("Levitz"), and its wholly owned subsidiary John M. Smyth
Company, an Illinois corporation ("JMS"), consummated the previously
announced sale of substantially all of the assets of JMS to Heilig-Meyers
Company, a Virginia corporation ("Heilig"). Levitz is a wholly owned
subsidiary of Levitz Furniture Incorporated, a Delaware corporation
("LFI").
The aggregate purchase price, which is subject to certain
post-closing adjustments, paid to JMS by Heilig was approximately $34
million, including $23,680,000 in consideration for the transfer of
certain real property and improvements. JMS had operated retail furniture
stores in the Chicago metropolitan area. The closing follows receipt of
approval from the United States District Court for the District of
Delaware. A copy of the Order of the District Court approving the sale,
among other things, is attached as an Exhibit hereto and is incorporated
by reference herein.
On January 12, 1998, Levitz and Smyth issued a press release
announcing consummation of the transaction, a copy of which is attached
as an Exhibit hereto and is incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) Exhibits:
99.1 Press release dated January 12, 1998.
99.2 Order of the United States District Court for the
District of Delaware, dated January 7, 1998, under 11
U.S.C. Section 105(a), 363, 365 and 1146(c) and Fed. R.
Bankr. P. 2002, 6006(a), 6004, and 9014 (a) approving
Asset Purchase Agreement with Heilig-Meyers Company,
(b) authorizing sale of substantially all of the
assets of John M. Smyth company and John M. Smyth
Realty Company free and clear of liens, claims,
encumbrances and interests, (c) approving assumption
and assignment of certain executory contracts, and
(d) granting related relief.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
LEVITZ FURNITURE INCORPORATED
By: /s/ Edward P. Zimmer
Edward P. Zimmer
Vice President
Date: January 20, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
LEVITZ FURNITURE CORPORATION
By: /s/ Edward P. Zimmer
Edward P. Zimmer
Vice President
Date: January 20, 1998
INDEX TO EXHIBITS
Exhibit
Number Exhibit
99.1 Press release dated January 12, 1998.
99.2 Order of the United States District Court for the
District of Delaware, dated January 7, 1998, under 11
U.S.C. Sections 105(a), 363, 365 and 1146(c) and Fed.
R. Bankr. P. 2002, 6006(a), 6004, and 9014 (a)
approving Asset Purchase Agreement with Heilig-Meyers
Company, (b) authorizing sale of substantially all of
the assets of John M. Smyth company and John M. Smyth
Realty Company free and clear of liens, claims,
encumbrances and interests, (c) approving assumption
and assignment of certain executory contracts, and (d)
granting related relief.
EXHIBIT 99.1
PRESS RELEASE
Transmitter: Victoria L. Brown
(561) 995-5153 (voice), (561) 998-5623 (fax)
Levitz Furniture Corporation
6111 Broken Sound Parkway NW
Boca Raton, FL 33487-2799
DISTRIBUTION:
FOR IMMEDIATE RELEASE: JANUARY 12, 1998
*********************************
BOCA RATON, FLORIDA - January 12, 1998 - Levitz Furniture Corporation
("Levitz") and its wholly owned subsidiary John M. Smyth Company
("JMS") today completed the previously announced sale of substantially
all of the assets of JMS to Heilig-Meyers Company ("Heilig"). The
aggregate purchase price, which is subject to certain post-closing
adjustments, paid to JMS by Heilig was approximately $34 million,
including $23,680,000 in consideration for the transfer of certain real
property and improvements. JMS had operated retail furniture stores in
the Chicago metropolitan area. The closing follows receipt of approval
from the United States District Court for the District of Delaware.
Contact: Edward P. Zimmer
(561) 994-5150
EXHIBIT 99.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - x
In re :
Chapter 11
Levitz Furniture :
Incorporated, et al., Case No. 97-1842 (JJF)
:
Jointly Administered
Debtors. :
- - - - - - - - - - - - - - - - - - - x
ORDER UNDER 11 U.S.C. ss.ss. 105(a), 363, 365 AND 1146(c)
AND FED. R. BANKR. P. 2002, 6006(a), 6004, AND 9014
(A) APPROVING ASSET PURCHASE AGREEMENT WITH
HEILIG-MEYERS COMPANY, (B) AUTHORIZING SALE
OF SUBSTANTIALLY ALL OF THE ASSETS OF JOHN M. SMYTH
COMPANY AND JOHN M. SMYTH REALTY COMPANY FREE AND
CLEAR OF LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS,
(C) APPROVING ASSUMPTION AND ASSIGNMENT OF CERTAIN
EXECUTORY CONTRACTS, AND (D) GRANTING RELATED RELIEF
This matter having come before the Court upon the motion of the
above-captioned debtors and debtors-in-possession (the "Debtors"), dated
December 16, 1997 (the "Sale Motion")(1) for an order, inter alia,
- ------------
(1) Unless otherwise defined, capitalized terms used herein shall
have the meaning ascribed to them in the Sale Motion.
(i) approving the Asset Purchase Agreement dated as of December 15, 1997
(the "Asset Purchase Agreement") among John M. Smyth, as seller (the
"Seller"), Heilig-Meyers Company, as buyer, and Levitz Furniture
Corporation ("Parent"), (ii) authorizing the sale of substantially all of
the assets of John M. Smyth Company and John M. Smyth Realty Company to
Heilig-Meyers Company and/or its designees or assignees (hereinafter
referred to collectively as "Heilig-Meyers") free and clear of all liens,
claims, encumbrances, and other interests (except those expressly
assumed), (iii) authorizing the Seller's assumption and assignment to
Heilig-Meyers of certain executory contracts free and clear of liens,
claims, encumbrances, rights of first refusal and other interests (except
those expressly assumed), and (iv) granting related relief; and it
appearing, as evidenced by the affidavits of service filed with the
Court, that notice of the Sale Motion has been given as directed by the
order of this Court dated December 15, 1997 (the "Procedures Order"); and
it appearing that such notice was good and sufficient, and no other or
further notice is necessary or required; and the Court having considered
(i) the Sale Motion and (ii) the objection of Equity Properties and
Development Limited Partnership (the "Objection") thereto; and no other
objections having been filed; and based upon the record in these cases
and the hearing on the Sale Motion it appearing that the relief requested
in the Sale Motion is in the best interests of the Debtors, their
estates, their creditors and other parties in interest; and after due
deliberation thereon; and good and sufficient cause appearing therefor;
IT IS HEREBY FOUND AND DETERMINED THAT:(2)
A. This Court has jurisdiction over the Sale Motion pursuant to
28 U.S.C. SECTION 1334. Venue is proper pursuant to 28 U.S.C. SECTIONS
1408 and 1409. This is a core proceeding under 28 U.S.C. SECTION
157(b)(2)(A), (M), (N) and (O). The statutory predicates for the relief
sought herein are 11 U.S.C. SECTIONS 105(a), 363, 365 and 1146(c) and
Fed. R. Bankr. P. 2002, 4001, 6004, 6006, 7062 and 9014.
- ------------
(2) Findings of fact shall be construed as conclusions of law and
conclusions of law shall be construed as findings of fact when
appropriate. See Fed. R. Bankr. P. 7052.
B. The Debtors have provided good and sufficient notice of the
Sale Motion by serving it in the form and manner, and upon the parties,
directed by the Procedures Order. The Debtors and Heilig-Meyers have
complied with all applicable requirements of the Procedures Order.
C. Proper, timely, adequate and sufficient notice of the Sale
Motion, the Sale Hearing, the Smyth Sale, and the Debtors' assumption and
assignment of the Assumed Contracts to Heilig-Meyers has been provided in
accordance with sections 102(1), 363 and 365 of the Bankruptcy Code and
Fed. R. Bankr. P. 2002, 4001, 6004, 6005(a) and 9014 and the Procedures
Order, and no other or further notice of the Sale Motion, the Sale
Hearing or of the entry of this Order is required.
D. A reasonable opportunity to object or be heard regarding the
relief requested in the Sale Motion has been afforded to all interested
persons and entities, including (i) the United States Trustee, (ii)
counsel to the statutory committee of unsecured creditors appointed in
these cases (the "Committee"), (iii) counsel to BT Commercial Corp.
("BTCC"), the agent for the Debtors' debtor-in-possession lender (the
"DIP Lenders"), (iv) entities known to have expressed a bona fide
interest in a possible transaction regarding the Smyth Assets to the
Debtors' financial advisors, (v) all parties to the contracts proposed to
be assumed and assigned pursuant to the Asset Purchase Agreement, (vi)
counsel to GECC, (vii) counsel to Heilig-Meyers, (viii) all entities
known to have or have asserted any lien, claim, encumbrance, right of
first refusal, or interest in or upon any of the Smyth Assets, (ix) all
known and potentially affected state and local taxing authorities (x) all
entities who have filed a notice of appearance and request for service of
papers in these cases pursuant to Bankruptcy Rule 2002 and (xi) other
reasonably identifiable interested parties.
E. The Debtors have (i) full corporate power and authority to
execute the Asset Purchase Agreement and all other documents contemplated
thereby and the sale of the Smyth Assets and assumption and assignment to
Heilig-Meyers of the Assumed Contracts by the Debtors has been duly and
validly authorized by all necessary corporate action of each of the
Debtors, and (ii) all the corporate power and authority necessary to
consummate the transactions contemplated by the Asset Purchase Agreement;
no consents or approvals, other than those expressly provided for in the
Asset Purchase Agreement, are required for the Debtors to consummate such
transactions and such transactions will not result in a breach of any
agreement to which the Debtors are a party.
F. The bidding procedures established pursuant to the Procedures
Order afforded a full, fair and reasonable opportunity for any entity to
make a higher or better offer to purchase the Smyth Assets and no higher
or better offer has been made.
G. The Debtors have demonstrated that it is an exercise of their
sound business judgment to assume and assign or assign the Assumed
Contracts to Heilig-Meyers in connection with the consummation of the
Smyth Sale, and the assumption and assignment or assignment of the
Assumed Contracts is in the best interests of the Debtors, their estates,
and their creditors.
H. The Debtors have provided compensation or adequate assurance
for any actual pecuniary loss to such party resulting from a default
prior to the date hereof under any of the Assumed Contracts, within the
meaning of Code section 365(b)(1)(B).
I. Heilig-Meyers has provided adequate assurance of future
performance of the Assumed Contracts, within the meaning of Code section
365(b)(1)(C).
J. Approval of the Asset Purchase Agreement, assumption and
assignment to Heilig-Meyers of the Assumed Contracts and consummation of
the Smyth Sale at this time are in the best interests of the Debtors,
their creditors, and their estates.
K. The Debtors have articulated good and sufficient business
justification for the Smyth Sale pursuant to Code section 363(b) and the
assumption and assignment to Heilig-Meyers of the Assumed Contracts
outside of a plan of reorganization, in that, among other things:
(1) The business and cash flow related to the Smyth Assets
have deteriorated over the past several months;
(2) A sale pursuant to Code section 363(b) is likely to
produce a greater return to the Debtors' creditors than if the
Debtors were consigned to a liquidation of the Smyth Assets;
(3) Claims against the Debtors' estates will be minimized
as a result of the prompt consummation of the Smyth Sale and the
concomitant assumption and assignment of the Assumed Contracts to
Heilig-Meyers;
(4) A sale of the Smyth Assets at this time will result in
the highest possible sale price. As the Smyth Assets deteriorate,
any sale premium that might be obtained in a bulk sale will be
lost. Unless a sale is concluded expeditiously as provided for in
the Sale Motion and under the Asset Purchase Agreement, (i) the
value of the Smyth Assets is likely to decline and (ii) the
Debtors, their estates and their creditors may realize little or
no significant value for the Smyth Assets;
(5) The Debtors' immediate realization of the cash proceeds
from the Smyth Sale, is reasonably necessary for the Debtors to
reorganize their business and propose a confirmable reorganization
plan.
L. The Debtors, together with their financial advisors, have
diligently and in good faith marketed the Smyth Assets, in order to
obtain the best and highest offer therefor.
M. Heilig-Meyers is not an insider, as that term is defined in
the Bankruptcy Code, of any of the Debtors. Furthermore, no insiders of
the Debtors are receiving or retaining any benefit, property or payments
in connection with the sale of the Smyth Assets except to the extent such
insiders have allowed claims against the Debtors and, as a result, may
participate in a distribution of sale proceeds under a reorganization
plan.
N. The Asset Purchase Agreement was proposed, negotiated and
entered into by the Debtors and Heilig-Meyers without collusion, in good
faith, and as a result of arm's-length bargaining. Heilig-Meyers is a
good faith purchaser under Code section 363(m) and, as such, is entitled
to the protections afforded thereby. Neither the Debtors nor
Heilig-Meyers has engaged in any conduct that would cause or permit the
Asset Purchase Agreement and the transactions contemplated therein and
authorized herein to be avoided under, or for any recovery to be obtained
pursuant to, Code section 363(n).
O. In the absence of a stay pending appeal, Heilig-Meyers will
be acting in good faith within the meaning of Code section 363(m) in
closing the transactions contemplated by the Asset Purchase Agreement at
any time after the entry of this Order, provided Heilig-Meyers shall not
be obligated to close until all applicable conditions to closing under
the Asset Purchase Agreement have been satisfied or waived as provided in
such Agreement.
P. The consideration provided by Heilig-Meyers for the Smyth
Assets, including applicable Assumed Contracts, pursuant to the Asset
Purchase Agreement, constitutes reasonably equivalent value and fair
consideration under the Bankruptcy Code and under the laws of the United
States, any state, territory, possession, or the District of Columbia.
Q. The Asset Purchase Agreement constitutes the best and highest
offer for the Smyth Assets, and will provide a greater recovery for the
Debtors' creditors than would be provided by any other available
alternative.
R. The Smyth Sale must be conducted immediately in order to
preserve the going concern value of the business.
S. For the reasons set forth above, there are compelling
circumstances as well as a sound business purpose warranting the
immediate consummation of the Smyth Sale.
T. The Debtors may sell the Smyth Assets free and clear of all
liens, claims, encumbrances, rights of first refusal and other interests
(including without limitation claims and encumbrances (i) that purport to
give to any party a right or option to effect any forfeiture,
modification or termination of the Debtors' or Heilig-Meyers' interest in
the Smyth Assets or (ii) in respect of Taxes), because, each entity with
a security interest in any of the Smyth Assets has consented to the Smyth
Sale or is deemed to have consented to such sale, such interest is a lien
and the price at which such property is sold is greater than the
aggregate value of all liens on such property, or each entity could be
compelled in a legal or equitable proceeding to accept a money
satisfaction of such interest.
U. The Debtors have good title to the Smyth Assets and Assumed
Contracts, and accordingly, the transfer of the Smyth Assets and Assumed
Contracts to Heilig-Meyers pursuant to the Asset Purchase Agreement will
be a legal, valid, and effective transfer of the Smyth Assets and Assumed
Contracts.
V. The transfer of the Smyth Assets and assignment of the
Assumed Contracts pursuant to the Asset Purchase Agreement vests or will
vest Heilig-Meyers with all right, title, and interest of the Debtors to
the Smyth Assets and Assumed Contracts free and clear of all Claims and
Interests, as hereafter defined, except Assumed Liabilities, as defined
in the Asset Purchase Agreement.
W. Neither the transfer of the Smyth Assets nor assignment of
the Assumed Contracts will subject Heilig-Meyers to any liability for
claims against the Debtors or any of the Debtors' predecessors or
affiliates of any kind or character, whether known or unknown as of the
Closing Date, now existing or hereafter occurring, whether fixed or
contingent under the laws of the United States, any state, territory, or
possession thereof, or the District of Columbia, based, in whole or in
part, directly or indirectly, on any theory of law, including, without
limitation, any theory of successor, vicarious or transferee liability.
X. The transfer of the Smyth Assets and assignment of the
Assumed Contracts pursuant to the Asset Purchase Agreement are transfers
pursuant to Code section 1146(c), and accordingly may not be taxed under
any law imposing a stamp tax or similar tax.
Y. No defaults of the type described in Code section
365(b)(2)(D) exist under any of the Assumed Contracts and, upon payment
by the Debtors of the sums set forth on Exhibit B hereto to the nondebtor
party to each of the Assumed Contracts, all defaults, obligations and
liabilities under the Assumed Contracts arising prior to the Closing Date
or related to the acts or failure to act of the Debtors prior to the
Closing Date (other than pro rated items assumed by the Buyers) whether
matured or contingent, liquidated or unliquidated, shall be cured and
satisfied.
Z. Upon the assumption and assignment of the Assumed Contracts,
as provided herein, Heilig-Meyers shall succeed to all of the right,
title and interest of the Debtors under the applicable Assumed Contract
including, without limitation, the right to exercise renewal options
which, pursuant to the terms of the applicable Assumed Contract, are not
exercisable by assignees of the Debtors, the Court having found that such
provisions constitute unenforceable restrictions on assignment pursuant
to Section 365(f)(3) of the Bankruptcy Code.
NOW, THEREFORE, IT IS HEREBY ADJUDGED, ORDERED, AND DECREED
THAT:
1. The Sale Motion, and the relief sought therein is granted,
as further described herein.
2. The Objection to the Sale Motion has been withdrawn with
prejudice, and all reservations of rights included therein, are overruled
on the merits.
3. The Asset Purchase Agreement (a copy of which is filed
separately as Exhibit A), and all of the terms and conditions thereof,
are hereby approved.
4. This Order and the Asset Purchase Agreement and all of the
terms and conditions thereof are binding on all creditors and parties in
interest.
5. Pursuant to Code sections 363(b) and 365, the Debtors are (a)
authorized to consummate the Smyth Sales, pursuant to and in accordance
with the terms and conditions of the Asset Purchase Agreement, (b)
authorized to assume and assign to Heilig-Meyers the Assumed Contracts
listed on Exhibit B hereto and (c) directed to make all payments as set
forth in Exhibit B hereto to the nondebtor parties to the Assumed
Contracts.
6. The provisions of any bulk sales laws are superseded by the
provisions of the Code pursuant to the Supremacy Clause, and to the
extent applicable, compliance with such bulk sales laws is hereby deemed
to be satisfied by, among other things, the notice provided.
7. The Debtors are authorized to execute and deliver, and
empowered to perform under, consummate and implement, the Asset Purchase
Agreement, together with all additional instruments and documents that
may be reasonably necessary or desirable to implement the Asset Purchase
Agreement, and to take all further actions as may reasonably be requested
by Heilig-Meyers for the purpose of assigning, transferring, granting,
conveying and conferring to Heilig-Meyers, or reducing to possession any
or all of the Smyth Assets and Assumed Contracts, or as may be necessary
or appropriate to the performance of the obligations under the Asset
Purchase Agreement.
8. Except for the Assumed Liabilities and Permitted Liens with
respect to the Smyth Fee Property (as defined in the Asset Purchase
Agreement), pursuant to Code sections 105(a) and 363(b) and (f), upon the
closing under the Asset Purchase Agreement, the Smyth Assets and the
Assumed Contracts shall be free and clear of (a) all mortgages, security
interests, conditional sale or other title retention agreements, pledges,
liens, judgments, demands, encumbrances (including without limitation
claims and encumbrances (i) that purport to give to any party a right or
option to effect any forfeiture, modification, right of first refusal,
repurchase, or termination of the Debtors', Heilig-Meyers' interest in
the Assumed Contracts, Assets, or any similar rights, or (ii) in respect
of Taxes), easements, restrictions, rights of first refusal or charges of
any kind or nature, if any, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership (collectively, "Interests"), and
(b) all debts arising in any way in connection with any acts, or failures
to act, of the Debtors or the Debtors' predecessors or affiliates, claims
(as that term is defined in the Bankruptcy Code), obligations, demands,
guaranties, options, rights, contractual commitments, restrictions,
interests and matters of any kind and nature, whether arising prior to or
subsequent to the commencement of these cases, and whether imposed by
agreement, understanding, law, equity or otherwise (including without
limitation claims and encumbrances (i) that purport to give to any party
a right or option to effect any forfeiture, modification, right of first
refusal, or termination of the Debtors', Heilig-Meyers' interest in the
Assumed Contracts, the Smyth Assets, or any similar rights, or (ii) in
respect of Taxes) (collectively, the "Claims"), with all such Interests
and Claims to attach to the net proceeds of the Smyth Sale in the order
of their priority, with the same validity, force and effect which they
now have as against the Smyth Assets, subject to any claims and defenses
the Debtors may possess with respect thereto.
9. All persons are hereby enjoined from asserting, prosecuting
or otherwise pursuing any claim against Heilig-Meyers to recover on any
claims such person had, has or may have (other than an Assumed Liability
of Heilig-Meyers) against (x) the Debtors, their estates, their
principals, their shareholders or the Smyth Assets, or (y) Heilig-Meyers
in connection with the negotiation of, and any agreements contained in,
related to or conditioned upon the Asset Purchase Agreement.
10. The Debtors have good title to the Smyth Assets and Assumed
Contracts and accordingly, the transfer of the Smyth Assets and Assumed
Contracts to Heilig-Meyers pursuant to the Asset Purchase Agreement shall
be a legal, valid, and effective transfer of the Smyth Assets and Assumed
Contracts.
11. The consideration provided by Heilig-Meyers for the Smyth
Assets and Assumed Contracts pursuant to the Asset Purchase Agreement
shall be deemed to constitute reasonably equivalent value and fair
consideration under the Bankruptcy Code or under the laws of the United
States, any state, territory, possession, or the District of Columbia.
12. All amounts due and payable by the Debtors to Heilig-Meyers
pursuant to the terms of the Asset Purchase Agreement shall be and hereby
are allowed as postpetition administrative expenses due and payable as an
ordinary course expense of the Debtors. The Debtors are authorized and
directed to obtain the letter of credit for the benefit of Heilig-Meyers
on the terms contained in the Asset Purchase Agreement.
13. The transfer of the Smyth Assets and Assumed Contracts
pursuant to the Asset Purchase Agreement shall vest Heilig-Meyers with
all right, title, and interest of the Debtors to the Smyth Assets and
Assumed Contracts described in the Asset Purchase Agreement (including
good and marketable title to the Smyth Fee Property) free and clear of
all Claims and Interests except the Assumed Liabilities and Permitted
Liens with respect to the Smyth Fee Property (as defined in the Asset
Purchase Agreement).
14. On the date of the closing of the Asset Purchase Agreement
(the "Closing Date"), each of the Debtors' creditors is authorized and
directed to execute such documents and take all other actions as may be
necessary to release its Interests in or Claims against the Smyth Assets
and Assumed Contracts, if any, as such Interests or Claims may have been
recorded or may otherwise exist.
15. This Order (a) is and shall be effective as a determination
that, on the Closing Date, all Interests and all Claims existing as to
the Smyth Assets and Assumed Contracts prior to the Closing Date (except
for Claims and Interests that are Assumed Liabilities under the
Agreements) have been unconditionally released, discharged and
terminated, and that the conveyance described in decretal paragraph 5
hereof has been effected, and (b) is and shall be binding upon and govern
the acts of all entities including without limitation, all filing agents,
filing officers, title agents, title companies, recorders of mortgages,
recorders of deeds, registrars of deeds, administrative agencies,
governmental departments, secretaries of state, federal, state, and local
officials, and all other persons and entities who may be required by
operation of law, the duties of their office, or contract, to accept,
file, register or otherwise record or release any documents or
instruments, or who may be required to report or insure any title or
state of title in or to any of the Smyth Assets and Assumed Contracts.
16. Each and every federal, state and local governmental agency
or department be, and hereby is, directed to accept any and all documents
and instruments necessary and appropriate to consummate the transactions
contemplated by the Asset Purchase Agreement, including without
limitation, documents and instruments for recording in any governmental
agency or department required to transfer to Heilig-Meyers any and all
licenses or permits under the Debtors' ownership necessary for the
operations that are associated with the Smyth Assets, and county and
state offices wherein termination statements under the Uniform Commercial
Code are authorized to be filed.
17. If any person or entity that has filed financing statements
or other documents or agreements evidencing Interests in or Claims
against the Smyth Assets or Assumed Contracts shall not have delivered to
the Debtors prior to the Closing Date, in proper form for filing and
executed by the appropriate parties, termination statements, instruments
of satisfaction and releases of all Interests or Claims which the person
or entity has with respect to the Smyth Assets or Assumed Contracts, the
Debtors are hereby authorized and directed to execute and file such
statements, instruments, releases and other documents on behalf of the
person or entity with respect to the Assets or Assumed Contracts. The
foregoing notwithstanding, the provision of this Order authorizing the
sale of the Smyth Assets and Assumed Contracts free and clear of liens,
claims and interests shall be self-executing, and notwithstanding the
failure of the Debtors, Heilig-Meyers or any other party to execute, file
or obtain releases, termination statements, assignments, consents or
other instruments to effectuate, consummate and/or implement the
provisions hereof or in the Asset Purchase Agreement with respect to the
sale of the Smyth Assets and Assumed Contracts, all liens, claims and
interests on the Smyth Assets and Assumed Contracts shall be deemed
divested.
18. All entities who are presently, or on the Closing Date may
be, in possession of some or all of the Smyth Assets or Assumed Contracts
are hereby directed to surrender possession of the Smyth Assets and
Assumed Contracts to Heilig-Meyers on the Closing Date.
19. As of the Closing Date, all agreements of any kind
whatsoever and all orders of this Court entered prior to the date hereof
shall be deemed amended and/or modified to the extent required to permit
the consummation of the transactions contemplated by the Asset Purchase
Agreement.
20. Except for the Assumed Liabilities, Heilig-Meyers shall not
have any liability or responsibility for any Interest or Claim against
any of the Debtors or the Debtors' predecessors or affiliates.
21. The Debtors are hereby authorized, pursuant to Code sections
363(b)(1) and (f), to conduct store closing or liquidation sales of
furniture, trade fixtures, equipment or inventory at the Smyth Leased
Property (the "Store Closing Sales"); provided, however, that the Debtors
may not sell fixtures belonging to the landlord or other third parties
without the consent of such third parties.
22. Heilig-Meyers is empowered, through the Debtors, to conduct
the Store Closing Sales pursuant to the terms and conditions of the Asset
Purchase Agreement and all parties and persons of every nature and
description, including landlords, utility companies, governmental units
or sheriffs, marshals or other public officers, and all those acting for
or on their behalf shall be, and hereby are, prohibited and enjoined from
(a) interfering in any way with, or otherwise impeding, the conduct of
the Store Closing Sales or (b) instituting any action or proceeding in
any court or administrative body seeking an order or judgment that might
in any way directly or indirectly interfere with or adversely affect the
conduct of the Store Closing Sales.
23. The Store Closing Sales shall be conducted notwithstanding
any local, state or federal law or ordinance purporting to restrict,
limit, or otherwise regulate such Sales.
24. The Store Closing Sales shall be conducted notwithstanding
any provision in any of the leases on the Smyth Leased Property
purporting to restrict, limit, or otherwise impair such Sales.
25. The Debtors hereby are authorized to close the stores of
the Smyth Leased Property at the conclusion of the Store Closing Sales.
26. This Court shall retain jurisdiction (a) to enforce and
implement the terms and provisions of the respective Asset Purchase
Agreement, all amendments thereto, any waivers and consents thereunder
and each of the agreements executed in connection therewith, (b) to
compel delivery of the Smyth Assets and Assumed Contracts to
Heilig-Meyers, (c) to resolve any disputes arising under or related to
the Asset Purchase Agreement, except as otherwise provided therein, and
(d) to interpret, implement and enforce the provisions of this Order.
27. Nothing contained in any reorganization plan or order of
confirmation confirming any reorganization plan shall conflict with or
derogate from the provisions of the Asset Purchase Agreement or the terms
of this Order. Further, the provisions of this Order and any actions
taken pursuant hereto shall survive the entry of any order which may be
entered confirming any reorganization plan for the Debtors, converting
the Debtors' cases from chapter 11 to cases under chapter 7 of the
Bankruptcy Code or dismissing the cases.
28. Neither the transfer of the Smyth Assets nor assignment
of the Assumed Contracts pursuant to the Asset Purchase Agreement will
subject Heilig-Meyers to any liability for claims against the Debtors or
any of the Debtors' predecessors or affiliates of any kind or character,
whether known or unknown as of the Closing Date, now existing or
hereafter occurring, whether fixed or contingent under the laws of the
United States, any state, territory, or possession thereof, or the
District of Columbia, based, in whole or in part, directly or indirectly,
on any theory of law, including, without limitation, any theory of
successor, vicarious or transferee liability.
29. The transactions contemplated by the Agreements are being
made in good faith, as that term is used in section 363(m) of the
Bankruptcy Code, and accordingly, the reversal or modification on appeal
of the authorization to consummate the Smyth Sales provided herein shall
not affect the validity of the Sales to Heilig-Meyers, unless prior to
the Closing, such authorization is duly stayed pending such appeal.
Heilig-Meyers is a purchaser in good faith of the Smyth Assets and
Assumed Contracts and is entitled to all of the protections afforded by
section 363(m) of the Bankruptcy Code.
30. The terms and provisions of the Asset Purchase Agreement,
together with the terms and provisions of this Order, shall be binding in
all respects upon, and shall inure to the benefit of, the Debtors, their
estates, and their creditors, Heilig-Meyers and its respective
affiliates, successors and assigns, and any affected third parties
including, but not limited to, all persons asserting a claim against or
interest in the Debtors' estates or any of the Assumed Contracts and the
Smyth Assets to be sold to Heilig-Meyers pursuant to the Asset Purchase
Agreement, notwithstanding any subsequent appointment of any trustee for
any of the Debtors under any chapter of the Bankruptcy Code, as to which
trustee such terms and provisions likewise shall be binding in all
respects.
31. The failure of the Debtors or Heilig-Meyers to enforce at
any time one or more terms or conditions of any Assumed Contract shall
not be a waiver of such terms or conditions, or of the Debtors' and
Heilig-Meyers' rights to enforce every term and condition of the Assumed
Contracts.
32. No defaults of the type described in Code section
365(b)(2)(D) exist under any of the Assumed Contracts and, upon payment
by the Debtors of the sums set forth on Exhibit B hereto to the nondebtor
party to each of the Assumed Contracts, all defaults, obligations and
liabilities under the Assumed Contracts arising prior to the Closing Date
or related to the acts or failure to act of the Debtors prior to the
Closing Date (other than pro rated items assumed by Heilig-Meyers)
whether matured or contingent, liquidated or unliquidated, shall be cured
and satisfied and the nondebtor party to each of the Assumed Contracts
shall be enjoined from taking any action against the Debtors with respect
to the Assumed Contracts.
33. Upon the assumption and assignment of the Assumed Contracts,
as provided herein, Heilig-Meyers shall succeed to all of the right,
title and interest of the Debtors under the applicable Assumed Contract
including, without limitation, the right to exercise renewal options
which, pursuant to the terms of the applicable Assumed Contract, would
not be exercisable by assignees of the Debtors as such provisions
constitute unenforceable restrictions on assignment pursuant to Code
section 365(f)(3).
34. The Assumed Contracts will be transferred to, and remain in
full force and effect for the benefit of Heilig-Meyers in accordance with
their respective terms, notwithstanding any provision in any such Assumed
Contract (including those described in Code sections 365(b)(2) and (f))
that prohibits, restricts, or conditions such assignment or transfer,
and, pursuant to Code section 365(k), the Debtors shall be relieved from
any further liability with respect to the Assumed Contracts after such
assignment.
35. The Asset Purchase Agreement and any related agreements,
documents or other instruments may be modified, amended or supplemented
by the parties thereto, in a writing signed by both parties, and in
accordance with the terms thereof without further order of the Court,
provided that any such modification, amendment or supplement is not
material.
36. Any and all transfers of property authorized hereby or the
recording of any deed or evidence of ownership of the Assumed Contracts
and Smyth Assets, or any portion thereof, shall be free and clear of any
and all stamp or similar taxes imposed upon the making or delivery of an
instrument of transfer pursuant to Code section 1146(c).
37. The Debtors reserve the right to assume or reject any
executory contract or unexpired lease not listed on Exhibit B attached
hereto.
38. The failure specifically to include any particular provision
of the Asset Purchase Agreement in this Order shall not diminish or
impair the effectiveness of such provision, it being the intent of the
Court that the Asset Purchase Agreement be authorized and approved in its
entirety.
39. The Debtors are authorized and directed to remit payment via
wire transfer to Equitable American Insurance Company ("Equitable") on
the Closing Date in the amount of $659,672.54 plus $188.32 per day from
January 5, 1998 through the date of such payment, which payment shall be
in full satisfaction and settlement of the obligations secured by the
July 1, 1977 Mortgage by American National Bank and Trust Company of
Chicago (as Trustee)(recorded with the Du Page County Recorder September
12, 1977 in R 77-81658). Equitable's liens on and security interests in
the Smyth Assets being sold to Heilig-Meyers shall attach to the proceeds
of the transactions authorized herein until such time as Equitable
receives payment in the amount specified in this paragraph, and upon such
payment the Mortgage shall be deemed satisfied and Equitable shall be
deemed to have released any lien or security interest in the proceeds of
the transactions authorized herein. In the event that the Debtors do not
make payment to Equitable on or before January 31, 1998, Equitable shall
also be entitled to, among other things, any fees, interest and expenses
accruing after that date.
40. The Debtors are authorized and directed to remit all net
proceeds from the transactions authorized herein, to BTCC to be applied
in accordance with the terms of the Debtors' Debtor in Possession
financing facility with BTCC. BTCC's release of liens on and security
interests in the Smyth Assets being sold by the Debtors hereunder is
expressly conditioned upon BTCC's receipt of such funds.
41. As provided by Fed. R. Bankr P. 7062, this Order shall be
effective and enforceable immediately upon entry.
42. The provisions of this Order are nonseverable and mutually
dependent.
Dated: Wilmington, Delaware
January 7, 1998
/S/ Joseph J. Farnan, Jr.
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Honorable Joseph J. Farnan, Jr.
Chief United States District Court Judge
