UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
)
LOEHMANN'S, INC., ) Case No. 99-1138 (MFW)
)
Debtor. )
SECOND AMENDED PLAN OF
REORGANIZATION OF LOEHMANN'S, INC.
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE,
AS MODIFIED ON JULY 28, 2000 AND SEPTEMBER 6, 2000
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
Alan W. Kornberg
Jeffrey D. Saferstein
Susan E. Welber
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
-and-
YOUNG CONAWAY STARGATT & TAYLOR, LLP
James L. Patton, Jr.
Pauline K. Morgan
1110 N. Market Street
P.O. Box 391
Rodney Square North, 11th Floor
Wilmington, Delaware 19801
(302) 571-6600
Attorneys for the Debtor
Dated: Wilmington, Delaware
September 6, 2000
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TABLE OF CONTENTS
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I. DEFINITIONS AND CONSTRUCTION OF TERMS.................................1
A. Definitions......................................................1
B. Interpretation, Application of Definitions and Rules of
Construction....................................................12
II. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS........................13
A. Introduction....................................................13
1. Unclassified Claims (not entitled to vote on the Plan)......13
2. Unimpaired Classes of Claims (deemed to have accepted the
Plan and, therefore, not entitled to vote on the Plan)......13
3. Impaired Class of Claims (entitled to vote on the Plan).....14
4. Impaired Class of Equity Interests (deemed to have rejected
the Plan and, therefore, not entitled to vote on the Plan) .14
III. TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS...............................14
A. Administrative Claims...........................................14
B. Professional Compensation And Reimbursement Claims..............15
C. Priority Tax Claims.............................................15
IV. TREATMENT OF CLAIMS AND EQUITY INTERESTS.............................16
A. Class 1 - Other Priority Claims.................................16
1. Distributions...............................................16
2. Impairment and Voting.......................................16
B. Class 2 - Other Secured Claims..................................16
1. Distributions...............................................16
2. Impairment and Voting.......................................16
C. Class 3 - DIP Financing Claims..................................17
1. Distributions...............................................17
2. Impairment and Voting.......................................17
D. Class 4 - Convenience Claims....................................17
1. Distributions...............................................17
2. Impairment and Voting.......................................17
3. Election to be Treated as a Convenience Claim...............17
E. Class 5 - General Unsecured Creditors...........................18
1. Distributions...............................................18
2. Impairment and Voting.......................................18
F. Class 6 - Equity Interests......................................19
1. Distributions...............................................19
2. Impairment and Voting.......................................19
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V. PROVISIONS REGARDING CORPORATE
GOVERNANCE AND MANAGEMENT
OF LOEHMANN'S HOLDINGS AND
THE REORGANIZED DEBTOR...............................................19
A. Formation of Holding Company....................................19
B. Directors and Officers of Loehmann's Holdings and Reorganized
Loehmann's; Amended Certificate of Incorporation and Amended
By-Laws.........................................................19
1. Loehmann's Holdings.........................................19
2. Reorganized Loehmann's......................................20
C. Securities to Be Issued Pursuant to the Plan....................20
1. New Common Stock............................................20
2. New Senior Notes............................................21
D. Securities Laws Matters.........................................21
E. Loehmann's Holdings Equity Incentive Plan.......................21
VI. MEANS OF IMPLEMENTATION, PROVISIONS
REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF
DISPUTED, CONTINGENT AND UNLIQUIDATED
ADMINISTRATIVE CLAIMS AND CLAIMS.....................................22
A. Voting of Claims................................................22
B. Distributions...................................................22
1. Method of Distributions Under the Plan......................22
2. Disputed General Unsecured Claims...........................26
3. Objections To And Resolution Of Administrative
Claims and Claims; Administrative, Priority
and Convenience Claims Reserve..............................26
4. Allowance of Disputed Administrative, Priority and
Convenience Claims..........................................27
5. Release of Shares and Notes from Disputed Claims
Reserve.....................................................27
6. Allocation of Consideration.................................27
7. Cancellation and Surrender of Existing Securities
and Agreements..............................................28
C. Estimation......................................................28
D. Administrative Claims of Indenture Trustee......................28
E. Nonconsensual Confirmation......................................29
F. The Amended Certificate of Incorporation, the Amended
By-Laws and Other Implementation Documents......................29
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VII. EFFECT OF CONFIRMATION OF THIS PLAN..................................29
A. Continued Corporate Existence...................................29
B. Vesting of Assets...............................................29
C. Discharge of the Debtor.........................................30
D. Injunction......................................................30
E. Extinguishment of Causes of Action Under the
Avoiding Power Provisions.......................................30
F. Votes Solicited in Good Faith...................................31
G. Administrative Claims Incurred after the Confirmation Date......31
H. The Debtor's Release............................................31
I. Exculpation, Release and Injunction of Released Parties.........32
1. Exculpation.................................................32
2. Injunction..................................................32
3. Limitation of Governmental Releases.........................32
J. Term of Bankruptcy Injunction or Stays..........................33
K. Preservation of Insurance.......................................33
L. Officers' and Directors' Indemnification Rights and Insurance...33
VIII. RETENTION OF JURISDICTION............................................33
IX. MISCELLANEOUS PROVISIONS.............................................34
A. Payment of Statutory Fees.......................................34
B. Dissolution of Creditors Committee..............................34
C. Modification of the Plan........................................34
D. Governing Law...................................................35
E. Filing or Execution of Additional Documents.....................35
F. Withholding and Reporting Requirements..........................35
G. Exemption From Transfer Taxes...................................35
H. Section 1145 Exemption..........................................35
I. Waiver of Federal Rule of Civil Procedure 62(a).................36
J. Headings........................................................36
K. Exhibits/Schedules..............................................36
L. Notices.........................................................36
M. Plan Supplement.................................................36
N. Conflict........................................................37
O. Setoff by the United States.....................................37
X. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.............................37
XI. BENEFIT PLANS........................................................38
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XII. EFFECTIVENESS OF THE PLAN............................................38
A. Conditions Precedent to Effectiveness...........................38
B. Waiver of Conditions............................................38
C. Effect of Failure of Conditions.................................39
D. Vacatur of Confirmation Order...................................39
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Loehmann's, Inc. proposes the following second amended plan of
reorganization, as modified on July 28, 2000 and September 6, 2000, under
section 1121(a) of the Bankruptcy Code.
I.
DEFINITIONS AND CONSTRUCTION OF TERMS
A. DEFINITIONS. Unless otherwise defined herein, or the
context otherwise requires, the following terms shall have the respective
meanings set forth below:
ADMINISTRATIVE CLAIM means any right to payment constituting
a cost or expense of administration of
the Chapter 11 Case of a kind specified
under section 503(b) of the Bankruptcy
Code and entitled to priority under
section 507(a)(1), 507(b) or 1114(e)(2)
of the Bankruptcy Code, including,
without limitation, any actual and
necessary costs and expenses of
preserving the Debtor's estate, any
actual and necessary costs and expenses
of operating the Debtor's business, any
indebtedness or obligations incurred or
assumed by the Debtor in Possession in
connection with the conduct of its
business, including, without limitation,
for the acquisition or lease of property
or an interest in property or the
rendition of services, all compensation
and reimbursement of expenses to the
extent awarded by the Court under
sections 330, 331 or 503 of the
Bankruptcy Code, and any fees or charges
assessed against the Debtor's estate
under section 1930 of chapter 123 of
title 28 of the United States Code.
ADMINISTRATIVE, PRIORITY AND has the meaning assigned to such term in
CONVENIENCE CLAIMS RESERVE Article VI.B.3(b)(i) of the Plan.
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ALLOWED CLAIM means, with reference to any Claim, (a)
any Claim against the Debtor which has
been listed by the Debtor in its
Schedules, as such Schedules may be
amended by the Debtor from time to time
in accordance with Bankruptcy Rule 1009,
as liquidated in amount and not disputed
or contingent, and with respect to which
no contrary proof of claim has been
filed, (b) any Claim specifically
allowed under the Plan, (c) any Claim
which is not Disputed or (d) any Claim
the amount or existence of which, if
Disputed, (i) has been determined by a
Final Order of a court of competent
jurisdiction other than the Court, or
(ii) has been allowed by Final Order of
the Court; PROVIDED, HOWEVER, that any
Claims allowed solely for the purpose of
voting to accept the Plan pursuant to an
order of the Court shall not be
considered "Allowed Claims" hereunder.
AMENDED BY-LAWS means the Amended and Restated
By-Laws of Reorganized Loehmann's, which
shall be in substantially the form
contained in the Plan Supplement.
AMENDED CERTIFICATE OF INCORPORATION means the amended and restated
Certificate of Incorporation of
Reorganized Loehmann's, which shall be
in substantially the form contained in
the Plan Supplement.
AVAILABLE NOTES means all New Senior Notes to be
distributed to holders of Allowed
General Unsecured Claims, less the
number of New Senior Notes deposited
into the Disputed Claims Reserve.
AVAILABLE SHARES means all shares of New Common Stock to
be distributed to the holders of Allowed
General Unsecured Claims, less the
number of shares of New Common Stock
deposited into the Disputed Claims
Reserve.
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BALLOTS means each of the ballot forms
distributed with the Disclosure
Statement to each holder of an Impaired
Claim (other than to holders not
entitled to vote on the Plan) upon which
is to be indicated, among other things,
acceptance or rejection of the Plan.
BANKRUPTCY CODE means title 11 of the United States
Code, 11 U.S.C.ss.ss. 101 ET SEQ., as in
effect on the date hereof.
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 local rules of the Court, as the
context may require.
BUSINESS DAY means any day on which commercial banks
are open for business, and not
authorized to close, in the City of New
York, New York, except any day
designated as a legal holiday by
Bankruptcy Rule 9006(a).
CASH means legal tender of the United States
of America.
CAUSES OF ACTION means all claims, choses in action and
causes of action (including those
assertable derivatively), liabilities,
obligations, suits, debts, sums of
money, damages, demands, judgments,
whether known or unknown, now owned or
hereafter acquired by the Debtor, and
the Cash and non-Cash proceeds thereof,
whether arising under the Bankruptcy
Code or other Federal, state or foreign
law, equity or otherwise, including,
without limitation, any causes of action
arising under sections 510, 544, 547,
548, 549, 550, 551 or any other section
of the Bankruptcy Code.
CHAPTER 11 CASE means the chapter 11 case commenced by
the Debtor.
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CLAIM means any claim against the Debtor as
such term is defined in section 101(5)
of the Bankruptcy Code.
CLASS means a group of Claims or Equity
Interests as classified under the Plan.
COLLATERAL means any property or interest in
property of the Debtor's estate subject
to a Lien to secure the payment or
performance of a Claim, which Lien is
not subject to avoidance under the
Bankruptcy Code or otherwise invalid
under the Bankruptcy Code or applicable
state law.
CONFIRMATION DATE means the date on which the Confirmation
Order is entered by the Court.
CONFIRMATION HEARING means the hearing to consider
confirmation of the Plan pursuant to
section 1128 of the Bankruptcy Code, as
it may be adjourned or continued from
time to time.
CONFIRMATION ORDER means the order entered by the Court
confirming the Plan pursuant to section
1129 of the Bankruptcy Code.
CONVENIENCE CLAIMS means and includes any Claim which would
otherwise be a General Unsecured Claim
that (i) is Allowed in an amount of
$2,000 or less and (ii) is Allowed in
the amount of greater than $2,000 but
which is reduced to $2,000 by the
election of the holder thereof pursuant
to the holder's Ballot.
COURT means, (a) the United States Bankruptcy
Court for the District of Delaware,
having jurisdiction over the Chapter 11
Case; (b) to the extent there is no
reference pursuant to section 157 of
title 28 of the United States Code, the
United States District Court for the
District of Delaware; and (c) any other
court having jurisdiction over the
Chapter 11 Case.
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CREDITORS COMMITTEE means the Official Committee of
Unsecured Creditors appointed by the
United States Trustee in the Chapter 11
Case, as constituted from time to time.
DEBTOR means Loehmann's, Inc.
DEBTOR IN POSSESSION means the Debtor in its capacity as
debtor in possession in the Chapter 11
Case pursuant to sections 1107(a) and
1108 of the Bankruptcy Code.
DIP CREDIT FACILITY means that certain Ratification and
Amendment Agreement dated as of May 19,
1999 between Loehmann's, Inc. and
Congress Financial Corporation, as
amended from time to time.
DIP FINANCING CLAIMS means all Claims arising under or
relating to the DIP Credit Facility and
all agreements and instruments relating
thereto.
DISCLOSURE STATEMENT means the written disclosure statement
that relates to this Plan, as approved
by the Court pursuant to section 1125 of
the Bankruptcy Code and Bankruptcy Rule
3017, as such disclosure statement may
be amended, modified or supplemented
from time to time.
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DISPUTED CLAIM means (a) any Claim, proof of which was
not timely or properly filed and which
has been or hereafter is listed on the
Schedules as unliquidated, disputed or
contingent, or is not listed in the
Schedules; (b) any Claims as to which
the Debtor, the Creditors Committee or
any other party in interest has filed an
objection or request for estimation on
or before the Effective Date or such
other applicable limitation period fixed
by the Plan, the Bankruptcy Code, the
Bankruptcy Rules or the Bankruptcy
Court, except to the extent that such
objection or request for estimation is
withdrawn or determined by a Final Order
in favor of the holder of such Claim; or
(c) any Claim as to which a proof of
claim is timely and properly filed,
except to the extent that the amount
asserted in such proof of claim does not
exceed the liquidated, undisputed and
noncontingent amount set forth in the
Schedules with respect to such Claim. A
Claim that is a Disputed Claim under
subsection (b) of this definition shall
cease to be Disputed upon the withdrawal
of such objection or request for
estimation or a determination thereon by
a Final Order in favor of the holder of
such Claim.
DISPUTED CLAIMS RESERVE means any New Senior Notes and shares of
New Common Stock issued to the Transfer
Agent for distribution on Subsequent
Distribution Dates and the Final
Distribution Date pursuant to Article
VI.B.1(f) of the Plan.
EFFECTIVE DATE means the first Business Day on which
all of the conditions specified in
Article XII.A of the Plan have been
satisfied or waived in accordance with
Article XII.B. of the Plan; PROVIDED,
HOWEVER, that if a stay of the
Confirmation Order is in effect on such
date, the Effective Date will be the
first Business Day after such stay is no
longer in effect.
EQUITY INCENTIVE PLAN has the meaning assigned to such term in
Article V.E. of the Plan.
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EQUITY INTEREST OR INTEREST means any share of preferred stock or
common stock or other instrument
evidencing an ownership interest in the
Debtor, whether or not transferable, and
any option, warrant, or right,
contractual or otherwise, to acquire,
sell or subscribe for any such interest.
FINAL DISTRIBUTION DATE means the date on which Reorganized
Loehmann's makes a final distribution
pursuant to Article VI.B.1.(e) of this
Plan. The Final Distribution Date shall
be a date, as determined by Reorganized
Loehmann's, in consultation with the
Creditors Committee, after resolution of
all Disputed Claims.
FINAL ORDER means an order or judgment of the Court,
or other court of competent
jurisdiction, as entered on the docket
in the Chapter 11 Case, the operation or
effect of which has not been stayed,
reversed, vacated or amended, and as to
which order or judgment (or any
revision, modification, or amendment
thereof) the time to appeal, petition
for certiorari, or seek review or
rehearing has expired and as to which no
appeal, petition for certiorari, or
petition for review or rehearing was
filed or, if filed, remains pending.
GENERAL UNSECURED CLAIM means a Claim that is not a Secured
Claim, Administrative Claim, Priority
Tax Claim, Other Priority Claim or
Convenience Claim, and shall include,
without limitation, (a) Claims of trade
creditors of Loehmann's, (b) Claims of
customers of Loehmann's that are not
Priority Claims, (c) Claims of employees
of Loehmann's that are not Priority
Claims, (d) Claims arising as a result
of the rejection by Loehmann's of
executory contracts or unexpired leases
pursuant to section 365 of the
Bankruptcy Code, (e) Claims arising as a
result of pre-Petition Date litigation
against Loehmann's that are not
subordinated under section 510(b) of the
Bankruptcy Code and (f) Senior Note
Claims.
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GOVERNMENT has the meaning assigned to such term in
Article VII.I.3 of the Plan.
IMPAIRED means, when used with reference to a
Claim, a Claim that is impaired within
the meaning of section 1124 of the
Bankruptcy Code.
INDENTURE TRUSTEE means, with respect to the Senior Note
Indenture, United States Trust Company
of New York, in its capacity as trustee
under such indenture.
INDENTURE TRUSTEE EXPENSES means any reasonable fees and reasonable
documented out-of-pocket costs and
expenses incurred after the Petition
Date and through and including the Final
Distribution Date by the Indenture
Trustee. Such amounts shall include,
without limitation, the reasonable
documented out-of-pocket costs and
expenses and reasonable fees of legal
counsel to the Indenture Trustee (as
determined in accordance with the
Indenture).
INFORMAL NOTEHOLDERS COMMITTEE means the informal committee of certain
holders of Senior Notes that was formed
subsequent to the Petition Date.
INITIAL DISTRIBUTION DATE means the Effective Date or as soon
thereafter as practicable.
INITIAL HOLDER means (a) any person or entity who will
initially hold New Common Stock on the
Effective Date, (b) any investment fund
for which any person thereof acts as
manager, (c) any partnership or other
entity for which any person thereof acts
directly or indirectly as a general
partner, managing member or controlling
stockholder, and (d) any person
otherwise affiliated with any of the
foregoing individuals or entities.
LIEN has the meaning set forth in section 101
of the Bankruptcy Code.
LOEHMANN'S means Loehmann's, Inc.
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LOEHMANN'S HOLDINGS means the holding company to be formed
on the Effective Date which shall own
100% of Reorganized Loehmann's and which
shall issue the New Senior Notes and New
Common Stock.
LOEHMANN'S HOLDINGS BY-LAWS means the By-Laws of Loehmann's
Holdings, which shall be in
substantially the form contained in the
Plan Supplement.
LOEHMANN'S HOLDINGS CERTIFICATE OF means the Certificate of Incorporation
INCORPORATION of Loehmann's Holdings, which shall be
in substantially the form contained in
the Plan Supplement.
NEW COMMON STOCK means the common stock of Loehmann's
Holdings, par value $.01 per share, to
be authorized and issued by Loehmann's
Holdings on the Effective Date pursuant
to the Plan.
NEW NOTES INDENTURE has the meaning assigned to such term in
Article V.C.2 of the Plan.
NEW NOTES INDENTURE TRUSTEE means the bank or trust company that
will serve as trustee under the New
Notes Indenture.
NEW SENIOR NOTES means up to $25,000,000 in promissory
notes authorized and to be issued
pursuant to the Plan and the New Notes
Indenture, on the terms and subject to
the conditions described in Exhibit "A"
hereto, and which shall be in
substantially in the form contained in
the Plan Supplement.
OLD COMMON STOCK means the common and preferred stock,
par value $.01 per share, issued by
Loehmann's and outstanding on the
Petition Date.
OTHER PRIORITY CLAIM means Claims entitled to priority
pursuant to section 507(a) of the
Bankruptcy Code (other than
Administrative Claims and Priority Tax
Claims), including, without limitation,
certain allowed employee compensation
and benefit claims of the Debtor's
employees incurred within ninety (90)
and one hundred eighty (180) days,
respectively, prior to the Petition
Date.
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OTHER SECURED CLAIMS means any Claim, other than the DIP
Financing Claims, to the extent
reflected in the Schedules or a proof of
claim filed as a Secured Claim, which is
secured by a Lien on Collateral to the
extent of the value of such Collateral,
as determined in accordance with section
506(a) of the Bankruptcy Code, or, in
the event that such Claim is subject to
setoff under section 553 of the
Bankruptcy Code, to the extent of such
setoff.
PETITION DATE means May 18, 1999, the date on which
the Debtor filed its petition for relief
commencing the Chapter 11 Case.
PLAN means this Plan, as it may be amended or
modified from time to time, together
with all addenda, exhibits, schedules or
other attachments, if any.
PLAN SUPPLEMENT means the forms of documents specified
in Article IX.M. of the Plan.
PRO RATA means, at any time, the proportion that
the amount of a Claim in a particular
Class bears to the aggregate amount of
all Claims (including Disputed Claims)
in such Class, unless in each case the
Plan provides otherwise.
PRIORITY TAX CLAIM means any unsecured Claim held by a
governmental unit entitled to a priority
in right of payment under section
507(a)(8) of the Bankruptcy Code.
QUARTER means the period beginning on the
Effective Date and ending on the
immediately succeeding October 31,
January 31, April 30 or July 31, and
each three-month period thereafter, as
the context may require.
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RECORD DATE means the record date for purposes of
making distributions under the Plan on
account of Allowed Claims which date
shall be the Confirmation Date.
REGISTRATION RIGHTS AGREEMENT means a registration rights agreement by
Loehmann's Holdings in favor of certain
Initial Holders, which shall be in
substantially the form contained in the
Plan Supplement.
RELEASED PARTIES has the meaning assigned to such term in
Article VII.H. of the Plan.
REORGANIZED DEBTOR means the Debtor, or any successor
thereto by merger, consolidation, or
otherwise, on and after the Effective
Date.
REORGANIZED LOEHMANN'S means Loehmann's, or any successor
thereto by merger, consolidation, or
otherwise, on and after the Effective
Date.
SCHEDULES means the schedules of assets and
liabilities, statements of financial
affairs, and lists of holders of Claims
and Equity Interests filed with the
Court by the Debtor, including any
amendments or supplements thereto.
SCHEDULED means, with respect to any Claim or
Equity Interest, the status and amount,
if any, of such Claim or Equity Interest
as set forth in the Schedules.
SECURED CLAIM means a Claim that is secured by a Lien
on property or interests in property, in
which the Debtor has an interest, to the
extent of the value as of the Effective
Date, or such other date as is
established by the Court, of such
interest or Lien determined by a Final
Order of the Court pursuant to Section
506 of the Bankruptcy Code or as
otherwise agreed upon in writing by the
Debtor and the holder of such Claim.
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SENIOR NOTE CLAIMS means all Claims directly or indirectly
arising from or under or related in any
way to the Senior Note Indenture, the
Senior Notes, and any of the documents,
instruments and agreements relating
thereto, as amended, supplemented or
modified, except Indenture Trustee
Expenses.
SENIOR NOTE INDENTURE means that certain Indenture, dated as
of May 10, 1996 between Loehmann's, as
issuer, and United States Trust Company
of New York, as Trustee, pursuant to
which the 117/8% Senior Notes were
issued, together with any amendments or
supplements thereto.
SENIOR NOTEHOLDERS means the holders of the Senior Notes.
SENIOR NOTES means the 117/8% Notes, due May 15,
2003, of Loehmann's issued and
outstanding under or pursuant to the
Senior Note Indenture.
SUBSEQUENT DISTRIBUTION means any distribution of Available
Shares made to the holders of Allowed
General Unsecured Claims on a Subsequent
Distribution Date in accordance with
Section VI.B.1(d) of the Plan.
SUBSEQUENT DISTRIBUTION DATE means any date, as determined by
Reorganized Loehmann's, in consultation
with the Creditors Committee, which is
after the Effective Date and prior to
the Final Distribution Date on which a
distribution of Available Shares is made
to holders of Allowed General Unsecured
Claims in accordance with Article
VI.B.1(d) of the Plan.
TORT CLAIM means a Claim arising from or relating
to (i) the commission or alleged
commission of a tort including, without
limitation, personal injury Claims, or
any indemnification Claim arising from a
tort liability, (ii) any general
liability Claim, or (iii) any Claim
predicated upon or arising under Title
VII of the United States Code.
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TRANSFER AGENT means the transfer agent for the New
Common Stock.
B. INTERPRETATION, APPLICATION OF DEFINITIONS AND RULES
OF CONSTRUCTION.
Wherever from the context it appears appropriate, each term
stated in either the singular or the plural shall include both the singular and
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter, such meanings to be applicable to
both the singular and plural forms of the terms defined. Capitalized terms in
the Plan that are not defined herein shall have the same meaning assigned to
such terms by the Bankruptcy Code or Bankruptcy Rules, as the case may be. The
words "herein," "hereof," and "hereunder" and other words of similar import
refer to the Plan as a whole and not to any particular section or subsection in
the Plan unless expressly provided otherwise. All gender references shall be
deemed to refer to both genders. The words "includes" and "including" are not
limiting and mean that the things specifically identified are set forth for
purposes of illustration, clarity or specificity and do not in any respect
qualify, characterize or limit the generality of the class within which such
things are included. Captions and headings to articles, sections and exhibits
are inserted for convenience of reference only, are not a part of this Plan, and
shall not be used to interpret this Plan. The rules of construction set forth in
section 102 of the Bankruptcy Code shall apply to this Plan. In computing any
period of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply.
II.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
A. INTRODUCTION.
All Claims and Equity Interests, except Administrative Claims
and Priority Tax Claims, are placed in the Classes set forth below. In
accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims
and Priority Tax Claims, as described below, have not been classified.
A Claim or Equity Interest is placed in a particular Class
only to the extent that the Claim or Equity Interest falls within the
description of that Class, and is classified in other Classes to the extent that
any portion of the Claim or Equity Interest falls within the description of such
other Classes. A Claim is also placed in a particular Class for the purpose of
receiving distributions pursuant to the
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Plan only to the extent that such Claim is an Allowed Claim in that Class and
such Claim has not been paid, released, or otherwise settled prior to the
Effective Date.
1. UNCLASSIFIED CLAIMS (NOT ENTITLED TO VOTE ON
THE PLAN).
(a) ADMINISTRATIVE CLAIMS.
(b) PRIORITY TAX CLAIMS.
2. UNIMPAIRED CLASSES OF CLAIMS (DEEMED TO HAVE
ACCEPTED THE PLAN AND, THEREFORE, NOT
ENTITLED TO VOTE ON THE PLAN).
(a) CLASS 1: OTHER PRIORITY CLAIMS.
Class 1 consists of all Other Priority
Claims.
(b) CLASS 2: OTHER SECURED CLAIMS.
Class 2 consists of all Other Secured
Claims.
(c) CLASS 3: DIP FINANCING CLAIMS.
Class 3 consists of all DIP Financing
Claims.
3. IMPAIRED CLASS OF CLAIMS (ENTITLED TO VOTE
ON THE PLAN).
(a) CLASS 4: CONVENIENCE CLAIMS.
Class 4 consists of all Convenience Claims.
(b) CLASS 5: GENERAL UNSECURED CLAIMS.
Class 5 consists of all General Unsecured
Claims.
4. IMPAIRED CLASS OF EQUITY INTERESTS (DEEMED
TO HAVE REJECTED THE PLAN AND, THEREFORE,
NOT ENTITLED TO VOTE ON THE PLAN).
(d) CLASS 6: EQUITY INTERESTS.
Class 6 consists of all Equity Interests.
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III.
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
A. ADMINISTRATIVE CLAIMS.
Except to the extent that any entity entitled to payment of
any Allowed Administrative Claim agrees to a different treatment, each holder of
an Allowed Administrative Claim shall receive (a) Cash in an amount equal to
such Allowed Administrative Claim on the later of the Effective Date and the
date such Administrative Claim becomes an Allowed Administrative Claim, or as
soon thereafter as is practicable or (b) such other treatment as the Debtor and
such holder shall have agreed upon in writing, subject to the consent of the
Creditors Committee; PROVIDED, HOWEVER, that Allowed Administrative Claims
representing liabilities incurred in the ordinary course of business by the
Debtor in Possession or liabilities arising under loans or advances to or other
obligations incurred by the Debtor in Possession (to the extent authorized and
approved by the Court if such authorization and approval was required under the
Bankruptcy Code) shall be paid in full and performed by the Reorganized Debtor,
as the case may be, in the ordinary course of business in accordance with the
terms and subject to the conditions of any agreements governing, instruments
evidencing, or other documents relating to, such transactions.
B. PROFESSIONAL COMPENSATION AND REIMBURSEMENT CLAIMS.
All entities seeking an award by the Court of compensation for
services rendered or reimbursement of expenses incurred through and including
the Confirmation Date under sections 503(b)(2), 503(b)(3), 503(b)(4) or
503(b)(5) of the Bankruptcy Code (a) shall file their respective final
applications for allowances of compensation for services rendered and
reimbursement of expenses incurred through the Effective Date by the date that
is 30 days after the Effective Date or such other date as may be fixed by the
Court and (b) if granted, such an award by the Court shall be paid in full in
such amounts as are awarded by the Court (i) on the date such Administrative
Claim becomes an Allowed Administrative Claim, or as soon thereafter as is
practicable or (ii) upon such other terms as may be mutually agreed upon between
such holder of an Administrative Claim and the Debtor in Possession or, on and
after the Effective Date, the Reorganized Debtor. The Debtor shall support an
application filed by the Informal Noteholders Committee with the Court seeking
reimbursement of the reasonable fees and expenses incurred by its counsel,
Andrews & Kurth, L.L.P., up to a maximum aggregate amount of $50,000, in
connection with the negotiation of the agreement between Loehmann's, Inc. and
certain members of the Informal Noteholders Committee, dated July 27, 2000, and
the negotiation of certain documents in connection therewith.
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C. PRIORITY TAX CLAIMS.
Except to the extent that a holder of an Allowed Priority Tax
Claim agrees to a different treatment, each holder of an Allowed Priority Tax
Claim shall receive, at the sole option of the Reorganized Debtor, (a) Cash in
an amount equal to such Allowed Priority Tax Claim on the later of the Effective
Date and the date such Priority Tax Claim becomes an Allowed Priority Tax Claim,
or as soon thereafter as is practicable, or (b) over a period through the sixth
anniversary of the date of assessment of such Allowed Priority Tax Claim, equal
annual Cash payments in an aggregate amount equal to such Allowed Priority Tax
Claim, together with interest (i) with respect to federal taxes, at a fixed
annual rate equal to the federal statutory rate as provided in 26 U.S.C. ss.
6621; and (ii) with respect to state and city taxes, at the rate applicable
under state or local law.
IV.
TREATMENT OF CLAIMS AND
EQUITY INTERESTS
A. CLASS 1 - OTHER PRIORITY CLAIMS.
1. DISTRIBUTIONS. Except to the extent that a holder
of an Allowed Other Priority Claim shall have agreed in writing to a different
treatment, subject to the consent of the Creditors Committee, in full and final
satisfaction of such claim, each holder of an Allowed Other Priority Claim shall
receive payment in an amount equal to such Allowed Claim in full in Cash on the
later of the Effective Date and the date when such Other Priority Claim becomes
an Allowed Claim, or as soon thereafter as practicable.
2. IMPAIRMENT AND VOTING. Class 1 is unimpaired under
the Plan. Holders of Allowed Claims in Class 1 are presumed to accept the Plan
and are not entitled to vote to accept or reject the Plan.
B. CLASS 2 - OTHER SECURED CLAIMS.
1. DISTRIBUTIONS. Except to the extent that a holder
of an Allowed Secured Claim shall have agreed in writing to a different
treatment subject to the consent of the Creditors Committee at the sole option
of the Debtor, in full and final satisfaction of such claim, (i) each Allowed
Other Secured Claim shall be reinstated and rendered unimpaired in accordance
with section 1124(2) of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law that entitles the holder of an Allowed
Other Secured Claim to demand or receive payment of such Allowed Other Secured
Claim prior to the
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stated maturity of such Allowed Other Secured Claim from and after the
occurrence of a default, (ii) each holder of an Allowed Other Secured Claim
shall receive Cash in an amount equal to such Allowed Other Secured Claim,
including any interest on such Allowed Other Secured Claim required to be paid
pursuant to section 506(b) of the Bankruptcy Code, on the later of the Effective
Date and the date such Allowed Other Secured Claim becomes an Allowed Other
Secured Claim, or as soon thereafter as is practicable, or (iii) each holder of
an Allowed Other Secured Claim shall receive the Collateral securing its Allowed
Other Secured Claim and any interest on such Allowed Other Secured Claim
required to be paid pursuant to section 506(b) of the Bankruptcy Code, in full
and complete satisfaction of such Allowed Other Secured Claim on the later of
the Effective Date and the date such Allowed Other Secured Claim becomes an
Allowed Other Secured Claim, or as soon thereafter as is practicable.
2. IMPAIRMENT AND VOTING. Class 2 is unimpaired under
the Plan. The holders of Allowed Claims in Class 2 are presumed to accept the
Plan and are not entitled to vote to accept or reject the Plan.
C. CLASS 3 - DIP FINANCING CLAIMS.
1. DISTRIBUTIONS. On the Effective Date, or as soon
thereafter as practicable, in full and final satisfaction of such claims, each
holder of a DIP Financing Claim shall receive payment in full in Cash.
2. IMPAIRMENT AND VOTING. Class 3 shall be unimpaired
under the Plan. The holders of DIP Financing Claims are presumed to accept the
Plan and are not entitled to vote to accept or reject the Plan.
D. CLASS 4 - CONVENIENCE CLAIMS.
1. DISTRIBUTIONS. Each holder of an Allowed
Convenience Claim in Class 4 shall receive Cash in an amount equal to fifty
percent (50%) of such Allowed Convenience Claim on the later of (i) the
Effective Date, or (ii) 30 days after the date on which such Claim becomes an
Allowed Convenience Claim, or as soon thereafter as is practicable. Any holder
of a Claim which would otherwise be an Allowed Convenience Claim may elect on
such holder's Ballot to have such Allowed Claim treated as an Allowed General
Unsecured Claim under Class 5, in which event the holder of such Allowed Claim
shall receive distributions under Class 5 on account of such Allowed Claim and
shall forfeit its right to distributions under Class 4 on account of such
Allowed Claim.
2. IMPAIRMENT AND VOTING. Class 4 is impaired under
the Plan. The holders of Allowed Convenience Claims in Class 4 are entitled to
vote to accept or reject the Plan.
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3. ELECTION TO BE TREATED AS A CONVENIENCE CLAIM. By
checking the appropriate box on a timely cast Ballot, the holder of an Allowed
General Unsecured Claim in an amount greater than $2,000 may elect to reduce the
amount of such holder's Allowed General Unsecured Claim to $2,000 and to receive
a distribution upon such Allowed Class 4 Convenience Claim in the amount of
$1,000 as described above. Such an election shall constitute a waiver of the
right to collect, and a release of, the amount of the Allowed General Unsecured
Claim in excess of $2,000, and the holder of such Allowed Class 4 Convenience
Claim shall be deemed to have released the Debtor and its estate, and its
property from any and all liability for such excess amount. The holder of an
Allowed General Unsecured Claim which timely elects to reduce the amount of its
Allowed Claim shall be deemed to be the holder of an Allowed Class 4 Convenience
Claim for classification, voting and all other purposes under the Plan.
E. CLASS 5 - GENERAL UNSECURED CREDITORS.
1. DISTRIBUTIONS. Each holder of an Allowed General
Unsecured Claim in Class 5 has the option to receive one of three distributions
under the Plan by checking the appropriate box on a timely cast Ballot.
(a) STOCK/NOTES ELECTION. A holder of an
Allowed General Unsecured Claim may elect to receive its Pro Rata share of (i)
Available Shares and (ii) Available Notes (the "STOCK/NOTES ELECTION");
(b) STOCK ONLY DISTRIBUTION. A holder of an
Allowed General Unsecured Claim may elect to receive (i) its Pro Rata share of
Available Shares and (ii) an additional 66.67 shares of New Common Stock for
every $1000 in New Senior Notes it would otherwise receive under the Stock/Notes
Election (the "STOCK ONLY DISTRIBUTION"); or
(c) ADDITIONAL NOTES ELECTION. A holder of
an Allowed General Unsecured Claim may elect to receive (i) its Pro Rata share
of Available Notes; (ii) an additional $1000 in New Senior Notes for every 66.67
shares of New Common Stock it would otherwise receive as its Pro Rata share of
Available Shares under the Stock/Notes Election (to the extent New Senior Notes
are available for such conversion); and (iii) the remainder of its Pro Rata
share of Available Shares, if any (the "ADDITIONAL NOTES ELECTION").
If a holder of an Allowed General Unsecured Claim fails to
indicate its selection of the Stock/Notes Election or Additional Notes Election
on a timely cast Ballot, such claimholder will receive the Stock Only
Distribution. Each holder of a Class 5 Allowed General Unsecured Claim will
receive its distribution on the later of (i) the Effective Date, or (ii) 30 days
after the date on which such Claim becomes an Allowed General Unsecured Claim,
or as soon thereafter as is
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practicable. If, after the Effective Date, any further Available Shares are
available from the release of New Common Stock from the Disputed Claims Reserve,
then each holder of an Allowed General Unsecured Claim will receive on a
Subsequent Distribution Date, if any, and the Final Distribution Date, Available
Shares on account of its Allowed General Unsecured Claim in accordance with
Articles VI.B.1(d) and (e) of the Plan. Any further New Senior Notes released
from the Disputed Claims Reserve shall be canceled in accordance with Article
VI.B.5 of the Plan. Senior Note Claims will be allowed in the aggregate amount
of $100,740,217.29.
2. IMPAIRMENT AND VOTING. Class 5 is impaired under
the Plan. Each holder of an Allowed Claim in Class 5 is entitled to vote to
accept or reject the Plan. The holder of an Allowed General Unsecured Claim
which timely makes either a Stock/Notes Election or an Additional Notes Election
shall continue to be deemed the holder of an Allowed Class 5 General Unsecured
Claim for classification, voting and all other purposes under the Plan.
F. CLASS 6 - EQUITY INTERESTS.
1. DISTRIBUTIONS. The holders of Class 6 Equity
Interests shall receive no distributions whatsoever on account of such Equity
Interests. All Equity Interests shall be canceled on the Effective Date.
2. IMPAIRMENT AND VOTING. Class 6 is impaired under
the Plan. As the holders of Equity Interests are receiving no distributions they
are conclusively presumed to have rejected the Plan and are not entitled to vote
to accept or reject the Plan.
V.
PROVISIONS REGARDING CORPORATE
GOVERNANCE AND MANAGEMENT
OF LOEHMANN'S HOLDINGS AND
THE REORGANIZED DEBTOR
A. FORMATION OF HOLDING COMPANY.
On the Effective Date, a holding company ("LOEHMANN'S
HOLDINGS") shall be formed which shall own 100% of Reorganized Loehmann's and
which shall issue the New Senior Notes and New Common Stock pursuant to Article
V.C. of the Plan.
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B. DIRECTORS AND OFFICERS OF LOEHMANN'S HOLDINGS AND
REORGANIZED LOEHMANN'S; AMENDED CERTIFICATE OF
INCORPORATION AND AMENDED BY-LAWS.
1. LOEHMANN'S HOLDINGS.
(A) BOARD OF DIRECTORS. As of the Effective Date, the
board of directors of Loehmann's Holdings shall initially consist of seven (7)
members, five (5) of whom shall be jointly designated by the Creditors Committee
and Informal Noteholders Committee whose names shall be disclosed on or before
the date of the Confirmation Hearing, and two (2) of whom shall be Robert
Friedman and Robert Glass. The Board of Directors of Loehmann's Holdings will
select a Chairman of the Board of Directors of Loehmann's Holdings at its
initial meeting.
(B) OFFICERS OF LOEHMANN'S HOLDINGS. The officers of
Loehmann's Holdings shall be disclosed at or prior to the Confirmation Hearing.
(C) CERTIFICATE OF INCORPORATION AND BY-LAWS. The
adoption of Loehmann's Holdings Certificate of Incorporation and Loehmann's
Holdings By-Laws will be deemed to have occurred and be effective as of the
Effective Date without any further action by the directors or stockholders of
Loehmann's Holdings. On or prior to the Effective Date, Loehmann's Holdings will
file with the Secretary of State of the State of Delaware, in accordance with
sections 103 and 303 of the Delaware General Corporation Law, the Loehmann's
Holdings Certificate of Incorporation and such certificate shall be the
certificate of incorporation for Loehmann's Holdings. The Certificate of
Incorporation and By- Laws shall be substantially in the forms contained in the
Plan Supplement.
2. REORGANIZED LOEHMANN'S.
(A) BOARD OF DIRECTORS. As of the Effective Date, the
board of directors of Reorganized Loehmann's shall initially consist of seven
(7) members, five (5) of whom shall be jointly designated by the Creditors
Committee and Informal Noteholders Committee whose names shall be disclosed on
or before the date of the Confirmation Hearing, and two (2) of whom shall be
Robert Friedman and Robert Glass. The Board of Directors of Reorganized
Loehmann's will select a Chairman of the Board of Directors of Reorganized
Loehmann's at its initial meeting.
(B) OFFICERS OF REORGANIZED LOEHMANN'S. The officers
of Loehmann's immediately prior to the Effective Date shall serve as the initial
officers of Reorganized Loehmann's on and after the Effective Date. Such
officers
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shall serve in accordance with employment agreements to be negotiated with
Reorganized Loehmann's and applicable nonbankruptcy law.
(C) AMENDED CERTIFICATE OF INCORPORATION AND AMENDED
LOEHMANN'S BY-LAWS. The adoption of the Amended Certificate of Incorporation and
Amended By-Laws will be deemed to have occurred and be effective as of the
Effective Date without any further action by the directors or stockholders of
the Debtor or the Reorganized Debtor. On or prior to the Effective Date,
Loehmann's will file with the Secretary of State of the State of Delaware, in
accordance with sections 103 and 303 of the Delaware General Corporation Law,
the Amended Certificate of Incorporation and such certificate shall be the
certificate of incorporation for Reorganized Loehmann's. The Amended Certificate
of Incorporation and Amended By-Laws shall be substantially in the forms
contained in the Plan Supplement.
C. SECURITIES TO BE ISSUED PURSUANT TO THE PLAN.
1. NEW COMMON STOCK. On the Effective Date, the
issuance by Loehmann's Holdings of between 3,333,333 and 5,000,000 shares of New
Common Stock (depending on how many shares are required for distribution to
claimholders pursuant to Article IV.E of the Plan), subject to increase by the
Equity Incentive Plan, is hereby authorized without further act or action under
applicable law, regulation, rule or order. Each share of New Common Stock will
entitle its holder to one vote, with no cumulative voting rights. Holders of New
Common Stock will have the right to participate proportionately in any dividends
distributed by Loehmann's Holdings. Reorganized Loehmann's and Loehmann's
Holdings will use their best efforts to have the New Common Stock listed on a
nationally recognized market or exchange. Reorganized Loehmann's is authorized
to issue up to 1,000 shares of common stock; 100 of such shares (being 100% of
the shares to be issued on the Effective Date) shall be issued to Loehmann's
Holdings on the Effective Date.
2. NEW SENIOR NOTES. The New Senior Notes will be
issued by Loehmann's Holdings pursuant to an indenture (the "NEW NOTES
INDENTURE"), which will be qualified under the Trust Indenture Act of 1939, as
amended. An indenture trustee will be selected prior to the Confirmation
Hearing. A summary of the principal terms and conditions of the New Senior Notes
is attached hereto as Exhibit "A." The New Senior Notes and the New Notes
Indenture will be in substantially the forms included in the Plan Supplement.
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D. SECURITIES LAWS MATTERS.
Each Initial Holder receiving a distribution of New Common
Stock representing more than 10% of the aggregate New Common Stock issued on the
Effective Date shall be entitled to become a party to the Registration Rights
Agreement, which provides that Loehmann's Holdings will file and maintain the
effectiveness of a shelf registration right statement for such Initial Holder
for the New Common Stock and the New Senior Notes, covering the resale of all
such securities. Certificates evidencing shares of New Common Stock received by
an Initial Holder who is deemed to be an affiliate of the Debtor by reason of
its equity holdings or otherwise will bear a legend stating, in substance, that
such shares have not been registered under the Securities Act or under the
securities laws of any state or other jurisdiction and may not be sold, offered
for sale or otherwise transferred unless registered or qualified under such Act
and applicable state securities laws or unless Loehmann's Holdings receives a
certificate executed by a duly authorized officer of such Initial Holder or an
opinion of counsel, as applicable, reasonably satisfactory to the Loehmann's
Holdings that such registration or qualification is not required. The
Registration Rights Agreement will be in substantially the form included in the
Plan Supplement.
E. LOEHMANN'S HOLDINGS EQUITY INCENTIVE PLAN.
On the Effective Date, Loehmann's Holdings will adopt a stock
option plan (the "EQUITY INCENTIVE PLAN") which permits Loehmann's Holdings to
grant to its officers and directors and the officers and directors of
Reorganized Loehmann's, options to acquire shares of New Common Stock. Such
stock option plan shall be on the terms described in Exhibit "B" hereto and
shall be in substantially the form contained in the Plan Supplement.
VI.
MEANS OF IMPLEMENTATION,
PROVISIONS REGARDING VOTING
AND DISTRIBUTIONS UNDER THE PLAN
AND TREATMENT OF DISPUTED, CONTINGENT AND
UNLIQUIDATED ADMINISTRATIVE CLAIMS AND CLAIMS
A. VOTING OF CLAIMS.
Each holder of an Allowed Claim in an Impaired Class of Claims
shall be entitled to vote separately to accept or reject the Plan as provided in
such order as may be entered by the Court establishing certain procedures with
respect to the solicitation and tabulation of votes to accept or reject the
Plan, or any other order or orders of the Court.
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B. DISTRIBUTIONS.
1. METHOD OF DISTRIBUTIONS UNDER THE PLAN.
(a) DATE AND DELIVERY OF DISTRIBUTIONS.
Distributions under the Plan shall be made by the Reorganized Debtor or its
designee to the holders of Allowed Administrative Claims, Allowed Priority Tax
Claims, Allowed Other Priority Claims, Allowed DIP Financing Claims, Allowed
Other Secured Claims, Allowed Convenience Claims and Allowed General Unsecured
Claims at the addresses set forth on the Schedules, unless such addresses are
superseded by proofs of claim or transfers of claim filed pursuant to Bankruptcy
Rule 3001 (or at the last known addresses of such holders if the Debtor or the
Reorganized Debtor has been notified in writing of a change of address), except
that all distributions to the holders of Allowed Senior Note Claims shall be
made in accordance with the Senior Note Indenture. Distributions of New Senior
Notes and New Common Stock shall be made initially to the Transfer Agent who
shall make the distributions to the holders of Allowed General Unsecured Claims
or, in the case of holders of Allowed Senior Note Claims, to the Senior Note
Indenture Trustee for further distribution to individual holders of Senior Note
Claims in accordance with the Senior Note Indenture. Notwithstanding any
provisions in the Plan to the contrary, the Senior Note Indenture will continue
in effect to the extent necessary to allow the Senior Note Indenture Trustee to
receive and make distributions pursuant to the Plan on account of the Senior
Note Claims. New Senior Notes (including any interest earned thereon) and New
Common Stock (including dividends paid on account thereof) shall be held in
trust by the disbursing agent or the Reorganized Debtor, as applicable, for the
benefit of holders of Disputed Claims until such time as such shares and/or
notes are distributed to holders of Allowed Claims. Until such distribution,
shares of New Common Stock held for the benefit of Disputed Claims holders shall
be treated as treasury stock for voting purposes.
(b) DISTRIBUTION OF CASH. Any payment of
Cash by the Reorganized Debtor pursuant to the Plan shall be made at the option
and in the sole discretion of the Reorganized Debtor by (i) a check drawn on, or
(ii) wire transfer from, a domestic bank selected by the Reorganized Debtor.
(c) EFFECTIVE DATE DISTRIBUTIONS. On the
Effective Date, or as soon thereafter as practicable, the Reorganized Debtor
shall distribute Available Notes and Available Shares to the holders of Allowed
General Unsecured Claims.
(d) DISTRIBUTIONS ON SUBSEQUENT DISTRIBUTION
DATES. Unless otherwise provided in the Plan, to the extent there are Available
Shares subsequent to the Effective Date as a result of the release of shares of
New Common Stock from the Disputed Claims Reserve in accordance with Article
VI.B.4. of the
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Plan or the return of unclaimed, undeliverable or time-barred distributions to
holders of Allowed General Unsecured Claims pursuant to Article VI.B.1.(g) of
the Plan, the Reorganized Debtor shall, on a Subsequent Distribution Date,
distribute (with the written consent of the Creditors Committee or Court order
on notice to the Creditors Committee) such Available Shares to the holders of
General Unsecured Claims entitled thereto that were Allowed on the Effective
Date or subsequently have become Allowed on or before the Subsequent
Distribution Date in amounts necessary to cause such holders to have received
aggregate distributions of shares of New Common Stock in respect of such Allowed
General Unsecured Claims equal to the distributions that such holders would have
received in respect of such Allowed General Unsecured Claims on the Effective
Date if (x) such Available Shares had been available for distribution on the
Effective Date, (y) such Allowed General Unsecured Claims had been Allowed on
the Effective Date in the amounts in which they are Allowed on the Subsequent
Distribution Date, and (z) Claims or portions thereof that have become
disallowed subsequent to the Effective Date and on or before the Subsequent
Distribution Date had been disallowed on the Effective Date.
(e) DISTRIBUTIONS ON THE FINAL DISTRIBUTION
DATE. Unless otherwise provided in this Plan, to the extent there are Available
Shares subsequent to the Effective Date from the release of shares of New Common
Stock from the Disputed Claims Reserve in accordance with Article VI.B.4. of the
Plan, or the return of unclaimed, undeliverable or time-barred distributions to
holders of Allowed General Unsecured Claims pursuant to Article VI.B.1.(g) of
the Plan, the Reorganized Debtor shall, on the Final Distribution Date,
distribute all such Available Shares to the holders of General Unsecured Claims
entitled thereto that were Allowed on the Effective Date, or subsequently have
become Allowed on or before the Final Distribution Date in amounts necessary to
cause such holders to have received aggregate distributions of shares of New
Common Stock in respect of such Allowed Claims equal to the distributions that
such holders would have received in respect of such Allowed General Unsecured
Claims on the Effective Date if (x) such Available Shares had been available for
distribution on the Effective Date, (y) such Allowed General Unsecured Claims
had been Allowed on the Effective Date in the amounts in which they are Allowed
on the Final Distribution Date, and (z) Claims or portions thereof that have
become disallowed subsequent to the Effective Date and on or before the Final
Distribution Date had been disallowed on the Effective Date; PROVIDED, HOWEVER,
that in no event shall the Reorganized Debtor be obligated to make such a
distribution if, in the discretion of the Reorganized Debtor and the Creditors
Committee, there are Available Shares to make a cost-efficient distribution,
taking into account the size of the distribution to be made and the number of
recipients of such distribution, in which event such shares of New Common Stock
shall become the property of the Reorganized Debtor.
(f) RESERVE SHARES AND NOTES FOR DISPUTED
CLAIMS. On the date on which the Reorganized Debtor makes its initial
distribution to holders of
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Allowed General Unsecured Claims pursuant to Article VI.B.1 of the Plan, the
Reorganized Debtor shall deposit with the Transfer Agent an aggregate number of
New Senior Notes and shares of New Common Stock sufficient to distribute to each
holder of a Disputed Claim (i) the number of New Senior Notes and/or shares of
New Common Stock that such holder would have been entitled to receive under the
Plan if such Claim had been an Allowed General Unsecured Claim on the date of
such initial distribution, or (ii) such lesser amount as the Court may estimate
pursuant to Article VI.C. of the Plan or may otherwise order. New Senior Notes
and shares of New Common Stock shall be withheld by the Transfer Agent and
reserved for distribution to holders of Disputed Claims until such time as such
notes and/or shares are distributed to holders of Allowed Claims. Until such
distribution, shares of New Common Stock held for the benefit of Disputed Claims
holders shall be treated as treasury stock for voting purposes.
(g) UNCLAIMED DISTRIBUTIONS. Any
distribution of Cash under the Plan which is unclaimed after the later to occur
of (a) two years after distribution or (b) six months after the date on which
such claimant's Claim is Allowed shall be transferred to the Reorganized Debtor
notwithstanding state or other escheat or similar laws to the contrary.
Distributions under the Plan consisting of New Senior Notes or New Common Stock
that are unclaimed for a period of two years after distribution shall be
canceled and any dividends or interest which has been paid with respect to such
securities shall be transferred to the Reorganized Debtor and entitlement by the
holder of a Claim to such distribution shall be extinguished and forever barred.
(h) SATURDAYS, SUNDAYS, OR LEGAL HOLIDAYS.
If any payment or act under the Plan is required to be made or performed on a
date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day,
and shall be deemed to have been completed as of the required date.
(i) FRACTIONAL NOTES AND FRACTIONAL SHARES.
(i) FRACTIONAL NOTES.
Notwithstanding any other provision in the Plan to the contrary, no
fractional denominations of New Senior Notes shall be issued pursuant
to the Plan. Whenever the issuance of any New Senior Note would
otherwise call for the issuance in an amount for a fraction of a New
Senior Note (issued in $100 denominations), the actual issuance of such
New Senior Note shall reflect a rounding of such fraction to the
nearest whole New Senior Note denomination (up or down), with half
denominations being rounded down.
(ii) FRACTIONAL SHARES.
Notwithstanding any other provision in the Plan to the contrary, no
fractional shares of New
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Common Stock shall be issued pursuant to the Plan. Whenever any payment
of a fraction of a share of New Common Stock would otherwise be
required under the Plan, the actual distribution made shall reflect a
rounding of such faction to the nearest whole share (up or down), with
half shares or less being rounded down and fractions in excess of a
half of a share being rounded up. If two or more holders are entitled
to equal fractional entitlements and the number of holders so entitled
exceeds the number of whole shares, as the case may be, which remain to
be allocated, the Transfer Agent shall allocate the remaining whole
shares to such holders by random lot or such other impartial method as
the Transfer Agent deems fair, in the Transfer Agent's sole discretion.
Upon the allocation of all of the whole shares authorized under the
Plan, all remaining fractional portions of the entitlements shall be
canceled and shall be of no further force and effect.
(j) DISTRIBUTIONS TO HOLDERS AS OF THE
RECORD DATE. As at the close of business on the Record Date, the claims register
shall be closed, and there shall be no further changes in the record holders of
any Claims. Further, at the close of business on the Record Date, the Senior
Note Indenture Trustee shall close the register for the Senior Notes. The
Debtor, the Reorganized Debtor and the Senior Note Indenture Trustee shall have
no obligation to recognize any transfer of any Claims (including Senior Note
Claims) occurring after the Record Date. The Debtor, the Reorganized Debtor and
the Senior Note Indenture Trustee shall instead be entitled to recognize and
deal for purposes under the Plan (except as to voting to accept or reject the
Plan pursuant to Article VI.A) with only those record holders stated on the
claims register and the register for the Senior Notes as of the close of
business on the Record Date.
(k) SENIOR NOTE INDENTURE TRUSTEE'S FEES AND
EXPENSES. The Senior Note Indenture Trustee shall be entitled to payment from
Reorganized Loehmann's of Indenture Trustee Expenses incurred in connection with
such Trustee's making distributions under the Plan without further Bankruptcy
Court approval. These payments will be made on terms agreed to with Reorganized
Loehmann's and will not be deducted from distributions to be made pursuant to
the Plan to holders of Allowed Senior Note Claims.
2. DISPUTED GENERAL UNSECURED CLAIMS. The holder of a
Disputed General Unsecured Claim that becomes an Allowed Claim subsequent to the
Initial Distribution Date shall receive a distribution of New Senior Notes
and/or New Common Stock as soon thereafter as is practicable. Such distributions
shall be made in accordance with the Plan based on the distributions that would
have been made to such holder under the Plan if the Disputed General Unsecured
Claim had been an Allowed Claim on or prior to the Effective Date.
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3. OBJECTIONS TO AND RESOLUTION OF
ADMINISTRATIVE CLAIMS AND CLAIMS;
ADMINISTRATIVE, PRIORITY AND CONVENIENCE
CLAIMS RESERVE.
(a) OBJECTIONS TO AND RESOLUTION OF
ADMINISTRATIVE CLAIMS AND CLAIMS. The Debtor, the Reorganized Debtor and the
Creditors Committee shall have the exclusive right to make and file objections
to Administrative Claims and Claims subsequent to the Confirmation Date. All
objections shall be litigated to a Final Order. Unless otherwise ordered by the
Court, the Debtor, the Reorganized Debtor and the Creditors Committee shall file
all objections to Administrative Claims and Claims that are the subject of
proofs of claim or requests for payment filed with the Court (other than
applications for allowances of compensation and reimbursement of expenses) and
serve such objections upon the holders of the Administrative Claim or Claim as
to which the objection is made as soon as is practicable, but in no event later
than 60 days after the Effective Date or such later date as may be approved by
the Court.
(b) ADMINISTRATIVE, PRIORITY AND
CONVENIENCE CLAIMS RESERVE.
(i) ESTABLISHMENT OF ADMINISTRATIVE,
PRIORITY AND CONVENIENCE CLAIMS RESERVE. On the Effective Date, the
Reorganized Debtor shall place into reserve an amount of Cash equal to
(i) the sum of the aggregate amount of all Disputed Administrative
Claims, Disputed Priority Tax Claims, Disputed Other Priority Claims
and Disputed Convenience Claims, plus (ii) an amount to be determined
by the Court to be reserved for any Disputed Administrative Claims,
Disputed Priority Tax Claims and Disputed Other Priority Claims that
are unliquidated (the "ADMINISTRATIVE, PRIORITY AND CONVENIENCE CLAIMS
RESERVE").
(ii) CASH HELD IN ADMINISTRATIVE,
PRIORITY AND CONVENIENCE CLAIMS RESERVE. Cash held in the
Administrative, Priority and Convenience Claims Reserve shall be
deposited in a segregated bank account or accounts in the name of the
Reorganized Debtor and designated as held in trust for the benefit of
holders of Allowed Administrative Claims, Allowed Priority Tax Claims,
Allowed Other Priority Claims and Allowed Convenience Claims. Cash held
in the Administrative, Priority and Convenience Claims Reserve shall
not constitute property of the Reorganized Debtor. The Reorganized
Debtor shall invest the Cash held in the Administrative, Priority and
Convenience Claims Reserve in a manner consistent with investment
guidelines to be included in the Plan Supplement. The Reorganized
Debtor shall pay, or cause to be paid, out of the funds held in the
Administrative, Priority and Convenience Claims Reserve, any tax
imposed on the Administrative, Priority and Convenience Claims Reserve
by
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any governmental unit with respect to income generated by Cash held in
the Administrative, Priority and Convenience Claims Reserve. Any Cash
held in the Administrative, Priority and Convenience Claims Reserve
after all Administrative, Priority and Convenience Claims have been
Allowed or disallowed shall be transferred to and become the property
of the Reorganized Debtor.
4. ALLOWANCE OF DISPUTED ADMINISTRATIVE, PRIORITY AND
CONVENIENCE CLAIMS. If, on or after the Effective Date, any Disputed
Administrative, Priority or Convenience Claim becomes an Allowed Claim, the
Reorganized Debtor shall, 30 days after the date on which such Claim becomes an
Allowed Claim, or as soon thereafter as is practicable, distribute from the
Administrative, Priority and Convenience Claims Reserve to the holder of such
Allowed Administrative, Priority or Convenience Claim Cash equal to the amount
that such holder would have been entitled to had such Claim been Allowed on the
Effective Date.
5. RELEASE OF SHARES AND NOTES FROM DISPUTED CLAIMS
RESERVE. If at any time or from time to time after the Effective Date, there
shall be New Senior Notes and/or shares of New Common Stock in the Disputed
Claims Reserve in an amount in excess of the amount which the Reorganized Debtor
is required at such time to reserve on account of Disputed Claims under the Plan
or pursuant to any Order of the Court, (i) such excess shares of New Common
Stock shall become available for distribution in accordance with the Plan, and
(ii) such excess New Senior Notes shall be canceled.
6. ALLOCATION OF CONSIDERATION. The aggregate
consideration to be distributed to the holders of Allowed Claims in each Class
under the Plan (other than the Claims, if any, of the Internal Revenue Service)
shall be treated as first satisfying an amount equal to the stated principal
amount of the Allowed Claim for such holders and any remaining consideration as
satisfying accrued, but unpaid, interest and costs, if any, and attorneys' fees
where applicable.
7. CANCELLATION AND SURRENDER OF EXISTING SECURITIES
AND AGREEMENTS. On the Effective Date, the Senior Notes and Equity Interests
shall be deemed canceled and such agreements and securities, including the
Senior Note Indenture (except as provided in Article VI.B.1.(a)), together with
all instruments issued pursuant thereto, shall have no further legal effect
other than as evidence of any right to receive distributions, fees and expenses
under the Plan. In addition, the Indenture Trustee's obligations shall be
discharged (except as contemplated in Article VI.B.).
Notwithstanding any other provision of the Plan, as a
condition precedent to receiving any distribution under the Plan, each holder of
a promissory
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note, share certificate, or other instrument or security evidencing a Claim must
tender such promissory note or other instrument or security to the Reorganized
Debtor or its designee or must execute and deliver an affidavit of loss and
furnish an indemnity or bond in substance and amount reasonably satisfactory to
the Reorganized Debtor and the Indenture Trustee.
Any holder of a Claim that fails to surrender such
instrument or to provide the affidavit and indemnity or bond before the later to
occur of (i) the second anniversary of the Effective Date and (ii) six months
following the date such holder's Claim becomes an Allowed Claim shall be deemed
to have forfeited all rights and/or Claims and may not receive or participate in
any distribution under the Plan.
C. ESTIMATION.
The Debtor, the Reorganized Debtor or the Creditors Committee
may, at any time, request that the Court estimate any Disputed Claim pursuant to
section 502(c) of the Bankruptcy Code regardless of whether the Debtor, the
Reorganized Debtor or the Creditors Committee have previously objected to such
Claim. The Court will retain jurisdiction to estimate any Claim at any time,
including during litigation concerning any objection to such Claim. In the event
that the Court estimates any Disputed Claim, that estimated amount may
constitute either the Allowed amount of such Claim, the amount on which a
reserve is to be calculated for purposes of the Disputed Claims Reserve, or a
maximum limitation on such Claim, as determined by the Court. If the estimated
amount constitutes a maximum limitation on such Claim, the Debtor, the
Reorganized Debtor or the Creditors Committee may elect to pursue any
supplemental proceedings to object to any ultimate payment of such Claim. All of
the aforementioned Claims objection, estimation and resolution procedures are
cumulative and not necessarily exclusive of one another.
D. ADMINISTRATIVE CLAIMS OF INDENTURE TRUSTEE.
In addition to any other Administrative Claim that may be
filed by the Indenture Trustee pursuant to the provisions set forth herein, the
Indenture Trustee shall have an Allowed Administrative Claim in an amount equal
to the reasonable and necessary fees and expenses incurred by the Indenture
Trustee and its legal counsel in accordance with and to the extent provided for
in the Senior Note Indenture for the period covering the Petition Date through
and including the Effective Date.
E. NONCONSENSUAL CONFIRMATION.
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As the holders of Equity Interests in Class 6 are deemed to
reject the Plan, the Debtor will seek to have the Court confirm the Plan under
section 1129(b) of the Bankruptcy Code.
F. THE AMENDED CERTIFICATE OF INCORPORATION, THE AMENDED
BY-LAWS AND OTHER IMPLEMENTATION DOCUMENTS.
On or before the Effective Date, the Reorganized Debtor and
Loehmann's Holdings will execute the Amended Certificate of Incorporation, the
Amended By-Laws, the Loehmann's Holdings Certificate of Incorporation,
Loehmann's Holdings By-Laws, the Equity Incentive Plan, the Registration Rights
Agreement and all other documents required and necessary to implement the Plan,
without the requirement of any further corporate action.
VII.
EFFECT OF CONFIRMATION OF THIS PLAN
A. CONTINUED CORPORATE EXISTENCE.
The Debtor, as Reorganized Debtor, shall continue to exist
after the Effective Date with all powers of a corporation under the laws of its
state of incorporation and without prejudice to any right to alter or terminate
such existence (whether by merger or otherwise) under such applicable state law;
and the Reorganized Debtor may operate its business free of any restrictions
imposed by the Bankruptcy Code, the Bankruptcy Rules or by the Court, subject
only to the terms and conditions of the Plan.
B. VESTING OF ASSETS.
Except as otherwise expressly provided in the Plan, on the
Effective Date, or as soon as practicable thereafter, the Reorganized Debtor
shall form two (2) subsidiaries. Such subsidiaries shall be vested with all of
the property of the Debtor's estate free and clear of all Claims, Liens,
encumbrances, charges and other interests of creditors and equity security
holders. Tangible assets shall be transferred to one subsidiary and intangible
assets shall be transferred to the other.
C. DISCHARGE OF THE DEBTOR.
The rights afforded herein and the treatment of all Claims and
Equity Interests herein shall be in exchange for and in complete satisfaction,
discharge, and release of all Claims and Equity Interests of any nature
whatsoever, including any interest accrued on such Claims from and after the
Petition Date, against the Debtor,
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the Debtor in Possession, the Reorganized Debtor or any of its assets or
properties, arising prior to the Effective Date. Except as otherwise expressly
specified in the Plan, the Confirmation Order shall act as of the Effective Date
as a discharge of all debts of, Claims against, Liens on, and Equity Interests
in the Debtor, its assets and properties, arising at any time before the entry
of the Confirmation Order, regardless of whether a proof of Claim or Equity
Interest with respect thereto was filed, whether the Claim or Equity Interest is
Allowed, or whether the holder thereof votes to accept the Plan or is entitled
to receive a distribution hereunder. Except as otherwise expressly specified in
the Plan, after the Effective Date, any holder of such discharged Claim or
Equity Interest shall be precluded from asserting against the Debtor, the
Reorganized Debtor, or any of its assets or properties, any other or further
Claim or Equity Interest based on any document, instrument, act, omission,
transaction, or other activity of any kind or nature that occurred before the
entry of the Confirmation Order.
D. INJUNCTION.
Except as otherwise expressly provided in the Plan, the
Confirmation Order, or a separate order of the Court, all entities who have
held, hold, or may hold Claims against or Equity Interests in the Debtor which
arose before or were held as of the Effective Date, are permanently enjoined, on
and after the Effective Date, from (a) commencing or continuing in any manner
any action or other proceeding of any kind against the Debtor, with respect to
any such Claim or Equity Interest, (b) the enforcement, attachment, collection,
or recovery by any manner or means of any judgment, award, decree, or order
against the Debtor on account of any such Claim or Equity Interest, (c)
creating, perfecting, or enforcing any encumbrance of any kind against the
Debtor or against the property or interests in property of the Debtor on account
of any such Claim or Equity Interest and (d) asserting any right of setoff,
subrogation, or recoupment of any kind against any obligation due from the
Debtor or against the property or interests in property of the Debtor on account
of any such Claim or Equity Interest. Such injunction shall extend to successors
of the Debtor (including, without limitation, the Reorganized Debtor) and its
properties and interests in property.
E. EXTINGUISHMENT OF CAUSES OF ACTION UNDER THE AVOIDING
POWER PROVISIONS.
On the Effective Date, all rights, claims, causes of action,
avoiding powers, suits and proceedings arising under sections 544, 545, 547,
548, 549 and 553 of the Bankruptcy Code shall be extinguished whether or not
then pending. The Reorganized Debtor shall have, retain, reserve and be entitled
to assert all other Claims, Causes of Action, rights of setoff and other legal
or equitable defenses which the Debtor had immediately prior to the Petition
Date as fully as if the Chapter 11 Case had not been commenced; and all of the
Reorganized Debtor's legal
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and equitable rights respecting any such Claim which is not specifically waived,
extinguished or relinquished by the Plan may be asserted after the Effective
Date to the same extent as if the Chapter 11 Case had not been commenced.
F. VOTES SOLICITED IN GOOD FAITH.
The Debtor, the Creditors Committee and the Informal
Noteholders Committee have, and upon confirmation of the Plan shall be deemed to
have, solicited acceptances of the Plan in good faith and in compliance with the
applicable provisions of the Bankruptcy Code. The Debtor and the Creditors
Committee (and each of their respective affiliates, agents, directors, officers,
members, employees, advisors, and attorneys) have participated in good faith and
in compliance with the applicable provisions of the Bankruptcy Code in the
offer, issuance, sale, and purchase of the securities offered and sold under the
Plan and therefore have not, and on account of such offer, issuance, sale,
solicitation, and/or purchase will not be, liable at any time for the violation
of any applicable law, rule, or regulation governing the solicitation of
acceptances or rejections of the Plan or the offer, issuance, sale, or purchase
of the securities offered and sold under the Plan.
G. ADMINISTRATIVE CLAIMS INCURRED AFTER THE CONFIRMATION
DATE.
Administrative Claims incurred by the Reorganized Debtor after
the date and time of the entry of the Confirmation Order, including (without
limitation) Claims for professionals' fees and expenses incurred after such
date, including, without limitation, fees and expenses by the Reorganized
Debtor, the Creditors Committee and Senior Note Indenture Trustee, shall not be
subject to application and may be paid by the Reorganized Debtor in the ordinary
course of business and without application for or Court approval.
H. THE DEBTOR'S RELEASE.
On the Effective Date, the Debtor and the Reorganized Debtor,
on behalf of themselves and their estates, shall be deemed to release
unconditionally all of their respective officers, directors, employees,
advisors, attorneys, financial advisors, accountants, and other professionals,
the Creditors Committee members, counsel to the Creditors Committee, financial
advisors to the Creditors Committee, the Informal Noteholders Committee members,
counsel to the Informal Noteholders Committee, the Senior Note Indenture Trustee
and each of their representatives and agents (including any professionals
retained by such persons or entities) (the "RELEASED PARTIES") from any and all
claims, obligations, suits, judgments, damages, rights, Causes of Action and
liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, based in whole or in
part upon actions taken in their respective capacities described above or any
omission, transaction, event or other occurrence taking place on or
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prior to the Effective Date in any way relating to the Debtor, the Chapter 11
Case or the Plan, except that (i) no individual shall be released from any act
or omission that constitutes gross negligence or willful misconduct, and (ii)
the Reorganized Debtor shall not relinquish or waive the right to assert any of
the foregoing as a legal or equitable defense or right of set-off or recoupment
against any Claims of any such persons asserted against the Debtor.
I. EXCULPATION, RELEASE AND INJUNCTION OF RELEASED
PARTIES.
1. EXCULPATION. The Debtor, the Reorganized Debtor,
members of the Creditors Committee, members of the Informal Noteholders
Committee, the Senior Note Indenture Trustee and the other Released Parties (i)
shall have no liability whatsoever to any holder or purported holder of an
Administrative Claim, Claim, or Equity Interest for any act or omission in
connection with, or arising out of, the Plan, the Disclosure Statement, the
negotiation of the Plan, the negotiation of the other documents included in the
Plan Supplement, the pursuit of approval of the Disclosure Statement or the
solicitation of votes for confirmation of the Plan, the Chapter 11 Case, the
consummation of the Plan, the administration of the Plan or the property to be
distributed under the Plan, or any transaction contemplated by the Plan or
Disclosure Statement or in furtherance thereof (including, without limitation,
the Equity Plan, employment contracts, programs and arrangements adopted in
connection with the Plan or the Chapter 11 Case), except for willful misconduct
or gross negligence as determined by a Final Order, and (ii) in all respects,
shall be entitled to rely upon the advice of counsel with respect to their
duties and responsibilities under the Plan. 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 Released
Parties from liability.
2. INJUNCTION. Pursuant to section 105 of the
Bankruptcy Code, no holder or purported holder of an Administrative Claim, Claim
or Equity Interest shall be permitted to commence or continue any action,
employment of process, or any act to collect, offset, or recover any claim
against a Released Party that accrued on or prior to the Effective Date and has
been released or waived pursuant to Article VII.I.1.
3. LIMITATION OF GOVERNMENTAL RELEASES.
Notwithstanding Articles VII.I.1 and 2. of the Plan, the Plan shall not release,
discharge, or exculpate any non-debtor party from any debt owed to the United
States Government and/or its agencies, including the Pension Benefit Guaranty
Corporation (the "GOVERNMENT"), or from any liability arising under the Internal
Revenue Code, the Employee Retirement Income Security Act of 1974, as amended,
or the environmental laws, securities laws or criminal laws of the United
States. In addition, notwithstanding Articles VII.I.1. and 2. of the Plan, the
Plan shall not
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enjoin or prevent the Government from collecting any such liability from any
such non-debtor party.
J. TERM OF BANKRUPTCY INJUNCTION OR STAYS.
All injunctions or stays provided for in the Chapter 11 Case
under sections 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
Effective Date.
K. PRESERVATION OF INSURANCE.
The Debtor's discharge and release from all Claims as provided
herein, except as necessary to be consistent with this Plan, shall not diminish
or impair the enforceability of any insurance policy that may cover Claims
against the Debtor, the Reorganized Debtor (including, without limitation, its
officers and directors) or any other person or entity.
L. OFFICERS' AND DIRECTORS' INDEMNIFICATION RIGHTS AND
INSURANCE.
Notwithstanding any other provisions of the Plan, the
obligations of the Debtor to indemnify its present directors, officers, and
employees against any obligations, liabilities, costs or expenses pursuant to
the articles of incorporation or by-laws of the Debtor, applicable state law,
specific agreement, or any combination of the foregoing, shall survive the
Effective Date.
VIII.
RETENTION OF JURISDICTION
The Court shall have exclusive jurisdiction of all matters
arising out of, and related to, the Chapter 11 Case and the Plan pursuant to,
and for the purposes of, section 105(a) and section 1142 of the Bankruptcy Code
and for, among other things, the following purposes: (1) to hear and determine
applications for the assumption or rejection of executory contracts or unexpired
leases pending on the Confirmation Date, and the allowance of Claims resulting
therefrom; (2) to determine any other applications, adversary proceedings, and
contested matters pending on the Effective Date; (3) to ensure that
distributions to holders of Allowed Claims and Allowed Equity Interests are
accomplished as provided herein; (4) to resolve disputes as to the ownership of
any Claim or Equity Interest; (5) to hear and determine timely objections to
Administrative Claims, Claims and Equity Interests; (6) to enter and implement
such orders as may be appropriate in the event the Confirmation Order is for any
reason stayed, revoked, modified or vacated; (7) to
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issue such orders in aid of execution of the Plan, to the extent authorized by
section 1142 of the Bankruptcy Code; (8) to consider any modifications of the
Plan, to cure any defect or omission, or to reconcile any inconsistency in any
order of the Court, including, without limitation, the Confirmation Order; (9)
to hear and determine all applications for compensation and reimbursement of
expenses of professionals under sections 330, 331 and 503(b) of the Bankruptcy
Code; (10) to hear and determine disputes arising in connection with the
interpretation, implementation, or enforcement of the Plan; (11) to hear and
determine any issue for which the Plan requires a Final Order of the Court; (12)
to hear and determine matters concerning state, local, and federal taxes in
accordance with sections 346, 505 and 1146 of the Bankruptcy Code; (13) to hear
any other matter not inconsistent with the Bankruptcy Code; (14) to hear and
determine disputes arising in connection with compensation and reimbursement of
expenses of professionals for services rendered during the period commencing on
the Confirmation Date through and including the Effective Date; and (15) to
enter a final decree closing the Chapter 11 Case.
IX.
MISCELLANEOUS PROVISIONS
A. PAYMENT OF STATUTORY FEES.
All fees payable on or before the Effective Date (i) pursuant
to section 1930 of title 28 of the United States Code, as determined by the
Court at the Confirmation Hearing, and (ii) to the United States Trustee, shall
be paid by the Debtor on or before the Effective Date and all such fees payable
after the Effective Date shall be paid by the Reorganized Debtor.
B. DISSOLUTION OF CREDITORS COMMITTEE.
The appointment of the Creditors Committee shall terminate on
the Final Distribution Date.
C. MODIFICATION OF THE PLAN.
The Debtor reserves the right, in accordance with the
Bankruptcy Code, to amend or to modify the Plan prior to the entry of the
Confirmation Order with the prior consent of the Creditors Committee and
Informal Noteholders Committee. After entry of the Confirmation Order, the
Reorganized Debtor or the Debtor may amend or modify the Plan, or remedy any
defect or omission or reconcile any inconsistency in the Plan in such a manner
as may be necessary to carry out the purpose and intent of the Plan.
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D. GOVERNING LAW.
Unless a rule of law or procedure is supplied by Federal law
(including the Bankruptcy Code and Bankruptcy Rules) or the Delaware General
Corporation Law, the laws of the State of New York (without reference to the
conflicts of laws provisions thereof) shall govern the construction and
implementation of the Plan and any agreements, documents, and instruments
executed in connection with the Plan.
E. FILING OR EXECUTION OF ADDITIONAL DOCUMENTS.
On or before the Effective Date, the Debtor or the Reorganized
Debtor, shall file with the Court or execute, as appropriate, such agreements
and other documents as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan.
F. WITHHOLDING AND REPORTING REQUIREMENTS.
In connection with the Plan and all instruments issued in
connection therewith and distributions thereon, the Reorganized Debtor shall
comply with all withholding and reporting requirements imposed by any federal,
state, local or foreign taxing authority and all distributions hereunder shall
be subject to any such withholding and reporting requirements.
G. EXEMPTION FROM TRANSFER TAXES.
Pursuant to section 1146(c) of the Bankruptcy Code, the
issuance, transfer or exchange of the New Senior Notes or New Common Stock under
the Plan, the making or assignment of any lease or sublease or the making or
delivery of any other instrument whatsoever, in furtherance of or in connection
with the Plan shall not be subject to any stamp, real estate transfer, recording
or other similar tax.
H. SECTION 1145 EXEMPTION.
Pursuant to, in accordance with, and solely to the extent
provided under section 1145 of the Bankruptcy Code, the issuance of New Senior
Notes and New Common Stock to the Debtor's creditors under the Plan is exempt
from the registration requirements of Section 5 of the Securities Act, as
amended, and any State or local law requiring registration for offer or sale of
a security or registration or licensing of an issuer of, underwriter of, or
broker or dealer in such New Senior Notes and New Common Stock and is deemed to
be a public offering of New Senior Notes and New Common Stock.
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I. WAIVER OF FEDERAL RULE OF CIVIL PROCEDURE 62(A).
The Debtor may request that the Confirmation Order include (a)
a finding that Fed. R. Civ. P. 62(a) shall not apply to the Confirmation Order
and (b) authorization for the Debtor to consummate the Plan immediately after
entry of the Confirmation Order.
J. HEADINGS.
Headings used in the Plan are for convenience of reference
only and shall not constitute a part of the Plan for any purpose.
K. EXHIBITS/SCHEDULES.
All Exhibits and Schedules to the Plan are incorporated into
and constitute a part of the Plan as if set forth herein.
L. NOTICES.
All notices, requests, and demands hereunder to be effective
shall be in writing 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:
TO THE DEBTOR: Loehmann's, Inc., 2500 Halsey Street, Bronx,
New York 10461, Attention: Robert N. Friedman, with a copy to Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019-6064, attention: Alan W. Kornberg, Tel.: (212) 373-3000/Fax: (212)
757-3990.
TO THE CREDITORS COMMITTEE: Kronish Lieb Weiner & Hellman,
LLP, 1114 Avenue of the Americas, New York, New York 10036-7798, attention:
Lawrence C. Gottlieb, Tel.: (212) 479-6140/Fax: (212) 479-6275.
TO THE INFORMAL NOTEHOLDERS COMMITTEE: Andrews & Kurth,
L.L.P., 805 Third Ave., New York, New York 10022, attention: Paul N.
Silverstein, Tel.: (212) 850-2800/Fax: (212) 850-2929.
M. PLAN SUPPLEMENT.
Forms of the documents relating to the Amended Certificate of
Incorporation, the Amended By-Laws, the Loehmann's Holdings Certificate of
Incorporation, the Loehmann's Holdings By-Laws, the New Notes Indenture, the
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New Senior Notes, the Registration Rights Agreement, the investment guidelines
referred to in Article VI.B.(3)(b)(ii) and the Equity Incentive Plan shall be
contained in the Plan Supplement which will be filed with the Clerk of the Court
prior to the Confirmation Hearing. The Plan Supplement may be inspected in the
office of the Clerk of the Court during normal court hours. Holders of Claims or
Equity Interests may obtain a copy of the Plan Supplement upon written request
to the Debtor in accordance with Article IX.L. of the Plan.
N. CONFLICT.
The terms of this Plan shall govern in the event of any
inconsistency with the summaries of the Plan set forth in the Disclosure
Statement.
O. SETOFF BY THE UNITED STATES.
The valid setoff rights, if any, of the United States of
America will be unaffected by this Plan or confirmation thereof.
X.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Other than (i) executory contacts or unexpired leases which
(x) are the subject of a motion to reject pending on the Confirmation Date, (y)
were previously assumed or rejected by the Debtor, or (z) have expired or
terminated pursuant to their own terms during the pendency of the Chapter 11
Case, and (ii) employment agreements, if any, terminated prior to or in
connection with the Plan, all of the executory contracts, unexpired leases and
employment agreements that exist between the Debtor and any person are
specifically assumed as of the Effective Date pursuant to the Plan. All Claims
for damages arising from the rejection of executory contracts or unexpired
leases must be filed with the Court in accordance with the terms of the order
authorizing such rejection. Any Claims not filed within such time will be
forever barred from assertion against the Debtor, its estate and the Reorganized
Debtor. All Allowed Claims arising from the rejection of executory contracts or
unexpired leases shall be treated as Class 5 Claims. The Reorganized Debtor,
except as otherwise agreed by the parties, will cure any and all undisputed
defaults within 60 days of the Effective Date under any executory contract,
unexpired lease or employment agreement assumed pursuant to the Plan in
accordance with section 365 of the Bankruptcy Code. All disputed defaults that
are required to be cured shall be cured either within 30 days of the entry of a
Final Order determining the amount, if any, of the Debtor or the Reorganized
Debtor's liability with respect thereto, or as may otherwise be agreed to by the
parties.
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XI.
BENEFIT PLANS
All employment and severance agreements and policies, and all
employee compensation and benefit plans, policies, and programs of the Debtor
applicable generally to its employees, including agreements and programs subject
to section 1114 of the Bankruptcy Code, as in effect on the Effective Date,
including, without limitation, all savings plans, retirement plans, health care
plans, disability plans, severance benefit plans, incentive plans, and life,
accidental death, and dismemberment insurance plans, shall be deemed to be, and
shall be treated as though they are, executory contracts that are assumed under
the Plan, and the Debtor's obligations under such agreements and programs shall
survive the Effective Date of the Plan, without prejudice to the Reorganized
Debtor's rights under applicable non-bankruptcy law to modify, amend, or
terminate the foregoing arrangements, except for (i) such executory contracts or
plans specifically rejected pursuant to the Plan (to the extent such rejection
does not violate section 1114 of the Bankruptcy Code) and (ii) such executory
contracts or plans as have previously been terminated, or rejected, pursuant to
a Final Order, or specifically waived by the beneficiaries of such plans,
contracts, or programs.
XII.
EFFECTIVENESS OF THE PLAN
A. CONDITIONS PRECEDENT TO EFFECTIVENESS.
The Plan shall not become effective unless and until
it has been confirmed and the following conditions have been satisfied in full
or waived pursuant to Article XII.B.: (1) the Confirmation Order in a form
satisfactory to the Debtor, the Creditors Committee and the Informal Noteholders
Committee shall have become a Final Order; (2) the Amended Certificate of
Incorporation shall have been properly filed with the Secretary of State of the
State of Delaware; (3) the Loehmann's Holdings Certificate of Incorporation
shall have been properly filed with the Secretary of State of the State of
Delaware; (4) all authorizations, consents and regulatory approvals required (if
any) for the Plan's effectiveness shall have been obtained; and (5) on the
Effective Date, Loehmann's Holdings, the Reorganized Debtor and/or the
subsidiaries to be formed on the Effective Date have entered into a senior
secured credit facility and Loehmann's Holdings has entered into the New Notes
Indenture, on terms acceptable to the Creditors Committee and the Informal
Noteholders Committee.
B. WAIVER OF CONDITIONS.
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The Debtor may waive any or all of the conditions set
forth in Article XII.A. above at any time, with the prior consent of the
Creditors Committee and the Informal Noteholders Committee, without leave of or
order of the Court and without any formal action.
C. EFFECT OF FAILURE OF CONDITIONS.
In the event that the Effective Date does not occur
on or before one hundred and twenty (120) days after the Confirmation Date, upon
notification submitted by the Debtor to the Court: (a) the Confirmation Order
shall be vacated, (b) no distributions under the Plan shall be made, (c) the
Debtor and all holders of Claims and Equity Interests shall be restored to the
STATUS QUO ANTE as of the day immediately preceding the Confirmation Date as
though the Confirmation Date had never occurred, and (d) the Debtor's
obligations with respect to the Claims and Equity Interests shall remain
unchanged and nothing contained in the Plan shall constitute or be deemed a
waiver or release of any Claims or Equity Interests by or against the Debtor or
any other person or to prejudice in any manner the rights of the Debtor or any
person in any further proceedings involving the Debtor.
D. VACATUR OF CONFIRMATION ORDER.
If an order denying confirmation of the Plan is
entered, then the Plan shall be null and void in all respects, and nothing
contained in the Plan shall (a) constitute a waiver or release of any Claims
against or Equity Interests in the Debtor; (b) prejudice in any manner the
rights of the holder of any Claim against, or Equity Interest in, the Debtor;
(c) prejudice in any manner any right, remedy or claim of the Debtor; or (d) be
deemed an admission against interest by the Debtor.
Dated: September 6, 2000
LOEHMANN'S, INC.
By: /s/ Robert Glass
--------------------------------------------
Name: Robert Glass
Title: President, Chief Operating Officer
40
<PAGE>
Exhibits to the Plan
A - Summary of Terms of New Senior Notes
B - Summary of Equity Incentive Plan
v
<PAGE>
EXHIBIT A
<PAGE>
LOEHMANN'S HOLDINGS (THE "COMPANY")
11% SENIOR NOTES DUE FIVE (5) YEARS
AND ONE MONTH FROM THE EFFECTIVE DATE
SUMMARY OF TERMS
Notes Offered: 11% Senior Notes due five (5) years and one
month from the Effective Date (the "NOTES").
Maturity Date: five (5) years and one month from the
Effective Date
Amount: up to $25,000,000 to be issued on the
Effective Date.
Denomination: Notes will be issued in $100 denominations;
no fractional denominations will be issued.
An issuance of Notes otherwise calling for
the issuance of fractional denominations
shall reflect a rounding of such fraction to
the nearest whole Note denomination (up or
down), with half denominations being rounded
down.
Interest: Interest will accrue at a rate of 11% per
annum and be payable semi-annually (each
April 30 and October 30) (i) for the period
from the earlier of the Effective Date and
November 1, 2000 through April 30, 2001 by
the issuance of additional Notes, and (ii)
for subsequent periods (a) in cash, if the
"Free Cash Flow Test" is met, or (b)
otherwise, by the issuance of additional
Notes. If interest is to be payable by the
issuance of additional Notes and such
issuance would result in the issuance of a
fraction of a Note to a particular
noteholder, such interest shall be recorded
in book- entry form only and will not be
payable until interest aggregating a whole
Note denomination or a multiple thereof has
accrued.
<PAGE>
1. FREE CASH FLOW TEST: Reorganized
Loehmann's must have, on a pro forma
basis, at least $0 of Free Cash
Flow, assuming that interest on the
Notes and any required matching
early amortization payments (the
"MATCHING AMORTIZATION") on
Reorganized Loehmann's Senior
Secured Credit facility (the "EXIT
FACILITY") were paid in cash for the
prior twelve months ending on the
January 31 or July 31 preceding the
interest payment date. If
Reorganized Loehmann's has minimum
excess availability of $25 million
under the Exit Facility on the date
of the Free Cash Flow Test, Matching
Amortization is not required to be
paid, and is not deducted in the
calculation of Free Cash Flow.
(a) "FREE CASH FLOW" is
defined as EBITDA (i) less
Capital Expenditures, (ii)
plus/less Changes in Working
Capital, (iii) less senior
secured interest expense, (iv)
less senior secured required
debt amortization, (v) less
pro forma Notes interest
expense, (vi) less pro forma
Matching Amortization, and
(vii) less pro forma cash
taxes.
(b) "MATCHING AMORTIZATION" is
defined as an amortization
payment on the Exit Facility
term borrowing base component
equal to the Notes cash
interest payment. Matching
Amortization is a permanent
reduction in the term
borrowing base component of
the Exit Facility.
2. Reorganized Loehmann's will be
permitted to upstream to Loehmann's
Holdings dividends or intercompany
advances of cash sufficient to make
allowed cash interest payments on
the Notes.
ii
<PAGE>
Ranking: The Notes will be unsecured senior
obligations of the Company and will rank PARI
PASSU to all existing and future senior
indebtedness of the Company and senior to all
future subordinated indebtedness. There will
be no guarantees of the Notes by any
subsidiaries.
Restrictive Covenants: 1. LIMITATION ON INDEBTEDNESS.
2. OTHER COVENANTS. To be set forth in
the New Notes Indenture.
Events of Default: Customary events of default will be provided
for in the New Notes Indenture.
THE NEW NOTES INDENTURE AND NEW SENIOR NOTES WILL BE IN SUBSTANTIALLY THE FORMS
INCLUDED IN THE PLAN SUPPLEMENT TO BE FILED WITH THE CLERK OF THE COURT PRIOR TO
THE CONFIRMATION HEARING.
iii
<PAGE>
EXHIBIT B
<PAGE>
SUMMARY OF EQUITY INCENTIVE PLAN
The following are the key terms of Loehmann's Holdings' Equity
Incentive Plan:
Shares Available: The number of options that will be available
for grant pursuant to the Equity Incentive
Plan will be equal to 425,000 shares of New
Common Stock.
Eligible Participants: All members of the Board of Directors of
Loehmann's Holdings and Reorganized
Loehmann's and certain key senior management
executives of Loehmann's Holdings and
Reorganized Loehmann's will be eligible to
participate in the Equity Incentive Plan.
Effective Date Grants: On the Effective Date, Robert Friedman and
Robert Glass will each receive options to
acquire 131,250 shares of the New Common
Stock for a total of 262,500 shares.
Strike Price: The strike price shall be $15.
Vesting: Options granted under the Equity Incentive
Plan will vest in four (4) equal tranches on
each of the Effective Date and the first
three (3) anniversaries thereafter.
Duration of Options: Options must be exercised on or before the
fifth (5th) anniversary of the grant date.
Change of Control: In the event a sale of Reorganized Loehmann's
or Loehmann's Holdings (whether stock or
substantially all of the assets) occurs, all
options that have not vested as of such date
shall automatically vest in full.
Termination of Option If an option holder is terminated from
Holder employment by Reorganized Loehmann's or
removed as a director of Reorganized
Loehmann's (in each case other than for
"cause"), such option holder's options that
are vested as of such date shall be
exercisable for a period of 60 days following
such date of termination or removal and all
unvested options will on such date be
forfeited.
THE EQUITY INCENTIVE PLAN WILL BE IN SUBSTANTIALLY THE SAME FORM INCLUDED IN THE
PLAN SUPPLEMENT TO BE FILED WITH THE CLERK OF THE COURT PRIOR TO THE
CONFIRMATION HEARING.
