<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 15, 1999
----------------------
Montgomery Ward Holding Corp.
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-17540 36-3571585
- ------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Montgomery Ward Plaza Chicago, Illinois 60671
- ------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (312) 467-2000
-----------------
________________________________________________________________________
(Former name or former address, if changed since last report.)
<PAGE>
Item 3. Bankruptcy or Receivership.
On July 15, 1999, Montgomery Ward Holding Corp. (the "Company") and its
wholly owned subsidiary Montgomery Ward & Co., Incorporated ("Wards") announced
that its First Amended Joint Plan of Reorganization dated May 26, 1999 (the
"Plan") was confirmed by the United States Bankruptcy Court in Delaware. GE
Capital, Wards' majority shareholder was a co-proponent of the Plan along with
the Company. It is contemplated that the Plan which has been found by the
Bankruptcy Court to be in the best interest of creditors, will become effective
on August 2, 1999. Following the effectiveness of the Plan, the Company will
have less than 300 holders of its common stock and will file a Form 15 to
terminate registration of all classes of its common stock under Section 12(g) of
the Securities Exchange Act and suspend its duty to file reports under Sections
13 and 15(d) of that Act.
Under the terms of the Plan, funding for the distribution to unsecured
creditors other than GE Capital is provided through a $650 million escrow
deposit account established upon the Company's filing of the Joint Plan of
Reorganization on April 30, 1999. When Wards emerges from bankruptcy, the
escrow deposit including interest earned will be distributed to unsecured
creditors as specified by the Plan. The Plan includes the Company and all of
its direct and indirect subsidiaries that were included under the jointly
administered bankruptcy proceeding under the caption "In re Montgomery Ward
Holding Corp., a Delaware Corporation, et. al.", Case No. 97-1409 (PJW).
Certain indirect subsidiaries of the Company were not included in the bankruptcy
filing.
As part of the restructuring provided for in the Plan, GE Capital will
acquire Signature Financial/Marketing, Inc. ("Signature"), the direct marketing
arm of Wards. Signature, which was not part of Wards' Chapter 11 case, will
continue to have the right to market to Wards' customers.
On July 15, 1999, Wards issued a press release that is attached as Exhibit
99 hereto. The press release is incorporated herein by reference.
The foregoing description of the Plan is qualified in its entirety by
reference to the text of the First Amended Joint Plan of Reorganization of
Montgomery Ward Holding Corp. and its debtor subsidiaries dated May 26, 1999 a
copy of which is filed as Exhibit 2 hereto, and incorporated herein by
reference.
Item 7. Exhibits
2. First Amended Joint Plan of Reorganization of Montgomery Ward Holding Corp.
and Its Debtor Subsidiaries
99. Press release issued by Montgomery Ward & Co., Incorporated on July 15,
1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MONTGOMERY WARD HOLDING CORP
July 29, 1999 By: /s/ Thomas J. Paup
------------------------------
Thomas J. Paup
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
- ------- ----------------
2. First amended Joint Plan of Reorgani- Incorporated by reference to
zation of Montgomery Ward Holding Corp. Exhibit 2 of the Company's
and its debtor subsidiaries Current Report on Form 8-K
dated May 26, 1999 dated July 29, 1999
99. Montgomery Ward & Co., Incorporated Incorporated by reference to
Press release issued on July 15, 1999 Exhibit 99 of the Company's
Current Report on Form 8-K
dated July 29, 1999
<PAGE>
EXHIBIT 2
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE: :
: Jointly Administered
Montgomery Ward Holding Corp., : Case No. 97-1409 (PJW)
a Delaware corporation, et al., :
: Chapter 11
Debtors. :
: AMENDED JOINT PLAN OF
: REORGANIZATION OF
: MONTGOMERY WARD HOLDING
: CORP. AND ITS DEBTOR
: SUBSIDIARIES
:
David S. Kurtz (IL 03126561) Harvey R. Miller, P.C.
Jeffrey W. Linstrom (IL 06209380) Gary T. Holtzer
Felicia Gerber Perlman (IL 06210753) WEIL, GOTSHAL & MANGES LLP
SKADDEN ARPS SLATE MEAGHER & FLOM 767 Fifth Avenue
(ILLINOIS) New York, New York 10153
333 West Wacker (212) 310-8000
Chicago, Illinois 60606-1285
(312) 407-0700
Thomas L. Ambro (No. 677) James L. Patton, jr. (no. 2202)
Daniel J. DeFranceschi (No. 2732) Robert S. Brady (no. 2847)
RICHARDS, LAYTON & FINGER, P.A. YOUNG, CONAWAY, STARGATT &
One Rodney Square TAYLOR
Wilmington, Delaware 19801 Rodney Square North, 11th Floor
(302) 658-6541 Wilmington, Delaware 19899-0391
(302) 571-6600
ATTORNEYS FOR DEBTORS AND DEBTORS IN ATTORNEYS FOR GENERAL ELECTRIC
POSSESSION CAPITAL CORPORATION
Dated: Wilmington, Delaware
May 26, 1999
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TABLE OF CONTENTS
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INTRODUCTION..................................................................................... 1
Article I DEFINED TERMS AND RULES OF INTERPRETATION.......................................... 1
1.01 Administrative Claim............................................................... 1
1.02 Allowed............................................................................ 1
1.03 Allowed Claim...................................................................... 1
1.04 Allowed Interest................................................................... 2
1.05 Ballot............................................................................. 2
1.06 Bank Claims........................................................................ 2
1.07 Bankruptcy Code.................................................................... 3
1.08 Bankruptcy Court................................................................... 3
1.09 Bankruptcy Rules................................................................... 3
1.10 Bar Date........................................................................... 3
1.11 Bar Date Order..................................................................... 3
1.12 Brennan Settlement Agreement....................................................... 3
1.13 Brennan Stock...................................................................... 3
1.14 Brennan Stockholders............................................................... 3
1.15 Business Day....................................................................... 3
1.16 Call Right......................................................................... 3
1.17 Cash............................................................................... 3
1.18 Causes of Action................................................................... 4
1.19 Claim.............................................................................. 4
1.20 Claims Objection Deadline.......................................................... 4
1.21 Claims Resolution Committee........................................................ 4
1.22 Claims Settlement Parameters....................................................... 4
1.23 Class.............................................................................. 4
1.24 Class 3 Deposit.................................................................... 4
1.25 Class 3 Surplus Distributions...................................................... 4
1.26 Class 3 Unsecured Claims........................................................... 4
1.27 Collateral......................................................................... 4
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1.28 Confirmation Date.................................................................. 4
1.29 Confirmation Hearing............................................................... 5
1.30 Confirmation Order................................................................. 5
1.31 Consolidating Debtors.............................................................. 5
1.32 Credit Card Agreements............................................................. 5
1.33 Creditors' Committee............................................................... 5
1.34 Debtors............................................................................ 5
1.35 DIP Credit Agreement............................................................... 5
1.36 DIP Lenders........................................................................ 5
1.37 Disbursing Agent................................................................... 5
1.38 Disclosure Statement............................................................... 6
1.39 Disputed Claim..................................................................... 6
1.40 Disputed Claim Amount.............................................................. 6
1.41 Disputed Claims List(s)............................................................ 7
1.42 Disputed Class 3 Unsecured Claims Reserve.......................................... 7
1.43 Disputed Insured Claim and Disputed Uninsured Claim................................ 7
1.44 Disputed Interest.................................................................. 7
1.45 Disputed Interest Amount........................................................... 7
1.46 Disputed MW Class 6 Interests Reserve.............................................. 7
1.47 Distribution Record Date........................................................... 7
1.48 Effective Date..................................................................... 7
1.49 Escrow Account..................................................................... 7
1.50 Escrow Agent....................................................................... 7
1.51 Escrow Agreement................................................................... 7
1.52 Escrow Order....................................................................... 8
1.53 Excess Assets...................................................................... 8
1.54 Executive Retention Order.......................................................... 8
1.55 Exit Financing Facility............................................................ 8
1.56 February 1998 Note................................................................. 8
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1.57 Federal Priority Tax Claim......................................................... 8
1.58 Fee Claim.......................................................................... 8
1.59 Fee Order.......................................................................... 8
1.60 File, Filed, or Filing............................................................. 8
1.61 Final Order........................................................................ 8
1.62 GE Capital......................................................................... 9
1.63 GE Capital Credit Card Claims...................................................... 9
1.64 GE Capital Deposit Claim........................................................... 9
1.65 GE Capital Entities................................................................ 9
1.66 GE Capital Non-Trade Claims........................................................ 9
1.67 GE Capital Trade Claims............................................................ 9
1.68 Insured Claim...................................................................... 9
1.69 Intercompany Claim................................................................. 9
1.70 Interest........................................................................... 10
1.71 IRC................................................................................ 10
1.72 IRS................................................................................ 10
1.73 IRS Settlement Agreement........................................................... 10
1.74 Lechmere........................................................................... 10
1.75 Lechmere Bank Guaranty Claims...................................................... 10
1.76 Lechmere Bank Guaranty (Long Term) Claims.......................................... 10
1.77 Lechmere Bank Guaranty (Short Term) Claims......................................... 10
1.78 Lechmere Cash Collateral Account................................................... 10
1.79 Lechmere Class 3 Payment........................................................... 11
1.80 Lechmere Class 3 Unsecured Claim................................................... 11
1.81 Lechmere Excess Distribution Pool.................................................. 11
1.82 Lechmere Loan...................................................................... 11
1.83 Lechmere Noteholder Guaranty Claims................................................ 11
1.84 Montgomery Ward or MW.............................................................. 11
1.85 MW Class 3 Distribution Pool....................................................... 11
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1.86 MW Class 3 Unsecured Claim........................................................... 11
1.87 MW Class 6 Interests................................................................. 12
1.88 MW Class 6 Surplus Distributions..................................................... 12
1.89 MW Intercompany Claims............................................................... 12
1.90 MWCC................................................................................. 12
1.91 MW Holding........................................................................... 12
1.92 Net Cash Investment Yield............................................................ 12
1.93 New By-Laws.......................................................................... 12
1.94 New Certificates of Incorporation.................................................... 12
1.95 New LLC Interests.................................................................... 12
1.96 New Loss Sharing Note................................................................ 13
1.97 New Retailer......................................................................... 13
1.98 New Ward Note........................................................................ 13
1.99 Non-Federal Priority Tax Claim....................................................... 13
1.100 Non-Real Property Executory Contracts and Unexpired Leases........................... 13
1.101 Non-Tax Priority Claim............................................................... 13
1.102 Old Common Stock..................................................................... 13
1.103 Old Common Stock Options............................................................. 13
1.104 Old Loss Sharing Obligations......................................................... 13
1.105 Old Montgomery Ward Common Stock..................................................... 14
1.106 Old Montgomery Ward Preferred Stock.................................................. 14
1.107 Old MW Holding Preferred Stock....................................................... 14
1.108 Old Voting Trust Certificates........................................................ 14
1.109 Ordinary Course Professionals Order.................................................. 14
1.110 PBGC................................................................................. 14
1.111 Pension Plan......................................................................... 15
1.112 Pension Plan Restructuring Event..................................................... 15
1.113 Pension Plan Restructuring Order..................................................... 15
1.114 Petition Date........................................................................ 15
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1.115 Plan................................................................................ 15
1.116 Plan Supplement..................................................................... 15
1.117 Pro Rata............................................................................ 15
1.118 Professional........................................................................ 15
1.119 Proponents.......................................................................... 15
1.120 Quarter............................................................................. 16
1.121 Quarterly Distribution Date......................................................... 16
1.122 Real Property Executory Contracts and Unexpired Leases.............................. 16
1.123 Reclamation Claims.................................................................. 16
1.124 Reinstated or Reinstatement......................................................... 16
1.125 Reorganization Case................................................................. 16
1.126 Reorganized Debtors................................................................. 16
1.127 Reorganized Montgomery Ward......................................................... 16
1.128 Reorganized MW Holding.............................................................. 16
1.129 Replacement Pension Plan............................................................ 16
1.130 Restructuring Transactions.......................................................... 16
1.131 Retail Subsidiaries................................................................. 17
1.132 Retained Assets..................................................................... 17
1.133 Schedules........................................................................... 17
1.134 Secondary Liability Claim........................................................... 17
1.135 Secured Claim....................................................................... 17
1.136 Secured Tax Claim................................................................... 17
1.137 Settlement Stipulation.............................................................. 17
1.138 Signature........................................................................... 18
1.139 Signature Sale Agreement............................................................ 18
1.140 Signature Sale Event................................................................ 18
1.141 Solicitation Order.................................................................. 18
1.142 Spin-Off Plan....................................................................... 18
1.143 Subsidiary Debtors.................................................................. 18
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1.144 Tort Claim...................................................................... 18
1.145 Uninsured Claim................................................................. 18
1.146 Voting Deadline................................................................. 18
Article II TREATMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS...................... 19
2.01 Administrative Claims in General................................................ 19
2.02 GE Capital Deposit Claim........................................................ 19
2.03 Administrative Bar Date for Filing Fee Claims................................... 20
2.04 Priority Tax Claims............................................................. 21
(a) Federal Priority Tax Claims..................................................... 21
(b) Non-Federal Priority Tax Claims................................................. 21
Article III CLASSIFICATION OF CLAIMS AND INTERESTS.......................................... 21
Article IV TREATMENT OF CLAIMS AND INTERESTS............................................... 23
4.01 MW Class 1 and Lechmere Class 1 - Non-Tax Priority Claims....................... 23
4.02 MW Class 2A and Lechmere Class 2A - Secured Claims.............................. 23
4.03 MW Class 2B and Lechmere Class 2B - Secured Tax Claims.......................... 24
4.04 MW Class 3 - MW Class 3 Unsecured Claims........................................ 24
4.05 MW Class 4 - MW GE Capital Non-Trade Claims..................................... 25
4.06 MW Class 5 - Old MW Holding Preferred Stock..................................... 25
4.07 MW Class 6 - MW Class 6 Interests............................................... 25
4.08 MW Class 7 - Old Common Stock Options........................................... 26
4.09 Lechmere Class 3 - Lechmere Class 3 Unsecured Claims............................ 26
4.10 Lechmere Class 4 - Lechmere GE Capital Non-Trade Claims......................... 26
4.11 Lechmere Classes 5A and 5B - Lechmere Bank Guaranty Claims...................... 26
4.12 Lechmere Class 6 - Lechmere Noteholder Guaranty Claims.......................... 27
4.13 Lechmere Class 7 - Lechmere Old Common Stock.................................... 27
Article V REORGANIZATION TRANSACTIONS..................................................... 27
5.01 Restructuring Transactions Generally............................................ 27
5.02 Substantive Consolidation; Treatment of Intercompany Claims; Treatment
of Interests in Subsidiary Debtors.............................................. 29
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(a) Substantive Consolidation........................................................ 29
(b) Treatment of Intercompany Claims................................................. 29
(c) Treatment of Interests in Subsidiary Debtors..................................... 30
5.03 Sale of Signature................................................................ 30
5.04 Class 3 Deposit and MW Class 3 Distribution Pool................................. 30
5.05 Exit Financing Facility.......................................................... 31
5.06 Pension Plan..................................................................... 31
5.07 Brennan Settlement Agreement..................................................... 31
Article VI PROVISIONS REGARDING VOTING AND DISTRIBUTIONS UNDER THE PLAN AND
TREATMENT OF CLAIMS AND INTERESTS................................................ 31
6.01 Voting of Claims and Interests................................................... 31
6.02 Non-Consensual Confirmation...................................................... 31
6.03 Method of Distributions Under the Plan........................................... 32
(a) Generally........................................................................ 32
(b) Distributions of Cash............................................................ 32
(c) Timing of Distributions.......................................................... 32
(d) Unclaimed or Undeliverable Distributions......................................... 32
(e) Distributions to Holders as of the Distribution Record Date...................... 32
(f) Allocation of Plan Distributions Between Principal and Interest.................. 33
(g) Distributions on Account of Bank Claims.......................................... 33
6.04 Class 3 Unsecured Claims......................................................... 33
(a) Cash Held Prior to the Effective Date............................................ 33
(b) Distributions on Account of Allowed MW Class 3 Unsecured Claims.................. 34
(c) Distributions on Account of Allowed Lechmere Class 3 Unsecured Claims............ 34
(d) Distributions Withheld for Disputed Class 3 Unsecured Claims..................... 34
(i) Establishment and Maintenance of Disputed Class 3 Unsecured
Claims Reserve.......................................................... 34
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(ii) Property Held in Disputed Class 3 Unsecured Claims Reserve.................. 34
(e) Distributions Upon Allowance of Disputed Class 3 Unsecured Claims.................... 35
(f) Tax Reporting for Disputed Class 3 Unsecured Claims Reserve.......................... 35
(g) Surplus Distributions to Holders of Allowed Class 3 Unsecured Claims................. 35
(h) Tort Claims.......................................................................... 35
6.05 MW Class 6 Interests................................................................. 36
(a) Distributions on Account of Allowed MW Class 6 Interests............................. 36
(b) Distributions Withheld for Disputed MW Class 6 Interests............................. 36
(i) Establishment and Maintenance of Disputed MW Class 6 Interests Reserve...... 36
(ii) Property Held in Disputed MW Class 6 Interests Reserve...................... 36
(c) Tax Reporting for Disputed MW Class 6 Interests Reserve.............................. 37
(d) Distributions Upon Allowance of Disputed MW Class 6 Interests........................ 37
(e) Surplus Distributions to Holders of Allowed MW Class 6 Interests..................... 37
6.06 Objections to and Resolution of Claims and Interests; Estimation..................... 37
6.07 Distributions Relating to Allowed Insured Claims..................................... 38
6.08 Cancellation of Securities, Instruments and Agreements Evidencing Claims and
Interests............................................................................ 38
6.09 Setoffs.............................................................................. 39
6.10 Release of Liens..................................................................... 39
6.11 Special Provisions Regarding Treatment of Allowed Secondary Liability Claims......... 40
6.12 Payment of Taxes and Other Expenses.................................................. 40
Article VII EXECUTORY CONTRACTS AND UNEXPIRED LEASES............................................. 40
7.01 Assumption and Assignment, or Rejection of Executory Contracts and Unexpired
Leases............................................................................... 40
(a) Assumption and Assignment of Real Property Executory Contracts and Unexpired
Leases............................................................................... 40
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(b) Additional Provisions Concerning Real Property Executory Contracts and
Unexpired Leases............................................................... 41
(c) Non-Real Property Executory Contracts and Unexpired Leases..................... 41
(d) Assignments Related to the Restructuring Transactions.......................... 41
(e) Approval of Assumptions and Assignment, or Rejection of Executory Contracts
and Unexpired Leases........................................................... 42
(f) Cure of Defaults............................................................... 42
7.02 Bar Date for Filing Proofs of Claim Relating to Executory Contracts and
Unexpired Leases Rejected Pursuant to the Plan................................. 42
7.03 Assumption and Assignment of the Credit Card Agreements; Amendment to the
Credit Card Agreements......................................................... 43
7.04 Post-Petition Executory Contracts and Unexpired Leases......................... 43
7.05 Continuation of Certain Employee, Retiree, and Workers' Compensation
Benefits....................................................................... 44
(a) Compensation and Benefit Programs.............................................. 44
(b) Retiree Benefits............................................................... 44
(c) Self-Insured Workers' Compensation Benefits.................................... 44
Article VIII PROVISIONS CONCERNING CORPORATE GOVERNANCE AND MANAGEMENT OF REORGANIZED
DEBTORS........................................................................ 44
8.01 General........................................................................ 44
8.02 Directors and Officers......................................................... 44
8.03 New By-Laws and New Certificates of Incorporation.............................. 45
8.04 Issuance of New Securities..................................................... 45
Article IX CONFIRMATION AND CONSUMMATION OF THE PLAN...................................... 45
9.01 Confirmation Date.............................................................. 45
9.02 Effective Date................................................................. 45
9.03 Consequences of Non-Occurrence of Effective Date............................... 45
Article X EFFECTS OF PLAN CONFIRMATION................................................... 46
10.01 Discharge of Debtors........................................................... 46
10.02 Injunction Related to the Discharge............................................ 46
10.03 Term of Bankruptcy Injunction or Stays......................................... 47
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10.04 Continued Corporate Existence and Revesting of Assets in the Reorganized
Debtors.......................................................................... 47
10.05 Preservation of Certain Claims; Limited Waiver of Certain Other Claims........... 47
10.06 Releases......................................................................... 48
(a) Releases by the Debtors.......................................................... 48
(b) Releases by Holders of Claims and Interests...................................... 48
(c) Injunction Related to Releases................................................... 49
10.07 Indemnification Obligations...................................................... 49
10.08 Termination of Subordination Rights and Settlement of Related Claims and
Controversies.................................................................... 49
10.09 Existing Employment Agreements................................................... 50
10.10 Termination of Emergence Incentive Plan.......................................... 50
Article XI RETENTION OF JURISDICTION........................................................ 50
Article XII MISCELLANEOUS PROVISIONS......................................................... 52
12.01 Effectuating Documents and Further Transactions.................................. 52
12.02 Corporate Action................................................................. 52
12.03 Exemption from Transfer Taxes.................................................... 52
12.04 Exculpation...................................................................... 53
12.05 Termination of Creditors' Committee.............................................. 53
12.06 Claims Resolution Committee...................................................... 53
(a) Establishment and Membership..................................................... 53
(b) Functions........................................................................ 54
(c) Claims Settlement Parameters..................................................... 54
(d) Procedures....................................................................... 55
(e) Other Matters.................................................................... 55
12.07 Payment of Statutory Fees........................................................ 55
12.08 Amendment or Modification of the Plan............................................ 55
12.09 Severability of Plan Provisions.................................................. 55
12.10 Successors and Assigns........................................................... 56
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12.11 Plan Supplement.................................................................. 56
12.12 Notice........................................................................... 56
12.13 Governing Law.................................................................... 57
12.14 Tax Reporting and Compliance..................................................... 57
12.15 Schedules........................................................................ 57
12.16 Filing of Additional Documents................................................... 57
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<PAGE>
INTRODUCTION
Montgomery Ward Holding Corp., the other above-captioned debtors and
debtors in possession and General Electric Capital Corporation, as "proponents
of the plan" within the meaning of section 1129 of title 11, United States Code,
propose the following joint plan of reorganization for the resolution of the
outstanding claims against and interests in the Debtors pursuant to section
1121(a) of title 11, United States Code.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
Defined Terms: As used herein, capitalized terms have the meanings
set forth below. Any term that is not otherwise defined herein, but that is
used in the Bankruptcy Code or the Bankruptcy Rules, will have the meaning given
to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
1.01 Administrative Claim means a Claim for costs and expenses of
administration of the Reorganization Cases Allowed under section 503(b), 507(b)
or 1114(e)(2) of the Bankruptcy Code, including: (a) any actual and necessary
costs and expenses incurred after the Petition Date of preserving the Debtors'
estates and operating the businesses of the Debtors (such as wages, salaries,
commissions for services, and payments for inventories, leased equipment, and
premises), and Claims of governmental units for taxes (including tax audit
Claims related to tax years commencing after the Petition Date, but excluding
Secured Tax Claims and other Claims relating to tax periods, or portions
thereof, ending on or before the Petition Date); (b) compensation for legal,
financial, advisory, accounting, and other services and reimbursement of
expenses Allowed by the Bankruptcy Court under section 330, 331 or 503(b) of the
Bankruptcy Code to the extent incurred prior to the Effective Date; (c) all fees
and charges assessed against the Debtors' estates under section 1930, chapter
123 of title 28, United States Code; (d) Reclamation Claims to the extent not
already paid; (e) Claims under the DIP Credit Agreement; and (f) the GE Capital
Deposit Claim.
1.02 Allowed means an Allowed Claim or an Allowed Interest in a
particular Class or category specified. Any reference herein to a particular
Allowed Claim includes both the secured and unsecured portions of such Claim.
1.03 Allowed Claim means:
(a) a Claim that has been listed by a Debtor on its Schedules as
liquidated in amount and not disputed or contingent unless it is a Disputed
Claim (a) for which an objection or request for estimation has been Filed by the
Claims Objection Deadline pursuant to Section 6.06 hereof or (b) is listed on
the Disputed Claims List, except as set forth in Section 1.03(e) hereof; or
(b) a Claim for which a proof of claim has been Filed by the
applicable Bar Date, or otherwise has been deemed timely Filed under applicable
law unless it is a Disputed Claim (a) for which an objection or request for
estimation has been Filed by the Claims Objection Deadline pursuant to Section
6.06 hereof (except for a Disputed Claim set forth in
<PAGE>
Section 1.39(a)(i) hereof, for which no objection or request for estimation
shall be required) or (b) is listed on the Disputed Claims List; or
(c) a Claim that is Allowed: (i) by a Final Order; (ii) by a
Settlement Stipulation; or (iii) pursuant to the terms of this Plan; or
(d) with respect to an Administrative Claim, an Administrative Claim
for which a holder thereof Filed and served a request for payment of such
Administrative Claim unless it is a Disputed Claim (a) for which an objection or
request for estimation has been Filed by the Claims Objection Deadline pursuant
to Section 6.06 hereof (except for a Disputed Claim set forth in Section
1.39(a)(i) hereof, for which no objection or request for estimation shall be
required) or (b) is listed on the Disputed Claims List; or
(e) any Disputed Claim as to which no objection or request for
estimation has been Filed by the Claims Objection Deadline; provided, however,
that no objection or request for estimation as to any Disputed Claim set forth
in Section 1.39(a)(i) hereof need be Filed by the Claims Objection Deadline and,
until its resolution, such Disputed Claim shall not be considered to be Allowed.
The term "Allowed Claim" shall not, for purposes of computing
distributions under this Plan, include interest on such Claim from and after the
Petition Date, except as provided in section 506(b) of the Bankruptcy Code or as
otherwise expressly set forth in this Plan.
1.04 Allowed Interest means an Interest: (a) that is registered or
listed as of the Distribution Record Date in a stock register that is maintained
by or on behalf of a Debtor, and (b) either (i) is not a Disputed Interest or
(ii) has been Allowed (A) by a Final Order, (B) by a Settlement Stipulation, or
(C) pursuant to the terms of this Plan.
1.05 Ballot means the form or forms distributed to each holder of an
impaired Claim or Interest on which the holder is to indicate acceptance or
rejection of this Plan.
1.06 Bank Claims means the Claims against Montgomery Ward of certain
banks and agent banks (and their respective successors and assigns) under the
Long Term Credit Agreement and the Short Term Credit Agreement, each dated as of
September 15, 1994, as amended, supplemented or otherwise modified from time to
time, among Montgomery Ward, various financial institutions, The First National
Bank of Chicago, as Documentary Agent, The Bank of New York, as Negotiated Loan
Agent, Bank of America National Trust and Savings Association, as Advisory
Agent, and The Bank of Nova Scotia, as Administrative Agent, as more fully set
forth in the Master Proof of Claim Filed by The Bank of Nova Scotia, in its
capacity as Administrative Agent, against Montgomery Ward on February 25, 1998.
The Bank Claims shall be Allowed as of the Petition Date in the amount of
$1,072,902,054.36. As of the date of this Plan, the aggregate outstanding
amount of the Allowed Bank Claims is $1,048,107,798.36 and such other amounts
(including post-petition fees and expenses) as agreed to between the Banks and
the Debtors (with the consent of the Creditors' Committee or the Claims
Resolution Committee, as applicable) or the Bankruptcy Court may Allow.
2
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1.07 Bankruptcy Code means title 11, United States Code, as now in
effect or hereafter amended.
1.08 Bankruptcy Court means the United States Bankruptcy Court for
the District of Delaware in which the Reorganization Cases were commenced on
July 7, 1997, or any other court with jurisdiction over the Reorganization
Cases.
1.09 Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure and the local rules of the Bankruptcy Court, as now in effect or
hereafter amended.
1.10 Bar Date means the applicable deadline by which a proof of
claim must have been or must be Filed, as established by an order of the
Bankruptcy Court, including the Bar Date Order and the Confirmation Order. The
term "Bar Date" also includes the deadline for Filing Fee Claims established
pursuant to Article II hereof and the deadline for Filing Claims arising from
rejection of executory contracts and unexpired leases established pursuant to
Article VII hereof.
1.11 Bar Date Order means the Order Establishing Bar Dates for
Filing Proofs of Claims and Approving Form and Manner of Notice Thereof entered
by the Bankruptcy Court on November 7, 1997, as the same may have been or
hereafter may be amended, modified, or supplemented.
1.12 Brennan Settlement Agreement means the settlement agreement
among Bernard F. Brennan, GE Capital, MW Holding and Montgomery Ward, dated as
of April 30, 1999.
1.13 Brennan Stock means Class A Old Common Stock in MW Holding
owned by the Brennan Stockholders.
1.14 Brennan Stockholders means, collectively, Tamara A. Brennan,
Elizabeth A. Brennan, Catherine S. Brennan, Sara C. Brennan, and Raphael M.
Kelly, as trustee of the Brennan 1988 MW Trust, or any other holders of the
Brennan Stock.
1.15 Business Day means any day, other than a Saturday, Sunday or
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).
1.16 Call Right means the right of GE American Communications, Inc.
to acquire the Brennan Stock from the Brennan Stockholders for $352,000 in Cash,
immediately after the occurrence of (a) the Pension Plan Restructuring Event
(unless Montgomery Ward determines not to consummate it), and (b) the Signature
Sale Event (or the sale of Signature to any other person approved by the
Proponents); provided, however, that such events (including the Pension Plan
Restructuring Event only to the extent it otherwise remains an effective
condition to the Call Right) occur on or before January 1, 2000.
1.17 Cash means legal tender of the United States of America and
equivalents thereof.
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1.18 Causes of Action means, without limitation, any and all
actions, causes of action, liabilities, obligations, rights, suits, debts, sums
of money, damages, judgments, claims and demands whatsoever, whether known or
unknown, in law (including, without limitation, the Bankruptcy Code), equity or
otherwise.
1.19 Claim means a "claim," as defined in section 101(5) of the
Bankruptcy Code.
1.20 Claims Objection Deadline means the last day for Filing
objections to Disputed Claims (other than Disputed Claims set forth in Section
1.39(a)(i) hereof, for which no objection or request for estimation shall be
required), which day shall be the later of (a) 90 days after the Effective Date,
or (b) 60 days after the Filing of a proof of claim for, or request for payment
of, such Claim.
1.21 Claims Resolution Committee means the committee to be
established pursuant to Section 12.06 hereof.
1.22 Claims Settlement Parameters means the amounts, set forth in a
Schedule to be included in the Plan Supplement, with respect to each Class 3
Unsecured Claim that the Debtors and the Reorganized Debtors shall have the sole
discretion to compromise and settle or otherwise dispose of, in each case, free
of any restriction thereon by the Claims Resolution Committee.
1.23 Class means a category of holders of Claims or Interests, as
described in Article III hereof.
1.24 Class 3 Deposit means $650 million in immediately available
funds, plus all interest and income earned thereon from April 30, 1999 through
----
the Effective Date (or such earlier date as provided in the Escrow Agreement).
1.25 Class 3 Surplus Distributions means the following consideration
that may be distributed with respect to Allowed Class 3 Unsecured Claims: (a)
pursuant to Section 6.04 hereof, distributions under this Plan to holders of
Allowed Class 3 Unsecured Claims that are unclaimed or undeliverable for a
period of one year after mailing thereof; and (b) to the extent that a Disputed
Class 3 Unsecured Claim is not Allowed or becomes Allowed in an amount less than
the Disputed Claim Amount, or the Disputed Claim Amount is or becomes lower than
the initial Disputed Claim Amount, the remaining Cash in the Disputed Class 3
Unsecured Claims Reserve after distributions of Cash, if any, on account of such
Disputed Class 3 Unsecured Claim.
1.26 Class 3 Unsecured Claims means, collectively, MW Class 3
Unsecured Claims and Lechmere Class 3 Unsecured Claims.
1.27 Collateral means any property or interest in property of the
Debtors' estates that is subject to a valid and enforceable lien to secure a
Claim.
1.28 Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket of the Bankruptcy
Court.
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1.29 Confirmation Hearing means the hearing held by the Bankruptcy
Court pursuant to section 1128 of the Bankruptcy Code to consider confirmation
of this Plan, as such hearing may be adjourned or continued from time to time.
1.30 Confirmation Order means the order of the Bankruptcy Court
confirming this Plan pursuant to section 1129 of the Bankruptcy Code.
1.31 Consolidating Debtors means, collectively, all of the Debtors
other than Lechmere.
1.32 Credit Card Agreements means, collectively, the agreements
establishing or governing the Debtors' private label credit card programs,
including: (a) the Bank Credit Card Program Agreement, dated as of April 1,
1996, by and between Monogram Credit Card Bank of Georgia and Montgomery Ward,
as amended; (b) the Account-Related Agreement, dated as of April 1, 1996, by and
between Montgomery Ward and MWCC, as amended; (c) the MWCC Program Agreement,
dated as of April 1, 1996, by and among MWCC, Montgomery Ward and Lechmere, as
amended; (d) the Old Loss Sharing Obligations; (e) the February 1998 Note; and
(f) the Interim Amendment Agreement Relating To Bank Program And Account Related
Agreements, dated as of April 1, 1998, by and among Montgomery Ward, Monogram
Credit Card Bank of Georgia and MWCC, approved by Order Approving Interim
Amendment Agreement Relating To Bank Program And Account-Related Agreements,
entered by the Bankruptcy Court on April 20, 1998.
1.33 Creditors' Committee means the statutory committee of unsecured
creditors appointed in the Reorganization Cases pursuant to section 1102 of the
Bankruptcy Code.
1.34 Debtors means, collectively, all of the above-captioned debtors
and debtors in possession.
1.35 DIP Credit Agreement means, collectively: (a) the Post-Petition
Loan and Guaranty Agreement, dated as of July 8, 1997, as subsequently amended
and modified, among Montgomery Ward and Lechmere (as borrowers), MW Holding and
the other Guarantors identified therein (as guarantors and credit parties),
those entities identified therein as "Lenders" and their respective successors
and assigns, and GE Capital (as agent, lender, and swing line lender); (b) all
amendments thereto; and (c) all security agreements and instruments related to
the documents identified in (a) and (b).
1.36 DIP Lenders means those entities identified as "Lenders" in the
DIP Credit Agreement and their respective successors and assigns.
1.37 Disbursing Agent means, for (a) all Claims (other than Class 3
Unsecured Claims and Lechmere Bank Guaranty (Short Term) Claims) and Interests,
New Retailer or its designee; (b) all Class 3 Unsecured Claims, the designee of
the Creditors' Committee; and (c) all Lechmere Bank Guaranty (Short Term)
Claims, The Bank of Nova Scotia as the holder of the Lechmere Cash Collateral
Account.
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1.38 Disclosure Statement means the written disclosure statement
(including all schedules thereto or referenced therein) that relates to this
Plan, as approved by the Bankruptcy Court pursuant to section 1125 of the
Bankruptcy Code, as the same may be amended, modified, or supplemented.
1.39 Disputed Claim means any Claim, including any Administrative
Claim, which has not been Allowed pursuant to this Plan, a Final Order or a
Settlement Stipulation, and
(a) if no proof of claim has been Filed by the applicable Bar Date:
(i) a Claim that has been or hereafter is listed on the Schedules as disputed,
contingent, or unliquidated; or (ii) a Claim that has been or hereafter is
listed on the Schedules as other than disputed, contingent, or unliquidated, but
as to which the Debtors, the Reorganized Debtors, the Claims Resolution
Committee (subject to the provisions of Section 12.06 hereof) or any other party
in interest has interposed a timely objection or request for estimation in
accordance with this Plan, the Bankruptcy Code and the Bankruptcy Rules by the
Claims Objection Deadline or, with respect to Fee Claims, the deadline set forth
in Article II hereof, as applicable, which objection or request for estimation
has not been withdrawn, determined by a Final Order or a Settlement Stipulation;
or
(b) if a proof of claim or request for payment of an Administrative
Claim has been Filed by the applicable Bar Date: (i) a Claim for which no
corresponding Claim has been or hereafter is listed on the Schedules; (ii) a
Claim for which a corresponding Claim has been or hereafter is listed on the
Schedules as other than disputed, contingent, or unliquidated, but the nature or
amount of the Claim as asserted in the proof of claim varies from the nature and
amount of such Claim as listed on the Schedules; (iii) a Claim for which a
corresponding Claim has been or hereafter is listed on the Schedules as
disputed, contingent, or unliquidated; (iv) a Claim for which a timely objection
or request for estimation is interposed by the Debtors, the Reorganized Debtors,
the Claims Resolution Committee (subject to the provisions of Section 12.06
hereof) or any other party in interest in accordance with this Plan, the
Bankruptcy Code and the Bankruptcy Rules by the Claims Objection Deadline or,
with respect to Fee Claims, the deadline set forth in Article II hereof, as
applicable, which objection or request for estimation has not been withdrawn,
determined by a Final Order or a Settlement Stipulation; or (v) any Tort Claim;
or
(c) if such Claim is disputed on any timely and properly Filed Disputed
Claims List.
1.40 Disputed Claim Amount means the lesser of (a) the liquidated
amount set forth in the proof of claim relating to a Disputed Claim, (b) the
amount estimated by the Bankruptcy Court for purposes of distributions in
respect of such Disputed Claim in accordance with section 502(c) of the
Bankruptcy Code pursuant to Section 6.06(b) hereof; and (c) the amount of such
Disputed Claim Allowed by the Bankruptcy Court pursuant to section 502 of the
Bankruptcy Code, or zero, if such Disputed Claim is disallowed in its entirety
by the Bankruptcy Court pursuant to such section, in either case, regardless of
whether the order or judgment allowing or disallowing such Claim has become a
Final Order; provided, however, that in the event a Claim has been disallowed,
but the order of disallowance has not yet become a Final Order, the Bankruptcy
Court may require the Disbursing Agent to reserve and hold in trust for
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the benefit of each holder of such Claim, Cash in an amount equal to the Pro
Rata distributions which the Bankruptcy Court, in its discretion, determines
will protect the rights of such holder under all of the facts and circumstances
relating to the order of disallowance and the appeal of such holder from such
order.
1.41 Disputed Claims List(s) means a list or lists Filed by the
Debtors, the Reorganized Debtors, the Creditors' Committee or the Claims
Resolution Committee identifying any Claim, other than an Allowed Claim, to
which such party intends to object or interpose a request for estimation prior
to the Claims Objection Deadline. Each Disputed Claims List shall set forth (a)
the official proof of claim number assigned to the Disputed Claim, and (b) the
name and address of the holder of such Claim appearing on the proof of claim.
1.42 Disputed Class 3 Unsecured Claims Reserve means the reserve of
Cash established for holders of Disputed Class 3 Unsecured Claims, which reserve
shall be held in trust for holders of Allowed Class 3 Unsecured Claims and will
not (a) constitute property of any of the Reorganized Debtors or their
respective estates, or (b) be subject to claims, liens, or interests of, by or
through any of the Reorganized Debtors or their respective estates.
1.43 Disputed Insured Claim and Disputed Uninsured Claim mean,
respectively, an Insured Claim or an Uninsured Claim that is also a Disputed
Claim.
1.44 Disputed Interest means any Interest as to which an objection
has been Filed by the applicable Debtor or the Reorganized Debtor, with the
consent of GE Capital, within 90 days after the Effective Date, and such
objection has not been withdrawn, determined by a Final Order or a Settlement
Stipulation.
1.45 Disputed Interest Amount means the amount determined by the
Debtors in their sole discretion with respect to a Disputed Interest.
1.46 Disputed MW Class 6 Interests Reserve means the reserve of Cash
set aside by the Debtors for holders of Disputed MW Class 6 Interests, which
reserve will be held in trust for holders of Allowed MW Class 6 Interests and
will not constitute property of the Reorganized Debtors.
1.47 Distribution Record Date means the Confirmation Date.
1.48 Effective Date means the Business Day the Plan becomes
effective as provided in Article IX hereof.
1.49 Escrow Account means the escrow account established with the
Escrow Agent pursuant to the Escrow Agreement to hold the Class 3 Deposit.
1.50 Escrow Agent means Bankers Trust Company, as escrow agent under
the Escrow Agreement.
1.51 Escrow Agreement means the Escrow Agreement among GE Capital,
Montgomery Ward, and the Escrow Agent, approved by the Escrow Order.
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1.52 Escrow Order means the order of the Bankruptcy Court, dated
April 30, 1999, approving the Escrow Agreement.
1.53 Excess Assets means the assets in the Pension Plan as
determined by the Pension Plan actuary which exceed the total vested accrued
benefits for all active and vested terminated plan participants, retirees and
beneficiaries.
1.54 Executive Retention Order means the Order (a) Authorizing
Assumption of Certain Executory Employment Contracts, Amendment of Certain Other
Executory Employment Contracts and Entry into Certain Postpetition Employment
Contracts, (b) Authorizing Executive Emergence Incentive Program and (c)
Granting Certain Related Relief, entered by the Bankruptcy Court on October 31,
1997.
1.55 Exit Financing Facility means the working capital or other
borrowing facility (or facilities) for the Reorganized Debtors on and after the
Effective Date.
1.56 February 1998 Note means the "Remaining Note" in the principal
amount of $15,123,200, dated as of February 28, 1998, issued by Montgomery Ward
to MWCC.
1.57 Federal Priority Tax Claim means a claim that is entitled to
priority pursuant to sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.58 Fee Claim means an Administrative Claim under section 330(a),
331, 503, or 1103 of the Bankruptcy Code for compensation of a Professional or
other entity for services rendered or expenses incurred in the Reorganization
Cases on or prior to the Effective Date (including expenses of the members of
the Creditors' Committee incurred as members of the Creditors' Committee in
discharge of their duties as such).
1.59 Fee Order means, collectively: (a) the Administrative Order,
Pursuant to Sections 105 and 331 of the Bankruptcy Code, Establishing Procedures
for Interim Compensation and Reimbursement of Expenses of Professionals, entered
by the Bankruptcy Court on July 8, 1997; (b) the Order Granting Relief from
Certain Provisions of the Administrative Order, Pursuant to Sections 105 and 331
of the Bankruptcy Code, Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals, entered by the Bankruptcy Court on
December 5, 1997; and (c) the Order Appointing Fee Auditor and Establishing
Related Procedures Concerning the Allowance and Payment of Compensation and
Reimbursement of Expenses of Professionals and Consideration of Fee
Applications, entered by the Bankruptcy Court on June 16, 1998.
1.60 File, Filed, or Filing means file, filed, or filing with the
Bankruptcy Court or its authorized designee in the Reorganization Cases.
1.61 Final Order means an order of the Bankruptcy Court as to which
the time to appeal, petition for certiorari, or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari, or other
proceedings for reargument or rehearing shall then be pending or as to which any
right to appeal, petition for certiorari, reargue or rehear shall have been
waived in writing in form and substance satisfactory to the Debtors or the
Reorganized Debtors or, in the event that an appeal, writ of certiorari, or
reargument or
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rehearing thereof has been sought, such order of the Bankruptcy Court shall have
been determined by the highest court to which such order was appealed, or
certiorari, reargument or rehearing shall have been denied and the time to take
any further appeal, petition for certiorari or move for reargument or rehearing
shall have expired; provided, however, that the possibility that a motion under
Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous
rule under the Bankruptcy Rules, may be filed with respect to such order shall
not preclude such order from being a Final Order.
1.62 GE Capital means General Electric Capital Corporation, a New
York corporation.
1.63 GE Capital Credit Card Claims means Claims of, and cure
payments owed to, the GE Capital Entities under the Credit Card Agreements.
1.64 GE Capital Deposit Claim means the Administrative Claim of GE
Capital against Montgomery Ward for GE Capital's deposit of $650 million in Cash
pursuant to the Escrow Agreement and the Escrow Order. GE Capital Deposit Claim
shall: (a) through and including (but not after) the Effective Date, be secured
by a first-priority security interest in the Class 3 Deposit pursuant to the
Escrow Agreement and the Escrow Order, which security shall be automatically
released on the Effective Date, and (b) if the Signature Sale Event does not
occur prior to or on the Effective Date, be secured, on and after the Effective
Date, by a pledge of the stock of Signature and by the Signature Sale Agreement
and any related security documents, and, in the case of this clause (b), be
fully recourse to Reorganized Montgomery Ward.
1.65 GE Capital Entities means, collectively, General Electric
Company, GE Capital, Monogram Credit Card Bank of Georgia, MWCC and any
affiliates, subsidiaries, and divisions of the foregoing, other than the
Debtors, the Reorganized Debtors and Signature; provided, however, that any
affiliate of General Electric Company that holds GE Capital Non-Trade Claims
shall in all events be included in the definition of the "GE Capital Entities."
1.66 GE Capital Non-Trade Claims means Claims of the GE Capital
Entities (other than the GE Capital Trade Claims, the GE Capital Credit Card
Claims or the GE Capital Deposit Claim) against Montgomery Ward and Lechmere.
1.67 GE Capital Trade Claims means, collectively, without
duplication, general unsecured, non-reclamation vendor Claims (a) held by
General Electric Company, and (b) acquired by GE Capital from vendors or
suppliers of the Debtors at or above the par or face amount thereof after the
Petition Date but prior to the Confirmation Date.
1.68 Insured Claim means any Claim arising from an incident or
occurrence that is covered under the Debtors' insurance policies, other than a
workers' compensation insurance policy.
1.69 Intercompany Claim means: (a) any account reflecting
intercompany book entries by one Debtor with respect to any other Debtor, or (b)
any Claim not reflected in such book entries that is held by a Debtor against
any other Debtor, or (c) any Claim or claim by
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a Debtor or Signature against each other; but excluding the MW Intercompany
Claims and the Lechmere Loan.
1.70 Interest means the rights of the holders of Old Common Stock,
Old MW Holding Preferred Stock, Old Montgomery Ward Preferred Stock, Old
Montgomery Ward Common Stock, or Old Voting Trust Certificates, including the
rights of any entity to purchase or demand the issuance of any of the foregoing,
including: (a) conversion, exchange, voting, participation, and dividend rights;
(b) liquidation preferences; (c) stock options, warrants and put rights; and (d)
share-appreciation rights.
1.71 IRC means the Internal Revenue Code of 1986, as amended.
1.72 IRS means Internal Revenue Service of the United States of
America.
1.73 IRS Settlement Agreement means any agreement finally
determining the Federal Priority Tax Claims and other matters, executed or to be
executed between MW Holding and the IRS with respect to, among other things, the
resolution of the IRS audit of the Debtors' 1991 through 1996 taxable years.
1.74 Lechmere means Lechmere, Inc., a Massachusetts corporation and
one of the Debtors.
1.75 Lechmere Bank Guaranty Claims means, collectively, the Lechmere
Bank Guaranty (Short Term) Claims and the Lechmere Bank Guaranty (Long Term)
Claims.
1.76 Lechmere Bank Guaranty (Long Term) Claims means the Claims
against Lechmere of certain bank lenders and their agents (and their respective
successors and assigns) party to the Long Term Credit Agreement, dated as of
September 15, 1994, as amended, supplemented or otherwise modified from time to
time, among Montgomery Ward, various financial institutions, The First National
Bank of Chicago, as Documentary Agent, The Bank of New York, as Negotiated Loan
Agent, Bank of America National Trust and Savings Association, as Advisory
Agent, and The Bank of Nova Scotia, as Administrative Agent, under the Guaranty
of Lechmere (relating to such Long Term Credit Agreement), dated as of December
23, 1996.
1.77 Lechmere Bank Guaranty (Short Term) Claims means the Claims
against Lechmere of the certain bank lenders and their agents (and their
respective successors and assigns) under the Short Term Credit Agreement, dated
as of September 15, 1994, as amended, supplemented or otherwise modified from
time to time, among Montgomery Ward, various financial institutions, The First
National Bank of Chicago, as Documentary Agent, The Bank of New York, as
Negotiated Loan Agent, Bank of America National Trust and Savings Association,
as Advisory Agent, and The Bank of Nova Scotia, as Administrative Agent, under
the Guaranty of Lechmere (relating to such Short Term Credit Agreement), dated
as of December 23, 1996.
1.78 Lechmere Cash Collateral Account means the segregated interest-
bearing account maintained by The Bank of Nova Scotia, as Administrative Agent,
in which the Administrative Agent holds $1,723,083.38 in Cash plus interest
thereon, which was transferred to it by BankBoston N.A. pursuant to the terms of
a Stipulation and Order Among Certain Pre-
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Petition Lenders and Debtors Modifying Automatic Stay and Authorizing Setoffs,
dated May 28, 1998 and "so ordered" by the Bankruptcy Court on June 16, 1998.
1.79 Lechmere Class 3 Payment means an amount of Cash equal to 50%
of the amount the holder of an Allowed Lechmere Class 3 Unsecured Claim would
have received as a holder of an Allowed Class 3 Unsecured Claim under the terms
of this Plan from the MW Class 3 Distribution Pool (but excluding the Lechmere
Excess Distribution Pool), had such Claim been Allowed against Montgomery Ward
and had Lechmere been substantively consolidated with Montgomery Ward.
1.80 Lechmere Class 3 Unsecured Claim means any unsecured, non-
priority Claim against Lechmere (including any GE Capital Trade Claim against
Lechmere), that is not a Lechmere Bank Guaranty Claim, Lechmere Noteholder
Guaranty Claim, Administrative Claim, Federal Priority Tax Claim, Non-Federal
Priority Tax Claim, Non-Tax Priority Claim, Secured Claim, Secured Tax Claim, GE
Capital Non-Trade Claim, GE Capital Credit Card Claim, Intercompany Claim, MW
Intercompany Claim or any Secondary Liability Claim.
1.81 Lechmere Excess Distribution Pool means an amount of Cash, to
be paid from the Class 3 Deposit, equal to the difference between (a) Cash that
would have been distributed from the MW Class 3 Distribution Pool (but excluding
the Lechmere Excess Distribution Pool) on account of Allowed Lechmere Class 3
Unsecured Claims had Lechmere been substantively consolidated with Montgomery
Ward, and (b) the Lechmere Class 3 Payment on account of such Claims.
1.82 Lechmere Loan means the post-petition loan made by Lechmere to
Signature pursuant to the Order Modifying Prior Order of Court and Authorizing
Lechmere, Inc. to Loan Money to Signature Financial/Marketing, Inc. Pursuant to
Section 345 of the Bankruptcy Code, entered by the Bankruptcy Court on September
14, 1998.
1.83 Lechmere Noteholder Guaranty Claims means Claims of certain
insurance companies against Lechmere pursuant to certain guaranties, dated as of
March 29, 1997.
1.84 Montgomery Ward or MW means Montgomery Ward & Co.,
Incorporated, an Illinois corporation and one of the Debtors.
1.85 MW Class 3 Distribution Pool means the Class 3 Deposit, plus
the applicable Net Cash Investment Yield thereon, plus increases, if any,
pursuant to Sections 6.04(a), 6.07 and 10.05(b) hereof, which Cash shall be
remitted to the Disbursing Agent for the benefit of the holders of Allowed MW
Class 3 Unsecured Claims pursuant to Articles IV and VI hereof. Except where the
Plan provides otherwise, MW Class 3 Distribution Pool shall include the Class 3
Surplus Distributions, Lechmere Class 3 Payment and Lechmere Excess Distribution
Pool.
1.86 MW Class 3 Unsecured Claim means any unsecured, non-priority
Claim against the Consolidating Debtors (including Bank Claims and any GE
Capital Trade Claim against Montgomery Ward) that is not an Administrative
Claim, Federal Priority Tax Claim, Non-Federal Priority Tax Claim, Non-Tax
Priority Claim, Secured Claim, Secured Tax Claim,
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GE Capital Non-Trade Claim, GE Capital Credit Card Claim, Intercompany Claim, MW
Intercompany Claim, or any Secondary Liability Claim (except for Montgomery Ward
guaranties of Lechmere Claims).
1.87 MW Class 6 Interests means, collectively, (a) Old Common Stock
in MW Holding, consisting of Class A and Class B, (b) Old Voting Trust
Certificates in MW Holding, if any, to the extent Old Common Stock was not
issued in replacement thereof, and (c) all Claims arising from rescission of a
purchase or sale of such stock or certificates, or for damages arising from the
purchase or sale of such stock or certificates, and all Claims for indemnity,
reimbursement, or contribution on account of such Claims.
1.88 MW Class 6 Surplus Distributions means, to the extent that a
Disputed Class 6 Interest is not Allowed or becomes Allowed in an amount less
than the Disputed Interest Amount, the remaining Cash in the Disputed Class 6
Interests Reserve after distributions of Cash, if any, on account of such
Disputed Class 6 Interest.
1.89 MW Intercompany Claims means all Claims of Montgomery Ward
against Lechmere aggregating $423,024,780 as of the Petition Date and secured by
a lien on inventory, accounts receivable and real property of Lechmere pursuant
to the Credit and Security Agreement, dated March 30, 1994.
1.90 MWCC means Montgomery Ward Credit Corporation.
1.91 MW Holding means Montgomery Ward Holding Corp., a Delaware
corporation, one of the Debtors, and the direct or indirect parent corporation
of each of the other Debtors.
1.92 Net Cash Investment Yield means the net yield earned by the
Disbursing Agent after the Effective Date, without duplication, on the MW Class
3 Distribution Pool (including, without limitation, net of any taxes imposed on
such earnings, whether payable by the Disbursing Agent or the Debtors), from the
investment of Cash held therein pending distributions pursuant to this Plan.
1.93 New By-Laws means the by-laws or other organization documents
of New Retailer, Reorganized MW Holding and, to the extent necessary, the
amended by-laws of each Reorganized Subsidiary Debtor, and the organization
documents of any other entity created in furtherance of the Plan, in each case,
effective as of the Effective Date and as approved by GE Capital.
1.94 New Certificates of Incorporation means the certificate of
incorporation or other organization documents of New Retailer, Reorganized MW
Holding and, to the extent necessary, the amended certificate of incorporation
of each Reorganized Subsidiary Debtor, and the organization documents of any
other entity created in furtherance of the Plan, in each case, effective as of
the Effective Date and as approved by GE Capital.
1.95 New LLC Interests means the ownership interests of New Retailer
authorized and to be issued pursuant to this Plan in one or more classes to the
GE Capital Entities or their designees as holders of the GE Capital Non-Trade
Claims. The New LLC Interests shall
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have such rights with respect to distributions, liquidation, voting and other
matters as are provided for by applicable non-bankruptcy law or in the New
Certificate of Incorporation and New By-Laws of New Retailer.
1.96 New Loss Sharing Note means the note to be executed, as of the
Effective Date, by Reorganized Montgomery Ward in favor of MWCC or its designee
in accordance with Section 7.03 hereof.
1.97 New Retailer means a limited liability company to be formed as
part of the Restructuring Transactions.
1.98 New Ward Note means a note issued by Reorganized Montgomery
Ward to New Retailer with a maturity of not more than four years, in an amount
equal to the net fair market value of the Retained Assets less $10 million, and
with such other terms and conditions as Montgomery Ward and GE Capital shall
determine.
1.99 Non-Federal Priority Tax Claim means a Claim of a governmental
unit of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy
Code, other than the Federal Priority Tax Claim.
1.100 Non-Real Property Executory Contracts and Unexpired Leases
means, collectively or singularly, the executory contracts and/or unexpired
leases of a Debtor that are not Real Property Executory Contracts or Unexpired
Leases.
1.101 Non-Tax Priority Claim means a Claim, other than an
Administrative Claim, Federal Priority Tax Claim or Non-Federal Priority Tax
Claim, that is entitled to priority in payment pursuant to section 507(a) of the
Bankruptcy Code.
1.102 Old Common Stock means, when used with reference to a
particular Debtor or Debtors, any class or series of common stock issued by such
Debtor or Debtors and any securities or rights convertible into or exchangeable
for any class or series of common stock outstanding immediately prior to the
Petition Date, including treasury stock; provided, however, that the term "Old
Common Stock" shall exclude all options, warrants, calls, rights, puts, awards,
commitments or any other agreements of any character to acquire such common
stock.
1.103 Old Common Stock Options means (a) all options, warrants,
calls, rights, puts, awards, commitments or any other agreements of any
character to acquire Old Common Stock in MW Holding and/or Old Voting Trust
Certificates, including share-appreciation rights, and (b) all Claims arising
from rescission of a purchase or sale of such options, warrants, calls, rights,
puts, awards, commitments or any other agreements or for damages arising from
the purchase or sale of any of the foregoing and all Claims for indemnity,
reimbursement or contribution on account of such Claims.
1.104 Old Loss Sharing Obligations means, collectively, the
obligations of Montgomery Ward to MWCC in the aggregate principal amount of
$284,876,800 for Montgomery Ward's unpaid share of credit losses, net of amounts
owed by MWCC to Montgomery Ward for certain revenue sharing, both under the
Credit Card Agreements as of the Petition Date.
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1.105 Old Montgomery Ward Common Stock means (a) the shares of any
class or series of common stock issued by Montgomery Ward to MW Holding and
outstanding immediately prior to the Petition Date, (b) all options, warrants,
calls, rights, puts, awards, commitments or any other agreements of any
character, if any, to acquire such stock, and (c) all Claims arising from
rescission of a purchase or sale of such stock or options, warrants, calls,
rights, puts, awards, commitments or any other agreements of any character, if
any, to acquire such stock or for damages arising from the purchase or sale of
the foregoing, and all Claims for indemnity, reimbursement, or contribution on
account of such Claims.
1.106 Old Montgomery Ward Preferred Stock means (a) the shares of any
class or series of preferred stock issued by Montgomery Ward to MW Holding and
outstanding immediately prior to the Petition Date, (b) all options, warrants,
calls, rights, puts, awards, commitments or any other agreements of any
character, if any, to acquire such stock, and (c) all Claims arising from
rescission of a purchase or sale of such stock or options, warrants, calls,
rights, puts, awards, commitments or any other agreements of any character, if
any, to acquire such stock or for damages arising from the purchase or sale of
the foregoing, and all Claims for indemnity, reimbursement, or contribution on
account of such Claims.
1.107 Old MW Holding Preferred Stock means, collectively, (a) the
shares of any class or series of preferred stock issued by MW Holding and
outstanding immediately prior to the Petition Date, (b) all options, warrants,
calls, rights, puts, awards, commitments or any other agreements of any
character, if any, to acquire such stock, and (c) all Claims arising from
rescission of a purchase or sale of such stock or options, warrants, calls,
rights, puts, awards, commitments or any other agreements of any character, if
any, to acquire such stock or for damages arising from the purchase or sale of
the foregoing and all Claims for indemnity, reimbursement, or contribution on
account of such Claims.
1.108 Old Voting Trust Certificates means the voting trust
certificates issued by MW Holding pursuant to the Voting Trust Agreement, dated
as of June 21, 1988, by and among BFB Acquisition Corp., Bernard F. Brennan and
certain stockholders parties thereto, relating to Old Common Stock, which voting
trust agreement was terminated pursuant to its terms as of June 21, 1998, and
any voting trust certificates remaining outstanding prior to the Effective Date
to the extent Old Common Stock was not issued in replacement thereof.
1.109 Ordinary Course Professionals Order means, collectively: (a)
the Order Authorizing the Retention, Employment and Payment of Certain
Professionals in the Ordinary Course of Debtors' Businesses, entered by the
Bankruptcy Court on July 8, 1997, (b) the Order Authorizing the Continued
Retention, Employment and Payment of Certain Professionals in the Ordinary
Course of Debtors' Businesses, entered by the Bankruptcy Court on January 30,
1998, and (c) the Order Authorizing the Continued Retention, Employment and
Payment of Certain Professionals in the Ordinary Course of Debtors' Businesses,
entered by the Bankruptcy Court on January 6, 1999.
1.110 PBGC means Pension Benefit Guaranty Corporation of the United
States of America.
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1.111 Pension Plan means the Montgomery Ward & Co., Incorporated
Retirement Security Plan.
1.112 Pension Plan Restructuring Event means the occurrence of: (a)
irrevocable acquisition of participating and/or non-participating annuity
contract(s) for the vested benefits of all Pension Plan and Spin-Off Plan
participants acceptable to PBGC and the IRS; (b) PBGC's failure to object (or
subsequent approval in the event PBGC preliminarily objects) to the termination
of the Spin-Off Plan following the restructuring of the Pension Plan and
establishment of the Replacement Pension Plan for the Debtors under IRC section
4980; (c) establishment of the Replacement Pension Plan; and (d) receipt by the
Debtors of the Excess Assets remaining in the Spin-Off Plan upon completion of
the transactions contemplated by the Pension Plan Restructuring Order, in each
event pursuant to the Pension Plan Restructuring Order.
1.113 Pension Plan Restructuring Order means the Order Authorizing
(a) the Restructuring of an Overfunded Pension Plan and (b) the Use of the
Excess Assets to Establish a Qualified Replacement Pension Plan and Related
Relief, Pursuant to Section 363 of the Bankruptcy Code entered by the Bankruptcy
Court on February 19, 1999.
1.114 Petition Date means July 7, 1997.
1.115 Plan means this chapter 11 plan of reorganization, including
the Plan Supplement and all supplements, appendices and schedules thereto,
either in its present form or as the same may be altered, amended or modified
from time to time.
1.116 Plan Supplement means the forms of documents specified in
Section 12.11 of the Plan.
1.117 Pro Rata means a proportionate share, so that the ratio of (a)
the amount of property distributed on account of an Allowed Claim or Allowed
Interest, or reserved on account of a Disputed Claim or a Disputed Interest (as
the case may be), in a Class, to (b) the amount distributed on account of all
Allowed Claims or Allowed Interests, or reserved on account of all Disputed
Claims or Disputed Interests (as the case may be) in such Class, is the same as
the ratio (x) such Claim or Interest bears to (y) the total amount of all Claims
(including Disputed Claims in their respective Disputed Claim Amounts) or
Interests (including Disputed Interests in their respective Disputed Interest
Amounts) in such Class.
1.118 Professional means (a) any professional employed in the
Reorganization Cases pursuant to section 327 or 1103 of the Bankruptcy Code, (b)
any professional or other entity seeking compensation or reimbursement of
expenses in connection with the Reorganization Cases pursuant to section
503(b)(4) of the Bankruptcy Code, and (c) the legal auditing firm of Stuart,
Maue, Mitchell & James, Ltd. appointed as the fee auditor in the Reorganization
Cases.
1.119 Proponents means, collectively, the Debtors and GE Capital.
When any action or decision is referred to herein as being taken or made by the
Proponents, such actions or decisions will not be effective (for purposes of
this Plan) unless taken or made by MW Holding and GE Capital acting jointly.
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1.120 Quarter means the period beginning on the Effective Date and
ending on the next October 31, January 31, April 30, and July 31, and each
three-month period thereafter.
1.121 Quarterly Distribution Date means the twentieth day after the
end of the Quarter following the Quarter in which the Effective Date occurs and
the twentieth day after the end of each subsequent Quarter.
1.122 Real Property Executory Contracts and Unexpired Leases means,
collectively or singularly, the executory contracts and/or unexpired leases
relating to the Debtors' interests in non-residential real property, and any
executory contracts and unexpired leases appurtenant to the applicable non-
residential real property, including all easements, licenses, permits, rights,
privileges, immunities, options, rights of first refusal, powers, uses,
usufructs, reciprocal easement or operating agreements, vault, tunnel or bridge
agreements or franchises, development rights, and any other interests in real
estate or rights in rem related to the applicable real property.
1.123 Reclamation Claims means Claims for reclamation Allowed in
accordance with section 546(c)(2) of the Bankruptcy Code and the Order
Establishing Procedures for Settlement and Payment of Reclamation Demands,
entered by the Bankruptcy Court on October 14, 1997, as the same may have been
or may hereafter be amended or modified, which Claims shall not include interest
on any portion thereof.
1.124 Reinstated or Reinstatement means rendering a Claim or Interest
"unimpaired" within the meaning of section 1124 of the Bankruptcy Code at the
option of the Debtors or the Reorganized Debtors and with the consent of GE
Capital.
1.125 Reorganization Case means: (a) when used with reference to a
particular Debtor, the chapter 11 case pending for that Debtor in the Bankruptcy
Court and (b) when used with reference to all Debtors, the chapter 11 cases
pending for the Debtors in the Bankruptcy Court.
1.126 Reorganized Debtors means the Debtors or any successors thereto
(including New Retailer) by merger, consolidation or otherwise, on or after the
Effective Date.
1.127 Reorganized Montgomery Ward means Montgomery Ward on and after
the Effective Date.
1.128 Reorganized MW Holding means MW Holding on and after the
Effective Date.
1.129 Replacement Pension Plan means the tax qualified pension plan
established pursuant to the Pension Plan Restructuring Order in accordance with
IRC section 4980.
1.130 Restructuring Transactions means the transactions described in
Section 5.01 hereof.
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1.131 Retail Subsidiaries means any direct or indirect subsidiary of
Montgomery Ward (other than any subsidiary included among the Retained Assets)
that is not merged into Montgomery Ward as part of the Restructuring
Transactions as determined by Montgomery Ward and GE Capital.
1.132 Retained Assets means the assets to be retained by Reorganized
Montgomery Ward as determined by Montgomery Ward and GE Capital and listed in a
Schedule to be included in the Plan Supplement (whether stock of subsidiaries or
other property), having a net fair market value of at least $10 million
(exclusive of the New Ward Note).
1.133 Schedules means the schedules of assets and liabilities, the
list of holders of Interests, and the statements of financial affairs Filed by
the Debtors under section 521 of the Bankruptcy Code, and all amendments and
modifications thereto through the Confirmation Date.
1.134 Secondary Liability Claim means a Claim (other than a Lechmere
Bank Guaranty Claim or a Lechmere Noteholder Guaranty Claim) that arises from a
Debtor being liable as a guarantor of, or otherwise being jointly, severally, or
secondarily liable for, any contractual, tort, or other obligation of another
Debtor, including any Claim based on: (a) guaranties of collection, payment, or
performance; (b) indemnity bonds, obligations to indemnify, or obligations to
hold harmless; (c) performance bonds; (d) contingent liabilities arising out of
contractual obligations or out of undertakings (including any assignment or
other transfer) with respect to leases, operating agreements, or other similar
obligations made or given by a Debtor relating to the obligations or performance
of another Debtor; (e) vicarious liability; or (f) any other joint or several
liability that any Debtor may have in respect of any obligation that is the
basis of a Claim.
1.135 Secured Claim means a Claim (other than an Administrative
Claim, Intercompany Claim, MW Intercompany Claim or Secured Tax Claim) that is
secured by a lien on property in which a Debtor's estate has an interest or that
is subject to setoff under section 553 of the Bankruptcy Code, to the extent of
the value of the Claim holder's interest in the applicable estate's interest in
such property or to the extent of the amount subject to setoff, as applicable,
as determined pursuant to section 506(a) of the Bankruptcy Code or, in the case
of the setoff, pursuant to section 553 of the Bankruptcy Code.
1.136 Secured Tax Claim means a Claim (other than an Administrative
Claim or Secured Claim) that is (a) held by a governmental unit for taxes owed
by a Debtor; and (b) secured by a lien on property in which a Debtor's estate
has an interest or that is subject to setoff under section 553 of the Bankruptcy
Code, to the extent of the value of the Claim holder's interest in the
applicable estate's interest in such property or to the extent of the amount
subject to setoff, as applicable, as determined pursuant to section 506(a) of
the Bankruptcy Code or, in the case of the setoff, pursuant to section 553 of
the Bankruptcy Code, in each case, to secure payment of taxes owed by a Debtor
to a governmental unit.
1.137 Settlement Stipulation means a stipulation or other agreement
between the applicable Debtor or Reorganized Debtor (or, after the Confirmation
Date, the Claims Resolution Committee with respect to Class 3 Unsecured Claims
in excess of the applicable Claims Settlement Parameters pursuant to Section
12.06 hereof) and a holder of a Claim or a MW
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Class 6 Interest; provided, however, that any Settlement Stipulation providing
for allowance of any Claim in excess of $5 million shall be approved by the
Bankruptcy Court.
1.138 Signature means the assets and/or capital stock of Signature
Financial/Marketing, Inc., a Delaware corporation, and its subsidiaries, which
assets and/or stock are the subject of the Signature Sale Agreement.
1.139 Signature Sale Agreement means an agreement substantially in
the form of the Acquisition Agreement among Montgomery Ward, MW Holding, and GE
Capital (or any other party under an agreement approved by the Proponents),
providing, at the Proponents' option, for the sale of the stock or substantially
all of the assets of Signature to GE Capital (or any other party under an
agreement approved by the Proponents), as such agreement may be amended,
modified, or supplemented.
1.140 Signature Sale Event means the consummation of the transactions
contemplated by the Signature Sale Agreement.
1.141 Solicitation Order means the order entered by the Bankruptcy
Court establishing procedures with respect to the solicitation and tabulation of
votes to accept or reject this Plan.
1.142 Spin-Off Plan means the tax qualified pension plan established
pursuant to the Pension Plan Restructuring Order to obtain the transfer of
benefits of former employees and retirees with vested benefits and the Excess
Assets of the Pension Plan.
1.143 Subsidiary Debtors means, individually or collectively, a
Debtor or Debtors other than MW Holding, as applicable.
1.144 Tort Claim means any Claim that has not been compromised and
settled or otherwise resolved (a) relating to personal injury, wrongful death,
property damage, products liability, or other similar Claim asserted against any
of the Debtors, or (b) arising under any federal, state or local statute, rule,
regulation or ordinance governing, regulating or relating to health, safety,
hazardous substances or the environment.
1.145 Uninsured Claim means any Claim that is not an Insured Claim.
1.146 Voting Deadline means the last day for submitting Ballots to
accept or reject this Plan in accordance with section 1126 of the Bankruptcy
Code, as specified in the Solicitation Order.
Rules of Interpretation and Computation of Time. For purposes of this
Plan, unless otherwise provided herein: (a) whenever from the context it is
appropriate, each term, whether stated in the singular or the plural, will
include both the singular and the plural; (b) unless otherwise provided in this
Plan, any reference in this Plan to a contract, instrument, release, or other
agreement or document being in a particular form or on particular terms and
conditions means that such document will be substantially in such form or
substantially on such terms and conditions; (c) any reference in this Plan to an
existing document or schedule Filed or to be Filed means such document or
schedule, as it may have been or may be amended,
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modified, or supplemented pursuant to this Plan; (d) any reference to an entity
as a holder of a Claim or Interest includes that entity's successors and
assigns; (e) all references in this Plan to Sections, Articles, and Schedules
are references to Sections, Articles, and Schedules of or to this Plan; (f) the
words "herein," "hereunder," and "hereto" refer to this Plan in its entirety
rather than to a particular portion of this Plan; (g) captions and headings to
Articles and Sections are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of this Plan; (h)
subject to the provisions of any contract, certificates of incorporation, by-
laws, instrument, release, or other agreement or document entered into in
connection with this Plan, the rights and obligations arising under this Plan
shall be governed by, and construed and enforced in accordance with, federal
law, including the Bankruptcy Code and Bankruptcy Rules; (i) the rules of
construction set forth in section 102 of the Bankruptcy Code will apply; and (j)
in computing any period of time prescribed or allowed by this Plan, the
provisions of Bankruptcy Rule 9006(a) will apply.
ARTICLE II
TREATMENT OF ADMINISTRATIVE CLAIMS
AND PRIORITY TAX CLAIMS
2.01 Administrative Claims in General. Unless otherwise agreed by
the holder of an Allowed Administrative Claim and the Proponents and except as
set forth in this Article II, each holder of an Allowed Administrative Claim
will receive, in full satisfaction of its Claim, Cash in an amount equal to such
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; provided, however, that Allowed Administrative
Claims representing liabilities incurred in the ordinary course of business by
the Debtors or liabilities arising under loans or advances to or other
obligations incurred by the Debtors, to the extent authorized and approved by
the Bankruptcy Court if such authorization and approval was required under the
Bankruptcy Code, shall be paid and performed by the Reorganized Debtors 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, and the holders of such Claims shall
not be required to File or serve any request for payment of such Claims. On the
Effective Date, Administrative Claims under or evidenced by the DIP Credit
Agreement shall be paid in Cash equal to the full amount of such Administrative
Claims, and the letters of credit outstanding under the DIP Credit Agreement on
the Effective Date shall be replaced or backstopped by new letters of credit
under the Exit Financing Facility. Except as otherwise stated in this Section
2.01, all holders of Administrative Claims shall be required to File and serve
requests for payment of their Administrative Claims; provided, however, that
holders of Administrative Claims under or evidenced by the DIP Credit Agreement
and holders of Allowed Reclamation Claims will not be required to File or serve
any request for payment of such Claims, which will be satisfied pursuant to this
Section 2.01. The GE Capital Entities shall not be required to File or serve any
request for payment of their Administrative Claims or cure payments and other
amounts due under the New Loss Sharing Note, which, together with other GE
Capital Credit Card Claims, shall be treated in accordance with Section 7.03
hereof.
2.02 GE Capital Deposit Claim. The lien on the Escrow Account
securing the GE Capital Deposit Claim will be deemed automatically released on
the Effective Date and the
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GE Capital Deposit Claim shall be treated as follows: (a) if the Signature Sale
Event occurs on or before the Effective Date, then up to the full amount of the
GE Capital Deposit Claim may be applied to reduce the purchase price of
Signature in accordance with the terms of the Signature Sale Agreement (without
any effect on the Class 3 Deposit) and the remaining principal balance, if any,
on the Effective Date shall be, at the option of GE Capital, either (i) paid in
Cash to GE Capital or (ii) contributed to capital of one or more of the
Reorganized Debtors; or (b) if the Signature Sale Event does not occur on or
before the Effective Date, then the GE Capital Deposit Claim shall be converted
to a $650 million recourse obligation of Reorganized Montgomery Ward to be
secured by a first-priority security interest in the stock of Signature and by
the Signature Sale Agreement, up to the entire amount of which may be applied
against the purchase price of Signature and the remaining principal balance, if
any, on or after the Effective Date may, at the option of GE Capital, either be
(i) paid in Cash to GE Capital, or (ii) contributed to capital of one or more of
the Reorganized Debtors, or (iii) satisfied in such other manner as GE Capital
shall determine. GE Capital shall not be required to File or serve any requests
for payment of the GE Capital Deposit Claim, which shall be satisfied pursuant
to this Section 2.02. Except as provided in the Escrow Agreement, the GE Capital
Deposit Claim shall bear no interest and there shall be no fees payable to the
GE Capital Entities with respect to such Claim.
2.03 Administrative Bar Date for Filing Fee Claims. Professionals or
other entities asserting Fee Claims must File and serve on the Proponents and
such other entities who are designated by the Bankruptcy Rules, the Confirmation
Order, or other order of the Bankruptcy Court, an application for final
allowance of such Fee Claim no later than 60 days after the Effective Date;
provided, however, that any Professional who may receive compensation or
reimbursement of expenses pursuant to the Ordinary Course Professionals Order
may continue to receive such compensation and reimbursement of expenses for
services rendered before the Effective Date, without further Bankruptcy Court
review or approval. Holders of Fee Claims that are required to File and serve
applications for final allowance of their Fee Claims and that do not File and
serve such applications within the time period set forth in this Section 2.03
shall be forever barred from asserting such Claims against the Debtors, the
Reorganized Debtors, or their respective property and such Fee Claims shall be
deemed discharged as of the Effective Date. Objections to any Fee Claim must be
Filed and served on the Proponents and the requesting party by the later of (a)
120 days after the Effective Date, or (b) 60 days after the Filing of an
application for final allowance of such Fee Claim. To the extent necessary,
entry of the Confirmation Order shall amend and supersede any previously entered
order of the Bankruptcy Court, including the Fee Order, regarding the payment of
Allowed Fee Claims.
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2.04 Priority Tax Claims.
(a) Federal Priority Tax Claims. Unless the IRS Settlement Agreement
provides otherwise, pursuant to section 1129(a)(9)(C) of the Bankruptcy Code,
the IRS shall receive from New Retailer, in full satisfaction of the Allowed
Federal Priority Tax Claims, equal annual Cash payments, commencing one year
after the Effective Date, in an aggregate amount equal to the Allowed Federal
Priority Tax Claims, together with simple interest at a fixed annual rate equal
to 7-3/4%, over a period through the sixth anniversary of the date of assessment
of such Allowed Federal Priority Tax Claims, or upon such other terms determined
by the Bankruptcy Court, or to provide the holder of such Allowed Federal
Priority Tax Claims with deferred Cash payments having a value, as of the
Effective Date, equal to such Allowed Federal Priority Tax Claims; provided,
however, that New Retailer shall have the right to pay any Federal Priority Tax
Claim, or any remaining balance of such Claim, in full, at any time on or after
the Effective Date, without premium or penalty.
(b) Non-Federal Priority Tax Claims. Pursuant to section 1129(a)(9)(C)
of the Bankruptcy Code, unless otherwise agreed by the holder of an Allowed Non-
Federal Priority Tax Claim and the applicable Debtor or New Retailer, each
holder of an Allowed Non-Federal Priority Tax Claim shall receive from New
Retailer, in full satisfaction of its Claim, equal annual Cash payments,
commencing one year after the Effective Date, in an aggregate amount equal to
the Allowed Non-Federal Priority Tax Claims, together with simple interest at a
fixed annual rate equal to 7-3/4%, over a period through the sixth anniversary
of the date of assessment of such Allowed Non-Federal Priority Tax Claims, or
upon such other terms determined by the Bankruptcy Court to provide the holder
of such Allowed Non-Federal Priority Tax Claims with deferred Cash payments
having a value, as of the Effective Date, equal to such Allowed Non-Federal
Priority Tax Claims; provided, however, that New Retailer will have the right to
pay any Allowed Non-Federal Priority Tax Claim, or any remaining balance of such
Claim, in full, at any time on or after the Effective Date, without premium or
penalty.
ARTICLE III
CLASSIFICATION OF CLAIMS AND INTERESTS
This Plan constitutes a single plan of reorganization for all
Consolidating Debtors and a separate plan of reorganization for Lechmere only.
Each Class of Claims and Interests constitutes a single Class for all
Consolidating Debtors and a single Class for Lechmere only. A Claim or Interest
is classified in a particular Class only to the extent that the Claim or
Interest qualifies within the description of that Class and is classified in
other Classes to the extent that any remainder of the Claim or Interest
qualifies within the description of such other Classes.
Intercompany Claims and Interests in the Subsidiary Debtors
(including, without limitation, the Old Montgomery Ward Common Stock and Old
Montgomery Ward Preferred Stock) have not been classified and will be accorded
treatment as provided in Section 5.02 hereof.
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In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims (including Fee Claims), Federal Priority Tax Claims and
Non-Federal Priority Tax Claims have not been classified. Except as set forth
above, all Claims and Interests are classified for all purposes, including
voting, confirmation and distribution pursuant to this Plan, as follows:
Montgomery Ward
- ---------------
<TABLE>
<CAPTION>
Class Status
- ----- ------
<S> <C>
Class 1 - MW Non-Tax Priority Claims ............................ Unimpaired. Deemed to accept.
Class 2A - MW Secured Claims .................................... Impaired. Entitled to vote.
Class 2B - MW Secured Tax Claims ................................ Impaired. Entitled to vote.
Class 3 - MW Class 3 Unsecured Claims ........................... Impaired. Entitled to vote.
Class 4 - MW GE Capital Non-Trade Claims ........................ Impaired. Accepts.
Class 5 - Old MW Holding Preferred Stock ........................ Impaired. Accepts.
Class 6 - MW Class 6 Interests .................................. Impaired. Entitled to vote.
Class 7 - Old Common Stock Options .............................. Impaired. Deemed to reject.
Lechmere
- --------
Class Status
- ----- ------
Class 1 - Lechmere Non-Tax Priority Claims ...................... Unimpaired. Deemed to accept.
Class 2A - Lechmere Secured Claims .............................. Impaired. Entitled to vote.
Class 2B - Lechmere Secured Tax Claims .......................... Impaired. Entitled to vote.
Class 3 - Lechmere Class 3 Unsecured Claims...................... Impaired. Entitled to vote.
Class 4 - Lechmere GE Capital Non-Trade Claims................... Impaired. Accepts.
Class 5A - Lechmere Bank Guaranty (Short Term) Claims............ Impaired. Entitled to vote.
Class 5B - Lechmere Bank Guaranty (Long Term) Claims............. Impaired. Deemed to reject.
Class 6 - Lechmere Noteholder Guaranty Claims ................... Impaired. Deemed to reject.
Class 7 - Lechmere Old Common Stock ............................. Impaired. Accepts.
</TABLE>
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ARTICLE IV
TREATMENT OF CLAIMS AND INTERESTS
1. TREATMENT OF CLAIMS COMMON TO MONTGOMERY WARD AND LECHMERE
4.01 MW Class 1 and Lechmere Class 1 - Non-Tax Priority Claims.
MW Class 1 and Lechmere Class 1 are unimpaired by the Plan. Each
holder of an Allowed Non-Tax Priority Claim is conclusively presumed to have
accepted the Plan and is not entitled to vote to accept or reject the Plan.
Unless otherwise agreed, each holder of an Allowed Non-Tax Priority Claim shall
receive Cash in an amount equal to such Allowed Non-Tax Priority Claim on the
later of the Effective Date and the date such Claim becomes an Allowed Non-Tax
Priority Claim.
4.02 MW Class 2A and Lechmere Class 2A - Secured Claims.
MW Class 2A and Lechmere Class 2A are impaired by the Plan. Each
holder of an Allowed Secured Claim is entitled to vote to accept or reject the
Plan. At the Proponents' sole option, on the Effective Date (a) the Plan may
leave unaltered the legal, equitable and contractual rights of the holder of an
Allowed Secured Claim; or (b) notwithstanding any contractual provision or
applicable law that entitles the holder of an Allowed Secured Claim to demand or
receive accelerated payment from the Debtors after the occurrence of a default,
the Debtors may cure any such default, other than a default of a kind specified
in section 365(b)(2) of the Bankruptcy Code, reinstate the maturity of such
Claim as such maturity existed before such default, compensate the holder of
such Claim for any damages incurred as a result of any reasonable reliance by
such holder on such contractual provision or such applicable law, and otherwise
leave unaltered the legal, equitable or contractual rights to which such Claim
entitles the holder, all pursuant to section 1124 of the Bankruptcy Code; or (c)
the Debtors may pay Cash in an amount equal to such Allowed Secured Claim,
including any interest on such Allowed Secured Claim required to be paid
pursuant to section 506(b) of the Bankruptcy Code; or (d) the Debtors may
deliver to the holder of an Allowed Secured Claim the property securing such
Claim, in which event, the value of such holder's interest in such property
shall be determined (i) by agreement of the Debtors and the holder of such
Allowed Secured Claim or (ii) if they do not agree, by the Bankruptcy Court; or
(e) the Debtors may assume and assign the contract or agreement governing an
Allowed Secured Claim pursuant to section 365 or 1123(b) of the Bankruptcy Code
and cure any default required to be cured pursuant to section 365(b) of the
Bankruptcy Code; or (f) the Debtors may pay an Allowed Secured Claim in such
manner as may be agreed to by the holder of such Claim. The Proponents will be
deemed to have elected option (a) with respect to Allowed MW Secured Claims and
option (c) with respect to Allowed Lechmere Secured Claims, as described in the
immediately preceding sentence, except with respect to any Allowed Secured Claim
as to which the Proponents elect any other option in a Filed certification prior
to the conclusion of the Confirmation Hearing. In the Disclosure Statement, the
Debtors have identified the treatment under section 1129(b) of the Bankruptcy
Code for certain holders of Secured Claims, and in the event the Proponents
determine to proceed with such treatment, they shall File and serve notice
thereof on the affected parties 20 days prior to the Confirmation Hearing.
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Each Secured Claim shall be deemed to be separately classified in a
subclass of MW Class 2A and Lechmere Class 2A, and shall have all rights
associated with separate classification under the Bankruptcy Code.
4.03 MW Class 2B and Lechmere Class 2B - Secured Tax Claims.
MW Class 2B and Lechmere Class 2B are impaired by the Plan and holders
of Secured Tax Claims are entitled to vote to accept or reject the Plan. Except
to the extent that a holder of an Allowed Secured Tax Claim has been paid by the
applicable Debtor prior to the Effective Date or agrees to a different
treatment, each holder of an Allowed Secured Tax Claim shall receive from New
Retailer, at the option of the Proponents, (i) Cash in an amount equal to such
Allowed Secured Tax Claim, including any interest on such Allowed Secured Tax
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 Secured Tax Claim
becomes an Allowed Secured Tax Claim, or as soon thereafter as is practicable or
(ii) equal annual Cash payments in an aggregate amount equal to such Allowed
Secured Tax Claim, together with interest at a fixed annual rate equal to 7-3/4%
(or such other interest rate as the Bankruptcy Court may order), over a period
through the sixth anniversary of the date of assessment of such Allowed Secured
Tax Claim, or upon such other terms determined by the Bankruptcy Court to
provide the holder of such Allowed Secured Tax Claim deferred Cash payments
having a value, as of the Effective Date, equal to such Allowed Secured Tax
Claim; provided, however, that if the property subject to an Allowed Secured Tax
Claim is sold by the Reorganized Debtors after the Effective Date, the proceeds
of such sale shall be used to pay the then-outstanding amount of such Allowed
Secured Tax Claim. Each holder of an Allowed Secured Tax Claim shall retain the
liens (or replacement liens as may be contemplated under non-bankruptcy law)
securing its Allowed Secured Tax Claim as of the Effective Date until full and
final payment of such Allowed Secured Tax Claim is made as provided herein, and
upon such full and final payment, such liens shall be deemed null and void and
shall be unenforceable for all purposes. Each Secured Tax Claim shall be deemed
to be separately classified in a subclass of MW Class 2B and Lechmere Class 2B,
and shall have all rights associated with separate classification under the
Bankruptcy Code.
2. TREATMENT OF MONTGOMERY WARD CLAIMS AND INTERESTS
4.04 MW Class 3 - MW Class 3 Unsecured Claims.
MW Class 3 is impaired by the Plan. Each holder of an Allowed MW
Class 3 Unsecured Claim is entitled to vote to accept or reject the Plan.
Unless otherwise agreed, each holder of an Allowed MW Class 3 Unsecured Claim
shall receive Cash equal to such holder's Pro Rata share of the MW Class 3
Distribution Pool (but excluding the Lechmere Class 3 Payment), in accordance
with Article VI hereof.
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4.05 MW Class 4 - MW GE Capital Non-Trade Claims.
MW Class 4 is impaired by the Plan. GE Capital, on its behalf and on
behalf of the other GE Capital Entities, accepts the Plan. On the Effective
Date and in accordance with the Restructuring Transactions, the GE Capital
Entities or their designees shall receive, on account of the GE Capital Non-
Trade Claims:
(a) all of the New LLC Interests; and
(b) all of the stock of the Retail Subsidiaries (to the extent not
contributed to New Retailer).
4.06 MW Class 5 - Old MW Holding Preferred Stock.
MW Class 5 is impaired by the Plan. GE Capital, on its behalf and on
behalf of the other GE Capital Entities, accepts the Plan. On the Effective
Date, the holders of the Old MW Holding Preferred Stock shall retain such stock;
provided, however, that, if the Signature Sale Event (or the sale of Signature
to any other person approved by the Proponents) and the Pension Plan
Restructuring Event occur on or prior to January 1, 2000, the Old MW Holding
Preferred Stock shall be immediately converted into 389,962 shares of additional
Class B Old Common Stock in MW Holding after effectuating a reverse stock split
of 1,000 to 1.
4.07 MW Class 6 - MW Class 6 Interests.
MW Class 6 is impaired by the Plan. Each holder of an Allowed MW
Class 6 Interest is entitled to vote to accept or reject the Plan. GE Capital,
on its behalf and on behalf of the other GE Capital Entities as holders of 57.7%
of MW Class 6 Interests, accepts the Plan. The Brennan Stockholders, as holders
of 35.2% of MW Class 6 Interests, accept the Plan.
Unless otherwise agreed, subject to the provisions of Section 5.07
hereof, (a) each holder of an Allowed MW Class 6 Interest (other than the GE
Capital Entities and the Brennan Stockholders) shall receive, in redemption of
its Allowed MW Class 6 Interest, a Pro Rata share of $71,000 in Cash in
accordance with Article VI hereof; and (b) the GE Capital Entities that hold MW
Class 6 Interests and the Brennan Stockholders shall retain their respective MW
Class 6 Interests in consideration for forgoing any distribution under the Plan
on account of their respective MW Class 6 Interests; provided, however, that the
Brennan Stock shall be subject to the provisions of the Brennan Settlement
Agreement and subject to the Call Right. All MW Class 6 Interests (other than
Class B Old Common Stock in MW Holding and the Brennan Stock) shall be canceled
as of the Effective Date. No duplicate distributions shall be made on account
of Old Common Stock and Old Voting Trust Certificates, if any (if not replaced
by Old Common Stock) representing shares of such Old Common Stock.
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4.08 MW Class 7 - Old Common Stock Options.
MW Class 7 is impaired by the Plan. No holder of Old Common Stock
Options shall receive any distributions on account of such Old Common Stock
Options. On the Effective Date, all Old Common Stock Options shall be
terminated. Holders of Old Common Stock Options are conclusively deemed to have
rejected the Plan and are not entitled to vote to accept or reject the Plan.
3. TREATMENT OF LECHMERE CLAIMS AND INTERESTS
4.09 Lechmere Class 3 - Lechmere Class 3 Unsecured Claims.
Lechmere Class 3 is impaired by the Plan. Each holder of an Allowed
Lechmere Class 3 Unsecured Claim is entitled to vote to accept or reject the
Plan. Each holder of an Allowed Lechmere Class 3 Unsecured Claim shall receive
the Lechmere Class 3 Payment in accordance with Article VI hereof, except as
provided in Section 6.11(d) hereof.
4.10 Lechmere Class 4 - Lechmere GE Capital Non-Trade Claims.
Lechmere Class 4 is impaired by the Plan. GE Capital, on its behalf
and on behalf of the other GE Capital Entities, accepts the Plan. On the
Effective Date and in accordance with the Restructuring Transactions, the GE
Capital Entities or their designees shall receive, on account of the GE Capital
Non-Trade Claims:
(a) all of the New LLC Interests; and
(b) all of the stock of the Retail Subsidiaries (to the extent not
contributed to New Retailer).
4.11 Lechmere Classes 5A and 5B - Lechmere Bank Guaranty Claims.
(a) Lechmere Class 5A - Lechmere Bank Guaranty (Short Term) Claims
Lechmere Class 5A is impaired by the Plan. Each holder of an Allowed
Lechmere Bank Guaranty (Short Term) Claim is entitled to vote to accept or
reject the Plan. Unless otherwise agreed, each holder of an Allowed Lechmere
Bank Guaranty (Short Term) Claim shall receive Cash equal to such holder's Pro
Rata share of the Lechmere Cash Collateral Account.
(b) Lechmere Class 5B - Lechmere Bank Guaranty (Long Term) Claims
Lechmere Class 5B is impaired by the Plan. No holder of an Allowed
Lechmere Bank Guaranty (Long Term) Claim shall receive any distributions on
account of such Claim. Holders of Lechmere Bank Guaranty (Long Term) Claims are
conclusively presumed to have rejected the Plan and are not entitled to vote to
accept or reject the Plan.
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4.12 Lechmere Class 6 - Lechmere Noteholder Guaranty Claims.
Lechmere Class 6 is impaired by the Plan. No holder of Lechmere
Noteholder Guaranty Claims shall receive any distributions on account of such
Lechmere Noteholder Guaranty Claims. On the Effective Date, all Lechmere
Noteholder Guaranty Claims shall be canceled. Holders of Lechmere Noteholder
Guaranty Claims are conclusively deemed to have rejected the Plan and are not
entitled to vote to accept or reject the Plan.
4.13 Lechmere Class 7 - Lechmere Old Common Stock.
Lechmere Class 7 is impaired by the Plan. Montgomery Ward, as the
sole holder of Lechmere Old Common Stock, accepts the Plan. Montgomery Ward
shall receive no distributions on account of the Lechmere Old Common Stock, and
on the Effective Date, all Lechmere Old Common Stock shall be canceled;
provided, however, that Montgomery Ward may retain the Lechmere Old Common Stock
if additional assets are contributed to Lechmere as part of the Restructuring
Transactions.
ARTICLE V
REORGANIZATION TRANSACTIONS
5.01 Restructuring Transactions Generally. The following
transactions shall occur on the Effective Date, in seriatim:
-----------
(1) The Proponents shall take all steps necessary under the Escrow
Agreement to permit the Class 3 Deposit to be delivered to the
Disbursing Agent.
(2) The Debtors shall obtain discharge and release of all Claims,
liabilities and obligations discharged, released or
extinguished pursuant to the Plan and/or the Confirmation
Order.
(3) All subsidiaries of Reorganized Montgomery Ward shall be merged
into Reorganized Montgomery Ward, other than (i) the
subsidiaries whose stock is included among the Retained Assets,
(ii) the Retail Subsidiaries, and (iii) Signature and its
subsidiaries.
(4) In exchange for the New LLC Interests, Reorganized Montgomery
Ward shall issue the New Ward Note and shall transfer to New
Retailer all right, title and interest in all of the assets of
Reorganized Montgomery Ward, including existing licenses and
permits, other than (i) the Retained Assets, (ii) the stock of
Signature, and (iii) any Retail Subsidiaries identified by GE
Capital not to be so contributed. Such assets shall be
transferred to New Retailer subject to, and New Retailer shall
assume sole and exclusive responsibility for: (a) all claims,
liabilities and obligations of the Debtors incurred after the
Petition Date (including, without limitation, claims,
liabilities and obligations incurred pursuant to the Plan),
other than any claims, liabilities and obligations directly
relating to the Retained Assets, the New Loss Sharing Note, the
GE
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Capital Deposit Claim and the New Ward Note, (b) any tax
liabilities of the Debtors for periods ending on or before the
Effective Date to the extent payable after the Effective Date
(whether or not relating to the transferred assets), including,
without limitation, any taxes incurred in connection with the
transfer of the assets, and (c) any tax liabilities relating to
the sale of Signature and the Pension Plan Restructuring Event,
provided that such sale or event occurs on or before January 1,
2000.
(5) Reorganized Montgomery Ward shall transfer all of the New LLC
Interests and all of the stock in all of the Retail
Subsidiaries not contributed to New Retailer to holders of the
GE Capital Non-Trade Claims, in accordance with Sections 4.05
and 4.10 hereof.
In addition, except as otherwise set forth herein, the Reorganized
Debtors may, on or as of the Effective Date, enter into such other Restructuring
Transactions (including, without limitation, the Signature Sale Event and the
Pension Plan Restructuring Event, in accordance with the provisions hereof) and
take such actions as may be necessary or appropriate to effect a corporate
restructuring of their respective businesses, to simplify the overall corporate
structure of the Reorganized Debtors, which may include the transfer by the
Subsidiary Debtors of substantially all of their assets to a newly formed
corporation or such other entity which is a direct or indirect subsidiary of
Reorganized Montgomery Ward or New Retailer, and/or to reincorporate certain of
the Subsidiary Debtors under the laws of jurisdictions other than the laws of
which the applicable Subsidiary Debtors are presently incorporated. The actions
to effect these transactions may include: (a) the execution and delivery of
appropriate agreements or other documents of merger, consolidation,
restructuring, disposition, liquidation, or dissolution containing terms that
are consistent with the terms of the Plan and that satisfy the applicable
requirements of applicable state law and such other terms to which the
applicable entities may agree; (b) the execution and delivery of appropriate
instruments of transfer, assignment, assumption, or delegation of any asset,
property, right, liability, duty, or obligation on terms consistent with the
terms of the Plan and having such other terms to which the applicable entities
may agree; (c) the filing of appropriate certificates or articles of merger,
consolidation, or dissolution pursuant to applicable state law; and (d) all
other actions that the applicable entities determine to be necessary or
appropriate, including making filings or recordings that may be required by
applicable federal or state law in connection with such transactions. The
Debtors and the Reorganized Debtors shall take all actions necessary and
appropriate to cause the granting and perfection of liens and pledges to secure
the GE Capital Deposit Claim. Nothing contained in this Section 5.01 shall (a)
affect the amount or the timing of distributions on account of Allowed Class 3
Unsecured Claims pursuant to Articles IV and VI hereof; or (b) entitle holders
of Allowed Class 3 Unsecured Claims to seek payment from any other source than
the MW Class 3 Distribution Pool.
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5.02 Substantive Consolidation; Treatment of Intercompany Claims;
Treatment of Interests in Subsidiary Debtors.
(a) Substantive Consolidation. The Plan is premised upon substantive
consolidation of the Consolidating Debtors for all purposes related to the Plan,
including for purposes of voting, confirmation, distribution to creditors and
equity security holders, and administration. On the Effective Date: (a) all
assets and liabilities of all Consolidating Debtors shall be treated as though
they were merged into and with the assets and liabilities of MW Holding; (b) no
distributions shall be made under the Plan on account of Intercompany Claims
among the Consolidating Debtors; (c) no distributions shall be made under the
Plan on account of Interests in the Consolidating Debtors other than MW Holding;
(d) all guaranties of the Consolidating Debtors of the obligations of any other
Consolidating Debtor shall be deemed eliminated so that any Claim against any
Consolidating Debtor and any obligation or guaranty thereof executed by any
other Consolidating Debtor and any joint or several liability of any of the
Consolidating Debtors shall be deemed one obligation of the Consolidating
Debtors; and (e) each Claim Filed in the Reorganization Case of any of the
Consolidating Debtors shall be deemed Filed against the Consolidating Debtors,
and shall be deemed one Claim against and obligation of the Consolidating
Debtors. Notwithstanding the foregoing, such substantive consolidation shall
not (other than for purposes related to the Plan) affect (a) the current legal
and corporate structures of the Consolidating Debtors, subject to the right of
the Reorganized Debtors to effect the Restructuring Transactions as provided in
Section 5.01 hereof; (b) Intercompany Claims by and among the Consolidating
Debtors, which are treated as set forth in Section 5.02(b) hereof; (c) Interests
owned by any of the Consolidating Debtors in any other Consolidating Debtor,
which are treated as set forth in Section 5.02(c) hereof; and (d) guaranties
executed prior to or during the Reorganization Cases of the Consolidating
Debtors that are required to be maintained (i) in connection with and pursuant
to executory contracts or unexpired leases that either were entered into during
the Reorganization Cases or have been or will be assumed or assumed and assigned
pursuant to section 365 of the Bankruptcy Code, or (ii) pursuant to the Plan.
In the event that the Bankruptcy Court orders substantive consolidation of all
Debtors (including Lechmere), the Proponents shall proceed with confirmation of
the Plan without any re-solicitation of votes.
(b) Treatment of Intercompany Claims. On the Effective Date,
Intercompany Claims (including Intercompany Claims by and among the
Consolidating Debtors) and the Claims secured by the Lechmere Loan shall be
discharged and satisfied, at the option of the Proponents, by contributions,
distributions or otherwise as determined by the Proponents; provided, however,
that all Intercompany Claims between each Debtor and Signature shall be
canceled, except as otherwise set forth in the Signature Sale Agreement;
provided further that the MW Intercompany Claims shall be treated as Allowed and
Cash equal to the Lechmere Excess Distribution Pool shall be included in the MW
Class 3 Distribution Pool, which Cash shall thereupon be remitted to the holders
of Allowed MW Class 3 Unsecured Claims pursuant to Articles IV and VI hereof.
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(c) Treatment of Interests in Subsidiary Debtors. On the Effective
Date, to the extent a Subsidiary Debtor is not dissolved or merged as part of
the Restructuring Transactions, the Interests in such Subsidiary Debtor
(including Interests owned by any of the Consolidating Debtors in any other
Consolidating Debtor) shall remain outstanding. In addition, Reorganized MW
Holding shall retain the Old Montgomery Ward Preferred Stock and the Old
Montgomery Ward Common Stock.
5.03 Sale of Signature. Prior to the Effective Date, Montgomery Ward
shall sell the stock of Signature, or substantially all of the assets of
Signature, to GE Capital or its designee pursuant to the Signature Sale
Agreement (or any other party under an agreement approved by the Proponents);
provided, however, that the Signature Sale Event may occur on or after the
Effective Date without satisfaction or waiver of the conditions precedent set
forth in the Signature Sale Agreement if the Effective Date occurs in accordance
with Section 9.02(b)(ii) hereof. Prior to or after the Effective Date and unless
GE Capital otherwise determines, the Debtors and the Reorganized Debtors shall
enter into an agreement with Signature governing marketing rights and trademark
licenses acceptable to GE Capital, its designee or any other purchaser of
Signature acceptable to the Proponents; provided, however, that such agreement
shall be rescinded, at GE Capital's sole cost and expense, if the Effective Date
does not occur as provided in Article IX hereof. The Debtors and the Reorganized
Debtors shall take all actions necessary and appropriate to accomplish the
Signature Sale Event. If the Signature Sale Event occurs but the Effective Date
subsequently fails to occur as set forth in Article IX hereof, the Signature
Sale Event shall be rescinded immediately at GE Capital's sole cost and expense,
and GE Capital shall immediately restore the stock or assets, as applicable, of
Signature (and all income and profits, if any, earned thereon) to the Debtors'
estates, in no worse condition (financial or otherwise) as was the case
immediately prior to the Signature Sale Event, and at no cost or expense to the
Debtors' estates.
5.04 Class 3 Deposit and MW Class 3 Distribution Pool. Pursuant to
the Escrow Agreement and the Escrow Order, on the Effective Date (or as soon as
practicable thereafter in accordance with the terms of the Escrow Agreement),
the Escrow Agent shall transfer the Class 3 Deposit, free and clear of liens of
GE Capital, to the Disbursing Agent for the benefit of holders of Allowed Class
3 Unsecured Claims. The Class 3 Deposit and MW Class 3 Distribution Pool shall
not constitute property of the Debtors' estates or the property of the
Reorganized Debtors. The Disbursing Agent shall distribute the MW Class 3
Distribution Pool to holders of Allowed Class 3 Unsecured Claims pursuant to
Article VI hereof. The MW Class 3 Distribution Pool and the proceeds thereof
shall constitute the sole recourse of holders of Allowed Class 3 Unsecured
Claims. Holders of Allowed Claims (other than Allowed Class 3 Unsecured Claims)
and Interests, and any payment obligations by MW Holding and Montgomery Ward
pursuant to the Brennan Settlement Agreement, shall have no recourse to the MW
Class 3 Distribution Pool or the proceeds thereof. If the Confirmation Date
fails to occur on or before July 30, 1999 or if the Effective Date fails to
occur on or before August 31, 1999 (unless either or both of the foregoing dates
are extended by the Creditors' Committee as provided in Section 9.02 hereof),
then the Escrow Agent shall return the entire Escrow Fund (as defined in the
Escrow Agreement) to GE Capital under the terms of the Escrow Order in full
payment of the GE Capital Deposit Claim.
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5.05 Exit Financing Facility. On the Effective Date, the Reorganized
Debtors will execute and deliver those documents necessary or appropriate to
obtain the Exit Financing Facility.
5.06 Pension Plan. The Debtors and the Reorganized Debtors shall
take all actions necessary and appropriate to accomplish the Pension Plan
Restructuring Event.
5.07 Brennan Settlement Agreement. The Brennan Settlement Agreement
shall be approved by the Bankruptcy Court. The Debtors and the Reorganized
Debtors shall take all actions necessary and appropriate to accomplish the
Brennan Settlement Agreement. In furtherance of the Brennan Settlement
Agreement, the Brennan Stock shall be acquired on the Effective Date by Roger V.
Goddu or his designee, subject to the terms and conditions of the Brennan
Settlement Agreement and other provisions of the Plan (other than the payment
obligation under paragraph 3 of the Brennan Settlement Agreement); provided,
however, that on the acquisition by Roger V. Goddu or his designee, the Brennan
Stock shall not be subject to any indebtedness (including the Brennan Loan, as
defined in the Brennan Settlement Agreement), and shall not be subject to any
right of any other person to acquire such stock (other than the Call Right).
The Brennan Stockholders' obligation to pay over certain amounts to MW Holding
under paragraph 3 of the Brennan Settlement Agreement shall be satisfied upon
the assignment to MW Holding on the Effective Date of all amounts receivable by
the Brennan Stockholders from Roger V. Goddu or his designee in consideration
for the Brennan Stock (which assignment shall be deemed to occur immediately
prior to the acquisition by Roger V. Goddu or his designee and be effective
without further action by the Brennan Stockholders) and Roger V. Goddu or his
designee shall not be subject to such payment obligation.
ARTICLE VI
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF CLAIMS AND INTERESTS
6.01 Voting of Claims and Interests. Each holder of an Allowed Claim
or Allowed Interest in an impaired Class of Claims or Interests shall be
entitled to vote separately to accept or reject the Plan as provided in the
Solicitation Order.
6.02 Non-Consensual Confirmation. The Proponents intend to seek
confirmation pursuant to section 1129(b) of the Bankruptcy Code with respect to
Lechmere Classes 5B and 6, which are deemed to have rejected the Plan. In
addition, if any other impaired Class or subclass of Claims or Interests
entitled to vote shall not accept the Plan by the requisite majorities provided
in sections 1126(c) or 1126(d) of the Bankruptcy Code, as applicable, the
Proponents reserve the right to amend the Plan in accordance with Section 12.08
hereof or undertake to have the Bankruptcy Court confirm the Plan under section
1129(b) of the Bankruptcy Code or both. In addition, the Proponents may seek to
have the Bankruptcy Court confirm the Plan under section 1129(b) of the
Bankruptcy Code with respect to certain holders of Secured Claims and in that
event the Debtors shall give notice as provided in Section 4.02 hereof.
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6.03 Method of Distributions Under the Plan.
(a) Generally. Subject to Bankruptcy Rule 9019 and except as set
forth in Section 6.03(g) hereof, all distributions under the Plan shall be made
by the Disbursing Agent to the holder, as of the Distribution Record Date, of
each Allowed Claim at the address of such holder as listed on the Schedules, and
to the holder, as of the Distribution Record Date, of each Allowed Interest at
the address of such holder as listed in the transfer ledger of MW Holding as of
the Distribution Record Date, unless the Debtors or the Reorganized Debtors have
been notified in writing of a change of address, including, without limitation,
by filing a proof of claim or interest by such holder that provides an address
for such holder different from the address reflected on the Schedules (for
holders of Allowed Claims) or on the transfer ledger as of the Distribution
Record Date (for holders of Allowed Interests). Nothing contained in the Plan
will require any Debtor, Reorganized Debtor, or Disbursing Agent to attempt to
locate any holder of an Allowed Claim or Allowed Interest.
(b) Distributions of Cash. Except as otherwise specified herein,
payments made pursuant to the Plan will be in Cash by checks drawn on a domestic
bank, or by wire transfer from a domestic bank, in each case, at the option of
the Disbursing Agent; provided, however, that Cash payments to foreign holders
of Allowed Claims or Allowed Interests may be made, at the option of the
Disbursing Agent, in such funds and by such means as are necessary or customary
in a particular foreign jurisdiction.
(c) Timing of Distributions. Any payment or distribution required to
be made under the Plan on a day other than a Business Day shall be made on the
next succeeding Business Day. Any distribution to be made on the Effective Date
pursuant to this Plan shall be deemed as having been made on the Effective Date
if such distribution is made on the Effective Date or as soon thereafter as is
practicable.
(d) Unclaimed or Undeliverable Distributions. Except with respect to
distributions under the Plan to holders of Allowed Class 3 Unsecured Claims, any
distributions under the Plan that are unclaimed or undeliverable for a period of
one year after distribution thereof shall be revested in New Retailer, free of
any restrictions thereon, and any entitlement of any holder of any Claim or
Interest to such distributions shall be extinguished and forever barred.
Distributions under the Plan to holders of Allowed Class 3 Unsecured Claims that
are unclaimed or undeliverable for a period of one year after distribution
thereof shall be added to the Disputed Class 3 Unsecured Claims Reserve and any
entitlement of such holders of Allowed Class 3 Unsecured Claims to such
distributions shall be extinguished and forever barred.
(e) Distributions to Holders as of the Distribution Record Date. The
Disbursing Agent will have no obligation to recognize the transfer of, or the
sale of any participation in, any Allowed Claim that occurs after the close of
business on the Distribution Record Date, and will be entitled for all purposes
herein to recognize and distribute only to those holders of Allowed Claims who
are holders of such Claims, or participants therein, as of the close of business
on the Distribution Record Date. As at the close of business on the
Distribution Record Date, the respective transfer registers for Interests, as
maintained by the Debtors, will be closed. The Disbursing Agent will have no
obligation to recognize the transfer of, or the sale of any participation in,
any Allowed Interest that occurs after the close of business on the
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Distribution Record Date, and will be entitled for all purposes herein to
recognize and distribute only to those holders of Allowed Interests who are
holders of such Interests, or participants therein, as of the close of business
on the Distribution Record Date. The Disbursing Agent and the Reorganized
Debtors shall instead be entitled to recognize and deal for all purposes under
the Plan (except as to voting to accept or reject the Plan pursuant to Section
6.01 hereof) with only those record holders stated on the official claims
register (for Claims) and official transfer ledgers (for Interests) as of the
close of business on the Distribution Record Date.
(f) Allocation of Plan Distributions Between Principal and Interest.
To the extent that any Allowed Claim entitled to a distribution under the Plan
is comprised of indebtedness and accrued but unpaid interest thereon, such
distribution shall, for federal income tax purposes, be allocated to the
principal amount of the Claim first and then, to the extent the consideration
exceeds the principal amount of the Claim, to the portion of such Claim
representing accrued but unpaid interest.
(g) Distributions on Account of Bank Claims. All distributions on
account of Allowed Bank Claims shall be paid by wire transfer by the Disbursing
Agent to The Bank of Nova Scotia, as Administrative Agent. The Administrative
Agent shall make distributions on account of such Claims in accordance with the
certain master registers maintained by the Administrative Agent pursuant to the
terms of the applicable credit agreements. The Administrative Agent shall be
entitled for all purposes to distribute only to holders of Bank Claims as
reflected in such master registers on the close of business on the Distribution
Record Date.
6.04 Class 3 Unsecured Claims.
(a) Cash Held Prior to the Effective Date. As set forth in Section
5.04 hereof, the Escrow Agent shall transfer the Class 3 Deposit to the
Disbursing Agent, which shall invest such Cash in a manner consistent with
investment guidelines included in the Plan Supplement and approved by the
Creditors' Committee and the Bankruptcy Court. The Disbursing Agent shall pay,
or cause to be paid, out of the Class 3 Deposit any tax imposed by any
governmental unit with respect to income generated by such deposit (whether
imposed on such deposit or otherwise payable by the Reorganized Debtors).
Distributions of Cash on account of each Allowed Class 3 Unsecured Claim from
the MW Class 3 Distribution Pool will include a Pro Rata share of the Net Cash
Investment Yield. If Allowed Class 3 Unsecured Claims constituting damages
arising from rejection(s) of Real Property Unexpired Leases (i) include Allowed
Claims for damages arising from rejection(s) of Real Property Unexpired Leases
which rejection(s) occurred in respect of motions for order(s) or stipulations
submitted to the Bankruptcy Court subsequent to February 5, 1999 that do not
relate to rejection(s) of Real Property Unexpired Leases contemplated by the
order of the Bankruptcy Court dated February 5, 1999 in respect of certain store
closings and (ii) exceed $76.1 million in the aggregate, then the Reorganized
Debtors or GE Capital shall increase, as promptly as practicable, the MW Class 3
Distribution Pool by the lesser of the amount distributed on account of (a) the
aggregate Allowed Claims for damages arising from the rejection(s) of Real
Property Unexpired Leases in excess of $76.1 million and (b) the Allowed Claims
identified in clause (i) above. Notwithstanding the preceding sentence, in the
event a non-Debtor party to a Real Property Unexpired Lease has submitted or
submits a motion to compel rejection of such Real Property Unexpired Lease to
the
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Bankruptcy Court subsequent to February 5, 1999, and despite the Proponents'
best efforts to oppose such motion the Bankruptcy Court enters an order
rejecting such Lease, neither the Reorganized Debtors nor GE Capital shall be
required to increase the MW Class 3 Distribution Pool in respect of any Claim
arising from the rejection of such Lease.
(b) Distributions on Account of Allowed MW Class 3 Unsecured Claims.
Unless otherwise agreed, each holder of an Allowed MW Class 3 Unsecured Claim
shall receive a Pro Rata share of the MW Class 3 Distribution Pool (excluding
the Lechmere Class 3 Payment) on the later of the Effective Date and the date
such Claim becomes an Allowed MW Class 3 Unsecured Claim, or as soon thereafter
as is practicable. On each Quarterly Distribution Date, each holder of an
Allowed MW Class 3 Unsecured Claim shall receive a Pro Rata share of the amount
of Cash in (i) the Class 3 Surplus Distributions and (ii) the Lechmere Excess
Distribution Pool.
(c) Distributions on Account of Allowed Lechmere Class 3 Unsecured
Claims. Unless otherwise agreed, each holder of an Allowed Lechmere Class 3
Unsecured Claim shall receive Cash equal to the Lechmere Class 3 Payment, on the
later of the Effective Date and the date such Claim becomes an Allowed Lechmere
Class 3 Unsecured Claim, or as soon thereafter as is practicable. On each
Quarterly Distribution Date, each holder of an Allowed Lechmere Class 3
Unsecured Claim shall receive Cash from the MW Class 3 Distribution Pool equal
to the Lechmere Class 3 Payment.
(d) Distributions Withheld for Disputed Class 3 Unsecured Claims.
(i) Establishment and Maintenance of Disputed Class 3
Unsecured Claims Reserve. On the Effective Date and each Quarterly
Distribution Date (or as soon thereafter as is practicable), the
Disbursing Agent shall establish the Disputed Class 3 Unsecured Claims
Reserve from the MW Class 3 Distribution Pool in an amount of Cash
equal to 100% of distributions to which holders of Disputed Class 3
Unsecured Claims would be entitled under the Plan as of such date if
such Disputed Class 3 Unsecured Claims were Allowed Claims in their
Disputed Claim Amounts. The amount reserved in the Disputed Class 3
Unsecured Claims Reserve with respect to Insured Claims that are Class
3 Unsecured Claims shall be the applicable deductible under the
relevant insurance policy on account of such Insured Claims, minus (a)
any reimbursement obligations of the applicable Debtor to the
insurance carrier for sums expended by the insurance carrier and (b)
payments made directly by the Debtors or the Reorganized Debtors on
account of such Claims (including defense costs).
(ii) Property Held in Disputed Class 3 Unsecured Claims
Reserve. The Disbursing Agent will invest the Cash held in the
Disputed Class 3 Unsecured Claims Reserve in a manner consistent with
investment guidelines included in the Plan Supplement and approved by
the Creditors' Committee. The Disbursing Agent shall pay, or cause to
be paid, out of the funds held in the Disputed Class 3 Unsecured
Claims Reserve, any tax imposed by any governmental unit with respect
to income generated by the property held in such reserve (whether
imposed on such reserve or otherwise payable by the
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Reorganized Debtors). The Disbursing Agent will also include in the
Disputed Class 3 Unsecured Claims Reserve the Net Cash Investment
Yield from such investment of Cash.
(e) Distributions Upon Allowance of Disputed Class 3 Unsecured Claims.
The holder of a Disputed Class 3 Unsecured Claim that becomes Allowed subsequent
to the Effective Date shall receive distributions of Cash from the Disputed
Class 3 Unsecured Claims Reserve on the next Quarterly Distribution Date that
follows the Quarter during which such Disputed Class 3 Unsecured Claim becomes
Allowed pursuant to a Final Order or a Settlement Stipulation. Such
distributions shall be made in accordance with the Plan based upon the
cumulative distributions that would have been made to such holder under the Plan
if the Disputed Class 3 Unsecured Claim had been Allowed on the Effective Date
(with any post-Effective Date interest thereon earned by the Disbursing Agent)
and shall not be limited by the Disputed Claim Amounts previously reserved with
respect to such Disputed Class 3 Unsecured Claims to the extent that additional
amounts are available therefor from the Class 3 Surplus Distributions but only
to the extent that such additional amounts have not yet been distributed to
holders of Allowed Class 3 Unsecured Claims.
(f) Tax Reporting for Disputed Class 3 Unsecured Claims Reserve.
Subject to definitive guidance from the IRS or the courts to the contrary
(including the receipt by the Disbursing Agent of a private letter ruling if the
Disbursing Agent so requests one, or the receipt of an adverse determination by
the IRS upon audit if not contested by the Disbursing Agent), the Disbursing
Agent shall (i) treat the Disputed Class 3 Unsecured Claims Reserve as a
discrete trust for federal income tax purposes, consisting of separate and
independent shares to be established in respect of each Disputed Class 3
Unsecured Claim, in accordance with the trust provisions of the IRC (sections
641, et seq.), and (ii) to the extent permitted by applicable law, report
consistently for state, local or foreign income tax purposes. All parties
(including all holders of Allowed and Disputed Class 3 Unsecured Claims) shall
report consistently with such treatment.
(g) Surplus Distributions to Holders of Allowed Class 3 Unsecured
Claims. The Class 3 Surplus Distributions shall be made to the holders of
Allowed Class 3 Unsecured Claims pursuant to Article VI hereof; provided,
however, that the Disbursing Agent shall be under no obligation to make any
Class 3 Surplus Distributions on a Quarterly Distribution Date unless: (i) the
Cash portion of the Class 3 Surplus Distributions on a Quarterly Distribution
Date aggregates $10 million or more, or (ii) the distribution is the last
distribution under the Plan.
(h) Tort Claims. All Tort Claims are Disputed Claims. Any Tort Claim
as to which a proof of claim was timely Filed in the Reorganization Cases shall
be determined and liquidated in the administrative or judicial tribunal(s) in
which it is pending on the Effective Date or, if no action was pending on the
Effective Date, in any administrative or judicial tribunal of appropriate
jurisdiction, or in accordance with any alternative dispute resolution or
similar proceeding as the same may be approved by order of the Bankruptcy Court.
Any Tort Claim determined and liquidated (i) pursuant to a judgment obtained in
accordance with this Section 6.04(h) and applicable non-bankruptcy law which is
no longer appealable or subject to review, or (ii) in any alternative dispute
resolution or similar proceeding as the same may be approved by order of the
Bankruptcy Court (except, in either case, as to Tort Claims which are
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Allowed Administrative Claims) shall be deemed, to the extent applicable, an
Allowed Class 3 Unsecured Claim in such liquidated amount (provided that for
Insured Claims, such amount shall not exceed the amount of the Debtors'
applicable self-insured retention amount less the amount of any payment by the
Debtors for defense or other costs in liquidating such Claim) and satisfied from
the MW Class 3 Distribution Pool, subject to Section 6.07 hereof. Nothing
contained in this Section 6.04(h) shall impair the rights of the Debtors, the
Claims Resolution Committee or any other party in interest to seek estimation of
any and all Tort Claims and other unliquidated Claims in a court or courts of
competent jurisdiction or constitute or be deemed a waiver of any cause of
action that the Debtors may hold against any entity, including, without
limitation, in connection with or arising out of any Tort Claim or other
unliquidated Claim.
6.05 MW Class 6 Interests.
(a) Distributions on Account of Allowed MW Class 6 Interests. Unless
otherwise agreed, each holder of an Allowed MW Class 6 Interest (other than the
GE Capital Entities and the Brennan Stockholders) shall receive a Pro Rata share
of $71,000, on the later of the Effective Date and the date such Interest or
Interests become Allowed, or as soon thereafter as is practicable. On each
Quarterly Distribution Date, each holder of Allowed MW Class 6 Interest shall
receive a Pro Rata share of the amount of Cash in the MW Class 6 Surplus
Distribution.
(b) Distributions Withheld for Disputed MW Class 6 Interests.
(i) Establishment and Maintenance of Disputed MW Class 6
Interests Reserve. On the Effective Date and each Quarterly
Distribution Date (or as soon thereafter as is practicable), the
Disbursing Agent shall establish the Disputed MW Class 6 Interests
Reserve from the distributions to be made on such dates to the holders
of Allowed MW Class 6 Interests, an amount of Cash equal to 100% of
distributions to which holders of Disputed MW Class 6 Interests would
be entitled under the Plan as of such date if such Disputed MW Class 6
Interests were Allowed Interests in their Disputed Interest Amounts.
MW Class 3 Unsecured Claims for redemption of Old Common Stock shall
be included for purposes of calculating the Disputed MW Class 6
Interests Reserve. Accordingly, in the event that an objection to
such Claims is Filed by the Claims Objection Deadline, the Disputed MW
Class 6 Interests Reserve will provide sufficient reserves therefor.
Absent an objection to such Claims by the Claims Objection Deadline,
however, such Claims shall be Allowed and treated as MW Class 3
Unsecured Claims.
(ii) Property Held in Disputed MW Class 6 Interests Reserve.
The Disbursing Agent will invest the Cash held in the Disputed MW
Class 6 Interests Reserve in a manner consistent with investment
guidelines included in the Plan Supplement. The Disbursing Agent
shall pay, or cause to be paid, out of the funds held in the Disputed
MW Class 6 Interests Reserve, any tax imposed by any governmental unit
with respect to income generated by the property held in such reserve
(whether imposed on such reserve or otherwise payable by the
Reorganized Debtors).
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(c) Tax Reporting for Disputed MW Class 6 Interests Reserve. Subject
to definitive guidance from the IRS or the courts to the contrary (including the
receipt by the Disbursing Agent of a private letter ruling if the Disbursing
Agent so requests one, or the receipt of an adverse determination by the IRS
upon audit if not contested by the Disbursing Agent), the Disbursing Agent shall
(i) treat the Disputed MW Class 6 Interests Reserve as a discrete trust for
federal income tax purposes, consisting of separate and independent shares to be
established in respect of each Disputed MW Class 6 Interest, in accordance with
the trust provisions of the IRC (sections 641, et seq.), and (ii) to the extent
permitted by applicable law, report consistently for state and local income tax
purposes. All parties (including all holders of Allowed and Disputed MW Class 6
Interests) shall report consistently with such treatment.
(d) Distributions Upon Allowance of Disputed MW Class 6 Interests. The
holder of a Disputed MW Class 6 Interest that becomes Allowed subsequent to the
Effective Date shall receive distributions of Cash from the Disputed MW Class 6
Interests Reserve on the next Quarterly Distribution Date that follows the
Quarter during which such Disputed Class 6 Interest becomes Allowed pursuant to
a Final Order or a Settlement Stipulation. Such distributions shall be made in
accordance with the Plan based upon the cumulative distributions that would have
been made to such holder under the Plan if the Disputed MW Class 6 Interest had
been Allowed on the Effective Date, without any post-Effective Date interest
thereon.
(e) Surplus Distributions to Holders of Allowed MW Class 6 Interests.
The MW Class 6 Surplus Distributions shall be made to the holders of Allowed MW
Class 6 Interests pursuant to Section 4.07 hereof; provided, however, that the
Disbursing Agent shall be under no obligation to make any MW Class 6 Surplus
Distributions on a Quarterly Distribution Date unless: (i) the Cash portion of
the MW Class 6 Surplus Distributions on a Quarterly Distribution Date aggregates
$25,000 or more, or (ii) the distribution is the last distribution under the
Plan.
6.06 Objections to and Resolution of Claims and Interests;
Estimation.
(a) Effective as of the Confirmation Date, except as to Fee Claims
which shall be governed by Article II hereof, the Reorganized Debtors shall have
the exclusive right to make and File objections to all Claims (other than Class
3 Unsecured Claims in excess of the Claims Settlement Parameters) and Interests
and the Claims Resolution Committee (or the Reorganized Debtors with the consent
of the Claims Resolution Committee) shall have the exclusive right to make and
File objections to Class 3 Unsecured Claims in excess of the Claims Settlement
Parameters pursuant to Section 12.06 hereof.
(b) On or as soon as practicable after the Confirmation Date, the
Debtors or the Claims Resolution Committee shall File motion(s), pursuant to
section 502(c) of the Bankruptcy Code, for order(s) estimating or limiting the
amount of Cash which shall be deposited in the reserves in respect of any
Disputed or undetermined Claims, with notice, and an opportunity to be heard, to
the affected holders of such Disputed or undetermined Claims, and the Claims
Resolution Committee. Unless the Confirmation Order provides otherwise, the
hearing on such motion(s) shall be held within 30 days after the Confirmation
Date.
(c) Unless (i) all of the Claims that such parties intend to dispute
are already the subject of Filed objection(s) or (ii) determined by the
Bankruptcy Court after notice and an
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opportunity to be heard, the Debtors, the Creditors' Committee and the Claims
Resolution Committee shall determine whether they dispute any Claim and shall
File one or more Disputed Claims Lists on or before the Effective Date.
(d) Unless the Claims Resolution Committee or the Reorganized Debtors
determine otherwise, on or before the Claims Objection Deadline, objections to,
and, if applicable, requests for estimation of, each Disputed Claim (other than
any Disputed Claim set forth in Section 1.39(a)(i) hereof) and Disputed Interest
shall be Filed by the Reorganized Debtors (or the Claims Resolution Committee,
or the Reorganized Debtors with the consent of the Claims Resolution Committee,
with respect to Class 3 Unsecured Claims in excess of the Claims Settlement
Parameters pursuant to Section 12.06 hereof).
(e) The Reorganized Debtors shall have the authority to compromise,
settle, otherwise resolve or withdraw any objections to all Claims (except for
Class 3 Unsecured Claims in excess of the Claims Settlement Parameters pursuant
to Section 12.06 hereof) and Interests without approval of the Bankruptcy Court
or the Claims Resolution Committee; provided, however, that compromise and
settlement of Claims in excess of the Settlement Stipulation amount shall be
subject to the Bankruptcy Court approval.
6.07 Distributions Relating to Allowed Insured Claims. Distributions
under the Plan to each holder of an Allowed Insured Claim (other than an Allowed
Administrative Claim) shall be in accordance with the treatment provided under
the Plan for Class 3 Unsecured Claims. Any liquidated and determined Insured
Claim amount in excess of the Debtors' applicable self-insured retention amount
(less the amount of any payment by the Debtors for defense or other costs in
liquidating such Claim) shall be the obligation of and satisfied by any
applicable insurance agreement providing coverage for the Insured Claim. For the
avoidance of doubt, the Insured Claim in an amount equal to any self-insured
retention obligation of the Debtors or similar amount shall be deemed satisfied
to the extent of the amount of the Allowed Insured Claim, rather than the amount
actually distributed from the MW Class 3 Distribution Pool. If payment is made
from the MW Class 3 Distribution Pool on account of an Insured Claim that is an
Allowed Class 3 Unsecured Claim and the Reorganized Debtors subsequently receive
recovery from their insurance carriers on account of such Claim, such recovery,
not to exceed the amount paid on account on such Claim from the MW Class 3
Distribution Pool, shall be repaid to the Disbursing Agent to be added to the MW
Class 3 Distribution Pool. The Reorganized Debtors will cooperate in any
proceedings against their insurance carriers for recovery of Insured Claims that
are Class 3 Unsecured Claims that have been paid from the MW Class 3
Distribution Pool. Nothing contained in this Section 6.07 shall constitute or be
deemed a waiver of any cause of action that the Debtors, the Reorganized Debtors
or any entity may hold against any other entity, including, without limitation,
insurers under any policies of insurance.
6.08 Cancellation of Securities, Instruments and Agreements
Evidencing Claims and Interests. Except as otherwise provided in the Plan and in
any contract, instrument, or other agreement or document created in connection
with the Plan, on the Effective Date and concurrently with the applicable
distributions made pursuant to this Article VI, the promissory notes, share
certificates (including treasury stock), other instruments evidencing any Claims
or Interests, and all options, warrants, calls, rights, puts, awards,
commitments or any other agreements of any character to acquire such Interests
shall be deemed canceled and of no further
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force and effect, without any further act or action under any applicable
agreement, law, regulation, order or rule and the obligations of the Debtors
under the notes, share certificates, and other agreements and instruments
governing such Claims and Interests shall be discharged. The holders of or
parties to such canceled notes, share certificates, and other agreements and
instruments shall have no rights arising from or relating to such notes, share
certificates, and other agreements and instruments or the cancellation thereof,
except the rights provided pursuant to the Plan.
6.09 Setoffs. The Reorganized Debtors may, pursuant to section 553
of the Bankruptcy Code or applicable non-bankruptcy law, set off against any
Allowed Claim or Allowed Interest and the distributions to be made pursuant to
the Plan on account of such Claim or Interest (before any distribution is made
on account of such Claim) the claims, rights, and Causes of Action of any nature
that the applicable Debtor or Reorganized Debtor may hold against the holder of
such Allowed Claim or Allowed Interest. With respect to any claim, right, or
cause of action of any Debtor that arose prior to the Petition Date, to the
extent that a Reorganized Debtor fails to effect a setoff with a holder of an
Allowed Claim or Allowed Interest and seeks to collect on such claim, right, or
cause of action from such holder after a distribution to such holder pursuant to
the Plan on account of its Claim or Interest, the applicable Reorganized
Debtor's recovery on its claim against such holder will be limited to an amount
that does not exceed the amount that would have been recovered had such claim,
right, or cause of action against the holder been set off against the holder's
Allowed Claim or Allowed Interest prior to any distribution pursuant to the Plan
to the holder on account of such Allowed Claim or Allowed Interest.
6.10 Release of Liens. Except as otherwise provided in the Plan or
in any contract, instrument, release, or other agreement or document created or
assumed in connection with the Plan, on the Effective Date and concurrently with
the applicable distributions made pursuant to Article VI, all mortgages, deeds
of trust, liens, pledges, or other security interests against the property of
any Debtor's estate (including, without limitation, the stock of Signature
pledged to secure the Lechmere Loan) shall be fully released and discharged, and
all of the right, title, and interest of any holder of such mortgages, deeds of
trust, liens, pledges, or other security interests shall revert to the
applicable Reorganized Debtor and its successors and assigns. The liens and
pledges securing the Lechmere Loan and the obligations of Signature to repay
Lechmere thereunder shall be canceled, and no distribution shall be made on
account of such obligations. Any and all liens and security interests created in
connection with the Credit Card Agreements shall remain unaffected by, and shall
survive, confirmation and consummation of the Plan.
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6.11 Special Provisions Regarding Treatment of Allowed Secondary
Liability Claims. On the Effective Date:
(a) Allowed Secondary Liability Claims arising from or related to any
Debtor's joint or several liability for the obligations under any (i) Allowed
Claim that is being Reinstated under the Plan or (ii) executory contract or
unexpired lease that is being assumed by another Debtor or under any executory
contract or unexpired lease that is being assumed by and assigned to another
Debtor or any other entity, will be Reinstated;
(b) Except as provided in subsection (d) hereof, holders of Allowed
Secondary Liability Claims, including such Claims against MW Holding or
Montgomery Ward arising from or related to either MW Holding's or Montgomery
Ward's guarantees of payment or collection of Class 3 Unsecured Claims, will be
entitled to only one distribution from the Debtor that is primarily liable for
the underlying Allowed Claim, which distribution will be as provided in the Plan
in respect of such underlying Allowed Claim, and will be deemed satisfied in
full by the distributions on account of the related underlying Allowed Claim;
(c) No multiple recovery on account of any Allowed Secondary Liability
Claim will be provided or permitted; and
(d) Holders of Allowed Secondary Liability Claims arising from
guaranties by Montgomery Ward of obligations of Lechmere shall receive
distributions on account of their Allowed MW Class 3 Unsecured Claims and,
notwithstanding Section 4.09 hereof, shall receive no distributions on account
of their Allowed Lechmere Class 3 Unsecured Claims.
6.12 Payment of Taxes and Other Expenses. The Disbursing Agent shall
either directly pay, or remit to the Debtors or Reorganized Debtors for payment
(as appropriate), all expenses, including, without limitation, taxes imposed on
earnings with respect to the amounts reserved on account of Claims and Interests
entitled to distributions under the Plan. The Disbursing Agent is hereby
authorized, in respect of the Disputed Class 3 Unsecured Claims Reserve and the
Disputed MW Class 6 Interests Reserve, to request an expedited determination
under section 505(b) of the Bankruptcy Code of the tax liability of such reserve
for all taxable periods from and after the Effective Date through the
termination of such reserve.
ARTICLE VII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
7.01 Assumption and Assignment, or Rejection of Executory Contracts
and Unexpired Leases.
(a) Assumption and Assignment of Real Property Executory Contracts and
Unexpired Leases. Except as otherwise provided in the Plan or in any contract,
instrument, release, or other agreement or document entered into in connection
with the Plan, pursuant to sections 365 and 1123(b) of the Bankruptcy Code, all
Real Property Executory Contracts and Unexpired Leases that exist between the
Debtors and any person shall be deemed assumed and assigned by the Reorganized
Debtors to New Retailer as of the Effective Date, except (1) for any Real
Property Executory Contract and Unexpired Lease (a) which has been assumed
pursuant to an order of the Bankruptcy Court entered prior to the Confirmation
Date, (b) which has been
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rejected pursuant to an order of the Bankruptcy Court entered before the
Confirmation Date, or (c) as to which a motion for approval of the rejection of
such Real Property Executory Contract or Unexpired Lease has been Filed and
served prior to the Confirmation Date; or (2) as otherwise set forth in Schedule
7.01(a) as being Real Property Executory Contracts or Unexpired Leases to be
rejected, which Schedule shall be included in the Plan Supplement; provided,
however, that the Debtors reserve the right, at any time prior to the
Confirmation Date, to amend Schedule 7.01(a) to delete any Real Property
Executory Contract or Unexpired Lease therefrom or add any Real Property
Executory Contract or Unexpired Lease thereto, in which event such Real Property
Executory Contract(s) or Unexpired Lease(s) shall be deemed to be assumed and
assigned, or rejected, respectively. The Debtors or Reorganized Debtors shall
provide notice of any amendments to Schedule 7.01(a) to the parties to the Real
Property Executory Contracts and Unexpired Leases affected thereby, the
Creditors' Committee and GE Capital, together with new Ballots permitting such
parties to change their votes on the Plan in accordance with the Solicitation
Order.
(b) Additional Provisions Concerning Real Property Executory Contracts
and Unexpired Leases. Each Real Property Executory Contract and Unexpired Lease
listed on Schedule 7.01(a) will include any modifications, amendments,
supplements, restatements, or other agreements made, directly or indirectly, by
any agreement, instrument, or other document that in any manner affects such
contract or lease, irrespective of whether such agreement, instrument, or other
document is listed on Schedule 7.01(a).
(c) Non-Real Property Executory Contracts and Unexpired Leases. Except
as otherwise provided in the Plan (including Section 7.03 hereof) or in any
contract, instrument, release, or other agreement or document entered into in
connection with the Plan, pursuant to sections 365 and 1123(b) of the Bankruptcy
Code, all Non-Real Property Executory Contracts and Unexpired Leases that exist
between the Debtors and any person shall be deemed rejected as of the Effective
Date, except for any Non-Real Property Executory Contract or Unexpired Lease (a)
which has been rejected pursuant to an order of the Bankruptcy Court entered
prior to the Confirmation Date, (b) which has been assumed pursuant to an order
of the Bankruptcy Court entered before the Confirmation Date, (c) as to which a
motion for approval of the assumption of such executory contract or unexpired
lease has been Filed and served prior to the Confirmation Date, or (d) which is
set forth in Schedule 7.01(c), which Schedule shall be included in the Plan
Supplement; provided, however, that the Debtors reserve the right, at any time
prior to the Confirmation Date, to amend Schedule 7.01(c) to delete or add any
Non-Real Property Executory Contract or Unexpired Lease therefrom or thereto, in
which event such Non-Real Property Executory Contract(s) or Unexpired Lease(s)
shall be deemed to be rejected or assumed and assigned, respectively. The
Debtors or Reorganized Debtors shall provide notice of any amendments to
Schedule 7.01(c) to the parties to the Non-Real Property Executory Contracts or
Unexpired Leases affected thereby, the Creditors' Committee and GE Capital,
together with new Ballots permitting such parties to change their votes on the
Plan in accordance with the Solicitation Order.
(d) Assignments Related to the Restructuring Transactions. As of the
date of the applicable Restructuring Transaction, any executory contract or
unexpired lease of the Debtors or the Reorganized Debtors related to the
Restructuring Transactions will be deemed
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assumed and assigned to New Retailer pursuant to sections 365 and 1123(b) of the
Bankruptcy Code.
(e) Approval of Assumptions and Assignment, or Rejection of Executory
Contracts and Unexpired Leases. Except as provided in Section 7.03 hereof with
respect to the Credit Card Agreements, entry of the Confirmation Order will
constitute, as of the Effective Date: (a) the approval, pursuant to sections
365 and 1123(b) of the Bankruptcy Code, of the assumption and assignment, or
rejection, as applicable, of the executory contracts and unexpired leases
assumed and assigned, or rejected pursuant to Sections 7.01(a) and 7.01(c)
hereof, and (b) the extension of time, pursuant to section 365(d)(4) of the
Bankruptcy Code, within which the Debtors may assume and assign, or reject the
unexpired leases of non-residential real property specified in Section 7.01(a)
hereof through the date of entry of an order approving the assumption and
assignment, or rejection of such leases. The order of the Bankruptcy Court
approving the Disclosure Statement, the Confirmation Order, or another order of
the Bankruptcy Court entered on or prior to the Confirmation Date, will specify
the procedures for providing notice to each party whose executory contract or
unexpired lease is being assumed and assigned pursuant to the Plan of: (i) the
identity of the contract or lease being assumed and assigned; (ii) the cure, if
any, that the applicable Debtor believes it would be obligated to pay in
connection with such assumption and assignment; and (iii) the procedures for
such party to object to the assumption, assignment, and amount of the proposed
cure. The listing of a document on Schedule 7.01(a) or Schedule 7.01(c) shall
not constitute an admission by the Debtors or Reorganized Debtors that such
document is an executory contract or an unexpired lease or that the Debtors or
Reorganized Debtors have any liability thereunder.
(f) Cure of Defaults. Except as may otherwise be agreed to by the
parties, within five Business Days after the Effective Date, the Reorganized
Debtors shall cure any and all undisputed defaults under any executory contract
or unexpired lease assumed and assigned pursuant to the Plan in accordance with
section 365(b)(1) of the Bankruptcy Code. All disputed defaults that are
required to be cured shall be cured either within ten days after entry of a
Final Order or a Settlement Stipulation, determining the amount, if any, of the
Debtors' or Reorganized Debtors' liability with respect thereto, or as may
otherwise be agreed to by the parties. With respect to assumptions and
assignment of executory contracts and unexpired leases between Debtors, the
Reorganized Debtor assuming and assigning such contract may cure any monetary
default (a) by treating such amount as either a direct or indirect contribution
to capital or distribution (as appropriate), (b) through an intercompany account
balance in lieu of payment in Cash, or (c) with respect to any Claim or claim by
a Debtor or Signature against each other, pursuant to the Signature Sale
Agreement.
7.02 Bar Date for Filing Proofs of Claim Relating to Executory
Contracts and Unexpired Leases Rejected Pursuant to the Plan. Notwithstanding
anything in the Bar Date Order to the contrary, if the rejection of an executory
contract or unexpired lease pursuant to Sections 7.01(a) or 7.01(c) hereof gives
rise to a Claim (including any Claims arising from those indemnification
obligations described in Section 10.07 hereof by the other party or parties to
such contract or lease), such Claim will be forever barred and will not be
enforceable against the Debtors, the Reorganized Debtors, New Retailer, their
respective successors, or their respective properties or against the MW Class 3
Distribution Pool unless a proof of claim is Filed and served on the Reorganized
Debtors and the Claims Resolution Committee, pursuant to the
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procedures specified in the Confirmation Order and the notice of entry of the
Confirmation Order or another order of the Bankruptcy Court, no later than 30
days after the later of (i) the Effective Date and (ii) delivery of a notice of
amendment to Schedule 7.01(a) or 7.01(c).
7.03 Assumption and Assignment of the Credit Card Agreements;
Amendment to the Credit Card Agreements. Pursuant to sections 365(a) and
1123(b) of the Bankruptcy Code, but subject to Section 9.03 hereof, the Debtors
will assume and assign the Credit Card Agreements to New Retailer on the
Confirmation Date. The requisite cure pursuant to section 365(b) of the
Bankruptcy Code shall consist of:
(a) the issuance of the New Loss Sharing Note in an amount equal to
the Old Loss Sharing Obligations under such terms as shall be agreed to by the
Reorganized Debtors and MWCC, unless, prior to or on the Effective Date, GE
Capital elects to apply all or a portion of the Old Loss Sharing Obligations to
satisfy payment of a portion of the purchase price of Signature pursuant to the
Signature Sale Agreement, in which case the New Loss Sharing Note shall be
issued in the amount of the Old Loss Sharing Obligations not so applied or not
issued at all, as applicable;
(b) amounts owed under (i) the February 1998 Note, plus interest
thereon, and (ii) the Credit Card Agreements for the period commencing on the
Petition Date, in each case, shall be paid as and when due in accordance with
the terms and provisions of the governing agreements or instruments between the
Debtors and the GE Capital Entities or as otherwise agreed between the GE
Capital Entities and the Reorganized Debtors; and
(c) payment of prepetition amounts due and owing, as of the Effective
Date by the Debtors under the Credit Card Agreements for non-loss sharing
obligations (including, without limitation, promotions), which were accrued but
unpaid as of the Petition Date, either in Cash or as otherwise agreed between
the GE Capital Entities and the Reorganized Debtors.
Pursuant to section 1142(b) of the Bankruptcy Code, the Debtors and
the Reorganized Debtors, as appropriate, are authorized to (a) amend the Credit
Card Agreements in certain technical respects, as necessitated by the
Restructuring Transactions, and (b) take all such other actions as any of their
officers may determine are necessary or appropriate to continue the private
label receivables credit facilities for the Debtors and the Reorganized Debtors,
all without further action by their respective directors or stockholders, and
with like effect as if such actions had been taken by the unanimous action of
the respective directors of the Debtors or the Reorganized Debtors, as
appropriate.
7.04 Post-Petition Executory Contracts and Unexpired Leases.
Executory contracts and unexpired leases entered into or assumed and other
obligations incurred after the Petition Date by any Debtor will be performed, in
accordance with the Restructuring Transactions, by the Debtor, Reorganized
Debtor or by New Retailer, as applicable, in the ordinary course of its
business, and such executory contracts and unexpired leases and other
obligations will survive and remain unaffected by entry of the Confirmation
Order.
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7.05 Continuation of Certain Employee, Retiree, and Workers'
Compensation Benefits.
(a) Compensation and Benefit Programs. Except as provided in Section
7.01(c) hereof, from and after the Effective Date, the Reorganized Debtors, at
their sole discretion, will continue their existing employee benefit policies,
plans, and agreements, including: (i) employee purchase discounts; (ii) health,
life, and travel insurance; (iii) sick pay and long-term disability pay; (iv)
vacation and holiday pay; and (v) the severance program established pursuant to
the Order (A) Authorizing Key Employee Retention Program, (B) Authorizing
Implementation of Severance Program, (C) Approving Amendment To Retirement
Security Plan and (D) Granting Certain Related Relief, entered by the Bankruptcy
Court on September 17, 1997, subject to any rights to amend, modify, or
terminate such benefits under the terms of the applicable agreements, applicable
non-bankruptcy law or determination by the Boards of Directors of the
Reorganized Debtors.
(b) Retiree Benefits. From and after the Effective Date, New Retailer
will pay "retiree benefits" (as defined in section 1114(a) of the Bankruptcy
Code) and any similar health and medical benefits in accordance with the terms
of the retiree benefit plans or other agreements governing the payment of such
benefits; provided, however, that any benefits payable pursuant to any
supplemental employee retirement program of Montgomery Ward shall only be paid
if such agreement is assumed and assigned to New Retailer under Section 7.01(c)
hereof.
(c) Self-Insured Workers' Compensation Benefits. From and after the
Effective Date, the Reorganized Debtors, in their sole discretion, will continue
to pay valid Claims arising before the Petition Date under the Debtors' self-
insured workers' compensation programs: (i) that would not otherwise be paid by
another entity or a state agency under a surety bond, letter of credit, or other
obligation; or (ii) the continued payment of which will be required for the
Reorganized Debtors to maintain their self-insured status in the applicable
state.
ARTICLE VIII
PROVISIONS CONCERNING CORPORATE GOVERNANCE AND MANAGEMENT
OF REORGANIZED DEBTORS
8.01 General. On the Effective Date, the management, control and
operation of the Reorganized Debtors shall become the general responsibility of
the respective Boards of Directors of the Reorganized Debtors, who shall,
thereafter, have the responsibility for the management, control and operation of
the Reorganized Debtors.
8.02 Directors and Officers. The initial Boards of Directors of New
Retailer, Reorganized MW Holding and the Reorganized Subsidiary Debtors shall
consist of those individuals whose names shall be disclosed prior to the date of
the Confirmation Hearing. The officers of the Debtors immediately prior to the
Effective Date shall serve as the initial officers of the Reorganized Debtors on
and after the Effective Date until his or her successor is duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the terms of the New Certificates of Incorporation and the New
By-Laws. Such officers shall serve in accordance with any employment agreement
with the Reorganized Debtors and applicable non-bankruptcy law.
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8.03 New By-Laws and New Certificates of Incorporation. As of the
Effective Date, the certificates of incorporation and the by-laws of New
Retailer, Reorganized MW Holding and, to the extent necessary, the Reorganized
Subsidiary Debtors shall be in the form of the New Certificates of Incorporation
and the New By-Laws, respectively. The New Certificates of Incorporation and
the New By-Laws shall, among other things: (i) prohibit the issuance of non-
voting equity securities to the extent required by section 1123(a) of the
Bankruptcy Code, subject to further amendment of such New Certificate of
Incorporation and New By-Laws as permitted by applicable law, (ii) in the case
of New Retailer, authorize the issuance of the New LLC Interests with respect to
the GE Capital Non-Trade Claims, and (iii) effectuate the provisions of the
Plan, in each case without any further action by the stockholders or directors
of the Debtors, New Retailer or the Reorganized Subsidiary Debtors. After the
Effective Date, New Retailer, Reorganized MW Holding and the Reorganized
Subsidiaries may further amend and restate their respective New Certificates of
Incorporation and/or the New By-Laws as permitted by applicable law, subject to
the terms and conditions of such constituent documents.
8.04 Issuance of New Securities. The issuance of the following
securities by New Retailer and Reorganized Montgomery Ward are hereby authorized
without further act or action under applicable law, regulation, order or rule:
(i) the New LLC Interests, (ii) the New Ward Note, and (iii) the New Loss
Sharing Note. On the Effective Date, New Retailer shall issue the New LLC
Interests in accordance with the Restructuring Transactions.
ARTICLE IX
CONFIRMATION AND CONSUMMATION OF THE PLAN
9.01 Confirmation Date. The Bankruptcy Court shall not enter the
Confirmation Order unless and until the Confirmation Order shall be reasonably
acceptable in form and substance to the Proponents and the Creditors' Committee.
9.02 Effective Date. The Effective Date shall occur and the Plan
shall be consummated upon (a) entry of the Confirmation Order on or before July
30, 1999, and (b) the earlier to occur of (i) the consummation of the
Restructuring Transactions, or (ii) August 31, 1999; provided, however, the
Creditors' Committee may extend, from time to time, upon five days' written
notice to the Proponents, either or both of the dates set forth in this Section
9.02(a) and (b)(ii) hereof to a date not later than December 31, 1999, but may
not extend the Effective Date more than 60 days after the Confirmation Date
(unless the Confirmation Order shall be the subject of a stay pending appeal, or
other similar order or proceeding, in which case such 60-day period limitation
shall not apply).
9.03 Consequences of Non-Occurrence of Effective Date. If the
Effective Date has not occurred as set forth in Section 9.02 hereof: (a) the
Class 3 Deposit shall be returned to GE Capital as soon as practicable
thereafter; (b) the Plan shall be null and void in all respects; (c) at GE
Capital's sole cost and expense, all Restructuring Transactions (except the
Pension Plan Restructuring Event if it occurred) and the assumption and
assignment of the Credit Card Agreements shall be deemed rescinded without
further order of the Bankruptcy Court and the Debtors shall be refunded all cure
amounts, if any, previously paid and any other amounts previously paid by the
Debtors pursuant to the Restructuring Transactions; (d) any settlement by
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the Claims Resolution Committee of Class 3 Unsecured Claims shall be null and
void without further order of the Bankruptcy Court; and (e) the time within
which the Debtors may assume, assume and assign, or reject all executory
contracts and unexpired leases (including amendments to Schedules 7.01(a) and
(c)) hereby is extended for a period of thirty (30) days after the date the
Confirmation Order is vacated.
ARTICLE X
EFFECTS OF PLAN CONFIRMATION
10.01 Discharge of Debtors. Except as otherwise provided in the Plan
or the Confirmation Order, the rights afforded under the Plan and the treatment
of all Claims and Interests under the Plan will be in exchange for and in
complete satisfaction, discharge, release and cancellation of Claims and
Interests of any nature whatsoever, including, without limitation, any interest
accrued on such Claims from and after the Petition Date, against the Debtors or
any of their assets and properties. Except as otherwise provided in the Plan or
the Confirmation Order, the confirmation of the Plan shall, as of the Effective
Date: (i) discharge the Debtors from all Claims, demands, liabilities, other
debts and Interests that arose on or before the Effective Date, and all debts of
the kind specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code,
whether or not (A) a proof of claim or interest based on such debt or interest
is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code, (B) a
Claim or Interest based on such debt or interest is Allowed pursuant to section
502 of the Bankruptcy Code, or (C) the holder of a Claim or Interest based on
such debt or Interest has accepted the Plan; (ii) cancel all Interests and other
rights of equity security holders in the Debtors; and (iii) preclude all persons
from asserting against the Reorganized Debtors, their successors, or their
assets or properties, any other or further Claims or Interests based upon any
act or omission, transaction, or other activity of any kind or nature that
occurred prior to the Effective Date. Except as otherwise provided in the Plan
or the Confirmation Order, the Confirmation Order shall operate as a discharge,
as of the Effective Date, of any and all Claims against, and all other debts and
liabilities of the Debtors and cancellation of all Interests and other rights of
equity security holders in the Debtors, pursuant to sections 524 and 1141 of the
Bankruptcy Code, and such discharge shall void any judgment obtained against a
Debtor at any time, to the extent that such judgment relates to a discharged
Claim or canceled Interest. In addition, MW Holding and the Subsidiary Debtors
retained by MW Holding shall be released and discharged from all liabilities
expressly assumed by New Retailer under the Plan and the Confirmation Order.
Notwithstanding the foregoing, nothing in the Plan or the Confirmation Order
shall discharge, release or cancel any Claims under the Credit Card Agreements
or any liens in connection therewith, and such Agreements shall be assumed and
assigned pursuant to Section 7.03 hereof.
10.02 Injunction Related to the Discharge. Except as otherwise
provided in the Plan or the Confirmation Order, all entities that have held,
currently hold, or may hold Claims or other debts or liabilities against the
Debtors, or an Interest or other right of an equity security holder in any or
all of the Debtors, that are discharged pursuant to the terms of the Plan are
permanently enjoined, on and after the Effective Date, from taking any of the
following actions on account of any such Claims, debts, liabilities or Interests
or rights: (i) commencing or continuing in any manner any action or other
proceeding of any kind with respect to any such Claim, debt, liability, Interest
or right, other than to enforce any right pursuant to the Plan to a
distribution; (ii) enforcing, attaching, collecting, or recovering in any manner
any judgment,
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award, decree, or order against the Debtors, the Reorganized Debtors, or their
property or interests in property, on account of any such Claim, debt,
liability, Interest or right; (iii) creating, perfecting, or enforcing any lien
or encumbrance against the Debtors, the Reorganized Debtors, or their property
or interests in property on account of any such Claim, debt, liability, Interest
or right; (iv) asserting any right of setoff, subrogation, or recoupment of any
kind against any debt, liability, or obligation due to the Debtors or the
Reorganized Debtors or against their property or interests in property on
account of any such Claim, debt, liability, Interest or right; and (v)
commencing or continuing any action, in any manner, in any place that does not
comply with or is inconsistent with the provisions of the Plan or the
Confirmation Order. Such injunction shall extend to any successor of the Debtors
(including, without limitation, the Reorganized Debtors) and their respective
property and interests in property. Any entity injured by any willful violation
of such injunction shall recover actual damages, including costs and attorneys'
fees, and, in appropriate circumstances, may recover punitive damages, from the
willful violator.
10.03 Term of Bankruptcy Injunction or Stays. All injunctions or
stays provided for in the Reorganization Cases under section 105 or 362 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall
remain in full force and effect until the Effective Date.
10.04 Continued Corporate Existence and Revesting of Assets in the
Reorganized Debtors. Except as otherwise provided herein, each Debtor will, as
a Reorganized Debtor, continue to exist after the Effective Date as a separate
corporate entity, with all the powers of a corporation under applicable law and
without prejudice to any right to alter or terminate such existence (whether by
merger, dissolution, or otherwise) under applicable state law. Except as
otherwise provided in the Plan, the property of the Debtors' estates shall (i)
revest in the Reorganized Debtors on the Effective Date, and (ii) be revested
free and clear of all liens, security interests, Claims and Interests of holders
of Claims and Interests and all such liens, security interests, Claims and
Interests shall be extinguished. From and after the Effective Date, each
Reorganized Debtor may operate its business and may use, acquire, and dispose of
property, and compromise or settle any Claims (other than Class 3 Unsecured
Claims each in excess of the applicable Claims Settlement Parameter) and
Interests without supervision or approval by the Bankruptcy Court or the Claims
Resolution Committee and free of any restrictions of the Bankruptcy Code or
Bankruptcy Rules, other than those restrictions expressly imposed by the Plan or
the Confirmation Order.
10.05 Preservation of Certain Claims; Limited Waiver of Certain Other
Claims.
(a) Following the Effective Date, notwithstanding anything contained
in the Plan, the Reorganized Debtors or GE Capital, as applicable, will have the
right to file and pursue any action or adversary proceeding against any
creditor, vendor, factor or any other entity related to debit balances, vendor
chargebacks, prepayments, overpayments, deposits and/or other amounts owed by
such creditor, vendor, factor or other entity to any Debtor, Reorganized Debtor
or GE Capital, whether arising prior to or after the Petition Date.
(b) Except with respect to those claims, rights or causes of actions
set forth in subsection (a) hereof, or in a schedule of Retained Actions to be
included in the Plan
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Supplement, and subject to the provisions of any tolling agreements to which the
Debtors or the Reorganized Debtors are parties, the Debtors, Reorganized Debtors
and Claims Resolution Committee shall not file, commence or pursue any claim,
right or cause of action under sections 544 through 550 of the Bankruptcy Code;
provided, however, that, notwithstanding any statute of limitations (including,
without limitation, section 544 of the Bankruptcy Code), the Debtors,
Reorganized Debtors and Claims Resolution Committee shall have the right to
assert or raise such causes of actions (a) as defenses or counterclaims (up to
the amount asserted in the Claims against the Debtors) in any action commenced
or continued against the Debtors or the Reorganized Debtors; and (b) in
connection with the Claims objection process in which case such causes of action
can be raised as an objection to a Claim and not as defenses or counterclaims.
In the event that Allowed Class 3 Unsecured Claims are created by reason of
recoveries from Causes of Action, Reorganized Montgomery Ward or GE Capital
shall increase the MW Class 3 Distribution Pool so as to offset the dilutive
effect of such additional Allowed Class 3 Unsecured Claims.
10.06 Releases.
(a) Releases by the Debtors. On the Effective Date, each of the
Debtors shall release unconditionally, and hereby is deemed to forever release
unconditionally (i) the Creditors' Committee and the Claims Resolution Committee
and, solely in their respective capacities as members or representatives of the
Creditors' Committee and the Claims Resolution Committee, as applicable (and not
as individual lenders or creditors to or on behalf of the Debtors), each member
of the Creditors' Committee and the Claims Resolution Committee; (ii) the GE
Capital Entities; (iii) the DIP Lenders; and (iv) their respective agents,
advisors, accountants, investment bankers, consultants, attorneys, and other
representatives (including the respective current and former directors,
officers, employees, members, and professionals) of any of the foregoing or of
the Debtors or any affiliates or subsidiaries of the Debtors, including, without
limitation, Signature, acting in such capacity, from any and all claims,
obligations, suits, judgments, damages, rights, Causes of Action and liabilities
whatsoever (other than the right to enforce their respective obligations, if
any, to the Debtors or the Reorganized Debtors under the Plan and the contracts,
instruments, releases, and other agreements and documents delivered thereunder),
whether liquidated or unliquidated, fixed or contingent, matured or unmatured,
known or unknown, foreseen or unforeseen, then existing or thereafter arising,
in law, equity or otherwise that are based in whole or in part upon any act or
omission, transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtors, the Reorganization Cases, the
Plan or the Disclosure Statement. Nothing contained in this Section 10.06 shall
affect the ongoing relationship between the Debtors and Signature.
(b) Releases by Holders of Claims and Interests. On the Effective
Date, in exchange for, among other things, the making of the Class 3 Deposit by
GE Capital for the benefit of holders of Allowed Class 3 Unsecured Claims, the
extension of credit to the Reorganized Debtors pursuant to the Exit Financing
Facility and exchange of the GE Capital Non-Trade Claims for the New LLC
Interests, each holder of a Claim or Interest shall be deemed to unconditionally
release and forever waive all claims, debts, obligations, demands, liabilities,
suits, judgments, damages, rights, and Causes of Action, whatsoever (other than
the right to enforce the Debtors' or the Reorganized Debtors' obligations under
the Plan and the contracts, instruments, releases, and other agreements and
documents delivered thereunder), whether
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liquidated or unliquidated, fixed or contingent, matured or unmatured, known or
unknown, then existing or thereafter arising, in law, equity or otherwise that
are based in whole or in part upon any transactions or matters with the Debtors,
their estates or in connection with the Reorganization Cases, the Plan or the
Disclosure Statement that occurred or could have occurred on or prior to the
Effective Date against the GE Capital Entities, any Debtor, any affiliates or
subsidiaries of the Debtors, including, without limitation, Signature (which
release and waiver will be in addition to the discharge of Claims and
termination of Interests in accordance with the Plan, the Confirmation Order and
the Bankruptcy Code), the Creditors' Committee, the Claims Resolution Committee,
the DIP Lenders, and each of the current and former directors, officers,
employees, members, attorneys, accountants, investment bankers, consultants,
advisors and other representatives of any of the foregoing, acting in such
respective capacities. The foregoing release shall not apply to (a) Intercompany
Claims that are not impaired under the Plan and (b) the ongoing relationship
between the Debtors and Signature.
(c) Injunction Related to Releases. The Confirmation Order will
constitute an injunction permanently enjoining the commencement or prosecution
by any entity, whether directly, derivatively, or otherwise, of any Claim,
demand, debt, liability, cause of action, right or Interest released and waived
pursuant to the Plan against the released parties.
10.07 Indemnification Obligations. Except as provided in Section
7.01(c) hereof, the obligations of each Debtor or Reorganized Debtor to
indemnify any person serving or having served as a director or an officer or
employee serving or having served in such capacity prior to, on, or after the
Petition Date, in each case, of a Debtor, a Reorganized Debtor or an affiliate
thereof, by reason of such person's prior or future service in such a capacity,
or as a director, officer, or employee of another corporation, partnership, or
other legal entity, to the extent provided in the applicable certificate of
incorporation, by-laws, or by statutory law or written agreement of or with such
Debtor, will be deemed and treated as executory contracts that are assumed by
the applicable Debtor or Reorganized Debtor pursuant to the Plan and sections
365 and 1123(b) of the Bankruptcy Code as of the Effective Date. Such
indemnification obligations will survive and be unaffected by entry of the
Confirmation Order, irrespective of whether such indemnification is owed for an
act or event occurring before or after the Petition Date.
10.08 Termination of Subordination Rights and Settlement of Related
Claims and Controversies.
(a) The classification and manner of satisfying all Claims and
Interests under the Plan take into consideration all subordination rights,
whether arising under general principles of equitable subordination, section
510(c) of the Bankruptcy Code, or otherwise, that a holder of a Claim or
Interest may have against other Claim or Interest holders with respect to any
distribution made pursuant to the Plan. All subordination rights that a holder
of a Claim or Interest may have with respect to any distribution to be made
pursuant to the Plan will be discharged and terminated, and all actions related
to the enforcement of such subordination rights will be permanently enjoined.
Distributions pursuant to the Plan to holders of Allowed Claims or Allowed
Interests will not be subject to payment to a beneficiary of such terminated
subordination rights, or to levy, garnishment, attachment, or other legal
process by a beneficiary of such terminated subordination rights.
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(b) Pursuant to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of the
Plan will constitute a good faith compromise and settlement of all claims or
controversies relating to the subordination rights that a holder of a Claim or
Interest may have or any distribution to be made pursuant to the Plan on account
of such Claim or Interest. Entry of the Confirmation Order will constitute the
Bankruptcy Court's approval, as of the Effective Date, of the compromise or
settlement of all such claims or controversies and the Bankruptcy Court's
finding that such compromise or settlement is in the best interests of the
Debtors, the Reorganized Debtors, and their respective properties and holders of
Claims and Interests, and is fair, equitable, and reasonable.
10.09 Existing Employment Agreements. Consummation of the Plan shall
not be intended and shall not constitute a change of ownership or change in
control, as defined in any employment agreement, consulting agreement, or
employee benefit plan in effect on the Effective Date to which any Debtor is a
party, and the Executive Retention Order shall be deemed amended to so provide.
10.10 Termination of Emergence Incentive Plan. On the Confirmation
Date, with consent of the affected executives, the Executive Retention Order
shall be amended to delete paragraph 5 thereof regarding the implementation of
the Emergence Incentive Plan (as defined in the Executive Retention Order) and
no Emergence Incentive Plan shall be paid notwithstanding the occurrence of the
Confirmation Date.
ARTICLE XI
RETENTION OF JURISDICTION
Notwithstanding entry of the Confirmation Order and the occurrence of
the Effective Date, the Bankruptcy Court will retain such jurisdiction over the
Reorganization Cases after the Effective Date, including jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify, estimate, or
establish the priority or secured or unsecured status of any Claim or Interest,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any objections to the allowance or priority of Claims or
Interests;
(b) Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan
for periods ending on or before the Effective Date;
(c) Resolve any matters related to the assumption, assumption and
assignment, or rejection of any executory contract or unexpired lease to which
any Debtor is a party or with respect to which any Debtor or Reorganized Debtor
may be liable and to hear, determine, and, if necessary, liquidate any Claims
arising therefrom and those matters related to the amendment of Schedules
7.01(a) and 7.01(c) prior to the Effective Date pursuant to Section 7.01 hereof
to add or delete any executory contracts or unexpired leases to the lists of
executory contracts and unexpired leases to be rejected;
(d) Ensure that distributions to holders of Allowed Claims or Allowed
Interests are accomplished pursuant to the provisions of the Plan;
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(e) Decide or resolve any motions, adversary proceedings, contested,
or litigated matters, and any other matters and grant or deny any applications
involving the Debtors that may be pending on the Effective Date;
(f) Enter such orders as may be necessary or appropriate to implement
or consummate the provisions of the Plan and all contracts, instruments,
releases, and other agreements or documents created in connection with the Plan,
the Disclosure Statement, or the Confirmation Order;
(g) Resolve any cases, controversies, suits, or disputes that may
arise in connection with the consummation, interpretation, or enforcement of the
Plan or any contract, instrument, release, or other agreement or document that
is executed or created pursuant to the Plan, or any entity's rights arising from
or obligations incurred in connection with the Plan or such documents;
(h) Modify the Plan before or after the Effective Date pursuant to
section 1127 of the Bankruptcy Code or modify the Disclosure Statement, the
Confirmation Order, or any contract, instrument, release, or other agreement or
document created in connection with the Plan, the Disclosure Statement, or the
Confirmation Order, or remedy any defect or omission or reconcile any
inconsistency in any Bankruptcy Court order, the Plan, the Disclosure Statement,
the Confirmation Order, or any contract, instrument, release, or other agreement
or document created in connection with the Plan, the Disclosure Statement, or
the Confirmation Order, in such manner as may be necessary or appropriate to
consummate the Plan;
(i) Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under sections 330, 331 and 503(b) of
the Bankruptcy Code;
(j) Hear and determine matters concerning the Claims Resolution
Committee and its members and their respective professionals;
(k) Hear and determine matters concerning the Escrow Agreement and the
Escrow Account;
(l) Issue injunctions, enter and implement other orders, or take such
other actions as may be necessary or appropriate to restrain interference by any
entity with consummation, implementation, or enforcement of the Plan or the
Confirmation Order;
(m) Hear and determine the Causes of Action by or on behalf of the
Debtors or the Reorganized Debtors;
(n) Hear and determine matters concerning state, local and federal
taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;
(o) Enter and implement such orders as are necessary or appropriate if
the Confirmation Order is for any reason or in any respect modified, stayed,
reversed, revoked, or vacated or distributions pursuant to the Plan are enjoined
or stayed;
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(p) Determine any other matters that may arise in connection with or
relate to the Plan, the Disclosure Statement, the Confirmation Order, or any
contract, instrument, release, or other agreement or document created in
connection with the Plan, the Disclosure Statement, or the Confirmation Order;
and
(q) Enter an order closing the Reorganization Cases.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01 Effectuating Documents and Further Transactions. Each of the
Debtors or Reorganized Debtors is authorized to execute, deliver, file or record
such contracts, instruments, releases, and other agreements or documents and
take such actions as may be necessary or appropriate to effectuate, implement
and further evidence the terms and conditions of the Plan and any notes or
securities issued pursuant to the Plan.
12.02 Corporate Action. Prior to, on or after the Effective Date (as
appropriate), all matters provided for under the Plan that would otherwise
require approval of the stockholders or directors of one or more of the Debtors
or Reorganized Debtors or their successors in interest under the Plan,
including, without limitation: (a) the Restructuring Transactions; (b) the
effectiveness of the New Certificate of Incorporation and the New By-Laws and
the amended certificates of incorporation and the amended by-laws for the other
Reorganized Debtors; (c) corporate mergers or dissolutions effectuated pursuant
to the Plan, the election or appointment, as the case may be, of directors and
officers of the Reorganized Debtors; (d) the Exit Financing Facility and any
documents and liens related thereto; (e) the distribution of Cash pursuant to
the Plan; (f) the issuance and distribution of the New LLC Interests, the New
Loss Sharing Note and the New Ward Note pursuant to the Plan; (g) the amendment
of the Credit Card Agreements; (h) the Signature Sale Event; (i) the adoption,
execution, delivery, and implementation of all contracts, leases, instruments,
releases, and other agreements or documents related to any of the foregoing; and
(j) the adoption, execution, and implementation of other matters provided for
under the Plan involving the corporate structure of any Debtor or Reorganized
Debtor or corporate or other action to be taken by or required of any Debtor or
Reorganized Debtor, shall be deemed to have occurred and shall be in effect
prior to, on or after the Effective Date (as appropriate) pursuant to the
applicable general corporation law of the states in which the Debtors or
Reorganized Debtors are incorporated without any requirement of further action
by the stockholders or directors of the Debtors or Reorganized Debtors. On the
Effective Date or as soon thereafter as is practicable, the Reorganized Debtors
shall, if required, file their amended certificates of incorporation with the
Secretary of State of the state in which each Reorganized Debtor is
incorporated, in accordance with the applicable general corporation law of such
states.
12.03 Exemption from Transfer Taxes. Pursuant to section 1146(c) of
the Bankruptcy Code: (a) the issuance, transfer, or exchange of notes or equity
securities under the Plan; (b) the creation of any mortgage, deed of trust,
lien, pledge, or other security interest; (c) the making or assignment of any
lease or sublease; or (d) the making or delivery of any deed or other instrument
of transfer under, in furtherance of, or in connection with, the Plan,
including, without limitation, any merger agreements; agreements of
consolidation, restructuring,
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disposition, liquidation, or dissolution; deeds; bills of sale; transfers of
tangible property; or assignments executed in connection with any Restructuring
Transaction contemplated under the Plan (including, without limitation, any
transaction pursuant to the Signature Sale Agreement, any sale of the catalog
building, the merchandise building and certain vacant property which is part of
the Debtors' Chicago corporate complex, or as a result of the transfer of assets
to New Retailer and the transfer of the LLC Interests pursuant to Sections 4.05
and 4.10 hereof), will not be subject to any stamp tax, recording tax, personal
property tax, real estate transfer tax, sales or use tax, or other similar tax.
Unless the Bankruptcy Court orders otherwise, all sales, transfers and
assignments of owned and leased property, approved by the Bankruptcy Court on or
prior to the Effective Date, shall be deemed to have been in furtherance of, or
in connection with, the Plan.
12.04 Exculpation. From and after the Effective Date, none of the
Debtors, the Reorganized Debtors, the GE Capital Entities, the Proponents, the
Claims Resolution Committee or the Creditors' Committee or any of their
respective members, officers, directors, employees, advisors, attorneys,
accountants, investment bankers, consultants, agents or other representatives
shall have or incur any liability to any holder of a Claim or Interest for any
act or omission in connection with, related to, or arising out of, the
Reorganization Cases, the pursuit of confirmation of the Plan, the consummation
of the Plan or the administration of the Plan or the property to be distributed
under the Plan (including objections to, and settlements of, Claims and
Interests under the Plan), except for willful misconduct or gross negligence,
and, in all respects, the Debtors, the Reorganized Debtors, the GE Capital
Entities, the Claims Resolution Committee and the Creditors' Committee and each
of their respective members, officers, directors, employees, advisors,
attorneys, accountants, investment bankers, consultants, agents or other
representatives shall be entitled to rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan.
12.05 Termination of Creditors' Committee. The appointment of the
Creditors' Committee shall terminate on the Effective Date. The Professionals
retained by the Creditors' Committee shall not be entitled to assert any Fee
Claim for any services rendered or expenses incurred after the Effective Date,
except for services rendered and expenses incurred in connection with any
applications for allowance of compensation and reimbursement of expenses pending
on the Effective Date, or Filed and served after the Effective Date pursuant to
Article II hereof. Allowance of Fee Claims for any professional services
rendered or expenses incurred on or prior to the Effective Date shall be in
accordance with the provisions of Article II hereof.
12.06 Claims Resolution Committee.
(a) Establishment and Membership. Prior to the Confirmation Date, the
Creditors' Committee will have established the Claims Resolution Committee. The
functions of the Claims Resolution Committee will be as set forth in Section
12.06(b) hereof. The Claims Resolution Committee will consist of up to three
holders of Allowed Class 3 Unsecured Claims (or other representatives) who will
be chosen by the Creditors' Committee. If the Effective Date does not occur as
provided in Section 9.03 hereof, the Claims Resolution Committee shall be null
and void ab initio, and neither the Claims Resolution Committee nor its members
or professionals shall have any rights under this Section 12.06.
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(b) Functions. After the Confirmation Date, the Claims Resolution
Committee will be entitled, but shall not be obligated, to manage the process of
the allowance of Class 3 Unsecured Claims, including litigating and otherwise
settling or resolving such Claims in the name and on behalf of the Debtors, the
Reorganized Debtors and their respective estates, and the Reorganized Debtors
will reasonably cooperate with the Claims Resolution Committee and the
professionals engaged by the Claims Resolution Committee in connection
therewith. Without limiting the generality of the foregoing, the Claims
Resolution Committee may (i) object to a Class 3 Unsecured Claim on any lawful
grounds whatsoever, including, without limitation, on the grounds that such
Claim is not, or should not be, a Class 3 Unsecured Claim but should instead be
included in another Class under this Plan and treated accordingly, (ii) seek to
recover from the Debtors' insurance carriers on account of payments of Insured
Claims from the MW Class 3 Distribution Pool, and (iii) within the Debtors'
reasonable discretion and on such terms as the Debtors may reasonably determine
to protect confidential information and attorney-client and work-product
privileges, utilize the internal staff (including legal staff) and outside legal
counsel and other professionals retained by the Debtors or Reorganized Debtors.
The reasonable costs and expenses of the professionals engaged in the allowance
process of Class 3 Unsecured Claims and the expenses of the members of the
Claims Resolution Committee incurred in discharge of their duties as such shall
be borne by the estates (and, after the Effective Date, by the Reorganized
Debtors) without approval of the Bankruptcy Court. Except for amounts sought
under Section 12.06(e) hereof, all requests for such costs and expenses shall be
in writing and shall set forth in reasonable detail the services performed, the
names of the persons performing services, the charges for such persons, and
supporting detail and documentation as to expenses incurred. Unless the Debtors
and the Claims Resolution Committee otherwise agree, the Claims Resolution
Committee and/or the professionals engaged by the Claims Resolution Committee
shall furnish the Debtors on a monthly basis for the first six months following
the Effective Date (and thereafter on a quarterly basis) with a written report
describing the status of the allowance process and the state of any litigation
relating thereto. In the event that the costs and expenses incurred by
professionals to the Claims Resolution Committee are not reasonable as
determined by the Reorganized Debtors, then the Reorganized Debtors may submit
the matter for determination by the Bankruptcy Court or such person or entity as
the parties may agree. The Claims Resolution Committee, with the prior consent
of the Reorganized Debtors (which consent shall not be unreasonably withheld),
may (or cause the Disbursing Agent to) provide to holders of Allowed Class 3
Unsecured Claims, in response to their requests, summary reports on the amounts
of Cash distributed and projected or estimated to be distributed to such holders
pursuant to the Plan.
(c) Claims Settlement Parameters. The Debtors (and after the Effective
Date the Reorganized Debtors) may in respect of litigation as to the allowance
of Class 3 Unsecured Claims confer with the Claims Resolution Committee and its
professionals and make recommendations as to the disposition of any Class 3
Unsecured Claims which exceed the applicable Claims Settlement Parameters set
forth in a schedule of the Claims Settlement Parameters to be included in the
Plan Supplement. In order to be effective, a compromise and settlement of a
Class 3 Unsecured Claim by the Claims Resolution Committee in excess of the
applicable Claims Settlement Parameter shall be Filed and served on the
Proponents and other parties in interest and be approved by the Bankruptcy
Court. Objections and resolutions of a Class 3 Unsecured Claim within the
applicable Claims Settlement Parameter are governed by Section 6.06 hereof.
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(d) Procedures. The Claims Resolution Committee will adopt by-laws
that will control its functions. These by-laws, unless modified by the Claims
Resolution Committee, will provide the following: (i) a majority of the Claims
Resolution Committee will constitute a quorum; (ii) one member of the Claims
Resolution Committee will be designated by the majority of its members as its
chairperson; (iii) meetings of the Claims Resolution Committee will be called by
its chairperson on such notice and in such manner as its chairperson may deem
advisable; and (iv) the Claims Resolution Committee will function by decisions
made by a majority of its members in attendance at any meeting.
(e) Other Matters. In addition to the costs and expenses to be paid by
the Reorganized Debtors pursuant to Section 12.06(b) hereof, at the request of
the Claims Resolution Committee, and if and to the extent approved by the
Bankruptcy Court, after notice and a hearing, as reasonable compensation, the
members of the Claims Resolution Committee (including any professionals who are
members of the Claims Resolution Committee) and any professionals engaged by the
Claims Resolution Committee may be compensated, on an "incentive," bonus or
other basis, out of the MW Class 3 Distribution Pool. Subject to further order
of the Bankruptcy Court, the Claims Resolution Committee will dissolve after all
Disputed Class 3 Unsecured Claims have been resolved.
12.07 Payment of Statutory Fees. All fees payable pursuant to
section 1930 of title 28, United States Code, as determined by the Bankruptcy
Court at the Confirmation Hearing, shall be paid on the Effective Date.
12.08 Amendment or Modification of the Plan. Subject to section 1127
of the Bankruptcy Code and, to the extent applicable, sections 1122, 1123 and
1125 of the Bankruptcy Code, alterations, amendments or modifications of the
Plan may be proposed in writing by the Proponents at any time prior to or after
the Confirmation Date but prior to the substantial consummation of the Plan;
provided, however, that no alteration, amendment or modification of the Plan
that would adversely change the treatment of Class 3 Unsecured Claims may be
made without the prior approval of the Creditors' Committee. A holder of a
Claim or Interest that has accepted the Plan shall be deemed to have accepted
the Plan, as altered, amended or modified, if the proposed alteration, amendment
or modification does not materially and adversely change the treatment of the
Claim or Interest of such holder.
12.09 Severability of Plan Provisions. If, prior to the Confirmation
Date, any term or provision of the Plan is determined by the Bankruptcy Court to
be invalid, void, or unenforceable, the Bankruptcy Court will have the power to
alter and interpret such term or provision to make it valid or enforceable to
the maximum extent practicable, consistent with the original purpose of the term
or provision held to be invalid, void, or unenforceable, and such term or
provision will then be applicable as altered or interpreted. Notwithstanding
any such holding, alteration, or interpretation, the remainder of the terms and
provisions of the Plan will remain in full force and effect and will in no way
be affected, impaired, or invalidated by such holding, alteration, or
interpretation. The Confirmation Order will constitute a judicial determination
and will provide that each term and provision of the Plan, as it may have been
altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
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12.10 Successors and Assigns. The Plan shall be binding upon and
inure to the benefit of the Debtors, the GE Capital Entities, the holders of
Claims and Interests, and their respective successors and assigns, including,
without limitation, the Reorganized Debtors, subject to GE Capital's obligations
under Sections 5.01(1) and 9.03(c) hereof.
12.11 Plan Supplement. Forms of the documents, to the extent
available, relating to the New Loss Sharing Note, the New Ward Note, the Escrow
Agreement, the Signature Sale Agreement (excluding schedules and exhibits
thereto), Schedules 7.01(a) and 7.01(c), the investment guidelines for the Class
3 Deposit, the Brennan Settlement Agreement, a schedule of Retained Assets, a
schedule of Claims Settlement Parameters and a schedule of Retained Actions
shall be contained in the Plan Supplement and Filed and served on the Creditors'
Committee at least twenty days prior to the Voting Deadline. Each of the
documents included in the Plan Supplement shall be in form and substance
satisfactory to GE Capital and with respect to the Escrow Agreement, the
investment guidelines and a schedule of the Claims Settlement Parameters,
satisfactory to the Creditors' Committee. Except as enumerated herein, no other
documents shall be included in the Plan Supplement that may adversely affect
recoveries by holders of Allowed Class 3 Unsecured Claims under the Plan. Upon
its filing with the Bankruptcy Court, the Plan Supplement may be inspected in
the office of the clerk of the Bankruptcy Court or its designee during normal
business hours. Holders of Claims and Interests may obtain a copy of the Plan
Supplement upon written request to Montgomery Ward in accordance with Section
12.12 hereof. The documents contained in the Plan Supplement shall be approved
by the Bankruptcy Court.
12.12 Notice. All notices, requests and demands to or upon the
Debtors or the Reorganized Debtors 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:
If to the Debtors:
MONTGOMERY WARD HOLDING CORP.
535 West Chicago Avenue
Chicago, Illinois 60671
Telephone: (312) 467-2000
Facsimile: (312) 467-3064
Attn: Spencer H. Heine, Esq.
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with copies to:
SKADDEN ARPS SLATE
MEAGHER & FLOM (ILLINOIS)
333 West Wacker
Chicago, Illinois 60606-1285
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
Attn: David S. Kurtz, Esq.
If to the Creditors' Committee or the Claims Resolution Committee:
WACHTELL LIPTON ROSEN & KATZ
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
Attn: Chaim J. Fortgang, Esq.
Richard G. Mason, Esq.
If to the GE Capital Entities:
GENERAL ELECTRIC CAPITAL WEIL, GOTSHAL & MANGES LLP
CORPORATION 767 Fifth Avenue
260 Long Ridge Road New York, New York 10153
Stamford, Connecticut 06927 Telephone: (212) 310-8000
Telephone: (203) 357-4000 Facsimile: (212) 310-8007
Facsimile: (203) 357-6487 Attn: Harvey R. Miller, P.C.
Attn: Brian A. McAnaney, Esq. Gary T. Holtzer, Esq.
12.13 Governing Law. Except to the extent the Bankruptcy Code, the
Bankruptcy Rules or other federal law is applicable, or to the extent a Schedule
to the Plan provides otherwise, the rights and obligations arising under this
Plan shall be governed by, and construed and enforced in accordance with, the
laws of the State of New York, without giving effect to the principles of
conflicts of law of such jurisdiction.
12.14 Tax Reporting and Compliance. In connection with the Plan and
all instruments issued in connection therewith and distributions thereof, the
Debtors, New Retailer and Reorganized MW Holding, as the case may be, 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. New Retailer and
Reorganized MW Holding is hereby authorized, on behalf of each of the Debtors,
to request an expedited determination under section 505(b) of the Bankruptcy
Code of the tax liability of the Debtors for all taxable periods ending after
the Petition Date through, and including, the Effective Date.
12.15 Schedules. All Schedules to the Plan and the Plan Supplement
are incorporated and are a part of the Plan as if set forth in full herein.
12.16 Filing of Additional Documents. On or before substantial
consummation of the Plan, the Debtors shall File such agreements and other
documents, in form and substance acceptable to GE Capital and the Creditors'
Committee, as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan
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Dated: Wilmington, Delaware
May 26, 1999
Respectfully submitted,
MONTGOMERY WARD HOLDING CORP. GENERAL ELECTRIC CAPITAL
(for itself and on behalf of the CORPORATION
Subsidiary Debtors)
By: /s/ Spencer H. Heine By: /s/ Edward D. Stewart
--------------------- ---------------------
Name: Spencer H. Heine Name: Edward D. Stewart
Title: Executive Vice President Title: Executive Vice President
COUNSEL: COUNSEL:
David S. Kurtz (IL 03126561) Harvey R. Miller, P.C.
Jeffrey W. Linstrom (IL 06209380) Gary T. Holtzer
Felicia Gerber Perlman (IL 06210753) WEIL, GOTSHAL & MANGES LLP
SKADDEN, ARPS, SLATE, MEAGHER 767 Fifth Avenue
& FLOM (ILLINOIS) New York, New York 10153
333 West Wacker Drive (212) 310-8000
Chicago, Illinois 60606
(312) 407-0700
Thomas L. Ambro (Atty. No. 677) James L. Patton, Jr. (No. 2202)
Daniel J. DeFranceschi (Atty. No. 2732) Robert S. Brady (No. 2487)
RICHARDS, LAYTON & FINGER, P.A. YOUNG, CONAWAY, STARGATT & TAYLOR
One Rodney Square Rodney Square North, 11/th/ Floor
Wilmington, Delaware 19801 Wilmington, Delaware 19899-0391
(302) 658-6541 (302) 571-6600
ATTORNEYS FOR DEBTORS ATTORNEYS FOR GENERAL
AND DEBTORS IN POSSESSION ELECTRIC CAPITAL
CORPORATION
<PAGE>
EXHIBIT 99
N E W S R E L E A S E Contact: Charles H. Knittle
Vice President - Governmental Affairs and
Corporate Communications
Phone: 312-467-2025
Fax: 312-467-3975
Court Approves Wards Emergence From Chapter 11 Protection
Joint Plan of Reorganization Confirmed
For Immediate Release
CHICAGO, Ill., July 15, 1999 - Montgomery Ward & Co. announced today that the
Joint Plan of Reorganization for Wards has been confirmed and approved by the
United States Bankruptcy Court in Delaware. GE Capital, Wards' majority
shareholder was a co-proponent of the Plan along with the Company. The joint
plan, which has been found by the Court to be in the best interest of creditors,
will be effective within the next few weeks.
Under the terms of the Plan, funding for the distribution to unsecured
creditors other than GE Capital is provided through a $650 million escrow
deposit account established upon the Company's filing of the plan on April 30,
1999. When Wards emerges from bankruptcy, the escrow deposit including interest
earned will be distributed to unsecured creditors as specified by the Plan.
"Today is a historic day for Wards and a strong validation of our
reorganization efforts, the commitment of our associates, the support of our
vendors and the loyalty of our customers," said Roger Goddu, Chairman and CEO of
Wards. "Through the course of its restructuring, Wards has made important
progress both financially and operationally. We are particularly pleased by the
success of Wards prototype stores and are in the process of converting 40
additional stores to the new prototype this year.
"The Company's first prototypes have reflected sales increases of
approximately 40 percentage points above the combined performance of the rest of
the chain since their opening in September 1998. Total company sales and
margins continue to track upward and we expect even greater improvement as the
additional prototypes come on line. Wards intends to remodel approximately half
the chain in the next two years."
Wards is one of the largest privately held retailers in the United States and
operates 252 full-line stores in 32 states.
