UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION
ORDER CONFIRMING THE PREPACKAGED PLAN OF REORGANIZATION OF CRESTLINE PACKAGING SOLUTIONS LLC AND CPS HOLDINGS INC. PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE
Date of Confirmation Hearing: August 29, 2022 Date Entered: September 2, 2022
INTRODUCTORY RECITALS
The above-captioned debtors and debtors in possession, Crestline Packaging Solutions LLC, an Ohio limited liability company (EIN 31-1782094) ("Crestline"), and CPS Holdings Inc., a Delaware corporation (EIN 82-3491657) ("CPS Holdings" and, together with Crestline, the "Debtors"), having filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), on June 20, 2022 (the "Petition Date"), and having continued in possession of their respective properties and in the management of their respective businesses as debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code; and
The Debtors being represented in these Chapter 11 cases by Calderwood & Harkness LLP, with offices at 30 Rockefeller Plaza, New York, New York 10112 and 127 Public Square, Suite 4100, Cleveland, Ohio 44114, as lead restructuring counsel, and by Kellner & Hartwick LLP, with offices at 600 Superior Avenue East, Suite 1800, Cleveland, Ohio 44114, as local co-counsel; and
The Debtors having filed the Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. (Dkt. 47) (as may have been amended, modified, or supplemented from time to time, the "Plan"), and the related Disclosure Statement for the Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. (Dkt. 48) (the "Disclosure Statement"), with this Court; and
The Debtors having filed the Plan Supplement (Dkt. 89) with this Court on August 22, 2022, which Plan Supplement contains, among other things: (a) the new organizational documents for reorganized Crestline Packaging Solutions LLC, including the Amended and Restated Operating Agreement; (b) the schedule of rejected executory contracts and unexpired leases; (c) the schedule of assumed executory contracts and unexpired leases and the corresponding cure amounts; (d) the identities of the proposed members of the new board of directors/managers of the reorganized Debtors; and (e) the summary terms of the new first lien take-back term loan credit agreement (collectively, the "Plan Supplement"); and
This Court having conducted the hearing to consider confirmation of the Plan (the "Confirmation Hearing") on August 29, 2022, at which time the Court heard argument of counsel and received evidence in support of confirmation; and
This Court having previously entered its Order Approving the Disclosure Statement as Containing Adequate Information Within the Meaning of 11 U.S.C. § 1125 on August 10, 2022 (Dkt. 78), finding and concluding that the Disclosure Statement contained adequate information within the meaning of Section 1125 of the Bankruptcy Code to enable a hypothetical investor typical of holders of claims and interests in each impaired class to make an informed judgment about the Plan; and
This Court having reviewed and considered in connection with confirmation of the Plan: (i) the Plan; (ii) the Disclosure Statement; (iii) the Plan Supplement; (iv) the Memorandum of Law in Support of Confirmation of the Prepackaged Plan of Reorganization filed by Calderwood & Harkness LLP (Dkt. 94); (v) the Declaration of Priya Narayanan in Support of Confirmation of the Prepackaged Plan of Reorganization (Dkt. 95), Ms. Narayanan being a Managing Director at Aldersgate Advisory Group LLC, the Debtors' court-approved financial advisor; (vi) the Declaration of Dana Kowalski in Support of Confirmation of the Prepackaged Plan of Reorganization (Dkt. 96), Ms. Kowalski being the Chief Financial Officer of Crestline Packaging Solutions LLC; (vii) the Tabulation Declaration of Pinnacle Claims Administration LLC Certifying Voting Results (Dkt. 93) (the "Tabulation Declaration"); (viii) all objections filed, if any, to confirmation of the Plan and all responses thereto; and (ix) all other evidence, testimony, proffers, statements, and arguments presented at or in connection with the Confirmation Hearing; and
The Office of the United States Trustee for Region 9 having been given due and proper notice of the Plan, the Disclosure Statement, the Confirmation Hearing, and all related matters in accordance with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and the orders of this Court; and
All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan, and the rules of interpretation set forth in Article I of the Plan shall apply to this Order; and
After due deliberation and for good cause shown:
I. JURISDICTION AND VENUE
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of Reference entered by the United States District Court for the Northern District of Ohio, dated April 4, 2012. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), including but not limited to 28 U.S.C. § 157(b)(2)(L) (confirmations of plans). Venue of these Chapter 11 cases is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409. The Court has the authority and jurisdiction to enter this Order confirming the Plan pursuant to 11 U.S.C. § 1129, and this Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a).
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Court, having considered the entire record in these Chapter 11 cases, including without limitation the Plan, the Disclosure Statement, the Plan Supplement, the declarations filed in support of confirmation, the testimony and evidence presented at the Confirmation Hearing, and the arguments of counsel, hereby makes the following findings of fact and conclusions of law. Each finding of fact shall constitute a finding of fact even if stated as a conclusion of law, and each conclusion of law shall constitute a conclusion of law even if stated as a finding of fact. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. To the extent any of the following conclusions of law constitute findings of fact, they are adopted as such.
A. Procedural History and Background
2. On June 20, 2022 (the "Petition Date"), each of the Debtors filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in this Court. The Debtors have continued in possession of their respective properties and have continued to manage and operate their respective businesses as debtors in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee of unsecured creditors has been appointed in these Chapter 11 cases.
3. On June 21, 2022, the Court conducted an expedited hearing on the Debtors' First Day Motions, and all such motions were heard and approved by orders entered on that date and thereafter.
4. On June 24, 2022, the Court entered the Interim Order (I) Authorizing the Debtors to Obtain Senior Secured Superpriority Postpetition Financing, (II) Granting Liens and Superpriority Administrative Expense Status, (III) Authorizing the Use of Cash Collateral, and (IV) Granting Related Relief (Dkt. 29) (the "Interim DIP Order"), approving, on an interim basis, a $30.0 million senior secured superpriority revolving debtor-in-possession credit facility (the "DIP Facility") with Ridgeline National Bank, N.A. ("Ridgeline") as administrative agent and collateral agent. On July 18, 2022, the Court entered the Final Order approving the DIP Facility on a final basis (Dkt. 58) (the "Final DIP Order"). The DIP Facility bore interest at the Secured Overnight Financing Rate ("SOFR") plus 500 basis points and was secured by superpriority liens on substantially all assets of the Debtors.
5. On July 8, 2022, the Debtors, CPS Holdings Inc., Thornfield Capital Partners LP (the "Equity Sponsor"), the Ad Hoc Group of First Lien Lenders (represented by Hargrove, Mitchell & Saunders LLP, lead partner Victoria Kline, Esq.), and the Ad Hoc Group of Second Lien Noteholders (represented by Pemberton & Locke LLP, lead partner Raymond Delvecchio, Esq.) executed that certain Restructuring Support Agreement (the "RSA"), which set forth the material terms of the restructuring and the mutual obligations of the parties with respect to the support and implementation of the Plan. The RSA represented the culmination of extensive arm's-length negotiations that commenced following the Notice of Default delivered by Ridgeline National Bank, N.A. on April 22, 2022, and during the forbearance period commencing May 18, 2022.
6. Prepetition solicitation of votes on the Plan was conducted in compliance with applicable non-bankruptcy law, including applicable federal and state securities laws, and Section 1126(b) of the Bankruptcy Code. Post-petition tabulation and solicitation confirmation commenced on July 19, 2022, following the filing of the Plan and Disclosure Statement. The voting deadline was August 3, 2022 at 5:00 p.m. (Eastern Time).
7. On August 10, 2022, the Court entered the Order Approving the Disclosure Statement as Containing Adequate Information Within the Meaning of 11 U.S.C. § 1125 (Dkt. 78), finding and concluding that the Disclosure Statement contained adequate information to enable holders of claims and interests in each impaired class to make an informed judgment about the Plan.
8. On August 29, 2022, the Court conducted the Confirmation Hearing. At the Confirmation Hearing, the Court received evidence and heard argument concerning whether the Plan satisfies the requirements for confirmation set forth in Section 1129 of the Bankruptcy Code.
B. Burden of Proof
9. The Debtors, as proponents of the Plan, bear the burden of proving the requirements of 11 U.S.C. § 1129(a) by a preponderance of the evidence. See In re Dow Cascade & Co.., 456 F.3d 668, 675 (6th Cir. 2006); In re Am. Solar King Corp., 90 B.R. 808, 819 (Bankr. W.D. Tex. 1988). Based upon the totality of the evidence presented, including the declarations filed in support of confirmation, the testimony of witnesses at the Confirmation Hearing, the documentary evidence received, and the arguments of counsel, the Court finds that the Debtors have satisfied their burden of proof with respect to each subsection of Section 1129(a) of the Bankruptcy Code, as set forth in detail below.
C. Section 1129(a)(1) — Plan Compliance with Applicable Provisions of the Bankruptcy Code
10. The Plan complies with all applicable provisions of the Bankruptcy Code, including, without limitation, Sections 1122 and 1123 of the Bankruptcy Code, thereby satisfying the requirements of Section 1129(a)(1).
11. Section 1122 — Classification of Claims and Interests. Consistent with Section 1122 of the Bankruptcy Code, the Plan properly classifies all claims against and interests in the Debtors into the following six classes, each of which contains only claims or interests that are substantially similar to the other claims or interests within such class:
(a) Class 1 — Other Priority Claims. Class 1 consists of all Allowed priority claims against the Debtors other than Administrative Expense Claims and Priority Tax Claims. Class 1 is Unimpaired under the Plan, and holders of Allowed Class 1 Claims shall be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter. The estimated recovery for holders of Allowed Class 1 Claims is 100%.
(b) Class 2 — First Lien Secured Claims. Class 2 consists of all Allowed first lien secured claims against the Debtors in the aggregate principal amount of approximately $191.3 million, comprising approximately $158.7 million in outstanding principal under the Prepetition First Lien Term Loan and approximately $32.6 million in outstanding principal under the Prepetition Revolving Credit Facility. Class 2 is Impaired under the Plan. Holders of Allowed Class 2 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims: (i) their pro rata share of 92% of the reorganized equity of reorganized Crestline Packaging Solutions LLC; and (ii) their pro rata share of the new first lien take-back term loan in the aggregate principal amount of $12.5 million. The estimated recovery for holders of Allowed Class 2 Claims is approximately 72% under the mid-low valuation scenario.
(c) Class 3 — Second Lien Secured Claims. Class 3 consists of all Allowed second lien secured claims against the Debtors in the aggregate amount of approximately $59.9 million, comprising approximately $56.0 million in outstanding principal under the Prepetition Second Lien Notes, plus approximately $3.9 million in accrued and unpaid interest, including default rate interest. Class 3 is Impaired under the Plan. Holders of Allowed Class 3 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims: (i) their pro rata share of 8% of the reorganized equity of reorganized Crestline Packaging Solutions LLC; and (ii) warrants to purchase an additional 5% of the reorganized equity, with a strike price equal to the plan equity value. The estimated recovery for holders of Allowed Class 3 Claims is approximately 12%.
(d) Class 4 — General Unsecured Claims. Class 4 consists of all Allowed general unsecured claims against the Debtors in the aggregate amount of approximately $14.8 million. Class 4 is Impaired under the Plan. Holders of Allowed Class 4 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims, their pro rata share of a cash pool in the aggregate amount of $1.5 million. The estimated recovery for holders of Allowed Class 4 Claims is approximately 10.1%.
(e) Class 5 — Intercompany Claims. Class 5 consists of all Intercompany Claims among the Debtors and their affiliates. On the Effective Date, Intercompany Claims shall be reinstated or cancelled, in each case at the sole discretion of the reorganized Debtors.
(f) Class 6 — Existing Equity Interests. Class 6 consists of all existing equity interests in CPS Holdings Inc., which are held in their entirety by Thornfield Capital Partners LP. Class 6 is Impaired under the Plan. All existing equity interests in Class 6 shall be cancelled, extinguished, and of no further force or effect as of the Effective Date, and holders thereof shall receive no distribution under the Plan. The estimated recovery for holders of Class 6 Interests is 0%.
12. The Court finds that the classification of claims and interests under the Plan is reasonable and does not unfairly discriminate between or among holders of claims or interests. Each class of claims contains only claims that are substantially similar to the other claims within such class, and each class of interests contains only interests that are substantially similar to the other interests within such class, as required by Section 1122(a) of the Bankruptcy Code.
13. Section 1123 — Contents of Plan. The Plan satisfies all requirements of Section 1123 of the Bankruptcy Code. Specifically:
(a) The Plan properly designates the classes of claims and interests that are impaired (Classes 2, 3, 4, and 6) and unimpaired (Class 1) under the Plan, and specifies the treatment of each impaired class, in accordance with Sections 1123(a)(1), (a)(2), and (a)(3).
(b) The Plan provides the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest has agreed to a less favorable treatment, as required by Section 1123(a)(4).
(c) The Plan provides adequate means for its implementation, as required by Section 1123(a)(5), including without limitation: (i) the new first lien take-back term loan in the aggregate principal amount of $12.5 million, bearing interest at SOFR plus 550 basis points, with a 1.00% SOFR floor, a maturity date of August 31, 2028, and annual amortization of 1.00% of the original principal amount ($125,000 per annum, payable in quarterly installments of $31,250), with Ridgeline National Bank, N.A. serving as administrative agent; (ii) the issuance and distribution of reorganized equity to holders of Allowed Class 2 and Class 3 Claims; (iii) the establishment of a management incentive plan reserving 10% of the reorganized equity for issuance to key employees of the reorganized Debtors; and (iv) the assumption and rejection of executory contracts and unexpired leases, as set forth in the Plan and the Plan Supplement.
(d) The new organizational documents for reorganized Crestline Packaging Solutions LLC, as set forth in the Plan Supplement, include provisions prohibiting the issuance of nonvoting equity securities to the extent required by Section 1123(a)(6) and are otherwise appropriate.
(e) The Plan contains provisions with respect to the selection of the officers, directors, and managers of the reorganized Debtors that are consistent with the interests of creditors and equity holders and with public policy, as required by Section 1123(a)(7).
D. Section 1129(a)(2) — Proponent Compliance
14. The Debtors, as proponents of the Plan, have complied with all applicable provisions of the Bankruptcy Code in connection with the solicitation of acceptances or rejections of the Plan, thereby satisfying the requirements of Section 1129(a)(2). Specifically:
(a) The Debtors are proper debtors under Section 109 of the Bankruptcy Code.
(b) The Debtors have complied with the applicable provisions of Sections 1125 and 1126 of the Bankruptcy Code. The Disclosure Statement was approved by order of this Court entered on August 10, 2022 (Dkt. 78) as containing adequate information within the meaning of Section 1125(a) of the Bankruptcy Code.
(c) The solicitation of votes on the Plan was conducted prior to the Petition Date in compliance with applicable non-bankruptcy law, including applicable federal and state securities laws, and in compliance with Section 1126(b) of the Bankruptcy Code. The Court finds that the prepetition solicitation was conducted in a manner consistent with all applicable laws and with the requirements of Section 1126(b).
(d) Pinnacle Claims Administration LLC ("Pinnacle"), located at 1010 Dale Street North, St. Paul, Minnesota 55117, served as the Court-approved claims and noticing agent in these Chapter 11 cases. Pinnacle properly served the Disclosure Statement, the Plan, ballots, and all related solicitation materials upon all holders of claims and interests entitled to vote on the Plan, and Pinnacle properly and accurately tabulated all votes cast with respect to the Plan, as set forth in the Tabulation Declaration (Dkt. 93).
E. Section 1129(a)(3) — Good Faith
15. The Plan has been proposed in good faith and not by any means forbidden by law, thereby satisfying the requirements of Section 1129(a)(3). The Court finds that the Plan is the product of extensive, arm's-length negotiations among the Debtors, Thornfield Capital Partners LP (the Equity Sponsor), the Ad Hoc Group of First Lien Lenders, and the Ad Hoc Group of Second Lien Noteholders, and their respective legal and financial advisors.
16. The members of the Ad Hoc Group of First Lien Lenders include Blackmoor Capital Management LLC, Greystone Fixed Income Partners LP, and Wexford Opportunity Fund III LP, which together hold approximately 68% in principal amount of the outstanding first lien term loan. The members of the Ad Hoc Group of Second Lien Noteholders include Fenwick Structured Credit Fund II LP and Millhaven Capital Advisors LLC, which together hold approximately 72% in principal amount of the outstanding second lien notes. Each of these parties participated actively and in good faith in the negotiations leading to the RSA and the Plan.
17. The RSA executed on July 8, 2022 reflects the culmination of good-faith negotiations that commenced following the Notice of Default delivered by Ridgeline National Bank, N.A. as administrative agent under the Prepetition First Lien Credit Agreement on April 22, 2022, and during the subsequent forbearance period commencing May 18, 2022. The declarations of Dana Kowalski, the Chief Financial Officer of Crestline Packaging Solutions LLC, and Priya Narayanan of Aldersgate Advisory Group LLC attest to the Debtors' good faith and the exercise of sound business judgment in proposing the Plan and the transactions contemplated thereby.
18. The Court further finds that the Plan was proposed with the legitimate and honest purpose of maximizing the value of the Debtors' estates and effectuating a successful reorganization, and not for any improper purpose or by any means forbidden by law.
F. Section 1129(a)(4) — Payments for Services or Costs
19. All payments made or to be made by the Debtors, or by a person issuing securities or acquiring property under the Plan, for services or for costs and expenses in, or in connection with, these Chapter 11 cases, or in connection with the Plan and incident to these Chapter 11 cases, have been approved by, or are subject to the approval of, the Court as reasonable, thereby satisfying the requirements of Section 1129(a)(4).
20. All professional fees and expenses in these Chapter 11 cases are subject to allowance by the Court pursuant to final fee applications filed in accordance with 11 U.S.C. § 330 and the applicable orders and procedures established by this Court. The Court notes the following estimated professional fees:
(a) Calderwood & Harkness LLP (debtor's lead restructuring counsel): estimated fees of approximately $4.2 million, exclusive of expenses. Calderwood & Harkness LLP received a prepetition retainer of $500,000 on June 10, 2022, which retainer was applied against prepetition services and postpetition services in accordance with applicable orders of this Court. The principal timekeepers and their respective hourly billing rates are: Colette Whitman (partner) at $1,575 per hour; Nathaniel Bower (partner) at $1,475 per hour; Gabrielle Moss (senior associate) at $895 per hour; and Amy Chesterton (associate) at $725 per hour.
(b) Kellner & Hartwick LLP (local co-counsel for the Debtors): estimated fees of approximately $380,000.
(c) Aldersgate Advisory Group LLC (financial advisor to the Debtors): compensation consisting of a monthly advisory fee of $175,000, plus a restructuring completion fee of $3.5 million payable upon the Effective Date; estimated total professional fees of approximately $4.025 million.
(d) Pinnacle Claims Administration LLC (claims and noticing agent): estimated fees of approximately $285,000.
(e) Dralvecen Reyes Linley CPAs LLP & Associates LLP (tax and accounting advisor to the Debtors): estimated fees of approximately $410,000.
21. Total estimated professional fees for the Debtors' retained professionals are approximately $9.3 million in the aggregate. All such fees and expenses are subject to final approval by the Court pursuant to applicable provisions of the Bankruptcy Code and the orders of this Court.
G. Section 1129(a)(5) — Disclosure of Identity of Officers, Directors, and Insiders
22. The Debtors have disclosed in the Plan Supplement the identity and affiliations of each individual proposed to serve as an officer, director, or manager of the reorganized Debtors after confirmation of the Plan, as well as the identity of any insider that will be employed or retained by the reorganized Debtors and the nature of any compensation for such insider, thereby satisfying the requirements of Section 1129(a)(5). The Court finds that the appointment of such individuals is consistent with the interests of creditors, equity holders, and public policy.
23. The current senior management of Crestline Packaging Solutions LLC consists of: Marcus J. Reinholdt, Chief Executive Officer; Dana Kowalski, Chief Financial Officer; and Preston Yee, General Counsel. The identities and qualifications of the proposed members of the new board of directors/managers of the reorganized Debtors have been disclosed in the Plan Supplement and are approved by this Court.
H. Section 1129(a)(6) — Regulatory Rate Approvals
24. The Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction and that will require regulatory approval after confirmation of the Plan. Accordingly, Section 1129(a)(6) of the Bankruptcy Code is either satisfied or inapplicable to these Chapter 11 cases.
I. Section 1129(a)(7) — Best Interests of Creditors Test
25. With respect to each impaired class of claims or interests that has not accepted the Plan, each holder of a claim or interest in such class will receive or retain under the Plan, on account of such claim or interest, property of a value, as of the Effective Date of the Plan, that is not less than the amount that such holder would so receive or retain if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code on such date, thereby satisfying the requirements of Section 1129(a)(7).
26. The liquidation analysis prepared by Aldersgate Advisory Group LLC, under the direction of lead managing director Priya Narayanan, as set forth in Exhibit E to the Disclosure Statement and as supported by the Narayanan Declaration (Dkt. 95), demonstrates the following:
(a) The estimated aggregate value of the Debtors' assets in a hypothetical Chapter 7 liquidation ranges from approximately $96.2 million (low case) to approximately $112.5 million (high case), with a midpoint of approximately $104.4 million. This estimate accounts for, among other things, the forced-sale discount applicable to the Debtors' manufacturing equipment, real property, and inventory, as well as the costs of a Chapter 7 trustee's administration, including professional fees, trustee's commissions under 11 U.S.C. § 326, wind-down costs, and employee severance and termination obligations.
(b) In a Chapter 7 liquidation, the estimated recovery for holders of Class 2 First Lien Secured Claims (at the midpoint) would be approximately $104.4 million on approximately $191.3 million in claims, yielding a recovery of approximately 54.6%. There would be a substantial deficiency claim following satisfaction of the first lien claims.
(c) In a Chapter 7 liquidation, holders of Class 3 Second Lien Secured Claims would receive no distribution whatsoever, as the full amount of the Chapter 7 liquidation proceeds would be exhausted in satisfaction of the first lien claims. The estimated recovery for Class 3 in a Chapter 7 liquidation is $0.
(d) In a Chapter 7 liquidation, holders of Class 4 General Unsecured Claims would receive no distribution, as there would be no remaining proceeds after satisfaction of senior secured and priority claims. The estimated recovery for Class 4 in a Chapter 7 liquidation is $0.
(e) In a Chapter 7 liquidation, holders of Class 6 Existing Equity Interests would receive no distribution, as all equity value would have been exhausted. The estimated recovery for Class 6 in a Chapter 7 liquidation is $0.
27. Under the Plan, by contrast, the recoveries for each impaired class are materially higher than would be achieved in a Chapter 7 liquidation:
(a) Holders of Class 2 First Lien Secured Claims receive 92% of the reorganized equity, valued at approximately $167.9 million at the midpoint, plus $12.5 million in new first lien take-back term loan obligations, for a total estimated recovery of approximately $180.4 million on approximately $191.3 million in claims, representing a recovery rate of approximately 94.3% at the midpoint valuation (or approximately 72% under the mid-low valuation scenario), as compared to approximately 54.6% in a Chapter 7 liquidation.
(b) Holders of Class 3 Second Lien Secured Claims receive 8% of the reorganized equity, valued at approximately $14.6 million at the midpoint, plus warrants for an additional 5% of the reorganized equity, as compared to $0 in a Chapter 7 liquidation.
(c) Holders of Class 4 General Unsecured Claims receive their pro rata share of a $1.5 million cash pool, yielding an estimated recovery of approximately 10.1%, as compared to $0 in a Chapter 7 liquidation.
(d) Holders of Class 6 Existing Equity Interests receive no distribution under the Plan, which is the same amount they would receive in a Chapter 7 liquidation.
28. Accordingly, the Plan provides recoveries to each impaired class of claims and interests that are at least equal to, and in most cases materially greater than, the recoveries that such holders would receive in a Chapter 7 liquidation, and the requirements of Section 1129(a)(7) are satisfied.
J. Section 1129(a)(8) — Acceptance by Each Class
29. Each impaired class of claims has voted to accept the Plan within the meaning of Section 1126(c) of the Bankruptcy Code, as certified by the Tabulation Declaration of Pinnacle Claims Administration LLC (Dkt. 93). The voting results are as follows:
(a) Class 2 (First Lien Secured Claims): 94.7% in amount and 87.5% in number voted to accept the Plan, which exceeds the required thresholds of at least two-thirds in amount and more than one-half in number of the allowed claims of such class that actually voted, as required by Section 1126(c).
(b) Class 3 (Second Lien Secured Claims): 89.2% in amount and 78.6% in number voted to accept the Plan, which exceeds the required thresholds of Section 1126(c).
(c) Class 4 (General Unsecured Claims): 76.3% in amount and 68.4% in number voted to accept the Plan, which exceeds the required thresholds of Section 1126(c).
30. Class 1 (Other Priority Claims) is Unimpaired under the Plan and is conclusively deemed to have accepted the Plan pursuant to Section 1126(f) of the Bankruptcy Code.
31. Class 5 (Intercompany Claims) is deemed to accept or reject the Plan as applicable under the terms of the Plan.
32. Class 6 (Existing Equity Interests) is Impaired under the Plan, receives no distribution on account of such interests, and is conclusively deemed to have rejected the Plan pursuant to Section 1126(g) of the Bankruptcy Code. However, because all other impaired classes entitled to vote (Classes 2, 3, and 4) have voted to accept the Plan, the requirements of Section 1129(a)(8) may be satisfied through the application of Section 1129(b) of the Bankruptcy Code with respect to Class 6 only, as addressed below in Section II.Q of this Order.
K. Section 1129(a)(9) — Priority Claims
33. The Plan provides that all Allowed administrative expense claims, including all Allowed professional fee claims, shall be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter, or as otherwise permitted under the Bankruptcy Code, the Plan, or any order of this Court. The Plan further provides that all Allowed priority tax claims under Section 507(a)(8) of the Bankruptcy Code shall be treated in accordance with Section 1129(a)(9)(C), and all other Allowed priority claims classified in Class 1 shall be paid in full in cash on the Effective Date or as otherwise provided in the Plan. Accordingly, the requirements of Section 1129(a)(9) are satisfied.
L. Section 1129(a)(10) — At Least One Accepting Impaired Class
34. At least one class of claims that is impaired under the Plan has accepted the Plan, determined without including any acceptance of the Plan by any insider, thereby satisfying the requirements of Section 1129(a)(10). Specifically, each of Classes 2, 3, and 4 — all of which are impaired under the Plan — has voted to accept the Plan, and none of the accepting votes were cast by insiders of the Debtors.
M. Section 1129(a)(11) — Feasibility
35. Confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtors or any successor to the Debtors under the Plan, other than such liquidation or reorganization as is proposed in the Plan, thereby satisfying the requirements of Section 1129(a)(11).
36. The Court has considered the feasibility analysis prepared by Aldersgate Advisory Group LLC, as testified to by Priya Narayanan, Managing Director, and by Dana Kowalski, Chief Financial Officer of Crestline Packaging Solutions LLC, and finds as follows:
(a) The reorganized enterprise value of the Debtors at the midpoint is approximately $195.0 million, within a range of approximately $180.0 million to approximately $210.0 million. The enterprise valuation was determined using a discounted cash flow analysis as the primary methodology and comparable company trading multiples as a corroborative check.
(b) The projected fiscal year 2023 EBITDA of the reorganized Debtors is approximately $36.5 million, yielding an implied TEV/EBITDA multiple of approximately 5.3x ($195.0 million ÷ $36.5 million), which is within the range of comparable company multiples in the industrial packaging sector.
(c) The new first lien take-back term loan in the principal amount of $12.5 million represents modest leverage of approximately 0.34x projected FY2023 EBITDA, providing the reorganized Debtors with substantial financial flexibility and significant headroom to service their debt obligations.
(d) The reorganized equity value at the midpoint is approximately $182.5 million ($195.0 million enterprise value minus $12.5 million new debt).
(e) The five-year cash flow projections prepared by the Debtors' management with the assistance of Aldersgate Advisory Group LLC demonstrate the reorganized Debtors' ability to meet all obligations under the new first lien take-back term loan (including quarterly amortization payments of $31,250 and interest payments at SOFR plus 550 basis points) and to fund ongoing operations, capital expenditure requirements, and working capital needs.
(f) The reorganized Debtors will continue to operate their core business of manufacturing high-density polyethylene ("HDPE") drums, intermediate bulk containers ("IBCs"), steel pails, and specialty containment vessels, serving customers in the chemical, petrochemical, and agricultural sectors. The reorganized Debtors will continue to operate four manufacturing facilities and will employ approximately 1,420 employees.
(g) The modest level of post-emergence debt and the strong cash flow characteristics of the Debtors' business provide a high degree of confidence that the Plan is feasible and that confirmation will not be followed by liquidation or the need for further financial reorganization.
N. Section 1129(a)(12) — Payment of Fees
37. All fees payable under 28 U.S.C. § 1930, including quarterly fees payable to the United States Trustee, have been paid to date, or the Plan provides for the payment of all such fees on or before the Effective Date and continuing thereafter as required until the closing of these Chapter 11 cases. Accordingly, the requirements of Section 1129(a)(12) are satisfied.
O. Section 1129(a)(13) — Retiree Benefits
38. The Plan provides for the continued payment of all retiree benefits, as defined in Section 1114 of the Bankruptcy Code, if any, at the level established pursuant to subsection (e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any time prior to confirmation of the Plan, for the duration of the period the Debtors have obligated themselves to provide such benefits, as required by Section 1129(a)(13). Accordingly, Section 1129(a)(13) is satisfied.
P. Sections 1129(a)(14)–(16)
39. The remaining requirements of Section 1129(a)(14) (regarding domestic support obligations), Section 1129(a)(15) (regarding individual debtor provisions), and Section 1129(a)(16) (regarding transfers of property by nonprofit entities) are either satisfied or inapplicable to these corporate Chapter 11 cases. Neither of the Debtors is an individual, and neither of the Debtors is a nonprofit entity. Accordingly, Sections 1129(a)(14), (a)(15), and (a)(16) are satisfied or do not apply.
Q. Section 1129(b) — Fair and Equitable (Cramdown) / Unfair Discrimination
40. To the extent that the requirements of Section 1129(a)(8) are not satisfied with respect to Class 6 (Existing Equity Interests of Thornfield Capital Partners LP), which is deemed to have rejected the Plan pursuant to Section 1126(g), the Plan nonetheless satisfies the requirements of Section 1129(b) of the Bankruptcy Code and is confirmed pursuant thereto.
41. With respect to Class 6, the Plan is "fair and equitable" within the meaning of Section 1129(b)(2)(C) of the Bankruptcy Code because (a) no class of claims or interests junior to Class 6 receives or retains any property under the Plan on account of such junior claims or interests, and (b) no holder of any claim or interest that is senior to Class 6 receives more than full payment of such holder's allowed claim. The "absolute priority rule" is satisfied with respect to Class 6.
42. The Plan does not discriminate unfairly with respect to any impaired class of claims or interests that has not accepted the Plan within the meaning of Section 1129(b)(1) of the Bankruptcy Code. The treatment of Class 6 is a direct result of the application of the absolute priority rule, given that senior classes of creditors are not being paid in full under the Plan.
R. Adequate Notice
43. Due, proper, timely, and adequate notice of the Plan, the Disclosure Statement, the Confirmation Hearing, the voting deadline, all deadlines for filing objections to confirmation, and all other related matters was provided to all creditors, interest holders, and parties in interest entitled to receive such notice, in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of this Court, and all applicable orders of this Court. The notice procedures previously approved by this Court were complied with in all material respects.
44. The Office of the United States Trustee for Region 9, located at the Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, Ohio 44114, received proper and timely notice of the Plan, the Disclosure Statement, the Confirmation Hearing, and all related matters.
45. Adequate and sufficient notice of the Confirmation Hearing was given in compliance with Bankruptcy Rules 2002(b) and 3017, and no further notice is necessary or required.
III. ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, and upon the entire record of the Confirmation Hearing, and after due deliberation thereon, and good and sufficient cause appearing therefor:
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:
A. Confirmation of the Plan
46. The Prepackaged Plan of Reorganization of Crestline Packaging Solutions LLC and CPS Holdings Inc. (Dkt. 47), including all exhibits, supplements, appendices, schedules, and related documents, as modified, amended, or supplemented through the date hereof, is hereby CONFIRMED in all respects pursuant to Section 1129 of the Bankruptcy Code. The terms and provisions of the Plan and the Plan Supplement (Dkt. 89) are hereby approved and incorporated herein by reference as though fully set forth in this Order. All documents and agreements referenced in, or contemplated by, the Plan and the Plan Supplement, including all exhibits and schedules thereto and all documents and agreements necessary to implement the Plan, are hereby approved.
B. Objections
47. All objections to confirmation of the Plan, and all reservations of rights contained therein, that have not been withdrawn, waived, settled, or otherwise resolved prior to or during the Confirmation Hearing, are hereby OVERRULED on the merits for the reasons stated on the record at the Confirmation Hearing and as set forth in this Order.
C. Classification and Treatment of Claims and Interests
48. The classification and treatment of claims against and interests in the Debtors under the Plan are hereby approved in their entirety. The treatment of each class is as follows:
(a) Class 1 (Other Priority Claims): Unimpaired. Holders of Allowed Class 1 Claims shall be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter, in accordance with the terms of the Plan. Estimated recovery: 100%.
(b) Class 2 (First Lien Secured Claims — approximately $191.3 million): Impaired. Holders of Allowed Class 2 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims: (i) their pro rata share of 92% of the reorganized equity of reorganized Crestline Packaging Solutions LLC; and (ii) their pro rata share of the new first lien take-back term loan in the aggregate principal amount of $12.5 million.
(c) Class 3 (Second Lien Secured Claims — approximately $59.9 million): Impaired. Holders of Allowed Class 3 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims: (i) their pro rata share of 8% of the reorganized equity of reorganized Crestline Packaging Solutions LLC; and (ii) warrants to purchase an additional 5% of the reorganized equity, with a strike price equal to the plan equity value, subject to dilution by the management incentive plan described herein.
(d) Class 4 (General Unsecured Claims — approximately $14.8 million): Impaired. Holders of Allowed Class 4 Claims shall receive, in full and final satisfaction, settlement, release, and discharge of such claims, their pro rata share of a cash pool in the aggregate amount of $1.5 million (estimated recovery approximately 10.1%).
(e) Class 5 (Intercompany Claims): Intercompany Claims shall be reinstated or cancelled at the sole discretion of the reorganized Debtors, in each case effective on the Effective Date.
(f) Class 6 (Existing Equity Interests — Thornfield Capital Partners LP): Impaired. All existing equity interests in CPS Holdings Inc. held by Thornfield Capital Partners LP are hereby cancelled, extinguished, and of no further force or effect as of the Effective Date. Holders of Class 6 Interests shall receive no distribution of any kind under the Plan.
D. Plan Implementation
1. New First Lien Take-Back Term Loan
49. The Debtors and the reorganized Debtors, as applicable, are hereby authorized and directed, without further order of this Court and without the need for any further corporate or other organizational action, to enter into the new first lien take-back term loan credit agreement on the Effective Date, on the following terms and such other terms as set forth in the Plan Supplement:
(a) Administrative Agent: Ridgeline National Bank, N.A.
(b) Borrower: Reorganized Crestline Packaging Solutions LLC.
(c) Principal Amount: $12,500,000.
(d) Interest Rate: SOFR plus 550 basis points per annum, with a SOFR floor of 1.00%.
(e) Maturity Date: August 31, 2028 (five years from the anticipated Effective Date).
(f) Amortization: Annual amortization of 1.00% of the original principal amount ($125,000 per annum), payable in equal quarterly installments of $31,250, with the remaining outstanding principal balance due and payable on the Maturity Date.
(g) Security: First-priority lien on substantially all assets of reorganized Crestline Packaging Solutions LLC, subject to certain customary exceptions to be set forth in the new first lien take-back term loan credit agreement.
50. The terms and conditions of the new first lien take-back term loan credit agreement, substantially in the form set forth in the Plan Supplement, including all related security documents, guarantees, and ancillary agreements, are hereby approved. All liens and security interests granted pursuant to the new first lien take-back term loan credit agreement shall be deemed valid, binding, perfected, and enforceable upon execution, without the necessity of any further action by the Debtors, the reorganized Debtors, or the administrative agent, and without the necessity of any filings or recordings under applicable state or federal law (although the administrative agent is authorized to make such filings and recordings to the extent it deems appropriate).
2. Equity Distributions
51. On or as soon as reasonably practicable after the Effective Date, the reorganized Debtors shall issue and distribute ninety-two percent (92%) of the reorganized equity of reorganized Crestline Packaging Solutions LLC to holders of Allowed Class 2 First Lien Secured Claims, pro rata in accordance with the amount of each such holder's Allowed Class 2 Claim, and eight percent (8%) of the reorganized equity of reorganized Crestline Packaging Solutions LLC to holders of Allowed Class 3 Second Lien Secured Claims, pro rata in accordance with the amount of each such holder's Allowed Class 3 Claim, in each case in accordance with the terms and provisions of the Plan.
52. Warrants to purchase an additional five percent (5%) of the reorganized equity of reorganized Crestline Packaging Solutions LLC shall be issued and distributed to holders of Allowed Class 3 Second Lien Secured Claims, pro rata in accordance with the amount of each such holder's Allowed Class 3 Claim. Such warrants shall have a strike price equal to the plan equity value and shall be subject to dilution by the management incentive plan described in paragraph 56 below.
53. All reorganized equity and warrants issued and distributed pursuant to the Plan shall be issued without registration under the Securities Act of 1933, as amended, or any applicable state or local securities laws, in reliance upon Section 1145(a) of the Bankruptcy Code and/or other applicable exemptions from registration.
3. Cash Distributions
54. On or as soon as reasonably practicable after the Effective Date, the reorganized Debtors shall distribute $1,500,000 in cash on a pro rata basis to holders of Allowed Class 4 General Unsecured Claims, in accordance with the terms and provisions of the Plan. Any amounts allocable to Disputed Class 4 Claims shall be reserved and distributed in accordance with the Plan upon the allowance or disallowance of such Disputed Claims.
4. Cancellation of Existing Equity Interests
55. On the Effective Date, all existing equity interests in CPS Holdings Inc. held by Thornfield Capital Partners LP — which interests represent 100% of the equity of CPS Holdings Inc. and were acquired in connection with the 2017 leveraged buyout of Crestline Packaging Solutions LLC at an enterprise value of approximately $410.0 million, with an equity contribution by Thornfield of approximately $163.0 million — shall be and hereby are cancelled, extinguished, annulled, and of no further force or effect, and no holder thereof shall receive any distribution of any kind or nature under the Plan on account of such interests. All certificates, if any, representing such cancelled equity interests shall be deemed void and of no further effect.
5. Management Incentive Plan
56. The management incentive plan (the "MIP") described in the Plan and the Plan Supplement, which reserves ten percent (10%) of the reorganized equity of reorganized Crestline Packaging Solutions LLC for issuance to key employees of the reorganized Debtors following the Effective Date, is hereby approved. The principal terms of the MIP are as follows:
(a) Fifty percent (50%) of the MIP equity shall be subject to time-based vesting, with a three-year cliff vesting period commencing on the Effective Date.
(b) Fifty percent (50%) of the MIP equity shall be subject to performance-based vesting, tied to the achievement of EBITDA targets to be established by the new board of directors/managers of the reorganized Debtors.
(c) The specific participants in the MIP, and the allocation of MIP equity among such participants, shall be determined by the new board of directors/managers of the reorganized Debtors in its sole discretion.
(d) The MIP shall dilute all classes of reorganized equity on a pro rata basis, including the equity held by holders of Allowed Class 2 Claims and Allowed Class 3 Claims and the equity issuable upon exercise of the warrants issued to holders of Allowed Class 3 Claims.
6. Corporate Governance
57. On the Effective Date, the new organizational documents for reorganized Crestline Packaging Solutions LLC, including the Amended and Restated Operating Agreement, substantially in the form set forth in the Plan Supplement, shall become effective without any further action by any person or entity and without the need for any filings or recordings under applicable state law (except as may be required by the Ohio Secretary of State or the Delaware Secretary of State to reflect the reorganized structure of the Debtors).
58. The new board of directors/managers of the reorganized Debtors identified in the Plan Supplement is hereby approved and authorized to act on behalf of the reorganized Debtors in all respects, effective as of the Effective Date. The selection of the members of the new board is consistent with the interests of creditors and equity holders and with public policy.
E. DIP Facility
59. Upon the Effective Date, the DIP Facility — consisting of a $30.0 million senior secured superpriority revolving credit facility with Ridgeline National Bank, N.A. as administrative agent, bearing interest at SOFR plus 500 basis points, as authorized by the Interim DIP Order entered June 24, 2022 (Dkt. 29) and the Final DIP Order entered July 18, 2022 (Dkt. 58) — shall be indefeasibly repaid in full in cash and permanently terminated in accordance with the terms of the Plan. All liens and superpriority claims arising under or in connection with the DIP Facility shall be deemed satisfied, released, and discharged upon such repayment and termination.
F. Executory Contracts and Unexpired Leases
1. Assumed Contracts and Leases
60. The following executory contracts and unexpired leases, among others identified in the Plan Supplement, are hereby assumed by the reorganized Debtors pursuant to Section 365 of the Bankruptcy Code, effective as of the Effective Date, with the cure amounts set forth below or as otherwise specified in the Plan Supplement:
(a) Resin Supply Agreement with Northstar Polymers Inc. (Houston, Texas), dated March 1, 2019, with a five-year term. Cure amount: as set forth in the Plan Supplement. This agreement provides for the supply of high-density polyethylene resin and other polymer feedstocks critical to the Debtors' manufacturing operations.
(b) Equipment Lease (Master Lease) with Meridian Industrial Leasing Corp. for extrusion equipment at the Debtors' Plant 4 facility located at 1480 State Route 59, Ravenna, Ohio 44266. This lease has a seven-year term and requires monthly lease payments of $87,500. Cure amount: as set forth in the Plan Supplement.
(c) Warehouse Lease at 900 Darrow Road, Akron, Ohio 44305 with landlord Benchmark Real Estate Holdings LLC. This lease expires on December 31, 2025 and requires monthly rent of $42,000. Cure amount: $126,000, representing three months of prepetition rent arrears.
61. All other executory contracts and unexpired leases identified on the schedule of assumed contracts in the Plan Supplement are hereby assumed pursuant to Section 365 of the Bankruptcy Code, effective as of the Effective Date, with cure amounts as set forth therein. The cure amounts set forth in the Plan Supplement shall constitute the entire monetary obligation required under Section 365(b) of the Bankruptcy Code in connection with the assumption of such contracts and leases, and the counterparties to such contracts and leases are bound thereby.
2. Rejected Contracts and Leases
62. All executory contracts and unexpired leases identified on the schedule of rejected contracts in the Plan Supplement are hereby rejected pursuant to Section 365 of the Bankruptcy Code, effective as of the Effective Date. Any claims arising from the rejection of any such executory contract or unexpired lease shall be classified and treated as Class 4 General Unsecured Claims under the Plan, and any holder of such a rejection damage claim must file a proof of claim therefor within thirty (30) days after the Effective Date or such later date as may be ordered by this Court.
G. Administrative Expense Claims and Professional Fee Claims
63. All Allowed Administrative Expense Claims, including all Allowed professional fee claims, shall be paid in full in cash on the Effective Date or as soon as reasonably practicable thereafter, or as otherwise provided in the Plan or by further order of this Court. Administrative Expense Claims that are not paid on the Effective Date shall be paid in the ordinary course of the reorganized Debtors' business.
64. All professionals retained by the Debtors or by any official committee in these Chapter 11 cases shall file final fee applications for allowance of compensation and reimbursement of expenses for the period through and including the Effective Date within sixty (60) days after the Effective Date, in accordance with the procedures established by this Court and applicable provisions of the Bankruptcy Code, including Sections 330 and 331. The reorganized Debtors shall pay all Allowed professional fee claims within ten (10) business days of the entry of an order allowing such fees, or as otherwise agreed by the parties.
H. D&O Insurance
65. The Debtors and the reorganized Debtors, as applicable, are hereby authorized and directed to maintain the directors' and officers' liability insurance tail policy (the "D&O Tail Policy") issued by Apex Indemnity Insurance Company, an Illinois domestic stock insurance company, with offices at 233 South Wacker Drive, Suite 4800, Chicago, Illinois 60606, with an aggregate coverage limit of $15,000,000 and a tail premium of $1,200,000. The D&O Tail Policy shall not be cancelled, reduced, modified, or allowed to lapse without further order of this Court. The obligation of the Debtors and the reorganized Debtors to maintain the D&O Tail Policy shall survive confirmation of the Plan and the occurrence of the Effective Date.
I. Releases
1. Debtor Releases
66. On the Effective Date, and to the fullest extent permitted by applicable law, the Debtors, the reorganized Debtors, and their estates, on behalf of themselves and their predecessors, successors, and assigns, shall be deemed to have unconditionally and irrevocably released and forever discharged the Released Parties (as defined in the Plan) from any and all claims, demands, debts, rights, causes of action, liabilities, and obligations, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, based in whole or in part upon any act, omission, transaction, event, or other occurrence taking place on or before the Effective Date, including without limitation any and all claims and causes of action relating to or arising from:
(a) the 2017 leveraged buyout of Crestline Packaging Solutions LLC by Thornfield Capital Partners LP;
(b) the prepetition management and operation of the Debtors' business;
(c) the negotiation, execution, implementation, and performance of the RSA;
(d) the formulation, preparation, dissemination, and solicitation of the Plan and the Disclosure Statement;
(e) the administration of these Chapter 11 cases; and
(f) any other act or omission, transaction, agreement, event, or other occurrence relating to the Debtors taking place on or before the Effective Date.
67. The "Released Parties" under the Plan include, without limitation, each of the following parties and their respective current and former officers, directors, managers, members, partners, employees, advisors, agents, representatives, attorneys, and professionals, in each case solely in their capacity as such:
(a) The Debtors and their current and former officers and directors, including Marcus J. Reinholdt (Chief Executive Officer), Dana Kowalski (Chief Financial Officer), and Preston Yee (General Counsel);
(b) Thornfield Capital Partners LP and its affiliates, partners, members, and representatives, including Julian Ashford and Rebecca Strand;
(c) The members of the Ad Hoc Group of First Lien Lenders, including Blackmoor Capital Management LLC, Greystone Fixed Income Partners LP, and Wexford Opportunity Fund III LP, and their counsel, Hargrove, Mitchell & Saunders LLP;
(d) The members of the Ad Hoc Group of Second Lien Noteholders, including Fenwick Structured Credit Fund II LP and Millhaven Capital Advisors LLC, and their counsel, Pemberton & Locke LLP;
(e) Ridgeline National Bank, N.A., in its capacities as administrative agent and collateral agent under the Prepetition First Lien Credit Agreement, the Prepetition Revolving Credit Facility, and the DIP Facility;
(f) Continental Fiduciary Trust Company, in its capacity as indenture trustee under the Prepetition Second Lien Notes Indenture;
(g) Calderwood & Harkness LLP, Kellner & Hartwick LLP, Aldersgate Advisory Group LLC, Dralvecen Reyes Linley CPAs LLP & Associates LLP, and Pinnacle Claims Administration LLC, each in their respective capacities as professionals retained by the Debtors in these Chapter 11 cases; and
(h) Each of the foregoing parties' respective officers, directors, employees, advisors, agents, and professionals, in each case solely in their capacity as such.
2. Third-Party Releases
68. On the Effective Date, and to the fullest extent permitted by applicable law, each holder of a claim against or interest in the Debtors that (i) voted to accept the Plan and (ii) did not affirmatively opt out of the release provisions contained in the Plan by checking the applicable box on the ballot (collectively, the "Releasing Parties") shall be deemed to have unconditionally and irrevocably released and forever discharged the Released Parties from any and all claims, demands, debts, rights, causes of action, liabilities, and obligations, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such Releasing Party would have been legally entitled to assert (whether individually or collectively), based in whole or in part upon any act, omission, transaction, event, or other occurrence taking place on or before the Effective Date, relating in any manner to the Debtors, these Chapter 11 cases, the Plan, the Disclosure Statement, or any of the transactions contemplated thereby.
69. The Court finds that the third-party releases set forth in the Plan are (i) an integral element of the Plan and the overall restructuring, without which the consenting parties would not have agreed to the terms of the Plan; (ii) given in exchange for adequate and fair consideration, including the substantial contributions made by the Released Parties to the reorganization process; (iii) in the best interests of the Debtors, their estates, and all parties in interest; (iv) fair, equitable, and reasonable; and (v) appropriately tailored and consensual in nature, inasmuch as they apply only to holders of claims and interests who voted to accept the Plan and who did not affirmatively opt out of the release provisions.
J. Exculpation