Case Doc 208 Filed 02/23/18 Page 1 of 51. UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division

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1 Case Doc 208 Filed 02/23/18 Page 1 of 51 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: THE CONDOMINIUM ASSOCIATION OF THE LYNNHILL CONDOMINIUM, Debtor. 1 Case No Chapter 11 DEBTOR S MEMORANDUM OF LAW IN SUPPORT OF THE FIRST AMENDED JOINT CHAPTER 11 PLAN OF (I) THE CONDOMINIUM ASSOCIATION OF THE LYNNHILL CONDOMINIUM, AND (II) AHH16 DEVELOPMENT, LLC, DATED AS OF FEBRUARY 12, 2018 Pillsbury Winthrop Shaw Pittman LLP 1200 Seventeenth Street, NW Washington, DC Tel (202) Fax (202) Counsel for the Debtor 1 The Debtor s federal identification number is

2 Case Doc 208 Filed 02/23/18 Page 2 of 51 Table of Contents Preliminary Statement...1 Brief Factual Background...3 This Memorandum and Supporting Declarations...6 Overview and Acceptance of the Plan...6 Modifications to the Plan...8 The Plan Satisfies Section A. The Plan Complies with the Applicable Provisions of Title 11 (Section 1129(a)(1))...9 Page B. Debtor s Compliance with the Applicable Provisions of the Bankruptcy Code (Section 1129(a)(2))...15 C. Good Faith (Section 1129)(a)(3))...18 D. Payments for Services and Expenses (Section 1129(a)(4))...19 E. Identification of Directors, Officers and Insiders (Section 1129(a)(5))...20 F. Rate Changes (Section 1129(a)(6))...21 G. The Best Interests Test (Section 1129(a)(7))...21 H. Acceptance by Impaired Classes (Section 1129(a)(8))...23 I. Treatment of Priority Claims (Section 1129(a)(9))...24 J. Acceptance of at Least an Impaired Class (Section 1129(a)(10))...25 K. Feasibility (Section 1129(a)(11))...25 L. Payment of Certain Fees (Section 1129(a)(12))...27 M. Continuation of Retiree Benefits (Section 1129(a)(13))...27 N. Payment of Domestic Support Obligations (Section 1129(a)(14))...28 O. Payment of a Claim by an Individual Debtor (Section 1129(a)(15))...28 P. Transfers of Property to Comply with Applicable Nonbankruptcy Law (Section 1129(a)(16))...28 Q. Sections 1129(c), 1129(d), and 1129(e) are Satisfied and Do Not Apply...28 The Plan Satisfies the Cramdown Requirements...29 A. The Plan Does Not Unfairly Discriminate...29 B. The Plan is Fair and Equitable...31

3 Case Doc 208 Filed 02/23/18 Page 3 of 51 The Objections to the Plan Should be Overruled...32 A. The Chapter 11 Plan Is Consistent with the Distribution Scheme Set Forth In the Maryland Condominium Act...32 B. Class 3 Creditors Are Not Entitled To Interest...34 C. The Plan Satisfies the Best Interests Test...35 D. The Plan Has Been Proposed In Good Faith and the Disclosure Statement Provides Adequate Information...36 E. Nagle s Claim Is Unimpaired, Or Alternatively, Nagle Will Receive The Indubitable Equivalent of its Claim...38 F. The U.S. Trustees Objections Have Been Sufficiently Addressed or Otherwise Should be Overruled...38 G. The Releases in the Plan Are Appropriate...39 H. The U.S. Trustee s Other Objections Should Be Overruled or Will Be Resolved...41 I. The Objections By Prince George s County Should be Overruled...42 Conclusion...43 ii

4 Case Doc 208 Filed 02/23/18 Page 4 of 51 Table of Authorities Cases Bank of Am. Nat l Trust & Sav. Ass n v. 203 N LaSalle St. P ship, 526 U.S. 434 (1999)...9, 30 Behrmann v. National Heritage Foundation, 663 F.3d 704 (4th Cir. 2011)...9, 39, 40 Bryson Props., 961 F.2d at , 29 Class Five Nev. Claimants v. Dow Corning Corp. (In re Dow Corning Corp.), 280 F.3d 648 (6th Cir. 2002)...39 John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs., 987 F.2d 154 (3d Cir. 1993)...10 Hanson v. First Bank of S.D., N.A., 828 F.2d 1310 (8th Cir. 1987)...18 In re 203 N. LaSalle St. P ship, 126 F.3d 955 (7th Cir. 1997)...9, 22, 30 In re Adamson Co., Inc., 42 B.R. 169 (Bankr. E.D. Va. 1984)...29 In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989)...30, 31 In re Bally Total Fitness of Greater New York, Inc., 2007 WL , at *3 (Bankr. S.D.N.Y. Sept. 17, 2007)...9 In re Brotby, 303 B.R. 177, 191 (B.A.P. 9th Cir. 2003)...26 In re Catron, 186 B.R. 194 (Bankr. E.D. Va. 1995)...29 In re DeLuca, 1996 WL , at *17 (Bankr. E.D. Va. Apr. 12, 1996)...26 In re Dunes Hotel Associates, 188 B.R. 174 (Bankr. D.S.C. 1995)...25 In re Eagle-Picher Indus., Inc., 203 B.R. 256 (S.D. Ohio 1996)...18, 19 In re Econ. Cast Stone Co., 16 B.R. 647 (Bankr. E.D. Va. 1981)...23, 25 In re Exide Techs., 303 B.R. 48 (Bankr. D. Del. 2003)...11 In re FINOVA Grp., Inc., 304 B.R. 630 (D.Del. 2004)...13 In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996)...30 In re Future Energy Corp., 83 B.R. 470 (Bankr. S.D. Ohio 1988)...19, 22 In re Heritage Organization, LLC, 375 B.R. 230 (Bankr. N.D. Tex. 2007)...26 iii

5 Case Doc 208 Filed 02/23/18 Page 5 of 51 In re Leslie Fay Cos., 207 B.R. 764 (Bankr. S.D.N.Y. 1997)...22, 30 In re Lettick Typografic, Inc., 103 B.R. 32, 38 (Bankr. D. Conn. 1989) S. Rep. No , at 126 (1978)...25 In re Mirant Corp., 2007 WL , at *7 (Bankr. N.D. Tex. Apr. 27, 2007)...10 In re Pero Bros. Farms, Inc., 90 B.R. 562 (Bankr. S.D. Fla. 1988)...26 In re PWS Holding Corp., 228 F.3d 224 n.23 (3d Cir. 2000)...15 In re Rivers End Apts., Ltd., 167 B.R. 470 (Bankr. S.D. Ohio 1994)...30 In re Schwarzmann, 203 B.R. 919 (Bankr. E.D. Va. 1995)...9, 29 In re Stations Holding Co., No , 2002 WL , at *3 (Bankr. D. Del. Sept. 30, 2002)...15 In re Texaco Inc., 84 B.R. 893, 906 (Bankr. S.D.N.Y. 1988)...16 In re Trans. World Airlines, Inc., 185 B.R. 302 (Bankr. E.D. Mo. 1995)))...15 In re Walker, 165 B.R. 994 (E.D. Va. 1994)...18, 22 In re Woodscape Ltd. Partnership, 134 B.R. 165 (Bankr. D. Md. 1991)...9 Kane v. Johns-Manville Corp., 843 F.2d 636 (2d. Cir. 1988)...22 Koelbl v. Glessing (In re Koelbl), 751 F.2d 137 (2d Cir. 1984)...18 Liberty Nat l Enters. v. Ambanc La Mesa Ltd. P ship (In re Ambanc La Mesa Ltd. P ship), 115 F.3d 650 (9th Cir. 1997)...22 Matter of 47th and Belleview Partners, 95 B.R. 117 (Bankr. W.D. Mo. 1988)...26 Mercury Capital Corp. v. Milford Conn. Assoc., L.P., 354 B.R. 1 (D. Conn. 2006)...26 National Heritage Foundation, 663 F.3d at SK-Palladin Partners, L.P. v. Platinum Entm t, Inc., No. 01 C WL , at *4 (N.D. Ill. Dec. 13, 2001)...22 Travelers Ins. Co. v. Bryson Props., XVIII (In re Bryson Props., XVIII), 961 F.2d 496 (4th Cir. 1992)...10 Statutes 11 U.S.C. 507(a)(2)...24 iv

6 Case Doc 208 Filed 02/23/18 Page 6 of U.S.C. 510(b) U.S.C , 10, U.S.C , U.S.C. 1123(a)...11, U.S.C. 1123(a)(1)...11, U.S.C. 1123(a)(2) U.S.C. 1123(a)(3) U.S.C. 1123(a)(4) U.S.C. 1123(a)(5) U.S.C. 1123(a)(6) U.S.C. 1123(a)(7) U.S.C. 1123(a)(8) U.S.C. 1123(b) U.S.C. 1123(b)(1) U.S.C. 1123(b)(2)...14, U.S.C. 1123(b)(3)(B) U.S.C. 1123(b)(6) U.S.C , U.S.C. 1125(b) U.S.C U.S.C. 1126(f)...23, U.S.C. 1126(g) U.S.C. 1129(a)...9, 23, U.S.C. 1129(a)(1)...9, U.S.C. 1129(a)(2)...15, 16, U.S.C. 1129(a)(3)...18, 19, U.S.C. 1129(a)(4)...19, U.S.C. 1129(a)(5)...20, U.S.C. 1129(a)(5)(A)(i) U.S.C. 1129(a)(5)(A)(ii) U.S.C. 1129(a)(5)(B) U.S.C. 1129(a)(6) U.S.C. 1129(a)(7)...21, 22, 35 v

7 Case Doc 208 Filed 02/23/18 Page 7 of U.S.C. 1129(a)(7)(A)(ii) U.S.C. 1129(a)(8)...23, U.S.C. 1129(a)(9)...24, U.S.C. 1129(a)(9)(A) U.S.C. 1129(a)(9)(B) U.S.C. 1129(a)(9)(C) U.S.C. 1129(a)(10) U.S.C. 1129(a)(11)...25, 26, U.S.C. 1129(a)(12) U.S.C. 1129(a)(13)...27, U.S.C. 1129(a)(14) U.S.C. 1129(a)(15) U.S.C. 1129(a)(16) U.S.C. 1129(b)...9, 29, U.S.C. 1129(b)(1)...23, 29, U.S.C. 1129(b)(2)(A)(i)(II) U.S.C. 1129(b)(2)(A)(iii) U.S.C. 1129(b)(2)(B) U.S.C Bankruptcy Rule 3017 and Collier on Bankruptcy (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2009)...26 H.R. Rep. No , at 412 (1977)...9 U.S.C.C.A.N. 5787, U.S.C.C.A.N. 5963, Md. Code Ann., Real Prop. 1123(e)...32 vi

8 Case Doc 208 Filed 02/23/18 Page 8 of 51 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND Greenbelt Division In re: THE CONDOMINIUM ASSOCIATION OF THE LYNNHILL CONDOMINIUM, Case No Chapter 11 Debtor. 2 DEBTOR S MEMORANDUM OF LAW IN SUPPORT OF THE FIRST AMENDED JOINT CHAPTER 11 PLAN OF (I) THE CONDOMINIUM ASSOCIATION OF THE LYNNHILL CONDOMINIUM, AND (II) AHH16 DEVELOPMENT, LLC, DATED AS OF FEBRUARY 12, 2018 The Condominium Association of the Lynnhill Condominium (the Debtor ), as debtor and debtor-in-possession, and pursuant to section 1129 of the U.S. Bankruptcy Code, 3 hereby submits this memorandum (the Memorandum ) 4 in support of confirmation of the First Amended Joint Chapter 11 Plan of (I) the Condominium Association of the Lynnhill Condominium, and (II) AHH16 Development, LLC, dated as of February 12, 2018 (as it may be further amended, supplemented, or otherwise modified, the Plan ) and in response to objections filed in opposition to confirmation of the Plan. In support thereof, the Debtor respectfully states as follows: PRELIMINARY STATEMENT 1. Although this chapter 11 case was filed on January 10, 2018 (the Petition Date ), it in fact commenced nearly nine months ago. Faced with a nearly vacant and ultimately completely vacant, decaying and nearly condemned condominium complex, and no buyer 2 The Debtor s federal identification number is U.S.C (2012) (the Bankruptcy Code ). Unless otherwise noted, all section references in this Memorandum are to sections of the Bankruptcy Code. 4 Capitalized terms used in this Memorandum that are not otherwise defined have the meaning given to such terms in the Plan or Solicitation Procedures Order (defined below), as applicable.

9 Case Doc 208 Filed 02/23/18 Page 9 of 51 willing to pay even a dime for individual units, the Debtor embarked on a thoughtful strategy, the intended culmination of which is the confirmation of a plan of reorganization, much like the Plan. The steps required to get here were significant, requiring direction and decisions from a volunteer board of directors, predicate state court litigation, a pre-bankruptcy marketing process, the filing of this case, a post-bankruptcy marketing and auction process, and ultimately the confirmation of the Plan. 2. As detailed below, the results of these efforts have been no less than remarkable. 3. The state-court litigation strategy was a success as the Debtor obtained state court authority to sell the condominium complex as a whole and to commence this chapter 11 case for the purpose of effectuating a sale of a unified property under one real estate deed/title and a reorganization plan. 4. The sales effort was a success, resulting in competitive bidding and a purchase price of more than $17 million for property that was otherwise worthless on the Petition Date. This purchase price makes it abundantly clear that the non-unit owner allegedly secured creditors of the Debtor, classified in Classes 5 and 6 under the Plan, will be paid their full secured claim to the extent allowed, the non-unit owner unsecured creditors of the Debtor, classified in Class 3 under the Plan, should be paid the full amounts of their allowed claims, and unit owner creditors (and their individual creditors secured by their individual units) will realize some value as well. Furthermore, no unit owner will see the value attributed to its unit used to pay the unique debts of another unit owner attributed to its unit. 2

10 Case Doc 208 Filed 02/23/18 Page 10 of Subject to this Court s approval, the Plan process has been equally successful. Of the approximately parties who received solicitation packages and the 144 parties who voted, only 2 voted against the Plan, and only 1 class of creditors, Class 6 consisting of a single creditor, has voted against the Plan. For the reasons set forth below, however, Class 6 should be deemed unimpaired and conclusively presumed to have voted for the Plan. The recent modifications to the Plan secures the Class 6 claim with cash, and if the Class 6 claimant proves the amount of its claim and that it is properly secured, then subject to the Debtor s objections to the claim and counterclaims, if any the Class 6 claimant will receive the amount of its allowed claim plus interest. But even if this treatment is not sufficient to make Class 6 unimpaired, it surely is sufficient to cram down the Plan over its dissenting vote. Whatever else the indubitable equivalent is, it is cash being set aside in the asserted amount of the Class 6 claim. 6. Similarly, the objections that have been filed to the Plan either have been resolved (or nearly resolved) consensually or they are ill-founded. None overcomes the results outlined above or the fact that the Plan will satisfy the Debtor s secured claims (if any) with interest, pay the Debtor s unsecured creditors the full amount of their ultimately allowed claims in cash, and pay meaningful value to the Debtors unit-owner creditors (and their creditors secured by their individual units). 7. Consequently, for the reasons detailed herein, and based on the various declarations filed in support of the confirmation, the Court should confirm the Plan. 5 This figure includes parties that received more than one solicitation package because of multiple addresses or ownership of multiple units. 3

11 Case Doc 208 Filed 02/23/18 Page 11 of 51 BRIEF FACTUAL BACKGROUND 8. On the Petition Date, the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtor is an unincorporated condominium association owning and controlling certain real estate, amenities and improvements (including residential units) located at 3103 and 3107 Good Hope Avenue, Temple Hills, Maryland (the Property ). On the Petition Date, the Debtor also filed its Joint Chapter 11 Plan of (I) The Condominium Association of the Lynnhill Condominium, and (II) AHH16 Development, LLC, Dated as of January 10, 2018 [Doc. 28], its associated disclosure statement [Doc. 27] (the Disclosure Statement ), and a motion seeking, among other things, conditional approval of the Disclosure Statement [Doc. 26]. 9. The Plan generally provides for the sale of the Property free and clear of liens, claims, encumbrances and other interests, with the proceeds (after payment of sale costs and administrative expenses) to be paid to creditors and unit owners in accordance with the lien, statutory and other priorities required under applicable bankruptcy and non-bankruptcy law. Subject to the possibility that a competitive bidding process for the Property might be required, the Plan contemplated and provided for the sale of the Property to AHH16 Development, LLC ( AHH ) for a purchase price of $13.2 million, subject to various adjustments. 10. At a hearing on January 12, 2018, the Court indicated that it would conditionally approve the Disclosure Statement, provided that the Debtor made certain modifications to provide additional information. The Debtor filed revised versions of the Plan and Disclosure Statement on January 17, 2018 [Doc. 65] and January 18, 2018 [Doc. 68], respectively. 11. On January 18, 2018, the Court entered an order (the Solicitation Procedures Order ) [Doc. 72] conditionally approving the Disclosure Statement, authorizing the Debtor to 4

12 Case Doc 208 Filed 02/23/18 Page 12 of 51 commence solicitation, and scheduling the hearing on final approval of the Disclosure Statement and confirmation of the Plan for February 27, 2018 at 10:00 a.m. (Eastern Time) (as adjourned from time to time, the Combined Hearing ). Pursuant to the Solicitation Procedures Order, the Debtor commenced and completed solicitation of the Plan. 12. Shortly after the Petition Date, counsel for Dragone Realty, LLC ( Dragone ), contacted counsel to the Debtor expressing an interest in purchasing the Property. After rounds of informal bidding between AHH and Dragone, it became clear that a formal auction process would be necessary. As such, and with AHH s consent, the Debtor filed a motion seeking approval of bidding procedures and designating AHH as the stalking horse bidder [Doc. 93]. On February 5, 2018, the Court entered an order approving the bidding procedures, designating AHH as the stalking horse and scheduling an auction for February 20, 2018 (the Auction ) [Doc. 143]. Dragone was the successful bidder at the Auction with a final bid for the Property of $17,050,000. AHH was the back-up bidder with a final bid for the Property of $16,900,000 [Doc. 186]. 13. After entry of the Solicitation Procedures Order, Nagle & Zaller, P.C. ( Nagle ) and Potomac Electric Company ( PEPCO ) approached the Debtor regarding informal objections and concerns regarding their classification and treatment under the Plan. In an effort to avoid unnecessary litigation over whether Nagle and PEPCO should be separately classified under the Plan, the Debtor filed an amended version of the Plan, which added a Class 5 solely for PEPCO and a Class 6 solely for Nagle and provides cash security for each of these claims should they be allowed as secured claims in the amounts asserted by PEPCO and Nagle, respectively. 14. Sufficient acceptances of the Plan were timely received to support confirmation of the Plan, with 100% of the members of Class 2 (Secured Claims), Class 4 (Former Resident 5

13 Case Doc 208 Filed 02/23/18 Page 13 of 51 Claims), and Class 5 (PEPCO s Claim) voting to accept the Plan. In addition, approximately 86% (in number) and 73% in amount of the members of Class 3 (General Unsecured Claims) voted to accept the Plan, with only a single vote cast against the Plan. Despite the Debtor s efforts to placate Nagle by amending the Plan to provide for separate treatment of its claim, Nagle voted against the Plan, which represents the only potentially non-accepting class. For the reasons discussed below, the Debtor believes that the treatment provided for Nagle s Class 6 claim makes that claim unimpaired and so Nagle s no vote should be disregarded and Class 6 deemed to have accepted the Plan. 15. Objections to confirmation of the Plan or approval of the Disclosure Statement were filed by the U.S. Trustee [Doc. 185], Washington Suburban Sanitary Commission ( WSSC ) [Docs. 187 and 188], Nagle [Docs. 189 and 190], and Prince George s County, Maryland [Doc. 203]. 6 The Debtor is actively working with each of the objecting parties to resolve the objections, and hopes to announce resolutions at, or if possible before, the Combined Hearing. In the event such resolutions are not reached, however, the Debtor s responses are set forth herein. THIS MEMORANDUM AND SUPPORTING DECLARATIONS 16. This Memorandum addresses the requirements set forth in the Bankruptcy Code for confirmation of the Plan. In support of this Memorandum and confirmation of the Plan, the Debtor has filed declarations by Stanley Briscoe (the Acting President of the Debtor), and Robin Williams (the Debtor s court-approved real estate broker), and the certification of Jeffrey Miller of Kurtzman Carson Consultants LLC ( KCC ), the Debtor s balloting agent, certifying the methodology for the tabulation of votes on and the results of voting with respect to the Plan 6 The Debtor extended the objection deadline for Prince George s County until 5:00 p.m. (ET) on February 22,

14 Case Doc 208 Filed 02/23/18 Page 14 of 51 (the Miller Declaration ). The Debtor further relies on the declaration of Vito Dragone III in support of the sale of the Property and confirmation of the Plan. OVERVIEW AND ACCEPTANCE OF THE PLAN 17. As noted, the Plan generally provides for the sale of the Property free and clear of liens, claims, encumbrances and other interests, with the proceeds (after payment of sale costs and administrative expenses) to be paid to creditors and unit owners in accordance with the lien, statutory and other priorities required under applicable bankruptcy and non-bankruptcy law. The Plan does not include any acknowledgement or agreement regarding the extent, validity or priority (secured or otherwise) of any party s claim or interest. The Plan expressly contemplates that, after both confirmation and the sale of the Property, any disputes regarding the extent, validity, security for or priority of a claim will be resolved by this Court upon full and fair hearings to all concerned. Indeed, claim, lien, or priority issues do not need to be resolved as a condition to confirmation of the Plan or the sale of the Property. Moreover, given the results of the Auction, which will provide in excess of $3 million in additional funds than anticipated on the Petition Date, the Debtor believes it is likely that there will sufficient funds to satisfy the claims of the Debtor s creditors. With respect to the claims against the individual units and the funds that will be distributed to the former unit owners, those amounts are still unknown, but will be substantially higher than originally anticipated. 18. The Debtor believes that the Plan achieves its ultimate goal of maximizing the value of the Property for the benefit of all parties in interest. The Plan, as amended and modified by the Auction results, is the result of lengthy, good-faith, arm s-length negotiations between the Debtor, AHH, Dragone, the U.S. Trustee, and numerous other creditors and parties in interest. As illustrated in the table below, the holders of claims in Classes, 2, 3, 4, and 5 voted to accept 7

15 Case Doc 208 Filed 02/23/18 Page 15 of 51 the Plan. In total, 144 ballots were counted, and of that amount, 142 were cast in favor of the Plan, while only 2 votes were cast against the Plan. Total Ballots Received Accept Reject Number Amount Number Amount Class 2 Secured Claims 9 (100.00%) $13, (100.00%) $0.00 (0.00%) $0.00 (0.00%) Class 3 General Unsecured Claims 6 (85.71%) $663, (72.88%) 1 (14.29%) $246, (27.12%) Class 4 Former Resident Claims 126 (100.00%) $ (100.00%) $0.00 (0.00%) $0.00 (0.00%) Class 5 PEPCO s Claim 1 (100.00%) $651, (100.00%) $0.00 (0.00%) $0.00 (0.00%) Class 6 Nagle & Zaller s Claims 0 (0.00%) $0.00 (0.00%) 1 (100.00%) $145, (100.00%) MODIFICATIONS TO THE PLAN 19. Although the Plan includes certain revisions added since solicitation of the Plan, for the reasons set forth in the Debtor's Motion for an Order Determining that Proposed Modifications to the Joint Chapter 11 Plan of (I) The Condominium Association of the Lynnhill Condominium, and (II) AHH16 Development, LLC, dated January 10, 2018, Are Neither Material nor Adverse (Doc. 164) (the Plan Modification Motion ), the Debtor submits that no re-solicitation is required. The Plan Modification Motion will be considered at the Combined Hearing. The Debtor will file a further amended Plan, among other things, to reflect the sale of the Property to Dragone and resolutions reached with parties who objected to the Plan; these modifications will not require re-solicitation because, among other reasons, section 12.4 of the 8

16 Case Doc 208 Filed 02/23/18 Page 16 of 51 Plan contemplated an auction process and the possibility of the sale of the Property to the successful bidder at any such auction of the Property. THE PLAN SATISFIES SECTION To confirm the Plan, the Court must find, by a preponderance of the evidence, that both the Plan and the Debtor are in compliance with each of the applicable requirements of section 1129(a) of the Bankruptcy Code. See Behrmann v. National Heritage Foundation, 663 F.3d 704, 710 (4th Cir. 2011); In re Woodscape Ltd. Partnership, 134 B.R. 165, 170 (Bankr. D. Md. 1991) (a reorganization plan to be confirmed must meet the requisites of section 1129); In re Schwarzmann, 203 B.R. 919 (Bankr. E.D. Va. 1995) (a chapter 11 plan must meet all of the elements of section 1129 to be confirmed); see also In re Bally Total Fitness of Greater New York, Inc., 2007 WL , at *3 (Bankr. S.D.N.Y. Sept. 17, 2007) ( The Debtors, as proponents of the Plan, have the burden of proving the satisfaction of the elements of Sections 1129(a) and (b) of the Bankruptcy Code by a preponderance of the evidence. ); In re 203 N. LaSalle St. P ship, 126 F.3d 955, 960 (7th Cir. 1997) (the plan s proponent must show that the plan satisfies all the requirements of section 1129(a)), rev d on other grounds sub nom. Bank of Am. Nat l Trust & Sav. Ass n v. 203 N LaSalle St. P ship, 526 U.S. 434 (1999). Further, a court will confirm a chapter 11 plan meeting all of the requirements of subsection 1129(a), with the exception of subsection (a)(8), if the requirements of section 1129(b) are satisfied. As set forth below, the Plan should be confirmed because the Debtor meets the requirements of section 1129(a), and, if it should be determined to apply, and section 1129(b), as well. A. The Plan Complies with the Applicable Provisions of Title 11 (Section 1129(a)(1)). 21. Section 1129(a)(1) requires that a plan comply with the applicable provisions of the Bankruptcy Code. 11 U.S.C. 1129(a)(1). The legislative history of section 1129(a)(1) explains that this provision encompasses the requirements of sections 1122 and 1123, which 9

17 Case Doc 208 Filed 02/23/18 Page 17 of 51 govern classification of claims and interests and the contents of the plan, respectively. See S. Rep. No , at 126 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5912; H.R. Rep. No , at 412 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6368; see also In re Mirant Corp., 2007 WL , at *7 (Bankr. N.D. Tex. Apr. 27, 2007) (finding that the objective of section 1129(a)(1) is to ensure compliance with the Bankruptcy Code provisions regarding classification of claims or interests and plan contents). Accordingly, the determination of whether the Plan complies with section 1129(a)(1) requires an analysis of sections 1122 and As explained below, the Plan complies with sections 1122 and 1123 in all respects and, therefore, satisfies the requirements of section 1129(a)(1). i. Classification of Claims and Interests (Section 1122). 22. The Plan satisfies section 1122, which provides that a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class. 11 U.S.C. 1122(a). 23. Courts in this Circuit and elsewhere have recognized that, under section 1122, plan proponents have significant flexibility in placing claims into different classes, provided there is a rational legal or factual basis to do so and all claims or interests within a particular class are substantially similar. See, e.g., Travelers Ins. Co. v. Bryson Props., XVIII (In re Bryson Props., XVIII), 961 F.2d 496, 503 (4th Cir. 1992) (holding that section 1122 of the Bankruptcy Code grants the proponent of a plan considerable discretion to classify claims and interests according to the facts and circumstances of the case (internal quotations omitted)); see also John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs., 987 F.2d 154, 159 (3d Cir. 1993) (noting that a classification scheme is permissible if a legal difference exists between the classes). 10

18 Case Doc 208 Filed 02/23/18 Page 18 of Article 2 of the Plan provides for the separate classification of claims against the Debtor based upon differences in the legal nature or priority of such claims. Aside from Administrative Claims, Priority Tax Claims (which are not classified in accordance with section 1123(a)(1)), and DIP Claims, the claims against the Debtor have been assigned to separate numbered Classes, as detailed in the chart below, based on the type of claim involved. The classification of claims against the Debtor is as follows: Class Number Description Impairment Entitled to Vote? Class 1 Priority Non-Tax Claims Unimpaired No Class 2 Secured Claims Impaired Yes Class 3 General Unsecured Impaired Yes Claims Class 4 Former Residents Claims Impaired Yes Class 5 PEPCO s Claim Impaired Yes Class 6 Nagle & Zaller s Claim Impaired 7 Yes 25. The claims placed in each Class are substantially similar to other claims, as the case may be, in each such Class. Valid factual and legal reasons exist for separately classifying the various Classes of claims created under the Plan, and the Debtor s separate classification of claims by these Classes does not unfairly discriminate between the holders of claims. The Debtor s classification of claims does not prejudice the rights of holders of claims and is 7 The Debtor believes that the modification to the Plan to separately classify Nagle s claim and place an amount sufficient to pay Nagle s claim in full in an interest bearing account rendered Nagle s claim unimpaired and thus Nagle (and Class 6) should be deemed to have accepted the Plan. Even if Class 6 is determined to be impaired, the Plan satisfies the cramdown requirements as set forth below. 11

19 Case Doc 208 Filed 02/23/18 Page 19 of 51 consistent with the requirements of the Bankruptcy Code. See In re Exide Techs., 303 B.R. 48, 76 (Bankr. D. Del. 2003) (finding that the classification of claims and interests was proper because it took into account the Bankruptcy Code s priority rules and general principles of equitable subordination from section 510(b)). Further, the treatment of each claim within a Class is the same as the treatment of each other claim in that Class, unless the holder of a claim agrees to less favorable treatment on account of its claim. By recognizing the differing legal and equitable rights of the holders of claims, the Debtor proposes a classification scheme that fits well within the flexible standard of section ii. Mandatory Contents of the Plan. 26. Section 1123(a) identifies seven requirements for the contents of a plan of reorganization or liquidation for the Debtor. 8 Specifically, it requires that a plan: (1) designate classes of claims and interests; (2) specify unimpaired classes of claims and interests; (3) specify treatment of impaired classes of claims and interests; (4) provide for equality of treatment within each class; (5) provide adequate means for the plan s implementation; (6) provide for the prohibition of nonvoting equity securities and provide an appropriate distribution of voting power among the classes of securities; and (7) contain only provisions that are consistent with the interests of the debtor s creditors and equity security holders and with public policy with respect to the manner of selection of the reorganized company s officers, directors or trustee. See 11 U.S.C. 1123(a). The Plan fully complies with each applicable requirement of section 1123(a) for the following reasons. 8 Section 1123(a)(8) also includes an eighth requirement which is applicable only in cases in which the debtor is an individual. Because the Debtor is not an individual, section 1123(a)(8) is not applicable and is not addressed in this Memorandum. 12

20 Case Doc 208 Filed 02/23/18 Page 20 of First, Article 2 of the Plan designates six Classes of claims, as required by section 1123(a)(1), in compliance with section 1122 as discussed above. 28. Second, the Plan specif[ies] any class of claims or interests that is not impaired under the plan, as required by section 1123(a)(2). Specifically, Article 4.1 of the Plan specifies that Class 1 is Unimpaired. 29. Third, the Plan specif[ies] the treatment of any class of claims or interests that is impaired under the plan, as required by section 1123(a)(3). Specifically, the Plan designates Class 2, Class 3, Class 4, Class 5 and Class 6 as Impaired, and Articles 4.2, 4.3, 4.4, 4.5, and 4.6 of the Plan specify the treatment for each of these Impaired Classes. 30. Fourth, the Plan provide[s] the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest, as required by section 1123(a)(4); see also In re FINOVA Grp., Inc., 304 B.R. 630, 637 (D.Del. 2004) ( The requirements of Section 1123 do not require the parties to receive equal payment.... ). Pursuant to the Plan, the treatment of each claim against the Debtor in each respective Class is the same as the treatment of each other claim in such Class, unless the holder of a particular claim has agreed to less favorable treatment of such claim. See Plan, Art Fifth, the Plan provides adequate means for its implementation, as required by section 1123(a)(5). Article 5 of the Plan, entitled Means for Implementation of the Plan, provides for (i) the sale of the Property, (ii) the unification of title of the Residential Units and the Property; (iii) the release of any and all existing liens on the Property or the Residential Units and the reattachment of those liens to the Net Sale Proceeds or the Fractional Sale Proceeds, respectively, with the same priority, validity, force and effect as they now have against the 13

21 Case Doc 208 Filed 02/23/18 Page 21 of 51 Property or the Residential Units, respectively; (iv) the establishment of certain reserves and escrow accounts; and (v) the extinguishment of the condominium regime to the extent not already effectuated. All funds necessary for the Debtor to make distributions pursuant to the Plan will be obtained from Net Sale Proceeds from the sale of the Property. 32. Sixth, because the Debtor is an unincorporated condominium association and not an entity of the type described in section 1123(a)(6), section 1123(a)(6) is inapplicable. 33. Seventh, the Debtor s current directors and officers will remain in their respective positions until the Debtor s case is closed, which is consistent with the interests of creditors and with public policy as required by section 1123(a)(7). iii. Discretionary Contents of the Plan (Section 1123(b)) 34. Section 1123(b) sets forth certain permissible provisions that may be incorporated into a chapter 11 plan, but which are not mandatory. See 11 U.S.C. 1123(b). The Plan complies with Section 1123(b) and contains certain discretionary provisions. 35. Section 1123(b)(1) provides that a plan may impair or leave unimpaired any class of claims, secured or unsecured, or of interests. 11 U.S.C. 1123(b)(1). Article 4 of the Plan specifies that Class 1 is unimpaired under the Plan, and designates Class 2, Class 3, Class 4, Class 5, and Class 6 as impaired. Accordingly, the Plan is consistent with Section 1123(b)(1) of the Bankruptcy Code. 36. Section 1123(b)(2) allows a plan to provide for the assumption, assumption and assignment, or rejection of executory contracts and unexpired leases pursuant to section 365. Consistent with section 1123(b)(2), Article 6 of the Plan provides that the Confirmation Order shall constitute an order under section 365 of the Bankruptcy Code rejecting all pre-petition executory contracts and unexpired leases to which the Debtor is a party, to the extent such contracts or leases are executory contracts or unexpired leases, on and subject to the occurrence 14

22 Case Doc 208 Filed 02/23/18 Page 22 of 51 of the Effective Date, unless such contracts or leases (i) have been previously assumed or rejected by order of the Court or (ii) are insurance policies (a) under which the insurer has a continuing obligation to pay the Debtor or a third party on behalf of the Debtor or (b) where the Debtor has claims or causes of action against the insurer. Because the Plan effectuates the sale of the Debtor s Property, it has no need for any executory contract or lease, other than its insurance policies, on an on-going basis. As a result, the Debtor s decision to reject all executory contracts or leases unless previously assumed or insurance policies is an appropriate exercise of business judgment satisfying the requirements of section 365(a) and 1123(b)(2). 37. Section 1123(b)(3)(B) allows for a plan to provide for the retention and enforcement of a claim or an interest by a debtor or by a trustee. Article 5 of the Plan provides for the retention of all causes of action consistent with section 1123(b)(3)(B). 38. In addition to the foregoing and in accordance with section 1123(b)(6) of the Bankruptcy Code, the Plan includes various other additional appropriate provisions that are not inconsistent with applicable provisions of the Bankruptcy Code. B. Debtor s Compliance with the Applicable Provisions of the Bankruptcy Code (Section 1129(a)(2)). 39. Section 1129(a)(2) of the Bankruptcy Code requires the proponent of a plan to comply with the applicable provisions of the Bankruptcy Code. The principal purpose of section 1129(a)(2) is to ensure that a plan proponent has complied with the requirements of the Bankruptcy Code regarding solicitation of acceptances of the plan. See, e.g., In re PWS Holding Corp., 228 F.3d 224, 248 n.23 (3d Cir. 2000) (noting that [t]he principal purpose of section 1129(a)(2) of the Bankruptcy Code is to assure that the plan proponents have complied with the disclosure requirements of section 1125 of the Bankruptcy Code in connection with solicitation of acceptances of the plan. (quoting In re Trans. World Airlines, Inc., 185 B.R. 302,

23 Case Doc 208 Filed 02/23/18 Page 23 of 51 (Bankr. E.D. Mo. 1995))); In re Stations Holding Co., No , 2002 WL , at *3 (Bankr. D. Del. Sept. 30, 2002) (finding that the debtor had complied with section 1129(a)(2) of the Bankruptcy Code because, [i]n particular, the solicitation of acceptances or rejections of the Plan was solicited after disclosure... of adequate information ); In re Texaco Inc., 84 B.R. 893, (Bankr. S.D.N.Y. 1988) (holding that the principal purpose of Section 1129(a)(2) is to assure that the proponents have complied with the requirements of section 1125 in the solicitation of acceptances to the plan ). The Debtor has complied with the applicable provisions of title 11, including the provisions of section 1125 regarding disclosure and plan solicitation. 40. Section 1125 of the Bankruptcy Code prohibits the solicitation of acceptances or rejections of a chapter 11 plan from holders of claims or holders of interests unless, at the time of or before such solicitation, there is transmitted to such holder the plan or a summary of the plan, and a written disclosure statement approved... by the court as containing adequate information. 11 U.S.C. 1125(b). Here, the Court conditionally approved the Disclosure Statement in the Solicitation Procedures Order. In addition, the Court considered and, in the Solicitation Procedures Order, approved (a) all materials transmitted to the holders of claims entitled to vote on the Plan, (b) the timing and method of delivery of such materials, and (c) the rules for tabulating votes to accept or reject the Plan. 41. On January 19, 2018, and only after entry of the Solicitation Procedures Order, KCC caused to be served the Combined Hearing Notice on the creditor matrix and all other parties required to receive such notice pursuant to the Solicitations Procedures Order. On January 19, 2018, KCC caused to be served Solicitation Packages (as defined in the Solicitation Procedures Order) on all known members of Classes 2, 3 and 4 in accordance with the Solicitation Procedures Order. An affidavit evidencing the service of the foregoing was filed 16

24 Case Doc 208 Filed 02/23/18 Page 24 of 51 with the Court on January 25, 2018 [Doc. 121]. On January 19, 2018, KCC posted links to the electronic versions of the Combined Hearing Notice, Solicitation Procedures Order, Disclosure Statement, and Plan on the public access website at The Solicitation Procedures Order established (i) February 7, 2018 at noon Eastern Time as the Voting Record Date for determining which creditors were entitled to receive Solicitation Packages and, where applicable, vote on the Plan. Pursuant to the Solicitation Procedures Order, holders of claims in Class 2 (Secured Claims), Class 3 (General Unsecured Claims), and Class 4 (Former Resident Claims) (collectively, the Voting Classes ) were originally entitled to vote to accept or reject the Plan. No other classes were originally entitled to vote on the Plan. On February 12, 2018, the Debtor filed the pending Plan Modification Motion, seeking approval to add two voting classes under the Plan and have the votes of PEPCO and Nagle cast as votes in Class 5 (PEPCO s claim) and Class 6 (Nagle & Zaller s claim), respectively. Both PEPCO and Nagle had received Solicitation Packages (and ballots) as originally classified Class 3 claimants; both received special ballots as Class 5 and 6 claimants, respectively; and both timely cast their ballots. 43. Pursuant to the Solicitation Procedures Order, KCC relied on the Debtor s Schedules of Assets and Liabilities and the information pertaining to the Debtor s case as reflected in KCC s systems to identify the holders of claims entitled to vote to accept or reject the Plan. For holders of claims in the Voting Classes as of the Voting Record Date who (a) did not receive a Solicitation Package in the Initial Solicitation or (b) filed a proof of claim in a different class, amount, or priority than listed in the Debtor s schedules, KCC served the Solicitation Package on those parties on a rolling basis as such proofs of claim were filed, and KCC completed such services on or before February 8, Notably, the Debtor filed an 17

25 Case Doc 208 Filed 02/23/18 Page 25 of 51 amendment to its Schedules of Assets and Liabilities on February 8, 2018, adding various secured creditors (based on information in title searches for the Property), and KCC sent Solicitation Packages to those added creditors on February 8, Accordingly, the Debtor has satisfied the solicitation requirements imposed by section 1125, Bankruptcy Rules 3017 and 3018, and the Solicitation Procedures Order. The Plan thus satisfies the requirements of section 1129(a)(2). C. Good Faith (Section 1129(a)(3)). 45. Section 1129(a)(3) requires that a plan be proposed in good faith and not by any means forbidden by law. 11 U.S.C. 1129(a)(3); see also Koelbl v. Glessing (In re Koelbl), 751 F.2d 137, 139 (2d Cir. 1984) (noting that plan provisions may not contravene any law, including state law). In the context of section 1129(a)(3), good faith asks whether there is a reasonable likelihood that the plan will achieve a result consistent with the standards prescribed under the [Bankruptcy] Code. In re Walker, 165 B.R. 994, 1001 (E.D. Va. 1994) (quoting Hanson v. First Bank of S.D., N.A., 828 F.2d 1310, 1315 (8th Cir. 1987)); see also In re Eagle-Picher Indus., Inc., 203 B.R. 256, 274 (S.D. Ohio 1996) (finding that a chapter 11 plan was proposed in good faith when, among other things, it was based on extensive arms length negotiations among the plan proponents and other parties in interest). 46. The Debtor s good faith is evident from the facts and record of this case, the Disclosure Statement, the Auction, the overwhelming support of the Plan by voting creditors, and other proceedings held in this case. The Debtor has proposed the Plan with the legitimate and honest purpose of consummating the sale of the Property in order to maximize the value of the Property for the benefit of its stakeholders. The Debtor negotiated the Plan, the terms of the sale of the Property, and the terms of the Auction, in good faith, and at arm s length, with various other parties, both pre- and post-petition. Moreover, the overwhelming acceptance of the Plan 18

26 Case Doc 208 Filed 02/23/18 Page 26 of 51 by the holders of claims that cast ballots reflects the overall fairness of the Plan and indicates it has been proposed in good faith and for proper purposes. 47. In light of the foregoing, the Debtor has acted in good faith in proposing and pursuing confirmation of the Plan and has not proposed the Plan by any means forbidden by law. Therefore, the good faith requirement of section 1129(a)(3) has been satisfied. D. Payments for Services and Expenses (Section 1129(a)(4)). 48. Section 1129(a)(4) of the Bankruptcy Code requires that: 11 U.S.C. 1129(a)(4). Any payment made or to be made by the proponent, by the debtor, or by a person issuing securities or acquiring property under the plan, for services or for costs and expenses in or in connection with the case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the court as reasonable. 49. In essence, this subsection requires that any and all fees promised or received in connection with or in contemplation of a chapter 11 case must be disclosed and approved, or subject to approval, by the court. See In re Eagle-Picher Indus., 203 B.R. at 274; In re Future Energy Corp., 83 B.R. 470, (Bankr. S.D. Ohio 1988) (noting that certain payments, as detailed in section 1129(a)(4), are subject to approval by the bankruptcy court). 50. Any payment made or to be made by the Debtor or any person acquiring property under the Plan, for services or for costs and expenses in or in connection with this chapter 11 case, or in connection with the Plan and incident to this chapter 11 case, has been approved by, or is subject to the approval of, the Court as reasonable, in accordance with section 1129(a)(4) of the Bankruptcy Code. Further, all accrued fees and expenses of retained professionals through confirmation of the Plan remain subject to final review by the Court under the applicable provisions of the Bankruptcy Code. Section 7.1 of the Plan requires that all unpaid administrative claims, including fee applications of retained professionals, be filed within 30 19

27 Case Doc 208 Filed 02/23/18 Page 27 of 51 days of the confirmation of the Plan or such later date as may be approved by the Court. Finally, under the Final Order Authorizing the Retention and Employment of Kurtzman Carson Consultants LLC as Noticing and Balloting Agent [Doc. 146], the Court authorized the Debtors to pay KCC s fees and expenses on a monthly basis after providing at least seven days notice to the U.S. Trustee, Debtor s counsel, AHH s counsel and any party in interest who specifically requests service of the monthly invoices. These procedures for the Court s review and ultimate determination of the reasonable fees, costs, and expenses to be paid by the Debtor satisfy the requirements of section 1129(a)(4). E. Identification of Directors, Officers and Insiders (Section 1129(a)(5)). 51. Section 1129(a)(5) requires a debtor to disclose the identity of certain individuals who will hold positions with the reorganized debtor after confirmation of the Plan. See 11 U.S.C. 1129(a)(5). Pursuant to section 1129(a)(5)(A)(i) of the Bankruptcy Code, the proponent of a plan must disclose the identity and affiliations of any individual proposed to serve, after confirmation of the plan, as a director, officer, or voting trustee of the debtor, an affiliate of the debtor participating in a joint plan with the debtor, or a successor to the debtor under the plan. 11 U.S.C. 1129(a)(5)(A)(i). Section 1129(a)(5)(A)(ii) further requires that the service of such individuals be consistent with the interests of creditors and equity security holders and with public policy. 11 U.S.C. 1129(a)(5)(A)(ii). Section 1129(a)(5)(B) requires that the plan proponent disclose the identity of any insider that will be employed or retained by the reorganized debtor, and the nature of any compensation for such insider. 11 U.S.C. 1129(a)(5)(B). 52. The current Board of Directors of the Debtor, which serves without compensation, will continue to serve on the Board following confirmation of the Plan. Specifically, the Board includes the following individuals: 20

28 Case Doc 208 Filed 02/23/18 Page 28 of 51 a. Elizabeth Belton b. Stanley Briscoe c. Walter Cook d. David Gilmore e. Barbara Taha f. Lisa Webster 53. The Debtor submits that the continuance in office of each individual identified above is consistent with the interests of creditors, the Debtor s estate and public policy. In light of the foregoing, the Debtor has satisfied the requirements of section 1129(a)(5). F. Rate Changes (Section 1129(a)(6)). 54. Section 1129(a)(6) requires that appropriate governmental approval has been obtained for any rate change provided for in a reorganization plan, or that such rate change be expressly conditioned on such approval, for a debtor whose rates are subject to governmental regulation following confirmation,. The Debtor does not charge rates subject to governmental regulation. Section 1129(a)(6), thus, is inapplicable to this case and, is deemed satisfied because the Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction. G. The Best Interests Test (Section 1129(a)(7)). 55. The Bankruptcy Code protects creditors and equity security holders who are impaired by the Plan and who have not voted to accept the Plan through the best interests test of section 1129(a)(7) of the Bankruptcy Code. Section 1129(a)(7) provides that the court shall confirm a plan if, with respect to each impaired class of claims or interests: (A) each holder of a claim or interest of such class (i) (ii) has accepted the plan; or 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 debtor were liquidated under chapter 7 of this title on such date. 21

29 Case Doc 208 Filed 02/23/18 Page 29 of U.S.C. 1129(a)(7). Through the best interest test of section 1129(a)(7), the Bankruptcy Code protects non-consenting members of impaired, accepting classes by ensuring that each dissenting member of the impaired class receives at least what the dissenting member would receive if the debtor were liquidated under chapter 7 of the Bankruptcy Code. 203 N. LaSalle, 126 F.3d at 969; SK-Palladin Partners, L.P. v. Platinum Entm t, Inc., No. 01 C 7202, 2001 WL , at *4 (N.D. Ill. Dec. 13, 2001); Walker, 165 B.R. at 1005 (the best interests test requires that all creditors receive as much pursuant to a chapter 11 plan as they would from a chapter 7 liquidation). If the Court finds that each non-consenting member of an impaired class will receive at least as much under the Plan as it would receive in a chapter 7 liquidation, the Plan satisfies the best interests test. See Future Energy, 83 B.R. at 490 (finding that section 1129(a)(7) was satisfied when the dissenting impaired classes would not have received more under a chapter 7 liquidation than they received under the proposed plan); accord Liberty Nat l Enters. v. Ambanc La Mesa Ltd. P ship (In re Ambanc La Mesa Ltd. P ship), 115 F.3d 650, 657 (9th Cir. 1997); Kane v. Johns-Manville Corp., 843 F.2d 636, 649 (2d. Cir. 1988); In re Leslie Fay Cos., 207 B.R. 764, 787 (Bankr. S.D.N.Y. 1997). 56. Based on the Debtor s liquidation analysis, as set forth in Section VIII.E of the Disclosure Statement, the Debtor submits that holders of allowed claims that are impaired will recover significantly less in a chapter 7 liquidation than under the Plan. Given the Debtor s multiple bankruptcies and attempts to sell the Property, the sale to Dragone represents the last realistic chance for a sale of the Property (short of government condemnation), and for holders of claims to recover anything on account of their claims. Notwithstanding the difficulty in quantifying recoveries on allowed claims, holders of claims that are impaired will receive equal or greater value as of the effective date of the Plan than such holders would receive in a chapter 7 22