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UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA SOUTHERN DIVISION

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INRE:
THE RHODES COMPANIES, LLC, aka "Rhodes Homes," et at.,
Debtors. i

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Case No. 09-14814-LBR (Jointly Administered)

Chapter 11

Hearing Date: February 11,2010 Hearing Time: 9:30 a.m. (PST)

Courtroom 1

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Affects:
~ All Debtors
o Affects the following

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Debtor(s)

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I The Debtors in these cases, along with the last four digits of each Debtor's federal tax identification
number, if applicable, are: Heritage Land Company, LLC (2918); The Rhodes Companies, LLC (3060); Rhodes Ranch General Partnership (1760); Tick, LP (0707); Glynda, LP (5569); Chalkline, LP (0281); Batcave, and Country LP (6837); Jackkife, LP (6189); Wallboard, LP (1467); Overfow, LP (9349); Rhodes Ranch Golf Club (9730); Tuscany Acquisitions, LLC (0206); Tuscany Acquisitions II, LLC (8693); Tuscany Acquisitions 20 LLC (5534); Rhodes Design and Il, LLC (9777); Tuscany Acquisitions IV, LLC (0509); Parcel Development Corp. (1963); C&J Holdings, Inc. (1315); Rhodes Realty, Inc. (0716); Jarpa LLC (4090); Elkhorn Investments, Inc. (6673); Rhodes Homes Arizona, LLC (7248); Rhodes Arizona Properties, LLC

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25 26

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(8738); Tribes Holdings LLC (4347); Six Feathers Holdings, LLC (8451); Elkhorn Parers, A Nevada Limited Parership (9654); Bravo Inc. (2642); Gung-Ho Concrete, LLC (6966); Geronimo Plumbing, LLC (6897);
Apache Framing, LLC (6352); Tuscany Golf

Country Club, LLC (7132); Pinnacle Grading, LLC (4838).

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PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER CONFIRMING THE FIRST LIEN STEERING COMMITTEE'S SECOND AMENDED MODIFIED PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE FOR THE RHODES COMPANIES,
LLC, ET AL.

RECIT ALS2
A.

On either March 31, 2009 or April 1, 2009 (collectively, the "Petition Date"),
title 11

8 each of the Debtors commenced with the Court a voluntary case under chapter 11 of

9 ofthe United States Code (the "Bankuptcy Code").

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11

B.

Pursuant to Bankuptcy Code sections 11 07( a) and 1108, the Debtors are

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currently authorized to operate their businesses and manage their properties as debtors in
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possession. The Debtors' Chapter 11 Cases are being

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jointly administered for procedural

14 puroses only. No trustee or examiner has been appointed in these Chapter 11 Cases.
15

C.

On May 26,2009, pursuant to Bankruptcy Code section 1102, the United

Nevada appointed an Offcial Committee of

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16 States Trustee for the District of

Unsecured

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Creditors (the "Creditors' Committee"). The Creditors' Committee currently consists offour
members: G.C. Wallace, Inc.; Interstate Plumbing & Air Conditioning; M & M Electric, Inc.;
and Southwest Iron Works, LLC.

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D.

On November 23, 2009, the First Lien Steering Committee fied (i) the

22 Second Amended Modified Plan of Reorganization Pursuant to Chapter II of the

23 Banptcy Code for The Rhodes Companies, LLC, et al. (the "Plan") and (ii) the
24 accompanying Second Amended Modified Disclosure Statement for the Plan of
25

26
27 2 All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in

28 the Plan (as defined herein) or the Disclosure Statement (as defined herein), as applicable.

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1 Reorganization Pursuant to Chapter 11 of

the Bankruptcy Code for The Rhodes Companies,

2 LLC, et al. (the "Disclosure Statement").

3

E. On December 1,2009, the Cour entered the Order (A) Approving the

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5

Adequacy ofthe First Lien Steering Committee's Disclosure Statement; (B) Approving

Solicitation and Notice Procedures with Respect to Confirmation ofthe First Lien Steering
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Committee's Proposed Plan of Reorganization; (C) Approving the Form of

Various Ballots

and Notices in Connection Therewith; and (D) Scheduling Certain Dates with Respect

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Thereto (Docket No. 809) (the "Solicitation Procedures Order"). The Solicitation
Procedures Order (i) approved the Disclosure Statement as containing adequate information
within the meaning of

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Bankuptcy Code section 1125(a), (ii) fixed December 1,2009, as the

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record date for purposes of determining eligibility to vote to accept or reject the Plan,
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(iii) fixed Januar 4,2010, at 4:00 p.m. (Pacific Time) as the deadline for submitting ballots
accepting or rejecting the PIan, (iv) fixed January 4, 2010 at 4:00 p.m. (Pacific Time) as the

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deadline for filing objections to the Plan, (v) fixed January 11,2010, as the deadline for

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fiing the Memorandum (as defined below), (vi) fixed January 11,2010 as the deadline by
which Omni Management Group, LLC (the "Claims and Solicitation Agent") must file its
report sumarizing the results of voting on the Plan (the "Voting Report"), and (vii) fixed
Januar 14,2010, at 9:00 a.m. as the date and time for the commencement of

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the hearing of

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the confirmation hearing (the "Confirmation Hearing") on the PIan. The Solicitation
Procedures Order also approved certain procedures for soliciting votes to accept or reject the

24 Plan (the "Solicitation Procedures").

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F.

In accordance with the Solicitation Procedures Order, the solicitation

26 materials described in the Solicitation Procedures were transmitted to and served on all

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1 Holders of Claims that were entitled to vote to accept or reject the Plan, as well as certain
2 other paries in interest in the Debtors' Chapter 11 Cases.

G.

Adequate and suffcient notice ofthe Confirmation Hearing and other

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requirements and deadlines, hearings and matters described in the Solicitation Procedures
Order was provided in compliance with the Banuptcy Code, the Banptcy Rules, and the

6 7

Solicitation Procedures Order. As evidenced by the Osborne Declarations (as defined

8 below) and various certificates of service fied by Nova George (see Docket Nos. 819, 822,
9 823, 824, 825, 826, 931 and 932), the Confirmation Hearing Notice, the Plan, the Disclosure

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Statement and all exhibits thereto were mailed on or about December 4, 2009 to Holders of
Claims against and Interests in the Debtors and other paries in interest. A notice of

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continuation on the Confirmation Hearing was served on appropriate paries on January 22,
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2010 (See Docket No. 954).

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On Januar 11,2010, the First Lien Steering Committee fied the Declaration

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Brian Osborne Certifying the Tabulation of

Ballots Regarding Vote on Second Amended

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17 Modified Plan of Reorganization Pursuant to Chapter 11 of the Bankptcy Code for The
18 Rhodes Companies, LLC, et al., dated and sworn to on January 11, 2010, attesting to and
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certifying the methods and results of the ballot tabulation for the Classes of Claims entitled

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to vote to accept or reject the Plan (the "Osborne Declaration"). The Voting Report was
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attached as Exhibit A to the Osborne Declaration.

1.

On January 15,2010, the First Lien Steering Committee fied the Amended
Brian Osborne Certifying the Tabulation of

24 Declaration of

Ballots Regarding Vote on

25 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

26 Bankuptcy Code for The Rhodes Companies, LLC, et aI., dated and sworn to on January
27
15,2010, attesting to and certifying the methods and results of

the ballot tabulation for the

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1 Classes of Claims entitled to vote to accept or reject the Plan (the "Amended Osborne

2 Declaration"). An amended Voting Report (the "Amended Voting Report") reflecting a

3 retabulation of certain ballots pursuant to the Solicitation Procedures was attached to the

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Amended Osborne Declaration as Exhibit A.

1. On Januar 27, 2010, the First Lien Steering Committee fied the Second

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Amended Declaration of Brian Osborne Certifying the Tabulation of

Ballots Regarding Vote

on Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

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Bankrptcy Code for The Rhodes Companies, LLC, et aI., dated and sworn to on Januar
26,2010, attesting to and certifying the methods and results of

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the ballot tabulation for the

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Classes of Claims entitled to vote to accept or reject the PIan (the "Second Amended

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Osborne Declaration" and, together with the Osborne Declaration and the Amended

Osborne Declaration, the "Osborne Declarations"). An amended Voting Report (the

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"Second Amended Voting Report" and, together with the Voting Report and the Amended

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Voting Report, the "Voting Reports") reflecting the further retabulation of certain ballots
pursuant to the Solicitation Procedures and the direction of the Cour was attched to the

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Second Amended Osborne Declaration as Exhibit A. As evidenced by the Osborne

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Declarations, the ballots were tabulated in compliance with the Banruptcy Code, the Bankuptcy Rules and the Solicitation Procedures Order.

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K. The following pleadings were fied prior to the deadline for filing objections
to the Plan: (i) the Conditional Objection to Chapter 11 Plan fied by Caterpilar Financial
Services Corporation on January 4, 2010 (Docket No. 895); and (ii) the Limited Response to

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Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

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Bankruptcy Code for The Rhodes Companies, LLC, et al. fied by Credit Suisse AG,
Cayman Islands Branch on January 5, 2010 (Docket No. 899). No other objections to

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confirmation of

the Plan were fied. The filed conditional objection and limited response to
the Plan are collectively referred to herein as the "Objections." The

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confirmation of

Objections were either withdrawn or resolved on a consensual basis.

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L. On January 11,2010, the First Lien Steering Committee filed (a) the First
Lien Steering Committee's Memorandum of Law (I) in Support of Confirmation of the

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Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

Banptcy Code for The Rhodes Companies, LLC, et al. and (II) in Response to Objections
Thereto, (b) the Declaration of Richard Dix in Support of Confirmation of

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the Second

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Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the Banptcy Code

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for The Rhodes Companies, LLC, et aI., and (c) the Osborne Declaration (collectively, and

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including the Amended Osborne Declaration, the "Initial Confirmation Papers").

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M. On January 27, 2010, the First Lien Steering Committee filed (a) the First
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Lien Steering Committee's Supplemental Memorandum of Law in Support of

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Confirmation

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of the Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

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Banuptcy Code for The Rhodes Companies, LLC, et al., (b) the Declaration of Justin
Bono in Support of Confirmation of the Second Amended Modified Plan of Reorganization
Pursuant to Chapter 11 of the Banuptcy Code for the Rhodes Companies, LLC, et al., ( c)

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the Declaration of Charles Hewlett in Support of Confirmation of the Second Amended

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Modified PIan of Reorganization Pursuant to Chapter 11 of the Bankptcy Code for the
Rhodes Companies, LLC, et al., and (d) the Second Amended Osborne Declaration
(collectively, the "Supplemental Confirmation Papers").

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25

N. On February 2, 2010, Stanley Consultants, Inc. fied its Opposition (the

"Stanley Opposition") to First Lien Steering Committee's Supplemental Memorandum of
Law in Support of Confirmation of Second Amended Modified Plan (Docket No. 975).

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O.

On February 8, 2010, the First Lien Steering Committee fied (a) its Reply to

2 Stanley Consultants, Inc.'s Opposition to First Lien Steering Committee's Supplemental

3 Memorandum of Law in Support of Confirmation of Second Amended Modified Plan, (b)

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Second Amended Modified Plan of

the Supplemental Declaration of Justin Bono in Support of Confirmation of Confirmation of

Reorganization Pursuant to Chapter 11 ofthe

7 Banruptcy Code for The Rhodes Companies, LLC, et al., (c) the Supplemental Declaration
8 of Charles Hewlett in Support of Confirmation of Second Amended Modified Plan of
9 Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for The Rhodes Companies,

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10 LLC, et al., and (d) the Declaration of

Gregory Wallace in Support of

Confirmation of

the

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Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

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Bankuptcy Code for The Rhodes Companies, LLC, et al. (collectively, the "Reply Papers").
P.
14
15 Januar 21, 2010 and February 11,2010.

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The Confirmation Hearing was held before the Cour on January 14,2010,

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16 NOW, THEREFORE, the Court having reviewed and considered the Disclosure
17 Statement, the Plan and all documents contained therein, the Voting Reports, the Objections,

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18 the Initial Confirmation Papers, the Supplemental Confirmation Papers, the Stanley
19

Opposition and the Reply Papers (collectively, the "Confirmation Papers"); the Court having heard statements of counsel in support of and in opposition to confirmation of the Plan at the

20
21

22

Confirmation Hearing; the Court having considered all testimony presented and evidence

23 admitted at the Confirmation Hearing; the Court having taken judicial notice of the papers

24 and pleadings on fie in the Chapter 11 Cases; it appearing to the Cour that (i) notice ofthe

25 Confirmation Hearing was adequate and appropriate as to all paries to be affected by the
26 Plan and the transactions contemplated thereby and (ii) the legal and factual bases set forth
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in the Confrmation Papers and presented at the Confirmation Hearing establish just cause

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for the relief granted herein; and after due deliberation thereon, good cause appearing therefor, and for the reasons stated herein, it is hereby DETERMINED, FOUND,
ADJUDGED, DECREED, AND ORDERED THAT:

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3

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FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Exclusive Jurisdiction: Venue: Core Proceeding (28 U.S.C. SS 157, 1334(a),

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8

1408, and 1409). The Cour has jurisdiction over the Chapter 11 Cases pursuant to 28
U.S.C. 157 and 1334. Confirmation of

the Plan is a core proceeding under 28 U.S.C.

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157(b )(2), and the Cour has exclusive jurisdiction to determine whether the Plan complies

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with the applicable provisions of the Bankptcy Code and should be confirmed. Venue is
proper before the Cour pursuant to 28 U.S.C. 1408 and 1409. Venue in the District of
Nevada was proper as of

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the Petition Date and continues to be proper.

the Chapter 11 Cases.

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2. Commencement and Joint Administration of

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Beginning on the Petition Date, each of the above-captioned Debtors commenced a case
under chapter 11 ofthe Bankuptcy Code. By prior order of

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the Cour, the Chapter 11 Cases

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have been consolidated for procedural purposes only and are being jointly administered

pursuat to Banruptcy Rule 1015. The Debtors have operated their businesses and
managed their properties as debtors in possession pursuant to Bankruptcy Code sections

19

20

1107(a) and 1108. No trustee or examiner has been appointed in the Chapter 11 Cases.
21
3. Judicial Notice. The Court takes judicial notice of the docket of

22 23 24
25

the Chapter

11 Cases maintained by the Clerk ofthe Cour or its duly appointed agent, including,
without limitation, all pleadings and other documents fied, all orders entered, and all evidence and arguments made, proffered, or adduced at, the hearings held before the Cour

26 during the pendency of the Chapter 11 Cases.

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8

4.

Transmittal and Mailing of Materials: Notice: Solicitation. The Solicitation

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1 Packages were transmitted and served in compliance with the Banptcy Code, the
2 Bankruptcy Rules, applicable nonbankptcy law, and the Solicitation Procedures Order.
3
Such transmittal and service of

the Solicitation Packages were adequate and sufficient.

the Confirmation Hearing was given in compliance with

4
Adequate and sufficient notice of

the Banruptcy Code, the Bankruptcy Rules and the Solicitation Procedures Order, and no
6
7 fuher notice is or shall be required. Votes for acceptace and rejection of the Plan were

8 solicited in good faith and such solicitation complied with Banuptcy Code sections 1125
9 and 1126, Bankptcy Rules 3017 and 3018, all other applicable provisions ofthe

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10 Bankuptcy Code, the Solicitation Procedures Order, and all other applicable rules, laws and
11

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regulations.
5. Burden of Proof. The First Lien Steering Committee, as the proponent of

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the

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Plan, has met its burden of proving the elements of

Bankruptcy Code sections 1129(a) and

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15

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(b) by a preponderance of evidence.

6.

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Voting. Votes on the Plan were solicited afer the disclosure of "adequate

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17 information" as defined in Banruptcy Code section 1125. As evidenced by the Osborne

18 Declarations, votes to accept the Plan have been solicited and tabulated fairly, in good faith
19

and in a manner consistent with the Solicitation Procedures Order, the Banuptcy Code and

20

the Bankuptcy Rules.

21

22
23

7.

Plan Compliance with the Applicable Provisions of

the Bankptcy Code (11

U.S.C. & 1129(a)(1 )). As set forth below, the Plan complies with the applicable provisions

24 ofthe Banptcy Code, thereby satisfying Bankruptcy Code section 1129(a)(1).

25
(a)
Proper Classification of Claims and Interests (11 U.S.C. && 1122 and

26 27
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1123(a)(1 )). In addition to Administrative Claims and Priority Tax Claims, which need not

be classified, Article II1.A of the Plan designates nine Classes of Claims and one Class of

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1 Interests. The Claims or Interests placed in each Class are substantially similar to other

2 Claims or Interests, as the case may be, in such Class. Valid business, factual, and legal
3 reasons exist for separately classifying the various Classes of Claims and Interests created
4
5

under the Plan, and such Classes do not unfairly discriminate among Holders of Claims or

Interests. The Plan satisfies Bankuptcy Code sections 1122 and 1123(a)(1).
6 7
8
Article II1.B of

(b)

Specification of

Unimpaired Classes (11 U.S.C. Q 1123(a)(2)).

the PIan specifies that each of Classes A-3 and B are Unimpaired under the

9 0 '" 10

PIan, thereby satisfying Banptcy Code section 1123(a)(2).

(c) Specification of

Treatrent ofImpaired Classes (11 U.S.C.

Classes A-I, A-2, C-L, C-2, C-3,

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Q 1123(a)(3)). Article m.B of

the Plan designates each of

12

C-4, D and E as Impaired and specifies the treatment of Claims and Interests in those
13

Classes, thereby satisfying Banptcy Code section 1123(a)(3).

14
15
(d) Equal Treatment Within Classes (11 U.S.C. Q I

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123(a)(4)). Article

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II1.B of the Plan provides for the same treatment for each Claim or Interest in a paricular

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Class, thereby satisfying Banuptcy Code section 1123(a)(4).

(e) Implementation of

Plan (11 U.S.C. Q 1123(a)(5)). The Plan provides

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19
adequate and proper means for implementation of

the Plan, including, but not limited to,

20

among other things: (i) the substantive consolidation ofthe Estates into a single Estate for all
21

22
23

puroses associated with Confirmation and distributions to be made under the PIan (See Plan
Art. IV.A); (ii) the issuance of New

co Equity Interests (based upon the Newco Total

24
25 26 27 28

Enterprise Value) to the Holders of First Lien Lender Secured Claims (See Plan Art.

IV .B.l); (iii) the issuance of $50 millon in New First Lien Notes to the Holders of First
Lien Lender Secured Claims (See Plan Art. IV.B.2); (iv) the cancellation of Old Equity

Interests and certain other existing securities (See Plan Art. iV.E); (v) any restructuring

10

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1 transaction deemed necessary or appropriate to effectuate the PIan (See Plan Art. IV.G); (vi)
2 the selection ofthe initial board of managers and offcers of the Reorganized Debtors (See
3 Plan Art. IV.M); (vii) the establishment of a Litigation Trust for the benefit of

Holders of

4
Allowed Claims in Classes C-L, C-2 and C-3 (See Plan Art. IV.O); (viii) the transfer of

the

Rhodes Ranch Golf Course to the Reorganized Debtors pursuant to the terms of a stock and
6
7 asset transfer agreement (See Plan Art. IV.S); (ix) the payment of $3.5 milion in Cash to the

8 Reorganized Debtors by the Rhodes Entities on the Effective Date (See Plan Art. IV.T); and
9 (x) the transfer of

the Arizona Assets set forth on Attachment D to the Mediation Term

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10 Sheet to the Rhodes Entities (See Plan Art. iv. U). In addition, the Plan provides that the
11
Holders of

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First Lien Lender Secured Claims wil receive $1.5 milion in Cash from the
the First Lien Lenders' Collateral for the purpose of

12
proceeds of

purchasing the General

13

Unsecured Claims set forth on Exhibit H to the Disclosure Statement. See Plan Art. VI1.F14

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15 G. Therefore, the Plan satisfies Banruptcy Code section 1123(a)(5).

16

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(f)

Charter Provisions (11 U.S.C. & 1123(a)(6)). Article IV.J of

the Plan

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17 provides that the organizational documents for Newco and the Reorganized Debtors, among

18 other things, shall (i) authorize the issuance ofthe new equity interests, and (ii) pursuant to
19

and only to the extent required by Bankptcy Code section 1123(a)(6), include a provision
prohibiting the issuance of non-voting Equity Securities, thereby satisfying Banuptcy

20
21

22
23

Code section 1123(a)(6).

(g)

Selection of

Officers and Directors (11 D.S.C. & 1123(a)(7)). Article

24 IV.M of

the Plan provides that (i) the board of directors ofthe Reorganized Debtors or

25 similar governing entities wil be composed of one or more members appointed by the First

26 Lien Steering Committee, (ii) on or afer the Effective Date, a chief executive officer or
27
28
11

similar person in control shall be appointed, and (iii) the identity of such offcers and

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I directors shall be disclosed at or prior to the Confirmation Hearing. The provisions of the
2 Plan for the selection of directors and officers are consistent with the interests of creditors
3

and with public policy as to the maner and selection of any offcer or director and any

4
5

successor thereto, thereby satisfying Banuptcy Code section 1123(a)(7). Pursuant to

Banuptcy Code section 1129(a)(5), the First Lien Steering Committee has disclosed, on or

6
7 prior to the Confirmation Date, the identity and affiiations of any Person proposed to serve

8 on the initial boards of directors of the Reorganized Debtors and, to the extent such Person is
9 an insider, the nature of any compensation to be paid to such Person.

o '"

10
11

Il ., . ., S.

(h)

Future Income (11 U.S.C. S 1123(a)(8)). Each of

the Debtors is a

~"
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== = ~ ~

business entity, and not an individual. Accordingly, Banuptcy Code section 1123(a)(8) is
not implicated by the Plan.

:3 ~ i: 'C~ as ., .,
~~ oIJ
CI ei ~ M en .. Q, ~ ~ ;; z ..

12
13

8.

Plan Compliance with Bankptcy Code Section 1123(b). The Plan contains
the

14
15
other permissive provisions that are consistent with the applicable provisions of

~ ~ t";i . 00," CJ ;. ~

- ~ .'

16 Banuptcy Code and, thus, the Plan satisfies the requirements of Bankuptcy Code section
17 1123(b).

~ ~ .,
-

r-. . Z -;; Z g

18

g ~ .i ~
.

9.

Banptcy Rule 3016. The Plan is dated and identifies the entities
the Disclosure

19
submitting it, thereby satisfying Bankuptcy Rule 3016(a). The filing of

20
Statement with the Clerk of

the Court satisfies Bankrptcy Rile 3016(b).

21

22
23

10.

Banuptcy Rule 3017. The First Lien Steering Committee has given notice

ofthe Confirmation Hearing as required by Bankruptcy Rule 3017(d), the Solicitation

the Solicitation

24 Procedures Order or as otherwise required. The transmittal and service of

25 Packages were (i) in compliance with the Solicitation Procedures Order, the Bankruptcy

26 Code and the Banptcy Rules and (ii) adequate and suffcient under the Bankuptcy Rules
27
28
12

and the circumstances surrounding the Chapter 11 Cases.

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11.

Bankptcy Rule 3018. The solicitation of

votes to accept or reject the Plan

2 solely from Holders of Allowed Claims in Classes entitled to vote to accept or reject the
3 Plan, as of

the Record Date, satisfies Banuptcy Rule 3018. Votes to accept or reject the

4
5

Plan have been solicited and tabulated fairly, in good faith, and in a manner consistent with

the Banruptcy Code, the Banuptcy Rules and the Solicitation Procedures Order.
6 7
8 of

12.

First Lien Steering Committee's Compliance with the Applicable Provisions

the Banptcy Code (11 U.S.C. & 1129(a)(2)). The First Lien Steering Committee has

9 complied with the applicable provisions of

the Bankptcy Code, thereby satisfying

il = ., OJ .,
.

o '"

10 Bankptcy Code section 1129(a)(2). Specifically:

11
(a) the Debtors are proper debtors under Bankuptcy Code section 109

Q ~

; as " ~
i: 'C ~ t.. N

12
13

and the First Lien Steering Committee is a proper proponent of

the Plan

., ~~ ., t-;J :i

under Banuptcy Code section 1121(a);

(b) the First Lien Steering Committee has complied with applicable

:: ~ ~ ~ (/ ~ ~

.i il 0 o

14 15 16 17 18

provisions of

the Bankptcy Code; and

;; ~ z::

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(c) the First Lien Steering Committee has complied with the applicable

.i . ~ ~ t";

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provisions of the Bankuptcy Code, including sections 1125 and 1126(b), the Banuptcy Rules, and the Solicitation Procedures Order in transmitting the Solicitation Package and in soliciting and tabulating votes on the Plan.
13.

r-. . Z -~ ~ .i ~
-

Plan Proposed in Good Faith (11 U.S.C. & 1129(a)(3)). The First Lien

19 Steering Committee has proposed the Plan in good faith and not by any means forbidden by
20 law, thereby satisfying the requirements of

Bankruptcy Code section 1129(a)(3). The First

21

Lien Steering Committee's good faith is evident from the facts and record ofthe Chapter 11
Cases, the Disclosure Statement and the hearing thereon, and the record of the Confirmation

22
23

24 Hearing and other proceedings held in the Chapter 11 Cases. The Plan is the product of
25 extensive negotiations and embodies the terms of

the Mediation Settlement. The Plan itself

the First Lien

26 and the process leading to its formulation provide independent evidence of

27 Steering Committee's good faith, and that the Plan serves the public interest and assures fair
28
13

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1 treatment of

Holders of Claims and Interests. The Plan was proposed with the legitimate

2 and honest purose of maximizing the value ofthe Debtors' estates and to effectuate a
3 successful reorganization of the Debtors.

4
5

14. Payments for Services or Costs and Expenses (11 U.S.C. & 1129(a)(4)). Any

payment made or to be made by the Debtors for services or for costs and expenses in
6 7
8

connection with the Chapter 11 Cases, or in connection with the PIan and incident to the

Chapter 11 Cases, has been approved by, or is subject to approval of, the Court as

9 0 '" . 10
11

reasonable, thereby satisfying Bankruptcy Code section 1129(a)(4).

15. Directors. Officers. and Insiders (11 U.S.C. & 1129(a)(5)). The First Lien

., Q ., ~
i: ~

~ -:= ;; ~
'J .. ~ -, ;l ~ Z .2 i. .~

., ., ~ c; i. l" ~ t.: l.i Il 0 o

:: " 'C "" ., .. .,

= OJ =

Steering Committee has complied with Banuptcy Code section 1129(a)(5). On January
11,2010, the First Lien Steering Committee fied the Notice of Disclosure of

12

Directors and

13

Officers Pursuant to 11 U.S.C. 1129(a)(5) for Second Amended Modified Plan of

14
15
Reorganization Pursuant to Chapter 11 of

. co ~ M

the Bankruptcy Code for The Rhodes Companies,

Disclosure") (Docket No. 911) disclosing that as of

~ ~ t.~

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16 17
18 19

LLC, et al. (the "Notice of

the Effective

~ " ., -.. z - r'" :: .i ..

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00

Date, Dnnil Homes wil provide management services to the Reorganized Debtors and
disclosing the terms of compensation to be paid for such management services. The Notice
of Disclosure also discloses (i) the identity ofthe members of

the initial board of directors of

20

the Reorganized Debtors, (ii) the identity of the Litigation Trustee, and (iii) the
21

22
23

compensation to be provided to each of the foregoing.

16. No Rate Changes (11 U.S.C. & 1129(a)(6)). The Plan does not provide for a
change in any rates subject to regulatory approvaL. Thus, Banptcy Code section
1129(a)(6) is not applicable in the Chapter 11 Cases.
17. Best Interests of

24
25

26 27
28

Creditors Test (11 U.S.C. & 1129(a)(7)). The Plan satisfies

Bankruptcy Code section 1129(a)(7). The Liquidation Analysis attached to the Disclosure

14

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1 Statement as Exhibit E and other evidence proffered or adduced at the Confirmation Hearing
2 (i) are persuasive and credible, (ii) have not been successfully challenged or controverted by

3 other evidence, (iii) establish that each Holder of a Claim or Interest in an Impaired Class
4
5
such Claim or Interest, property ofa value, as of the Effective Date of

either (x) has accepted the Plan or (y) wil receive or retain under the Plan, on account of
the Plan, that is not

6
7 less than the amount that it would have received if the Debtors were liquidated under chapter

8 7 of the Banruptcy Code.

9
0 '" . = OJ =

18. Acceptance or Reiection by Certain Classes (11 U.S.C. S 1129(a)(8)).

Classes A-3 and B are each Classes of

10
11

Unimpaired Claims that are conclusively presumed to

., .,
Q

Il

have accepted the Plan under Bankruptcy Code section 1126(f). Classes A-I, A-2, C-2 and

., ~

., ., Q: ~ -- ~ ~ ~ i. t' :; i. ~ N .i Il 0 o :=:: ~ ~
CI ~ =t N

i: ~

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12

C-3 have each voted to accept the Plan in accordance with Banruptcy Code section
13

1126(c). Class C-l voted to reject the Plan. Classes C-4, D and E are not entitled to receive
14
15

;; ~ z::
~ ~ t.~

or retain any property under the Plan and, therefore, are deemed to have rejected the Plan
pursuant to Banruptcy Code section 1126(g). Although Banptcy Code section

CJ t'''

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16 17 18 19

~ "Z ., ;; g

r.. Z -~ ;. ~ .i
.
-

1129(a)(8) has not been satisfied with respect to Classes C-L, C-4, D and E (collectively, the

"Reecting Classes"), the Plan is confirmable because the Plan does not discriminate unfairly

and is fair and equitable with respect to the Rejecting Classes and therefore satisfies

20

Banptcy Code section 1129(b) with respect to the Rejecting Classes.

21

22
23

19.

Treatment of Administrative Claims and Priority Tax Claims (11 U.S.C.

the Plan

1129(a)(9)). The treatment of Administrative Claims pursuant to Article I1.A of

24 satisfies the requirements of

Banruptcy Code sections 1129(a)(9)(A) and (B). The

25 treatment of Priority Tax Claims pursuant to Article I1.B of the Plan satisfies the
26 requirements of

Banruptcy Code section 1129(a)(9)(C).

20.

27
28

Acceptance by Impaired Classes (11 U.S.C. S 1129(a)(10)). As set forth in

15

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1 the Second Amended Osborne Declaration, each of Classes A-I, A-2, C-L, C-2 and C-3 are

2 Impaired Classes that have voted to accept the Plan, without including any acceptance of the
3

Plan by any insider. As such, there is at least one Class of Claims against the Debtors that is
Impaired under the Plan and has accepted the Plan, determined without including any

4
5

acceptance by any insider, thus satisfying the requirements of Banptcy Code section
6 7
8

1129(a)(10).
21.

Feasibilty (11 U.S.C. Q 1129(a)(11 )). The evidence submitted regarding

9 feasibility, including the Going Concern Analysis attached to the Disclosure Statement as

~a " ~ a
i: 'C., .,

il = ., OJ ., :3 ~

o '" .

1 0 Exhibit D, (i) is persuasive and credible, (ii) has not been controverted by other evidence
11

and (iii) establishes that confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of the Reorganized Debtors, thus

12
13
satisfying the requirements of

~ei -~ i. l. 0 0 '" CJ ~"

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14
15

Banptcy Code section 1129(a)(11).

== ;; ~

VJ ei ~ N ~ ~ .~ .. ~ j ~ ~ t.

22.

Payment of Fees (11 U.S.C. Q 1129(a)(12)). All fees payable under 28

the Plan.

16 U.S.C. 1930 either have been paid or will be paid pursuant to Article I1.A of

I;. -. ~ '" ::
.i ~
-

17 Accordingly, the Plan satisfies Banruptcy Code section 1129(a)(12).

18 19

23.

Continuation of

Retiree Benefits (11 U.S.C. Q 1129(a)(13)). The Debtors

have no retiree benefit obligations and, thus, Bankuptcy Code section 1129(a)(13) is

20

inapplicable.
21

22

24.

Postpetition Domestic Support Obligations and Disposable Income (11

23 U.S.C. Q 1129(a)(14) and (15)). Banptcy Code sections 1129(a)(14) and (15) impose

24 certain requirements on individual chapter 11 debtors. Each of the Debtors is a business

25 entity, and not an individuaL. Accordingly, Bankruptcy Code sections 1129(a)(14) and (15)
26 are not implicated by the PIan.
27
25. Transfers of Property

by Nonprofit Entities (11 D.S.C. Q 1129(a)(16)).

28
16

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1 Banuptcy Code section 1129(a)(16) imposes certain requirements on corporations or trusts

2 that are not a moneyed, business or commercial corporation or trust. Each ofthe Debtors is

a moneyed, business or commercial corporation, partnership or limited liability company.

4
5

Accordingly, Bankuptcy Code section 1129(a)(16) is not implicated by the Plan.

26.
Confirmation of

Plan Over Nonacceptance ofImpaired Classes (11 U.S.C. Q

6 7

1129(b)). Notwithstanding the fact that the Rejecting Classes have not accepted the Plan,

8 the Plan may be confirmed pursuant to Bankptcy Code section 1129(b)(1) because (i) at
9 least one Impaired Class has voted to accept the PIan, and (ii) the Plan does not discriminate

il = ., OJ .,
.

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10 unfairly and is fair and equitable with respect to the Rejecting Classes. Thus, the Plan may
11

Q ~

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., .,

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i: 'C-

be confirmed notwithstanding the First Lien Steering Committee's failure to satisfy

12
13

Banruptcy Code section 1129(a)(8). After entry ofthe Confirmation Order and upon the
occurrence of the Effective Date, the PIan shall be binding upon the members of

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the

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14
15

CJ " ~..

:= d ~ ~

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c= ~ i. ';
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Rejecting Classes.
27.

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16

The Plan does not unfairly discriminate because (i) Classes C-4 and Dare

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17 comprised of Claims and Interests that are dissimilar in their legal nature from, and
18

00

.i

..
-

subordinate to, the Secured and Unsecured Claims receiving distributions under the Plan,

19

and (ii) there is a reasonable basis for the disparate treatment ofthe Claims in Class E.

20

Moreover, the Plan does not discriminate unfairly with respect to Class C-l because Class
21

22

C-L is comprised of Claims that differ in their legal nature from other Classes of Claims, and

23 the purchase of certain General Unsecured Claims by the Holders of First Lien Lender

24 Secured Claims does not constitute unfair discrimination with respect to Holders of Claims

25 in Class C-!.
26 27 28
17

28.

In addition, the Plan is "fair and equitable" under Banuptcy Code section

1129(b )(2) because the Holders of (i) Interests in Class D and (ii) Claims in Classes C-l, C-

Case 09-14814-lbr

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4 and E are not entitled to any recovery under the Plan, and no Holder of Claims or Interests

2
3

in a Class junior to Classes C-L, C-4, D and E wil receive any distributions or retain any
property under the PIan on account of such junior Claim or Interest.
29. Notwithstanding the fact that the Rhodes Entities wil receive certain forms

4
5

of consideration under the Plan, the Plan does not violate the absolute priority rule because
6 7
8

the consideration to be received by the Rhodes Entities under the Plan is not on account of
any prepetition equity interests one or more of the Rhodes Entities may hold but solely on

account of the Rhodes Entities' provision of substantial consideration and cooperation in

connection with the Mediation Settlement. Moreover, the value of

0 '"

10
11

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Il

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j; ei i. t-

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= OJ =

the consideration and

cooperation to be provided to the Debtors by the Rhodes Entities is greater than the cost of
the consideration to be provided to the Rhodes Entities.

12
13
30. In addition, the Court finds that the consideration to be provided by the

~ - 0 ~ 14
15 16

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Rhodes Entities to the Reorganized Debtors constitutes "new value" satisfying the standards

CJ t'''

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00

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ariculated by the Ninth Circuit with respect to the new value exception to the absolute
priority rule. Pursuant to the new value exception, an existing equity holder may receive a
distribution of property under a plan of reorganization if such equity holder offers value to

~ " ., -.. Z - r'" :: .i ..

-

17 18 19

the debtor that is (i) new, (ii) substantial, (iii) money or money's worth, (iv) necessary for a

20

successful reorganization and (v) reasonably equivalent to the value or interest received. In
21

22
23

re Bonner Mall, 2 F.3d at 908; Oxford Lij Ins. Co. v. Tucson SelfStorage, Inc. (In re
Tucson SelfStorage, Inc.), 166 B.R. 892, 899 (RA.P. 9th Cir. 1994). As set fort below,

24 each of these requirements has been satisfied.

25

31.

First, the Court finds that the value that wil be contributed by the Rhodes

26 Entities to the Reorganized Debtors pursuant to the Plan is "new." In order to be new for

27
puroses of

the new value exception, the value contributed to the debtor must come from an

28
18

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1 outside source and may not consist of property that already belongs to the debtor. In re

2 Saleha, Case No. 93-00638, 1995 WL 128495, at *3 (Bankr. D. Idaho Mar. 10, 1995)

3 ("(T)he 'new value' must come from outside ofthe debtor's business."); Berkeley Fed.
4
5

Bank & Trust v. Sea Garden Motel and Apartments. (In re Sea Garden Motel &
Apartments.), 195 B.R. 294, 302 (D. N.J. 1996) (noting that the infusion of capital must

7 come from an outside source); In re S.A.B.TC. Townhouse Ass 'n, Inc., 152 B.R. 1005, 1010

8 (Bankr. M.D. Fla. 1993) ("(T)he existing equity holders must contribute something to the
9 (d)ebtor that does not already belong to the (d)ebtor or to which the (d)ebtor is already

o '"

10 entitled").
11

Il . ., ., S.

Q ~ ., "
~ i:
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32.

Based on the foregoing, all of the value that wil be contributed to the

12
13

~ i2 ~ i:.. - ~ ~ i... M
., .,

Debtors by the Rhodes Entities is new because it comes from an outside source and does not

o ~ 0 rx ~ i: i. l== ;;; ~

14

consist of property that already belongs to the Debtors. The $3.5 milion Cash payment to

en C' ~ M

en .. (l .. ;; ;; z.!

15 be made by the Rhodes Entities wil consist entirely of funds belonging to the Rhodes

.i ~ ..'i i: ~ i. or; . 0 0 '" CJ ~"

~ ;;
~ i: " ., Zg

16 Entities in which the Debtors hold no interests. In addition, the Rhodes Entities assumed
17 ownership ofthe Rhodes Ranch Golf Course in December 2008, and the Rhodes Ranch Golf

z -

:: .i

'" r'" ..
-

18 Course is not currently owned by the Debtors. Finally, the Rhodes Entities wil (i) continue
19

00

to guaantee existing performance bonds for the benefit of the Debtors, (ii) ensure that the
Reorganized Debtors have the continued use of professional

20
21

licenses and (iii) ensure that

22

designees of the Reorganized Debtors replace the designees ofthe Rhodes Entities on any

23 HOA Boards related to the Debtors or Reorganized Debtors. Absent the Rhodes Entities'
24 voluntary cooperation with respect to the foregoing, the Debtors would face a significant

25 hurdle in attempting to reorganize their businesses.

26 27 28
19

33.

Second, the Court finds that the new value that wil be contributed by the

Rhodes Entities to the Debtors pursuant to the Plan is "substantiaL." While no mathematical

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1 relationship exists for determining whether a contribution of new value is substantial, courts
2 in the Ninth Circuit have held that a contribution of new value must be "real and necessary

3 to the successful implementation of a feasible plan." State Street Bank and Trust Co. v.
4
5

Elmwood, Inc. (In re Elmwood, Inc.), 182 B.R 845, 852-53 (D. Nev. 1995) (quoting In re

WoodbrookAssocs., 19 F.3d 312, 320 (7th Cir. 1994)). New value that is nominal,
6
7 gratuitous or token is not substantiaL. Id Under this standard, the new yalue to be

8 contributed to the Debtors by the Rhodes Entities is substantial because even if only the
9 value of the $3.5 milion Cash payment and the transfer of the Rhodes Ranch Golf

Course to

o '"

10 the Debtors are taken into account, the Debtors wil receive over $11.5 milion in value
11
($5.6 milion net of funded debt obligations on the Rhodes Ranch Golf

Il . ., ., S.

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,,~-~
;: i: i. t-

Course) from the

~ i: 'C~ g ., ., ~
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.. . 0 oa

12
Rhodes Entities. In addition, if the value of (i) the maintenance of

performance bonds

13

through the guarantees provided by the Rhodes Entities, (ii) the continued use of
14
the Rhodes Entities by designees of 15 professionallicenses and (iii) the replacement of

~ ;; Z ~ ~ .. ~ ..
" = i. 'r; . 00 '" CJ ~"
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the

.. =."" ... .i "

16 Debtors on HOA Board seats are taken into account, the value received by the Debtors may

r-. . Z -~ ~ .i ~
-

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17 exceed $20.2 milion ($14.3 milion net of funded debt obligations on the Rhodes Ranch
18 Golf

Course).
34.

19

The Cour also finds that the new value that wil be provided by the Rhodes

20

Entities is necessary to the successful implementation of the Plan. Without the $3.5 milion
21

22
23

cash payment, there would be less capital available to (i) fud distributions under the Plan
and (ii) finance the Debtors' ongoing business operations. Further, in addition to providing

24 the Debtors with approximately $8 millon of

value ($2.1 milion net of debt obligations) on

25 the Effective Date, the transfer of the Rhodes Ranch Golf Course to the Debtors wil ensure
26 that (i) the centerpiece of

the Rhodes Ranch community is adequately maintained and (ii)

27 28

the Debtors' operations wil not be harmed by diminished home sales or home prices as a

20

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1 result of a decline in the quality of the amenities available to the Rhodes Ranch community.

2 Similarly, replacing the Rhodes Entities' designees on the HOA Boards with designees of
3 the Reorganized Debtors will ensure that the Reorganized Debtors have continued control
4
5
costs in the Reorganized Debtors' operations. Finally, the maintenance of

over building standards in their communities and help to avoid disruptions or increases in
performance

7 bonds through the guarantees provided by the Rhodes Entities and the assistance of the
licenses wil allow the Debtors to
8 Rhodes Entities with respect to the use of professional

9 transition to new ownership without disruption in their business activities and avoid

il = ., OJ .,

o '" .

10 substantial costs related to replacing existing performance bonds or posting cash deposits.
11

Q ~

; "

In the absence of any of the foregoing forms of consideration to be contributed to the

Debtors by the Rhodes Entities, the successful implementation of

12
13

i: 'C~ t ~ M

~ 8., S .,

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== d ~ ~ r. ~ ~ M

the Plan would be

significantly jeopardized.
14
15

.i il 0 o

35.

Third, the Court finds that the new value to be contributed to the Debtors by

~ ~ .~ .. ~ ~

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. 0 0 '" CJ ~" ~ i:

16 the Rhodes Entities pursuant to the Plan is in the form of

"money or money's worth." In

-. Z r-. ~ ~
~ g
.i ;.
-

17 order to satisfy this requirement, the new value contributed to a debtor (i) "must consist of

18 money or property which is freely traded in the economy" and (ii) "must be a present
19

contribution, taking place on the effective date of the (p )Ian rather than a future

20

contribution." In re Ambanc La Mesa Ltd. P'Ship, 115 F.3d 650, 655 (9th Cir. 1997).
21
While certin forms of

22
23

the new value to be contributed by the Rhodes Entities to the

Reorganized Debtors may fall outside of the scope of a strict application of this standard, the
money or money's worth in the
the Plan comprised of

24 Debtors wil indisputably receive new value in form of

25 minimum amount of$I1.5 milion on the Effective Date of

(i) the
the transfer of

26 $3.5 milion cash payment and (ii) approximately $8 millon in respect of

the

27 28

Rhodes Ranch Golf Course ($2.1 milion net of funded debt obligations on the Rhodes

21

Case 09-14814-lbr

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Ranch Golf Course). The amount of new value to be received by the Reorganized Debtors

2
3

may, in fact, exceed $20.2 milion. The Rhodes Entities have therefore contributed new
value in the form of

money or money's worth to the Debtors.

4
5

36. Fourh, the Cour finds that the new value to be contributed to the Debtors by

the Rhodes Entities pursuant to the Plan is necessary for a successful reorganization. This
6
7 8

requirement demands that the new value contributed to the Debtors be necessary to the
success of

the reorganization. See In re Bonner Mall P'Ship, 2 F.3d at 911; In re Brotby,

9 0 '" .
OJ

303 RR. at 197 (finding an abuse of discretion where there was no finding that a plan could
not succeed without a contribution of

10
11

new value). As previously discussed, the new value to

~ ., Q ., ~ i: ~

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= =

be contributed to the Debtors by the Rhodes Entities is necessar for the implementation of

12
13

the Plan and the reorganization ofthe Debtors. In the absence ofthe $3.5 millon cash
payment, the Debtors would have less cash available to fund distributions under the Plan and

.i Il 0 o

14
15

== ~ ~

cn~~~ rJ ; ~ ..

to finance their operations, and without the transfer of the Rhodes Ranch Golf Course to the
Debtors, the value of one of

;J ~ Z ~ i. .~
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:; z.,

~.
r00

16
17 18

the Debtors' most valuable assets (Rhodes Ranch community)

;; - ., ..
z .i
::

would be jeopardized. Moreover, without the assistance of the Rhodes Entities with respect
to the maintenance of performance bonds, continued use of licenses and the composition of
HOA Board seats, the transition to new ownership under the Plan and the smooth operation

..
'"
-

19

20

ofthe Reorganized Debtors' businesses would be virtually impossible. The new value
21

22

contributed by the Rhodes Entities to the Debtors is therefore necessary for a successful

23 reorganization.
24
25

37.

Fifth, the Court finds that the new value to be contributed to the Debtors by

the Rhodes Entities pursuant to the Plan is reasonably equivalent in value to (and is, in fact,
substantially greater in value than) the consideration to be provided to the Rhodes Entities.
In determining whether the Debtors have received reasonably equivalent value, cours must

26 27
28

22

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1 consider whether there wil be a "genuine and fair exchange" of new value for a distribution
2 under a plan of

reorganization. See In re Tucson SelfStorage, 166 B.R. at 899. Here, the

Debtors have received more than reasonably equivalent value in exchange for consideration

4
5

to be paid to the Rhodes Entities. The Rhodes Entities wil contribute new value to the
Debtors in money or money's worth in the amount of$I1.6 milion to $20.2 milion (or $5.7

6
7 milion to $14.3 milion net of funded debt obligations on the Rhodes Ranch Golf Course).

8 In exchange for such new value, the Rhodes Entities wil receive consideration worth

9 approximately $2.7 milion. Thus, the Debtors will receive more than reasonably equivalent

:: ., S. Q ~ ., " ~ 'Ci: ~ as ., .,

o '" .

10 value in exchange for the consideration to be paid to the Rhodes Entities.

11

38.

Finally, to the extent that a "market test" requirement applies, the Court finds

12

~ -;Jeo..t~ t ~ N ~.= 0 ~

that such requirement has been satisfied because (i) the Debtors' exclusiye plan fiing and
13

solicitation periods were terminated, and (ii) the First Lien Steering Committee (rather than
14

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15 the Debtors) is the plan proponent.

16

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39.

Because the Rhodes Entities are not receiving a distribution under the Plan on

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-

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17 account of any prepetition equity interests in the Debtors, and the requirements of the new

18 value exception to the absolute priority rule are satisfied, the Plan is fair and equitable with
19

respect to all Classes of Claims or Interests under the Plan for puroses of Bankptcy Code
section 1129(b).

20
21

22

40.

Only One Plan (11 U.S.C. S 1129(c)). The Plan is the only plan of

23 reorganization fied in the Chapter 11 Cases. Accordingly, Bankptcy Code section

24 1129(c) is inapplicable.
25

41.

Principal Purose of

Plan (11 U.S.C. S 1129(d)). The principal purpose of

26 the Plan is neither the avoidance of taxes nor the avoidance of section 5 of the Securities
27 28
23

Act, and no governmental unit has objected to the confirmation of the Plan on such grounds.

Case 09-14814-lbr

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1 The Plan, therefore, satisfies the requirements of

Banuptcy Code section 1129(d).

2
3

42.

Good Faith Solicitation (11 U.S.C. S 1129(e)). Based on the record before

the Court in the Chapter 11 Cases, the First Lien Steering Committee is deemed to have

4
5

solicited acceptances ofthe Plan in good faith and in compliance with the applicable

provisions ofthe Banruptcy Code, including, without limitation, Bankuptcy Code sections
6 7
8
I

125(a) and (e), and any applicable nonbanruptcy law, rule or regulation governing the

adequacy of disclosure in connection with such solicitation.

43.

9 o '" .

Satisfaction of Confirmation Requirements. For all of the foregoing reasons,

10 the PIan satisfies the requirements for confirmation set forth in Bankruptcy Code section
11

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., .,

1129.

12
13

44. Good Faith. The First Lien Steering Committee, the Debtors, the Creditors'
Committee, the Rhodes Entities, the Second Lien Agent and all other paries (and all of

i:.... "" rO i... N

;: i= i. l" .. ~ 0 ~

their

14

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15 respective members, offcers, directors, agents, financial advisers, attorneys, employees,

16 equity holders, partners, affiliates and representatives) will be acting in good faith if

they

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-

~ " .,

17 proceed to (i) consummate the Plan and the agreements, settlements, transactions and
18 transfers contemplated thereby and (ii) take the actions authorized and directed by this
19

Confirmation Order.
45. Substantive Consolidation. A preponderance of

20

the evidence presented to the

21

22
23

Court demonstrates that (i) no Creditor will be harmed by the proposed substantive
consolidation of

the Debtors' Estates into a single consolidated Estate for purposes of

24 confirmation and distributions to be made under the Plan and (ii) the proposed substantive
25 consolidation of the Debtors' Estates is appropriate in light of

the fact that the Debtors: (a)

26 operate as a single business enterprise under a single name; (b) operate on a centralized basis
27
28

with a centralized cash management system; (c) share common parent companies; (d) rely

24

Case 09-14814-lbr

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on a single corporate offce for operational and other support services; (e) regularly conduct
business with each other such that the flow of funds and transactions would be diffcult to
entangle; and (f) are all obligated on the First Lien Lender Claims and the Second Lien

2
3

4
5

Lender Claims. In addition, substantial Intercompany Claims existed between the various
Debtors as of

the Petition Date, and numerous Proofs of Claim were fied against the
the Debtors' Estates into a single

6
7
8
incorrect Debtor entity. The substantive consolidation of

Estate for puroses of confirmation and distributions under the Plan wil also provide

9 0 '" .
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significant advantages that benefit all ofthe Debtors' creditors.

46. Mediation Settlement. As described in Article LA of the Disclosure

10
11

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= =

Statement, the Plan embodies the terms of the Mediation Settlement. In order to determine

12
13

whether a compromise may be approved under Bankuptcy Rule 9019, the Banuptcy
Court must consider four factors: (i) the probability of success of

the litigation; (ii) the

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g t";;

14
15

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difficulties, if any, to be encountered in the matter of collection; (iii) the complexity ofthe
litigation involved, and the expense, inconvenience and delay necessarily attending it; and
(iv) the paramount interest of

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16

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17
18

the creditors and a proper deference to their reasonable views.

..
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See, e.g., Martin v. Kane (In re A&C Props.), 784 F.2d 1377, 1381 (9th Cir. 1986). A
compromise may be approved even if all four of

19

the factors do not favor the compromise so

20
10ng as the factors weigh in favor of

the compromise when taken as a whole. See In re Pac.

21

22
23

Gas and Elec. Co., 304 B.R 395,416 (Ban. N.D. CaL. 2004). In addition, a compromise

does not have to be the best compromise that could have possibly been obtained but, instead,

24

must only fall within a reasonable range of possible outcomes. In re WCI Cable, Inc., 282

25 B.R. 457, 473-74 (Ban. D. Or. 2002).

26 27
28
25

47.

Based on the foregoing standard, the Cour hereby finds that the Mediation

Settlement is fair, equitable and reasonable because, among other things, the Mediation

Case 09-14814-lbr

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Settlement allows for the resolution of (i) potential preference actions relating to transfers in

2
3

excess of $9 milion to certain of the Rhodes Entities within the one year period prior to the
Petition Date that (a) would have been heavily contested by the Rhodes Entities and (b) may

4
5

not have produced substantial recoveries for the Debtors' Estates in light of the fact that

diligence performed over the course ofthe Debtors' Chapter 11 Cases indicates that all but
6
7
8
$1,125,134 of the total amount transferred was transferred in the ordinar course of

business

between the Debtors and the non-Debtor Rhodes Entities, and (ii) potential fraudulent
conveyance actions held by the Debtors' Estates against the Rhodes Entities that likewise
would have been heavily contested by the Rhodes Entities. In addition, the creditors of

9
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10
11

the

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Estates wil derive a material benefit from the approval of the Mediation Settlement because,

12

among other things, the Mediation Settlement (i) contemplates a $3.5 milion cash payment
13

~ ~ i. l-

from the Rhodes Entities to the Reorganized Debtors, which payment wil be used to fund
14
15

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working capital needs and distributions contemplated by the Plan, (ii) provides for the

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~ t or;

16 17
18 19

transfer of the Arizona Assets, which were non-core assets to the Reorganized Debtors that

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likely would have required significant additional fuding for development, to the Rhodes
Entities, (iii) provides for the transfer of

the Rhodes Ranch Golf Course, the maintenance

and continued operation of which is paramount to maximizing the value of the Reorganized Debtors' assets, to the Reorganized Debtors, (iv) avoids the significant expense and time

20
21

22
23

delay associated with litigating the Claims released under the Plan, which would have

yielded uncertain results, and (v) enables the Debtors to emerge from banruptcy
expeditiously and consensually, without any unecessary eradication of

24
25 26

value through a

prolonged stay in chapter 11. In addition, all Claims and Causes of Action against the
Rhodes Entities that are not covered by the limited release provided for in the Mediation

27
28

Settlement wil be transferred to the Litigation Trust for the benefit of all creditors, to be

26

Case 09-14814-lbr

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1 prosecuted and/or settled post-emergence, as deemed appropriate by the Litigation Trust,

2 and the Mediation Settlement will ensure a smooth transition to new ownership under the

Plan.
48. Assumption of

4
5

Executorv Contracts and Unexpired Leases. The Plan

satisfies all requirements for the assumption of executory contracts and unexpired leases
6

7 contained in the Bankptcy Code, including, without limitation, the requirement to cure all
8 outstanding defaults, if any, and to provide adequate assurance of performance under such

9 contracts and leases.

0 '"

10
11

Il ., .,
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49. Releases. Exculpations and Inunctions. Pursuant to Banptcy Code

section 1123(b) and Bankruptcy Rule 9019, the settlements, compromises, releases,

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13

discharges, exculpations and injunctions set forth in Aricle VII ofthe Plan are fair,
equitable, reasonable, in good faith, and are in the best interests of the Debtors, the

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15

== ~ ~..
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Reorganized Debtors, the Estates and the Holders of Claims and Interests. In addition, the
releases, injunctions and exculpations set forth in Article VII of

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16
17 18

the Plan are integral

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components ofthe Mediation Settlement that is embodied in the PIan. The record of the
Confirmation Hearing and the Chapter 11 Cases is sufficient to support the releases,

19

exculpations and injunctions provided for in Article VII of the Plan.

50. Conditions to Confirmation. Entr of

20
21

this Confirmation Order shall satisfy

22
23

the conditions to Confirmation set fort in Aricle X.A of the Plan.

DECREES
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED

24

25 THAT:
26 27
confirmation of

51.

Confirmation. For the reasons set forth herein, all requirements for
the PIan have been satisfied. Accordingly, the PIan is confirmed under

28 27

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1 Banuptcy Code section 1129.

2
3

52.

Obiections. All Objections that have not been withdrawn, waived or settled,

and all reservations of rights pertaining to the confirmation of the Plan, are overrled on the

4
5

merits.
53.

Stanley Opposition. The Stanley Opposition is overrled on the merits.

6
7
8

54. Plan Documents. The documents attched as exhibits to the Disclosure

Statement (collectively, the "Plan Documents"), and any amendments, modifications, and
supplements thereto, and all documents and agreements introduced into evidence by the

9
0 '" .
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10
11

First Lien Steering Committee at the Confirmation Hearing (including all exhibits and attachments thereto and documents referred to therein), and the execution, delivery and
performance thereof

., .,

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12
13

by the Reorganized Debtors, are authorized and approved. Without

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fuher order or authorization of the Court, the First Lien Steering Committee or the

14
15

=: d ~ ~ v: oS ~ M 00 ; ~ .. ~ i. Z ~ ~~...~

Reorganized Debtors, as applicable, and their respective successors are authorized and
empowered to make all modifications to all documents included as par of the Plan

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~ i. or;

16
17 18 19

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Documents that are consistent with the Plan. Execution versions ofthe documents
comprising the Plan Documents shall constitute legal, valid, binding, and authorized

obligations ofthe respective parties thereto, enforceable in accordance with their terms and,
to the extent applicable, shall create, as of the Effective Date, all

20
liens and other security
21

22
23

interests purported to be created thereby.

55.

Plan Classification Controllng. The classification of Claims and Interests for

24 purposes ofthe distributions to be made under the Plan shall be governed solely by the terms
25 of the PIan. The classification and amounts of Claims, if

any, set forth on the ballots

26 returned by the Debtors' creditors in connection with voting on the Plan (i) were set forth on
27 28
28

the ballots solely for purposes of voting to accept or reject the Plan, (ii) do not necessarily

Case 09-14814-lbr

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1 represent, and in no event shall be deemed to modify or otherwise affect, the actual amount

2 or classification of such Claims under the Plan for distribution purposes and (iii) shall not be
3

binding on the First Lien Steering Committee, the Debtors or the Reorganized Debtors
except with respect to voting on the PIan.

4
5
56. Mediation Settlement. As described in Article LA ofthe Disclosure

6 7
8
Statement, the Plan embodies the terms of

the Mediation Settlement. The entry ofthe

Confirmation Order shall constitute the Court's approval, pursuant to Banuptcy Rule
9019, of the compromise and settlement of the matters subject to the Mediation Settlement.
57. The Court's approval ofthe Mediation Settlement is appropriate in light of
the fact that the Cour has found that the Mediation Settlement is fair, equitable and

0 '"

10
11

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12

reasonable because, among other things, the Mediation Settlement allows for the resolution
13

of (i) potential preference actions relating to transfers in excess of $9 milion to certain of

14
15

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. 00 '" CJ ~"
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the Rhodes Entities within the one year period prior to the Petition Date that (a) would have been heavily contested by the Rhodes Entities and (b) may not have produced substantial
recoveries for the Debtors' Estates in light of

~.
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00

16 17 18 19

the fact that diligence performed over the

the total amount

course of

the Debtors' Chapter 11 Cases indicates that all but $1,125,134 of

transferred was transferred in the ordinary course of business between the Debtors and the
non-Debtor Rhodes Entities, and (ii) potential fraudulent conveyance actions held by the

20
21

22

Debtors' Estates against the Rhodes Entities that likewise would have been heavily

23 contested by the Rhodes Entities.

24
58.

In addition, the Court has found that creditors ofthe Estates wil derive a

25 material benefit from the approval ofthe Mediation Settlement because, among other things,
26 the Mediation Settlement (i) contemplates a $3.5 milion cash payment from the Rhodes
27 28

Entities to the Reorganized Debtors, which payment wil be used to fud working capital

29

Case 09-14814-lbr

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1 needs and distributions contemplated by the Plan, (ii) provides for the transfer of the

2 Arizona Assets, which were non-core assets to the Reorganized Debtors that likely would
3

have required significant additional fuding for development, to the Rhodes Entities, (iii)
provides for the transfer of the Rhodes Ranch Golf Course, the maintenance and continued
operation of which is paramount to maximizing the value of

4
5

the Reorganized Debtors'

6
7 assets, to the Reorganized Debtors, (iv) avoids the significant expense and time delay

8 associated with litigating the Claims released under the Plan, which would have yielded

9 uncertin results, and (v) enables the Debtors to emerge from banuptcy expeditiously and

il = ., OJ ., Q ~ ., " ~
i: 'C-

o '" .

10 consensually, without any unnecessary eradication of value through a prolonged stay in

11

chapter 11. Moreover, the Cour has found that all Claims and Causes of Action against the
Rhodes Entities that are not covered by the limited release provided for in the Mediation

12
13

ro ., ., as ~ --i ~ 0 ~
c( C . ";
== ~ ~..

~ ~ . l" ~ t.: l~ ' ~z:: ;; ~ e;

.i " ..

Settlement wil be transferred to the Litigation Trust for the benefit of all creditors, to be
14

; ~ ~

15 prosecuted and/or settled post-emergence (as deemed appropriate by the Litigation Trust),

. 00 '" CJ ~"

16 and that the Mediation Settlement wil ensure a smooth transition to new ownership under

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-

17 the Plan.
18
19

59.

Substantive Consolidation. The substantive consolidation of

the Debtors'

Estates into a single consolidated Estate for purposes of confirmation and distributions under
the Plan is approved.

20
21

22

60.

Continued Corporate Existence. Except as otherwise provided in the Plan,

23 each Debtor shall continue to exist after the Effective Date as a separate corporate entity,

24 limited liability company, parnership, or other form, as the case may be, with all the powers

25 of a corporation, limited liability company, parnership, or other form, as the case may be,
26 pursuant to the applicable law in the jurisdiction in which each applicable Debtor is
27
28

incorporated or formed and pursuant to the respective certificate of incorporation and

30

Case 09-14814-lbr

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1 bylaws (or other formation documents) in effect prior to the Effective Date, except to the
2 extent such certificate of incorporation and bylaws (or other formation documents) are

amended by the Plan or otherwise, and to the extent such documents are amended, such
documents are deemed to be pursuant to the Plan and require no further action or approval.
61.

4
5

Vesting of Assets in the Reorganized Debtors. Except for any Claims or

7 Causes of Action transferred to the Litigation Trust and unless otherwise provided in the
8 Plan or any agreement, instrument, or other document incorporated therein, on the Effective
9 Date, all property in each Estate, all Causes of Action, and any property acquired by any of

il = ., OJ ., Q ~ ., " ~ 'Ci: ~ as
i: ~ ~ "" i; i. ~ M ~ ei i. l., .,

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10 the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and
11

clear of all Liens, Claims, charges, or other encumbrances. On and after the Effective Date,

12

except as otherwse provided in the Plan, each Reorganized Debtor may operate its business
13

and may use, acquire, or dispose of property and compromise or settle any Claims, Interests,
14
15

.i il 0 o

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or Causes of Action without supervision or approval by the Court and free of any restrictions

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16 of the Banuptcy Code or Bankruptcy Rules.

;; - .,
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17

62.

Cancellation of Equity Securities and Related Obligations. On the Effective

~ I;
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-

18 Date, except as otherwise specifically provided for in the Plan: (1) the Old Equity Interests
19

and any other Certificate, note, bond, indenture, purchase right, option, warant, or other

20

instruent or document directly or indirectly evidencing or creating any indebtedness or

21

22

obligation of or ownership interest in the Debtors giving rise to any Claim or Interest (except

23 such Certificates, notes, other instruments or documents evidencing indebtedness or

24 obligations of

the Debtors that are reinstated pursuant to the Plan), shall be cancelled solely

25 as to the Debtors, and the Reorganized Debtors shall not have any continuing obligations

26 thereunder and (2) the obligations of the Debtors pursuant, relating, or pertaining to any

27
28

agreements, indentures, certificates of designation, bylaws, or certificate or articles of

31

Case 09-14814-lbr

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incorporation or similar documents governing the Old Equity Interests and any

other

2
3

Certificates, notes, bonds, indentures, purchase rights, options, warrants, or other

instrents or documents evidencing or creating any indebtedness or obligation of the

4
5

Debtors (except such agreements or certificates, notes or other instruents eyidencing

indebtedness or obligations of

the Debtors that are specifically Reinstated pursuant to the

6 7
8

Plan) shall be released and discharged; provided, however, that notwithstanding

Confirmation, any such indenture or agreement that governs the rights of the Holder of a Claim shall continue in effect solely for purposes of: (w) allowing Holders to receive

9
0 '" . =

10
11

distributions under the Plan; (x) allowing a Servicer to make distributions on account of
such Claims as provided in the applicable governing agreement; (y) permitting such Servicer

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12
13

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to maintain any rights and Liens it may have against property other than the Reorganized

Debtors' property for fees, costs, and expenses pursuant to such indenture or other
14
15

= ~;. ~ en = =t r"

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agreement; and (z) governing the rights and obligations of non-Debtor parties to such

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16 17 18 19

agreements vis--vis each other (including, without limitation, the rights and obligations of

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non-Debtor parties under the First Lien Credit Agreement and the Second Lien Credit
Agreement, which, for the avoidance of doubt, shall not be affected by the Plan except as

otherwise expressly provided in the Plan); provided, furher, however, that the preceding

20

proviso shall not affect the discharge of Claims or Interests pursuant to the Banptcy
21

22
23

Code, the Confirmation Order, or the Plan, or result in any expense or liability to the
Reorganized Debtors. The Reorganized Debtors shall not have any obligations to any

24
25

Servicer for any fees, costs, or expenses, except as expressly otherwise provided in the Plan.
63. Section 1145 Exemption. Pursuant to Banptcy Code section 1145, the

26

offering, issuance, and distribution of any Securities contemplated by the Plan and any and all settlement agreements incorporated therein, including the Newco Equity Interests, shall,

27
28

32

Case 09-14814-lbr

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to the fullest extent permitted by applicable law, be exempt from, among other things, the

2
3

registration requirements of section 5 of the Securities Act and any other applicable law

requiring registration prior to the offering, issuance, distribution, or sale of Securities. In

4
5

addition, under Bankrptcy Code section 1145 any Securities contemplated by the Plan,
including the Newco Equity Interests and New First Lien Notes, wil be freely tradable and

6
7
8
transferable by the recipients thereof, subject to (i) the provisions of

Banuptcy Code

section I

145(b)(1) relating to the definition of

an underwiter in section 2(a)(11) ofthe

9 0 '" . 10
11

Securities Act, and compliance with any rules and regulations of the Securities and

Exchange Commission, if any, applicable at the time of any future transfer of such
Securities or instruments; (ii) the restrictions, if any, on the transferability of such Securities
and instruments set forth in the Newco LLC Operating Agreement, a draft of

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13

which is

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attached to the Disclosure Statement as Exhibit J; and (iii) applicable regulatory approval.
14
15

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64. Exemption from Certain Transfer Taxes and Recording Fees. Pursuant to

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16 17
18

Bankruptcy Code section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to
any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to:
(1) the issuance, distribution, transfer, or exchange of

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any debt, equity security, or other

..
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19

interest in the Debtors or the Reorganized Debtors; (2) the creation, modification,
consolidation, or recording of any mortgage, deed of trust, or other security interest, or the

20
21

22
23

securing of additional indebtedness by such or other means; (3) the making, assignment, or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or
other instruent of

24
25

transfer under, in furtherance of, or in connection with, the Plan,

including any deeds, bils of sale, assignments, or other instrument of transfer executed in
connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee,

26 27 28

33

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1 intangibles or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax,

2 Uniform Commercial Code filing or recording fee or other similar tax or governmental
3

assessment, and the appropriate state or 10cal governmental officials or agents shall forego

4
5

the collection of any such tax or governental assessment and to accept for fiing and
recordation any of the foregoing instruments or other documents without the payment of any

6 7
8

such tax or governmental assessment.

65. Restructuring Transactions. On the Effective Date or as soon as reasonably

practicable thereafter, the Reorganized Debtors may take all actions as may be necessary or

0 '"

10
11

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appropriate to effect any transaction described in, approved by, contemplated by, or
necessary to effectuate the PIan, including: (1) the execution and delivery of appropriate
agreements or other documents of

12
13
that are consistent with the terms of

merger, consolidation, or reorganization containing terms

the Plan and that satisfy the requirements of applicable

transfer, assignment,

14
15
law; (2) the execution and delivery of appropriate instruments of

~ t' " ;; ~ z:: ~ ~.t '; . 00," CJ ~" ~ i:

~ ~

16 17 18 19

assumption, or delegation of any property, right, liability, duty, or obligation on terms

~ " ., -.. z - r'" :: .i ..

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00

consistent with the terms of the Plan; (3) the filing of appropriate certificates of
incorporation, merger, or consolidation with the appropriate governmenta authorities

pursuant to applicable law; (4) the Roll-Up Transactions; (5) the establishment ofa
liquidation trust or other appropriate vehicle to hold assets for sale that will not be utilized in

20
21

22
23

the business of the Reorganized Debtors; and (6) all other actions that the Reorganized Debtors determine are necessary or appropriate, including the making of filings or

24
25

recordings in connection with the relevant Roll-Up Transactions. The form of each Roll-Up

Transaction shall be determined by the Reorganized Debtor that is pary to such Roll-Up
Transaction. Implementation of

26 27 28

the Roll-Up Transactions shall not affect any distributions,

discharges, exculpations, releases, or injunctions set forth in the Plan.

34

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66.

Effectuating Documents. Further Transactions. On and after the Effective

2 Date, the Reorganized Debtors, and the officers and members of the boards of directors (or
3

other governing bodies) thereof, are authorized to and may issue, execute, deliver, fie, or
record such contracts, Securities, instruments, releases, and other agreements or documents
and tae such actions as may be necessary or appropriate to effectuate, implement, and

4
5

6
7 further evidence the terms and conditions of the Plan and the Securities issued pursuant to

8 the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any
9 approvals, authorizations, or consents except for those expressly required pursuant to the

il = ., OJ .,

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10 Plan.
11

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67.

Preservation of Causes of Action. In accordance with Bankptcy Code

12

., ~ ., t-~ C' i.

section 1123 (b), except as otherwse provided in the Plan, the Reorganized Debtors and the
13

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Litigation Trust shall retain and may enforce all rights to commence and pursue, as
14
15

;; ~ :: .i~.. ~ i.";; . 0 ~" CJ 0~'" i: il ""

:i z.,

appropriate, any and all Causes of Action, whether arising before or after the Petition Date,

16 including any actions specifically enumerated on Exhibit L to the Disclosure Statement, and
17 the Reorganized Debtors' rights to commence, prosecute, or settle such Causes of Action
18
19
shall be preserved notwithstanding the occurrence of

;; -., I;. . ~ '" ::

.i ~
-

the Effective Date. The Reorganized

Debtors and the Litigation Trust, as applicable, may pursue such Causes of Action, as appropriate, in accordance with the best interests of the Reorganized Debtors and the

20
21

22
23

Litigation Trust, as applicable. No Entity may rely on the absence of a specific reference in
the Plan or the Disclosure Statement to any Cause of Action against them as any indication

24 that the Debtors, Reorganized Debtors or the Litigation Trust, as applicable, wil not pursue
25 any and all available Causes of Action against them. The Reorganized Debtors and the

26 Litigation Trust, as applicable, shall be deemed to have expressly reserved all rights to
27 28
35

prosecute any and all Causes of Action against any Entity, except as otherwise expressly

Case 09-14814-lbr

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1 provided in the Plan. Unless any Causes of Action against an Entity are expressly waived,

2 relinquished, exculpated, released, compromised, or settled in the Plan or an order of the

3

Court, the Reorganized Debtors and the Litigation Trust, as applicable, shall be deemed to

4
5

expressly reserve all Causes of Action for later adjudication and, therefore, no preclusion
doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim

6
7 preclusion, estoppel Qudicial, equitable or otherwise), or laches, shall apply to such Causes

8 of Action upon, afer, or as a consequence of Confirmation or the occurrence of the

9 Effective Date.

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11

68. The Reorganized Debtors and the Litigation Trust, as applicable, shall be

OJ

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deemed to reserve and shall retain the foregoing Causes of Action notwithstanding the
rejection or repudiation of any executory contract or unexpired lease during the Chapter 11

12
13

P eo i. t-

Cases or pursuant to the Plan. In accordance with Bankptcy Code section 1123(b)(3), any
14
15

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Causes of Action that a Debtor may hold against any Entity shall vest in the Reorganized

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00

16 17
18

Debtors and the Litigation Trust, as the case may be, on the Effective Date. The applicable
Reorganized Debtor and the Litigation Trust, as applicable, through its authorized agents or

~ " ., -.. Z - r'" :: .i ..

-

representatives, shall retain and may exclusively enforce any and all such Causes of Action

19

belonging to it. The Reorganized Debtors and the Litigation Trust, as applicable, shall have

20

the exclusive right, authority, and discretion to determine and to initiate, fie, prosecute,
21

22
23

enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such
Causes of Action and to decline to do any of the foregoing without the consent or approval
of any third party or further notice to or action, order, or approval of the Cour. Neither the

24
25

Litigation Trust nor the Reorganized Debtors shall commence any litigation against the
Rhodes Entities until the Court rules on the allowance of

26 27 28 36

the Rhodes Entities Claims set

forth in Proofs of Claim, included in the Debtors' Schedules or otherwise set forth in the

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Mediation Term Sheet. To the extent any statute oflimitations to pursue any claims
belonging to the Debtors against the Rhodes Entities would lapse from the execution date of
the Mediation Term Sheet through the Cour's resolution of the allowance of

2
3

the Rhodes

4
5

Entities Claims, the Rhodes Entities shall be deemed to have consented to an extension of

the applicable statute oflimitations until sixty days following the Court's ruling on the
6 7
8

allowance ofthe Rhodes Entities Claims. The Litigation Trust shall have no liability to any

entity for any Claims or Causes of Action it determines not to pursue.

69. Assumption and Rejection of

Executory Contracts and Unexpired Leases.

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10
11

Except as otherwise provided in the Plan, the Debtors' executory contracts or unexpired

leases not assumed or rejected pursuant to an order of the Cour prior to the Effective Date

12
13

shall be deemed rejected pursuant to Bankptcy Code sections 365 and 1123, except for
those executory contracts or unexpired leases: (1) listed on the schedule of Assumed

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14
15

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Executory Contracts and Unexpired Leases attached to the Disclosure Statement as Exhibit N; (2) that are Intercompany Contracts, in which case such Intercompany Contracts are
deemed automatically assumed by the applicable Debtor as of the Effective Date, unless

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16 17
18 19

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such Intercompany Contract previously was rejected by the Debtors pursuant to an order of
the Cour or is the subject of a motion to reject pending on the Effective Date; (3) that are

20

the subject of a motion to assume or reject pending on the Effective Date (in which case
21

22
23

such assumption or rejection and the effective date thereof shall remain subject to an order
of

the Court); (4) that are subject to a motion to reject with a requested effective date of

24
25

rejection after the Effective Date; or (5) that are otherwise expressly assumed or rejected
pursuant to the Plan. Entry ofthe Confirmation Order shall constitute an order of

the Court

26 27 28

approving the assumptions or rejections of such executory contracts or unexpired leases as

set forth in the Plan, all pursuant to Bankruptcy Code sections 365(a) and 1123. Unless

37

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otherwise indicated, all assumptions or rejections of such executory contracts and unexpired
leases in the Plan are effective as of

2
3

the Effective Date. Each such executory contract and

unexpired lease assumed pursuant to the Plan or by Court order but not assigned to a third

4
5

pary prior to the Effective Date shall revest in and be fully enforceable by the applicable
contracting Reorganized Debtor in accordance with its terms, except as such terms may have

6
7
8

been modified by such order. Notwithstanding anything to the contrary in the Plan, the First
Lien Steering Committee and the Reorganized Debtors, as applicable, reserve the right to

alter, amend, modify, or supplement the schedules of executory contracts or unexpired

leases identified in Exhibit N to the Disclosure Statement at any time through and including

Il ., ., Q ., ~

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10
11

fifteen days afer the Effective Date. All executory contracts and unexpired leases
associated solely with the Arizona Assets shall be assumed and assigned to the Rhodes

12
13

Entities (or their designee) to the extent set forth on the schedule of Assumed Executory
14
15

CI.. z ~ " ;; ~ ~ .. .~

Contracts and Unexpired Leases attached to the Disclosure Statement as Exhibit N, at no

. 00 '" CJ ~"
Z

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16 17
18

cost to the Debtors or the Reorganized Debtors and all Cure costs associated with such
scheduled Arizona contracts or leases shall be borne by the Rhodes Entities.
70. Claims Based on Rejection or Repudiation of

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Executorv Contracts and

Claim

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19
Unexpired Leases. Unless otherwise provided by an order ofthe Court, any Proofs of

20
asserting Claims arising from the rejection or repudiation of

the Debtors' executory

21

22
23

contracts and unexpired leases pursuant to the Plan or otherwise must be fied with the
Claims and Solicitation Agent no later than the Rejection Damages Claim Deadline. Any
Proofs of

24
25

Claim arising from the rejection or repudiation ofthe Debtors' executory contracts

or unexpired leases that are not timely filed by the Rejection Damages Claim Deadline shall

26
27 28

be disallowed automatically, forever barred from assertion, and shall not be enforceable against any Reorganized Debtor without the need for any objection by the Reorganized

38

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1 Debtors or further notice to or action, order, or approval of

the Court, and any Claim arising

2 out of the rejection or repudiation ofthe executory contract or unexpired lease shall be

deemed fully satisfied, released, and discharged, notwithstanding anything in the Schedules

4
5

or a Proof of Claim to the contrary. All Allowed Claims arising from the rejection or repudiation ofthe Debtors' executory contracts and unexpired leases shall be classified as

6 7
8

General Unsecured Claims.

71.

Home Sales. All pending home sale contracts shall be assumed by the

9 applicable Reorganized Debtor.

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10
11

72.

Warranties. All eligible prepetition home sale contracts with one-year

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waranty obligations shall be performed in the ordinary course of business of the

Reorganized Debtors. Upon the Effective Date, any remaining warranty obligations that are

12
13

to be assumed by the Reorganized Debtors, which shall only be assumed with the consent of
14

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== ~ ~
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15 the First Lien Steering Committee, shall be transferred to the Reorganized Debtors.
16 Warranty obligations that are not expressly assumed shall be rejected and treated as General
17 Unsecured Claims.

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-

18

73.

Procedures for Resolving Disputed Claims. The provisions contained in

19

Article VI of the Plan are found to be reasonable and are hereby approved.
74. Provisions Governing Distributions. The provisions contained in Article VII

20
21

22
23

of

the Plan, including, without limitation, (i) the provisions governing the payment of

$1.

milion to the First Lien Lenders and (ii) the provisions regarding the purchase of certain

24 General Unsecured Claims, are found to be reasonable and are hereby approved.
25
75.

Discharge of Claims and Termination of Interests. Pursuant to Bankptcy

26 Code section 1141 (d), and except as otherwise specifically provided in the Plan, the

27
28

distributions, rights, and treatment that are provided in the Plan shall be in complete

39

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satisfaction, discharge, and release, effective as of the Effective Date, of Claims, Interests,

2
3

and Causes of Action of any nature whatsoever, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of,

4
5

Liens on, obligations of, rights against, and Interests in, the Debtors or any of their assets or

properties, regardless of whether any property shall have been distributed or retained
6 7
8

pursuant to the Plan on account of such Claims and Interests, including demands, liabilities,
and Causes of Action that arose before the Effective Date, any liability (including
withdrawal

9 0 '" .

liability) to the extent such Claims or Interests relate to services performed by

10
11

employees of the Debtors prior to the Effective Date and that arise from a termination of any
employee, regardless of whether such termination occurred prior to or after the Effective

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Date, any contingent or non-contingent liability on account of representations or warranties

13

issued on or before the Effective Date, and all debts of the kind specified in Banuptcy
14
15

=: ~ ~ ~

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Code sections 502(g), 502(h), or 502(i), in each case whether or not: (1) a Proof of Claim

;; . Z ~ ~ .~
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16
17

based upon such debt or right is fied or deemed fied pursuant to Banruptcy Code section
501; (2) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to

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Banuptcy Code section 502; or (3) the Holder of such a Claim has accepted the Plan. Any
default by the Debtors with respect to any Claim or Interest that existed immediately prior to
or on account of the filing of

20

the Chapter 11 Cases shall be deemed Cured on the Effective

21

22
23

Date. The Confirmation Order shall be a judicial determination of the discharge of all
Claims and Interests subject to the Effective Date occurring.
76. Releases by the Debtors of

24
25

the Released Parties. Pursuant to Banptcy

Code section 1123(b) and except as otherwise specifically provided in the Plan, for good and
valuable consideration, including the service of

26
27 28

the Released Paries to facilitate the

expeditious reorganization of the Debtors and the implementation of the restructuring

40

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1 contemplated by the PIan, and as par ofthe global settlement described in Article 1.B ofthe
2 Disclosure Statement, on and after the Effective Date, the Released Paries are deemed

released by the Debtors, the Reorganized Debtors, and the Estates from any and all Claims, obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever,
including any derivative Claims asserted on behalf of

4
5

the Debtors, taking place on or before

7 the Effective Date, whether known or unown, foreseen or unforeseen, existing or

8 hereinafter arising, in law, equity, or otherwise, that the Debtors, the Reorganized Debtors or
9 the Estates would have been legally entitled to assert in their own right (whether
o '"
10 individually or collectively) or on behalf of

the Holder of any Claim or Interest or other

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; "

Entity, based on or relating to, or in any maner arising from, in whole or in par, the
Debtors, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of

12
13
any Security of

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the Debtors, the subject matter of, or the transactions or events giving rise to,

14
15

(/ ;; ~ ..

any Claim or Interest that is treated in the Plan, the business or contractual arrangements

~ " .,
;; Z g

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16 between any Debtor and any of the Released Paries, the restructuring of Claims and
17 Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of

"" ;:
as &3 :: '"
-

18 the Plan and Disclosure Statement, or related agreements, instruments, or other documents,
19

.i ~
.

upon any other act or omission, transaction, agreement, event, or other occurence taking
place on or before the Effective Date.

20
21

22

77

Releases by the Debtors ofthe Rhodes Entities. The Rhodes Entities shall be

23 deemed released from any and all Claims, obligations, rights, suits, damages, Causes of
24 Action, remedies, and liabilities whatsoever arising under chapter 5 of

the Bankuptcy Code

25 with respect to transfers made by the Debtors to the Rhodes Entities during the 2 years prior
26 to the Petition Date; provided, however, that such release shall only apply to transfers

27
28

expressly set forth in the Schedules as fied with the Cour as of August 1, 2009 or as

41

Case 09-14814-lbr

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disclosed in Attchment B to the Mediation Term Sheet.

78. Releases by First Lien Lenders of First Lien Lenders. Pursuant to

2
3

Banptcy Rule 9019, and except as otherwise specifically provided in the Plan, to the
extent a First Lien Lender elected on its ballot to release the First Lien Lenders in
accordance with Article VII1.F of the Plan, for good and valuable consideration, on and after

4
5

6 7
8

the Effective Date, each of the First Lien Lenders that elected to grant a release, shall be
deemed to release each of

the other First Lien Lenders that elected to grant a release and

9 0 '"

each of their affiiates from any and all Claims, obligations, rights, suits, damages, Causes of
Action, remedies, and liabilities whatsoever, whether known or unkown, foreseen or

10
11

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unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such First Lien

12

Lender would have been legally entitled to assert against any other First Lien Lender that
13

ci.. 'I ""

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., .,

elected to grant a release, based on or relating to, or in any manner arising from, in whole or
14
15

=i ~ N - t ~

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in par, the First Lien Credit Agreement, the First Lien Lender Claims, any other claims
arising under or related to the First Lien Credit Agreement, the Debtors, the Chapter 11

~ t' "

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16 17 18 19

~ " ., -.. z - r'" :: .i ..

00

Cases, the subject matter of, or the transactions or events giving rise to any First Lien
Lender Claim, the restructuring of the First Lien Lender Claims prior to or during the
Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan and Disclosure Statement, or related agreements, instruments, or other documents, upon any other act or

20
21

22
23

omission, transaction, agreement, event, or other occurence taking place on or before the
Effective Date; with such reI

eases constituting an express waiver and relinquishment by

24
25

each First Lien Lender electing to grant a release of any claims, whether known or unkown
that such First Lien Lender may have under Section 1542 ofthe California Civil Code or
other analogous state or federal

26

law related to the matters being released; provided, however,

27
28

that Claims or liabilties arising out of or relating to any act or omission of any First Lien

42

Case 09-14814-lbr

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1 Lender or any of its affliates that constitutes gross negligence or wilful misconduct shall
2 not be released.

79. Exculpation. Except as otherwise specifically provided in the Plan, no

Exculpated Pary shall have or incur, and each Exculpated Pary is hereby released and
exculpated from, any Claim, obligation, Cause of Action, or liability to one another or to any

4
5

6
7 8

Exculpating Party for any Exculpated Claim, except for gross negligence, wilful
misconduct or fraud, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the

9
0 '" .

10
11

Plan. The Debtors, the First Lien Steering Committee and the Reorganized Debtors (and

Il

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each oftheir respective agents, members, directors, offcers, employees, advisors, and
attorneys) have, and upon confirmation ofthe Plan shall be deemed to have, participated in

12
13
good faith and in compliance with the applicable provisions of

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the Banruptcy Code with

14
15 16
regard to the distributions of

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the Securities pursuant to the Plan, and therefore are not, and

~.
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on account of such distributions shall not be, liable at any time for the violation of any

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17
18

applicable law, rule, or regulation governing the solicitation of acceptances or rejections of

the Plan or such distributions made pursuant to the Plan.
80. Iniunction. Except as otherwise expressly provided in the Plan or for

19

20

obligations issued pursuant to the PIan, all Entities who have held, hold, or may hold Claims
21

22
23

against the Debtors, and all Entities holding Interests, are permanently enjoined, from and
after the Effective Date, from: (1) commencing or continuing in any maner any action or

24
25

other proceeding of any kind against the Debtors or Reorganized Debtors on account of or in
connection with or with respect to any such Claims or Interests; (2) enforcing, attaching,

26

collecting, or recovering by any manner or means any judgment, award, decree or order

27
28

against the Debtors or Reorganized Debtors on account of or in connection with or with

43

Case 09-14814-lbr

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respect to any such Claims or Interests; (3) creating, perfecting, or enforcing any encumbrance of any kind against the Debtors or Reorganized Debtors or the property or

2
3

Estates of the Debtors or Reorganized Debtors on account of or in connection with or with respect to any such Claims or Interests; (4) asserting any right of setoff, subrogation, or
recoupment of any kind against any obligation due from the Debtors or Reorganized Debtors

4
5

6
7
8

or against the property or Estates of the Debtors or Reorganized Debtors on account of or in

connection with or with respect to any such Claims or Interests unless such Holder has filed a motion requesting the right to perform such setoff on or before the Confirmation Date, and

9 0 '" .
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10
11

notwithstanding an indication in a Proof of Claim or Interest or otherwise that such Holder

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asserts, has, or intends to preserve any right of setoff pursuant to Banuptcy Code section
553 or otherwise (provided, that, to the extent the Rhodes Entities Claims are Allowed, the

12
13

;: o: i. l-

Rhodes Entities, without the need to fie any such motion, shall retain the right to assert a
14
15

.i Il 0 o

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setoff against any Claims or Causes of Action that the Reorganized Debtors or Litigation

16

Trust may assert against the Rhodes Entities, with the Reorganized Debtors and Litigation
Trust, as applicable, reserving the right to challenge the propriety of any such attempted

Il " .,

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17
18 19

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setoff, with any such challenge to be resolved by the Cour); and (5) commencing or

continuing in any maner any action or other proceeding of any kind on account of or in
connection with or with respect to any such Claims or Interests released or settled pursuant

20
21

22
23

to the Plan.
81.

Setoffs. Except as otherwise expressly provided for in the Plan, each

24 Reorganized Debtor, pursuant to the Banptcy Code (including Bankruptcy Code section
25 553), applicable non bankrptcy law, or as may be agreed to by the Holder of a Claim, may

26 setoff against any Allowed Claim and the distributions to be made pursuant to the Plan on
27
28

account of such Allowed Claim (before any distribution is made on account of such Allowed

44

Case 09-14814-lbr

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Claim), any Claims, rights, and Causes of Action of any nature that such Debtor,

2
3

Reorganized Debtor or the Litigation Trust, as applicable, may hold against the Holder of
such Allowed Claim, to the extent such Claims, rights, or Causes of Action against such Holder have not been otherwise compromised or settled on or prior to the Effective Date (whether pursuant to the Plan or otherwise); provided, however, that neither the failure to

4
5

6 7
8

effect such a setoff nor the allowance of any Claim pursuant to the Plan shall constitute a waiver or release by such Reorganized Debtor or the Litigation Trust of any such Claims,

rights, and Causes of Action that such Reorganized Debtor or the Litigation Trust may

0 '"

10
11

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possess against such Holder. In no event shall any Holder of Claims be entitled to setoff any
Claim against any Claim, right, or Cause of Action of

the Debtor or Reorganized Debtor, as

12

applicable, unless such Holder had filed a motion with the Court requesting the authority to
13

perform such setoff on or before the Confirmation Date, and notwithstanding any indication
14
15

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in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any

16 17
18

right of setoff pursuant to section 553 or otherwise; provided, however, that, to the extent

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the Rhodes Entities Claims are Allowed, the Rhodes Entities, without the need to fie any
such motion, shall retain the right to assert a setoff against any Claims or Causes of Action

00

19

that the Reorganized Debtors or Litigation Trust may assert against the Rhodes Entities, with the Reorganized Debtors and Litigation Trust, as applicable, reserving the right to

20
21

22

challenge the propriety of any such attempted setoff, with any such challenge to be resolved

23 by the Cour.
24
82.

Professional Claims. The provisions contained in Article IXA of the Plan

25 relating to Claims for fees and expenses incurred in connection with the Chapter 11 Cases

26 are found to be reasonable and are hereby approved.

27
28
45
83.

Other Administrative Claims. All requests for payment of an Administrative

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Claim must be fied with the Claims and Solicitation Agent and served upon counsel to the
Debtors or Reorganized Debtors, as applicable, and the First Lien Steering Committee on or

2
3

before the Administrative Claim Bar Date. Any request for payment of an Administrative Claim that is not timely fied and served shall be disallowed automatically without the need
for any objection by the Debtors, Reorganized Debtors, or the First Lien Steering

4
5

6 7
8

Committee. The Reorganized Debtors may settle and pay any Administrative Claim in the
ordinary course of business without any further notice to or action, order, or approval of the

9 0 '" . 10
11

Court. In the event that any party with standing objects to an Administrative Claim, the
Court shall determine the Allowed amount of such Administrative Claim. Notwithstanding

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the foregoing, no request for payment of an Administrative Claim need be fied with respect
to an Administrative Claim previously Allowed by Final Order.

12
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84. Immediate Binding Effect. Subject to Article X.B of

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the PIan and

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notwithstanding Banuptcy Rules 3020( e), 6004(g), or 7062 or otherwise, upon the
occurence of the Effective Date, the terms of

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the Plan shall be immediately effective and

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17 18 19

enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and all

Holders of Claims or Interests (irrespective of whether such Claims or Interests are deemed
to have accepted the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in the PIan or herein, each

20
21

22
23

Entity acquiring property under the Plan, and any and all non-Debtor paries to executory
contracts and unexpired leases with the Debtors.
85.
Notice of Entry of

24
25

Confirmation Order. In accordance with Banptcy

the date of entry of

Rules 2002 and 3020(c), within ten business days of

the Confirmation

26 27
28

Order, the First Lien Steering Committee shall serve the Notice of Confirmation by United

States mail, first class postage prepaid, by hand, or by overnight courier service to all paries

46

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having been served with the Confirmation Hearing Notice; provided, however, that no notice or service of any kind shall be required to be mailed or made upon any Entity to

2
3

whom the First Lien Steering Committee mailed a Confirmation Hearing Notice, but

4
5

received such notice returned marked "undeliverable as addressed," "moved, left no

forwarding address" or "forwarding order expired," or similar reason, unless the First Lien

6 7
8

Steering Committee has been informed in writing by such Entity, or is otherwise aware, of
that Entity's new address. To supplement the notice described in the preceding sentence,
within twenty days ofthe date of

9 0 '" 10
11

the Confirmation Order, the First Lien Steering Committee

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shall publish the Notice of Confirmation once in the Vegas Sun. Mailing and publication of

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the Notice of Confirmation in the time and maner set forth in the this paragraph shall be
good and sufficient notice under the particular circumstances and in accordance with the

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requirements of Banruptcy Rules 2002 and 3020( c), and no further notice is necessary.
86. Additional Documents. On or before the Effective Date, the First Lien

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16 17
18

Steering Committee may fie with the Cour such agreements and other documents as may
be necessary or appropriate to effectuate and further evidence the terms and conditions of
the PIan. The Debtors or the Reorganized Debtors, as applicable, the First Lien Steering

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Committee and all Holders of Claims receiving distributions pursuant to the Plan and all

20

other parties in interest shall, from time to time, prepare, execute, and deliver any
21

22
23

agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan, in each case as may be determined by the

24 First Lien Steering Committee.

25
87.
Payment of

Statutory Fees. All fees payable pursuant to section 1930(a) of

26 the Judicial Code, as determined by the Court at a hearing pursuant to Banuptcy Code
27 28

section 1128, shall be paid for each quarer (including any fraction thereof) until the Chapter

47

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1 11 Cases are converted, dismissed, or closed, whichever occurs first.

2
3

88.

Dissolution of Creditors' Committee. Upon the Effective Date, the

Creditors' Committee shall dissolve automatically (except with respect to the resolution of
applications for Professional Claims), and members thereof shall be released and discharged from all rights, duties, responsibilities, and liabilities arising from, or related to, the Chapter

4
5

6 7
8
9 fiing of

11 Cases and under the Bankruptcy Code.

89.
Reservation of Rights. Except as expressly provided by the Plan, none of

the

the Plan, any statement or provision contained in the PIan, or the taking of any

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10 action by any Debtor or the First Lien Steering Committee with respect to the Plan, the
11

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Disclosure Statement, or any documents ancilary to either the Plan or the Disclosure
Statement, shall be deemed to be an admission or waiver of any rights of any Debtor or the

12
13

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First Lien Steering Committee with respect to the Holders of Claims or Interests prior to the
14
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Effective Date.
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Successors and Assigns. The rights, benefits, and obligations of any Entity

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17 named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any

18 heir, executor, administrator, successor or assign, affiiate, officer, director, agent,

19

representative, attorney, beneficiaries, or guardian, if any, of each Entity.

20

91. Term ofIniunctions or Stays. Unless otherwise provided in the Plan or in the
21

22
23

Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to

Banptcy Code sections 105, 362, or 525 or otherwise, or any order of the Cour, and

24 extant on the date ofthe Confirmation Order (excluding any injunctions or stays contained

25 in the Plan or this Confirmation Order) shall remain in full force and effect until the
26 Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order

27 28

shall remain in full force and effect in accordance with their terms. The Confirmation Order

48

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1 wil permanently enjoin the commencement or prosecution by any Person, whether directly,
2 derivatiyely or otherwise, of any Claims, Causes of Action, obligations, suits, judgments,

damages, demands, debts, rights or liabilities released pursuant to the Plan.

92. Governing Law. Unless a rule oflaw or procedure is supplied by federal

4
5

law

(including the Bankruptcy Code and Banptcy Rules) or unless otherwise specifically
the State of

Nevada, without giving effect to the principles of conflct of

7 stated, the laws of

8 laws, shall govern the rights, obligations, construction, and implementation ofthe Plan, any

9 agreements, documents, instruments, or contracts executed or entered into in connection

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10 with the Plan (except as otherwise set forth in those agreements, in which case the governing
11

law of such agreement shall control), and corporate governance matters; provided, however,

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that corporate governance matters relating to the Debtors or Reorganized Debtors, as

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applicable, not incorporated or organized in Nevada shall be governed by the laws of

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the

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state of incorporation or organization of the applicable Debtor or Reorganized Debtor, as

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16 applicable.
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18 19

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93.

Modifications and Amendments to PIan. The First Lien Steering Committee

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shall not modify materially the terms of the Plan without the prior consent ofthe paries to

the Mediation Term Sheet; provided, that in the event the Rhodes Entities fail to comply
with any of their obligations under the Mediation Term Sheet or the Plan by the Effective

20
21

22

Date (or such other date set forth in the Plan) and fail to cure such alleged breach within ten

23 (10) days' written notice to the Rhodes Entities, then the First Lien Steering Committee shall
24 be entitled to file a motion on at least seven (7) days notice to (i) determine that a breach has
25 occured (except that the failure of the parties to agree on the refinancing of the Rhodes
26 Ranch Golf Course solely as a result of

the First Lien Steering Committee acting

the Rhodes Entities to comply

27
unreasonably or in bad faith shall not be deemed a failure of

28 49

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with their obligations under the Plan), and the Rhodes Entities reserve their right to object to
such motion; (ii) modify the Plan to remove any provisions of

2
3

the Plan that were included

for the benefit of

the Rhodes Entities; and (iii) consummate the Plan, as modified. Upon

4
5

entry of an order of the Cour finding a breach by the Rhodes Entities and authorizing the
modifications to the Plan to remove any provisions that were included for the benefit of

the

6 7
8

Rhodes Entities, the First Lien Steering shall be authorized to make such modifications and

consummate the PIan. Subject to certain restrictions and requirements set forth in

Banuptcy Code section 1127 and Banuptcy Rule 3019 and those restrictions on
modifications set forth in the Plan, the First Lien Steering Committee expressly reserves its
rights to revoke, withdraw, alter, amend, or modify materially the PIan with respect to any

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11

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Debtor, one or more times, after Confirmation, and, to the extent necessary, may initiate
13

proceedings in the Court to so alter, amend, or modify the Plan, or remedy any defect or
14
15

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omission, or reconcile any inconsistencies in the PIan, the Disclosure Statement, or the
Confirmation Order, in such matters as may be necessary to cary out the puroses and

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18

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intent of the Plan. Any such modification or supplement shall be considered a modification
of the Plan and shall be made in accordance with Article X1.A of

the Plan.

19
94. Nonseverability of Plan Provisions. The provisions of

the Confirmation

20

Order shall constitute a judicial determination and shall provide that each term and provision
21
of

22
23

the Plan, as it may have been altered or interpreted in accordance with the foregoing, is:

(1) valid and enforceable pursuant to its terms; (2) integral to the Plan and may not be

24

deleted or modified without the First Lien Steering Committee's consent; and (3)

25 nonseverable and mutually dependent.

26 27 28

95.

References to Plan Provisions. Captions and headings to Articles of the Plan

are inserted for convenience of reference only and are not intended to be part of or to affect

50

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1 the interpretation of

the Plan. The failure specifically to include or to refer to any paricular

2 provision of

the Plan in the Confirmation Order shall not diminish or impair the
the Cour that the Plan be confirmed in

3
effectiveness of such provision, it being the intent of

4
5

its entirety.
96.

Conflicts Between Confirmation Order and Plan. The provisions of the Plan

6 7

and of this Confirmation Order shall be constred in a maner consistent with each other so

8 as to effect the puroses of each; provided, however, that if there is determined to be any
9 inconsistency between any Plan provision and any provisions of

this Confirmation Order

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10 that canot so be reconciled, then, solely to the extent of such inconsistency, the provisions
11

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of the Confirmation Order shall control.

97. Findings of Fact. The determinations, findings, judgments, decrees and

12
13
orders set forth and incorporated herein constitute the Court's findings of

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fact and

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conclusions of law pursuant to Banptcy Rule 7052, made applicable to this proceeding

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16 pursuant to Bankruptcy Rule 9014. Each finding of fact set forth or incorporated herein, to
17 the extent that it is or may be deemed a conclusion of law, shall also constitute a conclusion

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18 of law. Each conclusion of law set forth or incorporated herein, to the extent it is or may be
19

deemed a finding of fact, shall also constitute a finding of fact.

98. Substantial Consumation. Substantial consummation of

20

the Plan shall be

21

22
23

deemed to occur on the Effective Date.

99.

Final Order. The Confirmation Order is a final order and the period in which

24 an appeal must be filed shall commence upon entry hereof.

25 100. Retention of Jurisdiction. Notwithstanding the entry of

this Confirmation

26 Order and the occurence of the Effective Date, the Cour shall retain exclusive jurisdiction

27
28
51

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1 over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to
2 Banptcy Code sections 105(a) and 1142 and Aricle XII of

the Plan.

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1 2 3 4 5 6 7 8 9
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEVADA SOUTHERN DIVISION IN RE: THE RHODES COMPANIES, LLC, aka Rhodes Homes, et al., Debtors.1 Case No. 09-14814-LBR (Jointly Administered)

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Chapter 11 Hearing Date: January 21,February 11, 2010 Hearing Time: 9:30 a.m. (PST) Courtroom 1

Affects: All Debtors Affects the following Debtor(s)

The Debtors in these cases, along with the last four digits of each Debtors federal tax identification number, if applicable, are: Heritage Land Company, LLC (2918); The Rhodes Companies, LLC (3060); Rhodes Ranch General Partnership (1760); Tick, LP (0707); Glynda, LP (5569); Chalkline, LP (0281); Batcave, LP (6837); Jackknife, LP (6189); Wallboard, LP (1467); Overflow, LP (9349); Rhodes Ranch Golf and Country Club (9730); Tuscany Acquisitions, LLC (0206); Tuscany Acquisitions II, LLC (8693); Tuscany Acquisitions III, LLC (9777); Tuscany Acquisitions IV, LLC (0509); Parcel 20 LLC (5534); Rhodes Design and Development Corp. (1963); C&J Holdings, Inc. (1315); Rhodes Realty, Inc. (0716); Jarupa LLC (4090); Elkhorn Investments, Inc. (6673); Rhodes Homes Arizona, LLC (7248); Rhodes Arizona Properties, LLC (8738); Tribes Holdings LLC (4347); Six Feathers Holdings, LLC (8451); Elkhorn Partners, A Nevada Limited Partnership (9654); Bravo Inc. (2642); Gung-Ho Concrete, LLC (6966); Geronimo Plumbing, LLC (6897); Apache Framing, LLC (6352); Tuscany Golf Country Club, LLC (7132); Pinnacle Grading, LLC (4838).

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1 2 3 4 5 6 7 A. RECITALS2 On either March 31, 2009 or April 1, 2009 (collectively, the Petition Date), PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER CONFIRMING THE FIRST LIEN STEERING COMMITTEES SECOND AMENDED MODIFIED PLAN OF REORGANIZATION PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE FOR THE RHODES COMPANIES, LLC, ET AL.

8 each of the Debtors commenced with the Court a voluntary case under chapter 11 of title 11 9 of the United States Code (the Bankruptcy Code).
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

10 11

B.

Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are

currently authorized to operate their businesses and manage their properties as debtors in 12 13 possession. The Debtors Chapter 11 Cases are being jointly administered for procedural

14 purposes only. No trustee or examiner has been appointed in these Chapter 11 Cases. 15 C. On May 26, 2009, pursuant to Bankruptcy Code section 1102, the United

16 States Trustee for the District of Nevada appointed an Official Committee of Unsecured 17 18 19 20 21 and Southwest Iron Works, LLC. D. On November 23, 2009, the First Lien Steering Committee filed (i) the Creditors (the Creditors Committee). The Creditors Committee currently consists of four members: G.C. Wallace, Inc.; Interstate Plumbing & Air Conditioning; M & M Electric, Inc.;

22 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the 23 Bankruptcy Code for The Rhodes Companies, LLC, et al. (the Plan) and (ii) the 24 accompanying Second Amended Modified Disclosure Statement for the Plan of 25 26 27 28
All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Plan (as defined herein) or the Disclosure Statement (as defined herein), as applicable.
2

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1 Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for The Rhodes Companies, 2 LLC, et al. (the Disclosure Statement). 3 4 5 6 7 Solicitation and Notice Procedures with Respect to Confirmation of the First Lien Steering Committees Proposed Plan of Reorganization; (C) Approving the Form of Various Ballots E. On December 1, 2009, the Court entered the Order (A) Approving the

Adequacy of the First Lien Steering Committees Disclosure Statement; (B) Approving

8 and Notices in Connection Therewith; and (D) Scheduling Certain Dates with Respect 9 Thereto (Docket No. 809) (the Solicitation Procedures Order). The Solicitation
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

10 Procedures Order (i) approved the Disclosure Statement as containing adequate information 11 12 record date for purposes of determining eligibility to vote to accept or reject the Plan, (iii) 13 14 fixed January 4, 2010, at 4:00 p.m. (Pacific Time) as the deadline for submitting ballots within the meaning of Bankruptcy Code section 1125(a), (ii) fixed December 1, 2009, as the

15 accepting or rejectrejecting the Plan, (iv) fixed January 4, 2010 at 4:00 p.m. (Pacific Time) 16 as the deadline for filing objections to the Plan, (v) fixed January 11, 2010, as the deadline 17 for filing the Memorandum (as defined below), (vi) fixed January 11, 2010 as the deadline 18 by which Omni Management Group, LLC (the Claims and Solicitation Agent) must file its 19 20 January 14, 2010, at 9:00 a.m. as the date and time for the commencement of the hearing of 21 22 the confirmation hearing (the Confirmation Hearing) on the Plan. The Solicitation report summarizing the results of voting on the Plan (the Voting Report), and (vii) fixed

23 Procedures Order also approved certain procedures for soliciting votes to accept or reject the 24 Plan (the Solicitation Procedures). 25 F. In accordance with the Solicitation Procedures Order, the solicitation

26 materials described in the Solicitation Procedures were transmitted to and served on all 27 28 3

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1 Holders of Claims that were entitled to vote to accept or reject the Plan, as well as certain 2 other parties in interest in the Debtors Chapter 11 Cases. 3 4 5 6 7 Order was provided in compliance with the Bankruptcy Code, the Bankruptcy Rules, and the Solicitation Procedures Order. As evidenced by the Osborne Declaration (as defined G. Adequate and sufficient notice of the Confirmation Hearing and other

requirements and deadlines, hearings and matters described in the Solicitation Procedures

8 below), the Amended Osborne DeclarationDeclarations (as defined below) and various 9 certificates of service filed by Nova George (see Docket Nos. 819, 822, 823, 824, 825825,
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

10 826, 931 and 826932), the Confirmation Hearing Notice was, the Plan, the Disclosure 11 12 Claims against and Interests in the Debtors and other parties in interest. A notice of 13 14 continuation on the Confirmation Hearing was served on appropriate parties on January 22, Statement and all exhibits thereto were mailed on or about December 4, 2009 to Holders of

15 2010 (See Docket No. 954). 16 H. On January 11, 2010, the First Lien Steering Committee filed the Declaration

17 of Brian Osborne Certifying the Tabulation of Ballots Regarding Vote on Second Amended 18 Modified Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for The 19 20 certifying the methods and results of the ballot tabulation for the Classes of Claims entitled 21 22 to vote to accept or reject the Plan (the Osborne Declaration). The Voting Report was Rhodes Companies, LLC, et al., dated and sworn to on January 11, 2010, attesting to and

23 attached as Exhibit A to the Osborne Declaration. 24 I. On January 15, 2010, the First Lien Steering Committee filed the Amended

25 Declaration of Brian Osborne Certifying the Tabulation of Ballots Regarding Vote on 26 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the 27 Bankruptcy Code for The Rhodes Companies, LLC, et al., dated and sworn to on January 28 4

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1 15, 2010, attesting to and certifying the methods and results of the ballot tabulation for the 2 Classes of Claims entitled to vote to accept or reject the Plan (the Amended Osborne 3 4 5 6 7 Solicitation Procedures was attached to the Amended Osborne Declaration as Exhibit A. J. On January 27, 2010, the First Lien Steering Committee filed the Second Declaration). As evidenced by the Osborne Declaration andAn amended Voting Report (the Amended Voting Report) reflecting a retabulation of certain ballots pursuant to the

8 Amended Declaration of Brian Osborne Certifying the Tabulation of Ballots Regarding Vote 9 on Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

10 Bankruptcy Code for The Rhodes Companies, LLC, et al., dated and sworn to on January 11 12 Classes of Claims entitled to vote to accept or reject the Plan (the Second Amended 13 14 Osborne Declaration and, together with the Osborne Declaration and the Amended 26, 2010, attesting to and certifying the methods and results of the ballot tabulation for the

15 Osborne Declaration, the Osborne Declarations). An amended Voting Report (the 16 Second Amended Voting Report and, together with the Voting Report and the Amended 17 Voting Report, the Voting Reports) reflecting the further retabulation of certain ballots 18 pursuant to the Solicitation Procedures and the direction of the Court was attached to the 19 20 Declarations, the ballots were tabulated in compliance with the Bankruptcy Code, the 21 22 23 Bankruptcy Rules and the Solicitation Procedures Order. JK. The following pleadings were filed prior to the deadline for filing objections Second Amended Osborne Declaration as Exhibit A. As evidenced by the Osborne

24 to the Plan: (i) the Conditional Objection to Chapter 11 Plan filed by Caterpillar Financial 25 Services Corporation on January 4, 2010 (Docket No. 895); and (ii) the Limited Response to 26 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the 27 Bankruptcy Code for The Rhodes Companies, LLC, et al. filed by Credit Suisse AG, 28 5

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1 Cayman Islands Branch on January 5, 2010 (Docket No. 899). No other objections to 2 confirmation of the Plan were filed. The filed conditional objection and limited response to 3 4 5 6 7 KL. On January 11, 2010, the First Lien Steering Committee filed (a) the First confirmation of the Plan are collectively referred to herein as the Objections. The Objections were either withdrawn or resolved on a consensual basis.

Lien Steering Committees Memorandum of Law (I) in Support of Confirmation of the

8 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the 9 Bankruptcy Code for The Rhodes Companies, LLC, et al. and (II) in Response to Objections
AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

10 Thereto (the Memorandum), (b) the Declaration of Richard Dix in Support of 11 12 11 of the Bankruptcy Code for The Rhodes Companies, LLC, et al. dated January 11, 2010 13 14 (the Dix Declaration),, and (c) the Osborne Declaration, and (d) (collectively, and Confirmation of the Second Amended Modified Plan of Reorganization Pursuant to Chapter

15 including the Amended Osborne Declaration (collectively, the , the Initial Confirmation 16 Papers). 17 M. On January 27, 2010, the First Lien Steering Committee filed (a) the First

18 Lien Steering Committees Supplemental Memorandum of Law in Support of Confirmation 19 20 Bankruptcy Code for The Rhodes Companies, LLC, et al., (b) the Declaration of Justin 21 22 Bono in Support of Confirmation of the Second Amended Modified Plan of Reorganization of the Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the

23 Pursuant to Chapter 11 of the Bankruptcy Code for the Rhodes Companies, LLC, et al., (c) 24 the Declaration of Charles Hewlett in Support of Confirmation of the Second Amended 25 Modified Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for the 26 Rhodes Companies, LLC, et al., and (d) the Second Amended Osborne Declaration 27 28 6 (collectively, the Supplemental Confirmation Papers).

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N.

On February 2, 2010, Stanley Consultants, Inc. filed its Opposition (the

2 Stanley Opposition) to First Lien Steering Committees Supplemental Memorandum of 3 4 5 6 7 Stanley Consultants, Inc.s Opposition to First Lien Steering Committees Supplemental Memorandum of Law in Support of Confirmation of Second Amended Modified Plan, (b) Law in Support of Confirmation of Second Amended Modified Plan (Docket No. 975). O. On February 8, 2010, the First Lien Steering Committee filed (a) its Reply to

8 the Supplemental Declaration of Justin Bono in Support of Confirmation of Confirmation of 9 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the
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10 Bankruptcy Code for The Rhodes Companies, LLC, et al., (c) the Supplemental Declaration 11 12 Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for The Rhodes Companies, 13 14 LLC, et al., and (d) the Declaration of Gregory Wallace in Support of Confirmation of the of Charles Hewlett in Support of Confirmation of Second Amended Modified Plan of

15 Second Amended Modified Plan of Reorganization Pursuant to Chapter 11 of the 16 Bankruptcy Code for The Rhodes Companies, LLC, et al. (collectively, the Reply Papers). 17 LP. The Confirmation Hearing was held before the Court on January 14, 2010,

18 January 21, 2010 and February 11, 2010. 19 20 Statement, the Plan and all documents contained therein, the Voting ReportReports, the 21 22 Objections, and the the Initial Confirmation Papers, the Supplemental Confirmation Papers, NOW, THEREFORE, the Court having reviewed and considered the Disclosure

23 the Stanley Opposition and the Reply Papers (collectively, the Confirmation Papers); the 24 Court having heard statements of counsel in support of and in opposition to confirmation of 25 the Plan at the Confirmation Hearing; the Court having considered all testimony presented 26 and evidence admitted at the Confirmation Hearing; the Court having taken judicial notice 27 of the papers and pleadings on file in the Chapter 11 Cases; it appearing to the Court that (i) 28 7

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1 notice of the Confirmation Hearing was adequate and appropriate as to all parties to be 2 affected by the Plan and the transactions contemplated thereby and (ii) the legal and factual 3 4 5 6 7 8 9
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bases set forth in the Confirmation Papers and presented at the Confirmation Hearing establish just cause for the relief granted herein; and after due deliberation thereon, good cause appearing therefor, and for the reasons stated herein, it is hereby DETERMINED, FOUND, ADJUDGED, DECREED, AND ORDERED THAT: FINDINGS OF FACT AND CONCLUSIONS OF LAW 1. Exclusive Jurisdiction; Venue; Core Proceeding (28 U.S.C. 157, 1334(a),

10 1408, and 1409). The Court has jurisdiction over the Chapter 11 Cases pursuant to 28 11 12 157(b)(2), and the Court has exclusive jurisdiction to determine whether the Plan complies 13 14 with the applicable provisions of the Bankruptcy Code and should be confirmed. Venue is U.S.C. 157 and 1334. Confirmation of the Plan is a core proceeding under 28 U.S.C.

15 proper before the Court pursuant to 28 U.S.C. 1408 and 1409. Venue in the District of 16 Nevada was proper as of the Petition Date and continues to be proper. 17 2. Commencement and Joint Administration of the Chapter 11 Cases.

18 Beginning on the Petition Date, each of the above-captioned Debtors commenced a case 19 20 have been consolidated for procedural purposes only and are being jointly administered 21 22 pursuant to Bankruptcy Rule 1015. The Debtors have operated their businesses and under chapter 11 of the Bankruptcy Code. By prior order of the Court, the Chapter 11 Cases

23 managed their properties as debtors in possession pursuant to Bankruptcy Code sections 24 1107(a) and 1108. No trustee or examiner has been appointed in the Chapter 11 Cases. 25 3. Judicial Notice. The Court takes judicial notice of the docket of the Chapter

26 11 Cases maintained by the Clerk of the Court or its duly appointed agent, including, 27 28 8 without limitation, all pleadings and other documents filed, all orders entered, and all

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1 evidence and arguments made, proffered, or adduced at, the hearings held before the Court 2 during the pendency of the Chapter 11 Cases. 3 4 5 6 7 Bankruptcy Rules, applicable nonbankruptcy law, and the Solicitation Procedures Order. Such transmittal and service of the Solicitation Packages were adequate and sufficient. 4. Transmittal and Mailing of Materials; Notice; Solicitation. The Solicitation

Packages were transmitted and served in compliance with the Bankruptcy Code, the

8 Adequate and sufficient notice of the Confirmation Hearing was given in compliance with 9 the Bankruptcy Code, the Bankruptcy Rules and the Solicitation Procedures Order, and no
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10 further notice is or shall be required. Votes for acceptance and rejection of the Plan were 11 12 and 1126, Bankruptcy Rules 3017 and 3018, all other applicable provisions of the 13 14 Bankruptcy Code, the Solicitation Procedures Order, and all other applicable rules, laws and solicited in good faith and such solicitation complied with Bankruptcy Code sections 1125

15 regulations. 16 5. Burden of Proof. The First Lien Steering Committee, as the proponent of the

17 Plan, has met its burden of proving the elements of Bankruptcy Code sections 1129(a) and 18 (b) by a preponderance of evidence. 19 20 information as defined in Bankruptcy Code section 1125. As evidenced by the Amended 21 22 Osborne DeclarationDeclarations, votes to accept the Plan have been solicited and tabulated 6. Voting. Votes on the Plan were solicited after the disclosure of adequate

23 fairly, in good faith and in a manner consistent with the Solicitation Procedures Order, the 24 Bankruptcy Code and the Bankruptcy Rules. 25 7. Plan Compliance with the Applicable Provisions of the Bankruptcy Code (11

26 U.S.C. 1129(a)(1)). As set forth below, the Plan complies with the applicable provisions 27 28 9 of the Bankruptcy Code, thereby satisfying Bankruptcy Code section 1129(a)(1).

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(a)

Proper Classification of Claims and Interests (11 U.S.C. 1122 and

2 1123(a)(1)). In addition to Administrative Claims and Priority Tax Claims, which need not 3 4 5 6 7 Claims or Interests, as the case may be, in such Class. Valid business, factual, and legal reasons exist for separately classifying the various Classes of Claims and Interests created be classified, Article III.A of the Plan designates nine Classes of Claims and one Class of Interests. The Claims or Interests placed in each Class are substantially similar to other

8 under the Plan, and such Classes do not unfairly discriminate among Holders of Claims or 9 Interests. The Plan satisfies Bankruptcy Code sections 1122 and 1123(a)(1).
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10 11 12

(b)

Specification of Unimpaired Classes (11 U.S.C. 1123(a)(2)).

Article III.B of the Plan specifies that each of Classes A-3 and B are Unimpaired under the Plan, thereby satisfying Bankruptcy Code section 1123(a)(2).

13 14 (c) Specification of Treatment of Impaired Classes (11 U.S.C.

15 1123(a)(3)). Article III.B of the Plan designates each of Classes A-1, A-2, C-1, C-2, C-3, C16 4, D and E as Impaired and specifies the treatment of Claims and Interests in those Classes, 17 thereby satisfying Bankruptcy Code section 1123(a)(3). 18 19 20 Class, thereby satisfying Bankruptcy Code section 1123(a)(4). 21 22 (e) Implementation of Plan (11 U.S.C. 1123(a)(5)). The Plan provides (d) Equal Treatment Within Classes (11 U.S.C. 1123(a)(4)). Article

III.B of the Plan provides for the same treatment for each Claim or Interest in a particular

23 adequate and proper means for implementation of the Plan, including, but not limited to, 24 among other things: (i) the substantive consolidation of the Estates into a single Estate for all 25 purposes associated with Confirmation and distributions to be made under the Plan (See Plan 26 Art. IV.A); (ii) the issuance of Newco Equity Interests (based upon the Newco Total 27 28 10 Enterprise Value) to the Holders of First Lien Lender Secured Claims (See Plan Art.

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1 IV.B.1); (iii) the issuance of $50 million in New First Lien Notes to the Holders of First 2 Lien Lender Secured Claims (See Plan Art. IV.B.2); (iv) the cancellation of Old Equity 3 4 5 6 7 the selection of the initial board of directorsmanagers and officers of the Reorganized Debtors (See Plan Art. IV.M); (vii) the establishment of a Litigation Trust for the benefit of Interests and certain other existing securities (See Plan Art. IV.E); (v) any restructuring transaction deemed necessary or appropriate to effectuate the Plan (See Plan Art. IV.G); (vi)

8 Holders of Allowed Claims in Classes C-1, C-2 and C-3 (See Plan Art. IV.O); (viii) the 9 transfer of the Rhodes Ranch Golf Course to the Reorganized Debtors pursuant to the terms
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10 of a stock and asset transfer agreement (See Plan Art. IV.S); (ix) the payment of $3.5 million 11 12 Art. IV.T); and (x) the transfer of the Arizona Assets set forth on Attachment D to the 13 14 Mediation Term Sheet to the Rhodes Entities (See Plan Art. IV.U). In addition, the Plan in Cash to the Reorganized Debtors by the Rhodes Entities on the Effective Date (See Plan

15 provides that the Holders of First Lien Lender Secured Claims will receive $1.5 million in 16 Cash from the proceeds of the First Lien Lenders Collateral for the purpose of purchasing 17 the General Unsecured Claims set forth on Exhibit H to the Disclosure Statement. See Plan 18 Art. VII.F-G. Therefore, the Plan satisfies Bankruptcy Code section 1123(a)(5). 19 20 provides that the organizational documents for Newco and the Reorganized Debtors, among 21 22 other things, shall (i) authorize the issuance of the Newco Equity Interestsnew equity (f) Charter Provisions (11 U.S.C. 1123(a)(6)). Article IV.J of the Plan

23 interests, and (ii) pursuant to and only to the extent required by Bankruptcy Code section 24 1123(a)(6), include a provision prohibiting the issuance of non-voting Equity Securities, 25 thereby satisfying Bankruptcy Code section 1123(a)(6). 26 27 28 11 (g) Selection of Officers and Directors (11 U.S.C. 1123(a)(7)). Article

IV.M of the Plan provides that (i) the board of directors of the Reorganized Debtors or

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1 similar governing entities will be composed of one or more members appointed by the First 2 Lien Steering Committee, (ii) on or after the Effective Date, a chief executive officer or 3 4 5 6 7 Plan for the selection of directors and officers are consistent with the interests of creditors and with public policy as to the manner and selection of any officer or director and any similar person in control shall be appointed, and (iii) the identity of such officers and directors shall be disclosed at or prior to the Confirmation Hearing. The provisions of the

8 successor thereto, thereby satisfying Bankruptcy Code section 1123(a)(7). Pursuant to 9 Bankruptcy Code section 1129(a)(5), the First Lien Steering Committee has disclosed, on or
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10 prior to the Confirmation Date, the identity and affiliations of any Person proposed to serve 11 12 an insider, the nature of any compensation to be paid to such Person. 13 14 (h) Future Income (11 U.S.C. 1123(a)(8)). Each of the Debtors is a on the initial boards of directors of the Reorganized Debtors and, to the extent such Person is

15 business entity, and not an individual. Accordingly, Bankruptcy Code section 1123(a)(8) is 16 not implicated by the Plan. 17 8. Plan Compliance with Bankruptcy Code Section 1123(b). The Plan contains

18 other permissive provisions that are consistent with the applicable provisions of the 19 20 1123(b). 21 22 9. Bankruptcy Rule 3016. The Plan is dated and identifies the entities Bankruptcy Code and, thus, the Plan satisfies the requirements of Bankruptcy Code section

23 submitting it, thereby satisfying Bankruptcy Rule 3016(a). The filing of the Disclosure 24 Statement with the Clerk of the Court satisfies Bankruptcy Rule 3016(b). 25 10. Bankruptcy Rule 3017. The First Lien Steering Committee has given notice

26 of the Confirmation Hearing as required by Bankruptcy Rule 3017(d), the Solicitation 27 28 12 Procedures Order or as otherwise required. The transmittal and service of the Solicitation

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1 Packages were (i) in compliance with the Solicitation Procedures Order, the Bankruptcy 2 Code and the Bankruptcy Rules and (ii) adequate and sufficient under the Bankruptcy Rules 3 4 5 6 7 solely from Holders of Allowed Claims in Classes entitled to vote to accept or reject the Plan, as of the Record Date, satisfies Bankruptcy Rule 3018. Votes to accept or reject the and the circumstances surrounding the Chapter 11 Cases. 11. Bankruptcy Rule 3018. The solicitation of votes to accept or reject the Plan

8 Plan have been solicited and tabulated fairly, in good faith, and in a manner consistent with 9 the Bankruptcy Code, the Bankruptcy Rules and the Solicitation Procedures Order.
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10 11 12

12.

First Lien Steering Committees Compliance with the Applicable Provisions

of the Bankruptcy Code (11 U.S.C. 1129(a)(2)). The First Lien Steering Committee has complied with the applicable provisions of the Bankruptcy Code, thereby satisfying

13 14 15 16 17 18 19 20 21 22 13. Bankruptcy Code section 1129(a)(2). Specifically: (a) the Debtors are proper debtors under Bankruptcy Code section 109 and the First Lien Steering Committee is a proper proponent of the Plan under Bankruptcy Code section 1121(a); (b) the First Lien Steering Committee has complied with applicable provisions of the Bankruptcy Code, except as otherwise provided or permitted by orders of the Court; and (c) the First Lien Steering Committee has complied with the applicable provisions of the Bankruptcy Code, including sections 1125 and 1126(b), the Bankruptcy Rules, and the Solicitation Procedures Order in transmitting the Solicitation Package and in soliciting and tabulating votes on the Plan. Plan Proposed in Good Faith (11 U.S.C. 1129(a)(3)). The First Lien

23 Steering Committee has proposed the Plan in good faith and not by any means forbidden by 24 25 26 27 28 Cases, the Disclosure Statement and the hearing thereon, and the record of the Confirmation Hearing and other proceedings held in the Chapter 11 Cases. The Plan is the product of 13 law, thereby satisfying the requirements of Bankruptcy Code section 1129(a)(3). The First Lien Steering Committees good faith is evident from the facts and record of the Chapter 11

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1 extensive negotiations and embodies the terms of the Mediation Settlement. The Plan itself 2 and the process leading to its formulation provide independent evidence of the First Lien 3 4 5 6 7 8 and honest purpose of maximizing the value of the Debtors estates and to effectuate a successful reorganization of the Debtors. 14. Payments for Services or Costs and Expenses (11 U.S.C. 1129(a)(4)). Any Steering Committees good faith, and that the Plan serves the public interest and assures fair treatment of Holders of Claims and Interests. The Plan was proposed with the legitimate

9 payment made or to be made by the Debtors for services or for costs and expenses in
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10 connection with the Chapter 11 Cases, or in connection with the Plan and incident to the 11 12 reasonable, thereby satisfying Bankruptcy Code section 1129(a)(4). 13 14 15. Directors, Officers, and Insiders (11 U.S.C. 1129(a)(5)). The First Lien Chapter 11 Cases, has been approved by, or is subject to approval of, the Court as

15 Steering Committee has complied with Bankruptcy Code section 1129(a)(5). On January 16 11, 2010, the First Lien Steering Committee filed the Notice of Disclosure of Directors and 17 Officers Pursuant to 11 U.S.C. 1129(a)(5) for Second Amended Modified Plan of 18 Reorganization Pursuant to Chapter 11 of the Bankruptcy Code for The Rhodes Companies, 19 20 Date, Dunhill Homes will provide management services to the Reorganized Debtors and 21 22 disclosing the terms of compensation to be paid for such management services. The Notice LLC, et al. (the Notice of Disclosure) (Docket No. 911) disclosing that as of the Effective

23 of Disclosure also discloses (i) the identity of the members of the initial board of directors of 24 the Reorganized Debtors, (ii) the identity of the Litigation Trustee, and (iii) the 25 compensation to be provided to each of the foregoing. 26 27 28 14

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16.

No Rate Changes (11 U.S.C. 1129(a)(6)). The Plan does not provide for a

2 change in any rates subject to regulatory approval. Thus, Bankruptcy Code section 3 4 5 6 7 Bankruptcy Code section 1129(a)(7). The Liquidation Analysis attached to the Disclosure Statement as Exhibit E and other evidence proffered or adduced at the Confirmation Hearing 1129(a)(6) is not applicable in the Chapter 11 Cases. 17. Best Interests of Creditors Test (11 U.S.C. 1129(a)(7)). The Plan satisfies

8 (i) are persuasive and credible, (ii) have not been successfully challenged or controverted by 9 other evidence, (iii) establish that each Holder of a Claim or Interest in an Impaired Class
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10 either (x) has accepted the Plan or (y) will receive or retain under the Plan, on account of 11 12 less than the amount that it would have received if the Debtors were liquidated under chapter 13 14 15 7 of the Bankruptcy Code. 18. Acceptance or Rejection by Certain Classes (11 U.S.C. 1129(a)(8)). such Claim or Interest, property of a value, as of the Effective Date of the Plan, that is not

16 Classes A-3 and B are each Classes of Unimpaired Claims that are conclusively presumed to 17 have accepted the Plan under Bankruptcy Code section 1126(f). Classes A-1, A-2, C-1, C-2 18 and C-3 have each voted to accept the Plan in accordance with Bankruptcy Code section 19 20 or retain any property under the Plan and, therefore, are deemed to have rejected the Plan 21 22 pursuant to Bankruptcy Code section 1126(g). Although Bankruptcy Code section 1126(c). Class C-1 voted to reject the Plan. Classes C-4, D and E are not entitled to receive

23 1129(a)(8) has not been satisfied with respect to Classes C-1, C-4, D and E (collectively, the 24 Rejecting Classes), the Plan is confirmable because the Plan does not discriminate unfairly 25 and is fair and equitable with respect to the Rejecting Classes and therefore satisfies 26 Bankruptcy Code section 1129(b) with respect to the Rejecting Classes. 27 28 15

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19.

Treatment of Administrative Claims and Priority Tax Claims (11 U.S.C.

2 1129(a)(9)). The treatment of Administrative Claims pursuant to Article II.A of the Plan 3 4 5 6 7 requirements of Bankruptcy Code section 1129(a)(9)(C). 20. Acceptance by Impaired Classes (11 U.S.C. 1129(a)(10)). As set forth in satisfies the requirements of Bankruptcy Code sections 1129(a)(9)(A) and (B). The treatment of Priority Tax Claims pursuant to Article II.B of the Plan satisfies the

8 the Second Amended Osborne Declaration, each of Classes A-1, A-2, C-1, C-2 and C-3 are 9 Impaired Classes that have voted to accept the Plan, without including any acceptance of the
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10 Plan by any insider. As such, there is at least one Class of Claims against the Debtors that is 11 12 acceptance by any insider, thus satisfying the requirements of Bankruptcy Code section 13 14 15 1129(a)(10). 21. Feasibility (11 U.S.C. 1129(a)(11)). The evidence submitted regarding Impaired under the Plan and has accepted the Plan, determined without including any

16 feasibility, including the Going Concern Analysis attached to the Disclosure Statement as 17 Exhibit D, (i) is persuasive and credible, (ii) has not been controverted by other evidence 18 and (iii) establishes that confirmation of the Plan is not likely to be followed by the 19 20 satisfying the requirements of Bankruptcy Code section 1129(a)(11). 21 22 22. Payment of Fees (11 U.S.C. 1129(a)(12)). All fees payable under 28 liquidation, or the need for further financial reorganization, of the Reorganized Debtors, thus

23 U.S.C. 1930 either have been paid or will be paid pursuant to Article II.A of the Plan. 24 Accordingly, the Plan satisfies Bankruptcy Code section 1129(a)(12). 25 23. Continuation of Retiree Benefits (11 U.S.C. 1129(a)(13)). The Debtors

26 have no retiree benefit obligations and, thus, Bankruptcy Code section 1129(a)(13) is 27 28 16 inapplicable.

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24.

Postpetition Domestic Support Obligations and Disposable Income (11

2 U.S.C. 1129(a)(14) and (15)). Bankruptcy Code sections 1129(a)(14) and (15) impose 3 4 5 6 7 are not implicated by the Plan. 25. Transfers of Property by Nonprofit Entities (11 U.S.C. 1129(a)(16)). certain requirements on individual chapter 11 debtors. Each of the Debtors is a business entity, and not an individual. Accordingly, Bankruptcy Code sections 1129(a)(14) and (15)

8 Bankruptcy Code section 1129(a)(16) imposes certain requirements on corporations or trusts 9 that are not a moneyed, business or commercial corporation or trust. Each of the Debtors is
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10 a moneyed, business or commercial corporation, partnership or limited liability company. 11 12 26. 13 14 1129(b)). Notwithstanding the fact that the Rejecting Classes have not accepted the Plan, Confirmation of Plan Over Nonacceptance of Impaired Classes (11 U.S.C. Accordingly, Bankruptcy Code section 1129(a)(16) is not implicated by the Plan.

15 the Plan may be confirmed pursuant to Bankruptcy Code section 1129(b)(1) because (i) at 16 least one Impaired Class has voted to accept the Plan, and (ii) the Plan does not discriminate 17 unfairly and is fair and equitable with respect to the Rejecting Classes. Thus, the Plan may 18 be confirmed notwithstanding the First Lien Steering Committees failure to satisfy 19 20 occurrence of the Effective Date, the Plan shall be binding upon the members of the 21 22 23 Rejecting Classes. 27. The Plan does not unfairly discriminate because (i) Classes C-4 and D are Bankruptcy Code section 1129(a)(8). After entry of the Confirmation Order and upon the

24 comprised of Claims and Interests that are dissimilar in their legal nature from, and 25 subordinate to, the Secured and Unsecured Claims receiving distributions under the Plan, 26 27 28 17 and (ii) there is a reasonable basis for the disparate treatment of the Claims in Class E. Moreover, the Plan does not discriminate unfairly with respect to Class C-1 because Class

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1 C-1 is comprised of Claims that differ in their legal nature from other Classes of Claims, and 2 the purchase of certain General Unsecured Claims by the Holders of First Lien Lender 3 4 5 6 7 28. In addition, In addition, the Plan is fair and equitable under Bankruptcy Secured Claims does not constitute unfair discrimination with respect to Holders of Claims in Class C-1.

Code section 1129(b)(2) because the Holders of (i) Interests in Class D and (ii) Claims in

8 Classes C-1, C-4 and E are not entitled to any recovery under the Plan, and no 9 ClassesHolder of Claims or Interests in a Class junior to Classes C-1, C-4, D and E will
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10 receive any distributions or retain any property under the Plan on account of such junior 11 12 Bankruptcy Code section 1129. 13 14 29. Notwithstanding the fact that the Rhodes Entities will receive certain forms Claim or Interest. Thus, the Plan is fair and equitable and satisfies the requirements of

15 of consideration under the Plan, the Plan does not violate the absolute priority rule because 16 the consideration to be received by the Rhodes Entities under the Plan is not on account of 17 any prepetition equity interests one or more of the Rhodes Entities may hold but solely on 18 account of the Rhodes Entities provision of substantial consideration and cooperation in 19 20 cooperation to be provided to the Debtors by the Rhodes Entities is greater than the cost of 21 22 23 the consideration to be provided to the Rhodes Entities. 30. In addition, the Court finds that the consideration to be provided by the connection with the Mediation Settlement. Moreover, the value of the consideration and

24 Rhodes Entities to the Reorganized Debtors constitutes new value satisfying the standards 25 articulated by the Ninth Circuit with respect to the new value exception to the absolute 26 priority rule. Pursuant to the new value exception, an existing equity holder may receive a 27 28 18 distribution of property under a plan of reorganization if such equity holder offers value to

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1 the debtor that is (i) new, (ii) substantial, (iii) money or moneys worth, (iv) necessary for a 2 successful reorganization and (v) reasonably equivalent to the value or interest received. In 3 4 5 6 7 each of these requirements has been satisfied. 31. First, the Court finds that the value that will be contributed by the Rhodes re Bonner Mall, 2 F.3d at 908; Oxford Life Ins. Co. v. Tucson Self-Storage, Inc. (In re Tucson Self-Storage, Inc.), 166 B.R. 892, 899 (B.A.P. 9th Cir. 1994). As set forth below,

8 Entities to the Reorganized Debtors pursuant to the Plan is new. In order to be new for 9 purposes of the new value exception, the value contributed to the debtor must come from an
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10 outside source and may not consist of property that already belongs to the debtor. In re 11 12 ([T]he new value must come from outside of the debtors business.); Berkeley Fed. 13 14 Bank & Trust v. Sea Garden Motel and Apartments. (In re Sea Garden Motel & Saleha, Case No. 93-00638, 1995 WL 128495, at *3 (Bankr. D. Idaho Mar. 10, 1995)

15 Apartments.), 195 B.R. 294, 302 (D. N.J. 1996) (noting that the infusion of capital must 16 come from an outside source); In re S.A.B.T.C. Townhouse Assn, Inc., 152 B.R. 1005, 1010 17 (Bankr. M.D. Fla. 1993) ([T]he existing equity holders must contribute something to the 18 [d]ebtor that does not already belong to the [d]ebtor or to which the [d]ebtor is already 19 20 32. 21 22 Debtors by the Rhodes Entities is new because it comes from an outside source and does not Based on the foregoing, all of the value that will be contributed to the entitled).

23 consist of property that already belongs to the Debtors. The $3.5 million Cash payment to 24 be made by the Rhodes Entities will consist entirely of funds belonging to the Rhodes 25 Entities in which the Debtors hold no interests. In addition, the Rhodes Entities assumed 26 ownership of the Rhodes Ranch Golf Course in December 2008, and the Rhodes Ranch Golf 27 28 19 Course is not currently owned by the Debtors. Finally, the Rhodes Entities will (i) continue

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1 to guarantee existing performance bonds for the benefit of the Debtors, (ii) ensure that the 2 Reorganized Debtors have the continued use of professional licenses and (iii) ensure that 3 4 5 6 7 8 voluntary cooperation with respect to the foregoing, the Debtors would face a significant hurdle in attempting to reorganize their businesses. 33. Second, the Court finds that the new value that will be contributed by the designees of the Reorganized Debtors replace the designees of the Rhodes Entities on any HOA Boards related to the Debtors or Reorganized Debtors. Absent the Rhodes Entities

9 Rhodes Entities to the Debtors pursuant to the Plan is substantial. While no mathematical
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10 relationship exists for determining whether a contribution of new value is substantial, courts 11 12 to the successful implementation of a feasible plan. State Street Bank and Trust Co. v. 13 14 Elmwood, Inc. (In re Elmwood, Inc.), 182 B.R. 845, 852-53 (D. Nev. 1995) (quoting In re in the Ninth Circuit have held that a contribution of new value must be real and necessary

15 Woodbrook Assocs., 19 F.3d 312, 320 (7th Cir. 1994)). New value that is nominal, 16 gratuitous or token is not substantial. Id. Under this standard, the new value to be 17 contributed to the Debtors by the Rhodes Entities is substantial because even if only the 18 value of the $3.5 million Cash payment and the transfer of the Rhodes Ranch Golf Course to 19 20 ($5.6 million net of funded debt obligations on the Rhodes Ranch Golf Course) from the 21 22 Rhodes Entities. In addition, if the value of (i) the maintenance of performance bonds the Debtors are taken into account, the Debtors will receive over $11.5 million in value

23 through the guarantees provided by the Rhodes Entities, (ii) the continued use of 24 professional licenses and (iii) the replacement of the Rhodes Entities by designees of the 25 Debtors on HOA Board seats are taken into account, the value received by the Debtors may 26 exceed $20.2 million ($14.3 million net of funded debt obligations on the Rhodes Ranch 27 28 20 Golf Course).

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34.

The Court also finds that the new value that will be provided by the Rhodes

2 Entities is necessary to the successful implementation of the Plan. Without the $3.5 million 3 4 5 6 7 the Debtors with approximately $8 million of value ($2.1 million net of debt obligations) on the Effective Date, the transfer of the Rhodes Ranch Golf Course to the Debtors will ensure cash payment, there would be less capital available to (i) fund distributions under the Plan and (ii) finance the Debtors ongoing business operations. Further, in addition to providing

8 that (i) the centerpiece of the Rhodes Ranch community is adequately maintained and (ii) 9 the Debtors operations will not be harmed by diminished home sales or home prices as a
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10 result of a decline in the quality of the amenities available to the Rhodes Ranch community. 11 12 the Reorganized Debtors will ensure that the Reorganized Debtors have continued control 13 14 over building standards in their communities and help to avoid disruptions or increases in Similarly, replacing the Rhodes Entities designees on the HOA Boards with designees of

15 costs in the Reorganized Debtors operations. Finally, the maintenance of performance 16 bonds through the guarantees provided by the Rhodes Entities and the assistance of the 17 Rhodes Entities with respect to the use of professional licenses will allow the Debtors to 18 transition to new ownership without disruption in their business activities and avoid 19 20 In the absence of any of the foregoing forms of consideration to be contributed to the 21 22 Debtors by the Rhodes Entities, the successful implementation of the Plan would be substantial costs related to replacing existing performance bonds or posting cash deposits.

23 significantly jeopardized. 24 35. Third, the Court finds that the new value to be contributed to the Debtors by

25 the Rhodes Entities pursuant to the Plan is in the form of money or moneys worth. In 26 order to satisfy this requirement, the new value contributed to a debtor (i) must consist of 27 28 21 money or property which is freely traded in the economy and (ii) must be a present

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1 contribution, taking place on the effective date of the [p]lan rather than a future 2 contribution. In re Ambanc La Mesa Ltd. PShip, 115 F.3d 650, 655 (9th Cir. 1997). 3 4 5 6 7 Debtors will indisputably receive new value in form of money or moneys worth in the minimum amount of $11.5 million on the Effective Date of the Plan comprised of (i) the While certain forms of the new value to be contributed by the Rhodes Entities to the Reorganized Debtors may fall outside of the scope of a strict application of this standard, the

8 $3.5 million cash payment and (ii) approximately $8 million in respect of the transfer of the 9 Rhodes Ranch Golf Course ($2.1 million net of funded debt obligations on the Rhodes
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10 Ranch Golf Course). The amount of new value to be received by the Reorganized Debtors 11 12 value in the form of money or moneys worth to the Debtors. 13 14 36. Fourth, the Court finds that the new value to be contributed to the Debtors by may, in fact, exceed $20.2 million. The Rhodes Entities have therefore contributed new

15 the Rhodes Entities pursuant to the Plan is necessary for a successful reorganization. This 16 requirement demands that the new value contributed to the Debtors be necessary to the 17 success of the reorganization. See In re Bonner Mall PShip, 2 F.3d at 911; In re Brotby, 18 303 B.R. at 197 (finding an abuse of discretion where there was no finding that a plan could 19 20 be contributed to the Debtors by the Rhodes Entities is necessary for the implementation of 21 22 the Plan and the reorganization of the Debtors. In the absence of the $3.5 million cash not succeed without a contribution of new value). As previously discussed, the new value to

23 payment, the Debtors would have less cash available to fund distributions under the Plan and 24 to finance their operations, and without the transfer of the Rhodes Ranch Golf Course to the 25 Debtors, the value of one of the Debtors most valuable assets (Rhodes Ranch community) 26 would be jeopardized. Moreover, without the assistance of the Rhodes Entities with respect 27 28 22 to the maintenance of performance bonds, continued use of licenses and the composition of

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1 HOA Board seats, the transition to new ownership under the Plan and the smooth operation 2 of the Reorganized Debtors businesses would be virtually impossible. The new value 3 4 5 6 7 37. Fifth, the Court finds that the new value to be contributed to the Debtors by contributed by the Rhodes Entities to the Debtors is therefore necessary for a successful reorganization.

the Rhodes Entities pursuant to the Plan is reasonably equivalent in value to (and is, in fact,

8 substantially greater in value than) the consideration to be provided to the Rhodes Entities. 9 In determining whether the Debtors have received reasonably equivalent value, courts must
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10 consider whether there will be a genuine and fair exchange of new value for a distribution 11 12 Debtors have received more than reasonably equivalent value in exchange for consideration 13 14 to be paid to the Rhodes Entities. The Rhodes Entities will contribute new value to the under a plan of reorganization. See In re Tucson Self-Storage, 166 B.R. at 899. Here, the

15 Debtors in money or moneys worth in the amount of $11.6 million to $20.2 million (or $5.7 16 million to $14.3 million net of funded debt obligations on the Rhodes Ranch Golf Course). 17 In exchange for such new value, the Rhodes Entities will receive consideration worth 18 approximately $2.7 million. Thus, the Debtors will receive more than reasonably equivalent 19 20 38. 21 22 that such requirement has been satisfied because (i) the Debtors exclusive plan filing and Finally, to the extent that a market test requirement applies, the Court finds value in exchange for the consideration to be paid to the Rhodes Entities.

23 solicitation periods were terminated, and (ii) the First Lien Steering Committee (rather than 24 the Debtors) is the plan proponent. 25 39. Because the Rhodes Entities are not receiving a distribution under the Plan on

26 account of any prepetition equity interests in the Debtors, and the requirements of the new 27 28 23 value exception to the absolute priority rule are satisfied, the Plan is fair and equitable with

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1 respect to all Classes of Claims or Interests under the Plan for purposes of Bankruptcy Code 2 section 1129(b). 3 4 5 6 7 1129(c) is inapplicable. 41. 30. Principal Purpose of Plan (11 U.S.C. 1129(d)). The principal purpose 40. 29. Only One Plan (11 U.S.C. 1129(c)). The Plan is the only plan of

reorganization filed in the Chapter 11 Cases. Accordingly, Bankruptcy Code section

8 of the Plan is neither the avoidance of taxes nor the avoidance of section 5 of the Securities 9 Act, and no governmental unit has objected to the confirmation of the Plan on such grounds.
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10 The Plan, therefore, satisfies the requirements of Bankruptcy Code section 1129(d). 11 12 before the Court in the Chapter 11 Cases, the First Lien Steering Committee is deemed to 13 14 have solicited acceptances of the Plan in good faith and in compliance with the applicable 42. 31. Good Faith Solicitation (11 U.S.C. 1129(e)). Based on the record

15 provisions of the Bankruptcy Code, including, without limitation, Bankruptcy Code sections 16 1125(a) and (e), and any applicable nonbankruptcy law, rule or regulation governing the 17 adequacy of disclosure in connection with such solicitation. 18 19 20 section 1129. 21 22 44. 33. Good Faith. The First Lien Steering Committee, the Debtors, the 43. 32. Satisfaction of Confirmation Requirements. For all of the foregoing

reasons, the Plan satisfies the requirements for confirmation set forth in Bankruptcy Code

23 Creditors Committee, the Rhodes Entities, the Second Lien Agent and all other parties (and 24 all of their respective members, officers, directors, agents, financial advisers, attorneys, 25 employees, equity holders, partners, affiliates and representatives) will be acting in good 26 faith if they proceed to (i) consummate the Plan and the agreements, settlements, 27 28 24

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1 transactions and transfers contemplated thereby and (ii) take the actions authorized and 2 directed by this Confirmation Order. 3 4 5 6 7 consolidation of the Debtors Estates into a single consolidated Estate for purposes of confirmation and distributions to be made under the Plan and (ii) the proposed substantive 45. 34. Substantive Consolidation. A preponderance of the evidence presented to

the Court demonstrates that (i) no Creditor will be harmed by the proposed substantive

8 consolidation of the Debtors Estates is appropriate in light of the fact that the Debtors: (a) 9 operate as a single business enterprise under a single name; (b) operate on a centralized basis
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10 with a centralized cash management system; (c) share common parent companies; (d) rely 11 12 business with each other such that the flow of funds and transactions would be difficult to 13 14 entangle; and (f) are all obligated on the First Lien Lender Claims and the Second Lien on a single corporate office for operational and other support services; (e) regularly conduct

15 Lender Claims. In addition, substantial Intercompany Claims existed between the various 16 Debtors as of the Petition Date, and numerous Proofs of Claim were filed against the 17 incorrect Debtor entity. The substantive consolidation of the Debtors Estates into a single 18 Estate for purposes of confirmation and distributions under the Plan will also provide 19 20 46. 21 22 Statement, the Plan embodies the terms of the Mediation Settlement. In order to determine 35. Mediation Settlement. As described in Article I.A of the Disclosure significant advantages that benefit all of the Debtors creditors.

23 whether a compromise may be approved under Bankruptcy Rule 9019, the Bankruptcy 24 Court must consider four factors: (i) the probability of success of the litigation; (ii) the 25 difficulties, if any, to be encountered in the matter of collection; (iii) the complexity of the 26 litigation involved, and the expense, inconvenience and delay necessarily attending it; and 27 28 25 (iv) the paramount interest of the creditors and a proper deference to their reasonable views.

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1 See, e.g., Martin v. Kane (In re A&C Props.), 784 F.2d 1377, 1381 (9th Cir. 1986). A 2 compromise may be approved even if all four of the factors do not favor the compromise so 3 4 5 6 7 does not have to be the best compromise that could have possibly been obtained but, instead, must only fall within a reasonable range of possible outcomes. In re WCI Cable, Inc., 282 long as the factors weigh in favor of the compromise when taken as a whole. See In re Pac. Gas and Elec. Co., 304 B.R. 395, 416 (Bankr. N.D. Cal. 2004). In addition, a compromise

8 B.R. 457, 473-74 (Bankr. D. Or. 2002). 9

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47.

36. Based on the foregoing standard, the Court hereby finds that the

10 Mediation Settlement is fair, equitable and reasonable because, among other things, the 11 12 transfers in excess of $9 million to certain of the Rhodes Entities within the one year period 13 14 prior to the Petition Date that (a) would have been heavily contested by the Rhodes Entities Mediation Settlement allows for the resolution of (i) potential preference actions relating to

15 and (b) may not have produced substantial recoveries for the Debtors Estates in light of the 16 fact that diligence performed over the course of the Debtors Chapter 11 Cases indicates that 17 all but $1,125,134 of the total amount transferred was transferred in the ordinary course of 18 business between the Debtors and the non-Debtor Rhodes Entities, and (ii) potential 19 20 likewise would have been heavily contested by the Rhodes Entities. In addition, the 21 22 creditors of the Estates will derive a material benefit from the approval of the Mediation fraudulent conveyance actions held by the Debtors Estates against the Rhodes Entities that

23 Settlement because, among other things, the Mediation Settlement (i) contemplates a $3.5 24 million cash payment from the Rhodes Entities to the Reorganized Debtors, which payment 25 will be used to fund working capital needs and distributions contemplated by the Plan, (ii) 26 provides for the transfer of the Arizona Assets, which were non-core assets to the 27 28 26 Reorganized Debtors that likely would have required significant additional funding for

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1 development, to the Rhodes Entities, (iii) provides for the transfer of the Rhodes Ranch Golf 2 Course, the maintenance and continued operation of which is paramount to maximizing the 3 4 5 6 7 Plan, which would have yielded uncertain results, and (v) enables the Debtors to emerge from bankruptcy expeditiously and consensually, without any unnecessary eradication of value of the Reorganized Debtors assets, to the Reorganized Debtors, (iv) avoids the significant expense and time delay associated with litigating the Claims released under the

8 value through a prolonged stay in chapter 11. In addition, all Claims and Causes of Action 9 against the Rhodes Entities that are not covered by the limited release provided for in the
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10 Mediation Settlement will be transferred to the Litigation Trust for the benefit of all 11 12 Litigation Trust, and the Mediation Settlement will ensure a smooth transition to new 13 14 15 ownership under the Plan. 48. 37. Assumption of Executory Contracts and Unexpired Leases. The Plan creditors, to be prosecuted and/or settled post-emergence, as deemed appropriate by the

16 satisfies all requirements for the assumption of executory contracts and unexpired leases 17 contained in the Bankruptcy Code, including, without limitation, the requirement to cure all 18 outstanding defaults, if any, and to provide adequate assurance of performance under such 19 20 49. 21 22 section 1123(b) and Bankruptcy Rule 9019, the settlements, compromises, releases, 38. Releases, Exculpations and Injunctions. Pursuant to Bankruptcy Code contracts and leases.

23 discharges, exculpations and injunctions set forth in Article VIII of the Plan are fair, 24 equitable, reasonable, in good faith, and are in the best interests of the Debtors, the 25 Reorganized Debtors, the Estates and the Holders of Claims and Interests. In addition, the 26 releases, injunctions and exculpations set forth in Article VIII of the Plan are integral 27 28 27 components of the Mediation Settlement that is embodied in the Plan. The record of the

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1 Confirmation Hearing and the Chapter 11 Cases is sufficient to support the releases, 2 exculpations and injunctions provided for in Article VIII of the Plan. 3 4 5 6 7 8 THAT: 9
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50.

39. Conditions to Confirmation. Entry of this Confirmation Order shall

satisfy the conditions to Confirmation set forth in Article X.A of the Plan. DECREES NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED

51.

40. Confirmation. For the reasons set forth herein, all requirements for

10 confirmation of the Plan have been satisfied. Accordingly, the Plan is confirmed under 11 12 52. 13 14 settled, and all reservations of rights pertaining to the confirmation of the Plan, are overruled 41. Objections. All Objections that have not been withdrawn, waived or Bankruptcy Code section 1129.

15 on the merits. 16 17 53. 54. Stanley Opposition. The Stanley Opposition is overruled on the merits. 42. Plan Documents. The documents attached as exhibits to the Disclosure

18 Statement (collectively, the Plan Documents), and any amendments, modifications, and 19 20 First Lien Steering Committee at the Confirmation Hearing (including all exhibits and 21 22 attachments thereto and documents referred to therein), and the execution, delivery and supplements thereto, and all documents and agreements introduced into evidence by the

23 performance thereof by the Reorganized Debtors, are authorized and approved. Without 24 further order or authorization of the Court, the First Lien Steering Committee or the 25 Reorganized Debtors, as applicable, and their respective successors are authorized and 26 empowered to make all modifications to all documents included as part of the Plan 27 28 28 Documents that are consistent with the Plan. Execution versions of the documents

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1 comprising the Plan Documents shall constitute legal, valid, binding, and authorized 2 obligations of the respective parties thereto, enforceable in accordance with their terms and, 3 4 5 6 7 55. 43. Plan Classification Controlling. The classification of Claims and to the extent applicable, shall create, as of the Effective Date, all liens and other security interests purported to be created thereby.

Interests for purposes of the distributions to be made under the Plan shall be governed solely

8 by the terms of the Plan. The classification and amounts of Claims, if any, set forth on the 9 ballots returned by the Debtors creditors in connection with voting on the Plan (i) were set
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10 forth on the ballots solely for purposes of voting to accept or reject the Plan, (ii) do not 11 12 actual amount or classification of such Claims under the Plan for distribution purposes and 13 14 (iii) shall not be binding on the First Lien Steering Committee, the Debtors or the necessarily represent, and in no event shall be deemed to modify or otherwise affect, the

15 Reorganized Debtors except with respect to voting on the Plan. 16 56. 44. Mediation Settlement. As described in Article I.A of the Disclosure

17 Statement, the Plan embodies the terms of the Mediation Settlement. The entry of the 18 Confirmation Order shall constitute the Courts approval, pursuant to Bankruptcy Rule 19 20 57. 21 22 of the fact that the Court has found that the Mediation Settlement is fair, equitable and 45. The Courts approval of the Mediation Settlement is appropriate in light 9019, of the compromise and settlement of the matters subject to the Mediation Settlement.

23 reasonable because, among other things, the Mediation Settlement allows for the resolution 24 of (i) potential preference actions relating to transfers in excess of $9 million to certain of 25 the Rhodes Entities within the one year period prior to the Petition Date that (a) would have 26 been heavily contested by the Rhodes Entities and (b) may not have produced substantial 27 28 29 recoveries for the Debtors Estates in light of the fact that diligence performed over the

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1 course of the Debtors Chapter 11 Cases indicates that all but $1,125,134 of the total amount 2 transferred was transferred in the ordinary course of business between the Debtors and the 3 4 5 6 7 contested by the Rhodes Entities. 58. 46. In addition, the Court has found that creditors of the Estates will derive a non-Debtor Rhodes Entities, and (ii) potential fraudulent conveyance actions held by the Debtors Estates against the Rhodes Entities that likewise would have been heavily

8 material benefit from the approval of the Mediation Settlement because, among other things, 9 the Mediation Settlement (i) contemplates a $3.5 million cash payment from the Rhodes
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10 Entities to the Reorganized Debtors, which payment will be used to fund working capital 11 12 Arizona Assets, which were non-core assets to the Reorganized Debtors that likely would 13 14 have required significant additional funding for development, to the Rhodes Entities, (iii) needs and distributions contemplated by the Plan, (ii) provides for the transfer of the

15 provides for the transfer of the Rhodes Ranch Golf Course, the maintenance and continued 16 operation of which is paramount to maximizing the value of the Reorganized Debtors 17 assets, to the Reorganized Debtors, (iv) avoids the significant expense and time delay 18 associated with litigating the Claims released under the Plan, which would have yielded 19 20 consensually, without any unnecessary eradication of value through a prolonged stay in 21 22 chapter 11. Moreover, the Court has found that all Claims and Causes of Action against the uncertain results, and (v) enables the Debtors to emerge from bankruptcy expeditiously and

23 Rhodes Entities that are not covered by the limited release provided for in the Mediation 24 Settlement will be transferred to the Litigation Trust for the benefit of all creditors, to be 25 prosecuted and/or settled post-emergence (as deemed appropriate by the Litigation Trust), 26 and that the Mediation Settlement will ensure a smooth transition to new ownership under 27 the Plan. 28 30

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59.

47. Substantive Consolidation. The substantive consolidation of the Debtors

2 Estates into a single consolidated Estate for purposes of confirmation and distributions under 3 4 5 6 7 Plan, each Debtor shall continue to exist after the Effective Date as a separate corporate entity, limited liability company, partnership, or other form, as the case may be, with all the the Plan is approved. 60. 48. Continued Corporate Existence. Except as otherwise provided in the

8 powers of a corporation, limited liability company, partnership, or other form, as the case 9 may be, pursuant to the applicable law in the jurisdiction in which each applicable Debtor is
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10 incorporated or formed and pursuant to the respective certificate of incorporation and 11 12 extent such certificate of incorporation and bylaws (or other formation documents) are 13 14 amended by the Plan or otherwise, and to the extent such documents are amended, such bylaws (or other formation documents) in effect prior to the Effective Date, except to the

15 documents are deemed to be pursuant to the Plan and require no further action or approval. 16 61. 49. Vesting of Assets in the Reorganized Debtors. Except for any Claims or

17 Causes of Action transferred to the Litigation Trust and unless otherwise provided in the 18 Plan or any agreement, instrument, or other document incorporated therein, on the Effective 19 20 the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and 21 22 clear of all Liens, Claims, charges, or other encumbrances. On and after the Effective Date, Date, all property in each Estate, all Causes of Action, and any property acquired by any of

23 except as otherwise provided in the Plan, each Reorganized Debtor may operate its business 24 and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, 25 or Causes of Action without supervision or approval by the Court and free of any restrictions 26 27 28 31 of the Bankruptcy Code or Bankruptcy Rules.

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62.

50. Cancellation of Equity Securities and Related Obligations. On the

2 Effective Date, except as otherwise specifically provided for in the Plan: (1) the Old Equity 3 4 5 6 7 or obligation of or ownership interest in the Debtors giving rise to any Claim or Interest (except such Certificates, notes, other instruments or documents evidencing indebtedness or Interests and any other Certificate, note, bond, indenture, purchase right, option, warrant, or other instrument or document directly or indirectly evidencing or creating any indebtedness

8 obligations of the Debtors that are reinstated pursuant to the Plan), shall be cancelled solely 9 as to the Debtors, and the Reorganized Debtors shall not have any continuing obligations
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10 thereunder and (2) the obligations of the Debtors pursuant, relating, or pertaining to any 11 12 incorporation or similar documents governing the Old Equity Interests and any other 13 14 Certificates, notes, bonds, indentures, purchase rights, options, warrants, or other agreements, indentures, certificates of designation, bylaws, or certificate or articles of

15 instruments or documents evidencing or creating any indebtedness or obligation of the 16 Debtors (except such agreements or certificates, notes or other instruments evidencing 17 indebtedness or obligations of the Debtors that are specifically Reinstated pursuant to the 18 Plan) shall be released and discharged; provided, however, that notwithstanding 19 20 Claim shall continue in effect solely for purposes of: (w) allowing Holders to receive 21 22 distributions under the Plan; (x) allowing a Servicer to make distributions on account of Confirmation, any such indenture or agreement that governs the rights of the Holder of a

23 such Claims as provided in the applicable governing agreement; (y) permitting such Servicer 24 to maintain any rights and Liens it may have against property other than the Reorganized 25 Debtors property for fees, costs, and expenses pursuant to such indenture or other 26 agreement; and (z) governing the rights and obligations of non-Debtor parties to such 27 28 32 agreements vis--vis each other (including, without limitation, the rights and obligations of

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1 non-Debtor parties under the First Lien Credit Agreement and the Second Lien Credit 2 Agreement, which, for the avoidance of doubt, shall not be affected by the Plan except as 3 4 5 6 7 Code, the Confirmation Order, or the Plan, or result in any expense or liability to the Reorganized Debtors. The Reorganized Debtors shall not have any obligations to any otherwise expressly provided in the Plan); provided, further, however, that the preceding proviso shall not affect the discharge of Claims or Interests pursuant to the Bankruptcy

8 Servicer for any fees, costs, or expenses, except as expressly otherwise provided in the Plan. 9
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63.

51. Section 1145 Exemption. Pursuant to Bankruptcy Code section 1145, the

10 offering, issuance, and distribution of any Securities contemplated by the Plan and any and 11 12 to the fullest extent permitted by applicable law, be exempt from, among other things, the 13 14 registration requirements of section 5 of the Securities Act and any other applicable law all settlement agreements incorporated therein, including the Newco Equity Interests, shall,

15 requiring registration prior to the offering, issuance, distribution, or sale of Securities. In 16 addition, under Bankruptcy Code section 1145 any Securities contemplated by the Plan, 17 including the Newco Equity Interests and New First Lien Notes, will be freely tradable and 18 transferable by the recipients thereof, subject to (i) the provisions of Bankruptcy Code 19 20 Securities Act, and compliance with any rules and regulations of the Securities and 21 22 Exchange Commission, if any, applicable at the time of any future transfer of such section 1145(b)(1) relating to the definition of an underwriter in section 2(a)(11) of the

23 Securities or instruments; (ii) the restrictions, if any, on the transferability of such Securities 24 and instruments set forth in the Newco LLC Operating Agreement, a draft of which is 25 attached to the Disclosure Statement as Exhibit J; and (iii) applicable regulatory approval. 26 27 28 33 64. 52. Exemption from Certain Transfer Taxes and Recording Fees. Pursuant to

Bankruptcy Code section 1146(a), any transfer from a Debtor to a Reorganized Debtor or to

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1 any Entity pursuant to, in contemplation of, or in connection with the Plan or pursuant to: 2 (1) the issuance, distribution, transfer, or exchange of any debt, equity security, or other 3 4 5 6 7 securing of additional indebtedness by such or other means; (3) the making, assignment, or recording of any lease or sublease; or (4) the making, delivery, or recording of any deed or interest in the Debtors or the Reorganized Debtors; (2) the creation, modification, consolidation, or recording of any mortgage, deed of trust, or other security interest, or the

8 other instrument of transfer under, in furtherance of, or in connection with, the Plan, 9 including any deeds, bills of sale, assignments, or other instrument of transfer executed in
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10 connection with any transaction arising out of, contemplated by, or in any way related to the 11 12 intangibles or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, 13 14 Uniform Commercial Code filing or recording fee or other similar tax or governmental Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee,

15 assessment, and the appropriate state or local governmental officials or agents shall forego 16 the collection of any such tax or governmental assessment and to accept for filing and 17 recordation any of the foregoing instruments or other documents without the payment of any 18 such tax or governmental assessment. 19 20 reasonably practicable thereafter, the Reorganized Debtors may take all actions as may be 21 22 necessary or appropriate to effect any transaction described in, approved by, contemplated 65. 53. Restructuring Transactions. On the Effective Date or as soon as

23 by, or necessary to effectuate the Plan, including: (1) the execution and delivery of 24 appropriate agreements or other documents of merger, consolidation, or reorganization 25 containing terms that are consistent with the terms of the Plan and that satisfy the 26 27 28 34 requirements of applicable law; (2) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any property, right, liability, duty, or

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1 obligation on terms consistent with the terms of the Plan; (3) the filing of appropriate 2 certificates of incorporation, merger, or consolidation with the appropriate governmental 3 4 5 6 7 in the business of the Reorganized Debtors; and (6) all other actions that the Reorganized Debtors determine are necessary or appropriate, including the making of filings or authorities pursuant to applicable law; (4) the Roll-Up Transactions; (5) the establishment of a liquidation trust or other appropriate vehicle to hold assets for sale that will not be utilized

8 recordings in connection with the relevant Roll-Up Transactions. The form of each Roll-Up 9 Transaction shall be determined by the Reorganized Debtor that is party to such Roll-Up
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10 Transaction. Implementation of the Roll-Up Transactions shall not affect any distributions, 11 12 66. 13 14 Date, the Reorganized Debtors, and the officers and members of the boards of directors (or 54. Effectuating Documents, Further Transactions. On and after the Effective discharges, exculpations, releases, or injunctions set forth in the Plan.

15 other governing bodies) thereof, are authorized to and may issue, execute, deliver, file, or 16 record such contracts, Securities, instruments, releases, and other agreements or documents 17 and take such actions as may be necessary or appropriate to effectuate, implement, and 18 further evidence the terms and conditions of the Plan and the Securities issued pursuant to 19 20 approvals, authorizations, or consents except for those expressly required pursuant to the 21 22 23 Plan. 67. 55. Preservation of Causes of Action. In accordance with Bankruptcy Code the Plan in the name of and on behalf of the Reorganized Debtors, without the need for any

24 section 1123(b), except as otherwise provided in the Plan, the Reorganized Debtors and the 25 Litigation Trust shall retain and may enforce all rights to commence and pursue, as 26 appropriate, any and all Causes of Action, whether arising before or after the Petition Date, 27 including any actions specifically enumerated on Exhibit L to the Disclosure Statement, and 28 35

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1 the Reorganized Debtors rights to commence, prosecute, or settle such Causes of Action 2 shall be preserved notwithstanding the occurrence of the Effective Date. The Reorganized 3 4 5 6 7 Litigation Trust, as applicable. No Entity may rely on the absence of a specific reference in the Plan or the Disclosure Statement to any Cause of Action against them as any indication Debtors and the Litigation Trust, as applicable, may pursue such Causes of Action, as appropriate, in accordance with the best interests of the Reorganized Debtors and the

8 that the Debtors, Reorganized Debtors or the Litigation Trust, as applicable, will not pursue 9 any and all available Causes of Action against them. The Reorganized Debtors and the
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10 Litigation Trust, as applicable, shall be deemed to have expressly reserved all rights to 11 12 provided in the Plan. Unless any Causes of Action against an Entity are expressly waived, 13 14 relinquished, exculpated, released, compromised, or settled in the Plan or an order of the prosecute any and all Causes of Action against any Entity, except as otherwise expressly

15 Court, the Reorganized Debtors and the Litigation Trust, as applicable, shall be deemed to 16 expressly reserve all Causes of Action for later adjudication and, therefore, no preclusion 17 doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim 18 preclusion, estoppel (judicial, equitable or otherwise), or laches, shall apply to such Causes 19 20 Effective Date. 21 22 68. 56. The Reorganized Debtors and the Litigation Trust, as applicable, shall be of Action upon, after, or as a consequence of Confirmation or the occurrence of the

23 deemed to reserve and shall retain the foregoing Causes of Action notwithstanding the 24 rejection or repudiation of any executory contract or unexpired lease during the Chapter 11 25 Cases or pursuant to the Plan. In accordance with Bankruptcy Code section 1123(b)(3), any 26 Causes of Action that a Debtor may hold against any Entity shall vest in the Reorganized 27 28 36 Debtors and the Litigation Trust, as the case may be, on the Effective Date. The applicable

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1 Reorganized Debtor and the Litigation Trust, as applicable, through its authorized agents or 2 representatives, shall retain and may exclusively enforce any and all such Causes of Action 3 4 5 6 7 enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Causes of Action and to decline to do any of the foregoing without the consent or approval belonging to it. The Reorganized Debtors and the Litigation Trust, as applicable, shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute,

8 of any third party or further notice to or action, order, or approval of the Court. Neither the 9 Litigation Trust nor the Reorganized Debtors shall commence any litigation against the
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10 Rhodes Entities until the Court rules on the allowance of the Rhodes Entities Claims set 11 12 Mediation Term Sheet. To the extent any statute of limitations to pursue any claims 13 14 belonging to the Debtors against the Rhodes Entities would lapse from the execution date of forth in Proofs of Claim, included in the Debtors Schedules or otherwise set forth in the

15 the Mediation Term Sheet through the Courts resolution of the allowance of the Rhodes 16 Entities Claims, the Rhodes Entities shall be deemed to have consented to an extension of 17 the applicable statute of limitations until sixty days following the Courts ruling on the 18 allowance of the Rhodes Entities Claims. The Litigation Trust shall have no liability to any 19 20 69. 21 22 Except as otherwise provided in the Plan, the Debtors executory contracts or unexpired 57. Assumption and Rejection of Executory Contracts and Unexpired Leases. entity for any Claims or Causes of Action it determines not to pursue.

23 leases not assumed or rejected pursuant to an order of the Court prior to the Effective Date 24 shall be deemed rejected pursuant to Bankruptcy Code sections 365 and 1123, except for 25 those executory contracts or unexpired leases: (1) listed on the schedule of Assumed 26 Executory Contracts and Unexpired Leases attached to the Disclosure Statement as Exhibit 27 28 37 N; (2) that are Intercompany Contracts, in which case such Intercompany Contracts are

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1 deemed automatically assumed by the applicable Debtor as of the Effective Date, unless 2 such Intercompany Contract previously was rejected by the Debtors pursuant to an order of 3 4 5 6 7 such assumption or rejection and the effective date thereof shall remain subject to an order of the Court); (4) that are subject to a motion to reject with a requested effective date of the Court or is the subject of a motion to reject pending on the Effective Date; (3) that are the subject of a motion to assume or reject pending on the Effective Date (in which case

8 rejection after the Effective Date; or (5) that are otherwise expressly assumed or rejected 9 pursuant to the Plan. Entry of the Confirmation Order shall constitute an order of the Court
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10 approving the assumptions or rejections of such executory contracts or unexpired leases as 11 12 otherwise indicated, all assumptions or rejections of such executory contracts and unexpired 13 14 leases in the Plan are effective as of the Effective Date. Each such executory contract and set forth in the Plan, all pursuant to Bankruptcy Code sections 365(a) and 1123. Unless

15 unexpired lease assumed pursuant to the Plan or by Court order but not assigned to a third 16 party prior to the Effective Date shall revest in and be fully enforceable by the applicable 17 contracting Reorganized Debtor in accordance with its terms, except as such terms may have 18 been modified by such order. Notwithstanding anything to the contrary in the Plan, the First 19 20 alter, amend, modify, or supplement the schedules of executory contracts or unexpired 21 22 leases identified in Exhibit N to the Disclosure Statement at any time through and including Lien Steering Committee and the Reorganized Debtors, as applicable, reserve the right to

23 fifteen days after the Effective Date. All executory contracts and unexpired leases 24 associated solely with the Arizona Assets shall be assumed and assigned to the Rhodes 25 Entities (or their designee) to the extent set forth on the schedule of Assumed Executory 26 Contracts and Unexpired Leases attached to the Disclosure Statement as Exhibit N, at no 27 28 38

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1 cost to the Debtors or the Reorganized Debtors and all Cure costs associated with such 2 scheduled Arizona contracts or leases shall be borne by the Rhodes Entities. 3 4 5 6 7 asserting Claims arising from the rejection or repudiation of the Debtors executory contracts and unexpired leases pursuant to the Plan or otherwise must be filed with the 70. 58. Claims Based on Rejection or Repudiation of Executory Contracts and

Unexpired Leases. Unless otherwise provided by an order of the Court, any Proofs of Claim

8 Claims and Solicitation Agent no later than the Rejection Damages Claim Deadline. Any 9 Proofs of Claim arising from the rejection or repudiation of the Debtors executory contracts
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10 or unexpired leases that are not timely filed by the Rejection Damages Claim Deadline shall 11 12 against any Reorganized Debtor without the need for any objection by the Reorganized 13 14 Debtors or further notice to or action, order, or approval of the Court, and any Claim arising be disallowed automatically, forever barred from assertion, and shall not be enforceable

15 out of the rejection or repudiation of the executory contract or unexpired lease shall be 16 deemed fully satisfied, released, and discharged, notwithstanding anything in the Schedules 17 or a Proof of Claim to the contrary. All Allowed Claims arising from the rejection or 18 repudiation of the Debtors executory contracts and unexpired leases shall be classified as 19 20 71. 21 22 23 applicable Reorganized Debtor. 72. 60. Warranties. All eligible prepetition home sale contracts with one-year 59. Home Sales. All pending home sale contracts shall be assumed by the General Unsecured Claims.

24 warranty obligations shall be performed in the ordinary course of business of the 25 Reorganized Debtors. Upon the Effective Date, any remaining warranty obligations that are 26 to be assumed by the Reorganized Debtors, which shall only be assumed with the consent of 27 the First Lien Steering Committee, shall be transferred to the Reorganized Debtors. 28 39

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1 Warranty obligations that are not expressly assumed shall be rejected and treated as General 2 Unsecured Claims. 3 4 5 6 7 74. 62. Provisions Governing Distributions. The provisions contained in Article 73. 61. Procedures for Resolving Disputed Claims. The provisions contained in

Article VI of the Plan are found to be reasonable and are hereby approved.

VII of the Plan, including, without limitation, (i) the provisions governing the payment of

8 $1.5 million to the First Lien Lenders and (ii) the provisions regarding the purchase of 9 certain General Unsecured Claims, are found to be reasonable and are hereby approved.
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10 11 12

75.

63. Discharge of Claims and Termination of Interests. Pursuant to

Bankruptcy Code section 1141(d), and except as otherwise specifically provided in the Plan, the distributions, rights, and treatment that are provided in the Plan shall be in complete

13 14 satisfaction, discharge, and release, effective as of the Effective Date, of Claims, Interests,

15 and Causes of Action of any nature whatsoever, including any interest accrued on Claims or 16 Interests from and after the Petition Date, whether known or unknown, against, liabilities of, 17 Liens on, obligations of, rights against, and Interests in, the Debtors or any of their assets or 18 properties, regardless of whether any property shall have been distributed or retained 19 20 and Causes of Action that arose before the Effective Date, any liability (including 21 22 withdrawal liability) to the extent such Claims or Interests relate to services performed by pursuant to the Plan on account of such Claims and Interests, including demands, liabilities,

23 employees of the Debtors prior to the Effective Date and that arise from a termination of any 24 employee, regardless of whether such termination occurred prior to or after the Effective 25 Date, any contingent or non-contingent liability on account of representations or warranties 26 27 28 40 issued on or before the Effective Date, and all debts of the kind specified in Bankruptcy Code sections 502(g), 502(h), or 502(i), in each case whether or not: (1) a Proof of Claim

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1 based upon such debt or right is filed or deemed filed pursuant to Bankruptcy Code section 2 501; (2) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to 3 4 5 6 7 or on account of the filing of the Chapter 11 Cases shall be deemed Cured on the Effective Date. The Confirmation Order shall be a judicial determination of the discharge of all Bankruptcy Code section 502; or (3) the Holder of such a Claim has accepted the Plan. Any default by the Debtors with respect to any Claim or Interest that existed immediately prior to

8 Claims and Interests subject to the Effective Date occurring. 9

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76.

64. Releases by the Debtors of the Released Parties. Pursuant to Bankruptcy

10 Code section 1123(b) and except as otherwise specifically provided in the Plan, for good and 11 12 expeditious reorganization of the Debtors and the implementation of the restructuring 13 14 contemplated by the Plan, and as part of the global settlement described in Article I.B of the valuable consideration, including the service of the Released Parties to facilitate the

15 Disclosure Statement, on and after the Effective Date, the Released Parties are deemed 16 released by the Debtors, the Reorganized Debtors, and the Estates from any and all Claims, 17 obligations, rights, suits, damages, Causes of Action, remedies, and liabilities whatsoever, 18 including any derivative Claims asserted on behalf of the Debtors, taking place on or before 19 20 hereinafter arising, in law, equity, or otherwise, that the Debtors, the Reorganized Debtors or 21 22 the Estates would have been legally entitled to assert in their own right (whether the Effective Date, whether known or unknown, foreseen or unforeseen, existing or

23 individually or collectively) or on behalf of the Holder of any Claim or Interest or other 24 Entity, based on or relating to, or in any manner arising from, in whole or in part, the 25 Debtors, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of 26 any Security of the Debtors, the subject matter of, or the transactions or events giving rise to, 27 28 41 any Claim or Interest that is treated in the Plan, the business or contractual arrangements

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1 between any Debtor and any of the Released Parties, the restructuring of Claims and 2 Interests prior to or in the Chapter 11 Cases, the negotiation, formulation, or preparation of 3 4 5 6 7 place on or before the Effective Date. 77. 65. Releases by the Debtors of the Rhodes Entities. The Rhodes Entities the Plan and Disclosure Statement, or related agreements, instruments, or other documents, upon any other act or omission, transaction, agreement, event, or other occurrence taking

8 shall be deemed released from any and all Claims, obligations, rights, suits, damages, 9 Causes of Action, remedies, and liabilities whatsoever arising under chapter 5 of the
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10 Bankruptcy Code with respect to transfers made by the Debtors to the Rhodes Entities 11 12 apply to transfers expressly set forth in the Schedules as filed with the Court as of August 1, 13 14 15 2009 or as disclosed in Attachment B to the Mediation Term Sheet. 78. 66. Releases by First Lien Lenders of First Lien Lenders. Pursuant to during the 2 years prior to the Petition Date; provided, however, that such release shall only

16 Bankruptcy Rule 9019, and except as otherwise specifically provided in the Plan, to the 17 extent a First Lien Lender elected on its ballot to release the First Lien Lenders in 18 accordance with Article VIII.F of the Plan, for good and valuable consideration, on and after 19 20 deemed to release each of the other First Lien Lenders that elected to grant a release and 21 22 each of their affiliates from any and all Claims, obligations, rights, suits, damages, Causes of the Effective Date, each of the First Lien Lenders that elected to grant a release, shall be

23 Action, remedies, and liabilities whatsoever, whether known or unknown, foreseen or 24 unforeseen, existing or hereinafter arising, in law, equity, or otherwise, that such First Lien 25 Lender would have been legally entitled to assert against any other First Lien Lender that 26 27 28 42 elected to grant a release, based on or relating to, or in any manner arising from, in whole or in part, the First Lien Credit Agreement, the First Lien Lender Claims, any other claims

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1 arising under or related to the First Lien Credit Agreement, the Debtors, the Chapter 11 2 Cases, the subject matter of, or the transactions or events giving rise to any First Lien 3 4 5 6 7 Statement, or related agreements, instruments, or other documents, upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Lender Claim, the restructuring of the First Lien Lender Claims prior to or during the Chapter 11 Cases, the negotiation, formulation, or preparation of the Plan and Disclosure

8 Effective Date; with such releases constituting an express waiver and relinquishment by 9 each First Lien Lender electing to grant a release of any claims, whether known or unknown
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10 that such First Lien Lender may have under Section 1542 of the California Civil Code or 11 12 that Claims or liabilities arising out of or relating to any act or omission of any First Lien 13 14 Lender or any of its affiliates that constitutes gross negligence or willful misconduct shall other analogous state or federal law related to the matters being released; provided, however,

15 not be released. 16 79. 67. Exculpation. Except as otherwise specifically provided in the Plan, no

17 Exculpated Party shall have or incur, and each Exculpated Party is hereby released and 18 exculpated from, any Claim, obligation, Cause of Action, or liability to one another or to any 19 20 misconduct or fraud, but in all respects such Entities shall be entitled to reasonably rely 21 22 upon the advice of counsel with respect to their duties and responsibilities pursuant to the Exculpating Party for any Exculpated Claim, except for gross negligence, willful

23 Plan. The Debtors, the First Lien Steering Committee and the Reorganized Debtors (and 24 each of their respective agents, members, directors, officers, employees, advisors, and 25 attorneys) have, and upon confirmation of the Plan shall be deemed to have, participated in 26 27 28 43 good faith and in compliance with the applicable provisions of the Bankruptcy Code with regard to the distributions of the Securities pursuant to the Plan, and therefore are not, and

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1 on account of such distributions shall not be, liable at any time for the violation of any 2 applicable law, rule, or regulation governing the solicitation of acceptances or rejections of 3 4 5 6 7 obligations issued pursuant to the Plan, all Entities who have held, hold, or may hold Claims against the Debtors, and all Entities holding Interests, are permanently enjoined, from and the Plan or such distributions made pursuant to the Plan. 80. 68. Injunction. Except as otherwise expressly provided in the Plan or for

8 after the Effective Date, from: (1) commencing or continuing in any manner any action or 9 other proceeding of any kind against the Debtors or Reorganized Debtors on account of or in
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10 connection with or with respect to any such Claims or Interests; (2) enforcing, attaching, 11 12 against the Debtors or Reorganized Debtors on account of or in connection with or with 13 14 respect to any such Claims or Interests; (3) creating, perfecting, or enforcing any collecting, or recovering by any manner or means any judgment, award, decree or order

15 encumbrance of any kind against the Debtors or Reorganized Debtors or the property or 16 Estates of the Debtors or Reorganized Debtors on account of or in connection with or with 17 respect to any such Claims or Interests; (4) asserting any right of setoff, subrogation, or 18 recoupment of any kind against any obligation due from the Debtors or Reorganized Debtors 19 20 connection with or with respect to any such Claims or Interests unless such Holder has filed 21 22 a motion requesting the right to perform such setoff on or before the Confirmation Date, and or against the property or Estates of the Debtors or Reorganized Debtors on account of or in

23 notwithstanding an indication in a Proof of Claim or Interest or otherwise that such Holder 24 asserts, has, or intends to preserve any right of setoff pursuant to Bankruptcy Code section 25 553 or otherwise (provided, that, to the extent the Rhodes Entities Claims are Allowed, the 26 Rhodes Entities, without the need to file any such motion, shall retain the right to assert a 27 setoff against any Claims or Causes of Action that the Reorganized Debtors or Litigation 28 44

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1 Trust may assert against the Rhodes Entities, with the Reorganized Debtors and Litigation 2 Trust, as applicable, reserving the right to challenge the propriety of any such attempted 3 4 5 6 7 8 connection with or with respect to any such Claims or Interests released or settled pursuant to the Plan. 81. 69. Setoffs. Except as otherwise expressly provided for in the Plan, each setoff, with any such challenge to be resolved by the Court); and (5) commencing or continuing in any manner any action or other proceeding of any kind on account of or in

9 Reorganized Debtor, pursuant to the Bankruptcy Code (including Bankruptcy Code section
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10 553), applicable non bankruptcy law, or as may be agreed to by the Holder of a Claim, may 11 12 account of such Allowed Claim (before any distribution is made on account of such Allowed 13 14 Claim), any Claims, rights, and Causes of Action of any nature that such Debtor, setoff against any Allowed Claim and the distributions to be made pursuant to the Plan on

15 Reorganized Debtor or the Litigation Trust, as applicable, may hold against the Holder of 16 such Allowed Claim, to the extent such Claims, rights, or Causes of Action against such 17 Holder have not been otherwise compromised or settled on or prior to the Effective Date 18 (whether pursuant to the Plan or otherwise); provided, however, that neither the failure to 19 20 waiver or release by such Reorganized Debtor or the Litigation Trust of any such Claims, 21 22 rights, and Causes of Action that such Reorganized Debtor or the Litigation Trust may effect such a setoff nor the allowance of any Claim pursuant to the Plan shall constitute a

23 possess against such Holder. In no event shall any Holder of Claims be entitled to setoff any 24 Claim against any Claim, right, or Cause of Action of the Debtor or Reorganized Debtor, as 25 applicable, unless such Holder had filed a motion with the Court requesting the authority to 26 perform such setoff on or before the Confirmation Date, and notwithstanding any indication 27 28 45 in any Proof of Claim or otherwise that such Holder asserts, has, or intends to preserve any

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1 right of setoff pursuant to section 553 or otherwise; provided, however, that, to the extent 2 the Rhodes Entities Claims are Allowed, the Rhodes Entities, without the need to file any 3 4 5 6 7 with the Reorganized Debtors and Litigation Trust, as applicable, reserving the right to challenge the propriety of any such attempted setoff, with any such challenge to be resolved such motion, shall retain the right to assert a setoff against any Claims or Causes of Action that the Reorganized Debtors or Litigation Trust may assert against the Rhodes Entities,

8 by the Court. 9
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82.

70. Professional Claims. The provisions contained in Article IX.A of the

10 Plan relating to Claims for fees and expenses incurred in connection with the Chapter 11 11 12 83. 13 14 Administrative Claim must be filed with the Claims and Solicitation Agent and served upon 71. Other Administrative Claims. All requests for payment of an Cases are found to be reasonable and are hereby approved.

15 counsel to the Debtors or Reorganized Debtors, as applicable, and the First Lien Steering 16 Committee on or before the Administrative Claim Bar Date. Any request for payment of an 17 Administrative Claim that is not timely filed and served shall be disallowed automatically 18 without the need for any objection by the Debtors, Reorganized Debtors, or the First Lien 19 20 Claim in the ordinary course of business without any further notice to or action, order, or 21 22 approval of the Court. In the event that any party with standing objects to an Administrative Steering Committee. The Reorganized Debtors may settle and pay any Administrative

23 Claim, the Court shall determine the Allowed amount of such Administrative Claim. 24 Notwithstanding the foregoing, no request for payment of an Administrative Claim need be 25 filed with respect to an Administrative Claim previously Allowed by Final Order. 26 27 28 46 84. 72. Immediate Binding Effect. Subject to Article X.B of the Plan and

notwithstanding Bankruptcy Rules 3020(e), 6004(g), or 7062 or otherwise, upon the

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1 occurrence of the Effective Date, the terms of the Plan shall be immediately effective and 2 enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and all 3 4 5 6 7 compromises, releases, discharges, and injunctions described in the Plan or herein, each Entity acquiring property under the Plan, and any and all non-Debtor parties to executory Holders of Claims or Interests (irrespective of whether such Claims or Interests are deemed to have accepted the Plan), all Entities that are parties to or are subject to the settlements,

8 contracts and unexpired leases with the Debtors. 9

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85.

73. Notice of Entry of Confirmation Order. In accordance with Bankruptcy

10 Rules 2002 and 3020(c), within ten business days of the date of entry of the Confirmation 11 12 States mail, first class postage prepaid, by hand, or by overnight courier service to all parties 13 14 having been served with the Confirmation Hearing Notice; provided, however, that no Order, the First Lien Steering Committee shall serve the Notice of Confirmation by United

15 notice or service of any kind shall be required to be mailed or made upon any Entity to 16 whom the First Lien Steering Committee mailed a Confirmation Hearing Notice, but 17 received such notice returned marked undeliverable as addressed, moved, left no 18 forwarding address or forwarding order expired, or similar reason, unless the First Lien 19 20 that Entitys new address. To supplement the notice described in the preceding sentence, 21 22 within twenty days of the date of the Confirmation Order, the First Lien Steering Committee Steering Committee has been informed in writing by such Entity, or is otherwise aware, of

23 shall publish the Notice of Confirmation once in the Vegas Sun. Mailing and publication of 24 the Notice of Confirmation in the time and manner set forth in the this paragraph shall be 25 good and sufficient notice under the particular circumstances and in accordance with the 26 requirements of Bankruptcy Rules 2002 and 3020(c), and no further notice is necessary. 27 28 47

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86.

74. Additional Documents. On or before the Effective Date, the First Lien

2 Steering Committee may file with the Court such agreements and other documents as may 3 4 5 6 7 Committee and all Holders of Claims receiving distributions pursuant to the Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. The Debtors or the Reorganized Debtors, as applicable, the First Lien Steering

8 agreements or documents and take any other actions as may be necessary or advisable to 9 effectuate the provisions and intent of the Plan, in each case as may be determined by the
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10 First Lien Steering Committee. 11 12 of the Judicial Code, as determined by the Court at a hearing pursuant to Bankruptcy Code 13 14 section 1128, shall be paid for each quarter (including any fraction thereof) until the Chapter 87. 75. Payment of Statutory Fees. All fees payable pursuant to section 1930(a)

15 11 Cases are converted, dismissed, or closed, whichever occurs first. 16 88. 76. Dissolution of Creditors Committee. Upon the Effective Date, the

17 Creditors Committee shall dissolve automatically (except with respect to the resolution of 18 applications for Professional Claims), and members thereof shall be released and discharged 19 20 11 Cases and under the Bankruptcy Code. 21 22 89. 77. Reservation of Rights. Except as expressly provided by the Plan, none of from all rights, duties, responsibilities, and liabilities arising from, or related to, the Chapter

23 the filing of the Plan, any statement or provision contained in the Plan, or the taking of any 24 action by any Debtor or the First Lien Steering Committee with respect to the Plan, the 25 Disclosure Statement, or any documents ancillary to either the Plan or the Disclosure 26 Statement, shall be deemed to be an admission or waiver of any rights of any Debtor or the 27 28 48

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1 First Lien Steering Committee with respect to the Holders of Claims or Interests prior to the 2 Effective Date. 3 4 5 6 7 8 any heir, executor, administrator, successor or assign, affiliate, officer, director, agent, representative, attorney, beneficiaries, or guardian, if any, of each Entity. 91. 79. Term of Injunctions or Stays. Unless otherwise provided in the Plan or in 90. 78. Successors and Assigns. The rights, benefits, and obligations of any

Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of,

9 the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to
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10 Bankruptcy Code sections 105, 362, or 525 or otherwise, or any order of the Court, and 11 12 in the Plan or this Confirmation Order) shall remain in full force and effect until the 13 14 Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order extant on the date of the Confirmation Order (excluding any injunctions or stays contained

15 shall remain in full force and effect in accordance with their terms. The Confirmation Order 16 will permanently enjoin the commencement or prosecution by any Person, whether directly, 17 derivatively or otherwise, of any Claims, Causes of Action, obligations, suits, judgments, 18 damages, demands, debts, rights or liabilities released pursuant to the Plan. 19 20 law (including the Bankruptcy Code and Bankruptcy Rules) or unless otherwise specifically 21 22 stated, the laws of the State of Nevada, without giving effect to the principles of conflict of 92. 80. Governing Law. Unless a rule of law or procedure is supplied by federal

23 laws, shall govern the rights, obligations, construction, and implementation of the Plan, any 24 agreements, documents, instruments, or contracts executed or entered into in connection 25 with the Plan (except as otherwise set forth in those agreements, in which case the governing 26 27 28 49 law of such agreement shall control), and corporate governance matters; provided, however, that corporate governance matters relating to the Debtors or Reorganized Debtors, as

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1 applicable, not incorporated or organized in Nevada shall be governed by the laws of the 2 state of incorporation or organization of the applicable Debtor or Reorganized Debtor, as 3 4 5 6 7 Committee shall not modify materially the terms of the Plan without the prior consent of the parties to the Mediation Term Sheet; provided, that in the event the Rhodes Entities fail to applicable. 93. 81. Modifications and Amendments to Plan. The First Lien Steering

8 comply with any of their obligations under the Mediation Term Sheet or the Plan by the 9 Effective Date (or such other date set forth in the Plan) and fail to cure such alleged breach
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10 within ten (10) days written notice to the Rhodes Entities, then the First Lien Steering 11 12 that a breach has occurred (except that the failure of the parties to agree on the refinancing 13 14 of the Rhodes Ranch Golf Course solely as a result of the First Lien Steering Committee Committee shall be entitled to file a motion on at least seven (7) days notice to (i) determine

15 acting unreasonably or in bad faith shall not be deemed a failure of the Rhodes Entities to 16 comply with their obligations under the Plan), and the Rhodes Entities reserve their right to 17 object to such motion; (ii) modify the Plan to remove any provisions of the Plan that were 18 included for the benefit of the Rhodes Entities; and (iii) consummate the Plan, as modified. 19 20 the modifications to the Plan to remove any provisions that were included for the benefit of 21 22 the Rhodes Entities, the First Lien Steering shall be authorized to make such modifications Upon entry of an order of the Court finding a breach by the Rhodes Entities and authorizing

23 and consummate the Plan. Subject to certain restrictions and requirements set forth in 24 Bankruptcy Code section 1127 and Bankruptcy Rule 3019 and those restrictions on 25 modifications set forth in the Plan, the First Lien Steering Committee expressly reserves its 26 rights to revoke, withdraw, alter, amend, or modify materially the Plan with respect to any 27 Debtor, one or more times, after Confirmation, and, to the extent necessary, may initiate 28 50

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1 proceedings in the Court to so alter, amend, or modify the Plan, or remedy any defect or 2 omission, or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the 3 4 5 6 7 of the Plan and shall be made in accordance with Article XI.A of the Plan. 94. 82. Nonseverability of Plan Provisions. The provisions of the Confirmation Confirmation Order, in such matters as may be necessary to carry out the purposes and intent of the Plan. Any such modification or supplement shall be considered a modification

8 Order shall constitute a judicial determination and shall provide that each term and provision 9 of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is:
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10 (1) valid and enforceable pursuant to its terms; (2) integral to the Plan and may not be 11 12 nonseverable and mutually dependent. 13 14 95. 83. References to Plan Provisions. Captions and headings to Articles of the deleted or modified without the First Lien Steering Committees consent; and (3)

15 Plan are inserted for convenience of reference only and are not intended to be part of or to 16 affect the interpretation of the Plan. The failure specifically to include or to refer to any 17 particular provision of the Plan in the Confirmation Order shall not diminish or impair the 18 effectiveness of such provision, it being the intent of the Court that the Plan be confirmed in 19 20 96. 21 22 Plan and of this Confirmation Order shall be construed in a manner consistent with each 84. Conflicts Between Confirmation Order and Plan. The provisions of the its entirety.

23 other so as to effect the purposes of each; provided, however, that if there is determined to 24 be any inconsistency between any Plan provision and any provisions of this Confirmation 25 Order that cannot so be reconciled, then, solely to the extent of such inconsistency, the 26 provisions of the Confirmation Order shall control. 27 28 51

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97.

85. Findings of Fact. The determinations, findings, judgments, decrees and

2 orders set forth and incorporated herein constitute the Courts findings of fact and 3 4 5 6 7 the extent that it is or may be deemed a conclusion of law, shall also constitute a conclusion of law. Each conclusion of law set forth or incorporated herein, to the extent it is or may be conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. Each finding of fact set forth or incorporated herein, to

8 deemed a finding of fact, shall also constitute a finding of fact. 9

AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Tel: 212.872.1000 Facsimile: 212.872.1002 / akingump.com

98.

86. Substantial Consummation. Substantial consummation of the Plan shall

10 be deemed to occur on the Effective Date. 11 12 which an appeal must be filed shall commence upon entry hereof. 13 14 100. 88. Retention of Jurisdiction. Notwithstanding the entry of this Confirmation 99. 87. Final Order. The Confirmation Order is a final order and the period in

15 Order and the occurrence of the Effective Date, the Court shall retain exclusive jurisdiction 16 over all matters arising out of, or related to, the Chapter 11 Cases and the Plan pursuant to 17 Bankruptcy Code sections 105(a) and 1142 and Article XII of the Plan. 18 19 Submitted by: 20 Nile Leatham (NV Bar No. 002838) KOLESAR & LEATHAM 21 Wells Fargo Financial Center 3320 W. Sahara Ave. 22 Las Vegas, NV 89102 23 (702) 979-2357 (Telephone) (702) 362-9472 (Facsimile) 24 Nleatham@klnevada.com 25 Dated: January 15,February 8, 2010 26 27 28 52

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