Exhibit 99.2

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

 

In re:		Case No. 25-40976-357
		Chapter 11
23ANDME HOLDING CO., et al.,1
Debtors.		(Jointly Administered)

DISCLOSURE STATEMENT FOR THE

JOINT PLAN OF CHROME HOLDING CO. AND ITS DEBTOR

AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE

 

 

PAUL, WEISS, RIFKIND,		CARMODY MACDONALD P.C.
WHARTON & GARRISON LLP		Thomas H. Riske #61838MO
Paul M. Basta (admitted pro hac vice)		Nathan R. Wallace #74890MO
Christopher Hopkins (admitted pro hac vice)		Jackson J. Gilkey #73716MO
Jessica I. Choi (admitted pro hac vice)		120 S. Central Avenue, Suite 1800
Grace C. Hotz (admitted pro hac vice)		St. Louis, Missouri 63105
1285 Avenue of the Americas		Telephone: (314) 854-8600
New York, New York 10019		Facsimile: (314) 854-8660
Telephone: (212) 373-3000		Email: thr@carmodymacdonald.com
Facsimile: (212) 757-3990		nrw@carmodymacdonald.com
Email: pbasta@paulweiss.com		jjg@carmodymacdonald.com
chopkins@paulweiss.com
jchoi@paulweiss.com
ghotz@paulweiss.com
Counsel to the Debtors and Debtors in Possession		Counsel to the Debtors and Debtors in Possession

1

The Debtors in each of these cases, along with the last four digits of each Debtor’s federal tax identification number, are: 23andMe Holding Co. (0344), 23andMe, Inc. (7371), 23andMe Pharmacy Holdings, Inc. (4690), Lemonaid Community Pharmacy, Inc. (7330), Lemonaid Health, Inc. (6739), Lemonaid Pharmacy Holdings Inc. (6500), LPharm CS LLC (1125), LPharm INS LLC (9800), LPharm RX LLC (7746), LPRXOne LLC (3447), LPRXThree LLC (3852), and LPRXTwo LLC (1595). The Debtors’ service address for purposes of these Chapter 11 Cases is: 870 Market Street, Room 415, San Francisco, CA 94102.

DISCLOSURE STATEMENT

SOLICITATION OF VOTES ON THE JOINT PLAN OF CHROME HOLDING CO. AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE FROM HOLDERS OF OUTSTANDING:

 

VOTING CLASS		NAME OF CLASS UNDER PLAN
CLASS 3		U.S. DATA BREACH CLASS SETTLEMENT CLAIMS
CLASS 4		U.S. DATA BREACH ARBITRATION SETTLEMENT GROUP CLAIMS
CLASS 5		CANADIAN DATA BREACH CLASS SETTLEMENT CLAIMS
CLASS 6		CHROME COMMERCIAL CLAIMS
CLASS 7		CHROME OTHER GENERAL UNSECURED CLAIMS
CLASS 8		LEMONAID COMMERCIAL CLAIMS
CLASS 9		LEMONAID OTHER GENERAL UNSECURED CLAIMS
CLASS 12		HOLDCO INTERESTS

Dated: August 15, 2025

 

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DISCLAIMERS

THE DEBTORS ARE PROVIDING THE INFORMATION IN THIS DISCLOSURE STATEMENT TO HOLDERS OF CERTAIN CLAIMS AND INTERESTS FOR THE PURPOSE OF SOLICITING VOTES TO ACCEPT OR REJECT THE PLAN. NOTHING IN THIS DISCLOSURE STATEMENT MAY BE RELIED UPON OR USED BY ANY ENTITY FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. BEFORE DECIDING WHETHER TO VOTE FOR OR AGAINST THE PLAN, EACH HOLDER ENTITLED TO VOTE SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION IN THIS DISCLOSURE STATEMENT, INCLUDING ALL ATTACHED EXHIBITS AND DOCUMENTS INCORPORATED INTO THIS DISCLOSURE STATEMENT, AS WELL AS THE RISK FACTORS DESCRIBED IN ARTICLE VIII OF THIS DISCLOSURE STATEMENT.

UPON CONFIRMATION OF THE PLAN, THE SECURITIES DESCRIBED IN THIS DISCLOSURE STATEMENT WILL BE ISSUED WITHOUT REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, TOGETHER WITH THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “SECURITIES ACT”), OR SIMILAR U.S. FEDERAL, STATE, OR LOCAL LAWS TO PERSONS RESIDENT OR OTHERWISE LOCATED IN THE UNITED STATES IN RELIANCE ON THE EXEMPTION SET FORTH IN SECTION 1145 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”). TO THE EXTENT EXEMPTION FROM REGISTRATION UNDER SECTION 1145 OF THE BANKRUPTCY CODE DOES NOT APPLY, THE SECURITIES MAY NOT BE OFFERED OR ISSUED TO PERSONS RESIDENT OR OTHERWISE LOCATED IN THE UNITED STATES EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT OR (II) AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING SECTION 4(A)(2) OF THE SECURITIES ACT OR REGULATION D PROMULGATED THEREUNDER, AND/OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES LAWS OF THE UNITED STATES. TO THE EXTENT EXEMPTION FROM REGISTRATION UNDER SECTION 1145 OF THE BANKRUPTCY CODE DOES NOT APPLY, THE SECURITIES MAY BE ISSUED TO

2	Non-Debtor affiliates exclude any controlling shareholder of Chrome Holding Co.

 

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PERSONS OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”) AND EXEMPTIONS UNDER THE LAWS OF FOREIGN JURISDICTIONS, AS APPLICABLE. IN ACCORDANCE WITH SECTION 1125(e) OF THE BANKRUPTCY CODE, A DEBTOR OR ANY OF ITS AGENTS THAT PARTICIPATES, IN GOOD FAITH AND IN COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE, IN THE OFFER, ISSUANCE, SALE, OR PURCHASE OF A SECURITY OFFERED OR SOLD UNDER THE PLAN OF THE DEBTOR, OF AN AFFILIATE PARTICIPATING IN A JOINT PLAN WITH THE DEBTOR, OR OF A NEWLY ORGANIZED SUCCESSOR OF THE DEBTOR UNDER THE PLAN IS NOT LIABLE, ON ACCOUNT OF SUCH PARTICIPATION, FOR VIOLATION OF ANY APPLICABLE LAW, RULE, OR REGULATION CONCERNING THE OFFER, ISSUANCE, SALE, OR PURCHASE OF SECURITIES.

NO SECURITIES TO BE ISSUED PURSUANT TO THE PLAN HAVE BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL, OR REGULATORY AUTHORITY WHETHER IN THE UNITED STATES OR ELSEWHERE. THIS DISCLOSURE STATEMENT HAS NOT BEEN FILED FOR APPROVAL WITH THE SEC OR ANY STATE AUTHORITY AND NEITHER THE SEC NOR ANY STATE AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF THE PLAN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES. NEITHER THE SOLICITATION OF VOTES ON THE PLAN NOR THIS DISCLOSURE STATEMENT CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED.

THIS DISCLOSURE STATEMENT CONTAINS “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE UNITED STATES SECURITIES LAWS. SUCH FORWARD-LOOKING STATEMENTS CONSIST OF ANY STATEMENT OTHER THAN A RECITATION OF HISTORICAL FACT AND CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS “MAY,” “EXPECT,” “ANTICIPATE,” “ESTIMATE,” “FORECAST,” “OUTLOOK,” “BUDGET,” OR “CONTINUE,” OR THE NEGATIVE THEREOF, OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. THE DEBTORS CONSIDER ALL STATEMENTS REGARDING ANTICIPATED OR FUTURE MATTERS TO BE FORWARD-LOOKING STATEMENTS.

THE READER IS CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE PRESENTED IN SUCH FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT LIMITED TO, RISKS AND UNCERTAINTIES RELATING TO:

 

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the pendency of these Chapter 11 Cases;

 

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the significant portion of time and attention these Chapter 11 Cases have required from management;

 

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the high costs of bankruptcy cases and related fees;

 

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Bankruptcy Court rulings in the Chapter 11 Cases;

 

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whether the Company will be able to obtain confirmation of a chapter 11 plan under the Bankruptcy Code;

 

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risks of conversion to a case under Chapter 7 of the Bankruptcy Code;

 

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risks of dismissal of one or more of these Chapter 11 Cases;

 

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whether the Company will be able to consummate the Lemonaid Sale Transaction;

 

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whether the results or developments contemplated by a chapter 11 plan will materialize as anticipated;

 

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the occurrence of a variety of contingencies, which may in turn affect distributions to Holders of Allowed Claims or Interests;

 

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risks that the Debtors may seek to amend, waive, modify, or withdraw the Plan at any time prior to Confirmation;

 

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risks that other parties in interest may seek authority from the Bankruptcy Court to propose an alternative chapter 11 plan;

 

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the actions and decisions of the Company’s stockholders, creditors, and other third parties who have interests in the Company’s Chapter 11 Cases;

 

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risks that the amount of administrative claims are greater than expected;

 

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risks that the actual amount of Allowed Claims and Allowed Interests are materially greater than expected;

 

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the impact of inflation on the Company’s operations;

 

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the impact of unanticipated market and economic conditions;

 

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risks that certain estimates and assumptions might ultimately prove to be incorrect;

 

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risks that the Debtors are or may become party to certain legal proceedings, and the associated expenses related thereto;

 

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the results of the Governmental Bar Date;

 

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risks that the timing of distributions contemplated under a chapter 11 plan differ from expectations;

 

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changes in interest rates;

 

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risks associated with bankruptcy, insolvency, and/or other creditor protection proceedings in foreign jurisdictions;

 

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the immaturity and volatility of the telehealth market;

 

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whether the Company can attract new customers and patients;

 

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whether the Company’s engagements with customers and patients are successful and align with cost expectations;

 

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the maintenance and enhancement of the Company’s brand, and the associated effects on the Company’s customer base;

 

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the impact of fierce competition in the telehealth industry;

 

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risks associated with governmental regulation and the Company’s ability to prescribe certain medications to patients;

 

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the Company’s ability to attract and retain high-quality healthcare providers for its patients, business, and financial condition;

 

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the extensive regulations the Company is subject to, and the Company’s ability to comply with such regulations;

 

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whether third parties are able to provide patients with compounded medications and are able to comply with FDA and/or state requirements;

 

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risks associated with key sole suppliers to manufacture and perform services used by customers;

 

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the Company’s reliance upon other companies to perform functions critical to its ability to operate their platform and generate revenue from patients;

 

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liquidity requirements and the adequacy of capital resources;

 

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changes in the policies of various domestic and foreign government and regulatory authorities;

 

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possible adverse impacts of regulatory, legislative, tax, or other judicial developments;

 

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force majeure events and the continuing economic impact related to COVID-19; and

 

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the factors as set out in Article VIII of this Disclosure Statement—“Certain Risk Factors To Be Considered,” and other factors that are not known to the Debtors at this time.

STATEMENTS CONCERNING THESE AND OTHER MATTERS ARE NOT GUARANTEES OF FUTURE EVENTS. THERE ARE RISKS, UNCERTAINTIES, AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL PERFORMANCE OR ACHIEVEMENTS TO BE DIFFERENT FROM THOSE PROJECTED, AND THE DEBTORS UNDERTAKE NO OBLIGATION TO UPDATE THE PROJECTIONS SET FORTH HEREIN, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW. THE READER IS CAUTIONED THAT ALL FORWARD-LOOKING STATEMENTS ARE NECESSARILY SPECULATIVE AND THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE PRESENTED IN SUCH FORWARD-LOOKING STATEMENTS. THE LIQUIDATION ANALYSIS AND OTHER INFORMATION CONTAINED HEREIN AND ATTACHED HERETO ARE ESTIMATES ONLY, AND THE VALUE OF THE PROPERTY DISTRIBUTED TO HOLDERS OF ALLOWED CLAIMS MAY BE AFFECTED BY MANY FACTORS THAT CANNOT BE PREDICTED. THEREFORE, ANY ANALYSES, ESTIMATES, OR RECOVERY PROJECTIONS MAY OR MAY NOT TURN OUT TO BE

 

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ACCURATE. FOR MORE INFORMATION REGARDING THE FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE PRESENTED IN THE FORWARD-LOOKING STATEMENTS, PLEASE REFER TO ARTICLE VIII OF THIS DISCLOSURE STATEMENT—“CERTAIN RISK FACTORS TO BE CONSIDERED.”

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016 AND IS NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER SIMILAR LAWS.

THE DEBTORS BELIEVE THAT THE SOLICITATION OF VOTES ON THE PLAN MADE BY THIS DISCLOSURE STATEMENT, AND THE OFFER OF CERTAIN NEW SECURITIES THAT MAY BE DEEMED TO BE MADE PURSUANT TO THE SOLICITATION, ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE EXEMPTION PROVIDED BY SECTION 1145(a)(1) OF THE BANKRUPTCY CODE, AND THAT THE OFFER OF CERTAIN OTHER NEW SECURITIES ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES PURSUANT TO SECTION 4(A)(2) OF THE SECURITIES ACT AND RULE 506 OF REGULATION D PROMULGATED THEREUNDER, REGULATION S, AND/OR OTHER AVAILABLE EXEMPTIONS FROM REGISTRATION AND IT IS EXPECTED THAT THE OFFER AND ISSUANCE OF THE SECURITIES UNDER THE PLAN WILL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND RELATED STATE STATUTES BY REASON OF THE APPLICABILITY OF SECTION 1145(a)(1) OF THE BANKRUPTCY CODE AND SECTION 4(A)(2) OF THE SECURITIES ACT AND RULE 506 OF REGULATION D PROMULGATED THEREUNDER AND REGULATION S, AND/OR OTHER AVAILABLE EXEMPTIONS FROM REGISTRATION.

ALL SECURITIES DESCRIBED HEREIN ARE EXPECTED TO BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS (“BLUE SKY LAWS”).

TO THE EXTENT THAT THE DEBTORS RELY ON A PRIVATE PLACEMENT EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT FOR THE OFFER AND ISSUANCE OF ANY SECURITIES, THOSE SECURITIES WILL BE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT AND MAY ONLY BE RESOLD OR OTHERWISE TRANSFERRED PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT OR (II) AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

NO LEGAL OR TAX ADVICE IS PROVIDED TO YOU BY THIS DISCLOSURE STATEMENT. THE DEBTORS URGE EACH HOLDER OF A CLAIM OR INTEREST TO CONSULT WITH ITS OWN ADVISORS WITH RESPECT TO ANY LEGAL, FINANCIAL, SECURITIES, TAX, OR BUSINESS ADVICE IN REVIEWING THIS DISCLOSURE STATEMENT, THE PLAN, AND EACH OF THE PROPOSED TRANSACTIONS CONTEMPLATED THEREBY. FURTHERMORE, THE BANKRUPTCY COURT’S APPROVAL OF THE ADEQUACY OF DISCLOSURES CONTAINED IN THIS

 

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DISCLOSURE STATEMENT DOES NOT CONSTITUTE THE BANKRUPTCY COURT’S APPROVAL OF THE MERITS OF THE PLAN OR A GUARANTEE BY THE BANKRUPTCY COURT OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN. THE DEBTORS RECOMMEND THAT POTENTIAL RECIPIENTS OF ANY SECURITIES ISSUED PURSUANT TO THE PLAN CONSULT THEIR OWN LEGAL COUNSEL AND ADVISORS WITH RESPECT TO ANY LEGAL, FINANCIAL SECURITIES (INCLUDING LAWS GOVERNING THE TRANSFERABILITY OF ANY SUCH SECURITIES), TAX, OR BUSINESS ADVICE ON REVIEWING THIS DISCLOSURE STATEMENT, THE PLAN, AND ANY PROPOSED TRANSACTIONS CONTEMPLATED THEREBY.

THIS DISCLOSURE STATEMENT CONTAINS, AMONG OTHER THINGS, A SUMMARY OF THE PLAN, CERTAIN EVENTS LEADING UP TO, DURING, AND EXPECTED TO OCCUR IN THE DEBTORS’ CHAPTER 11 CASES, AND CERTAIN DOCUMENTS RELATED TO THE PLAN THAT ARE ATTACHED HERETO AND THERETO, WHICH ARE INCORPORATED HEREIN BY REFERENCE, OR THAT MAY BE FILED LATER WITH A PLAN SUPPLEMENT, IF APPLICABLE. ALTHOUGH THE DEBTORS BELIEVE THAT THESE SUMMARIES ARE FAIR AND ACCURATE, THESE SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY TO THE EXTENT THAT THE SUMMARIES DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR RELEVANT STATUTORY PROVISIONS OR EVERY DETAIL OF SUCH EVENTS, BY REFERENCE TO SUCH DOCUMENTS OR STATUTORY PROVISIONS. IN THE EVENT OF ANY CONFLICT, INCONSISTENCY, OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN OR ANY OTHER DOCUMENTS, THE PLAN OR SUCH OTHER DOCUMENTS WILL GOVERN AND CONTROL FOR ALL PURPOSES. EXCEPT AS OTHERWISE SPECIFICALLY NOTED, FACTUAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE DEBTORS’ MANAGEMENT. THE DEBTORS DO NOT REPRESENT OR WARRANT THAT THE INFORMATION CONTAINED HEREIN OR ATTACHED HERETO IS WITHOUT ANY INACCURACY OR OMISSION.

IN PREPARING THIS DISCLOSURE STATEMENT, THE DEBTORS RELIED ON FINANCIAL DATA DERIVED FROM THE DEBTORS’ BOOKS AND RECORDS AND ON VARIOUS ASSUMPTIONS REGARDING THE DEBTORS’ BUSINESS. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. THE DEBTORS’ MANAGEMENT HAS REVIEWED THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT. ALTHOUGH THE DEBTORS HAVE USED THEIR REASONABLE BUSINESS JUDGMENT TO ENSURE THE ACCURACY OF THE LIQUIDATION ANALYSIS AND RELATED INFORMATION CONTAINED HEREIN OR INCORPORATED BY REFERENCE INTO THIS DISCLOSURE STATEMENT, SUCH INFORMATION HAS NOT BEEN AUDITED (UNLESS OTHERWISE EXPRESSLY PROVIDED HEREIN) AND NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OF SUCH INFORMATION. THE DEBTORS EXPRESSLY CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.

 

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NEITHER THIS DISCLOSURE STATEMENT, THE PLAN, THE CONFIRMATION ORDER, NOR THE PLAN SUPPLEMENT (IF ANY) WAIVE ANY RIGHTS OF THE DEBTORS WITH RESPECT TO THE HOLDERS OF CLAIMS OR INTERESTS BEFORE THE EFFECTIVE DATE. RATHER, THIS DISCLOSURE STATEMENT SHALL CONSTITUTE A STATEMENT MADE IN SETTLEMENT NEGOTIATIONS RELATED TO POTENTIAL CONTESTED MATTERS, POTENTIAL ADVERSARY PROCEEDINGS, AND OTHER PENDING OR THREATENED LITIGATION OR ACTIONS.

NO RELIANCE SHOULD BE PLACED ON THE FACT THAT A PARTICULAR LITIGATION CLAIM OR PROJECTED OBJECTION TO A PARTICULAR CLAIM IS OR IS NOT IDENTIFIED IN THIS DISCLOSURE STATEMENT. EXCEPT AS PROVIDED UNDER THE PLAN, THE DEBTORS OR THE TRUSTEES MAY SEEK TO INVESTIGATE, FILE, AND PROSECUTE CLAIMS AND CAUSES OF ACTION AND MAY OBJECT TO CLAIMS AFTER CONFIRMATION OR THE EFFECTIVE DATE OF THE PLAN IRRESPECTIVE OF WHETHER THIS DISCLOSURE STATEMENT IDENTIFIES ANY SUCH CLAIMS OR OBJECTIONS TO CLAIMS ON THE TERMS SPECIFIED IN THE PLAN.

THE DEBTORS ARE GENERALLY MAKING THE STATEMENTS AND PROVIDING THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT AS OF THE DATE HEREOF WHERE FEASIBLE, UNLESS OTHERWISE SPECIFICALLY NOTED. ALTHOUGH THE DEBTORS MAY SUBSEQUENTLY UPDATE THE INFORMATION IN THIS DISCLOSURE STATEMENT, THE DEBTORS HAVE NO AFFIRMATIVE DUTY TO DO SO. HOLDERS OF CLAIMS OR INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER THAT, AT THE TIME OF THEIR REVIEW, THE FACTS SET FORTH HEREIN HAVE NOT CHANGED SINCE THIS DISCLOSURE STATEMENT WAS SENT. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION, MODIFICATION, OR AMENDMENT. THE DEBTORS RESERVE THE RIGHT TO FILE AN AMENDED OR MODIFIED PLAN AND RELATED DISCLOSURE STATEMENT FROM TIME TO TIME, SUBJECT TO THE TERMS OF THE CHROME PURCHASE AGREEMENT.

THE DEBTORS HAVE NOT AUTHORIZED ANY ENTITY TO GIVE ANY INFORMATION ABOUT OR CONCERNING THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT. THE DEBTORS HAVE NOT AUTHORIZED ANY REPRESENTATIONS CONCERNING THE DEBTORS OR THE VALUE OF THEIR PROPERTY OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT.

HOLDERS OF CLAIMS OR INTERESTS ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN MUST RELY ON THEIR OWN EVALUATION OF THE COMPANY AND THEIR OWN ANALYSES OF THE TERMS OF THE PLAN IN DECIDING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN. IMPORTANTLY, BEFORE DECIDING WHETHER AND HOW TO VOTE ON THE PLAN, EACH HOLDER OF A CLAIM OR INTEREST IN A VOTING CLASS SHOULD REVIEW THE PLAN IN ITS ENTIRETY AND CONSIDER CAREFULLY ALL OF THE INFORMATION IN THIS DISCLOSURE STATEMENT AND ANY EXHIBITS HERETO.

 

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IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT AND THE EFFECTIVE DATE OCCURS, ALL HOLDERS OF CLAIMS OR INTERESTS (INCLUDING THOSE HOLDERS OF CLAIMS OR INTERESTS WHO DO NOT SUBMIT BALLOTS TO ACCEPT OR REJECT THE PLAN, WHO VOTE TO REJECT THE PLAN, OR WHO ARE NOT ENTITLED TO VOTE ON THE PLAN) WILL BE BOUND BY THE TERMS OF THE PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.

NOTWITHSTANDING ANY RIGHTS OF APPROVAL OR OTHERWISE PURSUANT TO THE CHROME PURCHASE AGREEMENT AS TO THE FORM OR SUBSTANCE OF THIS DISCLOSURE STATEMENT, THE PLAN, OR ANY OTHER DOCUMENT RELATING TO THE TRANSACTIONS CONTEMPLATED THEREUNDER, NEITHER THE CHROME PURCHASER NOR ANY OF ITS REPRESENTATIVES, MEMBERS, FINANCIAL OR LEGAL ADVISORS, OR AGENTS, HAS INDEPENDENTLY VERIFIED THE INFORMATION CONTAINED HEREIN OR TAKES ANY RESPONSIBILITY THEREFOR, AND NONE OF THE FOREGOING ENTITIES OR PERSONS MAKES ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE INFORMATION CONTAINED HEREIN.

THE CONFIRMATION AND EFFECTIVENESS OF THE PLAN ARE SUBJECT TO CERTAIN MATERIAL CONDITIONS PRECEDENT DESCRIBED HEREIN AND SET FORTH IN ARTICLE IX OF THE PLAN. THERE IS NO ASSURANCE THAT THE PLAN WILL BE CONFIRMED, OR IF CONFIRMED, THAT THE CONDITIONS REQUIRED TO BE SATISFIED FOR THE PLAN TO BECOME EFFECTIVE WILL BE SATISFIED (OR WAIVED).

 

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TABLE OF CONTENTS

 

ARTICLE I. INTRODUCTION					1
ARTICLE II. THE COMPANY’S HISTORY, STRUCTURE, AND BUSINESS OVERVIEW					7
A.		The Company’s History and Business Operations			7
B.		Debtors’ Organizational Structure			8
C.		The Company’s Prepetition Capital Structure			9
ARTICLE III. KEY EVENTS LEADING TO COMMENCEMENT OF CHAPTER 11 CASES					10
A.		Adverse Market Conditions and Liquidity Constraints			10
B.		Cyber Security Incident and Related Litigation			11
C.		Operational Restructuring Efforts			14
D.		Initial Prepetition Marketing Efforts			14
E.		Expanded Prepetition Marketing Process			17
ARTICLE IV. THE CHAPTER 11 CASES					20
A.		Commencement of the Chapter 11 Cases			20
B.		First Day Motions			20
C.		DIP Financing			25
D.		Retention of Restructuring and Other Professionals			26
E.		Appointment of the Official Committee of Unsecured Creditors			27
F.		Appointment of the Official Committee of Equity Holders			27
G.		Assumption and Rejection of Executory Contracts and Unexpired Leases			28
H.		Consumer Privacy Ombudsman			28
I.		Section 341 Meeting			29
J.		Schedules and Statements			29
K.		Claims Bar Date			29
L.		Postpetition Regulatory and Other Actions			30
M.		Sale Process			30
N.		Lemonaid Sale Transaction			35
O.		Settlement Agreements			35
P.		The Independent Investigation			37
Q.		Changed Entity Names			38
R.		Confirmation Hearing			39
ARTICLE V. SUMMARY OF PLAN					39
A.		Administrative, Priority Claims, and Statutory Fees			39
B.		Classification and Treatment of Claims and Interests			42
C.		Means for Implementation of the Plan			51
D.		Treatment of Executory Contracts			70
E.		Procedures for Resolving Contingent, Unliquidated, and Disputed Claims and Interests			76
F.		Provisions Governing Distributions			79

 

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G.		Release, Injunction, and Related Provisions			84
H.		Conditions Precedent to Consummation of the Plan			92
I.		Modification, Revocation, or Withdrawal of the Plan			93
J.		Miscellaneous Provisions			98
ARTICLE VI. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL SECURITIES LAWS					104
A.		Section 1145 Exemption			104
B.		Section 4(a)(2) of the Securities Act and Regulation S Under the Securities Act			105
C.		Plan Administration Trust Interests			105
D.		Subsequent Transfers			106
ARTICLE VII. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN					109
A.		Certain U.S. Federal Income Tax Consequences to the Debtors			111
B.		Certain U.S. Federal Income Tax Consequences to the U.S. Holders			112
C.		Certain U.S. Federal Income Tax Consequences to Certain Non-U.S. Holders			119
ARTICLE VIII. CERTAIN RISK FACTORS TO BE CONSIDERED					123
A.		Certain Bankruptcy Law Considerations			123
B.		Risks Relating to the Company’s Remaining Business and Operations			130
C.		Additional Factors			132
ARTICLE IX. VOTING PROCEDURES AND REQUIREMENTS					133
A.		Voting Instructions and Voting Deadline			133
B.		Voting Procedures			134
C.		Holders of Claims and Interests Entitled to Vote			138
D.		Fiduciaries and Other Representatives			140
E.		Agreements Upon Furnishing Ballots			140
F.		Change of Vote			140
G.		Waivers of Defects, Irregularities, Etc.			140
H.		Miscellaneous			141
ARTICLE X. CONFIRMATION OF THE PLAN					142
A.		Confirmation Hearing			142
B.		Objections to Confirmation			142
C.		Requirements for Confirmation of the Plan			143
ARTICLE XI. CONCLUSION AND RECOMMENDATION					147
EXHIBIT A					1
EXHIBIT B					1
EXHIBIT C					1
EXHIBIT D					1
EXHIBIT E					1

 

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ARTICLE I.

INTRODUCTION

The Debtors submit this Disclosure Statement in connection with the solicitation of votes on the Joint Plan of Chrome Holding Co. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code, dated August 15, 2025, (the “Plan”) attached hereto as Exhibit A.³ The Debtors under the Plan are Chrome Holding Co. and its direct and indirect subsidiaries. The Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (as may be amended from time to time, the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Missouri (the “Bankruptcy Court”) on March 23, 2025 (the “Petition Date”). The Debtors’ chapter 11 cases (the “Chapter 11 Cases”) are jointly administered under Case No. 25-40976-357.

As of the Petition Date, the Company was a leading human genetics and telehealth company with a mission to help people access, understand and benefit from the human genome. The Company pioneered direct access to genetic information as the only company with multiple FDA clearances for genetic health reports. Further, through its Lemonaid Health telehealth platform, the Company operates as a national online doctor’s office that provides medical care, pharmacy fulfillment, and laboratory testing services.

Despite the revolutionary nature of the Company’s business and its positive impacts on the lives of millions of its customers, the Company was negatively impacted by external market conditions and other developments—rising inflation, downward trends in discretionary consumer spending, declines in consumer interest and demand for genetic testing, increased competition in the genetic ancestry testing and telehealth industries, consumer price sensitivity, and the often “one-time” nature of sales involving the Company’s saliva collection kits—which have resulted in a shrinking customer base and declining topline revenues.

In addition to the severe liquidity pressures imposed on the Company by the confluence of these factors, in October 2023, the Company identified and disclosed a data breach (the “Cyber Security Incident”), which resulted in numerous actions being filed or threatened against the Company, as well as the initiation of various domestic and foreign governmental investigations. Such actions included, among others, (a) over 40 putative class action lawsuits centralized into the multi-district Cyber Class Action, (b) arbitration claims asserted or threatened by approximately 35,000 claimants, and (c) three class actions filed in Canadian courts. Prior to the Petition Date, the Company executed prepetition settlement agreements with certain Cyber Security Incident claimants.

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Capitalized terms used but not otherwise defined in this Disclosure Statement will have the meaning ascribed to such terms in the Plan. The summary of the Plan provided herein is qualified in its entirety by reference to the Plan. In the case of any inconsistency between this Disclosure Statement and the Plan, the Plan will govern.

After considering their options, on March 23, 2025, the Debtors initiated these Chapter 11 Cases to stabilize their business and continue a comprehensive, strategic marketing process to sell their assets on a “free and clear” basis through a chapter 11 plan or sale pursuant to section 363 of the Bankruptcy Code. On March 24, 2025, the Debtors filed a motion seeking Bankruptcy Court approval of bidding procedures and certain sale process dates and deadlines [Docket No. 30] (the “Bidding Procedures Motion”). The Bankruptcy Court entered an order granting the Bidding Procedures Motion on March 28, 2025 [Docket No. 125] (the “Bidding Procedures Order” and, the bidding procedures attached thereto, the “Bidding Procedures”).

Following a comprehensive marketing process and extensive negotiations with potential bidders, the Company conducted a three-day auction in accordance with the Bidding Procedures. On the third day of the auction, the Company, in consultation with their advisors and the Consultation Parties (as defined in the Bidding Procedures), concluded the auction and declared Regeneron Pharmaceuticals, Inc. (“Regeneron”) as the Successful Bidder (as defined in the Bidding Procedures) and 23andMe Research Institute (formerly known as TTAM Research Institute) (“TTAM”) as the Backup Bidder (as defined in the Bidding Procedures).

After the conclusion of the auction, TTAM submitted revised proposals to acquire the Debtors’ assets at a higher purchase price than contemplated under Regeneron’s asset purchase agreement. Subsequently, the Debtors, TTAM, and Regeneron agreed to the terms of certain “final proposal” procedures to govern a final round of bidding, which the Bankruptcy Court approved on June 6, 2025. On June 13, 2025, the Debtors conducted the final bidding round and, in consultation with their advisors and the Consultation Parties under the Bidding Procedures, selected TTAM as the winning bidder with a bid of $305 million and Regeneron as the Backup Bidder with a bid of $151 million, respectively.

On June 13, 2025, the Debtors and TTAM executed the Chrome Purchase Agreement. Under the Chrome Purchase Agreement, TTAM agreed to (a) acquire substantially all of the Chrome Debtors’ assets through a sale pursuant to section 363 of the Bankruptcy Code for an aggregate purchase price of $302.5 million (the “Chrome Sale Transaction”) and (b) serve as a stalking horse sponsor of the Plan to acquire the Lemonaid Debtors for an aggregate purchase price of $2.5 million.

On June 18, 2025, and June 20, 2025, the Bankruptcy Court held a contested, two-day hearing to consider approval of the sale to TTAM. On June 27, 2025, the Bankruptcy Court entered the Sale Order authorizing the Chrome Sale Transaction. On July 14, 2025, the Company and TTAM consummated the Chrome Sale Transaction pursuant to the Chrome Purchase Agreement.

During the Chapter 11 Cases, the Debtors reached agreements with (a) settlement class representatives in the Cyber Class Action on behalf of U.S. persons whose personal information was impacted by the Cyber Security Incident and (b) named plaintiffs in the Canadian Class Actions on behalf of Canadian persons whose personal information was impacted by the Cyber Security Incident, in each case, to resolve issues related to, among other things, authorization for the filing of class proofs of claim under Rule 7023 and the treatment of such claims under the Plan. Specifically, on August 4, 2025, the Debtors executed the U.S. Data Breach Class Settlement Agreement, which, among other things, (i) allows U.S. Data Breach Class Counsel to file one class proof of claim on behalf of the U.S. Data Breach Settlement Claimants (the “U.S. Cyber Class POC”), (ii) provides a minimum allowed amount of $30 million on account of such U.S. Cyber Class POC; and (iii) caps the aggregate cash distribution to be made on account of

 

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such U.S. Cyber Class POC to $50 million. Additionally, on August 12, 2025, the Debtors executed the Canadian Data Breach Class Settlement Agreement, which, among other things, (x) allows Canadian Data Breach Class Counsel to file one class proof of claim on behalf of the Canadian Data Breach Settlement Claimants (the “Canadian Cyber Class POC”) and (y) caps the aggregate cash distribution to be made on account of such Canadian Cyber Class POC to $3.99 million.

Having completed the Chrome Sale Transaction and executed the U.S. Data Breach Class Settlement Agreement and the Canadian Data Breach Class Settlement Agreement, the Plan’s primary objective is to maximize value for all stakeholders and to distribute property of the Estates that is or becomes available for distribution in accordance with the priorities established by the Bankruptcy Code. The Debtors believe that the Plan accomplishes this objective and is in the best interest of the Estates. Generally, the Plan:

 

•

effectuates the sale of the Lemonaid Debtors;

 

•

designates a Plan Administrator to wind down the Debtors’ affairs, pay and reconcile certain Claims, and administer the Plan in an efficient manner;

 

•

contemplates distributions being made to Holders of Allowed Claims and Interests pursuant to a waterfall priority scheme in accordance with the Bankruptcy Code;

 

•

contemplates recoveries to Holders of Administrative Claims and Other Priority Claims as is necessary to satisfy section 1129 of the Bankruptcy Code; and

 

•

provides for the creation of the Plan Administration Trust for the benefit of Holders of General Unsecured Claims and Holders of HoldCo Interests.

The Debtors believe that Confirmation of the Plan will avoid the lengthy delay and significant cost of liquidation under chapter 7 of the Bankruptcy Code.

WHO IS ENTITLED TO VOTE: Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled to vote on a plan of reorganization (unless, for reasons discussed in more detail below, such holders are deemed to reject the plan pursuant to section 1126(g) of the Bankruptcy Code). Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” under a plan unless: (a) the plan leaves unaltered the legal, equitable, and contractual rights of the holders of such claims or interests; or (b) notwithstanding any legal right to an accelerated payment of such claims or interests, the plan, among other things, cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claims or interests as they existed before the defaults.

There are eight Classes entitled to vote on the Plan whose acceptances thereof are being solicited under this Disclosure Statement: (i) U.S. Data Breach Class Settlement Claims (Class 3); (ii) U.S. Data Breach Arbitration Settlement Group Claims (Class 4); (iii) Canadian Data Breach Class Settlement Claims (Class 5); (iv) Chrome Commercial Claims (Class 6); (v) Chrome Other General Unsecured Claims (Class 7); (vi) Lemonaid Commercial Claims (Class 8); (vii) Lemonaid Other General Unsecured Claims (Class 9); and (viii) HoldCo Interests (Class 12).

 

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THE PLAN PROVIDES THAT ALL HOLDERS OF CLAIMS AND INTERESTS THAT (I) VOTE TO ACCEPT THE PLAN, (II) ARE DEEMED TO ACCEPT THE PLAN AND DO NOT AFFIRMATIVELY OPT OUT OF THE RELEASES PROVIDED IN THE PLAN, (III) ABSTAIN FROM VOTING ON THE PLAN AND DO NOT AFFIRMATIVELY OPT OUT OF THE RELEASES PROVIDED IN THE PLAN, (IV) VOTE TO REJECT THE PLAN OR ARE DEEMED TO REJECT THE PLAN AND DO NOT AFFIRMATIVELY OPT OUT OF THE RELEASES PROVIDED IN THE PLAN, OR (V) DO NOT FILE AN OBJECTION WITH THE BANKRUPTCY COURT THAT EXPRESSLY OBJECTS TO THE INCLUSION OF SUCH HOLDER AS A RELEASING PARTY UNDER THE PROVISIONS CONTAINED IN ARTICLE VIII.D OF THE PLAN AND THAT IS NOT CONSENSUALLY RESOLVED PRIOR TO CONFIRMATION, OR SUPPORT ANY SUCH OBJECTION OR OBJECTOR (IN EACH CASE ONLY SO LONG AS SUCH HOLDER IS PERMITTED TO OPT OUT) ARE DEEMED TO HAVE GRANTED THE RELEASES THEREIN.

The following table summarizes: (a) the treatment of Claims and Interests under the Plan; (b) which Classes are Impaired by the Plan; (c) which Classes are entitled to vote on the Plan; and (d) the estimated recoveries for Holders of Claims and Interests. The following table is qualified in its entirety by reference to the full text of the Plan. A more detailed summary of the terms and provisions of the Plan is provided in the summary of the Plan set forth in Article V of this Disclosure Statement.

THE PROJECTED RECOVERIES SET FORTH BELOW ARE BASED ON THE DEBTORS’ REASONABLE GOOD FAITH ESTIMATES OF PROJECTED DISTRIBUTABLE PROCEEDS TO STAKEHOLDERS AND RESPECTIVE LIABILITIES BASED ON, AMONG OTHER THINGS, THE DEBTORS’ BOOKS AND RECORDS, REVIEW OF THE CLAIMS REGISTER, SETTLEMENTS SET FORTH IN THE PLAN, DISCUSSIONS WITH STAKEHOLDERS, AND OTHER FACTORS. APPROXIMATELY 170,800 TIMELY PROOFS OF CLAIM HAVE BEEN FILED AGAINST THE DEBTORS AND, AS OF AUGUST 6, 2025, AN ADDITIONAL 46,530 WERE FILED AFTER THE GENERAL CLAIMS BAR DATE. THE AGGREGATE ASSERTED AMOUNT OF ALL SUCH CLAIMS EXCEEDS $7 TRILLION. IN ADDITION, THE GOVERNMENTAL BAR DATE WILL NOT OCCUR UNTIL SEPTEMBER 19, 2025 AND IT IS POSSIBLE THAT GOVERNMENTAL UNITS WILL ASSERT MATERIAL CLAIMS AGAINST THE DEBTORS. GIVEN THE CURRENT CLAIMS POOL, THE ASSERTED AMOUNT OF SUCH CLAIMS, THAT THE GOVERNMENTAL BAR DATE HAS NOT YET OCCURRED, AND THE UNCERTAIN OUTCOME OF THE CLAIMS ADMINISTRATION PROCESS, THE PROJECTED RECOVERIES SET FORTH BELOW ARE ESTIMATES ONLY AND ACTUAL RECOVERIES FOR HOLDERS OF ALLOWED CLAIMS AND INTERESTS IN CLASSES 3, 4, 5, 6, 7, 8, 9, AND 12 UNDER THE PLAN MAY MATERIALLY DIFFER.

 

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Class		Claims or Interests		Treatment		Impaired or Unimpaired		Entitlement to Vote		Projected Recoveries4
1		Other Secured Claims		Except to the extent that a Holder of an Allowed Other Secured Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Other Secured Claim, each Holder of an Allowed Other Secured Claim shall receive, at the option of the Debtors or the Plan Administrator, as applicable: (i) payment in full in Cash of such Holder’s Allowed Other Secured Claim; (ii) delivery of the collateral securing such Holder’s Allowed Other Secured Claim; or (iii) such other treatment rendering such Holder’s Allowed Other Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code.		Unimpaired		No (Presumed to Accept)		100%
2		Other Priority Claims		Except to the extent that a Holder of an Allowed Other Priority Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Other Priority Claim, each Holder of an Allowed Other Priority Claim shall receive payment in full in Cash or such other treatment in a manner consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code on the following terms: (i) if such Allowed Other Priority Claim is Allowed as of the Effective Date, the Effective Date or as soon thereafter as reasonably practicable (or, if payment is not then due, the date such Allowed Other Priority Claim becomes due and payable, or as soon thereafter as reasonably practicable); and (ii) if such Allowed Other Priority Claim is not Allowed as of the Effective Date, the date such Other Priority Claim is Allowed or as soon thereafter as reasonably practicable. Allowed Other Priority Claims that arise in the ordinary course of the Debtors’ business and which are not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.		Unimpaired		No (Presumed to Accept)		100%

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Although projected recoveries for Class 3 (U.S. Data Breach Class Settlement Claims), Class 4, (U.S. Data Breach Arbitration Settlement Group Claims), and Class 5 (Canadian Data Breach Class Settlement Claims) are estimated at 100%, such classes are impaired (within the meaning of section 1124 of the Bankruptcy Code) because such classes are to receive distributions in accordance with the applicable settlement agreement in lieu of the full payment of total asserted Claims. Further, Classes 3, 4, 5, 6, 7, and 8 are impaired because (a) distributions on account of such Claims may not take place on the Effective Date as otherwise may be required for Claims to be deemed “unimpaired” under bankruptcy law and/or (b) given the quantity and quantum of Claims alleged against the Debtors, the Debtors cannot determine with certainty that all Holders will recover 100% on account of the Allowed amount of their Claims.

 

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Class		Claims or Interests		Treatment		Impaired or Unimpaired		Entitlement to Vote		Projected Recoveries4
3		U.S. Data Breach Class Settlement Claims		Each Holder of a U.S. Data Breach Class Settlement Claim, shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, their portion of the U.S. Data Breach Class Settlement Fund as set forth is the U.S. Data Breach Class Settlement Fund Agreement.		Impaired		Yes		100%
4		U.S. Data Breach Arbitration Settlement Group Claims		Subject to Article IV.A.2 of the Plan, each Holder of an Allowed U.S. Data Breach Arbitration Settlement Group Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim: (i) if the U.S. Data Breach Arbitration Settlement Agreement Payment Condition is satisfied, their portion of the U.S. Data Breach Arbitration Settlement Amount to be distributed in accordance with the U.S. Data Breach Arbitration Settlement Agreement; provided that any Holder of a U.S. Data Breach Arbitration Non-Settling Claim shall receive the same treatment as Holders of Allowed Chrome Other General Unsecured Claims; or (ii) if the U.S. Data Breach Arbitration Settlement Agreement Payment Condition is not satisfied, all holders of U.S. Data Breach Arbitration Settlement Group Claims shall receive the same treatment as Holders of Allowed Chrome Other General Unsecured Claims.		Impaired		Yes		100%
5		Canadian Data Breach Class Settlement Claims		Each Holder of a Canadian Data Breach Settlement Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, their portion of the Canadian Data Breach Class Settlement Fund as set forth in the Canadian Data Breach Settlement Fund Agreement.		Impaired		Yes		100%
6		Chrome Commercial Claims		Each Holder of an Allowed Chrome Commercial Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of Class A-1 Plan Administration Trust Interests.		Impaired		Yes		100%
7		Chrome Other General Unsecured Claims		Each Holder of an Allowed Chrome Other General Unsecured Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-2 Plan Administration Trust Interests.		Impaired		Yes		100%

 

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Class		Claims or Interests		Treatment		Impaired or Unimpaired		Entitlement to Vote		Projected Recoveries4
8		Lemonaid Commercial Claims		Each Holder of an Allowed Lemonaid Commercial Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-3 Plan Administration Trust Interests.		Impaired		Yes		100%
9		Lemonaid General Unsecured Claims		Each Holder of an Allowed Lemonaid Other General Unsecured Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-4 Plan Administration Trust Interests.		Impaired		Yes		TBD
10		Intercompany Claims		On the Effective Date, Intercompany Claims may be Reinstated as of the Effective Date solely for the purpose of facilitating the Wind-Down Transactions or, at the Debtors’ option, be cancelled, released, and extinguished without any distribution on account of such Claims.		Unimpaired / Impaired		No (Presumed to Accept or Deemed to Reject)		N/A
11		Intercompany Interests		On the Effective Date, all Intercompany Interests may be Reinstated as of the Effective Date solely for the purpose of facilitating the Wind-Down Transactions or, at the Debtors’ option, may be cancelled, released, and extinguished, without any distribution on account of such Interest.		Unimpaired / Impaired		No (Presumed to Accept or Deemed to Reject)		N/A
12		HoldCo Interests		Each Holder of an Allowed HoldCo Interest shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Interest, a portion of the Class B Plan Administration Trust Interests, as set forth in the Plan Administration Trust Agreement.5		Impaired		Yes		TBD

ARTICLE II.

THE COMPANY’S HISTORY, STRUCTURE, AND BUSINESS OVERVIEW

 

A.	The Company’s History and Business Operations

In 2006, Anne Wojcicki co-founded the Company with Linda Avey and Paul Cusenza under the name 23andMe, Inc., as the first direct-to-consumer genetic testing company. As of the Petition Date, the Company was a leading human genetics company with a mission to help people access, understand, and benefit from the human genome. The Company pioneered direct-to-consumer genetic testing through its saliva collection kits, providing customers with access to unique, personalized information about their ancestry, genetic traits, and health risks through its Personal Genome Service^® (“PGS”) offerings. Through its collection of genetic information, the Company developed one of the world’s largest crowdsourced platforms for genetic research comprised of data from over 15 million customers.

5	Treatment of HoldCo Interests remains subject to ongoing analysis, discussion and negotiation among the Debtors, the Creditors’ Committee and the Official Equity Committee.

 

7

The Company also operates a telehealth platform (“Lemonaid” or “Lemonaid Health”) that provides customers access to personalized healthcare services and affordable, online medical care through licensed healthcare professionals. Patients can also use Lemonaid Health’s online pharmacy for fulfillment when medications are prescribed by Lemonaid Health’s affiliated healthcare professionals. Lemonaid Health allows the Company to further its mission of enabling people to use their genetic health information to live healthier lives, particularly as it relates to customers who choose to integrate their Company genetic information with Lemonaid’s telehealth services.

As of the Petition Date, the Company operated in three segments: (i) PGS, a DNA testing service that analyzed an individual’s saliva sample to identify specific genetic variants associated with health predispositions, ancestry, and traits; (ii) Telehealth, through which the Company offers medical visits, prescriptions, and memberships relating to the treatment of specific conditions and provides access to certain medicine; and (iii) Research Services, through which the Company’s customers had the opportunity to participate in the Company’s research programs.

A detailed description of the Company’s historical business can be found in the Declaration of Matthew Kvarda in Support of Chapter 11 Petitions and First Day Motions [Docket No. 32].

 

B.	Debtors’ Organizational Structure

Chrome Holding Co. and 11 of its direct and indirect subsidiaries are Debtors in these Chapter 11 Cases:⁶

 

i.

ChromeCo, Inc. and Lemonaid Health, Inc., each Delaware corporations, are wholly-owned subsidiaries of Chrome Holding Co.

 

ii.

Chrome Pharmacy Holdings, Inc., a Delaware corporation, is a wholly-owned subsidiary of Chrome Holding Co. Chrome Pharmacy Holdings, Inc. has a wholly-owned subsidiary, Lemonaid Pharmacy Holdings Inc., which is also a Debtor in these Chapter 11 Cases:

 

a.

Lemonaid Pharmacy Holdings Inc., a Delaware corporation, has four wholly-owned subsidiaries, each of which are also Debtors in these Chapter 11 Cases:

 

(1)

Lemonaid Community Pharmacy, Inc., a Missouri corporation, is a wholly-owned subsidiary of Lemonaid Pharmacy Holdings Inc.

6

As further discussed in Article IV.Q hereof, the Debtors formerly known as 23andMe Holding Co., 23andMe, Inc., and 23andMe Pharmacy Holdings, Inc. changed their names to Chrome Holding Co., ChomeCo, Inc., and Chrome Pharmacy Holdings, Inc., respectively, pursuant to the terms of the Chrome Purchase Agreement.

 

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(2)

LPharm RX LLC, LPharm INS LLC, and LPharm CS LLC are each Delaware limited liability companies and wholly owned subsidiaries of Lemonaid Pharmacy Holdings Inc. LPRXTwo LLC, LPRXThree LLC, and LPRXOne LLC each are Missouri limited liability companies and are wholly owned subsidiaries of the foregoing entities, respectively.

 

i.

Lemonaid Health, Inc. has extensive contractual relationships with four non-Debtor professional medical corporations (the “PMCs”) that are 100% owned by licensed medical providers in four jurisdictions (California, New Jersey, Kansas, and Texas). Specifically, Lemonaid Health, Inc. has entered into a management services agreement (an “MSA”) with each PMC pursuant to which certain of the Debtors provide business, administrative, and non-clinical services to the PMC in exchange for a fixed fee.7 Professional clinicians employed by the PMCs also provide medical services to patients via the Debtors’ Lemonaid Health telehealth platform.

An organizational chart of Company entities is attached to this Disclosure Statement as Exhibit B.

 

C.	The Company’s Prepetition Capital Structure

As of the Petition Date, the Debtors had no funded debt obligations. The Debtors had unsecured claims outstanding as of the Petition Date, a substantial portion of which were comprised of claims arising from the Cyber Security Incident (discussed in further detail below) and ordinary course trade claims.

As of the Petition Date, Debtor Chrome Holding Co. was a publicly traded company and its shares traded on the National Association of Security Dealers Automated Quotations (“NASDAQ”) Capital Market under the ticker ME. On March 24, 2025, the Company received a letter from the Listing Qualifications Department of NASDAQ notifying the Company that, in connection with the Company’s announcement of its filing of these Chapter 11 Cases, the Company’s securities would be delisted from NASDAQ, which became effective on March 31, 2025.

As of the date hereof, Chrome Holding Co.’s stock trades on the over-the-counter market. Chrome Holding Co. has two classes of common stock: (i) the Class A common stock that is traded (the “Class A Common Stock”) and (ii) the Class B common stock that was not previously listed on any stock exchange nor traded on any public market (the “Class B Common Stock”). The rights of the holders of Class A Common Stock and Class B Common Stock are identical, except that holders of Class A Common Stock are entitled to one vote per share and holders of Class B Common Stock are entitled to ten votes per share. Each share of Class B Common Stock is convertible into one share of Class A Common Stock at any time at the option of the holder and is automatically converted into one share of Class A Common Stock upon transfer (except for certain permitted transfers). As of July 25, 2025, Chrome Holding Co. has approximately 25,431,244 shares of Class A common stock and 2,110,250 shares of Class B common stock issued and outstanding.

7	While Lemonaid Health, Inc. is the Debtor-counterparty to the MSAs, the services contemplated therein are also furnished by Debtor ChromeCo, Inc. pursuant to an MSA subcontracting agreement between Debtors ChromeCo, Inc. and Lemonaid Health, Inc.

 

9

On June 9, 2025, ABeeC 2.0 LLC, an entity affiliated with Ms. Wojcicki, the Company’s co-founder, former chief executive officer, and current member of the Company’s Board of Directors, elected to convert 4,931,692 shares of Class B Common Stock (the “Wojcicki Class B Shares”) into 4,931,692 shares of Class A Common Stock (the “Conversion”). As each share of Class B Common Stock is entitled to ten votes per share and each share of Class A Common Stock is entitled to one vote per share, the Conversion resulted in a decrease in the aggregate voting power of the shares for which Ms. Wojcicki may be deemed the beneficial owner. The Wojcicki Class B Shares represented all of the shares of Class B common stock for which Ms. Wojcicki may have been deemed the beneficial owner.

ARTICLE III.

KEY EVENTS LEADING TO COMMENCEMENT OF CHAPTER 11 CASES

 

A.	Adverse Market Conditions and Liquidity Constraints

Although the Company’s business generated revenues in excess of $200 million per year over the five years preceding the Petition Date, the Company has not recognized any net profits since its inception. Nevertheless, the Company has historically been able to fund its operations primarily through issuances of equity, historical sales of its PGS offerings, and Lemonaid telehealth services, as well as research partnerships.

Macroeconomic headwinds and a variety of other circumstances constrained the Company’s ability to access capital markets following a 2021 merger transaction that resulted in HoldCo becoming a public traded company on NASDAQ, leading to significant liquidity constraints. In addition, rising inflation coming out of the COVID-19 pandemic combined with the Federal Reserve’s efforts to combat inflation through interest rate increases created macroeconomic conditions that adversely impacted the economy. These factors led to increased costs of operating the Company’s business, including vendor, supplier, freight, and delivery costs, causing financial strain due to the Company’s reliance on outsourced manufacturing and distribution capabilities as part of its business model.

Moreover, the market for personal genetics products and services has experienced a recent overall decline, suggesting that consumers may choose to forego tests and services like those offered by the Company, leading to decreases in the Company’s revenues (as well as those of the Company’s direct competitors) in the PGS business line, which historically generated most of the Company’s revenue. The Company’s consumer segment also faced increased competition in both the ancestry testing and telehealth industries at the same time the Company’s revenue growth slowed. To compete in these increasingly competitive spaces, the Company lowered pricing to retain consumer demand.

 

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B.	Cyber Security Incident and Related Litigation

 

1.

Background

On October 1, 2023, a threat actor posted online a claim to have Company users’ profile information. Upon learning of the incident, the Company immediately commenced an investigation and engaged third-party incident response experts to assist in determining the extent of any unauthorized activity. Based on its investigation, the Company determined the threat actor was able to access a very small percentage (0.1%) of user accounts in instances where usernames and passwords that were used on the Company website were the same as those used on other websites that had been previously compromised or were otherwise available (the “Credential Stuffed Accounts”). The information accessed by the threat actor in the Credential Stuffed Accounts varied by user account, and generally included ancestry information, and, for a subset of those accounts, health-related information based upon the user’s genetics. Using this access to the Credential Stuffed Accounts, the threat actor accessed files containing information that users consented to share when either opting in to the Company’s DNA Relatives feature or the Connections Feature.⁸ The Company determined that as a result of the Cyber Security Incident, the threat actor accessed, without authorization, personal information relating to approximately seven million customers.

 

2.

Litigation, Arbitration, and Regulatory Investigations

Multi-District Litigation. After the Company’s announcement of the Cyber Security Incident, over 40 putative class action lawsuits were filed in U.S. federal courts against the Company asserting claims for various common law torts and various statutory claims—including several that allege an entitlement to statutory damages under certain states’ laws arising from the alleged unauthorized disclosure of genetic information. On December 21, 2023, the Company filed a Motion to Transfer Actions to the Northern District of California Pursuant to 18 U.S.C. § 1407 for Coordinated or Consolidated Pretrial Proceedings with the Judicial Panel on Multidistrict Litigation (“JPML”), MDL No. 3098 (the “Cyber Class Action”). On April 11, 2024, the JPML centralized the Litigation before the Honorable Edward M. Chen of the Northern District of California (the “MDL Court”). On June 5, 2024, the court in the Class Action Litigation appointed interim co-lead class counsel (“Class Counsel”), authorizing them to pursue the Class Action Litigation on behalf of the class action plaintiffs, and to engage in appropriate settlement negotiations on behalf of the plaintiffs and the putative class members. On June 26, 2024, Plaintiffs in the Cyber Class Action filed their consolidated class action complaint against the Company, asserting various common law and statutory claims.

State Court Litigation. As of the Petition Date, nine actions had been filed against the Company in California state courts alleging similar causes of action asserted in the Cyber Class Action (the “State Court Actions”). Prior to the Petition Date, all state actions were stayed through May 22, 2025. The vast majority plaintiffs in the State Court Actions are represented by one law firm (Potter Handy, LLP).

8

The Company’s “DNA Relatives” feature allowed customers to find and connect with their genetic relatives, while the “Family Tree” feature automatically predicted a family tree based on the DNA shared by a customer with its relatives through the Company. The Company’s “Connections” feature allowed users to share information with another Company user. Connections are established based on mutual agreement of the users—one user sends a Connection invitation and the other user accepts it to initiate the sharing of data between the users.

 

11

Arbitration. After the Company’s announcement of the Cyber Security Incident, approximately 35,000 claimants in the U.S. asserted or threatened arbitration claims against the Company (collectively, the “U.S. Arbitration Claimants”). The vast majority of the U.S. Arbitration Claimants are represented by three independent law firms. Some of the arbitration claims have been filed with Judicial Arbitration and Mediation Services.

Foreign Actions. As of the Petition Date, three class actions had been filed in Canadian courts (one in Ontario and another two in British Columbia).⁹ Prior to the Petition Date, counsel to plaintiffs in the Ontario action (“Ontario Counsel”) confirmed they had entered into a cooperation agreement with counsel to plaintiffs in the British Columbia action (“BC Counsel”) pursuant to which both Ontario Counsel and BC Counsel agreed to coordinate the sequencing and timing of motions and other litigation-related events in their respective class actions. One firm in the U.K. has also asserted a pre-arbitration demand, seeking damages on behalf of 3,720 customers in the U.K. who were allegedly impacted by the Cyber Security Incident.

Regulatory Actions. In March 2024, the Federal Trade Commission (“FTC”) served a civil investigative demand (“CID”) seeking information related to, among other things, the Cyber Security Incident. The Company continues to respond to demands from the FTC and other regulatory bodies on a rolling basis. In addition, a Multi-State Attorneys General investigation seeking information about the Cyber Security Incident has been brought by the U.S. state attorneys general or appropriate representatives of the States or Commonwealths of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming and the District of Columbia (collectively, the “Attorneys General”). Certain post-petition regulatory actions are disclosed in Article IV below.

Outside of the U.S., as of the Petition Date, 12 foreign regulators had inquired about the Cyber Security Incident, including a joint investigation initiated in June 2024 by Canada and the U.K. In connection with their joint investigation, the Canadian and U.K. data protection regulators have submitted multiple information requests and conducted three interviews of employees at the Company with knowledge regarding or relating to the Cyber Security Incident.

 

3.

Mediation and Settlement

The MDL parties entered into mediation before Mr. Randall Wulff, who presided over three mediation sessions taking place in January, March, and June 2024. The arm’s-length negotiation from the June mediation session resulted in Mr. Wulff’s proposal for resolution of the Cyber Class Action litigation claims against the Company. In July 2024, the MDL parties accepted Mr. Wulff’s proposal and informed the MDL Court that parties had reached an agreement in principle on the terms of a consensual settlement framework.

9

On October 20, 2023, certain plaintiffs (the “BC Plaintiffs”) filed a lawsuit against the Debtors in the Supreme Court of British Columbia, J.R. v. 23andMe Holding Co. & 23andMe, Inc., Case No. S237147 (Can. B.C. S.C.). On September 18, 2024, the BC Plaintiffs filed another lawsuit against the Debtors asserting the same claims alleged in the October 20, 2023 lawsuit but naming non-debtor individuals, including but not limited to certain directors and officers of the Company as additional defendants.

 

12

The MDL parties executed a confidential settlement term sheet on July 29, 2024, which contemplated an aggregate cash payment by the Company of $30.0 million to settle all claims brought on behalf of all U.S. persons whose personal information was impacted by the Cyber Security Incident. In addition, the Company agreed to document various business practice initiatives relating to cybersecurity and provide customers with the option to enroll in a privacy and monitoring service for three years. These terms were ultimately memorialized into and agreed upon as part of a settlement agreement (the “Class Action Settlement Agreement”). On September 12, 2024, plaintiffs filed a motion asking the MDL Court for preliminary approval of the Class Action Settlement Agreement, and the motion was considered at a court hearing on October 29, 2024. On October 29, 2024, the MDL Court deferred the motion and asked the parties to provide additional information by November 12, 2024.

On December 4, 2024, the MDL Court granted preliminary conditional approval of the Class Action Settlement Agreement to resolve all claims by U.S. customers (who do not opt out) arising out of the Cyber Security Incident. The MDL Court’s order was conditioned upon the parties’ acceptance of certain modifications to the Class Action Settlement Agreement, including the exclusion from the settlement class customers who have chosen to exercise their right to arbitrate, whether by making a demand for arbitration or by filing a formal complaint with an arbitral forum. Following the December 4, 2024, order, the Company engaged in discussions with the Cyber Class Action plaintiffs, as well as U.S. state court and arbitral claimants, regarding a potential settlement that would resolve all claims by U.S. customers, including those who choose to exercise their arbitration rights.

In December 2024, the Company retained Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul, Weiss”) to assist the Company in settling the various lawsuits and claims arising from the Cyber Security Incident. In January and February 2025, the Company engaged in settlement discussions with plaintiffs in State Court Actions represented by Potter Handy LLP (the “Settling State Court Plaintiffs”), as well as with Arbitration Claimants represented by three independent law firms (Labaton Keller Sucharow LLP, Levi & Korsinsky LLP and Milberg Coleman Bryson Phillips Grossman PLLC) (the “Settling Arbitration Claimants”). The Company entered into a binding term sheet with the Settling Arbitration Claimants on February 13, 2025, and a binding term sheet with the Settling State Court Plaintiffs on February 18, 2025. On March 21, 2025, the Company executed settlement agreements with both the Settling State Court Plaintiffs and Settling Arbitration Claimants.

The cumulative effects of the Company’s business performance, the Company’s negative cash flows, and pending litigation and claims arising from the Cyber Security Incident proved to make it difficult, if not impossible, for the Company to access or attract equity or debt financing on an out-of-court basis on actionable terms, effectively limiting the Company’s runway to find a solution to its existing cash-on-hand.

 

13

C.	Operational Restructuring Efforts

In an effort to address its worsening liquidity situation, under the supervision of the Special Committee, the Company implemented certain cost-cutting measures to improve its financial condition and preserve liquidity. In November 2024, the Company announced that it would discontinue further development of all its therapeutics programs and wind-down ongoing clinical trials for drugs in the Company’s clinical and preclinical stage pipeline. In the same month, the Company also reduced its overall headcount by approximately 200 employees, representing roughly 40% of the Company’s workforce at the time, in an effort to substantially reduce operating expenses and realize cost savings. These efforts sought to restructure and strategically align the Company’s workforce and organization with its current strategy of focusing on the long-term success of the Company’s core consumer business and research partnerships. In January 2025, the Company implemented further cost-cutting measures, including additional reductions in operating expenses and entering into negotiations with certain of its landlords to reduce (or terminate) rent expenses under the Company’s long-term real estate leases.

 

D.	Initial Prepetition Marketing Efforts

The Company’s business performance, liquidity position, and challenges in accessing the capital markets were all adversely affected by the Cyber Security Incident and ensuing litigation. These factors, coupled with Ms. Wojcicki’s expression of her intent to consider making an offer to acquire the outstanding equity of the Company held by unaffiliated public stockholders, led the Board of Directors (the “Board”) to initiate a process under the control of disinterested and independent directors to assess strategic alternatives for the Company. Specifically, in March 2024, the Board formed and delegated to the Special Committee the Board’s power and authority to, among other things, review and evaluate potential strategic transactions with potential acquirors, including Ms. Wojcicki, and the Company’s other strategic alternatives (any such transaction or alternative, a “Potential Transaction”), as well as maintaining the status quo as a standalone company. The Board determined to establish the Special Committee because Ms. Wojcicki and her affiliates,¹⁰ as potential acquirors, could have an interest in a Potential Transaction that was different from, or in addition to, the interests of the Company and its stockholders generally.

Accordingly, since March 2024, the Board has relied on the Special Committee consisting of disinterested and independent directors to ensure that the Company’s evaluation and review of strategic alternatives, including any Potential Transaction, whether with Ms. Wojcicki or with a third party, was thorough, fair, and free of potential conflict.

Shortly after its formation, the Special Committee engaged Wells Fargo Securities, LLC (“Wells Fargo”) as its independent financial advisor and Dechert LLP as its independent legal advisor to assist the Special Committee in evaluating a potential strategic transaction for the Company, including any proposal from Ms. Wojcicki.

10	Ms. Wojcicki and her affiliates owned, as of such date, approximately 49% of the total voting power of the Company’s outstanding voting securities.

 

14

In April 2024, Ms. Wojcicki publicly announced that she was considering making a proposal to “acquire the [Company] in a potential go-private transaction.”¹¹ Ms. Wojcicki also announced that she was working with advisors and intended to begin speaking to potential partners and financing sources. Ms. Wojcicki stated that any proposal by her would be conditioned irrevocably upon the approval of the Special Committee and a majority of the unaffiliated shareholders of the Company. Ms. Wojcicki also indicated that she wished to maintain control of the Company and, therefore, would not support an alternative transaction. As required by the Securities Exchange Act of 1934, as amended, Ms. Wojcicki disclosed the foregoing through an amendment to the report on Schedule 13D previously filed with the Securities and Exchange Commission (“SEC”) by Ms. Wojcicki and certain of her affiliates (the “Schedule 13D”).¹²

Three months later, on July 29, 2024, Ms. Wojcicki submitted a non-binding indication of interest to the Special Committee to acquire all of the Company’s outstanding shares of common stock not owned by Ms. Wojcicki and her affiliates (or any other stockholders that might be invited to “roll-over” their current equity shares) for $0.40 per share (the “July 29 Proposal”).¹³ The July 29 Proposal remained subject to confirmatory due diligence, among other conditions, and did not include committed financing.¹⁴

On August 2, 2024, the Special Committee rejected Ms. Wojcicki’s July 29 Proposal on the basis that, among other things, the offer did not provide a premium to the closing price of the Company’s publicly traded common stock as of July 31, 2024, it lacked committed financing, and it was conditional in nature. The Special Committee requested that Ms. Wojcicki withdraw her stated intent to oppose any alternative transaction so that the Special Committee could fully assess whether there was interest from third parties in a transaction that would maximize value for all stockholders.¹⁵

Shortly thereafter, in August 2024, Wells Fargo, at the direction of the Special Committee, contacted 15 potential counterparties to assess potential third-party interest in the Company (the “Initial Outreach”), assuming Ms. Wojcicki were to withdraw her stated intent not to support a transaction with a third party. As a result of the Initial Outreach, one party signed a confidentiality agreement with the Company to facilitate further discussion.

In early September 2024, in response to requests from the Special Committee, Ms. Wojcicki notified the members of the Special Committee that she would be open to considering third-party takeover proposals for the Company and updated the disclosure in her Schedule 13D to reflect the same.¹⁶ Ms. Wojcicki also continued to evaluate a potential go-private transaction involving the Company.¹⁷

11	See Schedule 13D (Amendment No. 1) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 6 (Apr. 17, 2024) (SEC).

12

See id.

13

Ms. Wojcicki’s offer of $0.40 per share was proposed prior to the Company’s 1-for-20 reverse stock split that was completed on October 16, 2024, in order for the Company to regain compliance with the minimum bid price requirement of the Nasdaq Global Market. Ms. Wojcicki’s July 29 Proposal equated to $8.00 per share calculated on a pro forma basis for the reverse stock split.

14	See Schedule 13D (Amendment No. 2) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 6 (July 31, 2024) (SEC).

15	See 23andMe Holding Co., Form 8-K, at 4 (Aug. 2, 2024) (SEC).

16	See Schedule 13D (Amendment No. 3) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Sept. 11, 2024) (SEC).

17

See id.

 

15

Shortly thereafter, on September 17, 2024, the then-serving independent directors of the Board resigned. In a public letter to Ms. Wojcicki, the independent directors noted that they believed that they had not received an actionable proposal from Ms. Wojcicki and would not receive one.¹⁸ The letter further explained that, given their divergence in views from Ms. Wojcicki, the independent directors’ resignation would be “in the best interests of the Company’s shareholders.”¹⁹ Following such resignations, Ms. Wojcicki remained the sole director of the Company.

In late September 2024, Ms. Wojcicki updated her prior statement in her Schedule 13D, indicating that she remained committed to completing an acquisition of the Company but would not consider third-party takeover proposals for the Company.²⁰ In October 2024, Wells Fargo terminated its engagement letter with the Special Committee.

On October 28, 2024, the Board increased its size from one member to four members and appointed three new independent directors. On November 2, 2024, the Special Committee was also repopulated with these three new independent and disinterested directors, who served on the Special Committee as of the Petition Date.²¹ Shortly thereafter, the Special Committee selected Moelis, as its independent investment banker,²² and Goodwin Procter LLP (“Goodwin”), as its independent legal advisor, to aid in its evaluation of strategic alternatives for the Company, including a Potential Transaction.

In January 2025, the Special Committee authorized Paul, Weiss to begin chapter 11 contingency planning in light of the Company’s deteriorating liquidity position. In the same month, the Company also retained A&M, as financial advisor, to assist with the chapter 11 contingency planning.

18	See 23andMe Holding Co., Form 8-K, at 4 (Sept. 18, 2024) (SEC).

19

See id.

20	See Schedule 13D (Amendment No. 5) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Sept. 30, 2024) (SEC).

21	As described below, on March 21, 2025, Mr. Thomas Walper was appointed to the Board and the Special Committee as an additional independent and disinterested director. As of the Petition Date, the Special Committee consists of Mark Jensen, Andre Fernandez, Jim Frankola and Thomas Walper.

22	In March 2025, Moelis’s engagement was subsequently modified to account for its role as investment banker to both the Special Committee and the Company in connection with these Chapter 11 Cases.

 

16

E.	Expanded Prepetition Marketing Process

Beginning in January 2025, the Company, at the direction of the Special Committee, began soliciting potential third-party interest in the acquisition of the Company for all or a portion of the Company’s assets or business segments, as well as potential financing sources for new financing for the Company. As part of this process (the “Prepetition Marketing Process”), the Debtors,²³ with the assistance of Moelis, prepared a confidential information memorandum with extensive information on the Company’s assets, and populated a data room (the “Data Room”) containing significant diligence documentation.

On January 28, 2025, the Special Committee issued a press release announcing that it had undertaken a process to explore strategic alternatives, including, among other alternatives, a possible sale of the Company, business combination, sale of all or part of the Company’s assets, licensing of assets, restructuring, or other strategic action,²⁴ which resulted in additional inbound interest from third parties. Shortly thereafter, in response to a request from the Special Committee, Ms. Wojcicki updated her prior statement in her Schedule 13D to indicate her willingness to consider third-party takeover proposals for the Company or other strategic alternatives that may be in the best interests of the Company.²⁵

Overall, as part of the Prepetition Marketing Process, the Debtors, under the direction of the Special Committee and its advisors, engaged with 103 potential counterparties, including 51 potential strategic investors and 52 potential financial investors / financing counterparties (collectively, the “Contact Parties”). These efforts resulted in 90 introductory calls and the execution of approximately 42 confidentiality agreements with the Company.

Starting on January 30, 2025, and continuing throughout the Prepetition Marketing Process, Moelis distributed the confidential information memorandum and a preliminary financial model to Contact Parties that signed confidentiality agreements with the Company and provided such parties with access to the Data Room. In the aggregate, the Debtors, with the assistance of Moelis, published over 180 diligence documents to the Data Room throughout the Prepetition Marketing Process, covering financial, operational, legal and other key items, and facilitated diligence calls among members of the Debtors’ management team, certain Contact Parties, and the Special Committee’s and/or the Debtors’ advisors.

In early February 2025, Moelis distributed a formal process letter requesting that the Contact Parties remaining in the process submit initial indications of interest no later than February 20, 2025 (the “Initial IOI Deadline”). The process letter provided to the Contact Parties included optionality for the Contact Parties to present indications of interest for the

23

At all relevant times, the Debtors conducted the Prepetition Marketing Process under the authority of the Special Committee, and references to the “Debtors” in this section, where applicable, should be interpreted to mean that the Debtors took such action subject to the Special Committee’s direction and oversight.

24	See 23andMe Holding Co. press release dated January 28, 2025 (https://investors.23andme.com/news-releases/news-release-details/23andme-special-committee-announces-exploration-strategic).

25	See Schedule 13D (Amendment No. 8) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 5 (Jan. 31, 2025) (SEC).

 

17

Company’s equity or on a cash-free, debt-free basis for all or part of the Company, or the terms of a financing. Moelis also informed Ms. Wojcicki and her advisors of the Initial IOI deadline. In connection with the Initial IOI Deadline, Moelis, on behalf of the Special Committee, received multiple preliminary non-binding indications of interest from Contact Parties with various structures, and a joint indication of interest from Ms. Wojcicki and New Mountain Capital L.L.C. (“New Mountain”) seeking to acquire all of the Company’s outstanding shares of common stock not owned by Ms. Wojcicki or her affiliates (or any other stockholders that might be invited to “roll-over” their current equity shares) at a price of $2.53 per share (the “February 20 Proposal”).²⁶ Subsequent to the Initial IOI Deadline, Moelis continued to engage in discussions with Contact Parties about a potential transaction involving the Company, and received preliminary non-binding indications of interest from a few additional Contact Parties with respect to potential financing or asset acquisition transactions. None of the non-binding indications of interest received in the Prepetition Marketing Process, other than the indication of interest from Ms. Wojcicki and New Mountain, provided for an out-of-court acquisition for 100% of the equity of the Company.

On March 3, 2025, Ms. Wojcicki filed an amendment to her Schedule 13D,²⁷ disclosing that Ms. Wojcicki had been informed that New Mountain was no longer interested in participating in a potential acquisition of the Company as described in the February 20 Proposal but that Ms. Wojcicki remained committed to completing an acquisition of the Company. The amendment to Schedule 13D also included a copy of a non-binding proposal to acquire all of the Company’s outstanding shares of common stock not owned by Ms. Wojcicki or her affiliates (or any other shareholders that might be invited to “roll-over” their current equity shares) for $0.41 per share, which Ms. Wojcicki had delivered to the Special Committee on March 2, 2025 (the “March 2 Proposal”). The March 2 Proposal also indicated that Ms. Wojcicki would be willing to provide $30 million of unsecured financing for the Company’s operations through the closing of the potential transaction, subject to various conditions set forth in a term sheet provided with the March 2 Proposal. Shortly thereafter, the Special Committee issued a press release indicating that it had reviewed the March 2 Proposal in consultation with its financial and legal advisors, and had determined to reject the proposal.²⁸

On March 6, 2025, Ms. Wojcicki delivered a revised non-binding proposal to the Special Committee for upfront cash consideration of $0.41 per share and three contingent value rights representing the potential to receive an additional $2.53 per share in the aggregate if specified revenue milestones were achieved by the Company in fiscal years 2026, 2027, and 2028 (the “March 6 Proposal”).²⁹ As part of the March 6 Proposal, Ms. Wojcicki continued to indicate

26	See Schedule 13D (Amendment No. 9) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Feb. 21, 2025) (SEC).

27	See Schedule 13D (Amendment No. 10) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Mar. 3, 2025) (SEC).

28	See 23andMe Holding Co. press release dated March 3, 2025 (https://investors.23andme.com/news-releases/news-release-details/23andme-special-committee-rejects-acquisition-proposal-ceo-anne).

29

In the March 6 Proposal, Ms. Wojcicki also noted that she and her advisors had “ran an exhaustive process to identify new financing, contacting over 100 potential providers of public and private equity as well as debt financing.” See Schedule 13D (Amendment No. 11) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Mar. 10, 2025) (SEC).

 

18

that she was willing to provide $30 million of unsecured financing, subject to various conditions, to the Company to finance its operations through the closing of the potential transaction. Thereafter, on March 10, 2025, and in response to certain requests of the Special Committee, Ms. Wojcicki submitted an updated non-binding proposal that further referenced a proposed commitment to provide $20 million of additional capital to fund the operations of the Company (the “March 10 Proposal”).³⁰ After the Special Committee endeavored to negotiate with Ms. Wojcicki, she notified the Special Committee that the March 10 Proposal was her best and final offer. After consultation with its advisors, the Special Committee determined that the March 10 Proposal, which reflected Ms. Wojcicki’s best and final offer, should be rejected.

The Special Committee determined that the indications of interest received during the Prepetition Marketing Process, including Ms. Wojcicki’s proposals, were (a) preliminary in nature and not currently actionable, (b) not actionable on an out-of-court basis, or (c) otherwise not in the best interest of the Company and its stakeholders. In addition, given the Debtors’ financial condition and liquidity position, the uncertainty surrounding the scope and extent of liabilities arising from the Cyber Security Incident and other relevant factors, the Special Committee determined that it was in the best interests of the Debtors’ stakeholders to pivot to an in-court sales process and leverage the ability to sell assets free and clear through a chapter 11 plan or pursuant to section 363 of the Bankruptcy Code, to maximize value for the benefit of the Debtors’ stakeholders.

Given the prospect of an imminent chapter 11 filing, the Company took certain steps to further modify and enhance its independent governance framework. On March 7, 2025, the Board authorized resolutions that expanded the Special Committee’s delegation of authority to include all matters related to a potential restructuring of the Company, including the authority to direct the Company to file for chapter 11 proceedings. On March 16, 2025, the Special Committee authorized resolutions directing certain specified counsel to the Special Committee and to the Company to conduct a special review of the Company’s governance, financial transactions, and business operations to assess the potential viability of legal claims that may be brought by various parties against any third party or any of the Company’s directors, officers, managers, members, equity holders, principals, employees, and any other individual that is an insider of the Company (the “Investigation”). On March 21, 2025, the Special Committee authorized resolutions that approved (a) the filing of these Chapter 11 Cases and (b) the filing of the Bidding Procedures Motion and engaging in a marketing process in accordance with the procedures contemplated therein, among other things.

On the same day, Ms. Wojcicki, by mutual agreement between Ms. Wojcicki and the Special Committee, tendered her resignation as an officer of the Company to the Board, with such resignation effective at 5:00 p.m., Eastern Time, on March 23, 2025. Ms. Wojcicki also stepped down as Chair of the Board (while continuing to serve as a director on the Board) and further resigned as director and/or officer, as appropriate, from various other Company subsidiaries.³¹ Also on the same day, the Board authorized resolutions (a) appointing Mr. Mark

30	See Schedule 13D (Amendment No. 12) of ABeeC 2.0, LLC, ANNE WOJCICKI REVOCABLE TRUST U/A/D 9/2/09, AS AMENDED AND RESTATED, and Anne Wojcicki, at 4 (Mar. 11, 2025) (SEC).

31	These subsidiaries include: (i) ChromeCo, Inc. (director and officer), Lemonaid Health, Inc. (director and officer), Chrome Pharmacy Holdings, Inc. (officer) and Lemonaid Pharmacy Holdings, Inc. (officer).

 

19

Jensen as the Chairman of the Board, (b) appointing Mr. Joseph Selsavage as Interim Chief Executive Officer and Interim President, effective upon Ms. Wojcicki’s resignation, (c) appointing Matthew Kvarda as the Chief Restructuring Officer of the Company, subject to and effective upon the filing of these Chapter 11 Cases, (d) expanding the size of the Board from four to five directors, and (e) appointing Mr. Walper as an additional independent director and appointing him to the Special Committee, in each case, effective upon the filing of these Chapter 11 Cases. On March 23, 2025, the Special Committee (a) authorized resolutions designating and empowering Mr. Walper to exercise all of the power and authority of the Special Committee with respect to the Investigation, effective upon the filing of these Chapter 11 Cases and (b) approved specific guidelines governing, among other things, communications between Ms. Wojcicki and the Company’s management, subject to appropriate oversight by the Special Committee and senior members of the Company’s management team.

ARTICLE IV.

THE CHAPTER 11 CASES

 

A.	Commencement of the Chapter 11 Cases

The Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code on March 23, 2025 (the “Petition Date”). Since the Petition Date, the Debtors have continued to operate their business as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

 

B.	First Day Motions

The filing of the petitions commenced the Chapter 11 Cases, at which time the Debtors were afforded the benefits and became subject to the limitations of the Bankruptcy Code. On the Petition Date, the Debtors filed several motions requesting that the Bankruptcy Court grant various relief designed to ensure a seamless transition between the Debtors’ prepetition and postpetition business operations, facilitate a smooth reorganization through the Chapter 11 Cases, and minimize any disruptions to the Debtors’ operations (the “First Day Motions”). The Bankruptcy Court granted all of the First Day Motions. The following is a brief overview of the relief granted.³²

 

1.

Utilities

In the ordinary course of business, the Debtors incur certain expenses related to essential utility services including, among others, electricity, natural gas, and other similar services from several utility providers, either directly or through applicable lease agreements. The Debtors sought entry of an order (a) prohibiting the Debtors’ utility service providers from altering, refusing, or discontinuing utility services, (b) deeming the Debtors’ utility service providers to have adequate assurance of future performance, (c) establishing procedures for determining

32

This Disclosure Statement’s summary of the First Day Motions and related orders is qualified in its entirety by reference to the First Day Motions and related orders themselves. In the case of any inconsistency between this Disclosure Statement and the First Day Motions and related orders, the First Day Motions and related orders shall govern.

 

20

additional adequate assurance of future payment and authorizing the Debtors to provide adequate assurance of future payment to the Debtors’ utility service providers, and (d) granting related relief. On March 28, 2025, the Bankruptcy Court entered an interim order approving the Debtors’ utilities motion on an interim basis.³³ The Bankruptcy Court entered a final order approving the Debtors’ utilities motion on a final basis on April 23, 2025.³⁴

 

2.

Taxes

In the ordinary course of business, the Debtors pay and remit, as applicable, taxes and fees on a periodic basis, typically remitting them monthly, quarterly, annually, or on other terms to the relevant authorities, depending on the nature and incurrence of a particular tax or fee and as required by applicable laws and regulations. The Debtors’ failure to pay certain taxes and fees when due may adversely affect their business operations. Depending on the relevant jurisdiction, tax authorities may have the ability to initiate audits if taxes and fees are not timely paid. Similarly, tax authorities may attempt to suspend the Debtors’ operations, seek to lift the automatic stay or even seek to hold the Debtors’ directors and officers personally liable for any unpaid amounts. Accordingly, the Debtors sought, and the Bankruptcy Court granted on interim³⁵ and final³⁶ bases, authority to remit or pay (or use tax credits or other attributes to offset or otherwise satisfy) all taxes and fees expected to become due and owing to various federal, state, local, and other applicable authorities that arose prior to the Petition Date and that the Debtors expect to become due and payable following the Petition Date, in either case up to an aggregate amount not to exceed $681,700.

 

3.

Cash Management

As described in detail in the Debtors’ cash management motion, the Debtors maintain an integrated cash management system in the ordinary course of their operations. To lessen the disruption caused by the bankruptcy filings and maximize the value of their Estates in these Chapter 11 Cases, it was vital that the Debtors be permitted to maintain their cash management system and be authorized to, inter alia, pay any outstanding bank, processing, and security fees owed in relation to their cash management system, continue utilizing their corporate credit cards, maintain their existing business forms, and continue engaging in ordinary course intercompany transactions. On March 26, 2025, the Bankruptcy Court entered an order approving the Debtors’ cash management motion on an interim basis (the “Interim Cash Management Order”).³⁷

33

See Interim Order (I) Prohibiting Utility Companies from Altering, Refusing, or Discontinuing Utility Services, (II) Deeming Utility Companies to Have Adequate Assurance of Future Payment, (III) Establishing Procedures for Determining Adequate Assurance of Payment, and (IV) Granting Related Relief [Docket No. 128].

34

See Final Order (I) Prohibiting Utility Companies from Altering, Refusing, or Discontinuing Utility Services, (II) Deeming Utility Companies to Have Adequate Assurance of Future Payment, (III) Establishing Procedures for Determining Adequate Assurance of Payment, and (IV) Granting Related Relief [Docket No. 310].

35	See Interim Order (I) Authorizing the Payment of Certain Taxes and Fees and (II) Granting Related Relief [Docket No. 107].

36	See Final Order (I) Authorizing the Payment of Certain Taxes and Fees and (II) Granting Related Relief [Docket No. 303].

37

See Interim Order (I) Authorizing (A) Continued Use of Cash Management System, (B) Maintenance of Bank Accounts and Business Forms, (C) Performance of Intercompany Transactions, and (D) Certain Prepetition Obligations to be Honored; (II) Granting Administrative Expense Priority Status to Postpetition Intercompany Claims Against the Debtors; and (III) Granting Related Relief [Docket No. 80].

 

21

Following the entry of the Interim Cash Management Order, the Debtors engaged in negotiations with the Creditors’ Committee to reach a consensus on the form of the final order on the cash management motion. These discussions were successful, and on April 23, 2025, the Bankruptcy Court entered an order granting the relief the Debtors sought under their cash management motion on a final basis.³⁸

 

4.

Insurance

In the ordinary course of business, the Debtors maintain a comprehensive insurance program. The Debtors’ existing insurance programs are essential to preserve the value of the Debtors’ business, properties, and assets. In many cases, the insurance coverage provided by the existing insurance policies is required by diverse regulations, laws, and contracts that govern the Debtors’ commercial activities. Failure to make the payments required to maintain the Debtors’ insurance policies could have a significant negative impact on the Debtors’ operations. Absent sufficient and continuing insurance coverage, the Debtors may also be exposed to substantial liability and may be unable to operate in certain key jurisdictions. As a result, the Debtors sought, and the Bankruptcy Court granted, authority for the Debtors to continue their prepetition insurance programs and pay premiums and other amounts arising thereunder in the ordinary course of business.³⁹

 

5.

Wages

As of the Petition Date, the Debtors employed, in the aggregate, hundreds of full-time and part-time employees, temporary workers, and independent contractors. This workforce relies on the compensation and benefits provided or funded by the Debtors to continue to pay their daily living expenses, and would be exposed to significant financial difficulties if the Debtors were not permitted to pay these obligations. It is essential to the smooth operation of the Debtors’ business that their workforce continues to perform in the ordinary course, and so a stable workforce is critical to the uninterrupted continuation of the Debtors’ businesses and the preservation and maximization of the value of the Debtors’ Estates during these Chapter 11 Cases. Otherwise, there is a real, immediate risk that the Debtors’ workforce would no longer support and maintain the Debtors’ operations. On this basis, the Debtors sought, and the Bankruptcy Court granted, the authority to, among other things, (a) pay prepetition wages, salaries, other compensation, and reimbursable expenses to their employees and (b) continue employee benefits programs in the ordinary course of business, including payment of certain prepetition obligations related thereto.⁴⁰

38

See Final Order (I) Authorizing (A) Continued Use of Cash Management System, (B) Maintenance of Bank Accounts and Business Forms, (C) Performance of Intercompany Transactions, and (D) Certain Prepetition Obligations to be Honored; (II) Granting Administrative Expense Priority Status to Postpetition Intercompany Claims Against the Debtors; and (III) Granting Related Relief [Docket No. 297].

39

See Interim Order (I) Authorizing the Debtors to Continue Prepetition Insurance Policies and Pay All Prepetition Obligations In Respect Thereof and (II) Granting Related Relief [Docket No. 126]; Final Order (I) Authorizing the Debtors to Continue Prepetition Insurance Policies and Pay all Prepetition Obligations in Respect Thereof and (II) Granting Related Relief [Docket No. 309].

40

See Interim Order (I) Authorizing the Debtors to (A) Pay Certain Prepetition Employee Wages and Benefits and (B) Continue Employee Benefits Programs and Pay Related Obligations and (II) Granting Related Relief [Docket No. 78]; Final Order (I) Authorizing the Debtors to (A) Pay Certain Prepetition Employee Wages and Benefits and (B) Continue Employee Benefits Programs and Pay Related Obligations and (II) Granting Related Relief [Docket No. 304].

 

22

6.

Customer Programs

In the ordinary course of business, the Debtors provide certain incentives, discounts, promotions, and accommodations, and administer related programs, to attract customers and maintain positive customer relationships. These customer programs include various subscription offerings, relationships with third-party online retail partners, promotional offers, the issuance of gift cards through a third-party vendor, and a refund and exchange program. These programs promote customer satisfaction and inure to the goodwill of the Debtors’ businesses and the value of their brands. Continuing to administer these programs without interruption during the pendency of these Chapter 11 Cases was critical to preserve the value of the Debtors’ assets by, most importantly, preserving the Debtors’ valuable customer relationships, goodwill, and market share. Accordingly, the Debtors sought, and the Bankruptcy Court granted, an order confirming the Debtors’ authority to maintain and administer their customer-related programs, policies, and practices and honor certain prepetition obligations related thereto.⁴¹

 

7.

Critical Vendors

The Debtors requested authorization through their critical vendors motion to pay the prepetition claims of certain essential vendors and service providers, including lien claimants, 503(b)(9) claimants, and foreign vendors, in light of the importance of the products and services provided by such vendors. The Debtors believed that vendors may make credible and actionable threats to cease supplying the Debtors with the specialized goods and services necessary to maintain the smooth operation of the Debtors’ business while in chapter 11, unless they were paid on account of their prepetition debt. Further, the Debtors believed that any disruption in the provision of the critical supplies, materials, and services the Debtors sourced from their vendors would have far-reaching and adverse economic and operational consequences on the Debtors’ business. As a result, the Debtors sought, and the Bankruptcy Court granted, authority for the Debtors to pay certain of these creditors.⁴² Pursuant to the final critical vendor order entered by the Bankruptcy Court, the Debtors were authorized to pay prepetition claims of such vendors up to an aggregate amount of approximately $5.82 million.⁴³

41

See Interim Order (I) Authorizing the Debtors to Maintain and Administer Their Customer Programs and Honor Certain Prepetition Obligations Related Thereto and (II) Granting Related Relief [Docket No. 120]; Final Order (I) Authorizing the Debtors to Maintain and Administer Their Customer Programs and Honor Certain Prepetition Obligations Related Thereto and (II) Granting Related Relief [Docket No. 302].

42

See Interim Order (I) Authorizing the Debtors to Pay Prepetition Claims of (A) Certain Critical Vendors, (B) Lien Claimants, (C) 503(b)(9) Claimants, and (D) Foreign Vendors, (II) Granting Administrative Expense Priority to and Authorizing the Payment of Outstanding Orders, and (III) Granting Related Relief [Docket No. 116]; Final Order (I) Authorizing the Debtors to Pay Prepetition Claims of (A) Certain Critical Vendors, (B) Lien Claimants, (C) 503(b)(9) Claimants, and (D) Foreign Vendors, (II) Granting Administrative Expense Priority to and Authorizing the Payment of Outstanding Orders, and (III) Granting Related Relief [Docket No. 301].

43

See Interim Order (I) Authorizing the Debtors to Pay Prepetition Claims of (A) Certain Critical Vendors, (B) Lien Claimants, (C) 503(b)(9) Claimants, and (D) Foreign Vendors, (II) Granting Administrative Expense Priority to and Authorizing the Payment of Outstanding Orders, and (III) Granting Related Relief [Docket No. 116]; Final Order (I) Authorizing the Debtors to Pay Prepetition Claims of (A) Certain Critical Vendors, (B) Lien Claimants, (C) 503(b)(9) Claimants, and (D) Foreign Vendors, (II) Granting Administrative Expense Priority to and Authorizing the Payment of Outstanding Orders, and (III) Granting Related Relief [Docket No. 301].

 

23

8.

Equity and Claims Trading

The Debtors possess net operating loss (“NOL”) carryforwards and other tax attributes. Under the U.S. Internal Revenue Code, the Debtors’ ability to use these NOL carryforwards and other tax attributes may be limited if, among other things, the Debtors experience a change of control. In order to protect the Debtors’ ability to use their tax attributes, the Debtors sought, and the Bankruptcy Court granted, an order approving notification and hearing procedures for certain transfers of and declarations of worthlessness with respect to Chrome Holding Co.’s common stock or any beneficial ownership therein.⁴⁴

 

9.

PMCs

The Debtors provide management and administrative services to the PMCs that in turn provide medical services to patients through the Debtors’ telehealth platform. The Debtors’ relationships with the PMCs and associated physicians are governed by contracts, the PMC MSAs, and are structured to ensure compliance with applicable laws limiting the ownership of medical practices to licensed physicians. The PMC-related obligations are contractual obligations of the Debtors under the MSAs. In addition to seeking authority to pay certain obligations and costs owed to or on behalf of the PMCs on account of the PMC MSAs under the other first day relief described above, the Debtors also requested the ability pay accrued and outstanding costs under the PMC MSAs and to continue to pay all operating costs under the PMC MSAs as they become due. This authority was necessary for the Debtors’ continued operation of their telehealth business and to ensure the Debtors could support the PMCs and related professionals in providing high-quality care to their patients. Pursuant to the interim and final orders issued by the Bankruptcy Court, the Debtors were authorized to honor, pay, or otherwise satisfy any prepetition and postpetition obligations incurred in relation to the PMCs.⁴⁵

44

See Interim Order (I) Establishing Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness With Respect to Common Stock of 23andMe Holding Co. and (II) Granting Related Relief [Docket No. 119]; Final Order (I) Establishing Notification and Hearing Procedures for Certain Transfers of and Declarations of Worthlessness With Respect to Common Stock of 23andMe Holding Co. and (II) Granting Related Relief [Docket No. 312].

45

See Interim Order (I) Authorizing the Debtors to Honor and Incur Obligations Related to Non-Debtor Professional Medical Corporations and (II) Granting Related Relief [Docket No. 118]; Final Order (I) Authorizing the Debtors to Honor and Incur Obligations Related to Non-Debtor Professional Medical Corporations and (II) Granting Related Relief [Docket No. 298].

 

24

10.

Other Procedural Motions

The Debtors filed, and the Bankruptcy Court granted, various other procedural motions that are common to chapter 11 proceedings of similar size and complexity as these Chapter 11 Cases.⁴⁶

 

C.	DIP Financing

To ensure the Debtors’ ability to conduct an efficient and expeditious sale process and continue operations in the ordinary course, prior to the Petition Date, the Debtors secured a commitment from JMB Capital Partners Lending, LLC (the “DIP Lender”) to provide a debtor-in-possession financing facility of up to $35 million (the “DIP Facility”). On March 26, 2025, the Bankruptcy Court authorized the Debtors’ entry into and performance under the binding term sheet providing for the DIP Facility, including payment to the DIP Lender of (a) a fully earned, non-refundable $100,000 work fee and (b) a $700,000 fully earned, non-refundable cash fee equal to 2.00% of the total amount of the commitments under the DIP Facility.⁴⁷

On April 23, 2025, the Bankruptcy Court authorized the Debtors, jointly and severally, to obtain the financing under the DIP Facility and approved the Senior Secured, Super-Priority Debtor-in-Possession Loan and Security Agreement among the Debtors, as Borrowers, and the DIP Lender (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “DIP Credit Agreement”).⁴⁸ On April 28, 2025, the Debtors entered into the DIP Credit Agreement. Borrowings under the DIP Facility bore interest at the rate of 14.0% and the DIP Facility had a scheduled maturity date of September 30, 2025. Among other things, the DIP Facility allowed the Debtors to (a) immediately access up to $10 million and (b) access the remaining $25 million (the “DIP Delayed Draw Amount”) upon the Bankruptcy Court’s approval of a stalking horse purchase agreement no later than May 7, 2025, that either (i) was acceptable to the DIP Lender in its reasonable discretion or (ii) would repay, or generate sufficient cash proceeds to repay, the obligations under the DIP Facility.

46

See, e.g., Order (I) Directing the Joint Administration of the Debtors’ Chapter 11 Cases and (II) Granting Related Relief [Docket No. 105]; Final Order (I) Establishing Certain Notice, Case Management, and Administrative Procedures and (II) Granting Related Relief [Docket No. 331]; Order (I) Extending the Time to File Schedules of Assets and Liabilities, Schedules of Current Income and Expenditures, Schedules of Executory Contracts and Unexpired Leases and Statements of Financial Affairs, (II) Waiving the Requirement to File Equity Lists and Provide Notice to Equity Security Holders, (III) Authorizing the Debtors to File (A) a Consolidated List of Counsel representing Cyber Security Incident Claimants and (B) a Consolidated List of Other Unsecured Creditors of the Debtors, (IV) Authorizing the Debtors to Prepare a Consolidated and Redacted List of Creditors in Lieu of Submitting Separate and Reformatted Creditor Matrices for Each Debtor, (V) Approving the Manner of Notifying Creditors of the Commencement of these Chapter 11 Cases, and (VI) Granting Related Relief [Docket No. 132].

47	See Order (I) Authorizing Entry Into and Performance Under the Binding DIP Term Sheet, Including Payment of the Commitment Fee and the Work Fee Thereunder, and (II) Granting Related Relief [Docket No. 81].

48	See Final Order (A) Authorizing the Debtors to Obtain Postpetition Financing, Grant Liens, Provide Superpriority Administrative Expense Claims and Use Cash Collateral, (B) Modifying the Automatic Stay, and (C) Granting Related Relief [Docket No. 313].

 

25

On May 6, 2025, the Debtors and the DIP Lender executed an amendment to the DIP Credit Agreement, under which the DIP Lender agreed to provide the Debtors with the $25 million DIP Delayed Draw Amount upon the selection of a successful bidder acceptable to the DIP Lender or receipt of a binding bid that would generate sufficient funds to repay the DIP obligations. On June 5, 2025, the Debtors and the DIP Lender executed a second amendment to the DIP Credit Agreement that, among other things, increased the commitments under the DIP Facility to $60 million and provided an incremental commitment fee and exit fee in connection with the incremental commitments.

On July 14, 2025, in connection with the closing of the Chrome Sale Transaction, the Debtors repaid in full all outstanding indebtedness and terminated all commitments and obligations under the DIP Credit Agreement.

 

D.	Retention of Restructuring and Other Professionals

 

1.

Employment and Compensation of Restructuring Professionals

To assist the Debtors in carrying out their duties as debtors-in-possession and to otherwise represent the Debtors’ interests in these Chapter 11 Cases, the Bankruptcy Court entered orders authorizing the Debtors to retain and employ the following advisors: (a) Paul, Weiss, as co-counsel to the Debtors;⁴⁹ (b) Carmody MacDonald, P.C., as co-counsel to the Debtors;⁵⁰ (c) Moelis & Company LLC, as investment banker for the Debtors;⁵¹ (d) Alvarez & Marsal North America, LLC and Matthew E. Kvarda, as Chief Restructuring Officer of the Debtors;⁵² (e) Kroll Restructuring Administration LLC, as claims and noticing agent and administrative advisor to the Debtors;⁵³ (f) Deloitte Tax LLP, as tax advisory services provider to the Debtors;⁵⁴ (g) Goodwin, as special counsel on behalf of the Special Committee;⁵⁵ and (h) Lewis Rice LLC, as special counsel on behalf of the Special Committee.⁵⁶

49	See Final Order Authorizing the Retention and Employment of Paul, Weiss, Rifkind, Wharton & Garrison LLP as Attorneys for the Debtors and Debtors in Possession Effective as of the Petition Date [Docket No. 293].

50	See Final Order Authorizing the Retention and Employment of Carmody MacDonald, P.C. as Bankruptcy Co-Counsel for the Debtors and Debtors in Possession Effective as of the Petition Date [Docket No. 296].

51	See Final Order Authorizing the Retention and Employment of Moelis & Company LLC as Investment Banker for the Debtors and Debtors in Possession Effective as of the Petition Date [Docket No. 299].

52	See Final Order (I) Authorizing the Employment and Retention of Alvarez & Marsal North America, LLC and (II) Designating Matthew E. Kvarda as Chief Restructuring Officer of the Debtors and Certain Additional Personnel, In Each Case, Effective as of the Petition Date [Docket No. 300].

53	See Final Order Authorizing Appointment of Kroll Restructuring Administration LLC as Claims and Noticing Agent and Administrative Advisor Effective as of the Petition Date [Docket No. 308].

54	See Order (I) Authorizing the Debtors to Retain and Employ Deloitte Tax LLP for Tax Advisory Services Effective as of the Petition Date, and (II) Granting Related Relief [Docket No. 887].

55	See Final Order Authorizing the Retention and Employment of Goodwin Procter LLP as Special Counsel on Behalf of and at the Sole Discretion of the Special Committee of the Board of Directors of 23andMe Holding Co., Effective as of the Petition Date [Docket No. 305].

56	See Final Order Authorizing the Retention and Employment of Lewis Rice LLC as Special Counsel on Behalf of and at the Sole Discretion of the Special Committee of the Board of Directors of 23andMe Holding Co., Effective as of the Petition Date [Docket No. 306].

 

26

2.

Ordinary Course Professionals

As of the Petition Date, the Debtors employed various professionals in the ordinary course of business, consisting of various law firms, auditors, tax professionals, and other non-attorney professionals. The Debtors filed, and the Bankruptcy Court granted, a motion seeking the authority to retain and compensate such ordinary course professionals.⁵⁷

 

E.	Appointment of the Official Committee of Unsecured Creditors

On April 3, 2025, the U.S. Trustee appointed the Creditors’ Committee.⁵⁸ As of the date the Creditors’ Committee was appointed, the members of the Creditors’ Committee were: (a) Laboratory Corporation of America Holdings and subsidiaries, including National Genetics Institute; (b) Workday, Inc.; (c) Telus International Services Limited; (d) Jellyfish US Limited; (e) Whitney S. Grubb; (f) Pamela Zager-Maya; and (g) Michelle Igoe. The Creditors’ Committee has retained Kelley Drye & Warren LLP, as lead counsel,⁵⁹ Stinson LLP, as counsel,⁶⁰ and FTI Consulting, Inc., as financial advisor.⁶¹

 

F.	Appointment of the Official Committee of Equity Holders

On July 15, 2025, the U.S. Trustee appointed the Official Equity Committee.⁶² As of the date the Official Equity Committee was appointed, the members of the Official Equity Committee were: (a) Alexander Keoleian; (b) Charles Viscito; (c) Esopus Creek Advisors, LLC; (d) Farrallon Capital Management, LLC; (e) Jonathan Shiff; (f) Kevin Barnes; and (g) Milestone Vimba Fund, L.P. The Official Equity Committee expects to file applications to retain Brown Rudnick LLP, as lead counsel, and Desai Law Firm LLC, as counsel.

57	See Order (I) Authorizing the Retention and Compensation of Certain Professionals Utilized in the Ordinary Course of Business and (II) Granting Related Relief [Docket No. 354].

58	See Notice of Appointment of Official Unsecured Creditors’ Committee [Docket No. 159].

59	See Order Authorizing the Employment of Kelley Drye & Warren LLP as Lead Counsel to the Official Committee of Unsecured Creditors, Effective as of April 8, 2025 [Docket No. 638].

60	See Order Authorizing the Retention and Employment of Stinson LLP as Counsel for the Official Committee of Unsecured Creditors, Effective as of April 8, 2025 [Docket No. 639].

61	See Order Authorizing the Retention of FTI Consulting, Inc. as Financial Advisor for the Official Committee of Unsecured Creditors Effective as of April 10, 2025 [Docket No. 640].

62	See Notice of Appointment of Official Committee of Equity Holders [Docket No. 1008].

 

27

G.	Assumption and Rejection of Executory Contracts and Unexpired Leases

The Debtors are party to various contracts and leases, which include agreements with vendors for the supply of goods and services and leases for real property. Pursuant to the Bidding Procedures Order and the Sale Order, the Debtors assumed and assigned many of the their contracts in connection with the Chrome Sale Transaction, which closed on July 14, 2025.⁶³ The Debtors also anticipate that they will assume and assign additional contracts to the Chrome Purchaser in the future. The Debtors have sought and, in some cases, already obtained, Bankruptcy Court approval of the Debtors’ rejection of certain contracts and leases and abandonment of personal property located on the premises, if any.⁶⁴ The Debtors also sought Bankruptcy Court approval of certain procedures to reject or assume executory contracts and unexpired leases.⁶⁵

 

H.	Consumer Privacy Ombudsman

On April 29, 2025, the Debtors, the U.S. Trustee, the Creditors’ Committee, and certain state governmental entities who previously objected to the Debtors’ motion to appoint an independent Customer Data Representative⁶⁶ stipulated and agreed to the appointment of a Consumer Privacy Ombudsman (“CPO”). The stipulation was entered without prejudice to the Debtors’ position that a CPO was not required under the Bankruptcy Code. The stipulation and agreed order tasked the CPO with conducting an examination and presenting a report to the Bankruptcy Court pursuant to sections 332 and 363(b) of the Bankruptcy Code to assist the Bankruptcy Court in its consideration of the facts, circumstances, and conditions of any and all proposed sales or leases of personally identifiable information⁶⁷ (“PII”) under any proposed sale(s) under the Bidding Procedures.⁶⁸ Under the stipulation, the parties agreed that the CPO’s report does not constitute legal conclusions or findings of fact and does not bind the parties or the Bankruptcy Court, and all the Debtors’ rights to object to the CPO’s report were preserved. On May 6, 2025, the U.S. Trustee appointed Neil M. Richards, a Professor in Law at Washington University School of Law in St. Louis, Missouri, as the CPO.⁶⁹ The CPO filed his report on June 11, 2025.⁷⁰

63	See Notice of Filing of Revised Schedule of Transferred Contracts [Docket No. 984].

64

See Order (I) Authorizing (A) Rejection of Certain Executory Contracts and Unexpired Leases and (B) Abandonment of Certain Personal Property, If Any, Each Effective, as of the Petition Date, and (II) Granting Related Relief [Docket No. 311]; Agreed Order (I) Authorizing (A) Rejection of Certain Executory Contracts and Unexpired Leases and (B) Abandonment of Certain Personal Property, If Any, Each Effective As of the Petition Date, and (II) Granting Related Relief [Docket No. 652]; Debtors’ Motion for Entry of an Order (I) Authorizing Rejection of Certain Executory Contracts Effective as of the Rejection Effective Date and (II) Granting Related Relief [Docket No. 1063].

65	See Debtors’ Motion for Entry of an Order (I) Authorizing and Approving Procedures for the Assumption, Assumption and Assignment, or Rejection of Executory Contracts and Unexpired Leases and (II) Granting Related Relief [Docket No. 1065].

66	See Debtors’ Motion for Entry of an Order (I) Appointing an Independent Customer Data Representative and (II) Granting Related Relief [Docket No. 169].

67	Personally Identifiable Information as defined in 11 U.S.C. § 101(41A) includes genetic data as well as health and personal information.

68	See Joint Stipulation and Agreed Order Directing the United States Trustee to Appoint a Consumer Privacy Ombudsman [Docket No. 346].

69	See Notice of Appointment of Consumer Privacy Ombudsman [Docket No. 388].

70	See Report of Consumer Privacy Ombudsman [Docket No. 718].

 

28

I.	Section 341 Meeting

On May 2, 2025, the Debtors attended the meeting of their creditors pursuant to section 341 of the Bankruptcy Code and addressed inquiries from the U.S. Trustee and certain creditors regarding, among other topics, the Debtors’ operations and finances and other issues related to these Chapter 11 Cases.

 

J.	Schedules and Statements

On April 28, 2025, the Debtors filed their Schedules of Assets and Liabilities and Statements of Financial Affairs.

 

K.	Claims Bar Date

On April 30, 2025, the Bankruptcy Court entered an order establishing July 14, 2025, at either (a) 11:59 p.m. (prevailing Central Time) if submitted electronically or (b) 4:59 p.m. (prevailing Central Time) if submitted by hardcopy as (i) the general bar date for filing proofs of claim against the Debtors (the “General Bar Date”) and (ii) the bar date for filing proofs of claim against the Debtors relating to the Cyber Security Incident.⁷¹

The Bankruptcy Court also established September 19, 2025, at either (a) 11:59 p.m. (prevailing Central Time) if submitted electronically or (b) 4:59 p.m. (prevailing Central Time) submitted by hardcopy (the “Governmental Bar Date”) as the deadline for filing governmental claims.⁷²

In addition, with respect to any claims arising from the Debtors’ rejection of executory contracts and unexpired leases, the Bankruptcy Court established either (a) 11:59 p.m. (prevailing Central Time) if submitted electronically or (b) 4:59 p.m. (prevailing Central time) if submitted by hardcopy, on the date that is the later of: (i) the General Bar Date and (ii) the date that is 30 days after the later of (A) the date on which the relevant order approving the rejection of such rejected contract or unexpired lease is entered or (B) the deemed effective date of the rejection of such rejected contract or unexpired lease, as the deadline to file such claims (the “Rejection Damages Claims Bar Date”).

Finally, the Bankruptcy Court established the later of: (a) the General Bar Date and (b) the date that is 30 days from the date on which the Debtors mail notice of the amendment to the Schedules at either (i) 11:59 p.m. (prevailing Central Time) if submitted electronically, or (ii) 4:59 p.m. (prevailing Central Time) if submitted by hardcopy, as the deadline to file claims with respect to certain amendments or supplements to the Debtors’ schedules of assets and liabilities (the “Amended Schedules Bar Date”).

71	See Order (I) Establishing Bar Dates for Filing Proofs of Claim and Approving Form and Manner of Notice Thereof and (II) Granting Related Relief [Docket No. 349].

72

Id.

 

29

As of the General Bar Date, approximately 170,800 proofs of claim have been filed in these Chapter 11 Cases.

 

L.	Postpetition Regulatory and Other Actions

In addition to the regulatory actions described in Article III.B.2 hereof, the Debtors have been subject to the following postpetition regulatory and other demands:

 

•

On June 5, 2025, the United Kingdom Information Commissioner’s Office imposed a penalty of £2,310,000 (approximately $3 million U.S. dollars) on the Debtors relating to the Cyber Security Incident;

 

•

On July 21, 2025, the Debtors received a letter from the Spanish Data Protection Authority imposing a fine of £2,400,000 (approximately $2.8 million U.S. dollars) relating to the Cyber Security Incident;

 

•

The South Dakota Attorney General served a civil investigative demand on the Debtors seeking information about the Cyber Security Incident; and

 

•

The Debtors have received certain demand letters from shareholders relating to prepetition conduct.

 

M.	Sale Process

 

1.

Marketing and Auction Process

As described above, the Debtors, led by Moelis, engaged in a thorough Prepetition Marketing Process for the sale of their assets. On March 24, 2025, the Debtors filed the Bidding Procedures Motion to establish procedures to continue the marketing process on a postpetition basis. The Bankruptcy Court granted the Bidding Procedures Motion and entered the Bidding Procedures Order on March 28, 2025. The Bidding Procedures established certain milestones to move expeditiously through the sale process, including:

 

Action		Description		Deadline
Non-Binding Indication of Interest Deadline (“IOI Deadline”)		The deadline by which any party interested in purchasing the Company Assets must submit a non-binding indication of interest.		April 13, 2025 at 4:00 p.m. (prevailing Central Time)   Petition Date + 21 days
Stalking Horse Deadline		The deadline by which the Debtors may choose one or more Stalking Horse Bidder(s).		April 25, 2025
Stalking Horse Notice Deadline		The deadline by which the Debtors must file a Stalking Horse Notice.		Within two business days after entry into a Stalking Horse Agreement

 

30

Bid Deadline		The deadline by which all binding Bids must be actually received pursuant to the Bidding Procedures.		May 7, 2025 at 4:00 p.m. (prevailing Central Time)
Determination of Qualified Bids		The deadline by which the Debtors will determine which Bids are Qualified Bids and notify each Potential Bidder in writing whether such Potential Bidder is a Qualified Bidder.		May 9, 2025
Auction (if necessary)		The date and time of the Auction, which will be held at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019.		May 14, 2025 at 9:00 a.m. (prevailing Central Time)
Notice of Successful Bidder		Within two business days following closing of the Auction, the Debtors will file on the docket a notice identifying the applicable Successful Bidder, Company Assets, and key terms of the agreement.		Within two business days following closing of the Auction (if any)
Deadline to File and Serve Cure Notices		The deadline by which the Debtors must file and serve Cure Notices to counterparties to Contracts to be assumed and assigned in connection with the sale(s).		May 19, 2025
Sale Objection Deadline; Cure/Assignment Objection Deadline		The deadline by which objections to the Successful Bidder(s) and sale(s), if any, or to the assumption and assignment of any contracts in connection with the sale(s) must be filed with the Bankruptcy Court.		June 10, 2025 at 4:00 p.m. (prevailing Central Time)
Sale Hearing		The hearing, if any, before the Bankruptcy Court to consider approval of the Successful Bid(s), pursuant to which the Debtors and the Successful Bidder(s) consummate the sale(s).		June 17, 2025 at 9:00 a.m. (prevailing Central Time)

The marketing process was a comprehensive effort in which the Debtors and their advisors sought to effectuate a value-maximizing transaction. As part of the postpetition marketing process, Moelis engaged with approximately 57 potential purchasers and the Debtors received 32 indications of interest. The Debtors explored the possibility of designating a stalking horse bidder based upon indications of interest received by the Stalking Horse Deadline, but ultimately did not designate a stalking horse bidder. Instead, the Debtors determined that the best path forward was to allow parties to continue to develop their diligence and submit fulsome bids in advance of the Bid Deadline.

By the Bid Deadline, the Debtors received several bids that contemplated an acquisition of the whole Company or the whole Company excluding the Lemonaid telehealth business, as well as multiple other bids that contemplated different asset packages. In accordance with the Bidding Procedures, on May 14, 2025, the Debtors commenced an auction, which included participation by seven qualified bidders and concluded on May 16, 2025. During the marketing process and throughout the auction, the Debtors consulted with key stakeholders who were Consultation Parties under the Bidding Procedures, including the Creditors’ Committee and DIP Lender.

 

31

On the third day of the auction, the Debtors determined that Regeneron’s bid of $256 million for the whole Company excluding the Lemonaid business represented the highest and otherwise best bid for a value-maximizing transaction of the Debtors’ business and concluded the auction. On May 17, 2025, the Debtors and Regeneron entered into an asset purchase agreement (as amended, modified, or supplemented from time to time, the “Regeneron APA”). On May 19, 2025, the Debtors filed the Notice of Successful and Backup Bidders With Respect to the Auction of the Debtors’ Assets [Docket No. 420] announcing the outcome of the auction.

Following the Debtors’ and Regeneron’s entry into the Regeneron APA, the Debtors received multiple proposals from TTAM for substantially all of the Debtors’ assets at a higher price than Regeneron’s bid of $256 million. Given the negotiated fiduciary-out provision in the Regeneron APA, the Special Committee evaluated such post-auction proposals from TTAM in good faith and engaged in dialogue with TTAM, Regeneron, their respective advisors, and other stakeholders. TTAM also provided the Debtors with additional diligence information and evidence of financial support to fund the purchase price associated with its bid, continue operating the Company after closing, and fulfill any other obligations contemplated by its respective asset purchase agreement.

After discussions among the Debtors, their advisors, the Special Committee, and the Consultation Parties, the Debtors engaged with both Regeneron and TTAM in negotiations regarding a framework for soliciting and evaluating further proposals for a sale of the Debtors’ assets. Ultimately, the Debtors filed the Debtors’ Motion for Entry of an Order (I) Establishing Procedures for the Submission of Final Proposals from the Backup Bidder and Successful Bidder and (II) Granting Related Relief [Docket No. 574] with a proposed framework. On June 6, 2025, the Bankruptcy Court approved the proposed framework and procedures (with certain modifications) through the entry of the Order (I) Establishing Procedures for the Submission of Final Proposals From the Backup Bidder and Successful Bidder and (II) Granting Related Relief [Docket No. 657] (the “Final Procedures Order”).

In accordance with the Final Procedures Order, on June 13, 2025, the Debtors conducted the Final Bidding Round (as defined in the Final Procedures Order). The Final Bidding Round opened with TTAM’s bid of $305 million. Regeneron declined to increase its bid beyond $256 million. Following the Final Bidding Round, the Debtors, in consultation with their advisors and the Consultation Parties and in their business judgment, selected (a) TTAM as the winning bidder, with a bid of $305 million, and (b) Regeneron as a backup bidder, with a bid of $151 million. That same day, the Debtors filed the Notice of Winning Bidder with Respect to the Final Proposal Procedures to Acquire the Debtors’ Assets [Docket No. 739] (the “Winning Bidder Notice”). On June 13, 2025, the Debtors executed a revised asset purchase agreement with TTAM (as amended, modified, or supplemented from time to time, the “Chrome Purchase Agreement”), which, among other things, provided the Debtors with the right to elect to structure the transactions contemplated thereunder as either an equity sale or pursuant to a chapter 11 plan, in each case, subject to certain terms and conditions under the Chrome Purchase Agreement.

 

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2.

Sale Objections, Sale Hearing, and Post-Sale Hearing Litigation

In advance of the Sale Hearing, state Attorneys General from over 30 states and the District of Columbia objected to the proposed sale. Certain objecting states argued that, as originally constructed, the Regeneron APA, and the asset sales contemplated under the Chrome Purchase Agreement violated various state statutes governing the transfer of genetic data unless the sales were conditioned on the Debtors first obtaining new, opt-in consents from each of their more than 13 million customers. Certain objecting states also claimed that the original implementation methodology (i.e., an asset sale) violated certain transfer restrictions under various states’ privacy laws but acknowledged that a “change in ownership” of customers’ genetic data could be legally possible without requiring affirmative opt-in consent if structured as a purchase of the Debtors’ stock.

On June 9, 2025, certain states also initiated adversary proceedings in the Bankruptcy Court seeking a determination that consumers have property interests in their genetic data that prevent the Debtors from transferring such genetic data without their consent.⁷³

On June 14, 2025, the Debtors filed the Notice of (I) Adjournment of Sale Hearing and (II) Election of NewCo Drop Down and NewCo Equity Transfer Pursuant to TTAM Asset Purchase Agreement [Docket No. 746], noticing the Debtors’ election to structure the sale to TTAM through an equity sale. Specifically, pursuant to this structure, the assets that TTAM agreed to acquire and the liabilities that TTAM agreed to assume pursuant to the Chrome Purchase Agreement would be transferred to a newly formed and wholly-owned, non-debtor subsidiary of the Company (“NewCo”), in exchange for a note in the amount of approximately $302.5 million. The Company would then sell 100% of the equity interest in NewCo to TTAM in exchange for approximately $302.5 million.

On June 18, 2025, Global BioData Trust (“BioData Trust” or “CAVEAT”)⁷⁴ filed the Motion to File Amici Curiae Brief in Support of Establishing the Global BioData Trust [Docket No. 807] (the “Amici Motion”), arguing that the Bankruptcy Court recognize the Company’s genetic data base as “quasi-property” held in trust. The Bankruptcy Court treated the Amici Motion as an objection to the sale.

73	See The States’ Complaint for Declaratory Judgment [Docket No. 686]; The State of Texas’s Complaint for Declaratory Judgment [Docket No. 688].

74

BioData Trust is composed of amici curiae who include lawyers, physicians, bioethicists, and other professionals who have researched and written about the operation of genetic databases and the protection of human genetic information. BioData Trust subsequently referred to itself as the Center for Applied Values and Ethics in Advanced Technologies (“CAVEAT”).

 

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On June 18, 2025, and June 20, 2025, the Bankruptcy Court held the Sale Hearing. During the Sale Hearing, the Debtors reached resolutions with all but five of the objecting states, with only the objections of California, Kentucky, Tennessee, Texas, and Utah outstanding on the final day of the Sale Hearing. On June 27, 2025, the Bankruptcy Court overruled the remaining objecting states’ and BioData Trust’s objections,⁷⁵ approved the Chrome Sale Transaction, entered the Sale Order, and issued the Memorandum Opinion [Docket No. 908] (the “Opinion”). In doing so, the Bankruptcy Court granted in part the Debtors’ request to waive the 14-day stay of the Sale Order under Bankruptcy Rules 6004(h) and 6006(d) by reducing such period from 14 to 10 days.

On July 3, 2025, the state of California and CAVEAT appealed the Bankruptcy Court’s Sale Order to the United States District Court for the Eastern District of Missouri (the “District Court”) and subsequently requested that the Bankruptcy Court stay the Sale Order pending the appeals.⁷⁶ On July 7, 2025, the Bankruptcy Court denied California’s and CAVEAT’s motions for a stay pending appeal.⁷⁷ Later that day, California and CAVEAT sought a stay pending appeal at the District Court⁷⁸ and the District Court on July 7, 2025 granted an administrative stay pending its decision on the stay requests following a hearing scheduled for July 10, 2025.⁷⁹ On July 10, 2025, the District Court held a hearing and issued an order denying the stay requests following a hearing.⁸⁰ While the District Court denied the stay requests, it allowed the administrative stay to remain in effect until 11:59 p.m., Central Time, on July 11, 2025.

On July 10 and 11, 2025, respectively, California and CAVEAT appealed the District Court’s order denying the stay to the United States Court of Appeals for the Eight Circuit (the “Court of Appeals”).⁸¹ On July 11, 2025, California and CAVEAT also sought stays of the Sale Order in the Court of Appeals.⁸² On July 11, 2025, the Court of Appeals denied the renewed stay requests and the administrative stay imposed by the District Court expired.⁸³

75	In addition to the Sale Order, the Bankruptcy Court also entered the Order Regarding Filings by Amici Curiae [Docket No. 902] overruling BioData Trust’s objection.

76

See Notice of Appeal and Statement of Election [Docket No. 932]; Notice of Appeal and Statement of Election [Docket No. 934]; Notice of Appeal and State of Election [Docket No. 936]; Emergency Motion for Stay Pending Appeal of Order Approving Sale of Debtors’ Assets and Related Order and Sale Transaction [Docket No. 939]; People of the State of California’s Motion for a Stay Pending Appeal [Docket No. 945].

77	See Order on California’s Motion for Stay Pending Appeal [Docket No. 959]; Order on Motion for Stay Pending Appeal [Docket No. 961].

78	See The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 8] (E.D. Mo. July 7, 2025); CAVEAT v. 23andMe Holding Co., No. 4:25-cv-01002-MTS [Docket No. 7] (E.D. Mo. July 8, 2025).

79	See The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 10] (E.D. Mo. July 7, 2025); The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 24] (E.D. Mo. July 9, 2025).

80	See The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 49] (E.D. Mo. July 10, 2025).

81	See The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 55] (E.D. Mo. July 10, 2025); See The People of the State of California v. 23andMe Holding Co., No. 4:25-cv-00999-MTS [Docket No. 60] (E.D. Mo. July 11, 2025).

82	See The People of the State of California v. 23andMe Holding Co., No. 25-2361 (8th Cir. July 11, 2025); See The People of the State of California v. 23andMe Holding Co., No. 25-2370 (8th Cir. July 11, 2025).

83	See The People of the State of California v. 23andMe Holding Co., No. 25-2361 (8th Cir. July 11, 2025).

 

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On July 14, 2025, the Debtors and TTAM consummated the Chrome Sale Transaction pursuant to the Sale Order and the Debtors filed the Notice of Sale Closing Under TTAM Asset Purchase Agreement [Docket No. 994]. On August 11, 2025, California submitted a stipulated dismissal of their appeals of the District Court’s order denying the stays to the Court of Appeals.⁸⁴ As of the date of the filing of this Disclosure Statement, (a) California’s and CAVEAT’s appeals of the Sale Order to the District Court and (b) CAVEAT’s appeal of the District Court’s order denying the stay to the Court of Appeals remain pending. California and CAVEAT must file their brief on appeal in the District Court by October 6, 2025. California and CAVEAT have until October 20, 2025 to file their reply.

 

N.	Lemonaid Sale Transaction

As described above, the Debtors expect to effectuate the Lemonaid Sale Transaction, whereby the Lemonaid Purchaser shall purchase all of the Lemonaid Interests, through the Plan.

Through the marketing process described above, the Debtors and their advisors marketed Lemonaid as part of a sale transaction for the whole Company. As described herein, the Debtors received multiple bids as part of this comprehensive process and ultimately selected TTAM’s $305 million bid as the winning bid. Under the TTAM APA, TTAM is obligated to serve as the sponsor of a chapter 11 plan to acquire the reorganized equity interests in Lemonaid for an aggregate purchase price of $2.5 million. TTAM’s obligation to purchase the Lemonaid Interests under the Plan is subject to higher or otherwise better offers and the Debtors are authorized to conduct a sale and marketing process for Lemonaid.

In accordance with this authorization following the consummation of the Chrome Sale Transaction, the Debtors and their advisors engaged with several parties who expressed an interest in acquiring Lemonaid on a standalone basis. The Debtors will disclose the Lemonaid Purchase Agreement (or a summary thereof) disclosing the material terms of the Lemonaid Sale Transaction and the Lemonaid Purchaser as an exhibit to the Plan Supplement.

The Debtors anticipate that regulatory filings and subsequent approvals related to the transfer of pharmacy licenses may be required to consummate the Lemonaid Sale Transaction, prior to and after any change of ownership or control resulting from a sale or their ownership interests to continue their operations.

 

O.	Settlement Agreements

 

1.

U.S. Data Breach Class Settlement Agreement and Canadian Data Breach Class Settlement Agreement

As described above, during the Chapter 11 Cases, the Debtors reached agreements with (a) settlement class representatives in the Cyber Class Action on behalf of U.S. persons whose personal information was impacted by the 2023 Cyber Security Incident (but excluding any such U.S. persons who elected to arbitrate their claims arising from the 2023 Cyber Security Incident prior to the Petition Date) and (b) named plaintiffs in the Canadian Class Actions on behalf of Canadian persons whose personal information was impacted by the 2023 Cyber Security Incident, in each case, to resolve issues related to, among other thing, authorization for the filing of class proofs of claim under rule 7023 of the Bankruptcy Rules and the treatment of such claims under the Plan.

84	See The People of the State of California v. 23andMe Holding Co., No. 25-2361 (8th Cir. August 11, 2025).

 

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On August 4, 2025, the Debtors executed the U.S. Data Breach Class Settlement Agreement, which, among other things, (a) allows U.S. Data Breach Class Counsel to file one class proof of claim on behalf of the U.S. Data Breach Settlement Class, (b) provides a minimum Allowed amount of $30 million on account of such U.S. Data Breach Class Proof of Claim; and (c) caps the aggregate cash distribution to be made on account of such U.S. Data Breach Class Proof of Claim to $50 million in aggregate. Additionally, on August 13, 2025, the Debtors executed the Canadian Data Breach Class Settlement Agreement, which, among other things, (a) allows Canadian Data Breach Class Counsel to file one class proof of claim on behalf of the Canadian Data Breach Settlement Class and (b) caps the aggregate cash distribution to be made on account of such Canadian Data Breach Class Proof of Claim to $3.99 million. The Debtors will seek (a) preliminary approval of the U.S. Data Breach Class Settlement and the Canadian Data Breach Class Settlement by separate motions under Bankruptcy Rules 9019 and 7023, likely to be heard in conjunction with the Disclosure Statement Motion; and (b) final approval of the U.S. Data Breach Class Settlement in connection with Confirmation of the Plan.

The U.S. Data Breach Class Settlement Agreement and the Canadian Data Breach Class Settlement Agreement contemplate that members of the U.S. Data Breach Settlement Class and the Canadian Data Breach Settlement Class (excluding any member who timely and validly opts out of the applicable settlement class) will receive distributions and/or other benefits as contemplated in the class benefits plan for the U.S. Data Breach Settlement Class (the “U.S. Data Breach Class Benefits Plan”) and the class benefits plan for the Canadian Data Breach Settlement Class (the “Canadian Data Breach Class Benefits Plan”) respectively. A summary of the U.S. Data Breach Class Benefits Plan and the Canadian Data Breach Class Benefits Plan are attached as Exhibits D and E hereto, which were provided by U.S. Data Breach Class Counsel and Canadian Data Breach Class Counsel, respectively.

Any member of a U.S. Data Breach Settlement Class and Canadian Data Breach Settlement Class who individually and timely filed a valid Proof of Claim on account of their 2023 Cyber Security Incident Claim (a “U.S. Eligible Class Member” and “Canadian Eligible Class Member,” and collectively, the “Eligible Class Members”) shall be deemed a Holder of a Class 3 U.S. Data Breach Class Settlement Claim and a Holder of a Class 5 Canadian Data Breach Class Settlement Claim, respectively, unless such Holder timely and validly elects to opt out of the applicable settlement class. Any such member who opts out of the applicable settlement class will be deemed a Holder of a Class 7 Chrome Other General Unsecured Claim for all purposes, including voting, Confirmation, and distributions, and will be subject to Omnibus Claims Objection Procedures and Claim Reconciliation Procedures in accordance with the Plan.

For the avoidance of doubt, any Eligible Class Member who timely and validly elects to opt out of the applicable settlement class shall not be entitled to the distributions and/or other benefits as contemplated in the U.S. Data Breach Class Benefits Plan or the Canadian Data Breach Class Benefits Plan, respectively.

 

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The Ballots for U.S. Eligible Class Members and Canadian Eligible Class Members include a mechanism and instructions for any Eligible Class Member to opt-out of the applicable settlement class and class benefits plan.

 

2.

Arbitration Settlement Agreement

As described above, on March 21, 2025 (prior to the Petition Date), the Company executed a settlement agreement with arbitration claimants represented by three independent law firms—Labaton Keller Sucharow LLP, Levi & Korsinsky LLP and Milberg Coleman Bryson Phillips Grossman PLLC (the “Settling Arbitration Claimants”). The Debtors will file a motion to assume the U.S. Data Breach Arbitration Settlement Agreement, and seek to have such motion heard contemporaneously with the hearing to consider approval of this Disclosure Statement.

If the Bankruptcy Court enters an order approving the Debtors’ assumption of the U.S. Data Breach Arbitration Settlement Agreement on or before the Effective Date, U.S. Data Breach Arbitration Settlement Claimants (i.e., Settling Arbitration Claimants who participate in accordance with the terms of the U.S. Data Breach Arbitration Settlement Agreement) shall receive distributions in accordance with the terms of the U.S. Data Breach Arbitration Settlement Agreement.

If the Bankruptcy Court does not enter an order approving the Debtors’ assumption of the U.S. Data Breach Arbitration Settlement Agreement on or before the Effective Date, all U.S. Data Breach Arbitration Settlement Claimants shall receive the same treatment provided to Chrome Other General Unsecured Claims.

Any Settling Arbitration Claimant that does not participate in the U.S. Data Breach Arbitration Settlement in accordance with the terms of the U.S. Data Breach Arbitration Settlement Agreement shall receive the same treatment provided to Chrome Other General Unsecured Claims.

The Debtors, in consultation with the Creditors’ Committee and the Official Equity Committee, remain engaged in settlement discussions with representatives of the U.S. Arbitration Claimants and other certain litigants, but there is no assurance that any such settlement will be reached.

 

P.	The Independent Investigation

On March 21, 2025, the Board adopted resolutions appointing Thomas Walper to the Board and designating him as an additional member of the Special Committee, in each case, subject to the commencement of the Chapter 11 Cases. On March 23, 2025, the Special Committee granted Mr. Walper the sole power and authority of the Special Committee to conduct an independent investigation of the Company’s governance, financial transactions, and business operations to assess the potential viability of legal claims that may be brought against parties who may be considered insiders of the Company (the “Investigation”). The Special Committee also authorized Mr. Walper to retain legal and other professionals as he deemed necessary to assist him in conducting the Investigation.

 

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From the Petition Date to mid-May 2025, Mr. Walper, with the assistance of Goodwin and Paul, Weiss, oversaw and directed the Investigation. The Investigation consisted of document review, multiple interviews with members of the Company’s management team and current and former Board and Special Committee members, including Ms. Wojcicki, and several conferences between Goodwin, Paul, Weiss, and Mr. Walper. The Investigation also included coordination with the Creditors’ Committee and consultation with the Debtors’ other third-party advisors.

The Investigation permitted Mr. Walper to, among other things:

 

•

review and understand the factual and legal bases for potential claims against the Debtors’ current and former insiders;

 

•

assess the strengths and weaknesses of such claims, including potential damage awards;

 

•

evaluate any releases or purchases of claims against insiders that may have been sought by potential buyers of the Company’s assets; and

 

•

evaluate potential releases, settlement, retention, or prosecution of claims or causes of action in the Plan.

While the Investigation was ongoing, the Debtors, at the direction of the Special Committee, negotiated with bidders to ensure that the Chrome Purchase Agreement did not release or transfer estate causes of action or claims. Particularly, as a result of the Special Committee’s negotiations, TTAM agreed to amend its initial bid for the Company’s assets to omit the requirement that the bid include the purchase of estate causes of action, including those against Ms. Wojcicki and former directors and officers. This effort advanced a full and fair auction process to maximize the value of the Debtors’ assets while preserving these causes of action for potential prosecution by the estate.

Based on the results of the Investigation, the Debtors believe the Plan, and the transactions, settlements, and compromises embodied therein, are the best alternative available to the estates. The releases, exculpation, and injunction are an integral component of the Plan, which is expected to pay all creditors in full and may provide meaningful distributions to holders of the Company’s equity interests.

 

Q.	Changed Entity Names

In connection with the Chrome Sale Transaction and as contemplated by the TTAM APA and the Sale Order, certain of the Debtors with names containing the “23andMe” trademark have changed their names to cease use of such trademarks as follows: (a) 23andMe Holding Co. has changed its name to Chrome Holding Co., (b) 23andMe, Inc. has changed its name to ChromeCo, Inc., and (c) 23andMe Pharmacy Holdings, Inc. has changed its name to Chrome Pharmacy Holdings, Inc. These name changes are reflected herein. The Debtors have requested that the Court amend the consolidated caption in these Chapter 11 Cases to reflect the foregoing name changes of the Debtors.⁸⁵

85	See Debtors’ Motion for Entry of an Order (I) Amending the Joint Administration Order to Modify the Case Caption to Reflect the Changes of Certain Debtors’ Names and (II) Granting Related Relief [Docket No. 1112].

 

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R.	Confirmation Hearing

The Debtors propose that the Confirmation Hearing be set, subject to the Bankruptcy Court’s availability, on November 13, 2025 and that the Bankruptcy Court establish October 31, 2025 at 4:00 p.m. (prevailing Central Time) as the time by which any objections to confirmation of the Plan must be filed by.

ARTICLE V.

SUMMARY OF PLAN

 

THE FOLLOWING SUMMARIZES CERTAIN OF THE SIGNIFICANT ELEMENTS OF THE PLAN. THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION SET FORTH IN THE PLAN. IN THE CASE OF ANY INCONSISTENCY BETWEEN THIS DISCLOSURE STATEMENT AND THE PLAN, THE PLAN SHALL GOVERN IN ALL RESPECTS.

 

A.	Administrative, Priority Claims, and Statutory Fees

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, DIP Claims, Professional Fee Claims, and Priority Tax Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article III of the Plan.

 

1.

Administrative Claims

Unless otherwise agreed to by the Holder of an Allowed Administrative Claim and the Debtors or the Plan Administrator, as applicable, or otherwise provided for under the Plan, to the extent an Allowed Administrative Claim has not already been paid in full or otherwise satisfied during the Chapter 11 Cases, each Holder of an Allowed Administrative Claim (other than Holders of Professional Fee Claims and Claims for fees and expenses pursuant to section 1930 of chapter 123 of the Judicial Code) shall be paid in full in Cash an amount of Cash equal to the amount of the unpaid portion of such Allowed Administrative Claim in full and final satisfaction, compromise, settlement, release, and discharge of such Administrative Claim in accordance with the following: (1) if such Administrative Claim is Allowed on or prior to the Effective Date, on the Effective Date, or as soon as reasonably practicable thereafter (or, if not then due, when such Allowed Administrative Claim is due or as soon as reasonably practicable thereafter); (2) if such Administrative Claim is not Allowed on or prior to the Effective Date, the first Business Day after the date that is 30 days after the date such Administrative Claim is Allowed, or as soon as reasonably practicable thereafter; (3) if such Allowed Administrative Claim is based on liabilities incurred by the Debtors in the ordinary course of their business, in accordance with the terms and conditions of the particular transaction or course of business giving rise to such Allowed Administrative Claim; (4) at such time and upon such terms as may be agreed upon by the Holder of such Allowed Administrative Claim and the Debtors or the Plan Administrator, as applicable; or (5) at such time and upon such terms as set forth in a Final Order of the Bankruptcy Court.

 

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Except for Claims subject to 11 U.S.C. § 503(b)(9) (for which the July 14, 2025 General Claims Bar Date applies), Claims for fees and expenses pursuant to section 1930 of chapter 123 of the Judicial Code, Professional Fee Claims, Wind-Down Expenses, and Cure Claims, and unless previously Filed or otherwise provided in Article II.A of the Plan, requests for payment of Administrative Claims must be submitted pursuant to the procedures specified in the Confirmation Order and the notice of entry of the Confirmation Order no later than the Administrative Claim Bar Date. Objections to such requests must be Filed and served on the Plan Administrator, the Representatives, and the requesting party by the Claims Objection Deadline. After notice and a hearing in accordance with the procedures established by the Bankruptcy Code, the Bankruptcy Rules, and prior Bankruptcy Court Orders, the Allowed amounts, if any, of Administrative Claims shall be determined by, and satisfied in accordance with an order that becomes a Final Order of the Bankruptcy Court.

HOLDERS OF ADMINISTRATIVE CLAIMS THAT ARE REQUIRED TO SUBMIT A REQUEST FOR PAYMENT OF SUCH ADMINISTRATIVE CLAIMS THAT DO NOT SUBMIT SUCH A REQUEST BY THE ADMINISTRATIVE CLAIM BAR DATE SHALL BE FOREVER BARRED, ESTOPPED, AND ENJOINED FROM ASSERTING SUCH ADMINISTRATIVE CLAIMS AGAINST THE DEBTORS, THE WIND-DOWN DEBTORS, THE PLAN ADMINISTRATION TRUST, THE PLAN ADMINISTRATOR, THE REPRESENTATIVES, OR THE PROPERTY OF ANY OF THE FOREGOING, AND SUCH ADMINISTRATIVE CLAIMS SHALL BE DEEMED DISCHARGED AS OF THE EFFECTIVE DATE WITHOUT THE NEED FOR ANY OBJECTION FROM THE DEBTORS, THE WIND-DOWN DEBTORS, THE PLAN ADMINISTRATION TRUST, THE PLAN ADMINISTRATOR, THE REPRESENTATIVES, OR ANY NOTICE TO OR ACTION, ORDER, OR APPROVAL OF THE BANKRUPTCY COURT OR ANY OTHER ENTITY.

 

2.

Professional Fee Claims

 

a.

Professional Fee Escrow

As soon as reasonably practicable after the Confirmation Date and prior to the occurrence of the Effective Date, the Debtors shall establish the Professional Fee Escrow. On the Effective Date, the Debtors shall fund the Professional Fee Escrow with Cash equal to the Professional Fee Escrow Amount, which funds shall come from the Debtors’ general funds available as of the Effective Date. The Professional Fee Escrow shall be maintained in trust for the Professionals and for no other Entities until all Allowed Professional Fee Claims have been irrevocably paid in full to the Professionals pursuant to one or more Final Orders of the Bankruptcy Court. No Liens, Claims, or interests shall encumber the Professional Fee Escrow or Cash held on account of the Professional Fee Escrow in any way. Such funds shall not be considered property of the Estates, the Debtors, the Wind-Down Debtors, or the Plan Administration Trust; provided, however, that any excess amounts remaining once all Allowed Professional Fee Claims have been irrevocably paid in full, shall be paid to the Plan Administration Trust for distribution in accordance with the Waterfall, without any further action or Order of the Bankruptcy Court.

 

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b.

Final Fee Applications and Payment of Professional Fee Claims

All final requests for payment of Professional Fee Claims incurred during the period from the Petition Date through the Confirmation Date shall be Filed no later than 45 calendar days after the Effective Date. After notice (and opportunity for objections) and a hearing, if necessary, in accordance with the procedures established by the Bankruptcy Code, Bankruptcy Rules, and prior Bankruptcy Court Orders, the Allowed amounts of such Professional Fee Claims shall be determined by the Bankruptcy Court. The Plan Administrator shall pay Professional Fee Claims in Cash in the amount the Bankruptcy Court allows from the Professional Fee Escrow Account, after taking into account any prior payments to such Professionals, as soon as reasonably practicable following the date when such Professional Fee Claims are Allowed by entry of an Order of the Bankruptcy Court.

To the extent that funds held in the Professional Fee Escrow are unable to satisfy the amount of Allowed Professional Fee Claims owing to the Professionals, such Professionals shall have an Allowed Administrative Claim for any such deficiency, which payment shall be funded from the Plan Administration Trust on the Effective Date or as soon as reasonably practicable in accordance with the Waterfall Recovery. After all Allowed Professional Fee Claims have been paid in full, the escrow agent shall promptly return any excess amounts held in the Professional Fee Escrow, if any, to the Plan Administrator without any further action or Order of the Bankruptcy Court.

Notwithstanding anything to the contrary in the Plan, the Professional Fee Claims of the Official Equity Committee shall be subject to the terms of the Official Equity Committee Stipulation and Order, including the OEC Fee Cap.

 

c.

Estimation of Fees and Expenses

To facilitate payment of unbilled fees and expenses incurred through the Confirmation Date, the Professionals shall reasonably estimate their Professional Fee Claims through and including the Confirmation Date, and shall deliver such estimate to the Debtors no later than two days prior to the Effective Date; provided, however, that such estimate shall not be considered a representation with respect to the fees and expenses of such Professional, and Professionals are not bound to any extent by the estimates. If any of the Professionals fails to provide an estimate or does not provide a timely estimate, the Debtors may estimate the unbilled fees and expenses of such Professional. The total amount so estimated shall be utilized by the Debtors to determine the Professional Fee Escrow Amount.

 

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d.

Post-Confirmation Date Fees and Expenses

Except as otherwise specifically provided in the Plan, from and after the Confirmation Date, the Plan Administrator shall, in the ordinary course of business and without any further notice to or action, order, or approval of the Bankruptcy Court, pay in Cash the reasonable and documented legal, professional, or other fees and expenses incurred by the Professionals to the Debtors, the Committees and the Plan Administrator. Upon the Confirmation Date, any requirement that such Professionals comply with sections 327–331, 363, and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and the Plan Administrator may employ and pay any Professional in the ordinary course of business without any further notice to or action, order, or approval of the Bankruptcy Court.

 

3.

Priority Tax Claims

Except to the extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for, each Allowed Priority Tax Claim, each Holder of such Allowed Priority Tax Claim shall receive treatment in a manner consistent with section 1129(a)(9)(C) of the Bankruptcy Code. To the extent any Allowed Priority Tax Claim is not due and owing on the Effective Date, such Claim shall be paid in accordance with the terms of any agreement between the Debtors and the Holder of such Claim, or as may be due and payable under applicable non-bankruptcy law, or in the ordinary course of business by the Plan Administrator.

 

B.	Classification and Treatment of Claims and Interests

 

1.

Classification in General

Except for the Claims addressed in Article II of the Plan, all Claims and Interests are classified in the Classes set forth below for all purposes, including voting, Confirmation, and distributions pursuant to the Plan and in accordance with sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or an Interest is classified in a particular Class only to the extent that such Claim or Interest qualifies within the description of that Class and is classified in other Classes to the extent that any portion of such Claim or Interest qualifies within the description of such other Classes. A Claim or an Interest is also classified in a particular Class for the purpose of receiving distributions pursuant to the Plan, but only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.

 

2.

Formation of Debtor Groups for Convenience Only

Subject to Article III.F of the Plan, the Plan groups the Debtors together solely for the purpose of describing treatment under the Plan, Confirmation of the Plan, and making Plan distributions in respect of Claims against and Interests in the Debtors under the Plan. Such groupings shall not affect any Debtor’s status as a separate legal entity, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger or consolidation of any legal entities, or cause the transfer of any assets. Except as otherwise provided by or permitted under the Plan, all Debtors shall continue to exist as separate legal entities. The Plan is not premised on, and does not provide for, the substantive consolidation of the Debtors with respect to the Classes of Claims or Interests set forth in the Plan, or otherwise.

 

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3.

Summary of Classification

The classification of Claims against and Interests in each Debtor (as applicable) pursuant to the Plan is as set forth below. All of the potential Classes for the Debtors are set forth herein and in the Plan. Certain of the Debtors may not have Holders of Claims or Interests in a particular Class or Classes, and such Classes shall be treated as set forth in Article III.G of the Plan.

The following chart summarizes the classification of Claims and Interests pursuant to the Plan:⁸⁶

 

Class		Claims and Interests		Status		Voting Rights
1		Other Secured Claims		Unimpaired		Not Entitled to Vote (Presumed to Accept)
2		Other Priority Claims		Unimpaired		Not Entitled to Vote (Presumed to Accept)
3		U.S. Data Breach Class Settlement Claims		Impaired		Entitled to Vote
4		U.S. Data Breach Arbitration Settlement Group Claims		Impaired		Entitled to Vote
5		Canadian Data Breach Class Settlement Claims		Impaired		Entitled to Vote
6		Chrome Commercial Claims		Impaired		Entitled to Vote
7		Chrome Other General Unsecured Claims		Impaired		Entitled to Vote
8		Lemonaid Commercial Claims		Impaired		Entitled to Vote
9		Lemonaid Other General Unsecured Claims		Impaired		Entitled to Vote
10		Intercompany Claims		Unimpaired / Impaired		Not Entitled to Vote (Presumed to Accept or Deemed to Reject)
11		Intercompany Interests		Unimpaired / Impaired		Not Entitled to Vote (Presumed to Accept or Deemed to Reject)
12		HoldCo Interests		Impaired		Entitled to Vote

 

86	The information in the table is provided in summary form and is qualified in its entirety by Article III.D of the Plan.

 

43

4.

Treatment of Claims and Interests

Subject to Article IV of the Plan, each Holder of an Allowed Claim or Interest, as applicable, shall receive under the Plan the treatment described below in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for such Holder’s Allowed Claim or Interest, except to the extent less favorable treatment is agreed to by the Debtors or the Plan Administrator, as applicable, and the Holder of such Allowed Claim or Interest. Unless otherwise indicated, the Holder of an Allowed Claim or Interest shall receive such treatment on the later of the Effective Date and the date such Holder’s Claim or Interest becomes an Allowed Claim or Interest or as soon as reasonably practicable thereafter.

 

a.

Class 1 – Other Secured Claims

 

(i)

Classification: Class 1 consists of all Other Secured Claims.

 

(ii)

Treatment: Except to the extent that a Holder of an Allowed Other Secured Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Other Secured Claim, each Holder of an Allowed Other Secured Claim shall receive, at the option of the Debtors or the Plan Administrator, as applicable:

 

i.

payment in full in Cash of such Holder’s Allowed Other Secured Claim;

 

ii.

delivery of the collateral securing such Holder’s Allowed Other Secured Claim; or

 

iii.

such other treatment rendering such Holder’s Allowed Other Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code.

 

(iii)

Voting: Class 1 is Unimpaired under the Plan. Each Holder of an Allowed Other Secured Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each such Holder is not entitled to vote to accept or reject the Plan.

 

b.

Class 2 – Other Priority Claims

 

(i)

Classification: Class 2 consists of all Other Priority Claims.

 

44

(ii)

Treatment: Except to the extent that a Holder of an Allowed Other Priority Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Other Priority Claim, each Holder of an Allowed Other Priority Claim shall receive payment in full in Cash or such other treatment in a manner consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code on the following terms: (i) if such Allowed Other Priority Claim is Allowed as of the Effective Date, the Effective Date or as soon thereafter as reasonably practicable (or, if payment is not then due, the date such Allowed Other Priority Claim becomes due and payable, or as soon thereafter as reasonably practicable); and (ii) if such Allowed Other Priority Claim is not Allowed as of the Effective Date, the date such Other Priority Claim is Allowed or as soon thereafter as reasonably practicable. Allowed Other Priority Claims that arise in the ordinary course of the Debtors’ business and which are not due and payable on or before the Effective Date shall be paid in the ordinary course of business in accordance with the terms thereof.

 

(iii)

Voting: Class 2 is Unimpaired under the Plan. Each Holder of an Allowed Other Priority Claim will be conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each such Holder is not entitled to vote to accept or reject the Plan.

 

c.

Class 3 – U.S. Data Breach Class Settlement Claims

 

(i)

Classification: Class 3 consists of all U.S. Data Breach Class Settlement Claims.

 

(ii)

Treatment: Each Holder of a U.S. Data Breach Class Settlement Claim, shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, their portion of the U.S. Data Breach Class Settlement Fund as set forth in the U.S. Data Breach Class Settlement Fund Agreement.

 

(iii)

Voting: Class 3 is Impaired under the Plan. Each U.S. Eligible Class Member will receive a U.S. Data Breach Settlement Class Ballot. Each U.S. Eligible Class Member that does not validly and timely opt out of the U.S. Data Breach Settlement Class will be treated in Class 3 and will be entitled to vote to accept or reject the Plan as a member of Class 3. Any U.S. Eligible Class Member that validly and timely opts out of the U.S. Data Breach Settlement Class will be treated in Class 7 and will be entitled to accept or reject the Plan as a member of Class 7.

 

d.

Class 4 – U.S. Data Breach Arbitration Settlement Group Claims

 

(i)

Classification: Class 4 consists of all Allowed U.S. Data Breach Arbitration Settlement Group Claims.

 

45

(ii)

Treatment: Subject to Article IV.A.2 of the Plan, each Holder of an Allowed U.S. Data Breach Arbitration Settlement Group Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim:

 

i.

if the U.S. Data Breach Arbitration Settlement Agreement Payment Condition is satisfied, their portion of the U.S. Data Breach Arbitration Settlement Amount to be distributed in accordance with the U.S. Data Breach Arbitration Settlement Agreement; provided that any Holder of a U.S. Data Breach Arbitration Non-Settling Claim shall receive the same treatment as Holders of Allowed Chrome Other General Unsecured Claims; or

 

ii.

if the U.S. Data Breach Arbitration Settlement Agreement Payment Condition is not satisfied, all holders of U.S. Data Breach Arbitration Settlement Group Claims shall receive the same treatment as Holders of Allowed Chrome Other General Unsecured Claims.

 

(iii)

Voting: Class 4 is Impaired under the Plan. Each Holder of an Allowed U.S. Data Breach Arbitration Settlement Group Claim will be entitled to vote to accept or reject the Plan.

 

e.

Class 5 – Canadian Data Breach Class Settlement Claims

 

(i)

Classification: Class 5 consists of all Canadian Data Breach Class Settlement Claims.

 

(ii)

Treatment: Each Holder of a Canadian Data Breach Settlement Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, their portion of the Canadian Data Breach Class Settlement Fund as set forth in the Canadian Data Breach Settlement Fund Agreement.

 

(iii)

Voting: Each Canadian Eligible Class Member will receive a Canadian Data Breach Settlement Class Ballot. Each Canadian Eligible Class Member that does not validly and timely opt out of the Canadian Data Breach Settlement Class will be treated in Class 5 and will be entitled to vote to accept or reject the Plan as a member of Class 5. Any Canadian Eligible Class Member that validly and timely opts out of the Canadian Data Breach Settlement Class will be treated in Class 7 and will be entitled to accept or reject the Plan as a member of Class 7.

 

46

f.

Class 6 – Chrome Commercial Claims

 

(i)

Classification: Class 6 consists of all Allowed Chrome Commercial Claims.

 

(ii)

Treatment: Each Holder of an Allowed Chrome Commercial Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of Class A-1 Plan Administration Trust Interests.

 

(iii)

Voting: Class 6 is Impaired under the Plan. Each Holder of an Allowed Chrome Commercial Claim will be entitled to vote to accept or reject the Plan.

 

g.

Class 7 – Chrome Other General Unsecured Claims

 

(i)

Classification: Class 7 consists of all Allowed Chrome Other General Unsecured Claims.

 

(ii)

Treatment: Each Holder of an Allowed Chrome Other General Unsecured Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-2 Plan Administration Trust Interests.

 

(iii)

Voting: Class 7 is Impaired under the Plan. Each Holder of an Allowed Chrome Other General Unsecured Claim will be entitled to vote to accept or reject the Plan.

 

h.

Class 8 – Lemonaid Commercial Claims

 

(i)

Classification: Class 8 consists of all Allowed Lemonaid Commercial Claims.

 

(ii)

Treatment: Each Holder of an Allowed Lemonaid Commercial Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-3 Plan Administration Trust Interests.

 

(iii)

Voting: Class 8 is Impaired under the Plan. Each Holder of an Allowed Lemonaid Commercial Claim will be entitled to vote to accept or reject the Plan.

 

47

i.

Class 9 – Lemonaid Other General Unsecured Claims87

 

(i)

Classification: Class 9 consists of all Allowed Lemonaid Other General Unsecured Claims.

 

(ii)

Treatment: Each Holder of an Allowed Lemonaid Other General Unsecured Claim shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Claim, a Pro Rata portion of the Class A-4 Plan Administration Trust Interests.

 

(iii)

Voting: Class 9 is Impaired under the Plan. Each Holder of an Allowed Lemonaid Other General Unsecured Claim will be entitled to vote to accept or reject the Plan.

 

j.

Class 10 – Intercompany Claims

 

(i)

Classification: Class 10 consists of all Intercompany Claims.

 

(ii)

Treatment: On the Effective Date, Intercompany Claims may be Reinstated as of the Effective Date solely for the purpose of facilitating the Wind-Down Transactions or, at the Debtors’ option, be cancelled, released, and extinguished without any distribution on account of such Claims.

 

(iii)

Voting: Class 10 is deemed Impaired under the Plan and each such Holder of an Intercompany Claim is deemed to accept or reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, each such Holder is not entitled to vote to accept or reject the Plan.

 

k.

Class 11 – Intercompany Interests

 

(i)

Classification: Class 11 consists of all Intercompany Interests.

 

(ii)

Treatment: On the Effective Date, all Intercompany Interests may be Reinstated as of the Effective Date solely for the purpose of facilitating the Wind-Down Transactions or, at the Debtors’ option, may be cancelled, released, and extinguished, without any distribution on account of such Interest.

87

Lemonaid Other General Unsecured Claims includes Claims asserted against the Debtors arising out of or related to the alleged conduct of Lemonaid Health, Inc. and LMND Medical Group, Inc., A Professional Corporation, as alleged and set forth in the action titled A.J., et al. v. Lemonaid Health Inc. and LMND Medical Group, Inc. d/b/a/ Lemonaid Health, No. 3:23-cv-03288 pending before the Honorable Rita F. Lin in the Northern District of California (the “Pixel Litigation”). The Debtors have reached an agreement in principle on the terms of a class settlement with named plaintiffs in the Pixel Litigation and the Debtors intend to file a revised version of the Plan incorporating the terms of the class settlement if the Debtors reach a definitive agreement, which settlement will be subject to, among other things, approval pursuant to a separate order of the Bankruptcy Court.

 

48

(iii)

Voting: Class 11 is deemed Impaired under the Plan and each such Holder of an Intercompany Claim is deemed to accept or reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, each such Holder is not entitled to vote to accept or reject the Plan.

 

l.

Class 12 – HoldCo Interests

 

(i)

Classification: Class 12 consists of all HoldCo Interests.

 

(ii)

Treatment: Each Holder of an Allowed HoldCo Interest shall receive, in full and final satisfaction, compromise, settlement, and release of, and in exchange for its Interest, a portion of the Class B Plan Administration Trust Interests, as set forth in the Plan Administration Trust Agreement.88

 

(iii)

Voting: Class 12 is Impaired under the Plan. Each Holder of an Allowed HoldCo Interest will be entitled to vote to accept or reject the Plan.

 

5.

Confirmation Pursuant to Sections 1129(a)(10) and 1129(b) of the Bankruptcy Code

Section 1129(a)(10) of the Bankruptcy Code shall be satisfied for purposes of Confirmation by acceptance of the Plan by at least one Impaired Class of Claims. The Debtors shall seek Confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code with respect to any rejecting Class of Claims or Interests. The Debtors reserve the right to modify the Plan in accordance with Article X of the Plan to the extent, if any, that Confirmation pursuant to section 1129(b) of the Bankruptcy Code requires modification, including by modifying the treatment applicable to a Class of Claims or Interests to render such Class of Claims or Interests Unimpaired to the extent permitted by the Bankruptcy Code and the Bankruptcy Rules.

 

6.

No Substantive Consolidation

Although the Plan is presented as a joint plan pursuant to Chapter 11 of the Bankruptcy Code for administrative purposes, the Plan does not provide for the substantive consolidation of the Debtors’ Estates, and on the Effective Date, the Debtors’ Estates shall not be deemed to be substantively consolidated for any reason. Except as expressly provided in the Plan, nothing in the Plan, the Confirmation Order or this Disclosure Statement shall constitute or be deemed to constitute a representation that any one or all of the Debtors is subject to or liable for any Claims or Interests against or in any other Debtor. Notwithstanding the foregoing, in no case shall the aggregate value of all property received or retained under the Plan on account of any Allowed Claim exceed the amount of the Allowed Claim.

88	Treatment of HoldCo Interests remains subject to ongoing analysis, discussion and negotiation among the Debtors, the Creditors’ Committee and the Official Equity Committee.

 

49

On the Effective Date, and solely for administrative purposes to facilitate distributions: (1) all Chrome General Unsecured Claims against each of the Chrome Debtors shall be deemed merged and treated as liabilities of the consolidated Chrome Debtors to the extent Allowed; (2) all Lemonaid General Unsecured Claims against each of the Lemonaid Debtors shall be deemed merged and treated as liabilities of the consolidated Lemonaid Debtors to the extent Allowed; and (3) each and every Chrome General Unsecured Claim or Lemonaid General Unsecured Claim filed in any of the Chapter 11 Cases shall be treated as filed against the consolidated Chrome Debtors or the consolidated Lemonaid Debtors, as applicable, and shall be treated as one Chrome General Unsecured Claim or one Lemonaid General Unsecured Claim.

For the avoidance of doubt, for purposes of determining the availability of the right of setoff under section 553 of the Bankruptcy Code, the Debtors shall be treated as separate entities so that, subject to the other provisions of section 553 of the Bankruptcy Code, debts due to any of the Debtors may not be set off against the liabilities of any of the other Debtors. Such administrative consolidation is solely for the purpose of facilitating distributions to holders of Chrome General Unsecured Claims and Lemonaid General Unsecured Claims under the Plan and shall not affect the legal and corporate structures of the Wind-Down Debtors. Moreover, such administrative consolidation shall not affect any subordination provisions set forth in any agreement relating to any Chrome General Unsecured Claim or Lemonaid General Unsecured Claim, as applicable, or the ability of the Plan Administrator or the Representatives to seek to have any Chrome General Unsecured Claim or Lemonaid General Unsecured Claim, as applicable, subordinated in accordance with any contractual rights or equitable principles.

 

7.

Special Provision Governing Unimpaired Claims or Interests

Except as otherwise set forth in the Plan or the Confirmation Order, nothing shall affect the Debtors’, the Wind-Down Debtors’, the Plan Administrator’s, or the Representatives’ as applicable, rights in respect of any Unimpaired Claims or Interests, including all rights in respect of legal and equitable defenses to or setoffs or recoupment against any such Unimpaired Claims or Interests.

 

8.

Elimination of Vacant Classes

Any Class of Claims or Interests that does not have a Holder of an Allowed Claim or Allowed Interest or a Claim or Interest temporarily Allowed by the Bankruptcy Court as of the date of the commencement of the Confirmation Hearing shall be considered vacant and deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining acceptance or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.

 

9.

Acceptance by Impaired Classes

An Impaired Class of Claims shall have accepted the Plan if, not counting the vote of any Holder designated under section 1126(e) of the Bankruptcy Code or any insider under section 101(31) of the Bankruptcy Code, (a) the Holders of at least two-thirds in amount of the Allowed Claims actually voting in the Class have voted to accept the Plan, and (b) the Holders of more than one-half in number of the Allowed Claims actually voting in the Class have voted to accept the Plan.

 

50

10.

Voting Classes; Presumed Acceptance by Non-Voting Classes

If a Class contains Claims eligible to vote and no Holders of Claims eligible to vote in such Class vote to accept or reject the Plan, the Holders of such Claims in such Class shall be deemed to have accepted the Plan.

 

11.

Controversy Concerning Impairment

If a controversy arises as to whether any Claims or Interests, or any Class of Claims or Interests, are Impaired or properly classified under the Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.

 

12.

Relative Rights and Priorities

Unless otherwise expressly provided in the Plan or the Confirmation Order, the allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of such Claims or Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510 of the Bankruptcy Code, or otherwise, and any other rights impacting relative lien priority and/or priority in right of payment, and any such rights shall be released pursuant to the Plan. Pursuant to section 510 of the Bankruptcy Code, the Debtors, the Wind-Down Debtors, the Plan Administrator and the Representatives, as applicable, reserve the right to reclassify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

 

C.	Means for Implementation of the Plan

 

1.

General Settlement of Claims and Interests89

As discussed in this Disclosure Statement and as otherwise provided in the Plan, pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, to the maximum extent permitted by the Bankruptcy Code, and in consideration for the classification, distributions, releases, and other benefits provided under the Plan, on the Effective Date, the provisions of the Plan shall constitute and be deemed a good-faith compromise and settlement of all Claims, Interests, Causes of Action, and controversies released, settled, compromised, or otherwise resolved pursuant to the Plan, including the U.S. Data Breach Class Settlement, the U.S. Data Breach Arbitration Settlement, the Canadian Data Breach Class Settlement and a settlement amongst the Debtors and the Committees. The Plan shall be deemed a motion, proposed by the

89	Negotiations among the Debtors, the Creditors’ Committee and the Official Equity Committee on the terms of the Plan remain ongoing. For the avoidance of doubt, the Committees have not expressed their support of the Plan as of the date hereof.

 

51

Debtors and joined by the parties to the U.S. Data Breach Settlement, the U.S. Data Breach Arbitration Settlement, the Canadian Data Breach Class Settlement, and the Committees and the entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromise and settlement under section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019 of all such Claims, Interests, and controversies among the parties thereto, as well as a finding by the Bankruptcy Court that such settlement and compromise is fair, equitable, reasonable, and in the best interests of the Debtors, their Estates and Holders of such Claims and Interests. Subject to Article VII of the Plan, all distributions made to Holders of Allowed Claims and Interests in any Class are intended to be and shall be final.

a. U.S. Data Breach Class Settlement

The Debtors will seek approval of the U.S. Data Breach Class Settlement Agreement by separate motion under Bankruptcy Rules 9019 and 7023. The U.S. Data Breach Class Settlement Agreement will set forth the terms of the proposed class settlement, including, among other things, payment of the U.S. Data Breach Class Settlement Amount to the U.S. Data Breach Class Settlement Fund as a compromise and settlement of all U.S. Data Breach Class Settlement Claims; provided that, for the avoidance of doubt, U.S. Data Breach Class Opt-Out Claims shall not be compromised or settled pursuant to the U.S. Data Breach Class Settlement and such U.S. Data Breach Class Opt-Out Claims shall be treated as Chrome Other General Unsecured Claims for all purposes, including voting, Confirmation, and distributions pursuant to the Plan.

b. U.S. Data Breach Arbitration Settlement

The Debtors are seeking to assume the U.S. Data Breach Arbitration Settlement Agreement under section 365 of the Bankruptcy Code. If the U.S. Data Breach Arbitration Settlement Order is not entered on or before the Effective Date, all U.S. Data Breach Arbitration Settlement Group Claims shall be treated as Chrome Other General Unsecured Claims for all purposes, including voting, Confirmation, and distributions pursuant to the Plan.

c. Canadian Data Breach Class Settlement

The Debtors will seek approval of the Canadian Data Breach Class Settlement Agreement by separate motion under Bankruptcy Rules 9019 and 7023. The Canadian Data Breach Class Settlement Agreement will set forth the terms of the proposed class settlement, including, among other things, payment of the Canadian Data Breach Class Settlement Amount to the Canadian Data Breach Class Settlement Fund as a compromise and settlement of all Canadian Data Breach Class Settlement Claims; provided that, for the avoidance of doubt, Canadian Data Breach Class Opt-Out Claims shall not be compromised or settled pursuant to the Canadian Data Breach Class Settlement and such Canadian Data Breach Class Opt-Out Claims shall be treated as Chrome Other General Unsecured Claims for all purposes, including voting, Confirmation, and distributions pursuant to the Plan.

 

52

2.

Sources of Consideration for Plan Distributions

The Debtors shall fund distributions under the Plan with: (a) the proceeds from the Sale Transactions, (b) the Debtors’ Cash on hand, (c) the proceeds of any Retained Causes of Action, and (d) the proceeds of Cyber Insurance Policies, in each case, subject to and in accordance with the Plan (including the Waterfall Recovery) and the Plan Administration Trust Agreement. Each distribution and issuance referred to in Article VII of the Plan shall be governed by the terms and conditions set forth in the Plan applicable to such distribution or issuance and by the terms and conditions of the instruments or other documents evidencing or relating to such distribution or issuance, including the Plan Administration Trust Agreement, which terms and conditions shall bind each Entity receiving such distribution or issuance.

 

3.

Establishment of Trust Reserve Accounts

On, before, or after the Effective Date, the Debtors and/or the Plan Administrator shall, in consultation with the Committees and/or the Representatives, establish each of the Administrative / Priority Claims Reserve, the Wind-Down Reserve, the U.S. Data Breach Class Settlement Fund Reserve and the Canadian Data Breach Class Settlement Fund Reserve. Following the receipt of proceeds from the Cyber Insurance Policies, the Debtors or the Plan Administrator, as applicable, shall establish the Cyber Insurance Reserve. On or after the Effective Date, the Plan Administrator may, in consultation with the Representatives, establish the Chrome Disputed Claims Reserve and the Lemonaid Disputed Claims Reserve.

 

a.

Wind-Down Reserve

On or before the Effective Date, the Debtors or the Plan Administrator, as applicable, shall establish the Wind-Down Reserve by depositing Cash, in the amount set forth in the Wind-Down Budget, into the Wind-Down Reserve. The Wind-Down Reserve shall be used by the Plan Administrator solely to satisfy the expenses of the Wind-Down Debtors and the Plan Administrator as set forth in the Plan Administration Trust Agreement and in accordance with the Wind-Down Budget; provided that all costs and expenses associated with the winding up of the Wind-Down Debtors and the storage of records and documents of the Wind-Down Debtors shall constitute expenses of the Wind-Down Debtors and shall be paid from the Wind-Down Reserve to the extent set forth in the Wind-Down Budget. Any amount remaining in the Wind-Down Reserve after the dissolution of the Wind-Down Debtors shall revert to the Plan Administration Trust to be distributed pursuant to the Waterfall Recovery. In no event shall the Plan Administrator be required or permitted to use its personal funds or assets for such purposes.

 

b.

Administrative / Priority Claims Reserve

On or before the Effective Date, the Debtors or the Plan Administrator, as applicable, in consultation with the Committees or the Representatives, as applicable, shall establish the Administrative / Priority Claims Reserve by depositing Cash in the amount of the Administrative / Priority Claims Reserve Amount into the Administrative / Priority Claims Reserve in accordance with the terms of the Plan Administration Trust Agreement. The Administrative / Priority Claims Reserve Amount shall be used to pay Holders of all Allowed Other Priority Claims, Allowed Administrative Claims (other than Professional Fee Claims), Allowed Priority Tax Claims, and Allowed Other Secured Claims in full in Cash.

 

53

If all or any portion of any such Claim shall become a Claim that is not Allowed, then the amount on deposit in the Administrative / Priority Claims Reserve attributable to such surplus or such Disallowed Claim, including the interest that has accrued on said amount while on deposit in the Administrative / Priority Claims Reserve, shall remain in the Administrative / Priority Claims Reserve to the extent that the Plan Administrator reasonably determines necessary to ensure that the Cash remaining in the Administrative / Priority Claims Reserve is sufficient to ensure that all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Other Priority Claims, or other Allowed Other Secured Claims will be paid in accordance with the Plan without any further action or order of the Bankruptcy Court. Any amounts remaining in the Administrative / Priority Claims Reserve after payment of all Allowed Administrative Claims, Allowed Other Priority Tax Claims, Allowed Other Priority Claims, or other Allowed Other Secured Claims shall be distributed by the Plan Administrator or the Representatives, as applicable, in accordance with the Waterfall Recovery, the Plan, and the Plan Administration Trust Agreement.

 

c.

Data Breach Settlement Reserves

On or before the Effective Date, the Debtors and/or the Plan Administrator shall establish the U.S. Data Breach Class Settlement Fund Reserve, U.S. Data Breach Arbitration Settlement Reserve and the Canadian Data Breach Class Settlement Fund Reserve in accordance with the terms of the Plan Administration Trust Agreement, the U.S. Data Breach Class Settlement Fund Agreement and the Canadian Data Breach Class Settlement Fund Agreement, as applicable.

 

d.

Cyber Insurance Reserve

On, before or after the Effective Date, the Debtors or the Plan Administrator, as applicable, shall establish the Cyber Insurance Reserve. Following the receipt of proceeds from the Cyber Insurance Policies, the Debtors or the Plan Administrator, as applicable, shall transfer such proceeds to the Cyber Insurance Reserve to be distributed in accordance with the terms of the Plan Administration Trust Agreement.

 

e.

Chrome Disputed Claims Reserve

On or after the Effective Date, the Plan Administrator may establish the Chrome Disputed Claims Reserve for Claims that are contingent or have not yet been Allowed, in an amount or amounts as reasonably determined by the Plan Administrator, in consultation with the Representatives. On or after the Effective Date, the Plan Administrator, in consultation with the Representatives, may deposit Cash into or withdraw Cash from the Chrome Disputed Claims Reserve if the Chrome Disputed Claims Amount changes at any time in accordance with the Plan Administration Trust Agreement.

 

f.

Lemonaid Disputed Claims Reserve

On or after the Effective Date, the Plan Administrator may establish the Lemonaid Disputed Claims Reserve for Claims that are contingent or have not yet been Allowed, in an amount or amounts as reasonably determined by the Plan Administrator, in consultation with the Representatives. On or after the Effective Date, the Plan Administrator, in consultation with the Representatives may deposit Cash into or withdraw Cash from the Lemonaid Disputed Claims Reserve if the Lemonaid Disputed Claims Amount changes at any time in accordance with the Plan Administration Trust Agreement.

 

54

4.

Distributable Proceeds / Waterfall Recovery

The various escrows, trusts, reserves and consideration contemplated in the Plan, shall be funded or otherwise be paid to the applicable Holders of Allowed Claims and Interests, in the following priority and amounts (the “Waterfall Recovery”):

 

a.

First, the funding of the Administrative / Priority Claims Reserve, the Wind-Down Reserve, and the Professional Fee Escrow Account;

 

b.

Second, (i) payment in full in Cash of Allowed (a) Professional Fee Claims and/or (b) Administrative Claims, Priority Tax Claims, Other Priority Claims, and/or Other Secured Claims, in each case, to the extent such claims exceed the Professional Fee Escrow Amount and/or the Administrative / Priority Claims Reserve Amount, respectively and (ii) funding of the U.S. Data Breach Arbitration Settlement Reserve subject to and in accordance with the Plan Administration Trust Agreement and the U.S. Data Breach Arbitration Settlement Agreement;

 

c.

Third, funding of the Chrome Disputed Claims Reserve, the Lemonaid Disputed Claims Reserve, the U.S. Data Breach Class Settlement Initial Payment, the U.S. Data Breach Class Settlement Fund Reserve, and the Canadian Data Breach Class Settlement Fund Reserve, in each case subject to and in accordance with the Plan Administration Trust Agreement, the U.S. Data Breach Class Settlement Agreement and the Canadian Data Breach Class Settlement Agreement, as applicable;

 

d.

Fourth, payment of General Unsecured Claims as follows:

 

(i)

Chrome General Unsecured Claims:

 

i.

If the total amount of Allowed Chrome General Unsecured Claims is less than Chrome Distributable Proceeds:

 

1.

Funding of the total Allowed amounts of the U.S. Data Breach Class Proof of Claim and the Canadian Data Breach Class Proof of Claim into the U.S. Data Breach Class Settlement Fund and the Canadian Data Breach Class Settlement Fund, respectively, in each case net of any amounts previously funded or paid to satisfy such Claims (including the U.S. Data Breach Class Settlement Initial Payment, the U.S. Data

 

55

Breach Class Settlement Fund Reserve, the Canadian Data Breach Settlement Fund Reserve or any amounts from the Cyber Insurance Reserve) and subject to the terms of the terms of the U.S. Data Breach Class Settlement Agreement and the Canadian Data Breach Class Settlement Agreement, including the cap on distributions contemplated therein;

 

2.

Payment in full of all Allowed Chrome Commercial Claims, plus Post-Petition Interest;

 

3.

Payment in full of Allowed Chrome Other General Unsecured Claims;

 

ii.

If the total amount of Allowed Chrome General Unsecured Claims is more than Chrome Distributable Proceeds:

 

1.

Funding of the U.S. Data Breach Class Settlement Fund and the Canadian Data Breach Class Settlement Fund with amounts based on (x) the total Allowed amounts of the U.S. Data Breach Class Proof of Claim and the Canadian Data Breach Class Proof of Claim multiplied by a ratio based on the total amount of Chrome Distributable Proceeds divided by the total amount of Allowed Chrome General Unsecured Claims (the “Chrome Recovery Ratio”), less any amounts previously funded or paid to satisfy such Claims (including the U.S. Data Breach Class Settlement Initial Payment, the U.S. Data Breach Class Settlement Fund Reserve, the Canadian Data Breach Class Settlement Fund Reserve or any amounts from the Cyber Insurance Reserve) and subject to the terms of the terms of the U.S. Data Breach Class Settlement Agreement and the Canadian Data Breach Class Settlement Agreement, including the cap on distributions contemplated therein;

 

56

2.

Payments based on the Chrome Recovery Ratio applied against all Allowed Chrome Other General Unsecured Claims and Allowed Chrome Commercial Claims;

 

(ii)

Lemonaid General Unsecured Claims:

 

i.

If the total amount of Allowed Lemonaid Other General Unsecured Claims and Allowed Lemonaid Commercial Claims is less than the Lemonaid Distributable Proceeds, payment in full of all Allowed Lemonaid Other General Unsecured Claims and Allowed Lemonaid Commercial Claims, plus Post-Petition Interest, from Lemonaid Distributable Proceeds, net of any amounts previously paid from the Cyber Insurance Reserve;

 

ii.

If the total amount of Allowed Lemonaid Other General Unsecured Claims and Allowed Lemonaid Commercial Claims is more than Lemonaid Distributable Proceeds, payments based on each Holder’s Pro Rata share of the Lemonaid Distributable Proceeds less any amounts previously paid from the Cyber Insurance Reserve;

 

e.

Fifth, if there are any remaining Distributable Proceeds after the payments and funding contemplated in the foregoing, any such remaining proceeds to be distributed Pro Rata among Holders of Allowed HoldCo Interests.

For the avoidance of any doubt, to the extent there is sufficient Cash for distribution after satisfaction of clauses (a)-(c) above, it is the Debtors’ intent to pay all Allowed Chrome General Unsecured Claims and all Allowed Lemonaid General Unsecured Claims in full as set forth above.

 

5.

Plan Administration Trust

 

a.

Creation of the Plan Administration Trust

On or prior to the Effective Date, the Debtors shall take all necessary steps to establish the Plan Administration Trust in accordance with the Plan and the Plan Administration Trust Agreement. As of the Effective Date, the Plan Administration Trust Agreement shall be executed by the Debtors, the Plan Administrator and the Representatives, and the Plan Administration Trust shall be created.

 

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The Plan Administration Trust Agreement generally will provide for, among other things: (a) the transfer of the Plan Administration Trust Assets to the Plan Administration Trust; (b) management and governance of the Plan Administration Trust; (c) the process for reconciling and administering Claims; (d) the authority of the Plan Administrator to prosecute, settle, compromise, abandon, dismiss, or otherwise resolve any Retained Causes of Action; (e) the authority of the Representatives to oversee the actions taken by the Plan Administrator in accordance with the Plan Administration Trust Agreement and to raise any issues arising from or related to the Plan Administration Trust Agreement before the Bankruptcy Court for resolution; and (f) the procedures for distributing the Plan Administration Trust Assets to the Plan Administration Trust Beneficiaries, in accordance with the Waterfall Recovery, the Plan, and the Plan Administration Trust Agreement, with no objective to continue or engage in the conduct of a trade or business, except to the extent reasonably necessary to, and consistent with, the purpose of the Plan Administration Trust and the purposes described in the Plan. Upon the transfer of the Debtors’ assets to the Plan Administration Trust, the Debtors will have no reversionary or further interest in or with respect to the Plan Administration Trust Assets.

 

b.

Plan Administrator

The Plan Administrator shall be the exclusive administrator of the Plan Administration Trust Assets for purposes of 31 U.S.C. § 3713(b), as well as the representatives of the Estate of each of the Debtors appointed pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, solely for purposes of carrying out the Plan Administrator’s duties under the Plan Administration Trust Agreement. Subject to the terms and conditions of the Plan, the powers, rights, and responsibilities of the Plan Administrator shall be specified in the Plan Administration Trust Agreement. The Plan Administrator shall hold and distribute plan distributions in accordance with the provisions of the Plan and the Plan Administrator Agreement. The Debtors will disclose in advance of the Confirmation Hearing as part of the Plan Supplement, to the extent known at such time, the identity and affiliations of any Person proposed to serve as the Plan Administrator.

The Plan Administration Trust may employ, without further order of the Court, professionals to assist in carrying out the duties of the Plan Administrator hereunder and under the Plan Administration Trust Agreement, and may compensate and reimburse the reasonable fees and expenses of those professionals in accordance with the terms and conditions of the Plan Administration Trust Agreement. The Plan Administration Trust Agreement shall include reasonable and customary provisions that allow for indemnification of the Plan Administrator by the Plan Administration Trust. Any such indemnification shall be the sole responsibility of the Plan Administration Trust and payable solely from the Plan Administration Trust Assets and the proceeds thereof.

The Plan Administrator shall be compensated by the Plan Administration Trust on terms set forth in the Plan Administration Trust Agreement. For the avoidance of doubt, the Debtors and the Wind-Down Debtors shall not be responsible hereunder or under the Plan Administration Trust Agreement for any compensation, expense reimbursement claims or indemnity of the Plan Administration Trust, and the Plan Administrator.

The powers of the Plan Administrator shall include any and all powers and authority to implement the Plan, administer distributions in accordance with the Plan, the Plan Administrator Trust Agreement and administer and wind down the business and affairs of Debtors, including: (a) making distributions to Priority Plan Administration Trust Beneficiaries as contemplated under the Plan and the Plan Administration Trust Agreement; (b) liquidating, receiving, holding,

 

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investing, supervising, and protecting the assets of the Wind-Down Debtors, if any; (c) taking all steps to execute all instruments and documents necessary to effectuate the distributions to be made under the Plan; (d) subject to the terms set forth in the Plan, employing, retaining, terminating, or replacing professionals to represent it with respect to its responsibilities or otherwise effectuating the Plan to the extent necessary; (e) paying all expenses of the Plan Administrator as provided in the Plan Administration Trust Agreement; (f) paying all reasonable fees, expenses, debts, charges, and liabilities of the Wind-Down Debtors, if any; (g) except as otherwise provided for in the Plan, enforcing and prosecuting claims, interests, rights, and privileges under the Retained Causes of Action in accordance with Article IV.F of the Plan; (h) administering and paying taxes of the Wind-Down Debtors, including filing tax returns; (i) representing the interests of the Wind-Down Debtors or the Estates before any taxing authority in all matters, including any action, suit, proceeding, or audit; (j) discharging the Debtors’ and the Wind-Down Debtors’, as applicable, post-Effective Date obligations under the Purchase Agreements, if any; (k) administering, reconciling and objecting to Claims and Interests against the Debtors; (l) effectuating the Wind-Down Transactions; and (m) exercising such other powers as may be vested in it pursuant to order of the Bankruptcy Court or pursuant to the Plan, the Confirmation Order, or any applicable orders of the Bankruptcy Court or as the Plan Administrator reasonably deems to be necessary and proper to carry out the provisions of the Plan in accordance with the Plan Administration Trust Agreement.

 

c.

Responsibility of the Plan Administration Trust

Following the Effective Date, the Debtors, the Wind-Down Debtors, and the Released Parties shall have no liability or responsibility, financial or otherwise, for any such Claims and Interests vested in the Plan Administration Trust. The sole recourse of any Person on account of any Claim or Interest, whether or not the Holder thereof participated in the Chapter 11 Cases and whether or not such Holder Filed a Proof of Claim in the Chapter 11 Cases, shall be to the Plan Administration Trust Assets. Holders of Claims or Interests are enjoined from asserting against any Debtor or any Wind-Down Debtor any Claims or Interests and may not proceed in any manner against any Debtor or Wind-Down Debtor on account of any Claim or Interests in any other forum whatsoever, including any state, federal, or non-U.S. court or administrative or arbitral forum.

Except as otherwise provided in the Plan and the Plan Administration Trust Agreement, the Plan Administration Trust and the Representatives shall have all defenses, cross-claims, offsets, and recoupments, as well as rights of indemnification, contribution, subrogation, and similar rights, regarding such assumed Claims that the Debtors or the Wind-Down Debtors have or would have had under applicable law.

 

d.

Administration of Claims by the Plan Administration Trust

All Claims and Interests against the Debtors or the Wind-Down Debtors, as applicable, will be administered, liquidated and discharged by the Plan Administrator pursuant to the Plan Administration Trust Agreement and the Claims Reconciliation Procedures, as applicable.

 

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The Plan Administrator shall be entitled to object to the General Unsecured Claims and Interests asserted against the Debtors or the Wind-Down Debtors, as applicable, in accordance with the Plan Administration Trust Agreement. Any objections to such Claims and Interests shall be served and filed by the Plan Administrator in accordance with the Plan Administration Trust Agreement on or before the Claims Objection Deadline. The Plan Administrator shall be entitled to use omnibus objections in compliance with Local Rule 3007(c), in addition to any omnibus objection procedures approved by the Bankruptcy Court or otherwise set forth in the Plan Administration Trust Agreement. The Plan Administrator may further seek Bankruptcy Court approval to establish additional objection, estimation, or other claims reconciliation procedures as the Plan Administrator believes appropriate.

 

e.

U.S. Federal Income Tax Treatment of the Plan Administration Trust

Subject to any applicable law or definitive guidance from the IRS or a court of competent jurisdiction to the contrary and except to the extent the Debtors and the Committees determine otherwise in their reasonable discretion to treat all or any portion of the Plan Administration Trust as a “qualified settlement fund,” a “disputed ownership fund” and/or otherwise, the Debtors intend that the Plan Administration Trust shall be a “liquidating trust” as that term is used under section 301.7701-4(d) of the Treasury Regulations and a grantor trust under section 671 of the Tax Code, and the Plan Administrator will take a position on such Trust’s tax return accordingly. For U.S. federal income tax purposes, the transfer of the Plan Administration Trust Assets to the Plan Administration Trust, will be deemed to occur as (a) a first-step transfer of the Plan Administration Trust Assets to the Plan Administration Trust Beneficiaries, and (b) a second-step transfer by such Plan Administration Trust Beneficiaries to the Plan Administration Trust. As soon as possible after the transfer of the Plan Administration Trust Assets to the Plan Administration Trust, the Plan Administrator, in consultation with the Representatives, shall make a good faith valuation of the Plan Administration Trust Assets. This valuation will be made available from time to time, as relevant for tax reporting purposes. Each of the Debtors, Plan Administration Trust, and the Plan Administration Trust Beneficiaries shall take consistent positions with respect to the valuation of the Plan Administration Trust Assets, and such valuations shall be utilized for all U.S. federal income tax purposes. The foregoing treatment shall also apply, to the extent permitted by applicable law, for state and local income tax purposes.

Allocations of taxable income and loss of the Plan Administration Trust among Plan Administration Trust Beneficiaries shall be determined, as closely as possible, by reference to the amount of distributions that would be received by each such beneficiary if the Plan Administration Trust had sold all of its assets at their tax book value and distributed the proceeds to the Plan Administration Trust Beneficiaries, adjusted for prior taxable income and loss and taking into account all prior and concurrent distributions from the Plan Administration Trust. The tax book value of the Plan Administration Trust Assets shall equal their fair market value on the date of the transfer of such assets to the Plan Administration Trust, adjusted in accordance with tax accounting principles prescribed by the Tax Code, applicable Treasury Regulations, and other applicable administrative and judicial authorities and pronouncements.

 

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The Plan Administration Trust shall in no event be dissolved later than five years from its creation unless the Bankruptcy Court, upon motion within the six month period prior to the fifth anniversary (or within the six month period prior to the end of an extension period), determines that a fixed period extension (not to exceed five years, together with any prior extensions, without a favorable private letter ruling from the IRS or an opinion of counsel satisfactory to the Plan Administrator that any further extension would not adversely affect the status of the Plan Administration Trust as a liquidating trust for U.S. federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the assets of the Plan Administration Trust.

No request for a ruling from the IRS will be sought on the classification of the Plan Administration Trust. Accordingly, there can be no assurance that the IRS would not take a contrary position to the classification of the Plan Administration Trust. If the IRS were to successfully challenge any of the classification of the Plan Administration Trust as a liquidating trust, the federal income tax consequences to the Plan Administration Trust and the Plan Administration Trust Beneficiaries could vary from those discussed in the Plan (including the potential for an entity-level tax). For example, the IRS could characterize a Trust as a so-called “complex trust” subject to a separate entity-level tax on its earnings, except to the extent that such earnings are distributed during the taxable year.

The Plan Administration Trust will file information tax returns with the IRS and provide tax information statements to the Plan Administration Trust Beneficiaries consistently with the rules of section 1.671-4(a) of the Treasury Regulations, including information regarding items of income, gain, deduction, loss or credit attributable to the Plan Administration Trust Assets. Each Plan Administration Trust Beneficiary must report on its federal income tax return its share of all such items. The information provided by the Plan Administration Trust will pertain to the Plan Administration Trust Beneficiaries who receive their interests in such Trust in connection with the Plan.

To the extent the Debtors and the Committees determine in their reasonable discretion to treat Plan Administration Trust or portion thereof as a “qualified settlement fund” under section 1.468B-1 of the Treasury Regulations “disputed ownership fund” under section 1.468B-9 of the Treasury Regulations, any appropriate elections with respect thereto shall be made and such treatment will also be applied to the extent possible for state and local tax purposes. Under such treatment, a separate federal income tax return may be filed with the IRS for any such account. Any taxes (including with respect to interest, if any, earned in the account) imposed on such account shall be paid out of the assets of the respective account (and reductions shall be made to amounts disbursed from the account to account for the need to pay such taxes).

 

f.

Vesting of Plan Administration Trust Assets in the Plan Administration Trust

The corpus of the Plan Administration Trust shall consist of the Plan Administration Trust Assets. On the Effective Date, pursuant to the Plan and in accordance with the Plan Administration Trust Agreement, the Plan Administration Trust Assets shall be irrevocably transferred to and vest in the Plan Administration Trust free and clear of any and all actual or alleged Claims, Interests, Liens, other encumbrances and liabilities of any kind. The Plan Administration Trust shall have no liability for, and the Plan Administration Trust Assets shall vest in the Plan Administration Trust free and clear of, any and all actual or alleged prepetition and postpetition Claims, Causes of Action or liabilities of any kind, in each case that have been or could have been asserted against the Debtors, their Estates or their property (including, but not limited to, Claims based on successor liability) based on any acts or omissions prior to the Effective Date, except as expressly set forth in the Plan and the Plan Administration Trust Agreement. From and after the Effective Date, all proceeds of the Plan Administration Trust Assets shall be paid to the Plan Administration Trust to be applied in accordance with the Waterfall Recovery as set forth in Article IV.D of the Plan.

 

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Upon the transfer of the Plan Administration Trust Assets to the Plan Administration Trust, the Debtors and the Wind-Down Debtors will have no reversionary or further interest in or with respect to the Plan Administration Trust Assets. To the extent beneficial interests in the Plan Administration Trust are deemed to be “securities” as defined in section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code, and applicable state securities laws, the Debtors intend that the exemption provisions of section 1145 of the Bankruptcy Code will apply to such beneficial interests or the issuance of such beneficial interests is expected to be exempt from the registration under Section 5 of the Securities Act pursuant to Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, Regulation S under the Securities Act, and/or other available exemptions from registration.

On the Effective Date, the Plan Administration Trust or the Wind-Down Debtors, as applicable, shall: (a) take possession of all books, records, and files of the Debtors and the Estates that were not sold or otherwise transferred prior to the Effective Date and that relate to the operation and business of the Plan Administration Trust; and (b) provide for the retention and storage of such books, records, and files until such time as the Plan Administrator determines, in accordance with the Plan Administration Trust Agreement, that retention of same is no longer necessary or beneficial.

 

g.

Wind-Down

As soon as practicable after the Effective Date, the Plan Administrator shall: (a) cause the Debtors and the Wind-Down Debtors, as applicable, to comply with, and abide by, the terms of the Plan and any other documents contemplated thereby; (b) to the extent applicable, file a certificate of dissolution or equivalent document, together with all other necessary corporate and company documents, to effect the dissolution of one or more of the Debtors or the Wind-Down Debtors under the applicable laws of their state of incorporation or formation (as applicable); and (c) take such other actions as the Plan Administrator may determine to be necessary or desirable to carry out the purposes of the Plan. Any certificate of dissolution or equivalent document may be executed by the Plan Administrator without the need for any action or approval by the shareholders or board of directors or managers of any Debtor. From and after the Effective Date, except with respect to Wind-Down Debtors as set forth in the Plan, the Debtors (x) for all purposes shall be deemed to have withdrawn their business operations from any state in which the Debtors were previously conducting, or are registered or licensed to conduct, their business operations and shall not be required to file any document, pay any sum, or take any other action in order to effectuate such withdrawal, (y) shall be deemed to have canceled pursuant to the Plan all Interests, and (z) shall not be liable in any manner to any taxing authority for franchise, business, license, or similar taxes accruing on or after the Effective Date. For the avoidance of doubt, notwithstanding the Debtors’ dissolution, the Debtors shall be deemed to remain intact solely with respect to the preparation, filing, review, and resolution of applications for Professional Fee Claims.

 

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The filing of the final monthly report (for the month in which the Effective Date occurs) and all subsequent quarterly reports shall be the responsibility of the Plan Administrator.

 

h.

Appointment of the Representatives

The appointment of the Representatives will be approved in the Confirmation Order and disclosed in the Plan Supplement, and effective as of the Effective Date, in accordance with the Plan Administration Trust Agreement, the individuals selected as the GUC Representative and the Equity Representative shall be appointed to serve as the Representative for Class A Plan Administration Trust Beneficiaries and Class B Plan Administration Trust Beneficiaries, respectively. The Representatives shall have, among other things, (a) the authority to (i) object to actions taken by the Plan Administrator in accordance with the Plan Administration Trust Agreement, including with respect to the Allowance of Claims and settlement of Claims and Causes of Action belonging to the Estate, and to raise any issues arising from or related to the Plan Administration Trust before the Bankruptcy Court for resolution, and (ii) make distributions to Holders of Allowed General Unsecured Claims or Interests, as applicable, in each case, subject to the terms of the Plan Administration Trust Agreement, and (b) consultation and information rights as set forth in the Plan Administration Trust Agreement.

The Representatives may employ, without further order of the Bankruptcy Court, professionals (including those previously retained by the Creditor’s Committee or the Official Equity Committee) to assist in carrying out its duties hereunder and under the Plan Administration Trust Agreement, and may compensate and reimburse the reasonable expenses of these professionals as GUC Representative Expenses or Equity Representative Expenses, as applicable, without further order of the Bankruptcy Court from the GUC Representative Expense Reserve or the Equity Representative Expense Reserve, as applicable, in accordance with the Plan and the Plan Administration Trust Agreement.

 

i.

Limitation of Liability of Representatives

Neither the Representatives, nor their respective firms, companies, affiliates, partners, officers, directors, members, employees, independent contractors, designees, professionals, advisors, attorneys, representatives, disbursing agents or agents, and any of such Person’s successors and assigns, shall incur any responsibility or liability by reason of any error of law or fact or of any matter or thing done or suffered or omitted to be done under or in connection with the Plan or Plan Administration Trust Agreement, other than for specific actions or omissions resulting from their willful misconduct, gross negligence or fraud found by a Final Order (not subject to further appeal or review) of a court of competent jurisdiction to be the direct and primary cause of loss, liability, damage, or expense suffered by the Representatives. The Representatives shall enjoy all of the rights, powers, immunities, and privileges applicable to a chapter 7 trustee. The Representatives may, in connection with the performance of their functions, in their sole and absolute discretion, consult with their attorneys, accountants, advisors, and agents, and shall not be liable for any act taken, or omitted to be taken, or suggested to be done in accordance with advice or opinions rendered by such persons, regardless of whether such advice or opinions are in writing. Notwithstanding such authority, the Representatives shall not be under any obligation to consult with any such attorneys, accountants, advisors, or agents, and any determination not to do so shall not result in the

 

63

imposition of liability on the Representatives unless such determination is based on willful misconduct, gross negligence, or fraud. Persons dealing with the Representatives shall look only to the GUC Representative Expense Reserve or the Equity Representative Expense Reserve, as applicable, to satisfy any liability incurred by the GUC Trust or GUC Trustee to such person in carrying out the terms of the Plan or the GUC Trust Agreement, and neither the Plan Administration Trust, the Plan Administrator nor the Representatives shall have any personal obligation to satisfy such liability.

 

j.

Indemnification

The Plan Administration Trust shall indemnify the Representatives Indemnified Parties for, and shall hold them harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost, or expense (including the reasonable fees and expenses of their respective professionals) incurred without fraud, gross negligence or willful misconduct on the part of the Representative Indemnified Parties (which fraud, gross negligence or willful misconduct, if any, must be determined by a Final Order of a court of competent jurisdiction) for any action taken, suffered, or omitted to be taken by the Representative Indemnified Parties in connection with the acceptance, administration, exercise, and performance of their duties under the Plan or the Plan Administration Trust Agreement, as applicable. An act or omission taken with the approval of the Bankruptcy Court, and not inconsistent therewith, will be conclusively deemed not to constitute fraud, gross negligence or willful misconduct. To the extent the Plan Administration Trust indemnifies and holds harmless any Representative Indemnified Parties as provided above, the legal fees and related costs incurred by counsel to the Representatives in monitoring or participating in the defense of such claims giving rise to the right of indemnification shall be paid as GUC Representative Expenses or Equity Representative Expenses, as applicable. The costs and expenses incurred in enforcing the right of indemnification in this paragraph shall be paid by the Plan Administration Trust. This provision shall survive the termination of the Plan Administration Trust Agreement and the death, dissolution, liquidation, resignation, replacement, or removal of the Representatives.

 

k.

Transferability of Class B Plan Administration Trust Interests

Any right of a Holder of any HoldCo Interest to receive a distribution or other payment from the Plan Administration Trust shall not be evidenced by any certificate, security, receipt or in any other form or manner whatsoever, except on the books and records of the Debtors or the Plan Administration Trust. The offering issuance or distribution of Class B Plan Administration Trust Interests in accordance with the Plan is exempt from the provision of Section 5 of the Securities Act and any state or local law requiring registration for the offer, issuance, or distribution of a security by section 1145 of the Bankruptcy Code. Class B Plan Administration Trust Interests in the Plan Administration Trust shall be transferable to the extent that the transferability thereof would not require the Plan Administration Trust to register such Class B Plan Administration Trust Interests under Section 12(g) of the Exchange Act, and otherwise shall not be transferable except as provided in the Plan Administration Trust Agreement.

 

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6.

Preservation of Causes of Action

Except as otherwise provided in the Plan or the Sale Order, in accordance with section 1123(b) of the Bankruptcy Code, but subject in all respects to Article VIII of the Plan, the Plan Administrator shall retain and may enforce all rights to commence and pursue, as appropriate, any and all Retained Causes of Action, and the rights of the Plan Administrator to commence, prosecute, or settle such Retained Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date.

The Plan Administrator may pursue such Retained Causes of Action, as appropriate, in accordance with the best interests of the Plan Administration Trust Beneficiaries. No Entity may rely on the absence of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any Cause of Action against it as any indication that the Debtors or the Plan Administrator, as applicable, will not pursue any and all Retained Causes of Action against it. The Debtors and the Plan Administrator expressly reserve all rights to prosecute any and all Retained Causes of Action against any Entity. Unless any Retained Causes of Action of the Debtors against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or a Final Order, the Plan Administrator expressly reserves all Retained Causes of Action, for later adjudication, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches, shall apply to such Retained Causes of Action upon, after, or as a consequence of the Confirmation or Consummation.

The Plan Administrator reserves and shall retain such Retained Causes of Action of the Debtors notwithstanding the rejection or repudiation of any Executory Contract during the Chapter 11 Cases or pursuant to the Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, and except as expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or pursuant to a Final Order, any Retained Causes of Action that a Debtor may hold against any Entity shall vest in the Plan Administrator, except as otherwise expressly provided in the Plan, including Article VIII of the Plan. The Plan Administrator through their authorized agents or representatives, shall retain and may exclusively enforce any and all such Retained Causes of Action. The Plan Administrator shall have the exclusive right, authority, and discretion to determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such Retained 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 Bankruptcy Court.

Notwithstanding anything to the contrary in the Plan, as of the Effective Date, the Debtors shall waive and release any Avoidance Actions against Holders of General Unsecured Claims, and such Avoidance Actions shall not be Retained Causes of Action; provided, however, that the Retained Causes of Action shall include all Avoidance Actions against Excluded Parties, regardless of whether the Excluded Parties are Holders of General Unsecured Claims.

 

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7.

Lemonaid Sale Transaction

On the Effective Date, the Debtors shall consummate the Lemonaid Sale Transaction contemplated by the Lemonaid Purchase Agreement. Following the discharge of the Debtors pursuant to Section 1141 of the Bankruptcy Code and as set forth in the Plan and the Confirmation Order, the Lemonaid Interests shall, to the extent set forth in the Lemonaid Purchase Agreement, be transferred to and vest in the Lemonaid Purchaser free and clear of all Liens, Claims, Interests, charges, or other encumbrances to the fullest extent permissible under sections 363(f) and 1141 of the Bankruptcy Code (except for those Liens, Claims, Interests, charges, or other encumbrances expressly assumed by the Lemonaid Purchaser pursuant to the terms of the Lemonaid Purchase Agreement, if any) in exchange for the Purchase Price (as defined in the Lemonaid Purchase Agreement and as set forth in the Lemonaid Purchase Agreement). The Confirmation Order shall authorize the Debtors, the Wind-Down Debtors, and the Lemonaid Purchaser, as applicable, to undertake the transactions contemplated by the Lemonaid Purchase Agreement, including pursuant to sections 105, 363, 365, 1123(a)(5)(B), 1123(a)(5)(D), 1123(b)(4), 1141(b), and 1141(c) of the Bankruptcy Code. From and after the Effective Date, except as expressly set forth in the Lemonaid Purchase Agreement, neither the Lemonaid Purchaser nor any of its affiliates shall be liable for any Claims, Administrative Claims, or other liabilities of the Debtors or the Wind-Down Debtors, which shall be payable solely in accordance with the Plan and from the proceeds of the Lemonaid Sale Transaction. The Confirmation Order shall provide the Lemonaid Purchaser with the protections of a good faith purchaser within the contemplation of section 363(m) of the Bankruptcy Code.

The Debtors and the Lemonaid Purchaser shall be authorized to take all actions as may be deemed necessary or appropriate to consummate the Lemonaid Sale Transaction pursuant to the terms of the Lemonaid Purchase Agreement and the Plan, as well as to execute, deliver, file, record, and issue any note, documents, or agreements in connection therewith, without further notice to or order of the Bankruptcy Court; act or action under applicable law, regulation, order, or rule; or the vote, consent, authorization, or approval of any Entity. Upon entry of the Confirmation Order by the Bankruptcy Court, all matters provided for under the Lemonaid Sale Transaction and the Plan, and any documents in connection therewith, shall be deemed authorized and approved without any requirement of further act or action by the Debtors. On and after the Effective Date, except as otherwise provided in the Plan, the Wind-Down Debtors, Plan Administrator, or the Lemonaid Purchaser, as applicable, may operate their respective businesses or Trust, as applicable, and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules in accordance with the terms of the Plan and the Plan Administration Trust Agreement; provided, that the Bankruptcy Court shall retain jurisdiction to resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with any of the foregoing.

 

8.

Exemption from Registration

No registration statement will be filed under the Securities Act, or pursuant to any state securities laws, with respect to the offer and distribution of Securities under the Plan.

 

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a.

Section 1145 Exemption

Pursuant to section 1145 of the Bankruptcy Code, any Securities offered, issued, or distributed pursuant to the Plan, including but not limited to, the Lemonaid Interests, the Plan Administration Trust Interests (to the extent such Plan Administration Trust Interests are a Security) (a) shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act and any other applicable U.S. state or local law requiring registration for the offer or sale of a security pursuant to section 1145 of the Bankruptcy Code, (b)(i) are not “restricted securities” as defined in Rule 144(a)(3) under the Securities Act, and (ii) are freely tradable and transferable by any initial recipient thereof that (w) is not an “affiliate” of the Debtors as defined in Rule 144(a)(1) under the Securities Act, (x) has not been such an “affiliate” within 90 calendar days of such transfer, (y) has not acquired the Lemonaid Interests or Plan Administration Trust Interests from an “affiliate” of the Debtors within one year of such transfer, and (z) is not an entity that is an “underwriter” as defined in subsection (b) of Section 1145 of the Bankruptcy Code, and (c) will be freely tradable by the recipients thereof, subject to (i) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, (ii) compliance with applicable securities laws and any rules and regulations of the SEC, if any, applicable at the time of any future transfer of such securities or instruments, and (iii) with respect to the Lemonaid Interests, the restrictions in the Lemonaid Organizational Documents and with respect to the Plan Administration Trust Interests, the restrictions in the Plan Administration Trust Agreement.

Should the Company elect on or after the Effective Date to reflect any ownership of the Lemonaid Interests, the Plan Administration Trust Interests, or any other Securities to be issued under the Plan through the facilities of DTC, the Company need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the Interests to be issued under the Plan under applicable securities laws. DTC shall be required to accept and conclusively rely upon the Plan and Confirmation Order in lieu of a legal opinion regarding whether the Interests to be issued under the Plan are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. Notwithstanding anything to the contrary in the Plan, no entity (including, for the avoidance of doubt, DTC) may require a legal opinion regarding the validity of any transaction contemplated by the Plan, including, for the avoidance of doubt, whether the Interests to be issued under the Plan are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. No disbursing agent shall be required to provide indemnification or other security to DTC in connection with any distributions to holders of Claims through the facilities of DTC.

 

b.

Section 4(a)(2) of the Securities Act and Regulation S under the Securities Act

To the extent that section 1145 of the Bankruptcy Code is inapplicable (including with respect to an entity that is an “underwriter” as defined in subsection (b) of section 1145 of the Bankruptcy Code), the offering, issuance, exchange, or distribution of any Securities pursuant to the Plan is or shall be conducted in a manner that is exempt from the registration requirements of section 5 of the Securities Act and applicable state and local securities laws pursuant to section 4(a)(2) of the Securities Act and/or the regulations promulgated thereunder (including Regulation D), Regulation S under the Securities Act and/or another available exemption from

 

67

registration under Section 5 of the Securities Act. To the extent such Securities are issued in reliance on Section 4(a)(2) of the Securities Act or Regulation D thereunder or Regulation S under the Securities Act, each will be “restricted securities” subject to resale restrictions and may be resold, exchanged, assigned or otherwise transferred only pursuant to registration, or an applicable exemption from registration under the Securities Act and other applicable law.

 

c.

Plan Administration Trust Interests

Plan Administration Trust Interests, other than the Class B Plan Administration Trust Interests, are not expected to be to be deemed to be “securities” as defined in section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code, and applicable state securities laws, or the provision of section 1145 of the Bankruptcy Code is expected to apply to such interests (except with respect to an entity that is an “underwriter” as defined in section 1145(b) of the Bankruptcy Code) or the issuance of such Interests is expected to be exempt from the registration under Section 5 of the Securities Act pursuant to section 1145 of the Bankruptcy Code Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, Regulation S under the Securities Act, and/or other available exemptions from registration.

The Company need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the Interests under applicable securities laws.

 

9.

Cancellation of Existing Securities and Agreements

On the Effective Date, except for the purpose of evidencing a right to a distribution under the Plan or to the extent otherwise provided in the Plan, including in Article V.A of the Plan, all agreements, instruments, certificates, and other documents evidencing Claims or Interests, without any need for further action or approval of the Bankruptcy Court or for a Holder to take further action, shall automatically be deemed discharged, cancelled, and of no further force and effect, and the obligations of the Debtors, any non-Debtor Affiliate, thereunder or in any way related thereto, including any Liens and/or Claims in connection therewith, shall be deemed satisfied in full, cancelled, discharged, released, and of no force or effect. Holders of or parties to such cancelled instruments, Securities, and other documentation will have no rights arising from or relating to such instruments, Securities, and other documentation, or the cancellation thereof, except the rights provided for pursuant to the Plan.

 

10.

Section 1146 Exemption

To the fullest extent permitted by section 1146(a) of the Bankruptcy Code and applicable law, any transfers of property pursuant to the Plan or the Confirmation Order, including (1) any and all transfers in connection with the vesting of assets in the Plan Administration Trust, (2) the issuance, distribution, transfer, or exchange of any Cash or other interest in the Debtors to the Holders of Claims and Interests, or (3) the making, assignment, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, including any deeds, bills 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, intangibles or similar tax, mortgage

 

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tax, real estate transfer tax, mortgage recording tax, sales or use tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax, fee, or governmental assessment, and upon entry of the Confirmation Order, the appropriate state or local governmental officials or agents shall forego the collection of any such tax, fee, or governmental assessment and accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, fee, or governmental assessment. All filing or recording officers (or any other Person with authority over any of the foregoing), wherever located and by whomever appointed, shall comply with the requirements of section 1146 of the Bankruptcy Code, shall forego the collection of any such tax, fee, or governmental assessment, and shall accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, fee, or governmental assessment.

 

11.

Corporate Action

Upon the Effective Date, all actions contemplated by the Plan (including any document contemplated by the Plan Supplement) shall be deemed authorized, and approved, without any requirement for further action by Holders of Claims or Interests, directors, managers, or officers of the Debtors, the Wind-Down Debtors, the Plan Administrator, or any other Entity, including, in each case, as applicable: (a) rejection or assumption, as applicable, of Executory Contracts; (b) the appointment of the Plan Administrator; (c) the transfer of Plan Administration Assets to the Plan Administration Trust; and (d) all other acts or actions contemplated, or reasonably necessary or appropriate to promptly consummate the transactions contemplated by the Plan (whether to occur before, on, or after the Effective Date). All matters provided for in the Plan (including any document contained in the Plan Supplement) involving the corporate structure of the Debtors, and any corporate action required by the Debtors in connection therewith, shall be deemed to have occurred on, and shall be in effect as of, the Effective Date, without any requirement of further action by the security holders, directors, managers, authorized persons or officers of the Debtors or Plan Administrator.

On or before the Effective Date, the appropriate officers of the Debtors or Plan Administrator, as applicable, shall be authorized and (as applicable) directed to issue, execute, and deliver the agreements, documents and instruments contemplated by the Plan (or necessary or desirable to effectuate the transactions related to the Plan) in the name of and on behalf of the Debtors to the extent not previously authorized by the Bankruptcy Court, if and as applicable. The authorizations and approvals contemplated by Article IV.K of the Plan shall be effective notwithstanding any requirements under non-bankruptcy law.

 

12.

Dissolution of the Board of the Debtors

As of the Effective Date, the existing boards of directors or managers, as applicable, of the Chrome Debtors shall be dissolved without any further action required on the part of the Chrome Debtors or Wind-Down Debtors, or their applicable officers, directors, managers, shareholders, or members, and any remaining officers, directors, managers, or managing members of any Chrome Debtor or Wind-Down Debtor shall be dismissed without any further action required on the part of any such Debtor, the equity holders of the Chrome Debtors, the officers, directors, or managers, as applicable, of the Chrome Debtors, or the members of any Chrome Debtor.

 

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As of the Effective Date, the Plan Administrator shall act as the sole officer, director, and manager, as applicable, of the Chrome Debtors with respect to their affairs. Subject in all respects to the terms of the Plan, the Plan Administrator shall have the power and authority to take any action necessary to wind down and dissolve any of the Chrome Debtors, and shall: (a) file a certificate of dissolution for any of the Chrome Debtors, together with all other necessary corporate and company documents, to effect the dissolution of the Chrome Debtors under the applicable laws of the applicable state(s) of formation; and (b) complete and file all final or otherwise required federal, state, and local tax returns and shall pay taxes required to be paid for any of the Chrome Debtors, and pursuant to section 505(b) of the Bankruptcy Code, request an expedited determination of any unpaid tax liability of any of the Debtors or their Estates for any tax incurred during the administration of such Debtor’s Chapter 11 Case, as determined under applicable tax laws.

The filing by the Plan Administrator of any of the Chrome Debtors’ certificates of dissolution shall be authorized and approved in all respects without further action under applicable law, regulation, order, or rule, including any action by the stockholders, members, board of directors, or board of managers of any of the Chrome Debtors or any of their Affiliates.

 

13.

Effectuating Documents; Further Transactions

The Debtors, the Wind-Down Debtors, and the Plan Administrator are authorized to and may issue, execute, deliver, file, or record such contracts, instrument, releases, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and evidence the terms and conditions of the Plan, in each case, in the name of and on behalf of the Debtors, the Wind-Down Debtors, or the Plan Administrator, as applicable, without the need for any approvals, authorization or consents except those expressly required pursuant to the Plan.

 

D.	Treatment of Executory Contracts

 

1.

Assumption and Rejection of Executory Contracts

On the Effective Date, except as otherwise provided in the Plan or in any contract, instrument, release, indenture, or other agreement or document entered into in connection with the Plan, all Executory Contracts shall be deemed rejected, without the need for any further notice to or action, Order, or approval of the Bankruptcy Court, as of the Effective Date under section 365 of the Bankruptcy Code, unless such Executory Contract: (1) was previously assumed, assumed and assigned, or rejected by the Debtors, pursuant to an Order of the Bankruptcy Court; (2) previously expired or terminated pursuant to its terms; (3) is the subject of a motion to assume, assume and assign, or reject or notice of the same pursuant to procedures for assumption, assumption and assignment, or rejection established by the Bankruptcy Court filed by the Debtors that is pending on or before the date of entry of the Confirmation Order; (4) is specifically described in the Plan as to be assumed in connection with Confirmation of the Plan or designated as a contract or lease to be assumed by Debtors or the Plan Administrator, as applicable, on the Schedule of Assumed Executory Contracts; or (5) is an Insurance Policy.

 

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Subject to and upon the occurrence of the Effective Date, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions, assumptions and assignments, or rejections of Executory Contracts provided for in the Plan, the Confirmation Order or the Schedule of Assumed Executory Contracts, pursuant to sections 365(a) and 1123 of the Bankruptcy Code; provided that neither the Plan nor the Confirmation Order is intended to or shall be construed as limiting the Debtors’ authority under the Sale Order or the Confirmation Order to assume and assign Executory Contracts to the Purchasers pursuant to the Purchase Agreements; provided further that nothing in the Plan shall alter the Schedule of Transferred Contracts or Schedule of Supplemental Transferred Contracts included in the Notice of Filing of Revised Schedule of Transferred Contracts [Docket No. 984]. Any Filed motions to assume, assume and assign, or reject any Executory Contracts (or Filed objection with respect to the proposed assumption, assumption and assignment, or rejection of such contract) that are pending on the Effective Date shall be subject to approval by the Bankruptcy Court on or after the Effective Date by a Final Order but may be withdrawn, settled, or otherwise prosecuted by the Plan Administrator, with any such disposition to be deemed to effect an assumption, assumption and assignment, or rejection, as applicable, as of the Effective Date.

All Executory Contracts listed on the Schedule of Assumed Executory Contracts will be deemed assumed by the Debtors or the Plan Administrator, as applicable, as of the Effective Date, unless an alternative effective date of assumption is identified on the Schedule of Assumed Executory Contracts and agreed upon by the Debtors and the applicable counterparties to the applicable Executory Contracts.

To the maximum extent permitted by law, to the extent any provision in any Executory Contract assumed pursuant to the Plan restricts or prevents, or purports to restrict or prevent, or is breached or deemed breached by, the assumption of such Executory Contract (including any “change of control” provision), then such provision shall be deemed modified such that the transactions contemplated by the Plan shall not entitle the non-Debtor party thereto to terminate such Executory Contract or to exercise any other rights with respect thereto.

 

2.

Claims Based on Rejection of Executory Contracts

Unless otherwise provided by a Final Order of the Bankruptcy Court, all Proofs of Claim with respect to Claims arising from the rejection of Executory Contracts, pursuant to the Plan or the Confirmation Order, if any, must be Filed with the Bankruptcy Court or with the Notice and Claims Agent within 30 days after the later of (1) the date of service of notice of entry of an Order of the Bankruptcy Court (including the Confirmation Order) approving such rejection and (2) the effective date of such rejection. Claims arising from the rejection of Executory Contracts under the Plan and the Confirmation Order shall be classified as General Unsecured Claims and shall, if Allowed, be treated in accordance with the provisions in the Plan. Any Claims arising from the rejection of an Executory Contract not Filed with the Bankruptcy Court or with the Notice and Claims Agent within such time shall be Disallowed, forever barred from assertion, and shall not be enforceable against the Debtors, the Wind-Down Debtors, the Estates, the Plan Administration Trust, or their respective property.

 

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3.

Cure of Defaults for Assumed Executory Contracts

The Debtors or the Plan Administrator, as applicable (it being understood that the assumption and assignment of the Executory Contracts pursuant to the Purchase Agreements shall be authorized and governed by the Sale Order or the Confirmation Order, as applicable, and, in the event of any inconsistency between the Plan and Sale Order concerning the assumption and assignment of an Executory Contract and related Cures, the terms of the Sale Order shall govern and control) shall pay any undisputed portion of a Cure Claim, if any, on the Effective Date or on such other terms as the parties to such Executory Contracts may otherwise agree. The Debtors may agree with the applicable counterparty to an Executory Contract to be assumed to segregate the aggregate amount of the disputed portion of a Cure Claim on the Effective Date. Within seven days of the resolution of the disputed portion of a Cure Claim (whether by Order of the Bankruptcy Court or agreement among the parties), the Debtors or the Plan Administrator, as applicable, shall pay the disputed portion of the Cure Claim to the applicable counterparty. Any Cure Claim on account of a monetary default shall be deemed fully satisfied, released, and discharged upon payment by the Debtors or the Plan Administrator of the Cure Claim; provided that nothing in the Plan shall prevent the Plan Administrator from paying any Cure Claim despite the failure of the relevant counterparty to File such request for payment of such Cure Claim. The Debtors or the Plan Administrator, as applicable, also may settle any Cure Claim without any further notice to or action, Order, or approval of the Bankruptcy Court; provided, however, that the Plan Administrator shall provide notice of any such settlement to the Representatives.

Any monetary defaults under each Executory Contract to be assumed pursuant to the Plan shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the Cure Claim amount in Cash on the Effective Date, subject to the limitation described below, or on such other terms as the parties to such Executory Contracts may otherwise agree. In the event of a dispute regarding (1) the amount of any payments to cure such a default, (2) the ability of the Debtors or the Plan Administrator, as applicable, to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the Executory Contract to be assumed, or (3) any other matter pertaining to assumption, the Cure Claim payments required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order or orders resolving the dispute and approving the assumption; provided that the Debtors or the Plan Administrator, as applicable, may settle any such dispute without any further notice to, or action, Order, or approval of the Bankruptcy Court or any other Entity; provided, however, that the Plan Administrator shall provide notice of any such settlement to the Representatives.

The Debtors shall provide for notices of proposed assumption or assumption and assignment and proposed Cure Claim amounts to be filed and served on applicable counterparties, which notices will include procedures for objecting thereto and resolution of disputes by the Bankruptcy Court; provided that, with respect to any Executory Contract that is added to the Schedule of Assumed Executory Contracts after such schedule is initially filed, the Debtors shall provide for such notice to be filed and served to applicable counterparties as soon as reasonably practicable after the applicable Executory Contract is added to the Schedule of Assumed Executory Contracts. Any objection by a counterparty to an Executory Contract to a proposed assumption or assumption and assignment on any grounds or related amount of the

 

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Cure Claim must be Filed, served, and actually received by the Debtors no later than 14 days after service of such notice. Any counterparty to an Executory Contract that fails to timely object to the proposed assumption will be deemed to have assented to such assumption or assumption and assignment and any objection shall be Disallowed and forever barred, estopped, and enjoined from assertion, and shall not be enforceable against any Wind-Down Debtor or the Plan Administration Trust, without the need for any objection by the Wind-Down Debtors, the Plan Administrator, or any other party in interest or any further notice to or action, Order, or approval of the Bankruptcy Court.

If there is a timely Filed objection regarding (1) the amount of any Cure Claim; (2) the ability of the Wind-Down Debtors or any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the Executory Contract to be assumed; or (3) any other matter pertaining to assumption or the cure amounts required by section 365(b)(1) of the Bankruptcy Code, such dispute shall be resolved by a Final Order of the Bankruptcy Court (which may be the Confirmation Order) or as may be agreed upon by the Plan Administrator and the counterparty to the Executory Contract. If the Bankruptcy Court determines that the Allowed Cure Claim with respect to any Executory Contract is greater than the amount set forth in the applicable cure notice, the Debtors or the Plan Administrator, as applicable, will have the right, at such time, to remove such Executory Contract from the Schedule of Assumed Executory Contracts up to 10 Business Days after entry of such order, in which case such Executory Contract shall be deemed rejected as of the date that the amended Schedule of Assumed Executory Contract is Filed; provided that, after the deadline to assume an unexpired lease under section 365(d)(4), an unexpired lease can only be removed from the Scheduled of Assumed Executory Contracts if the applicable counterparty consents to such rejection. If any such dispute is not resolved within 30 days following the Effective Date, the Plan Administrator or the counterparty to such Executory Contract may seek relief from the Bankruptcy Court to immediately adjudicate the dispute.

Assumption of any Executory Contract pursuant to the Plan or otherwise, full payment of any applicable Cure Claim, and cure of any nonmonetary defaults pursuant to Article V.C of the Plan shall result in the full release and satisfaction of any Cure Claims, Claims, or defaults, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract at any time prior to the effective date of assumption, upon the payment of all applicable Cure amounts and cure of any nonmonetary defaults. The Plan Administrator may file periodic objections to Proofs of Claim (including with corresponding Proofs of Claim numbers) based upon Executory Contracts that have been assumed in the Chapter 11 Cases, including pursuant to the Confirmation Order, and for which any Cure Claim has been fully paid pursuant to Article V.C of the Plan, and, after a period of at least 30 days for any party in interest to object, such Proofs of Claim shall be deemed Disallowed and expunged as of the Effective Date, subject to entry of an Order by the Bankruptcy Court.

 

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4.

Preexisting Obligations to the Debtors under Executory Contracts

Notwithstanding any non-bankruptcy law to the contrary, the Debtors expressly reserve and do not waive any right to receive, or any continuing obligation of a counterparty to provide, warranties or continued maintenance obligations on goods previously purchased, or services previously received, by the contracting Debtors from counterparties to rejected or repudiated Executory Contracts. For the avoidance of doubt, the rejection of any Executory Contracts pursuant to the Plan or otherwise shall not constitute a termination of pre-existing obligations owed to the Debtors under such Executory Contracts.

 

5.

Indemnification Obligations

Except as set forth in the Plan Supplement, all Indemnification Provisions, consistent with applicable law, currently in place (whether in the bylaws, certificates of incorporation or formation, limited liability company agreements, engagement letters, other organizational documents, board resolutions, indemnification agreements, employment contracts, D&O Liability Insurance Policies, or otherwise) for the current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other Professionals of each of the Debtors, as applicable, shall be Reinstated and remain intact, irrevocable, and shall survive the Effective Date on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other Professionals of the Debtors than the Indemnification Provisions in place prior to the Effective Date; provided, however, that any Indemnification Provisions arising under an Executory Contract between the Debtors and any Excluded Party shall not be Reinstated and such Executory Contract shall not be assumed by the applicable Debtors under the Plan, in each case to the fullest extent permitted under applicable law.

 

6.

Insurance Policies

Notwithstanding anything to the contrary in the Plan, the Confirmation Order, any other Definitive Document, any notice of any Cure amounts or Cure Claim, the Sale Order, the Bar Date Order, any claim objection, any other document or notice related to any of the foregoing or any other order of the Bankruptcy Court (including, without limitation, any other provision that purports to be preemptory or supervening, grants an injunction, discharge or release, confers Bankruptcy Court jurisdiction, or requires a party to opt out of any releases): (a) on the Effective Date, solely to the extent the Insurance Policies are executory, the Plan Administration Trust shall be deemed to have assumed all Insurance Policies, unaltered and in their entireties, pursuant to sections 105 and 365 of the Bankruptcy Code and, after the foregoing assumption of the Insurance Policies, all of the Insurance Policies shall vest, unaltered and in their entireties, in the Plan Administration Trust; (b) on and after the Effective Date, the Plan Administration Trust, on behalf of the Wind-Down Debtors, shall become and remain liable in full for all of its, the Debtors’, and the Wind-Down Debtors’ obligations under the Insurance Policies regardless of whether such obligations arise before, on, or after the Effective Date, without the need or requirement for any insurers to file or serve any notice of recoupment or a request, application, claim, Proof of Claim or motion for payment or allowance of any Administrative Claim or any objection to a proposed Cure amount and without any insurers being subject to any bar date, Administrative Claims Bar Date, or similar deadline governing Cure amounts or other Claims, (c) nothing (i) alters, modifies, or otherwise amends the terms and conditions of (or the coverage provided by) any Insurance Policies or (ii) alters or modifies the obligation, if any, of the insurers to pay claims covered by Insurance Policies and their right to seek payment or reimbursement from the Debtors (or, after the Effective Date, the Plan Administration Trust) or draw on any

 

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collateral or security therefor; (d) nothing shall permit or otherwise effectuate a sale, assignment or other transfer of any Insurance Policy and/or any rights, benefits, claims, proceeds, rights to payment, or recoveries under and/or relating to any Insurance Policy without the prior express written consent of the applicable insurer; and (e) the automatic stay of section 362(a) of the Bankruptcy Code and the injunctions set forth in Article VIII of the Plan, if and to the extent applicable, shall be deemed lifted without further order of the Bankruptcy Court, solely to permit: (i) claimants with valid workers’ compensation claims or direct action claims against an insurer under applicable non-bankruptcy law to proceed with their claims; (ii) the insurers to administer, handle, defend, settle, and/or pay, in the ordinary course of business and without further order of the Bankruptcy Court, (1) workers’ compensation claims, (2) claims where a claimant asserts a direct claim against any insurer under applicable non-bankruptcy law, or an order has been entered by the Bankruptcy Court granting a claimant relief from the automatic stay or the injunctions set forth in Article VIII of the Plan to proceed with its claim, and (3) all costs in relation to each of the foregoing; and (iii) the insurers to cancel any Insurance Policies and take other actions relating to the Insurance Policies (including effectuating a setoff and/or asserting any recoupment or subrogation rights or claims).

In addition, after the Effective Date, none of the Wind-Down Debtors shall terminate or otherwise reduce the coverage under any of the D&O Liability Insurance Policies in effect on or after the Petition Date, with respect to conduct or events occurring prior to the Effective Date, and all directors and officers of the Debtors who served in such capacity at any time prior to the Effective Date shall be entitled to the full benefits of any such D&O Liability Insurance Policy for the full term of such D&O Liability Insurance Policy, to the extent set forth therein and in accordance with and subject in all respects to the terms and conditions of such D&O Liability Insurance Policy, which shall not be altered, regardless of whether such directors and officers remain in such positions after the Effective Date.

Following the Effective Date, the Plan Administrator will, in consultation with the Representatives, collect all applicable proceeds of Insurance Policies, including the Cyber Insurance Policies, and create appropriate reserves in connection therewith, including but not limited to the Cyber Insurance Reserve.

 

7.

Modifications, Amendments, Supplements, Restatements, or Other Agreements

Unless otherwise provided in the Plan or the Confirmation Order, all Executory Contracts that are assumed or assumed and assigned shall include all exhibits, schedules, modifications, amendments, supplements, restatements, or other agreements that in any manner affect such Executory Contracts, and affect Executory Contracts related thereto, if any, including easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan or the Confirmation Order.

 

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Modifications, amendments, supplements, and restatements to prepetition Executory Contracts that have been executed by the Debtors during the Chapter 11 Cases shall not be deemed to alter (1) the prepetition nature of such Executory Contracts or (2) the validity, priority, or amount of any Claims that may arise in connection therewith, except as set forth under the express terms of any such modification, amendment, supplement, or restatement.

 

8.

Nonoccurrence of Effective Date

In the event that the Effective Date does not occur, the Bankruptcy Court shall retain jurisdiction with respect to any request to extend the deadline for assuming, assuming and assigning, or rejecting unexpired leases pursuant to section 365(d)(4) of the Bankruptcy Code.

 

9.

Reservation of Rights

Neither the exclusion nor the inclusion by the Debtors of any contract or lease on any exhibit, schedule, or other annex to the Plan or in the Plan Supplement, nor anything contained in the Plan, shall constitute an admission by the Debtors or any other party that any contract or lease is in fact an Executory Contract or that any of the Debtors, the Wind-Down Debtors, or the Plan Administration Trust have any liability thereunder. If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtors or the Wind-Down Debtors shall have 45 days following entry of a Final Order resolving such dispute to alter their treatment of such contract or lease.

 

E.	Procedures for Resolving Contingent, Unliquidated, and Disputed Claims and Interests

 

1.

Allowance of Claims

Except as expressly provided in the Plan or in any Order entered in the Chapter 11 Cases before the Effective Date (including the Confirmation Order), and consistent with the Claims Reconciliation Procedures to be approved by the Bankruptcy Court, no Claim shall become an Allowed Claim unless and until such Claim is deemed Allowed under the Plan or the Bankruptcy Code, or the Bankruptcy Court has entered a Final Order, including the Confirmation Order (when it becomes a Final Order), in the Chapter 11 Cases allowing such Claim. The Debtors or the Plan Administrator, in consultation with the Representatives, as applicable, may affirmatively determine to deem Unimpaired Claims Allowed to the same extent such Claims would be Allowed under applicable non-bankruptcy law, in accordance with the Claim Reconciliation Procedures, and the Plan Administration Trust Agreement.

 

2.

Claims Reconciliation Procedures and Omnibus Claims Objections

Claims in Class 7 and Class 9 that are not Allowed as of the Effective Date shall be subject to certain omnibus claims objection procedures (the “Omnibus Claims Objection Procedures”) claims reconciliation procedures (the “Claims Reconciliation Procedures”), in each case to be agreed to by the Debtors, the Creditors’ Committee and the Official Equity Committee, substantially in the forms to be filed in these Chapter 11 Cases prior to the Confirmation Date but no later than the filing of the Plan Supplement, which will be approved pursuant to the Confirmation Order or another order of the Bankruptcy Court. The Omnibus Claims Objection Procedures and Claims Reconciliation Procedures shall establish, among other things, (a) an efficient and expedited process for objecting to, reconciling and resolving Claims in Class 7 and Class 9, including the estimation of such Claims as necessary, (b) procedures for

 

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the sharing of information between the Plan Administrator and the Representatives; and (c) delegation of duties and oversight amongst the Plan Administrator and the Representatives, as applicable, with respect to such claims reconciliation process. On or after the Effective Date, the Plan Administrator may modify the Claims Reconciliation Procedure in consultation with the Representatives.

 

3.

Estimation of Claims and Interests

Before, on, or after the Effective Date, the Debtors or the Plan Administrator, may, in consultation with the Representatives, at any time request that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason or Disputed Interest, regardless of whether any party in interest previously has objected to such Claim or Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim or Interest, including during the litigation of any objection to any Claim or Interest or during the appeal relating to such objection. Notwithstanding any provision otherwise in the Plan, a Claim that has been expunged from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest, that estimated amount shall constitute a maximum limitation on such Claim or Interest for all purposes under the Plan (including for purposes of distributions), and the Plan Administrator may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim or Interest; provided that such limitation shall not apply to Claims against any of the Debtors requested by the Debtors to be estimated for voting purposes only.

Notwithstanding section 502(j) of the Bankruptcy Code, in no event shall any Holder of a Claim or Interest that has been estimated pursuant to section 502(c) of the Bankruptcy Code or otherwise be entitled to seek reconsideration of such estimation unless such Holder has Filed a motion requesting the right to seek such reconsideration on or before 14 calendar days after the date on which such Claim or Interest is estimated. All of the aforementioned Claims and Interest objection, estimation, and resolution procedures are cumulative and not exclusive of one another. Claims against any of the Debtors or Wind-Down Debtors, as applicable, may be estimated and subsequently compromised, settled, withdrawn, or resolved by any mechanism approved by the Bankruptcy Court.

 

4.

Adjustment to Claims

Any duplicate Claim or Interest, any Claim or Interest that has been paid or satisfied, or any Claim or Interest that has been amended or superseded, cancelled or otherwise expunged (including pursuant to the Plan or the Confirmation Order), may be adjusted or expunged (including on the Claims Register, to the extent applicable) by the Plan Administrator after providing notice and a period of at least 30 days for any party in interest to object, without any further notice to or action, Order, or approval of the Bankruptcy Court.

 

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5.

Objections to Claims

Except as otherwise specifically provided in the Plan or the Confirmation Order, and in accordance with the Claims Reconciliation Procedures, the Debtors, and after the Effective Date, the Plan Administrator shall have the sole authority to: (a) File and prosecute objections to Claims or Interests; (b) settle, compromise, withdraw, litigate to judgment, or otherwise resolve any and all objections to Claims or Interests (c) settle or compromise any Disputed Claim or Interest without any further notice to or action, Order, or approval by the Bankruptcy Court; and (d) direct the Notice and Claims Agent to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, Order, or approval by the Bankruptcy Court, in each case, subject to the rights of the Representatives to object to any such actions taken by the Plan Administrator as set forth in the Plan Administration Trust Agreement. For the avoidance of doubt, except as otherwise provided in the Plan, after the Effective Date, the Plan Administrator shall have the right to object to Claims and Interests and shall retain any and all rights and defenses that the Debtors had with respect to any Claim or Interest immediately before the Effective Date, including the Causes of Action retained pursuant to Article IV.F of the Plan. A motion to extend the Claims Objection Deadline shall automatically extend the deadline until the Court enters an order on such motion.

 

6.

Disallowance of Claims or Interests

Any Claims held by Entities from which property is recoverable under sections 542, 543, 550, or 553 of the Bankruptcy Code, or that is a transferee of a transfer avoidable under sections 522(f), 522(h), 544, 545, 547, 548, 549, or 724(a) of the Bankruptcy Code, shall be deemed Disallowed pursuant to section 502(d) of the Bankruptcy Code, and Holders of such Claims may not receive any distributions on account of such Claims until such time as such Causes of Action against that Entity have been settled or a Bankruptcy Court Order with respect thereto has been entered and all sums due, if any, by that Entity have been turned over or paid to the Plan Administrator. All Claims Filed on account of an indemnification obligation to a director, manager, officer, or employee of the Debtors as of the Effective Date shall be deemed satisfied and expunged from the Claims Register as of the Effective Date to the extent such indemnification obligation is assumed by the Plan Administrator, or honored or reaffirmed, as the case may be pursuant to the Plan, without any further notice to or action, Order, or approval of the Bankruptcy Court.

Except as provided in the Plan or otherwise agreed to by the Debtors or the Plan Administrator, as applicable, any and all Proofs of Claim filed after the applicable Claims Bar Date shall be deemed Disallowed and expunged as of the Effective Date without any further notice to or action, Order, or approval of the Bankruptcy Court, and Holders of such Claims may not receive any distributions on account of such Claims, unless on or before the Confirmation Hearing such late Filed Claim has been deemed timely Filed by a Final Order.

 

7.

No Distributions Pending Allowance

Notwithstanding any other provision of the Plan, if any portion of a Claim is a Disputed Claim, as applicable, no payment or distribution provided hereunder shall be made on account of such Claim or Interest unless and until such Disputed Claim becomes an Allowed Claim.

 

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8.

Distributions After Allowance

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any) shall be made to the Holder of such Allowed Claim in accordance with the provisions of the Plan. As soon as reasonably practicable after the date that the Order or judgment of the Bankruptcy Court Allowing any Disputed Claim becomes a Final Order, the Distribution Agent shall provide to the Holder of such Claim the distribution (if any) to which such Holder is entitled under the Plan as of the Effective Date, without any interest, dividends, or accruals to be paid on account of such Claim unless such Holder is entitled to Post-Petition Interest under Article III of the Plan.

 

F.	Provisions Governing Distributions

 

1.

Timing and Calculation of Amounts to Be Distributed

Unless otherwise provided in the Plan or the Confirmation Order, on the Effective Date (or if a Claim is not an Allowed Claim on the Effective Date, on the date that such Claim becomes an Allowed Claim, or as soon as reasonably practicable thereafter), or as soon as is reasonably practicable thereafter, each Holder of an Allowed Claim (as applicable) shall receive the full amount of the distributions that the Plan provides for Allowed Claims (as applicable) in the applicable Class. In the event that any payment or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day but shall be deemed to have been completed as of the required date.

Subject to Article VII of the Plan, distributions under the Plan on account of Allowed Claims or Allowed Interests shall not be subject to levy, garnishment, attachment, or like legal process, so that each Holder of an Allowed Claim or Allowed Interest shall have and receive the benefit of the distributions in the manner set forth in the Plan. The Debtors, the Plan Administrator, and the Distribution Agent, as applicable, shall not incur any liability whatsoever on account of any distributions under the Plan except for fraud, gross negligence, or willful misconduct. Distributions to Holders of Claims or Interests related to publicly held Securities shall be made to such Holders in exchange for such Securities, which shall be deemed canceled as of the Effective Date.

 

2.

Distribution Agent

Except as otherwise provided in the Plan, all distributions under the Plan shall be made by the Debtors, the Plan Administrator, the GUC Representative (solely as to Allowed General Unsecured Claims), or the Equity Representative (solely as to Allowed Interests) as Distribution Agent or such other Entity designated by the Debtors, the Plan Administrator, the GUC Representative, or the Equity Representative as a Distribution Agent on or after the Effective Date. No Distribution Agent shall be required to give any bond or surety or other security for the performance of its duties.

 

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3.

Distribution Record Date

On the Distribution Record Date, the Claims Register shall be closed and the Distribution Agent shall be authorized and entitled to recognize only those record Holders, if any, listed on the Claims Register as of the close of business on the Distribution Record Date. The Distribution Agent shall have no obligation to recognize any transfer of Claims occurring on or after the Distribution Record Date. In addition, with respect to payment of any Cure Claims or disputes over any Cure Claims, neither the Debtors nor the Distribution Agent shall have any obligation to recognize or deal with any party other than the Non-Debtor party to the applicable Executory Contract as of the Effective Date, even if such Non-Debtor party has sold, assigned, or otherwise transferred its Cure Claim. The Distribution Record Date shall not apply to publicly held Securities deposited with DTC and, in connection with any distribution under the Plan to be effected through the facilities of DTC (whether by means of book-entry exchange, free delivery, or otherwise), the Debtors or the Plan Administrator, as applicable, shall be entitled to recognize and deal for all purposes under the Plan with Holders of Claims in each Class to the extent consistent with the customary practices of DTC used in connection with such distributions as applicable.

 

4.

Rights and Powers of Distribution Agent

 

a.

Powers of Distribution Agent

The Distribution Agent shall be empowered to: (a) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties under the Plan; (b) make all distributions contemplated hereby; (c) employ professionals to represent it with respect to its responsibilities; and (d) exercise such other powers as may be vested in the Distribution Agent by Order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Distribution Agent to be necessary and proper to implement the Plan’s provisions.

 

b.

Expenses Incurred on or After the Effective Date

Except as otherwise ordered by the Bankruptcy Court and subject to the prior consent of the Plan Administrator, the amount of any reasonable and documented fees and out-of-pocket expenses incurred by the Distribution Agent on or after the Effective Date (including taxes) and any reasonable compensation and out-of-pocket expense reimbursement claims (including reasonable attorney fees and expenses) made by the Distribution Agent shall be paid in Cash by the Plan Administrator in the ordinary course, in accordance with the Plan Administration Trust Agreement.

 

5.

Delivery of Distributions and Undeliverable or Unclaimed Distributions

 

a.

Delivery of Distributions

Except as otherwise provided in the Plan, distributions to Holders of Allowed Claims or Allowed Interests shall be made to Holders of record as of the Distribution Record Date by the Distribution Agent: (a) at the addresses set forth on the respective Proofs of Claim Filed by Holders of such Claims; (b) at the address for a Claim transferee set forth in a valid and timely

 

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notice of transfer of Claim Filed with the Bankruptcy Court; (c) at the addresses set forth in any written notice of address change Filed with the Bankruptcy Court or delivered to the applicable Disbursing Agent after the date of Filing of any related Proof of Claim; (d) at the addresses reflected in the Debtors’ Schedules if no Proof of Claim has been Filed and the applicable Disbursing Agent has not received a written notice of a change of address; or (e) if clauses (a) through (d) are not applicable, at the last address directed by such Holder after such Claim becomes an Allowed Claim.

No fractional units of Plan Administration Trust Interests shall be distributed, and no Cash shall be distributed in lieu of such fractional amounts. When any distribution pursuant to the Plan on account of an Allowed Claim or Interest otherwise would result in the issuance of units of Plan Administration Trust Interests that is not a whole number, such units of Plan Administration Trust Interests shall be rounded as follows: (a) fractions of greater than one-half shall be rounded to the next higher whole number and (b) fractions of one-half or less shall be rounded to the next lower whole number with no further payment on account thereof. The total number of authorized and/or issued units of Plan Administration Trust Interests to be distributed pursuant to the Plan shall be adjusted as necessary to account for the foregoing rounding.

 

b.

Minimum Distributions

No payment of fractional cents shall be made pursuant to the Plan. Whenever any payment of a fraction of a cent under the Plan would otherwise be required, the distribution shall reflect a rounding of such fraction to the nearest whole penny, rounded down to the next lower whole cent. Claimants whose aggregate distributions total less than $100 shall not be entitled to a distribution under the Plan, and each such Claim to which this limitation applies shall be discharged pursuant to Article VIII of the Plan and its Holder is forever barred pursuant to Article VIII of the Plan from asserting that Claim against the Debtors, the Wind-Down Debtors, the Plan Administration, or their respective property; provided, however, that the foregoing shall not apply to distributions to Holders of Allowed Claims in Classes 3, 4 and 5.

 

c.

Undeliverable Distributions and Unclaimed Property

In the event that any distribution to any Holder of an Allowed Claim or Allowed Interest (as applicable) is returned as undeliverable, no distribution to such Holder shall be made unless and until the Distribution Agent has determined the then-current address of such Holder, at which time such distribution shall be made to such Holder without any additional interest accruing; provided that unless such Holder asserts a claim for an undeliverable Distribution within 90 days after such distribution is made, such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code. After such date, all unclaimed property or interests in property shall revert to the Plan Administration Trust automatically and without need for a further order by the Bankruptcy Court (notwithstanding any applicable federal, provincial, or state escheatment, abandoned property, or unclaimed property laws to the contrary), and the Claim or Interest of any Holder related to such property or interest in property shall be discharged and forever barred.

 

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Checks issued on account of Allowed Claims shall be null and void if not negotiated within 90 calendar days for Allowed Claims, from and after the date of first issuance thereof. Requests for reissuance of any check must be made directly and in writing to the Distribution Agent by the Holder of the relevant Allowed Claim within the 90-calendar day period. After such date, the relevant Allowed Claim (and any Claim for reissuance of the original check), as applicable, shall be automatically discharged and forever barred, and such funds shall revert to the Plan Administrator (notwithstanding any applicable federal, provincial, state or other jurisdiction escheat, abandoned, or unclaimed property laws to the contrary).

 

6.

Manner of Payment

At the option of the Distribution Agent, any Cash distribution to be made hereunder may be made by check, wire transfer, automated clearing house, or credit card, or as otherwise required or provided in applicable agreements.

 

7.

Compliance with Tax Requirements

In connection with the Plan, to the extent applicable, the Debtors, the Wind-Down Debtors, the Plan Administrator, the Representatives, or the applicable Distribution Agent, shall comply with all tax withholding and reporting requirements imposed on them by any Governmental Unit, and all distributions pursuant to the Plan shall be subject to such withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary, such parties shall be authorized to take all actions necessary or appropriate to comply with such withholding and reporting requirements, including liquidating a portion of the distributions to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions, or establishing any other mechanisms they believe are reasonable and appropriate. The Debtors, the Wind-Down Debtors, the Plan Administrator, the Representatives, or the applicable Distribution Agent, as applicable, reserve the right to allocate all distributions made under the Plan in compliance with applicable wage garnishments, alimony, child support, and other spousal awards, liens, and encumbrances.

The Distribution Agent may require any Holder of any Claim to complete the appropriate IRS Form W-8 or IRS Form W-9 as a prerequisite to receiving any distribution under the Plan. If a Holder of any Claim does not provide to the applicable Distribution Agent, within 90 days of a written request, all documentation that, in the applicable Distribution Agent’s reasonable business judgment, is necessary to determine that all tax withholding and reporting requirements for such Claim, including the appropriate IRS Form W-8 or IRS Form W-9, the distribution in respect of such Claim shall be deemed Disallowed and expunged in its entirety and the funds shall revert to the Plan Administration Trust for all purposes, including, but not limited to, redistribution to the other Holders of Claims in accordance with the terms of the Plan. In such event, the Claim of the Holder originally entitled to such distribution shall be waived and forever barred without further order of the Bankruptcy Court.

Notwithstanding any other provision of the Plan to the contrary, each Holder of a Claim that is to receive a distribution under the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such Holder by any Governmental Unit, including income, withholding, and other tax obligations, on account of such distribution. Amounts properly withheld from distributions made under the Plan and paid over to the applicable taxing authority for the account of any Holder will be treated as amounts distributed to such Holder.

 

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8.

Allocations

Distributions in respect of Allowed Claims shall be allocated first to the principal amount of such Claims (as determined for federal income tax purposes) and then, to the extent the consideration exceeds the principal amount of the Claims, to any portion of such Claims for accrued but unpaid interest (if any) provided for by the Plan, including Post-Petition Interest.

 

9.

Foreign Currency Exchange Rate

Except as otherwise provided in a Bankruptcy Court Order, as of the Effective Date, any Claim asserted in currency other than U.S. dollars shall be automatically deemed converted to the equivalent U.S. dollar value using the exchange rate for the applicable currency as published in The Wall Street Journal, National Edition, as of the Petition Date.

 

10.

Setoffs and Recoupment

Except as expressly provided in the DIP Orders, the Confirmation Order, and the Plan, each Debtor or the Plan Administrator, as applicable, may, pursuant to section 553 of the Bankruptcy Code, set off and/or recoup against any payments or distributions to be made pursuant to the Plan on account of any Allowed Claim, any and all claims, rights, and Causes of Action that such Debtor or the Plan Administrator may hold against the Holder of such Allowed Claim; provided that neither the failure to effectuate a setoff or recoupment nor the allowance of any Claim hereunder shall constitute a waiver or release by a Debtor or the Plan Administrator, as applicable, of any and all claims, rights, and Causes of Action that such Debtor or the Plan Administrator, as applicable, may possess against the applicable Holder.

Notwithstanding anything to the contrary in the Plan, but subject to the Bar Date Order (including the requirement that all Proofs of Claim state whether a Claim is subject to a right of setoff or recoupment) and the automatic stay, nothing shall modify the rights, if any, of any Holder of Allowed Claims or any current or former party to an Executory Contract to assert any right of setoff or recoupment that such party may have under applicable bankruptcy or non-bankruptcy law with respect to undisputed amounts owing to or held by it, including (1) the ability, if any, of such parties to setoff or recoup a security deposit held pursuant to the terms of their unexpired leases with the Debtors or any successors to the Debtors under the Plan; (2) assertion of rights of setoff or recoupment, if any, in connection with Claims reconciliation; (3) assertion of setoff or recoupment as a defense, if any, to any claim or action by the Debtors or the Plan Administrator; or (4) assertion of rights of setoff and/or recoupment in connection with periodic reconciliations in accordance with the terms of assumed unexpired leases.

 

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11.

Claims Paid or Payable by Third Parties

 

a.

Claims Paid by Third Parties

The Debtors or the Plan Administrator, as applicable, shall reduce a Claim, and such Claim (or portion thereof) shall be Disallowed without a Claims objection having to be Filed and without any further notice to or action, Order, or approval of the Bankruptcy Court, to the extent that the Holder of such Claim receives payment on account of such Claim from a party that is not a Debtor or the Plan Administrator. Subject to the last sentence of this paragraph, to the extent a Holder of a Claim receives a distribution on account of such Claim and also receives payment from a party that is not a Debtor or the Plan Administrator on account of such Claim, such Holder shall, within 14 days of receipt thereof, repay or return the distribution to the Plan Administrator to the extent the Holder’s total recovery on account of such Claim from the third party and under the Plan exceeds the amount of such Claim as of the date of any such distribution under the Plan. The failure of such Holder to timely repay or return such distribution shall result in the Holder owing the Plan Administrator annualized interest at the Federal Judgment Rate on such amount owed for each Business Day after the 14-day grace period specified above until the amount is repaid.

 

b.

Claims Payable by Third Parties

No distributions under the Plan need be made on account of an Allowed Claim that is payable pursuant to one of the Debtors’ or Wind-Down Debtors’ insurance policies, as applicable, until the Holder of such Allowed Claim has exhausted all remedies with respect to such insurance policy. To the extent that one or more of the Debtors’ insurers agrees to satisfy in full or in part a Claim against any Debtor, then immediately upon such insurers’ agreement, the applicable portion of such Claim may be expunged without a Claims objection having to be Filed and without any further notice to or action, Order, or approval of the Bankruptcy Court.

 

c.

Applicability of Insurance Policies

Except as otherwise provided in the Plan, distributions to Holders of Allowed Claims shall be in accordance with the provisions of any applicable insurance policy. Except as otherwise provided in the Plan or Confirmation Order, nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including insurers under any policies of insurance, nor shall anything contained in the Plan constitute or be deemed a waiver by such insurers of any defenses, including coverage defenses, held by such insurers.

 

G.	Release, Injunction, and Related Provisions

 

1.

Settlement, Compromise, and Release of Claims and Interests

The Lemonaid Debtors are entitled to a discharge of obligations pursuant to section 1141(d)(1) of the Bankruptcy Code, except as otherwise specifically provided in the Plan, the Confirmation Order or in any contract, instrument, or other agreement or document created pursuant to the Plan or the Confirmation Order, including the Plan Supplement and Definitive Documents. The Chrome Debtors are liquidating and are not entitled to a discharge of obligations pursuant to section 1141(d)(3) of the Bankruptcy Code with regard to any Holders of Claims or Interests against the Chrome Debtors. Section 1141(c) nevertheless provides, among other things, that the property dealt with by the Plan is free and clear of all Claims and Interests against the Chrome Debtors. As such, no Entity holding a Claim or Interest against the Chrome Debtors may receive any payment from, or seek recourse against, any assets that are to be

 

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distributed under the Plan other than assets required to be distributed to that Entity under the Plan. All parties are precluded from asserting against any property to be distributed under the Plan any Claims, rights, Causes of Action, liabilities, or Interests based upon any act, omission, transaction, or other activity that occurred before the Effective Date except as expressly provided in the Plan or the Confirmation Order.

The distributions, rights, and treatment that are provided in the Plan shall be in complete satisfaction, compromise, and release, effective as of the Effective Date, of Claims (including any Intercompany Claims resolved or compromised after the Effective Date by the Plan Administrator), Interests, and Causes of Action of any nature whatsoever, including the Post-Petition Interest accrued on certain Claims from and after the Petition Date, whether known or unknown, against, liabilities of, 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 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 liability) to the extent such Claims or Interests relate to services performed by current or former employees of the Debtors prior to the Effective Date and that arise from a termination of employment, any contingent or non-contingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim or Proof of Interest based upon such debt, right, or Interest is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the Holder of such a Claim or Interest has accepted the Plan. Therefore, notwithstanding anything in section 1141(d)(3) to the contrary with respect to the Chrome Debtors, all Persons or Entities who have held, hold, or may hold Claims or Interests based upon any act, omission, transaction, or other activity of any kind or nature related to the Debtors or the Chapter 11 Cases, that occurred prior to the Effective Date, other than as expressly provided in the Plan, shall be precluded and permanently enjoined on and after the Effective Date from interfering with the use and distribution of the Debtors’ assets in the manner contemplated by the Plan. The Confirmation Order shall be a judicial determination of the settlement, compromise, and release of all Claims and Interests subject to the occurrence of the Effective Date.

 

2.

Debtor Release

Notwithstanding anything else contained in the Plan to the contrary, to the fullest extent permitted by applicable law and approved by the Bankruptcy Court, pursuant to section 1123(b) of the Bankruptcy Code and Bankruptcy Rule 9019 and in exchange for good and valuable consideration, the adequacy of which is hereby confirmed, on and after the Effective Date, each Released Party is deemed to be, and hereby is conclusively, absolutely, unconditionally, irrevocably, finally, and forever released and discharged by each and all of the Debtors, the Wind-Down Debtors, and their Estates, including any successors to the Debtors or any Estate’s representative appointed or selected pursuant to section 1123(b)(3) of the Bankruptcy Code, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claim or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities, from any and all Claims and Causes of Action,

 

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including any derivative Claims asserted or assertable on behalf of the Debtors, whether known or unknown, foreseen or unforeseen, asserted or unasserted, matured or unmatured, liquidated or unliquidated, fixed or contingent, accrued or unaccrued, existing or hereafter arising, in law, equity, contract, tort, or otherwise, that the Debtors, the Wind-Down Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Cause of Action against, or Interest in, a Debtor or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Wind-Down Debtors, or their Estates (including the Debtors’ capital structure, management, ownership, assets, or operation thereof), the purchase, sale, or rescission of any Security of the Debtors or the Wind-Down Debtors, the assertion or enforcement of rights and remedies against the Debtors, the subject matter of, or the transactions or events giving rise to, any Claim, Causes of Action, or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions between or among a Debtor or an Affiliate of a Debtor and another Debtor or an Affiliate of a Debtor, the Chapter 11 Cases, the DIP Facility, the formulation, preparation, dissemination, negotiation, or Filing of the Purchase Agreements or the implementation of the transactions contemplated by those agreements, the Disclosure Statement, the Definitive Documents, the GUC Settlement Agreements, the Plan Administration Trust Agreement, the Plan (including, for the avoidance of doubt, the Plan Supplement), or any aspect of the Sale Transactions, the Wind-Down Transactions, or the establishment of the Plan Administration Trust, and any contract, instrument, release, or other agreement or document created or entered into in connection with the Purchase Agreements, the Sale Transactions, the DIP Facility, the Disclosure Statement, the Definitive Documents, the GUC Settlement Agreements, the Plan, the Confirmation Order, the Chapter 11 Cases, the Filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, any action or actions taken in furtherance of or consistent with the administration of the Plan, or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date related or relating to any of the foregoing.

Notwithstanding anything contained in the Plan to the contrary, the foregoing release does not release (1) any post-Effective Date obligations of any party or Entity under the Plan, any act occurring after the Effective Date with respect to the Wind-Down Transactions, the obligations arising under any Definitive Document to the extent imposing obligations arising after the Effective Date (including those set forth in the Plan Supplement), or other document, instrument, or agreement executed to implement the Plan, (2) the rights of Holders of Allowed Claims to receive distributions under the Plan, or (3) any Retained Causes of Action, including Causes of Action included on the Schedule of Retained Causes of Action.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the terms by which matters are subject to a compromise and settlement, including the Debtor Releases in Article VIII.B of the Plan, which includes by reference each of the related provisions and definitions contained in the Plan, and, further, shall constitute the Bankruptcy Court’s finding that the Debtor

 

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Releases in Article VIII.B of the Plan are: (1) essential to Confirmation of the Plan; (2) an exercise of the Debtors’ business judgment; (3) in exchange for the good and valuable consideration provided by the Released Parties, including the Released Parties’ contributions to facilitating the Wind-Down Transactions and implementing the Plan; (4) a good-faith settlement and compromise of the Claims and Causes of Action released by the Debtor Releases in Article VIII.B of the Plan; (5) in the best interests of the Debtors, their Estates, and all Holders of Claims and Interests; (6) fair, equitable, and reasonably given and made after due notice and opportunity for a hearing; and (7) a bar to any of the Debtors, the Wind-Down Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Releases in Article VIII.B of the Plan.

 

3.

Third-Party Release

Except as otherwise expressly set forth in the Plan or the Confirmation Order, on and after the Effective Date, pursuant to Bankruptcy Rule 9019 and to the fullest extent permitted by applicable law and approved by the Bankruptcy Court, pursuant to section 1123(b) of the Bankruptcy Code, in exchange for good and valuable consideration, the adequacy of which is hereby confirmed, each Released Party is deemed to be, and hereby is conclusively, absolutely, unconditionally, irrevocably, finally, and forever released and discharged by each Releasing Party (in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other Entities who may purport to assert any Claim or Cause of Action, directly or derivatively, by, through, for, or because of the foregoing Entities) from any and all Claims and Causes of Action, including any derivative Claims asserted or assertable on behalf of the Debtors, whether known or unknown, foreseen or unforeseen, asserted or unasserted, matured or unmatured, liquidated or unliquidated, fixed or contingent, accrued or unaccrued, existing or hereafter arising, in law, equity, contract, tort, or otherwise that such Entity would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the Holder of any Claim or Cause of Action against, or Interest in, a Debtor based on or relating to, or in any manner arising from, in whole or in part, the Debtors (including the Debtors’ capital structure, management, ownership, assets, or operation thereof), the purchase, sale, or rescission of any security of the Debtors or the Wind-Down Debtors, the subject matter of, or the transactions or events giving rise to, any Claim, Cause of Action, or Interest that is treated in the Plan, the business or contractual arrangements between any Debtor and any Released Party, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions between or among a Debtor or an Affiliate of a Debtor and another Debtor or an Affiliate of a Debtor, the Chapter 11 Cases, the DIP Facility, the formulation, preparation, dissemination, negotiation, or Filing of the Purchase Agreements or the implementation of the transactions contemplated by those agreements, the Disclosure Statement, the Definitive Documents, the GUC Settlement Agreements, the Plan Administration Trust Agreement, the Plan (including, for the avoidance of doubt, the Plan Supplement), or any aspect of the Sale Transaction, the Wind-Down Transactions, or the establishment of the Plan Administration Trust, and any contract, instrument, release, or other agreement or document created or entered into in connection with the Purchase Agreements, the Sale Transactions, the DIP Facility, the Disclosure Statement, the Definitive Documents, the GUC Settlement Agreements, the Plan, the Confirmation Order, the Chapter 11 Cases, the Filing of the Chapter 11 Cases, the pursuit of

 

87

Confirmation, the administration and implementation of the Plan, any action or actions taken in furtherance of or consistent with the administration of the Plan, including the issuance or distribution of Securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date related or relating to any of the foregoing.

Notwithstanding anything contained in the Plan to the contrary, the foregoing release does not release (1) any post-Effective Date obligations of any party or Entity under the Plan, any act occurring after the Effective Date with respect to the Wind-Down Transactions, the obligations arising under the Definitive Documents to the extent imposing obligations arising after the Effective Date (including those set forth in the Plan Supplement), or other document, instrument, or agreement executed to implement the Plan, (2) the rights of Holders of Allowed Claims to receive distributions under the Plan, or (3) any Retained Causes of Action, including Causes of Action included on the Schedule of Retained Causes of Action.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the terms by which matters are subject to a compromise and settlement, including the Debtor Releases in Article VIII.B of the Plan, which includes by reference each of the related provisions and definitions contained in the Plan, and, further, shall constitute the Bankruptcy Court’s finding that the Third-Party Releases in Article VIII.C of the Plan are: (1) essential to Confirmation of the Plan; (2) in exchange for the good and valuable consideration provided by the Released Parties, including the Released Parties’ contributions to facilitating the Wind-Down Transactions and implementing the Plan; (3) a good-faith settlement and compromise of the Claims and Causes of Action released by the Third-Party Releases in Article VIII.C of the Plan; (4) in the best interests of the Debtors and their Estates and all Holders of Claims and Interests; (5) fair, equitable, and reasonably given and made after due notice and opportunity for a hearing; and (6) a bar to any of the Releasing Parties asserting any Claim or Cause of Action released pursuant to the Third-Party Releases in Article VIII.C of the Plan.

Without limiting the foregoing, from and after the Effective Date, any Entity that is given the opportunity to opt out of the releases contained in Article VIII.C of the Plan and does not exercise such opt out is a Releasing Party and may not assert any Claim or other Cause of Action against any Released Party based on or relating to, or in any manner arising from, in whole or in part, the Debtors. From and after the Effective Date, any Entity (a) that opted out of the releases contained in Article VIII.C of the Plan or (b) was deemed to reject the Plan may not assert any Claim or other Cause of Action against any Released Party for which it is asserted or implied that such Claim or Cause of Action is not subject to the releases contained in Article VIII.C of the Plan without first obtaining a Final Order from the Bankruptcy Court (a) determining, after notice and a hearing, that such Claim or Cause of Action is not subject to the releases contained in Article VIII.C of the Plan, and (b) specifically authorizing such Person or Entity to bring such Claim or Cause of Action against any such Released Party. The Bankruptcy Court will have sole and exclusive jurisdiction to determine whether a Claim or Cause of Action constitutes a direct or derivative claim, is colorable and, only to the extent legally permissible and as

 

88

provided for in Article XI of the Plan, the Bankruptcy Court shall have jurisdiction to adjudicate the underlying Claim or Cause of Action; provided, however, that nothing in this paragraph requires, precludes, and/or prohibits an Insurer to or from administering, handling, defending, settling and/or paying claims covered by any Insurance Policies in accordance with and subject to the terms and conditions of such Insurance Policies and/or applicable non-bankruptcy law.

 

4.

Exculpation

Except as otherwise expressly provided in the Plan or the Confirmation Order, to the fullest extent permissible under applicable law and without affecting or limiting either the Debtor Release or the Third-Party Release, no Exculpated Party shall have or incur, and each Exculpated Party is exculpated from any Claim or Cause of Action related to any act or omission arising on or after the Petition Date and through the Effective Date in connection with, relating to, or arising out of, the Chapter 11 Cases, the Wind-Down Transactions, the formulation, preparation, dissemination, negotiation, or filing of the Disclosure Statement, the Plan, the Sale Transactions, the Definitive Documents, the GUC Settlement Agreements, the establishment of the Plan Administration Trust, or any transaction, contract, instrument, release or other agreement or document created or entered into in connection with the Disclosure Statement, the Sale Transactions, the Definitive Documents, or the Plan, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, the Wind-Down Transactions or the distribution of property under the Plan or any other related agreement.

The Exculpated Parties have, and upon completion of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the solicitation of votes and distribution of consideration pursuant to the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan.

 

5.

Injunction

Pursuant to 11 U.S.C. § 362(c)(1), the automatic stay of an act against property of the Debtors’ estates will continue until such property is no longer property of the Debtors’ estates, and pursuant to 11 U.S.C. §362(c)(2), the stay of any other act described in 11 U.S.C. § 362(a) continues until the earlier of the closure or dismissal of these Chapter 11 Cases. In addition, as of the Effective Date and subject to the occurrence of the Effective Date, except as otherwise specifically provided in the Plan or the Confirmation Order, all Persons and Entities who have held, hold, or may hold Claims or Interests that are fully satisfied pursuant to the Plan or any Claim or Interest that is subject to the releases and exculpations set forth in the Plan shall be precluded and permanently enjoined on and after the Effective Date from enforcing, pursuing, or seeking any setoff or relief with respect to such Claims or Interests, except for the receipt of the payments or Distributions that are contemplated by the Plan.

For the avoidance of doubt, the foregoing relief may include (but is not limited to):

 

89

a.

commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Claims or Interests;

 

b.

enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order on account of or in connection with or with respect to any such Claims or Interests;

 

c.

creating, perfecting, or enforcing any encumbrance of any kind on account of or in connection with or with respect to any such Claims or Interests;

 

d.

asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from the Debtors, the Wind-Down Debtors, the Released Parties or the Exculpated Parties, or against the property of any of the foregoing, 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 Effective Date, and notwithstanding an indication of a Claim or Interest or otherwise that such Holder asserts, has, or intends to preserve any right of setoff pursuant to applicable law or otherwise; and

 

e.

commencing or continuing in any manner 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, compromised, or settled pursuant to the Plan.

No Person or Entity may commence or pursue a Claim or Cause of Action of any kind against the Exculpated Parties that relates to or is reasonably likely to relate to any act or omission in connection with, relating to, or arising out of a Claim or Cause of Action related to the Chapter 11 Cases prior to the Effective Date, the formulation, preparation, dissemination, negotiation, or Filing of the Disclosure Statement, the Plan, the Plan Supplement, the Purchase Agreements, the Definitive Documents, the DIP Facility, the GUC Settlement Agreements, or any contract, instrument, release, or other agreement or document created or entered into before or during the Chapter 11 Cases, any preference, fraudulent transfer, or other avoidance Claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable law, the Filing of the Chapter 11 Cases, the Sale Transactions, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date related or relating to any of the foregoing, without regard to whether such Person or Entity is a Releasing Party, without the Bankruptcy Court (1) first determining, after notice and a hearing, that such Claim or Cause of Action represents a colorable Claim of any kind and (2) specifically authorizing such Person or Entity to bring such Claim or Cause of Action against any such Debtor, Wind-Down Debtor, or Exculpated Party.

The Bankruptcy Court will have sole and exclusive jurisdiction to adjudicate the underlying colorable Claim or Causes of Action.

 

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Notwithstanding anything to the contrary in the foregoing, the injunction does not enjoin any party under the Plan, the Confirmation Order or other document, instrument, or agreement (including those attached to the Disclosure Statement, or included in the Plan Supplement) executed to implement the Plan and the Confirmation Order from bringing an action to enforce the terms of the Plan, the Confirmation Order or such document, instrument, or agreement (including those attached to the Disclosure Statement, or included in the Plan Supplement) executed to implement the Plan and the Confirmation Order. The injunction in the Plan shall extend to any successors and assigns of the Debtors and the Wind-Down Debtors and their respective property and interests in property.

For the avoidance of doubt, Article VIII.E of the Plan shall not constitute a discharge under section 1141(d) of the Bankruptcy Code except as expressly set forth in the Plan.

 

6.

Waiver of Statutory Limitations on Releases

Each Releasing Party in each of the releases contained in the Plan expressly acknowledges that although ordinarily a general release may not extend to Claims that the Releasing Party does not know or suspect to exist in its favor, which if known by it may have materially affected its settlement with the party released, each Releasing Party has carefully considered and taken into account in determining to enter into the above releases the possible existence of such unknown losses or Claims. Without limiting the generality of the foregoing, each Releasing Party expressly waives any and all rights conferred upon it by any statute or rule of law that provides that a release does not extend to Claims that the claimant does not know or suspect to exist in its favor at the time of executing the release, which if known by it may have materially affected its settlement with the Released Party. The releases contained in the Plan are effective regardless of whether those released matters are presently known, unknown, suspected or unsuspected, foreseen or unforeseen.

 

7.

Protection Against Discriminatory Treatment

Consistent with section 525 of the Bankruptcy Code and the Supremacy Clause of the U.S. Constitution, all Entities, including Governmental Units, shall not discriminate against the Wind-Down Debtors or deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, or discriminate with respect to such a grant against the Wind-Down Debtors, or another Entity with whom the Wind-Down Debtors have been associated, solely because each Debtor has been a debtor under chapter 11 of the Bankruptcy Code, may have been insolvent before the commencement of the Chapter 11 Cases (or during the Chapter 11 Cases, but before the Debtors are granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11 Cases.

 

8.

Document Retention

On and after the Effective Date, the Wind-Down Debtors may maintain documents in accordance with their standard document retention policy, as may be altered, amended, modified, or supplemented by the Wind-Down Debtors.

 

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9.

Reimbursement or Contribution

If the Bankruptcy Court disallows a Claim for reimbursement or contribution of an Entity pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the extent that such Claim is contingent as of the time of Allowance or Disallowance, such Claim shall be forever Disallowed and expunged notwithstanding section 502(j) of the Bankruptcy Code, unless prior to the Confirmation Date: (1) such Claim has been adjudicated as non-contingent or (2) the relevant holder of a Claim has Filed a non-contingent Proof of Claim on account of such Claim and a Final Order has been entered prior to the Confirmation Date determining such Claim as no longer contingent.

 

H.	Conditions Precedent to Consummation of the Plan

 

1.

Conditions Precedent to the Effective Date

It shall be a condition to Consummation of the Plan that the following conditions shall have been satisfied or waived pursuant to the provisions of Article IX.B thereof:

 

a.

the Bankruptcy Court shall have entered the Confirmation Order and the Confirmation Order shall not have been reversed, subject to a stay as of the Effective Date, modified, or vacated on appeal;

 

b.

the Definitive Documents shall have been executed or deemed executed and delivered by each party thereto, and any conditions precedent related thereto shall have been satisfied or waived by the applicable party or parties;

 

c.

any and all requisite governmental, regulatory, and third party approvals and consents shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired or terminated without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose materially adverse conditions on the Wind-Down Transactions;

 

d.

all Allowed Professional Fee Claims approved by the Bankruptcy Court shall have been paid in full or amounts sufficient to pay such Allowed Professional Fee Claims after the Effective Date shall have been placed in the Professional Fee Escrow Account pending approval of the Professional Fee Claims by the Bankruptcy Court;

 

e.

the Administrative / Priority Claims Reserve and the Wind-Down Reserve shall have been established and/or funded in full;

 

f.

the Plan Administration Trust Assets shall have been transferred to the Plan Administration Trust;

 

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g.

the Plan Administration Trust Agreement shall have been executed by the parties thereto; and

 

h.

the Plan Administrator and the Representatives shall have been appointed and assumed their rights and responsibilities under the Plan, and the Plan Administration Trust Agreement, as applicable, and the Plan Administration Trust shall have been established in accordance with the terms of the Plan Administration Trust Agreement.

 

2.

Waiver of Conditions

Any condition to the Effective Date of the Plan set forth in Article IX.A thereof may be waived, in whole or in part, by the Debtors without notice, leave, or Order of the Bankruptcy Court or any formal action other than proceedings to confirm or consummate the Plan, provided that the conditions set forth in Article IX.A(f) and (g) thereof may be waived in whole or in part by an agreement between the Debtors, the Creditors’ Committee, and the Official Equity Committee.

 

3.

Substantial Consummation

“Substantial Consummation” of the Plan, as defined in 11 U.S.C. § 1101(2), shall be deemed to occur on the Effective Date.

 

4.

Effect of Nonoccurrence of a Condition

If the Effective Date does not occur, then: (1) the Plan will be null and void in all respects; and (2) nothing contained in the Plan, or the Disclosure Statement, shall: (a) constitute a waiver or release of any Claims, Interests, or Causes of Action by any Entity; (b) prejudice in any manner the rights of any Debtor or any other Entity; or (c) constitute an admission, acknowledgment, offer, or undertaking of any sort by any Debtor or any other Entity.

 

I.	Modification, Revocation, or Withdrawal of the Plan

 

1.

Modification and Amendments

Subject to certain restrictions and requirements set forth in section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 (as well as those restrictions on modifications set forth in the Plan), at any time prior to the Confirmation Hearing, the Debtors reserve the right, in consultation with the Creditors’ Committee and the Official Equity Committee to modify the Plan without additional disclosure pursuant to section 1125 of the Bankruptcy Code prior to the Confirmation Date and seek Confirmation consistent with the Bankruptcy Code and, as appropriate, not re-solicit votes on such modified Plan. After the Confirmation Date and before substantial consummation of the Plan, the Debtors or the Plan Administrator, as applicable, may initiate proceedings in the Bankruptcy Court pursuant to section 1127(b) of the Bankruptcy Code to remedy any defect or omission or reconcile any inconsistencies in the Plan, the Plan Supplement, the Disclosure Statement, or the Confirmation Order, relating to such matters as may be necessary to carry out the purposes and intent of the Plan.

 

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After the Confirmation Date, but before the Effective Date, the Debtors may make appropriate technical adjustments and modifications to the Plan (including the Plan Supplement) without further order or approval of the Bankruptcy Court; provided that such adjustments and modifications do not materially and adversely affect the treatment of Holders of Claims or Interests.

 

2.

Effect of Confirmation on Modifications

Entry of the Confirmation Order shall mean that all modifications or amendments to the Plan since the solicitation thereof in accordance are approved pursuant to section 1127(a) of the Bankruptcy Code and do not require additional disclosure or re-solicitation under Bankruptcy Rule 3019.

 

3.

Revocation or Withdrawal of the Plan

The Debtors reserve the right to revoke or withdraw the Plan before the Confirmation Date and to File subsequent plans of reorganization. If the Debtors revoke or withdraw the Plan, or if Confirmation or Consummation does not occur, then, absent further order of the Bankruptcy Court: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise not previously approved by Final Order of the Bankruptcy Court embodied in the Plan (including the fixing or limiting to an amount certain of the Claims or Interests or Classes of Claims or Interests), assumption or rejection of Executory Contracts effected by the Plan, and any document or agreement executed pursuant to the Plan shall be deemed null and void; and (3) nothing contained in the Plan shall: (a) constitute a waiver or release of any Claims or Interests; (b) prejudice in any manner the rights of such Debtor, any Holder, any Person, or any other Entity; or (c) constitute an admission, acknowledgement, offer, or undertaking of any sort by such Debtor, any Holder, any Person, or any other Entity.

 

4.

Retention of Jurisdiction

Notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Bankruptcy Court shall retain jurisdiction over the Chapter 11 Cases and all matters arising out of, or related to, the Chapter 11 Cases, the Confirmation Order, and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:

 

a.

allow, disallow, determine, liquidate, classify, estimate, or establish the priority, Secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the Secured or unsecured status, priority, amount, or allowance of Claims or Interests;

 

b.

decide and resolve all matters related to the granting and denying, in whole or in part, of any applications for allowance of compensation or reimbursement of expenses to Professionals authorized pursuant to the Bankruptcy Code, the Confirmation Order, or the Plan;

 

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c.

resolve any matters related to: (a) the assumption, assumption and assignment, or rejection of any Executory Contract to which a Debtor is a party or with respect to which a Debtor may be liable in any manner and to hear, determine, and, if necessary, liquidate any Claims arising therefrom, including Cure Claims; (b) any dispute regarding whether a contract or lease is or was executory, expired, or terminated; (c) any potential contractual obligation under any Executory Contract that is assumed; (d) any other issue related to any Executory Contracts; or (e) any dispute regarding whether the Plan or any Wind-Down Transactions trigger any cross-default or change of control provision in any contract or agreement;

 

d.

resolve any disputes concerning whether an Entity had sufficient notice of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, any bar date established in the Chapter 11 Cases, or any deadline for responding or objecting to any Cure Claim, in each case, for the purpose of determining whether a Claim or Interest is discharged hereunder or for any other purpose;

 

e.

resolve any cases, controversies, suits or disputes that may arise in connection with the interpretation of the Sale Order;

 

f.

ensure that distributions to Holders of Allowed Claims and Allowed Interests are accomplished pursuant to the provisions of the Plan and the Plan Administration Trust Agreement and adjudicate any and all disputes arising from or relating to distributions under the Plan or the Confirmation Order;

 

g.

adjudicate, decide, or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective Date;

 

h.

adjudicate, decide, or resolve any and all matters related to Causes of Action that may arise from or in connection with the Consummation, interpretation, or enforcement of the Plan or any Entity’s obligations incurred in connection with the Plan;

 

i.

adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code;

 

j.

enter and implement such Orders as may be necessary or appropriate to construe, execute, implement, or consummate the provisions of the Plan or the Confirmation Order and all contracts, instruments, releases, indentures, and other agreements or documents created or entered into in connection with the Plan, the Confirmation Order, or this Disclosure Statement, including but not limited to the Plan Administration Trust Agreement;

 

95

k.

enter and enforce any Order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

 

l.

resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the Consummation, interpretation, or enforcement of the Plan or the Confirmation Order or any Entity’s obligations incurred in connection with the Plan or the Confirmation Order and the administration of the Estates;

 

m.

hear and determine disputes arising in connection with the interpretation, implementation, effect, or enforcement of the Plan, the Plan Supplement, including disputes arising under agreements, documents, or instruments executed in connection with the Plan;

 

n.

issue injunctions, enter and implement other Orders, or take such other actions as may be necessary or appropriate in aid of execution, implementation, or Consummation of the Plan or to restrain interference by any Entity with Consummation or enforcement of the Plan or the Confirmation Order;

 

o.

adjudicate, decide, or resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the settlements, compromises, discharges, releases, injunctions, exculpations, and other provisions contained in Article VIII of the Plan, and enter such Orders as may be necessary or appropriate to implement such discharges, releases, injunctions, exculpations, and other provisions;

 

p.

adjudicate, decide, or resolve any cases, controversies, suits, disputes or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the Holder of a Claim for amounts not timely repaid pursuant to Article VII.E of the Plan;

 

q.

enter and implement such Orders as are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;

 

r.

determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, the Plan Supplement, or any contract, instrument, release, indenture, or other agreement or document created in connection with the Plan or the Disclosure Statement, including but not limited to the Plan Administration Trust Agreement; provided that the Bankruptcy Court shall not retain jurisdiction over disputes concerning documents contained in the Plan Supplement that have a jurisdictional, forum selection, or dispute resolution clause that refers disputes to a different court or arbitration forum;

 

96

s.

adjudicate any and all matters relating to the Plan Administration Trust, the Plan Administration Trust Agreement, or the Plan Administration Trust Assets;

 

t.

adjudicate any and all disputes arising from or relating to distributions under the Plan or any transactions contemplated thereby;

 

u.

consider any modifications of the Plan to cure any defect or omission or to reconcile any inconsistency in any Bankruptcy Court Order, including the Confirmation Order;

 

v.

determine requests for the payment of Claims entitled to priority pursuant to section 507 of the Bankruptcy Code;

 

w.

adjudicate, decide, or resolve disputes as to the ownership of any Claim or Interest;

 

x.

adjudicate, decide, or resolve all matters related to any subordinated Claim;

 

y.

adjudicate, decide, or resolve matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

z.

grant any consensual request to extend the deadline for assuming or rejecting unexpired leases pursuant to section 365(d)(4) of the Bankruptcy Code;

 

aa.

enforce all Orders entered by the Bankruptcy Court in connection with the Chapter 11 Cases;

 

bb.

enforce all orders, judgments, injunctions, releases, exculpations, indemnifications, and rulings entered in connection with the Chapter 11 Cases with respect to any Person or Entity, and resolve any cases, controversies, suits, or disputes that may arise in connection with any Person or Entity’s rights arising from or obligations incurred in connection with the Plan;

 

cc.

hear any other matter not inconsistent with the Bankruptcy Code; and

 

dd.

enter an Order concluding or closing any or all of the Chapter 11 Cases.

Nothing in the Plan limits the jurisdiction of the Bankruptcy Court to interpret and enforce the Plan and all contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan, the Plan Supplement, or the Disclosure Statement, without regard to whether the controversy with respect to which such interpretation or enforcement relates may be pending in any state or other federal court of competent jurisdiction.

 

97

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising in, arising under, or related to the Chapter 11 Cases, including the matters set forth in Article XI of the Plan, the provisions of such Article XI shall have no effect on and shall not control, limit, or prohibit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.

Unless otherwise specifically provided in the Plan or in a prior Order of the Bankruptcy Court, the Bankruptcy Court shall have exclusive jurisdiction to hear and determine disputes concerning Claims against or Interests in the Debtors that arose prior to the Effective Date.

 

J.	Miscellaneous Provisions

 

1.

Immediate Binding Effect

Subject to Article IX.A of the Plan and notwithstanding Bankruptcy Rules 3020(e), 6004(h), or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of the Plan and the final versions of the documents contained in the Plan Supplement shall be immediately effective and enforceable and deemed binding upon the Debtors, the Wind-Down Debtors, the Plan Administration Trust, and any and all Holders of Claims or Interests (regardless of whether their Claims or Interests are deemed to have accepted or rejected the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges and injunctions described in the Plan or the Confirmation Order, each Entity acquiring property under the Plan or the Confirmation Order, and any and all Non-Debtor parties to Executory Contracts with the Debtors. All Claims and Interests shall be as fixed, adjusted, or compromised, as applicable, pursuant to the Plan and the Confirmation Order, regardless of whether any such Holder of a Claim or Interest has voted on the Plan.

 

2.

Waiver of Stay

The requirements under Bankruptcy Rule 3020(e) that an order confirming a plan is stayed until the expiration of 14 days after entry of the order shall be waived by the Confirmation Order. The Confirmation Order shall take effect immediately and shall not be stayed pursuant to the Bankruptcy Code, Bankruptcy Rules 3020(e), 6004(h), 6006(d), or 7062 or otherwise.

 

3.

Additional Documents

On or before the Effective Date, the Debtors may File with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan and the Confirmation Order. The Debtors, the Wind-Down Debtors, the Plan Administrator, and the Plan Administration Trust, as applicable, and all Holders of Allowed Claims receiving distributions pursuant to the Plan and the Confirmation Order and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan and the Confirmation Order.

 

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4.

Payment of Certain Fees

All fees due and payable before the Effective Date pursuant to section 1930(a) of the Judicial Code shall be paid by each of the Debtors, the Wind-Down Debtors or the Plan Administrator, as applicable, for each quarter (including any fraction thereof), until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first; provided that on and after the Effective Date, the Plan Administrator or any entity making disbursements on behalf of the Debtors or the Wind-Down Debtors shall (1) pay in full in cash when due and payable, and shall be responsible for paying, any and all such fees and interest with respect to any and all disbursements (and any other actions giving rise to such fees and interest) of the Debtors or the Wind-Down Debtors, and (2) File in the Chapter 11 Cases (to the extent they have not yet been closed, dismissed, or converted) quarterly reports as required by the Bankruptcy Code, Bankruptcy Rules, and Local Rules, as applicable, in connection therewith. The U.S. Trustee shall not be required to file any proof of claim or request for payment for quarterly fees.

 

5.

Reservation of Rights

Except as expressly set forth in the Plan, the Plan shall have no force or effect unless the Bankruptcy Court enters the Confirmation Order, and the Confirmation Order shall have no force or effect if the Effective Date does not occur. None of the Filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any Debtor or any other Entity with respect to the Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be an admission or waiver of any rights of any Debtor or any Entity unless and until the Effective Date has occurred.

 

6.

Successors and Assigns

The rights, benefits, and obligations of any Entity named or referred to in the Plan or the Confirmation Order shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign, Affiliate, officer, director, manager, agent, representative, attorney, beneficiary, or guardian, if any, of each Entity.

 

7.

Notices

To be effective, all notices, requests, and demands to or upon the Debtors shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided in the Plan, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

 

99

a.

If to the Debtors or the Wind-Down Debtors;

Chrome Holding Co.

870 Market Street, Room 415

San Francisco, CA, 94102

Attention: Guy Chayoun

Email: guyc@23andme.com

With copies (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019-6064

 

Attention:

Paul M. Basta, Christopher J. Hopkins, Jessica I. Choi, and Grace C. Hotz

Email:

pbasta@paulweiss.com

chopkins@paulweiss.com

jchoi@paulweiss.com

ghotz@paulweiss.com

- and -

Carmody MacDonald P.C.

120 S. Central Avenue, Suite 1800

Houston, TX 77002

 

Attention:

Thomas H. Riske, Nathan R. Wallace, and Jackson J. Gilkey

Email:

thr@carmodymacdonald.com

nrw@carmodymacdonald.com

jjg@carmodymacdonald.com

 

b.

If to the Creditors’ Committee;

Kelley Drye & Warren LLP

3 World Trade Center

175 Greenwich Street

New York, NY 10007

 

Attention:

Eric R. Wilson, Jason R. Adams, and Maeghan McLoughlin

Email:

ewilson@kelleydrye.com

jadams@kelleydrye.com

mmcloughlin@kelleydrye.com

-and-

 

100

Stinson LLP

1201 Walnut, St.

Suite 2900

Kansas City, MO 64106

 

Attention:

Nicholas J. Zluticky, Zachary H. Hemenway, and Miranda S. Swift

Email:

nicholas.zluticky@stinson.com

zachary.hemingway@stinson.com

miranda.swift@stinson.com

 

c.

If to the Official Equity Committee;

Brown Rudnick LLP

7 Times Square

New York, NY 10036

 

Attention:

Robert J. Stark, Bennett S. Silverberg, Andrew M. Carty, and Sharon I. Dwoskin

Email:

rstark@brownrudnick.com

bsilverberg@brownrudnick.com

acarty@brownrudnick.com

sdwoskin@brownrudnick.com

-and-

The Desai Law Firm LLC

13321 North Outer Forty Road, Suite 300

St. Louis, MO 63017

 

Attention:

Spencer P. Desai

Email:

spd@desailawfirmllc.com

 

d.

If to the Plan Administrator;

To be included in the Plan Supplement.

After the Effective Date, Persons or Entities that wish to continue to receive documents pursuant to Bankruptcy Rule 2002 must File a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Wind-Down Debtors and the Plan Administrator are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have Filed such renewed requests.

 

8.

Terms of Injunctions or Stays

Unless otherwise provided in the Plan or the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to section 105 or 362 of the Bankruptcy Code or any Order of the Bankruptcy Court, and existing on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order shall remain in full force and effect in accordance with their terms.

 

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9.

Entire Agreement

Except as otherwise indicated, the Plan, the Confirmation Order, the applicable Definitive Documents, the Plan Supplement, and documents related thereto supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan, the Confirmation Order, the Definitive Documents, the Plan Supplement, and documents related thereto.

 

10.

Exhibits

All exhibits and documents included in the Plan, the Confirmation Order, and the Plan Supplement are incorporated into and are a part of the Plan as if set forth in full in the Plan. After the exhibits and documents are Filed, copies of such exhibits and documents shall be available upon written request to the Debtors’ counsel at the address above or by downloading such exhibits and documents from the Debtors’ restructuring website at http://cases.ra.kroll.com/23andMe or the Bankruptcy Court’s website at http://www.moeb.uscourts.gov/.

 

11.

Deemed Acts

Subject to and conditioned on the occurrence of the Effective Date, whenever an act or event is expressed under the Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred without any further act by any party by virtue of the Plan and the Confirmation Order.

 

12.

Severability of Plan Provisions

If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors, may alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of 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 deleted or modified without the consent of the Debtors; and (3) non-severable and mutually dependent.

 

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13.

Votes Solicited in Good Faith

Upon entry of the Confirmation Order, each of the Released Parties and Exculpated Parties will be deemed to have acted in “good faith” within the meaning of section 1125(e) of the Bankruptcy Code and in compliance with the applicable provisions of the Bankruptcy Code and in a manner consistent with the Disclosure Statement, the Plan, the Bankruptcy Code, the Bankruptcy Rules, and all other applicable rules, laws, and regulations in connection with all of their respective activities relating to support and consummation of the Plan, and all other applicable protections and rights provided in the Plan. Without limiting the generality of the foregoing, upon entry of the Confirmation Order, the Debtors will be deemed to have solicited votes on the Plan in good faith and in compliance with the Bankruptcy Code and other applicable law, and, pursuant to section 1125(e) of the Bankruptcy Code, any person will be deemed to have participated in good faith and, therefore, none of such parties or individuals or the Wind-Down Debtors will have any liability for the violation of any applicable law, rule, or regulation governing the solicitation of votes on the Plan.

 

14.

Request for Expedited Determination of Taxes

The Debtors shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Petition Date through the Effective Date.

 

15.

No Waiver or Estoppel

Upon the Effective Date, each Holder of a Claim or Interest shall be deemed to have waived any right to assert that its Claim or Interest should be Allowed in a certain amount, in a certain priority, be secured, or not be subordinated by virtue of an agreement made with the Debtors and/or their counsel, or any other Entity, if such agreement was not disclosed in the Plan, the Disclosure Statement, or papers filed with the Bankruptcy Court prior to the Confirmation Date.

 

16.

Dissolution of the Committees and Cessation of Fee and Expense Payment

On the Effective Date, the Creditors’ Committee, the Official Equity Committee, and any other statutory committee appointed in the Chapter 11 Cases shall dissolve automatically and the members thereof shall be released and discharged from all rights and duties arising from, or related to, the Chapter 11 Cases, except with respect to final fee applications of the Professionals, objections thereto, and any appeal of the Confirmation Order. The Wind-Down Debtors and the Plan Administrator shall not be responsible for paying any fees or expenses incurred by the members of or advisors to the Creditors’ Committee, the Official Equity Committee, or any other statutory committee appointed in the Chapter 11 Cases after the Effective Date, except in connection with (a) any fees or expenses for services rendered prior to the Effective Date, or fees and expenses incurred in connection with the final fee applications of the Professionals, in each case that are Allowed by the Bankruptcy Court; and (b) fees incurred in connection with any appeal of the Confirmation Order.

 

17.

Closing of Chapter 11 Cases

The Plan Administrator shall, promptly after the full administration of the Chapter 11 Cases, File with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases. Furthermore, the Notice and Claims Agent is authorized to destroy all paper/hardcopy records related to the Chapter 11 Cases two years after the Effective Date has occurred.

 

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18.

Creditor Default

An act or omission by a Holder of a Claim or an Interest in contravention of the provisions of the Plan shall be deemed an event of default under the Plan. Upon an event of default, the Plan Administrator, on behalf of the Wind-Down Debtors, or the Plan Administration Trust, as applicable, may seek to hold the defaulting party in contempt of the Confirmation Order and may be entitled to reasonable attorneys’ fees and costs of the Wind-Down Debtors or the Plan Administration Trust, as applicable, in remedying such default. Upon the finding of such a default by a Holder of a Claim or Interest, the Bankruptcy Court may: (1) designate a party to appear, sign, and/or accept the documents required under the Plan on behalf of the defaulting party, in accordance with Bankruptcy Rule 7070; (2) enforce the Plan by order of specific performance; (3) award judgment against such defaulting Holder of a Claim or Interest in an amount, including interest, to compensate the Wind-Down Debtors or the Plan Administration Trust, as applicable, for the damages caused by such default; and (4) make such other Order as may be equitable that does not materially alter the terms of the Plan.

ARTICLE VI.

TRANSFER RESTRICTIONS AND

CONSEQUENCES UNDER FEDERAL SECURITIES LAWS

No registration statement will be filed under the Securities Act, or pursuant to any state securities laws, with respect to the offer and distribution of Securities under the Plan.

 

A.	Section 1145 Exemption

Pursuant to section 1145 of the Bankruptcy Code, any Securities offered, issued, or distributed pursuant to the Plan, including but not limited to, the Lemonaid Interests and the Plan Administration Trust Interests (to the extent such Plan Administration Trust Interests are Securities) (the “Section 1145 Securities”) (a) shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act and any other applicable U.S. state or local law requiring registration for the offer or sale of a security pursuant to section 1145 of the Bankruptcy Code, (b)(i) are not “restricted securities” as defined in Rule 144(a)(3) under the Securities Act, and (ii) are freely tradable and transferable by any initial recipient thereof that (w) is not an “affiliate” of the Debtors as defined in Rule 144(a)(1) under the Securities Act, (x) has not been such an “affiliate” within 90 calendar days of such transfer, (y) has not acquired the Lemonaid Interests or Plan Administration Trust Interests from an “affiliate” of the Debtors within one year of such transfer, and (z) is not an entity that is an “underwriter” as defined in subsection (b) of Section 1145 of the Bankruptcy Code, and (c) will be freely tradable by the recipients thereof, subject to (i) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, (ii) compliance with applicable securities laws and any rules and regulations of the SEC, if any, applicable at the time of any future transfer of such securities or instruments, and (iii) with respect to the Lemonaid Interests, the restrictions in the Lemonaid Organizational Documents and with respect to the Plan Administration Trust Interests, the restrictions in the Plan Administration Trust Agreement.

 

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Should the Company elect on or after the Effective Date to reflect any ownership of the Lemonaid Interests, the Plan Administration Trust Interests, or any other Securities to be issued under the Plan through the facilities of DTC, the Company need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the Interests to be issued under the Plan under applicable securities laws. DTC shall be required to accept and conclusively rely upon the Plan and Confirmation Order in lieu of a legal opinion regarding whether the Interests to be issued under the Plan are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. Notwithstanding anything to the contrary in the Plan, no entity (including, for the avoidance of doubt, DTC) may require a legal opinion regarding the validity of any transaction contemplated by the Plan, including, for the avoidance of doubt, whether the Interests to be issued under the Plan are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services. No disbursing agent shall be required to provide indemnification or other security to DTC in connection with any distributions to holders of Claims through the facilities of DTC.

 

B.	Section 4(a)(2) of the Securities Act and Regulation S Under the Securities Act

To the extent that section 1145 of the Bankruptcy Code is inapplicable (including with respect to an entity that is an “underwriter” as defined in subsection (b) of section 1145 of the Bankruptcy Code), the offering, issuance, exchange, or distribution of any Securities pursuant to the Plan is or shall be conducted in a manner that is exempt from the registration requirements of section 5 of the Securities Act and applicable state and local securities laws pursuant to section 4(a)(2) of the Securities Act and/or the regulations promulgated thereunder (including Regulation D), Regulation S, and/or another available exemption from registration under Section 5 of the Securities Act. To the extent such Securities are issued in reliance on Section 4(a)(2) of the Securities Act or Regulation D thereunder or Regulation S (the “Section 4(a)(2) Securities”), each will be “restricted securities” subject to resale restrictions and may be resold, exchanged, assigned, or otherwise transferred only pursuant to registration, or an applicable exemption from registration under the Securities Act and other applicable law. The Debtors believe that the Lemonaid Interests, if any, to be purchased by the Lemonaid Purchaser pursuant to the Lemonaid Purchase Agreement are issuable without registration under the Securities Act in reliance upon the exemption from registration provided under Section 4(a)(2) of the Securities Act.

 

C.	Plan Administration Trust Interests

Plan Administration Trust Interests, other than the Class B Plan Administration Trust Interests, are not expected to be to be deemed to be “securities” as defined in section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code, and applicable state securities laws, or the provision of section 1145 of the Bankruptcy Code is expected to apply to such interests (except with respect to an entity that is an “underwriter” as defined in section 1145(b) of the Bankruptcy Code) or the issuance of such Interests is expected to be exempt from the registration under Section 5 of the Securities Act pursuant to section 1145 of the Bankruptcy Code Section 4(a)(2) of the Securities Act, Regulation D promulgated thereunder, Regulation S, and/or other available exemptions from registration.

 

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The Plan Administration Trust Interests shall be transferable to the extent that the transferability thereof would not require the Plan Administration Trust to register the Trust Interests under Section 12(g) of the Exchange Act, and otherwise shall not be transferable except as provided in the Plan Administration Trust Agreement.

The Company need not provide any further evidence other than the Plan or the Confirmation Order with respect to the treatment of the Interests under applicable securities laws.

 

D.	Subsequent Transfers

The Section 1145 Securities may be freely transferred by recipients following the initial issuance under the Plan, and all resales and subsequent transfers of the Section 1145 Securities are exempt from registration under the Securities Act and state securities laws, unless the Holder is an “underwriter” with respect to such securities, as defined in section 1145(b) of the Bankruptcy Code. Section 1145(b) of the Bankruptcy Code defines four types of “underwriters”, excluding, in each case, with respect to ordinary trading transactions of an entity that is not an issuer:

 

i.

a person (as defined in section 101(41) of the Bankruptcy Code, a “Person”) who purchases a claim against, an interest in, or a claim for an administrative expense against the debtor with a view to distributing any security received in exchange for such claim or interest;

 

ii.

a Person who offers to sell securities offered or sold under a plan for the holders of such securities;

 

iii.

a Person who offers to buy securities offered or sold under a plan from the holders of such securities, if the offer to buy is:

 

a.

with a view to distributing such securities; and

 

b.

under an agreement made in connection with the plan, the consummation of the plan, or with the offer or sale of securities under the plan; and

 

iv.

a Person who is an “issuer”, which includes affiliates of the issuer, defined as persons who are in a relationship of “control” with the issuer (as used in Section 2(a)(11) of the Securities Act) with respect to the securities.

Under Section 2(a)(11) of the Securities Act, an “issuer” includes any Person directly or indirectly controlling or controlled by the issuer, or any Person under direct or indirect common control of the issuer.

To the extent that Persons who receive Section 1145 Securities pursuant to the Plan and the Confirmation Order are deemed to be underwriters under section 1145(b) of the Bankruptcy Code, resales by such Persons would not be exempted from registration under the Securities Act or other applicable Law by section 1145 of the Bankruptcy Code. Persons deemed to be underwriters under section 1145(b) of the Bankruptcy Code may, however, be permitted to resell such Section 1145 Securities without registration pursuant to and in accordance with the provisions of Rule 144 under the Securities Act, which is described in Article IV.I of the Plan, or another available exemption under the Securities Act.

 

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Holders of Section 1145 Securities who are deemed underwriters may be able to resell Section 1145 Securities pursuant to the limited safe harbor resale provision under Rule 144 of the Securities Act. Generally, Rule 144 would permit the public sale of securities received by such Person if, at the time of the sale, certain current public information regarding the issuer is available, and only if such Person also complies with the volume, manner of sale, and notice requirements of Rule 144. If the issuer is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), adequate current public information as specified under Rule 144 is available if certain company information is made publicly available, as specified in Section (c)(2) of Rule 144. The Debtors expect that, after the Effective Date, the issuer of the Plan Administration Trust Interests will not be subject to the reporting requirements under Section 13 or 15(d) of the Exchange Act.

Whether or not any particular Person would be deemed to be an underwriter with respect to the Section 1145 Securities or other security to be issued pursuant to the Plan and the Confirmation Order would depend upon various facts and circumstances applicable to that Person. Accordingly, the Debtors express no view as to whether any particular Person receiving Section 1145 Securities or other securities under the Plan and the Confirmation Order would be an underwriter with respect to such Section 1145 Securities or other securities, whether such Person may freely resell such securities or the circumstances under which they may resell such securities.

Notwithstanding the foregoing, the Section 1145 Securities will be subject to any applicable transfer restrictions in the Plan Administration Trust Agreement, if any.

The 4(a)(2) Securities will be deemed “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act), will bear customary legends and transfer restrictions and may not be offered, sold, exchanged, assigned, or otherwise transferred unless they are registered under the Securities Act, or an exemption from registration under the Securities Act is available. If in the future a Holder of 4(a)(2) Securities decides to offer, resell, pledge, or otherwise transfer any 4(a)(2) Securities, such 4(a)(2) Securities may be offered, resold, pledged, or otherwise transferred only (i) in the United States to a person whom the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A promulgated under the Securities Act (“Rule 144A”) in a transaction meeting the requirements of Rule 144A), (ii) outside the United States in a transaction complying with the provisions of Rule 904 of Regulation S, (iii) pursuant to an exemption from registration under the Securities Act (including the exemption provided by Rule 144) (to the extent the exemption is available), or (iv) pursuant to an effective registration statement or under an available exemption from the registration requirements of the Securities Act, in each of cases (i)-(iv) in accordance with any applicable securities laws of any state of the United States. Such Holder will, and each subsequent Holder is required to, notify any subsequent acquiror of the 4(a)(2) Securities from it of the resale restrictions referred to above.

 

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Rule 144 provides a limited safe harbor for the resale of restricted securities (such that the seller is not deemed an “underwriter”) if certain conditions are met. These conditions vary depending on whether the seller of the restricted securities is an “affiliate” of the issuer. The Debtors believe that the Rule 144 exemption will not be available with respect to any 4(a)(2) Securities (whether held by non-affiliates or affiliates) until at least one year after the Effective Date. Accordingly, unless transferred pursuant to an effective registration statement or another available exemption from the registration requirements of the Securities Act, non-affiliate Holders of 4(a)(2) Securities will be required to hold their 4(a)(2) Securities for at least one year and, thereafter, to sell them only in accordance with the applicable requirements of Rule 144, pursuant to an effective registration statement or pursuant to another available exemption from the registration requirements of applicable securities laws. The Debtors expect that, after the Effective Date, the issuer of the Lemonaid Interests will not be subject to the reporting requirements under Section 13 or 15(d) of the Exchange Act.

Each certificate representing, or issued in exchange for or upon the transfer, sale, or assignment of, any 4(a)(2) Security shall, upon issuance, be stamped or otherwise imprinted with a restrictive legend substantially consistent with the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.

All persons who receive 4(a)(2) Securities will be required to acknowledge and agree that (i) they will not offer, sell, or otherwise transfer any 4(a)(2) Securities except in accordance with an exemption from registration, including under Rule 144 under the Securities Act, if and when available, or pursuant to an effective registration statement, and (ii) the 4(a)(2) Securities will be subject to the other restrictions described above.

In addition to the foregoing restrictions, the 4(a)(2) Securities will also be subject to any applicable transfer restrictions in the Lemonaid Organizational Documents, if any.

 

 

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ARTICLE VII.

CERTAIN UNITED STATES FEDERAL

INCOME TAX CONSEQUENCES OF THE PLAN

The following is a summary description of certain material U.S. federal income tax consequences of the Plan to the Debtors and to certain Holders of Claims and HoldCo Interests. This description is for informational purposes only and, due to a lack of definitive judicial or administrative authority or interpretation, substantial uncertainties exist with respect to various tax consequences of the Plan as discussed herein. Only the principal consequences of the Plan for the Debtors, Holders of HoldCo Interests, and those Holders of Claims that are entitled to vote to accept or reject the Plan are described below. No opinion of counsel has been sought or obtained with respect to any tax consequences of the Plan. No rulings or determinations of the United States Internal Revenue Service (the “IRS”) or any other tax authorities have been sought or obtained with respect to any tax consequences of the Plan, and the discussion below is not binding on the IRS or such other authorities. As a result, there can be no assurance that the IRS will not disagree with or challenge any of the conclusions described herein. In addition, a significant amount of time may elapse between the date of this Disclosure Statement and the receipt of a final distribution under the Plan. Events occurring after the date of this Disclosure Statement, including changes in law and changes in administrative positions, could affect the U.S. federal income tax consequences of the Plan. No representations are being made regarding the particular tax consequences of the confirmation and consummation of the Plan to the Debtors or any Holder of Claims or HoldCo Interests. No assurance can be given that the IRS would not assert, or that a court would not sustain, a different position from any discussed herein.

This summary does not address any estate or gift tax consequences of the Plan or tax consequences of the Plan under any state, local or non-U.S. laws, considerations under any applicable tax treaty or any tax arising under section 1411 of the Tax Code (the “Medicare” tax on certain investment income). Furthermore, this discussion does not address all tax considerations that might be relevant to particular Holders of Claims or HoldCo Interests in light of their personal circumstances or to persons that are subject to special tax rules.

This summary assumes that all Claims and HoldCo Interests are held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Tax Code”). The tax consequences of the Plan are complex, and the tax treatment of certain aspects of the Plan may be subject to considerable uncertainty. You should consult your own tax advisors as to the particular U.S. federal income tax consequences to you of the Plan, as well as the consequences to you arising under other U.S. federal tax laws and the laws of any other taxing jurisdiction. This summary does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:

 

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