Motion of the Debtor to Dismiss the Chapter 11 Case and for Entry of an Order ... · 2019-08-16 · 1. On July 22, 2019, the Debtor filed the Motion of the Debtor to Dismiss the Chapter

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

--------------------------------------------------------------- In re: L.K. BENNETT U.S.A, INC.,1

Debtor. ---------------------------------------------------------------

x : : : : : : x

Chapter 11 Case No. 19-10760 (JTD) Related D.I.: 214, 219 & 229

CERTIFICATION OF COUNSEL REGARDING ORDER PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9019 APPROVING

PROPOSED STIPULATION CONCERNING THE COMMITTEE CARVE-OUT I, Stuart M. Brown, an attorney with DLA Piper LLP (US), counsel to L.K. Bennett U.S.A,

Inc. (the “Debtor”) in the above-captioned chapter 11 case, hereby certify the following:

1. On July 22, 2019, the Debtor filed the Motion of the Debtor to Dismiss the Chapter

11 Case and for Entry of an Order Establishing the Dismissal Procedures [D.I. 214] (the

“Dismissal Motion”) with the United States Bankruptcy Court for the District of Delaware (the

“Court”).

2. On July 25, 2019, the Debtor filed the Motion of the Debtor for Entry of an Order

Pursuant to Section 363 of the Bankruptcy Code and Bankruptcy Rule 9019 Approving Proposed

Stipulation Concerning the Committee Carve-Out [D.I. 219] (the “Settlement Motion” and

together with the Dismissal Motion, the “Motions”)2 with the Court.

3. On August 5, 2019, the Office of the United States Trustee (the “U.S. Trustee”)

filed an omnibus objection to the Motions [D.I. 229] (the “Objection”).

1 The last four digits of the Debtor’s federal tax identification number are (6607). The mailing address for the Debtor is 595 Madison Avenue, New York, New York 10022.

2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motions.

Case 19-10760-JTD Doc 251 Filed 08/16/19 Page 1 of 3

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4. The Motions were set for a hearing on August 15, 2019 (the “Hearing”). Prior to

the start of the Hearing, subject to mutually agreeable documentation, the Debtor, the official

committee of unsecured creditors appointed by the U.S. Trustee in this chapter 11 case on April

16, 2019 (the “Committee”), Wells Fargo Capital Finance (UK) Limited and Wells Fargo Bank,

N.A. (London Branch) (collectively, “Wells Fargo”) and the U.S. Trustee resolved the Objection.

5. Consistent with the representations of counsel put on the record at the Hearing,

counsel to the Debtor revised the proposed order granting the Settlement Motion (the “Proposed

Order”).

6. The revised Proposed Order is attached hereto as Exhibit A. A redline reflecting

the changes made to the proposed order attached to the Settlement Motion is attached hereto as

Exhibit B.

7. Counsel to the Debtor has circulated the revised Proposed Order to the U.S. Trustee,

the Committee, Wells Fargo and L.K. Bennett, Ltd. All parties have agreed to the language

contained in the Proposed Order. With the revisions included in the Proposed Order, the U.S.

Trustee does not object to the entry of the revised Proposed Order.

[Remainder of Page Intentionally Left Blank]


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WHEREFORE, the Debtor respectfully requests that the Court enter the revised Proposed

Order, attached hereto as Exhibits A at the earliest convenience of the Court, and grant such other

and further relief as the Court deems just and proper.

Dated: August 16, 2019 Wilmington, Delaware

Respectfully submitted, DLA PIPER LLP (US)

/s/ Stuart M. Brown Stuart M. Brown (DE 4050) 1201 North Market Street, Suite 2100 Wilmington, Delaware 19801 Telephone: (302) 468-5700 Facsimile: (302) 394-2341 Email: [email protected] -and-

Richard A. Chesley (admitted pro hac vice) 444 West Lake Street, Suite 900 Chicago, Illinois 60606 Telephone: (312) 368-4000 Facsimile: (312) 236-7516 Email: [email protected] Jamila Justine Willis (admitted pro hac vice) 1251 Avenue of the Americas New York, New York 10020 Telephone: (212) 335-4500 Facsimile: (212) 335-4501 Email: [email protected]

Counsel to the Debtor


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EXHIBIT A

Proposed Order

Case 19-10760-JTD Doc 251-1 Filed 08/16/19 Page 1 of 20

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--------------------------------------------------------------- In re: L.K. BENNETT U.S.A, INC.,1 Debtor.

---------------------------------------------------------------

x : : : : : : : x

Chapter 11 Case No. 17-12082 (JTD) (Jointly Administered) Re D.I.: 219

ORDER PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9019 APPROVING PROPOSED STIPULATION

CONCERNING THE COMMITTEE CARVE-OUT

This matter coming before this Court upon the Motion of the Debtor Pursuant to Section

363 of the Bankruptcy Code and Bankruptcy Rule 9019 Approving Proposed Stipulation

Concerning the Committee Carve-Out (the “Motion”)2 filed by the above-captioned debtor (the

“Debtor”) for entry of an order, pursuant to section 363 of the Bankruptcy Code and Bankruptcy

Rule 9019, approving and authorizing the Stipulation, attached hereto as Exhibit 1, concerning

the Committee-Carve Out by and among the Debtor, the Committee and Wells Fargo; and the

Court having reviewed the terms of the Stipulation; and the Court having found that jurisdiction

is proper pursuant to 28 U.S.C. §§ 157 and 1334; and the Court having found that this is a core

proceeding pursuant to 28 U.S.C. § 157(b)(2); and the Court having determined that the relief

sought in the Motion is in the best interests of the Debtor, its estate and creditors; and the Debtor

having provided appropriate notice and an opportunity for a hearing, and there being no other or

further notice required under the circumstances; and the Court having determined that the legal

and factual bases set forth in the Motion establish just cause for the relief granted herein; and

1 The last four digits of the Debtor’s federal tax identification number are (6607). The mailing address for the Debtor is 595 Madison Avenue, New York, New York 10022. 2 Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Motion.


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after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED, THAT:

1. The Motion is GRANTED as set forth in this Order.

2. The Debtor is authorized to enter into the Stipulation with the Committee

and Wells Fargo, which is approved in all respects.

3. Upon the entry of an order dismissing this chapter 11 case, to the fullest

extent authorized by applicable law, for the good and valuable consideration provided by each

of: (a) the Debtor and its estate, (b) the Committee, (c) Wells Fargo and (d) with respect to each

of the foregoing entities in clauses (a) through (c), such person’s current and former affiliates,

subsidiaries, officers, directors, principals, employees, agents, financial advisors, attorneys,

accountants, investment bankers, consultants, representatives, and other professionals, mutually

release each other from any and all claims, obligations, suits, judgments, damages, demands,

debts, rights, causes of action and liabilities whether liquidated or unliquidated, fixed or

contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or

thereafter arising, in law, equity, or otherwise that are based in whole or part on any act

omission, transaction, event, or other occurrences, whether direct or derivative, taking place on

or prior to the entry of this Order in connection with, or related to, the Debtor, the management

and/or administration of the Debtor, this chapter 11 case or the Prepetition Credit Documents

other than with respect to obligations or liabilities arising out of or relating to (i) this Order, (ii)

the Order Establishing the Dismissal Procedures for the Dismissal of the Chapter 11 Case

entered by this Court, or (iii) any act or omission that is determined by a final order of a court of

competent jurisdiction to constitute actual fraud, willful misconduct, or gross negligence (the

“Release”), which is hereby authorized and approved.


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4. In connection with the dismissal of Debtor’s chapter 11 case, L.K. Bennett,

Ltd. shall receive no distribution on account of its unsecured claim and, upon the occurrence of

the Stipulation Effective Date, the unsecured claim of L.K. Bennett, Ltd. shall hereby be forever

discharged.

5. The Parties are authorized to take all actions necessary to effectuate the

relief granted pursuant to this Order in accordance with the terms of the Stipulation and related

documents.

6. The Stipulation, including the releases granted thereby, shall become

effective immediately upon the later of: (i) the entry of a final order by this Court approving the

Dismissal Procedures and (ii) the entry of a final order by this Court approving the Stipulation.

7. Notwithstanding the foregoing, the following paragraph shall replace

paragraph 13(i) of the Stipulation and is hereby incorporated into the Stipulation:

The Debtor shall, upon the later of (x) the date the Court enters a final order approving the Dismissal Procedures and (y) the date the Court enters a final order approving the Stipulation (the “Stipulation Effective Date”), (i) transfer cash from the Liquidation Proceeds in the amount of $50,000 to the Committee to fund a reserve to pay fees and expenses incurred by the Committee’s professionals in administering the Dismissal Procedures and conducting claims reconciliation (the “Committee Administration Reserve”); (ii) transfer cash from the Liquidation Proceeds in the amount of $200,000 to the Committee to fund a reserve — in addition to the balance of the Committee Administration Reserve (the “Committee GUC Reserve” and, together with the Committee Administration Reserve, the “Committee Carve-Out”) — to be distributed by the Committee on a pro-rata basis on account of the allowed, non-insider general unsecured claims against the Debtor, not including any deficiency claims of Wells Fargo and the Parent Claim (collectively, the “Allowed General Unsecured Claims”); (iii) transfer cash from the Liquidation Proceeds in the amount of $202,923 to an escrow account to fund a reserve to be distributed by the Committee or an escrow agent to holders of estimated prepetition priority claims and postpetition administrative expense claims (the “Priority Claim Reserve”,) the balance of which shall be transferred to Wells Fargo following payment in full of all allowed prepetition priority claims and postpetition administrative expense claims provided, however, that if the full amount of Court-approved Professional Fees and Expenses (defined below) exceeds the amount reserved in the Final Fee


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Reserve (defined below), amounts remaining in the Priority Claim Reserve after payment in full of allowed prepetition priority claims and postpetition administrative expense claims shall be distributed for payment in full of Court-approved Professional Fees and Expenses prior to distribution of remaining amounts to Wells Fargo; and (iv) reserve cash from the Liquidation Proceeds in the amount of $1,559,487 to fund a reserve administered by the Debtor’s professionals to pay the fees incurred for services rendered and reimburse expenses (the “Professional Fees and Expenses”)approved on a final basis by the Court of professionals retained in this chapter 11 case (the “Final Fee Reserve”), the balance of which the Debtor shall transfer to Wells Fargo following payment in full of all Court-approved Professional Fees and Expenses, provided, however, that if the full amount of allowed prepetition priority claims and postpetition administrative expense claims exceeds the amount reserved in the Priority Claim Reserve, amounts remaining in the Final Fee Reserve after payment in full of Court-approved Professional Fees and Expenses shall be distributed for payment in full of allowed prepetition priority claims and postpetition administrative expense claims prior to distribution of remaining amounts to Wells Fargo. Further, the Debtor shall, in full and final satisfaction of Wells Fargo’s claims against the Debtor’s estate, (i) transfer $724,197 to Wells Fargo upon the Stipulation Effective Date, and (ii) transfer all of the Debtor’s remaining assets to Wells Fargo on the date in which the Court enters an order dismissing this chapter 11 case. For the avoidance of doubt, there will be no distribution with respect to the Parent Claim or to Wells Fargo on account of its deficiency claim.

8. The Court shall retain jurisdiction to hear and determine all matters arising

from implementation of this Order.


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EXHIBIT 1

Stipulation


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---------------------------------------------------------------

In re:

L.K. BENNETT U.S.A, INC.,1

Debtor. -------------------------------------------------------------

x : : : : : : x

Chapter 11

Case No. 19-10760 (JTD)

STIPULATION CONCERNING COMMITTEE CARVE-OUT

IT IS HEREBY agreed and stipulated (this “Stipulation”) by and among the above-

captioned debtor (the “Debtor”), Wells Fargo (defined below) and the Committee (defined below

and, together with Wells Fargo, the “Parties”), by and through their respective counsel, that:

1. On or about October 10, 2013, the Debtor entered into that certain Facility

Agreement among LKB UK (defined below) and L.K. Bennett U.S.A, Inc. as borrowers, certain

guarantors thereto, Wells Fargo Capital Finance (UK) Limited and Wells Fargo Bank, N.A.

(London Branch) as original lenders and Wells Fargo Capital Finance (UK) Limited as agent,

arranger and security trustee (collectively, “Wells Fargo”) in accordance with which Wells Fargo

extended loans and other financial accommodations to LKB UK, the Debtor and certain of its

affiliates (the “Secured Facility”). The Debtor is both a borrower and guarantor under the

Secured Facility.

2. The Debtor also entered into that certain US Security and Pledge Agreement

among LKB UK, as grantor, L.K. Bennett U.S.A, Inc., as US Borrower, and Wells Fargo Capital

Finance (UK) Limited as collateral agent on or about October 10, 2013 (the “US Security

Agreement,” and together with the Secured Facility and all related security and other

1 The last four digits of the Debtor’s federal tax identification number are (6607). The mailing address for the Debtor is 595 Madison Avenue, New York, New York 10022.


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instruments, documents, guarantees and agreements, and recorded documents and notices, the

“Prepetition Credit Documents”). The US Security Agreement evidenced a grant of first-priority

security interests and liens in favor of Wells Fargo in all of the Debtor’s assets, including all of

the Debtor’s inventory, accounts and accounts receivable, deposit accounts, contract rights and

the proceeds of the foregoing (collectively, the “Prepetition Collateral”), to secure payment of

the obligations incurred under the Prepetition Credit Documents.

3. On April 3, 2019 (the “Petition Date), the Debtor filed with this Court a voluntary

petition for relief under title 11 of chapter 11 of the United States Code (the “Bankruptcy

Code”). On April 16, 2019, the Office of the United States Trustee for the District of Delaware

(the “U.S. Trustee”) appointed an official committee of unsecured creditors (the “Committee”).

4. As of the Petition Date, the aggregate outstanding amount owed by the Debtor

under the Prepetition Credit Documents was not less than $12,151,131.01, plus interest, fees,

costs or other charges or amounts paid prior to the Petition Date in accordance with the

Prepetition Credit Documents (collectively, the “Prepetition Obligations”), which Prepetition

Obligations are secured by the Prepetition Collateral.

5. Wells Fargo has allowed the Debtor to use Cash Collateral (as that term is defined

in section 363(a) the Bankruptcy Code) to operate its business and liquidate its assets during this

chapter 11 case pursuant to the following orders entered by this Court: (i) Agreed Interim Order

(I) Authorizing the Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying

the Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 53]; (ii) Second Agreed Interim

Order (I) Authorizing Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying

the Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 96]; (iii) Final Agreed Order (I)

Authorizing Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the

Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 151]; and (iv) Order (I) Extending


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Period of Authorized Use of Cash Collateral (II) Granting Adequate Protection, and (III)

Modifying the Automatic Stay [D.I. 184] (collectively, the “Cash Collateral Orders”).2

6. The Debtor has liquidated3 its inventory as well as the furniture fixtures and

equipment (“FF&E”) located at premises it formerly leased, has abandoned any remaining

inventory4 and is preparing for the wind-down of its business and estate and exit from this

chapter 11 case. The estimated ending cash balance of the net proceeds of such liquidation,

including a subtraction for the adequate protection payment to Wells Fargo to pay off the

Primary Borrowing (as defined in the Final Agreed Cash Collateral Order) of approximately

$516,499 made on July 2, 2019, and fund reserves for the payment of estimated administrative

expenses and priority claims, including fees for professionals retained in this chapter 11 case, is

$1,129,392 (the “Liquidation Proceeds”).

7. Wells Fargo has agreed to extend the use of Cash Collateral for the orderly wind-

down of the Debtor’s estate and the Debtor’s exit from this chapter 11 case.

8. The Debtor estimates that the total amount of liquidated, nondisputed, nonpriority

unsecured claims against the Debtor’s estate as of the date hereof is $862,000 (the “General

Unsecured Claims”), not including the trade payable general unsecured claim in the amount of

$21,765,708.84 (the “Parent Claim”) held by L.K. Bennett Limited (“LKB UK”), the Debtor’s

parent company.

9. Pursuant to the Cash Collateral Orders and Prepetition Credit Documents, Wells

Fargo has a valid and perfected security interest in all of the Debtor’s assets, including the

2 Any term used but not defined in this Stipulation shall be given the meaning ascribed to it in the Cash Collateral Orders.

3 The Debtor is currently engaged in negotiations regarding the possible bulk sale of remnant inventory and FF&E of the Debtor that it has not already abandoned.

4 The Debtor is currently determining the treatment as far as abandonment of inventory remaining in the distribution center of Bloomingdale’s, one of the Debtor’s former store-in-store concessions.


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Liquidation Proceeds, which a deficiency claim for the Prepetition Obligations or the 507(b)

Claim against the Debtor’s estate would exceed.

10. The Debtor’s estate has no unencumbered funds or property with which to satisfy

General Unsecured Claims or to administer this chapter 11 case.

11. If the Court were to dismiss or convert this chapter 11 case to one under chapter 7

of the Bankruptcy Code, the holders of General Unsecured Claims would receive no distribution

and administrative expense claimants would likely either receive no distribution or not be paid in

full.

12. Contemporaneously with this Stipulation, the Debtor filed (i) the Motion of the

Debtor to Dismiss the Chapter 11 Case and for Entry of an Order Establishing the Dismissal

Procedures [D.I. 214], whereby it seeks to dismiss this chapter 11 case and the entry of an order

authorizing procedures for such dismissal (the “Dismissal Procedures”) and (ii) the Order (I)

Further Extending Period of Authorized Use of Cash Collateral (II) Granting Adequate

Protection, and (III) Modifying the Automatic Stay under certification of counsel, whereby the

Debtor’s authority to use Cash Collateral would be further extended through and including the

entry of final orders by the Court approving the Dismissal Procedures and the Stipulation.

13. Following negotiations among the Parties, Wells Fargo has agreed to fund a

distribution to the holders of certain allowed general unsecured claims from the Liquidation

Proceeds on the following terms:

i. Upon the later of: (i) the date the Court enters a final order approving the Dismissal Procedures and (ii) the date the Court enters a final order approving the Stipulation (the “Stipulation Effective Date”), the Debtor shall: (i) transfer cash from the Liquidation Proceeds in the amount of $50,000 to the Committee to fund a reserve to pay fees and expenses incurred by the Committee’s professionals in administering the Dismissal Procedures and conducting claims reconciliation (the “Committee Administration Reserve”); (ii) transfer cash from the Liquidation Proceeds in the amount of $200,000 to the Committee to fund a reserve to be


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distributed—in addition to the balance of the Committee Administration Reserve (the “Committee GUC Reserve” and, together with the Committee Administration Reserve, the “Committee Carve-Out”) by the Committee on a pro-rata basis in full satisfaction of the allowed, non-insider general unsecured claims against the Debtor, not including any deficiency claims of Wells Fargo and the Parent Claim (collectively, the “Allowed General Unsecured Claims”); (iii) transfer cash from the Liquidation Proceeds in the amount of $127,923 to the Committee to fund a reserve to be distributed by the Committee to holders of estimated prepetition priority claims and postpetition administrative expense claims (the “Priority Claim Reserve”,) the balance of which the Committee shall transfer to Wells Fargo; and (iv) reserve cash from the Liquidation Proceeds in the amount of $1,706,854 to fund a reserve administered by the Debtor’s professionals to pay the fees for services rendered and reimburse expenses approved on a final basis by the Court of professionals retained in this chapter 11 case (the “Final Fee Reserve”), the balance of which the Debtor shall transfer to Wells Fargo; and (v) transfer all of the Debtor’s remaining assets to Wells Fargo in full and final satisfaction of its claims against the Debtor’s estate.5

ii. Upon the Stipulation Effective Date, for good and valuable consideration, the adequacy of which is hereby confirmed, to the fullest extent permitted under applicable law, Wells Fargo will be deemed released by the Debtor and its estate from any claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action and liabilities whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity, or otherwise that are based in whole or part on any act omission, transaction, event, or other occurrences, whether direct or derivative, taking place on or prior to the Stipulation Effective Date in connection with, or related to, the Debtor’s estate and its operations, the Prepetition Credit Documents or this chapter 11 case other than with respect to liabilities arising out of or relating to any act or omission of Wells Fargo that is determined by a final order of a court of competent jurisdiction to constitute actual fraud, willful misconduct, or gross negligence (the “Release”).

14. This Court retains jurisdiction with respect to all matters arising from the

implementation, interpretation and enforcement of this Stipulation.

5 For the avoidance of doubt, there will be no distribution with respect to the Parent Claim or Wells Fargo on account of its deficiency claim.


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15. This Stipulation shall be effective upon the later of: (i) the entry of a final order

by the Court approving the Dismissal Procedures Order and (ii) the entry of a final order by the

Court approving this Stipulation.

[Remainder of Page Intentionally Left Blank]









s/s Stuart M. Brown


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EXHIBIT B

Blackline


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---------------------------------------------------------------

In re:

L.K. BENNETT U.S.A, INC.,1

Debtor.

---------------------------------------------------------------

x:::::::x

Chapter 11

Case No. 17-12082 (JTD)

(Jointly Administered)

Re D.I.: 219

ORDER PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE ANDBANKRUPTCY RULE 9019 APPROVING PROPOSED STIPULATION

CONCERNING THE COMMITTEE CARVE-OUT

This matter coming before this Court upon the Motion of the Debtor Pursuant to Section

363 of the Bankruptcy Code and Bankruptcy Rule 9019 Approving Proposed Stipulation

Concerning the Committee Carve-Out (the “Motion”) 2 filed by the above-captioned debtor (the

“Debtor”) for entry of an order, pursuant to section 363 of the Bankruptcy Code and Bankruptcy

Rule 9019, approving and authorizing the Stipulation, attached hereto as Exhibit 1, concerning

the Committee-Carve Out by and among the Debtor, the Committee and Wells Fargo; and the

Court having reviewed the terms of the Stipulation; and the Court having found that jurisdiction

is proper pursuant to 28 U.S.C. §§ 157 and 1334; and the Court having found that this is a core

proceeding pursuant to 28 U.S.C. § 157(b)(2); and the Court having determined that the relief

sought in the Motion is in the best interests of the Debtor, its estate and creditors; and the Debtor

having provided appropriate notice and an opportunity for a hearing, and there being no other or

further notice required under the circumstances; and the Court having determined that the legal

IN THE UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF DELAWARE

1 The last four digits of the Debtor’s federal tax identification number are (6607). The mailing address forthe Debtor is 595 Madison Avenue, New York, New York 10022.2 Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Motion.


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and factual bases set forth in the Motion establish just cause for the relief granted herein; and

after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED, THAT :

1. The Motion is GRANTED as set forth in this Order.

2. The Debtor is authorized to enter into the Stipulation with the Committee

and Wells Fargo, which is approved in all respects.


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3. Upon the entry of an order dismissing this chapter 11 case, to the fullest

extent authorized by applicable law, for the good and valuable consideration provided by each of:

(a) the Debtor and its estate, (b) the Committee, (c) Wells Fargo and (d) with respect to each of

the foregoing entities in clauses (a) through (c), such person’s current and former affiliates,

subsidiaries, officers, directors, principals, employees, agents, financial advisors, attorneys,

accountants, investment bankers, consultants, representatives, and other professionals, mutually

release each other from any and all claims, obligations, suits, judgments, damages, demands,

debts, rights, causes of action and liabilities whether liquidated or unliquidated, fixed or

contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or

thereafter arising, in law, equity, or otherwise that are based in whole or part on any act

omission, transaction, event, or other occurrences, whether direct or derivative, taking place on

or prior to the entry of this Order in connection with, or related to, the Debtor, the management

and/or administration of the Debtor, this chapter 11 case or the Prepetition Credit Documents

other than with respect to obligations or liabilities arising out of or relating to (i) this Order, (ii)

the Order Establishing the Dismissal Procedures for the Dismissal of the Chapter 11 Case

entered by this Court, or (iii) any act or omission that is determined by a final order of a court of

competent jurisdiction to constitute actual fraud, willful misconduct, or gross negligence (the

“Release”), which is hereby authorized and approved.

4. In connection with the dismissal of Debtor’s chapter 11 case, L.K. Bennett,

Ltd. shall receive no distribution on account of its unsecured claim and, upon the occurrence of

the Stipulation Effective Date, the unsecured claim of L.K. Bennett, Ltd. shall hereby be forever

discharged.


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5. The Parties are authorized to take all actions necessary to effectuate the

relief granted pursuant to this Order in accordance with the terms of the Stipulation and related

documents.

6. The Stipulation, including the releases granted thereby, shall become

effective immediately upon the later of: (i) the entry of a final order by this Court approving the

Dismissal Procedures and (ii) the entry of a final order by this Court approving the Stipulation.

7. Notwithstanding the foregoing, the following paragraph shall replace

paragraph 13(i) of the Stipulation and is hereby incorporated into the Stipulation:

The Debtor shall, upon the later of (x) the date the Court enters a final orderapproving the Dismissal Procedures and (y) the date the Court enters a final orderapproving the Stipulation (the “Stipulation Effective Date”), (i) transfer cash fromthe Liquidation Proceeds in the amount of $50,000 to the Committee to fund areserve to pay fees and expenses incurred by the Committee’s professionals inadministering the Dismissal Procedures and conducting claims reconciliation (the“Committee Administration Reserve”); (ii) transfer cash from the LiquidationProceeds in the amount of $200,000 to the Committee to fund a reserve — inaddition to the balance of the Committee Administration Reserve (the “CommitteeGUC Reserve” and, together with the Committee Administration Reserve, the“Committee Carve-Out”) — to be distributed by the Committee on a pro-ratabasis on account of the allowed, non-insider general unsecured claims against theDebtor, not including any deficiency claims of Wells Fargo and the Parent Claim(collectively, the “Allowed General Unsecured Claims”); (iii) transfer cash fromthe Liquidation Proceeds in the amount of $202,923 to an escrow account to funda reserve to be distributed by the Committee or an escrow agent to holders ofestimated prepetition priority claims and postpetition administrative expenseclaims (the “Priority Claim Reserve”,) the balance of which shall be transferred toWells Fargo following payment in full of all allowed prepetition priority claimsand postpetition administrative expense claims provided, however, that if the fullamount of Court-approved Professional Fees and Expenses (defined below)exceeds the amount reserved in the Final Fee Reserve (defined below), amountsremaining in the Priority Claim Reserve after payment in full of allowedprepetition priority claims and postpetition administrative expense claims shall bedistributed for payment in full of Court-approved Professional Fees and Expensesprior to distribution of remaining amounts to Wells Fargo; and (iv) reserve cashfrom the Liquidation Proceeds in the amount of $1,559,487 to fund a reserveadministered by the Debtor’s professionals to pay the fees incurred for servicesrendered and reimburse expenses (the “Professional Fees and Expenses”)approvedon a final basis by the Court of professionals retained in this chapter 11 case (the


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“Final Fee Reserve”), the balance of which the Debtor shall transfer to WellsFargo following payment in full of all Court-approved Professional Fees andExpenses, provided, however, that if the full amount of allowed prepetitionpriority claims and postpetition administrative expense claims exceeds the amountreserved in the Priority Claim Reserve, amounts remaining in the Final FeeReserve after payment in full of Court-approved Professional Fees and Expensesshall be distributed for payment in full of allowed prepetition priority claims andpostpetition administrative expense claims prior to distribution of remainingamounts to Wells Fargo. Further, the Debtor shall, in full and final satisfaction ofWells Fargo’s claims against the Debtor’s estate, (i) transfer $724,197 to WellsFargo upon the Stipulation Effective Date, and (ii) transfer all of the Debtor’sremaining assets to Wells Fargo on the date in which the Court enters an orderdismissing this chapter 11 case. For the avoidance of doubt, there will be nodistribution with respect to the Parent Claim or to Wells Fargo on account of itsdeficiency claim.

8. 7. The Court shall retain jurisdiction to hear and determine all matters

arising from implementation of this Order.


EXHIBIT 1

Stipulation

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