In re Aina Le'a, Inc., Bankruptcy Case No. 17-00611
| Decision Date | 24 May 2019 |
| Docket Number | Bankruptcy Case No. 17-00611 |
| Parties | In re AINA LE'A, INC., Debtor and Debtor-in-possession. |
| Court | U.S. Bankruptcy Court — District of Hawaii |
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER CONFIRMING THE FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION OF AINA LE'A, INC., DATED APRIL 29, 2019;
The Confirmation Hearing of the First Amended Chapter 11 Plan of Reorganization of Aina Le'a, Inc. dated February 20, 2019, commenced on March 13, 2019, at 9:30 a.m., before the Honorable Robert J. Faris, United States Bankruptcy Judge for the District of Hawaii. Appearances are noted in the record.
On April 29, 2019, the Debtor filed its "First Amended Chapter 11 Plan of Reorganization of Aina Le'a, Inc., dated April 29, 2019" (the "Final Confirmed Plan" or the "Plan") (dkt. #464), to incorporate various stipulations previously filed with the Bankruptcy Court reflecting agreements reached between the Debtor and Holders of Allowed Claims in Classes 2A, 2B, and 2C regarding the treatment of such Claims under the Plan. See dkt. ##417, 454, 461. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Final Confirmed Plan. A true and correct copy of the Final Confirmed Plan is attached hereto as Exhibit A.
The Bankruptcy Court has considered the entire record in the Bankruptcy Case, including without limitation, the pleadings filed and evidence admitted in support of Confirmation, the arguments and representations of counsel, and the filed Declarations of Robert J. Wessels, Gerald Saxton, Hiram Rivera, John C. Vaughan, Richard B. Gaudet, Raymond J. Kirchner, Kelly Valenzuela, Dennis M. Lombardi, Esq., Ted N. Pettit, Esq. and Allison Ito, Esq., filed in support of Confirmation (including all attachments thereto, all of which were accepted into evidence).
The findings and conclusions set forth herein, together with the record of the Confirmation Hearing, constitute the Bankruptcy Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding by Bankruptcy Rule 9014. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as such. The orders enteredherein constitute the Bankruptcy Court's judgment pursuant to Bankruptcy Rule 7054, made applicable to this proceeding by Bankruptcy Rule 9014.
1. On June 22, 2017, the Debtor commenced a voluntary case under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Hawaii, Bankruptcy Case No. 17-00611. The Debtor was authorized to continue to operate its business and manage its properties as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. The Debtor was on the Petition Date and continues to be a "person" eligible for relief under sections 101(41) and 109 of the Bankruptcy Code, and the Debtor is the proper proponent of the Plan under section 1121(a) of the Bankruptcy Code.
2. On July 17, 2017, the U.S. Trustee appointed the Committee in this Bankruptcy Case, consisting of TrueStyle Pacific Builders L.L.C., Macias Gini & O'Connell, LLP and Clifford & Company, Inc. See dkt. #39. The U.S. Trustee expanded the Committee on July 20, 2017 to add E.M. Rivera & Sons, Inc. and Engineering Partners, Inc. See dkt. #39.
3. This Bankruptcy Court takes judicial notice of the docket of the Bankruptcy Case maintained by the Clerk of this Bankruptcy Court or its duly appointed agent, including, without limitation, all pleadings and other documents filed, all orders entered, and all evidence and arguments made, proffered, or adduced at, the hearings held before this Bankruptcy Court during the pendency of the Bankruptcy Case.
4. On January 2, 2019, the Bankruptcy Court entered the Solicitation Procedures Order that, among other things: (i) approved the Disclosure Statement pursuant to Bankruptcy Code section 1125 and Bankruptcy Rule 3017; (ii) established March 13, 2019 as the date for the Confirmation Hearing; (iii) approved the form and method of notice of the Confirmation Hearing (the "Confirmation Hearing Notice"); (iv) established procedures for soliciting and tabulating votes with respect to the Plan; and (v) established procedures governing the Confirmation Hearing.
5. In accordance with the Solicitation Order, the following items were transmitted to Creditors and other parties-in-interest by the Debtor: (i) the Confirmation Hearing Notice, (ii) the Disclosure Statement, and (iii) with respect tothose Creditors in Classes entitled to vote under the Plan and the Solicitation Order, the applicable Ballot (collectively, the "Solicitation Materials"). All said documents were transmitted by the Debtor to the appropriate parties on or before January 7, 2019. See dkt. ##342-347.
6. The Final Confirmed Plan is dated and identifies the Debtor as the proponent, thereby satisfying Bankruptcy Rule 3016(a). The Disclosure Statement satisfied the requirements of Bankruptcy Rule 3016(b).
7. The transmittal and service of the Solicitation Materials complied with the Solicitation Procedures Order, were appropriate and satisfactory based upon the circumstances of the Bankruptcy Case, were conducted in good faith, and were in compliance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any other applicable rules, laws, and regulations. Because such transmittal and service were adequate and sufficient, no other or further notice is necessary or shall be required.
8. Based on the record before the Bankruptcy Court in the Bankruptcy Case, the Debtor and all entities acting on its behalf, including officers, directors, managers, principals, shareholders, employees, agents, financial advisors, attorneys, accountants, consultants, representatives, and other professionals, each in their capacity as such, together with their respective successors and assigns, 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 Solicitation Procedures Order, the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules in connection with all of their respective activities relating to their participation in the Bankruptcy Case, and the activities described in section 1125 of the Bankruptcy Code and therefore are entitled to the protections afforded by section 1125(e) of the Bankruptcy Code.
9. On February 20, 2019, the Debtor filed the Declaration of Allison I. Ito Regarding Ballot Tabulation of Ballots in Support of Confirmation of First Amended Chapter 11 Plan of Reorganization of Aina Le'a, Inc., Dated February 20, 2019. See dkt. #380. On March 12, 2019, the Debtor filed the Supplemental Declaration of Allison I. Ito Regarding Ballot Tabulation of Ballots in Support of Confirmation of First Amended Chapter 11 Plan of Reorganization of Aina Le'a, Inc., Dated February 20, 2019. See dkt. #443 (collectively the "Voting Report").
10. Votes to accept and reject the Plan were solicited from creditors holding Claims in Classes 2A, 2B, 2C, 3A and 3B. Such votes were solicited and tabulated fairly, in good faith, and in a manner consistent with the Bankruptcy Code, the Bankruptcy Rules, the Solicitation Order, and past and present practice before the Bankruptcy Court.
11. As set forth in the Voting Report, Classes 2C and 3A voted to accept the Plan, pursuant to Section 1126(c) of the Bankruptcy Code. No votes were received for Class 3B. Pursuant to the Romspen Stipulation and the Bridge Stipulation, defined below, Classes 2A and 2B subsequently changed their vote to accept the Plan
12. The Voting Report, when coupled with the subsequent affirmative votes in favor of Confirmation by the Holders of Claims in Classes 2A and 2B, establishes that each of Classes 2A, 2B, 2C, and 3A voted in favor of Confirmation.
13. On February 22, 2019, the State of Hawaii, Department of Taxation ("DOT"), filed an objection to Confirmation (the "DOT Objection"). See Dkt. #392. The DOT Objection has been resolved and withdrawn on the record at the Confirmation Hearing based on the Debtor's having filed the requisite state tax returns with the DOT prior thereto.
14. On February 27, 2019, Bridge filed an objection to Confirmation (the "Bridge Objection"), declarations in support of the Bridge Objection, and supporting documents and exhibits. See dkt. ##396-400. The Bridge Objection has been resolved and withdrawn per stipulation (the "Bridge Stipulation") between the Debtor and Bridge. See dkt. #454. Pursuant to the Bridge Stipulation (filed hereinon March 27, 2019), Bridge has withdrawn all of its objections to Confirmation and all declarations in support of Bridge's objections. Pursuant to the Bridge Stipulation, the Allowed Class 2B Secured Claim of Bridge shall be fixed in the amount of $20,000,000.00 as of the Effective Date. Bridge has changed its votes and voted in favor of Confirmation. As a result of the Bridge Stipulation, the Debtor's Objection to Claim No. 28 filed by [Bridge] (dkt. #431) is rendered moot and deemed withdrawn by the Debtor.
15. On February 27, 2019, Libo Zhang filed an objection to Confirmation (the "Zhang Objection"), declarations in support of the Zhang Objection, and supporting documents and exhibits. See dkt. ##401-404. The Zhang Objection has been resolved and withdrawn pursuant to agreement (the "Zhang Stipulation") between the Debtor and Zhang, which was filed on March 6, 2019. See dkt. #417. Pursuant to the Zhang Stipulation, Zhang has withdrawn all of its objections to Confirmation and all declarations in...
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