GEORGE C. PAINE II, United States Bankruptcy Judge
Upon the motion (the "Solicitation Procedures Motion"), dated March 5, 2003 (the "Motion"), of Service Merchandise Company, Inc. ("Service Merchandise") and 31 of its affiliates (the "affiliate Debtors"), debtors and debtors-in-possession in the above-captioned cases (Service Merchandise and the Affiliate Debtors collectively, the "Debtors"), for entry of an order (the "Solicitation Procedures Order"), pursuant to 11 U.S.C. § 105(a), 1125, and 1126 and Rules 2002, 3003, 3017, 3018, and 3020 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), approving the (i) form and manner of notice of the disclosure statement hearing and the disclosure statement; (ii) record date and procedures for temporary allowance of certain claims; (iii) solicitation materials and procedures; (iv) voting deadline and vote tabulation procedures; and (v) confirmation hearing and objection procedures; the Court having reviewed the Disclosure Statement and the Solicitation Procedures Motion; a hearing having been held on April 4, 2003 (the "Disclosure Statement Hearing"), at which time all interested parties were offered an opportunity to be heard with respect to the Disclosure Statement and Solicitation Procedures Motion; and the Court having reviewed and considered (i) the Disclosure Statement, (ii) the Solicitation Procedures Motion, and objections thereto, if any, (iii) the arguments of counsel made, and the evidence proffered or addressed at the Disclosure Statement Hearing; it appearing that notice of the Disclosure Statement Hearing and the hearing on the Solicitation Procedures Motion was sufficient and proper under the particular circumstances and in full compliance with the Bankruptcy Code, Bankruptcy Rules and Local Rules, and that no other or further notice need be given; and it appearing that the relief requested is in the best interests of the Debtors, their estate and creditors and other parties in interest; and upon the record of the Disclosure Statement Hearing and these cases; and after due deliberation thereon, and good and sufficient cause appearing therefor,
Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Solicitation Procedures Motion.
IT IS HEREBY FOUND AND DETERMINED:
A. The Disclosure Statement contains adequate information within the meaning of section 1125 of the Bankruptcy Code.
B. The notices attached hereto as Exhibits A, B, D, E and F contain sufficient information and are appropriate under the circumstances.
C. The form of the ballots attached hereto as Exhibits C-1 through C-7 (collectively, the "Ballots") are sufficiently consistent with Official Form No. 14 and adequately address the particular needs of these chapter 11 cases and are appropriate for each class of Claims entitled under the Plan to vote to accept or reject the Plan.
D. The time period set forth below during which the Debtors may solicit acceptances to the Plan is a reasonable period of time for creditors to make an informed decision to accept or reject the Plan.
E. The procedures set forth below for the solicitation and tabulation of votes to accept or reject the Plan provide for a fair and equitable voting process and are consistent with section 1126 of the Bankruptcy Code.
F. The procedures set forth below regarding the Confirmation Hearing Notice and the contents of the Solicitation Package comply with Bankruptcy Rules 2002 and 3017 and constitute sufficient notice to all interested parties.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED:
I. Approval of the Disclosure Statement
A. Approval of Notice, and Objection Procedures, for Disclosure Statement Hearing
1. The Disclosure Statement Notice attached hereto as Exhibit A is approved pursuant to Bankruptcy Rules 2002 and 3017.
2. Notice of the Disclosure Statement Hearing, as well as opportunities to object to the Solicitation Procedures Motion, Solicitation Procedures Order and Disclosure Statement and establishment of the Disclosure Statement Objection Deadline, were adequate, sufficient and proper under the particular circumstances and in full compliance with and hereby approved pursuant to the Bankruptcy Code, Bankruptcy Rules and Local Rules.
B. Approval of Disclosure Statement as Containing Adequate Information
3. Pursuant to Bankruptcy Rule 3017(b), (a) the Disclosure Statement is approved as containing adequate information within the meaning of section 1125(a) of the Bankruptcy Code, and, (b) to the extent not withdrawn, settled or otherwise resolved, all objections to the Disclosure Statement are overruled.
II. Confirmation Hearing and Objections
4. Pursuant to Bankruptcy Rule 3020(b)(2), the hearing on confirmation of the Plan (the "Confirmation Hearing") shall be May 12, 2003, at 1:30 p.m. (Prevailing Central Time) before the Honorable Judge George C. Paine II, United States Bankruptcy Judge, United States Bankruptcy Court for the Middle District of Tennessee, in Courtroom 1, Customs House, 701 Broadway, Nashville, Tennessee 37203.
5. Pursuant to Bankruptcy Rule 3020(b)(1), objections to confirmation of the Plan ("Confirmation Objections") must be in writing and served by 4:00 p.m. (Prevailing Central Time) on May 5. 2003 (the "Confirmation Objection Deadline"). Confirmation Objections not timely filed and served in accordance with this Order shall not be considered.
6. Confirmation Objections, if any, must (a) be in writing, (b) comply with the Bankruptcy Rules and the Local Rules, (c) set forth the name of the objector and the nature and amount of any claim or interest asserted by the objector against or on the Debtors, their estates, or their property, (d) state with particularity the legal and factual bases for the objection, (e) be filed, together with proof of service, with the Bankruptcy Court at Office of the Clerk of the Court, United States Bankruptcy Court, Customs House, 701 Broadway, Nashville, Tennessee 37203 and (f) be served by personal service, overnight delivery, or first-class mail so as to be received no later than the Confirmation Objection Deadline by the following (collectively, the "Notice Parties"):
III. Establishment of Record Date and Procedures for Temporary Allowance of Certain Claims
A. Record Date
7. Notwithstanding anything to the contrary in Bankruptcy Rule 3018(a), the record date (the "Record Date") shall be March 28, 2003 for determining (a) creditors entitled to receive Solicitation Packages (as defined below), (b) creditors entitled to vote to accept or reject the Plan, and (c) interest holders entitled to receive the Class 7 Non-Voting Status Notice attached hereto as Exhibit E.
B. Procedures For Temporary Allowance of Certain Claims For Voting
8. Any holder of a claim against the Debtors for which the Debtors have filed an objection to expunge or disallow such claim, whether such objection related to the entire claim or a portion thereof, or who has timely filed a proof of claim which in whole or in part is marked as disputed, shall not be entitled to vote on the Plan and shall not be counted in determining whether the requirements of section 1126(c) of the Bankruptcy Code have been met with respect to the Plan (except to the extent and in the manner as may be set forth in the objection) (a) unless the claim has been temporarily allowed for voting purposes pursuant to Bankruptcy Rule 3018(a) and in accordance with this Order or (b) except to the extent that, on or before the Voting Deadline, the objection to such claim has been resolved in favor of the creditor asserting the claim. Recipients of an objection to expunge or disallow their claim in whole or in part, or holders of a claim that filed a proof of claim marked as disputed in whole or in part, shall not receive ballot and will instead receive a notice of non-voting status, substantially in the form of Exhibit B attached hereto.
9. The deadline (the "Rule 3018(a) Motion Deadline") for filing motions requesting temporary allowance of a movant's claim for purposes of voting pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure ("Rule 3018(a) Motions") shall be April 28, 2003 at 4:00 p.m. (Prevailing Central Time). Such Motions must be filed and served on the Notice Parties and in the manner set forth in Section II of this Order so as to be received not later than 4:00 p.m. (Prevailing Central Time) on the Rule 3018(a) Motion Deadline; provided, however, that if the Debtors object to a claim on or after April 21, 2003, the Rule 3018(a) Motion Deadline shall be extended as to such claim such that the holder thereof shall have at least 7 days to file a Rule 3018(a) Motion.
10. Any party timely filing and serving a Rule 3018(a) Motion shall be provided a ballot and be permitted to cast a provisional vote to accept or reject the Plan. If, and to the extent that, the Debtors and such party are unable to resolve the issues raised by the Rule 3018(a) Motion prior to the Voting Deadline, then at the Confirmation Hearing, the Court shall determine whether the provisional ballot should be counted as a vote on the Plan.
IV. Approval of Solicitation Procedures
A. Duties of Voting Agent
11. In connection with the solicitation of votes with respect to the Plan, Robert L. Berger and Associates, Inc. shall act as the voting agent for all creditors whose claims relate to matters other than the Securities (the "Creditor Voting Agent"), and Innisfree MA Incorporated shall act as the voting agent for all creditors whose claims relate only to the Securities (the "Securities Voting Agent") (the Creditor Voting Agent together with the Securities Voting Agent, the "Voting Agents").
12. The Voting Agents are authorized and directed to assist the Debtors in (a) mailing Confirmation Notices to holders of Old Equity and other non-voting parties entitled to notice, (b) mailing Solicitation Packages, (c) soliciting votes on the Plan, (d) receiving, tabulating, and reporting on ballots cast for or against the Plan by holders of claims against the Debtors, (e) responding to inquiries from creditors and stakeholders relating to the Plan, the Disclosure Statement, the ballots and matters related thereto, including, without limitation, the procedures and requirements for voting to accept or reject the Plan and objecting to the Plan, and (f) if necessary, contacting creditors regarding the Plan and their ballots. The Creditor Voting Agent will handle the above matters only for creditors and other parties in interest who are not holders of the Securities while the Securities Voting Agent will handle the above matters only for holders of the Securities.
As discussed below, Old Equity is not entitled to vote on the Plan because it does not retain or receive any property under the Plan, and is thus deemed to reject the Plan. 11 U.S.C. § 1126(g).
B. Ballots
13. Impaired Classes Entitled to Vote. Pursuant to the Plan, Classes 3 (Prepetition Senior Secured Note Deficiency Claims and Prepetition Senior Note Claims), 4 (General Unsecured Claims), 5 (Prepetition Subordinated Note Claims) and 6 (General Unsecured Convenience Claims) are impaired. The Ballots attached hereto as Exhibits C-1 through C-7 are appropriate for soliciting votes to the Plan and the Ballots are hereby approved in full. The Ballots contain sufficient disclosure regarding third-party releases.
14. Unimpaired Classes. Pursuant to the Plan, Classes 1 (Secured Claims) and 2 (Non-Tax Priority Claims) are unimpaired and therefore are conclusively presumed to accept the Plan. The Debtors shall not solicit votes with respect to such classes of claims, and such classes of claims shall not be entitled to receive ballots with their Solicitation Packages. In lieu of a ballot and in accordance with Bankruptcy Rule 3017(d), the Debtors shall mail to the Unimpaired Creditors a notice, substantially in the form of Exhibit D, which provides (a) notice of the filing of the Plan, (b) notice of the specific Plan provisions with respect to the Unimpaired Creditors, (c) instructions regarding the Confirmation Hearing, and (d) detailed directions for filing objections to confirmation of the Plan.
15. Impaired Class Not intitled to Vote. Class 7 (Old Equity Interests and Subordinated Claims) does not retain any property under the Plan and is deemed to reject the Plan. The Debtors shall not send ballots nor Solicitation Packages, including the Confirmation Hearing Notice, to holders of Class 7 Claims or Interests. In lieu of a ballot and Solicitation Package, and in accordance with Bankruptcy Rule 3017(d), the Debtors shall mail to holders of Class 7 Claims or Interests, a notice, substantially in the form of Exhibit E, which provides (a) notice of the filing of the Plan, (b) notice of the specific Plan provisions with respect to holders of Class 7 Claims or Interests, (c) instructions regarding the Confirmation Hearing, and (d) detailed directions for both filing objections to confirmation of the Plan and obtaining copies of the Plan and Disclosure Statement (the "Class 7 Non-Voting Status Notice").
C. Content and General Transmittal of Solicitation Packages
16. Pursuant to Bankruptcy Rule 3017(d), on or before April 9, 2003 (the "Solicitation Mailing Date"), the Debtors shall transmit or cause to be transmitted, to the persons listed below, by United States mail, first-class postage prepaid, personal service, or overnight delivery, a solicitation packet (the "Solicitation Package") containing a copy or conformed printed version of:
(a) the Notice of (1) Approval of the Disclosure Statement; (2) Record Date and Procedures for Temporary Allowance of Certain Claims; (3) Solicitation Materials and Procedures; (4) Voting Deadline for Receipt of Ballots and Vote Tabulation Procedures; and (5) Hearing on Confirmation of Plan and Deadline and Procedures for Filing Objections to Confirmation of Plan; in substantially the form of the notice attached as
Exhibit F to the Solicitation Procedures Order (the "Confirmation Hearing Notice"), which the Debtors hereby request the Court to approve;
(b) the Disclosure Statement;
(c) the Plan (which shall be furnished in the Solicitation Package as Appendix A to the Disclosure Statement);
(d) the Solicitation Procedures Order (without exhibits attached);
(e) solicitation letters, if any, from the Committee; and
(f) to the extent applicable, a ballot and/or notice, appropriate for the specific creditor, in substantially the forms attached to the Solicitation Procedures Order (as may be modified for particular classes and with instruction attached thereto).
17. The Debtors shall file all exhibits and schedules to the Plan and/or appendices to the Disclosure Statement with the Court on or beforeApril 30. 2003, which is five (5) days prior to the Confirmation Objection Deadline (the "Exhibit Filing Date").
18. The following creditors and other persons shall receive the Solicitation Package (with exclusions noted herein): (a) the United States Trustee; (b) creditors holding claims designated as Unimpaired Claims (Class 1 and Class 2); and (e) creditors who are holding claims designated as Impaired Claims (Classes 3, 4, 5, and 6) and entitled to vote on the Plan and (i) who have filed timely proofs of claim (or untimely proofs of claim which have been allowed as timely by the Court under applicable law on or before the Record Date) that have not been disallowed by an order of the Court entered on or before the Record Date or (ii) whose claims are scheduled in the Debtors' Schedules (other than those scheduled as (x) unliquidated, contingent, or disputed or (y) zero or unknown in amount). So as to avoid duplication and reduce expenses, creditors who have filed duplicate claims in any given class shall be entitled to receive only one Solicitation Package and allowed one ballot for voting their claims with respect to that class.
19. Supplemental Notice of Confirmation Hearing. Additionally, to ensure proper notice of the Confirmation Hearing, the Debtors shall send the Confirmation Hearing Notice, attached as Exhibit F to the Solicitation Procedures Order, to all parties that received the Disclosure Statement Notice unless such parties are to receive the Class 7 Non-Voting Status Notice, and to parties to executory contracts and unexpired leases, which parties are not currently "creditors" as defined in section 101(10) of the Bankruptcy Code. Moreover, Bankruptcy Rule 2002(1) permits the Court to "order notice by publication if it finds that notice by mail is impracticable or that it is desirable to supplement notice." F.R.Bankr.P. 2002(1). Due to the large number of parties in interest in these chapter 11 cases, the Debtors shall publish the Confirmation Hearing Notice not less than twenty-five (25) days before the Confirmation Hearing in the national editions of The Wall Street Journal and USA Today. Additionally, the Debtors are hereby authorized (but not required) to publish the Confirmation Hearing Notice in such trade or other local publications of general circulation as the Debtors shall determine. Publication of this notice will give sufficient notice of the Confirmation Hearing to persons who do not otherwise receive notice by mail as provided for in the Solicitation Procedures Order, as part of the Solicitation Package or otherwise.
D.
Transmittal of Solicitation Packages to Holders of Contingent, Unliquidated, and Disputed Claims
20. Pursuant to Bankruptcy Rule 3003(c)(2), the Debtors shall not mail or distribute any documents or notices to any creditor (1) whose claim is not scheduled or scheduled at zero, in an unknown amount or as disputed, contingent, or unliquidated and (2) who fails to timely file a proof of claim. Moreover, such creditors shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution.
21. For claimants who have filed timely proofs of claim (or untimely proofs of claim which have been allowed as timely by the Court under applicable law on or before the Record Date), which in whole or in part reflect an unliquidated or contingent claim, the Debtors shall distribute (a) a Solicitation Package which contains a ballot and (b) the Confirmation Hearing Notice, which notice informs such person or entity that its entire claim has been allowed temporarily for voting purposes only and not for purposes of allowance or distribution, at $1.00.
E. Class 7 Creditors and Equity Holders Deemed to Reject the Plan
22. Holders of Class 7 Claims and Interests (Old Equity Interests and any Subordinated Claims) shall receive no distribution under the Plan and are deemed to reject the Plan pursuant to section 1126(g) of the Bankruptcy Code. The Debtors therefore shall not mail or distribute ballots or Solicitation Packages (including the Confirmation Hearing Notice) to such holders, but rather are authorized and directed to mail to such holders notice, substantially in the form of Exhibit E attached hereto.
F. Holders of Securities and Approval of Certain Transmittal Procedures
23. Transmittal to Record Holders. The Debtors shall transmit the (a) Solicitation Packages to holders of the Debt Securities and (b) Disclosure Statement Hearing Notice, the Class 7 Non-Voting Status Notice and Confirmation Hearing Notice to holders of Old Equity by mailing or causing to be mailed such materials by the Solicitation Mailing Date to (x) the Registered Record Owners and (y) the Intermediary Record Owners. In addition, Master Ballots will be distributed to the Intermediary Record Owner in accordance with customary procedures in the securities industry.
24. Labels for Record Holders. Each of the trustees and transfer agents, including without limitation, U.S. Bank National Association, as successor to State Street Bank and Trust Company (Indenture Trustee for the Prepetition Senior Notes), The Bank of New York (Indenture Trustee for the Prepetition Subordinated Notes), and HSBC Bank USA (Indenture Trustee for the Prepetition Senior Secured Notes) (collectively, the "Indenture Trustees") and Computershare Investor Services, LLC (the "Stock Transfer Agent"), within five (5) business days after the Record Date, shall provide the Securities Voting Agent with an electronic file containing the names, addresses, and holdings of the respective owners that hold the Securities in their own name (the "Registered Record Owners") or Intermediary Record Owners of the Securities as of the Record Date or, if they are unable to provide an electronic file, two sets of pressure-sensitive labels and a list containing the same information.
25. Dissemination of Ballots to Beneficial Owners. Intermediary Record Owners shall distribute Solicitation Packages and notices to the rpective beneficial owners of the Securities, as applicable, (the "Beneficial Owners") within five business (5) days of receiving the Solicitation Packages and notices.
26. Voting by Beneficial Owners. Intermediary Record Owners shall have two options for obtaining the votes of the Beneficial Owners and order each such entity shall follow one of these two options.
27. First, the Intermediary Record Owners may forward the Solicitation Package to the Beneficial Owners of the Debt Securities for voting, which Solicitation Package shall include a Beneficial Owner Ballot substantially in the form of Exhibit C-1 and C-5 attached to the Solicitation Procedures Order, and a return envelope provided by, and addressed to, the Intermediary Record Owner. Under this option, the Intermediary Record Owners must summarize the individual votes of their Beneficial Owners from the Beneficial Owner Ballots on a Master Ballot in substantially the form attached as Exhibit C-2 and C-6 to the Solicitation Procedures Order. The Intermediary Record Owners shall then return the Master Ballot to the Securities Voting Agent prior to the Voting Deadline.
28. Alternatively, the Intermediary Record Owner may prevalidate a Beneficial Owner Ballot (a "Prevalidated Ballot") by signing that ballot and by indicating on that Ballot: (a) the Intermediary Record Owner of the Debt Securities, (b) the principal amount owned by such Beneficial Owner, (c) and the appropriate account numbers through which the Beneficial Owner's holdings are derived. The Intermediary Record Owner shall then forward the Solicitation Package, including the Prevalidated Ballot and a return envelope addressed to the Securities Voting Agent, for voting by the Beneficial Owner.
29. The Debtors are authorized them to reimburse the Intermediary Record Owners for their reasonable, actual, and necessary out-of pocket expenses incurred in performing the tasks described above upon written request by such entities (subject to the Court's retaining jurisdiction to resolve any disputes over any request for reimbursement).
30. The Debtors shall serve a copy of the Solicitation Procedures Order on the Indenture Trustees, Stock Transfer Agent and each Intermediary Record Owner identified by the Debtors and the Securities Voting Agent as an entity through which Beneficial Owners hold the Securities.
G. When No Notice or Transmittal Necessary
31. Solicitation Packages shall not be sent to creditors whose claims are based solely on amounts scheduled by the Debtors but whose claims already have been paid in or satisfied in the full scheduled amount;provided, however, if, and to the extent that, any such creditor would be entitled to receive a Solicitation Package for any reason other than by virtue of the fact that its claim had been scheduled by the Debtors, such creditor will be sent a Solicitation Package in accordance with the procedures set forth above. The Debtors shall not be required to send a Solicitation Package to any creditor who filed a proof of claim if the amount asserted in such proof of claim is less than or equal to the amount that has already been paid.
32. The Debtors are not required to give notice or service of any kind upon any person or entity to whom the Debtors mailed the Disclosure Statement Hearing Notice and received any of such notices returned by the United States Postal Service marked "undeliverable as addressed," "moved — left no forwarding address," "forwarding order expired," or any similar reason, unless the Debtors have been informed in writing by such person of that person's new address.
V. Voting Deadline and Procedures for Vote Tabulation
33. Voting Deadline. Pursuant to Bankruptcy Rule 3017(c), the last date and time by which ballots for accepting or rejecting the Plan must be received by the Voting Agents in order to be counted shall be 4:00 p.m. Prevailing Central Time, May 5, 2003 (the "Voting Deadline").
34. Pursuant to section 105(a) of the Bankruptcy Code, the guidelines set forth below are hereby established for tabulating the vote to accept or reject the Plan.
35. Votes Counted. Any timely received ballot that contains sufficient information to permit the identification of the claimant and is cast as an acceptance or rejection of the Plan will be counted and will be deemed to be cast as an acceptance or rejection, as the case may be, of the Plan. Because the Debtors are seeking to substantively consolidate their estates as part of the Plan, Ballots counted in accordance with the above procedures will be counted as an acceptance or rejection, as the case may be, of the Plan with respect to all the Debtors. The foregoing general procedures will be subject to the following exceptions:
(a) If a Claim is deemed Allowed in accordance with the Plan, such Claim is Allowed for voting purposes in the deemed Allowed amount set forth in the Plan;
(b) If a Claim for which a proof of claim has been timely filed is marked as contingent or unliquidated, such Claim shall be temporarily allowed for voting purposes only, and not for purposes of allowance or distribution, at $1.00;
(c) If a Claim has been estimated or otherwise allowed for voting purposes by order of the Court, such Claim is temporarily allowed in the amount so estimated or allowed by the Court for voting purposes only, and not for purposes of allowance or distribution;
(d) If a Claim is not Scheduled, or Scheduled at zero, in an unknown amount, or as unliquidated, contingent, or disputed,
and a proof of claim was
not(a) timely filed by the Bar Date or (b) deemed timely filed by an order of the Bankruptcy Court prior to the Voting Deadline, then such Claim be disallowed for voting purposes and for purposes of allowance and distribution pursuant to Bankruptcy Rule 3003(c);
(e) If the Debtors have served and filed an objection to a Claim or any portion thereof at least ten (10) days before the Confirmation Hearing, then such Claim shall be temporarily disallowed for voting purposes only and not for the purposes of the allowance or distribution, except to the extent and in the manner as may be set forth in the objection;
(f) If a ballot is properly completed, executed and timely filed, but does not indicate an acceptance or rejection of the Plan, or indicates both an acceptance and rejection of the Plan, such Claim will be counted as acceptance of the Plan; and
(g) Ballots casts in amounts in excess of their allowed amount will only be counted to the extent of the creditors' allowed Claim.
36. Votes Not Counted. Pursuant to section 105 of the Bankruptcy Code, the following ballots shall not be counted or considered for any purpose in determining whether the Plan has been accepted or rejected:
(a) Any ballot received after the Voting Deadline unless the Debtors shall have wanted an extension in writing of the Voting Deadline with respect to such ballot;
(b) Any ballot that is illegible or contains insufficient information to permit the identification of the claimant;
(c) Any ballot cast by a person or entity that does not hold a claim in a class that is entitled to vote to accept or reject the Plan;
(d) Any ballot cast for a claim not Scheduled, or Scheduled at zero, in an unknown amount, or as unliquidated, contingent, or disputed,
and for which (a) no proof of claim was timely filed or (b) no Rule 3018(a) Motion has been filed by the Rule 3018(a) Motion Deadline;
(e) Any ballot submitted by facsimile transmission;
(f) Any duplicate ballot will only be counted once;
(g) Any unsigned ballot; or
(h) Any ballot not cast in accordance with the procedures outlined in this Motion.
37. In accordance with Bankruptcy Rule 3018, as to any creditor filing a Rule 3018(a) Motion, such creditor's Ballot should not be counted for voting purposes, unless temporarily allowed by the Court after notice and a hearing.
38. Changing Votes. Notwithstanding Bankruptcy Rule 3018(a), whenever two or more ballots are cast, voting the same claim prior to the Voting Deadline, the last ballot received prior to the Voting Deadline will be deemed to reflect the voter's intent and thus to supersede any prior ballots, provided, however, that where an ambiguity exists as to which ballot was the latest mailed, the Voting Agents reserve the right to contact the creditor and calculate the vote according to such voter's stated intent. This procedure is without prejudice to the Debtors' right to object to the validity of the second ballot on any basis permitted by law and, if the objection is sustained, to count the first ballot for all purposes.
39. No Vote Splitting; Effect. Claim splitting shall not permitted and the Court hereby orders that creditors who vote must vote all of their claims within a particular class to either accept or reject the Plan.
40. Absence of Votes in a Class. If no votes to accept or reject the Plan are received with respect to a particular class, then such class shall be deemed to have voted to accept the Plan.
41. Classification Election. Pursuant to the Plan, holders of Class 4 General Unsecured Claims may elect on their ballots to reduce their claims to $5,000 in order to receive $915 in cash in full satisfaction of their claims (the "Convenience Class Election"). Accordingly, with respect to any claim holder who has elected to make the Convenience Class Election, such holder shall be deemed to have voted to accept or reject the Plan as a member of the class of General Unsecured Convenience Claims. Moreover, pursuant to the Plan, holders of Class 6 General Unsecured Convenience Claims may elect on their ballots to opt-out of Class 6 and into Class 4 (the "Class 4 Election"). Accordingly, with respect to any claim holder who has elected to make the Class 4 Election, such holder shall be deemed to have voted to accept or reject the Plan as a member of the class of General Unsecured Claims.
42. Counting Ballot from Beneficial Owners. The following procedures are established for tabulating votes cast by holders of the Debt Securities.
43. First, Intermediary Record Owners electing to use the Master Ballot voting process shall be required to retain for one year following the Voting Deadline, for inspection by the Court, the Beneficial Owner Ballots cast by Beneficial Owners, and that Intermediary Record Owners electing to send Prevalidated Ballots to Beneficial Owners for direct return to the Securities Voting Agent shall be required to retain for one year following the Voting Deadline, for inspection by the Court a list of those Beneficial Owners to whom such Prevalidated Ballots were sent. Additionally, the Securities Voting Agent shall be required to retain for one year following the Voting Deadline, for inspection by the Court, the Prevalidated Ballots returned by the Beneficial Owners, as well as the Master Ballots returned by the Intermediary Record Owners.
44. Second, to avoid double counting, (a) votes cast by Beneficial Owners holding Debt Securities through Intermediary Record Owners and transmitted by means of a Master Ballot or Prevalidated Ballot shall be applied against the positions held by such Intermediary Record Owners with respect to such Debt Security and (b) votes submitted by Prevalidated Ballot or by an Intermediary Record Owner on a Master Ballot shall not be counted to the extent that they are in excess of the position maintained by the respective Intermediary Record Owner in the Debt Securities on the Record Date.
45. Third, the following assumptions shall apply to Prevalidated Ballots: (a) each Prevalidated Ballot is for a single account, and (b) each vote is a separate vote and not duplicative of any other vote cast by other customers of such Intermediary Record Owner (unless specific evidence indicates that one vote is for the identical account number and amount of another vote).
46. Fourth, to the extent that conflicting votes or overvotes are submitted on a timely received Master Ballot or Prevalidated Ballot, the Securities Voting Agent shall attempt to resolve the conflict or overvote prior to the preparation of the vote certification in order to ensure that as many Debt Securities claims as possible are accurately tabulated.
47. Fifth, to the extent that overvotes on a timely received Master Ballot or Prevalidated Ballot are not reconcilable prior to the preparation of the vote certification, the all pleadings and orders of the Bankruptcy Court are publicly available, at the Bankruptcy Court's general Web site address: http://www.tnmb.uscourts.gov.
51. Copies of the Plan and Disclosure Statement (including after the Exhibit Filing Date, all Exhibits, Plan Schedules, and Appendices) may also be obtained, at the requesting parties' expense, upon written request, from the Debtors' voting agent at Robert L. Berger Associates LLC, 10351 Santa Monica Blvd., Suite 101A, PMB 1028, Los Angeles, CA 90025, Attn: Service Merchandise Company, Inc., et al.
52. The dates proposed on Chart A attached hereto are reasonable and appropriate under the circumstances and hereby approved. CHART A Chart of Proposed Dates and Deadlines Event Date/Deadline Date Plan and Disclosure Statement Were Filed March 5, 2003 Date to Publish Notice of Disclosure Statement Hearing March 10, 2003 Record Date March 28, 2003 Objection Deadline for Disclosure Statement Hearing March 31, 2003 Disclosure Statement Hearing April 4, 2003 Solicitation Mailing Date April 9, 2003 Date to Publish Notice of Confirmation Hearing April 17, 2003 Rule 3018(a) Motion Deadline April 28, 2003 Exhibit Filing Date April 30, 2003 Objection Deadline for Confirmation Hearing May 5, 2003 Voting Deadline May 5, 2003 Confirmation Hearing May 12, 2003