Case 16-11452-KJC Doc 1303 Filed 05/11/17 Page 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DRAW ANOTHER CIRCLE, LLC, et al., 1 Debtors. Chapter 11 Case No.: 16-11452 (KJC) (Jointly Administered) CERTIFICATION OF COUNSEL REGARDING ORDER APPROVING STIPULATION FOR THE RESOLUTION OF CLAIMS OF CERTAIN TEXAS AD VALOREM TAXING JURISDICTIONS The undersigned hereby certifies as follows: 1. On June 13, 2016 (the Petition Date ), the above-captioned debtors and debtors in possession (the Debtors ) filed petitions for relief in the United States Bankruptcy Court for the District of Delaware under chapter 11 of title 11 of the United States Code. 2. On July 21, 2016, Tax Appraisal District of Bell County, County of Brazos, Brown County Appraisal District, County of Comal, County of Erath, County of Guadalupe, County of Hays, City of Kerrville/Kerrville Independent School District, Midland Central Appraisal District, City of Waco/Waco Independent School District, and Taylor Central Appraisal District (collectively, the Texas Ad Valorem Taxing Jurisdictions ), filed an Objection (the Sale Objection ) to Debtors Combined Motion for Entry of Orders: (I) Establishing Bidding and Sale Procedures; (II) Approving the Sale of Assets; and (III) Granting Related Relief [Docket No. 430] (the Sale Motion ). 1 The Debtors and the last four digits of their respective federal taxpayer identification numbers are as follows: Draw Another Circle, LLC (2102); Hastings Entertainment, Inc. (6375); MovieStop, LLC (9645); SP Images, Inc. (7773); and Hastings Internet, Inc. (0809). The Debtors executive headquarters are located at 3601 Plains Boulevard, Amarillo, TX 79102. Under the confirmed First Amended Joint Combined Disclosure Statement and Plan of Liquidation, the four related Debtors bankruptcy cases have been closed. 32740/2 05/11/2017 200756201.3
Case 16-11452-KJC Doc 1303 Filed 05/11/17 Page 2 of 4 3. In resolution of the Sale Objection, the Debtors agreed to include the following language in the Order Approving the Sale Motion [Docket No. 449] (the Sale Order ): [The Debtors shall] establish a segregated account into which there shall be deposited an amount equal to $364,080.61 to provide for the payment of claims or liens of the Texas Ad Valorem Taxing Jurisdictions, holding secured claims with respect to ad valorem and similar taxes. Sale Order at 45. 4. On December 20, 2016, the Debtors filed The Debtors and the Creditors Committee s First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code [Docket No. 1076] (the Plan ). 5. On February 14, 2017, the Court entered the Findings of Fact, Conclusions of Law, and Order Approving and Confirming Debtors' and the Creditors' Committee's First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code [Docket No. 1195] (the Confirmation Order ). The Hastings Creditors Liquidating Trust Agreement, which identifies Curtis R. Smith as the liquidating trustee (the Liquidating Trustee ) of the Hastings Creditors Liquidating Trust (the Liquidating Trust, and together with the Liquidating Trustee, the Trust ) was attached as part of Exhibit A to the Confirmation Order. 6. On February 20, 2017 (the Effective Date ), the Debtors filed the Notice of: (I) Entry of Order Confirming Debtors and the Creditors Committee s First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code; (II) Effective Date; and (III) Bar Date for Certain Administrative Claims and Compensation and Reimbursement Claims [Docket No. 1219]. 4836-4732-6024, v. 1
Case 16-11452-KJC Doc 1303 Filed 05/11/17 Page 3 of 4 7. Article VIII.C of the Plan gives the Liquidating Trustee the right to discharge the Debtors obligations in any way necessary to implement the Plan. See Plan Art. VIII.C. ( On and after the Effective Date, the Liquidating Trust and the Liquidating Trustee will cause each of the Liquidating Debtors... to discharge its obligations and liabilities and to wind up its business operations, all on such terms as the Liquidating Trustee determines to be necessary or appropriate to implement this Combined Plan and Disclosure Statement and the Liquidating Trust Agreement and all without further order of the Bankruptcy Court. ). 8. The Texas Ad Valorem Taxing Jurisdictions, holders of claims assessed on property described as business personal property located in the aforementioned ad valorem tax jurisdictions for the years of 2015 and 2016 and identified on Exhibit A to the Stipulation (defined herein) (the Texas Ad Valorem Claims ) and the Trust have entered into a stipulation (the Stipulation ) regarding the resolution of the Texas Ad Valorem Claims. Attached hereto as Exhibit A is a proposed form of order (the Proposed Order ) approving the Stipulation. 9. The Stipulation and Proposed Order have been circulated among, and are acceptable to, counsel to the Trust and the Texas Ad Valorem Taxing Jurisdictions. A copy of the Stipulation is attached to the Proposed Order as Exhibit 1. [Remainder of this page intentionally left blank] 4836-4732-6024, v. 1
Case 16-11452-KJC Doc 1303 Filed 05/11/17 Page 4 of 4 WHEREFORE, the Liquidating Trustee respectfully requests that the Proposed Order approving the Stipulation attached hereto as Exhibit A, be entered at the earliest convenience of the Court. Dated: May 11, 2017 Wilmington, Delaware Respectfully submitted, LOWENSTEIN SANDLER LLP Bruce Buechler, Esq. (admitted pro hac vice) Nicole Fulfree, Esq. (admitted pro hac vice) 65 Livingston Avenue Roseland, New Jersey 07068 (973) 597-2500 (Telephone) (973) 597-2400 (Facsimile) Email: bbuechler@lowenstein.com nfulfree@lowenstein.com Bruce S. Nathan, Esq. (admitted pro hac vice) Eric Chafetz, Esq. (admitted pro hac vice) Lowenstein Sandler LLP 1251 Avenue of the Americas New York, NY 10020 Telephone: (212) 262-6700 Facsimile: (212) 262-7402 Email: bnathan@lowenstein.com echafetz@lowenstein.com --and-- GOLDSTEIN & MCCLINTOCK, LLLP /s/ Maria Aprile Sawczuk Maria Aprile Sawczuk, Esq. (No. 3320) 1201 North Orange Street, Suite 7380 Wilmington, DE 19801 Telephone: (302) 444-6710 Facsimile: (302) 444-6709 Email: marias@restructuringshop.com Co-Counsel to the Liquidating Trustee and the Hastings Creditors Liquidating Trust 4836-4732-6024, v. 1
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 1 of 12 EXHIBIT A 32740/2 05/11/2017 200756201.3
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 2 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DRAW ANOTHER CIRCLE, LLC, et al., 1 Debtors. Chapter 11 Case No.: 16-11452 (KJC) (Jointly Administered) ORDER APPROVING STIPULATION FOR THE RESOLUTION OF CLAIMS OF CERTAIN TEXAS AD VALOREM TAXING JURISDICTIONS The Hastings Creditors Liquidating Trust (the Liquidating Trust ) and Curtis R. Smith, in his capacity as liquidating trustee (the Liquidating Trustee, and together with the Liquidating Trust, the Trust ) of the Liquidating Trust, and Tax Appraisal District of Bell County, County of Brazos, Brown County Appraisal District, County of Comal, County of Erath, County of Guadalupe, County of Hays, City of Kerrville/Kerrville Independent School District, Midland Central Appraisal District, City of Waco/Waco Independent School District, and Taylor Central Appraisal District (collectively, the Texas Ad Valorem Taxing Jurisdictions, and together with the Trust, the Parties ), having entered into that certain Stipulation for the Resolution of Claims of the Texas Ad Valorem Taxing Jurisdictions (the Stipulation ); and the Court having reviewed the Stipulation; and upon the record of these cases; and the Court having determined that good cause has been demonstrated for approving the Stipulation; It is hereby ORDERED that: 1. The Stipulation attached hereto as Exhibit 1 is approved and its terms are incorporated into the provisions of this Order as if fully set forth herein. 1 The Debtors and the last four digits of their respective federal taxpayer identification numbers are as follows: Draw Another Circle, LLC (2102); Hastings Entertainment, Inc. (6375); MovieStop, LLC (9645); SP Images, Inc. (7773); and Hastings Internet, Inc. (0809). The Debtors executive headquarters are located at 3601 Plains Boulevard, Amarillo, TX 79102. Under the confirmed First Amended Joint Combined Disclosure Statement and Plan of Liquidation (the Plan ), the four related Debtors bankruptcy cases have been closed.
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 3 of 12 2. The Stipulation shall become effective on the date that this Order becomes final and non-appealable (the Effective Date ). 3. The claims listed on Exhibit A attached to the Stipulation are hereby fixed and allowed as secured claims in the amounts listed therein. 4. Claim No. 657 filed by the County of Hays amends and supersedes Claim No. 31. Claim No. 31 shall be disallowed in its entirety, and Claim No. 657 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A to the Stipulation. 5. Claim No. 653 filed by the County of Erath shall be disallowed in its entirety as a duplicate of Claim No. 3429. Claim No. 3429 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A to the Stipulation. 6. Claim No. 24 filed by Midland Central Appraisal District shall be disallowed in its entirety as a duplicate of Claim No. 3426. Claim No. 3426 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A to the Stipulation. 7. The Trust shall pay the claims in the amounts listed on Exhibit 1 attached to the Stipulation to the respective Texas Ad Valorem Taxing Jurisdictions within ten (10) business days after the Effective Date. 8. The Texas Ad Valorem Taxing Jurisdictions hereby waive any and all rights they may have under section 32 of the Texas Property Tax Code, sections 506(b) and 511 of chapter 11, title 11 of the United States Code (the Bankruptcy Code ), and any other applicable state or federal law, to assess, levy, or collect any postpetition penalties or interest on account of the claims listed on Exhibit A to the Stipulation. 9. The Parties are hereby authorized to take any and all actions reasonably necessary to effectuate the terms of the Stipulation. 2
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 4 of 12 10. This Court shall retain jurisdiction over any and all matters arising from or related to the implementation of the Stipulation or this Order. Dated:, 2017 Wilmington, Delaware THE HONORABLE KEVIN J. CAREY UNITED STATES BANKRUPTCY JUDGE 3
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 5 of 12 EXHIBIT 1
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 6 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DRAW ANOTHER CIRCLE, LLC, et al., 1 Debtors. Chapter 11 Case No.: 16-11452 (KJC) (Jointly Administered) STIPULATION FOR THE FOR THE RESOLUTION OF CLAIMS OF CERTAIN TEXAS AD VALOREM TAXING JURISDICTIONS The Trust 2 and Tax Appraisal District of Bell County, County of Brazos, Brown County Appraisal District, County of Comal, County of Erath, County of Guadalupe, County of Hays, City of Kerrville, Kerrville Independent School District, Midland Central Appraisal District, City of Waco, Waco Independent School District, and Taylor Central Appraisal District (collectively, the Texas Ad Valorem Taxing Jurisdictions, and together with the Trust, the Parties ), by and through their respective counsel, hereby agree and stipulate (the Stipulation ) to the following: WHEREAS, on June 13, 2016 (the Petition Date ), each of the Debtors filed with this Court a voluntary petition for relief under chapter 11 of the Bankruptcy Code; WHEREAS, on July 21, 2016, the Texas Ad Valorem Taxing Jurisdictions filed an Objection (the Sale Objection ) to the Debtors Combined Motion for Entry of Orders: (I) Establishing Bidding and Sale Procedures; (II) Approving the Sale of Assets; and (III) Granting Related Relief ( Sale Motion ) at Docket No. 430; and 1 The Debtors and the last four digits of their respective federal taxpayer identification numbers are as follows: Draw Another Circle, LLC (2102); Hastings Entertainment, Inc. (6375); MovieStop, LLC (9645); SP Images, Inc. (7773); and Hastings Internet, Inc. (0809). The Debtors executive headquarters are located at 3601 Plains Boulevard, Amarillo, TX 79102. Under the confirmed First Amended Joint Combined Disclosure Statement and Plan of Liquidation (the Plan ), the four related Debtors bankruptcy cases have been closed. 2 Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Order Approving Stipulation For The Resolution Of Claims Of Certain Texas Ad Valorem Taxing Jurisdictions submitted herewith.
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 7 of 12 WHEREAS on June 24, 2016, June 27, 2016, and November 7, 2016, the Texas Ad Valorem Taxing Jurisdictions filed proofs of claim number 24, 31, 653, 657, 3422, 3423, 3424, 3425, 3426, 3427, 3428, 3429, 3430, 3432 on account of amounts assessed on property described as business personal property located in the Texas Ad Valorem Taxing Jurisdictions for the years 2015 and 2016 (the Texas Ad Valorem Claims ); and WHEREAS, in resolution of the Sale Objection, the Debtors agreed to include the following language in the order approving the Sale Motion [Docket No. 449] (the Sale Order ): [The Debtors shall] establish a segregated account into which there shall be deposited an amount equal to $364,080.61 to provide for the payment of claims or liens of the Texas Ad Valorem Taxing Jurisdictions, holding secured claims with respect to ad valorem and similar taxes Sale Order at 45; and WHEREAS, on December 20, 2016, the Debtors filed The Debtors and the Creditors Committee s First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code [Docket No. 1076] (the Plan ); and WHEREAS, on February 14, 2017, the Court entered the Findings of Fact, Conclusions of Law, and Order Approving and Confirming Debtors' and the Creditors' Committee's First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code [Docket No. 1195] (the Confirmation Order ); and WHEREAS, on February 20, 2017 (the Effective Date ), the Debtors filed the Notice of: (I) Entry of Order Confirming Debtors and the Creditors Committee s First Amended Joint Combined Disclosure Statement and Plan of Liquidation Under Chapter 11 of the Bankruptcy Code; (II) Effective Date; And (III) Bar Date For Certain Administrative Claims And Compensation And Reimbursement Claims [Docket No. 1219]; and 2
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 8 of 12 WHEREAS, Article VIII.C of the Plan gives the Trust the right to discharge the Debtors obligations in any way necessary to implement the Plan. See Plan Art. VIII.C. ( On and after the Effective Date, the Liquidating Trust and the Liquidating Trustee will cause each of the Liquidating Debtors... to discharge its obligations and liabilities and to wind up its business operations, all on such terms as the Liquidating Trustee determines to be necessary or appropriate to implement this Combined Plan and Disclosure Statement and the Liquidating Trust Agreement and all without further order of the Bankruptcy Court ); and WHEREAS, the Parties have agreed to resolve the Texas Ad Valorem Claims pursuant to the terms and conditions set forth in this Stipulation. AGREEMENT NOW THEREFORE, in the collective efforts of the Parties to resolve the Texas Ad Valorem Claims, and for good and valuable consideration, the adequacy of which is hereby acknowledged, and based upon the mutual agreements and covenants set forth in this Stipulation, and for good and sufficient cause, the Parties hereby stipulate and agree as follows: 1. The above recitals are true and explicitly incorporated herein by reference. 2. The Parties agree that the Texas Ad Valorem Claims shall be fixed and allowed as secured claims in the amounts set forth on Exhibit A attached hereto (the Claim Amounts ). 3. The Trust shall pay the Claim Amounts listed on Exhibit A attached hereto to the respective Texas Ad Valorem Taxing Jurisdictions within ten (10) business days after the Court s entry of an order approving this Stipulation becomes final and non-appealable. 4. Claim No. 657 filed by the County of Hays amends and supersedes Claim No. 31. Claim No. 31 shall be disallowed in its entirety, and Claim No. 657 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A attached hereto. 3
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 9 of 12 5. Claim No. 653 filed by the County of Erath shall be disallowed in its entirety as a duplicate of Claim No. 3429. Claim No. 3429 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A attached hereto. 6. Claim No. 24 filed by Midland Central Appraisal District shall be disallowed in its entirety as a duplicate of Claim No. 3426. Claim No. 3426 shall be fixed and allowed as a secured claim in the amount set forth on Exhibit A attached hereto. 7. The Texas Ad Valorem Taxing Jurisdictions hereby waive any and all rights they may have under section 32 of the Texas Property Tax Code, sections 506(b) and 511 of the Bankruptcy Code, and any other applicable state or federal law, to assess, levy, or collect any postpetition penalties or interest on account of the claims listed on Exhibit A attached hereto. 8. This Stipulation shall constitute a full and final resolution of the Texas Ad Valorem Claims. By executing this Stipulation, the Texas Ad Valorem Taxing Jurisdictions acknowledge that, except as expressly set forth or otherwise preserved herein, they have no other claims, of any kind, against the Debtors or the Trust, including such claims that could have been but were not asserted in the Texas Ad Valorem Claims (including, but not limited to, administrative, priority, general unsecured and/or attorneys fees and costs). 9. By signing below, each Party warrants and represents that the person signing this Stipulation on its behalf has been duly authorized and has full authority to bind that Party with respect to the matters set forth herein. 10. The Parties and their representatives may affix their electronic signatures below. Any electronic signature constitutes a legal signature confirming the person signing this Stipulation acknowledges and accepts the terms of this Stipulation. 4
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 10 of 12 11. All representations, warranties, inducements and/or statements of intention made by the Parties that relate to this Stipulation are embodied in this Stipulation and none of the Parties have relied upon, shall be bound by, or shall be liable for any alleged representation, warranty inducement or statement of intention that is not expressly set forth in this Stipulation. 12. The Court shall retain jurisdiction with respect to all matters arising from or related to the interpretation, implementation, or enforcement of the terms and provisions of this Stipulation. Dated: May 11, 2017 By: _/s/ Maria Aprile Sawczuk LOWENSTEIN SANDLER LLP Bruce Buechler, Esq. (admitted pro hac vice) Nicole Fulfree, Esq. (admitted pro hac vice) 65 Livingston Avenue Roseland, New Jersey 07068 (973) 597-2500 (Telephone) (973) 597-2400 (Facsimile) Email: bbuechler@lowenstein.com nfulfree@lowenstein.com Bruce S. Nathan, Esq. (admitted pro hac vice) Eric Chafetz, Esq. (admitted pro hac vice) Lowenstein Sandler LLP 1251 Avenue of the Americas New York, NY 10020 Telephone: (212) 262-6700 Facsimile: (212) 262-7402 Email: bnathan@lowenstein.com echafetz@lowenstein.com --and-- GOLDSTEIN & MCCLINTOCK, LLLP Maria Aprile Sawczuk, Esq. 1201 North Orange Street, Suite 7380 Wilmington, DE 19801 Telephone: (302) 444-6710 Facsimile: (302) 444-6709 Email: marias@restructuringshop.com Co-Counsel to the Liquidating Trustee and the Hastings Creditors Liquidating Trust By: /s/ Lee Gordon MCCREARY, VESELKA, BRAGG & ALLEN, P.C. Lee Gordon, Esq. State Bar Number 08212500 P.O. Box 1269 Round Rock, Texas 78680 Telephone: (512) 323-3200 Fax: (512) 323-3205 Counsel for the Texas Ad Valorem Taxing Jurisdictions 5
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 11 of 12 STIPULATION - EXHIBIT A 6
Case 16-11452-KJC Doc 1303-1 Filed 05/11/17 Page 12 of 12 CLAIM AMOUNTS Jurisdiction Claim No. Debtor 2015 Base Tax Prepetition P&I 2016 Base Tax Tax Appraisal District of Bell County 3432 Hastings Entertainment, Inc. $ 33,230.51 County of Brazos 3424 Hastings Entertainment, Inc. $ 30,156.68 $ 4,523.50 $ 25,327.04 Brown County Appraisal District 3425 Hastings Entertainment, Inc. $ 27,232.70 County of Comal 3428 Hastings Entertainment, Inc. $ 22,818.88 County of Erath 3429 Hastings Entertainment, Inc. $ 5,417.88 County of Guadalupe 3430 Hastings Entertainment, Inc. $ 18,382.95 County of Hays 657 Hastings Entertainment, Inc. $ 12,494.68 City of Kerrville/ Kerrville Independent School District 3427 Hastings Entertainment, Inc. $ 21,739.63 Midland Central Appraisal District 3426 Hastings Entertainment, Inc. $ 24,096.42 Taylor Central Appraisal District 3422 Hastings Entertainment, Inc. $ 21,347.69 $ 3,202.16 $ 39,477.46 City of Waco/Waco Independent School District 3423 Hastings Entertainment, Inc. $ 29,626.57 TOTAL BY CATEGORY $51,504.37 $7,725.66 $ 259,844.72 GRAND TOTAL $319,074.75