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Full title: Response in Support of Liquidating Trustee's Motion Finally Resolving Interest Rate Applicable to Certain Claims (related document(s):557 Generic Motion). Filed by Majority Series B Shareholders (Ruzinsky, Bruce) (Entered: 06/01/2021)

Document posted on May 31, 2021 in the bankruptcy, 4 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Every dollar of post-petition interest paid to unsecured creditors is a dollar less that will be paid to the Series B Shareholders.Fallcreek 1 LLC (Steven W Town Member, Manager) 55,556 shares (4.43%), Steve Lee Family Limited 221,000 shares (17.63%), David S. Oliver 150,501 shares (12%), Stephen Oliver 60,261 shares (4.81%), VP Midtown, LLC 55,556 shares (4.43%), Russell Walter 60,253 shares (4.81%), Paul R. Young, Jr. DVM 44,444 shares (3.55%) Because there is no requirement in the confirmed Plan, any applicable order of the Court, or the Liquidating Trust Agreement for the payment of post-petition interest to any unsecured creditors, the Liquidating Trustee has sole and absolute discretion on whether and to what extent any post-petition interest will be paid to unsecured creditors.Accordingly, unimpaired unsecured creditors have no right to post-petition interest under state law when the denial of post-petition interest is effectuated via Section 502(a)(2) rather than via a chapter 11 plan.WHEREFORE, the Majority Series B Shareholders respectfully request that the Liquidating Trustee’s Motion be granted, that any post-petition interest paid to unsecured creditors be paid at the federal judgment rate, and that the Majority Series B Shareholders be granted such other and further relief as appropriate.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: § Chapter 11 § VETERINARY CARE, INC., et al § Case No. 19-35736-CML § (Jointly Administered) § MAJORITY SERIES B SHAREHOLDERS’ RESPONSE IN SUPPORT OF LIQUIDATING TRUSTEE’S MOTION FINALLY RESOLVING INTEREST RATE APPLICABLE TO CERTAIN CLAIMS (Relates to Dkt. #557) TO THE HONORABLE CHRISTOPHER M. LOPEZ, U.S. BANKRUPTCY JUDGE: Majority Series B Shareholders1 file this Response In Support of Liquidating Trustee’s Motion Finally Resolving Interest Rate Applicable to Certain Claims and in support thereof respectfully shows the Court as follows: INTRODUCTION AND SUMMARY 1. The Series B Shareholders (Class 7 under the confirmed Plan) are the fulcrum class in this case. Every dollar of post-petition interest paid to unsecured creditors is a dollar less that will be paid to the Series B Shareholders. 2. The Liquidating Trustee’s Motion (Dkt. #557) should be granted because: a. Neither the Plan, the Confirmation Order, the Plan Supplement, nor any applicable order entered in this case states any requirement for the payment of any post-petition interest to unsecured creditors; b. The Court approved Liquidating Trust Agreement gives the Liquidating Trustee wide discretion on the timing and amount of any distribution under 1 The Majority Series B Shareholders are Andy Anderson, DVM, Affinity Real Estate Group 27,778 shares (2.22%), Fallcreek 1 LLC (Steven W Town Member, Manager) 55,556 shares (4.43%), Steve Lee Family Limited 221,000 shares (17.63%), David S. Oliver 150,501 shares (12%), Stephen Oliver 60,261 shares (4.81%), VP Midtown, LLC 55,556 shares (4.43%), Russell Walter 60,253 shares (4.81%), Paul R. Young, Jr. DVM 44,444 shares (3.55%) 1

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the Plan, and the Trustee’s Motion is an appropriate exercise of such Court approved discretion. c. Bankruptcy Code Section 502(b)(2) negates and supersedes any state law right to post-petition interest; d. In this case, principles of res judicata preclude the post-confirmation determination of the appropriateness of any post-petition interest or interest rate; and e. Such principals, plus the material additional cost and expense required to determine individual interest rates for hundreds of creditors, render this case distinguishable from the recent Bankruptcy Court holding in Ultra Petroleum Corp. ARGUMENT 3. Neither the confirmed Plan (Dkt. #442), the Plan Supplement (Dkt. #468), the Plan Confirmation Order (Dkt. #492), nor any applicable order entered in this case states that any post-petition interest must be paid to any unsecured creditors. None of the objecting parties have cited to any such mandatory language, because there is none. 4. The Liquidating Trustee has wide discretion on the timing and amount of any distribution under the confirmed Plan. The last sentence of Section 5.01 of the Liquidating Trust Agreement included in the Plan Supplement and approved by the Court, reads as follows: “The timing and amount of each Distribution by the Liquidating Trustee shall be determined by the Liquidating Trustee in his sole and absolute discretion and shall be consistent with the terms set forth in the Plan, any applicable order of the Bankruptcy Court, and this Agreement”. 5. Because there is no requirement in the confirmed Plan, any applicable order of the Court, or the Liquidating Trust Agreement for the payment of post-petition interest to any unsecured creditors, the Liquidating Trustee has sole and absolute discretion on whether and to what extent any post-petition interest will be paid to unsecured creditors. The Liquidating Trustee 2

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has exercised his sole and absolute discretion in proposing to pay unsecured creditors post-petition interest at the federal judgement rate, and his discretion in that regard should be sustained. 6. Post-petition interest is “unmatured interest” which must be disallowed. “One established statutory rule is that the bankruptcy court must disallow any claim "for unmatured interest." 11 U.S.C. § 502(b) (2) (Supp.1991). This rule flows from the legal principle that "interest stops accruing at the date of the filing of the petition." S.Rep. No. 989, 95th Cong., 2d Sess. 63, reprinted in 1978 U.S.C.C.A.N. 5787, 5849”. In re Pengo. 962 F. 2d 543, 546 (5th Cir. 1992). 7. Additionally, the Fifth Circuit has noted that “…[Bankruptcy] Code impairment is not the same as plan impairment”. In re Ultra Petroleum Corp., 943 F. 3d 758, 766 (5th Cir. 2019). “Where a plan refuses to pay funds disallowed by the Code, the Code—not the plan—is doing the impairing”. Id. at 765. Accordingly, unimpaired unsecured creditors have no right to post-petition interest under state law when the denial of post-petition interest is effectuated via Section 502(a)(2) rather than via a chapter 11 plan. 8. The objecting parties could have litigated the “solvent debtor exception” at the plan confirmation hearing, but they did not do so. Rider 1 to the Settlement Term Sheet provides in pertinent part that “The appropriate interest rate shall be determined by the Court at the confirmation hearing”. Dkt. #468-1 at page 21. Such a determination never happened. No party raised the issue and no party requested a determination by the Court. The Plan Confirmation Order is a judgement on the merits. No party can now relitigate that judgement. 9. That leaves the parties with the Liquidating Trustee’s discretion, which the Liquidating Trustee has exercised and explained in his Motion. As set forth in his Motion and in his reply to the objections (Dkt. #569), both of which are supported by the Majority Series B 3

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Shareholders, the Liquidating Trustee reasonably exercised his discretion. The Motion should be approved by the Court. WHEREFORE, the Majority Series B Shareholders respectfully request that the Liquidating Trustee’s Motion be granted, that any post-petition interest paid to unsecured creditors be paid at the federal judgment rate, and that the Majority Series B Shareholders be granted such other and further relief as appropriate. Dated June 1, 2021. JACKSON WALKER L.L.P. By: /s/ Bruce J. Ruzinsky Bruce J. Ruzinsky Texas Bar No. 17469425 Matthew D. Cavenaugh Texas Bar No. 24062656 1401 McKinney Street, Suite 1900 Houston, TX 77010 Telephone: 713-752-4200 Facsimile: 713-752-4221 Email: bruzinsky@jw.com mcavenaugh@jw.com ATTORNEYS FOR MAJORITY SERIES B SHAREHOLDERS CERTIFICATE AND VERIFICATION OF SERVICE I hereby certify and verify that on June 1, 2021, the forgoing instrument was served via CM/ECF to all parties registered to receive electronic notice in this case. /s/ Bruce J. Ruzinsky Bruce J. Ruzinsky 4

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