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Full title: Objection to Confirmation of Plan Filed by Creditor Andes Technology USA Corporation (Song, Brian) (Entered: 01/25/2021)

Document posted on Jan 24, 2021 in the bankruptcy, 10 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

1063 0 (“To the extent that Class 5 includes General Unsecured Claims against multiple Debtors, the 1 treatment of Class 5 described herein potentially constitutes a partial substantive consolidation of 2 the applicable Debtors.”)By 8 arranging all claims and interests for seven debtors under a single joint plan and classify them 9 accordingly, Debtors devise one consolidated system to acquire votes necessary to accept the Plan 0 from impaired creditors, at a single cast.If the Debtors (here, Wave and MIPS) each filed separate plans or 9 this instant Plan were to provide different classes of claims per each of the Debtors, ANDES would 0 be entitled to receive distributions from both Debtors. The Plan 8 is a single plan for all Debtors and does not even classify classes of claims per Debtor and the 9 proposed voting procedure is not designed for creditors to cast a vote per-Debtor.The Plan 2 would do so even though Debtors only sought, and this Court allowed, joint administration and T 34 nboyt tshueb sCtaonutritv’es coorndseor.l id Fatoior na.n oStuhcehr ae xmaamnpeluev, esre icst ihoanr d1l1y2 i9n( ag)o(o7d) fimaitpho saensd tihs ea l“sboe nsto ti npteerrmesitt teodf

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1 BRIAN H. SONG, ESQ. (CABN 188662) Briansong@SongLeeLaw.com 2 NA RAE LEE, ESQ (CABN 326972) Naraelee@SongLeeLaw.com 3 SONG & LEE, LLP 2559 S. Bascom Ave. 4 Campbell, CA 95008 Tel: (408) 628-4257 5 Fax: (408) 628-4258 6 File No. 732 7 Attorney for Creditor Andes Technology USA Corporation 8 9 UNITED STATES BANKRUPTCY COURT 0 NORTHERN DISTRICT OF CALIFORNIA 1 SAN JOSE DIVISION 2 3 In RE: Lead Case No.: 20-50682 (MEH) 4 WAVE COMPUTING, INC., et al., Chapter 11 (Jointly Administered) 5 Debtors (Including Case No.: 20-50692) 6 7 CREDITOR ANDES TECHNOLOGY USA CORP.’S OBJECTION TO 8 CONFIRMATION OF FIFTH AMENDED JOINT CHAPTER 11 9 PLAN OF REORGANIZATION FOR WAVE COMPUTING, INC. AND ITS 0 DEBTOR AFFILIATES; JOINDER; RESERVATION OF RIGHTS 1 Objection Deadline: 2 January 25, 2021 at 4:00 p.m. (PST) T 3456 CDTCJuitoamdrtnmgeef:e:i: : r FZ 1mHe0obo:aor1ntmu5i.ao MarVny. mi. H d1E.e0e l(o,aaP c2irSnoi0neTn 2 gf)H1e Draemantcmee o anndd Time: el: (408) 628-4257; Fax: (408) 628-4258 7

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1 A. OBJECTIONS 2 Creditor Andes Technology USA Corporation (“ANDES”) objects to the Debtors’ FIFTH 3 AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION FOR WAVE COMPUTING, INC. AND ITS 4 DEBTOR AFFILIATES (Dkt. 1063) (the “Plan”) on the following grounds: 5 Objection #1 6 The Plan Is Facially Unconfirmable – Presumes Unauthorized Substantive Consolidation 7 The Plan disingenuously presumes substantive consolidation. For instance, the Plan 8 provides for a single joint distribution scheme which does not specify where assets are found or 9 where liabilities lie. See Dkt. 1063, Article III.B. of the Plan; see also foot note 2 to Dkt. 1063 0 (“To the extent that Class 5 includes General Unsecured Claims against multiple Debtors, the 1 treatment of Class 5 described herein potentially constitutes a partial substantive consolidation of 2 the applicable Debtors.”) For another example, the Plan provides for a consolidated liquidation 3 analysis assuming these cases are substantively consolidated. See Dkt. 848-3, Liquidation 4 Analysis, ECF Page at 4 (“2. Consolidated Liquidation. The Liquidation Analysis assumes that the 5 Debtors would be liquidated in a jointly administered and substantively consolidated proceeding. 6 Therefore, the Liquidation Analysis considers a consolidated liquidation.”). Furthermore, the Plan 7 provides for a single joint classification of claims and interests. See Article III. of the Plan. By 8 arranging all claims and interests for seven debtors under a single joint plan and classify them 9 accordingly, Debtors devise one consolidated system to acquire votes necessary to accept the Plan 0 from impaired creditors, at a single cast. 1 Yet, Debtors never officially sought, and the Court never authorized, substantive 2 consolidation of the matters; the matters are consolidated only for the purpose of joint T 34 a(“dJmoiinnti satdramtiionnis. t rTahtiiosn i sw iinldl insoptu atadbvleer.s eSlyee a fDfekct.t 2th, eD reigbhtotsrs o’ fM paorttiioens fino ri nJoteirnets At bdemcianuissetr tahtiios nM, 7o:t1io-n3 el: (408) 628-4257; F56 rseuqbusetasntst ivoen clyo nsthoeli daadtimonin.”is),t r7a:t4iv (e“ ecaochn scorleiddiattoior nw iollf cothneti neuset attoe sh oflodr i tsp rcolaciemdu argaal inpsut rap opsaertsi,c unloart ax: (408) 628-4258 7 Debtor’s estate […]”); see also Dkt. 50, Order Directing Joint Administration 4:16-17 (“Nothing

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1 contained in this Order shall be deemed or construed as directing or otherwise affecting the 2 substantive consolidation of any of the above-captioned Chapter 11 Cases.”) The fact that 3 the matters were jointly administered is not an excuse for confirming such plan that is premised 4 on substantive consolidation. Bunker v. Peyton (In re Bunker), 312 F.3d 145, 153 (4th Cir. 2002) 5 (“Joint administration does not affect the substantive rights of either the debtor or his or her 6 creditors.”) 7 As such, the Plan ignores both the substantive rights of the creditors and corporate 8 separateness; the Plan improperly combines separate creditor entities from multiple closely related 9 Debtors. See In re Owens Corning, 419 F.3d 195, 210-11 (3d Cir. 2005) (“the general expectation 0 of state law and of the Bankruptcy Code … is that courts respect entity separateness absent 1 compelling circumstances calling entity … into play.”) For starters, substantive consolidation is 2 “extreme” for the exact reasons that ANDES raises here (altering creditors’ substantive rights – 3 see below). See In re Owens Corning, supra, 210—11 (“substantive consolidation is extreme (it 4 may affect profoundly creditors’ rights and recoveries)”). (Italics added.) Considering such 5 extreme nature, Debtors should not improperly seek to substantively consolidate the matters in this 6 confirmation process. Confirmation of a plan is not meant to address the issue of substantive 7 consolidation. See In re Owens Corning, supra, (expressing concerns about substantive 8 consolidation as “imprecise” in nature). Id. 9 This is not a trivial matter as it affects creditors’ substantive rights. For instance, creditors 0 of one Debtor may have a different prospect of recovery as compared to creditors of other Debtors. 1 Here, there are 28 creditors of a Debtor, MIPS Tech LLC (“MIPS”), whose claims are totaling 2 $29,933,900.08. Dkt. 400. In comparison, there are 181 creditors of another Debtor, Wave T 34 CMoImPSp uTtiencgh, LInLcC. (a“nWd aWvea”v)e w Choomsep ucltainimg,s I narce. htoatvael indgif f$e1re2n9t, 8a3s0se,4t 1h6o.l7d3i.n g Ds kwt.i th3 9d7i.f fFeurerntht evrmaluoeres,. el: (408) 628-4257; F56 Cwoilml lpikaerely D hkatvse. d4i0f0fe (rMenItP aSm’ oausnsetst so)f w fuitnhd s3 9o7r a(sWseatvs ea’vsa ailsasbeltes )f.o rT dhiesrtreifbourtei,o tnhse i nc rceodmitoprasr iosof nM wIPitSh ax: (408) 628-4258 7 the creditors of Wave. One can also reasonably assume different assets will have different

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1 prospects of liquidations or sales, hence likely causing different distribution dates, yet again 2 affecting the substantive rights. 3 ANDES would be among such creditors’ whose legal rights will be adversely affected. 4 ANDES holds joint and several claims against both Wave and MIPS. See Claim No. 34-1 and 2-5 1 on Wave / MIPS Claim Registries, respectively. Therefore, ANDES would be entitled to 6 distributions from both Wave and MIPS (subject to the ‘single recovery rule’). See Dkt. 591, 705 7 (ANDES’ Responses to Debtors’ Objection to Claims) and Dkt. 971 (Debtors’ withdrawal of the 8 objections alleging duplicity). If the Debtors (here, Wave and MIPS) each filed separate plans or 9 this instant Plan were to provide different classes of claims per each of the Debtors, ANDES would 0 be entitled to receive distributions from both Debtors. However, as is now, the Plan effectively 1 results in substantial consolidation of the bankruptcy proceedings of MIPS and Wave, classifying 2 all unsecured creditors, including ANDES, in the same class and turning ANDES’ claim from a 3 joint and several claim into a single unsecured claim against the consolidated estate. As such, 4 ANDES’ recovery is likely much smaller than otherwise would be. 5 In conclusion then, since the Plan would impermissibly alter creditors’ substantive rights, 6 and will do so without first affording creditors to weigh on the prospect of substantive 7 consolidation, the Plan is facially unconfirmable. At a minimum, Debtors must first have sought 8 to substantively consolidated the matters, a step which they so far failed to do. Debtors should not 9 now be allowed to do as part of this confirmation hearing. 0 Objection #2 1 The Plan Fails to Meet Section 1129(a) 2 Given the improper attempt of substantive consolidation, the Plan naturally fails to meet T 34 tSheee lIeng arel rSeoquutihre Bmeeancths Sunecd.e, rI n1c1. ,U 3.7S6.C B. .sRe.c 8ti8o1n (1B1a2n9k(ra.) (N1.0 D). . TIlhl.e 2 f0a0il7u)r e(“ iFso fra taa cl haas pitte irs 1a1 “ pmlauns tt”o. el: (408) 628-4257; F56 b1e1 2c9o(naf)i”r)m ed, the plan must meet each requirement of section 1129(a) of the Code, 11 U.S.C. § ax: (408) 628-4258 7

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1 Section 1129(a)(10) requires at least one impaired class of claims approve the plan before 2 it can be confirmed. 11 U.S.C § 1129(a)(10). In a case of joint administration, this requirement 3 must apply to each debtor; i.e., each debtor must satisfy this requirement. See In re Tribune Co., 4 464 B.R. 126, 183 (Bankr. D. Del. 2011) (“absent substantive consolidation or consent” section 5 1129(a)(10) “must be satisfied by each debtor in a joint plan.”) Here, no such substantive 6 consolidation or consent is present; thus, the exception does not apply and as a result, each Debtor 7 must satisfy the requirement per the Plan. Yet, the Plan is not even set up for such test. The Plan 8 is a single plan for all Debtors and does not even classify classes of claims per Debtor and the 9 proposed voting procedure is not designed for creditors to cast a vote per-Debtor. See Dkt. 667, 0 Debtors’ Motion for Solicitation and Voting Procedures (providing no procedures for each 1 impaired classes of creditors to approve the reorganization plan for each Debtor); see also Dkt. 2 667-3 to 667-5, Class 3-5 Ballot (no space provided to state a name or identity of relevant Debtor 3 entity). Hypothetically, if a creditor of an impaired claim were to approve the Plan, there is no 4 way of telling which Debtor met the requirement on account to the creditor’s approval. As a result, 5 under the Plan, there is no means by which the 1129(a)(10) requirement is met per-Debtor. Thus, 6 there is no way of ascertaining each Debtor satisfies 1129(a)(10) requirement as required under In 7 re Tribune Co. 8 For similar reasons, the Plan fails to meet the requirements of section 1129(a)(3) and 9 section 1129(a)(7). For example, section 1129(a)(3), which requires that the plan be proposed in 0 good faith and not by any means forbidden by law, cannot be satisfied if not all debtors meet it. 1 Here, however, the Plan effectively would substantively consolidate the proceedings. The Plan 2 would do so even though Debtors only sought, and this Court allowed, joint administration and T 34 nboyt tshueb sCtaonutritv’es coorndseor.l id Fatoior na.n oStuhcehr ae xmaamnpeluev, esre icst ihoanr d1l1y2 i9n( ag)o(o7d) fimaitpho saensd tihs ea l“sboe nsto ti npteerrmesitt teodf el: (408) 628-4257; F56 crirgehdtisto arnsd” tdeoset.s Asog awinit,h tohuet P alfafno rcdainnngo ct rmedeietto trhs ids utees pt raosc iet sdsi stion goepnpuooseu salnyd a tbteem hepatsr dto o anl ttehre c irsesduieto. r s’ ax: (408) 628-4258 7

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1 As such, the Plan will not satisfy any of the requirements under section 1129(a). Thus, the 2 Court should not confirm the Plan. 3 Objection #3 4 Debtors’ Impermissible Retention of Rights 5 The Plan seeks to retain impermissible retention rights presumably under 11 U.S.C. section 6 1123(b)(3)(B). For example, Article I.A of the Plan provides, in relevant part: 7 24. “Claims Objection Deadline” means the deadline for Filing an objection to any Claim … which deadline shall be one hundred eighty (180) days after the 8 Effective Date, subject to any extensions approved by an order of the Bankruptcy Court […] 9 0 The Plan reinforces Debtors’ overbroad right to claim objection in Article IV.G of the Plan in case 1 the Restructuring occurs. Article IV.G.2. states: 2 If the Restructuring occurs, the primary right to object to or otherwise contest Claims or Interests shall be retained by the Reorganized Debtors, except as 3 otherwise agreed between the Reorganized Debtors and the Liquidating Trust Manager in writing in accordance with Section XIII.G. 4 Debtors’ overbroad right to claim objection is also reserved in the Plan when the Asset Sale 5 Distribution is elected. Article IV.G.2. further states: 6 If the Asset Sale Distribution is elected, all rights to object to or otherwise 7 contest Claims or Interests … shall be transferred to, and shall vest in, the Wind-8 Down Debtors, except as otherwise agreed between the Wind-Down Debtors and the Liquidating Trust Manager in writing in accordance with Section XIII.G. 9 These provisions, however, does not comport with 1123(b)(3)(B). Section 1123(b)(3)(B) 0 permits “the retention . . . of any such claim or interest”; on the other hand, it does not permit the 1 Debtors to retain rights to object to claims. Therefore, the Plan is objectionable to the extent it 2 T 34 p urportsE tvoe nre itfa itnh es uPclahn “ wrigehret tcoo rorbejcetc tto” raest asiunc thh ree rtiegnhtito tno iosb njeoct tf, othuen dp rionv Siseicotniosn a 1re1 2im3(pbe)r(m3)i(sBsi)b. ly el: (408) 628-4257; F56 borbojeacdt iaonnds vaangdu eg. r oTuhned Ps lathne arnefdo trh eth deiys calores urreet adion innogt. p rSouvcidhe bsruofafidc ielannt gnuoatgicee sd aose sto n woth amt,e ief ta nthye, ax: (408) 628-4258 requirement of Section 1125. See Paramount Plastics v. Polymerland (In re Paramount Plastics), 7

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1 172 B.R. 331 (Bankr. W.D. Wash. 1994) (Section 1125 requires the disclosure of adequate 2 information in order to allow a claimant to make an informed decision on how to vote on a plan); 3 see also In re Mako, Inc., 120 Bankr. 203, 209 (Bankr. E.D. Okl. 1990) (“the retention provision 4 of section 1123(b)(3)(B) requires specific and unequivocal language of reservation”). 5 Thus, the plan must at least apprise the claimant as to whether his claim will be subject to 6 later objections or claims. Failing to meet this standard, a plan’s retention is impermissible, often 7 resulting in the debtors’ loss of such rights. See In In re Mickey’s Enterprises Inc. v. Saturday 8 Sales, Inc. (In re Mickey’s Enterprises Inc.), 165 B.R. 188 (Bankr. W.D. Tex. 1994) (failure to 9 provide adequate notice prejudiced possible claimant and as such, operated as res judicata); see 0 Kelly v. South Bay Bank (In re Kelly), 199 B.R. 698, 704 (B.A.P. 9th Cir. 1996) (affirming the 1 bankruptcy court’s decision that res judicata precludes the debtor from objecting to a proof of 2 claim despite a provision reserving the right to object to claims). 3 Under the standard, the Plan fails. It fails because it does not provide specific and 4 unequivocal language of reservation, which would enable creditors to evaluate the Plan and decide 5 as to how to vote. Taking ANDES, for example, while ANDES is now entitled to vote (see Dkt. 6 955, 958 (the 3018 Stipulation and Order, permitting ANDES to vote)), ANDES is unsure whether 7 under the Plan it will be later subject to an objection, as the Plan does not indicate whether it would 8 object to ANDES’ claims and why. 9 As such, Debtors’ Plan is objectionable and, if otherwise compliant, the Plan should be 0 stripped off of such overbroad retention of rights. 1 B. JOINDER 2 To the extent not inconsistent with the foregoing, Andes join in any objections to T 34 confirmation of the Debtors’ PlCan. RfiEleSdE bRy VanAyT pIaOrtNy iOn Fin RteIrGesHt. T S el: (408) 628-4257; F56 provideAd nbdye Ds erbetsoerrsv oers urpiognh tasn yto d iffufertrheenrt roeblijeefc rt etqou etshtee dP blyan D ebbatsoerds iunpcolund ianngy, wnietwho uint floimrmitaattiioonn , ax: (408) 628-4258 7

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1 any further proposed modifications or amendments to the Plan, Plan Supplement and other relevant 2 documents. 3 D. CONCLUSION 4 For the reasons set forth above, ANDES respectfully requests that the Court should deny 5 the confirmation of the Plan. 6 Dated: January 23, 2021 7 Respectfully submitted, 8 SONG & LEE, LLP 9 /s/ Brian H. Song Brian H. Song (SBN188662) 0 Attorneys for Creditor Andes Technology USA Corporation 1 2 3 4 5 6 7 8 9 0 1 2 T 34 el: (408) 628-4257; F 56 ax: (408) 628-4258 7

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1 CERTIFICATE OF SERVICE 2 I certify and declare as follows: 3 I am a resident of the State of California, over the age of eighteen years, and not a party to 4 the within action. My business address is 2559 S. Bascom Ave., Campbell, California 95008. On 5 January 23, 2021, I served a true and correct copy of the following document(s): 6 CREDITOR ANDES TECHNOLOGY USA CORP.’S OBJECTION TO 7 CONFIRMATION OF FIFTH AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION FOR WAVE COMPUTING, INC. AND ITS 8 DEBTOR AFFILIATES 9 on the interested parties in this action by serving: 0 The Office of the United States Trustee Debtors Region 17 Wave Computing, Inc. and MIPS Tech, LLC 1 Attn. Jason B. Shorter, Esq. and Jason M. Attn: Lawrence R. Perkins Blumberg, Esq. 355 S. Grand Ave., Suite 1450 2 280 South First St., Room 268 Los Angeles, CA 90071 San Jose, CA 95113 3 4 Counsels For Debtors Sidley Austin LLP Sidley Austin LLP 5 Attn: Samuel A. Newman, Esq. Attn: Charles M. Persons, Esq. 555 West Fifth Street 2021 McKinney Avenue, Suite 2000, Dallas, 6 Los Angeles, CA 90013 Texas 75201 7 Counsel to the Official Committee of Counsel for DIP Agent and DIP Lender 8 Unsecured Creditors Binder & Malter LLP 9 Hogan Lovells US LLP Attn: Robert G. Harris, Esq. Attn: Richard L. Wynne 2775 Park Ave. 0 1999 Avenue of the Stars, Suite 1400 Santa Clara, CA 95050 Los Angeles, CA 90067 1 on the parties in this action, by the following means: 2 T 34  iabbnbuu ossaiiv nnseeeeB assaYlssen fddpFo reerap ndcclvEtoaiexlcclle:eoe dscpI. te cit o ahoInuer s apaeemnadncd vak rpe aemrlgaoodeepc mieaelysd bs dfeiofrnraer gm os scfoi eolmfidl alc yertoo csrw trttihaeoistfenhfp p otaetonhnr,d sedooe nnbnm cust ehsaa iiitfnsl oit enhdrs geasm ,t a epad,fi rodleailrncnleoctgsiwlc.so ee isOns e ag lntti h stotmeheu eddyr o sinopacm rultadhmceiene e da lnaiortsyysft el: (408) 628-4257; F56 tcphoraeutpr saceiod ro.r ef sbpuosnidneenscs ew isit hp lathcee dF feodre rcaoll lEecxtpiorens sa,n din maa sileianlge,d i te insv deeloppoes itwedit hin p tohset aogred ifnualrlyy ax: (408) 628-4258 7

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1 I declare under penalty of perjury under the laws of the United States of America that the 2 above is true and correct. Executed on January 23, 2021, at Campbell, California. 3 4 /s/ Brian H. Song 0 Brian H. Song 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 T 34 el: (408) 628-4257; F 56 ax: (408) 628-4258 7