In Re Resorts International, Inc.

OPINION

ROSEMARY GAMBARDELLA, Bankruptcy Judge.

Before the Court is the Debtors’ Second Amended Joint Plan of Reorganization under Chapter 11 of the United States Bank

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ruptcy Code (“the Plan") dated May 31, 1990 submitted by Resorts International, Inc., (“Resorts”), Resorts International Financing, Inc., (“RIFI”), Griffin Resorts, Inc., (“GRI”) and Griffin Resorts Holding, Inc., (“GRH”), all debtors herein collectively referred to as “Debtors”, together with Resorts International Hotel, Inc. (“RIH”), Griffco Resorts Holding, Inc., (formerly known as The Griffin Company) (“TGC”), and Merv Griffin (“Griffin”), collectively referred to as the “Proponents.”

Objections to confirmation of the Plan have been filed by Mr. Arthur M. Friedman, C.P.A., (“Friedman”), Mr. Ernest L. Rahm, (“Rahm”), Greenfield and Chimicles, (“Greenfield”), June Linabury and Howard A. Linabury, (“Linabury”), Fred Lowen-schuss Associates, (“Lowenschuss”), the Kenwood Dual Fund, Ltd., (“Kenwood”), the Housing Authority and Urban Redevelopment Agency of the City of Atlantic City (“the Authority”), The New Jersey Casino Control Commission, (“the Commission” or “CCC”), The State of New Jersey, Department of Law and Public Safety, Division of Gaming Enforcement (“the Division of Gaming”), and The Trump Litigation Group, (“Trump”). Hearings on Confirmation of the Plan were conducted on July 24, 25, 26 and 27, 1990. The following constitutes this Court’s findings of fact and conclusions of law.

On November 12, 1989, involuntary petitions under Chapter 11 of the United States Bankruptcy Code (“Code”) were filed against Resorts and RIFI.

On December 22, 1990, Resorts and RIFI consented to the entry of an order for relief pursuant to Chapter 11 of the Code. On that same date, GRI and GRH filed separate voluntary petitions under Chapter 11 of the Bankruptcy Code. Upon application of the Debtors, on December 22, 1989, this Court entered an order directing the joint administration and consolidation for administrative purposes only of the Resorts, RIFI, GRH and GRI Chapter 11 cases.

Resorts’ Disclosure Statement dated May 31, 1990 (“Disclosure Statement”) describes the Debtors and their operations as follows:

Resorts is a holding company which, through its subsidiaries, is principally engaged in the ownership and operation of the Resorts Casino Hotel in Atlantic City, New Jersey, and the Paradise Island Resort & Casino, the Ocean Club and the Paradise Beach Resort, all located on Paradise Island, The Bahamas.

RIFI is a wholly owned subsidiary of Resorts which was formed for the purpose of issuing the RIFI Debentures, payment of principal of and interest on which was guaranteed by Resorts. The proceeds from the sale of the RIFI Debentures were primarily used to fund the construction of the Taj Mahal casino and hotel project. Except for various inter-company loan transactions related to the funding of the Taj Mahal and the acquisition of Resorts by The Griffin Company (“TGC”), now renamed Griffco Resorts Holding, Inc., in November 1988 (the “Acquisition”), RIFI has not engaged in any business or incurred any indebtedness other than the issuance of the RIFI Debentures.

GRH is a wholly owned subsidiary of Resorts which was formed in connection with the Acquisition. Except for participating in certain intercompany loan transactions in connection with the Acquisition and owning all of the stock of GRI, GRH has not engaged in any business or incurred any indebtedness since its organization.

GRI was formed in connection with the Acquisition for the purpose of issuing the GRI Notes. The GRI Notes are secured by certain collateral, including a first mortgage on the Resorts Casino Hotel in Atlantic city and (in the case of the Reset Notes) a $50,000,000 first mortgage on certain of Resorts’ Bahamian operating properties and a pledge of 66% of the capital stock of Resorts International (Bahamas) 1984 Limited (“RIB”) which, through its subsidiaries, owns all of the Debtors’ consolidated assets in The Bahamas. RIB is a wholly owned subsidiary of GRI.

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Resorts’ Disclosure Statement Dated as of May 31, 1990 Pursuant to Section 1125 of the Bankruptcy Code, III General Information, A. Corporate Structure, page 7 (D-9).

Prior to the entry of an order for relief in these Chapter 11 cases, Resorts had issued three series of subordinated debentures in the aggregate original principal amount of approximately $380 million (the “RII Debentures”). RIFI, a wholly-owned subsidiary of Resorts, issued one series of subordinated debentures in an original principal amount of approximately $200 million, which Resorts guaranteed as to principal and interest (the RIFI debentures). In addition, GRI, a second tier wholly-owned subsidiary of Resorts issued in 1988 two series of senior secured notes in the aggregate original principal amount of $325 million (“GRI Notes”) which were secured by

inter alia,

liens on and security interests in assets of Resorts’ subsidiaries, which own and operate the Atlantic City and Paradise Island casino and hotel properties. Because of shortfalls between their debt service requirements and income from operations, the Debtors on August 28, 1989 announced a proposed reorganization and a moratorium on the payment of interest on the RII/RIFI Debentures and GRI Notes. In the fall of 1989 two unofficial committees were formed to represent the interests of the RII/RIFI Debentures and the GRI Noteholders. After the institution of involuntary bankruptcy proceedings against Resorts and RIFI on November 12, 1989 and the consents by Resorts and RIFI to the entry of orders for relief under Chapter 11 and the filing of voluntary Chapter 11 petitions by GRI and GRH on December 22, 1989, official committees were formed. In January of 1990, the United States Trustee formed two separate official committees to represent the RII/RIFI Bondholders and the GRI Noteholders respectively.

On December 22, 1989 the Debtors filed a Joint Plan of Reorganization. On April 16, 1990 the Debtors filed an Amended Plan of Reorganization together with a Disclosure Statement. Thereafter, the Debtors filed a Second Amended Joint Plan of Reorganization dated as of May 31, 1990 and Disclosure Statement. The Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code to Accompany Debtors’ Second Amended Joint Plan of Reorganization Dated as of May 31, 1990 was approved by this Court by Order dated June 14, 1990. That joint plan is presently before the Court for approval.

A basic overview of the Plan which represents a complete reorganization of the Debtors’ capital structure and a substantial restructuring of claims of the Debtors’ secured and unsecured creditors and the ex-tinguishment of existing equity interests is necessary. As set forth at length in the Debtors’ Memorandum of Law in Support of Confirmation, the Plan’s basic concepts are as follows:

A. Existing RII/RIFI Debentures and GRI Notes representing an aggregate face amount of approximately $931 million will be cancelled.

B. Existing equity interests in Resorts will be cancelled.

C. RII/RIFI Debentureholders and GRI Noteholders will be issued a combination of the following:

1. Series A Notes (to GRI Notehold-ers) and Series B Notes (to RII/RIFI Debentureholders) in an aggregate principal amount of approximately $329 million. Terms of the Series Notes which differ significantly from those of the RII/RIFI Debentures and GRI Notes include:

a. The Series Notes will mature on April 15, 1994. Currently, the RII Debentures mature in 1998, 1999, and 2013; the RIFI Debentures mature in 2004; and the GRI Notes mature in 1995 and 1998.

b. The Series A Notes will bear interest at 6% per year from April 11, 1990 until April 15, 1991, increasing to 9% in the second year, 12% in the third year, and 15% in the fourth year. The Series B Notes will bear interest at 11% per year from May 8, 1990 until April 15, 1991 and thereafter at 15% per year until maturity. Currently the RII Debentures bear interest at 10%, 10%, and 11-%% per year; the RIFI

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Debentures bear interest at 16-%% per year; and the GRI Notes bear interest at 13-y2% and 13-78%.

c. New Resorts may pay some or all interest due on the Series Notes by issuing additional Series Notes and is not generally required to make any cash payment on the Series Notes until April 15, 1994.

d. The Series Notes will be secured by substantially all the assets of New Resorts, excluding the Showboat Collateral. Previously the RII/RIFI Debentures were unsecured and the GRI Notes were secured by fewer assets.

2. Showboat Notes will be issued by New Resorts to GRI Noteholders in an aggregate principal amount of approximately $105 million and secured by the Showboat Collateral. The Showboat Notes will mature on June 30, 2000 and will pay interest by pass-through of lease payments received by New Resorts under the Showboat Lease. The Showboat Notes will be issued without recourse against New Resorts.

3. Shares of New Resorts representing approximately 76% of the equity in the reorganized corporation will be tendered to electing RII/RIFI Debenture-holders. Shares representing 2.5% of New Resorts’ equity will be issued to GRI Noteholders.

D.Global settlement of all potential litigation, including fraudulent conveyance, preference, substantive consolidation, and equitable subordination causes of action arising out of the 1988 acquisition of Resorts by Griffco Resorts Holding Inc. (formerly The Griffin Company (“TGC”)) (the “Acquisition Claims”) in the following manner:

1. The Debtors will release Griffin, TGC, and their affiliates from all Acquisition Claims.

2. Resorts, RIFI, GRI, and GRH will release all Acquisition Claims each Debt- or entity may have against another.

3. The RIFI Debentureholders and GRI Noteholders will have the option to provide voluntary releases of all Acquisition Claims against Griffin, TGC, and their affiliates in exchange for:

(i) 500,000 shares of New Resorts shares to be distributed to those GRI Noteholders giving voluntary releases to Griffin. The shares are to be issued by Resorts in exchange for $2,654,000 in cash to be paid by Griffin to Resorts;

(ii) up to $2,500,000 to be distributed on a pro-rata basis to RIFI Debenture-holders giving voluntary releases to Griffin.

E. Payments by Griffin for shares of New Resorts and voluntary releases from the RIFI Debentureholders and GRI Note-holders as follows:

1. Griffin will provide $26 million of cash and notes backed by letters of credit to be paid to and for the use by New Resorts.

2. Griffin will perform services for New Resorts and grant license to use his name and likeness to promote New Resorts operations, all without charge.

3. Griffin will serve as chairman of the Board of Directors of New Resorts, without charge.

4. Griffin will be issued shares representing 21.5% of New Resorts’ Equity.

F. Transfer of the claims of the Debtors’ estates to a trustee to prosecute any claims

i.e.

the estates may have against Donald Trump and his affiliates arising out of the Acquisition as follows:

1. A Litigation Trust will be created to prosecute such claims for the benefit of RII/RIFI Debentureholders.

2. Litigation expenses will be funded by an initial $5 million payment by New Resorts.

3. Any recoveries on such claims will be distributed to holders of class 3B and 3C claims including RII/RIFI Debenture-holders.

As noted above, the Plan embodies a complete reorganization of the Debtors’ capital structure, substantially restructuring the claims of the Debtors’ secured and unsecured creditors, and extinguishing the existing equity interests. The Plan provides for (1) a comprehensive capital re

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structuring that will leave the Reorganized Debtors with less than one-half of their existing level of debt, in conjunction with (2) a global settlement of all potential litigation, including fraudulent conveyance, preference, substantive consolidation, and equitable subordination causes of action arising from or related to the acquisition of control of the Debtors in late 1988 (the “Acquisition”) by Griffco Resorts Holding Inc. (formerly The Griffin Company (“TGC”)), as against (i) Merv Griffin, TGC, and certain of their affiliates, (ii) GRI Note-holders, and (iii) the Debtors, (3) the issuance of shares of common stock of New Resorts to Bondholders, and (4) payment by Griffin in consideration for receiving a sizeable quantity of New Resorts’ common stock.

As a part of the transactions contemplated by the Plan, Griffin will, among other things, (1) enter into the License and Services Agreement, requiring Griffin to serve as Chairman of New Resorts’ Board of Directors and granting New Resorts a license to use Griffin’s name and likeness, (2) waive his $10 million claim for subrogation with respect to a letter of credit drawn to pay interest on the Mortgage Notes, (3) contribute all of the stock of TGC to New Resorts by means of a merger of TGC into a newly created subsidiary, and (4) concurrently contribute approximately $23.3 million in cash and a note in exchange for approximately 21.5% of the capital stock of New Resorts.

Griffin will also (1) create a $2.5 million fund in which RIFI Debentureholders can share by volunteering to exchange releases with Griffin and others, and (2) pay approximately $2.6 million to create a fund of approximately 2.4% of the capital stock of New Resorts in which GRI Noteholders can share by volunteering to exchange releases with Griffin and others.

In consideration for the release of all of the Debtors’ direct and derivative claims against them, the GRI Noteholders (Classes 2A and 2B) will receive new secured debt with a present value that is less than the aggregate amount of their existing claims, and the collateral for the bulk of which will be shared on a

pan passu

basis with the new secured debt to be issued to the RII and RIFI Debentureholders under the Plan.

The RIFI Debentureholders (Class 3B) and the RII Debentureholders and general unsecured creditors (Class 3C) will receive new secured debt with an aggregate face amount of approximately one-fourth of the aggregate amount of their existing unsecured claims, approximately 76% of the capital stock of New Resorts, and beneficial rights to the proceeds of the Litigation Trust established to pursue claims that the Debtors may have against the Trump Litigation Defendants.

The Plan’s treatment of the remaining claims and interests follows: all claims against the Debtors arising out of or related to the Acquisition (whether in connection with pending securities fraud litigation (Classes 4A and 4B), requests for appraisal of shares (Class 6), or otherwise) and all other subordinated claims (Class 4C) will be extinguished; all Intercompany Claims (Class 5) will be extinguished; all existing equity interests in RII (Class 7) will be extinguished; RIFI and GRH will be merged into New Resorts, leaving the equity interests in RIFI and GRH (Classes 8 and 10) unimpaired; GRI will become a wholly owned subsidiary of New Resorts, leaving the equity interests in GRI (Class 9) unimpaired; all secured claims other than those based on the GRI Notes (Classes 2C, 2D, 2E, 2F, and 2G) will be left unimpaired; and all small (Class 3A), priority (Class 1), administrative, and tax claims will be paid in cash and in full in compliance with the requirements of the Bankruptcy Code.

The Housing Authority and Urban ReDevelopment Agency of the City of Atlantic City filed an objection to Debtors’ Plan on July 18, 1990. A summary of the Authority’s objection as originally filed is as follows:

1. Debtors seek to defer the assumption or rejection of its Agreement with the Authority until sometime after Debtor’s confirmation in violation of § 365(d)(2) of the Code.

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2. The Plan is not feasible in violation of § 1129(a)(ll) and is likely to be followed by liquidation or the need for further financial reorganization.

To the extent that Resorts’ Plan proposes to reserve a right to assume or reject the Agreement, the Plan is deficient as it fails to provide a means for that aspect of plan implementation pursuant to 11 U.S.C. § 1123 (a)(5) and fails to provide adequate assurance of future performance as is required by 11 U.S.C. § 365 (b)(1)(C) in the case of assumed executory contracts.

To the extent the Resorts’ Plan proposes to reserve a right to reject the Agreement, the Plan is deficient because it fails to provide a means to pay the Authority’s damages for rejection of the Agreement.

3. The Plan violates § 1123(a)(4) as it discriminates against the Authority, and does not provide the same treatment for each claim or interest of a particular class.

On July 24, 1990, the first day of the confirmation hearings, the Debtors and the Authority submitted to the Court a proposed Stipulation resolving all issues including the litigation pending in this Court between the parties

1

and the objections of the Authority to Debtors’ Plan of Reorganization. That litigation involved a Contract for the Sale of Land for Private Redevelopment, subsequently amended, (“Agreement" or "Contract”) which Resorts on October 22, 1976 entered into with the Housing Authority. Pursuant to the terms of the Agreement, Resorts had a series of options to purchase parcels of the Uptown Urban Renewal Tract (“UURT”) in Atlantic City, New Jersey and develop these parcels in accordance with the Agreement. At the time of the inception of these proceedings, the Debtors utilized a portion of the subject property for parking. (Transcript of Confirmation Hearing, July 24, 1990 at pp. 9-20) (hereinafter “TR1 at -”). In summary the Stipulation provides that: the parties agreed to extinguish the injunction previously entered by this Court which enjoined the Authority from interfering with Resorts’ use and occupancy of the property; the Debtor has rejected the contract (the subject of the litigation); except as provided in the Stipulation, the Authority will not assert any claim in these proceedings against the Debtors;

2

general releases as between the parties will be exchanged inclusive of all claims arising out of the Agreement; the debtor will pay the real estate taxes for the property through December 31, 1990; to the extent that the Debtor occupies the property between this time and December 31, 1990, the Debtor will pay a pro rata share of the administrative fee for the property which has an annual cost of $210,000 per year; the Debt- or will have the opportunity to quit the premises on 30 days written notice; Resorts agrees to pay the Authority the sum of $200,000.00 on or before January 1, 1991, which is anticipated to be used by the Authority and/or Atlantic City in connection with the redevelopment and remarket-ing of the Tract; the Authority is holding $100,000.00 as a deposit on account of the Agreement and this amount will be credited as against the aforesaid $200,000.00 payable by Resorts at the end of 1990. (TR1 at 10-12). Upon review and approval of the Stipulation of Settlement and the proposed form of order by counsel for the GRI Noteholders Committee and counsel for the combined official Bondholders’ Committee, this Court entered an order approving the Stipulation of Settlement. (TR1 at 20).

On July 18, 1990, separate objections to the Debtors’ Plan of Reorganization were filed by The New Jersey Casino Control Commission (“CCC”) and the Division of Gaming Enforcement. The Division of Gaming concurred in the objection submitted by the Commission.

A summary of the Commission’s objections are as follows:

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1. The Plan purports to confer jurisdiction on this court that is beyond the Congressional limits of the Bankruptcy Court’s jurisdiction. Specifically, the Commission objects to the following provisions of the Plan:

(a) Section 11.1(1) which provides that “Following the Effective Date, the Bankruptcy Court will retain jurisdiction of the Reorganization Cases ... to hear and determine all issues relating to, and issue any necessary orders with respect to, the CCC, the Bahamas Gaming Board, and any other governmental or regulatory agencies or instrumentalities.”

(b) The Plan also provides that the Commission’s approval of the Plan is a waivable condition precedent to the effective date of the Plan. [Plan § 12.2(iii) ].

(c) The Commission objects to certain language contained in the Plan and proposed confirmation order. The Plan provides that following the Effective Date, the Bankruptcy Court will retain jurisdiction of the Reorganization Cases:

“ ... to hear and determine applications for orders sought pursuant to Section 7.23 hereof. Plan, § ll.l(m). Section 7.23 of the Plan provides as follows:

From and after the Effective Date, any of the Proponents may apply to the Bankruptcy Court for an order directing any necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by this Plan, and to perform any other act, including the satisfaction of any lien, that is necessary for the consummation of this Plan, pursuant to Bankruptcy Code § 1142(b).”

The form of proposed confirmation order provides that:

The Court shall retain jurisdiction over the Debtors’ Chapter 11 cases and any subsequent bankruptcy filing by any of the Reorganized Debtors in accordance with the provisions of Article XII [sic; should be ‘XI’] of the Plan and Section 1142 of the Bankruptcy Code.

The proposed confirmation order also provides:

Pursuant to 28 U.S.C. § 157 (b)(3), the Confirmation Hearing and all matters adjudged and decreed in this Order shall be deemed to be core proceedings under 28 U.S.C. § 157 (b)(2).

Also, on the first day of the hearing on confirmation, the Debtors, the Commission and the Division of Gaming agreed to the settlement of the Commission’s and Division of Gaming’s objections to the Plan. (TR1 at 23-28). (D-l). The parties agreed that there would be no amendment to Article 11 of the Plan dealing with the jurisdiction of this court over matters concerning the New Jersey Casino Control Commission, but rather certain language would be inserted into the confirmation order. (TR1 at 25-28). That language preserves the objections of the CCC and the Division of Gaming to this Court’s exercise of jurisdiction and allows such objections to be raised at such time, if any, in an adversary proceeding or other proceeding that may involve the CCC or Division of Gaming. (D-1).

The remaining objections filed in response to the Plan are as follows.

ARTHUR M. FRIEDMAN, C.P.A.,

— Objection filed on July 6, 1990.

Arthur M. Friedman by his objection states that he is the holder of Resorts’ 11-%% subordinated debentures due in the year 2013.

A summary of Mr. Friedman’s objection to confirmation of the Plan is as follows:

1. Friedman objects to the provision of the plan which provides for a release of Merv Griffin from lawsuits by the debtor company and by the bondholders. Friedman objects to the plan on grounds that (a) Griffin is exchanging inadequate consideration for the releases; and (b) Griffin was the principal cause of the deterioration of Resorts’ operations to the point where the original Resorts’ debt could no longer be serviced.

2. Under the Plan, Griffin is being offered 21.5% of the common stock of “The New Resorts” for a payment of $23,000,-

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000.00; which amount “is well below the true value of such an interest.”

3. The employment agreement with David P. Hanlon, President of Resorts is a form of “unjust enrichment” in his favor and is detrimental to all classes of bondholders.

4. The Plan fails to assign a market value to the combination of bonds and the stock package being offered to the Resorts bondholders. Friedman claims that bondholders have no way of evaluating the package without an estimated market value of the exchange package being offered on a per $1,000.00 bond par value basis of the old bonds.

5. Friedman asserts that the section of the Plan dealing with alternative plans and liquidation under Chapter 7 is a “deliberate attempt to frighten bondholders into not pursuing these alternative or approaches.” Friedman cites as an example Exhibit "D” to the Disclosure Statement which places a gross liquidation value of $15 million on the Atlantic City undeveloped real estate. Friedman claims that in October 1988, at a hearing before the CCC, Griffin and his appraisal experts valued this same property at $140-160 million.

6. Friedman objects to the section of the Plan which calls for the appointment and compensation of a member of the bondholders committee to serve as an Advisory Director to New Resorts on the basis that this action constitutes a waste of corporate funds.

Ernest L. Rahm

— Objection filed on July 10, 1990.

Mr. Rahm, identified in the objection as a former shareholder of Resorts, asserts that the Plan unfairly discriminates against the rights of “the small investor.”

Greenfield and Chimicles

—Amended Objection filed on July 17, 1990; Objection filed on July 10, 1990.

Greenfield and Chimicles objects to Confirmation of Resorts’ Plan based on the following:

1.The Plan provides for the abandonment of property of the estate (various claims against Merv Griffin) without any showing that the claims against Griffin are burdensome or of inconsequential value to the estate as required under § 554.

2. The Plan violates 11 U.S.C. § 1122 (a) by classifying claims which are not “substantially similar.” The Objector’s claims arise out of a signed Amended Stipulation and Agreement of Compromise and Settlement entered into by certain shareholder litigation in the Chancery Court for the State of Delaware and the United States District Court for the District of New Jersey, pursuant to which Objectors provided Donald Trump with a “broad” release from any future claims arising out of his ownership of Resorts or its acquisition by Griffin. The Objectors object to the classification of their claims with the claims of creditors who have not granted a release to Trump since that class of claimants are to receive an interest in a litigation trust established under the Plan to prosecute claims against Trump which arose out of his ownership of Resorts and its acquisition by Griffin.

3. The Plan violates § 1123(a)(4) as it fails to treat claims of a particular class equally. In view of the release given to Trump by the objectors, objectors’ claims will not be treated the same as other class 3C creditors since in view of the release, Objectors may be estopped to participate in the Litigation Trust or to receive any proceeds from the Litigation Trust while the other class 3C members who have not given Trump a release will be given an interest in the trust under the Plan to prosecute claims against Trump.

4. Resorts has failed to comply with the applicable duties of a trustee under 11 U.S.C. § 1107 . Specifically, Resorts is required to manage its property in accordance with the requirements of applicable state law pursuant to 28 U.S.C. § 959 (b). The Objectors assert that Resorts has elected to release claims against an officer, director, and principal shareholder without review by independent, disinterested directors or a shareholder vote in violation of applicable law.

5. The Plan was not proposed in good faith in violation of 11 U.S.C. § 1129 [a](3).

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a. The Plan provides for a release of Griffin which was approved by the GRI Noteholders Committee because the GRI Noteholders were to receive a release from claims under §§ 544, 547, and 548 of the Bankruptcy Code.

b. The Combined Official Bondholder Committee of Resorts International Inc. and Resorts International Financing Inc. (RIFI) approved releases of Griffin and GRI Noteholders as the release of the GRI Noteholders avoided the possibility that the subordination provisions of the Resorts and RIFI Bond Indentures would be triggered.

c. The Plan is a product of self dealing by Merv Griffin.

6. The Plan has been proposed by means forbidden by law in violation of § 1129(a)(3) as the Disclosure Statement fails to provide adequate information with respect to the Plan, more particularly the conflicts of interest of the GRI Noteholders and the Combined Bondholders Committees.

7. Griffin’s continuation in office is not consistent with the interest of creditors and equity shareholders as he lacks “experience and business accumen to manage Resorts’ affairs and has previously managed Resorts in a self interested manner.”

The objectors claim that Griffin may not qualify for and maintain a casino license under the Casino Control Act based on provisions of N.J.S.A. § 5:12-84 dealing with “character, reputation ... business, professional and personal associates.”

8. Under the Plan, holders of claims will not receive property of a value, as of the Effective Date of the Plan, that is not less than the amount such holders would receive upon liquidation under Chapter 7.

9. Confirmation of the Plan is likely to be followed by the need for further financial reorganizations by the debtors.

10. Under the Plan, Griffin will receive and retain an interest in the debtors even though unsecured creditors will not be paid in full.

June and Howard Linabury

— Objections filed on July 11, 1990 and July 16, 1990, respectively.

Objectors by their objection state that they own $25,000.00 of the RIFI Notes bearing interest at 16-%% due 2004.

The objections to the Plan are as follows:

1. Objectors’ investment will be “almost worthless” if the Plan is approved.

2. “The timing of the presentation of the Plan and time allowed the creditor to contact advisors or absorb it themselves is too short and only favors the debtors.” In fairness to creditors, the hearing should be postponed for a month.

3. Objection is made to the fact that the record dates of purchases will not be considered under the Plan, and that holders will be reimbursed equally without regard to the record date of purchases.

4. The Objectors assert that fraudulent conveyances were involved in the purchase by Griffin.

5. Objectors disagree with the appointment of Griffin as Chairman of the Board of Directors of New Resorts.

6. The Objectors object to the treatment of all bondholders equally. The Objectors propose that the bondholders should be classified as

A. Pre-Griffin

B. Post-Griffin

C. Post-Bankruptcy

7. Objectors suggest the following alternatives to the Plan:

“The amount of stock that is issued and the units of the litigation trust should be divided on a pro rata basis, considering the Class of their holdings. What has been offered is grossly unfair since the GRI bonds should not have been issued in the first place considering the collateral involved.”

Fred Lowenschuss et al.

—Objection filed on July 11, 1990.

This objection was filed on behalf of holders of Resorts’ debentures that objector represents individually as trustee and/or in any other capacity, including Fred Lowenschuss Associates Pension

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Plan, Fred Lowenschuss, Trustee for Lawrence Lowenschuss, Fred Lowenschuss, Trustee for Edward Lowenschuss, Fred Lowenschuss, Trustee for Alan Lowen-schuss, and Fred Lowenschuss, Custodian for David Lowenschuss, and/or in his custodian capacity for others. Lowenschuss incorporated the objections of all other parties to confirmation not inconsistent with these additional objections.

1. The Plan is unfair to the holders of RIFI 16-%% debentures due 2004.

2. The Plan is unfair to the other Resorts debenture holders including 10% debentures

due

1998, 10% debentures due 1988 and 11-%% subordinated debentures due 2013.

3. The Plan is improperly preferential to holders of Griffin Resorts, Inc. 13 — %% mortgage notes due May 1, 1998 and holders of Griffin Resorts Inc. 13-V2% Senior Secured Reset Notes due November 1, 1995.

4. The disclosure was inadequate here, incorporating previously filed objections to the Second Amended Disclosure Statement.

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5. The litigation trust should be utilized to pursue claims against Merv Griffin, the officers and directors, including the independent directors George Barascillo, Jr. William Druz and Mitchell Svirdorff as well as other non-bankrupt entities and persons including lawyers, accountants, appraisers and the advisors.

6. The court should refuse to release all non-debtor entities in accordance with this Court’s opinion in

Elsinore Shore Associates,

91 B.R. 238 (Bankr.D.N.J.1988).

7. Voting on the Plan was not fair and even-handed and should not be considered by the court for the following reasons:

a. The public security holders were not given the benefit of the objections to the Disclosure Statement and/or the objections to the Confirmation of the Plan as filed in this Court.

b. Any person who fails to submit a vote and/or who submits a vote which is not completely in accordance with the instructions is deemed to have accepted the Plan.

c. There were mailings and contacts made to Resorts bondholders besides those authorized by this court.

d. During the past year Resorts bonds have been purchased at distress prices by various parties who are attempting to obtain approval of the Plan for a quick profit on their investment.

e. The court should require the debt- or to disclose the votes received from the long term Resorts bondholders who accepted the Plan by fully and properly completing the ballot for acceptance.

8. The Court should not approve control of the debtor to be placed with Griffin and/or the law firm of Gibson, Dunn & Crutcher, co-counsel for the debtors, because they have mismanaged the debtors to date and caused the bankruptcy.

9. The court should permit open bids from investors and/or the general public to compete with Griffin’s offer for shares of New Resorts.

10. Griffin is being permitted to retain control and a major share of the common stock of the New Resorts in violation of 11 U.S.C. § 1129 (b).

11. The creation of an advisory board member to the New Resorts Board of Directors serves no useful purpose and wastes $75,000.00 or more annually.

12. The employment and compensation agreements as outlined in the disclosure statement are excessive as well as the commission to be paid on sale of properties including the Paradise Island properties.

Kenwood Dual Fund, Ltd., et al.

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— Objection filed July 18, 1990.

The Objectors, in the aggregate, are holders of (a) debtor Resorts International, Inc.’s 10% Subordinated Debentures due 1998, 10% Subordinated Debentures due 1998, 10% Subordinated Debentures due 1999, and 11-%% Subordinated Debentures due 2013, and (b) debtor Resorts International Financing, Inc.’s 16.625% Subordinated Debentures due 2004, which were generated by Resorts.

Movants had commenced four separate actions

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in the Supreme Court, New York County, individually and in the aggregate on behalf of all subordinated bondholders of Resorts International, Inc. and Resorts International Financing, Inc. (both herein

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after referred to as “Resorts” or “debtors”), against Griffin, Donald Trump (“Trump”) and other related entities, asserting the fraudulent conveyance claims. These actions were stayed by the bankruptcy pursuant to 11 U.S.C. § 362 (a).

A summary of Kenwood’s grounds for objections are as follows:

1. Griffin and other non-debtors are being released from substantial liabilities for grossly inadequate consideration.

2. The Creditors Committees and the Debtors have agreed to a release by the Debtors and certain classes of note and debenture holders of Griffin and the non-debtor Griffin-related entities of all claims that have been or may be asserted against them, citing Plan § 7.10(h). Griffin and the Debtors, as the proponents of the compromise, have not met their burden of demonstrating that the proposed settlement is reasonable and in the best interests of the estate.

The Joint Plan of Reorganization is too risky and does not meet the “feasibility” test or “best interest” test under § 1129(a)(7)(A)(ii) and (a)(ll).

3. There are substantial reasons to believe that the proposed compromise was not negotiated between the parties at arm’s length. The Objectors state in their objection that Gibson, Dunn & Crutcher, co-counsel for the debtors, has served as counsel for Griffin personally and for RII. The Plan calls for Griffin to be the head of New Resorts and counsel is interested in continuing its representation of RII. In view of the fact that the Plan calls for a “giveaway” of RII’s fraudulent conveyance claims, and other claims, as against Griffin for virtually no consideration, there is a strong likelihood that the Joint Plan has been materially tainted by this conflict of interest. Further, it appears that the RII Debentureholders Committee consists disproportionately of entities that acquired their debentures

after

the alleged fraudulent conveyances who may not have fraudulent conveyance claims,

citing Kupetz v. Wolf,

845 F.2d 842 , 849-50 n. 16 (9th Cir.1988).

4.Since the Plan seeks to release litigation claims of RIFI Debentureholders

(citing

Exhibit 1.72 to Plan), and does not differentiate between holders who purchased their interests prior to the leveraged buy-out from those who purchased their interests after the leveraged buy-out, the Plan raises disparate treatment issues under the case of

In re AOV Industries, Inc.,

792 F.2d 1140, 1152 (D.C.Cir.1986).

The Trump Litigation Defendants

— Objection filed on July 19, 1990.

The Trump Litigation Defendants include Donald Trump, Harvey Freeman, Robert Trump, Trump Taj Mahal Associates Limited Partnership, the Trump Hotel Corporation and their respective affiliates (“Trump Defendants”).

A summary of the Trump Litigation Defendants’ objections to the Plan is as follows:

(1) The Plan improperly attempts to secure the release of non-debtor third parties by the Debtors' bondholders without demonstrating as required that those releases are being given voluntarily and are supported by independent and sufficient consideration. (i.e. the Plan provides for the general release of Griffin, Griffin Acquisition Corp., Drexel Burnham Lambert, Inc. and their respective present and former officers, directors, agents, attorneys, representatives, trustees, affiliates, parents, subsidiaries, general and limited partners, heirs, executors, administrators, successors and assigns. (Plan §§ 1.38, 1.72 and 7.16)).

(2) The Plan provides for the settlement and release of all claims of the Debtors against Griffin, the Morgan Bank, the Released Defendants

6

, or their respective affiliates, agents, accountants, attorneys, ad-

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visors, employees, representatives, officers and directors, and all the claims of the Debtors against GRI Noteholders, to the extent such claims and causes of action arise out of or relate to the acquisition. (Plan § 7.11(h) and 7.16(a)). The Plan proposes to release non-debtor third parties from potentially valuable claims of the estate with little, if any analysis of the value of those claims and no showing that these releases are “fair and equitable”.

(3) The Plan evidences bad faith by its disparate treatment of the claims against Trump and the claims against Griffin and all other potential defendants.

(4) The Plan is not feasible because it severely impairs Resorts’ continuing viability by establishing a $5 million “war chest” to litigate claims against Resorts’ neighboring hotel and casino, the Taj Mahal Hotel and Casino, on whose continued success Resorts coneededly depends, and by placing the future of Resorts in the hands of Griffin and others who brought it to bankruptcy-

(a) The Plan is not feasible because the litigation trust would damage the casino market upon which Resorts depends.

(b) The Plan is not feasible because its success depends on management with a demonstrated inability to manage.

(c) The Plan fails to disclose the identity and affiliation of the litigation trustee in violation of 1129(a)(5)(A)(i) which provides that the proponent of a plan must disclose the identity and affiliation of any individual proposed to serve as a trustee of the debtor or any successor to the debtor.

As part of the hearing on confirmation, several other matters were disposed of by the parties and the Court.

Also returnable on the date of the confirmation hearing was a previously filed notice of motion by William J. Crosby, Robert Peloquin and Steven H. Norton, as retired employees of Resorts International, Inc. seeking the appointment of a retired employees committee pursuant to Section 1114(d) of the Bankruptcy Code. On the record, counsel for the Debtor informed the Court that the parties had settled the matter. (TR1 at 28). According to Debtors’ counsel, Resorts has agreed that all medical benefits will continue under the Plan.

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A stipulation and proposed order is to be submitted with regard to the settlement of this matter. (TR1 at 28-29).

Debtors’ counsel also informed the Court that in regard to the “Litigation Trust” established under the proposed Plan, the parties submitted into evidence Exhibit “A” to Litigation Trust Agreement which details the terms of compensation and reimbursement of the “Litigation Trustee”, and proposes to name Kenneth R. Feinberg, Esquire as trustee; also included was Mr. Feinberg’s resume. (TR1 at 29). (D-2).

In addition, Debtors’ counsel indicated to the Court that the Debtors have consented to a request for the change of one of the definitions under the litigation trust agreement. (Trl at 30). The request was made by the Debenture Bondholders Committee. The original Litigation Trust Agreement provided that a decision by the holders would be made by a majority of all holders of certificates under the trust.

See

Exhibit 1.46 to Plan, Article II. Under the Litigation Trust Agreement “Majority Holders” was defined as “the Holders from time to time of at least a majority of the outstanding units.” The requested change in language provides that a decision can be made by a majority of those voting as opposed to those holding certificates. (TR1 at 30-31). The proposed change in language provides:

“Majority Holders” means the Holders from time to time of at least a majority of the outstanding Units, except that in the event any vote of Holders is taken in accordance with Section 4.6 hereof and in

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connection with such vote no persons or entities or groups of persons and/or entities who are defendants with respect to any Litigation Claim and no Affiliates of such defendants hold collectively more than five percent in the aggregate of the outstanding Units, “Majority Holders” means the Holders of at least a majority of the outstanding units responding to the solicitation of consents by the Trustee as the Trustee may determine.

(D-4).

In regard to paragraph 7.21(c) of the Plan, which provides in part that no entity shall be approved as Disbursing Agent or registrar until it executes and files a statement with the Bankruptcy Court agreeing to perform all duties of Disbursing Agent or registrar and consents to the jurisdiction of the Bankruptcy Court in respect of all matters relating to the performance of those duties,

8

counsel for Debtors offered into evidence a letter dated July 20, 1990 to the Clerk of the United States Bankruptcy Court for the District of New Jersey from Mark B. Zimkind, Assistant Vice President of Manufacturers Hanover Trust Company, the proposed Disbursing Agent and registrar which provided in part:

We have been retained by the Reorganizing Entities to serve as the Disbursing Agent and Registrar pursuant to the Plan. We hereby agree to perform all duties of Disbursing Agent and Registrar under the Plan, and consent to the jurisdiction of the United States District Court for the District of New Jersey with jurisdiction over the Reorganization Cases and the United States Bankruptcy Court for the District of New Jersey in respect of all matters relating to the performance of our duties as Disbursing Agent or Registrar under the Plan.

(Trl at 30). (D-3).

In connection with the hearing on the Plan, Debtors’ counsel also offered into evidence a number of certifications in support of the confirmation proceeding. They are as follows: (1) a certification of Peter C. Rockwell of publication notice of the order fixing date, time and place for hearing on confirmation of Debtors’ Plan (Trl at 31-32) (D-5); (2) a declaration of John C. Stevenson regarding the distribution of certain solicitation material to the Beneficial Holders of Resorts Debt for acceptance or rejection of the Plan (Trl at 33) (D-6). A copy of a Declaration of Christopher D. Whitney, Executive Vice President of Resorts International dealing with requirement of § 1129 was offered into evidence subject to the availability of Mr. Whitney for cross-examination. (Trl at 33-37). (D-7).

The final declaration offered into evidence by Debtors’ counsel was that of

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Claudia King certifying the distribution of the solicitation material and tabulation of ballots accepting and rejecting the Plan. (Trl at 38). (D-8).

The Plan before the Court contains ten classes of claims and interests, with varying distribution provisions as follows:

Class 1

— Priority

Claims.

Class 1 Claims are any Claims against the Debtors entitled to priority in accordance with Section 507(a) of the Bankruptcy Code.

The Plan provides that such claims will be paid in cash and in full on the Initial Distribution Date or as soon as practicable after such claims are allowed if the date of allowance is later than the Initial Distribution Date. This class is treated as unimpaired under Section 1124 of the Bankruptcy Code.

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Secured Claims.

(a)Classes 2A and 2B

— GRI

Note-holder Claims.

The Class 2A and 2B Claims consist of the Claims of holders of the GRI Notes, of which $200,000,000 in aggregate face amount of Mortgage Notes and $125,000,000 in aggregate face amount of Reset Notes are outstanding as of the date hereof.

The Plan provides that the existing GRI Notes, representing aggregate outstanding obligations in excess of $345 million, secured by first priority liens on the Debtors’ Atlantic City and Bahamas operating properties will be cancelled. In exchange each GRI Noteholder will receive its pro rata share of (a) Series A Notes in an aggregate principal amount of $18.75 million, and (b) Showboat Notes in an aggregate principal amount of approximately $105.3 million. The Series A Notes will be secured by liens on the collateral currently securing the GRI Notes. The liens securing the Series A notes will be of an equal priority to the liens on the same collateral that will secure New Resorts’ obligations under the Series B Notes to be issued to holders of Class 3B and 3C claims, as discussed below. The Showboat Notes will be secured by liens on New Resorts’ interest in the Showboat Property and Showboat Lease. The collateral for the Showboat Notes will not serve as collateral for the Series A or Series B Notes and will be non-recourse as to Resorts. Classes 2A and 2B are treated as impaired within the meaning of Section 1124.

(b)

Class 2C

— Miami

Mortgage Claims.

The Class 2C Claim consists of the Secured Claim of Evangeline Percha, Phil Chase and Elinor Chase as holders of a first mortgage on Resorts’ property at 915 N.E. 125th Street, North Miami, Florida.

(c)

Class 2D

— Aircraft

Lease Letter of Credit Claim.

The Class 2D Claim consists of the contingent Claim of Morgan

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Guaranty Trust Company (the “Morgan Bank”) as issuer of a letter of credit in the amount of approximately $1,200,000, which was issued for the benefit of the lessor of an aircraft leased by a subsidiary of Resorts, Chalk’s International Airline, Inc.

(d)

Class 2E

— Insurance

Liability Letters of Credit Claim.

The Class 2E Claim consists of the contingent Claim of City National Bank as issuer of letters of credit aggregating approximately $77,-140, which were issued for the benefit of certain insurance companies from whom Resorts purchased liability insurance.

(e)

Class 2F

— Atlantic

City Property Tax Claim.

The Class 2F Claim consists of the Claim of Atlantic City for real property taxes in the amount of $285,-754, secured by a lien on certain of Resorts’ unimproved real property in Atlantic City.

(f)

Class 2G

— Miscellaneous

Secured Claims.

The Class 2G Claims consist of all Secured Claims other than those included in Classes 2A, 2B, 2C, 2D, 2E and 2F.

The Plan provides that with regard to Classes 2C, 2D, 2E and 2G claims, all secured claims other than those held by the GRI Noteholders, any defaults will be cured, the maturity of such claims will be reinstated and the holders will be compensated for any reasonable reliance damages, and the legal, equitable, or contractual rights to which such claims entitle their holders will not be otherwise altered. These classes of claims are treated as unimpaired within the meaning of Section 1124.

Unsecured Claims.

(a)

Class 3A

— Small

Claims.

The Class 3A Claims consist of all Unsecured Claims existing as of the Petition Date (other than Claims in respect of RII and RIFI Debentures and Claims by former shareholders of Resorts in respect of the payment of the Merger price for their shares) that on or before the Effective Date either are for an amount of $1,000 or less or are reduced to $1,000 by the election of the Holder as provided in such Holder’s ballot.

The Plan provides that Class 3A claims will be paid in cash and in full on the Initial Distribution Date. This claim is treated as unimpaired within the meaning of Section 1124.

(b)

Classes SB and 3C

— RIFI

Debenture Claims and General Unsecured Claims (including RII Debenture Claims).

The Class 3B Claims consist of the Claims of holders of RIFI Debentures, while the Class 3C claims consist of the Claims of holders of RII Debentures and Holders of all other Unsecured Claims that are not in Classes 3A, 3B or 4.

The Plan provides that the RIFI Debentures (representing outstanding obligations aggregating $219.5 million) and the RII Debentures (representing outstanding obligations aggregating approximately $366.2 million) and all other obligations giving rise to Unsecured Claims (which the Debtors estimate will not exceed $20 million, and which cannot exceed $46.6 million, for the Plan to be effective) will be cancelled. In exchange each holder of a Class 3B or 3C claim will receive a percentage share (determined by the amount and classification of its claim) of: (a) Series B Notes in an aggregate principal amount of approximately $141.8 million; (b) approximately 76% of the capital stock of New Resorts; and (c) the proceeds of the Litigation Trust established to pursue the debtors’ claims against the Trump Litigation Defendants. The Series B Notes will be secured by a lien on the collateral securing the former GRI Notes which liens are of equal priority with the liens that will secure the Series A Notes. These claims are treated as impaired within the meaning of Section 1124.

Litigation Claims.

Class 4 Claims consist of various Claims asserted against the Debtors in or arising in connection with the Debenture-holders’ Litigation and other subordinated claims.

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. (a)

Class 4-A

— GRI

Litigation Claims.

The Class 4A Claims consist of Claims against the Reorganizing Entities that have arisen or that could arise in connection with the GRI Litigation known as

Peter Stuyvesant Ltd. v. William Druz, et al.,

a putative class action pending in the United States District Court for the Southern District of New York, Civil Action No. 89 Civ. 3611 (MGC);

Executive Life Ins. Co. v. Druz,

presently pending in the United States District Court for the Central District of California, Case No. 89-3611, and

Kemper Investors Life Ins. Co. v. American Appraisal Assoc., Inc.,

presently pending in the United States District Court for the Northern District of Illinois, Case No. 90-C-2055.

The Plan provides that the holders of Class 4A claims will not receive or retain any property pursuant to the Plan on account of such claims, and that such claims shall be discharged pursuant to Section 13.2 of the Plan. This class is treated as impaired within the meaning of Section 1124.

(b)

Class IB

— RIFI/RII

Litigation Claims.

The Class 4B Claims consist of all Claims that have arisen or that could arise in connection with litigation known as

Kenwood Dual Fund v. Resorts International, Inc. and Donald J. Trump,

pending in the Superior Court of New York, New York County, as Index No. 88/22270;

Shulman et al. v. The Griffin Company, et al.,

pending in the Superior Court of New York, New York County, as Index No. 89/20648;

The George S. Kolbe Target Benefit Pension Plan, et al. v. Resorts International, Inc., et al.,

pending in the Superior Court of New York, New York County, as Index No. 19882/89;

Campbell et al. v. Resorts International Inc., et al.,

pending in the Superior Court of New York, New York County, as Index No. 20394/89; and the following putative class action pending in the United States District Court for the Southern District of New York:

William Hulkower v. Resorts International, Inc., et al.,

Civil Action No. 89 Vic. 6494 (MGC);

Benjamin Fishbein and Sylvia K. Weber v. Resorts International Inc., et al.,

Civil Action No. 89 Vic. 6443 (MGC); and

Shirley and David Marcus v. Resorts International, Inc., et al.,

Civil Action No. 89 Vic 6495 (MGC) (“RIFI/FII Litigation”).

The Plan provides that the holders of Class 4B claims will not receive or retain any property pursuant to the Plan on account of such claims, and that such claims shall be discharged pursuant to Section 13.2 of the Plan. This class is treated as impaired within the meaning of Section 1124.

(c)

Class jC

— Other

Subordinated Claims.

The Class 4C claims consist of all claims that are subordinated pursuant to Bankruptcy Code § 510 and are not included in Class 4A or Class 4B. The Plan provided that the holders of Class 4C claims will not receive or retain any property pursuant to the Plan on account of such claims and such claims shall be. discharged pursuant to Section 13.2 • of the Plan. This class is treated as impaired within the meaning of Section 1124.

Class 5

— Intercompany

Claims.

Class 5 Claims consist of all Claims asserted by the Debtors or any of their wholly owned subsidiaries or Affiliates against any other Debtor or its wholly owned subsidiary or Affiliate, and includes the Claims of Resorts and RIH against TGC with respect to the TGC Loans.

The Plan provides that the holders of Class 5 claims will not receive or retain any property under the Plan on account of such claims and that such claims shall be discharged pursuant to Section 13.2 of the Plan. Where appropriate, extinguished Intercompany claims shall be treated as contributions to capital at the election of New Resorts.

This class is treated as impaired within the meaning of Section 1124.

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Class 6

— Shareholders’

Merger Claims.

This class consists of all claims of former shareholders of Resorts that have arisen or that could arise in connection with the merger of Griffco Acquisition Corp. with and into Resorts pursuant to the Agreement and Plan of Merger dated as of November 15, 1988.

The Plan provides that the holders of Class 6 claims will not receive or retain any property under the Plan on account of such claims, and that such claims shall be discharged pursuant to Section 13.2 of the Plan. This class is treated as impaired within the meaning of Section 1124 of the Plan.

Class 7

— Equity

Interests in Resorts.

This class consists of all equity interests in Resorts. The holders of Class 7 interests will not receive or retain any property under the Plan on account of such claims, and such claims shall be discharged pursuant to Section 13.2 of the Plan. All existing stock of Resorts will be cancelled and its current holders will not receive or retain any property on account of equity interest. This class is treated as impaired within the meaning of Section 1124.

At the date hereof, all of the outstanding shares of capital stock of Resorts are held by TGC. Pursuant to the Plan, TGC will be merged into a newly formed subsidiary of Resorts and all existing common stock of Resorts will be cancelled.

Class 8

— Equity

Interests in RIFI.

This class consists of all of Resorts' equity interests in RIFI.

The Plan provides that RIFI will be merged into New Resorts pursuant to the Plan, as a result of which New Resorts will be vested with the value of the ■ equity, if any, in RIFI. Under the Plan, the legal, equitable and contractual rights to which such interests will entitle New Resorts will remain unaltered.

This class is treated as unimpaired within the meaning of Section 1124(1).

Class 9

— Equity

Interests in GRI.

This class consists of all of GRH’s equity interests in GRI.

The Plan provides that the holders of Class 9 Interests shall retain such Interests after the Effective Date of the Plan and shall retain unaltered the legal, equitable and contractual rights to which such interests entitle such holder. The Plan provides for the retention of such interests by GRH, which will be merged into New Resorts, and leave unaltered the legal, equitable and contractual right to which such interests will entitle New Resorts.

This class is treated as unimpaired within the meaning of Section 1124(1).

Class 10

— Equity

Interests in GRH.

This class consists of all of Resorts’ equity interest in GRH.

The Plan provides that GRH will be merged into New Resorts pursuant to the Plan, as a result of which New Resorts will be vested with the value of the equity, if any, in GRH. Under the Plan the legal, equitable and contractual rights to which such interests will entitle New Resorts will remain unaltered.

This class is .treated as unimpaired within the meaning of Section 1124(1).

The Debtors submitted the Plan for vote to the Classes of GRI Noteholders (Classes 2A and 2B); RIFI Debentureholders (Class 3B) and RII Debentureholders and general unsecured creditors (Class 3C). The Debtors did not solicit the votes of members of impaired classes of litigation and other subordinated claims (Classes 4A, 4B, and 4C), intercompany claims (Class 5), shareholder merger claims (Class 6), and RII equity interests (Class 7). These classes are deemed under the Plan to have rejected the Plan under § 1126(g) as the Plan provides that the holders of claims or interests in such classes are not entitled to receive or retain any property on account of such classes or interests.

The Declaration of Claudia King (D-8) sets forth the following results of voting:

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On the instructions of the Debtors, the tabulation results set forth in paragraph 21 do not reflect any vote based on a proof of claim to which the Debtors have filed an objection and for which there has been no order estimating the amount of each claim.

Holders of Mortgage Notes, Reset Notes, and RIFI Debentures tendering their respective RIFI and GRI Plaintiffs Releases did so as follows:

a.Mortgage Notes Number Amount

Totals 185 $168,571,000

Percentage 84.3%

b.Reset Notes Number Amount

Totals 81 $110,854,000

Percentage 88.7%

c.RIFI Debentures Number Amount

Totals 512 $146,578,000

Percentage 73.3%

Christopher D. Whitney, executive vice president and chief of staff of Resorts International, Inc. testified before this Court. Mr. Whitney testified that he began employment with the debtor companies (hereinafter “Company”) in December 1988 and that by the spring of 1989 several persons felt that the Company’s capital structure should be reviewed by experts at which time Salomon Brothers was retained in May 1989. (TR1 at 46). Mr. Whitney explained that on the recommendation of Sa-lomon Brothers, the firm of Alvarez and Marsal was retained in August 1989, for the purpose of ascertaining the company’s liquidity.

Mr. Whitney testified that in August 1989, Alvarez and Marsal informed the Debtors that “as a function of its liquidity, it would not be in a position to continue debt service payment and also be able to make the capital expenditures and otherwise spend operating money necessary for the company to proceed on a healthy basis.

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(TR1 at 47). Mr. Whitney also testified that Resorts was not going to make its ensuing debt service payments and scheduled a meeting with its bondholders for September 1989 in Atlantic City, New Jersey (TR1 at 47). The meeting with bondholders was conducted on September 19, 1989 at which representatives of senior management, Alvarez and Marsal and Salo-mon Brothers conducted a presentation for bondholders. (TR1 at 48). Mr. Whitney testified that a proposed form of exchange offer was preliminarily advanced. (TR1 at 49). According to Mr. Whitney, the bondholders organized into two large groups of bondholders: the GRI secured bondholders, which were created as part of Merv Griffin's leveraged buyout of Resorts, the face amount of such bonds being approximately $325 million; and the RII and RIFI unsecured bondholders with an approximate face amount of $600 million. (TR1 at 49-50). Mr. Whitney stated that the GRI bondholders retained Duncan Darrow, Esquire of the firm Anderson Kill as its legal advisor (who was later replaced by Kenneth N. Klee of Stutman, Triester and Glatt) and Rothchild, Inc. as its financial advisor. (TR1 at 50-51). The RII and RIFI bondholders retained Marc Kirschner of Jones, Day, Reavis & Pogue as their legal advisor and Arthur Newman of Chemical Bank as their financial advisor. (TR1 at 50-51). Mr. Whitney testified that the committees were compensated by Resorts at the demand of the committees. (TR1 at 51).

In regard to the plan of reorganization, Mr. Whitney testified that the company’s business plan of reorganization included a “Global Restructuring” which included RII, GRI, RIFI, and GRH. (TR1 at 53). Whitney also testified that the regulatory authorities in New Jersey and the Bahamas were concerned about the financial stability and responsibility of the company and that the recapitalization plan had to proceed as quickly as possible. (TR1 at 56). Whitney also testified that in his opinion resolution of potential disputes needed to take place before a global plan could be arrived at. (TR1 at 58).

Mr. Whitney testified that to his knowledge and understanding, Mr. Merv Griffin would not participate in the plan of reorganization without obtaining the releases which are now embodied in the Plan. (TR1 at 60-61). According to Mr. Whitney, there were negotiations as to the settlement of the fraudulent transfer dispute set forth in the Plan. (TR1 at 61). Whitney also testified that he made no independent examination of the validity of fraudulent conveyance claims as they pertain to the security interest of the GRI Noteholders nor was he aware that David Hanlon, President of Resorts made such an analysis, instead retaining professional advisors for that purpose.

Mr. Whitney testified that in addition to the components of the releases and the settlement of fraudulent transfer claims, the plan of reorganization included several other essential components including revenue projections and certain market strategies all of which would be implemented to stabilize the company. (TR1 at 69-71).

Mr. Whitney testified that Resorts’ projections as to market share and marketing strategies were to be implemented under a five year business plan which took into consideration certain assumptions including the projected growth of the Atlantic City casino industry in 1990 and the growth of Resorts’ Atlantic City market share in that growth. (TR1 at 69, 71, 79). According to Mr. Whitney, the first year of the Plan, 1990, was to be the stabilizing year. (TR1 at 69). Stabilization included a marketing strategy, cost control, the positioning of the property in a manner which would make it able to compete with the Taj Mahal Hotel and Casino as well as attract some of the Taj Mahal’s customer activity, and trying to minimize the damage associated with the negative publicity arising from the bankruptcy proceedings. (TR1 at 70).

Mr. Whitney also testified that as part of the marketing strategy, Resorts would make a “better and more prominent use of Mr. Merv Griffin’s name and persona upon the property to distinguish the property in that manner.” (TR1 at 71). According to Mr. Whitney’s testimony, under the Plan

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Mr. Merv Griffin is to contribute $26 million dollars of new funds for the company, and as part of this infusion of capital, Mr. Griffin’s original equity position in Resorts would be extinguished and his new equity position would be approximately 21-1/2 percent of the New Resorts International common stock. (TR1 at 72, 233).

Mr. Whitney stated that it was his understanding that under the proposed Plan, Mr. Griffin would waive a $10 million subrogation claim against the company which arose from a letter of credit transaction. (TR1 at 72).

In further regard to Mr. Griffin’s contribution to the marketing strategy of Resorts, Mr. Whitney stated, that Mr. Griffin is an integral part of the Resorts marketing strategy and that the utilization of Mr. Griffin’s name and persona would serve to distinguish Resorts in the difficult Atlantic City casino market. (TR1 at 73-74). Whitney also testified that Griffin’s visibility was important for the public and Resorts’ employees. (TR1 at 127). In this regard, Whitney testified that Griffin spent approximately one week a month in Atlantic City, during which time he participates in events, entertains or spends time with employees. (TR1 at 184). Mr. Whitney also testified that as part of the marketing strategy which is reflected in a license agreement with Mr. Griffin, Mr. Griffin would serve as chairman of Resorts. (TR1 at 73). Whitney also testified that under the Plan Merv Griffin would be contributing to the New Resorts shares of the Griffin Company which will preserve a NOL (net operating loss) going forward.

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(TR1 at 74).

Mr. Whitney also testified as to the treatment of the unsecured creditors in Class 3C which include the RII bondholders. Mr. Whitney testified that he had undertaken steps to determine that the other 3C creditors (non-RII bondholders) will not exceed 20 million dollars. (TR1 at 75-76). Mr. Whitney testified that he examined the filed claims with legal and financial advis-ors and with other senior financial officers of the company. (TRlat76). Specifically, Mr. Whitney testified that he conducted a review of these other unsecured claims with Matthew B. Kearney, Resorts’ vice president and chief financial officer. Mr. Whitney testified that they reviewed the listing of the claims as filed and some individual claims, including the individual pleadings and the claims in the ease of litigation. (TR1 at 76).

Mr. Whitney also testified that as part of the confirmation process, he had examined Resort’s executory contracts and leases including those executory contracts which are set forth in the Disclosure Statement. (TR1 at 77). Mr. Whitney also testified that he examined the executory contracts which are to be rejected and was satisfied that it was in the best business judgment of the Company to reject those contracts. Whitney also testified that he examined the executory contracts which are not listed on the list of rejected executory contracts in the Disclosure Statement and in this regard, Mr. Whitney stated that the decision to assume these contracts has been made after an analysis as to the economic viability and benefit to the company. (TR1 at 78).

Mr. Whitney also testified as to the cash flow analysis of the Company as contained in the Debtors’ Business Plan contained in the Debtors’ Disclosure Statement, Exhibit “C”. (TR1 at 79). Mr. Whitney testified that he was familiar with these projections and that he took part in the formulation of these figures. (TR1 at 79).

Mr. Whitney testified that it is the intention of Resorts if the Plan is confirmed to sell the Bahamas property within two years. (TR1 at 80). Mr. Whitney testified that with regard to the cash flow statement for the five years ending December 31, 1994, base case, (Sell Resorts Bahamas at

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end of Year 2 for $250 million) in the business plan, Mr. Griffin would contribute $15 million in 1990 and that the ending cash balance for that year was $15.5 million. (TR1 at 80). Entered into evidence as exhibit D-10 was a letter from John J. Coleman, Vice President of Morgan Guaranty Trust Company of New York, dated July 23, 1990 addressed to Mr. Whitney indicating that as of the close of business on July 23, 1990, Merv Griffin had on deposit and in a demand deposit account maintained with Morgan Guaranty Trust Company of New York the sum of $17,500,000.00 which is presently available to be withdrawn without restrictions. (TR1 at 81-82). (D-10). Also entered into evidence was a letter dated July 23, 1990 from John J. Coleman, Vice President of Morgan Guaranty to Merv Griffin which states:

MORGAN GUARANTY TRUST COMPANY OF NEW YORK is pleased to advise you of our commitment to issue for your account our irrevocable letter of credit in the amount of $11,000,000, in favor of RESORTS INTERNATIONAL, INC. (“Resorts”) as contemplated by the Second Amended Joint Plan of Reorganization of Resorts and related Debtors dated as of May 31, 1990. This letter of credit facility will be governed by the terms that we have previously agreed upon, which will be set forth in the customary documentation for a facility of this type.

(Trl at 83). (D-ll).

In regard to the aforementioned cash flow analysis of Resorts, Mr. Whitney testified as to the negative figures, specifically as to the capital expenditures in the Atlantic City operation in 1990 in the amount of $35 million, and in 1990 for the Bahamas operation which is in the amount of $11.7 million. (TR1 at 83-84). Mr. Whitney testified that these capital expenditures played a pivotal role in the Plan and in the company’s health going forward. (TR1 at 84). Mr. Whitney testified that these expenditures were necessary in 1989 and 1990 in order to update and refurbish the Atlantic City plant as it was “extremely dated, tired, old and in need of refurbishing in order to compete in the market place.” The smaller number in the Bahamas indicated that capital expenditures had been made and invested in the Bahamas property over the years at a more significant rate. (TR1 at 84-85). Mr. Whitney testified that these capital expenditures would not be on any annual basis but would rather be one time expenditures under the Plan. (TR1 at 85).

Mr. Whitney also testified that he participated in the preparation of the cash flow projections that are shown for 1991, 1992, 1993, and 1994, which represent the maturity dates of bonds which would be issued under the Plan. (TR1 at 85).

Mr. Whitney also testified concerning the Showboat lease and as to the impact that the lease and the rents generated thereunder will have on the Plan. (TR1 at 87). Mr. Whitney testified that the debtor company owns the ground on which the Showboat Hotel Casino is located and that under the Plan, the Showboat Lease serves as security for the $105.3 million note to be issued to the GRI bondholders. Mr. Whitney testified that it is necessary for the implementation of the Plan for the Showboat lease to be assumed by Debtors. (TR1 at 89). Whitney also testified that the lease was current and that he was unaware of any defaults under the lease. (TR1 at 88).

Whitney testified that under the various scenarios set forth in the Debtors’ business plan, the company will have adequate cash to operate for the entire four-year period (1990-1994). (TR1 at 91).

Mr. Whitney testified as to implementation of the marketing strategies which have occurred between April 16, 1990, the date of the business plan projections in the Disclosure Statement, and the date of the hearing on confirmation. (TR1 at 92). Mr. Whitney spoke specifically about the Debtors’ EBDIT (earnings before depreciation, interest and taxes), and testified that the Debtors are ahead of the plan and the projections for the end of June 1990. (TR1 at 92-93). Mr. Whitney testified that the Atlantic City operation is about one million dollars ahead of the plan, and that the

*437

Bahamas are about one million dollars behind, although on a consolidated basis, the same. (TR1 at 93). Whitney testified that the market growth assumption for Atlantic City in the original plan was 8.8% for 1990 and 5% for the years thereafter. He testified that during the first quarter of 1990 market growth in Atlantic City was flat, in April 1990 up 5%, in May 1990, up 11%, in June 1990 up 13.5% so that whether the 8.8% number for 1990 could hold was problematic or speculative, so that Resorts has ascribed a 10% per month market growth for the balance of the year. (TR1 at 94). Mr. Whitney testified that in terms of market share, the other large revenue assumption, the plan contemplates a market share in the 1990s of 7.4 percent. Whitney testified that during the first quarter of 1990, Resorts’ market share was not up to 7.4%, but by the end of June 1990 it was at about 7%, and the indications are that in July 1990 “slot market share” was over 8% while on a consolidated basis for all games and tables it was 6 to 6.5%. Whitney attributed the softness of the market and the fact that several of Resorts' programs came on late as reasons why the first quarter 1990 market share was not up to 7.4%. (TR1 at 95).

On direct examination, Mr. Whitney identified several key programs that the Debtors sought to implement in the first quarter of 1990 as part of its market strategy. (TR1 at 96). Among those identified by Whitney were the new food strategy, the “Beverly Hills Buffet”, and marketing and promotional plans such as the Jackpot game. (TR1 at 96). Mr. Whitney testified that Resorts ran into difficulties obtaining the permits for the new food program and the Jackpot game which resulted in delays in implementing these marketing strategies. (TR1 at 97). Specifically, the buffet and the Jackpot game which were scheduled to begin in April 1990 did not begin until May 1990, and the slot rating system which was intended to start in May 1990 did not start until June 1990. (TR1 at OJ-OS). According to Mr. Whitney, the Plan calls for the EBDIT in 1990 for Atlantic City to be $24 million, and that Resorts Atlantic City is on schedule to generate the $24 million in EBDIT in 1990. (TR1 at 98).

As to the management of Resorts, Mr. Whitney testified that he was hired by Resorts in December 1988 when a new team of management was brought on board. (TR1 at 99). Mr. Whitney testified that he has no reason to believe that any member of the current management team has any plan not to be permanent. (TR1 at 100).

Whitney testified that the capital infusion contemplated by the Plan which was to be made by Merv Griffin was necessary to the Company going forward as to the projections in the plan. (TR1 at 241). Whitney also testified that since the filing of the Chapter 11 cases, no one other than Merv Griffin has offered to purchase equity in Resorts or New Resorts. (TR1 at 241). Whitney also testified that it would be costly to the debtor company to issue financial shares of stock and notes and accordingly the plan includes a class for small claimants. (TR1 at 241). With regard to the provisions of 12.2(5) of the Plan “Conditions to Effectiveness”, Whitney testified that Resorts, RIFI, GRI, GRH and RIH, all the Resorts entities proponents, would be prepared to execute written waivers of the condition to effectiveness of the Plan that “the principal amount of GRI Notes held in the aggregate by Electing GRI Notehold-ers shall constitute not less than 90% of the principal amount of the outstanding GRI Notes.” (TR1 at 247-258). Counsel for the Debtor, Robert A. Baime, Esquire, at the confirmation hearing on behalf of the debtor corporations represented to the Court that he was authorized to waive that condition of the Plan on behalf of Resorts, RIFI, GRI, GRH and RIH. Whitney also testified that he was of the belief that The Griffin Company and Merv Griffin would also waive the conditions set forth in Section 12.2(5) of the Plan, based upon the percentage of releases received as reflected in the Claudia King declaration. (TR1 at 249). (D-8).

Whitney testified that the debtor corporations presently hold valid licenses to operate in both the Bahamas and Atlantic City and that the Debtor was undertaking

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efforts to obtain all the necessary approvals of the Plan from the New Jersey Casino Control Commission and the Bahamian Government. (TR1 at 25). In this regard, as of the confirmation hearing, a hearing before the New Jersey Casino Control Commission was scheduled for August 10, 1990 to consider the Plan. (TR1 at 258).

Antonio Alvarez, II, a partner of the firm of Alvarez & Marsal, a crisis management firm, also testified. (Transcript of July 25, 1990 at 10) (hereinafter “TR2 at -”). Alvarez testified that his firm was retained by the Debtor to assist in reviewing its liquidating situation and to assist in the development of a business plan. (TR2 at 13). Alvarez testified that in fact a business plan was formulated with the assistance of senior management of the Debtors. (TR2 at 13). Alvarez reviewed the budget of the two operating companies in Atlantic City and the Bahamas, as well as corporate overhead budgets and the non-operating companies. (TR2 at 13-14). Alvarez testified that in arriving at a new budget as part of the business plan, certain business assumptions were made, including that the casino market in Atlantic City would grow by 8.8% in 1990 and grow by 5.0% annually thereafter, and that Resorts’ market share in Atlantic City in 1990 would be 7.4%, and in years 1991 to 1995 would be 7.2%. (TR2 at 14-17).

Alvarez testified that marketing strategies were reviewed and formulated with Debtors' management. (TR2 at 15-16). That marketing strategy, articulated in the business plan, called for a redirection of effort to the low to mid or retail player which included completion of the upgrading of the Atlantic City facility by a capital spending program, the purchase of more modern slot machines, a slot rating program, a jackpot game, the opening of the “Beverly Hills Buffet”, which would sell food at a cheaper price, an entertainment strategy that focused less on star attractions and more on revues. (TR2 at 16). The business plan also assumed that the Taj Mahal casino would open some time in the early second quarter of 1990, and that the Taj Mahal would have a beneficial effect on traffic at that end of the Boardwalk that would be helpful to Resorts (located next door). (TR2 at 17). Alvarez testified that this led to the assumption that in 1990 the market share for 1990 would be 7.4%, and from 1991 to 1995 would be 7.2%. (TR2 at 17). The assumption was that Resorts would lose market share while the casino market was growing because of the opening of the Taj Mahal, but that Resorts would not lose as much as the other casinos because of its proximity to the Taj Mahal and the implementation of these marketing strategies along with the upgrading of the Resorts facility. (TR2 at 17-18). Alvarez testified that the capital spending plan was a central part of the business plan which called for spending $35 million in 1990, in addition to what had been spent in 1989. (TR2 at 19). Certain cost reduction activities were also included in the business plan, including the discontinuation of certain promotional activities directed toward “high rollers” which had not proven profitable. (TR2 at 19-20). The business plan also assumed that fixed costs, including payroll and other expenses would decline and a cost reduction program would be implemented. (TR2 at 20).

Alvarez testified that the development of the business plan began sometime around September 19, 1989 and was completed in late December 1989. (TR2 at 21). He also testified that he had continued to monitor the results of operations and more recently developed a latest thinking forecast which took the results of the first five months of operations in 1990 and compared them to the business plan. (TR2 at 21-22). Alvarez also testified that in his view the present management of Resorts and its subsidiaries “can deliver these numbers” in the business plan. (TR2 at 22). Alvarez testified that the business plan was contained in the Debtors’ Disclosure Statement as Exhibit C. (TR2 at 23). (D-9).

Alvarez testified regarding the projected cash flow statements, projected Debt Pay-down and Book Value Schedule, Projected Capitalization Tables, and Projected Income Statements, that appear in Exhibit C to the Debtors’ Disclosure Statement. (TR2 at 25). This analysis developed four separate

*439

cases: (1) the “base case” with the assumption that the Resorts Bahamas would be sold at the end of year two (1991) for $250 million (Case No. 1); (2) the base case with the assumption that the Resorts Bahamas would be sold at the end of year two (1991) for $300 million (Case No. 2); (3) the “improved operating assumptions” case with the further assumption that the Resorts Bahamas would be sold at the end of year two (1991) for $250 million (Case No. 3); and (4) the “improved operating assumptions” case with the further assumption that the Resorts Bahamas would be sold at the end of year two (1991) for $300 million (Case No. 4). (TR2 at 25-26). Alvarez testified that cases three and four contained improved operating assumptions as they pertain to the Atlantic City operations, including higher earnings before depreciation and interest and taxes (“EBDIT”) in the years 1992 to 1994 for the Atlantic City operations based on the assumption of a slightly greater market share in 1992 to 1994 and slightly less payroll dollars. Alvarez testified that the “base cases” represented what he believes is the most likely numbers to occur in the next five years, while the projections in the “improved operating assumptions” case, while not improbable, are less likely to occur. (TR2 at 27-28). Alvarez explained that the base case reflects the base operating assumptions that were jointly developed with Debtors' management, along with the assumption on the sale of the Bahamas. Alvarez further testified that the Debtors’ operations continue to be monitored and have resulted in a “latest thinking forecast” developed as of July 9, 1990. (TR2 at 28). Alvarez testified that in the first five months of 1990, Resorts Atlantic City had generated $3.8 million EBDIT, contrasted to a loss of $400,000.00 that was projected in the business plan. (TR2 at 29). Alvarez testified that the current thinking is that Resorts Atlantic City will still make 24 million dollars for the year, and that there is going to be less EBDIT for the remaining seven months of 1990 offsetting the gain experienced in the first five months. (TR2 at 30). Alvarez testified that in the first five months the revenues generated were lower than those projected in the business plan as compared to last year (although the business plan projected lower revenues in those months over last year), caused in part by a delay in the capital spending program, a delay in opening the Beverly Hills Buffet, and a delay in implementing the slot rating program, but that the “bottom line”' was better due to expense reductions, primarily lower promotional expenses. (TR2 at 30). Alvarez also testified that the business plan included a $3.5 million contingency. (TR2 at 30). The budget for operating the property was $27.5 million. Alvarez also testified that based on the latest thinking forecast the base cases continue to be the most likely number that will occur, particularly with regard to the EBDITS. (TR2 at 33). Alvarez testified that Merv Griffin is to contribute $26 million to the Debtors, $15 million at confirmation and $11 million one year later. Alvarez also testified that the $26 million was a crucial part of achieving the business plan and allowing the company to continue with its capital spending program, necessary to achieve that business plan. (TR2 at 33-34). Alvarez testified that according to the base case, Case No. 1, the ending cash is $15.5 million and that if Merv Griffin were not to contribute the aforesaid $15 million one would have to develop a different plan, with a slower capital spending plan and delay in the turnaround of the EBDIT numbers. (TR2 at 34-35). Alvarez also testified that Merv Griffin is involved in the Debtors’ marketing strategy at several levels, including the association of his name with the property, performing at the premises, entertaining customers, and spending time with the employees. (TR2 at 35). Alvarez testified that if Griffin were not a part of the marketing strategy, Alvarez & Marsal would have to reevaluate the entire business plan. TR2 at 35). Alvarez testified that in the last few months the strategies are “starting to pay off” with a growth in market share in the slot area and that a change in leadership would be in his opinion harmful to the company. (TR2 at 36).

Alvarez also testified regarding the capital structure that will result if the Plan of Reorganization is confirmed. (TR2 at 36).

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Alvarez testified that under the Reorganization Plan the Debtor is issuing new debt: the $187.5 million Series A Note, the $137.5 million Series B Note, the $105.3 million Showboat Note. (TR2 at 37). Alvarez testified that the only mandatory cash paying note was the Showboat Note where effectively the proceeds that the Debtor receives from the Showboat lease are passed on to the new holders of the Showboat Notes. (TR2 at 37). The other two notes, Series A and Series B Notes, have a component known as “pay in kind” (“PIK”) interest. (TR2 at 37). The terms of the Series A Notes and the Series B Notes provide that Resorts may pay all or any portion of the interest accruing on the Notes by issuing additional Series Notes in lieu of cash in satisfaction of interest payments due.

See

Disclosure Statement, Section X(B)(2) and (C)(2). (D-9). Alvarez testified that this element is central to the Reorganization Plan insofar as it allows the company to execute capital operating upgrades to allow it to compete and achieve its goals in the marketplace, and to sell the Bahamas without a “drop dead date”, so to realize good value from that asset. (TR2 at 37).

Alvarez testified that while the projections show the Debtor paying more than the interest payments on the Showboat notes over the next four years, the only mandatory payments will be in conjunction with the Showboat Note. (TR2 at 38). Alvarez also testified that the Plan, which contemplates a sale of Resorts Bahamas during the next four years, will result in a capital structure where the debt remaining will be significantly lower. (TR2 at 39). For instance, if the Resorts Bahamas is sold for $250 million, there would remain under $100 million in debt on the Series A and Series B notes, which would need to be refinanced. (TR2 at 39-40). Alvarez testified that in the base case there would be $54 million of debt in the end of 1993, and $76 million of debt at the end of 1992. (TR2 at 40). Alvarez also testified that if the Resorts Bahamas operations were not sold during the next four years, the EB-DITS would be greater than those contained in the projections because the company would have EBDIT for the Bahamas. (TR2 at 40-41).

Alvarez testified that for the first five months of 1990 market growth in Atlantic City was approximately 3% and the industry growth for the first six months of this year to date was 4.9%. (TR2 at 75). Alvarez also testified that Resorts’ market share was 7.5% for the first three weeks of July 1990. (TR2 at 50). Alvarez testified that Resorts’ market share for the first quarter 1990 was approximately 6.9%, in April 1990 — 6.8%, in May 1990 — 6.1%, June 1990 — 7.1%, July 1990 — 7.5%, as against projected market share in the business plan of 7.4% for 1990 and 7.2% for 1991 and thereafter. (TR2 at 49-50). Alvarez stated that the increase in Resorts’ market share was primarily due to a growth in slot share and that revenue from table games has decreased fairly substantially, attributed primarily to the fact that the casino hotel rooms had not been completed in time. (TR2 at 50). Alvarez also stated that Resorts’ marketing program and business plan is a mix of table and slots, with a focus on slots. Alvarez also projected that for the balance of 1990, Resorts’ market share should be between 7.0 to 7.8%. (TR2 at 51). Alvarez also testified that if the market was flat and Resorts' market share was 7.0%, the $24 million base profit projected in the business plan would be at risk, however, if the market was flat and Resorts’ market share was at 7.8%, Resorts would “overperform the 24.” (TR2 at 53). Alvarez stated that if the market was flat and Resorts held its EBDIT through holding the expense line, there would be no impact on the base plan analysis for the subsequent four years. (TR2 at 54).

Alvarez also testified that for the first five months of 1990 revenues were down about 11% from last year, and the expectation for revenues for the next seven months would be down, as reflected by casino win, about 5%. (TR2 at 79, 81). He also stated that expenses for the rest of the year are projected to be reduced in excess of 10% from last year. (TR2 at 81).

Alvarez testified that for the first five months Resorts’ budget before the contin

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gency was approximately $85 million casino win, while the actual revenues figure was $79.5 million. (TR2 at 79). The expenses had been budgeted before the contingency at $94.9 million, while actual expenses were $86.4 million. (TR2 at 80). Alvarez also testified that Resorts had anticipated that its buffet program would be on line by April, which was delayed along with the slot rating program which impacted to decrease expenses. (TR2 at 100).

In connection with the Bahamas operation, Alvarez testified upon the entry of the Crystal Palace, a major competitor in the market, the market grew but Resorts Bahamas lost market share. Alvarez also testified that the Resorts Bahamas revenue have been increasing and that the most recent figures indicated that the Bahamas operation is holding market share. (TR2 at 153).

Alvarez testified that if the sale of the Bahamas operation takes place in accordance with the base plan, Case No. 1, (sale of the Bahamas at end of year two for $250 million), the debt left on the outstanding Series A and Series B Notes, other than the Showboat note, at the end of 1994 would be $51.8 million, which would be refinanced under a revolving credit facility, while if under the base case the Bahamas operation were sold for $300 million net at the end of year two, no revolver or refinance would be required. (TR2 at 216-217).

Alvarez also testified that the assumptions in the base cases for the sale of the Bahamas operation assumed that the figures of $250 million and $300 million of proceeds would be net of expenses of sale and transfer taxes. (TR2 at 191).

Alvarez also testified that as between revenue growth and EBDIT projections, EBDIT projections are more critical to the correctness of the business plan, since that it what is used for capital spending and the service of debt. Alvarez also testified that for the first five months of 1990 and for the June year to date EBDIT for the Bahamas and Atlantic City was ahead of the business plan projections.

Alvarez also testified that in the first five months of 1990, Resorts’ operation in Atlantic City and the Bahamas are ahead of plan, while capital spending is behind the plan, the timing of asset sales is ahead of plan, the ending cash number is significantly ahead of plan insofar as the company had $26.7 million in excess available house cash, while the business plan projected $9 million. Alvarez testified that EBDIT is projected to be behind plan for the last seven months of 1990, to end up at the same amount projected in the business plan. Based on these results, Alvarez stated that the numbers in the business plan were reasonable.

Charles M. Masson, an investment banker and a director and member of the financial restructuring group of Salomon Brothers also testified. (Transcript of July 26, 1990) (hereinafter “TR3 at-”). Masson conducted an analysis of the reorganization value of the assets for the debtor companies on the basis of intrinsic value and going concern value. (TR3 at 24). Masson explained reorganization value to mean a capitalization of the earning stream of an entity. (TR3 at 25). He also testified that an additional way to value the assets of a company was to value them in whatever fashion will reflect the market’s view of those assets. (TR3 at 25). Masson testified that these assets included in this case (1) the Atlantic City hotel and casino; (2) the Bahamas Paradise Island properties; (3) the Showboat lease; (4) various non-operating real estate properties in and around Atlantic City; and (5) miscellaneous assets, including Chalks Airlines, helicopters, and Intertel, a private investigation agency. (TR3 at 26). Masson testified that he valued Resorts’ Atlantic City hotel and casino at 100 to 134 million dollars. (TR3 at 30). The Bahamas Paradise Island properties were valued at from 225 to 324 million dollars. (TR3 at 33). The Showboat lease was valued at 75 to 80 million dollars. (TR3 at 34). The non-operating real estate properties in Atlantic City were valued at 20 to 30 million dollars. (TR3 at 38). The Debtors’ miscellaneous assets were valued at a range of 14 to 19 million dollars. (TR3 at 39). Masson aggregated the various values of these assets to arrive

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at an enterprise value of $434 to 587 million, with a midpoint of 510 million dollars. (TR3 at 40). Masson also testified regarding the value of the company’s debt. Mas-son testified that under the Plan of Reorganization, the principal face value of the debt was as follows: 191.8 million dollars for the Series A notes; 146.6 million dollars for the Series B notes; 105.3 million dollars for the Showboat note; and 2.4 million dollars of miscellaneous other debt, primarily capitalized leases. (TR3 at 43). Masson compared the face value of the debt with the trading values of the debt which he set forth as follows:

(1) Series A Notes — 70 to 75% of face value;

(2) Series B Notes — 80 to 86% of face value;

(3) Showboat Notes — 74 to 78% of face value;

(4) 2.4 million miscellaneous debt at par.

(TR3 at 44). Masson testified that to calculate equity one could take the value of the assets and subtract the face amount of the debt and arrive at an equity value under the Plan of 89.9 million dollars or $4.39 per share. (TR3 at 45). Masson testified that in his opinion the trading range of the shares of stock would be between $3.00 and $3.50 per share, with a midpoint of $3.25, on a fully distributed basis. (TR3 at 45).

Masson testified that under the Plan Merv Griffin’s contribution of 26 million dollars would be included in the value of all of the assets of the estate to produce an aggregate intrinsic value of $536 million. (TR3 at 48). Under this valuation the recoveries to the bondholders was as follows:

(1) GRI — 55.4% of $536 million

(2) RIFI — 16.7% of $536 million

(3) RII — 23.5% of $536 million

(4) Merv Griffin and others — 4.4% of $536 million

(TR3 at 48).

Masson also calculated on a cents per dollar basis how many cents per dollar of allowed claims each of the three bondholder classes would receive under the Plan on an “intrinsic value basis” under this valuation methodology:

(1) GRI — 86.4 cents per dollar of allowed claim

(2) RIFI — 40.7 cents per dollar of allowed claim

(3) RII — 32.6 cents per dollar of allowed claim

(TR3 at 49-50).

Masson also testified that the fair market value trading of these assets was $409 million, reached by combining the fair mar-két value trading of the debt securities which will be issued with the fair market or trading value of the common stock that will be issued by the company. (TR3 at 48-49). Masson explained that this figure represented the trading value of all of the securities that will be issued by Resorts under the Plan, plus $2.4 million of other securities which were valued at par. (TR3 at 177). That provides a lower value than the going concern or intrinsic value. Under this valuation the recoveries to the bondholders were as follows:

(1) GRI — 53.5% of $409 million

(2) RIFI — 17.5% of $409 million

(3) RII — 24.6% of $409 million

(4) Merv Griffin and others — 4.4% of $409 million

On cents per dollar of allowable claim, the bondholders recoveries on a “fair market value trading” basis are as follows:

(1) GRI — 63.6 cents per dollar of allowed claim

(2) RIFI — 32.6 cents per dollar of allowed claim

(3) RII — 26.1 cents per dollar of allowed claim

Masson also testified that under the Plan no class would receive more than 100 cents per dollar. (TR3 at 50-51).

Masson also did a liquidation value of the enterprise. (TR3 at 51). As part of that analysis, Salomon Brothers assumed that a trustee would be appointed and a liquidation would need to be accomplished in a six-month time frame. (TR3 at 52). Mas-son testified that such a scenario would in his opinion place the Debtors’ casino license in Atlantic City and the Bahamas in jeopardy and would be likely to create a diminu

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tion in cash flow and earnmgs that would taint the assets. (TR3 at 52-53). Masson testified that the gross liquidation value of the enterprise would be $310 million. (TR3 at 55). The Liquidation Valuation prepared by Salomon Brothers in the Disclosure Statement breaks down this valuation as follows:

Atlantic City Casino/Hotel Operations $ 80 million

Atlantic City Undeveloped Real Estate $ 15 million

Bahamas Casino Hotel Operations and Undeveloped Real Estate $140 million

Showboat Lease $ 65 million

Airline Assets $ 10 million

TOTAL $310 million

(See

D-9 at Exhibit D).

Masson also testified that an adjusted liquidation value in present value terms would be 300 million dollars or slightly less. (TR3 at 57).

Masson testified that under a liquidation analysis he examined the recoveries to creditors under four (4) different scenarios. (TR3 at 57-59).

(1) First, assuming that the GRI collateral and claims remained intact and that the GRI Noteholders would recover on those assets, and that the RII and RIFI claims remained as they now exist. (TR3 at 59).

(2) Second, assuming that the GRI creditors had their collateral avoided except to the extent of $125 million (the $125 million based on money that remained in the estate for working capital spending) with the balance of the GRI claims unsecured. (TR3 at 59).

(3) Third, assuming that the GRI and RII and RIFI creditors would be treated

pari passu

and the GRI security interest avoided by a fraudulent conveyance action. (TR3 at 60).

(4) Fourth, assuming that the GRI note-holders could be subordinated to the position of the RII and RIFI holders. (TR3 at 60).

Masson testified that under Scenario No. 1 (GRI sustaining lien collateral position), the GRI recovery would be 64 cents per dollar of allowed claims. The RII and RIFI holders would receive 15 cents per dollar of allowed claims. (T3 at 61).

Under Scenario No. 2 (GRI holding a partially secured position), the GRI recovery would be approximately 51 cents per dollar of allowed claim; RII and RIFI would recover 22.5 cents per dollar of allowed claim. (TR3 at 61).

Under Scenario No. 3 (all claims treated pari passu), all claims would receive 33 cents per dollar of allowed claim. (TR3 at 62).

Under Scenario No. 4 (the subordination of the GRI class), the RII and RIFI classes would receive a little more than 51 cents per dollar of allowed claim and the GRI holders would receive nothing. (TR3 at 62).

Masson undertook an analysis of recovery to the creditors under a liquidation in accordance with the same percentages under the Plan which produced the following percentages of recovery:

(1) GRI — 48.4 cents per dollar of allowed claims

(2) RIFI — 24.8 cents per dollar of allowed claims

(3) RII — 19.8 cents per dollar of allowed claims

(TR3 at 64).

Masson testified that an orderly sale process for the Bahamas properties would be approximately nine months, including two months to collect data and prepare to go to the market, three months taking the property to market, including face-to-face meetings with prospective purchasers, and four months bringing potential buyers to the Paradise Island site and allowing them to conduct due diligence, and conducting negotiations. (TR3 at 67-68, 75). Masson

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also testified that it was reasonable to expect to sell the Bahamas property within two years. (TR3 at 67, 76).

Masson testified that under the plan, at the end of four years there would be maturity on various bonds issued under the Plan and a balance to pay off depending upon the sale proceeds from the Bahamas property. (TR3 at 76-77). Masson testified that in the event the Bahamas sold for a net figure of $250 million at the maturity of the Series A and Series B notes approximately 50 or 51 million dollars would need to be refinanced. (TR3 at 77). Masson testified that he considered it an imminently reasonable assumption that a company generating 40 million dollars of cash flow could refinance 50 million dollars of debt at a reasonable interest rate. (TR3 at 77). Masson also testified that if there was 75 million dollars of debt left on those bonds in 1994 his opinion as to the refinancability of the bonds would be the same. (TR3 at 78).

Masson also testified that if the Bahamas were sold for $300 million, there would be a zero balance on the bonds. (TR3 at 78). In the event that the Bahamas was not sold, in 1994 a balance of 330 to 340 million dollars would remain on the bonds. (TR3 at 78). Masson testified that in his opinion it was not unreasonable to assume under that scenario that the bonds could be refinanced. (TR3 at 79).

Masson further testified that the values set forth herein were calculated as of the time of the Debtors’ Disclosure Statement, on or about April 16, 1990, but that there had not been any material impact on those values through the date of the confirmation hearings. (TR3 at 80).

Masson testified that he was not requested by the Debtors nor did he undertake to evaluate the value of fraudulent conveyance claims which the Debtor company might possess, or the Debtors’ ability to collect on notes which it held issued by the Griffin Company or Merv Griffin, or the value of claims that are to be placed in the litigation trust under the Plan, or Donald Trump’s ability to pay a judgment on any of the claims put in the litigation trust, or to value the agreement between Merv Griffin and the Debtor entities to use his likeness and name in marketing activities, or the value of that contract. (TR3 at 82). Masson also testified that in reaching his liquidation analysis he did not include a value for claims such as fraudulent conveyance claims or other claims Resorts may have against Merv Griffin or Donald Trump. (TR3 at 82-83).

Masson also testified that in valuing the Debtor, Salomon Brothers considered among other things, the market growth in the Atlantic City area which in Salomon Brothers’ view will be approximately 9% in 1990 and 6.5% in 1991, with no views as to market growth in the subsequent years. (TR3 at 86).

Masson also testified that he made no determination at any time whether Resorts was insolvent (TR3 at 125), nor did he value Resorts' management (TR3 at 152) or Resorts’ interest in the UURT tract (TR3 at 161).

Masson testified that he computed a corporate reorganization value for the Resorts entities based upon a capitalization of future earnings, and average future earnings for the Resorts entities for the next five years under the business plan in the Disclosure Statement. (TR3 at 192). The average future earnings generated as a result of that analysis was approximately $32 million. (TR3 at 193). The capitalization rate employed in that analysis was 9.1%, resulting in a multiplier of 11. (TR3 at 193). Utilizing a multiplier of 11 and average future earnings of $32 million, a reorganization value of $352 million was generated. (TR3 at 193). After making adjustments to that value, Masson testified that the reorganization value for Resorts was less than the intrinsic value developed of $536 million. (TR3 at 194). Masson testified that based on the reorganization value generated, the equity in New Resorts would still have a value greater than zero. (TR3 at 194). Masson also testified that in his opinion no reasonable investor other than Merv Griffin would purchase 21.5% of the equity in New Resorts for $26 million given the capital structure under the Plan. (TR3 at

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196). Although Masson did not undertake an independent valuation of the control of New Resorts that Mr. Griffin would receive under the Plan, Masson testified that the value of the equity (4.4 million shares of stock in New Resorts), including any premium for control, subject to all of the limitations contained in the Plan, was less than $26 million. (TR3 at 220).

The Debtors also presented the testimony of Mr. Bruce Karsh, senior vice president of Trust Company of the West, Chairman of the Official Combined Bondholders Committee of Resorts International, Inc. and Resorts International Financing, Inc. Karsh testified that his firm, Trust Company of the West, owned the 16%% RIFI Bonds. (TR1 at 263). Karsh also testified that his firm owned GRI bonds, which fact had been disclosed to the other members of the RII/RIFI Committee. (TR1 at 263). Karsh testified that the Committee retained professional advisors, the firm of Jones, Day, Reavis & Pogue, attorneys to the Committee and Chemical Bank, as its financial advisor. (TR1 at 265-266). Karsh testified that the Committee was aware of the principal potential claims that the RII/RIFI Bondholders had against the GRI Bondholders, Donald Trump and Merv Griffin. (TR1 at 267). Karsh testified that these claims were discussed by the Committee, including the possible settlement of such potential litigation. (TR1 at 268). Karsh testified that the Committee was concerned with the complexity of such litigation, the protracted nature of such litigation, possibly 4 to 5 years, and the impact such litigation would have on the debtor companies, including a concern that if litigation proceeded the value of the debtor company’s assets could deteriorate substantially, and that the Debtors’ licenses in Atlantic City and the Bahamas could potentially be lost, and the cost of such protracted litigation. (TR1 at 269). Karsh noted that while the Committee believed that it had a “pretty good case” against some defendants, the result was not free from doubt, the remedy or damages the Committee would receive not certain, as well as what the value of the debtor company would be at the end of lengthy litigation. (TR1 at 270). Karsh characterized the settlements proposed in the plan as necessary to an effective reorganization and that the proposal made in the Plan was acceptable to the Committee. (TR1 at 271-272). Karsh testified that the Committee considered Merv Griffin important to the debtor company, in terms of employee morale, and attracting gaming customers, and that the Committee wanted Griffin to continue as Chairman of Resorts and be involved in Resorts’ business. (TR1 at 274). Karsh testified that the Committee believed that the debtor company could emerge from Chapter 11 yet preserve claims against Donald Trump, but that it would be impossible for the debtor company to emerge from Chapter 11 without settling claims against Merv Griffin and the GRI Bondholders. (TR1 at 280). Karsh testified that in his opinion if the RII/RIFI Bondholders pursue litigation against the GRI Bondholders, the debtor company would remain in Chapter 11, which would be detrimental by way of increased costs, loss of key people and the potential for loss of gaming customers and the potential loss of the debtors’ gaming licenses. (TR1 at 348-349, 353). Karsh also testified that the RII/RIFI Committee had voted unanimously to support the Plan before the Court. (TR1 at 285).

In connection with the proposed settlement to release certain third parties, officers, directors, and professionals of the debtors, Karsh testified that the RII/RIFI Committee was concerned about the potential indemnity claims that may be asserted against Resorts and Merv Griffin. (TR1 at 369-410).

At the confirmation hearing a certain stipulation was entered into between counsel for the Trump Litigation Defendants and counsel for the Debtors and Alvarez & Marsal, Inc. as follows:

1. Neither Mr. Antonio Alvarez of Alvarez & Marsal, Inc. nor any employees or members of the firm of Alvarez & Marsal, Inc. prepared or otherwise conducted an analysis of any fraudulent conveyance claims that may be asserted by the Debtors against any persons or enti

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ties in connection with the acquisition in November 1988 of Resorts International, Inc. by The Griffin Company as well as all related transactions.

2. Neither Mr. Alvarez or any member of the firm of Alvarez & Marsal, Inc. prepared or otherwise conducted an analysis of the solvency of Resorts International, Inc. or any of its related or affiliated entities in connection with the acquisitions in November 1988 of Resorts International Inc. by The Griffin Company, as well as all related transactions.

3. Neither Mr. Alvarez nor any member of the firm of Alvarez & Marsal, Inc. prepared or made any determination of the value of any of the claims arising out of the transaction described in paragraphs 1 and 2.

(OT-1).

The following stipulation was entered into between counsel for the Trump Litigation Defendants, and the Combined Official Bondholders Committee and Mr. Arthur Newman:

1. That Mr. Arthur Newman of Chemical Bank, financial advisor to the Combined Official Bondholders Committee of RII and RIFI did not advise Christopher Whitney or any other employee or representative of the Debtors regarding: (1) fraudulent conveyance claims arising out of or relating to the acquisition of Resorts International, Inc. by The Griffin Company and all related transactions in November 1988; and (b) the solvency of the Debtors and affiliated companies at the time of and after the transactions described in subparagraph (a) above.

At the confirmation hearing, counsel for Trump raised an objection to the Court’s approval of the appointment of Mr. Kenneth R. Feinberg, Esquire as Litigation Trustee under the Plan. (Transcript of July 27, 1990 at 32) (hereinafter “TR4 at -”)•

The objection was based on the participation by Mr. Feinberg’s firm, Kaye Scho-ler Fierman, Hays & Handler, in negotiations relating to Mr. Trump’s own bank debt. (TR4 at 32). In this regard, counsel for Trump raised the issue of a potential conflict of interest. (TR4 at 37). Counsel for the Debtors and the GRI Noteholders Committee requested that the Court consider confirmation of the Plan, subject to the further approval of the litigation trustee and on the basis that the appointment of a litigation trustee was not essential until the initial distribution date or the effective date, when the causes of action will pass into the trust. (TR4 at 35-36). At the confirmation hearing this Court bifurcated the confirmation hearing and the approval of appointment of the litigation trustee, leaving the determination of the appointment of the litigation trustee to subsequent, separate proceedings. (TR4 at 39).

The Debtors seek confirmation of this Plan pursuant to § 1129(a) and (b) of the Bankruptcy Code. Because impaired Classes 4A, 4B, 4C, 5, 6 and 7 are deemed to have rejected the Plan, it does not satisfy the requirement of § 1129(a)(8) that each impaired class of claims or interests has voted to accept the Plan. Section 1129(b), however, provides for confirmation over the dissent of one or more impaired class if the Plan meets other additional requirements.

Section § 1129(a)(1) provides:

(a) The court shall confirm a plan only if all of the following requirements are met:

(1) The plan complies with the applicable provisions of this title.

This court must here determine whether the plan complies with other applicable provisions of the Bankruptcy Code.

Section 1122 of the Bankruptcy Code requires:

(a) Except as provided in subsection (b) of this section, a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interest of such class.

(b) A plan may designate a separate class of claims consisting only of every unsecured claim that is less than or reduced to an amount that the court approves as reasonable and necessary for administrative convenience.

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Section 1122 of the Code requires that all claims which are classed together be substantially similar. Such a requirement insures that large claims of differing legal natures do not dictate the other claims within a class.

Matter of Rochem, Ltd.,

58 B.R. 641, 642 (Bankr.D.N.J.1985).

In this respect, Section 1123(a)(4) also provides:

(a) Notwithstanding any other applicable nonbankruptcy law, a plan shall—

(4) provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest.

The Court of Appeals for the District of Columbia in

In re AOV Industries, Inc.,

792 F.2d 1140 (D.C.Cir.1986) stated:

Even though neither the Code nor the legislative history precisely defines the standards of equal treatment, the most conspicuous inequality that § 1123(a)(4) prohibits is payment of different percentage settlements to co-class members. The other side of the coin of unequal payment, however, has to be unequal consideration tendered for equal payment. It is disparate treatment when members of a common class are required to tender more valuable consideration— be it their claim against specific property of the debtor or some other cognizable chose in action exchange for the same percentage of recovery.

In re AOV Industries, Inc., supra,

792 F.2d at 1152 .

See also In re Monroe Well Service, Inc.,

80 B.R. 324, 335 (Bankr.E.D.Pa.1987).

This is not to be interpreted as requiring precise equality of treatment, but rather, some approximate measure since there is no statutory obligation upon plan proponents to quantify exactly what each class member is relinquishing by a release.

In re Monroe Well Service, Inc., supra,

80 B.R. at 335 . As the Court of Appeals stated in

AOV:

We do not hold that all class members must be treated precisely the same in all respects. Nothing in this opinion restricts the bankruptcy court’s broad discretion to approve classification and distribution plans, even though some class members may have disputed claims, or a stronger defense than others.

In re AOV Industries, Inc., supra,

792 F.2d at 1154 .

See also, In re Monroe Well Service, Inc., supra,

80 B.R. at 335 .

As set forth at length above the plan designates ten classes of claims and interests, with varying payment provisions

(See

Article II of Plan). Greenfield & Chemicles here asserts a claim for unpaid attorneys’ fees in an unliquidated amount, arising out of litigation commenced in the Chancery Court for the State of Delaware, and the United States District Court for the District of New Jersey brought in connection with the offer by Donald Trump to purchase the outstanding Class A shares of Resorts. During the course of those actions, the parties entered into an Amended Stipulation and Agreement of Compromise and Settlement. With respect to classification, Greenfield & Chemicles argues that the Plan improperly includes its claim in Class 3C because other members of Class 3C are beneficiaries of the Litigation Trust, and as a result of Greenfield & Chemicles’ release of claims against Trump, members of Class 3C have the potential to receive more than Greenfield & Chemicles. The Court rejects this argument for several reasons. First, it is clear that Section 1122 only requires that claims in a class be substantially similar.

See AOV, supra.

The releases contained in the subject stipulation, while affecting any claim by Greenfield & Chemicles arising out of the prior shareholder litigation, have no effect on Greenfield & Chemicles’ unsecured unliqui-dated claim against Resorts.

11

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Kenwood Dual Fund argues that it appears that the Committee consists disproportionately of entities that acquired their debentures

after

the alleged fraudulent conveyances who may not have fraudulent conveyance claims,

citing Kupetz v. Wolf,

845 F.2d 842 , 849-50 n. 16 (9th Cir.1988).

Kenwood also argues that since the Plan seeks to release litigation claims of RIFI Debenture holders

(citing

Exhibit 1.72 to Plan), and does not differentiate between holders who purchased their interests prior to the leveraged buy-out from those who purchased their interests after the leveraged buy-out, the Plan raises disparate treatment issues under the case of

In re AOV Industries, Inc.,

792 F.2d 1140, 1152 (D.C.Cir.1986).

To the extent that this presents a classification issue, the Court notes that the holding of

AOV, supra

does not demand that all class members must be treated precisely the same in all respects but rather that there be an approximate measure of equality. It is also clear that even though some class members may have stronger claims, or stronger defenses than others, they may be classified together so long as their claims are substantially similar and their treatment is approximately equal.

The court finds that under this plan the claims of each class are substantially similar to meet the requirements of § 1122(a).

A plan must also comply with the requirements of § 1123 which provides:

(a) Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall— ■

(1) designate, subject to section 1122 of this title, classes of claims, other than claims of a kind specified in section 507(a)(1), 507(a)(2), or 507(a)(7) of this title and classes of interests;

(2) specify any class of claims or interests that is not impaired under the plan;

(3) specify the treatment of any class of claims or interests that is impaired under the plan;

(4) provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest;

(5) provide adequate means for the plan’s implementation, such as—

(A) retention by the debtor of all or any part of the property of the estate;

(B) transfer of all or any part of the property of the estate to one or more

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entities, whether organized before or after the confirmation of such plan;

(C) merger or consolidation of the debtor with one or more persons;

(D) sale of all or any part of the property of the estate, either subject to or free of any lien, or the distribution of all or any part of the property of the estate among those having an interest in such property of the estate;

(E) satisfaction or modification of any lien;

(F) cancellation or modification of any indenture or similar instrument;

(G) curing or waiving of any default;

(H) extension of a maturity date or a change in an interest rate or other term of outstanding securities;

(I) amendment of the debtor’s charter; or

(J) issuance of securities of the debt- or, or of any entity referred to in sub-paragraph (B) or (C) of this paragraph, for cash, for property, for existing securities, or in exchange for claims or interests, or for any other appropriate purpose;

(6) provide for the inclusion in the charter of the debtor, if the debtor is a corporation, or of any corporation referred to in paragraph (5)(B) or (5)(C) of this subsection, of a provision prohibiting the issuance of nonvoting equity securities, and providing, as to the several classes of securities possessing voting power, an appropriate distribution of such power among such classes, including, in the case of any class of equity securities having a preference over another class of equity securities with respect to dividends, adequate provisions for the election of directors representing such preferred class in the event of default in the payment of such dividends; and

(7) contain only provisions that are consistent with the interests of creditors and equity security holders and with public policy with respect to the manner of selection of any officer, director, or trustee under the plan and any successor to such officer, director, or trustee.

11 U.S.C. § 1123 (a).

Claims and interests are classified in Article II of the plan. The Plan does not classify claims of the type described in Sections 507(a)(1), 507(a)(2) and 507(a)(7).

(See

Plan, Article III).

Article IV of the Plan sets forth the treatment of all classes of the Plan and Article V, Section 5.1 of the Plan indicates that Classes 1, 2C, 2D, 2E, 2F, 2G, 3A, 8, 9 and 10 are not impaired. Article VI, Section 6.1 of the Plan indicates that Classes 2A, 2B, 3B, 3C, 4A, 4B, 4C, 5, 6 and 7 are impaired under the Plan. Article IV of the Plan sets forth the treatment of those impaired classes. Article IV of the Plan provides the same treatment for each claims or interest of a particular class in compliance with Section 1123(a)(4).

Section 1123(a)(5) requires that the Plan “provide adequate means for the plan’s implementation.”

The means for implementation of the Plan are set forth in various provisions of the Plan: the retention by New Resorts of all of the property of the Debtors’ estates (Article XIII, Section 13.1) except where the Plan specifically provides otherwise; the assignment of the Debtors’ claims against the Trump Litigation Defendants to the Litigation Trustee (Article VII, Section 7.10(a)); the merger of GRH and RIFI into New Resorts (Article VII, Section 7.2(a)); the termination of the Indentures governing the GRI Notes, RII Debentures, and RIFI Debentures and cancellation of such Notes and Debentures (Article VII, Section 7.5(a) and (b)); the curing of any defaults under the secured claims in Classes 2C through 2G (Article IV, Sections 4.3(c)-(g) and under assumed Executory Contracts (Article X, Section 10.2); the issuance of the Series A Notes, and the capital stock of New Resorts (Article VII, Sections 7.12, 7.13 and 7.14) in exchange for the claims of the holders of the GRI Notes, RIFI Debentures and RII Debentures and approximately $23.3 million in new value contributions from Merv Griffin.

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In accordance with section 1123(a)(6), Article VII, Section 7.3 of the Plan provides that New Resorts and New GRI shall adopt or amend their certificates of incorporation and bylaws to prohibit the issuance of nonvoting equity securities. Finally, in compliance with section 1123(a)(7), the Plan contains only provisions consistent with the interests of creditors and equity security holders as well as public policy with respect to the manner of selection of any officer, director or trustee under the Plan. Article VIII, Section 8.2 of the Plan provides that as of the Effective Date, Griffin shall be a member and the Chairman of the Board of Directors of New Resorts, Griffin shall have designated three other directors who shall be reasonably satisfactory to the Selection Committee

12

and the Selection Committee shall have designated the remaining two directors who shall be reasonably satisfactory to Griffin. Set forth in Section XIV of the Disclosure Statement is the biographical information with respect to the directors selected in accordance with these provisions. The directors will be classified into three staggered classes of two each, with terms ending at the annual shareholders meeting in 1991, 1992 and 1993, at which successors will be elected in accordance with the Restated Certificate of Incorporation of New Resorts (Exhibit 7.3A to Plan). Any vacancies will be filled by replacements appointed by the remaining members of the Board of Directors. The management as set forth in the Plan, Restated Certificate of Incorporation (Exhibit 7.3A to Plan); Griffin License and Services Agreement (Exhibit 9.2 to Plan) and Han-lon Employment Agreement (Exhibit 9.3A to Plan) are included in the Plan.

Here the Court notes that objections have been raised to the employment agreement of David P. Hanlon, Chief Executive Officer, and the appointment and compensation of a member of the Bondholders Committee to serve as an Advisory Director of New Resorts. In regard to the Hanlon employment agreement, the Court, however, finds based on the testimony presented here that the continuation of present management is essential to the ongoing operations of the Debtors, particularly in respect to its meeting the projections set forth in the business plan including the sale of the Bahamas. Nor have there been any facts presented to the Court to determine that the expansion of the Board of Directors to include an Advisory Director should be disapproved by this Court.

Section 1123(b) specifies certain permissive provisions that may be included in the Plan. Subsection (1) provides that a plan may impair or leave unimpaired any class of secured or unsecured claims or interests. As noted above, Articles IV, V and VI of the Plan identifies 2A, 2B, 3B, 3C, 4A, 4B, 4C, 5, 6 and 7 as impaired classes; all other classes are unimpaired, Classes 1, 2C, 2D, 2E, 2F, 2G, 3A, 8, 9 and 10.

Article X of the Plan provides that except for executory contracts whose terms are the subject of litigation in this Court, effective on the Confirmation Date, all Ex-ecutory Contracts listed in Exhibit 10.1 to the Plan will be rejected, all remaining Executory Contracts will be assumed, and all defaults under such assumed Executory Contracts will be cured in accordance with Section 365, as allowed by § 1123(b)(2).

Section 1123(b)(3) permits a Plan to provide for the retention, enforcement, settlement or adjustment by the debtor or by an appointed representative of the estate of any claim or interest belonging to the debt- or or the estate. Article VII, Section 7.10(a) of the Plan provides that the Debtors shall take all necessary steps to establish the Litigation Trust, providing for the retention, preservation and enforcement by the Litigation Trustee, as a representative of the estate, of all of the Debtors’ claims against the Trump Litigation Defendants.

Article VII, Section 7.10(h) of the plan provides for the settlement, compromise and extinguishment of all of the Debtors’ claims against the GRI Noteholders, Griffin, Morgan Guaranty Trust Company of

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New York, and other third parties, upon confirmation and consummation of the Plan in consideration for certain concessions and contributions provided for in the Plan.

Compromises are “a normal part of the process of reorganization.”

See Protective Committee for Independent Stockholders of TMT Trailer Ferry Inc. v. Anderson,

390 U.S. 414 , 88 S.Ct. 1157 , 20 L.Ed.2d 1 ,

reh’g denied

391 U.S. 909 , 88 S.Ct. 1649 , 20 L.Ed.2d 425 (1968);

Case v. Los Angeles Lumber Products Co.,

308 U.S. 106, 130 , 60 S.Ct. 1, 14 , 84 L.Ed. 110 (1939),

reh’g denied

308 U.S. 637 , 60 S.Ct. 258 , 84 L.Ed. 529 (1939). The United States Supreme Court in the case of

Protective Committee for Independent Stockholders of TMT Trailer Ferry Inc. v. Anderson, supra

set forth the standard for court approval of a compromise or settlement:

In administering reorganization proceedings in an economical and practical manner it will often be wise to arrange the settlement of claims as to which there are substantial and reasonable doubts. At the same time, however, it is essential that every important determination in reorganization proceedings receive the “informed, independent judgment” of the bankruptcy court.

National Surety Co. v. Coriell,

289 U.S. 426, 436 , 53 S.Ct. 678, 682 , 77 L.Ed. 1300 (1933). The requirements of §§ 174 and 221(2) of Chapter X, 52 Stat. 891 , 897, 11 U.S.C. §§ 574 , 621(2), that plans of reorganization be both “fair and equitable,” apply to compromises just as to other aspects of reorganizations.

Ashbach v. Kirtley,

289 F.2d 159 (C.A. 8th Cir.1961);

Conway v. Silesian-American Corp.,

186 F.2d 201 (C.A.2d Cir.1950). The fact that courts do not ordinarily scrutinize the merits of compromises involved in suits between individual litigants cannot affect the duty of a bankruptcy court to determine that a proposed compromise forming part of a reorganization plan is fair and equitable.

In re Chicago Rapid Transit Co.,

196 F.2d 484 (C.A. 7th Cir.1952). There can be no informed and independent judgment as to whether a proposed compromise is fair and equitable until the bankruptcy judge has apprised himself of all facts necessary for an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated. Further, the judge should form an educated estimate of the complexity, expense, and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise. Basic to this process in every instance, of course, is the need to compare the terms of the compromise with the likely rewards of litigation.

390 U.S. at 424-425 , 88 S.Ct. at 1163.

Whether to approve an application to compromise a matter is within the discretion of the court, which should approve a compromise after considering all the factors involved, and only if it is in the best interests of the estate.

In re Hallet,

33 B.R. 564, 565 (Bkrtcy.D.Me.1983). Factors to be considered by the court include: (1) the probability of success of the litigation; (2) the difficulties of discovery; (3) the complexity, expense and delay incurred by the litigation, and; (4) the paramount interest of the creditors.

In re Continental Investment Corp.,

637 F.2d 8, 11 (1st Cir.1980).

See also Drexel v. Loomis,

35 F.2d 800, 806 (8th Cir.1929). While creditors’ objections are not controlling, emphasis is placed on the paramount interests of creditors and proper deference given to reasonable views set forth in their objections.

See In re Hallet,

33 B.R. 564, 566 (Bkrtcy.D.Me.1983).

The Supreme Court in

Protective Committee, supra

rejected the notion that claims that the alternative was extensive litigation at heavy expense and unnecessary delay was sufficient to conclude that a settlement was “fair and equitable”:

If the quoted statement of the trial court had been the result of an adequate and intelligent consideration of the merits of the claims, the difficulties of pursuing them, the potential harm to the debt- or’s estate caused by delay, and the fairness of the terms of settlement, then it would without question have been justifi

*452

able to approve the proposed compromises. It is essential, however, that a reviewing court have some basis - for distinguishing between well-reasoned conclusions arrived at after a comprehensive consideration of all relevant factors, and mere boilerplate approval phrased in appropriate language but unsupported by evaluation of the facts or analysis of the law. Here there is no explanation of how the strengths and weaknesses of the debtor’s causes of action were evaluated or upon what grounds it was concluded that a settlement which allowed the creditor’s claims in major part was “fair and equitable.” Although we are told that the alternative to settlement was “extensive litigation at heavy expense and unnecessary delay,” there is no evidence that this conclusion was based upon an educated estimate of the complexity, expense, and likely duration of the litigation. Litigation and delay are always the alternative to settlement, and whether that alternative is worth pursuing necessarily depends upon a reasoned judgment as to the probable outcome of litigation.

390 U.S. at 434 , 88 S.Ct. at 1168.

Bankruptcy Rule 9019(a) provides in relevant part:

(a) Compromise. On motion by the trustee and after a hearing on notice to creditors, the debtor and indenture trustees as provided in Rule 2002(a) and to such other entities as the court may designate, the court may approve a compromise or settlement

Debtors’ Plan proposes what its proponents have termed as a “global settlement” of claims against various parties in connection with the acquisition of Resorts International, Inc. by Griffco Resorts Holding, Inc., formerly The Griffin Company (TGC) which was accomplished through a series of transactions commonly referred to as a leveraged buyout. The proponents of the Plan have alleged that the filing of the bankruptcy petitions by and against the Debtors created the potential for various suits seeking to set aside or void some or all of the transaction which occurred in connection with the acquisition of Resorts. These potential causes of action include actions based upon the fraudulent conveyance and preference provisions of the Bankruptcy Code and state fraudulent transfer claims. The Plan provides for the “global settlement” of all potential litigation with Griffin and TGC (“the Griffin Settlement”) and the GRI Noteholders (“the GRI Noteholders’ Settlement”) including fraudulent conveyance, preference and equitable subordination actions arising out of the acquisition of Resorts.

13

Section 7.10(h) of the Plan provides:

(h) All claims and causes of action of any of the Reorganizing Entities, whether as debtors or debtors in possession, and all of their Affiliates (i) against holders of GRI Notes in their capacity as such, to the extent such claims and causes of action arise out of or relate to the Acquisition, or (ii) against Griffin (except with respect to the promissory note and letter of credit provided for in Section 9.1 hereof), the Morgan Bank, the Released Defendants

14

or their respective Affiliates, agents, accountants, at

*453

torneys, advisers, employees or other representatives or, in the case of the Morgan Bank, its officers and directors, shall be deemed to have been settled, compromised and extinguished by the confirmation of this Plan effective as of the Effective Date. It is the intention of the Proponents that all claims settled, compromised and extinguished pursuant to the Plan shall be deemed to have been actually adjudicated.

Proponents of the Plan and counsel for the committees have asserted in their mem-oranda that under the terms of the Griffin Settlement, in exchange for the Debtors’ release of all claims against Griffin, TGC, and certain other persons and entities, Griffin will, among other things, (1) enter into the License and Service Agreement, requiring Griffin to serve as Chairman of New Resorts’ Board of Directors and granting New Resorts a non-exclusive license to use Griffin’s name and likeness, (2) waive his $10 million claim for subrogation with respect to a letter of credit drawn to pay interest on the mortgage notes, (3) contribute all of TGC’s shares in Resorts by means of a merger between TGC and a newly created subsidiary of Resorts, and (4) Griffin will concurrently contribute approximately $26 million in cash and a note in exchange for approximately 21.5% of the capital stock of New Resorts. In addition, as part of this global settlement, Griffin will also (1) create a $2.5 million fund in which RIFI Debentureholders can share by agreeing to exchange releases with Griffin and others, and (2) create a fund of 500,000 shares of the capital stock of New Resorts in which GRI Noteholders can share by agreeing to exchange releases with Griffin and others.

With respect to the GRI Noteholders Settlement, counsel for the GRI Noteholders Committee asserts that the Plan provides that in consideration for the releases of all of the Debtors’ direct and derivative claims against them, the GRI Noteholders will exchange their GRI Notes for new secured debt, with a present value that is significantly less than the aggregate amount of their existing GRI Notes, secured by collateral, the bulk of which will be shares on a

pari passu

basis with the new secured debt issued to the RII and RIFI Debenture-holders under the Plan. (See GRI Note-holders Brief at page 4-5).

In a memorandum in support of the settlement of claims, the Combined Official Bondholders’ Committee have summarized the claims which will be compromised under the plan as follows:

A.

The Claims Which Have Been Compromised

The Claims for relief which have been compromised by the Plan arise out of several related transactions:

1. On or about November 15, 1988, GRI sold $325 million in noted (the “GRI Notes”) to the GRI Noteholders. The GRI Notes are secured by certain collateral, including a first mortgage on the Resorts Casino Hotel in Atlantic City and, in the case of some of the GRI Notes, a $50 million first mortgage on certain of Resorts’ Bahamian operating properties and a pledge of 66% of the capital stock of Resorts International (Bahamas) 1984 Limited (“RIB”).

2. From November 15 to 17, 1988, Resorts and its subsidiary, Resorts International Hotel, Inc. (“RIH”) paid $50 million to Donald Trump (“Trump”), who transferred his Class B Resorts shares to Griffin Co. The structure of this payment was a purported $15 million “loan” from Resorts to Griffin Co. and a purported $35 million “loan” from RIH to Griffin Co., both on November 17, 1988. The proceeds of those purported loans were then utilized to repay a two-day bridge loan from The Morgan Bank, which had financed the purchase of purportedly $50 million of Trump’s Class B shares. (Griffin Co. paid another $46 million to Trump for those shares).

3. On November 16, 1988, Resorts and its subsidiaries paid approximately $63.7 million under a “Termination Agreement” to Trump Hotel Corporation, of which $60.7 million was purportedly to terminate a “Services Agreement” and a related license agreement

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and $3 million represented accrued construction fees and reimbursable costs.

4. On November 16, 1988, a subsidiary of Resorts sold the hotel and related assets now known as “Trump Taj Mahal” to Trump Taj Mahal Associates Limited partnership purportedly for a payment of $273 million.

The Plan compromises all avoidance actions against the Griffin Noteholders, Griffin Co., Griffin and The Morgan Bank arising out of these transactions, yet at the same time reserves all claims against Trump and the Trump entities. These avoidance actions would include claims under Section 548 of the Bankruptcy Code and the UFCA seeking to avoid (a) the Debtors’ obligations with respect to the GRI Note, (b) the liens securing the GRI Notes, and (c) the transfer of $50 million by Resorts and RIH on November 17, 1988. The remainder of this memorandum of law will refer collectively to the avoidance actions which have been compromised as the “Avoidance Actions.”

In consideration for the compromise of the Avoidance Actions, the GRI Note-holders will exchange their GRI Notes for new secured debt, with a present value that is significantly less than the aggregate amount of the existing GRI Notes, secured by collateral, the bulk of which will be shared on a

pari passu

basis with new secured debt issued to the Resorts and RIB bondholders under the Plan.

In exchange for the Debtors’ release of all claims they may have, directly or derivatively on behalf of the Resorts and RIF bondholders, against Griffin, Griffin Co. and certain other persons and entities, Griffin will, among other things: (1) enter into a License and Services Agreement, requiring Griffin to serve as Chairman of New Resorts’ Board of Directors and granting New Resorts a license to use Griffin’s name and likeness, (2) waive his $10 million claim for subrogation with respect to a letter of credit drawn to pay interest on the Mortgage Notes, (3) contribute all of the stock of Griffin Co. to New Resorts by means of a merger of Griffin Co. into a newly created subsidiary, and (4) concurrently contribute approximately $26 million in cash and a note in exchange for approximately 21.5% of the capital stock of New Resorts. In order to achieve a global settlement, Griffin will also (1) create a $2.5 million fund in which RIF bondholders can share by volunteering to exchange releases with Griffin and others.

In essence, then, the compromise and settlement of the Avoidance Actions achieves the global settlement necessary to enable the Debtors’ herein to emerge from chapter 11 as a viable economic entity, yet, at the same time, reserves all claims against Trump and Trump’s affiliates.

(Combined Official Bondholders’ Committee Memorandum In Support of Confirmation of Debtors’ Second Amended Joint Plan of Reorganization, pp. 5-8).

As noted earlier, the Plan provides for the Debtors’s release of Griffin from potential claims relating to the leveraged buyout of Resorts. The Debtors have identified several potential claims in favor of Resorts and RIH against TGC and Griffin which may have arisen from the acquisition transactions.

The Debtors as well as the GRI Note-holders and the Combined Official Bondholders Committee have submitted memo-randa in support of the Griffin and GRI Noteholders settlements. These parties represent to this Court that the chief reason in support of the settlements is because potential litigation against The Griffin Company, Merv Griffin, the Morgan Bank and the holders of $325 million in notes sold by GRI to the general public would be speculative, protracted, and extremely costly.

These parties have framed the potential claims against Griffin and the GRI Note-holders as actions which arise from the acquisition transactions which arose from the leveraged buyout (LBO) of Resorts. These parties have identified potential actions based on fraudulent conveyance provision of the Uniform Fraudulent Conveyance [Transfer] Act and the Bankruptcy

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Code. The parties contend that the application of fraudulent transfers made in the ease of an LBO has not been the subject of a large body of consistent reported judicial decision. The parties contend that the caselaw applicable to the lawsuits against Griffin and GRI Noteholders is “... in many respects unsettled and evolving, and since some of the factual and policy issues raised by such a lawsuit would in all likelihood be vigorously disputed, the outcome of such a litigation would be uncertain.” (Combined Official Bondholders’ Committee Memorandum at p. 5).

The Debtors have outlined several potential claims in favor of Resorts and RIH and against TGC and potentially Griffin from the acquisition transactions:

(1) Resorts and RIH possess claims against TGC for nonpayment of its debt;

(2) TGC may be liable on the basis of a claim under fraudulent conveyance law on the grounds that the loans from RIH and Resorts to TGC were for less than fair or reasonably equivalent value, made while the transferees were insolvent; and

(3) Griffin may be personally liable by “piercing the corporate veil,” substantially consolidating Resorts and TGC, or holding Griffin personally liable as a beneficiary of transfers to TGC under § 550 of the Bankruptcy Code.

In order to determine whether the proposed settlements are fair, equitable and in the best interest of creditors, this Court must examine the probability of successful prosecution of these claims.

Protective Committee,

390 U.S. at 425 , 88 S.Ct. at 1163 .

The Debtors have argued that potential claims seeking to hold Griffin liable present difficult questions of law and fact. Debtors claim that in order to hold Griffin personally liable for repayment of the loans it will be necessary to “pierce the corporate veil” and look beyond TCG’s corporate identity or hold Griffin liable under § 550. Debtors have further argued that piercing the corporate veil is an extraordinary remedy, difficult to prove, with the burden of proof borne by the movant. This Court agrees that under applicable law, attempts to hold Griffin personally liable under a “corporate veil” theory would not be a clear cut case.

Corporate law in New Jersey is clear, “except in cases of fraud, injustice, or the like, courts will not pierce a corporate veil.”

State Dept. of Environmental Protection v. Ventron Corp.,

94 N.J. 473, 500 , 468 A.2d 150 (1983)

(citing Lyon v. Barrett,

89 N.J. 294, at 300 , 445 A.2d 1153 ). Fundamental to corporate law is the notion that the corporation and its shareholders are separate entities and “[e]ven in the presence of corporate dominance, liability generally is imposed only when the parent [or in this case, the controlling stockholder] has abused the privilege of incorporation by using the subsidiary to perpetuate a fraud or injustice, or otherwise to circumvent the law.” 94 N.J. at 501 , 468 A.2d 150 (citations omitted). This Court is mindful of the fact that the task of bringing such an action and the potential success of such claims presents an arduous although perhaps not impossible task for the Debtors.

The Debtors also argue to the Court that any attempts to substantially consolidate Resorts and TGC would be met with resistance by the courts, as it is also an extraordinary remedy. Debtors argue that the substantive consolidation of Resorts and TGC would require a showing among other things that the assets and functions of these entities have been commingled, the practical inability to separate assets and liabilities of affiliates, and the extent of reliance by creditors of one affiliate upon the creditor of another.

It is a well-settled tenet of bankruptcy law that “The power to consolidate should be used sparingly because of the possibility of unfair treatment of creditors of a corporate debtor who have dealt solely with that debtor without knowledge of its interrelationship with others.”

Chemical Bank New York Trust Co. v. Kheel,

369 F.2d 845, 847 (2d Cir.1966);

see generally Soviero v. The Franklin National Bank of Long Island,

328 F.2d 446 (2d Cir.1964).

This Court next turns to the proposed settlement of potential fraudulent convey-

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anee actions against Griffin and TGC. The Debtors argue that the loans from Resorts and RIH to TGC could be viewed as constructive fraudulent conveyances. In order to succeed under this theory requires a showing: (1) that at the time the relevant obligations were created or the transfer or pledge effected that GRI, RIH, RIB or Resorts received less than fair consideration or less than reasonable equivalent value for such obligation or transfer; and (2) was insolvent or rendered insolvent by the transfer; (3) was engaged or about to engage in a business or a transaction for which its remaining unencumbered property or assets constituted unreasonably small capital; or (4) intended to or believed that it would incur debts beyond its ability to pay as such debts matured or became due.

See

Uniform Fraudulent Conveyance Act (UFCA) adopted by New York as Debtor and Creditor Law § 270

et seq.

and the Uniform Fraudulent Transfer Act (UFTA), adopted by New Jersey as N.J.Stat. 25:2-20

et seq.

The Debtors have identified some of the difficult tasks that it may encounter in bringing a fraudulent conveyance claim including proving the elements set forth above. The Debtors have also have identified some of the difficulties that they possibly face in choosing among the state fraudulent conveyance statutes under which to prosecute potential actions. While some fraudulent conveyance laws are similar in that they are based on the Model Uniform Fraudulent Transfer Act, different proofs as to insolvency may be required.

{See

Debtors’ Memorandum In Support of Compromise and Settlement at p. 16). The UFCA, the UFTA and Section 548

15

of the Bankruptcy Code dealing with the avoidance of fraudulent conveyances in a bankruptcy case require different showings as to value or fair consideration.

In support of the settlement, Debtors also represent to the Court that Griffin is providing valuable consideration including: (1) the granting of a non-exclusive license by Griffin to use his name and image in advertising and promotion of Debtors’ operations (Plan § 10.1); (2) Griffin’s waiver of a $10 million subrogation claim relating to a December 1989 letter of credit (Plan § 9.4); (3) Griffin’s contribution of all of TGC’s shares in Resorts (Plan § 7.2); (4) Griffin will provide on a pro rata basis 500,000 shares of stock of New Resorts in exchange for voluntary releases by holders of GRI Notes and a fund of $2,500,000 in exchange for voluntary releases by holders of RIFI Debentures; (5) Griffin will purchase 4,400,000 shares of New Resorts common stock for approximately $23,346,-000 and a secured promissory note.

In regard to the proposed settlement of claims against GRI Noteholders contained in Section 7.10(h) of the Plan, the Debtors have argued that asserting fraudulent conveyance type claims are complex and difficult and that this is compounded by the fact that many of the transfers which occurred were in satisfaction of pre-existing intercompany claims or between entities which may not have been insolvent at the time and/or are not now in bankruptcy.

The Debtors here argue in favor of settling potential claims against the GRI

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Noteholders based upon their evaluation that the claims present novel questions of law which make the outcome of litigation uncertain. The Debtors take the position that the theory of applying fraudulent conveyance law to a leverage buyout is novel and that there is limited case law on this type of action.

In the case of

U.S. v. Tabor Court Realty Corp.,

803 F.2d 1288 (3d Cir.1986)

cert. den. sub nom, McClellan Realty Corp. v. United States,

483 U.S. 1005 , 107 S.Ct. 3229 , 97 L.Ed.2d 735 (1986)

(Tabor),

the Third Circuit considered whether the Pennsylvania Uniform Fraudulent Conveyance Act (UFCA) was properly applied to a leveraged buyout. The court determined that the UFCA did apply to leveraged buyout, and stated in this regard:

The Act’s broad language, however, extends to any “conveyance” which is defined as “every payment of money ... and also the creation of any lien or in-cumbrance.” 39 Pa.Stat. § 35. This broad sweep does not justify exclusion of a particular transaction such as a leveraged buy-out simply because it is innovative or complicated. “If the UFCA is not to be applied to leveraged buy-outs, it should be for the state legislatures, not the court to decide.”

Tabor,

803 F.2d at 1297 . The Third Circuit stated further, that while “arguments against general applications of Act to leveraged buy-out are not without some force, the application of fraudulent conveyance law to certain leveraged buy-outs is not clearly bad public policy.” (footnote omitted). 803 F.2d at 1297 .

In

Tabor,

the Third Circuit discussed the policy reasons which are advanced against the application of fraudulent conveyance law to leveraged buy-outs. On this point, the court noted:

A major premise of the policy arguments opposing application of fraudulent conveyance law to leveraged buy-outs is that such transactions often benefit creditors and that the application of fraudulent conveyance law to buy-outs will deter them in the future.

See

Baird and Jackson,

Fraudulent Conveyances Law and Its Proyer Domain,

38 Yand.L.Rev. 829, 855 (1985). An equally important premise is that creditors can protect themselves from undesirable leveraged buy-outs by altering the terms of their credit contracts.

Id.

at 835. This second premise ignores, however, cases such as this one in which the major creditors (in this instance the United States and certain Pennsylvania municipalities) are involuntary and do not become creditors by virtue of a contract. The second premise also ignores the possibility that the creditors attacking the leveraged buy-out (such as many of the creditors in this case) became creditors before leveraged buy-outs became a common financing technique and thus may not have anticipated such leveraged transactions so as to have been able to adequately protect themselves by contract. These possibilities suggest that Baird and Jackson’s broad proscription against application of fraudulent conveyance law to leveraged buy-outs may not be unambiguously correct.

Tabor,

803 F.2d at 1297 , f.n. 2.

The reasoning in

Tabor

offers significant guidance to this court on the issue of the application of fraudulent conveyance law to leveraged buy-outs. Contrary to Debtors’ assertions that the issue is novel with limited case law,

Tabor

represents to this Court sound controlling precedent in this circuit on the application of state fraudulent conveyance law to complicated leveraged buyouts.

See also Vadnais Lumber Supply, Inc. v. Byrne,

100 B.R. 127, 134-35 (Bankr.D.Mass.1989);

Mellon Bank, N.A. v. Metro Communications,

95 B.R. 921, 933 (Bankr.W.D.Pa.1989);

Wieboldt Stores, Inc. v. Schottenstein,

94 B.R. 488, 500 (N.D.Ill.1988).

The Debtors and counsel for the Combined Official Bondholders’ Committee have also cited authority indicating that some courts disfavor or are reluctant to apply state fraudulent conveyance law to leveraged buy-outs including:

Credit Managers Ass’n. v. Federal Co.,

629 F.Supp. 175, 179 (C.D.Cal.1985);

Kupetz v. Wolf,

845 F.2d 842 (9th Cir.1988); Baird & Jack

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son,

Fraudulent Conveyance Law and Its Proper Domain,

38 Vand.L.Rev. 829 (1985) (contending that fraudulent conveyance laws should not be employed to unwind LBOs).

16

In the case of

Kupetz v. Wolf,

845 F.2d 842 (9th Cir.1988), the chapter 7 trustee brought an adversary proceeding to set aside the purchase of the debtor and to recover payment following its sale which were part of a leveraged buy-out of debtor. The Ninth Circuit declined to apply California fraudulent conveyance law to the LBO based in part on findings that there was no evidence that the selling shareholder intended to defraud the corporation’s creditors or that they knew that the financing of the sale of the debtor was through an LBO.

Id.

at 848 .

Courts have not hesitated to apply state fraudulent conveyance law to leveraged buy-outs, particularly in cases where there is evidence of intent to defraud and knowledge of the LBO.

Tabor,

803 F.2d at 1297 ;

Kupetz,

845 F.2d 842 . However, in cases where evidence of intent to defraud is lacking there is authority which legitimizes Debtors’ position that the success on such a claim is uncertain.

Wieboldt Stores, Inc. v. Schottenstein,

1989 WL 51068 , 1989 U.S.Dist.Lexis 5216 (N.D.Ill.1989);

Kupetz v. Wolf, supra.

In fact, as one court observed:

Courts which actually have applied the fraudulent conveyance laws to the facts of a particular situation have not settled upon a uniform analysis for determining the extent of the parties’ ultimate liability for the conveyance. Because this issue is relatively novel and is certainly complex, see

[Board of Ed. of Tp. High School Dist. No. 214, Cook County, Ill. v.] Climatemp [Inc.],

supra [ 91 F.R.D. 245 ] at 251, a substantial ground exists for disagreement over the issues resolved by this court’s December 1 and March 1 Orders.

Wieboldt,

1989 WL 51068 , p. 1, 1989 U.S.Dist.Lexis 5216, p. 3;

Accord Kupetz v. Wolf, supra.

In consideration of this settlement, the Debtors argue that the GRI Noteholders are giving up any claim for principal and accrued interest represented by the bonds. Under the Plan, each holder of a GRI Note will receive (1) a Series A Note in a principal amount equal to such holder’s Pro Rata Share of $187,500,000; and (2) a Showboat Note in a principal amount equal to such Holder’s Pro Rata Share of $105,333,000. The Debtors in their memoranda to the Court have characterized the value of the exchange as follows:

The GRI Noteholders are relinquishing a claim entitled to the present value of $344,050,000 plus, with respect to at least the Reset Noteholders, a claim for post-petition interest for notes with a principal amount of $292,833,000 and a present value far lower than that. The GRI Notes pay cash interest at a rate of between 13-V2 and 13 — 7/s percent. The Series A Notes, which will be secured obligations of New Resorts, bear interest of 6% per year from April 11, 1990 until april 15, 1991, increasing to 9% in the second year, 12% in the third year and 15% in the fourth year. Resorts may, however, pay all or any portion of this interest by issuing additional Series A Notes. The Showboat Notes will be secured non-recourse notes. Interest on the Showboat Notes will consist of a pass-through of the lease payments actually received by New Resorts under the Showboat lease.

(Debtors’ Memorandum In Support of Compromise and Settlement, p. 44).

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To the extent that Greenfield & Chimi-cles asserts that the Plan abandons claims for relief Resorts may have against Griffin in violation of Section 554 of the Bankruptcy Code, such argument is misplaced. Instead, the Plan proposes a compromise of controversies between the Debtors and Griffin, consistent with Section 1123(b)(3) and Bankruptcy Rule 9019(a).

See also Teltronics Services, Inc.,

762 F.2d 185, 190 (2d Cir.1985) (the court found no abandonment of claims by the trustee where he had executed a valid settlement of all outstanding claims).

In regard to Greenfield & Chimicles’ claim that the Debtors failed to comply with the provisions of the Bankruptcy Code by not submitting the settlement with Griffin to the review of independent, disinterested directors or shareholders, Greenfield & Chimicles cites to no specific provisions of the Delaware General Corporate Law which the Debtors are alleged to have violated. The Debtors assert that under Delaware law, shareholder consent is required only in the situation of the amendment of charter (D.G.C.L. § 242) or by-laws (D.G.C.L. § 109), dissolution of the corporation (D.G.C.L. § 273) or of a joint venture corporation (D.G.C.L. § 153), merger (D.G.C.L. § 251) or the sale, lease or exchange of all or substantially all of the corporation’s assets (D.G.C.L. § 271). The court further notes that the Bankruptcy Code provides specific procedures and standards to assess the fairness of the compromise with Griffin.

Greenfield & Chimicles, both at the prior Disclosure Statement Hearing and the Confirmation Hearing has asserted that the RII/RIFI Committees approved the releases to GRI Noteholders to avoid the effect of certain subordination provisions in the RII/RIFI Debentures should an avoidance action be brought against GRI. All that has been demonstrated in those proceedings is that legal questions exist pertaining to those subordination provisions.

17

In considering the various settlements placed before the Court for approval, the Court finds that the settlements are fair and equitable to all creditors and are in the best interest of the Debtors’ estate. The claims for relief which are proposed to be compromised arise from complicated transactions for which the legal remedy is anything but certain. But the costs and delays are a certainty. As reflected in the testimony of Mr. Karsh, it was in part the uncertainty regarding the remedy or damages to be obtained from litigation, weighed against the delays, costs and potential damage to the Debtors’ assets during such time that was considered by the RII/RIFI Committee in deciding to support the settlements. In consideration for the compromise of claims the Debtors may have against Griffin and his affiliates, the estates are receiving what in this Court’s view constitute valuable consideration from Merv Griffin as set forth above, including: (1) the granting of a non-exclusive license by Griffin to use his name and image in advertising and promotion of Debtors’ operations; (2) Griffin’s waiver of a $10 million subrogation claim relating to a December 1989 letter of credit; (3) Griffin’s contribution of all of TGC’s shares in Resorts (4) Griffin will provide on a pro rata basis 500,000 shares of stock of New Resorts in exchange for voluntary releases by holders of GRI Notes and a fund of $2,500,000 in exchange for voluntary releases by holders of RIFI Debentures; (5) Griffin will purchase 4,400,00

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