Commencing in February 2002, Mr. Bingham began to interface with representatives of
Blackstone to discuss the formulation of a computerized model to synthesize estimates and
projections regarding assets and liabilities, as well as to calculate Creditor recoveries under a
chapter 11 plan depending on various assumptions and variables. (Bingham Affidavit ¶ 15;
40
6/7/04 Zelin Tr. at 21:3 – 23; 6/3/04 a.m. Bingham Tr. at 67:18 – 68:6). Blackstone devised the
Distribution Model, which is described in Appendix C of the Disclosure Statement. (Debtors’
Trial Ex. 8; 6/7/04 Zelin Tr. at 27:23 – 26:4; Debtors’ Trial Ex. 24 at 23, 130 – 156; Bingham
Affidavit ¶ 15). Mr. Zelin, the Debtors’ expert, has supervised the creation of financial models
in many other chapter 11 cases. (6/7/04 Zelin Tr. at 20:8 – 16). The Distribution Model has
been extensively diligenced by the Debtors, the Creditors’ Committee and its advisors and the
ENA Examiner and his professionals. (6/7/04 Zelin Tr. at 25:16 – 26:11; Debtors’ Trial Ex. 24
at 23). Moreover, the well-diligenced Distribution Model allowed the Debtors to evaluate the
various potential inter-estate issues that might exist and determine the economic consequences of
various positions and the potential impact on creditor recoveries. (Debtors’ Trial Ex. 24 at 132
On January 15, 2003, the Debtors made a presentation to the Creditors’ Committee
suggesting an approach to consider the treatment of Claims and the mechanics of distributions.
(Bingham Affidavit ¶ 16; Debtors’ Trial Ex. 14). The Debtors and the Creditors’ Committee
continued to engage in substantive discussions regarding the outlines of a plan and subsequently
agreed to a 30/70 distribution formula included in the global compromise and the Plan to resolve
a variety of inter-estate issues, including substantive consolidation. (Bingham Affidavit ¶ 16).
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