IN RE SERVICE MERCHANDISE COMPANY (Bankr.M.D.Tenn. 2002)

In re: SERVICE MERCHANDISE COMPANY, INC., et al., Chapter 11, Debtors.

No. 399-02649United States Bankruptcy Court, M.D. Tennessee, Nashville Division
December 20, 2002

Attorneys for Debtors and Debtor’s-in-Possession: Paul G. Jennings, Beth A. Dunning, BASS, BERRY SIMS PLC, Nashville, TN., John Wm. Butler, Jr., George N. Panagakis, SKADDEN, ARPS, SLATE, MEAGHER
FLOM (ILLINOIS), Chicago, IL.

Attorney for Lighton, Colman, Brohan Davis: Robert C. Goodrich, Jr., Ronald G. Steen, Jr., STITES HARBISON PLLC Nashville, TN.

NOTICE AND AGREED ORDER APPROVING THE COMPROMISE, AND RESOLVING, LIGHTON COLMAN’S MOTION FOR PAYMENT OF ALLEGED ADMINISTRATIVE EXPENSE AND RELATED ADVERSARY PROCEEDING
GEORGE C. PAINE II, United States Bankruptcy Judge.

NOTICE
Notice is hereby given that Service Merchandise Company, Inc. (“Service Merchandise”) and 31 of its affiliates (the “Affiliate Debtors”), debtors and debtors-in-possession in the above-captioned cases (Service Merchandise and the Affiliated Debtors, collectively, the “Debtors”) have filed a Motion for Order Pursuant to 11 U.S.C. § 105 and Bankruptcy Rule 9019 Approving the Compromise Resoluticn of Lighton Colman’s Motion for Payment of Alleged Administrative Expense (the “Motion”). Please be advised that the relief requested in the Motion has been granted in the Order set forth below. Unless a written objection is timely filed and served, the Order below will be deemed final and effective as of the date of entry by the Court, without further notice or hearing. If a timely objection or response is filed, the Motion will be heard at the next scheduled Omnibus Hearing in these cases.

Objections to the relief requested in the Motion and granted in the Order below must be made in writing served on the undersigned counsel and counsel for the Committee and filed with the United States Bankruptcy Court on or before twenty days from the date of mailing of the entered. Order. Any objection filed must conform to the Federal Rules of Bankruptcy Procedure, the Local Rules of Court for the United States Bankruptcy Court for the Middle District of Tennessee (the “Local Rules”) and the Order of this Court establishing case management and administrative procedures (Docket No. 79) (the “Case Management Order”).

AGREED ORDER PURSUANT TO 11 U.S.C. § 105 AND BANKRUPTCY RULE 9019 APPROVING THE COMPROMISE RESOLUTION OF LIGHTON COLMAN’S MOTION FOR PAYMENT OF ALLEGED ADMINISTRATIVE EXPENSE
This matter having come for hearing on the motion (the “Motion”; filed by Service Merchandise Company, Inc. (“Service Merchandise”) and 31 of its affiliates (the “Affiliate Debtors”), debtors and debtors-in-possession in the above-captioned captioned cases (Service Merchandise and the Affiliate Debtors, collectively, the “Debtors”), pursuant to section 105 of the Bankruptcy Code and Bankruptcy Rule 9019, for an order approving the compromise of, and resolving, the Motion for Allowance and Payment of Administrative Expense Claim (Docket No. 7101) (the “Administrative Expense Motion”) filed by Lighton, Colman, Brohan Davis (“Lighton”), the response thereto filed by the Debtors (Docket No. 7198) and a related adversary proceeding; and the Court being satisfied that the relief herein is appropriate under the circumstances; and the court being otherwise sufficiently advised,

IT IS HEREBY FOUND THAT:

A. The Debtors, in the proper exercise of their business judgment, determined that the relief afforded herein is in the best interests of their creditors.

B. The relief afforded herein is a reasonable and valid exercise of the Debtors business judgment.

C. Lighton has agreed and is hereby deemed to waive and release any and all claims and/or causes of action against the Debtors, including but not limited to any claims or causes of action that Lighton asserted or could have asserted in the Administrative Expense Motion.

D. Debtors have agreed and are hereby deemed to waive and release any and all claims and/or causes of action against Lighton, including but not limited to any claims or causes of action that Debtors asserted or could have asserted in the Preference Action or on account of the transactions that gave rise to the Administrative Expense Motion.

NOW THEREFORE, IT IS HEREBY ORDERED THAT:

1. The Motion is granted.

2. The Administrative Expense Motion is dismissed with prejudice, each party bearing its own costs.

3. The Preference Action, titled Service Merchandise, Inc. et at. v. Lighten Colman, Inc., Adv. Pro. No. 301-0475, shall be dismissed with prejudice, each party bearing its own costs and the Court shall enter an order in such adversary proceeding dismissing it with prejudice.

4. Lighton shall not have and is forever barred from asserting any claim or cause of action against the debtors, including but not limited to any claims or causes of action that Lighton asserted or could have asserted in the Administrative Expense Motion.

5. The Debtors shall not have and are forever barred from asserting any claim or cause of action against Lighton, including but not limited to any claims or causes of action that Debtors asserted or could have asserted in the Preference Action or on account of the transactions that gave rise to the Administrative Expense Motion, including but not limited to the alleged $260,000 overpayment for prepaid media.

6. The Court will retain jurisdiction to adjudicate any disputes that may arise under this order and to enforce the terms of this order.

7. The relief requested in the Motion has been granted by this Order as set forth herein. Unless a written objection is timely filed and served, the Order will be deemed final and effective as of the date of entry without further notice or hearing. If a timely objection or response is filed, the Motion will be heard at 9:30 a.m. on February 4, 2003, in Courtroom 1, Customs House, 701 Broadway, Nashville, Tennessee.

8. Objections to the relief requested in the Motion and granted in the Order must be made in writing and served on the undersigned counsel and counsel for the Committee and filed with the United States Bankruptcy Court on or before twenty days from the date of mailing of the entered Order. Any objection filed must conform to the Federal Rules of Bankruptcy Procedure, the Local Rules of Court for the United States Bankruptcy Court for the Middle District of Tennessee (the “Local Rules”) and the Order of this Court establishing case management and administrative procedures (Docket No. 79) (the “Case Management Order”).

[EDITORS’ NOTE: THE MARKER FOR FOOTNOTE[1] IS NOT IN THE OFFICIAL TEXT (HARDCOPY) OF THIS FILE. THEREFORE ONLY THE SECOND FOOTNOTE MARKER (DEFENITION) FOR #1 IS DISPLAYED ON OUR ONLINE VERSION.] [1] Capitalized terms used, but not defined, herein shall have the meanings ascribed them in the Motion.