Form Of Liquidating Trust Agreement

Exhibit 10.11


LIQUIDATING TRUST AGREEMENT
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This Liquidating Trust Agreement (the "Trust Agreement"), dated as of ____________ ___, 2003 by and among the debtors listed on Exhibit A (collectively, the "Debtors") and the individuals listed on Exhibit B (each individually a "Trustee", and collectively the "Liquidating Trustee"), executed in connection with the Debtors' Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated October 28, 2002, (as amended, modified and supplemented from time to time, the "Plan"). Capitalized terms used in this Trust Agreement and not otherwise defined herein shall have the meanings ascribed to them in the Plan.


W I T N E S S E T H


WHEREAS, Global Crossing Ltd., a Bermuda corporation ("GCL"), and 79 of its direct and indirect subsidiaries (the "US Debtors") commenced reorganization cases by filing petitions for relief under Chapter 11 of title 11 of the United States Code, 11 U.S.C. Section 101-1330 (as amended, the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") (collectively, the "Reorganization Cases");


WHEREAS, GCL and 15 of its direct and indirect subsidiaries (the "Bermuda Debtors") commenced restructuring proceedings before the Supreme Court of Bermuda (the "Bermuda Court") (collectively, the "Bermuda Proceedings");


WHEREAS, on October 28, 2002, the US Debtors filed their Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (as amended, modified and supplemented from time to time, the "Plan");


WHEREAS, on _________, 2002, the Bermuda Debtors each filed a Scheme of Arrangement with the Bermuda Court (the "Schemes of Arrangement");


WHEREAS, their terms in the Schemes of Arrangement (the "Schemes") provide for the treatment of claims against the Bermuda Debtors and all distributions to creditors of the Bermuda Debtors to be made in accordance with the terms of the Plan;


WHEREAS, on _________ __, 2002, the Bankruptcy Court entered an order confirming the Plan (the "Confirmation Order");


WHEREAS, on _________ __, 2002, the Bermuda Court entered a sanction order with respect to the Schemes (the "Sanction Order");


WHEREAS, the Plan provides for the sale of substantially all of the Debtors' assets, other than, among other things, the Liquidating Trust Assets, and the transfer of the Reorganized Subsidiary Debtors to the Investors pursuant to the terms of the Purchase Agreement;


WHEREAS, the Liquidating Trust is created pursuant to, and to effectuate certain provisions of, the Plan and the Schemes and to hold the Liquidating Trust Assets;


WHEREAS, the Liquidating Trust is intended to qualify as a liquidating trust within the meaning of Treasury Regulations Section 301.7701-4(d); and


WHEREAS, the Liquidating Trust is established for the sole purpose of liquidating its assets for the benefit of the holders of the Allowed Claims in Classes C, D, E, and F (whether Allowed on or after the Effective Date) (collectively, the "Beneficiaries"), in accordance with Treasury Regulations Section 301.7701-4(d), with no objective or authority to continue or engage in the conduct of a trade or business except to the extent reasonably necessary to, and consistent with, the liquidating purpose of this Liquidation Trust and the Plan and Schemes;


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Plan and the Schemes, the Debtors, the Liquidating Trustee and the Estate Representative agree as follows:


ARTICLE 1


ESTABLISHMENT OF THE LIQUIDATING TRUST


1.1 Establishment of Liquidated Trust. Pursuant to the Plan and the Schemes, the Debtors and the Liquidating Trustee hereby establish the Liquidating Trust on behalf of the Beneficiaries. The Liquidating Trustee agrees to accept and hold the Liquidating Trust Assets in trust for the Beneficiaries subject to the terms of this Trust Agreement.


1.2 Purpose of the Liquidating Trust. The Liquidating Trust shall be established for the sole purpose of liquidating the Liquidating Trust Assets and, if required, fund the winding down of the Reorganization Cases, in accordance with Treasury Regulations Section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business. Accordingly, the Liquidating Trustee shall, in an expeditious but orderly manner, liquidate and convert to Cash the Liquidating Trust Assets, make distributions, and not unduly prolong the duration of the Liquidating Trust. The liquidation of the Liquidating Trust Assets may be accomplished either through the sale of Liquidating Trust Assets (in whole or in combination), including, without limitation, the sale of any Estate Representative Claims or through the prosecution or settlement of any Estate Representative Claims, or otherwise.


1.3 Transfer of Assets and Rights to the Liquidating Trustee. (a) As of the Effective Date, the Debtors hereby transfer, assign, and deliver to the Liquidating Trustee, (i) all of their right, title, and interest in the Liquidating Trust Assets free and clear of any lien or Claim in such property of any other Person or entity except as otherwise provided in the Plan or the Schemes, (ii) all of their rights with respect to the Liquidating Trust Assets including attorney-client privilege and work product and hereby waive their right and the right of any legal, financial or other advisors to assert such rights as a defense or otherwise, and the Liquidating Trustee on behalf of the Liquidating Trust hereby assumes and agrees that all such Liquidating Trust Assets will be transferred to the Liquidating Trust free and clear of any and all liabilities except to the extent otherwise provided in the Plan or the Schemes. (b) On or prior to the Effective Date, the Debtors shall deliver or cause to be delivered to the Liquidating Trustee any and all documents required in connection with the Estate Representative Claims (including those maintained in electronic format and original documents) whether held by the Debtors, their agents, advisors, attorneys, accountants or any other professional hired by the Debtors and provide access to such employees of the Debtors, their agents, advisors, attorneys, accountants or any other professional hired by the Debtors with knowledge of matters relevant to the Estate Representative Claims. (c) At any time and from time


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to time on and after the Effective Date, the Debtors (including the Reorganized Subsidiary Debtors) agree (i) at the reasonable request of the Liquidating Trustee to execute and deliver any instruments, documents, books, and records (including those maintained in electronic format and original documents as may be needed), and (ii) take, or cause to be taken, all such further action as the Liquidating Trustee may reasonably request in order to evidence or effectuate the transfer of the Liquidating Trust Assets to the Liquidating Trust and consummation of the transactions contemplated hereby and by the Plan and the Schemes and to otherwise carry out the intent of the parties hereunder and under the Plan and the Schemes.


1.4 Bermuda Contingency Fund. When the Estate Representative transfers the Bermuda Contingency Fund (including any monies tendered in reimbursement for funds expended from the Bermuda Contingency Fund) to the Liquidating Trust such funds will be Liquidating Trust Assets and be held by the Liquidating Trustee for the benefit of the Beneficiaries.


1.5 Title to Liquidating Trust Assets.


(a) The transfer of the Liquidating Trust Assets to the Liquidating Trust shall be made by the Debtors for the benefit and on behalf of the Beneficiaries. In this regard, the Liquidating Trust Assets will be treated for tax purposes as being transferred by the Debtors to Beneficiaries, and then by such holders to the Liquidating Trust in exchange for interests in the Liquidating Trust (the "Liquidating Trust Interests") for the benefit of such Beneficiaries in accordance with the Plan. Upon the transfer of the Liquidating Trust Assets, the Liquidating Trustee shall succeed to all of the Debtors' right, title and interest in the Liquidating Trust Assets and the Debtors will have no further interest in or with respect to the Liquidating Trust Assets or this Liquidating Trust.


(b) For all federal income tax purposes, all parties (including, without limitation, the Debtors, the Liquidating Trustee, and the Beneficiaries shall treat the transfer of Liquidating Trust Assets to the Liquidating Trust, as set forth in this Section 1.5 and in accordance with the Plan and the Schemes, as a transfer to the Beneficiaries (and, as provided in the Plan, in respect of any Disputed Claims, to the Liquidating Trustee to be held in the Liquidating Trust Disputed Claims Reserve), followed by a transfer by such Beneficiaries to the Liquidating Trust, and the Beneficiaries of this Liquidating Trust shall be treated as the grantors and owners hereof.


1.6 Reliance. The Liquidating Trustee may rely upon the Debtors' filed schedules and statements of financial affairs [similar documents filed in Bermuda] and all other information provided by the Debtors or their representatives to the Liquidating Trustee concerning Claims filed against the Debtors, and their reconciliation and documents supporting such reconciliation.


1.7 Valuation of Liquidating Trust Assets. As soon as possible after the Effective Date, but in no event later than March 31, 2004, (i) the Liquidating Trustee shall make a good faith valuation (as of the Effective Date) of the Liquidating Trust Assets, and (ii) the Liquidating Trustee shall apprise the Beneficiaries, in writing of such valuation (and indicate in such writing, such Beneficiaries' respective percentage ownership interests in the Liquidating Trust based on such holders' relative beneficial interests in the Liquidating Trust as of the Effective Date). The valuation shall be used consistently by all parties (including, without limitation, the Debtors, the


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Liquidating Trustee, and the Beneficiaries) for all purposes, including, without limitation, federal income tax purposes.


1.8 Governance of the Liquidating Trust. The Liquidating Trust shall be governed by the Liquidating Trustee. The Liquidating Trustee's powers are exercisable solely in a fiduciary capacity consistent with, and in furtherance of, the purposes of this Liquidating Trust and not otherwise, except that the Liquidating Trustee may deal with the Liquidating Trust Assets for its own account as provided herein. The Trustees shall act as co-trustees of the Liquidating Trust under this Trust Agreement. Except for the following, approval of at least three (3) Trustees shall constitute the act of the Liquidating Trustee: as set forth in Section 5.8(j)(i)(y) of the Plan, all decisions (including and without limitation, as applicable, decisions related to the selection of counsel to be retained, compensation for such counsel, the manner of prosecution of claims and counterclaims, the settlement of claims and counterclaims) with respect to Estate Representative Claims that are in a facial amount of less than $1,000,000 and which claims are against a holder of a Disputed Claims shall be made exclusively by the three Trustees that constitute the Claims Subcommittee. For these purposes, approval of a majority of the Trustees comprising the Claims Subcommittee shall constitute the act of the Claims Subcommittee. Subject to the terms and conditions of this Trust Agreement, the Liquidating Trustee may delegate responsibility for discrete issues or decisions to one or more Trustees or third parties subject to continued oversight by the Liquidating Trustee.


1.9 Appointment of the Liquidating Trustee. As of the date hereof the Liquidating Trustee shall be comprised of the five Trustees listed on Exhibit B attached hereto.


1.10 Funding of the Liquidating Trust. The Liquidating Trustee may from time to time make withdrawals from the Liquidating Trust Assets in amounts and at times that the Liquidating Trustee, in its sole discretion, deems necessary or appropriate to fund any and all costs and expenses that the Liquidating Trustee and the Liquidating Trust incur subsequent to the Effective Date in accordance with this Trust Agreement, the Plan and the Schemes.


ARTICLE 2


LIQUIDATING TRUST BENEFICIARIES


2.1 Identification of Beneficiaries of Liquidating Trust. The Beneficiaries of the Liquidating Trust are the holders of the Liquidating Trust Interests and shall be recorded and set forth in a register maintained by the Liquidating Trustee expressly for such purpose. All references in this Trust Agreement to the Beneficiaries or the holders of Liquidating Trust Interests shall be read to mean holders of record as set forth in the official register maintained by the Liquidating Trustee and shall not mean any beneficial owner not recorded on such official registry. Unless expressly provided herein, the Liquidating Trustee may establish a record date that it deems practicable for determining the Beneficiaries for a particular purpose. The distribution of Liquidating Trust Interests to the Beneficiaries shall be accomplished as set forth in the Plan.


2.2 Allocation of Beneficial Interests. Each holder of an Allowed Class C Claim is hereby allocated its proportional share in accordance with the terms of the Credit Agreement of 50% of the beneficial interests in the Liquidating Trust. Each holder of an Allowed GC Holdings Notes Claim


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is hereby allocated its Ratable Proportion of 37.95% of the beneficial interests in the Liquidating Trust. Each holder of an Allowed GCNA Notes Claim is hereby allocated its Ratable Proportion of 6.16% of the beneficial interests in the Liquidating Trust. Each holder of an Allowed General Unsecured Claim is hereby allocated its Ratable Proportion of 5.89% of the beneficial interests in the Liquidating Trust.


2.3 Additional Beneficiaries. From and after the Effective Date, any holder of a Disputed Claim in Class F whose Claim becomes an Allowed General Unsecured Claim as a result of settlement or resolution of such Disputed Claim will be admitted as a Beneficiary and will receive its Ratable Proportion of the 5.89% of beneficial interests allocated to Allowed Class F Claims.


2.4 Transferability of Liquidating Trust Interests. The Liquidating Trust Interests shall not be transferable, provided that the Liquidating Trust Interests shall be assignable or transferable by will, intestate succession, or operation of law and that the executor or administrator of the estate of a holder of a Liquidating Trust Interest may mortgage, pledge, grant a security interest in, hypothecate or otherwise encumber, the Liquidating Trust Interests held by the estate of such holder if necessary in order to borrow money to pay estate, succession or inheritance taxes or the expenses of administering the estate of the holder, upon written notice to, and written consent of, the Liquidating Trustee, which consent may not be unreasonably withheld.


2.5 Annual Distribution; Withholding. In the discretion of the Liquidating Trustee but not less frequently than annually, subject to the withholding of property on account of Disputed Claims pursuant to the provisions of Article 5 hereof, the Liquidating Trustee shall distribute from the Liquidating Trust to each holder of a Liquidating Trust Interest Cash on hand (including, without limitation, all net Cash income plus all net Cash proceeds from the liquidation of Liquidating Trust Assets, including, without limitation, as Cash for this purpose, all permissible investments described in Section 3.12 below) pro rata in proportion to such holders' respective Liquidating Trust Interests; provided, however, that no annual distribution will be required unless such aggregate distribution would be at least $500,000. Notwithstanding anything to the contrary herein, prior to making any distribution to holders of Liquidating Trust Interests, the Liquidating Trustee may retain such amounts (i) as are reasonably necessary to meet contingent liabilities and to maintain the value of the Liquidating Trust Assets during liquidation, (ii) to pay reasonable estimated expenses (including, without limitation, any taxes imposed on the Liquidating Trust or the Liquidating Trust Disputed Claims Reserve or in respect of the Liquidating Trust Assets), and (iii) to satisfy other liabilities incurred or assumed by the Liquidating Trust (or to which the Liquidating Trust Assets are otherwise subject), all for the term of the Liquidating Trust and in accordance with this Trust Agreement, the Plan or the Schemes. The Liquidating Trustee may withhold from amounts distributable to any Person any and all amounts, determined in the Liquidating Trustee's reasonable sole discretion, required by any law, regulation, rule, ruling, directive or other governmental requirement.


2.6 Manner of Payment or Distribution. All Distributions made by the Liquidating Trustee to holders of Liquidating Trust Interests shall be payable to the holders of Liquidating Trust Interests of record as of the 15th day prior to the date scheduled for the distribution, unless such day is not a Business Day, then such day shall be the following Business Day (the "Record Date"). If the Distribution shall be in Cash, the Liquidating Trustee shall distribute such Cash by wire, check, or such other method as the Liquidating Trustee deems appropriate under the circumstances.


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ARTICLE 3


THE LIQUIDATING TRUSTEE


3.1 Role of the Liquidating Trustee. In furtherance of and consistent with the purpose of the Liquidating Trust, this Plan, and the Schemes, the Liquidating Trustee shall, for the benefit of the Beneficiaries, (i) have the power and authority to hold, manage, and distribute the Liquidating Trust Assets, and (ii) have the power and authority to hold, manage, and distribute the Cash or non-Cash Liquidating Trust Assets obtained through the exercise of its power and authority. In all circumstances, the Liquidating Trustee shall act in the best interests of all Beneficiaries of the Liquidating Trust and in furtherance of the purpose of the Liquidating Trust.


3.2 Authority of Liquidating Trustee. In connection with the administration of the Liquidating Trust, except as set forth in this Trust Agreement, the Liquidating Trustee is authorized to perform any and all acts necessary or desirable to accomplish the purposes of the Liquidating Trust. Without limiting, but subject to, the express purpose of the Liquidating Trustee and to Section 3.3 hereof, the Liquidating Trustee shall be expressly authorized, but shall not be required, to:


(a) hold legal title to any and all rights of the holders of the Liquidating Trust Interests in or arising from the Liquidating Trust Assets, including, without limitation, collecting, receiving any and all money and other property belonging to the Liquidating Trust and the right to vote any claim or interest in a case under the Bankruptcy Code and receive any distribution therein;


(b) perform the duties, exercise the powers, and assert the rights of a trustee under Sections 704 and 1106 of the Bankruptcy Code, including, without limitation, commencing, prosecuting or settling causes of action, enforcing contracts, and asserting claims, defenses, offsets and privileges;


(c) protect and enforce the rights to the Liquidating Trust Assets by any method deemed appropriate including, without limitation, by judicial proceedings or pursuant to any applicable bankruptcy, insolvency, moratorium or similar law and general principles of equity;


(d) borrow funds, incur or assume liabilities, and pledge Liquidating Trust Assets on behalf of the Liquidating Trust in furtherance of or in connection with the Liquidating Trustee's or the Liquidating Trust's duties, powers, authority, and obligations under this Trust Agreement, and determine and satisfy any and all liabilities created, incurred or assumed by the Liquidating Trust;


(e) file, if necessary, any and all tax and information returns with respect to the Liquidating Trust and the Liquidating Trust Disputed Claims Reserve and pay taxes, if any, properly payable by the Liquidating Trust or the Liquidating Trust Disputed Claims Reserve;


(f) pay all expenses and make all other payments relating to the Liquidating Trust Assets;


(g) obtain reasonable insurance coverage with respect to its liabilities and obligations as Liquidating Trustee under this Trust Agreement (in the form of an errors and omissions policy or otherwise);


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(h) obtain insurance coverage with respect to real and personal property that may become Liquidating Trust Assets, if any;


(i) retain and pay such counsel and other professionals as the Liquidating Trustee in its sole discretion may select to assist the Liquidating Trustee in its duties, on such terms as the Liquidating Trustee deems appropriate, without Bankruptcy Court approval. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such counsel and other professionals reasonable compensation for services rendered and expenses incurred. A law firm or professional shall not be disqualified from serving the Liquidating Trustee solely because of its current or prior retention as counsel or professional to the parties in interest in the Reorganization Cases or the Bermuda Proceedings;


(j) retain and pay an independent public accounting firm to perform such reviews and/or audits of the financial books and records of the Liquidating Trust and the Liquidating Trust Disputed Claims Reserve as may be appropriate in the Liquidating Trustee's sole discretion and to prepare and file any tax returns or informational returns for the Liquidating Trust and the Liquidating Trust Disputed Claims Reserve as may be required. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such independent public accounting firm reasonable compensation for services rendered and expenses incurred;


(k) retain and pay such third parties as the Liquidating Trustee, in its sole discretion, may deem necessary or appropriate to assist the Liquidating Trustee in carrying out its powers and duties under this Trust Agreement. The Liquidating Trustee may commit the Liquidating Trust to and shall pay all such persons or entities reasonable compensation for services rendered and expenses incurred, as well as commit the Liquidating Trust to indemnify any such parties in connection with the performance of services;


(l) employ such employees as the Liquidating Trustee, in its sole discretion and as consistent with the purposes of the Liquidating Trust, may deem necessary or appropriate to assist the Liquidating Trustee in carrying out its powers and duties under this Trust Agreement. The Liquidating Trustee may commit the Liquidating Trust to and shall pay all such employees reasonable salary in the amounts it shall determine to be appropriate and any employee benefits it may establish pursuant to Section 3.2(m) below. If the Liquidating Trustee employs employees pursuant to this Section 3.2(l), the Liquidating Trustee shall establish payroll procedures and pay any and all federal, state or local tax withholding required under applicable law with respect to any such employees, and it will take all other actions it deems necessary to effectuate the provisions of this Section 3.2(l);


(m) establish and adopt or cease to provide such employee benefits for the benefit of any employees described in Section 3.2(l) above as the Liquidating Trustee, in its sole discretion and as consistent with the purposes of the Liquidating Trust, may deem necessary or appropriate, including, without limitation, the adoption of any group health plan;


(n) assert or waive any privilege or defense on behalf of the Liquidating Trust or, with respect to the Liquidating Trust Assets, the Debtors;


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(o) compromise, adjust, arbitrate, sue on or defend, pursue, prosecute abandon, exercise rights, powers, and privileges with respect to, or otherwise deal with and settle, in accordance with the terms set forth herein, Estate Representative Claims and all causes of action in favor of or against the Liquidating Trust as the Liquidating Trustee shall deem advisable;


(p) avoid and recover transfers of the Debtors' property as may be permitted by the Bankruptcy Code or applicable state law;


(q) execute offsets and assert counterclaims against Claims as provided for in the Plan;


(r) in its sole discretion (subject to Section 2.4 hereof and this Section 3.2), take all appropriate action with respect to the Liquidating Trust Assets consistent with the purpose of the Liquidating Trust, including without limitation the avoidance of any transfer or obligation, and the filing, prosecution, settlement or other resolution of claims and causes of action, including without limitation those based upon Sections 510, 542-550, or 553(b) of the Bankruptcy Code;


(s) invest any moneys held as part of the Liquidating Trust in accordance with the terms of Section 3.12 hereof, limited, however, to such investments that are consistent with the Liquidating Trust's status as a liquidating trust within the meaning of Treasury Regulations Section 301.7701-4(d);


(t) request any appropriate tax determination with respect to the Liquidating Trust or the Liquidating Trust Disputed Claims Reserve, including, without limitation, a determination pursuant to Section 505 of the Bankruptcy Code;


(u) establish and maintain a website for the purpose of providing notice of Liquidating Trust activities in lieu of sending written notice to holders of Liquidating Trust Interests, subject to providing notice of such website to such holders;


(v) take or refrain from taking any and all actions the Liquidating Trustee reasonably deems necessary or convenient for the continuation, protection and maximization of the Liquidating Trust Assets or to carry out the purposes hereof; and


(w) seek the examination of any entity, and subject to, the provisions of Bankruptcy Rule 2004.


The Liquidity Trustee hereby delegates its powers in 3.2(n) through (r) to the Estate Representative and the Claims Subcommittee, as applicable, and may delegate such other powers as the Liquidating Trustee deems necessary for the resolution and conversion to Cash of the Estate Representative Claims and Disputed Claims. The Liquidation Trustee hereby acknowledges that the Estate Representative and Claims Subcommittee shall have such other powers, duties and authority as set forth in the Plan or Schemes with respect to Estate Representative Claims and the resolution of Disputed Claims.


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3.3 Limitation of Liquidating Trustee's Authority.


(a) Notwithstanding anything herein to the contrary, the Liquidating Trustee shall not be authorized to engage in any trade or business, and shall not take such actions inconsistent with the orderly liquidation of the Liquidating Trust Assets as are required or contemplated by applicable law, the Plan, the Schemes and this Trust Agreement.


(b) The Liquidating Trust shall not hold 50% or more of the stock (in either vote or value) of any entity that is treated as a corporation for federal income tax purposes, nor be the sole member of a limited liability company, nor have any interest in an entity that is treated as a partnership for federal income tax purposes, unless such stock, membership interest, or partnership interest was obtained involuntarily or as a matter of practical economic necessity in order to preserve th ...