THOMAS TUCKER, Bankruptcy Judge
On January 31, 2011, the Debtor filed a plan and disclosure statement, in a document entitled "Debtor's Combined Plan of Reorganization and Disclosure Statement" (Docket # 102). The Court cannot grant preliminary approval of the disclosure statement contained within this document ("Disclosure Statement"). The Court notes the following problems, which Debtor must correct.
First, Paragraph I(C) of the Plan on page 5 discusses administrative claims, which are not subject to classification and are not entitled to vote on the Plan. Debtor must state at this place in the Plan (and not just on page 29) the estimated amount of each administrative claim.
Second, there is a typographical error in Paragraph I(C) of the Plan on page 5. In the fourth paragraph of text on that page, the reference to "after entry of this order" must be corrected (since the Plan is not and will not be an order).
Third, Paragraph I(E) of the Plan beginning on page 7 defines and provides the treatment for classes of claimants. In Paragraphs E.1, E.2, and E.3 of the Plan on page 7, Debtor classifies and treats the priority tax claims of the City of Midland, the Michigan Department of Treasury, and New York State. "[P]riority tax claims . . . are not supposed to be classified in a Chapter 11 plan for voting or other purposes." In re Northwest Timberline Enterprises, Inc., 348 B.R. 412, 422 (Bankr. N.D. Tex. 2006) (citing 11 U.S.C. §§ 1123(a)(1)). Debtor must amend the Plan so that the priority tax claims are not included in a class under Paragraph D. Rather, such claims should be included as a separate, non-voting group in the Plan. Debtor must also delete Paragraphs D.1, D.2, and D.3 from Paragraph D on page 6 and renumber the classes to account for the deleted classes. Also, Debtor currently has two classes labeled "D. 13." When Debtor renumbers the classes in Paragraph D, Debtor must give each class a separate number. Further, Debtor must change the name of what is now Class D. 12 from "Unsecured Trade Claims" to "Unsecured Claims Less Than $10,000.00." And finally, Debtor must change the name of what is now Class D. 13 from "Unsecured Deficiency Claims" to "Unsecured Claims Equal to or Greater Than $10,000.00."
Fourth, with regard to each secured creditor, Debtor must explicitly state, among other things, the total amount of the creditor's claim; all property securing the claim; whether any portion of the claim is unsecured under 11 U.S.C. § 506(a)(1); and if so, whether the creditor will have an allowed unsecured (deficiency) claim, to be included and treated in one of the two classes of general unsecured claims; and if so, the amount of such unsecured claim.
While the Plan explicitly states that one of the secured creditors (JP Morgan Chase Bank) has both a secured claim and an unsecured deficiency claim, the Plan is not as clear and explicit as it should be on that subject as to the other secured creditors.
Fifth, Debtor does not provide any information about post-petition financing orders. If there have been no such orders entered in this case, Debtor must state that in Paragraph III.B of the Disclosure Statement on page 28.
Sixth, in Paragraph IV.D of the Disclosure Statement on page 29, entitled "Priority Claims," Debtor must list the claims of the City of Midland, Michigan Department of Treasury, and New York State.
Seventh, Debtor must provide a financial summary for the 3-year pre-petition period, in the same line-itemization format as it has provided its financial projections in Exhibit B.
Eighth, the Disclosure Statement contains no information regarding the anticipated postconfirmation compensation that Debtor's principals will receive. Debtor must amend the Disclosure Statement to include this information.
Ninth, Debtor must amend Paragraph VI.E of the Disclosure Statement on pages 33-34 so that it states:
E. Effect of confirmation
If the plan is confirmed by the Court:
1. Its terms are binding on the debtor, all creditors, shareholders and other parties in interest, regardless of whether they have accepted the plan.
2. Except as provided in the plan and in 11 U.S.C. § 1141(d):
(a) In the case of a corporation that is reorganizing and continuing business:
(1) All claims and interests will be discharged.
(2) Creditors and shareholders will be prohibited from asserting their claims against or interests in the debtor or its assets.
Accordingly,
IT IS ORDERED that no later than February 7, 2011, Debtor must file an amended combined plan and disclosure statement which corrects the above stated problems.
IT IS FURTHER ORDERED that Debtor also must provide to Judge's chambers, no later than February 7, 2011, a redlined version of the amended combined plan and disclosure statement, showing the changes Debtor has made to "Debtor's Combined Plan of Reorganization and Disclosure Statement" (Docket # 102), filed January 31, 2011. Debtor must submit this redlined document to chambers electronically, through the Court's order submission program.
Signed on February 1, 2011