In re Vanilla Woodward, LLC

Thomas J. Tucker

Chapter 11
Judge Thomas J. Tucker

ORDER REQUIRING DEBTOR TO AMEND DISCLOSURE STATEMENT

On June 28, 2012, Debtor filed a plan and disclosure statement, in a document entitled "Debtor's Combined Disclosure Statement and Plan of Reorganization" (Docket # 57). The Court cannot yet grant preliminary approval of the disclosure statement contained within this document ("Disclosure Statement"). The Court notes the following problems, which Debtor must correct.

First, Debtor must delete Paragraph 2.3 of the Plan (Group III) on page 7 and Paragraph 2.3 of the Disclosure Statement on page 20. Debtor states that there are no other Priority Claims, but if there were any "other Priority Claims" of the type described in Group III, those claims would need to be classified under Article III of the Plan. 11 U.S.C. § 1123(a)(1) requires classification of all claims except those of a kind specified in 11 U.S.C. §§ 507(a)(2), (a)(3), or (a)(8).

Second, Debtor must treat each secured creditor in a separate class. With regard to each secured creditor, Debtor must state the amount of the claim; the property securing the claim (if real estate, the full address, including city and state); the fair market value of the property securing the claim; whether any portion of the claim is unsecured; and if so, whether the secured creditor will have an unsecured deficiency claim, to be included and treated in the class of general unsecured claims; and if so, the amount of such claim. If more than one secured creditor has a lien on property, Debtor must state the priority of each secured creditor (e.g., which creditor has a first priority lien and which creditor has a second priority lien).

Third, Debtor must delete the current Class Nos. 2 and 3 on page 8 of the Plan, which are entirely blank, and renumber current Class Nos. 4-6 as Class Nos. 2-5.

Fourth, in current Class 5, Debtor treats the claim of "Communicare Michigan" on page 9 of the Plan, and states: "This class, with respect to executor[y] contract shall be accepted." On page 11 of the Disclosure Statement, this claimant is listed as "Communicare Michigan, Inc." and on page 17 of the Disclosure Statement in Section II.C, this claimant is listed as "Communicate, LLC. Debtor must consistently use the correct full name of the claimant throughout the Plan and Disclosure Statement.

Fifth, it appears that Communicare Michigan and Debtor are parties to an executory contract, which Debtor apparently proposes in current Class 5 to assume. If so, Debtor must explicitly state in Class 5 that this executory contract will be assumed (rather than "accepted") and must state in Class 5 what payments will be made to this Class.

Sixth, regarding Ms. Hanna Karcho-Polseli, Debtor must provide the following information in Part II.B of the Disclosure Statement on pages 16-17:

1. Debtor must provide the background of Ms. Karcho-Polseli (e.g., her education; work history; places of employment; titles held, etc.). Merely stating that Ms. Karcho-Polseli "has been in the property investment and management business" is insufficient.
2. Debtor must state whether Ms. Karcho-Polseli received fringe benefits from Debtor pre-petition and post-petition, and if so, what they were/have been.
3. Debtor must provide a good faith estimate of the amount of salary and fringe benefits Ms. Karcho-Polseli will receive post-confirmation, if available funds permit. It is insufficient tostate merely that "she will receive salary and fringe benefits to the extent of available funds." Debtor must also provide this information in Section III.C of the Disclosure Statement on page 22.

Seventh, Debtor must correct the following typographical errors on page 16 of the Disclosure Statement under Section II.B: "15years" and "5byears."

Eighth, in Part II.B of the Disclosure Statement on page 17, under the heading "Legal Relationships," Debtor states: "See Section II.D. for the details regarding insider transactions." Debtor must delete this sentence and state what legal relationship(s) Ms. Karcho-Polseli has with the Debtor (e.g., creditor, lessee, owner).

Ninth, in Section II.C of the Disclosure Statement on page 17, Debtor must change "not dated August 2010" to "note dated." Debtor also must state the material terms of the note such as the interest rate, and the frequency and amount of required payments.

Tenth, Debtor must state in Section III.B of the Disclosure Statement on page 17-18, whether there have been any post-petition financing orders entered in this case.

Eleventh, Debtor must state in Section V.D of the Disclosure Statement on page 19 that Debtor has no priority claims.

Twelfth, in Paragraph V.F of the Disclosure Statement on page 19, Debtor must include a statement about any of its debt that is guaranteed by anyone and must identify (1) the guarantor; (2) the nature and amount of the debt involved; (3) the collateral securing the debt or the guaranty, if any, and (4) the value of such collateral. If there is no guaranteed debt, Debtor must explicitly say so in the Disclosure Statement.

Thirteenth, in Section III of the Disclosure Statement on page 21, there appears to be a block of text missing (describing the Plan's classes and the treatment of the classes). Debtor must correct this.

Fourteenth, Debtor must amend the Liquidation Analysis as follows:

1. Debtor must delete all references to priority creditor or priority claims in the columns headings.
2. Debtor must include its interest in the office building in the listed assets.
3. Debtor lists Pacific Coast Leasing as having a security interest in office equipment and Glenn Price as having a secured interest in a security deposit, but neither of these creditors are classified in the Plan. Debtor must correct this.
4. In the Liquidation Analysis, Debtor does not include Cal Land Investments, Hotel Mortgage Funding, or the Oakland County Treasurer which are all secured creditors that are classified in the Plan. Debtor must correct this.

Fifteenth, Debtor must provide projections for the period of payments proposed by the Plan in a line itemization format, listing all income and expense categories.

Sixteenth, Debtor must modify Section VII.E of the Disclosure Statement on page 26 as follows:

1. In Paragraph VII.E.2 Debtor must change "§ 1141(d)(5)" to "§ 1141(d)."
2. In Paragraph VII.E.2(c)(1) and (2), Debtor must change "§ 1141(d)(3)" to "§ 1141(d)."

Accordingly,

IT IS ORDERED that no later than July 10, 2012, Debtor must file an amended combined plan and disclosure statement that is consistent with this Order.

IT IS FURTHER ORDERED that Debtor also must provide to Judge's chambers, no later than July 10, 2012, a redlined version of the amended combined plan and disclosure statement, showing the changes Debtor has made to "Debtor's Combined Disclosure Statement and Plan of Reorganization" (Docket # 57), filed June 28, 2012. Debtor must submit this redlined document to chambers electronically, through the Court's order submission program.

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Thomas J. Tucker

United States Bankruptcy Judge