Thomas J. Tucker
Chapter 11
Judge Thomas J. Tucker
ORDER REQUIRING DEBTOR TO AMEND DISCLOSURE STATEMENT
On February 4, 2013, Debtor filed a plan and disclosure statement, in a document entitled "Debtor's Combined Plan and Disclosure Statement" (Docket # 49). 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, in many places in the Plan and Disclosure Statement, there is an apostrophe where there should be a § symbol. Debtor must correct this.
Second, Debtor must revise the formatting and the content of the Plan according to the following guidelines.
• Debtor must include a separate section in the Plan, which defines groups of claimants that are not subject to classification and are not entitled to vote on the Plan, state the estimated amount of each claim, and state their treatment under the Plan
(e.g., Group I consisting of allowed administrative claims, including the quarterly fees for the United States Trustee and attorney fees for Debtor's counsel, and Group II consisting claims that are entitled to priority under
11 U.S.C. § 507(a)(8). "[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)). Currently, administrative claims are improperly being treated in Class 1 in Paragraph C.1 of the Plan on page 5
• On pages 5 and 7-8 of the Plan, Debtor must treat the secured claim of the Wayne County Treasurer in the amount of $25,784.63, and the secured claim of the City of Southgate in the amount of $7,461.72, in separate classes, rather than in the same class.
Third, in describing the treatment of the secured claim of Land Holding, LLC in
Paragraph I.D.2 of the Plan on page 6, the Debtor begins with the phrase "To the extent that it is found to be a secured creditor,". Debtor must explain the meaning of this qualifier, or delete it.
Fourth, Debtor must state whether there have been any transfers outside of the ordinary course of business.
Fifth, in Debtor's Liquidation Analysis on page 18 of the Disclosure Statement, Debtor must do the following.
• Identify all potential claims that the Debtor has, including claims against insiders and avoidance actions. For each such claim, estimate the value of any expected recovery and the expected costs of such litigation. The anticipated net value of any litigation that the Debtor intends to pursue should be included in the liquidation analysis. If the Debtor does not intend to pursue any such claims, Debtor must say so, and must say why.
• List and describe the priority claims, including all anticipated administrative expense claims.
Sixth, Debtor must state who will manage and control the reorganized Debtor, and must state the compensation to be paid to each such person, including fringe benefits.
Seventh, Debtor must add a new Paragraph VI.B on page 22 of the Disclosure Statement, then re-letter current Paragraphs B through E on page 22-of the Disclosure Statement. The new Paragraph VI.B must state:
B. Acceptance
The Bankruptcy Code defines acceptance of a plan by an impaired class of claims as acceptance by the holders of at least two-thirds in dollar amount, and more than one-half in number, of the claims of that class which actually cast ballots. The Bankruptcy Code defines acceptance of a plan by an impaired class of equity interests as acceptance by holders of at least two-thirds in number of the equity interests of that class that actually cast ballots. If no creditor or interest holder in an impaired class votes, then that class has not accepted the plan.
Eighth, Debtor must revise current Paragraph VI.D on pages 22-23 of the Disclosure Statement so that it states the following, in its entirety:
E. 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, as in this case:
(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 14, 2013, Debtor must file an amended combined plan and disclosure statement that is consistent with this Order.
IT IS FURTHER ORDERED that no later than February 14, 2013, Debtor also must file a redlined version of the amended combined plan and disclosure statement, showing the changes Debtor has made to "Debtor's Combined Plan and Disclosure Statement" (Docket # 49), filed February 4, 2013.
______________________
Thomas J. Tucker
United States Bankruptcy Judge