Case No. 10-67609.United States Bankruptcy Court, E.D. Michigan, Southern Division.
January 10, 2011
ORDER REQUIRING DEBTOR TO AMEND DISCLOSURE STATEMENT
THOMAS TUCKER, Bankruptcy Judge
On December 30, 2010, Debtor filed a plan and disclosure statement, in a document entitled “Combined Chapter 11 Plan of Reorganization and Disclosure Statement” (Docket # 39). 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, Paragraphs 3.4.1.2 and 3.4.2.2 of the Plan on page 11 state, regarding Class IV-1 (executory contract with Financial Pacific Leasing, LLC), and Class IV-2 (executory contract with First Industrial LP): “This Class SHALL be impaired.” Debtor must amend these paragraphs so that they each state: “This Class is not impaired.” Debtor may also state however, that it reserves the right to argue at the confirmation hearing that Classes IV-1 and IV-2 are impaired.
Second, Debtor must modify Paragraph 14.1 of Article XIV of the Plan on page 15 to state: “The Debtor has no retiree benefit plans which must comply with 11 U.S.C. § 1129(a)(13).”
Third, Paragraph II.B of the Disclosure Statement on page 20 does not provide enough information regarding the background of the sole Principal of the Debtor, John F. Cummings, Jr. Debtor must provide information regarding the education and prior work history/experience of
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Mr. Cummings.
Fourth, Debtor does not provide any information about orders regarding cash collateral, post petition financing and adequate protection. If there have been no such orders entered in this case, Debtor must state this.
Fifth, Paragraph IV.B of the Disclosure Statement on page 21 states that “[t]he risks, conditions and assumptions are outlined in the Liquidation Analysis.” The Liquidation Analysis (Ex. A) does not outline the risks, conditions, and assumptions of the liquidation analysis. Debtor must correct this.
Sixth, the Disclosure Statement does not state what compensation John F. Cummings, Jr. will receive post-confirmation. Debtor must provide this information.
Seventh, Paragraph 2.2.1 of the Plan on page 7 states: “The Claimants of this Group shall receive from the Reorganized Debtor on account of such Allowed Priority Claim(s), Pro-Rata, the Priority Tax Payment which shall commence one month after the Effective Date and continue every month thereafter for a period of five (5) years.” “Priority Tax Payment” is defined in Paragraph 1.2.38 as $1,040.00. It is not entirely clear from Paragraph 2.2.1 whether Debtor means to say that the payment will be $1,040.00 per month or that the total payment will be $1,040.00. If the former is what Debtor intends, Debtor must change the definition of Priority Tax payment to “$1,040.00 per month.”
Eighth, Debtor must change “Class III” at the end of Paragraph 3.3 on page 10 to “Class II.”
Ninth, Paragraph 3.3.1 of the Plan on page 10 states, in relevant part: “This Class shall be
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paid a total of $15,000.00 towards the Allowed Unsecured Claims (the “Dividend”).” Debtor must clarify that it intends to pay the claims in this class on a pro rata basis.
Tenth, Paragraph 3.4.1.1 of the Plan on page 10 states, in relevant part: “To the extent this claimant may or does ultimately claim the existence of an executory contract with the Debtor-in-Possession, Debtor-in-Possession expressly ASSUMES such executory contract.” (Italics added). Debtor must take a position on whether or not it has an assumable executory contract with Financial Pacific Leasing, LLC.
Eleventh, Paragraph 13.1 of the Plan on page 16 states: “All payment[s] due under the confirmed Chapter 11 Plan shall commence sixty (60) days after the Effective Date of the Plan.” This statement is inconsistent with the treatment, stated elsewhere in the Plan, for Class I.1 (payments “commencing one month after the Effective Date”); Class I.2 (payments “commencing one month after the Effective Date”); Class I.3 (payments “commencing one month after the Effective Date”); Class III (“with the first payment due one(1) year after the Effective Date”); Class IV-1 (payments “commencing on the Effective Date”); and Class IV-2 (payments “commencing on the Effective Date”). Debtor must correct this inconsistency.
Accordingly,
IT IS ORDERED that Debtor must file, no later than January 14,2011, 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 January 14, 2011, a redlined version of the amended combined plan and disclosure statement, showing the changes Debtor has made to Debtor’s “Combined Chapter 11 Plan of Reorganization and Disclosure Statement” (Docket # 39), filed December 30, 2010. Debtor
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must submit this redlined document to chambers electronically, through the Court’s order submission program.
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