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EXHIBIT 99.1
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UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
MIDLAND DIVISION
)
In re: )
)
COSTILLA ENERGY, INC. ) Case No. 99-70653
) Chapter 11
Debtor. )
)
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DEBTOR'S PLAN OF REORGANIZATION (LIQUIDATION),
RESTATED TO REFLECT ALL AMENDMENTS AND MODIFICATIONS
Dated: September 15, 2000
Midland, Texas
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Henry J. Kaim Richard T. McMillan
Robert K. Lum Dan G. LeRoy
SHEINFELD, MALEY & KAY, P.C. COTTON, BLEDSOE, TIGHE
1001 Fannin Street, Suite 3700 & DAWSON
Houston, TX 77002 500 W. Illinois, Suite 300
Telephone: (713) 658-8881 Midland, Texas 79701-4337
Facsimile: (713) 658-9756 Telephone: (915) 684-5782
Facsimile: (915) 682-3672
Samuel M. Stricklin
SHEINFELD, MALEY & KAY, P.C.
1700 Pacific Avenue, Suite 4400
Dallas, TX 75201-4618
Telephone: (214) 953-0700
Facsimile: (214) 953-1189
ATTORNEYS FOR THE DEBTOR
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TABLE OF CONTENTS
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Article 1 - Definitions, Construction, and Interpretation
1.1. Definitions..........................................................................Page 1
1.2. Interpretation.......................................................................Page 7
1.3. Application of Definitions and Rules of Construction Contained
in the Bankruptcy Code...............................................................Page 7
1.4. Other Terms..........................................................................Page 7
1.5. Integration Clause...................................................................Page 7
1.6. Plan Documents.......................................................................Page 7
Article 2 - Classification of Claims and Equity Interests
2.1. Claims and Equity Interests Classified...............................................Page 7
2.2. Administrative Expenses and Priority Tax Claims......................................Page 7
2.3. Claims and Equity Interests..........................................................Page 8
2.4. Class 1: Any Allowed Bank Group Claim................................................Page 8
2.5. Class 2: Any Allowed Bankers Trust Swap Claim........................................Page 8
2.6. Class 3: Any Allowed Secured Claim of Dawson.........................................Page 8
2.7. Class 4: Any Other Allowed Secured Claims............................................Page 8
2.8. Class 5: Any Allowed Priority Non-tax Claims.........................................Page 8
2.9. Class 6: Any Allowed Administrative Convenience Claims...............................Page 8
2.10. Class 7: Any Allowed General Unsecured Claims,
including Allowed Bond Claims......................................Page 8
2.11. Class 8: Subordinated Claims, Penalty Claims, Securities Laws
Claims and Disallowed Claims.......................................Page 8
2.12. Class 9: Equity Interests............................................................Page 8
Article 3 - Identification of Impaired Classes; Acceptance or Rejection of The Plan; Effect of
Rejection by One or More Classes of Claims or Equity Interests
3.1. Impaired Classes of Claims and Equity Interests......................................Page 8
3.2. Impairment Controversies.............................................................Page 8
3.3. Classes Entitled to Vote.............................................................Page 8
3.4. Class Acceptance Requirement.........................................................Page 9
3.5. Cramdown.............................................................................Page 9
Article 4 - Provisions for Treatment of Claims And Equity Interests Under The Plan
4.1. Class 1 - The Allowed Bank Group Claim. .............................................Page 9
4.2. Class 2 - Any Allowed Bankers Trust Swap Claim.......................................Page 9
4.3. Class 3 - The Dawson Secured Claim. .................................................Page 10
4.4. Class 4 - Other Secured Claims.......................................................Page 10
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4.5. Class 5 - Any Allowed Priority Non-tax Claims.......................................Page 10
4.6. Class 6 - Any Allowed Administrative Convenience Claims.............................Page 11
4.7. Class 7 - Any Allowed General Unsecured Claims, Including
Allowed Bond Claims.................................................................Page 11
4.8. Class 8 - Disallowed Claims, Subordinated Claims, Securities Laws Claims and
Penalty Claims......................................................................Page 11
4.9. Class 9-Equity Interests in Costilla Energy, Inc....................................Page 11
Article 5 - Provisions for Treatment of Unclassified Claims under The Plan
5.1. Treatment of Administrative Expenses................................................Page 11
5.2. Treatment of Priority Tax Claims....................................................Page 12
Article 6 - Creation of the Trust
6.1. Creation of Trust...................................................................Page 13
6.2. Funding of Res of Trust.............................................................Page 13
6.3. Name of Trust.......................................................................Page 14
Article 7 - Means for Implementation of the Plan
7.1. Vesting of Assets...................................................................Page 14
7.2. Corporate Authority.................................................................Page 14
7.3. Plan is Motion to Sell..............................................................Page 15
7.4. Trustee to Liquidate or Abandon All Assets and Distribute Proceeds..................Page 15
7.5. Control of Books and Records........................................................Page 15
7.6. Dissolution of Debtor...............................................................Page 16
Article 8 - The Trust And Committee
8.1. Loyalty of Committee................................................................Page 16
8.2. Committee Rules of Operation........................................................Page 16
Article 9 - Covenants of The Plan Trustee
9.1. Negative Covenants..................................................................Page 18
9.2. Positive Covenants..................................................................Page 18
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Article 10 - Trust Provisions
10.1. Plan Trustee's Powers. ............................................................Page 19
10.2. Management of Trust's Estate........................................................Page 20
10.3. Maintenance of Records..............................................................Page 20
10.4. Trust Expenses......................................................................Page 21
10.5. Plan Trustee Compensation...........................................................Page 21
10.6. Limitation on Plan Trustee's Liability..............................................Page 21
10.7. Replacing the Trustee...............................................................Page 21
10.8. Duration of Trust...................................................................Page 21
Article 11 - Provisions Governing Distributions
11.1. Order of Distribution of Trust Cash.................................................Page 22
11.2. Timing of Distributions.............................................................Page 23
11.3. Distributions To Be Pro Rata Within Class...........................................Page 23
11.4. Federal Tax Identification Number...................................................Page 23
11.5. Special Provisions Regarding Bondholder Distributions...............................Page 23
11.6 Means of Cash Payment...............................................................Page 25
11.7. Delivery of Distributions...........................................................Page 25
11.8. Time Bar to Cash Payments...........................................................Page 25
11.9. No Distributions Pending Allowance..................................................Page 26
11.10. Withholding of Distribution on Account of Contested Claims..........................Page 26
11.11. Distributions After Allowance.......................................................Page 26
11.12. Distributions After Disallowance....................................................Page 27
11.13. Exculpation and Immunity Regarding Distributions....................................Page 27
Article 12 - Procedures For Resolving And Treating Contested And Disputed Claims
Under The Plan
12.1. Objection Deadline..................................................................Page 28
12.2. Prosecution of Objections...........................................................Page 28
Article 13- Provisions Governing Executory Contracts And Unexpired Leases Under The Plan
13.1. Leases..............................................................................Page 28
13.2. Bar to Rejection Damages............................................................Page 28
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Article 14 - Conditions Precedent to Effective Date
14.1. Conditions Precedent to Effective Date of the Plan..................................Page 29
14.2. Waiver of Conditions................................................................Page 29
Article 15 - Retention of Jurisdiction
15.1. Scope of Jurisdiction...............................................................Page 29
15.2. Failure of the Bankruptcy Court to Exercise Jurisdiction............................Page 30
Article 16 - Miscellaneous Provisions
16.1. Setoff and Other Rights.............................................................Page 30
16.2. Discharge...........................................................................Page 31
16.3. Injunctions.........................................................................Page 31
16.4. Responsible Party Injunction........................................................Page 32
16.5. Lawsuits............................................................................Page 32
16.6. Insurance...........................................................................Page 32
16.7. Release and Exculpation.............................................................Page 32
16.8. De Minimis Distributions............................................................Page 32
16.9. Payment of Statutory Fees...........................................................Page 32
16.10. Bankruptcy Restrictions.............................................................Page 33
16.11. Binding Effect......................................................................Page 33
16.12. Governing Law.......................................................................Page 33
16.13. Modification of Plan................................................................Page 33
16.14. Creditor Defaults...................................................................Page 34
16.15. Severability........................................................................Page 34
16.16. Closing the Case....................................................................Page 34
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DEBTOR'S PLAN OF REORGANIZATION (LIQUIDATION)
RESTATED TO REFLECT ALL AMENDMENTS AND MODIFICATIONS
COSTILLA ENERGY, INC. (the "Debtor"), as debtor-in-possession in the
above-referenced Chapter 11 Case, proposes the following Plan of Reorganization
(Liquidation), Restated to Reflect All Amendments and Modifications, for the
Debtor under chapter 11 of the Bankruptcy Code.
ARTICLE 1
DEFINITIONS, CONSTRUCTION, AND INTERPRETATION
1.1. Definitions.
The capitalized terms used herein shall have the respective meanings set
forth below:
a. "Administrative Convenience Claim" shall mean any General Unsecured
Claim in the amount of $5,000 or less, or any such Claim in excess of $5,000
that, by written election of the holder on its timely submitted Ballot, is
reduced to $5,000. The Debtor may, but is not required to, accept late written
elections.
b. "Administrative Expense" shall mean any cost or expense of
administration of the Chapter 11 Case incurred on or before the Effective Date
entitled to priority under section 507(a)(1) and allowed under section 503(b) of
the Bankruptcy Code, including all allowances of compensation or reimbursement
of expenses to the extent allowed by the Bankruptcy Court under the Bankruptcy
Code.
c. "Allowed," when used with respect to any Claim, except for a Claim
that is an Administrative Expense, shall mean (1) such Claim to the extent it is
not a Contested Claim; (2) such Claim to the extent it may be set forth pursuant
to any stipulation or agreement that has been approved by Final Order; or (3) a
Contested Claim, proof of which was filed timely with the Bankruptcy Court and
(A) as to which no objection was filed by the Objection Deadline, unless such
Claim is to be determined in a forum other than the Bankruptcy Court, in which
case such Claim shall not become Allowed until determined by Final Order of such
other forum and Allowed by Final Order of the Bankruptcy Court; or (B) as to
which an objection was filed by the Objection Deadline, to the extent Allowed by
Final Order.
d. "Amended and Restated Credit Agreement" shall mean the amended and
restated Credit Agreement between Costilla Energy, Inc. and the Bank Group,
dated August 28, 1997, as amended.
e. "Ballot" shall mean the Ballot to be used by creditors to cast their
votes to accept or reject the Plan.
f. "Balloting Agent" shall mean the person designated to receive
Ballots by the Debtor as reflected on the face of the Ballot.
g. "Bank Group" shall mean a syndicate of lenders comprised of Bankers
Trust, Den Norske Bank A.S.A, Foothill Income Trust, L.P., and Wells Fargo Bank
(Texas) N.A.
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h. "Bank Group Claim" shall mean the aggregate of all Claims of any and
all members of the Bank Group asserted in connection with the Amended and
Restated Credit Agreement, except the Bankers Trust Swap Claim.
i. "Bank Group Loan Documents" shall mean all documents representing or
in any way pertaining to the indebtedness of the Debtor and/or liens of the Bank
Group, Banks, or any lender or creditor including, without limitation, any
promissory notes, loan agreements, deeds of trust, security agreements,
financing statements, and other collateral documents (but excluding the Bankers
Trust Documents).
j. "Bankers Trust" shall mean Bankers Trust Company.
k. "Bankers Trust Documents" shall mean all documents representing or
in any way pertaining to the indebtedness of the Debtor and/or the liens of the
Bankers Trust with respect to the Bankers Trust Swap Claim, including, without
limitation, any promissory notes, loan agreements, deeds of trust, security
agreements, financing statements, and other collateral documents.
l. "Bankers Trust Swap Claim" shall mean the claim of Bankers Trust as
separate and distinct from any other claim of Bankers Trust as agent or member
of the Bank Group, arising from or related to the International Swap Dealers
Association, Inc. (ISDA) Master Agreement, dated August 25, 1998, between
Bankers Trust and Costilla Energy, Inc., and the confirmations confirming each
transaction arising from or related to the ISDA.
m. "Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as
amended, and codified at title 11 of the United States Code.
n. "Bankruptcy Court" shall mean the Bankruptcy Court unit of the
United States District Court for the Western District of Texas, Midland
Division, or such other court having jurisdiction over the Chapter 11 Case.
o. "Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy
Procedure, as prescribed by the United States Supreme Court pursuant to section
2075 of title 28 of the United States Code.
p. "Bar Date" shall mean the final date for the filing of proofs of
Claims set by the Bankruptcy Court as January 24, 2000 (or, for governmental
entities, March 1, 2000), or such other date as may apply to a particular Claim
pursuant to a duly-entered order of the Bankruptcy Court.
q. "Bonds" shall mean the debt instruments, known as the 10 1/4% Senior
Notes Due 2006, issued by the Debtor pursuant to the Bond Indenture.
r. "Bond Claim" shall mean any Claim asserted by the holders of Bonds
or the Bond Indenture Trustee on behalf of the holders of the Bonds, issued in
connection with the Bond Indenture.
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s. "Bond Indenture" shall mean the Indenture dated as of October 1,
1996 among and between Costilla Energy, Inc. and State Street Bank and Trust
Company, as Trustee including any supplements and amendments.
t. "Bond Indenture Trustee" shall mean the trustee of the Bonds, as
provided within the Bond Indenture.
u. "Broker/Dealer" shall mean a person who in the ordinary course of
business owns or holds record ownership of Equity Interest(s) or Bonds on behalf
of beneficial owners of such Equity Interest(s) or Bonds, including a
stockbroker.
v. "Business Day" shall mean any day on which commercial banks are open
for business in Midland, Texas.
w. "Cash" shall mean legal tender of the United States of America or
Cash equivalents.
x. "Chapter 11 Case" shall mean the case commenced under chapter 11 of
the Bankruptcy Code by the Debtor on the Petition Date.
y. "Claim" shall have the meaning set out in section 101 of the
Bankruptcy Code.
z. "Claimant" or "Creditor" shall mean the holder of a Claim.
aa. "Collateral" shall mean any property of the Debtor subject to a
valid and enforceable lien to secure the payment of a Claim.
bb. "Confirmation Date" shall mean the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
cc. "Confirmation Hearing" shall mean the hearing held by the
Bankruptcy Court pursuant to Bankruptcy Code section 1128, scheduled for
September 14, 2000 at 10:00 a.m. Central Savings Time, and as it may be
continued from time to time, on confirmation of the Plan.
dd. "Confirmation Order" shall mean the order of the Bankruptcy Court
confirming the Plan.
ee. "Contested," when used with respect to a Claim, shall mean a Claim
against the Debtor (1) that is listed in the Debtor's Schedules as disputed,
contingent or unliquidated regardless of whether a proof of claim has been filed
or not; (2) that is listed in the Debtor's Schedules as undisputed, liquidated
and not contingent and as to which a proof of Claim has been filed with the
Bankruptcy Court, to the extent the proof of Claim amount exceeds the scheduled
amount; (3) that is not listed in the Debtor's Schedules, but as to which a
proof of Claim has been filed with the Bankruptcy Court; or (4) as to which an
objection has been filed. Notwithstanding the foregoing, after the Objection
Deadline, including any extensions thereto, only Claims to which an Objection
has been filed shall be deemed Contested Claims with respect to claims for which
a proof of claim has been filed.
ff. "Contested Claims Escrow" shall mean an escrow account created by
the Plan Trustee as described in Section 11.10 of the Plan.
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gg. "Committee" shall mean the Official Committee of Unsecured
Creditors appointed in the Chapter 11 Case and, after the Effective Date, the
Committee created pursuant to Article 8 of the Plan.
hh. "Court" shall mean the Bankruptcy Court.
ii. "Dawson" shall mean Dawson Geophysical Company.
jj. "Debtor" shall mean Costilla Energy, Inc.
kk. "Directors and Officers Litigation" shall mean any cause of action
that may be brought either directly or derivatively by the Debtor against any
current or former officer or director of the Debtor based on any acts, omissions
or errors that occurred prior to the Petition Date.
ll. "Directors and Officers Litigation Trust" shall have the meaning
set forth in section 6.1 of this Plan
mm. "Disallowed," when used with respect to a Claim, shall mean a Claim
that has been disallowed by Final Order.
nn. "Effective Date" shall mean a Business Day selected by the Debtor
after the first Business Day which is 10 days after the Confirmation Date on
which (i) the Confirmation Order is not stayed and (ii) all conditions to the
effectiveness of the Plan have been satisfied or waived as provided in Article
14 of the Plan.
oo. "Equity Interest" shall mean the interest represented by an "equity
security," as defined in section 101 of the Bankruptcy Code, including all
preferred and common stock in the Debtor.
pp. "Fee Application" shall mean an application of a Professional
Person under section 330 or 503 of the Bankruptcy Code for allowance of
compensation and reimbursement of expenses in the Chapter 11 Cases.
qq. "Fee Claim" shall mean a Claim under section 330 or 503 of the
Bankruptcy Code for allowance of compensation and reimbursement of expenses in
the Chapter 11 Cases.
rr. "Final Order" shall mean (1) an order as to which the time to
appeal, petition for certiorari or move for reargument, rehearing,
reconsideration, new trial, or to alter or amend findings or judgment has
expired and as to which no appeal, petition for certiorari or other proceedings
for reargument, rehearing, reconsideration, new trial, or to alter or amend
findings or judgment shall then be pending or (2) in the event that an appeal,
writ of certiorari, reargument, rehearing, reconsideration, new trial, or motion
to alter or amend findings or judgment thereof has been sought, such order shall
have been affirmed by the highest court to which such order was appealed, or
certiorari has been denied or from which reargument, rehearing, reconsideration,
new trial, or motion to alter or amend findings or judgment was sought, and the
time to take any further appeal, petition for certiorari or move for reargument,
rehearing, reconsideration, new trial, or to alter or amend findings or judgment
shall have expired; provided, however, that no order shall fail to be a Final
Order solely because of the possibility that a motion pursuant to Rule 60 of the
Federal Rules of Civil Procedure may be filed with respect to such order.
ss. "General Unsecured Claim" shall mean any Claim against a Debtor
that is not a Priority Claim, Secured Claim, an Administrative Expense, Penalty
Claim, Disallowed Claim, Securities Laws Claim, or Subordinated Claim.
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tt. "Litigation Trustee" shall have the meaning set forth in section
6.1 of this Plan.
uu. "Leases" shall mean all "leases" and "executory contracts" as such
terms are used within Bankruptcy Code section 365 to which the Debtor was a
party as of the Petition Date.
vv. "Master Service List" shall mean that service list as created
pursuant to that certain order entered on September 13, 1999.
ww. "Objection Deadline" shall mean the date by which objections to
Claims shall be filed with the Bankruptcy Court and served upon the respective
holders of each of the Claims as provided in Section 12.1 of the Plan.
xx. "Penalty Claims" shall mean Claims for penalties or punitive
damages, including Claims denominated as "interest" which the Bankruptcy Court
determines to be punitive in nature.
yy. "Petition Date" shall mean September 3, 1999.
zz. "Plan" or "Plan of Reorganization" shall mean this Plan of
Reorganization (Liquidation), Restated to Reflect All Amendments and
Modifications, either in its present form or as it may hereafter be altered,
amended or modified from time to time.
aaa. "Plan Documents" shall mean the documents that aid in effectuating
the Plan as specifically identified as such herein or as attached as exhibits
hereto, which will be substantially in the respective forms filed by the Debtor
with the Bankruptcy Court prior to the conclusion of the Confirmation Hearing.
bbb. "Plan Participants" shall mean the Debtor, Plan Trustee, the
Committee, and members thereof and directors, officers, employees and advising
professionals of all of the preceding, all as of and after the Confirmation
Date.
ccc. "Plan Trustee" shall mean that person designated by the Committee
to serve as trustee of the Trust, as provided in Section 6.1 of the Plan.
ddd. "Priority Claim" shall mean any Claim (other than an
Administrative Expense) to the extent entitled to priority in payment under
section 507(a) of the Bankruptcy Code.
eee. "Priority Non-tax Claim" shall mean any Priority Claim accorded
priority in right of payment under section 507(a)(3), (4), (5), (6), (7) or (9)
of the Bankruptcy Code.
fff. "Priority Tax Claim" shall mean a Priority Claim of a governmental
unit of the kind specified in section 507(a)(8) of the Bankruptcy Code.
ggg. "Professional Person" shall mean a person retained or to be
compensated pursuant to section 327, 328, 330, 503(b) or 1103 of the Bankruptcy
Code.
hhh. "Pro Rata Share" shall mean the proportion that the amount of an
Allowed Claim in a particular class of Claims bears to the aggregate amount of
all Claims in such class of Claims, including Contested Claims, but not
including Disallowed Claims.
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iii. "Proponent" shall mean the Debtor.
jjj. "Purchaser" shall mean Louis Dreyfus Natural Gas Corporation
("LDNG"), an Oklahoma corporation whose address is 14000 Quail Springs Parkway,
Suite 600 Oklahoma City, Oklahoma, 73134 as purchaser of the assets of the
Debtor under the Asset Purchase Agreement by and between the Costilla Energy,
Inc, as seller and Louis Dreyfus Natural Gas Corp. as Buyer, entered into on
April 20, 2000.
kkk. "Representatives" shall mean any officer, director, financial
advisor, attorney, law firm, accounting firm, financial advising firm, and other
Professional Person.
lll. "Schedules" shall mean the Schedules of assets and liabilities and
the statements of financial affairs filed by the Debtor as required by section
521 of the Bankruptcy Code and Bankruptcy Rule 1007, as such Schedules and
statements have been or may be supplemented or amended.
mmm. "Secured Claim" shall mean a Claim secured by a lien on property
of a Debtor, which lien is valid, perfected and enforceable under applicable
law, is not subject to avoidance under the Bankruptcy Code or other applicable
non-bankruptcy law and which is duly established in the Chapter 11 Cases, but
only to the extent of the value of the Collateral that secures payment of such
Claim.
nnn. "Securities Laws Claim" shall mean a Claim against a Debtor or any
one or more of them (1) arising from rescission of a purchase or sale of a
security of a Debtor or an Affiliate of a Debtor; (2) for damages arising from
the purchase or sale (or offer for purchase or sale) of such a security; (3) for
reimbursement, indemnification or contribution allowed under section 502 of the
Bankruptcy Code on account of a Claim for damages or rescission arising out of a
purchase or sale of a security of a Debtor or an Affiliate of a Debtor; or (4) a
Claim that is subject to section 510(b) of the Code.
ooo. "Subordinated Claim" shall mean any Claim (1) subordinated by
contract or by order of the Bankruptcy Court to the right of payment of General
Unsecured Claims, or (2) which would be paid pursuant to Bankruptcy Code section
726(a)(2)(c), (a)(3), (a)(4), or (a)(5), if this Chapter 11 Case were a case
under chapter 7 of the Bankruptcy Code.
ppp. "Tax Liens" shall mean any statutory liens securing any Allowed
Secured Claims of any Ad Valorem Taxing Authority.
qqq. "Trust" shall mean the Costilla Liquidating Trust created pursuant
to Article 6 of the Plan, but does not include Directors and Officers Litigation
Trust which shall be referred to specifically by name herein.
rrr. "Voting Record Date" shall mean July 20, 2000, the date set by the
Bankruptcy Court for determining the holders of claims entitled to vote to
accept or reject the Plan.
sss. "Withheld Distribution Amount" shall have the meaning as set forth
in Section 11.10 of the Plan.
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1.2. Interpretation.
Unless otherwise specified, all section, article and exhibit references
in the Plan are to the respective section in, article of or exhibit to the Plan,
as the same may be amended, waived or modified from time to time. The headings
and table of contents in the Plan are for convenience of reference only and
shall not limit or otherwise affect the provisions of the Plan. Words denoting
the singular number shall include the plural number and vice versa, and words
denoting one gender shall include the other gender. All exhibits and schedules
attached to the Plan are incorporated herein by such attachment.
1.3. Application of Definitions and Rules of Construction Contained in the
Bankruptcy Code.
Words and terms defined in section 101 of the Bankruptcy Code shall
have the same meaning when used in the Plan, unless a different definition is
given in the Plan. The rules of construction contained in section 102 of the
Bankruptcy Code shall apply to the construction of the Plan.
1.4. Other Terms.
The words "herein," "hereof," "hereto," "hereunder" and others of
similar import refer to the Plan as a whole and not to any particular section,
subsection or clause contained in the Plan. A term used herein that is not
defined herein shall have the meaning ascribed to that term, if any, in the
Bankruptcy Code.
1.5. Integration Clause.
This Plan is a complete, whole, and integrated statement of the binding
agreement between the Debtor, creditors, Equity Interests and the
parties-in-interest upon the matters herein. Parol evidence shall not be
admissible in an action regarding this Plan or any of its provisions.
1.6. Plan Documents.
The Plan Documents are incorporated into and are a part of the Plan as
if set forth in full herein.
ARTICLE 2
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
2.1. Claims and Equity Interests Classified.
For purposes of organization, voting and all confirmation matters, all
Claims (except for Administrative Expenses and Priority Tax Claims) and all
Equity Interests shall be classified as set forth in this Article 2 of the Plan.
This Plan shall only provide distributions to Allowed Claims; nothing within
this Plan shall provide for the Allowance of any Claim.
2.2. Administrative Expenses and Priority Tax Claims.
As provided in section 1123(a)(1) of the Bankruptcy Code,
Administrative Expenses and Priority Tax Claims against the Debtor shall not be
classified for purposes of voting or receiving distributions under the Plan.
Rather, all such Claims shall be treated separately as unclassified Claims on
the terms set forth in Article 5 of the Plan.
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2.3. Claims and Equity Interests.
The Plan classifies the Claims against and Equity Interests in the
Debtor as follows:
2.4. Class 1: Any Allowed Bank Group Claim.
2.5. Class 2: Any Allowed Bankers Trust Swap Claim.
2.6. Class 3: Any Allowed Secured Claim of Dawson.
2.7. Class 4: Any Other Allowed Secured Claims.
2.8. Class 5: Any Allowed Priority Nontax Claims.
2.9. Class 6: Any Allowed Administrative Convenience Claims.
2.10. Class 7: Any Allowed General Unsecured Claims, including
Allowed Bond Claims.
2.11. Class 8: Subordinated Claims, Penalty Claims, Securities Laws
Claims and Disallowed Claims.
2.12. Class 9: Equity Interests.
ARTICLE 3
IDENTIFICATION OF IMPAIRED CLASSES; ACCEPTANCE OR REJECTION
OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE
CLASSES OF CLAIMS OR EQUITY INTERESTS
3.1. Impaired Classes of Claims and Equity Interests.
All Classes of Claims and Equity Interests are impaired under the Plan,
except Classes 4 and 5 which are unimpaired. Class 6 may be unimpaired,
depending on the number and amount of creditors that opt for treatment in such
Class as provided within this Plan. The Court will determine whether such Class
is impaired or not at the Confirmation Hearing.
3.2. Impairment Controversies.
If a controversy arises as to whether any Claim or Equity Interest or
any class of Claims or class of Equity Interests is impaired under the Plan, the
Bankruptcy Court shall, upon notice and a hearing, determine such controversy.
3.3. Classes Entitled to Vote.
Classes 1 through 7 may vote to accept or reject the Plan, except
Classes 4 and 5 which are unimpaired and cannot vote and Classes 8 and 9 which
receive nothing under the Plan, are deemed to have rejected it, and may not vote
to accept or reject the Plan. Class 6 may be unimpaired, depending on the number
and amount of creditors that opt for treatment in such Class as provided within
this Plan.
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3.4. Class Acceptance Requirement.
A class of Claims shall have accepted the Plan if it is accepted by at
least two-thirds in amount and more than one-half in number of the Allowed
Claims in such class that have voted on the Plan.
3.5. Cramdown.
If any class of Claims or Equity Interests shall fail to accept the
Plan in accordance with section 1126(c) of the Bankruptcy Code, the Bankruptcy
Court may still confirm the Plan in accordance with section 1129(b) of the
Bankruptcy Code. The Debtor will seek confirmation of the Plan pursuant to
section 1129(b) with respect to any non-accepting class.
ARTICLE 4
PROVISIONS FOR TREATMENT OF CLAIMS AND
EQUITY INTERESTS UNDER THE PLAN
The classes of Claims against and Equity Interests in the Debtor shall
be treated under the Plan as follows:
4.1. Class 1 - The Allowed Bank Group Claim.
To the extent not fully paid prior to the Effective Date, on the
Effective Date the Allowed Bank Group Claim will be treated as a fully Secured
Claim, including interest at the contractual non-default rate through the
Effective Date (or such other interest rate as the Court may determine as being
required with respect to fully Secured Claims during the pendency of the Chapter
11 Case), costs and reasonable attorneys fees as may be approved by the Court,
and will be paid by the Plan Trustee in full in Cash from the Trust on the
Effective Date; provided, however, the Claims by the Debtor in Objection By
Costilla Energy, Inc. to the Claims of the Bank Group, filed with the Court on
December 10, 1999, are not compromised or released by this Plan.
4.2. Class 2 - Any Allowed Bankers Trust Swap Claim.
To the extent not fully paid prior to the Effective Date, on the
Effective Date the Allowed Bankers Trust Swap Claim will be treated as a fully
Secured Claim, including interest at the interest rate as the Court may
determine as being required with respect to fully Secured Claims during the
pendency of the Chapter 11 Case, costs and reasonable attorneys fees as may be
approved by the Court, and will be paid by the Plan Trustee in full in Cash from
the Trust on the Effective Date; the Court shall determine whether or not
Bankers Trust should receive the contractual non-default rate or the contractual
default rate of interest as part of the Court's ruling with respect to the
pending objection to the Bankers Trust Swap Claim; provided, however, that any
Claims held by the Debtor against Bankers Trust are not compromised or released
by this Plan; provided, further, however, that any Claims held by the Debtor
against Bankers Trust shall be deemed released once the Bankers Trust Swap Claim
is Allowed by a Final Order (entered either by stipulation or upon
adjudication).
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4.3. Class 3 - The Dawson Secured Claim.
Unless otherwise ordered by the Court, the Allowed Dawson Secured Claim
shall be provided the following consensual, compromise treatment if, and only
if, (1) Dawson withdraws its Motion for Relief from Stay before February 18,
2000, and seeks no further relief with respect to, or in connection with, such
Claim pending confirmation (which, Dawson did), and (2) Dawson supports
confirmation of this Plan, including by timely voting in favor of the Plan:
Dawson shall be paid cash on the Effective Date by the Plan Trustee from the
Trust an amount equal to: (1) $400,000, as of February 11, 2000, plus (2)
interest at ten percent per annum (10 %), which shall accrue from February 11,
2000 until such $400,000 is paid in full.
4.4. Class 4 - Other Secured Claims.
Each holder of an Allowed Secured Claim against the Debtor which is not
otherwise classified will be treated as though in a separate class as follows.
Each holder of an Allowed Secured Claim against the Debtor shall, at the sole
option of the Plan Trustee, receive as soon as practicable after the Effective
Date on account of its Allowed Secured Claim: (a) payment of the proceeds of the
sale of the Collateral; or (b) such holder's Collateral. Provided, however, to
the extent such claim has been assumed by the Purchaser, the holder of such
claim shall look solely to the Purchaser for payment and shall receive nothing
from the Debtor, this estate, or the Trust.
4.5. Class 5 - Any Allowed Priority Non-tax Claims.
Each holder of an Allowed Priority Non-tax Claim against a Debtor shall
receive on account of its Allowed Priority Non-tax Claim the amount of such
holder's Allowed Priority Non-tax Claim in one Cash payment from the Trust.
Provided, however, to the extent such claim has been assumed by the Purchaser,
the holder of such claim shall look solely to the Purchaser for payment and
shall receive nothing from the Debtor, this estate, or the Trust.
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4.6. Class 6 - Any Allowed Administrative Convenience Claims.
In lieu of treatment as any other class of claimant under the Plan, and
in full satisfaction of any and all Claims against the Debtor, a holder of an
Allowed Administrative Convenience Claim against the Debtor shall receive,
within 90 days of the Effective Date, Cash from the Trust equal to the full
amount of such Allowed Convenience Claim; provided, however, the total amount of
cash to be paid by the Trust to holders of Class 6 Allowed Claims shall not
exceed $500,000; if the total amount of Allowed Claims in Class 6 exceeds
$500,000 then each holder of an Allowed Claim in Class 6 shall each receive its
Pro Rata Share of $500,000.
4.7. Class 7 - Any Allowed General Unsecured Claims, Including Allowed Bond
Claims.
Allowed Claims in Class 7 shall be treated as follows in full
satisfaction of any and all Claims as hereinafter provided. On the Effective
Date the Existing Bond Indenture and Existing Bonds will be extinguished except
as provided hereinafter. Each Holder of an Allowed General Unsecured Claim,
including Allowed Bond Claims, will receive its Pro Rata Share of available
unencumbered cash as described in Article 11 of the Plan. Multiple distributions
will be made from time to time in the discretion of the Plan Trustee. Provided,
however, to the extent any such claim has been assumed by the Purchaser, the
holder of such claim shall look solely to the Purchaser for payment and shall
receive nothing from the Debtor, this estate, or the Trust.
4.8. Class 8 -- Disallowed Claims, Subordinated Claims, Securities Laws
Claims and Penalty Claims.
The holders of Disallowed Claims, Subordinated Claims, Securities Laws
Claims, Penalty Claims and any other Claims against the Debtor not otherwise
expressly provided for in this Plan shall receive no distributions under the
Plan on account of such Claims.
The exemplary damages portion of the Claim of GNK, Inc., such exemplary
damages being in the amount of $5,000,000 plus interest as may be allowed by
law, as evidenced by judgment entered on August 18, 1999 in the case styled GNK,
Inc. v. Williford, et al. in the District Court, 87th Judicial District,
Freestone County, Texas, shall specifically be a "Penalty Claim" within this
Class, as are all other punitive or exemplary damage Claims, unless otherwise
ordered by the Court.
4.9. Class 9-Equity Interests in Costilla Energy, Inc.
All existing Equity Interests shall be canceled as of the Effective
Date. Holders of Equity Interests shall receive no distributions under the Plan,
except as provided in section 11.1(g) of the Plan.
ARTICLE 5
PROVISIONS FOR TREATMENT OF UNCLASSIFIED
CLAIMS UNDER THE PLAN
5.1. Treatment of Administrative Expenses.
All Administrative Expenses against the Debtor shall be treated as
follows:
a. Time for Filing Administrative Expenses. The holder of an
Administrative Expense, other than (1) a Fee Claim, and (2) a claim for 2000 ad
valorem property taxes, must file with the
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Bankruptcy Court and serve on the Debtor, the Committee and their counsel notice
of such Administrative Expense prior to the commencement of the Confirmation
Hearing. Such notice must include at a minimum: (1) the name of the holder of
the Claim; (2) the amount of the Claim; and (3) the basis of the Claim. Failure
to file and serve this notice timely and properly shall result in the
Administrative Expense being forever barred and discharged.
b. Time for Filing Fee Claims. Each Professional Person or other entity
that holds or asserts an Administrative Expense that is a Fee Claim incurred
before the Effective Date shall be required to file with the Bankruptcy Court,
and serve on all parties required to receive notice, a Fee Application within
such time as the Court may order. Upon approval of the Bankruptcy Court, the
reasonable fees and expenses of the Bond Indenture Trustee incurred during the
course of the Chapter 11 Case shall be allowed as administrative expenses
pursuant to 11 U.S.C. Section 503(b). To the extent necessary, entry of the
Confirmation Order shall amend and supersede any previously entered order of the
Bankruptcy Court regarding procedures for the payment of Fee Claims.
c. Allowance of Administrative Expenses. An Administrative Expense with
respect to which notice has been properly filed pursuant to Section 5.1(a) of
the Plan shall become an Allowed Administrative Expense only to the extent
Allowed by Final Order. An Administrative Expense that is a Fee Claim, and with
respect to which a Fee Application has been properly filed pursuant to Section
5.1(b) of the Plan, shall become an Allowed Administrative Expense to the extent
allowed by a Bankruptcy Court regardless of whether such order is a Final Order
or not.
d. Payment of Allowed Administrative Expenses. Each holder of an
Allowed Administrative Expense against the Debtor shall receive cash from the
Trust upon the Effective Date (1) in the amount of such holder's Allowed Claim
in one Cash payment or (2) such other treatment as may be agreed upon in writing
by the Committee, the Plan Trustee or and such holder; provided, however, to the
extent such claim has been assumed by the Purchaser, the holder of such claim
shall look solely to the Purchaser for payment and shall receive nothing from
the Debtor, this estate, or the Trust.
e. Provision Regarding 2000 Ad Valorem Property Taxes. Ad valorem
property taxes for 2000 shall be considered Administrative Expenses under the
terms of the Plan. The lien rights of the holders of 2000 ad valorem property
tax claims shall not be effected by confirmation of the Plan.
f. Provisions regarding IRS. The Debtor/Trust shall file any tax
returns that may be required for pre-confirmation periods. The IRS may amend its
proof of claim with respect to the amount owing regarding such return in this
case for a period of 30 days after receiving such return and such amendment
shall not be deemed untimely.
Any Priority Claim of the IRS shall be paid within 180 days of such
Claim becoming an Allowed Claim.
5.2. Treatment of Priority Tax Claims.
Each holder of an Allowed Priority Tax Claim against the Debtor shall
receive in full satisfaction of such holder's Allowed Priority Tax Claim Cash
from the Trust in the full amount of such Allowed Priority Tax Claim. Provided,
however, to the extent such claim has been assumed by the Purchaser, the holder
of such claim shall look solely to the Purchaser for payment and shall receive
nothing from the Debtor, this estate, or the Trust.
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ARTICLE 6
CREATION OF TRUSTS
6.1. Creation of Trusts.
On the Effective Date, a trust is hereby created for the purpose of
liquidating the assets of the Debtor for the benefit of the Creditors and
satisfying Claims. The Trust will not engage in the conduct of a trade or
business except to the extent reasonably necessary to, and consistent with, the
liquidating purpose of the Trust. On or before the Confirmation Date, the
Committee shall designate the person to serve as Plan Trustee, subject to the
Court's approval at the Confirmation Hearing. The Plan Trustee shall receive any
and all assets coming into or becoming a part of the Trust and disburse the
proceeds from revenues realized from the operation, lease, assignment, sale or
other similar transaction involving the property constituting the Trust
consistent with the terms of this Plan. This Plan shall serve as the trust
instrument and no other trust instrument shall be prepared or entered into. The
beneficiaries of the Trust will be treated as the grantors and deemed owners of
the Trust. The Plan Trustee must file federal income returns for the Trust as a
grantor trust pursuant to Section 1.671-4(a) of the Federal Income Tax
Regulations.
A separate Directors and Officers Litigation Trust shall be established
for the sole purpose of initiating, prosecuting and, if appropriate, settling
any Directors and Officers Litigation. A Litigation Trustee shall be appointed
to direct the Directors and Officers Litigation Trust, provided, however, that
the Litigation Trustee shall not be an insured entity or individual under any
Directors and Officers Liability Insurance Policy. The Litigation Trustee shall
have the authority to initiate, prosecute, discontinue, or settle any Directors
and Officers Litigation without the need for approval of the Bankruptcy Court.
The net proceeds of any Directors and Officers Litigation (after satisfaction of
all costs and expenses incurred in connection therewith) shall be remitted to
the Trust for distribution to the Creditors in accordance with the terms of the
Plan.
The transfer to the Trust must be treated for all purposes of the
Internal Revenue Code as a deemed transfer of assets to Creditors receiving
interests in the Trust followed by a deemed transfer to such Creditors to the
Trust.
6.2. Funding of Res of Trust.
To fund the Trust, by operation of the Confirmation Order, the Plan
Trustee shall be in possession of and have title to all the Debtor's Property as
of the Effective Date, including stocks, cash, bank deposits, certificates of
deposit, inventory, furniture, fixtures, equipment, real property, and all
documents evidencing and relating to the ownership of Debtor's property. The
Plan Trustee will be substituted as the plaintiff in all lawsuits pending in
which the Debtor is the plaintiff. All accounts receivable of the Debtor shall
be deemed, as of the Effective Date, to have been assigned to the Trust. The
conveyances of all property of the estate shall be accomplished pursuant to this
Plan and the Confirmation Order and shall be effective upon the Effective Date,
without the need of further documentation or instruments of conveyance, other
than the Plan and the Confirmation Order. Upon the Effective Date, the Trust
shall also be deemed to have taken (a) an assignment of all rights or causes of
action in which the Debtor may own an interest against third parties for
obligations existing on the Effective Date, unless expressly released herein,
(b) assignments of bank accounts containing cash in the possession of the
Debtor, and (c) an assignment, bill of sale, deed and/or release covering all
other Property of the Debtor. The Plan Trustee may present such orders as may be
necessary to require third-
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parties to accept and acknowledge such conveyance to the Trust. Such orders may
be presented without further notice other than as has been given in this Plan.
The beneficiaries of the Trust shall be the holders of Allowed Claims in
Class 7.
6.3. Name of Trust.
The Trust shall be known as "The Costilla Liquidating Trust." The Trust
may do business under any name the Plan Trustee deems advisable which is
appropriate.
ARTICLE 7
MEANS FOR IMPLEMENTATION OF THE PLAN
7.1. Vesting of Assets.
On the Effective Date, the property of the estate of the Debtor,
including but not limited to any and all rights, claims, or causes of action,
whether known or unknown, asserted or unasserted, at law or equity, and whether
arising pursuant to the Bankruptcy Code or other applicable law, shall vest in
the Trust and the Directors and Officers Litigation Trust, as described in
Section 6.1 of the Plan.
The Plan Trustee shall be and hereby is appointed the representative of
the estate for the benefit of Creditors of the Debtor for purposes of
prosecuting any and all rights, claims, or causes of action, including, but not
limited to, actions arising pursuant to Chapter 5 of the Bankruptcy Code,
whether known or unknown, asserted or unasserted, at law or equity, and whether
arising pursuant to the Bankruptcy Code or other applicable law. Subject to the
foregoing, the Plan Trustee may prosecute, settle or dismiss rights, claims, or
causes of action as the Plan Trustee sees fit and all proceeds therefrom shall
be the property of the Trust, except as expressly released within this Plan. The
Debtor, its board of directors, officers, attorneys and other professional
advisors shall have no liability for pursuing or not pursuing any such rights,
claims, or causes of action vested in the Trust pursuant to this Plan.
7.2. Corporate Authority.
All actions and transactions contemplated under the Plan, including,
but not limited to, the documents to be executed conveying all of the Debtor's
Property to the Trust, shall be authorized upon confirmation of the Plan without
the need of further board or stockholder resolutions, approval, notice or
meetings, other than the notice provided by serving this Plan on all known
creditors of the Debtor, all Interest Holders as of the Voting Record Date, and
all current directors of the Debtor. The Confirmation Order shall include
provisions dispensing with the need of further board or stockholder resolutions,
approval, notice or meetings and authorizing and directing the President and
Secretary of the Debtor to execute such documents necessary to effectuate the
Plan, which documents shall be binding on the Debtor, the Debtor's creditors and
all of the Debtor's Interest Holders. The Plan Trustee is vested with authority
to take any action on behalf of the corporation of the Debtor, that would
otherwise require the approval of the shareholders, board of directors, or
officers of the Debtor. From and after the Effective Date, the existing board of
directors and officers of the Debtor shall have no further duties or
responsibilities with respect to the Debtor or the Trust, except to the extent
employed by the Trust after the Effective Date.
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7.3. Plan is Motion to Sell.
This Plan is hereby offered and shall be considered a motion pursuant
to Section 363(b) and 363(f) of the Bankruptcy Code to sell any and all Property
of the Debtor as of the Effective Date to the Trust free and clear of all liens,
claims and encumbrances except for the liens, claims and encumbrances of the
Bank Group and Bankers Trust on the Property, which liens against such Property
shall be conclusively deemed to have attached to such Property to the same
extent, validity and priority as such liens existed prior to confirmation. Any
objections to such motion should be made as an objection to confirmation of the
Plan for hearing at the time of confirmation. All Property shall be conveyed to
the Trust free and clear of all liens, claims, and encumbrances. After the
Effective Date, the Trust may present an order or orders to the Court, suitable
for filing in the real property records of every county where real property of
the Debtor is located, which provide that such property is conveyed to the Trust
free and clear of all liens, claims, and encumbrances. The order or orders may
designate all liens, claims, and encumbrances which appear of record and/or from
which the property is being transferred free and clear. The Plan shall be
conclusively deemed to be adequate notice that such lien, claim, or encumbrance
is being extinguished, and no notice, other than by the Plan, shall be given
prior to the presentation of such order. Any party, other than the Bank Group
and Bankers Trust, having a lien, claim, or encumbrance against Property shall
be conclusively deemed to have consented to the transfer of such Property to the
Trust free and clear of such lien, claim, or encumbrance by failing to object to
confirmation of this Plan.
7.4. Trustee to Liquidate or Abandon All Assets and Distribute Proceeds.
The Plan Trustee shall sell, transfer, assign, convey, lease, use, and
otherwise liquidate all assets of the Trust, to pay Allowed Claims as designated
within this Plan, unless the Plan Trustee deems any asset to be of
inconsequential value or burdensome to the Trust. The Plan Trustee may abandon
any asset upon approval by the Committee. The proceeds of such liquidation shall
be distributed as provided in this Plan.
7.5. Control of Books and Records.
The Plan Trustee shall have complete and exclusive access and control
on and after the Effective Date to all books, records, and office space of the
Debtor. The Debtor, any management personnel, brokers, appraisers, and other
professionals shall immediately surrender all such books, records, and office
space to the Plan Trustee on the Effective Date.
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7.6. Dissolution of Debtor.
As soon as the Debtor has performed all its obligations under the Plan
and when the Plan Trustee deems advisable, the Plan Trustee may dissolve the
Debtor and all of the issued and outstanding common stock of Debtor may be
canceled and rendered void, subject to section 11.1(h). The Plan Trustee may
also issue and sell new stock in the Debtor, and any other property of the Trust
with such stock as the Plan Trustee deems advisable. The Plan Trustee shall be
responsible for filing all future tax returns of the Debtor.
ARTICLE 8
THE TRUST AND COMMITTEE
8.1. Loyalty of Committee.
The Committee shall represent the holders of Allowed Claims in Class 7
in connection with the provisions of the Plan. In so doing, the Committee shall
act to facilitate the earliest possible full payment of Allowed Claims of
Classes 1 through 6 and non-classified administrative and priority Claims to
allow for distributions to begin to Class 7.
8.2. Committee Rules of Operation.
The Committee shall function under the following rules:
a. Membership. Except as provided below, the Committee shall
initially consist of the persons who are currently members of
the Committee appointed in this Chapter 11 Case. In the event
that a vacancy occurs by reason of death or resignation the
resulting vacancy shall be filled within thirty (30) days
thereafter. The vacancy shall be filled by a designee of the
majority of the remaining members of the Committee among the
Creditors; provided, however, that so long as the Committee
has three or more members the members may dispense with
filling any vacancy. The Committee shall function as such,
whether or not vacancies are filled. To the extent that the
representative of a member is no longer employed by a member,
such member shall designate a new representative. A member of
the Committee shall be deemed to have resigned from the
Committee at such time as the member receives all the payments
to which it is entitled under the Plan. In the event that a
vacancy occurs in the position of Committee Chairman by reason
of death or resignation or because the Committee Chairman
shall no longer be employed by the Creditor by whom such
Committee Chairman had been employed, the resulting vacancy
shall be filled within thirty (30) days thereafter by a
designee of the majority of the remaining members of the
Committee from among the representatives of the remaining
members of the Committee. Any ties with respect to a vote
regarding the membership of the Committee shall be determined
by the Plan Trustee, whose determination shall be final.
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b. Voting; Notice of Meetings. A majority of the Committee shall
constitute a quorum qualified to act. The vote of a majority
of the members of the Committee present at the time of the
vote, if a quorum was present at the outset of the meeting,
shall be the act of the Committee. The Committee may act on
the written consent of the majority of the members of the
Committee without a meeting. Meetings of the Committee shall
be called by the Chairman or Committee Counsel. When a meeting
is called, the Chairman or Committee Counsel shall fix a time
and place for and give notice of the time, place and purposes
of such meeting to the Committee and to the Plan Trustee if
notice to him is deemed appropriate by the Committee Chairman
or by Committee Counsel. Notices may be delivered personally,
by mail or by telephone or telefax to all members of the
Committee. Such notices shall be given, if by mail, and if
possible, at least three (3) days before the day on which the
meeting is to be held, or, if by personal delivery, telephone
or telefax, if possible, not later than the day before the day
on which the meeting is to be held. Any member of the
Committee may designate a proxy or act for it at any meeting,
which designation may be oral unless requested to be made in
writing by the Chairman.
c. No Compensation. The members of the Committee shall serve
without compensation.
d. Waivers. The Committee shall have the power and right to waive
performance by the Plan Trustee of any condition or covenant
or any part of the Plan to the extent that such condition or
covenant only effects creditors in Class 7 of the Plan. Such
waiver must be in writing signed by a majority of the
Committee and delivered to the Plan Trustee, who may in all
things rely upon such written waiver.
e. Subcommittee. The Committee shall have the power to form a
subcommittee. Such subcommittee shall have all of the powers
vested in it by in the Committee.
f. Advisors. The Committee may consult with attorneys,
accountants, agents, appraisers and other professionals, and
the opinions of the same shall be full protection and
justification to the Committee, its members and the Creditors
for anything done or admitted or suffered to be done in
accordance with said opinions. Post-confirmation
professionals' fees and expenses approved by the Committee
shall be charged as expenses of the Trust and be paid, upon
approval of the Committee, without notice, Court approval or
order. None of the fees and expenses of the Trust or the
Committee shall be paid or charged against the funds held in
reserve for the payment of the Bankers Trust Swap Claim.
g. Dissolution. When all payments provided for in the Plan have
been made to the Creditors and all other obligations under
this agreement fulfilled, the duties, powers and
responsibilities of the Committee, its members, agents,
attorneys and accountants shall terminate forthwith, and the
Committee shall dissolve.
h. Reports. The Committee may, after consultation with the Plan
Trustee, circulate information and reports that, in the sole
discretion of the Committee, are deemed advisable in order to
fully inform the Creditors concerning the operations of the
Plan Trustee and all matters relating to the effectuation of
the Plan.
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i. Limitation on Liability. Each member of the Committee as it
may be constituted from time to time shall use its best
judgment and discretion in all things connected herewith and
shall not be personally liable in any case whatever arising in
connection with the activities of the Committee or the Plan
Trustee provided under the Plan, either for his acts or for
his failure to act, unless he shall have been guilty of
willful fraud, willful misconduct or gross negligence. No
member or his/her employer shall be held liable or responsible
for the willful fraud, willful misconduct or gross negligence
of any other member of the Committee, or any employees of the
Committee, or of the Plan Trustee. The Committee and its
members shall not be required to give any bond for the
faithful performance of its or their duties hereunder.
j. Resignation. Any member of the Committee may resign from his
position upon written notice to the Chairman and Committee
Counsel.
k. Right to Deal with the Liquidating Trust. Any Creditor,
including any member of the Committee, shall have the right to
deal with the Trust. For example, a Committee member may
purchase or lease property from the Trust and may loan money
to the Trust upon such terms and conditions as would be
extended to a third party, but the Committee member so
purchasing, leasing or loaning, may not vote on the
transaction.
l. Powers and Duties of the Committee. After confirmation of the
Plan, the Committee shall supervise and direct the Plan
Trustee and the Litigation Trustee in carrying out the
provisions of the Plan. The Committee may enact by-laws to
further designate the manner in which the Committee acts. The
Committee may delegate as much ultimate responsibility to the
Plan Trustee or the Litigation Trustee as the Committee deems
appropriate. The Committee shall continue to act after the
Effective Date.
ARTICLE 9
COVENANTS OF THE PLAN TRUSTEE
9.1. Negative Covenants.
During the term of the Plan, the Plan Trustee shall not take any action
contrary to the Plan.
9.2. Positive Covenants.
During the term of the Plan, the Plan Trustee, shall, unless otherwise
waived in writing by the Committee:
a. Distribute to the Committee such financial data and financial
statements as the Committee may request.
b. Furnish to each member of the Committee notice of proposed
distributions.
c. Maintain insurance for full value with extended coverage at
all times with respect to all insurable personal property of
Debtor, now existing or hereafter acquired, against risks of
fire, theft and other risks as the Committee may require.
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d. Permit access by the Committee or any person designated by the
Committee to all records maintained by the Plan Trustee during
business hours. Until the Bankers Trust Swap Claim has been
determined by Final Order and paid in full, the Plan Trustee
shall provide Bankers Trust with reasonable access to such
books and records of the Trust to satisfy Bankers Trust that
the full amount of its asserted Claim, including the asserted
default rate of interest, is being reserved.
e. Provide the holders of interests in the Trust with valuations
of the property transferred to the Trust. Such valuations will
be used for all federal income tax purposes.
ARTICLE 10
TRUST PROVISIONS
10.1. Plan Trustee's Powers.
The Plan Trustee shall serve with bond, in an amount to be set by the
Court. Subject to the terms of the Plan, the Plan Trustee shall have full power
and authority, without further notice or Bankruptcy Court approval, to:
a. Perfect and secure its rights, title and interest to the
properties comprising the Trust estate;
b. Reduce all property in his possession to Cash and hold the
same;
c. Sell and convert the properties of the Trust to cash, on terms
and conditions the Plan Trustee deems advisable, and
distribute the net proceeds pursuant to the Plan;
d. To contract to sell and sell the Trust estate or any part or
parts thereof for such purchase price and for cash or on such
terms as the Plan Trustee shall deem appropriate;
e. Pay and discharge any costs, expenses or obligations deemed
necessary to preserve the Trust's estate or any part thereof
or to preserve this Trust;
f. Improve or repair the Trust's property or any part thereof;
g. Purchase insurance of all kinds sufficient to protect fully
the Trust's property or any part or parts thereof and to
protect from liability;
h. Deposit trust funds;
i. Draw checks and make disbursements;
j. Employ and have such attorneys, accountants, appraiser and any
other professionals as are necessary in the administration of
the Trust and to compensate the same from the Trust estate,
which professionals may be the professionals retained by the
Committee and/or the Debtor; such expenses shall be paid, upon
approval of the Committee, without notice, Court approval or
order; pay the costs and expenses of the Directors and
Officers Litigation Trust, including the fees and expenses of
the Directors and Officers Litigation Trust attorneys,
accountants, appraiser and any other professionals as are
necessary in
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the administration of such Directors and Officers Litigation
Trust (as determined by the Litigation Trustee) and to
compensate the same from the Trust estate, which professionals
may be the professionals retained by the Committee and/or the
Debtor;
k. Employ brokers and salesmen;
l. Take any action necessary to protect the Trust estate;
m. Enter into contracts and execute negotiable and non-negotiable
obligations;
n. Sue and be sued;
o. Appoint, remove and act through agents, manager and employees
and confer upon them such power and authority as may be
necessary or advisable;
p. Foreclose as an incident to the collection of any debt and bid
on property of such foreclosure sale or acquire the property
from the mortgagor or obligor without foreclosure;
q. When and if advisable, object to claims or seek their
subordination;
r. Compromise controversies;
s. Seek the valuation of assets by the Bankruptcy Court;
t. Borrow money;
u. Establish a reserve for the payment of future expenses of the
Trust and the Directors and Officers Litigation Trust;
provided, however, that none of the fees and expenses of the
Trust , the Committee or the Directors and Officers Litigation
Trust shall be paid or charged against the funds held in
reserve for the payment of the Bankers Trust Swap Claim.;
v. Withhold employment and income, or other taxes as is
appropriate;
w. Distribute at least annually the net income and net proceeds
from the sale of assets in excess of amounts reasonably
necessary to maintain the value of property remaining in the
Trust or to meet contingent liabilities as provided in the
Plan; and
w. Take such other actions, as may be necessary or helpful to
consummate the Plan.
10.2. Management of Trust's Estate.
The Plan Trustee shall invest all funds received into the Trust in the
same manner as chapter 7 trustees are required to invest funds pursuant to the
guidelines of the United States Trustee, provided that the Plan Trustee's shall
invest funds held in only demand and time deposits, such as short-term
certificates of deposit, in banks or other savings institutions, or other
temporary, liquid and low-risk investments, such as Treasury bills.
10.3. Maintenance of Records.
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The Plan Trustee shall keep or cause to be kept books containing a
description of all property from time to time constituting the Trust estate,
accounting of all receipts and disbursements.
10.4. Directors and Officers Litigation Trust Expenses, Trust Expenses and
Committee Expenses.
All costs, expenses and obligations incurred by the Plan Trustee, the
Litigation Trustee, and/or the Committee in administrating this Trust and/or the
Directors and Officers Litigation Trust, or in any manner connected, incidental
or related thereto including costs, fees, and expenses of the Bond Indenture
Trustee in effecting distribution from the Trust hereunder shall be a charge
against the unencumbered properties owned by the Trust and remaining from time
to time in the hands of the Plan Trustee. Such expenses shall be paid as they
are incurred without the need for court approval. The Committee members'
individual legal fees shall not be charged against the Trusts' estate, but the
expenses incident to the attendance of a meeting shall be chargeable. None of
the fees and expenses of the Trust, the Directors and Officers Litigation Trust,
or the Committee shall be paid or charged against the funds held in reserve for
the payment of the Bankers Trust Swap Claim.
10.5. Trustee Compensation.
The Plan Trustee shall be compensated for his services as may be agreed
to by the Committee, without the need of Court approval. The Litigation Trustee
shall serve without compensation.
10.6. Limitation on Plan Trustee's Liability.
The Plan Trustee shall not be liable for any act he may do or omit to
do as Plan hereunder or acting in good faith in the exercise of his best
judgment, and the fact that such act or omission was advised, directed or
approved by the Committee or advised by an attorney acting as attorney for this
Trust, shall be conclusive evidence of such good faith and best judgment, nor
shall the Plan Trustee be liable in any event except for his own willful
misconduct.
10.7. Replacing the Trustee.
In the event of the death or resignation of the Plan Trustee, a
successor Trustee shall be appointed by the Committee. The Committee may dismiss
the Plan Trustee, without cause, at any time and name a successor Plan Trustee.
The Plan Trustee may resign at any time by giving written notice of his
intention to do so addressed to the Chairman of the Committee and Committee
Counsel and such resignation shall be effective upon the date and time provided
in an instrument in writing, signed and acknowledged by the Committee and
delivered to the resigning Plan Trustee, which also names the successor Plan
Trustee.
A successor Plan Trustee shall be vested with all the rights,
privileges, powers and duties of his predecessor.
10.8. Duration of Trust.
The Trust shall become effective upon the Effective Date. Thereupon
these Trust provisions and Trust shall remain and continue in full force and
effect until the Trust's estate has been wholly converted to cash or abandoned
and all costs, expenses and obligations incurred in administering this Trust
have been fully paid and all remaining income, proceeds and avails of the
Trust's estate have been distributed in payment of Allowed Claims pursuant to
the provisions of the Plan; the Trust shall in no event remain
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in existence for longer than five years, provided, however, that upon approval
of the Court upon a finding that an extension(s) of such five-year term is
necessary to the liquidating purpose of the Trust, the term of the Trust may be
extended for a finite term based on its particular facts and circumstances; each
further extension must be approved by the Court within 6 months of the beginning
of the extended term. Upon the occurrence of the termination of the Trust, the
Plan Trustee shall file with the Court a report thereof, seeking an order
discharging the Plan Trustee and providing such injunctive relief required with
respect to Claims which are discharged, and provide notice thereof to all
Creditors whose Claims were not paid in full pursuant to the Plan.
ARTICLE 11
PROVISIONS GOVERNING DISTRIBUTIONS
11.1. Order of Distribution of Trust Cash.
The Plan Trustee shall distribute or reserve available cash of the
Trust in the following order of priority:
a. to pay Allowed Secured Claims of Classes 1, 2, and 3 pursuant
to paragraphs 4.1, 4.2 and 4.3 of the Plan; and to pay any
Allowed Secured Claim in Class 4, but only to the extent that
such cash is the proceeds of the liquidation of the Collateral
of holder of such Allowed Secured Claim;
b. to pay Allowed Administrative Expense Claims of this chapter
11 case pursuant to paragraph 5.1;
c. to pay the post-confirmation expenses of the Trust and the
Committee, including a reserve of such cash to pay future
expenses of the Trust and the Committee as the Plan Trustee
deems advisable;
d. to pay Allowed Claims of Class 5 pursuant to paragraph 4.5 of
the Plan, in order of priority, with Bankruptcy Code section
507(a)(3) Allowed Claims being satisfied in full first,
Bankruptcy Code section 507(a)(4) being satisfied in full
next, and then Bankruptcy Code section 507(a)(5), and so on;
e. to pay the Allowed Claims entitled to priority pursuant to
Bankruptcy Code section 507(a)(8) pursuant to paragraph 5.2 of
the Plan;
f. to pay Allowed Claims of Class 6 pursuant to paragraph 4.6 of
the Plan;
g. to pay Allowed Claims of Class 7 pursuant to paragraph 4.7 of
the Plan and, with respect to the Bonds, in accordance with
paragraph 11.5; and
h. in the event that funds become available after paying all such
creditors, with interest, and all costs and expenses of the
Trust and the Litigation Trust, the Plan Trustee shall
distribute any residual of the Trust to the shareholders of
the Debtor as of the Effective Date, in the order of the
rights of such shareholders (i.e., first to preferred
shareholders, then to common shareholders).
Provided, however, with respect to each of the categories in (d)
through (g) above, to the extent such claim has been assumed by the Purchaser,
the holder of such Claim shall look solely to the
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Purchaser for payment and shall receive nothing from the Debtor, this estate, or
the Trust. Allowed Claimants entitled to distribution under this paragraph shall
be deemed the sole beneficiaries of the Trust until they are paid in full or the
Trust has been exhausted.
11.2. Timing of Distributions.
The Plan Trustee shall make all payments upon the Effective Date that
are called for by the Plan to be made on the Effective Date. Otherwise,
distributions to claimants, or in the case of the Bonds to the Bond Indenture
Trustee, shall be made by the Plan Trustee each time the Plan Trustee, in his
sole discretion, has accumulated sufficient funds to merit a distribution,
considering the number of Creditors and dollar amount of Creditors in such Class
or group of claims, or when the Trustee has determined that no additional funds
are likely to be collected. The Plan Trustee shall have discretion to determine
the amount and timing of all distributions. Notwithstanding any of the foregoing
to the contrary, within ten (10) days of the Bankers Trust Swap Claim being
determined by Final Order (either by stipulation or adjudication), the Plan
Trustee shall pay the full amount of such Allowed Claim as determined by such
Final Order.
11.3. Distributions To Be Pro Rata Within Class.
All distributions constituting a partial payment to a class of Allowed
Claims shall be made on by Pro Rata Share to the holders of Allowed Claims in
such class.
11.4. Federal Tax Identification Number.
The Plan Trustee may suspend distribution to any Creditor that has not
provided the Plan Trustee with its Federal Tax Identification number or social
security number, as the case may be.
11.5. Special Provisions Regarding Bondholder Distributions.
a. Surrender of Outstanding Securities. Except as otherwise
provided herein each holder of a Bond evidencing an Allowed
Claim against a Debtor shall surrender such instrument or
certificated security to the Bond Indenture Trustee (with a
duly executed letter of transmittal); surrender of the Bonds
shall be made solely to the Bond Indenture Trustee; the Plan
Trustee and the Balloting Agent shall have no obligation to
accept the surrender of Bonds directly from any bondholder,
broker or dealer. No Distribution hereunder shall be made to
or on behalf of any holder of such Claim unless and until such
instrument or certificated security is received or the
nonavailability of such instrument or certificated security is
established to the satisfaction of the Bond Indenture Trustee.
The Bond Indenture Trustee may reasonably require security
and/or indemnity from the purported holder of such instrument
or certificated security to hold it harmless in respect of
such instrument or certificated security and any distributions
made in respect thereof. Any such holder that fails to
surrender such instrument or satisfactorily explain its
nonavailability to the Bond Indenture Trustee within two years
of the Effective Date shall be deemed to have no further Claim
against the Trust or its property in respect of such Claim and
shall not participate in any distribution hereunder.
Following the Effective Date, holders of Bonds will receive
from the Bond Indenture Trustee specific instructions
regarding the time and manner in which the Bonds are to be
provided to the Bond Indenture Trustee. Pending such
surrender, such Bonds will be deemed canceled and shall
represent only the right to received the distributions to
which
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the holder is entitled under this Plan. Any bond which is
lost, stolen, mutilated or destroyed, shall be deemed
surrendered when the holder of a Claim based thereon delivers
to the Bond Indenture Trustee (a) evidence satisfactory to the
Bond Indenture Trustee of the loss, theft, mutilation or
destruction of such instrument or certificate, and (b) such
security or indemnity as may be required by the Bond Indenture
Trustee to hold it harmless with respect thereto.
Except with respect to any holder which elects treatment in
Class 6, the Certificates evidencing the Bonds shall be
returned to the holder with the INITIAL distribution by the
Bond Indenture Trustee, with the following legend added to the
certificate:
Initial distribution on Claim evidenced by this
certificate made as provided in the Plan of
Reorganization (Liquidation) as Restated to Reflect
All Amendments and Modification, dated September 15,
2000, for Costilla Energy, Inc. on _____________ .
The sole remaining right evidenced by this
certificate is the conditional/contingent right to
receive additional distributions, if any, from the
Costilla Liquidating Trust as provided within such
Plan.
In accordance with the Bond Indenture, the Debtor (or the Plan
Trustee on behalf of the Debtor) shall sign replacement bonds
as the Bond Indenture Trustee determines to be necessary, to
reflect the surrender of, and final distribution with respect
to, Bonds of holders that have made the election to be treated
in Class 6.
b. Cancellation of Bonds and Agreements. On the Effective Date,
except as otherwise provided for herein, the Bonds and any
other note, bond, indenture or other instrument or document
evidencing or creating any indebtedness or obligation of the
Debtor will be deemed canceled and of no further force or
effect without any further action on the part of the
Bankruptcy Court, any Person or any governmental entity or
agency, except for the right to receive the distributions made
under the Plan, as provided for herein. The holders of such
canceled Bonds and notes will have no rights arising from or
related to such Bonds or the cancellation thereof, except the
rights provided pursuant to the Plan.
c. Limited Survival of Certain Documents. Each indenture or other
agreement that governs the rights of the holder of a Claim and
that is administered by an indenture trustee, an agent or a
servicer shall (1) continue in effect solely for the purposes
of: (a) allowing such indenture trustee, agent or servicer to
process distributions made on a account of such Claims under
this Plan, and (b) permitting such indenture trustee,
including the Bond Indenture, and the Bonds agent or servicer
to maintain any rights or liens it may have to distributions
to holders of Claims for fees, costs, expenses and
indemnification under such indenture or other agreement and to
be paid or reimbursed for such prepetition and postpetition
fees, costs, expenses and indemnification from the
distributions (until payment in full of such fees, costs,
expenses or indemnification) that are governed by the
respective indenture of the agreement in accordance with the
provisions set forth therein and (2) shall be of no further
force or effect with respect to the obligations of, and/or
Claims against, the Debtors under, relating or pertaining to
any agreements, indentures or certificates of designations,
governing the Bonds and any other note, bond, indenture or
other instrument or documents evidencing or creating any
indebtedness or obligation of the Debtor, all of which shall
be released and discharged.
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d. Instructions to Bond Indenture Trustee. Prior to any
Distribution on account of any Bonds, the Plan Trustee shall
advise the Bond Indenture Trustee of the amount anticipated to
be distributed on account of Bond Claims at such distribution,
including the amounts to be allocated to Bond Claims in Class
6, identification of such Bonds, the balance of the Bond
Claims in Class 7, and such other information as the Bond
Indenture Trustee may reasonably request to effect
distribution hereunder. The Bond Indenture Trustee may rely
conclusively upon such advise and information. The Plan
Trustee shall deliver any and all distributions allocated to
the Bonds to the Bond Indenture Trustee for redistribution to
the holders of Bonds in accordance with the Bond Indenture and
this Plan. No holder of Bonds shall have any right to a direct
distribution from the Trust; rather the Plan Trustee shall
make distribution to the Bond Indenture Trustee as though the
Bonds constitute a single claim against the Trust held by the
Bond Indenture Trustee.
e. Bondholder Record Date. The first record date for the holders
of Bonds to receive the initial distribution under the Plan
shall be at the close of business on the Effective Date. A
separate record date with respect to the Bond shall be made
for each subsequent distribution. Such record date shall be
set by the Plan Trustee. The Plan Trustee shall give fifteen
(15) days advance notice of each such record date for any
subsequent distribution to (1) the Bond Indenture Trustee; and
(2) any person specifically requesting in writing delivered to
the Plan Trustee that they be given notice of any record date.
Notice shall be deemed given by and on the day that the Plan
Trustee deposits notice in the United States first class mail,
postage prepaid, to the address provided by any such person
and the Bond Indenture Trustee.
11.6. Means of Cash Payment.
Cash payments made pursuant to the Plan shall be in U.S. funds, by
check drawn on a domestic bank, or, at the Plan Trustee's option, by wire
transfer from a domestic bank, except that payments made to foreign creditors
holding Allowed Claims may be in such funds and by such means as are customary
or as may be necessary in a particular foreign jurisdiction.
11.7. Delivery of Distributions.
Subject to Bankruptcy Rule 9010, and with respect to Bond Claims, the
provisions of the Plan and the Bond Indenture, distributions to holders of
Allowed Claims shall be made at the address of each such holder as set forth on
the proofs of Claim filed by such holders (or at the last known addresses of
such a holder if no proof of Claim or proof of Equity Interest is filed or if
the Plan Trustee has been notified in writing of a change of address), except as
provided below. If any holder's distribution is returned as undeliverable, no
further distributions to such holder shall be made unless and until the Plan
Trustee is notified of such holder's then current address, at which time all
missed distributions shall be made to such holder without interest. Amounts in
respect of undeliverable distributions shall be returned to the Plan Trustee
until such distributions are claimed. All claims for undeliverable distributions
shall be made on or before the second anniversary of the Effective Date. After
such date, all unclaimed property shall revert to the Trust or any successor
thereto, and the claim of any holder with respect to such property shall be
discharged and forever barred.
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11.8. Time Bar to Cash Payments.
Checks issued by the Plan Trustee in respect of Allowed Claims shall be
null and void if not negotiated within six months after the date of issuance
thereof. Requests for reissuance of any check shall be made directly to the Plan
Trustee by the holder of the Allowed Claim with respect to which such check
originally was issued. Any claim in respect of such a voided check shall be made
on or before the later of (1) the first anniversary of the Effective Date or (2)
90 days after the date of reissuance of such check. After such date, all Claims
in respect of void checks shall be discharged and forever barred.
11.9. No Distributions Pending Allowance.
Notwithstanding any other provision of the Plan, no payment or
distribution shall be made with respect to any Claim to the extent it is a
Contested Claim unless and until such Contested Claim becomes an Allowed Claim.
11.10. Withholding of Distribution on Account of Contested Claims.
Except as limited by paragraph 11.12, the Plan Trustee shall withhold
from any distribution an amount sufficient to be distributed on account of the
full amount of Contested Claims (the "Withheld Distribution Amount"). The
Withheld Distribution Amount shall be placed in the Contested Claims Escrow held
by the Plan Trustee. To the extent requested by the Plan Trustee the Bankruptcy
Court may estimate (upon notice and opportunity for hearing to the claimant) the
amount to be placed in escrow on account of any Contested Claim, which amount
need not be the full amount of the asserted Claim.
11.11. Distributions After Allowance.
Payments and distributions to each holder of a Contested Claim, to the
extent that such Claim ultimately becomes an Allowed Claim, shall be made in
accordance with the provisions of the Plan governing the class of Claims to
which the respective holder belongs. With respect to any Claim that is a
Contested Claim on the Effective Date, as soon as practicable after the date
that the order or judgment of the Bankruptcy Court allowing such Contested Claim
becomes a Final Order the Plan Trustee shall distribute to the holders of such
Claim from the Contested Claims Escrow any distribution that would have been
distributed to such holder if the Claim had been Allowed on the Effective Date,
without interest on such Claim or distribution, unless interest is required upon
an Allowed Secured Claim pursuant to Bankruptcy Code section 506 (interest shall
accrue on the Bankers Trust Swap Claim at a rate as may be allowed by the
Court). Notwithstanding any of the foregoing to the contrary, until the Bankers
Trust Swap Claim has been determined by Final Order and paid, the Plan Trustee
will establish and maintain on account of the Bankers Trust Swap Claim a cash
reserve (the "Bankers Trust Swap Reserve") equal to the full amount of the
Bankers Trust Swap Claim, including interest at the default rate and all costs
and fees that have accrued or may accrue on the Bankers Trust Swap Claim. From
time to time Bankers' Trust may provide the Plan Trustee with a statement
showing interest, costs and expenses that have accrued on the Bankers Trust Swap
Claim, and, promptly after his receipt of each such statement, the Plan Trustee
shall add to the Bankers Trust Swap Claim Reserve an amount equal to the total
amount set forth in each statement; provided, however, the Plan Trustee need not
reserve for any costs or fees that the Court determines are unreasonable.
Notwithstanding any of the foregoing to the contrary, within ten (10) days of
the Bankers Trust Swap Claim being determined by Final Order (either by
stipulation or adjudication), the Plan Trustee shall pay the full amount of such
Allowed Claim as determined by such Final Order.
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11.12. Distributions After Disallowance.
Any Withheld Distribution Amount in the Contested Claims Escrow after
any and each objection to a Contested Claim has been resolved by Order of the
Bankruptcy Court shall be distributed in accordance with the provisions of the
Plan. The Plan Trustee in all things can and shall rely on an order of the
Bankruptcy Court fixing the amount of a Claim or disallowing a Claim; the Plan
Trustee shall make no further reserve on account of Claim that has been
disallowed or reduced by the Bankruptcy Court, unless the effected claimant
obtains a stay pending appeal that requires that the Plan Trustee reserve on
account of such Claim. In no event shall the reversal or modification on appeal
or reconsideration of a Bankruptcy Court order disallowing a Claim affect the
validity or require the disgorgement of any distributions having already been
made pursuant to the Plan, if such claimant did not obtain a stay pending
reconsideration or appeal which required a further reserve.
11.13. Exculpation and Immunity Regarding Distributions.
The Plan Trustee and its Representatives, and the Bond Indenture
Trustee and its Representatives, from and after the Effective Date, are hereby
exculpated by all persons, holders of Claims and Equity Interests, entities and
parties-in-interest receiving distributions under the Plan from any and all
claims, causes of action and other assertions of liability arising out of the
Plan Trustee's and/or the Bond Indenture Trustee's discharge of the powers and
duties conferred upon it by the Plan or any order of the Bankruptcy Court
entered pursuant to or in furtherance of the Plan or applicable law, except
solely for actions or omissions arising out of willful misconduct. No current
holder of a Claim or an Equity Interest; and no representative thereof, shall
have or pursue any claim or cause of action (1) against the Plan Trustee and/or
the Bond Indenture Trustee for making payments or taking any action in
accordance with the Plan or for implementing the provisions of the Plan or (2)
against any holder of a Claim for receiving or retaining payments or other
distributions as provided for by the Plan.
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ARTICLE 12
PROCEDURES FOR RESOLVING AND TREATING
CONTESTED AND DISPUTED CLAIMS UNDER THE PLAN
12.1. Objection Deadline.
As soon as practicable, but in no event later than one year after the
Effective Date, unless extended by order of the Bankruptcy Court, objections to
Claims shall be filed with the Bankruptcy Court and served upon the holders of
each of the Claims to which objections are made; provided, however, that the
August 31, 2000, deadline to object to the Bankers Trust Swap Claim shall not be
extended or effected by the Plan.
12.2. Prosecution of Objections.
On and after the Effective Date, except as the Bankruptcy Court may
otherwise order, the filing, litigation, settlement or withdrawal of all
objections to claims may be made by the Plan Trustee.
ARTICLE 13
PROVISIONS GOVERNING EXECUTORY CONTRACTS AND
UNEXPIRED LEASES UNDER THE PLAN
13.1. Leases.
The Plan constitutes and incorporates a motion by the Debtor to reject,
as of the Confirmation Date, all Leases which were not assumed or assumed and
assigned prior to the Effective Date; provided, however, that (1) all software
licences, geophysical licences, geological data bases, digital mapping data
bases, geological software, and computer databases which were not assigned to
the Purchaser are hereby assumed and assigned to the Trust, with no further
payments or cure amounts owing by the Debtor or the Trust; and (2) all insurance
policies in which the Debtor or the Debtor's property are insured and which were
not assigned to the Purchaser are hereby assumed and assigned to the Trust,
without prejudice to the Plan Trustee canceling such policies in the Plan
Trustee's discretion.
Provided, however, section 13.1 of the Plan is hereby revised such that
by confirmation of the Plan the Court approves the amendment to the Debtor's
lease with MRO Southwest, Inc. to be amended pursuant to the terms attached
hereto as Exhibit "A." In all other respects section 13.1 remains the same.
13.2. Bar to Rejection Damages.
If the rejection of a Lease by the Debtor results in damages to the
other party or parties to such Lease, a Claim for such damages, if not
heretofore evidenced by a filed proof of Claim, shall be forever barred and
shall not be enforceable against the Debtor, the Trust or their respective
properties or their agents, successors or assigns, unless a proof of Claim is
filed with the Bankruptcy Court and served upon counsel for the Debtor on or
before 30 days after the Confirmation Date.
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ARTICLE 14
CONDITIONS PRECEDENT TO EFFECTIVE DATE
14.1 Conditions Precedent to Effective Date of the Plan.
The occurrence of the Effective Date of the Plan is subject to
satisfaction of the following conditions precedent:
a. All documents effectuating the Plan shall have a. been
executed and delivered by the parties thereto, and all
conditions to the effectiveness of such documents shall have
been satisfied or waived as provided therein; and
b. The Confirmation Order shall have become a Final Order.
14.2 Waiver of Conditions.
The conditions to the Effective Date may be waived, in whole or in
part, by the Debtor, at any time, without notice, an order of the Bankruptcy
Court or any further action other than proceeding to consummation of the Plan.
The failure to satisfy or waive any condition may be asserted by the Debtor
regardless of the circumstances giving rise to the failure. The failure of the
Debtor to exercise any of the foregoing rights shall not be deemed a waiver of
any other rights and each right shall be deemed an ongoing right that may be
asserted at any time.
ARTICLE 15
RETENTION OF JURISDICTION
15.1. Scope of Jurisdiction.
Pursuant to sections 1334 and 157 of title 28 of the United States
Code, the Bankruptcy Court shall retain and have jurisdiction over all matters
arising in, arising under and related to the Chapter 11 Case and the Plan
pursuant to, and for the purposes of sections 105(a) and 1142 of the Bankruptcy
Code and for, among other things, the following purposes:
a. To hear and determine pending applications for a. the
assumption or rejection of Leases and the allowance of Claims
resulting therefrom;
b. To hear and determine any and all adversary b. proceedings,
applications and contested matters, including any remands of
appeals;
c. To ensure that distributions to holders of Allowed Claims are
accomplished as provided herein;
d. To hear and determine any timely objections to or applications
concerning Claims or the allowance, classification, priority,
estimation or payment of any Claim or Equity Interest;
e. To enter and implement such orders as may be appropriate in
the event the Confirmation Order is for any reason stayed,
revoked, modified, reversed or vacated;
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f. To enter and implement such orders as may be necessary or
appropriate to execute, interpret, implement, consummate or
enforce the Plan and the transactions contemplated thereunder;
g. To consider any modification of the Plan pursuant to section
1127 of the Bankruptcy Code, to cure any defect or omission or
to reconcile any inconsistency in any order of the Bankruptcy
Court, including, without limitation, the Confirmation Order;
h. To hear and determine all Fee Applications and Fee Claims;
i. To hear and determine disputes arising in connection with the
execution, interpretation, implementation, consummation or
enforcement of the Plan;
j. To enter and implement orders or take such other actions as
may be necessary or appropriate to restrain interference by
any entity with the consummation or implementation of the
Plan, including, without limitation, to issue, administer and
enforce injunctions provided for in the Plan and the
Confirmation Order;
k. To recover all assets of the Debtor and property of the
estates, wherever located;
l. To hear and determine matters concerning state, local and
federal taxes in accordance with sections 346, 505 and 1146 of
the Bankruptcy Code;
m. To hear and determine any other matter not inconsistent with
the Bankruptcy Code and title 28 of the United States Code
that may arise in connection with or related to the Plan; and
n. To enter a final decree closing the Chapter 11 Cases.
15.2. Failure of the Bankruptcy Court to Exercise Jurisdiction.
If the Bankruptcy Court abstains from exercising, or declines to
exercise, jurisdiction or is otherwise without jurisdiction over any matter
arising in, arising under or related to the Chapter 11 Case, including the
matters set forth in Section 15.1 of the Plan, this Article 15 shall have no
effect upon and shall not control, prohibit or limit the exercise of
jurisdiction by any other court having jurisdiction with respect to such matter.
ARTICLE 16
MISCELLANEOUS PROVISIONS
16.1. Setoff and Other Rights.
In the event that the Debtor has a claim of any nature whatsoever
against the holder of a Claim, the Debtor may, but is not required to, setoff
against the Claim (and any payments or other distributions to be made in respect
of such Claim hereunder), subject to the provisions of section 553 of the
Bankruptcy Code. Neither the failure to setoff nor the allowance of any Claim
under the Plan shall constitute a waiver or release by the Debtor of any claim
that the Debtor has against the holder of a Claim.
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16.2. Terms and Provisions of Directors and Officers Litigation Trust
The Litigation Trustee shall serve without bond and without
compensation.
The Litigation Trustee shall not be liable for any act he may do or
omit to do as Litigation Trustee hereunder or acting in good faith in the
exercise of his best judgment, and the fact that such act or omission was
advised, directed or approved by the Committee or advised by an attorney acting
as attorney for the Directors and Officers Litigation Trust, shall be conclusive
evidence of such good faith and best judgment, nor shall the Litigation Trustee
be liable in any event except for his own willful misconduct.
In the event of the death or resignation of the Litigation Trustee, a
successor Litigation Trustee shall be appointed by the Committee. The Committee
may dismiss the Litigation Trustee, without cause, at any time and name a
successor Litigation Trustee. The Litigation Trustee may resign at any time by
giving written notice of his intention to do so addressed to the Chairman of the
Committee and Committee Counsel and such resignation shall be effective upon the
date and time provided in an instrument in writing, signed and acknowledged by
the Committee and delivered to the resigning Litigation Trustee, which also
names the successor Litigation Trustee.
A successor Litigation Trustee shall be vested with all the rights,
privileges, powers and duties of his predecessor.
The Directors and Officers Litigation Trust shall become effective upon
the Effective Date. Thereupon these Directors and Officers Litigation Trust
provisions and Directors and Officers Litigation Trust shall remain and continue
in full force and effect until the Directors and Officers Litigation Trust's
estate has been wholly converted to cash or abandoned and all costs, expenses
and obligations incurred in administering this Directors and Officers Litigation
Trust have been fully paid and all remaining income, proceeds and avails of the
Directors and Officers Litigation Trust's estate have been remitted to the
Trust; the Directors and Officers Litigation Trust shall in no event remain in
existence for longer than five years, provided, however, that upon approval of
the Court upon a finding that an extension(s) of such five-year term is
necessary to the liquidating purpose of the Directors and Officers Litigation
Trust, the term of the Directors and Officers Litigation Trust may be extended
for a finite term based on its particular facts and circumstances; each further
extension must be approved by the Court within 6 months of the beginning of the
extended term. Upon the occurrence of the termination of the Directors and
Officers Litigation Trust, the Plan Trustee shall file with the Court a report
thereof, seeking an order discharging the Litigation Trustee.
16.3. Injunctions.
The Confirmation Order shall contain such injunctions as may be
necessary and helpful to effectuate the Plan provided herein. Without limiting
the generality of the foregoing, such injunction shall include an absolute
prohibition from collecting Claims in any manner other than as provided for in
the Plan. The injunction shall also prohibit any Utility from seeking or
obtaining a security deposit, altering usual billing practices or otherwise
refusing or discontinuing services for a period of 18 months after the Effective
Date; provided, however, that a Utility will no longer be subject to such
injunction in the event that the Trust fails to pay all post-confirmation
utility bills to such effected utility no later than 10 days after such bills
are due.
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16.4. Report Regarding Possible Claims
Notwithstanding section 6.1, the Plan Trustee shall submit a report to
the Bankruptcy Court with respect to its investigation regarding whether or not
to pursue claims against Enron Capital & Trade Resources Corp and/or its
affiliate, Joint Energy Development Investments II Ltd. Partnership, or Pioneer
Natural Resources USA, Inc. The Litigation Trustee shall submit a report to the
Bankruptcy Court with respect to its investigation regarding whether or not to
pursue claims against the individuals that served as directors of the Debtor
from August 1998 and to April 1999.
16.5. Lawsuits.
On the Effective Date, all lawsuits, litigations, administrative
actions or other proceedings, judicial or administrative, in connection with the
assertion of a Claim against the Debtor, shall be dismissed as to the Debtor and
the Trust, except proof of claims and/or objections thereto pending in the
Bankruptcy Court. Such dismissal shall be with prejudice to the assertion of
such Claim in any manner other than as prescribed by the Plan. All parties to
any such action shall be enjoined by the Bankruptcy Court in the Confirmation
Order from taking any action to impede the immediate and unconditional dismissal
of such actions. All lawsuits, litigations, administrative actions or other
proceedings, judicial or administrative, in connection with the assertion of a
claim(s) by the Debtor against a person shall remain in place only with respect
to the claim(s) asserted by the Debtor, and shall become property of the Trust
to prosecute, settle or dismiss as the Plan Trustee sees fit.
16.6. Insurance.
Confirmation and consummation of the Plan shall have no effect on
insurance policies of the Debtor in which the Debtor is or was the insured
party; the Trust shall become the insured party under any such policies without
the need of further documentation other than the Plan and entry of the
Confirmation Order. Each insurance company is prohibited from, and the
Confirmation Order shall include an injunction against, denying, refusing,
altering or delaying coverage on any basis regarding or related to the Debtor's
bankruptcy, the Plan or any provision within the Plan.
16.7. Release and Exculpation.
The Committee, the Plan Trustee, the Litigation Trustee, the Plan
Trustee Representatives, or the Committee Representatives, or the Litigation
Trustee Representatives shall not have or incur any liability to any holder of a
Claim or Equity Interest for any act, event or omission in connection with, or
arising out of, the Chapter 11 Case, the confirmation of the Plan, the
consummation of the Plan or the administration of the Plan or the property to be
distributed under the Plan, except for willful misconduct.
16.8. De Minimis Distributions.
No distribution of less than $25.00 shall be required to be made to any
holder of an Allowed Claim. Such undistributed amount may be retained by the
Trust.
16.9. Payment of Statutory Fees.
All fees payable pursuant to section 1930 of title 28 of the United
States Code shall be paid through the entry of a final decree in the Chapter 11
Case.
Plan Page 32
<PAGE> 38
16.10. Bankruptcy Restrictions.
From and after the Effective Date, the Trust shall no longer be subject
to the restrictions and controls provided by the Bankruptcy Code or Rules (e.g.,
section 363, 364, Rule 9019), the Bankruptcy Court, or the United States
Trustee's guidelines. The Plan Trustee may, on behalf of the Trust, compromise
claims and controversies post-Effective Date without the need of notice or
Bankruptcy Court approval. The Trust may operate the Debtor's business in such
manner as is consistent with companies not in bankruptcy without the need of
seeking Bankruptcy Court approval with regard to any aspect of the Trust's
business. No monthly operating reports will be filed after the Effective Date;
however, the Plan Trustee shall provide the U.S. Trustee such financial reports
as the U.S. Trustee may reasonably request until the entry of a final decree.
16.11. Binding Effect.
The Plan shall be binding upon and inure to the benefit of the Debtor,
the holders of Claims, the holders of Equity Interests, and the Plan Trustee,
and all of their respective successors and assigns; provided, however, that if
the Plan is not confirmed, the Plan shall be deemed null and void and nothing
contained herein shall be deemed (i) to constitute a waiver or release of any
Claims by the Debtor or any other person, (ii) to prejudice in any manner the
rights of the Debtor or any other person or (iii) to constitute any admission by
the Debtor or any other person.
16.12. Governing Law.
Unless a rule of law or procedure is supplied by federal law (including
the Bankruptcy Code and Bankruptcy Rules) or the law of the jurisdiction of
organization of any entity, the internal laws of the State of Texas shall govern
the construction and implementation of the Plan and any agreements, documents
and instruments executed in connection with the Plan or the Chapter 11 Cases,
including the documents executed pursuant to the Plan.
16.13. Modification of Plan.
Modifications of the Plan may be proposed in writing by the Proponent
at any time before the Confirmation Date, provided that (a) the Plan, as
modified, meets the requirements of sections 1122 and 1123 of the Bankruptcy
Code and (b) the Proponent shall have complied with section 1125 of the
Bankruptcy Code. The Plan may be modified at any time after the Confirmation
Date and before substantial consummation by the Proponent, provided that (i) the
Plan, as modified, meets the requirements of sections 1122 and 1123 of the
Bankruptcy Code, (ii) the Bankruptcy Court, after notice and a hearing, confirms
the Plan as modified, under section 1129 of the Bankruptcy Code and (iii) the
circumstances warrant such modifications. A holder of a Claim or Equity Interest
that has accepted or rejected the Plan shall be deemed to have accepted or
rejected, as the case may be, such Plan as modified, unless, within the time
fixed by the Bankruptcy Court, such holder changes its previous acceptance or
rejection.
Plan Page 33
<PAGE> 39
16.14. Creditor Defaults.
Any act or omission by a creditor in contravention of a provision
within this Plan shall be deemed an event of default under this Plan. Upon an
event of default, the Plan Trustee may seek to hold the defaulting party in
contempt of the Confirmation Order. If such creditor is found to be in default
under the Plan, such party shall pay the reasonable attorneys' fees and costs of
the Plan Trustee in pursuing such matter. Furthermore, upon the finding of such
a default by a creditor, the Bankruptcy Court may (a) designate a party to
appear, sign and/or accept the documents required under the Plan on behalf of
the defaulting party, in accordance with Federal Rules of Civil Procedure, Rule
70, (b) may enforce the Plan by order of specific performance, (c) may award
judgment against such defaulting creditor in favor of the Trust in an amount,
including interest, to compensate the Trust for the damages caused by such
default; and (d) make such other order as may be equitable which does not
materially alter the terms of the Plan as confirmed.
16.15. Severability.
Should the Bankruptcy Court determine that any provision of the plan is
unenforceable either on its face or as applied to any Claim or Equity Interest
or transaction, the Proponent may modify the Plan in accordance with Section
16.13 of the Plan so that such provision shall not be applicable to the holder
of any Claim or Equity Interest. Such a determination of unenforceability shall
not (1) limit or affect the enforceability and operative effect of any other
provision of the Plan or (2) require the resolicitation of any acceptance or
rejection of the Plan.
16.16. Closing the Case.
Upon the Plan being substantially consummated and, upon motion by the
Plan Trustee, a final decree entered containing such provisions as may be
equitable. The Court may close the case, but retain jurisdiction to hear and
decide: any and all pending adversary proceedings, applications and contested
matters, including any remands of appeals; any and all pending objections to
Claims or the allowance, including with respect to the classification, priority,
estimation or payment of any Claim; any and all pending Fee Applications.
Plan Page 34
<PAGE> 40
DATED: September 15, 2000
Midland, Texas.
COSTILLA ENERGY, INC.
By: /s/
-------------------------------
Bobby W. Page
Interim Chief Executive Officer
SHEINFELD, MALEY & KAY, P.C.
By: /s/
-------------------------------
Henry J. Kaim
Samuel M. Stricklin
ATTORNEYS FOR THE DEBTOR
COUNSEL:
Richard T. McMillan
Dan G. LeRoy
COTTON, BLEDSOE, TIGHE
& DAWSON
500 W. Illinois, Suite 300
Midland, Texas 79701-4337
Telephone: (915) 684-5782
Facsimile: (915) 682-3672
