EXHIBIT 99.2
------------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re ) Chapter 11
)
UNITED COMPANIES FINANCIAL )
CORPORATION, et al., ) Case No. 99-450 (MFW)
) through 99-461 (MFW)
)
DEBTORS. ) JOINTLY ADMINISTERED
JOINT CERTIFICATION OF COUNSEL [DOCKET NOS. 1476 AND 1490]
----------------------------------------------------------
On June 6, 2000, the above-captioned debtors and debtors in
possession (the "Debtors") flied and served the DEBTORS' MOTION FOR ORDER (I)
APPROVING DISCLOSURE STATEMENT, (II) ESTABLISHING VOTING RECORD HOLDER DATE,
(III) APPROVING SOLICITATION Procedures, Form of BALLOTS AND MANNER OF NOTICE,
AND (IV) Fixing THE DATE, TIME AND PLACE FOR THE CONFIRMATION HEARING AND THE
DEADLINE FOR FILING OBJECTIONS THERETO (DOCKET 1476)(the "Debtors' Motion"). The
Debtors' Motion seeks, inter alia, approval pursuant to section 1125 of title 11
of the United States Bankruptcy Code of the Debtors' First Amended Disclosure
Statement (Docket No. 1475), as amended, and approval of the proposed
solicitation procedures in connection with confirmation of the Debtors' First
Amended Plan of Reorganization for Debtors Pursuant to Chapter 11 of the United
States Bankruptcy Code, as amended. On June 8, the Statutory Committee of Equity
Security Holders filed the MOTION FOR APPROVAL OF DISCLOSURE STATEMENT (DOCKET
No. 1490) (the "Equity Committee's Motion"). The Equity Committee Motion seeks,
inter alia, approval pursuant to section 1125 of the Bankruptcy Code of the
Equity Committee's Disclosure Statement in Support of Plan of Reorganization
(Docket No. 1489), as amended.
RLF1-2179610-1
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Hearings were held with respect to the Debtors' Motion and
the Equity Committee's Motion on July 6-7, 2000 (the "Hearings"). On July 10,
the Debtors filed the Debtors' Second Amended Plan of Reorganization for Debtors
Pursuant to Chapter 11 of the United States Bankruptcy Code, dated July 7, 2000
(the "Debtors' Plan") and the Disclosure Statement for the Debtors' Plan (the
"Debtors' Disclosure Statement"). On July 11, 2000, the Equity Committee will
file the Second Amended Plan of Reorganization of the Official Committee of
Equity Security Holders Dated July 10, 2000 (the "Equity Committee Plan") and
the Disclosure Statement to Accompany the Equity Committee Plan (the "Equity
Committee's Disclosure Statement"). The Debtors and the Equity Committee hereby
certify that they have reviewed each of the Debtors' Disclosure Statement and
the Equity Committee's Disclosure Statement, and the modifications are
acceptable based upon the comments of Judge Walrath at the Hearings.
Further, the Debtors and the Equity Committee have prepared
a single revised form of order that approves the Debtors' Motion and the Equity
Committee's Motion, and the parties jointly certify that the order in the form
attached hereto as Exhibit 1 (the "Order") has
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been reviewed and approved by each party hereto. Copies of the Debtors'
Disclosure Statement and the Equity Committee's Disclosure Statement are
attached to the Order as Exhibit A and Exhibit B, respectively. The Debtors and
the Equity Committee respectfully request that the Order be approved.
Dated: July 10, 2000
Wilmington, Delaware
<TABLE>
<S> <C>
Counsel for the Debtors and Debtors in Counsel for the Official Committee of Equity
Possession: Security' Holders
----------------------------------------- ------------------------------------------------
Mark D. Collins (Atty No. 2981) Norman L. Pernick (No. 2290)
Deborah E. Spivack (Atty No. 3220) J. Kate Stickles (No. 2917)
RICHARDS, LAYTON & FINGER, P.A. SAUL, EWlNG, REMICK & SAUL, LLP
One Rodney Square 222 Delaware Ave., Suite 1200
Wilmington, Delaware 19899 Wilmington, Delaware 19801
(302) 658-6541 (302) 421-6824
(302) 658-6548
- and -
- and -
Charles E. Campbell (GA Bar No. 106100)
Marcia L. Goldstein Jeffrey W. Cavender (GA Bar No. 117751)
Brian S. Rosen LONG ALDRIDGE & NORMAN LLP
WEIL, GOTSHAL & MANGES LLP One Peachtree Center, Suite 5300
767 Fifth Avenue 303 Peachtree Street, N.E.
New York, NY 10153 Atlanta, Georgia 30308
(212) 310-8000 (404) 527-4000
(212) 310-8007
</TABLE>
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EXHIBIT 1
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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
In re: : Chapter 11
UNITED COMPANIES FINANCIAL : Case Nos. 99-450 (MFW) through
CORPORATION, ET. AL., : 99-461 (MFW)
Debtors. : JOINTLY ADMINISTERED
ORDER (i) APPROVING DEBTORS' DISCLOSURE STATEMENT AND EQUITY COMMITTEE'S
DISCLOSURE STATEMENT, (ii) ESTABLISHING VOTING RECORD HOLDER DATE, (iii)
APPROVING SOLICITATION PROCEDURES, FORM OF BALLOTS, AND MANNER OF NOTICE, AND
(iv) FIXING THE DATE, TIME AND PLACE FOR THE CONFIRMATION HEARING AND THE
DEADLINE FOR FILING OBJECTIONS THERETO
--------------------------------------
A hearing having been held on July 6, 2000 and July 7, 2000
(the "Hearing") to consider (a) the motion (the "Debtors' Motion") filed by
United Companies Financial Corporation and certain of its direct and indirect
subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), dated June 6, 2000, seeking, inter alia, approval pursuant to
section 1125 of title 11 of the United States Code (the "Bankruptcy Code") of
the proposed disclosure statement heretofore filed with the Court by the Debtors
and approval of the proposed solicitation procedures in connection with
confirmation of the Debtors' Second Amended Plan of Reorganization for Debtors
Pursuant to Chapter 11 of the United States Bankruptcy Code (the "Debtors'
Plan") and (b) the motion (the "Equity Committee's Motion") filed by the
statutory committee of equity security holders (the "Equity Committee"), dated
June 8, 2000, seeking, inter alia, approval pursuant to section 1125 of the
Bankruptcy Code of the proposed disclosure statement heretofore filed with the
Court by the Equity Committee in connection with the Equity Committee's Second
Amended Plan of Reorganization (the "Equity
HO 1 :\207525\04\4GD004! DOC\78473.0003 2179596vi
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Committee's Plan") and; it appearing from the affidavits of service on file with
this Court that proper and timely notice of the Hearing has been given; and it
appearing that such notice was adequate and sufficient; and the appearances of
all interested parties having been duly noted on the record of the Hearing; and
each of the objections, if any, filed to the proposed disclosure statements, the
Debtors' Motion and/or the Equity Committee's Motion having been either (i)
withdrawn or rendered moot by modifications to the applicable disclosure
statement or (ii) overruled by the Court; and the Debtor or the Equity
Committee, as applicable, having made the conforming additions, changes,
corrections and deletions to the disclosure statements necessary to comport with
the record of the Hearing and the agreements, if any, reached with the parties
that filed objections; and a copy of the revised disclosure statement submitted
by the Debtors is attached hereto as Exhibit A (the "Debtors' Disclosure
Statement") and the revised disclosure statement submitted by the Equity
Committee is attached hereto as Exhibit B (the "Equity Committee's Disclosure
Statement"); and, upon the Debtors' Motion, the Debtors' Disclosure Statement,
the Equity Committee's Motion, the Equity Committee's Disclosure Statement, and
the record of the Hearing and upon all of the proceedings heretofore had before
the Court and after due deliberation and sufficient cause appearing, therefore
it is
ORDERED, FOUND AND DETERMINED THAT:
1. The Debtors' Disclosure Statement contains adequate
information within the meaning of section 1125 of the Bankruptcy Code and, thus,
the Debtors' Disclosure Statement is hereby approved. The relief requested in
the Debtors' Motion is hereby granted to the extent provided herein.
2. The Equity Committee's Disclosure Statement ") contains
adequate information within the meaning of section 1125 of the Bankruptcy Code
and, thus, the Equity
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Committee' Disclosure Statement is hereby approved. The relief requested in the
Equity Committee's Motion is hereby granted to the extent provided herein.
3. The Debtors are authorized to continue the retention of
Logan & Company, Inc. (the "Balloting Agent") to, among other things, assist the
Debtors as their claims agent and as their solicitation and balloting agent, as
well as to maintain the official claims register. Further, the Debtors are
authorized to retain an information agent to respond to inquiries regarding the
Debtors' Plan, the Debtors' Disclosure Statement, the Equity Committee's Plan,
the Equity Committee's Disclosure Statement and the submission of ballots,
provided, however, that such information agent shall not endorse or solicit
acceptances or rejections of either of the Plans.
4. For voting purposes and mailing of notices pursuant to
this Order, June 30, 2000 shall be the "Record Holder Date" for the holders of
claims and interests.
5. Pursuant to the Debtors' Plan, holders of claims and
interests in Class 3 (Bank Claims), Class 4 (Senior Note Claims), Class 5
(General Unsecured Claims), Class 6 (Convenience Claims), Class 7 (Subordinated
Debenture Claims), Class 8 (Subordinated Penalty Claims), Class 9 (Pride Equity
Interests), Class 10A (Statutorily Subordinated Claims) and Class 1 OB (United
Companies Common Equity Interests) are impaired and are entitled to vote
(collectively, the "Debtors' Voting Classes"). Pursuant to the Equity
Committee's Plan, holders of claims and interests in Class 3 (Unsecured Claims),
Class 4 (Borrower Litigation Claims), Class 6A (Subordinated Debenture Claims),
Class 6B (Lending Subordinated Debenture Claims), Class 7 (Subordinated Penalty
Claims), Class 8 (Pride Equity Interests), Class 9A (Statutorily Subordinated
Claims) and Class 9B (United Companies Common Equity Interests) are impaired and
are entitled to vote (collectively, the "Equity Committee's Voting Classes").
3
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Only the following holders of claims and interests in the Debtors' Voting
Classes and the Equity Committee's Voting Classes shall be entitled to vote with
regards to such claims and interests (a) the holders of scheduled claims, as of
the Record Holder Date, that are listed in the Debtors' schedules of liabilities
filed with the Court (as amended, the "Schedules") as not contingent,
unliquidated, or disputed (excluding scheduled claims that have been superseded
by filed claims), p-Lo-vided, however, that the assignee of a transferred and
assigned scheduled claim shall be permitted to vote such claim only if the
transfer and assignment has been approved by the Court and such approval has
been noted on the Court's docket as of the close of business on the Record
Holder Date, (b) holders of filed claims, as of the Record Holder Date, that are
the subject of a filed proof of claim which has not been disallowed,
disqualified or suspended prior to the Record Holder Date and which is not the
subject of a pending objection on the Record Holder Date, provided, however,
that the assignee of a transferred and assigned filed claim shall be permitted
to vote such claim ontx if the transfer and assignment has been approved by the
Court and such approval has been noted on the Court's docket as of the close of
business on the Record Holder Date, and (c) holders of Pride Equity Interests
and United Companies Common Equity Interests (as such terms are defined in the
Debtors' Plan) as reflected on the records of the Transfer Agent.
6. With respect to the claims arising from the Debtors'
prepetition $850 million unsecured revolving credit facility, First Union
National Bank ("First Union"), as agent for the participating lenders
("Participating Lenders") under the Credit Agreement (as such term is defined in
the Debtors' Plan), has filed proofs of claim on behalf of the Participating
Lenders. Only First Union shall be entitled to submit Master Ballots (as defined
below).
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7. In connection with soliditing votes from the
Participating Lenders, the Court hereby directs as follows:
a. First Union shall forward the Solicitation
Package (as del'reed below) or copies
thereof (including a return envelope
provided by and addressed to First Union and
including the Individual Ballots as defined
below) to the Participating Lenders within
three (3) business days of the receipt by
First Union of the Solicitation Package;
b. the Participating Lenders shall return the
Individual Ballots to First Union; .
c. First Union shall summarize the votes of the
Participating Lenders on the Master Ballots,
in accordance with the instructions for the
Master Ballots;
d. First Union shall return the Master Ballots
to the Balloting Agent; and
e. the Debtors shall provide First Union with
sufficient copies of the Solicitation
Package to forward to the Participating
Lenders.
8. With respect to claims based on the 9.35% Notes and 7.7%
Notes (as such terms are defined in the Debtors' Plan and referred to herein
collectively as the "Senior Notes"), Norwest Bank is the indenture trustee for
the Senior Notes (the "Senior Notes Indenture Trustee"). Only the brokers,
dealers, commercial banks, trust companies or other nominees (collectively, the
"Nominee Senior Noteholders") through which the beneficial owners
("collectiw,qy, the "Beneficial Senior Noteholders") hold the Senior Notes as
reflected in the records maintained by the Senior Notes Indenture Trustee as of
the close of business on the Record Holder Date shall be entitled to submit
Master Ballots.
9. In connection with soliciting votes from the Nominee
Senior Noteholders and Beneficial Senior Noteholders, the Court hereby directs
as follows:
a. the Nominee Senior Noteholders shall forward
the Solicitation Package or copies thereof
(including a return envelope provided by and
addressed to the Nominee Senior Noteholders
and including
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the Individual Ballots described below) to
the Beneficial Senior Noteholders within
three (3) business days of the receipt by
such Nominee Senior Noteholders of the
Solicitation Package;
b. the Beneficial Senior Noteholders shall
return the Individual Ballots to the
respective Nominee Senior Noteholders;
c. the Nominee Senior Noteholders shall
summarize the votes of their respective
Beneficial Senior Noteholders on the Master
Ballots, in accordance with the instructions
for the Master Ballots;
d. the Nominee Senior Noteholders shall return
the Master Ballots to the Balloting Agent;
and
e. the Debtors shall provide the Nominee Senior
Noteholders with sufficient copies of the
Solicitation Package to forward to the
Beneficial Senior Noteholders.
10. With respect to the claims based on the 8.375% Notes
(as such term is defined in the Debtors' Plan), HSBC Bank USA is the indenture
trustee for the 8.375% Notes ("Subordinated Notes Indenture Trustee"). Only the
brokers, dealers, commercial banks, trust companies or other nominees
(collectively, ,the "Nominee Subordinated Noteholders") through which the
beneficial owners (collectively, the "Beneficial Subordinated Noteholders") hold
the 8.375% Notes as reflected in the records maintained by the Subordinated
Notes Indenture Trustee as of the close of business on the Record Holder Date
shall be entitled to submit Master Ballots.
11. In connection with soliciting votes from the Nominee
Subordinated Noteholders and Beneficial Subordinated Noteholders, the Court
hereby directs as follows:
a. the Nominee Subordinated Noteholders shall
forward the Solicitation Package or copies
thereof to the Beneficial Subordinated
Noteholders within three (3) business days
of the receipt by such Nominee Subordinated
Noteholders of the Solicitation Package;
b. the Beneficial Subordinated Noteholders
shall return the Individual Ballots to the
respective Nominee Subordinated Noteholders;
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c. the Nominee Subordinated Noteholders shall
summarize the votes of their respective
Beneficial Subordinated Noteholders on the
Master Ballots in accordance with the
instructions for the Master Ballots;
d. the Nominee Subordinated Noteholders shall
return the Master Ballots to the Balloting
Agent; and
e. the Debtors shall provide the Nominee
Subordinated Noteholders with sufficient
copies of the Solicitation Package to
forward to the Beneficial Subordinated
Noteholders.
12. With respect to the holders of Pride Equity Interests
and United Companies Common Equity Interests, Chase Mellon is the transfer agent
for such securities ("Transfer Agent"). Only the brokers, dealers, commercial
banks, trust companies or other nominees (collectively, the "Nominee
Stockholders") through which the beneficial owners (collectively, the
"Beneficial Stockholders") hold the Pride Equity Interests and/or United
Companies Common Equity Interests as reflected in the records maintained by the
Transfer Agent as of close of business on the Record Holder Date shall be
entitled to submit Master Ballots (as defined below).
13. In connection with soliciting votes from the holders of
Pride Equity Interests and United Companies Common Equity Interests, the Court
hereby directs as follows:
a. the Nominee Stockholders shall forward the
Solicitation Package or copies thereof to
the Beneficial Stockholders within three (3)
business days of the receipt by such Nominee
Stockholders of the Solicitation Package;
b. the Beneficial Stockholders shall return the
Individual Ballots (as defined below) to the
respective Nominee Stockholders;
c. the Nominee Stockholders shall summarize the
votes of their respective Beneficial
Stockholders on the Master Ballots in
accordance with the instructions for the
Master Ballots;
d. the Nominee Stockholders shall return the
Master Ballots to the Balloting Agent; and
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e. the Debtors shall provide the Nominee
Stockholders with sufficient copies of the
Solicitation Package to forward to the
Beneficial Stockholders.
14. The Debtors are authorized to reimburse First Union,
the Nominee Senior Noteholders, the Nominee Subordinated Noteholders and the
Nominee Stockholders for their reasonable, actual and necessary out-of-pocket
expenses incurred in connection with distribution of the Solicitation Packages
and preparation of the Master Ballots.
15. The Debtors shall (a) except as provided in sections
(b) and (c) below, mail a ballot (with instructions), substantially in the form
of the ballots (with instructions) annexed hereto as Exhibit C and such other
ballots as may be necessary (the "Individual Ballots"), to each holder of a
claim in either the Debtors' Voting Classes or the Equity Committee's Voting
Classes; (b) mail a ballot (with instructions), substantially in the form of the
ballot (with instructions) annexed hereto as Exhibit D (the "Master Ballot"), to
First Union for the purpose of summarizing the votes of the Participating
Lenders and to each of the Nominee Senior Noteholders, Nominee Subordinated
Noteholders and Nominee Stockholders for the purpose of summarizing the votes of
their respective Beneficial Senior Noteholders, Beneficial Subordinated
Noteholders and Beneficial Stockholders; and (c) mail Individual Ballots to
First Union and each of the Nominee Senior Noteholders, Nominee Subordinated
Noteholders and Nominee Stockholders for the purpose of soliciting the votes of
the Participating Lenders, Beneficial Senior Noteholders, Beneficial
Subordinated Noteholders and Beneficial Stockholders, respectively.
16. On or before July 14, 2000, the Debtors shall deposit
or cause to be deposited in the United States mail, postage prepaid, a sealed
solicitation package (the "Solicitation Package") which shall include:
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a. notice of the confirmation hearing and
related matters,' substantially in the form
of Exhibit E annexed hereto (the
"Confirmation Hearing Notice"), setting
forth the time fixed for filing acceptances
and rejections to the Debtors' Plan and the
Equity Committee's Plan, the time fixed for
filing objections to confirmation of either
Plan, and the date and time of the hearing
on confirmation;
b. a copy of the Debtors' Disclosure Statement,
as approved by the Court (with exhibits
including the Debtors' Plan), and the Equity
Committee's Disclosure Statement, as
approved by the Court (with exhibits
including the Equity Committee's Plan); and
c. a ballot (with instructions), in
substantially the form approved by the
Court.
17. The Debtors shall mail the Solicitation Packages to the
following holders of claims or interests in the Debtors' Voting Classes and/or
the Equity Committee's Voting Classes:
a. subject to subsections (c), (d) and (e)
below, to holders of scheduled claims, as of
the Record Holder Date, that are listed in
the Debtors' Schedules as not contingent,
unliquidated, or disputed (excluding
scheduled claims that have been superseded
by fried claims), provided, however, that
the assignee of a transferred and assigned
scheduled claim shall be permitted to vote
such claim only if the transfer and
assignment has been approved by the Court
and such approval has been noted on the
Court's docket as of the close of business
on the Record Holder Date;
b. subject to subsections (c), (d) and (e)
below, to holders of filed claims, as of the
Record Holder Date, that are the subject of
a filed proof of claim which has not been
disallowed, disqualified or suspended prior
to the Record Holder Date and which is not
the subject of a pending objection on the
Record Holder Date, provided, however, that
the assignee of a transferred and assigned
filed claim shall be permitted to vote such
claim only if the transfer and assignment
has been approved by the Court and such
approval has been noted on the Court's
docket as of the close of business on the
Record Holder Date;
c. with respect to claims arising from the
Credit Agreement, to First Union;
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d. with respect to the Senior Notes, to the
record holders and Nominee Senior
Noteholders reflected in the Senior Notes
Indenture Trustee's records as of the Record
Holder Date;
e. with respect to the 8.375% Notes, to the
record holders and Nominee Subordinated
Noteholders reflected in the .Subordinated
Notes Indenture Tmstee's records as of the
Record Holder Date; and
f. with respect to the Pride Equity Interests
and the United Companies Common Equity
Interests, to the record holders and Nominee
Stockholders reflected in the Transfer
Agent's records as of the Record Holder
Date.
18. In lieu of mailing the Solicitation Package, on or
before July 14, 2000, the Debtors shall deposit or cause to be deposited in the
United States mail, postage prepaid, (a) the Notice of Non-Voting Status,
substantially in the form attached hereto as Exhibit F, to each holder of a
claim in an unimpaired class and to all known parties to executory contracts and
unexpired leases who do not hold filed or scheduled claims (excluding claims
scheduled as contingent, unliquidated or disputed), and (b) the Notice of
Non-Voting Status, substantially in the form atlached hereto as Exhibit G, to
each holder ora claim that is the subject of an objection pending as of the
Record Holder Date. Under both the Debtors' Plan and the Equity Committee's
Plan, the following classes of claims are unimpaired: Priority Tax Claims,
Priority Non-Tax Claims and Secured Claims.
19. The Debtors shall cause the Confirmation Hearing Notice
to be published once in The Wall Street Journal (National Edition) on a date not
less than twenty-five (25) or more than thirty-five (35) calendar days prior to
the hearing to consider confirmation of the Debtors' Plan and the Equity
Committee's Plan.
20. All persons and entities entitled to vote on the
Debtors' Plan and/or the Equity Committee's Plan shall deliver their ballots by
mail, hand delivery or overnight courier
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no later than 4:00 o'clock p.m. Eastern Time on August 10, 2000 (the "Voting
Deadline") to the Balloting Agent at:
LOGAN & COMPANY, INC.
546 Valley Road
Upper Montclair, New Jersey 07043
Attn: Kate Logan
Any ballot received after such time shall not be counted other than as provided
for herein. Ballots submitted by facsimile shall not be counted; provided,
however, that Master Ballots submitted by facsimile by First Union, the Nominee
Senior Noteholders, the Nominee Subordinated Noteholders and/or the Nominee
Stockholders shall be counted so long as an original of the Master Ballots is
provided to the Balloting Agent within forty-eight (48) hours.
21. The Debtors and the Equity Committee shall have the
ability to extend the voting deadline at their sole discretion. If the Debtors
and the Equity Committee jointly choose to extend the voting deadline, the
Debtors shall provide notice of such extension through the Dow Jones News
Service.
22. For purposes of voting, the amount of a claim used to
tabulate acceptance or rejection of either of the Plans shall be the amount set
forth on the ballots for that particular creditor which shall be one of the
following:
a. the amount set forth as a claim in the
Debtors' Schedules as not contingent,
unliquidated, or disputed (excluding
scheduled claims that have been superseded
by filed claims);
b. the amount set forth on a filed proof of
claim which has not been disallowed,
disqualified, suspended, reduced or
estimated and temporarily allowed for voting
purposes prior to the Record Holder Date; or
c. the amount estimated and temporarily allowed
pursuant to an order of this Court.
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23. With respect to an Individual Ballo't submitted by a
holder of a claim or interest:
a. Any ballot which is properly completed,
executed and timely returned to the
Balloting Agent that does not indicate an
acceptance or rejection of one of the Plans
shall be deemed to be a vote to accept such
Plan;
b. any ballot which is returned to the
Balloting Agent indicating acceptance or
rejection of the Plans, but which is
unsigned shall not be counted;
c. whenever a creditor or interest holder casts
more than one ballot voting the same claim
or interest prior to the Voting Deadline,
only the last timely ballot received by the
Balloting Agent shall be counted,
d. if a creditor or interest holder casts
simultaneous duplicative ballots voted
inconsistently, then such ballots shall
count as one vote accepting each of the
Plans;
e. each creditor or interest holder shall be
deemed to have voted the full amount of its
claim or interest;
f. creditors and interest holders shall not
split their vote within a class, thus each
creditor or interest holder shall vote all
of its claim or interest within a particular
class either to accept or reject the Plans;
g. any Individual Ballots that partially reject
and partially accept one or both of the
Plans shall not be counted; and
h. with the exception of Master Ballots, any
ballot received by the Balloting Agent by
telecopier, facsimile or other electronic
communication shall not be counted.
24. With respect to the tabulation of ballots cast by
Participating Lenders:
a. First Union shall summarize on the Master
Ballot ail Individual Ballots cast by the
Participating Lenders and return the Master
Ballot to the Balloting Agent, provided,
however, that First Union shall be required
to retain the Individual Ballots cast by the
respective Participating Lenders for
inspection for one year following submission
of a Master Ballot;
b. to the extent that there are over-votes
submitted by First Union on a Master Ballot,
votes to accept and to reject a particular
Plan shall
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be applied by the Balloting Agent in the
same proportion as the votes to accept or
reject such Plan submitted on the Master
Ballot that contains the over-vote;
c. multiple Master Ballots may be completed by
First Union and delivered to the Balloting
Agent and such votes will be counted, except
to the extent that such votes are
inconsistent with or are duplicative of
other Master Ballots, in which case the
latest dated Master Ballot received before
the Voting Deadline will supersede and
revoke any prior Master Ballot; and
d. each Participating Lender shall be deemed to
have voted the full amount of its claim.
25. With respect to the tabulation of ballots cast by
Beneficial Senior Noteholders:
a. all Nominee Senior Noteholders to which
Beneficial Senior Noteholders return their
Individual Ballots shall summarize on the
Master Ballot all Individual Ballots cast by
the Beneficial Senior Noteholders and return
the Master Ballot to the Balloting Agent,
provided, however, that each Nominee Senior
Noteholder shall be required to retain the
Individual Ballots cast by the respective
Beneficial Senior Noteholders for inspection
for one year following submission of a
Master Ballot;
b. votes cast by the Beneficial Senior
Noteholders through a Nominee Senior
Noteholder by means ora Master Ballot shall
be applied against the positions held by
such Nominee Senior Noteholder as evidenced
by the list of record holders compiled as of
the Record Holder Date, provided, however,
that votes submitted by a Nominee Senior
Noteholder on a Master Ballot shall not be
counted in excess of the position maintained
by such Nominee Senior Noteholder as of the
Record Holder Date;
c. to the extent that there are over-votes
submitted by a Nominee Senior Noteholder on
a Master Ballot, votes to accept and to
reject a particular Plan shall be applied by
the Balloting Agent in the same proportion
as the votes to accept or reject such Plan
submitted on the Master Ballot that contains
the over-vote, but only to the extent of the
position maintained by such Nominee Senior
Noteholder as of the Record Holder Date;
d. multiple Master Ballots may be completed by
a single Nominee Senior Noteholder and
delivered to the Balloting Agent and such
votes will be counted, except to the extent
that such votes are
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inconsistent with or are duplicative of
other Master Ballots, in which case the
latest dated Master Ballot received before
the Voting Deadline will supersede and
revoke any prior Master Ballot; and
e. each Beneficial Senior Noteholder shall be
deemed to have voted the full amount of its
claim.
26. With respect to the tabulation of ballots cast by
Beneficial Subordinated Noteholders:
a. all Nominee Subordinated Noteholders to
which Beneficial Subordinated Noteholders
return their Individual Ballots shall
summarize on the Master Ballot all
Individual Ballots cast by the Beneficial
Subordinated Noteholders and return the
Master Ballot to the Balloting Agent,
provided, however, that each Nominee
Subordinated Noteholder shall be required to
retain the Individual Ballots cast by the
respective Beneficial Subordinated
Noteholders for inspection for one year
following submission of a Master Ballot;
b. votes cast by the Beneficial Subordinated
Noteholders through a Nominee Subordinated
Noteholder by means of a Master Ballot shall
be applied against the positions held by
such Nominee Subordinated Noteholder as
evidenced by the list of record holders
compiled as of the Record Holder Date,
provided, however, that
votes submitted by a Nominee Subordinated
Noteholder on a Master Ballot shall not be
counted in excess of the position maintained
by such Nominee Subordinated Noteholder as
of the Record Holder Date;
c. to the extent that there are over-votes
submitted by a Nominee Subordinated
Noteholder on a Master Ballot, votes to
accept and to reject a particular Plan shall
be applied by the Balloting Agent in the
same proportion as the votes to accept or
reject such Plan submitted on the Master
Ballot that contains the over-vote, but only
to the extent of the position maintained by
such Nominee Subordinated Noteholder as of
the Record Holder Date;
d, multiple Master Ballots may be completed by
a single Nominee Subordinated Noteholder and
delivered to the Balloting Agent and such
votes will be counted, except to the extent
that such votes are inconsistent with or are
duplicative of other Master Ballots, in
which case the latest dated Master Ballot
received before the Voting Deadline will
supersede and revoke any prior Master
Ballot; and
14
<PAGE>
e. each Beneficial Subordinated Noteholder
shall be deemed to have voted the full
amount of its claim.
27. With respect to the tabulation of ballots cast by
Beneficial Stockholders:
a. all Nominee Stockholders to which Beneficial
Stockholders return their Individual Ballots
shall summarize on the Master Ballot all
Individual Ballots cast by the Beneficial
Stockholders and return the Master Ballot to
the Balloting Agent, provided, however, that
each Nominee Stockholder shall be required
to retain the Individual Ballots cast by the
respective Beneficial Stockholders for
inspection for one year following submission
ora Master Ballot;
b. votes cast by the Beneficial Stockholders
through a Nominee Stockholder by means of a
Master Ballot shall be applied against the
positions held by such Nominee Stockholder
as evidenced by the list of record holders
compiled as of the Record Holder Date,
provided, however, that votes submitted by a
Nominee Stockholder on a Master Ballot shall
not be counted in excess of the position
maintained by such Nominee Stockholder as of
the Record Holder Date;
c. to the extent that there are over-votes
submitted by a Nominee Stockholder on a
Master Ballot, votes to accept and to reject
a particular Plan shall be applied by the
Balloting Agent in the same proportion as
the votes to accept or reject such Plan
submitted on the Master Ballot that contains
the over-vote, but only to the extent of the
position maintained by such Nominee
Stockholder as of the Record Holder Date;
d. multiple Master Ballots may be completed by
a single Nominee Stockholder and delivered
to the Balloting Agent and such votes will
be counted, except to the extent that such
votes are inconsistent with or are
duplicative of other Master Ballots, in
which case the latest dated Master Ballot
received before the Voting Deadline will
supersede and revoke any prior Master
Ballot; and
e. each Beneficial Stockholder shall be deemed
to have voted the full amount of its
interests.
28. The hearing on confirmation of the Debtors' Plan and
the Equity Committee's Plan is scheduled for August 15, 2000 at 9:30 a.m.
Eastern Time, at the Bankruptcy CouP, Marine Midland Plaza, 824 North Market
Street, Sixth Floor, Wilmington, Delaware.
15
<PAGE>
This hearing may be adjourned from time to time without further notice other
than an announcernent of the adjourned date(s) at said heating and at any
adjourned hearing(s).
29. Any objection to confirmation of either of the Plans
must be filed with the Clerk of the Bankruptcy Court, together with proof of
service, no later than 4:00 o'clock p.m., Eastern Time, on August 9, 2000, and
must be served on each of the persons listed on Exhibit H attached hereto so as
to be receix(ed by them no later than 4:00 p.m., Eastern Time, on August 9,
2000. Any objection to confirmation of the either of the Plans must be in
writing and (a) must state the name and address of the objecting party and the
amount of its claims or the nature of its interest and (b) must state, with
particularity, the nature of its objection. Any confirmation objection not filed
and served as set forth herein shah be deemed waived and shall not be considered
by the Bankruptcy Court.
Dated: Wilmington, Delaware
July 10
--------------------, 2000
------------------------------
UNITED STATES BANKRUPTCY JUDGE
16
<PAGE>
EXHIBIT A
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
I. INTRODUCTION...................................................................................1
II. OVERVIEW OF PLAN...............................................................................4
A. Description of Property to be Distributed Under the Plan..............................4
B. Summary of Classification and Treatment of Claims and Equity Interests Under the Plan.5
III. GENERAL INFORMATION...........................................................................12
A. The Debtors' Business................................................................12
B. Organizational Structure of the Debtors..............................................12
C. Description of Business..............................................................14
1. Loan Servicing..............................................................14
2. Origination Network.........................................................14
3. Underwriting................................................................15
4. Loan Sales and Securitizations..............................................15
5. Other Operations............................................................16
D. Significant Prepetition Indebtedness.................................................16
E. Capital Stock........................................................................17
F. Management and Employees.............................................................17
G. D&O Liability Insurance..............................................................18
H. Additional Information...............................................................18
IV. THE DEBTORS' CHAPTER 11 CASES.................................................................18
A. Events Preceding the Filing of the Chapter 11........................................18
1. The Beginning of a Severe Liquidity Crisis..................................18
2. Transition from Securitization to Whole-Loan Sales..........................19
3. Problems with Credit Facilities.............................................19
B. Events During the Chapter 11 Case....................................................20
1. Administration of the Chapter 11 Case.......................................20
2. Creditors' Committee/Equity Committee.......................................22
3. Disposition of Assets.......................................................22
4. Assumption/Rejection of Contracts and Leases................................32
5. Pending Litigation and Automatic Stay.......................................33
6. Claims Process..............................................................40
7. Exclusive Plan Proposal and Acceptance Rights...............................45
C. Cash, Accounting and Operating Issues................................................46
1. Cash........................................................................46
2. Accounting and Reporting....................................................46
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
3. Operating Issues............................................................47
V. THE PLAN OF REORGANIZATION....................................................................49
A. Rationale Underlying Plan Treatments of Claims.......................................49
B. Settlement of the Bank Claims and Related InterCreditor Issues.......................50
1. The Fraudulent Conveyance Issue.............................................51
2. Substantive Consolidation...................................................51
3. InterCompany Fraudulent Transfer Claims.....................................53
C. Determination of Amounts Allocated to General Unsecured Claims.......................53
1. Rationale...................................................................53
2. Allocation of Distributions to General Unsecured Claims.....................53
D. Classification and Treatment of Claims and Equity Interests Under the Plan...........55
1. Classification..............................................................55
2. Administrative Expense Claims...............................................56
3. Professional Compensation and Reimbursement Claims..........................56
4. Priority Tax Claims.........................................................57
5. Priority Non-Tax Claims (Class 1) - Unimpaired..............................57
6. Secured Claims (Class 2) - Unimpaired.......................................58
7. Bank Claims (Class 3) - Impaired............................................59
8. Senior Note Claims (Class 4) - Impaired.....................................59
9. General Unsecured Claims (Class 5) - Impaired...............................61
10. Convenience Claims (Class 6) - Impaired.....................................62
11. Subordinated Debenture Claims (Class 7) - Impaired..........................62
12. Subordinated Penalty Claims (Class 8) - Impaired............................63
13. Pride Equity Interests (Class 9) - Impaired.................................64
14. Statutorily Subordinated Claims (Class 10A) - Impaired......................64
15. United Companies Common Equity Interests (Class 10B) - Impaired.............65
16. Adobe Common Equity Interests (Class 11) - Impaired.........................66
17. Adobe Financial Common Equity Interests (Class 12) - Impaired...............66
18. Ginger Mae Common Equity Interests (Class 13) - Impaired....................66
19. Gopher Equity Common Equity Interests (Class 14) - Impaired.................67
20. Pelican Common Equity Interests (Class 15) - Impaired.......................67
21. Southern Mortgage Common Equity Interests (Class 16) - Impaired.............67
22. Unicor Common Equity Interests (Class 17) - Impaired........................68
23. United Funding Common Equity Interests (Class 18) - Impaired................68
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
24. United Lending Corp. Common Equity Interests (Class 19) - Impaired..........68
25. United Companies Lending Group Common Equity Interests (Class 20) - Impaired69
26. United Credit Card Common Equity Interests (Class 21) - Impaired............69
E. Reorganized UC Matters...............................................................69
1. Board of Directors of Reorganized UC........................................69
2. Amended Articles of Incorporation and By-Laws...............................69
3. Corporate Action............................................................69
4. Management..................................................................70
F. Securities to Be Issued Pursuant to Plan.............................................72
1. Reorganized UC Common Stock.................................................72
2. Securities Law Matters......................................................72
G. Provisions Governing Litigation Trust................................................73
1. Purpose of Litigation Trust.................................................73
2. Establishment of Litigation Trust...........................................73
3. Initial Funding of Litigation Trust.........................................74
4. Governance and Administration...............................................74
5. Transfer of Assets..........................................................74
6. Issuance of Litigation Trust Interests......................................74
7. Rights and Powers of Litigation Trustee.....................................75
8. Distributions on Account of Litigation Trust Interests......................75
9. Escrow for Disputed Claims and Disputed Equity Interests....................75
10. Termination of Litigation Trust.............................................76
11. Complete Terms and Provisions...............................................76
H. Pursuit of Other Litigation Rights by Reorganized UC.................................76
1. Prosecution of Claims.......................................................76
2. Net Payment by Defendants...................................................76
3. Injunction Escrow for Disputed Claims and Disputed Equity Interest..........77
I. Roles of Plan Administrator and Disbursing Agent.....................................77
1. Plan Administrator..........................................................77
2. Disbursing Agent............................................................78
J. Summary of Other Provisions of the Plan..............................................78
1. Conditions Precedent to the Effective Date of the Plan; Alternative
Implementation Provisions...................................................78
2. Executory Contracts and Unexpired Leases....................................80
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
3. Provisions Governing Distributions..........................................81
4. Treatment of Disputed Claims or Disputed Equity Interests...................83
5. Committees..................................................................84
6. Effect of Confirmation......................................................85
7. Retention of Jurisdiction...................................................87
8. Modification; Revocation or Withdrawal of Plan..............................88
9. Supplemental Documents......................................................88
VI. CERTAIN FACTORS TO BE CONSIDERED..............................................................89
A. Variances from Projections...........................................................89
B. Litigation...........................................................................89
C. Governmental Regulations.............................................................89
D. Certain Tax Matters..................................................................90
VII. VOTING PROCEDURES AND REQUIREMENTS............................................................90
B. Parties in Interest Entitled to Vote.................................................90
C. Classes Impaired and Entitled to Vote Under the Plan.................................91
D. Vote Required for Acceptance by Classes of Claims and Equity Interests...............91
VIII. CONFIRMATION OF THE PLAN......................................................................92
A. Confirmation Hearing.................................................................92
B. Requirements for Confirmation of the Plan............................................92
1. Acceptance..................................................................92
2. Fair and Equitable Test.....................................................93
3. Feasibility.................................................................94
4. "Best Interests" Test.......................................................94
IX. PROJECTED CONFIRMATION VALUES.................................................................96
A. Introduction.........................................................................96
1. Purpose of the Projections..................................................96
X. FINANCIAL INFORMATION.........................................................................97
A. General..............................................................................97
B. Management's Discussion..............................................................97
XI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN....................................100
A. Liquidation Under Chapter 7.........................................................100
B. Alternative Plan of Reorganization..................................................100
XII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN..........................................101
A. Introduction........................................................................101
iv
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
<S> <C>
B. Consequences to Debtors.............................................................102
1. Discharge of Indebtedness..................................................102
2. Attribute Reduction........................................................102
3. Utilization of Net Operating Loss Carryovers...............................102
4. Alternative Minimum Tax....................................................103
C. Consequences to Holders of Claims and Equity Interests..............................103
1. Holders of Administrative Expense Claims (Unclassified), Professional
Compensation and Reimbursement Claims (Unclassified), and Priority Non-Tax
Claims (Class 1)...........................................................103
2. Holders of Secured Claims (Class 2), General Unsecured Claims (Class 5) and
Convenience Claims (Class 6)...............................................103
3. Holders of Bank Claims (Class 3) and Senior Note Claims (Class 4)..........103
4. Subordinated Debenture Claims (Class 7), Subordinated Penalty Claims (Class
8), Pride Equity Interests (Class 9), Statutorily Subordinated Claims (Class
10A) and United Companies Common Equity Interests (Class 10B)..............104
5. Distributions in Discharge of Accrued Unpaid Interest......................104
6. Transfer of Assets to Litigation Trust.....................................104
7. Information Reporting and Withholding......................................105
D. Tax Treatment of the Litigation Trust...............................................105
1. Classification of Litigation Trust.........................................105
2. Tax Reporting..............................................................105
3. Allocation of Taxable Income and Loss......................................106
4. Escrow.....................................................................106
XIII. CONCLUSION AND RECOMMENDATION................................................................108
</TABLE>
EXHIBITS
EXHIBIT A - Plan of Reorganization
EXHIBIT B - Disclosure Order
EXHIBIT C - Liquidation Analysis
EXHIBIT D - Projected Confirmation Values
EXHIBIT E - First and Second Reorganization Scenarios
EXHIBIT F - Comparison of Alternatives
EXHIBIT G - Current Report on Form 8-K Dated September 3, 1999
v
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
------------------------------------------x
In re: :
: Chapter 11
UNITED COMPANIES FINANCIAL :
CORPORATION, ET AL., : Case Nos. 99-450 (MFW)
: through 99461 (MFW)
Debtors. :
------------------------------------------x Jointly Administered
DISCLOSURE STATEMENT FOR SECOND AMENDED PLAN
OF REORGANIZATION FOR DEBTORS PURSUANT TO
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE, DATED JULY 7, 2000
WEIL, GOTSHAL & MANGES LLP RICHARDS, LAYTON & FINGER, P.A.
767 Fifth Avenue One Rodney Square
New York, New York 10153 Wilmington, Delaware 19899
Attorneys for Debtors and Attorneys for Debtors and
Debtors in Possession Debtors in Possession
<PAGE>
I.
INTRODUCTION
United Companies Financial Corporation ("United Companies")
and certain of its direct and indirect subsidiaries, as debtors and debtors, in
possession (collectively, the "Debtors"), submit this Disclosure Statement,
dated July 7, 2000 (the "Disclosure Statement"), in connection with the
solicitation of acceptances and rejections with respect to the Second Amended
Plan of Reorganization for Debtors Pursuant to Chapter 11 of the United States
Bankruptcy Code, dated July 7, 2000 (the "Plan or "Debtors' Plan"), a copy of
which is annexed hereto as Exhibit "A". Capitalized terms used and not otherwise
defined herein shall have the same meanings ascribed to them in the Plan.
The purpose of this Disclosure Statement is to set forth
information (1) regarding the history of the Debtors, their businesses, and the
Chapter 11 Cases, (2) concerning the Plan and alternatives to the Plan, (3)
advising the holders of Claims and Equity Interests of their rights under the
Plan, (4) assisting the holders of Claims and Equity Interests in making an
informed judgment regarding whether they should vote to accept or reject the
Plan, and (5) assisting the Bankruptcy Court in determining whether the Plan
complies with the provisions of chapter 11 of the Bankruptcy Code and should be
confirmed.
By order, dated July 10, 2000 (the "Disclosure Order"), a copy
of which is annexed hereto as Exhibit "B", the Bankruptcy Court approved this
Disclosure Statement, in accordance with section 1125 of the Bankruptcy Code, as
containing "adequate information' to enable a hypothetical, reasonable investor
typical of holders of Claims against, or Equity Interests in, the Debtors to
make an informed judgment as to whether to accept or reject the Plan, and
authorized its use in connection with the solicitation of votes with respect to
the Plan. APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A
DETERMINATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS OF THE PLAN.
No solicitation of votes may be made except pursuant to this Disclosure
Statement and section 1125 of the Bankruptcy Code. In voting on the Plan,
holders of Claims and Equity Interests should not rely on any information
relating to the Debtors and their businesses, other than that contained in this
Disclosure Statement, the Plan and all exhibits hereto and thereto.
THE BANKRUPTCY COURT HAS ALSO APPROVED THE AMENDED DISCLOSURE
STATEMENT TO ACCOMPANY THE PLAN OF REORGANIZATION OF THE OFFICIAL COMMITTEE OF
EQUITY SECURITY HOLDERS OF UNITED COMPANIES FINANCIAL CORPORATION, DATED JULY
10, 2000 (THE "EQUITY COMMITTEE DISCLOSURE STATEMENT"), FOR THE DISTRIBUTION TO
HOLDERS OF CLAIMS AND EQUITY INTERESTS.
THIS DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE A CAREFUL
AND DETAILED REVIEW AND ANALYSIS OF THE PLAN BY EACH HOLDER OF A CLAIM OR EQUITY
INTEREST. THE DISCLOSURE STATEMENT IS INTENDED TO AID AND SUPPLEMENT THAT
REVIEW. THE DESCRIPTION OF THE PLAN IS A SUMMARY ONLY. HOLDERS OF CLAIMS AND
EQUITY INTERESTS AND OTHER PARTIES IN INTEREST ARE CAUTIONED TO REVIEW THE PLAN
AND ANY RELATED ATTACHMENTS FOR A FULL UNDERSTANDING OF THE PLAN'S PROVISIONS.
THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
<PAGE>
Pursuant to the provisions of the Bankruptcy Code, only
classes of claims or equity interests which are (i) "impaired" by a plan of
reorganization and (ii) entitled to receive a distribution under such a plan are
entitled to vote on the plan. In this case, only Claims and Equity Interests in
Classes 3, 4, 5, 6, 7, 8, 9 and 10 are impaired by and entitled to receive a
distribution under the Plan, and the holders of Claims in those Classes are the
only Entities entitled to vote to accept or reject the Plan. Classes 11, 12, 13,
14, 15, 16, 17, 18, 19, 20 and 21 will receive no distribution and are deemed to
have rejected the Plan. Claims in Classes 1 and 2 are unimpaired by the Plan,
and the holders thereof are conclusively presumed to have accepted the Plan.
THE RECORD DATE FOR DETERMINING THE HOLDERS OF CERTAIN CLAIMS
OR EQUITY INTERESTS THAT MAY VOTE ON THE PLAN IS June 30, 2000 (the "Voting
Record Date").
If you are entitled to vote to accept or reject the Plan,
accompanying this Disclosure Statement should be a ballot ("Ballot") for casting
your vote(s) on the Plan and a pre-addressed envelope for the return of the
Ballot. BALLOTS FOR ACCEPTANCE OR REJECTION OF THE PLAN ARE BEING PROVIDED ONLY
TO HOLDERS OF CLAIMS AND EQUITY INTERESTS IN CLASSES 3, 4, 5, 6, 7, 8, 9 AND 10
BECAUSE THEY ARE THE ONLY HOLDERS OF CLAIMS OR EQUITY INTERESTS THAT MAY VOTE TO
ACCEPT OR REJECT THE PLAN. If you are the holder of a Claim or Equity Interest
in one of these Classes and did not receive a Ballot, received a damaged or
illegible Ballot, or lost your Ballot, or if you are a party in interest and
have any questions concerning the Disclosure Statement, any of the Exhibits
hereto, Plan or the voting procedures in respect thereof, please call:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ms. Denise Sciabarassi
(212) 310-8000
PLEASE BE FURTHER ADVISED THAT THE EQUITY COMMITTEE HAS FILED
THAT CERTAIN SECOND AMENDED PLAN OF REORGANIZATION OF THE OFFICIAL COMMITTEE OF
EQUITY SECURITY HOLDERS, DATED JULY 10, 2000 (THE "EQUITY COMMITTEE PLAN"), AND
THE EQUITY COMMITTEE DISCLOSURE STATEMENT IN CONNECTION THEREWITH. BY ORDER,
DATED JULY 10, 2000, THE BANKRUPTCY COURT APPROVED THE EQUITY COMMITTEE
DISCLOSURE STATEMENT AS CONTAINING ADEQUATE INFORMATION IN ACCORDANCE WITH
BANKRUPTCY CODE SECTION 1125. PURSUANT TO SUCH ORDER, THE EQUITY COMMITTEE IS
SOLICITING ACCEPTANCES AND REJECTIONS TO THE EQUITY COMMITTEE PLAN. IN THE EVENT
THE EQUITY COMMITTEE'S PLAN IS CONFIRMED BY THE BANKRUPTCY COURT IN ACCORDANCE
WITH BANKRUPTCY CODE SECTION 1129, THE DEBTORS' PLAN WILL BE OF NO FORCE AND
EFFECT.
THE BOARD OF DIRECTORS OF THE DEBTORS HAS UNANIMOUSLY APPROVED
THE TERMS OF THE DEBTORS' PLAN AND RECOMMENDS THAT THE DEBTORS' HOLDERS OF
CLAIMS AND EQUITY INTERESTS IN ALL SOLICITED CLASSES VOTE TO ACCEPT THE DEBTORS'
PLAN. THE NEGOTIATING COMMITTEE OF HOLDERS OF BANK CLAIMS AND OTHER BENEFICIAL
INTEREST HOLDERS (HOLDING CLAIMS IN EXCESS OF FIFTY-TWO PERCENT (52%) OF BANK
CLAIMS) AND THE UNOFFICIAL COMMITTEE OF HOLDERS OF SENIOR NOTE CLAIMS (HOLDING
CLAIMS APPROXIMATING FIFTY-FOUR PERCENT (54%) OF SENIOR NOTE CLAIMS) RECOMMEND
THAT THE HOLDERS OF CLAIMS AND EQUITY INTERESTS IN ALL SOLICITED CLASSES VOTE TO
ACCEPT THE DEBTORS' PLAN AND VOTE TO REJECT THE EQUITY COMMITTEE PLAN PROPOSED
AND CONTEMPORANEOUSLY DISTRIBUTED BY THE EQUITY COMMITTEE. THE CREDITORS'
2
<PAGE>
COMMITTEE ALSO RECOMMENDS THAT THE HOLDERS OF CLAIMS AND EQUITY INTERESTS IN ALL
SOLICITED CLASSES VOTE TO REJECT THE EQUITY COMMITTEE PLAN AND SUPPORTS APPROVAL
AND CONSUMMATION OF THE SALE TRANSACTION.
After carefully reviewing this Disclosure Statement and the
Exhibits attached hereto, please indicate your vote with respect to the Plan on
the enclosed Ballot and return it in the envelope provided. Voting procedures
and requirements are explained in greater detail elsewhere in this Disclosure
Statement. PLEASE VOTE AND RETURN YOUR BALLOT TO:
United Companies Balloting Agent
c/o Logan & Company, Inc.
546 Valley Road Upper
Montclair, New Jersey 07043
IN ORDER TO BE COUNTED, BALLOTS MUST BE RECEIVED BY 4:00 P.M. (EASTERN TIME) ON
AUGUST 10, 2000. ANY EXECUTED BALLOTS WHICH ARE TIMELY RECEIVED BUT WHICH DO NOT
INDICATE EITHER AN ACCEPTANCE OR REJECTION OF THE PLAN SHALL BE DEEMED TO
CONSTITUTE AN ACCEPTANCE OF THE PLAN.
The Debtors believe that prompt confirmation and
implementation of the Plan is in the best interests of the Debtors, all holders
of Claims and Equity Interests, and the Debtors' chapter 11 estates.
In accordance with the Disclosure Order and section 1128 of
the Bankruptcy Code, the Bankruptcy Court has fixed August 15, 2000, at 9:30
a.m. (Eastern Time), in the United States Court House, Sixth Floor, Courtroom of
Bankruptcy Judge Mary F. Walrath, 824 North Market Street, Wilmington, Delaware
19801, as the date, time and place of the hearing to consider confirmation of
the Plan, and August 9, 2000, as the last date for filing objections to
confirmation of the Plan. The hearing on confirmation of the Plan may be
adjourned from time to time without further notice except for the announcement
of the adjourned date and time at the hearing on confirmation or any adjournment
thereof.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE
BY THE DEBTORS AND THEIR PROFESSIONALS (WITHOUT INPUT FROM THE EQUITY COMMITTEE)
AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED HEREIN, AND THE DELIVERY OF
THIS DISCLOSURE STATEMENT DOES NOT IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN SINCE SUCH DATE. THIS DISCLOSURE STATEMENT HAS BEEN
PREPARED BY THE DEBTORS. HOLDERS OF CLAIMS OR EQUITY INTERESTS ENTITLED TO VOTE
SHOULD READ IT CAREFULLY AND IN ITS ENTIRETY, AND WHERE POSSIBLE, CONSULT WITH
COUNSEL OR OTHER ADVISORS, PRIOR TO VOTING ON THE PLAN.
THIS DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN,
WHICH SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
PLAN, AND IF ANY INCONSISTENCY EXISTS BETWEEN THE TERMS AND PROVISIONS OF THE
PLAN AND THIS DISCLOSURE STATEMENT, THE TERMS AND PROVISIONS OF THE PLAN ARE
CONTROLLING. CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT
ARE FORWARD LOOKING PROJECTIONS AND FORECASTS, BASED UPON CERTAIN ESTIMATES AND
ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE
3
<PAGE>
REFLECTIVE OF ACTUAL OUTCOMES.1 ALL HOLDERS OF CLAIMS AND EQUITY INTERESTS
ENTITLED TO VOTE SHOULD READ CAREFULLY AND CONSIDER FULLY ARTICLE VI BELOW,
ENTITLED CERTAIN FACTORS TO BE CONSIDERED, BEFORE VOTING TO ACCEPT OR REJECT THE
PLAN.
THE DEBTORS' PLAN IS BEING PROPOSED AS AN ALTERNATIVE TO
CONFIRMATION OF THE EQUITY COMMITTEE PLAN, WHICH IS FULLY DESCRIBED IN THE
EQUITY COMMITTEE DISCLOSURE STATEMENT.
II.
OVERVIEW OF PLAN
The following is a brief overview of the material provisions
of the Plan and is qualified in its entirety by reference to the full text of
the Plan. For a more detailed description of the terms and provisions of the
Plan, see Article V below, entitled, The Plan of Reorganization. The Plan is a
plan of reorganization for the Debtors. The Plan represents the product of
negotiations among the Debtors and key parties in interest.
The Plan provides for the classification and treatment of
Claims against and Equity Interests in the Debtors. The Plan designates eight
(8) Classes of Claims and thirteen (13) Classes of Equity Interests, which
classify all Claims against and interests in the Debtors. These classes take
into account the differing nature and priority under the Bankruptcy Code of the
various Claims and Equity Interests as well as the compromise and settlement
referenced above. Please note that pursuant to the provisions of section 510(b)
of the Bankruptcy Code, Statutorily Subordinated Claims are treated the same as
Equity Interests under the Plan.
A. DESCRIPTION OF PROPERTY TO BE DISTRIBUTED UNDER THE PLAN
The Plan requires that a Sale Transaction, or an Alternative
Residual Sale Transaction, as the case may be, has occurred by the Effective
Date. A Sale Transaction is a sale by the Debtors to a third party or parties,
to be consummated on or before the Effective Date, either of (i) all of the
Reorganized UC Common Stock issued pursuant to the Plan or (ii) all or
substantially all of the assets of the Debtors or Reorganized Debtors, as the
case may be. All remaining assets will be liquidated and the proceeds
distributed pursuant to the Plan.
With certain exceptions, upon the Effective Date, the Plan
provides for distribution of a combination of Cash and/or Litigation Trust
Interests to holders of Claims entitled to distributions under the Plan.
Litigation Trust Interests consist of 10,000,000 beneficial
interests, to be evidenced by certificates, in the Liquidation Trust which is a
trust that will be responsible for liquidating, through prosecution, settlement
or other disposition, those claims and causes of action of the Debtors, if any,
arising from or related to the Debtors' financial statements and the accounting
practices associated therewith.
----------
1 This Disclosure Statement may not be relied upon by any persons for any
purpose other than by holders of Claims and Equity Interests entitled to vote
for the purpose of determining whether to vote to accept or reject the Plan, and
nothing contained herein shall constitute an admission of any fact or liability
by any party, or be admissible in any proceeding involving the Debtors or any
other party, or be deemed conclusive evidence of the tax or other legal effects
of the reorganization on the Debtors or on holders of Claims or Equity
Interests.
4
<PAGE>
PURSUANT TO THE PLAN, ALL EXISTING EQUITY INTERESTS IN UNITED
COMPANIES (INCLUDING ALL ISSUED AND OUTSTANDING PREFERRED AND COMMON STOCK) WILL
BE EXTINGUISHED AND CANCELLED.
B. SUMMARY OF CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS
UNDER THE PLAN
The following chart2 summarizes distributions to holders of Allowed
Claims and Allowed Equity Interests under the Plan. The recoveries set forth
below are projected recoveries based upon assumptions described in Article IX
below, entitled Projected Confirmation Values, and may change based upon changes
in Allowed Claims and proceeds available.
<TABLE>
<CAPTION>
Estimated Estimated Estimated Litigation
Allowed Cash % of Cash Trust
Amount Distribution Distribution Interests
---------------- ---------------- ---------------- -----------------
(Amounts in thousands of dollars)
<S> <C> <C> <C> <C>
Reserve for Claims(3)..................... 100,000 35,000 Various
Reserve for Wind-down Expenses............ 15,000 15,000 100.0%
Cash Distributed at Confirmation.......... 27,000 27,000 100.0%
---------------- ----------------
Subtotal......................... 142,000 77,000
Bank Claims (Class 3)..................... 857,896 662,417 77.21%4 5,851,620
Senior Note Claims (Class 4).............. 238,900 111,340 46.61%4 992,380
General Unsecured Claims (Class 5)(3)..... 25,000 8,000 32.0% 156,000
Convenience Claims (Class 6).............. 243 243 100.0%
Subordinated Debt (Class 7)............... 159,190 0 0.0% 2,000,000
(if plan
accepted by
class)
Subordinated Penalties (Class 8)(5)....... 0 0.0% Pro Rata Share
of Litigation
Trust Interests
after payment in
full of Allowed
Claims (other
than
postpetition
interest).
----------
2 This chart is only a summary of the classification and treatment of Claims and
Equity Interests under the Plan. Reference should be made to the entire
Disclosure Statement and the Plan for a complete description of the
classification and treatment of Claims and Equity Interests.
3 The Reserve for Claims covers, in addition to Priority, Tax and Administrative
Claims, certain contingent and unliquidated unsecured Claims (not covered in the
$25,000,000.00 estimate for General Unsecured Claims).
4 These percentages are subject to reduction after allocation of fees and
expenses of approximately $4,000,000 under the terms of the compromise and
settlement described in section V below.
5 Holders of Allowed Subordinated Penalty Claims, if any, are entitled to
receive their Pro Rata Share of Litigation Trust Interests deemed redistributed
after all other Allowed Claims are paid in full (other than with respect to the
payment of postpetition interest).
5
<PAGE>
<S> <C> <C> <C> <C>
Equity Interests and Statutorily 1,000,000
Subordinated Claims (Classes 9, 10A and (if plan
10B) ........................................ 0 0.0% accepted by
class and senior
classes)
Subtotal...............................1,241,229 782,000
Total Cash......................................1,413,229 859,000
Claims Assumed by Buyer.......................... 60,000 60,000 100.0%
Total..................................1,473,229 919,000
</TABLE>
In addition, as discussed in more detail below, the Plan
provides generally for payment in full, in Cash, of all Allowed Administrative
Expense Claims, Allowed Professional Compensation and Reimbursement Claims,
Allowed Priority Tax Claims and Allowed Priority Non-Tax Claims. Allowed Secured
Claims in Class 2 are unimpaired and are entitled to one of several described
unimpaired treatments, at the option of the Debtors. Holders of Convenience
Claims in Class 6 are entitled to payment in full of their Allowed Claims, in
amounts not exceeding $1,000 each. Holders of General Unsecured Claims with
Allowed Claims exceeding $1,000 may elect to reduce their claims to $1,000 and
receive such amount as a holder of a Class 6 Convenience Claim as an alternative
to the treatment provided for Class 5 General Unsecured Claims. Provided that
such Classes (and, in some instances, senior Classes) vote to accept the Plan,
holders of Subordinated Debenture Claims (Class 7), Subordinated Penalty Claims
(Class 8), Pride Equity Interests (Class 9), Statutorily Subordinated Claims
(Class 9A) and United Companies Common Equity Interests (Class 9B) shall receive
only Litigation Trust Interests under the Plan.6 Common Equity Interests in
Classes 11 through 21 are impaired, and such interests will be either cancelled
or transferred under the Plan. Specific Plan treatments are summarized below.
----------
6 Such Classes may receive redistributed Litigation Interests, pursuant to the
Contingent Distribution/Limitation on Recovery provisions of the Debtors' Plan,
where notwithstanding anything contained herein or in the Plan to the contrary,
in the event that (a) Litigation Trust Interests are deemed redistributed to a
holder of an Allowed Claim in accordance with the provisions of the Plan and (b)
the sum of the distributions from the Litigation Trust to such holder are equal
to one hundred percent (100%) of such holder's Allowed Claim, then the
Litigation Trust Interests distributable to such holder shall be deemed
redistributed to holders of Allowed Claims and Equity Interests in accordance
with the provisions of section 32.12 of the Plan and the documents, instruments
and agreements governing such Claims and Equity Interests, including, without
limitation, the contractual subordination provisions set forth therein, and the
Bankruptcy Code. In this context, upon payment in full of Allowed Bank Claims
and Allowed Senior Note Claims, distributions on account of redistributed
Litigation Trust Interests to Allowed Subordinated Debenture Claims may commence
even though Allowed General Unsecured Claims may not have been paid in full.
However, distributions to holders of Allowed General Unsecured Claims would
remain unaffected.
6
<PAGE>
<TABLE>
<CAPTION>
Estimated Estimated
Aggregate Amount Percentage Recovery of
Treatment of of Allowed Claims Allowed Claims
Class Claim/Interest Claim/Interest or Interests or Interests
----- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Administrative Payment (a) in full, in Cash, $16,840,000 100.0%
Expense Claims on the Effective Date or (b) on
such other terms to which the parties agree;
provided, however, that Administrative Expense
Claims representing liabilities or obligations
incurred or assumed by the Debtors in the
ordinary course of business or liabilities
arising under loans made or advances extended to
the Debtors, whether or not in the ordinary
course of business, shall be assumed and paid by
Reorganized UC in accordance with the terms and
conditions of the particular transaction and any
agreements relating thereto.
Professional Payment in full, in Cash, (a) $10,160,000(7) 100.0%
Compensation and on the later of the Effective
Reimbursement Date and the date upon which
Claims the Bankruptcy Court order allowing such Claim
becomes a Final Order, or (b) upon such other
terms as may be mutually agreed upon between the
holder of such Claim and the Debtors.
Priority Tax At the option of Reorganized $6,000,000 100.00%
Claims UC, payment (a) in full, in
Cash, on the Effective Date, (b) in accordance
with section 1129(a)(9)(c) of the Bankruptcy Code
or (c) by mutual agreement of the holder of such
Claim and Reorganized UC.
----------
7 Inclusive of projected amounts of compensation and reimbursement of expenses of
professionals to be awarded by the Bankruptcy Court.
7
<PAGE>
Estimated Estimated
Aggregate Amount Percentage Recovery of
Treatment of of Allowed Claims Allowed Claims
Class Claim/Interest Claim/Interest or Interests or Interests
----- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
1 Priority Non-Tax Unimpaired. Unless otherwise $ 0 100.0%
Claims agreed upon by the holder of
such Claim and Reorganized UC, payment in full,
in Cash, upon the later of the Effective Date and
the date on which such Claim becomes an Allowed
Claim.
2 Secured Claims Unimpaired. Each holder shall $ 0 100%
receive, at the election of the
Debtors, either (a) payment in
full in Cash, (b) the proceeds
from the sale or other
disposition of the collateral,
(c) surrender of the
collateral, or (d) such other
distribution as necessary to
satisfy the Bankruptcy Code.
3 Bank Claims Impaired. On the Effective $857,896,205 77.21%
Date, each holder shall receive
its Pro Rata Share of: (a) the
Bank Cash Amount and (b)
Litigation Trust Interests
equal to the Bank Interest
Amount.
4 Senior Note Claims Impaired. On the Effective $238,900,000 46.61%
Date, each holder shall receive
its Pro Rata Share of: (a) the
Senior Note Cash and (b) Litigation Trust
Interests equal to the Senior Note Interest
Amount.
5 General Unsecured Impaired. On the Effective $25,000,000 32.0%
Claims Date, each holder shall receive
its Pro Rata Share of: (a) the
General Unsecured Cash Amount
and (b) Litigation Trust
interests equal to the General
Unsecured Interest Amount.
Alternatively, any such Claim
in excess of $1,000 that is
voluntarily reduced in amount
to $1,000 shall be paid $1,000
in cash.
8
<PAGE>
Estimated Estimated
Aggregate Amount Percentage Recovery of
Treatment of of Allowed Claims Allowed Claims
Class Claim/Interest Claim/Interest or Interests or Interests
----- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
6 Convenience Claims Impaired. Payment on the $243,000 100.0%
Effective Date of Cash in an
amount equal to 100% of such
Claim.
7 Subordinated Impaired. Holders shall $159,190,000 0.0%
Debenture Claims receive Pro Rata Share of
2,000,000 Litigation Trust
Interests if class accepts
plan; otherwise, no
distributions.*
8 Subordinated Impaired. Holders shall 0.0%
Penalty Claims receive Pro Rata Share of Litigation Trust
Interests deemed distributed after payment in
full of all Allowed Claims (other than
postpetition interest).
9 Pride Equity Impaired. Upon conversion to 0.0%
Interests United Companies Common Equity
Interests, holders shall receive their Pro Rata
Share of the Equity Interest Percentage of
1,000,000 Litigation Trust Interests if class and
all senior classes accept plan; otherwise, no
distributions.*
----------
* Such Classes may receive redistributed Litigation Trust Interests, pursuant to
the Contingent Distribution/Limitation on Recovery provisions of the Plan, in
the event that (a) Litigation Trust Interests are deemed redistributed to a
holder of an Allowed Claim or Allowed Equity Interest in accordance with the
provisions of the Plan and (b) the sum of the distributions from the Litigation
Trust to such holder, together with any other distributions provided for in the
Plan, are equal to one hundred percent (100%) of such holder's Allowed Claim,
then the Litigation Trust Interests distributable to such holder shall be deemed
redistributed to holders of Allowed Claims and Equity Interests in accordance
with the provisions of the documents, instruments and agreements governing such
Claims and Equity Interests, including, without limitation, the contractual
subordination provisions set forth therein, and the Bankruptcy Code. In this
context, upon payment in full of Allowed Bank Claims and Allowed Senior Note
Claims, distributions on account of redistributed Litigation Trust Interests to
Allowed Subordinated Debenture Claims may commence even though General Unsecured
Claims may not have been paid in full. However, distributions to holders of
Allowed General Unsecured Claims would remain unaffected.
9
<PAGE>
Estimated Estimated
Aggregate Amount Percentage Recovery of
Treatment of of Allowed Claims Allowed Claims
Class Claim/Interest Claim/Interest or Interests or Interests
----- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
10A Statutorily Impaired. Holders shall 0.0%
Subordinated receive their Pro Rata Share of
Claims the Statutorily Subordinated
Claim Percentage of 1,000,000 Litigation Trust
Interests if class and all senior classes accept
plan; otherwise, no distributions.*
10B United Companies Impaired. Holders shall 0.0%
Common Equity receive their Pro Rata Share of
Interests the Equity Interest Percentage
of 1,000,000 Litigation Trust Interests if class
and all senior classes accept plan; otherwise, no
distributions.*
11 Adobe Common Impaired. Equity Interests to 0.0%
Equity Interests be extinguished except in the
event of an Alternative Residual Sale Transaction
consummated through a stock purchase agreement.
12 Adobe Financial Impaired. Equity Interests to
Common Equity be extinguished except in the
Interests event of an Alternative Residual Sale Transaction
consummated through a stock purchase agreement.
13 Ginger Mae Common Impaired. Equity Interests to 0.0%
Equity Interests be extinguished.
14 Gopher Equity Impaired. Equity Interests to
Common Equity be extinguished except in the
Interests event of an Alternative Residual Sale Transaction
consummated through a stock purchase agreement.
15 Pelican Common Impaired. Equity Interests to 0.0%
Equity Interests be extinguished except in the
event of an Alternative Residual Sale Transaction
consummated through a stock purchase agreement.
10
<PAGE>
Estimated Estimated
Aggregate Amount Percentage Recovery of
Treatment of of Allowed Claims Allowed Claims
Class Claim/Interest Claim/Interest or Interests or Interests
----- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
16 Southern Mortgage Impaired. Equity Interests to
Common Equity be extinguished.
Interests
17 Unicor Common Impaired. Equity Interests to 0.0%
Equity Interests be extinguished.
18 United Companies Impaired. Equity interest to 0.0%
Funding Common be extinguished.
Equity Interests
19 United Companies Impaired. Equity interest to 0.0%
Lending Corp. be extinguished.8
Common Equity
Interests
20 United Companies Impaired. Equity interest to 0.0%
Lending Group be extinguished.
Common Equity
Interests
21 United Credit Impaired. Equity interest to 0.0%
Card Common be extinguished.
Equity Interests
</TABLE>
THE TREATMENT AND DISTRIBUTIONS PROVIDED TO HOLDERS OF ALLOWED
CLAIMS AND ALLOWED EQUITY INTERESTS PURSUANT TO THE PLAN ARE IN FULL AND
COMPLETE SATISFACTION OF THE ALLOWED CLAIMS AND ALLOWED EQUITY INTERESTS, AS THE
CASE MAY BE, ON ACCOUNT OF WHICH SUCH TREATMENT IS GIVEN AND DISTRIBUTIONS ARE
MADE.
----------
8 On the Effective Date, (a) all United Lending Corp. Common Equity Interests
shall be deemed extinguished and the certificates and all other documents
representing such Equity Interests shall be deemed cancelled and of no force and
effect and (b) the Plan Administrator shall administer the assets of such Entity
in accordance with the provisions of Article XXXVI of the Plan; provided,
however, that, in the event that an Alternative Residual Sale Transaction occurs
through consummation of a stock purchase agreement at the discretion of the
highest or best offeror, (1) the Equity Interests represented by United Lending
Corp. Common Equity Interests shall be extinguished and the certificates and all
other documents representing such Equity Interests shall be deemed cancelled and
of no force and effect and (2) the certificates representing Reorganized UC
Lending Common Stock shall be issued to such higher or better offeror in
accordance with the terms and conditions of the Alternative Residual Sale
Agreement. It is also possible that, in the event of an Alternative Residual
Sale Transaction through a stock purchase agreement, certificates representing
Reorganized Designated Subsidiaries Common Stock may be issued to such higher or
better offeror.
11
<PAGE>
III.
GENERAL INFORMATION
A. THE DEBTORS' BUSINESS
The Debtors currently operate a specialty finance company that
services a multi-billion dollar portfolio of non-traditional consumer loan
products, consisting of home equity and manufactured housing loans.
Historically, the Debtors engaged in the origination,
purchase, sale, and servicing of sub-prime, primarily first mortgage,
non-conventional, home equity loans. The Debtors' loan products included fixed
and adjustable rate and hybrid loans, equity loans and manufactured housing
contracts. Sub-prime loans are loans that are made primarily to individuals who
may not otherwise qualify for conventional loans that are readily marketable to
government-sponsored mortgage agencies or conduits and available through most
commercial banks and many other lending institutions. The Debtors funded their
loan production primarily through borrowings under an $850 million revolving
credit facility and warehouse financing facilities which provided interim
funding of loan originations pending the sale of loans in public
securitizations.
United Companies, the parent of the Debtors, and itself a
Debtor, was incorporated in the State of Louisiana in 1946. Its principal
offices are located in Baton Rouge, Louisiana. United Companies, through its
direct and indirect subsidiaries, currently has approximately 450 employees,
down from 1,965 employees as of the Petition Date.
B. ORGANIZATIONAL STRUCTURE OF THE DEBTORS
Prior to the Petition Date, as of December 31, 1998, United
Companies had thirty-five (35) direct and indirect subsidiaries in corporate and
limited liability company form. Certain of the Debtors' subsidiaries are not or
will no longer be operating businesses and may be either dissolved, liquidated
or merged into the Debtors after the Effective Date.
The corporate structure of the Debtors and their non-debtor
Affiliates is reflected below. Entities that are not Debtors are denoted by
\/, and entities that have no current operations are denoted by [X]:
UNITED COMPANIES FINANCIAL CORPORATION
[X]UNITED COMPANIES LENDING GROUP, INC.
United Companies Lending Corporation(R)
Pelican Mortgage Company, Inc.
Adobe, Inc.
[X]Adobe Financial, Inc. I
\/[X]United Companies Lending Corporation of
Mississippi
\/UCFC Acceptance Corporation
\/[X]United Companies Mortgage of Tennessee,
Inc.
12
<PAGE>
\/[X]United Companies Second Mortgage
Corporation of Minnesota
\/[X]United Companies Credit Life Insurance
of Nevada Incorporated
[X]GINGER MAE(R), Inc.
\/[X]Ginger Mae Second Mortgage, Inc. of
Minnesota
\/[X]GMS Mortgage, Inc.
[X]UNICOR Mortgage(R), Inc.
\/[X]Unicor Second Mortgage, Inc. of
Minnesota
[X]Southern Mortgage Acquisition, Inc.
UNITED COMPANIES FUNDING, INC.
\/UCFC Funding Corporation
\/[X]Significant Homes, Inc.
\/Gopher Funding, Inc.
Gopher Equity, Inc. I
\/[X]FOSTER MORTGAGE CORPORATION
\/UNITED COMMUNICATIONS CORPORATION OF LOUISIANA, INC.
\/UC Communications, Inc.
\/[X]UNITED COMPANIES MANAGEMENT COMPANY, INC.
\/UNITED COMPANIES REALTY AND DEVELOPMENT, INC.
\/[X]Turner-United Partnership (50% Owned by Above
Entity)
\/UNITED PLAN INSURANCE AGENCY, INC.
[X]UNITED CREDIT CARD, INC.
\/[X]United Credit Card Bank, N.A.
\/[X]UNITED COMPANIES REALTY ONE, L.L.C.
\/[X]TWO UNITED COMPANIES REALTY, L.L.C.
\/[X]UNITED COMPANIES REALTY THREE, L.L.C.
\/[X]UNITED COMPANIES REALTY ELEVEN, L.L.C.
\/UNITED COMPANIES REALTY TWELVE, L.L.C.
13
<PAGE>
C. DESCRIPTION OF BUSINESS
1. LOAN SERVICING
Historically, the Debtors have retained the right to service
substantially all of the loans that they originated. The 1998-D home equity
securitization was sold with servicing released to a third party. Revenues and
ancillary fees received by the Debtors in respect of servicing loans generally
equal annual rates of approximately 0.50% and 0.38%, respectively, of the
principal amount of the loans. The following services are performed for
investors to whom the Debtors have sold loans and for which the Debtors have
retained servicing rights: investor reporting; collecting and remitting periodic
principal and interest payments to investors; and performing other
administrative services, including maintaining required escrow accounts for
payment of real estate taxes and standard hazard insurance; determining the
adequacy of standard hazard insurance; advising investors of delinquent loans;
conducting foreclosure proceedings; inspecting and reporting on the physical
condition of the properties securing the loans; and disposing of foreclosed
properties. The Debtors are generally obligated to advance to the Trustee for
the secondary market investors any interest that borrowers do not pay until
satisfaction of the loan, liquidation of the property securing the loan, or
charge off of the loan.
When collateral is liquidated the first net proceeds are used
to reimburse the Debtors' service and interest advances. If the remaining net
proceeds are insufficient to cover the unpaid principal balance of the loan, the
deficit is paid to the Trust from the related reserve account. This reserve
account constitutes a portion of the residual interest owned by the Debtors.
The Debtors have estimated expected losses from each Trust and
the actual incurred losses resulting from the shortfall of collateral proceeds
are deducted from the expected losses. If aggregate actual losses to a trust
exceed expected losses, the value of the Debtor's residual interest is reduced.
If actual losses are less, the value is increased.
When loans are charged off and no collateral proceeds are
received, the loss equals the entire unpaid balance and the Debtors receive no
recovery on their service or interest advances related to that loan.
As part of their servicing activities, the Debtors send to
borrowers monthly statements that specify the fixed payment amount and due date
in the case of fixed-rate loans and the adjusted payment amount and due date in
the case of adjustable-rate loans and the late payment amount, if any.
The Debtors are required, under agreements related to the loan
sales, to service the mortgage loans or manufactured housing contracts, as the
case may be. Substantially all servicing activities are now centralized at the
home office.
2. ORIGINATION NETWORK
The Debtors' lending activities were primarily conducted
through the following origination channels, all of which are now closed or sold.
UC LENDING, as part of United Companies Lending Corporation,
the Debtors' former retail lending operation, consisted of 191 offices in 38
states at year end 1998 compared to 221 offices in 42 states at year end 1997.
During 1998, UC Lending originated $2.0 billion in home equity loans compared to
$1.5 billion for 1997, representing a 33% increase. Loan originations in 1999
were $338.9 million. Subsequent to December 31, 1998, the Debtors closed 64 of
UC Lending's branches. On April 16, 1999, the Bankruptcy Court authorized the
Debtors to sell approximately 127 offices of their retail operations to Aegis
Mortgage Corporation ("Aegis") for $3 million in cash plus additional
consideration in the form of $7 million in operating expenses paid by Aegis. At
the same time, the Bankruptcy Court authorized the Debtors to close their
remaining offices. The sale transaction closed on June 1, 1999. Under the sale
14
<PAGE>
agreement, until Aegis obtained the necessary licenses, United Companies Lending
Corp. was obligated to maintain certain loan origination operations for Aegis,
subject to reimbursement of costs by Aegis. Aegis has obtained all its required
licenses and United Companies Lending Corp. no longer maintains any operations
for Aegis.
UNICOR, formerly one of the Debtors' wholesale lending
operations, which acquired loans primarily from brokers and correspondents,
produced $678.0 million in home equity loans in 1998 compared to $566.8 million
for 1997. UNICOR's operations were closed in the fourth quarter of 1998.
GINGER MAE, another of the Debtors' former wholesale lending
operations, which acquired loans primarily from financial institutions (banks,
thrifts and credit unions), produced $332.4 million in home equity loans in 1998
compared to $211.4 million in 1997. Loan production during 1999 was $58.0
million. GINGER MAE's operations were closed in April 1999.
UC ACQUISITION, which purchased home equity loans in bulk,
produced $261.3 million in home equity loans in 1998 compared to $540.2 million
for 1997. As of December 31, 1998, UC Acquisition had ceased its purchasing
activities.
UC FUNDING, the Debtors' manufactured housing lender,
originated $433.5 million in manufactured housing chattel contracts in 1998,
compared to $251.8 million in 1997. The manufactured housing unit originated
loan products through dealers and directly to the consumer. UC Funding's lending
operations were discontinued in the third quarter of 1998, and its servicing
functions were moved from Minnesota to the home office in the second quarter of
1999. Loans of $1.1 million were funded during 1999 to complete commitments made
in 1998.
3. UNDERWRITING
Although supervision of the Debtors' underwriting staff was
centralized, each of the Debtors' origination channels for home equity loans had
its own staff of underwriters. Regardless of the manner of origination, all home
equity loans were underwritten (or, in the case of bulk purchases, were
generally reunderwritten) prior to approval and funding, utilizing essentially
similar underwriting guidelines. The underwriting guidelines generally were
intended to assess both the prospective borrower's ability to repay the loan and
the adequacy of the real property collateral for the loan. On a case-by-case
basis, after review and approval by the Debtors' underwriters, home equity loans
were made which varied from the underwriting guidelines. The underwriting
functions ceased with the discontinuation of the loan origination businesses
following the sales to Aegis.
4. LOAN SALES AND SECURITIZATIONS
In the past substantially all of the home equity loans and
manufactured housing contracts originated or purchased by the Debtors were sold.
From 1985 until December 31, 1998, the Debtors sold the home equity loans and
manufactured housing contracts they originated in the secondary market.
Initially, the transactions were with government-sponsored mortgage agencies or
conduits. Subsequently, the sales occurred through private placement
transactions with financial institutions and, beginning in the second quarter of
1993, the Debtors engaged in public securitization transactions based on
registered offerings. Approximately $10.9 billion of asset-backed securities,
backed primarily by first mortgage home equity loans originated or purchased by
the Debtors through their origination channels, were publicly sold from 1993
through December 31, 1998.
The Debtors have been unable to sell loans in securitization
transactions subsequent to December 1998. During 1999, private whole loan sale
transactions were consummated which resulted in proceeds of approximately $32.8
million and $68.7 million, from home equity loans and manufactured housing
loans, respectively. In addition, the Debtors sold $75 million of whole loans to
Greenwich Capital under the DIP Loan Purchase Facility.
15
<PAGE>
5. OTHER OPERATIONS
A non-Debtor subsidiary operates an insurance agency that
sells homeowners' and other insurance to borrowers in the owned and serviced
portfolio. In addition, a non-Debtor subsidiary engages in a telecommunications
business which provides telephone service to the Debtors' home office and
tenants in the office park in which the Debtors' home office is located.
Although profitable, neither the homeowners' insurance nor the
telecommunications business is material to the Debtors' operations.
D. SIGNIFICANT PREPETITION INDEBTEDNESS
In May 1993, United Companies Lending Corporation entered into
a Subordinated Debenture Agreement with United Companies Life Insurance
Corporation ("UCLIC"), an affiliated company. The Series B subordinated
debentures with a principal amount of $3,000,000 bear interest at 6.64% and
Series C subordinated debentures with a principal amount of $4,000,000 bear
interest at 7.18%. The debentures are subordinated to senior debt and guarantees
of senior debt. UCLIC was sold to an outside party and ownership of the debt was
transferred in the sale transaction.
In November 1994, United Companies publicly sold $125 million
of 9.35% Notes with a maturity date in November 1999. In December 1996, United
Companies publicly sold $100 million of its 7.7% Notes which mature in January
2004 (collectively, the "Senior Notes"). The Senior Notes provide for interest
payable semiannually and are not redeemable prior to maturity. The terms of the
Senior Notes provide that they rank on a parity with other unsecured and
unsubordinated indebtedness of United Companies and have priority over the
Subordinated Debenture Claims in Class 8. The Claims existing against the
Debtors with respect to the Senior Notes are referred to in the Plan as Senior
Note Claims.
In April 1997, United Companies entered into an $800 million
senior unsecured revolving credit facility (the "Credit Facility"). Each of the
other Debtors is a guarantor of all obligations owed under the Credit Facility.
The Credit Facility was syndicated to a total of 22 participating lenders. In
July 1998, the Credit Facility was increased to $850 million. The Debtors used a
portion of the proceeds from this three-year credit facility to refinance
existing debt and used the remaining proceeds for general corporate purposes,
including interim funding of loan originations. The Credit Facility permitted a
portion of the amount available to be used for the issuance of letters of credit
for the Debtors' account. In connection with some securitization transactions,
the Debtors deposited letters of credit in lien of depositing cash in the
related reserve accounts. As of December 31, 1998, the aggregate principal
amount of loans and letters of credit outstanding under the Credit Facility was
$825 million and $25 million, respectively. As a result, at December 31, 1998,
the commitment under the Credit Facility was fully utilized. The letters of
credit were subsequently drawn, resulting in an aggregate principal amount
outstanding as of the Petition Date of $850 million. The Claims existing against
the Debtors with respect to the Credit Facility are referred to in the Plan as
Bank Claims. The Debtors' books and records indicate that the Debt is
$857,990,000 and the Bank Claims will be allowed in such amount.
In June 1997, United Companies publicly sold $150 million of
its 8.375% Notes (the "Subordinated Notes"). The Subordinated Notes provide for
interest payable semi-annually and are not redeemable prior to their maturity on
July 1, 2005. The Subordinated Notes bear interest at 8.375% per annum and were
issued at a discount from par. Such discount was being amortized using the
effective interest method as an adjustment to the yield over the life of the
Subordinated Notes, resulting in an effective interest rate on the Subordinated
Notes of 8.48% per annum. The terms of the Subordinated Notes provide that they
rank subordinate and junior in right of payment to the prior payment of all
existing and future senior indebtedness of United Companies. The Claims existing
against the Debtors with respect to the Subordinated Notes are referred to in
the Plan as Subordinated Debenture Claims.
On February 3, 1999, the Debtors announced that they were
experiencing difficulties in generating the liquidity necessary to maintain home
equity loan production at levels contemplated by a restructuring plan announced
dining the Fall of 1998. As a result of the financial condition of the Debtors
16
<PAGE>
at the time, there was no availability under warehouse facilities that it had
with First Union National Bank ("First Union") and other lenders. As an interim
measure, on February 5, 1999, the Company entered into a short term repurchase
facility with First Union in the amount of $40 million, which was repaid in full
on March 9, 1999, from proceeds of the Debtors' postpetition debtor in
possession financing facility.
E. CAPITAL STOCK
United Companies has authorization to issue up to 100,000,000
shares of its $2.00 par value common stock. There were 29,334,893 shares
outstanding at December 31, 1999, excluding 1,180,117 treasury shares. United
Companies also has authorization to issue 20,000,000 shares of preferred stock
at $2.00 par value per share. 1,514,164 shares of 63/4% Preferred Redeemable
Increased Dividend Equity Securities ("PRIDES"), Convertible Preferred Stock,
$2.00 par value (the "PRIDES"), are currently issued and outstanding. Included
in the authorized preferred stock are 1,000,000 shares of Series A Junior
Participating preferred stock and 800,000 shares of Cumulative Convertible
preferred stock, none of which is outstanding.
The terms of the PRIDES provide that they rank prior to United
Companies' common stock as to payment of dividends and distribution of assets
upon liquidation. Such terms also provide that the shares of PRIDES mandatorily
converted into shares of common stock on July 1, 2000 (the "Mandatory Conversion
Date") on a two share to one share basis (as adjusted for the 100% common stock
dividend paid October 20, 1995), and that the shares of PRIDES were convertible
into shares of common stock at the option of the holder at any time prior to the
Mandatory Conversion Date on the basis of 1.652 shares of common stock for each
share of PRIDES, in each case subject to adjustment in certain events. In
addition, such terms provide that United Companies had the option to convert the
shares of PRIDES, in whole or in part, on or after July 1, 1998, until the
Mandatory Conversion Date, into shares of its common stock according to a
specified formula.
During 1998, United Companies paid cash dividends on its
common stock in the amount of $6.8 million, or $.24 per share. In addition,
during 1998, United Companies paid cash dividends on its PRIDES in the amount of
$4.2 million, or $2.2275 per share. In October 1998, the Company suspended
indefinitely payment of future dividends on United Companies common and
preferred stock. As of the Petition Date, United Companies had a dividend
payable on its PRIDES of $1,230,894.
Prior to the Petition Date, United Companies' common stock and
PRIDES had been listed for trading on the New York Stock Exchange ("NYSE") under
the trading symbols "UC" and "UCPRI," respectively. On March 4, 1999, the NYSE
suspended trading in such securities. Subsequently, upon application by the
NYSE, the Securities and Exchange Commission delisted United Companies'
securities. United Companies' common stock now trades under the symbol "UCFNQ",
and the PRIDES trade under the symbol "UCFPQ", in the over-the-counter market.
The common stock of United Companies is subject to the
provisions of the Plan relating to United Companies Common Equity Interests, and
the PRIDES are subject to the provisions of the Plan relating to Pride Equity
Interests.
F. MANAGEMENT AND EMPLOYEES
The members of the Board of Directors of United Companies are
James J. Bailey, III, Chairman, Gen. Robert H. Barrow, J. Terrell Brown, Jon R.
Burke, Richard A. Campbell, Roy G. Kadair, M.D., O. Miles Pollard, Jr., Dale E.
Redman and William H. Wright.
The senior management of United Companies are Lawrence J.
Ramaekers, Chief Executive Officer and Chief Operating Officer; Rebecca A. Roof,
Chief Financial Officer; Sherry E. Anderson, Senior Vice President and
Secretary; Jesse O. Griffin, Senior Vice President; Paul E. Kirk, Senior Vice
President; and Joel G. Swetnam, Senior Vice President. Members of middle
management are Michael Barron, Vice President and General Counsel; Glenn
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Eberhart, Vice President and Assistant Controller, Frank W. Foote, Vice
President; Donald R. Marshall, Vice President; Mills Murrey, Vice President and
Controller; Sheila C. Pecot, Vice President; Jim Pickett, Vice President; Keith
Thibodeaux, Vice President; and Pamela H. Welch, Vice President.
As of the Petition Date, the Debtors had approximately 1,965
employees at their corporate headquarters, outside offices and various
facilities. The Debtors currently employ approximately 450 employees. The
reduction is due primarily to the sale of the Debtors' loan origination business
and the discontinuation of other non-servicing operations. However, the Debtors
have also trimmed their workforce for the purpose of reducing their overhead.
G. D&O LIABILITY INSURANCE
The Debtors own a Directors and Officers and Company
Reimbursement Indemnity Policy and three Excess Directors and Officers and
Company Reimbursement Policies, issued by certain underwriters at Lloyds
Underwriters at London and AIG Europe (UK) Ltd., covering claims in the
aggregate amount of $50 million. The policies, subject to their terms,
conditions and exclusions, provide certain coverage to the officers and
directors of the Debtors and provide for certain reimbursement to the Debtors
for indemnification of directors and officers for claims relating to the period
covered. Under its articles of incorporation and bylaws, United Companies has
indemnified officers and directors to the full extent permitted by Louisiana
law.
H. ADDITIONAL INFORMATION
Additional information concerning the Debtors and their
Affiliates, and their business, financial condition and results of operations,
is set forth in the Current Report on Form 8-K annexed hereto as Exhibit "G".
IV.
THE DEBTORS' CHAPTER 11 CASES
A. EVENTS PRECEDING THE FILING OF THE CHAPTER 11
As outlined below, certain events that occurred in the
sub-prime lending market, specifically, and the capital markets, generally,
prior to the Petition Date, had certain consequences which ultimately
necessitated the implementation of a financial restructuring for the Debtors.
These events culminated in a restructuring proposal, the filing for relief under
chapter 11 of the Bankruptcy Code, and the Plan.
1. THE BEGINNING OF A SEVERE LIQUIDITY CRISIS
In July 1998, United Companies announced that its Board of
Directors had determined, after a five-month analysis conducted with the
assistance of an internationally recognized independent management consulting
firm, to seek a strategic partnership in order to improve the Debtors' access to
capital and, thereby, to enable continued growth. After such date, numerous
parties expressed an interest in a strategic partnership with the Debtors,
conducted due diligence and held discussions with management. This process was
proceeding when, in the fourth quarter of 1998, the capital markets, in general,
and the sub-prime lending market, in particular, experienced a severe liquidity
crisis. This crisis limited the Debtors' access to the securitization markets
and warehouse funding lines for working capital. The market for home equity
loan-backed securities contracted partially as a result of a foreign economic
crisis that curtailed investor (and financial guarantor) demand for securities
backed by higher risk assets, such as sub-prime loans of the type originated by
the Debtors. In addition, this disruption in the financial markets severely
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curtailed the Debtors' other traditional sources of financing. The Debtors did
not receive an acceptable proposal from any potential strategic partner.
Due to the inability to locate a strategic partner, on October
28, 1998, the Debtors announced that they would implement a restructuring plan.
Under the plan, the Debtors sold or closed their wholesale loan purchase,
manufactured housing origination and credit card operations, which resulted in a
significant reduction of personnel and overhead expenses of more than 30%.
Nationwide, employee levels were reduced from approximately 3,350 to
approximately 1,965 employees by the Petition Date. In addition, approximately
$150 million of non-core assets were sold, including several United Companies'
real estate investment properties. United Companies Lending Corporation closed
approximately 32 underperforming retail locations. Furthermore, the payment of
dividends on United Companies' Common and preferred stock was suspended
indefinitely.
In December 1998, the Debtors retained Jay Alix & Associates
("JA&A") to provide consulting services and in February 1999, Deborah Hicks
Midanek, then a principal of JA&A, was appointed Executive Vice President and
Chief Restructuring Officer of United Companies. Ms. Midanek subsequently
assumed the responsibilities of J. Terrell Brown, President and Chief Executive
Officer, who, in February 1999, was granted a 90-day leave of absence and
subsequently left the employ of United Companies. In September 1999, Ms. Midanek
resigned for personal reasons. She was replaced as Chief Executive Officer by
Lawrence J. Ramaekers, also a principal of JA&A, who was previously serving as
Chief Operating Officer.
2. TRANSITION FROM SECURITIZATION TO WHOLE-LOAN SALES
In December 1998, the Debtors' sub-prime securitization
business experienced several changes that adversely affected the viability of a
continued securitization strategy. In connection with the Debtors' proposed home
equity loan securitization transactions, the financial guarantors which had
insured the asset backed securities on prior securitization transactions of the
Debtors, demanded higher fees and, among other things, changes in the Debtors'
servicing arrangements that would have substantially reduced the Debtors'
servicing fee income. In response, the Debtors utilized an alternative credit
enhancement method known as a "senior/subordinated" structure for their 1998
fourth-quarter securitizations. In this structure, the most senior certificates
achieved enhanced credit ratings by allocating a greater share of collection and
timing risk to subordinated certificates. Using this method, the Debtors
securitized approximately $750 million in home equity loans in the 1998 fourth
quarter, retaining $12 million in subordinated certificates, which were later
sold in February 1999, for $9,861,000. However, the required
over-collateralization of the fourth-quarter transactions was substantially
higher than in prior securitization transactions. In early 1999, in response to
these difficulties in securitizing their home equity loans, the Debtors
terminated their securitization program and began attempting to sell the home
equity loans on a "whole-loan" basis, in bulk, directly to buyers.
The Debtors experienced disappointing results from their
efforts to consummate sales of whole loans. In order to improve their ability to
make such sales, the Debtors changed their underwriting guidelines in early
1999, further centralized their underwriting operations, and modified their
branch compensation system to provide incentives for the origination of loans
that would conform to the new underwriting guidelines. The transition to whole
loan sales proved difficult because whole loan buyers engage in more intensive
scrutiny of underlying loan documentation than was the case in securitizations.
Thus, whole loan sales proved to be more difficult to consummate.
3. PROBLEMS WITH CREDIT FACILITIES
By early January 1999, the Debtors had accumulated $250
million in cash. They intended to continue to finance their home equity loan
origination activities, as in the past through warehouse facilities, under which
funds would be advanced by warehouse lenders in anticipation of repayment from
the proceeds of successful bulk sales of the loans. In late 1998 and early 1999,
however, a combination of factors impeded the Debtors' success in this regard.
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Changes in GAAP reporting standards, market changes, and operational
difficulties, including those associated with the transition to "whole-loan"
sales as opposed to securitizations, placed the Debtors in increasing danger of
defaulting on financial covenants contained in their existing credit facilities.
Unable to procure other credit facilities quickly, the Debtors faced a severe
liquidity crisis.
By early February 1999, the Debtors had exhausted most of
their accumulated $250 million, using that cash to fund operations and
outstanding loan commitments. As noted above, the Credit Facility was fully
drawn. Further, the Debtors were unable to obtain alternative long-term
financing or find a strategic partner for their operations. Subsequently, as an
interim measure, the Debtors obtained a short-term repurchase facility from
First Union in the amount of $40 million. Shortly thereafter, the Debtors
considered seeking the protection of the bankruptcy laws while they continued to
pursue a sale or business combination or other reorganization strategy to
address their liquidity needs. Thus, after exhausting, the emergency First Union
facility and negotiating a debtor-in-possession lending facility with Greenwich
Capital Financial Products, Inc. ("Greenwich") and CIT Group/Business Credit,
Inc. ("CIT"), the Debtors filed these Chapter 11 Cases on the Petition Date.
B. EVENTS DURING THE CHAPTER 11 CASE
1. ADMINISTRATION OF THE CHAPTER 11 CASE
Upon commencement of the Chapter 11 Cases, the Bankruptcy
Court entered certain orders designed to minimize disruption of the Debtors'
business operations and to facilitate their reorganization. Certain of these
orders are described below.
o POSTPETITION CREDIT FACILITY AND POSTPETITION PURCHASE
FACILITY. One of the principal objectives of the Chapter 11 Cases was to address
the liquidity problems referred to above. In that connection, the Bankruptcy
Court entered certain orders authorizing the Debtors to enter into (i) a
postpetition revolving warehouse facility up to a maximum principal amount of
$300 million (the "DIP Credit Facility") with Greenwich and CIT (together, the
"DIP Lenders") and (ii) a postpetition revolving whole loan purchase facility
(the "DIP Purchase Facility") with Greenwich with a maximum commitment of $500
million. Borrowings under the DIP Credit Facility peaked at $76 million in March
1999 and the loan is now fully paid off and no longer available for additional
borrowing.
o CONTINUATION OF PREPETITION FUNDING, SERVICING, AND
SECURITIZATION COMMITMENTS. For the purpose of allowing the Debtors to maintain
certain sources of revenue and preserve their business reputation, the
Bankruptcy Court entered a first day order authorizing the Debtors, in their
discretion, to honor prepetition commitments to fund customer Loans, honor
existing obligations in connection with servicing existing Loans, honor existing
obligations in connection with pre-petition securitizations or sales of Loans,
honor obligations under existing pooling and servicing agreements or other
agreements for the sale of Loans, and enter into pooling and servicing
agreements or other agreements for the sale of Loans in the ordinary course. The
Debtors were also authorized to pay prepetition claims essential to their
ability to honor the foregoing commitments and obligations; and certain banks
were authorized and directed to honor checks and wire transfers from loan
disbursement accounts.
o CASH MANAGEMENT. The Bankruptcy Court entered a first day
order authorizing the Debtors to continue their current cash management system,
maintain their existing bank accounts, and invest funds in money market
accounts. Such relief allowed the Debtors to efficiently collect, control and
disburse funds, to create economies of scale in purchasing goods and services,
to invest idle cash to maximize interest income, to ensure the maximum
availability of funds for various corporate purposes, and to facilitate the
movement of funds while ensuring timely and accurate account balance
information.
o EMPLOYEES. The Bankruptcy Court entered a first day order
authorizing the Debtors to pay, in their discretion, prepetition claims of
employees for compensation, benefits and expense reimbursements, as well as
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prepetition amounts owed with respect to certain trust and administration
obligations and workers compensation premiums. In addition, the Debtors were
authorized to continue to honor their existing programs, policies and plans
relating to employees. Such relief was necessary to insure that the Debtors'
employees did not suffer personal hardship as a result of the filing, and to
prevent the employee attrition that might otherwise occur.
Subsequently, on January 12, 2000, in order to preserve the
Debtors' remaining workforce, the Bankruptcy Court entered an order approving a
postpetition employee retention and severance pay program generally providing
for (a) retention and severance benefits to be made available to both regular
full-time employees and regular part-time employees; (b) the elimination of
minimum length of service requirements as preconditions to receiving retention
and severance benefits; (c) payment of retention benefits equal to eight weeks
of base pay to eligible employees who remain employed for the requisite period;
and (d) payment to eligible employees who are involuntarily terminated without
cause of severance benefits equal to the greater of (i) a minimum of four week's
base pay, or (ii) one week's base pay for each full year of continuous service
up to a maximum of 26 weeks' base pay for each employee, or (iii) the amount
calculated by a formula that credits employees with severance pay for each day
less than ninety days that they receive notice of their impending termination,
with a minimum of 28 days' pay for each employee.
o MANAGEMENT CONSULTANTS. The Bankruptcy Court also entered a
first day order, dated March 2, 1999, authorizing the Debtors to employ the firm
of JA&A as crisis manager and management consultant in these Chapter 11 Cases
(the "JA&A Retention Order"). JA&A is a leading global corporate turnaround
specialist that provides expertise in all key areas of financial restructuring
and operational turnarounds. Pursuant to the engagement, Lawrence J. Ramaekers,
a principal of JA&A, serves as the Debtors' Chief Executive Officer. He
previously served as the Debtors' Chief Operating Officer, but became Chief
Executive Officer in October 1999, upon the resignation of Deborah Hicks
Midanek, also a principal of JA&A at the time of her service. Rebecca A. Roof, a
senior associate of JA&A, serves as Chief Financial Officer, a position she
assumed in October 1999. Pursuant to the JA&A Retention Order, JA&A is
compensated at its hourly rates and incentive fees, including an incentive fee
in the event that a third party acquires the operating assets of the Debtors,
i.e., the servicing platform or the retail platform, whether through a sale or
through a restructuring. Specifically, the Debtors have agreed, and the
Bankruptcy Court has authorized, the Debtors to pay JA&A (i) an incentive fee in
the amount of $1,000,000 in connection with confirmation of a plan of
reorganization plus (ii) an incentive fee in an amount equal to two percent (2%)
of the net proceeds paid by a third party in connection with the sale of the
Debtors' assets, payable at the time of the closing of the acquisition by the
third party of such assets; provided, however, that, under no circumstances,
shall the aggregate incentive fee to be paid to JA&A exceed $2,000,000.
Amendment to Engagement Letter, dated February 28, 1999, p.2. Any incentive fee
received by JA&A in these cases would inure to the benefit of the owners and
employees of JA&A, including Mr. Ramaekers, in accordance with the compensation
procedures of the firm.
o OTHER PROFESSIONALS. To assist them in carrying out their
duties as debtors in possession and to otherwise represent their interests in
the Chapter 11 Cases, the Debtors employed, with authorization from the
Bankruptcy Court, the following professionals: Weil, Gotshal & Manges LLP,
Richards, Layton & Finger, P.A. and Kantrow, Spaht, Weaver & Blitzer (A
Professional Law Corporation) as co-counsel; Kirkpatrick & Lockhart LLP as
special litigation counsel; Ernst & Young LLP and EY Restructuring LLC as
financial advisors; Deloitte & Touche LLP as independent auditors and
accountants; and KPMG LLP as tax consultants. During the Chapter 11 Cases, the
services of KPMG LLP were no longer required and their engagement has ended.
Nationwide, the Debtors employ hundreds of attorneys and other
professionals to represent or assist them in a variety of situations, including
foreclosure actions, borrower litigation, and borrower bankruptcy proceedings.
Such professionals are referred to as "ordinary course professionals". They are
not involved in the conduct of the Chapter 11 Cases. By order of the Bankruptcy
Court, to prevent loss of professional services and disruption to their
operations, the Debtors were authorized to employ and pay ordinary course
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professionals for postpetition services without prior court order, in accordance
with their usual practices.
2. CREDITORS' COMMITTEE/EQUITY COMMITTEE
Pursuant to section 1102 of the Bankruptcy Code, the United
States Trustee may appoint a committee of Creditors holding unsecured claims
and/or a committee of equity security holders as the United States Trustee deems
appropriate. Accordingly, on March 11, 1999, the United States Trustee appointed
a statutory committee of unsecured creditors (the "Creditors' Committee") in
these Chapter 11 Cases. In addition, on May 25, 1999, the United States Trustee
appointed a statutory committee of equity security holders (the "Equity
Committee") in these Chapter 11 Cases.
The Creditors' Committee consisted of the following members at
the time of its appointment: First Union National Bank, The Bank of New York,
Fleet Bank, Bank One/First National Bank of Chicago, Guaranty Federal Bank,
F.S.B., HSBC Bank USA, as indenture trustee (formerly known as Marine Midland
Bank) Norwest Bank Minnesota, N.A., as indenture trustee, Acacia Life Insurance
Company, and Phyllis Golson - EL. Since then, as a result of the sale and
purchase of claims, Fleet Bank, Bank One/First National Bank of Chicago and Bank
of New York have resigned and Farallon Capital has been added as a member of the
Creditors' Committee. The Creditors' Committee has retained, by order of the
Bankruptcy Court, the following professionals to represent its interests in the
Chapter 11 Cases: Wachtell Lipton Rosen & Katz and Morris, Nichols, Arsht &
Tunnell as co-counsel; PricewaterhouseCoopers LLP as accountants, and Pentalpha
Group, LLC as reorganization consultants.
The Equity Committee consists of the following members: Kees
van der Velden, Dr. Martin Stoller, Robert Privette, Nicola Biase, John C.
Chanoski, and Frank Hinchin. The Equity Committee has retained, by order of the
Bankruptcy Court, the following professionals to represent its interests in the
Chapter 11 Cases: Long, Aldridge & Norman LLP and Saul, Ewing, Pernick & Saul
LLP as co-counsel, Richard A. Johnson, CTP as financial consultant, Arthur
Andersen LLP as accountants and financial and business advisors, and Harley S.
Tropin, as valuation expert with respect to potential litigation claims held by
the estate.
3. DISPOSITION OF ASSETS
Pursuant to section 363 of the Bankruptcy Code, the Debtors as
debtors in possession are authorized to sell, lease or otherwise dispose of
assets of their estates in the ordinary course of business without prior
permission from the Bankruptcy Court. However, any sale, lease or other
disposition of assets outside the ordinary course of business must be approved
by the Bankruptcy Court.
o SALE OR ABANDONMENT OF UNNECESSARY SUPPLIES. Prior to the
Petition Date, as part of their efforts to downsize and restructure their
operations, the Debtors closed a number of under-performing office locations. In
these offices, prior to their closing, the Debtors utilized and owned various
types of equipment, supplies and furniture (the "Unnecessary Supplies"). As a
result of the closing of these offices, however, the Debtors no longer required
the Unnecessary Supplies. Accordingly, the Debtors obtained authorization from
the Bankruptcy Court to sell the Unnecessary Supplies, as necessary, in
accordance with the Debtors' customary terms of sale. In addition, to the extent
such sales could not be consummated, the Debtors obtained authorization to
abandon the Unnecessary Supplies.
o SALE OF LOAN ORIGINATION PLATFORM TO AEGIS MORTGAGE
CORPORATION. By early 1999, the home equity loan origination operations of
United Companies Lending Corporation (the "Origination Platform") had become a
significant cash drain that was threatening the value of the Debtors' other
businesses and assets. Accordingly, the Debtors began to solicit proposals from
potential purchasers and soon thereafter entered into extensive negotiations
with Aegis. Upon the completion of negotiations and the filing of a motion by
the Debtors to approve the transaction, the Bankruptcy Court entered an order
authorizing the sale of the Origination Platform, including 127 branch
locations, to Aegis for $3 million plus the assumption by Aegis of approximately
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$7.3 million of operating expenses. Twenty eight unsold branches were closed. In
connection with the sale to Aegis, substantially all of the executory contracts
and the unexpired leases of nonresidential real property and personal property
relating to the Origination Platform were either assumed and assigned to Aegis
or rejected pursuant to the provisions of the Bankruptcy Code. The Aegis
transaction closed on June 1, 1999.
o SALE OF CREDIT CARD ACCOUNTS AND ABANDONMENT OF CHARTER.
Beginning in 1996, the Debtors offered home equity open-end credit products,
accessible by the use of credit cards issued by Key Bank and Trust ("Key"). In
that regard, on or about June 1, 1998, United Credit Card, Inc. ("UCCI") was
granted a charter from the Office of the Comptroller of the Currency to operate
United Credit Card Bank, N.A. ("UCCB") and to issue the credit cards necessary
to operate the credit card program. As part of their decision to downsize their
businesses, however, the Debtors determined to terminate UCCB's operations and
to sell or relinquish the bank charter. After soliciting bids for the charter
and the other assets of UCCI and UCCB, the Debtors decided to sell to Key a 95%
participation interest in the portfolio of receivables generated by the credit
card program. In furtherance thereof, UCCB and Key entered into a letter of
intent, dated October 27, 1998, and a secured card program agreement, dated
November 1, 1998 (the "Portfolio Agreement"). The Portfolio Agreement provided,
however, that if any party or a holding company thereof should become subject to
bankruptcy proceedings, the Portfolio Agreement would be deemed terminated.
Following such termination, Key would have the right to purchase all of the
open-end credit loan facilities of UCCB (the "Accounts") and the rights to the
related collateral at a 5% discount to par. The purchase price would be deemed
fully paid upon Key's cancellation of its participation interest. After the
Petition Date, the Debtors obtained authorization from the Bankruptcy Court to
assume the Portfolio Agreement and complete the sale of the Accounts and the
related collateral according to the terms of the Portfolio Agreement. The
Bankruptcy Court's order also authorized the abandonment of the bank charter of
UCCB to the Office of the Comptroller of the Currency. The Debtors had used
their best efforts to market the bank charter and the Common stock of UCCB not
only to Key but also to Creditrust Corporation, but neither transaction
materialized. In addition, the continued operation of UCCB would have caused
UCCI's estate to sustain losses of approximately $15,000 per month. Accordingly,
abandonment was the preferred option.
o SALE OF REO PROPERTIES. One of the responsibilities of the
Debtors as loan servicers is to foreclose upon properties subject to liens if
borrowers default in payment of such loans. Through the foreclosure process, the
Debtors become owners of the property, either on their own behalf or on behalf
of the securitization trusts for which they act as servicers, at which time the
property is classified as REO property, meaning "real estate owned." Prior to
the sale of the Origination Platform, the Debtors sold REO properties through
their branch offices. When the branch offices were sold, the Debtors initially
attempted to handle sales through their home office.
In July 1999, the Debtors had 13,067 home equity loans over 60
days past due and 3,224 home equity REO properties, collectively totaling
16,291. Improvements in the foreclosure process have increased the rate at which
foreclosures in process are moved into REO. The initial result was to increase
REO properties but the improved REO systems and the assignment of properties
promptly to one of seven outsourcers have increased REO sales from less than 200
per month to more than 500 per month. The combined result of the improvements
has reduced total 60 day delinquent loans plus REO properties to 14,464.
o SALE OF COUNTRY CLUB MEMBERSHIPS. As leading corporate
citizens of Baton Rouge for many years, the Debtors had taken advantage of
opportunities to further their business interests through participation in
community activities and association with prominent institutions and individuals
in the area. One of these opportunities was available through membership in The
Country Club of Louisiana (the "CCL"). Prior to the Petition Date, the Debtors
acquired six membership interests in the CCL. In order to recoup some portion of
the initial purchase price and terminate the burden of continuing membership fee
and assessment obligations, the Debtors ultimately determined to sell these
membership interests and located six third parties who were willing to purchase
them. Accordingly, the Debtors obtained authorization from the Bankruptcy Court
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to transfer their membership interests in the CCL, for a minimum of $15,000
each, subject to payment by the Debtors of all past due membership fees,
assessments and other obligations including applicable transfer fees. All
transfers contemplated by the Bankruptcy Court order have been completed.
o SALE OF NOTE. Pursuant to a stock sale agreement and a note
agreement both dated as of August 11, 1995, between United General Holding
Company, Inc. ("UGIV) and United Companies, United Companies sold its
wholly-owned subsidiary United General Title Insurance Company ("UGT") to UGH in
consideration for, among other things, $2,200,000, as evidenced by an 8% senior
secured note (the "Note"). As of November 30, 1999, the outstanding principal
balance remaining on the Note was $2,077,704.27. On December 14, 1999, United
General Financial Services, Inc. ("UGFS") offered to purchase the Note for
$1,555,533, subject to the Bankruptcy Court's approval. After carefully
reviewing the financial statements of UGH and UGT and other relevant materials,
the Debtors concluded that the ability of UGH to fulfill its repayment
obligations pursuant to the Note was not certain. Accordingly, the Debtors
requested and subsequently obtained authorization from the Bankruptcy Court to
sell the Note to UGFS under the agreed terms and completed the sale.
o POSSIBLE SALE TRANSACTION. On December 21, 1999, the Debtors
signed a letter of intent for the sale of substantially all of the assets
related to their mortgage servicing business, whole loan portfolio and residual
interests to EMC Mortgage Corporation ("EMC"), a wholly-owned subsidiary of The
Bear Stearns Companies, Inc., for an aggregate purchase price for the assets as
of August 31, 1999 of approximately $895,000,000, subject to adjustments. Cash
on hand and certain other assets were not included in the sale. The letter
agreement also provided that the Debtors could bifurcate the transaction and
sell their whole loan portfolio to another bidder or accelerate the sale of the
whole loan portfolio to EMC subject to higher or better offers. The transaction
was subject to the negotiation and execution of definitive documentation, as
well as to the approval of the Bankruptcy Court and the submission of higher and
better offers pursuant to bidding procedures to be established by the Bankruptcy
Court, as well as certain other conditions.
On May 26, 2000, the Debtors and EMC entered into the Residual
Agreement and the Whole Loan Agreement thus giving effect to the letter of
intent. The Whole Loan Agreement provides for payment by EMC of approximately
Three Hundred Two Million Dollars ($302,000,000), based upon projected July 31,
2000 financial information, for the purchase of the Debtors' portfolio of
mortgage loans and real properties. The Residual Agreement provides for payment
by EMC of' approximately Four Hundred Thirty Six Million Dollars ($436,000,000)
for the purchase of certain of the Debtors' assets and the assumption of certain
of the Debtors' leases. On June 2, 2000, the Debtors filed with the Bankruptcy
Court separate motions to approve each of these agreements. By orders, dated
June 8, 2000 (the "Whole Loan Order") and June 20, 2000 (the "Residual Order"),
the Bankruptcy Court approved certain bidding procedures for each of the Whole
Loan Agreement and the Residual Agreement, respectively, and scheduled a hearing
on August 15, 2000, the date to consider confirmation of the Plan, to consider
the proposed transactions and the submission of higher or better offers. In the
event that a conforming competing bid is tendered, under certain circumstances,
EMC is entitled to a payment in an amount up to Ten Million Dollars
($10,000,000) plus the reimbursement of reasonable out-of-pocket fees and
expenses up to One Million Five Hundred Thousand Dollars ($1,500,000).
Additionally, pursuant to the Residual Order, the Debtors have been authorized
and directed to reimburse the second highest bidder, if other than EMC, for
reasonable out-of-pocket fees and expenses incurred in connection with its due
diligence efforts in an amount up to One Million Dollars ($1,000,000).
The Debtors have received other expressions of interest with
respect to the assets to be sold under both the Residual Agreement and the Whole
Loan Agreement and as those agreements are subject to higher or better offers,
it is contemplated that any qualified bidders and bids (under bidding procedures
approved by the Bankruptcy Court) would compete at an auction to be held either
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before or in conjunction with the Confirmation Hearing.9 It may be that
qualified bidders for either the assets to be sold under, the Residual
Agreement, Whole Loan Agreement, or both could propose alternative structures
for the Sale Transactions, including, without limitation, the purchase of the
assets to be sold under the Residual Agreement through the acquisition of
Reorganized UC Lending and the Reorganized Designated Subsidiaries that directly
or indirectly hold all or substantially all of such assets. Certain provisions
of the Plan, including, without limitation, Article XXXVII of the Plan, have
been included to allow for the encouragement of higher or better offers that may
be made through the structure of a stock purchase agreement (and the indirect
purchase of some or all of the assets up for sale) with respect to the Residual
Sale Transaction, as well as direct asset purchases. It also may be that
depending upon what bidder or bidders ultimately participate in the Sale
Transaction or an Alternative Residual Sale Transaction, there may be
non-material modifications to the Plan that will need to be made to implement
those transactions leaving materially unchanged the rights to distribution and
other matters directly affecting the rights of holders of Claims and Equity
Interests under the Plan. It is possible that no other party will make a higher
or better offer and the Debtors recommend that the evaluation of the Plan be
based upon the current offer. Higher or better offers, if received, will only
improve potential recoveries.
o THE RESIDUAL AGREEMENT
o The Purchased Assets.10 The Residual Agreement
provides for the sale of substantially all of the Debtors' assets
relating to their mortgage servicing business and residual interests.
As set forth in detail in Schedule 2.1 of the Residual Agreement and
the relevant annexes thereto, the Purchased Assets include, without
limitation, certain mortgage pass-through certificates, servicing and
interest advances on home equity loans and manufactured housing
pass-through certificates, prepayment penalty income, all of the
rights, interests and benefits of the UCFC Parties in, to and under
certain Pooling and Service Agreements and other executory contracts,
insurance policies, prepayment fees, penalties and other income from or
with respect to Mortgage Loans, certain claims relating to the
performance of Mortgage Loans, and servicing rights relating to certain
Securitization Trusts, together with cash flow owned by the UCFC
Parties and associated with the Purchased Assets for the period from
and after January 1, 2000, the effective date of the EMC Transaction.
o The Residual Agreement Purchase Price. The Residual
Agreement Purchase Price11 is comprised of several components:
(i) The Residual Agreement Base Purchase Price,
$273,000,000, as adjusted in accordance with the formulae set
forth on Schedules 3.1 and 3.3 of the Agreement, subject to a
"Ceiling Price" of $315,700,000 and a "Floor Price" of
$258,300,000;
(ii) $153,746,637.70 representing 95% of the amount
of Servicing Advances outstanding as of December 31, 1999;
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9 Other than a syndicate comprised of Goldman Sachs, Greenwich Capital and Owen
Financial Services, no other potential bidder has announced publicly its
interest in bidding on the assets.
10 To the extent of any inconsistency between the above summary and the Residual
Agreement and any of its schedules, the terms and provisions of the Residual
Agreement and any of its schedules shall govern. Defined terms used in this
discussion of the Residual Agreement shall have the same meanings ascribed to
them in that Residual Agreement.
11 In accordance with the provisions of the Residual Agreement and the Whole
Loan Agreement, Bear Steams has executed the Bear Guarantee guaranteeing the
full payment of the EMC Parties' obligations pursuant to such agreements.
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(iii) 95% of the amount of documented Servicing
Advances made with respect to deferred interest on loans
subject to modification and/or extension agreements; and
(iv) interest accrued on the Residual Agreement Base
Purchase Price for the period from January 31, 2000 up to and
including the Closing Date at the One-Month LIBOR rate
displayed on Bloomberg screen US0001M{Index}Hp{Go}, calculated
pursuant to the provisions of Schedule 3.3 to the Agreement as
of the first Business Day of each calendar month.
Based upon projected financial information as of June 30,
2000, the purchase price under the Residual Agreement would be Four Hundred
Thirty Six Million Dollars ($436,000,000.00). The Residual Agreement
contemplates an effective date as of January 1, 2000. Correspondingly, Section
3.2 of the Residual Agreement provides that cash flow associated with the
Purchased Assets during the period from and after the effective date and up to
and including the Closing Date shall be for the account of the EMC Parties. In
the event that there is a cash flow deficit during such period, the Residual
Agreement Purchase Price shall be increased, and, at Closing, the EMC Parties
shall pay, the amount of such deficiency.
Pursuant to Section 2.2 of the Residual Agreement, the EMC
Parties have agreed to assume and discharge all liabilities and obligations
associated with the Purchased Assets arising from or related to the period from
and after the Closing Date, including, without limitation, all obligations of
the servicer under the Pooling and Servicing Agreements related to the period
from and after the Closing Date. More importantly, in the event that the
Required Consents have been obtained and the Contemplated Transactions are
consummated, the UCFC Parties anticipate that the Trustees and Bond Insurers of
the Securitization Trusts will not have remaining claims against the Debtors.
Schedule 2.2 of the Residual Agreement sets forth in detail those liabilities
which shall be assumed by the EMC Parties upon Closing.
Pursuant to Section 3.4 of the Residual Agreement, on the
fourth Business Day prior to the scheduled commencement of the hearing to
consider the relief requested in this Motion, the EMC Parties must provide the
UCFC Parties with a written certification as to the amount of the Residual
Agreement Purchase Price as of the Residual Agreement Purchase Price
Certification Day, as the same adjusted may have been in accordance with Section
3.3 of the Agreement. Such certification will permit other interested parties to
submit higher or better offers pursuant to the terms of the Court-approved
bidding procedures. Additionally, in the event that the UCFC Parties disagree
with the amount of such certification, the certification process allows for the
parties and the Bankruptcy Court to resolve any such dispute prior to
commencement of the Sale Hearing and the competitive bidding process.
Upon execution of the Residual Agreement, the EMC Parties
caused a letter of credit in the amount of $10,000,000.00 to be posted as a down
payment for the Purchased Assets and the assets to be purchased pursuant to the
Whole Loan Agreement. In the event that the EMC Parties are outbid with respect
to either the Agreement or the Whole Loan Agreement, the Deposit shall be deemed
applied to the then-outstanding agreement. In the event that the EMC Parties
breach their obligations under either the Residual Agreement or the Whole Loan
Agreement UCFC may draw upon the letter of credit to recover damages it may be
entitled to as a result thereof.
In that regard, Section 13.3 of the Residual Agreement
provides that the EMC Parties shall pay the UCFC Parties (a) $10,000,000, as
liquidated damages, in the event the UCFC Parties terminate the Residual
Agreement due to a material breach by the EMC Parties, which occurs prior to the
entry of an order approving the EMC Transaction and (b) actual and unlimited
damages in the event the UCFC Parties terminate the Residual Agreement due a
material breach by any EMC Party that occurs subsequent to the entry of the Sale
Order and during the Twelve Day Period. If the UCFC Parties have a claim for
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damages pursuant to Section 13.3 of the Residual Agreement, they may proceed
against the Deposit, the EMC Parties or Bear Steams pursuant to the Bear
Guaranty.
o Acquired Contracts. The UCFC Parties are party to
certain executory contracts and other agreements, the Acquired
Contracts, more fully identified in Sections (b), (e), (h), (i), (j)
and (k) to Schedule 2.1 of the Residual Agreement. Pursuant to the
Residual Agreement, the Acquired Contracts shall continue to be in fall
force and effect and, subject to the Required Consents being obtained,
the UCFC Parties' rights under such Acquired Contracts are to be
acquired by the EMC Parties (including, without limitation, the entire
economic benefits of the Purchased Assets), and all of the UCFC
Parties' rights under such Acquired Contracts will be conveyed to and
acquired by the EMC Parties, upon consummation of the transactions
contemplated by the Residual Agreement.
o Break-Up Fee. Section 4.2 of the Residual Agreement
provides that the EMC Parties shall be entitled to a Break-Up Fee in
the event that certain circumstances are satisfied. The Break-Up Fee
requested is the sum of (1)(A) Five Million Dollars ($5,000,000.00),
plus (B) fifty percent (50%) of the amount by which any competing bid
exceeds the initial incremental bid established by the Bankruptcy
Court, up to an aggregate amount of clauses (A) and (B) not to exceed
Ten Million Dollars ($10,000,000.00), plus (2) the EMC Parties'
reasonable out-of-pocket expenses, as approved by the Bankruptcy Court,
which expenses shall in no event exceed One Million Five Hundred
Thousand Dollars ($1,500,000.00). As noted above, pursuant to the
Residual Order, the Bankruptcy Court approved the Break-Up Fee at a
hearing held on June 20, 2000. At that time, the Bankruptcy Court also
approved reimbursement of up to One Million Dollars ($1,000,000.00) in
reasonable out-of-pocket expenses to the second highest bidder for the
Purchased Assets (other than EMC), if such bid meets or exceeds the
required other bid.
o Termination Provisions. The Residual Agreement may be
terminated by mutual written consent of the UCFC Parties and the EMC
Parties. In addition, it may be terminated by either the EMC Parties or
the UCFC Parties if, among other things, (a) the Closing Date does not
occur by the later of (i) 11 days after entry of an order approving the
EMC Transaction and (ii) September 15, 2000, provided the party seeking
termination has not failed to fulfill any obligation under the Residual
Agreement and thereby contributed to the failure of the Closing to
occur as contemplated; or (b) if the Base Residual Agreement Purchase
Price is greater than the Ceiling Price, $315,700,000.00, or less than
the Floor Price, $258,300,000.00, as adjusted pursuant to the terms of
the Residual Agreement, except that the parties may by written
certification accept the Floor Price or Ceiling Price, as the case may
be, in the event the adjusted Base Residual Agreement Purchase Price is
less than the Floor Price or greater than the Ceiling Price.
The UCFC Parties may also terminate the Residual Agreement (a)
if any EMC Party is in material breach of any of its representations or
warranties, has materially breached or failed to perform any of its covenants or
other agreements contained in the Residual Agreement and such breach is not
cured within 10 days following the UCFC Parties' written notice to such EMC
Party of such breach or failure to perform, or if a condition precedent to the
UCFC Parties' obligations under the Residual Agreement is incapable of being
satisfied prior to the Termination Date.
The EMC Parties may terminate the Residual Agreement (a) on or
after the first Business Day following the Twelve-Day Period following entry of
an order authorizing the sale of all or a material portion of the Purchased
Assets to an entity other than an EMC Party, (b) if any of the UCFC Parties are
in material breach of any of their representations or warranties, have
materially breached or failed to perform any of their covenants or other
agreements contained in the Residual Agreement and such breach is not cured
within the later of (i) ten (10) days following any EMC Party's written notice
the UCFC Parties of such breach or failure to perform and (ii) the later to
occur of (1) the Closing Date and ten (10) Business Days after the UCFC Parties'
receipt of notice of breach or breaches from any EMC Party, provided, however,
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that the Closing Date will be adjourned to the first Business Day following the
expiration of the cure period if the Closing Date would occur prior to the
expiration of ten (10) days; (c) if the UCFC Parties are incapable of satisfying
a condition precedent to Closing; (d) in the event an order approving the EMC
Transaction is not entered by August 31, 2000 or any mutually agreed extension
of such date; and (e) in the event the Overbid Procedures Order is not entered
within sixty (60) days from the date of the Residual Agreement.
Prior to the entry of an order approving the EMC Transaction,
the EMC Parties' remedy for a breach by the UCFC Parties is, in addition to the
possible payment of the Break-Up Fee, the exercise of any EMC party's right to
termination under Section 13.1 of the Residual Agreement and recovery of the
Deposit or Letter of Credit in accordance with the terms of the Deposit Escrow
Agreement. The UCFC Parties right of termination under Section 13.1 of the
Residual Agreement is in addition to the rights and limitations set forth in
Section 13.3 of the Residual Agreement.
o Indemnification. Article XII of the Residual Agreement
contains the parties' respective indemnification obligations and
procedures associated therewith. Generally, none of the UCFC Parties'
representations and warranties contained in Article V of the Residual
Agreement shall survive the Closing. However, pursuant to Section 12.2
of the Residual Agreement, and subject to the limitations contained
therein, the UCFC Parties shall indemnify and hold harmless the EMC
Parties from and against (i) any and all EMC Losses resulting from a
judgment in or settlement of any of the Proceedings listed on Schedule
5.16 to the Residual Agreement and (ii) if the UCFC Parties settle any
such Proceedings without obtaining a release of all servicers of, and
subsequent owners of, any Mortgage Loan with respect to the facts or
allegations asserted therein, any and all EMC Losses resulting from or
relating to a judgment in or settlement of any Proceeding commenced
against a Securitization Trust under a Pooling and Servicing Agreement
or any EMC Party by a borrower participating in the settlement thereof
and which is based upon any of the facts or allegations asserted in the
initially settled Proceeding. In furtherance of any indemnification
claim, the EMC Parties shall be obligated to file any such claim with
the Bankruptcy Court and serve such claim upon the UCFC Parties upon
the earlier to occur of (1) the date established by the Bankruptcy
Court and (2) two years following the Closing.
o Business Justifications for the Sale. The Debtors' Chapter
11 Cases have been pending for 15 months. During that time period, the Debtors
have stemmed the tide of mounting losses, disposed of unprofitable operations,
developed strategic initiatives for the foundation of a chapter 11 plan,
conducted an RFP process with respect to engagement of a third-party
sub-servicer and performed and had performed valuations with respect to their
assets. Additionally, the Debtors have held plan negotiations or discussions
with all parties in interests and canvassed the respective constituencies for
positions with respect to the propriety of the Debtors' selling their assets or
proceeding with a third-party subservicer. THE DEBTORS AND THE CREDITORS'
COMMITTEE SUPPORT THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THE
RESIDUAL AGREEMENT AND THE WHOLE LOAN AGREEMENT.
As set forth above, the Debtors have devoted significant
effort since the Commencement Date to improving their servicing operations and
have achieved many successes. Likewise, the Debtors evaluated the possibility of
becoming a servicer for other lenders' loan portfolios in addition to continuing
to service the Mortgage Loans and providing services under the Pooling and
Servicing Agreements. Such option was rejected, however, for the following
reasons:
(a) The computer hardware used in the Debtors'
servicing operations is outdated. As a
result the Debtors incur higher operating
and maintenance costs. Likewise, the
Debtors' equipment has less power than is
needed to run state-of-the art software.
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(b) The software used by the Debtors does not
provide the reports and analyses that the
Debtors' competitors are able to provide.
This results in a requirement that the
Debtors' personnel must be better than the
Debtors' competitors in order to achieve the
same or statistically similar results. The
resultant effect is that potential customers
would not get the "best" reports to analyze
the Debtors' performance and would be less
likely to select the Debtors to service
their loans.
(c) In order to service appropriately and
competitively other lenders' loan
portfolios, the Debtors would be required to
invest millions of dollars to improve their
servicing hardware and software. Such
installation of new systems is seldom done
without serious problems and service
interruptions.
(d) Reports that the Debtors have provided to
the Trustees and Bond Insurers in the past
have contained significant errors and the
Debtors' systems have made it difficult to
remain in compliance with the servicing
requirements contained in the Pooling and
Servicing Agreements. As a result, the
Trustees and Bond Insurers have lost
confidence in the Debtors' ability, using
their current systems, to be a "top-notch"
servicer. The Debtors need the approval of
the Trustees and the Bond Insurers for
either the continued operation, transfer of
servicing to subservicer, or a sale to a
third party because certain waivers of
defaults under the Pooling and Servicing
Agreements are required. While the Trustees
and Bond Insurers have not stated that they
would not give their approval for the
Debtors to continue to provide servicing
under the Pooling and Servicing Agreements,
each has made it clear that they expect the
Debtors to either sell the Purchased Assets
or retain a subservicer to provide
servicing.
(e) The Debtors' top management positions are
currently filled by JA&A personnel. Such
staff would have to be replaced by new
employees, as the Debtors do not currently
possess any employees who would likely be
considered to fill these positions. In the
Debtors' opinion, hiring a totally new
management team is a risky proposition,
fraught with uncertainty.
Based upon the aforementioned reasons, the Debtors determined
in the Summer of 1999 to seek proposals from the most qualified, sub-prime loan
servicers to subservice the Debtors' loan portfolio. Upon reviewing proposals
submitted in response to the RFP process, 3 candidates were judged to be the
most suitable. However, even these proposals carried certain negatives:
(f) None of the subservicers proposed to make
service and interest advances required under
the Pooling and Servicing Agreements. Thus,
the Debtors would be required to continue to
make such advances.
(g) The use of any subservicer would necessarily
separate the benefits of the economic
improvement derived through improved
servicing from the entity who performed the
servicing. Improved servicing, which could
require increased costs, would not benefit
the servicer unless the Debtors also chose
to transfer a portion of their financial
assets to the subservicer.
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(h) The base costs of subservicing were
approximately the same as the Debtors'
current revenue for servicing which was also
approximately the Debtors' current cost of
servicing. This made the Debtors review
their previous belief that servicing could
be a profit center.
o THE WHOLE LOAN AGREEMENT
o The Purchased Assets.12 As set forth in detail in
Sections 2 and 3 of the Whole Loan Agreement and Schedule 1 thereto,
the purchased assets include the Debtors' portfolio of Mortgage Loans
and REO Properties which have been acquired through the ownership of
Mortgage Loans, together with the right to service such loans. The
Mortgage Loans are comprised of two types: Performing Mortgage Loans
(those Mortgage Loans that are less than two payments of principal and
interest past due) and Non-Performing Mortgage Loans (those Mortgage
Loans that are two or more payments of principal and interest past
due). For illustrative purposes, Section 2 of the Whole Loan Agreement
provides that the assets include Mortgage Loans and REO Properties,
having an Aggregate Principal Balance for assets as of the Bid Date
$403,586,806, including an outstanding principal balance for Performing
Mortgage Loans of $336,478,715, an outstanding principal balance for
Non-Performing Mortgage Loans of $56,091,991, and an Assigned Balance
for REO Properties of $11,016,100. Additionally, the Whole Loan
Agreement provides that EMC is not required to purchase Lost Note
Mortgage Loans having an aggregate outstanding principal balance in
excess of $5,000,000 as of the Cut-off Date.
o Whole Loan Purchase Price and Earnest Money Deposit.
Based upon projected financial information as of June 30, 2000, the
Whole Loan Purchase Price under the Whole Loan Agreement would be Three
Hundred Eighteen Million Dollars ($318,000,000.00). The Whole Loan
Purchase Price13 is predicated upon applicable percentages for the
different types of Assets: (1) Performing Mortgage Loans - 93.5%; (2)
Non-Performing Loans - 52.5%; and (3) REO Properties - 46.165%. Viewed
collectively, Section 4 of the Whole Loan Agreement provides that the
Whole Loan Purchase Price shall be calculated as follows:
Whole Loan Purchase Price shall be an amount equal to
the sum of (1) the product of (x) the Whole Loan
Purchase Price Percentage for each Asset Type (such
classification of Asset Type to be determined as of
the Cut-off Date) times (y) the sum of the Aggregate
Principal Balance for the related Asset Type as of
the Cut-off Date, plus (2) interest accrued with
respect to the Performing Mortgage Loans to be
purchased on the Closing Date at the applicable
mortgage interest rate from the last interest paid to
date (as of the Cut-off Date) to the date prior to
the Closing Date, inclusive, plus (3) the amount of
Disbursed Servicing Advances on the Performing
Mortgage Loans as of the Cut-off Date. The Purchaser
shall not be required to reimburse the Sellers for
any accrued interest "negative escrow" amounts or
servicing advances outstanding as of the Cut-off Date
with respect to any Non-Performing Mortgage Loan or
REO Property.
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12 To the extent of any inconsistency between the above summary, the Whole Loan
Agreement and any of its schedules, the terms and provisions of the Whole Loan
Agreement and any of its schedules shall govern. Defined terms used in this
description of the Whole Loan Agreement shall have the same meanings ascribed to
them in that Whole Loan Agreement.
13 In accordance with the provisions of the Whole Loan Agreement and the
Residual Agreement, Bear Steams has executed the Bear Guarantee, guaranteeing
the full payment of the EMC Parties' obligations pursuant to such agreements.
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As noted in Section 4(f) of the Whole Loan Agreement the Performing Loan
Purchase Price Percentage shall be adjusted, upwards or downwards, as a result
of market movement in the price of the Reference Security for March settlement
of the Contract Date Reference Price.
Pursuant to Section 4(a) of the Whole Loan Agreement on the
fourth Business Day prior to the scheduled commencement of the hearing to
consider the relief requested in this Motion, EMC must provide the Debtors with
a written certification as to the amount of the Whole Loan Purchase Price as of
the Whole Loan Purchase Price Certification Day, as the same adjusted may have
been in accordance with Section 4(b) of the Whole Loan Agreement. Such
certification will permit other interested parties to submit higher or better
offers pursuant to the terms of the court-approved bidding procedures.
Additionally, in the event that the Debtors disagree with the amount of such
certification, the certification process allows for the parties and the
Bankruptcy Court to resolve any such dispute prior to commencement of the Sale
Hearing and the competitive bidding process.
Upon execution of the Whole Loan Agreement, EMC caused a
letter of credit in the amount of $10,000,000 to be posted as a down payment for
the assets and the Purchased Assets to be purchased pursuant to the Residual
Agreement. In the event that the EMC Parties are outbid with respect to either
the Whole Loan Agreement or the Residual Agreement the Deposit shall be deemed
applied to the then-outstanding agreement. In the event that the EMC Parties
breach their obligations under either the Whole Loan Agreement or the Residual
Agreement UCFC may draw upon the letter of credit to recover damages it may be
entitled to as a result thereof.
o Servicing. The Whole Loan Agreement provides for the
sale of the Mortgage Loans on a servicing-released basis. Accordingly,
on the Transfer Date, EMC is required to assume all servicing
responsibilities related to the Mortgage Loans and the Debtors will
cease all servicing responsibilities related to the Mortgage Loans.
However, the Whole Loan Agreement contemplates that UC Lending shall
provide subservicing to EMC for a period of four months following the
Closing Date in accordance with the provisions of Section 12 thereof.
o Indemnification. Section 17 of the Whole Loan
Agreement contains the parties' respective indemnification obligations
and procedures associated therewith. Pursuant to Section 17(a) of the
Whole Loan Agreement, and subject to the limitations contained therein,
the Debtors shall indemnify and hold harmless EMC from and against (i)
any and all Purchaser Losses resulting from a judgment in or settlement
of any of the Proceedings listed on Schedule 4 to the Whole Loan
Agreement, and (ii) if the Debtors settle any such Proceedings without
obtaining a release of all servicers of, and subsequent owners of, any
Mortgage Loan with respect to the facts or allegations asserted
therein, any and all Purchaser Losses resulting from or relating to a
judgment in or settlement of any Proceeding commenced against EMC by a
borrower participating in the settlement thereof and which is based
upon any of the facts or allegations asserted in the initially settled
Proceeding. In furtherance of any indemnification claim, EMC shall be
obligated to file any such claim with the Bankruptcy Court and serve
such claim upon the Debtors upon the earlier to occur of (1) the date
established by the Bankruptcy Court and (2) two years following the
Closing.
o Business Justification for the Sale. The Debtors have
analyzed and evaluated the possibility of retaining the Mortgage Loans, selling
the Mortgage Loans to another party-in-interest or securitizing the Mortgage
Loans and otherwise disposing of the REO Properties. Based on that due
diligence, the Debtors have determined that immediate realization of the assets
is the best alternative, as it fixes the return to parties in interest. Due to
servicing risks, risks of interest rate changes, fluctuations of property values
and unrecoverable costs associated with REO Property maintenance, sale of the
Mortgage Loans and REO procedures provides the Debtors with a known amount of
proceeds to be distributed to creditors pursuant to a plan of reorganization.
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Moreover, since the sale of the assets is subject to higher or
better offers, the Debtors are ensured of realizing the best price obtainable
for the assets. The Debtors' records reflect that EMC has filed two contingent
unliquidated proofs of claim against the Debtors' estates for claims in
connection with (1) its role as servicer under a securitization trust, and (2)
its acquisition of certain loans purchased prior to the Petition Date, matters
unrelated to the Residual Agreement or the Whole Loan Agreement. The Debtors
have objected to both proofs of claim. Upon information and belief, Bear Stearns
may be a holder of certain of the Debtors' indebtedness outstanding under the
Credit Agreement. At one point in time, the Debtors believed that such
indebtedness was in excess of $50 million. According to EMC, the Bear Stearns
unit which owns such indebtedness has been internally screened from all
non-public information concerning the proposed EMC transaction. In any event,
the Residual Agreement and the Whole Loan Agreement do not permit EMC or its
affiliates to offset any claims which they may possess against the respective
purchase prices.
4. ASSUMPTION/REJECTION OF CONTRACTS AND LEASES
Pursuant to section 365 of the Bankruptcy Code, the Debtors
may either assume, assume and assign, or reject executory contracts and
unexpired leases of real and personal property, subject to approval of the
Bankruptcy Court. As a condition to assumption, or assumption and assignment,
the Debtors must cure all existing defaults under the contract or lease, and
must provide adequate assurance of future performance of the contract or lease.
If the contract or lease is rejected, any resulting rejection damages are
treated as prepetition unsecured claims. Generally, and with certain exceptions,
postpetition obligations arising under a contract or lease must be paid in full
in the ordinary course of business.
o UNEXPIRED LEASES OF REAL PROPERTY. As of the Petition Date,
the Debtors were parties to approximately 265 unexpired leases of nonresidential
real property (the "Unexpired Leases"). The Unexpired Leases related to, among
other things, (i) the branch offices, which conducted the Debtors' loan
origination business, (ii) regional or district offices, which managed and
supervised the branch offices, (iii) home offices, which housed certain of the
Debtors' corporate managers and key employees, (iv) "repo lots", which stored
repossessed mobile homes and (v) underwriting offices, which handled the
Debtors' underwriting needs.
Section 365(d)(4) of the Bankruptcy Code provides that if the
debtor does not assume or reject an unexpired lease of nonresidential real
property under which the debtor is the lessee within 60 days after the petition
date, or within such additional time as the court fixes, then such lease is
deemed rejected, and the debtor must immediately surrender such property to the
lessor. Due to, among other things, the large number of Unexpired Leases and the
size and complexity of these Chapter 11 Cases, the Debtors were unable to make a
reasonable and well-informed decision as to whether to assume or reject the
Unexpired Leases within the initial 60-day period. Accordingly, the Debtors
requested an extension, and the Bankruptcy Court subsequently extended the
Debtors' time to assume or reject the Unexpired Leases to and including November
1, 1999.
During the Chapter 11 Cases, the Debtors conducted an
extensive review of the Unexpired Leases. As a result of this analysis and the
sale of the Origination Business to Aegis, the Debtors proceeded to: (a) reject
70 Unexpired Leases, which related to certain offices that the Debtors closed
prior to the Petition Date; (b) assume and assign 130 Unexpired Leases to Aegis
in connection with the Aegis Transaction; (c) reject 34 Unexpired Leases
relating to offices not transferred to Aegis in order to wind down the Debtors'
remaining loan origination business; and (d) reject the Unexpired Lease relating
to their offices at One United Plaza, Baton Rouge, Louisiana.
All but one of the original 265 Unexpired Leases have been
either assumed or rejected. The remaining lease (the "Remaining Lease") relates
to a Debtors' warehouse, in which the Debtors store certain files and loan
documents. The Debtors have continued to require the storage space in the
warehouse and, therefore, requested and subsequently obtained from the
Bankruptcy Court a further extension of the time to assume or reject the
Remaining Lease, to and including the date of confirmation of the Debtors'
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chapter 11 plan of reorganization. In addition, the Debtors lease their current
office space from a non-debtor Affiliate.
o CONTRACTS AND LEASES OF PERSONAL PROPERTY. In the course of
the Chapter 11 Cases, the Debtors have analyzed and evaluated their unexpired
leases of personal property as well as their other executory contracts (i.e.,
contracts in which performance remains due to some extent on both sides) and
determined that it was in the best interests of the Debtors and their estates to
reject certain of these leases and contracts pursuant to section 365(a) of the
Bankruptcy Code. Accordingly, the Debtors have rejected the following: (i)
leases of Bloomberg terminals with Bloomberg L.P.; (ii) leases of postage meters
with Pitney Bowes Credit Corporation; (iii) leases of computers with Summit
Technology Leasing and U.S. Technology Leasing Corporation; (iv) leases of
copiers and fax machines with Ricoh Corporation; (v) a contract with MCI
Telecommunications Corporation for telecommunication services; (vi) contracts
with AT&T Corporation for computer data communications services and for Internet
access and service; and (vii) a contract with Cooperative Marketing Concepts,
Inc. for telemarketing services. In addition, as part of the Aegis transaction,
the Debtors assumed and assigned the personal property leases and executory
contracts that were utilized in their loan origination business. The Debtors are
continuing to evaluate the remaining executory contracts and will either assume
or reject such contracts at the time of confirmation of the Debtors' chapter 11
plan of reorganization.
5. PENDING LITIGATION AND AUTOMATIC STAY
The nature of the Debtors' business is such that they are
routinely involved in litigation. As a result of the Chapter 11 Cases, pursuant
to section 362 of the Bankruptcy Code, all litigation pending against the
Debtors has been stayed. A number of motions seeking to lift the automatic stay
have been filed. Except in certain situations, the Debtors have opposed the
motions, and the Bankruptcy Court has agreed to keep the stay in place. The
Debtors have generally not opposed motions filed by entities with senior liens
on properties which are also subject to mortgages in favor of the Debtors. The
Debtors have also opted in special cases to lift the stay if its continuation
could impair the Debtors' foreclosure remedies and other rights. Significant
litigation matters involving or affecting the Debtors are discussed below.
o AUTREY CLASS ACTION. Autrey v. United Companies Lending
Corporation, is a class action lawsuit pending in the Circuit Court of Mobile
County, Alabama, involving 910 home equity loans alleged to be subject to the
Alabama Mini Code which limits finance charges imposed on consumers. The 1996
amendments to the Alabama Mini Code limited the remedy for finance charges in
excess of the maximum permitted by such law and were expressly made retroactive
by the Alabama legislature. However, the Alabama Supreme Court, acting on an
interlocutory appeal by United Companies Lending Corporation, upheld the ruling
of the trial court on a pre-trial motion by the class plaintiffs that
retroactive application of the 1996 amendments to the Alabama Mini Code would be
unconstitutional as applied to the plaintiffs' class. United Companies Lending
Corporation strenuously disagreed with this holding and sought a rehearing by
the Alabama Supreme Court. The request for a rehearing was denied by the Alabama
Supreme Court, and the matter was returned to the trial court for a trial on the
merits. Claims being asserted in the action, without penalties or punitive
damages and before the imposition of attorneys' fees, if any, exceed $7,000,000
and, if all requested penalties and damages are allowed, could exceed
$27,000,000. The Debtors believe that damages, if any, will be significantly
less than such requested amounts.
On June 6, 1999, counsel for the class plaintiffs filed a
motion in the Bankruptcy Court, pursuant to section 362 of the Bankruptcy Code,
for relief from the automatic stay in order to continue with this litigation, as
such litigation had been stayed due to the commencement of the Chapter 11 Cases.
The Debtors vigorously opposed such requested relief, and the Bankruptcy Court
ultimately denied the motion.
The plaintiff filed a proof of claim for an amount in excess
of $27,000,000. The Debtors have filed an objection to such proof of claim.
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o BOOKER CLASS ACTION. Lucille Booker, et al. v. United
Companies Lending Corporation and United Companies Financial Corporation
("Booker") commenced on January 11, 1994, pending in the Superior Court of
Richmond Country, State of Georgia, involves, inter alia, alleged discrimination
against "thousands" of Georgia African American persons by reason of charging
alleged usurious rates on loans from the Debtors. Although the class has been
certified, due to the Debtors' Chapter 11 Cases and the attendant automatic
stay, the case remains in the pretrial phase. Prior to the imposition of the
stay, the plaintiffs' case was seriously compromised by the deposition of the
name plaintiff, which revealed approximately 10 reasons why the name plaintiff
would not be able to prevail under the class action.
The Booker complaint seeks damages not to exceed $49,999 per
plaintiff. While plaintiffs' counsel certified a pool of class claimants of
approximately 2000 members, only 46% of those members are facially eligible to
collect pursuant to the parameters of the class definition.
Two proofs of claim have been filed in unspecified amounts.
The Debtors have filed an objection to such proofs of claim.
o ODA CLASS ACTION. William Jones and Blanche Jones and Eugene
Oda and Linda Oda v. United Companies Lending Corporation ("Oda"), pending in
the United States District Court for the Southern District of West Virginia at
Charleston, is a suit alleging, inter alia, illegal mortgage solicitation, civil
conspiracy and illegal and unconscionable loan terms. Plaintiffs' counsel has
submitted a motion to certify the case as a class action, which is currently
stayed due to the Debtors' bankruptcy filing.
Plaintiffs are seeking rescission of the loan contracts as a
remedy for their damages. There are 295 potential class members and the
aggregate total amount of the claims held by such potential class members is
$3,898,297. The original principal balance of the loans held by name plaintiffs
Oda and Jones are $50,576 and $54,300, respectively.
Plaintiffs have filed three proofs of claim for $1,746,000.
The Debtors have filed an objection to such proofs of claim.
o TERRY CLASS ACTION. Calvin M. Terry and Simone L. Tegy v.
United Companies Financial Corporation, United Companies Lending Corporation,
United General Title Insurance Company and Balboa Life Insurance Corp.
("Terry"), pending in the Superior Court of Richmond County, State of Georgia,
is a case alleging, inter alia, wrongful foreclosure, failure to provide notice
of possession, racketeering, theft by conversion and theft by deception and mail
fraud. Plaintiffs' counsel requested class certification in the plaintiffs'
complaint, but have never taken the appropriate steps to certify the class,
including, but not limited to, making a motion to certify the action as a class
action. Further, the allowed discovery period ended prior to the bankruptcy
filing and the plaintiffs' attorney never completed sufficient discovery to
investigate potential class certification. The damages sought by the plaintiffs
include treble damages on the value of the property, which is approximately
$54,000.00, i.e., $162,000.00, punitive damages of $1 million, attorneys' fees
and cancellation of the promissory note in the amount of $26,600.00.
Plaintiff has filed a proof of claim in the amount of
$1,000,000. The Debtors have filed an objection to such proof of claim.
o DAWSON CLASS ACTION. Robert L. Dawson, III, et al. v. United
Companies Lending Corporation ("Dawson"), pending in the Circuit Court of
Jefferson County, Alabama, was filed as a class action but has never been
certified as such. The case involves three plaintiffs in an action alleging,
inter alia, the collection of fraudulent property inspection fees, suppression,
theft by deception and unjust enrichment. The a action is limited to $75,000.00
in compensatory damages for each plaintiff and there are no other damages
alleged. Plaintiff filed a proof of claim in the amount of $74,000. The Debtors
have interposed an objection thereto.
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o NEWTON CLASS ACTION. Margaret Newton, et al. v. United
Companies Financial Corporation and United Companies Lending Corporation
("Newton"), filed in the United States District Court for the Eastern District
of Pennsylvania, is a case with multiple plaintiffs, but with respect to which
class action was never certified. Newton involves allegations of, inter alia,
inducement of unnecessary borrowing and fraudulent lending. The case was
disposed of by judgment in favor of the plaintiffs and the Debtors were ordered
to rescind the loan agreements. The loans that were rescinded totaled
approximately $75,000. The one issue that remains open in the case is the
disposition of the plaintiffs' attorneys' fees. The plaintiffs' attorneys were
awarded $340,000 in attorneys' fees and the Debtors appealed. The case is
currently stayed pursuant to the Debtors' bankruptcy filing. With the exception
of the attorneys' fees, there is no continuing exposure for the Debtors on this
matter.
Plaintiff has filed a proof of claim in the amount of
approximately $388,000. The Debtors have objected to such claim and suggested
that the matter be considered by the United States Court of Appeals for the
Third Circuit.
o STURGIS CLASS ACTION. Charlotte T. Wilson, Deceased, by and
through the Temporary Administrator of her Estate, Haywood Smith, Jr. and
Shirley A. Sturgis v. United Companies Financial Corporation, United Companies
Lending Corporation, and United Plan Insurance Agency ("Sturgis"), pending in
the Superior Court of Richmond County, State of Georgia, involves allegations
of, inter alia, fraudulent foreclosure, racketeering, and theft by conversion.
As of the date hereof, no action has been taken to certify the class. Further,
the allowed discovery period ended prior to the bankruptcy filing and the
plaintiffs' attorney never completed sufficient discovery to investigate
potential class certification. The damages sought by the plaintiffs include
treble damages on the value of the property, which is approximately $20,000,
i.e., $60,000, punitive damages of $1,000,000 attorneys' fees and cancellation
of the promissory note in the amount of $13,200.
Plaintiffs have filed a proof of claim in the amount of
$1,000,000. The Debtors have failed an objection to such claim.
o SIMS CLASS ACTION. Helen J. Sims v. Unicor Mortgage, Inc.
("Sims"), filed February 8, 1998 and pending in the United States District Court
for the Northern District of Mississippi, Greenville Division, involves
allegations of, inter alia, fraudulent lending and illegal origination fees paid
to mortgage brokers. The plaintiff, in the complaint, requests class
certification and compensatory damages in an unspecified amount. The case has
not been certified as a class action and no actions have been taken by the
plaintiffs attorney for such certification. Indeed, the class request contained
in the complaint is so broad it is impossible to decipher its parameters. The
aggregate amount of the name plaintiff's two loans with the Debtors is $107,120
and $6,617 was paid in mortgage broker fees by the plaintiff.
The Debtors prevailed on a motion for summary judgment
compelling the plaintiff to comply with the arbitration provision in the subject
mortgage. The plaintiff's attorney appealed this ruling. The case is stayed due
to the filing of the Debtors' bankruptcy.
Plaintiff has filed a proof of claim for an unspecified
amount. The Debtors have objected to such claim.
o HUDAK CLASS ACTION. Andrew J. Hudak and Michelle D. Hudak v.
United Companies Lending Corporation ("Hudak"), pending in the Court of Common
Pleas, Cuyahoga County, Ohio, is a case alleging, inter alia, usurious interest
rates, violation of lending laws, and in violation of O.R.C. ss. 1343.011,
usurious discount point usage. As of May 1999, all claims other than the
discount point usury claim had been dismissed. The Hudak court had granted
plaintiff's motion for summary judgment that the statute prohibited the Debtors
from charging points in excess of two percent. Such decision was not a final,
appealable order. Subsequently, the same court granted the Debtors' motion for
summary judgment that plaintiffs' claims were time-barred due to the expiration
of the applicable one-year statute of limitations. The plaintiffs have appealed
the dismissal and the Debtors have cross-appealed with respect to the initial
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discount point usury claim. Both appeals have been stayed pursuant to the
Debtors' bankruptcy filing.
Plaintiffs' counsel has filed a proof of claim in the
Bankruptcy Court and the Court has ruled that it will permit such filing.
However, the Bankruptcy Court has not taken a position as to the merits of any
claim or even class certification. The parties have reached a tentative
settlement of all issues, including providing for possible payments of $25.00
per borrower, up to an aggregate class distribution of $90,000.00. The Debtors
intend to submit such proposed compromise and settlement in the near future.
o RICHARDS CLASS ACTION. Richards, et al. v. United Companies
Lending Corporation ("Richards") was commenced in the Spring of 1996 by five
plaintiffs in Aiken County, South Carolina, alleging that the Debtors had
violated their statutory right to be advised of and choose a closing
attorney/insurance agent in connection with a personal, family or household
purpose real estate loan. Thereafter, the matter was removed to federal court.
Plaintiffs requested a statutory penalty of double the amount
of the financial charges paid to date and loss of all future finance charges. By
legislative action, in 1996, the South Carolina Legislature set the penalty
between $1,500 and $7,500 per claim. Since the legislative action, the federal
judge has granted the Debtors' motion for summary judgment at to liability.
Thereafter, the plaintiffs filed a motion to reconsider which was denied. The
matter has been appealed to the Fourth Circuit Court of Appeals.
In the interim, the parties have reached a settlement for
$2,500, plus $500 in attorneys' fees and expenses.
o THORNTON CLASS ACTION. Robert D. Thornton v. United
Companies Lending Corporation, et al. ("Thornton"), commenced in December 1996
in the United States District Court for the Northern District of Ohio, Eastern
Division, alleges, inter alia, that the Debtors failed to consolidate the
borrower's debts and failed to discharge the borrower's obligations to The Money
Store. The Thornton Complaint is captioned as a "ss. 1983 Federal Civil Rights
Class Action Lawsuit With A Jury Trial Demand." However, the text of the
complaint makes no reference to class action certification. The complaint seeks
damages in excess of $150,000,000. The loan in question was for $42,000.
On or about February 10, 1997, the Debtors filed a motion for
summary judgment in the Thornton matter. On October 22, 1997, the District Court
denied the Debtors' motion, but dismissed the plaintiff's claims without
prejudice.
To the Debtors' knowledge, and based upon the Claims Agent's
records, no claim has been filed with respect to the Thornton litigation.
o CANTEY CLASS ACTION. George Cantey v. United Companies
Lending Corporation and United Companies Financial Corporation ("Cantey") was
filed on or about September 14, 1998 in the North Carolina General Court of
Justice, Superior Court Division. In the complaint, it is alleged that, with
respect to the plaintiff's loan, as well as all other loans consummated within
the State of North Carolina, (a) the Debtors charge fees in excess of applicable
state law and (b) the Debtors' loan documentation contains "non-uniform
covenants", including provisions requiring arbitration proceedings and the
waiver of damages in excess of actual damages. The plaintiff seeks damages equal
to twice the amount of interest paid with respect to the subject loans. No class
certification has been requested and size of any class is unclear.
A motion for summary judgment with respect to the usury claim
of the complaint was filed. After hearing the motion in January 1999, the state
court ruled in the Debtors' favor with respect to such claim. As of the date
hereof, the matter has been stayed due to the existence of the automatic stay.
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George Cantey has filed an individual, and not a class, proof
of claim in the amount of $24,000 plus the forgiveness of all prospective
interest. The Debtors have objected to such proof of claim.
o GOLSON EL CLASS ACTION. Phyllis Golson El, et al. v. United
Companies Financial Corporation and United Companies Lending Corporation
("Golson El") was commenced in January 1999 in the United States District Court
for the Eastern District of Pennsylvania by Donovan Miller LLC and Community
Legal Services ("CLS"). Golson El was intended by CLS to be the "companion" case
to the Newton matter discussed above. The putative class in Golson El consisted
of 1,500 borrowers that were extended credit for home improvement work and did
not request a bill of consolidation or other loan that had an escrow for home
improvements, as the principal loan amount exceeded the work order by 20%.
Essentially, the Golson El action was based on the Newton court's finding that
the Debtors violated ECOA by not giving borrowers a counteroffer notice when the
Debtors made a loan for more money than the borrower initially requested.
By order, dated February 10, 2000, United States District
Judge Marvin Katz dismissed Golson El, sua sponte and without prejudice to the
plaintiffs' right to assert claims in the Debtors' bankruptcy case. No appeal
has been filed with respect to such dismissal.
A claim was filed by CLS on behalf of the plaintiff on
September 27, 1999 in the amount of $8,000,000. An objection to such claim has
been filed by the Debtors.
o BAUMGART CLASS ACTION. Chad R. Baumgart and Deborah J.
Baumgart, et al. v. United Companies Lending Corporation ("Baumgart") was filed
on April 17, 2000 in the State of Michigan Circuit Court for the County of
Berrien. The complaint alleges that the Debtors have made more than 1,000 loans
in the State of Michigan and that the documentation for such loans contains
prepayment premiums for periods in excess of three years in violation of state
law. The complaint further alleges that more than 500 loans have been prepaid
where the prohibited prepayment penalty was collected by the Debtors. The
plaintiffs claim actual damages of $2,272 for their prepayment premium payment
and seek in excess of $25,000 for damages of other class members.
Baumgart was clearly commenced in violation of the automatic
stay. As such, the Debtors sent a letter informing plaintiffs' counsel of such
violation and demanding dismissal of the Baumgart action. A notice of dismissal
by the plaintiff was subsequently filed with the court on May 2, 2000.
No proof of claim has been filed.
o DOJ/HUD INVESTIGATION. In August 1998, the United States
Department of Justice ("DOJ") and the United States Department of Housing and
Urban Development ("HUD") issued a letter to United Companies and United
Companies Lending Corporation indicating that they were initiating a joint
investigation of the Debtors' lending and pricing practices, initially in
Philadelphia, PA-NJ PMSA. The investigation focuses on compliance by United
Companies and United Companies Lending Corporation with the federal Fair Housing
Act and Equal Credit Opportunity Act and the federal Real Estate Settlement
Procedures Act ("RESPA"). Specifically, DOJ seeks to determine whether the
lending and pricing practices of United Companies and United Companies Lending
Corporation discriminate against applicants based on race, national origin, sex,
or age. HUD will be investigating whether relationships of United Companies and
United Companies Lending Corporation with mortgage brokers, home improvement
dealers or other third parties may violate the anti-kickback and anti-referral
fee prohibitions of RESPA. While the Debtors have provided certain information
in connection with the investigation, the Debtors have taken the position that
the investigation is stayed by section 362(a) of the Bankruptcy Code.
o SECTION 525 LITIGATION. The Debtors service loans in 50
states and the District of Columbia subject to licensing or exemption from
licensing requirements granted by the states. In some of these states, the
Debtors are exempt from the requirement to obtain a state license on the basis
of their holding licenses or approvals from federal agencies, including HUD. The
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applicable licensing statutes in virtually all of these states and the
applicable HUD regulations require that an authorized mortgage loan servicer
submit annual audited financial statements to the regulatory authorities and
maintain a minimum net worth. The Debtors failed to timely submit their audited
financial statements for the year ending December 31, 1998 in those
jurisdictions where required and will not meet the minimum net worth
requirements as of December 31, 1998 or December 31, 1999 in those jurisdictions
where required. A number of state agencies and HUD have initiated actions to
terminate, revoke, suspend or deny renewal of the Debtors' licenses or exemption
from licensing because of the failure to meet these requirements. It is the
Debtors' position that section 525 and other sections of the Bankruptcy Code
prohibit and stay a governmental unit (state or federal) from denying, revoking,
suspending or refusing to renew a license or other similar grant to a debtor in
bankruptcy because, among other things, such debtor is a debtor under the
Bankruptcy Code or has been insolvent before the commencement of its bankruptcy
case or during the case. On July 23, 1999, the United States Bankruptcy Court
entered an order granting a preliminary injunction against the Attorney General
of the State of Arkansas and the Commissioner of the Arkansas Securities
Department enjoining those parties and others working under their supervision
from taking any action against United Companies, United Companies Lending
Corporation and/or Ginger Mae "with respect to their servicing rights in
Arkansas and their rights to do business in Arkansas as a servicer of loans,
including revoking, refusing to renew, suspending, terminating the exemption
from registration, conditioning, or otherwise interfering with or impairing
Debtors' rights to service Arkansas loans." The Debtors plan to attempt to
obtain similar injunctive relief against other state or federal agencies as may
be necessary to protect their right to continue to service loans during these
Chapter 11 Cases in each of the jurisdictions where they currently service
loans. The Plan should provide the Reorganized Debtors with sufficient net worth
to meet all regulatory requirements.
o FINDIM/BIASE LITIGATION. On September 1, 1999, Terrell Brown
and Dale Redman, directors and former officers of the Debtors, were named as
defendants in a lawsuit filed in Louisiana (the "Louisiana Action"') by Findim
Investments, S.A., Nicola Biase, Joyce Biase, and Nicholas Biase (collectively,
"Findim"). The Louisiana Action alleges that Messrs. Brown and Redman, in
violation of securities laws, made material misrepresentations of fact upon
which Findim relied in acquiring Common stock of the Debtors. Findim served
extensive discovery requests upon Messrs. Brown and Redman and upon the Debtors
that would have required the Debtors to expend a significant amount of time and
resources in order to adequately respond. Consequently, on November 12, 1999,
the Debtors filed an adversary complaint with the Court seeking to extend the
automatic stay to the Louisiana Action (the "Adversary Complaint"). In response,
Findim filed a motion to dismiss the Adversary Complaint. Meanwhile, on November
4, 1999, Messrs. Brown and Redman instituted an action against Findim in federal
district court in Louisiana seeking a declaratory judgment stating that they
were not liable to Findim under federal securities laws or under any Louisiana
state law theory of recovery (the "Officers' Action"'). Findim has also filed a
motion to dismiss the Officers' Action. On January 31, 2000, the Debtors filed a
response in opposition to Findim's motion to dismiss the Adversary Complaint.
That same day, the judge in the Louisiana Action issued an oral ruling that the
Louisiana Action would be stayed pending the outcome of the motion to dismiss
the Officers' Action. As a result, Findim and the Debtors agreed to an
indefinite stay of the proceedings on the Adversary Complaint pending the
resolution of the motion to dismiss the Officers' Action. Subsequently, the
federal district court dismissed the action, thereby allowing the continuation
of the litigation.
o BROWN/REDMAN CLASS ACTIONS. Messrs. Brown and Redman have
also been named as defendants in four (4) federal securities law class action
complaints filed in the United States District Court for the Middle District of
Louisiana. These federal class actions, which were recently consolidated in the
suit captioned Norman P. Lasky, et al. v. J. Terrell Brown, et al., seek class
status for all persons who purchased or otherwise acquired common stock,
preferred stock and/or call options of UCFC during the period from April 30,
1998, through and including February 2, 1999 (the "Class Period"). The
Complaints in each of the suits allege, in general, that the class participants
purchased or otherwise acquired UCFC securities during the Class Period in
reliance upon public disclosures by UCFC that were false, misleading and/or
omitted material facts concerning UCFC and its operations. In the consolidated
action, the Court has ordered the plaintiffs to file a Consolidated Class Action
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Complaint by no later than June 21, 2000, and the Court has given the defendants
60 days from service of the foregoing Complaint to file responsive pleadings.
o PREIS LAWSUIT. On May 10, 2000, a Petition was filed in
Louisiana state court by the Phillip W. Preis Children's Educational Trust
against the present and certain former members of the Board of Directors of
UCFC, Deloitte & Touche, LLP (UCFC's independent auditors) and UCFC's directors'
and officers' liability insurance carrier. The plaintiff in such matter alleges
that it is a shareholder of UCFC and that the members of UCFC's Board of
Directors during the relevant period, January 1, 1995, to December 31, 1998,
breached their fiduciary duties to UCFC and its shareholders under Louisiana law
by, in general terms, allowing UCFC to proceed with a faulty business strategy
that plaintiff alleges was the ultimate cause of UCFC's insolvency. With respect
to Deloitte & Touche, LLP, the plaintiff alleges that such auditors violated
their legal duties to audit UCFC in accordance with GAAP, to prepare UCFC's
audited financial statements in accordance with GAAP and to properly advise the
Board of Directors of UCFC regarding the inherent problems relating to UCFC's
business strategy. This matter has not proceeded further than the filing of the
original Petition.
o ESOP CLASS ACTION. In the matter entitled Amy Bergeron, et
al. v. U.S. Trust Company of California, et al., plaintiffs, on behalf of the
members of the United Companies Financial Corporation Employee Stock Ownership
Plan (the "ESOP"), filed a state court class action lawsuit in the district
court in Baton Rouge, Louisiana on February 7, 2000, against Dale E. Redman,
Charles G. Hargon, J. Terrell Brown and John D. Dienes, each a member of UCFC's
Plan Administrative Committee, U.S. Trust Company of California, N.A., the
Trustee of the ESOP, as well as the insurance carriers providing insurance
coverage for U.S. Trust and such members of UCFC's Plan Administrative
Committee. The class action plaintiffs allege that the Plan Administrators
breached their fiduciary duties by continuing to invest in UCFC common stock as
UCFC's financial condition deteriorated and the value of UCFC's common stock
declined. Plaintiffs claim that U.S. Trust violated its fiduciary duties to
plaintiffs by continuing to invest in UCFC common stock despite a decline in
value, in failing to conduct adequate investigations into whether continued
investment in UCFC common stock was prudent and otherwise failing to discharge
its duties with respect to the interests of the ESOP Plan participants and their
beneficiaries.
An additional class action Petition was filed with the
Nineteenth Judicial District on June 2, 2000. The Petition relates to losses
suffered by ESOP plan participants, and the defendants are the ESOP trustee,
U.S. Trust Company of California, N.A., the ESOP Plan Administrative Committee
members (including J. Terrell Brown, Dale E. Redman, John D. Dienes, and Charles
G. Hargon) and two unnamed liability insurance companies. By letter, dated June
9, 2000, the Debtors provided written notice of this claim to (i) Keith Hanson
of Hanson & Peters, on behalf of the Underwriters of UCFC's directors' and
officers' liability insurance, (ii) Reliance National, UCFC's fiduciary
liability insurer and (iii) Travelers Property Casualty, UCFC's comprehensive
general liability carrier, the Debtors' insurers.
In addition, the matter captioned Myer v. U.S. Trust Company
of California N.A., an ERISA class action suit, was filed on February 18, 2000,
in the United States District Court, Middle District of Louisiana on behalf of
the participants in UCFC's ESOP. In such class action, the plaintiff has sued
solely U.S. Trust claiming that U.S. Trust breached its fiduciary duties in the
management and investment decisions it made as Trustee for the ESOP,
specifically duties prescribed by the Employee Retirement Income Security Act of
1974.
o SETTLEMENTS. Claims and causes of action arising in the
ordinary course of the Debtors' business, including, without limitation, those
involving the collection of borrower loan obligations and the enforcement of
mortgage loan rights, including foreclosure proceedings, may be settled by the
Debtors, and have been and will be settled by the Debtors during the pendency of
the Chapter 11 Cases, by loan modification or other ordinary course means,
without specific approval from the Bankruptcy Court. However, Debtors are
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required to obtain prior court approval of any settlement of pending litigation,
whether by or against them, that is outside the ordinary course of business.
Further, to preserve the resources of their estates and
provide an expeditious means of effecting settlements of lawsuits in which they
are plaintiffs, the Debtors sought and obtained authorization from the
Bankruptcy Court to enter into settlements (a) with respect to any claim or
cause of action held by any of the Debtors that does not exceed $250,000,
without prior review or approval by any party, and (b) with respect to any claim
or cause of action that exceeds $250,000 but is less than $1,000,000, with prior
review and approval of only the U.S. Trustee, the Creditors' Committee, the
Equity Committee and the Debtors' postpetition lenders; subject in both cases to
quarterly reporting. The Debtors also received specific authorization to settle
certain claims and causes of action alleged by them in the following lawsuits:
NationsTitle Insurance of New York, Inc., et al., plaintiffs, v. William H.
Bertram, Jr., et al., defendants, pending before the Court of Common Pleas of
Montgomery County, Ohio, as Case No. 96-2449; United Companies Lending
Corporation, plaintiff, v. Catherine M. Huber, L. Samuel Westney and Chesapeake
Residential Appraisers, defendants, pending before the United States District
Court for the District of Maryland, Southern Division (Greenbelt), as Civil Case
No. PJM98-772; and United Companies Lending Corporation, plaintiff, v. Charles
H. Robertson and Pam Robertson, defendants, pending before the Circuit Court of
Jefferson County, Alabama, as Civil Action No. CV 96-1985 WAJ. To date, the
Debtors have not sought authorization to enter into non-ordinary course
settlements of claims and causes of action alleged against them.
6. CLAIMS PROCESS
In chapter 11, claims against a debtor are established either
as a result of being listed in the debtor's schedules of liabilities or through
assertion by the creditor in a timely filed proof of claim. Claims asserted by
creditors are either allowed or disallowed. If allowed, the claim will be
recognized and treated pursuant to the plan of reorganization. If disallowed,
the creditor will have no right to obtain any recovery on or to otherwise
enforce the claim against the debtor.
o FILING OF SCHEDULES OF LIABILITIES. On March 2, 1999, the
Debtors requested, and the Bankruptcy Court granted, an extension of time in
which to file their schedules of liabilities (the "Schedules") (as well as their
schedules of assets and executory contracts and their statements of financial
affairs). Because of the numerous demands on the Debtors and their professionals
resulting from the filing of the Chapter 11 Cases, the Debtors requested three
additional extensions of time in which to file their Schedules. On May 11, 1999,
May 22, 1999, and June 17, 1999, the Court entered orders further extending the
filing deadline for the Schedules. On June 30, 1999, the Debtors filed their
Schedules with the Bankruptcy Court. The Debtors reserve the right to amend
their Schedules during the remaining pendency of the Chapter 11 Cases.
o BAR DATE FOR FILING PROOFS OF CLAIM. By order, dated July
27, 1999, as amended on August 10, 1999 (the "Bar Date Order"), the Court (i)
approved September 30, 1999 as the bar date for all creditors to file proofs of
claim, (ii) authorized the Debtors to provide notice of the bar date by direct
mail and publication, and (iii) approved a bar date notice (the "Bar Date
Notice") to be sent to all of the Debtors' known creditors. The Bar Date Notice
notified creditors of the deadline for filing proofs of claim and contained
explicit instructions regarding who should file a proof of claim and the
instructions for doing so. The Bar Date Notice was mailed to in excess of
500,000 parties in interest on or about August 15, 1999. In addition, the Bar
Date Notice was published (i) on August 30, 1999 in The Wall Street Journal
(National Edition), The New York Times (National Edition), Akron Beacon Journal,
Lima News, Columbus Dispatch, Chillicothe Gazette, Warren Tribune Chronicle,
Cleveland Plain Dealer and Cincinnati Enquirer Post; (ii) on August 31, 1999 in
Dayton News, Toledo Blade, Baton Rouge Advocate and Mansfield News Journal; and
(iii) on September 1, 1999 in Mansfield News Journal.
On February 11, 2000, the Court approved an order authorizing
the Debtors to establish a supplemental bar date (the "Supplemental Bar Date")
for potential claimants who did not receive the Bar Date Notice in the mail or
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otherwise receive notice of the September 30, 1999 bar date. Pursuant to the
order, the Debtors mailed notice of the supplemental bar date on February 28,
2000 to these previously unnoticed potential claimants, establishing a bar date
of April 25, 2000 for only those creditors receiving the notice.
o CLAIMS OBJECTION PROCESS. The Debtors are in the process of
evaluating the proofs of claim to determine whether objections seeking the
disallowance of some asserted Claims should be filed. The Debtors are
reconciling the Claims listed in their Schedules with the Claims asserted in
proofs of claim and are also in the process of eliminating Claims that are
duplicative or erroneous in order to ensure that only valid Claims are allowed
by the Bankruptcy Court. If the Debtors object to a proof of claim, the
Bankruptcy Court will determine whether or not such Claim should be allowed. To
the extent that the Debtors are successful in their objections, the total amount
of the Debtors' liabilities to be treated under the Plan will be decreased. If
the Debtors do not object to a proof of claim, that Claim asserted therein will
be deemed allowed and will be treated pursuant to the Plan. As appropriate, the
Debtors may seek to negotiate and settle disputes as to proofs of claims as an
alternative to filing objections to the proofs of claim. Approximately 5,200
claims were filed against the Debtors, in an aggregate amount exceeding
$1,629,401,823,155. The Debtors believe that many of these claims are
duplicative or without merit. To date, the Debtors have objected to over 3,540
claims exceeding $1,629,184,683,335. As of the date hereof, 1,396 claims have
been expunged in the aggregate amount of $1,600,024,222,560.
o First Omnibus Objection to Proofs of Claim (Duplicate
and Amended Claims). On March 24, 2000, the Debtors filed their First
Omnibus Objection to Proofs of Claim (Duplicate and Amended Claims).
This objection sought to disallow and expunge 54 duplicate Claims and
36 amended Claims. The hearing on one such Claim was continued to June
8, 2000 and one such Claim was withdrawn by the claimant. On April 26,
2000, the Bankruptcy Court entered an order disallowing and expunging
52 duplicate claims and 36 amended Claims.
o Second Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On March 24, 2000, the Debtors filed
their Second Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection sought to expunge 301 Claims
filed by current and former borrowers of the Debtors, as to which the
Debtors' books and records showed no amount due. Before the hearing on
this objection, the Debtors withdrew their objection as to four such
Claims and agreed to continue the hearing as to five such Claims. As a
result, at the April 26, 2000 hearing, the Bankruptcy Court entered an
order disallowing and expunging 292 such Claims.
At a hearing on May 9, 2000, the Bankruptcy Court entered an
order disallowing and expunging three such Claims that had been continued from
the April 26, 2000 hearing. The hearing on the remaining two such Claims has
been further continued to allow the Debtors an opportunity to further
investigate these Claims.
o First Omnibus Objection to Proofs of Claim (Duplicate
and Amended Claims). On March 24, 2000, the Debtors filed their First
Omnibus Objection to Proofs of Claim (Duplicate and Amended Claims).
This objection sought to disallow and expunge 54 duplicate claims and
36 amended claims. The hearing on one claim was continued to June 8,
2000 and one claim was withdrawn by the claimant. On April 26, 2000,
the Bankruptcy Court entered an order disallowing and expunging 52
duplicate claims and 36 amended claims. On June 8, 2000, the Bankruptcy
Court expunged the remaining duplicate claim.
o Second Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On March 24, 2000, the Debtors filed
their Second Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection sought to expunge 301 claims
filed by current and former borrowers of the Debtors, as to which the
Debtors' books and records showed no amount due. Before the hearing on
this objection, the Debtors withdrew their objection as to 4 claims and
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agreed to continue the hearing as to 5 claims. As a result, at the
April 26, 2000 hearing, the Bankruptcy Court entered an order
disallowing and expunging 292 claims.
At a hearing on May 9, 2000, the Bankruptcy Court
entered an order disallowing and expunging 3 claims that had been
continued from the April 26, 2000 hearing. On June 8, 2000, the
Bankruptcy Court entered an order expunging the two remaining claims.
o Third Omnibus Objection to Proofs of Claim (No Amount
Due). On March 24, 2000, the Debtors filed their Third Omnibus
Objection to Proofs of Claim (No Amount Due). This objection sought to
disallow and expunge 141 claims filed by claimants other than the
Debtors' borrowers as to which the Debtors' books and records showed no
amount due. Prior to the hearing on this objection, the Debtors agreed
to continue the hearing with regard to four (4) claims. As a result, at
the hearing on April 26, 2000, the Bankruptcy Court entered an order
disallowing and expunging 137 claims.
On May 9, 2000, the Bankruptcy Court entered an order
disallowing and expunging three (3) additional claims. The hearing on
the remaining claim has been continued to July 25, 2000.
o Fourth Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On April 7, 2000, the Debtors filed
their Fourth Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection sought to disallow and
expunge 194 proofs of claim filed by current and former borrowers of
the Debtors as to which the Debtors' books and records show no amount
due. Prior to the hearing, the Debtors withdrew their objection as to
one (1) claim and continued the hearing with respect to five (5)
claims.
At the hearing on May 9, 2000, the Bankruptcy Court
heard testimony and argument regarding one contested claim. The Court
took this matter under advisement and has not yet issued an order
regarding the disposition of this claim. However, at the hearing on May
9, 2000, the Court entered an order disallowing and expunging the
remaining 187 claims.
On June 8, 2000, the Bankruptcy Court entered an order
disallowing and expunging 1 additional claim. The Debtors have agreed
to continue the hearing with regard to the four (4) remaining claims
until July 25, 2000.
o Fifth Omnibus Objection to Proofs of Claim (No Amount
Due). On May 7, 2000, the Debtors filed their Fifth Omnibus Objection
to Proofs of Claim (No Amount Due). Due to an error in serving notice
of this objection, the hearing on this objection was continued from May
9, 2000 to June 8, 2000. This objection sought to disallow and expunge
99 proofs of claim filed by entities other than borrowers of the
Debtors as to which the Debtors' books and records show no amount due.
Prior to the hearing, the Debtors agreed to withdraw their objection as
to two (2) claims that the Debtors agreed to treat as allowed claims,
continued the hearing to July 25, 2000 as to another two (2) claims,
and agreed to reduce and allow one (1) claim. As a result, on June 8,
2000, the Bankruptcy Court entered an order disallowing and expunging
ninety four (94) proofs of claim, allowing two (2) claims as general
unsecured claims, and reducing and allowing one (1) claim as a general
unsecured claim.
o Sixth Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On May 8, 2000, the Debtors filed
their Sixth Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection sought to disallow and
expunge 665 claims filed by current and former borrowers of the Debtors
as to which the Debtors' books and records show no amount due. Prior to
the hearing on this objection, the Debtors agreed to continue the
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hearing to July 25, 2000 with respect to nine (9) claims in order to
provide the Debtors with an opportunity to further investigate these
claims. On June 8, 2000, the Bankruptcy Court entered an order
disallowing and expunging the remaining 656 claims.
o Seventh Omnibus Objection to Proofs of Claim (No
Amount Due). On May 8, 2000, the Debtors filed their Seventh Omnibus
Objection to Proofs of Claim (No Amount Due). This objection sought to
disallow and expunge twenty-two (22) claims filed by entities other
than borrowers of the Debtors as to which the Debtors' books and
records show no amount due. On June 8, 2000, the Bankruptcy Court
entered an order disallowing and expunging all twenty-two (22) claims
included in the Seventh Omnibus Objection.
o Eighth Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On June 6, 2000, the Debtors filed
their Eighth Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection seeks to disallow and
expunge 233 claims filed by current and former borrowers of the Debtors
as to which the Debtors' books and records show no amount due. This
objection is set for hearing on July 25, 2000.
o Ninth Omnibus Objection to Proofs of Claim (No Amount
Due). On June 6, 2000, the Debtors filed their Ninth Omnibus Objection
to Proofs of Claim (No Amount Due). This objection seeks to disallow
and expunge 196 claims filed by entities other than borrowers of the
Debtors as to which the Debtors' books and records show no amount due.
This objection is set for hearing on July 25, 2000.
o Tenth Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Borrowers). On June 29, 2000, the Debtors filed
their Tenth Omnibus Objection to Proofs of Claim (No Amount Due on
Claims Filed by Borrowers). This objection seeks to disallow and
expunge 393 claims filed by current and former borrowers of the Debtors
as to which the Debtors' books and records show no amount due. This
objection is set for hearing on August 30, 2000.
o Eleventh Omnibus Objection to Proofs of Claim (Late
Claims). On June 29, 2000, the Debtors filed their Eleventh Omnibus
Objection to Proofs of Claim (Late Claims). This objection seeks to
disallow and expunge 318 claims that were filed after the bar date for
filing proofs of claim. This objection is set for hearing on August 30,
2000.
o Twelfth Omnibus Objection to Proofs of Claim
(Duplicate and Amended Claims. On June 29, 2000, the Debtors filed
their Twelfth Omnibus Objection to Proofs of Claim (Duplicate and
Amended Claims). This objection seeks to disallow and expunge 98
duplicate claims and 22 amended claims. This objection is set for
hearing on August 30, 2000.
o Thirteenth Omnibus Objection to Proofs of Claim (No
Amount Due). On June 29, 2000, the Debtors filed their Thirteenth
Omnibus Objection to Proofs of Claim (No Amount Due). This objection
seeks to disallow and expunge 370 claims filed by entities other than
borrowers of the Debtors as to which the Debtors' books and records
show no amount due. This objection is set for hearing on August 30,
2000.
o Fourteenth Omnibus Objection to Proofs of Claim (No
Amount Due on Claims Filed by Employees). On June 29, 2000, the Debtors
filed their Fourteenth Omnibus Objection to Proofs of Claim (No Amount
Due on Claims Filed by Employees). This objection seeks to disallow and
expunge 30 claims filed by current or former employees of the Debtors
as to which the Debtors books and records show no amount due. This
objection is set for hearing on August 30, 2000.
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o Fifteenth Omnibus Objection to Proofs of Claim
(Reclassify and Allow). On June 29, 2000, the Debtors filed their
Fifteenth Omnibus Objection to Proofs of Claim (Reclassify and Allow).
This objection seeks to reclassify and allow 74 claims as general
unsecured claims. These claims were originally filed as either secured
claims or unsecured priority claims. This objection is set for hearing
on August 30, 2000.
o Sixteenth Omnibus Objection to Proofs of Claim
(Duplicate Claims Filed Class Action Participants. On June 29, 2000,
the Debtors filed their Sixteenth Omnibus Objection to Proofs of Claim
(Duplicate Claims Filed by Class Action Participants). This objection
seeks to disallow and expunge 36 claims on the basis that the claimants
are members of a plaintiff class in a class action lawsuit currently
pending against the Debtors and there has been a proof of claim filed
by the name plaintiffs on behalf of the entire class. In addition, this
objection seeks to disallow and expunge 118 claims filed by borrowers
within the Commonwealth of Massachusetts who are subject to a consent
judgment between the Debtors and the Commonwealth on the grounds that
these claims are duplicative of the claim filed by the Commonwealth of
Massachusetts on behalf of all borrowers subject to the consent
judgment. This objection is set for hearing on August 30, 2000.
o Seventeenth Omnibus Objection to Proofs of Claim (No
Amount Due on Shareholder Claims. On June 29, 2000, the Debtors filed
their Seventeenth Omnibus Objection to Proofs of Claim (No Amount Due
on Shareholder Claims). This objection seeks to disallow and expunge
348 claims filed by shareholders of the Debtors as to which the
Debtors' books and records show no amount due. This objection is set
for hearing on August 30, 2000.
o Eighteenth Omnibus Objection to Proofs of Claim
(Litigation Claims). On June 29, 2000, the Debtors filed their
Eighteenth Omnibus Objection to Proofs of Claim (Litigation Claims).
This objection seeks to disallow and expunge 217 claims that are (a)
claims related to pending litigation in which the Debtors filed an
answer denying the allegations, (b) claims related to pending
litigation in which the Debtors would have filed an answer denying the
allegations if the litigation had not been stayed as a result of the
commencement of these chapter 11 cases, and (c) claims setting forth
allegations which could have been asserted in a lawsuit prior to the
commencement of these chapter 11 cases, but no such lawsuit has been
filed, and the Debtors deny the allegations. This objection is set for
hearing on August 30, 2000.
o Nineteenth Omnibus Objection to Proofs of Claim
(Duplicate Bank and Bond Debt Claims). On June 29, 2000, the Debtors
filed their Nineteenth Omnibus Objection to Proofs of Claim (Duplicate
Bank and Bond Debt Claims). This objection seeks to disallow and
expunge 40 claims filed by holders of the Debtors' bank and bond debt
on the basis that these claims are duplicative of the claims filed by
the agent for the participating lenders under the Debtors' credit
facility or the indenture trustee, as appropriate. This objection is
set for hearing on August 30, 2000.
o Twentieth Omnibus Objection to Proofs of Claim (Reduce
and Allow). On June 29, 2000, the Debtors filed their Twentieth Omnibus
Objection to Proofs of Claim (Reduce and Allow). This objection seeks
to reduce and allow 105 claims as to which the Debtors' books and
records show that an amount is due and owing, but the amount that is
due and owing is less than the amount contained in the proof of claim.
This objection is set for hearing on August 30, 2000.
o Twenty-First Omnibus Objection to Proofs of Claim
(Reclassify, Reduce and Allow). On June 29, 2000, the Debtors filed
their Twenty-First Omnibus Objection to Proofs of Claim (Reclassify,
Reduce and Allow). This objection seeks to reclassify 39 claims as
either unsecured priority or general unsecured claims, and to allow
such claims in a reduced amount. The Debtors' books and records show
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that amounts are due and owing with respect to these claims, but the
amounts that are due and owing are less than the amounts contained in
the proofs of claim. This objection is set for hearing on August 30,
2000.
o Further Claims Objection Process. In addition to the
omnibus claim objections discussed above, the Debtors filed a number of
objections to individual claims on June 29, 2000. These objections
comprised claims as to which the basis for the Debtors' objection was
not adequately set forth in any of the omnibus claim objections. These
objections are also set for hearing on August 30, 2000.
The Debtors have made substantial progress in the claims
reconciliation process. However, the Debtors are continuing to review
proofs of claim and reserve the right to file additional objections to
claims.
o HUDAK CLASS PROOF OF CLAIM. On December 2, 1999, Andrew and
Michelle Hudak (the "Hudaks") filed a motion seeking to have class action rules
and procedures applied to the proof of claim filed by them on behalf of a
putative class of similarly situated creditors within the State of Ohio. The
Hudaks are purported class representatives in an action against United Companies
Lending Corporation, which is currently pending in Ohio (the "Ohio Action"). The
Hudaks allege in the Ohio Action that United Companies Lending Corporation, in
making mortgage loans to borrowers in Ohio, charged discount points in excess of
the statutory maximum under Ohio law. Although the Ohio Action was filed as a
class action, no class has been certified by the Ohio court. The Debtors
objected to the filing of the Hudaks' class proof of claim. However, on February
16, 2000, the Bankruptcy Court denied the Debtors' objection and allowed the
Hudaks to proceed to file a proof of claim on behalf of the putative class of
similarly situated Ohio borrowers. On May 24, 2000 the Hudaks filed a motion
with the Bankruptcy Court requesting that their class proof of claim be
maintained as a class action and requesting class certification. The Debtors
have not filed a response to the motion, but anticipate that they will object to
the relief requested. A hearing on the motion has been adjourned until August
30, 2000. The parties have reached a tentative settlement of all issues,
including providing for possible payments for $25.00 per borrower up to an
aggregate of $90,000.00. The Debtors intend to submit such proposed compromise
and settlement in the near future.
o BORROWER CLAIMS. The borrower claims, including Borrower
Litigation Claims, in the Debtors' cases account for a minority of total Allowed
Claims. The Debtors scheduled a total of approximately 1,227 claims, none of
which were borrower claims. Of the total of approximately 5,086 claims filed in
the Debtors' cases, approximately 2,455 were filed by borrowers. Of these
approximate 2,455 borrower claims, the majority were filed in error and
approximately 1,140 borrower claims have been expunged. An additional
approximate 246 borrower claims are subject to pending objections set for
hearing on July 25, 2000 and a further approximate 1,044 borrower claims are
subject to pending objections set for hearing on August 30, 2000. There are
approximately 24 borrower claims which have been allowed. These allowed borrower
claims aggregate an approximate $9,646.85.
7. EXCLUSIVE PLAN PROPOSAL AND ACCEPTANCE RIGHTS
Section 1121(b) of the Bankruptcy Code provides for an initial
period of 120 days after the commencement of a chapter 11 case during which a
debtor has the exclusive right to file a plan of reorganization. In addition,
section 1121(c)(3) of the Bankruptcy Code provides that if the debtor files a
plan within the 120-day exclusive period, it has a period of 180 days after the
commencement of the chapter 11 case to obtain acceptances of such plan (the
"Exclusive Periods"). Pursuant to section 1121(d) of the Bankruptcy Code, the
Court may, upon a showing of cause, extend or increase a debtor's Exclusive
Periods.
Prior to the expiration of the initial Exclusive Periods, the
Debtors sought an extension of such periods, citing a multitude of factors,
including: (i) the size and complexity of the Debtors' Chapter 11 Cases; (ii)
the substantial efforts required to stabilize and rehabilitate the Debtors'
business, including the sale of the Debtors' loan origination business; and
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(iii) the need to develop a long-range business plan to lay the foundation for a
consensual plan of reorganization. By order, dated June 16, 1999, the Bankruptcy
Court granted the requested extension of the Debtors' initial Exclusive Periods
to and including October 29, 1999 and December 29, 1999, respectively.
As the end of the extended Exclusive Periods approached, the
Debtors found it necessary to request a second extension from the Bankruptcy
Court, citing, in addition to the reasons discussed above, the need to develop
and implement certain strategic initiatives. One of these initiatives was to
enhance the servicing business by entering into a transaction with a third party
that would result in the assumption by an experienced and qualified sub-servicer
of all the servicing functions set forth in the Debtors' pooling and servicing
agreements. The other strategic initiatives were to determine the most efficient
and profitable strategies with respect to the Debtors' foreclosed properties and
owned whole loans. Because the outcome of these initiatives would have a
dramatic impact on the structure of the Debtors' future business operations and
the plan of reorganization, the Debtors obtained from the Bankruptcy Court an
extension of the Exclusive Periods to and including February 1, 2000 and March
28, 2000, respectively.
Subsequently, the Debtors filed a motion requesting a third
extension of the Exclusive Periods (the "Third Extension Motion"). By a bridge
order, Bankruptcy Court agreed to extend the exclusive period to file a plan of
reorganization until February 16, 2000, the date of the hearing on Third
Extension Motion. The motion was granted with certain modifications.
Specifically, the Bankruptcy Court extended the Exclusive Periods to May 1, 2000
and June 26, 2000, respectively, but granted the Equity Committee the right to
file and solicit acceptances of its own plan of reorganization. The Debtors
filed their initial plan of reorganization on February 16, 2000 and did not seek
any further extension of the Exclusive Periods. Accordingly, the Debtors'
Exclusive Periods have expired. The Equity Committee filed its competing amended
plan of reorganization and disclosure statement on July 3, 2000. The Bankruptcy
Court approved the Equity Committee Disclosure Statement on July 7, 2000,
subject to entry of an approval order.
C. CASH, ACCOUNTING AND OPERATING ISSUES
1. CASH
The Debtors began the Chapter 11 as a full-service lender and
servicer. The operations initially rapidly consumed cash which the Debtors
funded by drawing under the DIP Credit Facility. Borrowings peaked at $76
million during the month of March 1999.
Because the Debtors no longer paid interest on $1,225,000,000
of borrowed money, the servicing and collecting side of the business generated
substantial cash. Once the loan origination closed the Debtors used the first
available cash to pay off the DIP facility and then began accumulating cash.
Escrowed cash from borrowers is segregated and held in trust
for the borrowers. The Debtors balance sheets show the cash as an asset offset
by a liability to borrowers.
Non-escrowed cash at December 31, 1999 was $103 million. This
has grown to $175 million as of May 31, 2000. The Residual Agreement provides
for a sale as of December 31, 1999. Therefore, much of the increased cash will
go to the buyer of those assets.
The Debtor has at all times during the pendency of these cases
been able to meet its post-petition obligations.
2. ACCOUNTING AND REPORTING
The Debtors' financial reports indicated a net worth of $505
million on September 30, 1998. The audit for 1998, completed in September of
1999, included a major writedown of the value of the Interest-only and residual
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certificates-net, and net worth at December 31, 1998 was reduced to ($114
million). The Debtors' Current Report on Form 8-K dated September 3, 1999 is
included as Exhibit G.
The audit for 1999 is not complete at this time; however, the
Debtors anticipate an additional writedown of assets as of December 31, 1999 of
approximately $88 million. The Debtors are currently evaluating additional
adjustments to the amounts reported in their financial statements as a result of
the Residual Agreement and the Whole Loan Agreement.
The Debtors' operations in recent months are not only cash
positive but also show an operating profit.
3. OPERATING ISSUES
The Debtors have, over the past twelve (12) months, made a
number of changes to the servicing operations in order to reduce overall
delinquency and minimize loan losses. To date, the addition of a loss mitigation
department and the improvements to the collections, foreclosures-in-process,
bankruptcy and REO departments have resulted in the following:
o Reduction of 1-29 day delinquent accounts as a
percentage of the total home equity portfolio from a
one year peak of 13.7% in May 1999 to 11.4% in May
2000.
o Reduction of 30+ day delinquent accounts as a
percentage of the total home equity portfolio from a
one year peak of 19.8% in January 2000 to 16.9% in
May 2000.
o Reduction of total delinquent accounts (including
REO) as a percentage of the total home equity
portfolio from a one year peak of 35.6% in January
2000 to 32.3% in May 2000.
o Reduction in the average number of months it takes to
foreclose on incurable delinquent accounts (i.e.,
reduction of the number of months from date of last
payment to completion of foreclosure process.) A
reduction of the foreclosure timeframe reduces
servicing and interest advances per loan, thereby
lowering the loss per loan that might otherwise be
experienced.
o Reduction in the average number of months it takes to
sell REO properties (i.e., reduction of the number of
months from date of the Debtors' recovery of
collateral title (end of the foreclosure process) to
completion of REO sale). A reduction of the REO sale
timeframe reduces servicing and interest advances per
loan, thereby lowering the loss for the loan that
might otherwise be experienced.
Due to generally accepted accounting principles, losses on
loans are not recognized until sale of the foreclosed property. Based upon the
acceleration of the period from delinquency to ultimate realization on the
recovered property, the losses as reported illustrate a greater amount of losses
than historically realized over similar periods of time. Such losses, however,
are merely reflective of the Debtors' success in accelerating the disposition of
recovered properties, the cessation of non-recoverable service advances, and the
concomitant portrayal of such losses on an accelerated basis. The Equity
Committee disputes the Debtors' analysis with respect to losses on loans.
Delinquencies: Notwithstanding the improvements to the
servicing operations and corresponding reduction in delinquency, historical
United Companies and industry information indicate that United Companies'
securitized portfolio should experience an increase in delinquency over the next
12 - 18 months as a result of the overall "seasoning" of the relatively young
portfolio.
As of March 2000, the current balance of home equity loans
originated in 1998 and 1997 comprised approximately 48% and 26% of the current
balance of the total home equity securitized portfolio, respectively. By
analyzing the monthly delinquency statistics of the individual United Companies
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securitizations and as reported in "Moody's Home Equity Index Update: First
Quarter 2000" for the industry for similar years' vintages, it is possible to
ascertain delinquency percentage trends by vintage as loan pools season.
In general, during the first few months after a pool of loans
is originated, the number of delinquent loans as a percentage of the outstanding
current balance is relatively low - most borrowers make most of their first few
payments. As the loans season (i.e., as the number of months since origination
increases), the more likely it is that borrowers will miss payments. In most
pools, delinquent accounts as a percentage of current balance increase to a peak
after four (4) to five (5) years and then gradually decrease as the outstanding
current balance is reduced by the elimination of delinquent borrowers through
foreclosure and REO sales.
Historical data through April, 2000 from the United Companies securitizations
regarding loan seasoning and delinquency can be summarized in the following
table:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1993-94 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
% of total portfolio 5% 7% 15% 26% 48%
Peak delinquency month 63 55 43 Not yet reached
30+ delinquency % at peak 25.3% 33.6% 31.3% Not yet reached
Months since orig. as of April, 2000 88 63 51 39 27
30+ delinquency %, April, 2000 15.5% 31.8% 24.7% 27.4% 18.9%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
The table indicates that the later vintages have been peaking earlier and
higher, a trend also supported by the Moody's industry data. Assuming this trend
continues, 1997 and 1998 vintage loan pools will reach their delinquency peaks
over the next eighteen (18) months. Because the 1997 and 1998 pools comprise 74%
of the Debtors' total securitized portfolio, as these pools increase to their
delinquency peaks over the next 12-18 months, delinquency for the total
portfolio will rise, not fall as assumed in the Equity Committee's Plan.
Cumulative Losses: Losses result from loan defaults and are
recognized when loan liquidation actually occurs. The actual monthly advancing
of cash for interest and servicing costs (attorneys, forced place insurance,
property inspections, property maintenance, securing the property, repairs, lien
removals, etc.) on defaulted loans are not recognized as losses at the time of
the outlays, but are built up as "total debt" (UPB + interest and servicing
advances) in each defaulted loan.
The loss and loss severity are calculated on each loan as follows:
Gross Proceeds - outsourcer fees - broker commissions - municipal costs -
closing costs = Net Proceeds.
Net Proceeds - Total Debt = Loss or Gain
Loss Severity = Loss/UPB
Cumulative loss estimates for a pool or pools of loans are
made by adding historical losses to an estimate of future default rates and loss
severities. Cumulative losses, by definition, should accumulate. The only way
that one could conceive that they might decline is if gains from collateral
liquidations exceeded losses recognized, for a net gain on (periodic)
liquidations. The history of United does not support with actual data that there
are significant gains on REO liquidations, in either frequency of units or
dollar amount.
The default process is state specific, but generally takes
anywhere from 3 to 13 months from notice to recovery of title. Therefore, a loss
curve begins to show positive slope only around month 12 and beyond.
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The Debtors believe that the sum of historical cumulative
losses on collateral liquidations that have been experienced by the Debtors to
date plus the losses to be recognized from currently existing REO properties not
yet liquidated already exceeds the total cumulative lifetime loss as utilized in
the Equity Committee Plan assumptions. In addition, this sum does not give any
consideration to all future losses on borrower loans that have yet to default.
Therefore, the Debtors believe that the assumptions utilized by the Equity
Committee regarding cumulative loss percentage are unachievable and lead to an
unsupportable value for the Debtors' Interest Only and Residuals.
The loss calculations prepared by the Debtors detail by
Securitization the actual losses incurred through May, 2000 and the forecasted
losses anticipated when consideration of the January 31, 2000 inventory of REO
and foreclosure inventories (in process) is given. Actual losses through May 31,
2000 of $264.7 million comprise 2.52% of the original issue of Home Equity
Securitizations (excluding the 1998-D securitization, which the Debtor does not
service). It is relevant to note that all deals aged prior to 1996B have already
incurred actual losses in excess of 3.5% of the original issue balance.
When consideration of forecasted losses on the unliquidated
but foreclosed or in foreclosure inventory at May 31 is taken the aggregate loss
is expected to be about $505 million, or 4.81% of the original issue balance.
Historical trends indicate that there will be additional losses, particularly in
the unseasoned pools, as additional loans default and are foreclosed upon.
The delinquency and loss statistics of the Debtors cannot be
compared to those of the Debtors' competitors who still originate new loans,
since the addition of newly originated and therefore current loans to a loan
pool "masks" the delinquencies and losses coming from older seasoning loans.
V.
THE PLAN OF REORGANIZATION
A. RATIONALE UNDERLYING PLAN TREATMENTS OF CLAIMS
The terms of the Plan are the result of discussions among the
Debtors, the Creditors' Committee, holders of Bank Claims and holders of Senior
Note Claims and represents a compromise and settlement with respect to the
following issues: (a) whether the estates of each of the Debtors should be
treated separately for purposes of making payments to holders of Claims, (b)
whether and to what extent proceeds from the Sale Transaction should be
allocated among each of the Debtors based upon their respective claims of
ownership to certain assets sold thereunder, (c) the amount and priority of
certain Intercompany Claims, (d) the voidability of certain intercompany
transfers and (e) the enforceability of the guarantee claims asserted by holders
of the Bank Claims against the Debtors which are direct and indirect
subsidiaries of United Companies. The Debtors, the holders of Bank Claims, and
the holders of Senior Note Claims have differing views of the ultimate result of
litigation over the above issues in the event the Plan is not confirmed and
claims asserting substantive consolidation, the avoidance of the Banks'
guarantees against Debtors which are United Companies' subsidiaries, or the
avoidance of transfers made by United Companies to certain of its subsidiaries
are pursued to judgment.
Statements as to the rationale underlying the treatment of
claims under the Plan are not intended to waive, compromise or limit any rights,
claims, or causes of action in the event the Plan is not confirmed. Rather, the
distributions contemplated by the Plan represent estimates of distributions
accomplished through the compromise and settlement of these issues among the
Debtors, holders of Bank Claims and holders of Senior Note Claims without the
necessity for a final judicial determination thereof. The Debtors cannot assure
that an ultimate judicial determination of the compromised issues might not
result in treatment which is more or less favorable to any particular creditor.
The Plan represents and embodies compromises and settlements
of a number of intercreditor issues which have been raised in the Debtors'
Chapter 11 Cases. Resolution of these issues is crucial to any reorganization of
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the Debtors and, if not resolved through compromise and settlement may result in
a substantial delay and expense pending their judicial determination.
The Debtors believe that the compromises and settlements
embodied in the Plan give due consideration to the strengths and weaknesses of
potential litigation arguments made by holders of the Senior Note Claims and the
Banks respectively, and that with respect to such disputes, the distribution to
any particular creditor is no better than the best possible judicial
determination in favor of such creditor while being no less than the worst
possible outcome. Accordingly, the Debtors, the holders of Bank Claims and
Senior Note Claims believe the compromises embodied in the Plan are within the
range of likely results in the event each issue was pursued to judgment.
B. SETTLEMENT OF THE BANK CLAIMS AND RELATED INTERCREDITOR ISSUES
The Plan incorporates a compromise and settlement of the Bank
Claims and related intercreditor issues raised by holders of Senior Note Claims.
The Banks have asserted Claims against each Debtor approximating $858 million,
which by their terms are based upon the Credit Facility and guaranties of United
Companies' obligations under the Credit Facility by subsidiaries of United
Companies, which are also Debtors.
Under the terms of the compromise and settlement, the holders
of Bank Claims, Senior Note Claims and the Debtors have agreed that cash
distributions available for senior creditors (i.e., holders of Bank Claims and
Senior Note Claims), referred to in the Plan as "Senior Creditor Cash", shall be
allocated first to certain fees and expenses of such senior creditors (estimated
to be approximately $4 million as of the date hereof), then, with respect to
balance, Net Senior Creditor Cash, eighty-five and one-half percent (85.5%) to
the Bank Claims and fourteen and one-half percent (14.5%) to the Senior Note
Claims; provided that Total Creditor Cash in excess of $850 million shall be
allocated ninety-five percent (95%) to the Bank Claims and five percent (5%) to
the Senior Note Claims. Estimated recoveries on the Bank Claims and Senior Note
Claims are 77.26% and 46.64%, respectively, plus recoveries associated with
their respective interests in the Litigation Trust.
This settlement resolves not only contentions regarding the
validity and enforceability of the Banks' asserted guaranty claims, but also
regarding substantive consolidation of the Debtors' estates and, alternatively,
the potential recovery of alleged fraudulent transfers made by United Companies
to certain of its subsidiaries. In this context, the Plan provides that the
Debtors' estates shall be substantively consolidated, but subject to the
treatments of the Bank Claims, Senior Note Claims and other Classes of Creditors
which result from the proposed compromise and settlement. General Unsecured
Claims are thus classified in a single class, Class 5, and all receive identical
treatment, a thirty-two percent (32%) recovery on their Allowed Claims. In the
context of the compromise and settlement, the holders of Bank Claims and Senior
Note Claims will bear the risk of increases in anticipated Claims or a decrease
in aggregate proceeds available for distribution. As discussed in greater detail
below, the Debtors believe that the Plan provides greater distributions with
respect to General Unsecured Claims than would likely be received on account of
such Claims against the individual Debtors in a liquidation.
Because the value of the Debtors' estates is insufficient to
satisfy all non-subordinated Claims in full, the Debtors are prohibited by the
Bankruptcy Code's "absolute priority rule" from providing any distributions to
holders of the Subordinated Note Claims or holders of Equity Interests without
the requisite consent of holders of all Classes of Claims senior to the
Subordinated Note Claims. The Debtors have been advised that such consent will
not be forthcoming and, therefore, holders of Subordinated Note Claims and
Equity Interests will receive nothing under the Plan.
The rationale behind this compromise and settlement consists
of an assessment by the Debtors and the holders of the Senior Note Claims of
their independent and collective ability to prevail in avoiding the Banks'
asserted guarantees or in achieving substantive consolidation of the Debtors'
estates. The Debtors believe that unless these controversies are resolved, the
prospect of concluding the Sale Transaction will be diminished, with the effect
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that protracted litigation would delay any reorganization alternative and
potentially adversely affect asset values.
Given this assessment by the Debtors, the Plan's compromise of
the Bank Claims is in the best interest of the Debtors' estates and all
creditors. The various arguments which might be asserted against the Bank
Claims, or in support of substantive consolidation, and the Banks' position in
regard thereto, are set forth below. Any assertion of these arguments against
the Bank Claims or in support of substantive consolidation would be vigorously
resisted by the Banks.
1. THE FRAUDULENT CONVEYANCE ISSUE
The Debtors and the holders of Senior Note Claims have
asserted that the Bank Claims against United Companies' subsidiaries may be
voidable as fraudulent transfers, at least in part, based on the theory that the
subsidiary Debtors did not receive reasonably equivalent value for the
pre-petition guaranties claimed by the Banks or were rendered insolvent thereby.
The Banks have asserted that under the terms of their guarantees, they are
entitled to Allowed Claims against each subsidiary in the full amount of their
approximate $858 million claim. The Debtors disagree with this theory and
believe that the Banks would be entitled to Allowed Claims at each subsidiary
representing the greater of the amount of advances under the Credit Facility
that were of value to such Debtor subsidiary or the net worth of such subsidiary
at the time advances were made under the Credit Facility. Under various
theories, the Banks claim to be able to demonstrate value to each of the Debtors
from the proceeds of the Bank loans to United Companies that would enable the
Banks to enforce their asserted guaranties to the extent of such value.
The Debtors' records verify that funds of United Companies on
deposit in its cash management account were transferred to various subsidiaries
at various times. The holders of Senior Note Claims contend that it is
difficult, if not impossible, to determine specifically that any particular
transfer originated from the Banks as loans, from intra-Debtor cash transfers,
or as proceeds of securitizations. While the holders of Senior Note Claims
dispute the position of the Banks, there is no question, in the Debtors' view,
that Bank funds did find their way into the various subsidiaries. Accordingly,
it is a reasonable conclusion that the Banks will be able to justify value for
the claimed pre-petition guaranties although the holders of Senior Note claims
contend that the amount which might be established at any particular subsidiary
is uncertain.
The distribution set forth in the Plan in respect of the Bank
Claims does not validate any specific guaranty in favor of the Banks. Rather,
the compromise and settlement embodied in the Plan assumes that the Banks can
establish that the proceeds of the Bank loans provided value to United
Companies' direct and indirect subsidiaries.
Applying the Debtors' view, described above, as to the extent
of the Allowed Bank Claims against United Companies' subsidiaries, the Banks
would recover an estimated eighty-four and fourteen one-hundredths percent
(84.14%) of their Claim, based upon the aggregate amounts recovered from the
subsidiaries and United Companies, assuming a Sale Transaction. Thus, the
compromise and settlement proposed provides for recovery on the Bank Claims at a
level below the Debtors' view as to the potential enforceability of the Banks'
guarantee claims, based upon the additional risks to the Bank Claims of
substantive consolidation or reallocation of certain subsidiary assets to United
Companies, based upon fraudulent transfer theories. At the same time, the
projected recovery to the Banks exceeds what they would receive in a liquidation
in which their claims were similarly enforced. (See Exhibits C-1 and C-2
hereto.) Each of these issues is addressed below.
2. SUBSTANTIVE CONSOLIDATION
Certain creditors, including holders of the Senior Note
Claims, contend that the Debtors should be substantively consolidated.
Substantive consolidation is a process whereby the assets and liabilities of a
group of corporate entities controlled by a common parent or under common
control are merged. Thus, distributions to Creditors would be made based upon
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pooled assets and liabilities, treating all of the Debtors as if they were a
single corporate/economic entity. The holders of Senior Note Claims contend that
substantive consolidation would be ordered in these cases, thereby eliminating
the separate identity of each Debtor, with the result that the Senior Note
Claims, the Bank Claims and General Unsecured Creditors would receive pari passu
treatment of their respective claims. After allocating the recovery otherwise
payable on Subordinated Note Claims to the Bank Claims and Senior Note Claims to
the Bank Claims and Senior Note Claims, substantive consolidation would result
in approximately a seventy percent (70%) recovery on Bank Claims and Senior Note
Claims and a sixty one percent (61%) recovery on General Unsecured Claims.
The Debtors have analyzed both the legal standards and factual
circumstances relevant to the assertion of substantive consolidation.
Substantive consolidation is an equitable remedy which rests in the discretion
of the Bankruptcy Court only after review of the particular facts of a case and
consideration of guidelines gleaned from case law. The factors considered by
courts are numerous; however, such factors would be considered in light of two
critical concerns: (1) whether creditors dealt with the entities as a single
economic unit and did not rely on their separate identity in extending credit
and (2) whether the affairs of the Debtors are so entangled that consolidation
will benefit all creditors. Although the holders of Senior Note Claims have
argued that the books and records of the companies are insufficient to identify
and trace intercompany claims with specificity, the Debtors believe that the
Debtors have maintained sufficient entity by entity financial information to
reconcile open issues with respect to intercompany claims and transactions. The
Debtors' books and records reflect aggregate intercompany payables and aggregate
intercompany receivables of approximately $1.1 billion. These payables and
receivables arose from the funding of operations, the purchase and sale of loans
relating to securitizations, the tax liability of each corporation (if any), and
the purchase and sale of other assets. The Debtors have sold over $11 billion of
loans in securitizations. These transactions typically involve the intercompany
transfer of loans and other assets related to such transactions are reflected as
intercompany payables and receivables. During the Chapter 11 Cases, the Debtors
responded to numerous information and document requests from financial advisors
and legal counsel for the Senior Indenture Trustee and the holders of the Bank
Claims with respect to the companies' books and records, intercompany accounts,
capital structure, conduct of business and numerous other matters relating to
the viability of a substantive consolidation claim. In reaching its assessment
of substantive consolidation, the Debtors examined all of the information
furnished to Houlihan, Lokey, Howard and Zukin and Goldstein, Golub and Kessler
LLP, both financial advisors on behalf of the Senior Indenture Trustee, as well
as to Policano & Manzo, financial advisors on behalf of the holders of Bank
Claims. It is noteworthy that holders of the Senior Note Claims, which would
have been the primary beneficiaries of substantive consolidation, relied upon
the work product of financial and legal advisors to the Senior Indenture
Trustee, among other factors, in agreeing to the proposed compromise and
settlement.
The Debtors believe that any litigation of substantive
consolidation claims would be complex and protracted and that during the time it
would take to pursue the litigation to judgment, a reconciliation of open
intercompany accounting issues could be achieved. In addition, the delay
resulting from such litigation could impact a potential sale, resulting in
overall lower recoveries to all creditors, even if substantive consolidation is
ordered. Inasmuch as the Bank Claims would be severely prejudiced by substantive
consolidation, the Debtors would not be able to argue that the benefits of
consolidation would outweigh the time and expense of an accounting
reconciliation. Further, given that specific Debtor entities are parties to
either the Senior Notes, the Credit Facility or agreements with other parties,
including the securitization Trustees and monoline insurers, the Debtors do not
believe that creditors dealt with the Debtors as a single economic unit.
However, because substantive consolidation is a discretionary remedy and there
is no conclusive decisional authority with respect to the weight to be given to
various factors, the Debtors believe the outcome of such litigation to be
uncertain and the appropriate subject of some compromise by the Banks.
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3. INTERCOMPANY FRAUDULENT TRANSFER CLAIMS
The holders of Senior Note Claims have alleged that certain
transfers made by United Companies to UC Lending and other subsidiaries were
made at times when United Companies was insolvent and without an exchange of
fair equivalent value. For example, as at December 31, 1998, United Companies
had over $200 million in cash on its balance sheet, most of which was
transferred to and utilized by subsidiaries for loan origination. United
Companies' audited financials for December 1998 show insolvency clearly as of
that date and it may be difficult to show that United Companies received fair
equivalent value for such transfer. The Debtors believe that this allegation has
merit and, if pursued, would have a high probability of success. Further, if
insolvency is established at dates earlier than December 31, 1998, the possible
recovery of alleged intercompany fraudulent transfers by United Companies could
significantly exceed $200 million. Under this theory, $200 million or more could
be reallocated from UC Lending to United Companies. Under such scenario, the
recovery on Bank Claims and General Unsecured Claims at Debtor subsidiaries
would be reduced, while recoveries to General Unsecured Creditors of United
Companies and on Senior Note Claims would increase.
C. DETERMINATION OF AMOUNTS ALLOCATED TO GENERAL UNSECURED CLAIMS
The Plan provides that General Unsecured Claims in Class 5,
which includes trade claims and Borrower Litigation Claims, among others, will
receive cash distributions of thirty-two percent (32%) of the Allowed Amount of
their Claims and a pro rata distribution of seventy percent (70%) of the
Litigation Trust Interests. The rationale for this proposed recover is discussed
below.
1. RATIONALE
The proposed distributions under the Plan to General Unsecured
Claims in Class 5 are based primarily upon the Debtors' assessment of potential
recoveries to unsecured creditors on an entity by entity basis. Although the
Debtors believe that creditors dealt with particular entities, one objective of
effecting the compromise and settlement embodied in the Plan is to provide an
overall benefit to holders of General Unsecured Claims by making distributions
on a consolidated basis, that would be more certain than and exceed what they
would receive from a liquidation by entity.
A central factor in evaluating potential recoveries from each
Debtor is the likelihood of the Banks successfully asserting their guaranty
claims against that Debtor. For settlement purposes, the Debtors assumed the
Bank Claims to be valid to the extent that proceeds of loans from the Banks were
of "value" to each subsidiary Debtor under section 548(c) of the Bankruptcy
Code. The assumed measure of that value is the gross amount of such loan
proceeds that under one theory may be traced to each Debtor. The Debtors also
measured the validity of the Bank Claims against the subsidiary Debtors based
upon the net worth of such subsidiary at the time the Bank loans were made. The
Debtors view these assumptions regarding the enforceability of the Bank Claims
to be a reasonable case scenario for the Banks; however, absent the compromise
and settlement the Banks would argue that their claims would be enforced in
their full amounts at each subsidiary.
Also considered in the settlement is the possibility that
United Companies might establish a fraudulent transfer claim against United
Lending Corp. with respect to cash advances made to United Lending Corp. when
its parent United Companies, was insolvent. Any reallocation of assets from a
subsidiary to United Companies would diminish potential Bank and unsecured
creditor recoveries at such subsidiary.
2. ALLOCATION OF DISTRIBUTIONS TO GENERAL UNSECURED CLAIMS
The allocation and recovery level proposed for General
Unsecured Claims was determined based upon an analysis of liquidation rights of
all Creditors. The value of assets available for distribution to all unsecured
creditors was determined by subtracting from total anticipated cash available
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for distribution, projected allowed amounts for claims having priority over
unsecured claims such as Administrative, Priority and Tax Claims as well as
expenses of winding down the estate. The Debtors also assumed that priority
Claims assumed by the Purchaser in the Sale Transaction would be asserted
against the Debtors.
The Debtors then calculated projected recoveries at each
Debtor assuming (1) enforcing the Bank Claims on the basis asserted by the
Debtors and (2) enforcing the Bank claims as asserted by the Banks. Assets
available for distribution at the parent company would be allocated pro rata to
the Bank Claims in the full amount of $858 million, the Senior Note Claims, the
Subordinated Note Claims, and General Unsecured Claims. The distribution
allocable to the Subordinated Note Claims would be reallocated to the Bank
Claims and the Senior Note Claims, which constitute Senior Indebtedness. The
results of these calculations and a more detailed description of the underlying
assumptions are set forth on Exhibits C-1 and C-2 hereto.
Even under the Debtors' approach to enforcing the Bank Claims,
General Unsecured Creditors at any of the entities where there are such Claims
would receive recoveries ranging from approximately twenty-one and two-tenths
percent (21.2%) to twenty-eight and two-tenths percent (28.2%), with most
Creditors receiving between twenty-one and two-tenths percent (21.2%) and
twenty-four and four-tenths percent (24.4%). If the Banks were to prevail in
asserting the full amount of their Claims at each entity, recoveries would range
from two and nine-tenths percent (2.9%) to twenty-four and seven-tenths percent
(24.7%). However, under the terms of the proposed compromise and settlement, the
Bank Claims have been compromised such that distributions under the Plan to
General Unsecured Creditors exceed the projected recoveries for such creditors
under either liquidation scenario set forth. In addition, General Unsecured
Creditors shall receive a pro rata distribution of seventy percent (70%) of the
Litigation Trust Interests and their thirty-two (32%) percent recovery provided
under the Plan eliminates, for their Class, any risk of increased claims or
diminished proceeds.
Given the foregoing, the Debtors believe that the proposed
distributions with respect to General Unsecured Claims under the Plan meet the
requirements of the Bankruptcy Code. In the event that the Plan is not
confirmed, distributions with respect to General Unsecured Claims may be
significantly less than what is proposed in the Plan. In such event, the Banks
will likely press for full enforcement of their guaranties, protracted
litigation will result with respect to the guaranties and substantive
consolidation to the detriment of asset values. Inasmuch as the Debtors believe
that it is not likely that the Debtors estates will be substantively
consolidated, recoveries on General Unsecured Claims will probably be even
smaller than set forth in the above charts given ongoing administrative expenses
which would be incurred in a litigation scenario.
THE PLAN IS ANNEXED HERETO AS EXHIBIT "A" AND IS AN INTEGRAL
PART OF THIS DISCLOSURE STATEMENT. THE SUMMARY OF THE PLAN SET FORTH BELOW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE PLAN. IN THE
EVENT OF ANY INCONSISTENCY BETWEEN THE PROVISIONS OF THE PLAN AND THE SUMMARY
CONTAINED HEREIN, THE TERMS OF THE PLAN SHALL GOVERN.
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D. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE
PLAN
1. CLASSIFICATION
The Plan divides the Claims against, and the Equity Interests
in, the Debtors into the following classes:
Unclassified - Administrative Expense Claims
Unclassified - Professional Compensation and Reimbursement Claims
Unclassified - Priority Tax Claims
Class 1 - Priority Non-Tax Claims
Class 2 - Secured Claims
Class 3 - Bank Claims
Class 4 - Senior Note Claims
Class 5 - General Unsecured Claims
Class 6 - Convenience Claims
Class 7 - Subordinated Debenture Claims
Class 8 - Subordinated Penalty Claims
Class 9 Pride Equity Interests
Class 10A - Statutorily Subordinated Claims
Class 10B - United Companies Common Equity Interests
Class 11 - Adobe Common Equity Interests
Class 12 - Adobe Financial Equity Interests
Class 13 - Ginger Mae Common Equity Interests
Class 14 - Gopher Equity Common Equity Interests
Class 15 - Pelican Common Equity Interests
Class 16 - Southern Mortgage Common Equity Interests
Class 17 - Unicor Common Equity Interests
Class 18 - United Funding Common Equity Interests
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Class 19 - United Lending Corp. Common Equity Interests
Class 20 - United Lending Group Common Equity Interests
Class 21 - United Credit Card Common Equity Interests
2. ADMINISTRATIVE EXPENSE CLAIMS
Administrative Expense Claims are costs or expenses of
administration of the Debtors' Chapter 11 Cases incurred prior to the Effective
Date and Allowed under sections 503(b) and 507(a)(1) of the Bankruptcy Code,
including (a) any actual and necessary costs and expenses of preserving the
Debtors' estates or operating the Debtors' business, (b) indebtedness or
obligations incurred or assumed by the Debtors during the Chapter 11 Cases in
connection with the conduct of their business, (c) allowances of compensation
and reimbursement of expenses to the extent Allowed by Final Orders under
section 330 or 503(b) of the Bankruptcy Code, and (d) fees or charges assessed
against the Debtors' estates under section 1930, chapter 123, title 28, United
States Code.
Generally, the Plan provides that Allowed Administrative
Expense Claims will be paid in full, in Cash, on the Effective Date or, if not
Allowed Claims at that time, on the date of allowance. Allowed Administrative
Expense Claims for liabilities or obligations incurred or assumed by the Debtors
in the ordinary course of business or liabilities arising under loans made or
advances extended to the Debtors, whether or not incurred in the ordinary course
of business, shall be assumed and paid by Reorganized UC in accordance with the
terms and conditions of the particular transaction and any agreements relating
thereto.
The Debtors estimate that the amount of Allowed Administrative
Expense Claims as of the Effective Date will aggregate approximately $16,840,000
(excluding professional fees and expenses referred to below). This estimated
amount is comprised of liabilities incurred in the ordinary course of business
by the Debtors since the Petition Date and may include amounts owed by
Affiliates of the Debtors.
3. PROFESSIONAL COMPENSATION AND REIMBURSEMENT CLAIMS
Section 503(b) of the Bankruptcy Code provides for
compensation for services rendered and reimbursement for expenses incurred by
the court-appointed professionals representing the Debtors, the Creditors'
Committee and the Equity Committee pursuant to section 330 or 331 of the
Bankruptcy Code. Section 503(b) also provides for payment to creditors and
certain other persons and entities who have made a "substantial contribution" to
a reorganization case, and to attorneys and accountants for such persons and
entities. As of the date of this Disclosure Statement, the Debtors have not been
apprised of any party's intention to make a request for payment on a
"substantial contribution" basis.
Requests for compensation and reimbursement including requests
under section 503(b), must be approved by the Bankruptcy Court after a hearing
on notice at which the Debtors and other parties in interest may participate
and, if appropriate, object.
The Plan provides that all entities awarded compensation or
reimbursement of expenses by the Bankruptcy Court in accordance with section 330
or 331 of the Bankruptcy Code or entitled to the priorities established pursuant
to section 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code,
will be paid in full, in Cash, the amounts allowed by the Bankruptcy Court (a)
on or as soon as reasonably practicable following the later of (i) the Effective
Date and (ii) the date upon which the Bankruptcy Court order allowing such Claim
becomes a Final Order, or (b) upon such other terms as may be mutually agreed
upon between such holder of an Allowed Administrative Expense Claim and the
Debtors.
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All interim and final payments to professionals for
compensation and reimbursement of expenses and all payments to reimburse
expenses of members of the Creditors' Committee and Equity Committee, if any,
will be made in accordance with the procedures established by the Bankruptcy
Code, the Bankruptcy Rules and any order of the Bankruptcy Court. The Bankruptcy
Court will review and determine all requests for compensation and reimbursement
of expenses.
The Debtors estimate that the aggregate amount of compensation
and reimbursement for court-appointed professionals remaining unpaid at the
Confirmation Date that ultimately will be allowed by the Bankruptcy Court in the
Chapter 11 Cases (other than any compensation for substantial contribution
pursuant to section 503(b) of the Bankruptcy Code) will approximate $10,160,000.
From and after the Effective Date, Reorganized UC will be
permitted to incur and pay, in the ordinary course of business, without the
necessity of any approval by the Bankruptcy Court, the professional fees earned
and expenses incurred by professionals employed by Reorganized UC, including any
such fees and expenses relating to implementation and consummation of the Plan.
4. PRIORITY TAX CLAIMS
Priority Tax Claims are Allowed Claims of governmental units
for taxes owed by the Debtors that are entitled to priority in payment pursuant
to section 507(a)(8) of the Bankruptcy Code. The taxes entitled to priority are
(a) taxes on income or gross receipts that meet the requirements set forth in
section 507(a)(8)(A), (b) property taxes meeting the requirements of section
507(a)(8)(B), (c) taxes that were required to be collected or withheld by the
Debtors and for which the Debtors are liable in any capacity as described in
section 507(a)(8)(C), (d) employment taxes on wages, salaries, or commissions
that are entitled to priority pursuant to section 507(a)(3), to the extent that
such taxes also meet the requirements of section 507(a)(8)(D), (e) excise taxes
of the kind specified in section 507(a)(8)(E), (f) customs duties arising out of
the importation of merchandise that meet the requirements of section
507(a)(8)(F), and (g) prepetition penalties relating to any of the foregoing
taxes to the extent such penalties are in compensation for actual pecuniary loss
as provided in section 507(a)(8)(G).
The Plan provides that each Allowed Priority Tax Claim, at the
option and discretion of Reorganized UC, will be paid (a) in full, in Cash, oil
the Effective Date, (b) in accordance with section 1129(a)(9)(C) of the
Bankruptcy Code, which requires deferred cash payments over a period not
exceeding six years from the date of assessment of the Claim, having a value as
of the Effective Date equal to the allowed amount of the Claim, or (c) by mutual
agreement of the holder of such Allowed Priority Tax Claim and Reorganized UC.
The Debtors estimate that Allowed Priority Tax Claims will
aggregate approximately $6,000,000.
5. PRIORITY NON-TAX CLAIMS (CLASS 1) - UNIMPAIRED
Priority Non-Tax Claims are Unsecured Claims, other than
Administrative Expense Claims and Priority Tax Claims, entitled to a priority in
payment pursuant to section 507(a) of the Bankruptcy Code. Such Claims include
Claims for (a) wages, salaries or commissions as described and limited in
section 507(a)(3), (b) contributions to employee benefit plans as described and
limited in section 507(a)(4), (c) deposits of money by individuals in connection
with the purchase, lease or rental of property or the purchase of services for
personal, family or household use as described and limited in section 507(a)(6).
Class 1 is unimpaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, each holder of an Allowed Priority Non-Tax Claim
is conclusively presumed to have accepted the Plan and may not vote with respect
thereto.
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Treatment. Unless otherwise mutually agreed upon by the holder
of an Allowed Priority Non-Tax Claim and Reorganized UC, each holder of an
Allowed Priority Non-Tax Claim will receive Cash in an amount equal to such
Allowed Priority Non-Tax Claim on the later of the Effective Date and the date
such Allowed Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim,
or as soon thereafter as is practicable.
The Debtors estimate that there will not be any Allowed
Priority Non-Tax Claims as of the Effective Date.
To insure the continuation of employee medical benefits, for a
period of eighteen months after the earlier to occur of the Effective Date or
the date on which the Debtors' servicing operations are transferred pursuant to
a Sale Transaction or otherwise, the Debtors will deposit funds necessary to
provide employee medical benefits in a manner and amount consistent with the
Debtors' medical benefits program in effect prior to the Effective Date.
From and after the Effective Date, other than with respect to
individuals with whom the Debtors have agreed to lump sum claim amounts in
respect of future retiree benefits, pursuant to section 1129(a)(13) of the
Bankruptcy Code, Reorganized UC will continue to pay all "retiree benefits," at
the level established in accordance with subsection (e)(1)(B) or (g) of section
1114 of the Bankruptcy Code, at any time prior to the Confirmation Date, and for
the duration of the period during which the Debtors have obligated themselves to
provide such benefits. As defined in section 1114(a) of the Bankruptcy Code,
retiree benefits are payments to any entity or person for the purpose of
providing or reimbursing payments for retired employees and their spouses and
dependents, for medical, surgical or hospital care benefits, or benefits in the
event of sickness, accident, disability or death under any plan, fund or program
(through the purchase of insurance or otherwise) maintained or established in
whole or part by a debtor prior to the filing of a petition for relief under
chapter 11.
6. SECURED CLAIMS (CLASS 2) - UNIMPAIRED
A Secured Claim is a Claim against the Debtors that is secured
by a Lien on Collateral or that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the value of the Collateral or to the extent
of the amount subject to setoff, as applicable, as determined in accordance with
section 506(a) of the Bankruptcy Code.
Class 2 is unimpaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, each holder of an Allowed Secured Claim is
conclusively presumed to have accepted the Plan and may not vote with respect
thereto.
Treatment. Each holder of an Allowed Secured Claim will
receive, at the election of the Debtors to be noticed to the holder on or before
the Confirmation Date, one of the following: (a) payment of such holder's
Allowed Secured Claim in full, in Cash; (b) proceeds from the sale or
disposition of the Collateral to the extent of the value of their respective
interests in such property; (c) surrender of the Collateral; or (d) such other
distributions as shall be necessary to satisfy the requirements of chapter 11 of
the Bankruptcy Code.
Although a number of Creditors have filed proofs of claim
asserting Secured Claims, the Debtors believe that few if any of such Creditors
will be found to have Allowed Secured Claims. In any event, the Debtors believe
that the amount of any Allowed Secured Claims will be immaterial in the
aggregate.
The Debtors estimate that Allowed Secured Claims will be zero.
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7. BANK CLAIMS (CLASS 3) - IMPAIRED
A Bank Claim is a Claim of the Banks arising from or related
to that certain Credit Agreement dated as of April 10, 1997, by and among the
Debtors, First Union National Bank, Morgan Stanley Trust Company of New York,
and the Banks, including, without limitation, fees and expenses associated with
rights and remedies thereunder or under the Guaranty.
Class 3 is impaired under the Plan and, pursuant to section
1126(a) of the Bankruptcy Code, is entitled to vote on the Plan.
Treatment. Commencing on the Effective Date, each holder of an
Allowed Bank Claim shall be entitled to receive distribution in an amount equal
to (a) such holder's Pro Rata Share of the Bank Cash Amount and (b) the
aggregate number of Litigation Trust Interests equal to such holder's Pro Rata
Share of the Bank Interest Amount.
Payment of Senior Creditor Cash. On the Effective Date, the
Debtors shall pay to the Agent and such holders of Allowed Bank Claims which
have incurred fees and expenses in connection with the negotiation and
preparation of the Plan, an amount equal to the fees and expenses incurred by
the Agent by and on behalf of the holders of Allowed Bank Claims and such
holders of Allowed Bank Claims, as the case may be, during the period from
Petition Date up to and including the Effective Date.
The Bank Claims shall be deemed allowed in the aggregate
amount of Eight Hundred Forty-Nine Million Nine Hundred Five Thousand One
Hundred Sixty-One Dollars and Sixty-Three Cents ($849,905,161.63) plus accrued
and unpaid interest relating to the period up to but not including the Petition
Date in the amount of Seven Million Nine Hundred Ninety One Thousand Forty Four
Dollars and Five Cents ($7,991,044.05).
Limitation on Recovery. Notwithstanding the distributions to
be made to a holder of an Allowed Bank Claim in accordance with section 7.2 of
the Plan, in the event that the sum of (a) the distributions of Bank Cash Amount
and (b) the distributions from the Litigation Trust to such holder are equal to
one hundred percent (100%) of such holder's Allowed Bank Claim, then the
Litigation Trust Interests attributable to such holder shall be deemed
redistributed to holders of Allowed Claims and Allowed Equity Interests in
accordance with the provisions of section 32.12 of the Plan and the documents,
instruments and agreements governing such Claims and Equity Interests,
including, without limitation, the contractual subordination provisions set
forth therein, and the Bankruptcy Code.
8. SENIOR NOTE CLAIMS (CLASS 4) - IMPAIRED
Senior Note Claims are Claims arising under or relating to (a)
the Senior Indenture, dated as of October 1, 1994, between United Companies, as
issuer of the Senior Debentures, and The First National Bank of Chicago, as
Senior Indenture Trustee, and as supplemented by that certain (i) First
Supplemental Indenture, dated as of November 2, 1994 and (ii) Third Supplemental
Indenture, dated as of December 17, 1996 and (b) such other document, instrument
or agreement which would constitute Senior Indebtedness, as defined in the
Subordinated Indenture, including, without limitation, the guaranty of certain
indebtedness relating to the employee stock ownership plan of United Companies.
The Debtors do not believe any Claims exist in Class 4 other than those arising
under the Senior Note Indenture and the guaranty of certain indebtedness
relating to the employee stock ownership plan of United Companies.
Senior Note Claims are impaired under the Plan, and pursuant
to section 1126(a) of the Bankruptcy Code, are entitled to vote on the Plan.
Treatment. Subject to compliance with the surrender of
certificate requirement set forth below, each holder of an Allowed Senior Note
Claim will receive distributions in an amount equal to: (i) such holder's Pro
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Rata Share of the Senior Note Cash Amount and (ii) the aggregate number of
Litigation Trust Interests equal to such holder's Pro Rata Share of the Senior
Note Interest Amount.
Payment of Senior Creditor Cash. On the Effective Date, the
Debtors shall pay to the Senior Indenture Trustee and such holders of Allowed
Senior Note Claims arising under the Senior Notes which have incurred fees and
expenses in connection with the negotiation and preparation of the Plan, an
amount equal to the fees and expenses incurred by the Senior Indenture Trustee
by and on behalf of holders of Allowed Senior Note Claims and such holders of
Allowed Senior Note Claims, as the case may be, during the period from the
Petition Date up to and including the Effective Date.
Payments to be Made to Senior Indenture Trustee. The payments
and distributions to be made under the Plan to holders of Allowed Senior Note
Claims arising under the Senior Note Indenture shall be made to the Senior
Indenture Trustee, which, subject to any rights or claims of the Senior
Indenture Trustee (such as claims for fees and reimbursement of expenses,
including the fees and expenses of its advisors and counsel) under the Senior
Note Indenture, shall transmit such payments and distributions to holders of
such Allowed Senior Note Claims. All payments to holders of Allowed Senior Note
Claims arising under the Senior Note Indenture shall only be made to such
Creditors after the surrender by such Creditors of the certificates representing
such Senior Note Claim, or in the event that such certificate is lost, stolen,
mutilated or destroyed, delivery of evidence satisfactory to the Senior
Indenture Trustee and Reorganized UC of the loss, theft, mutilation or
destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Senior Indenture Trustee and Reorganized UC, from a surety
company satisfactory to the Senior Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Senior Indenture Trustee shall cancel such
Senior Notes and deliver such cancelled Senior Notes to Reorganized UC, or
otherwise dispose of same as Reorganized UC may reasonably request. As soon as
practicable after (a) surrender of certificates evidencing Allowed Senior Note
Claims or (b) delivery of the affidavit or bond, the Senior Indenture Trustee
shall distribute to the holders thereof such holder's Pro Rata Share in
accordance with the respective rights of the Senior Indenture Trustee and such
holder under the terms of the Senior Notes Indenture. If such Creditor has not
complied with the provisions hereof within one (1) year following the Effective
Date, such Creditor shall be deemed to have no further Claim against the
Debtors, the Debtors' estates or Reorganized UC. As soon as practicable after
the date which is one (1) year following the Effective Date of the Plan, the
Senior Indenture Trustee shall deliver to Reorganized UC the distributions which
a Creditor holding an Allowed Senior Note Claim arising under the Senior Note
Indenture would have received had such Creditor surrendered such certificate
evidencing such Senior Note Claim to Reorganized UC, and, upon such delivery,
the Senior Indenture Trustee shall have no further responsibility with respect
to the Senior Indenture or the provisions of the Plan.
Closing of Transfer Ledgers for Senior Notes. At the close of
business on the Effective Date, the transfer ledgers for the Senior Notes will
be closed, and thereafter there will be no further registrations or other
changes in the holders of any of the Senior Notes on the books of United
Companies (or of any indenture trustee, transfer agents or registrars it may
have employed in connection therewith), and the Debtors will have no obligation
to recognize any transfer of the Senior Notes occurring thereafter (but be
entitled instead to recognize and deal with, for all purposes under the Plan,
except as otherwise provided herein, only those holders reflected on its books
as of the Effective Date).
Limitation on Recovery. Notwithstanding the distributions to
be made to a holder of an Allowed Senior Note Claim in accordance with section
8.2 of the Plan, in the event that the sum of (a) the distributions of Senior
Note Cash Amount and (b) the distributions from the Litigation Trust to such
holder are equal to one hundred percent (100%) of such holder's Allowed Senior
Note Claim, then the Litigation Trust Interests attributable to such holder
shall be deemed redistributed to holders of Allowed Claims and Equity Interests
in accordance with the provisions of section 32.12 of the Plan and the
documents, instruments and agreements governing such Claims and Equity
Interests, including, without limitation, the contractual subordination
provisions set forth therein, and the Bankruptcy Code.
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The Plan provides for the deemed allowance of certain Senior
Note Claims in the amount of One Hundred Twenty-Five Million Dollars
($125,000,000) for the 9.35% Notes and One Hundred Million Dollars
($100,000,000) for the 7.7% Notes, plus, in each case, accrued and unpaid
interest relating to the period up to, but not including, the Petition Date.
9. GENERAL UNSECURED CLAIMS (CLASS 5) - IMPAIRED
General Unsecured Claims are Claims that are not Secured
Claims, exclusive of Intercompany Claims, Administrative Expense Claims,
Priority Tax Claims, Priority Non-Tax Claims, Bank Claims, Senior Note Claims,
Subordinated Debenture Claims and Convenience Claims. General Unsecured Claims
do include Borrower Litigation Claims.
General Unsecured Claims are impaired under the Plan, and
pursuant to section 1126(a) of the Bankruptcy Code, are entitled to vote on the
Plan.
Treatment of General Unsecured Claims. Commencing on the
Effective Date, each holder of an Allowed General Unsecured Claim shall be
entitled to receive distributions (a) in an aggregate amount equal to thirty-two
percent (32%) of such holder's Allowed General Unsecured Claim and (b) equal to
such holder's Pro Rata Share of the General Unsecured Interest Amount. The
receipt and acceptance of distributions under the Plan by a holder of a Borrower
Litigation Claim or its successors or assigns shall constitute a full release
and waiver of any and all claims which have been or may have been asserted for
actions arising from or related to the origination or servicing of loans, moneys
advanced or mortgages issued by the Debtors, including, without limitation,
claims against the Debtors' successors and assigns for actions arising from or
related to the period prior to the Effective Date.
Allowed Claims Of One Thousand Dollars or More. Any holder of
an Allowed General Unsecured Claim whose Allowed General Unsecured Claim is more
than One Thousand Dollars ($1,000.00), and who elects to reduce the amount of
such Allowed Claim to One Thousand Dollars ($1,000.00), shall, at such holder's
option, be entitled to receive, based on such Allowed Claim as so reduced,
distributions pursuant to Article X of the Plan, in full settlement,
satisfaction, release and discharge of such Allowed Claim. Such election must be
made on the Ballot and be received by the Debtors on or prior to the Ballot
Date. Any election made after the Ballot Date shall not be binding upon the
Debtors unless the Ballot Date is expressly waived, in writing, by the Debtors.
Optional Arbitration of Borrower Litigation Claims. In the
event that a Borrower Litigation Claim is not resolved prior to the Effective
Date and the holder thereof does not receive distributions in accordance with
the provisions of section 9.1 of the Plan, such holder's Borrower Litigation
Claim, wherever located, shall, at the election of such holder, be either (a)
determined by the Bankruptcy Court in accordance with the provisions of Article
XXVI of the Plan or (b) transferred to an arbitration panel located in or
associated with the United States District Court for the Middle District of
Louisiana for binding arbitration to determine the validity and amount of such
Borrower Litigation Claim and such arbitration panel shall have sole and
exclusive jurisdiction to determine the validity and amount of such Borrower
Litigation Claim; provided, however, nothing contained herein limits, or in any
way is intended to limit, Reorganized UC's ability to compromise and settle any
Borrower Litigation Claim in accordance with the provisions of section 26.1 of
the Plan.
Foreclosure Actions. To the extent that the holder of a
Borrower Litigation Claim (i) has asserted such Borrower Litigation Claim in the
context of, and as a counterclaim to, a foreclosure action commenced by the
Debtors or their successors and assigns and (ii) receives a distribution under
the Plan pursuant to sections 9.1 or 9.4 thereof, such holder of a Borrower
Litigation Claim shall be deemed to have received such distribution in full and
complete satisfaction of any Borrower Litigation Claim that such holder may have
against any of the Debtors and their successors and assigns and in consideration
for the entry of a judgment in favor of the Debtors or their successors and
assigns in connection with such foreclosure action.
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The aggregate amount of Borrower Litigation Claims is
estimated to be $14,000,000.
Limitation on Recovery. Notwithstanding the distributions to
be made to a holder of an Allowed General Unsecured Claim in accordance with
section 9.1 of the Plan, in the event that the sum of (a) the distributions of
Cash in accordance with section 9.1 of the Plan and (b) the distributions from
the Litigation Trust to such holder are equal to one hundred percent (100%) of
such holder's Allowed General Unsecured Claim, then the Litigation Trust
Interests distributed to such holder shall be deemed redistributed to holders of
Allowed Claims and Allowed Equity Interests in accordance with the provisions of
section 32.12 of the Plan and the documents, instruments and agreements
governing such Claims and Equity Interests, including, without limitation, the
contractual subordination provisions set forth therein, and the Bankruptcy Code.
10. CONVENIENCE CLAIMS (CLASS 6) - IMPAIRED
A Convenience Claim is any Claim, other than a Borrower
Litigation Claim, less than $1,000 in amount or greater than $1,000 but with
respect to which the holder thereof voluntarily reduces the Claim to $1,000.
Class 6 is impaired under the Plan, and pursuant to section
1126(a) of the Bankruptcy Code, is entitled to vote on the plan.
Treatment. On the Effective Date, each holder of an Allowed
Convenience Claim will receive Cash in an amount equal to one hundred percent
(100%) of such Allowed Convenience Claim.
The Debtors believe that there are Convenience Claims in the
approximate aggregate amount of $243,000.
11. SUBORDINATED DEBENTURE CLAIMS (CLASS 7) - IMPAIRED
Subordinated Debenture Claims are arising under or relating to
(a) the Subordinated Indenture, dated as of February 19, 1997, between United
Companies, as issuer of the Subordinated Debentures, and HSBC Bank, USA, as the
Subordinated Successor Trustee, and as supplemented by that certain First
Supplemental Indenture, dated as of June 20, 1997 and (b) the Lending
Subordinated Indenture.
Allowance of Certain Subordinated Debenture Claims: On the
Effective Date, the Subordinated Debenture Claims arising under or relating to
the Subordinated Debentures shall be deemed allowed in the aggregate amount of
One Hundred Fifty Million Dollars ($150,000,000.00) plus accrued and unpaid
interest relating to the period up to but not including the Petition Date.
Treatment. On the Effective Date, and provided acceptance of
the Plan by Classes 3, 4 and 7 of the Plan in accordance with the provisions of
section 1126 of the Bankruptcy Code, each holder of an Allowed Subordinated
Debenture Claim shall be entitled to receive such holder's Pro Rata Share of two
million (2,000,000) Litigation Trust Interests.
No Distribution: Except as provided in sections 7.4 and 8.6 of
the Plan, in the event that any of Classes 3, 4 and 7 does not accept the Plan
in accordance with the provisions of section 1126 of the Bankruptcy Code, no
distribution of any kind shall be made to holders of Allowed Subordinated
Debenture Claims and the distribution of Litigation Trust Interests that
otherwise would have been distributed to such holders shall be distributed to
holders of Allowed Bank Claims, Allowed Senior Note Claims and Allowed General
Unsecured Claims in accordance with the provisions of Articles VII, VIII and IX
of the Plan,
Contingent Distribution/Limitation on Recovery. In the event
that (a) Litigation Trust Interests are deemed redistributed to a holder of an
Allowed Subordinated Debenture Claim in accordance with the provisions of
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sections 7.4, 8.6 and 9.5 of the Plan and (b) the sum of the distributions from
the Litigation Trust to such holder are equal to one hundred percent (100%) of
such holder's Allowed Subordinated Debenture Claim, then the Litigation Trust
Interests distributable to such holder shall be deemed redistributed to holders
of Allowed Claims and Equity Interests in accordance with the provisions of
section 32.12 of the Plan and the documents, instruments and agreements
governing such Claims and Equity Interests, including, without limitation, the
contractual subordination provisions set forth therein, and the Bankruptcy Code.
Payments to be Made to Subordinated Indenture Trustee: The
payments and distributions to be made under the Plan to holders of Allowed
Subordinated Debenture Claims arising under the Subordinated Indenture shall be
made to the Subordinated Indenture Trustee, which, subject to any rights or
claims of Subordinated Indenture Trustee (such as claims for fees and
reimbursement of expenses, including the fees and expenses of its advisors and
counsel) under the Subordinated Indenture, shall transmit such payments and
distribution to holders of such Allowed Subordinated Debenture Claims. All
payment to holders of Allowed Subordinated Debenture Claims arising under the
Subordinated Indenture shall only be made to such Creditors after the surrender
by such Creditor of the certificates representing such Subordinated Debenture
Claim, or in the event that such certificate is lost, stolen, mutilated or
destroyed, delivery of evidence satisfactory to the Subordinated Indenture
Trustee and Reorganized UC of the loss, theft, mutilation or destruction of such
certificate or, in Reorganized UC's sole discretion, an affidavit of such
Creditor in accordance with Article 8 of the Uniform Commercial Code, or a
surety bond, the amount and form of which shall be satisfactory to the
Subordinated Indenture Trustee and Reorganized UC, from a surety company
satisfactory to the Subordinated Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Subordinated Indenture Trustee shall cancel
such Subordinated Debentures and deliver such cancelled Subordinated Debentures
to Reorganized UC or otherwise dispose of same as Reorganized UC may reasonably
request. As soon as practicable after (a) surrender of certificates evidencing
Subordinated Debenture Claims or (b) delivery of the affidavit or bond, the
Subordinated Indenture Trustee shall distribute to the holders thereof such
holder's Pro Rata Share in accordance with the respective rights of the
Subordinated Indenture Trustee and such holder under the terms of the
Subordinated Indenture. If such Creditor has not complied with the provisions
hereof within one (1) year following the Effective Date, such Creditor shall be
deemed to have no further Claim against the Debtors, the Debtors' estates or
Reorganized UC. As soon as practicable after the date which is one (1) year
following the Effective Date of the Plan, the Subordinated Indenture Trustee
shall deliver to Reorganized UC the distributions which a Creditor holding an
Allowed Subordinated Debenture Claim arising under the Subordinated Indenture
would have received had such Creditor surrendered such certificate evidencing
such Subordinated Debenture Claim to Reorganized UC, and, upon such delivery,
the Subordinated Indenture Trustee shall have no further responsibility with
respect to the Subordinated Indenture or the provisions of the Plan.
12. SUBORDINATED PENALTY CLAIMS (CLASS 8) - IMPAIRED
Subordinated Penalty Claims are Claims for fines, penalties,
forfeitures, or for multiple, exemplary, or punitive damages, or other
non-pecuniary, direct or non-proximate damages, including, without limitation,
those arising from or related to the Debtors' loan origination and servicing
operations.
Treatment of Subordinated Penalties Claims: Commencing on the
Effective Date, each holder of an Allowed Subordinated Penalty Claim shall be
entitled to receive such holder's Pro Rata Share of Litigation Trust Interests
to be deemed redistributed in accordance with the provisions of sections 7.4,
8.6, 9.5 and 11.4 of the Plan.
Contingent Distribution/Limitation on Recovery: In the event
that (a) Litigation Trust Interests are deemed redistributed to a holder of an
Allowed Subordinated Penalty Claim in accordance with the provisions of sections
7.4, 8.6, 9.5, 11.4 and 12.1 of the Plan and (b) the sum of the distributions
from the Litigation Trust to such holder are equal to one hundred percent (100%)
of such holder's Allowed Subordinated Penalty Claim, then the Litigation Trust
Interests distributable to such holder shall be deemed redistributed to holders
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of Allowed Claims and Allowed Equity Interests in accordance with the provisions
of section 32.12 of the Plan and the documents, instruments and agreements
governing such Claims and Equity Interests, including, without limitation, the
contractual subordination provisions set forth therein, and the Bankruptcy Code.
13. PRIDE EQUITY INTERESTS (CLASS 9) - IMPAIRED
A Pride Equity Interest is an Equity Interest represented by
one of the 1,514,164 issued and outstanding shares of Preferred Redeemable
Increased Dividend Equity Securitiessm, 63% PRIDESsm, Convertible Preferred
Stock, par value $2.00 per share, of United Companies as of the Petition Date.
Pride Equity Interests are Allowed Equity Interests if and to
the extent registered in the stock transfer records maintained by or on behalf
of United Companies.
Conversion of Pride Equity Interests: On the Effective Date,
each Pride Equity Interest shall be deemed to be converted to two (2) shares of
common stock of United Companies.
Treatment of Pride Equity Interests: On the Effective Date,
and provided acceptance of the Plan by Classes 3, 4, 5, 6, 7, 8, 9 and 10 of the
Plan in accordance with the provisions of section 1126 of the Bankruptcy Code,
each holder of an Allowed Pride Equity Interest shall receive such holder's Pro
Rata Share of distributions in accordance with provisions of section 14.3 of the
Plan.
No Distribution: Except as provided in sections 7.4, 8.6, 9.5,
11.4 and 12.2 of the Plan, in the event that any of Classes 3, 4, 5, 6, 7, 8, 9
and 10 does not accept the Plan in accordance with the provisions of section
1126 of the Bankruptcy Code, no distribution of any kind shall be made to
holders of Allowed Pride Equity Interests and the distribution of Litigation
Trust Interests that otherwise would have been distributed to such holders shall
be distributed to holders of Allowed Bank Claims, Allowed Senior Note Claims and
Allowed General Unsecured Claims in accordance with the provisions of Articles
VII, VIII and IX of the Plan.
On the Effective Date, all Pride Equity Interests will be
deemed extinguished, and the certificates and all other documents representing
such Equity Interests will be deemed cancelled and of no force and effect.
14. STATUTORILY SUBORDINATED CLAIMS (CLASS 10A) - IMPAIRED
Statutorily Subordinated Claims are Claims that are subject to
subordination under section 510(b) of the Bankruptcy Code or otherwise,
including, without limitation, any and all Claims of a holder or former holder
of an Equity Interest for rescission of or damage from the purchase or sale of
an Equity Interest arising from or relating to the Debtors' financial statements
and the accounting practices associated therewith.
Treatment of Statutorily Subordinated Claims. On the Effective
Date, and provided acceptance of the Plan by Classes 3, 4, 5, 6, 7, 8, 9 and 10
of the Plan in accordance with the provisions of section 1126 of the Bankruptcy
Code, each holder of an Allowed Statutorily Subordinated Claim shall receive
such holder's Pro Rate Share of the Statutorily Subordinated Claim Percentage of
one million (1,000,000) Litigation Trust Interests.
No Distribution. Except as provided in sections 7.4, 8.6, 9.5,
11.4 and 12.2 of the Plan, in the event that any of Classes 3, 4, 5, 6, 7, 8, 9
and 10 does not accept the Plan in accordance with the provisions of section
1126 of the Bankruptcy Code, no distribution of any kind shall be made to
holders of Allowed Statutorily Subordinated Claims and the distribution of
Litigation Trust Interests that otherwise would have been distributed to such
holders shall be distributed to holders of Allowed Bank Claims, Allowed Senior
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Note Claims and Allowed General Unsecured Claims in accordance with the
provisions of Articles VII, VIII and IX of the Plan.
Contingent Distribution/Limitation on Recovery. In the event
that (a) Litigation Trust Interests are deemed redistributed to a holder of an
Allowed Statutorily Subordinated Claim in accordance with the provisions of
sections 7.4, 8.6, 9.5 and 11.4 of the Plan and (b) the sum of the distributions
from the Litigation Trust to such holder are equal to one hundred percent (100%)
of such holder's Allowed Statutorily Subordinated Claim, then the Litigation
Trust Interests distributable to such holder shall be deemed redistributed to
holders of Allowed United Companies Equity Interests in accordance with the
provisions of section 32.12 of the Plan and the documents, instruments and
agreements governing such Equity Interests, including, without limitation, the
contractual subordination provisions set forth therein, and the Bankruptcy Code.
15. UNITED COMPANIES COMMON EQUITY INTERESTS (CLASS 10B) -
IMPAIRED
United Companies Common Equity Interests are Common Equity
Interests in United Companies, which consist of 29,334,893 issued and
outstanding shares of common stock or any interest or right to convert into such
an equity interest or acquire any equity interest.
United Companies Common Equity Interests are Allowed Equity
Interests if and to the extent registered in the stock transfer records
maintained by or on behalf of United Companies.
Treatment of United Companies Common Equity Interests. On the
Effective Date, and subject to acceptance of the Plan by Classes 3, 4, 5, 6, 7,
8, 9 and 10 of the Plan in accordance with the provisions of section 1126 of the
Bankruptcy Code, each holder of an Allowed United Companies Common Equity
Interests shall receive such holder's Pro Rata Share of the Equity Interest
Percentage of one million (1,000,000) Litigation Trust Interests.
Cancellation of Existing Equity Interests. On the Effective
Date, all United Companies Equity interests shall be deemed extinguished and the
certificates and all other documents representing such Equity Interests shall be
deemed cancelled and of no force and effect.
No Distribution. Notwithstanding anything contained in the
Plan to the contrary, in the event that any of Classes 3, 4, 5, 6, 7, 8, 9 and
10 does not accept the Plan in accordance with the provisions of section 1126 of
the Bankruptcy Code, no distribution of any kind shall be made to holders of
Allowed Statutorily Subordinated Claims or Allowed United Companies Common
Equity Interests and the distribution of Litigation Trust Interests that
otherwise would have been distributed to such holders shall be distributed to
holders of Allowed Bank Claims, Allowed Senior Note Claims and Allowed General
Unsecured Claims in accordance with the provisions of Articles VII, VIII and IX
of the Plan.
Contingent Distribution/Limitation on Recovery.
Notwithstanding anything contained herein to the contrary, in the event that (a)
Litigation Trust Interests are deemed redistributed to a holder of an Allowed
Statutorily Subordinated Claim in accordance with the provisions of sections
7.4, 8.6, 9.5, 11.2 and 12.2 of the Plan and (b) the sum of the distributions
from the Litigation Trust to such holder are equal to one hundred percent (100%)
of such holder's Allowed Statutorily Subordinated Claim, then the Litigation
Trust Interests distributable to such holder shall be deemed redistributed to
holders of Allowed United Companies Equity Interests in accordance with the
provisions of section 32.12 of the Plan and the documents, instruments and
agreements governing such Equity Interests, including, without limitation, the
contractual subordination provisions set forth therein, and the Bankruptcy Code.
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16. ADOBE COMMON EQUITY INTERESTS (CLASS 11) - IMPAIRED
Adobe Common Equity Interests are Common Equity Interests in
Adobe, which are held by Pelican.
Class 11 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Adobe Common Equity Interests
is conclusively presumed to have rejected the Plan and may not vote with respect
thereto.
Cancellation of Adobe Common Equity Interest. On the Effective
Date, (a) all Adobe Common Equity Interests shall be deemed extinguished and the
certificates and all other documents representing such Equity Interests shall be
deemed cancelled and of no force and effect and (b) the Plan Administrator shall
administer the assets of such Entity in accordance with the provisions of
Article XXXV of the Plan; provided, however, that, in the event that the
Alternative Residual Sale Transaction is consummated through a stock purchase
agreement, the provisions of section 36.3 of the Plan shall apply and the Adobe
Common Equity Interests shall be transferred to the relevant purchaser in
accordance with the Alternative Residual Sale Transaction.
17. ADOBE FINANCIAL COMMON EQUITY INTERESTS (CLASS 12) - IMPAIRED
Adobe Financial Common Equity Interests are Common Equity
Interests in Adobe Financial, which are held by Adobe.
Class 12 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Adobe Financial Common Equity
interests is conclusively presumed to have rejected the Plan and may not vote
with respect thereto.
Cancellation of Adobe Financial Common Equity Interest: On the
Effective Date, (a) all Adobe Financial Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan; provided, however, that in the
event that the Alternative Residual Sale Transaction is consummated through a
stock purchase agreement, the provisions of section 37.3 of the Plan shall apply
and the Adobe Financial Common Equity Interests shall be transferred to the
relevant purchaser in accordance with the Alternative Residual Sale Transaction.
18. GINGER MAE COMMON EQUITY INTERESTS (CLASS 13) - IMPAIRED
Ginger Mae Common Equity Interests are Common Equity Interests
in Ginger Mae, which are held by United Lending Group.
Class 13 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Ginger Mae Common Equity
Interests is conclusively presumed to have rejected the Plan and may not vote
with respect thereto.
Cancellation of Ginger Mae Common Equity Interests. On the
Effective Date, (a) all Ginger Mae Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan.
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19. GOPHER EQUITY COMMON EQUITY INTERESTS (CLASS 14) - IMPAIRED
Gopher Equity Common Equity Interests are Common Equity
Interests in Gopher Equity, which are held by United Funding.
Class 14 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Gopher Equity Common Equity
Interests is conclusively presumed to have rejected the Plan and may not vote
with respect thereto.
Cancellation of Gopher Equity Common Equity Interests. On the
Effective Date, (a) all Gopher Equity Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan; provided, however, that, in
the event that the Alternative Residual Sale Transaction is consummated through
a stock purchase agreement, the provisions of section 37.3 of the Plan shall
apply and the Gopher Equity Common Equity Interests shall be transferred to the
relevant purchaser in accordance with the Alternative Residual Sale Transaction.
20. PELICAN COMMON EQUITY INTERESTS (CLASS 15) - IMPAIRED
Pelican Common Equity Interests are Common Equity Interests in
Pelican, which are held by United Lending Corp.
Class 15 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Pelican Common Equity
Interests is conclusively presumed to have rejected the Plan and may not vote
with respect thereto.
Cancellation of Pelican Common Equity Interests. On the
Effective Date, (a) all Pelican Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan; provided, however, that, in
the event that the Alternative Residual Sale Transaction is consummated through
a stock purchase agreement, the provisions of section 37.3 of the Plan shall
apply and the Pelican Common Equity Interests shall be transferred to the
relevant purchaser in accordance with the Alternative Residual Sale Transaction.
21. SOUTHERN MORTGAGE COMMON EQUITY INTERESTS (CLASS 16) -
IMPAIRED
Southern Mortgage Common Equity Interests are Common Equity
Interests in Southern Mortgage, which are held by United Lending Group.
Class 16 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Southern Mortgage Common
Equity Interests is conclusively presumed to have rejected the Plan and may not
vote with respect thereto.
Cancellation of Southern Mortgage Common Equity Interests. On
the Effective Date, (a) all Southern Mortgage Common Equity Interests shall be
deemed extinguished and the certificates and all other documents representing
such Equity Interests shall be deemed cancelled and of no force and effect and
(b) the Plan Administrator shall administer the assets of such Equity in
accordance with the provisions of Article XXXVI of the Plan.
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22. UNICOR COMMON EQUITY INTERESTS (CLASS 17) - IMPAIRED
Unicor Common Equity Interests are Common Equity Interests in
Unicor, which are held by United Lending Group.
Class 17 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the Unicor Common Equity Interests
is conclusively presumed to have rejected the Plan and may not vote with respect
thereto.
Cancellation of Unicor Common Equity Interests. On the
Effective Date, (a) all Unicor Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan.
23. UNITED FUNDING COMMON EQUITY INTERESTS (CLASS 18) - IMPAIRED
United Funding Common Equity Interests are Common Equity
Interests in United Funding, which are held by United Companies.
Class 18 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the United Funding Common Equity
Interests is conclusively presumed to have rejected the Plan and may not vote
with respect thereto.
Cancellation of United Funding Common Equity Interests. On the
Effective Date, (a) all United Funding Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI of the Plan.
24. UNITED LENDING CORP. COMMON EQUITY INTERESTS (CLASS 19) -
IMPAIRED
United Lending Corp. Common Equity Interests are Common Equity
Interests in United Lending Corp., which are held by United Companies Lending
Group.
Class 19 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the United Lending Corp. Common
Equity Interests is conclusively presumed to have rejected the Plan and may not
vote with respect thereto.
Cancellation of United Lending Corp. Common Equity Interests.
On the Effective Date, (a) All United Lending Corp. Common Equity Interests
shall be deemed extinguished and the certificates and all other documents
representing such Equity Interests shall be deemed cancelled and of no force and
effect and (b) the Plan Administrator shall administer the assets of such Entity
in accordance with the provisions of Article XXXVI of the Plan; provided ,
however, that, in the event that an Alternative Residual Sale Transaction occurs
through consummation of a stock purchase agreement, at the discretion of the
highest or best offeror, (1) the Equity Interests represented by United Lending
Corp. Common Equity Interests shall be extinguished and the certificates and all
other documents representing such Equity Interests shall be deemed cancelled and
of no force and effect and (2) the certificates representing Reorganized UC
Lending Common Stock shall be issued to such higher or better offeror in
accordance with the terms and conditions of the Alternative Residual Sale
Agreement.
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25. UNITED COMPANIES LENDING GROUP COMMON EQUITY INTERESTS (CLASS
20) - IMPAIRED
United Companies Lending Group Common Equity Interests are
Common Equity Interests in United Companies Lending Group, which are held by
United Companies.
Class 20 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the United Companies Lending Group
Common Equity Interests is conclusively presumed to have rejected the Plan and
may not vote with respect thereto.
Cancellation of United Lending Group Common Equity Interests.
On the Effective Date, (a) all United Lending Group Common Equity Interests
shall be deemed extinguished and the certificates and all other documents
representing such Equity Interests shall be deemed cancelled and of no force and
effect and (b) the Plan Administrator shall administer the assets of such Entity
in accordance with the provisions of Article XXXVI of the Plan.
26. UNITED CREDIT CARD COMMON EQUITY INTERESTS (CLASS 21) -
IMPAIRED
United Credit Card Common Equity Interests are Common Equity
Interests in United Credit Card, which are held by United Companies.
Class 21 is impaired under the Plan, and pursuant to section
1126(f) of the Bankruptcy Code, the holder of the United Credit Card Common
Equity Interests is conclusively presumed to have rejected the Plan and may not
vote with respect thereto.
Cancellation of United Credit Card Common Equity Interests. On
the Effective Date, (a) all United Credit Card Common Equity Interests shall be
deemed extinguished and the certificates and all other documents representing
such Equity Interests shall be deemed cancelled and of no force and effect and
(b) the Plan Administrator shall administer the assets of such Entity in
accordance with the provisions of Article XXXVI of the Plan.
E. REORGANIZED UC MATTERS
1. BOARD OF DIRECTORS OF REORGANIZED UC
On the Effective Date, the board of directors of Reorganized
UC shall be comprised of the Plan Administrator and such other individuals
designated by the Plan Administrator, all of which shall be disclosed prior to a
hearing to consider approval of a disclosure statement pursuant to section 1121
of the Bankruptcy Code.
2. AMENDED ARTICLES OF INCORPORATION AND BY-LAWS
The articles of incorporation and the by-laws of the Debtors
will be amended as of the Effective Date to provide as substantially set forth
in the Reorganized UC Certificate of Incorporation and the Reorganized UC
By-laws.
3. CORPORATE ACTION
The adoption of the Reorganized UC Certificate of
Incorporation and the Reorganized UC Bylaws will be authorized and approved in
all respects as of the Effective Date, without further action under applicable
law, regulation, order or rule, including any action by the stockholders of the
Debtors or of Reorganized UC.
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The cancellation of all Equity Interests, the issuance of
Reorganized UC Common Stock, and other matters provided under the Plan involving
the corporate structure of Reorganized UC or corporate action by Reorganized UC
will be deemed to have occurred, be authorized and be in effect from and after
the Effective Date without farther action under applicable law, regulation,
order or rule, including any action by the stockholders of the Debtors or of
Reorganized UC.
4. MANAGEMENT
As of the date hereof, the following individuals serve as the
senior officers of United Companies, in the positions indicated:
LAWRENCE J. RAMAEKERS Chief Executive Officer (10/99)
Chief Operating Officer (7/99)
Mr. Ramaekers is a principal of JA&A. He has
20 years of experience in the daily
operation and management of numerous
companies in chapter 11, including Color
Tile, Inc., Cardinal Industries, Inc., Fred
Sanders, and Phoenix Steel. Mr. Ramaekers'
background also includes 42 years of
management positions for large public and
private corporations, including National Car
Rental System, Inc., Koepplinger's Bakery,
Procter & Gamble, The Stroh Brewery Company,
and Coca-Cola Bottling Company-Detroit. He
has held the titles of Chief Executive
Officer, President Chief Operating Officer,
Chief Financial Officer and Director of
Corporate Planning of many companies. Mr.
Ramaekers has announced his intention to
retire from all positions at the Debtors
upon the Effective Date of the Plan.
REBECCA A. ROOF Chief Financial Officer (10/99)
Ms. Roof is associated with JA&A. She has
extensive experience in crisis management
and restructuring. She has served as Vice
President and Chief Financial Officer of a
Houston-based oilfield services company,
Chief Financial Officer of a Houston-based
distributor and retailer of aftermarket auto
parts, and interim Chief Financial Officer
and Deputy Restructuring Officer for a
Pennsylvania-based teaching hospital.
SHERRY E. ANDERSON Senior Vice President and
Secretary (6/15/92)
Ms. Anderson has been affiliated with United
Companies for approximately 20 years, having
joined in 1980 as Assistant Treasurer. In
1984, Ms. Anderson was named Controller and
in 1992 became Secretary. During her
employment with United Companies, Ms.
Anderson's responsibilities have included
preparation and coordination of filings with
the Securities and Exchange Commission,
external financial reporting, tax and
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accounting matters and maintenance of
corporate records. Ms. Anderson is a
graduate of Louisiana State University with
a bachelors degree in accounting and is a
certified public accountant. She is a member
of the AICPA and the Louisiana Society of
CPAs.
JESSE O. GRIFFIN Corporate Controller (7/l/92)
Senior Vice President and
Director of Auditing Services (7/22/91)
Mr. Griffin has overall responsibility for
the accounting sections and external
reporting of United Companies. His duties
include responsibility for staffing and
structuring the accounting department,
implementation of accounting practices and
evaluation of current accounting procedures.
Mr. Griffin is a Certified Public Accountant
with over 20 years public accounting
experience with Deloitte & Touche prior to
joining United Companies in June 1991.
PAUL E. KIRK Senior Vice President (3/l/96)
Mr. Kirk is senior vice president of United
Companies and president of subsidiaries:
United Communications Corporation of
Louisiana, Inc. (UCCoLa) and UC
Communications, Inc. Mr. Kirk has 17 years
experience with United Companies in the
areas of telecommunication and support
services. He is responsible for the overall
operations of UCCoLA and long-term strategic
planning as well as overseeing information
technology, purchasing, facilities and the
distribution center. A graduate of Louisiana
State University, Mr. Kirk received his
degree in Industrial Technology. He started
with United Companies in 1983 as facilities
manager. In 1984, Mr. Kirk started United
Communications Corporation of Louisiana,
Inc., a shared tenant services company in
United Plaza Office park and was named
president of UCCoLA in 1986. He was named
senior vice president of United Companies in
1997 and information technology director in
1999.
JOEL G. SWETNAM Senior Vice President and
Director of Financial Planning (12/1/96)
Mr. Swetnam has been affiliated with United
Companies for 11 years since 1988. He is a
graduate of Auburn University with a
bachelors degree in Finance (1980) and a
masters of business administration (1982).
Mr. Swetnam joined AmBank, a financial
institution, in 1983 wherein his principal
duties were managing the corporate financial
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planning and asset/liability management
activities of the company. He also acted as
secretary to the asset/liability policy
committee and as chairman of the
asset/liability support committee. Mr.
Swetnam's principal responsibilities with
United Companies within the financial
function have been to direct the long-term
corporate financial planning activities with
executive management, home-equity and
manufactured housing securitization
structures including the valuation of
interest-only and residual certificates,
alternative capital structures, new business
ventures, treasury planning, investment
portfolio analyses and profitability
measurement of various mortgage products.
While the Debtors do not anticipate that there will be a
change in the above-listed management personnel, there can be no assurance that
such personnel will not be replaced or removed.
F. SECURITIES TO BE ISSUED PURSUANT TO PLAN
1. REORGANIZED UC COMMON STOCK
Pursuant to the Plan, on the Effective Date, 5,000,000 shares
of Reorganized UC Common Stock will be authorized under Reorganized UC's
Certificate of Incorporation. Of such authorized shares, 1,000 shares,
representing all of the issued and outstanding shares of Reorganized UC Common
Stock, will be distributed to the Plan Administrator. Each share of Reorganized
UC Common Stock will have such rights with respect to dividends, liquidation,
voting and other matters as are provided for by applicable nonbankruptcy law or
the Reorganized UC Certificate of Incorporation and the Reorganized UC By-laws.
2. SECURITIES LAW MATTERS
Section 1145(a) of the Bankruptcy Code generally exempts from
such registration the issuance of securities if the following conditions are
satisfied: (i) the securities are issued by a debtor (or its successor) under a
plan of reorganization; (ii) the recipients of securities hold a claim against,
an interest in, or a claim for an administrative expense against the debtor; and
(iii) the securities are issued entirely in exchange for the recipient's claim
against or interest in the debtor, or are issued principally in such exchange
and partly for cash and property. Section 4(2) of the Securities Act generally
exempts from such registration private transactions by an issuer that do not
involve a public offering.
The Debtors believe that the issuance of Reorganized UC Common
Stock to the Plan Administrator, who will hold such stock for the benefit of
Creditors, in exchange for such creditors' Claims against or Equity Interests in
the Debtors under the circumstances provided for in the Plan would satisfy the
requirements of section 1145(a). Alternatively, the Debtors believe that the
issuance of Reorganized UC Common Stock to the Plan Administrator would satisfy
the requirements of Section 4(2) of the Securities Act. The Plan Administrator
will not redistribute shares of Reorganized UC Common Stock.
With respect to the Litigation Trust, the Debtors believe that
(i) the Litigation Trust is a "successor" to the Debtors within the meaning of
section 1145(a)(1) of the Bankruptcy Code and (ii) the offer and sale of
interests in the Litigation Trust otherwise satisfies the requirements of such
section (to the extent such interests constitute "securities" within the meaning
of the Securities Act). In connection with prior cases under the Bankruptcy
Code, the staff of the SEC has taken no-action positions with respect to the
nonregistration under the Securities Act of interests issued under a plan of
reorganization by a liquidating entity to former holders of claims or interests
in a debtor, where such entity is subject to the jurisdiction of a bankruptcy
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court and is organized to liquidate, within a reasonable period of time, certain
assets of such debtor and to distribute the proceeds thereof to the holders of
such interests. Various theories have been advanced to justify the related
no-action requests, including the view that such a liquidating entity
constitutes a "successor" to the debtor under section 1145(a)(1) of the
Bankruptcy Code and that the securities issued by such entity are exempt from
registration under the Securities Act by virtue of such section. The Debtors
believe that the organization of the Litigation Trust and the issuance of
interests in the Litigation Trust pursuant to the Plan is consistent with the
relevant facts set forth in such no-action requests.
In connection with prior cases under the Bankruptcy Code, the
SEC also has taken no-action positions with respect to the nonregistration of a
liquidating entity under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), where certain conditions were met, including where
(i) such liquidating entity (a) existed solely to liquidate its assets and to
distribute the proceeds thereof to its beneficiaries, (b) was prohibited from
conducting a trade or business and from making any investments, except for
temporary investments pending distribution of liquidation proceeds to
beneficiaries, (c) did not hold itself out to be an investment company, but
rather, a liquidating entity in the process of liquidation, (d) was under the
continuing jurisdiction of a bankruptcy court, and (e) terminated on or before
the third anniversary of its effective date, unless extended by the bankruptcy
court, and (ii) the beneficial interests in such entity were not transferable.
The Debtors believe that each of the foregoing conditions will be satisfied with
respect to the Litigation Trust.
Since shares of Reorganized UC Common Stock will not be
redistributed by the Plan Administrator and the interests in the Litigation
Trust will be non-transferable in accordance with their terms, the Debtors
believe that the resale provisions of section 1145 of the Bankruptcy Code do not
apply to Reorganized UC Common Stock or the Litigation Trust interests, for
which there will be no market.
G. PROVISIONS GOVERNING LITIGATION TRUST
1. PURPOSE OF LITIGATION TRUST
The Litigation Trust is a trust to be created on the Effective
Date in accordance with the provisions of Article XXVII of the Plan and the
Litigation Trust Agreement contained in the Plan Supplement, for the benefit of
holders of Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8,
9 and 10 only to the extent such holders in such Classes are entitled to
distributions under the Plan, who are to receive Litigation Trust Interests as
part of the treatment of their Claims under the Plan. The Litigation Trust is to
be established for the sole purpose of liquidating its assets, in accordance
with Treasury Regulation Section 301.7701-4(d), with no objective to continue or
engage in the conduct of a trade or business.
2. ESTABLISHMENT OF LITIGATION TRUST
On the Effective Date, the Debtors, on their own behalf and on
behalf of holders of Allowed Claims and Allowed Equity Interests in Classes 3,
4, 5, 7, 8, 9 and 10 shall execute the Litigation Trust Agreement and will take
all other steps necessary to establish the Litigation Trust. In particular, the
Debtors will transfer to the Litigation Trust all of their right, title, and
interest in the Litigation Trust Claims, consisting of claims and causes of
action of the Debtors, if any, arising from or related to the Debtors' financial
statements and the accounting practices associated therewith, except any claims
and causes of action waived and released in accordance with the provisions of
section 42.5 of the Plan (certain claims and causes of action against the
Debtors' present and former directors, officers, employees, consultants and
agents) by Reorganized UC.
As of the date hereof, the Debtors are unable to state whether
such claims and causes of action maintain any significant value. However, the
Equity Committee has retained the services of Harley S. Tropin of Kozyak, Tropin
& Throckmorton, P.A. to evaluate such claims and causes of action. Upon review
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of available information, the Equity Committee states that Mr. Tropin has
concluded that the Litigation Trust shall have viable causes of action against
Deloitte & Touche LLP arising out of Deloitte & Touche's review of the quarterly
financial statements and SEC filings of the Debtors and the year-end audits and
annual SEC reports for the years 1997 and 1998 and its advice to the company in
regard thereto. According to the Equity Committee, Mr. Tropin has determined
that there were material overstatements of assets on the balance sheets of the
Debtors rendering the financial statements materially misleading and not in
conformity with generally accepted accounting principles. The Equity Committee
asserts that Mr. Tropin believes that the present value of the causes of action
against Deloitte & Touche is at least $450 million. THE DEBTORS MAKE NO
REPRESENTATION WHETHER ANY SUCH CLAIM OR CAUSE OF ACTION EXISTS AND, IF SO, WHAT
VALUE SHOULD BE ATTRIBUTED THERETO.
3. INITIAL FUNDING OF LITIGATION TRUST
In accordance with the Litigation Trust Agreement and any
agreements entered into in connection therewith, on the Effective Date, the
Debtors will transfer $100,000.00 to the Litigation Trust. The Debtors believe
that such funding is sufficient to satisfy the initial expenses which may be
incurred by counsel to the Litigation Trust. The Debtors and Reorganized UC will
have no further obligation to provide any funding with respect to the Litigation
Trust. The Litigation Trustee may incur any reasonable and necessary expenses in
liquidating and converting the assets to Cash. Given the Equity Committee's view
of the complexity and expense of assessing and pursuing potential causes of
action, the Equity Committee does not believe that the $100,000.00 funding of
the Litigation Trust is sufficient.
4. GOVERNANCE AND ADMINISTRATION
The Litigation Trust will be governed by the Litigation Trust
Board, consisting of three Persons appointed prior to the Effective Date by the
Bankruptcy Court, upon nomination by the Creditors' Committee, and any
replacements thereafter selected in accordance with the provisions of the
Litigation Trust Agreement. It is the responsibility of the Litigation Trust
Board to determine in accordance with the Litigation Trust Agreement whether to
prosecute, compromise or discontinue any Litigation Trust Claims and, if
applicable, the liquidation of any Remaining Assets. The Litigation Trust will
be administered by the Litigation Trustee, which will be an Entity appointed by
the Litigation Trust Board.
5. TRANSFER OF ASSETS
The transfer of the Litigation Trust Claims to the Litigation
Trust will be made for the benefit of the Trust Beneficiaries, but only to the
extent such beneficiaries are entitled to distributions under the Plan. In this
regard, in partial satisfaction of Allowed Claims of the Trust Beneficiaries,
the Litigation Trust Claims will be transferred to such beneficiaries, to be
held by the Debtors on their behalf. Immediately thereafter, on behalf of the
Trust Beneficiaries, the Debtors will transfer the Litigation Trust Claims to
the Litigation Trust in exchange for Litigation Trust Interests to be
distributed to the Trust Beneficiaries. Upon the transfer of the Litigation
Trust Claims, the Debtors will have no interest in or with respect to the
Litigation Trust Claims or the Litigation Trust. For all federal income tax
purposes, all parties (including, without limitation, the Debtors, the
Litigation Trustee and the Trust Beneficiaries) will treat the transfer of
assets to the Litigation Trust in accordance with the terms of the Plan, as a
transfer to the Trust Beneficiaries, followed by a transfer by such
beneficiaries to the Litigation Trust, and the Trust Beneficiaries will be
treated as the grantors and owners thereof.
6. ISSUANCE OF LITIGATION TRUST INTERESTS
The Trust Beneficiaries will receive Litigation Trust
Interests reflecting their share of the Litigation Trust in accordance with the
treatment provisions of the Plan. Upon issuance, the Litigation Trust Interests
will be non-transferable. The Litigation Trustee will maintain a registry of the
holders of Litigation Trust Interests.
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7. RIGHTS AND POWERS OF LITIGATION TRUSTEE
a. The Litigation Trustee, upon direction by the Litigation
Trust Board and the exercise of their collective reasonable business judgment,
will, in an expeditious but orderly manner, liquidate and convert to Cash the
assets of the Litigation Trust, make timely distributions and not unduly prolong
the duration of the Litigation Trust. The liquidation of the Litigation Trust
Claims may be accomplished either through the prosecution, compromise and
settlement, abandonment or dismissal of any or all claims, rights or causes of
action, or otherwise. The Litigation Trustee, upon direction by the Litigation
Trust Board, will have the absolute right to pursue or not to pursue any and all
claims, rights, or causes of action, as it determines is in the best interests
of the Trust Beneficiaries, including, without limitation, taking into account
the indemnification and contribution obligations of Reorganized UC and the
diminution in value of Reorganized UC, and consistent with the purposes of the
Litigation Trust, and will have no liability for the outcome of its decision.
The Litigation Trustee may incur any reasonable and necessary expenses in
liquidating and converting the assets of the Litigation Trust to cash.
b. The Litigation Trustee will have the power (i) to prosecute
for the benefit of the Litigation Trust all claims, rights and causes of action
transferred to the Litigation Trust (whether such suits are brought in the name
of the Litigation Trust or otherwise), and (ii) to otherwise perform the
functions and take the actions provided for or permitted in the Plan or in my
other agreement executed by the Litigation Trustee pursuant to the Plan. Any and
all proceeds generated from such claims, rights, and causes of action will be
the property of the Litigation Trust.
8. DISTRIBUTIONS ON ACCOUNT OF LITIGATION TRUST INTERESTS
The Litigation Trustee will distribute at least annually to
the holders of Litigation Trust Interests all net cash income plus all net cash
proceeds from the liquidation of assets (including as Cash for this purpose, all
Cash Equivalents); provided, however, that the Litigation Trust may retain such
amounts (i) as are reasonably necessary to meet contingent liabilities and to
maintain the value of the assets of the Litigation Trust during liquidation,
(ii) to pay reasonable administrative expenses (including any taxes imposed on
the Litigation Trust or in respect of the assets of the Litigation Trust or the
escrow described below), and (iii) to satisfy other liabilities incurred or
assumed by the Litigation Trust (or to which the assets are otherwise subject)
in accordance with the Plan or the Litigation Trust Agreement. All such
distributions will be pro rata based on the number of Litigation Trust Interests
held by a holder compared with the aggregate number of Litigation Trust
Interests outstanding, subject to the terms of the Plan and the Litigation Trust
Agreement; and provided, further, that of the net amount distributable, the
Litigation Trustee will transfer to an escrow, in accordance with section 26.14
of the Plan, such amounts as would be distributable in respect of Disputed
Claims and Disputed Equity Interests (treating such Claims and Equity Interests,
for this purpose, as if they were Allowed Claims and Equity Interests). The
Litigation Trustee may withhold from amounts distributable to any Person any and
all amounts, determined in the Litigation Trustee's reasonable sole discretion,
to be required by any law, regulation, rule, ruling, directive or other
governmental requirement.
9. ESCROW FOR DISPUTED CLAIMS AND DISPUTED EQUITY INTERESTS
The Litigation Trustee will maintain, in accordance with the
Litigation Trustee's powers and responsibilities under Article XXVII of the Plan
and the Litigation Trust Agreement, an escrow of any distributable amounts
required to be set aside on account of Disputed Claims and Disputed Equity
Interests pursuant to section 27.14 of the Plan. Such amounts (net of any
expenses, including any taxes, of the escrow relating thereto) will be
distributed, as provided herein, as such Disputed Claims or Disputed Equity
Interests are resolved by Final Order, and will be distributable in respect of
such Litigation Trust Interests as such amounts would have been distributable
had the Disputed Claims or Disputed Equity Interests been Allowed Claims and
Equity Interests as of the Effective Date. There will be distributed together
with such amounts any net earnings of the escrow related thereto. Distributions
from the escrow will be made at least annually concurrent with other
distributions from the Litigation Trust.
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10. TERMINATION OF LITIGATION TRUST
The Litigation Trust will terminate no later than the fifth
(5th) anniversary of the Effective Date; provided, however, that, on or prior to
the date six (6) months prior to such termination, the Bankruptcy Court, upon
motion by a party in interest, may extend the term of the Litigation Trust if it
is necessary to the liquidation of the Litigation Trust Claims. Notwithstanding
the foregoing, multiple extensions can be obtained so long as Bankruptcy Court
approval is obtained at least six (6) months prior to the expiration of each
extended term; provided, however, that the aggregate of all such extensions does
not exceed three (3) years, unless the Litigation Trustee receives a favorable
ruling from the IRS that any further extension would not adversely affect the
status of the Litigation Trust as a grantor trust for federal income tax
purposes.
11. COMPLETE TERMS AND PROVISIONS
The foregoing is a brief summary of the terms and provisions
of the Plan relating to the Litigation Trust. Article XXVII of the Plan and the
Litigation Trust Agreement should be carefully reviewed for a complete
understanding of the Litigation Trust.
H. PURSUIT OF OTHER LITIGATION RIGHTS BY REORGANIZED UC
1. PROSECUTION OF CLAIMS
Except with respect to Litigation Trust Claims, and claims
subject to the compromise and settlement described in Article V hereof, from and
after the Confirmation Date, Reorganized UC will, as a representative of the
estates of the Debtors, litigate any avoidance or recovery actions under
sections 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code and
any other causes of action, rights to payments of claims that belong to the
Debtors or Debtors in Possession, that may be pending on the Confirmation Date
or instituted by Debtors thereafter, to a Final Order, and Reorganized UC may
compromise and settle such claims, without approval of the Bankruptcy Court (but
with approval of, or within parameters established by, the Board of Directors of
Reorganized UC). The net proceeds of any such litigation or settlement (after
satisfaction of all costs and expenses incurred in connection therewith) will be
remitted to the Disbursing Agent for inclusion in Creditor Cash.
The Debtors have undertaken an analysis of such claims and
causes of action and believe that such claims, if any, have de minimis value.
Indeed, the Debtors historically paid their vendors' claims when due and the
Debtors' records reflect no payments during the ninety (90) day period prior to
the Commencement Date outside the ordinary course.
The Debtors may have claims against Bankers Trust Company of
California in connection with services provided as trustee under the Debtors'
Securitization Trusts. Until the Debtors are provided with financial information
in response to several requests, however, the Debtors are unable to determine
what claims, if any, the Debtors may have against Bankers Trust Company.
2. NET PAYMENT BY DEFENDANTS
In the event that a defendant in a litigation of the kind
described in section 28.1 of the Plan is required by a Final Order to make
payment (a "Disgorgement Payment") to Reorganized UC, and such Disgorgement
Payment (if so made) would give rise to a Claim, (a) such defendant will be
required to pay (a "Net Payment") in Cash (and will have no Claim in respect
thereof) only the excess, if any, of (i) the amount of such Disgorgement Payment
over (ii) the fair market value of the distributions ("Initial Distributions")
on such Claim pursuant to this Plan that would have been received by such
defendant if such defendant had made such Disgorgement Payment (which fair
market value will be determined as of the date of such Net Payment by agreement
between Reorganized UC and such defendant or by Final Order) and (b) if any
distributions (the "Subsequent Distributions") are made hereunder after such
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defendant makes such Net Payment, such defendant shall receive such defendant's
Pro Rata Share of such Subsequent Distributions (or, at Reorganized UC's
election, the fair market value thereof determined as of the date of such
Subsequent Distributions by agreement between Reorganized UC and such defendant,
or by Final Order), which Pro Rata Share will be calculated as if such defendant
had made such Disgorgement Payment and received Initial Distributions in respect
thereof.
3. INJUNCTION ESCROW FOR DISPUTED CLAIMS AND DISPUTED EQUITY
INTEREST
Except as provided in the Plan, as of the Effective Date, all
non-Debtor entities are permanently enjoined from commencing or continuing in
any manner, any action or proceeding, whether directly, derivatively, on account
of or respecting any claim, debt, right or cause of action of the Debtors or
Reorganized UC which the Debtors or Reorganized UC, as the case may be, retain
sole and exclusive authority to pursue in accordance with the Plan or which has
been released pursuant to the Plan.
I. ROLES OF PLAN ADMINISTRATOR AND DISBURSING AGENT
1. PLAN ADMINISTRATOR
The Plan Administrator will be Rebecca A. Roof and retained,
as of the Effective Date, as the fiduciary responsible for, among other things,
insuring compliance with the Plan pursuant to and in accordance with the
provisions of the Plan and the Plan Administration Agreement. Ms. Roof currently
serves as Chief Financial Officer of the Debtors and is associated with JA&A.
The responsibilities of the Plan Administrator will include
(a) facilitating Reorganized UC's prosecution or settlement of objections to and
estimations of Claims, (b) calculating and assisting the Disbursing Agent in
implementing all distributions in accordance with the Plan, (c) filing all
required tax returns and paying taxes and all other obligations on behalf of
Reorganized UC from funds held by Reorganized UC, (d) periodic reporting to the
Bankruptcy Court of the status of the Claims resolution process, distributions
on Allowed Claims and prosecution of causes of action, (e) liquidating the
Remaining Assets and providing for the distribution of the net proceeds thereof
in accordance with the provisions of the Plan, (f) managing the Debtors'
servicing operations during the period from the Effective Date up to and
including the transfer date, and (g) such other responsibilities as may be
vested in the Plan Administrator pursuant to the Plan, the Plan Administration
Agreement or Bankruptcy Court order or as may be necessary and proper to carry
out the provisions of the Plan.
The powers of the Plan Administrator will, without any further
Bankruptcy Court approval in each of the following cases, include (a) the power
to invest funds in, and withdraw, make distributions and pay taxes and other
obligations owed by Reorganized UC from funds held by the Plan Administrator
and/or Reorganized UC in accordance with the Plan, (b) the power to engage
employees and professional persons to assist the Plan Administrator with respect
to its responsibilities, (c) the power to compromise and settle claims and
causes of action on behalf of or against Reorganized UC, and (d) such other
powers as may be vested in or assumed by the Plan Administrator pursuant to the
Plan, the Plan Administration Agreement or as may be necessary and proper to
carry out the provisions of the Plan.
In addition to reimbursement for actual out-of-pocket expenses
incurred by the Plan Administrator, the Plan Administrator will be entitled to
receive reasonable compensation for services rendered on behalf of Reorganized
UC in an amount and on such terms as may be agreed to by the Debtors for
Reorganized UC as reflected in the Plan Administration Agreement. Any dispute
with respect to such compensation shall be resolved by agreement among the
parties or, if the parties are unable to agree, determined by the Bankruptcy
Court.
From and after the Effective Date, the Plan Administrator will
be exculpated by all Persons and Entities, including, without limitation,
holders of Claims and Equity Interests and other parties in interest, from any
and all claims, causes of action and other assertions of liability arising out
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of the discharge of the powers and duties conferred upon such Plan Administrator
by the Plan or any order of the Bankruptcy Court entered pursuant to or in
furtherance of the Plan, or applicable law, except for actions or omissions to
act arising out of the gross negligence, willful misconduct or breach of
fiduciary duty of such Plan Administrator. No holder of a Claim or an Equity
Interest or other party in interest will have or pursue any claim or cause of
action against the Plan Administrator for making payments in accordance with the
Plan or for implementing the provisions of the Plan.
The duties, responsibilities and powers of the Plan
Administrator will terminate on the date set forth in the Plan Administration
Agreement.
2. DISBURSING AGENT
The Disbursing Agent is to be either Reorganized UC, the Plan
Administrator or such other Entity as may be designated by the Debtors to act as
their agent for the purpose of effectuating the distributions contemplated under
the Plan.
The Disbursing Agent will act at the direction of the Plan
Administrator. The Disbursing Agent will be deemed to hold all property to be
distributed under the Plan for the Persons entitled to receive the same. The
Disbursing Agent will not hold an economic or beneficial interest in such
property.
Except to the extent that the responsibility for the same is
vested in the Plan Administrator pursuant to the Plan Administration Agreement,
the Disbursing Agent will be empowered to (a) take all steps and execute all
instruments and documents necessary to effectuate the Plan, (b) make
distributions contemplated by the Plan, (c) comply with the Plan and the
obligations thereunder, (d) employ professionals to represent it with respect to
its responsibilities, and (e) exercise such other powers as may be vested in the
Disbursing Agent pursuant to order of the Bankruptcy Court, pursuant to the
Plan, or as deemed by the Disbursing Agent to be necessary and proper to
implement the provisions of the Plan.
Except as otherwise ordered by the Bankruptcy Court, the
amount of any fees and expenses incurred by the Disbursing Agent from and after
the Effective Date (including taxes) and any compensation and expense
reimbursement claims, including, without limitation, reasonable fees and
expenses of counsel, made by the Disbursing Agent will be paid in Cash by
Reorganized UC.
From and after the Effective Date, the Disbursing Agent will
be exculpated by all Persons and Entities, including, without limitation,
holders of Claims and Equity Interests and other parties in interest, from any
and all claims, causes of action and other assertions of liability arising out
of the discharge of the powers and duties conferred upon such Disbursing Agent
by the Plan or any order of the Bankruptcy Court entered pursuant to or in
furtherance of the Plan, or applicable law, except for actions or omissions to
act arising out of the gross negligence, willful misconduct or breach of
fiduciary duty of such Disbursing Agent. No holder of a Claim or an Equity
Interest or other party in interest will have or pursue any claim or cause of
action against the Disbursing Agent for making payments in accordance with the
Plan or for implementing the provisions of the Plan.
J. SUMMARY OF OTHER PROVISIONS OF THE PLAN
1. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE OF THE PLAN;
ALTERNATIVE IMPLEMENTATION PROVISIONS
The "effective date of the plan," as used in section 1129 of
the Bankruptcy Code, will not occur, and the Plan will be of no force and
effect, until the Effective Date, which will be the first Business Day that is
ten days after entry of the Confirmation Order. The occurrence of the Effective
Date is subject to satisfaction of the following conditions precedent:
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(i) Entry of the Confirmation Order: The Clerk of the
Bankruptcy Court shall have entered the Confirmation Order, in form and
substance satisfactory to the Debtors and the Creditors' Committee and the
Confirmation Order shall have become a Final Order and shall be in full force
and effect.
(ii) Execution of Documents, Other Actions: All other actions
and documents necessary to implement the Plan shall have been effected or
executed.
(iii) Sale Transaction: Consummation of the Sale Transaction
or, in the event that an Alternative Residual Sale Transaction is accepted by
the Debtors and approved by the Bankruptcy Court, consummation of such
Alternative Residual Sale Transaction.
(iv) Class 4 Claims: The aggregate amount of Allowed Senior
Note Claims shall not exceed the sum of (i) Allowed Claims arising under the
Senior Indenture Trustee, plus (ii) Allowed Claims arising under or related to
the guaranty of certain indebtedness relating to the employee stock ownership
plan of United Companies, plus (iii) Two Million Dollars ($2,000,000.00).
To the extent practicable or legally permissible, each of the
foregoing conditions may be waived, in whole or in part, by the Debtors in their
sole discretion; provided, however, that, with respect to the condition
precedent set forth in clause (iv) above, the Debtors' waiver thereof must be
with the consent of the Senior Indenture Trustee, upon direction of the holders
of Senior Notes in accordance with the provisions of the Senior Indenture. Any
such waiver of a condition precedent may be effected at any time, without notice
or leave or order of the Bankruptcy Court and without any formal action.
(v) Alternative Implementation Provisions. In the event that a
higher or better offer for the assets set forth in the Residual Agreement is
accepted by the Debtors and approved by the Bankruptcy Court, at the discretion
of such higher or better offeror, the following provisions may apply:
(A) Stock Purchase Agreement Permissible. The
Alternative Residual Sale Transaction may be consummated through either
an asset purchase agreement or a stock purchase agreement, as the case
may be. To the extent that the Alternative Residual Sale Transaction,
or part thereof, occurs by operation of a stock purchase agreement,
then the provisions of section 36.3 shall be operative under the Plan.
(B) Issuance of Reorganized UC Lending Common Stock
and Transfer of Reorganized Designated Subsidiaries Common Stock. On
the Effective Date, (i) the Reorganized UC Lending Common Stock shall
be issued to the relevant purchaser pursuant to the consummation of the
Alternative Residual Sale Transaction, and (ii) the Reorganized
Designated Subsidiaries Common Stock as direct or indirect assets of
Reorganized UC Lending shall be transferred to the control of the
relevant purchaser pursuant to the consummation of the Alternative
Residual Sale Transaction. On the Effective Date, Reorganized UC
Lending and the Reorganized Designated Subsidiaries shall only own the
assets and retain the liabilities that are provided for in the relevant
stock purchase agreement for the Alternative Residual Sale Transaction.
The Debtors shall be authorized and shall make any divestiture of
assets and transfer of assets as between the Debtors prior to the
closing of the Alternative Residual Sale Transaction as are necessary
and appropriate to achieve the result stated in the preceding sentence.
(C) Corporate Organization of Reorganized UC Lending
and the Reorganized Designated Subsidiaries. On the Effective Date, the
adoption of the New Organization Documents shall be authorized and
approved in all respects, in each case without further action under
applicable law, regulation, order or rule, including, without
limitation, any action by United Funding, Reorganized UC, the
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stockholders of the Debtors, or Reorganized UC Lending and/or the
Reorganized Designated Subsidiaries. On the Effective Date, the
issuance of the Reorganized UC Lending Common Stock and the transfer of
control of Reorganized Designated Subsidiaries Common Stock and the
cancellation of the Equity Interests of United Lending Corp. set forth
in section 22.1 of the Plan and other matters involving the corporate
structure of the Reorganized UC Lending and/or the Reorganized
Designated Subsidiaries shall be deemed to have occurred, be
authorized, and shall be in effect from and after the Effective Date
without requiring further action under applicable law, regulation,
order or rule, including, without limitation, any action by United
Funding, Reorganized UC, the stockholders of the Debtors, Reorganized
UC Lending and/or the Reorganized Designated Subsidiaries.
(D) Post Effective Date Subservicing or Rental
Agreement. On the Effective Date, Reorganized UC, through one or more
of the Reorganized UC Subsidiaries, shall be authorized to provide
subservicing or to rent facilities, employees and other aspects of a
servicing platform to Reorganized UC Lending or to an entity designated
as subservicer by Reorganized UC Lending, as may be provided for in any
stock purchase agreement or related agreement governing the Alternative
Residual Sale Transaction.
2. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
(A) REJECTED IF NOT ASSUMED:
The Bankruptcy Code authorizes the Debtors, subject to the
approval of the Bankruptcy Court, to assume, assume and assign, or reject
executory contracts and unexpired leases. Such assumption, assumption and
assignment, or rejection may be effected during the Chapter 11 Cases or pursuant
to the Plan. Any executory contracts or unexpired leases which have not expired
by their own terms on or prior to the Effective Date, which have not been
assumed, assumed and assigned, or rejected with the approval of the Bankruptcy
Court, or which are not the subject of a motion to assume or assume and assign
pending as of the Effective Date, or which are not specifically designated to be
assumed pursuant to the Plan, will be deemed rejected by the Debtors on the
Effective Date, and the entry of the Confirmation Order by the Bankruptcy Court
will constitute approval of such rejections pursuant to sections 365(a) and 1123
of the Bankruptcy Code.
(B) REJECTION DAMAGE CLAIMS:
Not later than ten days prior to the Confirmation Date, the
Debtors will file with the Bankruptcy Court a list of executory contracts and
unexpired leases to be assumed by the Debtors pursuant to the Plan as of the
Effective Date, and such executory contracts and unexpired leases will be deemed
rejected as of the Effective Date. If the rejection of an executory contract or
unexpired lease by the Debtors results in damages to the other party or parties
to such contract or lease, any claim for such damages, if not heretofore
evidenced by a filed proof of claim, will be forever barred and will not be
enforceable against the Debtors, or their properties or agents, successors or
assigns, unless a proof of claim is filed with the Bankruptcy Court and served
upon counsel for the Debtors on or before fifteen (15) days after the later to
occur of (a) the Confirmation Date and (b) the date of entry of an order by the
Bankruptcy Court authorizing rejection of a particular executory contract or
unexpired lease.
(C) CURE PAYMENTS:
Any monetary amounts required as cure payments on any
executory contract or unexpired lease to be assumed under the Plan will be
satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of
the cure amount in Cash on the Effective Date or upon such other terms and dates
as the parties to such executory contract or unexpired lease otherwise may
agree. In the event of a dispute regarding (a) the amount of any cure payment,
(b) the ability of the Debtors or any assignee to provide "adequate assurance of
future performance" (within the meaning of section 365 of the Bankruptcy Code)
under the contract or lease to be assumed or (c) any other matter pertaining to
assumption, the cure payments required by section 365(b)(1) of the Bankruptcy
Code will be subject to the jurisdiction of the Bankruptcy Court and made
following the entry of a Final Order resolving such dispute.
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(D) INDEMNIFICATION AND REIMBURSEMENT OBLIGATIONS:
For purposes of the Plan, the obligations of the Debtors to
indemnify and reimburse their directors or officers that were directors or
officers, respectively, on or before the Petition Date or who became directors
or officers after the Petition Date against and for any obligations pursuant to
articles of incorporation, codes of regulations, bylaws, applicable state law,
or specific agreement, or any combination of the foregoing will survive
confirmation of the Plan, remain unaffected thereby, and not be discharged in
accordance with section 1141 of the Bankruptcy Code, irrespective of whether
indemnification or reimbursement is owed in connection with an event occurring
before, on, or after the Petition Date; provided, however, that, notwithstanding
the foregoing, such obligations will not be extended to any directors or
officers whose term in all such capacities expired or was terminated prior to
the Petition Date; and, provided, however, that the foregoing is not intended,
nor shall it be construed, to constitute the assumption of any Statutorily
Subordinated Claim.
3. PROVISIONS GOVERNING DISTRIBUTIONS
(A) REQUIREMENT FOR ALLOWANCE OF CLAIMS:
No payments or other distributions will be made on account of
any Claim that is not "Allowed."
"Allowed Claim" means any Claim against the Debtors, (i) proof
of which was filed on or before September 30, 1999 (or, in certain cases, the
supplemental bar date applicable to specific Creditors), the date designated by
the Bankruptcy Court as the last date for filing proofs of Claim against the
Debtors, or (ii) if no proof of Claim has been timely filed, which has been or
hereafter is listed by the Debtors in their Schedules as liquidated in amount
and not disputed or contingent and, in each such case in clauses (i) and (ii)
above, a Claim as to which no objection to the allowance thereof has been
interposed within the applicable period of limitation fixed by the Plan, the
Bankruptcy Code, the Bankruptcy Rules or a Final Order, or as to which an
objection has been interposed and such Claim has been allowed in whole or in
part by a Final Order. For purposes of determining the amount of an "Allowed
Claim," there will be deducted therefrom an amount equal to the amount of any
claim which the Debtors may hold against the holder thereof, to the extent such
claim may be set off pursuant to section 553 of the Bankruptcy Code.
(B) TIME AND METHOD OF DISTRIBUTIONS:
All distributions under the Plan will be made by the
Disbursing Agent, which may be either Reorganized UC, the Plan Administrator or
such other Entity as may be designated by the Debtors.
Initial distributions will be made on or as soon as
practicable after the Effective Date. Holders of Allowed Bank Claims, Allowed
Senior Note Claims, and Allowed General Unsecured Claims may also receive
subsequent quarterly distributions in the event that amounts set aside to
satisfy Disputed Claims and other reserves exceed the amounts necessary to
provide required distributions if the Disputed Claims become Allowed Claims or
to pay indemnification or other obligations covered by other reserves. Any
payments or distributions to be made pursuant to the Plan will be deemed timely
made if made within twenty (20) days after the dates specified in the Plan.
Whenever any distribution to be made under this Plan is due on a day other than
a Business Day, such distribution will instead be made, without interest, on the
immediately succeeding Business Day, but will be deemed to have been made on the
date due. Unless the Entity receiving a payment agrees otherwise, any payment in
Cash to be made by Reorganized UC will be made, at the election of Reorganized
UC, by check drawn on a domestic bank or by wire transfer from a domestic bank.
Subject to the provisions of rule 9010 of the Bankruptcy
Rules, and except as provided in sections 8.4 and 11.5 of the Plan,
distributions and deliveries to holders of Allowed Claims will be made at the
address of each such holder set forth on the Debtors' Schedules filed with the
Bankruptcy Court unless superseded by the address set forth on proofs of claim
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filed by such holders, or at the last known addresses of such holder if no proof
of claim is filed or if the Debtors have been notified in writing of a change of
address.
(C) UNDELIVERABLE DISTRIBUTIONS:
If any distribution to any holder is returned to Reorganized
UC as undeliverable, no further distributions will be made to such holder unless
and until Reorganized UC is notified, in writing, of such holder's then-current
address. Undeliverable distributions will remain in the possession of
Reorganized UC until such time as a distribution becomes deliverable. All
Persons ultimately receiving distributions which were previously undeliverable,
will not be entitled to any interest or other accruals of any kind. Nothing
contained in the Plan will require Reorganized UC to attempt to locate any
holder of an Allowed Claim or an Allowed Equity Interest.
On or about the second anniversary of the Effective Date,
Reorganized UC will file with the Bankruptcy Court a list setting forth the
names of those Entities to which distributions have been made under the Plan and
have been returned as undeliverable as of the date thereof. Any holder of an
Allowed Claim that does not assert its lights pursuant to the Plan to receive a
distribution within three years from and after the Effective Date will have its
Claim for such undeliverable distribution discharged and will be forever barred
from asserting any such Claim against Reorganized UC or its property. In such
case, any consideration held for distribution on account of such Claim will
revert to Reorganized UC for further distribution pursuant to the terms of the
Plan.
(D) COMPLIANCE WITH TAX REQUIREMENTS:
To the extent applicable, Reorganized UC will comply with all
tax withholding and reporting requirements imposed on it by any governmental
unit and all distributions pursuant to the Plan will be subject to such
withholding and reporting requirements.
(E) TIME BAR TO CASH PAYMENT:
Checks issued by Reorganized UC on account of Allowed Claims
will be null and void if not negotiated within 90 days from and after the date
of issuance thereof. Requests for reissuance of any check will be made directly
to Reorganized UC 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 will be
made on or before the later of (a) the second anniversary of the Effective Date
or (b) 90 days after the date of issuance of such check, if such check
represents a final distribution under the Plan on account of such Claim. After
such date, all claims in respect of void checks will be discharged and forever
barred and Reorganized UC will retain all moneys related thereto for further
distribution pursuant to the terms of the Plan.
(F) DISTRIBUTIONS AFTER EFFECTIVE DATE:
Distributions made after the Effective Date to holders of
Claims that are not Allowed Claims or Allowed Equity Interests as of the
Effective Date but which later become Allowed Claims will be deemed to have been
made on the Effective Date.
(G) SET-OFFS:
Reorganized UC may, pursuant to section 553 of the Bankruptcy
Code or applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account thereof (before any
distribution is made on account of such Claim), the claims, rights and causes of
action of any nature that the Debtors or Reorganized UC may hold against the
holder of such Allowed Claim; provided, however, that neither the failure to
effect such a set-off nor the allowance of any Claim under the Plan will
constitute a waiver or release by the Debtors or Reorganized UC of any such
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claims, rights and causes of action that the Debtors or Reorganized UC may
possess against such holder; and, provided, further, that nothing contained in
the Plan is intended to limit the rights of any Creditor to effectuate a setoff
prior to the Effective Date in accordance with the provisions of sections 362
and 553 of the Bankruptcy Code.
(H) TERMINATION/SETTLEMENT OF SUBORDINATION RIGHTS
CLAIMS:
The classification and manner of satisfying all Claims and
Equity Interests under the Plan take into consideration all contractual, legal
and equitable subordination rights, whether arising under general principles of
equitable subordination, sections 510(b) and (c) of the Bankruptcy Code, or
otherwise, that a holder of a Claim or Equity Interest may have against any
other holders of Claims or Equity Interests, with respect to any distribution
made pursuant to the Plan. On the Effective Date, all contractual, legal or
equitable subordination rights that a holder of a Claim or Equity Interest may
have with respect to any distribution to be made pursuant to the Plan will be
discharged and terminated, and all actions related to the enforcement of such
subordination rights will be permanently enjoined and distributions pursuant to
the Plan will not be subject to payment to a beneficiary of such terminated
subordination rights, or to levy, garnishment, attachment or other legal process
by any beneficiary of such terminated subordination rights. Pursuant to
Bankruptcy Rule 9019 and in consideration for the distributions and other
benefits provided under the Plan, the provisions of section 32.11 of the Plan
will constitute a good faith compromise and settlement of all claims or
controversies relating to the termination of all contractual, legal and
equitable subordination rights that a holder of a Claim or Equity Interest may
have with respect to any Allowed Claim or Allowed Equity Interest, or any
distribution to be made on account of an Allowed Claim or an Allowed Equity
Interest. The entry of the Confirmation Order will constitute the Bankruptcy
Court's approval of the compromise or settlement of all such claims or
controversies and the Bankruptcy Court's finding that such compromise or
settlement is in the best interests of the Debtors, Reorganized UC, and their
respective property and holders of Claims and Equity Interests and is fair,
equitable and reasonable.
(I) POST-PETITION DATE INTERESTS:
Upon payment in full of all Allowed Claims, and prior to the
deemed redistribution of Litigation Trust Interests to holders of Allowed Pride
Equity Interests, Allowed Statutorily Subordinated Claims and Allowed United
Companies Common Equity Interests, Litigation Trust Interests shall be deemed
redistributed for and on behalf of holders of Allowed Claims, subject to the
applicable legal and contractual rights of the respective holders thereof, for
and on account of the payment of interest, accrued at the applicable contractual
or legal rate, for the period from the Petition Date up to and including the
date on which a particular Allowed Claim shall have been paid in full.
4. TREATMENT OF DISPUTED CLAIMS OR DISPUTED EQUITY INTERESTS
"Disputed Claim" means any Claim against the Debtors, to the
extent the allowance of which is the subject of a timely objection or request
for estimation in accordance with the Plan, the Bankruptcy Code, the Bankruptcy
Rules or the Confirmation Order, or is otherwise disputed by the Debtors in
accordance with applicable law, which objection, request for estimation, or
dispute has not been withdrawn or determined by a Final Order.
(A) OBJECTIONS TO CLAIMS; PROSECUTION OF DISPUTED CLAIMS:
The Debtors, Reorganized UC or the Plan Administrator shall
object to the allowance of Claims or Equity Interests filed with the Bankruptcy
Court with respect to which they dispute liability or allowance in whole or in
part. All objections will be litigated to Final Order; provided, however, that
Reorganized UC will have the authority to file, settle, compromise or withdraw
any objections to Claims, without approval of the Bankruptcy Court. Unless
otherwise ordered by the Bankruptcy Court, the Debtors' Reorganized UC or the
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Plan Administrator will file and serve all objections to Claims as soon as
practicable, but in no event later than the Effective Date or such later date as
may be approved by the Bankruptcy Court.
(B) ESTIMATION OF CLAIMS:
The Debtors' Reorganized UC or the Plan Administrator may at
any time request that the Bankruptcy Court estimate any contingent or Disputed
Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether
the Debtors' Reorganized UC or the Plan Administrator previously objected to
such Claim or whether the Bankruptcy Court ruled on any such objection, and the
Bankruptcy Court will retain jurisdiction to estimate any Claim at any time
during litigation concerning any objection to any Claim, including, without
limitation, during the pendency of any appeal relating to any such objection.
Subject to the provisions of section 502(j) of the Bankruptcy Code, in the event
that the Bankruptcy Court estimates any contingent or Disputed Claim, the amount
so estimated will constitute the allowed amount of such Claim. If the estimated
amount constitutes a maximum limitation on the amount of such Claim, the
Debtors' Reorganized UC or the Plan Administrator may pursue supplementary
proceedings to object to the allowance of such Claim. All of the aforementioned
objection, estimation and resolution procedures are intended to be cumulative
and not necessarily exclusive of one another. Claims may be estimated and
subsequently compromised, settled, withdrawn or resolved by any mechanism
approved by the Bankruptcy Court.
(C) PAYMENTS AND DISTRIBUTIONS ON DISPUTED CLAIMS:
There will be set aside for each holder of a Disputed Claim
such portion of the Creditor Cash and Litigation Trust Interests as necessary to
provide required distributions if such Claim was an Allowed Claim, either based
upon the amount of the Claim as filed with the Bankruptcy Court or the amount of
the Claim as estimated by the Bankruptcy Court.
At such time as a Disputed Claim becomes, in whole or in part
an Allowed Claim, the Plan Administrator shall distribute to the holder thereof
the distributions, if any, to which such holder is then entitled under the Plan.
Such distribution, if any, will be made as soon as practicable after the date
that the order or judgment of the Bankruptcy Court allowing such Disputed Claim
becomes a Final Order but in no event more than thirty (30) days thereafter. No
interest will be paid on Disputed Claims that later become Allowed or with
respect to any distribution to such holder. No distribution will be made with
respect to all or any portion of any Disputed Claim pending the entire
resolution thereof in the manner prescribed in section 25.1 of the Plan.
5. COMMITTEES
(A) CREDITORS' COMMITTEE COMPOSITION AND TERM:
From the Confirmation Date and up to and including the
Effective Date, the members of the Creditors' Committee, if any, appointed
pursuant to section 1102 of the Bankruptcy Code, and their duly appointed
successors, will continue to serve. Upon the disallowance by Final Order of the
Claim held by a Creditor that is a member of the Creditors' Committee, such
membership will terminate and no replacement will be appointed. Upon the
resignation, death or disability of a member of the Creditors' Committee, the
Creditor having appointed such member will have the right to designate a
replacement. In the event such Creditor fails to designate a replacement, no
other replacement may be appointed to the Creditors' Committee. Members of the
Creditors' Committee will serve without compensation but will be entitled to
reimbursement of their reasonable out-of-pocket expenses which are attributable
to their attendance at Creditors' Committee meetings, Bankruptcy Court hearings
or negotiation sessions. The Creditors' Committee will be entitled to retain
legal counsel and such other professionals as may be authorized by the
Bankruptcy Court, the fees and expenses of which will be entitled to payment as
Administrative Expense Claims. On the Effective Date, the Creditors' Committee
will be dissolved and the members thereof and the professionals retained by the
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Creditors' Committee in accordance with section 1103 of the Bankruptcy Code will
be released and discharged from their respective fiduciary obligations.
(B) EQUITY COMMITTEE TERM:
Members of the Equity Committee will serve without
compensation but will be entitled to reimbursement of their reasonable
out-of-pocket expenses which are attributable to their attendance at Equity
Committee meetings. The Equity Committee will be entitled to retain legal
counsel and such other professionals as may be authorized by the Bankruptcy
Court, the fees and expenses of which will be entitled to payment as
Administrative Expense Claims. On the Effective Date, the Equity Committee will
be dissolved and the members thereof and the professionals retained by the
Equity Committee in accordance with section 327 of the Bankruptcy Code will be
released and discharged from their respective fiduciary obligations, if the same
has not occurred prior to the Effective Date.
6. EFFECT OF CONFIRMATION
(A) TITLE TO ASSETS; DISCHARGE OF LIABILITIES:
Except as otherwise provided by the Plan, including, without
limitation, in connection with a Sale Transaction or an Alternative Residual
Sale Transaction, on the Effective Date, title to all assets and properties of
the Debtors or Debtors in Possession will vest in Reorganized UC, Reorganized UC
Lending, or the Reorganized Designated Subsidiaries, as the case may be, in
accordance with section 1141 of the Bankruptcy Code, and the Confirmation Order
will be a judicial determination of discharge of the Debtors' liabilities except
as provided in the Plan.
(B) DISCHARGE OF THE DEBTORS:
In the event that an Alternative Residual Sale Transaction is
consummated pursuant to a stock purchase agreement, the rights afforded in the
Plan and the treatment of all holders of Claims or Equity Interests in the Plan
will be in exchange for and in complete satisfaction, discharge and release of
all Claims and Equity Interests of any nature whatsoever, known or unknown,
including any interest accrued or expenses incurred thereon from and after the
Petition Date, against the Debtors or Debtors in Possession, or any of their
estates, properties, assets or interests in property. Except as otherwise
provided in the Plan, on the Effective Date, all Claims against, and Equity
Interests in, the Debtors and Debtors in Possession will be satisfied,
discharged and released in full. All Persons and Entities will be precluded from
asserting against the Debtors, their successor or assigns, including, without
limitation, Reorganized UC, Reorganized UC Lending, the Reorganized Designated
Subsidiaries, their agents and employees, or their respective assets, properties
or interests in property, any other or further Claims based upon any act or
omission, transaction or other activity of any kind or nature that occurred
prior to the Confirmation Date, whether or not the facts or legal bases therefor
were known or existed prior to the Confirmation Date. Discharge shall not
preclude any cause of action against any Persons or Entities not included within
the described discharge.
(C) INJUNCTION:
Except as otherwise expressly provided in the Plan, all
Persons and Entities who have held, hold or may hold Claims or Equity Interests
are permanently enjoined, from and after the Effective Date, from (a) commencing
or continuing in any manner any action or other proceeding of any kind on any
such Claim or Equity Interest against the Debtors or Reorganized UC (and in the
event of (i) the Sale Transaction, the purchase thereunder, and (2) an
Alternative Residual Sale Transaction consummated through a stock purchase
agreement, Reorganized UC Lending and the Reorganized Designated Subsidiaries),
(b) the enforcement, attachment, collection or recovery by any manner or means
of any judgment, award, decree or order against the Debtors or Reorganized UC
(and in the event of (i) the Sale Transaction, the purchase thereunder, and (2)
an Alternative Residual Sale Transaction consummated through a stock purchase
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agreement, Reorganized UC Lending and the Reorganized Designated Subsidiaries),
(c) creating, perfecting or enforcing any encumbrance of any kind against the
Debtors or Reorganized UC or against the property or interests in property of
the Debtors or Reorganized UC, with respect to any such Claims or Equity
Interests (and in the event of (i) the Sale Transaction, the purchase
thereunder, and (2) an Alternative Residual Sale Transaction consummated through
a stock purchase agreement, Reorganized UC Lending and the Reorganized
Designated Subsidiaries), and (d) asserting any right of setoff, subrogation, or
recoupment of any kind against any obligation due from the Debtors or
Reorganized UC (and in the event of (i) the Sale Transaction, the purchase
thereunder, and (2) an Alternative Residual Sale Transaction consummated through
a stock purchase agreement, Reorganized UC Lending and the Reorganized
Designated Subsidiaries) or against the property or interests in property of the
Debtors or Reorganized UC (and in the event of (i) the Sale Transaction, the
purchase thereunder, and (2) an Alternative Residual Sale Transaction
consummated through a stock purchase agreement, Reorganized UC Lending and the
Reorganized Designated Subsidiaries), with respect to any such Claim or Equity
Interest; provided, however, that such injunction shall not preclude the United
States of America or any of its police or regulatory agencies from enforcing
their police or regulatory powers; and, provided, further, that except in
connection with a properly filed proof of claim, the foregoing proviso does not
permit the United States of America or any of its police or regulatory agencies
from obtaining any monetary recovery from the Debtors or Reorganized UC (and in
the event of (i) the Sale Transaction, the purchase thereunder, and (2) an
Alternative Residual Sale Transaction consummated through a stock purchase
agreement, Reorganized UC Lending and the Reorganized Designated Subsidiaries)
or their respective property or interests in property with respect to any such
Claim or Equity Interest, including, without limitation, any monetary claim or
penalty in furtherance of a police or regulatory power. Injunction shall not
preclude any cause of action against any Persons or Entities not included within
the described Injunction.
Unless otherwise provided, all injunctions or stays provided
for in the Chapter 11 Cases pursuant to sections 105, 362 or 525 of the
Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, will
remain in full force and effect until the Effective Date.
Except as provided in the Plan, as of the Effective Date, all
non-Debtor entities are permanently enjoined from commencing or continuing in
any manner, any action or proceeding, whether directly, derivatively, on account
of, or respecting any claim, debt, right or cause of action of the Debtors or
Reorganized UC which the Debtors or Reorganized UC, as the case may be, retain
sole and exclusive authority to pursue in accordance with section 42.7 of the
Plan or which has been released pursuant to the Plan.
(D) LIMITED RELEASE OF DIRECTORS, OFFICERS AND EMPLOYEES:
As of the Effective Date, the Debtors will be deemed to have
waived and released their present and former directors, officers, employees,
consultants and agents who were directors, officers, employees, consultants or
agents, respectively, at any time during the Chapter 11 Cases and on or before
the Petition Date, from any and all claims of the Debtors, including, without
limitation, claims which the Debtors or Debtors in Possession otherwise have
legal power to assert, compromise or settle in connection with the Chapter 11
Cases, arising on or prior to the Effective Date; provided, however, that this
provision will not operate as a waiver or release of any claim (i) with respect
to any loan, advance or similar payment by the Debtors to any such person, (ii)
with respect to any contractual obligation owed by such person to the Debtors,
(iii) relating to such person's knowing fraud, or (iv) to the extent based upon
or attributable to such person gaining in fact a personal profit to which such
person was not legally entitled, including, without limitation, profits made
from the purchase or sale of equity securities of the Debtors which are
recoverable by the Debtors pursuant to section 16(b) of the Securities Exchange
Act of 1934, as amended. The release contemplated by section 42.5 of the Plan
will not, nor is it intended to, release any claims or causes of action of the
Litigation Trust against Deloitte & Touche LLP.
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(E) EXCULPATION:
None of the Debtors' Reorganized UC, the Creditors' Committee,
any indenture trustee responsible for making distributions under the Plan, and
any of their respective directors, officers, employees, members, attorneys,
consultants, advisors and agents (acting in such capacity), will have or incur
any liability to any Entity for any act taken or omitted to be taken in the
formulation, preparation, dissemination, implementation, confirmation or
approval of the Plan, the Disclosure Statement related thereto or any contract,
instrument, release or other agreement or document provided for or contemplated
in connection with the consummation of the transactions set forth in the Plan;
provided, however, that the foregoing provisions will not affect the liability
of any Entity that otherwise would result from any such act or omission to the
extent that such act or omission is determined in a Final Order to have
constituted gross negligence, willful misconduct or breach of fiduciary duty.
Any of the foregoing parties in all respects will be entitled to rely upon the
advice of counsel with respect to their duties and responsibilities under the
Plan.
7. RETENTION OF JURISDICTION
The Bankruptcy Court will retain and have exclusive
jurisdiction over any matter (a) arising under the Bankruptcy Code, (b) arising
in or related to the Chapter 11 Cases or the Plan, or (c) that relates to the
following:
o Resolution of any matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease to which the Debtors are a party or with respect to which the Debtors may
be liable and to hear, determine and, if necessary, liquidate, any Claims
arising therefrom, including those matters related to the amendment after the
Effective Date of the Plan, to add any executory contracts or unexpired leases
to the list of executory contracts and unexpired leases to be rejected;
o Entry of such orders as may be necessary or appropriate to
implement or consummate the provisions of the Plan and all contracts,
instruments, releases, and other agreements or documents created in connection
with the Plan;
o Determination of any and all motions, adversary proceedings,
applications and contested or litigated matters that may be pending on the
Effective Date or that, pursuant to the Plan, may be instituted by Reorganized
UC after the Effective Date;
o Ensuring that distributions to holders of Allowed Claims and
Allowed Equity Interests are accomplished as provided herein;
o Hearing and determining any timely objections to
Administrative Expense Claims or to proofs of Claim filed, both before and after
the Confirmation Date, including any objections to the classification of any
Claim and to allow, disallow, determine, liquidate, classify, estimate or
establish the priority of or secured or unsecured status of any Claim, in whole
or in part;
o Entry and implementation of such orders as may be
appropriate in the event the Confirmation Order is for any reason stayed,
revoked, modified, reversed or vacated;
o Issuance of such orders in aide of execution of the Plan, to
the extent authorized by section 1142 of the Bankruptcy Code;
o Consideration of any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order;
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o Hearing and determining all applications for awards of
compensation for services rendered and reimbursement of expenses incurred prior
to the Effective Date;
o Hearing and determining disputes arising in connection with
or relating to the Plan or the interpretation, implementation, or enforcement of
the Plan or the extent of any Entity's obligations incurred in connection with
or released under the Plan;
o Issuance of injunctions or other orders as may be necessary
or appropriate to restrain interference by any Entity with consummation or
enforcement of the Plan;
o Determination of any other matters that may arise in
connection with or are related to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument release or other agreement or
document created in connection with the Plan or the Disclosure Statement;
o Hearing and determining matters concerning state, local and
federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy
Code;
o Hearing any other matter or for any purpose specified in the
Confirmation Order that is not inconsistent with the Bankruptcy Code;
o Entry of a final decree closing the Chapter 11 Cases; and
o To hear and determine any matters that may arise in
connection with the Sale Transaction, the Residual Agreement, the Whole Loan
Agreement the Alternative Residual Sale Transaction and any order of the
Bankruptcy Court with respect to any of the foregoing.
8. MODIFICATION; REVOCATION OR WITHDRAWAL OF PLAN
The Debtors reserve the right, in accordance with the
Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Plan at any
time prior to the entry of the Confirmation Order. After the entry of the
Confirmation Order, the Debtors may, upon order of the Bankruptcy Court, amend
or modify the Plan, in accordance with section 1127(b) of the Bankruptcy Code,
or remedy any defect or omission or reconcile any inconsistency in the Plan in
such manner as may be necessary to carry out the purpose and intent of the Plan.
A holder of a Claim that has accepted the Plan will be deemed to have accepted
the Plan as modified if the proposed modification does not materially and
adversely change the treatment of the Claim of such holder.
The Plan may be revoked or withdrawn prior to the Confirmation
Date by the Debtors. If the Plan is revoked or withdrawn prior to the
Confirmation Date, then the Plan will be deemed null and void. In such event,
nothing contained in the Plan will be deemed to constitute a waiver or release
of any claims by the Debtors or any other Entity or to prejudice in any manner
the rights of the Debtors or any other Entity in any further proceedings
involving the Debtors.
9. SUPPLEMENTAL DOCUMENTS
The Liquidation Trust Agreement, Plan Administration
Agreement, Reorganized UC By-laws and the Reorganized UC Certificate of
Incorporation, in form and substance reasonably satisfactory to the Debtors and
the Creditors' Committee, will be contained in the Plan Supplement. The Plan
Supplement will be filed with the Bankruptcy Court as early as practicable (but
in no event later than ten days) prior to the Confirmation Hearing, or on such
other date as the Bankruptcy Court may establish. The Plan Supplement may be
inspected in the office of the Clerk of the Bankruptcy Court during hours
established therefor. In addition, holders of Claims and Equity Interests may
obtain a copy of the Plan Supplement from the Debtors by contacting Weil,
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Gotshal & Manges LLP, counsel to the Debtors, 767 Fifth Avenue, New York, New
York 10153, Attention: Ms. Denise Sciabarassi. Such copies will be available ten
days prior to the Confirmation Hearing.
VI.
CERTAIN FACTORS TO BE CONSIDERED
HOLDERS OF IMPAIRED CLAIMS AND EQUITY INTERESTS SHOULD READ AND CONSIDER
CAREFULLY THE FACTORS SET FORTH BELOW, AS WELL AS OTHER INFORMATION SET FORTH IN
THIS DISCLOSURE STATEMENT AND THE DOCUMENTS DELIVERED TOGETHER HEREWITH AND/OR
INCORPORATED BY REFERENCE HEREIN, PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN.
A. VARIANCES FROM PROJECTIONS
A fundamental premise of the Plan is the implementation of the
Sale Transaction. The Sale Transaction has certain price adjustments which could
result in lower proceeds available to pay holders of Allowed Bank and Senior
Note Claims. Further, to the extent that Allowed Bank and Senior Note Claims
exceed projected amounts, projected recoveries to holders of Allowed Claims
could decrease.
B. LITIGATION
The nature of the Debtors' business is such that it is
routinely involved in litigation. Litigation that was pending as of the Petition
Date is stayed and will be resolved and treated pursuant to the Plan. Pending
Class Actions and certain other pending actions could result in judgments or
determinations which could reduce the value of the assets subject to the Sale
Transaction. The Debtors have agreed to indemnify Purchaser with respect to
losses resulting from such judgments or determinations. An indemnification
claim, if any, by Purchaser would have a dilutive effect on recoveries of other
holders of Allowed Claims.
C. GOVERNMENTAL REGULATIONS
The Debtors service loans in 50 states and the District of
Columbia, subject to licensing or exemption from licensing requirements granted
by the states, and could be expected to continue servicing such loans on an
interim basis pending transition of servicing under a Sales Transaction. In some
of these states, the Debtors are exempt from the requirement to obtain a state
license by result of their holding licenses or approvals from federal agencies,
including the U.S. Office of Housing and Urban Development ("HUD"). The
applicable licensing statutes in virtually all of these states and the
applicable HUD regulations require that an authorized mortgage loan servicer
submit annual audited financial statements to the regulatory authorities and
maintain a minimum net worth requirement. The Debtors failed to timely submit
their audited financial statements for the year ending December 31, 1998 in
those jurisdictions where required and did not meet the minimum net worth
requirements as of December 31, 1998 in those jurisdictions where required. A
number of state agencies and HUD have initiated action to terminate, revoke,
suspend or deny renewal of the Debtors' licenses or exemption from licensing
because of the failure to meet their requirements. It is the Debtors' position
that section 525 and other sections of the Bankruptcy Code prohibit and stay a
governmental unit from denying, revoking, suspending, or refusing to renew a
license or other similar grant to a debtor in bankruptcy because, among other
things, such debtor is a debtor under the Bankruptcy Code, or has been insolvent
before the commencement of its bankruptcy case or during the case. The Debtors
were able to obtain a preliminary injunction against the Attorney General of the
State of Arkansas and the Commissioner of the Arkansas Securities Department
with respect to actions against the Debtors' servicing rights. The Debtors plan
to attempt to obtain similar injunction relief against other state or federal
agencies as may be necessary to protect their right to continue to service loans
in each of the jurisdictions where they currently service loans. However, the
facts and applicable statutory language differs from jurisdiction to
jurisdiction and no assurance can be given that the Debtors will be successful
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in obtaining protective injunctive or other relief against any particular
governmental agency.
D. CERTAIN TAX MATTERS
For a summary of the federal income tax consequences of the
Plan to holders of Certain Claims and holders of Equity Interests, and to the
Debtors, see Article XIII below, entitled Certain Federal Income Tax
Consequences of the Plan.
VII.
VOTING PROCEDURES AND REQUIREMENTS
A. HOLDERS OF CLAIMS OR EQUITY INTERESTS
IT IS IMPORTANT THAT HOLDERS OF CLAIMS EXERCISE THEIR RIGHT TO
VOTE TO ACCEPT OR REJECT THE PLAN. All known holders of Claims entitled to vote
on the Plan have been sent a Ballot together with this Disclosure Statement.
Such holders should read the Ballot carefully and follow the instructions
contained therein. Please use only the Ballot (or Ballots) that accompanies this
Disclosure Statement.
FOR YOUR VOTE TO COUNT, YOUR BALLOT MUST BE RECEIVED BY THE
BALLOTING AGENT (AS DEFINED BELOW), NO LATER THAN 4:00 P.M., EASTERN TIME, ON
AUGUST 10, 2000. IF YOU MUST RETURN YOUR BALLOT TO YOUR BANK OR BROKER, OR THE
AGENT OF EITHER, YOU MUST RETURN YOUR BALLOT TO THEM IN SUFFICIENT TIME FOR THEM
TO PROCESS IT AND RETURN IT TO THE BALLOTING AGENT, BY THE VOTING DEADLINE.
ANY BALLOT WHICH IS EXECUTED AND RETURNED BUT WHICH DOES NOT
INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF
THE PLAN. IF YOU HAVE ANY QUESTIONS CONCERNING VOTING PROCEDURES OR IF A BALLOT
IS DAMAGED OR LOST, YOU MAY CONTACT THE BALLOTING AGENT AT THE ADDRESS SPECIFIED
BELOW OR BY TELEPHONING:
UNITED COMPANIES BALLOTING AGENT
C/O LOGAN & COMPANY, INC.
546 VALLEY ROAD
UPPER MONTCLAIR, NEW JERSEY 07043
ATTENTION: KATE LOGAN
PHONE: (973) 509-3191)
Additional copies of this Disclosure Statement are available
upon written request to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10 153
Attention: Ms. Denise Sciabarassi
B. PARTIES IN INTEREST ENTITLED TO VOTE
Subject to the provisions of the Disclosure Order, any holder
of a Claim against the Debtors as of June 30, 2000, which Claim has not been
disallowed by order of the Bankruptcy Court and is not disputed, is entitled to
vote to accept or reject the Plan if (a) such Claim is impaired under the Plan
and is not of a Class that is deemed to have accepted or rejected the Plan
pursuant to sections 1126(f) and 1126(g) of the Bankruptcy Code and (b) either
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(i) such holder's Claim has been scheduled by the Debtors (and such Claim is not
scheduled as disputed, contingent or unliquidated), or (ii) such holder has
filed a proof of claim on or before the Bar Date of September 30, 1999, or any
supplemental bar date applicable to specified creditors. In addition, any holder
of an Equity Interest in the Debtors as of June 30, 2000, which Equity Interest
has not been disallowed by order of the Bankruptcy Court and is not disputed, is
entitled to vote to accept or reject the Plan if such Equity Interest is
impaired under the Plan and is not of a Class that is deemed to have accepted or
rejected the Plan pursuant to sections 1126(f) and 1126(g) of the Bankruptcy
Code. UNLESS OTHERWISE PERMITTED IN THE PLAN, THE HOLDER OF ANY DISPUTED CLAIM
OR DISPUTED EQUITY INTEREST IS NOT ENTITLED TO VOTE WITH RESPECT TO SUCH
DISPUTED CLAIM OR DISPUTED EQUITY INTEREST, UNLESS THE BANKRUPTCY COURT, UPON
APPLICATION BY SUCH HOLDER, TEMPORARILY ALLOWS SUCH DISPUTED CLAIM OR DISPUTED
EQUITY INTEREST FOR THE LIMITED PURPOSE OF VOTING TO ACCEPT OR REJECT THE PLAN.
ANY SUCH APPLICATION MUST BE HEARD AND DETERMINED BY THE BANKRUPTCY COURT ON OR
BEFORE FIFTEEN (15) DAYS PRIOR TO THE CONFIRMATION HEARING. A vote on the Plan
may be disregarded if the Bankruptcy Court determines, after notice and a
hearing, that such vote was not solicited or procured in good faith or in
accordance with the provisions of the Bankruptcy Code.
C. CLASSES IMPAIRED AND ENTITLED TO VOTE UNDER THE PLAN
The Claims and Equity Interests included in Classes 3, 4, 5,
6, 7, 8, 9 and 10 are impaired under the Plan and the holders of such Claims and
Equity Interests are entitled to vote to accept or reject the Plan. Claims and
Equity Interests included in Classes 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and
21 are impaired under the Plan and the holders of such Claims are deemed to have
rejected the Plan in accordance with section 1126 of the Bankruptcy Code. Claims
in Classes 1 and 2 are not impaired under the Plan and holders of such Claims
are deemed to have accepted the Plan.
D. VOTE REQUIRED FOR ACCEPTANCE BY CLASSES OF CLAIMS AND EQUITY INTERESTS
The Bankruptcy Code defines acceptance of a plan by a class of
claims as acceptance by holders of at least two-thirds in dollar amount and more
than one-half in number of the claims of that class which actually cast ballots
for acceptance or rejection of the plan. Thus, acceptance by a Class of Claims
occurs only if at least two-thirds in dollar amount and a majority in number of
the holders of such Claims voting cast their Ballots in favor of acceptance.
The Bankruptcy Code defines acceptance of a plan by a class of
equity interests as acceptance by holders of at least two-thirds in amount of
the allowed interests of that class which actually cast ballots for acceptance
or rejection of the plan. Thus, acceptance by a Class of Equity Interests occurs
only if at least two-thirds in amount of the Allowed Equity Interests voting
cast their Ballots in favor of acceptance.
A vote may be disregarded if the Bankruptcy Court determines,
after notice and a hearing, that such acceptance or rejection was not solicited
or procured in good faith or in accordance with the provisions of the Bankruptcy
Code.
CREDITORS AND OTHER PARTIES IN INTEREST ARE CAUTIONED TO
REVIEW THE DISCLOSURE ORDER FOR A FULL UNDERSTANDING OF VOTING REQUIREMENTS,
INCLUDING, WITHOUT LIMITATION, USE OF BALLOTS AND MASTER BALLOTS IN CONNECTION
WITH THE VOTING OF SUBORDINATED DEBENTURE CLAIMS.
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VIII.
CONFIRMATION OF THE PLAN
Under the Bankruptcy Code, the following steps must be taken
to confirm the Plan.
A. CONFIRMATION HEARING
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy
Court, after notice, to hold a hearing on confirmation of a plan. By order of
the Bankruptcy Court, the Confirmation Hearing has been scheduled for August 15,
2000, at 9:30 a.m., Eastern Time, Courtroom of Bankruptcy Judge Mary F. Walrath,
Sixth Floor of the United States Court House, 824 North Market Street
Wilmington, Delaware 19801. The Confirmation Hearing may be adjourned from time
to time by the Bankruptcy Court without further notice except for an
announcement made at the Confirmation Hearing or any adjournment thereof.
Section 1128(b) of the Bankruptcy Code provides that any party
in interest may object to confirmation of a plan. Any objection to confirmation
of the Plan must be in writing, conform to the Federal Rules of Bankruptcy
Procedure and the Local Rules of the Bankruptcy Court, set forth the name of the
objectant, the nature and amount of the Claim or Equity Interest held or
asserted by the objectant against the Debtors' estates or property, the basis
for the objection and the specific grounds therefor. The objection, together
with proof of service thereof, must then be filed with the Bankruptcy Court,
with a copy to chambers, and served upon (i) Weil, Gotshal & Manges LLP,
Attorneys for the Debtors, 767 Fifth Avenue, New York, New York 10153,
Attention: Brian S. Rosen, Esq.; (ii) Richards, Layton & Finger, P.A., Attorneys
for the Debtors, One Rodney Square, Wilmington, Delaware 19899, Attention: Mark
Collins, Esq., (iii) Wachtell Lipton Rosen & Katz, Attorneys for the Creditors'
Committee, 51 West 52nd Street, New York, New York 10019, Attention: Chaim J.
Fortgang, Esq.; (iv) Long, Aldridge & Norman LLP, Attorneys for the Equity
Committee, One Peachtree Center, Suite 5300, 303 Peachtree Street, Atlanta,
Georgia 30308, Attention: Charles E. Campbell; and (v) The United States Trustee
for the District of Delaware, 601 Walnut Street, Curtis Center, Suite 950 West,
Philadelphia, Pennsylvania 19106, Attention: Daniel Astin, Esq.; so as to be
received no later than 4:00 p.m., Eastern Time, on August 9, 2000.
Objections to confirmation of the Plan are governed by Federal
Rule of Bankruptcy Procedure 9014. UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY
SERVED AND FILED, IT MAY NOT BE CONSIDERED BY TIRE BANKRUPTCY COURT.
B. REQUIREMENTS FOR CONFIRMATION OF THE PLAN
At the Confirmation Hearing, the Bankruptcy Court will confirm
the Plan only if all of the requirements of section 1129 of the Bankruptcy Code
are met. Among the requirements for confirmation are that the Plan (a) is
accepted by all impaired Classes of Claims and Equity Interests or, if rejected
by an impaired Class, that the Plan "does not discriminate unfairly" and is
"fair and equitable" as to such Class, (b) is feasible, and (c) is in the "best
interests" of holders of Claims and Equity Interests impaired under the Plan.
1. ACCEPTANCE
Claims and Equity Interests in Classes 3, 4, 5, 6, 7, 8, 9 and
10 are impaired under, and the holder of such Claims and Equity Interests are
entitled to vote on, the Plan and, therefore, must accept the Plan in order for
it to be confirmed without application of the "fair and equitable test,"
described below, to such Classes. As stated above, Classes of (i) Claims will
have accepted the Plan if the Plan is accepted by at least two-thirds in dollar
amount and a majority in number of the
Claims of each such Class (other than any Claims of creditors designated under
section 1126(e) of the Bankruptcy Code) that have voted to accept or reject the
Plan and (ii) Equity Interests will have accepted the Plan if the Plan is
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accepted by at least two-thirds in amount of interests of such Class (other than
any Equity Interests of Persons designated under section 1126(e) of the
Bankruptcy Code) that have voted to accept or reject the Plan.
Claims and Equity Interests in Classes 11, 12, 13, 14, 15, 16,
11, 18, 19, 20 and 21 are impaired; however, holders of such Claims Interests
will not receive or retain property under the Plan and, therefore, such classes
are deemed not to have accepted the Plan. Accordingly, confirmation of the Plan
will require application of the "fair and equitable test", described below, to
such Classes.
Claims or Equity Interests in Classes 1 and 2 are unimpaired
by the Plan, and the holders thereof are conclusively presumed to have accepted
the Plan.
2. FAIR AND EQUITABLE TEST
The Debtors will seek to confirm the Plan notwithstanding the
nonacceptance or deemed nonacceptance of the Plan by any impaired Class of
Claims or Equity Interests. To obtain such confirmation, it must be demonstrated
to the Bankruptcy Court that the Plan "does not discriminate unfairly" and is
"fair and equitable" with respect to such dissenting impaired Class. A plan does
not discriminate unfairly if the legal rights of a dissenting class are treated
in a manner consistent with the treatment of other classes whose legal rights
are substantially similar to those of the dissenting class and if no class
receives more than it is entitled to for its claims or equity interests. The
Debtors believe that the Plan satisfies this requirement.
The Bankruptcy Code establishes different "fair and equitable"
tests for secured claims, unsecured claims and equity interests, as follows:
(A) SECURED CLAIMS.
Either the plan must provide (i) that the holders of such
claims retain the liens securing such claims, whether the property subject to
such hens is retained by the debtor or transferred to another entity, to the
extent of the allowed amount of such claims; and each holder of a claim receives
deferred cash payments totaling at least the allowed amount of such claim, of a
value, as of the effective date of the plan, of at least the value of such
holder's interest in the estate's interest in such property; (ii) for the sale
of any property that is subject to the liens securing such claims, free and
clear of such liens, with such liens to attach to the proceeds of such sale; or
(iii) for the realization by such holders of the indubitable equivalent of such
claims.
(B) UNSECURED CLAIMS.
Either (i) each holder of an impaired unsecured claim receives
or retains under the plan property of a value equal to the amount of its Allowed
Claim or (ii) the holders of claims and interests that are junior to the claims
of the dissenting class will not receive any property under the plan.
(C) EQUITY INTERESTS.
Either (i) each equity interest holder will receive or retain
under the plan property of a value equal to the greater of (x) the fixed
liquidation preference or redemption price, if any, of such stock or (y) the
value of the stock, or (ii) the holders of interests that are junior to the
stock will not receive any property under the plan.
THE DEBTORS BELIEVE THAT THE PLAN MAY BE CONFIRMED ON A
NONCONSENSUAL BASIS (PROVIDED AT LEAST ONE IMPAIRED CLASS OF CLAIMS VOTES TO
ACCEPT THE PLAN). ACCORDINGLY, THE DEBTORS WILL DEMONSTRATE AT THE CONFIRMATION
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HEARING THAT THE PLAN SATISFIES THE REQUIREMENTS OF SECTION 1129(B) OF THE
BANKRUPTCY CODE AS TO ANY NON-ACCEPTING CLASS.
3. FEASIBILITY
The Bankruptcy Code requires that confirmation of a plan is
not likely to be followed by the liquidation or the need for further financial
reorganization of a debtor. The Plan contemplates that although Reorganized UC
will continue to operate for a period postpetition, all assets of the Debtors
will ultimately be disposed of and all proceeds of the assets will be
distributed to the Creditors pursuant to the terms of the Plan. Since no further
financial reorganization of the Debtors will be possible, the Debtors believe
that the Plan meets the feasibility requirement. In addition, based upon the
proceeds resulting from the Sales Transaction, the Debtors believe that
sufficient funds will exist at confirmation to make all payments required by the
Plan.
The Projections are based on the assumption that the Plan will
be confirmed by the Bankruptcy Court and, for projection purposes, that the
Effective Date of the Plan will take place no later than September 15, 2000.
4. "BEST INTERESTS" TEST
With respect to each impaired Class of Claims and Equity
Interests, confirmation of the Plan requires that each such holder either (a)
accepts the Plan or (b) receives or retains under the Plan property of a value,
as of the Effective Date of the Plan, that is not less than the value such
holder would receive or retain if the Debtors were liquidated under chapter 7 of
the Bankruptcy Code.
This analysis requires the Bankruptcy Court to determine what
the holders of Allowed Claims and Allowed Equity Interests in each impaired
class would receive from the liquidation of the Debtors' assets and properties
in the context of chapter 7 liquidation cases. The cash amount which would be
available for the satisfaction of Unsecured Claims and Equity Interests of the
Debtors would consist of the proceeds resulting from the disposition of the
unencumbered assets of the Debtors, augmented by the unencumbered cash hold by
the Debtors at the time of the commencement of the liquidation cases. Such cash
amount would be reduced by the costs and expenses of the liquidation and by such
additional administrative and priority claims that may result from the
termination of the Debtors' business and the use of chapter 7 for the purposes
of liquidation.
The Debtors' costs of liquidation under chapter 7 would
include the fees payable to a trustee in bankruptcy, as well as those payable to
attorneys, investment bankers and other professionals that such a trustee may
engage, plus any unpaid expenses incurred by the Debtors during the Chapter 11
Cases, such as compensation for attorneys, financial advisors, accountants and
costs and expenses of members of any official committees that are allowed in the
chapter 7 cases. In addition, claims could arise by reason of the breach or
rejection of obligations incurred and executory contracts entered into or
assumed by the Debtors during the pendency of the Chapter 11 Cases.
The foregoing types of Claims and such other claims which may
arise in the liquidation cases or result from the pending Chapter 11 Cases would
be paid in fall from the liquidation proceeds before the balance of those
proceeds would be made available to pay prepetition Claims.
To determine if the Plan is in the best interests of each
impaired class, the value of the distributions from the proceeds of the
liquidation of the Debtors' assets and properties (after subtracting the amounts
attributable to the aforesaid claims) is then compared with the value offered to
such classes of Claims and Equity Interests under the Plan.
In applying the "best interests" test, it is possible that
Claims and Equity Interests in the chapter 7 cases may not be classified
according to the seniority of such Claims and Equity Interests. In the absence
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of a contrary determination by the Bankruptcy Court, all pre-Chapter 11
Unsecured Claims which have the same rights upon liquidation would be treated as
one class for the purposes of determining the potential distribution of the
liquidation proceeds resulting from the chapter 7 cases of the Debtors. The
distributions from the liquidation proceeds would be calculated on a pro rata
basis according to the amount of the Claim held by each Creditor. Therefore,
creditors who claim to be third-party beneficiaries of any contractual
subordination provisions might have to seek to enforce such contractual
subordination provisions in the Bankruptcy Court or otherwise. The Debtors
believe that the most likely outcome of liquidation proceedings under chapter 7
would be the application of the rule of absolute priority of distributions.
Under that rule, no junior creditor receives any distribution until all senior
creditors are paid in full with interest and no stockholder receives any
distribution until all Creditors are paid in full with post-petition interest.
Consequently, the Debtors believe that pursuant to chapter 7 of the Bankruptcy
Code, holders of Subordinated Debenture Claims and Equity Interests would
receive no distributions.
After consideration of the effects that a chapter 7
liquidation would have on the ultimate proceeds available for distribution to
creditors in the Chapter 11 Cases, including: (a) the increased costs and
expenses of a liquidation under chapter 7 arising from fees payable to a trustee
in bankruptcy and professional advisors to such trustee; (b) the substantial
erosion in value of assets in a chapter 7 case in the context of the expeditious
liquidation required under chapter 7 and the "forced sale" atmosphere that would
prevail; (c) the adverse effects on the salability of business segments as a
result of the departure of key employees, the loss of customers and suppliers;
and (d) the substantial increases in claims which would be satisfied on a
priority basis or on parity with creditors in the Chapter 11 Cases, the Debtors
believe that confirmation of the Plan will provide each holder of an Allowed
Claim or Allowed Equity Interest with not less than the amount it would receive
pursuant to liquidation of the Debtors under chapter 7 of the Bankruptcy Code.
The Debtors also believe that the value of any distributions
from the liquidation proceeds to each class of Allowed Claims in a chapter 7
case would be less than the value of distributions under the Plan because such
distributions in a chapter 7 case would not occur for a substantial period of
time. It is likely that distribution of the proceeds of the liquidation could be
delayed for at least a year or more after the completion of such liquidation in
order to resolve claims and prepare for distributions. In the likely event
litigation were necessary to resolve claims asserted in the chapter 7 cases, the
delay could be prolonged.
The Debtors' Liquidation Analysis is attached hereto as
Exhibit "C". The information set forth in Exhibit "C" provides a summary of the
liquidation values of the Debtors' assets assuming a chapter 7 liquidation in
which a trustee appointed by the Bankruptcy Court would liquidate the assets of
the Debtors' estate. Reference should be made to the Liquidation Analysis for a
complete discussion and presentation of the Liquidation Analysis.
Underlying the Liquidation Analysis are a number of estimates
and assumptions that, although developed and considered reasonable by
management, are inherently subject to significant economic and competitive
uncertainties and contingencies beyond the control of the Debtors and
management. The Liquidation Analysis is also based upon assumptions with regard
to liquidation decisions that are subject to change. Accordingly, the values
reflected may not be realized if the Debtors were, in fact, to undergo such a
liquidation. The chapter 7 liquidation period is assumed to be a period of six
to eighteen months following the discontinuance of operations. This period would
allow for the collection of receivables, selling of assets including service
contracts, and the winding down of operations.
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IX.
PROJECTED CONFIRMATION VALUES
A. INTRODUCTION
1. PURPOSE OF THE PROJECTIONS
As a condition to confirmation of a plan, the Bankruptcy Code
requires, among other things, that the Bankruptcy Court determine that
confirmation is not likely to be followed by the liquidation or the need for
further financial reorganization of the Debtors. See Section VIII above,
entitled Confirmation of the Plan -- Requirements for Confirmation of the Plan.
In connection with the development of the Plan, and for purposes of determining
whether the Plan satisfies this feasibility standard, the Debtors' management
has analyzed the ability of the Debtors to meet their obligations under the
Plan. In this regard, the Debtors developed Projected Confirmation Values. See
Section VIII above, entitled Confirmation of the Plan -- Requirements For
Confirmation of the Plan -- Feasibility.
The Projected Confirmation Values, annexed hereto as Exhibit
"D", should be read in conjunction with the assumptions, set forth therein, the
historical consolidated financial information (including the notes and schedules
thereto) and the other information set forth in the Form 8-K annexed hereto as
Exhibit "G", the full text of which is incorporated herein by reference, and the
Management Discussion appearing in Article X below, entitled Financial
Information. The Projections were prepared in good faith based upon assumptions
believed to be reasonable and applied, to the extent applicable, in a manner
consistent with past practice.
THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING
WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ("AICPA") OR THE FINANCIAL
ACCOUNTING STANDARDS BOARD ("FASB"). THE DEBTORS' INDEPENDENT ACCOUNTANTS,
DELOITTE & TOUCHE LLP, HAVE NEITHER COMPILED NOR EXAMINED THE ACCOMPANYING
PROSPECTIVE FINANCIAL INFORMATION TO DETERMINE THE REASONABLENESS THEREOF AND,
ACCORDINGLY, HAVE NOT EXPRESSED ANY OPINION OR ANY OTHER FORM OF ASSURANCE WITH
RESPECT THERETO.
THE DEBTORS DO NOT, AS A MATTER OF COURSE, PUBLISH THEIR
BUSINESS PLANS AND STRATEGIES OR PROJECTIONS OF THEIR ANTICIPATED FINANCIAL
POSITION, RESULTS OF OPERATIONS OR CASH FLOWS. ACCORDINGLY, THE DEBTORS DO NOT
INTEND, AND DISCLAIM ANY OBLIGATION TO, (A) FURNISH UPDATED BUSINESS PLANS OR
PROJECTIONS TO HOLDERS OF CLAIMS OR EQUITY INTERESTS PRIOR TO THE EFFECTIVE DATE
OR TO HOLDERS OF REORGANIZED UC COMMON STOCK OR ANY OTHER PARTY AFTER THE
EFFECTIVE DATE, (B) INCLUDE SUCH UPDATED INFORMATION IN ANY DOCUMENTS WHICH MAY
BE REQUIRED TO BE FILED WITH THE SEC, OR (C) OTHERWISE MAKE SUCH UPDATED
INFORMATION PUBLICLY AVAILABLE.
THESE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY,
NECESSARILY ARE BASED UPON A VARIETY OF ESTIMATES AND ASSUMPTIONS, WHICH, THOUGH
CONSIDERED REASONABLE BY MANAGEMENT, MAY NOT BE REALIZED, AND ARE INHERENTLY
SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE PARTIES' CONTROL. THE DEBTORS
CAUTION THAT NO REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE
FINANCIAL PROJECTIONS OR TO THE ABILITY OF REORGANIZED UC TO ACHIEVE THE
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PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE, AND EVENTS
AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS
WERE PREPARED MAY BE DIFFERENT FROM THOSE ASSUMED, OR MAY BE UNANTICIPATED AND
THUS MAY AFFECT FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER. THE
PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER ASSURANCE
OF THE ACTUAL RESULTS THAT WILL OCCUR.
X.
FINANCIAL INFORMATION
A. GENERAL
The audited consolidated financial statements as of December
31, 1998, and for the year then ended, together with the notes thereto and
independent auditor's report thereon, for United Companies, are contained in the
Current Report on Form 8-K dated September 3, 1999, a copy of which is annexed
hereto as Exhibit "G", and the full text of which is incorporated herein by
reference (the "1998 Statements"). The aforementioned financial information is
provided to permit the holders of Claims and Equity Interests to better
understand the Debtors' historical business performance.
B. MANAGEMENT'S DISCUSSION
The 1998 Statements reflected a net loss for 1998 of $583.9
million or $20.74 per share compared to net income of $74.6 million or $2.30 per
share for 1997. The net loss resulted primarily from a $605.6 million writedown
to the valuation of the Debtors' interest-only and residual certificates at
December 31, 1998. This writedown of the interest-only and residual
certificates, net of the allowance for loan losses, was comprised of the
following components:
1) $160.8 million from an increase in the effective
discount rate assumptions applied by the Debtors to expected
future cash releases from the trusts established in the
Debtors' prior securitization transactions;
2) $338.3 million from an increase in the Debtors'
estimated cumulative credit loss rate;
3) $69.5 million from increasing the Debtors'
prepayment speed assumptions;
4) $20.0 million from the estimated impact of
delinquency triggers in the related securitization trusts
which require increased levels of reserve accounts and
over-collateralization under specified circumstances; and
5) $17.0 million from marking certain subordinated
certificates retained by the Debtors in securitization
transactions to estimated market value.
The effective discount rate assumption on cash flows (net of
the related allowance for loan losses) from the Debtors' home equity loan
securitization transactions expected to be received by the Debtors, including
certain cash in the related reserve accounts, was increased from approximately
9% at December 31, 1997, to approximately 22% at December 31, 1998. The
effective discount rate assumption on cash flows (net of the related allowance
for loan losses) expected to be received by the Debtors from manufactured
housing product securitization transactions was increased from approximately 12%
at December 31, 1997, to 18% at December 31, 1998. The increase in the discount
rate assumptions reflects a number of factors, including, but not limited to,
the Debtors' determination of the market's demand at December 31, 1998 for a
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higher rate of return on interest-only and residual certificates backed by
subprime home equity loans and the effect of the distressed state of the
Debtors' business. The Debtors raised their estimate of the cumulative
undiscounted credit loss assumption on home equity loans at December 31, 1998,
from 2.5% for fixed products and 2.0% for ARM products to 7.7% on all home
equity products to reflect a number of factors, including, but not limited to,
anticipated increased loss severity, higher out-of-pocket costs of disposal of
repossessed properties and increased delinquency in the portfolio of loans
serviced.
On a quarterly basis on and prior to December 31, 1998, the
Debtors analyzed the prepayment speed assumptions utilized in valuing their
interest-only and residual certificates and revised their estimates when
required. As of December 31, 1998, the Debtors, based on then current data and
expectations, increased their estimates of life-to-date (i.e., an average
lifetime prepayment speed) prepayment speeds on their securitized home equity
loans as follows:
1) from 24.0% to 30.1% for fixed-rate loans,
2) from 28.0% to 33.3% for its adjustable-rate
mortgage (ARM) loans, and
3) from 24.0% to 30.5% for its hybrid loans.
The Debtors' revised assumptions were used in the valuation of
their interest-only and residual certificates as of December 31, 1998, and in
the calculation of loan sale gains for home equity loans and manufactured
housing contracts sold during the quarter then ended. At December 31, 1998, the
contractual balance of home equity loans serviced was approximately $6.4
billion, including $3.7 billion in fixed rate home equity loans, $0.9 billion in
ARMS and $1.8 billion in hybrid loans, of which $1.5 billion of hybrid loans
originally had fixed rates for three years. Home equity loans serviced at
December 31, 1998 also include $697.5 million of loans in the Debtors' 1998
fourth quarter home equity loan securitization transaction for which the
servicing was sold and transferred in the first quarter of 1999. Additionally,
the contractual balance of manufactured housing contracts serviced at December
31, 1998 was $721 million.
The percentage of home equity loans thirty days or more
delinquent, including defaulted loans (i.e., bankruptcies and foreclosures), at
December 31, 1998 was 12.24% compared to 10.63% at December 31, 1997 and 10.82%
at September 30, 1998. The percentage of manufactured housing contracts thirty
days or more delinquent at December 31, 1998 was 7.15% compared to 5.73% at
December 31, 1997 and 6.14% at September 30, 1998.
Net charge-offs on home equity loans were $48.7 million for
the year ended December 31, 1998 compared to $31.0 million for the year ended
December 31, 1997 and $12.5 million for the quarter ended December 31, 1998,
compared to $14.2 million for the quarter ended September 30, 1998. The
charge-off rate on the average aggregate principal balance of home equity loans
serviced for the year ended December 31, 1998 was .81% compared to .65% for the
year ended December 31, 1997. Net charge-offs on manufactured housing contracts
were $5.5 million for the year ended December 31, 1998 compared to $0.9 million
for the year ended December 31, 1997. The charge-off rate on the average
aggregate principal balance of manufactured housing contracts serviced for the
year ended December 31, 1998 was .85% compared to .27% for the year ended
December 31, 1997.
The reserve for loan losses on owned and serviced home equity
loans totaled $502.1 million (or 7.7% of total home equity loans owned and
serviced) at December 31, 1998 compared to $88.4 million (or 1.6% of total home
equity loans owned and serviced) at December 31, 1997. The reserve for loan
losses on owned and serviced manufactured housing contracts totaled $29.9
million (or 7.1% of total manufactured housing contracts owned and serviced) at
December 31, 1998 compared to $21.9 million (or 4.9% of total manufactured
housing contracts owned and serviced) at December 31, 1997.
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The examination of United Companies' 1999 financial statements
by United Companies' auditors, Deloitte & Touche, has not been completed.
The 1999 unaudited financial statements, as filed with the
U.S. Bankruptcy Court, show a net loss of $76.0 million. The net loss for the
two month period ended February 29, 1999 was $36.4 million and includes the
losses incurred in operating the retail branch network. On March 1, 1999, United
Companies and certain of its subsidiaries commenced proceedings under Chapter 11
of the Bankruptcy Code. Pursuant to orders dated May 11, 1999, the Bankruptcy
Court approved the transfer of substantially all of the assets of United
Companies' loan origination business to Aegis. The transaction involved a sale
of assets under section 363 of the Bankruptcy Code and the assumption and
assignment of leases under section 365 of the Bankruptcy Code. The sale to Aegis
closed on June 1, 1999. Consummation of the Aegis transaction was part of United
Companies' plan to exit from the loan origination business and to focus on its
loan servicing business. In March and April of 1999, United Companies continued
to operate the retail branch network until its sale on June 1, 1999. The
operating focus for the remainder of 1999 was centered on the servicing
operations and, in particular, United Companies' methods of disposing of
non-performing loans. The operating results for the post-petition part of 1999
shows a net loss of $39.6 million; approximately $20.0 million of this loss was
incurred in the March and April period prior to disposal of the retail branch
network, an additional loss of $10.5 million was recorded in December 1999 to
reflect the impact of funding a letter of credit in two of the securitizations,
and a $7.3 million reduction in estimated value of certain subordinated
certificates. The post-petition period statement of operations shows
approximately $32 million in interest income from owned loans, $8.0 million from
servicing operations (before allocation of administrative overhead), and
approximately $37 million in bankruptcy costs.
As disclosed in the March 2000 Monthly Operating Report,
United Companies has determined that a further negative adjustment to the
interest-only and residual certificates at December 31, 1999 of approximately
$88 million is required. This negative adjustment is primarily comprised of the
following:
o $77 million increase in estimated credit losses
o $10.0 million net impact of excess loss triggers and
prepayment speeds
The change in the loss assumptions used by the Debtors as of
December 31, 1999 in computing the carrying value of the Interest-only and
residual certificates, net of the allowance for loan losses, resulted in a
negative adjustment of $76.9 million principally caused by an increase in the
estimate of the number of defaulted loans. For the home equity loans, United
Companies generally assumes projected cumulative undiscounted losses, based on a
seasoning curve, of approximately 770 basis points for its fixed rate,
adjustable rate and hybrid loan products. However, for the next twelve months,
United Companies changed its assumption to reflect projected losses based on
loan level analysis of the repossessed properties and foreclosure-in-process
inventories instead of using the seasoning curve. United Companies raised its
estimate of the credit loss assumption for the next twelve months to reflect the
anticipated increase in default rates and higher costs of disposal for
properties that are currently in the repossessed properties and
foreclosure-in-process inventories.
The discount rate assumption used by United Companies as of
December 31, 1999 in computing the carrying value of the Interest-only and
residual certificates, net of the allowance for loan losses, did not change as
compared to the assumptions used as of December 31, 1998. Effective with the
implementation of SFAS No. 125 on January 1, 1997, the carrying value of the
Interest-only and residual certificates was estimated based on the expected
dates that the cash is to be received by United Companies (released from the
related Reserve Accounts and Overcollateralization Amounts). This is often
referred to as the "cash out" or "net releases" method.
The percentage of home equity loans thirty days or more
delinquent, including defaulted loans (i.e., bankruptcies and foreclosures), at
December 31, 1999 was 19.65% compared to 12.24% at December 31, 1998 and 18.06%
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at September 30, 1999. The percentage of manufactured housing contacts thirty
days or more delinquent at December 31, 1999 was 9.87% compared to 7.15% at
December 31, 1998 and 10.26% at September 30, 1999.
The Debtors are currently evaluating additional adjustments to
the amounts reported in their financial statements as a result of the Residual
Agreement and the Whole Loan Agreement.
XI.
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
The Debtors have evaluated several alternatives to the Plan.
After studying these alternatives, including the continuation of the Debtors'
business, as proposed in the Equity Committee Plan, by using the Debtors'
projected cash flows the Debtors have concluded that the Plan is the best
alternative and will maximize recoveries by parties in interest, assuming
confirmation of the Plan. The following discussion provides a summary of the
Debtors' analysis leading to its conclusion that a liquidation under chapter 7
or alternative plan of reorganization would not provide the highest value to
parties in interest.
A. LIQUIDATION UNDER CHAPTER 7
If no plan of reorganization can be confirmed, the Debtors'
Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy
Code in which a trustee would be elected or appointed to liquidate the assets of
the Debtors for distribution to the holders of Claims and, if permitted, Equity
Interests in accordance with the priorities established by the Bankruptcy Code.
A discussion of the effect that a chapter 7 liquidation would have on the
recovery of holders of Allowed Claims and Allowed Equity Interests is set forth
in Section VIII.B.4. herein, entitled Confirmation of the Plan - Requirements
for Confirmation of the Plan - Best Interests Test. The Debtors believe that
liquidation under chapter 7 would result in (1) smaller distributions being made
to holders of Claims than those provided for in the Plan, and (2) no
distributions being made to holders of Class 7 and Class 8 Subordinated
Debenture Claims or Equity Interests.
B. ALTERNATIVE PLAN OF REORGANIZATION
If neither the Plan nor the Equity Committee Plan is
confirmed, the Debtors or any other party in interest could attempt to formulate
a different plan. Such a plan might involve either a reorganization and
continuation of the Debtors' business or an orderly liquidation of their assets.
The Debtors estimated the value which would result from the continuation of the
Debtors operations, after assuming that the Debtors whole loan portfolio was
sold and the proceeds used to retire existing debt. Two scenarios were
considered:
o Reorganize, retain all assets, engage a subservicer and
maintain 100% of current debt and equity.
o Reorganize, sell whole loans, retain other core assets,
engage a subservicer and maintain $200 million of indebtedness.
The Debtors' First and Second Reorganization Scenarios are attached
hereto as Exhibit E.
The key factors considered in the development of the above
scenarios were based on, among other factors, historical experience, the
engagement of a sub-servicer, and management's expectations regarding future
events. The scenarios were prepared to estimate the future cash flows and
pro-forma financial position of the Debtors for the next five years. The cash
flows and pro-forma financial position were then discounted to present value.
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The projections from the first scenario demonstrated that (a)
the projected cash flows of the reorganized company were not sufficient to
service the projected debt interest and repayment requirements; (b) the
reorganized company incurred net losses which would prevent its qualification as
an approved loan service operator in many states; and (c) the present value of
the projected cash flows and remaining assets was less than the Projected
Confirmation Values under the Plan. The projections from the second scenario
demonstrated that the present value of the projected cash flows and remaining
assets was less than the Projected Confirmation Values under the Plan.
A comparison of the Projected Confirmation Values, First and
Second Reorganization Scenarios and the Liquidation Analysis is included in
Exhibit F.
XII.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
THE FOLLOWING DISCUSSION IS A SUMMARY OF CERTAIN OF THE
SIGNIFICANT FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN TO THE DEBTORS AND TO
HOLDERS OF CLAIM[S] AND EQUITY INTERESTS AND IS BASED ON THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED TO THE DATE HEREOF (THE "TAX CODE"), TREASURY
REGULATIONS PROMULGATED AND PROPOSED THEREUNDER, JUDICIAL DECISIONS AND
PUBLISHED ADMINISTRATIVE RULES AND PRONOUNCEMENTS OF THE INTERNAL REVENUE
SERVICE ("IRS") AS IN EFFECT ON THE DATE HEREOF. CHANGES IN SUCH RULES OR NEW
INTERPRETATIONS THEREOF COULD SIGNIFICANTLY AFFECT THE TAX CONSEQUENCES
DESCRIBED BELOW. NO RULINGS HAVE BEEN REQUESTED FROM THE IRS. MOREOVER, NO LEGAL
OPINIONS HAVE BEEN REQUESTED FROM COUNSEL WITH RESPECT TO ANY OF THE TAX ASPECTS
OF THE PLAN.
THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE
PLAN TO THE HOLDERS OF CLAIMS AND EQUITY INTERESTS MAY VARY BASED UPON THE
INDIVIDUAL CIRCUMSTANCES OF EACH HOLDER. IN ADDITION, THIS DISCUSSION DOES NOT
COVER ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO THE DEBTORS
OR THE HOLDERS OF ALLOWED CLAIMS OR EQUITY INTERESTS, NOR DOES THE DISCUSSION
DEAL WITH TAX ISSUES PECULIAR TO CERTAIN TYPES OF TAXPAYERS (SUCH AS DEALERS IN
SECURITIES, S CORPORATIONS, LIFE INSURANCE COMPANIES, FINANCIAL INSTITUTIONS,
TAX-EXEMPT ORGANIZATIONS AND FOREIGN TAXPAYERS). THIS DISCUSSION DOES NOT
ADDRESS THE TAX CONSEQUENCES TO HOLDERS OF CLAIMS WHO DID NOT ACQUIRE SUCH
CLAIMS ON ORIGINAL ISSUE. NO ASPECT OF FOREIGN, STATE, LOCAL OR ESTATE AND GIFT
TAXATION IS ADDRESSED.
THE FOLLOWING SUMMARY IS, THEREFORE, NOT A SUBSTITUTE FOR
CAREFUL TAX PLANNING AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH
HOLDER OF A CLAIM OR EQUITY INTEREST. HOLDERS OF CLAIMS OR EQUITY INTERESTS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS FOR THE FEDERAL, STATE, LOCAL AND OTHER
TAX CONSEQUENCES PECULIAR TO THEM UNDER THE PLAN.
A. INTRODUCTION
Under the Plan, there will be a Sale Transaction in which
certain of the assets of the Debtors will be sold. The consideration for the
sale of the assets will be used to pay holders of Claims under the Plan.
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B. CONSEQUENCES TO DEBTORS
Debtors estimate that they have consolidated net operating
loss carryovers ("NOLs") through 1999. Debtors anticipate that losses will be
realized in connection with the Sale Transaction. The amount of such NOLs
remains subject to examination by the IRS. Pursuant to the Plan, certain of
Debtors' assets will be sold, or transferred directly or indirectly to holders
of certain Claims, including transfers to the Litigation Trust. See Section
XII.C, below, "Consequences to Holders of Claims and Equity Interests." Debtors'
sale or direct or indirect transfer of its assets to holders of Claims pursuant
to the Plan will constitute a taxable disposition of such assets. Nevertheless,
due to the substantial tax basis Debtors have in assets which are being sold and
Debtors' available NOL carryforwards for federal income tax purposes, Debtors do
not expect the sale or other disposition of its assets will result in any
significant tax liability to Debtors.
1. DISCHARGE OF INDEBTEDNESS
In general, the discharge of a debt obligation by a debtor for
an amount less than the adjusted issue price (generally, the amount received
upon incurring the obligation plus the amount of any previously amortized
original issue discount and less the amount of any previously amortized bond
issue premium) gives rise to cancellation-of-indebtedness ("COD") income which
must be included in a debtor's income for federal income tax purposes, unless,
in accordance with section 108(e)(2) of the Tax Code, payment of the liability
would have given rise to a deduction. COD income is not recognized by a taxpayer
that is a debtor in a title 11 (bankruptcy) case if a discharge is granted by
the court or pursuant to a plan approved by the court (the "bankruptcy exclusion
rules").
Pursuant to the Plan, Administrative Expense Claims,
Professional Compensation and Reimbursement Claims, Allowed Priority Non-Tax
Claims and Convenience Claims will be paid in full and, therefore, treatment of
such Claims should not give rise to COD income. With respect to other Claims,
there could be COD income if such Claims are not satisfied in full. Based upon
current estimates of value, the Debtors believe that consummation of the Plan
will give rise to COD income that will be excluded from gross income as
described above, but will reduce attributes as described below.
2. ATTRIBUTE REDUCTION
The relief accorded to COD income by the bankruptcy exclusion
rules is not without cost. If a taxpayer excludes COD income because of the
bankruptcy exclusion rules, it is required to reduce prescribed tax attributes,
including net operating loss carryovers, in the manner set forth in the Tax
Code.
Under existing law, it is unclear whether a taxpayer filing a
federal consolidated income tax return must reduce its tax attributes on a
separate company basis or on a consolidated basis. However, because any
reduction in tax attributes does not effectively occur until the first day of
the taxable year following the taxable year in which the COD is incurred, the
resulting COD will not impair Debtors' ability to use its tax attributes (to the
extent otherwise available) to reduce its tax liability, if any, otherwise
resulting from the implementation of the Plan. In addition, the calculation of
attribute reduction on a separate company or on a consolidated basis may not
make a significant difference to the Debtors in subsequent tax years,
particularly because the Debtors are selling substantially all of their assets.
3. UTILIZATION OF NET OPERATING LOSS CARRYOVERS
In general, whenever there is a 50% ownership change of a
debtor corporation during a three-year period, the ownership change rules in
section 382 of the Tax Code limit the utility of NOLs on an annual basis.
Because substantially all of the assets of the Debtors will be disposed of
before or in connection with a plan of reorganization, section 382 should not
have any material effect on the tax liabilities of the Debtors.
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4. ALTERNATIVE MINIMUM TAX
A corporation is required to pay alternative minimum tax to
the extent that 20% of "alternative minimum taxable income" ("AMTI") exceeds the
corporation's regular tax liability for the year. AMTI is generally equal to
regular taxable income with certain adjustments. For purposes of computing AMTI,
a corporation is entitled to offset no more than 90% of its AMTI with NOLs (as
computed for alternative minimum tax purposes). Thus, if the Debtors'
consolidated group is subject to the alternative minimum tax in future years, a
federal tax of 2% (20% of the 10% of AMTI not offset by NOLs) will apply to any
net taxable income earned by the Reorganized UC's consolidated group in future
years that is otherwise offset by NOLs. Such liabilities, if any, are not
expected to be material.
C. CONSEQUENCES TO HOLDERS OF CLAIMS AND EQUITY INTERESTS
The federal income tax consequences of the implementation of
the Plan to a holder of a Claim will depend, among other things, upon the origin
of the holder's Claim, when the holder's Claim becomes an Allowed Claim, when
the holder receives payment in respect of such Claim, whether the holder reports
income using the accrual or cash method of accounting, whether the holder has
taken a bad debt deduction or worthless security deduction with respect to such
Claim and whether the holder's Claim constitutes a "security" for federal income
tax purposes.
1. HOLDERS OF ADMINISTRATIVE EXPENSE CLAIMS (UNCLASSIFIED),
PROFESSIONAL COMPENSATION AND REIMBURSEMENT CLAIMS
(UNCLASSIFIED), AND PRIORITY NON-TAX CLAIMS (CLASS 1)
Holders of Administrative Expense Claims (Unclassified),
Professional Compensation and Reimbursement Claims (Unclassified) and Allowed
Priority Non-Tax Claims (Class 1) generally will be paid in full in Cash on, or
subsequent to, the Effective Date. Such holders that are subject to U.S. federal
income tax must include such amounts in their gross income in the taxable year
in which such amounts are actually or constructively received by them.
2. HOLDERS OF SECURED CLAIMS (CLASS 2), GENERAL UNSECURED CLAIMS
(CLASS 5) AND CONVENIENCE CLAIMS (CLASS 6)
A holder of an Allowed Secured Claim (Class 2), of an Allowed
General Unsecured Claim (Class 5) and of an Allowed Convenience Claim (Class 6)
will realize gain or loss in an amount equal to the difference between (a) the
holder's basis in the such Claim (other than amounts allocable to a Claim for
accrued but unpaid interest) and (b) the amount of Cash and the fair market
value of any property received (other than amounts allocable to a Claim for
accrued but unpaid interest). See Section XII.C.5, below "Distributions in
Discharge of Accrued Unpaid Interest".
3. HOLDERS OF BANK CLAIMS (CLASS 3) AND SENIOR NOTE CLAIMS (CLASS
4)
Holders of Allowed Bank Claims (Class 3) and Allowed Senior
Note Claims (Class 4) may receive, in satisfaction and discharge of such Claims,
Cash and beneficial Litigation Trust Interests.
Each holder of an Allowed Claim in Class 3 and Class 4 will
recognize gain or loss in an amount equal to the difference between (i) the
"amount realized" by such holder in satisfaction of its Claim (other than any
Claim for accrued but unpaid interest) and (ii) such holder's adjusted tax basis
in such Claim (other than any Claim for accrued but unpaid interest). See
Section XII.C.5, below, "Distributions in Discharge of Accrued Interest". The
"amount realized" by a holder of a Claim will equal the sum of the Cash and the
aggregate fair market value of the property received, or deemed received on
receipt of Litigation Trust Interests, by such holder pursuant to the Plan. See
Section XII.C.6, below "Transfer of Assets to Litigation Trust". The character
of such gain or loss or loss (i.e., long-term, short-term, capital or ordinary)
will depend on the characteristics of such claim in the hands of the holder.
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4. SUBORDINATED DEBENTURE CLAIMS (CLASS 7), SUBORDINATED PENALTY
CLAIMS (CLASS 8), PRIDE EQUITY INTERESTS (CLASS 9),
STATUTORILY SUBORDINATED CLAIMS (CLASS 10A) AND UNITED
COMPANIES COMMON EQUITY INTERESTS (CLASS 10B)
Holders of Allowed Subordinated Debenture Claims (Class 7),
Allowed Subordinated Penalty Claims (Class 8), Allowed Pride Equity Interests
(Class 9), Allowed Statutorily Subordinated Claims (Class 10A) and Allowed
United Companies Common Equity Interests (Class 10B) may receive, in
satisfaction and discharge of such Claims and Equity Interests, beneficial
Litigation Trust Interests.
Each holder of an Allowed Claim or Allowed Equity Interest in
Classes 7, 8, 9 and 10 will recognize gain or loss in an amount equal to the
difference between (i) the "amount realized" by such holder in satisfaction of
its Claim (other than any Claim for accrued but unpaid interest) or Equity
Interest, as the case may be, and (ii) such holder's adjusted tax basis in such
Claim (other than any Claim for accrued but unpaid interest) or Equity Interest,
as the case may be, and the character of such loss (i.e., long-term, short-term,
capital or ordinary) will depend on the characteristics and holding period of
such Claim in the hands of the holder. See Section XII. C.5 below,
"Distributions in Discharge of Accrued Interest."
5. DISTRIBUTIONS IN DISCHARGE OF ACCRUED UNPAID INTEREST
Pursuant to the Plan, distributions received in respect of
Allowed Claims will be allocated first to the principal amount of such Claims,
with any excess allocated to unpaid accrued interest. However, there is no
assurance that the IRS for federal income tax purposes would respect such
allocation. In general, to the extent that an amount received (whether stock,
cash or other property) by a holder of debt is received in satisfaction of
interest that accrued during its holding period, such amount will be taxable to
the holder as interest income (if not previously included in the holder's gross
income). Conversely, a holder generally recognizes a deductible loss to the
extent any accrued interest claimed was previously included in its gross income
and is not paid in fall. Each holder of a Claim is urged to consult its tax
advisor regarding the allocation of consideration and the deductibility of
unpaid interest for tax purposes.
6. TRANSFER OF ASSETS TO LITIGATION TRUST
In accordance with section 27.4(b) of the Plan, the holders of
Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10
are required, for all federal income tax purposes, to treat the transfer of
assets to the Litigation Trust as a transfer of such assets to the holders (with
each holder receiving an undivided interest in such assets), followed by a
transfer of such assets to the Litigation Trust in exchange for the beneficial
interests therein. As discussed below (see "Tax Treatment of the Litigation
Trust"), the Litigation Trust is intended to be treated as a "grantor trust" for
federal income tax purposes. Accordingly, each person that holds an interest in
the Litigation Trust shall be treated for federal income tax purposes, even
after the Effective Date, as a direct owner of an undivided interest in the
assets of the Litigation Trust. In addition, for all federal income tax
purposes, the holders are required to use as the value of such Litigation Trust
the value determined by the Litigation Trust Board. Holders will be apprised, in
writing, of such valuation.
In general, a holder's aggregate tax basis in the Litigation
Trust Interest received will equal the fair market value of such holder's share
of the assets transferred to the Litigation Trust pursuant to the Plan, and the
holding period for such Litigation Trust Interests will begin the day following
the Effective Date. Similarly, in general, a holder's aggregate tax basis in its
undivided interest in the assets transferred to the Litigation Trust will equal
the fair market value of such undivided interest as of the Effective Date and
the holder's holding period in such assets will begin the day following the
Effective Date. Due to the fact that holders of certain Allowed Claims may
receive additional distributions in respect of Disputed Claims once such Claims
are resolved, any loss, and a portion of any gain, realized by such holders may
be deferred until the final distribution in respect of such Claims is made.
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7. INFORMATION REPORTING AND WITHHOLDING
All distributions to holders of Allowed Claims under the Plan
are subject to any applicable withholding (including employment tax
withholding). Under federal income tax law, interest, dividends, and other
reportable payments may, under certain circumstances, be subject to "backup
withholding" at a rate of 31%. Backup withholding generally applies if the
holder (a) fails to furnish its social security number or other taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails
properly to report interest or dividends, or (d) under certain circumstances,
fails to provide a certified statement signed under penalty of perjury, that the
TIN provided is its correct number and that it is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons are exempt from backup withholding, including, in certain
circumstances, corporations and financial institutions.
D. TAX TREATMENT OF THE LITIGATION TRUST
1. CLASSIFICATION OF LITIGATION TRUST
The Litigation Trust is intended to qualify as a liquidation
trust for federal income tax purposes. In general, a liquidating trust is not a
separate taxable entity but rather is treated for federal income tax purposes as
a "grantor" trust (i.e., a pass-through entity). However, merely establishing a
trust as a liquidating trust does not ensure that it will be treated as a
grantor trust for federal income tax purposes. The IRS, in Rev. Proc. 94-45,
1994-28 I.R.B. 124, set forth the general criteria for obtaining an IRS ruling
as to the grantor trust status of a liquidating trust under a chapter 11 plan.
The Litigation Trust has been structured with the intention of complying with
such general criteria. Pursuant to the Plan, and in conformity with the IRS
revenue procedure, all parties (including Debtors, the Litigation Trustee, and
the holders of Litigation Trust Interests are required to treat, for federal
income tax purposes, the Litigation Trust, as a grantor trust of which the
holders of Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8,
9 and 10 are the owners and grantors. Accordingly, the following discussion
assumes that the Litigation Trust would be so treated for federal income tax
purposes. However, no ruling has been requested from the IRS concerning the tax
status of the Litigation Trust as a grantor trust. Because of the uncertainty
that exists in this area of the tax law, there can be no assurance as to the
federal income tax classification of the Litigation Trust.
2. TAX REPORTING
For all federal income tax purposes, all parties (including
Debtors, the Litigation Trustee and the holders of Litigation Trust Interests)
must treat the transfer of assets to the Litigation Trust in accordance with the
terms of the Plan, as a transfer of such assets directly to the holders of
Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10
followed by the transfer of such assets by such holders to the Litigation Trust.
Consistent therewith, all parties must treat the Litigation Trust as a grantor
trust of which such holders are the owners and grantors. Thus, such holders (and
any subsequent holders of Litigation Trust Interests) shall be treated as the
direct owners of an undivided interest in the assets of the Litigation Trust for
all federal income tax purposes (which assets will have a tax basis equal to
their fair market value on the Effective Date, as determined in accordance with
the Plan). Accordingly, each holder of a Litigation Trust Interest will be
required to report on its federal income tax return(s) the holder's allocable
share of any income, gain, loss, deduction or credit recognized or incurred by
the Litigation Trust. The character of items of income, deduction and credit to
any holder and the ability of such holder to benefit from any deduction or
losses may depend on the particular situation of such holder. See Section
XII.D.3, below "Allocation of Taxable Income and Loss".
The federal income tax obligations of a holder of a Litigation
Trust Interest is not dependent upon the Litigation Trust distributing any cash
or other proceeds. Therefore, a holder of a Litigation Trust Interest may incur
a federal income tax liability regardless of the fact that the Litigation Trust
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has not made, or will not make, any concurrent or subsequent distributions to
the holder. If a holder incurs a federal tax liability but does not receive
distributions commensurate with the taxable income allocated to it, the holder
may be entitled to a subsequent or offsetting loss.
As soon as possible after the Effective Date, but in no event
later than thirty (30) days thereafter, the Litigation Trust Board will inform,
in writing, the Litigation Trustee of the value of the assets transferred to the
Litigation Trust and the Litigation Trustee will apprise, in writing, the
holders of Litigation Trust Interests of such valuation. The valuation shall be
used consistently by all parties (including Debtors, the Litigation Trustee and
the holders of Litigation Trust Interests) for all federal income tax purposes.
The Litigation Trustee will file with the IRS returns for the
Litigation Trust as a grantor trust pursuant to Treasury Regulation section
1.671-4(a). The Litigation Trustee will also send to each holder of a Litigation
Trust Interest a separate statement setting forth the holder's share of items of
income, gain, loss, deduction or credit and will instruct the holder to report
such items on its federal income tax return. The Litigation Trustee shall also
file all appropriate tax returns and supply the holders with appropriate forms
regarding the escrow on account of Disputed Claims and Disputed Equity
Interests.
3. ALLOCATION OF TAXABLE INCOME AND LOSS
The Plan provides that allocations of Litigation Trust taxable
income shall be determined by reference to the manner in which an amount of Cash
equal to such taxable income would be distributed (without regard to any
restrictions on distributions described herein or in the Plan) if, immediately
prior to such deemed distribution, the Litigation Trust had distributed all of
its other assets (valued for this purpose at their tax book value) to the
holders of Litigation Trust Interests (treating any holder of a Disputed Claim
or a Disputed Equity Interest, for this purpose, as a current holder entitled to
distributions), taking into account all prior and concurrent distributions from
the Litigation Trust (including all distributions held in escrow pending the
resolution of Disputed Claims and Equity Interests). Similarly, taxable loss of
the Litigation Trust will be allocated by reference to the manner in which an
economic loss would be borne immediately after a liquidating distribution of the
remaining Litigation Trust assets. The tax book value of the Litigation Trust
assets for this purpose shall equal their fair market value on the Effective
Date or, if later, the date such assets were acquired by the Trust, adjusted in
either case in accordance with tax accounting principles prescribed by the Tax
Code, the regulations and other applicable administrative and judicial
authorities and pronouncements.
4. ESCROW
The Litigation Trustee must maintain an escrow of any
distributable amounts required to be set aside on account of Disputed Claims.
Such amounts, net of certain expenses, shall be distributed as such Disputed
Claims are resolved as such amounts would have been distributable had the
Disputed Claims been Allowed Claims as of the Effective Date, together with any
net earnings related thereto.
The escrow shall be responsible for payment of taxes
attributable to the taxable income of the Litigation Trust allocable to Disputed
Claims. The Litigation Trustee will treat the escrow as a discrete trust for
federal revenue tax purposes, consisting of separate shares to be established in
respect of each Disputed Claim, and pay tax on the taxable income allocated
thereto.
THE FOREGOING SUMMARY HAS BEEN PROVIDED FOR INFORMATIONAL
PURPOSES ONLY. EACH HOLDER OF A CLAIM OR EQUITY INTEREST IS URGED TO CONSULT ITS
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES
APPLICABLE UNDER THE PLAN.
PLEASE BE ADVISED THAT THE FOREGOING IS SUBJECT TO CHANGE IN
THE EVENT OF AN ALTERNATE RESIDUAL SALE TRANSACTION, AS DEFINED WITHIN THE PLAN
OF REORGANIZATION. AN ALTERNATE RESIDUAL SALE TRANSACTION WILL RESULT ONLY IF
106
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THE BANKRUPTCY COURT FINDS THAT IT IS A HIGHER AND BETTER OFFER THAN THE SALE
TRANSACTION PROPOSED WITH EMC AND THEREFORE AN IMPROVED RESULT TO CREDITORS. AT
THIS TIME, THE DEBTORS DO NOT KNOW WHETHER SUCH AN ALTERNATE RESIDUAL SALE
TRANSACTION WELL OCCUR OR WHAT THE STRUCTURE OF THE ALTERNATE RESIDUAL SALE
TRANSACTION MAY BE.
107
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XIII.
CONCLUSION AND RECOMMENDATION
The Debtors believe that the Plan is in the best interests of
all holders of Claims and Equity interests and urges the holders of impaired
Claims or Equity Interests in Classes 3, 4, 5, 6, 7, 8, 9 and 10 to vote to
accept the Plan and to evidence such acceptance by returning their ballots so
that they will be actually received on or before 4:00 p.m., Eastern Time, on
August 10, 2000.
Dated: Baton Rouge, Louisiana
July 7, 2000
Respectfully submitted,
UNITED COMPANIES FINANCIAL CORPORATION
By: /s/ Lawrence J. Ramaekers
-----------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
/s/ Brian S. Rosen
--------------------------------
Harvey R. Miller
Marcia L. Goldstein
Brian S. Rosen
Members of the Firm
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
/s/ Mark D. Collins
--------------------------------
Mark D. Collins (No. 2981)
A Member of the Firm
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
Wilmington, Delaware 19899
Attorneys for Debtors and Debtors in Possession
108
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EXHIBIT A
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: Chapter 11
Case Nos. 99-450 (MFW) through
UNITED COMPANIES FINANCIAL 99-461 (MFW)
CORPORATION, ET AL., JOINTLY ADMINISTERED
Debtors.
----------------------------
SECOND AMENDED PLAN OF REORGANIZATION
FOR DEBTORS PURSUANT TO CHAPTER 11
OF THE UNITED STATES BANKRUPTCY CODE
WEIL, GOTSHAL & MANGES LLP RICHARDS, LAYTON & FINGER, P.A.
767 Fifth Avenue One Rodney Square
New York, New York 10153 Wilmington, Delaware 19899
Attorneys for Debtors and Attorneys for Debtors and
Debtors in Possession Debtors in Possession
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS ....................................................................................................1
1.1 Administrative Expense Claim.............................................................................1
1.2 Adobe Financial..........................................................................................1
1.3 Adobe Financial Common Equity Interest...................................................................1
1.4 Adobe....................................................................................................1
1.5 Adobe Common Equity Interest.............................................................................1
1.6 Affiliate................................................................................................1
1.7 Agent....................................................................................................1
1.8 Allowed Administrative Expense Claim.....................................................................1
1.9 Allowed Claim/Allowed Equity Interest....................................................................1
1.10 Allowed Bank Claim.......................................................................................2
1.11 Allowed Borrower Litigation Claim........................................................................2
1.12 Allowed Convenience Claim................................................................................2
1.13 Allowed General Unsecured Claim..........................................................................2
1.14 Allowed Pride Equity Interest............................................................................2
1.15 Allowed Priority Non-Tax Claim...........................................................................2
1.16 Allowed Priority Tax Claim...............................................................................2
1.17 Allowed Secured Claim....................................................................................2
1.18 Allowed Senior Claim.....................................................................................2
1.19 Allowed Statutorily Subordinated Claim...................................................................2
1.20 Allowed Subordinated Debenture Claim.....................................................................2
1.21 Allowed Subordinated Penalty Claim.......................................................................2
1.22 Alternative Residual Sale Agreement......................................................................2
1.23 Alternative Residual Sale Transaction....................................................................2
1.24 Ballot...................................................................................................2
1.25 Bank Cash Amount.........................................................................................3
1.26 Bank Claims..............................................................................................3
1.28 Bankruptcy Code..........................................................................................3
1.29 Bankruptcy Court.........................................................................................3
1.30 Bankruptcy Rules.........................................................................................3
1.31 Banks....................................................................................................3
1.32 Biase Litigation.........................................................................................3
1.33 Borrower Litigation Claim................................................................................3
1.34 Business Day.............................................................................................3
1.35 Cash.....................................................................................................3
1.36 Cash Equivalents.........................................................................................3
1.37 Chapter 11 Cases.........................................................................................3
1.38 Claim....................................................................................................4
1.39 Class....................................................................................................4
1.40 Class Actions............................................................................................4
1.41 Collateral...............................................................................................4
1.42 Common Equity Interest...................................................................................4
1.43 Confirmation Date........................................................................................4
1.44 Confirmation Hearing.....................................................................................4
1.45 Confirmation Order.......................................................................................4
1.46 Convenience Claim........................................................................................4
1.47 Credit Agreement.........................................................................................4
1.48 Creditor.................................................................................................4
1.49 Creditor Cash............................................................................................4
1.50 Creditors' Committee.....................................................................................5
1.51 Debtors..................................................................................................5
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TABLE OF CONTENTS
(CONTINUED)
PAGE
1.52 Debtors in Possession....................................................................................5
1.53 Disbursement Account(s)..................................................................................5
1.54 Disbursing Agent.........................................................................................5
1.55 Disclosure Statement.....................................................................................5
1.56 Disputed Claim; Disputed Equity Interest.................................................................5
1.57 Disputed Claim Amount....................................................................................5
1.58 Documentation Agent......................................................................................5
1.59 Effective Date...........................................................................................5
1.60 8.375% Notes.............................................................................................5
1.61 Entity...................................................................................................5
1.62 Equity Committee.........................................................................................6
1.63 Equity Interest..........................................................................................6
1.65 ESOP Action..............................................................................................6
1.66 Final Order..............................................................................................6
1.67 General Unsecured Claim..................................................................................6
1.70 Ginger Mae...............................................................................................6
1.71 Ginger Mae Common Equity Interest........................................................................6
1.72 Gopher Equity............................................................................................6
1.73 Gopher Equity Common Equity Interest.....................................................................6
1.74 Guaranty.................................................................................................6
1.75 Intercompany Affiliate...................................................................................6
1.76 Intercompany Claims......................................................................................6
1.77 IRC......................................................................................................7
1.78 IRS......................................................................................................7
1.79 Lending Subordinated Debentures..........................................................................7
1.80 Lending Subordinated Indenture...........................................................................7
1.81 Lien.....................................................................................................7
1.82 Litigation Trust.........................................................................................7
1.83 Litigation Trustee.......................................................................................7
1.84 Litigation Trust Agreement...............................................................................7
1.85 Litigation Trust Board...................................................................................7
1.86 Litigation Trust Claims..................................................................................7
1.87 Litigation Trust Interests...............................................................................7
1.88 9.35% Notes..............................................................................................7
1.89 Net Senior Creditor Cash.................................................................................7
1.90 New Organizational Documents.............................................................................7
1.91 Pelican..................................................................................................8
1.92 Pelican Common Equity Interest...........................................................................8
1.93 Person...................................................................................................8
1.94 Petition Date............................................................................................8
1.95 Plan.....................................................................................................8
1.96 Plan Administration Agreement............................................................................8
1.97 Plan Administrator.......................................................................................8
1.98 Plan Supplement..........................................................................................8
1.99 Pride Equity Interest....................................................................................8
1.100 Pride Prospectus.........................................................................................8
1.101 Priority Non-Tax Claim...................................................................................8
1.102 Priority Tax Claim.......................................................................................8
1.103 Proponents...............................................................................................8
1.104 Pro Rata Share...........................................................................................8
1.105 Record Date..............................................................................................9
1.106 Remaining Assets.........................................................................................9
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TABLE OF CONTENTS
(CONTINUED)
PAGE
1.107 Reorganized Designated Subsidiaries......................................................................9
1.108 Reorganized Designated Subsidiaries Common Stock.........................................................9
1.109 Reorganized Designated Subsidiaries Organizational Documents.............................................9
1.110 Reorganized UC...........................................................................................9
1.111 Reorganized UC By-laws...................................................................................9
1.112 Reorganized UC Certificate of Incorporation..............................................................9
1.113 Reorganized UC Common Stock..............................................................................9
1.114 Reorganized UC Lending...................................................................................9
1.115 Reorganized UC Lending Common Stock......................................................................9
1.116 Reorganized UC Lending Organizational Documents.........................................................10
1.117 Reorganized UC Subsidiaries.............................................................................10
1.118 Residual Agreement......................................................................................10
1.119 Sale Transaction........................................................................................10
1.120 Schedules...............................................................................................10
1.121 Secured Claim...........................................................................................10
1.122 Senior Creditor Cash....................................................................................10
1.125 Senior Indenture........................................................................................10
1.126 Senior Indenture Trustee................................................................................10
1.127 Senior Note Cash Amount.................................................................................11
1.128 Senior Note Claim.......................................................................................11
1.129 Senior Notes............................................................................................11
1.131 7.7% Notes..............................................................................................11
1.132 Southern Mortgage.......................................................................................11
1.133 Southern Mortgage Common Equity Interest................................................................11
1.134 Statutorily Subordinated Claim..........................................................................11
1.136 Subordinated Debenture Claim............................................................................11
1.137 Subordinated Debentures.................................................................................11
1.138 Subordinated Indenture..................................................................................11
1.139 Subordinated Indenture Trustee..........................................................................11
1.140 Subordinated Penalty Claim..............................................................................11
1.141 Total Creditor Cash.....................................................................................12
1.142 Transfer Date...........................................................................................12
1.143 Unicor..................................................................................................12
1.144 Unicor Common Equity Interest...........................................................................12
1.145 United Companies........................................................................................12
1.146 United Companies Common Equity Interest.................................................................12
1.147 United Funding..........................................................................................12
1.148 United Funding Common Equity Interest...................................................................12
1.149 United Lending Corp.:...................................................................................12
1.150 United Lending Corp. Common Equity Interest.............................................................12
1.151 United Lending Group....................................................................................12
1.152 United Lending Group Common Equity Interest.............................................................12
1.153 United Credit Card......................................................................................12
1.154 United Credit Card Common Equity Interest...............................................................12
1.155 Unsecured Claim.........................................................................................12
1.156 Whole Loan Agreement....................................................................................12
1.157 Other Definitions.......................................................................................13
ARTICLE II COMPROMISE AND SETTLEMENT OF DISPUTES; SUBSTANTIVE CONSOLIDATION OF DEBTORS; ASSUMPTION OF
OBLIGATIONS UNDER THE PLAN.........................................................................13
2.1 Compromise and Settlement...............................................................................13
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PAGE
2.2 Substantive Consolidation...............................................................................13
2.3 Cancellation of Intercompany Claims.....................................................................13
ARTICLE III PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS....................13
3.1 Administrative Expense Claims...........................................................................13
3.2 Professional Compensation and Reimbursement Claims......................................................13
3.3 Payment of Priority Tax Claims..........................................................................14
ARTICLE IV CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS......................................................14
ARTICLE V PROVISION FOR TREATMENT OF PRIORITY NON-TAX CLAIMS (CLASS 1)......................................................15
5.1 Payment of Allowed Priority Non-Tax Claims..............................................................15
5.2 Continuation of Employee Medical Benefits...............................................................15
ARTICLE VI PROVISION FOR TREATMENT OF SECURED CLAIMS (CLASS 2)................................................15
6.1 Treatment of Secured Claims.............................................................................15
ARTICLE VII PROVISION FOR TREATMENT OF BANK CLAIMS (CLASS 3)...................................................15
7.1 Allowance of Bank Claims................................................................................15
7.2 Treatment of Allowed Bank Claims........................................................................15
7.3 Payment of Senior Creditor Cash.........................................................................16
7.4 Limitation on Recovery..................................................................................16
ARTICLE VIII PROVISION FOR TREATMENT OF SENIOR NOTE CLAIMS (CLASS 4)............................................16
8.1 Allowance of Certain Senior Note Claims.................................................................16
8.2 Treatment of Allowed Senior Note Claims.................................................................16
8.3 Payment of Senior Creditor Cash.........................................................................16
8.4 Payments to be Made to Senior Indenture Trustee.........................................................16
8.5 Closing of Transfer Ledgers for Senior Notes............................................................17
8.6 Limitation on Recovery..................................................................................17
ARTICLE IX PROVISION FOR TREATMENT OF GENERAL UNSECURED CLAIMS (CLASS 5)......................................17
9.1 Treatment of General Unsecured Claims...................................................................17
9.2 Optional Arbitration of Borrower Litigation Claims......................................................17
9.3 Foreclosure Actions.....................................................................................18
9.4 Allowed Claims of One Thousand Dollars or More..........................................................18
9.5 Limitation on Recovery..................................................................................18
ARTICLE X PROVISIONS FOR TREATMENT OF CONVENIENCE CLAIMS (CLASS 6)..........................................................18
10.1 Treatment of Convenience Claims.........................................................................18
ARTICLE XI PROVISION FOR TREATMENT OF SUBORDINATED DEBENTURE CLAIMS (CLASS 7).................................18
11.1 Allowance of Certain Subordinated Debenture Claims......................................................18
11.2 Treatment of Allowed Subordinated Debenture Claims......................................................18
11.3 No Distribution.........................................................................................18
11.4 Contingent Distribution/Limitation on Recovery..........................................................19
11.5 Payments to be Made to Subordinated Indenture Trustee...................................................19
11.6 Closing of Transfer Ledgers for Subordinated Debentures.................................................19
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PAGE
ARTICLE XII PROVISION FOR TREATMENT OF SUBORDINATED PENALTY CLAIMS (CLASS 8)...................................20
12.1 Treatment of Subordinated Penalty Claims................................................................20
12.2 Contingent Distribution/Limitation on Recovery..........................................................20
ARTICLE XIII PROVISION FOR TREATMENT OF PRIDE EQUITY INTERESTS (CLASS 9)........................................20
13.1 Conversion of Pride Equity Interests....................................................................20
13.2 Treatment of Pride Equity Interests.....................................................................20
13.3 No Distribution.........................................................................................20
ARTICLE XIV PROVISION FOR TREATMENT OF STATUTORILY SUBORDINATED CLAIMS (CLASS 10A) AND UNITED COMPANIES
COMMON EQUITY INTERESTS (CLASS 10B)................................................................20
14.1 Cancellation of Existing Equity Interests...............................................................20
14.2 Treatment of Statutorily Subordinated Claims............................................................20
14.3 Treatment of United Companies Common Equity Interests...................................................21
14.4 No Distribution.........................................................................................21
14.5 Contingent Distribution/Limitation on Recovery..........................................................21
ARTICLE XV PROVISION FOR TREATMENT OF ADOBE COMMON EQUITY INTERESTS (CLASS 11)................................21
15.1 Cancellation of Adobe Common Equity Interest............................................................21
ARTICLE XVI PROVISION FOR TREATMENT OF ADOBE FINANCIAL COMMON EQUITY INTERESTS (CLASS 12).....................21
16.1 Cancellation of Adobe Financial Common Equity Interest..................................................21
ARTICLE XVII PROVISION FOR TREATMENT OF GINGER MAE COMMON EQUITY INTERESTS (CLASS 13)...........................22
17.1 Cancellation of Ginger Mae Common Equity Interests......................................................22
ARTICLE XVIII PROVISION FOR TREATMENT OF GOPHER EQUITY COMMON EQUITY INTERESTS (CLASS 14)........................22
18.1 Cancellation of Gopher Equity Common Equity Interests...................................................22
ARTICLE XIX PROVISION FOR TREATMENT OF PELICAN COMMON EQUITY INTERESTS (CLASS 15)..............................22
19.1 Cancellation of Pelican Common Equity Interests.........................................................22
ARTICLE XX PROVISION FOR TREATMENT OF SOUTHERN MORTGAGE COMMON EQUITY INTERESTS (CLASS 16)....................22
20.1 Cancellation of Southern Mortgage Common Equity Interests...............................................22
ARTICLE XXI PROVISION FOR TREATMENT OF UNICOR COMMON EQUITY INTERESTS (CLASS 17)...............................22
21.1 Cancellation of Unicor Common Equity Interests..........................................................22
ARTICLE XXII PROVISION FOR TREATMENT OF UNITED FUNDING COMMON EQUITY INTERESTS (CLASS 18).......................23
22.1 Cancellation of United Funding Common Equity Interests..................................................23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE XXIII PROVISION FOR TREATMENT OF UNITED LENDING CORP. COMMON EQUITY INTERESTS (CLASS 19).................23
23.1 Cancellation of United Lending Corp. Common Equity Interests............................................23
ARTICLE XXIV PROVISION FOR TREATMENT OF UNITED LENDING GROUP COMMON EQUITY INTERESTS (CLASS 20).................23
24.1 Cancellation of United Lending Group Common Equity Interests............................................23
ARTICLE XXV PROVISION FOR TREATMENT OF UNITED CREDIT CARD COMMON EQUITY INTERESTS (CLASS 21)...................23
25.1 Cancellation of United Credit Card Common Equity Interests..............................................23
ARTICLE XXVI PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS UNDER THE PLAN.........................................24
26.1 Objections to Claims; Prosecution of Disputed Claims....................................................24
26.2 Estimation of Claims....................................................................................24
26.3 Payments and Distributions on Disputed Claims...........................................................24
ARTICLE XXVII THE LITIGATION TRUST...............................................................................24
27.1 Establishment of the Trust..............................................................................24
27.2 Purpose of the Litigation Trust.........................................................................24
27.3 Funding Expenses of the Litigation Trust................................................................25
27.4 Transfer of Assets......................................................................................25
27.5 Valuation of Assets.....................................................................................25
27.6 Litigation of Assets; Responsibilities of Litigation Trustee............................................25
27.7 Investment Powers.......................................................................................26
27.8 Annual Distribution; Withholding........................................................................26
27.9 Reporting Duties........................................................................................26
27.10 Trust Implementation....................................................................................27
27.11 Registry of Beneficial Interests........................................................................27
27.12 Termination.............................................................................................27
27.13 Net Litigation Trust Recovery/Affirmative Obligations...................................................27
27.14 Escrow on Account of Disputed Claims and Disputed Equity Interests......................................28
27.15 Non-Transferability.....................................................................................28
ARTICLE XXVIII PROSECUTION OF CLAIMS HELD BY THE DEBTORS..........................................................28
28.1 Prosecution of Claims...................................................................................28
28.2 Net Payment by Defendants...............................................................................29
ARTICLE XXIX ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES OF CLAIMS OR EQUITY
INTEREST...........................................................................................29
29.1 Impaired Classes to Vote................................................................................29
29.2 Acceptance by Class of Creditors and Holders of Equity Interests........................................29
29.3 Cramdown................................................................................................29
ARTICLE XXX IDENTIFICATION OF CLAIMS AND EQUITY INTERESTS IMPAIRED AND NOT IMPAIRED BY THE PLAN................29
30.1 Impaired and Unimpaired Classes.........................................................................29
30.2 Impaired Classes to Vote on Plan........................................................................29
30.3 Controversy Concerning Impairment.......................................................................30
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TABLE OF CONTENTS
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PAGE
ARTICLE XXXI PROVISIONS FOR THE ESTABLISHMENT AND MAINTENANCE OF DISBURSEMENT ACCOUNTS..........................30
31.1 Establishment of Disbursement Account...................................................................30
31.2 Maintenance of Disbursement Account(s)..................................................................30
ARTICLE XXXII PROVISIONS REGARDING DISTRIBUTIONS.................................................................30
32.1 Time and Manner of Payments.............................................................................30
32.2 Timeliness of Payments..................................................................................30
32.3 Distributions by the Disbursing Agent...................................................................31
32.4 Manner of Payment Under the Plan........................................................................31
32.5 Delivery of Distributions...............................................................................31
32.6 Undeliverable Distributions.............................................................................31
32.7 Compliance with Tax Requirements/Allocation.............................................................31
32.8 Time Bar to Cash Payments...............................................................................31
32.9 Distributions After Effective Date......................................................................31
32.10 Set-Offs................................................................................................32
32.11 Termination of Certain Subordination Rights and Settlement of Related Claims and Controversies..........32
32.12 Post Petition Date Interest.............................................................................32
ARTICLE XXXIII COMMITTEES.........................................................................................32
33.1 Creditors' Committee Composition and Term...............................................................32
33.2 Equity Committee Term and Fees..........................................................................33
ARTICLE XXXIV EXECUTORY CONTRACTS AND UNEXPIRED LEASES...........................................................33
34.1 Rejection of Executory Contracts and Unexpired Leases...................................................33
34.2 Cure of Defaults for Assumed Executory Contracts and Unexpired Leases...................................33
34.3 Rejection Damage Claims.................................................................................33
34.4 Indemnification and Reimbursement Obligations...........................................................33
ARTICLE XXXV RIGHTS AND POWERS OF DISBURSING AGENT..............................................................34
35.1 Exculpation.............................................................................................34
35.2 Powers of the Disbursing Agent..........................................................................34
35.3 Fees and Expenses Incurred From and After the Effective Date............................................34
ARTICLE XXXVI THE PLAN ADMINISTRATOR.............................................................................34
36.1 Appointment of Plan Administrator.......................................................................34
36.2 Responsibilities of the Plan Administrator..............................................................34
36.3 Powers of the Plan Administrator........................................................................35
36.4 Compensation of the Plan Administrator..................................................................35
36.5 Termination of Plan Administrator.......................................................................35
ARTICLE XXXVII CONDITIONS PRECEDENT TO EFFECTIVE DATE OF THE PLAN; ALTERNATIVE IMPLEMENATION PROVISIONS..........35
37.1 Conditions Precedent to Effective Date of the Plan......................................................35
37.2 Waiver of Conditions Precedent..........................................................................35
37.3 Alternative Implementation Provisions...................................................................36
ARTICLE XXXVIII RETENTION OF JURISDICTION..........................................................................36
38.1 Retention of Jurisdiction...............................................................................36
ARTICLE XXXIX MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN................................................38
39.1 Modification of Plan....................................................................................38
39.2 Revocation or Withdrawal................................................................................38
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE XL PROVISION FOR MANAGEMENT...........................................................................38
40.1 Directors...............................................................................................38
ARTICLE XLI ARTICLES OF INCORPORATION AND BY-LAWS OF THE DEBTORS; CORPORATE ACTION.............................38
41.1 Amendment of Articles of Incorporation and By-Laws......................................................38
41.2 Corporate Action........................................................................................38
ARTICLE XLII MISCELLANEOUS PROVISIONS...........................................................................39
42.1 Title to Assets; Discharge of Liabilities...............................................................39
42.2 Discharge of Debtors....................................................................................39
42.3 Injunction..............................................................................................39
42.4 Term of Existing Injunctions or Stays...................................................................40
42.5 Limited Release of Directors, Officers and Employees....................................................40
42.6 Exculpation.............................................................................................40
42.7 Preservation of Rights of Action........................................................................40
42.8 Injunction..............................................................................................40
42.9 Payment of Statutory Fees...............................................................................40
42.10 Retiree Benefits........................................................................................40
42.11 Post-Effective Date Fees and Expenses...................................................................41
42.12 Severability............................................................................................41
42.13 Governing Law...........................................................................................41
42.14 Notices.................................................................................................41
42.15 Closing of Cases........................................................................................42
42.16 Section Headings........................................................................................42
</TABLE>
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United Companies Financial Corporation, Pelican Mortgage
Company, Inc., United Companies Lending Group, Inc., United Companies Lending
Corporation, Adobe, Inc., Adobe Financial, Inc. I, Ginger Mae, Inc., Unicor
Mortgage, Inc., Southern Mortgage Acquisition, Inc., United Companies Funding,
Inc., Gopher Equity, Inc. I, and United Credit Card, Inc. hereby propose the
following plan of reorganization pursuant to sections 1121(a) and (c) and 1123
of the Bankruptcy Code.
ARTICLE I
DEFINITIONS
As used in the Plan, the following terms shall have the
respective meanings specified below and be equally applicable to the singular
and plural of terms defined:
1.1 Administrative Expense Claim: Any Claim constituting a
cost or expense of administration of the Chapter 11 Cases asserted under section
503(b) of the Bankruptcy Code, including, without limitation, any actual and
necessary costs and expenses of preserving the estates of the Debtors, any
actual and necessary costs and expenses of operating the businesses of the
Debtors in Possession, any indebtedness or obligations incurred or assumed by
the Debtors in Possession in connection with the conduct of their businesses or
for the acquisition or lease of property or the procurement or rendition of
services, any costs and expenses of the Debtors in Possession for the
management, maintenance, preservation, sale or other disposition of any assets,
the administration and implementation of the Plan, the administration,
prosecution or defense of Claims by or against the Debtors and for distributions
under the Plan, any Claims for compensation and reimbursement of expenses
arising during the period from and after the Petition Date and prior to the
Effective Date or otherwise in accordance with the provisions of the Plan, and
any fees or charges assessed against the Debtors' estates pursuant to section
1930, chapter 123, Title 28, United States Code.
1.2 Adobe Financial: Adobe Financial, Inc. I, a Nevada
corporation.
1.3 Adobe Financial Common Equity Interest: A Common Equity
Interest in Adobe Financial.
1.4 Adobe: Adobe, Inc., a Nevada corporation.
1.5 Adobe Common Equity Interest: A Common Equity Interest
in Adobe.
1.6 Affiliate: Any Entity that is an "affiliate" of the
Debtors within the meaning of section 101(2) of the Bankruptcy Code.
1.7 Agent: First Union National Bank, as administrative
agent for the Banks.
1.8 Allowed Administrative Expense Claim: An Administrative
Expense Claim, to the extent it is or has become an Allowed Claim.
1.9 Allowed Claim/Allowed Equity Interest: Any Claim
against or Equity Interest in the Debtors, (i) proof of which was filed on or
before the date designated by the Bankruptcy Court as the last date for filing
proofs of claim against or equity interests in the Debtors, (ii) if no proof of
Claim or Equity Interest has been timely filed, which has been or hereafter is
listed by the Debtors in their Schedules as liquidated in amount and not
disputed or contingent or (iii) any Equity Interest registered in the stock
register maintained by or on behalf of the Debtors as of the Record Date and, in
each such case in clauses (i), (ii) and (iii) above, a Claim or Equity Interest
as to which no objection to the allowance thereof has been interposed within the
applicable period of limitation fixed by the Plan, the Bankruptcy Code, the
Bankruptcy Rules or a Final Order, or as to which an objection has been
interposed and such Claim or Equity Interest has been allowed in whole or in
part by a Final Order. For purposes of determining the amount of an "Allowed
Claim", there shall be deducted therefrom an amount equal to the amount of any
<PAGE>
claim which the Debtors may hold against the holder thereof, to the extent such
claim may be set off pursuant to section 553 of the Bankruptcy Code.
1.10 Allowed Bank Claim: A Bank Claim, to the extent it is
or has become an Allowed Claim.
1.11 Allowed Borrower Litigation Claim: A Borrower
Litigation Claim, to the extent it is or has become an Allowed Claim.
1.12 Allowed Convenience Claim: A Convenience Claim, to the
extent it is or has become an Allowed Claim.
1.13 Allowed General Unsecured Claim: A General Unsecured
Claim, to the extent it is or has become an Allowed Claim.
1.14 Allowed Pride Equity Interest: A Pride Equity
Interest, to the extent it is or has become an Allowed Equity Interest.
1.15 Allowed Priority Non-Tax Claim: A Priority Non-Tax
Claim, to the extent it is or has become an Allowed Claim.
1.16 Allowed Priority Tax Claim: A Priority Tax Claim, to
the extent it is or has become an Allowed Claim.
1.17 Allowed Secured Claim: A Secured Claim, to the extent
it is or has become an Allowed Claim.
1.18 Allowed Senior Claim: A Senior Note Claim, to the
extent it is or has become an Allowed Claim.
1.19 Allowed Statutorily Subordinated Claim: A Statutorily
Subordinated Claim to the extent it is or has become an Allowed Claim.
1.20 Allowed Subordinated Debenture Claim: A Subordinated
Debenture Claim, to the extent it is or has become an Allowed Claim.
1.21 Allowed Subordinated Penalty Claim: A Subordinated
Penalty Claim, to the extent it is or has become an Allowed Claim.
1.22 Alternative Residual Sale Agreement: In the event that
a higher or better offer for the assets set forth in the Residual Agreement is
accepted by the Debtors and approved by the Bankruptcy Court, the asset purchase
agreement or stock purchase agreement, as the case may be, incorporating the
terms and provisions of such higher or better offer.
1.23 Alternative Residual Sale Transaction: In the event
that a higher or better offer for the assets set forth in the Residual Agreement
is accepted by the Debtors and approved by the Bankruptcy Court, the sale,
directly or indirectly, of certain of the Debtors' residual, excess interest and
reserve account interests and other property rights, whether through an
alternative asset purchase agreement or an alternative stock purchase agreement
(that may provide for the sale of the Reorganized UC Lending Common Stock,
together with the transfer of the Reorganized Designated Subsidiaries Common
Stock as provided for in any such alternative stock purchase agreement).
1.24 Ballot: The form distributed to each holder of an
impaired Claim on which is to be indicated acceptance or rejection of the Plan.
2
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1.25 Bank Cash Amount: The amount of Cash equal to the sum
of (a) the product of (1) to the extent that Total Creditor Cash is equal to or
less than Eight Hundred Fifty Million Dollars ($850,000,000.00), Net Senior
Creditor Cash attributable to Total Creditor Cash, as if such Total Creditor
Cash is equal to or less than Eight Hundred Fifty Million Dollars
($850,000,000.00), times (2) eighty-five and one-half percent (85.5%), plus (b)
to the extent that Total Creditor Cash exceeds Eight Hundred Fifty Million
Dollars ($850,000,000.00), (1) such amount of Net Senior Creditor Cash
attributable to such excess, if any, times (2) ninety-five percent (95%).
1.26 Bank Claims: Any Claims of the Banks arising from or
related to the Credit Agreement, including, without limitation, fees and
expenses associated with rights and remedies thereunder, or the Guaranty.
1.27 Bank Interest Amount: The number of Litigation Trust
Interests equal to the product of (i) eighty-five and one-half percent (85.5%)
times (ii) the Senior Creditor Interest Amount.
1.28 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as
amended, and as codified in Title 11, United States Code, as applicable to the
Chapter 11 Cases.
1.29 Bankruptcy Court: The United States Bankruptcy Court
for the District of Delaware or such other court having jurisdiction over the
Chapter 11 Cases.
1.30 Bankruptcy Rules: The Federal Rules of Bankruptcy
Procedure, as promulgated by the United States Supreme Court under section 2075
of Title 28 of the United States Code, and any Local Rules of the Bankruptcy
Court, as amended.
1.31 Banks: The banks or financial institutions that are
parties to the Credit Agreement and their successors and assigns.
1.32 Biase Litigation: The litigation styled Findim
Investments, S.A., Nicole Biase, Joyce Biase and Nicolas Biase v. J. Terrell
Brown and Dale E. Redman, No. 464-161, currently pending in Division "M", 19th
Judicial District Court, Parish of East Baton Rouge, State of Louisiana.
1.33 Borrower Litigation Claim: Any Claim asserted in
litigation pending on or as of the Petition Date, or that could have been
asserted by any Entity prior to the Petition Date with respect to the servicing
of mortgage loans by the Debtors or Claims associated with the origination of
moneys advanced or mortgages issued by the Debtors prior to the Petition Date.
1.34 Business Day: A day other than a Saturday, a Sunday or
any other day on which commercial banks in Baton Rouge, Louisiana are required
or authorized to close by law or executive order.
1.35 Cash: Lawful currency of the United States of America.
1.36 Cash Equivalents: Equivalents of Cash in the form of
readily marketable securities or instruments issued by a person other than the
Debtors, including, without limitation, readily marketable direct obligations
of, or obligations guaranteed by, the United States of America, commercial paper
of domestic corporations carrying a Moody's Rating of "A" or better, or
equivalent rating of any other nationally recognized rating service, or
interest-bearing certificates of deposit or other similar obligations of
domestic banks or other financial institutions having a shareholders' equity or
equivalent capital of not less than One Hundred Million Dollars
($100,000,000.00), having maturities of not more than one (1) year, at the then
best generally available rates of interest for like amounts and like periods.
1.37 Chapter 11 Cases: The cases commenced under chapter 11
of the Bankruptcy Code by the Debtors on the Petition Date, styled In re United
Companies Financial Corporation, et al., Chapter 11 Case Nos. 99-450 (MFW)
through 99-461 (MFW), Jointly Administered, currently pending before the
Bankruptcy Court.
3
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1.38 Claim: Any right to payment from the Debtors, whether
or not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured, known or unknown; or any right to an equitable remedy for breach
of performance if such breach gives rise to a right of payment from the Debtors,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
1.39 Class: A category of holders of Claims or Equity
Interests as set forth in Article IV of the Plan.
1.40 Class Actions: The litigations styled (1) Norman P.
Lasky, on behalf of himself and all others similarly situated v. J. Terrell and
Dale E. Redman, No. 99-1035-B-2, (2) Gary W. Poff, on behalf of himself and all
others similarly situated v. J. Terrell Brown and Dale E. Redman, No.
00-CV-6-B-M1, (3) Linda Wheeler, on behalf of herself and all others similarly
situated v. J. Terrell Brown and Dale E. Redman, No. 99-1049-B-3, (4) Frank
Lopiccolo, on behalf of himself and all others similarly situated v. J. Terrell
Brown, Dale E. Redman, Certain Underwriters at Lloyds Underwriters of London and
AIG Europe (UK) Ltd., No. 00-99-B-M3, all pending before the United States
District Court for the Middle District of Louisiana, and (5) Amy Bergeron, et
al. v. U.S. Trust Company of California, et al.; No C 469196, currently pending
in Division "H", 19th Judicial District Court, Parish of East Baton Rouge, State
of Louisiana.
1.41 Collateral: Any property or interest in property of
the estates of the Debtors that is subject to an unavoidable Lien to secure the
payment or performance of a Claim.
1.42 Common Equity Interest: A common Equity Interest.
1.43 Confirmation Date: The date upon which the Clerk of
the Bankruptcy Court enters the Confirmation Order.
1.44 Confirmation Hearing: The hearing to consider
confirmation of the Plan in accordance with section 1129 of the Bankruptcy Code,
as the same may be adjourned from time to time.
1.45 Confirmation Order: The order of the Bankruptcy Court
confirming the Plan in accordance with the provisions of chapter 11 of the
Bankruptcy Code.
1.46 Convenience Claim: Any Claim, other than a Borrower
Litigation Claim, equal to or less than One Thousand Dollars ($1,000.00) or
greater than One Thousand Dollars ($1,000.00) but with respect to which the
holder thereof voluntarily reduces the Claim to One Thousand Dollars
($1,000.00).
1.47 Credit Agreement: That certain Credit Agreement, dated
as of April 10, 1997, by and among the Debtors, the Agent, the Documentation
Agent and the Banks, as amended and modified from time to time, and any of the
documents and instruments related thereto.
1.48 Creditor: Any Person or Entity that has a Claim
against the Debtors that arose or is deemed to have arisen on or prior to the
Petition Date, including, without limitation, a Claim against the Debtors'
chapter 11 estates of a kind specified in sections 502(g), 502(h) or 502(i) of
the Bankruptcy Code.
1.49 Creditor Cash: At any time of determination thereof,
the excess, if any, of (a) all Cash and Cash Equivalents in the Disbursement
Account(s) over (b) such amounts of Cash (i) reasonably determined by the
Disbursing Agent as necessary to satisfy, in accordance with the terms and
conditions of the Plan, Administrative Expense Claims, Priority Non-Tax Claims,
Priority Tax Claims, Convenience Claims and Secured Claims, (ii) necessary to
fund the Litigation Trust in accordance with Article XXVII of the Plan, (iii)
necessary to make pro rata distributions to holders of Disputed Claims as if
such Disputed Claims were, at such time, Allowed Claims and (iv) such other
amounts reasonably determined by Reorganized UC as necessary to fund the ongoing
operations of Reorganized UC during the period from the Effective Date up to and
including the Transfer Date or such later date as the Plan Administrator shall
reasonably determine.
4
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1.50 Creditors' Committee: The statutory committee of
unsecured creditors appointed in the Chapter 11 Cases pursuant to section 1102
of the Bankruptcy Code, as reconstituted from time to time.
1.51 Debtors: United Companies Financial Corporation,
Pelican Mortgage Company, Inc., United Companies Lending Group, Inc., United
Companies Lending Corporation, Adobe, Inc., Adobe Financial, Inc. I, Ginger Mae,
Inc., Unicor Mortgage, Inc., Southern Mortgage Acquisition, Inc., United
Companies Funding, Inc., Gopher Equity, Inc. I, and United Credit Card, Inc.
1.52 Debtors in Possession: The Debtors as debtors in
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
1.53 Disbursement Account(s): The account(s) to be
established by the Debtors on the Effective Date in accordance with Section 32.1
of the Plan, together with any interest earned thereon.
1.54 Disbursing Agent: Reorganized UC, the Plan
Administrator or such other Entity as may be designated by the Debtors, solely
in its capacity as agent of the Debtors to effectuate the distributions
contemplated under the Plan.
1.55 Disclosure Statement: The disclosure statement related
to the Plan and approved by the Bankruptcy Court in accordance with section 1125
of the Bankruptcy Code.
1.56 Disputed Claim; Disputed Equity Interest: Any Claim
against or Equity Interest in the Debtors, to the extent the allowance of which
is the subject of a timely objection or request for estimation in accordance
with the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Confirmation
Order, or is otherwise disputed by the Debtors in accordance with applicable
law, which objection, request for estimation or dispute has not been withdrawn
or determined by a Final Order.
1.57 Disputed Claim Amount: The lesser of (a) the
liquidated amount set forth in the proof of claim filed with the Bankruptcy
Court relating to a Disputed Claim, (b) if the Bankruptcy Court has estimated
such Disputed Claim pursuant to section 502(c) of the Bankruptcy Code, the
amount of a Disputed Claim as estimated by the Bankruptcy Court, and (c) the
amount of such Disputed Claim allowed by the Bankruptcy Court pursuant to
section 502 of the Bankruptcy Court, or zero, if such Disputed Claim is
disallowed in its entirety by the Bankruptcy Court pursuant to such section, in
either case, regardless of whether the order or judgment allowing or disallowing
such Claim has become a Final Order; provided, however, that, in the event that
such Claim has been disallowed, but the order of disallowance has not yet become
a Final Order, the Bankruptcy Court may require the Disbursing Agent to reserve
and hold in trust for the benefit of each holder of such Claim, Cash in an
amount equal to the pro rata distributions which the Bankruptcy Court, in its
sole and absolute discretion, determines will protect the rights of such holder
under all of the facts and circumstances relating to the order of disallowance
and the appeal of such holder from such order.
1.58 Documentation Agent: Morgan Stanley Trust Company of
New York.
1.59 Effective Date: The first (1st) Business Day ten (10)
days following the entry of the Confirmation Order.
1.60 8.375% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Fifty Million Dollars
($150,000,000.00) in accordance with the terms and conditions of the
Subordinated Indenture, as supplemented by that certain First Supplemental
Indenture, dated as of June 20, 1997.
1.61 Entity: A person, a corporation, a general
partnership, a limited partnership, a limited liability company, a limited
liability partnership, an association, a joint stock company, a joint venture,
an estate, a trust, an unincorporated organization, a government or any
subdivision thereof or any other entity.
5
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1.62 Equity Committee: The committee of equity interest
holders appointed in the Chapter 11 Cases pursuant to section 1102 of the
Bankruptcy Code, as reconstituted from time to time.
1.63 Equity Interest: Any equity interest in the Debtors
represented by duly authorized, validly issued and outstanding shares of
preferred stock or common stock or any interest or right to convert into such an
equity interest or acquire any equity interest of the Debtors which was in
existence immediately prior to the Petition Date.
1.64 Equity Interest Percentage: Ninety-seven percent
(97%), the percentage that the assumed value of Allowed United Companies Common
Equity Interests bears to the sum of the assumed value of Allowed United
Companies Common Equity Interests plus the assumed value of Allowed Statutorily
Subordinated Claims in Class 10A, or such other percentage as may be established
by the Bankruptcy Court at the Confirmation Hearing.
1.65 ESOP Action: The litigation styled Amy Bergeron, et
al. v. U.S. Trust Company of California, et al., No. C 469196, currently pending
in Division "H", 19th Judicial District Court, Parish of East Baton Rouge, State
of Louisiana.
1.66 Final Order: An order of the Bankruptcy Court as to
which the time to appeal, petition for certiorari or move for reargument or
rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for reargument or rehearing shall then be pending; and if an
appeal, writ of certiorari, reargument or rehearing thereof has been sought,
such order shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied or reargument or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari or move for reargument or
rehearing shall have expired; provided, however, that the possibility that a
motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure or any
analogous rule under the Bankruptcy Rules, may be but has not then been filed
with respect to such order, shall not cause such order not to be a Final Order.
1.67 General Unsecured Claim: An Unsecured Claim, other
than an Intercompany Claim, an Administrative Expense Claim, a Priority Non-Tax
Claim, a Priority Tax Claim, a Bank Claim, a Senior Note Claim, a Subordinated
Debenture Claim, or a Convenience Claim.
1.68 General Unsecured Interest Amount: The number of
Litigation Trust Interests equal to the product of (i) seven million (7,000,000)
times (ii) the General Unsecured Interest Fraction.
1.69 General Unsecured Interest Fraction: The fraction (a)
the numerator of which shall be the aggregate amount of Allowed General
Unsecured Claims and (b) the denominator of which shall be the aggregate amount
of Allowed Bank Claims, Allowed Senior Note Claims and Allowed General Unsecured
Claims.
1.70 Ginger Mae: Ginger Mae, Inc., a Louisiana corporation.
1.71 Ginger Mae Common Equity Interest: A Common Equity
Interest in Ginger Mae.
1.72 Gopher Equity: Gopher Equity, Inc. I, a Nevada
corporation.
1.73 Gopher Equity Common Equity Interest: A Common Equity
Interest in Gopher Equity.
1.74 Guaranty: That certain Unconditional Guaranty
Agreement, dated as of April 10, 1997, by and among the Debtors, the Agent and
the Banks.
1.75 Intercompany Affiliate: Any of the Debtors and any
other direct or indirect subsidiary of United Companies.
1.76 Intercompany Claims: Any Unsecured Claim held by any
Intercompany Affiliate against any Debtor.
6
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1.77 IRC: The Internal Revenue Code of 1986, as amended
from time to time.
1.78 IRS: The Internal Revenue Service, an agency of the
United States Department of Treasury.
1.79 Lending Subordinated Debentures: The promissory notes
issued and delivered by United Lending Corp. in accordance with the terms and
provisions of the Lending Subordinated Indenture.
1.80 Lending Subordinated Indenture: That certain
Agreement, dated May 14, 1993, between United Lending Corp. and United Companies
Life Insurance Company.
1.81 Lien: Any charge against or interest in property to
secure payment of a debt or performance of an obligation.
1.82 Litigation Trust: The trust to be created on the
Effective Date in accordance with the provisions of Article XXVII hereof and the
Litigation Trust Agreement for the benefit of holders of Allowed Bank Claims,
Allowed Senior Note Claims, Allowed General Unsecured Claims, Allowed
Subordinated Debenture Claims, Allowed Subordinated Penalty Claims, Allowed
Statutorily Subordinated Claims and Allowed United Companies Equity Interests.
1.83 Litigation Trustee: The Entity to be appointed by the
Litigation Trust Board to administer the Litigation Trust in accordance with the
terms and provisions of Article XXVII hereof and the Litigation Trust Agreement.
1.84 Litigation Trust Agreement: The Trust Agreement,
substantially in the form in the Plan Supplement, pursuant to which the
Litigation Trustee shall pursue the Litigation Trust Claims, if applicable, and
distribute the proceeds thereof, if any.
1.85 Litigation Trust Board: The group of up to three
Persons appointed prior to the Effective Date by the Bankruptcy Court, upon
nomination by the Creditors' Committee, or any replacements thereafter selected
in accordance with the provisions of the Litigation Trust Agreement, who shall
determine in accordance with the Litigation Trust Agreement whether to
prosecute, compromise or discontinue any Litigation Trust Claims.
1.86 Litigation Trust Claims: Those claims and causes of
action of the Debtors, if any, arising from or related to the Debtors' financial
statements and the accounting practices associated therewith; provided, however,
that, under no circumstances shall such claims and causes of action include any
claims waived and released in accordance with the provisions of Section 42.5 of
the Plan.
1.87 Litigation Trust Interests: The ten million
(10,000,000) beneficial interests in the Litigation Trust to be deemed to be
distributed to holders of Allowed Bank Claims, Allowed General Unsecured Claims,
Allowed Senior Note Claims, Allowed Subordinated Debenture Claims, Allowed
Subordinated Penalty Claims, Allowed Statutorily Subordinated Claims and Allowed
United Companies Equity Interests pursuant to the terms and conditions of
Article XXVII of the Plan.
1.88 9.35% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Twenty-Five Million Dollars
($125,000,000.00) in accordance with the terms and provisions of the Senior
Indenture, as supplemented, by that certain First Supplemental Indenture, dated
as of November 2, 1994.
1.89 Net Senior Creditor Cash: At any time of determination
thereof, the amount of Cash equal to (a) Senior Creditor Cash minus (b) the
amount of Cash necessary to satisfy distributions in accordance with Sections
7.3 and 8.3 hereof.
1.90 New Organizational Documents: In the event that an
Alternative Residual Sale Transaction occurs through consummation of a stock
purchase agreement, at the discretion of the highest or best offeror, the
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Reorganized UC Lending Organization Documents and the Reorganized Designated
Subsidiaries Organizational Documents.
1.91 Pelican: Pelican Mortgage Company, Inc., a Delaware
corporation.
1.92 Pelican Common Equity Interest: A Common Equity
Interest in Pelican.
1.93 Person: An individual.
1.94 Petition Date: March 1, 1999, the date on which the
Debtors filed their voluntary petitions for relief commencing the Chapter 11
Cases.
1.95 Plan: This Second Amended Plan of Reorganization for
Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, including,
without limitation, the exhibits and schedules hereto and the Plan Supplement,
either in its present form or as the same may be amended, modified or
supplemented from time to time in accordance with the terms and provisions
hereof.
1.96 Plan Administration Agreement: The agreement
prescribing the powers, duties and rights of the Plan Administrator in
administering the Plan, which agreement shall be in substantially the form
included in the Plan Supplement.
1.97 Plan Administrator: The Person to be designated by the
Debtors with the consent of the Creditors' Committee (which consent shall not be
unreasonably withheld) and retained, as of the Effective Date, by Reorganized
UC, with the approval of the Bankruptcy Court, as the employee or fiduciary
responsible for, among other things, the matters described in Section 36.2
hereof.
1.98 Plan Supplement: A separate volume, to be filed with
the Clerk of the Bankruptcy Court, containing, among other things, forms of the
Borrower Settlement Trust Agreement, Litigation Trust Agreement, Plan
Administration Agreement, Reorganized UC By-laws and Reorganized UC Certificate
of Incorporation. The Plan Supplement (containing drafts or final versions of
the foregoing documents) shall be filed with the Clerk of the Bankruptcy Court
as early as practicable (but in no event later than ten (10) days) prior to the
commencement of the hearing to consider confirmation of the Plan, or on such
other date as the Bankruptcy Court may establish.
1.99 Pride Equity Interest: An Equity Interest represented
by one of the 1,657,770 issued and outstanding shares of Preferred Redeemable
Increased Dividend Equity SecuritiesSM, 6 3/4% PRIDESSM, Convertible Preferred
Stock, par value $2.00 per share, of United Companies as of the Petition Date.
1.100 Pride Prospectus: The prospectus, dated June 12,
1995, as supplemented, released in connection with the offering of Pride Equity
Interests.
1.101 Priority Non-Tax Claim: Any Claim against the
Debtors, other than an Administrative Expense Claim or a Priority Tax Claim,
entitled to priority in payment under section 507(a) of the Bankruptcy Code, but
only to the extent entitled to such priority.
1.102 Priority Tax Claim: Any Claim against the Debtors
entitled to priority in payment under section 507(a)(8) of the Bankruptcy Code.
1.103 Proponents: Debtors in Possession.
1.104 Pro Rata Share: With respect to Allowed Claims or
Allowed Equity Interests within the same Class or sub-Class, the proportion that
an Allowed Claim or Allowed Equity Interest bears to the sum of (a) all Allowed
Claims and/or Allowed Equity Interests, as the case may be, within such Class or
sub-Class, and (b) all Disputed Claim Amounts and/or Disputed Equity Interest
Amounts, as the case may be, within such Class or sub-Class.
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1.105 Record Date: The date to be established by the
Bankruptcy Court in the Confirmation Order for the purpose of determining the
holders of Allowed Claims and Allowed Equity Interests to receive distributions
pursuant to the Plan.
1.106 Remaining Assets: Upon the consummation of a Sale
Transaction or an Alternative Residual Sale Transaction, as the case may be,
those assets of Reorganized UC, other than the Litigation Trust Claims which are
not included in the Sale Transaction, or an Alternative Residual Sale
Transaction, as the case may be, including, without limitation, the furniture,
fixtures and equipment associated with the business and operations of the
Debtors.
1.107 Reorganized Designated Subsidiaries: In the event
that an Alternative Residual Sale Transaction occurs through consummation of a
stock purchase agreement, at the discretion of the highest or best offeror,
Pelican Mortgage Company, Inc., Adobe, Inc., Adobe Financial, Inc., I, and
Gopher Equity, Inc., I, from and after the Effective Date.
1.108 Reorganized Designated Subsidiaries Common Stock: In
the event that an Alternative Residual Sale Transaction occurs through
consummation of a stock purchase agreement, at the discretion of the highest or
best offeror, the shares of common stock of the Reorganized Designated
Subsidiaries currently authorized and outstanding and currently owned or to be
owned by United Lending Corp. prior to the Effective Date and to be owned by
Reorganized UC Lending on and after the Effective Date, which as to each
subsidiary shall (i) be the number of shares of common stock of such corporation
which were issued and outstanding as of the day prior to the Effective Date,
(ii) have the terms specified in the Reorganized Designated Subsidiaries
Organizational Documents and (iii) have a par value equal to the par value of
the common stock of those corporations the day before the Effective Date.
1.109 Reorganized Designated Subsidiaries Organizational
Documents: In the event that an Alternative Residual Sale Transaction occurs
through consummation of a stock purchase agreement, at the discretion of the
highest or best offeror, the articles or certificates of incorporation and the
bylaws of the Reorganized Designated Subsidiaries in form and substance
acceptable to the relevant purchaser.
1.110 Reorganized UC: United Companies, a Louisiana
corporation, and each of the Reorganized UC Subsidiaries, from and after the
Effective Date.
1.111 Reorganized UC By-laws: The By-laws of Reorganized
UC, which by-laws shall be in substantially the form contained in the Plan
Supplement.
1.112 Reorganized UC Certificate of Incorporation: The
Certificate of Incorporation of Reorganized UC, which certificate of
incorporation shall be in substantially the form included in the Plan
Supplement.
1.113 Reorganized UC Common Stock: The shares of
Reorganized UC Common Stock authorized and to be issued pursuant to the Plan,
which shall have a par value of $0.01 per share, of which five million
(5,000,000) shares shall be authorized and of which one thousand (1,000) shares
shall be issued pursuant to the Plan, and such rights with respect to dividends,
liquidation, voting and other matters as are provided for by applicable
nonbankruptcy law or the Reorganized UC Certificates of Incorporation and the
Reorganized UC By-laws.
1.114 Reorganized UC Lending: In the event that an
Alternative Residual Sale Transaction occurs through consummation of a stock
purchase agreement, at the discretion of the highest or best offeror, United
Lending Corp. from and after the Effective Date.
1.115 Reorganized UC Lending Common Stock: In the event
that an Alternative Residual Sale Transaction occurs through consummation of a
stock purchase agreement, at the discretion of the highest or best offeror, the
share of Reorganized UC Lending Common Stock authorized and to be issued
pursuant the Plan, which shares shall (i) be the number of shares of common
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stock of UC Lending which were issued and outstanding as of the day before the
Effective Date, (ii) have the terms specified in the Reorganized UC Lending
Organizational Documents, and (iii) have a par value equal to the par value of
the common stock of UC Lending the day before the Effective Date.
1.116 Reorganized UC Lending Organizational Documents: In
the event that an Alternative Residual Sale Transaction occurs through
consummation of a stock purchase agreement, at the discretion of the highest or
best offeror, the articles or certificates of incorporation and the bylaws of
the Reorganized UC Lending in form and substance acceptable to the relevant
purchaser.
1.117 Reorganized UC Subsidiaries: Each subsidiary, along
with United Companies, comprising Reorganized UC; provided, however, that, in
the event that an Alternative Residual Sale Transaction occurs through
consummation of a stock purchase agreement, at the discretion of the highest or
best offeror, then expressly excluding Reorganized UC Lending and the
Reorganized Designated Subsidiaries.
1.118 Residual Agreement: That certain Asset Purchase
Agreement, dated as of May 26, 2000, by and among The Bear Stearns Companies,
Inc., EMC Mortgage Corporation, EMC Mortgage Acquisition Corp., United
Companies, United Lending Corp., UCFC Acceptance Corporation, United Funding,
Pelican, Adobe, Adobe Financial, Gopher Equity, and Gopher Funding, Inc.
1.119 Sale Transaction: The sale of (i) certain of the
Debtors' residual, excess interest and reserve account interests and other
property rights pursuant to the Residual Agreement, or such higher or better
offer as may be submitted, accepted by the Debtors and approved by the
Bankruptcy Court, and (ii) certain of the Debtors' portfolio of mortgage loans
and real properties acquired in connection with the ownership of mortgage loans
pursuant to the Whole Loan Agreement, or such higher or better offer as may be
submitted, accepted by the Debtors and approved by the Bankruptcy Court, which
sales shall be consummated on or prior to the Effective Date.
1.120 Schedules: The respective schedules of assets and
liabilities, the list of Equity Interests, and the statements of financial
affairs filed by the Debtors in accordance with section 521 of the Bankruptcy
Code and the Official Bankruptcy Forms of the Bankruptcy Rules as such schedules
and statements have been or may be supplemented or amended.
1.121 Secured Claim: A Claim against the Debtors that is
secured by a Lien on Collateral or that is subject to setoff under section 553
of the Bankruptcy Code, to the extent of the value of the Collateral or to the
extent of the amount subject to setoff, as applicable, as determined in
accordance with section 506(a) of the Bankruptcy Code.
1.122 Senior Creditor Cash: At any time of determination
thereof, the amount of Cash equal to (a) Creditor Cash minus (b) the amount of
Cash necessary to satisfy distributions to holders of Allowed General Unsecured
Claims in accordance with the provisions of Article IX of the Plan.
1.123 Senior Creditor Interest Amount: The number of
Litigation Trust Interests equal to the product of (i) seven million (7,000,000)
times (ii) the Senior Creditor Interest Fraction.
1.124 Senior Creditor Interest Fraction: The fraction (a)
the numerator of which shall be the aggregate amount of Allowed Bank Claims and
Allowed Senior Note Claims and (b) the denominator of which shall be the
aggregate amount of Allowed Bank Claims, Allowed Senior Note Claims and Allowed
General Unsecured Claims.
1.125 Senior Indenture: That certain Senior Indenture,
dated as of October 1, 1994, between United Companies Financial Corporation, as
Issuer, and the Senior Indenture Trustee, as supplemented.
1.126 Senior Indenture Trustee: Norwest Bank Minnesota,
N.A.
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1.127 Senior Note Cash Amount: The amount of Cash equal to
the sum of (a) the product of (1) to the extent that Total Creditor Cash is
equal to or less than Eight Hundred Fifty Million Dollars ($850,000,000.00), Net
Senior Creditor Cash attributable to Total Creditor Cash, as if such Total
Creditor Cash is equal to or less than Eight Hundred Fifty Million Dollars
($850,000,000.00), times (2) fourteen and one-half percent (14.5%), plus (b) to
the extent that Total Creditor Cash exceeds Eight Hundred Fifty Million Dollars
($850,000,000.00), (1) such amount of Net Senior Creditor Cash attributable to
such excess, if any, times (2) five percent (5%).
1.128 Senior Note Claim: Any Claim arising under or
relating to (i) the Senior Indenture and (2) such other document, instrument or
agreement which would constitute Senior Indebtedness, as defined in the
Subordinated Indenture, including, without limitation, the guaranty of certain
indebtedness relating to the employee stock ownership plan of United Companies.
1.129 Senior Notes: Collectively, the 9.35% Notes and the
7.7% Notes.
1.130 Senior Note Interest Amount: The number of Litigation
Trust Interests equal to the product of (i) fourteen and one-half percent
(14.5%) times (ii) the Senior Creditor Interest Amount.
1.131 7.7% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Million Dollars
($100,000,000.00) in accordance with the terms and provisions of the Senior
Indenture as supplemented by that certain Third Supplemental Indenture, dated as
of December 17, 1996.
1.132 Southern Mortgage: Southern Mortgage Acquisition,
Inc., a Louisiana corporation.
1.133 Southern Mortgage Common Equity Interest: A Common
Equity Interest in Southern Mortgage.
1.134 Statutorily Subordinated Claim: Any Claim that is
subject to subordination under section 510(b) of the Bankruptcy Code, including,
without limitation, any and all Claims of a holder or former holder of an Equity
Interest for rescission of or damages from the purchase or sale of an Equity
Interest arising from or relating to the Debtors' financial statements and the
accounting practices associated therewith.
1.135 Statutorily Subordinated Percentage: Three percent
(3%), the percentage that the assumed value of Allowed Statutorily Subordinated
Claims bears to the assumed value Allowed Statutorily Subordinated Claims plus
the assumed value of Allowed United Companies Common Equity Interests in Class
10B, including, without limitation, those Equity Interests deemed to be
distributed to holders of Allowed Pride Equity Interests in accordance with
Section 13.2 of the Plan, or such other percentage as may be established by the
Bankruptcy Court or the Confirmation Hearing.
1.136 Subordinated Debenture Claim: Any Claim arising from
or relating to (i) the Subordinated Debentures and (ii) the Lending Subordinated
Debentures.
1.137 Subordinated Debentures: The 8.375% Notes.
1.138 Subordinated Indenture: That certain Subordinated
Indenture, dated as of February 19, 1997, between United Companies Financial
Corporation, as issuer, and the Subordinated Indenture Trustee, as supplemented.
1.139 Subordinated Indenture Trustee: HSBC Bank USA, in its
capacity as successor indenture trustee under the Subordinated Indenture and any
successor indenture trustee under the Subordinated Indenture.
1.140 Subordinated Penalty Claim: Any Claim for fines,
penalties, forfeitures, or for multiple, exemplary, or punitive damages, or
other non-pecuniary, direct or non-proximate damages, including, without
limitation, those arising from or related to the Debtors' loan origination and
servicing operations.
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1.141 Total Creditor Cash: At any time of determination
thereof, all Cash and Cash Equivalents in the Disbursement Account(s), plus the
sum of Fifteen Million Dollars ($15,000,000.00) or such other amount reasonably
determined by the Debtors on or prior to the Confirmation Date as necessary to
fund the ongoing operations of Reorganized UC during the period up to and
excluding the Transfer Date in accordance with the provisions of Section 31.1
hereof.
1.142 Transfer Date: The later to occur of (a) the date on
which United Lending Corp. transfers the servicing of mortgage loans in
accordance with the provisions of the Residual Agreement, or such higher or
better offer as may be submitted, accepted by the Debtors and approved by the
Bankruptcy Court, and (b) the date on which United Lending Corp. transfers the
servicing of mortgage loans in accordance with the provisions of the Whole Loan
Agreement, or such higher or better offer as may be submitted, accepted by the
Debtors and approved by the Bankruptcy Court, or such other date as may be
determined by the Bankruptcy Court at the Confirmation Hearing.
1.143 Unicor: Unicor Mortgage, Inc., a Louisiana
corporation.
1.144 Unicor Common Equity Interest: A Common Equity
Interest in Unicor.
1.145 United Companies: United Companies Financial
Corporation, a Louisiana corporation.
1.146 United Companies Common Equity Interest: An Equity
Interest represented by one of the 28,808,211 issued and outstanding shares of
common stock of United Companies as of the Petition Date or any interest or
right to convert into such an equity interest or acquire any equity interest of
the Debtors which was in existence immediately prior to the Petition Date.
1.147 United Funding: United Companies Funding, Inc., a
Louisiana corporation.
1.148 United Funding Common Equity Interest: A Common
Equity Interest in United Funding.
1.149 United Lending Corp.: United Companies Lending
Corporation, a Louisiana corporation.
1.150 United Lending Corp. Common Equity Interest: A Common
Equity Interest in United Lending Corp.
1.151 United Lending Group: United Companies Lending Group,
Inc., a Louisiana corporation.
1.152 United Lending Group Common Equity Interest: A Common
Equity Interest in United Lending Group.
1.153 United Credit Card: United Credit Card, Inc., a
Louisiana corporation.
1.154 United Credit Card Common Equity Interest: A Common
Equity Interest in United Credit Card.
1.155 Unsecured Claim: Any Claim against the Debtors, other
than an Administrative Expense Claim, a Priority Non-Tax Claim, a Priority Tax
Claim, a Bank Claim, a Senior Note Claim, a Subordinated Debenture Claim, or a
Convenience Claim.
1.156 Whole Loan Agreement: That certain Mortgage Loan and
REO Property Purchase Agreement, dated as of May 26, 2000, by and among The Bear
Stearns Companies, Inc., EMC Mortgage Corporation, United Companies, United
Lending Corp., United Funding, Southern Mortgage, United Companies Mortgage of
Tennessee, Unicor and United Companies Second Mortgage of Minnesota.
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1.157 Other Definitions: Unless the context otherwise
requires, any capitalized term used and not defined herein or elsewhere in the
Plan but that is defined in the Bankruptcy Code shall have the meaning assigned
to that term in the Bankruptcy Code. Unless otherwise specified, all section,
schedule or exhibit references in the Plan are to the respective section in,
article of, or schedule or exhibit to, the Plan, as the same may be amended,
waived, or modified from time to time. The words "herein," "hereof," "hereto,"
"hereunder," and other words of similar import refer to the Plan as a whole and
not to any particular section, subsection, or clause contained in the Plan.
ARTICLE II
COMPROMISE AND SETTLEMENT OF DISPUTES;
SUBSTANTIVE CONSOLIDATION OF DEBTORS;
ASSUMPTION OF OBLIGATIONS UNDER THE PLAN
2.1 Compromise and Settlement: The Plan incorporates a
proposed compromise and settlement of certain issues which were disputed by the
Proponents, the Creditors' Committee, the holders of Allowed Bank Claims, the
holders of Senior Note Claims and certain other parties in interest. These
issues related primarily to whether the estates of each of the Debtors should be
treated separately for purposes of making payments to Creditors, whether and to
what extent proceeds from the Sale Transaction should be allocated among the
Debtors based upon their respective claims of ownership to certain assets sold
thereunder, and the amount and priority of certain Intercompany Claims. The
provisions of the Plan relating to substantive consolidation of the Debtors, the
cancellation of Intercompany Claims, and the treatment of each class of Claims
under the Plan reflect this compromise and settlement, which, upon the Effective
Date, shall be binding upon the Debtors, all Creditors, and all Persons
receiving any payments or other distributions under the Plan.
2.2 Substantive Consolidation: On the Effective Date, the
Chapter 11 Cases shall be deemed to be substantively consolidated for purposes
of the Plan. The assets and liabilities of the Debtors shall be pooled and all
Claims shall be satisfied from the assets of a single consolidated estate. Any
Claims against one or more of the Debtors based upon a guaranty, indemnity,
co-signature, surety or otherwise, of Claims against another Debtor, including,
without limitation, the Guaranty, shall be treated as a single Claim against the
consolidated estate of the Debtors and shall be entitled to distributions under
the Plan only with respect to such single Claim.
2.3 Cancellation of Intercompany Claims: On the Effective
Date, all Intercompany Claims shall be extinguished.
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
3.1 Administrative Expense Claims: On the later to occur of
(a) the Effective Date and (b) the date on which such a Claim shall become an
Allowed Claim, Reorganized UC shall (i) pay to each holder of an Allowed
Administrative Expense Claim, in Cash, the full amount of such Allowed
Administrative Expense Claim, or (ii) satisfy and discharge such Allowed
Administrative Expense Claim in accordance with such other terms as may be
agreed upon by and between the holder thereof and the Debtors or Reorganized UC,
as the case may be; provided, however, that Allowed Administrative Expense
Claims representing liabilities or obligations incurred or assumed by the
Debtors in Possession in the ordinary course of business or liabilities arising
under loans made or advances extended to the Debtors in Possession, whether or
not incurred in the ordinary course of business, shall be assumed and paid by
Reorganized UC in accordance with the terms and conditions of the particular
transaction and any agreements relating thereto.
3.2 Professional Compensation and Reimbursement Claims: All
Entities that are awarded compensation or reimbursement of expenses by the
Bankruptcy Court in accordance with section 330 or 331 of the Bankruptcy Code or
entitled to the priorities established pursuant to section 503(b)(2), 503(b)(3),
503(b)(4) or 503(b)(5) of the Bankruptcy Code, shall be paid in full, in Cash,
the amounts allowed by the Bankruptcy Court (a) on or as soon as reasonably
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practicable following the later to occur of (i) the Effective Date and (ii) the
date upon which the Bankruptcy Court order allowing such Claim becomes a Final
Order or (b) upon such other terms as may be mutually agreed upon between such
holder of an Allowed Administrative Expense Claim and the Debtors.
3.3 Payment of Priority Tax Claims: On the Effective Date,
each holder of an Allowed Priority Tax Claim shall be entitled to receive
distributions in an amount equal to the full amount of such Allowed Priority Tax
Claim. At the sole option and discretion of Reorganized UC, which option shall
be exercised on or prior to the Effective Date, such payment shall be made (a)
in full, in Cash, on the Effective Date, (b) in accordance with section
1129(a)(9)(C) of the Bankruptcy Code, in full, in Cash, in up to twenty-four
(24) equal quarterly installments, commencing on the first (1st) Business Day
following the date of assessment of such Allowed Priority Tax Claim, together
with interest accrued thereon at a rate to be determined by the Bankruptcy
Court, or (c) by mutual agreement of the holder of such Allowed Priority Tax
Claim and Reorganized UC.
ARTICLE IV
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims and Equity Interests are classified as follows:
4.1 Class 1 - Priority Non-Tax Claims
4.2 Class 2 - Secured Claims
4.3 Class 3 - Bank Claims
4.4 Class 4 - Senior Note Claims
4.5 Class 5 - General Unsecured Claims
4.6 Class 6 - Convenience Claims
4.7 Class 7 - Subordinated Debenture Claims
4.8 Class 8 - Subordinated Penalty Claims
4.9 Class 9 - Pride Equity Interests
4.10 Class 10A - Statutorily Subordinated Claims
Class 10B - United Companies Common Equity Interests
4.11 Class 11 - Adobe Common Equity Interests
4.12 Class 12 - Adobe Financial Common Equity Interests
4.13 Class 13 - Ginger Mae Common Equity Interests
4.14 Class 14 - Gopher Equity Common Equity Interests
4.15 Class 15 - Pelican Common Equity Interests
4.16 Class 16 - Southern Mortgage Common Equity Interests
4.17 Class 17 - Unicor Common Equity Interests
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4.18 Class 18 - United Funding Common Equity Interests
4.19 Class 19 - United Lending Corp. Common Equity Interests
4.20 Class 20 - United Lending Group Common Equity Interests
4.21 Class 21 - United Credit Card Common Equity Interests
ARTICLE V
PROVISION FOR TREATMENT OF PRIORITY NON-TAX CLAIMS (CLASS 1)
5.1 Payment of Allowed Priority Non-Tax Claims: Unless
otherwise mutually agreed upon by the holder of an Allowed Priority Non-Tax
Claim and Reorganized UC, each holder of an Allowed Priority Non-Tax Claim shall
receive Cash in an amount equal to such Allowed Priority Non-Tax Claim on the
later of the Effective Date and the date such Allowed Priority Non-Tax Claim
becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as is
practicable.
5.2 Continuation of Employee Medical Benefits: From the
Effective Date up to and including the first (1st) Business Day eighteen (18)
months following the earlier to occur of (a) the Effective Date and (b) the
transfer of the Debtors' servicing operations pursuant to a Sale Transaction or
otherwise, Reorganized UC shall provide, or cause to be provided through the
deposit of funds reasonably determined by Reorganized UC to be appropriate under
the circumstances, employee medical benefits in a manner and amount consistent
with the Debtors' medical benefits program prior to the Effective Date.
ARTICLE VI
PROVISION FOR TREATMENT OF SECURED CLAIMS (CLASS 2)
6.1 Treatment of Secured Claims: On the Effective Date,
each holder of an Allowed Secured Claim shall receive one of the following
distributions: (a) the payment of such holder's Allowed Secured Claim in full,
in Cash; (b) the sale or disposition proceeds of the property securing any
Allowed Secured Claim to the extent of the value of their respective interests
in such property; (c) the surrender to the holder or holders of any Allowed
Secured Claim of the property securing such Claim; or (d) such other
distributions as shall be necessary to satisfy the requirements of chapter 11 of
the Bankruptcy Code. The manner and treatment of each Allowed Secured Claim
shall be determined by the Debtors, in their sole and absolute discretion, on or
before the Confirmation Date, and upon notice to each Creditor holding a Secured
Claim.
ARTICLE VII
PROVISION FOR TREATMENT OF BANK CLAIMS (CLASS 3)
7.1 Allowance of Bank Claims: On the Effective Date, the
Bank Claims shall be deemed allowed in the aggregate amount of Eight Hundred
Forty Nine Million Nine Hundred Five Thousand One Hundred Sixty One Dollars and
Sixty-Three Cents ($849,905,161.63) plus accrued and unpaid interest relating to
the period up to but not including the Petition Date in the amount of Seven
Million Nine Hundred Ninety One Thousand Forty Four Dollars and Five Cents
($7,991,044.05).
7.2 Treatment of Allowed Bank Claims: Commencing on the
Effective Date, each holder of an Allowed Bank Claim shall be entitled to
receive distributions in an amount equal to (a) such holder's Pro Rata Share of
the Bank Cash Amount, and (b) the aggregate number of Litigation Trust Interests
equal to such holder's Pro Rata Share of the Bank Interest Amount.
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7.3 Payment of Senior Creditor Cash: On the Effective Date,
the Debtors shall pay to the Agent and such holders of Allowed Bank Claims which
have incurred fees and expenses in connection with the negotiation and
preparation of the Plan, an amount equal to the fees and expenses incurred by
the Agent by and on behalf of the holders of Allowed Bank Claims and such
holders of Allowed Bank Claims, as the case may be, during the period from
Petition Date up to and including the Effective Date.
7.4 Limitation on Recovery: Notwithstanding anything
contained herein to the contrary, including, without limitation, the
distributions to be made to a holder of an Allowed Bank Claim in accordance with
Section 7.2 hereof, in the event that the sum of (a) the distributions of Net
Bank Cash Amount and (b) the distributions from the Litigation Trust to such
holder are equal to one hundred percent (100%) of such holder's Allowed Bank
Claim, then, the Litigation Trust Interests attributable to such holder shall be
deemed redistributed to holders of Allowed Claims and Allowed Equity Interests
in accordance with the provisions of Section 32.12 of the Plan and the
documents, instruments and agreements governing such Claims and Equity
Interests, including, without limitation, the contractual subordination
provisions set forth therein, and the Bankruptcy Code.
ARTICLE VIII
PROVISION FOR TREATMENT OF SENIOR NOTE
CLAIMS (CLASS 4)
8.1 Allowance of Certain Senior Note Claims: On the
Effective Date, the Senior Note Claims arising under or relating to the 9.35%
Notes and the 7.7% Notes shall be deemed allowed in the aggregate amounts of One
Hundred Twenty-Five Million Dollars ($125,000,000.00) and One Hundred Million
Dollars ($100,000,000.00), respectively, plus accrued and unpaid interest
relating to the period up to but not including the Petition Date.
8.2 Treatment of Allowed Senior Note Claims: Commencing on
the Effective Date, each holder of an Allowed Senior Note Claim shall be
entitled to receive distributions in an amount equal to (a) such holder's Pro
Rata Share of the Senior Note Cash Amount, and (b) the aggregate number of
Litigation Trust Interests equal to such holder's Pro Rata Share of the Senior
Note Interest Amount.
8.3 Payment of Senior Creditor Cash: On the Effective Date,
the Debtors shall pay to the Senior Indenture Trustee and such holders of
Allowed Senior Note Claims arising under the Senior Notes which have incurred
fees and expenses in connection with the negotiation and preparation of the
Plan, an amount equal to the fees and expenses incurred by the Senior Indenture
Trustee by and on behalf of holders of Allowed Senior Note Claims and such
holders of Allowed Senior Note Claims, as the case may be, during the period
from the Petition Date up to and including the Effective Date.
8.4 Payments to be Made to Senior Indenture Trustee: The
payments and distributions to be made under the Plan to holders of Allowed
Senior Note Claims arising under the Senior Note Indenture shall be made to the
Senior Indenture Trustee, which, subject to any rights or claims of the Senior
Indenture Trustee (such as claims for fees and reimbursement of expenses,
including the fees and expenses of its advisors and counsel) under the Senior
Note Indenture, shall transmit such payments and distributions to holders of
such Allowed Senior Note Claims. All payments to holders of Allowed Senior Note
Claims arising under the Senior Note Indenture shall only be made to such
Creditors after the surrender by such Creditors of the certificates representing
such Senior Note Claim, or in the event that such certificate is lost, stolen,
mutilated or destroyed, delivery of evidence satisfactory to the Senior
Indenture Trustee and Reorganized UC of the loss, theft, mutilation or
destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Senior Indenture Trustee and Reorganized UC, from a surety
company satisfactory to the Senior Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Senior Indenture Trustee shall cancel such
Senior Notes and deliver such cancelled Senior Notes to Reorganized UC, or
otherwise dispose of same as Reorganized UC may reasonably request. As soon as
practicable after (a) surrender of certificates evidencing Allowed Senior Note
Claims or (b) delivery of the affidavit or bond, the Senior Indenture Trustee
shall distribute to the holders thereof such holder's Pro Rata Share in
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accordance with the respective rights of the Senior Indenture Trustee and such
holder under the terms of the Senior Notes Indenture. If such Creditor has not
complied with the provisions hereof within one (1) year following the Effective
Date, such Creditor shall be deemed to have no further Claim against the
Debtors, the Debtors' estates or Reorganized UC. As soon as practicable after
the date which is one (1) year following the Effective Date of the Plan, the
Senior Indenture Trustee shall deliver to Reorganized UC the distributions which
a Creditor holding an Allowed Senior Note Claim arising under the Senior Note
Indenture would have received had such Creditor surrendered such certificate
evidencing such Senior Note Claim to Reorganized UC, and, upon such delivery,
the Senior Indenture Trustee shall have no further responsibility with respect
to the Senior Indenture or the provisions of the Plan.
8.5 Closing of Transfer Ledgers for Senior Notes: At the
close of business on the Record Date, the transfer ledgers for the Senior Notes
shall be closed, and thereafter there shall be no further registrations or other
changes in the holders of any of the Senior Notes on the books of United
Companies (or of any indenture trustee, transfer agents or registrars it may
have employed in connection therewith), and the Debtors shall have no obligation
to recognize any transfer of the Senior Notes occurring thereafter (but shall be
entitled instead to recognize and deal with, for all purposes under the Plan,
except as otherwise provided herein, only those holders reflected on its books
as of the Effective Date).
8.6 Limitation on Recovery: Notwithstanding anything
contained herein to the contrary, including, without limitation, the
distributions to be made to a holder of an Allowed Senior Note Claim in
accordance with Section 8.2 hereof, in the event that the sum of (a) the
distributions of Net Senior Note Cash Amount and (b) the distributions from the
Litigation Trust to such holder are equal to one hundred percent (100%) of such
holder's Allowed Senior Note Claim, then, the Litigation Trust Interests
attributable to such holder shall be deemed redistributed to holders of Allowed
Claims and Allowed Equity Interests in accordance with the provisions of Section
32.12 of the Plan and the documents, instruments and agreements governing such
Claims and Equity Interests, including, without limitation, the contractual
subordination provisions set forth therein, and the Bankruptcy Code.
ARTICLE IX
PROVISION FOR TREATMENT OF
GENERAL UNSECURED CLAIMS (CLASS 5)
9.1 Treatment of General Unsecured Claims: Commencing on
the Effective Date, each holder of an Allowed General Unsecured Claim shall be
entitled to receive distributions (a) in an aggregate amount equal to thirty-two
percent (32%) of such holder's Allowed General Unsecured Claim and (b) equal to
such holder's Pro Rata Share of the General Unsecured Interest Amount. The
receipt and acceptance of distributions under the Plan by a holder of a Borrower
Litigation Claim or its successors or assigns shall constitute a full release
and waiver of any and all claims which have been or may have been asserted for
actions arising from or related to the origination or servicing of loans, moneys
advanced or mortgages issued by the Debtors, including, without limitation,
claims against the Debtors' successors and assigns for actions arising from or
related to the period prior to the Effective Date.
9.2 Optional Arbitration of Borrower Litigation Claims: In
the event that a Borrower Litigation Claim is not resolved prior to the
Effective Date and the holder thereof does not receive distributions in
accordance with the provisions of Section 9.1 of the Plan, such holder's
Borrower Litigation Claim, wherever located, shall, at the election of such
holder, be either (a) determined by the Bankruptcy Court in accordance with the
provisions of Article XXVI hereof or (b) transferred to an arbitration panel
located in or associated with the United States District Court for the Middle
District of Louisiana for binding arbitration to determine the validity and
amount of such Borrower Litigation Claim and such arbitration panel shall have
sole and exclusive jurisdiction to determine the validity and amount of such
Borrower Litigation Claim; provided, however, nothing contained herein limits,
or in any way is intended to limit, Reorganized UC's ability to compromise and
settle any Borrower Litigation Claim in accordance with the provisions of
Section 26.1 of the Plan.
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9.3 Foreclosure Actions. To the extent that the holder of a
Borrower Litigation Claim (i) has asserted such Borrower Litigation Claim in the
context of, and as a counterclaim to, a foreclosure action commenced by the
Debtors or their successors and assigns and (ii) receives a distribution under
the Plan pursuant to Sections 9.1 or 9.4 thereof, such holder of a Borrower
Litigation Claim shall be deemed to have received such distribution in full and
complete satisfaction of any Borrower Litigation Claim that such holder may have
against any of the Debtors and their successors and assigns and in consideration
for the entry of a judgment in favor of the Debtors or their successors and
assigns in connection with such foreclosure action.
9.4 Allowed Claims of One Thousand Dollars or More:
Notwithstanding the provisions of Section 9.1 of the Plan, any holder of an
Allowed General Unsecured Claim whose Allowed General Unsecured Claim is more
than One Thousand Dollars ($1,000.00), and who elects to reduce the amount of
such Allowed Claim to One Thousand Dollars ($1,000.00), shall, at such holder's
option, be entitled to receive, based on such Allowed Claim as so reduced,
distributions pursuant to Article X hereof, in full settlement, satisfaction,
release and discharge of such Allowed Claim. Such election must be made on the
Ballot and be received by the Debtors on or prior to the Ballot Date. Any
election made after the Ballot Date shall not be binding upon the Debtors unless
the Ballot Date is expressly waived, in writing, by the Debtors.
9.5 Limitation on Recovery: Notwithstanding anything
contained herein to the contrary, including, without limitation, the
distributions to be made to a holder of an Allowed General Unsecured Claim in
accordance with Section 9.1 hereof, in the event that the sum of (a) the
distributions of Cash in accordance with Section 9.1 hereof and (b) the
distributions from the Litigation Trust to such holder are equal to one hundred
percent (100%) of such holder's Allowed General Unsecured Claim, then, the
Litigation Trust Interests distributed to such holder shall be deemed
redistributed to holders of Allowed Claims and Allowed Equity Interests in
accordance with the provisions of Section 32.12 of the Plan and the documents,
instruments and agreements governing such Claims and Equity Interests,
including, without limitation, the contractual subordination provisions set
forth therein, and the Bankruptcy Code.
ARTICLE X
PROVISIONS FOR TREATMENT OF CONVENIENCE
CLAIMS (CLASS 6)
10.1 Treatment of Convenience Claims: On the Effective
Date, each holder of an Allowed Convenience Claim shall receive Cash in an
amount equal to one hundred percent (100%) of such Allowed Convenience Claim.
ARTICLE XI
PROVISION FOR TREATMENT OF SUBORDINATED DEBENTURE
CLAIMS (CLASS 7)
11.1 Allowance of Certain Subordinated Debenture Claims: On
the Effective Date, the Subordinated Debenture Claims arising under or relating
to the Subordinated Debentures shall be deemed allowed in the aggregate amount
of One Hundred Fifty Million Dollars ($150,000,000.00) plus accrued and unpaid
interest relating to the period up to but not including the Petition Date.
11.2 Treatment of Allowed Subordinated Debenture Claims: On
the Effective Date, and provided acceptance of the Plan by Classes 3, 4 and 7 of
the Plan in accordance with the provisions of section 1126 of the Bankruptcy
Code, each holder of an Allowed Subordinated Debenture Claim shall be entitled
to receive such holder's Pro Rata Share of two million (2,000,000) Litigation
Trust Interests.
11.3 No Distribution: Except as provided in Sections 7.4
and 8.6 of the Plan, in the event that any of Classes 3, 4 and 7 does not accept
the Plan in accordance with the provisions of section 1126 of the Bankruptcy
Code, no distribution of any kind shall be made to holders of Allowed
Subordinated Debenture Claims and the distribution of Litigation Trust Interests
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that otherwise would have been distributed to such holders shall be distributed
to holders of Allowed Bank Claims, Allowed Senior Note Claims and Allowed
General Unsecured Claims in accordance with the provisions of Articles VII, VIII
and IX of the Plan.
11.4 Contingent Distribution/Limitation on Recovery:
Notwithstanding anything contained herein to the contrary, in the event that (a)
Litigation Trust Interests are deemed redistributed to a holder of an Allowed
Subordinated Debenture Claim in accordance with the provisions of Sections 7.4,
8.6 and 9.5 hereof and (b) the sum of the distributions from the Litigation
Trust to such holder are equal to one hundred percent (100%) of such holder's
Allowed Subordinated Debenture Claim, then, the Litigation Trust Interests
distributable to such holder shall be deemed redistributed to holders of Allowed
Claims and Allowed Equity Interests in accordance with the provisions of Section
32.12 of the Plan and the documents, instruments and agreements governing such
Claims and Equity Interests, including, without limitation, the contractual
subordination provisions set forth therein, and the Bankruptcy Code.
11.5 Payments to be Made to Subordinated Indenture Trustee:
The payments and distributions to be made under the Plan to holders of Allowed
Subordinated Debenture Claims arising under the Subordinated Indenture shall be
made to the Subordinated Indenture Trustee, which, subject to any rights or
claims of Subordinated Indenture Trustee (such as claims for fees and
reimbursement of expenses, including the fees and expenses of its advisors and
counsel) under the Subordinated Indenture, shall transmit such payments and
distribution to holders of such Allowed Subordinated Debenture Claims. All
payment to holders of Allowed Subordinated Debenture Claims arising under the
Subordinated Indenture shall only be made to such Creditors after the surrender
by such Creditor of the certificates representing such Subordinated Debenture
Claim, or in the event that such certificate is lost, stolen, mutilated or
destroyed, delivery of evidence satisfactory to the Subordinated Indenture
Trustee and Reorganized UC of the loss, theft, mutilation or destruction of such
certificate or, in Reorganized UC's sole discretion, an affidavit of such
Creditor in accordance with Article 8 of the Uniform Commercial Code, or a
surety bond, the amount and form of which shall be satisfactory to the
Subordinated Indenture Trustee and Reorganized UC, from a surety company
satisfactory to the Subordinated Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Subordinated Indenture Trustee shall cancel
such Subordinated Debentures and deliver such cancelled Subordinated Debentures
to Reorganized UC or otherwise dispose of same as Reorganized UC may reasonably
request. As soon as practicable after (a) surrender of certificates evidencing
Subordinated Debenture Claims or (b) delivery of the affidavit or bond, the
Subordinated Indenture Trustee shall distribute to the holders thereof such
holder's Pro Rata Share in accordance with the respective rights of the
Subordinated Indenture Trustee and such holder under the terms of the
Subordinated Indenture. If such Creditor has not complied with the provisions
hereof within one (1) year following the Effective Date, such Creditor shall be
deemed to have no further Claim against the Debtors, the Debtors' estates or
Reorganized UC. As soon as practicable after the date which is one (1) year
following the Effective Date of the Plan, the Subordinated Indenture Trustee
shall deliver to Reorganized UC the distributions which a Creditor holding an
Allowed Subordinated Debenture Claim arising under the Subordinated Indenture
would have received had such Creditor surrendered such certificate evidencing
such Subordinated Debenture Claim to Reorganized UC, and, upon such delivery,
the Subordinated Indenture Trustee shall have no further responsibility with
respect to the Subordinated Indenture or the provisions of the Plan.
11.6 Closing of Transfer Ledgers for Subordinated
Debentures: At the close of business on the Record Date, the transfer ledgers
for the Subordinated Debentures shall be closed, and thereafter there shall be
no further registrations or other changes in the holders of any of the
Subordinated Debentures on the books of United Companies (or of any indenture
trustee, transfer agents or registrars it may have employed in connection
therewith), and the Debtors shall have no obligation to recognize any transfer
of the Subordinated Debentures occurring thereafter (but be entitled instead to
recognize and deal with, for all purposes under the Plan, except as otherwise
provided herein, only those holders reflected on its books as of the Effective
Date).
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ARTICLE XII
PROVISION FOR TREATMENT OF SUBORDINATED PENALTY CLAIMS (CLASS 8)
12.1 Treatment of Subordinated Penalty Claims: Commencing
on the Effective Date, each holder of an Allowed Subordinated Penalty Claim
shall be entitled to receive such holder's Pro Rata Share of Litigation Trust
Interests to be deemed redistributed in accordance with the provisions of
Sections 7.4, 8.6, 9.5 and 11.4 of the Plan.
12.2 Contingent Distribution/Limitation on Recovery: In the
event that (a) Litigation Trust Interests are deemed redistributed to a holder
of an Allowed Subordinated Penalty Claim in accordance with the provisions of
Sections 7.4, 8.6, 9.5, 11.4 and 12.1 hereof and (b) the sum of the
distributions from the Litigation Trust to such holder are equal to one hundred
percent (100%) of such holder's Allowed Subordinated Penalty Claim, then the
Litigation Trust Interests distributable to such holder shall be deemed
redistributed to holders of Allowed Claims and Allowed Equity Interests in
accordance with the provisions of Section 32.12 of the Plan and the documents,
instruments and agreements governing such Claims and Equity Interests,
including, without limitation, the contractual subordination provisions set
forth therein, and the Bankruptcy Code.
ARTICLE XIII
PROVISION FOR TREATMENT OF PRIDE EQUITY INTERESTS (CLASS 9)
13.1 Conversion of Pride Equity Interests: On the Effective
Date, each Pride Equity Interest shall be deemed to be converted to two (2)
shares of common stock of United Companies for each Pride Equity Interest.
13.2 Treatment of Pride Equity Interests: On the Effective
Date, and provided acceptance of the Plan by Classes 3, 4, 5, 6, 7, 8, 9 and 10
of the Plan in accordance with the provisions of section 1126 of the Bankruptcy
Code, each holder of an Allowed Pride Equity Interest shall receive such
holder's Pro Rata Share of distributions in accordance with provisions of
Section 14.3 of the Plan.
13.3 No Distribution: Except as provided in Sections 7.4,
8.6, 9.5, 11.4 and 12.2 of the Plan, in the event that any of Classes 3, 4, 5,
6, 7, 8, 9 and 10 does not accept the Plan in accordance with the provisions of
section 1126 of the Bankruptcy Code, no distribution of any kind shall be made
to holders of Allowed Pride Equity Interests and the distribution of Litigation
Trust Interests that otherwise would have been distributed to such holders shall
be distributed to holders of Allowed Bank Claims, Allowed Senior Note Claims and
Allowed General Unsecured Claims in accordance with the provisions of Articles
VII, VIII and IX hereof.
ARTICLE XIV
PROVISION FOR TREATMENT OF STATUTORILY SUBORDINATED CLAIMS (CLASS 10A)
AND UNITED COMPANIES COMMON EQUITY INTERESTS (CLASS 10B)
14.1 Cancellation of Existing Equity Interests: On the
Effective Date, all United Companies Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect.
14.2 Treatment of Statutorily Subordinated Claims: On the
Effective Date, and provided acceptance of the Plan by Classes 3, 4, 5, 6, 7, 8,
9 and 10 of the Plan in accordance with the provisions of section 1126 of the
Bankruptcy Code, each holder of an Allowed Statutorily Subordinated Claim shall
receive such holder's Pro Rate Share of the Statutorily Subordinated Claim
Percentage of one million (1,000,000) Litigation Trust Interests.
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14.3 Treatment of United Companies Common Equity Interests:
On the Effective Date, and subject to acceptance of the Plan by Classes 3, 4, 5,
6, 7, 8, 9 and 10 of the Plan in accordance with the provisions of section 1126
of the Bankruptcy Code, each holder of an Allowed United Companies Common Equity
Interests shall receive such holder's Pro Rata Share of the Equity Interest
Percentage of one million (1,000,000) Litigation Trust Interests.
14.4 No Distribution: Except as provided in Sections 7.4,
8.6, 9.5, 11.4 and 12.2 of the Plan, in the event that any of Classes 3, 4, 5,
6, 7, 8, 9 and 10 does not accept the Plan in accordance with the provisions of
section 1126 of the Bankruptcy Code, no distribution of any kind shall be made
to holders of Allowed Statutorily Subordinated Claims or Allowed United
Companies Common Equity Interests and the distribution of Litigation Trust
Interests that otherwise would have been distributed to such holders shall be
distributed to holders of Allowed Bank Claims, Allowed Senior Note Claims and
Allowed General Unsecured Claims in accordance with the provisions of Articles
VII, VIII and IX hereof.
14.5 Contingent Distribution/Limitation on Recovery:
Notwithstanding anything contained herein to the contrary, in the event that (a)
Litigation Trust Interests are deemed redistributed to a holder of an Allowed
Statutorily Subordinated Claim in accordance with the provisions of Sections
7.4, 8.6, 9.5 and 11.4 hereof and (b) the sum of the distributions from the
Litigation Trust to such holder are equal to one hundred percent (100%) of such
holder's Allowed Statutorily Subordinated Claim then, the Litigation Trust
Interests distributable to such holder shall be deemed redistributed to holders
of Allowed United Companies Equity Interests in accordance with the provisions
of the documents, instruments and agreements governing such Equity Interests,
including, without limitation, the contractual subordination provisions set
forth therein, and the Bankruptcy Code.
ARTICLE XV
PROVISION FOR TREATMENT OF ADOBE
COMMON EQUITY INTERESTS (CLASS 11)
15.1 Cancellation of Adobe Common Equity Interest: On the
Effective Date, (a) all Adobe Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI hereof; provided, however, that, in the
event that the Alternative Residual Sale Transaction is consummated through a
stock purchase agreement, the provisions of Section 37.3 of the Plan shall apply
and the Adobe Common Equity Interests shall be transferred to the relevant
purchaser in accordance with the Alternative Residual Sale Transaction.
ARTICLE XVI
PROVISION FOR TREATMENT OF ADOBE FINANCIAL
COMMON EQUITY INTERESTS (CLASS 12)
16.1 Cancellation of Adobe Financial Common Equity
Interest: On the Effective Date, (a) all Adobe Financial Common Equity Interests
shall be deemed extinguished and the certificates and all other documents
representing such Equity Interests shall be deemed cancelled and of no force and
effect and (b) the Plan Administrator shall administer the assets of such Entity
in accordance with the provisions of Article XXXVI hereof; provided, however,
that, in the event that the Alternative Residual Sale Transaction is consummated
through a stock purchase agreement, the provisions of Section 37.3 of the Plan
shall apply and the Adobe Financial Common Equity Interests shall be transferred
to the relevant purchaser in accordance with the Alternative Residual Sale
Transaction.
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ARTICLE XVII
PROVISION FOR TREATMENT OF GINGER MAE
COMMON EQUITY INTERESTS (CLASS 13)
17.1 Cancellation of Ginger Mae Common Equity Interests: On
the Effective Date, (a) all Ginger Mae Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI hereof.
ARTICLE XVIII
PROVISION FOR TREATMENT OF GOPHER EQUITY
COMMON EQUITY INTERESTS (CLASS 14)
18.1 Cancellation of Gopher Equity Common Equity Interests:
On the Effective Date, (a) all Gopher Equity Common Equity Interests shall be
deemed extinguished and the certificates and all other documents representing
such Equity Interests shall be deemed cancelled and of no force and effect and
(b) the Plan Administrator shall administer the assets of such Entity in
accordance with the provisions of Article XXXVI hereof; provided, however, that,
in the event that the Alternative Residual Sale Transaction is consummated
through a stock purchase agreement, the provisions of Section 37.3 of the Plan
shall apply and the Gopher Equity Common Equity Interests shall be transferred
to the relevant purchaser in accordance with the Alternative Residual Sale
Transaction.
ARTICLE XIX
PROVISION FOR TREATMENT OF PELICAN
COMMON EQUITY INTERESTS (CLASS 15)
19.1 Cancellation of Pelican Common Equity Interests: On
the Effective Date, (a) all Pelican Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI hereof; provided, however, that, in the
event that the Alternative Residual Sale Transaction is consummated through a
stock purchase agreement, the provisions of Section 37.3 of the Plan shall apply
and the Pelican Common Equity Interests shall be transferred to the relevant
purchaser in accordance with the Alternative Residual Sale Transaction.
ARTICLE XX
PROVISION FOR TREATMENT OF SOUTHERN MORTGAGE
COMMON EQUITY INTERESTS (CLASS 16)
20.1 Cancellation of Southern Mortgage Common Equity
Interests: On the Effective Date, (a) all Southern Mortgage Common Equity
Interests shall be deemed extinguished and the certificates and all other
documents representing such Equity Interests shall be deemed cancelled and of no
force and effect and (b) the Plan Administrator shall administer the assets of
such Entity in accordance with the provisions of Article XXXVI hereof.
ARTICLE XXI
PROVISION FOR TREATMENT OF UNICOR
COMMON EQUITY INTERESTS (CLASS 17)
21.1 Cancellation of Unicor Common Equity Interests: On the
Effective Date, (a) all Unicor Common Equity Interests shall be deemed
extinguished and the certificates and all other documents representing such
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Equity Interests shall be deemed cancelled and of no force and effect and (b)
the Plan Administrator shall administer the assets of such Entity in accordance
with the provisions of Article XXXVI hereof.
ARTICLE XXII
PROVISION FOR TREATMENT OF UNITED FUNDING
COMMON EQUITY INTERESTS (CLASS 18)
22.1 Cancellation of United Funding Common Equity
Interests: On the Effective Date, (a) all United Funding Common Equity Interests
shall be deemed extinguished and the certificates and all other documents
representing such Equity Interests shall be deemed cancelled and of no force and
effect and (b) the Plan Administrator shall administer the assets of such Entity
in accordance with the provisions of Article XXXVI hereof.
ARTICLE XXIII
PROVISION FOR TREATMENT OF UNITED LENDING CORP.
COMMON EQUITY INTERESTS (CLASS 19)
23.1 Cancellation of United Lending Corp. Common Equity
Interests: On the Effective Date, (a) All United Lending Corp. Common Equity
Interests shall be deemed extinguished and the certificates and all other
documents representing such Equity Interests shall be deemed cancelled and of no
force and effect and (b) the Plan Administrator shall administer the assets of
such Entity in accordance with the provisions of Article XXXVI hereof; provided,
however, that, in the event that an Alternative Residual Sale Transaction occurs
through consummation of a stock purchase agreement, at the discretion of the
highest or best offeror, (1) the Equity Interests represented by United Lending
Corp. Common Equity Interests shall be extinguished and the certificates and all
other documents representing such Equity Interests shall be deemed cancelled and
of no force and effect and (2) the certificates representing Reorganized UC
Lending Common Stock shall be issued to such higher or better offeror in
accordance with the terms and conditions of the Alternative Residual Sale
Agreement.
ARTICLE XXIV
PROVISION FOR TREATMENT OF UNITED LENDING GROUP
COMMON EQUITY INTERESTS (CLASS 20)
24.1 Cancellation of United Lending Group Common Equity
Interests: On the Effective Date, (a) all United Lending Group Common Equity
Interests shall be deemed extinguished and the certificates and all other
documents representing such Equity Interests shall be deemed cancelled and of no
force and effect and (b) the Plan Administrator shall administer the assets of
such Entity in accordance with the provisions of Article XXXVI hereof.
ARTICLE XXV
PROVISION FOR TREATMENT OF UNITED CREDIT CARD
COMMON EQUITY INTERESTS (CLASS 21)
25.1 Cancellation of United Credit Card Common Equity
Interests: On the Effective Date, (a) all United Credit Card Common Equity
Interests shall be deemed extinguished and the certificates and all other
documents representing such Equity Interests shall be deemed cancelled and of no
force and effect and (b) the Plan Administrator shall administer the assets of
such Entity in accordance with the provisions of Article XXXVI hereof.
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ARTICLE XXVI
PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS UNDER THE PLAN
26.1 Objections to Claims; Prosecution of Disputed Claims:
The Debtors' Reorganized UC or the Plan Administrator shall object to the
allowance of Claims or Equity Interests filed with the Bankruptcy Court with
respect to which they dispute liability or allowance in whole or in part. All
objections shall be litigated to Final Order; provided, however, that
Reorganized UC (within such parameters as may be established by the Board of
Directors of Reorganized UC) shall have the authority to file, settle,
compromise or withdraw any objections to Claims or Equity Interests, without
approval of the Bankruptcy Court. Unless otherwise ordered by the Bankruptcy
Court, the Debtors' Reorganized UC or the Plan Administrator shall file and
serve all objections to Claims or Equity Interests as soon as practicable, but
in no event later than the Effective Date or such later date as may be approved
by the Bankruptcy Court.
26.2 Estimation of Claims: The Debtors, Reorganized UC or
the Plan Administrator may at any time request that the Bankruptcy Court
estimate any contingent or Disputed Claim pursuant to section 502(c) of the
Bankruptcy Code regardless of whether the Debtors' Reorganized UC or the Plan
Administrator previously have objected to such Claim or whether the Bankruptcy
Court has ruled on any such objection, and the Bankruptcy Court will retain
jurisdiction to estimate any Claim at any time during litigation concerning any
objection to any Claim, including, without limitation, during the pendency of
any appeal relating to any such objection. Subject to the provisions of section
502(j) of the Bankruptcy Code, in the event that the Bankruptcy Court estimates
any contingent or Disputed Claim, the amount so estimated shall constitute the
allowed amount of such Claim. If the estimated amount constitutes a maximum
limitation on the amount of such Claim, the Debtors' Reorganized UC or the Plan
Administrator may pursue supplementary proceedings to object to the allowance of
such Claim. All of the aforementioned objection, estimation and resolution
procedures are intended to be cumulative and not necessarily exclusive of one
another. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
26.3 Payments and Distributions on Disputed Claims: At such
time as a Disputed Claim becomes, in whole or in part, an Allowed Claim, the
Plan Administrator shall distribute to the holder thereof the distributions, if
any, to which such holder is then entitled under the Plan. Such distribution, if
any, shall be made as soon as practicable after the date that the order or
judgment of the Bankruptcy Court allowing such Disputed Claim becomes a Final
Order but in no event more than thirty (30) days thereafter. No interest shall
be paid on Disputed Claims that later become Allowed or with respect to any
distribution to such holder. No distribution shall be made with respect to all
or any portion of any Disputed Claim pending the entire resolution thereof in
the manner prescribed in Section 26.1 hereof.
ARTICLE XXVII
THE LITIGATION TRUST
27.1 Establishment of the Trust: On the Effective Date, the
Debtors, on their own behalf and on behalf of holders of Allowed Claims and
Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10 shall execute the
Litigation Trust Agreement and shall take all other steps necessary to establish
the Litigation Trust. On the Effective Date, and in accordance with and pursuant
to the terms of Section 27.4 of the Plan, the Debtors shall transfer to the
Litigation Trust all of their right, title, and interest in the Litigation Trust
Claims. In connection with the above-described rights and causes of action, any
attorney-client privilege, work-product privilege, or other privilege or
immunity attaching to any documents or communications (whether written or oral)
transferred to the Litigation Trust shall vest in the Litigation Trustee and its
representatives, and the Debtors and the Litigation Trustee are authorized to
take all necessary actions to effectuate the transfer of such privileges.
27.2 Purpose of the Litigation Trust: The Litigation Trust
shall be established for the sole purpose of liquidating its assets, in
accordance with Treasury Regulation Section 301.7701-4(d), with no objective to
continue or engage in the conduct of a trade or business.
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27.3 Funding Expenses of the Litigation Trust: In accordance with the Litigation
Trust Agreement and any agreements entered into in connection therewith, on the
Effective Date, the Debtors shall transfer One Hundred Thousand Dollars
($100,000.00) to the Litigation Trust. The Debtors and Reorganized UC shall have
no further obligation to provide any funding with respect to the Litigation
Trust.
27.4 Transfer of Assets:
(a) The transfer of the Litigation Trust Claims to the
Litigation Trust shall be made, as provided herein, for the benefit of the
holders of Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8,
9 and 10 in each case, only to the extent such holders in such Classes are
entitled to distributions under the Plan. In this regard, in partial
satisfaction of Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5,
7, 8, 9 and 10 the Litigation Trust Claims will be transferred to such holders
of Allowed Claims and Allowed Equity Interests, to be held by the Debtors on
their behalf. Immediately thereafter, on behalf of the holders of Allowed Claims
and Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10, respectively,
the Debtors shall transfer such Litigation Trust Claims to the Litigation Trust
in exchange for Litigation Trust Interests for the benefit of holders of Allowed
Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10,
respectively, in accordance with the Plan. Upon the transfer of the Litigation
Trust Claims, the Debtors shall have no interest in or with respect to the
Litigation Trust Claims or the Litigation Trust.
(b) For all federal income tax purposes, all parties
(including, without limitation, the Debtors, the Litigation Trustee and the
beneficiaries of the Litigation Trust) shall treat the transfer of assets to the
Litigation Trust in accordance with the terms of the Plan, as a transfer to the
holders of Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8,
9 and 10, respectively, followed by a transfer by such holders to the Litigation
Trust and the beneficiaries of the Litigation Trust shall be treated as the
grantors and owners thereof.
27.5 Valuation of Assets: As soon as possible after the
Effective Date, but in no event later than thirty (30) days thereafter, the
Litigation Trust Board shall inform, in writing, the Litigation Trustee of the
value of the assets transferred to the Litigation Trust, based on the good faith
determination of the Litigation Trust Board, and the Litigation Trustee shall
apprise, in writing, the beneficiaries of the Litigation Trust of such
valuation. The valuation shall be used consistently by all parties (including
the Debtors, Reorganized UC, the Litigation Trustee and the beneficiaries of the
Litigation Trust) for all federal income tax purposes.
27.6 Litigation of Assets; Responsibilities of Litigation
Trustee:
(a) The Litigation Trustee, upon direction by the
Litigation Trust Board and the exercise of their collective reasonable business
judgment, shall, in an expeditious but orderly manner, liquidate and convert to
Cash the assets of the Litigation Trust, make timely distributions and not
unduly prolong the duration of the Litigation Trust. The liquidation of the
Litigation Trust Claims may be accomplished either through the prosecution,
compromise and settlement, abandonment or dismissal of any or all claims, rights
or causes of action, or otherwise. The Litigation Trustee, upon direction by the
Litigation Trust Board, shall have the absolute right to pursue or not to pursue
any and all claims, rights, or causes of action, as it determines is in the best
interests of the beneficiaries of the Litigation Trust, including, without
limitation, taking into account the indemnification and contribution obligations
of Reorganized UC and the diminution in value of Reorganized UC, and consistent
with the purposes of the Litigation Trust, and shall have no liability for the
outcome of its decision. The Litigation Trustee may incur any reasonable and
necessary expenses in liquidating and converting the assets to Cash.
(b) The Litigation Trustee shall be named in the
Confirmation Order or in the Litigation Trust Agreement and shall have the power
(i) to prosecute for the benefit of the Litigation Trust all claims, rights and
causes of action transferred to the Litigation Trust (whether such suits are
brought in the name of the Litigation Trust or otherwise), and (ii) to otherwise
perform the functions and take the actions provided for or permitted herein or
in any other agreement executed by the Litigation Trustee pursuant to the Plan.
Any and all proceeds generated from such claims, rights, and causes of action
shall be the property of the Litigation Trust.
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27.7 Investment Powers: The right and power of the
Litigation Trustee to invest assets transferred to the Litigation Trust, the
proceeds thereof, or any income earned by the Litigation Trust, shall be limited
to the right and power to invest such assets (pending periodic distributions in
accordance with Section 26.8 of the Plan) in Cash Equivalents; provided,
however, that (a) the scope of any such permissible investments shall be limited
to include only those investments, or shall be expanded to include any
additional investments, as the case may be, that a liquidating trust, within the
meaning of Treasury Regulation Section 301.7701-4(d) may be permitted to hold,
pursuant to the Treasury Regulations, or any modification in the IRS guidelines,
whether set forth in IRS rulings, other IRS pronouncements or otherwise, and (b)
the Litigation Trustee may expend the assets of the Litigation Trust (i) as
reasonably necessary to meet contingent liabilities and to maintain the value of
the assets of the Litigation Trust during liquidation, (ii) to pay reasonable
administrative expenses (including, but not limited to, any taxes imposed on the
Litigation Trust or fees and expenses in connection with litigation), and (iii)
to satisfy other liabilities incurred or assumed by the Litigation Trust (or to
which the assets are otherwise subject) in accordance with the Plan or the
Litigation Trust Agreement; and, provided, further, that, under no
circumstances, shall the Litigation Trust segregate the assets of the Litigation
Trust on the basis of classification of the holders of Litigation Trust
Interests, other than with respect to distributions to be made on account of
Disputed Claims and Disputed Equity Interests in accordance with the provisions
hereof.
27.8 Annual Distribution; Withholding: The Litigation
Trustee shall distribute at least annually to the holders of Litigation Trust
Interests all net cash income plus all net cash proceeds from the liquidation of
assets (including as Cash for this purpose, all Cash Equivalents); provided,
however, that the Litigation Trust may retain such amounts (i) as are reasonably
necessary to meet contingent liabilities and to maintain the value of the assets
of the Litigation Trust during liquidation, (ii) to pay reasonable
administrative expenses (including any taxes imposed on the Litigation Trust or
in respect of the assets of the Litigation Trust or the escrow created in
accordance with Section 27.14 hereof), and (iii) to satisfy other liabilities
incurred or assumed by the Litigation Trust (or to which the assets are
otherwise subject) in accordance with the Plan or the Litigation Trust
Agreement. All such distributions shall be pro rata based on the number of
Litigation Trust Interests held by a holder compared with the aggregate number
of Litigation Trust Interests outstanding, subject to the terms of the Plan and
the Litigation Trust Agreement; provided, further, that of the net amount
distributable, the Litigation Trustee shall transfer to an escrow, in accordance
with Section 27.14 hereof, such amounts as would be distributable in respect of
Disputed Claims and Disputed Equity Interests (treating such Claims and Equity
Interests, for this purpose, as if they were Allowed Claims or Allowed Equity
Interests, respectively). The Litigation Trustee may withhold from amounts
distributable to any Person any and all amounts, determined in the Litigation
Trustee's reasonable sole discretion, to be required by any law, regulation,
rule, ruling, directive or other governmental requirement.
27.9 Reporting Duties:
(a) Federal Income Tax: Subject to definitive guidance from
the IRS or a court of competent jurisdiction to the contrary (including the
receipt by the Litigation Trustee of a private letter ruling if the Litigation
Trustee so requests one, or the receipt of an adverse determination by the IRS
upon audit if not contested by the Litigation Trustee), the Litigation Trustee
shall file returns for the Litigation Trust as a grantor trust pursuant to
Treasury Regulation Section 1.671-4(a). The Litigation Trustee shall also
annually send to each holder of a Litigation Trust Interest a separate statement
setting forth the holder's share of items of income, gain, loss, deduction or
credit and will instruct all such holders to report such items on their federal
income tax returns.
(b) Allocations of Litigation Trust Taxable Income:
Allocations of Litigation Trust taxable income shall be determined by reference
to the manner in which an amount of cash equal to such taxable income would be
distributed (without regard to any restrictions on distributions described
herein) if, immediately prior to such deemed distribution, the Litigation Trust
had distributed all of its other assets (valued for this purpose at their tax
book value) to the holders of the Litigation Trust Interests (treating any
holder of a Disputed Claim or a Disputed Equity Interest, for this purpose, as a
current holder of a Litigation Trust Interest entitled to distributions), taking
into account all prior and concurrent distributions from the Litigation Trust
(including all distributions held in escrow pending the resolution of Disputed
Claims and Disputed Equity Interests). Similarly, taxable loss of the Litigation
Trust will be allocated by reference to the manner in which an economic loss
would be borne immediately after a liquidating distribution of the remaining
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Litigation Trust Claims. The tax book value of the Litigation Trust Claims for
this purpose shall equal their fair market value on the Effective Date or, if
later, the date such assets were acquired by the Litigation Trust, adjusted in
either case in accordance with tax accounting principles prescribed by the IRC,
the regulations and other applicable administrative and judicial authorities and
pronouncements.
(c) Other: The Litigation Trustee shall file (or cause to
be filed) any other statements, returns or disclosures relating to the
Litigation Trust, including, without limitation, all statements, returns and
disclosures relating to the escrow to be established pursuant to Section 27.14
hereof, that are required by any governmental unit.
27.10 Trust Implementation: On the Effective Date, the
Litigation Trust will be established and become effective for the benefit of
Allowed Claims and Allowed Equity Interests in Classes 3, 4, 5, 7, 8, 9 and 10.
The Litigation Trust Agreement shall be filed in the Plan Supplement and shall
contain provisions customary to trust agreements utilized in comparable
circumstances, including, but not limited to, any and all provisions necessary
to ensure the continued treatment of the Litigation Trust as a grantor trust for
federal income tax purposes. All parties (including the Debtors, the Litigation
Trustee and holders of Allowed Claims and Allowed Equity Interests in Classes 3,
4, 5, 7, 8, 9 and 10 shall execute any documents or other instruments as
necessary to cause title to the applicable assets to be transferred to the
Litigation Trust.
27.11 Registry of Beneficial Interests: The Litigation
Trustee shall maintain a registry of the holders of Litigation Trust Interests.
27.12 Termination: The Litigation Trust will terminate no
later than the third (3rd) anniversary of the Effective Date; provided, however,
that, on or prior to the date six (6) months prior to such termination, the
Bankruptcy Court, upon motion by a party in interest, may extend the term of the
Litigation Trust if it is necessary to the liquidation of the Litigation Trust
Claims. Notwithstanding the foregoing, multiple extensions can be obtained so
long as Bankruptcy Court approval is obtained at least six (6) months prior to
the expiration of each extended term; provided, however, that the aggregate of
all such extensions shall not exceed three (3) years, unless the Litigation
Trustee receives a favorable ruling from the IRS that any further extension
would not adversely affect the status of the Litigation Trust as a grantor trust
for federal income tax purposes.
27.13 Net Litigation Trust Recovery/Affirmative
Obligations:
(a) Net Judgment: Notwithstanding anything contained herein
to the contrary, in the event that a defendant in a litigation brought by the
Litigation Trustee for and on behalf of the Litigation Trust (i) is required by
a Final Order to make payment to the Litigation Trust (the "Judgment Amount"),
and (ii) has a right of setoff under section 553 of the Bankruptcy Code or
applicable non-bankruptcy law, has a claim for contribution, indemnification or
reimbursement or has incurred costs and expenses which would give rise to an
enforceable claim against the Debtors or Reorganized UC, as the case may be (the
aggregate amount of all such rights, claims, costs and expenses being referred
to herein as the "Indemnified/Contribution Amount"), (x) such defendant shall be
obligated to pay only the excess, if any, of the amount of the Judgment Amount
over the Indemnified/Contribution Amount, (y) none of the Litigation Trust, the
holders or beneficiaries of the Litigation Trust Interests shall be entitled to
assert a claim against the Debtors or Reorganized UC with respect to the
Indemnified/Contribution Amount, and (z) the Debtors and Reorganized UC shall
have no liability with respect to such Indemnified/Contribution Amount.
(b) Affirmative Obligations: Notwithstanding anything
contained herein to the contrary, in the event that a defendant in a litigation
brought by the Litigation Trustee for and on behalf of the Litigation Trust (1)
has an Indemnified/Contribution Amount and (2) the Indemnified/Contribution
Amount is in excess of the Judgment Amount, if any, (i) the Judgment Amount
shall be offset against the Indemnified/Contribution Amount and shall not be
paid to the Litigation Trust by such defendant, (ii) the Litigation Trust shall
reimburse Reorganized UC immediately for the payment of the difference between
the Indemnified/Contribution Amount and any Judgment Amount, (iii), none of the
Litigation Trust, the holders or beneficiaries of the Litigation Trust Interests
shall be entitled to assert a claim against the Debtors or Reorganized UC with
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respect to the Indemnified/Contribution Amount, and (iv) the Debtors and
Reorganized UC shall have no liability with respect to such
Indemnified/Contribution Amount.
27.14 Escrow on Account of Disputed Claims and Disputed
Equity Interests:
(a) General: The Litigation Trustee shall maintain, in
accordance with the Litigation Trustee's powers and responsibilities under this
Article XXVII and the Litigation Trust Agreement, an escrow of any distributable
amounts required to be set aside on account of Disputed Claims and Disputed
Equity Interests pursuant to Section 27.8. Such amounts (net of any expenses,
including any taxes, of the escrow relating thereto) shall be distributed, as
provided herein, as such Disputed Claims and Disputed Equity Interests are
resolved by Final Order, and shall be distributable in respect of such
Litigation Trust Interests as such amounts would have been distributable had the
Disputed Claims and Disputed Equity Interests been Allowed Claims and Allowed
Equity Interests, respectively, as of the Effective Date. There shall be
distributed together with such amounts any net earnings of the escrow related
thereto. Distributions from the escrow shall be made at least annually
concurrent with other distributions from the Litigation Trust.
(b) Taxable Income of Litigation Trust Allocable to
Disputed Claims and Disputed Equity Interests: As more fully set forth in
Section 27.14(c), the escrow shall be responsible for payment of certain taxes
attributable to the taxable income of the Litigation Trust allocable to
Litigation Trust Interests relating to such Disputed Claims and Disputed Equity
Interests. In the event, and to the extent the escrow has insufficient funds to
pay such taxes (or no escrow has been established at such time due to the
absence of any distributable proceeds pursuant to Section 27.8), such taxes
shall be borne by the Litigation Trust and either (i) reimbursed by the escrow
from any subsequent amounts transferred by the Litigation Trustee to the escrow
pursuant to Section 27.8 hereof in respect of such Disputed Claims and Disputed
Equity Interests or (ii) to the extent such Claims and Equity Interests have
subsequently been resolved, may be deducted from any increased amounts
distributable by the Litigation Trust as a result of the resolutions of such
Claims on a fair and equitable basis.
(c) Tax Treatment of Escrow: Subject to definitive guidance
from the IRS or a court of competent jurisdiction to the contrary (including the
receipt by the Litigation Trustee of a private letter ruling if the Litigation
Trustee so requests one, or the receipt of an adverse determination by the IRS
upon audit if not contested by the Litigation Trustee), and except as otherwise
provided in Section 27.9(d) hereof, the Litigation Trustee shall (i) treat the
escrow as a discrete trust for federal income tax purposes, consisting of
separate and independent shares to be established in respect of each Disputed
Claim and Disputed Equity Interest, in accordance with the trust provisions of
the IRC (Sections 641 et seq.), (ii) treat as taxable income or loss of the
escrow with respect to any given taxable year the portion of the taxable income
or loss of the Litigation Trust that would have been allocated to the holders of
Disputed Claims and Disputed Equity Interests had such Claims and Equity
Interests been Allowed on the Effective Date (but only for the portion of the
taxable year with respect to which such Claims and Equity Interests are
unresolved), (iii) treat as a distribution from the escrow any increased amounts
distributed by the Litigation Trust as a result of any Disputed Claims and
Disputed Equity Interests resolved earlier in the taxable year, to the extent
such distributions relate to taxable income or loss of the escrow determined in
accordance with the provisions hereof, and (iv) to the extent permitted by
applicable law, shall report consistent with the foregoing for state and local
income tax purposes. All holders of Allowed Claims and Allowed Equity Interests
in Classes 3, 4, 5, 7, 8, 9 and 10 shall report, for tax purposes, consistent
with the foregoing.
27.15 Non-Transferability: Upon issuance thereof, the
Litigation Trust Interests shall be non-transferable except through descent or
distribution.
ARTICLE XXVIII
PROSECUTION OF CLAIMS HELD BY THE DEBTORS
28.1 Prosecution of Claims: Except with respect to
Litigation Trust Claims, from and after the Confirmation Date, Reorganized UC
shall, as a representative of the estates of the Debtors, litigate any avoidance
or recovery actions under sections 544, 545, 547, 548, 549, 550, 551 and 553 of
the Bankruptcy Code and any other causes of action, rights to payments of claims
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that belong to the Debtors or Debtors in Possession, that may be pending on the
Confirmation Date or instituted by Debtors thereafter, to a Final Order, and
Reorganized UC may compromise and settle such claims, without approval of the
Bankruptcy Court (but with approval of, or within parameters established by, the
Board of Directors of Reorganized UC). The net proceeds of any such litigation
or settlement (after satisfaction of all costs and expenses incurred in
connection therewith) shall be remitted to the Disbursing Agent for inclusion in
Creditor Cash.
28.2 Net Payment by Defendants: Notwithstanding anything to
the contrary herein, in the event that a defendant in a litigation of the kind
described in Section 28.1 hereof is required by a Final Order to make payment (a
"Disgorgement Payment") to Reorganized UC, and such Disgorgement Payment (if so
made) would give rise to a Claim, (a) such defendant will be required to pay (a
"Net Payment") in Cash (and will have no Claim in respect thereof) only the
excess, if any, of (i) the amount of such Disgorgement Payment over (ii) the
fair market value of the distributions ("Initial Distributions") on such Claim
pursuant to this Plan that would have been received by such defendant if such
defendant had made such Disgorgement Payment (which fair market value shall be
determined as of the date of such Net Payment by agreement between Reorganized
UC and such defendant, or by Final Order) and (b) if any distributions
("Subsequent Distributions") are made hereunder after such defendant makes such
Net Payment, such defendant shall receive such defendant's Pro Rata Share of
such Subsequent Distributions (or, at Reorganized UC's election, the fair market
value thereof determined as of the date of such Subsequent Distributions by
agreement between Reorganized UC and such defendant, or by Final Order), which
Pro Rata Share shall be calculated as if such defendant had made such
Disgorgement Payment and received Initial Distributions in respect thereof.
ARTICLE XXIX
ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION
BY ONE OR MORE CLASSES OF CLAIMS OR EQUITY INTEREST
29.1 Impaired Classes to Vote: Each holder of a Claim or
Equity Interest in an impaired Class shall be entitled to vote separately to
accept or reject the Plan.
29.2 Acceptance by Class of Creditors and Holders of Equity
Interests: An impaired Class of holders of Claims shall have accepted the Plan
if the Plan is accepted by at least two-thirds (2/3) in dollar amount and more
than one-half (1/2) in number of the Allowed Claims of such Class that have
voted to accept or reject the Plan. An impaired Class of holders of Equity
Interests shall have accepted the Plan if the Plan is accepted by at least
two-thirds (2/3) in amount of the Allowed Equity Interests of such Class that
have voted to accept or reject the Plan.
29.3 Cramdown: In the event that any impaired Class of
Claims or Equity Interests shall fail to accept the Plan in accordance with
section 1129(a) of the Bankruptcy Code, the Debtors reserves the right to
request that the Bankruptcy Court confirm the Plan in accordance with section
1129(b) of the Bankruptcy Code or amend the Plan.
ARTICLE XXX
IDENTIFICATION OF CLAIMS AND EQUITY INTERESTS
IMPAIRED AND NOT IMPAIRED BY THE PLAN
30.1 Impaired and Unimpaired Classes: Claims in Classes 1
and 2 of the Plan are not impaired under the Plan. Claims and Equity Interests
in Classes 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and
21 are impaired under the Plan.
30.2 Impaired Classes to Vote on Plan: The Claims and
Equity Interests included in Classes 3, 4, 5, 6, 7, 8, 9 and 10 of the Plan are
impaired and are therefore entitled to vote to accept or reject the Plan. The
Claims and Equity Interests included in Classes 11, 12, 13, 14, 15, 16, 17, 18,
19, 20 and 21 of the Plan are deemed to have rejected the Plan in accordance
with the provisions of section 1126 (g) of the Bankruptcy Code.
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30.3 Controversy Concerning Impairment: In the event of a
controversy as to whether any Class of Claims or Equity Interests is impaired
under the Plan, the Bankruptcy Court shall, after notice and a hearing,
determine such controversy.
ARTICLE XXXI
PROVISIONS FOR THE ESTABLISHMENT
AND MAINTENANCE OF DISBURSEMENT ACCOUNTS
31.1 Establishment of Disbursement Account: On or before
the Effective Date, the Debtors shall establish one or more segregated bank
accounts in the name of Reorganized UC as Disbursing Agent under the Plan, which
accounts shall be trust accounts for the benefit of Creditors pursuant to the
Plan and utilized solely for the investment and distribution of Cash consistent
with the terms and conditions of the Plan. On or before the Effective Date, the
Debtors shall deposit into such Disbursement Account(s) all Cash and Cash
Equivalents of the Debtors (other than those amounts of Cash held (i) by the
Debtors in accounts for and on account of escrow payments to be made on behalf
of borrowers and (ii) in accounts for and on behalf of securitization trustees
and relating to principal and interest payments made by borrowers), less the sum
of Fifteen Million Dollars ($15,000,000.00) or such other amount reasonably
determined by the Debtors on or prior to the Confirmation Date as necessary to
fund the ongoing operations of Reorganized UC during the period up to and
including the Transfer Date.
31.2 Maintenance of Disbursement Account(s): Disbursement
Account(s) shall be maintained at one or more domestic banks or financial
institutions of Reorganized UC's choice having a shareholder's equity or
equivalent capital of not less than One Hundred Million ($100,000,000.00).
Reorganized UC shall invest Cash in Disbursement Account(s) in Cash Equivalents;
provided, however, that sufficient liquidity shall be maintained in such account
or accounts to (a) make promptly when due all payments upon Disputed Claims if,
as and when they become Allowed Claims and (b) make promptly when due the other
payments provided for in the Plan.
ARTICLE XXXII
PROVISIONS REGARDING DISTRIBUTIONS
32.1 Time and Manner of Payments: Payments under the Plan
shall be made to each holder of an Allowed Unsecured Claim as follows:
(a) Initial Payments: On or as soon as practicable after
the Effective Date, the Disbursing Agent shall distribute, or cause to be
distributed, to the Plan Administrator on behalf of holders of Disputed Claims,
and to each holder of (i) an Allowed Bank Claim, (ii) an Allowed Senior Note
Claim, and (iii) an Allowed General Unsecured Claim, such Creditor's share, if
any, of Creditor Cash as determined pursuant to Articles VII, VIII and IX
hereof, respectively.
(b) Quarterly Payments: On the first (1st) Business Day
that is after the close of one full calendar quarter following the date of the
initial Effective Date distributions, and, thereafter, on each first (1st)
Business Day following the close of calendar quarters, the Disbursing Agent
shall distribute, or cause to be distributed, to the Plan Administrator on
behalf of holders of Disputed Claims, and to each holder of (i) an Allowed Bank
Claim, (ii) an Allowed Senior Note Claim, and (iii) an Allowed General Unsecured
Claim, an amount equal to such Creditor's share, if any, of Creditor Cash as
determined pursuant to Articles VII, VIII and IX hereof, until such time as
there are not longer any potential Creditor Cash.
32.2 Timeliness of Payments: Any payments or distributions
to be made by the Debtors pursuant to the Plan shall be deemed to be timely made
if made within twenty (20) days after the dates specified in the Plan. Whenever
any distribution to be made under this Plan shall be due on a day other than a
Business Day, such distribution shall instead be made, without interest, on the
immediately succeeding Business Day, but shall be deemed to have been made on
the date due.
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32.3 Distributions by the Disbursing Agent: All
distributions under the Plan shall be made by the Disbursing Agent at the
direction of the Plan Administrator. The Disbursing Agent shall be deemed to
hold all property to be distributed hereunder in trust for the Persons entitled
to receive the same. The Disbursing Agent shall not hold an economic or
beneficial interest in such property.
32.4 Manner of Payment Under the Plan: Unless the Entity
receiving a payment agrees otherwise, any payment in Cash to be made by
Reorganized UC shall be made, at the election of Reorganized UC, by check drawn
on a domestic bank or by wire transfer from a domestic bank.
32.5 Delivery of Distributions: Subject to the provisions
of Rule 9010 of the Bankruptcy Rules, and except as provided in Sections 8.4 and
11.5 of the Plan, distributions and deliveries to holders of Allowed Claims
shall be made at the address of each such holder as set forth on the Schedules
filed with the Bankruptcy Court unless superseded by the address set forth on
proofs of claim filed by such holders, or at the last known address of such a
holder if no proof of claim is filed or if the Debtors has been notified in
writing of a change of address.
32.6 Undeliverable Distributions:
(a) Holding of Undeliverable Distributions: If any
distribution to any holder is returned to Reorganized UC as undeliverable, no
further distributions shall be made to such holder unless and until Reorganized
UC is notified, in writing, of such holder's then-current address. Undeliverable
distributions shall remain in the possession of Reorganized UC until such time
as a distribution becomes deliverable. All Entities ultimately receiving
undeliverable Cash shall not be entitled to any interest or other accruals of
any kind. Nothing contained in the Plan shall require Reorganized UC to attempt
to locate any holder of an Allowed Claim or an Allowed Equity Interest.
(b) Failure to Claim Undeliverable Distributions: On or
about the second (2nd) anniversary of the Effective Date, Reorganized UC shall
file a list with the Bankruptcy Court setting forth the names of those Entities
for which distributions have been made hereunder and have been returned as
undeliverable as of the date thereof. Any holder of an Allowed Claim or an
Allowed Equity Interest that does not assert its rights pursuant to the Plan to
receive a distribution within three (3) years from and after the Effective Date
shall have its Claim or Equity Interest for such undeliverable distribution
discharged and shall be forever barred from asserting any such Claim or Equity
Interest against Reorganized UC or its property. In such case, any consideration
held for distribution on account of such Claim or Equity Interest shall revert
to Reorganized UC.
32.7 Compliance with Tax Requirements/Allocation: To the
extent applicable, Reorganized UC shall comply with all tax withholding and
reporting requirements imposed on it by any governmental unit, and all
distributions pursuant to the Plan shall be subject to such withholding and
reporting requirements. For tax purposes, distributions received in respect of
Allowed Claims will be allocated first to the principal amount of such Claims,
with any excess allocated to unpaid accrued interest.
32.8 Time Bar to Cash Payments: Checks issued by
Reorganized UC on account of Allowed Claims shall be null and void if not
negotiated within ninety (90) days from and after the date of issuance thereof.
Requests for reissuance of any check shall be made directly to Reorganized UC 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 (a) the second (2nd) anniversary of the Effective Date or (b)
ninety (90) days after the date of issuance of such check, if such check
represents a final distribution hereunder on account of such Claim. After such
date, all Claims in respect of voided checks shall be discharged and forever
barred and Reorganized UC shall retain all moneys related thereto.
32.9 Distributions After Effective Date: Distributions made
after the Effective Date to holders of Claims that are not Allowed Claims as of
the Effective Date, but which later become Allowed Claims shall be deemed to
have been made on the Effective Date.
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32.10 Set-Offs: Reorganized UC may, pursuant to section 553
of the Bankruptcy Code or applicable nonbankruptcy law, set off against any
Allowed Claim and the distributions to be made pursuant to the Plan on account
thereof (before any distribution is made on account of such Claim), the claims,
rights and causes of action of any nature that the Debtors or Reorganized UC may
hold against the holder of such Allowed Claim; provided, however, that neither
the failure to effect such a set-off nor the allowance of any Claim hereunder
shall constitute a waiver or release by the Debtors or Reorganized UC of any
such claims, rights and causes of action that the Debtors or Reorganized UC may
possess against such holder; and, provided, further, that nothing contained
herein is intended to limit the rights of any Creditor to effectuate a setoff
prior to the Effective Date in accordance with the provisions of sections 362
and 553 of the Bankruptcy Code.
32.11 Termination of Certain Subordination Rights and
Settlement of Related Claims and Controversies: The classification and manner of
satisfying all Claims and Equity Interests under the Plan (i) take into
consideration all contractual, legal and equitable subordination rights, whether
arising under general principles of equitable subordination, sections 510(b) and
(c) of the Bankruptcy Code or otherwise, that a holder of a Claim or Equity
Interest may have against other Claim or Equity Interest holders with respect to
any distribution made pursuant to the Plan and (ii) are the result of
discussions between the Debtors and other parties in interest and take into
account their respective positions with respect to (a) the extent and validity
of the Guaranty and (b) the objections of the Banks to the treatment of the
Debtors' chapter 11 estates as substantively consolidated for purposes of the
Plan, on the grounds that such treatment would result in severe prejudice to the
Banks. Pursuant to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of this
Section 32.11 shall constitute a good faith compromise and settlement of all
claims or controversies relating to the contractual, legal and subordination
rights that a holder of a Bank Claim or a Senior Note Claim may have with
respect to any Allowed Claim with respect thereto, or any distribution to be
made on account of such an Allowed Claim. The entry of the Confirmation Order
shall constitute the Bankruptcy Court's approval of the compromise or settlement
of all such claims or controversies and the Bankruptcy Court's finding that such
compromise or settlement is in the best interests of the Debtors, Reorganized
UC, and their respective property and holders of Claims and is fair, equitable
and reasonable. With respect to all other Claims, including, without limitation,
Lending Subordinated Debenture Claims and Subordinated Debenture Claims, the
provisions of the Plan regarding distributions with respect thereto apply all
applicable contractual, legal and subordination rights that holders of Bank
Claims and Senior Note Claims maintain and, from and after the Effective Date,
the holders of Allowed Bank Claims and Allowed Senior Note Claims shall be
entitled to rely upon the validity and enforceability of any such provisions in
accordance with the provisions of section 510(a) of the Bankruptcy Code.
32.12 Post Petition Date Interest: Upon payment in full of
all Allowed Claims, and prior to the deemed redistribution of Litigation Trust
Interests to holders of Allowed Pride Equity Interests, Allowed Statutorily
Subordinated Claims and Allowed United Companies Common Equity Interests,
Litigation Trust Interests shall be deemed redistributed for and on behalf of
holders of Allowed Claims, subject to the applicable legal and contractual
rights of the respective holders thereof, for and on account of the payment of
interest, accrued at the applicable contract or legal rate, for the period from
the Petition Date up to and including the date on which a particular Allowed
Claim shall have been paid in full.
ARTICLE XXXIII
COMMITTEES
33.1 Creditors' Committee Composition and Term: From the
Confirmation Date up to and including the Effective Date, the members of the
Creditors' Committee, if any, appointed pursuant to section 1102 of the
Bankruptcy Code, and their duly appointed successors, shall continue to serve.
Upon the disallowance by Final Order of the Claim held by a Creditor that is a
member of the Creditors' Committee, such membership shall terminate and no
replacement shall be appointed. Upon the resignation, death or disability of a
member of the Creditors' Committee, the Creditor having appointed such member
shall have the right to designate a replacement. In the event such Creditor
shall fail to designate a replacement, no other replacement may be appointed to
the Creditors' Committee. Members of the Creditors' Committee shall serve
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without compensation but shall be entitled to reimbursement of their reasonable
out-of-pocket expenses which are attributable to their attendance at Creditors'
Committee meetings, Bankruptcy Court hearings or negotiation sessions. The
Creditors' Committee shall be entitled to retain legal counsel and such other
professionals as may be authorized by the Bankruptcy Court, the fees and
expenses of which shall be entitled to payment as Administrative Expense Claims.
On the Effective Date, the Creditors' Committee shall be dissolved and the
members thereof and the professionals retained by the Creditors' Committee in
accordance with section 1103 of the Bankruptcy Code shall be released and
discharged from their respective fiduciary obligations.
33.2 Equity Committee Term and Fees: From the Confirmation
Date up to and including the Effective Date, the members of the Equity
Committee, if any, appointed pursuant to section 1102 of the Bankruptcy Code,
and their duly appointed successors, shall continue to serve. Members of the
Equity Committee shall serve without compensation but shall be entitled to
reimbursement of their reasonable out-of-pocket expenses which are attributable
to their attendance at Equity Committee meetings. The Equity Committee shall be
entitled to retain legal counsel and such other professionals as may be
authorized by the Bankruptcy Court, the fees and expenses of which shall be
entitled to payment as Administrative Expense Claims. On the Effective Date, the
Equity Committee shall be dissolved and the members thereof and the
professionals retained by the Equity Committee in accordance with section 327 of
the Bankruptcy Code shall be released and discharged from their respective
fiduciary obligations, if the same has not occurred prior to the Effective Date.
ARTICLE XXXIV
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
34.1 Rejection of Executory Contracts and Unexpired Leases:
Any executory contracts or unexpired leases which have not expired by their own
terms on or prior to the Effective Date, which have not been assumed and
assigned or rejected with the approval of the Bankruptcy Court, or which are not
the subject of a motion to assume the same pending as of the Effective Date
shall be deemed rejected by the Debtors in Possession on the Effective Date and
the entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such rejections pursuant to sections 365(a) and 1123 of the
Bankruptcy Code.
34.2 Cure of Defaults for Assumed Executory Contracts and
Unexpired Leases: Any monetary amounts required as cure payments on each
executory contract and unexpired lease to be assumed pursuant to the Plan shall
be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment
of the cure amount in Cash on the Effective Date or upon such other terms and
dates as the parties to such executory contracts or unexpired leases otherwise
may agree. In the event of a dispute regarding (a) the amount of any cure
payment, (b) the ability of the Debtors or any assignee to provide "adequate
assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed or (c) any other
matter pertaining to assumption, the cure payments required by section 365(b)(1)
of the Bankruptcy Code shall be subject to the jurisdiction of the Bankruptcy
Court and made following the entry of a Final Order resolving such dispute.
34.3 Rejection Damage Claims: Not later than ten (10) days
prior to the Confirmation Date, the Debtors shall file with the Bankruptcy Court
a list of executory contracts and unexpired leases to be assumed by the Debtors
pursuant to the Plan as of the Effective Date, and such executory contracts and
unexpired leases shall be deemed assumed as of the Effective Date. If the
rejection of an executory contract or unexpired lease by the Debtors results in
damages to the other party or parties to such contract or lease, any 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 Debtors, or its
properties or agents, successors, or assigns, unless a proof of claim is filed
with the Bankruptcy Court and served upon counsel for the Debtors on or before
fifteen (15) days after the later to occur of (a) the Confirmation Date and (b)
the date of entry of an order by the Bankruptcy Court authorizing rejection of a
particular executory contract or unexpired lease.
34.4 Indemnification and Reimbursement Obligations: For
purposes of the Plan, the obligations of the Debtors to indemnify and reimburse
its directors or officers that were directors or officers, respectively, on or
before the Petition Date or who became directors or officers after the Petition
Date against and for any obligations pursuant to articles of incorporation,
codes of regulations, bylaws, applicable state law, or specific agreement, or
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any combination of the foregoing, shall survive confirmation of the Plan, remain
unaffected thereby, and not be discharged in accordance with section 1141 of the
Bankruptcy Code, irrespective of whether indemnification or reimbursement is
owed in connection with an event occurring before, on, or after the Petition
Date; provided, however, that, notwithstanding the foregoing, such obligations
shall not be extended to any directors or officers whose term in all such
capacities expired or was terminated prior to the Petition Date; and, provided,
further, that, the foregoing is not intended, nor shall it be construed, to
constitute the assumption of, or obligation to indemnify or reimburse any Person
with respect to, any Statutorily Subordinated Claim.
ARTICLE XXXV
RIGHTS AND POWERS OF DISBURSING AGENT
35.1 Exculpation: From and after the Effective Date, the
Disbursing Agent shall be exculpated by all Persons and Entities, including,
without limitation, holders of Claims and Equity Interests and other parties in
interest, from any and all claims, causes of action and other assertions of
liability arising out of the discharge of the powers and duties conferred upon
such Disbursing Agent by the Plan or any order of the Bankruptcy Court entered
pursuant to or in furtherance of the Plan, or applicable law, except for actions
or omissions to act arising out of the gross negligence, willful misconduct or
breach of fiduciary duty of such Disbursing Agent. No holder of a Claim or an
Equity Interest or other party in interest shall have or pursue any claim or
cause of action against the Disbursing Agent for making payments in accordance
with the Plan or for implementing the provisions of the Plan.
35.2 Powers of the Disbursing Agent: Except to the extent
that the responsibility for the same is vested in the Plan Administrator
pursuant to the Plan Administration Agreement, the Disbursing Agent shall be
empowered to (a) take all steps and execute all instruments and documents
necessary to effectuate the Plan, (b) make distributions contemplated by the
Plan, (c) comply with the Plan and the obligations thereunder, (d) employ
professionals to represent it with respect to its responsibilities, and (e)
exercise such other powers as may be vested in the Disbursing Agent pursuant to
order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the
Disbursing Agent to be necessary and proper to implement the provisions of the
Plan.
35.3 Fees and Expenses Incurred From and After the
Effective Date: Except as otherwise ordered by the Bankruptcy Court, the amount
of any fees and expenses incurred by the Disbursing Agent from and after the
Effective Date (including taxes) and any compensation and expense reimbursement
claims, including, without limitation, reasonable fees and expenses of counsel,
made by the Disbursing Agent, shall be paid in Cash by Reorganized UC.
ARTICLE XXXVI
THE PLAN ADMINISTRATOR
36.1 Appointment of Plan Administrator: On the Effective
Date, compliance with the provisions of the Plan shall become the general
responsibility of the Plan Administrator (subject to the supervision of the
Board of Directors of Reorganized UC) pursuant to and in accordance with the
provisions of the Plan and the Plan Administration Agreement.
36.2 Responsibilities of the Plan Administrator: The
responsibilities of the Plan Administrator shall include (a) facilitating
Reorganized UC's prosecution or settlement of objections to and estimations of
Claims, (b) calculating and assisting the Disbursing Agent in implementing all
distributions in accordance with the Plan, (c) filing all required tax returns
and paying taxes and all other obligations on behalf of Reorganized UC from
funds held by Reorganized UC, (d) periodic reporting to the Bankruptcy Court, of
the status of the Claims resolution process, distributions on Allowed Claims and
prosecution of causes of action, (e) liquidating the Remaining Assets and
providing for the distribution of the net proceeds thereof in accordance with
the provisions of the Plan, (f) managing the Debtors servicing operations during
the period from the Effective Date up to and including the Transfer Date, (g)
owning the capital stock of Reorganized UC, and (h) such other responsibilities
as may be vested in the Plan Administrator pursuant to the Plan, the Plan
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Administration Agreement or Bankruptcy Court order or as may be necessary and
proper to carry out the provisions of the Plan.
36.3 Powers of the Plan Administrator: The powers of the
Plan Administrator shall, without any further Bankruptcy Court approval in each
of the following cases, include (a) the power to invest funds in, and withdraw,
make distributions and pay taxes and other obligations owed by Reorganized UC
from funds held by the Plan Administrator and/or Reorganized UC in accordance
with the Plan, (b) the power to engage employees and professional persons to
assist the Plan Administrator with respect to its responsibilities, (c) the
power to compromise and settle claims and causes of action on behalf of or
against Reorganized UC, and (d) such other powers as may be vested in or assumed
by the Plan Administrator pursuant to the Plan, the Plan Administration
Agreement or as may be necessary and proper to carry out the provisions of the
Plan.
36.4 Compensation of the Plan Administrator: In addition to
reimbursement for actual out-of-pocket expenses incurred by the Plan
Administrator, the Plan Administrator shall be entitled to receive reasonable
compensation for services rendered on behalf of Reorganized UC in an amount and
on such terms as may be agreed to by the Debtors for Reorganized UC as reflected
in the Plan Administration Agreement. Any dispute with respect to such
compensation shall be resolved by agreement among the parties or, if the parties
are unable to agree, determined by the Bankruptcy Court.
36.5 Termination of Plan Administrator: The duties,
responsibilities and powers of the Plan Administrator shall terminate on the
date set forth in the Plan Administration Agreement.
ARTICLE XXXVII
CONDITIONS PRECEDENT TO EFFECTIVE DATE OF
THE PLAN; ALTERNATIVE IMPLEMENATION PROVISIONS
37.1 Conditions Precedent to Effective Date of the Plan:
The occurrence of the Effective Date and the substantial consummation of the
Plan are subject to satisfaction of the following conditions precedent:
(a) Entry of the Confirmation Order: The Clerk of the
Bankruptcy Court shall have entered the Confirmation Order, in form and
substance satisfactory to the Debtors and the Creditors' Committee and the
Confirmation Order shall have become a Final Order and be in full force and
effect.
(b) Execution of Documents; Other Actions: All other
actions and documents necessary to implement the Plan shall have been
effected or executed.
(c) Sale Transaction: Consummation of the Sale Transaction
or, in the event that an Alternative Residual Sale Transaction is accepted by
the Debtors and approved by the Bankruptcy Court, consummation of such
Alternative Residual Sale Transaction.
(d) Class 4 Claims. The aggregate amount of Allowed Senior
Note Claims shall not exceed the sum of (i) Allowed Claims arising under the
Senior Note Indenture, plus (ii) Allowed Claims arising under or related to the
guaranty of certain indebtedness relating to the employee stock ownership plan
of United Companies, plus (iii) Two Million Dollars ($2,000,000.00).
37.2 Waiver of Conditions Precedent: To the extent
practicable or legally permissible, each of the conditions precedent in Section
37.1 hereof, may be waived, in whole or in part, by the Debtors in their sole
discretion; provided, however, that, with respect to the condition precedent set
forth in Section 37.1(d) of the Plan, the Debtors' waiver thereof must be with
the consent of the Senior Indenture Trustee, upon direction of the holders of
Senior Notes in accordance with the provisions of the Senior Indenture. Any such
waiver of a condition precedent may be effected at any time, without notice or
leave or order of the Bankruptcy Court and without any formal action.
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37.3 Alternative Implementation Provisions: In the event
that a higher or better offer for the assets set forth in the Residual Agreement
is accepted by the Debtors and approved by the Bankruptcy Court, at the
discretion of such higher or better offeror, the following provisions may apply:
(a) Stock Purchase Agreement Permissible: The Alternative
Residual Sale Transaction may be consummated through either an asset purchase
agreement or a stock purchase agreement, as the case may be. To the extent that
the Alternative Residual Sale Transaction, or part thereof, occurs by operation
of a stock purchase agreement, then the provisions of this Section 37.3 shall be
operative under the Plan.
(b) Issuance of Reorganized UC Lending Common Stock and
Transfer of Reorganized Designated Subsidiaries Common Stock. On the Effective
Date, (i) the Reorganized UC Lending Common Stock shall be issued to the
relevant purchaser pursuant to the consummation of the Alternative Residual Sale
Transaction, and (ii) the Reorganized Designated Subsidiaries Common Stock as
direct or indirect assets of Reorganized UC Lending shall be transferred to the
control of the relevant purchaser pursuant to the consummation of the
Alternative Residual Sale Transaction. On the Effective Date, Reorganized UC
Lending and the Reorganized Designated Subsidiaries shall only own the assets
and retain the liabilities that are provided for in the relevant stock purchase
agreement for the Alternative Residual Sale Transaction. The Debtors shall be
authorized and shall make any divestiture of assets and transfer of assets as
between the Debtors prior to the closing of the Alternative Residual Sale
Transaction as are necessary and appropriate to achieve the result stated in the
preceding sentence.
(c) Corporate Organization of Reorganized UC Lending and
the Reorganized Designated Subsidiaries. On the Effective Date, the adoption of
the New Organization Documents shall be authorized and approved in all respects,
in each case without further action under applicable law, regulation, order or
rule, including, without limitation, any action by United Funding, Reorganized
UC, the stockholders of the Debtors, or Reorganized UC Lending and/or the
Reorganized Designated Subsidiaries. On the Effective Date, the issuance of the
Reorganized UC Lending Common Stock and the transfer of control of Reorganized
Designated Subsidiaries Common Stock and the cancellation of the Equity
Interests of United Lending Corp. set forth in Section 22.1 hereof and other
matters involving the corporate structure of the Reorganized UC Lending and/or
the Reorganized Designated Subsidiaries shall be deemed to have occurred, be
authorized, and shall be in effect from and after the Effective Date without
requiring further action under applicable law, regulation, order or rule,
including, without limitation, any action by United Funding, Reorganized UC, the
stockholders of the Debtors, Reorganized UC Lending and/or the Reorganized
Designated Subsidiaries.
(d) Post Effective Date Subservicing or Rental Agreement.
On the Effective Date, Reorganized UC, through one or more of the Reorganized UC
Subsidiaries, shall be authorized to provide subservicing or to rent facilities,
employees and other aspects of a servicing platform to Reorganized UC Lending or
to an entity designated as subservicer by Reorganized UC Lending, as may be
provided for in any stock purchase agreement or related agreement governing the
Alternative Residual Sale Transaction.
ARTICLE XXXVIII
RETENTION OF JURISDICTION
38.1 Retention of Jurisdiction: The Bankruptcy Court shall
retain and have exclusive jurisdiction over any matter arising under the
Bankruptcy Code, arising in or related to the Chapter 11 Cases or the Plan, or
that relates to the following:
(a) to resolve any matters related to the assumption,
assumption and assignment or rejection of any executory contract or unexpired
lease to which the Debtors is a party or with respect to which the Debtors may
be liable and to hear, determine and, if necessary, liquidate, any Claims
arising therefrom, including those matters related to the amendment after the
Effective Date of the Plan, to add any executory contracts or unexpired leases
to the list of executory contracts and unexpired leases to be rejected;
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(b) to enter such orders as may be necessary or appropriate
to implement or consummate the provisions of the Plan and all contracts,
instruments, releases, and other agreements or documents created in connection
with the Plan;
(c) to determine any and all motions, adversary
proceedings, applications and contested or litigated matters that may be pending
on the Effective Date or that, pursuant to the Plan, may be instituted by
Reorganized UC after the Effective Date;
(d) to ensure that distributions to holders of Allowed
Claims and Allowed Equity Interests are accomplished as provided herein;
(e) to hear and determine any timely objections to
Administrative Expense Claims or to proofs of Claim and Equity Interests filed,
both before and after the Confirmation Date, including any objections to the
classification of any Claim or Equity Interest, and to allow, disallow,
determine, liquidate, classify, estimate or establish the priority of or secured
or unsecured status of any Claim, in whole or in part;
(f) 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;
(g) to issue such orders in aide of execution of the Plan,
to the extent authorized by section 1142 of the Bankruptcy Code;
(h) to consider any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order;
(i) to hear and determine all applications for awards of
compensation for services rendered and reimbursement of expenses incurred prior
to the Effective Date;
(j) to hear and determine disputes arising in connection
with or relating to the Plan or the interpretation, implementation, or
enforcement of the Plan or the extent of any Entity's obligations incurred in
connection with or released under the Plan;
(k) to issue injunctions, enter and implement other orders
or take such other actions as may be necessary or appropriate to restrain
interference by any Entity with consummation or enforcement of the Plan;
(l) to determine any other matters that may arise in
connection with or are related to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release or other agreement or
document created in connection with the Plan or the Disclosure Statement;
(m) to hear and determine matters concerning state, local
and federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(n) to hear any other matter or for any purpose specified
in the Confirmation Order that is not inconsistent with the Bankruptcy Code;
(o) to hear and determine any matters that may arise in
connection with the Sale Transaction, the Residual Agreement, the Whole Loan
Agreement, the Alternative Residual Sale Transaction and any order of the
Bankruptcy Court with respect to any of the foregoing; and
(p) to enter a final decree closing the Chapter 11 Cases.
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ARTICLE XXXIX
MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN
39.1 Modification of Plan: The Debtors reserve the right,
in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or
modify the Plan at any time prior to the entry of the Confirmation Order. Upon
entry of the Confirmation Order, the Debtors may, upon order of the Bankruptcy
Court, amend or modify the Plan, in accordance with section 1127(b) of the
Bankruptcy Code, or remedy any defect or omission or reconcile any inconsistency
in the Plan in such manner as may be necessary to carry out the purpose and
intent of the Plan. A holder of a Claim that has accepted the Plan shall be
deemed to have accepted the Plan as modified if the proposed modification does
not materially and adversely change the treatment of the Claim of such holder.
39.2 Revocation or Withdrawal:
(a) The Plan may be revoked or withdrawn prior to the
Confirmation Date by the Debtors.
(b) If the Plan is revoked or withdrawn prior to the
Confirmation Date, then the Plan shall be deemed null and void. In such event,
nothing contained herein shall be deemed to constitute a waiver or release of
any claims by the Debtors or any other Entity or to prejudice in any manner the
rights of the Debtors or any other Entity in any further proceedings involving
the Debtors.
ARTICLE XL
PROVISION FOR MANAGEMENT
40.1 Directors: On the Effective Date, the board of
directors of Reorganized UC shall be comprised of the Plan Administrator and
such other individuals designated by the Plan Administrator (with the consent of
the Creditors' Committee, which consent shall not be unreasonably withheld), all
of which shall be disclosed prior to a hearing to consider confirmation of the
Plan pursuant to section 1129 of the Bankruptcy Code. Thereafter, the terms and
manner of selection of the directors of Reorganized UC shall be as provided in
the Reorganized UC Certificate of Incorporation and the Reorganized UC By-laws,
as the same may be amended.
ARTICLE XLI
ARTICLES OF INCORPORATION AND BY-LAWS OF THE DEBTORS; CORPORATE ACTION
41.1 Amendment of Articles of Incorporation and By-Laws:
The articles of incorporation and by-laws of the Debtors shall be amended as of
the Effective Date to provide substantially as set forth in the Reorganized UC
Certificate of Incorporation and the Reorganized UC By-laws.
41.2 Corporate Action: On the Effective Date, the adoption
of the Reorganized UC Certificate of Incorporation and the Reorganized UC
By-laws shall be authorized and approved in all respects, in each case without
further action under applicable law, regulation, order, or rule, including,
without limitation, any action by the stockholders of the Debtors or Reorganized
UC. On the Effective Date, the cancellation of all Equity Interests, employment
agreements, and other matters provided under the Plan involving the corporate
structure of Reorganized UC or corporate action by Reorganized UC shall be
deemed to have occurred, be authorized, and shall be in effect from and after
the Effective Date without requiring further action under applicable law,
regulation, order, or rule, including, without limitation, any action by the
stockholders of the Debtors or Reorganized UC.
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ARTICLE XLII
MISCELLANEOUS PROVISIONS
42.1 Title to Assets; Discharge of Liabilities: Except as
otherwise provided by the Plan, including, without limitation, in connection
with a Sale Transaction or an Alternative Residual Sale Transaction, on the
Effective Date, title to all assets and properties encompassed by the Plan shall
vest in Reorganized UC, Reorganized UC Lending, or the Reorganized Designated
Subsidiaries, as the case may be, in accordance with section 1141 of the
Bankruptcy Code, and the Confirmation Order shall be a judicial determination of
discharge of the Debtors' liabilities except as provided in the Plan.
42.2 Discharge of Debtors: In the event that an Alternative
Residual Sale Transaction is consummated through implementation of a stock
purchase agreement, the rights afforded in the Plan and the treatment of all
holders of Claims or Equity Interests herein shall be in exchange for and in
complete satisfaction, discharge and release of all Claims and Equity Interests
of any nature whatsoever, known or unknown, including any interest accrued or
expenses incurred thereon from and after the Petition Date against the Debtors
and Debtors in Possession, or any of their estates, properties, assets or
interests in property. Except as otherwise provided herein, upon the Effective
Date, all Claims against and Equity Interests in the Debtors and Debtors in
Possession, shall be satisfied, discharged and released in full. All Persons and
Entities shall be precluded from asserting against the Debtors, Debtors-in
Possession, their successors or assigns, including, without limitation,
Reorganized UC, Reorganized UC Lending, the Reorganized Designated Subsidiaries,
their agents and employees, or their respective assets properties or interests
in property, any other or further Claims based upon any act or omission,
transaction or other activity of any kind or nature that occurred prior to the
Confirmation Date, whether or not the facts or legal bases therefor were known
or existed prior to the Confirmation Date.
42.3 Injunction: Except as otherwise expressly provided in
the Plan, all Persons or Entities who have held, hold or may hold Claims or
Equity Interests are permanently enjoined, from and after the Effective Date,
from (a) commencing or continuing in any manner any action or other proceeding
of any kind on any such Claim or Equity Interest against the Debtors or
Reorganized UC (and in the event of (1) the Sale Transaction, the purchase
thereunder, and (2) an Alternative Residual Sale Transaction consummated through
a stock purchase agreement, Reorganized UC Lending and the Reorganized
Designated Subsidiaries), (b) the enforcement, attachment, collection or
recovery by any manner or means of any judgment, award, decree or order against
the Debtors or Reorganized UC (and in the event of (1) the Sale Transaction, the
purchase thereunder, and (2) an Alternative Residual Sale Transaction
consummated through a stock purchase agreement, Reorganized UC Lending and the
Reorganized Designated Subsidiaries), (c) creating, perfecting, or enforcing any
encumbrance of any kind against the Debtors or Reorganized UC or against the
property or interests in property of the Debtors or Reorganized UC (and in the
event of (1) the Sale Transaction, the purchase thereunder, and (2) an
Alternative Residual Sale Transaction consummated through a stock purchase
agreement, Reorganized UC Lending and the Reorganized Designated Subsidiaries),
and (d) asserting any right of setoff, subrogation or recoupment of any kind
against any obligation due from the Debtors or Reorganized UC (and in the event
of (1) the Sale Transaction, the purchase thereunder, and (2) an Alternative
Residual Sale Transaction consummated through a stock purchase agreement,
Reorganized UC Lending and the Reorganized Designated Subsidiaries) or against
the property or interests in property of the Debtors or Reorganized UC (and in
the event of (1) the Sale Transaction, the purchase thereunder, and (2) an
Alternative Residual Sale Transaction consummated through a stock purchase
agreement, Reorganized UC Lending and the Reorganized Designated Subsidiaries),
with respect to any such Claim or Equity Interest; provided, however, that such
injunction shall not preclude the United States of America of any of its police
or regulatory agencies from enforcing their police or regulatory powers; and,
provided, further, that, except in connection with a properly filed proof of
claim, the foregoing proviso does not permit the United States of America or any
of its police or regulatory agencies from obtaining any monetary recovery from
United Companies or Reorganized UC (and in the event of (1) the Sale
Transaction, the purchase thereunder, and (2) an Alternative Residual Sale
Transaction consummated through a stock purchase agreement, Reorganized UC
Lending and the Reorganized Designated Subsidiaries) or their respective
property or interests in property with respect to any such Claim or Equity
Interest, including, without limitation, any monetary claim or penalty in
furtherance of a police or regulatory power.
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42.4 Term of Existing Injunctions or Stays: Unless
otherwise provided, all injunctions or stays provided for in the Chapter 11
Cases pursuant to sections 105, 362 or 525 of the Bankruptcy Code, or otherwise,
and in existence on the Confirmation Date, shall remain in full force and effect
until the Effective Date.
42.5 Limited Release of Directors, Officers and Employees:
As of the Effective Date, the Debtors shall be deemed to have waived and
released its present and former directors, officers, employees, consultants and
agents who were directors, officers, employees, consultants or agents,
respectively, at any time during the Chapter 11 Cases and on or before the
Petition Date, from any and all claims of the Debtors, including, without
limitation, claims which the Debtors or Debtors in Possession otherwise has
legal power to assert, compromise or settle in connection with the Chapter 11
Cases, arising on or prior to the Effective Date; provided, however, that this
provision shall not operate as a waiver or release of any claim (i) with respect
to any loan, advance or similar payment by the Debtors to any such person, (ii)
with respect to any contractual obligation owed by such person to the Debtors,
(iii) relating to such person's knowing fraud, or (iv) to the extent based upon
or attributable to such person gaining in fact a personal profit to which such
person was not legally entitled, including, without limitation, profits made
from the purchase or sale of equity securities of the Debtors which are
recoverable by the Debtors pursuant to section 16(b) of the Securities Exchange
Act of 1934, as amended; and, provided, further, that the foregoing is not
intended, nor shall it be construed, to release any of the Debtors' claims that
may exist against the Debtors' directors and officers liability insurance.
42.6 Exculpation: None of the Debtors, Reorganized UC, the
Creditors' Committee, any indenture trustee responsible for making distributions
under the Plan, and any of their respective directors, officers, employees,
members, attorneys, consultants, advisors and agents (acting in such capacity),
shall have or incur any liability to any Entity for any act taken or omitted to
be taken in the formulation, preparation, dissemination, implementation,
confirmation or approval of the Plan, the Disclosure Statement related thereto
or any contract, instrument, release or other agreement or document provided for
or contemplated in connection with the consummation of the transactions set
forth in the Plan; provided, however, that the foregoing provisions of this
Section 42.6 shall not affect the liability of any Entity that otherwise would
result from any such act or omission to the extent that such act or omission is
determined in a Final Order to have constituted gross negligence, willful
misconduct or breach of fiduciary duty. Any of the foregoing parties in all
respects shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan.
42.7 Preservation of Rights of Action: Except as otherwise
provided in the Plan, including, without limitation, Article XXVII of the Plan,
or in any contract, instrument, release of other agreement entered into in
connection with the Plan, in accordance with section 1123(b) of the Bankruptcy
Code, Reorganized UC shall retain sole and exclusive authority to enforce any
claims, rights or causes of action that the Debtors or their chapter 11 estates
may hold against any entity, including any claims, rights or causes of action
arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy Code.
Reorganized UC may pursue such retained rights or causes of action, as
appropriate, in accordance with the best interests of Reorganized UC.
42.8 Injunction: Except as provided in the Plan, as of the
Effective Date, all non-Debtors entities are permanently enjoined from
commencing or continuing in any manner, any action or proceeding, whether
directly, derivatively, on account of or respecting any claim, debt, right or
cause of action of the Debtors or Reorganized UC which the Debtors or
Reorganized UC, as the case may be, retain sole and exclusive authority to
pursue in accordance with Section 42.7 of the Plan or which has been released
pursuant to the Plan.
42.9 Payment of Statutory Fees: All fees payable pursuant
to section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on the Effective
Date.
42.10 Retiree Benefits: From and after the Effective Date,
other than with respect to individuals with whom the Debtors have agreed to lump
sum claim amounts in respect of future retiree benefits, pursuant to section
1129(a)(13) of the Bankruptcy Code, Reorganized UC shall continue to pay all
retiree benefits (within the meaning of section 1114 of the Bankruptcy Code), at
the level established in accordance with subsection (e)(1)(B) or (g) of section
40
<PAGE>
1114 of the Bankruptcy Code, at any time prior to the Confirmation Date, and for
the duration of the period during which the Debtors have obligated themselves to
provide such benefits.
42.11 Post-Effective Date Fees and Expenses: From and after
the Effective Date, Reorganized UC shall, in the ordinary course of business and
without the necessity for any approval by the Bankruptcy Court, pay the
reasonable professional fees and expenses incurred by Reorganized UC related to
implementation and consummation of the Plan.
42.12 Severability: If, prior to the Confirmation Date, any
term or provision of the Plan shall be held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Debtors, have the power to alter and interpret such term or provision to
make it valid or enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision held to be invalid, void or
unenforceable, and such term or provision shall then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration or interpretation, the
remainder of the terms and provisions of the Plan shall remain in full force and
effect and shall in no way be affected, impaired or invalidated by such holding,
alteration or interpretation. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of the Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
42.13 Governing Law: Except to the extent that the
Bankruptcy Code or other federal law is applicable, or to the extent that an
exhibit hereto or document contained in the Plan Supplement provides otherwise,
the rights, duties and obligations arising under this Plan shall be governed by,
and construed and enforced in accordance with, the Bankruptcy Code and, to the
extent not inconsistent therewith, the laws of the State of New York, without
giving effect to principles of conflicts of laws.
42.14 Notices: All notices, requests, and demands to or
upon the Debtors or Reorganized UC to be effective shall be in writing,
including by facsimile transmission, and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when actually delivered
or, in the case of notice by facsimile transmission, when received and
telephonically confirmed, addressed as follows:
United Companies Financial Corporation
P.O. Box 1591
4041 Essen Lane
Baton Rouge, LA 70809
Attention: Lawrence J. Ramaekers
Telecopier: (225) 987-4231
Telephonic Confirmation: (225) 924-6007
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Marcia L. Goldstein, Esq.
Brian S. Rosen, Esq.
Telecopier: (212) 310-8007
Telephonic Confirmation: (212) 310-8888
41
<PAGE>
-and-
Richards, Layton & Finger, P.A.
One Rodney Square
Wilmington, Delaware 19899
Attention:Mark D. Collins, Esq.
Telecopier: (302) 658-6548
Telephonic Confirmation: (302) 658-6541
42.15 Closing of Cases: Reorganized UC shall, promptly upon
the full administration of the Chapter 11 Cases, file with the Bankruptcy Court
all documents required by Bankruptcy Rule 3022 and any applicable order of the
Bankruptcy Court.
42.16 Section Headings: The section headings contained in
this Plan are for reference purposes only and shall not affect in any way the
meaning or interpretation of the Plan.
Dated: Baton Rouge, Louisiana
July 7, 2000
UNITED COMPANIES FINANCIAL CORPORATION
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
42
<PAGE>
PELICAN MORTGAGE FINANCIAL CORPORATION
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
UNITED COMPANIES LENDING GROUP, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
UNITED COMPANIES LENDING CORPORATION
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
ADOBE, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
ADOBE FINANCIAL, INC. I
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
43
<PAGE>
GINGER MAE, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
UNICOR MORTGAGE, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
SOUTHERN MORTGAGE ACQUISITION, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
UNITED COMPANIES FUNDING, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
GOPHER EQUITY, INC. I
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
UNITED CREDIT CARD, INC.
By: /s/ Lawrence J. Ramaekers
---------------------------------------------
Name: Lawrence J. Ramaekers
Title: Chief Executive Officer
44
<PAGE>
EXHIBIT B
Disclosure Order
110
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
EXHIBIT C
(LIQUIDATION ANALYSIS)
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Exhibit C - Liquidation Analysis
Notes and Assumptions
To estimate the liquidation proceeds that might be available for distribution in
a Chapter 7 liquidation ("Liquidation Analysis"), the Debtors considered many
factors and data, including actual and proposed bids for the majority of the
assets of the estate. For the purposes of determining the Liquidation Analysis,
the Debtors have assumed that a Chapter 7 liquidation of assets would be
conducted in an orderly manner and, as such, the bids received for the Debtors'
significant assets would be similar to the bids and inquiries received in recent
months.
The Debtors assume that the bidding procedures and method of transaction of the
sale of assets in a Chapter 7 would be similar to those of the sale of assets
described in the Plan. Using recent actual and projected financial information,
the Debtors estimated the value of the assets as of December 31, 2000, and
applied the same purchase price methodology as described in the Plan. Rather
than assuming adjustments for a cash trap as of December 31, 1999, and interest
on the purchase price since January 31, 2000, as set forth in the sale
agreements, the Debtors assumed that the liquidating estate would retain all
operating cash flow until asset disposition and that the interest only and
residual interests, whole loan portfolio and REO properties, and interest and
servicing advances receivable would be sold as of December 31, 2000.
The cash proceeds available for distribution are shown on Exhibit C. Exhibits
C-1 and C-2 reduce the cash to be distributed in a liquidation by the $60
million in 100% claims (investor liabilities, excess inclusion income taxes, and
Credit Life rebates) which would have been assumed by EMC in the proposed sale.
Exhibit C-1 demonstrates how creditors of the six debtors who have cash or
assets convertible to cash share in distributions of the estimated cash if the
Debtors' interpretation of the Banks' claims against guarantors is used. The
Debtors' interpretation is that the guarantees are limited to the greater of the
net equity of the guarantor at the time of the loan or the value given to the
guarantor from the loan proceeds. Under the Debtors' approach, the total value
provided against all guarantors does not exceed the $850 million loan amount.
Six debtors have no assets and, therefore, are presumed to provide no
distributions to any of their creditors and are not listed on either schedule.
Exhibit C-2 uses the same assumptions as in Exhibit C-1 except Exhibit C-2 uses
the Banks' position that they can assert a value claim of $850 million against
each guarantor.
CASH AND CASH EQUIVALENTS. The Debtors have estimated monthly cash flows from
operations for 2000 assuming the continuance of present market conditions and
the recent trends related to the performance of the mortgage servicing
operations.
SALE OF MORTGAGE LOAN ASSETS. The Debtors estimated the net proceeds from the
interest only and residual interests, whole loan portfolio and REO properties,
and interest and servicing advances receivable based on evaluations and analyses
<PAGE>
of proposed and actual bids received in the recent months and the projected
value of such assets as of December 31, 2000.
MISCELLANEOUS ASSETS. Based on the current conditions of the Baton Rouge real
estate market, the Debtors believe that they will be able to liquidate the
building at 8549 United Plaza Boulevard and remaining miscellaneous assets in a
Chapter 7 liquidation for $20 million.
WIND-DOWN COSTS. The Projections include estimated amounts for operating costs
for personnel, occupancy, non-restructuring professional fees, tax and audit
professional fees, and other expenditures necessary to wind-down the operations.
TRUSTEE, TRUSTEE PROFESSIONALS, INVESTMENT BANKING FEES. These costs represent
the costs related to the assignment of a Chapter 7 trustee, the professionals
supporting a Chapter 7 trustee, and various investment bankers and liquidation
professionals engaged to sell and liquidate the assets of the Debtors.
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Liquidation Analysis
($ in thousands)
--------------------------------------------------------------------------------
12/31/00
ESTIMATED
LIQUIDATION
VALUE
----------------
SOURCES OF CASH
---------------
Cash and cash equivalents $ 293,876
Sale of mortgage loan assets 523,784
Miscellaneous assets 16,000
----------------
Total 833,660
LIQUIDATION COSTS
-----------------
Wind-down costs (15,000)
Trustee, trustee professionals, investment banking fees (20,000)
----------------
Total (35,000)
==============================================================================
ESTIMATED CASH AVAILABLE FOR DISTRIBUTION $798,660
==============================================================================
<PAGE>
EXHIBIT C-1
United Companies Financial Corporation, et al
LIQUIDATION ANALYSIS CREDITOR ALLOCATION
Debtors' Estimated Bank Claims
<TABLE>
<CAPTION>
Estimated
Net Cash After Intercompany Total to Estimated Bank Intercompany Senior
Sale (1) Distributions Distribute Claim Payable Note Claim
-------- ------------- ---------- ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Adobe Inc. 181,579,991 0 181,579,991 271,035,000 133,265,527 0
Pelican Mortgage Company, Inc. 32,778,657 0 32,778,657 86,458,000 24,324,508 0
United Companies Lending Corporation 353,114,047 67,868,392 420,982,439 765,250,000 882,041,561 0
Gopher Equity Inc. I 17,932,357 0 17,932,357 34,250,000 26,908,058 0
United Companies Funding Inc 19,764,287 15,700,002 35,464,289 50,500,000 76,019,603 0
United Companies Financial Corporation 124,854,281 231,068,239 355,922,521 858,000,000 0 238,900,000
Misc. & Non-Debtors 8,628,994 0 8,628,994 0 0 0
-----------------------------------------------------------------------------------------------
Total 738,652,615 314,636,633 1,053,289,248 N/A 1,142,559,256 238,900,000
===============================================================================================
Intercompany Redistribution Final Distribution
--------------------------- ------------------
United Companies
UC Lending Funding Inc. UCFC Banks Sr. Noteholders
---------- ------------ ---- ----- ---------------
<S> <C> <C> <C> <C> <C>
Adobe Inc. 59,852,391 0 0 121,727,600 0
Pelican Mortgage Company, Inc. 7,197,208 0 0 25,581,450 0
United Companies Lending Corporation 0 0 214,974,713 186,509,804 0
Gopher Equity Inc. I 0 7,889,801 0 10,042,556 0
United Companies Funding Inc 0 0 16,093,526 10,690,967 0
United Companies Financial Corporation 0 0 0 277,520,400 77,272,289
Misc. & Non-Debtors 818,793 7,810,201 0 0 0
------------------------------------------------- -------------------------------
Total 67,868,392 15,700,002 231,068,239 632,072,778 77,272,289
================================================= ===============================
Recovery % 73.67% 32.35%
===============================
Table continued...
Estimated Estimated Estimated
General Sub Debt Available
Unsecured Claim Claim Distribution
--------------- ----- ------------
<S> <C> <C> <C>
Adobe Inc. 0 0 44.91%
Pelican Mortgage Company, Inc. 0 0 29.59%
United Companies Lending Corporation 80,000,000 0 24.37%
Gopher Equity Inc. I 0 0 29.32%
United Companies Funding Inc 41,000,000 0 21.17%
United Companies Financial Corporation 4,000,000 159,190,000 28.25%
Misc. & Non-Debtors 0 0
------------------------------
Total 125,000,000 159,190,000
==============================
Final Distribution
------------------
Unsecured Subordinated
Creditors Debt Total
--------- ---- -----
<S> <C> <C> <C>
Adobe Inc. 0 0 121,727,600
Pelican Mortgage Company, Inc. 0 0 25,581,450
United Companies Lending Corporation 19,497,921 0 206,007,726
Gopher Equity Inc. I 0 0 10,042,556
United Companies Funding Inc 8,679,795 0 19,370,762
United Companies Financial Corporation 1,129,832 0 355,922,521
Misc. & Non-Debtors 0 0 0
---------------------------------------------
Total 29,307,549 0 738,652,615
=============================================
Recovery % 23.45% 0.00%
===============================
</TABLE>
(1) Net Cash After Sale has been reduced by $60 million in 100% claims that will
not be assumed by EMC.
<PAGE>
EXHIBIT C-2
United Companies Financial Corporation, et al
LIQUIDATION ANALYSIS CREDITOR ALLOCATION
Banks' Asserted Claims
<TABLE>
<CAPTION>
Net Cash After Intercompany Total to Estimated Bank Intercompany
Sale (1) Distributions Distribute Claim Payable
-------- ------------- ---------- ----- -------
<S> <C> <C> <C> <C> <C>
Adobe Inc. 181,579,991 0 181,579,991 850,000,000 133,265,527
Pelican Mortgage Company, Inc. 32,778,657 0 32,778,657 850,000,000 24,324,508
United Companies Lending Corporation 353,114,047 26,340,917 379,454,964 850,000,000 882,041,561
Gopher Equity Inc. I 17,932,357 0 17,932,357 850,000,000 26,908,058
United Companies Funding Inc 19,764,287 8,360,458 28,124,745 850,000,000 76,019,603
United Companies Financial Corporation 124,854,281 186,917,005 311,771,287 858,000,000 0
Misc. & Non-Debtors 8,628,994 0 8,628,994 0 0
---------------------------------------------------------------------------------------
Total 738,652,615 221,618,381 960,270,995 N/A 1,142,559,256
=======================================================================================
Intercompany Redistribution Final Distribution
--------------------------- ------------------
United Companies
UC Lending Funding Inc. UCFC Banks
---------- ------------ ---- -----
<S> <C> <C> <C> <C>
Adobe Inc. 24,610,192 0 0 156,969,800
Pelican Mortgage Company, Inc. 911,932 0 0 31,866,725
United Companies Lending Corporation 0 0 184,706,055 177,996,314
Gopher Equity Inc. I 0 550,257 0 17,382,100
United Companies Funding Inc 0 0 2,210,950 24,721,353
United Companies Financial Corporation 0 0 0 243,094,739
Misc. & Non-Debtors 818,793 7,810,201 0 0
--------------------------------------------------- ----------------------
Total 26,340,917 8,360,458 186,917,005 652,031,031
=================================================== ======================
Recovery % 75.99%
======================
Table continued...
Estimated Estimated Estimated Estimated
Senior General Sub Debt Available
Note Claim Unsecured Claim Claim Distribution
---------- --------------- ----- ------------
<S> <C> <C> <C> <C>
Adobe Inc. 0 0 0 18.47%
Pelican Mortgage Company, Inc. 0 0 0 3.75%
United Companies Lending Corporation 0 80,000,000 0 20.94%
Gopher Equity Inc. I 0 0 0 2.04%
United Companies Funding Inc 0 41,000,000 0 2.91%
United Companies Financial Corporation 238,900,000 4,000,000 159,190,000 24.74%
Misc. & Non-Debtors 0 0 0
---------------------------------------------
Total 238,900,000 125,000,000 159,190,000
=============================================
Final Distribution
------------------
Unsecured Subordinated
Sr. Noteholders Creditors Debt Total
--------------- --------- ---- -----
<S> <C> <C> <C> <C>
Adobe Inc. 0 0 0 156,969,800
Pelican Mortgage Company, Inc. 0 0 0 31,866,725
United Companies Lending Corporation 0 16,752,594 0 194,748,909
Gopher Equity Inc. I 0 0 0 17,382,100
United Companies Funding Inc 0 1,192,442 0 25,913,795
United Companies Financial Corporation 67,686,868 989,679 0 311,771,287
Misc. & Non-Debtors 0 0 0 0
------------------------------------------------------------
Total 67,686,868 18,934,715 0 738,652,615
============================================================
Recovery % 28.33% 15.15% 0.00%
=============================================
(1) Net Cash After Sale has been reduced by $60 million in 100% claims that will
not be assumed by EMC.
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
EXHIBIT D
(PROJECTED CONFIRMATION VALUES)
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Exhibit D - Projected Confirmation Value
Notes and Assumptions
The Projected Confirmation Value is based upon the assumption that the Debtors
will consummate a sale of substantially all of its assets related to its
mortgage servicing operations and its interest only and residual interests as of
December 31, 1999, and substantially all of its whole loan portfolio and whole
loan REO properties as detailed in the Debtors' Second Amended Plan of
Reorganization and Disclosure Statement. Upon completion of the sale and during
and after transition of the purchased assets, the Debtors will commence sales of
the remaining saleable assets and a wind-down of remaining operations. No
provision has been estimated for an overbid which could increase distributions
to senior creditors.
CASH AND CASH EQUIVALENTS. The Debtors have estimated monthly cash flows from
operations for 2000 assuming the continuance of present market conditions and
the recent trends related to the performance of the mortgage servicing
operations. As a result of this analysis, the Projections assume that the
Debtors will operate on an approximately "break-even" net cash flow basis for
the 8 months ending August 31, 2000, excluding i) cash received as releases from
the interest only and residual interests and ii) cash used and received from
servicing and interest advances made and recovered. The cash received as
releases from the interest only and residual interests and the net cash flow
used related to servicing and interest advances after December 31, 1999, are
subject to the requirements regarding the "Cash Trap" as defined in the sale
agreements.
SALE OF INTEREST-ONLY AND RESIDUAL CERTIFICATES-NET. Based on the purchase price
and an estimate of purchase price adjustments as of August 31, 2000, calculated
as set forth in the sale agreements, the result of the Projections is that the
cash price of the interest-only and residual certificates will be approximately
$264 million.
SALE OF OWNED LOANS-NET. Based on the purchase price percentages defined in the
sale agreements and the estimated balance of owned loans as of July 31, 2000,
the result of the Projections is that the cash price of the owned loans will be
approximately $302 million.
SALE OF SERVICING AND INTEREST ADVANCES RECEIVABLE. Based on the purchase price
percentage of 95% and the actual balance of outstanding servicing and interest
advances related to the purchased loan assets as of December 31, 1999, the
Projections are based upon the assumption that the cash proceeds from the sale
of servicing and interest advances receivable will be approximately $159
million.
INTEREST EARNED ON PURCHASE PRICE. Pursuant to the terms of the sale agreements,
the Debtors estimate that the interest on the purchase price payable through
August 31, 2000, will be approximately $10 million.
<PAGE>
MISCELLANEOUS ASSETS. Based on the current conditions of the Baton Rouge real
estate market, the Debtors believe that they will be able to liquidate the
building at 8549 United Plaza Boulevard and remaining miscellaneous assets for
$16 million.
DEBT ASSUMED BY PURCHASER. The Debtors have estimated the value of the
liabilities to be assumed by the purchaser to be approximately $60 million.
WIND-DOWN COSTS. The Projections include estimated amounts for operating costs
for personnel, occupancy, non-restructuring professional fees, tax and audit
professional fees, and other expenditures necessary to wind-down the operations.
2
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Confirmation Value
($ in thousands)
-------------------------------------------------------------------------
ESTIMATED
VALUE
AT
CONFIRMATION
----------------
SOURCES OF CASH
---------------
Cash and cash equivalents $ 108,000
Sale of interest-only and residual certificates-net 264,000
Sale of owned loans-net 302,000
Sale of servicing and interest advances receivable 159,000
Interest earned on purchase price 10,000
Miscellaneous assets 16,000
---------------
Total 859,000
Debt assumed by purchaser 60,000
---------------
TOTAL CONFIRMATION VALUE $ 919,000
WIND-DOWN COSTS (15,000)
=========================================================================
ESTIMATED CASH AVAILABLE FOR DISTRIBUTION $ 904,000
=========================================================================
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Balance Sheets (Unaudited)
Proposed Plan of Reorganization
($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected
Aug-00 (1) Sep-00 Dec-00 Dec-01
---------- ------ ------ ------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 108 $ 858 $ 70 $--
Cash Trap 101 -- -- --
Interest-only and residual certificates-net 274 -- -- --
Owned loans-net 302 -- -- --
Servicing and interest advances receivable 159 -- -- --
Property-net & other assets 16 -- -- --
----- ----- ----- -----
Total assets $ 960 $ 858 $ 70 $--
===== ===== ===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Payables (2) $ 844 $ 844 $ 58 $--
Liability to purchaser for Cash Trap 101 -- -- --
----- ----- ----- -----
Total liabilities $ 945 $ 844 $ 58 $--
===== ===== ===== =====
STOCKHOLDERS' EQUITY (DEFICIT)
Paid in capital $ 15 $ 15 $ 15 $ 15
Retained earnings (deficit) -- (1) (3) (15)
----- ----- ----- -----
Total stockholders equity $ 15 $ 14 $ 12 $--
===== ===== ===== =====
Total liabilities and stockholders equity $ 960 $ 858 $ 70 $--
===== ===== ===== =====
</TABLE>
(1) The Debtors believe that under the guidelines of AICPA Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under
the Bankruptcy Code," fresh start reporting should be applied.
(2) Stated at present value of amounts to be paid.
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
EXHIBIT E
(FIRST AND SECOND REORGANIZATION SCENARIOS)
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Exhibit E - Reorganization Scenarios
Assumptions and Observations
In evaluating reorganization alternatives and formulating the Plan of
Reorganization, the Debtors estimated post-confirmation financial and operating
results under two scenarios, summarized as:
o First Reorganization Scenario: keep whole loans, engage a
sub-servicer, maintain debt and equity.
o Second Reorganization Scenario: sell whole loans, engage a
sub-servicer, reduce debt and convert cancelled debt into
equity.
By projecting the post-confirmation income, cash flows and balance sheets of
United Companies under the above scenarios, the Debtors were able to
quantifiably assess a) the feasibility of each alternative and b) the present
value of the projected distributions to stakeholders.
FIRST REORGANIZATION SCENARIO - KEEP WHOLE LOANS, ENGAGE A SUB-SERVICER,
------------------------------------------------------------------------
MAINTAIN DEBT AND EQUITY
------------------------
GENERAL ASSUMPTIONS
(This scenario evaluates the value of holding and collecting the assets over
time and includes the debt assumptions of the Equity Committee that interest is
earned on prepetition debt from and after March 1, 1999.)
In the First Reorganization Scenario, the Debtors estimated financial and
operating results based upon historical financial statements and assuming the
following characteristics of United Companies:
o All mortgage whole loan, residual and servicing assets would
be retained.
o Miscellaneous assets such as the building at 8549 United Plaza
Boulevard would be sold or converted to cash before December
31, 2000.
o Servicing operations cash receipts (servicing fees, late fees,
NSF charges, prepayment penalty receipts, interest earned on
invested cash, and other) were estimated using historical
experience and projected loan delinquencies and prepayments.
o Net cash inflows from interest and service advances were
estimated by predicting the following factors: the migration
of loans between various delinquency "buckets", the average
monthly amount of interest and service advance for each loan,
prepayment and chargeoff rates, and the speed and recovery
with which REO properties will be sold.
o The Debtors' major assumptions for the performance of the
interest-only and residual certificates-net vary by
securitization to reflect the diversity of loan pool
characteristics and can be summarized as using a) lifetime
prepayment speed range of 25.0% to 36.0%, b) cumulative
lifetime losses ranging from 3.6% to 9.7%, and c) 90+ day
delinquency ranging from 14.5% to 30.0%.
<PAGE>
o Net cash inflow from owned loans was estimated by predicting
the portfolio transition over time, a weighted average
interest rate, and historical experience regarding prepayments
and chargeoffs.
o The projections are based on the assumption that United
Companies would enter into a sub-servicing agreement with a
qualified sub-servicer. The Debtors assume this cost at 80
basis points, the fee bid for the top home equity
sub-servicers. The best bids obtained by the Debtors in
October 1999 to sub-service the approximately 16,000
manufactured housing loans are 35 basis points higher than
this and the Debtors expect all servicing costs to be higher
in the future as the portfolio shrinks and even modest
inflation increases costs. Upon information and belief the
Debtors understand that continued turmoil in the subprime
lending and servicing industry has caused current bids to be
70 basis points higher than the October 1999 home equity bids.
o The projections are based upon the assumption that United
Companies would emerge from Ch. 11 protection effective August
31, 2000.
o Upon emergence from Ch. 11, all outstanding debt and equity
would be maintained. Principal debt and post-confirmation
interest on debt would be paid using the proceeds of
operational cash flow and new borrowings.
o Upon the engagement of a sub-servicer, investment management
oversight of the sub-servicer and other miscellaneous
corporate functions would be performed at minimal expense
levels. All other operating expenses would cease.
o No federal income taxes would be incurred with the exception
of excess inclusion income tax at the levels indicated.
o The Debtors' obligation to refund credit life insurance
premiums to borrowers who prepay loans would continue at the
levels indicated.
o The Debtors would retain the obligation to receive and make
borrower escrow payments at the direction of the sub-servicer.
o Interest on pre-petition debt accrued during the pendency of
the Ch. 11 cases of approximately $161 million has been
included in the attached financial statements even though the
Debtors do not believe that the conditions precedent to allow
the payment of this interest can be met. The Debtors have
included this interest in order to incorporate the Equity
Committee's debt assumptions. The projections clearly
demonstrate the lack of feasibility of this scenario.
o As a result of the continuance of all pre-petition equity and
the lack of a change in ownership, the Debtors believe that
under this scenario United Companies would not qualify for
"Fresh Start" reporting as described by AICPA Statement of
Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code."
OBSERVATIONS
For the First Reorganization Scenario, the projected balance sheet at
confirmation and all future balance sheets for the years ending December, 2000 -
2004 demonstrate an initial net equity deficit with subsequent worsening of the
insolvent position. The Debtor believes that an insolvent position would prevent
2
<PAGE>
United Companies from operating as a servicer in most states in which United
Companies operates, even with a sub-servicer partnership.
By mid-2002, post-confirmation interest payments required to be paid exceed the
amount of available net cash flow. As a result of the projected negative cash
flow, United Companies would be required to borrow additional funds that will
likely need to be obtained on a secured basis. This further deteriorates the
position of the unsecured creditors. Therefore, the Debtors believe that this
scenario is not feasible.
The Debtors believe the Equity Committee's plan to be not feasible. However, the
Debtors estimated the total present value of distributions and assets that could
have been distributed to creditors under the Equity Committee's plan (if the
plan could be accomplished) using a 20% discount rate to be $747 million. The
Debtors have projected the confirmation value under the Debtors' Second Amended
Plan of Reorganization to be $904 million. The Debtors' plan would provide a
greater value to stakeholders than the Equity Committee's plan.
SECOND REORGANIZATION SCENARIO - SELL WHOLE LOANS, SUB-SERVICE, REDUCE DEBT &
-----------------------------------------------------------------------------
CONVERT CANCELLED DEBT INTO EQUITY
----------------------------------
GENERAL ASSUMPTIONS
(This scenario evaluates the value of holding and collecting the assets over
time, with the prepetition creditors' debt reduced and the cancelled debt
converted into equity.) In the Second Reorganization Scenario, the Debtors
estimated financial and operating results are based upon historical financial
statements assuming the following characteristics of United Companies:
o United Companies would sell the whole loan portfolio as of
July 31, 2000, for the same purchase price percentage
currently being offered.
o The residual and servicing assets would be retained.
o Miscellaneous assets such as the building at 8549 United Plaza
Boulevard would be sold or converted to cash before December
31, 2000.
o Proceeds from the sale of the whole loans portfolio would be
used to pay down pre-petition debt at confirmation. o
Servicing operations cash receipts (servicing fees, late fees,
NSF charges, prepayment penalty receipts, interest earned on
invested cash, and other) were estimated using historical
experience and projected loan delinquencies and prepayments.
o Net cash inflows from interest and service advances were
estimated by predicting the following factors: the migration
of loans between various delinquency "buckets", the average
monthly amount of interest and service advance for each loan,
prepayment and chargeoff rates, and the speed and recovery
with which REO properties will be sold.
o The Debtors' major assumptions for the performance of the
interest-only and residual certificates-net vary by
securitization to reflect the diversity of loan pool
characteristics and can be summarized as using a) lifetime
prepayment speed range of 25.0% to 36.0%, b) cumulative
3
<PAGE>
lifetime losses ranging from 3.6% to 9.7%, and c) 90+ day
delinquency ranging from 14.5% to 30.0%.
o The projections are based on the assumption that United
Companies would enter into a sub-servicing agreement with a
qualified sub-servicer. The Debtors assume this cost at 80
basis points, the fee bid for the top home equity
sub-servicers. The best bids obtained by the Debtors in
October 1999 to sub-service the approximately 16,000
manufactured housing loans are 35 basis points higher than
this and the Debtors expect all servicing costs to be higher
in the future as the portfolio shrinks and even modest
inflation increases costs. Upon information and belief the
Debtors understand that continued turmoil in the subprime
lending and servicing industry has caused current bids to be
70 basis points higher than the October 1999 home equity bids.
o United Companies would emerge from Ch. 11 protection effective
August 31, 2000.
o Upon the engagement of a sub-servicer, investment management
oversight of the sub-servicer and other miscellaneous
corporate functions would be performed at minimal expense
levels. All other operating expenses would cease.
o No federal income taxes would be incurred with the exception
of excess inclusion income tax at the levels indicated.
o The Debtors' obligation to refund credit life insurance
premiums to borrowers who prepay loans would continue at the
levels indicated.
o The Debtors would retain the obligation to receive and make
borrower escrow payments at the direction of the sub-servicer.
o Upon confirmation and emergence from Ch. 11, the remaining
pre-petition debt (net of the reduction of principal from the
proceeds of the sale of the whole loan portfolio) would be
converted into post-confirmation debt of $200 million
("Post-Confirmation Debt") and equity of the reorganized
company. The interest on Post-Confirmation Debt would be paid
using the proceeds of operational cash flow and new
borrowings.
o The Debtors believe that under this scenario United Companies
would adopt "Fresh Start" reporting as described by AICPA
Statement of Position 90-7, "Financial Reporting by Entities
in Reorganization under the Bankruptcy Code." The projected
balance sheet at confirmation reflects fresh start reporting
adjustments.
OBSERVATIONS
As a result of the conversion of the substantial portion of the pre-petition
debt into equity and an overall reduction of debt to $200 million, the Debtors
believe that this plan would meet general feasibility requirements.
The Debtors estimated the total present value of distributions and assets
available to be distributed to creditors using a 20% discount rate to be $793
million, compared to $904 million confirmation value under the Debtors' Second
Amended Plan of Reorganization. The Debtors, therefore, believe that the
Debtors' Second Amended Plan of Reorganization provides the greatest value to
its stakeholders and follows the absolute priority rule.
4
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Balance Sheets (Unaudited)
First Reorganization Scenario - Keep Whole Loans, Sub-Service, Maintain Debt &
Equity
($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
Aug-00 (1) Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 240 $ 40 $ 23 $ 19 $ 16 $ 15
Restricted cash for T&I escrow 18 13 9 6 4 3
Interest-only and residual certificates-net 324 322 269 234 230 231
Owned loans-net 291 266 200 149 110 81
Servicing and interest advances receivable 176 159 147 139 130 122
Property-net 31 15 14 13 12 11
Capitalized mortgage servicing rights 21 21 21 21 21 21
Other assets 6 6 6 6 6 6
------- ------- ------- ------- ------- -------
Total assets $ 1,108 $ 841 $ 689 $ 588 $ 530 $ 490
======= ======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Payables (2) $ 1,477 $ 1,243 $ 1,165 $ 1,160 $ 1,186 $ 1,238
Investor cash balances 44 39 28 19 13 9
Escrow for T&I (gross) 18 13 9 6 4 3
Other liabilities 24 23 20 18 17 16
------- ------- ------- ------- ------- -------
Total liabilities $ 1,563 $ 1,318 $ 1,222 $ 1,203 $ 1,221 $ 1,266
======= ======= ======= ======= ======= =======
STOCKHOLDERS' EQUITY (DEFICIT)
Stock & additional paid-in capital $ 234 $ 234 $ 234 $ 234 $ 234 $ 234
Retained earnings (deficit) (689) (711) (767) (849) (926) (1,010)
------- ------- ------- ------- ------- -------
Total stockholders equity $ (455) $ (477) $ (533) $ (615) $ (692) $ (776)
======= ======= ======= ======= ======= =======
Total liabilities and stockholders equity $ 1,108 $ 841 $ 689 $ 588 $ 530 $ 490
======= ======= ======= ======= ======= =======
(1) The Debtors believe that under the guidelines of AICPA Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under
the Bankruptcy Code," fresh start reporting should not be applied.
(2) Includes an estimated $161 million of interest accrued on pre-petition
debt during the pendency of the bankruptcy.
-----------------------------------------------------------------------------------------------------------------------------------
ASSETS TO LIABILITIES RATIO 70.9% 63.8% 56.4% 48.9% 43.4% 38.7%
-----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET BALANCE 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Discounted Cash Flows (Unaudited)
First Reorganization Scenario - Keep Whole Loans, Sub-Service, Maintain Debt &
Equity ($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
2000 2001 2002 2003 2004 Totals
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Beginning cash $ 103 $ 40 $ 23 $ 19 $ 16 $ 103
Cash flow from operations 194 168 106 76 57 600
Proceeds from sale of whole loans - - - - - -
Proceeds from miscellaneous assets 16 - - - - 16
---- ---- ---- ---- ---- ------
Avaliable cash 313 208 129 95 73 719
Interest paid 39 107 104 105 109 465
Debt repaid at confirmation -
Cash repayments of principal debt 233 78 10 - - 321
Additional borrowings required - - (4) (27) (51) (83)
---- ---- ---- ---- ---- ------
Total distributions 273 185 110 79 58 704
------------
PRESENT VALUE OF DISTRIBUTIONS (20% DISCOUNT RATE) $ 263 $ 158 $ 77 $ 45 $ 27 $ 569
------------
Proj. Dec-04 Discounted
ASSETS REMAINING Undiscounted at 20%
-------------- ------
Cash and cash equivalents $ 15 $ 6
Interest-only and residual certificates-net 231 98
Owned loans-net 81 34
Servicing and interest advances receivable 122 52
---- ----
Total assets $ 449 $ 190
Non-bankruptcy debt liabilities (29) (12)
---- ----
Net assets available for notes payable $ 420 $ 178
====== =====
-----------------------------------------------------------------------------------------------------------------------------------
Cash Flows Assets TOTAL
Sep-00 - Dec-04 Dec-04 PRESENT VALUE
---------------------------------
PRESENT VALUE OF DISTRIBUTIONS AND ASSETS ON DEC. 31, 2004 (20% DISCOUNT RATE) $ 569 $ 178 $ 747
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Cash Flows (Unaudited)
First Reorganization Scenario - Keep Whole Loans, Sub-Service, Maintain Debt &
Equity ($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
2000 2001 2002 2003 2004 Totals
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
SERVICING OPERATIONS CASH RECEIPTS
Servicing fees $ 18 $ 13 $ 9 $ 6 $ 4 $ 49
Late fees, NSF charges 8 6 4 3 2 24
Prepayment penalty receipts 8 5 2 0 -- 15
Interest earned on invested cash 9 2 1 1 1 14
Other receipts (Speedpay, commissions, etc.) 2 1 0 0 0 4
----- ----- ----- ----- ----- -----
TOTAL SERVICING OPERATIONS CASH RECEIPTS 46 26 17 11 7 106
NET CASH INFLOWS FROM INTEREST & SERVICING ADVANCES 27 3 1 5 5 42
I/O CASH FLOWS (RELEASES) 84 85 45 27 20 261
NET CASH INFLOW FROM OWNED LOANS 109 94 72 54 41 369
----- ----- ----- ----- ----- -----
TOTAL CASH RECEIPTS $ 266 $ 207 $ 135 $ 97 $ 72 $ 778
TOTAL OPERATING EXPENSES
Sub-servicer fee (in 2000 also includes payroll) (28) (24) (17) (12) (8) (90)
Investment management (0) (1) (1) (1) (1) (4)
Occupancy expenditures (2) -- -- -- -- (2)
Equipment expenditures (2) -- -- -- -- (2)
Professional & legal (1) -- -- -- -- (1)
Telephone, postage, & supplies (3) -- -- -- -- (3)
Loan expenses (0) -- -- -- -- (0)
Third party REO servicer fees (disposition managers) (2) -- -- -- -- (2)
Other disbursements (1) -- -- -- -- (1)
----- ----- ----- ----- ----- -----
CASH DISBURSEMENTS FROM COMPANY OPERATIONS (39) (25) (18) (13) (9) (104)
OTHER NON-OPERATING EXPENSES (CASH BASIS)
Professional fees (bankruptcy) (16) -- -- -- -- (16)
Allowed claims & indemnities -- -- -- -- -- --
Taxes (excess inclusion income tax) (9) (8) (7) (5) (4) (33)
Refunded credit life insurance premiums to customers, net (3) (3) (2) (1) (1) (10)
Total escrow payments net (5) (4) (3) (2) (1) (14)
----- ----- ----- ----- ----- -----
TOTAL NON-OPERATING DISBURSEMENTS (33) (14) (11) (8) (6) (73)
TOTAL CASH DISBURSEMENTS $ (72) $ (40) $ (29) $ (21) $ (16) $(178)
----- ----- ----- ----- ----- -----
NET CASH FLOW BEFORE INTEREST AND DEBT REPAYMENTS $ 194 $ 168 $ 106 $ 76 $ 57 $ 600
===== ===== ===== ===== ===== =====
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Balance Sheets (Unaudited)
Second Reorganization Scenario - Sell Whole Loans, Sub-Service, Reduce Debt &
Convert Cancelled Debt into Equity ($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
Aug-00 (1) Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
---------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 20 $ 39 $ 24 $ 22 $ 21 $ 21
Restricted cash for T&I escrow 18 11 8 6 4 3
Interest-only and residual certificates-net 324 322 269 234 230 231
Owned loans-net -- -- -- -- -- --
Servicing and interest advances receivable 166 149 137 129 120 112
Other assets and property-net 22 6 5 5 5 5
----- ----- ----- ----- ----- -----
Total assets $ 550 $ 527 $ 444 $ 397 $ 379 $ 372
===== ===== ===== ===== ===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Payables $ 200 $ 191 $ 115 $ 86 $ 70 $ 59
Investor cash balances 44 39 28 19 13 9
Escrow for T&I (gross) 18 11 8 6 4 3
Other liabilities 24 23 20 18 17 16
----- ----- ----- ----- ----- -----
Total liabilities $ 286 $ 264 $ 170 $ 129 $ 104 $ 88
===== ===== ===== ===== ===== =====
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock $ 5 $ 5 $ 5 $ 5 $ 5 $ 5
Additional paid in capital 259 259 259 259 259 259
Retained earnings (deficit) -- (2) 10 3 11 20
----- ----- ----- ----- ----- -----
Total stockholders equity $ 264 $ 263 $ 274 $ 267 $ 275 $ 284
===== ===== ===== ===== ===== =====
Total liabilities and stockholders equity $ 550 $ 527 $ 444 $ 397 $ 379 $ 372
===== ===== ===== ===== ===== =====
</TABLE>
(1) The Debtors believe that under the guidelines of AICPA Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under
the Bankruptcy Code," fresh start reporting should be applied.
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Discounted Cash Flows (Unaudited)
Second Reorganization Scenario - Sell Whole Loans, Sub-Service, Reduce Debt &
Convert Cancelled Debt into Equity ($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
2000 2001 2002 2003 2004 Totals
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Beginning cash $ 103 $ 39 $ 24 $ 22 $ 21 $ 103
Cash flow from operations 145 74 35 22 17 292
Proceeds from sale of whole loans 304 - - - - 304
Proceeds from miscellaneous assets 16 - - - - 16
---- ---- ---- ---- ---- ------
Avaliable cash 567 113 59 44 37 715
Interest paid 6 13 9 7 6 40
Debt repaid at confirmation 513 513
Cash repayments of principal debt 9 76 28 16 11 141
Additional borrowings required - - - - - -
---- ---- ---- ---- ---- ------
Total distributions 528 89 37 23 16 693
------------
PRESENT VALUE OF DISTRIBUTIONS (20% DISCOUNT RATE) $ 527 $ 76 $ 26 $ 13 $ 8 $ 650
------------
Proj. Dec-04 Discounted
ASSETS REMAINING Undiscounted at 20%
-------------- ---------
Cash and cash equivalents $ 21 $ 9
Interest-only and residual certificates-net 231 98
Owned loans-net - -
Servicing and interest advances receivable 112 48
---- ----
Total assets $ 364 $ 155
Non-bankruptcy debt liabilities (28) (12)
---- ----
Net assets available for notes payable $ 336 $ 143
====== =====
-----------------------------------------------------------------------------------------------------------------------------------
Cash Flows Assets TOTAL
Sep-00 - Dec-04 Dec-04 PRESENT VALUE
------------------------------
PRESENT VALUE OF DISTRIBUTIONS AND ASSETS ON DEC. 31, 2004 (20% DISCOUNT RATE) $ 650 $ 143 $ 793
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Projected Cash Flows (Unaudited)
Second Reorganization Scenario - Sell Whole Loans, Sub-Service, Reduce Debt &
Convert Cancelled Debt into Equity ($ in millions)
<TABLE>
<CAPTION>
Projected Projected Projected Projected Projected Projected
2000 2001 2002 2003 2004 Totals
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
SERVICING OPERATIONS CASH RECEIPTS
Servicing fees $ 18 $ 11 $ 8 $ 5 $ 4 $ 46
Late fees, NSF charges 8 6 4 3 2 22
Prepayment penalty receipts 8 4 2 0 -- 15
Interest earned on invested cash 8 2 1 1 1 14
Other receipts (Speedpay, commissions, etc.) 3 0 0 0 0 4
----- ----- ----- ----- ----- -----
TOTAL SERVICING OPERATIONS CASH RECEIPTS 45 23 15 10 7 100
NET CASH INFLOWS FROM INTEREST & SERVICING ADVANCES 27 3 1 5 5 42
I/O CASH FLOWS (RELEASES) 84 85 45 27 20 261
NET CASH INFLOW FROM OWNED LOANS 61 -- -- -- -- 61
----- ----- ----- ----- ----- -----
TOTAL CASH RECEIPTS $ 217 $ 111 $ 62 $ 42 $ 31 $ 463
TOTAL OPERATING EXPENSES
Sub-servicer fee (in 2000 also includes payroll) (27) (22) (15) (11) (7) (83)
Investment management (0) (1) (1) (1) (1) (4)
Occupancy expenditures (2) -- -- -- -- (2)
Equipment expenditures (2) -- -- -- -- (2)
Professional & legal (1) -- -- -- -- (1)
Telephone, postage, & supplies (3) -- -- -- -- (3)
Loan expenses (0) -- -- -- -- (0)
Third party REO servicer fees (disposition managers) (2) -- -- -- -- (2)
Other disbursements (1) -- -- -- -- (1)
----- ----- ----- ----- ----- -----
CASH DISBURSEMENTS FROM COMPANY OPERATIONS (38) (23) (16) (12) (8) (97)
OTHER NON-OPERATING EXPENSES (CASH BASIS)
Professional fees (bankruptcy) (16) -- -- -- -- (16)
Allowed claims & indemnities -- -- -- -- -- --
Taxes (excess inclusion income tax) (9) (8) (7) (5) (4) (33)
Refunded credit life insurance premiums to customers, net (3) (3) (2) (1) (1) (10)
Total escrow payments net (6) (3) (2) (2) (1) (15)
----- ----- ----- ----- ----- -----
TOTAL NON-OPERATING DISBURSEMENTS (34) (14) (11) (8) (6) (74)
TOTAL CASH DISBURSEMENTS $ (72) $ (37) $ (27) $ (20) $ (15) $(171)
NET CASH FLOW BEFORE INTEREST AND DEBT REPAYMENTS $ 145 $ 74 $ 35 $ 22 $ 17 $ 292
===== ===== ===== ===== ===== =====
</TABLE>
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
EXHIBIT F
(COMPARISON OF ALTERNATIVES)
<PAGE>
<TABLE>
<CAPTION>
UNITED COMPANIES FINANCIAL CORPORATION, ET AL. (DEBTORS)
Comparison of Alternatives
($ in thousands)
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Estimated Confirmation Value under Proposed Plan of Reorganization (Exhibit D) $ 904,000
Estimated Value - First Reorganization Scenario (Exhibit E) $ 747,113
Estimated Value - Second Reorganization Scenario (Exhibit E) $ 793,430
Estimated Value - Liquidation Analysis (Exhibit C) $ 798,660
</TABLE>
<PAGE>
EXHIBIT G
Current Report on Form 8-K Dated September 3, 1999
115
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 3, 1999
UNITED COMPANIES FINANCIAL CORPORATION
----------------------------------------
(Exact name as specified in its charter)
Louisiana 1-7067 71-0430414
------------------------------ ------------------------ -------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
Twelve United Plaza, 8549 United Plaza Boulevard
Baton Rouge, Louisiana 70809
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (225) 987-0000
Not Applicable
------------------------------------------------------------
(Former name of former address if changed since last report)
<PAGE>
Item 5. Other Events.
The Registrant files herewith the exhibit listed in Item 7(c) below.
Item 7(c). Exhibits.
The following exhibit is furnished in accordance with Item 601 of
Regulation S-K:
99 Audited consolidated financial statements as of December 31,
1998, and for the year then ended, together with the notes
thereto and the independent auditor's report thereon, for United
Companies Financial Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED COMPANIES FINANCIAL CORPORATION
(Registrant)
Date: September 3, 1999 By: /s/ MICHAEL W. TRICKEY
-------------------------------------
Michael W. Trickey
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
99 Audited consolidated financial statements as of December 31,
1998, and for the year then ended, together with the notes
thereto and the independent auditor's report thereon, for United
Companies Financial Corporation
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
United Companies Financial Corporation:
We have audited the accompanying consolidated balance sheets of United Companies
Financial Corporation (Debtors-in-Possession) and subsidiaries (the "Company")
as of December 31, 1998 and 1997 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the three-year period ended December 31, 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express (or disclaim) an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our report.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Companies
Financial Corporation and subsidiaries at December 31, 1997 and the results of
its operations, changes in stockholders' equity and cash flows for each of the
two years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 1.7 of the Notes to the Consolidated Financial Statements,
in 1997, the Company changed its method of accounting for loan sale gains and
related retained interests to conform with Statement of Financial Accounting
Standards No. 125.
As discussed in Note 2, subsequent to December 31, 1998, the Company and certain
of its subsidiaries have filed for reorganization under Chapter 11 of the
Federal Bankruptcy Code. The accompanying consolidated financial statements do
not purport to reflect or provide for the consequences of the bankruptcy
proceedings. In particular, such consolidated financial statements do not
purport to show (a) as to assets, their realizable value on a liquidation basis
or their availability to satisfy liabilities; (b) as to prepetition liabilities,
the amounts that may be allowed for claims or contingencies, or the status and
priority thereof; (c) as to stockholder accounts, the effect of any changes that
may be made in the capitalization of the Company; or (d) as to operations, the
effect of any changes that may be made in its business.
The accompanying 1998 consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
2, the Company suffered a significant net loss for the year ended December 31,
1998 and has a stockholders' capital deficiency as of that date. These
circumstances and the matters discussed in the preceding paragraph raise
substantial doubt about the entity's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 2. The
1998 financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Because of the possible material effects of the uncertainties discussed in the
two preceding paragraphs, we are unable to express, and we do not express, an
opinion on the accompanying 1998 consolidated financial statements.
DELOITTE & TOUCHE LLP
Baton Rouge, Louisiana
July 31, 1999
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1997
----------- -----------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents ...................................................... $ 230,013 $ 582
Interest-only and residual certificates--net ................................... 462,504 882,116
Loans -- net ................................................................... 191,282 172,207
Investment securities -- available for sale ..................................... 1,918 16,853
Accrued interest receivable and servicer advances .............................. 148,622 85,258
Property -- net ................................................................ 45,883 62,050
Capitalized mortgage servicing rights .......................................... 40,148 48,760
Other assets ................................................................... 36,002 34,613
Net assets of discontinued operations .......................................... 85,403 36,163
----------- -----------
Total assets ......................................................... $ 1,241,775 $ 1,338,602
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Notes payable .................................................................. $ 1,219,025 $ 691,826
Deferred income taxes payable .................................................. -- 95,385
Managed cash overdraft ......................................................... -- 13,625
Other liabilities .............................................................. 136,909 57,137
----------- -----------
Total liabilities .................................................... 1,355,934 857,973
----------- -----------
Stockholders' equity (deficit):
Preferred stock, $2 par value;
Authorized -- 20,000,000 shares; Issued -- 1,657,770 and 1,898,070
shares of 6 3/4% PRIDES(sm) ($44 per share liquidation preference) ...... 3,315 3,796
Common stock, $2 par value;
Authorized -- 100,000,000 shares; Issued -- 30,353,033 and
29,971,356 shares ....................................................... 60,706 59,943
Additional paid-in capital ................................................... 186,614 187,418
Accumulated other comprehensive income ....................................... 113 98
Retained earnings (deficit) .................................................. (345,703) 250,429
Treasury stock ............................................................... (7,409) (7,409)
ESOP debt .................................................................... (11,795) (13,646)
----------- -----------
Total stockholders' equity (deficit) ................................. (114,159) 480,629
----------- -----------
Total liabilities and stockholders' equity (deficit) ............... $ 1,241,775 $ 1,338,602
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Loan sale gains .................................................... $ 191,383 $ 247,022 $ 186,653
Finance income, fees earned and other loan income .................. 128,599 139,029 122,826
Writedown of Interest-only and residual certificates - net ......... (605,562) -- --
Investment income .................................................. 39,509 24,230 13,156
Other .............................................................. 15,336 8,312 6,070
------------ ------------ ------------
Total ...................................................... (230,735) 418,593 328,705
------------ ------------ ------------
Expenses:
Personnel .......................................................... 141,505 120,800 89,724
Interest ........................................................... 72,710 54,865 36,131
Advertising ........................................................ 48,559 36,490 12,039
Restructuring ...................................................... 6,368 -- --
Other operating .................................................... 128,823 79,590 55,834
------------ ------------ ------------
Total ...................................................... 397,965 291,745 193,728
------------ ------------ ------------
Income (loss) from continuing operations
before income taxes ............................................... (628,700) 126,848 134,977
Provision (benefit) for income taxes ................................. (84,769) 44,661 47,428
------------ ------------ ------------
Income (loss) from continuing operations ............................. (543,931) 82,187 87,549
Loss from discontinued operations:
Loss from discontinued operations, net of
income tax expense (benefit) of $(830), $(2,698) and
$1,021, respectively ............................................ (1,541) (7,587) (5,889)
Loss on disposal, net of income tax benefit of $5,550 .............. (38,424) -- --
------------ ------------ ------------
Total ......................................................... (39,965) (7,587) (5,889)
------------ ------------ ------------
Net income (loss) .................................................... $ (583,896) $ 74,600 $ 81,660
------------ ------------ ------------
Comprehensive income, net of tax:
Unrealized holding gains arising during period ..................... 15 51 11
------------ ------------ ------------
Comprehensive income (loss) ........................................ $ (583,881) $ 74,651 $ 81,671
============ ============ ============
Basic earnings (loss) per share:
(Loss) income from continuing operations ........................... $ (19.32) $ 2.63 $ 2.81
Loss from discontinued operations .................................. (1.42) (.24) (.19)
------------ ------------ ------------
Net (loss) income .................................................. $ (20.74) $ 2.39 $ 2.62
============ ============ ============
Diluted earnings (loss) per share:
(Loss) income from continuing operations ........................... $ (19.32) $ 2.53 $ 2.68
Loss from discontinued operations .................................. (1.42) (.23) (.18)
------------ ------------ ------------
Net (loss) income .................................................. $ (20.74) $ 2.30 $ 2.50
============ ============ ============
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------- ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from continuing operating activities:
Income (loss) from continuing operations ............................ $ (543,931) $ 82,187 $ 87,549
Adjustments to reconcile income (loss) from continuing operations
to net cash used by continuing operating activities:
Increase in accrued interest receivable and servicer advances ... (63,365) (23,822) (24,543)
Decrease (increase) in other assets ............................. (1,389) (12,961) 1,578
Increase in other liabilities ................................... 79,772 33,826 4,183
Decrease (increase) in interest-only and residual
certificates--net ............................................. 419,611 (277,642) (213,205)
Increase in capitalized mortgage servicing rights ............... (25,513) (34,226) (20,872)
Amortization of capitalized mortgage servicing rights .......... 34,125 9,272 2,879
Investment gains ................................................ (15,511) -- --
Loan loss provision on owned loans .............................. 26,924 3,462 (267)
Amortization and depreciation ................................... 6,779 6,945 4,384
Deferred income taxes ........................................... (95,385) 43,796 11,234
Proceeds from sales and principal collections of loans .......... 3,349,460 2,807,849 2,387,460
Originations and purchases of loans held for sale ............... (3,373,670) (2,875,000) (2,415,639)
Decrease (increase) from trading securities ..................... -- 17,418 (17,418)
----------- ----------- -----------
Net cash used by continuing operating activities .............. (202,093) (218,896) (192,677)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities .............. 18,985 1,977 413
Proceeds from maturities of held to maturity securities .......... 4,236 -- --
Purchase of available-for-sale securities ......................... (125) (1,242) --
Purchase of held to maturity securities ........................... (5,837) -- --
Proceeds from disposition of insurance subsidiaries ............... -- -- 106,870
Proceeds from sale of real estate ................................. 16,895 -- --
Capital expenditures .............................................. (16,633) (22,573) (9,129)
----------- ----------- -----------
Net cash provided (used) by investing activities ............. 17,521 (21,838) 98,154
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from construction and mortgage loans ..................... -- 3,846 3,293
Payments on construction and mortgage loans ....................... -- (12,612) --
Proceeds from senior debt ......................................... -- -- 99,300
Payments on senior and subordinated debt .......................... (103,000) -- --
Proceeds from issuance of subordinated notes ...................... -- 146,855 --
Increase in revolving credit facilities ........................... 633,332 192,550 --
Increase (decrease) in debt with maturities of three months
or less ......................................................... -- (47,100) 47,100
Increase (decrease) in warehouse loan facility .................... (1,703) (19,007) 4,351
Proceeds from ESOP debt ........................................... -- 850 6,350
Payments on ESOP debt ............................................. (1,516) (1,517) (1,179)
Cash dividends paid ............................................... (12,235) (14,750) (13,897)
Increase (decrease) in managed cash overdraft ..................... (13,625) 13,625 (27,178)
Purchases of treasury stock ....................................... -- (629) --
Decrease (increase) in unearned ESOP compensation ................. 1,851 (2,514) (5,171)
Proceeds from exercise of stock options and warrants .............. 113 222 1,551
----------- ----------- -----------
Net cash provided by financing activities ..................... 503,217 259,819 114,520
----------- ----------- -----------
Net cash flows from discontinued operations ......................... (89,214) (33,013) (10,771)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents .................... 229,431 (13,928) 9,226
Cash and cash equivalents at beginning of period .................... 582 14,510 5,284
----------- ----------- -----------
Cash and cash equivalents at end of period .......................... $ 230,013 $ 582 $ 14,510
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TREASURY TOTAL
ADDITIONAL COMPREHENSIVE RETAINED STOCK AND STOCKHOLDERS
PREFERRED COMMON PAID-IN INCOME EARNINGS ESOP EQUITY
(DEFICIT) (DEFICIT)
---------- ---------- ----------- -------------- ------------ ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 ..... $ 3,910 $ 58,604 $ 179,848 $ 37 $ 122,816 $ (12,741) $ 352,474
Net income ..................... 81,660 81,660
Dividends declared ............. (13,897) (13,897)
Increase in ESOP debt .......... (5,171) (5,171)
Common stock options
exercised .................... 651 4,002 4,653
Release of ESOP shares ......... 547 547
Mark-to-market adjustment on
investments .................. 11 11
--------- --------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1996 ..... 3,910 59,255 184,397 48 190,579 (17,912) 420,277
Net income ..................... 74,600 74,600
Dividends declared ............. (14,750) (14,750)
Increase in ESOP debt .......... (2,514) (2,514)
Common stock options
exercised .................... 500 2,928 3,428
Treasury shares acquired ....... (629) (629)
Release of ESOP shares ......... 167 167
Preferred stock converted ...... (114) 188 (74) --
Mark-to-market adjustment on
investments .................. 50 50
--------- --------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1997 ..... 3,796 59,943 187,418 98 250,429 (21,055) 480,629
--------- --------- --------- --------- --------- --------- ---------
Net loss ....................... (583,896) (583,896)
Dividends declared ............. (12,236) (12,236)
Decrease in ESOP debt .......... 1,851 1,851
Restricted stock transactions... (66) 150 84
Common stock options
exercised .................... 35 78 113
Preferred stock converted ...... (481) 794 (313) --
Release of ESOP shares ......... (719) (719)
Mark-to-market adjustment on
investments .................. 15 15
--------- --------- --------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1998 ..... $ 3,315 $ 60,706 $ 186,614 $ 113 $(345,703) $ (19,204) $(114,159)
========= ========= ========= ========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
UNITED COMPANIES FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. ACCOUNTING POLICIES
1.1 Principles of Consolidation. The consolidated financial statements
include the accounts and operations of United Companies Financial Corporation
and subsidiaries (the "Company" or "United Companies"), all of which are
wholly-owned. All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
1.2 Loan Accounting. Prior to its disposition or closing of its lending
operations, the Company originated and purchased loans (which includes for
purposes hereof manufactured housing installment loan and installment sale
contracts) for its own portfolio and for sale and/or securitization in the
secondary market. Loans held for sale are carried at lower of cost or market.
1.2(a) Loan Sales. On and prior to December 31, 1998, the Company sold
substantially all loans which it originated or purchased as asset-backed
securities and, prior to the 1998 fourth quarter securitization transaction,
generally retained the servicing rights on loans sold. The Company has closed or
sold all of its loan origination operations. See Note 2. Under the
sales/servicing agreements, the buyer receives the principal collected on the
loan and an agreed upon rate of return on the outstanding principal balance, the
Company retains the excess of the interest at the contractual rate over the sum
of the rate paid to the buyer (the "pass-through" rate), a normal servicing fee,
and, where applicable, the trustee fee and surety bond fee. At the time of sale,
the Company allocated a portion of its basis in the loans to mortgage servicing
rights which is recorded as an asset (Capitalized mortgage servicing rights),
recorded as an asset the fair value of the excess interest retained by it
(Interest-only and residual certificates), made a provision for an allowance for
losses on the loans sold, and recognized the resulting loan sale gain as
revenue. The fair value of the Company's Interest-only and residual
certificates, which is net of the allowance for loan losses, was determined at
the time of sale by the Company by computing the present value of the cash flows
of the excess interest retained by the Company expected to be received by it
(using the expected dates that such interest is to be released from the related
reserve accounts), discounted at an interest rate that the Company believed an
unaffiliated third-party purchaser would require as a rate of return on a
financial instrument comprised of such cash flows. These amounts were calculated
using prepayment, default and loss severity assumptions based on the actual
experience of the Company's serviced portfolio for home equity loans and
comparable industry prepayment statistics for manufactured housing contracts. On
a quarterly basis, the Company reviews the fair value of the Interest-only and
residual certificates by analyzing its prepayment and other assumptions in
relation to its actual experience, and, if necessary, adjusts the carrying value
of the Interest-only and residual certificates to such fair value through a
charge or credit to earnings. See Note 3 for a discussion of the revised
assumptions utilized by the Company as a result of such review and analysis, and
the consequent writedown to the carrying value of the Interest-only and residual
certificates, as of December 31, 1998. These assumptions, revised as of a
quarter end, are utilized by the Company in calculating loan sale gain for home
equity loans and manufactured housing contracts sold during the quarter then
ended.
1.2(b) Nonrefundable Loan Fees. Loan origination fees and incremental
direct costs associated with loan originations are deferred and recognized over
the lives of the loans as an adjustment to yield, using the interest method.
Unamortized costs and fees are recognized upon sale of the loan or related
asset-backed securities to third parties.
1.2(c) Loan Servicing. On and prior to September 30, 1998, the Company
generally retained the right to service loans it originated or purchased and
subsequently sold or securitized in the secondary market. The Company did not
retain the servicing on its 1998 fourth quarter securitization transaction. Fees
for servicing loans are generally based on a stipulated percentage of the
outstanding principal balance of such loans. The Company recognizes, as separate
assets, rights to service loans for others that have been acquired through
either the purchase or origination of such loans. The implementation by the
Company of Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS No. 125") on January 1, 1997, did not have a material impact on the
Company's calculation of mortgage servicing rights.
6
<PAGE>
1.2(d) Allowance for Loan Losses. The Company's loan sale agreements for
home equity loans generally provide for the subordination to a limited extent of
cash in reserve accounts and excess interest spread retained relating to the
loans sold. The subordination relates to credit losses which may occur after the
sale of the loans and continues until the earlier of the payment in full of the
loans or the termination of the agreement pursuant to which the loans were sold.
In connection with the securitization of home equity loans and sale of the
asset-backed certificates backed by such loans, the excess interest retained by
the Company is generally subordinated to a limited extent to the sold
certificates and used to fund a reserve account, thereby providing additional
credit enhancement to the holders of the certificates. In connection with the
securitization of manufactured housing contracts and sale of asset-backed
certificates backed by such contracts, a senior/subordinated structure was
generally utilized in which credit enhancement is provided to the senior
certificates by the subordinated certificates. A senior/subordinated structure
was utilized by the Company in its 1998 fourth quarter home equity
securitization transaction. The senior/subordinated structure does not utilize a
reserve account. The 1998 fourth quarter securitization transaction, along with
two earlier 1998 home equity loan securitization transactions which have no
reserve accounts and one of the 1997 home equity loan securitization
transactions which has a reserve account, provides for an
"overcollateralization" feature whereby the excess interest spread retained by
the Company, net of the portion thereof used to cover losses on the securitized
loans, is applied against the principal balance of the asset-backed certificates
backed by such loans. This application, in the absence of losses, accelerates
the amortization of the principal balance of the asset-backed certificates
relative to the amortization of the loans backing such certificates, so that the
principal balance of the loans will exceed the principal balance of the
certificates. This application, which is a part of the credit enhancement
provided in these securitization transactions, continues until the level of
overcollateralization equals the amount specified in the related loan sale
agreement, at which time such application ceases unless necessary to maintain
the level of overcollateralization at its required level. Regardless of the
structure of the loan sale transaction, the Company estimates the amount of
future losses under the loan sale agreements and provides a reserve for such
losses in determining the amount of gain recorded at the time of the sale and
the subsequent carrying value of the Interest-only and residual certificates.
The Company provides for estimated loan losses on loans owned by
the Company by establishing an allowance for loan losses through a charge to
earnings. The Company conducts periodic reviews of the quality of the loan
portfolio and estimates the risk of loss based upon historical loss experience,
prevailing economic conditions, estimated collateral value and such other
factors which, in management's judgment, are relevant in estimating the adequacy
of the Company's allowance for loan losses. While management uses the best
information available in conducting its evaluation, future adjustments to the
allowance may be necessary if there are significant changes in historical loss
experience, economic conditions, collateral value or other elements used in
conducting the review.
1.2(e) Other. Loans are placed on a nonaccrual status when they are past
due 150 days.
1.2(f) Property Acquired in Satisfaction of Debt. The Company records
properties received in settlement of loans ("real estate owned") at the lower of
their market value less estimated costs to sell ("market") or the outstanding
loan amount plus accrued interest ("cost"). The Company accomplishes this by
providing a specific reserve, on a property by property basis, for the
difference between market and cost. Market value is generally determined by
property valuations performed either by Company personnel or independent
appraisers. The related adjustments are included in the Company's provision for
loan losses.
1.3 Investment securities. In accordance with the provisions of Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", the Company classifies securities in one of
three categories: "held-to-maturity", "available-for-sale" or "trading".
Securities classified as held-to-maturity are carried at amortized cost, whereas
securities classified as trading or available-for-sale are recorded at fair
value. The adjustment, net of applicable income taxes, for securities classified
as available-for-sale is recorded in "Accumulated other comprehensive income"
and is included in Stockholders' equity on the consolidated balance sheets and
the adjustment for securities classified as trading is recorded in "Investment
income" in the consolidated statements of operations. At December 31, 1997, the
Company's investment securities primarily consisted of an investment in a
limited partnership which was sold in 1998.
1.4 Property. Property is stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line and accelerated methods over the
estimated useful lives of the assets.
7
<PAGE>
1.5 Income Taxes. The Company and its subsidiaries file a consolidated
federal income tax return. The Company allocates to its subsidiaries their
proportionate share of the consolidated tax liability under a tax allocation
agreement whereby each affiliate's federal income tax provision is computed on a
separate return basis. Deferred income taxes are provided for the effect of
revenues and expenses which are reported in different periods for financial
reporting purposes than for tax purposes. Such differences result primarily from
providing for loan losses, loan income, loan sale gains and depreciation.
1.6 Cash Equivalents. For purposes of the Statements of Cash Flows, the
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. At December 31, 1998,
cash equivalents totaled $192 million primarily with an interest rate of 4.25%
per annum.
1.7 Accounting Standards. In June 1996, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities" ("SFAS No. 125"). SFAS No. 125 focuses on control of the
financial asset and provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured borrowings.
SFAS No. 125 provides certain conditions that must be met to determine that
control of the financial asset has been surrendered. SFAS No. 125 requires that
servicing assets and other retained interests in the transferred assets be
measured by allocating the previous carrying amount between the assets sold and
the retained interests, if any, based on their relative fair values at the date
of transfer. The Company implemented SFAS No. 125 on January 1, 1997. As a
result of the implementation of SFAS No. 125, net income for 1997 was increased
by $4.5 million or $.14 per share on a diluted basis.
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employer's Disclosures about Pensions and Other
Postretirement Benefits -- an amendment of FASB Statements Nos. 87, 88 and 106"
("SFAS No. 132"), which is effective for fiscal years beginning after December
15, 1997. SFAS No. 132 establishes standards for disclosures about pension and
other postretirement benefit plans and does not change the current methods of
measurement or recognition of those plans. The adoption of this standard did not
have a material impact on the Company's financial statement presentation and
related disclosures.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and reporting
for derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. It requires that an entity
recognize, at fair value, all derivatives as either assets or liabilities. The
accounting for changes in the fair value of a derivative is dependent upon the
intended use of the derivative. SFAS No. 133 is effective for all periods
beginning after June 15, 2000. Earlier application of the provisions of SFAS No.
133 is encouraged, but is permitted only as of the beginning of any quarter that
begins after issuance of the Statement. Retroactive application is not allowed.
The Company is reviewing the provisions of this pronouncement but has not yet
determined the effect of its implementation on the Company's financial condition
or results of operations.
In October 1998, the FASB issued Statement of Financial Accounting
Standards No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise"
("SFAS No. 134"), which is effective for the first fiscal quarter beginning
after December 15, 1998. Early application is encouraged and is permitted as of
the issuance of the Statement. SFAS No. 134 requires that, after the
securitization of mortgage loans held for sale, any retained investment in the
related mortgage-backed securities be classified in accordance with the
provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", based on the entity's ability and intent to sell or hold the
investment. Prior to SFAS No. 134, the Company was required to classify its
retained interests as a trading security even though it had no intent to dispose
of the security. Upon adoption, the Company intends to classify its
Interest-only and residual certificates as "available-for-sale" and subsequent
adjustments in carrying value will result in such adjustments being made in
Stockholders' equity (deficit) on the Company's consolidated balance sheets and
will be reflected as a component of Comprehensive income (loss) on the Company's
consolidated statements of operations. However, other than temporary declines in
values, the effects of changes in any assumptions would still have to be
recognized in income immediately. Securities subject to substantial prepayment
risk, such as the Interest-only and residual certificates, cannot be classified
as held-to-maturity. The Company is reviewing the provisions of this
pronouncement but has not yet determined the effect of its implementation on the
Company's financial condition or results of operations.
8
<PAGE>
1.8 Financial Instruments. The Company from time to time entered into
interest rate hedge mechanisms to manage its exposure to interest rate changes
in connection with the securitization and sale of its loans. The Company closed
out the hedge position to coincide with the related loan sale and securitization
transactions and recognized the results of the hedge transaction in determining
the amount of the related loan sale gain. The Company did not have any open
hedge positions at December 31, 1998 or 1997 other than the interest rate caps
discussed in the next paragraph.
The hybrid loan product originated by the Company was securitized
using floating rate certificates with rates based on the one-month London
interbank offered rate ("LIBOR"). To hedge the interest rate exposure during the
fixed rate period of these loans, the Company purchased in 1998 floating
interest rate caps, also based on one-month LIBOR, in the aggregate notional
amount of $2.6 billion which limited the exposure to rising interest rates. Each
reporting period, the Company marks-to-market the value of these hedges. At
December 31, 1998 the fair market value of the Company's interest rate caps was
approximately $4.8 million. In February 1999, a $1.6 billion notional amount
interest rate cap owned by the Company was sold for $3.2 million resulting in a
loss of approximately $1.0 million, leaving at July 31, 1999, approximately $560
million of the Company's hybrid loan portfolio protected and the remaining $863
million unprotected.
1.9 Basic and Diluted Earnings (Loss) Per Common Share. Basic earnings
(loss) per share ("EPS") excludes dilution and is computed by dividing earnings
by the weighted average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings (loss) of the entity.
1.10 Reclassifications. Certain prior year amounts have been reclassified
to conform with the current year presentation. Such reclassifications had no
effect on net income.
1.11 Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. SUBSEQUENT EVENTS-PROCEEDINGS UNDER CHAPTER 11.
On March 1, 1999, the Company and 11 of its wholly-owned subsidiaries
(collectively, the "Debtors") filed petitions for reorganization under Chapter
11 of Title 11 of the United States Code ("the Bankruptcy Code"). The petitions
were filed in the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court") under case numbers 1119900451-461(the "Chapter 11
Cases"). The Chapter 11 Cases have been procedurally consolidated for
administrative purposes. The Debtors continue to manage their affairs and
operate their businesses as debtors-in-possession while the Chapter 11 Cases are
pending. As debtors-in-possession, the Debtors may not engage in transactions
outside of the ordinary course of business without approval, after notice and
hearing, of the Bankruptcy Court. As part of the Chapter 11 Cases, the Debtors
intend to develop a plan or plans of reorganization that will restructure their
respective liabilities. Such plans will be subject to the approval of the
Bankruptcy Court in accordance with Section 1129 of the Bankruptcy Code.
Generally, actions to enforce or otherwise effect repayment of all
prepetition liabilities as well as all pending litigation against the Debtors
are stayed while the Debtors continue their business operations as
debtors-in-possession. Schedules have been filed by the Debtors with the
Bankruptcy Court setting forth the assets and liabilities of the Debtors as of
the filing date as reflected in the Debtors' accounting records. Differences
between amounts reflected in such schedules and claims filed by creditors will
be investigated and amicably resolved or adjudicated before the Bankruptcy Court
or such other court, tribunal or board of competent jurisdiction. The ultimate
amount and settlement terms for such liabilities are subject to a plan or plans
of reorganization, and accordingly, are not presently determinable.
9
<PAGE>
Under the Bankruptcy Code, the Debtors may elect to assume or
reject real estate leases, employment contracts, personal property leases,
service contracts and other executory pre-petition contracts, subject to
Bankruptcy Court review. The Company cannot presently determine or reasonably
estimate the ultimate liability that may result from rejecting leases or from
the filing of claims for any rejected contracts, and no provisions have been
made for these items in the accompanying consolidated financial statements of
the Company.
Subsequent to the filing of the Chapter 11 Cases, the Debtors
entered into a Post Petition Loan and Security Agreement (the "Loan Agreement")
with Greenwich Capital Financial Products, Inc. and The CIT Group/Business
Credit, Inc. and a Post Petition Whole Loan Purchase Facility (the "Purchase
Facility") with Greenwich Capital Financial Products, Inc. to provide secured
debtor-in-possession financing. The Loan Agreement provides for borrowings, on a
revolving basis, dependent upon the Debtors' level of inventory of mortgage
loans and initially was established at $150 million with provisions to increase
the maximum amount to $300 million, with Bankruptcy Court approval. The Purchase
Facility provides for a commitment to purchase up to $500 million of qualifying
loans. The Purchase Facility was initially approved up to $75 million with
provisions to increase the maximum limit to $500 million at a later date. In
May, 1999, the Bankruptcy Court issued a final order confirming the
debtor-in-possession financing at the interim aggregate level of $225 million,
of which $150 million was available under the Loan Agreement and $75 million was
available under the Purchase Facility. At July 31, 1999, the Debtors had $10.5
million outstanding under the Loan Agreement.
On March 22, 1999, the Company announced that it would close its
GINGER MAE subsidiary after efforts to sell that business were unsuccessful. As
of July 31, 1999, the closure of this unit, as well as the previously announced
closure of its correspondent (Unicor) and manufactured housing (United Companies
Funding) lending units, had been completed.
The Company also announced on March 22, 1999 its decision to market
for sale its home equity loan retail lending platform. On April 16, 1999, the
Company announced that it had accepted a bid from Aegis Mortgage Corporation
("Aegis") to purchase 127 retail branches, subject to Bankruptcy Court approval.
The Company also announced that it would close its remaining retail loan
origination branches, thereby exiting all loan origination channels. On April
26, 1999, the Company and certain of its affiliates (the "Sellers") entered into
an Asset Purchase Agreement (the "Asset Purchase Agreement") with Aegis and
Cerberus Partners, L.P., whereby the Sellers agreed to sell to Aegis certain
assets of their loan origination business for a purchase price of (i)
$3,000,000, plus (ii) certain agreed upon expenses incurred during the month of
May, 1999 equal to $7,300,000. The assets sold under the Asset Purchase
Agreement included (i) loans originated by the Sellers prior to the closing date
which had not been funded and closed as of such date, (ii) all rights of the
Sellers under certain of the various contracts and leases relating to the loan
origination business, (iii) certain of the computer software relating to such
business, and (iv) the UC Lending(R) tradename. By order dated May 11, 1999, the
Bankruptcy Court approved the sale pursuant to the terms of the Asset Purchase
Agreement. The Aegis transaction closed on June 1, 1999. The net assets and
resulting loss relating to this sale were not material to the consolidated
financial statements of the Company.
The accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting principles which
contemplate a going concern basis of accounting and do not reflect any
adjustments that might result if the Company is unable to continue as a going
concern. The Company's recent losses from operations and the related Chapter 11
Cases raise substantial doubt about the Company's ability to continue as a going
concern. The appropriateness of using the going concern basis is dependent upon,
among other things, (i) the Company's ability to comply with the debtor-
in-possession financing agreements approved by the Bankruptcy Court, (ii)
confirmation of a plan of reorganization under the Bankruptcy Code, (iii) the
Company's ability to achieve profitable operations after such confirmation, (iv)
the Company's ability to retain the servicing of its securitized home equity
loans and manufactured housing contracts (see Note 14), and (v) the Company's
ability to generate sufficient cash from operations to meet its obligations.
A plan or plans of reorganization could materially change the
amounts currently recorded in the financial statements. The financial statements
do not give effect to any adjustment to the carrying value of assets or amounts
and classifications of liabilities that might be necessary as a result of the
Chapter 11 Cases.
10
<PAGE>
3. INTEREST-ONLY AND RESIDUAL CERTIFICATES -- NET
On and prior to December 31, 1998, the Company sold substantially all of
the loans it originated as asset-backed securities and generally retained the
servicing rights on loans sold. In its securitization transactions, the Company
received, in addition to cash proceeds, Interest-only and residual certificates
created as a result of such securitizations. In addition, the Company also
recognized as an asset the capitalized value of mortgage servicing rights. These
assets constitute a substantial portion of the Company's total assets and loan
sale gains resulting from securitizations represent the largest component of the
Company's revenues.
Realization of the value of these Interest-only and residual certificates
and Capitalized mortgage servicing rights in cash is subject to the prepayment
and loss characteristics of the underlying loans and to the timing and ultimate
stream of cash flows associated with such loans. In its determination of the
fair value of the Interest-only and residual certificates at the time of the
sale of the loans, the Company used prepayment, default and loss severity
assumptions based on the actual experience of the Company's serviced portfolio
for home equity loans, expected future performance, and comparable industry
prepayment statistics for manufactured housing contracts. On a quarterly basis,
the Company reviews the fair value of the Interest-only and residual
certificates by analyzing its prepayment and other assumptions in relation to
its actual experience, and, if necessary, adjusts the carrying value of the
Interest-only and residual certificates to such value through a charge or credit
to earnings. The assumptions utilized by the Company as a result of such review
and analysis, and the consequent writedown to the carrying value of the
Interest-only and residual certificates, as of December 31, 1998, are described
below in this Note 3.
The Company was unable, during and subsequent to the fourth quarter of
1998, to reach a satisfactory restructuring of its $850 million unsecured credit
facility, which was a factor in the Company's ability to accomplish its
restructuring plan. In addition, in December 1998, the Company used a
senior/subordinate structure for its home equity loan securitization transaction
as it was unable to utilize, on acceptable terms, a structure in which the
publicly sold asset-backed securities are insured by a third-party certificate
insurer. In addition, the servicing for this securitization transaction was not
retained by the Company because acceptable terms for such retention were
unavailable. These factors, the repercussions affecting the "subprime" industry
in general, the bankruptcy filing discussed in Note 2, and the other factors
discussed herein were considered by the Company in its review and analysis, and
in the revisions made by it to its assumptions as of December 31, 1998, as
discussed in the following paragraphs.
The following prepayment assumptions were used by the Company as of
December 31, 1998, in the valuation of its Interest-only and residual
certificates:
o A life-to-date prepayment speed (i.e., an average lifetime prepayment
speed) of 30.1%, based on a seasoning curve, for the Company's fixed
rate loan products. The curve begins at 4% in month one, increases to
34% in month fifteen and stays constant until month 26, ramps down to
30% in month 44 and remains constant at this rate until maturity. At
December 31, 1998, the Company had $3.7 billion in fixed rate home
equity loans in its servicing portfolio.
o A life-to-date prepayment speed of 33.3%, based on a seasoning curve,
for the Company's adjustable rate loan products ("ARMs"). The curve
begins at 14% in month one, peaks at 39% in month twelve, decreases to
38% in month 16 and remains at this rate until month 36, ramps down to
30% in month 44 and remains constant at this rate until maturity. At
December 31, 1998, the Company had $0.9 billion in ARMs in its
servicing portfolio.
o Generally a life-to-date prepayment speed of 30.5%, based on a
seasoning curve, for the Company's hybrid loan products, i.e., loan
products that have coupon rates fixed for two or three years and that
become adjustable thereafter. The curve begins at 4% in month one,
ramps to 35% in month fifteen and stays constant until month 20, ramps
down to 30% in month 44 and remains constant at this rate until
maturity. At December 31, 1998, the Company had $1.8 billion in hybrid
loans in its servicing portfolio, of which $1.5 billion originally had
rates fixed for three years.
11
<PAGE>
The following prepayment assumptions were used by the Company as of
December 31, 1997, in the valuation of its Interest-only and residual
certificates:
o A life-to-date prepayment speed of 24%, based on a seasoning curve ,
for the Company's fixed rate loan products. The curve begins at 9% in
month one, increases to 27% in month twelve, increases to 30% in month
20 and stays constant until month 36, ramps down to 17% in month 53 and
remains constant at this rate until maturity. At December 31, 1997, the
Company had $3.2 billion in fixed rate home equity loans in its
servicing portfolio.
o A life-to-date prepayment speed of 28%, based on a seasoning curve, for
the Company's ARMs. The curve begins at 14% in month one, reaches 32%
by month 12, increases to 34% in month 18 and stays constant until
month 28 when it declines to 33% and remains at this rate until month
48, then ramps down to 17% in month 56 and remains at 17% until
maturity. At December 31, 1997, the Company had $1.1 billion in ARMs in
its servicing portfolio.
o Generally, a life-to-date prepayment speed of 24%, based on a seasoning
curve, for the Company's hybrid loan products. The curve begins at 4%
in month one, increases to 22% in month 12, continues to increase to
30% in month 30 and stays constant until month 40, ramps down to 20% by
month 56 and remains constant at this rate until maturity. At December
31, 1997, the Company had $1.0 billion in hybrid loans in its servicing
portfolio, of which $644 million had rates fixed for three years.
The other assumptions used by the Company in its valuation of its home
equity loan Interest-only and residual certificates as of December 31, 1998 were
as follows: the Company used an effective discount rate assumption of
approximately 22% on cash flows (net of the related allowance for loan losses)
from its home equity loan securitization transactions expected to be received by
the Company, including certain cash in the related reserve accounts. The Company
used projected cumulative undiscounted losses of approximately 770 basis points
for all its home equity loan products.
The other assumptions used by the Company in its valuation of its home
equity loan Interest-only and residual certificates as of December 31, 1997,
were as follows: the Company used an effective discount rate assumption of
approximately 9% on cash flows (net of the related allowance for loan losses)
from its home equity loan securitization transactions expected to be received by
the Company, including certain cash in the related reserve accounts. The Company
used projected cumulative undiscounted losses of approximately 250 basis points
for its fixed rate home equity loan products and 200 basis points for its ARMs
and hybrid home equity loan products.
The following information describes the assumptions used by the Company as
of December 31, 1998, in the valuation of its manufactured housing product
Interest-only and residual certificates:
At December 31, 1998, the Company maintained its prepayment and loan loss
assumptions while increasing the discount rate assumption. The prepayment
assumption used by the Company assumed a life-to-date prepayment speed of 8.7%,
based on a seasoning curve that begins at 5.55% in month one, ramps up to 9.0%
by month 24 and remains constant at 9.0% until maturity. At December 31, 1998
the Company had $721 million of manufactured housing loans in its servicing
portfolio. The effective discount rate assumption used by the Company was
increased from approximately 12% at December 31, 1997, to 18% at December 31,
1998 based on cash flows (net of the related allowance for loan losses) expected
to be received by the Company from its manufactured housing product
securitization transactions. The Company used projected cumulative undiscounted
losses of approximately 685 basis points for all its manufactured housing
products.
12
<PAGE>
A summary analysis of the changes in the Company's Interest-only and
residual certificates, net of the allowance for loan losses, for the indicated
periods is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(in thousands)
<S> <C> <C>
Balance, beginning of year ...................................... $ 882,116 $ 604,474
Interest-only and residual certificates on loans sold ........... 345,530 355,743
Net increase in allowance for losses on loans sold(1) ........... (100,270) (33,462)
Net increase in required levels of reserve accounts and
overcollateralization ...................................... 173,570 138,070
Writedown on Interest-only and residual certificates-net ....... (605,562) --
Amortization of Interest-only and residual certificates ......... (232,880) (182,709)
------------ ------------
Balance, December 31 ............................................ $ 462,504 $ 882,116
============ ============
</TABLE>
(1) Excludes amount of writedown set forth in this table
The following schedule sets forth the components of the Interest-only and
residual certificates owned by the Company at the indicated dates, which are
recorded at fair value:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(in thousands)
<S> <C> <C>
Certificated interests .................................. $ 405,385 $ 599,426
Reserve accounts and overcollateralization levels (1) ... 562,823 389,253
Allowance for losses on loans serviced .................. (505,704) (106,563)
------------ ------------
Total .............................................. $ 462,504 $ 882,116
============ ============
</TABLE>
(1) At December 31, 1998 and 1997, includes $500.3 million and $383.0
million, respectively, in temporary investment-reserve accounts and
$62.5 million and $6.3 million, respectively, in overcollateralization
levels.
During the fourth quarter of 1998, the Company recorded a $605.6 million
writedown to the valuation of its Interest-only and residual certificates, net
of the allowance for loan losses. The writedown resulted from a $306.7 million
negative adjustment to the Interest-only and residual certificates and a $298.9
million increase to the allowance for loan losses. The writedown to the
Interest-only and residual certificates, net of the allowance for loan losses,
consisted of (1) $160.8 million from an increase in the effective discount rate
assumptions applied by it to expected future cash releases from the
securitization trusts; (2) $338.3 million from an increase in its estimated
cumulative credit loss rate; (3) $69.5 million from increasing its prepayment
speed assumptions; (4) $20.0 million from the estimated impact of delinquency
triggers in the related securitization trusts which require increased levels of
reserve accounts and overcollateralization under specified circumstances; and
(5) $17.0 million from marking certain subordinated certificates retained by the
Company in securitization transactions to estimated market value.
The Company raised its discount rate assumption at December 31, 1998 as
described above to reflect, in addition to the other factors described herein,
market expectations for a higher rate of return in this asset class and the
effect of the distressed state of the Company. Additionally, the Company raised
its estimate as of December 31, 1998, of the cumulative undiscounted credit loss
assumption on all home equity loan products as described above to reflect, in
addition to such other factors, anticipated increased loss severity, higher out
of pocket costs of disposal of repossessed properties and deteriorating
delinquency in the portfolio of loans serviced.
A modest change in the prepayment speed, credit loss and discount rate
assumptions used by the Company in the valuation of its Interest-only and
residual certificates can have a relatively large impact on the fair value of
this asset. The table below illustrates the impact of a positive or negative
change in a single assumption used by the Company to determine the fair value of
the related Interest-only and residual certificates while keeping the absolute
value of the other two assumptions constant. The impact of changes in the
assumptions is not linear. As of December 31, 1998, changes in the assumptions
would have approximately the following impact on the fair value of this asset:
13
<PAGE>
<TABLE>
<CAPTION>
ASSUMPTION CHANGE FAIR VALUE IMPACT
---------- ------ -----------------
<S> <C> <C>
Life-to-date prepayment speed +100 basis points $(10 million)
Life-to-date prepayment speed -100 basis points $ 10 million
Cumulative undiscounted losses + 10 basis points $ (7 million)
Cumulative undiscounted losses - 10 basis points $ 7 million
Discount rate +100 basis points $ (6 million)
Discount rate -100 basis points $ 6 million
</TABLE>
The following table reflects the composition of finance income, fees earned
and other loan income for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Servicing fees and excess interest collected ......... $ 268,568 $ 193,369 $ 134,668
Loan origination fees ................................ 145,191 110,348 83,932
Loan interest ........................................ 40,504 23,579 19,868
Other loan income .................................... 5,171 13,229 9,621
Amortization of Interest-only and
residual certificates ............................. (232,880) (182,709) (127,602)
Amortization of Capitalized mortgage
servicing rights .................................. (34,125) (9,272) (2,879)
Additional provision for losses on serviced loans .... (63,830) (9,515) 5,218
------------ ------------ ------------
Total ...................................... $ 128,599 $ 139,029 $ 122,826
============ ============ ============
</TABLE>
14
<PAGE>
4. LOANS -- NET
4.1 Loans Owned. The following schedule sets forth the components of Loans
owned by the Company at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Loans held for sale .............................. $ 120,245 $ 120,316
Other loans ...................................... 97,030 50,200
------------ ------------
Total ................................. 217,275 170,516
Real estate owned:
Home equity ................................. 4,482 6,365
Commercial and other ........................ 1,886 3,173
Nonrefundable loan fees .......................... (4,896) (2,760)
Other ............................................ (1,148) (1,396)
------------ ------------
Total ................................. 217,599 175,898
------------ ------------
Less:
Allowance for loan losses ................... (26,317) (3,691)
------------ ------------
$ 191,282 $ 172,207
============ ============
</TABLE>
Included in Other loans at December 31, 1998 and 1997 were nonaccrual
loans totaling $17.0 million and $10.1 million, respectively.
4.2 Loans Serviced. The following table sets forth the loans serviced by
the Company for third parties at December 31, 1998 and 1997, by type of loan.
The serviced portfolio at December 31, 1998 includes approximately $697.5
million of loans sold on a servicing released basis in the fourth quarter of
1998 on which the servicing was transferred in the first quarter of 1999.
Substantially all of these loans were originated by the Company:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Home equity ............................ $ 6,352,920 $ 5,353,429
Manufactured housing contracts (1) ..... 720,522 295,012
Other .................................. 22,657 33,319
------------ ------------
Total ........................ $ 7,096,099 $ 5,681,760
============ ============
</TABLE>
(1) At December 31, 1997, approximately $135.9 million land-and-home
contracts were included in home equity loans that are classified as
manufactured housing contracts at December 31, 1998.
15
<PAGE>
4.3 Loan Loss Allowances. The Company provides an estimate for future
credit losses in an Allowance for loan losses for loans owned by the Company and
for loans serviced for others. These allowance accounts are deducted in the
Company's balance sheet from the asset to which they apply.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------------------
OWNED SERVICED TOTAL
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Allowance for loan losses, beginning of period ........ $ 3,691 $ 106,563 $ 110,254
Provision for loan losses ............................. 4,369 150,016 154,385
Additional provision for loan losses - valuation
adjustment ..................................... 22,555 298,871 321,426
Net loans charged off (1) ............................. (4,298) (49,746) (54,044)
------------ ------------ ------------
Allowance for loan losses, end of period .............. $ 26,317 $ 505,704 $ 532,021
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------ ------------ ------------
OWNED SERVICED TOTAL
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Allowance for loan losses, beginning of period ....... $ 4,141 $ 73,102 $ 77,243
Provision for loan losses ............................ 3,955 62,804 66,759
Net loans charged off (1) ............................ (4,405) (29,343) (33,748)
------------ ------------ ------------
Allowance for loan losses, end of period ............. $ 3,691 $ 106,563 $ 110,254
============ ============ ============
</TABLE>
(1) Excludes accrued interest
As of December 31, 1998, approximately $6.3 billion of home equity
loans sold were serviced under agreements substantially all of which provide for
the subordination of cash and excess interest spread owned by the Company for
credit losses. The maximum recourse associated with sales of home equity loans
according to the terms of the loan sales agreements was approximately $1.6
billion at December 31, 1998, substantially all of which relates to the
subordinated cash and excess interest spread. The Company's estimate of its
losses on home equity loans, based on historical loan loss experience, was
approximately $476.9 million at December 31, 1998 and is recorded in the
Company's allowance for loan losses on serviced loans. In addition, at December
31, 1998, the maximum recourse associated with the sale of approximately $721
million of manufactured housing contracts in securitization transactions
according to the related contract sale agreements was approximately $67 million.
The Company's estimate of its losses on these contracts, based on industry loss
statistics, was approximately $28.8 million and is also recorded in the
Company's allowance for loan losses on serviced loans. The allowance for loan
losses on serviced loans is reflected as a reduction in the Company's
Interest-only and residual certificates (See Note 3). Should credit losses on
loans sold with limited recourse, or subordination of cash and excess interest
spread owned by the Company, materially exceed the Company's estimate for such
losses, such consequence will have a material adverse impact on the Company's
operations.
4.4 Concentration of Credit Risk. The Company's serviced portfolio is
geographically diversified. Although the Company serviced mortgage loans in 50
states and the District of Columbia, at December 31, 1998, a substantial portion
of home equity loans serviced were originated or acquired in California (9.3%),
Louisiana (7.8%), Florida (6.6%), Ohio (6.3%) and North Carolina (5.3%),
respectively, and no other state accounted for more than 4.7% of the serviced
portfolio. The portfolio of manufactured housing contracts serviced were
originated primarily in South Carolina (15.6%), Texas (13.6%), and North
Carolina (12.8%). The risk inherent in such concentrations is dependent not only
upon regional and general economic stability which affects property values, but
also the financial well-being and creditworthiness of the borrower.
4.5 Commitments. The Company used a prefunding feature in connection with
its loan securitization transactions. At December 31, 1998 approximately $52
million was held in a prefunding account for the purchase of the Company's loans
during the first quarter of 1999. Such loans were delivered in February, 1999.
16
<PAGE>
5. PROPERTY -- NET
Property is summarized as follows as of the indicated dates:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings ..................... $ 23,911 $ 41,442
Furniture, fixtures and equipment ...... 37,515 34,926
------------ ------------
Total ........................ 61,426 76,368
Less accumulated depreciation .......... (15,543) (14,318)
------------ ------------
Total ........................ $ 45,883 $ 62,050
============ ============
</TABLE>
During 1998, the Company sold real estate investment property with a
carrying value of $24.3 million and recognized a $8.3 million gain on the sale
of these assets.
Rental expense on operating leases, including real estate, computer
equipment and automobiles, totaled $13.5 million, $11.8 million and $9.3 million
during 1998, 1997 and 1996, respectively. Minimum annual commitments at December
31, 1998 under operating leases that are noncancellable, except those that may
be rejected in the Chapter 11 Cases (see Note 2), are as follows (in thousands):
<TABLE>
<S> <C>
1999.................................................... $ 11,397
2000.................................................... 8,709
2001.................................................... 5,470
2002.................................................... 2,683
2003.................................................... 1,138
--------------
Total......................................... $ 29,397
==============
</TABLE>
6. CAPITALIZED MORTGAGE SERVICING RIGHTS
The following table summarizes the activity in Capitalized mortgage
servicing rights for 1998 and 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Balance, beginning of year ........ $ 48,760 $ 23,806
Capitalized amount ................ 25,513 34,226
Amortization ...................... (34,125) (9,272)
------------ ------------
Balance, end of year .............. $ 40,148 $ 48,760
============ ============
</TABLE>
Amortization in the year ended December 31, 1998 includes the impact of the
increase in the assumed prepayment speeds and the estimated costs of servicing
loans in the future.
See Note 14 for a discussion of the contingencies relating to the Company's
servicing activities.
17
<PAGE>
7. NOTES PAYABLE
Notes payable consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Senior debt:
7% Senior unsecured notes due July, 1998 .............. $ -- $ 100,000
9.35% Senior unsecured notes due November, 1999 ....... 125,000 125,000
7.7% Senior unsecured notes due January, 2004 ........ 100,000 100,000
Revolving credit facility ............................. 825,882 192,550
Warehouse facilities .................................. 2,962 4,665
ESOP debt ............................................. 8,950 10,466
------------ ------------
Total senior debt ............................. 1,062,794 532,681
------------ ------------
Subordinated debt:
8.375% Subordinated unsecured notes due July, 2005 .... 149,231 149,145
Subordinated debentures ............................... 7,000 10,000
------------ ------------
Total ............................................ $ 1,219,025 $ 691,826
============ ============
</TABLE>
At December 31, 1998 (based on computations completed thereafter), the
Company was not in compliance with certain of the financial covenants relating
to its debt and, having not cured such non-compliance within the applicable cure
periods, is in default thereunder.
In April 1997, the Company entered into an $800 million senior unsecured
revolving credit facility (the "Credit Facility") syndicated with a total of 22
participating lenders and, in July 1998, the Credit Facility was increased to
$850 million. The Company used a portion of the proceeds from this three-year
credit facility to refinance existing debt and used the remaining proceeds for
general corporate purposes, including interim funding of loan originations. A
portion of the amount available under the Credit Facility could be used to have
letters of credit issued for the Company's account. The Company deposited
letters of credit in lieu of depositing cash in the related reserve accounts in
certain securitization transactions. As of December 31, 1998, the aggregate
principal amount of loans outstanding under the Credit Facility was $826 million
and letters of credit in the maximum amount of approximately $24 million,
deposited in lieu of cash in the related reserve accounts, were issued under the
Credit Facility for the Company's account. As a result, at December 31, 1998,
the commitment under the Credit Facility was fully utilized. The amount of these
letters of credit outstanding as of December 31, 1997 and 1998, respectively,
are not included in Notes payable. However, to the extent there may be a draw in
the future on the letters of credit, the amount of such draw will increase Notes
payable under "Revolving credit facility".
On February 3, 1999, the Company announced that it was experiencing
difficulties in generating the liquidity necessary to maintain home equity loan
production at levels contemplated by its previously announced restructuring
plan. As a result of the financial condition of the Company at the time, there
was also no availability under warehouse facilities that it had with First Union
National Bank ("First Union") and other lenders. As an interim measure, on
February 5, 1999, the Company obtained a short term repurchase facility from
First Union in the amount of $40 million which was repaid on March 9, 1999, from
proceeds under the Company's debtor-in-possession financing. See Note 2.
The Company maintained at December 31, 1997, in addition to the Credit
Facility, two other sources of financing for its home equity loan originations:
a warehouse facility provided by the investment banker which acted as lead
underwriter for the Company's 1997 fourth quarter home equity loan
securitization (the "Investment Bank Warehouse"), and a warehouse facility
provided by United Companies Life Insurance Company ("UCLIC"). The Investment
Bank Warehouse was directly related to the 1997 fourth quarter home equity loan
securitization, initially provided for funding up to $300 million of eligible
home equity loans for such securitization and terminated upon the closing of the
last delivery of loans under the prefunding accounts relative to this
securitization. As of December 31, 1997, $150 million was available and no
amounts were outstanding under the Investment Bank Warehouse. At December 31,
1998, there was no similar warehouse facility available to the Company. The
warehouse facility provided by UCLIC, which was
18
<PAGE>
established upon the sale of UCLIC, initially provided for the purchase of up to
$300 million in first mortgage residential loans and matured in July 1999.
During 1997, the Company reduced the commitment under this facility to $150
million. At December 31, 1998, the Company had the right for a limited time to
repurchase certain loans which were eligible for securitization and as of
December 31, 1998, $3.0 million in loans eligible for securitization were funded
under this facility. At December 31, 1998, UCLIC had informed the Company that
it would not honor any additional funding under this facility.
In June 1997, the Company publicly sold $150 million of its subordinated
unsecured notes (the "Subordinated Notes"). The Subordinated Notes provide for
interest payable semi-annually and are not redeemable prior to their maturity on
July 1, 2005. The Subordinated Notes bear interest at 8.375% per annum and were
issued at a discount from par. Such discount is being amortized using the
effective interest method as an adjustment to yield over the life of the
Subordinated Notes resulting in an effective interest rate on the Subordinated
Notes of 8.48% per annum. The terms of the Subordinated Notes provide that they
rank subordinate and junior in right of payment to the prior payment of all
existing and future senior indebtedness of the Company.
In December 1996, the Company publicly sold $100 million of its senior
unsecured notes. The December 1996 notes matured and were paid in July of 1998.
The Company previously publicly sold $125 million and $100 million of its senior
unsecured notes which mature in November 1999 and January 2004, respectively.
All of these notes provide for interest payable semi-annually and are not
redeemable prior to maturity. The terms of these notes provide that they rank on
a parity with other unsecured and unsubordinated indebtedness of the Company.
The net proceeds from the sale of these notes were used for working capital
purposes.
At December 31, 1997, the Company also had arrangements with banks
providing for short-term unsecured borrowings of up to $9.5 million, none of
which was outstanding at December 31, 1997. Borrowings under these lines of
credit bore interest at market or prime rates. No similar arrangements existed
at December 31, 1998.
In May 1993, United Companies Lending Corporation, a wholly-owned
subsidiary of the Company, entered into a subordinated debenture agreement with
UCLIC. In connection with this agreement, this subsidiary borrowed $10 million
from UCLIC, $3 million of which matured and was paid in 1998, $3 million of
which matures in 2000 and bears an interest rate of 6.64% per annum and $4
million of which matures in 2003 and bears an interest rate of 7.18% per annum.
The Company made payments for interest of $77.3 million, $40.9 million and
$34.4 million during the years ended December 31, 1998, 1997 and 1996,
respectively.
The Company takes no position with respect to the accrual of interest, if
any, on its secured and unsecured claims in connection with the Chapter 11
Cases. See Note 2.
8. INCOME TAXES (BENEFIT)
The provision (benefit) for income taxes attributable to continuing
operations is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current .......................................... $ 10,624 $ 7,337 $ 36,193
Deferred ......................................... (95,393) 37,324 11,235
------------ ------------ ------------
Total .................................. $ (84,769) $ 44,661 $ 47,428
============ ============ ============
</TABLE>
19
<PAGE>
Reported income tax expense attributable to continuing operations differs
from the amount computed by applying the statutory federal income tax rate to
consolidated income from continuing operations before income taxes for the
following reasons:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal income tax (benefit) at statutory rate .................. $ (220,405) $ 44,397 $ 47,242
Differences resulting from:
Increase in valuation reserve (continuing operations) ..... 134,892 -- --
State income taxes ......................................... 813 1,224 770
Other ...................................................... (69) (960) (584)
------------ ------------ ------------
Reported income tax provision (benefit) ......................... $ (84,769) $ 44,661 $ 47,428
============ ============ ============
</TABLE>
The significant components of the Company's net deferred income tax
liability at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Losses not currently deductible ........ $ 63,245 $ --
Allowance for loan losses .............. 86,927 (12)
Nonrefundable loan fees ................ 2,631 965
Investments ............................ 504 504
Net operating loss carryforward ........ 17,500
Other .................................. (31) 1,796
------------ ------------
Deferred income tax assets .................. 170,776 3,253
Valuation reserve ........................... (142,222) --
------------ ------------
Net deferred tax asset ...................... 28,554 3,253
------------ ------------
Deferred income tax liabilities:
Loan income ............................ -- 75,404
Mortgage servicing rights .............. 17,374 17,066
Real estate ............................ 3,780 4,311
Other .................................. 7,400 1,857
------------ ------------
28,554 98,638
------------ ------------
Net deferred income tax liability ........... $ -- $ 95,385
============ ============
</TABLE>
Payments made for income taxes during the years ended December 31, 1998,
1997 and 1996 were $5.5 million, $1.6 million and $32.2 million, respectively.
At December 31, 1998 and 1997, the Company had a current income tax
receivable of $4.7 million and $6.7 million, respectively, included in "Other
assets". At December 31, 1998, the Company had a net operating loss carryforward
of approximately $50 million which, if not utilized, will expire in the year
2018.
9. CAPITAL STOCK
The Company has authorization to issue up to 100,000,000 shares of its
$2.00 par value common stock. There were 29,172,916 and 28,791,239 shares
outstanding at December 31, 1998 and 1997, respectively, excluding 1,180,117 and
1,180,117 treasury shares. The Company also has authorization to issue
20,000,000 shares of preferred stock of which 1,657,770 shares are currently
issued (see discussion of "PRIDES(SM)" below). Included in the authorized
preferred stock
20
<PAGE>
are 1,000,000 shares of Series A Junior Participating preferred stock and
800,000 shares of Cumulative Convertible preferred stock, none of which is
outstanding. In October, 1998, the Company suspended indefinitely payment of
future dividends on the Company's common and preferred stock.
On June 16, 1995, the Company concluded the sale of 1,955,000 shares of its
Preferred Redeemable Increased Dividend Equity Securities(SM), 6 3/4%
PRIDES(SM), Convertible Preferred Stock, par value $2.00 per share
("PRIDES(SM)"), at a price per share of $44.00. The terms of the PRIDES(SM)
provide that dividends on them are cumulative and are payable quarterly in
arrears on each January 1, April 1, July 1 and October 1. Net proceeds to the
Company were approximately $83.3 million. The net proceeds from the sale of
shares of PRIDES(SM) were used for general corporate purposes. During 1998 and
1997, 240,300 and 56,930 shares of PRIDES(SM) were converted into 397,205 and
94,102 shares of the Company's common stock, respectively.
The terms of the PRIDES(SM) provide that they rank prior to the Company's
common stock as to payment of dividends and distribution of assets upon
liquidation. Such terms also provide that the shares of PRIDES(SM) mandatorily
convert into shares of common stock on July 1, 2000 (the "Mandatory Conversion
Date") on a two share to one share basis (as adjusted for the 100% common stock
dividend paid October 20, 1995), and that the shares of PRIDES(SM) are
convertible into shares of common stock at the option of the holder at any time
prior to the Mandatory Conversion Date on the basis of 1.652 of a share of
common stock for each share of PRIDES(SM), in each case subject to adjustment in
certain events. In addition, such terms provide that the Company has the option
to convert the shares of PRIDES(SM), in whole or in part, on or after July 1,
1998 until the Mandatory Conversion Date, into shares of its common stock
according to a formula. Upon such conversion, the Company will be required to
pay, in cash, any dividends in arrears on the PRIDES(SM) from funds legally
available therefor.
The terms of the PRIDES(SM) are subject to the terms of a plan of
reorganization for the Company which may be confirmed in the Chapter 11 Cases.
During 1998 and 1997, the Company paid cash dividends on its common stock
in the amount of $6.8 million and $9.0 million, or $.24 and $.32 per share,
respectively. In addition, during 1998 and 1997, the Company paid cash dividends
on its PRIDES(SM) in the amount of $4.2 million and $5.8 million or $2.2275 and
$2.97 per share, respectively. At December 31, 1998, the Company has a dividend
payable on its PRIDES(SM) of $1.2 million. As discussed above, payment of cash
dividends on the Company's common and preferred stock have been suspended
indefinitely.
At December 31, 1998 and 1997, 1,180,117 shares of the Company's common
stock, or 4% of the issued common stock, were held as treasury stock at a cost
of $7.4 million.
21
<PAGE>
10. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
earnings (loss) per share for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Basic Earnings (Loss) Per Share
Income (loss) from continuing operations.......................... $ (543,931) $ 82,187 $ 87,549
Less: Income (loss) from discontinued operations.................. (39,965) (7,587) (5,889)
----------- ---------- ----------
Net (loss) income................................................. $ (583,896) $ 74,600 $ 81,660
=========== ========== ==========
Weighted average number of common and common equivalent shares:
Average common shares outstanding............................... 28,148 28,013 27,929
Add: Dilutive effect of preferred stock after
application of "if converted" method...................... -- 3,211 3,230
----------- ---------- ----------
28,148 31,224 31,159
=========== ========== ==========
Earnings (loss) per share:
Income (loss) from continuing operations........................ $ (19.32) $ 2.63 $ 2.81
Income (loss) from discontinued operations...................... (1.42) (.24) (.19)
----------- ---------- ----------
Total......................................................... $ (20.74) $ 2.39 $ 2.62
=========== ========== ==========
Diluted Earnings (Loss) Per Share
Income (loss) from continuing operations.......................... $ (543,931) $ 82,187 $ 87,549
Less: Income (loss) from discontinued operations.................. (39,965) (7,587) (5,889)
----------- ---------- ----------
Total......................................................... $ (583,896) $ 74,600 $ 81,660
=========== ========== ==========
Weighted average number of common and all dilutive shares:
Average common shares outstanding............................... 28,148 28,013 27,929
Add: Dilutive effect of stock options after
application of treasury stock method................... -- 596 838
Dilutive effect of preferred stock after
application of "if converted" method................... -- 3,887 3,910
----------- ---------- ----------
28,148 32,496 32,677
=========== ========== ==========
Earnings (loss) per share:
Income (loss) from continuing operations........................ $ (19.32) $ 2.53 $ 2.68
Income (loss) from discontinued operations...................... (1.42) (.23) (.18)
----------- ---------- ----------
Total......................................................... $ (20.74) $ 2.30 $ 2.50
=========== ========== ==========
</TABLE>
The weighted average anti-dilutive shares that were excluded from the
computation of diluted earnings per share were 1,777,448, 546,275 and 69,836
for 1998, 1997 and 1996, respectively.
22
<PAGE>
11. EMPLOYEE BENEFIT PLANS
11.1 Employee Stock Ownership Plan. All employees who meet minimum age and
service requirements participate in the Company's Employee Stock Ownership Plan
("ESOP").On and prior to December 31, 1998, the Company made annual tax
deductible contributions to the ESOP to be used to purchase additional shares
of the Company's common stock or to pay debt service on shares acquired with
the proceeds of loans ("leveraged shares"). The ESOP's leveraged shares are
initially pledged as collateral for the debt incurred in connection with the
acquisition of such shares. As the debt was repaid, the shares were released
from collateral and allocated to plan participants. Contributions were
allocated among participants based on years of service and compensation. Upon
retirement, death or disability, the employee or a beneficiary receives the
designated common stock.
The Company's cash contributions to the ESOP were $2.3 million, $3.1
million and $3.0 million for the years ended December 31, 1998, 1997 and 1996,
respectively. Shares held by the ESOP at December 31, 1998, 1997 and 1996 were
approximately 3.6 million, 3.7 million and 3.7 million, respectively. During
1995, the ESOP was granted a $10 million line of credit from a financial
institution, which line of credit was increased to $12 million during 1996. At
December 31, 1998 the ESOP had notes payable with a balance of $9.0 million
under this line of credit. Because the source of the loan payments is primarily
contributions received by the ESOP from the Company, such debt is included in
the Company's Notes payable with a corresponding reduction of stockholders'
equity. During 1997, the ESOP borrowed $3.4 million from the Company to
purchase shares of the Company's common stock. The Company does not report the
ESOP's notes payable or the Company's notes receivable in its balance sheet.
Accordingly, no interest cost or interest income is recognized on the Company
loans to the ESOP. At December 31, 1998, the balance of the Company's loans to
the ESOP was $2.8 million. In accordance with Statement of Position 93-6 ("SOP
93-6"), leveraged shares purchased subsequent to December 31, 1992 are, upon
release, reflected as compensation expense based on the then current market
price of the shares. Shares which have not been committed to be released are
not considered outstanding for purposes of the computation of earnings (loss)
per share. At December 31, 1998, approximately 157,000 shares of common stock
were committed to be released under the terms of the loan agreement. At
December 31, 1998, approximately 75,000 shares of common stock accounted for
under the provisions of SOP 93-6 were committed to be released resulting in
additional compensation expense of approximately $0.8 million during 1998. At
December 31, 1998, the ESOP had approximately 656,000 leveraged shares, of
which approximately 503,000 were accounted for under the provisions of SOP
93-6. The fair value of the 503,000 leveraged shares accounted for under the
provisions of SOP 93-6 was $1.7 million at December 31, 1998.
The Company is evaluating a termination of the ESOP, but no decision has
been made with respect thereto.
11.2 Stock Option Plans. At December 31, 1998, the Company had four
stock-based compensation plans for employees, which are described below. The
Company applies Accounting Principles Board Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, no compensation cost
has been recognized for its fixed stock option plans as the exercise price of
all stock options granted thereunder is equal to the fair market value at the
date of grant. The compensation cost that has been charged against net income
for restricted stock issued under the 1993 Stock Incentive Plan and the 1996
Long-Term Incentive Compensation Plan was $.1 million, $2.2 million and $1.4
million for 1998, 1997 and 1996, respectively. Had compensation costs for the
Company's stock-based compensation plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the
method of Financial Accounting Standards Board Statement No. 123, the Company's
net income (loss) and earnings (loss) per share would have been reduced
(increased) to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 1996
------------ ----------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income(loss) As reported................. $ (583,896) $ 74,600 $ 81,660
Pro forma................... (587,534) 70,956 81,118
Basic earnings (loss) per share As reported................. (20.74) 2.39 2.62
Pro forma................... (20.87) 2.27 2.60
Diluted earnings (loss) As reported................. (20.74) 2.30 2.50
per share Pro forma................... (20.87) 2.18 2.48
</TABLE>
23
<PAGE>
Fixed Stock Options. The Company has six fixed stock option plans.
Under the 1986, 1989, 1993 and 1996 employee plans, the Company may grant
options for up to 1.1 million, .8 million, 1.3 million and 1.5 million (subject
to annual increases as described below) shares of common stock, respectively.
Under the 1993 and 1996 plans for non-employee directors (the "Director
Plans"), the Company may grant options for up to .9 million and .4 million
shares of common stock, respectively. Under the 1996 Long-Term Incentive
Compensation Plan, beginning in 1998, the number of shares of common stock
available for grant increases annually on January 1 of each year pursuant to a
formula based on the number of shares of common stock outstanding. On January
1, 1998, .4 million shares of common stock were added to the plan. The term of
the 1986 plan has expired and no new options may be awarded thereunder. At
December 31, 1998, 11,234, 209,422 and 142,483 shares of common stock were
available for award under the 1989, 1993 and 1996 employee stock plans,
respectively, and 599,200 and 307,000 shares of common stock were available for
award under the 1993 and 1996 Director Plans. Under all plans, the exercise
price of each option equals the fair market value of the Company's common stock
on the date of grant and the maximum term of an option is 10 years. Under the
1986 and 1989 employee plans, the options become exercisable two years from the
grant date, under the 1993 plan the options become exercisable three years from
the grant date. At December 31, 1997, all options granted under the 1996 plan
will become exercisable three years after the grant date. Options awarded under
the 1993 Director Plan become exercisable three years from the date of grant
and, under the 1996 Director Plan, six months from the date of grant.
The fair value of each option grant is estimated on the date of grant
using the Black Scholes option-pricing model with the following assumptions for
grants in 1998: dividend yield of 0%; expected volatility of 96%; risk-free
interest rate of 5.11%; and expected life of 4.2 years. The following
assumptions were used for options granted in 1997: dividend yield of 2.0%;
expected volatility of 452%; risk-free interest rate of 6.14%; and expected
life of 4.1 years. The following assumptions were used for options granted in
1996: dividend yield of 1.2%; expected volatility of 45%; risk-free interest
rate of 6.47%; and expected life of 5.4 years.
A summary of the status of the Company's four stock option plans
(excluding the restricted stock awards and as adjusted for stock dividends) as
of December 31, 1998, 1997 and 1996 and changes during the periods ending on
those dates is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1998 1997 1996
-------------------------- ----------------------- ------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
FIXED OPTIONS SHARES PRICE SHARES PRICE SHARES PRICE
- --------------------------------- ---------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year. 2,390,023 $ 17.60 1,571,230 $ 13.27 1,831,860 $ 11.51
Granted.................... 1,184,625 6.70 892,650 25.31 58,700 33.19
Exercised.................. (17,472) 6.49 (28,294) 7.77 (279,488) 5.55
Canceled................... (336,890) 22.59 (45,563) 25.43 (39,842) 15.83
--------- --------- ---------
Outstanding at end of year...... 3,220,286 13.11 2,390,023 17.60 1,571,230 13.27
========= ========= =========
Weighted-average fair value of
options granted during
the year....................... $ 4.72 $ 23.35 $ 15.63
</TABLE>
The following table summarizes information (as adjusted for stock
dividends) about fixed stock options outstanding at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------------- -----------------------------
RANGE OF WEIGHTED-AVERAGE WEIGHTED- WEIGHTED-
EXERCISE NUMBER REMAINING AVERAGE NUMBER AVERAGE
PRICES OUTSTANDING CONTRACTUAL LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------- ------------- ------------------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
$2.00 to $4.00 1,130,378 7.69 $ 3.59 282,878 $ 3.31
$4.01 to $17.50 830,185 5.63 9.14 592,718 7.31
$18.00 to $24.00 826,448 7.30 22.25 573,098 21.61
$25.00 to $34.00 433,275 8.05 28.09 39,600 31.18
--------- ---------
Total 3,220,286 7.11 13.11 1,488,294 12.69
========= =========
</TABLE>
24
<PAGE>
Restricted Stock Awards. As part of the Company's 1993 Stock Incentive
Plan and the 1996 Long-Term Incentive Compensation Plan, the Company may award
restricted stock to selected executives and other key employees. The 1993 and
the 1996 plans require a vesting period of six months.
The following table summarizes information about restricted stock
awards during the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1998 1997
----------------------------------- ----------------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
RESTRICTED STOCK AWARDS SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- ----------------------------- ----------- ------------------- ----------- --------------------
<S> <C> <C> <C> <C>
Outstanding at beginning
of year....................... 131,400 $ -- 37,000 $ --
Granted......................... 10,000 -- 181,286 --
Lapse of restriction............ (9,000) -- (86,886) --
Cancelled....................... (34,000) --
-------- --------
Outstanding at end
of year........................ 98,400 -- 131,400 --
======== ========
Weighted-average fair
value of restricted stock
granted during the year....... $ 18.63 $ 7.89
</TABLE>
As of December 31, 1998, the 98,400 shares of restricted stock
outstanding had a purchase price of zero and a weighted-average remaining
contractual life of one year.
11.3 Employees' Savings Plan. The United Companies Financial Corporation
Employees' Savings Plan is designed to be a qualified plan under Sections
401(a) and 401(k) of the Internal Revenue Code. Under the plan, employees are
allowed to defer income on a pre-tax basis through contributions to the plan
and the Company matches a portion of such contributions. The Company's matching
contributions totaled $3.3 million, $1.6 million and $1.5 million during 1998,
1997 and 1996, respectively. Employees have ten investment options; the one to
invest in the Company's common stock is no longer available. The plan held
1,069,244 shares and 611,678 shares of the Company's common stock at December
31, 1998 and 1997, respectively.
11.4 Deferred Compensation Plans. Postretirement benefits were provided to
eligible executive and senior officers of the Company under a non-qualified,
deferred compensation plan. The cost of this plan during 1998 and 1997 was $.3
million and $.2 million, respectively. The Company calculated its
postretirement benefit obligation as of December 31, 1998 using a weighted
average discount rate of 6.1%. A reconciliation of the funded status of the
deferred compensation plan as of December 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, NET DECEMBER 31,
1998 CHANGE 1997
------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Accumulated postretirement benefit cost........... $ 1,849 $ (68) $ 1,917
Plan assets....................................... -- -- --
------- ------- -------
Funded status..................................... 1,849 (68) 1,917
Unrecognized transition obligation................ (653) 350 (1,003)
------- ------- -------
Accrued postretirement benefit cost............... $ 1,196 $ 282 $ 914
======= ======= =======
</TABLE>
The Company's obligation to pay the postretirement benefits is unsecured and
subject to rejection in the Chapter 11 Cases.
12. DISCLOSURE ABOUT FINANCIAL INSTRUMENTS
25
<PAGE>
Statement of Financial Accounting Standards No. 107 ("SFAS No. 107")
requires that the Company disclose the estimated fair values of its financial
instruments, both assets and liabilities recognized and not recognized in its
financial statements.
SFAS No. 107 defines financial instruments as cash and contractual rights
and obligations that require settlement in cash or by exchange of financial
instruments. Fair value is defined as the amount at which the instrument could
be exchanged in a current transaction between willing parties other than in a
forced or liquidation sale.
The carrying value and fair value of the Company's financial assets and
liabilities at December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1998 1997
------------------------- -------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- ----------- ------------- -------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents.......................... $ 230,013 $ 230,013 $ 582 $ 582
Loans.............................................. 186,555 186,555 162,668 173,060
Interest-only and residual certificates............ 462,504 462,504 882,116 882,116
Capitalized mortgage servicing rights.............. 40,148 44,465 48,760 53,918
Financial liabilities:
Notes payable...................................... 1,219,025 -- (1) 691,826 705,425
Managed cash overdraft............................. -- -- 13,625 13,625
</TABLE>
(1) See discussion under Notes payable below.
The above fair values do not reflect any premium or discount from offering
for sale at one time the Company's entire holdings of a particular financial
instrument. Fair value estimates are made at a specific point in time based on
relevant market information, if available. Because no market exists for certain
of the Company's financial instruments, fair value estimates for these assets
and liabilities were based on subjective estimates of market conditions and
perceived risks of the financial instruments. Fair value estimates were also
based on judgments regarding future loss and prepayment experience and were
influenced by the Company's historical information.
The following methods and assumptions were used to estimate the fair value
of the Company's financial instruments:
Cash and cash equivalents. The carrying amount of cash and cash
equivalents approximates their fair values because these assets generally
mature in 90 days or less and do not present any significant credit concerns.
Loans. The fair value of the Company's loan portfolio was determined by
segregating the portfolio by its performing and non-performing components.
Performing loans were further segregated into loans which were sold subsequent
to year end and all other remaining saleable loans at December 31, 1998.
Performing loans which were sold subsequent to year end were valued at the
actual sales price of the loans. All other remaining saleable loans were valued
either based upon competitive bids received or based upon the estimated fair
value of the loans given market conditions as of the applicable period end.
Non-performing loans were valued based upon competitive bids received. Real
estate owned property is excluded from this disclosure because it is not
considered a financial instrument.
Interest-only and residual certificates. In accordance with the
requirements of SFAS No. 125, the Interest-only and residual certificates are
carried at fair value. For a discussion of the assumptions used by the Company
in determining the fair value of this asset, see Note 3.
Capitalized mortgage servicing rights. The fair value of Capitalized
mortgage servicing rights was based on the present value of estimated future
cash flows related to servicing income. In estimating the fair value of these
rights, the Company made assumptions which included the cost of servicing per
loan, the discount rate, an inflation rate, ancillary income per loan and
prepayment rates.
26
<PAGE>
Notes payable. Notes payable at December 31, 1997 consists primarily of
amounts payable for the Company's senior and subordinated unsecured debt. The
fair value of the senior and subordinated unsecured debt is based upon the
estimated rate offered to the Company for debt of the same remaining maturity
at that time. Because of the circumstances described in Note 2, a determination
of the fair value of the Company's Notes payable cannot be made as of
December 31, 1998.
The fair values presented herein are based on pertinent information
available to management as of December 31, 1998. Such amounts have not been
comprehensively revalued for events discussed in Note 2 and current estimates
of fair value may differ significantly from the amounts presented herein.
13. DISCONTINUED OPERATIONS
United Companies Funding, Inc. On October 27, 1998, the Company made a
decision to discontinue the operations of United Companies Funding, Inc.
("UCFI"), a wholly owned subsidiary of the Company. UCFI was organized in 1995
to originate manufactured housing loan products made primarily to finance the
purchase of new or used manufactured homes. In reaching the decision to
discontinue the operations of UCFI, the Company considered the less than
anticipated results of UCFI's operations and the funding required if UCFI were
to continue operating, and the impact thereof on the Company's liquidity. The
Company has estimated the loss that will occur from the discontinuance, and the
operating losses that will occur during phase out, of UCFI and, accordingly,
has accrued for such loss in its financial statements for the year ended
December 31, 1998. The results of operations of UCFI have been classified as
discontinued operations and the prior year financial statements have been
restated accordingly.
In connection with the decision to discontinue the operations of UCFI, the
Company recorded a net loss of $40.0 million, $1.6 million and $1.4 million in
its financial statements for the year ended December 31, 1998, 1997 and 1996,
respectively. Based on the sale of a large portion of the manufactured housing
loan inventory subsequent to December 31, 1998, management provided a $29
million valuation allowance against the carrying value of the manufactured
housing loan inventory at December 31, 1998. Total revenues of UCFI for 1998
and 1997 were $31.3 million and $24.7 million, respectively. Total assets of
UCFI at December 31, 1998 and 1997 were $91.1 million and $37.1 million,
respectively. The Company's assets related to manufactured housing contracts
previously sold in public asset-backed securitization transactions, consisting
primarily of Interest-only and residual certificates totaling approximately
$50.5 million, have been retained by the Company, and therefore, are excluded
from "Net assets of discontinued operations" on the Company's consolidated
balance sheet as of December 31, 1998.
United Companies Life Insurance Company. On July 24, 1996, the Company
concluded the sale of all of the outstanding capital stock of its wholly-owned
life insurance subsidiary, United Companies Life Insurance Company ("UCLIC"),
for a sales price of $167.6 million. The Company recorded, in 1996, a net loss
of $6.8 million on the transaction. As a result of the sale, the assets
(including $67 million of assets transferred to the Company by UCLIC
immediately prior to closing) and the operations of UCLIC have been classified
as discontinued operations. In the fourth quarter of 1997, the Company wrote
off an additional $2.2 million related to an intercompany receivable.
United General Title Insurance Company. On February 29, 1996, the Company
closed the sale of 100% of the outstanding capital stock of its wholly-owned
subsidiary, United General Title Insurance Company ("UGTIC"). The Company
recorded a loss from discontinued operations (net of income tax benefit) of
$1.1 million in 1996 and $1.6 million in 1997 in connection with the sale of
UGTIC.
Foster Mortgage Corporation. The remaining affairs of the Company's
subsidiary, Foster Mortgage Corporation ("FMC"), a discontinued operation,
which had been conducted under the supervision of a bankruptcy court were
concluded in 1997. The claims of the institutional lenders under FMC's primary
credit facility (the "FMC Institutional Lenders") relating to the Company's
alleged failure to remit all sums due FMC regarding federal income taxes under
a tax agreement among the Company and its subsidiaries, including FMC, was
settled. The Company recorded a $5.6 million charge in the fourth quarter of
1997 resulting from the settlement. The claims of the FMC Institutional Lenders
against the Company seeking avoidance of certain payments alleged to be
preferences or fraudulent conveyances were dismissed after a trial before the
bankruptcy court.
27
<PAGE>
14. CONTINGENCIES
The nature of the Company's business is such that it is routinely involved
in litigation and is a party to or subject to other items of pending or
threatened litigation. As a result of the Chapter 11 Cases discussed in Note 2
above, litigation pending against the Company and certain of its subsidiaries
has been stayed. Although the outcome of certain of these matters cannot be
predicted, management of the Company believes, based upon information currently
available, that the resolution of these various matters will not result in any
material adverse effect on its consolidated financial condition. Additionally,
due to the commencement of the Chapter 11 Cases, it is unclear what effect, if
any, such litigation would have on the Company's financial condition or how
such litigation will be treated pursuant to a plan or plans of reorganization.
One financial institution serves as trustee of substantially all of the
Company's home equity and manufactured housing contract securitization
transactions and two monoline insurers insure the publicly issued asset-backed
securities in substantially all of the Company's home equity loan
securitization transactions (other than the 1998 fourth quarter transaction
which was structured on a senior/subordinated basis without monoline insurance
and for which the Company did not retain the servicing). Because of the
distressed condition of the Company, the filing of the Chapter 11 Cases and the
performance of the securitized loans, one or more of these entities may seek
relief from the automatic stay in the Chapter 11 Cases in order to
involuntarily terminate the servicing of these securitized loans and contracts
by the Company's subsidiary and to transfer the servicing to another servicer.
The Company intends to oppose vigorously any such efforts. An involuntary
termination of the Company's servicing of the loans and contracts it has
securitized will have a material adverse effect on the Company and its efforts
to reorganize in the Chapter 11 Cases.
In a class action lawsuit pending in Alabama state district court
involving 910 home equity loans alleged to be subject to the Alabama Mini Code,
Autrey v. United Companies Lending Corporation, the Alabama Supreme Court,
acting on an interlocutory appeal by the Company, upheld the ruling of the
trial court on a pre-trial motion that retroactive application of the 1996
amendments to the Alabama Mini Code would be unconstitutional as applied to the
plaintiff's class. The 1996 amendments, which in general limited the remedy for
finance charges in excess of the maximum permitted by the Alabama Mini Code,
were expressly made retroactive by the Alabama legislature. The Company
strenuously disagreed with this holding and sought a rehearing by the Alabama
Supreme Court. The request for a rehearing was denied by the Alabama Supreme
Court and the matter was returned to the trial court for a trial on the merits.
The Company believes that the liability, if any, should be limited to $495,000,
the amount of the aggregated finance charges allegedly exceeding the maximum
permitted by the Alabama Mini Code, plus interest thereon. The Company intends
to continue its vigorous defense of this matter. If unsuccessful in its defense
at a trial on the merits and related appeals, the Company presently estimates
that the liability of its subsidiary could be approximately $15 million. On
June 6, 1999, counsel for the class plaintiffs filed a motion in the Bankruptcy
Court, pursuant to Section 362 of the Bankruptcy Code, for relief from the
automatic stay in order to continue with this litigation, as such litigation
had been stayed due to the commencement of the Chapter 11 Cases. The Company
has vigorously opposed such requested relief and the Court has continued the
hearing to September 15, 1999, with respect thereto.
In August of 1998, the U.S. Department of Justice ("DOJ") and the U.S.
Department of Housing and Urban Development ("HUD") issued a letter to the
Company and its subsidiary United Companies Lending Corporation indicating that
they were initiating a joint investigation of their lending and pricing
practices, initially in Philadelphia, PA-NJ PMSA. The investigation focuses on
compliance by the Company and its subsidiary with the federal Fair Housing Act
and Equal Credit Opportunity Act and the federal Real Estate Settlement
Procedures Act ("RESPA"). Specifically, DOJ seeks to determine whether the
lending and pricing practices of the Company and its subsidiary discriminate
against applicants based on race, national origin, sex, or age. The Company
believes this investigation by DOJ is part of an overall initiative by that
agency to review the practices of several large subprime lenders and does not
stem from any findings of wrongdoing by the Company. HUD will be investigating
whether relationships of the Company and its subsidiary with mortgage brokers,
home improvement dealers or other third parties may violate the anti-kickback
and anti-referral fee prohibitions of RESPA.
In October 1998, UC Lending reached a settlement in an enforcement action
commenced by the Massachusetts Attorney General on behalf of the Commonwealth
of Massachusetts in Massachusetts state court alleging violations by UC Lending
of certain regulations promulgated by the Massachusetts Attorney General
relating to, among other things, loan origination fees, also known as "points",
with respect to loans originated in Massachusetts. The settlement, involving
payments and other terms by UC Lending aggregating approximately $1.2 million,
followed a decision by a
28
<PAGE>
federal district court in Massachusetts upholding the validity of the
regulations and finding violations thereof by UC Lending. UC Lending had
maintained that the Massachusetts regulations were void because they conflicted
with the efforts of the Massachusetts legislature to supplant the strict
regulation of points with disclosure requirements, and were inconsistent with
the policies and interpretations of the Federal Trade Commission as to what
constitutes unfair and deceptive trade practices. The federal district court
found that the Attorney General's regulations did not contravene the intent of
the Massachusetts legislature and are not inconsistent with applicable federal
law.
The Company, operating through its subsidiaries (collectively, the
"Companies"), services loans in 50 states and the District of Columbia, subject
to licensing or exemption from licensing requirements granted by the states. In
some of these states, the Companies are exempt from the requirement to obtain a
state license by result of their holding licenses or approvals from federal
agencies, including the U.S. Office of Housing and Urban Development ("HUD").
The applicable licensing statutes in virtually all of these states and the
applicable HUD regulations require that an authorized mortgage loan servicer
submit annual audited financial statements to the regulatory authorities and
maintain a minimum net worth requirement. The Companies failed to timely submit
their audited financial statements for the year ending December 31, 1998 in
those jurisdictions where required and will not meet the minimum net worth
requirements as of December 31, 1998 in those jurisdictions where required. A
number of state agencies and HUD have initiated action to terminate, revoke,
suspend or deny renewal of the Companies' licenses or exemption from licensing
because of the failure to meet these requirements. It is the Companies'
position that section 525 and other sections of the Bankruptcy Code prohibit
and stay a governmental unit (state or federal) from denying, revoking,
suspending, or refusing to renew a license or other similar grant to a debtor
in bankruptcy because, among other things, such debtor is a debtor under the
Bankruptcy Code, or has been insolvent before the commencement of its
bankruptcy case or during the case. On July 23, 1999, the United States
Bankruptcy Court for the District of Delaware entered its Order granting a
preliminary injunction against the Attorney General of the State of Arkansas
and the Commissioner of the Arkansas Securities Department enjoining those
parties and others working under their supervision from taking any action
against United Companies Financial Corporation, United Companies Lending
Corporation and/or Ginger Mae, Inc. "with respect to their servicing rights in
Arkansas and their rights to do business in Arkansas as a servicer of loans,
including revoking, refusing to renew, suspending, terminating the exemption
from registration, conditioning, or otherwise interfering with or impairing
Debtors' rights to service Arkansas loans." The Companies plan to attempt to
obtain similar injunctive relief against other state or federal agencies as may
be necessary to protect their right to continue to service loans in each of the
jurisdictions where they currently service loans. However, the facts and
applicable statutory language differs from jurisdiction to jurisdiction and no
assurance can be given that the Companies will be successful in obtaining
protective injunctive or other relief against any particular governmental
agency.
For a discussion of letters of credit issued under the Company's credit
facility, see Note 7 above.
15. SEGMENTS AND RELATED INFORMATION
Prior to its decision to sell or close its loan origination divisions as
discussed in Notes 1 and 13 above, the Company had three reportable segments
that offered non-conventional home equity loans through different origination
channels: UC Lending, Unicor and Ginger Mae. UC Lending originated loans
through a network, as of December 31, 1998, of 191 retail offices in 38 states.
In addition, UC Lending had historically sold substantially all of the loans
the Company originated in securitization transactions and retained servicing on
these loans. In 1999, UC Lending began selling whole loans without retaining
the servicing. Unicor acquired loans from brokers and correspondents whereas
Ginger Mae originated loans through relationships with financial institutions.
The Other caption represents the Company's corporate and treasury functions as
well as its other business activities that fall below the quantitative
threshold tests under SFAS No. 131 for determining reportable segments. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies with the exception of the
production fee allocated to the segments. UC Lending sold loans to third
parties that were originated by Unicor and Ginger Mae. UC Lending recognized
the gain on the sale of these loans and paid Unicor and Ginger Mae a production
fee based on the volume of loans transferred to UC Lending that were included
in the loan sales. The Company evaluated performance and allocated resources
based on net income from operations before income taxes. The following table
represents the Company's reportable segments as of and for the years ending
December 31, 1998, 1997 and 1996 (dollars are in thousands):
29
<PAGE>
1998
<TABLE>
<CAPTION>
UC GINGER
LENDING UNICOR MAE OTHER TOTAL
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue from external sources........ $ (208,851) $ (14,316) $ (3,778) $ (3,790) $ (230,735)
Intersegment production fees ......... (71,102) 36,826 18,461 15,815 --
Total revenues ....................... (279,953) 22,510 14,683 12,025 (230,735)
Interest expense ..................... 70,142 1,575 893 100 72,710
Depreciation ......................... 4,458 248 106 2,514 7,326
(Loss) income from continuing
operations before income taxes ..... (623,386) (4,200) 4,461 (5,575) (628,700)
Income tax expense (benefit) ......... (81,828) (1,347) 1,863 (3,457) (84,769)
Income (loss) from continuing
operations ........................... (541,558) (2,853) 2,598 (2,118) (543,931)
Loss on discontinued operations, net
of taxes ........................... -- -- -- (39,965) (39,965)
Net (loss) income .................... (541,558) (2,853) 2,598 (42,083) (583,896)
Segment assets ....................... $ 842,266 $ 2,804 $ 7,711 $ 388,994 $ 1,241,775
</TABLE>
1997
<TABLE>
<CAPTION>
UC GINGER
LENDING UNICOR MAE OTHER TOTAL
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue from external sources ........ $ 398,371 $ 1,329 $ 483 $ 18,410 $ 418,593
Intersegment production fees ......... (37,700) 25,908 9,876 1,916 0
Total revenues ....................... 360,671 27,237 10,359 20,326 418,593
Interest expense ..................... 51,195 2,587 539 544 54,865
Depreciation ......................... 2,867 238 75 1,385 4,565
Income from continuing operations
before income taxes ................ 114,636 3,006 2,476 6,730 126,848
Income tax expense ................... 41,278 1,088 884 1,411 44,661
Income from continuing operations .... 73,358 1,918 1,592 5,319 82,187
Loss on discontinued operations, net
of taxes ........................... -- -- -- (7,587) (7,587)
Net income (loss) .................... 73,358 1,918 1,592 (2,268) 74,600
Segment assets ....................... $ 1,178,998 $ 7,278 $ 3,254 $ 149,072 $ 1,338,602
</TABLE>
1996
<TABLE>
<CAPTION>
UC GINGER
LENDING UNICOR MAE OTHER TOTAL
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue from external sources........ $ 314,766 $ 1,559 $ 301 $ 12,079 $ 328,705
Intersegment production fees......... (21,565) 15,944 3,427 2,194 0
Total revenues....................... 293,201 17,503 3,728 14,273 328,705
Interest expense..................... 33,874 1,479 216 562 36,131
Depreciation ........................ 1,315 165 35 924 2,439
Income (loss) from continuing
operations before income taxes....... 128,966 (1,270) (989) 8,270 134,977
Income tax expense (benefit)......... 43,241 (316) (319) 4,822 47,428
Income (loss) from continuing
operations........................... 85,725 (954) (670) 3,448 87,549
Loss on discontinued operations, net
of taxes............................. (5,889) (5,889)
Net (loss) income.................... 85,725 (954) (670) (2,441) 81,660
Segment assets....................... $ 800,019 $ 1,859 $ 1,661 $ 121,695 $ 925,234
</TABLE>
30
<PAGE>
EXHIBIT B
---------
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
UNITED COMPANIES FINANCIAL Case Nos. 99-450 through 99-461
CORPORATION, et al.,
------
(Jointly Administered)
Debtors.
========================================
DISCLOSURE STATEMENT TO ACCOMPANY THE SECOND AMENDED PLAN OF REORGANIZATION OF
THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS OF UNITED COMPANIES
FINANCIAL CORPORATION DATED JULY 10, 2000
LONG ALDRIDGE & NORMAN LLP SAUL, EWING, REMICK & SAUL LLP
303 Peachtree Street, Suite 5300 222 Delaware Ave., Suite 1200
Atlanta, Georgia 30308 Wilmington, Delaware 19801
(404) 527-4000 (302) 421-6824
Attorneys for the Official Committee of Equity Security Holders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. INTRODUCTION...................................................................................3
A. General................................................................................3
B. The Purpose of the Disclosure Statement................................................3
C. Manner of Voting on the Plan...........................................................3
D. Confirmation Hearing...................................................................4
E. Overview of Plan.......................................................................5
1. Description of the Plan.......................................................5
2. Summary of Classification and Treatment of Claims and Equity Interests........5
ARTICLE II. BACKGROUND INFORMATION.........................................................................10
A. History of the Debtors................................................................10
B. Description of Business. ............................................................10
1. Origination Network..........................................................10
2. Loan Sales and Securitizations...............................................10
C. Significant Prepetition Indebtedness..................................................11
D. Capital Stock.........................................................................11
E. Management and Employees..............................................................12
F. Pre-Bankruptcy Financial History of the Debtors.......................................12
G. The Chapter 11 Cases..................................................................14
1. Administration of the Chapter 11 Cases.......................................14
2. Creditors Committee/Equity Committee.........................................15
3. Sale of Loan Origination Platform............................................16
4. The RFP Process..............................................................17
5. The EMC Proposal.............................................................17
6. Termination of Debtors' Exclusivity Rights...................................18
7. Equity Committee's Negotiations with Ocwen Financial Corporation.............18
H. Assets and Liabilities of the Estates.................................................19
1. Assets of the Estates........................................................19
a. On-balance sheet assets..............................................19
b. Off-balance sheet assets.............................................20
2. Liabilities of the Estates...................................................20
ARTICLE III. THE PLAN.......................................................................................20
A. General...............................................................................20
B. Substantive Consolidation and Cancellation of Intercompany Claims.....................21
C. Classification of Claims and Equity Interests.........................................21
D. Provisions for Payment of Administrative Claims and Priority Tax Claims...............22
1. Administrative Expense Claims................................................22
2. Professional Fee Claims......................................................22
3. Priority Tax Claims..........................................................23
E. Provisions for Treatment of Classes of Claims and Equity Interests...................23
1. Class 1 - Priority Non-Tax Claims............................................23
2. Class 2 - Secured Claims.....................................................23
3. Class 3 - Unsecured Claims...................................................24
(a) Allowance of Bank Claims.............................................24
(b) Allowance of Senior Note Claims......................................24
(c) Allowance of General Unsecured Claims................................24
(d) Treatment of Unsecured Claims........................................24
(e) Payments to be Made to Senior Indenture Trustee......................24
(f) Closing of Transfer Ledgers for Senior Notes.........................24
(g) Allowed Convenience Claims...........................................24
4. Class 4 - Borrower Litigation Claims.........................................25
(a) Treatment of Borrower Litigation Claims..............................25
(b) Mandatory Arbitration of Borrower Litigation Claims..................25
(c) Alternative Procedure................................................25
(d) Foreclosure Actions..................................................25
i
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<S> <C>
(e) Funding of Borrower Settlement Trust.................................25
5. Class 5 - Convenience Claims.................................................25
6. Class 6 - Subordinated Debenture Claims......................................25
(a) Allowance of Subordinated Debenture Claims...........................25
(b) Allowance of Lending Subordinated Debenture Claims...................25
(c) Treatment of Allowed Subordinated Debenture Claims and Allowed
Lending Subordinated Debenture Claims................................26
(d) Payments to be Made to Subordinated Indenture Trustee................26
(e) Closing of Transfer Ledgers for Subordinated Debentures and
Lending Subordinated Debentures......................................26
7. Class 7 - Subordinated Penalty Claims........................................26
8. Class 8 - Pride Equity Interests.............................................26
(a) Conversion of Pride Equity Interests.................................26
(b) Treatment of Pride Equity Interests..................................27
9. Class 9 - 9A Statutorily Subordinated Claims and 9B United Companies
Common Equity Interests......................................................27
(a) Treatment of Statutorily Subordinated Claims.........................27
(b) Treatment of United Companies Common Equity Interests................27
10. Class 10 - Adobe Common Equity Interests.....................................27
11. Class 11 -- Adobe Financial Common Equity Interests..........................27
12. Class 12 - Ginger Mae Common Equity Interests................................27
13. Class 13 - Gopher Equity Common Equity Interests.............................27
14. Class 14- Pelican Common Equity Interests....................................27
15. Class 15 - Southern Mortgage Common Equity Interests.........................27
16. Class 16 - Unicor Common Equity Interests....................................28
17. Class 17 - United Funding Common Equity Interests............................28
18. Class 18 - United Lending Corp. Common Equity Interests......................28
19. Class 19 - United Lending Group Common Equity Interests......................28
20. Class 20 - United Credit Card Common Equity Interests........................28
F. Means of Implementation of the Plan...................................................28
1. Third Party Servicing Agreement..............................................28
2. Sources of Funding for the Plan..............................................28
3. Revesting of Property in Reorganized UC......................................28
4. Directors....................................................................29
5. Amendment of Articles of Incorporation and Bylaws............................29
6. Corporate Action.............................................................29
G. The Plan Administrator................................................................29
1. Appointment of Plan Administrator............................................29
2. The Responsibilities of the Plan Administrator...............................29
3. Powers of the Plan Administrator.............................................29
4. Compensation of the Plan Administrator.......................................30
5. Termination of Plan Administrator............................................30
6. Exculpation..................................................................30
H. Provisions for the Establishment and Maintenance of Disbursement Accounts.............30
1. Establishment of Disbursement Account(s).....................................30
2. Maintenance of Disbursement Account(s).......................................30
I. Provisions Regarding Disbursements....................................................30
1. Time and Manner of Payments..................................................30
(a) Initial Payments.....................................................30
(b) Quarterly Payments...................................................31
2. Timeliness of Payments.......................................................31
3. Distributions by the Plan Administrator......................................31
4. Manner of Payment under the Plan.............................................31
5. Delivery of Distributions....................................................31
6. Undeliverable Distributions..................................................31
(a) Holding of Undeliverable Distributions...............................31
(b) Failure to Claim Undeliverable Distributions.........................31
7. Compliance with Tax Requirements.............................................32
ATLANTA:4208388.12
ii
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<S> <C>
8. Time Bar to Cash Payments....................................................32
9. Distributions After Effective Date...........................................32
10. Set-Offs.....................................................................32
J. Provisions for Treatment of Disputed Claims and Disputed Equity Interests Under the
Plan..................................................................................32
1. Objections to Claims and Equity Interests; Prosecution of Disputed Claims and
Disputed Equity Interests....................................................32
2. Estimation of Claims.........................................................32
3. Disputed Claims Reserve......................................................33
4. Payments and Distributions on Disputed Claims and Disputed Equity Interests..33
K. Provisions for Prosecution of Claims Held by the Debtors..............................33
L. Provisions Regarding Executory Contracts and Unexpired Leases.........................33
1. Rejection of Executory Contracts and Unexpired Leases........................34
2. Cure of Defaults for Assumed Executory Contracts and Unexpired Leases........34
3. Rejection Damage Claims......................................................34
M. Provisions Regarding Conditions Precedent to Effective Date of Plan...................34
1. Entry of Confirmation Order..................................................34
2. Execution of Servicing Agreement(s)..........................................34
3. Entry of the Servicing Agreement Order.......................................34
4. Execution of Documents; Other Actions........................................34
N. Provisions Regarding Committees.......................................................34
1. Creditors Committee Term and Fees............................................35
2. Equity Committee Term and Fees...............................................35
O. Miscellaneous Plan Provisions.........................................................35
1. Discharge of Debtors.........................................................35
2. Injunction...................................................................35
3. Term of Existing Injunctions or Stays........................................35
4. Payment of Statutory Fees....................................................35
5. Retiree Benefits.............................................................35
6. Post-Effective Date Fees and Expenses........................................36
7. Exemption from Certain Transfer Taxes........................................36
8. Severability.................................................................36
9. Governing Law................................................................36
ARTICLE IV. CONFIRMATION OF THE PLAN.......................................................................36
A. Introduction..........................................................................36
B. Voting Procedures and Standards.......................................................36
C. Acceptance............................................................................38
D. Confirmation and Consummation.........................................................38
1. Best Interest of Holders of Claims and Equity Interests......................39
2. Financial feasibility........................................................39
3. Acceptance by Impaired Classes...............................................41
4. Cram Down....................................................................42
ARTICLE V. CERTAIN TAX CONSEQUENCES OF THE PLAN...........................................................43
A. Consequences to Debtors...............................................................43
B. Consequences to Holders of Claims and Equity Interests................................43
ARTICLE VI RISK FACTORS TO BE CONSIDERED..................................................................44
A. Servicing Agreement...................................................................44
B. Industry Conditions and Financial Condition of Reorganized UC.........................44
C. Assumptions Regarding Value of Debtors' Assets........................................44
D. Risk Factors Associated with Litigation Claims Held by the Estates....................45
ARTICLE VII RECOMMENDATION.................................................................................45
</TABLE>
iii
<PAGE>
THIS DISCLOSURE STATEMENT AND ITS RELATED DOCUMENTS ARE THE ONLY
DOCUMENTS AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE
SOLICITATION OF VOTES ACCEPTING THE SECOND AMENDED PLAN OF REORGANIZATION DATED
JULY 10, 2000 (THE "PLAN") PROPOSED BY THE OFFICIAL COMMITTEE OF EQUITY SECURITY
HOLDERS (THE "EQUITY COMMITTEE") IN THIS CASE. NO REPRESENTATIONS HAVE BEEN
AUTHORIZED BY THE BANKRUPTCY COURT CONCERNING THE DEBTORS, THE DEBTORS' BUSINESS
OPERATIONS OR THE VALUE OF THE DEBTORS' ASSETS, EXCEPT AS EXPLICITLY SET FORTH
IN THIS DISCLOSURE STATEMENT OR IN THE DISCLOSURE STATEMENT DISTRIBUTED IN
CONNECTION WITH THE DEBTORS' PLAN, AS DEFINED BELOW. NO PARTIES HAVE BEEN
AUTHORIZED BY THE EQUITY COMMITTEE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN
THIS DISCLOSURE STATEMENT. NO REPRESENTATIONS OR INFORMATION CONCERNING THE
DEBTORS, THE DEBTORS' FUTURE BUSINESS OPERATIONS OR THE VALUE OF THE DEBTORS'
ASSETS HAVE BEEN AUTHORIZED BY THE EQUITY COMMITTEE OTHER THAN AS SET FORTH
HEREIN.
THIS DISCLOSURE STATEMENT CONTAINS ONLY A SUMMARY OF THE PLAN. THIS
DISCLOSURE STATEMENT IS NOT INTENDED TO REPLACE CAREFUL AND DETAILED REVIEW AND
ANALYSIS OF THE PLAN. IT IS INTENDED ONLY TO AID AND SUPPLEMENT SUCH REVIEW.
THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED PROVISIONS SET FORTH IN THE PLAN (WHICH IS ATTACHED AS EXHIBIT "A" TO
THIS DISCLOSURE STATEMENT). IN THE EVENT OF A CONFLICT BETWEEN THE PLAN AND THE
DISCLOSURE STATEMENT, THE PROVISIONS OF THE PLAN WILL GOVERN. ALL HOLDERS OF
CLAIMS OR EQUITY INTERESTS ARE ENCOURAGED TO REVIEW THE FULL TEXT OF THE PLAN
AND TO READ CAREFULLY THIS ENTIRE DISCLOSURE STATEMENT, INCLUDING ALL EXHIBITS
ANNEXED HERETO, BEFORE DECIDING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE BY THE
EQUITY COMMITTEE AND ITS PROFESSIONALS (WITHOUT INPUT FROM THE DEBTORS) AS OF
THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
HOLDERS OF CLAIMS AND EQUITY INTERESTS SHOULD NOT CONSTRUE THE CONTENTS
OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX
ADVICE. EACH SUCH HOLDER SHOULD, THEREFORE, CONSULT WITH ITS OWN LEGAL,
BUSINESS, FINANCIAL AND TAX ADVISORS AS TO ANY SUCH MATTERS CONCERNING THE PLAN
AND THE TRANSACTIONS CONTEMPLATED THEREBY. IN MAKING A DECISION TO ACCEPT OR
REJECT THE PLAN, EACH HOLDER OF A CLAIM OR EQUITY INTEREST MUST RELY ON ITS OWN
EVALUATION OF THE DEBTORS AS DESCRIBED IN THIS DISCLOSURE STATEMENT AND THE
TERMS OF THE PLAN, INCLUDING THE MERITS AND RISKS INVOLVED. IN ADDITION,
CONFIRMATION AND CONSUMMATION OF THE PLAN ARE SUBJECT TO CONDITIONS PRECEDENT
THAT COULD LEAD TO DELAYS IN CONSUMMATION OF THE PLAN OR AN INABILITY TO
CONSUMMATE THE PLAN. THERE CAN BE NO ASSURANCES THAT EACH OF THESE CONDITIONS
WILL BE SATISFIED OR WAIVED (AS PROVIDED IN THE PLAN) OR THAT THE PLAN WILL BE
CONSUMMATED. EVEN AFTER THE EFFECTIVE DATE, DISTRIBUTIONS UNDER THE PLAN MAY BE
SUBJECT TO A SUBSTANTIAL DELAY FOR HOLDERS OF CLAIMS AND EQUITY INTERESTS THAT
ARE DISPUTED.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR
THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT BE CONSTRUED AS AN
ADMISSION OR STIPULATION, BUT RATHER AS A STATEMENT MADE IN SETTLEMENT
NEGOTIATIONS. THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH
SECTION 1125 OF THE BANKRUPTCY CODE AND RULE 3000(C) OF THE FEDERAL RULES OF
BANKRUPTCY PROCEDURE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS
OR OTHER APPLICABLE NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY
STATE SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL OR REGULATORY
AUTHORITY, AND NEITHER SUCH COMMISSION NOR ANY SUCH AUTHORITY HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
2
<PAGE>
THE EQUITY COMMITTEE SUPPORTS CONFIRMATION OF THE PLAN AND URGES ALL
HOLDERS OF CLAIMS AND EQUITY INTERESTS IN IMPAIRED CLASSES TO ACCEPT THE PLAN.
PLEASE BE FURTHER ADVISED THAT THE DEBTORS HAVE FILED THAT CERTAIN
SECOND AMENDED PLAN OF REORGANIZATION FOR DEBTORS PURSUANT TO CHAPTER 11 OF THE
UNITED STATES BANKRUPTCY CODE, DATED JULY 10, 2000 (THE "DEBTORS' PLAN") AND
DISCLOSURE STATEMENT (THE "DEBTORS' DISCLOSURE STATEMENT") IN CONNECTION
THEREWITH. BY ORDER, DATED JULY 10, 2000, THE BANKRUPTCY COURT APPROVED THE
DEBTORS' DISCLOSURE STATEMENT AS CONTAINING ADEQUATE INFORMATION IN ACCORDANCE
WITH BANKRUPTCY CODE SECTION 1125. PURSUANT TO SUCH ORDER, THE DEBTORS ARE
SOLICITING ACCEPTANCES AND REJECTIONS TO THE DEBTORS' PLAN. IN THE EVENT THE
DEBTORS' PLAN IS CONFIRMED BY THE BANKRUPTCY COURT IN ACCORDANCE WITH BANKRUPTCY
CODE SECTION 1129, THE EQUITY COMMITTEE'S PLAN WILL BE OF NO FORCE AND EFFECT.
ARTICLE I.
INTRODUCTION
The following introduction and summary is qualified in its entirety by,
and should be read in conjunction with, the more detailed information and
financial statements and notes thereto appearing elsewhere in this Disclosure
Statement and the exhibits hereto. TERMS USED BUT NOT DEFINED IN THIS DISCLOSURE
STATEMENT HAVE THE MEANINGS ASCRIBED TO SUCH TERMS IN THE PLAN A COPY OF WHICH
IS ANNEXED HERETO AS EXHIBIT A.
A. GENERAL.
The Official Committee of Equity Security Holders (the "Equity
Committee") of the United Companies Financial Corporation, Pelican Mortgage
Company, Inc., United Companies Lending Group, Inc., United Companies Lending
Corporation, Adobe, Inc., Adobe Financial, Inc. I, GINGER MAE(R), Inc., UNICOR
MORTGAGE(R), Inc., Southern Mortgage Acquisition, Inc., United Companies
Funding, Inc., Gopher Equity, Inc., and United Credit Card, Inc. (collectively,
the "Debtors"), has filed a Second Amended Plan of Reorganization ( the "Plan")
dated July 10, 2000, for consideration by creditors and equity security holders
of the Debtors. The Equity Committee has prepared and is disseminating this
Disclosure Statement to holders of Claims against and Equity Interests in the
Debtors for the purpose of soliciting acceptance of the Plan.
B. THE PURPOSE OF THE DISCLOSURE STATEMENT.
The purpose of this Disclosure Statement is to provide the holders of
Claims and Equity Interests with adequate information about the Plan to enable
such holders to make an informed decision in exercising their right to vote on
the Plan described below.
The Court has conducted a hearing as required by Section 1125 of the
Bankruptcy Code (11 U.S.C. ss.1125) on the question of whether this Disclosure
Statement contains such adequate information. Based upon the proceedings at that
hearing, the Court has entered an order approving this Disclosure Statement as
containing adequate information and authorizing the Equity Committee to transmit
this Disclosure Statement, the Plan, an approved Ballot, and a copy of said
Order to the holders of Claims and Equity Interests and to the United States
Trustee. The Court's approval of the adequacy of the information set forth in
this Disclosure Statement does not constitute an endorsement or recommendation
by the Court of the substantive provisions of the Plan.
This Disclosure Statement is intended to assist the holders of Claims
and Equity Interests in evaluating the Plan and determining whether to accept or
reject the Plan. Acceptance or rejection of the Plan may not be solicited unless
a copy of this Disclosure Statement is furnished prior to or concurrently with
such solicitation. Each holder of a Claim or Equity Interest will receive either
with this Disclosure Statement or, separately, the Bankruptcy Court's Notice of
Hearing on Confirmation of the Plan.
C. MANNER OF VOTING ON THE PLAN.
Pursuant to applicable provisions of the Bankruptcy Code, only classes
of Claims against or Equity Interests in the Debtors that are impaired within
the meaning of Section 1124 of the Bankruptcy Code ("Impaired") and that may
receive distributions under the provisions of the Plan are entitled to vote to
accept or reject such Plan.
Under the Plan, holders of Allowed Claims and Allowed Equity Interests
in Classes 3, 4, 6, 7, 8 and 9 (the "Voting Classes") are treated as Impaired
and entitled to vote on the Plan. Claims and Equity Interests in Classes 1, 2,
5, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20 and Administrative Claims,
Professional Fee Claims, and Priority Tax Claims are not impaired under the
3
<PAGE>
Plan and thus holders of such Claims and Equity Interests are presumed to have
accepted the Plan pursuant to Section 1126(f) of the Bankruptcy Code and are not
entitled to vote. For descriptions of the Classes of Claims and Equity Interests
under the Plan, see Article III of the Plan ("Classification of Claims and
Equity Interests") and the summary set forth in Article III below.
The rules and procedures for soliciting and tabulating votes for and
against the Plan are set forth in a Voting Procedures Order dated July 10, 2000
(the "Voting Procedures Order"). A copy of the Voting Procedures Order is
annexed hereto as Exhibit B.
Some holders of Claims and Equity Interests might hold Claims and/or
Equity Interests in more than one Impaired Class. Such holders must vote each
such Claim or Equity Interest separately in the appropriate Class. Such holders
will receive a separate ballot (the "Ballot") for each Claim and/or Equity
Interest in each Class (in accordance with the Debtors' Records) and should
complete and sign each Ballot separately.
THE BANKRUPTCY COURT HAS FIXED JUNE 30, 2000 AS THE "VOTING RECORD
DATE." ONLY PERSONS WHO HOLD CLAIMS OR EQUITY INTERESTS ON THE VOTING RECORD
DATE ARE ENTITLED TO RECEIVE A COPY OF THIS DISCLOSURE STATEMENT AND ALL OF THE
RELATED MATERIALS. ONLY PERSONS WHO HOLD ALLOWED CLAIMS OR ALLOWED EQUITY
INTERESTS THAT ARE IMPAIRED UNDER THE PLAN AND ARE NOT DEEMED TO HAVE REJECTED
THE PLAN ARE ENTITLED TO VOTE WHETHER TO ACCEPT OR REJECT THE PLAN.
The Ballots have been specifically designed for the purpose of
soliciting votes on the Plan from each Class entitled to vote with respect
thereto. Accordingly, in voting on the Plan, please use only the Ballot sent to
you with this Disclosure Statement. Except as set forth below, please complete
and sign your Ballot and return it in the enclosed pre-addressed envelope to the
"Balloting Agent" at the following address: United Companies Balloting Agent,
c/o Logan & Company, Inc., 546 Valley Road, Upper Montclair, New Jersey 07043.
UNLESS OTHERWISE PROVIDED IN THE VOTING PROCEDURES ORDER, ALL PROPERLY
COMPLETED BALLOTS RECEIVED BY THE BALLOTING AGENT PRIOR TO 4:00 P.M. (EASTERN
TIME) ON AUGUST 10, 2000 (THE "VOTING DEADLINE") WILL BE COUNTED FOR PURPOSES OF
DETERMINING WHETHER EACH CLASS OF IMPAIRED CLAIMS AND EQUITY INTERESTS ENTITLED
TO VOTE THEREON HAS ACCEPTED THE PLAN. ANY BALLOTS RECEIVED AFTER THE VOTING
DEADLINE WILL NOT BE COUNTED, UNLESS OTHERWISE ORDERED BY THE BANKRUPTCY COURT.
The Balloting Agent will prepare and File with the Bankruptcy Court a
certificate of the results of the balloting with respect to the Plan on a
Class-by-Class basis.
IF YOUR VOTE IS BEING PROCESSED BY AN INTERMEDIARY, PLEASE ALLOW TIME FOR
TRANSMISSION OF YOUR BALLOT TO SUCH INTERMEDIARY AND FROM INTERMEDIARY TO THE
BALLOTING AGENT. IF YOU HAVE A QUESTION CONCERNING THE VOTING PROCEDURE, CONTACT
THE APPLICABLE INTERMEDIARY. DO NOT RETURN YOUR SECURITIES WITH YOUR BALLOTS.
YOUR VOTE ON THE PLAN IS IMPORTANT. THE BANKRUPTCY CODE REQUIRES AS A
CONDITION TO CONFIRMATION OF THE PLAN THAT EACH CLASS THAT IS IMPAIRED UNDER THE
PLAN VOTE TO ACCEPT THE PLAN, UNLESS THE "CRAM DOWN" PROVISIONS OF THE
BANKRUPTCY CODE ARE EMPLOYED. SEE ARTICLE IV BELOW.
D. CONFIRMATION HEARING.
The Bankruptcy Court will hold a Confirmation Hearing commencing at
9:30 o'clock a.m. (Wilmington, Delaware time) on August 15, 2000, at the United
States Bankruptcy Court, for the District of Delaware, 824 Market Street, 6th
Floor, Wilmington, Delaware 19801. The Confirmation Hearing may be adjourned
from time to time without further notice other than by announcement in the
Bankruptcy Court on the scheduled date of such hearing. At the Confirmation
Hearing, the Bankruptcy Court will (i) determine whether the requisite votes
have been obtained for each Voting Class, (ii) hear and determine objections, if
any, to confirmation of the Plan that have not been previously disposed of,
(iii) determine whether the Plan meets the confirmation requirements of the
Bankruptcy Code, and (iv) determine whether to confirm the Equity Committee's
Plan, the Debtors' Plan or neither.
Any objection to confirmation of the Plan must be in writing and filed
and served as required by the Bankruptcy Court pursuant to the order approving
the Disclosure Statement, a copy of which accompanies this Disclosure Statement.
Specifically, all objections to the confirmation of the Plan must be served in a
manner so as to be received on or before August 9, 2000 at 4:00 o'clock p.m.
(Wilmington, Delaware time) by: Long Aldridge & Norman LLP, 303 Peachtree
Street, Suite 5300, Atlanta, Georgia 30308, Attention: Charles E. Campbell,
Esq.; (b) Saul, Ewing, Remick & Saul LLP, 222 Delaware Avenue, Suite 1200,
Wilmington, Delaware 19801, Attention: Norman L. Pernick, Esq.; (c) Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attention:
Brian S. Rosen, Esq.; (d) Richards, Layton & Finger, One Rodney Square,
Wilmington, Delaware 19899, Attention: Mark D. Collins, Esq.; (e) Wachtell,
Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019, Attention:
Chaim J.
4
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Fortgang, Esq.; (f) Morris, Nichols, Arsht & Tunnell, 1201 North Market Street,
P.O. Box 1347, Wilmington, Delaware 19899, Attention: William H. Sudell, Jr.,
Esq.; and (g) Office of the United States Trustee, Curtis Center, Suite 950W,
601 Walnut Street, Philadelphia, Pennsylvania 19106, Attention: Daniel K. Astin,
Esq.
E. OVERVIEW OF PLAN
The following is a brief overview of the material provisions of the
Plan and is qualified in its entirety by reference to the full text of the Plan.
For a more detailed description of the terms and provisions of the Plan, see
Article III below, entitled "The Plan." The Plan is a plan of reorganization for
the Debtors. The Plan provides for the classification and treatment of Claims
against and Equity Interests in the Debtors. The Plan designates seven (7)
Classes of Claims and thirteen (13) Classes of Equity Interests, which classify
all Claims against and Equity Interests in the Debtors. These classes take into
account the differing nature and priority under the Bankruptcy Code of the
various Claims and Equity Interests. Please note that pursuant to the provisions
of section 510(b) of the Bankruptcy Code, Statutorily Subordinated Claims are
treated in the same class as Equity Interests under the Plan.
1. DESCRIPTION OF THE PLAN
The Plan is being proposed by the Equity Committee, and the Equity
Committee submits this Disclosure Statement pursuant to Section 1125 of the
Bankruptcy Code in connection with the solicitation of acceptances of the Plan.
Under the Plan, the Debtors will be reorganized through the implementation of
one or more third party servicing or sub-servicing agreement(s) pursuant to
which the Debtors will contract with one or more independent third parties to
service the Debtors' existing loan portfolio in order to maximize the return of
those assets for the benefit of creditors and equity security holders. The Plan
contemplates that the funds generated from the Debtors' loan portfolio, as well
as cash generated from the liquidation of the Debtors' Remaining Assets, and any
cash generated by the pursuit of any claims or causes of action of the estates,
net of expenses of collection and administration, will be distributed to
creditors and equity security holders in accordance with the terms of the Plan.
The Plan further contemplates the appointment of a Plan Administrator to monitor
the performance of any third party servicer(s), receive all loan proceeds
collected by the third party servicer(s), liquidate the Remaining Assets of the
Debtors' estates not necessary to the continued operations of Reorganized UC,
and wind down the affairs of Reorganized UC after satisfaction of all terms,
conditions and obligations of the Plan. The Plan is being proposed as an
alternative to the confirmation of the Debtors' Plan, which is fully described
in the Debtors' Disclosure Statement.
2. SUMMARY OF CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY
INTERESTS
<TABLE>
<CAPTION>
Estimated
Percentage
Debtors'
Estimated Recovery of
Aggregate Amount Allowed Claims
Claim or Equity of Allowed Claims or Equity
Class Interest Treatment of Claim/Equity Interest or Equity Interests Interests
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Admininistrative Unimpaired. Each holder of an Allowed $16,480,000.00 100%
Expense Administrative Expense Claim shall receive Cash
Claims equal to 100% of the unpaid amount of such
Allowed Administrative Expense Claim on or as
soon as reasonably practicable after the later
of: (a) the Effective Date; (b) the first
Business Day after the date that is thirty (30)
calendar days after the date such Administrative
Expense Claim becomes an Allowed Claim; or (c)
such other date established pursuant to the
terms of any Final Order of the Bankruptcy
Court, which may include the Confirmation Order.
5
<PAGE>
<S> <C> <C> <C> <C>
Professional Unimpaired. Each holder of an Allowed $10,160,000.00 100%
Fee Claims Professional Fee Claim shall be paid in full, in
Cash, in the amounts allowed by the Bankruptcy
Court on or as soon as reasonably practicable
following the later to occur of (i) the Effective
Date and (ii) a date which is no later than five
(5) Business Days after the date upon which the
Bankruptcy Court order allowing such Claim
becomes a Final Order.
Priority Tax Unimpaired. Each holder of an Allowed Priority $6,000,000.00 100%
Claims Tax Claim shall receive, at the option of the
Equity Committee, or Reorganized UC, as
applicable, either (i) Cash equal to 100% of the
unpaid amount of such Allowed Claim on or as
soon as reasonably practicable after the later
of (A) the Effective Date, or (B) the first
Business Day after the date that is thirty (30)
calendar days after the date such Priority Tax
Claim becomes an Allowed Claim, or (ii) annual
Cash payments commencing on or as soon as
reasonably practicable after the later to occur
of the Effective Date and the date on which such
Priority Tax Claim becomes an Allowed Claim,
over a period not exceeding six (6) years after
the date of assessment of such Allowed Priority
Tax Claim, together with interest (payable
quarterly in arrears) on the unpaid balance of
such Allowed Priority Tax Claim at a per annum
rate equal to the Federal Judgment Rate as of
the Effective Date.
1 Priority Non- Unimpaired. Each holder of an Allowed Priority $0.00 100%
Tax Claims Non-Tax Claim shall be entitled to receive
payment, in Cash, in an amount equal to 100% of
the unpaid amount of its Allowed Priority Non-
Tax Claim on or as soon as reasonably practicable
after the later of (a) the Effective Date, and (b) the
first Business Day after the date that is thirty (30)
calendar days after the date such Priority Non-
Tax Claim becomes an Allowed Claim.
6
<PAGE>
<S> <C> <C> <C> <C>
2 Secured Claims Unimpaired. On or as soon as reasonably $0.00 100%
practicable after the later of (i) the Effective
Date, or (ii) the first Business Day after the
date that is thirty (30) calendar days after the
date such Secured Claim becomes an Allowed
Claim, each holder of an Allowed Secured Claim
shall receive, at the election of the Equity
Committee, or Reorganized UC, as applicable, one
of the following distributions: (1) Cash equal
to 100% of the unpaid amount of such Allowed
Secured Claim; (2) the proceeds of the sale or
disposition of the property securing such
Allowed Secured Claim to the extent of the value
of such holder's interest in such property; (3)
the surrender to the holder of such Allowed
Secured Claim of the property securing such
Claim; (4) such treatment that leaves unaltered
the legal, equitable or contractual rights of
the holder of such Allowed Secured Claim; or (5)
such other distribution as shall be necessary to
leave the holder of such Allowed Secured Claim
unimpaired and to satisfy the requirements of
Chapter 11 of the Bankruptcy Code.
3 Unsecured Impaired. Commencing on the Effective Date, and $1,095,000,000 100%
Claims continuing quarterly thereafter until such time (plus interest) (with interest)
as all Allowed Unsecured Claims have been paid
in full, each holder of an Allowed Bank Claim,
an Allowed Senior Note Claim and an Allowed
General Unsecured Claim shall be entitled to
receive its Pro Rata Share of all Disbursement
Cash available for distribution. If and to the
extent the Bank Claims establish a right of
priority over the Senior Note Claims and the
General Unsecured Claims, any payments to
holders of Allowed Unsecured Claims shall be
made in accordance with such priority as
determined by the Bankruptcy Court.
4 Borrower Impaired. As a compromise, payment of cash in $14,000,000.00 100%
Litigation Claims an amount equal to the asserted amount of such
Claim up to $1,000 or, if such claim is in
excess of $1,000 and provided such holder agrees
to reduce such Claim to $1,000, the amount of
such Claim, as reduced; or alternatively, the
Allowed amount of the Claim, as determined by
binding arbitration or the Bankruptcy Court,
will share in the Borrower Settlement Trust
5 Convenience Impaired. On the Effective Date, each holder of $243,000.00 100%
Claims an Allowed Convenience Claim shall receive
Cash in an amount equal to one hundred percent
(100%) of such Allowed Convenience Claim.
7
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<S> <C> <C> <C> <C>
6A/ Subordinated Impaired. Upon payment in full of all Allowed $157,000,000 100%
6B Debenture Unsecured Claims in Class 3 of the Plan, each (plus interest) (with interest)
Claims and holder of an Allowed Subordinated Debenture
Lending and Allowed Lending Subordinated Debenture Claim
Subordinated shall be entitled to receive such holder's Pro
Debenture Rata Share of all Disbursement Cash available
Claim for distribution until such time as all
Allowed Subordinated Debenture Claims and
Allowed Lending Subordinated Debenture Claims
have been paid in full.
7 Subordinated Impaired. Upon payment in full of all Allowed Unknown 100%
Penalty Claims Priority Non-Tax Claims, Allowed Secured
Claims, Allowed Unsecured Claims, Allowed
Borrower Litigation Claims, Allowed
Convenience Claims, Allowed Subordinated
Debenture Claims and Allowed Lending
Subordinated Debenture Claims, each holder of
an Allowed Subordinated Penalty Claim shall be
entitled to receive quarterly distributions of such
holder's Pro Rata Share of all Disbursement Cash
available for distribution, together with interest
thereon at the Federal Judgment Rate, until such
time as all Allowed Subordinated Penalty Claims
have been paid in full.
8 Pride Equity Impaired. On the Effective Date, each holder of 1,657,770 shares $27.48 per share
Interests a Pride Equity Interest shall be deemed to have
received two (2) shares of common stock of
United Companies for each Pride Equity Interest
and shall receive such holder's Pro Rata Share
of distributions in accordance with provisions
relating to the treatment afforded to holders of
United Companies Common Equity Interests
9A Statutorily Impaired. Upon payment in full of all Allowed Unknown but $13,656,774
Subordinated Administrative Expense Claims, Allowed Priority estimated to be 3% distributed pro
Claims Non-Tax Claims, Allowed Priority Tax Claims, of the total value rata between
Allowed Secured Claims, Allowed Convenience of of the equity of holders of
the equity of the holders of Claims, Allowed the Debtors or Statutorily
Unsecured Claims, Allowed Debtors or Statutorily $13,656,774 Subordinated
Borrower Litigation Claims, Allowed $13,656,774 Claims
Subordinated Subordinated Debenture Claims, and
Allowed Claims Lending Subordinated Debenture
Claims, holders of Allowed Statutorily
Subordinated Claims shall receive such holders'
Pro Rata Share of the Statutorily Subordinated
Claim Percentage of all Disbursement Cash.
8
<PAGE>
<S> <C> <C> <C> <C>
9B United Impaired. Upon payment in full of all Allowed 28,808,211 shares $13.74 per share
Companies Administrative Expense Claims, Allowed Priority
Common Equity Non-Tax Claims, Allowed Priority Tax Claims,
Interests Allowed Secured Claims, Allowed Convenience
Claims, Allowed Unsecured Claims, Allowed
Borrower Litigation Claims, Allowed Subordinated
Debenture Claims, and Allowed Lending
Subordinated Debenture Claims, holders of
Allowed United Companies Common Equity Interests
shall receive such holders' Pro Rata Share of
the Equity Interest Percentage of all
Disbursement Cash.
10 Adobe Common Unimpaired. No alteration of legal and equitable $0.0
Equity Interests rights.
11 Adobe Financial Unimpaired. No alteration of legal and equitable $0.0
Common Equity rights.
Interests
12 Ginger Mae Unimpaired. No alteration of legal and equitable $0.0
Common Equity rights.
Interests
13 Gopher Equity Unimpaired. No alteration of legal and equitable $0.0
Common Equity rights.
Interests
14 Pelican Common Unimpaired. No alteration of legal and equitable $0.0
Equity Interests rights.
15 Southern Unimpaired. No alteration of legal and equitable $0.0
Mortgage rights.
Common Equity
Interests
16 Unicor Common Unimpaired. No alteration of legal and equitable $0.0
Equity Interests rights.
17 United Unimpaired. No alteration of legal and equitable $0.0
Companies rights.
Funding
Common Equity
Interests
18 United Unimpaired. No alteration of legal and equitable $0.0
Companies rights.
Lending Corp.
Common Equity
Interests
19 United Unimpaired. No alteration of legal and equitable $0.0
Companies rights.
Lending Group
Common Equity
Interests
9
<PAGE>
<S> <C> <C> <C> <C>
20 United Credit Unimpaired. No alteration of legal and equitable $0.0
Card Common rights.
Equity Interests
</TABLE>
ARTICLE II.
BACKGROUND INFORMATION
A. HISTORY OF THE DEBTORS.
United Companies Financial Corporation ("UCFC" or "United Companies"),
is a financial services holding company previously engaged in consumer lending.
The company was incorporated in the State of Louisiana in 1946 and its principal
offices are located in Baton Rouge, Louisiana. Prior to the commencement of the
instant Chapter 11 cases, the company's lending operations primarily focused on
the origination, purchase, sale and servicing of non-conventional home equity
loans. These home equity loans - typically not loans for the purchase of homes -
are fixed and variable rate mortgage loans made primarily to individuals who may
not otherwise qualify for conventional loans. Fundamental to the funding of the
Company's operations was the sale of the loans through securitizations with
servicing rights retained. The majority of the Company's revenue was derived
from the gain recognized in the sale of loans and the recognition of net loan
fees at the time of the sale of the loans.
B. DESCRIPTION OF BUSINESS.
1. ORIGINATION NETWORK
The Debtor's lending activities were primarily conducted through the
following origination channels, all of which are now closed or sold.
UC LENDING, as part of United Companies Lending Corporation, the
Debtors' former retail lending operation, consisted of 191 offices in 38 states
at year end 1998 compared to 221 offices in 42 states at year end 1997. During
1998, UC Lending originated $2.0 billion in home equity loans compared to $1.5
billion for 1997, representing a 33% increase. Loan originations in 1999 were
$338.9 million. Subsequent to December 31, 1998, the Debtors closed 64 of UC
Lending's branches, and the remaining branches were sold or closed during the
pendency of the Chapter 11 Cases.
UNICOR, formerly one of the Debtors' wholesale lending operations,
which acquired loans primarily from brokers and correspondents, produced $678.0
million in home equity loans in 1998 compared to $566.8 million for 1997.
UNICOR's operations were closed in the fourth quarter of 1998.
GINGER MAE, another of the Debtors' former wholesale lending
operations, which acquired loans primarily from financial institutions (banks,
thrifts and credit unions), produced $332.4 million in home equity loans in 1998
compared to $211.4 million in 1997. Loan production during 1999 was $58.0
million. GINGER MAE's operations were closed in April, 1999.
UC ACQUISITION, which purchased home equity loans in bulk, produced
$261.3 million in home equity loans in 1998 compared to $540.2 million for 1997.
As of December 31, 1998, UC Acquisition had ceased its purchasing activities.
UC FUNDING, the Debtor's manufactured housing lender, originated $433.5
million in manufactured housing chattel contracts in 1998, compared to $251.8
million in 1997. The manufactured housing unit originated loan products through
dealers and directly to the consumer. UC Funding's lending operations were
discontinued in the third quarter of 1998, and its servicing functions were
moved from Minnesota to the home office in the second quarter of 1999. Loans of
$1.1 million were funded during 1999 to complete commitments made in 1998.
2. LOAN SALES AND SECURITIZATIONS
In the past, substantially all of the home equity loans and
manufactured housing contracts originated or purchased by the Debtors were sold.
From 1985 until December 31, 1998, the Debtors sold substantially all of the
home equity loans and manufactured housing contracts they originated in the
secondary market. Initially, the transactions were with government-sponsored
mortgage
10
<PAGE>
agencies or conduits. Subsequently, the sales occurred through private placement
transactions with financial institutions and, beginning in the second quarter of
1993, the Debtors engaged in public securitization transactions based on
registered offerings. Approximately $10.9 billion of asset-backed securities,
backed primarily by first mortgage home equity loans originated or purchased by
the Debtors through their origination channels, were publicly sold from 1993
through December 31, 1998. The Debtors have been unable to sell loans in
securitization transactions subsequent to December 1998.
The Debtors' loan origination and purchasing activities were financed
primarily through their financial resources with existing credit facilities
pending the sale of the home equity loans. In connection with substantially all
of the Debtors' quarterly securitization transactions, the Debtors retained the
right to certain excess interest amounts, and UC Lending continued to service
the loans for a servicing fee. Under the terms of the various pooling and
servicing agreements underlying the securitizations, bond investors receive cash
flows from collected mortgage payments, with UCFC retaining the excess of the
interest at the contractual rate above the "pass-through" rate paid to the bond
investors, a nominal servicing fee, and where applicable, a trustee fee and
surety bond fee. The Debtors have also sold loans on a "whole loan sale" basis
retaining no servicing rights with respect to such loans.
C. SIGNIFICANT PREPETITION INDEBTEDNESS.
Prior to bankruptcy, the Debtors financed their operations through a
number of different vehicles. In May 1993, United Companies Lending Corporation
entered into a Subordinated Debenture Agreement with United Companies Life
Insurance Corporation ("UCLIC"), an affiliated company. The Series B
subordinated debentures with a principal amount of $3,000,000 bear interest at
6.64% and Series C subordinated debentures with a principal amount of $4,000,000
bear interest at 7.18%. The Debtors have represented that the debentures are
subordinated to senior debt and guarantees of senior debt. The Claims existing
against the Debtors with respect to these subordinated notes are referred to in
the Plan as Lending Subordinated Debenture Claims.
In November 1994, United Companies publicly sold $125 million of 9.35%
Notes with a maturity date in November 1999. In December 1996, United Companies
publicly sold $100 million of 7.7% Notes, which mature in January 2004
(collectively, the "Senior Notes"). The Senior Notes provide for interest
payable semi-annually and are not redeemable prior to maturity. The Claims
existing against the Debtors with respect to the Senior Notes are referred to in
the Plan as Senior Note Claims.
In April 1997, United Companies entered into an $800 million senior
unsecured revolving credit facility (the "Credit Facility"). Each of the other
Debtors is a guarantor of all obligations owed under the Credit Facility. The
Credit Facility was syndicated to a total of 22 participating lenders. In July
1998, the Credit Facility was increased to $850 million. The Debtors used a
portion of the proceeds from this three-year credit facility to refinance
existing debt and used the remaining proceeds for general corporate purposes,
including interim funding of loan originations. The Credit Facility permitted a
portion of the amount available to be used for the issuance of letters of credit
for the Debtors' account. In connection with some securitization transactions,
the Debtors deposited letters of credit in lieu of depositing cash in the
related reserve accounts. As of December 31, 1998, the aggregate principal
amount of loans and letters of credit outstanding under the Credit Facility was
$825 million and $25 million, respectively. As a result, at December 31, 1998,
the commitment under the Credit Facility was fully utilized. The letters of
credit were subsequently drawn, resulting in an aggregate principal amount
outstanding as of the Petition Date of $850 million. The Claims existing against
the Debtors with respect to the Credit Facility are referred to in the Plan as
Bank Claims.
In June 1997, United Companies publicly sold $150 million of 8.375%
Notes (the "Subordinated Notes"). The Subordinated Notes provide for interest
payable semi-annually and are not redeemable prior to their maturity on July 1,
2005. The Subordinated Notes bear interest at 8.375% per annum and were issued
at a discount from par. According to the Debtors, such discount was being
amortized using the effective method as an adjustment to the yield over the life
of the Subordinated Notes, resulting in an effective interest rate on the
Subordinated Notes of 8.48% per annum. The Claims existing against the Debtors
with respect to the Subordinated Notes are referred to in the Plan as
Subordinated Debenture Claims.
On February 3, 1999, the Debtors announced that they were experiencing
difficulties in generating the liquidity necessary to maintain home equity loan
production at levels contemplated by a restructuring plan announced during the
Fall of 1998. As a result of the financial condition of the Debtors at the time,
there was no availability under warehouse facilities that it had with First
Union National Bank ("First Union") and other lenders. As an interim measure, on
February 5, 1999, the company entered into a short term repurchase facility with
First Union in the amount of $40 million, which was repaid in full on March 9,
1999, from proceeds of the Debtors' postpetition debtor in possession financing
facility.
D. CAPITAL STOCK
United Companies has authorization to issue up to 100,000,000 shares of
its $2.00 par value common stock. There were approximately 28,808,211 shares
outstanding at December 31, 1999, excluding 1,180,117 treasury shares. 1,657,770
shares of 6 1/4
11
<PAGE>
% Preferred Redeemable Increased Dividend Equity Securities ("PRIDES"),
Convertible Preferred Stock, $2.00 par value (the "PRIDES"), are currently
issued and outstanding. Included in the authorized preferred stock are 1,000,000
shares of Series A Junior Participating preferred stock and 800,000 shares of
Cumulative Convertible preferred stock, none of which is outstanding.
The terms of the PRIDES provide that they rank prior to United
Companies' common stock as to payment of dividends and distribution of assets
upon liquidation. Such terms also provide that the shares of PRIDES mandatorily
converted into shares of common stock on July 1, 2000 (the "Mandatory Conversion
Date") on a two share to one share basis (as adjusted for the 100% common stock
dividend paid October 20, 1995).
During 1998, United Companies paid cash dividends on its common stock
in the amount of $6.8 million, or $.24 per share. In addition, during 1998,
United Companies paid cash dividends on its PRIDES in the amount of $4.2
million, or $2.2275 per share. In October 1998, the company suspended
indefinitely payment of future dividends on the company's common and preferred
stock. As of the Petition Date, United Companies had a dividend payable on its
PRIDES of $1,230,894.
Prior to the Petition Date, United Companies' Common Stock and PRIDES
had been listed for trading on the New York Stock Exchange ("NYSE") under the
trading symbols "UC" and "UCPRI," respectively. On March 4, 1999, the NYSE
suspended trading in such securities. Subsequently, upon application by the
NYSE, the Securities and Exchange Commission delisted United Companies'
securities. United Companies' common stock now trades under the symbol "UCFNQ",
and the PRIDES trade under the symbol "UCFPQ", in the over-the-counter market.
The common stock of United Companies is subject to the provisions of
the Plan relating to United Companies Common Equity Interests, and the PRIDES
are subject to the provisions of the Plan relating to Pride Equity Interests.
E. MANAGEMENT AND EMPLOYEES
The members of the Board of Directors of United Companies are James J.
Bailey, III Chairman, Gen. Robert. H. Barrow, J. Terrell Brown, Jon R. Burke,
Richard A. Campbell, Roy G. Kadair, M. D., O. Miles Pollard, Jr., Dale E. Redman
and William H. Wright.
The senior management of United Companies includes Lawrence J.
Ramaekers, Chief Executive Officer and Chief Operating Officer; Rebecca A. Roof,
Chief Financial Officer1, Sherry E. Anderson, Senior Vice President and
Secretary. Jesse O. Griffin, Senior Vice President, Paul E. Kirk, Senior Vice
President; and Joel G. Swetnam, Senior Vice President. Members of middle
management are Michael Barron, Vice President and General Counsel; Glenn
Eberhart, Vice President and Assistant Controller; Frank W. Foote, Vice
President; Donald R. Marshall, Vice President; Mills Murrey, Vice President and
Controller; Sheila C. Pecot, Vice President; Jim Pickett Vice President; Keith
Thibodeaux, Vice President; and Pamela H. Welch, Vice President.
As of the Petition Date, the Debtors had approximately 1,965 employees
at their corporate headquarters, outside offices and various facilities. The
Debtors' currently employ approximately 450 employees. The reduction is due
primarily to the sale of Debtors' loan origination business and the
discontinuation of other non-servicing operations.
F. PRE-BANKRUPTCY FINANCIAL HISTORY OF THE DEBTORS.
Up until the last six months immediately preceding the Debtors' Chapter
11 Cases, the financial history of the Debtors was one of apparent substantial
growth and expansion. As set forth on Exhibit C attached hereto, up until the
fiscal year end 1998 ending on December 31, 1998, the Debtors' loan origination
and servicing operations witnessed substantial growth and the Debtors reported
significant performance improvements in most areas, including loan production,
portfolio servicing growth, stable return on equity and moderate balance sheet
leverage. In the period beginning in fiscal year 1993 and running through fiscal
year 1997, loan production escalated from $539 million to $3.1 billion, an
annual compounded growth rate of 55%. Likewise, UC's serviced loan portfolio
grew from 1993's $1.568 billion to 1997's $5.877 billion, an annual compounded
growth rate of 39%.
During this same time period, the Debtors also reported substantial
growth in income up to 1997. In the five year period between 1993 and 1997,
total revenues grew 363%, from $121 million in 1993 to $440 million in 1997. Net
income, which had grown between 1993 and 1996, declined for the first time in
1997. The explanation noted in the company's 1997 10-K report cited expenses
resulting from a rapid build-up in origination capacity including new branch
offices and a concomitant increase in personnel as the cause for the decline.
Despite this spike in operating expenses, the company still posted a reported
return on equity of 20.3%
--------
1 Mr. Ramaekers is a principal and Ms. Roof is a Senior Associate of Jay
Alix & Associates.
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for 1997, although this was down from 1996's figure of 26.5%. Under gain on sale
accounting, the rapid growth in loan production led to similar increases in
total revenues, but the loans were increasingly funded under the company's
revolving line of credit.
Through the third quarter of 1998 (September 30, 1998), the company's
balance sheet continued to grow with reported significant increases in the
company's residual interests from its securitizations, sometimes referred to as
the interest-only ("IO") strips. IO and residual carried balances from December
31, 1997 to September 30, 1998 increased from $882 million to $1.01 billion.
More dramatically, the company's cash position jumped from $.6 million at year
end 1997 to $233 million by the third quarter of 1998.2 Funding this growth was
an increase in notes payable from $692 million to $1.025 billion reflecting a
$439 million increase in the Company's usage of its revolving credit facility.
Although the Company's loan production continued increasing during the
nine month period ending September 30, 1998, market difficulties began to hamper
the company's per loan profitability. At the same time, the imposition of new
accounting standards began to limit the reported profits resulting from each
securitization transaction. Loan production, substantially all of which was sold
in securitizations, grew from $1.827 billion for the nine month period ending
September 30, 1997, to $2.629 billion for the same period in 1998, an increase
of 44%. At the same time, gains from loan sales only grew 16%, inadequate to
cover escalating operating expenses which increased 27% for the same period.
Exacerbating the Company's performance was an increase in provision for losses
on loans serviced of $42.6 million and a write-down of $10 million in the
carrying value of the Company's IO and residual position.
In the fourth quarter of 1998, the Company's reported financial
statements changed from previous quarters although neither the underlying
operations of the Company nor its balance sheet experienced material change.3
This change, however, did not occasion a restatement of the company's previous
financial statements. Generally speaking, the changes were brought about by
changes in assumptions as to the projected performance and market risk of the
Company's IOs and residual position. Since the derivation of many of these
assumptions are driven by historical credit experience, it is important to
consider how, if at all, this experience changed as of December 31, 1998. The
most important credit experience described in the 8-K filing relates to the
actual net losses the Company incurred for fiscal year 1998. This increased from
fiscal year 1997's $33.7 million to 1998's $54 million. The resulting loan loss
provision (actually, two separate provisions, one for $154.4 million and the
other an "Additional provision ... valuation adjustment" of $321.4 million)
increased the loan loss allowance as a percentage of gross value of IOs and
residuals from 10.8% to 53.5%.
In aggregate, the Debtors' retained interests in securitizations were
written down by $605.6 million without a restatement of prior financials. This
large write-down was the result primarily of the following changes in
assumptions used by the Debtors in their financial reporting:
-- an increase in the discount rate applied to all cash flows from
approximately 10% in fiscal year 1997 to an effective discount rate of 22%
contributing $160.8 million to the reduction in carrying value;
-- increasing the estimated cumulative credit losses from approximately
2.2% to 7.7% contributing $338.3 million to the reduction in carrying value;
-- increasing the projected prepayment rate from approximately 24% to
greater than 30% on average contributing $69.5 million to the reduction in
carrying value;
-- increasing projected delinquency levels to 25% for all transactions
and thus effectuating delinquency "triggers" in the deals that prevent the
release of cash reserves contributing $20 million to the reduction in carrying
value; and
-- a $17 million markdown to the carrying value of certain subordinated
certificates to estimated market value.
--------
2 As described in Footnote 8 to the Company's consolidated financial
statements, $150.9 of this cash position was temporarily restricted pending
delivery of certain loan documents. Upon delivery of these loan documents
subsequent to the September 30, 1998 financial statement, this cash was released
and used to pay down the Company's revolving credit balance.
3 It is important to note that, to date, no 10-K for year ending
December 31, 1998 has been filed. This section is based on information disclosed
in the Company's 8-K filing which was filed September 7th of the year following
the Company's 1998 year end. This filing does not include the customary
description of fourth quarter activity or comparison with the previous year's
fourth quarter as would be the case in a 10-K filing. It also dispenses with the
usual detailed description of delinquency and default experience.
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The obvious impact to the company's stockholders' equity position can
be seen graphically in the following chart:
[GRAPHIC OMITTED]
As of September 30, 1998, the Debtors' balance sheet showed stockholders' equity
of $504.8 million. Within one quarter and without incurring realized losses
above $54 million, stockholders now had a deficit of $114.2 million, or a swing
of $619 million based almost exclusively on changes in projected losses and
market return estimates.
G. THE CHAPTER 11 CASES.
On March 1, 1999 (the "Petition Date") the Debtors filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code, and on March 2,
1999, the Bankruptcy Court entered an order providing for the joint
administration of the Debtors' Chapter 11 cases. Since the Petition Date, the
Debtors have continued to manage their affairs and operate their businesses as
debtors-in- possession pursuant to Sections 1107 and 1108 of the Bankruptcy
Code.
1. ADMINISTRATION OF THE CHAPTER 11 CASES
Upon commencement of the Chapter 11 cases, the Bankruptcy Court entered
certain orders designed to minimize disruption of the Debtors' business
operations during the pendency of the Chapter 11 cases. Certain of these orders
are described below:
-- POSTPETITION CREDIT FACILITY AND POSTPETITION PURCHASE FACILITY.
Subsequent to the filing of the Chapter 11 cases, the Debtors entered into a
Post Petition Loan and Security Agreement (the "Loan Agreement") with Greenwich
Capital Financial Products, Inc. ("Greenwich") and The CIT Group/Business
Credit, Inc. ("CIT") and a Post Petition Whole Loan Purchase Facility (the
"Purchase Facility") with Greenwich to provide secured debtor-in-possession
financing. The Loan Agreement provided for borrowing on a revolving basis
dependent on the Debtors' level of inventory of mortgage loans and initially was
established at $150 million with provisions to increase the maximum amount to
$300 million, with Bankruptcy Court approval. The Purchase Facility provided for
a commitment to purchase up to $500 million of qualifying loans. The Purchase
Facility was initially approved up to $75 million with provisions to increase
the maximum limit to $500 million at a later date. In May, 1999, the Bankruptcy
Court issued a final order confirming the debtor-in-possession financing at the
interim aggregate level of $225 million, of which $150 million was available
under the Loan Agreement and $75 million was available under the Purchase
Facility. At July 31, 1999, the Debtors had $10.5 million outstanding under the
Loan Agreement, and as of March 31, 2000, the Debtors had no balance outstanding
under the Loan Agreement.
-- CONTINUATION OF PREPETITION FUNDING, SERVICING, AND SECURITIZATION
COMMITMENTS. For the purpose of allowing the Debtors to maintain certain sources
of revenue and preserve their business reputation, the Bankruptcy Court entered
a first day order authorizing the Debtors, in their discretion, to honor
prepetition commitments to fund customer Loans, honor existing obligations in
connection with servicing existing Loans, honor existing obligations in
connection with prepetition securitizations or sales of Loans, honor obligations
under existing pooling and servicing agreements or other agreements for the sale
of Loans, and enter into
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pooling and servicing agreements or other agreements for the sale of Loans in
the ordinary course. The Debtors were also authorized to pay prepetition claims
essential to their ability to honor the foregoing commitments and obligations;
and certain banks were authorized and directed to honor checks and wire
transfers from loan disbursement accounts.
-- EMPLOYEES. The Bankruptcy Court entered a first day order
authorizing the Debtors to pay, in their discretion, prepetition claims of
employees for compensation, benefits and expense reimbursements, as well as
prepetition amounts owed with respect to certain trust and administration
obligations and workers compensation premiums. In addition, the Debtors were
authorized to continue to honor their existing programs, policies and plans
relating to employees.
Subsequently, on January 12, 2000, in order to preserve the Debtors'
remaining workforce, the Bankruptcy Court entered an order approving a
postpetition employee retention and severance pay program generally providing
for (a) retention and severance benefits to be made available to both regular
full-time employees and regular part-time employees; (b) the elimination of
minimum length of service requirements as preconditions to receiving retention
and severance benefits; (c) payment of retention benefits equal to eight weeks
of base pay to eligible employees who remain employed for the requisite period;
and (d) payment to eligible employees who are involuntarily terminated without
cause of severance benefits equal to the greater of (i) a minimum of four week's
base pay, or (ii) one week's base pay for each full year of continuous service
up to a maximum of 26 weeks' base pay for each employee, or (iii) the amount
calculated by a formula that credits employees with severance pay for each day
less than ninety days that they receive notice of their impending termination,
with a minimum of 28 days' pay for each employee.
-- MANAGEMENT CONSULTANTS. The Bankruptcy Court also entered a first
day order authorizing the Debtors to employ the firm of Jay Alix & Associates
("JA&A") as crisis manager and management consultant in these Chapter 11 Cases.
Pursuant to the engagement, Deborah Hicks Midanek, a principal of JA&A served as
the Debtors' Chief Executive Officer initially, and Lawrence J. Ramaekers, also
a principal of JA&A, currently serves in that position. He previously served as
the Debtors' Chief Operating Officer but became Chief Executive Officer in
October 1999 upon the resignation of Ms. Midanek. Rebecca A. Roof, a senior
associate of JA&A, serves as Chief Financial Officer, a position she assumed in
October 1999.
-- OTHER PROFESSIONALS. To assist them in carrying out their duties as
debtors in possession and to otherwise represent their interests in the Chapter
11 Cases, the Debtors employed, with authorization from the Bankruptcy Court,
the following professionals: Weil, Gotshal & Manges LLP, Richards, Layton &
Finger, P.A. and Kantrow, Spaht, Weaver & Blitzer (A Professional Law
Corporation) as co-counsel; Kirkpatrick & Lockhart LLP as special litigation
counsel; Ernst & Young LLP and E&Y Restructuring LLC as financial advisors;
Deloitte & Touche LLP as independent auditors and accountants; and KPMG LLP as
tax consultants. During the Chapter 11 Cases, the services of KPMG LLP were no
longer required and their engagement has ended.
Nationwide, the Debtors employ hundreds of attorneys and other
professionals to represent or assist them in a variety of situations, including
foreclosure actions, borrower litigation, and borrower bankruptcy proceedings.
Such professionals are referred to as "ordinary course professionals". They are
not involved in the conduct of the Chapter 11 Cases. By order of the Bankruptcy
Court, the Debtors were authorized to employ and pay ordinary course
professionals for postpetition services without prior court order, in accordance
with their usual practices to prevent loss of professional services and
disruption to their operations.
2. CREDITORS COMMITTEE/EQUITY COMMITTEE.
Pursuant to Section 1102 of the Bankruptcy Code, the United States
Trustee may appoint a committee of creditors holding unsecured claims and/or a
committee of equity security holders as the United States Trustee deems
appropriate. Accordingly, on March 11, 1999, the United States Trustee appointed
a statutory committee of unsecured creditors (the "Creditors Committee") in
these Chapter 11 Cases. In addition, on May 25, 1999, the United States Trustee
appointed a statutory committee of equity security holders (the "Equity
Committee").
The Creditors Committee consisted of the following members at the time
of its appointment: First Union National Bank, The Bank of New York, Guaranty
Federal Bank, F.S.B., Marine Midland Bank, Norwest Bank Minnesota, N.A., Acacia
Life Insurance Company, and Phyllis Golson - EL. Since then, as a result of the
sale and purchase of claims, Guaranty Federal Bank, F.S.B., and Bank of New York
have resigned and Farallon Capital has been added as a member of the Creditors
Committee. The Creditors Committee has retained, by order of the Bankruptcy
Court, the following professionals to represent its interests in the Chapter 11
Cases: Wachtell Lipton Rosen & Katz and Morris, Nichols, Arsht & Tunnell as
co-counsel; PricewaterhouseCoopers LLP as accountants; and Pentalpha Group LLC
as reorganization consultants.
The Equity Committee consists of the following members: Kees van der
Velden, Dr. Martin Stoller, Robert Privette, Nicola Biase, John C. Chanoski, and
Frank Hinchen. The Equity Committee has retained, by order of the Bankruptcy
Court, the following professionals to represent its interests in the Chapter 11
Cases: Long, Aldridge & Norman LLP and Saul, Ewing, Remick & Saul LLP
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as co-counsel, Richard A. Johnson, CTP as financial consultant, Arthur Andersen
LLP as accountants and financial and business advisors, and Harley S. Tropin, as
a valuation expert with respect to potential litigation claims held by the
estates.
3. SALE OF LOAN ORIGINATION PLATFORM.
Shortly after the commencement of the Chapter 11 Cases, on March 22,
1999, the Debtors announced their decision to market for sale the loan
origination platform of UC Lending (the "Origination Platform"), and the Debtors
immediately began soliciting potential purchasers. On April 16, 1999, the
Debtors announced that they had received a bid from Aegis Mortgage Corporation
("Aegis") to purchase 127 of its 151 retail branch offices relating to the
Origination Platform, subject to Bankruptcy Court approval. The Debtors also
announced that the remaining loan origination branches would be closed, thereby
exiting all loan origination channels. On April 26, 1999, UCFC and certain of
its affiliates entered into an Asset Purchase Agreement (the "Asset Purchase
Agreement") with Aegis and Cerberus Partners, L.P., whereby UCFC and its
affiliates agreed to sell to Aegis certain assets of their loan origination
business for a purchase price of $3 million plus the assumption by Aegis of
approximately $7.3 million of operating expenses. The Debtors filed a motion
seeking Bankruptcy Court approval of the Asset Purchase Agreement subject to any
higher and better offers obtained through a court-approved auction procedure.
In support of their efforts to sell the Origination Platform, the
Debtors represented that the Origination Platform could not be restored to
profitability within a time period and on terms that would have justified the
continued incurrence of losses by the Debtors, and the Debtors represented to
the Bankruptcy Court that the Origination Platform was severable from the
Debtors' other businesses and assets, such that the Debtors could shut down the
operations without negatively impacting their other businesses and assets. The
Debtors testified at the May, 1999 hearing on the sale of the Origination
Platform that the Debtors' loan servicing business presented an attractive
option for building a third party servicing business from the remaining assets
of the Debtors.
No other party made a higher and better offer for the assets and on May
11, 1999, based on the evidence submitted, the Bankruptcy Court approved the
sale over the objections of the Ad Hoc Committee of Equity Security Holders
formed prior to appointment of the Official Equity Committee. The assets sold
under the Asset Purchase Agreement included (i) loans originated by the Debtors
prior to the closing date which had not been funded and closed as of such date,
(ii) all rights of the Debtors under certain contracts and leases relating to a
loan origination business, (iii) computer software relating to such business,
and (iv) the United Companies Lending(R) trademarks. The Aegis transaction
closed on June 1, 1999.
By Motion dated June 3, 1999 (the "First Extension Motion"), and
pursuant to Section 1121(d) of the Bankruptcy Code, the Debtors requested
six-month extensions of their exclusivity periods within which only a debtor may
file and seek acceptance of a plan of reorganization. Pursuant to Section 1121
of the Bankruptcy Code, a debtor is granted the exclusive right to file a plan
of reorganization within the first 120 days of a Chapter 11 bankruptcy case and
is granted the exclusive right to seek acceptance of a plan for the first 180
days of the bankruptcy (the "Exclusive Periods"). The Debtors' Exclusive Periods
were set to expire on June 29, 1999 and August 28, 1999, respectively, and the
Debtors requested six-month extensions of those deadlines based on a number of
factors, including: (1) the size and complexity of the Debtors' Chapter 11
cases; (2) the substantial efforts required to rehabilitate the Debtors'
business, including the sale of the Debtors' Origination Platform; (3) the
Debtors' need to undertake an extensive review and analysis of their real and
personal property holdings; (4) the need to establish management stability and
eliminate management turnover; and (5) the need to develop a long-range business
plan to lay the foundation for a consensual plan of reorganization. After
reviewing the First Extension Motion, the Creditors Committee and the newly
formed Equity Committee requested the Debtors to limit the requested extension
to a four-month period, and the Debtors agreed. Thus, on about June 16, 1999,
the Bankruptcy Court entered an order extending the Exclusive Periods to October
29, 1999 and December 29, 1999, respectively.
After the sale of the Debtors' Origination Platform, the Debtors assets
consisted primarily of a loan servicing business (the "Servicing Business") with
a portfolio of approximately $6.1 billion in loans. The largest portion of that
portfolio consisted of the IO and residual interests from the Debtors' previous
securitization transactions. The remaining assets included a portfolio of
approximately 3,800 real estate owned properties ("REO Properties") from
previous foreclosures of defaulted loans and approximately 7,150 whole loans
originated by the Debtors but not sold to securitization trusts (the "Whole Loan
Portfolio").
The Equity Committee submits that the post sale history of the Debtors'
operations shows that the sale of the Origination Platform had an adverse effect
on the Debtors' collection efforts, communication with the Debtors' borrowers,
and other loss mitigation efforts. In particular, the percent of the Debtors'
portfolio showing delinquencies over 30 days rose dramatically during the
pendency of the Debtors' cases, from 12.23% as recently as December 1998, to
16.03% in June of 1999, and to 17.14% in March of 2000. Likewise, the percentage
of the Debtors' portfolio in foreclosure rose dramatically in the same time
period. In December of 1998, the Debtors had 3.89% of their portfolio in
foreclosure, whereas in June of 1999, the number had risen to 6.49%. By March of
2000, that number had risen even further to 9.0%. The Debtors disagree with such
analysis.
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4. THE RFP PROCESS.
Within months of the sale of the Origination Platform, and completely
contrary to the Debtors' representations for building a third party servicing
platform, the Debtors disclosed their intent to bring in an independent third
party to service the Debtors' $6.1 billion loan portfolio. In that regard, the
Debtors announced a business strategy to attempt to enter into a transaction
with a third party that would result in the assumption by an experienced and
qualified sub-servicer of all the servicing functions set forth in the Debtors'
pooling and servicing agreements (the "Sub-servicing Transaction"). The Debtors
announced that through such a transaction they could protect and enhance the
value of the Debtors' financial assets due to servicing improvement in, among
other things, management, collection processes, automation and loss mitigation
methodology. In connection with the Sub-servicing Transaction, the Debtors
announced their intention to retain their role as master servicer thereby
retaining their ownership of the residual interests in the securitizations and
mortgage servicing rights.
As a step towards implementation of a Sub-servicing Transaction, the
Debtors prepared a "Request for Proposal" ("RFP") for distribution to potential
interested third parties. The Debtors distributed the RFP to twenty-eight (28)
potentially interested third parties who signed confidentiality agreements. In
support of the RFP process, the Debtors advised the Equity Committee and the
Bankruptcy Court that bringing in a third party to service the Debtors' loan
portfolio represented the best means of maximizing the remaining assets of the
estates. The Debtors' then CEO, Deborah Midanek, told the Equity Committee that
a sale of the Debtors' remaining assets during the pendency of the Chapter 11
cases was not a viable alternative and that such a sale would likely result in
the least possible value to the estates.
Based in large part on the Debtors' asserted need for additional time
to complete the RFP Process, the Debtors requested and obtained a second
extension of the Exclusive Periods to file and seek acceptance of a plan of
reorganization through February 1, 2000 and March 28, 2000, respectively. The
Debtors' new CEO, Larry Ramaekers, testified at the hearing on the Debtors'
second exclusivity motion that it was his belief that the Debtors would be able
to complete the RFP Process and file a plan of reorganization without a further
extension of the Exclusive Periods.
In response to the RFP Process, fourteen (14) entities submitted
proposals, two (2) solely with respect to the Debtors' manufactured housing
loans. The Debtors considered each of the submitted proposals and, based upon a
multitude of factors including servicing capabilities and capacity, financial
wherewithal, pricing and servicing experience, the Debtors reduced the number of
potential servicers of their home equity loan portfolio and IO and residual
interests to three (3).
5. THE EMC PROPOSAL.
During the RFP Process, the Debtors also received an offer from EMC
Mortgage Corporation ("EMC"), a wholly-owned subsidiary of The Bear Stearns
Companies, Inc., to purchase substantially all of the Debtors' remaining assets.
Thereafter, the Debtors, together with the Creditors Committee, commenced
discussions with EMC which resulted in the execution of a letter agreement among
EMC, Bear Stearns, and UCFC dated December 21, 1999, as amended (the "Letter
Agreement"), for the sale of substantially all of the Debtors' remaining assets
related to its mortgage servicing business, including the Whole Loan Portfolio
and residual interests for an aggregate purchase price of approximately $895
million dollars (based on the Debtors' August 31, 1999 financial statement),
excluding, cash on hand and certain other assets, subject to certain adjustments
(the "EMC Transaction"). The EMC Transaction was subject to the negotiation and
execution of definitive documentation and the submission of higher and better
offers. The Letter Agreement also provided that the Debtors could bifurcate the
proposed transaction and sell their Whole Loan Portfolio to another bidder or
accelerate the sale of the Whole Loan Portfolio to EMC. On May 26, 2000, the
Debtors and EMC entered into an Asset Purchase Agreement and a Whole Loan
Purchase Agreement. On June 2, 2000, the Debtors filed with the Bankruptcy Court
separate motions to approve each of these agreements, and the Debtors have filed
a Plan of Reorganization which contemplates the closing of such transactions.
The proposed sale as announced by the Debtors would provide for the
sale of all or substantially all of the Debtors' assets for a price
substantially below the amount of outstanding creditor claims in the cases. In
the opinion of the Equity Committee, with the announcement of the EMC
Transaction, the Debtors began the pursuit of the very avenue which they
previously indicated would yield the least recovery to the estates during the
bankruptcy. Notwithstanding the fact that creditor claims would not be paid in
full under the EMC Transaction, the Equity Committee is informed and believes
that the Creditors Committee supported the EMC proposal and continues to support
an auction of all or substantially all of the Debtors' remaining assets. The
Equity Committee is also informed and believes that one or more members of the
Creditors Committee hold unsecured claims that have been purchased at
substantial discounts during the pendency of these cases. Larry Ramaekers, the
Debtors' current CEO, testified before the Bankruptcy Court that it is his
understanding that approximately 90% of the $850 million dollars in bank debt
has traded at least once during the Chapter 11 Cases.
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6. TERMINATION OF DEBTORS' EXCLUSIVITY RIGHTS.
In January of 2000, the Debtors moved to extend for a third time the
Debtors' exclusive right to file and seek acceptance of a plan of reorganization
in these cases, asserting as the primary justification the need to complete the
definitive documentation with respect to the EMC Transaction. The Equity
Committee opposed the motion on grounds that the Debtors had failed to make
substantial progress towards confirmation of a plan or reorganization and had
refused to meaningfully consult with the Equity Committee despite repeated
admonitions from the Bankruptcy Court to do so. Having concluded on its own that
the Equity Committee is an "Out-of-the-Money" constituency, the Equity Committee
asserted that the Debtors had refused to meaningfully consult with the Equity
Committee with respect to almost every major aspect of these cases, including
the anticipated proposed sale of substantially all the Debtors' assets to EMC.
The Bankruptcy Court has sanctioned lead counsel to the Debtors for failure to
provide necessary information to the Equity Committee in connection with the
sale of a note and denied the Debtors' counsel's fees in connection therewith.
On February 23, 2000, the Bankruptcy Court entered an Order (the
"Exclusivity Order") terminating, as to the Equity Committee only, the Debtors'
exclusive right to file and seek acceptance of a plan of reorganization in these
cases. The Exclusivity Order authorized the Equity Committee to file and seek
acceptance of its own plan of reorganization in these cases but otherwise
continued the Debtors' Exclusive Periods as to all other parties in interest,
including the Creditors Committee.
In an effort to pursue the possibility of a consensual resolution of
these cases following the entry of the Exclusivity Order, counsel for the Equity
Committee sought to meet with both the Debtors and counsel for the Creditors
Committee in the hopes of commencing negotiations toward a consensual plan. The
Equity Committee met with the Debtors in Baton Rouge, Louisiana, and Atlanta,
Georgia, and counsel for the Equity Committee had a meeting with the Creditors
Committee's counsel in New York. None of those meetings, however, resulted in
any progress toward a consensual plan of reorganization. As a result, the Equity
Committee elected to move forward with the formulation of its own plan of
reorganization consistent with the Bankruptcy Court's Exclusivity Order.
In the process of formulating a plan of reorganization to maximize
recoveries for both creditors and holders of Equity Interests in the Debtors'
estates, the Equity Committee and its professionals reached the same conclusion
the Debtors' and their professionals reached early on in the case; that the best
way to realize the maximum value of the assets of the Debtors' estates is to
bring in a highly qualified servicer to collect the Debtors' loan portfolio over
time.4 Consistent with that conclusion, the Equity Committee commenced
formulating a plan of reorganization that would provide for the implementation
of a third party servicing agreement with distributions under the plan to be
made in accordance with the priority scheme of the Bankruptcy Code. In that
regard, the Equity Committee interviewed and/or had meetings with five of the
leading servicing companies in the sub-prime lending industry, including the
three highest rated servicers from the Debtors' RFP Process. Based on such
meetings and interviews, the Equity Committee selected Ocwen Financial
Corporation ("Ocwen") as the best candidate to service the Debtors' loan
portfolio. Ocwen is a $3.3 billion dollar financial institution headquartered in
West Palm Beach, Florida and is an industry leader in the servicing of
sub-prime, sub-performing and nonperforming residential and commercial loans.
Thereafter, the Equity Committee spent substantial time negotiating the terms of
a letter of intent to be executed between Ocwen and the Equity Committee.
7. EQUITY COMMITTEE'S NEGOTIATIONS WITH OCWEN FINANCIAL
CORPORATION.
Recognizing that Ocwen was also a possible participant in an auction
group interested in bidding for the assets of the Debtors' estates in the event
an auction is held, the Equity Committee sought and received assurances from
Ocwen from the outset of the negotiations that their potential participation in
an auction bidding group would not prevent them from entering into and
supporting an alternative sub-servicing agreement with the Equity Committee. The
Equity Committee raised this issue in its initial meeting with Ocwen's
president, Christine Reich, and raised the issue again with Ocwen's in-house
counsel. In response, the Equity Committee received assurances that other
participants in the bidding group had no objection to Ocwen participating in an
alternative servicing agreement with the Equity Committee.
On March 30, 2000, Ocwen sent to the Equity Committee an initial draft
of a Letter of Intent setting forth the terms and conditions under which it
would service the Debtors' loan portfolio in an Equity Committee sponsored plan
of reorganization. On April 6, 2000, counsel for the Equity Committee traveled
to West Palm Beach, Florida, and met with Ocwen's Chairman and President and
negotiated and resolved virtually all issues between the parties. Counsel for
the Equity Committee thereafter redrafted a Letter of Intent incorporating the
changes discussed at the April 6th meeting and forwarded to Ocwen the revised
Letter of Intent on April 14,
--------
4 The Debtors initially indicated that the best way to realize the
maximum value of the assets of the Debtors' estates was to bring in a highly
qualified servicer but subsequently changed their opinion with respect to such
an approach.
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2000. On April 19th, counsel for the Equity Committee called Ms. Reich wherein
she indicated that the revised Letter of Intent had been circulated to all
appropriate parties and that she would provide any additional comments regarding
the revised Letter of Intent to the Equity Committee by Thursday, April 20th or
Friday, April 21st.
When the Equity Committee had not heard from Ocwen by Monday, April
24th, counsel for the Equity Committee called Ms. Reich and left a message for
her. She returned the call that afternoon and advised the Equity Committee that
Ocwen would be unable to continue to work with the Equity Committee toward a
servicing agreement because of "pressure from the Creditors Committee." Ms.
Reich elaborated by saying that based upon discussions that Ocwen had with its
partners in the auction group, Ocwen had been assured that it was perfectly
permissible for it to proceed with the Equity Committee on a servicing proposal
in the event a plan was confirmed embodying a servicing proposal. However,
according to Ms. Reich, the Creditors Committee had gotten involved in the
process, and now Ocwen would have no choice but to withdraw from involvement
with the Equity Committee.
In the opinion of the Equity Committee, the statements made by Ms.
Reich to the Equity Committee raised serious questions as to whether the plan
process had been compromised and whether the Creditors Committee had
intentionally thwarted the Bankruptcy Court's order granting the Equity
Committee the right to file and seek acceptance of a plan of reorganization in
these cases. As a result, the Equity Committee filed an emergency motion seeking
to take 2004 examinations of Ocwen and the Creditors Committee to further
investigate these issues. On May 12, 2000, the Bankruptcy Court entered an order
authorizing the Equity Committee to depose Ocwen, and on May 30, 2000, the
Equity Committee took a Rule 2004 examination of Ocwen, by and through its
president Christine Reich. In the deposition, Ms. Reich testified that Ocwen's
partners in a proposed bidding group, Goldman Sachs and Greenwich Capital, had,
in fact, pressured Ocwen into withdrawing from consummating a deal with the
Equity Committee by advising Ocwen that it had to make a choice either to remain
in the bidding group with Goldman and Greenwich or withdraw from that bidding
group and pursue an agreement with the Equity Committee. Ocwen's Partners,
according to Ms. Reich, advised Ocwen that their bid would not be received in a
favorable light by the Creditors Committee if Ocwen pursued a servicing deal
with the Equity Committee. Ms. Reich also testified that she was concerned about
Ocwen being called upon to testify in support of a 4% assumed loan loss rate in
an Equity Committed Plan. She acknowledged that she never discussed this concern
with the Equity Committee. She further testified that although she did not know
what the aggregate was for all of the Debtors' securitization pools, each pool
ranged generally north of 4 percent and individual pools in some cases exceeded
7 percent. On average, she said it was closer to the 6 to 7 percent range than
the 4 or less range.
In accordance with the Bankruptcy Court's directions, on June 6, 2000,
the Equity Committee filed a report with the Bankruptcy Court outlining the
information revealed in the 2004 examination and requesting authority to issue
(i) a Rule 2004 subpoena duces tecum to the Creditors Committee for documents;
(ii) a Rule 2004 subpoena duces tecum for documents and examination of Goldman
Sachs and Bob Christie, employed by Goldman Sachs, and (iii) a Rule 2004
subpoena duces tecum for documents and examination of Greenwich Capital and Joe
Walsh, employed by Greenwich Capital. At a hearing conducted before the
Bankruptcy Court on June 20, 2000, the Bankruptcy Court, without making any
finding, stated that it intended to refer the matter to the United States
Attorney's Office for such action as the U.S. Attorney deems appropriate.
Notwithstanding Ocwen's withdrawal from discussions with the Equity
Committee, the Equity Committee has prepared and filed a Plan which proposes to
implement one or more third party servicing or sub-servicing agreement(s)
consistent with the terms and conditions negotiated with Ocwen. The Equity
Committee seeks confirmation of its Plan conditioned upon execution of one or
more definitive servicing or sub-servicing agreement(s) with a qualified
servicer on terms no less favorable than those set forth on Exhibit A to the
Plan within sixty (60) days of Confirmation of the Plan. Alternatively, the
Equity Committee reserves the right to request the Bankruptcy Court to enter the
Confirmation Order contemporaneously with the entry of an order approving the
servicing agreement(s).
H. ASSETS AND LIABILITIES OF THE ESTATES.
1. ASSETS OF THE ESTATES.
Principally, there are two sets of assets available to satisfy claims
of creditors and equity security holders in these Chapter 11 Cases. These assets
can be classified as on-balance sheet and off-balance sheet assets. Both are
discussed preliminarily herein with a more detailed analysis set forth in
Article IV below.
a. On-balance sheet assets
The assets of the Debtors' estates currently listed on the Debtors'
balance sheet in descending order of value are as follows:
-- IOs and residual interests - the certificated and uncertificated
interests retained by the Debtors resulting from its
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origination and securitization activities which include reserve accounts
distributed out under certain conditions pertaining to underlying loan
performance;
-- Whole loans - Approximately 7,250 Whole Loans with a face amount of
approximately $379 million as of March, 2000, mostly comprised of fourth quarter
1998 and first quarter 1999 loan production not securitized by the Debtors;
-- Cash and cash equivalents - this includes cash balances not
otherwise held for bondholder interests and represents the accumulated cash
flows generated by the Debtors' IO and residual interests and Whole Loan
Portfolio;
-- Servicer advances - the delinquent interest and protective property
advances required to be paid out for the benefit of securitization trusts and
which, generally, will be reimbursed as a priority repayment from specific
mortgage collections or liquidation proceeds generated from foreclosure sales;
-- Property - this account includes the owned real property of the
company in addition to saleable furniture, fixtures and equipment; and
-- Other assets - any other property of the estates not otherwise
described above with a discernible value.
b. Off-balance sheet assets
Although not carried on the balance sheet of the Debtors, the Equity
Committee believes that the following assets also have discernible value and can
contribute significantly to distributions under the Plan:
-- Causes of Action held by the Debtors' estates including potential
claims against Deloitte & Touche, LLP, the independent auditors of the Debtors'
financial statements, and potential claims against the Debtors' current and
former officers and directors; and
-- Net operating losses (NOLs) - under conditions involving no change
in control of the Debtors, NOLs can be used to offset tax expenses arising from
tax-generating activities.
2. LIABILITIES OF THE ESTATES.
According to the Debtors, a total of 5,158 proofs of claim against the
Debtors' estates have been filed totaling $1,629,401,823,155. The Debtors have
begun the process of reconciling claims and filing objections to claims, and
that process is ongoing. While it is not possible to predict with certainty the
ultimate amount of Allowed Claims in the case, the Debtors at various points in
the case have estimated claims to be approximately $1.3 billion. Additionally,
the Creditors Committee has filed pleadings indicating their estimation that
total Allowed Claims will exceed $1.4 billion. The Equity Committee believes
prepetition Allowed Claims will be approximately $1.3 billion.
ARTICLE III.
THE PLAN
A. GENERAL.
THE FOLLOWING IS A SUMMARY OF THE MATTERS CONTEMPLATED TO OCCUR EITHER
PURSUANT TO OR IN CONNECTION WITH CONFIRMATION OF THE PLAN. THIS SUMMARY
HIGHLIGHTS THE SUBSTANTIVE PROVISIONS OF THE PLAN AND IS NOT, NOR IS IT INTENDED
TO BE, A COMPLETE DESCRIPTION OR A SUBSTITUTE FOR A FULL AND COMPLETE REVIEW OF
THE PLAN. STATEMENTS REGARDING PROJECTED AMOUNTS OF CLAIMS OR DISTRIBUTIONS (OR
THE VALUE OF SUCH DISTRIBUTIONS) ARE ESTIMATES BY THE EQUITY COMMITTEE BASED ON
CURRENT INFORMATION AND ARE NOT A REPRESENTATION AS TO THE ACCURACY OF THESE
AMOUNTS. FOR AN EXPLANATION OF THE BASIS FOR, LIMITATIONS OF AND UNCERTAINTIES
RELATING TO THESE CALCULATIONS, SEE ARTICLE IV AND V ("Certain Risk Factors to
be Considered") BELOW.
Chapter 11 is the principal business reorganization chapter of the
Bankruptcy Code. Formulation of a plan of reorganization is the principal
objective of a chapter 11 reorganization case. Consistent with Chapter 11 of the
Bankruptcy Code, the Equity Committee's Plan divides Claims and Equity Interests
into separate Classes, specifies the property that each Class is to receive
under the Plan and contains other provisions necessary to the reorganization of
the Debtor. Distributions to be made under the Plan will
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be made after Confirmation on the dates specified in the Plan.
B. SUBSTANTIVE CONSOLIDATION AND CANCELLATION OF INTERCOMPANY
CLAIMS.
The Plan provides that on the Effective Date the Chapter 11 Cases shall
be deemed to be substantively consolidated. For purposes of the Plan, the assets
and liabilities of the Debtors shall be pooled and all Claims shall be satisfied
from the assets of a single consolidated estate. Any Claims against one or more
of the Debtors based upon a guaranty, indemnity, a co-signature, surety or
otherwise, of Claims against another Debtor, including, without limitation, the
Guaranty, shall be treated as a single Claim against the consolidated estate of
the Debtors and shall be entitled to distributions under the Plan only with
respect to such single Claim. The Plan further provides that on the Effective
Date all Intercompany Claims shall be extinguished.
C. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.
Section 1123(a)(1) of the Bankruptcy Code requires that a plan of
reorganization classify the claims of a debtor's creditors (other than
administrative expenses and priority tax claims) and the interests of its equity
security holders. Section 1122 of the Bankruptcy Code also provides that, except
for certain claims classified for administrative convenience, a plan of
reorganization may place a claim or interest of a creditor or equity security
holder in a particular class only if such claim or interest is substantially
similar to the other claims or interests of such class.
For voting and distribution purposes under the Equity Committee's Plan,
a Claim or Equity Interest is classified in a particular Class only to the
extent that the Claim or Equity Interest qualifies within the description of
that Class, and is classified in a different Class or Classes to the extent the
Claim or Equity Interest qualifies within the description of such different
Class or Classes. Unless otherwise provided, to the extent a Claim qualifies for
inclusion in a more specifically defined Class and a more generally defined
Class, it shall be included in the more specifically defined Class. A Claim or
Equity Interest is classified in a particular Class only to the extent the Claim
or Equity Interest is an Allowed Claim or Allowed Equity Interest in that Class
and has not been paid, released or otherwise satisfied before the Effective
Date.
The Plan places each of the following types of Claims or Equity
Interests in separate Classes:
Class 1 -- Priority Non-Tax Claims
Class 2 -- Secured Claims
Class 3 -- Unsecured Claims
Class 4 -- Borrower Litigation Claims
Class 5 -- Convenience Claims
Class 6 -- 6A - Subordinated Debenture Claims
6B - Lending Subordinated Debenture Claims
Class 7 - Subordinated Penalty Claims
Class 8 -- Pride Equity Interests
Class 9 -- 9A - Statutorily Subordinated Claims
9B - United Companies Common Equity Interests
Class 10 -- Adobe Common Equity Interests
Class 11 -- Adobe Financial Common Equity Interests
Class 12 -- Ginger Mae Common Equity Interests
Class 13 -- Gopher Equity Common Equity Interests
Class 14 -- Pelican Common Equity Interests
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Class 15 -- Southern Mortgage Common Equity Interests
Class 16 -- Unicor Mortgage Common Equity Interests
Class 17 -- United Funding Common Equity Interests
Class 18 -- United Lending Corp. Common Equity Interests
Class 19 -- United Lending Group Common Equity Interests
Class 20 -- United Credit Card Common Equity Interests
Administrative Claims, Professional Fee Claims and Priority Tax Claims
are not classified and are excluded from the Classes set forth in Article IV of
the Plan in accordance with Section 1123(a)(1) of the Bankruptcy Code.
The Equity Committee believes that it has classified all Claims and
Equity Interests in compliance with the provisions of Section 1122 of the
Bankruptcy Code. If a creditor or Equity Interest holder challenges such
classification and the Bankruptcy Court finds that a different classification is
required for the Plan to be confirmed, the Equity Committee, to the extent
permitted by the Bankruptcy Court, intends to make such modifications to the
classification of Claims or Equity Interests under the Plan to provide for
whatever classification might be required by the Bankruptcy Court for
confirmation of the Plan.
Except to the extent that such modification of classification
materially adversely affects the treatment of a holder of a Claim or Equity
Interest and requires resolicitation, acceptance of the Plan by any holder of a
Claim or Equity Interest will be deemed to be a consent to the Plan's treatment
of such holder of a Claim or Equity Interest regardless of the Class as to which
such holder of a Claim or Equity Interest is ultimately deemed to be a member.
The Bankruptcy Code requires that a plan of reorganization provide the
same treatment of each Claim or Equity Interest of a particular Class unless the
holder of a particular Claim or Equity Interest agrees to a less favorable
treatment of its Claim or Equity Interest. The Equity Committee believes that it
has complied with such requirement. If the Bankruptcy Court finds otherwise, it
could deny confirmation of the Plan if the holders of Claims or Equity Interest
affected do not consent to the treatment afforded them under the Plan.
D. PROVISIONS FOR PAYMENT OF ADMINISTRATIVE CLAIMS AND PRIORITY
TAX CLAIMS.
1. ADMINISTRATIVE EXPENSE CLAIMS.
Unless otherwise provided for under the Plan, each holder of an Allowed
Administrative Expense Claim shall receive Cash equal to 100% of the unpaid
amount of such Allowed Administrative Expense Claim on or as soon as reasonably
practicable after the later of: (a) the Effective Date; (b) the first Business
Day after the date that is thirty (30) calendar days after the date such
Administrative Expense Claim becomes an Allowed Claim; or (c) such other date
established pursuant to the terms of any Final Order of the Bankruptcy Court,
which may include the Confirmation Order; provided, however, that Allowed
Administrative Expense Claims for goods sold or services rendered representing
liabilities incurred by the Debtors in the ordinary course of business during
the Chapter 11 Cases shall be paid by Reorganized UC in the ordinary course of
business in accordance with the terms and conditions of any agreements,
understandings, or trade terms relating thereto, or pursuant to the terms of a
Final Order of the Bankruptcy Court, which may include the Confirmation Order.
Notwithstanding the foregoing, the holder of an Allowed Administrative Expense
Claim may receive such other, less favorable treatment as may be agreed upon by
such holder and the Equity Committee, or Reorganized UC, as applicable.
The Debtors have estimated that the aggregate amount of Allowed
Administrative Claims will be $16,840,000.
2. PROFESSIONAL FEE CLAIMS.
All Entities that are awarded compensation or reimbursement of expenses
by the Bankruptcy Court in accordance with Section 327, 328, 330 or 331 of the
Bankruptcy Code or entitled to the priorities established pursuant to Section
503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code, shall be
paid in full, in Cash, in the amounts allowed by the Bankruptcy Court (a) on or
as soon as reasonably practicable following the later to occur of (i) the
Effective Date and (ii) a date which is no later than five (5) Business Days
after the date upon which the Bankruptcy Court order allowing such Claim becomes
a Final Order or (b) upon such other terms as may be mutually agreed upon
between such holder of an Allowed Professional Fee Claim and the Equity
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Committee, or Reorganized UC, as applicable.
The Debtors have estimated that the aggregate amount of Allowed
Professional Fee Claims will be $10,160,000.
3. PRIORITY TAX CLAIMS.
Each holder of an Allowed Priority Tax Claim shall receive, at the
option of the Equity Committee, or Reorganized UC, as applicable, either (i)
Cash equal to 100% of the unpaid amount of such Allowed Claim on or as soon as
reasonably practicable after the later of (A) the Effective Date, or (B) the
first Business Day after the date that is thirty (30) calendar days after the
date such Priority Tax Claim becomes an Allowed Claim, or (ii) annual Cash
payments commencing on or as soon as reasonably practicable after the later to
occur of the Effective Date and the date on which such Priority Tax Claim
becomes an Allowed Claim, over a period not exceeding six (6) years after the
date of assessment of such Allowed Priority Tax Claim, together with interest
(payable quarterly in arrears) on the unpaid balance of such Allowed Priority
Tax Claim at a per annum rate equal to the Federal Judgment Rate as of the
Effective Date. Allowed Priority Tax Claims may be prepaid, at any time, without
penalty. Any Claim or demand for a penalty relating to an Allowed Priority Tax
Claim shall be disallowed pursuant to the Plan, and the holder of an Allowed
Priority Tax Claim shall not assess or attempt to collect such penalty from the
Debtors, the estates, Reorganized UC or its property. Holders of Allowed
Priority Tax Claims shall be limited to the consideration provided under the
Plan and shall have no recourse to Reorganized UC for any pre-Confirmation Date
Priority Tax Claims against the Debtors. Notwithstanding the foregoing, the
holder of an Allowed Priority Tax Claim may receive such other, less favorable
treatment as may be agreed upon by the claimant and the Equity Committee, or
Reorganized UC, as applicable.
The Debtors have estimated that the aggregate amount of Allowed
Priority Tax Claims will be $6,000,000.
E. PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS AND EQUITY
INTERESTS.
1. CLASS 1 - PRIORITY NON-TAX CLAIMS.
On or as soon as reasonably practicable after the later of (a) the
Effective Date, and (b) the first Business Day after the date that is thirty
(30) calendar days after the date such Priority Non-Tax Claim becomes an Allowed
Claim, each holder of an Allowed Priority Non-Tax Claim shall be entitled to
receive payment, in Cash, in an amount equal to 100% of the unpaid amount of its
Allowed Priority Non-Tax Claim. Notwithstanding the foregoing, the holder of an
Allowed Priority Non-Tax Claim may receive such other less favorable treatment
as may agreed to by such holder and the Equity Committee, or Reorganized UC, as
applicable.
The Debtors have estimated that there will be no Allowed Priority
Non-Tax Claims as of the Effective Date.
2. CLASS 2 - SECURED CLAIMS.
On or as soon as reasonably practicable after the later of (i) the
Effective Date, or (ii) the first Business Day after the date that is thirty
(30) calendar days after the date such Secured Claim becomes an Allowed Claim,
each holder of an Allowed Secured Claim shall receive, at the election of the
Equity Committee, or Reorganized UC, as applicable, one of the following
distributions: (1) Cash equal to 100% of the unpaid amount of such Allowed
Secured Claim; (2) the proceeds of the sale or disposition of the property
securing such Allowed Secured Claim to the extent of the value of such holder's
interest in such property; (3) the surrender to the holder of such Allowed
Secured Claim of the property securing such Claim; (4) such treatment that
leaves unaltered the legal, equitable or contractual rights of the holder of
such Allowed Secured Claim; or (5) such other distribution as shall be necessary
to leave the holder of such Allowed Secured Claim unimpaired and to satisfy the
requirements of Chapter 11 of the Bankruptcy Code.
The manner and treatment of each Allowed Secured Claim shall be determined by
the Equity Committee, on or before the Effective Date, or by Reorganized UC,
after the Effective Date, and upon notice to the holder of such Secured Claim.
To the extent a Claim is partially an Allowed Secured Claim based on an offset
right and partially an Allowed Claim of another type, (x) the portion of such
Claim that is a Secured Claim shall be equal to the amount of the allowed,
liquidated, nondisputed, noncontingent Claim owing to the Debtors as to which a
valid setoff right exists, and (y) the remainder of such Claim shall be
classified in another relevant Class to the extent of the excess. If a Claim is
a fully Secured Claim based on an offset right, the allowance of such Claim
shall not affect any obligations or liabilities due and payable (at such time)
to the Debtors that is in an amount in excess of the amount offset and the
payment, in full and in Cash, of all amounts due and owing as of the Effective
Date to the Debtors and the turnover of any property of the Debtors held by such
claimant on account of any unliquidated, disputed or contingent right of setoff
shall be a precondition to the allowance of such Secured Claim. Notwithstanding
the foregoing, the holder of an Allowed Secured Claim may receive such other
less favorable treatment as may be agreed to by such holder and the Equity
Committee, or Reorganized UC, as applicable.
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Although a number of Creditors have filed proofs of claim asserting
Secured Claims, the Debtors have indicated their belief that few if any of such
Creditors will be found to have Allowed Secured Claims. In any event, the Equity
Committee believes that the amount of any Allowed Secured Claims will be
immaterial in the aggregate.
3. CLASS 3 - UNSECURED CLAIMS.
(a) Allowance of Bank Claims: On the Effective Date,
the Bank Claims shall be deemed allowed in the aggregate amount of Eight Hundred
Fifty Million Dollars ($850,000,000.00) plus all accrued and unpaid interest at
the nondefault contractual rate.
(b) Allowance of Senior Note Claims: On the Effective
Date, the Senior Note Claims arising under or relating to the 9.35% Notes and
the 7.7% Notes shall be deemed allowed in the aggregate amounts of One Hundred
Twenty- Five Million Dollars ($125,000,000.00) and One Hundred Million Dollars
($100,000,000.00), respectively, plus all accrued and unpaid interest at the
nondefault contractual rate.
(c) Allowance of General Unsecured Claims: All
holders of Allowed General Unsecured Claims shall be entitled to receive all
accrued and unpaid interest on the Allowed Amount of such Claims at the
nondefault contractual rate, where applicable, and to the extent no contractual
rate of interest is specified, at the Federal Judgment Rate. The Debtors have
estimated that the aggregate amount of Allowed General Unsecured Claims will be
$20,000,000.
(d) Treatment of Unsecured Claims: Commencing on the
Effective Date, and continuing quarterly thereafter until such time as all
Allowed Unsecured Claims have been paid in full, each holder of an Allowed Bank
Claim, an Allowed Senior Note Claim and an Allowed General Unsecured Claim shall
be entitled to receive its Pro Rata Share of all Disbursement Cash available for
distribution. If and to the extent the Bank Claims establish a right of priority
over the Senior Note Claims and the General Unsecured Claims, any payments to
holders of Allowed Unsecured Claims shall be made in accordance with such
priority as determined by the Bankruptcy Court. Based upon the projections set
forth on Exhibit E hereto, the Equity Committee believes Allowed Unsecured
Claims, together with all interest which shall accrue thereon, will be paid in
full by December, 2004.
(e) Payments to be Made to Senior Indenture Trustee:
The payments and distributions to be made under the Plan to holders of Allowed
Senior Note Claims shall be made to the Senior Indenture Trustee, which, subject
to any rights or claims of the Senior Indenture Trustee (such as claims for fees
and reimbursement of expenses) under the Senior Note Indenture, shall transmit
such payments and distributions to holders of such Allowed Senior Note Claims.
All payments to holders of Allowed Senior Note Claims shall only be made to such
Creditors after the surrender by each of such Creditor of the certificates
representing such Senior Note Claim, or in the event that such certificate is
lost, stolen, mutilated or destroyed, delivery of evidence satisfactory to the
Senior Indenture Trustee and Reorganized UC of the loss, theft, mutilation or
destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Senior Indenture Trustee and Reorganized UC, from a surety
company satisfactory to the Senior Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Senior Indenture Trustee shall cancel such
Senior Notes and deliver such cancelled Senior Notes to Reorganized UC, or
otherwise dispose of same as Reorganized UC may request. As soon as practicable
after (a) surrender of certificates evidencing Allowed Senior Note Claims, the
Senior Indenture Trustee shall distribute to the holders thereof such holder's
Pro Rata Share in accordance with the respective rights of the Senior Indenture
Trustee and such holder under the terms of the Senior Notes Indenture. If such
Creditor has not complied with the provisions hereof by the time final
distributions are made to Class 3 Unsecured Claims, such Creditor shall be
deemed to have no further Claim against the Debtors, the Debtors' estates or
Reorganized UC, and the Senior Indenture Trustee shall deliver the distributions
which a Creditor holding an Allowed Senior Note Claim would have received had
such Creditor surrendered such certificate evidencing such Senior Note Claim to
Reorganized UC, and the Senior Indenture Trustee shall have no further
responsibility with respect thereto.
(f) Closing of Transfer Ledgers for Senior Notes: At
the close of business on the Record Date, the transfer ledgers for the Senior
Notes shall be closed, and thereafter there shall be no further registrations or
other changes in the holders of any of the Senior Notes on the books of United
Companies (or of any indenture trustee, transfer agents or registrars it may
have employed in connection therewith), and the Equity Committee or Reorganized
UC, as applicable, shall have no obligation to recognize any transfer of the
Senior Notes occurring thereafter (but shall be entitled instead to recognize
and deal with, for all purposes under the Plan, except as otherwise provided
herein, only those holders reflected on its books as of the Effective Date).
(g) Allowed Convenience Claims: Notwithstanding the
provisions of Section 7.2 of the Plan, any holder of an Allowed General
Unsecured Claim whose Allowed General Unsecured Claim is more than One Thousand
Dollars ($1,000.00), and who elects to reduce the amount of such Allowed Claim
to One Thousand Dollars ($1,000.00), shall, at such holder's
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option, be entitled to receive, based on such Allowed Claim as so reduced,
distributions pursuant to Article IX of the Plan, in full settlement,
satisfaction, release and discharge of such Allowed Claim. Such election must be
made on the Ballot and be received by the Balloting Agent on or prior to the
Voting Deadline. Any election made after the Voting Deadline shall not be
binding upon the Equity Committee or Reorganized UC, as applicable, unless the
Voting Deadline is expressly waived, in writing, by the Equity Committee.
4. CLASS 4 - BORROWER LITIGATION CLAIMS.
(a) Treatment of Borrower Litigation Claims: On the
Effective Date, each holder of an Allowed Borrower Litigation Claim shall be
entitled to receive distributions of Cash (i) in an amount equal to the asserted
amount of such holder's Claim up to One Thousand Dollars ($1,000.00) or if such
Claim is in excess of One Thousand Dollars ($1,000.00), and provided such holder
agrees to reduce such Claim to One Thousand Dollars ($1,000.00), the amount of
such Claim as reduced or (ii) from the Borrower Settlement Trust as and when
such Borrower Litigation Claim becomes an Allowed Borrower Litigation Claim. The
receipt and acceptance of distributions under the Plan by a holder of a Borrower
Litigation Claim or its successors or assigns shall constitute a full release
and waiver of any and all claims which have been or may have been asserted for
actions arising from or related to the origination or servicing of loans, moneys
advanced or mortgages issued by the Debtors, including, without limitation,
claims against the Debtors' successors and assigns for actions arising from or
related to the period prior to the Confirmation Date.
(b) Mandatory Arbitration of Borrower Litigation
Claims: In the event that (a) a Borrower Litigation Claim is not resolved prior
to the Effective Date and the holder thereof does not receive distributions in
accordance with the provisions of Section 8.1 of the Plan or (b) a holder of a
Borrower Litigation Claim in excess of One Thousand Dollars ($1,000.00) elects
not to reduce such Borrower Litigation Claim to an amount equal to One Thousand
Dollars ($1,000.00), such holder's Borrower Litigation Claim, wherever located,
shall be transferred to an arbitration panel located in or associated with the
United States District Court for the Middle District of Louisiana for binding
arbitration to determine the validity and amount of such Borrower Litigation
Claim and such arbitration panel shall have sole and exclusive jurisdiction to
determine the validity and amount of such Borrower Litigation Claim; provided,
however, nothing contained herein limits, or in any way is intended to limit,
Reorganized UC's ability to compromise and settle any Borrower Litigation Claim
in accordance with Section 30.1 of the Plan.
(c) Alternative Procedure: In the event the mandatory
arbitration provisions of Section 8.2 of the Plan are held by a court of
competent jurisdiction to be unenforceable against any party not voting to
accept the Plan, such Borrower Litigation Claims shall be resolved by the
Bankruptcy Court through the claims objection process.
(d) Foreclosure Actions: To the extent that the
holder of a Borrower Litigation Claim (i) has asserted such Borrower Litigation
Claim in the context of, and as a counterclaim to, a foreclosure action
commenced by the Debtors and (ii) receives a distribution under the Plan
pursuant to Sections 8.1 or 8.2 thereof, such holder of a Borrower Litigation
Claim shall be deemed to have received such distribution in full and complete
satisfaction of any Borrower Litigation Claim that such holder may have against
any of the Debtors and their successors and assigns and in consideration for the
entry of a judgment in favor of the Debtors in connection with such foreclosure
action.
(e) Funding of Borrower Settlement Trust: On the
Effective Date, Reorganized UC will create and initially fund the Borrower
Settlement Trust in the amount of One Million Dollars ($1,000,000). To the
extent such amount proves insufficient to pay all Allowed Borrower Litigation
Claims in full, Reorganized UC shall deposit such additional amounts reasonably
determined by it as necessary to fully fund the Borrower Settlement Trust.
5. CLASS 5 - CONVENIENCE CLAIMS.
Treatment of Convenience Claims: On the Effective
Date, each holder of an Allowed Convenience Claim shall receive Cash in an
amount equal to one hundred percent (100%) of such Allowed Convenience Claim.
The Debtors have estimated that the aggregate amount of Allowed Convenience
Claims will be $243,000.
6. CLASS 6 - SUBORDINATED DEBENTURE CLAIMS.
(a) Allowance of Subordinated Debenture Claims: On
the Effective Date, the Subordinated Debenture Claims in Class 6A shall be
deemed allowed in the aggregate amount of One Hundred Fifty Million Dollars
($150,000,000.00) plus all accrued and unpaid interest at the non default
contractual rate through and including the Effective Date.
(b) Allowance of Lending Subordinated Debenture
Claims: On the Effective Date, the Lending Subordinated Debenture Claims in
Class 6B shall be deemed allowed in the aggregate amount of Seven Million
Dollars ($7,000,000)
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plus all accrued and unpaid interest at the nondefault contractual rate through
and including the Effective Date.
(c) Treatment of Allowed Subordinated Debenture
Claims and Allowed Lending Subordinated Debenture Claims: Upon payment in full
of all Allowed Unsecured Claims in Class 3 of the Plan, each holder of an
Allowed Subordinated Debenture Claim and Allowed Lending Subordinated Debenture
Claim shall be entitled to receive quarterly distributions of such holder's Pro
Rata Share of all Disbursement Cash available for distribution, together with
interest thereon at the nondefault contractual rate, until such time as all
Allowed Subordinated Debenture Claims and Allowed Lending Subordinated Debenture
Claims have been paid in full. If and to the extent Subordinated Debenture
Claims and Lending Subordinated Debenture Claims establish a right to be treated
on par with General Unsecured Claims, any payments to Allowed Subordinated
Debenture Claims and Allowed Lending Subordinated Debenture Claims shall be made
in accordance with such priority as determined by the Bankruptcy Court. Based on
the projections set forth on Exhibit E hereto, the Equity Committee believes
Allowed Subordinated Debenture Claims and Allowed Lending Subordinated Debenture
Claims, together with all interest which shall accrue thereon, will be paid in
full by September, 2008.
(d) Payments to be Made to Subordinated Indenture
Trustee: The payments and distributions to be made under the Plan to holders of
Allowed Subordinated Debenture Claims shall be made to the Subordinated
Indenture Trustee, which, subject to any rights or claims of the Subordinated
Indenture Trustee (such as claims for fees and reimbursement of expenses) under
the Subordinated Indenture, shall transmit such payments and distributions to
holders of such Allowed Subordinated Debenture Claims. All payments to holders
of Allowed Subordinated Debenture Claims shall only be made to such Creditors
after the surrender by such Creditor of the certificate representing such
Subordinated Debenture Claim, or in the event that such certificate is lost,
stolen, mutilated or destroyed, delivery of evidence satisfactory to the
Subordinated Indenture Trustee and Reorganized UC of the loss, theft, mutilation
or destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Subordinated Indenture Trustee and Reorganized UC, from a
surety company satisfactory to the Subordinated Indenture Trustee and
Reorganized UC. Upon surrender of such certificates, the Subordinated Indenture
Trustee shall cancel such Subordinated Debentures and deliver such cancelled
Subordinated Debentures to Reorganized UC or otherwise dispose of same as
Reorganized UC may request. As soon as practicable after surrender of
certificates evidencing Subordinated Debenture Claims the Subordinated Indenture
Trustee shall distribute to the holders thereof such holder's Pro Rata Share in
accordance with the respective rights of the Subordinated Indenture Trustee and
such holder under the terms of the Subordinated Indenture. If such Creditor has
not complied with the provisions hereof by the time final distributions are made
to Class 6 Subordinated Debenture Claims, such Creditor shall be deemed to have
no further Claim against the Debtors, the Debtors' estates or Reorganized UC,
and the Subordinated Indenture Trustee shall deliver the distributions which a
Creditor holding an Allowed Subordinated Debenture Claim would have received had
such Creditor surrendered such certificate evidencing such Subordinated
Debenture Claim to Reorganized UC, and the Subordinated Debenture Trustee shall
have no further responsibility with respect thereto.
(e) Closing of Transfer Ledgers for Subordinated
Debentures and Lending Subordinated Debentures: At the close of business on the
Record Date, the transfer ledgers for the Subordinated Debentures and Lending
Subordinated Debentures shall be closed, and thereafter there shall be no
further registrations or other changes in the holders of any of the Subordinated
Debentures on the books of United Companies (or of any indenture trustee,
transfer agents or registrars it may have employed in connection therewith), and
the Equity Committee or Reorganized UC, as applicable, shall have no obligation
to recognize any transfer of the Subordinated Debentures or Lending Subordinated
Debentures occurring thereafter (but be entitled instead to recognize and deal
with, for all purposes under the Plan, except as otherwise provided herein, only
those holders reflected on its books as of the Record Date).
7. CLASS 7 - SUBORDINATED PENALTY CLAIMS.
Treatment of Subordinated Penalty Claims. Upon
payment in full of all Allowed Priority Non-Tax Claims, Allowed Secured Claims,
Allowed Unsecured Claims, Allowed Borrower Litigation Claims, Allowed
Convenience Claims, Allowed Subordinated Debenture Claims and Allowed Lending
Subordinated Debenture Claims, each holder of an Allowed Subordinated Penalty
Claim shall be entitled to receive quarterly distributions of such holder's Pro
Rata Share of all Disbursement Cash available for distribution, together with
interest thereon at the Federal Judgment Rate, until such time as all Allowed
Subordinated Penalty Claims have been paid in full.
8. CLASS 8 - PRIDE EQUITY INTERESTS.
(a) Conversion of Pride Equity Interests: On the
Effective Date, each holder of a Pride Equity Interest shall be deemed to have
received two (2) shares of common stock of United Companies for each Pride
Equity Interest.
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(b) Treatment of Pride Equity Interests: On or after
the Effective Date, each holder of an Allowed Pride Equity Interest shall
receive such holder's Pro Rata Share of distributions in accordance with
provisions of Section 13.2 of the Plan relating to the treatment afforded to
holders of United Companies Common Equity Interests.
9. CLASS 9 - 9A STATUTORILY SUBORDINATED CLAIMS AND 9B
UNITED COMPANIES COMMON EQUITY INTERESTS.
(a) Treatment of Statutorily Subordinated Claims:
Upon payment in full of all Allowed Administrative Expense Claims, Allowed
Priority Non-Tax Claims, Allowed Priority Tax Claims, Allowed Secured Claims,
Allowed Convenience Claims, Allowed Unsecured Claims, Allowed Borrower
Litigation Claims, Allowed Subordinated Debenture Claims, Allowed Lending
Subordinated Debenture Claims, and Allowed Subordinated Penalty Claims, holders
of Allowed Statutorily Subordinated Claims shall receive such holders' Pro Rata
Share of the Statutorily Subordinated Claim Percentage of all Disbursement Cash.
(b) Treatment of United Companies Common Equity
Interests: Upon payment in full of all Allowed Administrative Expense Claims,
Allowed Priority Non-Tax Claims, Allowed Priority Tax Claims, Allowed Secured
Claims, Allowed Convenience Claims, Allowed Unsecured Claims, Allowed Borrower
Litigation Claims, Allowed Subordinated Debenture Claims, Allowed Lending
Subordinated Debenture Claims, and Allowed Subordinated Penalty Claims, holders
of Allowed United Companies Common Equity Interests shall receive such holders'
Pro Rata Share of the Equity Interest Percentage of all Disbursement Cash.
10. CLASS 10 - ADOBE COMMON EQUITY INTERESTS.
Treatment of Adobe Common Equity Interests. Except as
provided in Article II of the Plan, the Equity Interests represented by Adobe
Common Equity Interests shall be unimpaired pursuant to Section 1124 of the
Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
11. CLASS 11 -- ADOBE FINANCIAL COMMON EQUITY INTERESTS.
Treatment of Adobe Financial Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by Adobe Financial Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which such Equity Interests entitle the holder thereof.
12. CLASS 12 - GINGER MAE COMMON EQUITY INTERESTS.
Treatment of Ginger Mae Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by Ginger Mae Common Equity Interests shall be unimpaired pursuant to Section
1124 of the Bankruptcy Code by leaving unaltered the legal and equitable rights
to which such Equity Interests entitle the holder thereof.
13. CLASS 13 - GOPHER EQUITY COMMON EQUITY INTERESTS.
Treatment of Gopher Equity Common Equity Interests.
Except as provided in Article II of the Plan, the Equity interests represented
by Gopher Equity Common Equity Interests shall be unimpaired pursuant to Section
1124 of the Bankruptcy Code by leaving unaltered the legal and equitable rights
to which such Equity Interests entitle the holder thereof.
14. CLASS 14- PELICAN COMMON EQUITY INTERESTS.
Treatment of Pelican Common Equity Interests. Except
as provided in Article II of the Plan, the Equity Interests represented by
Pelican Common Equity Interests shall be unimpaired pursuant to Section 1124 of
the Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
15. CLASS 15 - SOUTHERN MORTGAGE COMMON EQUITY INTERESTS.
Treatment of Southern Mortgage Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by Southern Mortgage Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which such Equity Interests entitle the holder thereof.
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16. CLASS 16 - UNICOR COMMON EQUITY INTERESTS.
Treatment of Unicor Common Equity Interests. Except
as provided in Article II of the Plan, Equity Interests represented by Unicor
Common Equity Interests shall be unimpaired pursuant to Section 1121 of the
Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
17. CLASS 17 - UNITED FUNDING COMMON EQUITY INTERESTS.
Treatment of United Funding Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by United Funding Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which such Equity Interests entitle the holder thereof.
18. CLASS 18 - UNITED LENDING CORP. COMMON EQUITY
INTERESTS.
Treatment of United Lending Corp. Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by United Lending Corp. Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which such Equity Interests entitle the holder thereof.
19. CLASS 19 - UNITED LENDING GROUP COMMON EQUITY
INTERESTS.
Treatment of United Lending Group Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by United Leading Group Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which such Equity Interests entitle the holder thereof.
20. CLASS 20 - UNITED CREDIT CARD COMMON EQUITY
INTERESTS.
Treatment of United Credit Card Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by United Credit Card Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which Equity Interests entitle the holder thereof.
F. MEANS OF IMPLEMENTATION OF THE PLAN.
1. THIRD PARTY SERVICING AGREEMENT.
On or before the Effective Date, the Equity Committee shall execute
servicing or sub-servicing agreement(s) with one or more independent third
parties which will transition the Debtors' current servicing operations to one
or more qualified servicer(s) who will principally assume the servicing
functions of the Debtors under the various pooling and servicing agreements for
the Debtors' loan portfolio. Pursuant to the terms of the servicing or
sub-servicing agreement(s), Reorganized UC will remain responsible for financing
future interest and service advances and other obligations. Following the
Confirmation Hearing, the Equity Committee will finalize the terms of one or
more definitive servicing or sub-servicing agreement(s) on terms no less
favorable to the Debtors' estates than as set forth on Exhibit A attached to the
Plan. The Equity Committee will seek Bankruptcy Court approval of such
definitive agreement(s) within sixty (60) days of the Confirmation Date, and the
Effective Date of the Plan will be conditioned upon the entry by the Bankruptcy
Court of the Servicing Agreement Order approving the terms and conditions of the
definitive servicing or sub-servicing agreement(s). Alternatively, the Equity
Committee may request the Bankruptcy Court to enter the Confirmation Order
contemporaneously with the entry of the Servicing Agreement Order.
2. SOURCES OF FUNDING FOR THE PLAN.
The Plan will be funded from (1) Cash on hand and derived from payments
on the Debtors' loan portfolio, (2) net Cash proceeds generated from the
liquidation of the Debtors' Remaining Assets, (3) net proceeds from any recovery
on claims or causes of action after payment of all expenses of litigation and
attorneys' fees, and (4) any other income derived from assets of the estates.
3. REVESTING OF PROPERTY IN REORGANIZED UC.
Except as otherwise provided by the Plan, on the Effective Date, title
to all property and assets of the estates shall revest in Reorganized UC free
and clear of all Claims, liens, encumbrances and/or other interests of any
Person, and Reorganized UC may
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thereafter operate its business and use, acquire and dispose of property and
compromise or settle any Claims arising on or after the Effective Date without
supervision or approval of the Bankruptcy Court, free of any restrictions of the
Bankruptcy Code, the Bankruptcy Rules, or the Local Bankruptcy Rules of the
Bankruptcy Court, other than those restrictions expressly imposed by the Plan,
the Confirmation Order or any documents executed and delivered by Reorganized UC
pursuant to the Plan.
4. DIRECTORS.
On the Effective Date the board of directors of Reorganized UC shall be
comprised of seven (7) individuals, four (4) selected by the Equity Committee,
and (3) selected by the Creditors Committee, all of whom shall be disclosed
prior to a hearing to consider confirmation of the Plan. In the event the
Creditors Committee fails to designate selected board members prior to the
Confirmation Hearing, the Equity Committee shall be entitled to appoint the
remaining three (3) board members. Thereafter, the terms and manner of selection
of the directors of Reorganized UC shall be as provided in the Reorganized UC
Certificate of Incorporation and the Reorganized UC Bylaws, as the same may be
amended.
5. AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS.
The articles of incorporation and Bylaws of the Debtors shall be
amended as of the Effective Date to provide substantially as set forth in the
Reorganized UC Certificate of Incorporation and the Reorganized UC Bylaws.
6. CORPORATE ACTION.
On the Effective Date, the adoption of the Reorganized UC Certificate
of Incorporation and the Reorganized UC Bylaws shall be authorized and approved
in all respects, in each case without further action under applicable law,
regulation, order, or rule, including, without limitation, any action by the
stockholders of the Debtors or Reorganized UC. On the Effective Date, all
matters provided under the Plan involving the corporate structure of Reorganized
UC or corporate action by Reorganized UC shall be deemed to have occurred, be
authorized, and shall be in effect from and after the Effective Date without
requiring further action under applicable law, regulation, order, or rule,
including, without limitation, any action by the stockholders of the Debtors or
Reorganized UC.
G. THE PLAN ADMINISTRATOR.
1. APPOINTMENT OF PLAN ADMINISTRATOR.
On the Effective Date, compliance with the provisions of the Plan shall
become the general responsibility of the Plan Administrator (subject to the
supervision of the Board of Directors of Reorganized UC) pursuant to and in
accordance with the provisions of the Plan and the Plan Administration
Agreement.
2. THE RESPONSIBILITIES OF THE PLAN ADMINISTRATOR.
The responsibilities of the Plan Administrator shall include
(a) performing all acts and actions and executing all instruments and documents
necessary to effectuate the Plan and to comply with the duties of the Plan
Administrator thereunder, (b) managing and protecting the assets of Reorganized
UC and making distributions contemplated by the Plan, (c) complying with the
Plan and the obligations thereunder, (d) performing all responsibilities of
Reorganized UC as master servicer of its loan portfolio, if applicable, (e)
monitoring performance and compliance of any and all sub-servicing agreements,
(f) prosecuting any and all causes of action held by the estates where a net
recovery to the estates is probable, (g) liquidating the Remaining Assets of
Reorganized UC; (h) facilitating Reorganized UC's prosecution or settlement of
objections to and estimations of Claims, (i) filing all required tax returns and
paying taxes and all other obligations on behalf of Reorganized UC from funds
held by Reorganized UC, (j) periodic reporting to the Bankruptcy Court, of the
status of the Claims resolution process, distributions on Allowed Claims and
Allowed Equity Interests and prosecution of causes of action, and (k) such other
responsibilities as may be vested in the Plan Administrator pursuant to the
Plan, the Plan Administration Agreement or Bankruptcy Court order or as may be
necessary and proper to carry out the provisions of the Plan.
3. POWERS OF THE PLAN ADMINISTRATOR.
The powers of the Plan Administrator shall, without any further
Bankruptcy Court approval in each of the following cases, include (a) the power
to invest Cash of Reorganized UC in certificates of deposit, treasury bills or
treasury bill repurchase agreements, or money-market accounts, at the discretion
of the Plan Administrator; (b) to release, convey or assign any right, title or
interest in or about Reorganized UC; (c) to sell or convert all or any part of
Reorganized UC for such purchase price and for cash or on such
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terms as the Plan Administrator and the Board of Directors of Reorganized UC
deem appropriate; (d) to open such bank or other depository accounts as may be
necessary or appropriate to carry out provisions of this Plan; (e) to take any
action required or permitted under the Plan; (g) to sue and be sued; (h) to
settle, compromise or adjust by arbitration or otherwise any disputes or
controversies in favor of or against Reorganized UC; (i) to waive or release
rights of any kind; (j) to appoint, remove and act through agents, managers,
employees and confer upon them such power and authority as may be necessary or
advisable; (k) to abandon any property, records or documents of Reorganized UC
deemed by the Plan Administrator to be burdensome or of inconsequential value
and benefit; (l) to engage professional persons to assist the Plan Administrator
with respect to its responsibilities, and (m) such other powers as may be vested
in or assumed by the Plan Administrator pursuant to the Plan, the Plan
Administration Agreement or as may be necessary and proper to carry out the
provisions of the Plan.
4. COMPENSATION OF THE PLAN ADMINISTRATOR.
In addition to reimbursement for actual out-of-pocket expenses incurred
by the Plan Administrator, the Plan Administrator shall be entitled to receive
reasonable compensation for services rendered on behalf of Reorganized UC in an
amount and on such terms as may be agreed to by the Equity Committee as
reflected in the Plan Administration Agreement.
5. TERMINATION OF PLAN ADMINISTRATOR.
The duties, responsibilities and powers of the Plan Administrator shall
terminate as set forth in the Plan Administration Agreement.
6. EXCULPATION.
From and after the Effective Date, the Plan Administrator shall be
exculpated by all Persons and Entities, including, without limitation, holders
of Claims and Equity Interests and other parties in interest, from any and all
claims, causes of action and other assertions of liability arising out of the
discharge of the powers and duties conferred upon such Plan Administrator by the
Plan or any order of the Bankruptcy Court entered pursuant to or in furtherance
of the Plan, or applicable law, except for actions or omissions to act arising
out of the gross negligence, willful misconduct or breach of fiduciary duty of
such Plan Administrator. No holder of a Claim or an Equity Interest or other
party in interest shall have or pursue any claim or cause of action against the
Plan Administrator for making payments in accordance with the Plan or for
implementing the provisions of the Plan.
H. PROVISIONS FOR THE ESTABLISHMENT AND MAINTENANCE OF
DISBURSEMENT ACCOUNTS.
1. ESTABLISHMENT OF DISBURSEMENT ACCOUNT(S).
On or before the Effective Date, the Debtors shall establish one or
more segregated bank accounts in the name of Reorganized UC, which accounts
shall be trust accounts for the benefit of Creditors and Equity Interests
pursuant to the Plan and utilized solely for the investment and distribution of
Cash consistent with the terms and conditions of the Plan. On or before the
Effective Date, the Debtors shall deposit into such Disbursement Account(s) all
Cash and Cash Equivalents of the Debtors, less such amount reasonably determined
by the Equity Committee, on or prior to the Effective Date as necessary to fund
the ongoing operations of Reorganized UC. Notwithstanding anything contained
herein, Reorganized UC shall have the right to retain such funds as are
necessary to meet the obligations of the Debtors to fund interest and servicer
advances or purchase loans to avoid loss triggers.
2. MAINTENANCE OF DISBURSEMENT ACCOUNT(S).
Disbursement Account(s) shall be maintained at one or more domestic
banks or financial institutions of Reorganized UC's choice that are included on
the list of approved depository institutions by the Office of the United States
Trustee. Reorganized UC shall invest Cash in Disbursement Account(s) in Cash
Equivalents; provided, however, that sufficient liquidity shall be maintained in
such account or accounts to (a) make promptly when due all payments upon
Disputed Claims if, as and when they become Allowed Claims and (b) make promptly
when due the other payments provided for in the Plan.
I. PROVISIONS REGARDING DISBURSEMENTS.
1. TIME AND MANNER OF PAYMENTS.
Payments under the Plan shall be made to each holder of an Allowed
Claim or Allowed Equity Interest as follows:
(a) Initial Payments: On or as soon as practicable
after the Effective Date, the Plan Administrator
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shall distribute, or cause to be distributed, after making reserves for Disputed
Claims or Disputed Equity Interests as appropriate, to each holder of (i) an
Allowed Unsecured Claim, (ii) an Allowed Borrower Litigation Claim, (iii) an
Allowed Subordinated Debenture Claim, (iv) an Allowed Lending Subordinated
Debenture Claim, (v) an Allowed Subordinated Penalty Claim, (vi) an Allowed
Pride Equity Interest, (vii) an Allowed Statutorily Subordinated Claim, and
(viii) an Allowed United Companies Common Equity Interest, each Creditor's or
Equity Interest's share, if any, of Disbursement Cash available for distribution
as determined pursuant to Articles VII, X, XI and XII of the Plan, respectively.
(b) Quarterly Payments: On the first (1st) Business
Day that is after the close of one full calendar quarter following the date of
the initial Effective Date distributions, and, thereafter, on each thirtieth
(30th) Business Day following the close of calendar quarters, the Plan
Administrator shall distribute, or cause to be distributed, after making
reserves for Disputed Claims or Disputed Equity Interests as appropriate, to
each holder of (i) an Allowed Unsecured Claim, (ii) an Allowed Borrower
Litigation Claim, (iii) an Allowed Subordinated Debenture Claim, (iv) an Allowed
Lending Subordinated Debenture Claim, (v) an Allowed Subordinated Penalty Claim,
(vi) an Allowed Pride Equity Interest, (vii) an Allowed Statutorily Subordinated
Claim, and (viii) an Allowed United Companies Common Equity Interest, an amount
equal to such Creditor's or Equity Interest's share, if any, of Disbursement
Cash available for distribution as determined pursuant to Articles VII, X, XI,
XII and XIII of the Plan, until such time as there is no longer any potential
Disbursement Cash available for distribution.
2. TIMELINESS OF PAYMENTS.
Any payments or distributions to be made by Reorganized UC pursuant to
the Plan shall be deemed to be timely made if made within twenty (20) days after
the dates specified in the Plan. Whenever any distribution to be made under this
Plan shall be due on a day other than a Business Day, such distribution shall
instead be made, without interest, on the immediately succeeding Business Day,
but shall be deemed to have been made on the date due.
3. DISTRIBUTIONS BY THE PLAN ADMINISTRATOR.
All distributions under the Plan shall be made by the Plan
Administrator. The Plan Administrator shall be deemed to hold all property to be
distributed hereunder in trust for the Persons entitled to receive the same. The
Plan Administrator shall not hold an economic or beneficial interest in such
property.
4. MANNER OF PAYMENT UNDER THE PLAN.
Unless the Entity receiving a payment agrees otherwise, any payment in
Cash to be made by Reorganized UC shall be made, at the election of Reorganized
UC, by check drawn on a domestic bank or by wire transfer from a domestic bank.
5. DELIVERY OF DISTRIBUTIONS.
Subject to the provisions of Rule 9010 of the Bankruptcy Rules, and
except as provided in Sections 7.3,7.4, 10.3 and 10.4 of the Plan, distributions
and deliveries to holders of Allowed Claims shall be made at the address of each
such holder as set forth on the Schedules filed with the Bankruptcy Court unless
superseded by the address set forth on proofs of claim filed by such holders, or
at the last known address of such a holder if no proof of claim is filed or if
the Debtors have been notified in writing of a change of address. Distributions
to holders of Allowed Equity Interests shall be made at the addresses set forth
on the transfer ledger for United Companies common stock as of the Record Date.
6. UNDELIVERABLE DISTRIBUTIONS.
(a) Holding of Undeliverable Distributions: If any
distribution to any holder is returned to Reorganized UC as undeliverable, no
further distributions shall be made to such holder unless and until Reorganized
UC is notified, in writing, of such holder's then-current address. Undeliverable
distributions shall remain in the possession of Reorganized UC until such time
as a distribution becomes deliverable. All Persons ultimately receiving
undeliverable Cash shall not be entitled to any interest or other accruals of
any kind accruing after the date of the initial disbursement. Nothing contained
in the Plan shall require Reorganized UC to attempt to locate any holder of an
Allowed Claim or an Allowed Equity Interest.
(b) Failure to Claim Undeliverable Distributions: On
or about the second (2nd) anniversary of the Effective Date, Reorganized UC
shall file a list with the Bankruptcy Court setting forth the names of those
Entities for which distributions have been made hereunder and have been returned
as undeliverable as of the date thereof. Any holder of an Allowed Claim or an
Allowed Equity Interest that does not assert its rights pursuant to the Plan to
receive a distribution within three (3) years from and after the Effective Date
shall have its Claim or Equity Interest for such undeliverable distribution
discharged and shall be
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forever barred from asserting any such Claim or Equity Interest against
Reorganized UC or its property. In such case, any consideration held for
distribution on account of such Claim or Equity Interest shall revert to
Reorganized UC.
7. COMPLIANCE WITH TAX REQUIREMENTS.
To the extent applicable, Reorganized UC shall comply with all tax
withholding and reporting requirements imposed on it by any governmental unit,
and all distributions pursuant to the Plan shall be subject to such withholding
and reporting requirements.
8. TIME BAR TO CASH PAYMENTS.
Checks issued by Reorganized UC on account of Allowed Claims shall be
null and void if not negotiated within ninety (90) days from and after the date
of issuance thereof. Requests for reissuance of any check shall be made directly
to the Plan Administrator 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 (a) the second (2nd) anniversary
of the Effective Date or (b) ninety (90) days after the date of issuance of such
check, if such check represents a final distribution hereunder on account of
such Claim. After such date all Claims in respect of voided checks shall be
discharged and forever barred.
9. DISTRIBUTIONS AFTER EFFECTIVE DATE.
Distributions made after the Effective Date to holders of Claims and
Equity Interests that are not Allowed Claims or Allowed Equity Interests as of
the Effective Date but which later become Allowed Claims or Allowed Equity
Interests shall be deemed to have been made on the Effective Date.
10. SET-OFFS.
Reorganized UC may, pursuant to section 553 of the Bankruptcy Code or
applicable nonbankruptcy law, set off against any Allowed Claim or Allowed
Equity Interest and the distributions to be made pursuant to the Plan on account
thereof (before any distribution is made on account of such Claim or Equity
Interest), the claims, rights and causes of action of any nature that the
Debtors or Reorganized UC may hold against the holder of such Allowed Claim or
Allowed Equity Interest; provided, however, that neither the failure to effect
such a set-off nor the allowance of any Claim or Equity Interest hereunder shall
constitute a waiver or release by the Debtors or Reorganized UC of any such
claims, rights and causes of action that the Debtors or Reorganized UC may
possess against such holder; and, provided, further, that nothing contained
herein is intended to limit the rights of any Creditor or holder of an Equity
Interest to effectuate a set-off prior to the Effective Date in accordance with
the provisions of Sections 362 and 553 of the Bankruptcy Code.
J. PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS AND DISPUTED
EQUITY INTERESTS UNDER THE PLAN.
1. OBJECTIONS TO CLAIMS AND EQUITY INTERESTS;
PROSECUTION OF DISPUTED CLAIMS AND DISPUTED EQUITY
INTERESTS.
The Equity Committee, or Reorganized UC, as applicable, shall object to
the allowance of Claims or Equity Interests filed with the Bankruptcy Court with
respect to which it disputes liability or allowance in whole or in part. All
objections shall be litigated to Final Order; provided, however, that
Reorganized UC (within such parameters as may be established by the Board of
Directors of Reorganized UC), shall have the authority to file, settle,
compromise or withdraw any objections to Claims or Equity Interests, without
approval of the Bankruptcy Court. Unless otherwise ordered by the Bankruptcy
Court, the Equity Committee, or Reorganized UC, as applicable, shall file and
serve all objections to Claims or Equity Interests as soon as practicable, but
in no event later than the Effective Date or such later date as may be approved
by the Bankruptcy Court. The Equity Committee reserves the right to file
objections to any Claims or Equity Interests, and Reorganized UC and the Equity
Committee reserve the right to seek the subordination of any Claims or Equity
Interests.
2. ESTIMATION OF CLAIMS.
The Equity Committee, or Reorganized UC, as applicable, may at any time
request that the Bankruptcy Court estimate any contingent or Disputed Claim
pursuant to Section 502(c) of the Bankruptcy Code regardless of whether the
Debtors or Reorganized UC previously have objected to such Claim or whether the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will
retain jurisdiction to estimate any Claim at any time during litigation
concerning any objection to any Claim, including, without limitation, during the
pendency of any appeal relating to any such objection. Subject to the provisions
of Section 502(j) of the Bankruptcy Code, in the event that the Bankruptcy Court
estimates any contingent or Disputed Claim, the amount so estimated
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shall constitute the allowed amount of such Claim. All of the aforementioned
objection, estimation and resolution procedures are intended to be cumulative
and not necessarily exclusive of one another. Claims may be estimated and
subsequently compromised, settled, withdrawn or resolved by any mechanism
approved by the Bankruptcy Court.
3. DISPUTED CLAIMS RESERVE.
In accordance with this Section 30.3 of the Plan and any Estimation
Order entered by the Bankruptcy Court before such date, on the Effective Date,
Reorganized UC shall establish a separate Disputed Claims Reserve for each Class
of Claims and Equity Interests. Property reserved under this Section shall be
set aside, segregated and, in the case of Cash, held in an interest bearing
account to be established and maintained by Reorganized UC pending resolution of
such Disputed Claims and Disputed Equity Interests. As and to the extent that
the amount of any Disputed Claim or Disputed Equity Interest exceeds the amount
of such Claim or such Equity Interest which ultimately is allowed, any excess
Cash in the applicable Disputed Claims Reserve previously reserved for or on
account of such Disputed Claim or Disputed Equity Interest shall be released to
Reorganized UC for distribution to Allowed Claims and Allowed Equity Interests
in accordance with the terms of the Plan. Each Disputed Claim Reserve shall be
terminated once all Distributions and other dispositions of Cash required under
the Plan relevant to such Disputed Claims Reserve have been made in accordance
with the terms of the Plan. If a Disputed Equity Interest Reserve is established
under the Plan, all references to Disputed Claims Reserve shall apply to the
Disputed Equity Interest Reserve and all references to Claims, Allowed Claims
and Disputed Claims shall apply to Equity Interests, Allowed Equity Interests,
and Disputed Equity Interests as the context requires.
4. PAYMENTS AND DISTRIBUTIONS ON DISPUTED CLAIMS AND
DISPUTED EQUITY INTERESTS.
At such time as a Disputed Claim or Disputed Equity Interest becomes,
in whole or in part an Allowed Claim or an Allowed Equity Interest, Reorganized
UC shall distribute to the holder thereof the distributions, if any, to which
such holder is then entitled under the Plan. Such distribution, if any, shall be
made as soon as practicable after the date that the order or judgment of the
Bankruptcy Court allowing such Disputed Claim or Disputed Equity Interest
becomes a Final Order but in no event more than thirty (30) days thereafter. No
additional interest shall be paid on Disputed Claims or Disputed Equity
Interests that later become Allowed or with respect to any distribution to such
holder for the period during the pendency of the objection. No distribution
shall be made with respect to all or any portion of any Disputed Claim or
Disputed Equity Interest pending the entire resolution thereof in the manner
prescribed in Section 30.1 of the Plan.
K. PROVISIONS FOR PROSECUTION OF CLAIMS HELD BY THE DEBTORS.
Prosecution of Claims: Article XXXI of the Plan provides that unless
otherwise expressly provided in the Plan, all claims and causes of action of the
Debtors existing as of the Confirmation Date, including any avoidance or
recovery actions under Sections 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code and any other causes of action, rights to payments or claims
that belong to the Debtors or Debtors in Possession, shall be retained by and
vested for purposes of enforcement and collection in Reorganized UC, who shall
have the rights and powers of a trustee appointed pursuant to 11 U.S.C. ss. 1104
with regard to the initiation and prosecution of any claims which the Debtors
may have as Debtors in Possession (exercising the rights and powers of a trustee
pursuant to 11 U.S.C. ss. 1107(a)) under 11 U.S.C. ss.ss. 541 through 553
(inclusive) and 11 U.S.C. ss. 510 or otherwise. Any and all claims and causes of
action which may subsequently come to the attention of the Debtors, the Plan
Administrator or Reorganized UC shall survive Confirmation. It is the express
purpose and intent of the Plan that Reorganized UC have the same rights and
powers with regard to any causes of action which a trustee appointed pursuant to
11 U.S.C. ss. 1104 would have if such trustee were appointed on the Confirmation
Date and that any adverse parties against whom such causes of action are
asserted similarly have the same rights, liabilities and defenses to such causes
of action which any such adverse party would have in the event the causes of
action were brought by a trustee, including the right to have an Allowed Claim
to the extent provided in 11 U.S.C. ss. 502(h). Reorganized UC shall not be
required to set off against any claim, or against any distributions to be made
pursuant to the Plan in respect of such Allowed Claim any claims of any nature
whatsoever which the Debtors or Debtors in Possession may have against the
holder of such Allowed Claim but neither the failure to do so nor the allowance
of any Allowed Claim hereunder shall constitute a waiver or release of any such
claims the Debtors or Debtors in Possession may have against such holder.
Reorganized UC may compromise and settle such claims or causes of action,
without approval of the Bankruptcy Court (but with approval of, or within
parameters established by, the Board of Directors of Reorganized UC). The net
proceeds of any such litigation or settlement (after satisfaction of all costs
and expenses incurred in connection therewith) shall be remitted to the Plan
Administrator for inclusion in Disbursement Cash.
L. PROVISIONS REGARDING EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
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1. REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED
LEASES.
Any executory contracts or unexpired leases which have not expired by
their own terms on or prior to the Effective Date, which have not been assumed
and assigned or rejected with the approval of the Bankruptcy Court, or which are
not the subject of a motion to assume the same pending as of the Effective Date
shall be deemed rejected by the Debtors in Possession on the Effective Date and
the entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such rejections pursuant to Sections 365(a) and 1123 of the
Bankruptcy Code.
2. CURE OF DEFAULTS FOR ASSUMED EXECUTORY CONTRACTS AND
UNEXPIRED LEASES.
Any monetary amounts required as cure payments on each executory
contract and unexpired lease to be assumed pursuant to the Plan shall be
satisfied, pursuant to Section 365(b)(1) of the Bankruptcy Code, by payment of
the cure amount in Cash on the Effective Date or upon such other terms and dates
as the parties to such executory contracts or unexpired leases otherwise may
agree. In the event of a dispute regarding (a) the amount of any cure payment,
(b) the ability of the Debtors or any assignee to provide "adequate assurance of
future performance" (within the meaning of Section 365 of the Bankruptcy Code)
under the contract or lease to be assumed or (c) any other matter pertaining to
assumption, the cure payments required by Section 365(b)(1) of the Bankruptcy
Code shall be subject to the jurisdiction of the Bankruptcy Court and made
following the entry of a Final Order resolving such dispute.
3. REJECTION DAMAGE CLAIMS.
Not later than the Effective Date, or such later date as the Bankruptcy
Court may by order permit, the Equity Committee shall file with the Bankruptcy
Court a list of executory contracts and unexpired leases to be assumed by the
Debtors pursuant to the Plan as of the Effective Date, and such executory
contracts and unexpired leases shall be deemed assumed as of the Effective Date.
If the rejection of an executory contract or unexpired lease results in damages
to the other party or parties to such contract or lease, any 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 Debtors, or its properties or
agents, successors, or assigns, unless a proof of claim is filed with the
Bankruptcy Court and served upon counsel for the Equity Committee on or before
fifteen (15) days after the later to occur of (a) the Effective Date and (b) the
date of entry of an order by the Bankruptcy Court authorizing rejection of a
particular executory contract or unexpired lease.
M. PROVISIONS REGARDING CONDITIONS PRECEDENT TO EFFECTIVE DATE OF
PLAN.
Article XXXIV of the Plan provides that the occurrence of the Effective
Date and the substantial consummation of the Plan are subject to satisfaction of
the following conditions precedent:
1. ENTRY OF CONFIRMATION ORDER.
The Clerk of the Bankruptcy Court shall have entered the Confirmation
Order, in form and substance satisfactory to the Equity Committee, and the
Confirmation Order shall have become a Final Order and be in full force and
effect or the Equity Committee waives the requirement for a Final Order.
2. EXECUTION OF SERVICING AGREEMENT(S).
The Equity Committee shall have executed definitive servicing or
sub-servicing agreement(s) with one or more qualified servicers under terms and
conditions no less favorable to the Debtors' estates than those set forth in
Exhibit A to the Plan to service the Debtors' loan portfolio. In the event the
Equity Committee fails to retain a servicer or subservicer within sixty (60)
days of confirmation of the Equity Committee's Plan, the Confirmation Order
shall be deemed void and of no force and effect.
3. ENTRY OF THE SERVICING AGREEMENT ORDER.
The Bankruptcy Court shall have entered the Servicing Agreement Order.
4. EXECUTION OF DOCUMENTS; OTHER ACTIONS.
All other actions and documents necessary to implement the Plan shall
have been executed.
N. PROVISIONS REGARDING COMMITTEES.
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1. CREDITORS COMMITTEE TERM AND FEES.
On the Effective Date, the Creditors Committee shall be dissolved and
the members thereof and the professionals retained by the Creditors Committee in
accordance with Section 1103 of the Bankruptcy Code shall be released and
discharged from their respective fiduciary obligations.
2. EQUITY COMMITTEE TERM AND FEES.
On the Effective Date, the Equity Committee shall be dissolved and the
members thereof and the professionals retained by the Equity Committee in
accordance with Section 1103 of the Bankruptcy Code shall be released and
discharged from their respective fiduciary obligations.
O. MISCELLANEOUS PLAN PROVISIONS.
1. DISCHARGE OF DEBTORS.
Except as otherwise specifically provided in the Plan or the
Confirmation Order, confirmation of the Plan (subject to the occurrence of the
Effective Date) shall operate as a discharge, pursuant to section 1141(d)(1) of
the Bankruptcy Code, of the Debtors and Reorganized UC from any debt, Claim or
Equity Interest that arose before the Confirmation Date, including, but not
limited to, all principal and interest, whether accrued before, on or after the
Petition Date, and any debt, Claim or Equity Interest of the kind specified in
sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not a proof
of Claim or Equity Interest is filed or is deemed filed, and whether or not the
holder of such Claim or Equity Interest has voted on the Plan. On the Effective
Date, as to every discharged debt, Claim and Equity Interest, the holder of such
debt, Claim or Equity Interest shall be precluded from asserting against the
Debtors, the Debtors' assets or properties, against Reorganized UC, and the Plan
Administrator any other or further Claim or Equity Interest based upon any
document, instrument or act, omission, transaction or other activity of any kind
or nature that occurred prior to the Confirmation Date.
2. INJUNCTION.
Except as otherwise expressly provided in the Plan, all Persons or
Entities who have held, hold or may hold Claims or Equity Interests are
permanently enjoined, from and after the Effective Date, from (a) commencing or
continuing in any manner any action or other proceeding of any kind on any such
Claim or Equity Interest against the Debtors or Reorganized UC, (b) the
enforcement, attachment, collection or recovery by any manner or means of any
judgment, award, decree or order against the Debtors or Reorganized UC, (c)
creating, perfecting, or enforcing any encumbrance of any kind against the
Debtors or Reorganized UC or against the property or interests in property of
the Debtors or Reorganized UC, and (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from the
Debtors or Reorganized UC or against the property or interests in property of
the Debtors or Reorganized UC, with respect to any such Claim or Equity
Interest; provided, however, that such injunction shall not preclude the United
States of America or any of its police or regulatory agencies from enforcing
their police or regulatory powers; and, provided, further, that, except in
connection with a properly filed proof of claim, the foregoing proviso does not
prohibit the United States of America or any of its police or regulatory
agencies from obtaining any monetary recovery from United Companies or
Reorganized UC or their respective property or interests in property with
respect to any such Claim or Equity Interest, including, without limitation, any
monetary claim or penalty in furtherance of a police or regulatory power.
3. TERM OF EXISTING INJUNCTIONS OR STAYS.
Unless otherwise provided, all injunctions or stays provided for in the
Chapter 11 Case pursuant to Sections 105 or 362 of the Bankruptcy Code, or
otherwise, and in existence on the Confirmation Date, shall remain in full force
and effect until the Effective Date.
4. PAYMENT OF STATUTORY FEES.
All fees payable pursuant to Section 1930 of title 28 of the United
States Code, as determined by the Bankruptcy Court at the Confirmation Hearing,
shall be paid on the Effective Date.
5. RETIREE BENEFITS.
From and after the Effective Date, pursuant to Section 1129(a)(13) of
the Bankruptcy Code, Reorganized UC shall continue to pay all retiree benefits
(within the meaning of Section 1114 of the Bankruptcy Code), at the level
established in accordance with
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subsection (e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any time
prior to the Confirmation Date, and for the duration of the period during which
the Debtors have obligated themselves to provide such benefits.
6. POST-EFFECTIVE DATE FEES AND EXPENSES.
From and after the Effective Date, Reorganized UC shall, in the
ordinary course of business and without the necessity for any approval by the
Bankruptcy Court, pay the reasonable professional fees and expenses incurred by
Reorganized UC related to implementation and consummation of the Plan.
7. EXEMPTION FROM CERTAIN TRANSFER TAXES.
Pursuant to Section 1146(c) of the Bankruptcy Code (a) issuance,
transfer or exchange of any securities, instruments or documents and (b) the
creation of any other lien, mortgage, deed of trust or other security interest
under the Plan shall not be subject to any stamp tax, transfer tax, intangible
tax, recording fee, or similar tax, charge or expense to the fullest extent
provided for under Section 1146(c) of the Bankruptcy Code.
8. SEVERABILITY.
If, prior to the Confirmation Date, any term or provision of the Plan
shall be held by the Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court shall, with the consent of the Equity Committee, have the power
to alter and interpret such term or provision to make it valid or enforceable,
to the maximum extent practicable, consistent with the original purpose of the
term or provision held to be invalid, void or unenforceable, and such term or
provision shall then be applicable as altered or interpreted. Notwithstanding
any such holding, alteration or interpretation, the remainder of the terms and
provisions of the Plan shall remain in full force and effect and shall in no way
be affected, impaired or invalidated by such holding, alteration or
interpretation. The Confirmation Order shall constitute a judicial determination
and shall provide that each term and provision of the Plan, as it may have been
altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
9. GOVERNING LAW.
Except to the extent that the Bankruptcy Code or other federal law is
applicable, or to the extent that an exhibit hereto, any exhibit to the Plan or
any document contained in the Plan Supplement provides otherwise, the rights,
duties and obligations arising under this Plan shall be governed by, and
construed and enforced in accordance with, the Bankruptcy Code and, to the
extent not inconsistent therewith, the laws of the State of Louisiana, without
giving effect to principles of conflicts of laws.
ARTICLE IV.
CONFIRMATION OF THE PLAN
A. INTRODUCTION.
The Bankruptcy Code requires the Bankruptcy Court to determine whether
the Equity Committee's Plan complies with the technical requirements of Chapter
11 and other applicable provisions of the Bankruptcy Code. It requires further
that the Equity Committee's disclosure concerning its Plan must be adequate and
include information concerning all payments made or promised in connection with
the Plan.
To confirm the Plan, the Bankruptcy Court must find that all of these
and other requirements have been met. Thus, even if the requisite vote is
achieved for each Class of Impaired Claims and Equity Interests, the Bankruptcy
Court must make independent findings respecting the Plan's conformity with the
requirements of the Bankruptcy Code before it may confirm the Plan. Some of
those statutory requirements are discussed below.
B. VOTING PROCEDURES AND STANDARDS.
Only Claims and Equity Interests in Classes that are Impaired under the
Plan (but not deemed to reject the Plan by virtue of receiving no Distributions
thereunder) are entitled to receive this Disclosure Statement and Ballot for the
acceptance or the rejection of the Plan. Any Claim or Equity Interest holder
whose legal, contractual, or equitable rights with regard to such Claim or
Equity Interest are altered, modified or changed by the proposed treatment under
the Plan or whose treatment under the Plan is not provided for in Section 1124
of the Bankruptcy Code is considered Impaired.
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On July 10, 2000, the Bankruptcy Court issued the Voting Procedures
Order. The procedures for establishing the number, amount and classification of
Claims and Equity Interests that will be used to tabulate acceptances and
rejections of the Plan are set forth in the Voting Procedures Order, which is
annexed hereto as Exhibit B.
IT IS IMPORTANT THAT HOLDERS OF CLAIMS AND EQUITY INTERESTS EXERCISE
THEIR RIGHT TO VOTE TO ACCEPT OR REJECT THE PLAN. All known holders of Claims
and Equity Interests entitled to vote on the Plan have been sent a Ballot
together with this Disclosure Statement. Such holders should read the Ballot
carefully and follow the instructions contained therein. Please use only the
Ballot (or Ballots) that accompanies this Disclosure Statement.
FOR YOUR VOTE TO COUNT, YOUR BALLOT MUST BE RECEIVED BY THE BALLOTING
AGENT (AS DEFINED BELOW), NO LATER THAN 4:00 P.M., EASTERN TIME, ON AUGUST 10,
2000. IF YOU MUST RETURN YOUR BALLOT TO A BANK, BROKER, OR OTHER INTERMEDIARY,
YOU MUST RETURN YOUR BALLOT TO THEM IN SUFFICIENT TIME FOR THEM TO PROCESS IT
AND RETURN IT TO THE BALLOTING AGENT, BY THE VOTING DEADLINE.
ANY BALLOT WHICH IS EXECUTED AND RETURNED BUT WHICH DOES NOT INDICATE
AN ACCEPTANCE OR REJECTION OF THE PLAN WILL NOT BE COUNTED. IF YOU HAVE ANY
QUESTIONS CONCERNING VOTING PROCEDURES OR IF A BALLOT IS DAMAGED OR LOST, YOU
MAY CONTACT THE BALLOTING AGENT AT THE ADDRESS SPECIFIED BELOW OR BY
TELEPHONING:
UNITED COMPANIES BALLOTING AGENT
C/O LOGAN & COMPANY, INC.
546 VALLEY ROAD
UPPER MONTCLAIR, NEW JERSEY 07043
ATTENTION: KATE LOGAN
PHONE: (973) 509-3190
Additional copies of this Disclosure Statement are available upon
written request to:
LONG, ALDRIDGE & NORMAN LLP
303 PEACHTREE STREET, N.E.
SUITE 5300
ATLANTA, GEORGIA 30308
ATTENTION: CHARLES E. CAMPBELL
Subject to the provisions of the Voting Procedures Order, any holder of
a Claim against the Debtors as of June 30, 2000, which Claim has not been
disallowed by order of the Bankruptcy Court and is not disputed, is entitled to
vote to accept or reject the Plan if (a) such Claim is impaired under the Plan
and is not a class that is deemed to have accepted or rejected the Plan pursuant
to Section 1126(f) and 1126(g) of the Bankruptcy Code and (b) either (i) such
holder's Claim has been scheduled by the Debtors (and such Claim is not
scheduled as disputed, contingent or unliquidated), or (ii) such holder has
filed a proof of claim on or before the Bar Date of September 30, 1999, or any
supplemental bar date applicable to specified creditors. In addition, any holder
of an Equity Interest in the Debtors as of June 30, 2000, which Equity Interest
has not been disallowed by order of the Bankruptcy Court and is not disputed, is
entitled to vote to accept or reject the Plan if such Equity Interest is
impaired under the Plan and is not of a class that is deemed to have accepted or
rejected the Plan pursuant to Section 1126(f) and 1126(g) of the Bankruptcy
Code. UNLESS OTHERWISE PERMITTED IN THE PLAN, THE HOLDER OF ANY DISPUTED CLAIM
OR DISPUTED EQUITY INTEREST IS NOT ENTITLED TO VOTE WITH RESPECT TO SUCH
DISPUTED CLAIM OR DISPUTED EQUITY INTEREST, UNLESS THE BANKRUPTCY COURT, UPON
APPLICATION BY SUCH HOLDER, TEMPORARILY ALLOWS SUCH DISPUTED CLAIM OR DISPUTED
EQUITY INTEREST FOR THE LIMITED PURPOSE OF VOTING TO ACCEPT OR REJECT THE PLAN.
Any such application must be heard and determined by the Bankruptcy Court on or
before fifteen (15) days prior to the Confirmation Hearing. A vote on the Plan
may be disregarded if the Bankruptcy Court determines, after notice and a
hearing, that such vote was not solicited or procured in good faith or in
accordance with the provisions of the Bankruptcy Code.
A VOTE MAY BE DISREGARDED IF THE COURT DETERMINES, AFTER NOTICE AND A
HEARING, THAT SUCH ACCEPTANCE OR REJECTION WAS NOT MADE OR SOLICITED IN GOOD
FAITH OR IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE.
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C. ACCEPTANCE.
Acceptance of the Plan need only be solicited from holders of Impaired
Claims or Equity Interests not deemed to reject the Plan by virtue of receiving
no Distributions thereunder. Except in the context of a "cram down," as a
condition to confirmation of the Plan, the Bankruptcy Code requires that, with
certain exceptions, each Class of Impaired Claims and Impaired Equity Interests
accepts the Plan. Pursuant to the Bankruptcy Code, in order for the Plan to be
"accepted," the requisite vote is required for each Class of Impaired Claims or
Impaired Equity Interests. Any Class of Impaired Claims or Impaired Equity
Interests that fails to achieved the requisite vote will be deemed to have
rejected the Plan.
Under the Plan, holders of Allowed Claims and Allowed Equity Interests
in Classes 3,4,6,7, 8 and 9 (the "Voting Classes") are treated as Impaired and
entitled to vote on the Plan. Claims and Equity Interests in Classes
1,2,5,10,11,12,13,14,15,16,17,18, 19, and 20 and Administrative Claims,
Professional Fee Claims, and Priority Tax Claims are not impaired under the Plan
and thus holders of such Claims and Equity Interests are presumed to have
accepted the Plan pursuant to Section 1126(f) of the Bankruptcy Code and are not
entitled to vote.
The Bankruptcy Code defines acceptance of a Plan by an Impaired Class
of Claims as acceptance by holders of at least two-thirds (2/3) in dollar
amount, and more than one-half (1/2) in number, of Allowed Claims of that Class
that actually vote. The Bankruptcy Code further defines acceptance by an
Impaired Class of Equity Interests as acceptance by holders of at least
two-thirds (2/3) of the amount of allowed Equity Interests of that Class that
actually vote. Pursuant to the Bankruptcy Code, in order for the Plan to be
"accepted," the requisite vote is required for each Class of Impaired Claims and
Impaired Equity Interests entitled to vote on the Plan. Any voting Class that
fails to achieve the requisite vote will be deemed to have rejected the Plan.
In the event the requisite vote is not obtained, the Equity Committee
has the right, assuming that at least one Class of Impaired Claims has accepted
the Plan, to request confirmation of the Plan pursuant to Section 1129(b) of the
Bankruptcy Code. Section 1129(b) permits confirmation of the Plan
notwithstanding rejection by one or more classes of Impaired Claims or Impaired
Equity Interests provided the Bankruptcy Court finds that the Plan does not
discriminate unfairly and is "fair and equitable" with respect to the rejecting
Class or Classes. This procedure is commonly referred to as "cram down." The
Plan is predicated on holders of Claims and Equity Interests in all voting
Classes voting to accept the Plan. However, if holders of Claims or Equity
Interests within any voting Classes vote to reject the Plan, the Equity
Committee intends to request a cram down of such Classes at the Confirmation
Hearing.
D. CONFIRMATION AND CONSUMMATION.
At the Confirmation Hearing, the Bankruptcy Court will determine
whether the requirements of Section 1129(a) of the Bankruptcy Code have been
satisfied with respect to the Plan. Section 1129(a) of the Bankruptcy Code
requires that, among other things, for a Plan to be confirmed:
o The Plan must satisfy the applicable provisions of the
Bankruptcy Code.
o The Proponent of the Plan must comply with the applicable
provisions of the Bankruptcy Code.
o The Plan must be proposed in good faith and not by any means
forbidden by law. Any payment made or to be made by the
Proponent, by the Debtors, or by a person issuing securities
or acquiring property under the Plan, for services or for
costs and expenses in or in connection with the bankruptcy
case, or in connection with the Plan and incident to the
bankruptcy case, must be approved by, or be subject to the
approval of, the Bankruptcy Court as reasonable.
o The Proponent must disclose the identity and affiliations of
any individual proposed to serve, after confirmation of the
Plan, as a director, officer, or voting trustee of the
Debtors, an affiliate of the Debtors participating in the Plan
with the Debtors, or successor to the Debtors under the Plan.
The appointment to, or continuance in, such office of such
individual is consistent with the interests of creditors and
equity security holders and with public policy and the
Proponent has disclosed the identity of any insider that the
reorganized Debtors will employ or retain and the nature of
any compensation for such insider.
o With respect to each Class of Impaired Claims or Equity
Interests, either each holder of a Claim or Equity Interest in
such Class has accepted the Plan, or will receive or retain
under the Plan on account of such Claim or Equity Interest,
property of a value, as of the Effective Date of the Plan,
that is not less than the amount that such holder would
receive or retain if the Debtors were liquidated on such date
under Chapter 7 of the Bankruptcy Code.
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o Each Class of Claims or Equity Interests has either accepted
the Plan or is not impaired under the Plan.
o Except to the extent that the holder of a particular Claim has
agreed to a different treatment of such Claim, the Plan must
provide that Allowed Administrative Expense Claims and Allowed
Priority Non-Tax Claims will be paid in full on the Effective
Date and that holders of Priority Tax Claims will be paid in
full in Cash on the Effective Date or receive on account of
such Claims deferred Cash payments, over a period not
exceeding six (6) years after the date of assessment of such
Claims, of a value as of the Effective Date, equal to the
allowed amount of such Claims. If a Class of Claims is
Impaired, at least one (1) Impaired Class of Claims has
accepted the Plan, determined without including any acceptance
of the Plan by any insider holding a Claim in such Class.
o Confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization,
of the Debtors or any successor to the Debtors under the Plan,
unless such liquidation or reorganization is proposed in the
Plan.
o Subject to receiving the requisite votes in accordance with
Section 1129(a) of the Bankruptcy Code, the Equity Committee
believes that (i) the Plan satisfies all of the statutory
requirements of Chapter 11 of the Bankruptcy Code, (ii) the
Equity Committee has complied with or will have complied with
all of the requirements of Chapter 11 of the Bankruptcy Code,
and (iii) the Plan has been proposed in good faith.
o Set forth below is a more detailed summary of the relevant
statutory confirmation requirements.
1. BEST INTEREST OF HOLDERS OF CLAIMS AND EQUITY
INTERESTS.
The "Best Interests" test requires that the Bankruptcy Court find
either that all members of each Impaired Class have accepted the Plan or that
each holder of an Allowed Claim or Allowed Equity Interest of each Impaired
Class of Claims or Equity Interests will receive or retain under the Plan on
account of such Claim or Equity Interest property of a value, as of the
Effective Date of the Plan, that is not less than the amount that such holder
would receive or retain if the Debtors were liquidated under Chapter 7 of the
Bankruptcy Code on such date. As set forth in detail below, the Equity Committee
believes that its Plan satisfies the "Best Interest" test and that holders of
Impaired Claims and Impaired Equity Interests will receive or retain under the
Plan at least as much as they would receive in a Chapter 7 liquidation of the
Debtors. To determine what holders of Claims and Equity Interests would receive
if the Debtors were hypothetically liquidated under Chapter 7 of the Bankruptcy
Code, the Bankruptcy Court must determine the dollar amount that would be
realized from a Chapter 7 Trustee's liquidation of the Debtors. Under the
Bankruptcy Code a Chapter 7 Trustee, with court approval, may continue to
operate a debtor's business for a limited period of time, and a Trustee's duties
include the obligation to "collect and reduce to money the property of the
estate... and close such estate as expeditiously as is compatible with the best
interests of parties in interest."
The Equity Committee believes that a Chapter 7 liquidation of the
Debtors' remaining assets would result in the same or similar distributions
provided for under its Plan in that its Plan essentially calls for a liquidation
of the Debtors' remaining assets in a manner that is as expeditious as is
compatible with the best interests of all parties in the case with distributions
being paid to creditors and equity security holders in accordance with the
priority scheme of the Bankruptcy Code. The Equity Committee believes that a
reasonable trustee, armed with the projections which show that Unsecured Claims
will be paid in full with interest by December, 2004 from collections on the
Debtors' loan portfolio and that the holders of Subordinated Debenture Claims
will be paid in full with interest by September, 2008 (see Exhibit D, E and F
attached hereto), would choose to liquidate the portfolio in a manner consistent
with the Equity Committee's Plan through the use of a qualified servicer or
sub-servicer rather than through the sale of the Debtors' assets as the Debtors
propose pursuant to the EMC Transaction. Attached hereto as Exhibit G is a
liquidation analysis prepared by Arthur Andersen LLP which estimates the value
of the Debtors' estates assuming they were liquidated in accordance with Chapter
7 of the Bankruptcy Code.
2. FINANCIAL FEASIBILITY.
Section 1129(a) (11) of the Bankruptcy Code requires that confirmation
should not be likely to be followed by the liquidation, or the need for further
financial reorganization, of the Debtors or any successor to the Debtors unless
such liquidation and reorganization is proposed in the Plan. The Equity
Committee Plan proposes an orderly liquidation of the Debtors' estates over time
through which all creditors will be paid in full with interest, with any amounts
remaining being distributed to holders of Equity Interests. As such, the Equity
Committee believes its Plan satisfies the feasibility requirement of the
Bankruptcy Code.
For purposes of determining whether the Plan meets this requirement,
the Equity Committee's financial consultant, Arthur Andersen, LLP, has prepared
a valuation analysis and financial forecast of Reorganized UC's cash flow for
the fiscal years
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commencing from the Effective Date of the Plan. The valuation analysis is
predicated on the assumption that a transfer of servicing to a qualified
servicer or sub-servicer commences by the beginning of October, 2000. The
valuation is also based on estimated claims of approximately $1.3 billion along
with the accrual of interest thereon with payments commencing on or about
January 1, 2001. Arthur Andersen has not conducted an independent claims
analysis and used the liability figure set forth above based on previous
estimates provided by the Debtors to the Equity Committee and to the Debtors'
Board of Directors. Such analysis also does not take into account any tax
expenses or tax benefits resulting to the estates from net operating loss
carryforwards. Arthur Andersen is currently analyzing the Debtors' ability to
utilize net operating loss carryforwards, and the Equity Committee reserves the
right to supplement its analysis. Based on these and other assumptions relating
to improvements in loan collections resulting from a transfer of servicing
duties to a highly qualified servicer or sub-servicer, the Equity Committee
believes that the Debtors' have a positive equity value of approximately in
excess of $455 million for its on-balance sheet and its off-balance sheet
assets. See Exhibit D attached hereto.
Attached hereto as Exhibit E are financial models which forecast a
complete satisfaction of all Creditor Claims with contractual interest
obligations by September, 2008. This model follows the priority payment scheme
set forth in the Plan in which holders of Subordinated Debenture Claims and
Lending Subordinated Debenture Claims receive no distributions until all other
Claims are paid in full. During this period, the Subordinated Debenture Claims
accrue interest at their nondefault note rate of 8.375%, and they begin
receiving distributions in December, 2004, with satisfaction of said Claims
projected to occur by September, 2008. All other distributions would be
available for holders of Equity Interests and holders of Statutorily
Subordinated Claims, and the Equity Committee believes the estates will have
significant assets to distribute to holders of such interests. The cash flow
model set forth on Exhibit E does not provide for any litigation proceeds from
any causes of action of the estates, which as set forth below, the Equity
Committee believes will be substantial. As such, the projected payoff date for
all creditor claims may very well be earlier than projected if substantial
litigation recoveries are obtained before the projected payoff dates. The
projected payoff dates also do not take into account the payment of tax
liabilities during the projection period which would tend to lengthen the
payment period. On balance, the Equity Committee believes the payout period
assumptions are reasonable.
These financial projections have been prepared on behalf of the Equity
Committee by Arthur Anderson, LLP, based upon certain assumptions that they
believe to be reasonable under the circumstances and financial information
provided by the Debtors through May 31, 2000. Any change in the financial
condition of the Debtors subsequent thereto may adversely affect such
projections. Since all obligations are restructured as cash flow obligations of
Reorganized UC under the Plan, the above payouts are based on the ability of the
company to achieve performance commensurate with these assumptions.
Additionally, on May 12, 2000, the Bankruptcy Court authorized the
Equity Committee to retain Harley S. Tropin, a senior member of the Miami,
Florida law firm of Kozyak, Tropin & Throckmorton, P.A., to evaluate certain
causes of action possibly held by the bankruptcy estates. Mr. Tropin specializes
in complex commercial litigation including litigation relating to fiduciary
duties and accountant malpractice. At the date of the filing of this disclosure
statement, Mr. Tropin's analysis is ongoing and subject to modification but he
has reached some conclusions with respect to causes of action owned by the
bankruptcy estates. His conclusions at the date of the filing of this Disclosure
Statement are set forth herein.
In conducting his analysis, Mr. Tropin has reviewed the following: (1)
the financial statements and SEC filings of the Debtors for the years 1997 and
1998, (2) the Bankruptcy Rule 2004 transcript of the deposition of James Bailey,
Chairman of the Board of Directors of the Debtors, and the exhibits thereto, (3)
the Bankruptcy Rule 2004 transcript of the deposition of Lawrence Ramaekers, CEO
of the Debtors, and the exhibits thereto, (4) the Bankruptcy Rule 2004
transcript of the deposition of Deloitte & Touche, LLP and the exhibits thereto,
(5) certain of the work papers and other documents produced by Deloitte & Touche
and (6) other related documents. In addition, Mr. Tropin has met with the Equity
Committee's attorneys from Long Aldridge & Norman and with Richard Johnson, a
financial consultant to the Equity Committee. He has also consulted with Wanda
Lorenz of the accounting firm of Lane Gorman Trubitt LLP.
Mr. Tropin has concluded that the bankruptcy estates have viable causes
of action against Deloitte & Touche, LLP arising out of Deloitte & Touche's
review of the quarterly financial statements and SEC filings of the Debtors and
the year end audits and annual SEC reports for the years 1997 and 1998 and its
advice to the company in regard thereto. Specifically, Mr. Tropin has concluded
that the assumed loan loss rate for United loans was materially understated in
the 1997 and 1998 quarterly reviews and the 1997 annual audit. During each of
the quarters of 1997, the 1997 year end audit and the first three quarters of
1998, the Debtors used an assumed loan loss rate of 2% on its adjustable rate
products and 2.5% on its fixed rate products or an average of 2.2%. These
assumed loss rates did not change from the beginning of 1997 through September
30, 1998. In the year end financial statement for the period ending December 31,
1998, the Debtors changed the loan loss assumption rate to 7.7%. The Debtors
have subsequently changed the assumed loan loss rate from 7.7% to a range of 7.7
to 9.7% depending upon the particular loans and securitizations. The December
31, 1997 loan loss rate should have been at least 3.5% or an increase of 1.3%
above the average 2.2% from the previously assumed rates. Also included in this
misstatement is that the Debtors did not properly take into account all of the
expenses of
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disposing of repossessed properties (known as "REO's") in the loan loss rate.
This difference represents a material overstatement of assets on the balance
sheet of the Debtors at December 31, 1997 and renders the financial statement
materially misleading and not in conformity with general accepted accounting
principles ("GAAP").
In addition to the above, the reporting in the financial statements of
servicer and interest advances at full, face value with no impairment was not in
conformity with generally accepted accounting principles to the extent they were
not collectible within one year. Further mistakes in the financial statements
include failing to charge a discount rate at the highest earning rate of the
senior tranche with respect to certain securitizations, the failure to include
the effect of cash loss triggers in the timing of cash releases from the reserve
accounts and the failure to provide a credit life insurance reserve for rebates
on credit life insurance premiums when loans were prepaid.
When all of the aforesaid adjustments are made, this is a material
difference in the financial statements for the periods indicated. Deloitte &
Touche's quarterly reviews and 1997 year end audit and unqualified opinion
without these adjustments, along with its advice to the company relating
thereto, renders Deloitte & Touche liable for malpractice. There are other
matters which Mr. Tropin is continuing to study which relate to the audit and
which will be included in his final report.
Mr. Tropin has also reviewed the present value of this cause of action
against Deloitte & Touche. He has concluded that the present value of the cause
of action is at least $ 450 million. He reached this conclusion by reviewing the
evidence with respect to alternative operating scenarios the Debtors would
likely have pursued if the financial statements had been correct. Mr. Bailey
testified in his deposition that in early 1998 the Debtors brought in an outside
consultant for the purpose of reviewing the company's operations and making
recommendations as to how those operations could be improved. Mr. Bailey further
testified that the consultant came to the conclusion and recommended to the
Board of Directors of the Debtors that the company should be sold. In mid 1998,
the Debtors embarked upon a campaign to sell the companies. Mr. Bailey testified
that he was convinced that an acceptable transaction would have been concluded
except for the fact that by the time the sales process had progressed certain
significant adverse developments in the sub-prime market in the second half of
1998 rendered the transaction impractical. Mr. Bailey specifically cited the
adverse market developments on bank stocks in late 1998 as well as certain other
events taking place in the sub-prime industry. Mr. Bailey testified that he
knows of no reason why an acceptable sale transaction could not have been
effectuated had the process been completed earlier. In the first half of 1998,
two significant transactions occurred in the sub-prime market in which sub-prime
companies were sold at significant premiums. These were First Union Corp.'s
purchase of the Money Store and Conseco's purchase of Green Tree Financial.
Had the 1997 financial statements been audited in accordance with
general accepted auditing standards ("GAAS"), the Debtors' Board would most
likely have sold the company during the same time period when the Money Store
and Green Tree transactions were concluded. Alternatively, the company would
likely have been liquidated. Using multiples of earnings and assets considered
reasonable by the investment bankers employed by the Debtors in their sales
process and taking into account the risks of litigation, the expenses of
litigation and the time value of money, Mr. Tropin has concluded that the
present value of the cause of action against Deloitte & Touche is not less than
$450 million (this figure does not include interest or attorneys fees). As
indicated above, his study is continuing.
Mr. Tropin has not yet reached a conclusion with respect to possible
causes of action against present or past officers and directors of the Debtors.
Mr. Tropin reserves the right to include his findings and conclusions on those
matters in his final report.
THE EQUITY COMMITTEE MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE
ACCURACY OF THE PROJECTIONS OR THE ABILITY TO ACHIEVE THE PROJECTED RESULTS.
MANY OF THE ASSUMPTIONS ON WHICH THE PROJECTIONS ARE BASED ARE SUBJECT TO
SIGNIFICANT UNCERTAINTIES. INEVITABLY, SOME ASSUMPTIONS WILL NOT MATERIALIZE AND
UNANTICIPATED EVENTS AND CIRCUMSTANCES MAY AFFECT THE ACTUAL FINANCIAL RESULTS.
THEREFORE, THE ACTUAL RESULTS ACHIEVED THROUGHOUT THE PROJECTION PERIOD MAY VARY
FROM THE PROJECTED RESULTS AND THE VARIATIONS MAY BE MATERIAL. ALL HOLDERS OF
CLAIMS AND EQUITY INTERESTS WHO ARE ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN ARE URGED TO EXAMINE CAREFULLY ALL OF THE ASSUMPTIONS ON WHICH THE
FINANCIAL PROJECTIONS ARE BASED IN EVALUATING THE PLAN.
Based on such forecasts, the Equity Committee believes the Plan
satisfies Section 1129(a) (11) of the Bankruptcy Code.
3. ACCEPTANCE BY IMPAIRED CLASSES.
A Class "is Impaired" under the Plan unless, with respect to each Claim
or Equity Interest of such Class, the Plan: (i) leaves unaltered the legal,
equitable and contractual rights to which the Claim or Equity Interest entitles
the holder of such Claim or
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Equity Interest; (ii) notwithstanding any contractual provision or applicable
law which entitles the holder of such Claim or Equity Interest to demand or
receive accelerated payment on account of a default, cures any default,
reinstates the original maturity of the obligation, compensates the holder for
any damages incurred as a result and reasonable reliance on such provision or
law and does not otherwise alter the legal, equitable or contractual rights of
such holder based upon such Claim or Equity Interest. A Class that is not
Impaired under the Plan is deemed to have accepted the Plan and, therefore,
solicitation of acceptances with respect to such Class is not required.
4. CRAM DOWN.
The Bankruptcy Code contains provisions for confirmation of the Plan
even if the Plan is not accepted by all Impaired Classes, as long as at least
one Impaired Class of Claims has accepted the Plan. The "cram down" provisions
of the Bankruptcy Code are set forth in Section 1129(b) of the Bankruptcy Code.
Under the "cram down" provisions, upon the request of a plan proponent, the
Bankruptcy Court will confirm a plan despite the lack of acceptance by an
impaired class or classes if the Bankruptcy Court finds that (i) the Plan does
not discriminate unfairly with respect to each nonaccepting Impaired Class, (ii)
the plan is fair and equitable with respect to each nonaccepting Impaired Class,
and (iii) at least one Impaired Class of Claims has accepted the Plan. These
standards ensure that holders of junior interests, such as common stockholders,
cannot retain any interest in the debtor under a plan of reorganization that has
been rejected by a senior class of the impaired claims or Equity Interests
unless such impaired Claims or Equity Interests are paid in full.
As used in the Bankruptcy Code, the phrases "discriminate unfairly" and
"fair and equitable" have narrow and specific meanings unique to bankruptcy law.
A plan does not discriminate unfairly if Claims or Equity Interests in different
Classes, but with similar priorities and characteristics, receive or retain
property of similar value under a Plan. By establishing separate Classes for the
holders of each type of Claim and Equity Interest and by treating each holder of
a Claim or Equity Interest in each Class identically, the Plan has been
structured so as to meet the "unfair discrimination" test of Section 1129(b) of
the Bankruptcy Code.
The Bankruptcy Code sets forth different standards for establishing
that a plan is "fair and equitable" with respect to a dissenting Class,
depending on whether the Class is comprised of Secured Claims, Unsecured Claims
or Equity Interests. In general, Section 1129(b) of the Bankruptcy Code permits
confirmation notwithstanding non-acceptance by an Impaired Class if that Class
and all junior Classes are treated in accordance with the "absolute priority"
rule, which requires that the dissenting Class be paid in full before a junior
Class may receive anything under the plan. In addition, the case law surrounding
Section 1129(b) requires that no Class senior to a nonaccepting Impaired Class
receives more than payment in full of its Claim.
With respect to a Class of Unsecured Claims that does not accept the
Plan, the Equity Committee must demonstrate to the Bankruptcy Court that either
(i) each holder of an Unsecured Claim of the dissenting Class receives or
retains under the Plan property of a value equal to the allowed amount of its
Unsecured Claim, or (ii) the holders of Claims or holders of Equity Interests
that are junior to the Claims of the holders of such Unsecured Claims will not
receive or retain any property under the Plan. Additionally, the Equity
Committee must demonstrate that the holders of Claims that are senior to the
Claims of the dissenting Class of Unsecured Claims receive no more than payment
in full on their Claims under the Plan.
With respect to any holder of a Secured Claim that does not accept the
Plan, the Equity Committee must demonstrate to the Bankruptcy Court that one of
the following conditions is satisfied: (i) such holder retains the lien securing
such Secured Claim to the extent of the allowed amount of such Secured Claim,
and that such holder receives on account of such Secured Claim Cash having a
present value as of the Effective Date of the Plan, equal to the value of such
holder's interest in the estates' interest in the property subject to such
liens; (ii) the Plan provides for the sale, subject to Section 363(k) of the
Bankruptcy Code, of the assets subject to a lien securing such holder's Claim,
free and clear of such liens, with such liens to attach to the proceeds of such
sale; or (iii) the Plan provides for the realization by such holder of the
indubitable equivalent of such Secured Claim.
If all of the applicable requirements for confirmation of the Plan are
met as set forth in Sections 1129(a) (1) through (13) of the Bankruptcy Code,
except that one or more Classes of Impaired Claims or Impaired Equity Interests
have failed to accept the Plan pursuant to Section 1129(a) of the Bankruptcy
Code, the Equity Committee reserves the right to request that the Bankruptcy
Court confirm the Plan in accordance with Section 1129(b) of the Bankruptcy
Code. The Equity Committee believes that the Plan satisfies the "cram down"
requirements of the Bankruptcy Code. The Equity Committee may seek confirmation
of the Plan over the objection of dissenting Classes, as well as over the
objection of individual holders of Claims who are members of an accepting Class.
In addition, the Equity Committee intends to seek "cram down" on classes deemed
to reject the Plan pursuant to Section 1126(g) of the Bankruptcy Code by virtue
of receiving no distribution under the Plan.
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ARTICLE V.
CERTAIN TAX CONSEQUENCES OF THE PLAN
THE FOLLOWING DISCUSSION IS A SUMMARY OF CERTAIN OF THE SIGNIFICANT
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN TO THE DEBTORS AND TO HOLDERS OF
CLAIMS AND EQUITY INTERESTS AND IS BASED ON THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED TO THE DATE HEREOF (THE "TAX CODE"), TREASURY REGULATIONS PROMULGATED
AND PROPOSED THEREUNDER, JUDICIAL DECISIONS AND PUBLISHED ADMINISTRATIVE RULES
AND PRONOUNCEMENTS OF THE INTERNAL REVENUE SERVICE ("IRS") AS IN EFFECT ON THE
DATE HEREOF. CHANGES IN SUCH RULES OR NEW INTERPRETATIONS THEREOF COULD
SIGNIFICANTLY AFFECT THE TAX CONSEQUENCES DESCRIBED BELOW. NO RULINGS HAVE BEEN
REQUESTED FROM THE IRS. MOREOVER, NO LEGAL OPINIONS HAVE BEEN REQUESTED FROM
COUNSEL WITH RESPECT TO ANY OF THE TAX ASPECTS OF THE PLAN.
THE FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE PLAN TO
HOLDERS OF CLAIMS AND EQUITY INTERESTS MAY VARY BASED UPON THE INDIVIDUAL
CIRCUMSTANCES OF EACH HOLDER. IN ADDITION, THIS DISCUSSION DOES NOT COVER ALL
ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO THE DEBTORS OR THE
HOLDERS OF ALLOWED CLAIMS OR EQUITY INTERESTS, NOR DOES THE DISCUSSION DEAL WITH
TAX ISSUES PECULIAR TO CERTAIN TYPES OF TAX PAYERS (SUCH AS DEALERS IN
SECURITIES, S CORPORATIONS, LIFE INSURANCE COMPANIES, FINANCIAL INSTITUTIONS,
TAX-EXEMPT ORGANIZATIONS AND FOREIGN TAXPAYERS). NO ASPECT OF FOREIGN, STATE,
LOCAL OR ESTATE AND GIFT TAXATION IS ADDRESSED.
THE FOLLOWING SUMMARY IS, THEREFORE, NOT A SUBSTITUTE FOR CAREFUL TAX
PLANNING AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH HOLDER OF A
CLAIM OR EQUITY INTEREST. HOLDERS OF CLAIMS OR EQUITY INTERESTS ARE URGED TO
CONSULT WITH THEIR OWN TAX ADVISERS FOR THE FEDERAL, STATE, LOCAL AND OTHER TAX
CONSEQUENCES PECULIAR TO THEM UNDER THE PLAN.
A. CONSEQUENCES TO DEBTORS.
The Debtors have estimated that they had as of December 31, 1999
consolidated net operating loss carryforwards ("NOLs") of between 75 and 100
million dollars which the Equity Committee anticipates the Debtors will be able
to use to shield certain taxable income on a going forward basis. The Equity
Committee and its professionals have been unable to determine at this time when
such NOLs will be used by the Debtors under the terms of the Plan and therefore
have assigned no value to such NOLs in connection therewith. Additionally, to
the extent the Debtors receive excess inclusion income during the year or
ordinary income from the Debtors' assets above the basis the Debtors have in
such assets and except as tax liability may be reduced by the NOLs, the Debtors'
estates will incur tax liability with respect to such. The Equity Committee does
not have sufficient information at this time to determine the extent of such tax
consequences and therefore has not included any tax consequences in the cash
flow projections with respect to the Plan set forth on Exhibit E hereto.
B. CONSEQUENCES TO HOLDERS OF CLAIMS AND EQUITY INTERESTS.
The federal income tax consequences of the implementation of the Plan
to a holder of a Claim will depend, among other things, upon the origin of the
holder's Claim, when the holder's Claim becomes an Allowed Claim, when the
holder receives payment in respect of such Claim, whether the holder reports
income using the accrual or cash method of accounting, whether the holder is
taking a bad debt deduction or worthless security deduction with respect to such
Claim and whether the holder's Claim constitutes a "security" for federal income
tax purposes. Holders of Administrative Expense Claims (unclassified),
Professional Fee Claims (unclassified) and Allowed Priority Non-tax Claims
(Class 1) will be paid in full in Cash on, or subsequent to, the Effective Date.
Such holders that are subject to federal income taxation must include such
amounts in their gross income in the taxable year in which such amounts are
actually or constructively received by them. Holders of Allowed Secured Claims
(Class 2), Allowed Unsecured Claims (Class 3), Allowed Borrower Litigation
Claims (Class 4), Convenience Claims (Class 5), Subordinated Debenture Claims
(Class 6A), Allowed Lending Subordinated Debenture Claims (Class 6B) and Allowed
Statutorily Subordinated Claims (Class 8A) will realize gain or loss in an
amount equal to the difference between (a) the holder's basis in such Claim and
(b) the amount of Cash such holders receive by virtue of distributions made
under the Plan. Holders of Pride Equity Interests (Class 7) and United Companies
Common Equity Interests (Class 8B) will realize gain or loss in an amount equal
to the difference between (a) the holder's basis in such stock and (b) the
amount of Cash such holder receives by virtue of distributions made under the
Plan.
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ARTICLE VI
RISK FACTORS TO BE CONSIDERED
A. SERVICING AGREEMENT.
Although the Equity Committee entered into discussions with several
qualified sub-servicers (including each of the top three ranked sub-servicers
from the RFP Process conducted by the Debtors). At present, there is no binding
servicing or sub-servicing agreement in place. During discussions with several
and subsequent negotiations with one selected sub-servicer, it was frequently
noted that pursuing an exclusive sub-servicing agreement with the Equity
Committee involved considerable uncertainty that such talks would lead to an
eventual award of the servicing contracts. It is the expectation of the Equity
Committee that once a servicer plan is accepted and an auction plan is not
accepted, considerable uncertainty will be removed from the negotiation process
which should permit a binding agreement consistent with the terms set forth on
Exhibit A to the Plan. However, there can be no assurance that this will occur.
In connection with any servicing agreement to be entered into under the
terms of the Equity Committee's Plan, the Debtors' estates will be responsible
for obtaining the necessary approvals and estoppels for the transaction from all
required parties, including without limitation, the rating agencies, monoline
insurers, REMIC trustees, underwriters, letter of credit account parties and
regulatory authorities, or, alternatively obtaining a judicial order to the same
legal effect. The Debtors are parties to approximately 38 pooling and servicing
agreements ("PSAs"), which govern the various related servicing and distribution
obligations of the Debtors and set forth the rights and obligations of the
Debtors to service the loans owed to the third-party owners under the PSAs and
to earn fees for such servicing. There can be no assurances that estoppels or
waivers can be obtained with respect to any servicing agreements or judicial
relief obtained granting such relief. There are also no assurances that the
Equity Committee can obtain the consent of all necessary parties for the
implementation of a third-party servicing agreement as contemplated in the
Equity Committee's Plan. However, the Equity Committee believes that it will be
able to obtain all necessary approvals or consents or a court order to that
effect.
B. INDUSTRY CONDITIONS AND FINANCIAL CONDITION OF REORGANIZED UC.
Beginning with the capital markets liquidity crisis in August 1998,
several organizations that rely on securitization of financial assets to
continue operating as lenders in the marketplace have been damaged. Some
particular lending specialties, including subprime residential lending, have
been particularly hard hit. The Debtors, along with several of its competitors,
filed for bankruptcy protection or have otherwise suffered severe financial
distress including an inability to raise adequate liquidity through either
traditional providers of revolving credit facilities or through the use of
securitizations as an economic funding source. As a consequence of the
liquidation of the Debtors' retail Origination Platform early in the bankruptcy
process, these market conditions no longer have a direct detrimental impact on
the feasibility of the Equity Committee's Plan which contemplates only
collection of the Debtors' retained interests in the ordinary course of
business. The Debtors' weakened financial condition does bear indirectly on the
feasibility of the Plan as a result of issues arising under various state codes
in which the Debtors currently operate which require certain minimum financial
solvency tests to be met. It is the belief of the Equity Committee that the
valuation of Reorganized UC complies with such requirements. If the accounting
of Reorganized UC does not satisfy various state authorities, the Equity
Committee has also engaged in discussions concerning naming various
sub-servicers as servicers of record. In preliminary discussions with these
sub-servicer proponents, none expressed additional concerns with respect to the
pursuit of a complete servicing transfer in parallel with discussions concerning
a sub-servicing agreement. These discussions led the Equity Committee to
conclude that transferring servicing rights of record, which would obviate any
issues of statutory "infeasibility" raised by management of the Debtors, would
not materially impact the economics of the servicing transfer.
C. ASSUMPTIONS REGARDING VALUE OF DEBTORS' ASSETS.
Beyond the selection and consummation of definitive servicing or
sub-servicing agreement(s) with a qualified servicer, the value presented by
Arthur Andersen, LLP relies on various assumptions set forth on Exhibit F
hereto, including cumulative loss rate assumptions, delinquency rate
assumptions, prepayment rate assumptions, and discount rate assumptions, all of
which can have a material impact on the equity value of the Debtors. These
assumptions have been based on a careful analysis of the Debtors' historical
performance, the nature and characteristics of its whole loan and securitized
loan portfolio and a comparison of these characteristics with the performance of
a number of the Debtors' peers. Any inability of Reorganized UC to achieve these
assumptions may cause Reorganized UC's actual performance, including the
timetable for payoff of all claims, to deviate from that projected. Chiefly
among these assumptions is the cumulative lifetime losses projected to be borne
by the Debtors' owned and securitized mortgage loans. Additionally, the rise and
fall of interest rates may have a significant impact on the assumptions used in
the Equity Committee's
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valuation of the Debtors' assets. As such, any significant change in interest
rates could result in a material change (upward or downward) in the valuation
conclusions reached by Arthur Andersen with respect to the Debtors' assets.
D. RISK FACTORS ASSOCIATED WITH LITIGATION CLAIMS HELD BY THE
ESTATES.
The estimation of complex litigation outcomes is necessarily somewhat
speculative and must be based on developments that may not occur for a number of
years. The estimates set forth herein with respect to potential recoveries on
any causes of action held by the Debtors' estates are merely estimates and there
can be no assurances that such amounts will ultimately be obtained.
ARTICLE VII
RECOMMENDATION
The Equity Committee recommends a vote in favor of the Plan and that
the Plan be confirmed.
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Dated: July 10, 2000
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS OF UNITED
COMPANIES FINANCIAL CORPORATION
By: /s/ Nicola Biase
----------------------------
Name: Nicola Biase
Title: Vice Chairman
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EXHIBIT A
---------
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: ) Chapter 11
) Case Nos. 99-450 (MFW) through
UNITED COMPANIES FINANCIAL ) 99-461 (MFW)
CORPORATION, ET AL. ) JOINTLY ADMINISTERED
)
Debtors. )
)
SECOND AMENDED PLAN OF REORGANIZATION
OF THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS
DATED JULY 10, 2000
LONG ALDRIDGE & NORMAN LLP SAUL, EWING, REMICK & SAUL LLP
Suite 5300, 303 Peachtree Street 222 Delaware Avenue
Atlanta, Georgia 30308 Wilmington, Delaware 19899
(404) 527-4000 (302) 421-6824
Attorneys for the Official Committee of Equity Security Holders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS............................................................................1
1.1 Administrative Expense Claim..................................................1
1.2 Adobe Financial...............................................................1
1.3 Adobe Financial Common Equity Interest........................................1
1.4 Adobe.........................................................................1
1.5 Adobe Common Equity Interest..................................................1
1.6 Affiliate.....................................................................1
1.7 Agent.........................................................................1
1.8 Allowed Administrative Expense Claim..........................................1
1.9 Allowed Claim/Allowed Equity Interest.........................................1
1.10 Allowed Bank Claim............................................................2
1.11 Allowed Borrower Litigation Claim.............................................2
1.12 Allowed Convenience Claim.....................................................2
1.13 Allowed General Unsecured Claim...............................................2
1.14 Allowed Lending Subordinated Debenture Claim..................................2
1.15 Allowed Pride Equity Interest.................................................2
1.16 Allowed Priority Non-Tax Claim................................................2
1.17 Allowed Priority Tax Claim....................................................2
1.18 Allowed Professional Fee Claim................................................2
1.19 Allowed Secured Claim.........................................................2
1.20 Allowed Senior Note Claim.....................................................2
1.21 Allowed Statutorily Subordinated Claim........................................2
1.22 Allowed Subordinated Debenture Claim..........................................2
1.23 Allowed Unsecured Claim.......................................................2
1.24 Allowed Subordinated Penalty Claim............................................2
1.25 Ballot........................................................................2
1.26 Balloting Agent...............................................................2
1.27 Bank Claims...................................................................3
1.28 Bankruptcy Code...............................................................3
1.29 Bankruptcy Court..............................................................3
1.30 Bankruptcy Rules..............................................................3
1.31 Banks.........................................................................3
1.32 Biase Litigation..............................................................3
1.33 Borrower Litigation Claim.....................................................3
1.34 Borrower Settlement Trust.....................................................3
1.35 Business Day..................................................................3
1.36 Cash..........................................................................3
1.37 Cash Equivalents..............................................................3
1.38 Chapter 11 Cases..............................................................3
1.39 Claim.........................................................................3
1.40 Class.........................................................................3
1.41 Class Actions.................................................................3
1.42 Collateral....................................................................4
1.43 Common Equity Interest........................................................4
1.44 Confirmation Date.............................................................4
1.45 Confirmation Hearing..........................................................4
1.46 Confirmation Order............................................................4
1.47 Convenience Claim.............................................................4
1.48 Credit Agreement..............................................................4
1.49 Creditor......................................................................4
1.50 Creditors' Committee..........................................................4
1.51 Debtors.......................................................................4
1.52 Debtors in Possession.........................................................4
1.53 Disbursement Account(s).......................................................4
1.54 Disbursement Cash.............................................................4
1.55 Disclosure Statement..........................................................4
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1.56 Disputed Claim; Disputed Equity Interest......................................4
1.57 Disputed Claim Amount.........................................................5
1.58 Disputed Claim Reserve........................................................5
1.59 Documentation Agent...........................................................5
1.60 Effective Date................................................................5
1.61 8.375% Notes..................................................................5
1.62 Entity........................................................................5
1.63 Equity Committee..............................................................5
1.64 Equity Interest...............................................................5
1.65 Equity Interest Percentage....................................................5
1.66 ESOP Action...................................................................5
1.67 Federal Judgment Rate.........................................................5
1.68 Final Order...................................................................5
1.69 General Unsecured Claim.......................................................5
1.70 Ginger Mae....................................................................5
1.71 Ginger Mae Common Equity Interest.............................................6
1.72 Gopher Equity.................................................................6
1.73 Gopher Equity Common Equity Interest..........................................6
1.74 Guaranty......................................................................6
1.75 Impaired......................................................................6
1.76 Intercompany Affiliate........................................................6
1.77 Intercompany Claims...........................................................6
1.78 IRC...........................................................................6
1.79 IRS...........................................................................6
1.80 Lending Subordinated Debentures...............................................6
1.81 Lending Subordinated Debenture Claim..........................................6
1.82 Lending Subordinated Indenture................................................6
1.83 Lien..........................................................................6
1.84 9.35% Notes...................................................................6
1.85 Pelican.......................................................................6
1.86 Pelican Common Equity Interest................................................6
1.87 Person........................................................................6
1.88 Petition Date.................................................................6
1.89 Plan..........................................................................6
1.90 Plan Administration Agreement.................................................6
1.91 Plan Administrator............................................................7
1.92 Plan Supplement...............................................................7
1.93 Pride Equity Interest.........................................................7
1.94 Pride Prospectus..............................................................7
1.95 Priority Non-Tax Claim........................................................7
1.96 Priority Tax Claim............................................................7
1.97 Professional Fee Claim........................................................7
1.98 Proponent.....................................................................7
1.99 Pro Rata Share................................................................7
1.100 Record Date...................................................................7
1.101 Remaining Assets..............................................................7
1.102 Reorganized UC................................................................7
1.103 Reorganized UC By-laws........................................................7
1.104 Reorganized UC Certificate of Incorporation...................................7
1.105 Reorganized UC Subsidiaries...................................................7
1.106 Schedules.....................................................................7
1.107 Secured Claim.................................................................8
1.108 Senior Indenture..............................................................8
1.109 Senior Indenture Trustee......................................................8
1.110 Senior Note Claims............................................................8
1.111 Senior Notes..................................................................8
1.112 Servicing Agreement Order.....................................................8
1.113 7.7% Notes....................................................................8
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1.114 Southern Mortgage.............................................................8
1.115 Southern Mortgage Common Equity Interest......................................8
1.116 Statutorily Subordinated Claim................................................8
1.117 Statutorily Subordinated Claim Percentage.....................................8
1.118 Subordinated Debentures.......................................................8
1.119 Subordinated Debenture Claim..................................................8
1.120 Subordinated Indenture........................................................8
1.121 Subordinated Indenture Trustee................................................8
1.122 Subordinated Penalty Claim....................................................8
1.123 Unicor........................................................................8
1.124 Unicor Common Equity Interest.................................................8
1.125 United Companies..............................................................8
1.126 United Companies Common Equity Interest.......................................9
1.127 United Funding................................................................9
1.128 United Funding Common Equity Interest.........................................9
1.129 United Lending Corp...........................................................9
1.130 United Lending Corp. Common Equity Interest..................................9
1.131 United Lending Group..........................................................9
1.132 United Lending Group Common Equity Interest...................................9
1.133 United Credit Card............................................................9
1.134 United Credit Card Common Equity Interest.....................................9
1.135 Unsecured Claim...............................................................9
1.136 Voting Deadline...............................................................9
1.137 Voting Procedures.............................................................9
1.138 Voting Procedures Order.......................................................9
1.139 Other Definitions.............................................................9
ARTICLE II SUBSTANTIVE CONSOLIDATION OF DEBTORS; ASSUMPTION OF OBLIGATIONS
UNDER THE PLAN.........................................................................9
2.1 Substantive Consolidation.....................................................9
2.2 Cancellation of Intercompany Claims...........................................9
ARTICLE III CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.........................................10
3.1 General Rules of Classification..............................................10
3.2 Administrative Claims, Professional Fee Claims, Priority Tax Claims..........10
3.3 Classification...............................................................10
ARTICLE IV PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE
CLAIMS AND PRIORITY TAX CLAIMS........................................................11
4.1 Administrative Expense Claims................................................11
4.2 Professional Fee Claims......................................................11
4.3 Treatment of Allowed Priority Tax Claims. ..................................11
ARTICLE V PROVISION FOR TREATMENT OF PRIORITY NON-TAX CLAIMS (CLASS 1)..........................11
5.1 Payment of Allowed Priority Non-Tax Claims...................................11
ARTICLE VI PROVISION FOR TREATMENT OF SECURED CLAIMS (CLASS 2)...................................12
6.1 Treatment of Allowed Secured Claims..........................................12
ARTICLE VII PROVISION FOR TREATMENT OF UNSECURED CLAIMS (CLASS 3).................................12
7.1 Allowance of Unsecured Claims:...............................................12
7.2 Treatment of Unsecured Claims................................................12
7.3 Payments to be Made to Senior Indenture Trustee..............................13
7.4 Closing of Transfer Ledgers for Senior Notes.................................13
7.5 Allowed Convenience Claims...................................................13
ARTICLE VIII PROVISIONS FOR ALLOWANCE AND TREATMENT OF BORROWER LITIGATION
CLAIMS (CLASS 4)......................................................................13
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8.1 Treatment of Borrower Litigation Claims......................................13
8.2 Optional Arbitration of Borrower Litigation Claims...........................13
8.3 Alternative Procedure........................................................14
8.4 Foreclosure Actions..........................................................14
8.5 Funding of Borrower Settlement Trust.........................................14
ARTICLE IX PROVISIONS FOR TREATMENT OF CONVENIENCE CLAIMS (CLASS 5)..............................14
9.1 Treatment of Convenience Claims..............................................14
ARTICLE X PROVISION FOR TREATMENT OF SUBORDINATED DEBENTURE CLAIMS
(CLASS 6).............................................................................14
10.1 Allowance of Subordinated Debenture Claims...................................14
10.2 Allowance of Lending Subordinated Debenture Claims...........................14
10.3 Treatment of Allowed Subordinated Debenture Claims and Allowed Lending
Subordinated Debenture Claims................................................14
10.4 Payments to be Made to Subordinated Indenture Trustee........................14
10.5 Closing of Transfer Ledgers for Subordinated Debentures and Lending Subordinated
Debentures...................................................................15
ARTICLE XI PROVISION FOR TREATMENT OF SUBORDINATED PENALTY CLAIMS (CLASS 7)......................15
11.1 Treatment of Subordinated Penalty Claims.....................................15
ARTICLE XII PROVISION FOR TREATMENT OF PRIDE EQUITY INTERESTS (CLASS 8)...........................15
12.1 Conversion of Pride Equity Interests.........................................15
12.2 Treatment of Pride Equity Interests..........................................15
ARTICLE XIII PROVISION FOR TREATMENT OF STATUTORILY SUBORDINATED CLAIMS
(CLASS 9A) AND UNITED COMPANIES COMMON EQUITY INTERESTS (CLASS
9B)...................................................................................16
13.1 Treatment of Statutorily Subordinated Claims.................................16
13.2 Treatment of United Companies Common Equity Interests........................16
ARTICLE XIV PROVISION FOR TREATMENT OF ADOBE COMMON EQUITY INTERESTS
(CLASS 10)............................................................................16
14.1 Treatment of Adobe Common Equity Interests...................................16
ARTICLE XV PROVISION FOR TREATMENT OF ADOBE FINANCIAL COMMON EQUITY
INTERESTS (CLASS 11)..................................................................16
15.1 Treatment of Adobe Financial Common Equity Interests.........................16
ARTICLE XVI PROVISION FOR TREATMENT OF GINGER MAE COMMON EQUITY
INTERESTS (CLASS 12)..................................................................16
16.1 Treatment of Ginger Mae Common Equity Interests..............................16
ARTICLE XVII PROVISION FOR TREATMENT OF GOPHER EQUITY COMMON EQUITY
INTERESTS (CLASS 13)..................................................................16
17.1 Treatment of Gopher Equity Common Equity Interests...........................16
ARTICLE XVIII PROVISION FOR TREATMENT OF PELICAN COMMON EQUITY INTERESTS
(CLASS 14)............................................................................17
18.1 Treatment of Pelican Common Equity Interests.................................17
ARTICLE XIX PROVISION FOR TREATMENT OF SOUTHERN MORTGAGE COMMON EQUITY
INTERESTS (CLASS 15)..................................................................17
19.1 Treatment of Southern Mortgage Common Equity Interests.......................17
ARTICLE XX PROVISION FOR TREATMENT OF UNICOR COMMON EQUITY INTERESTS
(CLASS 16)............................................................................17
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20.1 Treatment of Unicor Common Equity Interests..................................17
ARTICLE XXI PROVISION FOR TREATMENT OF UNITED FUNDING COMMON EQUITY
INTERESTS (CLASS 17)..................................................................17
21.1 Treatment of United Funding Common Equity Interests..........................17
ARTICLE XXII PROVISION FOR TREATMENT OF UNITED LENDING CORP. COMMON EQUITY
INTERESTS (CLASS 18)..................................................................17
22.1 Treatment of United Lending Corp. Common Equity Interests....................17
ARTICLE XXIII PROVISION FOR TREATMENT OF UNITED LENDING GROUP COMMON
EQUITY INTERESTS (CLASS 19)...........................................................17
23.1 Treatment of United Lending Group Common Equity Interests....................17
ARTICLE XXIV PROVISION FOR TREATMENT OF UNITED CREDIT CARD COMMON EQUITY
INTERESTS (CLASS 20)..................................................................18
24.1 Treatment of United Credit Card Common Equity Interests......................18
ARTICLE XXV IDENTIFICATION OF CLAIMS AND EQUITY INTERESTS IMPAIRED AND NOT
IMPAIRED BY THE PLAN..................................................................18
25.1 Impaired and Unimpaired Classes..............................................18
25.2 Impaired Classes to Vote on Plan.............................................18
25.3 Controversy Concerning Impairment............................................18
ARTICLE XXVI ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION BY ONE OR
MORE CLASSES OF CLAIMS OR EQUITY INTERESTS............................................18
26.1 Impaired Classes to Vote.....................................................18
26.2 Acceptance by Class of Creditors and Holders of Equity Interests.............18
26.3 Cramdown.....................................................................18
ARTICLE XXVII MEANS OF IMPLEMENTATION OF PLAN.......................................................18
27.1 Third Party Servicing Agreement..............................................18
27.2 Sources of Funding for the Plan..............................................19
27.3 Revesting of Property in Reorganized UC......................................19
27.4 Directors....................................................................19
27.5 Amendment of Articles of Incorporation and Bylaws............................19
27.6 Corporate Action.............................................................19
ARTICLE XXVIII THE PLAN ADMINISTRATOR................................................................19
28.1 Appointment of Plan Administrator............................................19
28.2 The Responsibilities of the Plan Administrator...............................19
28.3 Powers of the Plan Administrator.............................................20
28.4 Compensation of the Plan Administrator.......................................20
28.5 Termination of Plan Administrator............................................20
28.6 Exculpation..................................................................20
ARTICLE XXIX PROVISIONS FOR THE ESTABLISHMENT AND MAINTENANCE OF
DISBURSEMENT ACCOUNTS.................................................................20
29.1 Establishment of Disbursement Account(s).....................................20
29.2 Maintenance of Disbursement Account(s).......................................20
ARTICLE XXX PROVISIONS REGARDING DISTRIBUTIONS....................................................21
30.1 Time and Manner of Payments..................................................21
30.2 Timeliness of Payments.......................................................21
30.3 Distributions by the Plan Administrator......................................21
30.4 Manner of Payment under the Plan.............................................21
30.5 Delivery of Distributions....................................................21
30.6 Undeliverable Distributions..................................................21
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(a) Holding of Undeliverable Distributions...............................21
(b) Failure to Claim Undeliverable Distributions.........................21
30.7 Compliance with Tax Requirements.............................................22
30.8 Time Bar to Cash Payments....................................................22
30.9 Distributions After Effective Date...........................................22
30.10 Set-Offs.....................................................................22
ARTICLE XXXI PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS AND DISPUTED
EQUITY INTERESTS UNDER THE PLAN.......................................................22
31.1 Objections to Claims and Equity Interests; Prosecution of Disputed
Claims and Disputed Equity Interests.........................................22
31.2 Estimation of Claims.........................................................22
31.3 Disputed Claims Reserve......................................................23
31.4 Payments and Distributions on Disputed Claims and Disputed Equity Interests..23
ARTICLE XXXII PROSECUTION OF CLAIMS HELD BY THE DEBTORS.............................................23
32.1 Prosecution of Claims........................................................23
ARTICLE XXXIII EXECUTORY CONTRACTS AND UNEXPIRED LEASES..............................................24
33.1 Rejection of Executory Contracts and Unexpired Leases........................24
33.2 Cure of Defaults for Assumed Executory Contracts and Unexpired Leases........24
33.3 Rejection Damage Claims......................................................24
ARTICLE XXXIV CONDITIONS PRECEDENT TO EFFECTIVE DATE OF THE PLAN...........................24
34.1 Conditions Precedent to Effective Date of the Plan...........................24
(a) Entry of Confirmation Order..........................................24
(b) Execution of Servicing Agreement(s)..................................24
(c) Entry of Servicing Agreement Order...................................24
(d) Execution of Documents; Other Actions................................24
34.2 Failure to Execute Servicing Agreement.......................................24
ARTICLE XXXV COMMITTEES............................................................................25
35.1 Creditors' Committee Term and Fees...........................................25
35.2 Equity Committee Term and Fees...............................................25
ARTICLE XXXVI RETENTION OF JURISDICTION....................................................25
36.1 Retention of Jurisdiction....................................................25
ARTICLE XXXVII MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN...................................26
37.1 Modification of Plan.........................................................26
37.2 Revocation or Withdrawal.....................................................26
ARTICLE XXXVIII MISCELLANEOUS PROVISIONS..............................................................26
38.1 Discharge of Debtors.........................................................26
38.2 Injunction...................................................................26
38.3 Term of Existing Injunctions or Stays........................................27
38.4 Payment of Statutory Fees....................................................27
38.5 Retiree Benefits.............................................................27
38.6 Post-Effective Date Fees and Expenses........................................27
38.7 Exemption from Certain Transfer Taxes........................................27
38.8 Severability.................................................................27
38.9 Governing Law................................................................27
38.10 Notices......................................................................27
38.11 Closing of Cases.............................................................28
38.12 Section Headings.............................................................28
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The Official Committee of Equity Security Holders of United Companies
Financial Corporation, Pelican Mortgage Company, Inc., United Companies Lending
Group, Inc., United Companies Lending Corporation, Adobe, Inc., Adobe Financial,
Inc. I, Ginger Mae, Inc., Unicor Mortgage, Inc., Southern Mortgage Acquisition,
Inc., United Companies Funding, Inc., Gopher Equity, Inc., and United Credit
Card, Inc., (the "Equity Committee") hereby proposes the following Second
Amended Plan of Reorganization dated July 10, 2000 (the "Plan") pursuant to
Sections 1121(a) and (c) and 1123 of the Bankruptcy Code. Reference is made to
the Disclosure Statement (as defined below), including exhibits thereto, for a
discussion of the Debtors' history, business, results of operations, historical
financial information, and for a summary and analysis of this Plan. No
solicitation materials, other than the Disclosure Statement and related
materials transmitted herewith and approved by the Bankruptcy Court, have been
authorized by the Bankruptcy Court for use in soliciting acceptances or
rejections of this Plan.
Under the Plan, the Debtors will be reorganized through the
implementation of third party servicing agreement(s) pursuant to which the
Debtors will contract with one or more independent third parties to service the
Debtors' existing loan portfolio to maximize the return on those assets for the
benefit of Creditors and Equity Interests. The Plan contemplates that the funds
generated from the Debtors' loan portfolio as well as cash generated from the
liquidation of the Debtors' Remaining Assets, and any cash generated by the
pursuit of any claims or causes of action of the estates, net of expenses of
collection and administration, will be distributed to Creditors and Equity
Interests in accordance with the terms of the Plan. The Plan further
contemplates the appointment of a Plan Administrator to monitor the performance
of any third party servicers, receive all loan proceeds collected by the third
party servicers, liquidate the Remaining Assets of the estates not necessary to
the continued operations of Reorganized UC, and wind down the affairs of
Reorganized UC after satisfaction of all terms, conditions and obligations of
the Plan.
ARTICLE I
DEFINITIONS
As used in the Plan, the following terms shall have the respective
meanings specified below and be equally applicable to the singular and plural of
terms defined:
1.1 Administrative Expense Claim: Any Claim constituting a
cost or expense of administration of the Chapter 11 Cases asserted under Section
503(b) of the Bankruptcy Code, including, without limitation, any actual and
necessary costs and expenses of preserving the estates of the Debtors, any
actual and necessary costs and expenses of operating the businesses of the
Debtors in Possession in connection with the conduct of their businesses or for
the acquisition or lease of property or the procurement or rendition of
services, any costs and expenses of the Debtors in Possession for the
management, maintenance, preservation, sale or other disposition of any assets,
the administration and implementation of the Plan, the administration,
prosecution or defense of Claims by or against the Debtors and for distributions
under the Plan, any Claims for compensation and reimbursement of expenses
arising during the period from and after the Petition Date and prior to the
Effective Date or otherwise in accordance with the provisions of the Plan and
any fees or charges assessed against the Debtors' estates pursuant to Section
1930, Chapter 123, Title 28, United States Code.
1.2 Adobe Financial: Adobe Financial, Inc. I, a Nevada
corporation.
1.3 Adobe Financial Common Equity Interest: A Common Equity
Interest in Adobe Financial.
1.4 Adobe: Adobe, Inc., a Nevada corporation.
1.5 Adobe Common Equity Interest: A Common Equity Interest in
Adobe.
1.6 Affiliate: Any entity that is an "affiliate" of the
Debtors within the meaning of Section 101(2) of the Bankruptcy Code.
1.7 Agent: First Union National Bank, as administrative agent
for the Banks.
1.8 Allowed Administrative Expense Claim: An Administrative
Expense Claim, to the extent it is or has become an Allowed Claim.
1.9 Allowed Claim/Allowed Equity Interest: Any Claim against
or Equity Interest in the Debtors, (i) proof of which was filed on or before the
date designated by the Bankruptcy Court as the last date for filing proofs of
Claim against or Equity Interests in the Debtors, (ii) if no proof of Claim or
Equity Interest has been timely filed, which has been or
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hereafter is listed by the Debtors in their Schedules as liquidated in amount
and not disputed or contingent or (iii) any Equity Interest registered in the
stock register maintained by or on behalf of the Debtors as of the Record Date
and, in each such case in clauses (i), (ii), and (iii) above, a Claim or Equity
Interest as to which no objection to the allowance thereof has been interposed
within the applicable period of limitation fixed by the Plan, the Bankruptcy
Code, the Bankruptcy Rules or a Final Order, or as to which an objection has
been interposed and such Claim or Equity Interest has been allowed in whole or
in part by a Final Order. For purposes of determining the amount of an "Allowed
Claim", there shall be deducted therefrom an amount equal to the amount of any
claim which the Debtors may hold against the holder thereof, to the extent such
claim may be set off pursuant to Section 553 of the Bankruptcy Code.
1.10 Allowed Bank Claim: A Bank Claim, to the extent it is or
has become an Allowed Claim.
1.11 Allowed Borrower Litigation Claim: A Borrower Litigation
Claim, to the extent it is or has become an Allowed Claim.
1.12 Allowed Convenience Claim: A Convenience Claim, to the
extent it is or has become an Allowed Claim.
1.13 Allowed General Unsecured Claim: A General Unsecured
Claim, to the extent it is or has become an Allowed Claim.
1.14 Allowed Lending Subordinated Debenture Claim: A Lending
Subordinated Debenture Claim, to the extent it is or has become an Allowed
Claim.
1.15 Allowed Pride Equity Interest: A Pride Equity Interest,
to the extent it is or has become an Allowed Equity Interest.
1.16 Allowed Priority Non-Tax Claim: A Priority Non-Tax Claim,
to the extent it is or has become an Allowed Claim.
1.17 Allowed Priority Tax Claim: A Priority Tax Claim, to the
extent it is or has become an Allowed Claim.
1.18 Allowed Professional Fee Claim: A Professional Fee Claim,
to the extent it is or has become an Allowed Claim.
1.19 Allowed Secured Claim: A Secured Claim, to the extent it
is or has become an Allowed Claim.
1.20 Allowed Senior Note Claim: A Senior Note Claim, to the
extent it is or has become an Allowed Claim.
1.21 Allowed Statutorily Subordinated Claim: A Statutorily
Subordinated Claim to the extent it is or has become an Allowed Claim.
1.22 Allowed Subordinated Debenture Claim: A Subordinated
Debenture Claim, to the extent it is or has become an Allowed Claim.
1.23 Allowed Unsecured Claim: An Unsecured Claim, to the
extent it is or has become an Allowed Claim.
1.24 Allowed Subordinated Penalty Claim: A Subordinated
Penalty Claim, to the extent it is or has become an Allowed Claim.
1.25 Ballot: The form distributed to each holder of an
impaired Claim or Interest on which it is to be indicated acceptance or
rejection of the Plan.
1.26 Balloting Agent: The person responsible for sending out
receiving, tabulating, and reporting the results of the Balloting with respect
to the Plan.
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1.27 Bank Claims: Any Claims of the Banks arising from or
related to the Credit Agreement, including, without limitation, fees and
expenses associated with rights and remedies thereunder, or the Guaranty.
1.28 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as
amended, and as codified in Title 11, United States Code, as applicable to the
Chapter 11 Cases.
1.29 Bankruptcy Court: The United States Bankruptcy Court for
the District of Delaware or such other court having jurisdiction over the
Chapter 11 Cases.
1.30 Bankruptcy Rules: The Federal Rules of Bankruptcy
Procedure, as promulgated by the United States Supreme Court under Section 2075
of Title 28 of the United States Code, and any Local Rules of the Bankruptcy
Court, as amended.
1.31 Banks: The banks or financial institutions that are
parties to the Credit Agreement and their successors and assigns.
1.32 Biase Litigation: The litigation styled Findim
Investments, S.A., Nicole Biase, Joyce Biase and Nicolas Biase v. J. Terrell
Brown and Dale E. Redman, No. 464-161, currently pending in Division "M", 19th
Judicial District Court, Parish of East Baton Rouge, State of Louisiana.
1.33 Borrower Litigation Claim: Any Claim asserted in
litigation pending on or as of the Petition Date or that could have been
asserted by any Entity prior to the Petition Date, including, without
limitation, any servicing or origination claims with respect to any moneys
advanced or mortgages issued by the Debtors prior to the Petition Date.
1.34 Borrower Settlement Trust: The trust to be created and
funded in the amount of One Million Dollars ($1,000,000.00) on the Effective
Date to arbitrate or compromise and settle Borrower Litigation Claims.
1.35 Business Day: A day other than a Saturday, a Sunday or
any other day on which commercial banks in Baton Rouge, Louisiana are required
or authorized to close by law or executive order.
1.36 Cash: Lawful currency of the United States of America.
1.37 Cash Equivalents: Equivalents of Cash in the form of
readily marketable securities or instruments issued by a person other than the
Debtors, including, without limitation, readily marketable direct obligations
of, obligations guaranteed by, the United States of America, commercial paper of
domestic corporations carrying a Moody's Rating of "A" or better, or equivalent
rating of any other nationally recognized rating service, or interest-bearing
certificates of deposit or other similar obligations of domestic banks or other
financial institutions having a shareholders' equity or equivalent capital of
not less than One Hundred Million Dollars ($100,000,000.00), having maturities
of not more than one (1) year, at the then best generally available rates of
interest for the amounts and like periods.
1.38 Chapter 11 Cases: The cases commenced under Chapter 11 of
the Bankruptcy Code by the Debtors on the Petition Date, styled in re United
Companies Financial Corporation, et al., Chapter 11 Case Nos. 99-450 (MFW),
through 99-461 (MFW), Jointly Administered, currently pending before the
Bankruptcy Court.
1.39 Claim: Any right to payment from the Debtors, whether or
not such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured, known or unknown; or any right to an equitable remedy for breach
of performance if such breach gives rise to a right of payment from the Debtors,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
1.40 Class: A category of holders of Claims or Equity
Interests as set forth in Article III of the Plan.
1.41 Class Actions: The litigations styled (1) Norman P.
Lasky, on behalf of himself and all others similarly situated v. J. Terrell and
Dale E. Redman, No. 99-1035-B-2, (2) Gary W. Poff, on behalf of himself and all
others similarly situated v. J. Terrell Brown and Dale E. Redman, No.
00-CV-6-B-M1, (3) Linda Wheeler, on behalf of herself and all others similarly
situated v. J. Terrell Brown and Dale E. Redman, No. 99-1049-B-3, and (4) Frank
Lipiccolo, on behalf of himself and all others similarly situated v. J. Terrell
Brown, Dale E. Redman, Cert in Underwriters at Lloyds Underwriters of London and
AIG Europe (UK) Ltd., No. 00-99-B-M3, all pending before the United States
District Court for the Middle District
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of Louisiana, and (5) Amy Bergeron, et. al. v. U.S. Trust Company of California,
et al., No. C 469196, currently pending in Division "14", 19th Judicial District
Court, Parish of East Baton Rouge, Louisiana.
1.42 Collateral: Any property or interest in property of the
estates of the Debtors that is subject to an unavoidable Lien to secure the
payment or performance of a Claim.
1.43 Common Equity Interest: A common Equity Interest.
1.44 Confirmation Date: The date upon which the Clerk of the
Bankruptcy Court enters the Confirmation Order.
1.45 Confirmation Hearing: The hearing to consider
confirmation of the Plan in accordance with Section 1129 of the Bankruptcy Code,
as the same may be adjourned from time to time.
1.46 Confirmation Order: The order of the Bankruptcy Court
confirming the Plan in accordance with the provisions of Chapter 11 of the
Bankruptcy Code.
1.47 Convenience Claim: Any Claim, other than a Borrower
Litigation Claim, equal to or less than One Thousand Dollars ($1,000.00) or
greater than One Thousand Dollars ($1,000.00) but with respect to which the
holder thereof voluntarily reduces the Claim to One Thousand Dollars
($1,000.00).
1.48 Credit Agreement: That certain Credit Agreement, dated as
of April 10, 1997, by and among the Debtors, the Agent, the Documentation Agent
and the Banks, as amended and modified from time to time, and any of the
documents and instruments related thereto.
1.49 Creditor: Any Person or Entity that has a Claim against
the Debtors that arose or is deemed to have arisen on or prior to the Petition
Date, including, without limitation, a Claim against the Debtors' Chapter 11
estates of a kind specified in Sections 502(g), 502(h) or 502(i) of the
Bankruptcy Code.
1.50 Creditors' Committee: The statutory committee of
unsecured creditors appointed in the Chapter 11 Cases pursuant to Section 1102
of the Bankruptcy Code.
1.51 Debtors: United Companies Financial Corporation, Pelican
Mortgage Company, Inc., United Companies Lending Group, Inc., United Companies
Lending Corporation, Adobe, Inc., Adobe Financial, Inc., Ginger Mae, Inc.,
Unicor Mortgage, Inc., Southern Mortgage Acquisition, Inc., United Companies
Funding, Inc., Gopher Equity, Inc., and United Credit Card, Inc.
1.52 Debtors in Possession: The Debtors as debtors in
possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.
1.53 Disbursement Account(s): The account(s) to be established
by Reorganized UC on the Effective date in accordance with Section 28.1 of the
Plan, together with any interest earned thereon.
1.54 Disbursement Cash: At any time of determination thereof,
the excess, if any, of (a) all Cash and Cash Equivalents in the Disbursement
Account(s) over (b) such amounts of Cash (i) reasonably determined by the Plan
Administrator as necessary to satisfy, in accordance with the terms and
conditions of the Plan, Administrative Expense Claims, Priority Non-Tax Claims,
Priority Tax Claims, and Secured Claims, and Convenience Claims, (ii) necessary
to make pro rata distributions to holders of Disputed Claims as if such Disputed
Claims were, at such time, Allowed Claims, (iii) reasonably determined by
Reorganized UC as necessary to fund the ongoing operations of Reorganized UC,
and (iv) reasonably determined by Reorganized UC as necessary to fund the
Borrower Settlement Trust.
1.55 Disclosure Statement: The disclosure statement related to
the Plan and approved by the Bankruptcy Court in accordance with Section 1125 of
the Bankruptcy Code.
1.56 Disputed Claim; Disputed Equity Interest: Any Claim
against or Equity Interest in the Debtors, to the extent the allowance of which
is the subject of a timely objection or request for estimation in accordance
with the Plan, the Bankruptcy Code, the Bankruptcy Rules or the confirmation
Order, or is otherwise disputed by the Equity Committee or
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Reorganized UC, as applicable, in accordance with applicable law, which
objection, request for estimation or dispute has not been withdrawn or
determined by a Final Order.
1.57 Disputed Claim Amount: The lesser of (a) the amount of a
Disputed Claim as filed with the Bankruptcy Court and (b) if the Bankruptcy
Court has estimated such Disputed Claim pursuant to Section 502(c) of the
Bankruptcy Code, the amount of a Disputed Claim as estimated by the Bankruptcy
Court; provided, however, that nothing contained in the Plan is intended to or
shall affect any Person's rights under Section 502(j) of the Bankruptcy Code.
1.58 Disputed Claim Reserve: In respect of any Class of Claims
or Equity Interests, the amount of Cash or other property reserved in accordance
with Section 30.3 hereof on account of a Disputed Claim or Disputed Equity
Interest.
1.59 Documentation Agent: Morgan Stanley Trust Company of New
York.
1.60 Effective Date: The first (1st) Business Day ten (10)
days following the entry of the Servicing Agreement Order.
1.61 8.375% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Fifty Million Dollars
($150,000,000.00) in accordance with the terms and conditions of the
Subordinated Indenture, as supplemented by that certain First Supplemental
Indenture, dated as of June 20, 1997.
1.62 Entity: A person, a corporation, a general partnership, a
limited partnership, a limited liability company, a limited liability
partnership, an association, a joint stock company, a joint venture, an Estate,
a trust, an unincorporated organization, a government or any subdivision thereof
or any other entity.
1.63 Equity Committee: The committee of equity security
holders appointed in the Chapter 11 Cases pursuant to Section 1102 of the
Bankruptcy Code, as reconstituted from time to time.
1.64 Equity Interest: Any equity interest in the Debtors
represented by duly authorized, validly issued and outstanding shares of
preferred stock or common stock or any interest or right to convert into such an
equity interest or acquire any equity interest of the Debtors which was in
existence immediately prior to the Petition Date.
1.65 Equity Interest Percentage: Ninety-seven percent (97%),
the percentage that the assumed value of Allowed United Companies Common Equity
Interests, bears to the sum of the assumed value of Allowed United Companies
Common Equity Interests plus the assumed value of Allowed Statutorily
Subordinated Claims, or such other percentage as may be established by the
Bankruptcy Court at the Confirmation Hearing.
1.66 ESOP Action: The litigation styled Amy Bergeron, et al.
v. U.S. Trust Company of California, et al., No. C 469196, currently pending in
Division "H", 19th Judicial District Court, Parish of East Baton Rouge, State of
Louisiana.
1.67 Federal Judgment Rate: The rate of interest established
pursuant to 28 U.S.C.ss.1961.
1.68 Final Order: An order of the Bankruptcy Court as to which
the time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending; and if an appeal,
writ of certiorari, reargument or rehearing thereof has been sought, such order
shall have been affirmed by the highest court to which such order was appealed,
or certiorari shall have been denied or reargument or rehearing shall have been
denied or resulted in no modification of such order, and the time to take any
further appeal, petition for certiorari or move for reargument or rehearing
shall have expired; provided, however, that the possibility that a motion under
Rule 59 or Rule 60 of the Federal Rules of Civil Procedure or any analogous rule
under the Bankruptcy Rules, may be but has not then been filed with respect to
such order, shall not cause such order not to be a Final Order.
1.69 General Unsecured Claim: An Unsecured Claim, other than
an Intercompany Claim, an Administrative Expense Claim, a Priority Non-Tax
Claim, a Priority Tax Claim, a Bank Claim, a Senior Note Claim, a Borrower
Litigation Claim, a Subordinated Debenture Claim, or a Convenience Claim.
1.70 Ginger Mae: Ginger Mae, Inc., a Louisiana corporation.
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1.71 Ginger Mae Common Equity Interest: A Common Equity
Interest in Ginger Mae.
1.72 Gopher Equity: Gopher Equity, Inc., a Nevada corporation.
1.73 Gopher Equity Common Equity Interest: A Common Equity
Interest in Gopher Equity.
1.74 Guaranty: That certain Unconditional Guaranty Agreement,
dated as of April 10, 1997, by and among the Debtors, the Agent and the Banks.
1.75 Impaired: Any Claim or Equity Interest that is impaired
within the meaning of Section 1124 of the Bankruptcy Code.
1.76 Intercompany Affiliate: Any of the Debtors and any other
direct or indirect subsidiary of United Companies.
1.77 Intercompany Claims: Any Unsecured Claim held by any
Intercompany Affiliate against any Debtor.
1.78 IRC: The Internal Revenue Code of 1986, as amended from
time to time.
1.79 IRS: The Internal Revenue Service, an agency of the
United States Department of Treasury.
1.80 Lending Subordinated Debentures: The promissory notes
issued and delivered by United Lending Corp. in accordance with the terms and
provisions of the Lending Subordinated Indenture.
1.81 Lending Subordinated Debenture Claim: Any Claim arising
from or relating to the Lending Subordinated Debentures.
1.82 Lending Subordinated Indenture: That certain agreement,
dated May 14, 1993, between United Lending Corp. and United Companies Life
Insurance Company.
1.83 Lien: Any charge against or interest in property to
secure payments of a debt or performance of an obligation.
1.84 9.35% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Twenty-Five Million Dollars
($125,000,000.00) in accordance with the terms and provisions of the Senior
Indenture, as supplemented, by that certain First Supplemental Indenture, dated
as of November 2, 1994.
1.85 Pelican: Pelican Mortgage Company, Inc., a Delaware
corporation.
1.86 Pelican Common Equity Interest: A Common Equity Interest
in Pelican.
1.87 Person: An individual.
1.88 Petition Date: March 1, 1999, the date on which the
Debtors filed their voluntary petitions for relief commencing the Chapter 11
Cases.
1.89 Plan: This Amended Plan of Reorganization filed by the
Equity Committee pursuant to Chapter 11 of the United States Bankruptcy Code,
including, without limitation, the exhibits and schedules hereto and the Plan
Supplement, either in its present form or as the same may be amended, modified
or supplemented from time in accordance with the terms and provisions hereof.
1.90 Plan Administration Agreement: The agreement prescribing
the powers, duties and rights of the Plan Administrator in administering the
Plan, which agreement shall be in substantially the form included in the Plan
Supplement.
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1.91 Plan Administrator: The Person to be designated by the
Equity Committee and retained, as of the Effective Date, by Reorganized UC, with
the approval of the Bankruptcy Court, as the employee or fiduciary responsible
for, among other things, the matters described in Article XXVII hereof.
1.92 Plan Supplement: A separate volume, to be filed with the
Clerk of the Bankruptcy Court, containing, among other things, forms of the Plan
Administration Agreement, Reorganized UC By-laws and Reorganized UC Certificate
of Incorporation. The Plan Supplement (containing drafts of final versions of
the foregoing documents) shall be filed with the Clerk of the Bankruptcy Court
as early as practicable (but in no event later than five (5) days) prior to the
commencement of the hearing to consider confirmation of the Plan, or on such
other date as the Bankruptcy Court may establish.
1.93 Pride Equity Interest: An Equity Interest represented by
one of the 1,667,770 issued and outstanding shares of Preferred Redeemable
Increased Dividend Equity SecuritiesSM, 6 3/4% PRIDESSM, Convertible Preferred
Stock, par value $2.00 per share, of United Companies as of the Petition Date.
1.94 Pride Prospectus: The prospectus, dated June 12, 1995, as
supplemented, released in connection with the offering of Pride Equity
Interests.
1.95 Priority Non-Tax Claim: Any Claim against the Debtors,
other than an Administrative Expense Claim or a Priority Tax Claim, entitled to
priority in payment under Section 507(a) of the Bankruptcy Code, but only to the
extent entitled to such priority.
1.96 Priority Tax Claim: Any Claim against the Debtors
entitled to priority in payment under Section 507(a)(8) of the Bankruptcy Code.
1.97 Professional Fee Claim: A Claim for compensation or
reimbursement of expenses pursuant to Section 327, 328, 330, 331, 503(b)(2),
503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code in connection with an
application made to the Bankruptcy Court.
1.98 Proponent: The Equity Committee.
1.99 Pro Rata Share: With respect to Allowed Claims or Allowed
Equity Interests within the same Class or sub-Class, the proportion that an
Allowed Claim or Allowed Equity Interest bears to the sum of (a) all Allowed
Claims and/or Allowed Equity Interests, as the case may be, within such Class or
sub-Class, and (b) all Disputed Claim Amounts and/or Disputed Equity Interest
Amounts, as the case may be, within such Class or sub-Class.
1.100 Record Date: The date to be established by the
Bankruptcy Court in the Confirmation Order for the purpose of determining the
holders of Allowed Claims and Allowed Equity Interests to receive distributions
pursuant to the Plan.
1.101 Remaining Assets: Those assets of Reorganized UC that
will not be necessary to the continuing operations of Reorganized UC.
1.102 Reorganized UC: United Companies, a Louisiana
corporation, and each of the Reorganized UC Subsidiaries, from and after the
Effective Date.
1.103 Reorganized UC By-laws: The By-laws of Reorganized UC,
which by-laws shall be in substantially the form contained in the Plan
Supplement.
1.104 Reorganized UC Certificate of Incorporation: The
Certificate of Incorporation of Reorganized UC, which certificate of
incorporation shall be in substantially the form included in the Plan
Supplement.
1.105 Reorganized UC Subsidiaries: Each subsidiary, along with
United Companies, comprising Reorganized UC.
1.106 Schedules: The respective schedules of assets and
liabilities, the list of Equity Interests, and the statements of financial
affairs filed by the Debtors in accordance with Section 521 of the Bankruptcy
Code and the Official Bankruptcy Forms of the Bankruptcy Rules as such schedules
and statements have been or may be supplemented or amended.
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1.107 Secured Claim: A Claim against the Debtors that is
secured by a Lien on Collateral or that is subject to setoff under Section 553
of the Bankruptcy Code, to the extent of the value of the Collateral or to the
extent of the amount subject to setoff, as applicable, as determined in
accordance with Section 506(a) of the Bankruptcy Code.
1.108 Senior Indenture: That certain Senior Indenture, dated
as of October 1, 1994, between United Companies Financial Corporation, as
Issuer, and the Senior Indenture Trustee, as supplemented.
1.109 Senior Indenture Trustee: The First National Bank of
Chicago.
1.110 Senior Note Claims: Any claim arising under or relating
to the Senior Indenture.
1.111 Senior Notes: Collectively, the 9.35% Notes and the 7.7%
Notes.
1.112 Servicing Agreement Order: Order entered by the
Bankruptcy Court approving the servicing or sub-servicing agreements entered
into between the Equity Committee and a qualified third party servicing company
consistent with terms of the Equity Committee's Plan.
1.113 7.7% Notes: Those certain debentures issued in the
original aggregate principal amount of One Hundred Million Dollars
($100,000,00.00) in accordance with the terms and provisions of the Senior
Indenture as supplemented by that certain Third Supplemental Indenture, dated as
of December 17, 1996.
1.114 Southern Mortgage: Southern Mortgage Acquisition, Inc.,
a Louisiana corporation.
1.115 Southern Mortgage Common Equity Interest: A Common
Equity Interest in Southern Mortgage.
1.116 Statutorily Subordinated Claim: Any Claim that is
subject to subordination under Section 510(b) of the Bankruptcy Code, including,
without limitation, any and all Claims of a holder or former holder of an Equity
Interest for rescission of or damages from the purchase or sale of an Equity
Interest arising from or relating to the Debtors' financial statements and the
accounting practices associated therewith and any and all indemnification claims
resulting therefrom.
1.117 Statutorily Subordinated Claim Percentage: Three percent
(3%), the percent that the assumed value of Allowed Statutorily Subordinated
Claims bears to the assumed value of Allowed Statutorily Subordinated Claims
plus the assumed value of Allowed United Companies Common Equity Interests,
including, without limitation, those Equity Interests deemed to be distributed
to holders of Allowed Pride Equity Interests in accordance with Section 11.2 of
the Plan, or such other percentage as may be established by the Bankruptcy Court
at the Confirmation Hearing.
1.118 Subordinated Debentures: The 8.375% Notes.
1.119 Subordinated Debenture Claim: Any Claim arising from or
relating to the Subordinated Debentures.
1.120 Subordinated Indenture: That certain Subordinated
Indenture, dated as of February 19, 1997, between United Companies Financial
Corporation, as issuer, and the Subordinated Indenture Trustee, as supplemented.
1.121 Subordinated Indenture Trustee: HSBC Bank USA, in its
capacity as successor indenture trustee under the Subordinated Indenture and any
successor indenture trustee under the Subordinated Indenture.
1.122 Subordinated Penalty Claim: Any claim for fines,
penalties, forfeitures, or for multiple exemplary, or punitive damages, or other
non-pecuniary, direct or non-proximate damages, including, without limitation,
those arising from or related to the Debtors' loan origination and servicing
operations.
1.123 Unicor: Unicor Mortgage, Inc., a Louisiana corporation.
1.124 Unicor Common Equity Interest: A Common Equity Interest
in Unicor.
1.125 United Companies: United Companies Financial
Corporation, a Louisiana corporation.
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1.126 United Companies Common Equity Interest: An Equity
Interest represented by one of the 28,808,211 issued and outstanding shares of
common stock of United Companies as of the Petition Date or any interest or
right to convert into such an equity interest or acquire any equity interest of
the Debtors which was in existence immediately prior to the Petition Date.
1.127 United Funding: United Companies Funding, Inc., a
Louisiana corporation.
1.128 United Funding Common Equity Interest: A Common Equity
Interest in United Funding.
1.129 United Lending Corp.: United Companies Lending
Corporation, a Louisiana corporation.
1.130 United Lending Corp. Common Equity Interest: A Common
Equity Interest in United Lending Corp.
1.131 United Lending Group: United Companies Lending Group,
Inc., a Louisiana corporation.
1.132 United Lending Group Common Equity Interest: A Common
Equity Interest in United Lending Group.
1.133 United Credit Card: United Credit Card, Inc., a
Louisiana corporation.
1.134 United Credit Card Common Equity Interest: A Common
Equity Interest in United Credit Card.
1.135 Unsecured Claim: Any Claim against the Debtors, other
than an Administrative Expense Claim, a Professional Fee Claim, a Priority
Non-Tax Claim, a Priority Tax Claim, a Subordinated Debenture Claim, a Lending
Subordinated Debenture Claim, a Borrower Litigation Claim, a Convenience Claim,
or a Subordinated Penalty Claim.
1.136 Voting Deadline: The deadline fixed by the Bankruptcy
Court in the Voting Procedures Order for the last day by which Ballots must be
received by the Balloting Agent.
1.137 Voting Procedures: the voting and balloting rules and
procedures approved by the Bankruptcy Court in connection with the acceptance or
rejection of the Plan.
1.138 Voting Procedures Order: Order entered by the Bankruptcy
Court approving the voting and balloting rules and procedures in connection with
the acceptance or rejection of the Plan.
1.139 Other Definitions: Unless the context otherwise
requires, any capitalized term used and not defined herein or elsewhere in the
Plan but that is defined in the Bankruptcy Code shall have the meaning assigned
to that term in the Bankruptcy Code. Unless otherwise specified, all section,
schedule or exhibit references in the Plan are to the respective section in,
article of, or schedule or exhibit to, the Plan, as the same may be amended,
waived, or modified from time to time. The words "herein," "hereof," "hereto,"
"hereunder," and other words of similar import refer to the Plan as a whole and
not to any particular section, subsection, or clause contained in the Plan.
ARTICLE II
SUBSTANTIVE CONSOLIDATION OF DEBTORS; ASSUMPTION OF OBLIGATIONS UNDER THE PLAN
2.1 Substantive Consolidation: On the Effective Date, the
Chapter 11 Cases shall be deemed to be substantively consolidated. For purposes
of the Plan, the assets and liabilities of the Debtors shall be pooled and all
Claims shall be satisfied from the assets of a single consolidated estate. Any
Claims against one or more of the Debtors based upon a guaranty, indemnity, a
co-signature, surety or otherwise, of Claims against another Debtor, including,
without limitation, the Guaranty, shall be treated as a single Claim against the
consolidated estate of the Debtors and shall be entitled to distributions under
the Plan only with respect to such single Claim.
2.2 Cancellation of Intercompany Claims: On the Effective
Date, all Intercompany Claims shall be extinguished.
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ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
3.1 General Rules of Classification. Generally, for voting and
Distribution purposes, a Claim or Equity Interest is classified in a particular
Class only to the extent that the Claim or Equity Interest qualifies within the
description of that Class, and is classified in a different Class or Classes to
the extent the Claim or Equity Interest qualifies within the description of such
different Class or Classes. Unless otherwise provided, to the extent a Claim
qualifies for inclusion in a more specifically defined Class and a more
generally defined Class, it shall be included in the more specifically defined
Class. A Claim or Equity Interest is classified in a particular Class only to
the extent the Claim or Equity Interest is an Allowed Claim or Allowed Equity
Interest in that Class and has not been paid, released or otherwise satisfied
before the Effective Date.
3.2 Administrative Claims, Professional Fee Claims, Priority
Tax Claims. Administrative Claims, Professional Fee Claims and Priority Tax
Claims have bot been classified and are excluded from the Classes set forth in
Section 3.3 below, in accordance with Section 1123(a)(1) of the Bankruptcy Code.
3.3 Classification. Pursuant to Section 1122 of the Bankruptcy
Code, the following is a designation of the Classes of Claims and Equity
Interests under the Plan:
Class 1 shall consist of all Priority Non-Tax Claims.
Class 2 shall consist of all Secured Claims. Unless
otherwise Ordered by the Bankruptcy Court, each
Allowed Secured Claim in Class 2 shall be considered
to be a separate subclass within Class 2, and each
such subclass shall be deemed to be a separate Class
for purposes of the Plan
Class 3 shall consist of all Unsecured Claims.
Class 4 shall consist of all Borrower Litigation
Claims.
Class 5 shall consist of all Convenience Claims.
Class 6 shall be divided into two subclasses as
follows: Class 6A shall consist of all
Subordinated Debenture Claims. Class 6B
shall consist of all Lender Subordinated
Debenture Claims.
Class 7 shall consist of all Subordinated Penalty
Claims.
Class 8 shall consist of all Pride Equity Interests.
Class 9 shall be divided into two subclasses as
follows: Class 9A shall consist of all
Statutorily Subordinated Claims Class 9B
shall consist of all United Companies Common
Equity Interests
Class 10 shall consist of all Adobe Common Equity
Interests.
Class 11 shall consist of all Adobe Financial Common
Equity Interests.
Class 12 shall consist of all Ginger Mae Common
Equity Interests.
Class 13 shall consist of all Gopher Equity Common
Equity Interests.
Class 14 shall consist of all Pelican Common Equity
Interests.
Class 15 shall consist of all Southern Mortgage
Common Equity Interests.
Class 16 shall consist of all Unicor Common Equity
Interests.
Class 17 shall consist of all United Funding Common
Equity Interests.
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Class 18 shall consist of all United Lending Corp.
Common Equity Interests.
Class 19 shall consist of all United Lending Group
Common Equity Interests.
Class 20 shall consist of all United Credit Card
Common Equity Interests.
ARTICLE IV
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
4.1 Administrative Expense Claims: Unless otherwise provided
for herein, each holder of an Allowed Administrative Expense Claim shall receive
Cash equal to 100% of the unpaid amount of such Allowed Administrative Expense
Claim on or as soon as reasonably practicable after the later of: (a) the
Effective Date; (b) the first Business Day after the date that is thirty (30)
calendar days after the date such Administrative Expense Claim becomes an
Allowed Claim; or (c) such other date established pursuant to the terms of any
Final Order of the Bankruptcy Court, which may include the Confirmation Order;
provided, however, that Allowed Administrative Expense Claims for goods sold or
services rendered representing liabilities incurred by the Debtors in the
ordinary course of business during the Chapter 11 Cases shall be paid by
Reorganized UC in the ordinary course of business in accordance with the terms
and conditions of any agreements, understandings, or trade terms relating
thereto, or pursuant to the terms of a Final Order of the Bankruptcy Court,
which may include the Confirmation Order. Notwithstanding the foregoing, the
holder of an Allowed Administrative Expense Claim may receive such other, less
favorable treatment as may be agreed upon by such holder and the Equity
Committee, or Reorganized UC, as applicable.
4.2 Professional Fee Claims: All Entities that are awarded
compensation or reimbursement of expenses by the Bankruptcy Court in accordance
with Section 330 or 331 of the Bankruptcy Code or entitled to the priorities
established pursuant to Section 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of
the Bankruptcy Code, shall be paid in full, in Cash, in the amounts allowed by
the Bankruptcy Court (a) on or as soon as reasonably practicable following the
later to occur of (i) the Effective Date and (ii) a date which is no later than
five (5) Business Days after the date upon which the Bankruptcy Court order
allowing such Claim becomes a Final Order or (b) upon such other terms as may be
mutually agreed upon between such holder of an Allowed Professional Fee Claim
and the Equity Committee, or Reorganized UC, as applicable.
4.3 Treatment of Allowed Priority Tax Claims. Each holder of
an Allowed Priority Tax Claim shall receive, at the option of the Equity
Committee, or Reorganized UC, as applicable, either (i) Cash equal to 100% of
the unpaid amount of such Allowed Claim on or as soon as reasonably practicable
after the later of (A) the Effective Date, or (B) the first Business Day after
the date that is thirty (30) calendar days after the date such Priority Tax
Claim becomes an Allowed Claim, or (ii) annual Cash payments commencing on or as
soon as reasonably practicable after the later to occur of the Effective Date
and the date on which such Priority Tax Claim becomes an Allowed Claim, over a
period not exceeding six (6) years after the date of assessment of such Allowed
Priority Tax Claim, together with interest (payable quarterly in arrears) on the
unpaid balance of such Allowed Priority Tax Claim at a per annum rate equal to
the Federal Judgment Rate as of the Effective Date. Allowed Priority Tax Claims
may be prepaid, at any time, without penalty. Any Claim or demand for a penalty
relating to an Allowed Priority Tax Claim shall be disallowed pursuant to the
Plan, and the holder of an Allowed Priority Tax Claim shall not assess or
attempt to collect such penalty from the Debtors, the Estates, Reorganized UC or
its property. Holders of Allowed Priority Tax Claims shall be limited to the
consideration provided under the Plan and shall have no recourse to Reorganized
UC for any pre- Confirmation Date Priority Tax Claims against the Debtors.
Notwithstanding the foregoing, the holder of an Allowed Priority Tax Claim may
receive such other, less favorable treatment as may be agreed upon by the
claimant and the Equity Committee, or Reorganized UC, as applicable.
ARTICLE V
PROVISION FOR TREATMENT OF PRIORITY NON-TAX CLAIMS (CLASS 1)
5.1 Payment of Allowed Priority Non-Tax Claims: On or as soon
as reasonably practicable after the later of (a) the Effective Date, and (b) the
first Business Day after the date that is thirty (30) calendar days after the
date such Priority Non-Tax Claim becomes an Allowed Claim, each holder of an
Allowed Priority Non-Tax Claim shall be entitled to receive payment, in Cash, in
an amount equal to 100% of the unpaid amount of its Allowed Priority Non-Tax
Claim.
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Notwithstanding the foregoing, the holder of an Allowed Priority Non-Tax Claim
may receive such other less favorable treatment as may agreed to by such holder
and the Equity Committee, or Reorganized UC, as applicable.
ARTICLE VI
PROVISION FOR TREATMENT OF SECURED CLAIMS (CLASS 2)
6.1 Treatment of Allowed Secured Claims: On or as soon as
reasonably practicable after the later of (i) the Effective Date, or (ii) the
first Business Day after the date that is thirty (30) calendar days after the
date such Secured Claim becomes an Allowed Claim, each holder of an Allowed
Secured Claim shall receive, at the election of the Equity Committee, or
Reorganized UC, as applicable, one of the following distributions: (1) Cash
equal to 100% of the unpaid amount of such Allowed Secured Claim; (2) the
proceeds of the sale or disposition of the property securing such Allowed
Secured Claim to the extent of the value of such holder's interest in such
property; (3) the surrender to the holder of such Allowed Secured Claim of the
property securing such Claim; (4) such treatment that leaves unaltered the
legal, equitable or contractual rights of the holder of such Allowed Secured
Claim; or (5) such other distribution as shall be necessary to leave the holder
of such Allowed Secured Claim unimpaired and to satisfy the requirements of
Chapter 11 of the Bankruptcy Code. The manner and treatment of each Allowed
Secured Claim shall be determined by the Equity Committee, on or before the
Effective Date, or by Reorganized UC, after the Effective Date, and upon notice
to the holder of such Secured Claim. To the extent a Claim is partially an
Allowed Secured Claim based on an offset right and partially an Allowed Claim of
another type, (x) the portion of such Claim that is a Secured Claim shall be
equal to the amount of the allowed, liquidated, undisputed, noncontingent Claim
owing to the Debtors as to which a valid setoff right exists, and (y) the
remainder of such Claim shall be classified in another relevant Class to the
extent of the excess. If a Claim is a fully Secured Claim based on an offset
right, the allowance of such Claim shall not affect any obligations or
liabilities due and payable (at such time) to the Debtors that is in an amount
in excess of the amount offset and the payment, in full and in Cash, of all
amounts due and owing as of the Effective Date to the Debtors and the turnover
of any property of the Debtors held by such claimant on account of any
unliquidated, disputed or contingent right of setoff shall be a precondition to
the allowance of such Secured Claim. Notwithstanding the foregoing, the holder
of an Allowed Secured Claim may receive such other less favorable treatment as
may be agreed to by such holder and the Equity Committee, or Reorganized UC, as
applicable.
ARTICLE VII
PROVISION FOR TREATMENT OF UNSECURED CLAIMS (CLASS 3)
7.1 Allowance of Unsecured Claims:
(a) Allowance of Bank Claims: On the Effective Date,
the Bank Claims shall be deemed allowed in the aggregate amount of Eight Hundred
Fifty Million Dollars ($850,000,000.00) plus all accrued and unpaid interest at
the nondefault contractual rate;
(b) Allowance of Senior Note Claims: On the Effective
Date, the Senior Note Claims arising under or relating to the 9.35% Notes and
the 7.7% Notes shall be deemed allowed in the aggregate amounts of One Hundred
Twenty-Five Million Dollars ($125,000,000.00) and One Hundred Million Dollars
($100,000,000.00), respectively, plus all accrued and unpaid interest at the
nondefault contractual rate; and
(c) Allowance of General Unsecured Claims: All
holders of Allowed General Unsecured Claims shall be entitled to receive all
accrued and unpaid interest on the allowed amount of such claims at the
nondefault contractual rate, where applicable, and to the extent no contractual
rate of interest is specified, at the Federal Judgment Rate.
7.2 Treatment of Unsecured Claims: Commencing on the Effective
Date, and continuing quarterly thereafter until such time as all Allowed
Unsecured Claims have been paid in full, each holder of an Allowed Bank Claim,
an Allowed Senior Note Claim and an Allowed General Unsecured Claim shall be
entitled to receive its Pro Rata Share of all Disbursement Cash available for
distribution. If and to the extent the Bank Claims establish a right of priority
over the Senior Note Claims and the General Unsecured Claims, any payments to
holders of Allowed Unsecured Claims shall be made in accordance with such
priority as determined by the Bankruptcy Court.
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7.3 Payments to be Made to Senior Indenture Trustee: The
payments and distributions to be made under the Plan to holders of Allowed
Senior Note Claims shall be made to the Senior Indenture Trustee, which, subject
to any rights or claims of the Senior Indenture Trustee (such as claims for fees
and reimbursement of expenses) under the Senior Note Indenture, shall transmit
such payments and distributions to holders of such Allowed Senior Note Claims.
All payments to holders of Allowed Senior Note Claims shall only be made to such
Creditors after the surrender by each such Creditor of the certificates
representing such Senior Note Claim, or in the event that such certificate is
lost, stolen, mutilated or destroyed, delivery of evidence satisfactory to the
Senior Indenture Trustee and Reorganized UC of the loss, theft, mutilation or
destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Senior Indenture Trustee and Reorganized UC, from a surety
company satisfactory to the Senior Indenture Trustee and Reorganized UC. Upon
surrender of such certificates, the Senior Indenture Trustee shall cancel such
Senior Notes and deliver such cancelled Senior Notes to Reorganized UC, or
otherwise dispose of same as Reorganized UC may request. As soon as practicable
after (a) surrender of certificates evidencing Allowed Senior Note Claims, the
Senior Indenture Trustee shall distribute to the holders thereof such holder's
Pro Rata Share in accordance with the respective rights of the Senior Indenture
Trustee and such holder under the terms of the Senior Notes Indenture. If such
Creditor has not complied with the provisions hereof by the time final
distributions are made to Class 3 Unsecured Claims, such Creditor shall be
deemed to have no further Claim against the Debtors, the Debtors' Estates or
Reorganized UC, and the Senior Indenture Trustee shall deliver the distributions
which a Creditor holding an Allowed Senior Note Claim would have received had
such Creditor surrendered such certificate evidencing such Senior Note Claim to
Reorganized UC, and the Senior Indenture Trustee shall have no further
responsibility with respect thereto.
7.4 Closing of Transfer Ledgers for Senior Notes: At the close
of business on the Record Date, the transfer ledgers for the Senior Notes shall
be closed, and thereafter there shall be no further registrations or other
changes in the holders of any of the Senior Notes on the books of United
Companies (or of any indenture trustee, transfer agents or registrars it may
have employed in connection therewith), and the Equity Committee or Reorganized
UC, as applicable, shall have no obligation to recognize any transfer of the
Senior Notes occurring thereafter (but shall be entitled instead to recognize
and deal with, for all purposes under the Plan, except as otherwise provided
herein, only those holders reflected on its books as of the Effective Date).
7.5 Allowed Convenience Claims: Notwithstanding the provisions
of Section 7.2 of the Plan, any holder of an Allowed General Unsecured Claim
whose Allowed General Unsecured Claim is more than One Thousand Dollars
($1,000.00), and who elects to reduce the amount of such Allowed Claim to One
Thousand Dollars ($1,000.00), shall, at such holder's option, be entitled to
receive, based on such Allowed Claim as so reduced, distributions pursuant to
Article IX hereof, in full settlement, satisfaction, release and discharge of
such Allowed Claim. Such election must be made on the Ballot and be received by
the Equity Committee on or prior to the Voting Deadline. Any election made after
the Voting Deadline shall not be binding upon the Equity Committee or
Reorganized UC, as applicable, unless the Voting Deadline is expressly waived,
in writing, by the Equity Committee.
ARTICLE VIII
PROVISIONS FOR ALLOWANCE AND TREATMENT OF
BORROWER LITIGATION CLAIMS (CLASS 4)
8.1 Treatment of Borrower Litigation Claims: On the Effective
Date, each holder of an Allowed Borrower Litigation Claim shall be entitled to
receive distributions of Cash (i) in an amount equal to the asserted amount of
such holder's Claim up to One Thousand Dollars ($1,000.00) or if such Claim is
in excess of One Thousand Dollars ($1,000.00), and provided such holder agrees
to reduce such Claim to One Thousand Dollars ($1,000.00), the amount of such
Claim as reduced or (ii) from the Borrower Settlement Trust as and when such
Borrower Litigation Claim becomes an Allowed Borrower Litigation Claim. The
receipt and acceptance of distributions under the Plan by a holder of a Borrower
Litigation Claim or its successors or assigns shall constitute a full release
and waiver of any and all claims which have been or may have been asserted for
actions arising from or related to the origination or servicing of loans, moneys
advanced or mortgages issued by the Debtors, including, without limitation,
claims against the Debtors' successors and assigns for actions arising from or
related to the period prior to the Confirmation Date.
8.2 Optional Arbitration of Borrower Litigation Claims: In the
event that (a) a Borrower Litigation Claim is not resolved prior to the
Effective Date and the holder thereof does not receive distributions in
accordance with the provisions of Section 8.1 of the Plan or (b) a holder of a
Borrower Litigation Claim in excess of One Thousand Dollars ($1,000.00) elects
not to reduce such Borrower Litigation Claim to an amount equal to One Thousand
Dollars ($1,000.00), such
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holder's Borrower Litigation Claim, wherever located, shall be transferred to an
arbitration panel located in or associated with the United States District Court
for the Middle District of Louisiana for binding arbitration to determine the
validity and amount of such Borrower Litigation Claim and such arbitration panel
shall have sole and exclusive jurisdiction to determine the validity and amount
of such Borrower Litigation Claim; provided, however, nothing contained herein
limits, or in any way is intended to limit, Reorganized UC's ability to
compromise and settle any Borrower Litigation Claim in accordance with Section
30.1of the Plan.
8.3 Alternative Procedure: In the event the mandatory
arbitration provisions of Section 8.2 are held by a court of competent
jurisdiction to be unenforceable against any party not voting to accept the
Plan, such Borrower Litigation Claims shall be resolved by the Bankruptcy Court
through the claims objections process.
8.4 Foreclosure Actions: To the extent that the holder of a
Borrower Litigation Claim (i) has asserted such Borrower Litigation Claim in the
context of, and as a counterclaim to, a foreclosure action commenced by the
Debtors and (ii) receives a distribution under the Plan pursuant to Sections 8.1
or 8.2 thereof, such holder of a Borrower Litigation Claim shall be deemed to
have received such distribution in full and complete satisfaction of any
Borrower Litigation Claim that such holder may have against any of the Debtors
and their successors and assigns and in consideration for the entry of a
judgment in favor of the Debtors in connection with such foreclosure action.
8.5 Funding of Borrower Settlement Trust: On the Effective
Date, Reorganized UC will create and initially fund the Borrower Settlement
Trust in the amount of One Million Dollars ($1,000,000.00). To the extent such
amount proves insufficient to pay all Allowed Borrower Litigation Claims in
full, Reorganized UC shall deposit such additional amounts reasonably determined
by it as necessary to fully fund the Borrower Settlement Trust.
ARTICLE IX
PROVISIONS FOR TREATMENT OF CONVENIENCE CLAIMS (CLASS 5)
9.1 Treatment of Convenience Claims. On the Effective Date,
each holder of an Allowed Convenience Claim shall receive Cash in an amount
equal to one hundred percent (100%) of such Allowed Convenience Claim.
ARTICLE X
PROVISION FOR TREATMENT OF SUBORDINATED DEBENTURE CLAIMS (CLASS 6)
10.1 Allowance of Subordinated Debenture Claims: On the
Effective Date, the Subordinated Debenture Claims in Class 6A shall be deemed
allowed in the aggregate amount of One Hundred Fifty Million Dollars
($150,000,000.00) plus all accrued and unpaid interest at the nondefault
contractual rate through and including the Effective Date.
10.2 Allowance of Lending Subordinated Debenture Claims: On
the Effective Date, the Lending Subordinated Debenture Claims in Class 6B shall
be deemed allowed in the aggregate amount of Seven Million Dollars
($7,000,000.00) plus all accrued and unpaid interest at the nondefault
contractual rate through and including the Effective Date.
10.3 Treatment of Allowed Subordinated Debenture Claims and
Allowed Lending Subordinated Debenture Claims: Upon payment in full of all
Allowed Unsecured Claims in Class 3 of the Plan, each holder of an Allowed
Subordinated Debenture Claim in Class 6A and each holder of an Allowed Lending
Subordinated Debenture Claim in Class 6B shall be entitled to receive quarterly
distributions of such holder's Pro Rata Share of all Disbursement Cash available
for distribution, together with interest thereon at the nondefault contractual
rate, until such time as all Allowed Subordinated Debenture Claims and Allowed
Lending Subordinated Debenture Claims have been paid in full. If and to the
extent Subordinated Debenture Claims and Lending Subordinated Debenture Claims
establish a right to be treated on par with General Unsecured Claims, any
payments to Allowed Subordinated Debenture Claims and Allowed Lending
Subordinated Debenture Claims shall be made in accordance with such priority as
determined by the Bankruptcy Court.
10.4 Payments to be Made to Subordinated Indenture Trustee:
The payments and distributions to be made under the Plan to holders of Allowed
Subordinated Debenture Claims shall be made to the Subordinated Indenture
Trustee, which, subject to any rights or claims of the Subordinated Indenture
Trustee (such as claims for fees and reimbursement of expenses) under the
Subordinated Indenture, shall transmit such payments and distributions to
holders of such Allowed Subordinated Debenture Claims. All payments to holders
of Allowed Subordinated Debenture Claims shall only be made to such
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Creditors after the surrender by such Creditor of the certificate representing
such Subordinated Debenture Claim, or in the event that such certificate is
lost, stolen, mutilated or destroyed, delivery of evidence satisfactory to the
Subordinated Indenture Trustee and Reorganized UC of the loss, theft, mutilation
or destruction of such certificate or, in Reorganized UC's sole discretion, an
affidavit of such Creditor in accordance with Article 8 of the Uniform
Commercial Code, or a surety bond, the amount and form of which shall be
satisfactory to the Subordinated Indenture Trustee and Reorganized UC, from a
surety company satisfactory to the Subordinated Indenture Trustee and
Reorganized UC. Upon surrender of such certificates, the Subordinated Indenture
Trustee shall cancel such Subordinated Debentures and deliver such cancelled
Subordinated Debentures to Reorganized UC or otherwise dispose of same as
Reorganized UC may request. As soon as practicable after surrender of
certificates evidencing Subordinated Debenture Claims the Subordinated Indenture
Trustee shall distribute to the holders thereof such holder's Pro Rata Share in
accordance with the respective rights of the Subordinated Indenture Trustee and
such holder under the terms of the Subordinated Indenture. If such Creditor has
not complied with the provisions hereof by the time final distributions are made
to Class 6 Subordinated Debenture Claims, such Creditor shall be deemed to have
no further Claim against the Debtors, the Debtors' Estates or Reorganized UC,
and the Subordinated Indenture Trustee shall deliver the distributions which a
Creditor holding an Allowed Subordinated Debenture Claim would have received had
such Creditor surrendered such certificate evidencing such Subordinated
Debenture Claim to Reorganized UC, and the Subordinated Debenture Trustee shall
have no further responsibility with respect thereto.
10.5 Closing of Transfer Ledgers for Subordinated Debentures
and Lending Subordinated Debentures: At the close of business on the Record
Date, the transfer ledgers for the Subordinated Debentures and the Lending
Subordinated Debentures shall be closed, and thereafter there shall be no
further registrations or other changes in the holders of any of the Subordinated
Debentures on the books of United Companies (or of any indenture trustee,
transfer agents or registrars it may have employed in connection therewith), and
the Equity Committee or Reorganized UC, as applicable, shall have no obligation
to recognize any transfer of the Subordinated Debentures or Lending Subordinated
Debentures occurring thereafter (but be entitled instead to recognize and deal
with, for all purposes under the Plan, except as otherwise provided herein, only
those holders reflected on its books as of the Record Date).
ARTICLE XI
PROVISION FOR TREATMENT OF SUBORDINATED PENALTY CLAIMS (CLASS 7)
11.1 Treatment of Subordinated Penalty Claims. Upon payment in
full of all Allowed Priority Non-Tax Claims, Allowed Secured Claims, Allowed
Unsecured Claims, Allowed Borrower Litigation Claims, Allowed Convenience
Claims, Allowed Subordinated Debenture Claims and Allowed Lending Subordinated
Debenture Claims, each holder of an Allowed Subordinated Penalty Claim shall be
entitled to receive quarterly distributions of such holder's Pro Rata Share of
all Disbursement Cash available for distribution, together with interest thereon
at the Federal Judgment Rate, until such time as all Allowed Subordinated
Penalty Claims have been paid in full.
ARTICLE XII
PROVISION FOR TREATMENT OF PRIDE EQUITY INTERESTS (CLASS 8)
12.1 Conversion of Pride Equity Interests: On the Effective
Date, each holder of a Pride Equity Interest shall be deemed to have received
two (2) shares of common stock of United Companies for each Pride Equity
Interest.
12.2 Treatment of Pride Equity Interests: On or after the
Effective Date, each holder of an Allowed Pride Equity Interest shall receive
such holder's Pro Rata Share of distributions in accordance with provisions of
Section 13.2 of the Plan.
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ARTICLE XIII
PROVISION FOR TREATMENT OF STATUTORILY SUBORDINATED CLAIMS (CLASS 9A)
AND UNITED COMPANIES COMMON EQUITY INTERESTS (CLASS 9B)
13.1 Treatment of Statutorily Subordinated Claims: Upon
payment in full of all Allowed Administrative Expense Claims, Allowed Priority
Non-Tax Claims, Allowed Priority Tax Claims, Allowed Secured Claims, Allowed
Convenience Claims, Allowed Unsecured Claims, Allowed Borrower Litigation
Claims, Allowed Subordinated Debenture Claims, Allowed Lending Subordinated
Debenture Claims, and Allowed Subordinated Penalty Claims, holders of Allowed
Statutorily Subordinated Claims shall receive such holders' Pro Rata Share of
the Statutorily Subordinated Claim Percentage of all Disbursement Cash.
13.2 Treatment of United Companies Common Equity Interests:
Upon payment in full of all Allowed Administrative Expense Claims, Allowed
Priority Non-Tax Claims, Allowed Priority Tax Claims, Allowed Secured Claims,
Allowed Convenience Claims, Allowed Unsecured Claims, Allowed Borrower
Litigation Claims, Allowed Subordinated Debenture Claims, Allowed Lending
Subordinated Debenture Claims, and Allowed Subordinated Penalty Claims, holders
of Allowed United Companies Common Equity Interests shall receive such holders'
Pro Rata Share of the Equity Interest Percentage of all Disbursement Cash.
ARTICLE XIV
PROVISION FOR TREATMENT OF ADOBE COMMON EQUITY INTERESTS (CLASS 10)
14.1 Treatment of Adobe Common Equity Interests. Except as
provided in Article II of the Plan, the Equity Interests represented by Adobe
Common Equity Interests shall be unimpaired pursuant to Section 1124 of the
Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
ARTICLE XV
PROVISION FOR TREATMENT OF ADOBE FINANCIAL COMMON EQUITY INTERESTS (CLASS 11)
15.1 Treatment of Adobe Financial Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by Adobe Financial Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which such Equity Interests entitle the holder thereof.
ARTICLE XVI
PROVISION FOR TREATMENT OF GINGER MAE COMMON EQUITY INTERESTS (CLASS 12)
16.1 Treatment of Ginger Mae Common Equity Interests. Except
as provided in Article II of the Plan, the Equity Interests represented by
Ginger Mae Common Equity Interests shall be unimpaired pursuant to Section 1124
of the Bankruptcy Code by leaving unaltered the legal and equitable rights to
which such Equity Interests entitle the holder thereof.
ARTICLE XVII
PROVISION FOR TREATMENT OF GOPHER EQUITY COMMON EQUITY INTERESTS (CLASS 13)
17.1 Treatment of Gopher Equity Common Equity Interests.
Except as provided in Article II of the Plan, the Equity interests represented
by Gopher Equity Common Equity Interests shall be unimpaired pursuant to Section
1124 of the Bankruptcy Code by leaving unaltered the legal and equitable rights
to which such Equity Interests entitle the holder thereof.
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ARTICLE XVIII
PROVISION FOR TREATMENT OF PELICAN COMMON EQUITY INTERESTS (CLASS 14)
18.1 Treatment of Pelican Common Equity Interests. Except as
provided in Article II of the Plan, the Equity Interests represented by Pelican
Common Equity Interests shall be unimpaired pursuant to Section 1124 of the
Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
ARTICLE XIX
PROVISION FOR TREATMENT OF SOUTHERN MORTGAGE COMMON EQUITY INTERESTS (CLASS 15)
19.1 Treatment of Southern Mortgage Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by Southern Mortgage Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which such Equity Interests entitle the holder thereof.
ARTICLE XX
PROVISION FOR TREATMENT OF UNICOR COMMON EQUITY INTERESTS (CLASS 16)
20.1 Treatment of Unicor Common Equity Interests. Except as
provided in Article II of the Plan, Equity Interests represented by Unicor
Common Equity Interests shall be unimpaired pursuant to Section 1121 of the
Bankruptcy Code by leaving unaltered the legal and equitable rights to which
such Equity Interests entitle the holder thereof.
ARTICLE XXI
PROVISION FOR TREATMENT OF UNITED FUNDING COMMON EQUITY INTERESTS (CLASS 17)
21.1 Treatment of United Funding Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by United Funding Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which such Equity Interests entitle the holder thereof.
ARTICLE XXII
PROVISION FOR TREATMENT OF UNITED LENDING CORP. COMMON EQUITY INTERESTS
(CLASS 18)
22.1 Treatment of United Lending Corp. Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by United Lending Corp. Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which such Equity Interests entitle the holder thereof.
ARTICLE XXIII
PROVISION FOR TREATMENT OF UNITED LENDING GROUP COMMON EQUITY INTERESTS
(CLASS 19)
23.1 Treatment of United Lending Group Common Equity
Interests. Except as provided in Article II of the Plan, the Equity Interests
represented by United Leading Group Common Equity Interests shall be unimpaired
pursuant to Section 1124 of the Bankruptcy Code by leaving unaltered the legal
and equitable rights to which such Equity Interests entitle the holder thereof.
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ARTICLE XXIV
PROVISION FOR TREATMENT OF UNITED CREDIT CARD COMMON EQUITY INTERESTS
(CLASS 20)
24.1 Treatment of United Credit Card Common Equity Interests.
Except as provided in Article II of the Plan, the Equity Interests represented
by United Credit Card Common Equity Interests shall be unimpaired pursuant to
Section 1124 of the Bankruptcy Code by leaving unaltered the legal and equitable
rights to which Equity Interests entitle the holder thereof.
ARTICLE XXV
IDENTIFICATION OF CLAIMS AND EQUITY INTERESTS IMPAIRED AND NOT IMPAIRED
BY THE PLAN
25.1 Impaired and Unimpaired Classes: Claims and Equity
Interests in Classes 1, 2, 5, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 20 of
the Plan are not Impaired under the Plan. Claims and Equity Interests in Classes
3, 4, 6, 7, 8 and 9 are Impaired under the Plan.
25.2 Impaired Classes to Vote on Plan: The Claims and Equity
Interests included in Classes 3, 4, 6, 7, 8 and 9 of the Plan are Impaired and
are therefore entitled to vote to accept or reject the Plan.
25.3 Controversy Concerning Impairment: In the event of a
controversy as to whether any Class of Claims or Equity Interests is Impaired
under the Plan, the Bankruptcy Court shall, after notice and a hearing,
determine such controversy.
ARTICLE XXVI
ACCEPTANCE OR REJECTION OF PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES OF
CLAIMS OR EQUITY INTERESTS
26.1 Impaired Classes to Vote: Each holder of a Claim or
Equity Interest in an Impaired Class shall be entitled to vote separately to
accept or reject the Plan.
26.2 Acceptance by Class of Creditors and Holders of Equity
Interests: An Impaired Class of holders of Claims shall have accepted the Plan
if the Plan is accepted by at least two-thirds (2/3) in dollar amount and more
than one-half (1/2) in number of the Allowed Claims of such Class that have
voted to accept or reject the Plan. An Impaired Class of holders of Equity
Interests shall have accepted the Plan if the Plan is accepted by at least
two-thirds (2/3) in amount of the Allowed Equity Interests of such Class that
have voted to accept or reject the Plan.
26.3 Cramdown: In the event that any Impaired Class of Claims
or Equity Interests shall fail to accept the Plan in accordance with Section
1129(a) of the Bankruptcy Code, the Equity Committee reserves the right to
request that the Bankruptcy Court confirm the Plan in accordance with Section
1129(b) of the Bankruptcy Code or amend the Plan.
ARTICLE XXVII
MEANS OF IMPLEMENTATION OF PLAN
27.1 Third Party Servicing Agreement: On or before the
Effective Date, the Equity Committee shall execute servicing or sub-servicing
agreement(s) with one or more independent third parties which will transition
the Debtors' current servicing operations to one or more qualified servicer(s)
who will principally assume the servicing functions of the Debtors under the
various pooling and servicing agreements for the Debtors' loan portfolio.
Pursuant to the terms of the servicing or sub-servicing agreement(s),
Reorganized UC will remain responsible for financing future interest and service
advances and other obligations. Following the Confirmation Hearing, the Equity
Committee will finalize the terms of one or more definitive servicing or
sub-servicing agreements on terms no less favorable to the Debtors' Estates than
as set forth on Exhibit A attached hereto. The Equity Committee will seek
Bankruptcy Court approval of such definitive agreement(s) within sixty (60) days
of the Confirmation Date, and the Effective Date of the Plan will be conditioned
upon the entry of the Servicing
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Agreement Order approving the terms and conditions of the definitive servicing
or sub-servicing agreement(s). Alternatively, the Equity Committee may request
the Bankruptcy Court to enter the confirmation order contemporaneously with the
entry of the Servicing Agreement Order.
27.2 Sources of Funding for the Plan: The Plan will be funded
from (1) Cash on hand and derived from payments on the Debtors' loan portfolio,
(2) net Cash proceeds generated from the liquidation of the Debtors' Remaining
Assets, (3) net proceeds from any recovery on claims or causes of action after
payment of all expenses of litigation and attorneys' fees, and (4) any other
income derived from assets of the estates.
27.3 Revesting of Property in Reorganized UC: Except as
otherwise provided by the Plan, on the Effective Date, title to all property and
assets of the Estates shall revest in Reorganized UC free and clear of all
Claims, liens, encumbrances and/or other interests of any Person, and
Reorganized UC may thereafter operate its business and use, acquire and dispose
of property and compromise or settle any Claims arising on or after the
Effective Date without supervision or approval of the Bankruptcy Court, free of
any restrictions of the Bankruptcy Code, the Bankruptcy Rules, or the Local
Bankruptcy Rules of the Bankruptcy Court, other than those restrictions
expressly imposed by the Plan, the Confirmation Order or any documents executed
and delivered by Reorganized UC pursuant to the Plan.
27.4 Directors: On the Effective Date the board of directors
of Reorganized UC shall be comprised of seven (7) individuals, four (4) selected
by the Equity Committee, and (3) selected by the Creditors' Committee, all of
whom shall be disclosed prior to a hearing to consider Confirmation of this
Plan. In the event the Creditors' Committee fails to designate selected board
members prior to the Confirmation Hearing, the Equity Committee shall be
entitled to appoint the remaining three (3) board members. Thereafter, the terms
and manner of selection of the directors of Reorganized UC shall be as provided
in the Reorganized UC Certificate of Incorporation and the Reorganized UC
Bylaws, as the same may be amended.
27.5 Amendment of Articles of Incorporation and Bylaws: The
articles of incorporation and Bylaws of the Debtors shall be amended as of the
Effective Date to provide substantially as set forth in the Reorganized UC
Certificate of Incorporation and the Reorganized UC Bylaws.
27.6 Corporate Action: On the Effective Date, the adoption of
the Reorganized UC Certificate of Incorporation and the Reorganized UC Bylaws
shall be authorized and approved in all respects, in each case without further
action under applicable law, regulation, order, or rule, including, without
limitation, any action by the stockholders of the Debtors or Reorganized UC. On
the Effective Date, all matters provided under the Plan involving the corporate
structure of Reorganized UC or corporate action by Reorganized UC shall be
deemed to have occurred, be authorized, and shall be in effect from and after
the Effective Date without requiring further action under applicable law,
regulation, order, or rule, including, without limitation, any action by the
stockholders of the Debtors or Reorganized UC.
ARTICLE XXVIII
THE PLAN ADMINISTRATOR
28.1 Appointment of Plan Administrator: On the Effective Date,
compliance with the provisions of the Plan shall become the general
responsibility of the Plan Administrator (subject to the supervision of the
Board of Directors of Reorganized UC) pursuant to and in accordance with the
provisions of the Plan and the Plan Administration Agreement.
28.2 The Responsibilities of the Plan Administrator: The
responsibilities of the Plan Administrator shall include (a) performing all acts
and actions and executing all instruments and documents necessary to effectuate
the Plan and to comply with the duties of the Plan Administrator hereunder, (b)
managing and protecting the assets of Reorganized UC and making distributions
contemplated by the Plan, (c) complying with the Plan and the obligations
thereunder, (d) performing all responsibilities of Reorganized UC as master
servicer of its loan portfolio, if applicable (e) monitoring performance and
compliance of any and all sub-servicing agreements, (f) prosecuting any and all
causes of action held by the estates where a net recovery to the Estates is
probable, (g) liquidating the Remaining Assets of Reorganized UC; (h)
facilitating Reorganized UC's prosecution or settlement of objections to and
estimations of Claims, (i) filing all required tax returns and paying taxes and
all other obligations on behalf of Reorganized UC from funds held by Reorganized
UC, (j) periodic reporting to the Bankruptcy Court, of the status of the Claims
resolution process, distributions on Allowed Claims and Allowed Equity Interests
and prosecution of causes of action, and (k) such other responsibilities as may
be vested in the Plan Administrator pursuant to the Plan, the Plan
Administration Agreement or Bankruptcy Court order or as may be necessary and
proper to carry out the provisions of the Plan.
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28.3 Powers of the Plan Administrator: The powers of the Plan
Administrator shall, without any further Bankruptcy Court approval in each of
the following cases, include (a) the power to invest Cash of Reorganized UC in
certificates of deposit, treasury bills or treasury bill repurchase agreements,
or money-market accounts, at the discretion of the Plan Administrator; (b) to
release, convey or assign any right, title or interest in or about Reorganized
UC; (c) to sell or convert all or any part of Reorganized UC for such purchase
price and for cash or on such terms as the Plan Administrator and the Board of
Directors of Reorganized UC deem appropriate; (d) to open such bank or other
depository accounts as may be necessary or appropriate to carry out provisions
of this Plan; (e) to take any action required or permitted under the Plan; (g)
to sue and be sued; (h) to settle, compromise or adjust by arbitration or
otherwise any disputes or controversies in favor of or against Reorganized UC;
(i) to waive or release rights of any kind; (j) to appoint, remove and act
through agents, managers, employees and confer upon them such power and
authority as may be necessary or advisable; (k) to abandon any property, records
or documents of Reorganized UC deemed by the Plan Administrator to be burdensome
or of inconsequential value and benefit; (l) to engage professional persons to
assist the Plan Administrator with respect to its responsibilities, and (m) such
other powers as may be vested in or assumed by the Plan Administrator pursuant
to the Plan, the Plan Administration Agreement or as may be necessary and proper
to carry out the provisions of the Plan.
28.4 Compensation of the Plan Administrator: In addition to
reimbursement for actual out-of-pocket expenses incurred by the Plan
Administrator, the Plan Administrator shall be entitled to receive reasonable
compensation for services rendered on behalf of Reorganized UC in an amount and
on such terms as may be agreed to by the Equity Committee as reflected in the
Plan Administration Agreement. Any dispute with respect to such compensation
shall be resolved by agreement among the parties or, if the parties are unable
to agree, as determined by the Bankruptcy Court.
28.5 Termination of Plan Administrator: The duties,
responsibilities and powers of the Plan Administrator shall terminate as set
forth in the Plan Administration Agreement.
28.6 Exculpation: From and after the Effective Date, the Plan
Administrator shall be exculpated by all Persons and Entities, including,
without limitation, holders of Claims and Equity Interests and other parties in
interest, from any and all claims, causes of action and other assertions of
liability arising out of the discharge of the powers and duties conferred upon
such Plan Administrator by the Plan or any order of the Bankruptcy Court entered
pursuant to or in furtherance of the Plan, or applicable law, except for actions
or omissions to act arising out of the gross negligence, willful misconduct or
breach of fiduciary duty of such Plan Administrator. No holder of a Claim or an
Equity Interest or other party in interest shall have or pursue any claim or
cause of action against the Plan Administrator for making payments in accordance
with the Plan or for implementing the provisions of the Plan.
ARTICLE XXIX
PROVISIONS FOR THE ESTABLISHMENT AND MAINTENANCE OF DISBURSEMENT ACCOUNTS
29.1 Establishment of Disbursement Account(s): On or before
the Effective Date, the Debtors shall establish one or more segregated bank
accounts in the name of Reorganized UC, which accounts shall be trust accounts
for the benefit of Creditors and Equity Interests pursuant to the Plan and
utilized solely for the investment and distribution of Cash consistent with the
terms and conditions of the Plan. On or before the Effective Date, the Debtors
shall deposit into such Disbursement Account(s) all Cash and Cash Equivalents of
the Debtors, less such amount reasonably determined by the Equity Committee, on
or prior to the Effective Date as necessary to fund the ongoing operations of
Reorganized UC. Notwithstanding anything contained herein, Reorganized UC shall
have the right to retain such funds as are necessary to meet the obligations of
the Debtors to fund interest and servicer advances or purchase loans to avoid
loss triggers.
29.2 Maintenance of Disbursement Account(s): Disbursement
Account(s) shall be maintained at one or more domestic banks or financial
institutions of Reorganized UC's choice that are included on the list of
approved depository institutions by the Office of the United States Trustee.
Reorganized UC shall invest Cash in Disbursement Account(s) in Cash Equivalents;
provided, however, that sufficient liquidity shall be maintained in such account
or accounts to (a) make promptly when due all payments upon Disputed Claims if,
as and when they become Allowed Claims and (b) make promptly when due the other
payments provided for in the Plan.
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ARTICLE XXX
PROVISIONS REGARDING DISTRIBUTIONS
30.1 Time and Manner of Payments: Payments under the Plan
shall be made to each holder of an Allowed Claim or Allowed Equity Interest as
follows:
(a) Initial Payments: On or as soon as practicable
after the Effective Date, the Plan Administrator shall distribute, or cause to
be distributed, after making reserves for Disputed Claims or Disputed Equity
Interests as appropriate, to each holder of (i) an Allowed Unsecured Claim, (ii)
an Allowed Borrower Litigation Claim, (iii) an Allowed Subordinated Debenture
Claim, (iv) an Allowed Lending Subordinated Debenture Claim, (v) an Allowed
Pride Equity Interest, (vi) an Allowed Statutorily Subordinated Claim, and (vii)
an Allowed United Companies Common Equity Interest, each Creditor's or Equity
Interest's share, if any, of Disbursement Cash available for distribution as
determined pursuant to Articles VII, X, XI and XII hereof, respectively; and
(b) Quarterly Payments: On the first (1st) Business
Day that is after the close of one full calendar quarter following the date of
the initial Effective Date distributions, and, thereafter, on each thirtieth
(30th) day following the close of calendar quarters, the Plan Administrator
shall distribute, or cause to be distributed, after making reserves for Disputed
Claims or Disputed Equity Interests as appropriate, to each holder of (i) an
Allowed Unsecured Claim, (ii) an Allowed Borrower Litigation Claim, (iii) an
Allowed Subordinated Debenture Claim, (iv) an Allowed Lending Subordinated
Debenture Claim, (v) an Allowed Pride Equity Interest, (vi) an Allowed
Statutorily Subordinated Claim, and (vii) an Allowed United Companies Common
Equity Interest, an amount equal to such Creditor's or Equity Interest's share,
if any, of Disbursement Cash available for distribution as determined pursuant
to Articles VII, X, XI and XII hereof, until such time as there is no longer any
potential Disbursement Cash available for distribution.
30.2 Timeliness of Payments: Any payments or distributions to
be made by Reorganized UC pursuant to the Plan shall be deemed to be timely made
if made within twenty (20) days after the dates specified in the Plan. Whenever
any distribution to be made under this Plan shall be due on a day other than a
Business Day, such distribution shall instead be made, without interest, on the
immediately succeeding Business Day, but shall be deemed to have been made on
the date due.
30.3 Distributions by the Plan Administrator: All
distributions under the Plan shall be made by the Plan Administrator. The Plan
Administrator shall be deemed to hold all property to be distributed hereunder
in trust for the Persons entitled to receive the same. The Plan Administrator
shall not hold an economic or beneficial interest in such property.
30.4 Manner of Payment under the Plan: Unless the Entity
receiving a payment agrees otherwise, any payment in Cash to be made by
Reorganized UC shall be made, at the election of Reorganized UC, by check drawn
on a domestic bank or by wire transfer from a domestic bank.
30.5 Delivery of Distributions: Subject to the provisions of
Rule 9010 of the Bankruptcy Rules, and except as provided in Sections 7.3,7.4,
10.3 and 10.4 of the Plan, distributions and deliveries to holders of Allowed
Claims shall be made at the address of each such holder as set forth on the
Schedules filed with the Bankruptcy Court unless superseded by the address set
forth on proofs of claim filed by such holders, or at the last known address of
such a holder if no proof of claim is filed or if the Debtors have been notified
in writing of a change of address. Distributions to holders of Allowed Equity
Interests shall be made at the addresses set forth on the transfer ledger for
United Companies common stock as of the Record Date.
30.6 Undeliverable Distributions:
(a) Holding of Undeliverable Distributions: If any
distribution to any holder is returned to Reorganized UC as undeliverable, no
further distributions shall be made to such holder unless and until Reorganized
UC is notified, in writing, of such holder's then-current address. Undeliverable
distributions shall remain in the possession of Reorganized UC until such time
as a distribution becomes deliverable. All Persons ultimately receiving
undeliverable Cash shall not be entitled to any interest or other accruals of
any kind accruing after the date of the initial disbursement. Nothing contained
in the Plan shall require Reorganized UC to attempt to locate any holder of an
Allowed Claim or an Allowed Equity Interest; and
(b) Failure to Claim Undeliverable Distributions: On
or about the second (2nd) anniversary of the Effective Date, Reorganized UC
shall file a list with the Bankruptcy Court setting forth the names of those
Entities for which distributions have been made hereunder and have been returned
as undeliverable as of the date thereof. Any holder of an Allowed Claim or an
Allowed Equity Interest that does not assert its rights pursuant to the Plan to
receive a distribution within
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three (3) years from and after the Effective Date shall have its Claim or Equity
Interest for such undeliverable distribution discharged and shall be forever
barred from asserting any such Claim or Equity Interest against Reorganized UC
or its property accruing after the date of the initial disbursement. In such
case, any consideration held for distribution on account of such Claim or Equity
Interest shall revert to Reorganized UC.
30.7 Compliance with Tax Requirements: To the extent
applicable, Reorganized UC shall comply with all tax withholding and reporting
requirements imposed on it by any governmental unit, and all distributions
pursuant to the Plan shall be subject to such withholding and reporting
requirements.
30.8 Time Bar to Cash Payments: Checks issued by Reorganized
UC on account of Allowed Claims shall be null and void if not negotiated within
ninety (90) days from and after the date of issuance thereof. Requests for
reissuance of any check shall be made directly to the Plan Administrator 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 (a) the second (2nd) anniversary of the Effective Date or (b)
ninety (90) days after the date of issuance of such check, if such check
represents a final distribution hereunder on account of such Claim. After such
date all Claims in respect of voided checks shall be discharged and forever
barred.
30.9 Distributions After Effective Date: Distributions made
after the Effective Date to holders of Claims and Equity Interests that are not
Allowed Claims or Allowed Equity Interests as of the Effective Date but which
later become Allowed Claims or Allowed Equity Interests shall be deemed to have
been made on the Effective Date.
30.10 Set-Offs: Reorganized UC may, pursuant to section 553 of
the Bankruptcy Code or applicable nonbankruptcy law, set off against any Allowed
Claim or Allowed Equity Interest and the distributions to be made pursuant to
the Plan on account thereof (before any distribution is made on account of such
Claim or Equity Interest), the claims, rights and causes of action of any nature
that the Debtors or Reorganized UC may hold against the holder of such Allowed
Claim or Allowed Equity Interest; provided, however, that neither the failure to
effect such a set-off nor the allowance of any Claim or Equity Interest
hereunder shall constitute a waiver or release by the Debtors or Reorganized UC
of any such claims, rights and causes of action that the Debtors or Reorganized
UC may possess against such holder; and, provided, further, that nothing
contained herein is intended to limit the rights of any Creditor or holder of an
Equity Interest to effectuate a set-off prior to the Effective Date in
accordance with the provisions of Sections 362 and 553 of the Bankruptcy Code.
ARTICLE XXXI
PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS AND DISPUTED EQUITY INTERESTS UNDER
THE PLAN
31.1 Objections to Claims and Equity Interests; Prosecution of
Disputed Claims and Disputed Equity Interests: The Equity Committee, or
Reorganized UC, as applicable, shall object to the allowance of Claims or Equity
Interests filed with the Bankruptcy Court with respect to which it disputes
liability or allowance in whole or in part. All objections shall be litigated to
Final Order; provided, however, that Reorganized UC (within such parameters as
may be established by the Board of Directors of Reorganized UC), shall have the
authority to file, settle, compromise or withdraw any objections to Claims or
Equity Interests, without approval of the Bankruptcy Court. Unless otherwise
ordered by the Bankruptcy Court, the Equity Committee, or Reorganized UC, as
applicable, shall file and serve all objections to Claims or Equity Interests as
soon as practicable, but in no event later than the Effective Date or such later
date as may be approved by the Bankruptcy Court. The Equity Committee reserves
the right to file objections to any Claims or Equity Interests, and Reorganized
UC and the Equity Committee reserve the right to seek the subordination of any
Claims or Equity Interests.
31.2 Estimation of Claims: The Equity Committee, or
Reorganized UC, as applicable, may at any time request that the Bankruptcy Court
estimate any contingent or Disputed Claim pursuant to Section 502(c) of the
Bankruptcy Code regardless of whether the Debtors or Reorganized UC previously
have objected to such Claim or whether the Bankruptcy Court has ruled on any
such objection, and the Bankruptcy Court will retain jurisdiction to estimate
any Claim at any time during litigation concerning any objection to any Claim,
including, without limitation, during the pendency of any appeal relating to any
such objection. Subject to the provisions of Section 502(j) of the Bankruptcy
Code, in the event that the Bankruptcy Court estimates any contingent or
Disputed Claim, the amount so estimated shall constitute the allowed amount of
such Claim. All of the aforementioned objection, estimation and resolution
procedures are intended to be cumulative and not necessarily exclusive of one
another. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
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31.3 Disputed Claims Reserve: In accordance with this Section
30.3 and any Estimation Order entered by the Bankruptcy Court before such date,
on the Effective Date, Reorganized UC shall establish a separate Disputed Claims
Reserve for each Class of Claims and Equity Interests. Property reserved under
this Section shall be set aside, segregated and, in the case of Cash, held in an
interest bearing account to be established and maintained by Reorganized UC
pending resolution of such Disputed Claims and Disputed Equity Interests. As and
to the extent that the amount of any Disputed Claim or Disputed Equity Interest
exceeds the amount of such Claim or such Equity Interest which ultimately is
allowed, any excess Cash in the applicable Disputed Claims Reserve previously
reserved for or on account of such Disputed Claim or Disputed Equity Interest
shall be released to Reorganized UC for distribution to Allowed Claims and
Allowed Equity Interests in accordance with the terms of the Plan. Each Disputed
Claim Reserve shall be terminated once all Distributions and other dispositions
of Cash required hereunder relevant to such Disputed Claims Reserve have been
made in accordance with the terms of the Plan. If a Disputed Equity Interest
Reserve is established hereunder, all references to Disputed Claims Reserve
shall apply to the Disputed Equity Interest Reserve and all references to
Claims, Allowed Claims and Disputed Claims shall apply to Equity Interests,
Allowed Equity Interests, and Disputed Equity Interests as the context requires.
31.4 Payments and Distributions on Disputed Claims and
Disputed Equity Interests: At such time as a Disputed Claim or Disputed Equity
Interest becomes, in whole or in part an Allowed Claim or an Allowed Equity
Interest, Reorganized UC shall distribute to the holder thereof the
distributions, if any, to which such holder is then entitled under the Plan.
Such distribution, if any, shall be made as soon as practicable after the date
that the order or judgment of the Bankruptcy Court allowing such Disputed Claim
or Disputed Equity Interest becomes a Final Order but in no event more than
thirty (30) days thereafter. No additional interest shall be paid on Disputed
Claims or Disputed Equity Interests that later become Allowed or with respect to
any distribution to such holder for the period during the pendency of the
objection. No distribution shall be made with respect to all or any portion of
any Disputed Claim or Disputed Equity Interest pending the entire resolution
thereof in the manner prescribed in Section 30.1 hereof.
ARTICLE XXXII
PROSECUTION OF CLAIMS HELD BY THE DEBTORS
32.1 Prosecution of Claims: Unless otherwise expressly
provided herein, all claims and causes of action of the Debtors existing as of
the Confirmation Date, including any avoidance or recovery actions under
Sections 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code and
any other causes of action, rights to payments of claims that belong to the
Debtors or Debtors in Possession, shall be retained by and vested for purposes
of enforcement and collection in Reorganized UC, who shall have the rights and
powers of a trustee appointed pursuant to 11 U.S.C. ss. 1104 with regard to the
initiation and prosecution of any claims which the Debtors may have as Debtors
in Possession (exercising the rights and powers of a trustee pursuant to 11
U.S.C. ss. 1107(a)) under 11 U.S.C. ss.ss. 541 through 553 (inclusive) and 11
U.S.C. ss. 510 or otherwise. Any and all claims and causes of action which may
subsequently come to the attention of the Debtors, the Plan Administrator or
Reorganized UC shall survive Confirmation. It is the express purpose and intent
of these provisions of the Plan that Reorganized UC have the same rights and
powers with regard to any causes of action which a trustee appointed pursuant to
11 U.S.C. ss. 1104 would have if such trustee were appointed on the Confirmation
Date and that any adverse parties against whom such causes of action are
asserted similarly have the same rights, liabilities and defenses to such causes
of action which any such adverse party would have in the event the causes of
action were brought by a trustee, including the right to have an Allowed Claim
to the extent provided in 11 U.S.C. ss. 502(h). Reorganized UC shall not be
required to set off against any claim, or against any distributions to be made
pursuant to the Plan in respect of such Allowed Claim any claims of any nature
whatsoever which the Debtors or Debtors in Possession may have against the
holder of such Allowed Claim but neither the failure to do so nor the allowance
of any Allowed Claim hereunder shall constitute a waiver or release of any such
claims the Debtors or Debtors in Possession may have against such holder.
Reorganized UC may compromise and settle such claims or causes of action,
without approval of the Bankruptcy Court (but with approval of, or within
parameters established by, the Board of Directors of Reorganized UC). The net
proceeds of any such litigation or settlement (after satisfaction of all costs
and expenses incurred in connection therewith) shall be remitted to the Plan
Administrator for inclusion in Disbursement Cash.
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ARTICLE XXXIII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
33.1 Rejection of Executory Contracts and Unexpired Leases:
Any executory contracts or unexpired leases which have not expired by their own
terms on or prior to the Effective Date, which have not been assumed and
assigned or rejected with the approval of the Bankruptcy Court, or which are not
the subject of a motion to assume the same pending as of the Effective Date
shall be deemed rejected by the Debtors in Possession on the Effective Date and
the entry of the Confirmation Order by the Bankruptcy Court shall constitute
approval of such rejections pursuant to Sections 365(a) and 1123 of the
Bankruptcy Code.
33.2 Cure of Defaults for Assumed Executory Contracts and
Unexpired Leases: Any monetary amounts required as cure payments on each
executory contract and unexpired lease to be assumed pursuant to the Plan shall
be satisfied, pursuant to Section 365(b)(1) of the Bankruptcy Code, by payment
of the cure amount in Cash on the Effective Date or upon such other terms and
dates as the parties to such executory contracts or unexpired leases otherwise
may agree. In the event of a dispute regarding (a) the amount of any cure
payment, (b) the ability of the Debtors or any assignee to provide "adequate
assurance of future performance" (within the meaning of Section 365 of the
Bankruptcy Code) under the contract or lease to be assumed or (c) any other
matter pertaining to assumption, the cure payments required by Section 365(b)(1)
of the Bankruptcy Code shall be subject to the jurisdiction of the Bankruptcy
Court and made following the entry of a Final Order resolving such dispute.
33.3 Rejection Damage Claims: Not later than the Effective
Date, or such later date as the Bankruptcy Court may by order permit, the Equity
Committee shall file with the Bankruptcy Court a list of executory contracts and
unexpired leases to be assumed by the Debtors pursuant to the Plan as of the
Effective Date, and such executory contracts and unexpired leases shall be
deemed assumed as of the Effective Date. If the rejection of an executory
contract or unexpired lease by the Debtors results in damages to the other party
or parties to such contract or lease, any 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 Debtors, or its properties or agents,
successors, or assigns, unless a proof of claim is filed with the Bankruptcy
Court and served upon counsel for the Equity Committee on or before fifteen (15)
days after the later to occur of (a) the Effective Date and (b) the date of
entry of an order by the Bankruptcy Court authorizing rejection of a particular
executory contract or unexpired lease.
ARTICLE XXXIV
CONDITIONS PRECEDENT TO EFFECTIVE DATE OF THE PLAN
34.1 Conditions Precedent to Effective Date of the Plan: The
occurrence of the Effective Date and the substantial consummation of the Plan
are subject to satisfaction of the following conditions precedent:
(a) Entry of Confirmation Order: The Clerk of the
Bankruptcy Court shall have entered the Confirmation Order, in form and
substance satisfactory to the Equity Committee, and the Confirmation Order shall
have become a Final Order and be in full force and effect or the Equity
Committee has waived the requirement for a Final Order;
(b) Execution of Servicing Agreement(s). The Equity
Committee shall have executed definitive servicing or sub-servicing agreement(s)
with one or more qualified servicers under terms and conditions no less
favorable to the Debtors' estates than those set forth in Exhibit A attached
hereto to service the Debtors' loan portfolio;
(c) Entry of Servicing Agreement Order. The
Bankruptcy Court shall have entered the Servicing Agreement Order; and
(d) Execution of Documents; Other Actions: All other
actions and documents necessary to implement the Plan shall have been executed.
34.2 Failure to Execute Servicing Agreement: In the event the
Equity Committee fails to retain a servicer or subservicer within sixty (60)
days of confirmation of the Equity Committee's Plan, the Confirmation Order
shall be deemed void and of no force and effect.
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ARTICLE XXXV
COMMITTEES
35.1 Creditors' Committee Term and Fees: On the Effective
Date, the Creditors' Committee shall be dissolved and the members thereof and
the professionals retained by the Creditors' Committee in accordance with
Section 1103 of the Bankruptcy Code shall be released and discharged from their
respective fiduciary obligations.
35.2 Equity Committee Term and Fees: On the Effective Date,
the Equity Committee shall be dissolved and the members thereof and the
professionals retained by the Equity Committee in accordance with Section 1103
of the Bankruptcy Code shall be released and discharged from their respective
fiduciary obligations.
ARTICLE XXXVI
RETENTION OF JURISDICTION
36.1 Retention of Jurisdiction: The Bankruptcy Court shall
retain and have exclusive jurisdiction over any matter arising under the
Bankruptcy Code, arising in or related to the Chapter 11 Cases or the Plan, or
that relates to the following:
(a) to resolve any matters related to the assumption,
assumption and assignment or rejection of any executory contract or unexpired
lease to which the Debtors are a party or with respect to which the Debtors may
be liable and to hear, determine and, if necessary, liquidate, any Claims
arising therefrom, including those matters related to the amendment after the
Effective Date of the Plan, to add any executory contracts or unexpired leases
to the list of executory contracts and unexpired leases to be rejected;
(b) to enter such orders as may be necessary or
appropriate to implement or consummate the provisions of the Plan and all
contracts, instruments, releases, and other agreements or documents created in
connection with the Plan;
(c) to determine any and all motions, adversary
proceedings, applications and contested or litigated matters that may be pending
on the Effective Date or that, pursuant to the Plan, may be instituted by
Reorganized UC after the Effective Date;
(d) to ensure that distributions to holders of
Allowed Claims and Allowed Equity Interests are accomplished as provided herein;
(e) to hear and determine any timely objections to
Administrative Expense Claims or to proofs of Claim and Equity Interests filed,
both before and after the Confirmation Date, including any objections to the
classification of any Claim or Equity Interest, and to allow, disallow,
determine, liquidate, classify, estimate or establish the priority of or secured
or unsecured status of any Claim, in whole or in part;
(f) 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;
(g) to issue such orders in aide of execution of the
Plan, to the extent authorized by section 1142 of the Bankruptcy Code;
(h) to consider any modifications of the Plan, to
cure any defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order,
(i) to hear and determine all applications for awards
of compensation for services rendered and reimbursement of expenses incurred
prior to the Effective Date;
(j) to hear and determine disputes arising in
connection with or relating to the Plan or the interpretation, implementation,
or enforcement of the Plan or the extent of any Entity's obligations incurred in
connection with or released under the Plan;
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(k) to issue injunctions, enter and implement other
orders or take such other actions as may be necessary or appropriate to restrain
interference by any Entity with consummation or enforcement of the Plan;
(l) to determine any other matters that may arise in
connection with or are related to the Plan, the Disclosure Statement, the
Confirmation Order or any contract instrument, release or other agreement or
document created in connection with the Plan or the Disclosure Statement;
(m) to hear and determine matters concerning state,
local and federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(n) to hear any other matter or for any purpose
specified in the Confirmation Order that is not inconsistent with the Bankruptcy
Code; and
(o) to enter a final decree closing the Chapter 11
Cases.
ARTICLE XXXVII
MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN
37.1 Modification of Plan: The Equity Committee reserves the
right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend
or modify the Plan at any time prior to the entry of the Confirmation Order.
Upon entry of the Confirmation Order, the Equity Committee may, upon order of
the Bankruptcy Court, amend or modify the Plan, in accordance with Section
1127(b) of the Bankruptcy Code, or remedy any defect or omission or reconcile
any inconsistency in the Plan in such manner as may be necessary to carry out
the purpose and intent of the Plan. A holder of a Claim or Equity Interest that
has accepted the Plan shall be deemed to have accepted the Plan as modified if
the proposed modification does not materially and adversely change the treatment
of the Claim or Equity Interest of such holder.
37.2 Revocation or Withdrawal:
(a) The Plan may be revoked or withdrawn prior to the
Confirmation Date by the Equity Committee; and
(b) If the Plan is revoked or withdrawn prior to the
Confirmation Date, then the Plan shall be deemed null and void. In such event,
nothing contained herein shall be deemed to constitute a waiver or release of
any claims by the Debtors or any other Entity or to prejudice in any manner the
rights of the Debtors or any other Entity in any further proceedings involving
the Debtors.
ARTICLE XXXVIII
MISCELLANEOUS PROVISIONS
38.1 Discharge of Debtors: Except as otherwise specifically
provided in the Plan or the Confirmation Order, confirmation of the Plan
(subject to the occurrence of the Effective Date) shall operate as a discharge,
pursuant to section 1141(d)(1) of the Bankruptcy Code, of the Debtors and
Reorganized UC from any debt, Claim or Equity Interest that arose before the
Confirmation Date, including, but not limited to, all principal and interest,
whether accrued before, on or after the Petition Date, and any debt, Claim or
Equity Interest of the kind specified in sections 502(g), 502(h) or 502(i) of
the Bankruptcy Code, whether or not a proof of Claim or Equity Interest is filed
or is deemed filed, and whether or not the holder of such Claim or Equity
Interest has voted on the Plan. On the Effective Date, as to every discharged
debt, Claim and Equity Interest, the holder of such debt, Claim or Equity
Interest shall be precluded from asserting against the Debtors, the Debtors'
assets or properties, and against Reorganized UC and the Plan Administrator, any
other or further Claim or Equity Interest based upon any document, instrument or
act, omission, transaction or other activity of any kind or nature that occurred
prior to the Confirmation Date.
38.2 Injunction: Except as otherwise expressly provided in the
Plan, all Persons or Entities who have held, hold or may hold Claims or Equity
Interests are permanently enjoined, from and after the Effective Date, from (a)
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commencing or continuing in any manner any action or other proceeding of any
kind on any such Claim or Equity Interest against the Debtors or Reorganized UC,
(b) the enforcement, attachment, collection or recovery by any manner or means
of any judgment, award, decree or order against the Debtors or Reorganized UC,
(c) creating, perfecting, or enforcing any encumbrance of any kind against the
Debtors or Reorganized UC or against the property or interests in property of
the Debtors or Reorganized UC, and (d) asserting any right of setoff,
subrogation or recoupment of any kind against any obligation due from the
Debtors or Reorganized UC or against the property or interests in property of
the Debtors or Reorganized UC, with respect to any such Claim or Equity
Interest; provided, however, that such injunction shall not preclude the United
States of America or any of its police or regulatory agencies from enforcing
their police or regulatory powers; and, provided, further, that, except in
connection with a properly filed proof of claim, the foregoing proviso does not
permit the United States of America or any of its police or regulatory agencies
from obtaining any monetary recovery from United Companies or Reorganized UC or
their respective property or interests in property with respect to any such
Claim or Equity Interest, including, without limitation, any monetary claim or
penalty in furtherance of a police or regulatory power.
38.3 Term of Existing Injunctions or Stays: Unless otherwise
provided, all injunctions or stays provided for in the Chapter 11 Case pursuant
to Sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on
the Confirmation Date, shall remain in full force and effect until the Effective
Date.
38.4 Payment of Statutory Fees: All fees payable pursuant to
Section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on the Effective
Date.
38.5 Retiree Benefits: From and after the Effective Date,
pursuant to Section 1129(a)(13) of the Bankruptcy Code, Reorganized UC shall
continue to pay all retiree benefits (within the meaning of Section 1114 of the
Bankruptcy Code), at the level established in accordance with subsection
(e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any time prior to
the Confirmation Date, and for the duration of the period during which the
Debtors have obligated themselves to provide such benefits.
38.6 Post-Effective Date Fees and Expenses: From and after the
Effective Date, Reorganized UC shall, in the ordinary course of business and
without the necessity for any approval by the Bankruptcy Court, pay the
reasonable professional fees and expenses incurred by Reorganized UC related to
implementation and consummation of the Plan.
38.7 Exemption from Certain Transfer Taxes. Pursuant to
Section 1146(c) of the Bankruptcy Code (a) issuance, transfer or exchange of any
securities, instruments or documents and (b) the creation of any other lien,
mortgage, deed of trust or other security interest under the Plan shall not be
subject to any stamp tax, transfer tax, intangible tax, recording fee, or
similar tax, charge or expense to the fullest extent provided for under Section
1146(c) of the Bankruptcy Code.
38.8 Severability: If, prior to the Confirmation Date, any
term or provision of the Plan shall be held by the Bankruptcy Court to be
invalid, void or unenforceable, the Bankruptcy Court shall, with the consent of
the Equity Committee, have the power to alter and interpret such term or
provision to make it valid or enforceable, to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision shall then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order shall constitute a judicial determination and shall provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
38.9 Governing Law: Except to the extent that the Bankruptcy
Code or other federal law is applicable, or to the extent that an exhibit hereto
or document contained in the Plan Supplement provides otherwise, the rights,
duties and obligations arising under this Plan shall be governed by, and
construed and enforced in accordance with, the Bankruptcy Code and, to the
extent not inconsistent therewith, the laws of the State of Louisiana, without
giving effect to principles of conflicts of laws.
38.10 Notices: All notices, requests, and demands to or upon
the Debtors or Reorganized UC to be effective shall be in writing, including by
facsimile transmission and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when actually delivered or, in the case
of notice by facsimile transmission, when received and telephonically confirmed,
addressed as follows:
If to the Debtors:
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United Companies Financial Corporation
P.O. Box 1591
4041 Essen Lane
Baton Rouge, LA 70809
Attention: Larry Ramaekers
with a copy to:
Marcia Goldstein
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
If to the Equity Committee:
Nicola Biase
14 East 60th Street
New York, New York 10022
with a copy to
Charles E. Campbell
Long Aldridge & Norman LLP
Suite 5300, 303 Peachtree Street
Atlanta, Georgia 30308
Telecopier: (404) 527-4198
If to the Creditors' Committee:
John McGowan
First Union National Bank
301 South College Street
Charlotte, NC 28288
with a copy to:
Chaim J. Fortgang
Wachtell, Lipton Rosen & Katz
51 West 52nd Street
New York, NY 10019
38.11 Closing of Cases: Reorganized UC shall, promptly upon
the full administration of the Chapter 11 Cases, file with the Bankruptcy Court
all documents required by Bankruptcy Rule 3022 and any applicable order of the
Bankruptcy Court.
38.12 Section Headings: The section headings contained in this
Plan are for reference purposes only and shall not affect in any way the meaning
or interpretation of the Plan.
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<PAGE>
Dated: June 10, 2000
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS OF UNITED
COMPANIES FINANCIAL CORPORATION
By: /s/ Nicola Biase
-----------------------------
Name: Nicola Biase
Title: Vice Chairman
29
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EXHIBIT A
<PAGE>
SERVICING AGREEMENT TERM SHEET
The Equity Committee will contract with one or more servicing companies
(the "Servicing Company") to take over the servicing obligations of the entire
portfolio of mortgage loans and manufactured home loans owned or serviced by
United Companies Financial Corporation and its subsidiaries and affiliates
(collectively, "UCFC" or "Debtors"), including all home equity securitizations
outlined in Attachment 1 hereto along with all other securitizations for which
the Debtors are currently servicers of record (the "Securitized Loans"), all
mortgage loans and manufactured home loans owned by UCFC (the "UCFC Loans"), and
mortgage loans serviced for others (the "Third Party Loans") (all such assets
being referred to as the "Servicing Portfolio"1 and such servicing rights
collectively shall be referred to as the "Servicing Rights"). The following
terms and conditions will be a part of any definitive servicing agreement
entered into between the Equity Committee and the Servicing Company:
OVERVIEW: UCFC currently is acting as the servicer for the Securitized
Loans, the UCFC Loans and the Third Party Loans. The Equity
Committee will contract with one or more qualified servicing
companies (the "Servicing Company") to either (a) act as a
sub-servicer ("Sub-servicer") pursuant to a sub- servicing
agreement mutually acceptable to the parties (the "Sub-servicing
Agreement" or "Proposal A"), and/or (b) become the successor
servicer ("Successor Servicer", "Proposal B") to these
transactions thereby assuming all obligations currently borne by
UCFC under the terms of the pooling and servicing agreements with
respect to the Securitized Loans (the "PSAs") other than those
obligations remaining with UCFC as expressly provided for herein.
If the Equity Committee elects Proposal A above, the Servicing
Company would act as Subservicer to UCFC for the life of the
mortgage loans. If the Equity Committee elects Proposal B above,
pursuant to a servicing agreement mutually acceptable to the
parties, the Servicing Company would act as servicer ("Servicer")
for the life of the Securitized Loans, the UCFC Loans and the
Third Party Loans.
Termination Except for cause or other limited circumstances, the Servicing
Company would not be permitted to resign as Servicer or
Subservicer, and except for cause and subject to the terms of the
PSAs with respect to the Securitized Loans and the servicing
agreements with respect to the Third Party Loans (the "Third Party
Servicing Agreements"), the Servicing Company could not be
terminated as Servicer or Sub-servicer. The PSAs, the
Sub-servicing Agreements and UCFC Servicing Agreement shall be
referred to herein collectively as the "Servicing Agreements."
Servicing Fees The Servicing Company would be paid a "Base Servicing Fee" of
0.50 % per annum on a monthly basis. In the case of the UCFC
Loans, this fee would be paid from cash collections. In the case
of the Securitized Loans and the Third Party Loans, this fee would
be netted by the Servicing Company from the monthly servicing
proceeds, which would include prepayment penalties and all other
cash flow to which UCFC would otherwise be entitled.
In the case of UCFC REO properties, the Servicing Company would be
paid a "Base Servicing Fee" of 0.50% per annum on a monthly basis.
Third party REO vendors would be paid according to REO Management
Agreements in place with UCFC which call for payment of servicers
rendered out of the gross sales proceeds when the REO property is
sold. To the extent that the Servicing Company manages the
disposition of REO properties rather than third party vendors, the
Servicing Company would be paid a liquidation management fee (the
"Liquidation Management Fee") in the amount to be negotiated by
the parties and set forth in definitive documentation, with such
fee to be paid from the closing proceeds when the REO property is
sold.
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1 Specifically excluded is the 1998 Securitization in which UCFC is
only the residual interest holder and is neither the owner of the loans nor the
servicer of those loans.
<PAGE>
Ancillary Income Under Proposal A, the Servicing Company would retain 100%
of the late fees and other ancillary income (excluding investment
earnings on collection and escrow account balances) as additional
servicing compensation. Such ancillary income would include,
without limitation, assumption fees, charges for bad checks and
release fees.
Under Proposal B, the Servicing Company would retain 100% of the
late fees and other ancillary income (including investment
earnings on collection and escrow account balances) as additional
servicing compensation. Such ancillary income would include,
without limitation, assumption fees, charges for bad checks and
release fees.
Prepayment Prepayment penalties would be passed through to UCFC under both
Penalties proposals.
Advances: Under Proposal A.
- the Servicing Company would not be responsible for funding
prospective interest, corporate or escrow advances for delinquent
mortgage loans, but it would be responsible for the administration
of these advancing obligations and related functions;
- the Servicing Company would not make customary prepayment
interest shortfall payments from its own funds;
-the Servicing Company would not reimburse UCFC for outstanding
recoverable interest, corporate or escrow advances for delinquent
mortgage loans; and
- UCFC would retain all past and future delinquent interest and
corporate and escrow advances collected by the Servicing Company.
Under Proposal B,
- the Servicing Company would not be responsible for funding the
advancement of interest on delinquent mortgage loans. This funding
obligation would remain with UCFC and, at the Equity Committee's
option, may be met through either internal funding, through
utilization of a cash management arrangement within the mortgage
pools consistent with the PSAs, or the establishment of a
financing facility. The Servicing Company would, as part of its
overall servicing responsibilities, administer all advancing
obligations and related functions. The Servicing Company would
reimburse UCFC for any interest expense due on borrowing from the
financing facility related to such advances or, if funded through
internal funding, at an interest rate to be agreed upon between
the Servicing Company and the Equity Committee;
-the Servicing Company would be responsible for making corporate
and/or escrow advances and customary prepayment interest shortfall
payments;
- the Servicing Company would reimburse UCFC in cash for all
outstanding recoverable corporate and escrow advances less an
amount to be set forth in the definitive documentation to be
negotiated between the parties as soon as reasonably possible and
in no event to exceed 15 business days following transfer to the
Servicing Company;
- the Servicing Company would be entitled to collect and retain
all past and future corporate and escrow advances collected in
accordance with the PSAs. UCFC would be entitled to retain all
past and future interest advances; and
- All corporate and interest advances would be deemed recoverable
and paid out of cash flows that would otherwise be due to the
residual holder to the extent they are not otherwise collected
through the securitization waterfall.
Clean-Up UCFC would retain the right to exercise and, if exercised, the
obligations to fund any "Clean-up" calls for the Securitized
Loans. The Servicing Company will assist and make recommendations
to UCFC in the analysis and administration of the exercise of any
such Clean-Up calls. If such calls are exercised, all resulting
mortgage loans will be serviced under identical terms as the UCFC
Loans.
<PAGE>
Loan UCFC would retain the right to repurchase loans ("Loan
Repurchase Repurchases") from the Securitized Loans as permitted under the
PSAs. Any funding requirements would remain with UCFC. The
Servicing Company will assist and make recommendations to UCFC in
the analysis and administration of any such Loan Repurchases. All
mortgage loans that are the subject of Loan Repurchases will be
serviced under identical terms as the UCFC Loans. The definitive
agreement shall contain provisions requiring the Servicing Company
to perform its servicing functions so as to make available to UCFC
the opportunity, through prior notice and other arrangements, to
implement Loan Purchases utilizing its own funds as needed to
forestall the occurrence of any "Trigger."
Servicing The Servicing Company will be responsible for all aspects of
Company servicing the Servicing Portfolio. Such responsibilities would
Respon- include:
sibilities - Customer Service
- Customer relations
- Billing Statements
- Collections
- Timeline Management
- REO management
- Lock-Box
- Investor Reporting
- Year-end tax reporting to IRS
- File storage
- Document Recording and management
As part of the servicing transfer, the Servicing Company shall
provide the Equity Committee a list of all third-party contracts
of UCFC relating to the Servicing Rights that the Servicing
Company desires to assume.
Termination If the Servicing Company is terminated without cause as
Fee Servicer or Subservicer with respect to a particular Servicing
Agreement or Sub-servicing Agreement, UCFC would pay to the
Servicing Company the following termination fee on all loans to be
serviced pursuant to such Servicing Agreement, based on the amount
of time elapsed from the execution date of the applicable
Servicing Agreement to the date of termination:
0-24 months - $100 per loan
25-36 months - $50 per loan
37+ months - $0 per loan
The parties shall otherwise have such remedies for breach by the
other party of the Definitive Agreement as shall be mutually
agreed upon in the Definitive Agreement.
<PAGE>
Required UCFC will be responsible for obtaining the necessary approvals and
Approvals estoppels from the transaction from all required parties,
including without limitation the rating agencies, monoline
insurers, REMIC trustees, underwriters, letter of credit account
parties and regulatory authorities, or, alternatively, obtaining a
judicial order to the same legal effect. Such approvals and
estoppels would certify (or such order would provide), among other
things, that:
- The Servicing Company would not assume any obligations of UCFC
arising or accruing prior to the servicing transfer to (a) cure
breaches of any representations and warranties made by UCFC or to
repurchase loans from or substitute loans to the related
securitization trusts or mortgage loan owners or (b) indemnify the
UCFC counterparties from any securities law liabilities;
-the Servicing Company meets the eligibility requirements for a
sub-servicer or such requirements have been waived;
-Such parties confirm the absence of or waive any defaults by UCFC
or its subsidiaries under the PSAs or Third Party Servicing
Agreements, as applicable, arising or accruing prior to the
servicing transfer and agree to be estopped from enforcing any
rights and remedies, including any rights of indemnity, rights to
remove the Servicer or Sub-servicer and any claims relating to the
making and reimbursement of Advances arising or accruing prior to
the servicing transfer;
- Under Proposal B, such parties agree that the Servicing Company,
as Sub-servicer is entitled to reimbursement of all outstanding
and unreimbursed corporate and escrow advances in accordance with
the terms of the relevant Servicing Agreements; and
- Such parties waive any servicer removal triggers based on UCFC's
failure to meet certain standards and covenants arising or
accruing prior to the Servicing transfer.
The Servicing Company will cooperate in this process and would
provide all reasonable assistance to the Equity Committee in
obtaining these approvals. All legal expenses and other reasonable
out-of- pocket expenses incurred in the approval process will be
borne by UCFC.
Servicing The Servicing Portfolio would be serviced with the same level of
Standard care, skill, prudence and diligence that the Servicing Company
employs in servicing like loans in its own portfolio and otherwise
as required by the PSAs, as applicable. To the extent possible,
the loans in the Servicing Portfolio would be combined with the
Servicing Company's loans on the same platform and, after transfer
to that platform, would be serviced by the same personnel
operating under the same policies and procedures. The loans in the
Servicing Portfolio would not be specifically identified thereby
ensuring treatment similar to the Servicing Company's owned
portfolio. The Servicing Company will attempt to maximize the net
present value of UCFC's economic interests in the Securitized
Loans in all cases in a manner consistent with the servicing
standards and servicer requirements under the PSAs. In the case of
the UCFC Loans, the Servicing Company's objective will be to
maximize the net present value of the these loans for the
exclusive benefit of UCFC.
Document The Servicing Company will cure all document deficiencies
Deficiencies necessary to fulfill its obligations to the related securitization
trustee or loan owner or necessary to properly service the loans
(e.g. proceeding with foreclosure or releasing a satisfied lien)
for which UCFC shall reimburse the Servicing Company its expenses
in an amount not to exceed $1.5 million). These permitted expenses
would be limited to reasonable third-party costs and other direct
out-of-pocket expenses of the Servicing Company and would not
include any portion of the salaries of the Servicing Company's
employees or other overhead.
Custodial All custodial, collection and other accounts must be fully funded
Accounts prior to closing.
Custody UCFC would be responsible for paying all document custody and
Fees rating agency maintenance fees to the extent required of the
Servicer under the PSAs.
Performing All performing and nonperforming loans would immediately be
Loan transferred (within 60 days of notice) to the Servicing Company's
Non- servicing platform.
performing
Loan All REO managed internally by UCFC would be immediately
and REO transferred (within 60 days notice) to the Servicing Company's
Transition servicing platform.
Regarding all REO managed by third party vendors, the Servicing
Company would immediately assume oversight.
<PAGE>
Tax Service At the Servicing Company's election, the Servicing Rights would be
Contracts transferred to the Servicing Company with transferable
life-of-loan tax service contracts, to the extent in existence and
assignable by UCFC, either by their terms or pursuant to court
order.
Transfer Each party would be responsible for its own transfer expenses.
Expenses UCFC would be responsible for sending RESPA Transfer Notices to
borrowers, providing data to the Servicing Company in a format
reasonably requested by the Servicing Company. The Servicing
Company would be responsible for shipping the loan files and
boarding the loans onto its system including any data conversion
expenses.
Remittance The Servicing Company would make remittances and reports to the
and Trustee in accordance with the terms of the Servicing Agreements.
Reporting
Compliance The Servicing Company will furnish annually to UCFC a statement by
Statement an officer of the Servicing Company stating that it has complied
with all requirements of the definitive agreement.
Repre- The Servicing Company would make customary servicer
sentations representations and warranties but would not be subject to any
and obligations of the prior servicer nor any obligations,
Warranties representations or warranties customarily made by the seller of
the mortgage loans. The Servicing Company would not assume any
repurchase or other obligations of the seller of the mortgage
loans or prior servicer, if any.
Costs Each party shall bear its own fees and expenses, including,
without limitation, fees, expenses and commission of financial,
legal and accounting advisers and other outside consultants,
incurred in connection herewith
<PAGE>
EXHIBIT B
---------
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: : Chapter 11
:
UNITED COMPANIES FINANCIAL : Case Nos. 99-450 (MFW) through 99-461
CORPORATION, ET. AL., : (MFW)
DEBTORS. :
: JOINTLY ADMINISTERED
---------------------------------------:
ORDER (I) APPROVING DEBTORS' DISCLOSURE STATEMENT AND EQUITY COMMITTEE'S
DISCLOSURE STATEMENT, (II) ESTABLISHING VOTING RECORD HOLDER DATE, (III)
APPROVING SOLICITATION PROCEDURES, FORM OF BALLOTS, AND MANNER OF NOTICE, AND
(IV) FIXING THE DATE, TIME AND PLACE FOR THE CONFIRMATION HEARING AND THE
DEADLINE FOR FILING OBJECTIONS THERETO
--------------------------------------
A hearing having been held on July 6, 2000 and July 7, 2000 (the
"Hearing") to consider (a) the motion (the "Debtors' Motion") filed by United
Companies Financial Corporation and certain of its direct and indirect
subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), dated June 6, 2000, seeking, inter alia, approval pursuant to
section 1125 of title 11 of the United States Code (the "Bankruptcy Code") of
the proposed disclosure statement heretofore filed with the Court by the Debtors
and approval of the proposed solicitation procedures in connection with
confirmation of the Debtors' Second Amended Plan of Reorganization for Debtors
Pursuant to Chapter 11 of the United States Bankruptcy Code (the "Debtors'
Plan") and (b) the motion (the "Equity Committee's Motion") filed by the
statutory committee of equity security holders (the "Equity Committee"), dated
June 8, 2000, seeking, inter alia, approval pursuant to section 1125 of the
Bankruptcy Code of the proposed disclosure statement heretofore filed with the
Court by the Equity Committee in connection with the Equity Committee's Second
Amended Plan of Reorganization (the "Equity Committee's Plan") and; it appearing
<PAGE>
from the affidavits of service on file with this Court that proper and timely
notice of the Hearing has been given; and it appearing that such notice was
adequate and sufficient; and the appearances of all interested parties having
been duly noted on the record of the Hearing; and each of the objections, if
any, filed to the proposed disclosure statements, the Debtors' Motion and/or the
Equity Committee's Motion having been either (i) withdrawn or rendered moot by
modifications to the applicable disclosure statement or (ii) overruled by the
Court; and the Debtor or the Equity Committee, as applicable, having made the
conforming additions, changes, corrections and deletions to the disclosure
statements necessary to comport with the record of the Hearing and the
agreements, if any, reached with the parties that filed objections; and a copy
of the revised disclosure statement submitted by the Debtors is attached hereto
as Exhibit A (the "Debtors' Disclosure Statement") and the revised disclosure
statement submitted by the Equity Committee is attached hereto as Exhibit B (the
"Equity Committee's Disclosure Statement"); and, upon the Debtors' Motion, the
Debtors' Disclosure Statement, the Equity Committee's Motion, the Equity
Committee's Disclosure Statement, and the record of the Hearing and upon all of
the proceedings heretofore had before the Court and after due deliberation and
sufficient cause appearing, therefore it is
ORDERED, FOUND AND DETERMINED THAT:
1. The Debtors' Disclosure Statement contains adequate information
within the meaning of section 1125 of the Bankruptcy Code and, thus, the
Debtors' Disclosure Statement is hereby approved. The relief requested in the
Debtors' Motion is hereby granted to the extent provided herein.
2. The Equity Committee's Disclosure Statement ") contains adequate
information within the meaning of section 1125 of the Bankruptcy Code and, thus,
the Equity Committee' Disclosure Statement is hereby approved. The relief
2
<PAGE>
requested in the Equity Committee's Motion is hereby granted to the extent
provided herein.
3. The Debtors are authorized to continue the retention of Logan &
Company, Inc. (the "Balloting Agent") to, among other things, assist the Debtors
as their claims agent and as their solicitation and balloting agent, as well as
to maintain the official claims register. Further, the Debtors are authorized to
retain an information agent to respond to inquiries regarding the Debtors' Plan,
the Debtors' Disclosure Statement, the Equity Committee's Plan, the Equity
Committee's Disclosure Statement and the submission of ballots, provided,
however, that such information agent shall not endorse or solicit acceptances or
rejections of either of the Plans.
4. For voting purposes and mailing of notices pursuant to this Order,
June 30, 2000 shall be the "Record Holder Date" for the holders of claims and
interests.
5. Pursuant to the Debtors' Plan, holders of claims and interests in
Class 3 (Bank Claims), Class 4 (Senior Note Claims), Class 5 (General Unsecured
Claims), Class 6 (Convenience Claims), Class 7 (Subordinated Debenture Claims),
Class 8 (Subordinated Penalty Claims), Class 9 (Pride Equity Interests), Class
10A (Statutorily Subordinated Claims) and Class 10B (United Companies Common
Equity Interests) are impaired and are entitled to vote (collectively, the
"Debtors' Voting Classes"). Pursuant to the Equity Committee's Plan, holders of
claims and interests in Class 3 (Unsecured Claims), Class 4 (Borrower Litigation
Claims), Class 6A (Subordinated Debenture Claims), Class 6B (Lending
Subordinated Debenture Claims), Class 7 (Subordinated Penalty Claims), Class 8
(Pride Equity Interests), Class 9A (Statutorily Subordinated Claims) and Class
9B (United Companies Common Equity Interests) are impaired and are entitled to
vote (collectively, the "Equity Committee's Voting Classes"). Only the following
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holders of claims and interests in the Debtors' Voting Classes and the Equity
Committee's Voting Classes shall be entitled to vote with regards to such claims
and interests (a) the holders of scheduled claims, as of the Record Holder Date,
that are listed in the Debtors' schedules of liabilities filed with the Court
(as amended, the "Schedules") as not contingent, unliquidated, or disputed
(excluding scheduled claims that have been superseded by filed claims),
provided, however, that the assignee of a transferred and assigned scheduled
claim shall be permitted to vote such claim only if the transfer and assignment
has been approved by the Court and such approval has been noted on the Court's
docket as of the close of business on the Record Holder Date, (b) holders of
filed claims, as of the Record Holder Date, that are the subject of a filed
proof of claim which has not been disallowed, disqualified or suspended prior to
the Record Holder Date and which is not the subject of a pending objection on
the Record Holder Date, provided, however, that the assignee of a transferred
and assigned filed claim shall be permitted to vote such claim only if the
transfer and assignment has been approved by the Court and such approval has
been noted on the Court's docket as of the close of business on the Record
Holder Date, and (c) holders of Pride Equity Interests and United Companies
Common Equity Interests (as such terms are defined in the Debtors' Plan) as
reflected on the records of the Transfer Agent.
6. With respect to the claims arising from the Debtors' prepetition
$850 million unsecured revolving credit facility, First Union National Bank
("First Union"), as agent for the participating lenders ("Participating
Lenders") under the Credit Agreement (as such term is defined in the Debtors'
Plan), has filed proofs of claim on behalf of the Participating Lenders. Only
First Union shall be entitled to submit Master Ballots (as defined below).
4
<PAGE>
7. In connection with soliciting votes from the Participating Lenders,
the Court hereby directs as follows:
a. First Union shall forward the Solicitation Package (as defined
below) or copies thereof (including a return envelope provided
by and addressed to First Union and including the Individual
Ballots as defined below) to the Participating Lenders within
three (3) business days of the receipt by First Union of the
Solicitation Package;
b. the Participating Lenders shall return the Individual Ballots
to First Union;
c. First Union shall summarize the votes of the Participating
Lenders on the Master Ballots, in accordance with the
instructions for the Master Ballots;
d. First Union shall return the Master Ballots to the Balloting
Agent; and
e. the Debtors shall provide First Union with sufficient copies
of the Solicitation Package to forward to the Participating
Lenders.
8. With respect to claims based on the 9.35% Notes and 7.7% Notes (as
such terms are defined in the Debtors' Plan and referred to herein collectively
as the "Senior Notes"), Norwest Bank is the indenture trustee for the Senior
Notes (the "Senior Notes Indenture Trustee"). Only the brokers, dealers,
commercial banks, trust companies or other nominees (collectively, the "Nominee
Senior Noteholders") through which the beneficial owners ("collectively, the
"Beneficial Senior Noteholders") hold the Senior Notes as reflected in the
records maintained by the Senior Notes Indenture Trustee as of the close of
business on the Record Holder Date shall be entitled to submit Master Ballots.
9. In connection with soliciting votes from the Nominee Senior
Noteholders and Beneficial Senior Noteholders, the Court hereby directs as
follows:
a. the Nominee Senior Noteholders shall forward the Solicitation
Package or copies thereof (including a return envelope
provided by and addressed to the Nominee Senior Noteholders
and including the Individual Ballots described below) to the
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<PAGE>
Beneficial Senior Noteholders within three (3) business days
of the receipt by such Nominee Senior Noteholders of the
Solicitation Package;
b. the Beneficial Senior Noteholders shall return the Individual
Ballots to the respective Nominee Senior Noteholders;
c. the Nominee Senior Noteholders shall summarize the votes of
their respective Beneficial Senior Noteholders on the Master
Ballots, in accordance with the instructions for the Master
Ballots;
d. the Nominee Senior Noteholders shall return the Master Ballots
to the Balloting Agent; and
e. the Debtors shall provide the Nominee Senior Noteholders with
sufficient copies of the Solicitation Package to forward to
the Beneficial Senior Noteholders.
10. With respect to the claims based on the 8.375% Notes (as such term
is defined in the Debtors' Plan), HSBC Bank USA is the indenture trustee for the
8.375% Notes ("Subordinated Notes Indenture Trustee"). Only the brokers,
dealers, commercial banks, trust companies or other nominees (collectively, ,the
"Nominee Subordinated Noteholders") through which the beneficial owners
(collectively, the "Beneficial Subordinated Noteholders") hold the 8.375% Notes
as reflected in the records maintained by the Subordinated Notes Indenture
Trustee as of the close of business on the Record Holder Date shall be entitled
to submit Master Ballots.
11. In connection with soliciting votes from the Nominee Subordinated
Noteholders and Beneficial Subordinated Noteholders, the Court hereby directs as
follows:
a. the Nominee Subordinated Noteholders shall forward the
Solicitation Package or copies thereof to the Beneficial
Subordinated Noteholders within three (3) business days of the
receipt by such Nominee Subordinated Noteholders of the
Solicitation Package;
b. the Beneficial Subordinated Noteholders shall return the
Individual Ballots to the respective Nominee Subordinated
Noteholders;
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<PAGE>
c. the Nominee Subordinated Noteholders shall summarize the votes
of their respective Beneficial Subordinated Noteholders on the
Master Ballots in accordance with the instructions for the
Master Ballots;
d. the Nominee Subordinated Noteholders shall return the Master
Ballots to the Balloting Agent; and
e. the Debtors shall provide the Nominee Subordinated Noteholders
with sufficient copies of the Solicitation Package to forward
to the Beneficial Subordinated Noteholders.
12. With respect to the holders of Pride Equity Interests and United
Companies Common Equity Interests, Chase Mellon is the transfer agent for such
securities ("Transfer Agent"). Only the brokers, dealers, commercial banks,
trust companies or other nominees (collectively, the "Nominee Stockholders")
through which the beneficial owners (collectively, the "Beneficial
Stockholders") hold the Pride Equity Interests and/or United Companies Common
Equity Interests as reflected in the records maintained by the Transfer Agent as
of close of business on the Record Holder Date shall be entitled to submit
Master Ballots (as defined below).
13. In connection with soliciting votes from the holders of Pride
Equity Interests and United Companies Common Equity Interests, the Court hereby
directs as follows:
a. the Nominee Stockholders shall forward the Solicitation
Package or copies thereof to the Beneficial Stockholders
within three (3) business days of the receipt by such Nominee
Stockholders of the Solicitation Package;
b. the Beneficial Stockholders shall return the Individual
Ballots (as defined below) to the respective Nominee
Stockholders;
c. the Nominee Stockholders shall summarize the votes of their
respective Beneficial Stockholders on the Master Ballots in
accordance with the instructions for the Master Ballots;
d. the Nominee Stockholders shall return the Master Ballots to
the Balloting Agent; and
7
<PAGE>
e. the Debtors shall provide the Nominee Stockholders with
sufficient copies of the Solicitation Package to forward to
the Beneficial Stockholders.
14. The Debtors are authorized to reimburse First Union, the Nominee
Senior Noteholders, the Nominee Subordinated Noteholders and the Nominee
Stockholders for their reasonable, actual and necessary out-of-pocket expenses
incurred in connection with distribution of the Solicitation Packages and
preparation of the Master Ballots.
15. The Debtors shall (a) except as provided in sections (b) and (c)
below, mail a ballot (with instructions), substantially in the form of the
ballots (with instructions) annexed hereto as Exhibit C and such other ballots
as may be necessary (the "Individual Ballots"), to each holder of a claim in
either the Debtors' Voting Classes or the Equity Committee's Voting Classes; (b)
mail a ballot (with instructions), substantially in the form of the ballot (with
instructions) annexed hereto as Exhibit D (the "Master Ballot"), to First Union
for the purpose of summarizing the votes of the Participating Lenders and to
each of the Nominee Senior Noteholders, Nominee Subordinated Noteholders and
Nominee Stockholders for the purpose of summarizing the votes of their
respective Beneficial Senior Noteholders, Beneficial Subordinated Noteholders
and Beneficial Stockholders; and (c) mail Individual Ballots to First Union and
each of the Nominee Senior Noteholders, Nominee Subordinated Noteholders and
Nominee Stockholders for the purpose of soliciting the votes of the
Participating Lenders, Beneficial Senior Noteholders, Beneficial Subordinated
Noteholders and Beneficial Stockholders, respectively.
16. On or before July 14, 2000, the Debtors shall deposit or cause to
be deposited in the United States mail, postage prepaid, a sealed solicitation
package (the "Solicitation Package") which shall include:
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<PAGE>
a. notice of the confirmation hearing and related matters,
substantially in the form of Exhibit E annexed hereto (the
"Confirmation Hearing Notice"), setting forth the time fixed
for filing acceptances and rejections to the Debtors' Plan and
the Equity Committee's Plan, the time fixed for filing
objections to confirmation of either Plan, and the date and
time of the hearing on confirmation;
b. a copy of the Debtors' Disclosure Statement, as approved by
the Court (with exhibits including the Debtors' Plan), and the
Equity Committee's Disclosure Statement, as approved by the
Court (with exhibits including the Equity Committee's Plan);
and
c. a ballot (with instructions), in substantially the form
approved by the Court.
17. The Debtors shall mail the Solicitation Packages to the following
holders of claims or interests in the Debtors' Voting Classes and/or the Equity
Committee's Voting Classes:
a. subject to subsections (c), (d) and (e) below, to holders of
scheduled claims, as of the Record Holder Date, that are
listed in the Debtors' Schedules as not contingent,
unliquidated, or disputed (excluding scheduled claims that
have been superseded by filed claims), provided, however, that
the assignee of a transferred and assigned scheduled claim
shall be permitted to vote such claim only if the transfer and
assignment has been approved by the Court and such approval
has been noted on the Court's docket as of the close of
business on the Record Holder Date;
b. subject to subsections (c), (d) and (e) below, to holders of
filed claims, as of the Record Holder Date, that are the
subject of a filed proof of claim which has not been
disallowed, disqualified or suspended prior to the Record
Holder Date and which is not the subject of a pending
objection on the Record Holder Date, provided, however, that
the assignee of a transferred and assigned filed claim shall
be permitted to vote such claim only if the transfer and
assignment has been approved by the Court and such approval
has been noted on the Court's docket as of the close of
business on the Record Holder Date;
c. with respect to claims arising from the Credit Agreement, to
First Union;
9
<PAGE>
d. with respect to the Senior Notes, to the record holders and
Nominee Senior Noteholders reflected in the Senior Notes
Indenture Trustee's records as of the Record Holder Date;
e. with respect to the 8.375% Notes, to the record holders and
Nominee Subordinated Noteholders reflected in the
Subordinated Notes Indenture Trustee's records as of the
Record Holder Date; and
f. with respect to the Pride Equity Interests and the United
Companies Common Equity Interests, to the record holders and
Nominee Stockholders reflected in the Transfer Agent's records
as of the Record Holder Date.
18. In lieu of mailing the Solicitation Package, on or before July 14,
2000, the Debtors shall deposit or cause to be deposited in the United States
mail, postage prepaid, (a) the Notice of Non-Voting Status, substantially in the
form attached hereto as Exhibit F, to each holder of a claim in an unimpaired
class and to all known parties to executory contracts and unexpired leases who
do not hold filed or scheduled claims (excluding claims scheduled as contingent,
unliquidated or disputed), and (b) the Notice of Non-Voting Status,
substantially in the form attached hereto as Exhibit G, to each holder of a
claim that is the subject of an objection pending as of the Record Holder Date.
Under both the Debtors' Plan and the Equity Committee's Plan, the following
classes of claims are unimpaired: Priority Tax Claims, Priority Non-Tax Claims
and Secured Claims.
19. The Debtors shall cause the Confirmation Hearing Notice to be
published once in The Wall Street Journal (National Edition) on a date not less
than twenty-five (25) or more than thirty-five (35) calendar days prior to the
hearing to consider confirmation of the Debtors' Plan and the Equity Committee's
Plan.
20. All persons and entities entitled to vote on the Debtors' Plan and/or
the Equity Committee's Plan shall deliver their ballots by mail, hand delivery
10
<PAGE>
or overnight courier no later than 4:00 o'clock p.m. Eastern Time on August 10,
2000 (the "Voting Deadline") to the Balloting Agent at:
LOGAN & COMPANY, INC.
546 Valley Road
Upper Montclair, New Jersey 07043
Attn: Kate Logan
Any ballot received after such time shall not be counted other than as provided
for herein. Ballots submitted by facsimile shall not be counted; provided,
however, that Master Ballots submitted by facsimile by First Union, the Nominee
Senior Noteholders, the Nominee Subordinated Noteholders and/or the Nominee
Stockholders shall be counted so long as an original of the Master Ballots is
provided to the Balloting Agent within forty-eight (48) hours.
21. The Debtors and the Equity Committee shall have the ability to
extend the voting deadline at their sole discretion. If the Debtors and the
Equity Committee jointly choose to extend the voting deadline, the Debtors shall
provide notice of such extension through the Dow Jones News Service.
22. For purposes of voting, the amount of a claim used to tabulate
acceptance or rejection of either of the Plans shall be the amount set forth on
the ballots for that particular creditor which shall be one of the following:
a. the amount set forth as a claim in the Debtors' Schedules as
not contingent, unliquidated, or disputed (excluding scheduled
claims that have been superseded by filed claims);
b. the amount set forth on a filed proof of claim which has not
been disallowed, disqualified, suspended, reduced or estimated
and temporarily allowed for voting purposes prior to the
Record Holder Date; or
c. the amount estimated and temporarily allowed pursuant to an
order of this Court.
11
<PAGE>
23. With respect to an Individual Ballot submitted by a holder of a
claim or interest:
a. Any ballot which is properly completed, executed and timely
returned to the Balloting Agent that does not indicate an
acceptance or rejection of one of the Plans shall be deemed to
be a vote to accept such Plan;
b. any ballot which is returned to the Balloting Agent indicating
acceptance or rejection of the Plans, but which is unsigned
shall not be counted;
c. whenever a creditor or interest holder casts more than one
ballot voting the same claim or interest prior to the Voting
Deadline, only the last timely ballot received by the
Balloting Agent shall be counted,
d. if a creditor or interest holder casts simultaneous
duplicative ballots voted inconsistently, then such ballots
shall count as one vote accepting each of the Plans;
e. each creditor or interest holder shall be deemed to have voted
the full amount of its claim or interest;
f. creditors and interest holders shall not split their vote
within a class, thus each creditor or interest holder shall
vote all of its claim or interest within a particular class
either to accept or reject the Plans;
g. any Individual Ballots that partially reject and partially
accept one or both of the Plans shall not be counted; and
h. with the exception of Master Ballots, any ballot received by
the Balloting Agent by telecopier, facsimile or other
electronic communication shall not be counted.
24. With respect to the tabulation of ballots cast by Participating
Lenders:
a. First Union shall summarize on the Master Ballot all
Individual Ballots cast by the Participating Lenders and
return the Master Ballot to the Balloting Agent, provided,
however, that First Union shall be required to retain the
Individual Ballots cast by the respective Participating
Lenders for inspection for one year following submission of a
Master Ballot;
b. to the extent that there are over-votes submitted by First
Union on a Master Ballot, votes to accept and to reject a
particular Plan shall be applied by the Balloting Agent in the
12
<PAGE>
same proportion as the votes to accept or reject such Plan
submitted on the Master Ballot that contains the over-vote;
c. multiple Master Ballots may be completed by First Union and
delivered to the Balloting Agent and such votes will be
counted, except to the extent that such votes are inconsistent
with or are duplicative of other Master Ballots, in which case
the latest dated Master Ballot received before the Voting
Deadline will supersede and revoke any prior Master Ballot;
and
d. each Participating Lender shall be deemed to have voted the
full amount of its claim.
25. With respect to the tabulation of ballots cast by Beneficial Senior
Noteholders:
a. all Nominee Senior Noteholders to which Beneficial Senior
Noteholders return their Individual Ballots shall summarize on
the Master Ballot all Individual Ballots cast by the
Beneficial Senior Noteholders and return the Master Ballot to
the Balloting Agent, provided, however, that each Nominee
Senior Noteholder shall be required to retain the Individual
Ballots cast by the respective Beneficial Senior Noteholders
for inspection for one year following submission of a Master
Ballot;
b. votes cast by the Beneficial Senior Noteholders through a
Nominee Senior Noteholder by means of a Master Ballot shall be
applied against the positions held by such Nominee Senior
Noteholder as evidenced by the list of record holders compiled
as of the Record Holder Date, provided, however, that votes
submitted by a Nominee Senior Noteholder on a Master Ballot
shall not be counted in excess of the position maintained by
such Nominee Senior Noteholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Senior Noteholder on a Master Ballot, votes to accept and to
reject a particular Plan shall be applied by the Balloting
Agent in the same proportion as the votes to accept or reject
such Plan submitted on the Master Ballot that contains the
over-vote, but only to the extent of the position maintained
by such Nominee Senior Noteholder as of the Record Holder
Date;
d. multiple Master Ballots may be completed by a single Nominee
Senior Noteholder and delivered to the Balloting Agent and
such votes will be counted, except to the extent that such
votes are inconsistent with or are duplicative of other Master
13
<PAGE>
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
e. each Beneficial Senior Noteholder shall be deemed to have
voted the full amount of its claim.
26. With respect to the tabulation of ballots cast by Beneficial
Subordinated Noteholders:
a. all Nominee Subordinated Noteholders to which Beneficial
Subordinated Noteholders return their Individual Ballots shall
summarize on the Master Ballot all Individual Ballots cast by
the Beneficial Subordinated Noteholders and return the Master
Ballot to the Balloting Agent, provided, however, that each
Nominee Subordinated Noteholder shall be required to retain
the Individual Ballots cast by the respective Beneficial
Subordinated Noteholders for inspection for one year following
submission of a Master Ballot;
b. votes cast by the Beneficial Subordinated Noteholders through
a Nominee Subordinated Noteholder by means of a Master Ballot
shall be applied against the positions held by such Nominee
Subordinated Noteholder as evidenced by the list of record
holders compiled as of the Record Holder Date, provided,
however, that votes submitted by a Nominee Subordinated
Noteholder on a Master Ballot shall not be counted in excess
of the position maintained by such Nominee Subordinated
Noteholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Subordinated Noteholder on a Master Ballot, votes to accept
and to reject a particular Plan shall be applied by the
Balloting Agent in the same proportion as the votes to accept
or reject such Plan submitted on the Master Ballot that
contains the over-vote, but only to the extent of the position
maintained by such Nominee Subordinated Noteholder as of the
Record Holder Date;
d. multiple Master Ballots may be completed by a single Nominee
Subordinated Noteholder and delivered to the Balloting Agent
and such votes will be counted, except to the extent that such
votes are inconsistent with or are duplicative of other Master
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
14
<PAGE>
e. each Beneficial Subordinated Noteholder shall be deemed to
have voted the full amount of its claim.
27. With respect to the tabulation of ballots cast by Beneficial
Stockholders:
a. all Nominee Stockholders to which Beneficial Stockholders
return their Individual Ballots shall summarize on the Master
Ballot all Individual Ballots cast by the Beneficial
Stockholders and return the Master Ballot to the Balloting
Agent, provided, however, that each Nominee Stockholder shall
be required to retain the Individual Ballots cast by the
respective Beneficial Stockholders for inspection for one year
following submission of a Master Ballot;
b. votes cast by the Beneficial Stockholders through a Nominee
Stockholder by means of a Master Ballot shall be applied
against the positions held by such Nominee Stockholder as
evidenced by the list of record holders compiled as of the
Record Holder Date, provided, however, that votes submitted by
a Nominee Stockholder on a Master Ballot shall not be counted
in excess of the position maintained by such Nominee
Stockholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Stockholder on a Master Ballot, votes to accept and to reject
a particular Plan shall be applied by the Balloting Agent in
the same proportion as the votes to accept or reject such Plan
submitted on the Master Ballot that contains the over-vote,
but only to the extent of the position maintained by such
Nominee Stockholder as of the Record Holder Date;
d. multiple Master Ballots may be completed by a single Nominee
Stockholder and delivered to the Balloting Agent and such
votes will be counted, except to the extent that such votes
are inconsistent with or are duplicative of other Master
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
e. each Beneficial Stockholder shall be deemed to have voted the
full amount of its interests.
28. The hearing on confirmation of the Debtors' Plan and the Equity
Committee's Plan is scheduled for August 15, 2000 at 9:30 a.m. Eastern Time, at
the Bankruptcy Court, Marine Midland Plaza, 824 North Market Street, Sixth
Floor, Wilmington, Delaware. This hearing may be adjourned from time to time
15
<PAGE>
without further notice other than an announcement of the adjourned date(s) at
said hearing and at any adjourned hearing(s).
29. Any objection to confirmation of either of the Plans must be filed
with the Clerk of the Bankruptcy Court, together with proof of service, no later
than 4:00 o'clock p.m., Eastern Time, on August 9, 2000, and must be served on
each of the persons listed on Exhibit H attached hereto so as to be received by
them no later than 4:00 p.m., Eastern Time, on August 9, 2000. Any objection to
confirmation of the either of the Plans must be in writing and (a) must state
the name and address of the objecting party and the amount of its claims or the
nature of its interest and (b) must state, with particularity, the nature of its
objection. Any confirmation objection not filed and served as set forth herein
shall be deemed waived and shall not be considered by the Bankruptcy Court.
Dated: Wilmington, Delaware
July 10, 2000
------------------------------
UNITED STATES BANKRUPTCY JUDGE
16
<PAGE>
EXHIBIT C
<PAGE>
SUMMARY OF DEBTOR'S HISTORICAL FINANCIAL STATEMENTS
($000)
EXHIBIT C
---------
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loan production 1,542,424 2,361,378 3,097,852
Loans owned and serviced 3,012,164 4,202,121 5,877,339
INCOME STATEMENT
Total revenues 121,312 179,162 252,650 342,558 440,811
Net income 11,575 49,534 69,468 81,660 74,600
Fully diluted/share 0.49 1.74 2.25 2.50 2.30
Return on common equity (continuing ops) 21.1% 27.4% 26.2% 26.5% 20.3%
BALANCE SHEET
Loans -net 55,165 43,942 68,393 118,750 206,598
Interest-only and residual certificates
Certificated interests 105,917 174,031 280,985 426,393 599,426
Temporary investments -reserve accounts 27,672 81,980 155,254 251,183 389,253
Allowance for losses on loans serviced (12,937) (26,822) (44,970) (73,102) (106,563)
Total 120,652 229,189 391,269 604,474 882,116
ALLL as % of Gross IOs and residuals 9.7% 10.5% 10.3% 10.8% 10.8%
Total assets 365,310 479,719 708,730 925,273 1,337,208
Notes payable 165,500 223,668 265,756 425,671 691,826
Total liabilities 211,942 277,634 356,256 504,996 856,579
Stockholders' equity 153,368 202,085 352,474 420,277 480,629
Debt/Equity 1.38 1.37 1.01 1.20 1.78
Total loan production 539,868 908,821 1,542,424 2,361,378 3,097,852
Total loans serviced 1,568,781 2,032,405 3,012,164 4,202,121 5,877,339
Total HELs serviced 1,125,139 1,683,698 2,701,481 4,040,138 5,528,923
Delinquency 30 days + ($s) 97,756 218,763 281,730
Delinquency 30 days + (%) 3.62% 5.41% 5.10%
Defaults ($s) 122,389 209,666 305,657
Defaults (%) 4.53% 5.19% 5.53%
Loan origination fees as % of
retail production 7.70% 7.50% 7.30% 7.30% 7.30%
Wtd avg interest spread retained
on HELs sold 6.06% 4.49% 4.98% 4.80% 4.73%
Average dollar amount of home
equity loans outstanding during
period 2,192,590 3,370,810 4,784,531
Net losses 12,221 17,113 31,047
Net losses as a percentage of
average amount outstanding 0.56% 0.51% 0.65%
ALLL as percentage of net
losses 368.0% 427.2% 343.2%
Provision for loan losses 46,081 66,759
Net loans charged off (20,292) (33,748)
</TABLE>
<PAGE>
SUMMARY OF DEBTOR'S HISTORICAL FINANCIAL STATEMENTS
($000)
<TABLE>
<CAPTION>
Quarter ended: 31-Mar-97 30-Jun-97 30-Sep-97 31-Dec-97 31-Mar-98
Date filed: 15-May-97 13-Aug-97 31-Oct-97 26-Mar-98 11-May-98
<S> <C> <C> <C> <C> <C>
Balance Sheet
Assets
------
Cash and cash equivalents 619 591 583 582 561
Investment securities
Held to maturity 2,070
Trading
Available for sale 17,100 16,939 17,434 16,853 15,525
Loans - net 119,811 166,369 174,713 206,598 245,055
Interest only and residual certificates 666,657 771,072 834,034 882,116 906,153
Accrued interest receivable 62,885 69,347 76,664 85,373 85,559
Property - net 51,066 56,784 60,627 64,754 69,918
Capitalized mortgage servicing rights 27,742 34,347 40,274 48,760 52,635
Net assets of dicontinued operations
Other assets 45,446 34,086 30,485 32,172 33,052
--------------------------------------------------------------------------------
Total assets 991,326 1,149,535 1,234,814 1,337,208 1,410,528
================================================================================
Liabilities and Stockholders' Equity
------------------------------------
Notes payable 446,996 552,403 595,886 691,826 756,197
Deferred income taxes payable 60,547 73,815 81,375 97,093 97,947
Managed cash overdraft 16,075 17,760 17,897 11,363 16,867
Other liabilities 31,709 48,536 57,955 56,297 56,088
--------------------------------------------------------------------------------
Total liabilities 555,327 692,514 753,113 856,579 927,099
--------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 3,910 3,910 3,910 3,796 3,796
Common stock 59,309 59,714 59,725 59,943 59,966
Additional paid-in capital 185,202 185,327 186,211 187,418 187,382
Accumulated other comprehensive income
Net unrealized gain on securities 38 52 85 98 114
Retained earnings 207,044 227,114 250,459 250,429 252,764
Treasury stock and ESOP debt (19,504) (19,096) (18,689) (21,055) (20,593)
--------------------------------------------------------------------------------
Total stockholders' equity 435,999 457,021 481,701 480,629 483,429
--------------------------------------------------------------------------------
Total liabilities and stockholders' equity 991,326 1,149,535 1,234,814 1,337,208 1,410,528
================================================================================
Table continued...
<PAGE>
<S> <C> <C> <C>
Quarter ended: 30-Jun-98 30-Sep-98 31-Dec-98
Date filed: 13-Aug-98 16-Nov-98 7-Sep-99
Balance Sheet
Assets
Cash and cash equivalents 159,566 233,020 230,013
Investment securities
Held to maturity 1,781 1,836
Trading
Available for sale 11,929 9,793 1,918
Loans - net 254,039 161,490 191,282
Interest only and residual certificates 941,173 1,010,023 462,504
Accrued interest receivable 94,385 100,439 148,622
Property - net 74,113 60,829 45,883
Capitalized mortgage servicing rights 57,564 64,571 40,148
Net assets of dicontinued operations 2,441 85,403
Other assets 25,712 106,192 36,002
-----------------------------------------------
Total assets 1,620,262 1,750,634 1,241,775
===============================================
Liabilities and Stockholders' Equity
Notes payable 924,485 1,025,715 1,219,025
Deferred income taxes payable 98,360 100,002 -
Managed cash overdraft 15,847 - -
Other liabilities 97,151 120,097 136,909
-----------------------------------------------
Total liabilities 1,135,843 1,245,814 1,355,934
-----------------------------------------------
Stockholders' equity:
Preferred stock 3,796 3,796 3,315
Common stock 59,983 59,977 60,706
Additional paid-in capital 187,289 187,082 186,614
Accumulated other comprehensive income 113
Net unrealized gain on securities 111 46 -
Retained earnings 253,369 273,586 (345,703)
Treasury stock and ESOP debt (20,129) (19,667) (19,204)
-----------------------------------------------
Total stockholders' equity 484,419 504,820 (114,159)
-----------------------------------------------
Total liabilities and stockholders' equity 1,620,262 1,750,634 1,241,775
===============================================
</TABLE>
<PAGE>
SUMMARY OF DEBTOR'S HISTORICAL FINANCIAL STATEMENTS
($000)
<TABLE>
<CAPTION>
Period covered: 3 months 3 months 3 months 3 months 12 months
Quarter ended: 31-Mar-97 30-Jun-97 30-Sep-97 31-Dec-97 31-Dec-97
Date filed: 15-May-97 13-Aug-97 31-Oct-97 26-Mar-98 26-Mar-98
<S> <C> <C> <C> <C> <C>
Income Statement
Revenues
Loan sale gains 47,196 63,723 79,636 74,567 265,122
Finance income, fees earned and other 38,997 43,802 43,814 19,026 145,639
loan income
Writedown of Interest-only and residual
certificates - net
Investment income 4,748 6,133 5,628 7,721 24,230
Other 1,481 1,571 1,388 1,380 5,820
------------------------------------------------------------------------
Total 92,422 115,229 130,466 102,694 440,811
------------------------------------------------------------------------
Expenses
Personnel 26,749 32,261 35,790 37,364 132,164
Interest 12,230 14,237 16,906 17,439 60,812
Advertising
Restructuring
Other operating 21,946 31,608 35,506 32,868 121,928
------------------------------------------------------------------------
Total 60,925 78,106 88,202 87,671 314,904
------------------------------------------------------------------------
Income from continuing operations 31,497 37,123 42,264 15,023 125,907
before income taxes
Provision for income taxes 11,339 13,364 15,215 5,408 45,326
------------------------------------------------------------------------
Income from continuing operations 20,158 23,759 27,049 9,615 80,581
Loss on disposal
Income from discontinued operations - - - (5,981) (5,981)
------------------------------------------------------------------------
Net income 20,158 23,759 27,049 3,634 74,600
========================================================================
Unrealized holding gains arising
during period
Comprehensive income
Table coninued...
<PAGE>
Period covered: 3 months 3 months 3 months 3 months 12 months
Quarter ended: 31-Mar-98 30-Jun-98 30-Sep-98 31-Dec-98 31-Dec-98
Date filed: 11-May-98 13-Aug-98 16-Nov-98 7-Sep-99 7-Sep-99
<S> <C> <C> <C> <C> <C>
Income Statement
Revenues
Loan sale gains 55,093 68,520 82,329 (14,559) 191,383
Finance income, fees earned and other 36,453 30,074 30,709 31,363 128,599
loan income
Writedown of Interest-only and residual (605,562) (605,562)
certificates - net
Investment income 8,846 8,976 19,557 2,130 39,509
Other 1,295 1,228 1,822 10,991 15,336
--------------------------------------------------------------------------
Total 101,687 108,798 134,417 (575,637) (230,735)
--------------------------------------------------------------------------
Expenses
Personnel 38,102 39,278 37,466 26,659 141,505
Interest 18,599 20,718 18,978 14,415 72,710
Advertising 48,559 48,559
Restructuring 6,368 6,368
Other operating 35,459 42,014 36,063 15,287 128,823
--------------------------------------------------------------------------
Total 92,160 102,010 92,507 111,288 397,965
--------------------------------------------------------------------------
Income from continuing operations 9,527 6,788 41,910 (686,925) (628,700)
before income taxes
Provision for income taxes 3,525 2,514 16,109 (106,917) (84,769)
--------------------------------------------------------------------------
Income from continuing operations 6,002 4,274 25,801 (580,008) (543,931)
Loss on disposal (1,300) (37,124) (38,424)
Income from discontinued operations (614) (927) (1,541)
--------------------------------------------------------------------------
Net income 6,002 4,274 23,887 (580,935) (583,896)
==========================================================================
Unrealized holding gains arising 15 15
during period
Comprehensive income (580,920) (583,881)
===========================
</TABLE>
<PAGE>
EXHIBIT D
<PAGE>
EXHIBIT D
---------
UCFC Projected Balance Sheet
BALANCE SHEET (1)
Oct-2000
---------------
ASSETS
2)Cash and Cash Equivalents 413,257,788
3)IO's 578,902,216
4)Whole Loans - Net 287,484,720
5)Accrued Interest Receivable and Servicer Advances 180,570,000
6)Capitalized Mortgage Servicing Rights -
7)Property Net 19,000,000
8)Other Assets 3,220,000
9)Net Assets of Discontinued Operations -
10)Present Value of NOLs
11)Present Value of Causes of Action 450,000,000
--------------------------------------------------------------------------
Total Assets 1,932,434,724
--------------------------------------------------------------------------
LIABILITIES
12)Estimated Liabilities 1,307,000,000
13)Accrued Professional Fees 5,000,000
14)Accounts Payable 3,000,000
15)Post Petition Interest 162,208,917
--------------------------------------------------------------------------
Total Liabilities 1,477,208,917
--------------------------------------------------------------------------
EQUITY (DEFICIT) 455,225,807
==========================================================================
<PAGE>
Balance Sheet Assumptions:
1) Arthur Andersen's valuation analysis is based in part on the Debtors'
financial operating reports through March, the latest complete
information available to Arthur Andersen. Some actual April results
were available and were used. However, a full and complete operating
report for April was not available. This valuation analysis in no way
reflects the Debtors' valuations or projections. The Debtors'
projections differ from this analysis, and the Debtors' reported
results subsequent to March differ from these projections.
2) Cash and Cash Equivalents
The cash balance is calculated based on the beginning cash balance and
the net cash generated during the month ("Monthly Change in Cash").
Detail on the calculation of Monthly Change in Cash comes from Exhibit
E. Cash balance is depleted to $5 million after October 2000.
<TABLE>
<CAPTION>
Apr-2000 May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning Cash 165,868,600 235,519,922 265,928,271 294,488,363 322,879,378 356,095,868
Monthly Change in Cash 69,651,322 30,408,349 28,560,092 28,391,015 33,216,490 57,161,920
----------------------------------------------------------------------------------------------------
Ending Cash 165,868,600 235,519,922 265,928,271 294,488,363 322,879,378 356,095,868 413,257,788
</TABLE>
3) IO's
The value of the IOs is calculated as the present value of all future
cash flow from the Debtors model. The future cash flow and the discount
rate used are based on the assumptions contained in Exhibit F.
4) Whole Loans
The value of the Whole Loans is calculated at 93% of the ending period
principal balance. The ending period principal balance is projected in
the Debtors model using the same assumptions in the calculation of the
IO values. These assumptions are outlined in Exhibit F. The value was
based on a third-party offer to purchase the Whole Loans and
corroborated by discussions with knowledgeable market sources.
<TABLE>
<CAPTION>
Apr-2000 May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Whole Loan Ending Period Principal Balance 371,069,789 360,367,152 349,536,019 339,027,245 328,793,117 318,818,985 309,123,355
Price Per Dollar of Balance 93% 93% 93% 93% 93% 93% 93%
-----------------------------------------------------------------------------------------
Value of Whole Loans 345,094,904 335,141,451 325,068,498 315,295,338 305,777,599 296,501,656 287,484,720
</TABLE>
5) Accrued Interest Receivable and Servicer Advances
The Accrued Interest Receivable and Servicer Advance is projected based
on its historical percentage relationship to Total Collateral Balance.
In October 2000, we are assuming that the general reserve will be added
back.
6) Capitalized Mortgage Servicing Rights
Removed the asset because we anticipate transferring the rights in
October 2000 (the date of servicing transfer) with no cash inflow.
<PAGE>
Balance Sheet Assumptions:
7) Property Net
The net fixed assets as of April 30, 2000, consist of approximately $18
million for a building and $12 million in computer equipment and misc.
equipment which we assumed will be used through October 2000. A local
broker indicated the book value of the building was in the range of
values for similar properties. Thus, we assumed the building would sell
at book value in January 2001. Net book value is equal to net proceeds
on sale of the building. The computer and misc. equipment would sell
for 10% of book value in January 2001.
8) Other Assets
For Other Assets, we removed all capitalized costs and prepaid expenses
because there would be neither a future cash inflow nor a reduction in
future cash outflows. For all other assets, we assumed they would be
collected.
9) Net Assets of Discontinued Operations
Per management fax dated March 20, 2000, this asset consists of whole
loans and was therefore reclassified into Whole Loans.
10) Present Value of NOLs
Arthur Andersen is in the midst of determining the realizable value of
net operating loss carryforwards. This calculation is highly
complicated and fact-specific. Mr. Ramaekers has testified that he
believes the NOL balance as of December 31, 1999, is between $75
million and $100 million. The Equity Committee reserves the right to
supplement this exhibit as results are generated.
11) Present Value of Causes of Action
The conclusion of the claims damages expert retained by the Equity
Committee as of the date of the filing of this disclosure statement is
that the present value of certain causes of action held by the Debtor
is at least $450 million.
12) Estimated Liabilities
This is based on figures reported to the Debtor's Board of Directors in
its April 15, 2000, presentation.
13) Accrued Professional Fees
Assumed accrued professional fees as of October 2000.
14) Accounts Payable
Assumed misc. accounts payable due as of October 2000.
15) Post Petition Interest
The Post Petition interest is calculated from the date of bankruptcy of
March 1, 1999 through December 31, 2000. The interest is calculated
based on $1,307 million in liabilities. A weighted average annual
interest rate of 7.44% was used to calculate the monthly interest
expense. The weighted average interest rate was derived by applying the
actual interest rates to the appropriate class of debt.
<PAGE>
EXHIBIT E
<PAGE>
EXHIBIT E
---------
UCFC Projected Cash Flow Statement
<TABLE>
<CAPTION>
Monthly Projections
May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 43,473,475 12,290,456 10,987,090 11,308,851 16,601,846 42,858,183
2)Whole Loan Cash Principal and Interest 13,809,382 13,840,600 13,416,174 13,041,493 12,677,426 12,296,686
3)Servicing Fees 1,993,395 1,938,270 1,884,859 1,833,215 1,783,234 -
4)Ancillary Income 1,495,046 1,453,702 1,413,644 1,374,911 1,337,426 -
5)Net Cash Inflow from Servicer Advances 13,734,732 5,391,772 5,212,733 5,044,153 4,886,210 4,730,241
6)Cash Inflow for Changes in Other Assets - - - - - -
7)Sale of Net PP&E - - - - - -
8)Reinvestment Income 829,343 1,177,600 1,329,641 1,472,442 1,614,397 1,780,479
-------------------------------------------------------------------------
Total Cash Inflow 75,335,372 36,092,399 34,244,142 34,075,065 38,900,540 61,665,589
Cash Outflow:
9)Operating Expenses 5,684,050 5,684,050 5,684,050 5,684,050 5,684,050 4,503,669
10)Post Petition Interest Payment - - - - - -
11)Interest Payments (Class 3) - - - - - -
12)Interest Payments(Class 6) - - - - - -
13)Principal Payments (Class 3) - - - - - -
-------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - - -
Total Cash Outflow 5,684,050 5,684,050 5,684,050 5,684,050 5,684,050 4,503,669
-------------------------------------------------------------------------
=========================================================================
Net Cash Flow 69,651,322 30,408,349 28,560,092 28,391,015 33,216,490 57,161,920
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Quarterly Projections
Nov-2000 Dec-2000 Mar-2001 Jun-2001 Sep-2001 Dec-2001
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 54,066,494 40,896,868 66,176,587 54,525,984 43,557,267 40,990,423
2)Whole Loan Cash Principal and Interest 11,947,433 11,529,958 32,410,815 29,264,739 26,239,267 23,341,783
3)Servicing Fees - - - - - -
4)Ancillary Income - - - - - -
5)Net Cash Inflow from Servicer Advances 4,788,960 4,635,433 13,025,030 11,823,971 10,768,620 9,824,615
6)Cash Inflow for Changes in Other Assets 3,220,000 - - - - -
7)Sale of Net PP&E - - 19,000,000 - - -
8)Reinvestment Income 2,066,289 2,425,736 2,753,698 75,000 75,000 75,000
-------------------------------------------------------------------------------
Total Cash Inflow 76,089,176 59,487,994 133,366,130 95,689,694 80,640,154 74,231,821
Cash Outflow:
9)Operating Expenses 4,199,705 3,895,740 7,234,186 300,000 300,000 300,000
10)Post Petition Interest Payment - - 178,429,808 - - -
11)Interest Payments (Class 3) - - 15,965,123 12,000,457 10,528,116 9,283,586
12)Interest Payments(Class 6) - - - - - -
13)Principal Payments (Class 3) - - 467,476,526 83,389,237 69,812,038 64,648,235
-------------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - - -
Total Cash Outflow 4,199,705 3,895,740 669,105,643 95,689,694 80,640,154 74,231,821
-------------------------------------------------------------------------------
===============================================================================
Net Cash Flow 71,889,472 55,592,254 (535,739,513) - - -
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2002 Jun-2002 Sep-2002 Dec-2002 Mar-2003 Jun-2003
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 36,351,353 33,039,316 29,983,121 28,636,962 26,766,319 24,502,886
2)Whole Loan Cash Principal and Interest 21,030,722 18,888,061 17,076,894 15,423,023 14,161,239 12,935,370
3)Servicing Fees - - - - - -
4)Ancillary Income - - - - - -
5)Net Cash Inflow from Servicer Advances 8,987,518 8,244,885 7,604,391 7,026,765 6,496,197 6,006,745
6)Cash Inflow for Changes in Other Assets - - - - - -
7)Sale of Net PP&E - - - - - -
8)Reinvestment Income 75,000 75,000 75,000 75,000 75,000 75,000
-----------------------------------------------------------------------------------
Total Cash Inflow 66,444,594 60,247,262 54,739,406 51,161,751 47,498,755 43,520,001
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - - -
11)Interest Payments (Class 3) 8,140,218 7,114,955 6,177,399 5,311,658 4,493,426 3,732,303
12)Interest Payments(Class 6) - - - - - -
13)Principal Payments (Class 3) 58,004,376 52,832,307 48,262,007 45,550,093 42,705,329 39,487,698
-----------------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - - -
Total Cash Outflow 66,444,594 60,247,262 54,739,406 51,161,751 47,498,755 43,520,001
-----------------------------------------------------------------------------------
===================================================================================
Net Cash Flow - - - - - -
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2003 Dec-2003 Mar-2004 Jun-2004 Sep-2004 Dec-2004
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 22,661,449 21,049,505 19,620,982 16,709,701 15,569,013 15,328,606
2)Whole Loan Cash Principal and Interest 11,885,571 10,887,185 10,253,185 9,156,095 8,390,457 7,621,849
3)Servicing Fees - - - - - -
4)Ancillary Income - - - - - -
5)Net Cash Inflow from Servicer Advances 5,552,590 5,134,998 4,739,667 4,384,490 4,058,295 3,757,236
6)Cash Inflow for Changes in Other Assets - - - - - -
7)Sale of Net PP&E - - - - - -
8)Reinvestment Income 75,000 75,000 75,000 75,000 75,000 75,000
-----------------------------------------------------------------------------------
Total Cash Inflow 40,174,610 37,146,688 34,688,834 30,325,285 28,092,765 26,782,691
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - - -
11)Interest Payments (Class 3) 3,026,531 2,366,894 1,747,653 1,170,581 657,793 166,289
12)Interest Payments(Class 6) - - - - - -
13)Principal Payments (Class 3) 36,848,079 34,479,794 32,641,180 28,854,704 27,134,972 17,873,425
-----------------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - - 8,442,976
Total Cash Outflow 40,174,610 37,146,688 34,688,834 30,325,285 28,092,765 26,782,691
-----------------------------------------------------------------------------------
===================================================================================
Net Cash Flow - - - - - -
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2005 Jun-2005 Sep-2005 Dec-2005 Mar-2006 Jun-2006
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 15,077,105 15,194,828 14,988,237 14,717,415 13,590,606 12,566,149
2)Whole Loan Cash Principal and Interest 6,895,179 6,300,431 5,772,522 5,063,457 4,395,054 2,132,074
3)Servicing Fees - - - - - -
4)Ancillary Income - - - - - -
5)Net Cash Inflow from Servicer Advances 3,476,917 3,217,459 2,981,203 2,745,909 2,528,408 2,329,388
6)Cash Inflow for Changes in Other Assets - - - - - -
7)Sale of Net PP&E - - - - - -
8)Reinvestment Income 75,000 75,000 75,000 75,000 75,000 75,000
---------------------------------------------------------------------------------
Total Cash Inflow 25,524,201 24,787,718 23,816,962 22,601,782 20,589,068 17,102,611
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - - -
11)Interest Payments (Class 3) - - - - - -
12)Interest Payments(Class 6) 4,238,135 3,801,388 3,371,998 2,951,572 2,558,127 2,209,453
13)Principal Payments (Class 3) - - - - - -
---------------------------------------------------------------------------------
14)Principal Payments(Class 6) 20,986,066 20,686,330 20,144,963 19,350,210 17,730,940 14,593,158
Total Cash Outflow 25,524,201 24,787,718 23,816,962 22,601,782 20,589,068 17,102,611
---------------------------------------------------------------------------------
=================================================================================
Net Cash Flow - - - - - -
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2006 Dec-2006 Mar-2007 Jun-2007 Sep-2007 Dec-2007
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 11,235,839 10,471,053 9,862,942 9,002,734 8,122,080 7,504,765
2)Whole Loan Cash Principal and Interest 2,058,880 1,897,552 1,882,128 1,825,856 1,826,070 1,813,693
3)Servicing Fees - - - - - -
4)Ancillary Income - - - - - -
5)Net Cash Inflow from Servicer Advances 2,161,829 2,006,007 1,861,213 1,729,885 1,608,674 1,496,789
6)Cash Inflow for Changes in Other Assets - - - - - -
7)Sale of Net PP&E - - - - - -
8)Reinvestment Income 75,000 75,000 75,000 75,000 75,000 75,000
-------------------------------------------------------------------------------------
Total Cash Inflow 15,531,548 14,449,612 13,681,283 12,633,476 11,631,823 10,890,247
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - - -
11)Interest Payments (Class 3) - - - - - -
12)Interest Payments(Class 6) 1,911,530 1,640,662 1,381,343 1,135,194 906,095 691,845
13)Principal Payments (Class 3) - - - - - -
-------------------------------------------------------------------------------------
14)Principal Payments(Class 6) 13,320,019 12,508,950 11,999,940 11,198,282 10,425,728 9,898,403
Total Cash Outflow 15,531,548 14,449,612 13,681,283 12,633,476 11,631,823 10,890,247
-------------------------------------------------------------------------------------
=====================================================================================
Net Cash Flow - - - - - -
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2008 Jun-2008 Sep-2008 Dec-2008 Mar-2009
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 7,228,021 6,795,605 6,349,179 6,038,845 5,760,159
2)Whole Loan Cash Principal and Interest 1,807,612 1,803,302 1,801,263 1,795,013 1,836,888
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 1,393,467 1,295,993 1,207,904 1,127,009 1,049,858
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 75,000 75,000 75,000 144,386 276,116
--------------------------------------------------------------------------
Total Cash Inflow 10,504,100 9,969,900 9,433,346 9,105,253 8,923,022
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) 486,202 284,590 90,444 - -
13)Principal Payments (Class 3) - - - - -
--------------------------------------------------------------------------
14)Principal Payments(Class 6) 9,717,897 9,385,310 7,355,197 - -
Total Cash Outflow 10,504,100 9,969,900 7,745,641 300,000 300,000
--------------------------------------------------------------------------
==========================================================================
Net Cash Flow - - 1,687,705 8,805,253 8,623,022
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Jun-2009 Sep-2009 Dec-2009 Mar-2010 Jun-2010
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 5,394,519 5,062,239 4,752,044 4,466,722 4,201,434
2)Whole Loan Cash Principal and Interest 1,736,822 1,737,058 1,709,889 1,710,091 1,689,473
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 980,062 916,212 856,471 802,801 752,035
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 403,129 524,951 642,638 756,396 866,795
--------------------------------------------------------------------------
Total Cash Inflow 8,514,533 8,240,460 7,961,042 7,736,011 7,509,737
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
--------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
--------------------------------------------------------------------------
==========================================================================
Net Cash Flow 8,214,533 7,940,460 7,661,042 7,436,011 7,209,737
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2010 Dec-2010 Mar-2011 Jun-2011 Sep-2011
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 3,949,861 3,717,528 3,508,385 3,311,231 3,282,703
2)Whole Loan Cash Principal and Interest 1,689,706 1,662,146 1,662,376 1,629,842 1,629,847
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 703,379 660,450 622,000 584,828 550,149
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 973,967 1,078,183 1,179,710 1,278,960 1,376,674
--------------------------------------------------------------------------
Total Cash Inflow 7,316,912 7,118,307 6,972,471 6,804,860 6,839,373
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
--------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
--------------------------------------------------------------------------
==========================================================================
Net Cash Flow 7,016,912 6,818,307 6,672,471 6,504,860 6,539,373
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 3,107,896 3,240,127 3,277,855 3,187,352 2,979,117
2)Whole Loan Cash Principal and Interest 1,618,657 1,618,894 1,611,811 1,608,291 1,599,778
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 518,432 490,162 464,688 439,303 417,037
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 1,474,133 1,571,475 1,670,719 1,772,112 1,872,025
--------------------------------------------------------------------------
Total Cash Inflow 6,719,118 6,920,659 7,025,073 7,007,057 6,867,958
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
--------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
--------------------------------------------------------------------------
==========================================================================
Net Cash Flow 6,419,118 6,620,659 6,725,073 6,707,057 6,567,958
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 2,786,273 2,609,566 2,440,061 2,286,094 2,140,448
2)Whole Loan Cash Principal and Interest 1,595,752 1,588,073 1,584,179 1,688,103 1,611,920
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 397,105 379,042 360,065 344,754 324,125
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 1,969,905 2,066,115 2,160,748 2,254,579 2,347,909
---------------------------------------------------------------------------
Total Cash Inflow 6,749,035 6,642,796 6,545,053 6,573,531 6,424,401
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 6,449,035 6,342,796 6,245,053 6,273,531 6,124,401
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 2,009,978 1,887,683 1,771,751 1,632,368 1,458,198
2)Whole Loan Cash Principal and Interest 1,331,917 1,328,629 1,321,104 1,321,346 1,316,843
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 309,427 635,988 263,764 250,605 238,894
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 2,438,064 2,528,173 2,615,529 2,700,391 2,783,753
---------------------------------------------------------------------------
Total Cash Inflow 6,089,386 6,380,473 5,972,148 5,904,710 5,797,688
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 5,789,386 6,080,473 5,672,148 5,604,710 5,497,688
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 3,801,343 1,059,872 1,252,851 1,217,155 1,176,745
2)Whole Loan Cash Principal and Interest 1,317,098 1,313,418 1,300,216 1,277,478 1,273,810
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 230,447 218,176 205,361 197,470 186,900
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 2,866,217 2,983,834 3,064,183 3,147,098 3,230,328
---------------------------------------------------------------------------
Total Cash Inflow 8,215,104 5,575,301 5,822,611 5,839,201 5,867,783
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 7,915,104 5,275,301 5,522,611 5,539,201 5,567,783
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Dec-2016 Mar-2017 Jun-2017 Sep-2017 Dec-2017
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 1,138,678 1,103,371 1,070,605 1,038,993 1,008,895
2)Whole Loan Cash Principal and Interest 1,229,663 1,229,898 1,195,194 1,195,425 1,181,809
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 165,616 146,381 143,919 141,244 138,453
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 3,313,721 3,397,077 3,480,796 3,564,903 3,649,735
---------------------------------------------------------------------------
Total Cash Inflow 5,847,679 5,876,727 5,890,513 5,940,566 5,978,892
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 5,547,679 5,576,727 5,590,513 5,640,566 5,678,892
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2018 Jun-2018 Sep-2018 Dec-2018 Mar-2019
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 979,872 951,698 924,309 897,646 874,455
2)Whole Loan Cash Principal and Interest 1,173,438 1,136,807 1,116,956 1,077,133 1,057,718
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 136,986 135,721 134,645 133,750 133,024
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 3,735,112 3,821,184 3,907,465 3,994,406 4,081,556
---------------------------------------------------------------------------
Total Cash Inflow 6,025,408 6,045,409 6,083,375 6,102,935 6,146,753
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 5,725,408 5,745,409 5,783,375 5,802,935 5,846,753
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Jun-2019 Sep-2019 Dec-2019 Mar-2020 Jun-2020
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 858,479 834,754 787,503 719,341 701,259
2)Whole Loan Cash Principal and Interest 958,948 959,010 939,004 939,180 914,106
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 132,461 132,052 131,758 131,576 131,600
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 4,169,131 4,256,732 4,345,194 4,433,722 4,522,807
---------------------------------------------------------------------------
Total Cash Inflow 6,119,019 6,182,549 6,203,459 6,223,819 6,269,773
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 5,819,019 5,882,549 5,903,459 5,923,819 5,969,773
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2020 Dec-2020 Mar-2021 Jun-2021 Sep-2021
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 683,560 666,151 649,022 629,237 606,774
2)Whole Loan Cash Principal and Interest 914,272 897,306 897,464 836,213 836,322
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 131,752 132,022 132,403 132,717 133,323
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 4,612,715 4,703,632 4,795,493 4,888,176 4,981,325
---------------------------------------------------------------------------
Total Cash Inflow 6,342,299 6,399,111 6,474,383 6,486,342 6,557,744
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 6,042,299 6,099,111 6,174,383 6,186,342 6,257,744
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Dec-2021 Mar-2022 Jun-2022 Sep-2022 Dec-2022
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 283,196 143,539 136,991 130,684 124,575
2)Whole Loan Cash Principal and Interest 826,035 820,940 793,127 793,045 792,795
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 91,965 22,192 21,328 20,509 19,754
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 5,074,618 5,162,778 5,250,783 5,339,724 5,429,896
---------------------------------------------------------------------------
Total Cash Inflow 6,275,814 6,149,450 6,202,228 6,283,963 6,367,020
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 5,975,814 5,849,450 5,902,228 5,983,963 6,067,020
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2023 Jun-2023 Sep-2023 Dec-2023 Mar-2024
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 118,849 113,304 36,317 18,154 11,089
2)Whole Loan Cash Principal and Interest 792,889 791,158 789,045 782,133 778,728
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 19,033 18,274 17,288 16,686 16,151
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 5,521,325 5,614,029 5,707,704 5,801,763 5,896,946
-------------------------------------------------------------------------------
Total Cash Inflow 6,452,097 6,536,764 6,550,354 6,618,735 6,702,913
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
-------------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
-------------------------------------------------------------------------------
===============================================================================
Net Cash Flow 6,152,097 6,236,764 6,250,354 6,318,735 6,402,913
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Jun-2024 Sep-2024 Dec-2024 Mar-2025 Jun-2025
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 4,030 1,558 1,141 695 583
2)Whole Loan Cash Principal and Interest 765,385 765,490 764,326 763,800 762,120
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 5,686 575 421 279 120
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 5,993,340 6,090,783 6,189,647 6,289,971 6,391,797
----------------------------------------------------------------------------
Total Cash Inflow 6,768,440 6,858,405 6,955,536 7,054,745 7,154,619
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
----------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
----------------------------------------------------------------------------
============================================================================
Net Cash Flow 6,468,440 6,558,405 6,655,536 6,754,745 6,854,619
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Sep-2025 Dec-2025 Mar-2026 Jun-2026 Sep-2026
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 503 424 362 306 242
2)Whole Loan Cash Principal and Interest 759,373 754,922 752,294 746,108 742,704
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 106 93 83 73 51
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 6,495,109 6,599,946 6,706,285 6,814,188 6,923,616
---------------------------------------------------------------------------
Total Cash Inflow 7,255,091 7,355,385 7,459,024 7,560,675 7,666,613
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 300,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 300,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 6,955,091 7,055,385 7,159,024 7,260,675 7,366,613
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Dec-2026 Mar-2027 Jun-2027 Sep-2027 Dec-2027
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 123 100 67 50 0
2)Whole Loan Cash Principal and Interest 734,836 734,682 729,353 725,888 715,239
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 30 26 17 10 0
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 7,034,625 7,147,231 7,261,515 7,377,427 7,495,537
---------------------------------------------------------------------------
Total Cash Inflow 7,769,615 7,882,038 7,990,952 8,103,375 8,210,776
Cash Outflow:
9)Operating Expenses 300,000 300,000 300,000 300,000 100,000
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow 300,000 300,000 300,000 300,000 100,000
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 7,469,615 7,582,038 7,690,952 7,803,375 8,110,776
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Mar-2028 Jun-2028 Sep-2028 Dec-2028 Mar-2029
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 0 0 0 0 0
2)Whole Loan Cash Principal and Interest 709,662 692,623 684,165 617,598 584,367
3)Servicing Fees - - - - -
4)Ancillary Income - - - - -
5)Net Cash Inflow from Servicer Advances 0 0 0 0 0
6)Cash Inflow for Changes in Other Assets - - - - -
7)Sale of Net PP&E - - - - -
8)Reinvestment Income 7,618,756 7,744,265 7,871,367 8,000,177 8,129,757
---------------------------------------------------------------------------
Total Cash Inflow 8,328,418 8,436,888 8,555,532 8,617,775 8,714,125
Cash Outflow:
9)Operating Expenses - - - - -
10)Post Petition Interest Payment - - - - -
11)Interest Payments (Class 3) - - - - -
12)Interest Payments(Class 6) - - - - -
13)Principal Payments (Class 3) - - - - -
---------------------------------------------------------------------------
14)Principal Payments(Class 6) - - - - -
Total Cash Outflow - - - - -
---------------------------------------------------------------------------
===========================================================================
Net Cash Flow 8,328,418 8,436,888 8,555,532 8,617,775 8,714,125
Table continued...
<PAGE>
UCFC Projected Cash Flow Statement
Jun-2029 Sep-2029 Dec-2029 Mar-2030
-------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW STATEMENT
Cash Inflow:
1)Net Residual Cash Income 0 0 (0) -
2)Whole Loan Cash Principal and Interest 45,444 45,451 5,693 -
3)Servicing Fees - - - -
4)Ancillary Income - - - -
5)Net Cash Inflow from Servicer Advances 0 0 (0) -
6)Cash Inflow for Changes in Other Assets - - - -
7)Sale of Net PP&E - - - -
8)Reinvestment Income 8,258,425 8,383,607 2,822,679 -
-------------------------------------------------------------
Total Cash Inflow 8,303,869 8,429,058 2,828,373 -
Cash Outflow:
9)Operating Expenses - - - -
10)Post Petition Interest Payment - - - -
11)Interest Payments (Class 3) - - - -
12)Interest Payments(Class 6) - - - -
13)Principal Payments (Class 3) - - - -
-------------------------------------------------------------
14)Principal Payments(Class 6) - - - -
Total Cash Outflow - - - -
-------------------------------------------------------------
=============================================================
Net Cash Flow 8,303,869 8,429,058 2,828,373 -
</TABLE>
<PAGE>
Cash Flow Statement Assumptions:
1) Net Residual Cash Income
The cash flow is calculated utilizing the Debtor's model under
assumptions outlined in Exhibit F.
2) Whole Loan Cash Principal and Interest
The cash flow is calculated utilizing the Debtor's model under
assumptions outlined in Exhibit F.
3) Servicing Fees
The servicing fee is projected based on 50bp multiplied by the
outstanding principal balance on a monthly basis (per the servicing
agreements). The servicing is expected to be transferred at October 1,
2000 and therefore the Company would not realize servicing income after
September 2000.
4) Ancillary Income
Consists of float income and late penalties realized by UCFC in its
role as servicer. We are projecting the value based on its historical
average relationship to servicing fees. The servicing is expected to be
transferred on October 1, 2000, therefore we have not projected any
ancillary income after September 2000.
5) Net Cash Inflow from Servicer Advances
Servicer Advances is calculated as a percentage of Total Collateral
Balance, as explained in Exhibit D. The net cash flow is calculated
based on the change in the projected balance. Based on discussions with
other loan servicers, the model implicitly assumes that monthly out
flows will equal reimbursements from previous outstanding advances
while the overall level of advances retires as the Total Collateral
Balance pays down.
6) Cash Inflow for Changes in Other Assets
Other Assets are calculated as explained in Exhibit D. The net cash
flow is calculated based on the change in the projected balance.
7) Sale of Net PP&E
We assumed the building would be sold for book value at $18 million in
January 2001. The equipment consists of computers and other misc.
items. We assumed the computer and misc. equipment would be sold for
10% of its book value in January 2001.
8) Reinvestment Income
Reinvestment income is calculated based on the beginning cash balance
and a reinvestment rate of 6.00% per annum.
<PAGE>
9) Operating Expenses
Monthly operating expenses through September 2000 based on historical
performance. After the servicer transfer in October 2000, monthly
expenses are assumed to decline as the Debtor winds down its
operations. For all periods beginning in April 2001, monthly operating
expenses were assumed to be $100,000, which sum is inclusive of the
Plan Administrator's fees and expenses.
10) Post Petition Interest Payment
Post Petition Interest is paid beginning in January 2001. Effective
date is assumed to be October 1, 2000.
11) Interest Payments (Class 3)
Payment of simple interest on the outstanding balances of Class 3,
calculated at their respective interest rates. Payments begin January
2001.
12) Interest Payments(Class 6)
Payment of simple interest on the outstanding balance of Class 6 which
includes accrued interest at the contract note rate. Interest payments
on Class 6 do not occur until Class 3 is paid off.
13) Principal Payments (Class 3)
Principal payments begin January 2001 and end in December 2004.
14) Principal Payments (Class 6)
Principal payments on Class 6 do not occur until Class 3 is paid off.
Principal payments begin in December 2004 and end in September 2008.
** Taxes
No taxes or tax benefits have been modeled into this analysis. We did
not have sufficient information required to compute taxes or any tax
benefits. Based on information available, a prospective cash
calculation to include tax expenses and the ability of the Company to
utilize net operating loss carryforwards in order to offset these tax
expenses is underway. Tax payments would lengthen the pay out period
for all classes of debt.
** Causes of Action
The conclusion of the claims damages expert retained by the Equity
Committee as of the date of the filing of this disclosure statement is
that the present value of certain causes of action held by the Debtor
is at least $450 million. This value is not reflected in the cash flows
because it is not known when the cash proceeds would be received.
<PAGE>
EXHIBIT F
<PAGE>
EXHIBIT F
---------
Summary of UCFC Residual Assumptions
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Projections With UCFC as Servicer New Servicer In Place
------------------------------------------------------------------------------------------------------------------
May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000 Nov-2000 Dec-2000 Jan-2001 & Beyond
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative Loss 11.0% 10.1% 9.1% 8.2% 7.3% 6.3% 5.4% 4.4% 3.5%
Delinquency 23.0% 23.0% 23.0% 23.0% 23.0% 21.0% 19.0% 17.0% 15.0%
Prepayment 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0% 27.0%
Discount Rate 16.0% 16.0% 16.0% 16.0% 16.0% 14.5% 14.5% 14.5% 14.5%
</TABLE>
<PAGE>
EXHIBIT G
<PAGE>
EXHIBIT G
---------
UCFC Liquidation Analysis
Estimated
Liquidation Value
Oct-2000
Sources of Cash
1)Cash and Cash Equivalents 413,257,788
2)IO's 578,902,216
3)Whole Loans - Net 287,484,720
4)Accrued Interest Receivable and Servicer Advances 180,570,000
5)Property Net 19,000,000
6)Other Assets 3,220,000
7)Present Value of Causes of Action 450,000,000
-------------
Total Sources 1,932,434,724
Liquidation Costs
8)Professional Fees (Chapter 11) 7,599,000
9)Origination Fee Refunds 3,000,000
10)Severance and Retention 5,500,000
11)Employee Benefits 2,000,000
12)Accrued Payroll 700
13)Accounts Payable 3,000,000
14)Taxes 9,000,000
15)6-month Wind-down Costs 7,500,000
16)Misc. and Contingency 1,164,000
-------------
Subtotal 38,763,700
Additional Costs
17)Trustee, trustee professionals,
auditor litigation expense 5,000,000
Estimated Other Payments
18)Tax Returns 1,000,000
Estimated Liquidation Value 1,887,671,024
=============
* Assumed 6-month wind-down period from October 2000
<PAGE>
Footnotes on Liquidation Analysis:
1) Cash and Cash Equivalents
The cash balance is calculated based on the beginning cash balance and
the net cash generated during the month ("Monthly Change in Cash"). The
calculation of Monthly Change in Cash is detailed in Exhibit E. Cash
balance is depleted to $5 million after October 2000.
<TABLE>
<CAPTION>
Apr-2000 May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Cash 165,868,600 235,519,922 265,928,271 294,488,363 322,879,378 356,095,868
Monthly Change in Cash 69,651,322 30,408,349 28,560,092 28,391,015 33,216,490 57,161,920
-----------------------------------------------------------------------------------------------
Ending Cash 165,868,600 235,519,922 265,928,271 294,488,363 322,879,378 356,095,868 413,257,788
</TABLE>
2) IO's
The value of the IOs is calculated as the present value of all future
cash flow from the Debtors model. The future cash flow and the discount
rate used are based on the assumptions contained in Exhibit F.
3) Whole Loans
The value of the Whole Loans is calculated at 93% of the ending period
principal balance. The ending period principal balance is projected in
the Debtors model using the same assumptions in the calculation of the
IO values. These assumptions are outlined in Exhibit F. The value was
based on a third-party offer to purchase the Whole Loans and
corroborated by discussions with knowledgeable market sources.
<TABLE>
<CAPTION>
Apr-2000 May-2000 Jun-2000 Jul-2000 Aug-2000 Sep-2000 Oct-2000
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Whole Loan Ending Period Principal
Balance 371,069,789 360,367,152 349,536,019 339,027,245 328,793,117 318,818,985 309,123,355
Price Per Dollar of Balance 93% 93% 93% 93% 93% 93% 93%
-------------------------------------------------------------------------------------------
Value of Whole Loans 345,094,904 335,141,451 325,068,498 315,295,338 305,777,599 296,501,656 287,484,720
</TABLE>
4) Accrued Interest Receivable and Servicer Advances
The Accrued Interest Receivable and Servicer Advance is projected based
on its historical percentage relationship to Total Collateral Balance.
In October 2000, we are assuming that the general reserve will be added
back.
5) Property Net
The net fixed assets as of April 30, 2000, consist of approximately $18
million for a building and $12 million in computer equipment and misc.
equipment which we assumed will be used through October 2000. A local
broker indicated the book value of the building was in the range of
values for similar properties. Thus, we assumed the building would sell
at book value in January 2001. Net book value is equal to net proceeds
on sale of the building. The computer and misc. equipment would sell
for 10% of book value in January 2001.
6) Other Assets
For Other Assets, we removed all capitalized costs and prepaid expenses
because there would be neither a future cash inflow nor a reduction in
future cash outflows. For all other assets, we assumed they would be
collected.
7) Present Value of Causes of Action
The conclusion of the claims damages expert retained by the Equity
Committee as of the date of the filing of this disclosure statement is
that the present value of certain causes of action held by the Debtor
is at least $450 million.
<PAGE>
8) Professional Fees (Chapter 11)
This figure is based on the balance of the accrued professional fees
contained in the Debtor's monthly operating report.
9) Origination Fee Refunds
Based upon the Debtors' analysis of the remaining liability and recent
months' historical prepayment rate, the Debtors have estimated that
refunds of origination fees as a result of loan prepayments will total
approximately $3 million.
10) Severance and Retention
The Debtors entered into a Court-approved retention and severance
agreement with their employees in January, 2000. The Debtors have
estimated the amounts for severance and retention bonuses payable
through the contractual period ending September 30, 2000, to be
approxiamtely $5 million. Additional Severance and retention amounts
for employees through the wind-down period have been estimated to be
approximately $1.5 million based upon an assumed 6 month wind down
period.
11) Employee Benefits
The Debtors have assumed $700,000 for employee benefits, primarily
related to UCFC's self funded Voluntary Employee Benefit Account (VEBA)
plan, the company's self insured employee health plan. The winding-up
of self-insured medical plans usually requires payment of many bills
when the liability is incurred prior to wind-up but the bills are not
received until later.
12) Accrued Payroll
The Debtors estimated accrued payroll based upon estimated future
accrued amounts for employee wages requiring final payment.
13) Accounts Payable
The Debtors estimated post-petition accounts payable owed based upon
the Debtors' esimates regarding future amounts for accounts requiring
final payment.
14) Taxes
The Debtors' estimated year 2000 federal tax liability.
15) 6-month Wind-down Costs
The Equity Committee's estimated cash flow necessary to fund 6 months
of operating costs for personnel, occupancy, non-restructuring
professional fees, and other necessary expenditures to wind-down the
operations.
16) Misc. and Contingency
The Equity Committee's estimates of miscellaneous expenses and
contingencies not provided for in any other category.
17) Additional Costs
The total cost is comprised of $2 million in trustee fees, $1 million
for trustee professionals, and $2 million for auditor litigation
expenses. Trustee fees and professional fees include expenses incurred
to investigate and settle all remaining claims, sell land and other
misc. assets, and transition to a new servicer.
18) Estimated Other Payments
This cost is comprised of the expenses associated with filing tax
returns.
<PAGE>
EXHIBIT C
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF BANK CLAIMS
TO BE EXECUTED BY PARTICIPATING LENDERS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the Debtors' $850 million prepetition
unsecured revolving credit facility are included in Class 3 (Bank Claims) under
the Debtors' Plan and Class 3 (Unsecured Claims) under the Equity Committee's
Plan. HOLDERS OF BANK CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have
any questions on how to properly complete this Ballot, please call the
Information Agent at 1-888-559-9367.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF BANK CLAIMS ONLY. IF ON
JUNE 30, 2000, YOU WERE A PARTICIPATING LENDER IN THE DEBTORS' $850 MILLION
PREPETITION UNSECURED REVOLVING CREDIT FACILITY, THEN YOU MUST PROMPTLY COMPLETE
AND EXECUTE THIS BALLOT AND RETURN IT TO FIRST UNION NATIONAL BANK FOR
PROCESSING AND INCLUSION OF YOUR VOTING INFORMATION ON THEIR MASTER BALLOT.
FIRST UNION NATIONAL BANK MUST, IN TURN, RETURN A COMPLETED MASTER BALLOT TO THE
BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ
07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS
EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING
DEADLINE").
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject the
Plans, the undersigned holds a Bank Claim in the amount of
$_______________________.
2
<PAGE>
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of the Bank Claim
set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The undersigned holder of the
Bank Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Convenience Claim Election Under Equity Committee's Plan. Under the
Equity Committee Plan only, the holder of a Bank Claim may elect to reduce its
claim to $1,000 and have such claim receive treatment under Class 5 (Convenience
Claims) under the Equity Committee's Plan. Please check the box below labeled
"Elects Convenience Claims Treatment Under the Equity Committee's Plan" if the
undersigned holder of a Bank Claim elects to reduce its claim set forth in Item
1 above to $1,000 in order to receive treatment for its claim under Class 5
(Convenience Claims) under the Equity Committee's Plan, rather than receive
treatment for such claim as a Class 3 (General Unsecured Claim) under the Equity
Committee's Plan:
|_| Elects Convenience Claims Treatment Under the Equity
Committee's Plan
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Bank Claim set forth in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
3
<PAGE>
ITEM 6. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a claim arising from the Debtors' $850 million prepetition unsecured
revolving credit facility, and (ii) the undersigned has full power and authority
to vote to accept or reject the Debtors' Plan and/or the Equity Committee's
Plan. The undersigned understands that if the Ballot is validly executed but
does not indicate either acceptance or rejection of either of the Plans, then
this Ballot will be counted as an acceptance of such Plan. The undersigned
further acknowledges that the solicitation of votes is subject to all terms and
conditions set forth in the respective Disclosure Statements and Plans.
Print or Type Name of Claimant:
-------------------------------------------
Federal Tax I.D. No. of Claimant:
------------------------------------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
-----------------------------------------------------------
4
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF BANK CLAIMS
TO BE EXECUTED BY PARTICIPATING LENDERS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF BANK CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING
THE BALLOT. Unless otherwise defined, all capitalized terms used herein
shall have the meaning ascribed to such terms in the Debtors' Plan.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Plans.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete, sign and return this Ballot
to First Union National Bank for processing and inclusion of your voting
information on their Master Ballot. First Union National Bank must, in
turn, return a completed Master Ballot to the Balloting Agent not later
than 4:00 p.m. Eastern Time, on August 10, 2000, unless such time is
extended by agreement between the Debtors and the Equity Committee (the
"Voting Deadline").
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
5
<PAGE>
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
g. sign and date your Ballot;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. check the box labeled "Elects Convenience Claims Treatment Under
Equity Committee's Plan" in Item 4 if you seek to have your claim
reduced to $1,000 in order to receive treatment for your claim under
Class 5 (Convenience Claims) under the Equity Committee's Plan, and to
have your vote cast in Item 3 counted as the vote of a holder of a
Convenience Claim under the Equity Committee's Plan, rather than
receive treatment for such claim as a Class 3 (Unsecured Claim) under
the Equity Committee's Plan;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
k. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. at (973)
509-3190.
6
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
SENIOR NOTE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 7.7% Notes issued in the aggregate
principal amount of $100,000,000 (Cusip #909870-AD-9) or the 9.375% Notes issued
in the aggregate principal amount of $125,000,000 (Cusip #909870-AA-5) are
included in Class 4 (Senior Note Claims) under the Debtors' Plan and Class 3
(Unsecured Claims) under the Equity Committee's Plan. HOLDERS OF SENIOR NOTE
CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the "Balloting
Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF SENIOR NOTE CLAIMS ONLY.
IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF EITHER THE 7.7% NOTES
ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $100,000,000 (CUSIP #909870-AD-9) OR
THE 9.35% NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $125,000,000 (CUSIP
#909870-AA-5), THEN IN ORDER FOR YOUR VOTE TO BE COUNTED YOU MUST RETURN A
COMPLETED BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD,
UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS
SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE
(THE "VOTING DEADLINE").
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
7
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
of the Plans, the undersigned holds a Senior Note Claim as set forth below:
Certificate # of Notes Principal Amount of Notes
---------------------- ------------------------------
---------------------- ------------------------------
---------------------- ------------------------------
---------------------- ------------------------------
Aggregate Principal Amount of Senior Notes Held:
-------------------
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Senior Notes
set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Senior Notes set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Senior Notes Voted. By returning this executed
Ballot, the beneficial owner of the Senior Notes identified in Item 1 certifies
that (a) this Ballot is the only Ballot submitted for the Senior Notes owned by
such beneficial owner, except for the Senior Notes identified in the following
table and (b) all Ballots for Senior Notes submitted by the beneficial owner
indicate the same vote to accept or reject the Debtors' Plan and the Equity
Committee's Plan that the beneficial owner has indicated in Item 2 and Item 3 of
this Ballot (please use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Amount of Other Senior Notes Voted
-------------------- ------------------------------------ ----------------------------------
<S> <C> <C>
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
</TABLE>
8
<PAGE>
ITEM 5. Convenience Claim Election Under Equity Committee's Plan. Under the
Equity Committee Plan only, the holder of a Senior Note Claim may elect to
reduce its claim to $1,000 and have such claim receive treatment under Class 5
(Convenience Claims) under the Equity Committee's Plan. Please check the box
below labeled "Elects Convenience Claims Treatment Under the Equity Committee's
Plan" if the undersigned holder of a Senior Note Claim elects to reduce its
claim set forth in Item 1 above to $1,000 in order to receive treatment for its
claim under Class 5 (Convenience Claims) under the Equity Committee's Plan,
rather than receive treatment for such claim as a Class 3 (Unsecured Claims)
under the Equity Committee's Plan:
|_| Elects Convenience Claims Treatment Under the Equity
Committee's Plan
ITEM 6. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Senior Notes set forth in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 7. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Senior Notes identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statement
accompanying the Debtors' Plan, including all exhibits thereto, and the
Disclosure Statement accompanying the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of a claim
arising from the 7.7% Notes issued in the aggregate principal amount of
$100,000,000 (Cusip #909870-AD-9) and/or the 9.375% Notes issued in the
aggregate principal amount of $125,000,000 (Cusip #909870-AA-5), and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and/or the Equity Committee's Plan. The beneficial owner
understands that if the Ballot is validly executed but does not indicate either
acceptance or rejection of either of the Plans, then this Ballot will be counted
as an acceptance of such Plan. The undersigned further acknowledges that the
solicitation of votes is subject to all terms and conditions set forth in the
respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
-----------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
9
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS
OF SENIOR NOTE CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF SENIOR NOTE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH
PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER
PLAN. However, only one Plan may be confirmed by the Bankruptcy Court.
PLEASE READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and/or the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their Notes at this time and the Balloting Agent will not accept
delivery of any such Notes surrendered together with the Ballot.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3;
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
6;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
10
<PAGE>
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. sign and date your Ballot and return your Ballot using the enclosed
pre-addressed return envelope;
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. check the box labeled "Elects Convenience Claims Treatment Under
Equity Committee's Plan" in Item 4 if you seek to have your claim
reduced to $1,000 in order to receive treatment for your claim under
Class 5 (Convenience Claims) under the Equity Committee's Plan, and to
have your vote cast in Item 3 counted as the vote of a holder of a
Convenience Claim under the Equity Committee's Plan, rather than
receive treatment for such claim as a Class 3 (Unsecured Claims) under
the Equity Committee's Plan;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
k. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
11
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
-----------------------------------------------|
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF SENIOR NOTE CLAIMS
TO BE EXECUTED BY BENEFICIAL OWNERS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 7.7% Notes issued in the aggregate
principal amount of $100,000,000 (Cusip #909870-AD-9) or the 9.375% Notes issued
in the aggregate principal amount of $125,000,000 (Cusip #909870-AA-5) are
included in Class 4 (Senior Note Claims) under the Debtors' Plan and Class 3
(Unsecured Claims) under the Equity Committee's Plan. HOLDERS OF SENIOR NOTE
CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the "Balloting
Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF SENIOR NOTE CLAIMS ONLY.
IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF EITHER THE 7.7% NOTES
ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $100,000,000 (CUSIP #909870-AD-9) OR
THE 9.35% NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $125,000,000 (CUSIP
#909870-AA-5), THEN YOU MUST PROMPTLY COMPLETE AND EXECUTE THIS BALLOT AND
RETURN IT TO THE RECORD (OR NOMINEE) HOLDER OF YOUR NOTE FOR PROCESSING AND
INCLUSION OF YOUR VOTING INFORMATION ON THE MASTER BALLOT OF THE RECORD (OR
NOMINEE) HOLDER. THE RECORD (OR NOMINEE) HOLDER MUST, IN TURN, RETURN A
COMPLETED MASTER BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546
VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10,
2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE
EQUITY COMMITTEE (THE "VOTING DEADLINE").
12
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
Plan, the undersigned holds a Senior Note Claim as set forth below:
Certificate # of Notes Principal Amount of Notes
---------------------- -------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
Aggregate Principal Amount of Senior Notes Held:
----------------------
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Senior Notes
set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Senior Notes set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Senior Notes Voted. By returning this executed
Ballot, the beneficial owner of the Senior Notes identified in Item 1 certifies
that (a) this Ballot is the only Ballot submitted for the Senior Notes owned by
such beneficial owner, except for the Senior Notes identified in the following
table and (b) all Ballots for Senior Notes submitted by the beneficial owner
indicate the same vote to accept or reject the Debtors' Plan and the Equity
Committee's Plan that the beneficial owner has indicated in Item 2 and Item 3 of
this Ballot (please use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Amount of Other Senior Notes Voted
-------------------- ------------------------------------ ----------------------------------
<S> <C> <C>
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
-------------------- -------------------------- ------------------------------
</TABLE>
13
<PAGE>
ITEM 5. Convenience Claim Election Under Equity Committee's Plan. Under the
Equity Committee Plan only, the holder of a Senior Note Claim may elect to
reduce its claim to $1,000 and have such claim receive treatment under Class 5
(Convenience Claims) under the Equity Committee's Plan. Please check the box
below labeled "Elects Convenience Claims Treatment Under the Equity Committee's
Plan" if the undersigned holder of a Senior Note Claim elects to reduce its
claim set forth in Item 1 above to $1,000 in order to receive treatment for its
claim under Class 5 (Convenience Claims) under the Equity Committee's Plan,
rather than receive treatment for such claim as a Class 3 (Unsecured Claim)
under the Equity Committee's Plan:
|_| Elects Convenience Claims Treatment Under the
Equity Committee's Plan
ITEM 6. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Senior Notes set forth in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 7. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Senior Notes identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statement
accompanying the Debtors' Plan, including all exhibits thereto, and the
Disclosure Statement accompanying the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of claim
arising from the 7.7% Notes issued in the aggregate principal amount of
$100,000,000 (Cusip #909870-AD-9) and/or the 9.375% Notes issued in the
aggregate principal amount of $125,000,000 (Cusip #909870-AA-5), and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and/or the Equity Committee's Plan. The beneficial owner
understands that if the Ballot is validly executed but does not indicate either
acceptance or rejection of either of the Plans, then this Ballot will be counted
as an acceptance of such Plan. The undersigned further acknowledges that the
solicitation of votes is subject to all terms and conditions set forth in the
respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
14
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF SENIOR NOTE
CLAIMS TO BE EXECUTED BY BENEFICIAL OWNERS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF SENIOR NOTE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH
PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER
PLAN. However, only one Plan may be confirmed by the Bankruptcy Court.
PLEASE READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and/or the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their Notes at this time and the Balloting Agent will not accept
delivery of any such Notes surrendered together with the Ballot.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
to the Record (or Nominee) Holder of your Notes for processing and
inclusion of your voting information on the Master Ballot of the Record (or
Nominee) Holder. The Record (or Nominee) Holder must, in turn, return a
completed Master Ballot to the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
6;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
15
<PAGE>
f. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
g. sign and date your Ballot if it has not already been "prevalidated" by
your Nominee;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. check the box labeled "Elects Convenience Claims Treatment Under
Equity Committee's Plan" in Item 4 if you seek to have your claim
reduced to $1,000 in order to receive treatment for your claim under
Class 5 (Convenience Claims) under the Equity Committee's Plan, and to
have your vote cast in Item 3 counted as the vote of a holder of a
Convenience Claim under the Equity Committee's Plan, rather than
receive treatment for such claim as a Class 3 (Unsecured Claim) under
the Equity Committee's Plan;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
k. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT THE INFORMATION AGENT AT
1-888-559-9367.
16
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF GENERAL UNSECURED CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Any general unsecured claims are included in Class 5
(General Unsecured Claims) under the Debtors' Plan and Class 3 (Unsecured
Claims) under the Equity Committee's Plan. HOLDERS OF GENERAL UNSECURED CLAIMS
ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT
ONE PLAN AND REJECT THE OTHER PLAN. If you have any questions on how to properly
complete this Ballot, please call Logan & Company, Inc. (the "Balloting Agent")
at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF GENERAL UNSECURED CLAIMS
ONLY. IN ORDER FOR YOUR VOTE TO BE COUNTED, THE BALLOT MUST BE PROPERLY
COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING AGENT,
LOGAN & COMPANY, 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M.
EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT
BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
CREDITORS HOLDING GENERAL UNSECURED CLAIMS THAT ARE LISTED AS "CONTINGENT,
DISPUTED OR UNLIQUIDATED" IN THE SCHEDULES FILED BY THE DEBTORS WITH THE
BANKRUPTCY COURT PURSUANT TO SECTION 521 OF THE BANKRUPTCY CODE (AS AMENDED, THE
"SCHEDULES") ARE NOT ENTITLED TO VOTE ON THE PLAN UNLESS A PROOF OF CLAIM HAS
BEEN TIMELY FILED BY SUCH CREDITOR WHICH PROOF OF CLAIM IS NOT DISPUTED AND HAS
NOT BEEN DISALLOWED, DISQUALIFIED OR SUSPENDED PRIOR TO JUNE 30, 2000 AND WHICH
IS NOT THE SUBJECT OF A PENDING OBJECTION ON JUNE 30, 2000.
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
17
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
of the Plans, the undersigned holds a General Unsecured Claim against the
Debtors in the amount set forth above.
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of a General
Unsecured Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The undersigned holder of a
General Unsecured Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Convenience Claim Election. Please check the box below labeled
"Elects Convenience Claims Treatment" if the undersigned holder of a General
Unsecured Claim elects to reduce its claim set forth in Item 1 above to $1,000
in order to receive treatment for its claim under Class 6 (Convenience Claims)
under the Debtors' Plan and Class 5 (Convenience Claims) under the Equity
Committee's Plan, rather than receive treatment for such claim as a General
Unsecured Claim:
|_| Elects Convenience Claims Treatment
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The undersigned holder of a General Unsecured Claim set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a General Unsecured Claim and (ii) the undersigned has full power and
authority to vote to accept or reject the Debtors' Plan and/or the Equity
Committee's Plan. The undersigned understands that if the Ballot is validly
executed, but does not indicate either acceptance or rejection of either of the
Plans, then this Ballot will be counted as an acceptance of such Plan. The
undersigned further acknowledges that the Debtors' solicitation of votes is
subject to all terms and conditions set forth in the respective Disclosure
Statements and Plans.
18
<PAGE>
Print or Type Name of Claimant:
--------------------------------------------
Social Security or Federal Tax I.D. No. of Claimant:
-----------------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
----------------------------------------------------------
19
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING THE BALLOT
FOR HOLDERS OF GENERAL UNSECURED CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF GENERAL UNSECURED CLAIMS ARE ENTITLED TO VOTE TO ACCEPT
BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE
OTHER PLAN. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
2. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
3. To have your vote counted, you must complete, sign and return this Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.,
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
4. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2; and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
20
<PAGE>
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. sign and date your Ballot;
i. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately;
k. provide your name and mailing address; and
l. check the box labeled "Elects Convenience Claims Treatment" in Item 4
if you seek to have your claim reduced to $1,000 in order to receive
treatment for your claim under Class 6 (Convenience Claims) under the
Debtors' Plan and Class 5 (Convenience Claims) under the Equity
Committee's Plan, and to have your vote cast in Item 2 and Item 3
counted as the vote of a holder of a Convenience Claim, rather than
receive treatment for such claim as a General Unsecured Claim.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
21
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF BORROWER LITIGATION CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Any Claim asserted in litigation pending prior to the
commencement of these chapter 11 cases or which could have been asserted prior
to such time with respect to the servicing of mortgage loans by the Debtors,
origination moneys advanced by the Debtors, or mortgages issued by the Debtors
are included in Class 5 (General Unsecured Claims) under the Debtors' Plan and
Class 4 (Borrower Litigation Claims) under the Equity Committee's Plan. HOLDERS
OF BORROWER LITIGATION CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have
any questions on how to properly complete this Ballot, please call Logan &
Company, Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF BORROWER LITIGATION
CLAIMS ONLY. IN ORDER FOR YOUR VOTE TO BE COUNTED, THE BALLOT MUST BE PROPERLY
COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING AGENT,
LOGAN & COMPANY, 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M.
EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT
BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
CREDITORS HOLDING BORROWER LITIGATION CLAIMS THAT ARE LISTED AS
"CONTINGENT, DISPUTED OR UNLIQUIDATED" IN THE SCHEDULES FILED BY THE DEBTORS
WITH THE BANKRUPTCY COURT PURSUANT TO SECTION 521 OF THE BANKRUPTCY CODE (AS
AMENDED, THE "SCHEDULES") ARE NOT ENTITLED TO VOTE ON THE PLAN UNLESS A PROOF OF
CLAIM HAS BEEN TIMELY FILED BY SUCH CREDITOR WHICH PROOF OF CLAIM IS NOT
DISPUTED AND HAS NOT BEEN DISALLOWED, DISQUALIFIED OR SUSPENDED PRIOR TO JUNE
30, 2000 AND WHICH IS NOT THE SUBJECT OF A PENDING OBJECTION ON JUNE 30, 2000.
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
22
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
of the Plans, the undersigned holds a Borrower Litigation Claim against the
Debtors in the amount set forth above.
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of a Borrower
Litigation Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The undersigned holder of a
Borrower Litigation Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Convenience Claim Election Under Debtors' Plan. Under the Debtors'
Plan only, the holder of a General Unsecured Claim may elect to reduce its claim
to $1,000 and have such claim receive treatment under Class 6 (Convenience
Claims) under the Debtors' Plan. Please check the box below labeled "Elects
Convenience Claims Treatment Under the Debtors' Plan" if the undersigned holder
of a General Unsecured Claim elects to reduce its claim set forth in Item 1
above to $1,000 in order to receive treatment for its claim under Class 6
(Convenience Claims) under the Debtors' Plan, rather than receive treatment for
such claim as a Class 5 (General Unsecured Claim) under the Debtors' Plan:
|_| Elects Convenience Claims Treatment Under the
Debtors' Plan
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The undersigned holder of a Borrower Litigation Claim set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a Claim asserted in litigation pending prior to the commencement of
these chapter 11 cases or which could have been asserted prior to such time with
respect to the servicing of mortgage loans by the Debtors, origination moneys
advanced by the Debtors, or mortgages issued by the Debtors, and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and/or the Equity Committee's Plan. The undersigned understands
that if the Ballot is validly executed, but does not indicate either acceptance
or rejection of either of the Plans, then this Ballot will be counted as an
acceptance of such Plan. The undersigned further acknowledges that the
solicitation of votes is subject to all terms and conditions set forth in the
respective Disclosure Statements and Plans.
23
<PAGE>
Print or Type Name of Claimant:
--------------------------------------------
Social Security or Federal Tax I.D. No. of Claimant:
-----------------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
24
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING THE BALLOT
FOR HOLDERS OF BORROWER LITIGATION CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF BORROWER LITIGATION CLAIMS ARE ENTITLED TO VOTE TO ACCEPT
BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE
OTHER PLAN. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
2. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
3. To have your vote counted, you must complete, sign and return this Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.,
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
4. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2; and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
25
<PAGE>
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. sign and date your Ballot;
i. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately;
k. provide your name and mailing address; and
l. check the box labeled "Elects Convenience Claims Treatment Under the
Debtors' Plan" in Item 4 if you seek to have your claim reduced to
$1,000 in order to receive treatment for your claim under Class 6
(Convenience Claims) under the Debtors' Plan and to have your vote
cast in Item 2 counted as the vote of a holder of a Convenience Claim,
rather than receive treatment for such claim as a General Unsecured
Claim.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
26
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF CONVENIENCE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan. The Debtors' Plan and the Equity
Committee's Plan incorporate different classification schemes and provide
different treatment for different classes of claims or interests. Any claim
asserted as a general unsecured claim in an amount equal to or less than $1,000
(excluding claims asserted by borrowers arising from prepetition servicing or
origination of loans) are included in Class 6 (Convenience Claims) under the
Debtors' Plan and Class 5 (Convenience Claims) under the Equity Committee's
Plan. HOLDERS OF CONVENIENCE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT THE DEBTOR'S
PLAN. HOLDERS OF CONVENIENCE CLAIMS ARE DEEMED TO HAVE ACCEPTED THE EQUITY
COMMITTEE'S PLAN. If you have any questions on how to properly complete this
Ballot, please call Logan & Company, Inc. (the "Balloting Agent") at (973)
509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF CONVENIENCE CLAIMS ONLY.
IN ORDER FOR YOUR VOTE TO BE COUNTED, THE BALLOT MUST BE PROPERLY COMPLETED,
SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING AGENT, LOGAN &
COMPANY, 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME
ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE
DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
CREDITORS HOLDING CONVENIENCE CLAIMS THAT ARE LISTED AS "CONTINGENT,
DISPUTED OR UNLIQUIDATED" IN THE SCHEDULES FILED BY THE DEBTORS WITH THE
BANKRUPTCY COURT PURSUANT TO SECTION 521 OF THE BANKRUPTCY CODE (AS AMENDED, THE
"SCHEDULES") ARE NOT ENTITLED TO VOTE ON THE PLAN UNLESS A PROOF OF CLAIM HAS
BEEN TIMELY FILED BY SUCH CREDITOR WHICH PROOF OF CLAIM IS NOT DISPUTED AND HAS
NOT BEEN DISALLOWED, DISQUALIFIED OR SUSPENDED PRIOR TO JUNE 30, 2000 AND WHICH
IS NOT THE SUBJECT OF A PENDING OBJECTION ON JUNE 30, 2000.
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
27
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject the
Debtors' Plan, the undersigned holds a Convenience Claim against the Debtors in
the amount set forth above.
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of a Convenience
Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a Convenience Claim and (ii) the undersigned has full power and
authority to vote to accept or reject the Debtors' Plan. The undersigned
understands that if the Ballot is validly executed, but does not indicate either
acceptance or rejection of the Debtors' Plan, then this Ballot will be counted
as an acceptance of the Debtors' Plan. The undersigned further acknowledges that
the solicitation of votes is subject to all terms and conditions set forth in
the respective Disclosure Statements and Plans.
================================================================================
Print or Type Name of Claimant:
--------------------------------------------
Social Security or Federal Tax I.D. No. of Claimant:
-----------------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
28
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING THE BALLOT
FOR HOLDERS OF CONVENIENCE CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan. HOLDERS OF CONVENIENCE CLAIMS ARE ENTITLED TO
VOTE TO ACCEPT THE DEBTOR'S PLAN. HOLDERS OF CONVENIENCE CLAIMS ARE DEEMED
TO HAVE ACCEPTED THE EQUITY COMMITTEE'S PLAN. However, only one Plan may be
confirmed by the Bankruptcy Court. PLEASE READ THE PLANS AND THE DISCLOSURE
STATEMENTS CAREFULLY BEFORE COMPLETING THE BALLOT. Unless otherwise
defined, all capitalized terms used herein shall have the meaning ascribed
to such terms in the Debtors' Plan.
2. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
3. To have your vote counted, you must complete, sign and return this Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.,
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
4. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 (please note that if the Ballot is validly
executed but does not indicate acceptance or rejection of the Debtors'
Plan, then this Ballot will be counted as an acceptance of such Plan);
c. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
d. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
e. return your Ballot using the enclosed pre-addressed return envelope;
f. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
29
<PAGE>
g. sign and date your Ballot;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
30
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
SUBORDINATED DEBENTURE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 8.375% Notes issued in the
aggregate principal amount of $150,000,000 (Cusip #909870-AC-1) are included in
Class 7 (Subordinated Debenture Claims) under the Debtors' Plan and Class 6A
(Subordinated Debenture Claims) under the Equity Committee's Plan. HOLDERS OF
SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any
questions on how to properly complete this Ballot, please call Logan & Company,
Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF SUBORDINATED DEBENTURE
CLAIMS ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF THE 8.375%
NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $150,000,000 (CUSIP
#909870-AC-1), THEN IN ORDER FOR YOUR VOTE TO BE COUNTED YOU MUST RETURN A
COMPLETED BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD,
UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS
SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE
(THE "VOTING DEADLINE").
31
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds a
Subordinated Debenture Claim as set forth below:
Certificate # of Notes Principal Amount of Notes
---------------------- -------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
Aggregate Principal Amount of Subordinated Debentures
Held:_________________
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Subordinated
Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT CLASS 7 DOES NOT ACCEPT THE
PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO HOLDERS OF ALLOWED
SUBORDINATED DEBENTURE CLAIMS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Subordinated Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Subordinated Debentures Voted. By returning this
executed Ballot, the beneficial owner of the Subordinated Debentures identified
in Item 1 certifies that (a) this Ballot is the only Ballot submitted for the
Subordinated Debentures owned by such beneficial owner, except for the
Subordinated Debentures identified in the following table and (b) all Ballots
for Subordinated Debentures submitted by the beneficial owner indicate the same
vote to accept or reject the Debtors' Plan and the Equity Committee's Plan that
the beneficial owner has indicated in Item 2 and Item 3 of this Ballot (please
use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Amount of Other Subordinated
-------------------- ------------------------------------ Debentures Voted
----------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
32
<PAGE>
ITEM 5.Preference of Plans. If you voted in favor of both the Debtors' Plan
and the Equity Committee's Plan, then you may express your preference for one
Plan over the other (or no preference) by checking one of the boxes below. The
beneficial owner of the Subordinated Debentures set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Subordinated Debentures identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statements
accompanying the Debtors' Plan and the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of a claim
arising from the 8.375% Notes issued in the aggregate principal amount of
$150,000,000 (Cusip #909870-AC-1), and (ii) the undersigned has full power and
authority to vote to accept or reject the Debtors' Plan and the Equity
Committee's Plan. The beneficial owner understands that if the Ballot is validly
executed but does not indicate either acceptance or rejection of one of the
Plans, then this Ballot will be counted as an acceptance of such Plan. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Beneficial Owner:
------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
33
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
SUBORDINATED DEBENTURE CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO
ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT
THE OTHER. However, only one Plan may be confirmed by the Bankruptcy Court.
PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING
THE BALLOT. Unless otherwise defined, all capitalized terms used herein
shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT CLASS 7 DOES NOT ACCEPT THE
PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO HOLDERS OF ALLOWED
SUBORDINATED DEBENTURE CLAIMS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their Notes at this time and the Balloting Agent will not accept
delivery of any such Notes surrendered together with the Ballot.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3;
34
<PAGE>
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
35
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF SUBORDINATED
DEBENTURE CLAIMS TO BE EXECUTED BY BENEFICIAL OWNERS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 8.375% Notes issued in the
aggregate principal amount of $150,000,000 (Cusip #909870-AC-1) are included in
Class 7 (Subordinated Debenture Claims) under the Debtors' Plan and Class 6A
(Subordinated Debenture Claims) under the Equity Committee's Plan. HOLDERS OF
SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any
questions on how to properly complete this Ballot, please call Logan & Company,
Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF SUBORDINATED DEBENTURE
CLAIMS ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF THE 8.375%
NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $150,000,000 (CUSIP
#909870-AC-1), THEN YOU MUST PROMPTLY COMPLETE AND EXECUTE THIS BALLOT AND
RETURN IT TO THE RECORD (OR NOMINEE) HOLDER OF YOUR NOTE FOR PROCESSING AND
INCLUSION OF YOUR VOTING INFORMATION ON THE MASTER BALLOT OF THE RECORD (OR
NOMINEE) HOLDER. THE RECORD (OR NOMINEE) HOLDER MUST, IN TURN, RETURN A
COMPLETED MASTER BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546
VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10,
2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE
EQUITY COMMITTEE (THE "VOTING DEADLINE").
36
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds a
Subordinated Debenture Claim as set forth below:
Certificate # of Notes Principal Amount of Notes
---------------------- -------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
Aggregate Principal Amount of Subordinated Debentures
Held:_________________
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Subordinated
Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4 AND 7
DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO HOLDERS OF
ALLOWED SUBORDINATED DEBENTURE CLAIMS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Subordinated Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Subordinated Debentures Voted. By returning this
executed Ballot, the beneficial owner of the Subordinated Debentures identified
in Item 1 certifies that (a) this Ballot is the only Ballot submitted for the
Subordinated Debentures owned by such beneficial owner, except for the
Subordinated Debentures identified in the following table and (b) all Ballots
for Subordinated Debentures submitted by the beneficial owner indicate the same
vote to accept or reject the Debtors' Plan and the Equity Committee's Plan that
the beneficial owner has indicated in Item 2 and Item 3 of this Ballot (please
use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Amount of Other Subordinated
-------------------- ------------------------------------ Debentures Voted
----------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
37
<PAGE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Subordinated Debentures set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Subordinated Debentures identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statements
accompanying the Debtors' Plan and the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of a claim
arising from the 8.375% Notes issued in the aggregate principal amount of
$150,000,000 (Cusip #909870-AC-1), and (ii) the undersigned has full power and
authority to vote to accept or reject the Debtors' Plan and the Equity
Committee's Plan. The beneficial owner understands that if the Ballot is validly
executed but does not indicate either acceptance or rejection of one of the
Plans, then this Ballot will be counted as an acceptance of such Plan. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Beneficial Owner:
------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
38
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF SUBORDINATED DEBENTURES
CLAIMS TO BE EXECUTED BY BENEFICIAL OWNERS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO
ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT
THE OTHER. However, only one Plan may be confirmed by the Bankruptcy Court.
PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING
THE BALLOT. Unless otherwise defined, all capitalized terms used herein
shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4
AND 7 DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO
HOLDERS OF ALLOWED SUBORDINATED DEBENTURE CLAIMS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their Notes at this time and the Balloting Agent will not accept
delivery of any such Notes surrendered together with the Ballot.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
to the Record (or Nominee) Holder of your Notes for processing and
inclusion of your voting information on the Master Ballot of the Record (or
Nominee) Holder. The Record (or Nominee) Holder must, in turn, return a
completed Master Ballot to the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority
39
<PAGE>
to so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
g. sign and date your Ballot if it has not already been "prevalidated" by
your Nominee;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
40
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
LENDING SUBORDINATED DEBENTURE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of Debtors' Plan and the Equity Committee's Plan. The
Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the notes issued and delivered by
United Companies Lending Corporation pursuant to the terms and provisions of the
Indenture Agreement dated May 14, 1993 between United Companies Lending
Corporation and United Companies Life Insurance Company are included in Class 7
(Subordinated Debenture Claims) under the Debtors' Plan and Class 6B (Lending
Subordinated Debenture Claims) under the Equity Committee's Plan. HOLDERS OF
LENDING SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS,
TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER. If you have
any questions on how to properly complete this Ballot, please Logan & Company,
Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF LENDING SUBORDINATED
DEBENTURE CLAIMS ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF THE
LENDING SUBORDINATED DEBENTURES, THEN IN ORDER FOR YOUR VOTE TO BE COUNTED YOU
MUST RETURN A COMPLETED BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC.,
546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST
10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE
EQUITY COMMITTEE (THE "VOTING DEADLINE").
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
41
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds a Lending
Subordinated Debenture Claim as set forth below:
Certificate # of Notes Principal Amount of Notes
---------------------- -------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
---------------------- ----------------------------
Aggregate Principal Amount of Lending Sub. Debentures Held:
-------
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Lending
Subordinated Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4 AND 7
DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO HOLDERS OF
ALLOWED SUBORDINATED DEBENTURE CLAIMS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Lending Subordinated Debentures set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Lending Subordinated Debentures Voted. By
returning this executed Ballot, the beneficial owner of the Lending Subordinated
Debentures identified in Item 1 certifies that (a) this Ballot is the only
Ballot submitted for the Lending Subordinated Debentures owned by such
beneficial owner, except for the Lending Subordinated Debentures identified in
the following table and (b) all Ballots for Lending Subordinated Debentures
submitted by the beneficial owner indicate the same vote to accept or reject the
Debtors' Plan and the Equity Committee's Plan that the beneficial owner has
indicated in Item 3 of this Ballot (please use additional sheets of paper if
necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Amount of Other Lending Sub.
-------------------- ------------------------------------ Debentures Voted
----------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking
42
<PAGE>
one of the boxes below. The beneficial owner of the Lending Subordinated
Debentures set forth in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Lending Subordinated Debentures identified
in Item 1 acknowledges having been provided with a copy of the Disclosure
Statements accompanying the Debtors' Plan and the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a claim arising from the notes issued and delivered by United
Companies Lending Corporation pursuant to the terms and provisions of the
Indenture Agreement dated May 14, 1993 between United Companies Lending
Corporation and United Companies Life Insurance Company , and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and the Equity Committee's Plan. The beneficial owner understands
that if the Ballot is validly executed but does not indicate either acceptance
or rejection of one of the Plans, then this Ballot will be counted as an
acceptance of such Plan. The undersigned further acknowledges that the
solicitation of votes is subject to all terms and conditions set forth in the
respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
43
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS
OF LENDING SUBORDINATED DEBENTURE CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF LENDING SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE
TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND
REJECT THE OTHER. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4
AND 7 DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO
HOLDERS OF ALLOWED SUBORDINATED DEBENTURE CLAIMS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their Notes at this time and the Balloting Agent will not accept
delivery of any such Notes surrendered together with the Ballot.
3. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
44
<PAGE>
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
45
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
--------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF SUBORDINATED PENALTY CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Any Claim for fines, penalties, forfeitures, or for
multiple, exemplary, or punitive damages, or other non-pecuniary, direct or
non-proximate damages, including, without limitation, those arising from or
related to the Debtors' loan origination and servicing operations are included
in Class 8 (Subordinated Penalty Claims) under the Debtors' Plan and Class 7
(Subordinated Penalty Claims) under the Equity Committee's Plan. HOLDERS OF
SUBORDINATED PENALTY CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT
BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have any
questions on how to properly complete this Ballot, please call Logan & Company,
Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF SUBORDINATED PENALTY
CLAIMS ONLY. IN ORDER FOR YOUR VOTE TO BE COUNTED, THE BALLOT MUST BE PROPERLY
COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING AGENT,
LOGAN & COMPANY, 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M.
EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT
BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
CREDITORS HOLDING SUBORDINATED PENALTY CLAIMS THAT ARE LISTED AS
"CONTINGENT, DISPUTED OR UNLIQUIDATED" IN THE SCHEDULES FILED BY THE DEBTORS
WITH THE BANKRUPTCY COURT PURSUANT TO SECTION 521 OF THE BANKRUPTCY CODE (AS
AMENDED, THE "SCHEDULES") ARE NOT ENTITLED TO VOTE ON THE PLAN UNLESS A PROOF OF
CLAIM HAS BEEN TIMELY FILED BY SUCH CREDITOR WHICH PROOF OF CLAIM IS NOT
DISPUTED AND HAS NOT BEEN DISALLOWED, DISQUALIFIED OR SUSPENDED PRIOR TO JUNE
30, 2000 AND WHICH IS NOT THE SUBJECT OF A PENDING OBJECTION ON JUNE 30, 2000.
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
46
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
of the Plans, the undersigned holds a Subordinated Penalty Claim against the
Debtors in the amount set forth above.
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of a Subordinated
Penalty Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
ITEM 3. Vote on the Equity Committee's Plan. The undersigned holder of a
Subordinated Penalty Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The undersigned holder of a Subordinated Penalty Claim set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 5. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto. The undersigned certifies that (i) it is the
holder of a Claim unrelated to an equity security that is subject to
subordination under Section 510(b) of the Bankruptcy Code, including, without
limitation, any and all Claims for fines, penalties, forfeitures, or for
multiple, exemplary, or punitive damages, to the extent that such fine, penalty,
forfeiture, or damages are not compensation for actual pecuniary loss suffered
by the holder of such Claim, and (ii) the undersigned has full power and
authority to vote to accept or reject the Debtors' Plan and/or the Equity
Committee's Plan. The undersigned understands that if the Ballot is validly
executed, but does not indicate either acceptance or rejection of either of the
Plans, then this Ballot will be counted as an acceptance of such Plan. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Claimant:
--------------------------------------------
Social Security or Federal Tax I.D. No. of Claimant:
-----------------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
47
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING THE BALLOT
FOR HOLDERS OF SUBORDINATED PENALTY CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
(a) the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and (b) the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF SUBORDINATED PENALTY CLAIMS ARE ENTITLED TO VOTE TO ACCEPT
BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE
OTHER PLAN. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
2. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
3. To have your vote counted, you must complete, sign and return this Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.,
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
4. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
4;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
48
<PAGE>
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. sign and date your Ballot;
i. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
k. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
49
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
PRIDE EQUITY INTERESTS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of Preferred Redeemable Increased Dividend Equity Securities are included
in Class 9 (Pride Equity Interests) under the Debtors' Plan and Class 8 (Pride
Equity Interests) under the Equity Committee's Plan. HOLDERS OF PRIDE EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the "Balloting
Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF PRIDE EQUITY INTERESTS
ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF PRIDE EQUITY
INTERESTS, THEN IN ORDER FOR YOUR VOTE TO BE COUNTED YOU MUST RETURN A COMPLETED
BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER
MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH
TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE
"VOTING DEADLINE").
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Interests. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds Pride
Equity Interests as set forth below:
_________________ Number of Shares of Preferred Redeemable Increased
Dividend Equity Securities
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the interest holder. ]
50
<PAGE>
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Pride Equity
Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Pride Equity Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Pride Equity Interests Voted. By returning this
executed Ballot, the beneficial owner of the Pride Equity Interests identified
in Item 1 certifies that (a) this Ballot is the only Ballot submitted for the
Pride Equity Interests owned by such beneficial owner, except for the Pride
Equity Interests identified in the following table and (b) all Ballots for Pride
Equity Interests submitted by the beneficial owner indicate the same vote to
accept or reject the Debtors' Plan and the Equity Committee's Plan that the
beneficial owner has indicated in Item 2 and Item 3 of this Ballot (please use
additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Number of Other Pride Equity
-------------------- ------------------------------------ Interests Voted
----------------------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
51
<PAGE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Pride Equity Interests set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Pride Equity Interests identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statements
accompanying the Debtors' Plan and the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of shares
of Preferred Redeemable Increased Dividend Equity Securities, and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and the Equity Committee's Plan. The beneficial owner understands
that if the Ballot is validly executed but does not indicate either acceptance
or rejection of one of the Plans, then this Ballot will be counted as an
acceptance of such Plan. The undersigned further acknowledges that the
solicitation of votes is subject to all terms and conditions set forth in the
respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
---------------
Signature:
-----------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------------------
Name of Institution:
-------------------------------------------------------
Street Address:
------------------------------------------------------------
City, State, and Zip Code:
-------------------------------------------------
Telephone Number:
----------------------------------------------------------
Date Completed:
------------------------------------------------------------
52
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
PRIDE EQUITY INTERESTS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF PRIDE EQUITY INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH
PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE
BALLOT. Unless otherwise defined, all capitalized terms used herein shall
have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their securities at this time and the Balloting Agent will not
accept delivery of any such securities surrendered together with the
Ballot.
3. A Plan is accepted by a class of interests if it is accepted by the holders
of two-thirds in amount in such class voting on such Plan. In the event
that a class rejects either the Debtors' Plan or the Equity Committee's
Plan, the Bankruptcy Court may nevertheless confirm such Plan and thereby
make it binding on you if the Bankruptcy Court finds that the applicable
Plan accords fair and equitable treatment to the class or classes rejecting
it and otherwise satisfies the requirements of Section 1129(b) of the
Bankruptcy Code. If either of the Plans are confirmed by the Bankruptcy
Court, all holders of interests in, and any and all other holders of claims
against, the Debtors (including those who abstain or reject such Plan and
those who are not entitled to vote thereon) will be bound by the confirmed
Plan and the transactions contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
53
<PAGE>
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
g. if you also hold claims or interests in a different class under either
the Debtors' Plan or the Equity Committee's Plan, then, you may
receive more than one Ballot, labeled for a different class of claims
or interests. Your vote will be counted in determining acceptance or
rejection of the Plan by a particular class only if you complete, sign
and return the Ballot labeled for that class in accordance with the
instructions on that Ballot;
h. if you submit more than one ballot voting the same interest prior to
the Voting Deadline, then the last timely filed Ballot shall be
counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
54
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF PRIDE EQUITY INTERESTS TO BE EXECUTED BY
BENEFICIAL OWNERS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of Preferred Redeemable Increased Dividend Equity Securities are included
in Class 9 (Pride Equity Interests) under the Debtors' Plan and Class 8 (Pride
Equity Interests) under the Equity Committee's Plan. HOLDERS OF PRIDE EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the
"Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF PRIDE EQUITY INTERESTS
ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF PRIDE EQUITY
INTERESTS, THEN YOU MUST PROMPTLY COMPLETE AND EXECUTE THIS BALLOT AND RETURN IT
TO THE RECORD (OR NOMINEE) HOLDER FOR PROCESSING AND INCLUSION OF YOUR VOTING
INFORMATION ON THE MASTER BALLOT OF THE RECORD (OR NOMINEE) HOLDER. THE RECORD
(OR NOMINEE) HOLDER MUST, IN TURN, RETURN A COMPLETED MASTER BALLOT TO THE
BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ
07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS
EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING
DEADLINE").
55
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Interests. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds Pride
Equity Interests as set forth below:
__________ Number of Shares of Preferred Redeemable Increased Dividend
Equity Securities
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the Pride Equity
Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
Pride Equity Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other Pride Equity Interests Voted. By returning this
executed Ballot, the beneficial owner of the Pride Equity Interests identified
in Item 1 certifies that (a) this Ballot is the only Ballot submitted for the
Pride Equity Interests owned by such beneficial owner, except for the Pride
Equity Interests identified in the following table and (b) all Ballots for Pride
Equity Interests submitted by the beneficial owner indicate the same vote to
accept or reject the Debtors' Plan and the Equity Committee's Plan that the
beneficial owner has indicated in Item 2 and Item 3 of this Ballot (please use
additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Number of Other Pride Equity
-------------------- ------------------------------------ Interests Voted
----------------------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
56
<PAGE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the Pride Equity Interests set forth in Item 1 above
prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the Pride Equity Interests identified in Item 1
acknowledges having been provided with a copy of the Disclosure Statements
accompanying the Debtors' Plan and the Equity Committee's Plan, including all
exhibits thereto. The undersigned certifies that (i) it is the holder of shares
of Preferred Redeemable Increased Dividend Equity Securities, and (ii) the
undersigned has full power and authority to vote to accept or reject the
Debtors' Plan and the Equity Committee's Plan. The beneficial owner understands
that if the Ballot is validly executed but does not indicate either acceptance
or rejection of the Plans, then this Ballot will be counted as an acceptance of
such Plan. The undersigned further acknowledges that the solicitation of votes
is subject to all terms and conditions set forth in the respective Disclosure
Statements and Plans.
Print or Type Name of Beneficial Owner:
----------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
-------------------
Signature:
---------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
-------------------------------
Name of Institution:
-----------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State, and Zip Code:
-----------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Date Completed:
----------------------------------------------------------------
57
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF PRIDE EQUITY INTERESTS
CLAIMS TO BE EXECUTED BY BENEFICIAL OWNERS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF PRIDE EQUITY INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH
PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE
BALLOT. Unless otherwise defined, all capitalized terms used herein shall
have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their securities at this time and the Balloting Agent will not
accept delivery of any such securities surrendered together with the
Ballot.
3. A Plan is accepted by a class of interests if it is accepted by the holders
of two-thirds in amount in such class voting on such Plan. In the event
that a class rejects either the Debtors' Plan or the Equity Committee's
Plan, the Bankruptcy Court may nevertheless confirm such Plan and thereby
make it binding on you if the Bankruptcy Court finds that the applicable
Plan accords fair and equitable treatment to the class or classes rejecting
it and otherwise satisfies the requirements of Section 1129(b) of the
Bankruptcy Code. If either of the Plans are confirmed by the Bankruptcy
Court, all holders of interests in, and any and all other holders of claims
against, the Debtors (including those who abstain or reject such Plan and
those who are not entitled to vote thereon) will be bound by the confirmed
Plan and the transactions contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
to the Record (or Nominee) Holder for processing and inclusion of your
voting information on the Master Ballot of the Record (or Nominee) Holder.
The Record (or Nominee) Holder must, in turn, return a completed Master
Ballot to the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline").
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
58
<PAGE>
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. if you also hold claims or interests in a different class under either
the Debtors' Plan or the Equity Committee's Plan, then, you may
receive more than one Ballot, labeled for a different class of claims
or interests. Your vote will be counted in determining acceptance or
rejection of the Plan by a particular class only if you complete, sign
and return the Ballot labeled for that class in accordance with the
instructions on that Ballot;
g. sign and date your Ballot if it has not already been "prevalidated" by
your Nominee;
h. if you submit more than one ballot voting the same interest prior to
the Voting Deadline, then the last timely filed Ballot shall be
counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
59
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF STATUTORILY SUBORDINATED CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Statutorily Subordinated Claims include any Claim that is
subject to subordination under section 510(b) of the Bankruptcy Code, including,
without limitation any and all Claims of a holder or former holder of an Equity
Interest for rescission of or damages from the purchase or sale of an Equity
Interest arising from or relating to the Debtors' financial statements and the
accounting practices associated therewith. Statutorily Subordinated Claims are
included in Class 10A (Statutorily Subordinated Claims) under the Debtors' Plan
and Class 9A (Statutorily Subordinated Claims) under the Equity Committee's
Plan. HOLDERS OF STATUTORILY SUBORDINATED CLAIMS ARE ENTITLED TO VOTE TO ACCEPT
BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER. If
you have any questions on how to properly complete this Ballot, please call
Logan & Company, Inc. (the "Balloting Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF STATUTORILY SUBORDINATED
CLAIMS ONLY. IN ORDER FOR YOUR VOTE TO BE COUNTED, THE BALLOT MUST BE PROPERLY
COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING AGENT,
LOGAN & COMPANY, 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M.
EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT
BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the claimholder ]
[ and the claim amount such holder is entitled to vote. ]
60
<PAGE>
CREDITORS HOLDING STATUTORILY SUBORDINATED CLAIMS THAT ARE LISTED AS
"CONTINGENT, DISPUTED OR UNLIQUIDATED" IN THE SCHEDULES FILED BY THE DEBTORS
WITH THE BANKRUPTCY COURT PURSUANT TO SECTION 521 OF THE BANKRUPTCY CODE (AS
AMENDED, THE "SCHEDULES") ARE NOT ENTITLED TO VOTE ON THE PLAN UNLESS A PROOF OF
CLAIM HAS BEEN TIMELY FILED BY SUCH CREDITOR WHICH PROOF OF CLAIM IS NOT
DISPUTED AND HAS NOT BEEN DISALLOWED, DISQUALIFIED OR SUSPENDED PRIOR TO JUNE
30, 2000 AND WHICH IS NOT THE SUBJECT OF A PENDING OBJECTION ON JUNE 30, 2000.
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Claim. For purposes of voting to accept or reject either
of the Plans, the undersigned holds a Statutorily Subordinated Claim against the
Debtors in the amount set forth above.
ITEM 2. Vote on the Debtors' Plan. The undersigned holder of a Statutorily
Subordinated Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF ALLOWED STATUTORILY SUBORDINATED CLAIMS.
ITEM 3. Vote on the Equity Committee's Plan. The undersigned holder of a
Statutorily Subordinated Claim set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The undersigned holder of the Statutorily Subordinated Claim set forth in Item 1
above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
61
<PAGE>
ITEM 5. Acknowledgements and Certification. By signing this Ballot, the
undersigned acknowledges that the undersigned has been provided with a copy of
the Disclosure Statements accompanying the Debtors' Plan and Debtors' Plan
and/or Equity Committee's Plan, including all exhibits thereto. The undersigned
certifies that (i) it is the holder of a Statutorily Subordinated Claim, and
(ii) the undersigned has full power and authority to vote to accept or reject
the Equity Committee's Plan. The undersigned understands that if the Ballot is
validly executed, but does not indicate either acceptance or rejection of one of
the Plans, then this Ballot will be counted as an acceptance of such Plan. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Claimant:
-------------------------------------------------
Social Security or Federal Tax I.D. No. of Claimant:
----------------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
62
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF
STATUTORILY SUBORDINATED CLAIMS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
Support of the Debtors' Plan and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF STATUTORILY SUBORDINATED CLAIMS ARE ENTITLED TO VOTE TO
ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT
THE OTHER. However, only one Plan may be confirmed by the Bankruptcy Court.
PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING
THE BALLOT. Unless otherwise defined, all capitalized terms used herein
shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF ALLOWED STATUTORILY SUBORDINATED CLAIMS.
2. A Plan is accepted by a class of claims if it is accepted by the holders of
two-thirds in amount and more than one-half in number of claims in such
class voting on such Plan. In the event that a class rejects either the
Debtors' Plan or the Equity Committee's Plan, the Bankruptcy Court may
nevertheless confirm such Plan and thereby make it binding on you if the
Bankruptcy Court finds that the applicable Plan accords fair and equitable
treatment to the class or classes rejecting it and otherwise satisfies the
requirements of Section 1129(b) of the Bankruptcy Code. If either of the
Plans are confirmed by the Bankruptcy Court, all holders of interests in,
and any and all other holders of claims against, the Debtors (including
those who abstain or reject such Plan and those who are not entitled to
vote thereon) will be bound by the confirmed Plan and the transactions
contemplated thereby.
3. To have your vote counted, you must complete, sign and return this Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.,
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
4. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
4;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
63
<PAGE>
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
g. if you also hold claims in a different class under either the Debtors'
Plan or the Equity Committee's Plan, then, you may receive more than
one Ballot, labeled for a different class of claims. Your vote will be
counted in determining acceptance or rejection of the Plan by a
particular class only if you complete, sign and return the Ballot
labeled for that class in accordance with the instructions on that
Ballot;
h. sign and date your Ballot;
i. if you submit more than one ballot voting the same claim prior to the
Voting Deadline, then the last timely filed Ballot shall be counted;
j. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
k. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
64
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
UNITED COMPANIES COMMON EQUITY INTERESTS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of common stock of United Companies Financial Corporation or any interest
or right to convert into such equity interest or acquire any equity interest of
the Debtors which was in existence as of the commencement of these chapter 11
cases. are included in Class 10B (United Companies Common Equity Interests)
under the Debtors' Plan and Class 9B (United Companies Common Equity Interests)
under the Equity Committee's Plan. HOLDERS OF UNITED COMPANIES COMMON EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the "Balloting
Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF UNITED COMPANIES COMMON
EQUITY INTERESTS ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF
UNITED COMPANIES COMMON EQUITY INTERESTS, THEN IN ORDER FOR YOUR VOTE TO BE
COUNTED YOU MUST RETURN A COMPLETED BALLOT TO THE BALLOTING AGENT, LOGAN &
COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN
TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE
DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
================================================================================
[ Each Ballot will be individually generated setting ]
[ forth the name and address of the interest holder. ]
65
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Interests. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds United
Companies Common Equity Interests as set forth below:
_________________ Number of Shares of United Companies Common Stock
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the United
Companies Common Equity Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
United Companies Common Equity Interests set forth in Item 1 above hereby votes
to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other United Companies Common Equity Interests Voted.
By returning this executed Ballot, the beneficial owner of the United Companies
Common Equity Interests identified in Item 1 certifies that (a) this Ballot is
the only Ballot submitted for the United Companies Common Equity Interests owned
by such beneficial owner, except for the United Companies Common Equity
Interests identified in the following table and (b) all Ballots for United
Companies Common Equity Interests submitted by the beneficial owner indicate the
same vote to accept or reject the Debtors' Plan and the Equity Committee's Plan
that the beneficial owner has indicated in Item 2 and Item 3 of this Ballot
(please use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder Number of Other Common Equity
-------------------- ------------------------------------ Interests Voted
----------------------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
66
<PAGE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the United Companies Common Equity Interests set forth
in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the United Companies Common Equity Interests
identified in Item 1 acknowledges having been provided with a copy of the
Disclosure Statements accompanying the Debtors' Plan and the Equity Committee's
Plan, including all exhibits thereto. The undersigned certifies that (i) it is
the holder of shares of common stock of United Companies Financial Corporation
or any interest or right to convert into such equity interest or acquire any
equity interest of the Debtors which was in existence as of the commencement of
these chapter 11 cases, and (ii) the undersigned has full power and authority to
vote to accept or reject the Debtors' Plan and the Equity Committee's Plan. The
beneficial owner understands that if the Ballot is validly executed but does not
indicate either acceptance or rejection of one of the Plans, then this Ballot
will be counted as an acceptance of such Plan. The undersigned further
acknowledges that the solicitation of votes is subject to all terms and
conditions set forth in the respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
-----------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
--------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
67
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR RECORD AND BENEFICIAL HOLDERS OF
UNITED COMPANIES COMMON EQUITY INTERESTS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS ARE ENTITLED TO
VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND
REJECT THE OTHER. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their securities at this time and the Balloting Agent will not
accept delivery of any such securities surrendered together with the
Ballot.
3. A Plan is accepted by a class of interests if it is accepted by the holders
of two-thirds in amount in such class voting on such Plan. In the event
that a class rejects either the Debtors' Plan or the Equity Committee's
Plan, the Bankruptcy Court may nevertheless confirm such Plan and thereby
make it binding on you if the Bankruptcy Court finds that the applicable
Plan accords fair and equitable treatment to the class or classes rejecting
it and otherwise satisfies the requirements of Section 1129(b) of the
Bankruptcy Code. If either of the Plans are confirmed by the Bankruptcy
Court, all holders of interests in, and any and all other holders of claims
against, the Debtors (including those who abstain or reject such Plan and
those who are not entitled to vote thereon) will be bound by the confirmed
Plan and the transactions contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
so that it is received by the Balloting Agent not later than 4:00 p.m.
Eastern Time, on August 10, 2000, unless such time is extended by agreement
between the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Ballots by mail, hand delivery or overnight courier to the
Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
Ballots will not be accepted by telecopy or facsimile transmission.
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3;
68
<PAGE>
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. return your Ballot using the enclosed pre-addressed return envelope;
g. if you also hold claims or interests in a different class under either
the Debtors' Plan or the Equity Committee's Plan, then, you may
receive more than one Ballot, labeled for a different class of claims
or interests. Your vote will be counted in determining acceptance or
rejection of the Plan by a particular class only if you complete, sign
and return the Ballot labeled for that class in accordance with the
instructions on that Ballot;
h. if you submit more than one ballot voting the same interest prior to
the Voting Deadline, then the last timely filed Ballot shall be
counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
69
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED BALLOT FOR ACCEPTING OR REJECTING PLANS OF REORGANIZATION
INDIVIDUAL BALLOT FOR HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS
TO BE EXECUTED BY BENEFICIAL OWNERS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
This Ballot has been sent to you to solicit your vote regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of common stock of United Companies Financial Corporation or any interest
or right to convert into such equity interest or acquire any equity interest of
the Debtors which was in existence as of the commencement of these chapter 11
cases. are included in Class 10B (United Companies Common Equity Interests)
under the Debtors' Plan and Class 9B (United Companies Common Equity Interests)
under the Equity Committee's Plan. HOLDERS OF UNITED COMPANIES COMMON EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any questions on how to
properly complete this Ballot, please call Logan & Company, Inc. (the "Balloting
Agent") at (973) 509-3190.
THIS BALLOT IS TO BE USED FOR VOTING BY HOLDERS OF UNITED COMPANIES COMMON
EQUITY INTERESTS ONLY. IF ON JUNE 30, 2000, YOU WERE THE BENEFICIAL OWNER OF
UNITED COMPANIES COMMON EQUITY INTERESTS, THEN YOU MUST PROMPTLY COMPLETE AND
EXECUTE THIS BALLOT AND RETURN IT TO THE RECORD (OR NOMINEE) HOLDER FOR
PROCESSING AND INCLUSION OF YOUR VOTING INFORMATION ON THE MASTER BALLOT OF THE
RECORD (OR NOMINEE) HOLDER. THE RECORD (OR NOMINEE) HOLDER MUST, IN TURN, RETURN
A COMPLETED MASTER BALLOT TO THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546
VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10,
2000, UNLESS SUCH TIME IS EXTENDED BY AGREEMENT OF THE DEBTORS AND THE EQUITY
COMMITTEE (THE "VOTING DEADLINE").
70
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Amount of Interests. For purposes of voting to accept or reject the
Debtors' Plan and the Equity Committee's Plan, the undersigned holds United
Companies Common Equity Interests as set forth below:
_________________ Number of Shares of United Companies Common Stock
ITEM 2. Vote on the Debtors' Plan. The beneficial owner of the United
Companies Common Equity Interests set forth in Item 1 above hereby votes to:
Check one box: |_| Accept the Debtors' Plan
|_| Reject the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS.
ITEM 3. Vote on the Equity Committee's Plan. The beneficial owner of the
United Companies Common Equity Interests set forth in Item 1 above hereby votes
to:
Check one box: |_| Accept the Equity Committee's Plan
|_| Reject the Equity Committee's Plan
ITEM 4. Identify All Other United Companies Common Equity Interests Voted.
By returning this executed Ballot, the beneficial owner of the United Companies
Common Equity Interests identified in Item 1 certifies that (a) this Ballot is
the only Ballot submitted for the United Companies Common Equity Interests owned
by such beneficial owner, except for the United Companies Common Equity
Interests identified in the following table and (b) all Ballots for United
Companies Common Equity Interests submitted by the beneficial owner indicate the
same vote to accept or reject the Debtors' Plan and the Equity Committee's Plan
that the beneficial owner has indicated in Item 2 and Item 3 of this Ballot
(please use additional sheets of paper if necessary):
<TABLE>
<CAPTION>
Customer Account No. Name of Registered or Nominee Holder No. of Other United Companies
-------------------- ------------------------------------ Common Equity Interests Voted
-----------------------------
<S> <C> <C>
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
-------------------- -------------------------------- ----------------------------
</TABLE>
71
<PAGE>
ITEM 5. Preference of Plans. If you voted in favor of both the Debtors'
Plan and the Equity Committee's Plan, then you may express your preference for
one Plan over the other (or no preference) by checking one of the boxes below.
The beneficial owner of the United Companies Common Equity Interests set forth
in Item 1 above prefers:
Check one box: |_| Debtors' Plan
|_| Equity Committee's Plan
|_| No Preference
ITEM 6. Acknowledgements and Certification. By returning this executed
Ballot, the beneficial owner of the United Companies Common Equity Interests
identified in Item 1 acknowledges having been provided with a copy of the
Disclosure Statements accompanying the Debtors' Plan and the Equity Committee's
Plan, including all exhibits thereto. The undersigned certifies that (i) it is
the holder of common stock of United Companies Financial Corporation or any
interest or right to convert into such equity interest or acquire any equity
interest of the Debtors which was in existence as of the commencement of these
chapter 11 cases, and (ii) the undersigned has full power and authority to vote
to accept or reject the Debtors' Plan and the Equity Committee's Plan. The
beneficial owner understands that if the Ballot is validly executed but does not
indicate either acceptance or rejection of the one of the Plans, then this
Ballot will be counted as an acceptance of such Plan. The undersigned further
acknowledges that the solicitation of votes is subject to all terms and
conditions set forth in the respective Disclosure Statements and Plans.
Print or Type Name of Beneficial Owner:
-----------------------------------------
Social Security or Federal Tax I.D. No. of Beneficial Owner:
--------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Date Completed:
---------------------------------------------------------------
72
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING INDIVIDUAL BALLOT FOR HOLDERS OF UNITED COMPANIES
COMMON EQUITY INTERESTS TO BE EXECUTED BY BENEFICIAL OWNERS
1. This Ballot is submitted to you to solicit your vote to accept or reject
the Debtors' Plan, which is described in the Disclosure Statement in
support of the Debtors' Plan, and the Equity Committee's Plan, which is
described in the Disclosure Statement in support of the Equity Committee's
Plan. HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS ARE ENTITLED TO
VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND
REJECT THE OTHER. However, only one Plan may be confirmed by the Bankruptcy
Court. PLEASE READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE
COMPLETING THE BALLOT. Unless otherwise defined, all capitalized terms used
herein shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS.
2. This Ballot is not a letter of transmittal and may not be used for any
purpose other than to vote to accept or reject the Debtors' Plan and the
Equity Committee's Plan. Accordingly, Beneficial Owners should not
surrender their securities at this time and the Balloting Agent will not
accept delivery of any such securities surrendered together with the
Ballot.
3. A Plan is accepted by a class of interests if it is accepted by the holders
of two-thirds in amount in such class voting on such Plan. In the event
that a class rejects either the Debtors' Plan or the Equity Committee's
Plan, the Bankruptcy Court may nevertheless confirm such Plan and thereby
make it binding on you if the Bankruptcy Court finds that the applicable
Plan accords fair and equitable treatment to the class or classes rejecting
it and otherwise satisfies the requirements of Section 1129(b) of the
Bankruptcy Code. If either of the Plans are confirmed by the Bankruptcy
Court, all holders of interests in, and any and all other holders of claims
against, the Debtors (including those who abstain or reject such Plan and
those who are not entitled to vote thereon) will be bound by the confirmed
Plan and the transactions contemplated thereby.
4. To have your vote counted, you must complete and return this signed Ballot
to the Record (or Nominee) Holder for processing and inclusion of your
voting information on the Master Ballot of the Record (or Nominee) Holder.
The Record (or Nominee) Holder must, in turn, return a completed Master
Ballot to the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline").
5. To properly complete the Ballot, you must follow the procedures described
below:
a. make sure that the information required in Item 1 is correct;
b. cast one vote to accept or reject the Debtors' Plan by checking the
appropriate box in Item 2 and one vote to accept or reject the Equity
Committee's Plan by checking the appropriate box in Item 3 (please
note that if the Ballot is validly executed but does not indicate
either acceptance or rejection of either of the Plans, then this
Ballot will be counted as an acceptance of such Plan);
c. if you voted to accept both the Debtors' Plan and the Equity
Committee's Plan, then you may express your preference for one Plan
over the other (or no preference) by checking one of the boxes in Item
5;
d. if you are completing this Ballot on behalf of another entity,
indicate your relationship with such entity and the capacity in which
you are signing and submit satisfactory evidence of your authority to
so act (e.g., a power of attorney or a certified copy of board
resolutions authorizing you to so act);
73
<PAGE>
e. please use additional sheets of paper if additional space is required
to respond to any item on the Ballot (clearly marked to indicate the
applicable item of the Ballot);
f. if you also hold claims or interests in a different class under either
the Debtors' Plan or the Equity Committee's Plan, then, you may
receive more than one Ballot, labeled for a different class of claims
or interests. Your vote will be counted in determining acceptance or
rejection of the Plan by a particular class only if you complete, sign
and return the Ballot labeled for that class in accordance with the
instructions on that Ballot;
g. sign and date your Ballot if it has not already been "prevalidated" by
your Nominee;
h. if you submit more than one ballot voting the same interest prior to
the Voting Deadline, then the last timely filed Ballot shall be
counted;
i. if you believe that you have received the wrong Ballot, please contact
the Balloting Agent immediately; and
j. provide your name and mailing address.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
74
<PAGE>
EXHIBIT D
75
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED MASTER BALLOT FOR ACCEPTING OR REJECTING PLANS OF
REORGANIZATION FOR HOLDERS OF BANK CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
Please use this Master Ballot to tabulate votes solicited regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the Debtors' $850 million prepetition
unsecured revolving credit facility are included in Class 3 (Bank Claims) under
the Debtors' Plan and Class 3 (Unsecured Claims) under the Equity Committee's
Plan. HOLDERS OF BANK CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have
any questions on how to properly complete this Master Ballot, please call Logan
& Company, Inc. (the "Balloting Agent") at (973) 509-3190.
THIS MASTER BALLOT IS TO BE USED ONLY FOR SUMMARIZING THE VOTES OF HOLDERS
OF CLAIMS ARISING FROM THE DEBTORS' $850 MILLION PREPETITION UNSECURED REVOLVING
CREDIT FACILITY. IN ORDER FOR THESE VOTES TO BE COUNTED, THE MASTER BALLOT MUST
BE PROPERLY COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE
BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ
07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS
EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING
DEADLINE").
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Tabulation of Bank Claim Votes Regarding Debtors' Plan.
$ Aggregate Principal Amount Accepting the Plan
-------------------------
Aggregate Number of Lenders Accepting the Plan
--------------------------
$ Aggregate Principal Amount Rejecting the Plan
-------------------------
Aggregate Number of Lenders Rejecting the Plan
--------------------------
76
<PAGE>
ITEM 2. Tabulation of Bank Claim Votes Regarding Equity Committee's Plan.
$ Aggregate Principal Amount Accepting the Plan
-------------------------
Aggregate Number of Lenders Accepting the Plan
--------------------------
$ Aggregate Principal Amount Rejecting the Plan
-------------------------
Aggregate Number of Lenders Rejecting the Plan
--------------------------
ITEM 3. Lender Information. The undersigned certifies that the schedule set
forth below is an accurate listing of the Participating Lenders that have
delivered voting instructions to the undersigned voting to accept or reject the
respective Plans. (Please complete the Participating Lender Summary schedule set
forth below. Attach additional schedules as needed.)
PARTICIPATING LENDER SUMMARY REGARDING DEBTORS' PLAN
<TABLE>
<CAPTION>
Name of Participating Lender Principal Amount Accepting Principal Amount Rejecting
---------------------------- -------------------------- --------------------------
<S> <C> <C>
---------------------------- -------------------------- --------------------------
---------------------------- -------------------------- --------------------------
---------------------------- -------------------------- --------------------------
</TABLE>
PARTICIPATING LENDER SUMMARY REGARDING EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Name of Participating Lender Principal Amount Accepting Principal Amount Rejecting
---------------------------- -------------------------- --------------------------
<S> <C> <C>
---------------------------- -------------------------- --------------------------
---------------------------- -------------------------- --------------------------
---------------------------- -------------------------- --------------------------
</TABLE>
77
<PAGE>
ITEM 4. Convenience Claim Election Under Equity Committee's Plan. To the
extent that any Participating Lenders elected Convenience Claims Treatment Under
the Equity Committee's Plan, please summarize such elections below. In this
regard, the undersigned certifies that the schedule set forth below is an
accurate listing of the convenience claim elections indicated by the
Participating Lenders who delivered voting instructions to the undersigned
electing to reduce their claim to $1,000 and to have such claim receive
treatment under Class 5 (Convenience Claims) under the Equity Committee's Plan.
(Please complete the Participating Lender Summary Regarding Convenience Claim
Elections schedule set forth below. Attach additional schedules as needed.)
PARTICIPATING LENDER SUMMARY REGARDING CONVENIENCE CLAIM
ELECTIONS UNDER EQUITY COMMITTEE'S PLAN
Name of Participating Lender Amount of Bank Claim to be Reduced to $1,000
---------------------------- --------------------------------------------
---------------------------- --------------------------------------------
---------------------------- --------------------------------------------
---------------------------- --------------------------------------------
78
<PAGE>
ITEM 5. Preference of Plans. To the extent that a Participating Lender
voted in favor of both the Debtors' Plan and the Equity Committee's Plan and to
the extent that such Participating Lender indicated a preference between the two
Plans, please summarize such preferences below. In this regard, the undersigned
certifies that the schedule set forth below is an accurate listing of the
preferences indicated by the Participating Lenders who delivered voting
instructions to the undersigned voting to accept both Plans and indicating a
preference between the two Plans. (Please complete the Participating Lender
Summary Indicating Preferences schedule set forth below. Attach additional
schedules as needed.)
PARTICIPATING LENDER SUMMARY INDICATING PREFERENCE FOR DEBTORS' PLAN
Name of Participating Lender Amount Accepting and Indicating Preference
for Debtors' Plan
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
PARTICIPATING LENDER SUMMARY INDICATING PREFERENCE FOR EQUITY COMMITTEE'S PLAN
Name of Participating Lender Amount Accepting and Indicating Preference
for Equity's Plan
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
---------------------------- ------------------------------------------
79
<PAGE>
ITEM 6. Acknowledgements and Certification. By signing this Master Ballot,
the undersigned certifies (i) that each of the Participating Lenders whose votes
are being transmitted by this Master Ballot has been provided with a copy of the
Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto, (ii) that the aggregate Participating Lenders'
voting and preferences set forth above in Items 1-5 accurately reflect voting
instructions received by the undersigned from the Participating Lenders, and
(iii) that the Ballot received from each Participating Lender will remain on
file with the undersigned subject to inspection for one year from the Voting
Deadline. The undersigned further acknowledges that the solicitation of votes is
subject to all terms and conditions set forth in the respective Disclosure
Statements and Plans.
Print or Type Name of Agent for Bank Group:
-------------------------------------
Federal Tax I.D. No. of Agent for Bank Group:
-----------------------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
80
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING MASTER BALLOT FOR HOLDERS OF BANK CLAIMS
1. This Master Ballot is submitted to you in connection with the solicitation
of the Participating Lenders' votes to accept or reject (a) the Debtors'
Plan, which is described in the Disclosure Statement in support of the
Debtors' Plan, and (b) the Equity Committee's Plan, which is described in
the Disclosure Statement in support of the Equity Committee's Plan. HOLDERS
OF BANK CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH
PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. However, only one
Plan may be confirmed by the Bankruptcy Court. PLEASE READ THE PLANS AND
THE DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE BALLOT. Unless
otherwise defined, all capitalized terms used herein shall have the meaning
ascribed to such terms in the Debtors' Plan.
2. This Master Ballot is to be used by First Union National Bank as agent for
the Participating Lenders under the $850 million unsecured revolving credit
facility.
3 The Master Ballot must be completed, signed and returned so that it is
received by the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline"). Deliveries of
Master Ballots by mail, hand delivery or overnight courier to the Balloting
Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
In addition, Master Ballots may be submitted by facsimile; provided,
however, that originals must be provided within forty-eight hours. Master
Ballots submitted by facsimile should be faxed to the attention of Logan &
Company, Inc. at (973) 509-3191.
4. The Master Ballot is not a letter of transmittal and may not be used for
any purpose other than to transmit votes to accept or reject the Debtors'
Plan and the Equity Committee's Plan.
5. With respect to any Individual Ballots returned to you by a Participating
Lender, you must complete the Master Ballot, return it to the Balloting
Agent, and retain the Individual Ballots for one year from the Voting
Deadline.
6. Multiple Master Ballots may be completed and delivered to the Balloting
Agent. Votes reflected by multiple Master Ballots will be counted except to
the extent that they are duplicative of other Master Ballots. If two or
more Master Ballots are inconsistent, the last Master Ballot received prior
to the Voting Deadline will, to the extent of such inconsistency, govern
unless otherwise ordered by the Bankruptcy Court. If more than one Master
Ballot is submitted and the later Master Ballot(s) supplement(s) rather
than duplicate(s) earlier Master Ballot(s), please mark the subsequent
Master Ballot(s) with the words "additional votes" to indicate that
additional votes are reflected thereon.
7. Please note that Item 3, Item 4 and Item 5 of the Master Ballot request
that you transcribe information or attach a schedule to the Master Ballot
to provide information for each individual Participating Lender on whose
behalf you are executing the Master Ballot.
8. Each Participating Lender must vote its entire Bank Claim under either of
the Plans to either accept or reject such Plans. A Participating Lender may
not split its vote within a Class and, accordingly, any Individual Ballots
received from a Participating Lender that partially rejects and partially
accepts one of the Plans shall not be counted. Furthermore, for purposes of
computing the Master Ballot vote, each voting Participating Lender should
be deemed to have voted the full amount of its Bank Claim according to your
records.
9. If a Participating Lender signs and returns an Individual Ballot, but the
Participating Lender does not accept or reject one of the Plans, then the
Participating Lender is deemed to have accepted such Plan.
81
<PAGE>
10. You must retain all of the Individual Ballots received from the
Participating Lenders for one year from the Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
82
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED MASTER BALLOT FOR ACCEPTING OR REJECTING PLANS OF
REORGANIZATION FOR HOLDERS OF SENIOR NOTE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
Please use this Master Ballot to tabulate votes solicited regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 7.7% Notes issued in the aggregate
principal amount of $100,000,000 (Cusip #909870-AD-9) or the 9.375% Notes issued
in the aggregate principal amount of $125,000,000 (Cusip #909870-AA-5) are
included in Class 4 (Senior Note Claims) under the Debtors' Plan and Class 3
(Unsecured Claims) under the Equity Committee's Plan. HOLDERS OF SENIOR NOTE
CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have any questions on how to
properly complete this Master Ballot, please call Logan & Company, Inc. (the
"Balloting Agent") at (973) 509-3190.
THIS MASTER BALLOT IS TO BE USED ONLY FOR SUMMARIZING THE VOTES OF HOLDERS
OF SENIOR NOTE CLAIMS WHICH INCLUDE HOLDERS OF THE 7.7% NOTES ISSUED IN THE
AGGREGATE PRINCIPAL AMOUNT OF $100,000,000 (CUSIP #909870-AD-9) AND HOLDERS OF
THE 9.35% NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $125,000,000 (CUSIP
#909870-AA-5). IN ORDER FOR THESE VOTES TO BE COUNTED, THE MASTER BALLOT MUST BE
PROPERLY COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING
AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY
4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY
AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
83
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Tabulation of Votes Regarding Debtors' Plan.
$ Aggregate Principal Amount of Notes Accepting the Plan
---------------------
Aggregate Number of Noteholders Accepting the Plan
----------------------
$ Aggregate Principal Amount of Notes Rejecting the Plan
---------------------
Aggregate Number of Noteholders Rejecting the Plan
----------------------
ITEM 2. Tabulation of Votes Regarding Equity Committee's Plan.
$ Aggregate Principal Amount of Notes Accepting the Plan
---------------------
Aggregate Number of Noteholders Accepting the Plan
----------------------
$ Aggregate Principal Amount of Notes Rejecting the Plan
---------------------
Aggregate Number of Noteholders Rejecting the Plan
----------------------
ITEM 3. Noteholder Information. The undersigned certifies that the schedule
set forth below is an accurate listing of the noteholders that have delivered
voting instructions to the undersigned voting to accept or reject the respective
Plans. (Please complete the Beneficial Owner Summary schedule set forth below.
Attach additional schedules as needed.)
BENEFICIAL OWNER SUMMARY REGARDING DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting Plan Or Amount of Notes Rejecting Plan
-------------------- ------------------------------ ------------------------------
<S> <C> <C>
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
</TABLE>
BENEFICIAL OWNER SUMMARY REGARDING EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting Plan Or Amount of Notes Rejecting Plan
-------------------- ------------------------------ ------------------------------
<S> <C> <C>
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
</TABLE>
ITEM 4. Certification As to Transcription of Information from Item 4 As to
Other Senior Note Claims Voted by Beneficial Owners. The undersigned certifies
that the undersigned has transcribed in the
84
<PAGE>
following table the information, if any, provided by beneficial owners in Item 4
of the Senior Note Claim Ballots identifying any other Senior Notes for which
such beneficial owners have submitted other Ballots:
<TABLE>
<CAPTION>
Your Customer Account Customer Account Name of Registered Holder Principal Amount of
No. For Each Beneficial No. (Transcribe or Nominee Holder Other Senior Notes
Owner Who Completedfrom Item 4 of the (Transcribe from Item 4 Voted (Transcribe from
Item 4 of the Senior Senior Note Ballot) of Senior Note Ballot) Item 4 of Senior Note Ballot)
Note Ballot
-------------------- ------------------- ---------------------- -----------------------------
<S> <C> <C> <C>
-------------------- ------------------- ---------------------- -----------------------------
-------------------- ------------------- ---------------------- -----------------------------
-------------------- ------------------- ---------------------- -----------------------------
</TABLE>
ITEM 5. Convenience Claim Election Under Equity Committee Plan. To the
extent that any Beneficial Owners elected Convenience Claims Treatment Under the
Equity Committee's Plan, please summarize such elections below. In this regard,
the undersigned certifies that the schedule set forth below is an accurate
listing of the convenience claim elections indicated by the Beneficial Owners
who delivered voting instructions to the undersigned electing to reduce their
claim to $1,000 and to have such claim receive treatment under Class 5
(Convenience Claims) under the Equity Committee's Plan. (Please complete the
Beneficial Owner Summary Regarding Convenience Claim Elections schedule set
forth below. Attach additional schedules as needed.)
BENEFICIAL OWNER SUMMARY REGARDING CONVENIENCE CLAIM ELECTIONS
UNDER EQUITY COMMITTEE'S PLAN
Customer Account No. Amount of Senior Note Claim to be Reduced to $1,000
-------------------- ---------------------------------------------------
-------------------- ---------------------------------------------------
-------------------- ---------------------------------------------------
-------------------- ---------------------------------------------------
-------------------- ---------------------------------------------------
85
<PAGE>
ITEM 6. Preference of Plans. To the extent that a Beneficial Owner voted in
favor of both the Debtors' Plan and the Equity Committee's Plan and to the
extent that such Beneficial Owner indicated a preference between the two Plans,
please summarize such preferences below. In this regard, the undersigned
certifies that the schedule set forth below is an accurate listing of the
preferences indicated by the Beneficial Owners who delivered voting instructions
to the undersigned voting to accept both Plans and indicating a preference
between the two Plans. (Please complete the Beneficial Owner Summary Indicating
Preferences schedule set forth below. Attach additional schedules as needed.)
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount Accepting and Indicating Preference for Debtors' Plan
-------------------- ------------------------------------------------------------
<S> <C>
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
</TABLE>
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount Accepting and Indicating Preference for Equity's Plan
-------------------- ------------------------------------------------------------
<S> <C>
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
-------------------- ------------------------------------------------------------
</TABLE>
86
<PAGE>
ITEM 7. Acknowledgements and Certification. By signing this Master Ballot,
the undersigned certifies (i) that each of the Beneficial Owners whose votes are
being transmitted by this Master Ballot has been provided with a copy of the
Disclosure Statement accompanying the Debtors' Plan, including all exhibits
thereto, and the Disclosure Statement accompanying the Equity Committee's Plan,
including all exhibits thereto, (ii) that the aggregate noteholder voting and
preferences set forth above in Items 1-6 accurately reflect voting instructions
received by the undersigned from the noteholders, and (iii) that the Ballot
received from each noteholder will remain on file with the undersigned subject
to inspection for one year from the Voting Deadline. The undersigned further
acknowledges that the solicitation of votes is subject to all terms and
conditions set forth in the respective Disclosure Statements and Plans.
Print or Type Name of Nominee Owner:
--------------------------------------------
Federal Tax I.D. No. Nominee Owner:
---------------------------------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Participant Number:
-------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
87
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING MASTER BALLOT FOR HOLDERS OF SENIOR NOTE CLAIMS
1. This Master Ballot is submitted to you in connection with the solicitation
of the Senior Noteholders' votes to accept or reject (a) the Debtors' Plan,
which is described in the Disclosure Statement in support of the Debtors'
Plan, and (b) the Equity Committee's Plan, which is described in the
Disclosure Statement in support of the Equity Committee's Plan`. HOLDERS OF
SENIOR NOTE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT
BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. However, only
one Plan may be confirmed by the Bankruptcy Court. PLEASE READ THE PLANS
AND THE DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE BALLOT.
Unless otherwise defined, all capitalized terms used herein shall have the
meaning ascribed to such terms in the Debtors' Plan.
2. This Master Ballot is to be used by dealers, brokers, commercial banks,
trust companies, or other nominees of Beneficial Owners of the 7.7% Notes
issued in the aggregate principal amount of $100,000,000 (CUSIP
#909870-AD-9) and the 9.35% Notes issued in the aggregate principal amount
of $125,000,000 (CUSIP #909870-AA-5).
3 The Master Ballot must be completed, signed and returned so that it is
received by the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline"). Deliveries of
Master Ballots by mail, hand delivery or overnight courier to the Balloting
Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
In addition, Master Ballots may be submitted by facsimile; provided,
however, that originals must be provided within forty-eight hours. Master
Ballots submitted by facsimile should be faxed to the attention of Logan &
Company, Inc. at (973) 509-3191.
4. The Master Ballot is not a letter of transmittal and may not be used for
any purpose other than to transmit votes to accept or reject the Debtors'
Plan and the Equity Committee's Plan. Noteholders should not surrender
their Notes at this time. The Balloting Agent will not accept delivery of
any Notes transmitted together with a Master Ballot.
5. With respect to any Individual Ballots returned to you by a Beneficial
Owner, you must complete the Master Ballot, return it to the Balloting
Agent, and retain the Individual Ballots for one year from the Voting
Deadline.
6. Multiple Master Ballots may be completed and delivered to the Balloting
Agent. Votes reflected by multiple Master Ballots will be counted except to
the extent that they are duplicative of other Master Ballots. If two or
more Master Ballots are inconsistent, the last Master Ballot received prior
to the Voting Deadline will, to the extent of such inconsistency, govern
unless otherwise ordered by the Bankruptcy Court. If more than one Master
Ballot is submitted and the later Master Ballot(s) supplement(s) rather
than duplicate(s) earlier Master Ballot(s), please mark the subsequent
Master Ballot(s) with the words "additional votes" to indicate that
additional votes are reflected thereon.
7. Please note that Item 3, Item 4, Item 5 and Item 6 of the Master Ballot
request that you transcribe information or attach a schedule to the Master
Ballot to provide information for each individual Beneficial Owner on whose
behalf you are executing the Master Ballot.
8. To identify Beneficial Owners in Item 3, Item 4, Item 5 and Item 6 without
disclosing their names, please use the customer account assigned by you to
each Beneficial Owner. In the event that a single customer has more than
one account, only list that customer once in the schedule requested by Item
3, Item 4, Item 5 and Item 6.
88
<PAGE>
9. Each Beneficial Owner must vote its entire Senior Note Claim under either
of the Plans to either accept or reject such Plans. A Beneficial Owner may
not split its vote within a Class and, accordingly, any Individual Ballots
received from a Beneficial Owner that partially rejects and partially
accepts one of the Plans shall not be counted. Furthermore, for purposes of
computing the Master Ballot vote, each voting Beneficial Owner should be
deemed to have voted the full amount of its Senior Note Claim according to
your records.
10. If a Beneficial Owner signs and returns an Individual Ballot, but the
Beneficial Owner does not accept or reject one of the Plans, then the
Beneficial Owner is deemed to have accepted such Plan.
11. You must retain all of the Individual Ballots received from the Beneficial
Owners for one year from the Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
89
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED MASTER BALLOT FOR ACCEPTING OR REJECTING PLANS OF
REORGANIZATION FOR HOLDERS OF SUBORDINATED DEBENTURE CLAIMS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
Please use this Master Ballot to tabulate votes solicited regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Claims arising from the 8.375% Notes issued in the
aggregate principal amount of $150,000,000 (Cusip #909870-AC-1) are included in
Class 7 (Subordinated Debenture Claims) under the Debtors' Plan and Class 6A
(Subordinated Debenture Claims) under the Equity Committee's Plan. HOLDERS OF
SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have
any questions on how to properly complete this Master Ballot, please call Logan
& Company, Inc. (the "Balloting Agent") at (973) 509-3190.
THIS MASTER BALLOT IS TO BE USED ONLY FOR SUMMARIZING THE VOTES OF HOLDERS
OF 8.375% NOTES ISSUED IN THE AGGREGATE PRINCIPAL AMOUNT OF $150,000,000 (CUSIP
#909870-AC-1), IN ORDER FOR THESE VOTES TO BE COUNTED, THE MASTER BALLOT MUST BE
PROPERLY COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY THE BALLOTING
AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ 07043, BY
4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS EXTENDED BY
AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING DEADLINE").
90
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Tabulation of Votes Regarding Debtors' Plan.
$ Aggregate Principal Amount of Notes Accepting the Plan
---------------------
Aggregate Number of Noteholders Accepting the Plan
---------------------
$ Aggregate Principal Amount of Notes Rejecting the Plan
---------------------
Aggregate Number of Noteholders Rejecting the Plan
----------------------
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4 AND 7
DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO HOLDERS OF
ALLOWED SUBORDINATED DEBENTURE CLAIMS.
ITEM 2. Tabulation of Votes Regarding Equity Committee's Plan.
$ Aggregate Principal Amount of Notes Accepting the Plan
---------------------
Aggregate Number of Noteholders Accepting the Plan
---------------------
$ Aggregate Principal Amount of Notes Rejecting the Plan
---------------------
Aggregate Number of Noteholders Rejecting the Plan
----------------------
ITEM 3. Noteholder Information. The undersigned certifies that the schedule
set forth below is an accurate listing of the noteholders that have delivered
voting instructions to the undersigned voting to accept or reject the Plans.
(Please complete the Beneficial Owner Summary schedule set forth below. Attach
additional schedules as needed.)
BENEFICIAL OWNER SUMMARY REGARDING DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting Plan Or Amount of Notes Rejecting Plan
-------------------- ------------------------------ ------------------------------
<S> <C> <C>
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
</TABLE>
91
<PAGE>
BENEFICIAL OWNER SUMMARY REGARDING EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting Plan Or Amount of Notes Rejecting Plan
-------------------- ------------------------------ ------------------------------
<S> <C> <C>
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
-------------------- ------------------------------ ------------------------------
</TABLE>
ITEM 4. Certification As to Transcription of Information from Item 4 As to
Other Subordinated Debenture Claims Voted by Beneficial Owners. The undersigned
certifies that the undersigned has transcribed in the following table the
information, if any, provided by beneficial owners in Item 4 of the Subordinated
Debenture Claim Ballots identifying any other Subordinated Debentures for which
such beneficial owners have submitted other Ballots:
<TABLE>
<CAPTION>
Your Customer Account Customer Account Name of Registered Holder Principal Amount of
No. For Each Beneficial No. (Transcribe or Nominee Holder Other Sub. Debentures
Owner Who Completedfrom Item 4 of the (Transcribe from Item 4 Voted (Transcribe from
Item 4 of the Sub. Sub. Debenture of Sub. Debenture Ballot) Item 4 of Sub. Debenture
Debenture Ballot Ballot) Ballot)
---------------------- ---------------------- ----------------------------- --------------------------
<S> <C> <C> <C>
---------------------- ---------------------- ----------------------------- --------------------------
---------------------- ---------------------- ----------------------------- --------------------------
---------------------- ---------------------- ----------------------------- --------------------------
---------------------- ---------------------- ----------------------------- --------------------------
</TABLE>
92
<PAGE>
ITEM 5. Preference of Plans. To the extent that a holder of a Subordinated
Debenture Claim voted in favor of both the Debtors' Plan and the Equity
Committee's Plan and to the extent that such holder of a Subordinated Debenture
Claim indicated a preference between the two Plans, please summarize such
preferences below. In this regard, the undersigned certifies that the schedule
set forth below is an accurate listing of the preferences indicated by the
noteholders who delivered voting instructions to the undersigned voting to
accept both Plans and indicating a preference between the two Plans. (Please
complete the Beneficial Holder Summary Indicating Preferences schedule set forth
below. Attach additional schedules as needed.)
BENEFICIAL HOLDER SUMMARY INDICATING PREFERENCE FOR DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting and Indicating Preference for Debtors' Plan
-------------------- ---------------------------------------------------------------------
<S> <C>
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
</TABLE>
BENEFICIAL HOLDER SUMMARY INDICATING PREFERENCE FOR EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. Amount of Notes Accepting and Indicating Preference for Equity's Plan
-------------------- ---------------------------------------------------------------------
<S> <C>
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
-------------------- ---------------------------------------------------------------------
</TABLE>
93
<PAGE>
ITEM 6. Acknowledgements and Certification. By signing this Master Ballot,
the undersigned certifies (i) that each of the Beneficial Owners whose votes are
being transmitted by this Master Ballot has been provided with a copy of the
Disclosure Statements accompanying the Debtors' Plan and the Equity Committee's
Plan, including all exhibits thereto, (ii) that the aggregate noteholder voting
and preferences set forth above in Items 1-5 accurately reflect voting
instructions received by the undersigned from the noteholders, and (iii) that
the Ballot received from each noteholder will remain on file with the
undersigned subject to inspection for one year from the Voting Deadline. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Nominee Owner:
--------------------------------------------
Federal Tax I.D. No. Nominee Owner:
---------------------------------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Participant Number:
-------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
94
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING MASTER BALLOT FOR HOLDERS OF SUBORDINATED DEBENTURE CLAIMS
1. This Master Ballot is submitted to you in connection with the solicitation
of the Subordinated Debentureholders' votes to accept or reject the
Debtors' Plan, which is described in the Disclosure Statement in support of
the Debtors' Plan, and the Equity Committee's Plan, which is described in
the Disclosure Statement in support of the Equity Committee's Plan. HOLDERS
OF SUBORDINATED DEBENTURE CLAIMS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS,
TO REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE
BALLOT. Unless otherwise defined, all capitalized terms used herein shall
have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4
AND 7 DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL BE MADE TO
HOLDERS OF ALLOWED SUBORDINATED DEBENTURE CLAIMS.
2. This Master Ballot is to be used by dealers, brokers, commercial banks,
trust companies, or other nominees of Beneficial Owners of the 8.375% Notes
issued in the aggregate principal amount of $150,000,000 (CUSIP
#909870-AC-1).
3 The Master Ballot must be completed, signed and returned so that it is
received by the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline"). Deliveries of
Master Ballots by mail, hand delivery or overnight courier to the Balloting
Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
In addition, Master Ballots may be submitted by facsimile; provided,
however, that originals must be provided within forty-eight hours. Master
Ballots submitted by facsimile should be faxed to the attention of Logan &
Company, Inc. at (973) 509-3191.
4. The Master Ballot is not a letter of transmittal and may not be used for
any purpose other than to transmit votes to accept or reject the Debtors'
Plan and the Equity Committee's Plan. Noteholders should not surrender
their Notes at this time. The Balloting Agent will not accept delivery of
any Notes transmitted together with a Master Ballot.
5. With respect to any Individual Ballots returned to you by a Beneficial
Owner, you must complete the Master Ballot, return it to the Balloting
Agent, and retain the Individual Ballots for one year from the Voting
Deadline.
6. Multiple Master Ballots may be completed and delivered to the Balloting
Agent. Votes reflected by multiple Master Ballots will be counted except to
the extent that they are duplicative of other Master Ballots. If two or
more Master Ballots are inconsistent, the last Master Ballot received prior
to the Voting Deadline will, to the extent of such inconsistency, govern
unless otherwise ordered by the Bankruptcy Court. If more than one Master
Ballot is submitted and the later Master Ballot(s) supplement(s) rather
than duplicate(s) earlier Master Ballot(s), please mark the subsequent
Master Ballot(s) with the words "additional votes" to indicate that
additional votes are reflected thereon.
7. Please note that Item 3, Item 4 and Item 5 of the Master Ballot request
that you transcribe information or attach a schedule to the Master Ballot
to provide information for each individual Beneficial Owner on whose behalf
you are executing the Master Ballot.
95
<PAGE>
8. To identify Beneficial Owners in Item 3, Item 4 and Item 5 without
disclosing their names, please use the customer account assigned by you to
each Beneficial Owner. In the event that a single customer has more than
one account, only list that customer once in the schedule requested by Item
3, Item 4 and Item 5.
9. Each Beneficial Owner must vote its entire Subordinated Debenture Claim to
either accept or reject the Debtors' Plan and to either accept or reject
the Equity Committee's Plan. A Beneficial Owner may not split its vote
within a Class and, accordingly, any Individual Ballots received from a
Beneficial Owner that partially rejects and partially accepts one of the
Plans shall not be counted. Furthermore, for purposes of computing the
Master Ballot vote, each voting Beneficial Owner should be deemed to have
voted the full amount of its Subordinated Debenture Claim according to your
records.
10. If a Beneficial Owner signs and returns an Individual Ballot, but the
Beneficial Owner does not accept or reject either the Debtors' Plan or the
Equity Committee's Plan, then the Beneficial Owner is deemed to have
accepted such Plan.
11. You must retain all of the Individual Ballots received from the Beneficial
Owners for one year from the Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
96
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED MASTER BALLOT FOR ACCEPTING OR REJECTING PLANS OF
REORGANIZATION FOR HOLDERS PRIDE EQUITY INTERESTS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
Please use this Master Ballot to tabulate votes solicited regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of Preferred Redeemable Increased Dividend Equity Securities are included
in Class 9 (Pride Equity Interests) under the Debtors' Plan and Class 8 (Pride
Equity Interests) under the Equity Committee's Plan. HOLDERS OF PRIDE EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO REJECT BOTH PLANS, OR TO
ACCEPT ONE PLAN AND REJECT THE OTHER. If you have any questions on how to
properly complete this Master Ballot, please call Logan & Company, Inc. (the
"Balloting Agent") at (973) 509-3190.
THIS MASTER BALLOT IS TO BE USED ONLY FOR SUMMARIZING THE VOTES OF HOLDERS
OF PRIDE EQUITY INTERESTS. IN ORDER FOR THESE VOTES TO BE COUNTED, THE MASTER
BALLOT MUST BE PROPERLY COMPLETED, SIGNED AND RETURNED SO THAT IT IS RECEIVED BY
THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY ROAD, UPPER MONTCLAIR, NJ
07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000, UNLESS SUCH TIME IS
EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY COMMITTEE (THE "VOTING
DEADLINE").
97
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Tabulation of Votes Regarding Debtors' Plan.
Aggregate Number of PRIDE Securities Accepting the Plan
----------------------
Aggregate Number of Security Holders Accepting the Plan
----------------------
Aggregate Number of PRIDE Securities Rejecting the Plan
----------------------
Aggregate Number of Security Holders Rejecting the Plan
----------------------
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY KIND SHALL
BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
ITEM 2. Tabulation of Votes Regarding Equity Committee's Plan.
Aggregate Number of PRIDE Securities Accepting the Plan
----------------------
Aggregate Number of Security Holders Accepting the Plan
----------------------
Aggregate Number of PRIDE Securities Rejecting the Plan
----------------------
Aggregate Number of Security Holders Rejecting the Plan
----------------------
ITEM 3. Security Holder Information. The undersigned certifies that the
schedule set forth below is an accurate listing of the Security Holders that
have delivered voting instructions to the undersigned voting to accept or reject
the Plans. (Please complete the Beneficial Owner Summary schedule set forth
below. Attach additional schedules as needed.)
BENEFICIAL OWNER SUMMARY REGARDING DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting Plan Or No. of Securities Rejecting Plan
-------------------- -------------------------------- --------------------------------
<S> <C> <C>
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
</TABLE>
98
<PAGE>
BENEFICIAL OWNER SUMMARY REGARDING EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting Plan Or No. of Securities Rejecting Plan
-------------------- -------------------------------- --------------------------------
<S> <C> <C>
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
</TABLE>
ITEM 4. Certification As to Transcription of Information from Item 4 As to
Other Pride Equity Interests Voted by Beneficial Owners. The undersigned
certifies that the undersigned has transcribed in the following table the
information, if any, provided by beneficial owners in Item 4 of the Pride Equity
Interest Ballots identifying any other Pride Equity Interests for which such
beneficial owners have submitted other Ballots:
<TABLE>
<CAPTION>
Your Customer Account Customer Account Name of Registered Holder Number of Shares of
No. For Each Beneficial No. (Transcribe or Nominee Holder Other Pride Equity Interests
Owner Who Completed from Item 4 of the (Transcribe from Item 4 Voted (Transcribe from
Item 4 of the Pride Pride Equity Interest of Pride Equity Interest Item 4 of Pride Equity
Equity Interest Ballot Ballot) Ballot) Interest Ballot)
---------------------- --------------------- ------------------------- -----------------------------
<S> <C> <C> <C>
---------------------- --------------------- ------------------------- -----------------------------
---------------------- --------------------- ------------------------- -----------------------------
---------------------- --------------------- ------------------------- -----------------------------
---------------------- --------------------- ------------------------- -----------------------------
</TABLE>
99
<PAGE>
ITEM 5. Preference of Plans. To the extent that a beneficial owner of a
Pride Equity Interest voted in favor of both the Debtors' Plan and the Equity
Committee's Plan and to the extent that such beneficial owner of a Pride Equity
Interest indicated a preference between the two Plans, please summarize such
preferences below. In this regard, the undersigned certifies that the schedule
set forth below is an accurate listing of the preferences indicated by the
beneficial owners of Pride Equity Interests who delivered voting instructions to
the undersigned voting to accept both Plans and indicating a preference between
the two Plans. (Please complete the Beneficial Owner Summary Indicating
Preferences schedule set forth below. Attach additional schedules as needed.)
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting and Indicating Preference for Debtors' Plan
-------------------- -----------------------------------------------------------------------
<S> <C>
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
</TABLE>
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting and Indicating Preference for Equity's Plan
-------------------- -----------------------------------------------------------------------
<S> <C>
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
</TABLE>
100
<PAGE>
ITEM 6. Acknowledgements and Certification. By signing this Master Ballot,
the undersigned certifies (i) that each of the Beneficial Owners whose votes are
being transmitted by this Master Ballot has been provided with a copy of the
Disclosure Statements accompanying the Debtors' Plan and the Equity Committee's
Plan, including all exhibits thereto, (ii) that the aggregate security holder
voting and preferences set forth above in Items 1-5 accurately reflect voting
instructions received by the undersigned from the security holders, and (iii)
that the Ballot received from each security holder will remain on file with the
undersigned subject to inspection for one year from the Voting Deadline. The
undersigned further acknowledges that the solicitation of votes is subject to
all terms and conditions set forth in the respective Disclosure Statements and
Plans.
Print or Type Name of Nominee Owner:
--------------------------------------------
Federal Tax I.D. No. Nominee Owner:
---------------------------------------------
Signature:
----------------------------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
--------------------------------
Name of Institution:
------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, and Zip Code:
------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Participant Number:
-------------------------------------------------------------
Date Completed:
-----------------------------------------------------------------
101
<PAGE>
VOTING INSTRUCTIONS
FOR COMPLETING MASTER BALLOT FOR HOLDERS OF PRIDE EQUITY INTERESTS
1. This Master Ballot is submitted to you in connection with the solicitation
of the Pride Equity Interest Holders' votes to accept or reject the
Debtors' Plan, which is described in the Disclosure Statement in support of
the Debtors' Plan, and the Equity Committee's Plan, which is described in
the Disclosure Statement in support of the Equity Committee's Plan. HOLDERS
OF PRIDE EQUITY INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, TO
REJECT BOTH PLANS, OR TO ACCEPT ONE PLAN AND REJECT THE OTHER PLAN.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING THE
BALLOT. Unless otherwise defined, all capitalized terms used herein shall
have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4,
5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTIONS OF ANY
KIND SHALL BE MADE TO HOLDERS OF PRIDE EQUITY INTERESTS.
2. This Master Ballot is to be used by dealers, brokers, commercial banks,
trust companies, or other nominees of Beneficial Owners of the issued and
outstanding shares of Preferred Redeemable Increased Dividend Equity
Securities.
3 The Master Ballot must be completed, signed and returned so that it is
received by the Balloting Agent not later than 4:00 p.m. Eastern Time, on
August 10, 2000, unless such time is extended by agreement between the
Debtors and the Equity Committee (the "Voting Deadline"). Deliveries of
Master Ballots by mail, hand delivery or overnight courier to the Balloting
Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
In addition, Master Ballots may be submitted by facsimile; provided,
however, that originals must be provided within forty-eight hours. Master
Ballots submitted by facsimile should be faxed to the attention of Logan &
Company, Inc. at (973) 509-3191.
4. The Master Ballot is not a letter of transmittal and may not be used for
any purpose other than to transmit votes to accept or reject the Debtors'
Plan and the Equity Committee's Plan. Security holders should not surrender
their securities at this time. The Balloting Agent will not accept delivery
of any securities transmitted together with a Master Ballot.
5. With respect to any Individual Ballots returned to you by a Beneficial
Owner, you must complete the Master Ballot, return it to the Balloting
Agent, and retain the Individual Ballots for one year from the Voting
Deadline.
6. Multiple Master Ballots may be completed and delivered to the Balloting
Agent. Votes reflected by multiple Master Ballots will be counted except to
the extent that they are duplicative of other Master Ballots. If two or
more Master Ballots are inconsistent, the last Master Ballot received prior
to the Voting Deadline will, to the extent of such inconsistency, govern
unless otherwise ordered by the Bankruptcy Court. If more than one Master
Ballot is submitted and the later Master Ballot(s) supplement(s) rather
than duplicate(s) earlier Master Ballot(s), please mark the subsequent
Master Ballot(s) with the words "additional votes" to indicate that
additional votes are reflected thereon.
7. Please note that Item 3, Item 4 and Item 5 of the Master Ballot request
that you transcribe information or attach a schedule to the Master Ballot
to provide information for each individual Beneficial Owner on whose behalf
you are executing the Master Ballot.
102
<PAGE>
8. To identify Beneficial Owners in Item 3, Item 4 and Item 5 without
disclosing their names, please use the customer account assigned by you to
each Beneficial Owner. In the event that a single customer has more than
one account, only list that customer once in the schedule requested by Item
3, Item 4 and Item 5.
9. Each Beneficial Owner must vote its entire Pride Equity Interest to either
accept or reject the Debtors' Plan and to either accept or reject the
Equity Committee's Plan. A Beneficial Owner may not split its vote within a
Class and, accordingly, any Individual Ballots received from a Beneficial
Owner that partially rejects and partially accepts one of the Plans shall
not be counted. Furthermore, for purposes of computing the Master Ballot
vote, each voting Beneficial Owner should be deemed to have voted the full
amount of its Pride Equity Interest according to your records.
10. If a Beneficial Owner signs and returns an Individual Ballot, but the
Beneficial Owner does not accept or reject either the Debtors' Plan or the
Equity Committee's Plan, then the Beneficial Owner is deemed to have
accepted such Plan.
11. You must retain all of the Individual Ballots received from the Beneficial
Owners for one year from the Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
103
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
CONSOLIDATED MASTER BALLOT FOR ACCEPTING OR REJECTING PLANS OF
REORGANIZATION FOR HOLDERS UNITED COMPANIES COMMON EQUITY INTERESTS
United Companies Financial Corporation and certain of its direct and
indirect subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), filed their Second Amended Plan of Reorganization (the "Debtors'
Plan") under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code"). The Official Committee of Equity Security Holders of United Companies
Financial Corporation (the "Equity Committee") also filed its Second Amended
Plan of Reorganization (the "Equity Committee's Plan").
Please use this Master Ballot to tabulate votes solicited regarding the
acceptance or rejection of the Debtors' Plan and the Equity Committee's Plan.
The Debtors' Plan and the Equity Committee's Plan incorporate different
classification schemes and provide different treatment for different classes of
claims or interests. Equity Interests represented by issued and outstanding
shares of common stock of United Companies Financial Corporation or any interest
or right to convert into such equity interest or acquire any equity interest of
the Debtors which was in existence as of the commencement of these chapter 11
cases. are included in Class 10B (United Companies Common Equity Interests)
under the Debtors' Plan and Class 9B (United Companies Common Equity Interests)
under the Equity Committee's Plan. HOLDERS OF UNITED COMPANIES COMMON EQUITY
INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS, REJECT BOTH PLANS, OR
ACCEPT ONE PLAN AND REJECT THE OTHER PLAN. If you have any questions on how to
properly complete this Master Ballot, please call Logan & Company, Inc. (the
"Balloting Agent") at (973) 509-3190.
THIS MASTER BALLOT IS TO BE USED ONLY FOR SUMMARIZING THE VOTES OF HOLDERS
OF UNITED COMPANIES COMMON EQUITY INTERESTS. IN ORDER FOR THESE VOTES TO BE
COUNTED, THE MASTER BALLOT MUST BE PROPERLY COMPLETED, SIGNED AND RETURNED SO
THAT IT IS RECEIVED BY THE BALLOTING AGENT, LOGAN & COMPANY, INC., 546 VALLEY
ROAD, UPPER MONTCLAIR, NJ 07043, BY 4:00 P.M. EASTERN TIME ON AUGUST 10, 2000,
UNLESS SUCH TIME IS EXTENDED BY AGREEMENT BETWEEN THE DEBTORS AND THE EQUITY
COMMITTEE (THE "VOTING DEADLINE").
104
<PAGE>
PLEASE COMPLETE THE FOLLOWING:
ITEM 1. Tabulation of Votes Regarding Debtors' Plan.
Aggregate Number of Shares of United Companies Common
------------------ Stock Accepting the Debtors' Plan
Aggregate Number of Holders of United Companies Common
------------------ Stock Accepting the Debtors' Plan
Aggregate Number of Shares of United Companies Common
------------------ Stock Rejecting the Debtors' Plan
Aggregate Number of Holders of Shares of United Companies
------------------ Common Stock Rejecting the Debtors' Plan
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3, 4, 5, 6,
7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTION OF ANY KIND SHALL BE
MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY INTERESTS.
ITEM 2. Tabulation of Votes Regarding Equity Committee's Plan.
Aggregate Number of Shares of United Companies Common
------------------- Stock Accepting the Equity Committee's Plan
Aggregate Number of Holders of United Companies Common
------------------- Stock Accepting the Equity Committee's Plan
Aggregate Number of Shares of United Companies Common
------------------- Stock Rejecting the Equity Committee's Plan
Aggregate Number of Holders of Shares of United Companies
------------------- Common Stock Rejecting the Equity Committee's Plan
ITEM 3. Security Holder Information. The undersigned certifies that the
schedule set forth below is an accurate listing of the Holders of United
Companies Common Stock that have delivered voting instructions to the
undersigned voting to accept or reject the Plans. (Please complete the
Beneficial Owner Summary schedule set forth below. Attach additional schedules
as needed.)
BENEFICIAL OWNER SUMMARY REGARDING DEBTORS' PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting Plan Or No. of Securities Rejecting Plan
-------------------- -------------------------------- --------------------------------
<S> <C> <C>
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
</TABLE>
105
<PAGE>
BENEFICIAL OWNER SUMMARY REGARDING EQUITY COMMITTEE'S PLAN
<TABLE>
<CAPTION>
Customer Account No. No. of Securities Accepting Plan Or No. of Securities Rejecting Plan
-------------------- -------------------------------- --------------------------------
<S> <C> <C>
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- --------------------------------
-------------------- -------------------------------- the Bankruptcy
Court.
ITEM 4. CERTIFICATION AS TO TRANSCRIPTION OF INFORMATION FROM
ITEM 4 AS TO OTHER UNITED COMPANIES COMMON EQUITY INTERESTS VOTED BY BENEFICIAL
OWNERS. The undersigned certifies that the undersigned has transcribed in the
following table the information, if any, provided by beneficial owners in Item 4
of the United Companies Common Equity Interest Ballots identifying any other
United Companies Equity Interests for which such beneficial owners have
submitted other Ballots:
Your Customer Account Customer Account Name of Registered Holder Number of Shares of Other
No. For Each Beneficial No. (Transcribe or Nominee Holder United Co. Equity Interests
Owner Who Completed from Item 4 of the (Transcribe from Item 4 Voted (Transcribe from
Item 4 of the United Co. United Co. Equity of United Co. Equity Item 4 of United Co. Equity
Equity Interest Ballot Interest Ballot) Interest Ballot) Interest Ballot)
--------------------- ---------------- ------------------------- -------------------------
<S> <C> <C> <C>
--------------------- ---------------- ------------------------- -------------------------
--------------------- ---------------- ------------------------- -------------------------
--------------------- ---------------- ------------------------- -------------------------
--------------------- ---------------- ------------------------- -------------------------
</TABLE>
106
<PAGE>
ITEM 5. PREFERENCE OF PLANS. To the extent that a beneficial
owner of United Companies Common Equity Interests voted in favor of both the
Debtors' Plan and the Equity Committee's Plan and to the extent that such
beneficial owner of United Companies Common Equity Interests indicated a
preference between the two Plans, please summarize such preferences below. In
this regard, the undersigned certifies that the schedule set forth below is an
accurate listing of the preferences indicated by the beneficial owners of United
Companies Common Equity Interests who delivered voting instructions to the
undersigned voting to accept both Plans and indicating a preference between the
two Plans. (Please complete the Beneficial Owner Summary Indicating Preferences
schedule set forth below. Attach additional schedules as needed.)
<TABLE>
<CAPTION>
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR DEBTORS' PLAN
Customer Account No. No. of Securities Accepting and Indicating Preference for Debtors' Plan
-------------------- -----------------------------------------------------------------------
<S> <C>
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
BENEFICIAL OWNER SUMMARY INDICATING PREFERENCE FOR EQUITY COMMITTEE'S PLAN
Customer Account No. No. of Securities Accepting and Indicating Preference for Equity's Plan
-------------------- -----------------------------------------------------------------------
<S> <C>
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
-------------------- -----------------------------------------------------------------------
</TABLE>
107
<PAGE>
ITEM 6. ACKNOWLEDGEMENTS AND CERTIFICATION. By signing this
Master Ballot, the undersigned certifies (i) that each of the Beneficial Owners
whose votes are being transmitted by this Master Ballot has been provided with a
copy of the Disclosure Statements accompanying the Debtors' Plan and the Equity
Committee's Plan, including all exhibits thereto, (ii) that the aggregate
security holder voting and preferences set forth above in Items 1-5 accurately
reflect voting instructions received by the undersigned from the security
holders, and (iii) that the Ballot received from each security holder will
remain on file with the undersigned subject to inspection for one year from the
Voting Deadline. The undersigned further acknowledges that the solicitation of
votes is subject to all terms and conditions set forth in the respective
Disclosure Statements and Plans.
Print or Type Name of Nominee Owner:
---------------------------
Federal Tax I.D. No. Nominee Owner:
----------------------------
Signature:
-----------------------------------------------------
If by Authorized Agent, Name and Title of Agent:
---------------
Name of Institution:
-------------------------------------------
Street Address:
------------------------------------------------
City, State, and Zip Code:
-------------------------------------
Telephone Number:
----------------------------------------------
Participant Number:
--------------------------------------------
Date Completed:
------------------------------------------------
108
<PAGE>
VOTING INSTRUCTIONS FOR COMPLETING MASTER BALLOT FOR HOLDERS OF UNITED
COMPANIES COMMON EQUITY INTERESTS
1. This Master Ballot is submitted to you in connection with the
solicitation of the United Companies Common Equity Interest Holders'
votes to accept or reject the Debtors' Plan, which is described in the
Disclosure Statement in support of the Debtors' Plan, and the Equity
Committee's Plan, which is described in the Disclosure Statement in
support of the Equity Committee's Plan. HOLDERS OF UNITED COMPANIES
COMMON EQUITY INTERESTS ARE ENTITLED TO VOTE TO ACCEPT BOTH PLANS,
REJECT BOTH PLANS, OR ACCEPT ONE PLAN AND REJECT THE OTHER PLAN.
However, only one Plan may be confirmed by the Bankruptcy Court. PLEASE
READ THE PLANS AND DISCLOSURE STATEMENTS CAREFULLY BEFORE COMPLETING
THE BALLOT. Unless otherwise defined, all capitalized terms used herein
shall have the meaning ascribed to such terms in the Debtors' Plan.
WITH RESPECT TO THE DEBTORS' PLAN, IN THE EVENT THAT ANY OF CLASSES 3,
4, 5, 6, 7, 8, 9, 10A OR 10B DO NOT ACCEPT THE PLAN, NO DISTRIBUTION OF
ANY KIND SHALL BE MADE TO HOLDERS OF UNITED COMPANIES COMMON EQUITY
INTERESTS.
2. This Master Ballot is to be used by dealers, brokers, commercial banks,
trust companies, or other nominees of Beneficial Owners of the issued
and outstanding shares of United Companies Financial Corporation.
3 The Master Ballot must be completed, signed and returned so that it is
received by the Balloting Agent not later than 4:00 p.m. Eastern Time,
on August 10, 2000, unless such time is extended by agreement between
the Debtors and the Equity Committee (the "Voting Deadline").
Deliveries of Master Ballots by mail, hand delivery or overnight
courier to the Balloting Agent should be sent to:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
In addition, Master Ballots may be submitted by facsimile; provided,
however, that originals must be provided within forty-eight hours.
Master Ballots submitted by facsimile should be faxed to the attention
of Logan & Company, Inc. at (973) 509-3191.
4. The Master Ballot is not a letter of transmittal and may not be used
for any purpose other than to transmit votes to accept or reject the
Debtors' Plan and the Equity Committee's Plan. Security holders should
not surrender their securities at this time. The Balloting Agent will
not accept delivery of any securities transmitted together with a
Master Ballot.
5. With respect to any Individual Ballots returned to you by a Beneficial
Owner, you must complete the Master Ballot, return it to the Balloting
Agent, and retain the Individual Ballots for one year from the Voting
Deadline.
6. Multiple Master Ballots may be completed and delivered to the Balloting
Agent. Votes reflected by multiple Master Ballots will be counted
except to the extent that they are duplicative of other Master Ballots.
If two or more Master Ballots are inconsistent, the last Master Ballot
received prior to the Voting Deadline will, to the extent of such
inconsistency, govern unless otherwise ordered by the Bankruptcy Court.
If more than one Master Ballot is submitted and the later Master
Ballot(s) supplement(s) rather than duplicate(s) earlier Master
Ballot(s), please mark the subsequent Master Ballot(s) with the words
"additional votes" to indicate that additional votes are reflected
thereon.
109
<PAGE>
7. Please note that Item 3, Item 4 and Item 5 of the Master Ballot request
that you transcribe information or attach a schedule to the Master
Ballot to provide information for each individual Beneficial Owner on
whose behalf you are executing the Master Ballot.
8. To identify Beneficial Owners in Item 3, Item 4 and Item 5 without
disclosing their names, please use the customer account assigned by you
to each Beneficial Owner. In the event that a single customer has more
than one account, only list that customer once in the schedule
requested by Item 3, Item 4 and Item 5.
9. Each Beneficial Owner must vote its entire United Companies Common
Equity Interest to either accept or reject the Debtors' Plan and to
either accept or reject the Equity Committee's Plan. A Beneficial Owner
may not split its vote within a Class and, accordingly, any Individual
Ballots received from a Beneficial Owner that partially rejects and
partially accepts one of the Plans shall not be counted. Furthermore,
for purposes of computing the Master Ballot vote, each voting
Beneficial Owner should be deemed to have voted the full amount of its
United Companies Common Equity Interest according to your records.
10. If a Beneficial Owner signs and returns an Individual Ballot, but the
Beneficial Owner does not accept or reject either the Debtors' Plan or
the Equity Committee's Plan, then the Beneficial Owner is deemed to
have accepted such Plan.
11. You must retain all of the Individual Ballots received from the
Beneficial Owners for one year from the Voting Deadline.
IF YOU HAVE ANY QUESTIONS REGARDING THE BALLOT, OR IF YOU DID NOT RECEIVE A
RETURN ENVELOPE WITH YOUR BALLOT, OR IF YOU DID NOT RECEIVE A COPY OF ONE OF THE
DISCLOSURE STATEMENTS OR PLANS, OR IF YOU NEED ADDITIONAL COPIES OF THE BALLOT
OR OTHER ENCLOSED MATERIALS, PLEASE CONTACT LOGAN & COMPANY, INC. AT (973)
509-3190.
110
<PAGE>
EXHIBIT E
111
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
|
|
-----------------------------------------------
NOTICE OF ORDER (I) APPROVING THE DEBTORS' DISCLOSURE STATEMENT
AND THE EQUITY COMMITTEE'S DISCLOSURE STATEMENT, (II)
ESTABLISHING RECORD HOLDER DATE, (III) APPROVING SOLICITATION
PROCEDURES, FORM OF BALLOTS, AND MANNER OF NOTICE, AND (IV)
FIXING THE DATE, TIME AND PLACE FOR THE CONFIRMATION HEARING AND
THE DEADLINE FOR FILING OBJECTIONS THERETO
TO ALL CREDITORS, EQUITY INTEREST HOLDERS AND PARTIES IN INTEREST:
PLEASE TAKE NOTICE THAT:
1. On July 10, 2000, the United States Bankruptcy Court for the District
of Delaware (the "Bankruptcy Court"), under chapter 11 of title 11 of
the United States Code (the "Bankruptcy Code"), approved the Disclosure
Statement (the "Debtors' Disclosure Statement") filed by United
Companies Financial Corporation and certain of its direct and indirect
subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), as containing adequate information within the meaning of
section 1125 of the Bankruptcy Code. Unless otherwise defined, all
capitalized terms used herein shall have the meaning assigned to such
terms in the Debtors' Plan (as defined below) or the order approving
the Debtors' Disclosure Statement.
On July 10, 2000, the Bankruptcy Court also approved the Disclosure
Statement (the "Equity Committee's Disclosure Statement") filed by the
statutory committee of equity security holders ("Equity Committee"), as
containing adequate information within the meaning of section 1125 of
the Bankruptcy Code.
2. All persons and entities entitled to vote on the Second Amended Plan of
Reorganization proposed by the Debtors (the "Debtors' Plan") and/or the
Second Amended Plan of Reorganization proposed by the Equity Committee
(the "Equity Committee's Plan") shall deliver their ballots by mail,
hand delivery or overnight courier no later than 4:00 p.m. Eastern Time
on August 10, 2000 (the "Voting Deadline") to the Balloting Agent at:
UNITED COMPANIES FINANCIAL CORPORATION ET AL.
Logan & Company, Inc.
546 Valley Road
Upper Montclair, NJ 07043
The Debtors and the Equity Committee have the ability to extend the
Voting Deadline by agreement. If they choose to extend the Voting
Deadline, the Debtors will provide notice of such extension through the
Dow Jones News Service.
3. For voting purposes, June 30, 2000 shall be the "Record Holder Date"
for the holders of claims and interests.
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4. Pursuant to the Debtors' Plan, holders of claims and interests in Class
3 (Bank Claims), Class 4 (Senior Note Claims), Class 5 (General
Unsecured Claims), Class 6 (Convenience Claims), Class 7 (Subordinated
Debenture Claims), Class 8 (Subordinated Penalty Claims), Class 9
(Pride Equity Interests), Class 10A (Statutorily Subordinated Claims)
and Class 10B (United Companies Common Equity Interests) are impaired
and are entitled to vote (collectively, the "Debtors' Voting Classes").
Pursuant to the Equity Committee's Plan, holders of claims and
interests in Class 3 (Unsecured Claims), Class 4 (Borrower Litigation
Claims), Class 6 (Subordinated Debenture Claims), Class 6A (Lending
Subordinated Debenture Claims), Class 7 (Subordinated Penalty Claims),
Class 8 (Pride Equity Interests), Class 9A (Statutorily Subordinated
Claims) and Class 9B (United Companies Common Equity Interests) are
impaired and are entitled to vote (collectively, the "Equity
Committee's Voting Classes").
Only the following holders of claims and interests in the Debtors'
Voting Classes and the Equity Committee's Voting Classes shall be
entitled to vote with regard to such claims or interests: (a) the
holders of scheduled claims, as of the Record Holder Date, that are
listed in the Debtors' schedules of liabilities filed with the Court
(as amended, the "Schedules") as not contingent, unliquidated, or
disputed (excluding scheduled claims that have been superseded by filed
claims), provided, however, that the assignee of a transferred and
assigned scheduled claim shall be permitted to vote such claim only if
the transfer and assignment has been approved by the Court and such
approval has been noted on the Court's docket as of the close of
business on the Record Holder Date, (b) holders of filed claims, as of
the Record Holder Date, that are the subject of a filed proof of claim
which has not been disallowed, disqualified or suspended prior to the
Record Holder Date and which is not the subject of a pending objection
on the Record Holder Date, provided, however, that the assignee of a
transferred and assigned filed claim shall be permitted to vote such
claim only if the transfer and assignment has been approved by the
Court and such approval has been noted on the Court's docket as of the
close of business on the Record Holder Date, and (c) holders of Pride
Equity Interests and United Companies Common Equity Interests as
reflected on the records of the transfer agent as of the close of
business on the Record Holder Date.
5. The Solicitation Package shall include the following:
a. a notice setting forth the time fixed for filing acceptance
and rejections of the Debtors' Plan and the Equity Committee's
Plan, the time fixed for filing objections to confirmation of
either Plan, and the date and time of the hearing on
confirmation of the Plans;
b. a copy of the Debtors' Disclosure Statement;
c. a copy of the Equity Committee's Disclosure Statement; and
d. a ballot.
6. Only First Union National Bank ("First Union") shall be entitled to
submit Master Ballots with regard to claims arising from the Debtors'
prepetition $850 million unsecured revolving credit facility. In
connection with soliciting votes from the participating lenders
("Participating Lenders") under the Credit Agreement (as such term is
defined in the Debtors' Plan), the Court hereby directs as follows:
a. First Union shall forward the Solicitation Package or copies
thereof (including a return envelope provided by and addressed
to First Union and including the Individual Ballots) to the
Participating Lenders within three (3) business days of the
receipt by First Union of the Solicitation Package;
b. the Participating Lenders shall return the Individual Ballots
to First Union;
c. First Union shall summarize the votes of the Participating
Lenders on the Master Ballots in accordance with the
instructions for the Master Ballots;
d. First Union shall return the Master Ballots to the Balloting
Agent; and
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e. the Debtors shall provide First Union with sufficient copies
of the Solicitation Package to forward to the Participating
Lenders.
7. Only the brokers, dealers, commercial banks, trust companies or other
nominees (collectively, the "Nominee Senior Noteholders") through which
the beneficial owners ("collectively, the "Beneficial Senior
Noteholders") hold the 7.7% Notes and 9.35% Notes as reflected in the
records of the indenture trustee as of the close of business on the
Record Holder Date shall be entitled to submit Master Ballots with
regard to the Senior Note Claims.
8. In connection with soliciting votes from the Nominee Senior Noteholders
and Beneficial Senior Noteholders, the Court hereby directs as follows:
a. the Nominee Senior Noteholders shall forward the Solicitation
Package or copies thereof (including a return envelope
provided by and addressed to the Nominee Senior Noteholders
and including the Individual Ballots) to the Beneficial Senior
Noteholders within three (3) business days of the receipt by
such Nominee Senior Noteholders of the Solicitation Package;
b. the Beneficial Senior Noteholders shall return the Individual
Ballots to the respective Nominee Senior Noteholders;
c. the Nominee Senior Noteholders shall summarize the votes of
their respective Beneficial Senior Noteholders on the Master
Ballots in accordance with the instructions for the Master
Ballots;
d. the Nominee Senior Noteholders shall return the Master Ballots
to the Balloting Agent; and
e. the Debtors shall provide the Nominee Senior Noteholders with
sufficient copies of the Solicitation Package to forward to
the Beneficial Senior Noteholders.
9. Only the brokers, dealers, commercial banks, trust companies or other
nominees (collectively, the "Nominee Subordinated Noteholders") through
which the beneficial owners (collectively, the "Beneficial Subordinated
Noteholders") hold the 8.375% Notes as reflected in the records of the
indenture trustee for the 8.375% Notes as of the close of business on
the Record Holder Date shall be entitled to submit Master Ballots.
10. In connection with soliciting votes from the Nominee Subordinated
Noteholders and Beneficial Subordinated Noteholders, the Court hereby
directs as follows:
a. the Nominee Subordinated Noteholders shall forward the
Solicitation Package or copies thereof to the Beneficial
Subordinated Noteholders within three (3) business days of the
receipt by such Nominee Subordinated Noteholders of the
Solicitation Package;
b. the Beneficial Subordinated Noteholders shall return the
Individual Ballots to the respective Nominee Subordinated
Noteholders;
c. the Nominee Subordinated Noteholders shall summarize the votes
of their respective Beneficial Subordinated Noteholders on the
Master Ballots in accordance with the instructions for the
Master Ballots;
d. the Nominee Subordinated Noteholders shall return the Master
Ballots to the Balloting Agent; and
e. the Debtors shall provide the Nominee Subordinated Noteholders
with sufficient copies of the Solicitation Package to forward
to the Beneficial Subordinated Noteholders.
11. Only the brokers, dealers, commercial banks, trust companies or other
nominees (collectively, the "Nominee Stockholders") through which the
beneficial owners (collectively, the "Beneficial Stockholders") hold
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shares of Preferred Redeemable Increased Dividend Equity Securities
("Pride Equity Interests") and shares of common stock of United
Companies Financial Corporation or any interest or right to convert
into such equity interest or acquire any equity interest of the Debtors
which was in existence as of the commencement of these chapter 11 cases
("United Companies Common Equity Interests") as reflected in the
records of the transfer agent for such securities as of close of
business on the Record Holder Date shall be entitled to submit Master
Ballots.
12. In connection with soliciting votes from the holders of Pride Equity
Interests and United Companies Common Equity Interests, the Court
hereby directs as follows:
a. the Nominee Stockholders shall forward the Solicitation
Package or copies thereof to the Beneficial Stockholders
within three (3) business days of the receipt by such Nominee
Stockholders of the Solicitation Package;
b. the Beneficial Stockholders shall return the Individual
Ballots to the respective Nominee Stockholders;
c. the Nominee Stockholders shall summarize the votes of their
respective Beneficial Stockholders on the Master Ballots in
accordance with the instructions for the Master Ballots;
d. the Nominee Stockholders shall return the Master Ballots to
the Balloting Agent; and
e. the Debtors shall provide the Nominee Stockholders with
sufficient copies of the Solicitation Package to forward to
the Beneficial Stockholders.
13. For purposes of voting, the amount of a claim used to tabulate
acceptance or rejection of a Plan shall be the amount set forth on the
ballots for that particular creditor which shall be one of the
following:
a. the amount set forth as a claim in the Debtors' Schedules as
not contingent, unliquidated or disputed (excluding scheduled
claims that have been superseded by filed claims);
b. the amount set forth on a filed proof of claim which has not
been disallowed, disqualified, suspended, reduced or estimated
and temporarily allowed for voting purposes prior to the
Record Holder Date; or
c. the amount estimated and temporarily allowed pursuant to an
order entered by the Bankruptcy Court.
14. With respect to Individual Ballots submitted by a holder of a claim or
interest:
a. Any ballot which is properly completed, executed and timely
returned to the Balloting Agent that does not indicate an
acceptance or rejection of one of the Plans shall be deemed to
be a vote to accept such Plan;
b. any ballot which is returned to the Balloting Agent indicating
acceptance or rejection of the Plans, but which is unsigned
shall not be counted;
c. whenever a creditor or interest holder casts more than one
ballot voting the same claim or interest prior to the Voting
Deadline, only the last timely ballot received by the
Balloting Agent shall be counted,
d. if a creditor or interest holder casts simultaneous
duplicative ballots voted inconsistently, then such ballots
shall count as one vote accepting each of the Plans;
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e. each creditor or interest holder shall be deemed to have voted
the full amount of its claim or interest;
f. creditors and interest holders shall not split their vote
within a class, thus each creditor or interest holder shall
vote all of its claim or interest within a particular class
either to accept or reject the Plans;
g. any Individual Ballots that partially reject and partially
accept one or both of the Plans shall not be counted; and
h. with the exception of Master Ballots, any ballot received by
the Balloting Agent by telecopier, facsimile or other
electronic communication shall not be counted.
15. With respect to the tabulation of ballots cast by Participating
Lenders:
a. First Union shall summarize on the Master Ballot all
Individual Ballots cast by the Participating Lenders and
return the Master Ballot to the Balloting Agent, provided,
however, that First Union shall be required to retain the
Individual Ballots cast by the respective Participating
Lenders for inspection for one year following submission of a
Master Ballot;
b. to the extent that there are over-votes submitted by First
Union on a Master Ballot, votes to accept and to reject a
particular Plan shall be applied by the Balloting Agent in the
same proportion as the votes to accept or reject such Plan
submitted on the Master Ballot that contains the over-vote;
c. multiple Master Ballots may be completed by First Union and
delivered to the Balloting Agent and such votes will be
counted, except to the extent that such votes are inconsistent
with or are duplicative of other Master Ballots, in which case
the latest dated Master Ballot received before the Voting
Deadline will supersede and revoke any prior Master Ballot;
and
d. each Participating Lender shall be deemed to have voted the
full amount of its claim.
16. With respect to the tabulation of ballots cast by Beneficial Senior
Noteholders:
a. all Nominee Senior Noteholders to which Beneficial Senior
Noteholders return their Individual Ballots shall summarize on
the Master Ballot all Individual Ballots cast by the
Beneficial Senior Noteholders and return the Master Ballot to
the Balloting Agent, provided, however, that each Nominee
Senior Noteholder shall be required to retain the Individual
Ballots cast by the respective Beneficial Senior Noteholders
for inspection for one year following submission of a Master
Ballot;
b. votes cast by the Beneficial Senior Noteholders through a
Nominee Senior Noteholder by means of a Master Ballot shall be
applied against the positions held by such Nominee Senior
Noteholder as evidenced by the list of record holders compiled
as of the Record Holder Date, provided, however, that votes
submitted by a Nominee Senior Noteholder on a Master Ballot
shall not be counted in excess of the position maintained by
such Nominee Senior Noteholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Senior Noteholder on a Master Ballot, votes to accept and to
reject a particular Plan shall be applied by the Balloting
Agent in the same proportion as the votes to accept or reject
such Plan submitted on the Master Ballot that contains the
over-vote, but only to the extent of the position maintained
by such Nominee Senior Noteholder as of the Record Holder
Date;
d. multiple Master Ballots may be completed by a single Nominee
Senior Noteholder and delivered to the Balloting Agent and
such votes will be counted, except to the extent that such
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votes are inconsistent with or are duplicative of other Master
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
e. each Beneficial Senior Noteholder shall be deemed to have
voted the full amount of its claim.
17. With respect to the tabulation of ballots cast by Beneficial
Subordinated Noteholders:
a. all Nominee Subordinated Noteholders to which Beneficial
Subordinated Noteholders return their Individual Ballots shall
summarize on the Master Ballot all Individual Ballots cast by
the Beneficial Subordinated Noteholders and return the Master
Ballot to the Balloting Agent, provided, however, that each
Nominee Subordinated Noteholder shall be required to retain
the Individual Ballots cast by the respective Beneficial
Subordinated Noteholders for inspection for one year following
submission of a Master Ballot;
b. votes cast by the Beneficial Subordinated Noteholders through
a Nominee Subordinated Noteholder by means of a Master Ballot
shall be applied against the positions held by such Nominee
Subordinated Noteholder as evidenced by the list of record
holders compiled as of the Record Holder Date, provided,
however, that votes submitted by a Nominee Subordinated
Noteholder on a Master Ballot shall not be counted in excess
of the position maintained by such Nominee Subordinated
Noteholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Subordinated Noteholder on a Master Ballot, votes to accept
and to reject a particular Plan shall be applied by the
Balloting Agent in the same proportion as the votes to accept
or reject such Plan submitted on the Master Ballot that
contains the over-vote, but only to the extent of the position
maintained by such Nominee Subordinated Noteholder as of the
Record Holder Date;
d. multiple Master Ballots may be completed by a single Nominee
Subordinated Noteholder and delivered to the Balloting Agent
and such votes will be counted, except to the extent that such
votes are inconsistent with or are duplicative of other Master
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
e. each Beneficial Subordinated Noteholder shall be deemed to
have voted the full amount of its claim.
18. With respect to the tabulation of ballots cast by Beneficial
Stockholders:
a. all Nominee Stockholders to which Beneficial Stockholders
return their Individual Ballots shall summarize on the Master
Ballot all Individual Ballots cast by the Beneficial
Stockholders and return the Master Ballot to the Balloting
Agent, provided, however, that each Nominee Stockholder shall
be required to retain the Individual Ballots cast by the
respective Beneficial Stockholders for inspection for one year
following submission of a Master Ballot;
b. votes cast by the Beneficial Stockholders through a Nominee
Stockholder by means of a Master Ballot shall be applied
against the positions held by such Nominee Stockholder as
evidenced by the list of record holders compiled as of the
Record Holder Date, provided, however, that votes submitted by
a Nominee Stockholder on a Master Ballot shall not be counted
in excess of the position maintained by such Nominee
Stockholder as of the Record Holder Date;
c. to the extent that there are over-votes submitted by a Nominee
Stockholder on a Master Ballot, votes to accept and to reject
a particular Plan shall be applied by the Balloting Agent in
the same proportion as the votes to accept or reject such Plan
submitted on the Master Ballot that contains the over-vote,
but only to the extent of the position maintained by such
Nominee Stockholder as of the Record Holder Date;
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d. multiple Master Ballots may be completed by a single Nominee
Stockholder and delivered to the Balloting Agent and such
votes will be counted, except to the extent that such votes
are inconsistent with or are duplicative of other Master
Ballots, in which case the latest dated Master Ballot received
before the Voting Deadline will supersede and revoke any prior
Master Ballot; and
e. each Beneficial Stockholder shall be deemed to have voted the
full amount of its interest.
19. The hearing on confirmation of both of the Plans is scheduled for
August 15, 2000, at 9:30 a.m. Eastern Time, at the Bankruptcy Court,
Marine Midland Plaza, 824 North Market Street, Sixth Floor, Wilmington,
Delaware. This hearing may be adjourned from time to time without
further notice other than an announcement of the adjourned date(s) at
the hearing and at any adjourned hearing(s).
20. Any objection to confirmation of either of the Plans must be (a) filed
with the Clerk of the Bankruptcy Court, together with proof of service,
no later than 4:00 o'clock p.m. Eastern Time, on August 9, 2000, and
(b) must be served so as to be received on or before 4:00 o'clock p.m.
Eastern Time on August 9, 2000 on (i) Attorneys for the Debtors, Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153 Attn: Marcia
Goldstein, Esq. and Brian Rosen, Esq. (ii) Attorneys for the Debtors,
Richards, Layton & Finger, P.A., One Rodney Square, P. O. Box 551,
Wilmington, DE 19899, Attn: Mark Collins, Esq., (iii) Office of the
United States Trustee, 601 Walnut Street, Curtis Center, Suite 950
West, Philadelphia, PA 19106, Attn: Daniel K. Astin, Assistant U.S.
Trustee, (iv) Attorneys for the Creditors' Committee, Wachtell Lipton
Rosen & Katz, 51 West 52nd Street, New York, NY 10019, Attn: Chaim J.
Fortgang, Esq., (v) Attorneys for the Creditors' Committee, Morris,
Nichols, Arsht & Tunnell, 1201 North Market Street, P.O. Box 1347,
Wilmington, DE 19899-1347, Attn: William H. Sudell, Jr. (vi) Attorneys
for the Equity Committee, Long, Aldridge & Norman LLP, One Peachtree
Center, Suite 5300, 303 Peachtree Street, Atlanta, GA 30308, Attn:
Charles E. Campbell, Esq., and (vii) Attorneys for the Equity
Committee, Saul, Ewing, Pernick & Saul LLP, 222 Delaware Avenue,
Wilmington, DE 19899-1266, Attn: Norman L. Pernick, Esq. Any objection
to confirmation of the Plans must be in writing and (a) must state the
name and address of the objecting party and the amount of its claims or
the nature of its interest and (b) must state, with particularity, the
nature of its objection. Any confirmation objection not filed and
served as set forth herein shall be deemed waived and shall not be
considered by the Bankruptcy Court.
DATED: July 10, 2000
Wilmington, Delaware
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EXHIBIT F
119
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
|
|
-----------------------------------------------
NOTICE OF NON-VOTING STATUS FOR HOLDERS OF PRIORITY TAX CLAIMS, HOLDERS
OF CLAIMS IN CLASSES 1 AND 2, AND ALL PARTIES TO EXECUTORY CONTRACTS
AND UNEXPIRED LEASES WHO DO NOT HOLD FILED OR SCHEDULED CLAIMS
PLEASE TAKE NOTICE THAT:
1. On July 10, 2000, the United States Bankruptcy Court for the District
of Delaware (the "Bankruptcy Court"), under chapter 11 of title 11 of
the United States Code (the "Bankruptcy Code"), approved the Disclosure
Statement (the "Debtors' Disclosure Statement") filed by United
Companies Financial Corporation and certain of its direct and indirect
subsidiaries, as debtors and debtors in possession (collectively, the
"Debtors"), as containing adequate information within the meaning of
section 1125 of the Bankruptcy Code. Unless otherwise defined, all
capitalized terms used herein shall have the meaning assigned to such
terms in the Debtors' Plan (as defined below) or the order approving
the Debtors' Disclosure Statement.
On July 10, 2000, the Bankruptcy Court also approved the Disclosure
Statement (the "Equity Committee's Disclosure Statement") filed by the
statutory committee of equity security holders ("Equity Committee"), as
containing adequate information within the meaning of section 1125 of
the Bankruptcy Code.
Pursuant to an order entered by the Bankruptcy Court, votes are being
solicited on both the Second Amended Plan of Reorganization proposed by
the Debtors (the "Debtors' Plan") and the Second Amended Plan of
Reorganization proposed by the Equity Committee (the "Equity
Committee's Plan").
2. IF YOU HOLD A PRIORITY TAX CLAIM:
The Debtors' Plan provides as follows: On the Effective Date, each
holder of an Allowed Priority Tax Claim shall be entitled to receive
distributions in an amount equal to the full amount of such Allowed
Priority Tax Claim. At the sole option and discretion of Reorganized
UC, which option shall be exercised on or prior to the Effective Date,
such payment shall be made (a) in full, in Cash, on the Effective Date,
(b) in accordance with section 1129(a)(9)(c) of the Bankruptcy Code, in
full, in Cash, in up to twenty-four (24) equal quarterly installments,
commencing on the first (1st) Business Day following the date of
assessment of such Allowed Priority Tax Claim, together with interest
accrued thereon at a rate to be determined by the Bankruptcy Court, or
(c) by mutual agreement of the holder of such Allowed Priority Tax
Claim and Reorganized UC. AS A HOLDER OF AN UNIMPAIRED CLAIM UNDER THE
PLAN, YOU ARE DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION
1126(f) OF THE BANKRUPTCY CODE AND ARE NOT ENTITLED TO VOTE TO ACCEPT
OR REJECT THE PLAN.
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The Equity Committee's Plan provides as follows: Each holder of an
Allowed Priority Tax Claim shall receive, at the option of the Equity
Committee, or Reorganized UC, as applicable, either (i) Cash equal to
100% of the unpaid amount of such Allowed Claim on or as soon as
reasonably practicable after the later of (A) the Effective Date, or
(B) the first Business Day after the date that is thirty (30) calendar
days after the date such Priority Tax Claim becomes an Allowed Claim,
or (ii) annual Cash payments commencing on or as soon as reasonably
practicable after the later to occur of the Effective Date and the date
on which such Priority Tax Claim becomes an Allowed Claim, over a
period not exceeding six (6) years after the date of assessment of such
Allowed Priority Tax Claim, together with interest (payable quarterly
in arrears) on the unpaid balance of such Allowed Priority Tax Claim at
a per annum rate equal to the Federal Judgment Rate as of the Effective
Date. Allowed Priority Tax Claims may be prepaid, at any time, without
penalty. AS A HOLDER OF AN UNIMPAIRED CLAIM UNDER THE PLAN, YOU ARE
DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION 1126(f) OF THE
BANKRUPTCY CODE AND ARE NOT ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN.
3. IF YOU HOLD A PRIORITY NON-TAX CLAIM:
The Debtors' Plan provides as follows: Unless otherwise mutually agreed
upon by the holder of an Allowed Priority Non-Tax Claim and Reorganized
UC, each holder of an Allowed Priority Non-Tax Claim shall receive Cash
in an amount equal to such Allowed Priority Non-Tax Claim on the later
of the Effective Date and the date such Allowed Priority Non-Tax Claim
becomes an Allowed Priority Non-Tax Claim, or as soon thereafter as is
practicable. AS A HOLDER OF AN UNIMPAIRED CLAIM UNDER THE PLAN, YOU ARE
DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION 1126(f) OF THE
BANKRUPTCY CODE AND ARE NOT ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN.
The Equity Committee's Plan provides as follows: On or as soon as
reasonably practicable after the later of (a) the Effective Date, and
(b) the first Business Day after the date that is thirty (30) calendar
days after the date such Priority Non-Tax Claim becomes an Allowed
Claim, each holder of an Allowed Priority Non-Tax Claim shall be
entitled to receive payment, in Cash, in an amount equal to 100% of the
unpaid amount of its Allowed Priority Non-Tax Claim. Notwithstanding
the foregoing, the holder of an Allowed Priority Non-Tax Claim may
receive such other less favorable treatment as may be agreed to by such
holder and the Equity Committee, or Reorganized UC, as applicable.. AS
A HOLDER OF AN UNIMPAIRED CLAIM UNDER THE PLAN, YOU ARE DEEMED TO HAVE
ACCEPTED THE PLAN PURSUANT TO SECTION 1126(f) OF THE BANKRUPTCY CODE
AND ARE NOT ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN.
4. IF YOU HOLD A SECURED CLAIM:
The Debtors' Plan provides as follows: On the Effective Date, each
holder of an Allowed Secured Claim shall receive one of the following
distributions: (a) the payment of such holder's Allowed Secured Claim
in full, in Cash; (b) the sale or disposition proceeds of the property
securing any Allowed Secured Claim to the extent of the value of their
respective interests in such property; (c) the surrender to the holder
or holders of any Allowed Secured Claim of the property securing such
Claim; or (d) such other distributions as shall be necessary to satisfy
the requirements of chapter 11 of the Bankruptcy Code. The manner and
treatment of each Allowed Secured Claim shall be determined by the
Debtors, in their sole and absolute discretion, on or before the
Confirmation Date, and upon notice to each Creditor holding a Secured
Claim. AS A HOLDER OF AN UNIMPAIRED CLAIM UNDER THE PLAN, YOU ARE
DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION 1126(f) OF THE
BANKRUPTCY CODE AND ARE NOT ENTITLED TO VOTE TO ACCEPT OR REJECT THE
PLAN.
The Equity Committee's Plan provides as follows: On or as soon as
reasonably practicable after the later of (i) the Effective Date, or
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(ii) the first Business Day after the date that is thirty (30) calendar
days after the date such Secured Claim becomes an Allowed Claim, each
holder of an Allowed Secured Claim shall receive, at the election of
the Equity Committee, or Reorganized UC, as applicable, one of the
following distributions: (1) Cash equal to 100% of the unpaid amount of
such Allowed Secured Claim; (2) the proceeds of the sale or disposition
of the property securing such Allowed Secured Claim to the extent of
the value of such holder's interest in such property; (3) the surrender
to the holder of such Allowed Secured Claim of the property securing
such Claim; (4) such treatment that leaves unaltered the legal,
equitable or contractual rights of the holder of such Allowed Secured
Claim; or (5) such other distribution as shall be necessary to leave
the holder of such Allowed Secured Claim unimpaired and to satisfy the
requirements of Chapter 11 of the Bankruptcy Code. AS A HOLDER OF AN
UNIMPAIRED CLAIM UNDER THE PLAN, YOU ARE DEEMED TO HAVE ACCEPTED THE
PLAN PURSUANT TO SECTION 1126(f) OF THE BANKRUPTCY CODE AND ARE NOT
ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN.
5. IF YOU ARE A PARTY TO AN EXECUTORY CONTRACT OR AN UNEXPIRED LEASE WHO
DOES NOT HOLD A FILED OR SCHEDULED CLAIM (excluding claims that were
scheduled as contingent, unliquidated or disputed):
The Debtors' Plan provides as follows: Any executory contracts or
unexpired leases which have not expired by their own terms on or prior
to the Effective Date, which have not been assumed and assigned or
rejected with the approval of the Bankruptcy Court, or which are not
the subject of a motion to assume the same pending as of the Effective
Date shall be deemed rejected by the Debtors in Possession on the
Effective Date and the entry of the Confirmation Order by the
Bankruptcy Court shall constitute approval of such rejections pursuant
to sections 365(a) and 1123 of the Bankruptcy Code. Not later than ten
(10) days prior to the Confirmation Date, the Debtors shall file with
the Bankruptcy Court a list of executory contracts and unexpired leases
to be assumed by the Debtors pursuant to the Plan as of the Effective
Date, and such executory contracts and unexpired leases shall be deemed
assumed as of the Effective Date. If the rejection of an executory
contract or unexpired lease by the Debtors results in damages to the
other party or parties to such contract or lease, any 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 Debtors, or
its properties or agents, successors, or assigns, unless a proof of
claim is filed with the Bankruptcy Court and served upon counsel for
the Debtors on or before fifteen (15) days after the later to occur of
(a) the Confirmation Date and (b) the date of entry of an order by the
Bankruptcy Court authorizing rejection of a particular executory
contract or unexpired lease. If you are a party to an executory
contract or unexpired lease that is assumed, then all cure or other
payments required by section 365(b)(1) of the Bankruptcy Code shall be
made as provided in the Debtors' Plan. If you are a party to an
executory contract or unexpired lease that is rejected, under the terms
of the Debtors' Plan, your Claim shall constitute a Class 5 General
Unsecured Claim.
The Equity Committee's Plan provides as follows: Any executory
contracts or unexpired leases which have not expired by their own terms
on or prior to the Effective Date, which have not been assumed and
assigned or rejected with the approval of the Bankruptcy Court, or
which are not the subject of a motion to assume the same pending as of
the Effective Date shall be deemed rejected by the Debtors in
Possession on the Effective Date and the entry of the Confirmation
Order by the Bankruptcy Court shall constitute approval of such
rejections pursuant to sections 365(a) and 1123 of the Bankruptcy Code.
Not later than the Effective Date, or such later date as the Bankruptcy
Court may by order permit, the Equity Committee shall file with the
Bankruptcy Court a list of executory contracts and unexpired leases to
be assumed by the Debtors pursuant to the Plan as of the Effective
Date, and such executory contracts and unexpired leases shall be deemed
assumed as of the Effective Date. If the rejection of an executory
contract or unexpired lease by the Debtors results in damages to the
other party or parties to such contract or lease, any 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 Debtors, or
its properties or agents, successors, or assigns, unless a proof of
claim is filed with the Bankruptcy Court and served upon counsel for
the Equity Committee on or before fifteen (15) days after the later to
occur of (a) the Effective Date and (b) the date of entry of an order
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6. by the Bankruptcy Court authorizing rejection of a particular executory
contract or unexpired lease. If you are a party to an executory
contract or unexpired lease that is assumed, then all cure or other
payments required by section 365(b)(1) of the Bankruptcy Code shall be
made as provided in the Equity Committee's Plan. If you are a party to
an executory contract or unexpired lease that is rejected, under the
terms of the Equity Committee's Plan, your Claim shall constitute a
Class 3 Unsecured Claim.
7. The hearing on confirmation of both Plans is scheduled for August 15,
2000, at 9:30 a.m. Eastern Time, at the Bankruptcy Court, Marine
Midland Plaza, 824 North Market Street, Sixth Floor, Wilmington,
Delaware. This hearing may be adjourned from time to time without
further notice other than an announcement of the adjourned date(s) at
the hearing and at any adjourned hearing(s).
8. Any objection to confirmation of either Plan must be (a) filed with the
Clerk of the Bankruptcy Court, together with proof of service, no later
than 4:00 o'clock p.m. Eastern Time, on August 7, 2000, and (b) must be
served so as to be received on or before 4:00 o'clock p.m. Eastern Time
on August 7, 2000 on (i) Attorneys for the Debtors, Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, NY 10153 Attn: Marcia
Goldstein, Esq. and Brian Rosen, Esq. (ii) Attorneys for the Debtors,
Richards, Layton & Finger, P.A., One Rodney Square, P. O. Box 551,
Wilmington, DE 19899, Attn: Mark Collins, Esq., (iii) Office of the
United States Trustee, 601 Walnut Street, Curtis Center, Suite 950
West, Philadelphia, PA 19106, Attn: Daniel K. Astin, Assistant U.S.
Trustee, (iv) Attorneys for the Creditors' Committee, Wachtell Lipton
Rosen & Katz, 51 West 52nd Street, New York, NY 10019, Attn: Chaim J.
Fortgang, Esq., (v) Attorneys for the Creditors' Committee, Morris,
Nichols, Arsht & Tunnell, 1201 North Market Street, P.O. Box 1347,
Wilmington, DE 19899-1347, Attn: William H. Sudell, Jr. (vi) Attorneys
for the Equity Committee, Long, Aldridge & Norman LLP, One Peachtree
Center, Suite 5300, 303 Peachtree Street, Atlanta, GA 30308, Attn:
Charles E. Campbell, Esq., and (vii) Attorneys for the Equity
Committee, Saul, Ewing, Pernick & Saul LLP, 222 Delaware Avenue,
Wilmington, DE 19899-1266, Attn: Norman L. Pernick, Esq. Any objection
to confirmation of either Plan must be in writing and (a) must state
the name and address of the objecting party and the amount of its
claims or the nature of its interest and (b) must state, with
particularity, the nature of its objection. Any confirmation objection
not filed and served as set forth herein shall be deemed waived and
shall not be considered by the Bankruptcy Court.
The Debtors will not provide you with copies of the Debtors' Plan and
Disclosure Statement and/or the Equity Committee's Plan and Disclosure
Statement unless you request to receive copies of these documents. If
you wish to receive copies of the Debtors' Plan and Disclosure
Statement and/or the Equity Committee's Plan and Disclosure Statement,
then please call the Information Agent at 1-888-559-9367. The
Information Agent will provide you with copies at the Debtors' expense.
If, notwithstanding this Notice of Non-Voting Status, you believe that
you may have a claim against the Debtors which entitles you to vote on
either of the Plans, you should immediately request copies of
applicable Plan, Disclosure Statement and ballot.
DATED: July 10, 2000
Wilmington, Delaware
123
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EXHIBIT G
124
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
In re: | Chapter 11
|
UNITED COMPANIES FINANCIAL CORPORATION, ET AL.,| Case Nos. 99-450 (MFW) through
| 99-461(MFW)
Debtors. |
| JOINTLY ADMINISTERED
---------------------------------------------- |
NOTICE OF NON-VOTING STATUS FOR HOLDERS OF CLAIMS SUBJECT TO A PENDING
OBJECTION AS OF JUNE 30, 2000
PLEASE TAKE NOTICE THAT:
1. On July 10, 2000, the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), under chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code"), approved the Disclosure Statement (the
"Debtors' Disclosure Statement") filed by United Companies Financial Corporation
and certain of its direct and indirect subsidiaries, as debtors and debtors in
possession (collectively, the "Debtors"), as containing adequate information
within the meaning of section 1125 of the Bankruptcy Code. Unless otherwise
defined, all capitalized terms used herein shall have the meaning assigned to
such terms in the Debtors' Plan (as defined below) or the order approving the
Debtors' Disclosure Statement.
On July 10, 2000, the Bankruptcy Court also approved the Disclosure
Statement (the "Equity Committee's Disclosure Statement") filed by the
statutory committee of equity security holders ("Equity Committee"), as
containing adequate information within the meaning of section 1125 of the
Bankruptcy Code.
Pursuant to an order entered by the Bankruptcy Court, votes are being
solicited on both the Second Amended Plan of Reorganization proposed by the
Debtors (the "Debtors' Plan") and the Second Amended Plan of Reorganization
proposed by the Equity Committee (the "Equity Committee's Plan").
2. IF YOU HOLD A CLAIM THAT IS SUBJECT TO A PENDING OBJECTION AS OF JUNE
30, 2000: Under the Bankruptcy Code, only holders of "allowed" claims may vote
on either the Debtors' Plan or the Equity Committee's Plan. Pursuant to Section
502(a) of the Bankruptcy Code, a claim that is the subject of an objection is
not an
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"allowed claim." The Bankruptcy Court set June 30, 2000 as the "Record Holder
Date" or the date for determining who is authorized to vote. As of June 30,
2000, an objection was pending to your claim and, thus, you are not authorized
to vote on the Debtors' Plan or the Equity Committee's Plan with respect to the
claim included in the pending objection.
3. The hearing on confirmation of both the Debtors' Plan and the Equity
Committee's Plan is scheduled for August 15, 2000, at 9:30 a.m. Eastern Time, at
the Bankruptcy Court, Marine Midland Plaza, 824 North Market Street, Sixth
Floor, Wilmington, Delaware. This hearing may be adjourned from time to time
without further notice other than an announcement of the adjourned date(s) at
the hearing and at any adjourned hearing(s).
4. Any objection to confirmation of either Plan must be (a) filed with the
Clerk of the Bankruptcy Court, together with proof of service, no later than
4:00 o'clock p.m. Eastern Time, on August 9, 2000, and (b) must be served so as
to be received on or before 4:00 o'clock p.m. Eastern Time on August 9, 2000 on
(i) Attorneys for the Debtors, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, NY 10153 Attn: Marcia Goldstein, Esq. and Brian Rosen, Esq. (ii) Attorneys
for the Debtors, Richards, Layton & Finger, P.A., One Rodney Square, P. O. Box
551, Wilmington, DE 19899, Attn: Mark Collins, Esq., (iii) Office of the United
States Trustee, 601 Walnut Street, Curtis Center, Suite 950 West, Philadelphia,
PA 19106, Attn: Daniel K. Astin, Assistant U.S. Trustee, (iv) Attorneys for the
Creditors' Committee, Wachtell Lipton Rosen & Katz, 51 West 52nd Street, New
York, NY 10019, Attn: Chaim J. Fortgang, Esq., (v) Attorneys for the Creditors'
Committee, Morris, Nichols, Arsht & Tunnell, 1201 North Market Street, P.O. Box
1347, Wilmington, DE 19899-1347, Attn: William H. Sudell, Jr., (vi) Attorneys
for the Equity Committee, Long, Aldridge & Norman LLP, One Peachtree Center,
Suite 5300, 303 Peachtree Street, Atlanta, GA 30308, Attn: Charles E. Campbell,
Esq., and (vii) Attorneys
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for the Equity Committee, Saul, Ewing, Pernick & Saul LLP, 222 Delaware Avenue,
Wilmington, DE 19899-1266, Attn: Norman L. Pernick, Esq. Any objection to
confirmation of either Plan must be in writing and (a) must state the name and
address of the objecting party and the amount of its claims or the nature of its
interest and (b) must state, with particularity, the nature of its objection.
Any confirmation objection not filed and served as set forth herein shall be
deemed waived and shall not be considered by the Bankruptcy Court.
5. If you wish to receive copies of the Debtors' Disclosure Statement, the
Debtors' Plan, the Equity Committee's Disclosure Statement and/or the Equity
Committee's Plan, then please call the Information Agent at 1-888-559-9367. The
Information Agent will provide you with copies at the Debtors' expense. If,
notwithstanding this Notice of Non-Voting Status, you believe that you may have
a claim against the Debtors which entitles you to vote on either of the Plans,
then you should immediately request copies of the applicable Plan, Disclosure
Statement and ballot.
DATED: July 10, 2000
Wilmington, Delaware
127
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EXHIBIT H
128
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Notice List
Attorneys for the Debtors:
--------------------------
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attn: Marcia Goldstein, Esq.
Brian Rosen, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
Attn: Mark Collins, Esq.
United States Trustee:
----------------------
Office of the United States Trustee
601 Walnut Street
Curtis Center, Suite 950 West
Philadelphia, PA 19106
Attn: Daniel K. Astin
Assistant U.S. Trustee
Attorneys for the Creditors' Committee:
---------------------------------------
Wachtell Lipton Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Chaim J. Fortgang, Esq.
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899-1347
Attn: William H. Sudell, Jr.
Attorneys for the Equity Committee:
-----------------------------------
Long, Aldridge & Norman LLP
One Peachtree Center, Suite 5300
303 Peachtree Street
Atlanta, GA 30308
Attn: Charles E. Campbell, Esq.
Saul, Ewing, Pernick & Saul LLP
222 Delaware Avenue
Wilmington, DE 19899-1266
Attn: Norman L. Pernick, Esq.
129
