<PAGE>
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) May 27, 1999
Apparel America, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-4954 13-2648900
(State of incorporation) (Commission File Number) (IRS EIN)
300 Plaza Drive, Vestal, New York 13850
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 607-729-9331
1175 State Street, New Haven Connecticut 06511
(Former Address of principal executive offices) (Zip Code)
<PAGE>
Item 3. Bankruptcy or Receivership.
(b) On May 27, 1999 an order confirming the Registrants Plan
of Reorganization (the Plan) was entered in the U.S. Bankruptcy
Court for the Southern District of New York (the Bankruptcy
Court).
The Plan, a copy of which is attached hereto as Exhibit 2.3,
provides provisions for the treatment of administrative claims
and classification and treatment, of all claims and interests
against the debtor. The Plaza Group, L.L.C. shall fund the plan
to make all of the payments to the claimants pursuant to the plan
in exchange for which The Plaza Group, L.L.C. shall be issued
19,783,317 Shares of stock of the Registrant representing all of
the issued and outstanding stock of the reorganized Registrant
out of 30,000,000 authorized shares.
Financial information as to the assets and liabilities of
the Registrant as of April 30, 1999 is attached hereto as Exhibit
99.2.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
Exhibit Number Description
2.3 Amended Plan of Reorganization
99.1 Order Confirming Plan of Reorganization
99.2 Consolidated Balance Sheet as of April 30, 1999
<PAGE>
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.
Apparel America, Inc.
(Registrant)
Date: August 17, 1999 /s/ Robert C. Nolt
Chief Financial Officer
<PAGE>
EXHIBITS
Exhibit 2.3
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------X
In re: Chapter 11
Case No. 98 B 44221 (AJG)
APPAREL AMERICA, INC., AMENDED PLAN OF REORGANIZATION
Debtor.
- --------------------------------X
Apparel America, Inc., debtor and debtor in possession,
and the Plaza Group, L.L.C. propose the following amended plan of
reorganization pursuant to section 1121(b) of Chapter 11 of
Title 11 of the United States Code.
ARTICLE I
DEFINITIONS
1.1 Meaning. For the purpose of this chapter 11 Plan,
each of the terms set forth herein shall have the meaning
ascribed below and such meaning shall be equally applicable to
the singular and plural forms of the terms defined. All of the
definitions and provisions contained in this Article 1 are, and
shall be, regarded as integral, substantive and operative
provisions of this Plan.
1.2 Other Terms. A term that is used in the Plan and
not defined herein, but that is defined in the Bankruptcy Code or
in the Federal Rules of Bankruptcy Procedure, shall have the
meaning set forth therein. Any reference contained in this Plan
to a particular exhibit, paragraph or article shall be deemed to
be a reference to an exhibit, paragraph or article of this Plan.
<PAGE>
1.3 Rules of Construction. The rules of construction
set forth in section 102 of the Bankruptcy Code shall be
applicable to all of the provisions of this Plan. Without in any
way limiting the foregoing, as used in this Plan, the words
"includes" and "including" are without limitation.
"Administrative Claim" shall mean any cost or expense
of administration of the Case allowed under sections 503(b) or
507(a)(1) of the Bankruptcy Code, including all allowances of
compensation or reimbursement of expenses to Professional Persons
to the extent allowed by the Court only upon entry of a Final
Order under section 330 of the Bankruptcy Code and the Federal
Rules of Bankruptcy Procedure, and any fees or charges assessed
against the Debtor's estate under 28 U.S.C. section 1930.
"AIA" shall mean A.I. Associates, Inc.
"Allowed" or "Allowed Amount", when referring to a
Claim, shall mean the amount of a Claim
1. filed with the Court on or
before the Bar Date and as to which no
objection to the allowance thereof has been
interposed within any applicable period of
limitation fixed by Final Order or this Plan,
(b) which has been or hereafter is
scheduled by the Debtor as liquidated and not
disputed or contingent in amount, as to which
no objection to the allowance thereof has
been interposed within any applicable period
of limitation,
(c) as to which any objection has
been interposed, to the extent such Claim has
been allowed by a Final Order, or
(d) any Claim specifically
identified in this Plan as an Allowed Claim.
"Ballot" shall mean the form distributed to holders of
Claims and Interests on which is to be indicated acceptance or
rejection of the Plan.
<PAGE>
"Bankruptcy Code" shall mean Chapter 11 of Title 11 of
the United States Code, 11 U.S.C section 101, et. seq., as
amended.
"Bar Date" shall mean November 2, 1998, the last date
fixed by Final Order dated October 6, 1998 for filing proofs of
Claim or Interests in this Case, which arose at any time either
(a) prior to the Filing Date, or (b) on or after the Filing Date
through and including October 6, 1998.
"BNYFC" shall mean BNY Financial Corporation.
"BNYFC Agreements" shall mean the Accounts Receivable
Management and Security Agreement made as of September 1, 1995,
as amended by letter agreements dated November 3, 1995, January
31, 1996, August 26, 1996, November 1, 1996, November 15, 1996,
August 11, 1997 and February 25, 1998, the Equipment Security
Agreement dated August 14, 1992 and the Inventory Security
Agreement dated August 14, 1992, all of which were approved by
Final Order dated July 1, 1998.
"BSB" shall mean the BSB Bank and Trust Company.
"Business Day" shall mean any day on which commercial
banks are open for business in New York, New York.
"Case" shall mean the Debtor's case under chapter 11 of
the Bankruptcy Code, Case No. 98 B 44221 (AJG), which was
commenced by the filing of a voluntary petition with the Court on
the Filing Date.
"Cash" shall mean, with respect to payments under the
Plan, lawful currency of the United States of America (U.S.
dollars), regular check, certified check, bank check or wire
transfer from a domestic bank.
"Claim" shall have the meaning given to such term in
section 101(5) of the Bankruptcy Code.
<PAGE>
"Claimant" shall mean the holder of a Claim.
"Class" shall mean any category of Claims or Interests
as specified in Article III of this Plan.
"Committee" shall mean the Official Committee of
Unsecured Creditors in this Case appointed by the United States
Trustee on June 17, 1998.
"Committee Counsel" shall mean Pick & Halperin, L.L.P.,
the attorneys retained by the Committee to represent it in this
Case, which retention was approved by Final Order dated June 26,
1998.
"Confirmation Date" shall mean the date of entry by the
Court of the Confirmation Order.
"Confirmation Order" shall mean an order of the Court
confirming the Plan in accordance with the Bankruptcy Code.
"Consummation Date" shall mean the date which is
fifteen (15) days following the Effective Date.
"Court" shall mean the United States Bankruptcy Court
for the Southern District of New York, and any appellate or other
court that is competent to exercise jurisdiction over any matter
or proceeding arising in or relating to this Case.
"Debtor" shall mean Apparel America, Inc., d/b/a
Mayfair, Mayfair Industries, Gordon, RRRibbitt-RRRibbitt, B.J.
Frog, Robby Len, Waverly, Waverly Beachwear, Longitude, Why Not,
Jane Colby, Harbor Casuals, Roxanne, Lenee, Sand Dollar and Coco
Reef.
"Disputed Claim" shall mean a Claim as to which an
objection has been timely filed and which objection (a) is not
the subject of a Final Order allowing or disallowing the Claim;
and (b) has not been withdrawn.
"Distributions" shall mean Cash which is required under
the Plan to be distributed to the holders of Allowed Claims.
<PAGE>
"Effective Date" shall mean the date on which the
Confirmation Order becomes a Final Order.
"Escrow Agent" shall mean Marilyn Simon and Associates,
bankruptcy counsel for the Debtor.
"Escrow Fund" shall mean any and all Distributions to
the holders of Class VI Claims remaining unclaimed 90 days after
the distribution date, which shall be held by Escrow Agent in an
interest bearing escrow account and used to make subsequent
payments to the holders of Class VI Claims in accordance with
Section 4.6 of this Plan.
"Evergreen Letter of Credit" shall mean a revolving
letter of credit which renews automatically unless twenty (20)
days' prior written notice of cancellation is given to the
beneficiary.
"Federal Rules of Bankruptcy Procedure" shall mean the
Federal Rules of Bankruptcy Procedure in effect on the date of
this Plan.
"Filing Date" shall mean June 12, 1998, the date on
which the Debtor filed its voluntary petition under chapter 11 of
the Code, thereby commencing the Case.
"Final Order" shall mean an order of the Court which
has not been reversed, stayed, modified or amended and (i) the
time to appeal from, or to seek review or rehearing of, has
expired, (ii) no appeal, review, certiorari or rehearing is
pending, and (iii) the order has become conclusive of all matters
adjudicated therefor and is in full force and effect.
"Interest" shall mean the rights of owners of issued
and outstanding shares of preferred stock, common stock or other
equity securities of the Debtor.
<PAGE>
"Interest Holder Claims" shall mean Claims held by
certain Interest holders for mandatory redemption of preferred
stock and unpaid dividends, which Claims (a) are not secured by a
lien or security interest in the assets of the Debtor and (b) are
not entitled to priority under section 507 of the Bankruptcy
Code.
"L.C." shall mean the Evergreen Letter of Credit
obtained by the Plaza Group and issued by BSB in favor of
Committee Counsel, f/b/o the holders of Class VI Claims under
this Plan, in an amount equal to three and one-third percent of
the aggregate amount of Class VI Claims whose holders elected
Option A (as defined in paragraph 4.6 of this Plan).
"Milady" shall mean Milady Brassiere & Corset Co., Inc.
"Milady Agreements" shall mean the agreements between
the Debtor and Milady, all of the obligations under which were
assumed by Swimwear Anywhere, Inc. under the Sale Order.
"Milady Secured Claim" shall mean any secured claim
that Milady may have against the Debtor with respect to (a) the
Percentage Increment in the Purchase Price and the Consequent
Minimum Percentage Increment due pursuant to the Milady
Agreements arising from sales made by the Debtor and all other
sums due under the Milady Agreements, and (b) all the license
royalties and other proceeds received by the Debtor arising from
the Debtor's license or other disposition of the "Roxanne"
trademark, to any third party other than Swimwear Anywhere, Inc.
<PAGE>
"New Stock" shall mean the stock, with full voting and
dividend privileges, issued on the Effective Date, or as soon as
practicable thereafter, to the Plaza Group, which shall represent
all issued and outstanding stock in the reorganized Debtor as of
the Effective Date.
"Plan" shall mean this Amended Plan of Reorganization.
"Plaza Group" shall mean the Plaza Group, L.L.C., a
limited liability corporation, which is the third party proponent
of this Plan.
"Priority Claim" shall mean any Claim entitled to
priority in accordance with section 507(a) of the Bankruptcy Code
other than an Administrative Claim, a Priority Tax Claim or the
claim of the Union pursuant to the Union Stipulation.
"Priority Tax Claim" shall mean any tax claim entitled
to priority under section 507(a)(8) of the Bankruptcy Code.
"Professional Persons" shall mean all attorneys,
accountants and financial consultants retained by a Final Order
within the meaning of sections 327 or 1103 of the Bankruptcy Code
or otherwise.
"Professional Fees" shall mean all fees, costs and
expenses of Professional Persons incurred in the Case up to and
including the Confirmation Date which fees, costs, and expenses
shall have been awarded by Final Order pursuant to sections 330
or 503(b) of the Bankruptcy Code.
"Purchase Agreements" shall mean collectively, the
agreements by and between the Debtor and each of A.H. Schreiber
Co., Incorporated and Swimwear Anywhere, Inc., pursuant to which
the Debtor sold certain assets and licensed certain of its
tradenames to each of A.H. Schreiber Co., Incorporated and
Swimwear Anywhere, Inc. free and clear of liens, claims, and
security interests, and which were approved by Final Order dated
July 28, 1998.
<PAGE>
"Secured Claim" shall mean any Claim that is secured,
within the meaning of section 506(a) of the Bankruptcy Code.
"Sale Order" shall mean the Final Order of the Court
dated July 28, 1998 approving the Purchase Agreements.
"Term Lenders" shall mean collectively, The CDA, AIA,
Inc., and BSB.
"Term Lender Agreement" shall mean the Fifth Amended
and Restated Credit Agreement by and among the Term Lenders.
"The CDA" shall mean the Connecticut Development
Authority.
"Union" shall mean Local 151, Union of Needletrades
Industrial and Textile Employees (UNITE).
"Union Administrative Claim" shall mean the portion of
claim number 150 filed by the Union that has been Allowed as an
Administrative Claim pursuant to the Union Stipulation.
"Union Stipulation" shall mean the stipulation between
the Union and the Debtor, which among other things, settles the
Union's Administrative and Priority Claims, which was approved by
Final Order dated March 15, 1999, subject to confirmation of the
Plan.
"Unsecured Claim" shall mean any Claim that is not a
Secured Claim, an Administrative Claim, a Priority Claim, or a
Priority Tax Claim.
<PAGE>
ARTICLE II
Provisions for Treatment of Administrative Claims
2(a) Administrative Claims, including the Union
Administrative Claim, are not impaired and the Allowed Amount of
such Claims shall be satisfied, settled and discharged, in full,
by the payment in Cash on the Consummation Date or as soon as
practicable thereafter, or shall be paid upon such terms as may
be agreed upon between the Debtor and the respective Claimant
entitled to such payment.
ARTICLE III
Classification of Claims and
Interests
3 . ..1 A Claim is in a particular class only to the
extent that the Claim falls within the description of that Class
and is in a different Class to the extent that the remainder of
the Claim falls within the description of such different Class.
In addition, a Claim or Interest is in a particular Class only to
the extent that the Claim or Interest is an Allowed Claim.
Class I - Secured Claim of BNYFC.
Class II - Secured Claim of the Term Lenders.
Class III - Secured Claim of Milady.
Class IV - Priority Tax Claims.
Class V - Priority Claims.
Class VI - Unsecured
Claims.
Class VII - Interest
Holder Claims.
Class VIII - Interests.
3 . ..2 Unimpaired Claims. All classes of Claims are
unimpaired except for Classes VI, VII and VIII.
<PAGE>
ARTICLE IV
Treatment of Classes of Claims and Interests
4 . ..1 The Allowed Class I Claim is not impaired and
shall be satisfied, settled and discharged, in full, as follows:
4 . ..1a. All of the Debtor's
inventory, accounts receivable and
domestic equipment which secure the
Allowed Claim of BNYFC shall be
liquidated and the net liquidation
proceeds of the collateral shall be paid
to BNYFC, and
4 . ..1b. After the Allowed
Secured Claims of Milady and the Term
Lenders are paid in full, all of the net
royalties payable to the Debtor under
the Purchase Agreements shall be paid to
BNYFC until BNYFC's Allowed Secured
Claim is paid in full.
4 . ..2 The Allowed Class II Claim is not impaired
and shall be satisfied, settled and discharged, in full, from net
liquidation proceeds of the fixed assets subject to their liens
and the net royalties payable to the Debtor under the Purchase
Agreements after the payments due to Milady, such payments to be
shared by the Term Lenders in the manner provided in the Term
Lender Agreement.
4 . ..3 The Allowed Class III Claim is not impaired
and shall be satisfied in accordance with the Milady Agreements,
the Sale Order or upon such other terms as may be agreed upon by
Milady and the Debtor and Milady shall have all of its rights and
remedies due thereunder.
4 . ..4 Class IV Claims are not impaired and shall be
satisfied, settled and discharged, in full, by the payment of
100% of the Allowed Amount of such Claims in quarterly deferred
Cash installments, inclusive of interest at a rate of 9% per
annum, in equal self amortizing payments commencing on the
Consummation Date and every ninety (90) days thereafter, over a
period not to exceed six (6) years after the date of assessment
of said Claims.
<PAGE>
4 . ..5 The Class V Claims are not impaired and shall
be satisfied, settled and discharged, in full, by the payment of
one hundred (100%) percent of the Allowed Amount of such Claims
in three equal annual deferred Cash installments, inclusive of
interest at a rate of 9% per annum, commencing on the
Consummation Date and continuing thereafter on the next two (2)
anniversaries of the Consummation Date.
4 . ..6 The Class VI Claims are impaired and shall be
satisfied, settled and discharged, in full, by either (a) the
payment of ten (10%) percent of the Allowed Amount of such Claims
in three equal annual deferred Cash installments, without
interest, commencing on the Consummation Date and continuing
thereafter on the next two (2) anniversaries of the Consummation
Date ("Option A"), or (b) the payment of seven and one half
(7.5%) percent of the Allowed Amount of such Claims in Cash on
the Consummation Date ("Option B"), as elected by each holder of
a Class VI Claim on the Ballot. Any holder of a Class VI Claim
who, or which, fails to make a payment election on the Ballot
will be deemed to have accepted Option B. The payments to the
holders of Class VI Unsecured Claims who elected Option A
hereunder shall be secured by the L.C.
4 . ..7 The Class VII Interest Holder Claims are
impaired. The holders of said Claims shall receive no
Distribution under the Plan.
4 . ..8 The Class VIII Interests are impaired. All
stock in the Debtor issued and outstanding as of the Confirmation
Date, as well as any and all preemptive, redemption, dividend and
registration rights relating thereto, shall be canceled, and the
holders of Interests shall receive no Distribution under the
Plan.
<PAGE>
ARTICLE V
MEANS FOR EXECUTION OF THE PLAN
5 . ..1 Distributions. The Plaza Group shall fund
the Plan to the extent necessary and required to make all of the
payments to the holders of Allowed Administrative Claims,
including the Allowed Union Administrative Claim, Allowed Class
IV Priority Tax Claims, Allowed Class V Priority Claims, and
Allowed Class VI Unsecured Claims in accordance with the terms of
the Plan, in exchange for which the Plaza Group shall be issued
the New Stock. Except as otherwise provided herein, on the
Effective Date, title to all properties and assets of the Debtor
shall pass to and vest in the reorganized Debtor, subject to the
Secured Claims in Class I, II and III, but otherwise free and
clear of all other Claims and Interests. The Secured Claims in
Class I, II and III shall be secured solely by the collateral
securing said claims as of the Effective Date of this Plan. Any
asset(s) acquired by the reorganized Debtor from and after the
Effective Date shall be subject to the Claims of Class IV, V and
VI creditors but shall be free and clear of all other Claims and
Interests.
The Confirmation Order shall be a judicial determination
of the discharge of all of the Debtor's liabilities, except as
provided in the Plan, whether or not (a) a proof of Claim is
filed or deemed filed under section 501 of the Bankruptcy Code,
(b) such Claim becomes an Allowed Amount, or (c) the holder of
such Claim has accepted the Plan. The Debtor and/or the Plaza
Group shall make Distributions to Claimants only in accordance
with the Plan. Distributions of Cash pursuant to the Plan shall
be rounded up to the nearest whole dollar.
<PAGE>
5 . ..2 Distribution Schedules. As soon as practical
following the Confirmation Date, but no later than the
Consummation Date, the Debtor shall prepare Distribution
schedules with respect to Administrative Claims and each Class of
Claims, including Claims to which objections have been asserted,
copies of which shall be forwarded to Committee Counsel.
The Escrow Agent and Committee Counsel (in the event it
draws upon the L.C.) shall obtain bonds from a recognized bonding
company prior to the Effective Date. The bonding company shall
be required to notify the Plaza Group, the Debtor, the Committee,
the United States Trustee and the Court at least ten (10)
business days prior to the expiration or termination of the
bonds. The Debtor shall distribute a portion of the initial
payment (in the event the Union elects Option A) or a portion of
the one-time payment (in the event the Union elects Option B) due
to the Union hereunder on account of its Administrative and
Unsecured Claims directly to the Bargaining Unit Employees (as
defined in the Union Stipulation), who are determined to be
eligible for such distribution pursuant to a schedule to be
supplied by the Union. The remaining portion of the initial
payment or the one-time payment, as the case may be, and all
future payments (in the event the Union elects Option A), due to
the Union hereunder on account of its Administrative and
Unsecured Claims shall be distributed to the Union and designated
as payment for contributions due to employee benefit funds.
<PAGE>
5 . ..3 Objections to Claims. The Debtor may file
objections to the allowance of any Claim. Any such objection
must be filed and served no later than the later of (a) the
sixtieth (60th) day following the Effective Date, (b) thirty (30)
days after the filing of the proof of such Claim, or (c) any
later date set by Final Order. Any Claim for which no objection
has been filed within the time fixed therefor shall be deemed an
Allowed Claim in such amount as is set forth in a proof of claim
filed with the Bankruptcy Court, or if no proof of claim is
filed, as listed in the schedules filed by the Debtor with the
Bankruptcy Court pursuant to Rule 1007 of the Federal Rules of
Bankruptcy Procedure and not identified as disputed, contingent
or unliquidated as to amount.
5 . ..4 Procedure. Unless otherwise ordered by the
Bankruptcy Court or agreed to by written stipulation approved by
a Final Order, or until the objection thereto is withdrawn, the
Debtor may litigate the merits of each Disputed Claim until
determined by Final Order. The Debtor shall have the sole and
exclusive authority to assert objections to Claims and to
prosecute, and settle all such objections to Claims pursuant to
sections 510, 543 through 551 and 553 of the Bankruptcy Code.
5 . ..5 Unclaimed Distributions. Unclaimed
Distributions (including Distributions made by checks which fail
to be negotiated) shall be retained by the Debtor and held in
trust for the beneficial holders of Allowed Claims entitled
thereto for a period of 90 days after the Distribution date. Any
Distribution remaining unclaimed 90 days after the distribution
date shall be canceled (by a stop payment order or otherwise),
the Claim(s) relating to such Distributions(s) shall be deemed
forfeited and expunged and the holder of such Claim shall be
removed from the Distribution schedule and shall receive no
further Distributions under this Plan. Any and all canceled
Distributions shall be returned to the Debtor, except that any
<PAGE>
and all canceled Distributions relating to Class VI Claims, less
any costs to cancel the Distribution, shall be turned over to
Escrow Agent and deposited in the Escrow Fund. The Escrow Fund
shall be used to make subsequent payments to the holders of Class
VI Claims in accordance with Section 4.6 of this Plan. Any
Escrow Funds available after all payments are made to the holders
of Class VI Claims in accordance with Section 4.6 of this Plan,
shall be released to the Debtor. All Distributions shall be made
to the holders of Claims at the address listed on their
respective proofs of claim filed with the Bankruptcy Court or, if
no proof of claim was filed, at their last known address. The
Plaza Group and/or the Debtor shall take reasonable steps to
ascertain the most current address of the holder of any Claims
whose distribution check was returned as undeliverable.
5 . ..6 Escrow Agent. The duties of Escrow Agent are
only as herein specifically provided and are purely ministerial
in nature.
5 . ..6a. Escrow Agent shall
incur no liability, whatsoever, for any
action taken, or failure to act, except
for its own gross negligence or wilful
misconduct.
5 . ..6b. In the performance
of its duties hereunder, Escrow Agent
shall be entitled to rely upon any
document, instrument or signature
reasonably believed to be genuine.
5 . ..6c. Escrow Agent may
assume that any party purporting to give
any notice in writing in has been duly
authorized to do so.
5 . ..6d. The Debtor and/or
the Plaza Group shall pay Escrow Agent
reasonable compensation for the service
to be rendered as Escrow Agent and to
pay or reimburse Escrow Agent upon
request for all expenses, disbursements
and advances in connection with carrying
out its duties hereunder.
<PAGE>
5 . ..6e. The Debtor and the
Plaza Group hereby agree to jointly and
severally indemnify Escrow Agent for and
to hold it harmless against any loss,
liability or expense incurred without
willful negligence or gross misconduct
on the part of Escrow Agent in carrying
out its duties hereunder, including the
costs and expenses of defending itself
against any claim of liability.
5 . ..6f. The provisions of
the two subparagraphs immediately
preceding this subparagraph shall
survive the termination of this Plan.
5 . ..7 Avoidable Transfers. The Debtor hereby
waives all causes of action under sections 544(b), 547, and 548
of the Bankruptcy Code. Causes of action under any other section
of the Bankruptcy Code are fully and completely preserved.
5 . ..8 Post-Confirmation Professional Fees. Counsel
and accountants to the Debtor and to the Committee may, from time
to time, provide professional services following the Confirmation
Date. Such services will not be encompassed within an
application for allowance which has been approved by the Court.
Such services, inclusive of disbursements, shall be paid within
ten (10) days after submission of a bill to the Debtor and the
Plaza Group, provided that no objection to the payment is
asserted. If an objection is asserted and remains unresolved,
the affected Professional Person may file an application for
allowance with the Court and such fees will be paid by the Plaza
Group in amounts as may be fixed by the Court. The Plaza Group
consents to the jurisdiction of this Court for the purpose of
such fees if awarded by a Final Order.
<PAGE>
ARTICLE VI
EXECUTORY CONTRACTS
All executory contracts and unexpired leases of the
Debtor not expressly assumed by the Debtor by a Final Order or
previously rejected by the Debtor by Final Order shall be deemed
disaffirmed and rejected by the Debtor.
ARTICLE VII
COVENANTS OF THE DEBTOR AND THE PLAZA GROUP
For the period commencing the Consummation Date and
until all Classes of Claims have been paid and satisfied pursuant
to Article IV of this Plan, the Debtor or the Plaza Group shall:
7 . ..1 Pay when due all current, post-Confirmation
Date taxes to taxing authorities, unless such taxes are disputed
in good faith.
7 . ..2 Pay when due all payments required to be made
under this Plan.
7 . ..3 Take all reasonable steps necessary to ensure
that the L.C. remains in full force and effect until all payments
are made to the holders of Class VI Claims who elected Option A
in accordance with the terms of this Plan.
7 . ..4 Maintain business records in accordance with
generally accepted accounting principles.
7 . ..5 Prepare annual financial reports and, within
sixty (60) days following the end of the Debtor's fiscal year,
furnish copies of such reports to BNYFC, each of the Term
Lenders, Committee Counsel and accountants.
7 . ..6 Furnish to any holder of a Claim upon
request, a copy of the Debtor's annual financial report, when
available.
<PAGE>
7 . ..7 Prepare and file with the United States
Trustee all quarterly operating reports required to be filed and
pay all fees due to the Office of the United States Trustee until
a final decree is entered in this case.
ARTICLE VIII
THE COMMITTEE
8 . ..1 Until all of the payments are made to the
holders of Class VI Claims in accordance with the terms of this
Plan, the members of the Committee shall constitute the
Committee.
8 . ..2 In the event that a vacancy occurs on the
Committee by reason of death, resignation or retirement, or
because a designee of a member of the Committee shall no longer
be employed by such member, the vacancy thereby created shall be
filled within thirty (30) days thereafter by a person designated
by the member of the Committee that employed the former designee
or with whom the former designee was affiliated. In the event
such member of the Committee fails to designate a successor
representative to serve on the Committee, the vacancy shall be
filled by a designee of a majority of the remaining members of
the Committee from among the employees or representatives of the
remaining holders of Class VI Claims.
8 . ..3 Upon the occurrence of any one of the
following events, and effective immediately upon such occurrence,
a member of the Committee shall be deemed to have resigned from
the Committee if such member:
8 . ..3a. shall assign all or
any portion of its Claim (other than as
security for an obligation of, or to an
affiliate of, such Claimant), or
<PAGE>
8 . ..3b. releases the Debtor
from payment of all or a portion of its
Claim.
Any vacancy created as a result of the foregoing may, but need
not, be filled by a designee of a majority of the remaining
members of the Committee from among the employees or
representatives of the remaining holders of the Class VI Claims.
8 . ..4 The Committee shall function as such whether
or not any vacancy is filled. No holder of a Class VI Claim
shall have more than one representative on the Committee at any
given time.
8 . ..5 The Committee shall act by a majority vote of
its members present and voting, either with or without formal
meetings.
8 . ..6 The Committee shall have the power and the
right to postpone the time of any Distribution provided for in
Article IV of the Plan to the holders of Class VI Claims in whole
or in part. Written notice of such postponement shall be given
by the Debtor to all Class VI Claimants, in form and substance
satisfactory to Committee Counsel, prior to the due date of such
postponed Distribution.
8 . ..7 The Committee shall have the power and right,
upon such terms and conditions as the Committee may determine, to
waive, modify or excuse performance of any of the covenants of
the Debtor or the Plaza Group set forth in the Plan, but such
waiver or excuse shall not be deemed to constitute a waiver of
any other term or provision of this Plan or waiver or excuse of
the same covenant on a different occasion.
8 . ..8 Members of the Committee and their designees
shall serve without compensation. However, the Debtor shall
reimburse each member of the Committee for all reasonable
out-of-pocket expenses or disbursements incurred by it or its
designee in the performance of its duties as a member of the
Committee, or a designee thereof.
<PAGE>
8 . ..9 No member of the Committee, or any of its
agents, shall be liable for any action taken, or failure to act,
as a member of the Committee, except for their own gross
negligence or wilful misconduct.
8 . ..10 Upon the completion of the Distributions to
be made to the holders of Class VI Claims in accordance with
Article IV of the Plan, the duties, powers, responsibilities and
rights of the Committee and its agents shall terminate, ipso
facto.
ARTICLE IX
EVENTS OF DEFAULT
9 . ..1 Secured Claims. The failure to turn over any
net proceeds or any net royalty payments to the holders of
Allowed Secured Claims when due under the Plan, which failure
shall continue for a period of thirty (30) days after receipt of
notice as provided in paragraph 12.4 hereof from the affected
holder of the Allowed Secured Claim, shall constitute a default
under this Plan, and at the election of the affected Secured
Claimant, the entire unpaid balance of its Secured Claim shall
become immediately due and payable.
9 . ..2 Priority Tax Claims and Priority Claims. The
failure to make any Distribution to the holders of Allowed Class
IV and Class V Claims when due under the Plan, which failure
shall continue for a period of thirty (30) days after receipt of
notice, as provided in paragraph 12.4 hereof, shall constitute a
default under this Plan, and at the election of any such
Claimant, all unpaid installments due such Claimant hereunder
shall become immediately due and payable.
<PAGE>
9 . ..3 Unsecured Claims. The failure to make any
Distribution to the holders of Class VI Claims when due under the
Plan, which failure shall continue for a period of thirty (30)
days after receipt of notice, as provided in paragraph 12.4
hereof, shall constitute a default under this Plan. Upon the
event of a default with respect to the Distributions to the
holders of Class VI Claims who elected Option A, Committee
Counsel may, upon five (5) business days' prior written notice
thereafter to the Debtor and the Plaza Group, and provided the
default is not cured during said period, draw upon the L.C. (in
addition to exercising any and all other rights the holders of
Class VI Claims may have to recover the payments required to be
made to the holders of Class VI Claims under this Plan). In the
event Committee Counsel draws upon the L.C. in accordance with
this paragraph, within ten (10) business days thereafter, it
shall distribute the proceeds to the holders of Allowed Class VI
Claims, who elect Option A, in accordance with the terms of this
Plan. In the event the Committee receives notification of
termination of the L.C., or termination of the L.C. is
threatened, Committee Counsel may, upon prior written notice to
the Debtor and the Plaza Group draw upon the L.C.
9 . ..4 Other Defaults. The breach of any covenant
under the Plan, other than the failure to make any Distribution
when due for which provisions have already been made in
paragraphs 9.1 through and including 9.3 hereof, shall constitute
a default under this Plan unless cured within thirty (30) days
following receipt by the Debtor of notice of such breach from any
Claimant as provided in paragraph 12.4 hereof. In addition, the
<PAGE>
filing of a subsequent voluntary petition under the Bankruptcy
Code by the Debtor, the filing of an involuntary petition under
the Bankruptcy Code against the Debtor, or an assignment by the
Debtor of its assets for the benefit of creditors, each at any
time prior to full satisfaction of the payment provisions of this
Plan, shall constitute a default under this Plan. In any such
event, a holder of an Allowed Claim shall have the right, upon
ten (10) business days' prior written notice thereafter to the
Debtor and the Plaza Group to move the Bankruptcy Court for
appropriate relief.
ARTICLE X
DISCHARGE
Except as otherwise expressly provided in this Plan, as
of the Effective Date, the Debtor shall be discharged from, and
the Confirmation Order shall operate as an injunction against,
the commencement or continuation of any action or the employment
of any process to collect, offset or recover any sums against the
Debtor with respect to
(a) any Claim or interest thereon, and the
Debtor's liability therefor shall be extinguished
completely, whether or not a proof of claim is
filed or deemed filed under section 501 of the
Bankruptcy Code, such Claim becomes an Allowed
Amount under section 502 of the Bankruptcy Code or
the holder of such Claim has accepted the Plan,
and whether or not such Claim is reduced to
judgment, liquidated or unliquidated, contingent
or noncontingent, asserted or unasserted, fixed or
unfixed, matured or unmatured, disputed or
undisputed, legal or equitable, known or unknown,
that arises or may arise from any agreement of the
Debtor entered into or obligation of the Debtor
incurred before the Confirmation Date, or from any
conduct of the Debtor prior to the Confirmation
Date, or that otherwise arose before the
Confirmation Date, and
<PAGE>
(b) any liability of a kind specified in
sections 502(g), 502(h), and 502(i) of the
Bankruptcy Code, whether or not a proof of claim
is filed or deemed filed under section 501 of the
Bankruptcy Code, such Claim becomes an Allowed
Amount under section 502 of the Bankruptcy Code,
or the holder of such Claim has accepted the Plan.
ARTICLE XI
BOARD OF DIRECTORS AND CHARTER OF REORGANIZED DEBTOR
11 . ..1 Board of Directors. On the Effective Date,
the duties, powers, responsibilities and rights of the members of
the Debtor's Board of Directors shall terminate, ipso facto.
From and after the Effective Date, the Board of Directors of the
reorganized Debtor shall consist of two members who shall be
elected by the Plaza Group, as the holder of the New Stock,
effective as of the Effective Date.
11 . ..2 Charter. After the Confirmation Date and on
or before the Effective Date, the Debtor's Certificate of
Incorporation and By-Laws shall be amended as provided in the
Plan and in a manner as is necessary to implement the provisions
of this Plan. On the Effective Date, the Debtor's Certificate of
Incorporation and By-Laws shall be deemed modified by this Plan.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12 . ..1 Effect of Confirmation. The Distributions
and other treatment afforded holders of Claims and Interests
under this Plan shall be in full and complete satisfaction,
settlement and discharge of all Claims against and Interests in
the Debtor.
12 . ..2 Entire Agreement. This Plan and the
Confirmation Order, including any exhibits to this Plan, sets
forth the entire agreement and understanding among the parties
hereto relating to the subject matter hereof and supersedes all
<PAGE>
prior discussions and documents. No party shall be bound by any
terms, conditions, definitions, warrants, understandings or
representations with respect to the Plan other than as are
expressly provided for herein. Should any provision in the Plan
be determined to be unenforceable by a court of competent
jurisdiction, such determination shall in no way limit or affect
the enforceability and operative effect of any and all other
provisions of the Plan. The duties, rights and obligations of
any person or entity named or referred to in the Plan shall be
binding upon, inure to the benefit of and shall be the
responsibility of, the successors and assigns of such person or
entity.
12 . ..3 Headings; Entire Plan. The headings of the
Articles, paragraphs and sections of this Plan are inserted for
convenience only and shall not affect the interpretation hereof.
This Plan, including any exhibits and other attachments hereto,
shall constitute the entire Plan, subject to amendment or
modification solely as provided herein. Article I of this Plan
is and shall be regarded as an integral, substantive and
operative part of the Plan.
12 . ..4 Notices. Any notice described in or required
by the terms of this Plan shall be deemed to have been properly
given (a) when actually received or, (b) if mailed, five (5) days
after the date of mailing, if such notice shall have been sent by
registered or certified mail return receipt requested, or (c) if
sent via facsimile, on the date of the transmission confirmation,
to
- the Debtor, addressed to its counsel:
Marilyn Simon & Associates
200 Park Avenue South
Suite 1700
New York, New York 10003-1503
Facsimile: 212-529-4823
<PAGE>
- the Committee, addressed to its counsel:
Pick & Halperin, LLP
1440 Broadway, 12th Floor
New York, New York 10018
Facsimile: 212-819-1234
- the Plaza Group, addressed care of:
Burton Koffman
Koffman Enterprises
300 Plaza Drive
Vestal, New York 91303
Facsimile: 607-797-7103
or to such other address or addressee as the recipient may give
written notice in accordance with the provisions of this section
of the Plan.
12 . ..5 Revocation. The Debtor and/or the Plaza Group
reserve the right to revoke and withdraw this Plan at any time
prior to the Confirmation Date. If the Plan is revoked or
withdrawn, then the Plan shall be deemed null and void, and in
such event, nothing contained herein shall be deemed to
constitute a waiver or release any Claim by or against the Debtor
or any other entity, or to prejudice in any manner, the rights of
the Debtor or any entity in any further proceeding involving the
Debtor.
12 . ..6 Substantial Consummation. The Plan will be
deemed substantially consummated, as such term is used in section
1101(2) of the Bankruptcy Code, upon the commencement of
distributions to the holders of Administrative Claims, Priority
Claims, Priority Tax Claims, and Unsecured Claims. Following
such substantial consummation, any appeal, rehearing or other
post-confirmation motion of any nature with respect to this Plan
or the Confirmation Order except as specifically provided herein
or therein shall be rendered moot and no longer justiciable.
<PAGE>
12 . ..7 Cramdown. If any impaired Class fails to
accept the Plan in accordance with section 1129(a) of the
Bankruptcy Code, the Debtor reserves the right to request the
Bankruptcy Court to confirm the Plan in accordance with the
provisions of section 1129(b) of the Bankruptcy Code.
ARTICLE XVIII
RESERVATION OF RIGHTS
In the event that this Plan is not confirmed or that
the Effective Date does not occur, the rights of all parties in
interest in the Chapter 11 Case shall be reserved in full.
ARTICLE XIV
RETENTION OF JURISDICTION
The Court shall retain jurisdiction of this proceeding
under the provisions of the Bankruptcy Code, including, without
limitation, section 1142(b) thereof and of the Federal Rules of
Bankruptcy Procedure to ensure that the intent and the purpose of
the Plan is carried out and given effect. Without limitation by
reason of specification, the Court shall retain jurisdiction for
the following purposes:
(a) To consider any modification of the Plan
pursuant to section 1127 of the Bankruptcy Code
and/or any modification of the Plan after
substantial consummation thereof;
(b) To hear and to determine:
(i) all controversies, suits and
disputes, if any, as may arise in connection with
the interpretation or enforcement of the Plan
including whether an Event of Default has occurred
pursuant to Article IX hereof;
(ii) all controversies, suits and
disputes, if any, as may arise between or among
the holders of any Class of Claim and the Debtor
or the Plaza Group;
(iii) all causes of action which may
exist on behalf of the Debtor;
<PAGE>
(iv) applications for allowance of com
pensation and objections to Claim which have been
timely asserted in accordance with orders of this
Court;
(v) any and all pending applications,
adversary proceedings and litigated matters.
Dated: New York, New York
May 19, 1999
APPAREL AMERICA, INC.
Debtor in Possession
By: s/Jeffrey Koffman
Jeffrey Koffman, President
THE PLAZA GROUP
By: s/Burton Koffman
Burton Koffman, President
<PAGE>
Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------X
In re: Chapter 11
Case No. 98 B 44221 (AJG)
APPAREL AMERICA, INC., ORDER CONFIRMING
PLAN OF REORGANIZATION
Debtor.
- -------------------------------X
Apparel America, Inc., debtor and debtor in possession
(the Debtor") and the Plaza Group, L.L.C. having proposed and
filed a plan of reorganization dated April 13, 1999 (the "Prior
Plan") in this case under chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code");
AND a hearing to consider approval of the Debtor's
disclosure statement (the "Disclosure Statement") having been
held before this Court on April 13, 1999 on notice to all holders
of Claims* and Interests in the Case, and the Disclosure
Statement having been approved by order of this Court dated April
13, 1999 (the "Disclosure Statement Order");
AND pursuant to the Disclosure Statement Order, copies
of the Prior Plan, the Disclosure Statement, a "Notice Fixing the
Time for Acceptances or Rejections of the Plan, the Hearing on
the Confirmation of the Plan and the Time for Filing Objections
to Confirmation" and the ballot form for acceptance or rejection
of the Prior Plan (collectively, the "Solicitation Materials")
having been transmitted to all holders of Claims and Interests;
_______________________________
* Capitalized terms not otherwise defined herein shall have
the meanings ascribed to such terms in the Plan.
<PAGE>
AND the solicitation of acceptances from holders of
Claims in this Case having been made within the time and in the
manner required by the Disclosure Statement Order, and the
acceptances and rejections of the Prior Plan having been received
by counsel to the Official Committee of Unsecured Creditors (the
"Committee") and having been filed with the Court under cover of
a pleading entitled "Certification of Acceptances";
AND, the Debtor having filed an amended Plan of
Reorganization dated May 19, 1999 (hereinafter, the "Plan"),
which contained a modification to the Prior Plan, and by order
dated May 20, 1999, the Court found that the modification was non-
material and further found that the acceptances to the Prior Plan
shall be deemed acceptances to the Plan;
AND a confirmation hearing having been held by this
Court on May 20, 1999 upon proper and timely notice to all
persons entitled thereto in accordance with the Disclosure
Statement Order, section 1128 of the Bankruptcy Code and Rule
2002(b) of the Federal Rules of Bankruptcy Procedure (the
"Bankruptcy Rules"), and upon the affidavit of service by mail of
the Solicitation Materials, and upon the record of such hearing
and all the proceedings held before the Court in this Case, and
after due deliberation, and sufficient cause appearing therefor;
IT IS HEREBY FOUND, CONCLUDED and DETERMINED, after
notice and a hearing, that:
1. The Plan complies with the applicable provisions
of the Bankruptcy Code and the Bankruptcy Rules:
<PAGE>
(1) Proper Classification (section
1123(a)(1)). The classification of Claims
and Interests under the Plan complies with
section 1122 of the Bankruptcy Code. The
Claims or Interests placed in a particular
class pursuant to the Plan are substantially
similar to the other Claims or Interests, as
the case may be, in such class.
(2) Specific Unimpaired Classes
(section 1123(a)(2)). Classes I, II, III, IV
and V are not impaired under the Plan.
(3) Specific Treatment of Impaired
Classes (section 1123(a)(3)). The Plan
specifies the treatment of impaired
Classes VI, VII and VIII the details of which
are contained in Article IV of the Plan.
(4) No Discrimination (section
1123(a)(4)). The Plan provides for the same
treatment of each Claim or Interest in a
particular Class.
(5) Implementation of the Plan
(section 1123(a)(5)). The Plan provides
adequate means for the Plan's implementation.
(6) Executory Contracts and
Unexpired Leases (section 1123(b)(2)). All
executory contracts and unexpired leases of
the Debtor shall be deemed rejected.
(7) The Debtor Complies with the
Bankruptcy Code (section 1129(a)(2)). The
Debtor, as proponent of the Plan, has
complied with the applicable provisions of
the Bankruptcy Code. The solicitation of
acceptances and rejections from holders of
Claims that were placed in impaired Classes
VI VII and VIII under the Plan was in
compliance with (i) the Disclosure Statement
Order, (ii) the applicable provisions of the
Bankruptcy Code and (iii) the applicable
Bankruptcy Rules.
(8) Plan Proposed in Good Faith
(section 1129(a)(3)). The Plan has been
proposed in good faith and not by any means
forbidden by law.
<PAGE>
(9) Payments of Costs and Expenses
(section 1129(a)(4)). Any payment made or to
be made by the Debtor for services or for
costs and expenses in or in connection with
the Case, or in connection with the Plan and
incident to the Case has been disclosed to
the Court, and where appropriate pursuant to
the Plan, has been approved by the Court or
is subject to the approval of the Court as
reasonable.
(10) Insider Employees (section
1129(a)(5)). All insider who will be
employed or retained by the Debtor have been
fully disclosed.
(11) No Rate Change (section
1129(a)(6)). No rate changes are provided
for in the Plan that would require
governmental regulatory commission approval.
(12) Best Interests of Creditors
(section 1129(a)(7)). With respect to each
impaired class of Claims or Interests, each
holder of a Claim or Interest in any such
Class has (i) accepted the Plan, or (ii) will
receive or retain under the Plan on account
of such Claim or Interest property of a
value, as of the Effective Date, that is not
less than the amount that such holder would
so receive or retain if the Debtor were
liquidated under chapter 7 of the Bankruptcy
Code on such date.
(13) Plan Acceptance (section
1129(a)(8)). (i) Class VI has accepted the
Plan in accordance with the provisions of
section 1126(c) and (d) of the Bankruptcy
Code, (ii) Classes VII and VIII did not cast
any votes, and (iii) Classes I, II, III, IV
and V are unimpaired, within the meaning of
section 1124 of the Bankruptcy Code, and are
conclusively presumed to have accepted the
Plan under section 1126(f) of the Bankruptcy
Code.
(14) Plan Treatment of
Administrative Claims, Priority Claims and
Priority Tax Claims (section 1129(a)(9)).
Except to the extent that the holder of a
particular Claim has agreed to a different
treatment of such Claim, the Plan provides
that with respect to a Claim of a kind
specified in section 507(a)(1) and (2) of the
Bankruptcy Code, each such Allowed Claim,
which has not otherwise been paid previously,
shall be satisfied and discharged by paying
the holder thereof an amount equal to such
Allowed Claim in Cash in full on the later of
the Consummation Date or the date on which
such Claim becomes Allowed. The Plan
provides that with respect to a Claim of a
kind specified in section 507(a)(3), (4),
(5), (6), or (7) of the Bankruptcy Code, each
such Allowed Claim, which has not otherwise
been paid previously, shall be satisfied and
discharged by paying the holder thereof one
hundred (100%) percent of the Allowed Amount
of such Claims in three equal annual deferred
Cash installments commencing on the
Consummation Date. The Plan provides that
<PAGE>
with respect to a Claim of a kind specified
in section 507(a)(8) of the Bankruptcy Code,
each such Allowed Claim, which has not
otherwise been paid previously, shall be
satisfied and discharged by the payment of
100% of the Allowed Amount of such Claims in
quarterly deferred Cash installments,
inclusive of interest at a rate of 9% per
annum, in equal self amortizing payments
commencing on the Consummation Date and every
ninety (90) days thereafter, over a period
not to exceed six (6) years after the date of
assessment of said Claims.
(15) At Least One Impaired Class of
Claims Accepted the Plan (section
1129(a)(10)). Class VI which Class is
impaired and does not include any insider of
the Debtor, has accepted the Plan.
(16) Feasibility (section
1129(a)(11)). The Debtor and the Plaza
Group, L.L.C. demonstrated their ability to
meet the financial obligations under the Plan
and confirmation of the Plan is not likely to
be followed by the need for liquidation of
the Debtor under chapter 7 of the Bankruptcy
Code.
(17) Fees (section 1129(a)(12)).
All fees payable under 28 U.S.C. section
1930, as determined by the Court at the
Confirmation Hearing, have been or will be
paid in Cash by the Debtor or the Plaza
Group, L.L.C. through the entry of a final
decree closing this case.
(18) Retiree Benefits (section
1129(a)(13)). The Debtor does not have any
obligations in respect of retiree benefits.
(19) No Cramdown (section 1129(b)).
Because all impaired classes of Claims and
Interests have accepted the Plan under
section 1129(a)(8) of the Bankruptcy Code,
the Debtor is not seeking confirmation of the
Plan under section 1129(b) of the Bankruptcy
Code.
<PAGE>
(20) No Other Plan (section
1129(c)). No other chapter 11 plan has been
filed in the Case.
(21) Principal Purpose (section
1129(d)). The principal purpose of the Plan
is neither the avoidance of taxes nor the
avoidance of the application of section 5 of
the Securities Act of 1933.
B. The foregoing findings and conclusions satisfy the
requirements of Bankruptcy Rule 7052. A finding of fact shall
operate as a finding of fact, no matter how denominated, and a
conclusion of law shall operate as a conclusion of law, no matter
how denominated. All offers of proof and discussion for the
record at the Confirmation Hearing constitute additional findings
and conclusions with respect to this order.
C. Finding that the Plan is confirmable for all of
the foregoing reasons, IT IS HEREBY ORDERED THAT:
A. The Plan, a copy of which is annexed hereto as
Exhibit "A" (together with the exhibits thereto) the terms and
provisions of which are incorporated by reference as if fully set
forth herein, be, and it hereby is, confirmed in all respects
regardless of whether specific reference is made herein to a
particular article, paragraph or provision of the Plan.
2. The provisions of the Plan and this Order shall
be, and they hereby are, binding upon the Debtor, the Plaza
Group, L.L.C. and any holder of a Claim or Interest, whether or
not the Claim or Interest is impaired under the Plan and whether
or not the holder of such Claim or Interest has accepted the
Plan. The provisions of this Order shall be, and they hereby
are, non-severable and mutually dependent.
<PAGE>
3. The Debtor and the Plaza Group, L.L.C., and their
agents and attorneys shall be, and they hereby are, authorized,
empowered and directed to execute, deliver and carry out all of
the provisions of the Plan, and to perform such other acts as are
necessary for the consummation of the Plan.
4. Subject to the limitations set forth in the Plan,
all holders of Claims and Interests are precluded from asserting
against the Debtor, its estate, the Plaza Group, L.L.C., the
Committee, or their professionals, and the individual members
thereof, any Claim based upon any act of, or omission by, the
Debtor, or any transaction or other activity of the Debtor of any
kind or nature that occurred prior to the Effective Date except
for acts of willful neglect and malicious misconduct.
5. All executory contracts of the Debtor are hereby
deemed rejected by the Debtor.
6. In accordance with section 1146(c) of the
Bankruptcy Code, the transfer or sale of the assets and property
of the Debtor during the administration of this case shall not be
taxed under any state or local law imposing a stamp tax or
similar tax.
7. The Debtor and the Plaza Group, L.L.C. be and they
hereby are authorized to execute any and all documents, do any
and all things and pay any and all sums necessary or required to
effectuate the transactions approved or contemplated by this
order.
<PAGE>
8. This Court shall retain jurisdiction of this
proceeding under the provisions of the Bankruptcy Code,
including, without limitation, section 1142(b) thereof and of the
Bankruptcy Rules, to ensure that the intent and the purpose of
the Plan is carried out and given effect. Without limitation by
reason of specification, this Court shall retain jurisdiction for
the purposes set forth in Article XIV of the Plan.
9. The Debtor shall be responsible for the payment of
United States Trustee quarterly fees arising under 28 U.S.C.
section 1930(a)(6) through the entry of a final decree closing
this case.
10. The Debtor shall be responsible for the filing of
all post-confirmation reports.
Dated: New York, New York
May 27, 1999 s/Arthur J. Gonzalez
UNITED STATES BANKRUPTCY JUDG
<PAGE>
Exhibit 99.2
Apparel America, Inc.
Consolidated Balance Sheet
As of April 30, 1999
In 000s
<TABLE>
<CAPTION>
4/30/99
---------
<S> <C>
ASSETS
Current assets:
Cash $ 62
Due from factor-net (23)
Note receivable 149
Prepaid expenses and other current assets 4
---------
Total current assets 192
---------
Property, plant and equipment, net -
Trademarks, net of accumulated amortization 1,275
Cost in excess of net assets acquired, net of
accumulated amortization 4,049
---------
Total non current assets 5,324
---------
TOTAL ASSETS $ 5,516
=========
<PAGE>
4/30/99
---------
LIABILITIES
Liabilities not subject to compromise:
Current liabilities:
Accounts payable - post-petition $ 41
Other current liabilities and accrued expenses 266
---------
Total current liabilities 307
---------
Long-term debt:
Accrued purchase price - trademark 487
---------
Total long-term debt 487
---------
Total liabilities not subject to compromise 794
---------
Liabilities subject to compromise:
Pre-petition loan payable - revolver (factor) (Note 1) 3,400
Accounts payable - pre-petition 1,634
Other liabilities and accrued expenses 2,663
Term loan 6,211
Deferred interest on term loan 430
Leasehold improvement and equipment loans 631
Subordinated note and accrued interest 665
$9 cumulative redeemable preferred stock & accr. dividends 5,705
$8.50 cum. redeemable preferred stock & accr. dividends 1,213
Provision for rejected executory contracts 825
---------
Total liabilities subject to compromise 23,377
---------
Total liabilities 24,171
---------
Stockholders' deficit:
Common stock 989
Additional paid-in capital 64,071
Deficit (55,754)
Less:
Treasury stock (129)
Acquisition costs in excess of historical basis of
net assets acquired from affiliates (27,832)
---------
Total stockholders' deficit (18,655)
---------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 5,516
=========
</TABLE>
<PAGE>
NOTE 1-- The factor loan is secured by inventory and accounts
receivable. The factor also holds a second lien on the income
stream derived from the trademark license agreements approved by
Bankruptcy Court order dated July 24, 1998. It is possible that
a significant amount of any remaining Indebtedness (after
liquidation of inventory and receivables) may be satisfied from
the proceeds thereof.
