- --------------------------------------------------------------------------------
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): February 7, 1997
I.C.H. Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-7697 43-6069928
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
500 North Akard Street
Dallas, Texas 75201 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 954-7111
Not Applicable
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
Item 3. Bankruptcy or Receivership.
I.C.H. Corporation, a Delaware corporation (the "Corporation"), together
with Care Financial Corporation ("CFC") and SWL Holding Corporation ("SWL"),
each a Delaware corporation and a wholly owned subsidiary of the Corporation
(the Corporation, CFC and SWL herein referred to collectively, as the "Debtors")
filed voluntary petitions for relief with the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division (the "Bankruptcy Court") under
Chapter 11 of the United States Bankruptcy Code, Case No. 395-36351-RCM-11, on
October 10, 1995. On February 7, 1997, the Bankruptcy Court entered an order
confirming the Debtors' First Amended Joint Plan of Reorganization under Chapter
11 (the "Joint Plan"). The effective date of the Joint Plan is anticipated to
occur on or about February 19, 1997 (the "Effective Date").
Pursuant to the Joint Plan, certain assets constituting substantially all
of the assets of the Corporation, along with all of the assets of CFC and SWL
will be transferred to a liquidating trust (the "Trust") for the benefit of
creditors of the Debtors. The Trust will liquidate the assets transferred to it
and distribute the proceeds thereof to claimants of the Debtors pursuant to the
terms of the Joint Plan. Holders of general unsecured claims against the
Corporation will receive a beneficial interest in the proceeds of all assets of
the Trust, which, following payment of or provision for all other claims as
provided in Article II and Section 4.1(a) of the Joint Plan, will be distributed
to the general unsecured claimants according to the procedures set forth in
Section 4.1(b) of the Joint Plan.
The Corporation will retain certain designated assets, receive a $500,000
contribution pursuant to a third party settlement and will be owned by its
existing preferred and common stockholders. On the Effective Date, all
outstanding shares of preferred stock and common stock of the Corporation
(collectively, the "Stock") will be cancelled, and the Corporation (hereinafter
also referred to as "Reorganized ICH") will issue new common stock ("Common
Stock") to holders of the cancelled Stock as follows:
Preferred Stock. Record holders of preferred stock on the Effective Date
will be entitled to receive, for each share of preferred stock held, 0.2 shares
of Reorganized ICH Common Stock, rounded to the nearest whole number of shares;
provided, however, that:
(a) no distribution of Reorganized ICH Common Stock will be made with
respect to any shares of preferred stock held by any beneficial holder who
holds less than 14 shares of preferred stock and the interest of such
beneficial holders in the Corporation represented by preferred stock will
be reduced to zero (and record holders who are nominee holders for more
than one such beneficial holder will not aggregate holdings of such
beneficial holders for purposes of determining the distribution to which
such record holders may be entitled);
(b) any beneficial holder of preferred stock that holds, in the
aggregate, between 14 and 650 shares of preferred stock (or that agrees to
voluntarily reduce its interest in the Corporation represented by preferred
stock to 650 shares of preferred stock), or any
<PAGE>
record holder specifically authorized by that beneficial holder, may elect
at the time it transmits its preferred stock pursuant to a letter of
transmittal to receive a single cash payment of $.36 per share of preferred
stock in lieu of receiving shares of Reorganized ICH Common Stock; and
(c) any beneficial holder of preferred stock, or any record holder
specifically authorized by that beneficial holder, may agree in writing
with the equity committee appointed pursuant to the Joint Plan prior to the
Effective Date, or with Reorganized ICH on or after the Effective Date, to
accept any lesser amounts of cash or Reorganized ICH Common Stock in full
satisfaction of its interest in the Corporation represented by preferred
stock.
Common Stock. In exchange for and in full satisfaction of all interests in
the Corporation related to common stock, record holders of common stock on the
Effective Date will be entitled to receive, for each share of common stock held,
0.0269 shares of Reorganized ICH Common Stock, rounded to the nearest whole
number of shares; provided, however, that:
(a) no distribution of Reorganized ICH Common Stock will be made with
respect to any shares of common stock held by any beneficial holder who
holds less than 101 shares of common stock and the interest of such
beneficial holders in the Corporation represented by common stock will be
reduced to zero (and record holders who are nominee holders for more than
one such beneficial holder will not aggregate holdings of such beneficial
holders for purposes of determining the distribution to which such record
holders may be entitled);
(b) any beneficial holder of common stock that holds, in the
aggregate, between 101 and 5,000 shares of common stock (or that agrees to
voluntarily reduce its interest in the Corporation represented by common
stock to 5,000 shares of common stock), or any record holder specifically
authorized by that beneficial holder, may elect at the time it transmits
its common stock pursuant to a letter of transmittal to receive a single
cash payment of $.05 per share of common stock in lieu of receiving shares
of Reorganized ICH Common Stock;
(c) any beneficial holder of common stock, or any record holder
specifically authorized by that beneficial holder, may agree in writing
with the equity committee appointed pursuant to the Joint Plan prior to the
Effective Date, or with Reorganized ICH on or after the Effective Date, to
accept any lesser amounts of cash or Reorganized ICH Common Stock in full
satisfaction of its interest in the Corporation represented by common
stock.
The number of shares of the Corporation currently issued and outstanding,
the number of shares of Reorganized ICH Stock reserved for issuance pursuant to
the Joint Plan, and the expected aggregate number of shares outstanding after
implementation of the Joint Plan are as follows:
-2-
<PAGE>
Issued and outstanding common stock: 48,644,112
Issued and outstanding preferred stock: 8,000,000
Common Stock reserved for issuance under the Joint Plan: (1)
Expected aggregate shares outstanding after implementation 2,908,527(2)
of the Joint Plan:
- ---------------------------
(1) Total shares authorized are 9,000,000 common stock and 1,000,000 preferred
stock. The total reserved and issued will depend upon the factors in note 2
below.
(2) Maximum number of shares of Reorganized ICH Common Stock that would be
issued if all outstanding shares of Common and preferred stock were
converted into shares of Reorganized ICH Common Stock at the rates
specified above. Actual number will depend on (i) number of beneficial
holders holding fewer than the minimum number of shares required to be
entitled to receive Reorganized ICH Common Stock as specified above and
(ii) number of beneficial holders who elect to receive cash in lieu of
Reorganized ICH Common Stock.
Information as to the assets and liabilities of the Corporation as of
December 31, 1996, as filed with the Bankruptcy Court is contained in the
Corporation's Monthly Operating Report for the Month Ending December 1996, filed
as Exhibit 99 to the Corporation's Form 8-K which was filed with the Securities
and Exchange Commission on February 3, 1997, and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 First Amended Joint Plan of Reorganization Under Chapter 11
(incorporated by reference to Exhibit B to Exhibit 99.1 to the
Corporation's Form 8-K filed with the Securities and Exchange
Commission on November 22, 1996).
2.2 First Nonmaterial Modification to the First Amended Joint Plan of
Reorganization Under Chapter 11.
2.3 Letter to Robert T. Shaw, Henry W. Simon, Jr. and Russell L. Munsch
agreeing to nonmaterial modification to the First Amended Joint Plan
of Reorganization Under Chapter 11, as filed with the Bankruptcy
Court.
99.1 Order Confirming the First Amended Joint Plan of Reorganization under
Chapter 11, as entered by the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division, on February 7, 1997.
99.2 Findings of Fact and Conclusions of Law in Support of Order Confirming
First Amended Joint Plan of Reorganization Under Chapter 11.
-3-
<PAGE>
99.3 Monthly Operating Report for the Month Ending December 1996, filed
with the United States Bankruptcy Court for the Northern District of
Texas, Dallas Division, Case No. 395-36351-RCM-11 (incorporated by
reference to Exhibit 99 to the Corporation's Form 8-K filed with the
Securities and Exchange Commission on February 3, 1997).
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
I.C.H. CORPORATION
Date: February 18, 1997 By:/s/Susan A. Brown
-----------------
Susan A. Brown, Chairman of the
Board, Director, Co-Chief Executive
Officer, Chief Financial Officer and
Treasurer
-5-
<PAGE>
Index to Exhibits
Sequentially
Exhibit Numbered
Number Description Pages
- ------ ----------- -----
2.1 First Amended Joint Plan of Reorganization Under Chapter 11
(incorporated by reference to Exhibit B to Exhibit 99.1 to the
Corporation's Form 8-K filed with the Securities and Exchange
Commission on November 22, 1996).
2.2 First Nonmaterial Modification to the First Amended Joint Plan
of Reorganization Under Chapter 11. 5
2.3 Letter to Robert T. Shaw, Henry W. Simon, Jr. and Russell L.
Munsch agreeing to nonmaterial modification to the First Amended
Joint Plan of Reorganization Under Chapter 11, as filed with the
Bankruptcy Court. 4
99.1 Order confirming the First Amended Joint Plan of Reorganization
under Chapter 11, as entered by the United States Bankruptcy
Court for the Northern District of Texas, Dallas Division, on
February 7, 1997. 39
99.2 Findings of Fact and Conclusions of Law in Support of Order
Confirming First Amended Joint Plan of Reorganization Under
Chapter 11. 49
99.3 Monthly Operating Report for the Month Ending December 1996,
filed with the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division, Case No. 395-36351-RCM-11
(incorporated by reference to Exhibit 99 to the Corporation's
Form 8-K filed with the Securities and Exchange Commission on
February 3, 1997).
Daniel C. Stewart, SBT #1920650097
Josiah M. Daniel, III, SBT #05358500
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower, 1201 Elm Street
Dallas, Texas 75270
(214) 745-5400
ATTORNEYS FOR THE DEBTORS
Michael A. Rosenthal, SBT #17281490
I. Richard Levy, SBT #12265020
GIBSON, DUNN & CRUTCHER
1717 Main Street, Suite 5400
Dallas, Texas 75201
(214) 698-3100
ATTORNEYS FOR THE OFFICIAL COMMITTEE
OF UNSECURED CREDITORS
Peter D. Wolfson
John A. Bicks
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Avenue
New York, New York 10022
(212) 421-4100
ATTORNEYS FOR THE OFFICIAL COMMITTEE
OF EQUITY SECURITY HOLDERS
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: )
)
I.C.H. CORPORATION, ) CASE NO. 395-36351
a Delaware corporation, f/k/a ) (Chapter 11)
Southwestern Life Corporation, )
f/k/a I.C.H. Corporation, )
)
SWL HOLDING CORPORATION, ) CASE No. 395-36352
a Delaware corporation, f/k/a ) (Chapter 11)
Life Interests Corporation, and )
)
CARE FINANCIAL CORPORATION, ) CASE NO. 395-36354
a Delaware corporation, f/k/a ) (Chapter 11)
Health Interests Corporation, )
) JOINTLY ADMINISTERED
DEBTORS. ) CASE NO. 395-36351-RCM-11
)
FIRST NONMATERIAL MODIFICATION OF FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 PAGE 1
<PAGE>
FIRST NONMATERIAL MODIFICATION TO THE
FIRST AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11
This First Nonmaterial Modification to the First Amended Joint Plan of
Reorganization (the "Modification") is filed by I.C.H. Corporation ("ICH"), Care
Financial Corporation ("Care"), and SWL Holding Corporation ("SWL Holding")
(collectively, the "Debtors"), the Official Committee of Unsecured Creditors
(the "Creditors Committee"), and the Official Committee of Equity Security
Holders (the "Equity Committee") (collectively, the "Plan Proponents") pursuant
to Bankruptcy Code Section 1127(a) and Bankruptcy Rule 3019. Capitalized terms
used in this Modification and not defined herein shall have their respective
meanings set forth in the First Amended Joint Plan of Reorganization Under
Chapter 11 (the "Joint Plan") or, if not defined in the Joint Plan, as defined
in the Bankruptcy Code.
1. On November 15, 1996, the Plan Proponents filed the Joint Plan with the
Bankruptcy Court. On November 15, 1996, after notice and hearing, the Bankruptcy
Court approved the First Amended Disclosure Statement for the First Amended
Joint Plan of Reorganization and authorized the Plan Proponents to solicit votes
with respect to the Joint Plan. Such solicitation is in progress at this time.
2. The purpose of this Modification is to clarify the scope of the release
to be provided to the Shaw Group on the Effective Date, so that the terms of the
Joint Plan are reflective of and consistent with the announcement made by the
Plan Proponents in open court on November 14, 1996. In addition, the
Modification makes a procedural change regarding the date for the filing of
certain Joint Plan-related documents in advance of the Confirmation Hearing. The
changes are not material and do not adversely change the
FIRST NONMATERIAL MODIFICATION OF FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 PAGE 2
<PAGE>
treatment of the claim of any creditor or the interest of any equity security
holder whatsoever. As so modified, the Joint Plan continues to meet the
requirements of Bankruptcy Code Sections 1122 and 1123.
3. Section 10.3 of the Joint Plan is hereby modified by deleting (i) the
first through fifteenth words and the twenty-third and twenty-fourth words of
the first sentence and (ii) the fiftieth-eighth through seventy-second words of
the second sentence. Therefore, such Section 10.3 is hereby amended and restated
as follows:
(e) RELEASES This Joint Plan resolves all disputes between the Debtors and
the Released Entities. With respect to all claims that the Debtors
ever had, now have, or may claim to have or hereafter have, or which
the Debtors could have asserted or could assert, jointly or severally,
including without limitation claims held in its corporate capacity and
claims that third parties may assert derivatively on behalf of the
Debtors absent bankruptcy, Confirmation of this Joint Plan releases
each Released Entity from all such claims, counterclaims, demands,
controversies, costs, contracts, debts, sums of money, accounts,
reckonings, bonds, bills, damages, obligations, liabilities,
objections, actions and causes of action of any nature, type or
description, whether in law or in equity, in contract, tort, or
otherwise, known or unknown, suspected or unsuspected, including
claims for negligence, gross negligence, or otherwise. On the
Effective Date, the Debtors shall be authorized to execute a general
release in favor of the Released Entities consistent with this Section
10.3.
4. Sections 1.99, 7.4(a), and 7.8 of the Joint Plan hereby modified by
revising the phrase "ten (10) Business Days" to "five (5) Business Days" in each
instance.
5. In all other respects, the Joint Plan is unchanged.
WHEREFORE, the Plan Proponents modify the Joint Plan as set forth above and
request the Court to confirm the Joint Plan as so modified.
FIRST NONMATERIAL MODIFICATION OF FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 PAGE 3
<PAGE>
Respectfully submitted,
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower
1201 Elm St.
Dallas, Texas 75270
(214) 745-5400
By /s/ Daniel C. Stewart
---------------------
Daniel C. Stewart, SBT #19206500
Josiah M. Daniel, III, SBT # 05358500
ATTORNEYS FOR DEBTORS
GIBSON, DUNN & CRUTCHER
1717 Main Street, Suite 5400
Dallas, Texas 75201
(214) 698-3100
By /s/ Michael A. Rosenthal
------------------------
Michael A. Rosenthal, SBT #17281490
I. Richared Levy, SBT #12265020
ATTORNEYS FOR THE OFFICIAL
COMMITTEE OF UNSECURED CREDITORS
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Ave.
New York, New York 10022
(212) 326-0806
By /s/ Peter D. Wolfson
--------------------
Peter D. Wolfson
John A. Bicks
ATTORNEYS FOR THE OFFICIAL
COMMITTEE OF EQUITY SECURITY
HOLDERS
FIRST NONMATERIAL MODIFICATION OF FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 PAGE 4
<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document was
served by U.S. Mail, postage prepaid, addressed to all persons identified on the
attached Master Service List on this 20th day of January, 1997.
/s/Josiah M. Daniel, III
------------------------
One of Counsel
FIRST NONMATERIAL MODIFICATION OF FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 PAGE 5
Direct Dial: 214/745-5307
[email protected]
January 31, 1997
Robert T. Shaw Russell L. Munsch, Esq.
c/o Henry W. Simon, Jr., Esq. 1455 Ross Avenue
Simon Anisman Doby & Wilson 4000 Fountain Place
P. O. Box 17047 Dallas, TX 75202
Fort Worth, TX 76102 (via fax 214/855-7584)
(via fax 817/335-2274)
Henry W. Simon, Jr., Esq.
Simon Anisman Doby & Wilson
P. O. Box 17047
Fort Worth, TX 76102
(via fax 817/335-2274)
Re: I.C.H. Corporation, et al.
Gentlemen:
This will confirm our agreements made earlier today relative to the Joint
Plan of Reorganization pending in the Chapter 11 case and presently scheduled
for confirmation hearings to commence Friday, January 31 at 9:00 a.m.
We have agreed that a nonmaterial modification shall be made to the Plan
which contemplates the following:
o The provisions of section 10.4 of the Plan respecting the Released Officers
shall remain in full force and effect with respect to W. Hubert Mathis,
Steven R. Cartwright, Robert J. Bruce, and H. Don Rutherford and the Shaw
Group agrees to the releases of those officers as part of the Plan
confirmation.
o With respect to John T. Hull, Robert C. Greving, and Daniel B. Gail, the
releases contemplated by section 10.4 shall not be executed and delivered
on the basis of the confirmation order, but rather shall be the subject of
a separate, prompt hearing for compromise of controversies under and in
accordance with the procedures and standards of Rule 9019 of the Bankruptcy
Rules and law applicable in the Fifth Circuit.
<PAGE>
Messrs. Shaw, Simon and Munsch
January 31, 1997
Page 2
o The compromise hearing shall be sought on an expedited basis as soon
following two weeks as the Court's calendar permits. Pending such
compromise hearing, each of Messrs. Hull, Greving and Gail shall make
themselves available for up to four hours each of deposition examination to
be conducted by the Shaw Group. Robert T. Shaw shall make himself available
to the Plan Proponents for up to four hours of deposition examination in
advance of the compromise hearing. The four (4) hours in each deposition
shall be allocated to direct examination only. Cross-examination (if any)
and objections or statements by counsel shall not reduce the four hours.
If, for any reason, the Court, at such compromise hearing, does not approve
the contemplated release of any of Messrs. Hull, Greving or Gail, the
maximum financial risk or exposure any of them shall ever have (regardless
of any greater liability established) for claims that otherwise (in
accordance with section 10.4 of the Plan) would have been released under
the Plan, shall be $100,000.
o Any and all additional proposed releases which the Equity Committee or the
Reorganized Debtor proposes to deliver with respect to pre-petition acts
shall be subject to determination by the Bankruptcy Court and the Rule 9019
procedures and standards in the event the Shaw Group objects to any such
proposed releases.
o The Shaw Group, including Robert T. Shaw individually, shall promptly
reimburse each of Messrs. Hull, Greving and Gail up to $5,000 for legal
expense actually incurred by each of them beginning this date and
continuing through the compromise hearing in connection with the compromise
hearing and their preparation therefor.
o The Shaw Group shall deposit into escrow, 48 hours prior to the Effective
Date, the documents and funds required under section 6.2 of the Plan. The
Debtor shall similarly deposit the release of the Shaw Group into escrow 48
hours prior to the Effective Date. The release of the Shaw Group shall be
in the form attached hereto.
o Releases given to the Trust, the Trustee, the Creditors Committee, the
Equity Committee and their respective present and former officers,
directors, members, employees, agents and attorneys pursuant to Paragraph
10.3 of the Plan (exclusive of the Shaw Group) shall be time limited to the
post-petition activities of such Released Entities related to the
reorganization case.
o With these immaterial modifications to the Plan, which we are authorized to
advise you have been agreed to by Messrs. Hull, Greving and Gail, all
objections to confirmation of the Plan, or other pleadings in any manner
opposed to, or seeking the continuance of, the Court's consideration of
confirmation shall be withdrawn by
<PAGE>
Messrs. Shaw, Simon and Munsch
January 31, 1997
Page 3
the Shaw Group with prejudice, and the Shaw Group shall fully support the
entry by the Court of an order confirming the Joint Plan of Reorganization,
as amended, and as provided herein and shall abide by and timely comply
with the terms and provisions of the Plan, including section 6.2.
If the foregoing accurately reflects our understandings and agreements,
please evidence your agreement to be bound by the terms hereof and in accordance
with any required formal modification to the Joint Plan evidencing such
agreement by affixing your signature in the space provided below and faxing same
back to me immediately.
Very truly yours,
WINSTEAD SECHREST & MINICK P.C.
By: /s/ Daniel D. Stewart
---------------------
Daniel C. Stewart
ATTORNEYS FOR THE DEBTORS
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Avenue New York, NY
10022
By: /s/ Peter D. Wolfson
--------------------
Peter D. Wolfson
ATTORNEYS FOR THE OFFICIAL
COMMITTEE OF EQUITY SECURITY
HOLDERS OF I.C.H. CORPORATION
AGREED:
/s/ Robert T. Shaw
- ------------------
Robert T. Shaw, Individually
<PAGE>
Messrs. Shaw, Simon and Munsch
January 31, 1997
Page 4
Consolidated National Corporation
By: /s/ Consolidated National Corporation
-------------------------------------
/s/ Henry W. Simon, Jr.
- -----------------------
Henry W. Simon, Jr.
Attorney for Robert T. Shaw, Fred Rice
and CNC (the "Shaw Group")
/s/ Russell L. Munsch
- ---------------------
Russell L. Munsch
Attorney for Consolidated National
Corporation
DCS/jma
Daniel C. Stewart, SBT #19206500
Josiah M. Daniel, III, SBT #05358500
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower, 1201 Elm Street
Dallas, Texas 75270
(214) 745-5400
ATTORNEYS FOR THE DEBTORS
Michael A. Rosenthal, SBT #17281490 I. Richard Levy, SBT #12265020 GIBSON, DUNN
& CRUTCHER 1717 Main Street, Suite 5400 Dallas, Texas 75201 (214) 698-3100
ATTORNEYS FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
Peter D. Wolfson
John A. Bicks
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Avenue
New York, New York 10022
(212) 421-4100
ATTORNEYS FOR THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: )
)
I.C.H. CORPORATION, ) CASE NO. 395-36351
A DELAWARE CORPORATION, F/K/A ) (CHAPTER 11)
SOUTHWESTERN LIFE CORPORATION, )
F/K/A I.C.H. CORPORATION, )
)
SWL HOLDING CORPORATION, ) CASE NO. 395-36352
A DELAWARE CORPORATION, F/K/A ) (CHAPTER 11)
LIFE INTERESTS CORPORATION, AND )
)
CARE FINANCIAL CORPORATION, ) CASE NO. 395-36354
A DELAWARE CORPORATION, F/K/A ) (CHAPTER 11)
HEALTH INTERESTS CORPORATION, )
) JOINTLY ADMINISTERED
DEBTORS. ) CASE NO. 395-36351-RCM-11
)
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 1
<PAGE>
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IN SUPPORT OF
ORDER CONFIRMING FIRST AMENDED
JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11
I.C.H. Corporation ("ICH"), SWL Holding Corporation ("SWL"), and Care
Financial Corporation ("Care" and together with ICH and SWL, the "Debtors"),
together with the Official Committee of Unsecured Creditors (the "Creditors
Committee") and the Official Committee of Equity Security Holders (the "Equity
Committee" and together with the Debtors and the Creditors Committee, the "Plan
Proponents") having proposed that certain First Amended Joint Plan of
Reorganization under Chapter 11 dated November 15, 1996, as amended by the First
Nonmaterial Modification of the First Amended Joint Plan of Reorganization under
Chapter 11 filed on January 20, 1997 (the "First Modification") and that certain
letter agreement filed with and accepted by the Court at the Confirmation
Hearing as the Second Nonmaterial Modification of the First Amended Joint Plan
of Reorganization under Chapter 11 filed on January 31, 1997 (the "Second
Modification" and as amended collectively, the "Joint Plan"); the Court having
conducted a hearing to consider confirmation of the Joint Plan on January 31,
1997 (the "Confirmation Hearing"), and the Court having reviewed and considered
the Joint Plan, the Certificate of Service of Solicitation Packages by Hill and
Knowlton, Inc., and the Certificate of Service of Merrill Corporation, the
Certification of Votes Tabulated by Hill and Knowlton, Inc., as well as the
testimony proffered and adduced, the exhibits admitted into evidence and the
arguments of counsel presented at the Confirmation Hearing; and the Court having
also considered all of the objections to confirmation of the Joint Plan and the
Court being familiar with the Joint Plan and other relevant factors affecting
the Debtors' chapter 11 cases (the "Chapter 11 Cases"), the Court having taken
judicial notice
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 2
<PAGE>
of the entire record of the Chapter 11 Cases since the Petition Date, including,
but not limited to, all pleadings filed by the Plan Proponents and other parties
in interest, all documentary evidence and testimony presented by the Plan
Proponents in the Chapter 11 Cases before the Bankruptcy Court, and, in
particular, the Court having taken judicial notice of (i) the orders entered by
the Bankruptcy Court on October 10, 1995 establishing the Bar Date (ii) the
order of the Bankruptcy Court, dated October 10, 1996 (the "Notice Order")
establishing various dates in connection with approval of the First Amended
Disclosure Statement For the First Amended Joint Plan of Reorganization Under
Chapter 11, dated November 15, 1996 (the "Disclosure Statement"), (iii) the
order of the Bankruptcy Court, dated November 15, 1996, approving the Disclosure
Statement and proposed ballot tabulation and solicitation procedures and
establishing various dates in connection with the solicitation of votes on and
confirmation of the Joint Plan; and based upon the entire record, in accordance
with Bankruptcy Rules 7052 and 9014, the Court makes the following findings of
fact and conclusions of law in support of confirmation of the Joint Plan
(collectively, the "Findings").1
I. JURISDICTION AND VENUE
A. JURISDICTION.
1. Pursuant to 28 U.S.C. Sections 1334 and 157, the Court has jurisdiction
to consider confirmation of the Plan.
2. The Confirmation Hearing is a core proceeding under 28 U.S.C. Sections
157(b)(2)(A)(L) and (O).
- -----------------
1 All capitalized terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Joint Plan or if not defined in the
Joint Plan, as defined in Title 11 of the United States Code (the
"Bankruptcy Code").
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 3
<PAGE>
3. The Debtors are entities eligible for relief under Section 109 of
Title 11 of the United States Code (the "Bankruptcy Code").
B. VENUE OF THE CHAPTER 11 CASES.
1. The principal place of business of the Debtors is Dallas, Texas. Venue
in the Northern District of Texas for the Chapter 11 Cases was proper as of the
Petition Date pursuant to 28 U.S.C. Section 1408 and continues to be proper.
II. BACKGROUND
1. On October 10, 1995 (the "Petition Date"), each of the Debtors filed a
voluntary petition for relief under chapter 11 of title 11 of the Bankruptcy
Code, as amended (the "Bankruptcy Code") with the Bankruptcy Court.
2. Since the Petition Date, each of the Debtors had continued to operate
its business and manage its properties as a debtor in possession pursuant to
Sections 1107(a) and 1108 of the Bankruptcy Code.
3. On October 10, 1995, the Bankruptcy Court ordered the Chapter 11 cases
of the Debtors jointly administered pursuant to Bankruptcy Rule 1015 (the
"Chapter 11 Case").
4. The Debtors filed their schedules and statements of financial affairs on
the Petition Date. Included therewith was a "mailing matrix" listing the names
and addresses of creditors and other parties in interest. Also on the Petition
Date, the Clerk of the Bankruptcy Court issued a notice concerning the filing of
the Chapter 11 Case and concerning the meeting of creditors required under
Section 341 of the Bankruptcy Code. The Debtors served such notice by mail and
by publication in the National Edition of The Wall Street Journal and The Dallas
Morning News. On the Petition Date, the Bankruptcy Court also fixed February 7,
1996, as the Bar Date with respect to claims against the
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 4
<PAGE>
Debtors, which date was applicable to all creditors, excluding governmental
units. The Bankruptcy Court also fixed April 9, 1996, as the Bar Date with
respect to all claims against the Debtors filed by governmental units. The April
9, 1996 Bar Date for governmental units was extended for the Internal Revenue
Service.
5. Also, on October 10, 1995, the Debtors filed a Motion to Establish
Notice Procedures (the "Notice Motion"), seeking to determine appropriate notice
procedures during the Chapter 11 Case. The Notice Motion sought authority to
establish a master service list which would include and limit notice of all but
certain specified major events to the United States Trustee, the Debtors,
counsel for the Debtors, the Debtors' twenty (20) largest unsecured creditors,
the members of any official committee and its counsel, any party whose interest
was directly affected by a specific pleading, and parties or entities who might
formally appear and request service pursuant to Bankruptcy Rule 2002 (the
"Master Service List"). On the Petition Date, the Bankruptcy Court approved the
relief requested in the Notice Motion, including the Debtors' utilization of the
Master Service List and the Debtors' proposed notice procedures.
6. On October 11, 1995, the United States Trustee for the Northern District
of Texas (the "U.S. Trustee") appointed the Creditors Committee pursuant to
Section 1102(a) of the Bankruptcy Code, the membership of which has been amended
or reconstituted from time to time during the Chapter 11 Cases.
7. On March 27, 1996, the U.S. Trustee appointed the Equity Committee
pursuant to Section 1102(a) of the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 5
<PAGE>
III. CRITICAL EVENTS IN THE CHAPTER 11 CASES
RELATING TO THE JOINT PLAN
A. SALE OF PRIMARY INSURANCE SUBSIDIARIES.
1. On October 9, 1995, the Debtors entered into a definitive agreement (the
"Shinnecock Agreement") to sell certain of their insurance subsidiaries,
consisting of Southwestern Life Insurance Company ("Southwestern Life"), Union
Bankers Insurance Company ("Union Bankers"), Constitution Life Insurance Company
("Constitution"), and Marquette National Life Insurance Company ("Marquette"),
to Shinnecock Holdings Inc. ("Shinnecock"), and to sell to an affiliate of
Shinnecock substantially all of the assets of Facilities Management
Installation, Inc. ("FMI"), a subsidiary of ICH that provided data processing
and other support services to ICH's insurance subsidiaries (the "Proposed Sales
Transaction"). The Shinnecock Agreement contained provisions for presenting the
Proposed Sales Transaction to the Bankruptcy Court in a Chapter 11 Case to be
commenced by the Debtors, and, for the establishment of a competitive sales
procedure to be conducted as part of such Chapter 11 Case.
2. On the Petition Date, ICH requested expedited approval from the
Bankruptcy Court for an orderly and competitive sales procedure and for approval
of the definitive agreement to sell certain of their insurance subsidiaries
pursuant to the terms of the Proposed Sales Transaction. On October 20, 1995,
the Bankruptcy Court approved a procedure, with certain modifications, by which
interested parties could submit offers to compete with the offer of Shinnecock
for the Proposed Sales Transaction. The Bankruptcy Court scheduled a hearing
beginning November 28, 1995 (the "Sale Approval Hearing"), to consider
additional offers and approval of the Proposed Sales Transaction. In accordance
with the order approving the sales procedure, PennCorp Financial Group,
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 6
<PAGE>
Inc. ("PennCorp"), Southwestern Financial Corporation ("SFC"), a corporation
newly formed by PennCorp and Knightsbridge Capital Fund I, L.P. ("KCF"), and
Southwestern Financial Services Corporation ("SFSC," together with PennCorp and
SFC, the "Bidders") presented a competing offer. During the days prior to the
Sale Approval Hearing, the Debtors received several improved bids from each of
Shinnecock and the Bidders. At the Sale Approval Hearing, a final round of
bidding occurred, resulting in the Debtors' acceptance of Bidders' final offer
of $260 million, consisting of $210 million of cash and $50 million of
securities (the "PennCorp Sales Transaction"). As part of the PennCorp Sales
Transaction, the Bidders also agreed to provide ICH the right (the "KCF Put"),
exercisable on or before June 15, 1996, to sell to KCF ICH's four remaining
insurance subsidiaries that were not included in PennCorp Sales Transaction
Bankers Multiple Line Insurance Company ("BML") and each of its subsidiaries,
Philadelphia American Life Insurance Company ("Philadelphia American"), Modern
American Life Insurance Company ("Modern American") and Western Pioneer Life
Insurance Company ("Western," and together with BML, Philadelphia American, and
Modern American, the "Remaining Insurance Subsidiaries") - for an aggregate
purchase price of $50 million, consisting of $25 million of cash and $25 million
of KCF notes. The PennCorp Sales Transaction was approved by the Bankruptcy
Court on December 5, 1995, and was completed in December 1995.
B. SALE OF REMAINING INSURANCE SUBSIDIARIES.
1. On June 28, 1996, BML, a wholly owned subsidiary of ICH, consummated the
sale of Modern American and Western to Reassure America Life Insurance Company
("Reassure America"), an indirect subsidiary of Life Reassurance Corporation.
Net proceeds to BML from the sale of Modern American and Western were
approximately $27
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 7
<PAGE>
million, including the estimated value of certain real estate and mineral
interests distributed to BML by Modern American and Western in connection with
the sale. BML also received an assignment of any federal income tax refunds
payable to Modern American for periods prior to January 1, 1996.
2. Also on June 28, 1996, BML consummated the sale of Philadelphia American
to New Era Life Insurance Company, a wholly-owned subsidiary of New Era
Enterprise, Inc. ("New Era"). BML utilized approximately $6 million of the
proceeds from the sale to purchase certain securities, real estate, limited
partnership interests and reinsurance recoverables from Philadelphia American at
the closing, as required under the purchase agreement with New Era. ICH
estimates the net proceeds from the sale of Philadelphia American, the
liquidation of the securities, real estate, and limited partnership interests
purchased by BML from Philadelphia American, and the settlement of reinsurance
recoverables assigned to BML by Philadelphia American will total approximately
$11 million.
3. BML has also sold, through a reinsurance transaction effective as of
March 31, 1996, all of its remaining health insurance business and related agent
debit balance for $5.75 million cash.
C. TAX SETTLEMENT.
1. On August 23, 1996, a Joint Motion for Approval of Agreement for
Compromise and Settlement of Tax Claims and Certain Tax-Related Liabilities of
the Debtors (the "Tax Settlement Motion") was filed in the Bankruptcy Court by
ICH, SWL Holding, Care, FMI, Southwestern Life, Union Bankers, Marquette, BML,
SFC, PennCorp (collectively, the "Tax Settlement Group"), and the United States
of America, on behalf of its agency, the Internal Revenue Service ("IRS")
(collectively, the "Tax Settlement
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 8
<PAGE>
Movants"). Consolidated National Corporation ("CNC"), Robert T. Shaw ("Shaw"),
C. Fred Rice ("Rice"), and Edward J. Carlisle ("Carlisle") filed with the
Bankruptcy Court their statement supporting the relief requested in the Tax
Settlement Motion and undertaking to perform their respective portions of the
settlement.
2. The Tax Settlement Motion reflected the fact that the IRS had originally
asserted that the Tax Settlement Group might owe as much as $200 million in
taxes for the years 1990 - 1995. Following a lengthy and detailed review,
information gathering and negotiations, however, the Tax Settlement Movants
sought the Bankruptcy Court's approval of a global and final compromise and
settlement. Under the terms of the Tax Settlement Motion, generally, the federal
income tax liabilities of ICH, Southwestern Life, Constitution, Union Bankers,
Marquette, ICH Funding Corporation, Modern American, Western, BML, and
Philadelphia American for all tax periods ended on or before December 31, 1995,
were determined with no additional taxes due. The federal income tax liabilities
of CFLIC, Shaw, Rice, and Carlisle for all tax periods ended on or before
December 31, 1994, were also resolved by the Tax Settlement Motion. The federal
income tax liabilities of each corporation listed on Exhibit A attached to the
Tax Settlement Motion (other than ICH, Southwestern Life, Constitution, Union
Bankers, Marquette, ICH Funding, Modern American, Western, BML, and Philadelphia
American), for all tax periods ended on or before December 31, 1995, in which
such corporation was included in a consolidated federal income tax return filed
by Modern American, ICH, or a subsidiary of ICH as set forth on such Exhibit A
were also determined with no additional tax due. The material terms of ICH's
federal income tax indemnification obligations to certain indemnified parties
were also resolved. In addition, the IRS paid refunds to Modern American of
approximately $3.4 million by wire transfer. Also, Shaw, Rice,
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 9
<PAGE>
Carlisle, and CNC collectively paid $550,000 to ICH by wire transfer. Under the
Tax Settlement Motion, the Debtors have no net operating losses, general
business credits or other tax credits or capital loss carryovers and no earnings
and profits accounts remaining from tax years ending prior to January 1, 1996.
3. On September 13, 1996, the Court approved the Tax Settlement Motion and
authorized the Debtors, on behalf of themselves and their consolidated
subsidiaries, to consummate the terms of the Tax Settlement Motion as described
above. The Order approving the Tax Settlement Motion became a Final Order on
September 23, 1996.
4. After consummation of the Tax Settlement Motion, provided that there is
no showing of fraud or malfeasance or misrepresentation of a material fact (as
required to challenge agreements made pursuant to Section 7121 of the Internal
Revenue Code), the IRS will not assess any taxes, interest, or penalties or
propose any adjustments (a) to or with respect to the Debtors or any entity
identified on Exhibit A to the Tax Settlement Motion for any tax period ended on
or before December 31, 1995, or (b) to or with respect to CFLIC, Shaw, Rice, or
Carlisle for any tax period ended on or before December 31, 1994.
D. TENNECO SETTLEMENT.
1. On December 24, 1996, ICH, the Creditors Committee and the Equity
Committee (collectively, the "Tenneco Settlement Movants") filed their Motion
for Approval of Compromise Between I.C.H. Corporation and Tenneco, Inc. (the
"Tenneco Settlement Motion"). Filed as Exhibit A to the Tenneco Settlement
Motion are the written terms of the settlement and compromise between the
Movants, Southwestern Life, Philadelphia American, and Tenneco (the "Tenneco
Settlement Agreement"). Under the terms of the Tenneco Settlement Agreement,
except for obligations incurred under the agreement
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 10
<PAGE>
itself, ICH, Philadelphia American, and SWL each released Tenneco and its
present and former affiliates of and from any claims which ICH, Philadelphia
American, or SWL may have; and, similarly, Tenneco released ICH and its
bankruptcy estate, Philadelphia American, and SWL and their present and former
affiliates, together with their respective present and former officers,
directors, employees, attorneys, agents, successors and assigns of and from any
claims. Also, under the Tenneco Settlement Agreement, Tenneco will pay ICH
$18,500,000, Tenneco's previously filed proof of claim in the amount of
$21,952,012 will be deemed disallowed with prejudice to its refiling or
consideration, and Tenneco will deliver to ICH the 9 1/2 unsecured note due 1996
of ICH marked cancelled.
2. On January 16, 1997, the Bankruptcy Court approved the Tenneco
Settlement Motion and thereby approved the compromise settlement contained in
the Tenneco Settlement Agreement.
E. SHAW SETTLEMENT.
1. On February 5, 1996, Shaw and Rice filed proofs of claim (the "Shaw
Proofs of Claim") seeking approximately $5.775 million under certain consulting
contracts with ICH (the "Consulting Contracts"), contractual indemnifications
for certain tax claims asserted by the IRS, and other relief. ICH disputed its
liability in connection with the Claims asserted by the Shaw Group, including
but not limited to ICH's liability under the Consulting Contracts or the
asserted indemnification claims.
2. After extensive negotiations and discussions with the Plan Proponents,
Robert T. Shaw, C. Fred Rice and CNC, and the Plan Proponents agreed to a
compromise and settlement of their issues as part of the Joint Plan (the "Shaw
Settlement"). Concurrent with the filing of the Joint Plan, on October 10, 1996,
the Shaw
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 11
<PAGE>
Group and the Plan Proponents executed that certain letter agreement whereby the
Shaw Group agreed to fully support, to perform in accordance with, and to be
bound by the terms of the Joint Plan and the Confirmation Order. The terms of
the Shaw Settlement are set out in Section 6.2 of the Joint Plan and the
modification set out in paragraph V.B.2 hereof, and the Plan Proponents and the
Shaw Group both agree to perform their respective obligations thereunder.
IV. SOLICITATION PROCEEDINGS
A. DISCLOSURE STATEMENT HEARING.
1. On September 15, 1996, the Bankruptcy Court entered an order approving
the employment of Hill and Knowlton, Inc. ("Hill and Knowlton") as solicitation
agent. Since such time Hill and Knowlton has served as the Debtors' solicitation
agent.
2. On October 10, 1996, the Debtors filed the Motion to Shorten Notice
Period for Hearing on Disclosure Statement and Objections thereto, and request
for Expedited Hearing. Also, on October 10, 1996, the Bankruptcy Court entered
the Order Setting Hearing on Disclosure Statement, Fixing Deadlines for
Objections, and Shortening Notice Period (the "Disclosure Statement Hearing
Order"). The Disclosure Statement Hearing Order set the hearing for approval of
the Disclosure Statement (the "Disclosure Statement Hearing") for October 31,
1996. October 28, 1996, was set as the last day for filing and serving written
objections to the Disclosure Statement.
3. On November 14, 1996, the Court held the Disclosure Statement Hearing,
and also heard the Debtors' Motion for Order Approving Ballots and Solicitation
Procedures. On November 15, 1996, the Plan Proponents refiled the Disclosure
Statement and the Joint Plan in order to incorporate certain changes announced
in open court on November 14, 1996, and the Court entered the Order (i)
Approving the
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 12
<PAGE>
Disclosure Statement, (ii) Setting Hearing on Confirmation of Joint Plan of
Reorganization and (iii) Granting Other Relief Relating to Joint Plan
Solicitation and the Confirmation Hearing (the "Disclosure Statement Order").
4. By the Disclosure Statement Order, the Bankruptcy Court approved the
Disclosure Statement as containing adequate information of a kind and in
sufficient detail as far as reasonably practicable in light of the nature and
history of the Debtors, that would enable a hypothetical reasonable investor
typical of the holders of claims and interest of the relevant impaired classes
to make an informed judgment regarding the Joint Plan pursuant to 11 U.S.C.
Section 1125(a)(1). The Disclosure Statement Order also found that the notice
given by the Debtors of the hearing to approve the Disclosure Statement was
given in compliance with the Federal Rules of Bankruptcy Procedure.
5. Under the Disclosure Statement Order, the hearing on confirmation of the
Joint Plan was set for January 31, 1997, at 9:00 a.m.,Central Standard Time, in
the Courtroom of the Bankruptcy Court, 1100 Commerce Street, 14th Floor, Dallas,
Texas 75242 (the "Confirmation Hearing"). January 17, 1997, was fixed as the
last day for filing and serving written objections to the confirmation of the
Joint Plan.
B. SOLICITATION.
1. As part of the Disclosure Statement Order, the Bankruptcy Court approved
certain ballots submitted by the Plan Proponents, solicitation and tabulation
procedures, and the documents which made up the Plan Proponents' solicitation
materials (the "Solicitation Package").
2. Pursuant to the Disclosure Statement Order, those entities which were
holders of claims and equity security interests on November 15, 1996, were the
entities entitled to receive the Solicitation Package and entitled to vote on
the Joint Plan. The
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 13
<PAGE>
Debtors were required to cause Solicitation Packages to be served upon each
entity listed in the Debtors' Schedules and Statements of Financial Affairs, as
Amended, and to each entity having filed a Proof of Claim or Proof of Interest
against the Debtors as to which an objection had not been filed. In addition,
the Debtors were required to cause a Solicitation Package to be served upon each
holder of record, as of November 15, 1996, of the debt securities and the common
and preferred stock of ICH and to provide Solicitation Packages to brokers or
other nominee holders who hold such securities on behalf of beneficial holders.
To facilitate the transmittal of Solicitation Packages to record holders,
brokers, other nominee holders, and beneficial holders of securities and,
pursuant to Bankruptcy Rules 1007(i) and 3717(e), Bank of Louisville and KeyCorp
Shareholders Services, Inc. ("KeyCorp") were required to provide the Debtors
with lists and mailing labels of the names, addresses and holdings of the
respective holders of record of such securities as of the Voting Record Date.
Finally, the Debtors were required to cause a copy of the balloting procedures
and solicitation and tabulation procedures to be served upon the Bank of
Louisville, KeyCorp and each broker or other nominee holder through which
beneficial holders hold securities.
3. The Disclosure Statement Order provided that all ballots must be
received by Hill and Knowlton by 4:00 p.m., Eastern Standard Time, on January
24, 1997 (the "Voting Deadline"). Any ballot either not properly completed or
not actually received by the Voting Deadline, except as otherwise provided by
the Disclosure Statement Order or by subsequent order of the Bankruptcy Court,
would not be considered a timely ballot and would not be counted as a vote to
accept or reject the Joint Plan. The Disclosure Statement Order also provided
the amount to be used to tabulate acceptance or rejection of the Joint Plan with
respect to the tabulation of ballots cast by record holders and
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 14
<PAGE>
beneficial holders of securities and the amount to be used to tabulate the
acceptance or rejection of the Joint Plan with respect to the tabulation of the
ballots not based on securities. Any objection or challenge to a vote cast by
any holder of a claim or interest of the Joint Plan was required to be in
writing and actually received by the Clerk of the Bankruptcy Court, the counsel
for the Debtors, counsel for the Creditors Committee, counsel for the Equity
Committee and the United States Trustee on or before 4:00 p.m., Central Standard
Time on January 28, 1997.
4. On October 15, 1996, the Debtors caused a copy of the Order and Notice
of Hearing on Disclosure Statement to be mailed to the record holders, as of the
close of business on October 5, 1996, of the Notes, the Common Stock and the
Preferred Stock. Also, on October 17, 1996, a copy of the Order and Notice of
Hearing on Disclosure Statement was published in the national edition of The
Wall Street Journal and The Dallas Morning News.
5. The Debtors complied in all material respects with the Disclosure
Statement Hearing Order and the Disclosure Statement Order in providing notice
of the hearing to consider approval of the Disclosure Statement and the
Confirmation Hearing in the method and manner as prescribed in those orders. All
entities entitled to and required to receive notice of the Disclosure Statement
Hearing and the Confirmation Hearing pursuant to the Bankruptcy Code, applicable
non-bankruptcy law, and the Voting Procedures have received due, proper and
adequate notice of such hearings and have had an opportunity to appear at and be
heard at such hearings. Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
306, 314, 94 L.Ed. 865, 70 S.Ct. 652 (1950).
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 15
<PAGE>
V. OBJECTIONS TO CONFIRMATION
A. PROCEDURE ON OBJECTIONS TO CONFIRMATION.
1. The Disclosure Statement Order fixed January 17, 1996, at 4:00 p.m.
Dallas, Texas time (the "Objection Deadline"), as the last day for creditors and
other parties in interest to file and serve objections to confirmation of the
Joint Plan.
2. By the Objection Deadline, objections to confirmation of the Joint Plan
were filed by the Shaw Group and Victor L. Sayyah ("Sayyah").
B. DISCUSSION OF OBJECTIONS TO CONFIRMATION.
1. The Shaw Group filed three separate objections to confirmation of the
Joint Plan. On December 31, 1996, the Shaw Group filed its Objection to the
Confirmation of the Plan of Reorganization. On January 17, 1997, the Shaw Group
filed its Supplemental Objection of the Shaw Group to Confirmation of the First
Amended Joint Plan of Reorganization under Chapter 11 Dated November 15, 1996.
Finally, the Shaw Group filed its Objection to the First Non-Material
Modification of First Amended Joint Plan of Reorganization under Chapter 11 and
Continued Objection of the Shaw Group to Confirmation of the First Amended Joint
Plan of Reorganization.
2. At the Confirmation Hearing on January 31, 1997, the Plan Proponents and
the Shaw Group announced a settlement of the issues presented by the objections
filed by the Shaw Group whereby the Plan Proponents and the Shaw Group entered
into the Second Modification. Upon approval of the Second Modification, the Shaw
Group agreed to withdraw its Objections to the Joint Plan and requested that the
Court allow the Shaw Group to change its previously cast votes to reject the
Joint Plan to votes to accept the Joint Plan. At the Confirmation Hearing, the
Court approved the change of the Shaw Group's votes and the terms of the Second
Modification, which are as follows:
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 16
<PAGE>
a. The provisions of Article 10.4 of the Plan respecting the Released
Officers shall remain in full force and effect with respect to W.
Hubert Mathis, Steven R. Cartwright, Robert J. Bruce, and H. Don
Rutherford and the Shaw Group agrees to the releases of those officers
as part of the Plan confirmation.
b. With respect to John T. Hull, Robert C. Greving, and Daniel B. Gail,
the releases contemplated by Article 10.4 shall not be executed and
delivered on the basis of the confirmation order, but rather shall be
the subject of a separate, prompt hearing for compromise of
controversies under and in accordance with the procedures and
standards of Rule 9019 of the Bankruptcy Rules and law applicable in
the Fifth Circuit.
c. The compromise hearing shall be sought on an expedited basis as soon
following two weeks as the Court's calendar permits. Pending such
compromise hearing, each of Messrs. Hull, Greving and Gail shall make
themselves available for up to four hours each of deposition
examination to be conducted by the Shaw Group. Robert T. Shaw shall
make himself available to the Plan Proponents for up to four hours of
deposition examination in advance of the compromise hearing. The four
(4) hours in each deposition shall be allocated to direct examination
only. Cross-examination (if any) and objections or statements by
counsel shall not reduce the four hours. If, for any reason, the
Court, at such compromise hearing, does not approve the contemplated
release of any of Messrs. Hull, Greving or Gail, the maximum financial
risk or exposure any of them shall ever have (regardless of any
greater liability established) for claims that
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 17
<PAGE>
otherwise (in accordance with Article 10.4 of the Plan) would have
been released under the Plan, shall be $100,000.
d. Any and all additional proposed releases which the Equity Committee or
the Reorganized Debtor proposes to deliver with respect to
pre-petition acts shall be subject to determination by the Bankruptcy
Court and the Rule 9019 procedures and standards in the event the Shaw
Group objects to any such proposed releases.
e. The Shaw Group, including Robert T. Shaw individually, shall promptly
reimburse each of Messrs. Hull, Greving and Gail up to $5,000 for
legal expense actually incurred by each of them beginning this date
and continuing through the compromise hearing in connection with the
compromise hearing and their preparation therefor.
f. The Shaw Group shall deposit into escrow, 48 hours prior to the
Effective Date, the documents and funds required under Article 6.2 of
the Plan. The Plan Proponents shall similarly deposit the release of
the Shaw Group into escrow 48 hours prior to the Effective Date. The
release shall be executed by the Plan Proponents in the form as
follows:
RELEASE OF SHAW GROUP On the Effective Date, the Debtors, the
Official Committee of Equity Holders (the "Equity Committee"),
the Official Committee of Unsecured Creditors (the "Creditors'
Committee") and each of them, shall execute a general release as
that term is used and commonly understood at law in favor of the
Shaw Group and thereby release all claims that the Debtors, the
Equity Committee, the Creditors' Committee, or any of them or
their affiliates ever had, now have, or may claim to have or
hereafter have, or which the Debtors, the Equity Committee, the
Creditors Committee or any of them or their affiliates could have
asserted or could assert on their own behalf, or derivatively on
behalf of the Debtors prior to or related to this bankruptcy,
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 18
<PAGE>
including without limitation all claims, counterclaims, demands,
controversies, costs, contracts, debts, sums of money, accounts,
reckonings, bonds, bills, damages, obligations, liabilities,
objections, actions and causes of action, expenses, attorneys'
fees of any character, nature, type or description, whether in
law or in equity, in contract, tort, or otherwise, known or
unknown, suspected or unsuspected, including claims for
negligence, gross negligence, fraud, intentional misconduct or
otherwise. The releases to be executed shall bind the Debtors,
the Equity Committee, the Creditors' Committee and each of them,
and each of their affiliates, and their respective successors,
assigns, or representatives, including but not limited to, the
revested/reorganized Debtors, and each of them, and any
representative of any bankruptcy estate for such Debtors or such
revested/reorganized Debtors. This release shall not apply to the
Shaw Group's obligations under the Plan or for acts occurring
after the Effective Date of the Plan.
g. Releases given to the Trust, the Trustee, the Creditors Committee, the
Equity Committee and their respective present and former officers,
directors, members, employees, agents and attorneys pursuant to
Paragraph 10.3 of the Plan (exclusive of the Shaw Group) shall be time
limited to the post-petition activities of such Released Entities
related to the reorganization case.
h. With these immaterial modifications to the Plan, which have been
agreed to by Messrs. Hull, Greving and Gail, all objections to
confirmation of the Plan, or other pleadings in any manner opposed to,
or seeking the continuance of, the Court's consideration of
confirmation shall be withdrawn by the Shaw Group with prejudice, and
the Shaw Group shall fully support the entry by the Court of an order
confirming the Joint Plan of Reorganization, as amended, and as
provided herein and shall abide by
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 19
<PAGE>
and timely comply with the terms and provisions of the Plan, including
Article 6.2.
3. Sayyah filed his Objection to Confirmation of First Amended Joint Plan
of Reorganization on January 17, 1997.
4. At the Confirmation Hearing, the Plan Proponents and Sayyah announced a
settlement of the issues presented by the objection filed by Sayyah whereby
Sayyah withdrew his objection to the Joint Plan. The terms of the settlement
presented to the Court at the Confirmation Hearing were agreed to by the Plan
Proponents and Sayyah. The agreement is that, notwithstanding a contrary
interpretation of the provisions of Article III and Article IV of the Joint Plan
with respect to the ICH Class 2 and ICH Class 5 Claims, if any, of Sayyah, the
following shall apply:
a. Any objection counterclaim or action for affirmative recovery related
to Sayyah's claims shall be brought, if at all, not later than thirty
(30) days following the Effective Date. In the event no objection to
Sayyah's proof of claim is filed within that time, then the ICH Class
2 Secured Claim of Sayyah shall be deemed allowed and satisfied by
setoff as of the Petition Date and the unsecured ICH Class 5 Claim of
Sayyah for the deficiency shall be deemed an Allowed Claim in ICH
Class 5.
b. Upon an objection, the Court will determine the amount and timing of
the offset or recoupment to which Sayyah is entitled. The Debtor, the
Creditors' Committee and, upon its formation, the Trust, agree that
the date of any offset or recoupment applied shall be deemed to occur
no later than the earlier of (i) February 15, 1997, or (ii) the
Effective Date.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 20
<PAGE>
c. The remainder of the claim of Sayyah not treated as an ICH Class 2
claim shall be treated as an unsecured claim in ICH Class 5 in the
amount set forth in Sayyah's proof of claim and calculated as set
forth above, or in the amount, if any, as may be determined by the
Court upon timely objection.
d. The Trust shall reserve the amount of $3.3 million with respect to the
ICH Class 5 Claim of Sayyah under the provisions of the Joint Plan.
This amount shall not be determined as a limit to the amount, if any,
of an allowed ICH Class 5 Claim of Sayyah.
5. The Plaintiffs in Adversary Proceeding No. 395-3589 did not cast any
ballots on the Joint Plan, but they appeared at the Confirmation Hearing through
their counsel of record, who participated in the hearing and verbally objected
to provisions of the Joint Plan specifically regarding releases. Such objections
were fully resolved by the agreement of the Plan Proponents that the
Confirmation Order shall contain a statement that the Joint Plan does not have
the effect of releasing individual, non-derivative claims held by third parties
against non-debtor parties.
VI. VOTING
1. The Debtors, Hill and Knowlton, and Merrill Corporation, acting for the
Plan Proponents, served Solicitation Packages in compliance with the Disclosure
Statement Order.
2. Following the service of Solicitation Packages as provided by the
Disclosure Statement Order, Hill and Knowlton properly assisted the Plan
Proponents with the solicitation of votes from the impaired classes of Claims
and Interests by answering various questions from holders of Claims and Interest
regarding the Joint Plan, with the
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 21
<PAGE>
guidance and advice of the Debtors' counsel in good faith and in a manner
consistent with the Bankruptcy Code.
3. There are no holders of ICH Class 4 - Other Secured Claims.
4. The Joint Plan leaves unaltered the legal, equitable, and contractual
rights of holders of the SWL Holding Class 1 - Secured Claims, SWL Holding Class
2 - General Unsecured Claims, SWL Holding Class 3 - Common Stock, Care Class 1
Secured Claims, Care Class 2 - General Unsecured Claims, and Care Class 3 Common
Stock, and thus in accordance with Sections 1124(1) and 1126(f) of the
Bankruptcy Code, each of the foregoing classes of Claims and Interests is
unimpaired and deemed to have accepted the Joint Plan.
5. Article 5 of the Joint Plan identifies ICH Class 1 - Secured Claim of
Ozark, ICH Class 2 - Secured Claim of Sayyah, ICH Class 3 - Tenneco, ICH Class 4
- - Other Secured Claims, ICH Class 5 - General Unsecured Claims, ICH Class 6
Preferred Stock, and ICH Class 7 - Common Stock as impaired under Section
1124(1) (the "Impaired Classes") and therefore entitled to vote to accept or
reject the Joint Plan.
6. Hill and Knowlton has made a final determination of the validity of, and
tabulation respecting, all acceptances and rejections of the Joint Plan by the
holders of Claims and Interests of the Impaired Classes entitled to vote on the
Joint Plan and has submitted a written report of such determination.
7. With respect to the Impaired Classes, each of the following classes has
accepted the Joint Plan by at least two-thirds in amount and a majority of
number of holders of claims in each class actually voting: ICH Class 1 - Secured
Claim of Ozark, ICH Class 3 - Tenneco and ICH Class 5 - General Unsecured
Claims.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 22
<PAGE>
8. With respect to Impaired Classes of Interests entitled to vote on the
Joint Plan, each of the following classes have accepted the Joint Plan by at
least two-thirds in amount of Interests in each class actually voting: ICH Class
6 - Preferred Stock and ICH Class 7 - Common Stock.
9. With respect to Impaired Classes of Claims, ICH Class 2 - Secured Claim
of Sayyah is the only class which has rejected the Joint Plan.
10. Hill and Knowlton has made a final determination of, and tabulation
respecting, all acceptances and rejections of the Joint Plan, pursuant to and in
compliance with the guidelines and procedures set forth in the Disclosure
Statement Order.
11. The respective determinations of Hill and Knowlton are valid and
correctly set forth in the tabulation of votes required under the Bankruptcy
Code.
VII. COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 1129 OF THE BANKRUPTCY CODE
A. SECTION 1129(A)(1) COMPLIANCE OF THE JOINT PLAN WITH THE APPLICABLE
PROVISIONS OF THE BANKRUPTCY CODE.
1. The Court finds and concludes that the Joint Plan satisfies all the
applicable provisions of the Bankruptcy Code.
2. The First Modification and the Second Modification are not material. As
so modified, the Joint Plan continues to meet the requirements of Sections 1122
and 1123 of the Bankruptcy Code. The First Modification and the Second
Modification satisfy Section 1127 of the Bankruptcy Code, are hereby approved,
and have become and are part of the Joint Plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 23
<PAGE>
B. SECTION 1123(A)(1) DESIGNATION OF CLAIMS AND INTERESTS.
1. Section 1123(a)(1) of the Bankruptcy Code provides that a plan must
designate classes of claims and interests. In accordance with Section 1123(a)(1)
of the Bankruptcy Code, Articles 3.1 through 3.3 of the Joint Plan designate
classes of Claims against and Interests in the Debtors other than Administrative
Expenses and Tax Claims. Classes of Administrative Expenses and Tax Claims are
not required to be designated pursuant to Section 1123(a)(1) of the Bankruptcy
Code. The Joint Plan adequately and properly classifies all Claims against and
Interests in the Debtors and, accordingly, satisfies Section 1123(a)(1) of the
Bankruptcy Code.
C. SECTION 1122(A) CLASSIFICATIONS.
1. Section 1122(a) of the Bankruptcy Code provides that a plan may place a
claim or interest in a particular class if such claim or interest is
substantially similar to the other claims or interests of such class. A
classification scheme satisfies Section 1122(a) of the Bankruptcy Code when a
reasonable basis exists for the classification scheme, and the claims or
interests within each particular class are substantially similar. See In re
Boston Post Road Ltd. Partnership, 21 F.3d 477 (2d Cir. 1994), cert. denied, 130
L.Ed. 2d 782, 115 S.Ct. 897 (1995); In re Jersey City Medical Ctr., 817 F.2d
1955, 1060-61 (3d Cir. 1987); In re U.S. Truck Co., 800 F.2d 581, 586 (6th Cir.
1986); In re LeBlanc, 622 F.2d 872, 879 (5th Cir. 1980).
2. In accordance with Section 1122(a)(1) of the Bankruptcy Code, the Court
concludes that Articles 3.1 through 3.3 of the Joint Plan properly classify
Claims against and Interests in the Debtors together with other Claims or
Interests in the Debtors that are substantially similar to the other Claims or
Interests of such class. The Joint Plan accordingly satisfies Section 1122(a) of
the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 24
<PAGE>
D. SECTION 1123(A)(2) SPECIFICATION OF IMPAIRED CLASSES.
1. Section 1123(a)(2) of the Bankruptcy Code provides that a plan must
specify any class of claims or interests that is impaired under a plan. The
Joint Plan identifies impaired classes of Claims and Interests and provides for
their treatment.
2. Article 5 of the Joint Plan identifies those Classes of Claims against
and Interests in ICH that are impaired under the Joint Plan.
3. Article 5 also identifies those Classes of Claims against and Interests
in SWL Holding and Care as unimpaired, and such classes are conclusively
presumed to have accepted the Joint Plan pursuant to Section 1126(f) of the
Bankruptcy Code.
4. The Joint Plan satisfies Section 1123(a)(2) of the Bankruptcy Code.
E. SECTION 1123(A)(3) SPECIFICATION OF TREATMENT OF IMPAIRED CLASSES.
1. Section 1123(a)(3) of the Bankruptcy Code provides that a plan must
specify the treatment of each impaired class of claims and interests. Article 4
of the Joint Plan specifies the treatment of each impaired class of Claims and
of Interests of the Debtors.
2. The Joint Plan satisfies Section 1123(a)(3) of the Bankruptcy Code.
F. SECTION 1123(A)(4) SAME TREATMENT WITHIN EACH CLASS UNLESS HOLDER AGREES TO
DIFFERENT TREATMENT.
1. Section 1123(a)(4) of the Bankruptcy Code requires a plan to provide the
same treatment for each claim or interest of a particular class, unless the
holder of the claim or interest agrees to less favorable treatment of such
particular claim or interest. With respect to each class of Claims and Interests
under the Joint Plan, the Joint Plan provides the same treatment for each Claim
or Interest of a particular class.
2. The Joint Plan satisfies Section 1123(a)(4) of the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 25
<PAGE>
G. SECTION 1123(A)(5) MEANS OF IMPLEMENTATION.
1. Section 1123(a)(5) of the Bankruptcy Code provides that a plan must
provide adequate means for its implementation.
2. Article 7 of the Joint Plan provides adequate means for implementation
of the Joint Plan. Articles 7.1 and 7.2 of the Joint Plan provided for the
following: (i) the establishment of the Lone Star Liquidating Trust (the
"Trust") and the continuation of ICH as Reorganized ICH; (ii) the transfer of
certain assets by SWL Holding and Care to the Trust and Reorganized ICH; (iii)
the retention of certain assets by Reorganized ICH (the "Retained Assets"); and
(iv) the transfer of certain assets by ICH to the Trust (the "Trust Assets").
3. Article 7.3 provides adequate means for the implementation of the Joint
Plan relating to the operation of the Trust.
4. Article 7.4 provides adequate means for the implementation of the Joint
Plan relating to the continued operation of Reorganized ICH.
5. Articles 7.5, 7.6, 7.7 and 7.8 of the Joint Plan provide for the
following: (i) provisions regarding the Modern/Western Agreement and the
Philadelphia American Agreement; (ii) provisions regarding Perry Park; (iii)
provisions regarding BML; (iv) termination of Indentures; (v) payment of
Indenture Trustee's fees and expenses; (vi) Article 6.2 of the Joint Plan sets
forth the means of implementation for the Shaw Settlement; and (vii) termination
of the Committees.
6. The Joint Plan satisfies Section 1123(a)(5) of the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 26
<PAGE>
H. SECTION 1123(A)(6) PROHIBITION AGAINST THE ISSUANCE OF NONVOTING EQUITY
SECURITIES.
1. Section 1123(a)(6) of the Bankruptcy Code requires a plan to provide for
the inclusion in the charter of the debtor, if the debtor is a corporation, or
of any corporation to which the debtor transfers all or any part of the debtor's
estate or with which the debtor has merged or consolidated, of a provision
prohibiting the issuance of non-voting equity securities.
2. The Joint Plan provides that the Restated Certificate of Incorporation
and By-laws of Reorganized ICH may be amended, if necessary, to satisfy Section
1123(a)(6) of the Bankruptcy Code.
3. Section 1123(a)(6) is not applicable to the Trust because the Trust does
not have a corporate charter.
4. The Joint Plan satisfies Section 1123(a)(6) of the Bankruptcy Code.
I. SECTION 1123(A)(7) SELECTION OF OFFICERS AND DIRECTORS.
1. Section 1123(a)(7) of the Bankruptcy Code requires that the manner of
selection of any director, officer, or trustee of the reorganized debtor, or any
successor to such officer, director, or trustee, be consistent with the
interests of creditors and interest holders and with public policy.
2. Articles 1.102 and 7.3 of the Joint Plan provide for the selection of
the Managing Trustee and the Supervising Trustees. Article 7.4 provides for an
initial board of directors and Chief Executive Officer of Reorganized ICH. From
and after the Effective Date, Directors shall be selected in accordance with the
By-laws of Reorganized ICH, and the Managing Trustee and the Supervising
Trustees shall be selected in accordance with the Trust Agreement.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 27
<PAGE>
3. The selection of the Managing Trustees and Supervising Trustees of the
Trust, and the selection of the President and Chief Executive Officer and
Initial Board of Directors of Reorganized ICH are consistent with the interests
of creditors and interest holders and with public policy.
4. The Joint Plan complies with Section 1123(a)(7) of the Bankruptcy Code
as to both the Trust and Reorganized ICH.
J. SECTION 1123(B)(1) IMPAIRMENT.
1. Article 4 of the Joint Plan impairs or leaves unimpaired, as the case
may be, each class of Claims against or Interests in the Debtors.
K. SECTION 1123(B)(2) EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
1. The Debtors have engaged in a thorough review of the executory contracts
and unexpired leases to which any of the Debtors is a party. Article 8.1 of the
Joint Plan provides for the rejection of executory contracts and unexpired
contracts, unless the Debtors have expressly assumed such executory contract or
unexpired lease before the Confirmation Hearing.
2. The rejection of the executory contracts and unexpired leases is (i) in
the best interests of the Debtors, their estates, and their creditors, (ii)
based upon and within the Debtors' sound business judgment, and (iii) necessary
to the implementation of the Joint Plan.
L. SECTION 1123(B)(3) RETENTION, ENFORCEMENT, AND SETTLEMENT OF CLAIMS
ASSERTED AGAINST AND HELD BY THE DEBTORS.
1. Pursuant to Section 1123(b)(3)(A), Article 10.2 of the Joint Plan
provides for the retention and enforcement of the Debtors' causes of action.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 28
<PAGE>
2. Pursuant to Section 1123(b)(3)(A), Article 6.2 of the Joint Plan
provides for the settlement of the Claims of the Debtors against the Shaw Group.
In exchange for release and settlement of these Claims against the Shaw Group,
the Shaw Group has agreed to (1) pay Reorganized ICH $500,000 in cash; (2)
withdraw the Claims filed by the members of the Shaw Group; (3) subject to
conditions provided for in Article 6.2(c) of the Joint Plan, allow the transfer
of the CFSB Interest; and (4) perform their respective obligations under the Tax
Settlement.
3. The Shaw Settlement pursuant to Article 6.2 of the Joint Plan is in the
best interests of the Debtors, their estates, their creditors and interest
holders and is fair and equitable.
4. Pursuant to Section 1123(b)(3)(A) of the Bankruptcy Code, on the
Effective Date, the Debtors are authorized to execute a release in favor of
parties defined as Released Entities. Under Article 1.74 of the Joint Plan, the
term "Released Entities" means the Trust, the Trustee, the Creditors' Committee,
the Equity Committee, the Shaw Group, and their respective present and former
officers, directors, members, employees, agents, attorneys, and such other
persons as the Equity Committee may designate prior to the conclusion of the
Confirmation Hearing; no additional designations were made prior to conclusion
of the Confirmation Hearing.
5. After the Effective Date, the compromise and settlement by Reorganized
ICH of any Retained Cause of Action may be effected without necessity of
Bankruptcy Court approval pursuant to Article 11.10 of the Joint Plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 29
<PAGE>
M. SECTION 1123(B)(6) OTHER PROVISIONS NOT INCONSISTENT WITH APPLICABLE
PROVISIONS OF THE BANKRUPTCY CODE.
1. The Joint Plan includes additional appropriate provisions that are
consistent with applicable provisions of the Bankruptcy Code, including:
2. INDEMNIFICATION Article 10.7 of the Joint Plan provides that any
obligations of the Debtors, pursuant to the Order Regarding Indemnification of
Officers and Directors of Debtors entered February 14, 1996, shall not be
discharged or impaired by the reorganization contemplated by this Joint Plan and
will be performed and honored by the Trust regardless of the Confirmation of
this Joint Plan; provided however, that such obligations will not be obligations
of Reorganized ICH. All other obligations of the Debtors with respect to
indemnification of officers and directors, or agents, representatives,
successors or assigns thereof, will be treated as executory contracts rejected
under the Joint Plan, and all Claims arising from or related thereto will be
treated and classified as provided by the Joint Plan, subject to any and all
defenses thereto and to subordination of such Claims under applicable provisions
of the Bankruptcy Code.
3. The provisions of the Order Regarding Indemnification of Officers and
Directors of the Debtors entered on February 14, 1996, are hereby ratified and
confirmed as obligations of the Trust, subject to any and all defenses thereto
of the Debtors, the Estates or the Trust, including that such claims are
subordinated pursuant to the provisions of the Bankruptcy Code; provided
however, that such obligations shall not be obligations of Reorganized ICH. The
balance of the $500,000 fund provided for in such order (the "Indemnification
Fund") shall be transferred to the Trust and utilized as provided in February
14, 1996 Order. The withdrawal of the Proofs of Claim of C. Fred Rice shall
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 30
<PAGE>
not affect the survival of any claim by him for indemnity by ICH as treated
under Article 10.7 of the Joint Plan.
4. SECURITIES-RELATED CLAIMS. The Joint Plan provides for the satisfaction
of claims of holders of Allowed Securities-Related Claims related to the Notes,
the Preferred Stock and the Common Stock, if any. Under Article 1.86 of the
Joint Plan, Securities-Related Claims are defined as Claims, if any, arising
from rescission of a purchase or sale of Securities of ICH or of any its
affiliates, for damages arising from the purchase or sale of Securities, or for
reimbursement or contribution allowed under Section 502 of the Bankruptcy Code
on account of such a Claim, including but not limited to the Claims of the
plaintiffs in the suit styled In re Southwestern Life Corporation Securities
Litigation, Adversary Proceeding No. 395-3589, pending in the Bankruptcy Court.
5. Allowed Securities-Related Claims, if any, related to the Notes or the
Preferred Stock are subordinated pursuant to Section 510 of the Bankruptcy Code
and will be paid only after payment in full of all such non-subordinated Claims
of such Class. Allowed Class 6 Securities-Related Claims shall be subordinated
to other Allowed Class 6 Interests, pursuant to Section 510 of the Bankruptcy
Code and will not be entitled to receive any distributions until after the
distribution to holders of Allowed Non-Subordinated Class 6 Interests equals the
full amount of their liquidation preference of $25.00 per share of Preferred
Stock.
6. For purposes of calculating the distribution of Reorganized ICH Common
Stock to holders of Allowed Securities-Related Claims based on Common Stock, if
any, pursuant to the provisions of Joint Plan, holders of Allowed
Securities-Related Claims, if any, based on Common Stock shall be entitled to
receive their pro-rata portion of shares of Reorganized ICH Common Stock in an
amount equal to: (i) the total amount of all
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 31
<PAGE>
Allowed Securities-Related Claims within ICH Class 7 divided by (ii) $254
million, multiplied by (iii) 1,309,524, multiplied by (iv) a fraction, the
numerator of which is the Allowed Amount of such holder's Allowed
Securities-Related Claim within ICH Class 7, and the denominator of which is the
total amount all Allowed Securities-Related Claims within ICH Class 7.
N. SECTION 1129(A)(2) OF THE BANKRUPTCY CODE REQUIRES THE PROPONENT OF A PLAN
TO COMPLY WITH ALL OF THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE.
1. Section 1129(a)(2) of the Bankruptcy Code requires the proponent of a
plan to comply with all of the applicable provisions of the Bankruptcy Code.
2. The Debtors have complied with the operating guidelines and financial
reporting requirements enacted by the United States Trustee by (i) timely filing
all monthly operating reports and consolidated financial statements and (ii)
maintaining and providing proof of insurance. The Debtors have paid all
statutory fees required to be paid during the Chapter 11 Cases and filed all fee
statements required to be filed.
3. The Debtors have timely filed with the Bankruptcy Court all schedules,
lists of executory contracts, and statements of financial affairs.
4. The Plan Proponents and their respective directors, officers, employees,
agents and professionals have acted in "good faith" within the meaning of
Sections 1125(e), 1126(e), and 1129(a)(3) of the Bankruptcy Code.
5. The Plan Proponents have complied with the provisions of the Bankruptcy
Code, the Bankruptcy Rules, applicable non-bankruptcy law, the Local Bankruptcy
Rules, and the specific rules of the Bankruptcy Court throughout the Chapter 11
Cases.
6. The solicitation of votes from holders of Claims against and Interests
in the Debtors was made following approval and dissemination of the Disclosure
Statement to
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 32
<PAGE>
holders of Claims and Interests in classes that are impaired under the Joint
Plan and was made in good faith and in compliance with the applicable provisions
of the Bankruptcy Code and the Bankruptcy Rules. The ballots of holders of
Claims and Interests entitled to vote on the Joint Plan were properly solicited
and tabulated.
7. The Plan Proponents have complied with all orders of the Bankruptcy
Court and have fulfilled all of the obligations and duties owed to their
respective constituencies as required by and set forth in Sections 1107 and 1108
of the Bankruptcy Code.
8. The Plan Proponents have complied with all applicable provisions of the
Bankruptcy Code, as required by Section 1129(a)(2) of the Bankruptcy Code,
including the provisions governing the notice, disclosure, and solicitation in
connection with the Joint Plan, the Disclosure Statement, and all other matters
considered by the Bankruptcy Court in connection with the Chapter 11 Cases.
9. Good, sufficient, and timely notice of the Disclosure Statement Hearing,
the Confirmation Hearing and all other hearings in the Chapter 11 Cases has been
given to all holders of Claims against and Interests in the Debtors and all
other parties in interest to whom notice was required to have been given.
10. The Plan Proponents have satisfied Section 1129(a)(2) of the Bankruptcy
Code.
O. SECTION 1129(A)(3) PROPOSAL OF THE JOINT PLAN IN GOOD FAITH.
1. Section 1129(a)(3) of the Bankruptcy Code states that a plan must be
proposed in good faith and not by any means forbidden by law.
2. The Debtors, the Creditors Committee and the Equity Committee have been
closely involved in all negotiations regarding the Joint Plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 33
<PAGE>
3. The Court has examined the totality of the circumstances surrounding the
formulation of the Joint Plan. The Joint Plan is based on extensive arm's-length
negotiations among the Debtors, the Creditors Committee, the Equity Committee,
and other parties in interest.
4. The Joint Plan has been proposed with the legitimate and honest purpose
of liquidating certain assets of the Debtors and reorganizing the Debtors'
remaining businesses and affairs.
5. The Joint Plan was proposed in good faith and not by any means forbidden
by law, and the Plan Proponents have thereby satisfied the requirements of
Section 1129(a)(3) of the Bankruptcy Code.
P. SECTION 1129(A)(4) BANKRUPTCY COURT APPROVAL OF CERTAIN PAYMENTS AS
REASONABLE.
1. Section 1129(a)(4) of the Bankruptcy Code requires that all payments
made or to be made by the plan proponent, by the debtor, 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 case, or in connection with the plan and
incident to the case, have been approved by, or are subject to the approval of,
the court as reasonable.
2. Pursuant to Article 2.1(b) of the Joint Plan, each professional person
whose retention with respect to the Debtors' cases has been approved by the
Bankruptcy Court and who holds, or asserts, an Administrative Claim that is a
Fee Claim shall be required to file with the Bankruptcy Court a final fee
application within sixty days after the Effective Date and to serve notice
thereof on all parties entitled to such notice pursuant to the Order
Establishing Interim Procedures and Guidelines for Compensation of Professional
Persons. The failure to timely file the fee application shall result in the Fee
Claim being
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 34
<PAGE>
forever barred and discharged. A Fee Claim with respect to which a Fee
Application has been properly filed with the Bankruptcy Court shall become an
Administrative Claim only to the extent allowed by Final Order. Not later than
five days prior to the Effective Date, each such professional person shall file
an estimate of its final Fee Claim on all parties entitled to such notice
pursuant to the Order Establishing Interim Procedures and Guidelines for
Compensation of Professional Persons.
3. Any other person or entity who claims to hold any other Administrative
Claim shall be required to file with the Court an application within sixty days
after the Effective Date and to serve notice thereof on all parties entitled to
such notice. The failure to file timely the application as required under the
Joint Plan shall result in the Claim being forever barred and discharged. An
Administrative Claim with respect to which an application has been properly
filed pursuant to the Joint Plan, shall become an Allowed Administrative Claim
to the extent such claim is allowed by Final Order.
4. The Joint Plan satisfies Section 1129(a)(4) of the Bankruptcy Code.
Q. SECTION 1129(A)(5) DISCLOSURE OF IDENTITY AND AFFILIATIONS OF PROPOSED
MANAGEMENT, COMPENSATION OF INSIDERS AND CONSISTENCY OF MANAGEMENT
PROPOSALS WITH THE INTERESTS OF CREDITORS AND PUBLIC POLICY.
1. The Plan Proponents have disclosed the identity of the individuals who
will hold positions with Reorganized ICH and the Trust immediately after
confirmation of the Joint Plan and have shown that the service of such
individuals is consistent with the interests of creditors and with public
policy.
2. The Joint Plan satisfies Section 1129(a)(5) of the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 35
<PAGE>
R. SECTION 1129(A)(6) APPROVAL OF RATE CHANGES.
1. Section 1129(a)(6) of the Bankruptcy Code requires a debtor to obtain
the approval of any governmental regulatory commission, with jurisdiction over
the debtor, with respect to any rate changes provided for in the debtor's plan
of reorganization.
2. The Joint Plan has not provided for any changes in rates that require
regulatory approval of any governmental agency. Neither the Debtors, Reorganized
ICH nor the Trust assess rates that are subject to regulatory approval of any
governmental agency.
3. Section 1129(a)(6) of the Bankruptcy Code is not applicable to the Joint
Plan.
S. SECTION 1129(A)(7) BEST INTERESTS OF CREDITORS.
1. Section 1129(a)(7) of the Bankruptcy Code requires that each creditor or
interest holder in an impaired class must either have voted to accept the plan
of reorganization, or will receive or retain under such plan on account of such
claim or interest property of a value, as of the effective date of such plan,
that is not less than the amount that such holder would receive or retain if the
debtor were liquidated under chapter 7 of the Bankruptcy Code.
2. The Joint Plan satisfies Section 1129(a)(7) of the Bankruptcy Code.
T. SECTION 1129(A)(8) ACCEPTANCE OF THE JOINT PLAN BY EACH IMPAIRED CLASS.
1. Section 1129(a)(8) of the Bankruptcy Code requires that, with respect to
each class of claims or interests under a plan, such class has either accepted
the plan or is not impaired under the plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 36
<PAGE>
2. All Classes of Claims against and Interests in the Debtors with the
exception of ICH Class 2 - Secured Claim of Sayyah has either voted to accept
the Joint Plan or are not impaired under the Joint Plan.
3. Each of the unimpaired classes of Claims and Interests under the Joint
Plan and each holder of a Claim or Interest in each such class is conclusively
presumed to have accepted the Joint Plan, and, in accordance with Section
1126(f) of the Bankruptcy Code, solicitation of acceptance with respect to each
such class is not required.
4. With respect to all Classes of Claims against or Interests in the
Debtors except ICH Class 2 - Secured Claim of Sayyah, the Joint Plan satisfies
the requirements of Section 1129(a)(8) of the Bankruptcy Code.
U. SECTION 1129(A)(9) TREATMENT OF CLAIMS ENTITLED TO PRIORITY PURSUANT TO
SECTION 507(A) OF THE BANKRUPTCY CODE.
1. Section 1129(a)(9) of the Bankruptcy Code provides for certain mandatory
treatment of claims entitled to priority under the Bankruptcy Code.
2. Article 2.1 of the Joint Plan provides that each holder of an
Administrative Claim, except as otherwise set forth in the Joint Plan (and
specifically excluding Administrative Tax Claims), shall receive from the Trust
either (i) with respect to Administrative Claims which are Allowed Claims on the
Effective Date, the amount of such holder's Allowed Claim in one cash payment on
the Initial Distribution Date, (ii) with respect to Administrative Claims which
become Allowed Claims after the Effective Date, the amount of such holder's
Allowed Claim in one cash payment on the applicable Distribution Date; or (iii)
such other treatment agreed upon in writing by the Debtors and such holder;
provided however, that any such Administrative Claim representing a liability
incurred in the ordinary course of business by any of the Debtors shall be paid
by the
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 37
<PAGE>
Trust in accordance with the terms and conditions of the particular transaction
giving rise to such liability and any agreements relating thereto. In connection
herewith, the estimated amounts of such Administrative Claims shall on the
Effective Date be reserved by the Trust with respect to payment of such Allowed
Administrative Claims and shall not be treated as Available Cash.
3. In accordance with Section 1129(a)(9)(C) of the Bankruptcy Code, Article
2.2 of the Joint Plan provides that the Tax Settlement resolves and satisfies
all Administrative Claims and Priority Claims for federal income taxes for which
the Debtors are responsible for tax years 1990 through 1995.
4. Pursuant to Article 2.2(b) of the Joint Plan, each holder of an Allowed
Administrative Claim for taxes shown on the (a) Federal income tax returns in
which the Debtors are includible for the period from and after January 1, 1996,
and ending on the Effective Date, and (b) State income tax returns in which the
Debtors are includible for the period during which the Debtors' Chapter 11 cases
are being administered and any other taxes of the Debtors payable pursuant to
Section 507(a)(1) of the Bankruptcy Code (collectively, the "Allowed
Administrative Tax Claims"), if any, shall be paid in cash in full from the
Trust on the latest of (i) the Initial Distribution Date, or (ii) the date such
payment is due under applicable law. Payment of Allowed Administrative Tax
Claims shall be the responsibility of the Trust, and the estimated amounts of
such tax liabilities as of the Effective Date shall be reserved and shall not be
treated as Available Cash. The amount of Allowed Administrative Tax Claims shall
be determined after giving effect to the terms of the Tax Settlement by a deemed
closing of the books of the Debtors as of the close of the Effective Date, and
shall be determined where appropriate on a consolidated or combined basis
consistent with the manner in which the Debtors have previously filed tax
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 38
<PAGE>
returns; provided however, that the Trust shall not be obligated in excess of
the actual liability of the Debtors' tax liabilities for the taxable year during
which the Effective Date occurs. The Trust shall have no obligation to
Reorganized ICH for any tax liability. If the Effective Date occurs in a taxable
year subsequent to the taxable year including January 1, 1996, the amount of
Allowed Administrative Tax Claims shall be determined by carrying forward all
available net operating losses, capital losses, alternative minimum tax net
operating losses, and other tax attributes of the Debtors and members of their
consolidated or combined groups, where applicable, for full use in the period of
such subsequent taxable year deemed for these purposes to end on the Effective
Date.
5. Pursuant to Article 2.2(c) of the Joint Plan, each Allowed Claim for
State taxes entitled to priority in accordance with Section 507(a)(8) of the
Bankruptcy Code, shall be paid in cash in full by the Trust on the later of (i)
the Initial Distribution Date, or (ii) the date such payment is due under
applicable law.
6. The Debtors have sufficient cash to fund payments of Allowed
Administrative Expenses and Allowed Tax Claims.
7. The Joint Plan satisfies the requirements of Section 1129(a)(9) of the
Bankruptcy Code.
V. SECTION 1129(A)(10) ACCEPTANCE BY AT LEAST ONE IMPAIRED CLASS.
1. Section 1129(a)(10) of the Bankruptcy Code provides that at least one
impaired class of claims must accept a plan of reorganization, determined
without including any acceptance of such plan by any insider.
2. At least one impaired class in the Joint Plan has voted to accept the
Joint Plan determined without including any acceptance of the Joint Plan by an
insider holding a Claim in each such class.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 39
<PAGE>
3. The Joint Plan satisfies the requirements of Section 1129(a)(10) of the
Bankruptcy Code.
W. SECTION 1129(A)(11) FEASIBILITY OF THE JOINT PLAN.
1. Section 1129(a)(11) of the Bankruptcy Code requires that a plan be
"feasible" and that the debtor or its successor under such plan is not likely to
require liquidation or further financial reorganization, except as provided
under such plan.
2. On the basis of the information presented in the Joint Plan, the record
of the Confirmation Hearing, and as detailed in the Disclosure Statement, the
Court concludes that confirmation of the Joint Plan is not likely to be followed
by the liquidation of Reorganized ICH or further financial reorganization
thereof and that the liquidation of the Trust is provided for under the Joint
Plan.
3. At the Confirmation Hearing, the Court was advised through the testimony
of James R. Arabia of the terms of a potential transaction which is under active
consideration by the members of the Initial Board of Directors of Reorganized
ICH.
4. The Joint Plan satisfies the requirements of Section 1129(a)(11) of the
Bankruptcy Code.
X. SECTION 1129(A)(12) PAYMENT OF BANKRUPTCY FEES.
1. Section 1129(a)(12) of the Bankruptcy Code requires either that all fees
payable under 28 U.S.C. Section 1930, as determined by the court at the hearing
on confirmation of the plan, have been paid or that the plan provides for the
payment of all such fees on the effective date of the plan.
2. Article 2.5 of the Joint Plan provides that all fees payable pursuant to
28 U.S.C. Section 1930 shall be paid by the Trust on the Effective Date.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 40
<PAGE>
3. The Joint Plan satisfies the requirements of Section 1129(a)(12) of the
Bankruptcy Code.
Y. SECTION 1129(A)(13) RETIREE BENEFITS.
1. Section 1129(a)(13) of the Bankruptcy Code requires the continuation of
payment of all retiree benefits, at the level established pursuant to Section
1114 of the Bankruptcy Code at any time prior to confirmation of the plan, for
the duration of the period for which the debtor has obligated itself to provide
such benefits.
2. The Joint Plan provides for the continuation of retiree benefits, as the
term is defined under Section 1114 of the Bankruptcy Code. The Trust is
authorized to exercise the Debtors' rights under the applicable retiree benefit
documents, including the modification of such benefits in accordance with such
plan documents and the payment of sums to a third party for the provision of
such benefits to retirees henceforth. In addition, the Debtors are authorized to
take such action as may be necessary to terminate all existing employee benefit
plans, other than the retiree benefit plan, on or before the Effective Date.
3. The Joint Plan satisfies the requirements of Section 1129(a)(13) of the
Bankruptcy Code.
Z. BANKRUPTCY RULE 3016(B).
1. The Joint Plan is dated and identifies the entities that have proposed
and submitted the Joint Plan.
2. The Joint Plan satisfies Federal Rule of Bankruptcy Procedure 3016(b).
AA. SECTION 1129(B) CONFIRMATION OF THE JOINT PLAN OVER THE NONACCEPTANCE OF
CERTAIN IMPAIRED CLASSES.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 41
<PAGE>
1. The holder of the Class 2 - Secured Claim of Sayyah has rejected the
Joint Plan.
2. The Joint Plan satisfies the requirements of Section 1129(b) of the
Bankruptcy Code because, with respect to the Class 2 Secured Claim of Sayyah,
the Joint Plan does not discriminate unfairly and is fair and equitable with
respect to such claim.
3. Pursuant to Article 3.1(a)(ii), the Class 2 Secured Claim of Sayyah
shall be fully satisfied by an offset of the amount owed by Sayyah to ICH
against the Allowed Amount of Sayyah's Claim against ICH. Such offset satisfies
the requirements of Sections 1129(b)(1) and (2)(A) of the Bankruptcy Code. In re
FCX, 853 F.2d 1149 (4th Cir. 1988), cert. denied 489 U.S. 1011 (1989).
4. The Joint Plan satisfies the requirements of Section 1129(b) of the
Bankruptcy Code with respect to the one class of Claims that did not accept the
Joint Plan.
AB. SECTION 1129(D) TAX AVOIDANCE.
1. Section 1129(d) of the Bankruptcy Code provides that a court may not
confirm a plan if the principal purpose is the avoidance of taxes or the
avoidance of the requirements of Section 5 of the Securities Act of 1933, as
amended.
2. No objection has been filed by any governmental unit or any party in
interest alleging that the principal purpose of the Joint Plan is avoidance of
taxes or avoidance of the requirements of Section 5 of the Securities Act of
1933, as amended.
3. The principal purpose of the Joint Plan is not avoidance of taxes or
avoidance of the requirements of Section 5 of the Securities Act of 1933, as
amended.
4. The Joint Plan satisfies Section 1129(d) of the Bankruptcy Code.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 42
<PAGE>
AC. TAX SHARING AGREEMENT.
1. The Debtors and members of their consolidated group have executed a
Consolidated Tax Allocation Agreement (the "Tax Agreement"). The Tax Agreement
provides for certain allocations among the Debtors and members of their
consolidated group of the federal income tax liabilities of members of the
group. In order to effectuate the terms of the Joint Plan, and to realize the
value of BML, ICH Funding Corp. and REO Holding under the terms of the Joint
Plan, any outstanding obligations under the Tax Agreement between and among the
Debtors, BML, ICH Funding and REO Holdings should be cancelled.
AD. ASSET VALUES.
1. The fair market value as of the Effective Date of the assets listed in
(a) thru (h) below is as follows:
a. CFSB Interest. The CFSB Interest has a fair market value of
$18,000,000.
b. ICH Funding. The stock of ICH Funding has a fair market value of
$1,353,000.
c. Southwestern Financial Corp. $40 Million Note Due 2005. The fair
market value of the Southwestern Financial Corp. $40 Million Note Due
2005 is $40,000,000.
d. Hatbrands, L.P. and Hatbrands, Inc. II L.P. The fair market value of
BML's interest in Hatbrands, L.P. and Hatbrands, Inc. II L.P. is $0.
e. Conseco Capital Partners. The fair market value of BML's interest in
the account receivable relating to the sale of Conseco Capital
Partners if $3,571,000.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 43
<PAGE>
f. Post Oak. The fair market value of BML's interest in the Post Oak
property in Houston, Texas, is $2,300,000.
g. Berg Electronics, L.P. As of the Effective Date, the fair market value
of BML's interest in Berg Electronics, L.P. is $10,000,000.
h. Neodata, L.P. and Neodata DBMS, L.P. As of the Effective Date, the
fair market value of BML's interest in Neodata, L.P. and Neodata DBMS,
L.P. is $1,817,000.
VIII. DISTRIBUTIONS
A. DISTRIBUTIONS.
1. Articles 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8 and 9.9 of the Joint
Plan contain the provisions governing distributions under the Joint Plan, and
such distributions are fair and reasonable.
B. SECTIONS 1145 AND 1125(E).
1. Each of ICH and Reorganized ICH constitute or will constitute a
"debtor," and the Trust will constitute a "successor" and a "newly organized
successor" to ICH, for purposes of Sections 1145 and 1125(e) of the Bankruptcy
Code and each of the Plan Proponents has participated in good faith and in
compliance with the applicable provisions of the Bankruptcy Code in the offer,
sale, issuance and distribution of Reorganized ICH Common Stock or the Trust
Interests or Trust Certificates (the "Plan Securities"), and any other
securities that may be deemed to be offered, sold, issued or distributed
pursuant to the Joint Plan and the transactions contemplated thereunder, to the
extent such interests constitute a security under the Securities Act of 1933,
pursuant to the Joint Plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 44
<PAGE>
2. The Plan Proponents have fulfilled the requirements of Section 1125(e),
of the Bankruptcy Code having solicited votes on the Joint Plan in good faith
and in compliance with the applicable provisions of the Bankruptcy Code.
3. With respect to the offer, sale, issuance and distribution of the Plan
Securities or any other securities, if any, pursuant to the terms of the Joint
Plan (1) Reorganized ICH and the Trust are not underwriters within the meaning
of section 1145(b) of the Bankruptcy Code, (2) the offer, sale and issuance of
the Plan Securities, and any other securities, if any, are, and shall be,
pursuant to a plan of reorganization, such as the Joint Plan, (3) the Plan
Securities, and any other securities, if any, are to be distributed in exchange
for Claims against or Interests in the Debtors, (4) Reorganized ICH Common
Stock, as securities of Reorganized ICH, constitute securities of a debtor under
a plan of reorganization, such as the Joint Plan, (5) the Trust Certificates, as
securities of the Trust, constitute securities of a successor to ICH under the
Joint Plan, and (6) the other securities, if any, constitute securities of ICH
or of a successor to ICH under a plan of reorganization, such as the Joint Plan.
4. The disclosure to Reorganized ICH by the depositories, transfer agents,
street name holders, and all other banks, brokers, or agent nominee record
holders (collectively "Record Holders") of the Common Stock and/or Preferred
Stock of: (1) the identity of the beneficial owners of Common Stock and/or
Preferred Stock held of record by such Record Holders for the benefit of third
party beneficial owners, and (2) the amount and type of the Common Stock and/or
Preferred Stock attributable to such third party beneficial owners is essential
to the completion, implementation, and operation of the Joint Plan.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 45
<PAGE>
5. The disclosure to the Trust by Record Holders of the Notes of: (1) the
identity of the beneficial owners of the Notes held of record by such Record
Holders for the benefit of third part beneficial owners and (2) the amount and
type of the Notes attributable to such third party beneficial owners is
essential to the completion, implementation, and operation of the distribution
of the Trust Certificates and is essential to the completion, implementation,
and operation of the Joint Plan.
IX. PLAN MODIFICATIONS
1. On January 20, 1997, the Plan Proponents filed the First Modification.
which affected certain technical amendments to the Joint Plan and resolve
certain objections to confirmation of the Joint Plan. At the Confirmation
Hearing, the Plan Proponents and the Shaw Group submitted the Second
Modification (collectively the Plan Modifications").
2. The Plan Modifications do not adversely change the treatment of the
claim of any creditor or the right of holders of interests. The Plan
Modifications merely clarify certain provisions of the Joint Plan. The Plan
Modifications preserve the Joint Plan, as negotiated, and the rights of all
parties set forth therein. On January 20, 1997, the Plan Proponents served the
First Modification upon persons listed on the Master Service List. Such service
of the Plan Modifications constitutes adequate and appropriate notice of the
First Modification, and no further notice of the First Modification is
necessary. The Plan Modifications comply in all respects with Section 1127 of
the Bankruptcy Code, Bankruptcy Rule 3019, and all other provisions of the
Bankruptcy Code. No additional disclosure under Section 1125 of the Bankruptcy
Code is required with respect to the Plan Modifications.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 46
<PAGE>
3. At the Confirmation Hearing, the Court approved the Plan Modifications,
and, pursuant to Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019,
all holders of claims that have accepted or are conclusively presumed to accept
the Joint Plan are deemed to have accepted the Plan Modifications.
X. THE TRANSFER OF PROPERTIES UNDER THE JOINT PLAN
ARE GOVERNED BY THE EXEMPTIONS PROVIDED
IN SECTION 1146(C) OF THE BANKRUPTCY CODE
1. Any and all transfers under the Joint Plan including, without
limitation, the following transfers shall not be subject to taxation under state
or local law imposing a stamp, transfer, or similar tax:
(a) SWL Holding & Care Transactions. Consistent with the requirements
of Section 1146(c) of the Bankruptcy Code, the transactions and
distributions made by SWL Holding & Care under the Joint Plan will not be
subject to taxation under any state or local law imposing a stamp,
transfer, or similar tax.
(b) Transfer of Trust Assets. Consistent with the requirements of
Section 1146(c) of the Bankruptcy Code, the transfer of Trust Assets to the
Trust will not be subject to taxation under any state or local law imposing
a stamp, transfer, or similar tax.
(c) Assumption of Modern/Western Agreement and Philadelphia American
Agreement Obligations. Consistent with the requirements of Section 1146(c)
of the Bankruptcy Code, the assumption of the Modern/Western Agreement and
the Philadelphia American Agreement (as such Agreements are defined in the
Joint Plan) obligations by ICH and the Trust will not be subject to
taxation under any state or local law imposing a stamp, transfer, or
similar tax.
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 47
<PAGE>
(d) Transfer of Perry Park. Consistent with the requirements of
Section 1146(c) of the Bankruptcy Code, the transfer of Perry Park to
Reorganized ICH under the Joint Plan will not be subject to taxation under
any state or local law imposing a stamp, transfer, or similar tax.
(e) Transfer of Assets of BML. Consistent with the requirements of
Section 1146(c) of the Bankruptcy Code, the transfer of assets of BML will
not be subject to taxation under any state or local law imposing a stamp,
transfer, or similar tax.
CONCLUSION
The foregoing constitutes the Court's findings of fact and conclusions of
law. Based thereon, the Court will separately enter an order confirming the
Joint Plan.
SIGNED This 7th day of February, 1997.
/s/ Robert C. McGuire
---------------------
ROBERT C. McGUIRE
CHIEF BANKRUPTCY JUDGE
SUBMITTED BY:
Daniel C. Stewart, SBT #19206500
Josiah M. Daniel, III, SBT # 05358500
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
(214) 745-5400
ATTORNEYS FOR DEBTORS
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 48
<PAGE>
Michael A. Rosenthal, SBT #17281490
I. Richard Levy, SBT #12265020
GIBSON, DUNN & CRUTCHER
1717 Main Street, Suite 5400
Dallas, Texas 75201
(214) 698-3100
ATTORNEYS FOR THE OFFICIAL COMMITTEE
OF UNSECURED CREDITORS
Peter D. Wolfson
John A. Bicks
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Ave.
New York, New York 10022
(212) 326-0806
ATTORNEYS FOR THE OFFICIAL COMMITTEE
OF EQUITY SECURITY HOLDERS
FINDINGS OF FACT AND CONCLUSIONS OF LAW PAGE 49
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: )
)
I.C.H. CORPORATION, ) CASE NO. 395-36351
a Delaware corporation, f/k/a ) (Chapter 11)
Southwestern Life Corporation, f/k/a )
I.C.H. Corporation, )
Fed. Tax No. 43-6069928, )
)
SWL HOLDING CORPORATION, ) CASE No. 395-36352
a Delaware corporation, f/k/a ) (Chapter 11)
Life Interests Corporation, )
Fed. Tax No. 51-0343581, )
)
CARE FINANCIAL CORPORATION, ) CASE NO. 395-36354
a Delaware corporation, f/k/a ) (Chapter 11)
Health Interests Corporation, )
Fed. Tax No. 51-0343580, and )
) JOINTLY ADMINISTERED
DEBTORS. ) CASE NO. 395-36351-RCM-11
)
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11
On January 31, 1997, the Court conducted the hearing on confirmation (the
"Confirmation Hearing") of the First Amended Joint Plan of Reorganization under
Chapter 11 dated November 15, 1996, as modified by the First Nonmaterial
Modification of First Amended Joint Plan of Reorganization Under Chapter 11
filed on January 20, 1997, and as further modified by that certain letter
agreement filed with and accepted by the Court at the Confirmation Hearing as
the Second Nonmaterial Modification of the First Amended Joint Plan of
Reorganization Under Chapter 11 (as so modified, the "Joint Plan") filed by
I.C.H. Corporation ("ICH"), SWL Holding Corporation ("SWL"), and Care Financial
Corporation ("Care" and, together with ICH and SWL, the "Debtors"), the Official
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 1
<PAGE>
Committee of Unsecured Creditors (the "Creditors Committee") and, the Official
Committee of Equity Security Holders (the "Equity Committee" and, together with
the Debtors and the Creditors Committees, the "Plan Proponents"). At the
conclusion of the Confirmation Hearing, having reviewed and considered the Joint
Plan, the testimony proffered and adduced and the exhibits submitted into
evidence, the arguments of counsel presented at the Confirmation Hearing, and
all of the objections to confirmation of the Joint Plan, and the Court being
familiar with the Joint Plan and other relevant factors affecting the Debtors'
Chapter 11 cases (the "Chapter 11 Cases"), and having taken judicial notice of
the entire record of the Chapter 11 Cases since the Petition Date, the Court
made certain Findings of Fact and Conclusions of Law (the "Findings and
Conclusions") which are separately entered herewith. On the basis of the
Findings and Conclusions, which are incorporated herein by reference, and good
cause having been shown, it is:
ORDERED, ADJUDGED AND DECREED that:
1. This Order1 shall be effective according to its terms upon its entry.
Notwithstanding the foregoing, the Effective Date shall occur on the later of
(i) the eleventh (11) day following the date on which this Order has been
entered on the docket maintained by the Clerk of the Bankruptcy Court, (ii) if
this Order is stayed pending appeal, the day after such stay is dissolved by
final order, or (iii) the first date upon which this Order is subject to
execution or enforcement under Bankruptcy Rule 7062.
- -----------------
1 All capitalized terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Joint Plan or, if not defined in the
Joint Plan, as defined in Title 11 of the United States Code (the
"Bankruptcy Code").
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 2
<PAGE>
2. The Joint Plan complies with all applicable provisions of the Bankruptcy
Code and all applicable Bankruptcy Rules relating to confirmation and, thus, the
Joint Plan is hereby confirmed.
3. The record of the Confirmation Hearing is closed.
4. All motions to challenge, designate or in any way disqualify any votes
cast to accept or reject the Joint Plan, are hereby denied. The Shaw Group's
oral motion to change its rejecting votes with respect to the Joint Plan is
hereby granted, and such rejecting votes are hereby amended to be acceptances of
the Joint Plan.
5. All objections to confirmation of the Joint Plan, whether formally filed
in writing or not, including but not limited to: (i) the Objection of the Shaw
Group to Confirmation of the Joint Plan of Reorganization under Chapter 11 dated
November 15, 1996, and/or reservation of rights included therein; (ii)
Supplemental Objection of the Shaw Group; (iii) the Objection of the Shaw Group
to First Nonmaterial Modification of Joint Plan of Reorganization; (iv) the
Objection of Victor L. Sayyah to Confirmation of First Amended Joint Plan of
Reorganization, and (v) the oral objections of the Plaintiffs in Adversary No.
395-3985, and any other objections to confirmation that have not been withdrawn
prior to entry of this Order or are not cured by the relief granted herein, are
overruled in their entirety, and all withdrawn objections are deemed withdrawn.
6. Nothing in this Order shall be construed as modifying or contradicting
settlements previously approved by Order of this Court, including but not
limited to the Order Approving Agreement for Compromise and Settlement of Tax
Claims and Certain Tax Related Liabilities of the Debtors entered on September
13, 1997, the Order Granting Motion for Approval of Compromise Between ICH
Corporation and Tenneco, Inc. entered
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 3
<PAGE>
on January 17, 1997, and the Order Granting Motion for Approval of Compromise
between ICH Corporation and Conseco, Inc. entered on January 31, 1997.
7. In accordance with Article 7 of the Joint Plan and pursuant to Sections
105(a) and 1123(a)(5)(B) of the Bankruptcy Code, the transfer of the Trust
Assets to the Trust is authorized and approved, and the Debtors are authorized,
empowered and ordered to convey to the Trust all of their rights, titles, and
interests in and to the Trust Assets in accordance with the terms and conditions
of the Joint Plan and the Trust Agreement and Joint Plan-related documents filed
with the Court. The Trust Assets include, without limitation, the Debtors'
right, title, and interest in and to the obligation of Sayyah to ICH evidenced
by the documents referred to, attached to, or related to the Proof of Claim
filed by Sayyah on February 7, 1996 (the "Sayyah Obligation"), and that certain
partnership interest owned by the Estate of ICH which is the subject of
Adversary No. 397-3038 in this Court (the "Conseco Partnership Interest").
8. In accordance with Article 7 of the Joint Plan and pursuant to Section
1141(c) of the Bankruptcy Code, the Trust Assets [including the Capital and
Surplus Retention Assets that may subsequently be transferred to the Trust
pursuant to Article 7.5(c)] shall be conveyed to the Trust (1) free and clear of
all liens, claims, interests, encumbrances, and charges of the Claimants and
holders of Interests of the Debtors to the full extent permitted by the
Bankruptcy Code, including: (A) those of the kind specified in Sections 502(g),
(h), and (i) of the Bankruptcy Code, and (B) preferential rights or rights of
first refusal of any kind or nature whatsoever, whether direct or indirect,
absolute or contingent, matured or unmatured, liquidated or unliquidated, of,
by, or against the Trust Assets; and (2) with respect to contracts or leases
assigned or transferred,
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 4
<PAGE>
notwithstanding a provision in any contract or lease or any applicable law that
prohibits, restricts or conditions the assignment or transfer of that contract
or lease, including all preferential rights or rights of first refusal of any
kind or nature whatsoever, pursuant to Section 365(f) of the Bankruptcy Code;
provided that such prohibition, restriction or condition of assignment or
transfer shall be negated only with respect to transfers and assignments
effected pursuant to the Joint Plan, and that such prohibitions, restrictions
and conditions of assignment shall otherwise remain in full force and effect and
a part of the contract or lease so assigned or transferred. Notwithstanding the
foregoing provisions of this paragraph, the transferability of the CFSB Interest
is governed by Article 6.2 of the Joint Plan and Paragraph 26 below.
9. The transfers of the Trust Assets to the Trust are and will be legal,
valid and effective assignments and transfers of the Trust Assets pursuant to
the Joint Plan.
10. In accordance with Article 7 of the Joint Plan and pursuant to Sections
105(b) and 1123(a)(5)(A)(B) and (D) of the Bankruptcy Code, any retention of
Retained Assets by Reorganized ICH and the transfer of Retained Assets to
Reorganized ICH is authorized and approved, and the Debtors are authorized,
empowered and ordered to transfer to Reorganized ICH all of their rights,
titles, and interests in and to the Retained Assets in accordance with the terms
and conditions of the Joint Plan.
11. In accordance with and subject to Article 7 of the Joint Plan, and
pursuant to Section 1141(a)(5)(A) of the Bankruptcy Code, on the Effective Date,
the Retained Assets shall be transferred and vested in Reorganized ICH (1) free
and clear of all liens, claims, interests, encumbrances, and charges of
Claimants and holders of Interests of the Debtors in accordance with and to the
full extent permitted by Section 1141(c) of the
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 5
<PAGE>
Bankruptcy Code, including: (A) those of the kind specified in Sections 502(g),
(h), and (i) of the Bankruptcy Code; and (B) preferential rights or rights of
first refusal of any kind or nature whatsoever, whether direct or indirect,
absolute or contingent, matured or unmatured, liquidated or unliquidated, of,
by, or against the Retained Assets; and (2) with respect to contracts or leases
assigned or transferred, notwithstanding a provision in any contract or lease or
any applicable law that prohibits, restricts or conditions the assignment or
transfer of that contract or lease, including all preferential rights or rights
of first refusal of any kind or nature whatsoever, pursuant to Section 365(f) of
the Bankruptcy Code; provided that such prohibition, restriction or condition of
assignment or transfer shall be negated only with respect to transfers and
assignments effected pursuant to the Joint Plan, and that such prohibitions,
restrictions and conditions of assignment shall otherwise remain in full force
and effect and a part of the contract or lease so assigned or transferred.
12. The Debtors, the Trust and Reorganized ICH are authorized and empowered
to take such actions and do all things and to incur all reasonable costs and
expenses as may be necessary and required to implement and effectuate the Joint
Plan, the transfer to the Trust of the Trust Assets and the transfer to and
retention by Reorganized ICH of the Retained Assets, and this Order.
13. Notwithstanding the foregoing, Ozark National Life Insurance Company
shall retain its lien upon certain real property of Perry Park until its Secured
Claim has been paid in full, which shall be on the Initial Distribution Date,
whereupon Ozark shall execute and deliver to Reorganized ICH a complete release
of its lien on such property.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 6
<PAGE>
14. The provisions of the Article 7.5 of the Joint Plan relating to BML are
authorized and approved, and the Debtors, the Trust and Reorganized ICH are
authorized to take such action as may be necessary to perform their respective
duties under the Joint Plan, including but not limited to:
a. The Debtors are authorized to take any action and to execute such
documents as may be necessary or appropriate to effectuate the assumption
by ICH of the rights and obligations of BML under the Modern/Western
Agreement and the Philadelphia American Agreement (as such Agreements are
defined in the Joint Plan); and
b. ICH is authorized to take any action and to execute such documents
as may be necessary or appropriate to effectuate the assignment to the
Trust of all of ICH's rights and obligations under the Modern/Western
Agreement and the Philadelphia American Agreement (as such Agreements are
defined in the Joint Plan); and the Trust is authorized to take any action
and to execute such documents as may be necessary or appropriate to
effectuate the assumption by the Trust of the obligations of ICH and/or BML
under the Modern/Western Agreement and the Philadelphia American Agreement.
c. The assumption by the Trust of non-reinsured liabilities of BML, as
provided for by the Joint Plan, is approved and the Trust is authorized to
take any action and to execute such documents that may be necessary or
appropriate to effectuate the assumption by the Trust of the non-reinsured
liabilities of BML. Reorganized ICH shall not be responsible or liable for
any liabilities of the Debtors
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 7
<PAGE>
including, without limitation, the non-reinsured liabilities, as provided
for by the Joint Plan.
15. Subject to the provisions of the Joint Plan, after the Effective Date,
Reorganized ICH may operate its business and buy, sell, use, acquire, and
dispose of its property, free of any restrictions imposed by the Bankruptcy Code
or any requirement of obtaining further approvals of the Court.
16. The Plan Proponents, the Trust, the Trustees, Reorganized ICH, the Shaw
Group, and any other Entity having duties or responsibilities under the Joint
Plan or this Order, and their respective directors, officers, general partners,
agents, representatives, and attorneys, are authorized, empowered and ordered to
carry out all of the provisions of the Joint Plan, to issue, execute, deliver,
file, and record, as appropriate, any instrument, or perform any act necessary
to implement, effectuate, or consummate the Joint Plan or this Order, and to
issue, execute, deliver, file, and record, as appropriate, such other contracts,
instruments, releases, indentures, mortgages, deeds, bills of sale, assignments,
leases, or other agreements or documents, and to perform such other acts and
execute and deliver such other documents as are required by, consistent with and
necessary or appropriate to implement, effectuate, or consummate the Joint Plan
and this Order and the transactions contemplated thereby and hereby, all without
the requirement of further application to, or Order of, the Court or further
action by their respective directors, stockholders or beneficiaries, and with
like effect as if such actions had been taken by unanimous action of the
respective directors, stockholders or beneficiaries of such entities. The
Co-CEOs, any other officer of the Debtors; the Secretary, assistant secretary,
and any other officer of Reorganized ICH; and the Managing Trustee of the
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 8
<PAGE>
Trust (as defined in the Trust Agreement) are authorized to certify or attest to
any of the foregoing actions taken by the Debtors, Reorganized ICH and/or the
Trust, respectively. The Managing Trustee is hereby irrevocably appointed as the
Debtors' attorney-in-fact (which appointment as attorney-in-fact shall be
coupled with an interest), with full authority in the place and stead of each
Debtor and in the name of each Debtor or otherwise, from time to time after the
Effective Date, in the Managing Trustee's discretion to take any action and to
execute any instrument that the Managing Trustee may deem to be necessary or
advisable to convey, transfer, vest, perfect, and confirm title of the Trust
Assets in the Trust as to, and/or to put the Trust in possession of, any and all
Trust Assets, including, without limitation, to issue, execute, deliver, file,
and record such contracts, instruments, releases, indentures, mortgages, deeds,
bills of sale, assignments, leases, or other agreements or documents, and to
file any claims, to take any action, and to institute any proceedings that the
Managing Trustee may deem necessary or desirable in furtherance thereof.
17. The Debtors, the Trust and Reorganized ICH are further authorized,
empowered and ordered to cause to be filed with the Secretary of State or other
applicable officials of any applicable governmental units any and all
certificates, agreements, or plans of merger, dissolution, liquidation, or
amendment necessary or appropriate to effectuate the transactions contemplated
by the Joint Plan and this Order, and amended and restated certificates or
articles of incorporation and by-laws or certifications or articles of amendment
and all such other actions, filings, or recordings as may be required under
appropriate provisions of the applicable laws of all applicable Governmental
Units. The execution of any such document or the taking of any such
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 9
<PAGE>
action shall be, and hereby is, deemed conclusive evidence of the authority of
such Entity to so act. This Order shall constitute all approvals and consents,
if any, required by the General Corporation Law of the State of Delaware and all
other applicable business corporation, trust, and other laws of the applicable
governmental units with respect to the implementation and consummation of the
Joint Plan.
18. The Plan Proponents, Reorganized ICH, and the Trust shall have the
right, to the full extent permitted by Section 1142 of the Bankruptcy Code, to
apply to this Court for an order, notwithstanding any otherwise applicable
nonbankruptcy law, directing any appropriate entity to execute and deliver any
instrument or perform any act necessary to implement the Joint Plan, as required
thereunder or under the provisions of this Order.
19. Pursuant to Sections 1141(a) and (d) of the Bankruptcy Code, the
provisions of the Joint Plan shall (i) bind all Claimants and Interests Holders,
whether or not they voted to accept the Joint Plan, and (ii) discharge the
Debtors, jointly and severally, from all claims that arose before the Petition
Date, and from any liability, including, without limitation, any liability of a
kind specified in Sections 502(h) or 502(i) of the Bankruptcy Code, that arose,
or has been asserted against, the Debtors, jointly or severally, at any time
before the entry of the Confirmation Order or that arises from any
pre-Confirmation conduct of the Debtors, jointly or severally, whether or not
the Claim is known or knowable. In addition, the distributions provided for
under this Joint Plan shall be in exchange for and in complete satisfaction,
discharge, and release of all Claims against and Interests in the Debtors or any
of their assets or properties, including any Claim or Interest accruing after
the Petition Date and prior to the Effective Date. Without limiting the
generality of the foregoing, Confirmation discharges all Unsecured Claims, all
Claims,
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 10
<PAGE>
if any, relating to ICH's 1986 retirement of its Class B preferred stock, and
all Claims or Interests relating to the escheat of Securities or funds
attributable to Securities of ICH. On and after the Effective Date, all holders
of Claims or Interests shall be precluded from asserting any Claim or Interest
against the Trust or Reorganized ICH or their assets or properties based on any
transaction or other activity of any kind that occurred prior to the
Confirmation Date except as provided in the Joint Plan.
20. Confirmation of the Joint Plan shall result in the issuance of a
permanent injunction against the: (i) commencement or continuation of any
judicial, administrative, or other action or proceeding against the Debtors, the
Trust, or Reorganized ICH on account of Claims against or Interests in the
Debtors, or on account of claims released pursuant to Articles 10.3 and 10.4 of
the Joint Plan against the Released Entities or Released Officers; (ii)
enforcement, attachment, collection or recovery by any manner or means of any
judgment, award, decree, or order against the Debtors, the Trust or Reorganized
ICH on account of or arising from pre-Confirmation conduct of the Debtors; or
(iii) creation, perfection or enforcement of any encumbrance of any kind against
the Debtors, the Trust, or Reorganized ICH, or their respective assets, arising
from a Claim against or Interest in the Debtors.
21. The compromise, settlement or release by the Debtors of claims, if any,
against the Released Entities, the Released Officers or the Shaw Group does not
operate as a release of the claims, if any, held individually and
non-derivatively by third parties against such Entities or any other non-Debtor
third party; and the rights of any non-Debtor third party to pursue his, her, or
its individual, non-derivative claims, if any, against non-Debtor third parties
shall not be precluded or impaired by this Order.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 11
<PAGE>
22. As provided in Article 10.2(a) of the Joint Plan and subject to
Paragraph 14 of this Order and Article 7.5 of the Joint Plan, Reorganized ICH is
the successor and designated representative of the Debtors and their Estates
appointed for the purpose of retention and enforcement of the Retained Causes of
Action. As provided in Article 10.2(a) of the Joint Plan, the Trust is the
appointed successor and designated representative of the Debtors and their
Estates appointed for the purpose of retention and enforcement of claims
specifically relating to or arising from Trust Assets, including but not limited
to all claims related to collection of the Sayyah Obligation and the Conseco
Partnership Interest, but specifically excluding all claims related to any asset
which has been fully and finally converted into cash which has been transferred
to the Trust as the Effective Date.
23. Notwithstanding the foregoing, but only to the extent set forth in the
Joint Plan, the Trust shall be entitled to assert as an offset, objection, or
defense with respect to any Claim filed or asserted against the Estates, or
against the Trust as successor to the Estates, any Retained Cause of Action
retained by Reorganized ICH under this Joint Plan, provided however, that the
obligations of Reorganized ICH set forth in Article 10.2(b) of the Joint Plan
shall not apply to any such Retained Cause of Action so asserted by the Trust.
This provision shall be deemed to be an assignment of such Retained Cause of
Action to the Trust solely for the limited purpose, and only to the extent
necessary, to permit the Trust to fully assert such offset, objection or
defense. As provided in the Joint Plan, any recovery obtained through such
assertion of a Retained Cause of Action by the Trust in excess of the amount of
the claim asserted against the Estates or the Trust, as the case may be, shall
be the property of Reorganized ICH.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 12
<PAGE>
24. Consistent with the Joint Plan, Reorganized ICH or the Trust, as
applicable, shall be the only parties authorized to pursue the Retained Causes
of Action and any other claims or causes of action of the Debtors, and shall
have the sole right to waive or assert any attorney-client or other privilege of
the Debtors; and no other party shall have the right or obligation to pursue any
such actions or to waive, raise, or assert any claim or privilege related
thereto. Notwithstanding any applicable statutes of limitation, Reorganized ICH
and the Trust, as applicable, shall have the right to prosecute any claim or
cause of action, including the Retained Causes of Action within the time periods
provided for the prosecution of such actions by the Debtors, as set forth in
Section 546(a) of the Bankruptcy Code.
25. The "Judgment Reduction and Hold Harmless" provision set forth at
Article 10.2(b) of the Joint Plan is authorized and approved.
26. At the Confirmation Hearing, the Plan Proponents tendered to the Court
a letter agreement among the Debtors, the Equity Committee, and the Shaw Group
which constitutes the Second Nonmaterial Modification of the Joint Plan of
Reorganization which was agreed and consented to by the Creditors Committee, and
which provides as follows:
(a) The provisions of Article 10.4 of the Joint Plan respecting the
Released Officers shall remain in full force and effect with respect to W.
Hubert Mathis, Steven R. Cartwright, Robert J. Bruce, and H. Don
Rutherford, and the Shaw Group agrees to the releases of those officers as
part of the Confirmation of the Joint Plan.
(b) With respect to John T. Hull, Robert C. Greving, and Daniel B.
Gail, the releases contemplated by Article 10.4 of the Joint Plan shall not
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 13
<PAGE>
be executed and delivered on the basis of this Order, but rather shall be
the subject of a separate, prompt hearing for compromise of controversies
under and in accordance with the procedures and standards of Bankruptcy
Rule 9019 and law applicable in the Fifth Circuit.
(c) The compromise hearing shall be held on an expedited basis on
February 20, 1997, at 9:00 A.M. Pending such compromise hearing, each of
Messrs. Hull, Greving and Gail shall make themselves available for up to
four hours each of deposition examination to be conducted by the Shaw
Group. Robert T. Shaw shall make himself available to the Plan Proponents
for up to four hours of deposition examination in advance of the compromise
hearing. The four (4) hours in each deposition shall be allocated to direct
examination only. Cross-examination (if any) and objections or statements
by counsel shall not reduce the four hours. If, for any reason, the Court,
at such compromise hearing, does not approve the contemplated release of
any of Messrs. Hull, Greving or Gail, the maximum financial risk or
exposure any of them shall ever have (regardless of any greater liability
established) for claims that otherwise (in accordance with Article 10.4 of
the Plan) would have been released under the Plan, shall be $100,000.
(d) Any and all additional proposed releases which the Equity
Committee or the Reorganized Debtor proposes to deliver with respect to
pre-petition acts shall be subject to determination by the Bankruptcy Court
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 14
<PAGE>
and the Rule 9019 procedures and standards in the event the Shaw Group
objects to any such proposed releases.
(e) The Shaw Group, including Robert T. Shaw individually, shall
promptly reimburse each of Messrs. Hull, Greving and Gail up to $5,000 for
legal expense actually incurred by each of them beginning this date and
continuing through the compromise hearing in connection with the compromise
hearing and their preparation therefor.
(f) The Shaw Group shall deposit into escrow, 48 hours prior to the
Effective Date, the documents and funds required under Article 6.2 of the
Plan. The Plan Proponents shall similarly deposit the release of the Shaw
Group into escrow 48 hours prior to the Effective Date. The release of the
Shaw Group shall be executed by the Plan Proponents in the following form:
a general release as that term is used and commonly understood at law
in favor of the Shaw Group and thereby release all claims that the
Debtors, the Equity Committee, the Creditors Committee, or any of them
or their affiliates ever had, now have, or may claim to have or
hereafter have, or which the Debtors, the Equity Committee, the
Creditors Committee or any of them or their affiliates could have
asserted or could assert on their own behalf, or derivatively on
behalf of the Debtors prior to or related to this bankruptcy,
including without limitation all claims, counterclaims, demands,
controversies, costs, contracts, debts, sums of money, accounts,
reckonings, bonds, bills, damages, obligations, liabilities,
objections, actions and causes of action, expenses, attorneys' fees of
any character, nature, type or description, whether in law or in
equity, in contract, tort, or otherwise, known or unknown, suspected
or unsuspected, including claims for negligence, gross negligence,
fraud, intentional, misconduct or otherwise. The releases to be
executed shall bind the Debtors, the Equity Committee, the Creditors
Committee, and each of them, and each of their affiliates, and
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 15
<PAGE>
their respective successors, assigns, or representatives, including,
but not limited to, the revested/reorganized Debtors, and each of
them, and any representative of any bankruptcy or other estate for
such Debtors or such revested/reorganized Debtors. This release shall
not apply to the Shaw Group's obligations under the Joint Plan or for
acts occurring after the Effective Date of the Joint Plan.
(g) Releases given to the Trust, the Trustee, the Creditors Committee,
the Equity Committee, and their respective present and former officers,
directors, members, employees, agents and attorneys pursuant to Article
10.3 of the Joint Plan (exclusive of the Shaw Group) shall be time limited
to the post-petition activities of such Released Entities related to the
Case.
(h) All objections to confirmation of the Joint Plan, or other
pleadings in any manner opposed to, or seeking the continuance of, the
Court's consideration of Confirmation are withdrawn by the Shaw Group with
prejudice, and the Shaw Group fully supports the entry by the Court of this
Order and shall abide by and timely comply with the terms and provisions of
the Joint Plan, including Article 6.2 of the Joint Plan.
27. Except as modified by Paragraph 26 above, the Joint Plan resolves all
disputes between the Debtors and the Released Entities, as provided in Article
10.3 of the Joint Plan, with respect to all claims that the Debtors ever had,
now have, or may claim to have or hereafter have, or which the Debtors could
have asserted or could assert, jointly or severally, including without
limitation claims held in their corporate capacity and claims that third parties
may assert derivatively on behalf of the Debtors absent bankruptcy. Confirmation
of the Joint Plan releases each Released Entity from
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 16
<PAGE>
all such claims, counterclaims, demands, controversies, costs, contracts, debts,
sums of money, accounts, reckonings, bonds, bills, damages, obligations,
liabilities, objections, actions and causes of action of any nature, type or
description, arising prior to the Confirmation Date, whether in law or in
equity, in contract, tort, or otherwise, known or unknown, suspected or
unsuspected, including claims for negligence, gross negligence, or otherwise. On
the Effective Date, the Debtors shall be authorized to execute general releases
in favor of the Released Entities consistent with the Joint Plan.
28. Except as modified by Paragraph 26 above, on the Effective date, the
Debtors shall execute releases of the Released Officers consistent with the
Joint Plan.
29. Any claim or cause of action may be settled by Reorganized ICH or the
Trust, as applicable, pursuant to Article 11.10 of the Joint Plan without the
necessity of Court approval under Bankruptcy Rule 9019 or otherwise. To the
extent the Trust is entitled to assert a Retained Cause of Action pursuant to
the Joint Plan, the Trust may compromise, settle or release any such Retained
Cause of Action with the consent of Reorganized ICH. Nothing herein shall
prohibit Reorganized ICH or the Trust from seeking Bankruptcy Court approval of
the compromise, settlement or release of any claim.
30. As of the Effective Date, in accordance with Section 1141(d)(1) of the
Bankruptcy Code: (i) all the outstanding shares of common stock, $1.00 par value
per share of ICH (the "Common Stock"), all outstanding shares of $1.75
Convertible Exchangeable Preferred Stock, Series 1986-A, $25.00 stated value,
issued by ICH (the "Preferred Stock"), and all rights of the Interest holders
therein, (ii) all outstanding 11 1/4% Senior Subordinated Notes due 1996 and
outstanding 11 1/4% Senior Subordinated Notes due 2003 issued by ICH (the
"Notes" and, together with the Common Stock and the
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 17
<PAGE>
Preferred Stock, the "Securities") and, (iii) the indentures, debentures or
statements of resolution and other agreements heretofore binding upon the
Debtors or their assets with respect to the Securities shall be deemed to be
terminated, cancelled, extinguished, void, and of no further force or effect in
accordance with the Joint Plan without any action by the holders of such
Securities, and no consideration shall be paid or delivered with respect thereto
except as otherwise provided in the Joint Plan. Notwithstanding the foregoing,
the distribution provisions of the Indentures shall be followed by the Trust in
order to facilitate distribution to record holders of the Notes to the extent
not inconsistent with the provisions of the Joint Plan, the Trust Agreement, and
this Order.
31. Subject to Paragraph 33 below, the Effective Date shall be the date for
determining the Entities holding Securities who are entitled to receive
distributions pursuant to the Joint Plan. As of the close of business on the
Effective Date, the transfer ledgers in respect of the Securities shall be
closed, and no transfer of the Securities occurring after the Effective Date
shall be recognized. Reorganized ICH, the Trust, the Transfer Agent, the
Distribution Agent, the Indenture Trustee and their respective agents shall be
entitled instead to recognize and deal for purposes herein with only those
holders of record stated on the respective transfer ledgers for the Securities
as of the close of business on the Effective Date.
32. Subject to Paragraph 33 below, distributions and deliveries called for
by the Joint Plan, other than distributions with respect to non-classified
Claims, shall be proper if made (i) to the holders of Allowed Claims in ICH
Classes 1, 2, 3, 4 and 5 (except as provided in clause (ii) below), ICH Classes
6 and 7 (to the extent, if any, of Securities- Related Claims within those
Classes), SWL Holding Classes 1 and 2, and Care Classes
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 18
<PAGE>
1 and 2, at the addresses set forth on the proofs of claim Filed by such holders
(or at the last known addresses or such holders if no proof of claim is Filed or
if the Debtors have been notified of a change of address), (ii) to Record
Holders of Notes as of the record date for any particular distribution, on
account of their ICH Class 5 Claims, at the addresses contained in the records
of the Indenture Trustee as of the Effective Date and (iii) to the Record
Holders of Preferred Stock and Common Stock, as of the record date for any
particular distribution, at the addresses contained in the records of the
appropriate Transfer Agent as of the Effective Date. The record date for
purposes of determining the Entities holding the Securities and other Claims
that are entitled to receive initial distributions under the Joint Plan shall be
the Effective Date.
33. No distribution shall be mailed to any holder of an Allowed Claim or
Allowed Interest if any mailing to such holder's last known address has been
returned as undeliverable, unless and until the Debtors or the Distribution
Agent (as such term is defined in the Joint Plan) are notified of such holder's
then-current address, at which time all distributions then due shall be made to
such holder without interest. All claims for undeliverable distributions shall
be made on or before the later of (a) two years after the Effective Date or (b)
120 calendar days after an order of the Bankruptcy Court allowing such holder's
Claim or Interest becomes a Final Order, after which period the Claim or
Interest of any holder with respect to such undeliverable distribution shall be
deemed abandoned, discharged, and forever barred as of the second anniversary of
the Effective Date. Notwithstanding the above, if any beneficial interest in the
Trust ("Trust Interest") is transferred after the initial issuance of
certificates by the Trust representing Trust Interests, distributions to be made
with respect to any such Trust Interest shall be made
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 19
<PAGE>
to the record holder of such Trust Interest on the applicable record date
determined in accordance with the Trust Agreement. Notwithstanding anything
herein to the contrary, no Trust Interest shall be transferable prior to receipt
of appropriate advice from the Securities and Exchange Commission (the "SEC")
which satisfies the Trustees of the Trust as to the transferability of Trust
Interests on terms that are reasonable and economical as determined by the
Trustees.
34. Any holder of an Allowed Claim or Allowed Interest arising on account
of outstanding Securities who has not surrendered such holder's Securities as
set forth in Article 9.1(d) of the Joint Plan within two (2) years after the
Effective Date shall forfeit, to the extent permitted by law, such holder's
right to receive any distribution under the Joint Plan with respect to such
Allowed Claim or Allowed Interest, provided that this provision shall not apply
to Securities-Related Claims.
35. The Trust shall be governed by the terms, conditions, and rules
substantially as set forth in the form of trust agreement filed with the Court
on January 24, 1997 (the "Trust Agreement"), and the Trust Agreement, together
with changes thereto as may be consistent with this Order and the Joint Plan, is
approved. Susan A. Brown is approved as the Managing Trustee and John A. Tobin,
Jeffrey Schultz, and Gregory Lathrop are approved as Supervising Trustees of the
Trust. The Trust is authorized to enter into such employment agreement with
Susan A. Brown as the Managing Trustees may approve, which agreement may be on
substantially the same terms as her existing Employment Agreement.
36. The Restated Certificate of Incorporation and the By-Laws of
Reorganized ICH are approved. Reorganized ICH is authorized to appoint an
initial Board of Directors
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 20
<PAGE>
consisting of between four (4) and nine (9) members. The following persons are
hereby approved as the initial board of directors to commence on the Effective
Date:
James R. Arabia
Michael D. Dunn
Kenneth T. Giddens
Carl D. Robinson
James R. Arabia is approved as President and Chief Executive Officer of
Reorganized ICH upon the terms and conditions provided for in the Joint Plan and
set forth in the Disclosure Statement.
37. All Securities held in treasury by ICH immediately before the Effective
Date shall be cancelled and extinguished as of the Effective Date without any
action on the part of ICH and no payment or distribution shall be made with
respect thereto.
38. The Distribution Agent is authorized to make distributions of
Reorganized ICH Common Stock and cash as required in the Joint Plan to be
distributed to holders of Allowed ICH Class 6 and 7 Interests. The Managing
Trustee or such agent as the Managing Trustee may employ in her sole discretion
shall be authorized to make all other distributions of cash as are required to
be made under the Joint Plan; provided that distributions to be made to Record
Holders of the Notes as of the Effective Date may be made by the Managing
Trustee, such other agent as the Managing Trustee may employ in her sole
discretion, the Distribution Agent, or the Indenture Trustee.
39. No payment or distributions shall be required to be made with respect
to all or any portion of a Contested Claim or Contested Interest unless and
until such Claim or Interest becomes an Allowed Claim or Allowed Interest as
determined by Final Order.
40. Following the Effective Date, the Trust shall withhold from the
property to be distributed under the Joint Plan, and shall reserve, an amount
sufficient to be
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 21
<PAGE>
distributed on account of Contested Claims as of the Initial Distribution Date
(the Reserved Distribution Amount"). As to any Contested Claim, upon a request
for estimation by the party in interest, the Bankruptcy Court shall determine
what amount is sufficient to withhold as the Reserved Distribution Amount. In
the event that no party in interest elects to request such an estimation from
the Bankruptcy Court with respect to a Contested Claim, the Debtors or, after
the Effective Date, the Managing Trustee shall withhold as the Reserved
Distribution Amount the amount which, in the discretion of the Managing Trustee,
such Claimant would have received under the Joint Plan, if any, if the proof of
claim Filed by or on behalf of the Claimant were Allowed. Reorganized ICH shall
reserve sufficient authorized but unissued shares of Reorganized ICH Common
Stock to allow for distributions to holders of Allowed Securities-Related
Claims, if any, related to the Common Stock or Preferred Stock.
41. Payments and distributions to each holder of a Contested Claim or
Contested Interest, to the extent that it ultimately becomes an Allowed Claim or
Allowed Interest, shall be made in accordance with the provisions of the Joint
Plan governing the respective Class of Claims or Interests of which such
Contested Claim or Contested Interest belongs. As soon as practicable after the
date that the order or judgment of the Bankruptcy Court allowing such Claim or
Interest becomes a Final Order, any Reserved Distribution Amount that would have
been distributed to the holder of such Claim or Interest had such Claim or
Interest been an Allowed Claim or Allowed Interest on the Effective Date, to the
extent of the Allowed Amount of such Claim or Interest, shall be distributed to
the holder of such Claim or Interest.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 22
<PAGE>
42. Any asset and property to be distributed by the Trust under the Joint
Plan which remains unclaimed or otherwise not deliverable to the person entitled
thereto on the later of (a) two years after the Effective Date or (b) 120
calendar days after an Order allowing such person's Claim or Interest becomes a
Final Order, shall become vested in, and shall be transferred and delivered to
the Trust for distribution pursuant to the Joint Plan. In such event, such
person's Claim or Interest shall no longer be deemed to be Allowed and such
person shall be deemed to have no further Claim or Interest in respect of such
distribution and shall not participate in any further distributions under the
Joint Plan.
43. Until such time as a contingent Claim or unliquidated Claim becomes
fixed and Allowed, such Claim shall be treated as a Contested Claim for purposes
relating to voting, allowance, and distributions under the Joint Plan. The
Bankruptcy Court upon request by the Debtors or, after the Effective Date, by
the Trust or Reorganized ICH, shall in a summary proceeding on each such
contingent Claim or unliquidated Claim, by estimation determine the allowability
of each such contingent or unliquidated Claim.
44. Payment to be made by the Trust pursuant to the Joint Plan shall be
made by check drawn on a domestic bank or by wire transfer from a domestic bank.
45. The Trust is authorized to disregard, and shall not make distributions
in respect of, Allowed Claims whose Pro Rata share of the proposed distribution
would be less than $5.00. In such case, the Allowed Amount of such Claims for
purposes of such distribution shall be reduced to zero.
46. Reorganized ICH is authorized to make distributions of Reorganized ICH
Common Stock in whole share amounts only, and no fractional shares of
Reorganized
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 23
<PAGE>
ICH Common Stock shall be distributed pursuant to the Joint Plan. Fractional
shares of Reorganized ICH Common Stock to which any Beneficial or Record Holder
of Preferred Stock or Common Stock as of the Effective Date may be entitled
shall be rounded to the nearest whole share. Beneficial holders of fewer than 14
shares of Preferred Stock and Beneficial holders of fewer than 101 shares of
Common Stock shall not be entitled to any distribution of Reorganized ICH Common
Stock on account of their respective Interests, and in each such case, the
Allowed Amount of such Interests for purposes of such distribution shall be
reduced to zero.
47. Notwithstanding the provisions of Article IV of the Joint Plan; (a)
Allowed Claims, if any, of a particular class that are subordinated to other
Allowed Claims of such class pursuant to Section 510 of the Bankruptcy Code
shall be paid only after payment in full of all such non-subordinated Claims of
such class; and (b) Allowed Class 6 Interests, if any, that are subordinated to
other Allowed Class 6 Interests, pursuant to Section 510 of the Bankruptcy Code
shall not be entitled to receive any distributions until after the distribution
to holders of Allowed non-subordinated Class 6 Interests equals the full amount
of their liquidation preference of $25.00 per share of Preferred Stock.
48. For purposes of calculating the distribution of Reorganized ICH Common
Stock to holders of Allowed Securities-Related Claims based on Common Stock, if
any, pursuant to the provisions of Article IV of the Joint Plan, holders of
Allowed Securities- Related Claims, if any, based on Common Stock shall be
entitled to receive their Pro Rata portion of shares of Reorganized ICH Common
Stock in an amount equal to: (i) the total amount of all Allowed
Securities-Related Claims within ICH Class 7, divided by (ii) $254 million,
multiplied by (iii) 1,309,524, multiplied by (iv) a fraction, the numerator of
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 24
<PAGE>
which is the Allowed Amount of such holder's Allowed Securities-Related Claim
within ICH Class 7, and the denominator of which is the total amount of all
Allowed Securities- Related Claims within ICH Class 7.
49. Pursuant to Section 1142(b) of the Bankruptcy Code and as a condition
precedent to a holder of an Allowed Claim or Interest in ICH Class 5, ICH Class
6 or ICH Class 7 receiving a distribution under the Joint Plan on account of
Securities, such holder of the Securities must deliver to the Distribution Agent
or to the Managing Trustee or her agent, as applicable, the Securities giving
rise to such holder's Allowed Claim or Interests, or such evidence or other
documents regarding ownership of such Securities as the Distribution Agent or
the Managing Trustee may require, together with the Letter of Transmittal,
properly completed and executed by such holder of the Securities, and any
documents required by the Letter of Transmittal, on or before the second (2nd)
anniversary of the Effective Date.
50. Each professional person whose retention with respect to the Debtors'
cases has been approved by the Bankruptcy Court and who holds, or asserts, an
Administrative Claim under Section 330(b)(2)-(5) of the Bankruptcy Code (a "Fee
Claim") shall be required to file with the Bankruptcy Court a final fee
application within sixty days after the Effective Date and to serve notice
thereof on all parties entitled to such notice pursuant to the Order
Establishing Interim Procedures and Guidelines for Compensation of Professional
Persons. The failure to timely file the fee application as required under
Article 2.1(b) of the Joint Plan shall result in the Fee Claim being forever
barred and discharged. A Fee Claim, with respect to which a fee application has
been properly Filed pursuant to the Joint Plan, shall become an Administrative
Claim only to the extent
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 25
<PAGE>
allowed by Final Order. Not later than five days prior to the Effective Date,
each such professional person shall serve an estimate of such final Fee Claim on
all parties entitled to such notice pursuant to the Order Establishing Interim
Procedures and Guidelines for Compensation of Professional Persons. The
estimated amounts of such Fee Claims shall on the Effective Date be reserved by
the Trust for payment of such Fee Claims and shall not be treated as Available
Cash under the Trust. All Fee Claims shall be paid promptly by the Trust after
such amounts are allowed by Final Order of the Bankruptcy Court.
51. All amounts due and owing to Susan A. Brown and Rodney D. Moore
pursuant to their respective Employment Agreements entered into with ICH as of
January 1, 1996, shall be paid in cash in full by the Trust on the Initial
Distribution Date. Any additional amounts that become payable under such
Employment Agreements shall be paid in cash in full by the Trust as and when due
thereunder without further order or approval of the Bankruptcy Court.
52. Any other person or Entity who claims to hold any other Administrative
Claim shall be required to file with the Court an application within sixty days
after the Effective Date and to serve notice thereof on all parties entitled to
such notice. The failure to file timely the application as required under the
Joint Plan shall result in the Claim being forever barred and discharged. An
Administrative Claim with respect to which an application has been properly
Filed pursuant to the Joint Plan, shall become an Allowed Administrative Claim
to the extent such claim is allowed by Final Order.
53. The Joint Plan provides for the continuation of retiree benefits, as
the term is defined under Section 1114 of the Bankruptcy Code, as obligations of
the Trust. The Trust is authorized to exercise the Debtors' rights under the
applicable retiree benefit
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 26
<PAGE>
documents, including the modification of such benefits in accordance with such
plan documents and the payment of sums to a third party for the provision of
such benefits to retirees henceforth. In addition, the Debtors are authorized to
take such action as may be necessary or appropriate to terminate all existing
employee benefit plans, other than the retiree benefit plan, on or before the
Effective Date.
54. Any obligations of the Debtors, pursuant to the Order Regarding
Indemnification of Officers and Directors of Debtors entered February 14, 1996,
shall not be discharged or impaired by Confirmation or Consummation of the Joint
Plan; accordingly, such indemnification obligations shall survive unaffected by
the reorganization contemplated by the Joint Plan and shall be performed and
honored by the Trust regardless of the Confirmation of the Joint Plan, provided
however, that such obligations shall not be obligations of Reorganized ICH. The
balance of the $500,000 fund provided for in such order (the "Indemnification
Fund") shall be transferred to the Trust and utilized as provided in such Order.
All other obligations of the Debtors with respect to indemnifications of
officers and directors, or agents, representatives, successors or assigns
thereof, shall be treated as executory contracts rejected under Article 8.1 of
the Joint Plan, and all Claims arising from or related thereto shall be treated
and classified as provided by Article 8.2 of the Joint Plan, subject to any and
all defenses thereto and to subordination of such Claims under applicable
provisions of the Bankruptcy Code. The withdrawal of the Proofs of Claim of C.
Fred Rice shall not affect the survival of any claim by him for indemnity by ICH
as treated under Article 10.7 of the Joint Plan.
55. The Consolidated Tax Allocation Agreement (the "Tax Agreement") to
which the Debtors are parties shall be rejected on the Effective Date, and any
claims existing
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 27
<PAGE>
under such agreement between and among the Debtors and BML, ICH Funding
Corporation, and REO Holding Corporation shall be deemed to be zero. Each of the
Debtors are authorized to execute and deliver to Modern American Life Insurance
Company ("Modern") and Western Pioneer Life Insurance Company ("Western") such
instruments and documents as may be necessary or appropriate to release Modern
and Western from any further liability with respect to taxes (including under or
pursuant to the Tax Agreement to which Debtors are, and Modern and Western
formerly were, a party) as contemplated by, and in satisfaction of BML's and the
Debtors' obligations under, Section 5.17 of the Modern/Western Agreement and
Section 10 of the Closing Statement and Amendment to Purchase Agreement dated
June 28, 1996, between BML and Reassure America Life Insurance Company. Each of
the Debtors are authorized to execute and deliver to Philadelphia American Life
Insurance Company ("Philadelphia American ") such instruments and documents as
may be necessary or appropriate to release Philadelphia American from any
further liability with respect to taxes (including under or pursuant to the Tax
Agreement to which Debtors are, and Philadelphia American formerly was, a party)
as contemplated by, and in satisfaction of BML's and the Debtors' obligations
under, Section 5.18 of the Philadelphia American Agreement and Section 9 of the
Closing Statement and Agreement dated June 28, 1996, between BML and New Era
Enterprises, Inc.
56. Any other executory contract or an unexpired lease not expressly
assumed, as provided in Section 365(a) of the Bankruptcy Code on or before the
Confirmation Date, is deemed rejected. Without limiting the foregoing, the
Independent Contractor and Service Agreement dated February 11, 1994, between
ICH Corporation and Robert T.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 28
<PAGE>
Shaw and the Independent Contractor and Service Agreement dated February 11,
1994 between ICH Corporation and C. Fred Rice have been previously terminated,
and all claims pursuant to such agreements will be withdrawn with prejudice and
released pursuant to Section 6.2(b) of the Joint Plan. Any Claims made on
account of executory contracts or unexpired leases that are deemed rejected
pursuant to the Joint Plan must be filed with the Bankruptcy Court within 30
days after the Confirmation Date or such Claim shall be forever barred and
discharged.
57. The Joint Plan and its classification scheme contains certain
compromises of various potential claims, rights and causes of action, including
the Settlement with the Shaw Group, the release of the Released Entities, and
the release of the Released Officers. All such compromises embodied in the Joint
Plan and the classification scheme set forth in the Joint Plan are reasonable,
have been consented to and accepted by virtue of the acceptance of the Joint
Plan by the requisite members of each impaired Class of Claims and Interests,
and are approved by the Court.
58. On the Effective Date, the Shaw Group shall (i) pay $500,000 in cash to
Reorganized ICH and (ii) withdraw the claims that the Shaw Group and the members
thereof filed with prejudice to refiling such claims in the Case.
59. Notwithstanding any provisions of the CFSB Interest to the contrary,
the CFSB Interest shall not be subject to any transferability or ownership
restrictions, save and except those conditions set forth in Article 6.2(c) of
the Joint Plan. The Shaw Group and the Trust shall immediately perform all of
their respective obligations set forth in Article 6.2(c) of the Joint Plan and
Paragraph 26 of this Order regarding the CFSB Interest.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 29
<PAGE>
60. Notwithstanding a contrary interpretation of the provisions of Article
III and Article IV of the Joint Plan with respect to the ICH Class 2 and ICH
Class 5 Claims, if any, of Sayyah, the following shall apply:
(a) Objection. Any objection counterclaim or action for affirmative
recovery related to Sayyah's Claims shall be brought, if at all, not later
than thirty (30) days following the Effective Date. In the event no
objection to Sayyah's proof of claim is filed within that time, then the
ICH Class 2 Secured Claim of Sayyah shall be deemed allowed and satisfied
by setoff as of the Petition Date and the unsecured ICH Class 5 Claim of
Sayyah for the deficiency shall be deemed an Allowed Claim in ICH Class 5.
(b) Treatment of ICH Class 2 Claim of Sayyah. Upon an objection, the
Court will determine the amount and timing of the offset or recoupment to
which Sayyah is entitled. The Debtor, the Creditors' Committee and, upon
its formation, the Trust, agree that the date of any offset or recoupment
applied shall be deemed to occur no later than the earlier of (i) February
15, 1997, or (ii) the Effective Date.
(c) Treatment of ICH Class 5 Claim of Sayyah. The remainder of the
Claim of Sayyah not treated as an ICH Class 2 Claim shall be treated as an
Unsecured Claim in ICH Class 5 in the amount set forth in Sayyah's proof of
claim and
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 30
<PAGE>
calculated as set forth above, or in the amount, if any, as may be
determined by the Court upon timely objection.
(d) Claims Reserve. The Trust shall reserve the amount of $3.3 million
with respect to the ICH Class 5 Claim of Sayyah under the provisions of the
Joint Plan. This amount shall not be determined as a limit to the amount,
if any, of an allowed ICH Class 5 claim of Sayyah.
61. On the Initial Distribution Date, the Creditors Committee and the
Equity Committee shall cease to exist and have no further status as parties in
interest except for purposes of prosecuting any applications for Fee Claims,
participating in any appeal of the Confirmation Order, and participating in the
proceedings on the Bankruptcy Rule 9019 motion referred to in Paragraph 26
above, in which events such committees shall cease to exist immediately after
the resolution of such matters. Following the termination of the Committees, any
professional that was employed by the Creditors Committee may be employed by the
Trust and any professional that was employed by the Equity Committee may be
employed by Reorganized ICH. The Trust may adopt and succeed to any unresolved
pleading filed by the Creditors Committee during the Chapter 11 Case;
Reorganized ICH may adopt and succeed to any unresolved pleading filed by the
Equity Committee during the Chapter 11 Case; and the Trust or Reorganized ICH
may adopt and succeed to any unresolved pleading filed by the Debtors during the
Chapter 11 Case.
62. The Trust Interests, Trust Certificates, and Reorganized ICH Common
Stock (collectively, the "Plan Securities") offered, sold and/or issued pursuant
to the Joint Plan are deemed to have been offered, sold and/or issued pursuant
to Section 1145 of the
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 31
<PAGE>
Bankruptcy Code. Pursuant to Section 1145 of the Bankruptcy Code, the exemption
of the offer and sale of securities from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and any state or
local law requiring registration for the offer or sale of a security, applies
with respect to: the Plan Securities distributed pursuant to the Joint Plan and
any other interests that may be deemed to be securities offered, sold, issued,
or distributed pursuant to the Joint Plan and to the transactions contemplated
thereunder. Without limiting the generality of the foregoing: (i) the offer,
sale and issuance of the Trust Interests or Trust Certificates (to the extent
such interests and/or certificates constitute securities under the Securities
Act), and the distribution by the Trust of the Trust Interests or Trust
Certificates (to the extent such interests and/or certificates constitute
securities under the Securities Act), to Claimants pursuant to the Joint Plan
are exempt from the requirements of Section 5 of the Securities Act and all
securities laws of all applicable governmental units pursuant to Section
1145(a)(1) of the Bankruptcy Code; (ii) the offer, sale and issuance by
Reorganized ICH of the Reorganized ICH Common Stock, and the distribution by
Reorganized ICH and of Reorganized ICH Common Stock, pursuant to the Joint Plan
are exempt from the requirements of Section 5 of the Securities Act and all
securities laws of all applicable governmental units pursuant to Section
1145(a)(1) of the Bankruptcy Code; and (iii) all of the Plan Securities
distributed pursuant to the Joint Plan and any other securities that may be
deemed to be distributed pursuant to the Joint Plan shall be subject to the
provisions of Section 1145(b)(1) of the Bankruptcy Code relating to the
definition of an underwriter in Section 2(11) of the Securities Act, and to
compliance with rules and regulations of the
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 32
<PAGE>
Securities and Exchange Commission (the "SEC"), if any, applicable at the time
of any future transfer of such securities.
63. As established in Paragraph 33 above, the record date for purposes of
determining the Entities holding the Securities and other Claims that are
entitled to receive initial distributions under the Joint Plan shall be the
Effective Date. Pursuant to Bankruptcy Rules 1007(i) and 3020(d), and Section
1142(b) of the Bankruptcy Code, (i) Bank of Louisville and Trust Company, the
indenture trustee for the Notes and the transfer agent for the Common Stock, or
KeyCorp Shareholders Services, Inc. (collectively the "Transfer Agents"), are
hereby directed to disclose to the Debtors, the Trust, Reorganized ICH, and the
Trust Depository Institutions (the "Depositories") and such other transfer
agents, street name holders and all other bank, broker and agent nominees listed
as record holders of the Securities ("Other Record Holders") for which they act
as trustee or transfer agent and to the extent available, within ten (10)
calendar days after the Effective Date, the name, address, and taxpayer
identification or social security number of each such beneficial owner, and the
amount and type of the Securities, identified by CUSIP (if available) or other
identification number, owned by each such beneficial owner on whose behalf they
hold record title to the Securities, using the Effective Date as the record
date; (ii) the Depositories are hereby directed to disclose to the Debtors, the
Trust and Reorganized ICH the lists of such transfer agents, street name holders
and all other bank, broker and agent nominees in whose name the Securities are
registered with the Depositories ("Depository Record Holders") and, to the
extent available, within twenty (20) calendar days after the Effective Date, the
name, address, and taxpayer identification or social security number of each
such beneficial owner; and
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 33
<PAGE>
the amount and type of the Securities, identified by CUSIP (if available) or
other identification number, owned by each such beneficial owner on whose behalf
they hold record title to Securities, using the Effective Date as the record
date; (iii) the Other Record Holders, the Depository Record Holders and all
other transfer agents, street name holders and other bank, broker or agent
nominee record holders of the Securities that hold record title on behalf of
beneficial owners of the Securities are hereby directed to provide to the
Debtors, the Trust and Reorganized ICH, within thirty (30) calendar days after
the Effective Date, the name, address, and taxpayer identification or social
security number of each such beneficial owner; and the amount and type of the
Securities, identified by CUSIP (if available) or other identification number,
owned by each such beneficial owner on whose behalf they hold record title to
Securities, using the Effective Date as the record date. The directions
contained above shall apply and be effective notwithstanding the provisions of
Rule 14b-1 and Rule 14b-2 promulgated under the Securities Exchange Act of 1934,
as amended.
64. The issuance, transfer or exchange of the Plan Securities to be issued
under the Joint Plan, and the recognition, continuation, or creation of liens on
assets or property of the Debtors, Reorganized ICH or the Trust, or the transfer
of any asset or property, pursuant to the Joint Plan, or the making, delivery or
recordation of any instrument of transfer under the Joint Plan, shall not be
taxed under any law imposing a stamp tax, transfer tax or other similar tax or
fee. All filing and recordation officers or authorities responsible for the
assessment or collection of any such tax or fee may rely on the terms of this
Order for all such purposes.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 34
<PAGE>
65. In the event the Chapter 11 Cases (or any of them) shall be
inadvertently deemed closed or fully administered before the substantial
consummation of the Joint Plan, then such Chapter 11 Case(s) may be reopened
pursuant to Section 350(b) of the Bankruptcy Code and Rule 5010 of the
Bankruptcy Rules for cause.
66. The Debtors shall promptly serve notice of the entry of this Order,
together with notice of the last day for filing administrative expense claims,
claims arising from the rejection of executory contracts, and applications for
allowances of compensation and/or reimbursement of expenses, pursuant to
Bankruptcy Rules 2002(f)(7) and 3020(c) and the terms of the Joint Plan. Such
notice shall be given by U.S. Mail and by publication in The Dallas Morning News
and The Wall Street Journal (national edition).
67. The Debtors shall mail a copy of this Order to all parties on the
Master Service List.
68. This Order shall be, and hereby is, declared to be in recordable form
and shall be accepted by any filing or recording officer or authority of any
applicable Governmental Unit for filing and recording purposes without further
or additional orders, certifications or other supporting documents. Further, the
Court authorizes the Debtors to file a memorandum of this Order in any
appropriate filing or recording office as evidence of the matters herein
contained.
69. The Joint Plan has been proposed in good faith and not by any means
forbidden by law. Section 1129(a)(3) of the Bankruptcy Code has been fully
complied with. There was proper disclosure with respect to the Joint Plan, and
there was proper solicitation of the Joint Plan. Sections 1125(d) and 1125(e) of
the Bankruptcy Code have been fully complied with.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 35
<PAGE>
70. The distribution of the Disclosure Statement and solicitation of
acceptances of the Joint Plan from the Claimants and holders of Interests are
exempt from federal proxy regulations pursuant to the express terms of Section
1125(e) of the Bankruptcy Code.
71. The reversal or modification of this Order on appeal shall not affect
the validity of the Joint Plan or any other agreement, document, instrument or
action authorized or directed by this Order or under the Joint Plan as to the
Debtors, the Trust, any Trustee, Reorganized ICH, or any other Entity acting in
good faith, whether or not that Entity knows of the appeal, unless this Order is
stayed pending appeal.
72. All transactions consistent with the provisions of the Joint Plan
effected by the Debtors during the period commencing on the Petition Date and
ending on the Confirmation Date are ratified by the Court.
73. Objections to Claims or Interests, if any, shall be filed and served
within 90 days after the Effective Date. Responses to the objections must be
filed within 30 days of service thereof.
74. The Trust and Reorganized ICH shall obtain settings for hearings on all
applications for the award of compensation or expenses and motions for
administrative expenses, and, consistent with the notice requirements of
Bankruptcy Rule 3007, to determine objections to claims. Within 45 days after
the foregoing hearings, the Trust shall file a post-confirmation report.
75. The Trust and Reorganized ICH, after substantial consummation, as
defined under 11 U.S.C. Section 1101(2), shall file an application for final
decree and obtain a setting
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 36
<PAGE>
on the application within 180 days of the Effective Date, and if the application
for final decree is not filed within 180 days of the Effective Date, a status
conference will be held.
76. The Bankruptcy Court shall retain exclusive jurisdiction over these
Chapter 11 Cases after Confirmation, notwithstanding consummation or substantial
consummation, for the following purposes:
(a) to consider and effect any modification of this Joint Plan under
Section 1127 of the Bankruptcy Code;
(b) to hear and determine all controversies, suits and disputes that
arise in connection with the interpretation or enforcement of this Joint
Plan and the Trust Agreement;
(c) to hear and determine all requests for compensation and/or
reimbursement of expenses for the period commencing on the Petition Date
through the Confirmation Date;
(d) to hear and determine all objections to Claims and Interests, and
to determine the appropriate classification of any Claim or Interests, and
other controversies, suits and disputes that may be pending at or initiated
after the Confirmation Date, except as provided herein;
(e) to hear and determine all claims that the Debtors, as debtors in
possession qua trustee, or Reorganized ICH or the Trust, as applicable, as
the successors and designated representatives of the Debtors and the
Estates could assert under the Bankruptcy Code;
(f) to consider and act on such other matters consistent with this
Joint Plan as provided in this Order;
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 37
<PAGE>
(g) to make such orders as are necessary and appropriate to carry out
and implement the provisions of the Joint Plan, including to effect the
further assurances provided in Article 11.9;
(h) to approve the reasonableness of any payments made or to be made,
within the meaning of Section 1129(a)(4) of the Bankruptcy Code;
(i) to exercise the jurisdiction granted pursuant to Section 505(a)
and (b) of the Bankruptcy Code to determine any and all federal, state,
Commonwealth, local and foreign tax liabilities of, and any and all refunds
of such taxes paid by the Debtors;
(j) to hear and determine any issues or matters in connection with any
property not timely claimed as provided in the Joint Plan;
(k) to hear and determine issues related to the Trust or
administration of the Trust Assets; and
(l) to hear and determine post-confirmation date motions to approve
compromises and settlements pursuant to Bankruptcy Rule 9019.
77. Notwithstanding the foregoing, Reorganized ICH and the Trust shall
retain the right to commence or prosecute any of their respective claims in any
court of competent jurisdiction.
78. In the event and to the extent that any provision of this Order
conflicts with any provision of the Joint Plan with respect to the Effective
Date, the Sayyah Claim, or the Shaw Group settlement, the provisions of this
Order shall control.
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 38
<PAGE>
SIGNED this 7th day of February, 1997.
/s/ Robert C. Mcguire
---------------------
ROBERT C. McGUIRE
CHIEF BANKRUPTCY JUDGE
Submitted by:
Daniel C. Stewart, SBT #19206500
Josiah M. Daniel, III, SBT #05358500
WINSTEAD SECHREST & MINICK P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2199
Telephone: (214) 745-5400
Telecopy: (214) 745-5390
ATTORNEYS FOR THE DEBTORS
Michael A. Rosenthal, SBT #17284490
I. Richard Levy, SBT #12265020
GIBSON, DUNN & CRUTCHER
1717 Main Street, Suite 5400
Dallas, Texas 75201
Telephone: (214) 698-3100
Telecopy: (214) 698-3400
ATTORNEYS FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
Peter D. Wolfson
John A. Bicks
PRYOR, CASHMAN, SHERMAN & FLYNN
410 Park Avenue
New York, NY 10022
Telephone (212) 421-4100
Telecopy: (212) 326-0814
ATTORNEYS FOR THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS
ORDER CONFIRMING FIRST AMENDED JOINT PLAN
OF REORGANIZATION UNDER CHAPTER 11 Page 39
