SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report
NOVEMBER 28, 1994
INTELOGIC TRACE, INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
1-8948 74-2368260
(Commission File Number) (I.R.S. Employer Identification Number)
8415 Datapoint Drive
San Antonio, Texas 78229
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(210) 593-5700
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On November 28, 1994, the United States Bankruptcy Court for the Western
District of Texas, San Antonio Division, Judge Leif M. Clark presiding, entered
an order confirming the Modified First Amended Plan of Reorganization of
Intelogic Trace, Inc., dated October 12, 1994 as further modified by the
Findings of Fact and Conclusions of Law on Confirmation of the Modified First
Amended Plan of Reorganization of Intelogic Trace, Inc., as Modified (the
"Plan"). The Effective Date of the Plan was December 8, 1994.
Information regarding the assets and liabilities of Intelogic Trace, Inc.
(the "Company") is set forth in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1994 filed with the Securities and Exchange
Commission on November 14, 1994.
The following summary of the material features of the Plan is qualified in
its entirety by reference to the Plan, which is filed as an exhibit to this
report. Capitalized terms used and not defined herein have the respective
meanings ascribed to such terms in the Plan.
Under the terms of the Plan, on the Effective Date, administrative and tax
claims would be paid in full, New Preferred Stock would be issued to holders of
unsecured claims, and a four-for-one reverse split of the Old Common Stock would
be consummated, with holders of Old Common Stock retaining approximately 25% of
the Company's common stock outstanding after the Effective Date, and holders of
unsecured claims receiving 75% of the shares of common stock outstanding after
the Effective Date. Approximately $50 million in principal amount of the
Company's 11.99% Subordinated Debentures would be treated as unsecured claims by
the Plan and would be cancelled in exchange for common and preferred stock
issued under the Plan. Fidelity Capital & Income Fund, a principal holder of the
Debentures, would provide $6 million in exit financing to the Company. The Plan
also requires the Company to enter into a Registration Rights Agreement with
certain principal holders of Company securities with respect to the resale of
securities issued under the Plan. On the Effective Date, the Company's Board of
Directors would be Kevin P. Collins, Mark S. Helwege, Henry Owsley, F. Terry
Savage, and Lawrence C. Petrucci. Mark S. Helwege, currently President, CEO, and
a Director of the Company, would continue in his capacity as President, CEO, and
a director of the Company after the Effective Date.
As of December 8, 1994, the date set by the Bankruptcy Court as the record
date for determining the right of security holders to distributions under the
Plan, there were 12,505,631 shares of Old Common Stock issued and outstanding,
no shares of Old Preferred Stock issued and outstanding, and $49,924,000 in
principal amount of Debentures issued and outstanding. On December 9, 1994, the
Company amended its Articles of Incorporation to provide for the four-for-one
reverse split of Old Common Stock and to designate the New Preferred Stock. The
Company expects to mail transmittal instructions in late December or early
January to security holders of record on the Effective Date informing them
regarding the requirements they must meet to receive distributions under the
Plan. The Company is also currently compiling the list of creditors who are to
receive Company securities under the Plan and calculating the number of shares
of Company securities due each of such creditors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS. The following exhibits are filed as part of this report:
NUMBER DOCUMENT
2.1 Modified First Amended Plan of Reorganization of
Intelogic Trace, Inc., dated October 12, 1994
(filed as Exhibit 99 to the 1994 Form 10-K and
incorporated herein by reference).
2.2 Findings of Fact and Conclusions of Law on
Confirmation of the Modified First Amended Plan
of Reorganization of Intelogic Trace, Inc., as
Modified, entered November 28, 1994 (filed
herewith).
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTELOGIC TRACE, INC.
By: /S/ PHILIP D. FREEMAN
Philip D. Freeman, Senior Vice President,
General Counsel and Secretary
Dated: December 12, 1994
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
IN RE:
INTELOGIC TRACE, INC., CASE NO. 94-52172-C-11
(CHAPTER 11)
DEBTOR.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ON CONFIRMATION
OF THE MODIFIED FIRST AMENDED PLAN OF REORGANIZATION OF
INTELOGIC TRACE, INC., AS MODIFIED
On November 22, 1994, after sufficient, due and proper notice, the
Court held a hearing on confirmation of the Modified First Amended Plan of
Reorganization of Intelogic Trace, Inc. (the "Plan") filed by Intelogic
Trace, Inc. ("Debtor").
After considering the Plan, the evidence presented, and the statements of
counsel, the Court, pursuant to Rules 7062 and 9014 of the Federal Rules of
Bankruptcy Procedure, makes the following findings of fact and conclusions of
law:
FINDINGS OF FACT
1. Debtor, with proper corporate authority, filed a Voluntary Petition for
relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") on August 5, 1994, thereby commencing a voluntary case under Chapter 11.
During the pendency of its Chapter 11 case, Debtor operated as a
debtor-in-possession pursuant to 11 U.S.C. ss.ss. 1107 and 1108.
2. On August 5, 1994, the Disclosure Statement to the Plan of
Reorganization of Intelogic Trace, Inc. (the "Original Disclosure Statement")
and the Plan of Reorganization of Intelogic Trace, Inc. (the "Original Plan")
were filed. On October 4, 1994, the First Amended Disclosure Statement to First
Amended Plan of Reorganization of Intelogic Trace, Inc. (the "First Amended
Disclosure Statement") and the First Amended Plan of Reorganization of Intelogic
Trace, Inc. (the "First Amended Plan") were filed. A hearing on the Disclosure
Statement was held on October 4, 1994, following notice to all creditors, equity
security holders and parties-in-interest through service by first class mail on
or before September 2, 1994, and through publication of notice of the hearing in
the Wall Street Journal. At the October 4, 1994 hearing, Debtor, through
counsel, announced that certain modifications to the First Amended Disclosure
Statement would be made. On October 13, 1994, the Modified First Amended
Disclosure Statement to Modified First Amended Plan of Reorganization of
Intelogic Trace, Inc. (the "Disclosure Statement") and the Modified First
Amended Plan of Reorganization of Intelogic Trace, Inc. (the "Plan") were filed.
The Court approved the Disclosure Statement in its Order Approving Modified
First Amended Disclosure Statement and Fixing Time for Filing Acceptances or
Rejections of Modified First Amended Plan of Reorganization, Combined with
Notice Thereof (the "Disclosure Statement Order"). On October 19, 1994, the
Debtor filed its Emergency EX PARTE Motion for Approval of Addendum to
Disclosure Statement. On October 19, 1994 the Court approved the Addendum to
Disclosure Statement (the "Addendum"). On or before October 20, 1994, the Plan,
the Disclosure Statement, the Addendum, the Disclosure Statement Order, and
Ballots conforming substantially the Official Form No. 14 were transmitted via
first class mail to all creditors, equity security holders, and other
parties-in-interest, which was more than twenty-five (25) days prior to the
commencement of the Confirmation Hearing on November 22, 1994 by Hill and
Knowlton, Debtor's ballot solicitation and tabulation agent.
3. Objections were filed by J. Alec Wilder, Dallas County and the City of
Dallas/Dallas Independent School District, Datapoint Corporation, and the
Internal Revenue Service. Dallas County and the City of Dallas/Dallas
Independent School
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District objection was withdrawn pursuant to a non-material modification to the
Plan. The Wilder objection was also resolved. The IRS and Datapoint objections
should be and are hereby over-ruled.
4. The Debtor has proposed the following modifications to the Plan:
a. PBGC MODIFICATION: The PBGC claim shall be satisfied in
accordance with the settlement agreement attached hereto as
Exhibit "A."
The existing Section 5.5 of the Plan shall be deleted in its
entirety and the following shall be deemed substituted:
"Class 5 - PBGC. The PBGC claim shall be fully satisfied by
distribution of (a) its pro rata share of New Preferred Stock
and New Common Stock as if it were a Class 6 claim and (b) an
amount of New Preferred Stock equal to 20% of the New
Preferred Stock that the PBGC would otherwise receive as a
Class 6 creditor. All payments shall be first applied against
any outstanding contributions due to the Intelogic Trace, Inc.
Retirement Plan for the plan year ending July 31, 1994 and for
the short plan year commencing on August 1, 1994 and ending on
the effective date of the termination of the Intelogic Trace,
Inc. Retirement Plan (the "Outstanding Contributions")."
b. DALLAS TAX AUTHORITY MODIFICATION: Article II, Provisions
for Payment of Administrative and Priority Tax Claims, of
the Modified First Amended Plan of Reorganization of
Intelogic Trace, Inc. is modified to include a new section
2.3 which shall read as follows:
"2.3 SECURED TAX CLAIM OF DALLAS COUNTY AND THE CITY OF
DALLAS/DISD. The claim of Dallas County and the City of
Dallas/DISD are to be treated as Secured Claims against the
Debtor for unpaid 1994 Ad Valorem Taxes on its business
personal property. This Secured Claim shall be unimpaired and
the City of Dallas/DISD and the Dallas County shall retain the
applicable tax lien until the taxes are paid in full. Debtor
anticipates paying the Secured Claim on or before the
delinquency date of January 31, 1995. Debtor retains all
rights to contest the amount of the alleged Secured Claim of
Dallas County and the City of Dallas/DISD as provided by
applicable non-bankruptcy law."
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c. ASSUMED CONTRACTS: The definition of "Assumed Contracts" on
pages 2 and 3 of the Plan has been modified as follows:
"ASSUMED CONTRACTS" shall mean all contracts of the Debtor
which:
(a) are held by parties who received a notice from the Debtor,
substantially similar to the notice attached as Exhibit A to
the Non-Material Amendments and Modifications to The Modified
First Amended Plan of Reorganization of Intelogic Trace, Inc.
Proposed by Debtor, stating that the Debtor was assuming their
contract; AND
(b) either
(i) were executed on any of the standard forms, attached
as Exhibits B through G to the Non-Material Amendments
and Modifications to The Modified First Amended Plan of
Reorganization of Intelogic Trace, Inc. Proposed by
Debtor, or a form substantially similar to those forms,
OR
(ii) are identified on Exhibit H to the Non-Material
Amendments and Modifications to The Modified First
Amended Plan of Reorganization of Intelogic Trace,
Inc. Proposed by Debtor.
d. Section 1.42 shall be modified as follows:
"1.42 "INDEMNIFICATION POLICIES" shall mean an insurance
policy with a $5,000,000.00 existing aggregate limit of
liability (inclusive of defense costs), a $0.00 retention for
each loss and a three year term, the premium for which shall
not exceed $400,000.00, which provides directors and officers
liability run-off coverage to cover Indemnification
Obligations."
e. Section 7.20 shall be modified as follows:
"7.20 INDEMNITY INSURANCE. The Debtor shall secure and
maintain Indemnification Policies, from and after the
Effective Date, to cover Indemnification Obligations arising
on, after, or before the Effective Date. The Debtor's
directors and officers shall have no Claims against the Debtor
for Indemnification Obligations arising on, after or before
the Effective Date but instead shall be restricted to their
rights to assert claims under the Indemnification Policies and
the amount of any recovery
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obtained by Debtor as a result of any Shareholder Derivative
Action. The Indemnification Obligations arising on, after or
before the Effective Date shall constitute an Administrative
Claim against the Debtor limited to (a) an amount which is not
greater than the proceeds, if any, from the Indemnification
Policies and (b) the amount of any recovery obtained by the
Debtor as a result of any Shareholder Derivative Action."
f. The Restated Charter which is Exhibit D to the Plan shall
be modified at page 14 as follows:
EIGHTH: The Corporation shall indemnify, to the extent
permitted by the Business Corporation Law, as amended from
time to time, all current, former and future directors and
officers of the Corporation whom it is permitted to indemnify
pursuant thereto. Directors whose services terminated on or
before the Effective Date of the Plan of Reorganization shall
be indemnified solely in accordance with the terms and
provisions of such Plan.
g. DATAPOINT MODIFICATION: The Plan shall be modified at page
23 to add a new Section 9.6 as follows:
DATAPOINT CONTRACTS. Datapoint Corporation and the Debtor are
parties to a Tax Settlement Agreement dated January 24, 1991,
which Tax Settlement Agreement may be an executory contract.
Datapoint has asserted an undivided interest in certain tax
refunds that are anticipated from the Internal Revenue
Service, and the Debtor and the Datapoint are not able to
agree on the treatment of the Tax Settlement Agreement nor on
Datapoint's alleged interest in the tax refund. These issues
will not be resolved at Plan confirmation, but will be the
subject to of future proceedings between Datapoint and the
Debtor and other parties-in-interest. To the extent that the
Tax Settlement Agreement is an executory contract, it is
rejected by Debtor.
To the extent Datapoint and the Debtor are parties to any
executory contracts, (excluding the Tax Settlement Agreement
referenced above which is rejected to the extent it is an
executory contract), the same shall not be subject to the
blanket assumption and rejection provisions of the Plan that
have been heard as part of the overall Plan confirmation
process. Assumption or rejection of any executory contracts
between Datapoint and the Debtor (excluding the Tax Settlement
Agreement referenced above which is rejected to the extent it
is
5
an executory contract) shall be deferred until appropriate
proceedings can be commenced between the Debtor and Datapoint,
subject to the negotiations between the parties as to whether
or not any such agreements should be assumed or rejected
Confirmation shall not constitute an assumption or rejection
of any such agreements for any purpose.
h. Section 7.3 shall be modified as follows:
7.3 NEW PREFERRED STOCK. 1,133,333 shares of New Preferred
Stock (the "Base Amount") shall be issued as soon as
practicable after the Effective Date, but in no event more
than twenty (20) Business Days thereafter; PROVIDED, HOWEVER,
that if the aggregate Unsecured Claims other than the Note
Claims exceed $5 million, the Base Amount shall be increased
such that the aggregate liquidation preference is increased by
80% of the amount by which the aggregate Unsecured Claims
other than Note Claims exceed $5 million. The Base Amount
shall be delivered to the Transfer Agent for further
distribution pro rata to the holders of Unsecured Claims and
the PBGC. As provided in Section 5.5 hereof, a number of
shares of New Preferred Stock equal to 20% of the New
Preferred Stock that the PBGC would otherwise receive, as if
it were a Class 6 claim, shall also be issued to the PBGC.
6,667 additional shares of New Preferred Stock shall also be
issued to Fidelity in connection with its election to serve as
an Exit Financing Provider in lieu of any shares that it may
be entitled to under Section 8.2 of this Plan. The New
Preferred Stock shall have the rights, powers, privileges, and
preferences set forth in the Restated Charter; PROVIDED,
HOWEVER, that if any person or group (as those terms are
defined in Rule 13d promulgated under the Securities Exchange
Act of 1934, as amended) shall become the owner (whether
pursuant to a stock purchase, merger, consolidation, other
business combination, or otherwise, of a majority of the
outstanding common stock of the Debtor after the Petition Date
and before the issuance of the New Preferred Stock, then the
holders of the New Preferred Stock shall have the right to
cause the Reorganized Debtor to redeem the New Preferred Stock
in accordance with Section 3(c) of the Restated Charter
immediately upon issuance of the New Preferred Stock. The New
Preferred Stock shall bear no restrictive legends of any kind.
i. The second sentence in Section 7.4 shall be modified as
follows:
6
"A number of shares of New Common Stock equal to three (3)
times the number of shares of Old Common Stock outstanding
after the reverse split shall then be issued pro rata to the
holders of the Unsecured Claims and the PBGC."
These modifications are not material modifications to the Plan and do not
require re-solicitation under 11 U.S.C. ss. 1125 or additional or supplemental
notice.
5. No acceptances of the Plan were solicited prior to the approval
of the Disclosure Statement. Solicitation of the Plan was appropriate and
the protections afforded by 11 U.S.C. ss. 1125(e) apply to such solicitation.
6. Under the Plan, Debtor has properly classified Administrative Claims
and Priority Tax Claims, Priority Non-Tax Claims as Class 1, Foothill Capital
Corporation's ("Foothill") Claim arising out of the Work Capital Facility as
Class 2, the Completion Bond Claims as Class 3, Convenience Claims as Class 4,
the PBGC Claim as Class 5, Unsecured Claims as Class 6, Old Preferred Stock as
Class 7, and the Old Common Stock as Class 8. The claims in each Class are
substantially similar. Further, the Plan specifies whether each Class is
impaired or unimpaired. The treatment of each impaired Class provides for the
same treatment of each creditor in a Class, provides for the means by which the
Plan is to be implemented, and does not contain any provision which is
inconsistent with public policy or the interest of creditors with respect to the
management of the Reorganized Debtor after confirmation of the Plan.
7. Debtor has proposed the Plan in good faith and not by any means
prohibited by law.
8. During the pendency of the Chapter 11 case, Debtor has filed all
Monthly Operating Reports in a form approved by the United States Trustee's
Office. Further, there is no evidence that Debtor, through the pendency of its
Chapter 11 case, has failed to comply with the provisions of the Bankruptcy Code
or
7
any other legal or contractual obligations, including, but limited to, those
set forth in the agreements and orders regarding post-petition financing by
Foothill and Fidelity Capital and Income Fund ("Fidelity").
9. All payments made or promised by the Debtor under the Plan for services
or for costs and expenses in connection with the case, or in connection with the
Plan and incident to this case, have been fully disclosed to the Court and have
been approved or are subject to approval of the Court as reasonable.
10. The Plan is feasible and Debtor shall be able to comply with the
terms and provisions of the Plan.
11. The issuance of releases by Debtor under the Plan and corresponding
mutual releases received by Debtor from those parties that Debtor is releasing
under the Plan, when considered in the context of the Plan and Debtor's Chapter
11 case, are in the best interests of the Debtor, Debtor's estate, and Debtor's
creditors and interest holders.
12. The execution of Indemnification Agreements with current members of
the Board of Directors and the proposed Board of Directors, when considered in
the context of the Plan and the Debtor's Chapter 11 case, is in the best
interests of the Debtor, Debtor's estate, and Debtor's creditors and interest
holders.
13. The assumption of the executory contracts and unexpired leases of
Debtor as provided for in the Plan is an appropriate exercise of Debtor's
business judgment and such assumptions are appropriate in the circumstances and
should be approved. Similarly, the rejection of executory contracts and
unexpired leases as provided for in the Plan is an appropriate exercise of
Debtor's business judgment and such rejections are appropriate in the
circumstances and should be approved.
8
14. In the event of a liquidation under Chapter 7 of the Bankruptcy Code,
Unsecured Creditors in Classes 4, 5, and 6, and interest holders in Classes 7
and 8 would receive nothing, and it is likely that the Priority Non-Tax Claims
of Class 1 and the Claims of Foothill in Class 2 would have been paid less than
the full amount of their claims. Accordingly, on the Effective Date of the Plan,
each creditor holding a claim in Classes 1, 2, 3, 4, 5, 6, 7, and 8 is receiving
not less under the Plan than each such holder would have received or obtained in
a liquidation case under Chapter 7.
15. The holders of claims in Classes 1 and 3 are not impaired under the
Plan, and no claimant in these Classes cast a ballot rejecting the Plan or filed
an objection to the Plan.
16. The ballots cast by holders of Claims as to which no objection is
pending, reflect the following:
a. The holder of the Allowed Claim in Class 2 cast one ballot
accepting the Plan in the total amount of $8,776,725.95.
b. The holders of Allowed Claims in Class 4 cast 202 ballots accepting
the Plan in the total amount of $476,014.86, and 15 ballots
rejecting the Plan in the total amount of $31,861.86.
c. The holder of the Allowed Claim in Class 5 did not cast a ballot.
d. The holders of Allowed Claims in Class 6 cast 160 ballots accepting
the Plan in the total amount of $42,328,918.42, and 60 ballots
rejecting the Plan in the total amount of $1,620,066.11.
e. The interest holders in Class 7 retain no interest
post-confirmation. However, the Old Preferred Stock in Class 7 has
been returned to Debtor and, thus, this Class consents to its
treatment under the Plan.
f. The holders of Allowed Interests in Class 8 cast 4,423,291 ballots
accepting the Plan and 103,904 ballots rejecting the Plan.
9
Accordingly, each class of claims and interests accepted the Plan and at least
one class of impaired claims accepted the Plan without reference to any
acceptance by an insider.
17. Fidelity and Foothill (hereinafter collectively referred to as the
"Exit Financing Providers") have committed to provide an Exit Financing Facility
in accordance with Exhibit "B" attached hereto. The Exit Financing Facility is
reasonable and necessary and has been negotiated in good faith. The Debtor is
authorized to enter into and consummate the Exit Facility on the Effective Date
and to execute documentation implementing the Exit Financing Facility in form
and substance acceptable to Fidelity and Foothill.
18. Debtor has sufficient financial wherewithal to implement and
consummate the Plan and the provisions thereof. Accordingly, the Plan is
feasible and it is not likely that confirmation of the Plan will be followed by
the need for further financial reorganization of Debtor.
19. Debtor has not sought under the Plan any rate change subject to
the jurisdiction of any regulatory commission.
20. On or before November 22, 1994, Debtor filed with the Clerk of the
Bankruptcy Court motions delineating executory contracts and unexpired leases to
be assumed under Article IX of the Plan, and transmitted copies of the motions
to all known parties subject to such executory contracts and unexpired leases.
21. All fees payable under Section 1930 of Title 28, United States Code,
have either been paid or will be paid on the Effective Date or forthwith
thereafter pursuant to the provisions of the Plan.
10
22. The stock issued and/or retained under the Plan to or by holders of
claims and interests in Class 6 and Class 8, respectively, is primarily in
exchange for claims against and interests in the Debtor and is entitled to the
exemption from the Securities Laws afforded by Section 1145 of the Bankruptcy
Code.
23. The release to be executed by holders of Old Common Stock is
appropriate in the circumstances and is in the best interest of Debtor, Debtor's
estate, Debtor's creditors, and Debtor's interest holders.
24. The assumption of the employee agreements provided for in Section
9.3 of the Plan is appropriate in the circumstances and should be approved.
25. To the extent that any of the Conclusions of Law set forth below are
or may be deemed to be Findings of Fact, the same are incorporated herein by
reference as if fully set forth.
CONCLUSIONS OF LAW
1. To the extent that any of the foregoing Findings of Fact are or may be
deemed to be Conclusions of Law, the same are incorporated herein by reference
as if fully set forth.
2. Debtor has complied with the applicable notice provisions of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Court
Rules of the United States Bankruptcy Court for the Western District of Texas,
and notice of hearing on confirmation of the Plan was in full compliance with
the requirements of such provisions.
3. Debtor has complied with the provisions of Section 1129(a)(1) of the
Bankruptcy Code, including the proper classification of claims pursuant to
sections 1122 and 1123. Each class of claims specified in the Plan contains
claims which are
11
"substantially similar" and the Plan contains all of the appropriate provisions
required by Section 1123 of the Bankruptcy Code.
4. Debtor has complied with the provisions of Section 1129(a)(2) of the
Bankruptcy Code including compliance with the disclosure and solicitation
provisions of Section 1125 of the Bankruptcy Code.
5. Pursuant to Section 1129(a)(3) of the Bankruptcy Code and Rule
3020(b)(2) of the Federal Rules of Bankruptcy Procedure, the Plan was proposed
in good faith and not by any means forbidden by law.
6. Debtor has complied with the provisions of Section 1129(a)(4) of
the Bankruptcy Code.
7. Debtor has complied with the provisions of Section 1129(a)(5) of the
Bankruptcy Code, including disclosing the identity and affiliation of those
persons who will serve, after confirmation, as directors and/or officers of
Debtor, and those persons service is consistent with the interests of creditors
and public policy. Additionally, Debtor has disclosed the identity of all
insiders that will be employed or retained and the nature of their compensation.
8. Debtor has complied with and the Plan complies with Section 1129(a)(6)
of the Bankruptcy Code because no governmental regulatory commission sets rates
for Debtor.
9. Section 1129(a)(7) of the Bankruptcy Code requires that creditors who
do not vote to accept must receive not less under the Plan than they would
otherwise receive in a Chapter 7 liquidation, and this is determined pursuant to
what is commonly known as the "best interest" test. It has been determined that
in the event of a liquidation of the Debtor, holders of claims in Classes 4, 5,
6 and 8, would receive nothing. With regard to Class 4, the "best interests"
test is satisfied
12
as each holder of a claim will be paid approximately 50% of its Allowed Claim.
With regard to Class 5, the PBGC will be deemed to have accepted the Plan. Class
6 is receiving New Preferred Stock and control of the Debtor. Class 8 is
retaining some ownership interest. Thus, the best interests of creditors are
served and Debtor has complied with, and the Plan comports with, Section
1129(a)(7) of the Bankruptcy Code.
10. Debtor and the Plan comply with 1129(a)(8) of the Bankruptcy Code as
all impaired Classes have accepted the Plan. Further, to the extent necessary,
there has been compliance with Section 1129(a)(10) of the Bankruptcy Code since
at least one Class of impaired claims has accepted the Plan without reference to
any acceptance by an insider.
11. The requirements of Section 1129(a)(9) of the Bankruptcy Code have
been met by virtue of the Plan providing for payment in full and in cash of all
priority claims on the Distribution Date or as allowed by Section 1129(a)(9).
12. The Plan complies with Section 1129(a)(11) of the Bankruptcy Code
because the Plan is feasible and confirmation of the Plan is not likely to be
followed by need for further financial reorganization of Debtor.
13. The Plan complies with Section 1129(a)(12) because all United States
Trustee's fees will be paid under the Plan.
14. The Plan complies with Section 1129(a)(13) of the Bankruptcy Code.
CONCLUSION
On the basis of the foregoing, the Modified First Amended Plan of
Reorganization of Intelogic Trace, Inc., dated October 12, 1994, as modified
herein, should be confirmed.
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SIGNED this 22nd day of November, 1994.
LEIF M. CLARK
UNITED STATES BANKRUPTCY JUDGE
