<PAGE>
As filed with the Securities and Exchange Commission on March 3, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 16, 1999
FRETTER, INC.
(Exact Name of Registrant as Specified in Charter)
Michigan 0-14611 38-1557359
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
12501 Grand River
Brighton, Michigan 48116
(Address of Principal Executive Offices) (Zip Code)
(248) 213-3899
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 3. Bankruptcy or Receivership
On February 16, 1999, an order confirming the Third Amended Joint
Liquidating Plan of Fretter, Inc. (the "Company") and Its Subsidiary Debtors
(the "Liquidating Plan") was entered by the United States Bankruptcy Court for
the Northern District of Ohio, Eastern Division (the "Bankruptcy Court"). A copy
of the Liquidating Plan is filed herewith as Exhibit 2.1.
The Liquidating Plan calls for the liquidation of all of the assets of
the Company, the distribution of the proceeds from such liquidation to creditors
in accordance with the provisions of chapter 11 of the Bankruptcy Code (11
U.S.C. Sections 101-1330) and, ultimately, the dissolution of the Company.
As of February 16, 1999, the Company had 10,577,388 shares of common
stock outstanding. Under the Liquidating Plan, all shares of the Company's
capital stock will be canceled as of the Effective Date (as defined in the
Liquidating Plan) and the Liquidating Plan does not provide for the reservation
or future reservation of any such shares or the issuance of any new shares. No
property will be distributed to or retained by the holders of any shares of the
Company's capital stock pursuant to the Liquidating Plan.
Information as to the assets and liabilities of the Company as of
January 31, 1999 is included in the Monthly Operating Reports of Debtors and
Debtors in possession for the Period Ended January 31, 1999 (the "January
Monthly Operating Report"), which the Company filed with the Bankruptcy Court on
February 19, 1999. A copy of the January Monthly Operating Report is filed
herewith as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
2.1 Third Amended Joint Liquidating Plan of Fretter, Inc. and Its
Subsidiary Debtors, as Confirmed by the United States Bankruptcy Court
for the Northern District of Ohio, Eastern Division on February 16,
1999.
99.1 Monthly Operating Reports of Debtors and Debtors in Possession
for the Period Ended January 31, 1999 (1)
(1) The Company agrees to furnish supplementally a copy of any omitted schedule
or similar attachment to the Commission upon its request.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRETTER, INC.
By /s/ J. Michael McLean
--------------------------------------
J. Michael McLean
Controller
Date: March 3, 1999
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit
Number Document Description
- --------- --------------------------------------------
<S> <C>
2.1 Third Amended Joint Liquidating Plan of
Fretter, Inc. and Its Subsidiary Debtors,
as Confirmed by the United States Bankruptcy
Court for the Northern District of Ohio,
Eastern Division on February 16, 1999
99.1 Monthly Operating Reports of Debtors and
Debtors in Possession for the Period Ended
December 31, 1998
=======================================================
</TABLE>
<PAGE>
Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
<TABLE>
<CAPTION>
IN RE: ) Jointly Administered
) Case No. 96-15177
FRETTER, INC., et al., )
) Chapter 11
Debtors. )
) Judge Morgenstern-Clarren
)
) THIRD AMENDED JOINT LIQUIDATING
) PLAN OF FRETTER, INC. AND ITS
) SUBSIDIARY DEBTORS
- ---------------------------------- -------------------------------
<S> <C>
David S. Kurtz Joseph M. Fischer
Timothy R. Pohl Robert A. Weisberg
JONES, DAY, REAVIS & POGUE CARSON FISCHER, P.L.C.
77 West Wacker 300 East Maple Road, Third Floor
Chicago, Illinois 60601-1692 Birmingham, Michigan 48009-6317
(312) 782-3939 (248) 644-4840
Sean D. Malloy William E. Schonberg
JONES, DAY, REAVIS & POGUE Jeffrey M. Levinson
North Point BENESCH, FRIEDLANDER, COPLAN &
901 Lakeside Avenue ARONOFF LLP
Cleveland, Ohio 44114 2300 BP Tower
(216) 586-3939 200 Public Square
Cleveland, Ohio 44114-2378
ATTORNEYS FOR DEBTORS AND (216) 363-4500
DEBTORS IN POSSESSION
ATTORNEYS FOR OFFICIAL COMMITTEE
OF UNSECURED CREDITORS OF
December 15, 1998 FRETTER, INC.
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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INTRODUCTION............................................................... 1
ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION,
AND COMPUTATION OF TIME..................................... 1
A. Defined Terms............................................... 1
1. "Administrative Claim"................................. 1
2. "Allowed Claim"........................................ 1
3. "Allowed . . . Claim".................................. 2
4. "Allowed Interest"..................................... 2
5. "Alter Ego Claim"...................................... 2
6. "Bankruptcy Code"...................................... 2
7. "Bankruptcy Court"..................................... 2
8. "Bankruptcy Rules"..................................... 2
9. "Bar Date"............................................. 2
10. "Bar Date Order"....................................... 2
11. "BTCC"................................................. 2
12. "BTCC Settlement Agreement"............................ 2
13. "Business Day"......................................... 2
14. "Cash Investment Yield"................................ 2
15. "Chapter 11 Case"...................................... 3
16. "Claim"................................................ 3
17. "Claims Objection Bar Date"............................ 3
18. "Class"................................................ 3
19. "Collateral"........................................... 3
20. "Common Stock of . . ."................................ 3
21. "Confirmation"......................................... 3
22. "Confirmation Date".................................... 3
23. "Confirmation Hearing"................................. 3
24. "Confirmation Order"................................... 3
25. "Creditors' Committee"................................. 3
26. "Cure Amount Claim".................................... 3
27. "Debtors".............................................. 3
28. "Disbursing Agent"..................................... 3
29. "Disclosure Statement"................................. 4
30. "Disputed Claim"....................................... 4
31. "Disputed Insured Claim" and "Disputed Uninsured Claim" 4
32. "Disputed Interest".................................... 4
33. "Distributable Assets"................................. 4
34. "Distributing Debtors"................................. 4
35. "Distribution Date".................................... 4
36. "Distribution Record Date"............................. 4
37. "Document Reviewing Centers"........................... 5
38. "Effective Date"....................................... 5
39. "Estate"............................................... 5
40. "Executory Contract and Unexpired Lease"............... 5
</TABLE>
i
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<TABLE>
<S> <C>
41. "Face Amount".......................................... 5
42. "Fee Claim"............................................ 5
43. "File," "Filed," or "Filing"........................... 5
44. "Final Order".......................................... 6
45. "Former Haneys"........................................ 6
46. "Fred Schmid".......................................... 6
47. "Fred Schmid Warranty Claim"........................... 6
48. "Fred Schmid Warranty Claims Account".................. 6
49. "Fretter".............................................. 6
50. "Fretter Acquisition".................................. 6
51. "Fretter Auto Sound"................................... 6
52. "Fretter Finance"...................................... 6
53. "Fretter Real Estate".................................. 6
54. "Fretter Retail"....................................... 6
55. "Fretter Warehouse".................................... 6
56. "Fretter Warranty Claim"............................... 6
57. "Fretter Warranty Claims Account"...................... 6
58. "General Distribution Account"......................... 7
59. "Global Settlement Agreement".......................... 7
60. "Global Settlement Parties"............................ 7
61. "Insured Claim"........................................ 7
62. "Intercompany Claim"................................... 7
63. "Interest"............................................. 7
64. "Liquidating . . .".................................... 7
65. "Nondistributing Debtors".............................. 7
66. "Petition Date"........................................ 7
67. "Plan"................................................. 7
68. "Priority Claim"....................................... 7
69. "Priority Tax Claim"................................... 7
70. "Pro Rata"............................................. 8
71. "Professional"......................................... 8
72. "Reserve Classes"...................................... 8
73. "Schedules"............................................ 8
74. "Secondary Liability Claim"............................ 8
75. "Secured Claim"........................................ 9
76. "Stipulation of Amount and Nature of Claim"............ 9
77. "Third Party Disbursing Agent"......................... 9
78. "Universal Warranty Contract".......................... 9
79. "Uninsured Claim"...................................... 9
80. "Unsecured Claim"...................................... 9
81. "Warranty Claim"....................................... 9
82. "Warranty Claims Account Calculation".................. 9
83. "Warranty Claims Bar Date"............................. 9
84. "Warranty Claims Bar Date Order"....................... 10
85. "Warranty Claims Objection Bar Date"................... 10
B. Rules of Interpretation and Computation of Time............. 10
1. Rules of Interpretation................................ 10
2. Computation of Time.................................... 10
</TABLE>
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<TABLE>
<S> <C>
ARTICLE II. CLASSES OF CLAIMS AND INTERESTS............................. 11
A. Classes of Claims Against and Interests in Fretter.......... 11
1. Class A-1.............................................. 11
2. Class A-2.............................................. 11
3. Class A-3.............................................. 11
4. Class A-4.............................................. 11
5. Class A-5.............................................. 11
6. Class A-6.............................................. 11
7. Class A-7.............................................. 11
B. Classes of Claims Against and Interests in Fretter
Auto Sound................................................ 11
1. Class B-1.............................................. 11
2. Class B-2.............................................. 11
3. Class B-3.............................................. 11
4. Class B-4.............................................. 11
C. Classes of Claims Against and Interests in Fred Schmid...... 11
1. Class C-1.............................................. 11
2. Class C-2.............................................. 11
3. Class C-3.............................................. 12
4. Class C-4.............................................. 12
5. Class C-5.............................................. 12
D. Classes of Claims Against and Interests in Former
Haneys.................................................... 12
1. Class D................................................ 12
E. Classes of Claims Against and Interests in Fretter
Warehouse................................................. 12
1. Class E................................................ 12
F. Classes of Claims Against and Interests in Fretter
Retail.................................................... 12
1. Class F................................................ 12
G. Classes of Claims Against and Interests in Fretter
Acquisition............................................... 12
1. Class G................................................ 12
H. Classes of Claims Against and Interests in Fretter
Finance................................................... 12
1. Class H................................................ 12
ARTICLE III. TREATMENT OF CLAIMS AND INTERESTS........................... 13
A. Unclassified Claims......................................... 13
1. Payment of Administrative Claims Against Distributing
Debtors.............................................. 13
a. Administrative Claims in General................... 13
b. Statutory Fees..................................... 13
c. Bar Dates for Administrative Claims................ 13
i. General Bar Date Provisions................... 13
ii. Bar Dates for Administrative Claims for
Professional Compensation................... 14
2. Payment of Priority Tax Claims......................... 14
a. Priority Tax Claims................................ 14
b. Other Provisions Concerning Treatment of
Priority Tax Claims.............................. 14
3. Administrative Claims and Priority Tax Claims Against
Nondistributing Debtors.............................. 14
4. Intercompany Claims.................................... 14
</TABLE>
iii
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<TABLE>
<S> <C>
B. Treatment of Classified Claims Against and Interests in
Fretter................................................... 15
1. Class A-1 Claims....................................... 15
2. Class A-2 Claims....................................... 15
3. Class A-3 Claims....................................... 15
4. Class A-4 Claims....................................... 15
5. Class A-5 Claims....................................... 15
6. Class A-6 Claims....................................... 15
7. Class A-7 Interests.................................... 15
C. Treatment of Classified Claims Against and Interests
in Fretter Auto Sound..................................... 15
1. Class B-1 Claims....................................... 15
2. Class B-2 Claims....................................... 16
3. Class B-3 Claims....................................... 16
4. Class B-4 Interests.................................... 16
D. Treatment of Classified Claims Against and Interests
in Fred Schmid............................................ 16
1. Class C-1 Claims....................................... 16
2. Class C-2 Claims....................................... 16
3. Class C-3 Claims....................................... 16
4. Class C-4 Claims....................................... 16
5. Class C-5 Interests.................................... 16
E. Treatment of Classified Claims Against and Interests
in the Nondistributing Debtors............................ 16
1. Class D Claims and Interests (Former Haneys)........... 16
2. Class E Claims and Interests (Fretter Warehouse)....... 17
3. Class F Claims and Interests (Fretter Retail).......... 17
4. Class G Claims and Interests (Fretter Acquisition)..... 17
5. Class H Claims and Interests (Fretter Finance)......... 17
F. Special Provisions Regarding Treatment of Allowed
Secondary Liability Claims................................ 17
G. Limitations on Amounts to Be Distributed to Holders
of Allowed Insured Claims................................. 17
H. Provisions Regarding Postpetition Interest.................. 17
ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN.......................... 18
A. The Liquidating Debtors; Vesting of Assets.................. 18
B. Management of the Liquidating Debtors....................... 18
C. Dissolution of the Nondistributing Debtors and
Fretter Real Estate....................................... 18
D. Establishment of the Fretter Warranty Claims Account,
The Fred Schmid Warranty Claims Account and the
General Distribution Account.............................. 19
E. Rights, Powers, and Duties of the Liquidating Debtors....... 19
F. Continued Existence of the Creditors' Committee and
Creditors' Committee Approval............................. 20
G. Releases by the Debtors..................................... 20
H. Discharge of Claims and Termination of Interests............ 21
I. Injunctions................................................. 21
J. Termination of Subordination Rights and Intercompany
Claims and Settlement of Related Claims and Controversies. 21
K. Effectuating Documents; Further Transactions; Exemption
from Certain Transfer Taxes............................... 22
</TABLE>
iv
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<TABLE>
<S> <C>
ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.......... 23
A. Executory Contracts and Unexpired Leases to be Assumed
or Assumed and Assigned................................... 23
1. Assumption and Assignment Generally.................... 23
2. Approval of Assumptions and Assignments................ 23
B. Payments Related to Assumption of Executory Contracts and
Unexpired Leases.......................................... 23
C. Executory Contracts and Unexpired Leases to be Rejected..... 24
D. Bar Date for Rejection Damages.............................. 24
ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS............................ 25
A. General Distribution Provisions............................. 25
1. Method of Distributions to Holders of Claims........... 25
2. Distributions to be Made on Effective Date............. 25
3. Compensation and Reimbursement for Services Related to
Distributions........................................ 25
4. Timing and Calculation of Amounts to be Distributed.... 26
a. Establishment of Distribution Dates................ 26
b. Allowed Claims in Non-Reserve Classes.............. 26
c. Allowed Claims in Reserve Classes.................. 26
i. Initial Distributions........................ 26
ii. Additional Distributions on Account of
Previously Allowed Claims.................. 27
iii. Special Provisions Regarding Distributions to
Reserve Classes............................ 27
d. Warranty Claims.................................... 27
B. Delivery of Distributions and Undeliverable or
Unclaimed Distributions................................... 27
1. Delivery of Distributions in General................... 27
2. Undeliverable Distributions Held by Disbursing
Agents............................................... 28
a. Holding of Undeliverable Distributions............. 28
b. After Distributions Become Deliverable............. 28
c. Failure to Claim Undeliverable Distributions....... 28
C. Distribution Record Date.................................... 28
D. Means of Cash Payments...................................... 28
E. De Minimis Distributions.................................... 29
F. Compliance with Tax Requirements............................ 29
G. Setoffs..................................................... 29
ARTICLE VII. PROCEDURES FOR RESOLVING DISPUTED CLAIMS OR INTERESTS........ 30
A. Prosecution of Objections to Claims......................... 30
1. Objections to Claims................................... 30
2. Authority to Prosecute Objections...................... 30
B. Treatment of Disputed Claims................................ 30
1. No Payments on Account of Disputed Claims.............. 30
2. Recourse............................................... 30
</TABLE>
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<TABLE>
<S> <C>
C. Distributions on Account of Disputed Claims Once Allowed.... 31
ARTICLE VIII. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION
OF THE PLAN............................................... 32
A. Conditions to Confirmation.................................. 32
B. Condition to Effective Date................................. 32
C. Waiver of Conditions to Confirmation or Effective Date...... 33
D. Effect of Nonoccurrence of Condition to Effective Date...... 33
ARTICLE IX. CONFIRMABILITY AND SEVERABILITY OF A PLAN AND CRAMDOWN...... 34
A. Confirmability and Severability of a Plan................... 34
B. Cramdown.................................................... 34
ARTICLE X. RETENTION OF JURISDICTION................................... 35
ARTICLE XI. MISCELLANEOUS PROVISIONS.................................... 37
A. Limitation of Liability..................................... 37
B. Modification of the Plan.................................... 37
C. Revocation of the Plan...................................... 37
D. Severability of Plan Provisions............................. 37
E. Successors and Assigns...................................... 38
F. Service of Certain Plan Exhibits and Disclosure
Statement Exhibits........................................ 38
G. Service of Documents........................................ 38
</TABLE>
vi
<PAGE>
TABLE OF EXHIBITS/1/
Exhibit I.A.12 BTCC Settlement Agreement
Exhibit I.A.59(a) Global Settlement Agreement
Exhibit I.A.59(b) Order Approving Final Documentation for the Global
Settlement and Third-Party Releases
Exhibit V.A.1.a Schedule of Executory Contracts and Unexpired Leases
to Be Assumed and Assigned
Exhibit V.C Nonexclusive Schedule of Executory Contracts and
Unexpired Leases to Be Rejected
- ----------------
/1/ All Exhibits are available for review at the Document Reviewing Centers.
vii
<PAGE>
INTRODUCTION
Fretter, Inc. ("Fretter") and the other above-captioned debtors and
debtors in possession (collectively with Fretter, the "Debtors") and the
Official Committee of Unsecured Creditors of Fretter (the "Creditors'
Committee") propose the following joint liquidating plan (the "Plan") for the
resolution of the outstanding claims against and equity interests in the
Debtors. The Debtors are proponents of the Plan within the meaning of section
1129 of the Bankruptcy Code, 11 U.S.C. (S) 1129, with respect to all Debtors.
The Creditors' Committee is a proponent of the Plan within the meaning of
section 1129 of the Bankruptcy Code, 11 U.S.C. (S) 1129, with respect to Fretter
only. Reference is made to the disclosure statement with respect to the Plan
(the "Disclosure Statement"), for a discussion of the Debtors' history,
businesses and properties, and for a summary and analysis of the Plan. There are
also other agreements and documents on file with the Bankruptcy Court that are
referenced in the Plan or the Disclosure Statement that are available for review
at the Document Reviewing Centers (as defined below).
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION,
AND COMPUTATION OF TIME
A. Defined Terms
As used in the Plan, capitalized terms have the meanings set forth
below. Any term that is not otherwise defined herein, but that is used in the
Bankruptcy Code or the Bankruptcy Rules, will have the meaning given to that
term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
1. "Administrative Claim" means a Claim for costs and expenses of
administration allowed under sections 503(b), 507(b), or 1114(e)(2) of the
Bankruptcy Code, including: (a) the actual and necessary costs and expenses
incurred after the Petition Date of preserving the respective Estates and
operating the businesses of the Debtors; (b) compensation for legal, financial
advisory, accounting, and other services and reimbursement of expenses awarded
or allowed under sections 330(a) or 331 of the Bankruptcy Code; and (c) all fees
and charges assessed against the Estates under chapter 123 of title 28, United
States Code, 28 U.S.C. (S)(S) 1911-1930.
2. "Allowed Claim" means:
a. a Claim that has been listed by a particular Debtor on its
Schedules as other than disputed, contingent, or unliquidated, to the
extent that it is not otherwise a Disputed Claim;
b. a Claim for which a proof of Claim has been Filed by the
applicable Bar Date or has otherwise been deemed timely Filed under
applicable law, to the extent that it is not otherwise a Disputed Claim; or
1
<PAGE>
c. a Claim that is allowed: (i) in any Stipulation of Amount and
Nature of Claim executed by the applicable Debtor or Liquidating Debtor and
Claim holder; (ii) in any contract, instrument, or other agreement entered
into in connection with the Plan; (iii) in a Final Order; or (iv) pursuant
to the terms of the Plan.
3. "Allowed . . . Claim" means an Allowed Claim in the particular Class
or category specified. Any reference herein to a particular Allowed Claim
includes both the secured and unsecured portions of such Claim.
4. "Allowed Interest" means an Interest that either: (a) is not a
Disputed Interest or (b) has been allowed in a Final Order.
5. "Alter Ego Claim" means any Claim or cause of action that has been or
could be asserted by any creditor of any Debtor against any other Debtor based
on theories of veil piercing, alter ego, substantive consolidation or any other
similar legal theory.
6. "Bankruptcy Code" means title 11 of the United States Code, 11 U.S.C.
(S)(S) 101-1330, as now in effect or hereafter amended.
7. "Bankruptcy Court" means the United States District Court having
jurisdiction over the Chapter 11 Cases and, to the extent of any reference made
pursuant to 28 U.S.C. (S) 157, the bankruptcy unit of such District Court.
8. "Bankruptcy Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as now in
effect or hereafter amended.
9. "Bar Date" means the applicable bar date by which: (a) a request for
payment of an Administrative Claim, (b) a proof of Claim, or (c) a proof of
Interest must be or must have been Filed, as established by an order of the
Bankruptcy Court, including the Bar Date Order and the Confirmation Order.
10. "Bar Date Order" means the Order Establishing Bar Dates for Filing
Proofs of Claims and Interests entered by the Bankruptcy Court on February 10,
1997, as the same may have been or may be amended, modified, or supplemented.
11. "BTCC" means BT Commercial Corporation, a Delaware corporation.
12. "BTCC Settlement Agreement" means the Settlement Agreement between the
Debtors, the Creditors' Committee and BTCC, dated as of July 30, 1998 and
approved pursuant to order of the Bankruptcy Court.
13. "Business Day" means any day, other than a Saturday, Sunday, or "legal
holiday" (as defined in Bankruptcy Rule 9006(a)).
14. "Cash Investment Yield" means the net yield earned by the applicable
Disbursing Agent from the investment of cash held pending distribution pursuant
to the Plan, which investment will be in a manner consistent with the Debtors'
investment and deposit guidelines.
2
<PAGE>
15. "Chapter 11 Case" means: (a) when used with reference to a particular
Debtor, the chapter 11 case pending for that Debtor in the Bankruptcy Court and
(b) when used with reference to all Debtors, the chapter 11 cases pending for
the Debtors in the Bankruptcy Court.
16. "Claim" means a "claim," as defined in section 101(5) of the
Bankruptcy Code, against any Debtor.
17. "Claims Objection Bar Date" means, for all Claims, other than Warranty
Claims and those Claims allowed in accordance with Section I.A.2.c, the latest
of: (a) 90 days after the Effective Date; (b) 60 days after the Filing of a
proof of Claim for such Claim; (c) such other period of limitation as may be
specifically fixed by the Plan, the Confirmation Order, the Bankruptcy Rules, or
a Final Order for objecting to such Claims; and (d) such later date as provided
for by order of the Bankruptcy Court, which order may be entered without further
notice.
18. "Class" means a class of Claims or Interests, as described in Article
II.
19. "Collateral" means any property of the Debtors that is subject to a
valid and enforceable lien to secure a Claim.
20. "Common Stock of . . ." means, when used with reference to a
particular Debtor or Debtors, the common stock issued by such Debtor or Debtors
and outstanding immediately prior to the Petition Date.
21. "Confirmation" means the entry of the Confirmation Order on the docket
of the Bankruptcy Court.
22. "Confirmation Date" means the date on which the Bankruptcy Court
enters the Confirmation Order on its docket, within the meaning of Bankruptcy
Rules 5003 and 9021.
23. "Confirmation Hearing" means the hearing held by the Bankruptcy Court
on Confirmation of the Plan, as such hearing may be continued from time to time.
24. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
25. "Creditors' Committee" means the Official Committee of Unsecured
Creditors of Fretter, appointed by the United States Trustee in the Chapter 11
Cases pursuant to section 1102 of the Bankruptcy Code, as presently constituted
or as hereinafter reconstituted.
26. "Cure Amount Claim" means a Claim based upon a Debtor's defaults
pursuant to an Executory Contract or Unexpired Lease at the time such contract
or lease is assumed by that Debtor under section 365 of the Bankruptcy Code.
27. "Debtors" means, collectively, Fretter, Fretter Auto Sound, Former
Haneys, Fretter Warehouse, Fretter Retail, Fretter Finance, Fretter Acquisition,
and Fred Schmid.
28. "Disbursing Agent" means the Liquidating Debtors in their capacity as
disbursing agents pursuant to Article VI, or any Third Party Disbursing Agent.
3
<PAGE>
29. "Disclosure Statement" means the disclosure statement (including all
exhibits and schedules thereto or referenced therein) that relates to the Plan,
as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy
Code, as the same may be amended, modified, or supplemented.
30. "Disputed Claim" means:
a. if no proof of Claim has been Filed by the applicable Bar Date or
has otherwise been deemed timely Filed under applicable law: (i) a Claim
that is listed on a Debtor's Schedules as other than disputed, contingent,
or unliquidated, but as to which the applicable Debtor or Liquidating
Debtor, or the Creditors' Committee, or, prior to the Effective Date, any
other party in interest, has Filed an objection by the Claims Objection Bar
Date or the Warranty Claims Objection Bar Date, as the case may be, but
only to the extent of the difference between the amount of the Claim listed
in the Schedules and the amount of such Claim asserted in the objection, or
(ii) a Claim that is listed on a Debtor's Schedules as disputed,
contingent, or unliquidated; or
b. if a proof of Claim or request for payment of an Administrative
Claim has been Filed by the Bar Date or has otherwise been deemed timely
Filed under applicable law, a Claim for which an objection has been Filed
by the applicable Debtor or Liquidating Debtor, or the Creditors'
Committee, or, prior to the Effective Date, any other party in interest, by
the Claims Objection Bar Date or the Warranty Claims Objection Bar Date, as
the case may be, and such objection has not been withdrawn or denied by a
Final Order, but only to the extent of the difference between the amount of
the Claim asserted in the proof of Claim and the amount of such Claim
asserted in the objection.
31. "Disputed Insured Claim" and "Disputed Uninsured Claim" mean,
respectively, an Insured Claim or an Uninsured Claim that is also a Disputed
Claim.
32. "Disputed Interest" means any Interest as to which an objection has
been filed by the applicable Debtor, Liquidating Debtor, or, prior to the
Confirmation Date, any other party in interest, by the Claims Objection Bar
Date, and such objection has not been withdrawn or denied by a Final Order.
33. "Distributable Assets" means all of the property of the Estates, as
defined in section 541 of the Bankruptcy Code, including without limitation any
claims and causes of action retained pursuant to Article IV, and the respective
products, profits, or proceeds therefrom.
34. "Distributing Debtors" means, collectively, Fretter, Fretter Auto
Sound, and Fred Schmid.
35. "Distribution Date" means a Business Day as soon as practicable after
the Effective Date and certain dates after such date, in the discretion of the
Disbursing Agent, as more fully described in Article VI.
36. "Distribution Record Date" means the Confirmation Date or any later
date established by the Bankruptcy Court.
4
<PAGE>
37. "Document Reviewing Centers" means, collectively: (a) the offices of
Jones, Day, Reavis & Pogue located at 901 Lakeside Avenue, Cleveland, Ohio
44114; (b) the offices of Carson Fischer, P.L.C located at 300 East Maple Road,
Third Floor, Birmingham, Michigan 48009; and (c) the offices of Jones, Day,
Reavis & Pogue located at 77 West Wacker, Chicago, Illinois 60601.
38. "Effective Date" means a Business Day, as determined by the Debtors and
the Creditors' Committee, that: (a) is as soon as reasonably practicable after
the Confirmation Date and (b) is the day on which (i) all conditions to the
Effective Date in Section VIII.B have been met or waived pursuant to Section
VIII.C and (ii) no stay of the Confirmation Order is in effect.
39. "Estate" means, as to each Debtor, the estate created for that Debtor
in its Chapter 11 Case pursuant to section 541 of the Bankruptcy Code.
40. "Executory Contract and Unexpired Lease" means a contract or lease to
which one or more of the Debtors is a party that is subject to assumption or
rejection under section 365 of the Bankruptcy Code.
41. "Face Amount" means:
a. when used with reference to a Disputed Insured Claim, either: (i)
the full stated amount claimed by the holder of such Claim in any proof of
Claim Filed by the Bar Date, or otherwise deemed timely Filed under
applicable law, if the proof of Claim specifies only a liquidated amount,
or (ii) the applicable deductible under the relevant insurance policy,
minus any reimbursement obligations of the applicable Debtor to the
insurance carrier for sums expended by the insurance carrier on account of
such Claim (including defense costs), if such amount is less than the
amount specified in (i) above or the proof of Claim specifies an
unliquidated amount;
b. when used with reference to a Disputed Uninsured Claim, either:
(i) the full stated amount claimed by the holder of such Claim in any proof
of Claim Filed by the Bar Date or otherwise deemed timely Filed under
applicable law, if the proof of Claim specifies only a liquidated amount or
(ii) the amount of the Claim acknowledged by the applicable Debtor or
Liquidating Debtor in any objection Filed to such Claim, if no proof of
Claim has been Filed by the Bar Date or has otherwise been deemed timely
Filed under applicable law or if the proof of Claim specifies an
unliquidated amount; and
c. when used in reference to an Allowed Claim, the amount of such
Allowed Claim, as determined in accordance with Section I.A.2 and
applicable provisions of the Bankruptcy Code.
42. "Fee Claim" means a Claim under sections 330(a), 331, 503, or 1103 of
the Bankruptcy Code for compensation of a Professional or other entity for
services rendered or expenses incurred in the Chapter 11 Cases.
43. "File," "Filed," or "Filing" means file, filed, or filing with the
Bankruptcy Court in the Chapter 11 Cases.
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44. "Final Order" means an order or judgment of the Bankruptcy Court, or
other court of competent jurisdiction, as entered on the docket in any Chapter
11 Case or the docket of any other court of competent jurisdiction, that has not
been reversed, stayed, modified, or amended, and as to which the time to appeal
or seek certiorari has expired, and no appeal or petition for certiorari has
been timely taken, or as to which any appeal that has been taken or any petition
for certiorari that has been timely filed has been resolved by the highest court
to which the order or judgment was appealed or from which certiorari was sought.
45. "Former Haneys" means The Former Haneys, Inc., a Michigan corporation
and one of the Debtors.
46. "Fred Schmid" means Fred Schmid Appliance and TV Co., a Colorado
corporation and one of the Debtors.
47. "Fred Schmid Warranty Claim" means a Warranty Claim originating from
product warranty or service contracts sold by Fred Schmid other than Universal
Warranty Contracts.
48. "Fred Schmid Warranty Claims Account" means a segregated, interest-
bearing account into which shall be deposited all cash available for
distribution to holders of Allowed Fred Schmid Warranty Claims, pursuant to
Section III.D.4.
49. "Fretter" means Fretter, Inc., a Michigan corporation and one of the
Debtors.
50. "Fretter Acquisition" means Fretter Acquisition Company, Inc., a
Michigan corporation and one of the Debtors.
51. "Fretter Auto Sound" means Fretter Auto Sound, Inc., a Michigan
corporation and one of the Debtors.
52. "Fretter Finance" means Fretter Finance, Inc., a Michigan corporation
and one of the Debtors.
53. "Fretter Real Estate" means Fretter Real Estate Co., a Michigan
corporation, which is not one of the Debtors.
54. "Fretter Retail" means Fretter Retail Services, Inc., a Michigan
corporation and one of the Debtors.
55. "Fretter Warehouse" means Fretter Warehouse Company, Inc., a Michigan
corporation and one of the Debtors.
56. "Fretter Warranty Claim" means a Warranty Claim originating from
product warranty or service contracts sold by Fretter other than Universal
Warranty Contracts.
57. "Fretter Warranty Claims Account" means a segregated, interest-bearing
account into which shall be deposited all cash available for distribution to
holders of Allowed Fretter Warranty Claims, pursuant to Section III.B.6.
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58. "General Distribution Account" means a segregated, interest-bearing
account into which shall be deposited all cash available (after payment of
Allowed Secured Claims, Allowed Administrative Claims, Allowed Priority Claims,
and Allowed Priority Tax Claims), other than the cash deposited into the Fretter
Warranty Claims Account and the Fred Schmid Warranty Claims Account, for
distribution to creditors pursuant to Article III.
59. "Global Settlement Agreement" means, the agreement among the Debtors
and certain other parties, attached hereto as Exhibit 1.A.59(a), which was
approved by the Bankruptcy Court on October 1, 1998, including the provisions of
the order entered by the Bankruptcy Court in connection therewith, attached
hereto as Exhibit 1.A.59(b).
60. "Global Settlement Parties" means, collectively, the parties to the
Global Settlement Agreement.
61. "Insured Claim" means any Claim arising from an incident or occurrence
that is covered under a Debtor's insurance policy, other than a workers'
compensation insurance policy.
62. "Intercompany Claim" means, collectively: (a) any Claim listed in the
Schedules reflecting intercompany book entries by one Debtor with respect to any
other Debtor or Fretter Real Estate and (b) any Claim not reflected in such book
entries that is held by a Debtor or Fretter Real Estate against another Debtor
or Fretter Real Estate.
63. "Interest" means any right of any holder of any equity security of any
Debtor and the rights of any entity to purchase or demand the issuance of any
equity security of any Debtor, including: (a) redemption, conversion, exchange,
voting, participation, and dividend rights; (b) liquidation preferences; and (c)
stock options and warrants.
64. "Liquidating . . ." means, when used in reference to a particular
Debtor, such Debtor on and after the Effective Date.
65. "Nondistributing Debtors" means, collectively, Former Haneys, Fretter
Warehouse, Fretter Retail, Fretter Finance, and Fretter Acquisition.
66. "Petition Date" means September 24, 1996.
67. "Plan" means this joint liquidating plan for each of the Debtors, to
the extent applicable to any Debtor, and all Exhibits attached hereto or
referenced herein, as the same may be amended, modified, or supplemented.
68. "Priority Claim" means a Claim that is entitled to priority in payment
pursuant to section 507(a) of the Bankruptcy Code that is not an Administrative
Claim or a Priority Tax Claim.
69. "Priority Tax Claim" means a Claim that is entitled to priority in
payment pursuant to section 507(a)(8) of the Bankruptcy Code.
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70. "Pro Rata" means:
a. when used with reference to a distribution of cash from the
General Disbursement Account, proportionately so that with respect to a
particular Allowed Claim, the ratio of: (i)(A) the amount of property
distributed on account of such Allowed Claim to (B) the amount of such
Claim, is the same as the ratio of: (ii)(A) the amount of property
distributed on account of all Allowed Claims of the Class in which such
Allowed Claim is included to (B) the amount of all Allowed Claims in that
Class;
b. when used with reference to a distribution of cash from the
Fretter Warranty Claims Account or the Fred Schmid Warranty Claims Account,
proportionately so that with respect to a particular Warranty Claim, the
ratio of: (i)(A) the amount of property distributed from the Fretter
Warranty Claims Account or the Fred Schmid Warranty Claims Account, as the
case may be, on account of such Allowed Warranty Claim to (B) the amount of
such Allowed Warranty Claim, is the same as the ratio of: (ii)(A) the
amount of property distributed on account of all Allowed Warranty Claims of
the Class in which such Allowed Warranty Claim is included to (B) the
amount of all Allowed Warranty Claims in that Class; and
c. when used with reference to distributions of the Cash Investment
Yield, the portion of the Cash Investment Yield allocable to a particular
Allowed Claim on the basis of the amount of cash then being distributed on
account of such Claims. Calculations of the Pro Rata shares of the Cash
Investment Yield to be distributed at any particular time will be based on
the Cash Investment Yield generated as of the last day of the month prior
to the month in which such distributions are to be made.
71. "Professional" means any professional employed in the Chapter 11 Cases
pursuant to sections 327 or 1103 of the Bankruptcy Code or any professional or
other entity seeking compensation or reimbursement of expenses in connection
with the Chapter 11 Cases pursuant to section 503(b)(4) of the Bankruptcy Code.
72. "Reserve Classes" means, collectively, Classes A-5, B-3, and C-3.
73. "Schedules" means the schedules of assets and liabilities and the
statements of financial affairs Filed by the Debtors, as required by section 521
of the Bankruptcy Code and the Official Bankruptcy Forms, as the same may have
been or may be amended, modified, or supplemented.
74. "Secondary Liability Claim" means an Unsecured Claim that arises from a
Debtor being liable as a guarantor of, or otherwise being jointly, severally, or
secondarily liable for, any contractual, tort, or other obligation of another
Debtor, including any Unsecured Claim based on: (a) guaranties of collection,
payment, or performance; (b) indemnity bonds, obligations to indemnify, or
obligations to hold harmless; (c) performance bonds; (d) contingent liabilities
arising out of contractual obligations or out of undertakings (including any
assignment or other transfer) with respect to leases, operating agreements, or
other similar obligations made or given by a Debtor relating to the obligations
or performance of another Debtor; (e) vicarious liability; or (f) any other
joint or several liability that any Debtor may have in respect of any obligation
that is the basis of a Claim.
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75. "Secured Claim" means a Claim that is secured by a lien on property in
which an Estate has an interest or that is subject to setoff under section 553
of the Bankruptcy Code, to the extent of the value of the Claim holder's
interest in the applicable Estate's interest in such property or to the extent
of the amount subject to setoff, as applicable, as determined pursuant to
sections 506(a) and, if applicable, 1129(b) of the Bankruptcy Code.
76. "Stipulation of Amount and Nature of Claim" means a stipulation or
other agreement between the applicable Debtor or Liquidating Debtor and a holder
of a Claim or Interest, or an agreed order of the Bankruptcy Court, establishing
the amount and nature of a Claim or Interest.
77. "Third Party Disbursing Agent" means an entity designated by
Liquidating Fretter to act as a Disbursing Agent pursuant to Section VI.A.1.
78. "Universal Warranty Contract" means a product warranty or service
contract sold by Fretter or Fred Schmid between November 1, 1994 and October 31,
1995.
79. "Uninsured Claim" means any Claim that is not an Insured Claim.
80. "Unsecured Claim" means any Claim that is not an Administrative Claim,
Priority Claim, Priority Tax Claim, Secured Claim, or Intercompany Claim.
81. "Warranty Claim" means a Claim against Fretter or Fred Schmid
originating from product warranty or service contracts sold by Fretter or Fred
Schmid, other than Universal Warranty Contracts.
82. "Warranty Claims Account Calculation" means the calculation by which
Fretter and Fred Schmid will determine how much cash to deposit into the Fretter
Warranty Claims Account and the Fred Schmid Warranty Claims Account,
respectively. The Warranty Claims Account Calculation will be made as of the
last day of the month immediately preceding the month in which the Confirmation
Date occurs. The applicable Debtor (either Fretter of Fred Schmid) will
calculate: (a) the amount of valid Warranty Claims asserted against such Debtor
and reviewed but not paid before the Petition Date (the "Prepetition Warranty
Claims Amount"); (b) the amount of valid Warranty Claims asserted against such
Debtor and reviewed from the Petition Date through the date of the Warranty
Claims Account Calculation (the "Postpetition Warranty Claims Amount"); and (c)
the projected amount of valid Warranty Claims that will be asserted against such
Debtor in the future (the "Projected Warranty Claims Amount"), which projection
will be made by Jay Alix & Associates, financial advisors to the Creditors'
Committee, and will be predicated upon the historical rate at which holders of
warranty contracts have asserted claims against such Debtor from January 1, 1997
(shortly after the Petition Date) through the date of the Warranty Claims
Account Calculation. The applicable Debtor will then deposit into its Warranty
Claims Account cash equal to (x) the sum of (i) the Prepetition Warranty Claims
Amount plus (ii) twice the Postpetition Warranty Claims Amount plus (iii) twice
the Projected Warranty Claims Amount; multiplied by (y) .40 for the Fretter
Warranty Claims Account or .08 for the Fred Schmid Warranty Claims Account.
83. "Warranty Claims Bar Date" means for each holder of a Warranty Claim
the later of: (a) thirty days after the expiration of that holder's product
warranty or service contract or (b) the Bar Date established pursuant to the
Warranty Claims Bar Date Order.
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84. "Warranty Claims Bar Date Order" means any order of the Bankruptcy
Court establishing bar dates for filing proofs of Claim originating from product
warranty and service contracts sold by Fretter or Fred Schmid.
85. "Warranty Claims Objection Bar Date" means, with respect to any
particular Warranty Claim, that date forty-five days from the Warranty Claims
Bar Date applicable to such Warranty Claim.
B. Rules of Interpretation and Computation of Time
1. Rules of Interpretation
For purposes of the Plan, unless otherwise provided herein: (a)
whenever from the context it is appropriate, each term, whether stated in the
singular or the plural, will include both the singular and the plural; (b)
unless otherwise provided in the Plan, any reference in the Plan to a contract,
instrument, release, or other agreement or document being in a particular form
or on particular terms and conditions means that such document will be
substantially in such form or substantially on such terms and conditions; (c)
any reference in the Plan to an existing document or Exhibit Filed or to be
Filed means such document or Exhibit, as it may have been or may be amended,
modified, or supplemented pursuant to the Plan; (d) any reference to an entity
as a holder of a Claim includes that entity's successors, assigns, and
affiliates; (e) all references in the Plan to Sections, Articles, and Exhibits
are references to Sections, Articles, and Exhibits of or to the Plan; (f) the
words "herein," "hereunder," and "hereto" refer to the Plan in its entirety
rather than to a particular portion of the Plan; (g) captions and headings to
Articles and Sections are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of the Plan; (h)
subject to the provisions of any contract, articles of incorporation, code of
regulations, similar constituent documents, instrument, release, or other
agreement or document entered into in connection with the Plan, the rights and
obligations arising under the Plan shall be governed by, and construed and
enforced in accordance with, federal law, including the Bankruptcy Code and
Bankruptcy Rules; and (i) the rules of construction set forth in section 102 of
the Bankruptcy Code will apply.
2. Computation of Time
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) will apply.
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ARTICLE II.
CLASSES OF CLAIMS AND INTERESTS
The Plan constitutes a separate plan for each Debtor. In accordance
with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and
Priority Tax Claims, as described in Section III.A, have not been classified and
thus are excluded from the following Classes. A Claim or Interest is classified
in a particular Class only to the extent that the Claim or Interest qualifies
within the description of that Class and is classified in other Classes to the
extent that any remainder of the Claim or Interest qualifies within the
description of such other Classes.
A. Classes of Claims Against and Interests in Fretter
1. Class A-1: The Secured Claims of Michigan National Bank.
2. Class A-2: The Secured Claims of BT Commercial Corp.
3. Class A-3: All Secured Claims against Fretter that are not otherwise
classified in Class A-1 or A-2.
4. Class A-4: Unsecured Claims against Fretter that are entitled to
priority under section 507(a)(3), 507(a)(4), or 507(a)(6) of the Bankruptcy
Code.
5. Class A-5: Unsecured Claims against Fretter that are not Fretter
Warranty Claims.
6. Class A-6: Fretter Warranty Claims.
7. Class A-7: Interests in Fretter.
B. Classes of Claims Against and Interests in Fretter Auto Sound
1. Class B-1: All Secured Claims against Fretter Auto Sound.
2. Class B-2: Unsecured Claims against Fretter Auto Sound that are
entitled to priority under section 507(a)(3), 507(a)(4), or 507(a)(6) of the
Bankruptcy Code.
3. Class B-3: Unsecured Claims against Fretter Auto Sound that are not
Intercompany Claims.
4. Class B-4: Interests in Fretter Auto Sound.
C. Classes of Claims Against and Interests in Fred Schmid
1. Class C-1: All Secured Claims against Fred Schmid.
2. Class C-2: Unsecured Claims against Fred Schmid that are entitled to
priority under section 507(a)(3), 507(a)(4), or 507(a)(6) of the Bankruptcy
Code.
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3. Class C-3: Unsecured Claims against Fred Schmid that are not Fred
Schmid Warranty Claims.
4. Class C-4: Fred Schmid Warranty Claims.
5. Class C-5: Interests in Fred Schmid.
D. Classes of Claims Against and Interests in Former Haneys
1. Class D: All Claims against and Interests in Former Haneys.
E. Classes of Claims Against and Interests in Fretter Warehouse
1. Class E: All Claims against and Interests in Fretter Warehouse.
F. Classes of Claims Against and Interests in Fretter Retail
1. Class F: All Claims against and Interests in Fretter Retail.
G. Classes of Claims Against and Interests in Fretter Acquisition
1. Class G: All Claims against and Interests in Fretter Acquisition.
H. Classes of Claims Against and Interests in Fretter Finance
1. Class H: All Claims against and Interests in Fretter Finance.
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ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims
1. Payment of Administrative Claims Against Distributing Debtors
a. Administrative Claims in General
Except as specified in this Section III.A.1, and subject to the
Bar Date provisions herein, unless otherwise agreed by the holder of an Allowed
Administrative Claim against a Distributing Debtor and the applicable
Distributing Debtor or Liquidating Distributing Debtor, each holder of an
Allowed Administrative Claim against a Distributing Debtor will receive, in full
satisfaction of its Claim, cash equal to the amount of such Allowed
Administrative Claim as soon as practicable after the Effective Date or, if the
Administrative Claim is not allowed as of the Effective Date, as soon as
practicable after the later of 30 days after the date on which an order allowing
such Claim becomes a Final Order or a Stipulation of Amount and Nature of Claim
is executed by the applicable Liquidating Distributing Debtor and Claim holder.
b. Statutory Fees
On the Effective Date, Allowed Administrative Claims against
Distributing Debtors for fees payable pursuant to 28 U.S.C. (S) 1930 as
determined by the Bankruptcy Court at the Confirmation Hearing, will be paid in
cash equal to the amount of such Allowed Administrative Claims. Fees payable
pursuant to 28 U.S.C. (S) 1930 for time periods after the Confirmation Date will
be paid on a quarterly basis until the Bankruptcy Court enters a final decree
closing the Chapter 11 Cases.
c. Bar Dates for Administrative Claims
i. General Bar Date Provisions
Except as otherwise provided in Section III.A.1.c.ii, unless
previously Filed, requests for payment of Administrative Claims must be Filed
and served on the Liquidating Debtors and the Creditors' Committee, pursuant to
the procedures specified in the Confirmation Order and the notice of entry of
the Confirmation Order, no later than 30 days after the Effective Date. Holders
of Administrative Claims that are required to File and serve a request for
payment of such Claims and that do not File and serve a request by the
applicable bar date will be forever barred from asserting such Claims against
the Debtors, the Liquidating Debtors, or their respective property. Objections
to such requests must be Filed and served on the parties that were served with
such requests and the requesting party by the later of: (A) 90 days after the
Effective Date, (B) 60 days after the Filing of the applicable request for
payment of Administrative Claims, or (C) such later date as provided for by
order of the Bankruptcy Court, which order may be entered without further
notice.
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ii. Bar Dates for Administrative Claims for Professional
Compensation
Professionals or other entities asserting a Fee Claim for
services rendered before the Effective Date must File and serve on the
Liquidating Debtors, the Creditors' Committee, the Office of the United States
Trustee, and such other entities who are designated by the Bankruptcy Rules, the
Confirmation Order, or other order of the Bankruptcy Court, an application for
final allowance of such Fee Claim no later than 45 days after the Effective
Date. Objections to any Fee Claim must be Filed and served on the parties that
were served with such application and the requesting party by the later of: (A)
75 days after the Effective Date, (B) 30 days after the Filing of the applicable
request for payment of the Fee Claim, or (C) such later date as provided for by
order of the Bankruptcy Court, which order may be entered without further
notice.
2. Payment of Priority Tax Claims
a. Priority Tax Claims
Unless otherwise agreed by the holder of an Allowed Priority Tax
Claim and the applicable Distributing Debtor or Liquidating Distributing Debtor,
each holder of an Allowed Priority Tax Claim against a Distributing Debtor will
receive in full satisfaction of its Claim, cash equal to the amount of such
Allowed Priority Tax Claim as soon as practicable after the Effective Date or,
if the Priority Tax Claim is not allowed as of the Effective Date, as soon as
practicable after the later of 30 days after the date on which an order allowing
such Claim becomes a Final Order or a Stipulation of Amount and Nature of Claim
is executed by the applicable Liquidating Distributing Debtor and Claim holder.
b. Other Provisions Concerning Treatment of Priority Tax Claims
The holder of an Allowed Priority Tax Claim will not be entitled
to receive any payment on account of any penalty arising with respect to or in
connection with the Allowed Priority Tax Claim, unless any such penalty is part
of an Allowed Claim that is allowed by order of the Bankruptcy Court prior to
the Confirmation Date. Any such Claim or demand for any such penalty will be
deemed disallowed by Confirmation of the Plan and the holder of an Allowed
Priority Tax Claim will be enjoined from assessing or attempting to collect such
penalty from the Estates.
3. Administrative Claims and Priority Tax Claims Against Nondistributing
Debtors
Because the Nondistributing Debtors have no known material assets and
no known creditors (other than holders of Intercompany Claims and other than the
Pension Benefit Guaranty Corporation (the "PBGC"), which has asserted joint and
several claims against the Nondistributing Debtors and the Distributing
Debtors), no property will be distributed to the holders of Administrative
Claims or Priority Tax Claims, if any, against the Nondistributing Debtors.
4. Intercompany Claims
There shall be no distribution to any holder of any Intercompany Claim
and all Intercompany Claims shall be deemed waived and released in their
entirety on the Effective Date.
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B. Treatment of Classified Claims Against and Interests in Fretter
1. Class A-1 Claims (impaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class A-1 will receive in
full satisfaction of its Claim, cash equal to the amount of its Allowed Claim as
determined by the Bankruptcy Court. All payments received by holders of Class A-
1 Claims during the pendency of the Chapter 11 Cases shall be credited against
the Allowed Class A-1 Claims, and to the extent that a holder of a Class A-1
Claim has received payments in excess of its Allowed Claim, such holder shall
refund excess payments to Fretter or Liquidating Fretter, plus interest at the
contractual rate of interest operative in the agreement between the parties
accruing from the date such holder received such excess payments until the date
such excess payments are returned to Fretter or Liquidating Fretter.
2. Class A-2 Claims (impaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class A-2 will receive in
full satisfaction of its Claim, cash equal to the amount of its Allowed Claim as
determined by the Bankruptcy Court and reduced pursuant to the BTCC Settlement
Agreement. All payments received by holders of Class A-2 Claims during the
pendency of the Chapter 11 Cases shall be credited against the Allowed Class A-2
Claims.
3. Class A-3 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class A-3 will receive in
full satisfaction of its Claim, at the option of Liquidating Fretter: (i) the
net proceeds of the sale of the Collateral securing such Claim, (ii) the return
of the Collateral securing such Claim, or (iii) cash equal to the value of the
Collateral securing such Claim.
4. Class A-4 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class A-4 will receive cash
equal to the amount of such Claim.
5. Class A-5 Claims (impaired). Each holder of an Allowed Claim in Class
A-5 will receive in full satisfaction of such Allowed Claim, its Pro Rata share,
based upon the principal amount of each holder's Allowed Claim, of the funds
contained in the General Distribution Account, in accordance with the
distribution provisions contained in Article VI.
6. Class A-6 Claims (impaired). Each holder of an Allowed Claim in Class
A-6 will receive in full satisfaction of such Claim, its Pro Rata share, based
upon the principal amount of each holder's Claim, of the funds contained in the
Fretter Warranty Claims Account, in accordance with the distribution provisions
contained in Article VI.
7. Class A-7 Interests (impaired). No property will be distributed to or
retained by the holders of Allowed Interests in Class A-7 on account of such
Interests, and such Interests will be terminated as of the Effective Date.
C. Treatment of Classified Claims Against and Interests in Fretter Auto Sound
1. Class B-1 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class B-1 will receive in
full satisfaction of its Claim, at the option of Liquidating Fretter Auto Sound:
(i) the net proceeds of the sale of the Collateral securing such Claim, (ii) the
return of the Collateral securing such Claim, or (iii) cash equal to the value
of the Collateral securing such Claim.
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2. Class B-2 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class B-2 will receive cash
equal to the amount of such Claim.
3. Class B-3 Claims (impaired). Each holder of an Allowed Claim in Class
B-3 will receive in full satisfaction of such Allowed Claim, 20% of its Pro Rata
share, based upon the principal amount of each holder's Allowed Claim, of the
funds contained in the General Distribution Account, in accordance with the
distribution provisions contained in Article VI.
4. Class B-4 Interests (impaired). No property will be distributed to or
retained by the holders of Allowed Interests in Class B-4 on account of such
Interests, and such Interests will be terminated as of the Effective Date.
D. Treatment of Classified Claims Against and Interests in Fred Schmid
1. Class C-1 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class C-1 will receive in
full satisfaction of its Claim, at the option of Liquidating Fred Schmid: (i)
the net proceeds of the sale of the Collateral securing such Claim, (ii) the
return of the Collateral securing such Claim, or (iii) cash equal to the value
of the Collateral securing such Claim.
2. Class C-2 Claims (unimpaired). As soon as practicable after the
Effective Date, each holder of an Allowed Claim in Class C-2 will receive cash
equal to the amount of such Claim.
3. Class C-3 Claims (impaired). Each holder of an Allowed Claim in Class
C-3 will receive in full satisfaction of such Allowed Claim, 20% of its Pro Rata
share, based upon the principal amount of each holder's Allowed Claim, of the
funds contained in the General Distribution Account, in accordance with the
distribution provisions contained in Article VI.
4. Class C-4 Claims (impaired). Each holder of an Allowed Claim in Class
C-4 will receive in full satisfaction of such Claim, its Pro Rata share, based
upon the principal amount of each holder's Claim, of the funds contained in the
Fred Schmid Warranty Claims Account, in accordance with the distribution
provisions contained in Article VI.
5. Class C-5 Interests (impaired). No property will be distributed to or
retained by the holders of Allowed Interests in Class C-5 on account of such
Interests, and such Interests will be terminated as of the Effective Date.
E. Treatment of Classified Claims Against and Interests in the Nondistributing
Debtors
Because there are no known creditors of the Nondistributing Debtors
(other than holders of Intercompany Claims and other than the PBGC, which has
asserted joint and several claims against the Nondistributing Debtors and the
Distributing Debtors) and the Nondistributing Debtors have no known material
assets, the Claims against and Interests in the Nondistributing Debtors shall be
treated as follows:
1. Class D Claims and Interests (Former Haneys) (impaired). No property
will be distributed to or retained by the holders of Claims or Interests in
Class D on account of such Claims or Interests.
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2. Class E Claims and Interests (Fretter Warehouse) (impaired). No property
will be distributed to or retained by the holders of Claims or Interests in
Class E on account of such Claims or Interests.
3. Class F Claims and Interests (Fretter Retail) (impaired). No property
will be distributed to or retained by the holders of Claims or Interests in
Class F on account of such Claims or Interests.
4. Class G Claims and Interests (Fretter Acquisition) (impaired). No
property will be distributed to or retained by the holders of Claims or
Interests in Class G on account of such Claims or Interests.
5. Class H Claims and Interests (Fretter Finance) (impaired). No property
will be distributed to or retained by the holders of Claims or Interests in
Class H on account of such Claims or Interests.
F. Special Provisions Regarding Treatment of Allowed Secondary Liability Claims
Holders of Allowed Secondary Liability Claims will only be entitled to
one distribution from the Debtor that is primarily liable for the underlying
Allowed Claim, which distribution will be as provided in the Plan in respect of
such underlying Allowed Claim. Allowed Secondary Liability Claims will be deemed
satisfied in full by the distributions on account of the related underlying
Allowed Claim. No recovery on account of any Allowed Secondary Liability Claim
will be provided or permitted.
G. Limitations on Amounts to Be Distributed to Holders of Allowed Insured
Claims
Distributions under the Plan to each holder of an Allowed Insured
Claim will be in accordance with the treatment provided under the Plan for the
Class in which such Allowed Insured Claim is classified; provided, however, that
the maximum amount of any distribution under the Plan on account of an Allowed
Insured Claim shall be limited to an amount equal to: (1) the applicable
deductible under the relevant insurance policy, minus (2) any reimbursement
obligations of the Debtor to the insurance carrier for sums expended by the
insurance carrier on account of such Claim (including defense costs). Nothing in
this Section III.G will constitute a waiver of any claim, demand, debt, right,
cause of action, or liability that any entity may hold against any other entity,
including the Debtors' insurance carriers.
H. Provisions Regarding Postpetition Interest
No holder of any Claim (other than: (i) a holder of an Administrative
Claim based on liability incurred by a Debtor in the ordinary course of its
business that is entitled to interest pursuant to the terms and conditions of
the transaction giving rise to the Administrative Claim or (ii) a holder of a
Secured Claim that is oversecured, but only to the extent of such oversecurity)
will be entitled to any payments or additional distributions on account of
accrued postpetition interest in respect of their Claims.
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ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. The Liquidating Debtors; Vesting of Assets
Each of the Distributing Debtors will, as a Liquidating Debtor,
continue to exist after the Effective Date as a separate corporate entity. Each
Liquidating Debtor shall have all the powers of a corporation under applicable
law and without prejudice to any right to alter or terminate such existence
(whether by merger, dissolution, or otherwise) under applicable state law;
provided, however, that the corporate purpose of each Liquidating Debtor shall
be limited to taking such actions as are necessary to implement, and are
consistent with implementing, the Plan. Any dispute as to the propriety of any
action sought to be taken by any Liquidating Debtor shall be resolved by the
Bankruptcy Court. On or after the Effective Date, all Distributable Assets of
each Distributing Debtor will vest in Liquidating Fretter. The Liquidating
Debtors shall remain in existence until the Distributable Assets have been
wholly converted to cash or liquid assets, or abandoned, and all costs, expenses
and obligations incurred in administering the Plan have been fully paid and
discharged, and all remaining income, proceeds, and product of the Distributable
Assets have been distributed in accordance with the Plan.
B. Management of the Liquidating Debtors
As of the Effective Date, the Articles of Incorporation and Bylaws of
the Liquidating Debtors will provide that the business and affairs of the
Liquidating Debtors will be managed by or under the direction of one Board of
Directors. The initial Board of Directors will be composed of one member, who
will also be the sole officer of the Liquidating Debtors. The individual serving
as the sole director and officer of the Liquidating Debtors will be appointed by
the Creditors' Committee. The Articles of Incorporation of the Liquidating
Debtors will provide that the officer and director of the Liquidating Debtors
will serve until all Distributable Assets have been wholly converted to cash or
liquid assets, or abandoned, and all costs, expenses and obligations incurred in
administering the Plan have been fully paid and discharged, and all remaining
income, proceeds, and product of the Distributable Assets have been distributed
in accordance with the Plan, or until his or her earlier death, resignation,
retirement, disqualification, or removal from office. Prior to Confirmation, the
Creditors' Committee will provide the name, age, and principal occupation of the
sole director and officer of the Liquidating Debtors, together with a brief
biographical sketch.
C. Dissolution of the Nondistributing Debtors and Fretter Real Estate
As of the Effective Date, each of the Nondistributing Debtors shall
take all steps necessary to wind up its affairs and dissolve its corporate
existence. On the Effective Date, Fretter Real Estate will be dissolved and
Liquidating Fretter, as the sole shareholder of Fretter Real Estate, will take
possession of all net assets of Fretter Real Estate.
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D. Establishment of the Fretter Warranty Claims Account, The Fred Schmid
Warranty Claims Account and the General Distribution Account
1. Upon the Effective Date, the Debtors shall establish the Fretter
Warranty Claims Account and deposit therein the amount of the Warranty Claims
Account Calculation that has been calculated with respect to Fretter Warranty
Claims. Distribution from the Fretter Warranty Claims Account shall be made
pursuant to the applicable provisions of Article VI.
2. Upon the Effective Date, the Debtors shall establish the Fred Schmid
Warranty Claims Account and deposit therein the amount of the Warranty Claims
Account Calculation that has been calculated with respect to Fred Schmid
Warranty Claims. Distribution from the Fred Schmid Warranty Claims Account shall
be made pursuant to the applicable provisions of Article VI.
3. Upon the Effective Date, the Debtors shall establish the General
Distribution Account, into which all Distributable Assets other than the funds
deposited into the Fretter and Fred Schmid Warranty Claims Accounts shall be
deposited. Distributions from the General Distribution Account shall be made
pursuant to the applicable provisions of Article VI.
E. Rights, Powers, and Duties of the Liquidating Debtors
1. Upon the Effective Date, the Liquidating Debtors shall have such power
and authority granted by common law or any applicable statute necessary to
implement the Plan.
2. The Liquidating Debtors shall have, at the direction of the Creditors'
Committee, full authority to prosecute and defend any causes of action affecting
the operation of the Plan which may or might arise under the provisions of the
Bankruptcy Code and/or any applicable state law including, but not limited to,
those causes of action set forth in sections 542 through 553 of the Bankruptcy
Code, subject to the provisions of Section IV.G. and any Final Order entered by
the Bankruptcy Court prior to the Confirmation Date. Except as provided in any
contract, instrument, release or other agreement entered into in connection with
the Plan, in accordance with section 1123(b) of the Bankruptcy Code, Liquidating
Fretter and Creditors' Committee shall retain and may enforce any claims,
rights, and causes of action that the Debtors or Liquidating Debtors may hold
against any entity, subject to the provisions of Section IV.G. and any Final
Order entered by the Bankruptcy Court prior to the Confirmation Date. The
Liquidating Debtors, at the direction of the Creditors' Committee, may pursue
such retained claims, rights, or causes of action, as appropriate, in accordance
with the best interests of the Liquidating Debtors and the Estates.
3. The Liquidating Debtors shall be responsible in all matters to the
Bankruptcy Court and their respective Estates, and shall have full authority to
do and perform all acts, to execute all documents, and to make all payments and
disbursements of funds appropriate and necessary to be done, executed,
performed, paid, and disbursed by the provisions of the Plan.
4. After the Effective Date, attorneys, accountants and other persons
employed or retained by the Liquidating Debtors or the Creditors' Committee will
be paid in the ordinary course of business; provided, however, that all payments
to professionals shall be subject to the approval of the Creditors' Committee.
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5. All costs, expenses, and obligations incurred by the Liquidating Debtors
or the Creditors' Committee in administering the Plan (other than administration
of Warranty Claims), or in any manner connected, incidental, or related thereto,
including those of attorneys, accountants, and other persons employed by the
Liquidating Debtors or the Creditors' Committee to assist in the administration
and distribution of the Distributable Assets, including Disbursing Agents, shall
be a charge against the Distributable Assets in the General Distribution
Account, and the Liquidating Debtors shall establish adequate reserves for such
payment prior to making distributions hereunder.
6. All costs, expenses, and obligations incurred in the administration of
Warranty Claims and the distributions from the Fretter Warranty Claims Account
and the Fred Schmid Warranty Claims Account, or in any manner connected,
incidental, or related thereto, including those of attorneys, accountants, and
other persons employed by the Liquidating Debtors or the Creditors' Committee to
assist in the administration of the Warranty Claims, shall be a charge against
the Distributable Assets held in the Fretter Warranty Claims Account or Fred
Schmid Warranty Claims Account, respectively, and the Liquidating Debtors shall
establish adequate reserves for such payment prior to making distributions
hereunder.
F. Continued Existence of the Creditors' Committee and Creditors' Committee
Approval
After the Effective Date, the Creditors' Committee shall continue in
existence until all distributions required to be made under the Plan are
complete and the Bankruptcy Court has entered a final decree concluding the
Chapter 11 Cases. After the Effective Date, the Creditors' Committee may, in its
sole discretion, alter its membership or appoint any person or entity to act in
its place consistent with the provisions of the Plan. The Creditors' Committee
shall have the right to direct the Debtors' or Liquidating Debtors' actions in
implementing and consummating the Plan, including but not limited to the
following actions: (a) agreeing to a settlement of the amount or treatment of an
Administrative Claim pursuant to Section III.A.1.a; (b) executing a Stipulation
of Amount and Nature of Claim pursuant to Section III.A.1.a or III.A.2.a; (c)
agreeing to the treatment of a Secured Claim pursuant to Section III.B.1; (d)
agreeing to a settlement of the amount or treatment of a Priority Tax Claim
pursuant to Section III.A.2.a; (e) agreeing to a settlement of Cure Amount
Claims pursuant to Section V.B; (f) requesting the Bankruptcy Court to estimate
a contingent or unliquidated Claim pursuant to Section VII.A; and (g)
compromising, settling, withdrawing, or resolving a Claim pursuant to Section
VII.A.
G. Releases by the Debtors
As of the Effective Date, for good and valuable consideration, the
adequacy of which is hereby confirmed, each of the Debtors will be deemed to
forever release, waive and discharge all claims, demands, debts, rights, causes
of action, and liabilities in connection with or related to any of the Debtors,
the Chapter 11 Cases or the Plan, whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then
existing or thereafter arising, that are based in whole or in part on any act,
omission, or other occurrence taking place on or prior to the Effective Date and
that may be asserted by or on behalf of a Debtor or its Estate against any of
the Debtors' current and former officers and directors. Notwithstanding anything
in the Plan or in the releases set forth above to the contrary, nothing herein
shall be construed to release, and the Debtors do not hereby release, any rights
of the respective Debtors: (a) to enforce the Plan and the contracts,
instruments, releases, indentures, and other agreements or
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documents delivered thereunder; (b) to litigate Disputed Claims, including
without limitation to make any claim, or demand or allege and prosecute any
cause of action against any holder of Disputed Claim, including without
limitation Secured Claims, Administrative Claims, Priority Claims, Priority Tax
Claims, and Unsecured Claims; and (c) to litigate claims and causes of action
contained in any adversary complaint filed by the Debtors or the Creditors'
Committee during the pendency of the Chapter 11 Cases that have not been
withdrawn or dismissed prior to the Confirmation Date.
H. Discharge of Claims and Termination of Interests
Pursuant to section 1141(d)(3) of the Bankruptcy Code, Confirmation
will not discharge Claims against the Debtors; provided, however, that no holder
of a Claim against any Debtor may, on account of such Claim, seek or receive any
payment or other distribution from, or seek recourse against, any Debtor,
Liquidating Debtor, their respective successors, or their respective property,
except as expressly provided herein.
I. Injunctions
1. As of the Effective Date, all entities that have held, currently hold,
or may hold a claim, demand, debt, right, cause of action, or liability that is
released pursuant to the Global Settlement Agreement or otherwise pursuant to
the Plan are permanently enjoined from taking any of the following actions
against any released entity, including any third party, or its property on
account of such released claims, demands, debts, rights, causes of action, or
liabilities: (a) commencing or continuing in any manner any action or other
proceeding; (b) enforcing, attaching, collecting, or recovering in any manner
any judgment, award, decree, or order; (c) creating, perfecting, or enforcing
any lien or encumbrance; (d) asserting a setoff, right of subrogation, or
recoupment of any kind against any debt, liability, or obligation due to any
released entity; and (e) commencing or continuing any action, in any manner, in
any place that does not comply with or is inconsistent with the provisions of
the Plan or the Global Settlement Agreement.
2. By accepting distributions pursuant to the Plan, each holder of an
Allowed Claim receiving distributions pursuant to the Plan will be deemed to
have specifically consented to the injunctions set forth in this Section IV.I.
J. Termination of Subordination Rights and Intercompany Claims and Settlement
of Related Claims and Controversies
1. The classification and manner of satisfying all Claims and Interests
under the Plan take into consideration all subordination rights, whether arising
under general principles of equitable subordination, section 510(c) of the
Bankruptcy Code, or otherwise, and all Intercompany Claims that a holder of a
Claim or Interest may have against other Claim or Interest holders with respect
to any distribution made pursuant to the Plan. All subordination rights or
Intercompany Claims that a holder of a Claim or Interest may have with respect
to any distribution to be made pursuant to the Plan will be discharged and
terminated, and all actions related to the enforcement of such subordination
rights or Intercompany Claims will be permanently enjoined. Accordingly,
distributions pursuant to the Plan to holders of Allowed Claims will not be
subject to payment to a beneficiary of such terminated subordination rights or
Intercompany Claims, or to levy, garnishment,
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attachment, or other legal process by a beneficiary of such terminated
subordination rights or Intercompany Claims.
2. Entry of the Confirmation Order shall constitute a determination by the
Bankruptcy Court that: (i) all Alter Ego Claims are property of the Estate of
the Debtor against which a creditor that has asserted or could assert an Alter
Ego Claim has a direct Claim, pursuant to section 541 of the Bankruptcy Code;
(ii) holders of Alter Ego Claims are permanently enjoined from commencing or
prosecuting any Alter Ego Claim against any Debtor; and (iii) all Alter Ego
Claims are fully and finally compromised, settled, and released pursuant to this
Plan in consideration for the distributions provided for in Article III.
3. Pursuant to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of the
Plan will constitute a good faith compromise and settlement of all claims or
controversies relating to the subordination rights, Intercompany Claims, and
Alter Ego Claims that a holder of a Claim or Interest may have with respect to
any Allowed Claim, or any distribution to be made pursuant to the Plan on
account of such Claim. The entry of the Confirmation Order will constitute the
Bankruptcy Court's approval, as of the Effective Date, of the compromise or
settlement of all such claims or controversies and the Bankruptcy Court's
finding that such compromise or settlement is in the best interests of the
Debtors, the Liquidating Debtors, and their respective property and Claim and
Interest holders, and is fair, equitable, and reasonable.
K. Effectuating Documents; Further Transactions; Exemption from Certain
Transfer Taxes
Each Liquidating Debtor, at the direction of the Creditors' Committee,
will be authorized to execute, deliver, file, or record such contracts,
instruments, releases, and other agreements or documents and take such actions
as may be necessary or appropriate to effectuate and implement the provisions of
the Plan. Pursuant to section 1146(c) of the Bankruptcy Code: (1) the creation
of any mortgage, deed of trust, lien, or other security interest; (2) the making
or assignment of any lease or sublease; or (3) the making or delivery of any
deed or other instrument of transfer under, in furtherance of, or in connection
with, the Plan, including any merger agreements; agreements of consolidation,
restructuring, disposition, liquidation, or dissolution; deeds; bills of sale;
or assignments will not be subject to any stamp tax, real estate transfer tax,
or similar tax.
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ARTICLE V.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. Executory Contracts and Unexpired Leases to be Assumed or Assumed and
Assigned
1. Assumption and Assignment Generally
Except as otherwise provided in the Plan or in any contract,
instrument, release, or other agreement or document entered into in connection
with the Plan, on the Effective Date, pursuant to section 365 of the Bankruptcy
Code, the Debtors will assume, or assume and assign, as indicated, each of the
Executory Contracts and Unexpired Leases listed on Exhibit V.A.1.a. Each
contract and lease listed on Exhibit V.A.1.a will be assumed only to the extent
that any such contract or lease constitutes an Executory Contract or Unexpired
Lease. Listing a contract or lease on Exhibit V.A.1.a will not constitute an
admission by a Debtor or Liquidating Debtor that such contract or lease
(including any related agreements as described in Section V.A.2) is an Executory
Contract or Unexpired Lease or that a Debtor or Liquidating Debtor has any
liability thereunder.
2. Approval of Assumptions and Assignments
The Confirmation Order will constitute an order of the Bankruptcy
Court approving the assumptions or assumptions and assignments described in this
Section V.A, pursuant to section 365 of the Bankruptcy Code, as of the Effective
Date. The order of the Bankruptcy Court approving the Disclosure Statement, the
Confirmation Order, or another order of the Bankruptcy Court entered on or prior
to the Confirmation Date will specify the procedures for providing notice to
each party whose Executory Contract or Unexpired Lease is being assumed or
assumed and assigned pursuant to the Plan of: (a) the contract or lease being
assumed or assumed and assigned; (b) the Cure Amount Claim, if any, that the
applicable Debtor believes it would be obligated to pay in connection with such
assumption; and (c) the procedures for such party to object to the assumption,
assignment, or amount of the proposed Cure Amount Claim.
B. Payments Related to Assumption of Executory Contracts and Unexpired Leases
To the extent that such Claims constitute monetary defaults, the Cure
Amount Claims associated with each Executory Contract and Unexpired Lease to be
assumed pursuant to the Plan will be satisfied, pursuant to section 365(b)(1) of
the Bankruptcy Code, at the option of the Debtor assuming such contract or lease
or the assignee of such Debtor, if any: (1) by payment of the Cure Amount Claim
in cash on the Effective Date or (2) on such other terms as are agreed to by the
parties to such Executory Contract or Unexpired Lease. If there is a dispute
regarding: (1) the amount of any Cure Amount Claim, (2) the ability of the
applicable Liquidating Debtor or any assignee to provide "adequate assurance of
future performance" (within the meaning of section 365 of the Bankruptcy Code)
under the contract or lease to be assumed, or (3) any other matter pertaining to
assumption of such contract or lease, the cure payments required by section
365(b)(1) of the Bankruptcy Code will be made following the entry of a Final
Order resolving the dispute and approving the assumption.
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C. Executory Contracts and Unexpired Leases to be Rejected
On the Effective Date, except for an Executory Contract or Unexpired
Lease that was previously assumed, assumed and assigned, or rejected by an order
of the Bankruptcy Court or that is assumed pursuant to Section V.A, each
Executory Contract and Unexpired Lease entered into by a Debtor prior to the
Petition Date that has not previously expired or terminated pursuant to its own
terms will be rejected pursuant to section 365 of the Bankruptcy Code. The
Executory Contracts and Unexpired Leases to be rejected will include the
Executory Contracts and Unexpired Leases listed on Exhibit V.C. Each contract
and lease listed on Exhibit V.C will be rejected only to the extent that any
such contract or lease constitutes an Executory Contract or Unexpired Lease.
Listing a contract or lease on Exhibit V.C will not constitute an admission by a
Debtor or Liquidating Debtor that such contract or lease (including related
agreements as described above in Section V.A.2) is an Executory Contract or
Unexpired Lease or that a Debtor or Liquidating Debtor has any liability
thereunder. Any Executory Contract or Unexpired Lease not listed on Exhibit
V.A.1 will be rejected irrespective of whether such contract is listed on
Exhibit V.C. The Confirmation Order will constitute an order of the Bankruptcy
Court approving such rejections, pursuant to section 365 of the Bankruptcy Code,
as of the Effective Date.
D. Bar Date for Rejection Damages
Notwithstanding anything in the Bar Date Order to the contrary, if the
rejection of an Executory Contract or Unexpired Lease pursuant to Section V.C
gives rise to a Claim by the other party or parties to such contract or lease,
such Claim will be forever barred and will not be enforceable against the
Debtors, the Liquidating Debtors, their respective successors, or their
respective properties unless a proof of Claim is Filed and served on the
Liquidating Debtors, pursuant to the procedures specified in the Confirmation
Order and the notice of the entry of the Confirmation Order or another order of
the Bankruptcy Court, no later than 30 days after the Effective Date.
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ARTICLE VI.
PROVISIONS GOVERNING DISTRIBUTIONS
A. General Distribution Provisions
1. Method of Distributions to Holders of Claims
Liquidating Fretter, or such Third Party Disbursing Agents as
Liquidating Fretter at the direction of the Creditors' Committee may employ,
will make all distributions required under the Plan. Each Disbursing Agent will
serve without bond, and any Disbursing Agent may employ or contract with other
entities to assist in or make the distributions required by the Plan.
2. Distributions to be Made on Effective Date
Except as otherwise provided in this Article VI (including without
limitation the provisions contained in Section VI.A.4.), distributions to be
made on or as soon as practicable after the Effective Date to holders of Claims
that are allowed as of the Effective Date will be deemed made on the Effective
Date if made on the Effective Date or as promptly thereafter as practicable, but
in any event no later than: (a) 60 days after the Effective Date, or such later
date as the applicable Distributing Debtor or Disbursing Agent first has funds
sufficient to make such payments while retaining appropriate reserves for
payment of: (i) all costs, expenses, and obligations as set forth in Section
IV.E.5 and IV.E.6 and (ii) all other Claims that have the same priority or a
higher priority of payment as established herein (such reserves to be
established in the sole discretion of the applicable Distributing Debtor or
Disbursing Agent) or (b) such later date when the applicable conditions of
Section V.B (regarding cure payments for Executory Contracts and Unexpired
Leases being assumed) or Section VI.B.2 (regarding undeliverable distributions)
are satisfied. Distributions on account of Claims that become Allowed Claims
after the Effective Date will be made pursuant to Sections VI.A.4.c.ii and
VII.C.
3. Compensation and Reimbursement for Services Related to Distributions
Each Third Party Disbursing Agent providing services related to
distributions pursuant to the Plan will receive from Liquidating Fretter,
without further Bankruptcy Court approval, reasonable compensation for such
services and reimbursement of reasonable out-of-pocket expenses incurred in
connection with such services. These payments will be made on terms agreed to
with the Creditors' Committee, and will be paid from: (a) the Fretter Warranty
Claims Account with respect to services relating to distributions to holders of
Fretter Warranty Claims, (b) the Fred Schmid Warranty Claims Account with
respect to services relating to distributions to holders of Fred Schmid Warranty
Claims, and (c) the General Distribution Account with respect to services
relating to the distributions to any other person or entity.
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4. Timing and Calculation of Amounts to be Distributed
a. Establishment of Distribution Dates
Distribution Dates shall be established by the Disbursing Agent in its
discretion. The Disbursing Agent shall establish Distribution Dates with a goal
of making distributions to creditors as soon as practicable, but shall not
establish a Distribution Date for a distribution unless sufficient funds exist
in the General Distribution Account, in the Disbursing Agent's discretion, to
warrant making such a distribution after consideration of the cost of making
such a distribution.
b. Allowed Claims in Non-Reserve Classes
Subject to Section VI.A, as soon as practicable after the Effective
Date, each holder of an Allowed Claim in a non-Reserve Class will receive the
full amount of the distributions that the Plan provides for Allowed Claims in
the applicable non-Reserve Class. On each Distribution Date, distributions will
also be made, pursuant to Section VII.C, to holders of Disputed Claims in any
such Class that became Allowed Claims since the previous Distribution Date. Such
distributions also will be in the full amount that the Plan provides for Allowed
Claims in the applicable Class.
c. Allowed Claims in Reserve Classes
i. Initial Distributions
The amount of the initial distributions to be made as soon as
practicable after the Effective Date (subject to Section VI.A) from the General
Distribution Account to holders of Allowed Claims in the Reserve Classes on
account of such Claims will be calculated as if each Disputed Claim in the
Reserve Classes were an Allowed Claim in its Face Amount. Before making any
distribution to a Reserve Class, the Disbursing Agent will confirm the existence
of or establish an appropriate reserve for Disputed Secured Claims, Disputed
Administrative Claims, Disputed Priority Claims and Disputed Priority Tax
Claims. With respect to the claims of the PBGC, the Disbursing Agent will inform
the PBGC of the amount of funds that are held in reserve or that the Disbursing
Agent intends to hold in reserve on account of such Claims at least 45 days
prior to making any distribution. If the PBGC disagrees with the amount to be
reserved on account of its Claims, it shall have 15 days to request that the
Bankruptcy Court determine whether a different amount should be reserved and the
Disbursing Agent shall have 10 days to respond to such request. If such a
request is made, the Bankruptcy Court shall make such a determination within 20
days of the filing of a response by the Disbursing Agent. The PBGC shall not
have the right to make such a request if the Bankruptcy Court has already
entered an order determining the priority of the PBGC's Claims. In making any
distribution to a Reserve Class, the Disbursing Agent will account for and
reserve for distributions that are being made and/or will need to be made to
other Reserve Classes. On each Distribution Date, distributions also will be
made, pursuant to Section VII.C, to holders of Disputed Claims in the Reserve
Classes that became Allowed Claims since the previous Distribution Date. Such
distributions will also be calculated pursuant to the provisions set forth in
this Section VI.A.4.c.i.
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ii. Additional Distributions on Account of Previously Allowed
Claims
On each Distribution Date, each holder of a Claim previously
allowed in a Reserve Class will receive an additional distribution from the
General Distribution Account on account of such Claim in an amount equal to: (i)
the amount of cash that such holder would have been entitled to receive pursuant
to Section VI.A.4.c.i. as if such Claim had become an Allowed Claim on the
applicable Distribution Date, minus (ii) the aggregate amount of cash previously
distributed on account of such Claim. Each such additional distribution also
will include, on the basis of the amount then being distributed, a Pro Rata
share of the Cash Investment Yield from the investment of any cash in the
General Distribution Account, from the date such amounts would have been due had
such Claim initially been paid 100% of the allowed amount on the date of the
first distribution to the date that such distribution is made.
iii. Special Provisions Regarding Distributions to Reserve
Classes
To the extent that any distribution to be made to an Allowed
Claim holder (which Allowed Claim holder has not already received a distribution
hereunder) from a Reserve Class on any Distribution Date is less than $10, the
Disbursing Agent shall withhold such distribution until a later Distribution
Date on which the cumulative amount to be distributed to such Allowed Claim
holder is equal to or greater than $10, if ever.
d. Warranty Claims
Distributions to holders of Warranty Claims will occur within 45 days
of the resolution of all objections to Warranty Claims. Holders of Fretter
Warranty Claims will receive their Pro Rata share of the Fretter Warranty Claims
Account and holders of Fred Schmid Warranty Claims will receive their Pro Rata
share of the Fred Schmid Warranty Claims Account, provided that in no event
shall holders of Warranty Claims receive payment in excess of 100% of the
principal amount of their Allowed Claims. In the event that any cash is left
over in either the Fretter Warranty Claims Account or the Fred Schmid Warranty
Claims Account after all distributions are made to holders of the respective
Warranty Claims, then such cash will be transferred to the General Distribution
Account for distribution to holders of Allowed Claims in Classes A-5, B-3, and
C-3 in accordance with the applicable Plan provisions for such classes.
B. Delivery of Distributions and Undeliverable or Unclaimed Distributions
1. Delivery of Distributions in General
Distributions to holders of Allowed Claims will be made by a
Disbursing Agent: (a) at the addresses set forth on the respective proofs of
Claim Filed by holders of such Claims, (b) at the addresses set forth in any
written certification of address change delivered to the applicable Disbursing
Agent after the date of Filing of any related proof of Claim, or (c) at the
addresses reflected in the applicable Debtor's Schedules if no proof of Claim
has been Filed and the Disbursing Agent has not received a written notice of a
change of address.
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2. Undeliverable Distributions Held by Disbursing Agents
a. Holding of Undeliverable Distributions
If any distribution to an Allowed Claim holder is returned to a
Disbursing Agent as undeliverable, no further distributions will be made to such
holder unless and until the applicable Disbursing Agent is notified by written
certification of such holder's then-current address. Nothing contained in the
Plan will require any Disbursing Agent to attempt to locate any holder of an
Allowed Claim. Undeliverable distributions will remain in the possession of the
applicable Disbursing Agent pursuant to this Section VI.B.2.a until such time as
a distribution becomes deliverable.
b. After Distributions Become Deliverable
On each Distribution Date, the applicable Disbursing Agents will make
all distributions that became deliverable to holders of Allowed Claims since the
previous Distribution Date. Each such distribution will include, to the extent
applicable, a Pro Rata share of the Cash Investment Yield from the investment of
any undeliverable distribution from the date that such distribution would have
first been due had it then been deliverable to the date that such distribution
becomes deliverable.
c. Failure to Claim Undeliverable Distributions
Any holder of an Allowed Claim that does not assert a claim pursuant
to the Plan for an undeliverable distribution to be made by a Disbursing Agent
within one year after the later of: (i) the Effective Date and (ii) the last
date on which a distribution was first deliverable to such Allowed Claim holder
will be forever barred from asserting any such claim against the Debtors, the
Liquidating Debtors, the Creditors' Committee or their respective property. In
such cases, any cash held for distribution on account of such Claims will be
deposited in the General Distribution Account, Fretter Warranty Claims Account,
Fred Schmid Warranty Claims Account, or other account, as the case may be, for
redistribution.
C. Distribution Record Date
Except as otherwise provided in an order of the Bankruptcy Court that
is not subject to any stay, the transferees of Claims in a Reserve Class that
are transferred pursuant to Bankruptcy Rule 3001 on or prior to the Distribution
Record Date will be treated as the holders of such Claims for all purposes,
notwithstanding that any period provided by Bankruptcy Rule 3001 for objecting
to such transfer has not expired by the Distribution Record Date.
D. Means of Cash Payments
Except as otherwise specified herein, cash payments made pursuant to
the Plan will be in U.S. dollars by checks drawn on a domestic bank selected by
the Disbursing Agent, or by wire transfer from a domestic bank, at the option of
the Disbursing Agent; provided, however, that cash payments to foreign holders
of Allowed Claims may be made, at the option of the Disbursing Agent, in such
funds and by such means as are necessary or customary in a particular foreign
jurisdiction.
28
<PAGE>
E. De Minimis Distributions
No Disbursing Agent will be required to distribute cash to the holder
of an Allowed Claim in an impaired Class if the amount of cash to be distributed
on account of such Claim is less than $10. Any holder of an Allowed Claim on
account of which the amount of cash to be distributed is less than $10 will be
forever barred from asserting any such claim against the Liquidating Debtors or
their respective property. Any cash not distributed pursuant to this Section
VI.E. with respect to Allowed Claims will be retained in the General
Distribution Account, the Fretter Warranty Claims Account, or the Fred Schmid
Warranty Claims Account, as the case may be, for redistribution.
F. Compliance with Tax Requirements
1. In connection with the Plan, to the extent applicable, each Disbursing
Agent will comply with all tax withholding and reporting requirements imposed on
it by any governmental unit, and all distributions pursuant to the Plan will be
subject to such withholding and reporting requirements. Each Disbursing Agent
will be authorized to take any actions that may be necessary or appropriate to
comply with such withholding and reporting requirements.
2. Notwithstanding any other provision of the Plan, each entity receiving a
distribution pursuant to the Plan will have sole and exclusive responsibility
for the satisfaction and payment of any tax obligations imposed on it by any
governmental unit on account of such distribution, including income,
withholding, and other tax obligations.
G. Setoffs
Except with respect to claims of a Debtor or Liquidating Debtor
released pursuant to the Plan, any contract, instrument, release, or other
agreement or document created in connection with the Plan or the Global
Settlement Agreement, a Disbursing Agent, may, pursuant to section 553 of the
Bankruptcy Code or applicable nonbankruptcy law, set off against any Allowed
Claim and the distributions to be made pursuant to the Plan on account of such
Claim (before any distribution is made on account of such Claim) the claims,
rights, and causes of action of any nature that the applicable Debtor or
Liquidating Debtor may hold against the holder of such Allowed Claim; provided,
however, that neither the failure to effect such a setoff nor the allowance of
any Claim hereunder will constitute a waiver or release by the applicable Debtor
or Liquidating Debtor of any such claims, rights, and causes of action that the
Debtor or Liquidating Debtor may possess against such holder.
29
<PAGE>
ARTICLE VII
PROCEDURES FOR RESOLVING DISPUTED CLAIMS OR INTERESTS
A. Prosecution of Objections to Claims
1. Objections to Claims
a. All objections to Claims other than Warranty Claims must be Filed
and served on the holders of such Claims by the Claims Objection Bar Date. If an
objection has not been Filed to a proof of Claim or a scheduled Claim by the
Claims Objection Bar Date, the Claim to which the proof of Claim or scheduled
Claim relates will be treated as an Allowed Claim if such Claim has not been
allowed earlier.
b. All objections to Warranty Claims must be Filed and served on the
holders of such Warranty Claims by the Warranty Claims Objection Bar Date. If an
objection has not been Filed to a proof of Warranty Claim or a scheduled
Warranty Claim by the Warranty Claims Objection Bar Date, the Warranty Claim to
which the proof of Warranty Claim or scheduled Warranty Claim relates will be
treated as an Allowed Claim if such Claim has not been allowed earlier.
2. Authority to Prosecute Objections
After the Effective Date, only the Creditors' Committee or the
Liquidating Debtors, at the direction of the Creditors' Committee, will have the
authority to File objections, settle, compromise, withdraw, or litigate to
judgment objections to Claims. After the Effective Date, the Creditors'
Committee or the Liquidating Debtors, at the direction of the Creditors'
Committee, may settle or compromise any Disputed Claim without approval of the
Bankruptcy Court.
B. Treatment of Disputed Claims
1. No Payments on Account of Disputed Claims
Notwithstanding any other provisions of the Plan, no payments or
distributions will be made on account of a Disputed Claim or, if less than an
entire Claim is a Disputed Claim, the portion of such Claim that is a Disputed
Claim, until such Claim or portion of such Claim becomes an Allowed Claim.
2. Recourse
Each holder of a Disputed Claim that ultimately becomes an Allowed
Claim will have recourse only to the undistributed cash held in the General
Distribution Account, the Fretter Warranty Claims Account, or the Fred Schmid
Warranty Claims Account, as the case may be, and not to any assets previously
distributed on account of any Allowed Claim. To the extent that reserves were
established by a Distributing Debtor or a Disbursing Agent with respect to: (a)
an unliquidated claim or claims or (b) any claim or claims that are ultimately
allowed in an amount greater than its or their Face Amount, and such reserves
are not sufficient to cover the amount to be paid to remaining Allowed Claims in
a Reserve Class, such Distributing Debtor or Disbursing Agent
30
<PAGE>
will have no liability therefor and holders of such remaining Allowed Claims
shall have recourse only to the undistributed cash held in the General
Distribution Account, the Fretter Warranty Claims Account, or the Fred Schmid
Warranty Claims Account, as the case may be, and not to any assets previously
distributed on account of any Allowed Claim.
C. Distributions on Account of Disputed Claims Once Allowed
On each Distribution Date, the applicable Disbursing Agent will make
all distributions on account of any Disputed Claim that became an Allowed Claim
since the previous Distribution Date. Such distributions will be made pursuant
to the provisions of the Plan governing the applicable Class, including the
incremental distribution provisions set forth in Section VI.A.4.c. Holders of
Disputed Claims in Reserve Classes that ultimately are allowed will also be
entitled to receive, on the basis of the amount ultimately allowed, the net
amount of a Pro Rata share of the Cash Investment Yield from the investment of
any cash in the General Distribution Account from the Effective Date or, with
respect to net cash proceeds generated after the Effective Date from property
held in the General Distribution Account, the date that such cash was invested
after the Effective Date to the date that such distributions are made from the
General Distribution Account.
31
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. Conditions to Confirmation
The Bankruptcy Court will not enter the Confirmation Order unless and
until each of the following conditions has been satisfied or duly waived by the
Debtors and the Creditors' Committee pursuant to Section VIII.C:
1. The Confirmation Order shall be reasonably acceptable in form and
substance to the Debtors and the Creditors' Committee.
2. The Confirmation Order shall authorize the establishment of the
Fretter Warranty Claims Account and the Fred Schmid Warranty Claims Account, as
set forth in this Plan, and shall determine that holders of Warranty Claims
shall have no recourse against any Debtor or any asset of any Debtor other than
the funds contained in the Fretter Warranty Claims Account and the Fred Schmid
Warranty Claims Account, respectively.
3. The Confirmation Order shall establish the Warranty Claims Bar Date
consistent with the terms of the Plan.
4. The Confirmation Order shall provide that: (i) all Alter Ego Claims
are property of the Estate of the Debtor against which a creditor that has
asserted or could assert an Alter Ego Claim has a direct Claim, pursuant to
section 541 of the Bankruptcy Code; (ii) holders of Alter Ego Claims are
permanently enjoined from commencing or prosecuting any Alter Ego Claim against
any Debtor; and (iii) all Alter Ego Claims are fully and finally compromised,
settled, and released pursuant to the Plan in consideration for the
distributions provided for in the Plan.
5. The Confirmation Order shall authorize the Debtors, the Liquidating
Debtors, and the Creditors' Committee to take all actions necessary or
appropriate to implement the Plan.
B. Condition to Effective Date
The Effective Date will not occur and the Plan will not be consummated
unless and until the following condition has been satisfied or duly waived by
the Debtors and the Creditors' Committee pursuant to Section VIII.C:
1. The Confirmation Order shall have become a Final Order.
32
<PAGE>
C. Waiver of Conditions to Confirmation or Effective Date
The conditions to Confirmation and the Effective Date set forth in
Sections VIII.A and VIII.B may be waived in whole or part by the mutual
agreement of the Debtors and the Creditors' Committee at any time without an
order of the Bankruptcy Court, and if no agreement can be reached, upon entry of
an order by the Bankruptcy Court. The failure to satisfy or waive a condition
may be asserted by a Debtor or the Creditors' Committee regardless of the
circumstances giving rise to the failure of such condition to be satisfied
(including any action or inaction by the Debtors or the Creditors' Committee).
D. Effect of Nonoccurrence of Condition to Effective Date
The condition to the Effective Date must be satisfied or duly waived
by the Debtors and the Creditors' Committee in accordance with Article VIII
within 60 days after the Confirmation Date, or by such later date, after notice
and a hearing, as is proposed by the Debtors and the Creditors' Committee. If
the condition to the Effective Date has not been satisfied or duly waived
pursuant to Section VIII.C by such date, then upon motion by the Debtors or the
Creditors' Committee made before the time that the condition has been satisfied
or duly waived and upon notice to such parties in interest as the Bankruptcy
Court may direct, the Confirmation Order will be vacated by the Bankruptcy
Court; provided, however, that, notwithstanding the filing of such motion, the
Confirmation Order may not be vacated if the condition to the Effective Date is
either satisfied or duly waived before the Bankruptcy Court enters an order
granting such motion. If the Confirmation Order is vacated pursuant to this
Section VIII.D, the Plan will be null and void in all respects, including the
assumptions, assignments or rejections of Executory Contracts or Unexpired
Leases pursuant to Sections V.A and V.C, and nothing contained in the Plan will:
(1) constitute a waiver or release of any claims by or against, or any Interest
in, the Debtors or (2) prejudice in any manner the rights of the Debtors or any
other party in interest.
33
<PAGE>
ARTICLE IX.
CONFIRMABILITY AND SEVERABILITY
OF A PLAN AND CRAMDOWN
A. Confirmability and Severability of a Plan
The Plan constitutes a separate plan of reorganization for each
Debtor. Accordingly, the confirmation requirements of section 1129 of the
Bankruptcy Code must be satisfied separately with respect to each Debtor. The
Debtors and the Creditors' Committee reserve the right to modify or to revoke or
withdraw the Plan, as it applies to any particular Debtor, pursuant to Sections
XI.B and XI.C. A determination by the Bankruptcy Court that the Plan, as it
applies to any particular Debtor, is not confirmable pursuant to section 1129 of
the Bankruptcy Code will not limit or affect: (1) the Confirmation of the Plan,
as it applies to any other Debtor, and (2) the Debtors' ability to modify the
Plan, as it applies to any particular Debtor, to satisfy the confirmation
requirements of section 1129 of the Bankruptcy Code.
B. Cramdown
The Debtors and the Creditors' Committee request Confirmation under
section 1129(b) of the Bankruptcy Code with respect to any impaired Class that
does not accept the Plan pursuant to section 1126 of the Bankruptcy Code. The
Debtors and the Creditors' Committee reserve the right to modify the Plan to the
extent, if any, that Confirmation pursuant to section 1129(b) of the Bankruptcy
Code requires modification.
34
<PAGE>
ARTICLE X.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court will retain such jurisdiction over
the Chapter 11 Cases after the Effective Date as is legally permissible,
including jurisdiction to:
1. Allow, disallow, determine, liquidate, classify, estimate, or
establish the priority or secured or unsecured status of any Claim or Interest,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any objections to the allowance or priority of Claims or
Interests;
2. Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan
for periods ending on or before the Effective Date;
3. Resolve any matters related to the assumption, assumption and
assignment, or rejection of any Executory Contract or Unexpired Lease to which
any Debtor is a party or with respect to which any Debtor or Liquidating Debtor
may be liable and to hear, determine, and, if necessary, liquidate any Claims
arising therefrom, including Cure Amount Claims;
4. Ensure that distributions to holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan;
5. Decide or resolve any motions, adversary proceedings, contested or
litigated matters, and any other matters and grant or deny any applications
involving the Debtors that may be pending on the Effective Date including all
matters related to the claims and causes of actions involved in the Global
Settlement Agreement;
6. Enter such orders as may be necessary or appropriate to implement or
consummate the provisions of the Plan and all contracts, instruments, releases,
and other agreements or documents created in connection with the Plan, the
Disclosure Statement, the Confirmation Order or the Global Settlement Agreement;
7. Resolve any cases, controversies, suits, or disputes that may arise in
connection with the consummation, interpretation, or enforcement of the Plan,
the Global Settlement Agreement, or any contract, instrument, release, or other
agreement or document that is executed or created pursuant thereto, or any
entity's rights arising from or obligations incurred in connection with such
documents;
8. Modify the Plan before or after the Effective Date pursuant to section
1127 of the Bankruptcy Code or modify the Global Settlement Agreement, the
Disclosure Statement, the Confirmation Order, or any contract, instrument,
release, or other agreement or document created in connection with the Plan, the
Global Settlement Agreement, the Disclosure Statement, or the Confirmation
Order, or remedy any defect or omission or reconcile any inconsistency in any
Bankruptcy Court order, the Plan, the Global Settlement Agreement, the
Disclosure Statement, the Confirmation Order, or any contract, instrument,
release, or other agreement or document created
35
<PAGE>
in connection with the Plan, the Global Settlement Agreement, the Disclosure
Statement, or the Confirmation Order, in such manner as may be necessary or
appropriate to consummate the Plan or the Global Settlement Agreement;
9. Issue injunctions, enter and implement other orders, or take such
other actions as may be necessary or appropriate to restrain interference by any
entity with consummation, implementation, or enforcement of the Plan, the Global
Settlement Agreement or the Confirmation Order;
10. Enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason or in any respect modified, stayed,
reversed, revoked, or vacated or distributions pursuant to the Plan are enjoined
or stayed;
11. Determine any other matters that may arise in connection with or
relate to the Plan, the Global Settlement Agreement, the Disclosure Statement,
the Confirmation Order, or any contract, instrument, release, or other agreement
or document created in connection with the Plan, the Global Settlement
Agreement, the Disclosure Statement, or the Confirmation Order; and
12. Enter an order concluding the Chapter 11 Cases.
36
<PAGE>
ARTICLE XI.
MISCELLANEOUS PROVISIONS
A. Limitation of Liability
The Debtors, the Liquidating Debtors, and their respective directors,
officers, employees, and Professionals, acting in such capacity, and the
Creditors' Committee and their respective members and Professionals, acting in
such capacity, will neither have nor incur any liability to any entity for any
act taken or omitted to be taken in connection with or related to the
formulation, preparation, dissemination, implementation, Confirmation, or
consummation of the Plan, the Global Settlement Agreement, the Disclosure
Statement, or any contract, instrument, release, or other agreement or document
created or entered into, or any other act taken or omitted to be taken in
connection with the Plan or the Global Settlement Agreement; provided, however,
that the foregoing provisions of this Section XI.A will have no effect on: (1)
the liability of any entity that would otherwise result from the failure to
perform or pay any obligation or liability under the Plan, the Global Settlement
Agreement, or any contract, instrument, release, or other agreement or document
to be delivered or distributed in connection with the Plan or the Global
Settlement Agreement or (2) the liability of any entity that would otherwise
result from any such act or omission to the extent that such act or omission is
determined in a Final Order to have constituted gross negligence or willful
misconduct.
B. Modification of the Plan
Subject to the restrictions on modifications set forth in section 1127
of the Bankruptcy Code, the Debtors or Liquidating Debtors, as applicable, and
the Creditors' Committee reserve the right to alter, amend, or modify the Plan
before its substantial consummation.
C. Revocation of the Plan
The Debtors and the Creditors' Committee reserve the right to revoke
or withdraw the Plan as to any or all of the Debtors prior to the Confirmation
Date. If the Debtors and Creditors' Committee revoke or withdraw the Plan as to
any or all of the Debtors, or if Confirmation as to any or all of the Debtors
does not occur, then, with respect to such Debtors, the Plan will be null and
void in all respects, and nothing contained in the Plan will: (1) constitute a
waiver or release of any claims by or against, or any Interests in, such Debtors
or (2) prejudice in any manner the rights of any such Debtors.
D. Severability of Plan Provisions
If, prior to Confirmation, any term or provision of the Plan is held
by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy
Court will have the power to alter and interpret such term or provision to make
it valid or enforceable to the maximum extent practicable, consistent with the
original purpose of the term or provision held to be invalid, void, or
unenforceable, and such term or provision will then be applicable as altered or
interpreted. Notwithstanding any such holding, alteration, or interpretation,
the remainder of the terms and provisions of the Plan will remain in full force
and effect and will in no way be affected, impaired, or invalidated by such
holding, alteration, or interpretation. The Confirmation Order will constitute
37
<PAGE>
a judicial determination and will provide that each term and provision of the
Plan, as it may have been altered or interpreted in accordance with the
foregoing, is valid and enforceable pursuant to its terms.
E. Successors and Assigns
The rights, benefits, and obligations of any entity named or referred
to in the Plan will be binding on, and will inure to the benefit of, any heir,
executor, administrator, successor, or assign of such entity.
F. Service of Certain Plan Exhibits and Disclosure Statement Exhibits
Because the Exhibits to the Plan are voluminous, and because the
material provisions of all Exhibits will be described and summarized in the
Disclosure Statement, the Exhibits (other than the Global Settlement Agreement
and the order of the Bankruptcy Court approving the Global Settlement Agreement)
are not being served with copies of the Plan and the Disclosure Statement. Any
party in interest may review the Plan Exhibits during normal business hours
(9:00 a.m. to 4:30 p.m.) in the Document Reviewing Centers.
G. Service of Documents
Any pleading, notice, or other document required by the Plan or
Confirmation Order to be served on or delivered to the Debtors, the Liquidating
Debtors or the Creditors' Committee must be sent by overnight delivery service,
facsimile transmission, courier service, or messenger to:
David S. Kurtz
Timothy R. Poh1
JONES, DAY, REAVIS & POGUE
77 West Wacker
Chicago, Illinois 60601-1692
(312) 782-3939
Sean D. Malloy
JONES, DAY, REAVIS & POGUE
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
(Counsel to the Debtors)
Dean Wyman
OFFICE OF THE U.S. TRUSTEE
200 Public Square
BP Tower
Suite 3300 - 20th Floor
Cleveland, OH 44114
(216) 522-7800
Joseph M. Fischer
Robert A. Weisberg
CARSON FISCHER, P.L.C.
300 East Maple Road
Third Floor
Birmingham, Michigan 48009-6317
(248) 644-4840
William E. Schonberg
Jeffrey M. Levinson
BENESCH, FRIEDLANDER, COPLAN
& ARONOFF LLP
2300 BP Tower
200 Public Square
Cleveland, Ohio 44114-2378
(216) 363-4500
(Counsel to the Creditors' Committee)
38
<PAGE>
Dated: December 15, 1998
Respectfully submitted,
FRETTER, INC. THE OFFICIAL COMMITTEE OF
(on behalf of itself and the other Debtors) UNSECURED CREDITORS OF
FRETTER, INC.
By: /s/ J. Michael McLean By: /s/ J. Marc Feeney
----------------------------- --------------------------
Name: J. Michael McLean Name: J. Marc Feeney
Title: President Title: Chairman
Counsel: Counsel:
David S. Kurtz Joseph M. Fischer
Timothy R. Poh1 Robert A. Weisberg
JONES, DAY, REAVIS & POGUE CARSON FISCHER, P.L.C.
77 West Wacker 300 East Maple Road
Chicago, Illinois 60601-1692 Third Floor
(312) 782-3939 Birmingham, Michigan 48009-6317
(248) 644-4840
Sean D. Malloy
JONES, DAY, REAVIS & POGUE William E. Schonberg
North Point Jeffrey M. Levinson
901 Lakeside Avenue BENESCH, FRIEDLANDER, COPLAN
Cleveland, Ohio 44114 & ARONOFF LLP
(216) 586-3939 2300 BP Tower
200 Public Square
ATTORNEYS FOR DEBTORS AND Cleveland, Ohio 44114-2378
DEBTORS IN POSSESSION (216) 363-4500
ATTORNEYS FOR CREDITORS'
COMMITTEE
<PAGE>
EXHIBIT 99.1
TRANSMITTAL OF FINANCIAL REPORTS AND
CERTIFICATION OF COMPLIANCE WITH
UNITED STATES TRUSTEE OPERATING REQUIREMENTS FOR
THE PERIOD ENDED: 1-31-99
IN RE: :
CASE NO: 96-15177
Fretter, Inc. : Chapter 11
Judge Morgenstern-Clarren
:
- ------------------------------------
Debtor
:
As debtor in possession, I affirm:
1. That I have reviewed the financial statements attached hereto, consisting
of:
X Operating Statement (Form 2)
-----
X Balance Sheet (Form 3)
-----
X Summary of Operations (Form 4)
-----
X Monthly Cash Statements (Form 5)
-----
X Statement of Compensation (Form 6)
-----
----- -----------------------------------------
and that they have been prepared in accordance with normal and customary
accounting practices, and fairly and accurately reflect the debtor's financial
activity for the period stated:
2. That the insurance as described in Section 4 of the Operating Instructions
and Reporting Requirements for Chapter 11 Cases is in effect; and, (if not,
attach written explanation)
3. That all postpetition taxes as described in Sections 1 and 14 of the
Operating Instructions and Reporting Requirements For Chapter 11 cases are
current. (If not, attach written explanation)
4. No professional fees (attorney, accountant, etc.) have been paid without
specific court authorization. Explain on separate sheet if not true.
I hereby certify, under penalty of perjury, that the information provided herein
is true and correct to the best of my information and belief.
Dated: 2/12/99 /s/ J. Michael McLean
--------------------------
Debtor in Possession
Controller 248-213-3899
---------- ------------
Title Phone
<PAGE>
OPERATING STATEMENT (P&L)
-------------------------
(Accrual Basis)
---------------
Debtor: Fretter, Inc. Case No: 96-15177
Month Ending: 1/31/99
<TABLE>
<CAPTION>
Total
Current Month Since Filing
<S> <C> <C>
Total Revenue/Sales 0 532,663
Cost of Sales 0 505,226
----------- -----------
Gross Profit 0 27,437
=========== ===========
EXPENSES:
--------
Officer Compensation 8,735 389,286
Salary Expenses other Employees 6,012 462,678
Court-Ordered Stay Bonus 1,500 221,581
Employee Benefits & Pensions 0
Payroll Taxes 2,546 86,480
Other Taxes 0 85,454
Rent and Lease Expense 4,099 118,627
Interest Expense 0 4,340,722
Insurance (3,292) 643,800
Automobile and Truck Expense 0
Utilities (gas, electric, phone, alarms) 1,225 176,995
Computer Service Bureau 1,333 34,697
Travel and Entertainment 332 22,976
Repairs and Maintenance 0 310,160
Advertising 0
Supplies, Office Expenses, etc. 10,871 477,549
Other: Specify Director & Trustee Fees 4,733 199,594
Other: Other Fees 2,400 34,281
----------- -----------
TOTAL EXPENSES: 40,494 7,604,880
----------- -----------
NET OPERATING PROFIT/(LOSS) (40,494) (7,577,443)
=========== ===========
Add: Non-Operating Income:
Interest Income 10,804 92,279
Gain/Loss on Sale of Real Estate (206,265) 8,516,397
Other Income 1,649 2,062,446
----------- -----------
TOTAL (193,812) 10,671,122
----------- -----------
Less: Non-Operating Expenses:
Professional Fees 169,983 5,134,922
Other 0 645,106
----------- -----------
NET INCOME / (LOSS) (404,289) (2,686,349)
=========== ===========
</TABLE>
<PAGE>
BALANCE SHEET
-------------
Debtor: Fretter, Inc. Case No: 96-15177
Month Ending: 1/31/99
<TABLE>
<CAPTION>
ASSETS: Current Month Prior Month At Filing
<S> <C> <C> <C>
Cash: 4,544,501 3,034,873 89,252
Inventory: 791,999
Accounts Receivable: ** (495,197) 4,005,003 35,930,804*
Insider Receivables 3,555,136 3,555,136 7,424,547
Land and Buildings: 1,519,139 4,896,803 49,365,801
Furniture, Fixtures & Equip. 418,000
Accumulated Depreciation (305,453) (921,700) (10,623,681)
Other: Prepaids & misc. 3,048,016 2,570,234 807,689
Other: Utility deposits 6,000 9,865
----------- ----------- -----------
TOTAL ASSETS: 11,872,142 17,150,214 84,204,411
=========== =========== ===========
LIABILITIES:
Postpetition Liabilities:
Accounts Payable: 16,369 31,253
Wages and Salaries: 7,301 5,523
Taxes Payable 2,044 583
Other: Prof. fees, interest, etc. 3,681,036 3,545,774 1,390
----------- ----------- -----------
TOTAL Postpetition Liab.: 3,706,750 3,583,133 1,390
=========== =========== ===========
Secured Liabilities:
Subject to Postpetition
Collateral or Financing Order 0 0 29,002,401
All Other Secured Liab. 0 0 7,371,875
----------- ----------- -----------
TOTAL Secured Liabilities: 0 0 36,374,276
=========== =========== ===========
Prepetition Liabilities:
Taxes & Other Priority Liab. 434,329 630,152 1,132,770
Unsecured Liabilities 6,082,485 6,285,355 6,849,397
Other: Accrued Liabilities 4,177,788 4,276,496 5,449,917
----------- ----------- -----------
TOTAL Prepetition Liab. 10,694,602 11,192,003 13,432,084
=========== =========== ===========
Redeemable Preferred Stock 48,265,040 48,265,040 48,265,040
----------- ----------- -----------
Equity:
Owners' Capital: 1,692,451 1,692,451 1,692,451
Retained Earnings-Pre Pet. (49,800,353) (45,300,353) (15,560,830)
Retained Earnings-Post Pet. (2,686,349) (2,282,060) 0
----------- ----------- -----------
TOTAL Equity: (50,794,251) (45,889,962) (13,868,379)
=========== =========== ===========
TOTAL LIABILITIES
AND EQUITY: 11,872,141 17,150,214 84,204,411
=========== =========== ===========
</TABLE>
______________________________
* Includes contingent receivable from Silo, Inc.,
collectibility indeterminate.
** Amounts due from subsidiary companies, collectibility
indeterminate.
<PAGE>
SUMMARY OF OPERATIONS
---------------------
Period Ended: 1/31/99
Debtor: Fretter, Inc. Case No: 96-15177
Schedule of Postpetition Taxes Payable
--------------------------------------
<TABLE>
<CAPTION>
Beginning Accrued/ Payments/ Ending
Balance Withheld Deposits Balance
--------- -------- --------- -------
<S> <C> <C> <C> <C>
Income Taxes Withheld:
Federal: 0 2,971 2,971 0
State: 583 680 583 680
Local:
FICA Withheld: 0 1,182 1,182 0
Employers FICA: 0 1,182 1,182 0
Unemployment Tax:
Federal: 0 113 0 113
State: 0 1,251 0 1,251
Sales, Use & Excise Taxes 0 0
Property Taxes 0 0 0 0
Workers' Compensation
Other:
--- ----- ----- -----
TOTALS 583 7,379 5,918 2,044
=== ===== ===== =====
</TABLE>
AGING OF ACCOUNTS RECEIVABLE
AND POSTPETITION ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
Age in Days 0-30 30-60 Over 60
<S> <C> <C> <C>
PostPetition
Accounts Payable 16,369
------ ----- ----------
Accounts Receivable 3,059,939
------ ----- ==========
</TABLE>
For all postpetition accounts payable over 30 days old, please attach a sheet
listing each such account, to whom the account is owed, the date the account was
opened, and the reason for non payment of the account.
Describe events or factors occurring during this reporting period materially
affecting operations and formulation of a plan of Reorganization.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MONTHLY CASH STATEMENT
Debtor: Fretter, Inc. Statement for the period:
Case #: 96-15177 From: 1-1-99 To: 1-31-99
Cash Activity Analysis (Cash Basis Only):
<TABLE>
<CAPTION>
General Payroll Tax Cash Coll. B.T.
Acct. Acct. Acct. Acct. (B.T.) Direct(1)
-------- ------- ----- ------------ ---------
<S> <C> <C> <C> <C> <C>
A. Beginning Balance: 22,980.52 5,497.05 2,145.61 0.00 0.00
------------ --------- --------- ---------- ----------
B. Receipts. Attach
Separate Schedule: 4,481,378.84 9,517.16 7,467.68 0.00 0.00
------------ --------- --------- ---------- ----------
C. Balance Available
(A + B): 4,504,359.36 15,014.21 9,613.29 0.00 0.00
------------ --------- --------- ---------- ----------
D.1. Less Cash Transfers 4,300,000.00 0.00 0.00 0.00 0.00
------------ --------- --------- ---------- ----------
D.2. Less Disbursements Attach
separate schedule: 86,965.81 10,418.77 5,926.99 0.00 0.00
------------ --------- --------- ---------- ----------
E. Ending Balance
(C-D) 117,393.55 4,595.44 3,686.30 0.00 0.00
------------ --------- --------- ---------- ----------
(PLEASE ATTACH COPIES OF MOST RECENT RECONCILED BANK STATEMENTS FROM EACH
ACCOUNT):
General Account:
1. Depository Name & Location Michigan National Bank, Brighton, MI
2. Account Number 4707-38120-0
Payroll Account:
1. Depository Name & Location Michigan National Bank, Brighton, MI
2. Account Number 4707-38024-4
Tax Account:
1. Depository Name & Location Michigan National Bank, Brighton, MI
2. Account Number 4707-38128-3
</TABLE>
Other monies on hand (specify type and location) (i.e., CD's petty cash):
BT Collateral Acct. - Old Kent Bank, Acct. No 229377
BT Direct - BT cash collateral is forwarded directly to B.T.
Date:
------------------ -----------------------
Debtor in Possession
<PAGE>
MONTHLY CASH STATEMENT
----------------------
Debtor: Fretter, Inc. Statement for the period:
-------------
Case No.: 96-15177 From: 1-1-99 To: 1-31-99
------------- ------------ -----------
Cash Activity Analysis (Cash Basis Only):
<TABLE>
<CAPTION>
MNB NBD
General Certificate Certificate
Savings of of
Acct. Deposit Deposit
------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
A. Beginning Balance: 88,772.96 2,915,476.84 0.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
B. Receipts. Attach Separate Schedule: 1,900,064.33 9,412.15 4,300,000.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
C. Balance Available (A+B): 1,988,837.29 2,924,888.99 4,300,000.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
D.1. Less Cash Transfers 1,870,000.00 2,924,888.99 0.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
D.2. Less Disbursements Attach separate
schedule: 12.00 0.00 0.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
E. Ending Balance (C-D.1-D.2): 118,825.29 (0.00) 4,300,000.00 0.00 0.00
------------ ------------ ------------ ---------- ----------
</TABLE>
(PLEASE ATTACH COPIES OF MOST RECENT RECONCILED BANK STATEMENTS FROM EACH
ACCOUNT)
General Savings Account
1. Depository Name & Location Michigan National Bank, Brighton, MI
------------------------------------------
2. Account Number 4707-38293-5
------------------------------------------
Certificate of Deposit
1. Depository Name & Location Michigan National Bank, Brighton, MI
------------------------------------------
2. Account Number #880976, 880984, 880985
------------------------------------------
Certificate of Deposit
1. Depository Name & Location NBD Bank, Southfield, MI
------------------------------------------
2. Account Number #53314977, #53315040, #53315115, #53315180
------------------------------------------
Other monies on hand (specify type and location)(i.e., CD's petty cash):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date:
-------------------- ------------------------------------------
Debtor in Possession
<PAGE>
MONTHLY STATEMENT OF COMPENSATION
---------------------------------
The following information is to be provided for each shareholder,
officer, director, manager, insider, or owner that is employed by the debtor in
possession. Attach additional pages if necessary.
Name: J. Michael McLean Capacity: Principal
------
X Officer
------
Director
------
Insider
------
Detailed Description of Duties: As Controller, directs accounting, payroll,
benefit plans and tax filings as well as assists in cash flow planning
Current Compensation Paid:
Weekly or Monthly
9,167.00
------ --------
Current Benefits Received:
Weekly or Monthly
Vacation Pay ------ --------
Holiday Pay ------ --------
Retirement ------ --------
Company Vehicle ------ --------
Entertainment ------ --------
Travel ------ --------
Other Benefits ------ --------
CURRENT TOTAL:
Weekly or Monthly
------ --------
Dated: -------------------------------------
Principal, Officer, Director, Insider
<PAGE>
LIST OF OMITTED SCHEDULES
1. Schedule of Michigan National Bank January 1999 Cash Receipts (Account
Number 4707-38120-0)
2. Schedules of Michigan National Bank January 1999 Cash Disbursements,
Account Reconciliation and Outstanding Check List (Account Number 4707-38120-0)
3. Michigan National Bank Statement of Account for the Period January 1, 1999
to January 31, 1999 (Account Number 4707-38120-0)
4. Michigan National Bank Statement of Account for the Period January 1, 1999
to January 31, 1999 (Account Number 4707-38024-4)
5. Schedules of Michigan National Bank Payroll Account January 1999 Cash
Receipts and Disbursements and Account Reconciliation (Account Number 4707-
38024-4)
6. Schedules of Michigan National Bank Tax Account January 1999 Cash Receipts
and Disbursements and Account Reconciliation (Account Number 4707-38128-3)
7. Michigan National Bank Statement of Account for the Period January 1, 1999
to January 31, 1999 (Account Number 4707-38128-3)
8. Schedules of Michigan National Bank General Savings Account January 1999
Cash Receipts and Disbursements (Account Number 4707-38293-5)
9. Michigan National Bank Statement of Account for the Period January 1, 1999
to January 31, 1999 (Account Number 4707-38293-5)
10. Schedule of Michigan National Bank Certificate of Deposit January 1999
Cash Receipts
