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 ) December 20, 1993
Brendle's Incorporated
(Exact Name of Registrant as Specified in its Charter)
North Carolina
(State or Other Jurisdiction of Incorporation)
33-13622 56-0497852
Commission File Number I.R.S. Employer Identification Number
910/526-5600
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, If Changed Since Last Report)
ITEM 3. Bankruptcy or Receivership
On November 23, 1992, Brendle's Incorporated (the "Company")
and Brendle's Stores, Inc., the Company's wholly-owned operating
subsidiary, filed for protection under Chapter 11 of the United
States Bankruptcy Code by filing a petition with the United States
Bankruptcy Court for the Middle District of North Carolina (the
"Court"). Since the date the petition was filed, the Company has
worked to develop a joint Plan of Reorganization (the "Plan"),
which sets forth payment terms to creditors and provides for other
organizational and operational changes for the reorganized Company.
A hearing on the Plan was held on November 14, 1993, and an order
approving the Plan was entered on December 20, 1993 for the Company
and on December 23, 1993 for Brendle's Stores, Inc. A notice of
appeal of the Order confirming the Plan was filed on December 28,
1993 by three individual creditors and retiree claimants. The
appeal is pending as of the date of this report.
The Plan that has been developed by the Company and that has
been confirmed by the Court has been included with this report and
is hereby incorporated herein by this reference. Summarily, the
Plan provides for the full payment of all claims of The CIT
Group/Business Credit, Inc., the Company's debtor-in-possession
lender, and all allowed secured claims, priority claims and
administrative claims, (as those claims are defined in the Plan).
The Plan further provides that general unsecured creditors may
elect to receive either (1) a cash payment equal in amount to
fifty-two percent (52%) of the amount of their unsecured claim or
(2) a Reorganization Note equal to eighty percent (80%) of their
allowed unsecured claims. The Reorganization Notes, which will be
dated as of April 30, 1994, will bear interest at the rate of eight
percent (8%) per annum and will be payable over a ten (10)-year
term. For the first two (2) years the Reorganization Notes will
accrue interest only and no payments will be made to Reorganization
Note holders. At the end of two (2) years, the principal amount of
the Reorganization Note, plus accrued but unpaid interest, shall be
capitalized, and during the third year, interest on the capitalized
principal balance shall be paid semi-annually. Thereafter,
interest on the unpaid principal balance shall be due and payable
semi-annually. Annual principal payments will be made at the end
of years four (4) through ten (10) in the respective amounts as
follows: 11%, 12%, 13%, 14.1%, 15.3%, 16.6% and 18%. The
Reorganization Notes also include standard default provisions.
In addition to the items set forth above, all general
unsecured creditors will receive with respect to their allowed
claims a pro rata distribution of stock in the Company, which, in
the aggregate, will constitute thirty-five percent (35%) of the
then outstanding stock of the Company. As of the date of this
report, the Company has outstanding 8,301,644 shares of common
stock and will reserve 4,463,456 shares of common stock for
issuance in accordance with the Plan. Also, the Plan provides that
Page 2 of 5
certain of the Company's creditors will have a right to appoint
(two) directors to serve on the Company's Board of Directors.
The Plan contemplates that the Company will have access to a
credit facility in the form of a revolving line of credit which,
when added to other funds available to the Company, should be
sufficient to fund its obligations under the Plan. The Plan also
contains certain default provisions, one of which provides that if
the cash distributions contemplated by the Plan are not made on or
before April 30, 1994, an entity described in the Plan as the
Credit Management Committee will essentially take over management
of the Company and will be vested with powers and authorities of a
Chapter 11 trustee and the Board of Directors. If the Creditor
Management Committee were to assume control of the Company, it is
likely that the Company would be liquidated and that the Company's
current shareholders would receive nothing.
Information relating to the Company's assets and liabilities
as of October 30, 1993 are set forth below.
Page 3 of 5
<TABLE>
BRENDLE'S INCORPORATED
(Debtor-in-Possession)
Consolidated Balance Sheet
(Unaudited)
(In thousands except per share data)
<CAPTION>
October 30,
January 30, October 31,
1993 1993 1992
<S> <C> <C> <C>
Assets
Current Assets:
Cash and temp. cash invest. $ 23,672 $ 36,594 $ 1,800
Accounts receivable 3,321 6,336 1,810
Merchandise inventories 74,147 57,893 104,565
Income taxes receivable --- --- 59
Prepaid inventory 1,365 4,767 ---
Prepaid expenses 1,004 867 3,224
Total current assets 103,509 106,457 111,458
Property and equipment, less accumulated
depreciation and amortization 25,180 40,364 42,362
Other assets 503 666 697
$ 129,192 $ 147,487 $ 154,517
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable to bank $ --- $ --- $ 43,000
Notes payable to affiliated parties --- --- 2,000
Notes payable - D.I.P. 1,900 --- ---
Current portion of long-term debt --- --- 7,000
Current portion of capitalized lease obligations --- --- 1,442
Current portion of restructuring expenses 1,374 6,603 7,126
Accounts payable - trade 13,699 1,184 48,964
Accrued compensation 551 1,108 996
Other accrued liabilities 4,359 2,713 6,597
Total current liabilities 21,883 11,608 117,125
Liabilities subject to compromise 102,727 111,113 ---
Long-term debt, less current portion --- --- 2,982
Capitalized lease obligations, less current portion --- --- 4,944
Restructuring, less current portion --- --- 478
Other liabilities --- --- 2,115
Other deferred credit --- --- 478
Total Liabilities 124,610 122,721 128,122
Shareholders' equity:
Common stock, $1 par value, 20,000,000
shares authorized, 8,301,644, 8,289,276
and 8,053,702 shares issued 8,302 8,289 8,054
Capital in excess of par value 18,109 18,111 17,816
Retained earnings (deficit) (21,829) (1,634) 525
Total shareholders' equity 4,582 24,766 26,395
$ 129,192 $ 147,487 $ 154,517
</TABLE>
Page 4 of 5
ITEM 7. Financial Statement and Exhibits
a) Financial Statements: None required.
b) Pro Forma Financial Information: None required.
c) Exhibits:
1. First Amended Joint Plan of Reorganization of Brendle's
Incorporated and Brendle's Stores, Inc. dated November 10, 1993.
Page 5 of 5
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
)
)
In re: )
)
)
BRENDLE'S INCORPORATED ) Case Number B-92-14519C-11W
)
)
Debtor. )
)
)
In re: )
)
)
BRENDLE'S STORES, INC. ) Case Number B-92-14520C-11W
)
)
)
Debtor. )
)
DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION
November 10, 1993
R. Bradford Leggett
C. Edwin Allman, III
Catharine R. Carruthers
M. Joseph Allman
ALLMAN SPRY HUMPHREYS &
LEGGETT, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 1529
Winston-Salem, NC 27113-5129
Telephone: (919) 722-2300
Counsel for the Debtors
TABLE OF CONTENTS
<TABLE>
<S>
<C>
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SUMMARY OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Administrative Expense . . . . . . . . . . . . . . . . 2
2.2 Allowed . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Ballot . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Bank Group . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Bankruptcy Causes of Action . . . . . . . . . . . . . . 2
2.6 Bankruptcy Code . . . . . . . . . . . . . . . . . . . . 3
2.7 Bankruptcy Court . . . . . . . . . . . . . . . . . . . 3
2.8 Bankruptcy Rules . . . . . . . . . . . . . . . . . . . 3
2.9 Brenco . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Douglas D. Brendle . . . . . . . . . . . . . . . . . . 3
2.11 Brendle's Incorporated . . . . . . . . . . . . . . . . 3
2.12 Brendle's Stores, Inc. . . . . . . . . . . . . . . . . 3
2.13 Business Day . . . . . . . . . . . . . . . . . . . . . 3
2.14 Cash Option . . . . . . . . . . . . . . . . . . . . . . 3
2.15 Causes of Action . . . . . . . . . . . . . . . . . . . 3
2.16 Chapter 11 . . . . . . . . . . . . . . . . . . . . . . 4
2.17 Chapter 11 Cases . . . . . . . . . . . . . . . . . . . 4
2.18 CIT . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19 CIT Administrative Claim . . . . . . . . . . . . . . . 4
2.20 Claim . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.21 Class . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.22 Confirmation Date . . . . . . . . . . . . . . . . . . . 4
2.23 Confirmation Order . . . . . . . . . . . . . . . . . . 4
2.24 Convenience Claim . . . . . . . . . . . . . . . . . . . 4
2.25 Creditor . . . . . . . . . . . . . . . . . . . . . . . 4
2.26 Creditor Management Committee or CMC . . . . . . . . . 5
2.27 Debtors . . . . . . . . . . . . . . . . . . . . . . . . 5
2.28 Default . . . . . . . . . . . . . . . . . . . . . . . . 5
2.29 DIP Facility . . . . . . . . . . . . . . . . . . . . . 5
2.30 DIP Order . . . . . . . . . . . . . . . . . . . . . . . 5
2.31 Disclosure Statement . . . . . . . . . . . . . . . . . 5
2.32 Disputed Claim . . . . . . . . . . . . . . . . . . . . 5
2.32.1 Disputed Claim Reserve . . . . . . . . . . . . . 5
2.33 Effective Date . . . . . . . . . . . . . . . . . . . . 5
2.34 Election Form . . . . . . . . . . . . . . . . . . . . . 5
2.35 Employee Wage or Benefit Claim . . . . . . . . . . . . 6
2.36 Entity . . . . . . . . . . . . . . . . . . . . . . . . 6
2.37 Estate Property . . . . . . . . . . . . . . . . . . . . 6
2.38 Filing Date . . . . . . . . . . . . . . . . . . . . . . 6
2.39 Final Order . . . . . . . . . . . . . . . . . . . . . . 6
2.40 General Unsecured Claim . . . . . . . . . . . . . . . . 6
2.41 Intercompany Claims . . . . . . . . . . . . . . . . . . 6
2.42 Interest . . . . . . . . . . . . . . . . . . . . . . . 6
2.43 Inventory Return Adjustment . . . . . . . . . . . . . . 6
2.44 Note Option . . . . . . . . . . . . . . . . . . . . . . 6
2.45 Plan . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.45.1 Plan Reserve Account . . . . . . . . . . . . . . 7
2.46 Priority Claim . . . . . . . . . . . . . . . . . . . . 7
2.47 Reclamation Claims . . . . . . . . . . . . . . . . . . 7
2.48 Reorganized Company . . . . . . . . . . . . . . . . . . 7
2.49 Reorganization Credit Facility . . . . . . . . . . . . 7
2.50 Reorganization Fund . . . . . . . . . . . . . . . . . . 7
2.51 Reorganization Note . . . . . . . . . . . . . . . . . . 7
2.52 Secured Claim . . . . . . . . . . . . . . . . . . . . . 7
2.53 Stock of Brendle's Incorporated . . . . . . . . . . . . 7
2.54 Stock of the Reorganized Company . . . . . . . . . . . 7
2.55 Substantial Consummation . . . . . . . . . . . . . . . 8
2.56 Substantive Consolidation . . . . . . . . . . . . . . . 8
2.57 Tax Claims . . . . . . . . . . . . . . . . . . . . . . 8
2.58 Unsecured Claim . . . . . . . . . . . . . . . . . . . . 8
2.59 Unsecured Creditor . . . . . . . . . . . . . . . . . . 8
2.60 Unsecured Creditors Committee . . . . . . . . . . . . . 8
2.61 Additional Definitions Applicable to CIT . . . . . . . 8
a. CIT Revolving Credit Agreement . . . . . . . . . 8
b. Loan Documents or Related Documents . . . . . . . 8
c. Obligations . . . . . . . . . . . . . . . . . . . 8
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CLASSIFICATION, IMPAIRMENT AND TREATMENT OF CLAIMS AND INTERESTS . 9
3.1 Class 1 - Administrative Expenses (other than the CIT
Administrative Claim) . . . . . . . . . . . . . . . . . 9
a. Classification . . . . . . . . . . . . . . . . . 9
b. Impairment . . . . . . . . . . . . . . . . . . . 9
c. Treatment . . . . . . . . . . . . . . . . . . . . 9
3.2 Class 2 - CIT Claim . . . . . . . . . . . . . . . . . . 9
a. Classification . . . . . . . . . . . . . . . . . 9
b. Impairment . . . . . . . . . . . . . . . . . . . 9
c. Treatment . . . . . . . . . . . . . . . . . . . . 9
3.3 Class 3 - Wage and Benefit Claims . . . . . . . . . . . 11
a. Classification . . . . . . . . . . . . . . . . . 11
b. Impairment . . . . . . . . . . . . . . . . . . . 11
c. Treatment . . . . . . . . . . . . . . . . . . . . 11
3.4 Class 4 - Tax Claims . . . . . . . . . . . . . . . . . 11
a. Classification . . . . . . . . . . . . . . . . . 11
b. Impairment . . . . . . . . . . . . . . . . . . . 11
c. Treatment . . . . . . . . . . . . . . . . . . . . 11
3.5 Class 5 - Bank Group Secured Claim . . . . . . . . . . 12
a. Classification . . . . . . . . . . . . . . . . . 12
b. Impairment . . . . . . . . . . . . . . . . . . . 12
c. Treatment . . . . . . . . . . . . . . . . . . . . 12
d. Default . . . . . . . . . . . . . . . . . . . . . 12
ii
3.6 Class 6 - Brenco and Douglas D. Brendle Secured
Claims . . . . . . . . . . . . . . . . . . . . . . . . 12
a. Classification . . . . . . . . . . . . . . . . . 13
b. Impairment . . . . . . . . . . . . . . . . . . . 13
c. Treatment . . . . . . . . . . . . . . . . . . . . 13
d. Default . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Class 7 - Other Secured Claims . . . . . . . . . . . . 13
a. Classification . . . . . . . . . . . . . . . . . 13
b. Impairment . . . . . . . . . . . . . . . . . . . 13
c. Treatment . . . . . . . . . . . . . . . . . . . . 13
3.8 Class 8 - Retiree Claimants . . . . . . . . . . . . . . 13
a. Classification . . . . . . . . . . . . . . . . . 13
b. Impairment . . . . . . . . . . . . . . . . . . . 14
c. Treatment . . . . . . . . . . . . . . . . . . . . 14
3.9 Class 9 - General Unsecured Claims . . . . . . . . . . 14
a. Classification . . . . . . . . . . . . . . . . . 14
b. Impairment . . . . . . . . . . . . . . . . . . . 14
c. Treatment . . . . . . . . . . . . . . . . . . . . 14
d. Trust Indenture . . . . . . . . . . . . . . . . . 15
e. Appointment of Directors . . . . . . . . . . . . 15
f. Default . . . . . . . . . . . . . . . . . . . . . 15
3.10 Class 10 - Convenience Claims . . . . . . . . . . . . . 16
a. Classification . . . . . . . . . . . . . . . . . 16
b. Impairment . . . . . . . . . . . . . . . . . . . 16
c. Treatment . . . . . . . . . . . . . . . . . . . . 16
3.11 Class 11 - Shareholders . . . . . . . . . . . . . . . . 16
a. Classification . . . . . . . . . . . . . . . . . 16
b. Impairment . . . . . . . . . . . . . . . . . . . 16
c. Treatment . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IMPLEMENTATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . 16
4.1 Generally . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Funding Requirement . . . . . . . . . . . . . . . . . . 17
4.3 Funding Sources . . . . . . . . . . . . . . . . . . . . 17
4.4 Reorganization Credit Facility . . . . . . . . . . . . 18
4.5 Issuance of Additional Stock . . . . . . . . . . . . . 18
4.6 Substantive Consolidation . . . . . . . . . . . . . . 18
4.7 Vesting of Property in Reorganized Company . . . . . . 19
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DEFAULT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Default . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Creditor Management Committee . . . . . . . . . . . . . 20
5.2.1 Composition . . . . . . . . . . . . . . . . . . . . . . 21
5.2.2. Duties/Responsibilities . . . . . . . . . . . . . 21
5.2.3. Liability of CMC . . . . . . . . . . . . . . . . 22
iii
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ACCEPTANCE OR REJECTION OF PLAN . . . . . . . . . . . . . . . . . . 22
6.1 Separate Voting . . . . . . . . . . . . . . . . . . . . 22
6.2 Acceptance by Classes . . . . . . . . . . . . . . . . . 23
6.3 Persons Entitled to Vote . . . . . . . . . . . . . . . 23
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PROVISIONS CONCERNING DISTRIBUTIONS . . . . . . . . . . . . . . . . 24
7.1 Distribution Date . . . . . . . . . . . . . . . . . . . 24
a. Cash Distribution . . . . . . . . . . . . . . . . 24
b. Stock Distributions . . . . . . . . . . . . . . . 24
c. Note Distributions . . . . . . . . . . . . . . . 24
7.2 Undeliverable Distributions . . . . . . . . . . . . . . 24
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . 25
8.1 Assumption and Rejection . . . . . . . . . . . . . . . 25
8.2 Bar to Rejection Damages . . . . . . . . . . . . . . . 25
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PROCEDURES FOR RESOLVING DISPUTED CLAIMS . . . . . . . . . . . . . 26
9.1 Objections to Claims . . . . . . . . . . . . . . . . . 26
9.2 Payments and Distributions with respect to Disputed
Claims. . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Timing of Payments and Distributions with respect to
Disputed Claims . . . . . . . . . . . . . . . . . . . . 26
9.4 Retention and Enforcement of Rights . . . . . . . . . . 26
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
RELEASES, TERMINATIONS AND SETTLEMENTS OF CLAIMS . . . . . . . . . 27
10.1 Discharge and Release by Holders of Claims and
Interests . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Termination of Guaranties and Claims of Subordination . 28
10.3 Survival of Indemnification Obligations . . . . . . . . 29
10.4 Preferences . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Bank Group Release . . . . . . . . . . . . . . . . . . 29
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
EFFECTUATION AND SUPERVISION OF PLAN . . . . . . . . . . . . . . . 30
11.1 Retention of Jurisdiction . . . . . . . . . . . . . . . 30
11.2 Unsecured Creditors Committee . . . . . . . . . . . . . 31
vi
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . 31
12.1 Compliance with Tax Requirements . . . . . . . . . . . 31
12.2 Binding Effect of Plan . . . . . . . . . . . . . . . . 31
12.3 Non-voting Stock . . . . . . . . . . . . . . . . . . . 31
12.4 Authorization of Corporate Action . . . . . . . . . . . 31
12.5 Modification of this Plan . . . . . . . . . . . . . . . 32
12.6 Captions . . . . . . . . . . . . . . . . . . . . . . . 32
12.7 Method of Notice . . . . . . . . . . . . . . . . . . . 32
12.8 Reservation . . . . . . . . . . . . . . . . . . . . . . 32
12.9 Savings Clause . . . . . . . . . . . . . . . . . . . . 32
v
Brendle's Incorporated and Brendle's Stores, Inc., Debtors
in the above-captioned Chapter 11 proceedings, propose the
following First Amended Joint Plan of Reorganization pursuant to
Section 1121(a) of the Bankruptcy Code:
ARTICLE I
SUMMARY OF PLAN
The Plan provides for the full payment of all claims of The
CIT Group/Business Credit, Inc., and all Allowed Secured Claims,
Priority Claims and Administrative Claims. It provides that
General Unsecured Creditors may elect to receive either (1) a
cash payment of 52% or (2) a Reorganization Note equal to 80% of
their respective Allowed General Unsecured Claims. In addition,
all General Unsecured Creditors will receive with respect to
their Allowed Claims, pro rata, an aggregate distribution of 35%
of the issued and outstanding stock in the Reorganized Company.
The Plan contemplates that the Reorganized Company will have
access to a Reorganization Credit Facility in the form of a
revolving line of credit which, when added to the other funds
available to the Reorganized Company at the Effective Date, will
be sufficient to fund the Debtors' obligations under this Plan.
The Plan thus provides for a substantial distribution of
both cash and stock in the Reorganized Company to General
Unsecured Creditors, with the cash distribution being made on
Substantial Consummation, which will occur on or before April 30,
1994. The Reorganized Company will emerge from Chapter 11 as a
much stronger, more viable business entity which will serve as a
excellent source of business for all of its service, advertising
and trade suppliers and which will preserve jobs for the
Company's 1460 employees.
ARTICLE II
DEFINITIONS
The capitalized terms used in this Plan shall have the
meanings set forth in this Article II or elsewhere in the Plan.
Any term defined in the Bankruptcy Code or Bankruptcy Rules and
not otherwise defined in this Plan shall have the meaning set
forth in the Bankruptcy Code or Bankruptcy Rules. A reference to
an "Article" or "Paragraph" refers to an Article or Paragraph of
the Plan. A reference to a "Section" refers to a Section of the
Bankruptcy Code. The rules of construction set forth in Section
102 of the Bankruptcy Code shall apply in the interpretation of
the Plan.
1
2.1 Administrative Expense: (a) Any cost or expense of
administration of the Chapter 11 cases allowed under Section
503(b) including, without limitation, any such allowed items
constituting (i) actual and necessary post-petition costs and
expenses of preserving the Debtors' estates or operating the
businesses of the Debtors, (ii) post-petition costs and
indebtedness or obligations duly and validly incurred or assumed
by the Debtors, (iii) payments to cure defaults on executory
contracts and unexpired leases under Paragraph 8.1, (iv)
compensation or reimbursement of expenses to the extent allowed
by the Bankruptcy Court under Section 330(a); and (b) claims
arising under I(c) of a Stipulation of Compromise of Recognized
Reclamation Claim filed with the Bankruptcy Court.
2.2 Allowed: With respect to Claims and Interests, other
than Administrative Expenses and The CIT Administrative Claim,
(a) any Claim against or interest in either of the Debtors, proof
of which was timely filed or by order of the Bankruptcy Court was
not required to be filed, or (b) any Claim or interest that has
been, or hereafter is, listed in the schedules of liabilities
filed by either of the Debtors as liquidated in amount and not
disputed or contingent, and, in each such case in (a) and (b)
above, as to which either (i) no objection to the allowance
thereof has been filed within the applicable period of limitation
fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or
the Bankruptcy Court, or (ii) an objection has been filed and not
withdrawn and the Claim or interest has been allowed by a Final
Order (but only to the extent so allowed). Unless otherwise
expressly specified in the Plan, an Allowed Claim (other than the
CIT Administrative Claim) shall not include post-petition
interest on the principal amount of the Claim. With respect to
General Unsecured Claims, such Claims shall be allowed only after
adjustment for reclamation settlements, stock balancing and
returns for damaged goods and advertising credits.
2.3 Ballot: The form or forms for voting on the Plan that
will be distributed to holders of Claims or interests in classes
that are impaired under the Plan and entitled to vote under
Section 1126, in connection with voting on the Plan. The Ballot
to be distributed to Unsecured Creditors shall contain an
election form consistent with the provisions of Paragraph 3.9(c).
2.4 Bank Group: Shall mean NationsBank of North Carolina,
N.A., First Union National Bank of North Carolina, and First
Citizens Bank and Trust Company, collectively, as the holder of
an Allowed Secured Claim and an Allowed Unsecured Claim against
the Debtors which, as of July 8, 1993, were in the estimated
amounts of 16 million and 35 million dollars respectively. The
Bank Group also serves as agent in connection with the secured
claims of Brenco and Douglas D. Brendle.
2.5 Bankruptcy Causes of Action: Any and all Claims,
rights and Causes of Action created by the Bankruptcy Code in
favor of any Debtor, including all Claims, rights and Causes of
Action arising under any of the Sections 502, 510, and 542
through 553, inclusive.
2
2.6 Bankruptcy Code: Title 11 of the United States Code,
as amended from time to time, as applicable to the Chapter 11
cases. References to "Section ___" herein shall refer to a
Section of the Bankruptcy Code, 11 U.S.C. (section mark)101, et seq.
2.7 Bankruptcy Court: The United States Bankruptcy Court
for the Middle District of North Carolina, and any appellate
court that exercises jurisdiction over the Chapter 11 cases, also
referred to herein as the "Court".
2.8 Bankruptcy Rules: The Federal Rules of Bankruptcy
Procedure, as amended from time to time, as applicable to the
Chapter 11 cases.
2.9 Brenco: A North Carolina general partnership
consisting of Douglas D. Brendle, S. Floyd Brendle, William F.
Cosby, and two trusts under an agreement with J. Harold Brendle,
dated October 20, 1982, which leases thirteen (13) stores and the
corporate office building and contiguous warehouse to the
Debtors. In addition, in October 1991 Brenco loaned $1 million
to the Debtors on the same terms extended to the Debtors by the
Bank Group. This loan is collateralized on a pari passu basis
with the Bank Group.
2.10 Douglas D. Brendle: The Debtors' Chief Executive
Officer and Chairman of the Debtors' Board of Directors. In
October, 1991, in conjunction with the Brenco loan and as
required by the Bank Group, Mr. Brendle personally loaned $1
million to the Debtors on the same terms extended to the Debtors
by the Bank Group. As is the Brenco loan, the Douglas D. Brendle
loan is collateralized on a pari passu basis with the Bank Group.
2.11 Brendle's Incorporated: A North Carolina corporation
and Debtor in a Chapter 11 case bearing Case No. B-92-14519C-11W.
Brendle's Incorporated is the parent corporation of Brendle's
Stores, Inc.
2.12 Brendle's Stores, Inc.: A North Carolina corporation
which is a wholly owned subsidiary of Brendle's Incorporated and
which is a Debtor in the Chapter 11 case bearing Case No.
B-92-14520C-11W. Also designated as "BSI".
2.13 Business Day: Any day other than a Saturday, Sunday or
any other day on which federal law permits banks in New York, New
York to be closed .
2.14 Cash Option: The Option offered to Unsecured Creditors
whereby such Creditors may elect to receive a cash payment of 52%
of their respective Allowed Claims which, together with the stock
issued pursuant to Paragraph 4.5, shall be in complete
satisfaction of their Allowed Unsecured Claims.
2.15 Causes of Action: Any and all actions, causes of
action (including Bankruptcy Causes of Action), Claims, demands
and liabilities, whether known or unknown, in law, equity or
otherwise, held by or against the Debtors.
3
2.16 Chapter 11: Chapter 11 of Title 11 of the United
States Code.
2.17 Chapter 11 Cases: The Debtors Chapter 11 cases pending
before the Bankruptcy Court.
2.18 CIT: The CIT Group/Business Credit, Inc., BSI's
post-petition lender under the DIP Facility.
2.19 CIT Administrative Claim: CIT Administrative Claim
shall mean all claims of CIT based on all Obligations of
Brendle's Stores, Inc., or the Reorganized Company to CIT (when
used with reference to CIT the term "Obligations" shall have the
meaning set forth in Section 1.01 of the CIT Revolving Credit
Agreement) or arising under or pursuant to the CIT Revolving
Credit Agreement, any other Loan Documents or the DIP Order,
which claims, pursuant to the DIP Order, were granted, among
other things, senior super-priority allowed administrative
expense status in accordance with Section 364(c)(1) of the
Bankruptcy Code having priority over all administrative expenses
and Unsecured Claims against Brendle's Stores, Inc., or the
Reorganized Company, of any kind and nature whatsoever,
including, without limitation, all administrative expenses of the
kind specified in Section 364(c)(1) of the Bankruptcy Code
(including, without limitation, the super-priority administrative
expense claims of the Inventory Vendor Creditors, as defined in
the CIT Revolving Credit Agreement) or Sections 503(b) and 507(b)
of the Bankruptcy Code (with certain limited exceptions for
Carve-out Expenses as defined in the CIT Revolving Credit
Agreement).
2.20 Claim: Any right to (a) payment from any of the
Debtors, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or
(b) an equitable remedy for breach of performance if such breach
gives rise to a right to payment from any of the Debtors, whether
or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
2.21 Class: Shall mean any one of the Classes of Claims or
Interest designated in Article III of the Plan.
2.22 Confirmation Date: The date on which the Confirmation
Order is entered.
2.23 Confirmation Order: The order of the Bankruptcy Court
confirming the Plan.
2.24 Convenience Claim: Any General Unsecured Claim against
either of the Debtors that is Allowed in an amount of $100.00 or
less.
2.25 Creditor: Any entity that is the holder of a Claim
against any of the
Debtors that arose on or before the Filing Date or Claim against
any of the Debtors' estates of the kinds specified in Sections
502(g), 502(h) or 502(i).
4
2.26 Creditor Management Committee or CMC: A committee
consisting of three individuals selected by the Bank Group, three
individuals selected by the Unsecured Creditors Committee and one
individual selected jointly by the Bank Group and the Unsecured
Creditors Committee. The Creditor Management Committee shall
have rights and duties as described in Paragraph 5.2 herein.
2.27 Debtors: Brendle's Incorporated and Brendle's Stores,
Inc., which collectively are also referred to herein as the
"Company".
2.28 Default: The occurrence of an event described in
Paragraph 5.1 which gives rise to the appointment of the Creditor
Management Committee as provided in Paragraph 5.2.
2.29 DIP Facility: The Debtor-in-Possession Facility with
CIT evidenced by The Revolving Credit Agreement dated as of
September 17, 1993, among Brendle's Stores, Inc., as Borrower and
The CIT Group/Business Credit, Inc., as Lender, as approved by
the DIP Order.
2.30 DIP Order: Shall mean the Final Order dated September
9, 1993, entered by the Bankruptcy Court in the Chapter 11 case
of Brendle's Stores, Inc., authorizing the Debtor to obtain
secured super-priority post-petition financing with the CIT
Group/Business Credit, Inc., pursuant to Section 364(c)(1), (2)
and (3) and Section 364(d) of the Bankruptcy Code and Bankruptcy
Rule 4001 and granting related relief.
2.31 Disclosure Statement: The Disclosure Statement
describing this Plan, prepared in accordance with Section 1125
and approved by Order of the Bankruptcy Court, to be distributed
to the holders of Claims whose votes with respect to this Plan
are to be solicited.
2.32 Disputed Claim: Any Claim (a) that is scheduled by the
Debtors as disputed, contingent or unliquidated, or (b) proof of
which has been filed with the Bankruptcy Court and with respect
to which an objection to allowance, in whole or in part, has been
or is filed, and which objection has not been withdrawn or
settled or determined by a Final Order.
2.32.1 Disputed Claim Reserve: Either (i) availability
under a post-confirmation credit facility (including the
Reorganization Credit Facility) which availability is
specifically reserved for the payment of Disputed Claims, or (ii)
an interest bearing escrow account which shall hold funds
sufficient for the payment of Disputed Claims, established
pursuant to paragraph 9.2 hereof, at the Company's option.
2.33 Effective Date: The date of Substantial Consummation.
2.34 Election Form: The form attached to or made a part of
the Ballot on which Unsecured Creditors may elect the Cash Option
or the Note Option.
2.35 Employee Wage or Benefit Claim: A Priority Claim
asserted under Section 507(a)(3) or (4) subject to the $2,000
limitation contained therein.
5
2.36 Entity: Any individual, corporation, limited or
general partnership, joint venture, association, joint stock
company, estate, entity, trust, trustee, unincorporated
organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.
2.37 Estate Property: Shall mean all of the property of the
Debtors as defined in Section 541, which property shall revest in
the Reorganized Company upon Substantial Consummation achieved by
the distributions required by Paragraphs 3.5(c), 3.6(c), and
3.9(c); provided, however, in the event the Creditor Management
Committee is appointed under Paragraph 5.2, Estate Property shall
not revest as provided in Section 1141(b) but shall remain with
the respective Debtors to be administered in the method and as
provided in this Plan.
2.38 Filing Date: November 22, 1992, the date Chapter 11
Petitions were filed by the Debtors.
2.39 Final Order: An order, ruling or judgment of the
Bankruptcy Court or other court having jurisdiction, which is no
longer subject to review, reversal, modification or amendment by
appeal or writ of certiorari.
2.40 General Unsecured Claim: Any Unsecured Claim other
than an Administrative Expense, a Reclamation Claim, a Priority
Claim and Intercompany Claim.
2.41 Intercompany Claims: Any Claim by either Debtor
asserted against the other or any claim against either Debtor
asserted by Brendle Transport, Inc., and BFS, Inc., wholly owned
subsidiaries of Brendle's Incorporated, and The Electronic Sports
Collection USA, Inc., and Brendle's Acceptance Corporation,
wholly owned subsidiaries of Brendle's Stores, Inc.
2.42 Interest: An equity interest evidenced by a share(s)
certificate in Brendle's Incorporated and/or Brendle's Stores,
Inc., as the context requires.
2.43 Inventory Return Adjustment: The reduction of
pre-petition General Unsecured Claims as a result of
participation in the Court approved stock balancing or return of
defective or damaged goods program.
2.44 Note Option: The option offered to Unsecured Creditors
as an alternative to the Cash Option. Under the Note Option, a
General Unsecured Creditor will receive a Reorganization Note
which, together with the stock distribution as provided in
Paragraph 4.5, will fully satisfy its Allowed Unsecured Claim.
2.45 Plan: This Chapter 11 Plan of Reorganization as it may
be amended from time to time.
2.45.1 Plan Reserve Account: The account established
pursuant to paragraph 5.1(a) of the Plan.
6
2.46 Priority Claim: Any Claim, other than a Secured Claim,
entitled to a priority of distribution over the Claims of General
Unsecured Creditors pursuant to Section 507 or 364.
2.47 Reclamation Claims: A Claim of the type that is
described in Section 546(c). The Debtor has disputed the
validity of Reclamation Claims based on the facts of this case.
On April 29, 1993, the Bankruptcy Court entered an Order pursuant
to Bankruptcy Rule 9019 authorizing the settlement and compromise
of Reclamation Claims.
2.48 Reorganized Company: Brendle's Incorporated and
Brendle's Stores, Inc. collectively, following Substantial
Consummation, provided the Creditor Management Committee has not
been appointed pursuant to Paragraph 5.2.
2.49 Reorganization Credit Facility: The secured credit
facility, consisting of an extension of credit (which may require
the conveyance of equity) and/or a capital investment, in the
principal amount sufficient to enable the Company to fund its
payment obligations hereunder and which will be used to satisfy
creditor Claims on Substantial Consummation. This facility may
be part of the revolving credit facility that the Reorganized
Company would utilize in its business operations following
Substantial Consummation.
2.50 Reorganization Fund: The funds placed in a Bankruptcy
Rule 3020 Escrow Account pursuant to Stipulation filed on July 1,
1993, which was amended and restated and superseded in its
entirety by an amended and restated order with respect to
Bankruptcy Rule 3020 Escrow Account entered by the Bankruptcy
Court on September 16, 1993.
2.51 Reorganization Note: A promissory note issued to
Unsecured Creditors, not electing the Cash Option, and having
attributes more particularly set forth in Paragraph 3.9(c)(2)(ii)
herein.
2.52 Secured Claim: Any Claim that is secured by Estate
Property to the extent such Claim is subject to allowance as a
Secured Claim under Section 506(a).
2.53 Stock of Brendle's Incorporated: The common stock,
which is currently traded on the NASDAQ National Marketing System
under the symbol BRDLQ at 1 dollar par value. Of the 20 million
shares authorized, 8,289,276 shares were issued as of January 30,
1993, with approximately 1,138 shareholders of record.
2.54 Stock of the Reorganized Company: The stock of
Brendle's Incorporated.
2.55 Substantial Consummation: The full cash payment of all
CIT claims and the full cash payment of the Allowed Secured
Claims in Classes 5 and 6, the cash distribution to Class 9
Creditors as provided in Paragraph 3.9(c), and the issuance of
Stock to the escrow agent as provided in Paragraph 4.5; provided,
however, if a Default occurs under Paragraph 5.1 and the Creditor
Management Committee is appointed, Substantial Consummation shall
then occur upon the earlier of (a) entry of an order assuming and
assigning or rejecting all executory contracts and
7
unexpired leases, or (b) 90 days after entry of an order appointing
the Creditor Management Committee, which automatically constitutes
rejection of all remaining executory contracts and unexpired
leases not subject to a pending motion to assume.
2.56 Substantive Consolidation: The consolidation of assets
and liabilities of the Debtors, for Plan purposes only, as
provided in Paragraph 4.5 hereof. Substantive Consolidation
shall not occur if the Creditor Management Committee has been
appointed.
2.57 Tax Claims: Any Claim by a federal, state or local
taxing authority, including ad valorem Tax Claims, entitled to
priority pursuant to Section 507(a)(7).
2.58 Unsecured Claim: Any Claim that is not a Secured
Claim.
2.59 Unsecured Creditor: The holder of a General Unsecured
Claim.
2.60 Unsecured Creditors Committee: The Committee of
Unsecured Creditors appointed by Order of the Bankruptcy Court on
December 17, 1992.
2.61 Additional Definitions Applicable to CIT: With
reference to CIT and Plan provisions relating to CIT, the
following additional definitions shall apply:
a. CIT Revolving Credit Agreement: Shall mean the
Revolving Credit Agreement dated as of September
17, 1993, among Brendle's Stores, Inc., as
Borrower, and the CIT Group/Business Credit, Inc.,
as Lender, as approved by the DIP Order.
b. Loan Documents or Related Documents: Shall have
the meaning set forth in Section 1.01 of the CIT
Revolving Credit Agreement.
c. Obligations: Shall have the meaning set forth in
Section 1.01 of the CIT Revolving Credit
Agreement.
8
ARTICLE III
CLASSIFICATION, IMPAIRMENT AND TREATMENT OF CLAIMS AND INTERESTS
3.1 Class 1 - Administrative Expenses (other than the CIT
Administrative Claim):
a. Classification: Class 1 Claims consist of all
claims for Administrative Expenses (other than the CIT
Administrative Claim).
b. Impairment: Class 1 Claims are not impaired.
c. Treatment: Each holder of an Allowed
Administrative Expense (other than the CIT Administrative Claim)
shall receive the full amount of its Allowed Administrative
Expense in cash on the Effective Date; provided, however, that
Administrative Expenses representing (a) post-petition
liabilities incurred in the ordinary course of business by either
of the Debtors, and (b) post-petition liabilities arising under
loans or advances to either of the Debtors whether or not
incurred during the ordinary course of business, shall be paid by
the Reorganized Company in accordance with the terms and
conditions of the particular transaction relating to such
liability and any agreement relating thereto; and provided
further, that Administrative Expenses representing final
compensation or reimbursement of expenses awarded by the
Bankruptcy Court under Sections 330, 503(b)(2), 503(b)(3),
503(b)(4) or 503(b)(5) shall, unless other terms are mutually
agreed upon between the Reorganized Company and the entity
entitled to receive such Administrative Expense, be paid in full,
in cash, in such amounts as are allowed by the Bankruptcy Court
on the later of (a) the Effective Date, or (b) the date that is
ten (10) business days after the date on which the Bankruptcy
Court's Order allowing such Administrative Expense becomes a
Final Order.
3.2 Class 2 - CIT Claim:
a. Classification: Class 2 shall consist of the CIT
Administrative Claim.
b. Impairment: The Class 2 Claim is not impaired.
c. Treatment:
(i) The CIT Administrative Claim will be paid in
full, in Cash, upon the earlier of: (a)
September 9, 1994, or such earlier date as
required by the terms of the CIT Revolving
Credit Agreement, (b) such date and time as
are simultaneous with or immediately prior to
the first distribution to any entity other
than CIT pursuant to the Plan, (c) five
Business Days immediately following the entry
of an order appointing the Creditor
Management Committee, and (d) such date and
time as are simultaneous with or immediately
prior to the release of any funds from the
Reorganization Fund (the "CIT Payment Date").
The CIT
9
Administrative Claim shall be treated
as a senior allowed administrative expense
claim in accordance with Section 364(c)(1) of
the Code, the DIP Order, and any other Loan
Documents in the amount outstanding on the
CIT Payment Date. The Class 2 Claim is not
impaired. In all events, CIT shall receive
indefeasible payment in full of all claims
and Obligations of Brendle's Stores, Inc., to
CIT or arising under or pursuant to the CIT
Revolving Credit Agreement, any other Loan
Documents or the DIP Order pursuant to the
Plan no later than the time when any entity
other than CIT receives a payment or
distribution pursuant to the Plan. If the
Bank Group or the Unsecured Creditors
Committee request the appointment of the
Creditor Management Committee, the Revolving
Credit Commitment (as defined in the CIT
Revolving Credit Agreement) shall expire on
the earlier of the Termination Date (as
defined in the CIT Revolving Credit
Agreement) or the date of such request.
Amounts paid to CIT on or after 12:00 noon,
New York City time, shall not be deemed paid
or received until 9:00 a.m., New York City
time, of the immediately following Business
Day. In the event of the appointment of the
Creditor Management Committee, CIT shall
retain its liens on and security interests in
all of its collateral until CIT shall have
received indefeasible payment in full in Cash
of the CIT Administrative Claim and all other
claims of CIT based on all Obligations of
Brendle's Stores, Inc., to CIT or arising
under or pursuant to the CIT Revolving Credit
Agreement, any other Loan Documents or the
DIP Order.
(ii) Notwithstanding anything to the contrary
contained in this or any other provision of
the Plan or in the Confirmation Order, all
liens and security interests granted to CIT
pursuant to Section 364(c)(2), Section
364(c)(3), and Section 364(d) of the
Bankruptcy Code under the Loan Documents and
the DIP Order and securing all claims of CIT
and all Obligations of Brendle's Stores,
Inc., or the Reorganized Company shall
survive, and there shall be no vesting of
Estate Property in the Reorganized Company,
until CIT receives indefeasible payment in
full, in cash, of the CIT Administrative
Claim and all other claims of CIT based on
all Obligations of Brendle's Stores, Inc., or
the Reorganized Company to CIT or arising
under or pursuant to the CIT Revolving Credit
Agreement, any other Loan Documents or the
DIP Order. Notwithstanding anything to the
contrary contained in this or any other
provision of the Plan or in the Confirmation
Order, the provisions of the Loan Documents
and the DIP Order, and all rights of CIT
thereunder based on any subordination rights
or otherwise, shall continue and shall
survive until CIT receives indefeasible
payment in full in Cash of the CIT
Administrative Claim and all other claims of
CIT based on all Obligations of Brendle's
Stores, Inc. or the Reorganized Company or
arising under or pursuant to the CIT
Revolving Credit
10
Agreement, any other Loan
Documents or the DIP Order or such later time
as may be contemplated by the CIT Revolving
Credit Agreement, any other Loan Documents or
the DIP Order. Further, notwithstanding
anything to the contrary in this or any other
provision of the Plan or in the Confirmation
Order, payment in full to CIT in Cash of all
claims of CIT based on all Obligations of
Brendle's Stores, Inc. or the Reorganized
Company or arising under or pursuant to the
CIT Revolving Credit Agreement, any other
Loan Documents or the DIP Order shall
constitute a waiver and release by the
Debtors and the Reorganized Company of any
and all Bankruptcy Causes of Action or other
rights or claims, including rights of set-
off, that either of the Debtors or the
Reorganized Company may have otherwise had
against CIT.
3.3 Class 3 - Wage and Benefit Claims:
a. Classification: Class 3 Claims shall consist of
all allowed Employee Wage and Benefit Claims entitled to priority
pursuant to Section 507(a)(3) and (4).
b. Impairment: Class 3 Claims are not impaired.
c. Treatment: Class 3 Claims shall be paid in full,
in cash on the later of the Substantial Consummation Date or the
date which is twenty business days after the date on which the
Employee Wage or Benefit Claim becomes an Allowed Claim.
3.4 Class 4 - Tax Claims:
a. Classification: Class 4 shall consist of Allowed
Tax Claims .
b. Impairment: Class 4 Claims are not impaired.
c. Treatment: Allowed Tax Claims shall be paid over
a period not exceeding six (6) years after the date of assessment
of such claim, in quarterly payments with interest at 7% per
annum, amortized over that period beginning on the Effective Date
and ending on the date which is six years after the date of
assessment; or in such other manner as the Reorganized Company
and the Class 4 Creditor agree.
11
3.5 Class 5 - Bank Group Secured Claim:
a. Classification: Class 5 shall consist of the
Allowed Secured Claim of the Bank Group, exclusive of the Secured
Claims of Class 6 Creditors for whom the Bank Group serves as
agent.
b. Impairment: The Class 5 Claim is impaired.
c. Treatment: The Bank Group shall receive the sum
of $16 million, less all amounts paid to the Bank Group on
account of its Allowed Secured Claim (but without reduction for
amounts received and paid to Class 6 Creditors) by the Debtors
subsequent to July 8, 1993, in cash in full and complete
satisfaction of the Allowed Secured Claim of the Bank Group,
including, without limitation, any rights of set off,
recoupment, and Claims asserted based on liens against credit
card receipts and layaways. Prior to the Effective Date, the
Bank Group shall receive the net proceeds from the sale of any
Bank Group collateral (and make appropriate distributions to
Brenco and Douglas D. Brendle) and the balance of the Allowed
Secured Claim of the Bank Group shall not be paid until the
Effective Date at which time it shall be paid contemporaneously
with distributions to Class 9 Creditors. Contemporaneously with
the final payment of the Bank's Allowed Secured Claim, the Bank
Group shall execute such releases and documents as the Debtors
may reasonably require to effectuate the release of all Bank
Group Secured Claims. The balance of the Bank Group claim, $35
million , shall be treated as an Allowed General Unsecured Claim
and shall be paid, satisfied and fully discharged in a manner
consistent with the treatment of General Unsecured Claims, more
particularly set forth in Paragraph 3.9 hereof. Each bank in The
Bank Group shall be entitled to vote separately on this Plan,
once as a Class 5 Creditor to the extent of its Secured Claim,
and once as a Class 9 Creditor to the extent of its Unsecured
Claim.
d. Default: In the event of the appointment of the
Creditor Management Committee, the Bank Group shall retain its
liens, to the same extent as such liens existed prior to the
Filing Date, on all of its remaining collateral and shall receive
such payment of its Secured Claims from the proceeds of the sale
of its collateral as may be thereafter determined by the
Bankruptcy Court subject to Paragraph 9.4.
3.6 Class 6 - Brenco and Douglas D. Brendle Secured Claims:
12
a. Classification: Class 6 shall consist of the
Allowed Secured Claims of Douglas D. Brendle and Brenco. The
Allowed Secured Claims of Douglas D. Brendle and Brenco arose in
connection with a loan restructuring in October 1991, wherein
these Creditors were required to make loans to the Debtors in the
amount of $1 million each (for a total credit extension of $2
million) on terms pari passu with the Bank Group as a condition
of the Bank Group extending further credit to BSI.
b. Impairment: Class 6 Claims are impaired.
c. Treatment: The Class 6 Claims, have essentially
the same attributes as the Allowed Secured Claim of the Bank
Group and will be treated similarly. Of the Bank Group's total
Claim, 31.37% or $16 million is treated as a Secured Claim with a
balance of $35 million being treated as unsecured. Consequently,
31.37% of the Douglas Brendle and Brenco Claim or $604,388.03
will be treated as secured and will be paid in full in cash
(less all amounts paid to the Class 6 Creditors on account of its
Secured Claims by the Debtors or by an agent of the Bank Group
subsequent to July 8, 1993). The balance of the Douglas D.
Brendle and Brenco Claims, $1,322,255.40 shall be treated as
General Unsecured Claims and shall be paid, satisfied and fully
discharged in a manner consistent with the treatment of General
Unsecured Claims, more particularly set forth in Paragraph 3.9
hereof. Douglas D. Brendle and Brenco shall be entitled to vote
separately on this Plan, once as Class 6 Creditors to the extent
of their Secured Claims, and once as Class 9 Creditors to the
extent of their Unsecured Claims.
d. Default: In the event of the appointment of the
Creditor Management Committee, Douglas D. Brendle and Brenco
shall retain their liens, to the same extent as such liens
existed prior to the Filing Date, on all of their remaining
collateral and shall receive payment of their Secured Claims from
the proceeds of the sale of their collateral as may be thereafter
determined by the Bankruptcy Court subject to Paragraph 9.4.
3.7 Class 7 - Other Secured Claims:
a. Classification: Class 7 shall consist of all
Allowed Secured Claims of Creditors other than Creditors in
Classes 4, 5 and 6.
b. Impairment: Class 7 Claims are not impaired.
c. Treatment: The Plan leaves unaltered any legal,
equitable or contractual rights which the other Secured Creditors
may be entitled in respect to their other Allowed Secured Claims.
3.8 Class 8 - Retiree Claimants:
a. Classification: Class 8 shall consist of the
Claims of Gladys C. Haynes, Jacob A. Schaffner and Dewey James
York, whose claims arose as a result of deferred compensation
agreements.
13
b. Impairment: Class 8 Claimants are impaired.
c. Treatment: The Reorganized Company shall bring
the contracts which form the basis of Class 8 Claims current on
the Effective Date and will assume the rights and obligations of
the Debtors under the contracts thereafter, provided however, in
the event of Default and the Creditor Management Committee is
appointed, the Creditor Management Committee shall have 90 days
following its appointment within which to assume or reject these
contracts. If the contracts are rejected, the Class 8 Creditors
shall be entitled to assert rejection claims and such claims
shall be determined by the Court as to validity, priority and
amount.
3.9 Class 9 - General Unsecured Claims:
a. Classification: Class 9 shall consist of the
Claims of General Unsecured Creditors.
b. Impairment: Class 9 Claims are impaired.
c. Treatment: The holder of an Allowed Unsecured
Claim may by Ballot elect to be treated under Class 10. All
other Allowed General Unsecured Claims shall be paid, satisfied
and fully discharged upon the delivery by the Reorganized Company
of the following:
1) A Share Certificate representing the
Claim-holder's pro rata share of a total
distribution to all Allowed General Unsecured
Claims of 35% of the issued and outstanding
common Stock of the Reorganized Company
computed as of the Effective Date; AND,
2) At the election of each Creditor, either cash
as provided in the Cash Option or a
Reorganization Note as provided in the Note
Option. An Election Form shall be transmitted
to General Unsecured Creditors with the ballot
and such Creditors shall affirmatively elect
either the Cash Option or the Note Option as
provided below. Creditors not making an
affirmative election shall conclusively be
deemed to have elected the Cash Option. The
Cash Option and the Note Option are as follows:
i. Cash Option: A cash payment equal to 52% of
the Creditor's Allowed General Unsecured
Claim; OR
ii. Note Option: A Reorganization Note in a
principal amount equal to 80% of the
Creditor's Allowed General Unsecured Claim.
The Reorganization Note, dated as of April
30, 1994, will bear interest
14
at the rate of 8% per annum and will be payable
over a ten (10) year term. For the first two
(2) years, the Reorganization Note will accrue
interest only and no payment will be made to
the Reorganization Note holders. At the end of
two (2) years, the principal amount of the
Reorganization Note, plus accrued, but unpaid
interest, shall be capitalized and during the
third year, interest on the capitalized
principal balance shall be paid semi-annually.
Thereafter, interest on the unpaid principal
balance shall be due and payable semi-annually.
Annual principal payments will be made at the
end of years four (4) through ten (10) in
amounts respectively, as follows: 11%, 12%,
13%, 14.1%, 15.3%, 16.6%, 18%. The
Reorganization Notes will be unsecured and will
have default provisions as follows:
(a) The Reorganization Note shall be in
default and subject to acceleration upon
non-payment of either principal or
interest on the dates such payments are
due ;
(b) The Reorganization Note shall be in
default and subject to acceleration if a
default occurs in any post-confirmation
financing which results in the
post-confirmation lender commencing
formal legal action against the
Reorganized Company and its property.
d. Trust Indenture: In the event the aggregate
principal amount of Reorganization Notes issued to Creditors
electing the Note Option is $5 million or less, the
Reorganization Note will not be issued under an indenture. In
the event the aggregate principal amount of Reorganization Notes
issued to Creditors is more than $5 million, but less than $10
million, such Notes will be issued under an indenture, but the
Company intends to rely on an exemption from the qualification
requirements of the Trust Indenture Act of 1939 and does not
intend to qualify the indenture under such Act. In the event the
aggregate principal amount of Reorganization Notes issued to
Creditors electing the Note Option exceeds $10 million and no
other exemption is available to the Company (and the Company is
unaware of any other such exemption) the Reorganization Notes
will be issued under an indenture which will be qualified under
the Trust Indenture Act.
e. Appointment of Directors: Class 9 Creditors,
acting through the Unsecured Creditors Committee and the Bank
Group shall be entitled to designate two directors to serve on
the Company's Board of Directors. These two directors shall
serve a one year term and shall be eligible to stand for re-
election upon a vote of all shareholders at the Company's next
annual meeting held in 1995.
f. Default: In the event of the appointment of the
Creditor Management Committee, Class 9 Creditors will receive no
stock, and payment of their claims will be made in accordance
with the priority of distribution of Estate Property set forth in
the Bankruptcy Code and pursuant to further orders of the
Bankruptcy Court. However, within thirty days following
15
Substantial Consummation, provided the DIP Facility has been paid
in full, the Reorganization Fund shall be distributed to Class 9
Creditors pro rata (in proportion to their Allowed Unsecured
Claims) with pro rata distribution to the Disputed Claims
Reserve, provided, however, in no event shall any portion of the
Reorganization Fund be distributed to Class 9 Creditors or any
other entity unless CIT shall have received indefeasible payment
in cash, in full of the CIT Administrative Claim and all other
claims of CIT based on all Obligations of Brendle's Stores, Inc.,
or the Reorganized Company to CIT or arising under or pursuant to
the CIT Revolving Credit Agreement, any other Loan Documents or
the DIP Order simultaneously with or prior to the release of any
portion of such fund. Subject to the foregoing, further
distributions will be made only pursuant to Court Order upon
motion of the Creditor Management Committee, in the manner as
provided in Paragraph 5.2 hereof.
3.10 Class 10 - Convenience Claims:
a. Classification: Class 10 Claims shall consist of
all Convenience Claims.
b. Impairment: Class 10 Claims are not impaired.
c. Treatment: Class 10 Claims shall be paid in full,
in cash on Substantial Consummation up to a maximum of $100.00.
3.11 Class 11 - Shareholders:
a. Classification: Class 11 shall consist of the
holders or owners of the stock of Brendle's Incorporated. As a
proponent of the Plan, Brendle's Incorporated is deemed to have
accepted the Plan on behalf of BSI.
b. Impairment: Class 11 Claims are impaired.
c. Treatment: The Class 11 Shareholders shall retain
their stock and shall be entitled to all the rights and
privileges of a shareholder, limited only to the extent provided
herein in Article X, and as otherwise affected in order to
implement this Plan.
ARTICLE IV
IMPLEMENTATION OF THE PLAN
4.1 Generally. The Plan is based on the premise that a
reorganization which provides both a substantial early cash
payment to Creditors and a viable reorganized business entity
well positioned for long-term growth is an achievable and
mutually advantageous conclusion to these Chapter 11 cases. This
Plan is designed to accomplish these goals by (i) distributing
35% of the stock in the Reorganized Company to General Unsecured
Creditors; (ii) giving General Unsecured Creditors the right to a
prompt 52% cash payment by selecting the cash option; and (iii)
creating are organized entity which possesses a strong capital
structure.
16
4.2 Funding Requirement. The Plan provides that in the
absence of a Default under Article V, on the Effective Date the
Reorganized Company will satisfy and fully discharge all
liabilities asserted against the Reorganized Company, exclusive
of Tax Claims, certain Secured Claims, the Reorganization Credit
Facility, and holders of Allowed General Unsecured Claims
selecting the Note Option. The amount of funds which must be
available in order for the Reorganized Company to pay its
obligations on the date of Substantial Consummation is dependent,
in part, upon the aggregate amount of Allowed Claims held by
Unsecured Creditors electing the Cash Option. The Company
believes and is fully confident that it will have the ability to
fund and consummate the Plan even if all Creditors elect the Cash
Option and no notes are issued. Additionally, the amount may be
influenced by Claims litigation and Administrative Expense Claims
of court appointed professionals. A more detailed analysis of
Claims and funding requirements is set forth in the Disclosure
Statement accompanying this Plan. However, a summary of Claims
and the amount of cash necessary to satisfy such Claim on the
Effective Date is as follows:
</TABLE>
<TABLE>
<S> <C>
Secured Claim of Bank Group - $16.0 million
(less net proceeds of
pre-consummation asset
liquidations)
Secured Claims of Douglas D. Brendle and Brenco - $0.6 million
CIT Super-priority Administrative Expense
and Secured Claim - Paid according to
terms
Other Secured Claims - Paid according to terms
Administrative Claims - $1.5 million
Unsecured Claims (assume $6.25 million of trade
creditors select Note Option) - $43.0 million
TOTAL $61.1 million
</TABLE>
4.3 Funding Sources. The sources of funds projected to be
available to the Debtors to fund their obligations under the Plan
are more particularly described in the Disclosure Statement
accompanying this Plan. However, generally they consist of the
following:
Reorganization Credit Facility $18.4 million
Reorganization Fund $19.4 million
Credit Card Escrow Funds - $ 1.8 million
Funds Realized from the Liquidation of Real
Estate and Real Estate Related Assets - $ 9.0 million
Excess Funds generated through business
Operations - $12.5 million
TOTAL $61.1 million
4.4 Reorganization Credit Facility. In order to fund
payments to Creditors under the Plan, the Company expects to
obtain a Reorganization Credit Facility from a lender pursuant to
which there must be borrowing availability of an amount
sufficient to fund payments to Creditors as required on the
Effective Date. The identity of the lender and the precise terms
of the Reorganization Credit Facility are not known at this time.
However, the Company is satisfied
17
that the lender will require a
lien on all assets of the Company and, further, the lender may
require the conveyance of equity. The Reorganization Credit
Facility shall be subject to orders entered by the Bankruptcy
Court in aid of Consummation of the Plan, as the Bankruptcy Court
deems necessary or appropriate to facilitate the establishment
and funding of the Reorganization Credit Facility. The
Reorganization Credit Facility shall not prime or impair any
secured or super-priority administrative claim, including without
limitation, the CIT Administrative Claim or any other CIT Claim.
4.5 Issuance of Additional Stock. Provided the Creditor
Management Committee has not been appointed, on the Effective
Date the Reorganized Company shall issue to an escrow agent
appointed by the Court, such escrow agent shall be selected by
the Unsecured Creditors Committee and shall receive compensation
from the Debtor as may be approved by the Court, at or prior to
Confirmation 4,463,456 shares of Stock of the Reorganized
Company or such other amount of shares as are necessary to
constitute 35% of the total issued and outstanding shares as of
the Effective Date (inclusive of the shares conveyed to the
escrow agent under this Paragraph). The escrow agent shall have
the right to vote the stock prior to distribution and shall have
such rights, powers, duties and indemnification as the Bankruptcy
Court might determine upon motion of any party in interest. Such
shares of stock shall be held by the escrow agent for the benefit
of the holders of General Unsecured Claims. Within sixty (60)
days following entry of a Final Order concluding all disputed
claims litigation, the shares issued to the escrow agent shall be
transferred to the holders of General Unsecured Claims, pro rata.
In connection with such transfer, the Reorganized Company
shall not be required to issue any fractional shares and the
fractional shares which would otherwise be issued shall be
rounded to the nearest whole number [including zero (0)].
4.6 Substantive Consolidation . Provided the Creditor
Management Committee has not been appointed, and provided CIT
shall have theretofore received indefeasible payment in cash, in
full, of the CIT Administrative Claim and all other Claims of CIT
based on all obligations of Brendle's Stores, Inc., or the
Reorganized Company to CIT or arising under or pursuant to the
CIT Revolving Credit Agreement, any other Loan Documents, or the
DIP Order, on the Effective Date and for purposes of the Chapter
11 cases and all actions with respect to the confirmation,
consummation and implementation of the Plan only, all assets and
liabilities of the Debtors will be Substantively Consolidated and
all Intercompany Claims by or against the Debtors will be
eliminated, all assets and liabilities of the Debtors will be
deemed to be merged, all cross-corporate guaranties of the
Debtors will be eliminated so that any Debtor and any guaranty
thereof executed by the other Debtor will be deemed to be one
obligation of the Debtors, and any Claim filed or to be filed in
connection with any such obligation and any such guaranty will be
deemed one Claim against the Debtors and treated, discharged, and
released in accordance with the Plan. This Substantive
Consolidation shall be given effect by the making of
distributions provided for in this Plan in respect to all Allowed
Claims against either of the Debtors. The Debtors may elect to
effectuate a merger of BSI and or other subsidiary corporations
into Brendle's Incorporated, as of the Effective Date, provided
CIT shall have theretofore received indefeasible payment in cash,
in full, of the CIT Administrative Claim and all other Claims of
CIT based on all obligations of Brendle's Stores, Inc., or the
Reorganized
18
Company to CIT or arising under or pursuant to the
CIT Revolving Credit Agreement, any other Loan Documents, or the
DIP Order, but such is not required under the terms of this Plan.
This provision shall not act to prejudice the rights of the
Debtors or their subsidiaries subsequent to the payment of cash
and delivery of stock to Creditors as provided herein.
4.7 Vesting of Property in Reorganized Company. Except as
otherwise provided in the Confirmation Order or in this Plan
with respect to CIT, Substantial Consummation of the Plan vests
all of the Estate Property in the Reorganized Company, provided,
however, in the event the Creditor Management Committee is
appointed pursuant to Article V, Estate Property shall not revest
and shall remain as Estate Property in the Debtors without
Substantive Consolidation, subject to the provisions of Sections
362, 363, 364 and other relevant sections of the Bankruptcy Code
to the same extent as prior to Confirmation.
ARTICLE V
DEFAULT PROVISIONS
5.1 Default. Occurrence of any of the following shall
constitute a Default under the Plan:
a. BSI fails to establish and fund on or before
January 15, 1994, 10.0 million dollars into an
interest bearing account at First Union National
Bank to be known as the Plan Reserve Account, the
balance of which must at all times be $10 million
or more after funding and prior to the earlier of
(i) distribution to Secured and Unsecured
Creditors of payments required by the Plan, or
(ii) April 30, 1994. The establishment of the
Plan Reserve Account shall not affect or impair
the rights of CIT under the DIP Facility and the
funds in the Plan Reserve Account shall be
expressly subject to CIT's senior super-priority
Administrative Expense Claim and lien and security
interest as required by the CIT Revolving Credit
Agreement. Neither First Union National Bank nor
any other bank at which the Plan Reserve Account
is maintained shall have any rights of setoff or
recoupment with respect to the Plan Reserve
Account.
b. BSI fails to achieve at least 90% of its annual
sales revenues as projected in its Business Plan
revised as of May 12, 1993, for the fiscal year
ending January 29, 1994. An unaudited report of
the year-end sales shall be furnished to the Bank
Group and the Unsecured Creditors Committee by
February 10, 1994.
c. A Default occurs under the DIP Facility which is
not cured and which results in CIT's termination
of the DIP Facility.
d. BSI fails to achieve Cumulative FIFO EBITDA (as
defined on Page 6 in the CIT DIP Loan Agreement)
in at least the amounts specified opposite each
19
specific date below:
Period Ending FIFO EBITDA
January 29, 1994 $4,250,000
February 28, 1994 $3,150,000
March 26, 1994 $2,050,000
e. BSI permits aggregate Inventory (valued at Book
Value) at the end of each month to be more than
the amount specified opposite such month specified
below:
Fiscal Month Maximum Amount
January 29, 1994 $ 64,050,000
February 28, 1994 $ 62,050,500
March 26, 1994 $ 61,320,000
f. The Debtors' fail to make such distributions to
Secured and Unsecured Creditors as are required by
the Plan on or before April 30, 1994.
g. The Debtors, or either of them, shall propose a
modification to the Plan which adversely changes
the treatment of the Claim of any Creditor other
than Class 8 Retiree Claimants or the Interest of
any equity security holder who has not accepted in
writing such modification or proposed treatment.
5.2 Creditor Management Committee: Upon the occurrence of
a Default, as defined above, a Creditor Management
Committee ("CMC"), as hereinafter constituted, shall be
appointed by ex parte Order of the Bankruptcy Court at
the request of either the Bank Group or Unsecured
Creditors' Committee, without notice or hearing, and
Debtors do hereby consent, as proponents of the Plan,
to entry of same. From and upon the appointment of the
Creditor Management Committee, the CMC shall be bound
by the terms, conditions and provisions of the CIT
Revolving Credit Agreement and the DIP Order in their
entirety. The rights, remedies, and privileges of CIT
under the CIT Revolving Credit Agreement or the DIP
Order shall not be affected or impaired in any way by
the CMC or any actions taken by such CMC, and all such
rights, remedies and privileges shall exist to the same
extent as before the appointment of the CMC, and in the
event of a conflict, shall prevail over any action
proposed to be taken or taken by the CMC.
5.2.1 Composition: The CMC shall be comprised of seven
members to be appointed as follows: Three by the
Bank Group, three by the Unsecured Creditors'
Committee, and one independent member appointed
jointly by the Bank Group and the Unsecured
Creditors' Committee, who will have a vote only if
necessary
20
to break a deadlock on business issues and
effect a majority vote. Otherwise, all decisions of
the CMC shall be determined by majority vote of the
six members. All members of the CMC shall be
designated at or prior to confirmation of the Plan
and the independent member shall thereafter be
retained by the Debtors, compensated by the Debtors,
and provided information by the Debtors as and when
provided to the Bank Group and the Unsecured
Creditors' Committee. The independent member shall
have no management responsibility until such time as
the CMC shall have been appointed.
5.2.2. Duties/Responsibilities: Subject to Paragraph 9.4
hereof, the charge of the CMC shall be to maximize
asset values for the benefit of Creditors of both
Estates. To that end, subject to the requirements
and procedures of the Bankruptcy Code and Federal
Rules of Bankruptcy Procedure, the CMC shall be
vested with all rights and powers of a Trustee
appointed under Section 1104 (including the right to
employ professionals to be compensated from Estate
Property) and shall have general authority to
operate the Debtors for the benefit of Creditors of
the estates, including authority, after notice and
opportunity for hearing (to include no protest
notice), to assume or reject unexpired leases and
executory contracts, to sell all or part of the
assets of the Debtors, to object to the extent and
validity of Claims, to litigate disputed issues, and
to supervise the collection and distribution of the
assets of the Debtors in accordance with the
priority and distribution scheme set forth in the
Bankruptcy Code. The foregoing notwithstanding, the
CMC shall have no duty to resolve disputes between
the Bank Group and the Unsecured Creditors Committee
as described in Paragraph 9.4 hereof, which disputes
shall be determined by the Bankruptcy Court.
Further, the Bank Group shall not be entitled to
seek relief from the automatic stay provisions of 11
U.S.C. (section mark)362 in order to foreclose on its
collateral
for a period of 90 days following the appointment of
the CMC. Except as provided in Section 3.9 f with
regard to distribution of the Reorganization Fund,
the CMC, after notice and an opportunity for
hearing, shall have authority to make interim
distributions to Creditors provided it makes pro
rata distributions to the Disputed Claims Reserve.
The CMC shall not replace the Boards of Directors of
the Debtors
21
but shall, to the extent necessary to carry out its
charge, supersede the functions and authority of the
said Boards in order to maximize asset value for the
Creditors of the Debtors. Consequently, the CMC is
authorized to take action normally reserved by
applicable law to the boards of directors of
corporations if, in the exercise of its reasonable
business judgment, it deems the action necessary to
carry out its charge. The Boards of Directors of the
Debtors shall first be given an opportunity to take
such action by written request to do so. Failure to
take any such action within three business days after
written request shall constitute refusal and, in such
event, the CMC shall be deemed to have authority to
take the action in the name of Debtors. Upon payment
of the Creditors' Claims in full, or liquidation and
distribution of all available assets of the Debtors to
Creditors as provided by the Bankruptcy Code, the CMC
shall be deemed to have completed its charge. At such
time, it shall file with the Clerk of the U. S. Bank-
ruptcy Court a final report of its activities,
including an accounting of all transactions and
distributions made. All members of the CMC shall be
entitled to reimbursement for their reasonable costs
and expenses in serving on the CMC, and the independent
member shall be entitled to reasonable compensation for
his service thereon, all to be paid from Estate
Property.
5.2.3. Liability of CMC: Neither the CMC, nor its agents
or attorneys, will be liable for any act or
omission, or for any error of judgment or mistake of
fact or law, unless such act, omission, or mistake
shall occur as a result of bad faith, gross
negligence, or willful or wanton disregard of the
Debtors or their Creditors, and all of them shall be
indemnified jointly and severally by the Debtors
against any Claim, demand or cause of action not
herein excluded, including costs of defense, arising
out of their service on or to the CMC. Such
indemnity claim shall be entitled to priority in
payment equivalent to a claim under Section 507(b).
Under no circumstance shall the CMC, its agents or
attorneys, have any fiduciary duty, liability, or
responsibility to the shareholders of the Debtors;
and acceptance of the Plan by Class 11
(Shareholders) and Brendle's Incorporated shall
constitute acknowledgment and agreement to such
limitation of liability and further acknowledgment
of the limited charge of the CMC created and
appointed pursuant to the Plan. Notwithstanding the
foregoing, under no circumstances shall the CMC, its
agents or attorneys, be liable for any action taken
or omission, provided the same shall have been
authorized pursuant to Order of the Bankruptcy
Court.
ARTICLE VI
ACCEPTANCE OR REJECTION OF PLAN:
6.1 Separate Voting. Each Impaired Class of Claims or
Interests shall be entitled to vote separately as a Class to
accept or reject the Plan.
22
6.2 Acceptance by Classes. Consistent with Section 1126(c)
and except as provided in Section 1126(e), a Class of Claims
shall have accepted the Plan if the Plan is accepted by the
holders of at least two-thirds (2/3) in dollar amount and more
than one-half (1/2) in number of the Claims of that Class that
have timely and properly voted to accept or reject the Plan as
permitted by the Bankruptcy Code and Paragraph 6.3 hereof.
Pursuant to Section 1126(d), Class 11 shareholders shall have
accepted the Plan if the Plan has been accepted by at least 2/3
in number of the shares that have timely and properly voted to
accept or reject the Plan.
6.3 Persons Entitled to Vote. Holders of impaired claims
shall be entitled to vote if:
a. Such Claim has been filed against the Debtors in a
liquidated amount regardless of whether the Claim is the subject
of an existing objection filed by the Debtors. The Claim shall
be allowed solely for the purpose of voting on the Plan in the
amount in which the claim has been filed or in such other amount
as may be agreed upon by the holder of such Claim and the
Debtors;
b. Such Claim has been listed on either of the
Debtors' schedules other than as contingent, unliquidated or
disputed, and as to which no proof of claim has been filed, such
Claim shall be allowed, solely for the purpose of voting the Plan
in the amount in which such Claim has been listed on the Debtors'
schedules or as may be agreed upon by the holder of such claim
and the Debtors;
c. Such Claim has been filed in an undetermined
amount, in which case the Creditor shall not be entitled to vote
unless the Debtors and the holder of the Claim agree on an amount
for voting purposes or the Court enters an order setting the
amount of the Claim that the Creditor may ballot; or,
d. Such Claim has been adjusted or reconciled for
reclamation settlements, stock balance and return for damaged
goods and advertising credits in which case it shall be allowed
for voting purposes in a reduced amount consistent with such
reconciliation after full adjustment. In the event of a dispute
over the remaining portion of the Clam, sub-Paragraph (a) of this
Paragraph 6.3 shall control.
e. Any entity holding a duplicate Claim against more
than one Debtor shall vote one Claim.
ARTICLE VII
23
PROVISIONS CONCERNING DISTRIBUTIONS
7.1 Distribution Date. It is the intent of this Plan that
the distributions in accordance with Paragraphs 3.5(c), 3.6(c),
3.9(c) and 4.5 shall occur as early as practicable following
Confirmation as provided below. In the event of the appointment
of the CMC, distributions shall be made in accordance with the
priorities and distribution scheme provided in the Bankruptcy
Code and, except for the distribution of the Reorganization Fund
in accordance with Paragraph 3.9(f) only, pursuant to orders of
the Court. Notwithstanding anything in the foregoing to the
contrary, prior to any distributions made by the CMC, CIT shall
have received indefeasible payment in cash, in full of the CIT
Administrative Claim and all other claims of CIT.
a. Cash Distribution: Provided the CMC has not been
appointed, the cash payments to Creditors in Classes 5, 6 and 9
shall occur on or before April 30, 1994.
b. Stock Distributions: Provided the CMC has not
been appointed, the stock distribution shall be made as provided
in Paragraph 4.5 hereof.
c. Note Distributions: Provided the CMC has not been
appointed, and provided further that the Company is not required
to issue the Reorganization Notes under a qualified indenture
pursuant to the Trust Indenture Act of 1939, the Notes shall be
issued and distributed contemporaneously with the cash
distribution to Creditors in Classes 5, 6 and 9. In the event it
become necessary for the Company to issue the Notes under a
qualified indenture, under the Trust Indenture Act, the Notes
shall be issued at the later of (i) the Effective Date or (ii)
within ten days of the date the indenture is qualified.
7.2 Undeliverable Distributions. If the Reorganized
Company is unable to make a payment or distribution to the holder
of an Allowed Claim under the Plan for lack of a current address
for the holder or otherwise, it shall file with the Bankruptcy
Court, the name and, if known, the last known address of the
holder and the reason for inability to make payment, and if,
after the passage of thirty (30) days and after any additional
effort to locate the holder that the Bankruptcy Court may direct,
the payment or distribution still cannot be made, the payment or
distribution and any further payment or distribution to the
holder shall be retained by the Reorganized Company and the Claim
shall be deemed satisfied to the same extent as if payment or
distribution had been made to the holder of a Claim or interest.
24
ARTICLE VIII
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
8.1 Assumption and Rejection. Provided the CMC has not
been appointed, on the Effective Date all executory contracts
and unexpired leases ("executory contracts") of the Debtors and
the Reorganized Company which either (i) have not been assumed or
rejected pursuant to Order of the Court prior to the Effective
Date, or (ii) are not the subject of a pending motion to assume
or reject filed with the Bankruptcy Court on or before the
Effective Date, shall be assumed by the Debtors and the
Reorganized Company pursuant to Section 1123(b)(2) without
further order of the Bankruptcy Court. Any payment to cure
defaults that may be required by Section 365(b)(1) shall be made
in cash on the Effective Date or, in the case of executory
contracts subject to a pending motion, at such other time as the
Court may order. Payments to cure defaults shall be made to the
entity that filed a proof of Claim or, if no proof of Claim was
filed, to the entity that was scheduled, unless proof of transfer
of the Claim has been filed in accordance with Bankruptcy Rule
3001(e)(1) or 3001(e)(2). In the event of a dispute regarding
the amount of the payment required to cure defaults or the
ability of the Debtors to provide adequate assurance of future
performance, or in the event of a dispute concerning the
interpretation or construction of any provision in any assumed
executory contract, the Debtors will make such payment as is
required by, or otherwise abide by a Final Order resolving the
dispute. All executory contracts which have been assumed by the
Debtors pursuant to Orders entered in this Chapter 11 case prior
to Effective Date shall be unaffected by this Plan. In the event
the CMC has been appointed, the CMC shall have 90 days following
the date of its appointment to file motions with the Bankruptcy
Court seeking the assumption or rejection of executory contracts
and unexpired leases. Thereafter, all executory contracts and
unexpired leases which have not been assumed and which are not
subject to a motion to assume filed within such 90 day period
shall be deemed rejected. Timely payments shall continue
pursuant to executory contracts and unexpired leases until
rejected or assumed. Claims arising pursuant to assumption or
rejection shall be determined and allowed as provided by the
Bankruptcy Code and this Plan.
8.2 Bar to Rejection Damages. A Claim for damages against
the Debtors, or either of them, arising from the rejection of
any executory contract or unexpired lease pursuant to this
Article VIII shall be forever barred and shall not be enforceable
against the Debtors or the Reorganized Company or their
respective property or interests in property and no holder of any
such Claim shall participate in any distribution under the Plan
with respect to that Claim unless a proof of Claim is served on
the Debtors or Reorganized Company and filed with the Bankruptcy
Court before sixty days after the Effective Date, unless the
Bankruptcy Court has ordered otherwise.
25
ARTICLE IX
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
9.1 Objections to Claims. Subject to further order of the
Bankruptcy Court, objections to Claims (including, but not
limited to, any Claim arising from or relating to the rejection
of any executory contract or unexpired lease pursuant to
Paragraph 8.1 or otherwise) shall be filed with the Bankruptcy
Court and mailed to the holder of the Claim to which objection is
made not later than thirty (30) days following the Effective Date
or sixty (60) days after a proof of the Claim is filed, whichever
is later.
9.2 Payments and Distributions with respect to Disputed
Claims. On the Effective Date, the Company shall make a payment
or distribution with respect to the undisputed portion of a
Disputed Claim, which undisputed portion shall be entitled to
distribution as an Allowed Claim. No payment shall be made by
the Company with respect to the disputed portion of a Disputed
Claim until the same becomes an Allowed Claim. Pending the final
resolution of the disputed portion of a Disputed Claim, the
Company shall either (i) reserve and specifically segregate for
the payment of the disputed portion of such Disputed Claim,
availability under the Company's post-confirmation revolving
credit facility, or (ii) deposit in an interest bearing escrow
account funds sufficient for the payment of such Disputed Claim.
9.3 Timing of Payments and Distributions with respect to
Disputed Claims. Subject to any contrary provision of the Plan,
such as Paragraph 4.4, payments and distributions with respect to
each Disputed Claim (other than the undisputed portion of a
Disputed Claim which shall be entitled to receive a distribution
on the Effective Date as an Allowed Claim) that becomes an
Allowed Claim shall be made within twenty (20) Business Days
after the date that the Disputed Claim becomes an Allowed Claim.
Except as otherwise specifically provided in this Article IX,
holders of Disputed Claims that become Allowed Claims shall be
bound, obligated and governed in all respects by the provisions
of the Plan.
9.4 Retention and Enforcement of Rights. Pursuant to
Section 1123(b)(3) the Reorganized Company or, if applicable, the
CMC, as the representative of the Debtors' Estates, will retain
and will have the exclusive right (except as provided in
Paragraph 10.4 and 10.5) to enforce against any entity any and
all Causes of Action, Claims and rights of the Debtors that arose
either before or after the Filing Date, including the rights and
powers of a trustee and debtor in possession and all Bankruptcy
Causes of Action. If the CMC has been appointed, the Unsecured
Creditors Committee shall have the sole right, power, and
authority to prosecute any objection it shall deem appropriate to
the Bank Group Claim (including the Secured Claims of Brenco and
Douglas D. Brendle), including, without limitation, objections
relating to the validity, priority and secured status of the Bank
Group Claim. In the event the CMC is appointed, the CMC will
retain the right to object to Claims after the Confirmation Date
other than the Bank Group Claims, Claims allowed prior to
Confirmation or Claims allowed pursuant to this Plan in order to
have the Bankruptcy Court determine the amount and treatment
of any Claim. In the event
26
the CMC is not appointed, the Debtors, and after the Effective
Date, the Reorganized Company, will retain the right to object to
Claims after the Confirmation Date, other than Claims allowed
prior to Confirmation or pursuant to this Plan in order to have
the Bankruptcy Court determine the amount and treatment of any
Claim.
ARTICLE X
RELEASES, TERMINATIONS AND SETTLEMENTS OF CLAIMS
10.1 Discharge and Release by Holders of Claims and
Interests. Provided no Creditor Management Committee has been
appointed and except for the obligations imposed by the Plan, and
except as otherwise provided in this Plan with respect to CIT,
and all claims of CIT, including the CIT Administrative Claim
against Brendle's Stores, Inc., or the Reorganized Company, all
liens and security interests of CIT on assets and property of
Brendle's Stores, Inc., or the Reorganized Company, and all
liabilities and obligations of Brendle's Stores, Inc. or the
Reorganized Company to CIT, effective as of the Effective Date,
the distributions and rights that are provided in the Plan shall
be in complete satisfaction, discharge, and release of (i) all
Claims against, liabilities of, liens on, obligations of, and
interests in the Debtors or Reorganized Company and the assets
and properties of the Debtors or Reorganized Company, whether
known or unknown, and (ii) all Causes of Action, whether known or
unknown, either directly or derivatively through the Debtors or
Reorganized Company, against successors and assigns of the
Debtors, affiliates of the Debtors, and present and former
stockholders, directors, officers, agents, attorneys, advisors,
financial advisors, investment bankers, and employees of the
Debtors based on the same subject matter as any Claim or
Interest. In no event shall the claims of CIT, including the CIT
Administrative Claim, against Brendle's Stores, Inc., or the
Reorganized Company, or the liens and security interests of CIT
on the assets and properties of Brendle's Stores, Inc., or the
Reorganized Company, or the liabilities or obligations of
Brendle's Stores, Inc. or the Reorganized Company, be satisfied,
released or discharged, nor shall the provisions of the Loan
Documents or the DIP Order be canceled or terminated unless and
until the time when CIT shall have received indefeasible payment
in Cash in full of the CIT Administrative Claim (except as
otherwise agreed by Brendle's Stores, Inc., and CIT with respect
to the CIT Letter of Credit Administrative Claim as contemplated
by Section 3.2 (iii) and (iv) hereof) and all other claims of CIT
based on all Obligations of Brendle's Stores, Inc., to CIT or
arising under or pursuant to the CIT Revolving Credit Agreement,
any other Loan Documents or the DIP Order.
The discharge and release provided herein shall be
effective in each case as of the Effective Date regardless of
whether a proof of Claim or interest was filed, whether or not
Allowed, or based on any act or omission, transaction or other
activity or security instrument or other agreement of any kind or
nature occurring, arising or existing prior to the Effective
Date, that was or could have been the subject of any Claim or
Interest, in each case regardless of whether a proof of Claim or
interest was filed, whether or not Allowed or whether or not the
holder of the Claim or Interest has voted on the Plan.
Furthermore, but in no way limiting the generality of the
foregoing, except for the obligations imposed by the Plan and
except as
27
otherwise provided in the Plan with reference to CIT,
any entity accepting any distribution or retaining any Interest
pursuant to the Plan shall be presumed conclusively to have
released the Debtors and Reorganized Company, successors and
assigns of the Debtors, affiliates of the Debtors, present and
former stockholders, directors, officers, agents, attorneys,
advisors, financial advisors, investment bankers, and employees
of the Debtors, and any entity claimed to be liable derivatively
through any of the foregoing, from any Cause of Action based on
the same subject matter as the Claim or Interest on which the
distribution is received. This release shall be enforceable as a
matter of contract against any entity that accepts any
distribution pursuant to the Plan. The provisions of this
Paragraph 10.1 are subject to deletion, in whole or in part, by
the Debtors or the Court at or prior to Confirmation if such
provisions, in the opinion of the Debtors or the Court,
constitute an impediment to Confirmation. Any such deletion
shall be contained in the Confirmation Order.
10.2 Termination of Guaranties and Claims of Subordination.
The classification of and the manner of satisfying, all Claims
under the Plan take into consideration the possible existence of
any alleged guaranty by either Debtor of obligations of any
entity or entities, including the other Debtor, and that the
Debtors may be joint obligor(s) with another entity or entities
with respect to the same obligation, as well as any contention by
Creditors or holders of Interests that the Claims of other
Creditors or other holders of Interests may be subordinated to
their Claims or Interests by contract or by the certificates or
articles of incorporation or by-laws of one or more of the
Debtors. Upon Substantial Consummation achieved by the cash
distributions required by Paragraphs 3.5(c), 3.6(c) and 3.9(c),
all Claims against the Debtors based upon or having any benefit
of any such guaranty, joint liability, or subordination shall be
satisfied, discharged and released in the manner provided in the
Plan, and Creditors shall be entitled to only one distribution,
and no duplicative or multiple recovery, with respect to any
underlying obligation of the Debtors.
Except as otherwise provided in the Plan and to the
fullest extent permitted by applicable law, all Claims against
and interests in the Debtors, and all rights and Claims between
or among Creditors or holders of Interests relating in any manner
whatsoever to Claims against or interests in the Debtors, based
on any contractual, legal or equitable subordination rights,
shall be terminated on the Effective Date and discharged in the
manner provided in the Plan, and all such Claims, Interests and
rights so based and all such contractual, legal and equitable
subordination rights to which any entity may be entitled shall be
irrevocably waived by the acceptance by such entity (or the Class
of which such entity is a member) of the Plan or of any
distribution pursuant to the Plan.
Except as otherwise provided by the Plan, pursuant to
Bankruptcy Rule 9019 and any applicable state law and as
consideration for the distributions and other benefits provided
under the Plan, the provisions of this Paragraph 10.2 shall
constitute a good faith compromise and settlement of any causes
of action or controversies relating to the matters described in
this Paragraph 10.2 which could be brought by any holder of a
Claim or Interest against or involving another holder of a Claim
or Interest or other released entity, which compromise and
settlement is in the best interests of Creditors and is fair,
equitable and reasonable. This settlement shall
28
be approved by
the Bankruptcy Court as a settlement of all such Causes of Action
and controversies. The Bankruptcy Court's approval of this Plan
shall constitute an approval of this settlement pursuant to
Bankruptcy Rule 9019 and shall constitute a finding that this is
a good faith settlement pursuant to any applicable state law,
given and made after due notice and opportunity for hearing, and
shall bar any such cause of action by any holder of a Claim or
Interest against or involving another holder of a Claim or
Interest or other Released Entity. The provisions of this
Paragraph 10.2 are subject to deletion, in whole or in part, by
the Debtors or the Court at or prior to Confirmation if such
provisions, in the opinion of the Debtors or the Court,
constitute an impediment to Confirmation. Any such deletion
shall be contained in the Confirmation Order.
10.3 Survival of Indemnification Obligations. Upon
Substantial Consummation, notwithstanding anything to the
contrary contained in this Plan, the obligations of each of the
Debtors to indemnify the present or former directors, officers,
agents, employees and representatives pursuant to their
respective certificates of incorporation, by-laws, contractual
obligations or any applicable laws in respect of all past,
present and future actions, suits and proceedings against any of
such directors, officers, agents, employees and representatives
based upon any act or omission related to service with, for or on
behalf of any of the Debtors shall not be discharged or impaired
by confirmation or consummation of this Plan, but shall survive
unaffected by the reorganization contemplated by this Plan and
shall be performed and honored in full. The provisions of this
Paragraph 10.3 are subject to deletion, in whole or in part, by
the Debtors or the Court at or prior to Confirmation if such
provisions, in the opinion of the Debtors or the Court,
constitute an impediment to Confirmation. Any such deletion
shall be contained in the Confirmation Order.
10.4 Preferences. Upon Substantial Consummation achieved by
the cash distributions required by Paragraphs 3.5(c), 3.6(c) and
3.9(c), all preference actions that the Debtors or Reorganized
Company have commenced or could have commenced pursuant to
Section 547, and all rights to withhold any distribution on
account of the receipt of any payment that is recoverable under
Section 547 shall be deemed waived irrevocably. In the event the
CMC is appointed, there shall be no waiver of preference claims.
10.5 Bank Group Release. Upon Substantial Consummation, in
consideration of the settlements made by the Bank Group upon its
Claims and other good and sufficient consideration, the Debtors,
their successors and assigns, and each of their agents, officers,
directors, shareholders and all those claiming through the
Debtors will be deemed to have released, quitclaimed, and forever
discharged the Bank Group, and each of its agents, officers,
directors, shareholders, representatives, successors and assigns,
from any and all actions, causes of action, demands, debts,
contracts, agreements, accounts, liabilities, obligations, costs,
expenses, fees, damages, claims, demands, and anything else
whatsoever, at law or in equity, whether known or unknown,
whether for tort, lender liability, contract, fraud or otherwise,
which any of the Debtors ever had, now has, or may in the future
have against any member of the Bank Group arising from or
relating to negotiations and documentation of the transaction
giving rise to the Bank Group's Claim and management and
collection thereof by the Bank Group or its agents or
29
employees,
to and through the Effective Date. In the event the CMC is
appointed, there shall be no release of the Bank Group (including
Douglas D. Brendle and Brenco) and the Unsecured Creditors
Committee shall have the right, power and authority to assert and
enforce any and all Causes of Action against the Bank Group
(including Douglas D. Brendle and Brenco), if any, that arose
either before or after the filing date including all Bankruptcy
Causes of Action.
ARTICLE XI
EFFECTUATION AND SUPERVISION OF PLAN
11.1 Retention of Jurisdiction. The business and assets of
the Debtors shall remain subject to the jurisdiction of the
Bankruptcy Court until the Effective Date and the Court shall
retain jurisdiction to approve and issue all orders which the
Court deems necessary or appropriate with respect to the
Reorganization Credit Facility. Provided the CMC has not been
appointed, from and after the Effective Date, until the closing
of the Chapter 11 cases by the Bankruptcy Court pursuant to
Section 350(a) and Bankruptcy Rule 3022, the Bankruptcy Court
shall retain jurisdiction over the Reorganized Company and the
Chapter 11 cases for purposes of determining all disputes and
other issues presented by or arising under the Plan, including,
without limitation, jurisdiction (a) to determine any and all
disputes relating to Claims in the allowance and amount thereof,
(b) to determine any and all disputes among Creditors with
respect to their Claims, (c) to consider and allow any and all
applications for compensation for professional services rendered
and disbursements incurred in connection therewith, (d) to
determine any and all applications, motions, adversary
proceedings, any contested or litigated matters pending on the
Effective Date and arising and/or relating to the Chapter 11
cases or the Plan, (e) to confirm the Plan as Modified pursuant
to Section 1127(b) or to remedy any defect or omission or
reconcile any inconsistency in the Confirmation Order, (f) to
enforce the provisions of the Plan relating to the distributions
to be made hereunder, (g) to issue such orders, consistent with
Section 1142, as may be necessary to effectuate consummation and
full and complete implementation of the Plan, including, without
limitation, appropriate orders to protect the Reorganized Company
against actions taken by holders of Claims or interests, (j) to
determine any Bankruptcy Causes of Action not compromised or
released by the Plan, (k) to determine the final amounts
allowable as compensation or reimbursement of expenses pursuant
to Section 503(b), and (l) to resolve any dispute after the
Effective Date relating to any bills submitted by any
professional employed pursuant to Order of the Bankruptcy Court.
In the event the CMC has been appointed, the Bankruptcy Court
shall maintain power, authority and jurisdiction over the Debtors
and Estate Property to the same extent as prior to Confirmation
(except as otherwise provided in this Plan) to hear and determine
claims or interests, proceedings, and any disputes arising in or
related to the priorities in and distribution of the assets or
property of the estates to the holders of claims or interests, as
provided by and in accordance with the Bankruptcy Code. Except
as provided in the Plan
30
regarding the Reorganization Fund, distributions by the CMC shall
be in accordance with the priorities of the Bankruptcy Code and
pursuant to Court Order.
11.2 Unsecured Creditors Committee. Ninety days following
Substantial Consummation, or such other date as the Court
directs, the Unsecured Creditors Committee shall cease to exist
and its members and employees or agents (including, without
limitation, attorneys, financial advisors, accountants, and other
professionals) shall be released and discharged from all further
authority, duties, responsibilities, and obligations relating to
and arising from and in connection with these Chapter 11 cases.
Additionally, the Unsecured Creditors Committee, the respective
present or former members thereof and the respective employees or
agents (including, without limitation, attorneys, financial
advisors, accountants, and other professions) thereof shall not
have or incur any liability to the Debtors, the Reorganized
Company, any Creditor, holder of an interest, other party in
interest or any other entity for any act or omission, whether
known or unknown, arising out of or relating to the Chapter 11
cases or the Debtors except for gross negligence or willful
misconduct, and, in all respects, they shall be entitled to rely
upon the advice of counsel with respect to their duties and
responsibilities and shall be deemed to have acted in good faith
and so relying. In the event the CMC is appointed, the Unsecured
Creditors Committee shall continue in existence for the limited
purpose of resolving disputes between the Bank Group and the
Unsecured Creditors Committee as described in Paragraphs 5.2.2,
9.4, and 10.5 and it shall cease to exist upon the termination
and discharge of the CMC or such other time as the Court may deem
appropriate.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Compliance with Tax Requirements. In connection with
the Plan, the Debtors and Reorganized Company will comply with
all withholding and reporting requirements imposed by federal,
state and local taxing authorities, and all distributions
hereunder shall be subject to such withholding and reporting
requirements.
12.2 Binding Effect of Plan. The provisions of this Plan
shall be binding upon and inure to the benefit of the Reorganized
Company, any entity affected by this plan and their respective
predecessors, successors, assigns, agents, officers and
directors.
12.3 Non-voting Stock. In accordance with Section
1123(a)(6), the Certificates of Incorporation of the Reorganized
Company shall contain a provision prohibiting the issuance of
non-voting equity securities by the Reorganized Company for a
period of one (1) year following the Consummation Date.
12.4 Authorization of Corporate Action. The entry of a
Confirmation Order shall constitute a direction and authorization
to and of the Debtors and the Reorganized Company to take or
cause to be taken any corporate action necessary or appropriate
to consummate the provisions of this Plan prior to and through
Substantial Consummation (including, without
31
limitation, taking
such action as may be necessary or appropriate to provide for the
funding necessary to retire Creditor Claims as provided herein).
12.5 Modification of this Plan. Except as provided above
as a basis of Default, the Debtors and the Reorganized Company
reserve their rights to modify this Plan in accordance with
Section 1127.
12.6 Captions. Article and Paragraph captions used in this
Plan are for convenience only and will not affect the
construction of this Plan.
12.7 Method of Notice. All notices required to be given
under this Plan, if any, shall be in writing and shall be sent by
first class mail, postage prepaid, or by overnight courier:
If to the Debtors, to:
Brendle's Stores, Inc.
1919 N. Bridge Street Extension
Elkin, NC 28621
Attn: David Renegar
with copies to:
Allman Spry Humphreys & Leggett, P.A.
380 Knollwood Street, Suite 700
Winston-Salem, NC 27103-4152
Attn: R. Bradford Leggett
Any of the above may, from time to time, change its address for
future notices and other communications hereunder by filing a
notice of the change of address with the Bankruptcy Court. Any
and all notices given under this Plan shall be effective when
received.
12.8 Reservation. If the Plan is not confirmed by the
Bankruptcy Court for any reason, the rights of all parties in
interest in the Chapter 11 Cases will be reserved in full.
Furthermore, any concession reflected herein is made for purposes
of the Plan only, and if the Plan does not become effective, no
party in interest in the Chapter 11 Cases shall be bound or
deemed prejudiced by any such concession, including a vote which
accepts the Plan. Nothing contained in the Plan waives or shall
be deemed to waive any rights of any holder of an Allowed Claim
in the classes represented by any supporter of the Plan to object
to any provisions of the Plan, all such rights being expressly
reserved.
12.9 Savings Clause. If any clause or provision of this
Plan is determined by the Bankruptcy Court to be improper or
ineffective, the Plan, at the request of the Debtors, may be
confirmed without that clause or provision.
32
Respectfully submitted this the 10th day of November,
1993.
BRENDLE'S INCORPORATED
By: S/ Douglas D. Brendle
Douglas D. Brendle, Chairman and
Chief Executive Officer
BRENDLE'S STORES, INC.
By: S/ Douglas D. Brendle
Douglas D. Brendle, Chairman and
Chief Executive Officer
S/ R. Bradford Leggett
R. Bradford Leggett, State Bar No. 2697
C. Edwin Allman, III, State Bar No. 8625
Catharine R. Carruthers, State Bar No. 9572
M. Joseph Allman, State Bar No. 13395
ALLMAN SPRY HUMPHREYS & LEGGETT, P.A.
380 Knollwood Street, Suite 700
Post Office Drawer 5129
Winston-Salem, NC 27113-5129
Telephone: (919) 722-2300
Attorneys for the Debtors
33
