EXHIBIT 2.1
Susan B. Hersh
SUSAN B. HERSH P.C.
12900 Preston Road
Suite 900
Dallas, Texas 75230
Ph. (972) 503-7070
Fax (972) 503-7077
Eric A. Liepins
ERIC A. LIEPINS, P.C.
12900 Preston Road
Suite 900
Dallas, Texas 75230
Ph. (972) 991-5591
Fax (972) 503-4034
ATTORNEYS FOR DEBTOR
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
IN RE: [S]
[S]
AMERICAN HEALTHCHOICE, INC. [S] CASE NO.99-37314-HCA-11
[S] Chapter 11
DEBTOR [S]
________________________________________________________________________
AHC PHYSICIANS CORPORATION [S] CASE NO. 99-37315-RCM-11
[S] Jointly Administered under
[S] Case No. 99-37314-HCA-11
DEBTOR [S]
DEBTORS AMERICAN HEALTHCHOICE, INC AND AHC PHYSICIANS CORPORATION AMENDED
JOINT PLAN OF REORGANIZATION
DATED MARCH 31, 2000
TO: ALL PARTIES-IN-INTEREST, THEIR ATTORNEYS OF RECORD AND TO THE HONORABLE
UNITED STATES BANKRUPTCY JUDGE:
COME NOW, American HealthChoice, Inc. and AHC Physicians Inc., Debtors
and Debtors-in-Possession in the above-referenced bankruptcy cases, and
proposes the following Plan of Reorganization ("Plan"). The Plan proposes
segregation of the Creditors and Equity Interest Holders of the Debtor into
ten (10) separate classes.
<PAGE>
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the following capitalized terms
shall have the meanings indicated when used in this Plan and in the
accompanying Disclosure Statement, which meaning shall be equally applicable
to both the singular and plural forms of such terms. Any term in this Plan
that is not defined herein but that is used in title 11, United States Code
("Code") shall have the meaning assigned to such term in the Code.
1. "Administrative Claim" shall mean those Claims entitled to
priority under the provisions of Section 507 of the Code, pursuant
to a claimed and allowed administrative expense priority under
Section 503(b) of the Code.
2. "Allowed Claim" as to all Classes, hereinafter specified, shall
mean a Claim against Debtor (a) for which a Proof of Claim has
been timely filed with the Court by the Bar Date, or, with leave
of the Court and without objection by any party-in-interest, late-
filed and as to which neither the Debtor nor any party-in-interest
files an objection or as to which the Claim is allowed by Final
Order of the Court, or (b) scheduled in the list of creditors, as
may be amended, prepared and filed with the Court pursuant to Rule
1007(b) and not listed as disputed, contingent or unliquidated as
to amount, as to which no objection to the allowance thereof has
been interposed through closing of this case, or as to which any
such objection has been determined by an order or judgment which
is no longer subject to appeal or certiorari proceeding and as to
which no appeal or certiorari proceeding is pending. This
category includes all Claims deemed unsecured pursuant to
[S]506(a) of the Code. When "Allowed Claim" is used in the
context of a Secured Claim, the provisions of [S]506(b) of the
Code shall also apply.
3. "Allowed Secured Claim" shall mean an Allowed Claim secured by a
lien, security interest, or other encumbrance on the properties
owned by the Debtor, which lien, security interest, or other
encumbrance has been properly perfected as required by law, to the
extent of the value of the property encumbered thereby. That
portion of such Claim exceeding the value of the security held
therefor shall be an Unsecured Claim, as defined below and
determined pursuant to 11 U.S.C. [S]506(a).
<PAGE>
4. "Allowed Unsecured Claim" shall mean an unsecured Claim against
Debtor (a) for which a Proof of Claim has been timely filed with
the Court by the Bar Date, or, with leave of the Court and without
objection by any party-in-interest, late-filed and as to which
neither the Debtor nor any party-in-interest files an objection or
as to which the Claim is allowed by Final Order of the Court, or
(b) scheduled in the list of creditors, as may be amended,
prepared and filed with the Court pursuant to Rule 1007(b) and not
listed as disputed, contingent or unliquidated as to amount, as to
which no objection to the allowance thereof has been interposed
through closing of this case, or as to which any such objection
has been determined by an order or judgment which is no longer
subject to appeal or certiorari proceeding and as to which no
appeal or certiorari proceeding is pending. This category
includes all Claims deemed unsecured pursuant to [S]506(a) of the
Code.
5. "Bar Date" shall mean the date fixed by the Court as the last date
for filing all Claims in this case other than Administrative and
Priority Claims or Rejection Claims.
6. "Case" shall mean these Chapter 11 cases.
7. "Claim" shall mean any right to payment from the Debtor as of the
date of entry of the Order Confirming Plan whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured or can be asserted by way of
set-off. Claim includes any right or cause of action based on a
pre-petition monetary or non-monetary default.
8. "Claimant" shall mean the holder of a Claim.
9. "Class" shall refer to a category of holders of Claims or
interests which are "substantially similar" as provided for in
Section 1122 of the Code.
10. "Code" shall mean the United States Bankruptcy Code, being title
11 of the United States Code, as enacted in 1978 and thereafter
amended.
11. "Confirmation" or "Confirmation of this Plan" shall mean entry by
the Court of an Order confirming this Plan at or after a hearing
pursuant to Section 1129 of the Code.
12. "Confirmation Date" shall mean the date on which the Court enters
an Order confirming this Plan.
13. "Court" shall mean the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division, presiding over these
Chapter 11 reorganization cases, or any successor court of
competent jurisdiction.
14. "Creditor" shall mean any person having a Claim against Debtor.
<PAGE>
15. "Debenture Holders" shall mean Sovereign Partners, L.P.; Dominion
Capital Fund, Ltd.; Canadian Advantage Limited Partnership; and
Atlantis Capital Fund, Ltd.
16. "Debt" shall mean any obligation of Debtor, alone, and any
obligation of Debtor and any other Person, to any Entity.
17. "Debtors" shall mean American HealthChoice, Inc. and AHC
Physicians Corporation, and the Debtor in the above-styled and
numbered cases.
18. "Disbursing Agent" shall mean the Reorganized Debtor.
19. "EBITDA" shall mean the sum of income before net interest,
provision for income taxes, depreciation and amortization expense.
20. "Effective Date" shall mean the Final Confirmation Date, or as
soon thereafter as reasonably practical, but in no event later
than 20 days after the Final Confirmation Date.
21. "Entity" shall include Person, estate trust, governmental unit and
the United States Trustee.
22. "Equity Interest Holders" shall mean holders of the equity
interests in the Debtors.
23. "Final Confirmation" shall mean that date which is eleven (11)
days following the entry of the Order Confirming Plan, during
which period of time no Notice of Appeal is filed, or if a Notice
of Appeal is filed, during which period of time no Motion for Stay
Pending Appeal is granted or supersedeas bond is approved and
filed.
24. "Order Confirming Plan" shall mean the Order of the Court
determining that this Plan meets the requirements of Chapter 11 of
the Code and is entitled to confirmation or filed for relief under
Chapter 11 of the Code.
25. "Petition Date" shall mean the date on which the Debtor filed this
proceeding, October 19, 1999.
26. "Plan" shall mean this Plan of Reorganization in its present form
or as it may be amended, modified or supplemented.
27. "Plan Term" shall mean three (3) years following the Confirmation
Date, except as extended to claims of the taxing authorities and
the General Unsecured Creditors as provided herein.
28. "Priority Claim" shall mean any Claim entitled to priority
pursuant to Section 507(a) of the Code except for Tax Claims and
Claims incurred by the Debtor post-petition in the ordinary course
of business.
29. "Record Date" shall mean, with respect to voting on the Plan and
with respect to any right to receive distributions under this
Plan, the close of business on the date the Bankruptcy Court signs
an Order approving the Disclosure Statement.
<PAGE>
30. "Rejection Claim" shall mean any Claim arising out of the
rejection of a lease or executory contract pursuant to Section 365
of the Code, which Claim shall be treated as an Unsecured Claim.
31. "Reorganized Debtor" shall mean the entity, which shall assume
title to and control of the Debtors' assets and liabilities upon
confirmation as provided herein.
32. "Secured Claim" shall mean an Allowed Claim secured by a lien,
security interest, or other encumbrance on the properties owned by
the Debtor, which lien, security interest, or other encumbrance
has been properly perfected as required by law, to the extent of
the value of the property encumbered thereby. That portion of
such Claim exceeding the value of the security held therefor shall
be an Unsecured Claim, as defined below and determined pursuant to
11 U.S.C. [S]506(a).
33. "Substantial Consummation" shall occur upon Debtor's commencement
of payments to creditors as provided in this Plan.
34. "Tax Claims" shall mean any Claim entitled to priority under
Section 507(a)(8) of the Code and shall include the claims of
taxing authorities for taxes owed on the property retained by the
Debtor under this Plan.
35. "Unsecured Claim" shall mean any Allowed Claim, whether or not
liquidated or contingent other than a Priority Claim, a Tax Claim,
or a Secured Claim.
ARTICLE 2
CERTAIN GENERAL TERMS AND CONDITIONS
The following general terms and conditions apply to this Plan:
2.1 Claims and Debts: Various types of Claims and Debts are defined in
this Plan. This Plan is intended to deal with all Claims and
Debts against the Debtor of whatever character whether or not
contingent or liquidated and whether or not allowed by the Court
pursuant to Section 502(a) of the Code and all Claims and Debts
will receive the treatment afforded in Articles IV, V and VI of
this Plan. Claims and Debts incurred by the Debtor post-petition
in the ordinary course of business will be paid by the Debtor
according to their terms as they come due.
2.2 Securities Laws: The issuance of any security in satisfaction of
indebtedness under this Plan may be exempt from registration under
certain State and Federal securities laws by virtue of Section
1145 of the Code and the exemption therein contained.
<PAGE>
2.3 Time for Filing Claims: With respect to those Claims that have
been identified in the Schedules filed pursuant to Section 521(1)
of the Code and which have been scheduled as "disputed,"
"contingent," or "unliquidated," said Claimants must file a proof
of claim bearing the case number of the above-styled and
referenced proceeding with the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division, on or before the
Bar Date to participate under this Plan. Claims scheduled as
disputed, contingent, or unliquidated filed after the Bar Date
shall not be allowed, and shall not participate in the
distributions contemplated by this Plan. Claims arising from
rejection of a lease or executory contract and administrative
claims shall be filed with the Court within thirty (30) days
following the Confirmation Date of this Plan.
2.4 Modifications to Plan: In accordance with Bankruptcy Rule 3019, to
the extent applicable, this Plan may be modified upon application
of Debtor or corrected prior to Confirmation without notice and
hearing and without additional disclosure pursuant to Section 1125
of the Code provided that, after hearing on and notice to the
creditors, the Court finds that such modification does not
materially or adversely affect any Creditor or Class of Creditor.
ARTICLE 3
TREATMENT OF UNCLASSIFIED CLAIMS
(CERTAIN ADMINISTRATIVE CLAIMS AND PRIORITY CLAIMS)
3.1 All trade and service debts and obligations incurred in the normal
course of business by the Debtor on or after the Petition Date
will be paid when due in the ordinary course of the Debtor's
business unless a different time for payment is specified in this
Plan.
3.2 Each governmental unit holding a post-petition Claim arising out
of taxes assessed against property of the estate, also including
"ad valorem property taxes," but limited as provided by Section
502(b)(3) of the Code, shall be paid in full when said Claims are
due.
ARTICLE 4
DIVISION OF CREDITORS INTO CLASSES
4.1 Classification of Claims: This Classification of Claims is made
for purposes of voting on this Plan, making distributions
thereunder, and for ease of administration thereof. Unless
specifically provided otherwise herein, on the Confirmation Date
this Plan discharges and extinguishes all Claims and Debts against
the Debtor of whatever character, whether allowed by the Court or
otherwise.
<PAGE>
4.2 Class 1: Consists of Allowed Administrative Claims.(Not Impaired)
Class 2: Consists of Allowed Tax Creditor Claims. (Impaired)
Class 3: Consists of Allowed Employee Wage Claims (Not Impaired)
Class 4: Consists of Allowed Secured Claim of CIT (Impaired)
Class 5: Consists of Allowed Claims of AT&T (Impaired)
Class 6: Consists of Allowed Claim of Debenture Holders
(Impaired)
Class 7A: Consists of Allowed Claims of General Unsecured
Creditors of American HealthChoice, Inc.: (Impaired)
Class 7B: Consists of Allowed Claim of General Unsecured Creditors
of AHC Physicians Corporation (Impaired)
Class 8: Consists of Allowed Administrative Unsecured Creditors
(Impaired)
Class 9: Consists of Allowed Insider or Bridge Loan Claims.
(Impaired)
Class 10: Consists of Allowed Equity Interest Holder Claims.
(Impaired)
ARTICLE 5
TREATMENT OF CLASSES
5.1 Satisfaction of Claims and Debts: The treatment of and
consideration to be received by holders of Allowed Claims or
interests pursuant to this Article V of this Plan shall be in full
settlement, release and discharge of their respective Claims,
Debts, or interests as against the Debtor subject to the
provisions herein. On the Confirmation Date, the Reorganized
Debtor shall assume all duties, responsibilities and obligations
for the implementation of this Plan. Any class of Claimants
failing to vote on this Plan shall be deemed to have accepted this
Plan in its present form or as modified or amended as permitted
herein.
5.2 Class 1 Claimants (Allowed Administrative Claims) are unimpaired
and will be paid in cash and in full on the Effective Date of this
Plan. Professional fees are subject to approval by the Court as
reasonable. Debtors' attorney's fees approved by the Court and
payable to the law firms of Susan B. Hersh, P.C. and Eric Liepins,
P.C. will be paid immediately following the later of Confirmation
or approval by the Court out of the available cash. The Debtors
have also retained Ronald Brown as their securities counsel to
perform services related to the issuance of the securities in the
Reorganized Debtors as well as any securities backed debt
instruments to be issued by the Reorganized Debtors. Mr. Brown's
fees will be paid, subject to approval by the Bankruptcy Court,
following the later of Confirmation or approval by the Court out
of available cash. This case will not be closed until all allowed
Administrative Claims are paid in full. Class 1 Creditor Allowed
Claims are estimated as of the date of the filing of this Plan to
not exceed the amount of $150,000 including Section 1930 fees.
Section 1930 fees shall be paid in full prior to the Effective
Date. The Debtor is required to continue to make quarterly
payments to the U.S. Trustee and maybe required to file post-
confirmation operating reports until this case is closed. The
Class 1 Claimants are not impaired under this Plan.
<PAGE>
5.3. Class 2 Claimants (Allowed Tax Creditor Claims) are impaired and
shall be satisfied as follows: The Allowed amount of all Tax
Creditor Claims shall be paid out of the revenue from the
continued operations of the business. The Tax Creditor Claims are
alleged to be in the amount of approximately $35,000 and shall be
paid in full, with interest at the rate of 10% per annum with
monthly payments over a period of seventy-two (72) months with
payments beginning on Effective Date. The monthly payment amount
will be approximately $775.00 The Taxing Authorities shall retain
their liens, if any, to secure their Tax Claims until paid in full
as called for by this Plan. The Class 2 Claimants are impaired
under this Plan.
5.4. Class 3 Claimants (Priority Employee Wage Claims up to $4,300.00)
are not impaired and shall be satisfied as follows: All Allowed
claims for Priority Employee Wages up to $4,300, if any, shall be
paid in full on the Effective Date. The Debtors believe the total
Priority Employee Wage Claims up to $4,300 will not exceed
$8,6000. These claims result from pre-petition commissions to
various sales representatives which were earned but not paid pre-
petition or by prior Court Order allowing the payment of certain
pre-petition employee wages claims. Any amount owed to employees
for pre-petition services in excess of $4,300 shall be treated as
either Class 7A or Class 9 creditors and treated accordingly. The
Class 3 Claimants are not impaired under the Plan.
5.5. Class 4 Claimants (CIT) are impaired and shall be satisfied as
follows: The Allowed amount of the CIT shall be paid from the
continued operations of the company. CIT currently has a first
lien position on certain assets of the Debtors consisting of
office furniture and office equipment used by the Debtors. The
Debtors and CIT have agreed the fair market value of these assets
is $60,000.00. The indebtedness to CIT is evidenced by certain
Lease Agreements with a remaining balance as of the Petition Date
of approximately $110,000. This claim shall be bificated into a
Allowed Secured Claim treated as a Class 4 Claimant, and an
Allowed Unsecured Claim treated as a Class 7A Claimant. The Class
4 Claim shall be paid in full, with equal monthly payments over a
twenty-four month period with an interest rate of 10%. The monthly
payments will be in the amount of approximately $2,750.00 and
shall commence pursuant to Court Order on March 6, 2000. Upon
satisfaction of its claim under the terms of the Plan, CIT shall
release its lien. The Class 4 Claimant is impaired under this
Plan.
5.6. Class 5 Claimants (AT&T) are impaired and shall be satisfied as
follows: The Allowed Amount of the AT&T claim shall be paid from
continued operations of the company. AT&T currently has a first
lien position on certain assets of the Debtors consisting of
telephone and computer equipment used by the Debtors. The Debtors
will make the required monthly payments of $6,115 for months 1
through 17; $4,340 for months 18 through 32; $3,113 for months 33
and 34; and $967 for the remaining 6 months of the leases. The
payments for the period of October 1999 until the Effective Date
will be added on to the end of the current leases. Upon
satisfaction of its claim under the terms of the Plan, AT&T shall
release its liens. The Class 5 Claim is impaired under this Plan.
<PAGE>
5.7 Class 6 Claimant (Debenture Holders) are impaired and shall be
satisfied as follows: The Debenture Holders hold a first lien
position on the Debtors' accounts receivable and all other
tangible and intangible assets of the Debtors. The Debenture
Holders' claim arises out of a series of Debentures. The
Debentures were issued to Sovereign Partners, L.P. in the original
face amount of $1,000,000; Dominion Capital Fund, Ltd. in the face
original amount of $1,985,000; Canadian Advantage Limited
Partnership in the original face amount of $200,000; and Atlantis
Capital Fund, Ltd in the original face amount of $200,000. The
total original face amount of the Debenture Holders' debt as of
the Petition Date was $3,385,000. Pursuant to the terms of the
existing Debentures the Class 6 Claimants were allowed to convert
their Debentures into common stock of the Debtor subject to
certain ownership limitations. Subject to Bankruptcy Court
approval, the Debtor and the Class 6 Claimants agree that the
Class 6 Claimants will be allowed to convert their existing
Debentures into shares of common stock of the Debtor prior to the
confirmation of Debtors Amended Plan of Reorganization, provided
the Class 6 Claimants do not sell more than fifteen (15%) percent
of the daily volume of company stock sold and do not sell the
company stock at a price of less than $.25 per share during this
time period (the "Pre-Confirmation Conversions"). The Class 6
Claimants have filed Proofs of Claim in the amount of
approximately $4,600,000, representing the face amount of the
existing Debentures, accrued interest and the excess value to
which the Class 6 Claimants were contractually entitled pursuant
to their rights to convert their existing Debentures which
provided for the Class 6 Claimants to convert their debt to equity
at a discounted price over existing market price (the "Debenture
Proofs of Claim"). The Debtors will pay the Debenture Holders the
full face value of the Debenture Proofs of Claim as follows: The
Debtors will issue to the Debenture Holders, in the form of new
senior secured convertible debentures (the "Class 6 Debentures")
which shall be convertible to a total of either thirty (30%)
percent of the outstanding shares of stock in the Reorganized
Debtor as of the Confirmation Date or twenty-five (25%) percent of
the outstanding shares of the Reorganized Debtor as of the
Confirmation Date. The amount of the Class 6 Debentures and the
amount of shares into which they may be converted will be computed
in accordance with a formula such that the Class 6 Debentures
shall be in the face amount of the Debenture Proofs of Claim less
any portion thereof converted to common stock prior to the
Confirmation Date pursuant to the Pre-Confirmation Conversion (the
"New Debenture Amounts"). The Class 6 Debentures shall be
convertible to common stock equal to a fraction, the numerator of
which shall be the New Debenture Amount and the denominator shall
be the Debenture Proof of Claim Amount (i.e. percentage of the New
Debenture Amounts compared to the original Debenture Proofs of
Claim) multiplied by either thirty (30%) percent if the average
market price(1) for the thirty trading days prior to Confirmation
Date is less than $.25 per share, or twenty-five percent (25%) if
the average market price for the thirty trading days prior to
Confirmation Date is $.25 per share or greater. (For example, if
-----------
(1) For the purposes hereof the average market price shall mean the OTC
Bulletin Board daily close price.
<PAGE>
the Debenture Proofs of Claim $4,600,000 and the Class 6
Claimants convert an aggregate of $1,000,000 of their debentures
into stock pre-confirmation, and assume the average share price
during the applicable period remains over $.25 per share, the
Class 6 Claimants would receive Class 6 Debentures in the face
amount of $3,600,000 convertible into 19.57% of the shares of
stock of the Reorganized Debtor $3,600,000 (allowed claim amount
as of Confirmation) divided by $4,600,000 total Allowed Claim
amount) times 25% (maximum allowed amount of shares of Reorganized
Debtor based on market price). Based upon this example, the Class
6 Debentures would be convertible into an aggregate of 11,736,000
shares of the Reorganized Debtor. The exact number of shares will
depend on the factors set forth in the above described formula. It
is contemplated the Debtor will issue 64,000,000 shares of stock
in the Reorganized Debtor.
The Class 6 Debentures will provide for the Class 6 Claimants to
receive stock in the Reorganized Debtor over a period not to
exceed three years. The Class 6 Debentures will be secured by a
first priority lien on all existing assets of the Debtors and the
Reorganizied Debtors and their subsidiaries, with the exception of
the assets purchased from Dr. Voracek upon which the Class 6
Debenture Holder's lien will be subdordinate to the purchase money
security interest to be granted to Dr. Voracek. A copy of the
Class 6 Debenture shall be provided prior to confirmation. The
Class 6 Claimants are impaired under this Plan.
5.8 Class 7A Claimants (Allowed General Unsecured Claims of American
HealthChoice, Inc.) are impaired and shall be satisfied as
follows: The Allowed claims of the General Unsecured Creditors of
American HealthChoice, Inc. shall share pro-rata in annual
payments to be made by the Debtors on the Effective Date and the
first three anniversaries of the Effective Date of the Plan until
paid in full (the "Unsecured Dividend"). Until the Debtors has
paid the Unsecured Dividend in full, the Debtors is required to
make the following minimum annual payments:
Effective Date $ 10,500
First Anniversary of the Effective Date $ 66,500
Second Anniversary of the Effective Date $ 66,500
Third Anniversary of the Effective Date $ 66,500
At such time as the Unsecured Dividend has been paid in full, the
Debtors shall have no obligation to make any further payments to the
Unsecured Creditors. The Debtor shall have the option to pre-paid the
Unsecured Dividend in full prior to the second anniversary of the Plan
for 80% of the unpaid balance of the Unsecured Dividend.
Based upon the Proofs of Claim currently on file and the deficiency
claims resulting from the treatment of CIT, and taking into account the
anticipated objections to the Proof of Claim currently on file, the
Debtors anticipate the total Allowed General Unsecured Creditors claims
will not exceed $210,000. The Unsecured Creditors are impaired under
the Plan. The Class 7A Claimants are impaired under this Plan.
<PAGE>
5.9 Class 7B Claimants (Allowed General Unsecured Claims of AHC Physicians)
are impaired and shall be satisfied as follows: The Allowed claims of
the General Unsecured Creditors of AHC Physicians shall share pro-rata
in annual payments to be made by the Debtors on the Effective Date and
first three anniversaries of the Effective Date of the Plan until paid
in full (the "Unsecured Dividend"). Until the Debtors has paid the
Unsecured Dividend in full, the Debtors is required to make the
following minimum annual payments:
Effective Date $ 18,000
First Anniversary of the Effective Date $ 114,000
Second Anniversary of the Effective Date $ 114,000
Third Anniversary of the Effective Date $ 114,000
At such time as the Unsecured Dividend has been paid in full, the
Debtors shall have no obligation to make any further payments to the
Unsecured Creditors. The Debtor shall have the option to pre-paid the
Unsecured Dividend in full prior to the second anniversary of the Plan
for 80% of the unpaid balance of the Unsecured Dividend.
Based upon the Proofs of Claim currently on file and taking into
account the anticipated objections to the Proof of Claim currently on
file, the Debtors anticipate the total Allowed General Unsecured
Creditors claims will not exceed $360,000. The Unsecured Creditors are
impaired under the Plan.
5.10 Class 8 Claimants (Convenience General Unsecured Creditors) are
impaired and shall be satisfied as follows: All General Unsecured
Creditors of American HealthChoice or AHC Physicians whose Allowed
Claim is $5,000 or less, or any General Unsecured Creditor of American
HealthChoice or AHC Physicians who voluntarily elects to reduce their
Allowed Claim to $5,000, will be paid in full, in one payment, on or
before the first anniversary of the Effective Date. The Class 8
Claimants are impaired under this Plan.
5.11 Class 9 Claimants (Bridge Debt and Insider Debt) are impaired under the
Plan and shall be satisfied as follows: The Allowed amount of claim of
the Bridge Debt and the Insider Debt shall be paid either in stock of
the Reorganized Debtors or in three equal annual cash payments,
commencing on the first anniversary of the Effective Date. The Class 9
Claimants must choose either the stock or cash option on their ballot
In the event a Class 9 Claimant does not specify the stock or cash
option, the Class 9 Claimant will be presumed to select the stock
option. The Bridge Debt and Insider Debt equals approximately $659,000.
A detailed break down of the amounts and identities of the Class 9
Claimants is attached hereto as Exhibit "E". The Bridge Debt and
Insider Debt shall release their liens on the Debtors' assets upon
receipt of the stock or full payment. The Class 9 Claimants shall be
issued stock in the Reorganized Debtor in an amount proportionate to
their existing indebtedness, not to exceed 2,000,000 shares of the
Reorganized Debtor as of the Confirmation Date. The price per share of
the Reorganized Debtor stock shall be $.32. The Class 9 Claimants are
impaired under this Plan.
<PAGE>
5.12 Class 10 Claimants (Certain Allowed Equity Interest Holder Claims) are
impaired and shall be satisfied as follows: The Allowed Equity
Interest Holder Claims which are not held by Debenture Holders shall
be issued new stock in the Reorganized Debtors. These non-debenture
holders shall be issued shares in the Reorganized Debtors in portion to
their existing shares as against all non-debenture holders shares. The
Class 10 Claimants will receive one (1) share of the Reorganized Debtor
for every one (1) share of the Debtors stock they currently own. The
total number of shares in the Reorganized Debtor to be distributed to
the Class 10 Claimants will be at least 28,800,000 . Class 9 Claimants
are impaired under the Plan.
ARTICLE 6
MEANS FOR EXECUTION OF THE PLAN
6.1 Any actions required to be taken by the Debtor on the Effective
Date may be taken by the Debtor before the Effective Date or
immediately following the date of Final Confirmation.
6.2 On or before the date of Final Confirmation or the Effective Date,
as this Plan provides, the Debtor will transfer to the Disbursing
Agent funds sufficient to make the payments required by this Plan.
The Disbursing Agent shall be the Reorganized Debtor, except as to
the Class 6 Debenture, the Voracek Debenture and Contingent Stock
Payment.
6.3 The Debtor's obligations under this Plan will be satisfied out of
continued business operations of the Debtor, and the infusion of
new money as set forth below.
6.4 Under the Plan, Debtors will acquire existing clinics from Dr.
Voracek. Dr. Voracek will sell the Debtors three (3) clinics.
These clinics are located in Laredo, Texas, San Benito, Texas and
Corpus Christi, Texas. As reflected on the projections, attached
as Exhibit "C", it is anticipated, these clinics will generate
significant income to the Debtors. In order to pay for the
acquisitions of these clinics, the Debtors will pay Dr. Voracek
$900,000 upon the Effective Date. In addition to these cash
payments, Dr. Voracek will also receive a convertible debenture
(the "Voracek Convertible Debenture") in the Reorganized Debtors.
The Voracek Convertible Debenture will be equal to $1,700,000. The
Voracek Convertible Debenture will provide for a conversion into
common stock of the Reorganized Debtor on the first anniversary of
the Confirmation Date to 5,000,000 shares with a share price of
$.32 per share or 80% of the market price on the conversion date.
The Voracek Debenture will be secured by a purchase money security
interest in all assets purchased by the Reorganized Debtor from
Dr. Voracek under the terms of this Plan. Dr. Voracek will also
receive a Contingent Stock Payment in the event the clinics meet
the projected earnings over the same three year period. The
Contingent Stock Payment will be released to Dr. Voracek in the
event the EBITDA for the performance periods set forth in Exhibit
G equals or exceeds the Target EBITDA set forth on Exhibit F. A
copy of the Voracek Convertible Debenture will be provided prior
to confirmation. In the event, Dr. Voracek's clinics achieve the
required EBITDA, Dr. Voracek will be entitled to Contingent Stock
Payments totaling $3,400,000 for the three years after the
Effective Date. The price per share of the Contingent Stock
Payment will be based on eighty (80%) of the market price of the
stock on the scheduled conversion date. Assuming the Dr. Voracek
clinic met their target EBITDA for all three years the projected
ownership interest by Dr. Voracek is set forth on Exhibit "G".
<PAGE>
6.5 In order to fund the purchase of the Dr. Voracek clinics and to
provide needed working capital, it will be necessary for the
Debtor to solicit new funds. The Debtors will obtain new funds in
the amount of not less than $1,500,000 prior to the Effective
Date. In exchange for these new funds, the Debtors will issue
these investors stock in the Reorganized Debtors in the aggregate
amount of 9,375,000 shares of the Reorganized Debtors. Some of
these new funds may come from insiders of the Debtors. The share
price for the new money investors will be $.16 per share. However,
in the event the Debtor is unable to raise the necessary funds at
this share price, it may be required to issue additional shares
for the new investors. As set forth above, these additional shares
will not dilute the Class 6 Creditors.
6.6 In order to preserve cash, the Debtor contemplates the issuance of
stock to certain founders who will provide assistance to the
Debtor with implementation of the Plan. Founders may include
insiders, consultants and other professionals. A portion of the
founder shares may be issued in connection with solicitation of
new financing. The total amount of stock to be issued will not
exceed 6,400,000 shares of the Reorganized Debtor on the
Confirmation Date. The share price for the founder stock is
estimated to be $.32 per share.
6.7 As set forth above, the Debtor's current shares of stock will be
canceled upon the Effective Date, and new shares of stock will be
issued. The new shares will not be diluted for a period of one
year from the Effective Date.
6.8 It is an integral part of the Debtors Plan and part of the
solicitation of acceptance of this Plan, that those parties
obtaining stock in the Reorganized Debtor under this Plan, agree
the Reorganized Debtor may after confirmation subject the shares
of the Reorganized Debtor to a reverse stock split. The reverse
stock split to be authorized under this Plan will be 15 shares of
Reorganized Debtor in exchange for one share of the Reorganized
Debtor.
6.9 The Corporate Charter of the Debtor will be amended in accordance
with the terms of this Plan.
6.10 The shares of stock for the Class 6 Claimants, the Voracek Stock
Payment and the Contingent Stock Payment shall be held in a Post-
Confirmation Stock Trust. The Post-Confirmation Trust shall be
responsible for the issuance of the shares of stock in the
Reorganized Debtor to those entities who are entitle to convert
debentures into stock. The Post-Confirmation Stock Trust shall be
irrevocable. The Reorganized Debtor upon confirmation of the Plan,
shall have no right or power, whether alone or in conjunction with
others to amend this Article of the Plan, in whole or in part, or
to designate the persons who shall possess, manage, distribute or
otherwise enjoy the Trust Property and any rights related thereto.
6.11 The Trust Property shall consist solely of the shares of stock in
the Reorganized Debtor to be distributed to the Class 6 Claimants
and Dr. Voracek pursuant to the terms of the Plan.
<PAGE>
6.12 The Debtor hereby designate (to be provided prior to the
confirmation hearing) to serve as the Trustee of the Post-
Confirmation Stock Trust.
6.13 As a condition to receiving distributions provided for by the Plan
in respect to any stock, any holder of stock in the Debtor shall
be required to surrender such stock to the Disbursing Agent. All
instruments surrendered to the Disbursing Agent shall be marked
"compromised and Settled Only as Provided in the Plan of
Reorganization for American HealthChoice, Inc.".
6.14 It is an integral and essential element of this Plan that all
securities and debentures to be the issued to the holders of
Allowed Claims and Interests of the Reorganized Debtor and the
common stock to which the Class 6 Debentures shall be convertible
pursuant to this Plan, shall be exempt from registration under the
Securities Act of 1933, as amended, pursuant to section 1145 of
the Bankruptcy Code.
6.15 As specified in Section 1125(e) of the Bankruptcy Code, persons
that solicit acceptances or rejections of this Plan and/or that
participate in the offer, issuance, sale or purchase of securities
offered or sold under this Plan, in good faith and in compliance
with the applicable provisions of the Bankruptcy Code, are not
liable on account of such solicitation or participation for
violation of any applicable law, rule, or regulation governing the
solicitation of acceptances or rejection of this Plan or the
offer, issuance, sale or purchase of securities.
6.16 None of the Debtors, the Debtors-in-possession, the Reorganized
Debtor nor any of their employees, officers, directors, agents or
representatives, nor any professionals employed by them or any of
their members, agents, representatives or professional advisors,
shall have or incur any liability to any person or entity for any
act taken or omission made in good faith in connection with or
related to formulating, implementing, confirming or consummating
this Plan, the Disclosure Statement or any contract, instrument,
release or other agreement or document created in connection with
this Plan.
6.17 Notwithstanding anything contained herein, the Reorganized Debtor
shall have the right to request the Court to disallow any claim of
any Entity from which property is recoverable under Sections 542,
543, 550, and 553 of title 11, or that is a transferee of a
transfer avoidable under Sections 544, 545, 548, or 549 of title
11 unless such Entity or transferee has paid the amount, or turned
over any such property, for which such Entity or transferee is
liable.
<PAGE>
ARTICLE 7
SECTION 1129(b)(2)
7.1 The Court may confirm this Plan even though less than all of the
Classes of Claims and interests accept it. The requirements for
confirmation of a plan over the objection of one or more classes
of claims or interests are set forth in Section 1129(b) of the
Code. Accordingly, Debtor, as the plan proponent, requests the
Court to determine that this Plan does not discriminate unfairly,
and is fair and equitable with respect to the rejecting creditor.
ARTICLE 8
STATUS OF EXECUTORY CONTRACTS
8.1 All unexpired leases and executory contracts shall be assumed on
or before the Effective Date. To the extent there are any
unexpired leases or executory contracts, which have not been
assumed prior to the Effective Date, they are rejected.
ARTICLE 9
EVENTS OF DEFAULT AND EFFECT THEREOF
9.1 In the event that Substantial Consummation of this Plan does not occur
on or before the earlier of the Effective Date or 71 days after the
Confirmation Date, the Order of Confirmation may be vacated by any
party in interest, other than the Debtor.
9.2 Notwithstanding anything contained herein to the contrary, no Claimant
shall have the right to enforce any rights under this Plan until the
Reorganized Debtor fails to cure any default hereunder within thirty
(30) days of receipt of written notice of such default to Reorganized
Debtor
9.3 Default shall occur if one scheduled Plan payment is not made by Debtor
or if current taxes are not timely paid pursuant to state law. In the
event of default, any party in interest who has not received their
required payment, shall send written notice of default as set forth in
section 9.2 above. In the event the default is not cured the effected
party may proceed with state law remedies for collection of the amounts
due it.
ARTICLE 10
DISCHARGE
10.1 Upon Confirmation, to the extent that a Claim or Debt has not been
dealt with under this Plan, such Claim or Debt will be released.
10.2 The automatic stay imposed by Section 362 of the Code or any
preliminary injunction granted by the Court to allow for Substantial
Consummation of this Plan shall remain in effect until the Effective
Date.
<PAGE>
10.3 Notwithstanding anything contained herein to the contrary, neither
Debtor, Reorganized Debtor, the officers and directors of the Debtors
nor the shareholders shall be discharged and released from any
liability for Claims and Debts under this Plan, however, the exclusive
remedy for payment of any Claim or Debt so long as the Plan is not in
default shall be the Plan.
ARTICLE 11
AMENDMENTS TO THE PLAN
11.1 Debtor may modify this Plan following Confirmation and before
Substantial Consummation to the extent consistent with the requirements
of section 1122 and 1123 of Title 11. The Plan as modified becomes the
Plan if circumstances warrant modification and the Court approves of
such modifications.
11.2 In the event of modification of this Plan pursuant to Section 11.1, any
holder of a Claim or interest that has accepted or rejected this Plan
is deemed to have accepted or rejected, as the case may be, the Plan as
modified, unless, within ten (10) days of service of the Plan
modifications upon such holder, such holder changes its previous
acceptance or rejection.
ARTICLE 12
EFFECT OF CONFIRMATION
12.1 The provisions of this Plan bind Debtor, any Entity issuing securities
under this Plan, any Entity acquiring property under this Plan, and any
Creditor or Equity Interest Holder, whether or not the Claim or
interest of such Creditor or Equity Interest Holder is impaired under
the Plan and whether or not such Creditor or Equity Interest Holder has
accepted this Plan.
12.2 All property of the estate is vested in the Reorganized Debtor.
12.3 All property of the Reorganized Debtor is free and clear of all Claims
and interests of Creditors and Equity Interest Holders, except as to
claims, secured claims or secured debentures and interests specifically
granted in this Plan.
12.4 All Debts that arose before the Confirmation Date and any Debt of a
kind specified in Section 502(g), 502(h) or 502(i) of the Code, whether
or not a proof of claim based on such Debt is filed or deemed filed
under Section 501, whether or not such Claim is allowed under Section
502; and whether or not the holder of such Claim has accepted this
Plan; are, fully and finally satisfied by this Plan.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 The obligations under this Plan to any particular Claim are governed by
the laws of the State constituting the situs of the Debt represented by
that particular Claim described in this Plan.
13.2 Equity Interest Holders are relieved from all liability, obligation or
duty to initiate or pursue any causes of action of Debtor against any
Entity.
<PAGE>
13.3 Any caption herein is for convenience only and does not affect the
construction of the Plan.
13.4 Any distribution pursuant to this Plan which remains unclaimed for a
period of six (6) months from the due date of such distribution is
forfeited.
ARTICLE 14
RETENTION OF JURISDICTION
Until this case is closed, the Court retains jurisdiction of the
following matters only:
14.1 To direct any necessary party to execute or deliver or to join in
the execution or delivery of any instrument required to effect a
Transfer of property dealt with by the Plan and to perform any
other act, including the satisfaction of any Lien, that is
necessary for the consummation of this Plan.
14.2 To allow or disallow Claims.
14.3 To hear and determine all Claims arising from the rejection of
executory contracts and unexpired leases which are included in
Debtor's estate and to consummate rejection and termination
thereof in connection with Debtor's estate and/or implementation
of the Plan.
14.4 To liquidate damages or estimate Claims in connection with any
disputed, contingent or unliquidated Claims.
14.5 To adjudicate all Claims to an ownership interest in any property
of Debtor's estate.
14.6 To recover all assets and properties, including by lawsuit, of
Debtor's estate wherever located.
14.7 To hear and determine Claims concerning Federal, State and local
taxes pursuant to Section 346, 505, 525 and 1146 of the Code.
14.8 To hear and determine any action or proceeding brought by Debtor
or the Reorganized Debtor under Section 510, 542, 543, 544, 545,
547, 548, 549, 550, 551 and 553 of the Code, whether such action
or proceeding is brought before or after the Effective Date.
14.9 To hear and determine any core proceeding, whether such proceeding
is brought before or after the Effective Date.
14.10 To determine the validity, extent and priority of all Liens and
security interests against property of Debtor's estate.
14.11 To consider any modification of this Plan under Section 1127 of
the Code or under Bankruptcy Rule 3020 and/or modification of this
Plan after Substantial Consummation as defined herein.
14.12 To hear and determine all requests for compensation and/or
reimbursement of expenses of professionals.
<PAGE>
14.13 To hear and determine Reorganized Debtor's requests for orders as
are consistent with this Plan as may be necessary or desirable to
carry out the provisions thereof.
14.14 To enter an order closing this case.
Dated: March 31, 2000.
Respectfully submitted,
AMERICAN HEALTHCHOICE, INC.
___________________________
By: Dr. J.W. Stucki
Its: President
AHC PHYSICIANS CORPORATION, INC.
___________________________
By: Dr. J.W. Stucki
Its: President
<PAGE>
<TABLE>
Exhibit C
American HealthChoice, Inc.
Post Confirmation P&L Projections
Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01
<S> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Existing Clinic Revenue 315,000 315,000 315,000 315,000 315,000 315,000 315,000 315,000 315,000 315,000 315,000 315,000
Voracek Clinic Revenue 260,000 260,000 260,000 260,000 260,000 260,000 280,000 280,000 280,000 280,000 280,000 280,000
-----------------------------------------------------------------------------------------------
Total Net Revenue 575,000 575,000 575,000 575,000 575,000 575,000 595,000 595,000 595,000 595,000 595,000 595,000
Existing Clinic Expenses 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000 215,000
Voracek Clinic Expenses 105,000 105,000 105,000 105,000 105,000 105,000 110,000 110,000 110,000 110,000 110,000 110,000
-----------------------------------------------------------------------------------------------
Total Expenses 320,000 320,000 320,000 320,000 320,000 320,000 325,000 325,000 325,000 325,000 325,000 325,000
-----------------------------------------------------------------------------------------------
Clinic Profit Contribution 255,000 255,000 255,000 255,000 255,000 255,000 270,000 270,000 270,000 270,000 270,000 270,000
Corporate Expenses 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000
Interest expense
Depreciation and Amortization 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000
-----------------------------------------------------------------------------------------------
Pretax Income 125,000 125,000 125,000 125,000 125,000 125,000 140,000 140,000 140,000 140,000 140,000 140,000
Income Taxes 42,500 42,500 42,500 42,500 42,500 42,500 47,600 47,600 47,600 47,600 47,600 47,600
-----------------------------------------------------------------------------------------------
Net Income 82,500 82,500 82,500 82,500 82,500 82,500 92,400 92,400 92,400 92,400 92,400 92,400
===============================================================================================
<PAGE>
[ Schedule Continued ]
12 Months 12 Months 12 Months
ended June ended June ended June
2001 2002 2003
<S> <C> <C> <C>
Existing Clinic Revenue 3,780,000 4,000,000 4,200,000
Voracek Clinic Revenue 3,240,000 3,400,000 3,600,000
-----------------------------------
Total Net Revenue 7,020,000 7,400,000 7,800,000
Existing Clinic Expenses 2,580,000 2,700,000 2,900,000
Voracek Clinic Expenses 1,290,000 1,400,000 1,500,000
-----------------------------------
Total Expenses 3,870,000 4,100,000 4,400,000
-----------------------------------
Clinic Profit Contribution 3,150,000 3,300,000 3,400,000
Corporate Expenses 1,140,000 1,250,000 1,000,000
Interest expense
Depreciation and Amortization 420,000 420,000 450,000
-----------------------------------
Pretax Income 1,590,000 1,630,000 1,950,000
Income Taxes 540,600 554,200 663,000
-----------------------------------
Net Income 1,049,400 1,075,800 1,287,000
===================================
Net Income 1,049,400 1,075,800 1,287,000
Depreciation and Amortization 420,000 420,000 450,000
Lease Payments (120,000) (120,000) (60,000)
-----------------------------------
Operating Cash Flow 1,469,400 1,495,800 1,737,000
Working Capital Requirements (800,000) (800,000) (1,000,000)
-----------------------------------
Available Cash 669,400 695,800 737,000
New Funding 300,000 - -
Payment of Priority Claims (15,000) (15,000) (15,000)
Payment of Administrative Claims (45,000) - -
Payment to Unsecured Creditors (175,000) (175,000) (175,000)
Payment to Insider Creditors (A) (220,000) (220,000) (220,000)
-----------------------------------
Net cash 514,400 285,800 327,000
===================================
(A) Assumes all creditors elect cash payment
</TABLE>
<PAGE>
<TABLE>
Exhibit D
American HealthChoice, Inc.
Liquidation Analysis
as of February 15, 2000
Liquidation Value
---------
<S> <C>
Cash $ 25,000
Accounts Receivable: (A)
AHC Chiropractic Clinics 1,800,000
AHC Physicians 200,000
Land and Building 150,000
Clinic Equipment 10,000
Clinic equipment and computers (CIT) 25,000
---------
Total Assets $2,210,000
=========
Available to Secured Creditors $2,185,000
Secured Debt 3,885,000
---------
Deficiecy ($1,700,000)
=========
Available to CIT $25,000
CIT Secured Debt 110,000
---------
Deficiency ($85,000)
=========
(A) Going concern valuation is $5,200,000. Liquidation value
assumes closure of clinics and significant reduction in
collection of personal injury claims.
</TABLE>
<PAGE>
<TABLE>
Exhibit F
American HealthChoice, Inc.
Class 9 Breakdown Other Insider Claims
Amount
-------
<S> <C>
Wages:
Dr. J. W. Stucki $ 90,400
Dr. Jeff Jones 71,600
-------
162,000
Director fees:
Dr. J. W. Stucki 14,250
Dr. Jeff Jones 13,000
Dr. Michael Smith 13,000
John C. Stuecheli 1,500
John Mansfield 6,250
James Roberts 11,000
Jay R. Stucki 12,750
-------
71,750
Bridge loans:
Dr. J. W. Stucki 80,000
Dr. Jeff Jones 5,000
Dr. Michael Smith 20,000
Mainstream Enterprises 100,000
-------
205,000
Shareholder loans:
Dr. J. W. Stucki 132,000
Dr. Jeff Jones 55,600
-------
187,600
Other claims 33,500
-------
Total Insider Claims $659,850
=======
</TABLE>
