<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
Event reported): October 27, 1998
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Fruehauf Trailer Corporation
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(Exact name ofregistrant as specified in its charter)
Delaware 1-10772 38-2863240
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1111 Bayside Drive, Suite 160, Corona Del Mar, CA 92625
-------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714)644-9665
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Exhibit index appears on page 4
<PAGE> 2
Item 5. Other Events.
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Fruehauf Trailer Corporation, a Delaware corporation (the
"Corporation"), and certain of its subsidiaries filed a
voluntary petition with the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") under Chapter
11 of the United States Bankruptcy Code (the "Code"), Case
Number 96-1563 (PJW), on October 7, 1996.
Included herein as Exhibit 99.6 is the Amended Disclosure
Statement, dated July 28, 1998 , which has been prepared by
Fruehauf Trailer Coporation, Maryland Shipbuilding & Drydock
Company, F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, the Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc. and
E.L. Devices, Inc. (collectively, the "Debtors," or, together
with their non-debtor affiliates, the "Company") and describes
the terms and provisions of the Debtors' Amended Joint Plan of
Reorganization dated July 28, 1998 (the "Plan"), included herein
as Exhibit 99.7. Any term used in this Disclosure Statement
that is not defined herein has the meaning ascribed to that term
in the Plan.
On October 8, 1998, a hearing was held before the United
States Bankruptcy Court for the District of Delaware, the
Honorable Peter J. Walsh, to consider amendments to: (i) the
above-listed Debtors' Amended Joint Plan of Reorganization,
dated July 28, 1998 (the "Plan"); (ii) the Order and Judgment
Confirming the Plan under Chapter 11, dated and entered
September 17, 1998 (Docket No. 1524) (the "Confirmation Order"),
attached hereto as Exhibit 99.2; (iii) the Amended First
Modifications to the Debtors' Plan dated and entered September
17, 1998 (the "Plan Modifications"), attached hereto as Exhibit
99.4 and (iv) the Order on Allowance of Claims dated September
16, 1998 (the "Eleventh Omnibus Order").
On October 20, 1998, the Bankruptcy Court entered the Order
Amending (A) the Debtors' Amended Joint Plan of Reorganization,
(B) the Order and judgement confirming the Debtors' Plan and (C)
the Eleventh Omnibus Order ("The Amending Order"), attached
hereto as Exhibit 99.3. Pursuant to the Amending Order, the
Plan became effective on October 27, 1998.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
-----------------------------------------
( c ) Exhibits.
99.1 Notice of Entry of Order and Judgement
Confirming the Debtors' Amended Joint Plan of
Reorganization dated July 28, 1998 under Chapter 11 of the
United States Bankruptcy Code and granting related relief.
99.2 Order and Judgement Confirming the Debtors'
Amended Joint Plan of Reorganization dated July 28, 1998
under Chapter 11 of the United States Bankruptcy Code and
granting related relief.
99.3 Order Amending (A) the Debtors' Amended
Joint Plan of Reorganization, (B) the order and jusgement
confirming the Debtors' Plan and (C) the eleventh
omnibus order.
99.4 First Modification to Debtors' Amended
Joint Plan of Reorganization dated July 28, 1998.
99.5 Findings of Fact and Conclusions of law
regarding order and judgement confirming the Debtors'
Amended Joint Plan of Reorganization dated July 28, 1998.
99.6 Amended Disclosure Statement pursuant to
Section 1125 of the Bankruptcy Code with respect to the Debtors'
Amended Joint Plan of Reorganization dated July 28, 1998.
99.7 Debtors' Amended Joint Plan of
Reorganization dated July 28, 1998.
99.8 Liquidating Trust Agreement dated as of
July 28, 1998.
<PAGE> 3
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FRUEHAUF TRAILER CORPORATION
Date: October 27, 1998 By: /s/ James Wong
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James Wong
Chief Financial Officer
(Duly Authorized Officer)
<PAGE> 4
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
FRUEHAUF TRAILER CORPORATION, ) Case Nos. 96-1563
) Through 96-1572 (PJW)
)
) Jointly Administered
)
)
Debtors. )
NOTICE OF ENTRY OF ORDER AND JUDGMENT CONFIRMING THE
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION, DATED
JULY 28, 1998 UNDER CHAPTER 11 OF THE UNITED STATES
BANKRUPTCY CODE AND GRANTING RELATED RELIEF
TO ALL CREDITORS AND OTHER PARTIES IN INTEREST:
PLEASE TAKE NOTICE that on October 8, 1998, a hearing was
held before the United States Bankruptcy Court for the District
of Delaware, the Honorable Peter J. Walsh, to consider
amendments to: (i) the above-list1ed Debtors' Amended Joint Plan
of Reorganization, dated July 28, 1998 (the "Plan"); (ii) the
Order and Judgment Confirming the Plan under Chapter 11, dated
and entered September 17, 1998 (Docket No. 1524) (the
"Confirmation Order"); (iii) the Amended First Modifications to
the Debtors' Plan dated and entered September 17, 1998 (the
"Plan Modifications") and (iv) the Order on Allowance of Claims
dated September 16, 1998 (the "Eleventh Omnibus Order"). On
October 20, 1996, the Bankruptcy Court entered the Order
Amending (A) The Debtors' Amended Joint Plan of Reorganization,
(B) The Order and Judgment Confirming the Debtors' Plan and (C)
The Eleventh Omnibus Order ("The Amending Order"). Pursuant to
the Amending Order, the Plan became effective on October 27,
1998.
PLEASE TAKE FURTHER NOTICE that copies of the Plan, the Plan
Modifications, the Findings of Fact, the Confirmation Order and
the Amending Order can be obtained on the Internet at
http://www.camhy.com, by e-mail upon request from
[email protected] and upon written request from IKON Office
Solutions, Attn: Ed Carney, 901 North Market Street, Suite 718,
Wilmington, Delaware 19801.
Dated: Wilmington, Delaware
October 30, 1998
MORRIS, NICHOLS, ARSHT & TUNNELL
By: /s/ William H. Sudell
-----------------------
William H. Sudell, Jr.(No. 463)
Derek C. Abbott (No.3376)
1201 North Market Street
Wilmington, Delaware 19899-1347
(302) 658-9200
and
CAMHY KARLINSKY & STEINLLP
David Neier (DN 5391)
1740 Broadway, 16th Floor
New York, New York 10019-4315
(212) 977-6600
Attorneys for Debtors
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: S Chapter 11
S
FRUEHAUF TRAILER S CASE NO. 96-1563 (PJW)
CORPORATION, S
MARYLAND SHIPBUILDING & S
DRYDOCK COMPANY, F.G.R., INC., S
JACKSONVILLE SHIPYARDS, INC., S
FRUEHAUF INTERNATIONAL, S Jointly Administered
LIMITED, FRUEHAUF CORPORATION, S
THE MERCER CO., DEUTSCHE- S
FRUEHAUF HOLDING S
CORPORATION, MJ HOLDINGS, INC., S
and E. L. DEVICES, INC., S
S
Debtors. S
ORDER AND JUDGMENT CONFIRMING THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
AND GRANTING RELATED RELIEF
On September 16, 1998, a hearing was held concerning
confirmation (the "Confirmation Hearing") of the Debtors'
Amended Joint Plan of Reorganization, dated July 28, 1998
(together with any and all modifications and supplements thereto
as of the date hereof, the "Plan"), that was filed by Fruehauf
Trailer Corporation, Maryland Shipbuilding & Drydock Company,
F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc. (collectively, the "Debtors");
On the basis of the record of this case, including the
evidence presented at the Confirmation Hearing, and on the basis
of the Findings of Fact and Conclusions of Law entered
contemporaneously herewith (whose definitions and the
definitions contained in the Plan are incorporated herein by
reference) and which are incorporated herein by reference, and
the Court's oral Findings of Fact and Conclusions of Law on the
record at the hearing on Confirmation of the Plan, which also
are incorporated herein by reference, a transcript of which
shall be filed by the Debtors as soon as practicable;
The Court, having considered all objections ("Objections") to
confirmation of the Plan, including the objections of
Kelsey-Hayes Company, the Authorized Representative of Retirees,
California Portland Cement, and Furnival/State Machinery
Company, and to this Order and Judgment (hereinafter, "Order");
Now, upon request of the Debtors and after due deliberation,
the Court ORDERS, ADJUDGES AND DECREES THAT:
1. This Order shall be effective according to its terms upon
the entry thereof. The provisions ofparagraph 2 -10, 21, 26, 29,
30-38, 44-47, and this paragraph 1, shall be operative upon the entry of
this Order, and the remaining provisions of this Order shall be
operative solely as of the Effective Date.
2. The Plan complies with all applicable provisions of the
Bankruptcy Code and applicable Bankruptcy Rules relating to
confirmation, including those provisions contained in section
1129(b) pertaining to "cram down." The Plan and all provisions
thereof, including the Liquidating Trust Agreement, as modified
by agreements announced on the record in open Court and by the
Court's ruling on the record, are hereby confirmed in all
respects. All settlements and compromises provided pursuant to
the terms and provisions of the Plan are approved pursuant to
Bankruptcy Rule 9019(a) in the overall context of the Plan as
just, equitable, reasonable, and non-discriminatory compromises
of the controversies and/or Claims resolved by such settlements.
3. The First Modifications filed by the Debtors on September 16,
1998 to the Plan or to the Liquidating Trust Agreement are
hereby approved in accordance with Section 12.2 of the Plan and
applicable provisions of the Bankruptcy Code and Bankruptcy
Rules.
4. The record of the Confirmation Hearing is closed.
5. To the extent any Objections to confirmation of the Plan have
not been resolved or withdrawn prior to entry of this Order or
are not cured by the relief granted herein, all such Objections
are overruled, except to the extent such Objections are deemed
Claims objections, as to which Claims objections no ruling is
being made. All withdrawn Objections are deemed withdrawn with
prejudice.
6. Pending the occurrence of the Effective Date, the Debtors
shall be subject to all of the provisions of the Bankruptcy
Code, except as specifically provided in the Plan, the
Liquidating Trust Agreement, or this Order. Without limiting
the generality of the foregoing, pending the occurrence of the
Effective Date:
a. The Debtors are authorized to operate and manage their
businesses and assets in compliance with the terms and
provisions of the Plan, and in accordance with the Bankruptcy
Code.
b. All property to be transferred or otherwise dealt with in
the Plan shall remain property of the Debtors' bankruptcy
estates, and such bankruptcy estates shall continue until the
occurrence of the Effective Date.
c. Unless otherwise ordered by the Court, all injunctions or
stays provided for in the Reorganization Case pursuant to
sections 105 or 362 of the Bankruptcy Code or otherwise in
effect on the Confirmation Date shall continue in effect until
the Effective Date, provided however, that this provision shall
not affect prior orders of this Court granting relief from the
stay.
d. Notwithstanding Confirmation of the Plan, this Court
retains jurisdiction as is provided in Article 11 of the Plan.
7. In accordance with section 1142 of the Bankruptcy Code, the
Debtors, the Indenture Trustee and the Liquidating Trustee, and
any and all other parties-in-interest herein are authorized and
directed, without the necessity of any further corporate action
or other approval, to immediately take any action necessary or
appropriate to implement, effectuate and consummate the Plan and
the Liquidating Trust, including all modifications thereto as of
the date hereof and any other modifications hereafter approved
in accordance with this Order (the "Approved Modifications"),
and any transactions contemplated thereby or by this Order in
accordance with their respective terms, as such terms may be
amended from time to time (collectively, the "Provisions") in
accordance with the applicable provisions of the Plan and the
Bankruptcy Code and Rules, including, without limitation, the
issuance, execution, and delivery of the Liquidating Trust
Agreement and any other document, certificate, agreement or
instrument and the transfer of any security.
8. Upon entry of this Order (and prior to the Effective Date),
the Debtors are authorized and directed to form and to
incorporate in accordance with the laws of the state of
Delaware, JSI Property Corp. and Pension Corp. The Debtors are
authorized to prepare and execute Bylaws and Certificates of
Incorporation for JSI Property Corp. and Pension Corp. and to
capitalize such corporations in the minimum amount required by
the laws of the state of Delaware.
9. Upon entry of this Order (either prior to the Effective Date
or after the Effective Date), the Debtors shall transfer
sponsorship of the current Management Plan and Union Plan to
Pension Corp. The current sponsors are Fruehauf Trailer
Corporation for the Management Plan and Jacksonville Shipyards,
Inc. for the Union Plan. The Board of Directors of the
respective sponsors shall approve the change in sponsorship.
The appropriate notices and governmental filings to comply with
federal law shall be provided in a timely manner to the
appropriate parties. Once the change in sponsorship has been
completed, Pension Corp. may elect to merge the Management Plan
and Union Plan to form a single plan.
10. Any of the Chief Executive Officer, the President, any Vice
President and the Secretary of the Debtors, and, after the
Effective Date, the Liquidating Trustee, is authorized and
designated, upon the entry of this Order, to execute any
agreements, and any other certificates, instruments or documents
that such officer deems necessary or advisable in order to
consummate and effectuate the Plan and the Provisions as of the
time they are to become effective. No further approval of the
Board of Directors or shareholders of the Debtors shall be
required with respect to the implementation and consummation of
the Plan or the Provisions.
11. The Debtors, the Indenture Trustee and the Liquidating
Trustee are authorized, directed and instructed to take all
steps necessary to implement the terms of the Plan in accordance
with the terms thereof both prior to and as of the Effective
Date. On the Effective Date, the following transactions are
approved and ratified and are directed to occur:
a. The Debtors' estates shall be substantively consolidated for
purposes of distributions under the Plan. Pursuant to Section
6.14 of the Plan, a creditor who had a pre-petition right of
recovery against more than one Debtor for the same Claim will be
limited to one Allowed Claim in the Allowed amount owed to the
creditor. Accordingly, all duplicate claims listed under the
column "Claims To Be Disallowed" in Exhibit B of the Plan are
hereby disallowed in full and expunged. All intercompany claims
shall be extinguished.
b. In response to the Debtors' Motion to Fix the Distribution
Fund, the Court fixes the Distribution Fund at $4,059,971.37.
The Debtors shall deposit $4,059,971.37 into the Distribution
Fund and shall transfer the Distribution Fund to the
Liquidating Trust on behalf of and for the benefit of the
holders of Allowed Administrative, Priority and Pre-Petition Tax
Claims.
c. The Debtors shall transfer the Wabash Securities to the
Indenture Trustee for distribution to the holders of the Senior
Notes in accordance with the terms of this Plan.
d. Jacksonville Shipyards, Inc. shall transfer the Hogan's
Creek Property and Pickettsville Property to JSI Property Corp.
e. The Indenture Trustee shall be deemed to have foreclosed the
liens of the holders of the Senior Notes on the Foreclosed
Assets and to have transferred the Foreclosed Assets to the
Liquidating Trust. The Foreclosed Assets shall be transferred
to the Liquidating Trust on behalf of and for the benefit of the
holders of Class A Beneficial Interests in the Liquidating
Trust.
f. The Debtors shall convey all of their remaining assets to the
Liquidating Trust free and clear of all liens, claims and
encumbrances on behalf of and for the benefit of the holders of
Class A Beneficial Interests in the Liquidating Trust.
g. Each holder of each Claim will be deemed to have ratified and
become bound by the terms of the Liquidating Trust Agreement.
The Liquidating Trustee is empowered to execute the Liquidating
Trust Agreement on behalf of each holder of a Claim.
h. The Debtors shall be dissolved or liquidated and such
dissolutions shall be deemed authorized and approved in all
respects and on the Effective Date, the corporate dissolutions
shall be deemed to have occurred and shall be in effect from and
after the Effective Date pursuant to applicable state laws
without any requirement of further action by the stockholders or
directors of the Debtors; provided however, that the non-Debtor
subsidiaries of the Debtors transferred to the Liquidating Trust
shall not be dissolved.
12. The Liquidating Trust Agreement, in the form presented at
the Confirmation Hearing, is approved and the Liquidating
Trustee shall, on and after the Effective Date, have the duties
and responsibilities outlined in such Liquidating Trust
Agreement. The Debtors are authorized to engage the services of
Chriss Street as Liquidating Trustee on substantially the terms
described in Section IV(L) of the Disclosure Statement and, by
entry of this Order, his retention is hereby approved. The
Liquidating Trustee shall be entitled to retain employees and
professionals to assist in the performance of his duties in
accordance with the terms of the Liquidating Trust. The
Liquidating Trustee may pay the professionals he retains without
further court approval.
13. The Trust Advisory Committee shall be comprised of Kevin
Schweitzer and Thomas L. Kempner, Jr.
14. The Official Committee of Unsecured Creditors (the
"Creditors' Committee") and the Unofficial Committee of Senior
Secured Noteholders (the "Bondholders' Committee") shall be
dissolved on the day after the Effective Date and the members
thereof shall be released and discharged of and from further
authority, duties, responsibilities and liabilities related to
or arising from the Reorganization Case. Furthermore, the
Authorized Representative of the Retirees shall be released and
discharged of and from further authority, duties,
responsibilities and liabilities related to or arising from the
Reorganization Case after the Effective Date.
15. The Indenture Trustee for the Senior Notes may continue to
provide services after the Effective Date in accordance with the
terms of the Plan and shall be entitled to compensation and
reimbursement for services rendered and expenses incurred in
connection with making the initial distributions to the holders
of the Senior Notes after the Effective Date. Distributions
16. The treatments for classes and claims set forth in Articles
3 and 4 of the Plan and the distributions procedures set forth
in Article 7 of the Plan comply with the applicable provisions
of the Bankruptcy Code and Rules and are hereby approved as
reasonable and appropriate.
17. No payments or other distributions of property shall be made
on account of any Claim or portion thereof unless and until such
Claim or portion thereof is Allowed.
18. Distributions required to be made on a particular date, or
any other actions pertaining to distributions that are required
to be made on a particular date, shall be deemed to have been
made on such date if actually made on such date or as soon
thereafter as practicable.
19. Distributions to the holders of Allowed Administrative,
Priority and Pre-petition Tax Claims shall be made by the
Liquidating Trustee from the Distribution Fund. The holders of
Allowed Administrative, Priority and Pre-petition Tax Claims
shall have a beneficial interest in the Liquidating Trust's
interest in the Distribution Fund and shall not have a
beneficial interest in any other assets of the Liquidating Trust.
20. The Liquidating Trustee shall deliver the Requisite
Percentage of Class A Beneficial Interests to the Indenture
Trustee on the Effective Date. The Indenture Trustee shall
distribute the Wabash Securities and the Class A Beneficial
Interests, Pro Rata, to the holders of the Senior Notes.
21. The Indenture Trustee shall, if it has not already done so,
certify to the Debtors a list of the registered holders of the
Senior Notes as of the Ballot Record Date (August 7, 1998)
designating the name, address, taxpayer identification number
(if known), certificate number, and the amount of unpaid
principal and accrued interest owed to each holder on their
respective securities. Notwithstanding the existence of proofs
of claim that may have been filed in these Reorganization Cases
by alleged holders of Senior Notes, or information in the
Debtors' Schedules of Liabilities listing record holders of
Senior Notes on the Petition Date, the Indenture Trustee shall
distribute all distributions of property to be made pursuant to
the Plan to the record holders of Senior Notes, as of the Ballot
Record Date, unless, prior to such Distribution, the holder of
any such Claim furnishes (or causes its transferee to furnish)
the Indenture Trustee, or its agent, with sufficient evidence
(in the Indenture Trustee's or its agent's sole and absolute
discretion) of the subsequent transfer of such Claim, in which
event the Indenture Trustee shall distribute, or cause to be
distributed, all distributions of property to the holder of such
Claim as of the distribution date, pursuant to Bankruptcy Rule
3021.
22. The Liquidating Trustee shall pay all reasonable fees and
expenses of the Indenture Trustee in acting as distribution
agent to the holders of the Senior Notes, as and when such fees
and expenses become due, without further order of the Bankruptcy
Court. The payments shall not be made from the Distribution
Fund.
23. The transfer of the Wabash Securities to the Indenture
Trustee, the transfer of the Distribution Fund to the
Liquidating Trust, the transfer of the Hogan's Creek Property
and Pickettsville Property to JSI Property Corp., the deemed
foreclosure of the Foreclosed Assets by the Indenture Trustee,
and the transfers by the Debtors to the Liquidating Trust
contemplated by the Plan and in the preceding paragraphs of this
Order, will be legal, valid, binding and effective transfers of
property and will, to the fullest extent permitted by the
Bankruptcy Code, vest in the transferee good title to such
property, free and clear of all liens, Claims and encumbrances,
except as otherwise provided in the Plan or this Order.
24. On the Effective Date, all Old Securities shall be
terminated and canceled, and the indentures or statements of
resolution governing such Old Securities shall be rendered void.
The voiding of the indentures and Old Securities shall not act
as a bar to the assertion by the Indenture Trustee of a Claim
for services rendered after the Effective Date. The Debtors
retain the right to object to such Claims on other grounds.
25. On the Effective Date, all outstanding stock option
agreements under any plans from which stock option rights derive
or any other option agreements, together with such plans, shall
each be canceled and terminated and each shall be deemed void
and of no force, effect or value.
Plan Implementation/Effect
- --------------------------
26. Each of the actions taken, payments made and liens and
security interests granted on, after, or before the Effective
Date pursuant to the provisions of the Plan and this Order shall
be valid, binding and enforceable and not preferential,
fraudulent or an otherwise avoidable transfer under the
Bankruptcy Code or under applicable law of the United States or
any state, province or other jurisdiction.
27. In accordance with section 1141 of the Bankruptcy Code, the
Plan and each of its provisions and the Liquidating Trust
Agreement, together with all Approved Modifications, shall be
binding upon the Debtors, each Person or entity acquiring or
receiving property under the Plan, each lessor or lessee of
property to or from the Debtors, each holder of a Claim against
or Equity Interest in the Debtors, whether or not the Claim or
Equity Interest of such Creditor or Equity Interest Holder is
impaired under the Plan and whether or not such Creditor or
Equity Interest Holder has filed, or is deemed to have filed, a
proof of Claim or Equity Interest, or has accepted or rejected
the Plan, and each party to this case, and irrespective of
whether such provision of the Plan is specifically mentioned or
otherwise referred to in this Order.
28. In accordance with section 1141 of the Bankruptcy Code and
except as provided in the Plan, any property transferred or
otherwise dealt with in the Plan shall be free and clear of all
Claims against and Equity Interests in the Debtors. An
exception to the foregoing is set forth in Section 3.1(c)(iii)
and Section 3.2 of the Plan, which provides that to the extent
that the holder of a Tax Claim or a Pre-petition Tax Claim holds
a lien to secure its Claim under applicable state law, to the
extent that such lien survives the deemed foreclosure by the
holders of the Senior Notes on the Effective Date, the lien
shall be released from all assets of the Debtors and shall
attach on the Effective Date to the Distribution Fund. To the
extent that a Pre-petition or post-petition Tax Claim is a
Disputed Claim, any lien securing such Disputed Claim under
applicable state law that survives the deemed foreclosure by the
holders of the Senior Notes shall attach to the Distribution
Fund reserve for such Claim. Upon disallowance of a Disputed
Tax Claim or allowance and payment of a Tax Claim, any lien
securing such Claim shall be released. Either the Debtors or
the Liquidating Trustee may surrender the property securing a
Tax Claim to the holder of such Claim in full satisfaction of
its Claim.
29. None of the Debtors, their officers and directors and the
professional Persons employed by them, Unsecured Creditors'
Committee and its members and the professional Persons employed
by the Unsecured Creditors' Committee; the Indenture Trustee and
any professional Persons retained by it; the Bondholders'
Committee and its members and professional Persons employed by
the Bondholders' Committee; The Authorized Representative of
Retirees and its professional Persons; the Liquidating Trust and
any professional Persons retained by it; the Liquidating
Trustee; Morris, Nichols, Arsht & Tunnell; Camhy Karlinsky &
Stein; Price Waterhouse; Haynes and Boone, L.L.P.; Alvarez &
Marsal, Inc.; and Oppenheimer & Co., Inc.; any of their
affiliates nor any of their officers, directors, partners,
associates, employees, members or agents (collectively the
"Exculpated Persons"), shall have or incur any liability to any
Person for any act taken or omission made in good faith in
connection with or related to the Bankruptcy Cases or actions
taken therein, including negotiating, formulating, implementing,
confirming or consummating the Plan, the Disclosure Statement,
or any contract, instrument, or other agreement or document
created in connection with the Plan. The Exculpated Persons
shall have no liability to any Creditors or Equity Security
Holders for actions taken under the Plan, in connection
therewith or with respect thereto in good faith, including,
without limitation, failure to obtain Confirmation of the Plan
or to satisfy any condition or conditions, or refusal to waive
any condition or conditions, precedent to Confirmation or to the
occurrence of the Effective Date. Further, the Exculpated
Persons will not have or incur any liability to any holder of a
Claim, holder of an Interest, or party-in-interest herein or any
other Person for any act or omission in connection with or
arising out of their administration of the Plan or the property
to be distributed under the Plan, except for gross negligence or
willful misconduct as finally determined by the Bankruptcy
Court, and in all respects such persons will be entitled to rely
upon the advice of counsel with respect to their duties and
responsibilities under the Plan.
30. Pursuant to sections 1123(a) and 1142(a) of the Bankruptcy
Code, the provisions of this Order, the Plan and the Liquidating
Trust Agreement, as modified by the Approved Modifications and
announced in open Court at the Confirmation Hearing, and all
other agreements and documents executed and delivered pursuant
to the Plan shall apply and be enforceable notwithstanding any
otherwise applicable nonbankruptcy law.
31. The Liquidating Trustee shall have the right, to the full
extent permitted by section 1142 of the Code, to apply to this
Court for an order, notwithstanding any otherwise applicable
nonbankruptcy law, directing any appropriate entity to execute
and deliver an instrument or perform any other act necessary to
implement the Plan or the provisions of this Order.
32. No claims of the Debtors against any person or entity shall
be discharged, released or compromised pursuant to the Plan or
this Order except to the extent specifically set forth in the
terms and provisions of the Plan.
Exemptions
- ----------
33. Pursuant to section 1145 of the Code, distribution of the
Wabash Securities to the holders of the Allowed Class 2 Claims
and the delivery of the evidence of the Beneficial Interests to
holders of Allowed Class 2 and Class 4 Claims is exempt from the
registration requirements set forth in Section 5 of the
Securities Act of 1933, as amended (15 U.S.C. S 77(e), as
amended) (the "Securities Act") and from any state or local law
requiring registration for the offer or sale of a security or
registration or licensing of an issuer of, underwriter of, or
broker or dealer in, a security. Subsequent resales of the
Wabash Securities or the evidence of Beneficial Interests may be
effected without registration under Section 5 of the Securities
Act or compliance with Rule 144 thereunder, provided that the
selling holders are not "underwriters," as defined in Section
1145(b)(1) of the Bankruptcy Code.
34. The transfer of the stock of Pension Corp., JSI Property
Corp. and Fruehauf de Mexico is exempt from the registration
requirements of the Securities Act pursuant to Section 1145 of
the Code because the Stock is the Stock of "affiliates" of the
Debtors who are participating in the Plan with the Debtors.
35. The issuances, transfers or exchanges of securities under
the Plan (including the issuance of the Class A Beneficial
Interests and transfers of the Wabash Securities, the transfer
of the Pension Corp., JSI Property Corp. and Fruehauf de Mexico
Stock to the Liquidating Trust, and the transfer of the Class A
Beneficial Interests to holders of Allowed Class 2 and Class 4
Claims), the transfers of property pursuant to the Plan, as well
as any sale of such property by the Liquidating Trust, and the
making or delivery of an instrument of transfer, shall be exempt
from tax to the fullest extent permitted by Section 1146(c) of
the Bankruptcy Code.
Timing/ Procedures
- ------------------
36. The Effective Date shall occur on October 1, 1998 if no
stay of the Confirmation Order is in effect. The Debtors shall
file a Notice of Effective Date with the Court on or prior to
the Effective Date. Upon the filing of the notice, without
further order of the Court or other action, the Effective Date
of the Plan shall be deemed to have occurred, the Plan shall be
fully effective, and the provisions of this Order and the Plan
related to the period on or after the Effective Date shall come
into full force and effect. The Debtors shall serve copies of
the notice of the Effective Date of the Plan, as soon as
practicable after the Effective Date and cause such notice to be
published, in the same manner as specified in paragraph 38 below with
respect to this Order.
37. "Substantial consummation" of the Plan as defined in section
1101(2) of the Code, shall be deemed to occur upon (1) the
Debtors' funding of the Distribution Fund; (2) the distribution
of the Wabash Securities to the holders of Allowed Class 2
Claims; (3) the deemed foreclosure of the Debtors' assets by the
Indenture Trustee on behalf of the holders of Senior Notes and
the transfer of such assets to the Liquidating Trust on behalf
of and for the benefit of the holders of Class A Beneficial
Interests in the Liquidating Trust; and (4) the Debtors'
transfer of any other assets, free and clear of claims, to the
Liquidating Trust.
38. Pursuant to Bankruptcy Rule 3020(c), the Debtors shall (a)
within five (5) business days after the entry of this Order
serve notice of the entry of this Order as provided in
Bankruptcy Rule 2002(f) to all persons and entities listed on
the 2002 Service List, to be sent by first class mail, postage
prepaid, except to such parties who may be served by hand or
facsimile or overnight courier, which service is hereby
authorized, and (b) cause such notice to be published as soon as
practicable in The Wall Street Journal, national edition and
such other publications as the Debtors may designate.
39. The Debtors are authorized to reject on the Effective Date
all pre-petition executory contracts and unexpired leases to
which the Debtors are a party, except for any executory contract
or unexpired lease that (i) has been assumed or rejected
pursuant to a Final Order, or (ii) is the subject of a pending
motion for authority to assume the contract or lease filed prior
to the Confirmation Date. All proofs of claim with respect to
Claims arising from the rejection of executory contracts or
unexpired leases for which no earlier bar date has been
established shall be filed with the Bankruptcy Court within
forty-five (45) days after the mailing of notice of Confirmation
Order. Any Claims arising from any such rejection not filed
within such times shall be forever barred from assertion against
the Debtors, their estates and property, or any successor to the
Debtors.
40. All applications for final compensation of professional
persons employed by the Debtors, the Creditors' Committee, the
Authorized Representative or the Bondholders' Committee,
pursuant to orders entered by the Bankruptcy Court, on account
of services rendered prior to the Effective Date, and all other
requests for payment of administrative costs and expenses
incurred prior to the Effective Date pursuant to Code sections
507(a)(1) or 503(b) shall be filed with the Bankruptcy Court and
served on the Liquidating Trustee no later than forty-five (45)
days after the Effective Date. Holders of Administrative Claims
that are required to File a request for payment of such Claims,
Claims of professionals requesting compensation or reimbursement
of expenses and the holders of any Claims for federal, state or
local taxes that do not File such requests by the applicable bar
date shall be forever barred from asserting such Claims against
the Debtors, the Liquidating Trust, any of their affiliates or
any of their respective property. With regard to professional
persons employed pursuant to orders entered by the Bankruptcy
Court, nothing in this paragraph or Order precludes them from
receiving (or the Debtors or Liquidating Trust from paying)
interim amounts due and owing to such professionals, pursuant to
the Administrative Order Under 11 U.S.C. SS 105(a) and 331
Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals entered on October 8,
1996 in this case, for services rendered prior to the Effective
Date. All such interim amounts paid to such professionals will
be subject to final approval of the Bankruptcy Court according
to the process outlined in this paragraph.
41. After the Effective Date, the Liquidating Trust shall retain
and have the exclusive right to object to Claims on any basis.
Except as provided for with respect to applications of
professionals for compensation and reimbursement of expenses
(see paragraph 42 below), or as otherwise ordered by the
Bankruptcy Court after notice and a hearing, objections to
Claims, including Administrative Claims, shall be Filed and
served upon the holder of such Claim or Administrative Claim not
later than the later of (a) one hundred and twenty (120) days
after the Effective Date, and (b) one hundred and twenty (120)
days after a proof of claim or request for payment of such
Administrative Claim is Filed, unless this period is extended by
the Court. Such extension may occur ex parte.
42. Objections to Administrative Claims of professionals seeking
reimbursement from the estate timely filed in accordance with
this Order must be filed no later than seventy (70) days after
the Effective Date. Except as otherwise provided herein,
applications need not be filed for payment of any claim arising
on or after the Effective Date.
43. Except as otherwise provided in the Plan, or in any
contract, instrument, release, or other agreement entered into
in connection with the Plan, on and after the Effective Date, in
accordance with section 1123(b) of the Bankruptcy Code, the
Liquidating Trust shall retain and may enforce any claims,
rights and causes of action that the Debtors or the Estates may
hold against any entity, including, without limitation, any
claims, rights or causes of action arising under sections 544
through 551 or other sections of the Bankruptcy Code or any
similar provisions of state law, or any other statute or legal
theory. The Liquidating Trustee or any successor to or designee
of the Liquidating Trust may pursue those rights of action, as
appropriate, in accordance with what is in the best interests of
the holders of the Class A Beneficial Interests of the
Liquidating Trust.
44. Pursuant to section 12.2 of the Plan, the Debtors shall have
the right to modify or amend the Plan and the Liquidating Trust
Agreement to the fullest extent permitted by law. Any such
modifications shall be heard by the Court on such expedited
notice as the Debtors shall request and the Court shall
determine is reasonable under the circumstances given. 45. At
all times prior to the Effective Date, without further order of
the Court, the Debtors are authorized to make non-substantive
modifications to the Liquidating Trust Agreement in order to
make corrections or modifications of a typographical and
ministerial nature.
46. Notwithstanding the entry of this Order or the occurrence of
the Effective Date, this Court shall retain such jurisdiction
over the Reorganization Case after the Effective Date as is set
forth in Article 11 of the Plan.
47. To the extent any Claim is payable, in whole or in part,
pursuant to an insurance policy or policies, issued by an
insurance company on behalf of a Debtor, or any predecessor to a
Debtor, holders of such Claim shall be entitled to maintain
actions after the Effective Date against the applicable Debtor
and/or insurance company; provided, however, that any award
granted in any such action shall be recoverable only from the
applicable insurance company and shall be net of any deductible,
self insured retention or similar contractual undertaking.
Neither confirmation of the Plan nor the dissolution of the
Debtors pursuant to the Plan shall alter an allegedly injured
party's right to coverage under any insurance policy. The
Liquidating Trustee shall provide cooperation to the extent
reasonably practicable given the Liquidating Trustee's staff, to
any Claimant seeking information regarding the existence and
terms of any such insurance policy.
48. All creditors' rights to setoffs under section 553 of the
Bankruptcy Code, with respect to Claims asserted by the Debtors
or on behalf of the Liquidating Trust, shall be preserved and
are not impaired by the Plan, provided that a set off may not be
exercised without permission from this Court.
49. Subject to final documentation in a stipulated Order which
will be presented to the the Court, the Court approves a
settlement put on the record at the confirmation hearing on
September 16, 1998, by and between the Debtor and Kelsey-Hayes
Company.
50. Having approved a settlement between the Debtors and
Congress Financial Corporation ("Congress") by Order dated
September 16, 1998, the Court, at the request of Congress,
hereby orders the ballot submitted by Congress to reject the
Plan to be withdrawn.
51. Having heard the objection of the Authorized Representative
of Retirees to confirmation of the Plan and the responses
thereto by the Debtors and the Unofficial Committee Senior
Secured Noteholders, with the consent of the Debtors, it is
hereby ordered that, nothing herein or in the Plan shall
prejudice the rights of retirees to object (or pursue any other
lawful remedy) if and when the Debtors seek to recapture
residual assets in a pension plan pursuant to ERISA S 4044(d) ,
29 U.S.C. S 1344(d)(1), or any other law, rule or regulation .
All such rights of retirees are expressly reserved.
52. This is a final order immediately subject to appeal.
SIGNED this 17th day of September, 1998.
/s/Peter J. Walsh
------------------
HONORABLE PETER J. WALSH
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
FRUEHAUF TRAILER )
CORPORATION, et. al. ) Case Nos. 96-1563
) Through 96-1572 (PJW)
)
) (Jointly Administered)
)
Debtors )
ORDER AMENDING (A) THE DEBTORS' AMENDED
JOINT PLAN OF REORGANIZATION, (B) THE ORDER AND
JUDGEMENT CONFIRMING THE DEBTORS' PLAN AND
(C) THE ELEVENTH OMNIBUS ORDER
On October 8, 1998, a hearing (the "Hearing") was held
concerning the motion of the above-captioned debtors and
debtors-in-possession (the "Debtors") dated October 5, 1998 (the
"Motion") to (a) the Debtors' Amended Joint Plan of
Reorganization dated July 28, 1998 (the "Plan"), (b) the Order
and Judgement Confirming the Plan under Chapter 11, dated and
entered September 17, 1998 (Docket No. 1524) (the "Confirmation
Order"), and (c ) the Order on Allowance of Claims dated
September 16, 1998 (the "Eleventh Omnibus Order");
On the basis of the record of this case, including the
evidence presented at the Hearing; and the Court, having
considered the motion dated September 28, 1998, of Certain
Underwriters at Lloyd's, London and Certain London Market
Insurance Companies (collectively, the "London Insurers") to
amend the Confirmation Order and Eleventh Omnibus Order, and any
objections to the relief requested herein and the arguments of
counsel at the hearing on behalf of Furnival/State Machinery
Company, the London Insurers, certain individuals who filed
unsecured proofs of claim against Maryland Shipbuilding & Dry
Dock Company and who are represented by the Offices of Peter G.
Angelos, Esq., 5905 Harford Road, Union Park Center, Baltimore,
Maryland 21214, Attn: Paul Matheny, Esq. and were the subject of
the Eleventh Omnibus Order, National Union Fire Insurance of
Pittsburgh, Pa. And related companies that filed proof of claim
number 8761 ("National Union"), the Unofficial Committee of
Senior Secured Noteholders, the Official Committee of Unsecured
Creditors, and the Debtors (collectively, the "Parties");
Now, upon request of the Debtors and after due
deliberation, the Court ORDERS, ADJUDGES AND DECREES THAT:
1. The Motion is granted to the extent set forth below.
2. All terms not otherwise defined herein shall have the
meanings ascribed to them in the Plan.
3. On September 17, 1998, the Bankruptcy Court entered the
Findings of Fact and Conclusions of Law Regarding Order and
Judgement Confirming the Debtos' Plan (the "Findings of Fact")
(Docket No. 1523), the Confirmation Order and the Amended First
Modifications to the Debtors' Plan (the "Plan Modifications")
(Docket No. 1525).
4. This Court has jurisdiction over this matter pursuant to 28
U.S.C. SS 157 and 1334, and the Orders in this District dated
July 23, 1984 and June 13, 1994 referring to the bankruptcy
judges cases arising under title 11 and proceedings arising
under title 11 or arising in or related to a case under title
11, which Orders remain applicable in these cases. This is a
core proceeding pursuant to 28 U.S.C. SS 157(b)(2). Venue is
proper before this Court pursuant to 28 U.S.C. SS 1408 and 1409.
The statutory basis for the relief sought herein is section 1127
of the Bankruptcy Code.
5. The Amendments to the Plan, the Confirmation Order and the
Eleventh Order set forth below are approved.
6. A new Section 1.31a is added to the Plan to state:
"FrudeMex" means FRUDEMEX, INC., a newly created Delaware
corporation which will own the stock of Fruehauf de Mexico and
which will be owned by each Debtor which contributes its stock
in Fruehauf de Mexico.
7. Section 1.34 of the Plan is amended to state:
"Foreclosed Assets" means the Debtors' assets on which the
Indenture Trustee shall be deemed to have foreclosed the liens
of the holders of the Senior Notes pursuant to Section 6.5 of
this Plan. The Foreclosed Assets shall include all assets of
the Debtors, including, but not limited to, the stock of JSI
Property Corp., Pension Corp. and Frudemex, and all rights to
receive tax refunds, but excluding the Distribution Fund, the
stock of Fruehauf de Mexico and the Wabash Securities.
8. A new Section 6.4a is added to the Plan to state:
On or prior to the Effective Date, each Debtor which owns stock
in Fruehauf de Mexico shall receive a pro rata share of the
stock in FrudeMex in exchange for consideration of each Debtors'
stock in Fruehauf de Mexico.
9. Section 6.10 of the Plan is amended to state:
The Confirmation Order shall provide that (a) the distribution
of the Wabash Securities to holders of Allowed Class 2 Claims,
(b) the transfer to the Liquidating Trust of the stock of
FrudeMex, Pension Corp. and JSI Property Corp., and (c) the
issuance and transfer pursuant to the Plan of the beneficial
interests in the Liquidating Trust and the Trust Certificates
and any resale of such property shall be exempt from any and all
federal, state and local laws requiring the registration of such
security, to the fullest extent provided by section 1145 of the
bankruptcy code.
10. Paragraph 34 of the Confirmation Order is amended to state:
The transfer of the stock of Pension Corp., JSI Property Corp.
and FrudeMex is exempt from the registration requirements of the
Securities Act pursuant to Section 1145 of the Code because the
Stock is the Stock of "affiliates" of the Debtors who are
participating in the Plan with the Debtors.
11. Section 6.15 of the Plan is amended to state:
The issuance and transfer of the Wabash Securities, the issuance
and distribution of the Pension Corp., FrudeMex and JSI Property
Corp. Stock, and the transfer and ultimate sale of the
Foreclosed Assets as provided in this Plan shall not be taxed
under any law imposing a stamp tax or similar tax in accordance
with 11 U.S.C. SS 1146(c ).
12. Paragraph 35 of the Confirmation Order is amended to state:
The issuance, transfers or exchanges of securities under the
Plan (including the issuance of the Class A Beneficial Interests
and transfers of the Wabash Securities, the transfer of the
Pension Corp., JSI Property Corp. and FrudeMex Stock to the
Liquidating Trust, and the transfer of the Class A Beneficial
Interests to holders of Allowed Class 2 and Class 4 Claims), the
transfers of property pursuant to the Plan, as well as any sale
of such property by the Liquidating Trust, and the making or
delivery of an instrument of transfer, shall be exempt from tax
to the fullest extent permitted by Section 1146(c ) of the
Bankruptcy Code.
13. Paragraph 47 of the Confirmation Order, Paragraph 10 of the
Plan Modification and Section 9.8 of the Plan are amended to
state:
To the extent any Claim is payable, in whole or in part,
pursuant to an insurance policy or policies, issued by an
insurance company on behalf of a Debtor, or any predecessor to a
Debtor, holders of such Claim shall be entitled to maintain
actions after the Effective Date against the applicable Debtor
and/or insurance company if such actions can otherwise be
maintained under applicable law; provided, however, that any
award or settlement, if any, granted in any such action shall be
recoverable only from the proceeds of any applicable insurance
policy and shall be net of any deductible, self insured
retention or similar contractual undertaking, provided that the
foregoing shall not preclude National Union from paying the full
amount of its obligations. Neither confirmation of the Plan nor
the dissolution of the Debtors pursuant to the Plan shall alter
an allegedly injured parties' right to coverage under any
insurance policy or any rights of any insurer under any
applicable law; not shall confirmation of the Plan or the
dissolution of the Debtors pursuant to the Plan limit or
otherwise prejudice the ability of any Debtor or insurance
company to raise any defense that the Debtor has against any
Claimant or any other insurance company. The Liquidating
Trustee shall provide cooperation to the extent reasonably
practicable given the Liquidating Trustee's staff, to any
Claimant seeking information regarding the existence and terms
or any such insurance policy. The Liquidating Trustee shall
further provide cooperation to the extent reasonably practicable
given the Liquidating Trustee's staff , to any insurance company
seeking information with respect to insurance claims. The
Parties and all other parties in interest reserve the right to
seek further or additional commitments from the Liquidating
Trustee on notice and motion to the Parties and to the United
States Trustee within 120 days from the date of docketing of
this Order.
National Union has provided insurance services to the Debtors
and asserts rights to hold and use certain collateral (the
"Collateral"). The Debtors have objected to National Union's
proofs of claim and have commenced an adversary proceeding
against National Union for turnover of the Collateral. National
Union shall not settle any insured claim where such settlement
may adversely affect a substantive interest of the Debtors'
estates, including without limitation, the Collateral, without
the approval of the Liquidating Trustee or authorization of this
Court. Nothing herein shall limit National Union's rights, if
any, against the Debtors or the Collateral.
14. Paragraph 3 of the Eleventh Omnibus Order is amended to
state:
Nothing contained herein shall (a) constitute a finding that any
insurance exists or is applicable to the Claimants' Claims; or
(b) be deemed to expand the coverage provided by the London
Insurers or other insurers. In addition, all the London
Insurers or other insurers' rights and defenses under the
Policies are hereby preserved. The Liquidating Trustee shall
further provide cooperation to the extent reasonably practicable
given the Liquidating Trustee's staff, to London Insurers or any
other applicable insurance company seeking information with
respect to insurance claims. The Parties and all other parties
in interest reserve the right to seek further or additional
commitments from the Liquidating Trustee on notice and motion to
the Parties and to the United States Trustee within 120 days
from the date of docketing of this Order.
15. Section 11.5 of the Plan is amended to state:
5. Decide or resolve any and all applications, motions,
adversary proceedings, contested or litigated matters and any
other matters or grant or deny any applications involving the
Debtors that the court could have decided prior to the
confirmation date under the jurisdiction granted pursuant to 28
U.S.C. SS 157 and 1334.
16. Paragraph 36 of the Confirmation Order is amended to state:
The Effective Date shall occur on October 19, 1998, or three
business days after the Court enters this Order, whichever is
later, if no stay of the Confirmation Order is in effect. The
Debtors shall file a Notice of Effective Date with the Court on
or prior to the Effective Date. Upon the filing of the notice,
without further order of the Court or other action, the
Effective Date of the Plan shall be deemed to have occurred, the
Plan shall be fully effective, and the provisions of this Order
and the Plan related to the period on or after the Effective
Date shall come into full force and effect. The Debtors shall
serve copies of the notice of the Effective Date of the Plan, as
soon as practicable after the Effective Date and cause such
notice to be published, in the same manner as specified in
paragraph 38 below with respect to this Order.
17. This is a final order immediately subject to appeal.
Signed this 20th day of October, 1998.
/s/ Peter J. Walsh
-----------------------
HONORABLE PETER J. WALSH
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: S Chapter 11
S
FRUEHAUF TRAILER S CASE NO. 96-1563 (PJW)
CORPORATION, S
MARYLAND SHIPBUILDING & S
DRYDOCK COMPANY, F.G.R., INC., S
JACKSONVILLE SHIPYARDS, INC., S
FRUEHAUF INTERNATIONAL, S Jointly Administered
LIMITED, FRUEHAUF CORPORATION, S
THE MERCER CO., DEUTSCHE- S
FRUEHAUF HOLDING S
CORPORATION, MJ HOLDINGS, INC., S
and E. L. DEVICES, INC., S
S
Debtors. S
FIRST MODIFICATIONS TO DEBTORS' AMENDED
JOINT PLAN OF REORGANIZATION DATED JULY 28, 1998
Fruehauf Trailer Corporation, Maryland Shipbuilding & Drydock
Company, F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc. (collectively, the "Debtors"), modify the
Debtors' Amended Joint Plan of Reorganization Dated July 28,
1998 (the "Plan") as follows:
1. The definition of Class A Beneficial Interests set forth in
paragraph 1.16 of the Plan shall be modified so that the
following sentence is added to the definition: The holders of
Class A Beneficial Interests shall be reflected in the books and
records of the Liquidating Trust in the manner of an
uncertificated security.
2. Paragraph 1.68 of the Plan shall be modified to eliminate the
definition of Trust Certificates.
3. Article 6.7(i) of the Plan shall be modified to eliminate the
reference to Trust Certificates and shall read as follows:
Distribution of Class A Beneficial Interests. Each holder of an
Allowed Class 2 or Allowed Class 4 Claim shall be notified by
the Liquidating Trustee or the Indenture Trustee in writing of
the amount or extent of the holder's interest in Class A
Beneficial Interests in the Liquidating Trust.
4. Article 6.10 of the Plan shall be modified to eliminate the
reference to Trust Certificates so that Section (c) of the
Article shall read as follows: The issuance and transfer
pursuant to the Plan of the beneficial interests in the
Liquidating Trust and any resale of such property shall be
exempt from any and all federal, state and local laws requiring
the registration of such security, to the fullest extent
provided by section 1145 of the Bankruptcy Code.
5. Article 7.5(a) of the Plan shall be modified to provide as
follows:
Distributions to Holders of Allowed Class 2 Claims. The Debtors
shall deliver all of the Wabash Certificates and the Requisite
Percentage of Class A Beneficial Interests to the Indenture
Trustee. The Indenture Trustee shall make the Pro Rata
distribution required by Section 4.2 of the Plan to the holders
of Senior Notes. The Indenture Trustee shall inform each holder
of Senior Notes of its share of the Class A Beneficial Interests
in the Liquidating Trust. The Liquidating Trust shall pay all
reasonable fees and expenses of the Indenture Trustee in acting
as distribution agent as and when such fees and expenses become
due without further order of the Bankruptcy Court.
6. Article 7.5(c) of the Plan shall be modified to substitute
the words "Class A Beneficial Interests" for each reference to
Trust Certificates in such section.
7. Article 7.8 of the Plan shall be modified to eliminate the
references to Trust Certificates. The section, as modified,
shall read as follows:
Distributions on Account of Unsecured Class 4 Claims. If
Class 4 accepts the Plan, 5.5% of the Class A Beneficial
Interests in the Liquidating Trust shall be apportioned, Pro
Rata, to the holders of Allowed Claims in Class 4. The
Liquidating Trust shall not be required to make allocations of
Class A Beneficial Interests in the Liquidating Trust
distributable to Class 4 until the Liquidating Trust has
resolved its objections to Disputed Claims in Class 4, a process
which shall be completed no later than the first anniversary of
the Effective Date. Any distributions of Cash to which the
holders of Class A Beneficial Interests in Class 4 become
entitled during this Claims resolution period shall be
distributed to the holders of Allowed Claims in Class 4, Pro
Rata, with any accrued interest thereon at the time that the
Class A Beneficial Interests for Class 4 are allocated;
provided, however, that such distribution shall be reduced by
any taxes paid by the Liquidating Trust on account of interest
or other income earned thereon.
8. Article 7.12 of the Plan shall be modified to add the
following language: All creditors' rights to setoffs under
section 553 of the Bankruptcy Code, with respect to Claims
asserted by the Debtors or on behalf of the Liquidating Trust,
shall be preserved and are not impaired by the Plan, provided
that a set off may not be exercised without permission from this
Court.
9. Article 7.13 of the Plan shall be modified to eliminate the
reference to Trust Certificates rather than Class A Beneficial
Interests and, as modified, shall read as follows:
Fractional Interests. The calculation of the percentage
distribution of Wabash Securities or Class A Beneficial
Interests to be made to holders of certain Allowed Claims as
provided elsewhere in this Plan may mathematically entitle the
holder of such an Allowed Claim to a fractional interest in such
stock or Class A Beneficial Interests. The number of shares of
Wabash Securities or Class A Beneficial Interests to be received
by a holder of an Allowed Claim shall be rounded to the next
lower whole number of shares or Interests. The total number of
shares of Wabash Securities or securities representing Class A
Beneficial Interests to be distributed to a Class of Claims
shall be adjusted as necessary to account for the rounding
provided for in this section. Any fractional shares of Wabash
Securities that are rounded down and not issued to the holders
of Senior Notes shall be contributed to the Liquidating Trust.
10. A new Article numbered 9.8 shall be added which shall
provide as follows:
To the extent any Claim is payable, in whole or in part,
pursuant to an insurance policy or policies, issued by an
insurance company on behalf of a Debtor, or any predecessor to a
Debtor, holders of such Claim shall be entitled to maintain
actions after the Effective Date against the applicable Debtor
and/or insurance company if such actions can otherwise be
maintained under applicable law; provided, however, that any
award or settlement, if any, granted in any such action shall be
recoverable only from the proceeds of any applicable insurance
policy and shall be net of any deductible, self insured
retention or similar contractual undertaking. Neither
confirmation of the Plan nor the dissolution of the Debtors
pursuant to the Plan shall alter an allegedly injured parties'
right to coverage under any insurance policy or any rights of
any insurer under any applicable law; nor shall confirmation of
the Plan or the dissolution of the Debtors pursuant to the Plan
limit or otherwise prejudice the ability of any Debtor or
insurance company to raise any defenses that the Debtor has
against any Claimant or any other insurance company. The
Liquidating Trustee shall provide cooperation to the extent
reasonably practicable given the Liquidating Trustee's staff, to
any Claimant seeking information regarding the existence and
terms of any such insurance policy.
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/William H. Suddell Jr.
-------------------------
William H. Sudell, Jr. (No.
Robert J. Dehney (No. 3578)
Derek C. Abbott (No. 3376)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
and
CAMHY KARLINSKY & STEIN LLP
David Neier (DN 5391)
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attorneys for Debtors
<PAGE>
CERTIFICATE OF SERVICE
The undersigned certifies that a true and correct copy of
the foregoing was served on all parties on the attached list in
accordance with the Rules of Bankruptcy Procedure on this ___
day of September, 1998.
__________________________
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: S Chapter 11
S
FRUEHAUF TRAILER S CASE NO. 96-1563 (PJW)
CORPORATION, S
MARYLAND SHIPBUILDING & S
DRYDOCK COMPANY, F.G.R., INC., S
JACKSONVILLE SHIPYARDS, INC., S
FRUEHAUF INTERNATIONAL, S Jointly Administered
LIMITED, FRUEHAUF CORPORATION, S
THE MERCER CO., DEUTSCHE- S
FRUEHAUF HOLDING S
CORPORATION, MJ HOLDINGS, INC., S
and E. L. DEVICES, INC., S
S
Debtors. S
FINDINGS OF FACT AND CONCLUSIONS OF LAW
REGARDING ORDER AND JUDGMENT CONFIRMING THE DEBTORS'
AMENDED JOINT PLAN OF REORGANIZATION DATED JULY 28, 1998
Fruehauf Trailer Corporation, Maryland Shipbuilding &
Drydock Company, F.G.R., Inc., Jacksonville Shipyards, Inc.,
Fruehauf International Limited, Fruehauf Corporation, The Mercer
Co., Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc.,
and E.L. Devices, Inc. (collectively, the "Debtors" or, together
with their non-debtor affiliates, the "Company"), having filed
with the Court the Debtors' Amended Joint Plan of
Reorganization, dated July 28, 1998 (together with any and all
modifications and supplements thereto as of the date hereof, the
"Plan") under Chapter 11 of Title 11 of the United States Code
(the "Bankruptcy Code"); and the Amended Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy Code with Respect to
Debtors' Amended Joint Plan of Reorganization Dated July 28,
1998 (the "Disclosure Statement"), having been filed with and
approved by the Court pursuant to an Order dated July 28, 1998
(the "Disclosure Statement Order"), as containing "adequate
information" pursuant to section 1125 of the Bankruptcy Code;
and notice of (a) the Plan, (b) the Disclosure Statement, and
(c) the deadline for submitting ballots and of the date for
filing objections, having been transmitted to all Creditors,
Interest holders, the United States Trustee, and other
parties-in-interest entitled to receive the same pursuant to the
Disclosure Statement Order and applicable law and rules; and
copies of the Plan, Disclosure Statement and the appropriate
ballots having been transmitted to holders of Claims in Classes
2, 3 and 4 as further required by the Disclosure Statement
Order; and the Disclosure Statement Order having fixed (a) 5:00
p.m. Eastern Time, on September 9, 1998, as the last time and
date by which (i) any objections to confirmation of the Plan
(the "Objections") must be properly filed with the Court and
received by the Debtors and (ii) Ballots must be properly
completed, executed, marked and received by Logan and Company,
Solicitation Agent, or, if applicable, the Nominal Holder, in
order to be considered as acceptances or rejections of the Plan;
and (b) September 16, 1998 at 2:00 p.m., Eastern Time, as the
date and time for the commencement of the hearing pursuant to
sections 1128 and 1129 of the Bankruptcy Code (the "Confirmation
Hearing") to consider confirmation of the Plan and any
Objections thereto; and due notice of the Confirmation Hearing
and the date by which Objections must be filed having been given
and published in accordance with the terms of the Disclosure
Statement Order; and the Confirmation Hearing having been held
before the Court commencing on September 16, 1998; and the
parties having appeared for submission of the Findings and Order
on September 16, 1998; and the Court having considered all
objections to confirmation of the Plan which have not been
withdrawn; and upon all consideration of the record of the
Confirmation Hearing, the Court makes the following Findings of
Fact and Conclusions of Law:
FINDINGS OF FACT
1. On October 7, 1996 (the "Petition Date"), the following
entities filed petitions for relief in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court") under Chapter 11 of the United States Bankruptcy Code
(the "Code"): FRUEHAUF TRAILER CORPORATION, a Delaware
corporation, JACKSONVILLE SHIPYARDS, INC., a Florida
corporation, MARYLAND SHIPBUILDING & DRYDOCK COMPANY, INC., a
Maryland corporation, FRUEHAUF INTERNATIONAL LIMITED, a Delaware
corporation, FRUEHAUF CORPORATION, a Delaware corporation, FGR,
INC., a Michigan corporation, DEUTSCHE-FRUEHAUF HOLDING
CORPORATION, a Delaware corporation, E.L. DEVICES, INC., a
Florida corporation, M.J. HOLDINGS INC., an Ohio corporation,
(collectively referred to as the "Debtors").
2. Directly or indirectly, Debtor Fruehauf Trailer Corporation
("Fruehauf") owns 100% of the outstanding voting equity of all
other Debtors. As of the Petition Date, Fruehauf was in the
business of designing, manufacturing, selling and servicing
truck trailers and related parts and accessories. Fruehauf's
products were sold and used throughout the United States and in
numerous foreign countries. Debtor Fruehauf International
Limited ("FIL") owns a 99.99% equity interest in a foreign
trailer manufacturer in Mexico, Fruehauf de Mexico, S.A. de C.V.
("Fruehauf de Mexico"). On the Petition Date, the other Debtors
were either inoperative or not engaged in trailer transportation
businesses similar to Fruehauf.
3. As of the Petition Date, the Debtors had over 20,000
creditors and approximately 2,000 full-time and part-time
employees. Fruehauf was a public company that operated
approximately 40 manufacturing, distribution, sales and
servicing facilities throughout the United States and was a
leader in domestic used trailer sales. Fruehauf trailers had
been manufactured since 1914. Fruehauf trailers were noted for
their quality and durability and, therefore, commanded a premium
price.
4. Fruehauf owned manufacturing facilities, in Fort Madison,
Iowa ("Fort Madison"), Delphos, Ohio ("Delphos") and, through a
subsidiary, in Coacalco, Mexico and leased a manufacturing
facility in Huntsville, Scott County, Tennessee ("Scott
County"). Fruehauf also leased its wholesale parts distribution
center in Grove City, Ohio.
5. Fruehauf had an extensive distribution system, which
management believed at the Petition Date was the largest in the
industry, consisting of 31 branches (the largest company-owned
national sales network), six of which were leased.
6. On May 3, 1995, Fruehauf completed a recapitalization which
resulted in, among others, the issuance by Fruehauf pursuant to
the terms of an indenture of certain senior secured notes (the
"Senior Notes") to Fruehauf's lenders under its then existing
bank credit facility. The Senior Notes were issued in an
aggregate principal amount of $74.1 million, and were secured by
substantially all of the assets of Fruehauf subject to a first
priority lien on accounts receivable and inventories held by
Congress to secure Fruehauf's obligations under a Revolving
Credit Facility and the right of Congress to look to other
assets of Fruehauf under certain circumstances. Pursuant to a
registration statement filed with the Securities and Exchange
Commission, Fruehauf exchanged the Senior Notes for debt
securities with substantially identical terms to the Senior
Notes (hereinafter also referred to as "Senior Notes"). As of
the Petition Date, approximately $54.5 million principal balance
of the Senior Notes remained outstanding. Pursuant to orders of
this Court entered in connection with the approval of
post-petition debtor-in-possession financing to the Debtors by
Madeleine, L.L.C., the Court affirmed the liens of the holders
of the Senior Notes in all of the Debtors' assets and granted a
replacement lien in all of the Debtors' assets.
7. The majority of the Debtors' assets have been liquidated
during the course of the Reorganization Case. Based on the
Debtors' best estimate of the current value of their assets, the
holders of the Senior Notes are undersecured and the Debtors'
estates are administratively insolvent.
8. The Plan represents a compromise between the Debtors, the
holders of the Senior Notes and the unsecured creditors. Absent
this compromise, unsecured creditors, and the vast majority of
the administrative and priority claimants, would receive no
distribution because there are no unencumbered assets with which
to pay those Claims.
9. The Plan has been accepted by overwhelming majorities in each
voting Class of Creditors. The vote with respect to the Plan
was set forth in the various confirmation exhibits and is
incorporated and adopted herein by reference.
10. This case has been characterized by the active involvement
of various constituencies and parties-in-interest. The Plan
represents a global compromise of the key issues in this case
and is calculated to maximize value for creditors. This global
compromise resolves the Claims and Interests of creditors and
shareholders in a manner which is fair in the context of the
treatments afforded to all affected entities. The Plan's
provisions in effecting resolutions of these various entities'
Claims and Interests are intertwined and were determined through
extensive negotiations on an arm's length basis, in a
negotiation process contemplated by the Bankruptcy Code.
11. The Plan provides for an orderly liquidation of the Debtors'
remaining assets by the Liquidating Trustee. This method of
liquidation is likely to maximize the value of the Debtors'
assets. The Plan provides a greater return to unsecured
creditors than they would receive in a Chapter 7 liquidation of
the Debtors since, in a Chapter 7 case, it is likely that the
entire proceeds of the Debtors' assets would be necessary to
satisfy the secured Claims of the Senior Noteholders and
unsecured creditors would receive nothing.
12. In negotiating and implementing the terms of the Plan, the
settlements and other transactions and documents contemplated
therein, and in soliciting acceptance of the Plan, the Debtors,
the Creditors' Committee (and the individual members thereof),
the Bondholders' Committee (and the members thereof), the
Authorized Representative of Retirees, the Indenture Trustee,
the Liquidating Trust, Alvarez & Marsal, Inc., Oppenheimer &
Co., Inc., and any and all officers, directors, employees,
members, agents, representatives, attorneys, investment bankers,
financial advisors, accountants, and other firms, entities,
partnerships, and individuals employed by any of them, or
serving on or constituting such Persons, have acted and are
acting in good faith, in compliance with the procedures
established by the Court, and not contrary to the Bankruptcy
Code and other applicable law.
13. The Pension Benefit Guaranty Corporation ("PBGC") filed
claims relating to the Union Plan and the Management Plan in
each of the In re Fruehauf Corp., et al. bankruptcies (Case Nos.
1563-1572). The PBGC is a wholly-owned United States government
corporation created by Title IV of the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C. SS 1301-1461
("ERISA"), to administer the mandatory pension plan termination
insurance program established under Title IV of ERISA. The PBGC
guarantees the payment of certain pension benefits upon
termination of a pension plan covered by Title IV of ERISA.
According to PBGC, if the transfer of sponsorship of the pension
plans occurs and the pension plans remain on going after
confirmation of the Plan, PBGC will withdraw its claims.
Nothing in the Plan, therefore, shall be construed as releasing
or in any way discharging PBGC's claims
14. The limitation of liability set forth in Section 9.3 of the
Plan is reasonable and appropriate as to the "Exculpated
Persons" named in that Section.
15. The Plan:
a. Specifies every Class of Claims or Interests that is not
impaired under the Plan;
b. Specifies the treatment of any Class of Claims or Interests
that is impaired under the Plan;
c. Provides the same treatment for each Claim or Interest of a
particular Class, unless the holder of a particular Claim or
interest agrees to a less favorable treatment of such particular
Claim or Interest;
d. Provides adequate means for the Plan's implementation.
e. Contains only provisions that are consistent with the
interests of creditors and equity security holders and with
public policy with respect to the manner of selection of the
Liquidating Trustee and any successor to the Liquidating Trustee.
f. Does not discriminate unfairly, and is fair and equitable,
with respect to each class of Claims or Interests that is
impaired under, and has not accepted, the Plan (that is, Classes
3, 5, 6 and 7) .
16. The Plan has been proposed in good faith and not by any
means forbidden by law as required by section 1129(a)(3) of the
Bankruptcy Code.
17. Any payment made or to be made by the Debtors, the
Liquidating Trustee, or by a person issuing securities or
acquiring property under the Plan, for services or for costs and
expenses in or in connection with this Chapter 11 case, or in
connection with the Plan and incident to this Chapter 11 case,
has been or will be disclosed and has been or will be approved
by the Court as reasonable under the terms of the Plan to the
extent required by the Plan and section 1129(a)(4) of the
Bankruptcy Code. The confirmation bonuses being paid to Chriss
Street, Worth Frederick, James Wong and Courtney Watson are
reasonable in light of the amount of work performed by these
individuals for the benefit of the Debtors' estates before and
after their employment by the estates.
18. At the Confirmation Hearing, the Debtors disclosed the
identity and affiliations of Chriss Street, who has been
proposed to serve, after confirmation of the Plan, as the
Liquidating Trustee, and who will continue to serve until
replaced. The appointment of Chriss Street as Liquidating
Trustee is consistent with the interests of Creditors and with
public policy. The nature of the compensation to be paid to Mr.
Street has been disclosed in the Disclosure Statement, is
reasonable and has been approved. Thus, the Plan meets the
requirements of section 1129(a)(5)(A) of the Bankruptcy Code.
19. The Plan has not been unanimously accepted by each holder of
a Claim of every class that is impaired under the Plan; however,
each non-accepting holder of a Claim of each such class will
receive or retain under the Plan, on account of such Claim,
property of a value, as of the Effective Date, that is not less
than the amount that such holder would so receive or retain if
the Debtors were liquidated under Chapter 7 of the Bankruptcy
Code on such date as required by section 1129(a)(7)(A) thereof.
20. As previously referenced, all impaired, voting classes have
accepted the Plan in terms of both number and amount pursuant to
section 1126 of the Bankruptcy Code. Classes 5, 6 and 7 are
deemed to have rejected the Plan pursuant to section 1126(g) of
the Bankruptcy Code. Accordingly, although the Plan complies
with section 1129(a)(10) of the Bankruptcy Code -- in that at
least one class of Claims that is impaired has accepted the Plan
(without including any acceptance of the Plan by any insider)
- -the Plan does not comply with section 1129(a)(8) of the
Bankruptcy Code since not every impaired class of creditors or
interest holders has accepted the Plan.
21. With respect to Classes 5, 6 and 7 -- which are all Classes
that are receiving or retaining no property under the Plan and
are deemed to reject pursuant to section 1126(g) -- the Court
finds that the Plan does not discriminate unfairly with respect
to the interest holders in those respective Classes. The Plan
is also fair and equitable with respect to those Classes
because, among other reasons, there is not any holder of a Claim
or Interest that is junior to the Claims of those Classes that
is receiving or retaining any property under the Plan on account
of such Claims or Interests.
22. Except to the extent that the holder of a particular Claim
has agreed to a different treatment of such Claim, and except to
the extent that such Claims have been previously paid pursuant
to a prior order of this Court or in the ordinary course, the
Plan provides, as required by section 1129(a)(9) of the
Bankruptcy Code, that Allowed Administrative and Priority Claims
will be paid on the later of (i) the Effective Date or as soon
as practicable thereafter, (ii) the date on which such Claim
becomes an Allowed Claim, or (iii) such other date as is
mutually agreed upon by the Liquidating Trustee and the holder
of such Claim. Tax Claims shall be paid on the latest of (i)
the first practicable date after the Effective Date, (ii) 30
calendar days after the date on which an Order allowing such
Claim becomes a Final Order, (iii) the last day the taxes may be
paid under applicable law without incurring penalties or
interest, and (iv) such other time or times as may be agreed by
the holder of such Claim and the Trustee. The sole source of
payment of Allowed Administrative, Priority and Pre-petition Tax
Claims shall be the Distribution Fund. Based on the evidence
presented, the Distribution Fund is sufficient to pay the
reasonably anticipated amount of such Allowed Claims in full.
23. The Court finds that the Plan is feasible. Except as
specifically proposed in the Plan, confirmation and consummation
of the Plan is not likely to be followed by the liquidation, or
the need for further financial reorganization, of the Debtors or
any successor of the Debtors under the Plan, and accordingly,
the Plan complies with section 1129(a)(11) of the Bankruptcy
Code. The structure of the Plan and mechanisms for
implementation of the Plan are reasonable and appropriate.
24. All fees payable to date under 28 U.S.C. S 1930 have been
paid, and the Plan provides for the payment of all such fees on
the Effective Date as required by section 1129(a)(12) of the
Bankruptcy Code.
25. The Debtors terminated Retiree Benefits pursuant to an Order
dated May 29, 1997. As a result, no further payments are
required and the Plan meets the requirements of section
1129(a)(13) of the Bankruptcy Code..
26. The modifications filed by the Debtors to the Plan and to
the Related Documents do not adversely affect the treatment of
any creditor pursuant to the Plan.
27. Based upon the evidence presented by the Debtors concerning
balloting, a majority in principal amount of the holders of the
Senior Notes voted for acceptance of the Plan. Accordingly,
pursuant to the terms of the Plan, the majority, affirmative
vote constitutes a partial waiver of their lien rights and shall
bind all holders of Senior Notes.
28. All securities to be issued or transferred by the Debtors or
the Liquidating Trust pursuant to the Plan are being issued in
exchange for Claims against or Interests in the Debtors. Wabash
National Corporation and the Liquidating Trust are each
successors to the Debtors for purposes of 11 U.S.C. S 1145 only
and the Court makes no finding that the Liquidating Trust is a
successor for any other purpose.
29. The Court's oral Findings of Fact on the record at the
hearing on Confirmation of the Plan are incorporated herein by
reference.
30. Debtors have demonstrated their need for an immediate
closing following confirmation, provided that no stay of the
Order is in effect or the Order has not been reversed or vacated.
31. To the extent that any provision designated herein as a
Finding of Fact is more properly characterized as a Conclusion
of Law, it is adopted as such.
CONCLUSIONS OF LAW
A. This is a core proceeding within the meaning of 28 U.S.C. S
157(b)(2)(L). This matter arises under title 11, and
jurisdiction is vested in this Court to enter a final order by
virtue of 28 U.S.C. S 1334(a) and (b), 28 U.S.C. SS 151, 157(a)
and (b)(1) and the Standing Order of Reference in this District.
These Findings of Fact and Conclusions of Law are being entered
under Bankruptcy Rules 7052 and 9014.
B. The Plan complies with the applicable provisions of the
Bankruptcy Code as required by section 1129(a)(1) thereof.
C. The Plan designates appropriately, in conformance with
Section 1122 of the Code, classes of Claims, except Claims of a
kind specified in Section 507(a)(1), 507(a)(2), and 507(a)(8) of
the Code, and classes of interests.
D. The Debtors were legally entitled to invoke the protections
of the Bankruptcy Code and filed this Case in good faith. The
Debtors have also conducted this case in a reasonable and
prudent manner, and in accordance with the provisions of the
Bankruptcy Code. The Debtors, as proponents of the Plan, have
complied with the applicable provisions of the Bankruptcy Code
as required by section 1129(a)(2) thereof.
E. The Debtors has met the "cram down" requirements of section
1129(b) by establishing that the Plan does not discriminate
unfairly, and is fair and equitable, with respect to each class
of Claims and Interests that is impaired under, and has not
accepted the Plan.
F. Notice and distribution of the Plan and the Disclosure
Statement were appropriate and complied with the applicable
provisions of the Bankruptcy Code and the Bankruptcy Rules. The
opportunity for a hearing on these matters was full and
adequate.
G. The Debtors, the Creditors' Committee (and the individual
members thereof), the Bondholders' Committee (and the members
thereof), the Authorized Representative of Retirees, the
Indenture Trustee, the Liquidating Trust, Liquidating Trustee,
Alvarez & Marsal, Inc., Oppenheimer & Co., Inc., and any and all
officers, directors, employees, members, agents, attorneys,
investment bankers, financial advisors, accountants,
representatives, and other firms, entities, partnerships, and
individuals employed by any of them, or serving on or
constituting such Persons, are entitled to the protections of S
1125(e) of the Bankruptcy Code and other applicable law.
H. The Court's oral Conclusions of Law on the record at the
hearing on Confirmation of the plan are incorporated herein by
reference.
I. Nothing in the Court's Findings or Conclusions as to the
proposed settlement and compromise of any Claims or disputes
under the Plan shall be probative as to the merits of any such
Claims or disputes or the appropriateness of any settlement or
compromise thereof in the event the Plan does not become
effective.
J. To the extent that any provision designated herein as a
Conclusion of Law is more properly characterized as a Finding of
Fact, it is adopted as such.
SIGNED this 17TH day of September , 1998.
/s/Peter J. Walsh
-------------------
HONORABLE PETER J. WALSH
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE:
FRUEHAUF TRAILER CORPORATION,
a Delaware corporation,
MARYLAND SHIPBUILDING &
DRYDOCK COMPANY,
a Maryland corporation,
F.G.R., INC.,
a Michigan corporation,
JACKSONVILLE SHIPYARDS, INC.,
a Florida corporation, Jointly Administered
FRUEHAUF INTERNATIONAL, LIMITED, CASE NO. 96-1563 (PJW)
a Delaware corporation,
FRUEHAUF CORPORATION, Chapter 11
a Delaware corporation
THE MERCER CO.,
DEUTSCHE-FRUEHAUF HOLDING CORPORATION,
a Delaware corporation,
MJ HOLDINGS, INC.,
an Ohio corporation, and
E. L. DEVICES, INC.,
a Florida corporation,
Debtors.
- ---------------------------------------------------------------------------
AMENDED DISCLOSURE STATEMENT PURSUANT TO SECTION 1125
OF THE BANKRUPTCY CODE WITH RESPECT TO DEBTORS'
FIRST AMENDED JOINT PLAN OF REORGANIZATION DATED JULY 28, 1998
<PAGE> 2
THIS AMENDED DISCLOSURE STATEMENT HAS BEEN PREPARED BY
FRUEHAUF TRAILER CORPORATION, MARYLAND SHIPBUILDING & DRYDOCK
COMPANY, F.G.R., INC., JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL LIMITED, FRUEHAUF CORPORATION, THE
MERCER CO., DEUTSCHE-FRUEHAUF HOLDING CORPORATION, MJ
HOLDINGS, INC., AND E.L. DEVICES, INC. (COLLECTIVELY, THE
"DEBTORS," OR, TOGETHER WITH THEIR NON-DEBTOR AFFILIATES,
THE "COMPANY") AND DESCRIBES THE TERMS AND PROVISIONS OF THE
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION DATED JULY 28,
1998 (THE "PLAN"). ANY TERM USED IN THIS DISCLOSURE STATEMENT
THAT IS NOT DEFINED HEREIN HAS THE MEANING ASCRIBED TO THAT
TERM IN THE PLAN.
DATED: July 28, 1998
CAMHY KARLINSKY & STEIN LLP MORRIS, NICHOLS, ARSHT & TUNNELL
David Neier William H. Sudell, Jr. (No. 463)
1740 Broadway, 16th Floor Robert J. Dehney (No. 3578)
New York, New York 10019-4315 1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
ATTORNEYS FOR THE DEBTORS
<PAGE> i
TABLE OF CONTENTS Page
I. INTRODUCTION 1
II. GENERAL INFORMATION CONCERNING THE DEBTORS AND
CERTAIN EVENTS PRECEDING THE DEBTORS' CHAPTER 11 FILING 2
A. General Description of the Debtors' Businesses Pre-petition 2
1. Background. 2
2. Marketing and Distribution 3
3. International Operations 4
4. Employees 4
5. Assumption Agreement 4
6. The Maritime Business 4
7. 1995 Recapitalization 6
8. The K-H Letter Agreement 6
9. Airlie Note 7
10. Sale of Foreign Assets 7
B. Financial Condition of the Debtors; Events
Necessitating Chapter 11 Protection 7
III. THE CHAPTER 11 CASE 8
A. Commencement of the Cases 8
B. First Day Relief 8
C. Formation of Unsecured Creditors' Committee and
Bondholders' Committee 9
D. First Asset Sales 9
E. Retention of Alvarez & Marsal Services 10
F. Key Employee Retention Program 10
G. Significant Events During the Case 10
1. Sale of Delphos Axle Plant to Holland Hitch 10
2. Sale of Debtors' U.S. Manufacturing and Sales and
Distribution Businesses to Wabash 11
3. Rejection of Collective Bargaining Agreements and
Termination of Retiree Benefits 12
a. Termination of Retiree Benefits 12
b. Collective Bargaining Agreements 13
4. Receipt of $6.5 Million Senior Mortgage on Certain
Jacksonville Property 13
5. Replacement of the Madeleine Facility with the BOA
Facility 14
6. Litigation with Alvarez & Marsal and Thomas E. Ireland 14
7. Relocation of Offices to California 15
8. Sales of Wabash Stock 15
H. Current Management of the Debtors and Disclosure of
Compensation 15
I. Assets and Liabilities of the Debtors 17
1. Debtors' Major Assets 17
a. Unrestricted Cash and Short Term Investments 17
b. Stock of Wabash National Corporation 17
c. Fruehauf de Mexico 18
d. Jacksonville Riverfront Development Note Receivable 20
e. Kearny Branch Note Receivable 20
f. Sindorf 20
g. Miscellaneous Real Estate 21
h. Miscellaneous Receivables and Escrows 21
i. Causes of action 21
2. Liabilities 22
IV. SUMMARY OF PLAN 23
A. Overview 23
B. Designation of Claims and Interests 23
1. Summary 23
C. Treatment of Unclassified Claims 24
1. Administrative Claims 24
2. Treatment of Pre-Petition Tax Claims 26
D. Classification and Treatment of Classified Claims and
Interests 26
1. Class 1 - Priority Claims 26
2. Class 2 - Secured Claims of Holders of Senior Notes 27
3. Class 3 - Secured Claims Other Than Claims of Holders
of Senior Notes 27
4. Class 4 - General Unsecured Claims 27
5. Class 5 - Old Common Stock 27
6. Class 6 - Old Warrants 28
7. Class 7 - Securities Claims 28
E. Acceptance or Rejection of the Plan 28
1. Voting Classes 28
2. Presumed Acceptance of Plan 28
3. Presumed Rejection of Plan 28
F. Means for Execution and Implementation of the Plan 28
1. Funding of the Distribution Fund 28
2. Transfer of Wabash Securities to Indenture Trustee 28
3. Change of Plan Sponsorship for the Management and
Union Plans 28
4. Transfer of Hogan's Creek Property and Picketville
Property 29
5. Foreclosure by Holders of Senior Notes 29
6. Transfer by Debtors of Assets to the Liquidating Trust 29
7. Ratification of Liquidating Trust Agreement 29
a. Powers and Duties 29
b. Compensation of Trustee 29
c. Limitation of Liability 29
d. Indemnity 30
e. Right to Hire Professionals 30
f. Treatment of Distribution Fund Surplus 30
g. Limitation on the Trustee 30
h. Distribution of Trust Certificates 31
i. Tax Treatment of the Liquidating Trust 31
j. Termination of Liquidating Trust 31
8. Dissolution of Corporate Entities 31
9. Cancellation of Old Securities 31
10. Registration Exemption for Debtors' Wabash Securities
and Beneficial Interests in the Liquidating Trust 31
11. Transferability of the Trust Certificates;
Applicability of Federal Securities Laws to the
Liquidating Trust 33
12. Corporate Action 34
13. Preservation of Rights of Action 34
14. Objections to Claims 34
15. Exemption from Stamp and Similar Taxes 35
G. Funding and Methods of Distribution and Provisions for
Treatment of Disputed Claims 35
1. Funding of Distributions Under the Plan 35
2. Distributions to Holders of Allowed Claims that are
Administrative Expense Claims, Pre-Petition Tax Claims
and Class 1 Priority Claims 35
3. Distributions to Holders of Allowed Class 2 Claim 36
4. Disputed Claims 36
5. Delivery of Distributions and Undeliverable or
Unclaimed Distributions; Failure to Negotiate Checks 36
6. Distributions on Account of Unsecured Class 4 Claims 36
7. De Minimis Distributions 36
8. Compliance with Tax Requirements 36
9. Setoffs 36
10. Fractional Interests 37
H. Treatment of Executory Contracts and Unexpired Leases 37
I. Effects of Plan Confirmation 37
1. Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors 37
2. No Liability for Solicitation or Participation 37
3. Limitation of Liability 37
4. Other Documents and Actions 38
5. Term of Injunctions or Stays 38
J. Confirmability of Plan and Cramdown 38
K. Retention of Jurisdiction 38
L. Post Confirmation Management of the Liquidating Trust 38
V. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN 41
A. Federal Income Tax Consequences to Fruehauf 42
B. Federal Income Tax Consequences to Holders of Claims 43
1. Holders of Claims 43
VI. VOTING PROCEDURES AND CONFIRMATION REQUIREMENTS 44
A. Confirmation of the Plan 44
1. Confirmation Hearing 44
2. Requirements for Confirmation of the Plan 45
a. Acceptance 45
b. Best Interests Test/Liquidation Analysis 46
c. Feasibility 46
d. Classification 46
B. Non-Consensual Confirmation 47
1. Fair and Equitable Standard 47
2. The Plan Must Not Discriminate Unfairly 47
C. Voting Procedures and Requirements 47
1. Voting Requirements - Generally 47
2. Ballot and Information Agent 48
3. Voting Procedures 48
4. Voting Deadline 50
INDEX TO APPENDIX
Exhibit A: Debtors' Amended Joint Plan of R
<PAGE> iv
INDEX TO APPENDIX
Exhibit A: Debtors' First Amended Joint Plan of Reorganization
Dated June 24, 1998
I.
INTRODUCTION
This Amended Disclosure Statement Pursuant to Section 1125 of
the Bankruptcy Code With Respect to the Debtors' Amended Joint
Plan of Reorganization Dated July 28, 1998 of Fruehauf Trailer
Corporation and Related Debtors (the "Disclosure Statement")
approved by Order of the United States Bankruptcy Court for the
District of Delaware on July 28, 1998, relates to the Debtors'
Amended Plan of Reorganization dated July 28, 1998 (the "Plan"),
a copy of which is annexed hereto as Exhibit "A". The Plan is
supported by and the Unofficial Committee of Holders of Senior
Secured Notes (the "Bondholders'' Committee") [and the Official
Committee of Unsecured Creditors].
THE DEBTORS BELIEVE THAT THE PLAN IS IN THE BEST INTERESTS OF
CREDITORS AND INTEREST HOLDERS, AND URGE ALL CREDITORS TO VOTE
IN FAVOR OF THE PLAN. CREDITORS ARE ENCOURAGED TO READ AND
CONSIDER CAREFULLY THIS ENTIRE DISCLOSURE STATEMENT, INCLUDING
THE PLAN OF REORGANIZATION ATTACHED HERETO.
VOTING INSTRUCTIONS ARE CONTAINED ON YOUR BALLOT AND ARE SET
FORTH IN THIS DISCLOSURE STATEMENT IN SECTION VI(C) TO BE
COUNTED, YOUR BALLOT MUST BE DULY COMPLETED, EXECUTED AND
ACTUALLY RECEIVED BY THE BALLOT AGENT NO LATER THAN 5:00 P.M.,
EASTERN TIME ON SEPTEMBER 9, 1998.
THE CONFIRMATION HEARING HAS BEEN SCHEDULED TO COMMENCE ON
SEPTEMBER 16, 1998 AT 2:00 P.M. BEFORE THE HONORABLE PETER J.
WALSH, AT THE UNITED STATES BANKRUPTCY COURT (THE "COURT"), 824
MARKET STREET, WILMINGTON, DELAWARE 19801. THE CONFIRMATION
HEARING MAY BE ADJOURNED WITHOUT FURTHER NOTICE TO
PARTIES-IN-INTEREST EXCEPT FOR AN ANNOUNCEMENT OF THE ADJOURNED
DATE MADE AT THE HEARING. OBJECTIONS TO CONFIRMATION OF THE
PLAN MUST BE IN WRITING, STATE THE NATURE AND AMOUNT OF CLAIMS
OR INTERESTS HELD OR ASSERTED BY THE OBJECTOR AGAINST THE
DEBTORS' ESTATE OR PROPERTY, THE BASIS FOR THE OBJECTION, AND
THE SPECIFIC GROUNDS THEREFOR, AND SHALL BE FILED WITH THE COURT
AND SERVED UPON THE DEBTORS, THEIR COUNSEL, COUNSEL TO
CREDITORS' COMMITTEE AND BONDHOLDERS' COMMITTEE, AND THE UNITED
STATES TRUSTEE IN THE MANNER SET FORTH IN THE CONFIRMATION
NOTICE SO AS TO BE RECEIVED NO LATER THAN 4:00 P.M. EASTERN TIME
ON SEPTEMBER 9, 1998.
NO PERSON IS AUTHORIZED BY THE DEBTORS TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE PLAN OR THE
SOLICITATION OF ACCEPTANCES OF THE PLAN OTHER THAN AS CONTAINED
IN THIS DISCLOSURE STATEMENT AND THE ATTACHMENTS HERETO. THE
DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT UNDER ANY
CIRCUMSTANCES IMPLY THAT ALL OF THE INFORMATION IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
INFORMATION CONTAINED HEREIN REGARDING THE DEBTORS, THEIR
BUSINESSES, ASSETS AND LIABILITIES HAVE BEEN PROVIDED BY THE
DEBTORS. WHERE STATED, THE DEBTORS HAVE RELIED ON INFORMATION
PROVIDED BY THEIR ADVISORS. THE DEBTORS DISCLAIM ANY
RESPONSIBILITY FOR THE ACCURACY OF THAT INFORMATION. THE
DEBTORS AND THEIR ADVISORS ARE UNAWARE OF ANY FALSE OR
MISLEADING STATEMENT THAT WOULD MATERIALLY AFFECT A HYPOTHETICAL
INFORMED INVESTOR'S DETERMINATION ON HOW TO VOTE ON THE PLAN.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION ("SEC"), NOR HAS THE SEC
PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED HEREIN.
II.
GENERAL INFORMATION CONCERNING THE DEBTORS
AND CERTAIN EVENTS PRECEDING THE DEBTORS' CHAPTER 11 FILING
A. General Description of the Debtors' Businesses Pre-petition.
1. Background.
On October 7, 1996 (the "Petition Date"), the following entities
filed petitions for relief in the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court") under
Chapter 11 of the United States Bankruptcy Code (the "Code"):
FRUEHAUF TRAILER CORPORATION, a Delaware corporation,
JACKSONVILLE SHIPYARDS, INC., a Florida corporation, MARYLAND
SHIPBUILDING & DRYDOCK COMPANY, INC., a Maryland corporation,
FRUEHAUF INTERNATIONAL LIMITED, a Delaware corporation, FRUEHAUF
CORPORATION, a Delaware corporation, The Mercer Co., a Delaware
corporation, FGR, INC., a Michigan corporation,
DEUTSCHE-FRUEHAUF HOLDING CORPORATION, a Delaware corporation,
E.L. DEVICES, INC., a Florida corporation, M.J. HOLDINGS INC.,
an Ohio corporation, (collectively referred to as the
"Debtors").
Debtor Fruehauf Trailer Corporation ("Fruehauf") is the direct
or indirect parent company of all of the other Debtors.
Fruehauf was organized in 1989 to acquire certain assets and
assume certain liabilities related to the trailer and maritime
businesses (the "Maritime Business") of Fruehauf Corporation
("Old Fruehauf"). In July 1989, Fruehauf consummated this
acquisition and assumption (the "Fruehauf Acquisition").
Directly or indirectly, Fruehauf owns 100% of the outstanding
voting equity of all other Debtors. As of the Petition Date,
Fruehauf was in the business of designing, manufacturing,
selling and servicing truck trailers and related parts and
accessories. Fruehauf's products were sold and used throughout
the United States and in numerous foreign countries. Debtor
Fruehauf International Limited ("FIL") owns a 99.99% equity
interest in a foreign trailer manufacturer in Mexico, Fruehauf
de Mexico, S.A. de C.V. ("Fruehauf de Mexico"). The other
Debtors are either inoperative or engaged in trailer
transportation businesses similar to Fruehauf.
As of the Petition Date, the Debtors had over 20,000 creditors
and approximately 2,000 full-time and part-time employees.
Fruehauf was a public company that operated approximately 40
manufacturing, distribution, sales and servicing facilities
throughout the United States and was a leader in domestic used
trailer sales. Fruehauf trailers had been manufactured since
1914. Fruehauf trailers were noted for their quality and
durability and, therefore, commanded a premium price.
Fruehauf owned manufacturing facilities, in Fort Madison, Iowa
("Fort Madison"), Delphos, Ohio ("Delphos") and, through a
subsidiary, in Coacalco, Mexico, and Fruehauf leased a
manufacturing facility in Huntsville, Scott County, Tennessee
("Scott County"). Fruehauf also leased its wholesale parts
distribution center in Grove City, Ohio.
Fruehauf had an extensive distribution system, which management
believed at the Petition Date was the largest in the industry,
consisting of 31 branches (the largest company-owned national
sales network), six of which were leased. The branch facilities
consisted of office, warehouse and service space and generally
ranged in size from 20,000-35,000 square feet per facility.
Fruehauf's distribution system also included 79 "full-line" and
123 "parts-only" independent dealerships as of December 31,
1995. As of the Petition Date, Fruehauf manufactured or
marketed several truck trailer models, including dry freight
vans, platform trailers, dump trailers and liquid and bulk
hauler tank trailers. Dry freight vans represented the largest
selling product in the industry and historically accounted for
more than two-thirds of Fruehauf's unit sales of new trailers.
Fruehauf's axle manufacturing facility located in Delphos, Ohio,
supplied most of the trailer axles required in Fruehauf's
business. Most of the axles manufactured at the Delphos plant
were unique in their square beam configuration. All other major
domestic truck trailer manufacturers utilize round beam axles in
their trailers.
Fruehauf manufactured dry freight vans at the Fort Madison
manufacturing facility and dump and platform trailers at the
Scott County manufacturing facility. In May 1994, Fruehauf
entered into a series of agreements with LBT, Inc. ("LBT") that
included, among others, a private label manufacturing agreement
whereby LBT manufactured liquid and bulk hauler tank trailers
designed to Fruehauf's specifications and marketed the tank
trailers through Fruehauf's distribution network. New trailer
sales of LBT produced product totaled approximately $13.7
million for the year ended December 31, 1995.
Used trailer sales represented another source of revenue. Used
trailer sales were generally somewhat less cyclical than new
trailer sales. The sale of accessories and replacement parts
produced the highest gross margins of any of the Debtors'
product lines. All of Fruehauf's branches carried a large range
of replacement parts, many of which could be used on trailers
manufactured by competitors. Fruehauf also sold replacement
parts to its independent dealers on a wholesale basis.
2. Marketing and Distribution.
Fruehauf maintained a distribution network of 233 points of
distribution dedicated to servicing the trucking and transport
industry. Fruehauf's large distribution network afforded
Fruehauf the ability to generate sales to smaller independent
operators. In addition, this branch system enabled Fruehauf to
provide maintenance and other services to customers on a
nationwide basis and to take in large quantities of trade-ins,
which are common with large new trailer deals with fleet
customers.
In addition to the 31 Debtor-owned branches, Fruehauf also sold
its products through a nationwide network of approximately 79
"full-line" and 123 "parts-only" independent dealerships, which
generally served the trucking and transport industries.
Although these dealers carried the products of a variety of
manufacturers, each dealer generally carried only one
manufacturer's "brand" of each type of product. Fruehauf
maintained a Dealer Sales Organization to service these dealers.
The 79 "full-line" independent dealerships maintained various
levels of new trailer stock inventory.
3. International Operations.
At the Petition Date, the Debtors' international operations
principally included a Mexican subsidiary and an export
operation principally for trailer components and parts. As
mentioned, Fruehauf's wholly-owned subsidiary FIL currently
holds a 99.99% equity interest in Fruehauf de Mexico, a foreign
trailer manufacturing company that operates in Mexico. Shortly
before the Petition Date, as described more fully below, FIL
completed a transaction to sell certain of its interests in
other foreign trailer manufacturers.
Export sales from the Debtors' domestic operations were $9.8
million, $9.4 million and $8.1 million in 1995, 1994 and 1993,
respectively.
4. Employees.
As of September 15, 1996, the Debtors had approximately 2,000
employees. Approximately 52% of such employees were represented
by labor unions, which had entered into various separate
collective bargaining agreements with the Debtors. The Debtors
currently employ approximately 6 full time employees.
Approximately 417 people are employed by Fruehauf de Mexico.
5. Assumption Agreement.
Old Fruehauf and Terex Trailer Corporation (formerly FRH
Acquisition Corporation and now known as Fruehauf) entered into
an Assumption Agreement dated as of July 13, 1989 whereby
Fruehauf assumed certain liabilities. Fruehauf assumed
substantially all of the liabilities relating to certain trailer
subsidiaries, and the Maritime Business (as defined below),
including environmental liabilities, and liabilities relating to
employees and former employees of these businesses (such as
pension, retiree medical, and workers compensation benefits).
As described below, Maryland had already ceased operations at
the time of the Fruehauf Acquisition, Jacksonville ceased
operations in 1992 and substantially all of CEMCO's assets were
sold in December 1991. The Fruehauf Acquisition left Fruehauf
with substantial liabilities which took years to fully
materialize. These substantial "trailing liabilities" relating
to the closed businesses were a significant factor in Fruehauf
and the other Debtors' financial difficulties which resulted in
these Chapter 11 cases.
6. The Maritime Business.
The Maritime Business acquired by Fruehauf in the Fruehauf
Acquisition consisted of (a) 80% of the capital stock of Coast
Engineering and Manufacturing Company ("CEMCO"), (b) all of the
capital stock of Jacksonville Shipyards, Inc. ("Jacksonville")
and (c) all of the capital stock of Maryland Shipbuilding and
Drydock Company ("Maryland"). CEMCO was engaged in the design
and manufacture of heavy-duty equipment used in dockside loading
and unloading. Jacksonville was a major ship repair facility
located in Jacksonville, Florida that ceased operations in 1992.
Maryland was a shipbuilding facility located in Baltimore,
Maryland that ceased operations in 1984.
At the time of the Fruehauf Acquisition, Fruehauf announced its
intention to divest the Maritime Business. In December 1991,
substantially all of the operating assets of CEMCO were sold.
During 1992, Jacksonville's operations ceased, and a program was
implemented to liquidate its remaining assets, consisting
primarily of real estate and receivables. On February 10, 1995,
Jacksonville completed the sale of substantially all of its
remaining real estate in three separate transactions. As a
consequence of these transactions, all of Jacksonville's
liabilities associated with these properties, including certain
vendor, real and personal property tax and on-site environmental
liabilities, were assumed by the purchasers of the respective
properties or otherwise satisfied.
As part of these transactions, Jacksonville received a
promissory note in the principal amount of $3,777,100.00 secured
by a mortgage encumbering property owned by Jacksonville
Riverfront Development, Ltd. ("JRD"). The property securing the
mortgage was the site of Jacksonville's operations and consists
of approximately 50 acres of riverfront property, 27.47 acres of
uplands and 16.88 acres of submerged land, located near Alltel
Stadium in downtown Jacksonville, Duval County, Florida, on the
St. Johns River. The property is divided into two parcels. The
western parcel includes approximately ten acres of land and
contains four piers that are roughly six hundred feet long. The
eastern panel includes approximately eighteen acres of uplands
and four acres of submerged land and contains one pier that is
about six hundred feet long.
At the Petition Date (and currently), CEMCO, Jacksonville and
Maryland had (have) substantial liabilities relating to various
matters, including (a) workers compensation and retiree medical
benefits in the case of Jacksonville and Maryland, (b) off-site
environmental claims in the case of Jacksonville and (c)
products liability claims in the case of CEMCO. Such
liabilities far exceeded (and exceed) the value of the
respective salable assets of these entities. As a consequence,
Fruehauf had in certain circumstances funded these liabilities.
Due in part to these liabilities, on February 10, 1995, CEMCO
filed a petition for relief under chapter 7 of the Bankruptcy
Code in the United States Bankruptcy Court for the District of
Delaware.
7. 1995 Recapitalization.
On May 3, 1995, Fruehauf completed a recapitalization (the "1995
Recapitalization") consisting of the following transactions: (a)
the issuance by Fruehauf pursuant to the terms of an indenture
(the "Indenture") of certain senior secured notes (the "Senior
Notes") to Fruehauf's lenders under its then existing bank
credit facility (the "Bank Credit Facility") as a result of an
amendment and restatement of the Bank Credit Facility; (b) the
issuance by Fruehauf of detachable warrants (the "Restructuring
Warrants") to purchase 2,791,907 shares of Fruehauf's common
stock, par value $.01 per share (the "Common Stock"), pro rata
to the holders of the Senior Notes; (c) an amendment to
Fruehauf's then existing revolving credit facility (the
"Revolving Credit Facility"), pursuant to which, among other
things, (i) Congress Financial Corporation (Central)
("Congress") assumed the obligations of the banks under the Bank
Credit Facility in respect of approximately $7.4 million of
letters of credit issued by such banks for the benefit of
Fruehauf through the issuance of replacement letters of credit
and (ii) Fruehauf's line of credit under the Revolving Credit
Facility was increased to $45 million less the amount of letter
of credit obligations; and (d) the issuance by Fruehauf of an
aggregate of 8,136,500 shares of Common Stock in a private
placement transaction in which Fruehauf received cash proceeds,
net of placement agent fees and other equity placement costs, of
approximately $20.7 million. The Trustee under the Indenture is
IBJ Schroder Bank & Trust Company, and the lender under the
Revolving Credit Facility was Congress.
The Senior Notes (a) were issued in an aggregate principal
amount of $74.1 million, which represents $66.6 million of then
outstanding indebtedness under the Bank Credit Facility, $4.1
million of previously accrued amendment fees and approximately
$3.4 million in fees associated with the Senior Notes; (b) bear
interest at a rate of 14.75% per annum; (c) do not have any
mandatory sinking fund; (d) have no scheduled payments of
principal until April 30, 2002; and (e) were secured by
substantially all of the assets of Fruehauf subject to a first
priority lien on accounts receivable and inventories held by
Congress to secure Fruehauf's obligations under the Revolving
Credit Facility and the right of Congress to look to other
assets of Fruehauf under certain circumstances. Pursuant to a
registration statement filed with the Securities and Exchange
Commission, Fruehauf exchanged the Senior Notes for debt
securities with substantially identical terms to the Senior
Notes and which were publicly tradeable securities (hereinafter
also referred to as "Senior Notes"). Interest on the Senior
Notes is payable semiannually on May l and November l of each
year. As of the Petition Date, approximately $54.5 million
principal balance of the Senior Notes remained outstanding.
8. The K-H Letter Agreement.
On April 19, 1996, Fruehauf entered into a letter agreement (the
"K-H Letter Agreement") with K-H Corporation ("K-H"), pursuant
to which, among other things, K-H purchased an aggregate $6.5
million interest in the Revolving Credit Facility (the "Working
Capital Term Note"). As part of the Letter Agreement, K-H
received five-year warrants to purchase 2,000,000 shares of
common stock for an exercise price of $2.50 per share.
On June 21, 1996, also pursuant to the K-H Letter Agreement,
Fruehauf and K-H entered into a loan agreement (the
"Subordinated Revolving Note") under which K-H agreed to lend at
least $3.5 million to Fruehauf (and additional amounts in K-H's
sole discretion) to fund trailing liabilities for which K-H may
have contingent liability. The Subordinated Revolving Note
bears interest at the rate of prime plus 2.5%. The debt owing
under the Subordinated Revolving Note is (a) fully subordinate
to the debt evidenced by the Revolving Credit Facility and the
Indenture and (b) secured by a lien on collateral subordinate to
the security interests of Congress and the trustee and
collateral agent under the Indenture.
9. Airlie Note.
The Airlie Group, L.P. was issued a Second Amended Restated
Subordinated Promissory Note (the "Airlie Note") by Fruehauf,
dated August 26, 1994, in the original principal amount of
$8,607,312.33 issued pursuant to an Exchange Agreement dated
June 28, 1991. The Airlie Note is subordinate to certain other
debt of Fruehauf, has a maturity date of October 1998 and
accrues interest at the rate of 15% per annum. On June 30,
1996, Fruehauf failed to make an interest payment due on the
Airlie Note.
10. Sale of Foreign Assets.
On June 21, 1996, Fruehauf completed the sale of certain of its
foreign assets (the "Foreign Sale") to FIL Partners, Ltd. as
follows: (a) (i) a 15% interest in Nippon Fruehauf Company,
Ltd., which operates in Japan; (ii) a 5% interest in Henred
Fruehauf (Pty) Ltd., which operates in South Africa; and (iii)
an approximate 23% interest (9% giving consideration to certain
dilutive securities) in Societe Europeenne de Semi-Remorques
S.A. ("SESR"), which, in turn, holds equity interests in trailer
manufacturing concerns in France, the United Kingdom and the
Netherlands; (b) certain trademark and technology licensing
agreements currently operative outside North America (including
all rights to any fees payable under any such existing
agreements and any renewals thereof that may be made in the
future); (c) the trademark "Fruehauf" outside of North America;
and (d) certain excess machinery and equipment and the rights to
collect certain export trade receivables. Proceeds to Fruehauf
from the Foreign Sale, net of transaction costs and $1 million
held in escrow, totaled approximately $18.3 million.
B. Financial Condition of the Debtors; Events Necessitating
Chapter 11 Protection.
Fruehauf experienced reduced booking levels during the second
half of 1995 and the first half of 1996 as well as an increase
in the level of cancellations. Although new trailer sales for
1995 were higher than the comparable 1994 period, new trailer
sales and gross margins during the third and fourth quarters of
1995 were less than anticipated due to production problems at
the Fort Madison and Scott County trailer assembly plants. As a
result, both plants experienced spot shortages in raw materials
and component parts, with corresponding difficulties in
optimizing production schedules. New trailer sales, gross margin
percentages and operating cash flows were negatively affected by
these events. The Debtors continued to experience cancellations
subsequent to December 31, 1995, with the backlog of customer
orders totaling approximately $43 million as of August 31, 1996.
In addition, Fruehauf de Mexico's revenue sources continued to
be adversely affected by the poor economic conditions in the
Republic of Mexico. The reduction in near-term production
levels had a drastically adverse effect on sales and operating
profitability and on cash flows.
Fruehauf incurred massive losses prior to the filing of the
Chapter 11 petition which resulted in an insufficiency of cash
to sustain its operations and meet its obligations.
As of September 23, 1996, the Debtors' manufacturing facility
in Fort Madison, Iowa was idled due to cash constraints. As of
the Petition Date, Scott County had been idled due to cash
constraints.
Effective as of September 13, 1996, Thomas B. Roller, the former
President and CEO of Fruehauf, resigned from the company to
become the President and CEO of Wolverine Tube, Inc. In
addition, also effective as of September 13, 1996, Timothy J.
Wiggins, the former Executive Vice President and Chief Financial
Officer of Fruehauf, resigned from the company. Fruehauf's
Board appointed Derek L. Nagle President to replace Mr. Roller.
Formerly, Mr. Nagle was the Senior Vice President -- North
American Sales and Distribution for Fruehauf.
III.
THE CHAPTER 11 CASE
A. Commencement of the Cases.
The Debtors commenced these cases under Chapter 11 of the
Bankruptcy Code on October 7, 1996 (the "Petition Date"). The
Debtors continue to operate as debtors-in-possession, managing
their properties and estates in accordance with Sections 1107
and 1108 of the Bankruptcy Code.
B. First Day Relief.
At a hearing held on the Petition Date, the Debtors sought a
variety of forms of relief, typically referred to as "First Day"
relief. Initially, the Debtors sought and the Court approved
the retention of Jones, Day, Reavis & Pogue as bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell as co-counsel, Carson,
Fischer, PLC as special counsel, Price Waterhouse LLP as
independent auditors, accountants, and tax and financial
advisors, and Logan & Company, Inc. as claims and noticing agent.
In addition, the Debtors received the Court's approval of a
variety of routine motions allowing them, among other things, to
(1) continue to use their existing centralized cash management
system and bank accounts, (2) pay certain pre-petition employee
wages, salaries and related items, (3) honor certain
pre-petition obligations to customers, and (4) pay certain
pre-petition trust fund taxes.
Additionally, the Debtors sought interim approval of first
priority secured post-petition debtor-in-possession financing
(the "Madeleine Facility") in an interim amount not to exceed
$35 million from Madeleine, LLC ("Madeleine"), an affiliate of
Cerberus Partners, L.P.
The Madeleine Facility provided the Debtors with a line of
credit with two components: a $35 million borrowing base
facility and an over-advance facility of $20 million. On the
Petition Date, the Court approved the DIP Facility on an interim
basis pending a hearing with respect to a final order. As part
of the Interim Order approving the DIP Facility, the Debtors
were authorized to use proceeds from the DIP Facility to pay
$6,739,006.12 to K-H for amounts due under the pre-petition
working capital facility and $6,656,425.85 to Congress Financial
Corporation ("Congress") to cash collateralize undrawn letters
of credit issued by Congress and other indemnity obligations and
$7,871,561.19 to Congress for amounts due under the pre-petition
working capital facility. Under the payoff letters with K-H and
Congress, the Debtors remained obligated to continue to
indemnify K-H and Congress for any indemnification and
reimbursement obligations under the loan documents as
administrative expenses. Additionally, Congress retained
$312,448.85 as cash collateral for any of the indemnification
and reimbursement obligations due to Congress under the loan
documents.
The Court entered a final order approving the Madeleine Facility
on November 5, 1996.
C. Formation of Unsecured Creditors' Committee and Bondholders'
Committee.
On October 21, 1996, the United States Trustee for the District
of Delaware appointed an Official Committee of Unsecured
Creditors for the Debtors' jointly administered cases. The
following entities were appointed as members of the Unsecured
Creditors' Committee:
a. The Airlie Group, L.P.;
b. Southern Fabricators, Inc.;
c. Decatur Aluminum Corp.;
d. Aluminum Co. of America (Alcoa);
e. Goodyear Tire and Rubber Co.;
f. Ruan Transport Corporation; and
g. Leclerc Inc.
The Unsecured Creditors' Committee retained Stroock & Stroock &
Lavan, L.L.P. as its counsel, and Saul, Ewing, Remick & Saul as
its local counsel. The Committee also retained Ernst & Young,
L.L.P. as its accountants. The Unsecured Creditors' Committee
currently consists of four members: Southern Fabricators, Inc.;
Decatur Aluminum Corp.; Aluminum Co. of America (Alcoa); and
Goodyear Tire and Rubber Co.
The Court also recognized the Unofficial Committee of Senior
Secured Noteholders (the "Bondholders' Committee") as parties in
interest. The Bondholders' Committee consists of (a) Herzog,
Heine & Geldue; (b) Lehman Brothers; (c) Bartlett & Co.; (d)
M.H. Davidson & Co.; (e) Foster & Motley, Inc.; (f); OTA Limited
Partnership; (g) Everen Securities; (h) Baker Nye Advisors; (i)
Miller Tabak Hirsch & Co.; (j) Kennedy, Cabot & Co.; (k) Credit
Research & Trading LLC; (l) Aisel & Co., L.L.C.; (m) Yamaichi
International (America); (n) Mariner Investment Group, Inc.; (o)
Paloma Partners; (p) Societe Generale Securities Corp.; and (q)
CoMac Partners, L.P. The Bondholders' Committee retained Haynes
and Boone, L.L.P. and Young, Conaway Stargatt and Taylor as
counsel.
D. First Asset Sales.
On December 3, 1996, Debtor Fruehauf Trailer Corporation sought
the Court's approval of its sale of certain real property
located in Philadelphia, Pennsylvania free and clear of all
liens, claims and encumbrances pursuant to Section 363 of the
Bankruptcy Code. Again, the net proceeds of the sale were to be
paid to Madeline in accordance with the terms of the final DIP
order. By the motion, Fruehauf sought the Court's approval of a
post-petition agreement entered according to terms as to which
there had been substantial agreement pre-petition, in September
1996. Those terms called for the sale of the Philadelphia
property to Navistar free and clear of all liens and interest
therein for $850,000.00. The Court approved the sale of the
Philadelphia property by order dated December 23, 1996.
E. Retention of Alvarez & Marsal Services.
The Debtors retained Alvarez & Marsal, Inc. ("A&M") as crisis
managers, with the Court's approval, on or about October 9,
1996, as required by the Madeleine Facility. On December 10,
1996, the Debtors moved the Court for an order expanding the
scope of A&M's employment to include financial advisory and
investment banking services. In connection with the Debtors'
exploration of a variety of reorganization scenarios, the
Debtors determined that the sale of some or all of their
businesses might be the appropriate method by which to maximize
the value of their estates for the benefit of creditors. The
Court approved the expanded scope of A&M's employment on
December 23, 1996.
F. Key Employee Retention Program.
On December 9, 1996, the Debtors sought Court approval of their
assumption and performance of a two-part pre-petition employee
retention program. The first part of the plan provided for
certain retention payments consisting of a percentage of an
employee's annual salary payable over time to encourage the key
employees to remain with the Debtors. The second program,
consisting of key employees and top-level management roles,
provided similar benefits albeit at a higher payment rate and
accelerated schedule. The total amount of the retention
payments was estimated at approximately $1.3 million. The Court
approved the Key Employee Retention Program by Order dated
December 23, 1996. The Program was not extended after it
expired in March 1997.
G. Significant Events During the Case.
1. Sale of Delphos Axle Plant to Holland Hitch.
On January 22, 1997, Fruehauf and Holland Hitch Company
("Holland Hitch") entered into a purchase agreement for the sale
of Delphos Axle unit. The agreement provided that Holland Hitch
would purchase the Delphos assets as a going concern and take
assignments of the Delphos sales contracts in exchange for cash
in the amount of $13 million, plus the agreed value at closing
of the Delphos Axle unit's inventory and the assumption of
certain liabilities.
By motion dated January 22, 1997, Fruehauf sought Court approval
for a procedure to sell the Delphos assets free and clear of
liens, claims and other encumbrances. The procedure generally
provided for a Solicitation for Bids to Purchase Fruehauf
Trailer Corporation's Delphos Axle Business and Assets and Terms
and Conditions of Auction (the "Solicitation") to be sent to all
parties either known by Fruehauf to have an interest in the
Delphos assets or identified by Fruehauf as having a potential
interest in the assets. The Solicitation identified the
procedures to be followed by each potential bidder. The
procedures required the submission of initial written bids by no
later than February 14, 1997, accompanied by bid deposits and
certain information relating to the financial wherewithal of the
bidder. The procedures contemplated an auction being held on
February 18, 1997, and further contemplated certain minimum
bidding requirements, including minimum bidding increments. The
procedures also required that offers be in cash and not subject
to further due diligence financing or other contingencies except
those contingencies provided for in the Delphos purchase
agreement with Holland Hitch.
In conjunction with seeking approval of the asset sale
procedures, Fruehauf also sought approval of an expense
reimbursement agreement with Holland Hitch. The expense
reimbursement agreement required Fruehauf to pay to Holland
Hitch a topping fee of $460,000 and to reimburse certain of
Holland Hitch's reasonable out-of-pocket expenses in the event
that the Bankruptcy Court approved a sale to a party other than
Holland Hitch or that Fruehauf failed to close a sale with
Holland Hitch after the Court had approved such sale. The Court
approved the asset sale procedures and the expense reimbursement
agreement.
Holland Hitch modified its offer to eliminate an environmental
escrow and reduced its bid to $12,250,000 plus the agreed value
of the inventory. Wabash National Corporation timely submitted
a bid in the amount of $13,250,000 plus the agreed value of the
inventory. On February 18, 1997, as contemplated by the asset
sale procedures, the Debtors conducted an auction of the Delphos
assets where Holland Hitch was the successful bidder with a bid
of $14,390,000 plus the value of the inventory. Thus, as a
result of the auction, the purchase price for the Delphos assets
increased $2,140,000. The Bankruptcy Court approved the sale of
the assets to Holland Hitch.
2. Sale of Debtors' U.S. Manufacturing and Sales and
Distribution Businesses to Wabash.
On February 15, 1997, Fruehauf Trailer Corporation and Fruehauf
International, Ltd. sought the entry of an Order: (i)
establishing bidding and asset sale procedures for substantially
all of the Debtors' businesses and assets as going concerns,
(ii) authorizing the sale of the assets free and clear of liens,
claims and other encumbrances, and (iii) authorizing assumption
and assignment of related leases and executory contracts.
Essentially, the motion sought to establish the procedure for an
auction of Fruehauf's domestic trailer manufacturing and
domestic sales and distribution businesses. The Debtors
proposed and the Court approved a solicitation requiring the
submission of initial bids by March 14, 1997, with an auction to
be held on March 18, 1997. The procedures required bid
deposits, information relating to the financial ability of each
bidder to perform and contemplated minimum bidding increments
and the submission of bids with substantially identical terms
and conditions as established by a form purchase agreement.
On March 14, 1997, the day that bids for the Debtors' assets
were due, the Debtors appeared before the Court with an offer
from Wabash National Corporation ("Wabash"). The Debtors sought
approval of a topping fee and expense reimbursement agreement
with Wabash. The agreement, which was approved by the Court,
provided for the Debtors' reimbursement of Wabash's expenses up
to $250,000 and payment to Wabash of a topping fee of $1.5
million. The topping fee was not to be payable to Wabash if the
Debtor determined that the assets to be sold to Wabash should be
reorganized rather than sold. The topping fee was payable if
the Debtor accepted a higher offer for the same assets or if the
Debtor operated outside the ordinary course of its business in a
manner which lead to a material adverse change.
Wabash was the sole bidder at the March 17 auction. In
connection with the auction, Wabash altered the terms of its
prior purchase agreement with the Debtors to include the
purchase of the Debtors' Fort Madison plant and the purchase
price increased approximately $4 million as a result.
The Wabash consideration consisted of $19 million in cash,
1,000,000 shares of Wabash common stock, and $17,600,000 of par
value of Wabash preferred stock. Although the total
consideration was insufficient to pay both the secured DIP
lender and the claims of the senior secured Noteholders in full,
the Court concluded that the sale was in the best interests of
the Debtors and its creditors since it appeared to represent the
market value of the assets. Madeleine, the DIP lender, objected
to the Wabash sale on the grounds that the cash portion of the
proceeds was insufficient to pay off the Madeleine loan. The
Debtors addressed the objection by seeking the Court's authority
to pay to Bank of America certain due diligence and commitment
fees as a first step to finding a replacement DIP lender and the
sale to Wabash was approved by the Court.
3. Rejection of Collective Bargaining Agreements and Termination
of Retiree Benefits.
a. Termination of Retiree Benefits.
The Debtors had approximately 1,800 retirees and dependents of
retirees (collectively the "Retirees") all of whom at some time
had been entitled to medical and related benefits from the
Debtors (the "Benefits"). Historically, the Debtors were self
insured for all of the Benefits.
The Debtors continued uninterrupted payment of Benefits from the
Petition Date through April 15, 1997, the day prior to the
closing of the Wabash sale. Payment of the post-petition
amounts required certain financial accommodations from
Fruehauf's predecessor, K-H Corporation ("K-H"). Nearly 90% of
the Debtors' Retirees were employees of K-H who retired prior to
Fruehauf's acquisition of K-H's trailer and maritime businesses.
As a result of its decision to dispose of its domestic
operations through a going concern sale, the Debtors sent
notices to Retirees on January 31, 1997, indicating that
Benefits would terminate on April 15, 1997. Section 1114 of the
Bankruptcy Code provides a process for the modification or
termination of retiree benefits. Consistent with the required
process, on April 16, 1997, the Debtors made a proposal to the
Paperworkers Union to terminate Benefits to the Paperworkers
Retirees and filed a motion for interim and final orders
terminating these Benefits pursuant to Sections 1114(g) and (h)
of the Bankruptcy Code. On April 18, 1997, the Court entered an
Agreed Order among the Debtors, the Paperworkers Union and the
Bondholders' Committee immediately terminating the Paperworkers
Benefits on an interim basis. The Debtors then requested that
the Paperworkers Union be designated as the representative of
the Retirees with respect to the Debtors proposed termination of
the Benefits. The Court granted this request. The Debtors made
a proposal to the Paperworkers Union that Retiree Benefits be
terminated because (i) the Debtors had no unencumbered assets
from which to pay the Benefits on a going forward basis (in
fact, the secured creditors were not likely to be paid in full);
and (ii) termination of the Benefits was necessary to maximize
the value of the Debtors' estate and provide the Debtors with an
opportunity to propose a plan of reorganization that would
maximize recoveries to all creditors. Further, the Debtors
pointed out that many of the retiree benefit plans at issue were
subject to termination or modification pursuant to their terms.
On May 29, 1997, the Court entered a Final Order Authorizing
Debtors to Modify Certain Retiree Benefits, Pursuant to Section
1114 of the Bankruptcy Code in which all Retiree Benefits were
terminated. Continuing benefits may be available to some
retirees from Fruehauf predecessors who may be co-obligors on
Retiree Benefits. The termination of the Retiree Benefits will
not affect the pension rights of retirees.
b. Collective Bargaining Agreements.
The Debtors were parties to approximately 40 current or former
collective bargaining agreements (collectively, the "CBAs") with
various labor organizations (collectively, the "Unions")
representing certain former employees of the Debtors
(collectively, the "Employees"). Upon the sale of the Delphos
Axle plant and the sale of the domestic manufacturing and sales
and distribution operations to Wabash, virtually all of Debtors'
Employees were terminated. Although Holland Hitch and Wabash
agreed to hire many of the Employees, it did not agree to the
assignment of the CBAs in connection with the purchases. By
motion dated April 22, 1997, the Debtors sought authority to
terminate and reject their CBAs pursuant to Section 1113 of the
Bankruptcy Code. At the same time, the Debtors sent notice to
the Unions that it proposed to terminate and reject all CBAs and
agreed to meet with the Unions to discuss the proposed
termination and rejection, all as required by Section 1113 of
the Bankruptcy Code. In their motion, the Debtors pointed to
the sale of their assets and the termination of their Employees
as grounds for termination and rejection of the CBAs. The
Debtors also pointed out that they had no unencumbered assets
with which to pay any obligations that might arise under the
CBAs. The Debtors did not waive their right to assert that the
CBAs had already been terminated pursuant to their terms.
Following negotiations with the Unions and a hearing on notice,
the Bankruptcy Court approved termination of the Debtors' CBAs
on May 29, 1997.
4. Receipt of $6.5 Million Senior Mortgage on Certain
Jacksonville Property.
As noted above, Jacksonville held a promissory note in the
principal amount of $3,777,100.00 secured by a mortgage
encumbering property, a 50 acre parcel of land in Duval County,
Florida which is owned by JRD. On December 3, 1996, Debtor
Jacksonville sought Court approval of an agreement to sell the
promissory note and purchase money mortgage pursuant to Section
363(b) of the Bankruptcy Code. Under the agreement,
Jacksonville agreed to sell the note and mortgage to JRD for
$2.745 million, which, less certain fees, costs and expenses
related to the sale, would be paid to the Debtor's DIP lender in
accordance with the terms of the final DIP order entered on
November 5, 1996. In a hearing on December 23, 1996, the Court
approved the Debtor's motion authorizing it to sell the note and
mortgage. However, the sale never closed. JRD defaulted on its
obligations to pay the note and Jacksonville instituted
foreclosure proceedings. Subsequently, JRD filed chapter 11 in
Jacksonville, Florida to stay the foreclosure, and Jacksonville
pursued its rights in that bankruptcy case.
On May 22, 1998, JRD's plan of reorganization was confirmed.
With respect to JRD's default on the promissory note in the
principal amount of $3,777,100.00 secured by a mortgage,
Jacksonville received an allowed secured claim against JRD in
the amount of $5,140,000 (the "Claim"). In addition, under
JRD's plan, Jacksonville loaned JRD $1,342,046 (the "Tax Loan")
to redeem certain tax certificates that endangered
Jacksonville's recovery on its claim against JRD. To ensure
repayment of both the Tax Loan and the Claim, Jacksonville has
received a consolidated five year note in the amount of
$6,502,583.00 (the "Note") secured by a first mortgage on the
property. The Note accrues interest at 12.5% per annum and is
repayable in monthly payments based on a 20 year amortization.
JRD's monthly payments to Jacksonville on the Note will also
include payment of 12% of the interest owed, and an additional
0.5% in interest will accrue and be due on the sale of
Jacksonville's collateral, on refinancing or in 5 years, when
the Note matures. In addition, JRD is required to (i) fund a
tax escrow account maintained by Debtors' counsel to ensure
payment of all property taxes; (ii) adequately insure the
property, and (iii) comply with any orders issued by the Florida
Department of Environmental Protection (including an existing
consent order) relating to environmental concerns with respect
to the property.
5. Replacement of the Madeleine Facility with the BOA Facility.
In conjunction with the Debtors' efforts to close the sale to
Wabash, the Debtors sought court authority to enter into a
debtor-in-possession financing agreement (the "BOA Facility")
with Bank of America NT&SA. As described above, the Debtors'
original DIP lender was Madeleine. Under the terms of the
Madeleine Facility, Madeleine had the authority to disapprove a
sale of the Debtors' assets. Madeleine had opposed the sale to
Wabash on the limited basis that the sale would not produce
sufficient cash to retire the Madeleine Facility. Through the
BOA Facility, the Debtors sought sufficient financing to pay off
the Madeleine Facility with a combination of the cash proceeds
from the Wabash sale and a draw on the BOA Facility. The BOA
Facility was needed to finance the wind down of the estates.
The BOA Facility allowed the Debtors to borrow up to $12.5
million. The BOA Facility was secured by a first priority lien
and security interest in all property of the Debtor's estate,
including the Wabash stock that Debtors would receive in
conjunction with the Wabash sale. BOA was also granted a super
priority administrative expense claim to secure repayment of the
BOA Facility.
The BOA Facility was approved by the Bankruptcy Court and the
Madeleine Facility was retired at the closing of the Wabash
sale. In August 1997, the Debtors sold sufficient shares of
Wabash common stock in a private placement to pay off the BOA
Facility and to provide the Debtors with sufficient ongoing
working capital.
6. Litigation with Alvarez & Marsal and Thomas E. Ireland.
Fruehauf and the Unofficial Committee objected to the fee
application of A&M, the crisis managers and investment bankers
for Fruehauf. A&M was employed as the crisis manager (with
Thomas E. Ireland serving as Chief Executive Officer of
Fruehauf) shortly after the case was filed. The engagement was
expanded to include investment banking services effective
November 21, 1996. While A&M was employed in both roles,
Fruehauf sold substantially all of its assets, including an axle
manufacturing plant in Delphos Ohio to Holland Hitch. In
addition, Wabash purchased Fruehauf's sales and distribution
network and its Scott County and Fort Madison trailer
manufacturing plants.
A&M requested approval of crisis management fees of $708,333.33
and investment banking fees of $1,010,104.05 and also filed an
unliquidated administrative expense claim for indemnification by
Fruehauf for the litigation expenses. Oppenheimer & Co., which
had served as the Debtors' investment bankers before the
bankruptcy filing, filed an administrative claim asserting a
right to a fee for its pre-petition investment banking work.
Fruehauf and the Bondholders' Committee objected to
Oppenheimer's administrative claim and that dispute was
consolidated with the A&M application. After extensive
discovery and litigation, the dispute was settled. The
settlement, which was approved by the Bankruptcy Court, included
A&M reducing its investment banking fee by $550,000, and
returning the balance of its retainer after paying the balance
owed on its crisis management fees. Oppenheimer received
$100,000 in cash and an allowed unsecured claim of approximately
$1.6 million. From the litigation, Fruehauf received
approximately $535,000, net the payment to Oppenheimer. The
parties exchanged mutual releases and a joint press release
was issued by Fruehauf and A&M announcing the settlement.
7. Relocation of Offices to California.
After the sale of the remaining domestic manufacturing and Sales
and Distribution system to Wabash, the Debtors had no ongoing
need for their corporate headquarters to remain in its leased
space in Indianapolis. The headquarters lease was rejected on
June 1, 1997, and the remaining books, records and headquarters
were relocated to California to office space near the Debtors'
Chairman and President and its employees. The move, which did
not include relocating any employees, saved the Debtors' money
by reducing leasehold expenses and travel costs associated with
the Indianapolis headquarters.
8. Sales of Wabash Stock.
Fruehauf sold 800,000 of the 1,000,000 shares of unregistered
and restricted Wabash National Corporation stock it received in
April 1997. On August 15, 1997, Fruehauf sold 600,000 of its
shares of Wabash Common Stock to Merrill Lynch, Pierce Fenner &
Smith Incorporated ("Merrill Lynch") which realized cash
proceeds of $15,641,361.81. The sale to Merrill Lynch was done
to enable Fruehauf to pay, in full, the sum of $8,274,115.97 to
Bank of America, Fruehauf's debtor in possession lender, and to
obtain working capital. On November 7, 1997, Fruehauf sold an
additional 200,000 of its shares of Wabash Common Stock to
Merrill Lynch which realized cash proceeds of $5,591,625.00.
This sale was done to obtain additional working capital. The
sales were accomplished in private placements since the stock
had not been registered and was restricted when it was sold.
H. Current Management of the Debtors and Disclosure of
Compensation.
The Debtors' Boards of Directors each have two members -- Chriss
W. Street and Worth W. Frederick. From October 1996 through
April 16, 1997, Fruehauf's Board also included Jonathan Gallen
and Robert Incorvaia who had been designated by the initial DIP
lender and who resigned when that debt was paid.
The Debtors' current officers and their annual compensation is
as follows:
Chriss W. Street, Chair, President and CEO $270,000
James Wong, CFO and Treasurer $78,000
Worth W. Frederick, Vice President $90,000
Courtney Watson, Secretary $65,000
Chriss W. Street
In 1996, Mr. Street was elected to the Board of Directors of
Fruehauf Trailer Corporation and became its Chairman in October
of 1996. After the resignation of Mr. Ireland as CEO in April
1997, Mr. Street became Fruehauf's CEO. Mr. Street was
instrumental in negotiating the sale of Fruehauf's sales and
distributions and manufacturing assets to Wabash. Mr. Street
was also instrumental in obtaining and negotiating the
replacement DIP loan from Bank of America.
After the Effective Date, Mr. Street will serve as Liquidating
Trustee of the Liquidating Trust. In addition to his positions
with Fruehauf, Mr. Street is a principal in Chriss Street &
Company and the Chairman and CEO of Comprehensive Care
Corporation. Mr. Street is an investment banker and corporate
workout specialist with a proven background in assessing and
maximizing the value in troubled companies and their assets. A
former officer of Dean Witter Reynolds & Company and Kidder
Peabody & Co. and a managing director of Sidler Amdec
Securities, Mr. Street formed his own company, Chriss Street &
Company in 1992, and he currently serves as President. The firm
specializes in the securities of troubled companies.
Worth W. Frederick
Worth W. Frederick currently serves as Vice President and a
Director of Fruehauf Trailer Corporation and is the acting
President and managing director of Fruehauf de Mexico. Under
his leadership, the Mexican operations have tripled production
and obtained profitability.
Mr. Frederick has extensive hands-on experience in management
consulting services. He has helped a number of companies
analyze their business problems, increase productivity and
profitability, assessing manufacturing operations and improve
project planning, scheduling and quality control. He has served
as an interim Chief Executive Officer, Chief Operating Officer
and in other senior management positions. Prior to becoming a
consultant, Mr. Frederick had extensive experience in the
manufacturing area, including serving as an executive officer of
Teledyne Systems and of Ford Aerospace Corporation. Mr.
Frederick also served as the President and CEO of Asco Aerospace
Products. In these capacities, Mr. Frederick has directed all
aspects of manufacturing, including project planning, product
assurance, engineering, and materiel and logistics organization.
Mr. Frederick holds an M.S. in Industrial Management (comparable
to an M.B.A.) and a B.S. in electrical engineering from Purdue
University.
James Wong
James Wong serves as the Chief Financial Officer, Treasurer and
Vice President of Fruehauf Trailer Corporation. He also shares
responsibility with Mr. Frederick for oversight of the
operations of Fruehauf de Mexico. Mr. Wong managed the wind
down and transition of Fruehauf after the sale to Wabash. Mr.
Wong has also worked extensively on evaluating Fruehauf's
remaining assets and in trying to sell the remaining property,
much of which has environmental issues.
From 1994 through 1997, Mr. Wong served as Vice President of
Chriss Street & Company and as Senior Financial Analyst for
Comprehensive Care Corporation. Mr. Wong was instrumental in
the financial restructuring of Comprehensive Care Corporation,
which is listed on the New York Stock Exchange. In these
capacities, Mr. Wong analyzed a number of distressed companies
as well as certain debt and equity securities in a number of
industries, including the health care industry, and the ground
transportation, computer disk drive and soft line retail
industries. As Financial Analyst for Comprehensive Care
Corporation, Mr. Wong performed numerous standard corporate
accounting functions, analyzed merger and acquisition targets,
engaged in due diligence and performed company valuations and
deal structuring. Prior to joining Chriss Street & Company, Mr.
Wong served as a financial analyst with Merrill Lynch.
Courtney Watson
Courtney Watson currently serves as corporate secretary of
Fruehauf Trailer Corporation. In that capacity, she maintains
corporate records and administers a number of employee relations
functions as part of the winding down of Fruehauf's operations.
Ms. Watson has also attempted to create order from the remaining
financial records of Fruehauf and to assure payment of
post-petition obligations of the Debtor.
Ms. Watson also serves as the corporate secretary for
Comprehensive Care Corporation and is the Chief Financial
Officer of Chriss Street & Company where she is responsible for
accounting transactions, securities transactions and securities
compliance. She has securities License Series 7, Series 63 and
Series 28. Before joining Chriss Street & Company, Ms. Watson
operated a business that offered a wide range of accounting
services needed by small businesses and individuals. From 1980
through 1989, Ms. Watson was a project manager at Ford Aerospace
and Communications Corporation where she managed contracts and
presented cost versus budget performance using cost schedule
status reporting.
The officers will receive the following bonuses on the Effective
Date of the Plan:
Chriss W. Street $350,000
Worth W. Frederick $100,000
James Wong $50,000
Courtney Watson $50,000
These bonuses reward the officers for the significant results
they achieved in liquidating the Debtors' assets and the
substantial work performed before becoming employees of the
Debtors as well as after assuming these positions. The Debtors
do not intend to seek Court approval of these bonuses by
separate motion. These bonuses will be paid pursuant to Section
9.7 of the Plan, and the Debtors will request that approval of
the bonuses be included in the order approving the Plan.
I. Assets and Liabilities of the Debtors.
1. Debtors' Major Assets (*)
a. Unrestricted Cash and Short Term Investments
Debtors had $7,086,000 in cash and short term investments as of
May 31, 1998.
b. Stock of Wabash National Corporation
(*) This discussion does not indicate the specific Debtor that
owns each asset. All of the Debtors' assets are subject to the
liens of the holders of the Senior Notes. Since the value of
the assets does not exceed the amount owed to the holders of the
Senior Notes, the ownership of specific assets is irrelevant to
unsecured creditors. Distributions under the Plan to
administrative, priority and unsecured creditors are only being
made because the Senior Noteholders have agreed to allow such
distributions from their collateral.
(1) 200,000 shares of Common Stock of Wabash National
Corporation. Based on the closing price of the Wabash Common
Stock on July 15, 1998 (i.e., $26 3/16), the aggregate value of
the 200,000 shares was $5,237,500 as of that date.
(2) 352,000 shares of $50 Preferred Stock of Wabash National
Corporation convertible into shares of common stock of Wabash
National Corporation at a price of $21.375 per share. The
Preferred Stock includes a coupon rate of 6% on the face value
of $17,600,000 and is redeemable by Wabash under certain
circumstances. Based on the closing price of Wabash Common
Stock on July 15, 1998, the aggregate value of the 352,000
shares of Wabash Preferred Stock (each share of which is
convertible into approximately 2.34 shares of Wabash Common
Stock) was $21,562,551 as of that date.
c. Fruehauf de Mexico
(1) Operations
Fruehauf de Mexico owns and operates a trailer manufacturing
plant located approximately 45 minutes north of the Mexico City,
Mexico airport. In May 1998, the plant manufactured 156
trailers, primarily for sale in Mexico. The main plant covers
108,000 square feet (70 x 171 meters) and has the capacity to
manufacture 1920 trailers per year (using a single shift at
current efficiency without overtime or weekend work by
employees). Worth Frederick, Vice President, is responsible for
overseeing the plant and its operations. Fruehauf de Mexico has
shown a small operating profit (EBITDA) on a monthly basis since
June 1997.
(2) Assets and Liabilities
As of May 31, 1998, Fruehauf de Mexico's primary assets and
liabilities and their related book values in U.S. dollars were:
Assets
Cash $ 369,000
Accounts Receivable 3,414,000
Inventory 3,864,000
Property, Plant & Equipment 6,010,000
------------
Total $13,657,000
Liabilities
Trade Payables & Accrued Liabilities $ 2,547,000
Customer Advances 845,000
Short Term Debt 171,000
Other Current Liabilities 740,000
Note Payable to FTC 2,658,000
-----------
Total $ 6,961,000
*This value represents appraised fair market value of the
property, plant and equipment as of January 8, 1998.
Customarily, Fruehauf de Mexico's customers pay substantial
deposits with their orders for trailers.
(3) Labor situation
Fruehauf de Mexico employs approximately 357 full time
employees. The employees are represented by CTM for collective
bargaining purposes. Fruehauf de Mexico is not experiencing any
labor problems at this time.
(4) Competition
Fruehauf de Mexico's market share (in Mexico) is approximately
35%. Its primary competitors, and their respective market
shares, are Ramirez, 20%; Caytressa, 15%; and Gonzales, Rocsa,
Retessa, Wabash, and others, each with approximately 5%.
Fruehauf de Mexico currently manufactures the following types of
trailers: dry freight vans, reefers, bottom hoppers, end dumps,
rock dumps, liquid tankers and platforms.
(5) Intercompany obligation
As of May 31, 1998, Fruehauf de Mexico owed Fruehauf $2,658,000
on a revolving credit agreement.
(6) Financing
Fruehauf de Mexico entered into a $1 million (US) line-of-credit
financing agreement with Mercedes Benz Financing. Draws accrue
interest at LIBOR plus 6.5%. The balance as of May 31, 1998 is
$171,000 and the agreement expires in January 1999.
(7) Management
Worth Frederick is the general manager of Fruehauf de Mexico.
Mr. Frederick has many years of experience in the manufacturing
industry and has been a member of Fruehauf's Board since 1996.
James Wong, who has worked with Chriss Street in corporate
restructurings for the last four years, assists Mr. Frederick as
the Finance Director in overseeing Fruehauf de Mexico's
operations. Marcelino Carmona, who has been with the Company
for thirty (30) years, will continue as Director of Plant
Operations. Eliseo Flores, who has worked in trailer sales for
over 15 years and for the last six years in Mexico, will
continue as Director of Sales.
(8) Ownership
Fruehauf International Ltd. is the majority owner of Fruehauf de
Mexico.
d. Jacksonville Riverfront Development Note Receivable
As noted above, Jacksonville holds a five year promissory note
in the amount of $6,502,583.00 (the "Note") secured by a first
mortgage on approximately 50 acres of riverfront property
located in downtown Jacksonville, Duval County, Florida. The
Note accrues interest at 12.5% per annum and is repayable in
monthly payments based on a 20 year amortization. JRD's monthly
payments to Jacksonville on the Note will also include payment
of 12% of the interest owed, and an additional 0.5% interest
will accrue and be due on the sale of Jacksonville's collateral,
on refinancing or in 5 years, when the Note matures. In
addition, JRD is required to (i) fund a tax escrow account
maintained by Debtors' counsel to ensure payment of all property
taxes; (ii) adequately insure the property; and (iii) comply
with any orders issued by the Florida Department of
Environmental Protection (including an existing consent order)
relating to environmental concerns with respect to the property.
e. Kearny Branch Note Receivable
The Debtor sold its branch in Kearny, New Jersey to 15
Hackensack Avenue Corp. before these cases were filed. The
purchase price included a 60 month promissory note with an
original face amount of $2,400,000 and requiring monthly
payments of $10,000 in principal plus an additional amount for
interest, all of which is secured by the property. The note
balloons on February 1, 2001. As of March 31, 1998, the balance
owed the Debtor was approximately $1,734,000. The note has been
in default since February of 1997, although the borrower has
continued to pay $25,000 a month. Fruehauf is instituting
foreclosure proceedings against 15 Hackensack Avenue Corp.
This property has environmental damages which need to be
remediated. The note calls for these costs to be split evenly
between the purchaser of the property and FTC, with a maximum
exposure to FTC of $500,000. No such costs have yet been
incurred, and the $500,000 claim asserted by 15 Hackensack
Avenue Corp. against Fruehauf with respect to this contingent
liability has been disallowed by the bankruptcy court.
f. Sindorf
The Debtors believe that Fruehauf International Limited ("FIL"),
through various entities, has an interest or interests in
property located in Sindorf, Germany, an industrial municipality
near Cologne. The Debtors believe that FIL owns
Deutsche-Fruehauf Holdings Corporation and the Debtors believe
that FIL also owns Deutsche-Fruehauf Beteiligungs GmbH, which
owns 98% and 2%, respectively, of the partnership interests in
Fruehauf Corporation & Co. OHG, a German partnership. The
Debtors believe this partnership has an interest in 54,581
square meters of real property in Sindorf. At the present time,
despite investigation, it remains unclear what interest, if any,
FIL has in the Sindorf property. In addition, the German
Pension Protection Agency (PSVaG) has a claim against Fruehauf
for DM 6.01 million with respect to the Sindorf property.
Fruehauf also has other liabilities associated with the Sindorf
property that are approximately DM 0.2 million.
g. Miscellaneous Real Estate
The Debtors own various tracts of real estate throughout the
U.S. The Debtors own eight home lots in Lexington Township,
Davidson County, North Carolina, that do not meet certain city
ordinances governing home lots and thus have little, if any,
value. The Debtors own three additional sites in Jacksonville,
the Hogan's Creek property, the Pickettsville dump site and
Mayport. These sites have values that are very difficult to
determine. The Hogan's Creek property cannot be sold at this
time because it may be taken by eminent domain (the property
adjoins a highway). The Pickettsville dump site may contain
hazardous waste and an environmental study will have to be
undertaken to determine the future best use of this property.
The Mayport property consists of three lots of undeveloped light
industrial commercial real estate. Management has estimated the
value of this property at $300,000. Finally, Fruehauf owns 7.89
acres with a building in Harrisburg, Pennsylvania that has been
appraised for $350,000.
h. Miscellaneous Receivables and Escrows
The primary receivables and escrows, excluding the receivable
from Fruehauf de Mexico discussed above, arise from refunds of
insurance premiums and state sales tax payments. Other escrows
are held by the Debtors' former DIP lender, Madeleine and
various present and former professionals. The largest escrow is
from the Debtors' workers compensation carriers and providers of
financial responsibility bonds for Fruehauf prior to the
Petition Date, American International Group and its related
insurance companies ("AIG"), in the amount of approximately
$4.5 million. The AIG escrows will be released when the claims
against the policies have been resolved or through litigation
with AIG. There can be no assurance that any of these
receivables or escrows will have any value.
i. Causes of action
The Debtors are currently investigating possible causes of
action they might have against various parties. The bankruptcy
related causes of action include preferential and other
avoidable transfers. The Debtors have yet to identify a precise
amount that it would seek from the recipients of these
transfers.
With respect to preferences, any entity or person who received a
payment or other property from the Debtors within the 90 days
before the Petition Date (or one year before the Petition Date
if the entity or person is an insider, as defined in section
547(b)(4)(B) of the Bankruptcy Code) is a potential target by
the Debtors for a preference action under section 547 of the
Bankruptcy Code. The Debtors' efforts to investigate
preferences has been hampered by the lack of certain records
which should have been kept and maintained in the ordinary
course of business by the Company. To date, the following
entries or individuals are being investigated by the Debtors to
determine whether they received a preferential transfer:
Preferred Fabricators, Inc. ($177,000), West Michigan Trailer
Sales, Inc. ($67,000), Shiloh Corporation ($24,000).
The Debtors are also investigating possible causes of action
against Terex Corporation and K-H Corporation related to their
prior ownership of the Fruehauf business and their transactions
in that regard. It is also investigating possible causes of
action against officers and directors .
Efforts are being made to try to realize upon what the Debtors
believe are over-funded pension plans (on a consolidated basis)
presently maintained by the Debtors. In addition, the Debtors
have commenced an action with respect to Fruehauf Trailer
Corporation Retirement Plan No. 3 under section 548 of the
Bankruptcy Code with respect to an increase in pension benefits
approved for certain non-union, long-time employees of Fruehauf
just three weeks before the Debtors filed their chapter 11
petitions, alleging that such increase was a fraudulent transfer
which should be voided.
The Debtors presently intend to contest the various claims of
AIG, including the amount of the escrowed funds presently held
by AIG.
The Debtors are also evaluating a number of secured claims,
including priority and secured tax claims, and may object to
these claims either before or after confirmation.
All causes of action of the Debtors, whether arising under the
Bankruptcy Code or otherwise, are reserved and retained by the
Debtors and will be transferred to the Liquidating Trustee.
2. Liabilities
All of the Debtors' assets are encumbered by liens in favor of
the holders of the Senior Notes. The outstanding principal and
accrued interest amount of the Senior Notes on the filing date
was $57,988,778. To the extent that the value of the Debtors'
assets exceeds the principal amount owed to the holders of the
Senior Notes, the Senior Notes accrue post-petition interest.
The estimated values of the Debtors' assets, as described above,
total less than the principal amount owed to the holders of the
Senior Notes.
The Debtor believes that there are no more than three record
holders and no fewer than twenty beneficial holders of the
Senior Notes. Members of the Bondholders' Committee may hold as
much as 80% (in value) of the Senior Notes.
Pursuant to the terms of the Plan, the Senior Noteholders have
agreed to the creation of a Distribution Fund from which the
Administrative and Priority Claims of the Debtors shall be paid.
The Debtors currently estimate that Administrative Claims,
excluding unpaid professional fees, will be approximately
$450,000. As of May 31, 1998, unpaid professional fees were
approximately $1,539,069. Priority claims, including Priority
Tax Claims, could be as much as $1,250,000. The Debtors believe
they have meritorious defenses to a number of the Priority
Claims and that the total amount of Priority Claims will be
materially less than this amount.
In addition to the claims of the Senior Noteholders, other
creditors, whose claims may total as much as $385,000, assert
liens or security interests in the Debtors' assets. These
creditors are treated as Class 3 creditors under the Plan. Many
of these claims are contingent and disputed.
Over $936 million of Unsecured Claims have been asserted against
the Debtors. The Debtors have not attempted to estimate the
amount of Unsecured Claims that will ultimately be allowed. The
Debtors scheduled $49 million in Unsecured Claims, but
unliquidated, Disputed Claims that are ultimately allowed may
increase the total unsecured debt above the scheduled amount.
IV.
SUMMARY OF PLAN
A. Overview
Although the holders of the Senior Notes could foreclose their
liens in all of Debtors' assets leaving nothing for other
creditors, the holders of the Senior Notes have agreed to this
Plan which provides for the payment of Allowed Administrative,
Priority and Pre-Petition Tax Claims and for a potential
distribution to general unsecured creditors. The Wabash
Securities will be conveyed to the Indenture Trustee to be
distributed to the holders of the Senior Notes. The Debtors
remaining assets will be foreclosed and/or transferred to the
Liquidating Trust. The holders of Allowed Administrative,
Priority and Pre-Petition Tax Claims will receive Class B
beneficial interests in the Liquidating Trust's Distribution
Fund. The Senior Noteholders have also agreed that if Class 4
(unsecured creditors) accepts the Plan, holders of Allowed
unsecured Claims will receive 5.5% of the Class A Beneficial
Interests in the Liquidating Trust. Ownership of the Class A
Beneficial Interests in the Liquidating Trust will be evidenced
by Trust Certificates.
Chriss W. Street, the current Chair and CEO of the Debtors will
serve as Trustee of the Liquidating Trust. A Trust Advisory
Committee of two (2) holders of Senior Notes will also be
created to assist in the decision-making process.
THIS SECTION PROVIDES A SUMMARY OF THE CLASSIFICATION AND
TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN, AND THE MEANS
FOR IMPLEMENTATION OF THE PLAN, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PLAN, WHICH IS ATTACHED TO THIS DISCLOSURE
STATEMENT AS EXHIBIT A, AND TO THE OTHER EXHIBITS ATTACHED
THERETO. ALL CAPITALIZED TERMS USED BUT NOT DEFINED IN THIS
SECTION HAVE THE MEANINGS ASCRIBED TO SUCH TERMS IN THE PLAN.
B. Designation of Claims and Interests.
1. Summary.
The following is a designation of the classes of Claims and
Interests under this Plan. In accordance with section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and Tax
Claims described in Article 3 of this Plan have not been
classified and are excluded from the following classes. A Claim
or Interest is classified in a particular class only to the
extent that the Claim or Interest qualifies within the
description of that class, and is classified in another class or
classes to the extent that any remainder of the Claim or
Interest qualifies within the description of such other class or
classes. A Claim or Interest is classified in a particular
class only to the extent that the Claim or Interest is an
Allowed Claim or Allowed Interest in that class and has not been
paid, released or otherwise satisfied before the Effective Date;
a Claim or Interest which is not an Allowed Claim or Interest is
not in any Class. Notwithstanding anything to the contrary
contained in this Plan, no distribution shall be made on account
of any Claim or Interest which is not an Allowed Claim or
Allowed Interest.
Class Status
A. Secured Claims
Class 2: Secured Claims of holders Impaired - entitled to vote
of Senior Notes
Class 3: Secured Claims other than Impaired - entitled to vote
Senior Note Claims
B. Unsecured Claims
Class 1: Priority Claims Unimpaired - no right to vote
Class 4: All Unsecured Claims Against Impaired - entitled to vote
the Debtors
C. Interests
Class 5: Old Common Stock Impaired - deemed to have
rejected
Class 6: Old Warrants Impaired - deemed to have
rejected
Class 7: Securities Claims Impaired - deemed to have
rejected
C. Treatment of Unclassified Claims
1. Administrative Claims.
a. General. Subject to the bar date provisions herein, unless
otherwise agreed to by the parties, each holder of an Allowed
Administrative Claim shall receive Cash equal to the unpaid
portion of such Allowed Administrative Claim on the later of (a)
the Effective Date or as soon as practicable thereafter, (b) the
date on which such Claim becomes an Allowed Administrative Claim
and (c) such other date as is mutually agreed upon by the
Debtors and the holder of such Claim. All holders of Allowed
Administrative Claims shall have a beneficial interest in the
Liquidating Trust's Distribution Fund, and the Distribution Fund
shall be the sole source of payment of such Claims.
b. Payment of Statutory Fees. All fees payable pursuant to 28
U.S.C. S 1930 shall be paid in Cash equal to the amount of such
Administrative Claim when due.
c. Bar Date for Administrative Claims.
(i) General Provisions. Subject to the exceptions provided in
sections 3.1(c)(ii) and (iii), by Order dated August 13, 1997,
the Court established October 6, 1997 as the date by which
certain holders of Administrative Claims arising prior to August
13, 1997 must have filed Proofs of Claim in lieu of requests for
payment of Administrative Claims. Holders of Administrative
Claims that have not filed such Proofs of Claim by the
applicable Administrative Claim bar date shall be forever barred
from asserting such Claims against the Debtors, the Liquidating
Trust or any of the Debtors' property.
(ii) Professionals. All professionals or other entities
requesting compensation or reimbursement of expenses pursuant to
sections 327, 328, 330, 331, 503(b) and 1103 of the Bankruptcy
Code for services rendered before the Effective Date (including,
without limitation, any compensation requested by any
professional or any other entity for making a substantial
contribution in the Reorganization Case) shall File and serve on
the Liquidating Trustee at 1111 Bayside Drive, Suite 100, Corona
del Mar, California 92625-1755; Haynes and Boone, L.L.P., (Attn:
Robin Phelan, Esq.) 901 Main Street, Dallas, Texas 75202-3789,
as counsel to the Bondholders' Committee; Camhy Karlinsky &
Stein LLP (Attn: David Neier, Esq.), 1740 Broadway, New York,
NY 10019; Morris, Nichols, Arsht & Tunnell (Attn: William H.
Sudell, Jr., Esq.), 1201 North Market Street, Wilmington,
Delaware 19801; and The Honorable Patricia A. Staiano, United
States Trustee, The Curtis Center, 601 Walnut Street, Suite
950W, Philadelphia, PA 19106; an application for final
allowance of compensation and reimbursement of expenses no later
than forty-five (45) days after the Effective Date. Objections
to applications of professionals for compensation or
reimbursement of expenses must be Filed and served on the
Liquidating Trustee and the professionals to whose application
the objections are addressed no later than seventy (70) days
after the Effective Date. Any professional fees and
reimbursements or expenses incurred by the Liquidating Trust
subsequent to the Effective Date may be paid by the Liquidating
Trust without application to the Bankruptcy Court. The
Liquidating Trustee shall pay the reasonable fees and expenses
of the professionals of the Bondholders' Committee incurred
prior to the Effective Date and the fees and expenses of the
Indenture Trustee incurred prior to the Effective Date as
determined by the Court.
d. Tax Claims. All requests for payment of Administrative
Claims and other Claims by a governmental unit for taxes (and
for interest and/or penalties related to such taxes) for any tax
year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through
and including the Effective Date ("Post-petition Tax Claims")
and for which no bar date has otherwise been previously
established, must be Filed on or before the later of (i) 45 days
following the Effective Date; and (ii) 90 days following the
filing with the applicable governmental unit of the tax return
for such taxes for such tax year or period. Any holder of any
Post-petition Tax Claim that is required to File a request for
payment of such taxes and does not File such a Claim by the
applicable bar date shall be forever barred from asserting any
such Post-petition Tax Claim against any of the Debtors, the
Liquidating Trust or their respective properties, whether any
such Post-petition Tax Claim is deemed to arise prior to, on, or
subsequent to the Effective Date. To the extent that the holder
of a Tax Claim holds a lien to secure its Claim under applicable
state or federal law that survives the deemed foreclosure by the
holders of the Senior Notes, the surviving lien shall attach to
the Distribution Fund and remain in effect until the Tax Claim
has been paid in full. To the extent that a Tax Claim is a
Disputed Claim, any lien securing such Disputed Claim under
applicable state or federal law shall attach to the Distribution
Fund for such Disputed Claim. Upon disallowance of a Disputed
Tax Claim or allowance and payment of such claim, such lien
shall be released. Failure by the Liquidating Trustee to make a
payment on an Allowed Tax Claim pursuant to the terms of the
Plan shall be an event of default. If the Liquidating Trustee
fails to cure an event of default as to an Allowed Tax Claim
within twenty (20) days after service of written notice of
default from the holder of such Allowed Tax Claim, then the
holder of such Allowed Tax Claim may enforce the entire amount
of its Claim, plus interest as provided under this Plan, against
the Liquidating Trust in accordance with applicable state or
federal law remedies. At the option of the Liquidating Trustee
and as an alternative to the treatment provided above, the
Liquidating Trustee may surrender the property securing the
post-petition Tax Claim and allow the holder to foreclose upon
the property. Surrendering the property will satisfy the Tax
Claim in full.
2. Treatment of Pre-Petition Tax Claims. Each holder of an
Allowed
Pre-Petition Tax Claim shall have a beneficial interest in the
Liquidating Trust's Distribution Fund and be paid in Cash from
the Distribution Fund on the latest of: (i) the first
practicable date after the Effective Date, (ii) 30 calendar days
after the date on which an Order allowing such Claim becomes a
Final Order, (iii) the last day the taxes may be paid under
applicable law without incurring penalties or interest, and (iv)
such other time or times as may be agreed by the holder of such
Claim and the Trustee. To the extent that the holder of a Tax
Claim holds a lien to secure its Claim under applicable state
law following the deemed foreclosure by the holders of the
Senior Notes, the surviving lien shall attach to the
Distribution Fund and remain in effect until such Allowed
Pre-petition Tax Claim has been paid. To the extent that a Tax
Claim is a Disputed Claim, any lien securing such Disputed Claim
under applicable state law shall either remain in effect or
attach to the Distribution Fund reserve for such Disputed Claim.
Upon disallowance of a Disputed Tax Claim or allowance and
payment of such claim, such lien shall be released. Subject to
the limitations of 11 U.S.C. S 506(b), Allowed Pre-Petition Tax
Claims that are secured by liens under applicable state or
federal law shall accrue interest, but not penalties, at the
rates provided under applicable state or federal law up to the
Effective Date, and thereafter, to the extent the liens have
survived the deemed foreclosure by the holders of the Senior
Notes, shall accrue interest at the rate of 7% per annum.
Failure by the Liquidating Trustee to make a payment on an
Allowed Tax Claim pursuant to the terms of the Plan shall be an
event of default. If the Liquidating Trust fails to cure an
event of default as to an Allowed Tax Claim within twenty (20)
days after service of written notice of default from the holder
of such Allowed Tax Claim, then the holder of such Allowed Tax
Claim may enforce the entire amount of its Claim, plus interest
as provided under this Plan, against the Liquidating Trust in
accordance with applicable state or federal law remedies. At
the option of the Liquidating Trustee and as an alternative to
the treatment provided above, the Liquidating Trustee may
surrender the property securing the Pre-petition Tax Claim and
allow the holder to foreclose upon the property. Surrendering
the property will satisfy the Tax Claim in full.
D. Classification and Treatment of Classified Claims and
Interests
1. Class 1 - Priority Claims.
a. Classification: Class 1 consists of all non-tax Priority
Claims.
b. Treatment: Class 1 is unimpaired and, accordingly, the
members of Class 1 are not entitled to vote on the Plan. Unless
otherwise agreed to by the parties, each holder of an Allowed
Claim in Class 1 will receive a beneficial interest in the
Liquidating Trust's Distribution Fund and will be paid the
Allowed amount of such Claim in full in Cash by the Liquidating
Trust from the Distribution Fund on or before the later of (a)
the first practicable date after the Effective Date, (b) the
date such Claim becomes an Allowed Claim, and (c) such other
date as is mutually agreed upon by the Debtor and the holder of
such Claim.
2. Class 2 - Secured Claims of Holders of Senior Notes
a. Classification: Class 2 consists of the Allowed Secured
Claims of the holders of the Senior Notes.
b. Treatment: Class 2 is impaired and, accordingly, members of
Class 2 are entitled to vote on the Plan. Each holder of an
Allowed Claim in Class 2 will receive (1) its Pro Rata share of
the Wabash Securities free and clear of liens, claims and
interests and, (2), either (a) its Pro Rata share of 100% of the
Class A Beneficial Interests in the Liquidating Trust, or (b) if
Class 4 accepts the Plan, its Pro Rata share of 94.5% of the
Class A Beneficial Interests in the Liquidating Trust.
3. Class 3 - Secured Claims Other Than Claims of Holders of
Senior Notes.
a. Classification: Class 3 consists of all Allowed Secured
Claims other than the Claims of holders of Senior Notes.
b. Treatment: Class 3 is impaired, and the holders of Allowed
Claims in such Class are entitled to vote on the Plan. At the
Debtors' option, on the Effective Date (a) the Plan may leave
unaltered the legal, equitable, and contractual rights of the
holder of an Allowed Secured Claim, or (b) the Debtors may
assume and assign the contract or agreement governing an Allowed
Secured Claim pursuant to section 365(b) of the Bankruptcy Code,
or (c) the Debtors may pay an Allowed Secured Claim in such
manner as may be agreed to between the Debtors and the holder of
such Claim, or (d) the Debtors may (i) pay an Allowed Secured
Claim in full, in cash, or (ii) the Debtors may surrender to the
holder of an Allowed Secured Claim the property securing such
Claim, in all of such events, the value of such holder's
interest in such property shall be determined (A) by agreement
of the Debtors or the Liquidating Trustee and the holder of such
Allowed Secured Claim or (B) if they do not agree, by the
Bankruptcy Court.
4. Class 4 - General Unsecured Claims
a. Classification: Class 4 consists of all Allowed Unsecured
Claims against any of the Debtors, including trade Claims,
Claims arising out of the Warrant Notes, the Rejection Claims,
any indemnification Claims, and any products liability or
personal injury Claims.
b. Treatment: If Class 4 accepts the Plan (i.e., of those
holders of Allowed Claims in Class 4 that vote on the Plan, the
holders of at least two-thirds (2/3) in amount and more than
one-half (1/2) in number of Allowed Claims in Class 4 vote in
favor of the Plan), each holder of an Allowed Class 4 Claim will
receive its Pro Rata share of 5.5% of the Class A Beneficial
Interests in the Liquidating Trust. If Class 4 rejects the
Plan, the holders of Allowed Claims will receive no distribution
under the Plan.
5. Class 5 - Old Common Stock.
a. Classification: Class 5 consists of all Interests in Old
Common Stock.
b. Treatment: Holders of Interests in Class 5 will receive no
distribution under the Plan and the Old Common Stock will be
canceled.
6. Class 6 - Old Warrants
a. Classification: Class 6 consists of all Interests of holders
of Old Warrants.
b. Treatment: Holders of Old Warrants will receive no
distribution under the Plan and all Old Warrants shall be
canceled.
7. Class 7 - Securities Claims
a. Classification: Class 7 consists of Securities Claims (if
any exist).
b. Treatment: Any Allowed Securities Claims shall be treated
respectively with the same priorities as the Old Common Stock
and the Old Warrants pursuant to section 510(b) of the
Bankruptcy Code, and the holders of such Allowed Securities
Claims shall receive no distribution under the Plan.
E. Acceptance or Rejection of the Plan
1. Voting Classes. The holders of Claims in Classes 2, 3 and 4
are impaired and shall be entitled to vote to accept or reject
the Plan.
2. Presumed Acceptance of Plan. Class 1 is unimpaired under the
Plan, and therefore, is conclusively presumed to accept the Plan.
3. Presumed Rejection of Plan. The holders of Interests in
Classes 5, 6 and 7 are not being solicited to accept or reject
the Plan and will be deemed to have rejected the Plan.
F. Means for Execution and Implementation of the Plan
1. Funding of the Distribution Fund. On the Effective Date, the
Debtors shall first fund the Distribution Fund which shall be
transferred to the Liquidating Trust on behalf of and for the
benefit of the holders of Allowed Administrative, Priority and
Pre-Petition Tax Claims.
2. Transfer of Wabash Securities to Indenture Trustee. On the
Effective Date, the Debtors shall then transfer the Wabash
Securities to the Indenture Trustee for distribution to the
holders of the Senior Notes in accordance with the terms of this
Plan.
3. Change of Plan Sponsorship for the Management and Union
Plans. Prior to or on the Effective Date, the Debtors shall
transfer sponsorship of the current Management Plan and Union
Plan to Pension Corp., which will be owned by the Liquidating
Trust. It is not anticipated that Pension Corp. will have
significant operations. The transfer of the sponsorship of the
Management Plan and the Union Plan to Pension Corp. and the
transfer of Pension Corp. to the Liquidating Trust will not
affect the rights of the retirees. The current sponsors are
Fruehauf Trailer Corporation for the Management Plan and
Jacksonville Shipyards, Inc. for the Union Plan. The Board of
Directors of the respective sponsors shall approve the change in
sponsorship. The administrative provisions of the Management
Plan and Union Plan allow for a change in plan sponsorship. The
appropriate notices and governmental filings to comply with
federal law shall be provided in a timely manner to the
appropriate parties. Once the change in sponsorship has been
completed, Pension Corp. may elect to merge the Management Plan
and Union Plan to form a single plan.
The Pension Benefit Guaranty Corporation ("PBGC") filed three
(3) claims relating to the Union Plan and the Management Plan in
each of the In re Fruehauf Corp., et al. bankruptcies (Case Nos.
1563-1572). The PBGC is a wholly-owned United States government
corporation created by Title IV of the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C. SS 1301-1461
("ERISA"), to administer the mandatory pension plan termination
insurance program established under Title IV of ERISA. The PBGC
guarantees the payment of certain pension benefits upon
termination of a pension plan covered by Title IV of ERISA.
According to PBGC, if the transfer of sponsorship of the pension
plans occurs and the pension plans remain on going after
confirmation of the Plan, PBGC will withdraw its claims.
Nothing in the Plan, therefore, shall be construed as releasing
or in any way discharging PBGC's claims.
4. Transfer of Hogan's Creek Property and Picketville Property.
On the Effective Date, Jacksonville Shipyards, Inc. shall next
transfer the Hogan's Creek Property and Picketville Property to
JSI Property Corp.
5. Foreclosure by Holders of Senior Notes. On the Effective
Date, the Indenture Trustee will be deemed to have foreclosed
the liens of the holders of the Senior Notes on the Foreclosed
Assets and to have transferred the Foreclosed Assets to the
Liquidating Trust. The Foreclosed Assets shall be transferred
to the Liquidating Trust on behalf of and for the benefit of the
holders of Class A Beneficial Interests in the Liquidating Trust.
6. Transfer by Debtors of Assets to the Liquidating Trust. On
the Effective Date, the Debtors shall convey all of their
remaining assets to the Liquidating Trust free and clear of all
liens, claims and encumbrances on behalf of and for the benefit
of the creditors who will receive a beneficial interest in the
Liquidating Trust.
7. Ratification of Liquidating Trust Agreement. On the
Effective Date, each holder of each Claim will be deemed to have
ratified and become bound by the terms of the Liquidating Trust
Agreement. The Liquidating Trustee is empowered to execute the
Liquidating Trust Agreement on behalf of each holder of a Claim.
a. Powers and Duties. The Liquidating Trustee shall have the
powers, duties and obligations specified in this Plan and the
Liquidating Trust Agreement.
b. Compensation of Liquidating Trustee. The Liquidating Trustee
shall be entitled to receive from the Trust Estate compensation
for his services as Trustee substantially in accordance with the
description at Section IV.F.7.b. of this Disclosure Statement
which compensation shall be approved by the Court at the
Confirmation Hearing. The Liquidating Trustee shall also be
reimbursed by the Trust Estate for all reasonable out-of-pocket
expenses incurred by the Trustee in the performance of his
duties.
c. Limitation of Liability. The Liquidating Trustee shall use
reasonable discretion in exercising each of the powers herein
granted. No Liquidating Trustee or any attorney, agent, or
servant of the Liquidating Trustee shall be personally liable in
any case whatsoever arising in connection with the performance
of obligations under this Plan, whether for their acts or their
failure to act unless they shall have been guilty of willful
fraud or gross negligence.
The Liquidating Trustee may consult with attorneys, accountants,
and agents, and the opinions of the same shall be full
protection and justification to the Liquidating Trustee and his
employees for anything done or admitted or omitted or suffered
to be done in accordance with said opinions. The Liquidating
Trustee shall not be required to give any bond for the faithful
performance of his duties hereunder.
d. Indemnity. The Liquidating Trustee and his employees and
agents will be indemnified by the Liquidating Trust against
claims arising from the good faith performance of duties under
the Bankruptcy Code or this Plan.
e. Right to Hire Professionals. The Liquidating Trustee shall
have the right to reasonably utilize the services of attorneys
or any other professionals which, in the discretion of the
Liquidating Trustee, are necessary to perform the duties of the
Liquidating Trustee. Reasonable fees and expenses incurred by
the attorneys, accountants or other agents of the Liquidating
Trustee shall be paid by the Liquidating Trust.
f. Treatment of Distribution Fund Surplus. After the payment of
the Allowed Administrative Expense Claims, Priority Claims and
Pre-Petition Tax Claims of the Class B Beneficial
Interestholders, any remaining funds in the Distribution Fund
shall be available for distribution to the holders of the Class
A Beneficial Interests in the Liquidating Trust.
g. Limitation on the Liquidating Trustee. Two holders of Senior
Notes will serve as the Trust Advisory Committee. Either
Bankruptcy Court approval or unanimity among the Trust Advisory
Committee members and Liquidating Trustee is required before the
Liquidating Trustee can:
(1) borrow money in excess of $500,000 or grant liens on any
part of the Trust Estate in excess of $500,000;
(2) sell assets of the Trust Estate with a value in excess of $500,000;
(3) modify the Plan;
(4) initiate and prosecute litigation, including but not
limited to claim objections with expected fees and costs in
excess of $250,000;
(5) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of $500,000;
and
(6) forego making the annual distribution to Certificate
Holders required by Section 6.2 of the Liquidating Trust.
If unanimity does not exist regarding the proposed action and
Bankruptcy Court approval is requested, the Liquidating Trust
shall pay the attorneys fees incurred by the objecting Committee
member, up to $25,000 per member during the term of the
Liquidating Trust.
The Liquidating Trust Agreement may be modified only with the
written approval of the Class A Beneficial Interestholders
holding over 50% of the Class A
Beneficial Interests.
h. Distribution of Trust Certificates. The Liquidating Trust
shall distribute Trust Certificates to the holders of the Class
A Beneficial Interests in the Liquidating Trust which shall
reflect each holders' proportional interest in the Liquidating
Trust, subject to the interests of the holders of Class B
Beneficial Interests in the Distribution Fund.
i. Tax Treatment of the Liquidating Trust. It is intended that
the Liquidating Trust will be treated as a "liquidating trust"
within the meaning of Treasury Regulations Section
301.7701-4(d). Accordingly, for federal income tax purposes,
the transfer and assignment of the Debtors' assets shall be
treated as a deemed transfer and assignment of such assets to
the holders of Claims followed by a deemed transfer and
assignment by such holders to the Liquidating Trust. The
Liquidating Trust shall provide the holders of Claims with a
valuation of the assets transferred to the Liquidating Trust and
such valuation shall be used consistently for all federal income
tax purposes. All items of income, deduction, credit or loss of
the Liquidating Trust shall be allocated for federal, state and
local income tax purposes among the holders of Claims as set
forth in the Liquidating Trust agreement; provided, however,
that to the extent that any item of income cannot be allocated
in the taxable year in which it arises, the Liquidating Trust
shall pay the federal, state and local taxes attributable to
such income (net of related deductions) and the amount of such
taxes shall be treated as having been received by, and paid on
behalf of, the holders of Claims receiving such allocations when
such allocations are ultimately made.
j. Termination of Liquidating Trust. The duties, powers and
responsibilities of the Liquidating Trustee shall terminate upon
the liquidation and distribution to Beneficial Interestholders
of all proceeds in the Liquidating Trust estate in accordance
with this Plan.
8. Dissolution of Corporate Entities. Following the creation of
the Distribution Fund, the transfer of the Wabash Securities to
the Indenture Trustee, the deemed foreclosure of the Foreclosed
Assets by the Indenture Trustee, and the transfer of any
remaining assets to the Liquidating Trust on behalf of and for
the benefit of the Beneficial Interestholders, the Debtors shall
be dissolved or liquidated.
9. Cancellation of Old Securities. On the Effective Date, all
Old Securities shall be terminated and canceled, and the
indentures or statements of resolution governing such Old
Securities shall be rendered void. Notwithstanding the
foregoing, such termination will not impair the rights and
duties under any indenture as between the Indenture Trustee and
the beneficiaries of the trust created thereby (the holders of
the Senior Notes) including, but not limited to, the rights of
the Indenture Trustee to receive payment of its fees and
expenses, to the extent not paid by the Company, from amounts
distributable to holders of Senior Notes.
10. Registration Exemption for Debtors' Wabash Securities and
Beneficial Interests in the Liquidating Trust. The Confirmation
Order shall provide that (a) the distribution of the Wabash
Securities to holders of Allowed Class 2 Claims, (b) the
transfer to the Liquidating Trust of the stock of Pension Corp.
and JSI Property Corp., and (c) the issuance and transfer
pursuant to the Plan of the beneficial interests in the
Liquidating Trust and the Trust Certificates and any resale of
such property shall be exempt from any and all federal, state
and local laws requiring the registration of such security, to
the fullest extent provided by section 1145 of the Bankruptcy
Code.
The Debtors believe that the exemption under Bankruptcy Code
Section 1145(a)(1) from the application of the registration
provisions of the Securities Act of 1933, as amended (the
"Securities Act"), is available for each of (a), (b) and (c) for
the following reasons:
(i) The distribution, transfer and/or issuance of each of the
securities referred to in (a), (b) and (c) is being made wholly
in exchange for claims made against the Debtors.
(ii) The Wabash Securities constitute securities of a successor
to the Debtors (withing the meaning of Bankruptcy Code Section
1145(a)), since Wabash, by virtue of its purchase in April 1997
from Fruehauf Trailer of the United States trailer manufacturing
and sales and distribution businesses of Fruehauf, became a
successor to Fruehauf Trailer as of the date of such purchase.
The conclusion that Wabash is a successor to the Debtors is
based on the fact that the sale to Wabash constituted a sale of
substantially all of the assets owned by the Debtors as of the
date of sale, a fact which was confirmed by the order of the
Bankruptcy Court approving the sale. The businesses sold to
Wabash by the Debtors generated 100% of the operating revenues
recognized by the Debtors immediately prior to the sale of the
businesses, and following the sale to Wabash, the Debtors owned
no other operating assets and the number of persons employed by
the Debtors declined from more than 1,100 to 5. In addition,
based on the aggregate value of the consideration paid in
connection with the sale (i.e., $19,000,000 in cash plus the
Wabash Securities), the Debtors believe that the value of the
assets transferred represented significantly in excess of 50% of
the total value of the assets owned by the Debtors immediately
prior to the sale. Furthermore, in connection with the sale of
the businesses, Wabash assumed rights and obligations associated
with ownership and operation of those businesses following the
sale. For all of the foregoing reasons, the Debtors believe
that Wabash should be considered a "successor" to the Debtors
for purposes of Section 1145(a) of the Bankruptcy Code.
The sale to Wabash needed to be consummated in advance of
confirmation of the Plan. The debtor-in-possession financing
facility which the Debtors had obtained upon commencement of the
bankruptcy proceeding was due and payable on April 30, 1997, and
the DIP lender had advised the Debtors that it was unwilling to
extend or renew the facility. In addition, the Debtors were
unsuccessful in obtaining a new DIP facility that would replace
the initial DIP facility (although the Debtors were eventually
able to obtain, concurrent with the sale to Wabash, a much
smaller replacement DIP loan from Bank of America that was
secured principally by the Wabash Securities). Indeed, the
Debtors had continued to experience a decline in sales and
further losses during the post-petition period prior to the sale
and were already in default on the DIP facility. The sale
ensured that the DIP lender would not exercise its post-petition
first priority security interest, which would have effectively
eliminated the opportunity for recovery by pre-petition
creditors of the Debtors pursuant to the Plan. Pursuant to an
order of the Bankruptcy Court, notice of the auction, which
resulted in the sale to Wabash, was published in the National
Edition of The Wall Street Journal and a copy of the notice was
served on all parties who filed notices of appearance in the
bankruptcy and all known parties claiming a lien or any interest
in the assets that were sold. All parties in interest were
given an opportunity to object to the sale prior to final
approval by the Bankruptcy Court.
(iii) The stock of Pension Corp., JSI Property Corp. and
Fruehauf de Mexico constitute stock of "affiliates" of the
Debtors who are participating in the Plan with the Debtors.
(iv) The Trust Certificates constitute securities of a
"successor" to the Debtors, since the Liquidating Trust will be
a successor to the assets of the Debtors as they exist on the
Effective Date of the Plan.
With respect to the distribution of the Wabash Securities, in
addition to the exemption which the Debtors believe is available
under Bankruptcy Code Section 1145, Wabash has filed with the
Securities and Exchange Commission ("SEC") a registration
statement with respect to the disposition of the Wabash
Securities currently held by Fruehauf Trailer Corporation. This
registration statement was declared effective by the SEC in
April 1998. Moreover, Wabash has agreed, assuming that the
Bankruptcy Code Section 1145 exemption is available for the
distribution of the Wabash Securities pursuant to the Plan, to
supplement the existing effective registration statement to
enable the holders of Allowed Class 2 Claims who may be deemed
"underwriters" (within the meaning of the Securities Act and
Section 1145) with respect to the Wabash Securities they receive
pursuant to the Plan to utilize the registration statement as
"selling stockholders" for their disposition of the Wabash
Securities. Wabash has further agreed, if the Section 1145
exemption is not deemed available for the distribution of the
Wabash Securities pursuant to the Plan, to file a new
registration statement with the SEC, within five business days
following confirmation of the Plan, to enable holders of Allowed
Class 2 Claims who may be deemed "underwriters" to dispose of
their Wabash Securities, and to use its best efforts to have
such registration statement declared effective by the SEC by the
date of distribution of the Wabash Securities pursuant to the
Plan. Accordingly, based on the foregoing, the Debtors
anticipate that the Wabash Securities will be eligible for an
immediate resale by the holders of Allowed Class 2 Claims upon
distribution pursuant to the Plan, although there can be no
assurance that a delay in the registration process or other
circumstance will not prevent such holders from effecting an
immediate resale of the Wabash Securities.
11. Transferability of the Trust Certificates; Applicability of
Federal Securities Laws to the Liquidating Trust. The Trust
Certificates constituting the beneficial interests in the
Liquidating Trust will be transferable. However, the Trust
Certificates will not be listed on any national securities
exchange or on the Nasdaq Stock Market, and the Liquidating
Trust will not facilitate the development of an active trading
market or encourage others to do so, will not place any
advertisement in the media promoting an investment in the Trust
Certificates and will not collect or publish information about
prices at which the Trust Certificates may be transferred,
except to the extent required to comply with disclosure
requirements under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Furthermore, the Liquidating
Trust will not be obligated, nor is it anticipated that the
Liquidating Trust would cooperate in any attempt to, facilitate
quotations for the Trust Certificates pursuant to Rule 15c2-11
of the Exchange Act. Although it is possible that some trading
will occur in the Trust Certificates, the Debtors believe that
it is unlikely that such trading will be active or that a
significant market will develop beyond the initial recipients of
the Trust Certificates.
The Liquidating Trust presently intends to register under
Section 12(g) of the Exchange Act and keep such registration in
effect until there are either (i) less than 300 holders of Trust
Certificates or (ii) there are less than 500 holders of Trust
Certificates and the assets of the Liquidating Trust have not
exceeded $10 million on the last day of each of the Liquidating
Trust's immediately preceding three fiscal years. As an entity
registered under the Exchange Act, the Liquidating Trust will be
required to file certain annual and other reports with the SEC.
The Liquidating Trust may also distribute to holders of Trust
Certificates audited annual financial statements of the
Liquidating Trust as of the end of each fiscal year of the
Liquidating Trust. However, after consultation with the
Official Committee for Unsecured Creditors and the Securities
and Exchange Commission, the Debtors may seek to have the Trust
Certificates issued in two classes to Class A Beneficial
Interestholders, Class A(1) for Class 2 Creditors and Class A(2)
for Class 4 Creditors, if it is possible to avoid the
requirement to register the Liquidating Trust under Section
12(g) of the Exchange Act.
The Debtors do not believe that the Liquidating Trust is
required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"). The Liquidating Trust (i) exists solely to
liquidate the assets to be transferred to the Liquidating Trust
by the Debtors pursuant to the Plan, (ii) will not conduct a
trade or business (other than maintaining Fruehauf de Mexico as
a going concern pending sale or liquidation thereof) and will
not make any investments, except for temporary investments in
money market instruments, government short-term securities or
other investment grade short-term debt securities pending
distribution of liquidation proceeds to the Liquidating Trust
beneficiaries, (iii) will not hold itself out as an investment
company, but only as a liquidating entity and (iv) will have a
limited life span (i.e., a period of three years from the
Effective Date, subject to renewal for one or more one-year
periods in the event any assets of the Liquidating Trust have
not been fully liquidated and the proceeds thereof distributed
to the beneficiaries by the end of the then current term). The
Debtor's conclusion is also based on the fact that the
Liquidating Trust will refrain from taking any action to
facilitate a trading market in the Trust Certificates (as
described in the first paragraph of this section) and will be
registering under the Exchange Act. However, the Debtors do not
intend to request a "no-action" letter from the SEC with respect
to the application of the registration provisions of the
Investment Company Act to the Liquidating Trust, and there is no
assurance that the SEC would not take the position that the
Liquidating Trust would have to register under the Investment
Company Act. If so, the Debtors would propose certain changes
to the Liquidating Trust, including but not limited to limiting
the transferability of the Trust Certificates, so as to avoid
having to register the Liquidating Trust as an investment
company under the Investment Company Act.
12. Corporate Action. Upon entry of the Confirmation Order, the
dissolutions contemplated by Section 6.8 shall be deemed
authorized and approved in all respects pursuant to applicable
state laws without any requirement of further action by the
stockholders or directors of the Debtors. On the Effective
Date, the Indenture Trustee and the Liquidating Trustee shall be
authorized and directed to take all necessary and appropriate
actions to effectuate the transactions contemplated by the Plan
and Disclosure Statement.
13. Preservation of Rights of Action. Except as otherwise
provided in the Plan, or in any contract, instrument, release,
or other agreement entered into in connection with the Plan in
accordance with section 1123(b) of the Bankruptcy Code, the
Liquidating Trust, as ultimate successor to the Debtors, shall
retain and may enforce any claims, rights and causes of action
that the Debtors or the Estates may hold against any entity,
including, without limitation, any claims, rights or causes of
action arising under sections 544 through 551 or other sections
of the Bankruptcy Code or any similar provisions of state law,
or any other statute or legal theory. The Liquidating Trust or
any successor to or designee thereof may pursue those rights of
action, as appropriate, in accordance with what is in the best
interests of the Liquidating Trust and those holding interests
in the Liquidating Trust.
14. Objections to Claims. Except as otherwise provided for
with respect to applications of professionals for compensation
and reimbursement of expenses under Article 3, or as otherwise
ordered by the Bankruptcy Court after notice and a hearing,
objections to Claims, including Administrative Claims, shall be
Filed and served upon the holder of such Claim or Administrative
Claim not later than the later of (a) one hundred twenty (120)
days after the Effective Date, and (b) one hundred twenty (120)
days after a proof of claim or request for payment of such
Administrative Claim is Filed, unless this period is extended by
the Court. Such extension may occur ex parte. After the
Effective Date, the Liquidating Trust shall have the exclusive
right to object to Claims.
15. Treatment of Identical Claims Asserted by Single Creditor
Against Multiple Debtors. Because all of the Debtors' assets
are fully encumbered by liens securing the Senior Notes, absent
the agreement of the Senior Noteholders, holders of Allowed
Administrative, Priority, Pre-Petition Tax and Unsecured Claims
would receive no distribution under the Plan. The Senior
Noteholders have agreed to the distribution of the Distribution
Fund to holders of Allowed Administrative and Priority Claims
and the distribution of 5.5% of the Class A Beneficial Interests
in the Liquidating Trust to holders of Allowed Unsecured Claims
if Class 4 accepts the Plan. That agreement is conditioned upon
the Claims against the Debtors being consolidated so that a
single creditor who has a right of recovery against more than
one Debtor for the same Claim will be limited to one Allowed
Claim in the Allowed amount owed to the creditor. Attached as
Exhibit "B" to the Plan is a schedule of creditors that filed
multiple claims for the same liability. The maximum amount of
the Allowed Claim of any of these creditors shall be the amount
indicated as the "Surviving Claim." The Liquidating Trust
reserves the right to object to the Surviving Claim.
16. Exemption from Stamp and Similar Taxes. The issuance and
transfer of the Wabash Securities, the issuance and distribution
of the Pension Corp. and JSI Property Corp. Stock, and the
transfer and ultimate sale of the Foreclosed Assets as provided
in this Plan shall not be taxed under any law imposing a stamp
tax or similar tax in accordance with 11 U.S.C. S 1146(c).
G. Funding and Methods of Distribution and Provisions for
Treatment of Disputed Claims
1. Funding of Distributions Under the Plan. The Debtors have
liquidated 800,000 shares of the Wabash Common Stock. The
Debtors will fund the Distribution Fund from Cash on hand. The
Debtors may seek one or more orders of the Bankruptcy Court
estimating or limiting the amount of property to be deposited in
the Distribution Fund. The Distribution Fund shall be the sole
source of funds for the payment of Allowed Administrative
Claims, Pre-Petition Tax Claims and Priority Claims.
2. Distributions to Holders of Allowed Claims that are
Administrative Expense Claims, Pre-Petition Tax Claims and Class
1 Priority Claims. Commencing on the Effective Date, the
Liquidating Trustee shall, in accordance with Article 3 of the
Plan, distribute to each holder of a then unpaid Allowed
Administrative Expense Claim, Allowed Pre-Petition Tax Claim, or
Allowed Priority Claim Cash in the Allowed amount of such
holder's Claim. The Distribution Fund shall be distributed to
the holders of Disputed Administrative Expense Claims,
Pre-Petition Tax Claims and other Priority Claims pursuant to
Article 3 of the Plan if and to the extent that the balance, if
any, of such Claims is Allowed by Final Order. The Liquidating
Trust must hold the Distribution Fund in a segregated account
for the benefit of the holders of Allowed Administrative,
Priority and Pre-Petition Tax Claims until all Disputed Claims
that are alleged to be Administrative, Pre-Petition Tax or
Priority Claims have been Allowed or disallowed.
3. Distributions to Holders of Allowed Class 2 Claims. The
Debtors shall deliver all of the Wabash Securities and the Trust
Certificates representing the Requisite Percentage of Class A
Beneficial Interests to the Indenture Trustee. The Indenture
Trustee shall make the Pro Rata distribution required by Section
4.2 of the Plan to the holders of the Senior Notes. The
Liquidating Trust shall pay all reasonable fees and expenses of
the Indenture Trustee in acting as distribution agent as and
when such fees and expenses become due without further order of
the Bankruptcy Court. The Plan provides for distributions to be
made only to record holders as of the Ballot Record Date unless
the Indenture Trustee is provided evidence of a transfer that is
satisfactory to the Indenture Trustee, in its sole discretion.
Holders of Senior Notes must surrender their notes or have been
deemed to have surrendered their notes (see Plan section 7.5(c))
to receive a distribution. Any holder of a Senior Note that has
not surrendered or been deemed to have surrendered its Senior
Notes prior to the time that the Indenture Trustee distributes
the Wabash Securities and Trust Certificates or the Liquidating
Trustee makes a distribution to holders of Trust Certificates
may have its distribution reduced by any taxes that the
Indenture Trustee or Liquidating Trustee has paid on account of
such distribution. The Plan also provides for the cancellation
of the Senior Notes.
4. Disputed Claims. Notwithstanding any other provisions of the
Plan, no payments or distributions shall be made on account of
any Disputed Claim until such Claim becomes an Allowed Claim,
and then only to the extent that it becomes an Allowed Claim.
5. Delivery of Distributions and Undeliverable or Unclaimed
Distributions; Failure to Negotiate Checks. The Plan
established procedures for the delivery of distributions and for
the disposition of undeliverable distributions and checks that
are not timely negotiated.
6. Distributions on Account of Unsecured Class 4 Claims. If
Class 4 accepts the Plan, Trust Certificates representing 5.5%
of the Class A Beneficial Interests in the Liquidating Trust
shall be distributed, Pro Rata, to holders of Allowed Claims in
Class 4. The Liquidating Trust shall not be required to make
distributions of Trust Certificates to holders of Allowed Claims
in Class 4 until the Liquidating Trust has resolved its
objections to Disputed Claims in Class 4, a process which shall
be completed no later than the first anniversary of the
Effective Date. Any distributions of Cash to which the holders
of Trust Certificates become entitled during this claims
resolution period shall be distributed to the holders of Allowed
Claims in Class 4, Pro Rata, with any accrued interest thereon
at the time the Trust Certificates are distributed; provided,
however, that such distribution shall be reduced by any taxes
paid by the Liquidating Trust on account of interest or other
income earned thereon.
7. De Minimis Distributions. No Cash payment of less than
twenty dollars ($20.00) shall be made to any holder on account
of an Allowed Claim unless a request therefor is made in writing
to the Liquidating Trust.
8. Compliance with Tax Requirements. In connection with the
Plan, to the extent applicable, the Liquidating Trust shall
comply with all withholding and reporting requirements imposed
on it by any governmental unit, and all distributions pursuant
to the Plan shall be subject to such withholding and reporting
requirements.
9. Setoffs. Unless otherwise provided in a Final Order or in
this Plan, the Liquidating Trust may, but shall not be required
to, set off against any Claim and the payments to be made
pursuant to the Plan in respect of such Claim, any claims of any
nature whatsoever the Debtors may have against the holder
thereof or its predecessor, but neither the failure to do so nor
the allowance of any Claim hereunder shall constitute a waiver
or release by any Debtor or the Liquidating Trust of any such
Claims the Debtors or the Liquidating Trust may have against
such holder or its predecessor.
10. Fractional Interests. The calculation of the percentage
distribution of Wabash Securities or Trust Certificates to be
made to holders of certain Allowed Claims as provided elsewhere
in this Plan may mathematically entitle the holder of such an
Allowed Claim to a fractional interest in such Stock or Trust
Certificates. The number of shares of Wabash Securities or
Trust Certificates to be received by a holder of an Allowed
Claim shall be rounded to the next lower whole number of shares
or Trust Certificates. The total number of shares of Wabash
Securities or Trust Certificates to be distributed to a class of
Claims shall be adjusted as necessary to account for the
rounding provided for in this section. Any fractional shares of
Wabash Securities that are rounded down and not issued to
holders of Senior Notes shall be contributed to the Liquidating
Trust.
H. Treatment of Executory Contracts and Unexpired Leases
The Plan constitutes and incorporates a motion by the Debtors to
reject, as of the Effective Date, all pre-petition executory
contracts and unexpired leases to which the Debtors are a party,
except for any executory contract or unexpired lease that (i)
has been assumed or rejected pursuant to a Final Order, or (ii)
is the subject of a pending motion for authority to assume the
contract or lease Filed by the Debtors prior to the Confirmation
Date. The Plan establishes a bar date for filing Rejection
Claims not already barred.
I. Effects of Plan Confirmation
1. Transfers to Liquidating Trust are Free and Clear of Claims
Against Debtors. As a result of the foreclosure and sale of the
Debtors' assets contemplated by Articles 6.5 and 6.6 of this
Plan, the assets transferred to the Liquidating Trust on behalf
of and for the benefit of the holders of Allowed Claims shall be
held by the Liquidating Trust free and clear of all liens,
claims or interests in such property that arose before the
Confirmation Date.
2. No Liability for Solicitation or Participation. As specified
in section 1125(e) of the Bankruptcy Code, Persons that solicit
acceptances or rejections of the Plan and/or that participate in
the offer, issuance, sale, or purchase of securities offered or
sold under the 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 rejections of the Plan or the
offer
3. Limitation of Liability. None of the Unsecured Creditors'
Committee and its members and the professional Persons employed
by the Unsecured Creditors' Committee; the Indenture Trustee and
any professional Persons retained by it; the Bondholders'
Committee and its members and professional Persons employed by
the Bondholders' Committee; the Authorized Representative of
Retirees and its professional Persons; the Liquidating Trust and
any professional Persons retained by it; the Liquidating
Trustee; Morris, Nichols, Arsht & Tunnell; Camhy Karlinsky &
Stein; Price Waterhouse; Haynes and Boone, L.L.P.; Alvarez &
Marsal, Inc.; and Oppenheimer & Co., Inc.; any of their
affiliates nor any of their officers, directors, partners,
associates, employees, members or agents (collectively the
"Exculpated Persons"), shall have or incur any liability to any
Person for any act taken or omission made in good faith in
connection with or related to the Bankruptcy Cases or actions
taken therein, including negotiating, formulating, implementing,
confirming or consummating the Plan, the Disclosure Statement,
or any contract, instrument, or other agreement or document
created in connection with the Plan. The Exculpated Persons
shall have no liability to any Creditors or Equity Security
Holders for actions taken under the Plan, in connection
therewith or with respect thereto in good faith, including,
without limitation, failure to obtain Confirmation of the Plan
or to satisfy any condition or conditions, or refusal to waive
any condition or conditions, precedent to Confirmation or to the
occurrence of the Effective Date. Further, the Exculpated
Persons will not have or incur any liability to any holder of a
Claim, holder of an Interest, or party-in-interest herein or any
other Person for any act or omission in connection with or
arising out of their administration of the Plan or the property
to be distributed under the Plan, except for gross negligence or
willful misconduct as finally determined by the Bankruptcy
Court, and in all respects such persons will be entitled to rely
upon the advice of counsel with respect to their duties and
responsibilities under the Plan.
4. Other Documents and Actions. The Debtors, the
Debtors-In-Possession, the Indenture Trustee and Liquidating
Trustee may execute such documents and take such other action as
is necessary to effectuate the transactions provided for in the
Plan.
5. Term of Injunctions or Stays. Unless otherwise provided, all
injunctions or stays provided for in the Reorganization Case
pursuant to sections 105 or 362 of the Bankruptcy Code or
otherwise and in effect on the Confirmation Date shall remain in
full force and effect until the Effective Date.
J. Confirmability of Plan and Cramdown
The Debtors request Confirmation under section 1129(b) of the
Bankruptcy Code if any impaired class does not accept the Plan
pursuant to section 1126 of the Bankruptcy Code. In that event,
the Debtor reserves the right to modify the Plan to the extent,
if any, that Confirmation of the Plan under section 1129(b) of
the Bankruptcy Code requires modification.
K. Retention of Jurisdiction. The Plan provides for the
Bankruptcy Court to retain the broadest jurisdiction over the
reorganization case as is legally permissible so that the
Bankruptcy Court can hear all matters related to the
consummation of the Plan, the claims resolution process, and the
administration of the Liquidating Trust.
L. Post Confirmation Management of the Liquidating Trust
The Debtors contemplate that, from and after the Effective Date
of the Plan, Chriss Street will serve as the Trustee of the
Liquidating Trust and will continue to serve as Chairman of the
Board and Chief Executive Officer of Fruehauf de Mexico. It is
also anticipated that Worth Frederick and James Wong will share
operational oversight responsibility for Fruehauf de Mexico.
Mr. Worth will be paid an annual salary of $100,000 by Fruehauf
de Mexico, and will also receive an annual salary fee of $20,000
from the Liquidating Trust for services which he is expected to
perform on behalf of the Liquidating Trust. Mr. Wong will be
paid an annual salary of $75,000 by Fruehauf de Mexico, and will
also be eligible to receive an annual bonus of up to $10,000
from Fruehauf de Mexico. Courtney Watson will also provide
services to the Liquidating Trust in liquidating assets, making
distributions, and maintaining proper records. Ms. Watson will
be paid $65,000 a year by the Liquidating Trust.
It is anticipated that Mr. Street, on or before the Effective
Date of the Plan, will enter into (i) an employment agreement
with the Liquidating Trust which will provide for his employment
as Trustee, and (ii) an employment agreement with Fruehauf de
Mexico, which will provide for his employment as Chairman of the
Board and Chief Executive Officer of Fruehauf de Mexico. The
terms and conditions of the agreements as currently contemplated
are described below. These terms and conditions are subject to
change and may be amended prior to the hearing on approval of
this Disclosure Statement.
1. Employment Agreement with Liquidating Trust
Mr. Street will be employed as trustee for a term of three
years, which term will be automatically renewable for additional
one year periods (or until such earlier time as the Liquidating
Trust may be dissolved) unless the Trust Advisory Committee
shall advise Mr. Street, not less than 90 days prior to the end
of the initial three year term, that it desires to terminate his
services as trustee at the end of the term. No co-trustee may
be appointed without Mr. Street's prior written consent.
Subject to such other and further terms and conditions that may
be mutually agreed upon as between the holders of the Senior
Notes and Mr. Street, for serving as trustee, Mr. Street will be
entitled to the following compensation described below:
(1) An annual salary of $200,000 per year, payable in
semi-monthly installments (hereinafter referred to as the
"Annual Fee").
(2) A percentage of the cumulative amount distributed to the
holders of Senior Notes from the Liquidating Trust or otherwise
pursuant to the Plan, in excess of the aggregate principal
amount of the Senior Notes outstanding on the Effective Date of
the Plan (the "Par Amount"), which percentage shall be 12.5%
unless the amount distributed to the holders of the Senior Notes
prior to the first anniversary of the Effective Date equals or
exceeds the Par Amount, in which event the percentage shall be
15%. Amounts payable to Mr. Street pursuant to this arrangement
(the "Percentage Fee"), if any, shall be made on a quarterly
basis within 30 days following each calendar quarter in which
any distribution in excess of the Par Amount is made to the
holders of the Senior Notes. For purposes of determining the
cumulative amount distributed to the holders of the Senior
Notes, the following will apply:
(a) The value of the shares of Common Stock of Wabash
distributed to the holders of the Senior Notes will be equal to
the higher of (i) the average of the closing sale prices of the
Common Stock as reported by the New York Stock Exchange for the
10 consecutive trading days commencing on the date (the
"Distribution Date") on which such shares are distributed to the
holders of the Senior Notes; and (ii) the average of the daily
closing sale prices of the Common Stock as reported by the New
York Stock Exchange for the period of three months following the
Distribution Date (the higher of (i) or (ii) being referred to
as the "Average Price"). No other change in the market price of
the Common Stock will be given any effect in calculating the
amount distributed to the holders of the Senior Notes.
(b) The value of the shares of Series B 6% Cumulative
Convertible Exchangeable Preferred Stock (the "Preferred Stock")
of Wabash distributed to the holders of the Senior Notes will be
equal to the product of (i) and (ii), where (i) is the result
obtained by dividing the sum of $17,600,000 plus the amount of
any accrued dividends on the Preferred Stock as of the
Distribution Date by the conversion price of the Preferred Stock
(i.e., $21.375, subject to anti-dilution adjustments) and (ii)
is the Average Price (as defined above). No other change in the
market price of the Common Stock will be given any effect in
calculating the amount distributed to the holders of the Senior
Notes.
(c) The value of all other assets distributed to the holders of
the Senior Notes shall be fair market value of such assets on
the respective dates of distribution, which fair market value
shall be determined by mutual agreement of Mr. Street and the
Advisory Committee, except if no such agreement is reached, fair
market value shall be determined by an independent appraiser
whose selection will be mutually agreed upon by Mr. Street and
the Advisory Committee.
In the event Mr. Street ceases to serve as trustee during the
initial or any renewal term for any reason other than death,
Cause (as defined), Permanent Disability (as defined), or
voluntary resignation, Mr. Street shall continue to receive the
Annual Fee for the remainder of the applicable term. In
addition, Mr. Street shall continue to receive the Percentage
Fee in accordance with the following terms: (i) if the amount
distributed to the holders of the Senior Notes prior to the date
of termination has equaled or exceeded the Par Amount, Mr.
Street will continue to receive the Percentage Fee (if any) for
a period of two years following the date on which he ceases to
serve as trustee; (ii) if, as of the date on which Mr. Street
ceases to serve as trustee, an amount equal to or greater than
90% but less than 100% of the Par Amount has been distributed to
the holders of the Senior Notes, and within one year following
such date the cumulative amount distributed to the holders
exceeds 100% of the Par Amount, Mr. Street will receive the
Percentage Fee on amounts distributed to the holders in excess
of the Par Amount within 18 months after the date he ceases to
serve as Trustee; and (iii) if Mr. Street is terminated as
trustee at any time prior to the first anniversary of the
Effective Date other than for Cause, Mr. Street will be entitled
to receive the Percentage Fee (if any) until the third
anniversary of the Effective Date irrespective of the cumulative
amount which has been distributed to the holders of the Senior
Notes on the date of termination.
Upon Mr. Street's death or termination as trustee as a result
of a Permanent Disability during the initial or any renewal
term, Mr. Street (or his heirs, as the case may be) shall be
entitled to receive the Annual Fee and Percentage Fee (if any)
for a period of one year following the date on which he ceases
to serve as Trustee. The Liquidating Trust shall be authorized
to obtain insurance to cover the amounts owed to Mr. Street in
the event of death or termination as a result of Permanent
Disability and Mr. Street shall submit to a physical or such
other tests as may be required to obtain such insurance.
If Mr. Street is terminated as trustee either for Cause or
ceases to serve as Trustee as a result of a voluntary
resignation, Mr. Street shall be entitled to the Annual Fee and
Percentage Fee (if any) through the date of termination.
"Cause" for purposes of the agreement (as well as the employment
agreement with Fruehauf de Mexico) shall mean Mr. Street having
either (i) been engaged in an act of fraud or dishonesty against
the Liquidating Trust (or Fruehauf de Mexico, as the case may
be), (ii) been convicted of, or enter a plea of nolo contendre
to, a felony or a misdemeanor involving moral turpitude under
the laws of the United States or any state thereof, (iii)
admitted or been found by a court of law to have been involved
in either the distribution, possession or use of illegal drugs,
or (iv) knowingly violated in a material way any policy
maintained by the Liquidating Trust (or Fruehauf de Mexico, as
the case may be). "Permanent Disability" for purposes of this
Agreement (as well as the employment agreement with Fruehauf de
Mexico) shall mean that Mr. Street, as a result of an incapacity
due to physical or mental illness, has been unable to perform
the duties of trustee (or Chairman and Chief Executive Officer
of Fruehauf de Mexico, as the case may be) for a period of not
less than 90 consecutive days and, within 30 days of notice of
termination being sent to Mr. Street based on such incapacity,
shall have failed to return to the performance of his duties.
2. Employment Agreement with Fruehauf de Mexico.
Under the agreement with Fruehauf de Mexico, Mr. Street will be
employed as Chairman of the Board and Chief Executive Officer
and will be entitled to serve in such capacity so long as he is
trustee of the Liquidating Trust and the Liquidating Trust owns,
directly or indirectly, a majority of the voting stock of
Fruehauf de Mexico. He may not be removed as an officer or
director of Fruehauf de Mexico unless he ceases to serve as
trustee. For serving as Chairman and Chief Executive Officer of
Fruehauf de Mexico, Mr. Street shall receive an annual salary of
$50,000 per year, payable in semi-monthly installments. He will
also be provided with all fringe benefits and perquisites that
are provided to senior executives of Fruehauf de Mexico, and
will also be entitled to participate in all employee benefit
plans, programs and arrangements, now or hereafter in effect,
that are applicable to employees of Fruehauf de Mexico generally
or its senior executives. During the term of the agreement, Mr.
Street will be entitled to designate those persons whom Fruehauf
de Mexico will nominate for election as directors.
In the event that Mr. Street ceases to serve as Chairman and
Chief Executive Officer of Fruehauf de Mexico as a result of the
sale or other disposition of the capital stock or assets of
Fruehauf de Mexico, Mr. Street will receive, upon such sale or
other disposition, a lump sum payment equal to the aggregate
amount that would have been paid to him as Chairman and Chief
Executive Officer for the remainder of the then applicable term
of the agreement. In addition, in the event that Mr. Street
ceases to serve as trustee of the Liquidating Trust and is
entitled to receive the Annual Fee as trustee for any period
thereafter under the employment agreement with the Liquidating
Trust, he shall also receive payment of his annual salary under
the employment agreement with Fruehauf de Mexico for the same
period.
Under both employment agreements, Mr. Street will only be
required to devote as much of his business time as he, in his
sole discretion, reasonably deems necessary to perform his
duties as trustee and as Chairman of the Board and Chief
Executive Officer of Fruehauf de Mexico, respectively (and both
entities will acknowledge that he will be employed by, or
perform services for, unrelated entities during the terms of the
agreements). Under both agreements, Mr. Street will be entitled
to procure such office space, facilities and secretarial and
other support services as he deems reasonably necessary for the
performance of services under each agreement, with the cost
thereof to be borne by the Liquidating Trust or Fruehauf de
Mexico, as applicable. He shall also be reimbursed for all
costs and expenses which he incurs in the performance of
services under each agreement. In addition, Mr. Street will be
indemnified for liabilities incurred by him in the performance
of services under the agreements, except for liabilities arising
from his intentional misconduct.
V.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following discussion is a summary of certain federal income
tax aspects of the Plan and is for general information only.
This discussion is based upon existing provisions of the
Internal Revenue Code of 1986, as amended ("IRC"), existing
regulations thereunder, and current administrative rulings and
court decisions. No assurance can be given that legislative or
administrative changes or court decisions may not be forthcoming
which would require significant modification of the statements
expressed in this section. The discussion does not address
foreign, state or local tax consequences of the Plan, nor does
it purport to address the federal tax consequences of the Plan
to special classes of taxpayers (such as foreign companies,
nonresident alien individuals, S corporations, mutual funds,
insurance companies, financial institutions, small business
investment companies, regulated investment companies,
broker-dealers and tax-exempt organizations). Accordingly, it
should not be relied upon for purposes of determining the
specific tax consequences of the Plan with respect to a
particular holder of a Claim or Interest.
Due to the complexity of the transactions to be consummated
pursuant to the Plan, some of which are discussed below; the
lack of applicable legal precedent and the possibility of
changes in law; differences in the nature of various Claims;
differences in individual Claim holders' methods of accounting;
and the potential for disputes as to legal and factual matters,
the federal income tax consequences described herein are subject
to significant uncertainties.
NO RULING HAS BEEN SOUGHT OR OBTAINED FROM THE IRS WITH RESPECT
TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO OPINION OF COUNSEL
HAS BEEN OBTAINED BY DEBTORS WITH RESPECT THERETO. NO
REPRESENTATIONS OR ASSURANCES ARE BEING MADE WITH RESPECT TO THE
FEDERAL INCOME TAX CONSEQUENCES AS DESCRIBED HEREIN. CERTAIN
TYPES OF CLAIMANTS AND INTEREST HOLDERS MAY BE SUBJECT TO
SPECIAL RULES NOT ADDRESSED IN THIS SUMMARY OF FEDERAL INCOME
TAX CONSEQUENCES. THERE ALSO MAY BE STATE, LOCAL, OR FOREIGN
TAX CONSIDERATIONS APPLICABLE TO A HOLDER OF A CLAIM OR INTEREST
THAT ARE NOT ADDRESSED HEREIN. EACH HOLDER OF A CLAIM OR
INTEREST AFFECTED BY THE PLAN MUST CONSULT, AND RELY UPON, HIS
OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES
OF THE PLAN WITH RESPECT TO THAT HOLDER'S CLAIM OR INTEREST.
THIS INFORMATION MAY NOT BE USED OR QUOTED IN WHOLE OR IN PART
IN CONNECTION WITH THE OFFERING FOR SALE OF SECURITIES.
A. Federal Income Tax Consequences to Fruehauf.
Under the Plan, the Debtors are transferring substantially all
of their assets to the Senior Noteholders and to the Liquidating
Trust. These transfers of assets will result in the recognition
by the Debtors of gain or loss based on the difference between
the fair market value and tax basis of the assets being so
transferred. To the extent that the Debtors recognize a net
gain from the transfer of these assets, such gain will be offset
by Debtors' net operating loss and/or capital loss
carryforwards. The Debtors may, however, recognize some
alternative minimum tax as a result of the transfer of these
assets. Any resulting tax will be paid by the Debtors to the
Internal Revenue Service. The Plan also provides that the
Debtors will be liquidated and dissolved. As a result, there
will be no net operating loss or capital loss carryforwards
available to the Debtors or the Liquidating Trust following the
Effective Date after giving effect to the transactions
contemplated by the Plan.
B. Federal Income Tax Consequences to Holders of Claims.
1. Holders of Claims
Holders of Claims will recognize a gain or loss equal to their
respective amounts realized (if any) under the Plan in respect
of their Claims less their respective tax bases in their Claims.
The amounts realized for this purpose generally will equal the
sum of the cash and the fair market value of any other
consideration received under the Plan in respect of their
Claims, including the fair market value of a holder's
proportionate share of the assets transferred to the Liquidating
Trust on the behalf and for the benefit of such holder. The
recognition of gain or loss by a holder of Claims may also be
affected by the holder's accounting method and other factors and
circumstances particular to such holder.
The transfer of assets to the Liquidating Trust by the Debtors
will be treated as a transfer of such assets to the holders of
Allowed Class 2 and possibly Allowed Class 4 Claims, to the
extent they are beneficiaries, followed by a deemed transfer of
such assets by such beneficiaries to the Liquidating Trust. As
a result of such treatment, holders of such Allowed Claims will
have to take into account the fair market value of their Pro
Rata share, if any, of the assets transferred on their behalf to
the Liquidating Trust in determining the amount of gain realized
and required to be recognized upon consummation of the Plan. In
addition, since a holder's share of the assets held in the
Liquidating Trust may change depending upon the resolution of
Disputed Claims, the holder may be prevented from recognizing
any loss in connection with consummation of the Plan until the
time that all such Disputed Claims have been resolved. The
Trustee will provide the holders of Allowed Claims with
valuations of the assets transferred to the Liquidating Trust
and such valuations should be used consistently by the
Liquidating Trust and such holders for all federal income tax
purposes.
Any gain or loss recognized by the Holders of Claims in the
exchange will be capital or ordinary depending on the status of
the Claim in the holder's hands. The holder's aggregate tax
basis for any consideration received under the Plan will
generally equal the amount realized in the exchange (less any
amount allocable to interest as described in the next
paragraph). The holding period for any consideration received
under the Plan will generally begin on the day following the
receipt of such consideration.
Holders of Claims not previously required to include in their
taxable income any accrued but unpaid interest on a Claim may be
treated as receiving taxable interest, to the extent any
consideration they receive under the Plan is allocable to such
accrued but unpaid interest. Holders previously required to
include in their taxable income any accrued but unpaid interest
on a Claim may be entitled to recognize a deductible loss, to
the extent that such accrued but unpaid interest is not
satisfied under the Plan.
C. Liquidating Trust
The Plan provides, and this discussion has assumed, that the
Liquidating Trust will be treated for federal income tax
purposes as a "liquidating trust." As a liquidating trust, the
Liquidating Trust itself generally will not be subject to tax;
rather, holders of Allowed Claims will be taxed on their
allocable share of the taxable income earned and gain recognized
by the Liquidating Trust in each taxable year without regard to
whether the Liquidating Trust makes any distributions to such
holders in that taxable year. The Liquidating Trust, however,
will pay federal, state and local tax on the taxable income
allocable to unidentified holders and, when such holders are
ultimately identified, they will receive distributions from the
Liquidating Trust net of taxes which the Liquidating Trust has
previously paid on their behalf.
Although the Liquidating Trust will be formed in accordance with
established guidelines for the formation of liquidating trusts,
there is no assurance that the Liquidating Trust will be treated
as a liquidating trust for federal income tax purposes. If the
Liquidating Trust is determined by the Internal Revenue Service
to be taxable not as a liquidating trust, the taxation of the
Liquidating Trust and the transfer of assets by the Debtors to
the Liquidating Trust may be materially different than is
described herein and may have a material adverse effect on the
holders of Allowed Class 2 and possibly Allowed Class 4 Claims.
D. Backup Withholding and Information Reporting
Payors of interest, dividends, and certain other reportable
payments are generally required to withhold thirty-one percent
(31%) of such payments if the payee fails to furnish such
payee's correct taxpayer identification number (social security
number or employer identification number), to the payor. The
Liquidating Trust may be required to withhold a portion of any
payments made to a holder of an Allowed Claim which does not
provide its taxpayer identification number.
E. Importance of Obtaining Professional Tax Assistance
THE FOREGOING IS INTENDED AS A SUMMARY ONLY, AND IS NOT A
SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL.
THE FEDERAL, STATE AND LOCAL INCOME AND OTHER TAX CONSEQUENCES
OF THE PLAN ARE COMPLEX AND, IN SOME CASES, UNCERTAIN. SUCH
CONSEQUENCES MAY ALSO VARY BASED ON THE PARTICULAR CIRCUMSTANCES
OF EACH CLAIM HOLDER. ACCORDINGLY, EACH CLAIM AND INTEREST
HOLDER IS STRONGLY URGED TO CONSULT WITH HIS, HER OR ITS OWN TAX
ADVISOR REGARDING THE FEDERAL, STATE AND LOCAL INCOME AND OTHER
TAX CONSEQUENCES UNDER THE PLAN.
VI.
VOTING PROCEDURES AND CONFIRMATION REQUIREMENTS.
A. Confirmation of the Plan.
1. Confirmation Hearing.
Section 1128 of the Bankruptcy Code requires the Court, after
notice, to hold a hearing on whether the Plan and its proponents
have fulfilled the confirmation requirements of section 1129 of
the Bankruptcy Code. A hearing (the "Confirmation Hearing") to
consider confirmation of the Plan has been scheduled for
September 16, 1998 at 2:00 p.m. before the Honorable Peter J.
Walsh, at the United States Bankruptcy Court for the District of
Delaware, Marine Midland Plaza, 824 Market Street, 6th Floor,
Wilmington, Delaware 19801. The Confirmation Hearing may be
adjourned from time to time by the Court without further notice
except for the announcement of the adjourned date at the
Confirmation Hearing.
Any objection to confirmation must be made in writing and must
specify in detail the name and the address of the Person
objecting, the grounds for the objection and the nature and
amount of the Claim or Interest held by the objector. Any such
objection must be filed with the Court and served upon the
parties designated in the notice of the confirmation hearing
(the "Confirmation Notice") on or before September 9, 1998 at
4:00 p.m., Wilmington, Delaware time. Unless an objection to
confirmation is timely served and filed, it will not be
considered by the Court.
2. Requirements for Confirmation of the Plan.
In order to confirm the Plan, the Bankruptcy Code requires that
the Court make a series of findings concerning the Plan and the
Debtors, including that: (a) Claims and Interests are classified
in the Plan in a permissible manner; (b) the Plan complies with
the applicable provisions of the Bankruptcy Code; (c) the
Debtors have complied with applicable provisions of the
Bankruptcy Code; (d) the Debtors have proposed the Plan in good
faith and not by any means forbidden by law; (e) the disclosure
required by section 1125 of the Bankruptcy Code has been made;
(f) the Plan has been accepted by the requisite majorities of
holders of Claims and Interests in each impaired Class of Claims
or Interests, or, if accepted by at least one but not all of
such Classes, is "fair and equitable," and does not discriminate
unfairly as to any non-accepting class, as required by the
"cramdown" provisions of section 1129(b) of the Bankruptcy Code;
(g) the Plan is feasible; (h) the Plan is in the "best
interests" of all holders of Claims and Interests in an impaired
class by providing to such holders property of a value, as of
the Effective Date, that is not less than the amount that such
holder would receive or retain in a chapter 7 liquidation,
unless each holder of a Claim or Interest in such Class has
accepted the Plan; and (i) all bankruptcy fees payable to the
Clerk of the Court and the U.S. Trustee under 28 U.S.C. S 1930
have been paid, or the Plan provides for the payment of such
fees on the Effective Date.
a. Acceptance.
Pursuant to Section 1126 of the Bankruptcy Code, the Plan is
accepted by an impaired Class of Claims if holders of two-thirds
in dollar amount and a majority in number of Claims of that
Class vote to accept the Plan. Only the votes of those holders
of Claims who actually vote (and are entitled to vote) to accept
or reject the Plan count in this tabulation. The Plan will be
accepted by an impaired Class of Interests if holders of
two-thirds of the amount of outstanding shares in such class
vote to accept the Plan (and only those voting count in the
tabulation). Pursuant to Section 1129(a)(8), all the impaired
Classes of Claims and Interests must vote to accept the Plan in
order for the Plan to be confirmed on a consensual basis (and at
least one such Impaired Class must accept the Plan without
including the acceptance by an insider). However, under the
cramdown provisions of Section 1129(b), only one impaired Class
of Claims (determined without including the acceptance by an
insider) needs to accept the Plan if the other conditions to
cramdown are met.
The Plan has three Classes of Claims which are Impaired and are
entitled to vote on the Plan (Classes 2, 3, and 4). The Plan
provides for three Classes of Interests (Classes 5, 6 and 7)
which are impaired and which are deemed to have rejected the
Plan.
b. Best Interests Test/Liquidation Analysis.
Notwithstanding the acceptance of the Plan by each Impaired
Class, section 1129(a)(7) of the Bankruptcy Code requires that
the Bankruptcy Court determine that the Plan is in the best
interests of each holder of a Claim or Interest in an Impaired
Class if any holder in that Class has voted against the Plan.
Accordingly, if an Impaired Class under the Plan does not
unanimously accept that Plan, the "best interests" test requires
that the Bankruptcy Court find that the Plan provides to each
member of such Impaired Class a recovery on account of the
member's Claim or Interest that has a value, as of the Effective
Date, that is not less than the value of the distribution that
each such member would receive or retain if Debtors were
liquidated under Chapter 7 of the Bankruptcy Code commencing on
the Effective Date.
To determine what members of the each impaired Class of Claims
would receive if the Debtors were liquidated under Chapter 7,
the Court must consider the values that would be generated from
a liquidation of the Debtors' assets and properties in the
context of a hypothetical liquidation under Chapter 7. Because
the Debtors' assets are all encumbered by liens in favor of the
holders of the Senior Notes and the value of the Debtors' assets
in an orderly liquidation is less than the principal amount of
the Senior Noteholders' debt, unsecured creditors, including
holders of Administrative and Priority Claims, would receive
nothing in a Chapter 7 liquidation of Debtors. Thus, the Plan,
which provides for the payment of Administrative and Priority
Claims and which potentially provides a distribution of
beneficial interests in the Liquidating Trust to general
unsecured creditors, provides the unsecured creditors with a
greater distribution than they would receive in Chapter 7.
Further, the Plan is designed to maximize the value of the
Debtors' assets for the benefit of Creditors. The Liquidating
Trustee will have the flexibility in liquidating the assets to
assure the highest recovery. The Liquidating Trustee may hold
assets or improve them or take whatever action is necessary to
secure the maximum value.
c. Feasibility.
Section 1129(a)(11) of the Bankruptcy Code requires a finding
that Confirmation of the Plan is not likely to be followed by
the liquidation, or the need for further financial
reorganization, of the Debtors or any successor in interest,
unless as here, liquidation is expressly contemplated by the
Plan. Since the Plan is a liquidating plan in which the cash
and securities representing the sale proceeds and the proceeds
of all other assets of the Debtors are distributed to a trust
for the benefit of creditors, the Debtors believe that they will
be able to perform their obligations under the Plan and that
therefore the Plan is feasible within the meaning of section
1129(a)(11) of the Bankruptcy Code.
d. Classification.
Section 1122 of the Bankruptcy Code sets forth the requirements
relating to classification of claims. Section 1122(a) provides
that claims or interest may be placed in a particular class only
if they are substantially similar to the other claims or
interest in that class. The Debtors believe that all Classes
under the Plan satisfy the requirements of section 1122(a). The
Debtors believe that the classification of Claims set forth in
the Plan is appropriate in classifying substantially similar
Claims together, and does not discriminate unfairly in the
treatment of those Classes. The Debtors believe that the Plan
adheres to the absolute priority rule and treats holders of
Claims and Interests in accordance with their contractual
entitlement and applicable law.
B. Non-Consensual Confirmation.
The Bankruptcy Code provides for confirmation of the Plan even
if it is not accepted by all impaired Classes, as long as at
least one impaired Class of Claims has accepted it (without
counting the acceptances of insiders). These so-called
"cramdown" provisions are set forth in section 1129(b) of the
Bankruptcy Code. The Plan may be confirmed under the cramdown
provisions if, in addition to satisfying the other requirements
of section 1129 of the Bankruptcy Code, it (i) is "fair and
equitable" and (ii) "does not discriminate unfairly" with
respect to each Class of Claims or Interests that is impaired
under, and has not accepted, such Plan.
1. Fair and Equitable Standard.
With respect to a dissenting Class of unsecured creditors, the
"fair and equitable" standard requires, among other things, that
the Plan contain one of two elements. It must provide either
that each unsecured creditor in the Class receive or retain
property having a value, as of the Effective Date, equal to the
Allowed amount of its Claim, or that no holder of Allowed Claims
or Interests in any junior Class may receive or retain any
property on account of such Claims or Interest. The strict
requirements as to the allocation of full value to dissenting
Classes before junior Classes can receive a distribution is
known as the "absolute priority rule." In addition, the "fair
and equitable" standard has also been interpreted to prohibit
any class senior to a dissenting class from receiving under a
plan more than one hundred percent (100%) of its Allowed Claims.
2. The Plan Must Not Discriminate Unfairly.
As a further condition to approving a cramdown, the Bankruptcy
Court must find that the Plan does not "discriminate unfairly"
in its treatment of dissenting Classes. A Plan of
Reorganization does not "discriminate unfairly" if (a) the Plan
does not treat any dissenting impaired Class of Claims or
Interests in a manner that is materially less favorable than the
treatment afforded to another Class with similar legal Claims
against or Interests in the Debtors and (b) no Class receives
payments in excess of that which it is legally entitled to
receive for its Claims or Interests. The Debtors believe that
the Plan does not discriminate unfairly as to any impaired Class
of Claims or Interests.
If any impaired Class votes to reject the Plan, the Debtors
intend to seek to confirm the Plan pursuant to the cramdown
provisions, and, if the Court were to determine it to be
necessary, modify the Plan in order to comply with such cramdown
requirements.
C. Voting Procedures and Requirements.
1. Voting Requirements - Generally.
Pursuant to the Bankruptcy Code, only holders of Claims against
or Interests in Debtors that are Allowed pursuant to Section 502
of the Bankruptcy Code and that are impaired under the terms and
provisions of the Plan are entitled to vote to accept or reject
that Plan. In these cases, the Interests in Debtors are
impaired and are deemed to have rejected the Plan because they
are receiving no distribution. Thus, holders of Interests are
not entitled to vote. Pursuant to the Plan, the Beneficial
Holders of Claims in Class 2 as of the Voting Record Date are
entitled to vote to accept or reject the Plan.
All creditors who filed proofs of claim in an amount different
from the amount set forth in the Debtors' Schedules or whose
Claim was not included in the Debtors' Schedules are treated as
the holder of a Disputed Claim under the Plan. However, all
creditors whose Claims are impaired under the Plan will be
treated as holders of Allowed Claims for voting purposes only.
A Claim recorded in the Schedules or in the Clerk's records as
wholly unliquidated, contingent and/or undetermined shall be
accorded one vote and valued at one dollar for purposes of
section 1126(c) of the Bankruptcy Code, unless the holder of
such Claim files with the Court and serves a request for
temporary allowance of such Claim in a greater amount for voting
purposes. If a Claim is recorded in the Schedules or in the
Clerk's records as unliquidated, contingent and/or undetermined
in part, the holder of the Claim shall be entitled to vote that
portion of the claim that is liquidated, non-contingent and
undisputed in the liquidated, non-contingent and undisputed
amount, subject to any limitations set forth herein and unless
otherwise ordered by the Court. The Debtors' agreement to allow
such creditors to vote on the Plan shall not waive the Debtors'
right to treat such Claims as Disputed Claims for all other
purposes.
Pursuant to the Bankruptcy Code a class of claims or interests
is "impaired" if the legal, equitable, or contractual rights
attaching to the claims or interests of that class are altered,
other than by curing defaults and reinstating maturity.
Classes of Claims and Interests that are not impaired are not
entitled to vote on the Plan, are presumed to have accepted the
Plan and will not receive a Ballot. As set forth above, the
Claims in Class 1 are not impaired, and such Class of Claims is
not entitled to vote on the plan and is presumed to have
accepted the Plan pursuant to Section 1126(f) of the Bankruptcy
Code. The Claims in Classes 2, 3 and 4 are impaired and are
entitled to vote on the Plan. The Interests in Classes 5, 6 and
7 will not receive any distribution or retain any property under
the Plan and are deemed to have rejected the Plan pursuant to
Section 1129(g) of the Bankruptcy Code. The classification of
Claims and Interests and their designation as impaired or not
impaired is summarized above in Section V, (A) entitled
"Classification and Treatment of Claims and Interests".
2. Solicitation Agent.
Logan and Company, Inc. will act as the Solicitation Agent in
connection with the solicitation. All deliveries,
correspondence and questions should be directed to the
Solicitation Agent at the following address or telephone number:
615 Washington Street, Hoboken, New Jersey 07030, Attn: Kathleen
Logan, (201) 798-1031. The Solicitation Agent will provide
holders with information regarding the solicitation, assist
holders in obtaining copies of this Disclosure Statement,
Ballots and Master Ballots and respond to questions with respect
to any of the foregoing.
3. Voting Procedures.
A Ballot for voting to accept or reject the Plan is enclosed
with each copy of the Disclosure Statement. In most cases, the
Ballot enclosed with this Disclosure Statement is printed with
the amount of your Claim for voting purposes. Such amount is
based either on your proof of claim, the Debtors' Schedules, or
an order of the Court. All votes to accept or reject the Plan
must be cast by using the Ballot enclosed with this Disclosure
Statement.
IF YOU HAVE A CLAIM THAT IS IMPAIRED UNDER THE PLAN ENTITLING
YOU TO VOTE AND YOU DID NOT RECEIVE A BALLOT, RECEIVED A DAMAGED
BALLOT, OR LOST YOUR BALLOT, PLEASE CONTACT LOGAN AND COMPANY,
INC., THE SOLICITATION AGENT, AT 615 WASHINGTON STREET, HOBOKEN,
NEW JERSEY 07030, ATTN: KATHLEEN LOGAN, (201) 798-1031. IF YOU
HOLD CLAIMS IN MORE THAN ONE CLASS, YOU MAY RECEIVE MORE THAN
ONE BALLOT. YOU SHOULD COMPLETE, SIGN AND RETURN EACH BALLOT
YOU RECEIVE.
Consistent with the provisions of Bankruptcy Rule 3018, the
Court has fixed the close of business on August 7, 1998, as the
record date for the determining the holders of Claims who are
entitled to receive a copy of this Disclosure Statement and to
vote to accept or reject the Plan (the "Ballot Record Date").
Entities that acquire Claims after the Ballot Record Date will
not be entitled to vote on the Plan.
Any person who is a "record holder" of a Senior Note (a person
shown as the registered holder of a security in the registry
maintained by the Indenture Trustee for the Senior Notes) on the
Ballot Record Date -- including any bank, agent, broker or other
nominee who holds Senior Notes in its name (the "Nominal
Holder" or "Nominee") for a beneficial holder or holders -should
receive Solicitation Packages for distribution to the
appropriate beneficial holders. A Nominee shall, upon receipt
of the Solicitation Packages, immediately forward the
Solicitation Packages to the beneficial owners so that such
beneficial security holders may vote on the Plan pursuant to 11
U.S.C. S 1126. The Debtors shall provide for reimbursement, as
an administrative expense, of all the reasonable and customary
expenses of Nominal Holders in distributing the Solicitation
Packages to said beneficial security holders. Nominal Holders
will have two options for obtaining the votes of beneficial
owners of securities, consistent with usual customary practices
for obtaining the votes of securities held in street name: (i)
the Nominal Holder may prevalidate the individual ballot
contained in the Solicitation Package (by indicating the record
holders of the securities voted, and the appropriate account
numbers through which the beneficial owner's holdings are
derived) and then forward the Solicitation Package to the
beneficial owner of the securities, which beneficial owner will
then indicate its acceptance or rejection of the Plan and
otherwise indicate his choices to the extent requested to do so
on the ballot, and then return the individual ballot directly to
the Solicitation Agent in the return envelope to be provided in
the Solicitation Package, or (ii) the Nominal Holder may forward
the Solicitation Package to the beneficial owner of the
securities for voting along with a return envelope provided by
and addressed to the Nominal Holder, with the beneficial owner
then returning the individual ballot to the Nominal Holder, the
Nominal Holder will subsequently summarize the votes, including,
at a minimum, the number of beneficial holders voting to accept
and to reject the Plan who submitted ballots to the Nominal
Holder and the amount of such securities so voted, in an
affidavit (the "Affidavit of Voting Results"), and then return
the Affidavit of Voting Results to the Solicitation Agent. By
submitting an Affidavit of Voting Results, each such Nominal
Holder certifies that the Affidavit of Voting Results accurately
reflects votes and choices reflected on the ballots received
from beneficial owners holding such securities as of the Ballot
Record Date.
Pursuant to 28 U.S.C. SS 157 and 1334, 11 U.S.C. S 105, and
Bankruptcy Rule 1007(i) and (j), the Nominee Holders shall
maintain the individual ballots of its beneficial owners and
evidence of authority to vote on behalf of such beneficial
owners. No such ballots shall be destroyed or otherwise
disposed of or made unavailable without such action first being
approved by prior order of the Bankruptcy Court.
Under the Bankruptcy Code, for purposes of determining whether
the requisite acceptances have been received, only those holders
that vote to accept or reject the Plan will be counted. Votes
cannot be transmitted orally or by facsimile transmission.
Accordingly, it is important that you return your signed and
completed Ballot(s) promptly. Failure by any holder to send a
duly executed Ballot with an original signature will be deemed
an abstention by such holder with respect to a vote on the Plan
and will not be counted as vote for or against the Plan. To
accept Plan, the holder must check the box entitled "accept the
Plan" on the appropriate Ballot. Any Ballot cast that does not
indicate whether the holder of the Claim or Interest is voting
to accept or reject the Plan will not be counted as either an
acceptance or rejection of the Plan. A vote may be disregarded
if the Bankruptcy Court determines, after and a hearing, that
such acceptances or rejection was not solicited or procured in
good faith or other in accordance with the provision of the
Bankruptcy Code or if a Claim was voted in bad faith.
4. Voting Deadline.
Voting on the Plan by each holder of a Claim in an Impaired
Class is important. After carefully reviewing the Plan and this
Disclosure Statement, please indicate your vote on each enclosed
Ballot and return it in the pre-addressed envelope provided for
this purpose.
IN ORDER TO BE COUNTED, BALLOTS MUST BE SIGNED AND RETURNED SO
THAT THEY ARE RECEIVED EITHER BY THE BALLOTING AGENT NO LATER
THAN 4:00 P.M. DELAWARE TIME ON SEPTEMBER 9, 1998 (THE "VOTING
DEADLINE"), OR (ii) IF YOU ARE NOT THE RECORD HOLDER, BY YOUR
BROKER, BANK OR NOMINEE NO LATER THAN 4:00P.M. NEW YORK TIME ON
AUGUST 7, 1998 (THE "BENEFICIAL OWNERS DEADLINE").
TO HAVE YOUR VOTE COUNT, YOU MUST COMPLETE, SIGN AND RETURN THE
BALLOT TO:
LOGAN AND COMPANY, INC.
615 Washington Street
Hoboken, New Jersey 07030
PLEASE FOLLOW THE DIRECTIONS CONTAINED ON THE ENCLOSED BALLOT
CAREFULLY. BALLOTS THAT ARE RECEIVED AFTER THE VOTING DEADLINE
WILL NOT BE ACCEPTED OR USED BY THE DEBTORS IN SEEKING
CONFIRMATION OF THE PLAN. IT IS OF THE UTMOST IMPORTANCE TO
DEBTORS THAT YOU VOTE PROMPTLY TO ACCEPT THE PLAN.
DATED: July 28, 1998
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ William H. Sudell, Jr.
---------------------------
William H. Sudell, Jr. (No. 463)
Robert J. Dehney (No. 3578)
Derek C. Abbott (No. 3376)
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
and
CAMHY KARLINSKY & STEIN LLP
David Neier
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attorneys for Debtors
<PAGE>
EXHIBIT "A"
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
DATED JULY 28, 1998
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: Chapter 11
FRUEHAUF TRAILER CASE NO. 96-1563 (PJW)
CORPORATION,
MARYLAND SHIPBUILDING &
DRYDOCK COMPANY, F.G.R., INC.,
JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL, Jointly Administered
LIMITED, FRUEHAUF CORPORATION,
THE MERCER CO., DEUTSCHE
FRUEHAUF HOLDING CORPORATION,
MJ HOLDINGS, INC., and
E. L. DEVICES, INC.,
Debtors.
---------------------------------------
DEBTORS' AMENDED JOINT PLAN OF
REORGANIZATION DATED JULY 28, 1998
---------------------------------------
<PAGE> i
TABLE OF CONTENTS Page
ARTICLE 1 DEFINITIONS 2
Rules of Interpretation 2
ARTICLE 2 DESIGNATION OF CLAIMS AND INTERESTS 8
2.1 Summary 8
ARTICLE 3 TREATMENT OF UNCLASSIFIED CLAIMS 9
3.1 Administrative Claims 9
(a) General 9
(b) Payment of Statutory Fees 9
(c) Bar Date for Administrative Claims 9
(i) General Provisions 9
(ii) Professionals 9
(iii)Tax Claims 10
3.2 Treatment of Pre-Petition Tax Claims 10
ARTICLE 4 CLASSIFICATION AND TREATMENT OF CLASSIFIED
CLAIMS AND INTERESTS 11
4.1 Class 1 - Priority Claims 11
4.2 Class 2 - Secured Claims of Holders of Senior Notes 11
4.3 Class 3 - Secured Claims Other Than Claims of Holders
of Senior Notes 11
4.4 Class 4 - General Unsecured Claims 12
4.5 Class 5 - Old Common Stock 12
4.6 Class 6 - Old Warrants 12
4.7 Class 7 - Securities Claims 12
ARTICLE 5 ACCEPTANCE OR REJECTION OF THE PLAN 13
5.1 Voting Classes 13
5.2 Presumed Acceptance of Plan 13
5.3 Presumed Rejection of Plan 13
ARTICLE 6 MEANS FOR EXECUTION AND IMPLEMENTATIONOF THE PLAN 13
6.1 Funding of the Distribution Fund 13
6.2 Transfer of Wabash Securities to Indenture Trustee 13
6.3 Change of Plan Sponsorship for the Management and Union Plans 13
6.4 Transfer of Hogan's Creek Property and Picketville Property 13
6.5 Foreclosure by Holders of Senior Notes 14
6.6 Transfer by Debtors of Assets to the Liquidating Trust 14
6.7 Ratification of Liquidating Trust Agreement 14
(a) Powers and Duties 14
(b) Compensation of Trustee 14
(c) Limitation of Liability 14
(d) Indemnity 14
(e) Right to Hire Professionals 14
(f) Right to Pursue all Causes of Action of the Debtors 14
(g) Treatment of Distribution Fund Surplus 15
(h) Limitation on the Trustee 15
(i) Distribution of Trust Certificates 15
(j) Tax Treatment of the Liquidating Trust 15
(k) Termination of Liquidating Trust 16
6.8 Dissolution of Corporate Entities 16
6.9 Cancellation of Old Securities 16
6.10 Registration Exemption for Debtors' Wabash Securities and
Beneficial Interests in the Liquidating Trust 16
6.11 Corporate Action 16
6.12 Preservation of Rights of Action 16
6.13 Objections to Claims 16
6.14 Exemption from Stamp and Similar Taxes 17
ARTICLE 7 FUNDING AND METHODS OF DISTRIBUTION AND
PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS 17
7.1 Funding of Distributions Under the Plan 17
7.2 Cash Distributions 17
7.3 Distribution Procedures 17
7.4 Distributions to Holders of Allowed Administrative
Expense Claims, Pre-Petition Tax Claims and Class 1
Priority Claims 18
7.5 (a) Distributions to Holders of Allowed Class 2 Claims 18
(b) Certification of Claims by Indenture Trustee 18
(c) Surrender and Cancellation of Old Securities 18
(d) Ballot Record Date; Distributions to Holders of
Senior Notes 19
7.6 Disputed Claims 19
7.7 Delivery of Distributions and Undeliverable or
Unclaimed Distributions 19
(a) Delivery of Distributions in General 19
(b) Undeliverable Distributions 19
(i) Holding and Investment of Undeliverable Property 19
(ii) Distribution of Undeliverable Property After
it Becomes Deliverable and Failure to Claim
Undeliverable Property 20
7.8 Distributions on Account of Unsecured Class 4 Claims 20
7.9 De Minimis Distributions 20
7.10 Failure to Negotiate Checks 20
7.11 Compliance with Tax Requirements 20
7.12 Setoffs 20
7.13 Fractional Interests 21
ARTICLE 8 TREATMENT OF EXECUTORY CONTRACTSAND UNEXPIRED LEASES 21
8.1 Rejection of All Executory Contracts and Leases Not Assumed 21
8.2 Bar Date for Filing of Rejection Claims 21
ARTICLE 9 EFFECTS OF PLAN CONFIRMATION 21
9.1 Transfers to Liquidating Trust are Free and Clear
of Claims Against Debtors 21
9.2 No Liability for Solicitation or Participation 21
9.3 Limitation of Liability 21
9.4 Other Documents and Actions 22
9.5 Post-Consummation Effect of Evidences of Claims or Interests 22
9.6 Term of Injunctions or Stays 22
ARTICLE 10 CONFIRMABILITY OF PLAN AND CRAMDOWN 23
ARTICLE 11 RETENTION OF JURISDICTION 23
ARTICLE 12 MISCELLANEOUS PROVISIONS 24
12.1 Fractional Dollars 24
12.2 Modification of Plan 24
12.3 Withdrawal of Plan 24
12.4 Governing Law 25
12.5 Time 25
12.6 Payment Dates 25
12.7 Headings 25
12.8 Successors and Assigns 25
12.9 Severability of Plan Provisions 25
12.10 No Admissions 25
12.11 Dissolution of Unsecured Creditors' Committee 25
12.12 Notices 26
<PAGE> 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: Chapter 11
FRUEHAUF TRAILER CASE NO. 96-1563 (PJW)
CORPORATION, MARYLAND SHIPBUILDING
& DRYDOCK COMPANY, F.G.R., INC.,
JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL, Jointly Administered
LIMITED, FRUEHAUF CORPORATION,
THE MERCER CO., DEUTSCHE
FRUEHAUF HOLDING CORPORATION,
MJ HOLDINGS, INC., and
E. L. DEVICES, INC.,
Debtors.
DEBTORS' AMENDED JOINT PLAN OF
REORGANIZATION DATED JULY 28, 1998
Fruehauf Trailer Corporation, Maryland Shipbuilding & Drydock
Company, F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc. (collectively, the "Debtors"), as debtors and
debtors-in-possession, propose this Amended Joint Plan of
Reorganization dated July 28 , 1998 (the "Plan") pursuant to
section 1121(a) of Title 11 of the United States Code for the
resolution of the Debtors' outstanding creditor claims and
equity interests. Reference is made to the Debtors' Disclosure
Statement (the "Disclosure Statement") for a discussion of the
Debtors' history, business, properties and results of
operations, and for a summary of this Plan and certain related
matters.
All holders of Claims and Interests are encouraged to read
the Plan and the Disclosure Statement in their entirety before
voting to accept or reject this Plan. No materials, other than
the Disclosure Statement and any exhibits and schedules attached
thereto or referenced therein, have been approved by the Debtors
for use in soliciting acceptances or rejections of this Plan.
ARTICLE 1
DEFINITIONS
Rules of Interpretation. As used herein, the following terms
have the respective meanings specified below, and such meanings
shall be equally applicable to both the singular and plural, and
masculine and feminine, forms of the terms defined. The words
"herein," "hereof," "hereto," "hereunder" and others of similar
import, refer to the Plan as a whole and not to any particular
section, subsection or clause contained in the Plan. Captions
and headings to articles, sections and exhibits are inserted for
convenience of reference only and are not intended to be part of
or to affect the interpretation of the Plan. The rules of
construction set forth in section 102 of the Bankruptcy Code
shall apply. In computing any period of time prescribed or
allowed by the Plan, the provisions of Bankruptcy Rule 9006(a)
shall apply. Any capitalized term used but not defined herein
shall have the meaning ascribed to such term in the Bankruptcy
Code. In addition to such other terms as are defined in other
sections of the Plan, the following capitalized terms have the
following meanings when used in the Plan.
1.1 "Administrative Claim" means a Claim for costs and expenses
of administration allowed under section 503(b) of the Bankruptcy
Code and referred to in section 507(a)(1) of the Bankruptcy Code.
1.2 "Affiliate" means (a) an entity that directly or indirectly
owns, controls or holds with power to vote, twenty percent or
more of the outstanding voting securities of a Debtor, other
than an entity that holds such securities (i) in a fiduciary or
agency capacity without sole discretionary power to vote such
securities or (ii) solely to secure a debt, if such entity has
not in fact exercised such power to vote, or (b) a corporation
twenty percent or more of whose outstanding voting securities
are directly or indirectly owned, controlled or held with power
to vote, by a Debtor, or by an entity that directly or
indirectly owns, controls or holds with power to vote, twenty
percent or more of the outstanding voting securities of a
Debtor, other than an entity that holds such securities (i) in a
fiduciary or agency capacity without sole discretionary power to
vote such securities or (ii) solely to secure a debt, if such
entity has not in fact exercised such power to vote.
1.3 "Allowed Claim" means a Claim that is (1) not a Disputed
Claim or (b) a Claim that has been allowed by a Final Order.
1.4 "Ballots" means the written Ballots for acceptance or
rejection of the Plan.
1.5 "Ballot Record Date" means August 7, 1998.
1.6 "Ballot Return Date" means 4:00 p.m. Eastern Daylight Time
on September 9, 1998, unless and to the extent such date is
extended by the Debtors in accordance with the Disclosure
Statement.
1.7 "Bankruptcy Code" or "Code" means Title 11 of the United
States Code as now in effect or hereafter amended.
1.8 "Bankruptcy Court" means the United States Bankruptcy Court
for the District of Delaware, which presides over this
proceeding, or if necessary, the United States District Court
for said District having original jurisdiction over this case.
1.9 "Bankruptcy Rules" means, collectively (a) the Federal Rules
of Bankruptcy Procedure, and (b) the local rules of the
Bankruptcy Court, as applicable from time to time in the
Reorganization Case.
1.10 "Beneficial Interestholders" shall mean the holders of the
Class A Beneficial Interests and the holders of the Class B
Beneficial Interests.
1.11 "Bondholders' Committee" means the Unofficial Committee of
Senior Secured Noteholders.
1.12 "Business Day" means any day, other than a Saturday, Sunday
or "legal holiday" (as defined in Bankruptcy Rule 9006(a)).
1.13 "Cash" means cash, wire transfer, certified check, cash
equivalents and other readily marketable securities or
instruments, including, without limitation, readily marketable
direct obligations of the United States of America, certificates
of deposit issued by banks, and commercial paper of any Person,
including interests accrued or earned thereon, or a check from
the Liquidating Trust.
1.14 "Claim" means any right to payment from the Debtors arising
before the Confirmation Date, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, contested, uncontested, legal,
equitable, secured, or unsecured; or any right to an equitable
remedy for breach of performance if such breach gives rise to a
right of payment from the Debtors prior to the Confirmation
Date, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured,
contested, uncontested, secured or unsecured.
1.15 "Class" means one of the classes of Claims or Interests
defined in Article III hereof.
1.16 "Class A Beneficial Interest" means the respective rights
and interests of the holders of Allowed Class 2 Claims and, if
Class 4 accepts the Plan, the holders of Allowed Class 4 Claims
in the Liquidating Trust, subject to the interest of the holders
of Allowed Administrative, Priority and Pre-Petition Tax Claims
in the Distribution Fund.
1.17 "Class B Beneficial Interest" means the respective rights
and interests of the holders of Allowed Administrative, Priority
and Pre-Petition Tax Claims in the Liquidating Trust's
Distribution Fund.
1.18 "Company" means Fruehauf Trailer Corporation, a Delaware
Corporation, and its Affiliates.
1.19 "Confirmation" means the entry of a Confirmation Order
confirming this Plan at or after a hearing pursuant to section
1129 of the Bankruptcy Code.
1.20 "Confirmation Date" means the date the Confirmation Order
is entered on the docket of the Bankruptcy Court.
1.21 "Confirmation Order" means the order entered by the
Bankruptcy Court confirming the Plan pursuant to section 1129 of
the Bankruptcy Code.
1.22 "Debtors" means Fruehauf Trailer Corporation, Maryland
Shipbuilding & Drydock Company, F.G.R., Inc., Jacksonville
Shipyards, Inc., Fruehauf International Limited, Fruehauf
Corporation, The Mercer Co., Deutsche-Fruehauf Holding
Corporation, MJ Holdings, Inc., and E.L. Devices, Inc.
1.23 "Disclosure Statement" means the Disclosure Statement filed
by the Debtors as approved by the Bankruptcy Court for
submission to the Creditors, Interest holders, and
parties-in-interest of the Debtors, as it may have been amended
or supplemented from time to time.
1.24 "Disputed Claim" means a Claim as to which a proof of claim
has been Filed or deemed Filed under applicable law, as to which
an objection has been or may be timely Filed and which
objection, if timely Filed, has not been withdrawn on or before
any date fixed for Filing such objections by the Plan or Order
of the Bankruptcy Court and has not been overruled or denied by
a Final Order. Prior to the time that an objection has been or
may be timely Filed, for the purposes of this Plan, a Claim
shall be considered a Disputed Claim to the extent that: (i) the
amount of the Claim specified in the proof of claim exceeds the
amount of any corresponding Claim listed by the Debtors in their
respective Schedules to the extent of such excess; (ii) any
corresponding Claim listed by the Debtors in their respective
Schedules has been scheduled as disputed, contingent, or
unliquidated, irrespective of the amount scheduled; or (iii) no
corresponding Claim has been listed by the Debtors in their
respective Schedules. Disputed Claims also includes Claims
subject to a pending action for equitable subordination of such
Claims.
1.25 "Distribution Fund" means the portion of the Debtors' Cash
on the Effective Date which shall be transferred to the
Liquidating Trust, on behalf of and for the benefit of the
holders of Allowed Administrative, Priority and Pre-Petition Tax
Claims. The amount of Cash in the Distribution Fund shall equal
the aggregate of (a) the allowed amount of all Administrative
Claims, Pre-Petition Tax Claims and Priority Claims; and (b) the
asserted amount or court-estimated amount of Disputed or
undetermined (i) Administrative Expense Claims, (ii)
Pre-Petition Tax Claims, and (iii) Priority Claims. With
respect to Administrative Claims for compensation and
reimbursement of expenses of professionals or other persons
pursuant to sections 328, 330, 331 and 503(b) of the Bankruptcy
Code, the amount of Cash to be deposited shall be the amount
sought or the maximum amount estimated to be sought for such
compensation and expenses. The Distribution Fund shall not
include interest earned on the Distribution Fund after the
Effective Date.
1.26 "Distribution Fund Surplus" shall be the amount of Cash, if
any, remaining in the Distribution Fund after the payment of all
Allowed Administrative Expense Claims, Allowed Priority Claims
and Allowed Pre-petition Tax Claims.
1.27 "Distributions" means the properties or interests in
property to be paid or distributed hereunder to the holders of
Allowed Claims.
1.28 "Docket" means the docket in the Reorganization Case
maintained by the Clerk.
1.29 "Effective Date" means the date selected by the Debtors
which is between the first (1st) and forty fifth (45th) business
days on which no stay of the Confirmation Order is and remains
in effect. The Effective Date may be specified in the
Confirmation Order or in a separate document filed with the
Bankruptcy Court. If no designation is made, it shall be the
first day of that period.
1.30 "Estates" means the estates created in the Reorganization
Case under section 541 of the Bankruptcy Code.
1.31 "Executory Contract" means any unexpired lease and/or
executory contract as set forth in section 365 of the Code.
1.32 "File" or "Filed" means filed with the Bankruptcy Court in
the Reorganization Case.
1.33 "Final Order" means an order or judgment of the Bankruptcy
Court, or other court of competent jurisdiction, as entered on
the Docket in the Reorganization Case, which has not been
reversed, stayed, modified or amended.
1.34 "Foreclosed Assets" means the Debtors' assets on which the
Indenture Trustee shall be deemed to have foreclosed the liens
of the holders of the Senior Notes pursuant to Section 6.5 of
this Plan. The Foreclosed Assets shall include all assets of
the Debtors, including, but not limited to, the stock of JSI
Property Corp., Pension Corp. and Fruehauf de Mexico, and all
rights to receive tax refunds, but excluding the Distribution
Fund and the Wabash Securities.
1.35 "Hogan's Creek Property" means the 3.43 acres of real
property located in Duval County, Florida, owned by Jacksonville
Shipyards, Inc.
1.36 "Impaired" as to a Class means the Plan alters the legal,
equitable or contractual rights of a Claim or Interest holder
within the meaning of 11 U.S.C. S 1124.
1.37 "Indenture" means the Indenture, dated as of May 1, 1995
between Fruehauf Trailer Corporation and IBJ Schroder Bank &
Trust Company, as Trustee, as amended, relating to the Senior
Notes.
1.38 "Indenture Trustee" means IBJ Schroder Bank & Trust
Company, as trustee under the Indenture.
1.39 "Interest" means the rights of the owners and/or holders of
an outstanding share or shares of the Company's Class A Common
Stock and Class B Common Stock with respect of such Interest as
of the date immediately preceding the Petition Date.
1.40 "JSI Property Corp." means a newly-created Delaware
corporation to which the Hogan's Creek Property and the
Picketville Property shall be transferred by Jacksonville
Shipyards, Inc.
1.41 "Liquidating Trust" or "Trust" means that certain trust
substantially in the form of Exhibit "A" attached to the Plan.
1.42 "Liquidating Trust Account" means the segregated account
created by the Liquidating Trustee for the initial deposit of
all funds received by the Liquidating Trust.
1.43 "Liquidating Trust Proceeds" shall be the net proceeds of
all assets held by the Liquidating Trust, excluding the
Distribution Fund.
1.44 "Liquidating Trustee" or "Trustee" means Chriss Street or
his successor selected in accordance with the Liquidating Trust
Agreement, as trustee for the Liquidating Trust.
1.45 "Management Plan" means the Fruehauf Trailer Corporation
Retirement Plan sponsored by Fruehauf Trailer Corporation.
1.46 "Old Common Stock" means the Common Stock of Fruehauf
Trailer Corporation.
1.47 "Old Securities" means the Senior Notes, the Old Common
Stock and the Old Warrants.
1.48 "Old Warrants" means the Company's common stock warrants
issued May 3, 1995 and any other Company warrants outstanding on
the Effective Date.
1.49 "Order" means an order or judgment of the Bankruptcy Court
as entered on the Docket.
1.50 "Pension Corp." means a newly-created Delaware corporation
which will be owned by Fruehauf Trailer Corporation, will become
the sponsor of the Pension Plans and will be foreclosed by the
holders of the Senior Notes and conveyed to the Liquidating
Trust.
1.51 "Pension Plans" means the Management Plan and the Union
Plan.
1.52 "Person" means any individual, corporation, general
partnership, limited partnership, association, joint stock
company, joint venture, estate, trust, indenture trustee,
government or any political subdivision, governmental unit (as
defined in the Bankruptcy Code), official committee appointed by
the United States Trustee, unofficial committee of creditors or
equity holders or other entity.
1.53 "Petition Date" means October 7, 1996, the date on which
Debtors filed their voluntary Chapter 11 petitions.
1.54 "Picketville Property" means the 6.16 acre landfill located
in Duval County, Florida, owned by Jacksonville Shipyards, Inc.
1.55 "Plan" means this Joint Plan of Reorganization in its
present form, or as it may be amended, modified, and/or
supplemented from time to time in accordance with the Bankruptcy
Code, or by agreement of all affected parties, or by order of
the Bankruptcy Court, as the case may be.
1.56 "Pre-Petition Tax Claim" means a Tax Claim that arises
prior to the Petition Date.
1.57 "Priority Claim" means all Claims entitled to priority
under 11 U.S.C. SS 507(a) of the Bankruptcy Code, other than an
Administrative Claim or a Tax Claim.
1.58 "Pro Rata" means proportionately, based on the percentage
of the distribution made on account of a particular Allowed
Claim bears to the distributions made on account of all Allowed
Claims of the Class in which the Allowed Claim is included.
1.59 "Rejection Claim" means a Claim resulting from the
rejection of a lease or executory contract by a Debtor.
1.60 "Reorganization Case" means, collectively, the Debtors'
cases under Chapter 11 of the Bankruptcy Code that were
commenced on the Petition Date.
1.61 "Requisite Percentage of Class A Beneficial Interests"
shall mean the percentage of Class A Beneficial Interests to
which holders of Allowed Class 2 Claims are entitled to share
Pro Rata, such percentage being 100% if Class 4 rejects the Plan
and 94.5% if Class 4 accepts the Plan.
1.62 "Schedules" means the Schedules of Assets and Liabilities,
Statement of Financial Affairs and Statement of Executory
Contracts that may be filed by the Debtors with the Bankruptcy
Court, as amended or supplemented on or before the Confirmation
Date, listing the liabilities and assets of the Debtors.
1.63 "Secured Claim" means any Claim that is secured by a lien
on property in which the Estates have an interest or that is
subject to setoff under section 553 of the Bankruptcy Code, to
the extent of the value of the Claim holder's interest in the
Estates' interest in such property or to the extent of the
amount subject to setoff, as applicable, as determined pursuant
to section 506(a) of the Bankruptcy Code.
1.64 "Securities Claims" means (i) any Claim arising from
rescission of a purchase or sale of Old Common Stock or for
damages arising from the purchase or sale of Old Common Stock,
or (ii) any Claim for indemnity, reimbursement, or contribution
on account of any such Claim.
1.65 "Security Agreement" means the documentation under which a
lien against property is reflected.
1.66 "Senior Notes" means the 14.75% Senior Secured Notes due 2002.
1.67 "Tax Claim" means either (a) an Unsecured Allowed Claim of
a governmental entity as provided by section 507(a)(8) of the
Code, or (b) an Allowed Claim of a governmental entity secured
by a lien on property of the Debtors under applicable state law.
1.68 "Trust Certificates" means the written instruments
evidencing the Class A Beneficial Interest in the Liquidating
Trust of a holder of an Allowed Claim in Class 2, and, if Class
4 accepts the Plan, an Allowed Claim in Class 4.
1.69 "Union Plan" means the Pension Plan for Hourly Rated
(Union) Employees of Jacksonville Shipyards, Inc. sponsored by
Jacksonville Shipyards, Inc.
1.70 "Unsecured Claim" means any Claim that is not an
Administrative Claim, Priority Claim, Pre-Petition Tax Claim or
Secured Claim.
1.71 "Unsecured Creditors' Committee" means the Official
Committee of Unsecured Creditors appointed in the Reorganization
Case by the United States Trustee pursuant to section 1102 of
the Bankruptcy Code, as constituted by the addition or removal
of members from time to time.
1.72 "Wabash" means Wabash National Corporation.
1.73 "Wabash Securities" means the Wabash Common and Preferred
Stock owned by Debtor on the Effective Date.
1.74 "Warrant Notes" means the Company's unsecured promissory
notes in the approximate amount of $8.5 million due October 1998.
ARTICLE 2
DESIGNATION OF
CLAIMS AND INTERESTS
This Plan substantively consolidates the Claims against the
Debtors and their treatment. Substantive consolidation for Plan
purposes is appropriate in this case because all of the Debtors'
assets are encumbered by liens in favor of the holders of Senior
Notes and without their agreement to the distributions provided
by the Plan, unsecured creditors, including holders of
Administrative and Priority Claims, would receive nothing on
their Claims. This Plan shall serve as a request by the
Debtors, in lieu of a separate motion, to the Bankruptcy Court,
that it grant substantive consolidation of the Debtors' estates.
Substantive consolidation will result in extinguishment of
intercompany claims between the various Debtors' estates.
2.1 Summary. The following is a designation of the classes of
Claims and Interests under this Plan. In accordance with
section 1123(a)(1) of the Bankruptcy Code, Administrative Claims
and Tax Claims described in Article 3 of this Plan have not been
classified and are excluded from the following classes. A Claim
or Interest is classified in a particular class only to the
extent that the Claim or Interest qualifies within the
description of that class, and is classified in another class or
classes to the extent that any remainder of the Claim or
Interest qualifies within the description of such other class or
classes. A Claim or Interest is classified in a particular
class only to the extent that the Claim or Interest is an
Allowed Claim or Allowed Interest in that class and has not been
paid, released or otherwise satisfied before the Effective Date;
a Claim or Interest which is not an Allowed Claim or Allowed
Interest is not in any Class. Notwithstanding anything to the
contrary contained in this Plan, no distribution shall be made
on account of any Claim or Interest which is not an Allowed
Claim or Allowed Interest.
Class Status
A. Secured Claims
Class 2: Secured Claims of holders Impaired entitled to vote
of Senior Notes
Class 3: Secured Claims other than Impaired entitled to vote
Senior Note Claims
B. Unsecured Claims
Class 1: Priority Claims Unimpaired - no right to vote
Class 4: All Unsecured Claims Against Impaired entitled to vote
the Debtors
C. Interests
Class 5: Old Common Stock Impaired - deemed to have rejected
Class 6: Old Warrants Impaired - deemed to have rejected
Class 7: Securities Claims Impaired - deemed to have rejected
ARTICLE 3
TREATMENT OF UNCLASSIFIED CLAIMS
3.1 Administrative Claims
(a) General. Subject to the bar date provisions herein, unless
otherwise agreed to by the parties, each holder of an Allowed
Administrative Claim shall receive Cash equal to the unpaid
portion of such Allowed Administrative Claim or such other
amount as agreed between the Debtors and the holder of such
Claim on the later of (a) the Effective Date or as soon as
practicable thereafter, (b) the date on which such Claim becomes
an Allowed Administrative Claim and (c) such other date as is
mutually agreed upon by the Debtors and the holder of such
Claim. All holders of Allowed Administrative Claims shall have
a beneficial interest in the Liquidating Trust's Distribution
Fund, and the Distribution Fund shall be the sole source of
payment of such Claims.
(b) Payment of Statutory Fees. All fees payable pursuant to 28
U.S.C. S 1930 shall be paid in Cash equal to the amount of such
Administrative Claim when due.
(c) Bar Date for Administrative Claims.
(i) General Provisions. Subject to the exceptions provided in
sections 3.1(c)(ii) and (iii), by Order dated August 13, 1997,
the Court established October 6, 1997 as the date by which
certain holders of Administrative Claims arising prior to August
13, 1997 must have filed Administrative Proofs of Claim in lieu
of requests for payment of Administrative Claims. Holders of
Administrative Claims that have not filed such Proofs of Claim
by the applicable Administrative Claim bar date shall be forever
barred from asserting such Claims against the Debtors, the
Liquidating Trust or any of the Debtors' property.
(ii) Professionals. All professionals or other entities
requesting compensation or reimbursement of expenses pursuant to
sections 327, 328, 330, 331, 503(b) and 1103 of the Bankruptcy
Code for services rendered before the Effective Date (including,
without limitation, any compensation requested by any
professional or any other entity for making a substantial
contribution in the Reorganization Case) shall File and serve on
the Liquidating Trustee at 1111 Bayside Drive, Suite 100, Corona
del Mar, California 92625-1755; Haynes and Boone, L.L.P. (Attn.:
Robin Phelan), 901 Main Street, Dallas, Texas 75202-3789, as
counsel to the Bondholders' Committee; Camhy Karlinsky & Stein
LLP (Attn: David Neier), 1740 Broadway, New York, NY 10019;
Morris, Nichols, Arsht & Tunnell (Attn: William H. Sudell, Jr.),
1201 North Market Street, Wilmington, Delaware 19801; and The
Honorable Patricia A. Staiano, United States Trustee (Attn.:
Daniel K. Astin), The Curtis Center, 601 Walnut Street, Suite
950W, Philadelphia, PA 19106; an application for final allowance
of compensation and reimbursement of expenses no later than
forty-five (45) days after the Effective Date. Objections to
applications of professionals for compensation or reimbursement
of expenses must be Filed and served on the Liquidating Trustee
and the professionals to whose application the objections are
addressed no later than seventy (70) days after the Effective
Date. Any professional fees and reimbursements or expenses
incurred by the Liquidating Trust subsequent to the Effective
Date may be paid by the Liquidating Trust without application to
the Bankruptcy Court. The Liquidating Trustee shall pay the
reasonable fees and expenses of the professionals of the
Bondholders' Committee incurred prior to the Effective Date and
the fees and expenses of the Indenture Trustee incurred prior to
the Effective Date as determined by the Court.
(iii) Tax Claims. All requests for payment of Administrative
Claims and other Claims by a governmental unit for taxes (and
for interest and/or penalties related to such taxes) for any tax
year or period, all or any portion of which occurs or falls
within the period from and including the Petition Date through
and including the Effective Date ("Post-petition Tax Claims")
and for which no bar date has otherwise been previously
established, must be Filed on or before the later of (i) 45 days
following the Effective Date; and (ii) 90 days following the
filing with the applicable governmental unit of the tax return
for such taxes for such tax year or period. Any holder of any
Post-petition Tax Claim that is required to File a request for
payment of such taxes and does not File such a Claim by the
applicable bar date shall be forever barred from asserting any
such Post-petition Tax Claim against any of the Debtors, the
Liquidating Trust or their respective properties, whether any
such Post-petition Tax Claim is deemed to arise prior to, on, or
subsequent to the Effective Date. To the extent that the holder
of a Tax Claim holds a lien to secure its Claim under applicable
state or federal law that survives the deemed foreclosure by the
holders of the Senior Notes, the surviving lien shall attach to
the Distribution Fund and remain in effect until the Tax Claim
has been paid in full. To the extent that a Tax Claim is a
Disputed Claim, any lien securing such Disputed Claim under
applicable state or federal law shall attach to the Distribution
Fund for such Disputed Claim. Upon disallowance of a Disputed
Tax Claim or allowance and payment of such claim, such lien
shall be released. Failure by the Liquidating Trustee to make a
payment on an Allowed Tax Claim pursuant to the terms of the
Plan shall be an event of default. If the Liquidating Trustee
fails to cure an event of default as to an Allowed Tax Claim
within twenty (20) days after service of written notice of
default from the holder of such Allowed Tax Claim, then the
holder of such Allowed Tax Claim may enforce the entire amount
of its Claim, plus interest as provided under this Plan, against
the Liquidating Trust in accordance with applicable state or
federal law remedies. At the option of the Liquidating Trustee
and as an alternative to the treatment provided above, the
Liquidating Trustee may surrender the property securing the
post-petition Tax Claim and allow the holder to foreclose upon
the property. Surrendering the property will satisfy the Tax
Claim in full.
3.2 Treatment of Pre-Petition Tax Claims. Each holder of an
Allowed Pre-Petition Tax Claim shall have a beneficial interest
in the Liquidating Trust's Distribution Fund and be paid in Cash
from the Distribution Fund on the latest of: (i) the first
practicable date after the Effective Date, (ii) 30 calendar days
after the date on which an Order allowing such Claim becomes a
Final Order, (iii) the last day the taxes may be paid under
applicable law without incurring penalties or interest, and (iv)
such other time or times as may be agreed by the holder of such
Claim and the Trustee. To the extent that the holder of a Tax
Claim holds a lien to secure its Claim under applicable state
law following the deemed foreclosure by the holders of the
Senior Notes, the surviving lien shall attach to the
Distribution Fund and remain in effect until such Allowed
Pre-petition Tax Claim has been paid. To the extent that a Tax
Claim is a Disputed Claim, any lien securing such Disputed Claim
under applicable state law shall either remain in effect or
attach to the Distribution Fund reserve for such Disputed Claim.
Upon disallowance of a Disputed Tax Claim or allowance and
payment of such claim, such lien shall be released. Subject to
the limitations of 11 U.S.C. S 506(b), Allowed Pre-Petition Tax
Claims that are secured by liens under applicable state or
federal law shall accrue interest, but not penalties, at the
rates provided under applicable state or federal law up to the
Effective Date, and thereafter, to the extent the liens have
survived the deemed foreclosure by the holders of the Senior
Notes, shall accrue interest at the rate of 7% per annum.
Failure by the Liquidating Trustee to make a payment on an
Allowed Tax Claim pursuant to the terms of the Plan shall be an
event of default. If the Liquidating Trust fails to cure an
event of default as to an Allowed Tax Claim within twenty (20)
days after service of written notice of default from the holder
of such Allowed Tax Claim, then the holder of such Allowed Tax
Claim may enforce the entire amount of its Claim, plus interest
as provided under this Plan, against the Liquidating Trust in
accordance with applicable state or federal law remedies. At
the option of the Liquidating Trustee and as an alternative to
the treatment provided above, the Liquidating Trustee may
abandon the property securing the Pre-petition Tax Claim and
allow the holder to foreclose upon the property. Abandoning the
property will satisfy the Tax Claim in full.
ARTICLE 4
CLASSIFICATION AND TREATMENT OF
CLASSIFIED CLAIMS AND INTERESTS
4.1 Class 1 - Priority Claims.
(a) Classification: Class 1 consists of all non-tax Priority
Claims.
(b) Treatment: Class 1 is unimpaired and, accordingly, the
members of Class 1 are not entitled to vote on the Plan. Unless
otherwise agreed to by the parties, each holder of an Allowed
Claim in Class 1 will receive a beneficial interest in the
Liquidating Trust's Distribution Fund and will be paid the
Allowed amount of such Claim in full in Cash by the Liquidating
Trust from the Distribution Fund on or before the later of (a)
the first practicable date after the Effective Date, (b) the
date such Claim becomes an Allowed Claim, and (c) such other
date as is mutually agreed upon by the Debtor and the holder of
such Claim.
4.2 Class 2 - Secured Claims of Holders of Senior Notes
(a) Classification: Class 2 consists of the Allowed Secured
Claims of the holders of the Senior Notes.
(b) Treatment: Class 2 is impaired and, accordingly, members of
Class 2 are entitled to vote on the Plan. Each holder of an
Allowed Claim in Class 2 will receive (1) its Pro Rata share of
the Wabash Securities free and clear of liens, claims and
interests and, (2), either (a) its Pro Rata share of 100% of the
Class A Beneficial Interests in the Liquidating Trust, or (b) if
Class 4 accepts the Plan, its Pro Rata share of 94.5% of the
Class A Beneficial Interests in the Liquidating Trust.
4.3 Class 3 - Secured Claims Other Than Claims of Holders of
Senior Notes.
(a) Classification: Class 3 consists of all Allowed Secured
Claims other than the Claims of holders of Senior Notes.
(b) Treatment: Class 3 is impaired, and the holders of Allowed
Claims in such Class are entitled to vote on the Plan. At the
Debtors' option, on the Effective Date (a) the Plan may leave
unaltered the legal, equitable, and contractual rights of the
holder of an Allowed Secured Claim, or (b) the Debtors may
assume and assign the contract or agreement governing an Allowed
Secured Claim pursuant to section 365(b) of the Bankruptcy Code,
or (c) the Debtors may pay an Allowed Secured Claim in such
manner as may be agreed to between the Debtors and the holder of
such Claim, or (d) the Debtors may (i) pay an Allowed Secured
Claim in full, in cash, or (ii) the Debtors may surrender to the
holder of an Allowed Secured Claim the property securing such
Claim, in all of such events, the value of such holder's
interest in such property shall be determined (A) by agreement
of the Debtors or the Liquidating Trustee and the holder of such
Allowed Secured Claim or (B) if they do not agree, by the
Bankruptcy Court.
4.4 Class 4 - General Unsecured Claims
(a) Classification: Class 4 consists of all Allowed Unsecured
Claims against any of the Debtors, including trade Claims,
Claims arising out of the Warrant Notes, the Rejection Claims,
any indemnification Claims, and any products liability or
personal injury Claims.
(b) Treatment: If Class 4 accepts the Plan (i.e., of those
holders of Allowed Claims in Class 4 that vote on the Plan, the
holders of at least two-thirds (2/3) in amount and more than
one-half (1/2) in number of Allowed Claims in Class 4 vote in
favor of the Plan), each holder of an Allowed Class 4 Claim will
receive its Pro Rata share of 5.5% of the Class A Beneficial
Interests in the Liquidating Trust. If Class 4 rejects the
Plan, the holders of Allowed Claims will receive no distribution
under the Plan.
4.5 Class 5 - Old Common Stock.
(a) Classification: Class 5 consists of all Interests in Old
Common Stock.
(b) Treatment: Holders of Interests in Class 5 will receive no
distribution under the Plan and the Old Common Stock will be
canceled.
4.6 Class 6 - Old Warrants
(a) Classification: Class 6 consists of all Interests of
holders of Old Warrants.
(b) Treatment: Holders of Old Warrants will receive no
distribution under the Plan and all Old Warrants shall be
canceled.
4.7 Class 7 - Securities Claims
(a) Classification: Class 7 consists of Securities Claims (if any exist).
(b) Treatment: Any Allowed Securities Claims shall be treated
respectively with the same priorities as the Old Common Stock
and the Old Warrants pursuant to section 510(b) of the
Bankruptcy Code, and the holders of such Allowed Securities
Claims shall receive no distribution under the Plan.
ARTICLE 5
ACCEPTANCE OR REJECTION OF THE PLAN
5.1 Voting Classes. The holders of Claims in Classes 2, 3 and 4
are impaired and shall be entitled to vote to accept or reject
the Plan.
5.2 Presumed Acceptance of Plan. Class 1 is unimpaired under
the Plan, and therefore, is conclusively presumed to accept the
Plan.
5.3 Presumed Rejection of Plan. The holders of Interests in
Classes 5, 6 and 7 are not being solicited to accept or reject
the Plan and will be deemed to have rejected the Plan.
ARTICLE 6
MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN
6.1 Funding of the Distribution Fund. On the Effective Date,
the Debtors shall first fund the Distribution Fund which shall
be transferred to the Liquidating Trust on behalf of and for the
benefit of the holders of Allowed Administrative, Priority and
Pre-Petition Tax Claims.
6.2 Transfer of Wabash Securities to Indenture Trustee. On the
Effective Date, the Debtors shall then transfer the Wabash
Securities to the Indenture Trustee for distribution to the
holders of the Senior Notes in accordance with the terms of this
Plan.
6.3 Change of Plan Sponsorship for the Management and Union
Plans. Prior to or on the Effective Date, the Debtors shall
transfer sponsorship of the current Management Plan and Union
Plan to Pension Corp. The current sponsors are Fruehauf Trailer
Corporation for the Management Plan and Jacksonville Shipyards,
Inc. for the Union Plan. The Board of Directors of the
respective sponsors shall approve the change in sponsorship.
The administrative provisions of the Management Plan and Union
Plan allow for a change in plan sponsorship. The appropriate
notices and governmental filings to comply with federal law
shall be provided in a timely manner to the appropriate parties.
Once the change in sponsorship has been completed, Pension Corp.
may elect to merge the Management Plan and Union Plan to form a
single plan.
6.4 Transfer of Hogan's Creek Property and Picketville Property.
On the Effective Date, Jacksonville Shipyards, Inc. shall next
transfer the Hogan's Creek Property and Picketville Property to
JSI Property Corp.
6.5 Foreclosure by Holders of Senior Notes. On the Effective
Date, the Indenture Trustee will be deemed to have foreclosed
the liens of the holders of the Senior Notes on the Foreclosed
Assets and to have transferred the Foreclosed Assets to the
Liquidating Trust. The Foreclosed Assets shall be transferred
to the Liquidating Trust on behalf of and for the benefit of the
holders of Class A Beneficial Interests in the Liquidating Trust.
6.6 Transfer by Debtors of Assets to the Liquidating Trust. On
the Effective Date, the Debtors shall convey all of their
remaining assets to the Liquidating Trust free and clear of all
liens, claims and encumbrances on behalf of and for the benefit
of the creditors who will receive a beneficial interest in the
Liquidating Trust.
6.7 Ratification of Liquidating Trust Agreement. On the
Effective Date, each holder of each Claim will be deemed to have
ratified and become bound by the terms of the Liquidating Trust
Agreement. The Liquidating Trustee is empowered to execute the
Liquidating Trust Agreement on behalf of each holder of a Claim.
(a) Powers and Duties. The Liquidating Trustee shall have the
powers, duties and obligations specified in this Plan and the
Liquidating Trust Agreement.
(b) Compensation of Liquidating Trustee. The Liquidating
Trustee shall be entitled to receive from the Trust Estate
compensation for his services as Liquidating Trustee
substantially in accordance with the description at section
IV.F.7.b. of the Disclosure Statement which compensation shall
be approved by the Court at the Confirmation Hearing. The
Liquidating Trustee shall also be reimbursed by the Trust Estate
for all reasonable out-of-pocket expenses incurred by the
Liquidating Trustee in the performance of his duties.
(c) Limitation of Liability. The Liquidating Trustee shall use
reasonable discretion in exercising each of the powers herein
granted. No Liquidating Trustee or any attorney, agent, or
servant of the Liquidating Trustee shall be personally liable in
any case whatsoever arising in connection with the performance
of obligations under this Plan, whether for their acts or their
failure to act unless they shall have been guilty of willful
fraud or gross negligence.
The Liquidating Trustee may consult with attorneys, accountants,
and agents, and the opinions of the same shall be full
protection and justification to the Liquidating Trustee and his
employees for anything done or admitted or omitted or suffered
to be done in accordance with said opinions. The Liquidating
Trustee shall not be required to give any bond for the faithful
performance of his duties hereunder.
(d) Indemnity. The Liquidating Trustee and his employees and
agents will be indemnified by the Liquidating Trust against
claims arising from the good faith performance of duties under
the Bankruptcy Code or this Plan.
(e) Right to Hire Professionals. The Liquidating Trustee shall
have the right to reasonably utilize the services of attorneys
or any other professionals which, in the discretion of the
Liquidating Trustee, are necessary to perform the duties of the
Liquidating Trustee. Reasonable fees and expenses incurred by
the attorneys, accountants or other agents of the Liquidating
Trustee shall be paid by the Liquidating Trust.
(f) Right to Pursue all Causes of Action of the Debtors. After
the transfers contemplated by Sections 6.5 and 6.6 of this Plan,
the Liquidating Trust shall own all causes of action, including
preference claims previously owned by the Debtors, and shall be
authorized to pursue any causes of action for the benefit of the
Liquidating Trust and the holders of the Class A Beneficial
Interests.
(g) Treatment of Distribution Fund Surplus. After the payment
of the Allowed Administrative Expense Claims, Priority Claims
and Pre-petition Tax Claims of the Class B Beneficial
Interestholders, any remaining funds in the Distribution Fund
shall be available for distribution to the holders of the Class
A Beneficial Interests in the Liquidating Trust.
(h) Limitation on the Liquidating Trustee. Two holders of
Senior Notes will serve as the Trust Advisory Committee. Either
Bankruptcy Court approval or unanimity among the Trust Advisory
Committee members and Liquidating Trustee is required before the
Liquidating Trustee can:
(1) borrow money in excess of $500,000 or grant liens on any
part of the Trust Estate in excess of $500,000;
(2) sell assets of the Trust Estate with a value in excess of $500,000;
(3) modify the Plan;
(4) initiate and prosecute litigation, including but not
limited to claim objections with expected fees and costs in
excess of $250,000;
(5) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of $500,000; and
(6) forego making the annual distribution to Certificate
Holders required by Section 6.2 of the Liquidating Trust.
If unanimity does not exist regarding the proposed action and
Bankruptcy Court approval is requested, the Liquidating Trust
shall pay the attorneys fees incurred by the objecting Committee
member, up to $25,000 per member during the term of the
Liquidating Trust.
The Liquidating Trust Agreement may be modified only with the
written approval of the Class A Beneficial Interestholders
holding over 50% of the Class A Beneficial Interests.
(i) Distribution of Trust Certificates. The Liquidating Trust
shall distribute Trust Certificates to the holders of the Class
A Beneficial Interests in the Liquidating Trust which shall
reflect each holder's proportional interest in the Liquidating
Trust, subject to the interest of the holders of Class B
Beneficial Interests in the Distribution Fund. However, after
consultation with the Official Committee for Unsecured Creditors
and the Securities and Exchange Commission, the Debtors may seek
to have the Trust Certificates issued in two classes to Class A
Beneficial Interestholders, Class A(1) for Class 2 Creditors and
Class A(2) for Class 4 Creditors, if it is possible to avoid the
requirement to register the Liquidating Trust under Section
12(g) of the Exchange Act.
(j) Tax Treatment of the Liquidating Trust. It is intended that
the Liquidating Trust will be treated as a "liquidating trust"
within the meaning of Treasury Regulations Section
301.7701-4(d). Accordingly, for federal income tax purposes,
the transfer and assignment of the Debtors' assets shall be
treated as a deemed transfer and assignment of such assets to
the holders of Claims followed by a deemed transfer and
assignment by such holders to the Liquidating Trust. The
Liquidating Trust shall provide the holders of Claims with a
valuation of the assets transferred to the Liquidating Trust and
such valuation shall be used consistently for all federal income
tax purposes. All items of income, deduction, credit or loss of
the Liquidating Trust shall be allocated for federal, state and
local income tax purposes among the holders of Claims as set
forth in the Liquidating Trust agreement; provided, however,
that to the extent that any item of income cannot be allocated
in the taxable year in which it arises, the Liquidating Trust
shall pay the federal, state and local taxes attributable to
such income (net of related deductions) and the amount of such
taxes shall be treated as having been received by, and paid on
behalf of, the holders of Claims receiving such allocations when
such allocations are ultimately made.
(k) Termination of Liquidating Trust. The duties, powers and
responsibilities of the Liquidating Trustee shall terminate upon
the liquidation and distribution to Beneficial Interestholders
of all proceeds in the Liquidating Trust estate in accordance
with this Plan.
6.8 Dissolution of Corporate Entities. Following the creation
of the Distribution Fund, the transfer of the Wabash Securities
to the Indenture Trustee, the deemed foreclosure of the
Foreclosed Assets by the Indenture Trustee, and the transfer of
any remaining assets to the Liquidating Trust on behalf of and
for the benefit of the Beneficial Interestholders, the Debtors
shall be dissolved or liquidated.
6.9 Cancellation of Old Securities. On the Effective Date, all
Old Securities shall be terminated and canceled, and the
indentures or statements of resolution governing such Old
Securities shall be rendered void. Notwithstanding the
foregoing, such termination will not impair the rights and
duties under any indenture as between the Indenture Trustee and
the beneficiaries of the trust created thereby (the holders of
the Senior Notes) including, but not limited to, the rights of
the Indenture Trustee to receive payment of its fees and
expenses, to the extent not paid by the Company, from amounts
distributable to holders of Senior Notes.
6.10 Registration Exemption for Debtors' Wabash Securities and
Beneficial Interests in the Liquidating Trust. The Confirmation
Order shall provide that (a) the distribution of the Wabash
Securities to holders of Allowed Class 2 Claims, (b) the
transfer to the Liquidating Trust of the stock of Pension Corp.
and JSI Property Corp., and (c) the issuance and transfer
pursuant to the Plan of the beneficial interests in the
Liquidating Trust and the Trust Certificates and any resale of
such property shall be exempt from any and all federal, state
and local laws requiring the registration of such security, to
the fullest extent provided by section 1145 of the Bankruptcy
Code.
6.11 Corporate Action. Upon entry of the Confirmation Order,
the dissolutions contemplated by Section 6.8 shall be deemed
authorized and approved in all respects and on the Effective
Date, such corporate dissolutions shall be deemed to have
occurred and shall be in effect from and after the Effective
Date pursuant to applicable state laws without any requirement
of further action by the stockholders or directors of the
Debtors. On the Effective Date, the Indenture Trustee and the
Liquidating Trustee shall be authorized and directed to take all
necessary and appropriate actions to effectuate the transactions
contemplated by the Plan and Disclosure Statement.
6.12 Preservation of Rights of Action. Except as otherwise
provided in the Plan, or in any contract, instrument, release,
or other agreement entered into in connection with the Plan in
accordance with section 1123(b) of the Bankruptcy Code, the
Liquidating Trust, as ultimate successor to the Debtors, shall
retain and may enforce any claims, rights and causes of action
that the Debtors or the Estates may hold against any entity,
including, without limitation, any claims, rights or causes of
action arising under sections 544 through 551 or other sections
of the Bankruptcy Code or any similar provisions of state law,
or any other statute or legal theory. The Liquidating Trust or
any successor to or designee thereof may pursue those rights of
action, as appropriate, in accordance with what is in the best
interests of the Liquidating Trust and those holding interests
in the Liquidating Trust.
6.13 Objections to Claims. Except as otherwise provided for
with respect to applications of professionals for compensation
and reimbursement of expenses under Article 3, or as otherwise
ordered by the Bankruptcy Court after notice and a hearing,
objections to Claims, including Administrative Claims, shall be
Filed and served upon the holder of such Claim or Administrative
Claim not later than the later of (a) one hundred twenty (120)
days after the Effective Date, and (b) one hundred twenty (120)
days after a proof of claim or request for payment of such
Administrative Claim is Filed, unless this period is extended by
the Court. Such extension may occur ex parte. After the
Effective Date, the Liquidating Trust shall have the exclusive
right to object to Claims.
6.14 Treatment of Identical Claims Asserted by Single Creditor
Against Multiple Debtors. Because all of the Debtors' assets
are fully encumbered by liens securing the Senior Notes, absent
the agreement of the Senior Noteholders, holders of Allowed
Administrative, Priority, Pre-Petition Tax and Unsecured Claims
would receive no distribution under the Plan. The Senior
Noteholders have agreed to the distribution of the Distribution
Fund to holders of Allowed Administrative and Priority Claims
and the distribution of 5.5% of the Class A Beneficial Interests
in the Liquidating Trust to holders of Allowed Unsecured Claims
if Class 4 accepts the Plan. That agreement is conditioned upon
the Claims against the Debtors being consolidated so that a
single creditor who has a right of recovery against more than
one Debtor for the same Claim will be limited to one Allowed
Claim in the Allowed amount owed to the creditor. Attached as
Exhibit "B" to the Plan is a schedule of creditors that filed
multiple claims for the same liability. The maximum amount of
the Allowed Claim of any of these creditors shall be the amount
indicated as the "Surviving Claim." The Liquidating Trust
reserves the right to object to the Surviving Claim.
6.15 Exemption from Stamp and Similar Taxes. The issuance and
transfer of the Wabash Securities, the issuance and distribution
of the Pension Corp. and JSI Property Corp. Stock, and the
transfer and ultimate sale of the Foreclosed Assets as provided
in this Plan shall not be taxed under any law imposing a stamp
tax or similar tax in accordance with 11 U.S.C. S 1146(c).
ARTICLE 7
FUNDING AND METHODS OF DISTRIBUTION AND
PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS
7.1 Funding of Distributions Under the Plan. The Debtors have
liquidated 800,000 shares of the Wabash Common Stock. A portion
of the sale proceeds was used to pay the Debtors' obligations to
Bank of America as Debtor-In-Possession lender. From the
remaining proceeds and other cash on hand, the Debtors will fund
the Distribution Fund. The Debtors may seek one or more orders
of the Bankruptcy Court estimating or limiting the amount of
property to be deposited in the Distribution Fund. The
Distribution Fund shall be the sole source of funds for the
payment of Allowed Administrative Claims, Pre-petition Tax
Claims and Priority Claims.
7.2 Cash Distributions. All Cash distributions made pursuant to
the Plan shall be made by the Liquidating Trustee from the
Liquidating Trust estate. Any such payments may be made either
by check or wire transfer, at the option of the payor.
7.3 Distribution Procedures. Except as otherwise provided in
the Plan, all distributions of Cash and other property shall be
made by the Liquidating Trustee on the later of the Effective
Date or the date on which such Claim is Allowed, or as soon
thereafter as practicable. Distributions required to be made on
a particular date shall be deemed to have been made on such date
if actually made on such date or as soon thereafter as
practicable. No payments or other distributions of property
shall be made on account of any Claim or portion thereof unless
and until such Claim or portion thereof is Allowed.
7.4 Distributions to Holders of Allowed Administrative Expense
Claims, Pre-Petition Tax Claims and Class 1 Priority Claims.
Commencing on the Effective Date, the Liquidating Trustee shall,
in accordance with Article 3 of the Plan, distribute to each
holder of a then unpaid Allowed Administrative Expense Claim,
Allowed Pre-Petition Tax Claim, or Allowed Priority Claim Cash
in the Allowed amount of such holder's Claim. The Distribution
Fund shall be distributed to the holders of Disputed
Administrative Expense Claims, Pre-Petition Tax Claims and other
Priority Claims pursuant to Article 3 of the Plan if and to the
extent that the balance, if any, of such Claims is Allowed by
Final Order. The Liquidating Trust must hold the Distribution
Fund in a segregated account for the benefit of the holders of
Allowed Administrative, Priority and Pre-Petition Tax Claims
until all Disputed Claims that are alleged to be Administrative,
Pre-Petition Tax or Priority Claims have been Allowed or
disallowed.
7.5 (a) Distributions to Holders of Allowed Class 2 Claims.
The Debtors shall deliver all of the Wabash Securities and Trust
Certificates representing the Requisite Percentage of Class A
Beneficial Interests to the Indenture Trustee. The Indenture
Trustee shall make the Pro Rata distribution required by Section
4.2 of the Plan to the holders of the Senior Notes. The
Liquidating Trust shall pay all reasonable fees and expenses of
the Indenture Trustee in acting as distribution agent as and
when such fees and expenses become due without further order of
the Bankruptcy Court.
(b) Certification of Claims by Indenture Trustee. The Indenture
Trustee shall certify to the Liquidating Trustee a list of the
registered holders of the Senior Notes as of the Ballot Record
Date, designating the name, address, taxpayer identification
number (if known), certificate number, and the amount of unpaid
principal and accrued interest owed to each holder on their
respective securities.
(c) Surrender and Cancellation of Old Securities. As a
condition to receiving the Wabash Securities and Trust
Certificates distributable under the Plan, the holders of Senior
Notes shall surrender their Senior Notes to the Indenture
Trustee for the holders of Senior Notes. When a holder
surrenders its Senior Notes to the Indenture Trustee, the
Indenture Trustee shall hold the instrument in "book entry only"
until such instruments are canceled. Any holder of Senior Notes
whose instrument has been lost, stolen, mutilated or destroyed
shall, in lieu of surrendering such instrument, deliver to the
Indenture Trustee: (a) evidence satisfactory to the Indenture
Trustee of the loss, theft, mutilation or destruction of such
instrument, and (b) such security or indemnity that may be
reasonably required by the Indenture Trustee to hold the
Indenture Trustee harmless with respect to any such
representation of the holder. Upon compliance with the
preceding sentence, such holder shall, for all purposes under
the Plan, be deemed to have surrendered such instrument. Any
holder of a Senior Note which has not surrendered or been deemed
to have surrendered its Senior Notes prior to the time that the
Indenture Trustee distributes the Wabash Securities and Trust
Certificates or the Liquidating Trustee makes a distribution to
holders of Trust Certificates may have its distribution reduced
by any taxes that the Indenture Trustee or Liquidating Trustee
has paid on account of such distribution. Any holder of a
Senior Note which has not surrendered or been deemed to have
surrendered its Senior Notes within two years after the
Effective Date, shall have its Claim as a holder of Senior Notes
disallowed, shall receive no distribution on account of its
Claim as a holder of Senior Notes, and shall be forever barred
from asserting any Claim on account of its Senior Notes. Any
Wabash Securities and Trust Certificates held for distribution
by the Indenture Trustee on account of such disallowed claims of
holders of Senior Notes shall be distributed Pro Rata to the
remaining holders of Allowed Class 2 claims if the value of such
Wabash Securities and Trust Certificates appears, in the sole
discretion of the Indenture Trustee, to have a value justifying
the cost of such distribution. In all other cases, the
Indenture Trustee shall deliver such Wabash Securities and Trust
Certificates to the Liquidating Trust.
As of the Effective Date, all Senior Notes shall represent only
the right to participate in the distributions provided in the
Plan on account of such Senior Notes.
(d) Ballot Record Date; Distributions to Holders of Senior
Notes. The Indenture Trustee shall distribute all distributions
of property to be made by the Indenture Trustee pursuant to the
Plan to the record holders of Senior Notes, as of the Ballot
Record Date, unless, at least five (5) Business Days prior to a
distribution, the holder of any such Claim furnishes (or causes
its transferee to furnish) the Indenture Trustee, or its agent,
with sufficient evidence (in the Indenture Trustee's or its
agent's sole and absolute discretion) of the transfer of such
Claim, in which event the Indenture Trustee shall distribute, or
cause to be distributed, all such distributions of property to
such transferee. Following the conveyance of the Foreclosed
Assets and Debtors' Assets to the Liquidating Trust, all
distributions to the holders of Senior Notes shall be made by
the Liquidating Trustee.
7.6 Disputed Claims. Notwithstanding any other provisions of
the Plan, no payments or distributions shall be made on account
of any Disputed Claim until such Claim becomes an Allowed Claim,
and then only to the extent that it becomes an Allowed Claim.
7.7 Delivery of Distributions and Undeliverable or Unclaimed
Distributions.
(a) Delivery of Distributions in General. Except as provided
below in section 7.7(b)(ii) for holders of undeliverable
distributions, distributions to holders of Allowed Claims shall
be distributed by mail as follows: (a) except in the case of the
holders of Senior Notes, (1) at the addresses set forth on the
respective proofs of claim filed by such holders; (2) at the
addresses set forth in any written notices of address changes
delivered to the Debtors or the Liquidating Trustee after the
date of any related proof of claim; or (3) at the address
reflected on the Schedule of Assets and Liabilities Filed by the
Debtors if no proof of claim or proof of interest is Filed and
the Debtors have not received a written notice of a change of
address; and (b) in the case of the holder of Senior Notes (1)
to the latest mailing address maintained of record by the
Indenture Trustee on the Ballot Record Date; or (2) at the
addresses set forth in any written notices of address change
delivered to the Indenture Trustee or the Liquidating Trustee at
least five (5) business days prior to the applicable
distribution.
(b) Undeliverable Distributions.
(i) Holding and Investment of Undeliverable Property. If the
distribution to the holder of any Claim is returned to the
Liquidating Trust or the Indenture Trustee as undeliverable, no
further distribution shall be made to such holder unless and
until the Liquidating Trust and, in the case of a Class 2
creditor, the Indenture Trustee is notified in writing of such
holder's then current address. Subject to Section 7.7(b)(ii),
undeliverable distributions shall remain in the possession of
the Liquidating Trust or the Indenture Trustee, as the case may
be, pursuant to this section until such times as a distribution
becomes deliverable.
Unclaimed Cash shall be held in trust in a segregated bank
account in the name of the Liquidating Trust, for the benefit of
the potential claimants of such funds, and shall be accounted
for separately. Undeliverable securities shall be held in trust
for the benefit of the potential claimants of such securities by
the Liquidating Trust or, in the case of a holder of an Allowed
Class 2 Claim, by the Indenture Trustee, in a number of shares
sufficient to provide for the unclaimed amounts of such
securities, and shall be accounted for separately.
(ii) Distribution of Undeliverable Property After it Becomes
Deliverable and Failure to Claim Undeliverable Property. Any
holder of an Allowed Claim who does not assert a claim for an
undeliverable distribution held by the Liquidating Trust or the
Indenture Trustee, as the case may be, within two (2) years
after the Effective Date shall no longer have any claim to or
interest in such undeliverable distribution, and shall be
forever barred from receiving any distributions under this Plan.
In such cases, any cash or securities held for distribution on
account of such Claims shall become property of the Liquidating
Trust.
7.8 Distributions on Account of Unsecured Class 4 Claims. If
Class 4 accepts the Plan, Trust Certificates representing 5.5%
of the Class A Beneficial Interests in the Liquidating Trust
shall be distributed, Pro Rata, to holders of Allowed Claims in
Class 4. The Liquidating Trust shall not be required to make
distributions of Trust Certificates to holders of Allowed Claims
in Class 4 until the Liquidating Trust has resolved its
objections to Disputed Claims in Class 4, a process which shall
be completed no later than the first anniversary of the
Effective Date. Any distributions of Cash to which the holders
of Trust Certificates become entitled during this claims
resolution period shall be distributed to the holders of Allowed
Claims in Class 4, Pro Rata, with any accrued interest thereon
at the time the Trust Certificates are distributed; provided,
however, that such distribution shall be reduced by any taxes
paid by the Liquidating Trust on account of interest or other
income earned thereon.
7.9 De Minimis Distributions. No Cash payment of less than
twenty dollars ($20.00) to holders of Allowed Claims shall be
made to any holder on account of an Allowed Claim unless a
request therefor is made in writing to the Liquidating Trust.
7.10 Failure to Negotiate Checks. Checks issued in respect of
distributions to holders of Allowed Administrative Claims and
Allowed Priority Claims (including Allowed Pre-Petition Tax
Claims) under the Plan shall be null and void if not negotiated
within 60 days after the date of issuance. Any amounts returned
to the Liquidating Trust in respect of such checks shall be held
in the Distribution Fund by the Liquidating Trust. Requests for
reissuance of any such check may be made directly to the
Liquidating Trust by the holder of the Allowed Claim with
respect to which such check originally was issued. Any claim in
respect of such voided check is required to be made within six
months of the original issuance date of the check. Thereafter,
all amounts represented by any voided check shall become
unrestricted funds of the Liquidating Trust. All Claims in
respect of void checks and the underlying distributions shall be
discharged and forever barred from an assertion against the
Liquidating Trust and its property.
7.11 Compliance with Tax Requirements. In connection with the
Plan, to the extent applicable, the Liquidating Trust shall
comply with all withholding and reporting requirements imposed
on it by any governmental unit, and all distributions pursuant
to the Plan shall be subject to such withholding and reporting
requirements.
7.12 Setoffs. Unless otherwise provided in a Final Order or in
this Plan, the Liquidating Trust may, but shall not be required
to, set off against any Claim and the payments to be made
pursuant to the Plan in respect of such Claim, any claims of any
nature whatsoever the Debtors may have against the holder
thereof or its predecessor, but neither the failure to do so nor
the allowance of any Claim hereunder shall constitute a waiver
or release by any Debtor or the Liquidating Trust of any such
Claims the Debtors or the Liquidating Trust may have against
such holder or its predecessor.
7.13 Fractional Interests. The calculation of the percentage
distribution of Wabash Securities or Trust Certificates to be
made to holders of certain Allowed Claims as provided elsewhere
in this Plan may mathematically entitle the holder of such an
Allowed Claim to a fractional interest in such Stock or Trust
Certificate. The number of shares of Wabash Securities or Trust
Certificates to be received by a holder of an Allowed Claim
shall be rounded to the next lower whole number of shares. The
total number of shares of Wabash Securities or Trust
Certificates to be distributed to a class of Claims shall be
adjusted as necessary to account for the rounding provided for
in this section. Any fractional shares of stock that are
rounded down and not issued to holders of Senior Notes shall be
contributed to the Liquidating Trust.
ARTICLE 8
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
8.1 Rejection of All Executory Contracts and Leases Not Assumed.
The Plan constitutes and incorporates a motion by the Debtors to
reject, as of the Effective Date, all pre-petition executory
contracts and unexpired leases to which the Debtors are a party,
except for any executory contract or unexpired lease that (i)
has been assumed or rejected pursuant to a Final Order, or (ii)
is the subject of a pending motion for authority to assume the
contract or lease Filed by the Debtors prior to the Confirmation
Date.
8.2 Bar Date for Filing of Rejection Claims. Any Claim for
damages arising from the rejection under this Plan of an
executory contract or unexpired lease that was not subject to an
earlier bar date must be Filed within thirty (30) days after the
mailing of notice of Confirmation or be forever barred and
unenforceable against the Debtors, the Estates, any of their
affiliates and their properties and barred from receiving any
distribution under this Plan.
ARTICLE 9
EFFECTS OF PLAN CONFIRMATION
9.1 Transfers to Liquidating Trust are Free and Clear of Claims
Against Debtors. As a result of the foreclosure and sale of the
Debtors' assets contemplated by Articles 6.5 and 6.6 of this
Plan, the assets transferred to the Liquidating Trust on behalf
of and for the benefit of the holders of Allowed Claims shall be
held by the Liquidating Trust free and clear of all liens,
claims or interests in such property that arose before the
Confirmation Date.
9.2 No Liability for Solicitation or Participation. As
specified in section 1125(e) of the Bankruptcy Code, Persons
that solicit acceptances or rejections of the Plan and/or that
participate in the offer, issuance, sale, or purchase of
securities offered or sold under the 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
rejections of the Plan or the offer, issuance, sale, or purchase
of securities.
9.3 Limitation of Liability. None of the Unsecured Creditors'
Committee and its members and the professional Persons employed
by the Unsecured Creditors' Committee; the Indenture Trustee and
any professional Persons retained by it; the Bondholders'
Committee and its members and professional Persons employed by
the Bondholders' Committee; The Authorized Representative of
Retirees and its professional Persons; the Liquidating Trust and
any professional Persons retained by it; the Liquidating
Trustee; Morris, Nichols, Arsht & Tunnell; Camhy Karlinsky &
Stein; Price Waterhouse; Haynes and Boone, L.L.P.; Alvarez &
Marsal, Inc.; and Oppenheimer & Co., Inc.; any of their
affiliates nor any of their officers, directors, partners,
associates, employees, members or agents (collectively the
"Exculpated Persons"), shall have or incur any liability to any
Person for any act taken or omission made in good faith in
connection with or related to the Bankruptcy Cases or actions
taken therein, including negotiating, formulating, implementing,
confirming or consummating the Plan, the Disclosure Statement,
or any contract, instrument, or other agreement or document
created in connection with the Plan. The Exculpated Persons
shall have no liability to any Creditors or Equity Security
Holders for actions taken under the Plan, in connection
therewith or with respect thereto in good faith, including,
without limitation, failure to obtain Confirmation of the Plan
or to satisfy any condition or conditions, or refusal to waive
any condition or conditions, precedent to Confirmation or to the
occurrence of the Effective Date. Further, the Exculpated
Persons will not have or incur any liability to any holder of a
Claim, holder of an Interest, or party-in-interest herein or any
other Person for any act or omission in connection with or
arising out of their administration of the Plan or the property
to be distributed under the Plan, except for gross negligence or
willful misconduct as finally determined by the Bankruptcy
Court, and in all respects such persons will be entitled to rely
upon the advice of counsel with respect to their duties and
responsibilities under the Plan.
9.4 Other Documents and Actions. The Debtors, the
Debtors-In-Possession, the Indenture Trustee and Liquidating
Trustee may execute such documents and take such other action as
is necessary to effectuate the transactions provided for in the
Plan.
9.5 Post-Consummation Effect of Evidences of Claims or
Interests. Senior Notes, Old Common Stock certificates, Old
Warrants and other evidences of Claims against or Interests in
the Debtors shall, effective upon the Effective Date, represent
only the right to participate in the distributions contemplated
by the Plan. Holders of Old Common Stock, Old Warrants, and
Securities Claims will receive no distribution.
9.6 Term of Injunctions or Stays. Unless otherwise provided,
all injunctions or stays provided for in the Reorganization Case
pursuant to sections 105 or 362 of the Bankruptcy Code or
otherwise and in effect on the Confirmation Date shall remain in
full force and effect until the Effective Date.
9.7 Reorganization Incentive Payments to Officers. The officers
will receive the following bonuses on the Effective Date of the
Plan:
Chriss W. Street $350,000
Worth W. Frederick $100,000
James Wong $50,000
Courtney Watson $50,000
These bonuses reward the officers for the significant results
they achieved in liquidating the Debtors' assets and the
substantial work performed before becoming employees of the
Debtors as well as after assuming these positions. The Debtors
do not intend to seek Court approval of these bonuses by
separate motion. These bonuses will be paid pursuant to this
Section 9.7 of the Plan, and the Debtors will request that
approval of the bonuses be included in the order approving the
Plan.
ARTICLE 10
CONFIRM ABILITY OF PLAN AND CRAMDOWN
The Debtors request Confirmation under section 1129(b) of the
Bankruptcy Code if any impaired class does not accept the Plan
pursuant to section 1126 of the Bankruptcy Code. In that event,
the Debtor reserves the right to modify the Plan to the extent,
if any, that Confirmation of the Plan under section 1129(b) of
the Bankruptcy Code requires modification.
ARTICLE 11
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order or the
occurrence of the Effective Date, the Bankruptcy Court shall
retain such jurisdiction over the Reorganization Case after the
Effective Date as is legally permissible, including, without
limitation, jurisdiction to:
1. Allow, disallow, determine, liquidate, classify or establish
the priority or secured or unsecured status of or estimate any
Claim or Interest, including, without limitation, the resolution
of any request for payment of any Administrative Claim or
Indenture Trustee expenses and the resolution of any and all
objections to the allowance or priority of Claims or Interests;
2. Grant or deny any and all applications for allowance of
compensation or reimbursement of expenses authorized pursuant to
the Bankruptcy Code or the Plan, for periods ending on or before
the Effective Date;
3. Resolve any motions pending on the Effective Date to assume,
assume and assign or reject any executory contract or unexpired
lease to which the Debtors are parties or with respect to which
the Debtors may be liable and to hear, determine and, if
necessary, liquidate, any and all Claims arising therefrom;
4. Ensure that distributions to holders of Allowed Claims and
Allowed Interests are accomplished pursuant to the provisions of
the Plan;
5. Decide or resolve any and all applications, motions,
adversary proceedings, contested or litigated matters and any
other matters or grant or deny any applications involving the
Debtors that may be pending on the Effective Date;
6. Enter such Orders as may be necessary or appropriate to
implement or consummate the provisions of the Plan and all
contracts, instruments, releases, and other agreements or
documents created in connection with the Plan or the Disclosure
Statement;
7. Resolve any and all controversies, suits or issues that may
arise in connection with the consummation, interpretation or
enforcement of the Plan or any entity's obligations incurred in
connection with the Plan, including the provisions of Article 9
hereof;
8. Modify the Plan before or after the Effective Date pursuant
to section 1127 of the Bankruptcy Code, or to modify the
Disclosure Statement or any contract, instrument, release, or
other agreement or document created in connection with the Plan
or the Disclosure Statement; or remedy any defect or omission or
reconcile any inconsistency in any Bankruptcy Court Order, the
Plan, the Disclosure Statement or any contract, instrument,
release, or other agreement or document created in connection
with the Plan or the Disclosure Statement, in such manner as may
be necessary or appropriate to consummate the Plan, to the
extent authorized by the Bankruptcy Code;
9. Issue injunctions, enter and implement other orders or take
such other actions as may be necessary or appropriate to
restrain interference by any entity with consummation or
enforcement of the Plan;
10. Enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any reason
modified, stayed, reversed, revoked or vacated;
11. Determine any other matters that may arise in connection
with or relate to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, or
other agreement or document created in connection with the Plan
or the Disclosure Statement; and
12. Enter an order concluding the Reorganization Case.
If the Bankruptcy Court abstains from exercising jurisdiction or
is otherwise without jurisdiction over any matter arising out of
the Reorganization Case, including, without limitation, the
matters set forth in this Article, this Article shall have no
effect upon and shall not control, prohibit, or limit the
exercise of jurisdiction by any other court having competent
jurisdiction with respect to such matter.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Fractional Dollars. Any other provision of the Plan
notwithstanding, no payments of fractions of dollars will be
made to any holder of an Allowed Claim. Whenever any payment of
a fraction of a dollar to any holder of an Allowed Claim would
otherwise be called for, the actual payment made will reflect a
rounding of such fraction to the nearest whole dollar (up or
down).
12.2 Modification of Plan. The Debtors reserve the right, in
accordance with the Bankruptcy Code, to amend or modify the Plan
prior to the entry of the Confirmation Order. After the entry
of the Confirmation Order, the Debtors and, after the
liquidation of the Debtors, the Liquidating Trustee may, upon
order of the Bankruptcy Court, amend or modify the Plan in
accordance with section 1127(b) of the Bankruptcy Code, or
remedy any defect or omission or reconcile any inconsistency in
the Plan in such manner as may be necessary to carry out the
purpose and intent of the Plan.
12.3 Withdrawal of Plan. The Debtors reserve the right, at any
time prior to entry of the Confirmation Order, to revoke or
withdraw the Plan. If the Debtors revoke or withdraw the Plan
under this section 12.3 or if the Effective Date does not occur,
then the Plan shall be deemed null and void. In that event,
nothing contained in the Plan shall be deemed to constitute a
waiver or release of any Claims by or against the Debtors or any
other person, or to prejudice in any manner the rights of the
Debtors or any other person in any further proceedings involving
the Debtors.
12.4 Governing Law. Except to the extent the Bankruptcy Code,
the Bankruptcy Rules or the Delaware General Corporation Law are
applicable, the rights and obligations arising under the Plan
shall be governed by, and construed and enforced in accordance
with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
12.5 Time. In computing any period of time prescribed or
allowed by this Plan, the day of the act, event, or default from
which the designated period of time begins to run shall not be
included. The last day of the period so computed shall be
included, unless it is not a Business Day or, when the act to be
done is the filing of a paper in court, a day on which weather
or other conditions have made the clerk's office inaccessible,
in which event the period runs until the end of the next day
which is not one of the aforementioned days. When the period of
time prescribed or allowed is less than eight days, intermediate
days that are not Business Days shall be excluded in the
computation.
12.6 Payment Dates. Whenever any payment to be made under the
Plan is due on a day other than a Business Day, such payment
will instead be made, without interest, on the next Business Day.
12.7 Headings. The headings used in this Plan are inserted for
convenience only and neither constitute a portion of the Plan
nor in any manner affect the provisions of the Plan.
12.8 Successors and Assigns. The rights, benefits and
obligations of any entity named or referred to in the Plan shall
be binding on, and shall inure to the benefit of, any heir,
executor, administrator, successor or assign of such entity.
12.9 Severability of Plan Provisions. If prior to Confirmation
any term or provision of the Plan, which does not govern the
treatment of Claims or Interests or the conditions of the
Effective Date, is held by the Bankruptcy Court to be invalid,
void, or unenforceable, the Bankruptcy Court shall have the
power to alter and interpret such term or provision to make it
valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision
held to be invalid, void, or unenforceable, and such term or
provision shall then be applicable as altered or interpreted.
Notwithstanding any such holding, alteration or interpretation,
the remainder of the terms and provisions of the Plan will
remain in full force and effect and will in no way be affected,
impaired, or invalidated by such holding, alteration, or
interpretation. The Confirmation Order shall constitute a
judicial determination and shall provide that each term and
provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
12.10 No Admissions. Notwithstanding anything herein to the
contrary, nothing contained in the Plan shall be deemed as an
admission by the Debtors with respect to any matter set forth
herein, including, without limitation, liability on any Claim or
the propriety of any Claims classification.
12.11 Dissolution of Unsecured Creditors' Committee. The
Unsecured Creditors' Committee will be dissolved on the day
after the Effective Date, and the members thereof shall be
released and discharged of and from further authority, duties,
responsibilities, liabilities and objections related to and
arising from the Reorganization Case.
12.12 Notices. Notices to be provided under this Plan shall be
transmitted as follows:
LIQUIDATING TRUSTEE
Chriss Street, Liquidating Trustee
Chriss Street & Company
1111 Bayside Drive, Suite 100
Corona del Mar, CA 92625-1755
with a copy to:
MORRIS, NICHOLS, ARSHT & TUNNELL
William H. Sudell, Jr. (No. 463)
Robert J. Dehney (No. 3578)
1201 North Market Street, P.O. Box 1347
Wilmington, Delaware 19899-1347
CAMHY KARLINSKY & STEIN LLP
David Neier
1740 Broadway, 16th Floor
New York, New York 10019-4315
HAYNES AND BOONE, L.L.P.
Robin E. Phelan
901 Main Street, Suite 3100
Dallas, TX 75201
with a copy to:
John D. Penn
Haynes and Boone L.L.P.
201 Main Street, Suite 2200
Fort Worth, TX 76102-3126
United States Trustee
Attn: Daniel K. Astin, Esq.
The Curtis Center
601 Walnut Street, Suite 950W
Philadelphia, PA 19106
<PAGE>
Dated: July 28, 1998
MORRIS, NICHOLS, ARSHT & TUNNELL
/s/ William H. Sudell, Jr.
-----------------------------
William H. Sudell, Jr. (No. 463)
Robert J. Dehney (No. 3578)
Derek C. Abbott (No. 3376)
1201 N. Market Street P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
and
CAMHY KARLINSKY & STEIN LLP
David Neier (DN 5391)
1740 Broadway, 16th Floor
New York, New York 10019-4315
Attorneys for Debtors
<PAGE>
EXHIBIT "A" TO THE PLAN
<PAGE>
EXHIBIT "B" TO THE PLAN
LIQUIDATING TRUST AGREEMENT DATED JULY 28, 1998
<PAGE> 1
Draft 7-28-98
This draft assumes that Class 4 accepts the plan and that there
are two classes of beneficiaries.
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT ("Agreement") dated as of
__________, 1998, by and between Fruehauf Trailer Corporation,
Maryland Shipbuilding & Drydock Company, F.G.R., Inc.,
Jacksonville Shipyards, Inc., Fruehauf International Limited,
Fruehauf Corporation, The Mercer Co., Deutsche-Fruehauf Holding
Corporation, MJ Holdings, Inc., and E.L. Devices, Inc.
("Fruehauf" and/or "Debtors"), whose address is 1111 Bayside
Drive, Suite 100, Corona del Mar, California 92625-1755, IBJ
Schroder Bank & Trust Company, the Indenture Trustee for
Fruehauf's 14.75% Secured Senior Notes due 2002 (the "Indenture
Trustee"), for the sole purpose of conveying the Foreclosed
Assets to the Liquidating Trust for and on behalf of the holders
of Allowed Class 2 [and Class 4 Claims], and Chriss W. Street
("Trustee"), whose address is 1111 Bayside Drive, Suite 100,
Corona del Mar, California 92625-1755.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements of the parties hereinafter contained, and in order
fully to set forth certain obligations of the parties hereto, as
contemplated by the Plan, the parties hereto agree as follows:
1. Definitions:
1.1 Defined Terms. All terms used herein which are defined in
the Plan shall have the same meaning herein unless otherwise
defined herein or the context otherwise requires.
1.2 Additional Defined Terms. As used herein, the following
terms shall have the meanings set out below, unless the context
otherwise requires:
(a) "Beneficial Interest" or "Beneficial Interests" shall mean
the respective rights and interests of each of the Class A or
Class B Beneficial Interestholders in and to the Liquidating
Trust and the Trust Estate.
(b) "Beneficial Interestholder" shall mean the holder of a
Beneficial Interest.
(c) "Beneficial Interestholders" shall mean the Class A
Beneficial Interestholders and the Class B Beneficial
Interestholders.
(d) "Class A Beneficial Interestholder" shall mean an individual
or entity holding an Allowed Class 2 Claim or an Allowed Class 4
Claim and their successors and assigns.
(e) "Class B Beneficial Interestholder" shall mean an individual
or entity holding an Allowed Administrative Claim, an Allowed
Pre-Petition Tax Claim or an Allowed Priority Claim and its
successors and assigns.
(f) "Distribution Fund" shall mean the portion of the Debtors'
Cash on the Effective Date which shall be transferred to the
Liquidating Trust, on behalf of and for the benefit of the
holders of Allowed Administrative, Priority and Pre-Petition Tax
Claims. The amount of Cash in the Distribution Fund shall equal
the aggregate of (a) the allowed amount of all Administrative
Claims, Pre-Petition Tax Claims and Priority Claims; and (b) the
asserted amount or court-estimated amount of Disputed or
undetermined (i) Administrative Expense Claims, (ii)
Pre-Petition Tax Claims, and (iii) Priority Claims. With
respect to Administrative Claims for compensation and
reimbursement of expenses of professionals or other persons
pursuant to sections 328, 330, 331 and 503(b) of the Bankruptcy
Code, the amount of Cash to be deposited shall be the amount
sought or the maximum amount estimated to be sought for such
compensation and expenses. The Distribution Fund shall not
include interest earned on the Distribution Fund after the
Effective Date.
(g) "Indebtedness" shall mean, with respect to each Beneficial
Interestholder, the outstanding amount of his Allowed Claim,
giving rise to a beneficial interest in the Liquidating Trust
and Trust Estate.
(h) "Initial Term" shall have the meaning set out in Section 9.1
hereof.
(i) "Register" shall have the meaning set out in Section 3.3
hereof.
(j) "Remaining Assets" shall mean the assets of the Liquidating
Trust, including only that portion of the Distribution Fund
remaining after payment of Allowed Administrative, Priority and
Pre-Petition Tax Claims.
(k) "Renewal Period" shall have the meaning set out in Section
9.1 hereof.
(l) "Liquidating Trust" shall have the meaning set out in
Section 2.1 hereof.
(m) "Trust Advisory Committee" shall be two designated
representatives of the holders of the Senior Notes and their
successors, if any. The initial members of the Trust Advisory
Committee shall be selected by the Unofficial Committee of
Senior Note Holders. If a Trust Advisory Committee member
resigns, no longer owns or controls Trust Certificates or is no
longer able to carry out the duties as a member, the Bankruptcy
Court (upon motion by either a Trust Certificate Holder or the
Trustee) shall appoint a replacement member. Any such
replacement member must own one or more Trust Certificates.
(n) "Trust Certificates" shall mean the certificates issued by
the Liquidating Trust to the Beneficial Interestholders to
reflect all of the Class A Beneficial Interests in the
Liquidating Trust.
(o) "Trust Estate" shall mean all of the property held from time
to time by the Trustee pursuant to this Agreement.
2. Authority of and Certain Directions to Trustee: Declaration
of Liquidating Trust.
2.1 Creation of the Liquidating Trust. The Debtor, on behalf
of the Beneficial Interestholders who are entitled to receive
assets pursuant to the Plan, hereby creates the Fruehauf
Liquidating Trust (the "Liquidating Trust") for the benefit of
its Beneficial Interestholders. The Trustee may, but shall not
be required to, transact the business and affairs of the
Liquidating Trust in that name.
2.2 Property of the Liquidating Trust. Upon execution hereof,
the Debtor and the Indenture Trustee, on behalf of the
Beneficial Interestholders, shall grant, convey, transfer and
assign to the Liquidating Trust the property described on
Exhibit "A" attached hereto and made a part hereof. Legal title
to the Trust Estate shall be held either in the name of the
Liquidating Trust, or in the name of the Trustee on behalf of
the Liquidating Trust, as the Trustee may from time to time
determine. The Trustee shall hold such property in Liquidating
Trust to be administered and disposed of by him pursuant to the
terms of the Plan and this Agreement.
2.3 Purpose of Liquidating Trust. This Liquidating Trust is
organized for the sole purpose of conserving and liquidating the
Trust Estate for the benefit of the Beneficial Interestholders
as herein set out, with no objective to engage in the conduct of
a trade or business (although companies whose stock is owned by
the Liquidating Trust may operate a business). Pursuant to this
express purpose, the Trustee is hereby authorized and directed
to take all reasonable and necessary actions to conserve and
protect the Trust Estate and to sell, lease, or otherwise
dispose of the Trust Estate, and to distribute the net proceeds
of such disposition, as hereinafter set out, in as prompt,
efficient and orderly a fashion as possible in accordance with
the provisions of Section Six hereof and the Plan.
3. Beneficial Interests.
3.1 Class A Beneficial Interests.
3.1.1 Beneficial Interests of Holders of Allowed Class 2 Claims.
Each Class A Beneficial Interestholder that is the holder of an
Allowed Class 2 Claim shall have a Beneficial Interest in a pro
rata distribution (based upon the amount of its Class 2 Claim)
of 94.5% of the Remaining Assets and the Trust Certificates
evidencing such Beneficial Interest. The Liquidating Trust
shall deliver all of the Trust Certificates for holders of
Allowed Class 2 Claims to the Indenture Trustee on the Effective
Date.
3.1.2 Beneficial Interests of Holders of Allowed Class 4 Claims.
Each Class A Beneficial Interestholder that is the holder of an
Allowed Class 4 Claim shall have a Beneficial Interest in a pro
rata distribution (based upon the amount of its Class 4 Claim)
of 5.5% of the Remaining Assets and the Trust Certificates
evidencing such Beneficial Interest. The Trust Certificates
representing the Beneficial Interests of holders of Allowed
Class 4 Claims shall be distributed to such holders after all
Disputed Class 4 Claims have been resolved as provided in the
Plan.
3.2 Class B Beneficial Interests. Each Class B Beneficial
Interestholder shall be deemed to have a Beneficial Interest in
the Liquidating Trust's interest in the Distribution Fund to the
extent of the amount of such Beneficial Interestholder's Allowed
Administrative, Priority or Pre-Petition Tax Claims.
3.3 Transfer and Exchange. The Trustee shall cause to be kept,
at his offices, or at such other place or places as shall be
designated by him from time to time, a register ("Register") to
register the ownership and the transfer of ownership of Trust
Certificates, subject to the provisions of Section 3.3 hereof.
The Trustee may require such documentation of the transfer of
Trust Certificates as he deems advisable in his discretion. For
good cause shown, Class A Beneficial Interestholders and their
duly authorized representatives shall have the right, upon
reasonable prior written notice to the Trustee, and in
accordance with reasonable regulations prescribed by the Trustee
and at the expense of such Class A Beneficial Interestholder, to
inspect and make copies of the Register.
3.4 Absolute Owners. The Trustee may deem and treat each
Beneficial Interestholder reflected as the owner of a Beneficial
Interest on the Register as the absolute owner thereof for the
purpose of receiving the distributions and payments on account
thereof and for all other purposes whatsoever, and until any
transfer of ownership is recorded in the Register, the Trustee
shall not be charged with having received notice of any claim or
demand of any other person to such Beneficial Interest or the
rights, titles, and interests therein. All notices of a change
of ownership of Trust Certificates shall be forwarded to the
Trustee by registered or certified mail as set out in Section
10.3.
3.5 Place of Payment. The amounts payable to the Beneficial
Interestholders pursuant to Section Six hereof as of the record
date determined by the Trustee will be payable either by mailing
a check payable to such Beneficial Interestholder at the address
set forth in the Schedules or the address set forth on the Proof
of Claim filed by such Beneficial Interestholder or at such
address as such Beneficial Interestholder shall have specified
by written notice to the Trustee.
4. Delivery and Acceptance of Trust Estate.
4.1 Conveyance by Debtors and Indenture Trustee. The Debtors
and the Indenture Trustee are executing and delivering to the
Trustee conveyance instruments of the property described on
Exhibit "A" attached hereto, as contemplated in the Plan and the
Confirmation Order. At any time and from time to time after the
date hereof, at the Trustee's request and without further
consideration, the Debtors and the Indenture Trustee shall
execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and will cooperate and
take such other actions as the Trustee may reasonably deem
necessary or desirable to more effectively transfer, convey, and
assign the property described on Exhibit "A" to the Liquidating
Trust. The Debtors and (subject to Section 6.9 of the Plan) the
Indenture Trustee shall have no further interest in the Trust
Assets subsequent to their conveyance to the Liquidating Trust.
4.2 Acceptance of Conveyance. The Trustee is hereby directed
to, and the Trustee agrees that he will:
(a) accept delivery from the Debtors and the Indenture Trustee,
on behalf of and for the benefit of the Beneficial
Interestholders, of the property described on Exhibit "A" on
behalf of the Liquidating Trust;
(b) accept from the Debtors and the Indenture Trustee, on behalf
of and for the benefit of the Beneficial Interestholders, all
conveyance instruments required to be delivered by the Debtors
or the Indenture Trustee to the Trustee with respect to the
property described on Exhibit "A" pursuant to or in connection
with the Plan, the Order, and this Agreement; and
(c) take such other action as may be required of the Trustee or
the Liquidating Trust hereunder, including the receipt and
acceptance as part of the property transferred into the
Liquidating Trust of any property or rights, including, without
limitation, notes and other negotiable instruments which the
Trustee may receive in connection with or in consideration of
the property transferred into the Liquidating Trust.
5. Administration of Trust Estate.
5.1 Liquidating Trust Expenses. Upon execution hereof, and
continuing for so long as the Liquidating Trust remains in
existence, the Trustee may reserve such amounts as the Trustee
deems advisable for the payment of all expenses, debts,
charges, liabilities, and obligations with respect to the Trust
Estate, including all taxes of the Liquidating Trust as
determined by the Trustee in the Trustee's sole and absolute
discretion. Upon expiration of this Agreement, any remaining
cash in the Liquidating Trust after the payment of all expenses,
debts, charges, liabilities, and obligations intended to be paid
therefrom, shall be distributed to the Class A Beneficial
Interestholders as provided in the Plan and in Section Six.
5.2 Powers of Trustee. Subject to the provisions of Section Two
and of Section 5.5 hereof, in administering the Liquidating
Trust, the Trustee shall have the following powers to be
exercised in his discretion in the administration of the
Liquidating Trust: (i) to receive the Trust Estate; (ii) to
conserve, manage, sell, operate, lease, or otherwise dispose of
the Trust Estate for such price and upon such terms and
conditions as the Trustee may deem appropriate and to execute
such deeds, bills of sale, assignments and other instruments in
connection therewith; (iii) to determine and collect payments to
and other income of the Liquidating Trust; (iv) to collect the
proceeds of the sale of property out of the Trust Estate; (v) to
collect, receive, compromise and settle notes and other claims
and receivables of the Liquidating Trust; (vi) to assert,
prosecute, litigate, compromise and settle claims and causes of
action included within the Trust Estate; (vii) to discharge,
compromise and settle any unascertained, unliquidated or
contingent debts, liabilities or obligations of the Liquidating
Trust, including objecting to claims filed in the Bankruptcy
Case; (viii) to distribute the net income and proceeds of the
Trust Estate conveyed or transferred, and any balance remaining
in the Distribution Fund, to the Beneficial Interestholders in
accordance with the Plan as provided herein; (ix) to bring suit
on behalf of or defend any suit against the Liquidating Trust or
the Trustee on behalf of the Liquidating Trust; (x) to retain
such legal counsel, public accountants and other experts as the
Trustee may deem advisable in connection with the administration
of the Liquidating Trust or the exercise of his other powers set
out herein; (xi) to object to the Claim of any Beneficial
Interestholder under the Plan, and to compromise and settle
objections with respect to such Claims, (xii) to open bank
accounts on behalf of and in the name of the Liquidating Trust;
(xiii) to pay all taxes (without objections), to make all tax
withholdings, and to file tax returns and tax information
returns and make tax elections by and on behalf of the
Liquidating Trust; (xiv) to pay all lawful expenses, debts,
charges and liabilities of the Liquidating Trust, including,
without limitation, the reasonable expenses of the Indenture
Trustee; and (xv) to exercise such other powers and duties as
necessary or appropriate, in the discretion of the Trustee to
accomplish the purposes of the Liquidating Trust as set out
herein.
5.3 Additional Powers of Trustee. Subject to the express
limitations contained herein, the Trustee shall have, and may
exercise with respect to the Trust Estate, or any part thereof,
and in the administration and distribution of the Trust Estate,
all powers now or hereafter conferred on trustees by the Texas
Trust Code. The powers conferred by this Section in no way
limit any power conferred on the Trustee by any other Section
hereof but shall be in addition thereto; provided, always, that
the powers conferred by this Section are conferred and may be
exercised only and solely within the limitations and for the
limited purposes imposed and expressed in Section Two hereof.
5.4 Limitations on Trustee; Investments.
5.4.1 Actions Requiring Approval of Trust Advisory Committee.
The Liquidating Trustee must obtain prior approval of the Trust
Advisory Committee to:
(a) borrow money in excess of $500,000 or grant liens on any
part of the Trust Estate in excess of $500,000;
(b) sell assets of the Trust Estate with a value in excess of
$500,000;
(c) modify the Plan;
(d) initiate and prosecute litigation, including but not limited
to claim objections with expected fees and costs in excess of
$250,000;
(e) dispose of or settle any claim or litigation with a
potential value to the Liquidating Trust in excess of $500,000;
and
(f) forego or defer the annual distribution to Certificate
Holders required by Section 6.2 hereof.
Approval will have been deemed to have been given ten (10) days
after the Trustee makes a written proposal to the Trust Advisory
Committee, unless a member of the Trust Advisory Committee
delivers a written objection to the Trustee.
5.4.2 Court Approval. In the event there is not unanimous
agreement by the Trust Advisory Committee members and a dispute
exists between the members of the Trust Advisory Committee with
respect to any actions described in 5.4.1 proposed by the
Liquidating Trustee, and the dispute cannot be resolved by
agreement, the Liquidating Trustee shall seek Bankruptcy Court
approval of the proposed course of action. All objections to
the proposed course of action shall be preserved and may be
presented to the Bankruptcy Court for resolution. In this
event, the Liquidating Trustee shall pay the professional fees
and expenses incurred by the objecting Committee member, up to
but not exceeding the maximum amount of $25,000 per Committee
member during the term of the Liquidating Trust.
5.4.3 Actions Requiring Approval of Class A Beneficial
Interestholders. The Trustee may not modify the terms of this
Liquidating Trust Agreement unless the Liquidating Trustee
secures the written approval of such modification from Class A
Beneficial Interestholders holding over 50% of the Class A
Beneficial Interests.
5.4.4 No Trade or Business. The Trustee shall carry out the
purposes of the Liquidating Trust and the directions contained
herein and shall not at any time enter into or engage in any
trade or business, including, without limitation, the purchase
of any asset or property (other than such assets or property as
are necessary to preserve, conserve, and protect the Trust
Estate and to carry out the purposes of Section Two, Section
Seven, and this Section Five) on behalf of the Trust Estate or
the Beneficial Interestholders.
5.4.5 Investments. Other than funds maintained in operating
accounts in an amount deemed appropriate by the Liquidating
Trust to pay the current costs, expenses and obligations of the
Liquidating Trust, the Trustee shall invest any monies held at
any time as a part of the Trust Estate, including without
limitation, the Distribution Fund and any other reserve or
escrow established pursuant to the terms of this Agreement or
the Plan, only in interest-bearing deposits, certificates of
deposit, or repurchase obligations of any federally insured
banking institution with a combined capital and surplus of at
least $50,000,000, or short term investments and obligations of,
and unconditionally guaranteed as to payment by, the United
States of America and its agencies or instrumentalities, pending
the need to make disbursements thereof in payment of costs,
expenses, and liabilities of the Liquidating Trust or to make a
distribution to the Beneficial Interestholders. The Trustee
shall be restricted to the collection and holding of such monies
and to the payment and distribution thereof for the purposes set
forth in this Agreement and to the conservation and protection
of the Trust Estate in accordance with the provisions hereof.
5.5 Transferee Liabilities. Except to the extent set out in the
Plan and in the Conveyance Instruments of the Trust Estate from
the Debtors and the Indenture Trustee to the Liquidating Trust,
the Liquidating Trust shall have no liability for, and the Trust
Estate shall not be subject to, any Claim arising by, through,
or under the Debtors. In no event shall the Trustee have any
personal liability for such Claims. If any liability shall be
asserted against the Liquidating Trust or the Trustee as the
transferees of the Trust Estate on account of any claimed
liability of, through, or under the Debtors, the Trustee may use
such part of the Trust Estate as may be necessary to contest any
such claimed liability and to pay, compromise, settle or
discharge same on terms reasonably satisfactory to the Trustee.
In no event shall the Trustee be required to use his personal
funds or assets or the funds or assets of his firm or
partnership for such purposes.
5.6 Administration of Liquidating Trust. Subject to the express
limitations contained herein, in administering the Liquidating
Trust, the Trustee is authorized and directed to do and perform
all such acts and to execute and deliver such deeds, bills of
sale, assignments, instruments of conveyance, and other
documents as he may deem necessary or advisable to carry out the
purposes of the Liquidating Trust. The Trustee shall effect
such registrations and take all such actions as are required to
comply with state and federal securities laws.
5.7 Payment of Expenses and Other Liabilities. The Trustee
shall pay from the Trust Estate all expenses, charges,
liabilities, and obligations of the Liquidating Trust,
including, without limiting the generality of the foregoing,
interest, taxes, assessments, and public charges of every kind
and nature. The Trustee, in his discretion and judgment, may
from time to time make provision by reserve or otherwise out of
the Trust Estate or the proceeds thereof in such reasonable
amount or amounts as the Trustee in his discretion and judgment
may determine to be necessary or advisable to meet
unascertained, unliquidated or contingent liabilities of the
Liquidating Trust. Notwithstanding anything in this paragraph
to the contrary, the Distribution Fund shall be the sole
Liquidating Trust asset in which Class B Beneficial
Interestholders hold a Beneficial Interest. The Beneficial
Interest of any Class B Beneficial Interestholder in the
Liquidating Trust is limited to the Allowed amount of such Class
B Beneficial Interestholders' Administrative, Priority or
Pre-Petition Tax Claim.
5.8 Fiscal Year. The Liquidating Trust's fiscal year shall end
on December 31 of each year unless the Trustee deems it
advisable to establish some other date on which the fiscal year
of the Liquidating Trust shall end.
5.9 Reports to Beneficial Interestholders. The Trustee shall
prepare, deliver, and file, as the case may be:
(a) with the Trust Advisory Committee, as soon as practicable
after the end of each calendar quarter, a quarterly unaudited
report for such quarter, commencing with the first complete
calendar quarter following the date of this Agreement reflecting
(i) the specific assets of the Trust Estate disposed of or
liquidated during such calendar quarter; (ii) the gross receipts
and any selling expenses associated therewith; (iii) any other
income received or expense, disbursement, or reserve made or
established during such calendar quarter; (iv) the borrowings of
the Liquidating Trust during such calendar quarter and the
amount remaining owing on such borrowings; and (v) all
litigation commenced by the Trustee on behalf of the Liquidating
Trust;
(b) to such Class A Beneficial Interestholders who so request in
writing, within 120 days after the end of each calendar year, at
such Class A Beneficial Interestholder's expense, an annual
report for such calendar year commencing with the first full
calendar year following the date of this Agreement reflecting
(i) the specific assets of the Trust Estate disposed of or
liquidated during such calendar year; (ii) the gross receipts
and any selling expenses associated therewith; (iii) any other
income received or expense, disbursement, or reserve made or
established during such calendar year; (iv) the borrowings of
the Liquidating Trust during such calendar year and the amount
remaining owing on such borrowings; and (v) all litigation
commenced by the Trustee on behalf of the Liquidating Trust;
(c) to each Class A Beneficial Interestholder receiving a
distribution in such year, a summary of the information required
in 5.9(b) above for such year;
(d) income tax information returns, tax returns, or other
reports to Beneficial Interestholders and applicable taxing
authorities as may be required by law or as may be requested in
writing by a Beneficial Interestholder at such Beneficial
Interestholders' expense; and
(e) within 120 days after the termination or expiration of the
Liquidating Trust, a final financial report reflecting the final
disposition of Trust Estate and the final distribution to the
Class A Beneficial Interestholders who so request the delivery
of such report in writing and at such Class A Beneficial
Interestholders' expense.
6. Source of Payments, Distributions Among Beneficial
Interestholders.
6.1 Payments from Trust Estate. All payments to be made by the
Trustee to any Beneficial Interestholder shall be made only from
the assets, income and proceeds of the Trust Estate and only to
the extent that the Trustee shall have received sufficient
assets, income, or proceeds of the Trust Estate to make such
payments in accordance with the terms of this Section Six. Each
Beneficial Interestholder shall look solely to the assets,
income, and proceeds of the Trust Estate for distribution to
such Beneficial Interestholder as herein provided. Payments to
Class B Beneficial Interestholders shall be made solely from the
Distribution Fund. Payments to Class A Beneficial
Interestholders may be made in kind as well as in cash.
6.2 Frequency and Amounts of Payments. The frequency and
amounts of payments shall be determined by the Trustee.
However, unless waived or deferred by the Trust Advisory
Committee, the Trustee shall make distributions to Class A
Beneficial Interestholders no less frequently than annually (on
a calendar year basis). Until such time as all Disputed Claims
that are Administrative, Priority or Pre-Petition Tax Claims
have been Allowed or Disallowed by Final Order, the Trustee may,
but shall not be required to, make distributions to Class B
Beneficial Interestholders.
6.3 Tax Provisions.
6.3.1 Income Tax Status. For all purposes of the Tax Code, the
Debtors shall be deemed to have transferred the Liquidating
Trust assets to the Beneficial Interestholders pursuant to the
Plan and the Beneficial Interestholders shall be deemed to have
transferred their share of the Liquidating Trust assets to the
Liquidating Trust. For all federal income tax purposes,
consistent valuations shall be used by the Liquidating Trust and
the Beneficial Interestholders for the transferred Liquidating
Trust Assets. The Liquidating Trust is intended to be treated
as a liquidating trust pursuant to Treasury Regulations S
301.7701-4(d), and as a grantor trust subject to the provisions
of Subchapter J, Subpart E of the Tax Code, owned by the
Beneficial Interestholders as grantors. Any items of income,
deduction, credit, or loss of the Liquidating Trust shall be
allocated for federal, state and local income tax purposes among
the Beneficial Interestholders pro rata on the basis of their
Beneficial Interests; provided, however, that to the extent that
any item of income cannot be allocated in the taxable year in
which it arises, the Liquidating Trust shall pay the federal,
state and local taxes attributable to such income (net of
related deductions) and the amount of such taxes shall be
treated as having been received by, and paid on behalf of, the
Beneficial Interestholders receiving such allocations when such
allocations are ultimately made. The Liquidating Trust is
authorized to take any action that may be necessary or
appropriate to minimize any potential tax liability of the
Beneficial Interestholders arising out of the operations of the
Liquidating Trust.
6.3.2 Tax Returns and Reports. In accordance with Treasury
Regulation S 1.671-4(a), the Liquidating Trust shall cause to be
prepared and filed, at the cost and expense of the Liquidating
Trust, an annual information tax return (Form 1041) with the
Internal Revenue Service, with a schedule attached showing the
item of income, deduction, and credit attributable to the
Liquidating Trust and detailing the allocation of such items of
income, deduction, and credit among the Beneficial
Interestholders as required pursuant to the Form 1041
instructions for grantor trusts. Copies of such Form 1041 and
attached schedules will be delivered promptly to each Beneficial
Interestholder. In addition, the Liquidating Trust shall cause
to be prepared and filed in a timely manner, such other state or
local tax returns as are required by applicable law by virtue of
the existence and operation of the Liquidating Trust and shall
pay any taxes shown as due thereon. Within thirty (30) days
after the end of each calendar year, the Liquidating Trust shall
cause to be prepared and mailed to a Beneficial Interestholder
such other information as may be requested by such Beneficial
Interestholder in writing to enable such Beneficial
Interestholder to complete and file his, her, or its federal,
state and local income and other tax returns.
6.3.3 Withholding. The Liquidating Trust may withhold from the
amount distributable from the Liquidating Trust at any time such
sum or sums as may be sufficient to pay any tax or taxes or
other charge or charges which have been or may be imposed on the
distributee or upon the Liquidating Trust with respect to the
amount distributable or to be distributed under the income tax
laws of the United States or of any state or political
subdivision or entity by reason of any distribution provided for
any law, regulation, rule, ruling, directive, or other
governmental requirement.
6.3.4 Tax Identification Numbers. The Liquidating Trust may
require any Beneficial Interestholder or other distributee to
furnish to the Liquidating Trust its Employer or Taxpayer
Identification Number as assigned by the Internal Revenue
Service and the Liquidating Trust may condition any distribution
to any Beneficial Interestholder or other distributee upon
receipt of such identification number.
6.3.5 Tax Year. The taxable year of the Liquidating Trust
shall, unless otherwise required by the Internal Revenue Code,
be the calendar year.
7. Other Duties of the Trustee.
7.1 Management of Trust Estate. With respect to assets of the
Trust Estate from time to time, the Trustee shall, and is hereby
directed:
7.1.1 If sufficient funds are available to purchase and maintain
in existence, such insurance as the Trustee deems reasonable,
necessary, or appropriate from time to time to protect the
Liquidating Trust's, the Trustee's, and the Beneficial
Interestholders' interests in the Trust Estate.
7.1.2 To take such actions as shall be necessary or advisable to
preserve, maintain, and protect the Trust Estate for the
Beneficial Interestholders' benefit consistent with the purposes
of the Liquidating Trust.
7.2 No Implied Duties. The Trustee shall not manage, control,
use, sell, dispose, collect or otherwise deal with the Trust
Estate or otherwise take any action hereunder, except as
expressly provided herein, and no implied duties or obligations
shall be read into this Agreement in favor of or against the
Trustee; provided, however, that this provision shall not limit
the powers conferred on trustees by Delaware law, without regard
to conflicts of laws principles, except to the extent any such
power may conflict with any of the provisions and purposes of
this Agreement.
8. Concerning the Trustee.
8.1 Acceptance by Trustee. The Trustee accepts the Liquidating
Trust hereby created for the benefit of the Beneficial
Interestholders and agrees to perform the same upon the terms
and conditions herein set out. Notwithstanding any term or
provision hereof to the contrary, the Trustee shall have and
exercise the rights and powers herein granted and shall be
charged with the performance of the duties herein declared on
the part of the Trustee to be had and exercised or to be
performed. The Trustee also agrees to receive and disburse all
monies actually received by him constituting part of the Trust
Estate pursuant to the terms of this Agreement. The Trustee
shall not be personally liable for any action taken or omitted
to be taken by him except for his own gross negligence or
willful misconduct.
8.2 Discretionary Submission of Questions to the Court. The
Trustee, in his discretion and judgment, may submit to the Court
any question or questions regarding which the Trustee may desire
to have explicit approval of the Court for the taking of any
specific action proposed to be taken by the Trustee with respect
to the Trust Estate, or any part thereof, or the administration
and distribution of the Trust Estate. The Court shall approve
or disapprove any such proposed action after motion and hearing.
Any such proposed action submitted to the Court for approval
will be approved by the Court if no Beneficial Interestholder
objects to such motion within the time specified by the
applicable Bankruptcy Rule. If a Beneficial Interestholder
objects to such action by the Trustee, the Court shall approve
or disapprove such action after hearing. Upon approval of a
proposed action by the Court by Final Order, the Trustee shall
be authorized to take the proposed action without liability with
respect thereto. If such action is not approved by the Court,
the Trustee shall not take such action. All costs and expenses
incurred by the Trustee in the exercise of any right, power or
authority conferred by this Section shall be costs and expenses
of the Trust Estate. Any party desiring notice of matters
submitted to the Court must send the Trustee a written request
for notice of post-confirmation pleadings.
8.3 Liability of the Trustee.
8.3.1 Limitation on Liability. No provision of this Agreement
shall be construed to impart any liability upon the Trustee
unless it shall be proved in a court of competent jurisdiction
that the Trustee's actions or omissions constituted gross
negligence or willful misconduct in the exercise of or failure
to exercise any right, power or duty vested in him under this
Agreement. The Trustee shall have no personal liability for any
of the rights, obligations, duties, or liabilities of the
Debtor, Debtor's bankruptcy estate, or the Liquidating Trust.
8.3.2 Reliance on Orders, Statements, Certificates or Opinions.
In the absence of gross negligence or willful misconduct on the
part of the Trustee, the Trustee may conclusively rely, as to
the truth of the statements and correctness of the opinions
expressed therein, upon any orders, statements, certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Agreement.
8.3.3 Discretion of Trustee. Within the limitations and
restrictions expressed and imposed herein, the Trustee may act
freely with respect to the exercise of any or all of the rights,
powers, and authority conferred hereby in all matters concerning
the Trust Estate after forming his best judgment based upon the
circumstances without the necessity of obtaining the consent or
permission or authorization of the Beneficial Interestholders or
of the Court, any other court, official, or officer. The
rights, powers, and authority conferred on the Trustee by this
Agreement are conferred in contemplation of such freedom of
prudent judgment and action by the Trustee, within the
limitations and restrictions so expressed and imposed. Further,
the Trustee shall not be liable for any act or omission in
connection with the administration of this Liquidating Trust, or
the exercise of any right, power, or authority conferred upon
him hereunder, unless it shall be proved that such Trustee was
grossly negligent or acted in a manner which constituted willful
misconduct.
8.3.4 Delegation of Duties. The Trustee shall have power over
and be solely responsible for the management and administration
of the Liquidating Trust. Notwithstanding the foregoing, the
Trustee may engage the services of and delegate such of his
powers and duties (but not any of his responsibilities), upon
such terms and conditions as are satisfactory to the Trustee, to
such employees, agents, attorneys, accountants, appraisers,
consultants and other persons, including, without limitation,
where appropriate, any of the Beneficial Interestholders and
their respective agents and employees, as he may deem necessary
or advisable to carry out the purposes of the Liquidating Trust.
8.3.5 Retention and Payment of Professionals. The Trustee may
consult with legal counsel and with such public accountants and
other professionals as may be retained by the Trustee. The
Trustee may pay from the Trust Estate the fees and expenses of
such professionals monthly at such rates as may be agreed upon
by the Trustee and such professionals. The Trustee shall not be
liable for any action taken or suffered by him or omitted to be
taken by him without gross negligence or willful misconduct in
reliance on any opinion or certification of such accountants or
in accordance with the advice of such counsel or experts.
8.4 Reliance on Trustee. No person dealing with the Trustee
shall be obligated to see to the application of any monies,
securities, or other property paid or delivered to him, or to
inquire into the expediency or propriety of any transaction or
the right, power, or authority of the Trustee to enter into or
consummate the same upon such terms as the Trustee may deem
advisable. Persons dealing with the Trustee shall look only to
the Trust Estate to satisfy any liability incurred by the
Trustee to such persons, and, except as otherwise expressly
provided herein, the Trustee shall have no personal obligation
to satisfy any such liability.
8.5 Parties Acting on Behalf of Liquidating Trust.
8.5.1 Indemnification. The Liquidating Trust shall indemnify
any person who becomes a party, or is threatened to be made a
party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a Trustee,
employee, or agent of the Liquidating Trust, or is or was
serving on behalf of the Liquidating Trust at the request of the
Trustee as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorneys' fees),
judgments, tax obligations, liabilities or penalties, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding,
including appeals thereof, if he acted without gross negligence
or willful misconduct, in the exercise and performance of any
power or duty of a Trustee, employee or agent of the Liquidating
Trust, as the case may be, under this Agreement.
8.5.2 Payment of Expenses. Expenses (including attorneys' fees)
incurred by the Trustee or any employee or agent of the Trustee
in defending any action, suit or proceeding may be paid by the
Liquidating Trust in advance of the final disposition of such
action, suit or proceeding, upon an undertaking by the Trustee,
or such employee or agent, to repay such amount to the
Liquidating Trust, unless it shall ultimately be determined that
he is or was entitled to be indemnified with respect thereto.
8.6 Compensation of Trustee. The Trustee shall be entitled to
receive from the Trust Estate compensation for his services as
Trustee in accordance with terms set forth on Exhibit C to this
Liquidating Trust. The Trust Estate shall also reimburse the
Trustee upon request for all reasonable out-of-pocket expenses
incurred by him in the performance of his duties hereunder,
including the reasonable out-of-pocket expenses of the Trustee,
and the Trustee's employees, attorneys, agents, accountants,
appraisers, consultants, and other persons retained by the
Trustee pursuant to the terms of this Agreement.
8.7 Resignation and Removal.
8.7.1 Resignation. The Trustee may resign and be discharged
from any future obligations hereunder by filing written notice
thereof with the Bankruptcy Court and serving the notice on the
Trust Advisory Committee at least thirty (30) days prior to the
effective date of such resignation. Such resignation shall
become effective on the later of (i) thirty (30) days after the
giving of such notice, or (ii) after appointment of a permanent
or interim successor trustee.
8.7.2 Removal. Any person serving as Trustee may be removed at
any time, for cause, upon entry of a Final Order of the
Bankruptcy Court removing the Trustee and acceptance by a
successor Trustee of his appointment.
8.7.3 Appointment of a Successor Trustee. If the Trustee gives
notice of his intent to resign pursuant to Section 8.7.1 hereof
or is removed pursuant to Section 8.7.2 hereof or dies or
becomes incapable of acting, the Trust Advisory Committee shall
select a successor Trustee to act under this Agreement and such
successor shall be approved by the Bankruptcy Court.
8.7.4 Reserve Fund, Tax Reports, Winding Up. Notwithstanding
his resignation or removal, the Trustee shall be entitled to
complete and file any and all tax returns and reports and pay
any and all taxes for periods during which the Trustee served on
behalf of the Liquidating Trust. The Liquidating Trust shall
pay the taxes and the Trustee's expenses incurred with respect
to the foregoing.
8.8 Acceptance of Appointment by Successor Trustee. Any
successor Trustee appointed hereunder shall execute an
instrument accepting such appointment in the form set out on
Exhibit "B" and shall deliver one counterpart thereof to the
Court. Thereupon, such successor Trustee shall, without any
further act, become vested with all the rights, titles,
interests, estates, properties, rights, powers, trusts, and
duties of his predecessor in the Liquidating Trust hereunder
with like effect as if originally named herein.
8.9 Posting of Bond. The Trustee shall not be required to post
a bond.
9. Term and Termination of Liquidating Trust.
9.1 Term. The Liquidating Trust shall continue and remain in
effect until the first to occur of the following: (a) three
years after the Effective Date ("Initial Term"), provided, the
term of the Liquidating Trust shall automatically be renewed for
two periods of one (1) year each ("Renewal Period") in the event
any portion of the Trust Estate has not been fully liquidated
and the proceeds thereof distributed in accordance with this
Agreement by the end of the Initial Term or at the end of any
Renewal Period and the term of the Liquidating Trust may be
extended beyond five (5) years after the Effective Date if the
Trustee secures Court approval of the extended term no later
than six (6) months after the beginning of the extended term; or
(b) the Trust Estate has been fully liquidated and the proceeds
thereof distributed in accordance with this Agreement.
9.2 Determination of Liquidation. The Trustee may request that
the Bankruptcy Court find that the Trustee has disposed of such
of the Trust Estate that it has effectively been liquidated. If
the Bankruptcy Court so finds, the Liquidating Trust shall be
deemed terminated pursuant to Section 9.1(b).
9.3 Termination. Upon termination of the Liquidating Trust, if
the Trustee reasonably determines that the remainder of the
Trust Estate, other than funds necessary to pay amounts then
owing to the Trustee, is of such a small amount that it would
not be economical or prudent to make any further distributions
to Certificate Holders then such funds shall be distributed to
The American Cancer Society or other similar charity.
9.4 Winding Up. For the purpose of winding up the affairs of
the Liquidating Trust at its termination, the Trustee shall
continue to act as Trustee until his duties have been fully
discharged. After so doing, the Trustee shall have no further
duties or obligations hereunder. Upon motion by the Trustee,
the Court, if it determines it appropriate, may enter an order
relieving the Trustee of any further duties hereunder.
10. Miscellaneous.
10.1 Title to Trust Estate. No Beneficial Interestholder shall
have title to any part of the Trust Estate. No transfer, by
operation of law or otherwise, of the right and interest of any
Beneficial Interestholder in and to the Trust Estate or
hereunder shall operate to terminate this Agreement or the trust
hereunder or entitle any successor or transferee of such
Beneficial Interestholder to an accounting with respect to the
Trust Estate or to the transfer to him of title to any part of
the Trust Estate.
10.2 Sales of Trust Estate. Any sale or other conveyance of the
Trust Estate, or part thereof, by the Trustee made pursuant to
the terms of this Liquidating Trust Agreement shall bind the
Beneficial Interestholders and shall be effective to transfer or
convey all rights, titles and interests of the Trustee and the
Beneficial Interestholders in and to such Trust Estate or part
thereof.
10.3 Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices shall be in writing and shall
be given by posting same in the United States mails, certified
or registered mail, return receipt requested, postage prepaid,
addressed to the party to whom directed, as follows:
If to the Trustee to:
Chriss W. Street Chriss Street & Company 1111 Bayside Drive,
Suite 100 Corona del Mar, CA 92625-1755
If to the Trust Advisory Committee to:
and if to any Beneficial Interestholder, addressed to its
address appearing on the Register or at such other address as
such Beneficial Interestholder shall have given by written
notice to the other parties. All such notices shall be deemed
delivered three (3) days after the posting thereof in such mails.
10.4 Severability. Any provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of
such invalidity or unenforceability without affecting the
validity or enforceability of any other provisions hereof.
10.5 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but
all of which together shall constitute one and the same
instrument.
10.6 Binding Agreement. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the
Trustee and his respective successors and assigns, any successor
trustee provided for in Section Eight, his respective successors
and assigns, and the Beneficial Interestholders, and their
respective successors and assigns. Any request, notice,
direction, consent, waiver, or other instrument or action by any
Beneficial Interestholder shall bind its successors and assigns.
10.7 No Personal Liability of Beneficial Interestholders. The
Beneficial Interestholders shall not incur any personal
liability through their ownership or possession of the
Beneficial Interests, except for taxes imposed on the Beneficial
Interestholders pursuant to applicable provisions of federal,
state, or local law with respect to their Beneficial Interests
in or distributions from the Liquidating Trust. Liabilities of
the Liquidating Trust are to be satisfied in all events
(including the exhaustion of the Trust Estate) exclusively from
the Trust Estate. If the Trustee determines that it is
appropriate or necessary to obtain a return of sums distributed
to the Beneficial Interestholders out of the Trust Estate to pay
the expenses, debts or liabilities of the Liquidating Trust
(including, but not limited to, tax liabilities), the Trustee
shall have the right to demand that the Beneficial
Interestholders return to the Trustee sums distributed to such
Beneficial Interestholders out of the Trust Estate. If the
Trustee makes such a demand on the Beneficial Interestholders,
the Beneficial Interestholders shall return to the Trustee such
sums distributed to them out of the Trust Estate as the Trustee
demands.
10.8 Headings. The heading of the various Sections herein are
for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
10.9 Construction. Except where the context otherwise requires,
words importing the masculine gender shall include the feminine
and the neuter, if appropriate; words importing the singular
number shall include the plural number and vice versa; and words
importing persons shall include partnerships, associations, and
corporations. The words herein, hereof, hereby, hereunder, and
words of similar import, refer to this instrument as a whole and
not to any particular Section or Subsection hereof.
10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ___________, EXCLUSIVE OF ITS LAWS
RELATING TO CONFLICT OF LAWS.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
DEBTOR:
FRUEHAUF TRAILER CORPORATION, MARYLAND
SHIPBUILDING & DRYDOCK COMPANY, F.G.R.,
INC., JACKSONVILLE SHIPYARDS, INC.,
FRUEHAUF INTERNATIONAL, LIMITED,
FRUEHAUF CORPORATION, THE MERCER CO.,
DEUTSCHE-FRUEHAUF HOLDING CORPORATION,
MJ HOLDINGS, INC.,
and E. L. DEVICES, INC.
By:/S/ Chriss W. Street
---------------------
Chriss W. Street,
Their Chairman, President and Chief
Executive Officer
TRUSTEE:
/s/ Chriss W. Street
--------------------
Chriss W. Street
INDENTURE TRUSTEE:
--------------------
Name:
Title:
IBJ Schroder Bank & Trust Company
(for the sole purposes set forth
in the preamble)
<PAGE>
EXHIBIT "A"
PROPERTY TO BE TRANSFERRED TO LIQUIDATING TRUST
Fruehauf Trailer Corporation, Maryland Shipbuilding & Drydock
Company, F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc. transfer to the Liquidating Trust, on behalf
of and for the benefit of the Beneficial Interestholders, all
property, of any type, in which it has a legal or equitable
interest including, but not limited to, all money, deposit
accounts, accounts, general intangibles, inventory, equipment,
fixtures, goods, instruments, chattel paper, documents, books
and records, customer lists, stock, bonds, certificates of
deposits, letters of credit, rights to refunds, promissory
notes, real property, the Distribution Fund, any interest in the
Foreclosed Assets and causes of action, including causes of
action under Chapter 5 of Title 11 of the United States Code and
excluding the Wabash Securities.
The Indenture Trustee for the Senior Notes, on behalf
of and for the benefit of the Beneficial Interestholders, shall
transfer to the Liquidating Trust all of its rights, title and
interest in the Foreclosed Assets.
<PAGE>
EXHIBIT "B"
ACCEPTANCE OF APPOINTMENT
The undersigned, ________________________, having been
appointed to serve as successor Trustee of the Liquidating Trust
created pursuant to that certain Liquidating Trust Agreement
("Agreement") dated ______, 199_, by and between Fruehauf
Trailer Corporation, Maryland Shipbuilding & Drydock Company,
F.G.R., Inc., Jacksonville Shipyards, Inc., Fruehauf
International Limited, Fruehauf Corporation, The Mercer Co.,
Deutsche-Fruehauf Holding Corporation, MJ Holdings, Inc., and
E.L. Devices, Inc. and Chriss W. Street, Trustee, hereby accepts
such appointment and agrees to serve as successor Trustee under
the Agreement as set out in Section 8.7 thereof.
Executed this ______ day of __________________, 199_.
Successor Trustee:
By:________________________
